Movers: AIG, Morgan Stanley, Goldman Sachs, WaMu, Dell, Constellation Energy
American International Group (AIG) - CNBC's David Faber reports Fed has reviewed AIG's books and has a good idea of what firm needs. There is some hope Fed will have something together by end of the day (not the business day). If not, it is likely AIG will file for bankruptcy, Faber said. Earlier, CNBC's Charlie Gasparino reports that government money is now on table in AIG discussions. This morning, S&P Ratings Services lowers long-term counterparty rating on AIG to 'A-' from 'AA-' and its short-term counterparty credit rating on AIG to 'A-2' from 'A-1+'. A.M. Best Co. downgrades financial strength rating to A (Excellent) from A+ (Superior) and issuer credit ratings of the domestic life and retirement services subsidiaries of AIG to "a" from "aa" (AIG). S&P Equity Research reiterates sell.
Morgan Stanley (MS), announcing third quarter results ahead of schedule, posts better-than-expected $1.32, vs. $1.38 a year ago, third quarter EPS on 1.0% revenue rise. Notes non-interest expense rose 7%. Street was looking for $0.77.
Goldman Sachs (GS) posts $1.81, vs. $6.13 a year ago, third quarter EPS on 43% total revenue decline. Effective income tax rate for first 9 months of fiscal year 2008 was 25.1%, down from 34.1% in fiscal year 2007. Net revenues in Investment Banking fell 40% year-over-year and 23% from the second quarter. Net revenues in Fixed Income, Currency and Commodities were 67% lower than a very strong third quarter fiscal year 2007, primarily reflecting particularly weak results in credit products and mortgages.
Washington Mutual (WM) - S&P Ratings Services lowers its counterparty credit rating on WM to 'BB-/B' from 'BBB-/A-3'. Also lowers rating on Washington Mutual Bank to 'BBB-/A-3' from 'BBB/A-2'. The outlook is negative. Says the current ratings and negative outlook assume an improvement in earnings for H2 '08, but a loss for the full year.
Wells Fargo & Co. (WFC) says that, as a result of the Chapter 11 filing by Lehman Brothers (LEH), it will record other-than-temporary impairment and take a non-cash charge to earnings in third quarter for its investments in senior unsecured notes and perpetual preferred securities issued by LEH. Says its investments in the notes and preferred securities are included in securities available for sale at a cost of about $90 million and $109 million, respectively.
Dell (DELL) says it is seeing further softening in global end-user demand in the current quarter.
Constellation Energy Group (CEG) tumbles 24.21 to 23.78 after CEG says in 8-K that it, Constellation Energy Commodities Group, and Baltimore Gas and Electric Company believe that the Lehman bankruptcy, possible resulting effects on subsidiaries of Lehman will not have a material adverse effect on CEG or its subsidiaries individually or collectively. S&P Equity Research says it appears market has clearly lost confidence in CEG's hedging strategies and its risk management practices. S&P downgrades CEG to hold from buy.
Barclays PLC (BCS) - S&P MarketScope Europe reports that BCS confirms it is discussing with Lehman the possible acquisition of certain assets on terms that would be attractive to its shareholders. A further announcement will be made in due course. The WSJ says LEH continues to seek buyers for some assets, including its U.S.
broker-dealer business and investment management arm.
SanDisk (SNDK) - S&P attributes strength in shares to an unconfirmed wire report that the head of Toshiba's semiconductor business, Shozo Saito, has said his company is interested in making a bid for SNDK. Reiterates hold on SNDK.
Citigroup upgrades Chubb (CB) and Travelers (TRV) to buy from hold. It believes CB, TRV stand to benefit from AIG's troubles.
Continental Airlines (CAL) rises 2.44 to 21.29 after Morgan Stanley upgrades the airline industry to attractive; CAL and UAL (UAUA) are raised to overweight from equal-weight; AMR (AMR) to equal-weight from underweight.
