Around the Street Archives / Around the Street / Resources / Company Profile

Around the Street: Week of 1/28/2008

On the heels of last week`s 75bp emergency rate cut and lingering recession fears, the Fed cut rates once again on Wednesday by 50bp in their regularly scheduled meeting. Chairman Bernanke also indicated that due to current stress in the credit markets additional rate cuts are a possibility.
Senator John McCain won a hard fought battle against Mitt Romney in the Florida primaries on Tuesday, setting himself apart as the clear frontrunner for the Republican ticket. On the Democratic side Hillary Clinton easily defeated Barack Obama, providing further proof that there is not yet a clear favorite for the Democrats.
New Home Sales fell 4.7% in the month of December despite builders slashing prices by 10%. This decline solidified 2007`s record 26% drop in new-home sales.
Investors looked for a lower open in pre market trading on Monday as global markets sold off earlier in the day. The Japanese Nikkei index fell 4 percent while the London FTSE 100 shed 2.05 percent.

Around the Street: Week of 1/21/2008

Markets pointed to another poor open on Wednesday as Apple pressured futures lower after missing Q1 earnings estimates.
The Fed made an emergency rate cut early Tuesday morning, taking 75 basis points off both the Fed Funds and Discount Rate. Rates now stand at 3.5% and 4% respectively.

Around the Street: Week of 1/14/2008

Futures moved higher in early trading on Monday as growing anticipation of a rate-cute and IBM`s (IBM) upbeat guidance raised investor sentiment.

Around the Street: Week of 1/7/2008

Goldman Sachs (GS) announced Wednesday morning that it expects the U.S. economy to fall into a recession in 2008, with real GDP contracting by 1% in both the 2nd and 3rd quarter of the year.
Stocks plummeted in afternoon trading on Tuesday after AT&T (T) announced a softening in its broadband business. Investors took this as a broad indicator of current economic conditions, prompting a sharp sell off.

Around the Street: Week of 12/31/2007

The housing market showed small signs of life this week as existing home sales for November reported a modest 0.4% rise. Home sales are down 20% over the past year.
Iowa primaries kicked off the 2008 elections with a few shakeups as former Arkansas governor Mike Huckabee took the Republican vote with 34%, while Senator Barack Obama comfortably took the Democratic ticket with 38%.
The nonfarm payroll report shook Wall Street on Friday morning as the economy created a meager 18k new jobs for the month of December, versus 58k expected by analysts. With this report marking the lowest job growth since August 2003 and an unemployment rate at 5.0% for the first time in 25 months, investors are placing their hopes on the actions of the Fed in the upcoming weeks.

Around the Street: Week of 12/17/2007

Morgan Stanley added further intensity to credit market woes Wednesday after announcing an additional $5.7 bln write-down after disappointing investors with a $10 bln loss in Q4.
The European Central Bank attempted to ease the credit crunch this week after announcing that they would infuse markets with $501 bln in short-term funding. The average rate taken by banks for the funding was 4.21%.

Around the Street: Week of 12/10/2007

Wall Street rebounded on Wednesday after the Fed announced that it will infuse liquidity into markets by holding term auctions that will allow banks to borrow at a discounted rate without the negative perception that often comes with borrowing from the Fed`s discount window.
Markets tumbled Tuesday as the Fed cut both the discount and Fed funds rate by 25 basis points. Though investors were clearly disappointed with the decision, with the prevailing sentiment indicating that a quarter percent drop was not enough to ease the current turmoil in the market.
UBS (UBS) announced a further $10 bln in subprime write-downs on Monday morning, saying that the continued deterioration of the U.S. mortgage market has required the bank to update their assumed losses;though shares were to the upside on news that the government of Singapore and an unnamed investor injected nearly $11.5 bln into the company.

Around the Street: Week of 12/3/2007

Job growth substantially outperformed consensus estimates in November, as the ADP employment report showed an 189,000 rise in payrolls compared to a consensus of 60,000.
Activision (ATVI) announced that it will merge with Vivendi Games, creating a gaming giant to contend with current leader Electronic Arts (ERTS).

