S&P futures vs fair value: -6.0. Nasdaq futures vs fair value: -13.3.
Futures point to a lower opening. Crude oil futures are continuing yesterday’s rally, prices are up 1.4% to $87.37. KeyCorp (KEY) and Stanley Furniture (STLY) came up short of consensus estimates and issued warnings for the fourth quarter. Meanwhile, Johnson & Johnson (JNJ) and US Bancorp (USB) beat their consensus estimates.
Bernanke spots relief in markets - WSJ
WSJ reports Fed Chair Ben Bernanke signaled satisfaction that the central bank’s recent actions have cushioned the economy from mkt turmoil, but he offered no clear signal on whether officials are inclined to cut rates again at their next policy meeting in two weeks. The Fed’s rate cuts and other moves to improve mkt functioning have served “to reduce some of the pressure in financial markets,” Mr. Bernanke said, and that “increases the likelihood of achieving moderate growth with price stability.” In a speech to the New York Economic Club last night, Mr. Bernanke also said the housing sector is expected to deteriorate further and is likely to be a “significant drag” on economic growth through early 2008. But he added that strong income growth has so far propped up consumer spending even in the face of signs — which he called “quite tentative” — of a cooling labor mkt. “It remains too early to assess the extent to which household and business spending will be affected by the weakness in housing and by the tightness in credit conditions.” Responding to a question after the speech about the effect of the falling dollar on inflation, Mr. Bernanke indicated some risk. “One cannot deny that, all else equal, when the dollar depreciates that there is some inflationary effect that comes through the cost of imports.” But, he said, “our experience over the recent decade has been that those effects are relatively small.” While Mr. Bernanke cautioned in his speech that “considerable strains remain” in financial mkts, he also acknowledged the risk of reducing rates — a nod to concerns that such moves might encourage some investors to take even more risks.
PII Polaris Inds beats by $0.05, beats on revs; raises FY07 guidance above consensus (49.23 )
Reports Q3 (Sep) earnings of $1.07 per share, $0.05 better than the Reuters Estimates consensus of $1.02; revenues rose 11.0% year/year to $544 mln vs the $526.7 mln consensus. Co raises guidance for FY07, to EPS of $3.05-3.10 vs. $3.01 consensus, prior guidance $2.95-3.05; sees FY07 rev growth of 5-6%, which equates to roughly $1.74-1.76 bln vs. $1.71 bln consensus. Co comments, “While the recent macro economic environment has caused some concern within the overall markets in which we compete, we are continuously monitoring consumer spending and industry trends and are making adjustments as appropriate. However, given the positive feedback we received at our dealer meeting held in July, our continued productivity and efficiency improvement efforts and the success of several of our new products, we are optimistic about the future for Polaris.”
SPWR Sunpower to Build 18-Megawatt Olivenza Solar Power Plant in Spain
Co announced that its Spanish subsidiary will design and construct an 18-megawatt Olivenza solar electric power plant in the Badajoz region of Spain. Olivenza is expected to generate more than 32 million kilowatt-hours of power per year upon completion. SunPower will debut its proprietary SunPower T20 Tracker solar tracking system in Europe at the 70-hectare site. The Tracker follows the sun as it moves across the sky, delivering up to 30% more energy than fixed-tilt systems while reducing installation cost per kilowatt. Olivenza is financed by a consortium of institutions, including AIG Financial Products Corp., a wholly-owned subsidiary of American International Group, Inc. and a principal investor in the energy and infrastructure sectors, and 360 CORPORATE, a Spanish principal investor in the energy and infrastructure sectors, as equity investors. This project will expand SunPower’s pioneering footprint in Spain to more than 100 megawatts under contract. Construction is expected to be complete in the spring of 2008.
NAPS Napster debuts web-based subscription service (3.18 )
Co unveiled a redesign their music subscription service with the launch of Napster 4.0. “Consumers want their digital music to be available wherever they are,” said Rob Enderle, principal analyst with the Enderle Group. “By migrating to the Web and eliminating the need to download any software, Napster has taken a significant leap forward, making it possible for subscribers to access its complete catalog — and more importantly, their own Napster music library — whenever and wherever they have access to the internet.”
