Movers: Citigroup, WaMu, Continental Airlines, Coventry Health, Huntsman
Citigroup (C) reportedly says it could take more hits from exposure to troubled bond insurers and risk credit products in the second quarter; it warns that it sees "substantial additional" markdowns on CDOs and potential write-downs in the second quarter.
Washington Mutual (WM) announces it will cut 1,200 jobs. This news comes after Wednesday's announcment by WaMu that it would stop offering two types of riskier mortgages: option adjustable-rate mortgages and WaMu Mortgage Plus loans.
Continental Airlines (CAL) and UAL Corp.'s (UAUA) United Airlines announce a framework agreement to cooperate extensively, linking their networks and services worldwide to the benefit of customers and creating revenue opportunities and cost savings and other efficiencies. In addition, CAL plans to join United in the Star Alliance, the most comprehensive airline alliance in the world. S&P reiterates strong buy on CAL.
Coventry Health Care (CVH) sees second quarter EPS of $0.55-$0.57 and 2008 EPS of $3.65-$3.75. Expects the 2008 Medicare Advantage medical loss ratio to be 85.5%-85.9%, an increase of approximately 300-340 basis points from the company's prior estimate. Also notes higher-than-expected levels of outpatient utilization and, to a lesser extent, a higher-than-expected inpatient unit cost trend caused by an increased severity level of facility claims. Wachovia reportedly downgrades to market perform.
XM Satellite Radio Holdings (XMSR) and Sirius Satellite Radio (SIRI) fall after Goldman Sachs reportedly cuts price targets for both stocks.
Hexion Specialty Chemicals and related entities file a lawsuit in Delaware court to declare its contractual rights with respect to its $10.6 billion merger deal with Huntsman (HUN) is no longer viable. Hexion says it believes that the capital structure agreed to by HUN, Hexion for the combined company is no longer viable because of HUN's increased net debt and its lower-than-expected earnings.
Circuit City Stores (CC) posts $1.00 first quarter loss per share, vs. $0.33 loss a year ago, on 11% consolidated same-store sales drop, 7.4% total sales drop. Loss was narrower than expected. It sees $170-$185 million second quarter loss from continuing operations before income taxes. Expects gradual recovery in the second half of fiscal year 2009. Suspends future dividend payments.
Triad Guaranty (TGIC) falls after the company announces that it has ended its negotiations with Lightyear Capital LLC to form a new mortgage insurance company. Also reports that Freddie Mac (FRE) has informed the company that the appeal of its subsidiary's suspension as an approved mortgage insurer has been denied.
Aetna (AET) reaffirms $0.93 second quarter operating EPS guidance and $4.00 for 2008. It says the medical cost trend it is experiencing in second quarter is in line with its expectations to date and consistent with it prior guidance of 7.5%, plus-or-minus 50 basis points.
J.M. Smucker (SJM) posts $0.67, vs. $0.75, fourth quarter EPS as restructuring and merger, other costs offset 20% sales rise. Sees $3.45-$3.50 fiscal year 2009 non-GAAP EPS on $3.8-$4.0 billion sales (before one-time costs associated with deal to merge PCG's Folgers coffee business into the company).
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