AIG to Raise $20 B, Home Depot Declines

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

U.S. stocks are expected to open lower as crude continue to climb higher and worries related to credit market resurface. European markets at mid day are down between 1% and 1.5% and Asian markets closed lower across the region. Home Depot reported sharply lower earnings on 6.5% fall in same store sales, however, DryShips revenue in the quarter jumped 62%.

[R]8:40AM New York – Home Depot profit declines and AIG plans to raise $20 billion.[/R]

U.S. stocks are expected to open lower on a decline in profit from Home Depot, crude prices hovering near a record level and worries related to the current credit market crisis.

European markets at mid day fell between 1% and 1.6% as crude oil traded at a new record in the morning trading in Europe and before the market hours in New York. Airlines, transportations and industrial companies declined.

Air France fell 3%, British Air fell 1% and discount carrier Ryanair Holdings dropped 3%. Macquarie group, one of the largest financial services companies in Australia tumbled 7% after the soon-to-be appointed chief executive Nicholas Moore sounded a skeptical note to meet or beat annual profit of A$1.8 billion in the last year.

AIG said that it may raise up to $20 billion after it is finished with the current bond offering. Only two weeks ago AIG was planning to raise only $11 billion and was indicating investors that it has enough surplus capital to fight the current credit market malaise. AIG reported losses in the last two quarters totaling $13 billion. AIG initially suggested that it may raise $11.9 billion in new capital and then raised the amount to $12.5 billion and now it is looking to raise $20 billion. This offering comes at a time when the stock has lost nearly one third of its value and more losses may be announced in the second quarter of this year.

AIG stock ((AIG)) fell in the pre-market trading by 35 cents to $38.60.

Home Depot, the largest hardware retailer chain, reported first quarter sales decreased 3.4% to $17.9 billion and consolidated net earnings fell to $356 million or 21 cents per share from $1.0 billion or 53 cents per share. The current quarter included one-time charge of $543 million to close 15 stores and reducing the new store development by 50.

Same store sales in the quarter fell 6.8% with the number of customer transaction declining 1.3% and average ticket item dropped 2.8% to $57.36.

Home Depot stock ((HD)) fell 62 cents to $28.15 in the pre-market trading.

DryShips Inc, Greek dry bulk shipper said first quarter revenues rose 62.6% to $232.1 million from $86.7 million a year ago. Net income in the quarter jumped 61.5% to $176.3 million or $4.61 per diluted share compared to net income of $67.8 million or $1.91 per share, a year ago.

DryShips Inc stock ((DRYS)) added $2.66 to $107.66.

Asian markets

In Tokyo Nikkei 225 Index closed lower 109.52 or 0.77% to 14,160.09, in Hong Kong Hang Seng index decreased 572.77 or 2.23% closed to 25,169.46. In Australia ASX 200 index lower 41.30 or 0.69% to close 5,908.10. In Malaysia KL Composite index decreased 13.24 or 1.02% closed to 1,287.43.

In South Korea Kospi Index decreased 12.22 or 0.65% to close at 1,873.15, in Thailand SET index closed higher 3.49 or 0.40% to 873.82. Sensex index in India decreased 204.76 or 1.17% to 17,230.18. Market of Indonesia was closed today.