INTC Intel to up 45nm Core 2 Extreme prices by 50% next year - Reghardware.com (25.75 ) -Update-
Reghardware.com reports that the upcoming ‘Penryn’-based 45nm high-end quad-core CPUs may well attract an even higher price premium than before, it has emerged. INTC has apparently informed customers that next year’s Core 2 Extreme processors will cost up to 50% more than today’s models. According to newly released Penryn pricing data posted by a number of websites, Nov’s Core 2 Extreme QX9650 will cost $999 when sold in batches of 1000 chips. That’s the price point Intel has maintained for the Extreme line of gaming processors since the family was introduced back in the Pentium D days. However, 1Q08 will see the 3GHz, 12MB L2, 1333MHz FSB chip joined by two 3.2GHz models: the QX9770 and the QX9775, priced at a staggering $1399 and $1499, respectively.
DHI DR Horton reports net sales orders for the fourth quarter ended Sept 30, 2007 of 6,374 homes (13.58 )
Co announces net sales orders for the fourth quarter ended September 30, 2007 of 6,374 homes ($1.3 bln), compared to 10,430 homes ($2.5 bln) for the same qtr of fiscal year 2006. Net sales orders for fiscal year 2007 totaled 33,687 homes ($8.2 bln), compared to 51,980 homes ($13.9 bln) for fiscal year 2006. The co’s cancellation rate for the fourth quarter of fiscal 2007 was 48%. “Market conditions for new home sales declined in our September quarter as inventory levels of both new and existing homes remained high while pricing remained very competitive. We also experienced reduced mortgage availability due to tighter lending standards, and buyers continued to approach the home buying decision cautiously. We expect the housing environment to remain challenging.”
PRICE Filings, Offerings, Pricings and IPOs
Filings: DG FastChannel (DGIT) files for a 3.5 mln share common stock offering and up to $25 mln of shares of preferred stock… DealerTrack (TRAK) files for a 4 mln share common stock offering; 2 mln shares by the co and 2 mln shares by selling shareholders… Expedia (EXPE) files for a mixed shelf offering… Newmont Mining (NEM) files for a mixed shelf offering… Offerings: HRPT Properties (HRP) commences offering of 9 mln shares of beneficial interest… Targa Resources (NGLS) commences a 12.5 mln common unit offering representing limited partner interests… Pricings: Gladstone Capital (GLAD 18.70) prices a 2.5 mln share common stock offering at $18.70/share… Rodman & Renshaw Capital (RODM) prices a public offering of 8 mln shares at $5/share (the stock will commence trading on the Nasdaq Global Mkt on Oct 16).
BIIB Biogen Idec downgraded to Sell at BWS Financial- tgt raised to $69 from $52 (82.51 )
BWS Financial downgrades BIIB to Sell from Hold and raises their tgt to $72 from $64 due to the significant jump in value on the sale news. The firm notes that the rumor of the co being acquired has been circulating on the Street for many months, and is the main contributor for the stock having increased from $52 to $69. There have been many names floating around as who the possible acquirer could be, but none of them seem to be the caliber that they would expect to make a final bid for BIIB. The firm says their perspective as to who could eventually purchase BIIB rests with two companies: Genentech (DNA) and Gilead Sciences (GILD). They believe that BIIB would be fully priced at $72 and no more than $76.
COF Capital One: 3Q07 preview; a busy but tranformational quarter - Calyon (68.52 )
Calyon expects COF to report 3Q07 Operating EPS of $1.88, or a loss of $0.40 on a GAAP basis, on Thurs, Oct 18th after the close of trading. Firm’s GAAP est is $0.14 lower than the Street consensus, but keep in mind that the est range is between a loss of $0.45 and profit of $0.57, due to what firm believes are differences in provisioning and marketing forecasts across the Street, in addition to a mix of GAAP and operating ests. Firm continues to believe that 1) the opportunity to leverage a vast card-holder base within North Fork’s markets should drive growth, and 2) the Hibernia team is following the money within Louisiana to places like Baton Rouge, while continuing to prudently grow the Texas franchise.
JNJ Johnson & Johnson beats by $0.07, reports revs in-line; guides FY07 EPS above consensus (65.65 )
Reports Q3 (Sep) earnings of $1.06 per share, $0.07 better than the Reuters Estimates consensus of $0.99; revenues rose 12.7% year/year to $14.97 bln vs the $14.86 bln consensus. Co raises guidance for FY07, sees EPS of $4.10-4.13, ex items vs. $4.06 consensus, prior guidance $4.02-4.07.
