Movers: Yahoo, Microsoft, Circuit City, Family Dollar Stores, UnitedHealth, Apollo
The Wall Street Journal reports that Microsoft (MSFT) is positioning itself for a new run at Yahoo's (YHOO) search business and has approached media firms, including Time Warner (TWX) and News Corp. (NWS), about joining it in a deal that would effectively lead to Yahoo's breakup. The WSJ also reported that Yahoo pushed to sell itself to Microsoft for about $33 a share in mid-May, weeks after the tech giant dropped its bid. S&P reiterates buy on YHOO.
Merrill Lynch downgrades General Motors (GM) to underperform from buy, cuts price target to $7.
Oppenheimer cuts estimates for Merrill Lynch (MER), maintains underperform.
Blockbuster (BBI) announces that it has decided to withdraw its proposal to acquire Circuit City (CC). Following the announcement, CC reiterates that its previously announced exploration of strategic alternatives to enhance shareholder value is an active and ongoing process.
Family Dollar Stores (FDO) posts better-than-expected $0.46, vs. $0.40 a year ago, third quarter EPS on flat same-store sales, 2.9% higher total sales. Sees fourth quarter same-store sales up 4%-6%, $0.30-$0.35 EPS. Now sees fiscal year 2008 EPS of $1.58-$1.63.
UnitedHealth Group (UNH) says in second quarter its risk-based businesses produced lower level of gross margin than expected, it experienced continuation of pressures it saw in the first quarter, sees $0.64-$0.66 second quarter adjusted EPS. The company settles a federal class action lawsuit relating to its historical stock options practices, to pay $895 million into settlement fund. Now sees 2008 adjusted EPS of $2.95-$3.05 on revenues in $81 billion range, prior to consideration of cash payments for litigation settlements; UNH previously projected $3.55-$3.60 2008 EPS.
Apollo Group (APOL) posts $0.91, vs. $0.81, third quarter non-GAAP EPS on 14% revenue rise. Total degreed enrollment grew by 11%.
Aladdin Knowledge Systems Ltd. (ALDN) sees second quarter revenues of $26.0-$26.5 million, GAAP EPS of $0.01, non-GAAP EPS of $0.04. It says second quarter revenues fell short of expectations primarily due to weaker global economy, several anticipated customer orders slipping from the second quarter. It cuts 2008 revenue forecast to $112-$120 million, GAAP EPS to $0.36-$0.44, excluding one-time expenses related to recent acquisitions. Sees $0.48-$0.56 non-GAAP 2008 EPS.
Starbucks (SBUX) announces that it will close about 600 underperforming company-operated stores in U.S. market and now expects to open fewer than 200 new U.S. company-operated stores in fiscal year 2009. Pre-tax charges related to store closures include about $200 million of asset write-offs to be recognized in third quarter fiscal year 2008. Projects $120-$140 million for lease termination costs and future lease obligations, nearly all of which will be recognized in fourth quarter fiscal year 2008 and first half of fiscal year 2009.
Technitrol (TNL) expects $320 million second quarter revenue, $12 million operating profit (excluding severance, asset impairment expenses) vs. previous outlook for $330 million revenue and $25 million operating profit.
Cites lower-than-expected demand in higher-margin electronic components and worsening conditions in North American economy, May earthquake in China which affected an electronic components factory, higher expenses related to transfers of auto components and former Sonion operations to Asia.
Libby (LBY) announces price increases affecting its North American market, selected international markets. Says these increases were made necessary by unprecedented escalation of energy costs, especially natural gas.
Walgreen (WAG) posts 3.4% higher June same-store sales, 9.9% higher total sales, 3.5% higher comp store front-end sales.
Isle of Capri Casinos (ISLE) posts $1.66 fourth quarter loss from continuing operations, vs. $0.43 loss a year ago, as write-offs and valuation charges and other items offset an 18% rise in revenue. For fiscal year 2009, sees depreciation expense of about $125 million; cash income taxes of less than $10 million, which would primarily represent state income taxes; interest expense of about $95-$100 million, net of capitalized interest; and maintenance capital expenditures of about $40 million.
MSCI Inc. (MXB) posts $0.18, vs. $0.24, second quarter EPS despite 22% revenue rise. Separately, Morgan Stanley (MS) says it plans to file registration statement on Form S-1 for the sale by MS of about half of its roughly 53 million-share ownership interest in MXB.
AVIS Budget Group (CAR) expects second quarter results to be below last year's. Says the quarter has turned out to be a significantly more challenging operating environment than expected. Cites rising fuel costs, weaker enplanements, lower commercial travel volumes, lower time and mileage rates per day.
Acuity Brands (AYI) posts $1.01, vs. $0.78, third quarter EPS from continuing operations on 2% sales rise. Expects pressure on gross margin in fourth quarter as a result of significant increases in commodity costs such as steel, aluminum, plastics and copper as well as higher freight costs due to significant rise in the price of diesel fuel.
Chesapeake Energy (CHK) and Plains Exploration & Production (PXP) enter into a Haynesville Shale joint venture in North Louisiana and East Texas. PXP has agreed to acquire a 20% interest in CHK's Haynesville Shale leasehold as of June 30, 2008 for $1.65 billion in cash. In addition, PXP has agreed to fund 50% of CHK's 80% share of drilling and completion costs for future Haynesville Shale JV wells over a several year period until an additional $1.65 billion has been paid.