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Stocks in the news Thursday
From Standard & Poor's Equity ResearchGeneral Electric (GE) falls 1.23 to 16.16 after S&P's Ratings Services revises outlook on GE and units, including General Electric Capital Corp., to negative from stable, affirms AAA long-term and A-1+ short-term credit ratings. S&P Ratings said its negative outlook is based partly on concerns regarding General Electric Capital Corp.'s future performance and funding, and that fundamentals-based earnings and cash flow could decline sufficiently during the next 2 years to warrant a downgrade.
Certain chip stocks fall after Jefferies analysts Adam Benjamin and Blayne Curtis downgrade Texas Instruments (TXN), Advanced Micro Devices (AMD), Cypress Semiconductor (CY), Intersil (ISIL), National Semiconductor (NSM), and Silicon Image (SIMG) to underperform from hold; Intel (INTC) to underperform from buy; Atheros Communications (ATHR), Conexant Systems (CNXT), Intellon (ITLN) and Mellanox Technologies (MLNX) to hold from buy.
General Motors (GM)reportedly says it and Chrysler LLC are not in merger talks. Comments issued in response to WSJ article reporting that GM and Chrysler LLC have reopened merger talks, as Chrysler owner Cerberus Capital Management LP has signaled willingness to cede part of its stake in the automaker.
FedEx (FDX) posts $1.58, vs. $1.54 a year ago, second quarter EPS on 1% revenue rise. Sees second half EPS of $0.69-$1.94. Says it will not provide third quarter guidance due to significant economic uncertainty, difficulty in forecasting impact of recently acquired DHL customers. Reaffirms last week's fiscal year 2009 EPS estimate of $3.50-$4.75. S&P reiterates buy.
Nike (NKE) posts $0.80, vs. $0.71, second quarter EPS on 6% revenue rise. Reports worldwide futures orders for athletic footwear and apparel, scheduled for delivery from December 2008 through April 2009, totaling $6.7 billion, 1% lower than such orders reported for the same period last year, but notes excluding forex, orders grew 6%. S&P reiterates buy.
Take-Two Interactive Software (TTWO) posts lower-than-expected $0.02, vs. $0.05, fourth quarter non-GAAP EPS on 11% sales rise. Street was looking for EPS of $0.05. Sees $0.70-$0.85 first quarter loss on revenue of $175-$225 million and fiscal year 2009 EPS of breakeven to $0.20 on revenue of $1.1-$1.25 billion. S&P reiterates sell.
Lennar (LEN) posts $5.12 fourth quarter loss, vs. $7.92 loss a year ago, despite 41% revenue drop. Notes fourth quarter 2008 includes $0.94 charge related to valuation adjustments and other write-offs; $4.61 charge related to non-cash deferred tax asset valuation allowance. Notes it ended fourth quarter with $1.1 billion in cash and no outstanding borrowings under its credit facility.
MEMC Electronic Materials (WFR) sees fourth quarter revenue of about $400-$425 million, with gross margin of approximately 46%, plus or minus one percentage point. This compares to WFR's previously announced targets of $500 million in revenue, plus or minus $25 million, with gross margin of 48% plus or minus two percentage points. S&P keeps hold.
Diamondrock Hospitality (DRH) says it will not issue any further dividends in 2008 and intends to issue its next dividend to its shareholders of record as of Dec. 31, 2009. Says 2009 dividend will be an amount equal to 100% of company's 2009 taxable income. Says it plans to take advantage of Internal Revenue Service's Revenue Procedure 2008-68 in order to pay a portion of that dividend in shares of common stock and the remainder in cash.
Worthington Industries (WOR) posts $2.02 second quarter loss per share, vs. $0.18 EPS a year ago, as charges offset 4.4% revenue rise.
Alliant Energy (LNT) expects 2008 EPS from continuing operations at low end of slightly below guidance: now sees $2.65 total LNT EPS, including $2.25 attributable to its utility business. Also expects 2009 EPS from continuing operations of $2.18-2.48, including $1.95-$2.25 from utility business. LNT says its board approved increase in 2009 expected annual dividend to $1.50 a share from $1.40. Company also said its WPL unit filed stipulation agreement with Public Service Commission of Wisconsin relating to pending 2009 retail electric and gas rate case.