Around the Street: Week of 11/26/2007

Wells Fargo (WFC) reported that it will need to set aside $1.4 bln during the fourth quarter to cover losses on home equity loans caused by the deteriorating housing market.
Citigroup (C) received a much needed $7.5 bln infusion from the Abu Dhabi investment authority, easing some concern over the banking giant`s near term future.
London based HSBC Holdings announced Monday that it will move two of its structured investment vehicles onto its balance sheet and provide nearly $35 bln in funding.
Black Friday proved to be better than expected this year as the data indicated a modest 8.3% rise in sales on the day. Online shopping also showed strength as Internet sales totaled nearly $800 mln over two days.

Around the Street: Week of 11/19/2007

Freddie Mac (FRE) added further hesitation to the mortgage crises as the lender posted a $2 bln loss in third quarter income; saying it needs fresh capital to maintain lending at current amounts. Fannie Mae (FNM) is also under pressure as it saw a quarterly loss of $1.4 bln.
Goldman Sachs (GS) downgraded Citigroup (C) before the bell on Monday as the broker faces $15 bln worth of write-downs over the next two quarters.

Around the Street: Week of 11/12/2007

E-Trade (ETFC) continued to fall further in early trading Monday as Citi downgraded the broker to a sell rating, citing the company`s lowered earnings forecast, bankruptcy rumors and substantial losses from mortgage market exposure.

Around the Street: Week of 11/5/2007

The dollar fell to new lows this week after Chinese officials announced that they will convert more of their foreign exchange stockpiles to stronger currencies such as the Euro. Rising oil prices and the housing credit crunch are blamed as two primary factors for the dollar`s recent decline in respect to the Euro.
Wall Street was shaken early Monday morning as Citigroup (C) reported an $11 bln write-down and announced the departure of chief executive Charles Prince. The announcement sent futures lower in early trading Monday, resulting in the market`s gap to the downside at the open.

Around the Street: Week of 10/29/2007

Payrolls rose by an astounding 166,000 in the month of October, easily eclipsing the consensus of 90,000. Also detailed in the labor department`s report was the unemployment rate staying steady at 4.7%. Strong growth in healthcare and food services led the way for the month, while banks and manufactures posted a decline in growth.
The FOMC cut both the Fed funds and discount rate by 25 basis points at their regularly scheduled meeting this week, leaving rates at 4.5% and 5% respectively. The Fed explained that the cut was necessary to protect the market from an expected growth slowdown in the near future.
The economy continued to elude credit market and subprime worries this week as the Commerce Department reported better than expected 3Q GDP growth of 3.9%, marking the strongest performance in six quarters. Consumer prices also proved to be positive, rising 1.7% and staying within the Feds comfort zone.
Merrill Lynch (MER) CEO Stan O`Neal is expected to announce his official departure from the company some time early this week. O`Neal plans to leave amid controversy of merger talks with Wachovia (WB) without board approval and the recent write-down mess reported last week in the company`s earnings report.

Around the Street: Week of 10/22/2007

Merrill Lynch (MER) moved the markets lower in early trading on Wednesday morning after reporting a $7.9 billion write-down for subprime loans and related securities. Further disappointing news came in the company`s earnings announcement as the banking giant reported a 94% decrease in 3Q revenue from a year ago.
Kohlberg Kravis Robers and Goldman Sachs (GS) announced that they will cancel their $8 bln deal to acquire Harman International (HAR). Both companies saw their share prices fall after the announcement early Monday morning.

Around the Street: Week of 10/15/2007

Leading Indicators rose by 0.3% for the month of September, with seven of the ten leading indicators seeing an increase. This month`s increase has continued the indicator`s volatile trend, as the August number was revised to a decrease by 0.8%
The Consumer Price Index gained 0.3% in the month of September, led by higher food and energy prices. Core inflation rose by a slower than expected 0.2% for the month, giving more credence to the possibility of a Fed rate cut.
Banking giants Bank of America (BAC), J.P. Morgan (JPM) and Citigroup (C) announced that they`ve agreed to create a joint fund to ensure liquidity in the commercial-paper markets. Over the past few months the commercial-paper markets have been in a crunch, seeing the amount outstanding asset-backed commercial paper fall by nearly 24%. While no specifics about the fund have been confirmed, many are speculating that it could be valued at nearly $100 bln.
General Motors (GM) shares moved higher in early trading Monday as the automaker detailed its plans for the Health Trust agreed upon with the UAW. The company said it will transfer $16 bln from its internal health-care trusts and add an addition $2.5 bln in cash to fund the new program.

