General Electric (NYSE: GE) closed at $20.35 Tuesday. GE November option implied volatility of 52 is above its 26-week average of 32 according to Track Data, suggesting larger price movement.
Siemens (NYSE: SI) closed at $63.97 Tuesday. SI November option implied volatility of 86 is above its 26-week average of 37 according to Track Data, suggesting larger price movement.
Philips Electronics (NYSE: PHG) closed at $18.71 Tuesday. PHG November option implied volatility of 68 is above its 26-week average of 43.
United Technologies (NYSE: UTX) closed at $50.95 Tuesday. UTX November option implied volatility of 53 is above its 26-week average of 33.
Hitachi Ltd (NYSE: HIT) closed at $51.63 Tuesday. HIT November option implied volatility of 71 is above its 26-week average of 36 according to Track Data.
Honeywell (NYSE: HON) closed at $28.85 Tuesday. HON November option implied volatility of 66 is above its 26-week average of 37.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
After being downgraded by Moody's, The Wall Street Journal reported that MBIA Inc (NYSE: MBI) will have to make $2.9 billion in termination payments and put up an additional $4.5 billion in collateral on agreements called Guaranteed Investment Contracts. As a result the firm is selling municipal bonds to raise cash.
Anheuser-Busch Companies Inc (NYSE: BUD) introduced a new business plan to help thwart a takeover by rival InBev. As part of its plan, The Wall Street Journal reported its intention to reduce headcount, raise prices and buy back more of its shares.
In an attempt to withstand the economic slowdown, the Financial Times reported that Siemens AG (NYSE: SI) announced plans to cut 17,200 jobs worldwide. Approximately 6,400 job cuts will be in Germany with a third more, elsewhere in Europe.
The Financial Times also reported that Citigroup Incorporated (NYSE: C) is planning to change its bonus system for hundreds of its top managers, in an attempt to increase cooperation and reduce competition within the company.
OTHER PAPERS:
John Varley, the CEO of Barclays Plc (NYSE: BCS), said the GBP4.5B rights issue answered naysayers, and said in an interview with The Sunday Telegraph that extra financing will not be necessary.
So far, the really big industries which have had lay-offs of tens of thousands of people are restricted to the troubled auto, airline, and financial sectors. That is beginning to change as the economic slowdown is become more severe and global.
One of the world's largest conglomerates, Siemens (NYSE: SI) will cut over 17,000 people. According to The Wall Street Journal (subscription required), the plan is "a broad cost-cutting drive amid tougher global economic conditions"
The move speaks volumes. Siemens does business in almost every country in the world. It has operations in the electronics, automation, infrastructure, medical, and transportation industries. Like GE (NYSE: GE), it has exposure across a vast number of sectors and regions.
The news gives some indication the economic conditions may be getting worse outside the U.S. and EU.
It is not the kind of revelation people need with the market dropping like a rock.
Douglas A. McIntyre is an editor at 247wallst.com.
MOST NOTEWORTHY: International Paper, Dynavax Tech and Telecom Italia were today's noteworthy downgrades:
JP Morgan downgraded International Paper (NYSE: IP) to Neutral from Overweight and said its purchase of Weyerhaeuser's (NYSE: WY) containerboard business will shift the company's focus back to North America and result in a less attractive product mix given increased OCC exposure.
Merriman downgraded shares of Dynavax Tech (NASDAQ: DVAX) to Neutral from Buy after the company's hepatitis B vaccine was placed on clinical hold.
Merrill cut Telecom Italia (NYSE: TI) to Neutral from buy as they expect stronger competition and regulatory measures to cut prices.
OTHER DOWNGRADES:
Bear Stearns (NYSE: BSC) was downgraded to Neutral from Accumulate at Buckingham.
ViewPoint Financial (NASDAQ: VPFG) was lowered to Market Perform from Outperform at Keefe Bruyette.
Bear downgraded Siemens (NYSE: SI) to Peer Perform from Outperform.
Europe's largest engineering group announced it expects earnings from the current quarter to drop by about 900 million euros ($1.4 billion). The company cited weak performance for its major business projects, dragged down by delays and order cancellations. Siemens reviewed major projects, focusing on its energy, transportation and IT solutions and services divisions.
The German conglomerate said that "the deterioration of these legacy projects"resulted in losses of 900 million euro, with 600 million euros brought by the power division, 200 million euros by the transport business and 100 million euros by the IT unit.
The Wall Street Journal reported that Siemens AG (NYSE: SI) estimated that its earnings this quarter would be dragged down by about $1.4B on weaker-than-expected performance in major business prospects.
