Markets & Finance

Movers: Apple, Honda, Morgan Stanley, Adobe, Xilinx


Stocks in the news Wednesday

From Standard & Poor's Equity ResearchApple (AAPL) falls 6.63 to 88.80 after the company says this year is the last year the company will exhibit at Macworld Expo, and that Philip Schiller, Apple's senior vice president of Worldwide Product Marketing, will deliver the opening keynote for this year's conference. Oppenheimer downgrades to perform from outperform. S&P reiterates strong buy.

Honda Motor (HMC) cuts 550 billion yen fiscal year 2009 operating income forecast to 180 billion yen, 485 billion yen net income forecast to 185 billion yen (both consolidated). Cuts third quarter dividend by 50% from 22 yen to 11 yen.

Morgan Stanley (MS) posts $2.24 fourth quarter loss from continuing operations, vs. $3.61 loss a year ago, on net revenues of $1.8 billion, compared with negative $0.4 billion in last year's fourth quarter. Street was looking for fourth quarter loss of $0.34. Notes Asset Management experienced a pre-tax loss of $1.8 billion, driven primarily by markdowns in principal investments and lower assets under management.

Adobe Systems (ADBE) posts $0.46, vs. $0.38 a year ago, fourth quarter GAAP EPS on slight revenue rise. Posts non-GAAP EPS of $0.60, vs. Street's view of $0.58. Sees first quarter GAAP EPS of $0.30-$0.35 on revenue of $800-$850 million.

Xilinx (XLNX) sees third quarter sequential sales decline of about 6%-10% due to much weaker-than-anticipated sales in the month of December from a broad base of end markets. This is a revision from previous sales guidance of up 2% to down 2% sequentially.

General Mills (GIS) posts $1.09, vs. $1.14, second quarter EPS on 8.3% sales rise. Notes second quarter fiscal year 2009 including $0.49 net reduction related to mark-to-market valuation, $0.22 gain from the sale of Pop Secret. Reaffirms 2009 input cost inflation estimate of 9%, says forex translation now expected to reduce fiscal year 2009 reported sales, EPS for the year. Despite this, raises $3.81-$3.85 fiscal year 2009 EPS guidance to $3.83-$3.87 before any impact from mark-to-market valuation and excluding the Pop Secret gain.

Newell Rubbermaid (NWL) reduces guidance for fourth quarter normalized EPS to $0.06-$0.10 from $0.29-$0.34; for 2008 normalized EPS to $1.17-$1.21 from $1.40-$1.45. Sees fourth quarter sales declining in low-teens percentage range. Also says an 8%-10% reduction of salaried workforce that began in 2008 will continue in 2009, and it will implement a wage and salary freeze, temporary shutdowns at number of manufacturing facilities to reduce inventory levels.

Hovnanian Enterprises (HOV) posts $5.79 fourth quarter loss, vs. $7.42 loss, as smaller write-downs offset 48% revenue decline. For fourth quarter, deliveries were 2,294 homes, excluding unconsolidated joint ventures, a decrease of 42% from fourth quarter fiscal year 2007. Net contracts in fourth quarter fell 56%.

Joy Global (JOYG) posts $1.11, vs. $0.64, fourth quarter EPS on 40% revenue rise. Gives guidance for fiscal year 2009 revenues of $3.5-$3.7 billion and EPS of $3.60-$4.00.

ISIS Pharmaceuticals (ISIS) and Abbott Labs (ABT) says ABT has exercised its option to purchase the remaining equity ownership in ISIS's Ibis Biosciences unit for $175 million. In addition to closing purchase price, ISIS will receive earn out payments from ABT tied to post-closing sales of Ibis systems, including instruments and assay kits.

