JPMorgan Exceeds Expectations

Elena
19 Jul, 2006
New York City

JPMorgan Chase & Co. rose 1.2% after the nation''s third largest bank reported sharply higher Q2 profit of 99 cents a share, compared with 28 cents a share last year on 19% revenue growth, beating estimates of earnings of 87 cents a share on revenue of $15.3 billion. Piper Jaffray Companies posted Q2 net income rise to 21 cents per share from 6 cents a year ago on increasing investment banking and interest revenue.

[R]9:00AM Stock futures pointed to a mixed opening ahead of data.[/R]
U.S. stock futures pointed to a mixed opening Wednesday, with investors awaiting inflation data and congressional testimony by Federal Reserve Chairman Ben Bernanke.

Market also awaited another batch of earnings news from major companies, including Motorola Inc. ((MOT)). After Tuesday''s close, Yahoo Inc. ((YHOO)) gave a 2006 revenue outlook below forecasts, sending its shares 10% in after-hours trading to $29.13. In contrast, International Business Machines Corp. ((IBM)) reported stronger-than-expected quarterly profit. Shares of IBM, the world''s largest computer services company, rose 3.1% to $76 in after-hours trading. Standard & Poor''s 500 futures were up 0.40 point, slightly above fair value. Dow Jones industrial average futures were flat, and Nasdaq 100 futures were down 4.75 points.

JPMorgan Chase & Co. ((JPM)) posted second-quarter earnings of $3.54 billion, or 99 cents a share vs. $994 million, or 28 cents a share a year ago. The most recent quarterly results include private equity gains of $340 million, material litigation insurance recoveries of $161 million, a gain of $64 million on the sale of MasterCard shares in that firm's IPO, $53 million in merger-related expenses, and a loss of $305 million tied to the repositioning of the company’s treasury portfolio. The numbers reported last year included litigation reserve costs of $1.2 billion, or 33 cents a share. Revenue in Q2 climbed to $15.72 billion from $13.71 billion a year earlier.

Piper Jaffray Companies ((PJC)) posted second-quarter earnings of $4.1 million, or 21 cents a share, up from $1.2 million, or 6 cents a share, a year ago. Excluding one-time restructuring and transaction-related expenses, earnings for the latest quarter would have come in at 75 cents a share. Revenue rose to $114.4 million vs. $102.1 million last year on increasing investment banking and interest revenue, which compensated the drop in the company’s institutional brokerage revenue.

Abbott’s ((ABT)) second-quarter net earnings dropped to $612.2 million or 40 cents a share, from $877.1 million, or 56 cents a share a year earlier. Excluding items the company posted a profit of 62 cents a share vs. 58 cents a share last year. Excluding items and incremental stock compensation costs, Abbott recorded earnings of 65 cents a share. Net sales in the latest quarter slipped to $5.5 billion from $5.52 billion a year ago.

Yahoo Inc. ((YHOO)) reported sharply lower second-quarter profit from a year earlier hurt by surging expenses for employee stock options and other costs. In the year-ago period the company recorded a one-time investment gain. Sales in the latest quarter rose as more businesses advertised on the company’s Internet pages. Net income for the quarter dropped to $164.3 million or 11 cents a share from $754.7 million or 51 cents last year, when option costs were not included in the company’s results. Excluding stock option costs and one-time gains and expenses, adjusted net income advanced to $237 million, or 16 cents a share, from $209 million, or 14 cents a year earlier. Sales for the quarter jumped 26% from last year and excluding the payments to other sites sales grew 28% to $1.12 billion.

International Business Machines Corp. ((IBM)) said that its second-quarter profit from continuing operations rose to $2 billion, or $1.30 a share from $1.85 billion, or $1.12 a share a year earlier. Revenue declined to $21.9 billion from $22.3 billion last year.
CSX Corp. ((CSX)) reported a second-quarter profit of $390 million, or $1.66 a share compared with $165 million or 73 cents a share last year. Excluding one-time items tied to insurance recoveries from Hurricane Katrina and tax benefits, the railroad company would have posted earnings of $1.16 vs. 96 cents a year ago. Surface transportation revenue advanced 12% from a year earlier to $2.4 billion. CSX also announced a two-for-one stock split.

