Today's late rally tied to breaking news of President-elect Obama's naming Timothy Geithner as Treasury Secretary for the next administration, but there was also an end of week bargain-buying hunt. Today was also options expiration. Whatever the real determination was, at least it was not yet another miserable day of relentless selling.
Gap Inc. (NYSE: GPS) posted earnings at $0.35 EPS on revenue of $246 million. While other retailers are stinking up a storm, this compares to earnings of $0.30 EPS and revenue of $238 million last year. While sales did drop over 7% to $3.56 billion, analysts' estimates from Thomson Reuters (First Call) were only $0.34 EPS and $3.57 billion. Shares were up 21% at $11.62 right before the close.
Microsoft Corp. (NASDAQ: MSFT) hired Sean Suchter, the former head of search operations at Yahoo! This could give them the brains and engine behind the search business without ever having to pay Yahoo! a dime. Shares were up 8% at $19.01 shortly before the close.
Nike Inc. (NYSE: NKE) managed a show of force when times are tough. The sporting apparel giant raised its quarterly dividend payout by 9% to $0.25. Shares were up over 6% at $46.41 right before the close.
USG Corp. (NYSE: USG) shares surged after disclosing that Warren Buffett and Faifax invested a combined $400 million into the home building products maker. This was on top of their investments in the company in the past. Shares were up 24% at $7.04 shortly before the close.
Wal-Mart Stores Inc. (NYSE: WMT) rallied after the board of directors elected Mike Duke to replace Lee Scott as President and CEO of Wal-Mart, effective February 1, 2008. Shares were up almost 2% at $51.55 right before the close.
TheStreet.com's Jim Cramer says the bank will be ready if the bailout plan is approved. If not, only BofA makes sense.
So what happens if we get the deal? What occurs? Will we see immediate deals? I think it depends on the accounting.
If an acquiring bank were to buy Washington Mutual (NYSE: WM) (Cramer's Take), say, without any assurances that those mortgages can be written down to where they can be flipped, the acquirer would be committing suicide.
That makes Washington Mutual just a so-so bet, although its $300 billion in deposits make it a terrific target. Put it this way, the FDIC will own WaMu in a week without the plan, and that will be mighty ugly for the FDIC. But it could happen anyway, given how bad the WaMu loan process was.
Instead, I think the focus will be on Wachovia (NYSE: WB) (Cramer's Take) because I believe Bob Steel has the best handle on what the process will look like. I think he is ready to dump his bad bank on the government in return for a stake by the government in it and then his good bank can thrive. I think that Wachovia goes from a dicey situation to one of the best ones.
U.S. stock futures were higher earlier this morning, as investor continued to watch the debate over the $700 billion bailout plan following President Bush's speech Wednesday when he warned "Our entire economy is in danger." But then General Electric cut its earnings estimates and futures began coming off highs. Now it seems stocks could start the day mixed. Also on tap today are data on durable-goods orders and new-home sales for August, as well as the weekly initial jobless claims number.
General Electric Co. (NYSE: GE) has lowered its outlook for third-quarter and full-year earnings, citing "unprecedented weakness and volatility in the financial services markets." The new guidance is far below analyst estimates. GE has also reaffirmed its commitment to maintaining a 'AAA' credit rating, and is taking steps to bolster its capital and liquidity position including suspending the current GE stock buyback, but not touching the dividend. GE shares are down nearly 5% in pre-market trading.
Delta (NYSE: DAL) and Northwest (NYSE: NWA) shareholders are to vote Thursday on the proposed deal to combine the two. The votes are expected to overwhelmingly back the deal. With that, the airlines will then need
to pass two more hurdles: U.S. regulatory approval and a pending federal lawsuit seeking to block the deal after which the two would become the world's biggest carrier. Shares of both are indicating higher.
As I noted in my earnings preview earlier this week, Wall Street was looking for 92 cents earnings per share for Nike's first fiscal quarter. The company surprised to the upside with a reported EPS of $1.03 a share. While this is down year-over-year from the $1.12 EPS it reported last year in the first quarter, it was still a good quarter considering the current economic environment.
Revenues grew nicely for Nike in the quarter, up a very respectable 17% to $5.4 billion. This also came in above analyst estimates of $5.19 billion.
One aspect of the company's overall business I discussed in the preview was that last quarter the company was able to overcome weak U.S. sales numbers by posting strong growth in international markets. This quarter, too, a weak U.S. dollar has helped boost sales in India and Asia, in particular China, where the recent summer Olympic games were held.
