Legg Mason Declines on Earnings

123jump.com Staff
10 May, 2006
New York City

The Federal Reserve raised interest rates a quarter percent to 5%, the highest level in five years, forcing U.S. stocks down. Whirlpool Corp. said it will consolidate operations by cutting 4,500 jobs and closing several plants as part of its acquisition of Maytag Corp. Baidu.com, Inc. reported earnings of $4.4 million. Legg Mason was 22 cents a share short of expectations. Toyota reports that it sold .3 million more vehicals in North America that it did a year ago.

[R]3:25 PM Toyota shares down 34 cents in afternoon trading.[/R]
Toyota Motor Corp ((TM)) reported a 39% rise in fourth quarter profit. Quarterly sales were up 18% from a year ago. It sold 7.97 million vehicles around the world, up from 7.4 million a year ago, and sold 2.6 million in North America, up from 2.3 million last year. The stock price has risen from $73 a year ago to $121. Legg Mason, Inc. ((LM)), a global asset management firm, reported its net income $1.03 a share, short of the anticipated $1.25 a share, but up from 98 cents a year ago. Its shares fell 6.1% in the Wednesday afternoon trade.

Baidu.com, Inc ((BIDU)), a Chinese-language Internet search provider, reported Q1 earnings of $4.4 Million vs. $312,000 a year ago. Revenue increased 196.8% to $16.9 million, compared to the estimated $15.14 million up from $5.6 million a year earlier. Global Imaging Systems, Inc. ((GISX)), a provider of office technology solutions, reported Q4 earnings of 63 cents a share, up from 57 cents a year ago. Revenue rose from $247.4 million to $268.6 million in the latest three month period vs. one year ago. It has earned 64 cents a share in the latest quarter.


[R]12:30PM European markets closed in the red.[/R]
European markets extended losses to finish in the negative ahead of the U.S. Fed Reserve interest-rate decision. The U.S. central bank is expected to raise its federal funds target rate to 5%. Weaker dollar against the euro pressured export-related issues like tech stocks Infineon Technologies, Philips Electronics, and SAP. However, carmaker DaimlerChrysler rose 2.5% as Deutsche Bank upgraded the company to buy from hold and lifted its price target to 59 euros from 45 euros. The euro rose 0.4% to $1.2806. The German DAX 30 dropped 0.4%, the French CAC 40 declined 0.6%, and London’s FTSE 100 fell 0.4%.

Crude oil prices eased back as weekly petroleum report showed increasing gasoline supplies. Light sweet crude June delivery fell 19 cents to $70.50 a barrel. Gasoline rose 3 cents to $2.08 a gallon, while heating oil was up to $2.004. London Brent lost 23 cents to $70.85. European gold crossed $700, hitting a new 255-year high on weaker dollar and global tensions. In London the precious metal rose to $701 per troy ounce from $695.90. In Zurich gold gained to $701.70 from $694.40. In Hong Kong gold jumped $23.13 to $702.50. Silver closed at $14.30, up from $14.20. The U.S. dollar traded mixed in European trading ahead of FOMC meeting. The euro traded at $1.2796, up from $1.2753. The dollar bought 110.53 yen, down from $111.10. The British pound was quoted at $1.8638, down from $1.8657.

[R]11:30AM The Dow advanced on General Motors.[/R]
Stocks gained some ground after the early weakness and the major equity indices turned mixed. The Dow moved to the upside, strongly supported by shares of General Motors ((GM)) which extended yesterday’s gains to post an advance of 2.3%. The stock rose to a six-month intraday high. Health insurance stocks showed significant strength in early trading, with the Morgan Stanley Healthcare Payor Index up 1.4%, offsetting the 1.1% loss posted on Tuesday. The sector was sent higher by Sierra Health Services ((SIE)) as shares of the health insurer rose 5.7% after Fitch Ratings upgraded the company''s senior debt ratings to BBB- from BB+. Airline SkyWest ((SKYW)) was a conspicuous gainer among airline stocks with a gain of 6.3%. Airline stocks moved to the positive, benefiting from recent weakness in the price of crude oil. The Amex Airline Index rose 1%. The decrease in oil prices followed a petroleum report that showed rising U.S. gasoline inventories. The price fell to $70.40, contributing to some weakness among energy stocks. The Philadelphia Oil Service Index and the Amex Oil Index lost 0.6%.