GOOG Google: View the recent data positively for GOOG and continue to expect a strong quarter - Jefferies (620.11 )
Jefferies notes that last night, comScore released qSearch data for September, showing that GOOG increased its US search market share by 50bps m/m to 57.0%. Yahoo! (YHOO) gained 40bps m/m to 23.7% while MSN (MSFT) lost 100bps m/m to 10.3%. They view the recent data positively for GOOG and continue to expect a strong quarter for the co given its strong query growth, market share gains and improvement in monetization following the slight change to its ads quality scoring in early August. GOOG reports 3Q earnings after the close of market this Thursday.
DRYS Jefferies raises their tgts on dry bulk shipping stocks DRYS, DSX, EGLE, EXM, GNK, QMAR and TBSI (126.77 )
Jefferies raises their tgts on dry bulk shipping stocks, saying they believe the shares are attractively valued as the outlook for the dry bulk shipping market remains attractive based on the significant quantities of new iron ore production capacity scheduled to come on-line over the next 12 months, which should further stimulate dry bulk shipping demand. Firm raises their DRYS tgt to $160 from $108, raises DSX tgt to $44 from $35, EGLE tgt to $39 from $36, EXM tgt to $92 from $57, GNK tgt to $93 from $82, QMAR tgt to $31 from $24, TBSI to $72 from $47.
BRCM Broadcom: Upgrade details (41.72 )
Citigroup upgraded BRCM to Buy from Hold with a $52 tgt, as they believe powerful Wireless momentum is now forming and sustained Networking and Broadband strength set up 43% and 23% EPS growth in C2008/09 and potential for rising St ests into mid-2008.
STT State Street beats by $0.21, beats on revs; comments on fixed income markets (68.93 )
Reports Q3 (Sep) earnings of $1.15 per share, ex items, $0.21 better than the Reuters Estimates consensus of $0.94; revenues rose 47.9% year/year to $2.24 bln vs the $2.02 bln consensus. Co said, “The fixed-income markets have experienced unprecedented disruption in this past quarter. We believe we are well positioned with both our portfolio and our asset-backed commercial paper conduits. While liquidity in the fixed income market remains challenging, our concentration in high-quality assets in our own portfolios as well as in the conduits, have limited the impact of this disruption on our business. We believe that we weathered the disruption in the fixed-income market well–without significantly affecting State Street’s results. We’re disappointed in the performance of a small number of fixed-income strategies at State Street Global Advisors which performed below our expectation.”
ISRG Intuitive Surgical: 3Q preview; expectations are redlining as they head into Q3 call - CIBC (250.73 )
CIBC notes ISRG has run up 67% since Q2 earnings and firm feels the current valuation is reflecting expectations for another blowout in 3Q. The key metric to watch is still new units. ISRG likely will have to significantly beat firm’s worldwide 56-unit est for the stock to work higher, which they do not expect. As for specifics on 3Q, they expect ISRG to slightly beat their ests for sales and EPS of $146 mln and $0.85, which are above Street ests of $143 mln and $0.79, respectively. Again, firm’s bottom line is that it will not be enough NT, and so they’re very cautious heading into the call.
AN AutoNation initiated with a Hold at Kevin Dann- tgt $20 (17.70 )
Kevin Dann initiates AN with a Hold and a $20 tgt saying AutoNation is in the process of adapting to the current weakness in the new car market. Additionally, the co’s used car business has experienced weakness due to fewer trade-ins. Florida and California make up 50% of AutoNation’s revenues, and the sub-prime mortgage market and housing crisis in those states have made it difficult for AutoNation to build sales momentum. The firm says while this is not a positive situation for AutoNation, the co is still generating strong cash flow, which it is using to repurchase shares.
USB US Bancorp beats by $0.01, reports revs in-line (32.51 )
Reports Q3 (Sep) earnings of $0.67 per share, $0.01 better than the Reuters Estimates consensus of $0.66; revenues rose 3.2% year/year to $3.53 bln vs the $3.54 bln consensus. Co reports return on average assets of 2.09% and return on average common equity of 23.3%.