Around the Street: Week of 10/8/2007

Molson Coors and SABMiller announced this week that the two brewers will combine their United States brewing operations into a joint venture called MillerCoors. The companies report an expected annual savings of $500 million from the deal.
Boeing (BA) announced this week that it will delay initial deliveries of its highly anticipated 787 Dreamliner by six months. The manufacturer cites integration problems as the reason for the delay.
Credit markets are firming up as evidenced by M&A activity this week. Business Objects (BOBJ) announced early Monday that they would be acquired by German software maker SAP AG (SAP). Also announcing a buyout deal of their own was United Industrial Corp (UIC) as Textron Inc (TXT) has agreed to purchase defense contractor.

Around the Street: Week of 10/1/2007

The Labor Department reported an 110,000 increase in nonfarm payrolls for the month of September. Payrolls from August were also revised to a gain of 89,000, compared to the initial report of a loss of 4,000. Unemployment increased slightly on the month to 4.7%.
The housing market continued to struggle this week as Tuesday`s Pending Home Sales reported a 6.5% decline for the month of August. This drop puts the index at its lowest level since 2001.

Around the Street: Week of 9/24/2007

Consumer Spending reported its fastest gain in two years as the figure rose 0.6% for the month of August. Another key economic indicator, core consumer price inflation, was up 0.1% in August. This puts core inflation at 1.8% for the year, marking its lowest level since 2004.
Durable Goods orders fell 4.9% in the month of August as airplanes and other transports dropped 11.2% for the month. The market reacted to the upside after the report due the possibility of further Fed rate cuts on indications of slowing economic growth and subsequent lowered inflation pressure.
General Motors (GM) found themselves in turmoil this week as 74,000 United Auto Workers left GM plants in protest on Monday. After two days of strike the automaker and UAW reached an agreement that responded to employee complaints about retirement stability and will establish an independent retiree health-care trust.

Around the Street: Week of 9/17/2007

Gold also rallied after the Fed`s decision this week as it peaked at $735.50 on Tuesday, marking its highest level since 1980.
The dollar nearly hit a record low against the euro this week as the fed cut interest rates. The high for the euro on Wednesday was 1.3988 to the dollar.
The Fed met this Tuesday for one of their regularly scheduled meetings, in which they lowered both the federal funds rate and discount rate by .5%, putting the rates at 4.75% and 5.25% respectively. Stocks rallied after the decision, led by the S&P 500 which gained 2.9% on the day.
Chinese markets reached record levels this week as the Shanghai Composite finished at a record 5,421.39 on Monday. These strong results came despite a 0.27 percentage-point increase on deposits and loans due to inflation concerns.

Around the Street: Week of 9/10/2007

Retail sales increased 0.3% for the month of August, led by strong performance in autos. Excluding autos, sales fell 0.4%, with poor performance by malls, grocery stores, and restaurants. Year to date retail sales are up 3.7%.
Banks borrowed $7.2 bln from the Fed discount window on Wednesday, up from an average of $2.7 bln per day the week prior. This is an indication of banks struggling to raise funding elsewhere. Commercial paper has also eased its decline this week as it fell $8.1 bln in the past week, down from $51.4 bln the week prior.
The dollar fell to a record low against the euro this week, as the euro peaked at $1.3877. This decline has been fueled by speculation that the fed will cut the federal funds rate by 25 or 50 basis points in their meeting on September 18.
Texas Instruments (TXN) narrowed in on their 3Q expectations this week, as the chip maker expects 4% to 8% in revenue growth. The company credits the growth on increased use of their chips in hard drives and printers.

