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LATE TRADING: Whole Foods Down Following 3Q Report July 31, 2006

Posted by notapundit in Economic News, Main.
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By Christopher Hinton

NEW YORK (Dow Jones)–Shares of Whole Foods Market Inc. (WFMI) fell 6.9% in after-market trading Monday as the grocer reported third-quarter revenue below Wall Street expectations.

Whole Foods posted revenue of $1.34 billion, up from $1.13 billion a year ago, but below the $1.36 billion expected by analysts. Meanwhile, same-store sales rose 9.9%.

The Austin, Texas, company said its net income rose to $53.9 million, or 37 cents a share, from $40.4 million, or 29 cents a share, a year ago. Analysts, on average, expected earnings of 34 cents a share.

Shares recently traded at $53.53, down $3.98.

Internet Security Systems Inc. (ISSX) shares rose 6 cents, or 0.3%, to $22.55 after the Atlanta company said it earned 22 cents a share, excluding items, on revenue of $82.7 million in the second quarter. A year ago, the company’s non-GAAP earnings were 21 cents a share, and its revenue was $79.1 million.

Shares MetLife Inc. (MET) slipped 2.7% to $50.62 after one of the nation’s top insurers said its second-quarter profit declined compared with a year-ago period that included more than $1 billion in one-time gains. Operating earnings came in above Wall Street expectations, however, due to a surge in total U.S. annuity deposits. But MetLife’s sales came in below Wall Street expectations.

Shares of Chipotle Mexican Grill Inc. (CMG) dropped 4.8% to $50, as the restaurant chain said its second-quarter profit fell 58% from results fattened by a one-time tax benefit a year ago. Its revenue climbed 31%, however.

Shares of Powerwave Technologies Inc. (PWAV) fell 2.4% to $7.75 after the maker of radio-frequency power amplifiers reported second-quarter earnings below Street expectations.

The Santa Ana, Calif., company reported second-quarter earnings of $12.6 million, or 10 cents a share, down 3% from $13 million, or 11 cents a share, in the same period last year.

Excluding acquisition-related charges and expenses, Powerwave posted per-share earnings of 13 cents. Analysts polled by First Call had, on average, expected 14 cents.

Powerwave said it encountered less-than-expected demand from its North American customers.

Shares of Zevex International Inc. (ZVXI) plunged 16% to $14 despite the medical device maker reporting greater second-quarter profit on greater revenue, and boosting its full-year revenue guidance.

However, the Salt Lake City company said it expects $200,000 to $300,000 in consulting charges in the second half of the year to make the company compliant with Sarbanes-Oxley, having passed the $75 million market-capitalization mark during the recent period.

For the second quarter, Zevex said it earned 24 cents a share, up from 3 cents a share last year, on revenue that rose 54% to $10.5 million. The company also raised its full-year revenue guidance to 30% growth. Last year, Zevex saw $34.9 million in revenue.

Shares of PeopleSupport Inc.’s (PSPT) soared 16% to $13.91 after the outsourcing company said second-quarter net income jumped 70% to $3.81 million, or 20 cents a share, from $2.24 million, or 12 cents a share, a year ago. The Los Angeles company’s revenue climbed to $25.9 million from $14.7 million in the year-ago period.

On average, analysts expected per-share earnings of 11 cents on revenue of $23.7 million.

Shares of Photronics Inc. (PLAB) lost 8.8% to $12.74 after the maker of precision quartz photomasks lowered its third-quarter guidance, citing a shortfall in flat-panel display mask orders.

For the July quarter, the Brookfield, Conn., company lowered its revenue expectation to the range of $106 million to $107 million from $119 million to $124 million. Earnings for the period are expected to be between 9 cents and 11 a share. Analysts, on average, expected third-quarter earnings of 29 cents a share on revenue of $122.3 million.

Shares of Affymetrix Inc. (AFFX) fell 7.4% to $19.97 after the company posted a second-quarter net loss of $10.05 million, or 15 cents a share, on revenue that fell 4.7% to $80.07 million. Excluding stock options expensing, Affymetrix posted a loss of 9 cents a share for the latest quarter.

Analysts, on average, had been looking for a per-share loss of a penny on revenue of $89 million, according to First Call.