U.S. stock futures are (finally) higher this morning, reacting to Warren Buffett's investment in Goldman Sachs as a vote of confidence in (what's remaining of )the financial markets. Later this morning, August existing home sales is due out, and it isn't expected to show any recovery or bottom. As a catalyst to this crisis, much worse-than-expected data may cause further market declines. For now, though, it looks like stocks would start on a positive note. Goldman Sachs Group Inc. (NYSE: GS) -- Billioner investor Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A) said Tuesday it is investing at least $5 billion in Goldman. The AP reports that "In addition to buying $5 billion in preferred stock, Berkshire also got warrants to buy another $5 billion in Goldman's common stock. Goldman also said late Tuesday it would raise another $2.5 billion in its own public stock offering." Seems Japanese bank Sumitomo Mitsui Financial may also invest between 100 billion and 300 billion yen in Goldman. GS stock is up over 4.5% in pre-market trading. The news gave a boost to Morgan Stanley (NYSE: MS) as well and its stock is also up about 4% in pre-market. American International Group Inc. (NYSE: AIG), Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) -- The FBI is investigating these financial institutions for potential fraud. Lehman Brothers Holdings Inc. (OTC: LHEMQ) also is under investigation. The news doesn't seem to affect shares of these companies, though, as AIG stock is up over 3% in pre-market trading, while FNM and FRE shares up over 10%. AIG also took the $85 billion loan from the N.Y. Fed.
Wednesday afternoon following the market close, Nike Inc. (NYSE: NKE) will be reporting its fiscal first quarter earnings, and analysts are looking to see the company show earnings for the quarter of 92 cents per share.
The last time that the company reported was back on June 25, when it was able to beat out Wall Street estimates by two pennies, with a reported 98 cents per share for its fiscal fourth quarter, mostly a result of strong international demand, which was able to overcome weak consumer spending that hurt the company at home in the U.S. In fact, to find the last time that the company reported quarterly figures under Wall Street estimates, you would have to go all the way back to its fiscal fourth quarter 2006 when it missed by a penny, with a reported 70 cents per share.
On a year over year basis, should Nike come in with 92 cents per share, it would be a 16.9% drop from the $1.12 that it was able to earn during the first quarter of 2007.
Earnings reports continue to dribble in as the quarter winds down. Much of the attention this week will be on homebuilders KB Home (NYSE: KBH) and Lennar Corp. (NYSE: LEN) as investors look for any sign that the housing sector has bottomed (home sales numbers are also due out this week; see below). Analysts surveyed by Thomson Financial anticipate that both companies will report that they narrowed their losses in the most recent quarter.
KB Home's expected $1.25 per share loss, on revenue of $725.5 million, compares to the previous quarter loss of $3.30 and to a year-ago loss of $6.19. However, KB Home's losses in the past few quarters have been deeper than expected. The Los Angeles-based homebuilder's long-range earnings growth forecast is 10.5%, less than the S&P 500. Analysts continue to recommend holding KB Home, and have for at least 120 days. Shares, however, reached a new 52-week high of $31.69 on Friday, and they are up 10.5% year to date.
Lennar is expected to post a loss of 52 cents per share, on revenue of $1.1 billion. That compares to the previous quarter's per-share loss of 76 cents and to a year-ago loss of $3.25. While Lennar also has tended in the past few quarters to miss expectations, the Miami-based company managed a positive surprise in the first quarter of 2008. Lennar's long-range earnings growth forecast is 10.3%, about the same as KB Home's. Analysts also recommend holding Lennar. Friday, shares of Lennar also reached a 52-week high, $27.75, but they are down 6.4% year to date.
This post is part of our Ads Gone Bad series. Share your thoughts and memories of this ad in the comments, and be sure to check out our other posts on marketing gone wrong.
Bloggers weren't kind to Nike's campaign for its Hyperdunk basketball shoes in late July. Three printed ads produced by Wieden+Kennedy were blamed as fostering anti-gay messages.
Most of the ads depicted one basketball player dunking over another in vaguely homo-erotic positions (mostly with one player's face in the other's crotch) with 'trash talk'-type slogans such as "Punks Jump Up," "Say Hello," "That Ain't Right." The hot-button line was from a popular 1992 rap song, "Punks Jump Up to get Beat Down," by Brand Nubian. The song was a good theme for basketball courts but for one thing; its lyrics, which advocated violence against homosexuals and featured the line, "I ain't down with gays."
At first, Nike supported the ad campaign. But when bloggers took the shoe giant to task for its "ethical sloppiness," Nike and its ad agency backed off and decided to withdraw the ads "to underline our ongoing commitment to supporting diversity in sport and the workplace."
Nike's move coincided with an ad-industry-wide debate about the use of gay stereotypes. Mars, Inc. also pulled an ad during the same week based on its criticism from national homosexual groups.
Whatever other problems it has, Nike Inc. (NYSE: NKE) has, historically, been on the side of the gay community. From sponsoring athletes at the Gay Games to offering domestic partnership benefits to its gay and lesbian employees, there is little fault for a gay rights activist to find with Nike.
