Movers: Goldman Sachs, Morgan Stanley, Citigroup, Wachovia, Wells Fargo, GE
Goldman Sachs Group (GS) - Moody's assigns a negative outlook to the long-term ratings of GS and its subsidiaries. The negative outlook reflects Moody's expectation of an extended downturn in capital market activity, which will reduce GS revenue and profit potential in 2009, if not beyond this period.
Morgan Stanley (MS) - Moody's places long-term debt ratings of MS and its subsidiaries on review for downgrade. All short-term ratings were affirmed at Prime-1. Spearately, Ladenburg says pressures on MS are "enormous." Ladenburg cuts $44 price target to $19; it rates the stock neutral. CNBC's Garparino says MS disputes Ladenburg claim that MS may have significant exposure to Lehman.
Citigroup (C) has decided not to ask that the Wells Fargo (WFC)- Wachovia (WB) merger be enjoined. However, Citi believes it has strong legal claims against Wachovia and Wells Fargo and their officers, directors, advisors and others for breach of contract and for tortious interference with contract. Plans to pursue these damage claims vigorously on behalf of its shareholders.
Wells Fargo says it and Citigroup have ended talks concerning a possible sale of certain banking assets of Wachovia and reaffirms that it is proceeding with its merger with WB as a whole company transaction with all of WB's banking and other operations, requiring no financial assistance from FDIC or any other government agency. Sandler O'Neill thinks news a relatively positive outcome for WB shareholders.
Barclays PLC (BCS) confirms it is considering a number of options, including capital raising, relating to the industry-wide commitment to increase Tier 1 Capital in the sector by an aggregate GBP25 billion, as announced by the UK government.
General Electric (GE) posts $0.43, vs. $0.54 a year ago, third quarter EPS as 33% decline in profit at its Capital Finance unit offsets 11% revenue rise. Posts $0.45 third quarter EPS from continuing operations. Street was looking for $0.45. Says it's on track to meet its revised guidance (in September) for the full year, adjusted for dilution.
Macy's (M) says based on the potential for lower sales, now expects $1.30-$1.50 fiscal year 2009 EPS, excluding one-time costs, impairment charge. Previous guidance was for $1.70-$1.85 fiscal year 2009 EPS. Says third quarter same-stores sales at Macy's fell by 5.8%. It says if weaker sales trends continue, same-store sales in fall season could be down by 3%-6%.
Centex (CTX) says due to deteriorating economic conditions, it will suspend its regular quarterly cash dividend, consistent with its strategy of conserving capital and building liquidity during this difficult business environment.
Deckers Outdoor (DECK) sees third quarter sales of about $195 million, which would represent an increase of 51% over 2007 levels, up from its previous guidance of an increase of about 34%. Based on higher-than-forecast sales, DECK expects to also exceed its previously issued third quarter EPS growth target of 12% over third quarter 2007. DECK further expects fourth quarter revenue, EPS to increase about 45%, 42%, respectively, over 2007 levels. S&P maintains buy.
Audiovox (VOXX) posts $0.10 second quarter loss per share, vs. $0.16 EPS on flat sales. Cites deteriorating global economy.
Prudential Financial (PRU) - Late yesterday, PRU forecast third quarter after-tax adjusted operating income for its Financial Services Businesses of $275-$375 million ($0.67-$0.90 per share). Results reflect estimated negative pre-tax impact of about $700 million. S&P maintains buy.
Biogen Idec (BIIB) says its Phase II trial of baminercept in rheumatoid arthritis (RA) patients who have had an inadequate response to conventional therapy with a disease-modifiscal yearing antirheumatic drug (DMARD) did not meet its primary endpoint or any of the pre-specified secondary endpoints. BIIB has decided to discontinue development of the compound in RA.
Total System Services (TSS) posts $0.33, vs. $0.35, third quarter EPS despite 9.4% revenue rise. Street was looking for $0.34. Believes the upcoming holiday shopping season will be slow.