Buy Backs and Texas Inst.

123jump.com Staff
25 Oct, 2005
New York City

Share buybacks from IBM and duPont supported these stocks but not the market. Legg Mason shares fall 5% despite 32% earnings rise. Afer the clsoe, Amazon indicated Q4 revenue on the lower end of the estimates of $2.9 billion but 14% higher than a year ago. Stock drops 7%. CME reports earnings growth of 30%. Lockheed reports 96 cents vs. 69 cents a year ago and Northrop reports 80 cents, flat earnings growth. Both defense contractors beat the estimates.

U.S. MARKET AVERAGES

Fall in consumer sentiments and tech stocks came under pressure.

The start of the session saw a quiet skepticism among buyers of tech stocks. Texas Instruments reported better than expected third quarter earnings but forecasted a lower than expected revenue in the fourth quarter. The stock declined 7.7% and dragged Nasdaq down 1% before recovering loss of only 6.38 to 2109.45.

Fall in consumer sentiment weighed on the broader market sentiment. Conference Board’s Leading Economic indicator fell in October to 85 from September read of 87.5. The unexpected fall in the indicator caused worries in the market that holiday spending may not be strong in the face of rising heating bill.

Tech stocks extended intra-day lows with the disk drive space currently down about 1.5%. Computer hardware and Internet stocks are also posting losses. The retail space has further declined.

The gold sector was among the day's best performers with a gain of 2.8%. However, energy and transportation stocks came off earlier highs.

Among the gaining stocks, JDA Software ((JDAS)) rallied 9% on earnings report, breaking to a new 52-week high. W.R. Berkley ((BER)) also managed to reach a fresh peak on earnings news. Arch Coal ((ACI)) is extended its earnings-inspired advance and added to its recent highs.

Shares of eBay ((EBAY)) plunged 4% on the news that Google is in the process of launching online payment service similar to eBay’s PayPal.

A number of stocks have fallen to new 52-week lows on earnings news. Altera ((ALTR)) and Lexmark ((LEX)), PRIMEDIA ((PRM)) have dropped on lowered guidance.

The Conference Board revealed that its index of consumer confidence dropped to 85 in October, compared to the 87.5 recorded for September. But the decline came with little surprise and on account of high energy prices. The economists were generally expecting the index to bounce back from September's slide to a level of about 89.

Existing home sales report was released by National Association of Realtors. For September, the measure came in unchanged from August's revised rate of 7.28 million units. Economists had expected a dip to a rate around 7.25 million units. The Association also said that existing home sales would have been without the Katrina related demand for homes in Louisiana State.

MOVERS AND SHAKERS

Texas Instruments ((TXN)) posted a 12% increase in third-quarter net income, but announced a fourth-quarter sales prediction that disappointed some investors and revealed a demand issue. The company’s stock lost 4.4%.

Chemical giant DuPont ((DD)) reported a third-quarter loss of $82 million and narrowed fourth-quarter earnings forecast. The company said this third-quarter loss came largely due to tax and hurricane-related charges. DuPont earned $331 million in the same period a year ago. The company’s stock was down 2.2%.

Dow component Intel Corp. ((INTC)) announced it will postpone the launch of one of its chips for the corporate server market to work on the design. The company’s stock fell 0.4%.

Ameritrade ((AMTD)) may have to fix earnings for several past periods because of some hedging transactions the company made in 2003. Ameritrade’s stock dropped 0.6%.

Northrop Grumman ((NOC)) said its third-quarter earnings fell slightly below a year-ago positions, citing damages from the recent hurricanes. The company expects earnings from continuing operations in 2006 to reach $4.10-$4.30 a share on sales of about $32 billion. Northrop is likely to be active today.

ECONOMIC NEWS

Consumer confidence continued to deteriorate in the month of October, according to a report from the Conference Board, surprising economists who had expected some improvement following a steep drop in September.

The Conference Board said that its consumer confidence index fell to 85.0 in October from an upwardly revised 87.5 in September. Economists had been expecting the index to increase to 89.0 compared to the 86.6 originally reported for September.

Lynn Franco, Director of the Conference Board Consumer Research Center said, “Much of the decline in confidence over the past two months can be attributed to the recent hurricanes, pump shock and a weakening labor market.”

The report showed that the drop by the consumer confidence index came as the present situation index fell to 108.2 in October from 110.4 in September while the expectations index decreased to 69.5 in October from 72.3 last month.

Tuesday morning, the National Association of Realtors released its report on existing home sales in the month of September, showing that sales were unchanged from August, holding at the second highest pace on record.

The report showed that existing home sales came in at a seasonally adjusted annual rate of 7.28 million units in September, unchanged from a downwardly revised August rate. Economists had expected sales to slip to a 7.25 million unit rate in September compared to the 7.29 million unit rate originally reported in August.

NAR noted that an increase in sales in areas surrounding the Hurricane Katrina disaster zone helped to offset declines in other areas.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished higher, boosted by solid gains on Wall Street overnight and the announcement of Ben Bernanke’s nomination to succeed Alan Greenspan at the Federal Reserve. The Nikkei rose 1.3%, Hong Kong’s Hang Seng climbed 0.5%, and Australia’s All Ordinaries gained 0.8%. The only decliner across the region was South Korea’s Kospi, losing 0.3%.

