Costco Profit to Miss Estimates

Elena
30 Aug, 2006
New York City

U.S. stock futures were sitting near the flat line Wednesday morning following a profit warning from Costco Wholesale and an advance by the oil price. Costco forecast earnings per share of 68 cents to 71 cents for Q4 and $2.23 to $2.26 for the fiscal year ending Sept 3. Analysts expected it to earn 77 cents for the quarter and $2.33 for the year.

[R]8:30AM Stocks to open flat on Costco profit warning.[/R]
U.S. stock futures were sitting near the flat line Wednesday morning following a profit warning from Costco Wholesale and an advance by the oil price. Crude oil futures rose 52 cents to $70.23 a barrel before the weekly petroleum report, expected to show a decline in crude and gasoline inventories.

Costco Wholesale Corp. ((COST)) said Wednesday that Q4 profit would come in below analyst expectations, citing lower-than-expected profit margins and an income-tax charge. The No. 1 U.S. wholesale club operator forecast earnings per share of 68 cents to 71 cents for the quarter and $2.23 to $2.26 for the fiscal year ending Sept. 3. Analysts expected it to earn 77 cents for the quarter and $2.33 for the year. Company’s shares dropped 6.1% in pre-market trading.

Among other companies in focus, Novell Inc. ((NOVL)) may decline after beginning an internal review of its stock-option grants that could result in not filing its quarterly results on time. Novell estimated that Q3 revenue fell a weaker-than-forecast 4%. Euronext, the European stock exchange operator that agreed to merge with the NYSE Group Inc. ((NYX)), reported a 63% profit jump. It also set a date for a vote on the merger. S&P 500 futures rose half a point at 1,305.60 and Nasdaq 100 futures were flat at 1,576.00. Dow industrial futures edged up 5 points.


[R]7:30AM Japan falls on media report, HK gains on Fed’s decision.[/R]
Asian markets were mixed on Wednesday. In Tokyo, the Nikkei 225 Average ended the day 0.12% lower to 15,872.02. Shares in Rakuten sank by their daily limit of 8.5% on rumors a weekly magazine intended to publish a damaging report about the company. Internet and cellular provider Softbank Corp. plunged 3.33%. Toshiba rising 2.53%, and Canon Inc up 2.15% led the advancing blue-chips in Tokyo.

Hong Kong''s Hang Seng Index closed up 1.18% to 17,284.71. Shares were led higher by rate-sensitive property stocks on expectations that U.S. rate rise cycle will come to an end soon. Developer Sun Hung Kai Properties gained 1.6%, and Cheung Kong Holdings edged up 1%. Henderson Land surged 3.9%.

The Shanghai Composite Index notched up 0.3% as the yuan hit its highest level against the dollar since being revalued last July. Australia''s S&P/ASX 200 was flat, edging down 0.01%. Beverage company Foster''s Group shed 0.64% after denying rumors it had been approached about a takeover. In South Korea, the Kospi index dropped 0.24%. Taiwan''s Weighted index gained 1.65%, with PC-maker Acer adding 7% after Merrill Lynch upgraded it to buy from neutral.


[R]6:30AM European markets were higher lifted by tech and transport shares.[/R]
European markets were higher by mid-morning on Wednesday. London FTSE 100 rose 0.4% to 5,910.2, while Frankfurt’s Xetra Dax added 0.4% to 5,867.3. In Paris, the CAC 40 advanced 0.5% to 5,184.13. Transport stocks were in demand, led by Moller-Maersk, the Danish container shipping group, which reported upbeat full-year guidance in the previous session. Its shares gained 4%.

EADS, continued to benefit from speculation about Russian stakebuilding, as state bank Vneshtorgbank was reported by the Russian press on Tuesday to have accumulated a 5% stake in EADS. Also in the transport sector, Deutsche Post, the German logistics and delivery group, advanced 1.8%, while Dutch group TNT gained 1.7%.

Crude oil for October delivery gained 19 cents to $69.90 a barrel, supported by an expected decline in U.S. crude and gasoline stocks in statistics due later on Wednesday and Iran''s determination to press ahead with its nuclear program.

Gold was trading around $614.20 an ounce, up a little from late New York trade and off a five-week low of $606.80 struck earlier on Tuesday. The euro was steady against the U.S. dollar in early European trading Wednesday, holding onto gains made as the chances of higher U.S. interest rates appeared to wither. The euro bought $1.2830, compared with $1.2831 in New York late Tuesday. The British pound slipped slightly to $1.8986 from $1.8989 on Tuesday, while the dollar was at 116.95 Japanese yen, up from 116.61 yen.