Wall Street Journal – Worldwide News Briefs For July 31,2006 July 31, 2006

Posted by notapundit in Main, US News, World News.
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THE U.S. CONTINUED to press diplomacy in the Mideast, while Olmert vowed there would be no cease-fire soon. Israeli strikes hit southern Lebanon, despite an agreement to suspend air attacks.
* * *
Gunmen in military fatigues kidnapped 29 people in Baghdad, and an Iraqi vice president said cabinet changes are in the works.
* * *
The U.N. Security Council passed a weakened resolution giving Iran until Aug. 31 to suspend uranium enrichment or face the threat of sanctions.
* * *
Bush said his administration will ‘do everything we can’ to revive WTO talks, calling the dormant Doha Round a ‘once-in-a-lifetime’ chance to boost world trade.
* * *
The FDA is considering allowing over-the-counter sales of the morning-after pill to women 18 and older — a surprise move that revives efforts to widen access to the emergency contraceptive.
* * *
Blair is to meet with Schwarzenegger and a group of CEOs in California on climate change and clean energy, but Bush’s top environmental adviser won’t attend.
* * *
Australian Prime Minister John Howard said he will seek another term, dashing the leadership ambitions of Treasurer Peter Costello.
* * *
Texas Republicans asked a federal appeals court to let them replace Tom DeLay on the November ballot, but Democrats argued state law requires keeping him as the Republican candidate.
* * *
Polling stations reopened in Congo’s second largest city, offering citizens another chance to vote after violence prevented some from casting ballots Sunday.
* * *
A roadside bomb killed 18 Sri Lankan soldiers, as a 2002 cease-fire with Tamil rebels came under increased pressure.
* * *
NATO troops assumed command of military operations in southern Afghanistan from the U.S.-led coalition in the latest bid to defeat resurgent Taliban forces.
* * *
Heat warnings were in place from Michigan to Oklahoma, with high temperatures expected to climb into the 90s or 100s, and sparking thunderstorms along its eastern edge.
* * *
Congress is near adoption of landmark pension legislation, but faces a partisan fight over federal estate taxes and the minimum wage that could delay Senate passage and disrupt other parts of the Republicans’ agenda.
* * *
A provision aimed at aiding struggling airlines has complicated action on a sweeping package designed to pump more money into private pension plans.
* * *
López Obrador, addressing a rally of half a million supporters in Mexico City, urged them to stage a sit-in to pressure for a recount of the disputed presidential vote.
* * *
A young boy’s disability has fueled the debate over the safety of reusing surgical blades, forceps and other medical devices.
* * *
China is refusing to take back 40,000 deportable immigrants in a spat over U.S. asylum policy, undercutting U.S. attempts to discourage illegal entrants.
* * *
Asian nations toned down language on North Korea after it threatened to quit a security forum if the group condemned its missile launches.

US Stocks End July With A Drop, On Rate, Oil Concerns July 31, 2006

Posted by notapundit in Economic News, Main.
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NEW YORK (Dow Jones)–Stocks ended the month of July with a slide, as Avon Products and Agco saw major pullbacks, while Humana headed higher and Arch Coal and its peers benefited from the current heat wave.

The Dow Jones Industrial Average lost 34.02, or 0.3%, to 11185.68. For the month, the first of the third quarter, the average rose 35.46 points, or 0.3%. With the gain, the Dow ended a two-month slide.

The Nasdaq Composite Index dropped 2.67, or 0.13%, to 2091.47. For July, the Nasdaq fell 80.62 points, or 3.7%, its fourth consecutive monthly decline.

The Standard & Poor’s 500 Index shed 1.89, or 0.15%, to 1276.66. The S&P 500 added 6.46, or 0.5%, in July, now having gained six of the year’s seven months.

On Monday, “You had cross currents, including conflicting signals in comments by two folks from the Fed, and mixed earnings,” said Jeff Applegate, chief investment officer at Fiduciary Global Advisors. “And you also had another 1%-plus back-up in oil. As a result we were stuck in an eddy, not much forward, not much back.”

Avon Products lost 3.82, or 12%, to 28.99. The direct seller of beauty products reported its second-quarter profit declined 54%, weighed by charges from a restructuring program begun in November.

Agco fell 2.74, or 11%, to 22.96. The maker of farm equipment reported second-quarter earnings that missed analysts’ expectations by 10 cents a share as sales fell 7.9% to $1.45 billion.

Humana gained 4.39, or 8.5%, to 55.93. The managed-care provider posted second-quarter results that far outpaced the average expectations on Wall Street, helped by strong performances in its Medicare Advantage, commercial and Tricare businesses.