European markets fell across the region erasing early gains. European stocks were pressured by disappointing earnings reports, weaker U.S. markets Tuesday, and advancing euro. The German DAX 30 lost 0.1%, the French CAC 40 fell 0.1% on sharp declines at the tire maker Michelin, and London’s FTSE closed down 0.2%, hurt by oil major BP.

ENERGY, METALS, CURRENCIES

Crude oil prices jumped back to over $62 a barrel ahead of winter season and oil inventory report later in the week. Light sweet crude December contract rose $2.12 cents to $62.44 a barrel on the Nymex. Heating oil rose 5 cents to $1.85 a gallon. Gasoline gained nearly 2 cents to $1.5985. Natural gas climbed over 6%, or 77 cents to $13.80 per 1,000 cubic feet.

Gold prices advanced in European trading as news on the new Fed Reserve Chairman pressured the U.S. dollar. In London gold closed at $471.85 per troy ounce, up from $466.20. In Zurich it climbed to $472.35, up from $466.75. In Hong Kong the precious metal rose $3.30 to close at $467.05. Silver closed at $7.78, up from $7.68.

In European trading the U.S. dollar fell against its major counterparts on news of Ben Bernanke replacing Fed Reserve Chairrman Alan Greenspan. The euro was quoted at $1.2104, up from $1.1979. The dollar changed hands at 114.68 yen, down from 115.40. The British pound was trading at $1.7857, up from $1.7675.

EARNINGS NEWS

Lockheed Martin Corp. ((LMT)), aerospace company and defense contractor, posted Q3 earnings 96 cents a share, up from 69 cents a share in the same period a year ago on sales growth, beating analyst estimate of 90 cents a share.

Chicago Mercantile Exchange Holdings ((CME)), stock exchange, reported that Q3 net income advanced 30% to $1.72 a share on revenue growth, including securities lending interest expenses up 22%. Average daily volumes totaled 4.2 million contracts in Q3, up 30%, on considerable volume growth on foreign exchange, interest rate and equity products.

DuPont ((DD)), chemical producer, reversed to a Q3 net loss of 9 cents a share, down vs. a profit of 33 cents a share, including a one-time tax gain of 8 cents a share, on tax and hurricane-related charges of 42 cents a share. If not for one-time items, DuPont would have gained 33 cents a share in Q3, beating analyst estimate of 29 cents per share. Revenue for Q3 rose to $6.3 billion from $6 billion in the year-ago period.

Sonic Automotive Inc. ((SAC)), automotive retailer, announced that earnings from continuing operations in Q3 were 65 cents per share, up from 51 cents in the same period last year on 9.5% revenue growth. Results included charges of 7 cents to 9 cents a share due to hurricane disruption. On a same-store basis, revenue increased 6%.

United Auto Group ((UAG)), automotive retailer, reported that Q3 net profit advanced 1.2% to 70 cents a share on 10.8% revenue growth, in line with analyst estimate. The company, which had a 7% increase in same-store retail sales, announced that the year-ago quarter benefited from the sale of investment, a reduction in its effective tax rate, a refund of U.K. consumption taxes and costs from the relocation of U.K. franchises.

Pentair, Inc. ((PNTR)), power-tool manufacturer, reported that Q3 net income fell to 46 cents a share, a cent down from the year-ago period despite 18% revenue growth. Earnings from continuing operations advanced 44% to 47 cents a share from 33 cents a share in the same time last year.

Ameritrade Holding Corp. ((AMTD)), securities brokerage services firm, announced its Q4 net income jumped to 23 cents a share, up from 14 cents a share a year ago on revenue growth, beating analyst estimate by a penny. Average client trades per day amounted to 146,000. The company stated it is in discussions with the SEC concerning accounting for and disclosure of its prepaid variable forward contracts with respect to its investment in approximately 7.9 million shares of Knight Capital Group, Inc.

Coventry Health Care Inc. ((CVH)), care products and services provider, posted Q3 earnings of 81 cents a share, up from 64 cents per share in the year-ago period on revenue growth, in line with analyst estimate for a profit of 81 cents a share.. The company stated that, as of Sept. 30, its total health plan membership stood at 2.51 million, a rise of 61,000 members over the year-ago period.

Certegy Inc. ((CEY)), credit and debit processing company, posted Q3 earnings of 37 cents a share, down from 43 cents a share in the same period a year ago despite revenue growth. Apart from non-recurring items, such as discontinued operations and merger-related costs, the company would have earned 48 cents a share, topping analyst estimate by a penny. The company expects Q4 adjusted earnings of 60 to 62 cents a share and revenue growth of 6% to 8%.

Lexmark International Group Inc ((LXK)), printing solutions manufacturer, posted Q3 earnings of 59 cents a share, down from $1.17 a share in the year-ago period on revenue decline, beating analyst estimate of 47 cents a share. The latest results incorporate a charge of 5 cents a share from a workforce reduction and a tax benefit of 5 cents a share, while the year-ago quarter incorporated 15 cents per share tax benefit. The company stated that revenue from its laser and inkjet printer products declined 10% year-over-year due to more aggressive pricing and promotional activities and weak demand.

U.S. Steel Corp. ((X)), steel products producer, posted Q3 earnings of 82 cents a share, down from $2.72 a share in the same time last year on sales decline, beating analysts’ expectations for a profit of 77 cents a share.