Altria Pursues Philip Morris Spinoff

Elena
29 Aug, 2007
New York City

U.S. market averages continued to post solid gains Wednesday, boosted by bargain-hunting after recent sell-off. Fed Reserve

[R]11:30AM Market averages traded higher. Fed to inject another $5.25 billion.[/R]

U.S. market averages continued to post solid gains Wednesday, boosted by bargain-hunting after recent sell-off. Fed Reserve’s announcement that it would inject $5.25 billion through a one-day repurchase agreement somewhat eased investor concerns about shrinking credit. Investors also kept an eye on the credit markets. The safest assets, Treasurys, were actively traded, while, more risky assets, like commercial paper, failed to attract a lot of attention.

In corporate news, Altria Group ((MO)) gained 0.7% after it said that it will pursue a spinoff of Philip Morris International unit to its shareholders and will increase company's quarterly dividend to 75 cents a share from 69 cents.

Tech stocks posted considerable strength in late morning trading. Gainers were led by Seagate Technology ((STX)) which rose 5% after the world's top maker of hard-disk drives raised its Q1 earnings and revenue forecasts. Apple Inc. ((AAPL)) rose 4.4% and Dow component Hewlett-Packard Co. ((HPQ)) climbed 2.5%.

The Dow rose 123.07, or 0.94% to 13.164.92, after falling 280 points on Tuesday. The blue-chip average was led higher by Intel ((INTC)), up 3.4%, General Motors ((GM)) which gained 2.6% and Home Depot ((HD)), rising 2.7%.

Most of the sectors posted strength with steel, oil, and tech stocks standing out as the strongest performances. At the same time, the biotech sector was one of the few sectors trading in the negative. The Standard & Poor's 500 index added 13.79, or 0.96%, to 1,446.15, while the Nasdaq composite index gained 29.06, or 1.16% to 2,529.70. The yield on the benchmark 10-year Treasury note was at 4.51%, down from 4.52% late Tuesday.


[R]09:45AM Wall Street rallied at opening, with Dow rising 100 points[/R]

Wall Street rallied at opening Wednesday, as investors took advantage of cheap buying after a heavy plunge in the previous session. The Dow Jones industrials jumped nearly 100 points. Leading gainers on the blue-chip average included General Motors Corp. ((GM)), up 2.3%, Intel Corp. ((INTC)), rising 2% and Alcoa Inc. ((AA)), moving up 1.6%. Altria Group ((MO)) also provided a boost with its shares rising 1.6%, as the company is expected to announce a spinoff of its cigarette business, Philip Morris International.

Among companies in focus, DaimlerChrysler ((DAI)) released its first full earnings report without Chrysler. The car maker said its net income fell 14% to $2.5 billion, or $2.36 a share, with revenue down 3% to $32.24 billion. It also noted that it will take a smaller charge that it had previously expected from selling most of the U.S. automaker. Daimler also said its financial services division produced a flat operating profit of $297 million. Company''s shares rose 3.5%.

Further on the earnings news front, Big Lots ((BIG)) jumped 8.5% after it said its Q2 profit rose on higher same-store sales and lower costs, beating analyst estimates. The closeout retailer also lifted its full-year profit guidance. Williams-Sonoma ((WSM)), a household goods and decor retailer, reported better-than-expected Q2 earnings and raised its full-year profit target. The stock climbed 7.6%. Double Hull Tankers ((DHT)) posted 11% profit increase in Q2 on strong charter rates and continued demand for its vessels.

The Dow rose 91.04, or 0.70%, to 13.132.89, after falling 280 points on Tuesday. The Standard & Poor''s 500 index added 10.76, or 0.75%, to 1,443.12, while the Nasdaq composite index gained 21.08, or 0.84%, to 2,521.72. Bonds fell slightly Wednesday, with the yield on the benchmark 10-year Treasury note at 4.53%, up from 4.52% late Tuesday.


[R]09:00AM U.S. stock futures pointed to a higher opening after Tuesday rout.[/R]
U.S. stock futures pointed to recovery Wednesday after a huge sell-off in the previous session, sparked by renewed concerns about economic growth and uncertainty whether the Fed Reserve will cut interest rates to stop credit turmoil from spreading further. On Wednesday, investors decided to take advantage of cheap buying on hopes that the stock market will soon overcome its volatility. As there are no major economy reports due out today, credit markets and corporate news will be in the spotlight.

Among companies in focus, Altria Group ((MO)) is expected to announce a spinoff of its cigarette business, Philip Morris International. Company’s shares rose 1.9% in the pre-open. Alltel Corp. ((AT)) also attracted attention, as its shareholders are scheduled to vote on a $24.7 billion takeover by private investors.

In earnings news, bookseller Borders Group ((BGP)) posted late Tuesday smaller-than-expected net income loss in Q2, blaming heavy charges which outweighed a boost in sales. DaimlerChrysler''s ((DAI)) U.S. shares gained after it said its Chrysler Group posted a 18% rise in profit.