Arch Coal rose 3.24, or 9.3%, to 37.94, Consol Energy gained 2.92, or 7.6%, to 41.16 and Peabody Energy advanced 3.90, or 8.5%, to 49.95. The stocks surged on sentiment that utilities would need extra coal to deal with potential power shortages caused by the current heat wave.

Volume on the New York Stock Exchange was 1.69 billion shares. Down volume beat up by 855 million shares to 737 million, and stocks that fell in value exceeded those that rose, 1,666 to 1,640.

The final Dow Jones Industrial Average close was 11185.68, down 34.02. On the New York Stock Exchange, there were 1,640 issues advancing, 1,666 declining and 161 unchanged.

NYSE volume totaled 1,624,186,110 shares, compared with 1,964,906,770 Friday.

The NYSE Composite Index was 8244.21, down 10.77 The average price per share fell by 10 cents.

Rambus (Nasdaq) jumped 1.98, or 13%, to 17.63. BWS Financial raised shares to buy from hold, citing the memory-technology company’s improving legal environment and a stock price that is trading below the investment firm’s fair-value assumption.

Apple Computer (Nasdaq) gained 2.37, or 3.6%, to 67.96. Banc of America Equity Research upgraded shares to buy from neutral and raised its price target to $79 from $68, citing strong demand for the company’s MacBooks and iPod digital music players.

Regal Entertainment lost 1.16, or 5.6%, to 19.66. The movie-theater operator missed second-quarter earnings expectations and didn’t confirm market speculation about a potential spinoff of its National CineMedia unit.

Wal-Mart Stores added 4 cents to 44.50. July sales results were at the high end of the discounting giant’s expectations. While Wal-Mart’s move was modest, it appeared to have an impact on the retail group in general. Target, Wal-Mart’s closest rival, lost 54 cents, or 1.2%, to 45.92. On the higher end, Kohl’s gained 1.42, or 2.6%, to 56.63 and AnnTaylor Stores advanced 86 cents, or 2.1%, to 41.06.

Dow industrial Exxon Mobil rose 74 cents, or 1.1%, to 67.74. The oil titan benefited from a rise in the price of crude oil. Also, J.P. Morgan Securities upgraded shares to overweight from neutral, saying the company’s strong second-quarter results improved the outlook for production growth.

Tyson Foods lost 42 cents, or 2.9%, to 14.15. The nation’s biggest meat company reported a deeper-than-expected fiscal third-quarter loss, prompting it to lower its fiscal-year earnings guidance and to announce further cuts in production of chicken.

Barr Pharmaceuticals rose 93 cents, or 1.9%, to 49.76. The U.S. government is considering allowing conditional over-the-counter sales of the drug company’s morning-after pill, The Associated Press reported.

Phelps Dodge gained 5.84, or 7.2%, to 87.34. Canadian mining company Teck Cominco raised its cash-and-stock offer for nickel producer Inco. But Inco is also being courted by Phelps Dodge, which could use the increased offer as a chance to step out of a possible bidding war that likely wouldn’t sit well with shareholders. Teck Cominco gained 1.25, or 1.9%, to 66.12 and Inco advanced 1.37, or 1.8%, to 77.77.

ImClone Systems (Nasdaq) fell 1.42, or 4.2%, to 32.50. Repligen’s patent-infringement case against ImClone’s colon-cancer drug Erbitux could move to a jury trial after a U.S. district court rejected ImClone’s attempt to get the lawsuit dismissed. Small-cap Repligen (Nasdaq) leapt 60 cents, or 25%, to 3.

Goodyear Tire & Rubber rose 43 cents, or 4.1%, to 11. Appaloosa Management L.P. disclosed that it holds a 6.4% passive stake in the tire maker.

ConAgra Foods shed 24 cents, or 1.1%, to 21.50. The packaged-foods producer agreed to sell its refrigerated meats business to Smithfield Foods for $575 million. Smithfield shed 24 cents to 28.45.

Coach rose 57 cents, or 2%, to 28.71. Given clear signals that business remains brisk and that the accessories and gifts marketer’s 20% annual profit-growth goal remains in reach, investors soon should begin to get over their fears that there is a lot more downside ahead, an article in Barron’s said.

Biovail lost 51 cents, or 2.3%, to 22.19. The Ontario Securities Commission, which has been investigating trading issues at the pharmaceutical company, alleged that company Chairman Eugene Melnyk and others failed to report trades of Biovail common stock held in various trusts.

