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Stocks in the news Wednesday
From Standard & Poor's Equity ResearchGeneral Electric (GE) shares were down 7% after after Deutsche Bank cut GE EPS estimates and target. Deutsche Bank says adjustments largely reflect deterioration at GE Capital - driven by tighter credit markets, asset shrinkage and debt pay-down. But the stock recovered a little on news that GE plans to sell $3 billion of perpetual preferred stock in a private offering to Warren Buffett's Berkshire Hathaway (BRKA).The perpetual preferred stock has a dividend of 10% and is callable after three years at a 10% premium. In conjunction with this offering, Berkshire Hathaway will also receive warrants to purchase $3 billion of common stock with a strike price of $22.25 per share, which is exercisable at any time for a five-year term. GE also announces plans to offer at least $12 billion of common stock to the public.
ImClone Systems (IMCL) rises 2.95 to 65.35 after the Wall Stree Journal reports that Eli Lilly (LLY) is in advanced talks to acquire IMCL for $70 a share. The offer values IMCL, maker of Erbitux, at $6.1 billion.
Ford Motor (F) shares fall 0.66 to 4.54 after Ford, Lincoln and Mercury dealers report total sales of 116,734 in September, down 34% from a year ago. Ford says September was the lowest sales month for the company and the industry this year.
Boston Scientific (BSX) shares fell after Johnson & Johnson's (JNJ) Cordis Corp. says U.S. district court in Delaware entered final judgment of $1.2 billion to Cordis on patents infringed by Medtronic (MDT) and Boston Scientific. Cordis says cases involve the original palmaz balloon expandable stent patent. MDT was ordered to pay about $521 million and BSX about $703 million. Merrill reportedly downgrades BSX to underperform.
American International Group (AIG) rises 0.32 to 3.65 after the Wall Street Journal reports that Maurice R. "Hank" Greenberg, the former chief executive officer of AIG, has asked the company's CEO for the chance to bid on any assets the insurer plans to sell.
Reliant Energy (RRI) falls 0.69 to 6.66 after Fitch announces that it has revised RRI's Rating Outlook to Negative from Stable, following RRI's announcement that it is revising its 2008 outlook downward due to financial impact of Hurricane Ike on the company's retail business and lower prices at its wholesale power business. In addition, RRI announced that it would be ending its credit-enhanced retail structure with Merrill Lynch and raising $1 billion in new capital.
Tenet Healthcare (THC) falls 0.30 to 5.25. UBS Financial takes a more cautious view on hospitals - it downgrades THC to sell from neutral, lowers Community Health (CYH) and Universal Health Services (UHS) to neutral from buy.
Rockwell Automation (ROK) announces restructuring actions designed to better align resources with growth opportunities and reduce costs in light of current, anticipated market conditions. Restructuring will result in headcount reductions, primarily in selling, general, administrative functions, equating to about 3% of its global workforce. To record pre-tax charge in the fourth quarter of about $50 million, which was not included in previous guidance. S&P keeps hold; cuts estimates, target.
Actuant (ATU) posts $0.54, vs. $0.50, fourth quarter EPS on 3.8% revenue rise. Sees $0.48-$0.52 first quarter EPS, $2.25-$2.35 fiscal year 2009 EPS on $1.725-$1.750 billion revenue. Expects 2009 to be a challenging year given the unsettled economic and credit environments and headwinds from the stronger U.S. dollar and higher borrowing costs.
Diebold (DBD) raises 2008 non-GAAP EPS guidance to $2.40-$2.45 from $2.25-$2.30. Cites earlier-than-expected progress from its cost-reduction initiatives, improved profitability from the company's Brazilian voting and lottery businesses, continued demand for its solutions in global financial markets and a lower anticipated effective tax rate.
Wal-Mart Stores (WMT) says in 3,500 stores across the U.S., it reduces prices on some of the most popular toys. Also, over the next 10 days it will fast track the opening of Christmas shops in stores nationwide.
Nuance Communications (NUAN) acquires Philips Speech Recognition Systems from Royal Philips Electronics for about $96.1 million. Expects acquisition in fiscal year 2009 to add $36-$39 million in GAAP revenue, $0.00-$0.01 in GAAP EPS. Updates guidance, now sees fourth quarter GAAP revenues of $248-$252 million, non-GAAP revenues of $258-$262 million, GAAP loss of $0.01-$0.02, and non-GAAP EPS of $0.25-$0.26.
Northern Trust (NTRS)- Fitch Ratings says it has placed the 'AA-' long-term and 'F1+' short-term Issuer Default Ratings (IDRs) of NTRS on Rating Watch Negative. Fitch also revises Rating Outlook on Northern Trust Company to Negative from Stable.
Emergent Biosolutions (EBS) says it signed a new, multi-year, firm fixed price contract with the U.S. Department of Health and Human Services to supply an additional 14.5 million doses of BioThrax (Anthrax Vaccine Adsorbed), its FDA licensed anthrax vaccine, for inclusion in the Strategic National Stockpile (SNS). Total value of this follow-on contract is between $364 million and $404 million, with higher amount tied to delivery of product having four-year expiry dating.
Wolverine World Wide (WWW) posts $0.62, vs. $0.54 a year ago, third quarter EPS on 2.8% revenue rise. Based on strength of third quarter results and its diversified global business model, it raises 2008 EPS forecast to $1.87-$1.92 on revised revenue range of $1.22-$1.24 billion.
Global Payments (GPN) announces agreements to provide its VIP LightSpeed suite of cash access products and services to nine additional U.S. casinos: Casino Queen in East St. Louis, Illinois; San Pablo Casino in San Pablo, California; as well as seven locations for Oneida Casino in Green Bay, Wisconsin.
Walter Industries (WLT) says recent Gulf Coast hurricanes may result in increased insurance claims, delinquencies from customers. These issues could hurt third quarter results by $4-$6 million. Reduces ests for metallurgical coal sales to 1.4-1.5 million tons, with average operating margin per ton of $62-$65. Also, plans to separate Financing business from its core Natural Resources operations. To distribute 100% of its interest in JWH Holding Co., LLC to its shareholders. Also says JWH Holding has agreed to merge with Hanover Capital Mortgage Holdings.