Markets & Finance

Movers: AIG, Lehman, Citigroup, Wal-Mart, VeriSign


Stocks in the news Thursday

From Standard & Poor's Equity ResearchAmerican International Group (AIG) posts $0.51 second quarter adjusted loss per share, vs. $1.77 adjusted EPS a year ago. Net loss was $2.06, vs. $1.64 EPS, reflecting $11.6 billion in investment losses/write-downs largely tied to AIG's outsized mortgage exposure. AIG said the continuation of the weak U.S. housing market and disruption in the credit markets, as well as global equity market volatility, had a substantial adverse effect on its second quarter 2008 results. S&P maintains hold.

Lehman Brothers (LEH) shares fall after the NY Post, citing sources, reports LEH CEO Dick Fuld is in scramble mode as he pursues multiple strategies designed to raise much-needed capital while at the same time ensuring that LEH remains in one piece. In recent days, Fuld has held discussions with various private-equity and foreign investors, including some from South Korea and other parts of Asia, about possibly raising more capital as he tries to offset a sale of $30 billion in hard-to-value mortgage assets, the newspaper said.

Citigroup (C) shares are in focus after a newswire report says that N.Y. Attorney General Andrew Cuomo will make a "major announcement" on an investigation into U.S. auction rate securities at 11:00 a.m. ET. Earlier, the WSJ reported that Citigroup could reach a preliminary agreement with regulators as soon as Thursday to buy back $5-$8 billion of auction-rate securities to settle allegations that it wrongly told customers the debt was safe. S&P maintains hold.

Wal-Mart Stores (WMT) posts 3.0% higher July total U.S. same-store sales without fuel, 3.7% higher with fuel, 9.4% higher total company sales. Notes with the end of stimulus checks, it knows consumers are spending more cautiously. Sees August U.S. same-store sales, excluding fuel, up 1%-2%, because it still sees sales volatility from week to week, especially around paycheck cycles. S&P says it is disappointed by soft sales in apparel and home categories, keeps buy.

VeriSign (VRSN) posts $0.25 second quarter non-GAAP EPS, vs. $0.02 loss, on 17% revenue rise. Reportedly says its divestiture process has been impacted by economic downturn; expects divestiture to take longer. Sees third quarter core revenue of $236-$241 million. S&P upgrades to sell from strong sell. Oppenheimer reportedly downgrades to perform from outperform.

Avis Budget Group (CAR) posts better-than-expected $0.15, vs. $0.22, second quarter EPS on 4.0% higher total revenue. Excluding items, the Street on average expected EPS of $0.06. CAR projects its 2008 revenue will increase vs. 2007, but EBITDA will be about $350 million, and pretax income will be about $140 million, excluding unusual items. In 2007, revenue was $6.0 billion, EBITDA was $409 million and pretax income was $198 million, excluding unusual items.

Martin Marietta Materials (MLM) posts $1.52, vs. $1.92, second quarter EPS on 1% sales drop. Notes the cost of petroleum-based products were up $18 million, which reduced EPS by $0.26; heritage aggregates product line pricing was up 6% and volume was down 9%. Lowers 2008 EPS guidance to $5.00-$5.65 from previous range of $6.25-$7.00. Cites challenging economic environment, energy inflation, credit market uncertainty, lagging infrastructure demand.

J.C. Penney (JCP) raises $0.38 second quarter EPS guidance to $0.50-$0.52, due to better-than-expected sell-through of promotionally priced merchandise, continued expense management measures taken over course of second quarter as part of the company's Bridge Plan. Posts 6.5% lower July same-store sales, 4.9% total sales drop. Notes its guidance was for July sales to decrease in mid-single digits.

Sunoco (SUN) posts better-than-expected $0.70, vs. $4.20, second quarter GAAP EPS as pressure on retail gasoline and chemicals margins, limited utilization offset 49% higher revenue. On a non-GAAP basis, EPS totaled $0.52, vs. Street expectations of about $0.30.

Costco Wholesale (COST) posts 10% higher total company July same-store sales, 14% higher total sales.

Target (TGT) posts 1.2% lower July same-store sales, 4.7% higher total sales. Says July comps sales performance was the near low end of its -1% to +1% planned range.

BJ's Wholesale Club (BJ) posts 17% higher July same-store sales (including contribution from sales of gasoline of 9.7%), 19% higher total sales.

Abercrombie & Fitch (ANF) posts 7% lower July same-store sales, 2% higher total sales. It says based upon lower-than-expected July sales, the company now expects to report EPS for the first half of $1.55, incl. $0.01 related charges associated with departure of senior executive.

American Eagle Outfitters (AEO) posts 7% lower July same-store sales, slightly lower total sales. Posts 9% lower second quarter same-store sales, 2% lower total sales. Reflecting July sales results, now expects second quarter EPS to be $0.28, vs. previous guidance of $0.28-$0.30.

Career Education (CECO) posts $0.14, vs. $0.05, second quarter EPS as lower operating expenses help offset a 2.2% revenue decline. Notes second quarter 2008 EPS included $0.02 of income from discontinued operations vs. a $0.01 loss from discontinued operations in the year-ago quarter. S&P reiterates sell.

Dynegy (DYN) posts $0.32 second quarter loss, vs. $0.09 EPS. Reports 14% decline in second quarter adj. EBITDA. Says operational and commercial results were hurt by Midwest weather events, including flooding and a transmission line outage, which negatively impacted basis differentials and reduced overall demand, and compressed Northeast and West realized spark spreads, which led to lower sales volumes. Reduces 2008 estimates to $955 million of adjusted EBITDA, $510 million of adjusted cash flow from operations, and $140 million of adjusted free cash flow.

UTStarcom (UTSI) posts wider-than-expected $0.31 second quarter loss, vs. $0.51 loss, on 18% sales rise. Street was looking for loss of $0.28. Gross margins for the second quarter of 2008 were 13.0% as compared to 14.8% in the second quarter of 2007. Jefferies downgrades to underperform from hold.

Williams Companies (WMB) posts $0.73, vs. $0.71, second quarter EPS on strong results from its Exploration & Production segment. Raises 2008 EPS forecast to $2.35-$2.80 from $2.30-$2.80, and 2009 to $2.10-$2.90 from $2.05-$2.90. Says its has identified $100-$300 million in potential future projects for 2008 and $200-$500 million for 2009.

AmeriCredit (ACF) posts $1.30 second quarter loss, vs. $0.66 EPS. Net loss included a $135 million after-tax impairment charge and a $7 million after-tax restructuring charge. Excluding goodwill impairment and restructuring charges, ACF earned $13 million pre-tax, even after significantly increasing loan loss provisions.

Aegon N.V. (AEG) posts € 0.08, vs. € 0.34, second quarter on 10% revenue drop. Notes net income affected by losses on investments, increase in credit impairments.

Limited Brands (LTD) posts 5% lower July same-stores sales, 6.7% lower total sales.

Cardinal Health (CAH) posts $0.92, vs. $0.61, fourth quarter EPS from continuing operations on 3% revenue rise. Posts $0.97 fourth quarter non-GAAP EPS from continuing operations. Street was looking for $0.95. Sees first quarter non-GAAP EPS of about $0.70, which compares unfavorably year-over-year due to strong branded price inflation a year ago. Expects fiscal year 2009 revenue growth of 6%-7%, non-GAAP EPS from continuing operations of $3.80-$3.95.


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