The tech-heavy Nasdaq remained below the flat line, dragged by weakness among semiconductor stocks, with the Philadelphia Semiconductor Index down 1.6% The networking sector also pressured the tech index, with Cisco ((CSCO)) shares down 2.9% on disappointing Q4 guidance. In late morning trading, the Dow added 7.84, or 0.07%, to 11,647.61, a fresh six-year high. The Standard & Poor''s 500 index was down 1.62, or 0.12%, at 1,323.52, and the Nasdaq composite index sank 9.59, or 0.41%, to 2,328.66. Bonds inched upward as traders awaited the Fed''s statement. The yield on the 10-year Treasury note slid to 5.11% from 5.13% late Tuesday.


[R]Crude oil and gasoline inventories slightly rose.[/R]
Crude oil inventories ticked up in the latest week, according to government statistics released Wednesday. The advance was far more modest than the gains posted in the previous week. Meanwhile, stocks of gasoline also pushed higher, building on the prior week''s advance. he Department of Energy''s Energy Information Administration revealed that crude oil inventories advanced by 300,000 barrels for the week ended May 5. Specifically, the measure rose to 347.0 million barrels from the prior week''s level of 346.7 million barrels. The move in the latest period added to a gain of 1.7 million barrels recorded in the previous week. This advance was preceded by a decline of 200,000 barrels in the prior week and a slide of 800,000 barrels in the week before that. In the most recent week, oil inventories were 4.9% higher than their levels of the same time last year. Gasoline inventories posted a week-over-week advance of 2.4 million barrels, the government said. This followed an advance of 2.1 million barrels in the previous week, which broke an 8-week streak of losses. In the latest period, gasoline stocks were 3.8% below their levels of last year. Inventories of distillate fuel oil recorded a gain in the most recent week, rising by 200,000 barrels. This followed a decline of 1.1 million barrels in the previous week.

[R]10.00 AM Indian index keeps on hitting new highs[/R]
Sensex in India put another 98.52 points or 0.79% to finish at an all-time high of 12,612.38. At one time in the trading it peaked at 12,624.37. The BSE recorded a turnover of Rs 4,815 crore, down from yesterday’s Rs 5,045 crore. The market breadth was robust, as the ratio of gainers to losers was 1.8:1. Bank shares led the gainers, as ONGC soared 3.5% to Rs 1,491 on 0.8 million shares, following its agreement with Halliburton Co to lift the output of its fields in Assam. ICICI bank also gained 3.7% to Rs. 663, while HDFC advanced 1% to Rs 863. State controlled banks advanced as well, State Bank of India gaining 2.4% to Rs 998.80 and Syndicate Bank soared 5% to Rs 100.50. Metal shares rose as well. Hindalco surged 5% to Rs 241.80, Nalco advanced 3% to Rs 324.50 and Sterile Industries ended up 2.6% to Rs 585.

Heavyweight Reliance Industries advanced 1.2% to Rs 1,169. Reliance shares soared ahead of the listing of Reliance Petroleum which is expected to be launched at Rs 80-82 up from its IPO price of Rs 60. L&T also put up 1% to Rs 2,802, having as many as 2.4 lakh shares change hands on the day. Cement shares were the main losers, as media reported that the government will most likely discuss ways to stem rising prices. ACC declined 2.2% to Rs 978, Gujarat Ambuja Cements lost 2.4% to Rs 117.25 and Grasim shed 1.5% to Rs 2395. Auto stocks were the other decliners with TVS Motors losing 2.8% to Rs 165, Maruti Udyog fell 1.6% to Rs 948.70 and Tata Motors shedding 1.4% to Rs 971.


