A weblog about stocks, technical analysis, the market and other things that pop into the mind of Manuel Backus, founder and head trader of Portfolio Crafter and First Hour Trading.
Stock of Micron Technology (Nasdaq: MU) closed down $0.56 or 4.6% to $11.51, after reporting quarterly earnings loss that was steeper than expected. The chipmaker also said that prices for memory chips have stabilized recently and that demand should pick up this year. The company took a $52 million loss in its second quarter and was cut to sell by Goldman Sachs. For the first quarter of fiscal 2007, the company reported a profit of $192 million, up from $63 million earned in the same period last year. This topped analysts' consensus estimate. Quarterly sales rose 16% to $1.58 billion, helped by demand for DRAM memory chips used in PCs being built ahead of Microsoft Corp.'s release of Vista.
Shares of Daimler Chrysler (NYSE: DCX) closed up $3.73 or 3% to $84.80, after billionaire investor Kirk Kerkorian offered to buy Chrysler for $4.5 billion. His bid is contingent upon reaching a deal on a new labor agreement with the United Auto Workers union. He would offer ownership stakes to the union and its membership as well as Chrysler management were he to buy it. The offer is contingent on reaching an "equitable arrangement" with DaimlerChrysler for it to assume some of the unfunded pension liabilities and health care costs of Chrysler retirees.
Shares of Best Buy (NYSE: BBY) closed down $1.24 to $47.89, despite reporting higher quarterly earnings that topped estimates. It reported an 18.5% rise in fourth-quarter profit, helped by sales of flat-panel televisions, and announced that it plans to offer Apple computers in 200 stores this year. Net income for the fiscal fourth quarter ended March 3 rose to $763 million, from $644 million a year earlier. Revenue increased 21% to $12.9 billion, and same-store sales increased 5.9%.
Shares of Daimler Chrysler (NYSE: DCX) closed down $0.38 to $82.57, after the CEO confirmed that the company is talking with potential buyers about its money-losing Chrysler unit. However, he was not able to give details of discussions and said all options for the automaker are still on the table.
Stock of Citigroup (NYSE: C) closed down $0.18 to $51.54, after reporting that it is looking to cut 15,000 jobs, as part of a broader restructuring plan that could cost the bank $1 billion. This cut would represent about a 5% reduction in Citigroup's worldwide work force of 327,000. Some of the reduction could be achieved by not filling positions opened through normal attrition.
Shares of Intel (Nasdaq: INTC) closed up $0.02 to $19.29, on news that it will invest $2.5 billion to build a chip plant in China, with the production of chipsets to begin in 2010. Groundbreaking is scheduled for July in Dalian, which will be Intel's first semiconductor plant in Asia. The 12-inch wafer plant will have a monthly capacity of 52,000 wafers and will use 90-nanometer technology to produce chip sets.
Stock of homebuilder KB Home (NYSE: KBH) fell 0.3% after reporting that first-quarter profit dropped 84% and cautioned that problems in sub-prime mortgages and imposition of stricter lending standards may put more stress on a wobbly market. Its first-quarter net income fell to $27.5 million, from $173.3 million earned in the year-earlier first quarter.
Shares of Motorola (NYSE: MOT) closed down $1.24 or 6% to $17.50, after warning that it will post a first-quarter loss and that full-year sales will miss forecasts, owing to weak sales of mobile devices. It also cut its revenue view to a range of $9.2 billion to $9.3 billion, from its January estimate of $10.4 billion to $10.6 billion.
Stock of ABM AMRO (NYSE: ABN) closed down $0.13 to $41.23, on news that it is discussing to be acquired by Barclays (NYSE: BCS) for for $80 billion. Shares of Barklays closed up $1.85 to $55.20. No details of the structure of any deal were released, but at current values a combination would create a $166 billion financial services giant.
