Symantec Drops 7% on Profit Warning

Elena
16 Jan, 2007
New York City

U.S. stocks opened slightly higher Tuesday, paying little attention to a weaker-than-expected manufacturing report for the New York region and a profit warning from software maker Symantec Corp. The Internet security software maker fell 7.6% after it warned that 2007 profit will come below analyst expectations. In addition, home builder Centex Corp. also warned its Q3 results would miss expectations. Chip maker Intel Corp. is expected to release its results after the closing bell.

[R]9:45AM Market opened modestly higher, despite profit warning from Symantec.[/R]
U.S. stocks opened slightly higher Tuesday, paying little attention to a weaker-than-expected manufacturing report for the New York region and a profit warning from software maker Symantec Corp. ((SYMC)). The Internet security software maker fell 7.6% after it warned that 2007 profit will come below analyst expectations. In addition, home builder Centex Corp. ((CTX)) also warned its Q3 results would miss expectations. Chip maker Intel Corp.((INTC)) is expected to release its results after the closing bell. Again in earnings-related news, online financial-services firm TD Ameritrade ((AMTD)) jumped 6.7% after reporting Q1 net income growth of 60% from year-ago levels, helped by trading commissions, interest revenue and fees. The company earned $145.6 million, or 24 cents a share, from $86 million, or 21 cents a year ago, beating estimates of 22 cents a share.

Telecommunications stocks were mixed to higher in early trading, led by FairPoint Communications and Nortel Networks Inc. FairPoint ((FRP)) jumped 10% on a deal to acquire the phone operations of Verizon Communications ((VZ)) in three states. Nortel ((NT)) rose 3% on a deal to become a key supplier for the BT Group in the buildout the U.K. carrier's next-generation Internet-based network. Share of airline stocks also moved higher at opening, as oil futures declined and Citigroup lifted price targets for JetBlue, Southwest Airlines Co. and AMR Corp. JetBlue Airways ((JBL)) rose 1%, Continental Airlines Co. ((CAL)) and American Airlines parent AMR Corp. ((AMR)) also gained over 1%. In the first hour of trading, the Dow Jones industrial average rose 12.41, or 0.10%, to 12,568.49. The Standard & Poor's 500 index was up 0.55, or 0.04%, at 1,431.28, and the Nasdaq composite index rose 3.69, 0.15%, to 2,506.51.


[R]9:30AM NY-2:30PM London The FTSE slips as inflation rises.[/R]
The FTSE 100 lost 0.19% to 6,252 at by midday.

Economic news

The consumer price index rose to 3% in December, above the target of 2% of Bank of England. If the inflation rate goes up any further, more than 1% above the 2.0% target by the government, the Bank of England will have to write to the Chancellor to give an explanation.

Decliners

Lonmin, the platinum refiner, shed 1.4% after the platinum producer announced repairs to one of its processing plants would cut output in the first half. Trading was less subdued at Debenhams as it reported a 4% drop in UK same-store retail sales in the 19 weeks to January 13. Shares in the department store chain declined further in mid-session exchanges, losing 5.4%.

BP lost 0.2% ahead of the publication of an inquiry into safety problems within its US operations, widely expected to be critical of the company. Northern Foods, the maker of oven-ready pizzas and meals, dipped 5.7% following its statement that sales growth in the Q3 slowed to 2.8% .

Miners traded in line with metals prices and were ahead of the list of declining shares. Antofagasta was 3% lower, Xstrata lost 2.6% and Rio Tinto fell 2%.

Christmas trading update of Tesco beat slightly forecasts of analysts as same-store sales advanced 5.9%. Hopes of strong results had already been priced into the stock and it dipped 0.5%.

Advancers

Demand for Smiths Group was slightly lower after the news on Monday of the sale by Smiths Group of its aerospace unit to GE and plans to return $2.1 billion of the $4.8 billion proceeds to investors. The stock advanced a further 3.9%, building on an 11 % gain by the end of the previous session.

Enterprise Inns was another gainer, 1.9% stronger after an upbeat trading statement was greeted by investors.


[R]9:00AM Market futures turned lower on weaker NY manufacturing activity.[/R]
U.S. stock futures reversed from earlier gains, dragged by surprising weakness in manufacturing activity in the New York region and a warning from security software maker Symantec. The New York Fed said that its general business conditions index fell to 9.13 in January from 22.19 in December, disappointing analysts who had expected a decline to 20.0. Shares of Symantec ((SYMC)) dropped 7% in the pre-open after the company lowered its outlook citing a weaker-than-expected performance by its data center management business and higher deferrals than expected. The company cut its adjusted earnings estimate to 24 to 25 cents a share from 29 to 30 cents a share, and its revenue forecast to $1.30 billion to $1.32 billion from $1.325 billion to $1.355 billion.

On the earnings news front, Wells Fargo & Co. ((WFC)) posted net income rise of 13% to 64 cents a share, up from 57 cents a share a year ago on 11% revenue increase. Quarterly earnings met analyst expectations, while the revenue came in above average estimates. Company''s shares gained 1.4%. Forest Laboratories ((FRX)) said Q3 profit rose 28% on a 16% sales growth. The pharmaceutical company earned 78 cents a share, compared with a profit of 57 cents a share last year on 18% revenue increase. The stock jumped 3.7% in pre-market trading. Precious metals miner Freeport-McMoRan Copper & Gold Inc. ((FCX)) reported Q4 profit drop of 8% to $1.99 per share, down from $2.19 per share last year, citing a decrease of production at its core Indonesian operations. The quarterly earnings missed estimates of 2.19 per share. The stock slipped 3.2%. S&P 500 futures erased earlier gains to trade down 0.20 of a point at 1,440.60 and Nasdaq 100 futures slipped 0.75 of a point to 1,861.50, after also seeing earlier gains. Dow industrial futures inched up 1 point to 12,627.