Downgrades: Friedman Billings downgrades Navigators Group (NAVG 58.09) to Market Perform from Outperform based on valuation. Miscellaneous: Friedman Billings initiates IPG Photonics (IPGP 21.07) with an Outperform and a $28.00 tgt and also added the co to the FBR Top Picks list. The firm expects the continued displacement of some traditional lasers by fiber lasers, expansion of the co’s product portfolio and product applications, and positive global economic growth to drive sales growth… Friedman Billings initiates Rofin-Sinar Technologies (RSTI 75.59) with an Outperform and a $92 tgt saying they believe that international capital equipment spending, the continued displacement of conventional tools by lasers, and the ongoing expansion of the company’s product portfolio and product applications will be the primary drivers of sales growth. Additionally, they expect margin expansion to result from operating leverage… Friedman Billings reinitiates II-VI (IIVI 34.7 
with an Outperform and a $43 tgt saying primary sales drivers are the continued adoption of industrial lasers and the subsequent growth in the industrial laser market, recurring revenues from the installed base of industrial lasers, and growth from certain military products… CIBC initiates SXC Health Solutions (SXCI 13.32) with an Outperform and an $18 tgt saying SXC provides P.B.M and I.T solutions to payors and pharmacies. Differentiator of SXC lies in its transparent pricing for P.B.M svcs, which offers visibility into real acq cost of drugs for clients (after rebates and discounts on generics)… Morgan Stanley initiates Western Refining (WNR 39.33) with an Equal Weight… Susquehanna initiates Cadence Pharma (CADX 14.00) with a Positive.
Upgrades: RBC upgrades Citrix Systems (CTXS 42.36) to Outperform from Sector Perform… ThinkEquity upgrades AudioCodes (AUDC 6.34) to Buy from Accumulate and raises their tgt to $8 from $6.50 saying as the N.G.N infrastructure turns toward applications, they believe the co is riding this strength to stronger results. Firm believes this result is sustainable. Downgrades: UBS downgrades THQ (THQI 24.6 to Neutral from Buy… Merrill Lynch downgrades Westpac (WBK 132.25) to Neutral from Buy… Morgan Stanley downgrades Anglo American (AAUK 34.69) to Equal Weight from Overweight… Piper Jaffay downgrades Biogen (BIIB 82.51) to Underperform from Market Perform… BB&T downgrades Knight Transportation (KNX 17.67) to Hold from Buy. Miscellaneous: Jefferies initiates Northstar Neuroscience (NSTR 11.52) with a Buy and a $21 tgt saying they view NSTR’s risk/reward as favorable ahead of the Phase III EVEREST trial data release… J.P Morgan initiates DPL (DPL 26.77) with a Neutral… Lehman initiates Winn Dixie (WINN 16.86) with an Overweight and a $21 tgt… Pacific Growth initiates First Solar (FSLR 134.95) with a Neutral… RBC initiates Boots and Coots (WEL 1.36) with an Outperform… UBS initiates RSC Holdings (RRR 16.40) with a Neutral and an $18 tgt… ThinkEquity initiates Towerstream (TWER 2.6 with a Buy and a $5 tgt saying the co is rapidly growing based on robust demand for high bandwidth services, market expansion, sales force growth, and higher ARPU services… ThinkEquity raises their tgt on Citrix Systems (CTXS 42.36) to $52 from $44 saying they expect Citrix to turn in an upside to consensus estimates driven by a higher-than-expected uptake in application networking spurred by the new Netscaler 8.0 product cycle.
OSTK Overstock.com downgraded to Sell at Stifel (34.02 )
Stifel downgrades OSTK to Sell from Hold as the stock has appreciated by more than 75% in the past two months (compared to the S&P 500 increase of about 10%) and now resides 60% above their tgt. The firm considers buying the shares on pullbacks into the upper teens or if their expectations for growth are proven conservative, all else being equal. The firm plans to continue monitoring proof of concept areas such as (1) customer acquisition costs; (2) margin expansion/cost controls; and (3) increases in selection and improvements to customer experience.
