Ambac Loss, Moody's Weak Earnings

123jump.com Staff
23 Apr, 2008
New York City

U.S. stocks edged higher after losing ground at the opening. Delta reported first quarter loss of $6.39 billion on revenue rise of 12% to $4.77 billion. Ambac Financial reported a loss of $1.66 billion compared to profit of $213 million from a year ago. Ambac reported loss in the quarter from CDOs of $1.73 billion and $1.04 billion in loan loss provisions. Health insurance company, WellPoint reported revenue rise of 3% to $15.55 billion and earnings decline of 25% to $588.1 million.

[R]9:30AM New York – U.S. stocks edged higher despite weak earnings from Delta, WellPoint, Ambac Financial and Moody’s.[/R]

U.S. stocks traded lower at the opening but quickly reversed the course after another round of weak earnings. Ambac Financial Group, Well Point and Delta earnings weighed on the market.

Ambac Financial ((ABK)) reported a net loss of $1.66 billion compared to a profit of $213 million. The bond insurer loss per share in the quarter was $11.69 compared to profit of $2.02 a year ago.

Revenue in the quarter, including losses was a negative $1.56 billion compared to $461.8 million a year ago. Ambac in the quarter reported a loss of $1.73 billion in collateralized loans and $1.04 billion in loss provisions.

Ambac ((ABK)) stock fell $1.28 to $4.72 at the opening.

WellPoint, medical insurance company reported first quarter revenue climbed 3.1% to $15.55 billion. Earnings in the quarter were $588.1 million or $1.07 per share compared to $783.1 million or $1.26 per share.

The medical-loss ratio, the portion of the premium used to pay medical bills, rose to 85.1% from 83.1%. Total number of health plan members increased 1.4% or 468,000 to 35.4 million.

The health insurer lowered its 2008 earnings forecast between $5.42 and $5.67 per share and raised its operating revenue by $300 million to $62.3 billion.

WellPoint ((WLP)) stock fell $1.15 to $45.40 at the opening.

Delta Air Lines ((DAL)) stock fell 22 cents to $6.59 after it reported first quarter net loss ballooned to $6.39 billion from $130 million and 12% rise in revenue to $4.77 billion from $4.24 billion. The airline took a charge of $6.1 billion non-cash charge and said that it will eliminate between 15 and 20 mainline and 60 to 70 regional jets by the end of the year.

Delta hedged 27% if its fuel cost and average cost of fuel in the quarter surged 48% to $2.85 a gallon. UAL, the parent of United Airlines reported 50% rise in its fuel cost and reported total fuel cost of $1.5 billion more than salaries and wages cost of $1.1 billion in the quarter.

Moody’s Corp ((MCO)) rose $2.78 to $39.29 after it reported revenue decline of 26% to $430.7 million from $583.0 million from a year ago. Diluted earnings per share declined 23% 48 cents from 62 cents a year ago. The company maintained its 2008 earnings guidance between $1.90 and $2.00 per share.

U.S. revenue declined 39% to $232.8 million and non-U.S. revenue fell 3% to $197.9 million from the same period. Moody’s global revenue results included approximately 200 basis points of positive impact from currency translation. Non-U.S. revenue accounted for 46% of Moody’s total revenue for the quarter, up from 35% in the year-ago period.

Within the ratings business, global structured finance revenue totaled $107.2 million for the first quarter of 2008, a decrease of 57% from a year earlier. U.S. structured finance revenue decreased 69%, driven by significant declines in issuance across most asset categories. Non-U.S. structured finance revenue decreased 29%, led by declines in the European credit derivatives and commercial real estate finance sectors.

Commodities review

Gold at the opening traded lower after stocks edged higher. Front month delivery price of gold future fell $21.40 to $903.80. Crude oil futures also edged lower by 98 cents to $117.099 per barrel. Natural gas edged 15 cents lower to $10.45 per mtbu.

Asian markets review

In Tokyo Nikkei 225 Index closed higher 31.34 or 0.23% to 13,579.16, in Hong Kong Hang Seng index increased 350.09 or 1.40% closed to 25,289.24. In Australia ASX 200 index higher 88.30 or 1.59% to close 5,652.90. In Malaysia KL Composite index increased 8.86 or 0.69% closed to 1,288.16.

In South Korea Kospi Index increased 13.30 or 0.74% to close at 1,800.79, in Thailand SET index closed lower 12.36 or 1.45% to 837.66 and Indonesia JSE Index edged increased 25.21 or 1.10% to 2,314.30. Sensex index in India decreased 85.83 or 0.51% to 16,698.04.