[R] 9:45AM Stocks opened lower, dragged by Cisco and Federated.[/R]
Stocks opened lower Wednesday ahead of FOMC meeting as investors anxiously awaited Fed Reserve interest-rate decision and signals that the Fed will make a pause in rate increases. Negative sentiment was also generated by disappointing forecasts from Cisco Systems and Federated Department Stores. A day after Dell ((DELL)) posted lowered expectations, Cisco ((CSCO)) released modest outlook exerting further pressure on tech stocks. Federated also weighed on market mood after the company posted Q1 net income loss on costs from acquiring May Department Stores Co.

The broker/dealer sector stood out as a notable decliner, led by Legg Mason ((LM)). The asset management firm fell more than 5.5% on disappointing earnings news. Some weakness was visible in the tech sector, with the semiconductor and disk drive sectors each down a little less than 1%. In contrast, housing stocks moved higher in the early trading hours, recovering from recent losses. In the first hour of trading, the Dow fell 15.20, or 0.13 %, to 11,624.57, but still stood at a six-year high. The Standard & Poor''s 500 index was down 2.55, or 0.19%, and the Nasdaq composite index sank 8.12, or 0.35%. Bonds were little changed as traders awaited the Fed''s statement. The yield on the 10-year Treasury note slid to 5.12 percent from 5.13 percent late Tuesday


[R]9:00 AM Stock futures indicated a weak market opening.[/R]
U.S. stock futures traded weak, awaiting the Fed Reserve announcement on interest rates, with the market growing optimistic that the Fed will signal a pause in rate increases. The benchmark fed funds rate is expected to be raised to 5% from 4.75%. On Tuesday, Dell ((DELL)) put pressure on technology stocks after releasing a profit warning, while a rally in General Motors ((GM)) sent the Dow to a six-year high. After the closing bell Tuesday, Dow component Disney ((DIS)) reported quarterly earnings increase, exceeding analyst expectations. Technology bellwether Cisco Systems Inc. ((CSCO)) reported better-than-expected quarterly earnings, but fell about 0.8% in electronic trading before the opening bell on a disappointing revenue forecast. Baidu.com Inc. ((BIDU)) shares jumped 29.3% before the opening bell after China''s most popular Web search system reported Tuesday sharply higher quarterly earnings. Symantec Corp. ((SYMC)) rose 2.5% on strong quarterly results that topped Wall Street targets. Standard & Poor''s 500 futures were down 1 point, slightly below fair value. Dow Jones industrial average futures were down 3 points, and Nasdaq 100 futures were down 3.75 points.

Crude oil prices steadied ahead of petroleum report, expected to show gasoline supplies. Light sweet crude June delivery traded unchanged at $70.69 a barrel. Gasoline marginally rose $2.0489 a gallon, while heating oil was up to $2.000. Natural gas gained about 5 cents to $6.626 per 1,000 cubic feet. London Brent added 10 cents to $71.18. European gold crossed $700, hitting a new 255-year high on weaker dollar and global tensions. In London the precious metal rose to $704.30 per troy ounce. In Zurich gold gained to $702.90. In Hong Kong gold jumped $23.13 to $702.50. The U.S. dollar dropped to one-year low in European trading ahead of FOMC meeting. The euro traded at $1.2784. The dollar bought 110.56 yen. The British pound was quoted at $1.8680.

Foster Wheeler Ltd, ((FWLT)), alternative-fuels facilities producer, reported a Q1 net income loss of 8 cents a share because of payments to warrant holders, down from a net income of 3 cents a share in the year-ago period. Otherwise the company said that net income advanced sharply to $15.7 million from $1.2 million in the year-ago period. If not for the allocation, the company would have earned 23 cents a share, including expenses of 3 cents a share for its adoption of SFAS No. 123R. Revenue advanced to $646 million from $523 million.

Reliant Energy Inc. ((RRI)), energy company, reported its Q1 net loss widened to 44 cents a share, from 8 cents a share in the year-earlier period despite revenue growth. Its loss from continuing operations rose to $81 million from $54 million. Adjusted EBITDA, advanced to $76 million from $21 million due to net gains from sales of emission allowances. The company missed analysts’ forecasts for a loss of 33 cents a share.

