Movers: WaMu, Morgan Stanley, AIG, Goldman Sachs, SanDisk, Nortel
Washington Mutual (WM) falls 0.31 to 2.01. The New York Times reports that WaMu has hired Goldman Sachs to look for buyers. Among the potential bidders that Goldman has talked to are Wells Fargo (WFC), JPMorgan Chase (JPM) and HSBC (HBC) -- but no buyers may materialize, says the Times. Earlier, S&P said it believes regulators may be concerned that WM's recent negative publicity will lead to depositors withdrawing funds from the bank. S&P shares these concerns, but at current levels thinks WM be attractive to potential suitors; it keeps hold opinion.
Morgan Stanley (MS) falls Down 7.22 to 21.48. Morgan Stanley is considering a merger with Wachovia (WB), reports The New York Times. In a memo reportedly released by MS, CEO Mack says "short sellers are driving our stock down." In response to today's share price weakness, S&P equity analyst Matthew Albrecht believes MS and GS are under pressure because market believes these firms cannot remain independent. Still cautious on MS shares due to severe market disruption, numerous uncertainties. Keeps hold opinion on MS. The company, 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.
American International Group (AIG) drops 1.53 to 2.22 after it gets a rescue plan from the government. The Federal Reserve Bank of New York is providing a 2-year, $85 billion secured revolving credit facility to AIG that will ensure the company can meet its liquidity needs. AIG will cede 79.9% of shareholders' equity to the Fed. S&P maintains sell, while Citigroup keeps hold and cuts target to $4.50 from $14.
Goldman Sachs (GS) drops 13.26 to 119.75. Oppenheimer cuts estimates on GS, maintains perform as it remains cautious on brokers as they battle. Yesterday GS posted $1.81 vs. $6.13 third quarter EPS on 43% total revenue drop.
Nortel Networks (NT) says with a sustained and expanding economic downturn, it is experiencing significant pressure as carrier customers cut back their capex further than previously expected, other customers are deferring investments. As a result, now expects third quarter revenues of about $2.3 billion. Also expects 2008 revenue to decline 2%-4% vs. year ago, sees gross margin of about 42% of revenue.
SanDisk (SNDK) announces that its Board of Directors have rejected an unsolicited, non-binding proposal from Samsung Electronics Co., Ltd to acquire SNDK for $26 per share cash. Board concluded that proposal "significantly undervalues SanDisk given the long-term prospects of its business."
Barclays PLC (BCS) says it has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers ( 2 Next Page