Costco Profit Misses Estimates

Elena
31 May, 2006
New York City

Stock futures were poised to a strong opening Wednesday ahead of the Fed Reserve FOMC minutes release. Costco, warehouse retailer, reported Q3 earnings of $235.6 million or 49 cents per share compared to $209.8 million or 43 cents per share last year. Analysts had been expecting the company to earn 50 cents per share.

[R]9:00AM Stock futures indicated a strong opening.[/R]
U.S. stock futures indicated a higher opening Wednesday, recovering from the heavy sell-off yesterday. Investors were focused on economic data with the Fed Reserve’s FOMC meeting minutes due out later in the day. Investors will search for hints on the outlook for interest rates after two years of rate hikes by the Fed. In corporate news, Costco Wholesale Corp. ((COST)) posted a profit slightly below analysts' expectations, while earnings from Tiffany & Co. Inc. ((TIF)) were above estimates. In deal news, equipment maker ADC Telecommunications Inc. ((ADCT)) agreed to buy Andrew Corp. ((ANDW)) in an all-stock deal worth about $2 billion. Shares of Andrew rose 22.7%. Shares of NRG Energy Inc.((NRG)) rose 23% in pre-market trading after power company Mirant Corp. ((MIR)) said it made an unsolicited offer to buy NRG for $8 billion but was rejected. Mirant shares were not trading on Inet. S&P 500 futures were up 5.10 points, slightly above fair value. Dow Jones industrial average futures were up 35 points, and Nasdaq 100 futures were up 7 points. The Dow Jones industrial average fell 1.6% on Tuesday on worries over consumer spending, with all 30 companies ending down for the first time since September 2004.

Layne Christensen Co, ((LAYN)), industrial services provider, reported Q1 earnings of 30 cents a share, up from a profit of 21 cents a share a year-ago. Revenue advanced 62.1% from $96.7 million in the same period a year ago. The company said revenue climbed across all of its divisions with the main advances in its mineral exploration and water and wastewater infrastructure businesses.

The Bon-Ton Stores Inc., ((BONT)), retailer, posted its Q1 loss broadened to 66 cents a share, from a loss of 27 cents a share in the year-ago period. Total sales doubled to $561.8 million from $262.5 million. The company posted income from operations of $6 million, compared to an operating loss of $3.8 million.

Dr. Reddy's Laboratories, ((RDY)), pharmaceutical producer, reported that Q4 loss narrowed to 236 million rupees ($5 million) against 520 million ($11 million) in the year-ago period on 64% higher revenue. Revenue amounted to 6.97 billion rupees ($157 million) from 4.25 billion ($96 million). Revenue aside from acquisitions rose 29% to 5.5 billion rupees, the company announced. Gross-profit margin narrowed to 42% of revenue. That resulted, the company said, from a smaller proportion of revenue from international branded products and thinner profit margins in the U.K. Some 11% of revenue came from Mexico, where profit margins are below the company average. Selling, general and administrative expense rose 32% to 2.3 billion rupees, the company added.

Tiffany & Co, ((TIF)), jewelry retailer, reported that Q1 earnings advanced to 30 cents a share, from 27 cents a share a year ago. Revenue advanced 6% to $539.2 million from last year's $509.9 million, as U.S. retail sales rose 2%, international sales grew 13% and direct marketing sales increased 4%. Worldwide same-store sales advanced 5%. The company beat analysts’ expectations for earnings of 28 cents a share. For the fiscal year ending in 2007, the company expects earnings of $1.77 to $1.82 a share and sales growth of almost 10%.

Costco Wholesale Corp, ((COST)), retailer, reported that Q3 net income advanced 12% to 49 cents a share on 11% revenue growth. The company missed analysts’ views by a penny. a share on revenue of $13.13 billion. The company added that comparable-store sales advanced 10%, international comparable-store sales were up 17% and U.S. comparable-store sales climbed 9%.


[R]8:00AM The America Channel Sued Comcast and Time Warner.[/R]
The America Channel, a startup cable television channel, sued cable giants Time Warner Inc. and Comcast Corp. on Tuesday trying to thwart their plans to acquire bankrupt Adelphia Communications Corp. Comcast and Time Warner agreed jointly last year to buy Adelphia, the nation's fifth-largest cable operator, for $17.6 billion, and divide up its systems between them. Comcast and Time Warner were accused of price-fixing and bid-rigging in their submission of a joint bid instead of competing against each other to acquire Adelphia's assets. Comcast serves more than 26 million cable TV customers, while Time Warner has more than 13 million. Adelphia, which filed for Chapter 11 bankruptcy in 2002 has over 5 million subscribers. The America Channel claimed in its lawsuit that the deal violated federal antitrust laws and would reduce competition in the cable TV industry. The lawsuit accused Time Warner and Comcast of conspiring to monopolize local cable systems and of using their alleged monopoly power to refuse to deal with independent networks. Except for seeking an injunction to block the Adelphia deal, TAC is also seeking monetary damages of about $1 billion.


[R]7:30AM Tokyo benchmark closed down on U.S. stocks and oil.[/R]
Asian markets finished lower. The Nikkei index shed 392.12 points, or 2.5%, to 15467.33, reaching its lowest close since Feb. 20. Among the decliners were Canon, dropping 4.2%, Nikko Cordial losing 2.39%. Real estate companies also declined, with Sumitomo Realty & Development down 2.9%. Steelmakers JFE Holdings reported 1% decline. Auto and bank stocks took no exception, as Honda Motor dropped 2.5% and Mizuho Financial Group lost 1.5%. Australian benchmark S&P/ASX 200 index plunged 103.7 points, or 2%, to finish at 5001.7 points on the day''''s low. BHP Billiton lost 3.8% and Rio Tinto was down also 3.8%. Singapore''''s Straits Times Index fell 2.3% in afternoon trade, to close at 2383.87 points.


[R]6:30AM Oil, banks and telecoms help Europe reverse into profit.[/R]
European markets rose by mid morning. London’s FTSE 100 recouped 0.5% to 5,679.5 , Frankfurt’s Xetra Dax edged up 0.2% to 5,633.39 and the CAC 40 in Paris added 0.1% to 4,896.27. On the corporate front, the telecom sector performed robustly. France Telecom rose 2.3% and Dutch operator KPN advanced 1.6%. Telecom Italia gained 1.6% while Spain’s Telefonica climbed 1.5%. Steel shares remained closely watched, as Corus, the Anglo-Dutch group, posted quarterly earnings below a year-ago level. The company announced that good results will be seen in the next six months. In other news from the sector, the much-talked-about merger of Arcelor with Severstal prompted investors into considering legal action to make Severstal launch a full bid for Arcelor.

Crude oil for July delivery slipped 4 cents to $71.99 a barrel by 0710 GMT, a day after prices advanced 66 cents to their highest close in two-and-a-half weeks on oil demand from China. Brent crude remained unchanged at $71.05 a barrel. The euro gained against the dollar. In morning European trading the euro bought $1.2873, up from $1.2865 the evening before in New York. The dollar slipped to purchase 111.97 Japanese yen from 112.17 the day before, while the British pound advanced slightly to $1.8837 from $1.8829 in New York.