U.S. stock futures were higher today, indicating a possible positive start on Wall Street after the Federal Reserve, in a coordinated effort with other central banks acted to calm the markets, injecting $180 billion in to money markets. Also in focus are WaMu and Morgan Stanley, both are said to be on the block. Weekly initial jobless claims will be announced an hour before the market opens, and could sway sentiment in the face of the deteriorating employment picture. The Philly Fed survey for September and August leading indicators are also on tap.
The New York Times reported that according to its sources,Morgan Stanley (NYSE: MS) is considering a merger with Wachovia (NYSE: WB). Morgan Stanley is considering other options as well, but so far all talks are preliminary and no deal may emerge. According to CNBC, Chinese bank Citic is also in talks with Morgan Stanley. If a deal goes through, it would leave Goldman Sachs (NYSE: GS) as the last one of the large independent brokers. MS shares are up 4% in pre-market trade, WB's up 10%.
Another option for Morgan Stanley reported by CNBC is sale of a minority stake to China's sovereign wealth fund, China Investment Corporation(CIC), which already owns 9.9% of Morgan.
The New York Times also reported Wednesday that according to their sources, Washington Mutual (NYSE: WM) has also begun exploring a sale in the event that it cannot find some other way to raise additional capital. Washington Mutual has hired Goldman Sachs to assess its options, which could include Wells Fargo (NYSE: WFC), JP Morgan Chase (NYSE: JPM) and HSBC (NYSE: HBC). According to Bloomberg, Citigroup Inc (NYSE: C) and Bank of America Corp (NYSE: BAC) have also expressed interest. WaMu shares are up 14% in pre-market trade. In general, all finanacial are up in pre-market over 2% and higher.
Last week's preview raised the question of whether consumers were turning to comfort foods in these uncertain times, specifically in terms of second quarter earnings of Campbell Soup (NYSE: CPB) and Krispy Kreme (NYSE: KKD). Campbell's strong earnings growth topped expectations, while Krispy Kreme narrowed its loss, though it fell short of estimates.
This coming week should bring reports from more food-related companies, from cereal maker General Mills and food packager CongAgra to grocery chain Kroger, to the parent companies of restaurants Cracker Barrel, Olive Garden, Red Lobster, Carl's Jr., and Hardees. Also look for reports from tech-related companies such as Oracle, Adobe, and Palm, as well as from financials Morgan Stanley and Goldman Sachs, and from economic bellwether FedEx.
Here's what analysts surveyed by Thomson Financial are expecting from some of the companies reporting earnings this week, as compared to their results from the same period of last year:
Today was a mixed bag. Shares spent most of the day in the red but staged a late day rally. Oil prices remained under $110 per barrel, which pulled down energy and commodity stocks yet again. Even the brief relief in today's Beige Book from the Federal Reserve hardly helped the situation despite it starting to see some energy price relief. The good news is that shares came back up in the last hour, masking some of the intra-day selling.
Here are today's unofficial closing bell levels: DJIA 11536.87 (+19.95) S&P500 (1275.35 (-2.22) NASDAQ 2334.74 (-14.50) 10YR T-Note 3.697% (-0.049%) Top Analyst Downgrades Top Analyst Upgrades
Lehman Brothers Holdings Inc. (NYSE: LEH) shares managed to show gains of more than 4% to $16.72 in today's final minutes after indicating down early on. Despite the on-again off-again stance with the Koreans, Doug was right ... this is like getting a root canal. CNBC's Charlie Gasparino noted that he has also said that HSBC may be interested.
Posted Jun 26th 2008 3:16PM by Tom Taulli Filed under: Deals
According to a number of studies, Wall Street's initial reaction to a proposed buyout is a good indication of whether a deal will pan out or not. So when Pier 1 Imports (NYSE: PIR) recently made an $88 million bid for Cost Plus World Markets (NASDAQ: CPWM), and the response from investors was immediately negative (the stock price fell 20%), it was probably telling.
I guess Pier 1 was listening. On Wednesday, the company said it was revoking its bid.
Funny enough, the CEO of Pier 1, Alex W. Smith, originally called the deal "compelling" and that it "would create significant value for the stakeholders of both companies."
Oops.
But now, according to Smith, it looks like the deal will be too expensive. After all, it appears that Cost Plus is going to fight.
Yet, why not try to fight back? Pier 1 does have some leverage. Plus, there are certainly cost synergies (basically, the industry really needs consolidation).
Then again, when it comes to Wall Street, sometimes it is easier to just give in.
Reporting today are the agrichemicals firm Monsanto (NYSE: MON) -- AP Preview, and after the close, software giant Oracle (NASDAQ: ORCL) and Nike (NYSE: NKE).
Reported Tuesday:
Jabil Circuit (NYSE: JBL) shares are up nearly 11% in premarket trading after the company reported its profit soared as revenue grew and costs declined, topping third-quarter earnings estimates. Merrill Lynch upgraded Jabil from Neutral to Buy.
