Movers: BCE, Sprint, Cadence Design, Ciena, Eli Lilly
BCE Acquisition Inc. announces that the deal to acquire BCE Inc. (BCE) has been terminated in accordance with its terms. Notes because KPMG has concluded that a required test for the solvency opinion was not met, this mutual condition to completion of the acquisition could not be, and was not, satisfied. Says under these circumstances neither party owes a termination fee to the other.
Moody's Investors Service downgrades Sprint Nextel's (S) senior unsecured debt rating to Ba2 from Baa3 and assigned a Corporate Family Rating of Ba1. As part of the rating action, Moody's also cuts short-term rating to Not Prime from Prime-3 and assigned a speculative grade liquidity rating of SGL-1. The outlook for Sprint's ratings is negative.
Cadence Design Systems (CDNS) posts $0.09 third quarter non-GAAP loss, vs. $0.33 EPS, on 42% revenue decline. Sees fourth quarter revenue of $215-$225 million and $0.04-$0.06 non-GAAP loss, 2008 revenue of $1.025-$1.035 billion and non-GAAP loss of $0.04-$0.06. S&P downgrades to sell from hold. Citigroup cuts estimates, target.
Ciena (CIEN) posts $0.10 fourth quarter non-GAAP loss, vs. $0.48 EPS a year ago, on 17% revenue decline. Says current results clearly demonstrate effects of a challenging macroeconomic and industry environment At this time, expects first quarter revenue of $170-$185 million.
Urban Outfitters (URBN) falls 3.70 to 15.16. In an SEC filing, URBN says its November same-store sales were flat and warns that sales trends could worsen further during the remainder of the holiday season. Wedbush Morgan, Citigroup cut estimates, target prices; maintain buy.
Gildan Activewear (GIL) posts $0.18, vs. $0.38, fourth quarter adjusted EPS as higher costs, expenses offset 27% sales rise. The current year expense includes a one-time income tax charge of $26.9 million, or $0.22 per share, related to the settlement of the Canada Revenue Agency (CRA) audit. Sees first quarter adjusted EPS of breakeven to $0.05 vs. $0.23 last year, $1.10-$1.30 in fiscal year 2009, before restr. charges which are not expected to be material.
Eli Lilly (LLY) reiterates its 2008 pro forma non-GAAP EPS guidance of $3.97- $4.02 (excluding Imclone acquisition), sees $4.35-$4.55 2009 non-GAAP EPS (excluding Imclone). Plans to reduce cost of bringing new medicine to market from $1.2 billion to $800 million by 2010. Separately, the company, Amylin and Alkermes says the FDA said the group now has appropriate pathway to demonstrate manufacturing comparability of exenatide (Byetta) once weekly for diabetes. Thinks its NDA submission for exenatide is on track to be completed by the end of the first half of 2009.
Procter & Gamble (PG) expects to grow organic sales for second quarter, but below the 4%-6% growth range estimated previously; cites reductions in retailer, distributor, consumers' in-home inventories in both developed and developing markets. Continues to expect second quarter EPS of $1.58-$1.63 and fiscal year 2009 EPS of $4.28-$4.38.
Boeing (BA) moves 787 Dreamliner jet's first flight into second quarter 2009 and the first delivery into the first quarter of 2010, reflecting the impact of disruption caused by recent Machinists' strike along with requirement to replace certain fasteners in early production airplanes.
Diodes (DIOD) updates fourth quarter revenue guidance to $88-$93 million. It notes continued global economic weakness, decreased demand. Says it has begun to initiate additional headcount reductions in international operations; as a result, it now sees fourth quarter GAAP EPS of $0.26-$0.31, which incl, among other things, repurchase of convertible debt, impact of the cost reductions taken previously, one-time cost of the additional planned headcount reductions, other required adjustments in accordance with GAAP. Sees fourth quarter non-GAAP EPS of $0.04-$0.08.
Lululemon Athletica (LULU) posts $0.13 vs. $0.12 third quarter EPS from continuing operations on 4% higher same-store sales on a constant-dollar basis, and 34% higher total revenue. Expects $0.15-$0.17 fourth quarter EPS on $90-$95 million total sales, same-store sales decline in low double digits (constant-dollar basis). Cuts fiscal year 2009 EPS guidance to $0.55-$0.57 from $0.68-$0.71, sees $340-$345 million total sales.
Sara Lee (SLE) to outsource pieces of its North American and European Finance (transaction processing) and Global Information Services (applications development and maintenance) groups, as well as global indirect procurement activities. Says about 700 positions, including roles currently performed by contractors, would become redundant.
Cummins (CMI) says it revised its outlook for 2008 due to the continuing decline in many of its key markets around the world. Now expects 2008 sales to increase by 9% over 2007, compared to its previous guidance of a 12% increase. Notes EBIT is forecast to be slightly more than 9% of sales, compared to its earlier guidance of 10%.
Stanley Works (SWK) says due to severe weakness in global economy, has experienced rapidly deteriorating biz conditions in its Construction/DIY, Industrial units. Notes sudden strengthening of dollar against major currencies has exerted additional pressure on fourth quarter EPS. Now sees 2008 EPS from continuing operations of $3.30-$3.40 (excluding charges). Plans to cut 2,000 jobs, or 10% of workforce, close 3 factories, eliminate some layers of management; to incur $80 million fourth quarter charge related to action. Says economic conditions too volatile to issue 2009 outlook.
XL Capital Ltd (XL) says in response to market rumors, it estimates mark-to-market decline on its investment portfolio (comprised of changes in unrealized losses, other than temporary impairments and realized losses on securities sales) due to changes in credit spreads and interest rates since the end of third quarter to date would be largely in line with that reported in third quarter. Company also expects about $200-$220 million in net investment fund affiliate losses from its alternative investment portfolio in fourth quarter.
NCI Building Systems (NCS) posts $1.26, vs. $1.27, fourth quarter EPS despite 9.8% sales rise. Says fourth quarter EPS came in above company guidance range. Says uncertain economic conditions combined with recent steel price declines and production curtailments have caused a significant reduction in visibility. Based upon current projections of an approximate 40% sequential decline in volume of tonnage shipped, expects to report modest loss for the first quarter, exclusive of special charges.
PMC-Sierra (PMCS) cuts $125-$135 million fourth quarter revenue forecast to $118-$122 million due to slower sales activity within fourth quarter due to weaker macroeconomic environment.
Emcore (EMKR) posts wider-than-expected $0.25 fourth quarter loss, vs. $0.34 loss, on 29% revenue rise. Street was looking for $0.01 loss. The company notes fourth quarter fiscal year 2008 consolidated gross margins decreased from 17.4% to negative 0.8%. Sees first quarter fiscal year 2009 revenue to be relatively flat on a sequential quarterly basis with a significantly improved bottom line; sees fiscal year 2009 revenue increasing by 10% compared to fiscal year 2008.
Cabot (CBT) says first quarter volumes in its Rubber Blacks, Performance Products and Fumed Metal Oxides Businesses are expected to be 20%-30% lower than in the same period last year. Expects lower volumes to have "considerable impact" on the full year. In addition to current curtailments of as much as 40% of its production, says it will implement operational and structural adjustments.
Horace Mann Educators (HMN) reduces its quartely dividend by 5-% to $0.0525 per share. Separately, HMN says it plans to repay $35-$40 million of its $75 million outstanding bank borrowing by Dec. 31, 2008.
CKE Restaurants (CKR) posts $0.10, vs. $0.11, third quarter EPS on 4.3% total revenue decline. Says results inline with consensus estimates. Blended company-operated same-store sales rose 0.9%.