Sears, Kmart Boosted by Merger News

The retail megadeal also lifts Martha Stewart shares; Altria gains, plus more of Wednesday's stocks in the news

Sears, Roebuck (S ) and Kmart (KMRT ) shares traded solidly higher Wednesday after the two retailing giants agreed to merge in a deal valued at $11 billion. Kmart holders will get one share of new Sears Holdings stock for each Kmart share. Sears holders will have the right to elect $50 in cash or 0.5 Sears Holdings share for each Sears share. S&P upgraded Sears stock to hold from strong sell.

Martha Stewart Living (MSO ) was seen higher Wednesday on news of the Sears and Kmart merger, which will raise prospects for the distribution of Martha Stewart products.

Altria Group (MO ) is among tobacco stocks seen higher on reports that a federal appeals court panel is pressing the issue of whether the government has the authority to fine cigarette makers billions of dollars as part of its racketeering case.

Hewlett-Packard (HPQ ) posted fourth-quarter earnings per share (non-GAAP) of 41 cents, vs. 36 cents a year ago, on an 8% revenue rise. The company sees first-half fiscal 2005 earnings per share of 72 cents to 74 cents on revenue of $41.8 billion to $42.3 billion. S&P maintained its hold rating.

News Corp. (B class) (NWS ) and News Corp. (A Class) (NWS.A ) will be added to the S&P 500 index after the close of trading on Dec. 17. The company to be replaced will be announced at a later date, roughly three to five business days before News Corp.'s addition.

Network Appliance (NTAP ) posted 15 cents, vs. 13 cents second-quarter earnings per share on a 36% sales rise. The company sees 15 cents to 16 cents third-quarter earnings per share (pro forma), on a 35% to 38% sales rise, and 60 cents to 61 cents fiscal 2005 earnings per share. S&P reiterates its sell rating.

RSA Security (RSAS ) dropped after Citigroup downgraded the stock to hold from buy.

CTI Molecular Imaging (CTMI ) gains after Bear Stearns upgrades the stock to outperform from peer perform. Yesterday, the company posted 20 cents, vs. 11 cents fourth-quarter earnings per share.

CommScope (CTV ) rose after CIBC World upgraded the stock to sector outperform from sector perform. S&P reiterates its hold rating. Yesterday, the company forecast $1.2 billion to $1.3 billion in 2005 sales, driven by modest volume growth and anticipated price increases.

Phillips-Van Heusen (PVH ) posted 52 cents, vs. 34 cents third-quarter earnings per share on a 4.4% revenue rise. The company raised its 2004 revenue estimate to $1.65 billion to $1.66 billion, and earnings per share to $1.29 to $1.30 (excluding items). Beyond 2004, the company says it is comfortable in its ability to grow earnings per share at 15% to 20% per year, and revenues 5% to 6%.

GeoResources (GEOI ) posted 11 cents, vs. 5 cents third-quarter earnings per share on a 43% revenue rise.

St. Paul Travelers (STA ) received a subpoena from the New York Attorney General office relating to an offer or sale of "non-traditional," or loss mitigation, insurance products.

Borders Group (BGP ) posted a 2-cents third-quarter loss per share, vs. a penny earnings per share a year ago, on 1.6% lower same-store sales at Borders superstores and a 4.1% decline at Waldenbooks. Total sales rose 3.1%. The company sees $1.55 to $1.62 fourth-quarter earnings per share.

Nordstrom (JWN ) posted 54 cents, vs. 33 cents, third-quarter earnings per share on 8.1% higher same-store sales and 9.4% higher total sales. The retailer raised its fiscal 2005 earnings-per-share estimate to $2.68 to $2.73.

Quiksilver (ZQK ) raises fourth-quarter earnings-per-share guidance to 39 cents to 40 cents, and revenue to $345 million to $348 million. The company says it is seeing no sign of a slowdown in business. Wedbush Morgan raises estimates and target.

Brocade Communications Systems (BRCD ) rises after it says a unit of Hitachi is to resell its next-generation midrange Storage Area Network switches. Separately, First Albany raises its target ahead of teh fourth-quarter earnings-per-share report due out Nov. 22. S&P keeps its hold rating.

    Before it's here, it's on the Bloomberg Terminal.