Red Lobster operator Darden Restaurants (NYSE: DRI) shares are up 1.9% in premarket trading after it also topped quarterly earnings estimates, postinga higher quarterly profit, boosted by the Olive Garden chain, and lower costs that helped raise operating profit at its Red Lobster chain.
Meanwhile Pier 1 Imports (NYSE: PIR) shares were also nearly 5% higher in after-hours trading Tuesday after the retailer said it abandoned plans to take over rival home furnishings retailer Cost Plus (NASDAQ: CPWM) for $88 million.
On Thursday, publisher John Wiley & Sons Inc. (NYSE: JW.A) reported that its fiscal fourth-quarter earnings more than doubled. Not so good news from retailer Pier 1 Imports Inc. (NYSE: PIR), which said Thursday that its fiscal first quarter loss narrowed, but still fell short of analysts' forecasts.
Wiley said that, for the quarter ended April 30, earnings soared to $29 million, or 49 cents per share, from $14.4 million, or 25 cents per share, in the same period of the previous year ago. Revenue grew 11% to $433 million. Results were lifted by the company's 2007 acquisition of Blackwell Publishing.
Analysts polled by Thomson Financial had expected 35 cents per share on $427.1 million in sales.
For the full year, earnings rose 48% to $147.5 million, or $2.49 per share, and revenue grew 36% to $1.67 billion. Wiley also announced its 15th consecutive annual dividend increase.
John Wiley shares rose $1.10 Thursday to $49.76, just shy of its 52-week high, but was trading lower Friday morning. Shares are up 13.3% year to date.
Stocks were up today, but less than you might imagine after a large drop of more than $4.00 on oil in late-day prices. So much for Goldman Sachs' raising oil target again today, as well as lifting the oil services sector and upping price targets for some of the sector's stocks .
Here are today's unofficial closing bell index levels:
Evergreen Solar Inc. (NASDAQ: ESLR) was one of the huge winners today with shares up over 20% at $12.33 in today's final minutes. The company announced a huge second round contract that added significantly to its backlog.
Huntsman Corporation (NYSE: HUN) imploded after its private equity buyout was officially notified as "being killed" by the buyers, and shares were down 38% at $12.79 at the end of the day. Mark that as an all-time low.
Things are getting hostile in the furniture business. That is, Pier 1 Imports (NYSE: PIR) has announced a $4 unsolicited bid for rival Cost Plus (NASDAQ: CPWM). That comes to about $88 million. On news of the deal, Cost Plus' shares rose 13% to $3.47.
Although, the folks at Cost Plus are skeptical, calling the deal "highly conditional." Of course, the board will meet to discuss the proposal.
With the recession and real estate bust, it's a good bet we'll see more consolidation in the furniture business. Simply put, it will be a way to cut capacity as well as reduce cost structures.
No doubt, Cost Plus will want to get a higher price, but in light of the challenging environment, that's probably going to be tough. Besides, Cost Plus and Pier 1 have many common shareholders, who may pressure for a transaction. What's more, Cost Plus's "poison pill" will expire on June 30th.
Shares of Pier 1 Imports (NYSE: PIR) tumbled more than 8% on Monday after Morgan Keegan analyst Laura Champine downgraded the stock to Underperform from Market Perform. She wrote in a note: "We are skeptical about Pier 1's ability to drive traffic without discounting, and our recent checks at Pier 1 suggest that the company is still using aggressive promotions to clear inventory ... If the company is being forced by a weakening consumer to stray from its plan of reducing store-wide markdowns, the margin impact could be extremely detrimental to earning."
Pier 1's struggles have been well-documented. The company is attempting a dramatic turnaround under the leadership of a new CEO after years of underperformance and tough competition from lower cost providers of similar products like Target (NYSE: TGT) and Wal-Mart (NYSE: WMT).
Turnarounds are always tough; most of them have a way of not really turning around at all. A weak economy and cautious consumer spending could be enough to make a very tough turnaround nearly impossible.
It appears that more than a few investors are betting this turnaround will end badly -- roughly 20% of the float is short.
Stock futures inched lower this morning, but seem to look for direction, somewhat cautious following yesterday's a late-session rally and ahead of a speech from Federal Reserve Chairman Ben Bernanke and retailers reporting December sales.
Wednesday, after going sideways most of the session, U.S. stocks rallied with the Dow industrials ending 146 points, or 1.16% higher, the S&P 500 was up nearly 19 points, or 1.36%, and the Nasdaq Composite snapped an eight-day losing streak to finally rise 34 points, or 1.39%.
Not much is on the economic docket today. Weekly initial jobless claims will be reported an hour before the opening bell, which may be looked at more than usual given the last employment report, and November wholesale inventories will be released after the session has started. What investors will be focusing on this morning is December sales data from retailers, which is expected to be one of the weakest with an overall gain of 1%. Already Costco Wholesale Corp. (NASDAQ: COST) said its December same-store sales rose 7%, beating analysts' expectations of 5.7%, according to Thomson Financial. Costco may be one of the few that beat estimates though. Pier 1 Imports (NYSE: PIR) saw its sales rise 1.3% in the five weeks to Jan 5.
