Markets & Finance

Movers: GM, Ford, United Technologies, BorgWarner, Bank of America


Stocks in the news Friday

From Standard & Poor's Equity ResearchA frantic, last-ditch attempt to forge a relief package for auto industry collapsed in the U.S. Senate, dealing a giant blow to the immediate hopes of the Big Three, due to a sharp partisan dispute over the wages paid to workers at the manufacturing giants, reports The Wall Street Journal. Senate Majority Leader Harry Reid of Nevada suggested the $14 billion wouldn't be revisited until January. "It's over with," he said. Separately, General Motors (GM) reportedly has hired bankruptcy lawyers.

Deutsche Bank reportedly downgrades Ford (F) to sell from hold; also downgrades TRW Automotive (TRW), Magna International (MGA), Lear (LEA) and American Axle & Manufacturing (AXL).

BorgWarner (BWA) cuts 2008 EPS guidance before special items to $1.85-$1.95 from $2.25-$2.35, cites rapidly deteriorating conditions in the auto industry that continue in every geographic region of the world. BWA will have reduced 2008 global employee levels by about 2,900 people, or 17% of its workforce, by yearend.

United Technologies (UTX) affirms expectation for 2008 EPS of $4.90; sees 2009 EPS of $4.65-$5.15, excluding impact of any acquisition-related costs resulting from adoption of SFAS 141. Expects revenues to fall to about $57 billion in 2009, as adverse forex impact more than offsets expected low single-digit organic growth.

Bank of America (BAC) is working on a plan to eliminate 30,000 to 35,000 positions over the next three years reflecting the pending merger with Merrill Lynch and the weak economic environment, which is affecting the level of business activity. Expects to have a final plan early in 2009.

Danaher (DHR) says it expects 2009 EPS to be in the range of $3.70 to $4.10. Despite the current economic backdrop, it believes the company is well positioned for 2009.

Waters (WAT) sees fourth quarter sales of $410-$420 million, vs. prior forecast of $454 millionM; $0.94-$0.99 non-GAAP EPS vs. previous estimate of $1.08-$1.12. Cites weaker than expected orders for new instruments resulting from deterioration in global economic conditions.

Helix Energy Solutions (HLX) says it intends to focus the future direction of the company around its deepwater construction, well intervention services. Will seek to 1) divest all or a portion of its oil and gas assets; 2) divest its interest in production facilities; 3) evaluate strategic alternatives with respect to disposition of its 58%-owned subsidiary, Cal Dive International. In deal to sell its 17.5% non-operating working interest in its Bass Lite field in Gulf of Mexico for $49 million.

Techwell (TWLL) lowers fourth quarter revenue guidanace to about $16.5 million, down 11% from third quarter 2008, flat with fourth quarter 2007. Says several of its larger security customers in Taiwan, China have pushed out orders in the last two weeks as a result of build-up of inventory in their factories.

Insteel Industries (IIIN) says while it hasn't previously provided numerical first quarter guidance, now expects to report a loss. Notes its order entry rate has been trending at severely depressed levels during the quarter due to tightening in credit markets, weakening economic outlook, inventory destocking measures being pursued by customers to increase their liquidity. Says, through the first two months of the quarter shipments were down 39% y/y, all of its manufacturing facilities operated on reduced schedules, which will continue through the remainder of quarter.

Sunstone Hotel Investors (SHO) says November total portfolio RevPAR was down 12% vs. prior year; November comparable portfolio RevPAR was down 12%, quarter-to-date (QTD) portfolio RevPAR was down 9.5%, QTD comparable portfolio RevPAR was down 8.7%. Reaffirms 2008 guidance; sees adj. EBITDA of $275-$285 million, adjusted FFO per share of $2.58-$2.75.

Advanced Energy Indusries (AEIS) to reduce its global workforce by approximately 114 people, or 7% of its total workforce. To take charges of about $1.9 million in the fourth quarter 2008, $1.3 million in first quarter 2009, $300,000 in second quarter 2009, consisting of severance costs and related expenses. Also reviewed its end of life product and inventory strategies, excess and obsolete inventory reserve policies; as result, to take about $3.5 million charge to cost of goods sold in fourth quarter 2008. Reconfirms its revenue guidance of $66-$72 million for fourth quarter 2008.

Standard Microsystems (SMSC) cuts $90-$93 million third quarter revenue forecast to $83-$85 million, down 13%-15% sequentially. Cites prolonged global economic challenges that have lead to weaker sales, inventory correction in PC market. Expects EPS to be generally consistent with prior guidance, including the benefit of unanticipated favorable forex.


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