Shares of TXU (NYSE: TXU) closed up $1.52 or 2% to $64.27, as it is reportedly being wooed by a private equity group, led by the Blackstone Group. This could upset the record-breaking $32 billion bid for the Texas power company from competing buyout shops. TXU had agreed to be acquired by a private equity group led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group last month in the largest leveraged buyout ever.
Stock of Community Health systems (NYSE: CYH) closed down $1.95 to $34.85, after stating that it was buying Triad Hospitals (NYSE: TRI) for $5.1 billion in cash, ending an existing $4.5 billion deal for Triad to be taken private by a group of private equity funds. Shares of Triad Hospitals closed up$2.52 to $51.88. The deal pays $54 per share in cash, plus $1.7 billion in debt. This is a 9% premium over Friday’s close at $49.36.
Shares of Wal-Mart (NYSE: WMT) closed up $0.29 to $46.29, after it stated that it was withdrawing its application for limited banking operations, after critics said the world's No. 1 retailer might use the bank as a stepping stone to offer a broader range of financial services. They have decided to better focus on other ways to serve customers.
Shares of Caremark RX (NYSE: CMX) closed down $0.46 to $62.29, after it approved a $24 billion takeover bid from drugstore CVS (NYSE: CVSX). Stock of CVS closed down $0.44 to $32.90, after CVS won the battle over the company against Express Scripts (Nasdaq: ESRX). The deal will allow CVS, to expand its prescription benefits business and mail-order operations at a time when traditional pharmacies are under pressure from mail-delivery facilities.
Stock of Accredited Home Lenders (Nasdaq: LEND) closed up $1.55 or 17% to $10.98, after saying it will sell $2.7 billion in loans at a discount as a means of buying time while it contends with a cash crunch. The loan sale is expected to be completed within days, and will result in a pretax charge of about $150 million. The loans are being sold at a substantial discount to alleviate pressures from margin calls.
Shares of Cisco Systems (Nasdaq: CSCO) closed down $0.04 to $25.81, after stating that it would buy WebEx (Nasdaq: WEBX) which makes online collaborative software, for about $3.2 billion. Stock of WebEx closed up $10.18 or 22% to $56.38. The deal will position Cisco to move deeper into the growing market for online software, especially for small- to medium-sized businesses. Cisco will buy all outstanding shares of WebEx for $57 a share in cash, a 23% premium over Wednesday closing price. WebEx, which generated revenues of $380 million in 2006, provides Web-based conferencing software and systems and other collaborative online applications.
Shares of General Motors (NYSE: GM) closed down $0.87 to $29.38, amidst warning about accounting problems, saying that its internal controls over financial reporting are ineffective and could make it hard for the company to execute its business plan. It acknowledged that the company had not maintained a sufficient complement of personnel with an appropriate level of technical accounting expertise and said it would make greater use of outside experts while it added staff with that necessary level of knowledge.
Stock of Ford Motors (Nasdaq: F) closed up $0.01 to $7.94, after it decided to sell its luxury Aston Martin line for $925 million. Aston Martin was founded in 1914, and makes several different sports cars with prices starting at $110,000. As part of the deal, Ford will retain a $77 million stake in the car brand.
Stock of New century Financials (NYSE: NEW) closed down $0.66 or 17% to $3.21, on worries that it will have to file for bankruptcy. The company said it had stopped taking new loan applications because some of its financial backers won't provide access to financing.
Shares of Yahoo (Nasdaq: YHOO) closed down $1.59 or 5% to $29.12, on news that AT&T (NYSE: T) wants to scale back its partnership with the search engine. Stock of AT&T Corp. rose 0.1%. The telecom company and Yahoo Inc. are negotiating potentially sweeping changes that could scale back their partnership. These changes could cost millions in revenue to Yahoo.
Stock of Google (Nasdaq: GOOG) closed up $16.61 to $457.55 after its CEO Eric Schmidt said that his firm and Apple Inc. (Nasdaq: AAPL) are working together on "many more" new projects, which he did not identify. Shares of Apple closed up $1.87 to $88.19 after this news.
