Credit-Markets Weakness Drag Stock Futures

Elena
24 Jul, 2007
New York City

U.S. stock futures were indicating a lower opening on Tuesday, dragged by continuous jitters in credit markets, as well as Q2 earnings drop and a soft outlook from chip maker Texas Instruments. Among other companies posting Q2 results, Lockheed Martin said its Q2 earnings rose 34% on higher sales across most of its businesses. AT&T reported 61% jump in Q2 net income, while PepsiCo posted Q2 profit rise to 94 cents a share, beating estimates.

[R]9:00AM Credit-markets jitters and profit drop at TI weighed on pre-market mood.[/R]

U.S. stock futures were indicating a lower opening on Tuesday, dragged by continuous jitters in credit markets, as well as Q2 earnings drop and a soft outlook from chip maker Texas Instruments. Among other companies posting Q2 results, Lockheed Martin, AT&T and PepsiCo posted better-than-expected quarterly profits. S&P 500 futures slipped 2.70 points at 1,546.30 as Nasdaq 100 futures fell 6.75 points at 2,046.75.00. Dow industrial futures were down 34 points.

On the earnings news front, American Express Co. ((AXP)) reported a 12% rise in Q2 net income. However, profit increase was limited by an 85% jump in loss provisions at the credit-card giant's main U.S. business.

Netflix Inc. ((NFLX)), the online DVD rental pioneer, reported 50% increase in its Q2 profit, benefiting from a gain related to a patent lawsuit settlement.

AT&T ((T)), the U.S. largest provider of Internet and phone services, reported 61% jump in Q2 net to $2.9 billion, or 47 cents per share, up from $1.81 billion, or 46 cents per share last year.

Lockheed Martin Corp. ((LMT)), the world's largest defense contractor, said its Q2 earnings rose 34% on higher sales across most of its businesses. The company said it earned $778 million, or $1.82 per share, up from the $580 million, or $1.34 per share a year ago, while revenue rose 7% to $10.65 billion. Quarterly results beat estimates for earnings of $1.53 per share per share on $10.2 billion in revenue. Lockheed also lifted its 2007 forecast.


[R]8:15AM Texas Instruments posted 75% earnings drop in Q2.[/R]

Texas Instruments Inc. ((TXN)), the world''s largest supplier of chips used in mobile phones, reported 75% earnings drop in Q2, compared with the year-ago period. The company said net income for Q2 was $610 million, or 42 cents per share, down from $2.39 billion, or $1.50 per share. Quarterly revenue stood at $3.42 billion, down from $3.7 billion in the year-ago period, due to a weaker demand for a broad range of products. The financial results met the average analyst expectations of earnings of 42 cents per share on $3.45 billion in revenue.

Last year, the chipmaker''s Q2 earnings were lifted by the $1.65 billion sale of its sensors business, as well as a $70 million royalty settlement and a $57 million sales tax refund. Texas Instruments projected Q3 earnings of 46 cents to 52 cents per share on revenue of $3.49 billion to $3.79 billion. Analysts expect earnings in the same range with quarterly sales of $3.7 billion. Company''s shares fell 3.3% in pre-market trading.