The Street is also waiting for Bernanke's speech later in the day, where he would address problems in the housing market.
Pier 1 Imports (NYSE: PIR) is North America's largest specialty retailer of imported decorative home furnishings and gifts. The firm offers a wide selection of furniture, lamps, vases, baskets, dinnerware, bath products, bedding accessories and other specialty products through more than 1,100 stores. Goods are imported from more than fifty countries. As much as three-quarters of the product assortment consists of items introduced by the chain within the preceding year. Bed Bath & Beyond (NASDAQ: BBBY) is a major competitor.
The company pleased investors last month, when it reported a fiscal Q3 loss of 11 cents per share and revenues of $374.2 million. Analysts had been looking for a loss of 24 cents and $374.6 million. Merchandise margins rose to 53% from 49.7% a year earlier and gross profit margins were 33.6% of sales, up from 30.9% a year ago. Analysts commented positively on the firm's cost-cutting efforts and on the high level of holiday traffic in the stores. Morgan Keegan upped the shares to "market perform". Wedbush Morgan boosted its rating to "buy" and issued a $7.50 price target.
The Wall Street Journaloffered (subscription required) one of the first bullish pieces I've seen on Pier 1 Imports (NYSE: PIR) in a long time:
Nine months into his first year as chief executive officer, retailing veteran Alex W. Smith has cut costs and slowed the pace of sales declines at the Fort Worth, Texas, company. Adding impulse items such as Halloween merchandise to storefronts, scrapping television ads in favor of spunky and targeted mailings, and implementing other changes have produced what Mr. Smith has called "seedlings of success." ... Couple those positives with recent insider buying and a coming show-and-tell by management, and some fans see a compelling case for the stock to double or triple within a couple of years.
I'll believe it when I see it. Much though I love Pier 1, the store just isn't as unique as it once was. Big box competitors like Target (NYSE: TGT) are offering very, very similar stuff -- for a lot less money. The Pier 1 brand probably still has some value. But buyout rumors have been circling for years as the stock has declined and so far nothing has come of it. And let's face it: You can only close so many stores, and watch your sales plummet as margins decline for so long before your brand starts to lose some of its equity.
Back in June, I wondered whether some kind of partnership with Wal-Mart (NYSE: WMT) could be beneficial. Wal-Mart needs some way to compete with Target for more upscale buyers, and perhaps a less-expensive line of Pier 1 products could help Pier 1 boost its sales -- the downside of course would be further erosion of the brand's equity, but many big-name brands offer off-priced products through the big boxes.
According to The Associated Press, the home decor industry is the "latest casualty of the ongoing housing and mortgage lending bust".
The purchase of new home furnishings is an easy expenditure for consumers to put off -- if people are anxious about their mortgage, or disheartened that their home isn't appreciating in value like it was a few years ago, that old couch starts to look a lot better.
All of this makes Pier 1 Imports (NYSE: PIR) look like a tough bet. The stock rallied last week on an analyst upgrade, but continues to face sales and margin pressures, in part because of lower-price competitors like Wal-Mart (NYSE: WMT). The company is in the midst of an attempted turnaround but the combination of competitive pressures and an industry-wide slowdown that recently claimed Bombay could be too much for the company to handle.
In the most recent quarter, Pier 1 saw its sales decline 7%, and it's going to be hard to turn that around if the industry as a whole continues to sputter.
In June, I suggested that it might be time for Wal-Mart and Pier 1 to team up. if Pier 1 continues to struggle with sales and profitability, and Wal-Mart continues to struggle to reach the more upscale demographic Target (NYSE: TGT) has nailed, it's something that both parties might want to consider.
U.S. stock futures were higher today, indicating a possible positive start on Wall Street after the Federal Reserve, in a coordinated effort with other central banks acted to calm the markets, injecting $180 billion in to money markets. Also in focus are WaMu and Morgan Stanley, both are said to be on the block. Weekly initial jobless claims will be announced an hour before the market opens, and could sway sentiment in the face of the deteriorating employment picture. The Philly Fed survey for September and August leading indicators are also on tap.
Last week's preview
Today was a mixed bag. Shares spent most of the day in the red but staged a late day rally. Oil prices remained under $110 per barrel, which pulled down energy and commodity stocks yet again. Even the brief relief in today's Beige Book from the Federal Reserve hardly helped the situation despite it starting to see some energy price relief. The good news is that shares came back up in the last hour, masking some of the intra-day selling. 
According to a number of studies, Wall Street's initial reaction to a proposed buyout is a good indication of whether a deal will pan out or not. So when 
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Pier 1 Imports
Wiley said that, for the quarter ended April 30, 
Stock futures inched lower this morning, but seem to look for direction, somewhat cautious following yesterday's a late-session rally and ahead of a speech from Federal Reserve Chairman Ben Bernanke and retailers reporting December sales.
The Wall Street Journal 
Is a second stimulus check up ahead?
Coke (KO) moving up nicely following Q3 earnings
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