Markets & Finance

Movers: Apple, Wachovia, American Express, Texas Instruments, SanDisk


Stocks on the move on Tuesday

From Standard & Poor's Equity ResearchApple (AAPL) posts $1.19, vs. $0.92 a year ago, third quarter EPS on 38% sales growth. Street was looking for $1.08. Gross margin was 34.8%, down from 36.9% in year-ago quarter. It sees fourth quarter EPS of about $1.00 and revenue of about $7.8 billion. S&P downgrades to sell from buy; concerned about gross margin trends.

Wachovia (WB) posts $4.20 second quarter loss per share, vs. $1.22 EPS a year ago, on a 3.2% drop in net interest income. Notes $6.1 billion noncash goodwill impairment charge in commercial-related subsegments reflecting declining market valuations, asset values. Cuts quarterly dividend to $0.05. Exits General Bank wholesale mortgage origination channel.

American Express (AXP) posts $0.56, vs. $0.86, second quarter EPS from continuing operations despite 8% revenue rise. Says second quarter results include a $374 million after-tax addition to U.S. lending credit reserves that reflects a deterioration of credit indicators beyond its prior expectation, and a $85 million after-tax charge to fair market value of AXP's retained interest in securitized Cardmember loans. Says it's no longer tracking to its prior forecast of 4%-6% EPS growth; the environment has weakened significantly since January 2008, particularly during June. S&P cuts estimate, target, keeps hold.

Texas Instruments (TXN) posts $0.44, vs. $0.42, second quarter EPS on 2% revenue decline. second quarter revenue and EPS were in the lower half of company's guidance range. Notes demand slowed unexpectedly in June primarily because distributors reduced inventory levels and did not replenish them late in quarter. Additionally, Wireless revenue declined in the quarter, continuing its first quarter weakness. Sees third quarter EPS of $0.41-$0.47 on revenue of $3.26-$3.54 billion. S&P reiterates hold, but cuts estimates, target.

SanDisk (SNDK) posts $0.10 second quarter non-GAAP loss, vs. $0.30 EPS a year ago, on 1% revenue decline. Says it's delaying the start of the next phase of production ramp in Fab 4 and now expects it to start no sooner than 4/09; is also pushing out its decision to invest in Fab 5 until market conditions improve. Citigroup reportedly downgrades to sell from hold.

Bank examiners from the Federal Reserve and the Comptroller of the Currency are inspecting the books of the nation's two largest mortgage finance companies, Freddie Mac (FRE) and Fannie Mae (FNM), as the Bush administration prods Congress to approve a plan that would enable it to inject billions of dollars into the companies: NYT.

United Parcel Service (UPS) posts $0.85, vs. $1.04, second quarter EPS as increasing fuel costs and a stagnant U.S. economy offset 6.7% revenue rise. Sees $3.50-$3.70 2008 EPS.

Caterpillar (CAT) posts $1.74, vs. $1.24, second quarter EPS on 20% revenue rise. Now sees 2008 sales of about $50 billion and $6.00 EPS, vs. previous outlook for sales of $47.2-$49.5 billion and EPS of $5.64-$6.18.

Merck (MRK) posts $0.86, vs. $0.82, second quarter non-GAAP EPS despite 1% revenue decline. MRK announces results of the Simvastatin plus Ezetimibe in Aortic Stenosis (SEAS) study, released yesterday, saying it is assessing the impact of the results on the contribution from its joint venture with Schering-Plough and at this time is not providing 2008 equity income guidance, GAAP and non-GAAP EPS guidance, and any long-term financial performance guidance. Leerink Swann, Merrill reportedly downgrade.

Schering-Plough (SGP) posts $0.24, vs. $0.34, second quarter GAAP EPS as higher costs offset a 55% rise in sales.

Kelly Services (KELYA) posts $0.30, vs. $0.41, second quarter EPS despite 3% revenue rise. S&P downgrades to strong sell from hold.

Mohawk Industries (MHK) posts $1.29, vs. $1.68, second quarter EPS on 7% sales decline. Says third quarter outlook is challenging given the environment. Slow demand with higher material and energy costs will continue to compress margins. As a result, MHK is raising product prices and transportation fees on most products. Sees third quarter EPS of $1.06-$1.15.

UnitedHealth Group (UNH) posts $0.27, vs. $0.89, second quarter EPS despite 6.7% revenue rise. Notes $0.67 adjusted second quarter 2008 EPS exceeded its revised outlook; special items included legal settlements, employee severance costs, sale of certain Nevada senior market assets. Continues to anticipate 2008 EPS of $2.95-$3.05.

DuPont (DD) posts $1.18, vs. $1.04, second quarter EPS on 12% sales rise. Narrowss $3.40-$3.55 2008 EPS forecast to $3.45-$3.55. Expects second half 2008 EPS to be modestly lower than last year due to impact of higher energy, ingredient costs, lower demand in certain developed markets, lower income from asset sales, higher base tax rate.

Lockheed Martin (LMT) posts $2.15, vs. $1.82, second quarter GAAP EPS on 3.6% revenue rise. Raises 2008 EPS forecast to $7.45-$7.60 on revenue of $41.9-$42.9 billion.

KeyCorp (KEY) posts $2.70 second quarter loss from continuing operations, vs. $0.85 EPS, as after-tax charges of $1.011 billion, or $2.43 per share, offset a 4.8% rise in net interest income. Notes the after-tax charges resulted from an adverse federal tax court ruling on a service contract lease transaction -- a ruling KEY intends to appeal based on its position that tax treatment it applied to its leveraged lease transactions complied with all applicable tax laws and regulations.

CME Group (CME) posts $3.93, vs. $3.52, second quarter non-GAAP pro forma EPS on 71% revenue rise. Expects 2008 pro forma operating expense to be closer to the bottom end of the previously stated guidance range of $855-$870 million (excluding NYMEX). Separately, CME announces it has obtained committed financing to support its acquisition of NYMEX Holdings. Says the committed financing takes the form of a $3.2 billion bridge financing facility with Bank of America and UBS.


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