Rural/Metro Corp, ((RURL)), provider of medical transportation, reported its fiscal Q3 net loss advanced to 16 cents a share, from 13 cents a share a year earlier. The company added that Q3 earnings include 18 cents a share from discontinued operations. The company also announced a $2.5 million charge pre-tax charge related to an ongoing government investigation into certain of its former Texas operations. Revenue advanced 6.8% to $137.9 million.

Southern Union Co., ((SUG)), energy company, reported Q1 earnings after the payment of preferred dividends of 82 cents a share, up from 81 cents a share a year ago. On a continuing operations basis, the company posted a profit of 60 cents a share, up from equivalent earnings of 48 cents a share a year-ago on revenue growth . The company missed analyst for a profit of 85 cents a share in Q1. Southern Union attributed the rise in earnings from continuing operations to improvement in its transportation and storage business and the acquisition of the Sid Richardson Energy Services business.

Teva Pharmaceutical Industries Ltd, ((TEVA)), pharmaceutical company, reversed to a Q1 loss of. $1.40 per ADR, down from a profit of 38 cents per ADR a year-ago. On an adjusted basis, before one-time charges, it earned 37 cents per ADR. The first quarter 2006 results includes a write off of $1.2 billion of in-process research and development and $64 million of inventory step-up in connection with the acquisition of Ivax, Teva added. The company missed analysts’ forecasts for a profit of 41 cents per ADR.

Ferro Corp, ((FOE)), performance materials producer, reported net income for 2005 after payment of preferred dividends of 30 cents a share for the year, down from 55 cents a share in 2004. On a continuing operations basis, Ferro gained 32 cents a share, for 2005, down from a equivalent profit of 62 cents a share a year-ago. The periods include charges coming at 24 cents a share and 2 cents a share, respectively. Sales advanced 2% in 2005 in comparison to 2004. Ferro added that these results are still preliminary as it continues to work to complete its financial filings for the year, an effort it expects to finish in September.

Legg Mason Inc., ((LM)), asset manager, reported fiscal Q4 net income advanced to $1.03 a share, up vs. 98 cents in the year-ago quarter. The company missed analysts’ expectations for $1.25 a share.

[R]8:15AM Asia closed largely lower. China Shanghai Composite advanced.[/R]
Asian-Pacific benchmarks closed broadly in the red, hurt by weaker dollar and cautious trading ahead of U.S. FOMC meeting and interest-rate decision. Strong blue-chip stocks rally in the U.S. failed to provide solid support. The Nikkei dropped 1.4% to 16951.93 as the weak dollar weighed on exporter-related issues. Kyocera fell 2.6%, Honda Motor declined 2.3%, Sony lost 1.2%, and Advantest Corp. shed 1.2% The dollar bought 110.45 yen. After market closed, Toyota Motor reported 39% increase in Q4 net income. Across the region, Shanghai Composite rose 1%, extending gains to hit a 2-year high on fresh fund flows. Hong Kong’s Hang Seng fell 0.3%, dragged by property stocks which offset gains in HSBC. Taiwan Weighted index dropped 0.9% on weak financial stocks and profit taking. South Korea’s Kospi closed flat.


[R]7:45AM European markets traded in a tight range at mid-day.[/R]
European markets traded in a lackluster fashion at midday as investors were cautious, eagerly awaiting the U.S. Fed Reserve interest-rate decision. The U.S. central bank is expected to raise its federal funds target rate to 5%. Weaker dollar against the euro pressured export-related stocks like tech stocks with Infineon Technologies and Philips Electronics moving lower. The euro rose 0.3% to $1.2794. However, gains in the automotive sector helped limit the downward trend. Automakers were supported by DaimlerChrysler which rose 2.5% as Deutsche Bank upgraded the company to buy from hold and lifted its price target to 59 euros from 45 euros. The German DAX 30 gained 0.2%, the French CAC 40 lost 0.1%, and London’s FTSE 100 edged down 0.03%.