But that didn't stop some people from making up fake controversies. The company's ads for its Hyperdunk basketball shoes feature competing basketball players in photos with heads in each other's crotches, hands on butts, etc. -- stuff that happens all the time during basketball games.
Now, in response to the criticism, the company is pulling the ads, citing its desire "to underline our ongoing commitment to supporting diversity in sport and the workplace."
The ads are funny and they're not homophobic -- Nike's track record on these issues demonstrates that. LGBT activists who make an issue out of stuff like this marginalize the real issues, by making it look like there aren't bigger battles to fight. With one presidential candidate who just learned what "LGBT" means, there clearly are. But silly stuff like this will turn people off and prevent those issues from being taken seriously.
American International Group (NYSE:AIG) Raised to Buy at Banc of America, according to 24/7 Wall St. The financial news site also reports Nike (NYSE:NKE) Cut to Neutral at HSBC.
UBS upgrades AMR (NYSE:AMR) to Neutral from Sell, according to Briefing.com.
MOST NOTEWORTHY: CSG Systems, Bankrate and Intercontinental Exchange were today's noteworthy upgrades:
Citigroup upgraded shares of CSG Systems (NASDAQ: CSGS) following the company's Comcast (NASDAQ: CMCSA) contract renewal to reflect increased visibility and an attractive cash flow yield. The firm raised their target price to $18.50 from $15.
Roth Capital upgraded Bankrate (NASDAQ: RATE) to Buy from Hold citing valuation, the company's announced stock repurchase program, and expectations for some gross margin expansion in 2H08.
BMO Capital upgraded Intercontinental Exchange (NYSE: ICE) to Outperform from Market Perform as they believes the threat of negative legislation to ICE's business has declined sharply in recent days and that current valuation is factoring a much worse outcome than is likely.
OTHER UPGRADES:
Lennar (NYSE: LEN) was upgraded at UBS to Neutral from Sell.
eHealth (NASDAQ: EHTH) was raised to Perform from Underperform at Oppenheimer.
Nike (NYSE: NKE) was raised to Positive from Neutral at Susquehanna.
If you love Adidas' clothing and footwear then I have some good news for you. Adidas is eying to open about 2,300 new stores in China by 2010, lifting its total number to 6,300. The company's decision came as a result of strong demand from China even in times when we might expect to see some downturns.
Frederic Seiller, a vice president in charge of retail operations for Greater China, stated that the the global economic slowdown had no impact on Adidas's sales in China. In addition, the company is optimistic about its further gains, and forecast a nice demand from the local sportswear market. From this point of view, total sales in China are expected to come to 1 billion euros by 2010.
As well as getting growth in revenue, by opening its biggest store in the world in central Beijing Adidas aims to beat rival Nike Inc. (NYSE: NKE). Back in 2007, China became Nike's second-largest market, and its Chinese sales reached $1 billion in 2008.
This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.
"From sea to shining sea" aptly describes the distance between Nike (NYSE: NKE) and Under Armour (NYSE: UA). Nike is headquartered in Beaverton, Oregon, while Under Armour calls Baltimore, Maryland, home. Nike splashed onto the scene locally in Oregon in 1964 and has developed a true international brand. With the likes of Michael Jordan, Joan Benoit Samuelson and Tiger Woods serving as spokesmen for the company, Nike has transcended virtually every sport and every demographic group.
Under Armour, founded in 1995, at first appealed to the serious athlete with its moisture-wicking synthetic fibers that help keep sweat and moisture from the skin and help regulate body temperature during strenuous exercise. Under Armour then discovered it was unwittingly creating a fashion statement. Like Nike, Under Armour is also crossing over to various demographic groups and weekend warriors as well.
Nike has the famous Swish as its corporate logo, while Under Armour has branded the bold U over A insignia. Nike has established its brand globally with a dual strategy of major retailers selling its apparel and shoes and its own distribution system. Nike has over 250 NikeTown stores in the United States and over 230 internationally. With the retail store system Nike can control the entire purchase from apparel to shoes to socks to sweatbands. Under Armour has just begun its own retail stores with two prototypes, one in Maryland and one in Illinois. It sells its various products through multiple channels, including its own user-friendly e-commerce web site.
Today's late rally tied to breaking news of President-elect Obama's naming Timothy Geithner as Treasury Secretary for the next administration, but there was also an end of week bargain-buying hunt. Today was also options expiration. Whatever the real determination was, at least it was not yet another miserable day of relentless selling.
U.S. stock futures were higher earlier this morning, as investor continued to watch the debate over the $700 billion bailout plan following 
Wednesday afternoon following the market close, 
Earnings reports continue to dribble in as the quarter winds down. Much of the attention this week will be on homebuilders 
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This post is part of 
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