Valley National Bancorp lost 1.03, or 3.8%, to 25.97. Ryan Beck cut shares to underperform from market perform due to concerns about valuation and narrowing margins.

El Paso gained 40 cents, or 2.6%, to 16. Shares could climb another 25% in the next year or two, as investors come to appreciate the natural-gas provider’s growth potential and the value of its pipeline and its exploration and production business, an article in Barron’s said.

By Karen Talley, Dow Jones Newswires

US Stocks Decline; Investors Worried About Interest Rates July 31, 2006

Posted by notapundit in Economic News, Main.
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By Scott Patterson

July saw a lot of fireworks on Wall Street – but stocks are finishing the month with a dud, as stocks decline amid rising oil prices and jitters about interest rates.

The focus of investors in July shifted from rates to corporate earnings results. Now, as earnings season winds down, attention is swinging back to interest rates and the Federal Reserve’s campaign to fight inflation.

Concerns about whether the Fed will raise rates once again next week, as well as nail-biting over the ongoing violence in the Middle East, kept stocks in check Monday following a strong performance last week. The Dow Jones Industrial Average fell 35.53 points to 11184.17. The Standard & Poor’s 500-stock index slid 1.78 to 1276.77 and the Nasdaq Composite Index lost 2 to 2092.

The Fed meets next Tuesday to decide whether to raise rates again. Recent weak economic data such as the second-quarter report on gross domestic product have reduced odds for another increase to about 35%, according to federal-fund futures contracts.

William Poole, president of the St. Louis Fed, put the odds for another rate increase slightly higher in a speech delivered before trading started Monday. While the GDP report “lowers the outlook for economic growth going forward,” Poole, who isn’t a member of the Federal Open Market Committee, told reporters after a speech in Louisville.

But since other data show the inflation pressures remain, “I am still very much in the 50-50 camp” regarding another rate increase, he said.

Janet Yellen, president of the San Francisco Fed and voting member of the Fed’s rate-setting committee, echoed Poole’s mixed take on the prospects for rates. In a speech in San Francisco, she said that the overnight bank lending rate “currently lies in a vicinity that is roughly appropriate for the Fed to attain its key objectives,” but “policy must be responsive to the data that actually emerges.”

The heavy focus on this week’s economic data is likely to have a dampening effect on stocks, analysts said. “I don’t think anyone wants to commit any serious money until we get this unemployment report out of the way,” said Peter Cardillo, chief market analyst at S.W. Bach.

Several reports due out later this week could have a big impact on whether the Fed decides to raise the target for the federal-funds rate by a quarter-point for the 18th time to 5.5%. Tuesday, the Labor Department will release data on personal income and spending, a report that contains closely watched inflation metrics. Also Tuesday, the Institute for Supply Management will release its July manufacturing index. On Friday, the government will issue the nonfarm payroll report for July.

Light, sweet crude rose $1.66 to $74.40 a barrel on the New York Mercantile Exchange amid news of escalating violence in the Mideast crisis. Natural-gas prices surged 13%, its biggest gain this year, as a heat wave struck the Midwest and Northeast, driving up demand for electricity.

In the only major release Monday, the July Chicago Purchasing Managers Index rose to a reading of 57.9 from a downwardly revised 56.5 figure in June, higher than the 55.7 reading expected. A reading above 50 indicates expansion.

Meanwhile, investors eyed some more earnings results. HSBC Holdings reported a 15% rise in first-half net profit on strong revenue growth in new businesses and emerging markets. Health-benefits provider Humana reported a stronger-than-forecast 10% profit rise and held to its 2006 outlook, but said marketing costs could be up to 15 cents a share higher than forecast.

Apple Computer gained more than 2% after a Banc of America analyst upgraded the stock to buy from “neutral,” citing the launch of the new iPod Nano later this year and solid demand for the company’s notebooks.

Dow Jones News Top Stories Of The Day – July 31, 2006 July 31, 2006

Posted by notapundit in Economic News, Main, US News, World News.
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HSBC reports net profit of $8.73 billion, well above analysts’ expectations of $8.1 billion, on strong revenue growth in new businesses and emerging markets and as costs decline in corporate and investment banking. Bank says the global economy remains strong, led by “intense” growth in China, and that it is “well-positioned” to benefit from shifts in the world economy. HSBC plans to enter Japan’s retail-banking market.