[R]NY manufacturing growth slowed more than expected.[/R]
AM Tuesday morning, the Federal Reserve Bank of New York released its report on activity in the manufacturing sector in the state of New York in the month of January. The report showed that pace of growth in the sector slowed much more than economists had expected. The New York Fed said that its general business conditions index fell to 9.13 in January from 22.19 in December, with a positive reading indicating growth in the sector. Economists had expected the index to fall to about 20.0.


[R]8:00AM U.S. stock futures traded slightly up, helped by $4.8 B acquisition deal.[/R]
U.S. stock market futures traded modestly higher after the long holiday weekend. Deal news from General Electric and economic data, expected to show improving New York-area manufacturing sentiment were in focus. On Friday, Wall Street ended higher, boosted by strength in the energy and technology sectors.

On Monday, General Electric ((GE)) agreed to acquire the aerospace business of Britain''s Smiths Group for $4.8 billion, and also agreed to a joint venture with Smiths in the area of detection. The market also awaited another batch of Q2 earnings reports, with Wells Fargo ((WFC)) and Freeport McMoRan Copper and Gold ((FCX)) on deck. Intel Corp. ((INTC)) is due to release its quarterly results after the close of trade. The world''s top chipmaker is expected to earn 25 cents per share for Q4. The chipmaker closed at $22.13 Friday. According to reports, Intel will restructure its Israeli operations and create a joint venture with STMicroelectronics ((STM)). Pfizer Inc. ((PFE)) may draw some attention on reports that CEO Jeffrey B. Kindler is about to announce several thousand job cuts. S&P 500 futures rose 2.2 points at 1,443.00 and Nasdaq 100 futures advanced 4 points at 1,866.25. Dow industrial futures rose 25 points.


[R]7:30 AM Asian shares ended lower on Tuesday on weak banks, car-makers.[/R]
Asian markets closed lower on Tuesday. The Nikkei Index in Japan ended the day 0.04% lower at 17,202. Toyota slipped 0.3% and Nissan shed 1.4%. Mizuho Financial Group edged 0.4% lower and Sumitomo Mitsui Financial Group lost 0.8%.

In Hong Kong, the Hong Kong Hang Seng Index lost 0.2% to 20,028. PetroChina shed 1.4%, as some analysts downgraded their forecasts and ratings on the stock after the company reported 2006 operating data Monday. Chong Hing Bank, one of Hong Kong smallest lenders, dipped 8.9% after denying Tuesday that it was in deal talks.

South Korean Kospi Index lost 0.1% to 1,390. Korean Air declined 4.6% in heavy volume on hopes it may have to borrow between 800 billion won ($856.7 million) and one trillion won if it buys 28.4% of S-Oil. LG.Philips LCD closed up 1% after some volatility ahead of the fourth quarter results. Hyundai Motor finished 2% higher on hopes for an early settlement of a dispute with its labor union over bonus payments.

In Australia, the stock market finished flat, with afternoon weakness in resources and banks. The biggest miner in the world, BHP, fell 1.5%, with selling gaining pace in the final session. Rival Rio Tinto shed 1.4%. ANZ Bank lost 0.7% and National Australia Bank slipped 0.2%.


[R]6:30AM European shares were lower Tuesday on weak miners, oil producers.[/R]
European markets traded lower on Tuesday. In early trade, FTSE 100 in London shed 0.3% to 6,246.5, Frankfurt Xetra Dax was fractionally lower at 6,730.33, the CAC 40 in Paris was unchanged at 5,630.32.

Decliners

Xstrata shed 3% and Antofagasta lost 2.6%. Norsk Hydro, the Norwegian oil and aluminium producer, shed 1.1%. SGS, the Swiss raw materials quality controller, fell 1.1% in spite of reporting a better-than-expected 19% rise in 2006 net profit. UBS, the Swiss investment bank, downgraded the shares from buy to neutral. Oil and gas producers fell in line with crude prices. The benchmark US Nymex front month contract fell below $53 a barrel in early trade on Tuesday. Norway Statoil fell 1.5 %, while Spain’s Repsol eased 0.5%.

Advancers

Safran, aerospace group, gained 4.1% after reporting unexpectedly strong full-year sales and targeting strong growth in 2007. Beverage makers advanced after a number of upgrades in the sector. Heineken, brewer, gained 2.5% after Morgan Stanley raised its rating from equal weight to overweight. Inbev, the Belgian beermaker, rose 1.7% after Sanford C Bernstein raised its price target.

Oil and commodities

Oil prices hovered above $53 a barrel on Tuesday, under pressure from warm weather and ample supplies. In early trading in London on Tuesday, U.S. crude was 18 cents higher at $53.17, while Brent futures gained 39 cents to $53.51.

Gold declined in London on speculation of increased investor sales because of declines in commodities. Gold for immediate delivery dropped 90 cents to $625.80 an ounce while copper gained on, erasing an earlier decline. Copper for delivery in three months on the LME gained $10, or 0.2%, to $5,640 a metric ton.

Currencies

The dollar traded at 120.48 yen in early trade, from 120.50 yen late yesterday, after reaching 120.74 yen, the strongest since Dec. 12, 2005. Against the euro, it was at $1.2898, from $1.2892 on Monday. The British pound traded at $1.9648, up from $1.9643.