According to the Financial Times, Bristol-Myers Squibb Company (NYSE: BMY) has reportedly made informal approaches to several potential bidders for its baby formula business, Mead Johnson, which is believed to be worth between $7B and $9B.
OTHER PAPERS:
The Telegraph reported that The Goldman Sachs Group Inc (NYSE: GS) is expected to announce a $3B writedown this week, part of which is attributable to their stake in Industrial & Commercial Bank of China. Goldman will also have writedowns of about $1.6B in its leveraged loan business.
Several union leaders are accusing General Motors Corporation (NYSE: GM) of trying to lower the wages of more positions than the company and union had agreed to under their labor contract, the Detroit News reported.
MOST NOTEWORTHY: Siemens , Siliconware Precision and Palm were today's noteworthy upgrades:
Goldman upgraded Siemens AG (NYSE: SI) to Buy from Neutral and views shares as defensive in the current environment.
Merriman upgraded shares of Siliconware Precision (NASDAQ: SPIL) to Buy from Neutral on valuation, as they believe the negative sentiment regarding the U.S. economy is already priced into shares.
JP Morgan upgraded Palm (NASDAQ: PALM) to Overweight from Underweight citing new smart-phone products expected in 2008 and stronger-than-expected Centro sales.
OTHER UPGRADES:
Pep Boys (NYSE: PBY) was raised to Neutral from Underperform at Credit Suisse.
Jefferies upgraded Pioneer Drilling (NYSE: PDC) to Buy from Hold.
Deutsche Bank upgraded Cablevision (NYSE: CVC) to Buy from Hold.
The Wall Street Journal reported that a New York law firm that was hired to probe into a bribes-for-business scandal at Siemens AG (NYSE: SI) has been hindered by many obstacles including lawyers' missteps and lack of subpoena powers, people familiar said.
Yahoo! Inc (NASDAQ: YHOO) is expected to reduce its workforce by as much as 5%, according to sources in the company and reported by the Financial Times. The company is reportedly going to lay off some 500-700 of its employees as soon as next Tuesday.
OTHER PAPERS:
In an effort to save as much as $50M per year, General Electric Company's (NYSE: GE) NBC Universal head Jeff Zucker said the broadcaster would reduce its reliance on pilot episodes of new series on its NBC television station. Mr. Zucker cited the slowdown in the economy and the Hollywood writers' strike as reasons for cutting costs, adding that "it's clear we are in a recession in the United States," the New York Times reported.
The big run-up in shares in Asia did not make it over to Europe. Concerns about the global economy still appear to be too great.
At 5 AM New York time, the FTSE was off .9% to 5,688. Commodity proxy and miner BHP Billiton (NYSE: BHP) was off 3.7%, GlaxoSmithKline (NYSE: GSK) was off 2.1%, so Big Pharma did not appear to be making a comeback.
In Germany, the DAXX fell off 1.7% to 6,658. Multi-national Siemens (NYSE: SI) held its own, down only 0.4%.
In France, the CAC 40 was down .8% to 4,805. France Telecom (NYSE: FTE) sank 2.3% to 23.25. But global financial services company AXA (NYSE: AXA) rose .7%.
Selling in Europe accelerated throughout the day. The fuel behind the drop appeared to be fear of a global slowdown and the impression that the Bush package to stimulate the economy would be too little, too late.
Watching the big markets in Europe left the impression of a simple and blind panic without a specific trigger. Investors simply wanted out, goaded by concerns that stocks have much further to fall. By the last hour of trading, the lemmings were running in force.
The German DAX was hit hardest, plunging 7.2% to 6,790. Shares in global mega-conglomerate Siemens (NYSE: SI) dropped 8.5%.
In the UK, the FTSE sold off 5.5% to 5,578. But there was real carnage among metal and mining companies. Both Rio Tinto (NYSE: RTP) and BHP Billiton (NYSE: BHP) dropped over 10%, killing over $25 billion in market cap. A recession would probably slow demand for commodities, driving the profits out of these companies. BHP has also talked about taking on tens of billions of dollars in debt to buy RTP. Such talk is not popular in times of tight credit.
The large banks in France, lead by BNP Paribas, fell through recent trading lows.
Hardly a single stock was spared.
Douglas A. McIntyre is an editor at 247wallst.com.
Philips said the acquisition significantly strengthens Philips Healthcare, will provide a strategic platform for further growth, and also leverages the acquisitions of Lifeline and Raytel.
Pennsylvania-based Respironics manufactures masks and ventilators for use in patients homes for the treatment of breathing disorders.
General Electric
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