Around the Street: Week of 9/3/2007

For the first time in four years nonfarm payrolls experienced a decline, as August saw an overall decrease of 4,000. This number came as a shock to economists as consensus for this month`s report was an increase of 115,000. Despite the miserable payroll figures unemployment held at 4.6% for the month.
The Fed`s Beige Book reported that economic growth has continued to expand throughout the nation. The indicator reported that recent financial market turmoil has had negative effects on the lending and housing markets, but has largely not disrupted other portions of the economy.

Around the Street: Week of 8/27/2007

The FOMC released the minutes of their August 7th meeting on Tuesday afternoon. The committee showed no sign of removing inflation as their primary concern. Though committee members did acknowledge the possible impact of the current credit conditions and did not rule out taking action.
News home sales were down 0.2% to 5.75 mln for the month of July. Median home prices are also down 0.6% in the past year to $230,200, marking a 12th consecutive monthly decline.
Taiwan based PC vendor Acer has agreed to purchase Gateway (GTW) for $710 mln or $1.90 per share. Together these two companies will control 12% of the global market share, compared to Dell’s 16%.

Around the Street: Week of 8/20/2007

Bank of America (BAC) invested $2 billion into Countrywide Financial (CFC) preferred stock this week. Bank of America says the deal will be mutually beneficial and strengthen both parties. The deal has had little effect on Countrywide share prices.
Leading Indicators rose 0.4% in the month of July. This increase indicates likely economic growth in the near future, lead by consumer expectations, vendor performance and jobless claims.
News of a possible merger between brokers TD Ameritrade and * ETrade sent the markets higher this week. Also discussing possibilities are hotel giants MGM and Dubai World. After minimal M&A activity this past month, investors are looking favorably upon these announcements.

Around the Street: Week of 8/13/2007

The Federal Reserve cut the discount rate to 5.75% from 6.25% before the market opened on Friday. In their statement they said that they were monitoring the current credit situation and are prepared to act as needed to mitigate any adverse effects on economic growth.
The Japanese Nikkei 225 index fell 5.4% to a 52-week low on Friday, marking its largest point drop in seven years. Recent strength in the yen over the dollar caused late day concerns in exporters, resulting in share prices of Sony, Toyota, Honda and Canon to fall.
The Japanese yen gained a 13-month high on the U.S. dollar in early hours on Thursday as traders cut risk by buying back yen instead of investing it in higher yield investments such as securities. This buyback was triggered by continued worries in the U.S. subprime market.
Countrywide Financial (CFC) shares plummeted this week after the lender announced that it drew from an $11.5 billion credit facility in efforts to boost liquidity.
The Consumer Price Index (CPI) for July saw a 0.1% increase, with a 0.2% increase in core CPI. This marks the slowest inflation rate in eight months, with falling energy prices helping offset rising medical and apparel costs.
Wal-Mart (WMT) reported a 49% rise in second quarter income before the opening bell on Tuesday, this was marked by an 8.9% rise in revenue to $93 billion. Despite these strong reports, Wal-Mart said profit margins were being squeezed by product discounts. The company also lowered its fiscal-year earnings forecast by 10 cents to $3.05 to $3.13 per share, causing share prices to fall.
This week Goldman Sachs (GS) announced that they would inject $3 billion into their Global Equity Opportunities hedge fund which has lost nearly 30% of its value in the last week. Despite recent adverse credit conditions which have lead to failure of other premier hedge funds from Bear Stearns and Europe, Goldman insists that this is not a bailout but rather an opportunity to capitalize on "exciting market conditions".

Around the Street: Week of 8/06/2007

Countrywide Financial (CFC) shares fell 17% in early trading on Friday after the company reported that disruption in the mortgage market could have an adverse affect on their financial condition. Share prices dipped to $28.66 from a 52-week high of $45 back in February.
The FOMC decided to keep interest rates at 5.25% for the ninth straight time after their meeting this week. In their statement they expressed the likelihood of continued economic growth over the next few quarters supported by job creation, income and a healthy global economy. The statement did address current credit conditions as a problem, and this softening bias caused stocks to rally.
Credit worries and market volatility continued this week as AIG reported that their residential mortgage delinquencies and defaults are on the rise. Also French Banking group BNP reported that it has suspended three funds after stating they are unable to value the funds due to a complete loss in liquidity caused by the U.S. credit markets.