In other corporate news, Google ((GOOG)) said that its chief financial officer George Reyes considers leaving the company. Google didn''t name a replacement. The stock gained 0.5% in pre-market trading.

In pre-market trading, Dow futures expiring in September rose 40, or 0.30%, to 13,135, while S&P''s 500 index futures rose 5.30, or 0.37%, to 1,443.60. Nasdaq 100 index futures rose 8.25, or 0.43%, to 1,916.00. Bonds were poised to open flat Wednesday, with the yield on the benchmark 10-year Treasury note at 4.52%, the same as late Tuesday.


[R]8:00AM Big Lots posted higher Q2 profit and lifted full-year forecast.[/R]

Big Lots ((BIG)), closeout retailer, said its Q2 profit jumped on higher same-store sales and lower costs, beating analyst estimates. The retailer reported net income rise to $23.4 million, or 22 cents per share, up from $4.3 million, or 4 cents per share a year ago. Income from continuing operations soared to $22.1 million, or 21 cents per share, from $4.7 million, or 4 cents per share.

Big Lots lifted its full-year forecast for profit of continuing operations, due to the upbeat Q2 financial results and current business trends. The company expects 2007 earnings from continuing operations to come in the range of $1.43 to $1.48 per share, up from earlier guidance of $1.25 to $1.30 per share. Analysts expect earnings of $1.31 per share.

The estimated figures are based on expectations of a same-store sales increase between 3% and 4%. Big Lots also released Q3 profit guidance in a range of 9 cents to 13 cents per share, assuming same-store sales will increase from 1% to 3%. At the same time, analysts anticipate a profit of 11 cents per share in the period. The retailer projected Q4 earnings between 87 cents and 92 cents per share, assuming the same increase in same-store sales as in Q3. Analysts expect Q4 earnings of 82 cents per share.


[R]7:00AM New York, 8:00PM Tokyo - Japanese stocks slide second day running following lower U.S. shares, as investor confidence hit new low. Yen continues on firm path with Finance Minister Fukushiro Nukaga planning government intervention in foreign currency market. Prices of wheat based products to rise.[/R]

Japanese stocks fell in a steep decline after a sharp sell-off in the U.S. Japan closed down 1.7% after plunging 3% in the morning trading. Exporters fell sharply on rising yen. Of the 225 Tokyo stocks, 206 dropped, 18 gained and 1 unchanged. Of the index stocks, 6 shares lost over 4% and 22 sank more than 3%, and only 13 stocks gained over 1%.

In Tokyo trading Nikkei 225 slipped 1.69% or 274.66 to 16,012.83 in a massive sell off led by exporters. At close, yen firmed to 114.49 against one American dollar from over 115 on Tuesday.

New Finance Minister Fukushiro Nukaga announced today that government will keep an eye on yen movements, and possibly intervene when needed to help economic growth. He told Japanese media today: “We must make efforts to avoid drastic changes of foreign- exchange rates to ensure that the economy maintains sustainable growth.” Previously, the Japanese central bank has intervened in the foreign exchange markets to buy US dollars to curb rising yen. Many fear that a strong yen could retard economic growth.

Japanese wheat based-products are expected to rise after government announced last week wheat sale prices for the six months from October will be raised 10%, in response to rising global wheat prices. Listed firms Nisshin Seifun Group Inc and Nippon Flour Mills Co said today they would decide on flour price hike by late September. Nisshin Seifun closed lower 1.04%.

Of the Nikkei 225 shares, exporters dropped sharply on concern a stronger yen will hurt foreign earnings. Japan Steel Work led decliners falling 4.7% followed by Ricoh Co Ltd down 4.5% while Mitsubishi Corp lost 4.3%. Mitsubishi Heavy Industries shed 4.25% while CSK Holdings finished down 4.10%. Financial shares fell on worries that there may be hidden subprime exposure. Mitsubishi UFJ Financial, Chiyoda Corp and Chiba Bank fell 3.6%, 3.34% and 2.96% respectively. Industrial stocks, Mitsubishi Industries, Yokogama Electric, Suzuki Motor, Sumitomo Electric all fell above 3%.

Yahoo Japan Corp continued racing higher pacing advancers up 4.6% after rolling out a new email service that allows consumers to send SMS from computers to cell phones. Isuzu Motors rose 4.4%. Tosoh Corp added 2.6% while Nippon Meat Pack gained 2.4% and Meiji Seika rose 2.37%. Some 5 stocks gained below 1%.

The Tokyo Stock Exchange Group Inc. announced Tuesday it had concluded an agreement with NYSE Euronext, which will advise the TSE Group on several key areas of information technology. Engineers from NYSE Euronext will provide recommendations to the TSE on various areas including network management and operation, exchange system capacity and performance management. Atsushi Saito, President & CEO, TSE Group, commented: “I am delighted that both exchanges have established further co-operative relationships. We see that, based on this agreement, receiving advice from the NYSE Euronext will enhance our system operations and benefit a variety of market participants”.