Markets & Finance

Movers: MBIA, Ambac, American Express, Lehman Brothers, Hovnanian, Williams-Sonoma


Wednesday's stocks in the news

From Standard & Poor's Equity ResearchMBIA Inc. (MBI) falls 0.93 to 5.76 after as Moody's Investors Service announces that it has placed the Aaa insurance financial strength ratings of MBIA Insurance Corporation and its affiliated insurance operating companies on review for possible downgrade. In addition, Moody's also places surplus note rating of MBIA Insurance Corporation (Aa2-rated) and the ratings of the holding company, MBIA, Inc. (senior debt at Aa3), on review for possible downgrade.

Ambac Financial Group (ABK) shares drop 0.46 to 2.54 after Moody's announces that it has placed the Aaa insurance financial strength ratings of Ambac on review for possible downgrade, and has placed the debt ratings of Ambac and related financing trusts on review for possible downgrade. Separately, Ambac shares will be removed from the S&P 500 index after the close of trading on June 10, and will be replaced by Lorillard Inc. Lorillard is being distributed to the public via a 2-tier process involving 1) retirement of the tracking stock Carolina Group (CG), in exchange for which about 62% of Lorillard's common stock will be issued, and 2) an offer in which shares of S&P 500 constituent Loews Corp. (LTR) can be exchanged for remaining shares of Lorillard. As of yesterday's close of trading ABK's market cap was roughly $860 million, ranking 500th.

At a Keefe Bruyette conference, American Express (AXP) CEO Kenneth Chenault says that the company is still tracking to the reported 2008 EPS growth assumption of 4%-6% disclosed earlier in the year, despite its view for "above average" credit losses.

Lehman Brothers Holdings (LEH) is trading higher as the WSJ reports that LEH has reached out to potential overseas investors, including at least one in South Korea, as it looks to raise fresh capital. S&P maintains hold.

Hovnanian Enterprises (HOV) posts $5.29 second quarter loss, vs. $0.49 loss a year ago, on 30% sales decline and $251 million in charges. Excluding unconsolidated joint ventures, HOV delivered 2,494 homes in second quarter, a decrease of 21% from 3,150 home deliveries in the year-ago quarter. The number of net contracts for second quarter, excluding unconsolidated joint ventures, declined 29% to 2,226 homes. S&P maintains hold; widens loss estimates.

Williams-Sonoma (WSM) posts $0.05 (excluding $0.05 benefit), vs. $0.16 a year ago, first quarter non-GAAP EPS on 9.0% lower same-store sales, 4.2% lower total sales. Sees second quarter same-store sales down 8%-10% (vs. earlier guidance of down 3.5%-6.0%) on retail net revenue of $478-$488 million (vs. earlier guidance of $493-$503 million). Also sees $0.15-$0.19 second quarter GAAP EPS; $1.45-$1.58 fiscal year 2009 EPS on $3.738-$3.804 billion revenue (vs. earlier guidance of $3.793-$3.877 billion revenue). S&P maintains hold.

Bob Evans Farms (BOBE) posts $0.52, vs. $0.42, fourth quarter EPS on 1.7% higher same-store sales at Bob Evans Restaurants, 4.3% higher total sales. Sees fiscal year 2009 same-store sales growth at Bob Evans Restaurants of 1.5%-2.0%, total sales growth of 3.5%-4.5%, EPS of $2.00-$2.10.

Procter & Gamble (PG) agrees to merge the Folgers coffee business into JM Smucker (SJM) in an all-stock reverse Morris Trust transaction valued at about $3.3 billion, including assumption of an estimated $350 million of Folgers debt. Terms: SJM will issue a one-time special dividend of $5/share to SJM holders, PG holders to get about 53.5% of SJM in tax-free stock-for-stock merger

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UAL Corp. (UAUA) reports May passenger load factor of 82.6%. Total scheduled revenue passenger miles (RPMs) decreased in May by 4.1% on a capacity decrease of 1.7% in scheduled available seat miles compared with the same period in 2007. Also announces that it will remove a total of 100 aircraft from its mainline fleet, including the 30 previously announced Boeing 737s, and reduce its mainline domestic capacity in the fourth quarter 2008 by 14% year-over-year.

Guess? (GES) posts $0.51, vs. $0.38, first quarter EPS on 30% revenue rise. Street view was for $0.46 EPS. Raises fiscal year 2009 EPS guidance to $2.40-$2.48 on revenue of $2.03-$2.08 billion.

Indevus Pharmaceuticals (IDEV) says based on recent discussions with the FDA regarding the NDA filing for NEBIDO, expects the FDA to formally request that the company provide additional safety data prior to approving NEBIDO.

Ingram Micro (IM) reaffirms $0.34-$0.37 second quarter EPS guidance (excluding costs related to expense-reduction plans in North America and Europe, Middle East and Africa regions) on sales in the range of $8.5-$8.75 billion.

HLTH Corp. (HLTH) agrees to sell its ViPS Inc. unit to General Dynamics (GD) for about $225 million. S&P's Scott Kessler says the proposed sale of this unit important because in February 2008, WebMD (WBMD) and HLTH announced a proposed combination that required sale of at least one of HLTH's two primary business units in advance of deal consummation. S&P now believes a WBMD/HLTH merger is more likely to occur. S&P does not provide analytical coverage on HLTH, reiterates strong sell on WBMD.

Mosaic Company (MOS) says phosphate sales volumes are expected to be in the range of 9.0-9.4 million tonnes for fiscal year 2009, potash sales volumes are expected to be 8.2-8.6 million tonnes. Estimates a realized DAP price, FOB plant, in the range of $1,020-$1,080 per tonne in the first quarter and an estimated average realized MOP price, FOB plant, in the range of $460-$510 per tonne for the same quarter. Says capital spending for fiscal year 2009 will grow significantly to $900 million to $1.1 billion, more than double the company.s historical rates.

Tibco Software (TIBX) expects second quarter total revenue of $147-$149 million, license revenue of $56-$57 million, non-GAAP EPS of $0.05-$0.06. Notes weakness in Americas, deal slippage.

Altera (ALTR) says it now expects that second quarter sequential revenue growth will be toward the high end of its previously issued 1%-4% guidance. Notes strong and broad-based growth in its new product category, led once again by Stratix II FPGAs. S&P reiterates hold.


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