Shares of Aeroflex Inc. (Nasdaq: ARXX) gained nearly 19%, as its board agreed to an offer under which it will be acquired by private-equity firms General Atlantic and Francisco Partners in a deal valued at $1 billion. Under terms of the deal, each outstanding share of Aeroflex will be purchased for $13.50 in cash. The bid represents a 23% premium to Friday's closing price of $11.01.
Stock of American International Group, Inc. (NYSE: AIG) closed up $2.40 or 3.6% to $69.81, after reporting higher quarterly earnings. The company also said it would buy back $5 billion in stock in 2007 as part of a broader $8 billion stock buyback plan. Net income came in at $3.44 billion, vs. $444 million, a year earlier.
Shares of Dell (NYSE: DELL) closed up $0.17 or 0.74% to $23.18, after reporting lower quarterly earnings that topped estimates on lower quarterly revenue that missed estimates. The company also cautioned that growth and profit margins will be limited during the next few quarters. It reported a 33% drop in fourth-quarter profits. It reported earnings of $673 million, for the quarter, compared to $1 billion last year. Its sales for the quarter were $14.4 billion, a 5.1% decrease from the year-ago period.
Shares of Oracle (Nasdaq: ORCL) closed up 34 cents to $16.77 on news that it will buy Hyperion Solutions Corp. (Nasdaq: HYSL) for $3.3 billion, to boost its position in the market for performance management software. Stock of Hyperion closed at $51.57. Oracle will pay $52 a share in cash for each Hyperion share, which represents a 21% premium over Wednesday's closing price. Oracle expects to close the deal in April 2007.
Stock of Wal-Mart Stores Inc (NYSE: WMT). fell 3.6% after it agreed to acquire 35% of Trust-Mart, a Taiwanese-owned operator of hypermarkets in China. The world's largest retailer has reportedly agreed to pay around $1 billion for the stake. Taking full control of Trust-Mart would more than double Wal-Mart's retail footprint in China, where it currently operates 68 Super-centers, three Sam's Clubs, and two Neighborhood Markets in 36 cities.
Shares of Station Casinos (NYSE: STN) closed up $3.20 or 4.2% to $86.50, after agreeing to be taken private for $5.4 billion by a firm led by its management. The total transaction is valued at approximately $8.8 billion, including a $3.4 million debt. FCP has agreed to pay $90 per share in cash, which marks a 30% premium over Station's closing stock price on Dec. 1.
Stock of Texas utility (NYSE: TXU) closed up $7.91 or 13% to $67.93, after agreeing to a $45 billion cash and debt buyout led by two private equity firms and the private equity unit of investment bank Goldman Sachs. This is the largest private equity buyout in history. The group will pay $69.25 a share for the company, a premium of 15.4% over Friday's close. The cash component of the deal is valued at $32.3 billion.
Shares of Lowe's (NYSE: LOW) closed up $1.30 to $34.93, after reporting lower fourth-quarter earnings that nonetheless topped estimates and also issuing a first-quarter and full-year forecast that is in line with analysts' estimates. It reported a 11.5% drop in fourth-quarter earnings as the battered U.S. housing market hurt sales. Total sales fell about 4% to $10.4 billion in the quarter, better than analyst estimates, while sales at stores open at least a year declined 5.3%.
Shares of Yum Brand (NYSE: YUM) closed down $0.55 or 1% to $60.51, after a pack of rats were seen scurrying around a closed KFC/Taco Bell restaurant in New York City. The restaurant had been cited in December for a number of health code violations, including evidence of rodents and live cockroaches.
Stock of Toll Brothers (NYSE: TOL) closed down $0.93 or 3.6% to $31.93, after reporting sharply lower fiscal first-quarter profit, reflecting the ongoing collapse of the housing market. It also lowered its fiscal 2007 forecast. Its quarterly net earnings fell, after a $96.9 million write-down for the lower value of land, as the housing market continued to flounder. It earned $54.3 million, down from $163.9 million in the year earlier quarter.
