Movers: Capital One, Gemstar-TV Guide, Palm, Synopsys
Merrill Lynch downgrades credit card companies Capital One Financial (COF), American Express (AXP), and Discover Financial Services (DFS) to sell from neutral; it believes deterioration in consumer credit and spending will continue to undermine fundamentals of each and lead to share price declines. Morgan Stanley reportedly downgrades Capital One to underweight from overweight.
Gemstar-TV Guide International (GMST) agrees to be acquired by Macrovision (MVSN) in a cash and stock deal worth about $2.8 billion. Terms: For each GMST share, $6.35 in cash or 0.2548 of a share in a new holding company that will own both GMST and MVSN.
Palm (PALM) sees second quarter revenue of $345-$350 million, vs. earlier guidance of $370-$380 million. It cites delay in shipping a product that the company had previously expected to have certified within the quarter. It now sees $0.22-$0.24 GAAP loss; $0.08-$0.10 non-GAAP loss.
Smith & Wesson (SWHC) falls after the company posts $0.07 second quarter EPS, vs. $0.07 a year ago, as higher costs offset 39% higher net product sales. It expects third quarter net income to be breakeven, fiscal year 2008 EPS of $0.40. Cowen downgrades to neutral from outperform.
IMAX Corp. (IMAX) announces a joint-venture agreement to install 100 IMAX digital projection systems at AMC locations in 33 major U.S. markets. Roth Capital, Merriman Curhan reiterate buy.
Synopsys (SNPS) posts $0.40 fourth quarter non-GAAP EPS, vs. $0.22 a year ago, on 11% revenue rise. It sees first quarter revenue of $308-$316 million, non-GAAP EPS of $0.37-$0.39; revenue from backlog: greater than 90%. For fiscal year 2008, it sees revenue of $1.3-$1.315 billion, non-GAAP EPS of $1.54-$1.60.
Yum Brands (YUM) expects fiscal year 2008 EPS growth of at least 10%, system-sales growth of at least 5%, revenue growth about even with FY 07. Announces expansion of its U.S. refranchising, targeting company ownership potentially below 10% by year-end 2010, down from approximately 20% at year-end 2007, dependent on market and other conditions.
Amgen (AMGN) says it is talking with the FDA with the goal of updating safety information in all erythropoiesis-stimulating agents (ESAs) labeling based on safety data from recently announced PREPARE interim study results in neoadjuvant breast cancer and the recently published follow-up data from the Gynecologic Oncology Group (GOG) study in cervical cancer.
Papa John's International (PZZA) sees $1.68-$1.76 2008 EPS, excluding the impact from the consolidation in accordance with FIN 46 of the results of the franchisee-owned cheese purchasing company, BIBP Commodities Inc., a variable interest entity.
National Semiconductor (NSM) posts $0.33 second quarter EPS, vs. $0.27 a year ago, as wider gross margin offset slight sales decline. It sees third quarter sales down 1%-5% sequentially due primarily to the seasonally slower holiday period. Consistent with lower sales, gross margin is expected to decline, and operating expenses are expected to be relatively comparable to second quarter levels.
Prudential Financial (PRU) announces offering of $3.0 billion aggregate principal amount of convertible senior notes due 2037. Prudential Financial has granted the initial purchaser of the convertible notes an overallotment option to purchase up to an additional $450 million aggregate principal amount of the convertible notes.
C.R. Bard (BCR) signs agreement to acquire the assets of the LifeStent product family from Edwards Lifesciences for $74 million upon closing and up to an additional $65 million on the achievement of certain milestones, including regulatory approvals.
Baird upgrades Jabil Circuit (JBL) to outperform from neutral.
ICO Inc. (ICOC) posts $0.22 fourth quarter EPS from continuing operations, vs. $0.10 a year ago, on 42% higher revenue. It anticipates "very satisfactory" year-over-year growth in its first quarter EPS and revenue.
Exar (EXAR) CEO Ralph Schmitt resigns as chief executive officer and president of EXAR and as a member of the Board of Directors. John McFarlane, a member of EXAR's Board, will assume, on an interim basis, the duties of CEO and president.
Cascade (CAE) posts lower-than-expected $1.00 third quarter EPS, vs. $0.94 a year ago, on 17% sales rise. It says third quarter lift truck industry shipments fell 13% in North America; expects this trend to continue.