AMZN Amazon.com downgraded to Sell at Stifel (90.53 )
Stifel downgrades AMZN to Sell from Hold as they believe the market is now overly optimistic on margin expansion and growth projections. The firm remains an advocate for Amazon and its consumer value proposition, and have recommended the shares in the past in periods of uncertainty. At current levels, they believe the market is pricing in continued accelerating revenue growth and operating margin expansion just as the cycle, seems to be peaking.
Upgrades: Friedman Billings upgrades Eaton (ETN 93.04) to Outperform from Market Perform and raises price target to $104 from $102 saying they believe that growth in non-residential and commercial aerospace markets, as well as increased profitability in the truck segment, are not factored into the stock price… Citigroup upgrades Broadcom (BRCM 41.72) to Buy from Hold… J.P Morgan upgrades Agilent (A 38.1 to Overweight from Neutral and adds to their Focus List… J.P Morgan upgrades Viacom (VIA.B 40.39) to Overweight from Neutral. Downgrades: Friedman Billings downgrades Manor Care (HCR 66.00) to Market Perform from Outperform following a late-summer sell-off, HCR shares have recovered to within 1.5% of their $67 price target, representing a modest 9% to 12% annualized return should the takeout by the Carlyle Group occur within six to eight weeks… McAdams Wright Ragen downgrades (TEK 37.85) to Sell from Buy and raises the price tgt to $38 from $35 after DHR announced yesterday that it will acquire Tektronix for $38 per share… Bear Stearns downgrades General Motors (GM 41.11) to Underperform from Peer Perform… Citigroup downgrades SRA International (SRX 29.0 to Hold from Buy… J.P Morgan downgrades Tektronix (TEK 37.85) to Neutral from Overweight… Lehman downgrades Syngenta (SYT 44.65) to Equal Weight from Overweight.
SVU Supervalu beats by $0.01, misses on revs; reaffirms FY08 EPS guidance, revs guidance (35.24 )
Reports Q2 (Aug) earnings of $0.69 per share, $0.01 better than the Reuters Estimates consensus of $0.68; revenues fell 4.8% year/year to $10.16 bln vs the $10.4 bln consensus. Co reaffirms guidance for FY08, sees EPS of $2.73-2.83 vs. $2.77 consensus; sees FY08 revs of $44 bln vs. $44.52 bln consensus.
STLY Stanley Furniture misses by $0.02, beats on revs; guides Q4 EPS below consensus, revs below consensus (16.58 )
Reports Q3 (Sep) earnings of $0.16 per share, $0.02 worse than the Reuters Estimates consensus of $0.18; revenues fell 3.6% year/year to $73.2 mln vs the $71.1 mln consensus. Co issues downside guidance for Q4, sees EPS of $0.05-0.09, excluding non-recurring items, vs. $0.18 consensus; sees Q4 revs of $62-66 mln vs. $69.05 mln consensus. CEO says, “Business conditions in the third quarter were about as anticipated. While we are disappointed with lower sales and earnings, we believe this is a result of current industry-wide conditions. We do not foresee any improvement in the demand environment anytime soon and have lowered our expectations for the balance of 2007.”
KEY KeyCorp misses by $0.14, misses on revs; guides Q4 EPS below consensus (32.35 )
Reports Q3 (Sep) earnings of $0.57 per share, $0.14 worse than the Reuters Estimates consensus of $0.71; revenues fell 9.4% year/year to $1.15 bln vs the $1.24 bln consensus. Co issues downside guidance for Q4, sees EPS of $0.68-0.74 vs. $0.75 consensus. “The fixed income market volatility had an adverse impact on our third quarter results,” said Chairman and Chief Executive Officer Henry L. Meyer III. “While the fixed income markets continue to remain under some pressure as we head into the fourth quarter, we believe most of the financial impact on our held-for-sale portfolios is behind us and we expect to see improved results from these portfolios over the remainder of the year.”
Sensex ends down 47pts at 19,012 - The Business Standard
The Business Standard reports the Sensex opened with a positive gap of 44 points at 19,103, and soon rallied to a new all-time intra-day high of 19,174. Profit-taking on account of weak global markes saw the index slip into red. The index slipped to a low of 18,778 - down 396 points from the peak. Fresh buying, thereafter, saw the index recover most of its losses at close. The Sensex finally ended (provisional) with a loss of 47 points at 19,012.