Shares of Cisco (Nasdaq: CSCO) closed up $0.02 to $27.40, and Apple Computers (Nasdaq: AAPL) closed up $0.31 to $89.51, after reaching an agreement so that both can use the iPhone name. This agreement has been reached after Cisco sued the iPod maker for using it for a new multimedia phone. In addition, the two companies will explore opportunities to work together in the areas of security, and consumer and institutional communications.
Stock of Whole Foods (Nasdaq: WFMI) closed up $6.41 to $52.11, after stating that it will buy Wild Oats (Nasdaq: OATS) for around $565 million in cash. Stock of Wild Oats closed $2.69 to $18.41, in active trading. This will allow Whole Foods to compete with much larger traditional grocers, which are increasingly offering organic foods. Whole Foods will pay $18.50 a share in cash - an 18% premium to the company's closing share price on Wednesday. Whole Foods will also assume $106 million of Wild Oats' debt.
Stock of United Technologies Corp. (NYSE: UTX) slipped 0.8%, as one of its unit Otis was fined a total of $1.3 billion by the European Commission for allegedly rigging prices to install and maintain escalators and elevators. The fine narrowly tops the 855 million euro penalty against eight vitamin makers in 2001 and a recent 750 million euro fine for electrical generation equipment makers.
Stock of Hewlett-Packard (NYSE: HPQ) closed down $2.03 or 4.7% to $41.10, despite reporting quarterly sales and earnings that increased from a year earlier and topped estimates. The company also forecast fiscal year 2007 sales and earnings in a range that beats analysts' forecasts. Its net income rose to $1.5 billion, up 26% from $1.2 billion a year ago. Quarterly revenue rose 11% to $25.1 billion during the quarter, from $22.6 billion a year ago. Analysts were anticipating the company to report $24.3 billion in sales during the quarter.
Shares of Arcelor Mittal (NYSE: MT) closed 1.6% higher, after reporting a 3.5% slip in 2006 net income due to a higher tax rate and also said it will distribute $2.4 billion to shareholders via a dividend and share buybacks. Full-year pro-forma profit fell to $7.97 billion from $8.26 billion. Its EBITDA rose 2.1% to $15.27 billion in 2006, but missed analysts' expectations of $15.32 billion. In the fourth quarter, Arcelor-Mittal earned $2.37 billion, compared with $2.18 billion, in the third quarter. Sales climbed 5% to $23.3 billion. The company generated $4.3 billion in cash during the latest quarter and cut debt by $2.3 billion.
Shares of Arcelor Mittal (NYSE: MT) closed 1.6% higher, after reporting a 3.5% slip in 2006 net income due to a higher tax rate and also said it will distribute $2.4 billion to shareholders via a dividend and share buybacks. Full-year pro-forma profit fell to $7.97 billion from $8.26 billion. Its EBITDA rose 2.1% to $15.27 billion in 2006, but missed analysts' expectations of $15.32 billion. In the fourth quarter, Arcelor-Mittal earned $2.37 billion, compared with $2.18 billion, in the third quarter. Sales climbed 5% to $23.3 billion. The company generated $4.3 billion in cash during the latest quarter and cut debt by $2.3 billion.
Shares of JetBlue (Nasdaq: JBLU) closed down $0.66 or 5% to $12.90, its CEO announced an overhaul that could cost the company $30 million dollars. The tag includes about $10 million for refunding tickets for canceled flights, $16 million for issuing travel vouchers and $4 million for incremental costs such as hiring overtime crews.
Stock of Sirius (Nasdaq: SIRI) jumped nearly 7% and XM Satellite (Nasdaq: XMSR) shares gained 13% on news of their deal. Although there was some doubt about whether regulators would approve the deal. Shares of Sirus closed up $0.22 to $3.92, and those of XM Satellite closed up $1.44 to $15.42. Each will own half of the combined company, which would offer listeners a much wider variety of programming, including sports, news and high-profile entertainers such as shock jock Howard Stern. XM Chairman Gary Parsons would remain chairman of the combined firm, while Sirius' Mel Karmazin would assume the role of CEO. The company would have a market value of roughly $13 billion, including approximately $1.6 billion in net debt. XM shareholders would get 4.6 shares of Sirius stock for each share of XM they own.
