Third-Quarter Earnings Ready to Hit

Elena
10 Oct, 2005
New York City

Asian-Pacific markets finished mixed with the Nikkei closed for a national holiday, while South Korea's Kospi climbed 2%. European stocks advanced on telecom equipment shares, led by the German DAX 30, up 0.9%. The earnings season is expected to begin with the world's biggest aluminum maker Alcoa, reporting after the bell. The company has lowered its Q3 earnings forecast to the range of 27 to 31 cents a share, blaming hurricanes and energy costs.

U.S. MARKET AVERAGES

U.S. stock futures point to a higher market opening on Monday ahead of the new earnings season. Investors’ attention is focused on the start of third-quarter earnings reports and end-of-the-year profit outlooks.

Dow component Alcoa, the world’s largest aluminum producer, will kick off the reporting season when it announces quarterly results after the closing bell.

Shares of Intel Corp. may be in focus as the semiconductor maker is expected to unveil new server-system chips that it hopes will close a performance gap with rival Advanced Micro Devices Inc.

General Motors Corp. shares may come under pressure after No. 1 U.S. auto-parts supplier Delphi Corp. filed for bankruptcy on Saturday.

S&P 500 futures were up 2.7 points, above their fair value. Dow Jones industrial average futures were up 19 points, while Nasdaq 100 futures were up 5 points.

Trading volume may be thinner than normal because the U.S. Treasury market is closed for Columbus Day, leaving investors without a proxy for the stock market.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed with the Japanese Nikkei closed for a national holiday. Across the region Hong Kong’s Hang Seng added 0.3% with China Resources Enterprise and oil company CNOOC among the biggest gainers. South Korea’s Kospi rebounded from last week’s decline of 3% to climb 2% on third-quarter earnings forecasts and positive consumer sentiment index data. The Tokyo foreign exchange market was closed Monday.

European markets traded higher at mid-day, boosted by telecom equipment stocks on news that Ericsson is near a deal talk with its smaller rival Marconi and on optimism from Nokia. The stock markets were also supported by higher finish on Wall Street Friday, steady oil prices, and German political news. The German DAX 30 added 0.9%, the French CAC 40 rose 0.7%, and London’s FTSE 100 increased 0.6%.

ENERGY, METALS, CURRENCIES

Oil prices climbed near $62 a barrel on approaching winter season in the Northern Hemisphere. Light sweet crude for November delivery rose 3 cents to trade at $61.87 a barrel on the Nymex. Heating oil inched up to $1.9670 a gallon. Gasoline rose a penny to $1.8360 a gallon. London Brent gained 12 cents to $59.33.

Gold prices advanced in European trading. In London the precious metal traded at the recommended price of $477.50 per troy ounce, up from $475. In Hong Kong gold rose $6 to close at $478.55. Silver opened at $7.76 up from $7.67.

In European trading the U.S. dollar traded mixed against all major currencies The euro was quoted at $1.2132, up from $1.2121.The dollar changed hands at 113.83 yen, up from 113.76. The British pound was trading at $1.7592, down from $1.7614.

EARNINGS NEWS

Nordic American Tanker Shipping Ltd. ((NAT)), oil tanker shipper, posted Q3 net income on Monday of 26 cents a share, down from 57 cents a share in the same period last year missing analysts’ expectations of 43 cents a share. The company announced that its Q3 dividend would be 60 cents a share, payable Nov. 17 to shareholders of record on Nov. 2.

W.R. Berkley Corp. ((BER)), insurance holding company, announced after the closing bell on Friday that it anticipates losses in Q3 of 24 cents a share after-tax, due to Hurricanes Katrina and Rita. The company's pre-tax estimates involve losses of $35 million incurred from Katrina and $15 million from Rita, and are net of applicable reinsurance and reinstatement premiums.

Dominion Homes Inc. ((DHOM)), single family homes builder, announced after Friday's closing bell that its Q3 earnings will miss analysts’ expectations of 38 cents a share, due to lower-than-expected home sales and deliveries. The company stated that it sold 433 homes in Q3, down from 598 homes a year earlier, a decline of 28%. The sales value of the homes sold during Q3 declined 25%, to $81.8 million from $109.4 million in the year-ago period.

Unisys Corp.((UIS)) announced that it would post a Q3 loss of 7 cents to 9 cents a share, including a two-cent charge for a change in debt redemption, missing analysts’ forecasts of a loss of 4 cents a share. The company had previously forecasted earnings of 4 cents to 6 cents a share. The net loss, including pension expense, would amount to 16 cents to 18 cents a share. Revenue would drop 4% on lower-than-anticipated results in both its services and technology businesses.

Mercantile Bank Corp. ((MBWM)), banking services company, reported on Monday that Q3 net income advanced to 56 cents a share, up vs. 41 cents in the year-ago period on revenue growth, matching analysts’ estimate. Net interest income rose 30% while non-interest income came to a 15% increase over the comparable period last year.