MBIA Inc. (MBI) falls 0.93 to 5.76 after as Moody's Investors Service announces that it has placed the Aaa insurance financial strength ratings of MBIA Insurance Corporation and its affiliated insurance operating companies on review for possible downgrade. In addition, Moody's also places surplus note rating of MBIA Insurance Corporation (Aa2-rated) and the ratings of the holding company, MBIA, Inc. (senior debt at Aa3), on review for possible downgrade.
Ambac Financial Group (ABK) shares drop 0.46 to 2.54 after Moody's announces that it has placed the Aaa insurance financial strength ratings of Ambac on review for possible downgrade, and has placed the debt ratings of Ambac and related financing trusts on review for possible downgrade. Separately, Ambac shares will be removed from the S&P 500 index after the close of trading on June 10, and will be replaced by Lorillard Inc. Lorillard is being distributed to the public via a 2-tier process involving 1) retirement of the tracking stock Carolina Group (CG), in exchange for which about 62% of Lorillard's common stock will be issued, and 2) an offer in which shares of S&P 500 constituent Loews Corp. (LTR) can be exchanged for remaining shares of Lorillard. As of yesterday's close of trading ABK's market cap was roughly $860 million, ranking 500th.
At a Keefe Bruyette conference, American Express (AXP) CEO Kenneth Chenault says that the company is still tracking to the reported 2008 EPS growth assumption of 4%-6% disclosed earlier in the year, despite its view for "above average" credit losses.
Lehman Brothers Holdings (LEH) is trading higher as the WSJ reports that LEH has reached out to potential overseas investors, including at least one in South Korea, as it looks to raise fresh capital. S&P maintains hold.
Hovnanian Enterprises (HOV) posts $5.29 second quarter loss, vs. $0.49 loss a year ago, on 30% sales decline and $251 million in charges. Excluding unconsolidated joint ventures, HOV delivered 2,494 homes in second quarter, a decrease of 21% from 3,150 home deliveries in the year-ago quarter. The number of net contracts for second quarter, excluding unconsolidated joint ventures, declined 29% to 2,226 homes. S&P maintains hold; widens loss estimates.
Williams-Sonoma (WSM) posts $0.05 (excluding $0.05 benefit), vs. $0.16 a year ago, first quarter non-GAAP EPS on 9.0% lower same-store sales, 4.2% lower total sales. Sees second quarter same-store sales down 8%-10% (vs. earlier guidance of down 3.5%-6.0%) on retail net revenue of $478-$488 million (vs. earlier guidance of $493-$503 million). Also sees $0.15-$0.19 second quarter GAAP EPS; $1.45-$1.58 fiscal year 2009 EPS on $3.738-$3.804 billion revenue (vs. earlier guidance of $3.793-$3.877 billion revenue). S&P maintains hold.
Bob Evans Farms (BOBE) posts $0.52, vs. $0.42, fourth quarter EPS on 1.7% higher same-store sales at Bob Evans Restaurants, 4.3% higher total sales. Sees fiscal year 2009 same-store sales growth at Bob Evans Restaurants of 1.5%-2.0%, total sales growth of 3.5%-4.5%, EPS of $2.00-$2.10.
Procter & Gamble (PG) agrees to merge the Folgers coffee business into JM Smucker (SJM) in an all-stock reverse Morris Trust transaction valued at about $3.3 billion, including assumption of an estimated $350 million of Folgers debt. Terms: SJM will issue a one-time special dividend of $5/share to SJM holders, PG holders to get about 53.5% of SJM in tax-free stock-for-stock merger
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