Ingersoll-Rand (IR) cuts $0.55-$0.75 fourth quarter adjusted EPS from continuing operations guidance to $0.20-$0.30. Cuts $3.35-$3.55 2008 EPS adjusted EPS from continuing operations forecast to $3.00-$3.10. Notes it had lower-than-expected revenues in all of its business segments, primarily due to softer North American and sharply declining Western European markets.
Apogee Enterprises(APOG) posts $0.63, vs. $0.26, third quarter EPS from continuing operations on 14% higher revenue. Backs its previously issued forecast for fiscal year 2009 EPS from continuing operations of $1.65-$1.82. Expects fiscal year 2009 revenue to increase 6%-8%, down from a previous forecast of 9%-12%, and sees fiscal year 2010 revenue falling at least 10% because of delays, cancellations and slower conversion of bid projects.
Avalonbay Communities (AVB) reduces planned development activity. Sees $55-$65 million non-cash charge for impairment in value for 8 land parcels owned that will not be developed. Sees $7 million non-cash charge for previously capitalized costs for 7 specific development rights for land under option deal that won't proceed to development. Sees $3 million cash charge for severance and related costs. Does not expect to start any new development during first half 2009. Sets combined regular and special common stock dividend of $2.70 per share.
Pentair (PNR) cuts $840 million fourth quarter sales forecast to $770 million due to sharp volume declines in its Technical Products business as well as certain industrial, commercial and residential Water businesses. Cuts $0.52-$0.55 fourth quarter adjusted EPS fron continuing operations forecast to $0.40-$0.42, $2.28-$2.31 2008 to $2.19-$2.21. Sets 2009 EPS guidance of $1.70-$2.00 with sales expected to decline in range of 8%-10%; expects 2009 free cash flow to be at least 100% conversion of net income.
Wausau Paper (WPP) Down 0.35 to 11.00 WPP cuts $0.03-$0.05 fourth quarter EPS guidance to about breakeven, reflecting weakening economic conditions and reduced customer order activity at both its Specialty Products and Printing & Writing business units. Anticipates taking fourth quarter market-related downtime of about 11,000 tons within Specialty Products and 7,000 tons within Printing & Writing.
Covance (CVD) cuts $3.18 2008 EPS on low-teens revenue growth guidance to $3.02 EPS on low double-digit revenue growth (both EPS targets exclude gain from sale of centralized ECG svcs). Sees modest q/q decline in first quarter EPS relating largely to new operations coming online. Sees 2009 revenue growth of 5%-10%, EPS of $3.00-$3.20, which assumes forex rates remain at budgeted levels throughout 2009, which would negatively impact y/y rev. growth by about $100 million and EPS by $0.27 vs. average 2008 exchange rates.
Coca-Cola Enterprises (CCE) sees 2008 EPS of $1.28-$1.31, including forex and excluding items affecting comparability, citing better-than-expected fourth quarter volume in North America, benefits from continued growth in Europe, operating expense initiatives. Also expects mid single-digit EPS growth in 2009 on a comparable and currency-neutral basis; sees 2009 revenue in North America and Europe each rising in mid-single-digit range.
Ensign Group (ENSG) says representatives of the U.S. Department of Justice served search warrants on its Service Center and six of its Southern California skilled nursing facilities. Notes warrants were issued as part of the Dept's ongoing investigation, which began in 2006, of what a DOJ investigator has previously characterized as "an investigation of claims submitted to the Medicare program for rehabilitation services" at one or more Ensign facilities.
Scholastic (SCHL) posts $1.55, vs. $2.10, second quarter EPS from continuing operations on 1% revenue decline (excludes impact of forex). Sees fiscal year 2009 EPS from continuing operations of $1.20-$1.50, excluding severance and one-time expenses associated with cost savings. Street is currently looking for fiscal year 2009 EPS of $1.72.
General Growth Properties (GGP) says its syndicate of lenders for the $900 million Fashion Show and Palazzo mortgage loans has entered into a Forbearance and Waiver agreement that extends until 2/12/09. GGP also says its syndicate of lenders for the 2006 Senior Credit Agreement has entered into a Forbearance and Waiver agreement that extends until 1/30/09 and, in connection with this agreement, GGP has agreed to certain restrictions and covenants with this syndicate during the forbearance period.