Asian stocks decline on U.S. home loan concern; banks slide - Bloomberg.com
Bloomberg.com reports Asian stocks dropped the most in four weeks after losses reported by Nomura Holdings and Citigroup renewed concern a U.S. housing slowdown will stunt earnings growth at financial companies. The Nikkei 225 Stock Average lost 1.3%, while the broader Topix index dropped 1.9%. All markets fell except Taiwan, China and Sri Lanka. Indonesia was closed for a holiday.
U.K. stocks retreat, led by BA on oil; Anglo American declines - Bloomberg.com
Bloomberg.com reports U.K. stocks slid, paced by British Airways as crude oil rallied to a record in New York… The benchmark FTSE 100 Index fell 39.10, or 0.6%, to 6,605.40 at 9:02 a.m. in London. The FTSE All-Share Index decreased 19.84, or 0.6%, to 3,391.57. Ireland’s ISEQ Index lost 82.51, or 1%, to 7,848.76.
BSC China’s CITIC bids for Bear Stearns stake - Reuters (120.69 )
China CITIC Bank Corp is bidding to buy a stake in U.S. investment bank Bear Stearns Cos (BSC), a senior Chinese regulator said on Tuesday, in the first official confirmation of media reports that the state-run bank is a potential suitor for the Wall St firm. BSC is among the institutions hardest-hit by the U.S. subprime mortgage crisis. Earlier this month, Chief Executive James Cayne said BSC would consider selling a stake to an investor from China or the Middle East if the deal created value. Jiang Dingzhi, vice-chairman of the China Banking Regulatory Commission, cited CITIC Bank’s interest in buying into BSC as he went through recent acquisitions and investments by Chinese banks in overseas financial institutions.
ERIC LM Ericsson sees lower than expected results in Q3 2007 (40.93 -0.26)
Co expects sales of SEK 43.5 b., an operating income of SEK 5.6 b. and a cash flow of SEK -1.6 b. for Q3 2007. This is below the co’s own as well as current market expectations and primarily a result of an unexpected shift in the business mix. Co says, “The unexpected development in the quarter is mainly due to a shortfall in sales in mobile network upgrades and expansions which resulted in an unfavorable business mix that also negatively affected Group margins. All other businesses performed as expected. The effect of market dynamics is always a matter of judgment. This quarter we have underestimated the effects.”
ADBE Adobe insiders draw down on shares - Barron’s Online (45.71 -0.41)
barron’s Online reports insiders at ADBE are regular sellers of company stock. The co’s founder and co-chairman John Warnock is the latest insider to add his name to the list. Warnock sold 25,000 shares for $1.1 mln last week, according to a late-Friday filing with the Securities and Exchange Commission. He paid an average of $45.34 per share. The sale represents a 1.8% slice of Warnock’s Adobe stake and comes with shares at an all-time high Friday. Including exercisable options, Warnock continues to hold 1.7 mln shares — less than 1% of ADBE’s outstanding shares… On Oct. 5, President and Chief Operating Officer Shantanu Narayen sold $11 mln worth of stock, or 246,000 shares following an options exercise that gave him 250,000 new shares.
‘Mad Money’ Recap: Lightning Round - TheStreet.com
Cramer was bullish Nvidia (NVDA) Dynegy (DYN), Cramer was bearish on Vasco Data Security (VDSI), Taser (TASR)… Cramer was also bearish on Lowe’s (LOW), Home Depot (HD) saying “I expect nothing from this stock until the Fed cuts at least 100 basis points. Then and only then will I be buying the stock.”
Cramer’s ‘Mad Money’ Recap - TheStreet.com
On Wednesday’s edition, Jim said Motorola (MOT) is a buy ahead of its earnings report on Wednesday. The first reason to buy it is on the possibility that when MOT reports on Wednesday, Zander will announce that he wants to spend more time with his family, Cramer said. “Unfortunately, his resignation is low probability,” but if it does happen it is a quick four-point upside for MOT. The “medium-probability” way to win with MOT is to bet the stock may have at long last reached its bottom, he said. The high-probability way to win with this stock is with the help of activist investor Carl Icahn, Cramer said. After BEA Systems (BEAS) and Biogen (BIIB) it’s clear from Icahn’s guest appearance on “Mad Money” last week that he now has his sights on MOT.
