AIG Loss Drags Averages; Crude Reaches $125

123jump.com Staff
09 May, 2008
New York City

U.S. stocks fell in the morning trading after AIG reported a large loss and a plan to raise $12.5 billion. AG took a pre-tax charge of $9.5 billion in the quarter on credit market related losses. Crude oil surged to another record high and traded above $125 a barrel. March trade deficit fell to $58.2 billion as imports of oil and automobiles declined. But, deficit for the first quarter remained at elevated level. AIG stock traded near its 10-year low.

[R]10:15AM New York – U.S. stocks fell after a large loss from AIG and crude oil above $125 a barrel.[/R]

U.S. stock opened lower after a sharply higher loss from AIG prompting worries that credit market related losses may take longer than anticipated. Investor enthusiasm has lifted stocks in the last six weeks of trading and most sectors have rebounded from the lows reached in the middle of March.

Crude oil reached another record high and traded above $125 a barrel in the morning as violence continues in Nigeria, disrupting oil supplies from the country.

March trade deficit declines but stays near record level

U. S. trade deficit in March fell after a decline in crude oil and automobiles imports. However, service sector failed to rise from a previous year. Total deficit in March fell to $58.2 billion from a revised $61.7 billion in February.

The goods deficit decreased $3.5 billion from February to $68.6 billion, and the services surplus was virtually unchanged at $10.4 billion. Exports of goods decreased $2.5 billion to $104.7 billion, and imports of goods decreased $6.0 billion to $173.3 billion. Exports of services were virtually unchanged at $43.8 billion, and imports of services decreased $0.1 billion to $33.4 billion.

The trade deficit with China in March fell to $16.1 billion from $18.4 billion and rose with OPEC nations to $7.5 billion from $6.9 billion, with European Union to $7.5 billion from $6.9 billion, with Canada to $6.5 billion from $5.5 billion and with Mexico $6.0 billion from $5.5 billion.

AIG falls on capital raising plan and sharply higher loss

American International Group, Inc reported net premiums written decreased to $12.08 billion compared to $12.11 billion for the same quarter of 2007. First quarter net loss was $7.81 billion or $3.09 per diluted share compared with net income of $4.13 billion or $1.58 per share during the year-ago period.

AIG announced a plan to raise approximately $12.5 billion in capital to strengthen its balance sheet through a common stock offering and an equity-linked offering for an aggregate of approximately $7.5 billion.

Included in the first quarter 2008 net loss and adjusted net loss was a pre-tax charge of approximately $9.11 billion or $5.92 billion after tax. First quarter 2008 results included pre-tax net realized capital losses of $6.09 billion or $3.96 billion after tax primarily from other-than-temporary impairment charges in AIG''s investment portfolio. At March 31, 2008, AIG''s consolidated assets were $1.051 trillion and shareholders'' equity was $79.70 billion.

AIG stock ((AIG)) fell $2.61 to $41.53 and it has steadily declined from its peak of $72.95 in June 2007.

Earnings review

California Pizza Kitchen, Inc, a casual dining restaurant said first quarter revenues increased 10% to $295.9 million from $164.7 million a year ago. Net income in the quarter decreased 44% to $2.5 million or 9 cents per diluted share compared to net income of $3.6 million or 12 cents per share, a year ago.

California Pizza Kitchen, Inc stock ((CPKI)) fell 7 cents to $15.94.

GSI Technology, Inc, a provider of static random access memory said fourth quarter revenues increased 8.13% to $15.2 million from $13.9 million a year ago. Net income in the quarter increased 41.03% to $2.8 million or 10 cents per diluted share compared to net income of $1.6 million or 6 cents per share, a year ago.

GSI Technology, Inc stock ((GSIT)) rose 47 cents to $4.07

Heelys, Inc, a distributor of sports products said first quarter net sales declined 73% to $13.1 million from $49.4 million a year ago. Net loss in the quarter was $1.0 million or 4 cents per diluted share compared to net income of $8.4 million or 30 cents per share, a year ago.