Around the Street: Week of 7/30/2007

Two Bear Stearns (BSC) hedge funds filed for protection under Chapter 15 bankruptcy on Tuesday. The funds collapsed after heavy betting on subprime loans backfired due to increasing defaults on these loans and the recent overall decline of the credit market.

Around the Street: Week of 7/23/2007

Following the second largest sell-off of the year due to worries about the credit market, Jeremy Grantham`s second quarter letter to clients in which he discusses the growth of leveraged loans is a must read.

Around the Street: Week of 7/9/2007

Rio Tinto (RTP) announced an offer for $38.1 bln or $101 a share for Alcan (AL) which exceeds Alcoa`s previous offer of $76 a share.
The group of firms behind the $25 bln buyout of Sallie Mae (SLM) announced that proposed legislation in front of the U.S. Congress could prevent the deal from going through.

Around the Street: Week of 6/25/2007

Oracle (ORCL) reported earnings of 31 cents a share up 23% from last year. Oracle missed earnings expectations of 35 cents a share but beat revenue expectations.
Existing home sales fell 0.3% last month to an annualized rate of 5.99 mln. Inventories rose by 5% to 4.43 mln, the highest level since June 1992.

Around the Street: Week of 6/18/2007

Morgan Stanley (MS) reported second-quarter earnings of $2.45 a share versus expectations of $2.01 a share.
The Supreme Court ruled against investors suing Wall Street banks over allegedly driving up prices on newly issued stocks during the dot-come bubble of the late 1990s.

Around the Street: Week of 6/11/2007

The Producer Price Index (PPI) came in at 0.9% versus concensus expectations of 0.7%. Core PPI excluding food and energy came in as expected at 0.2%.
Lehman Brothers (LEH) reported earnings of $2.21 a share versus concensus estimates of $1.88 a share on higher than expected revenue.

Around the Street: Week of 6/04/2007

Federal Reserve chief Ben Bernanke commented that he expects moderate economic growth despite the housing slowdown, emphasizing that the Fed is unlikely to cut interest rates any time soon.

Around the Street: Week of 5/28/2007

Wachovia (WB) announced they would acquire A.G. Edwards (AGE) for $6.8 billion which would create the second largest retail brokerage in the country.

Around the Street: Week of 5/21/2007

New-home sales rose an unexpected 16% during April to a seasonlly adjusted annual rate of 981,000 home compared to the expected pace of 865,000.
Staples (SPLS) reported 12% growth in first-quarter earnings on strong international sales despite poor domestic performance.
Alltel (AT) agreed to be taken private by TPG Capital and GS Capital Partners in a deal worth $27.5 bln. The deal is the largest buyout in the history of the U.S. telecommunications industry.

Around the Street: Week of 5/14/2007

Pimpco`s Bill Gross has published his latest investment outlook for May/June 2007.
Industrial production rose 0.7% in April versus an expected rise of 0.4%. All market groups recorded increases with motor vehicles being especially strong up 3.3%, the fastest rate since November.
Private equity firm, Cerebrus, announced they would buy 80% of Chrysler for $7.4 billion. The most surprising part of the deal was that the UAW, the auto-workers union, gave their support to the deal.

Around the Street: Week of 5/07/2007

With more than three-quarters of retail companies reporting, 86% missed April same-store sales expectations. Major retailers reporting included Wal-Mart (WMT) same-store sales lower by 3.5% and Target (TGT) lower by 6.1%. Costco (COST) beat expectations by .7% to come in higher by 7%.
The Federal Reserve voted to keep interest rates at 5.25%, as widely anticipated. In the policy statement, the fed reiterated its previous statement that future rate decisions would be based on data while inflation remains the primary concern.
Alcoa (AA) announced it would bid $73.25 per share for Alcan (AL), which would value the company at $26.9 bln. The bid represents a 32% premium to Alcan’s average closing price over the last 30 days. The unsolicited offer follows two years of unsuccessful negotiations between the boards of both companies.