St. Louis Fed president remarks he is “still very much in the 50-50 camp” on whether the FOMC will raise rates again next week. He isn’t a voting member this year. Poole adds Friday’s employment data will be key.

San Francisco Fed president says the federal-funds rate is about right for the current economy, but that “we are at a delicate point for policy.” She continues to fret about inflation.

National Association of Purchasing Management Chicago says its index of area business activity rises to 57.9 in July on a seasonally adjusted basis from 56.5 in June. Economists were expecting a reading of 56.0.

Meat processor’s shares fall 3% after it says it expects fiscal 2006 loss of 41c-51c a share, much wider than analysts’ mean estimate for a 4c loss. Tyson swings to much-wider-than-expected 3Q net loss of 15c a share as revenue falls 5% to $6.38 billion.

He notes Secretary of State Rice is working to achieve a sustainable cease-fire in the Middle East, but Israeli Prime Minister Olmert says there won’t be one soon. Israel and Hezbollah continue to hit targets, disrupting Israel’s 48-hour halt pledge.

U.N. Security Council passes a resolution giving Iran until the end of August to suspend uranium enrichment or face the threat of economic and diplomatic sanctions.

Dallas Federal Reserve Bank’s production activity index tumbles to 9.4 in July from 38.1 in June. Other indexes also fall, with general activity at 6.3, prices paid for raw materials at 56.2, prices received at 20.3 and employment at 17.2.

Some on Wall Street welcom a change at the helm of Pfizer, but investors and analysts were cautious in their praise of the new chief executive because they want to hear more about his plan for the drug giant’s future.

About 1,500 Delphi workers represented by the IUE-CWA opt to accept either an early retirement or a buyout package being offered by the bankrupt auto parts supplier as it scrambles to reduce structural costs, says company spokesman Lindsey Williams.

Two denizens of Southern California’s defense industry have hit the corporate auction block: Northrop Grumman’s navigation-systems unit, and Wyle Laboratories, a multipurpose test-and-research outfit, reports The Wall Street Journal.

Medical-device-makers agree to settle four patent disputes, limit legal parameters for two other disputes and cross-license some CRM and neuromodulation patents. St. Jude shares slip 1%; Boston Sci falls 2%.

Phelps Dodge’s hopes to acquire Canadian mining concern Inco are being challenged by a competing bid from Teck Cominco. Whether Phelps will step aside isn’t certain, market watchers say. Phelps Dodge shares gain 7%; Inco up 1%.

HMO credits its Medicare Advantage plan with pushing up net income to $89.5 million, or 53c a share. Analysts were expecting EPS of 35c. Revenue climbs 52% to $5.41 billion. Full-year earnings may top estimates. Shares climb 4%.

FDA is considering allowing over-the-counter sales of the morning-after pill, but only to women 18 and older, a surprise move that revives efforts to widen access to the emergency contraceptive almost a year after it was thought doomed.

Electric utility reports net income of $644 million, or 95c per share. Excluding items, EPS of 85c tops analysts’ forecast. Exelon and Public Service Enterprise Group boost offer to win approval from New Jersey regulators for proposed $16 billion merger.

Repligen’s patent-infringement lawsuit against ImClone’s colon drug Erbitux could move to a jury trial in the wake of ImClone’s failure to get the case dismissed. Repligen shares soar 23%; ImClone falls nearly 4%.

Auto-parts supplier posts 57% slump in fiscal 3Q net income of $20 million, or 29c a share, amid work stoppage at Canadian plant. EPS excluding items of 73c is 4c above estimates. Firm raises earnings forecast. Shares up 1%.


Speculation Drives Up Phelps Dodge Options
Prospectors drive up stock and options on the copper miner, creating potential opportunities for call sellers amid speculation about company’s future. Activity follows word that Teck Cominco raised rival offer to buy Inco. Shares up 8%.

Putnam Fund Takes Moderate Approach
Putman Investment Management’s David King says investors should consider the convertible market because they’ll reap rewards from Fed’s increased rates, the equity market has performed well and convertibles are sensitive to spreads.

============ U.S. MARKETS ACTION ===========
DJIA down 26.03 points to 11193.67
NASDAQ down 2.09 points to 2092.05
S&P 500 down 1.15 points to 1277.40
10-year T-note up 1/32 at 101 2/32 yield 4.983
NYMEX Spot Crude up $1.19 at $74.40/bbl
Dollar/Euro up 0.0015 at 1.2772