Heelys, Inc stock ((HLYS)) fell 11 cents to $4.35.

iPass Inc, software-enabled enterprise services provider said first quarter revenues increased 2.54% to $48.1 million from $46.8 million a year ago. Net loss in the quarter was $1.4 million or 2 cents per diluted share compared to net loss of $0.5 million or 1 cents per share, a year ago.

iPass Inc stock ((IPAS)) fell 45 cents to $2.11.

Liberty Media Corporation, cable channel operator said first quarter revenues increased 5% to $1.7 billion from $1.6 billion a year ago. Net income in the quarter increased 27.2% to $125 million or 21 cents per diluted share compared to net income of $91 million or 14 cents per share, a year ago.

Liberty Media Corporation stock ((LINTA)) fell 3 cents to $15.06.

Local.com Corporation, an Internet based paid-search advertising services provider said first quarter revenues increased 45% to $8.8 million from $4.8 million a year ago. Net loss in the quarter was $2.7 million or 19 cents per diluted share compared to net loss of $3.0 million or 33 cents per share, a year ago.

Local.com Corporation stock ((LOCM)) fell 34 cents to $4.56.

MoneyGram International, Inc, money transfer company said first quarter revenues increased 23% to $262.8 million from $213.1 million a year ago. Net loss in the quarter was $0.4 million or 4.40 cents per diluted share compared to net income of $29.8 million or 35 cents per share, a year ago.

MoneyGram International, Inc stock ((MGI)) fell 15 cents to $1.88.

Six Flags, Inc, regional theme parks operator said first quarter revenues increased 35% to $68.2 million from $50.7 million a year ago. Net income in the quarter was $149.9 million or 1.62 cents per diluted share compared to net loss of $170.6 million or 1.86 cents per share, a year ago.

Six Flags, Inc stock ((SIX)) fell 2 cents to $2.22.

Steinway Musical Instruments, Inc, a musical instrument maker said first quarter net sales increased 0.8% to $94.1 million from $93.4 million a year ago. Net income in the quarter increased 27.59% to $1.9 million or 23 cents per diluted share compared to net income of $1.4 million or 17 cents per share, a year ago.

Steinway Musical Instruments, Inc stock ((LVB)) fell $1.43 to $27.37.

The Knot, Inc, an online wedding planner said first quarter revenues increased 13% to $23.8 million from $21.0 million a year ago. Net income in the quarter declined 63% to $0.6 million or 2 cents per diluted share compared to net income of $1.6 million or 5 cents per share, a year ago.

The Knot, Inc stock ((KNOT)) fell $1.42 to $10.24.

U.S Auto Parts Network, Inc, an online provider of aftermarket auto parts said first quarter net sales increased 8.5% to $40.0 million from $43.7 million a year ago. Net loss in the quarter was $0.9 million or 3 cents per diluted share compared to net income of $0.2 million or 1 cent per share, a year ago.

U.S Auto Parts Network, Inc stock ((PRTS)) was unchanged at $3.20.

World Fuel Services Corporation, engaged land fuel products and related services on a worldwide basis said first quarter revenues increased 66% to $4.49 billion from $2.70 billion a year ago. Net income in the quarter increased 6% to $15.8 million or 55 cents per diluted share compared to net income of $14.8 million or 51 cents per share, a year ago.

World Fuel Services Corporation stock ((INT)) rose $2.36 to $27.88.

Asian markets review

In Tokyo Nikkei 225 Index closed lower 287.92 or 2.06% to 13,655.34, in Hong Kong Hang Seng index decreased 386.62 or 1.52% closed to 25,063.17. In Australia ASX 200 index higher 48.60 or 0.85% to close 5,771.80. In Malaysia KL Composite index increased 4.92 or 0.38% closed to 1,285.27.

In South Korea Kospi Index decreased 24.30 or 1.31% to close at 1,823.70, in Thailand SET index closed lower 3.46 or 0.41% to 846.71 and Indonesia JSE Index edged decreased 1.91 or 0.08% to 2,375.03. Sensex index in India decreased 343.58 or 2.01% to 16,737.07.