Kroger (KR) posts $0.42, vs. $0.38, second quarter EPS on 9.7% higher same-store sales, 12% total sales rise. Says, excluding the effect of Hurricane Ike, based on year-to-date results, management now expects identical sales growth of 4.5%-5.5% for fiscal year 2009. S&P reiterates buy.
Monsanto Company (MON) rises 5.97 to 111.01 after MON raises fiscal year 2008 ongoing EPS guidance to $3.58-$3.60, and revised its reported EPS guidance to $3.49-$3.51. Cites higher-than-expected sales and gross profit in the company's seeds and traits business and its Roundup and other glyphosate-based herbicide business. S&P reiterates strong buy.See
Micron Technology (MU) falls 0.39 to 3.95 after UBS Financial downgrades MU and Broadcom (BRCM) to neutral from buy, and SiRF Technology Holdings (SIRF) to sell from neutral.
Owens-Illinois (OI) cuts its 2008 free cash flow guidance to $400-$332 million from previously expected $500 million. Cites weakening demand for its products associated with cont. declines in Europe and U.S., extension of short-term capacity shutdowns, acceleration of cash payments attributable to recent announcements for permanent closures of plants in Canada and Italy, strong U.S. dollar. Sets $350 million stock buyback.
Best Buy (BBY) posts $0.48, vs. $0.55, second quarter EPS, as an increase in planned investment spending for strategic growth offset 4.2% higher same-store sales, 12% higher total sales. Maintains $3.25-$3.40 fiscal year 2009 EPS guidance range.
CBRL Group (CBRL) posts $0.91, vs. $1.15, fourth quarter EPS from continuing operations on 0.8% lower same-store sales, 4.8% lower total sales. Sees 2%-3% fiscal year 2009 same-store sales growth, 4.5%-5.5% total sales growth, EPS from continuing operations of $2.80-$3.00.
Ingram Micro (IM) now expects $0.18-$0.23 third quarter EPS, revenue in the range of $8.3-$8.9 billion. Says it is experiencing broad-based economic softness.
Synovus Financial ( Next Page
asp?symbol=SNV'>SNV) - Fitch Ratings downgrades long-term Issuer Default Ratings (IDRs), the Individual ratings, of SNV and its subsidiary banks. The Rating Outlook remains Negative. The rating action largely reflects the prospect of prolonged credit stress at SNV, which will continue to hamper its performance, weigh on its financial condition.
Aegon N.V. (AEG) details its exposure to Lehman Brothers after LEH files petition for Chapter 11 bankruptcy protection in the U.S. AEG says it does not hold common equity in Lehman; during 2008, AEG actively lowered its exposure to LEH by about 20%. As of Sep 12, 2008, AEG had total general account fixed income exposure of EUR 265 million, which includes Credit Default Swaps-related exposure to LEH.
Illinois Tool Works (ITW) posts 10% higher operating revenue for the three months ended Aug. 31, 2008. Says increase in revenue growth was due to contributions from translation and acquisitions.
International Rectifier (IRF) rejects Vishay Intertechnology's revised $23 per share buyout proposal. Says the offer significantly undervalues the future prospects of the co. and is not in the best interest of its shareholders.
Hewlett-Packard (HPQ) says it plans to implement a restructuring program for the recently-acquired EDS business group. As part of the plan, HPQ will reduce workforce by about 24,6000 employees, or about 7.5% of the combined company's workforce, with nearly half of the reductions occurring in U.S.
Standard Pacific. (SPF) says net new home orders from continuing operations for the first two months of third quarter 2008 were down 30% from year-earlier period. Notes its cancellation rate for 2008 two-month period was 28% compared to 34% in the year earlier period, 25% in the second quarter 2008. Says despite positive comparisons in some of its markets, its absolute sales absorption rates continue to reflect the difficult housing conditions in substantially all of its markets.
Lawson Software (LWSN) said that based on preliminary results, sees first quarter revenue of $190-$192 million and non-GAAP EPS of $0.04-$0.05 (excluding items). Street is looking for $0.07.