Schnitzer Steel Industries (SCHN) expects to report a first quarter net loss as a result of an estimated $60 million non-cash writedown of the value of the company's Metals Recycling and Steel Manufacturing inventories. Cites weakened market conditions in the final month of the first quarter in all three of SCHN's businesses, combined with a number of renegotiations, deferrals and cancellations of customer contracts, leading to lower sales volumes and reduced sales prices.

ConAgra Foods (CAG) posts $0.38, vs. $0.27, second quarter EPS from continuing operations ($0.43 vs. $0.30, excl. items impacting comparability) on 11% higher revenue. Citing recent trends and expected Consumer Foods operating profit improvement, company reaffirms guidance for fiscal year 2009 EPS from continuing operations to be slightly above $1.50, excluding items.

Satyam Computer Services Limited (SAY) announces it is not going ahead with its proposed acquisition of Maytas Properties and Maytas Infra, given the feedback it has received from the Investor community. Yesterday the company said its board approved proposals to acquire a 100% stake in Maytas Properties and a 51% stake in Maytas Infra. Total outflow for both acquisitions was expected to be $1.6 billion, comprising of $1.3 billion for stake in Maytas Properties, $300 million for stake in Maytas Infra. Susquehanna Financial reiterates positive.

Applied Micro Circuits (AMCC) expects third quarter revenue to be down sequentially by about 20%-25%. Prior guidance was that revenue would decrease approximately 10% from the level reported in second quarter. Cites slower-than-anticipated sales across all market segments.

Eastman Chemical (EMN) says reduction in management staff, which was recently completed, will result in a restructuring charge of about $5 million in fourth quarter.

Westlake Chemical (WLK) says lower production, weakened product demand and inventory write downs due to sharp drop in product prices will have a materially negative impact on fourth quarter and 2008 results. Says it idling one of its ethylene plants in Lake Charles, Louisiana due to significant customer inventory destocking and resulting weakened demand of the company's derivative products.

Gibraltar Industries (ROCK) says it does not expect to meet its 2008 EPS guidance due to unexpected and precipitous deterioration in business conditions in November. Also announces closing of its Enterprise, MS, facility and consolidation of its manufacturing operations into two other existing facilities, with no expected impact on sales. Piper Jaffray and Baird reportedly downgrade.

Leggett & Platt (LEG) sees adjusted fourth quarter EPS from continuing operations of breakeven to $0.15. Sees 2008 adjusted EPS of $0.85-$1.00. Cites extremely low market demand, leading to lower sales expectations, production curtailments (in an effort to reduce inventories), and an increase in anticipated LIFO costs. Believes 2009 cash flow from operations should be sufficient to fully fund the estimated $260-$270 million needed for capital expenditures and dividends.

Liz Claiborne (LIZ) suspends its quarterly cash dividend indefinitely. The company has paid the dividend scheduled for Dec. 15, 2008 in the amount of $0.05625 per share to stockholders of record at the close of business on Nov. 21, 2008.

Perfect World (PWRD) anticipates that, due to its acquisition of a game engine and two games, a substantial portion of the $15 million purchase price for this acquisition is attributable to in-process R&D, based upon certain recognized valuation principles. Says in accordance with U.S. GAAP, it may need to recognize a one-time non-recurring expense for value of such in-process R&D as of the date of acquisition during fourth quarter 2008.

Verifone Holdings (PAY) posts $0.19, vs. $0.14, fourth quarter non-GAAP EPS on 3% revenue rise. Sees first quarter revenue of $220-$230 million and non-GAAP EPS of $0.15-$0.19, fiscal year 2009 revenue of $920 million to $1.0 billion and non-GAAP EPS of $0.85- $1.10.

Silicon Storage Technology (SSTI) cuts $63-$68 million fourth quarter revenue forecast to $56-$58 million. To reduce its headcount by approximately 120 positions, or by 17%. Expects to incur restructuring charge of about $2.8 million. Widens $0.07-$0.12 fourth quarter GAAP net loss per share forecast to $0.11-$0.13 loss.


Steve Ballmer, Power Forward
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