Check Point Software Technologies Ltd. ((CHKP)) reported 16% lower second-quarter profit due to options related costs, while revenue dropped 3.9% from a year ago. The network-security software company’s profit decreased to $65.7 million, or 27 cents a share, from $78 million, or 32 cents a share last year. Excluding expenses tied to options and acquisitions, the quarterly profit would have been $76 million vs. $79.8 million last year and on a per-share basis the profit excluding these items would have remained unchanged from a year earlier at 32 cents a share. Revenue dropped to $138.9 million from $144.6 million last year.

Valmont Industries Inc. ((VMI)), fabricated metal products maker, reported 66% higher earnings in the most recent quarter at $17.3 million, or 67 cents vs. $10.4 million, or 42 cents a year ago. Revenue climbed 28% from last year to $338.8 million helped by solid performance from international businesses and higher utility product sales. The company sees its fiscal 2006 revenue to increase between 12% and 15%.


[R]8:00AM Oil prices rebounded ahead of U.S. inventory data.[/R]
Following Tuesday’s sell-off, crude oil prices rose Wednesday amid expectations that U.S. inventory data would show a decline in domestic gasoline stocks on strong demand for motor fuel during the summer driving season. According to a Dow Jones survey, U.S. gasoline stocks will fall by an average of 1.1 million barrels in the week ended July 14, extending the previous week''s decline. Crude stocks are expected to be flat, while distillate stocks, including heating oil and diesel fuel, were tipped to rise 1.3 million barrels. The continuing violent conflict between Israel and militants in Lebanon still weighed on the market.

Light, sweet crude for August delivery gained 38 cents to $73.92 a barrel in electronic trading on the New York Mercantile Exchange as of mid-afternoon in Singapore. Gasoline futures rose 1.75 cents to $2.2845 a gallon. September Brent crude futures on London''s ICE Futures exchange rose 51 cents to $74.87 a barrel. In other trading, heating oil prices rose 1.56 cents to $1.9990 a gallon. Natural gas futures rose 10.5 cents to $5.66 per 1,000 cubic feet.


[R]7:00AM Asian markets closed mixed. The Nikkei recovered.[/R]
Asian-Pacific benchmarks finished mixed Wednesday as stock exchanges reversed from much of earlier gains amid renewed advance by the price of oil, following reports Israeli ground troops were moving into southern Lebanon. Investors also awaited comments by the Fed Reserve Chairman Ben Bernanke as well as the June CPI data. The Nikkei ended up 0.4%, recovering from a month-long losing streak. Tech shares had a mixed performance, with Sony rising 1.1%, Advantest Corp, up 3.7%, while Softbank declined 3.7%. Automakers were among gaining stocks moving higher, led by Toyota Motor, up 0.9% and Mitsubishi Motors, up 0.5%. Across the region, Hong Kong’s Hang Seng rose 0.33%, lifted by strong gains for oil companies, real estate and China shares. China''s largest publicly listed oil company, Petro China climbed 1.8%. Singapore Straits Times advanced 0.47%, South Korea’s Kospi ended flat, while Australia’s benchmark closed down 0.4%. China’s Shanghai Composite had the sharpest decline today, falling 2.2%.


European stocks moved to the upside at mid-day trading Wednesday, boosted by considerable strength in the technology sector. Tech stocks led advancers on well-received earnings news from ASML Holding. The Dutch semiconductor rose 3.6% after it revealed that its second-quarter net income rose a stronger-than-forecast 49% to 167 million euros on 23% sales growth. Anglo-Dutch IT services group LogicaCMG also contributed to the upward move, posting a gain of 2.7%. The German DAX 30 climbed 0.5%, the French CAC 40 rose 0.4%, and London FTSE 100 advanced 0.4%.