Movers: Ambac, MBIA, Verizon, Borders, Continental, Wal-Mart, BJ's Wholesale
S&P's Ratings Services (which operates separately from S&P Equity Research) downgrades Ambac Financial Group (ABK) and MBIA Inc.(MBI) to 'A' and 'A-' from 'AA' and 'AA-', respectively, and placed on them CreditWatch with negative implications. S&P Ratings also also lowers its financial strength ratings on Ambac Assurance Corp. and MBIA Insurance Corp. to 'AA' from 'AAA' and placed the ratings on CreditWatch with negative implications.
Verizon Wireless, a joint venture of Verizon (VZ) and Vodafone (VOD), agrees to acquire Alltel Corp. in a cash merger. Under the terms of the agreement, Verizon Wireless will acquire the equity of Alltel for approximately $5.9 billion. Based on Alltel's projected net debt at closing of $22.2 billion, the aggregate value of the transaction is $28.1 billion. S&P maintains buy on Verizon shares.
Borders Group (BGP) says its will sell of its Australia/New Zealand/Singapore businesses -- which includes 30 Borders superstores -- to A&R Whitcoulls, an Australasian retailer of books and related products owned by private equity firm Pacific Equity Partners, for approximately $110 million. S&P maintains hold.
UAL Corp. (UAUA) moves up 0.91 to 10.05 after Lehman upgrades its airline group to positive from neutral; ups UAUA and Northwest Airlines (NWA) to overweight from equal-weight.
Dr. Pepper Snapple Group (DPS) rises 1.82 to 25.72 after the drink maker posts $0.38 (including charge related to restructure actions), vs. $0.27 a year ago, first quarter EPS (basic) on 3% sales rise. Expects 3%-5% 2008 net sales growth and EPS of at least $1.67.
Nucor (NUE) expects second quarter EPS of $1.75-$1.80, vs. $1.55-$1.60 prior forecast. Says continued strength in its sheet, plate, beam and bar businesses due to the solid global demand for steel and better-than-expected margins have favorably impacted the quarter, while upstream and downstream businesses also continue to perform well. S&P reiterates hold.
Wal-Mart Stores (WMT) posts 4.0% higher May same-store sales at Wal-Mart Stores, 3.6% higher at Sam's Club, 3.9% higher total U.S. same-store sales (all ex-fuel). Also posts 9.8% higher total sales. It sees U.S. same-store sales growth (ex-fuel) of 2%-4% for June.
Continental Airlines (CAL) CEO and its president, said in an employee bulletin that the company will reduce its flights, with fourth quarter domestic mainline departures down 16% year-over-year, available seat miles 11% lower. As a result, CAL will eliminate about 3,000 employee positions, including some in management. The carrier will also accelerate fleet retirements, retiring 67 aircraft in 2008 and 2009.
Lehman Brothers Holdings (LEH) is up 1.69 to 33.09 after Deutsche Bank maintains buy. Yesterday, shares moved higher as Merrill Lynch upgraded the stock to buy, and WSJ reported LEH had reached out to overseas investors to raise fresh capital.
Smithfield Foods (SFD) posts $0.01, vs. $0.46 a year ago, fourth quarter EPS from continuing operations as lower live-hog prices, higher raising costs offset 20% sales rise.
Ciena (CIEN) posts $0.40, vs. $0.26, second quarter non-GAAP EPS on 25% revenue rise. Sees fiscal year 2008 revenue growth of 27%.
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