Around the Street: Week of 4/30/07

The Labor Department reported sluggish job growth in April with only 88,000 jobs created, the lowest since November 2004. Most economists do not believe this number will cause the Federal Reserve to cut rates when they meet next Wednesday, however; similar numbers in coming months would show more signs of a weakening U.S. economy and might force the Fed to start thinking about a rate cut.
General Motors Corp. (GM) reported first quarter earnings down 90% to $0.11 per share from $1.06 per share a year ago. While GM reported a narrower loss in North American operations, they blamed weakness in the sub-prime sector for poor results at GMAC Financial Services and restructuring charges in Europe and Asia.
Merrill Lynch (MER), one of the world`s largest financial companies has announced a plan to repurchase up to $6 bln in common stock to increase wealth to shareholders. According to their CFO this decision will allow them to be active and flexible in managing their equity capital.

Around the Street: Week of 4/16/07

A Saudi based investor has bought a 3.1% stake in HSBC Holdings making him the second largest shareholder in Europe`s largest bank. Maan Abdulwahed Al-Sanea, the investor, started buying stock in mid-February noticing the banks strong fundamentals and having confidence in the current management team.
The Dow Composite finished at a record high of 12,803 on Wednesday after earnings reports from J.P.Morgan (JPM) and Intel (INTC) initiated momentum. The underlying message in the index is "A few Dow component earnings may help the index, but the broader market is starting to show signs that it jumped out ahead of this earnings season, perhaps a bit to soon".

Around the Street: Week of 4/09/07

Two senior executives from Dow Chemicals were let go for "inappropriate behavior" as they held a series of secret meetings with investment bankers and potential investors on the feasibilty of a leveraged buyout worth in excess of $52 bln.
Alcoa(AA) kicked off earnings season reporting better than expected numbers after the bell on Tuesday(4/10). This Dow-30 component posted a first quarter profit and pushed its earnings growth to 9% on demand from jet makers and global construction markets alongside a surge in metal prices.
In an administrative move to cut costs Citigroup (C) will eliminate 17,000 jobs in an effort to save $2.1 Billion and improve profit margins. This will be the largest jobs cut outside of the auto industry since 2005.

Around the Street: Week of 4/02/07

The growth for the manufacturing sector slowed last month as the Institute for Supply Management (ISM) shrank to 50.9 in March from 52.3 prior. While the index of prices rose 6.5 points to 65.5 from higher energy prices. The slowdown in manufacturing expansion combined with the cost increases add to inflation readings confronting the Fed.
The U.S. and South Korean negotiators have come to an agreement that could generate $20 billion in trade if it can overcome some legislative opposition. The deal will stand to benefit U.S. farmers and Korean manufacturers, and could possibly spread in the region as bilateral trade agreements grow in popularity.
After a 13 day standoff Iran announced that it will release the U.K. sailors. The affect of the ease of tensions between Britain and Iran led to a decrease in oil prices, but was limited by gains in gasoline futures.

Around the Street: Week of 3/26/07

Economic data will continue to play a role in how stocks trade this week as was evident by Monday mornings reaction to New Home Sales. February sales fell 3.9% to its lowest level since June 2000, commentators weigh in on what these numbers mean.
With a steady rise in gasoline prices and a weaker stock market Consumer Confidence dipped for the first time in five months.
20 year streak on trade policy in the U.S. is broken as sanctions against China cause stocks to turn and bring fears of a possible trade war.

Around the Street: Week of 3/19/07

The Fed loses bias to raise interest rates and left the target for the Fed Funds Rate at 5.25%. Rate changes in the future will depend on both the outlook for inflation (hotter than expected) and slowing economic growth. Economists Focus on Three Words "future policy adjustments" for what it means to future Fed rate moves.
Geopolitical tensions rise as 15 British naval personnel were captured at gunpoint by Iranian forces off the coast of Iraq. Negative news made futures players uneasy as oil futures reversed and traded higher.

Around the Street: Week of 2/26/07

Around the Street: Week of 2/12/07

Around the Street: Week of 2/05/07

Around the Street: Week of 1/29/07

Big Ben and the Gang expected to remain on hold this week...but what?s next?

Around the Street: Week of 1/22/07