Stock of Home Depot (NYSE: HD) closed down $0.15 to $41.29, after reporting lower quarterly earnings that missed estimates. It posted a 28% drop in fourth quarter profit as the weak U.S. housing market depressed sales at its retail stores. Earnings in the fourth quarter fell to $925 million, from $1.3 billion, a year earlier. Total sales rose 4% to $20.3 billion, below analysts' estimates of $20.8 billion. Retail store sales fell 2% to $17.4 billion, while sales at stores open at least a year fell 6.6%. Sales at Home Depot Supply, rose 64% to $2.9 billion.
Stock of AMR (NYSE: AMR) closed up $0.79 or 2% to $38.84, on media reports that the parent of American Airlines may be a buyout target for a group that includes Goldman Sachs (NYSE: GS) and British Airways (NYSE: BAB). The proposed bid is said to be between $9.8 billion, or $46 a share, and $11.1 billion, or $52 a share.
Shares of Microsoft (Nasdaq: MSFT) closed down $0.72 or over 2% to $28.74, after the software leader's CEO said that some analysts' forecasts for Vista revenue in fiscal-year 2008 are too aggressive. He also said that operating expenses should wane.
Shares of Applied Materials (Nasdaq: AMAT) closed up $0.70 or 4% to $18.89, after reporting quarterly earnings that beat forecast. While revenue was less than expected, investors focused on the strong earnings and positive forecast. Its net profit was $403.5 million, compared with $142.8 million a year earlier. Revenue was $2.28 billion, up 23% from a year earlier but lower than the $2.35 billion expected by analysts.
Shares of DaimlerChrysler (NYSE: DCX) jumped 8.3% to close at $69.78, after the automaker said it would consider "far reaching" options for Chrysler, including finding a partner. It also expects to eliminate 13,000 jobs in the Chrysler division. The move aims to cut $4.5 billion in costs as the company struggles to get back in the black by 2008.
Stock of 3M (NYSE: MMM) closed up $1.84 or 2.3% to $76.43, after its board approved a $7 billion share buyback plan and boosted its quarterly dividend. It has proposed to buy back up to $7 billion of its own shares over the next two years.
Shares of Caremark Rx (NYSE: CMX) closed up $1.97 or 3% to $62.88, after drug store CVS (NYSE: CVS) increased its bid by tripling a proposed special cash dividend to $6 a share. Stock of CVS closed down $0.40 to $32.09. CVS would pay $23.7 billion, or $54.26 per share, in stock plus the $6 cash dividend. On the other hand, Express Scripts' cash-and-stock offer has valued Caremark at $26.6 billion, or $61.08 per share.
Shares of Home Depot (NYSE: HD) closed up $0.44 or 1.6% to $41.44, on reports that it is considering the sale of its wholesale distribution unit, HD Supply, as it focuses on its retail business. HD supply has an annual revenue of about $12 billion. HD Supply has nearly 1,000 locations in the United States and Canada and has more than 26,000 employees.
Shares of Vodafone (NYSE: VOD) closed up $0.58 to $29.53, after it won a majority stake in Indian mobile firm Hutchison Essar, in a deal worth $11.1 billion. This values India's fourth-biggest mobile firm at around $19 billion, including debt. India's Essar Group, which owns 33% of Hutch Essar and had also been bidding for the 67% being sold by Hutchison Telecommunications International Ltd, confirmed the deal on Sunday. The deal is a critical move by Vodafone CEO Arun Sarin, who is under pressure amid slowing growth in Vodafone's core European markets to expand the business while at the same time not overpay for acquisitions.
