U.S. Stocks Rise, Techs Decline

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

U.S. stocks edged higher in the morning despite a large loss from Lehman Brothers. Lehman also raised $6 billion through common and preferred stocks offering at a discount to its closing price on Friday. CIT, received $3 billion in cash investment from Goldman Sachs. Tech stocks fell but resource and energy stocks rose in New York. Asian markets closed lower and European markets inched lower.

[R]11:30AM New York – U.S. stocks struggled after Lehman Brothers reported a loss of $2.8 billion.[/R]

U.S. stocks edged lower in the morning trading after Lehman Brothers reported a loss of $2.8 billion and said it raised $6 billion through common and preferred stock offering. Lehman for months said that it has sufficient capital and went as far as stating that most of the losses in the credit market have been reported. Similar optimistic notes were voiced by executives at Morgan Stanley and JP Morgan. Asian markets closed lower and European markets fell.

Existing home resale index in April rose 6.3% 88.2 after declining 1% in March. The home sales appear to be rising as investors who believe that home market has bottomed out showed willingness to purchase. However, home inventories remain high and median home prices are expected to fall.

Lehman Brothers expects a loss of $2.8 billion or $5.14 per share for the quarter ended on May 31. The investment broker earned $489 million or 81 cents per share in the first quarter and $1.3 billion or $2.21 per share in the same quarter a year ago. Lehman reported its quarterly results one week early and raised $6 billion.

Lehman expects to report net revenues for the second quarter of fiscal 2008 of negative ($0.7) billion, compared to $3.5 billion for the first quarter of 2008 and $5.5 billion for the second quarter of fiscal 2007. Net revenues for the second quarter of fiscal 2008 reflect negative mark to market adjustments and principal trading losses, net of gains on certain debt liabilities.

Moody’s investors rating service said that it has changed rating outlook negative after the company raised capital of $6 billion and reported a loss.

Lehman issued common stock and issue non-cumulative mandatory convertible preferred stock offering that has a liquidation preference of $1,000 per share. The stock will be converted to common stock in three years.

Lehman priced a $4.0 billion public offering of 143 million shares of common stock at $28.00 per share. The Firm also announced that it priced a $2.0 billion public offering of 2.0 million shares of 8.75% preferred stock, Series Q.

The preferred stock has a liquidation preference of $1,000 per share, and will pay quarterly cash dividends on a non-cumulative basis, when, as and if declared by the board of directors, at a rate of 8.75% per year on the liquidation preference.

Lehman Brothers Holdings Inc ((LEH)) in the last one year traded as high as $82.05 in June 2007 and as low as $20.25 in June 2008. Lehman stock ((LEH)) fell $2.60 to $29.69.

Merrill Lynch has reported losses related to credit markets of $37 billion and Morgan Stanley has written down assets by $12.6 billion. UBS still leads in the asset write down and credit market losses totaling 447 billion.

U.S. earnings in review

Alfacell Corporation, a development-stage biopharmaceutical company reported no revenues during the three months ended April 30, 2008 and April 30, 2007. Net loss in the quarter was $5.0 million or 11 cents per diluted share compared to net loss of $2.0 million or 4 cents per share, a year ago.

Alfacell Corporation ((ACEL)) in the last one year traded as high as $2.78 in July 2007 and as low as $0.61 in June 2008.

Bakers Footwear Group, Inc, a leading specialty retailer of moderately priced fashion footwear for young women reported first quarter sales decreased 13.13% to $43.5 million from $49.3 million a year ago. Net loss in the quarter was $4.9 million or 70 cents per diluted share compared to net loss of $1.0 million or 15 cents per share, a year ago.

Comparable store sales for the first quarter of fiscal 2008 decreased 11.1% compared to a decrease of 9.3% in the prior-year period.

Bakers Footwear Group, Inc ((BKRS)) in the last one year traded as high as $9.00 in June 2007 and as low as $1.30 in April 2008.

Exide Technologies, an electrical-energy storage technology provider reported fourth quarter sales increased 28% to $1.03 billion from $806.6 million a year ago. Net income in the quarter was $63.3 million or 80 cents per diluted share compared to net loss of $21.7 million or 36 cents per share, a year ago.

Net income for the full fiscal year 2008 was $32.1 million or $0.46 per diluted share as compared with a net loss of $105.9 million or $2.37 per share in fiscal 2007. Net sales for fiscal 2008 aggregated $3.70 billion as compared with $2.94 billion in fiscal 2007, an increase of 26%. Excluding the impact of favorable foreign exchange, net sales increased by $528.5 million, or 18%.

Exide Technologies ((XIDE)) in the last one year traded as low as $5.17 in November 2007 and as high as $17.80 in June 2008.

Krispy Kreme Doughnuts, Inc, a doughnut retailer reported first quarter revenues decreased 7% to $103.6 million from $110.9 million a year ago. Net income in the quarter was $4 million or 6 cents per diluted share compared to net loss of $7.4 million or 12 cents per share a year ago. Same-store sales or sales at locations open at least a year, fell 3.9% system-wide but rose 1.2% at company-owned stores.

Krispy Kreme Doughnuts, Inc ((KKD)) in the last one year traded as high as $9.50 in June 2007 and as low as $2.23 in January 2008.

European gainers and losers

Gaz De France led the gainers in the CAC 40 index stocks in the midday trade with a rise of 3.13% to 44.36 euros followed by gains in Suez of 2.58% to 47.94 euros, in Credit Agricole of 2.09% to 14.15 euros, in Air Liquide of 1.39% to 85.75 euros and in Alstom of 1.25% to 161.70 euros.

Saint Gobain led the midday decliners in the CAC 40 index with a loss of 2.28% to 47.93 euros followed by losses in Air France-KLM of 2.07% to 16.03 euros, in Cap Gemini of 1.90% to 42.64 euros, in Schneider Electric of 1.71% to 78.09 euros and in Dexia of 1.63% to 13.84 euros.

Among the DAX 30 index shares, Siemens AG led the gainers this afternoon with a rise of 2.06% to 71.40 euros followed by gains in Hypo Real Estate Holdings of 2% to 20.93 euros, in Volkswagen AG of 2% to 174.68 euros, in Fresius Medical Care of 1.75% to 35.99 euros and in E.ON AG of 1.38% to 135.95 euros.

MAN AG led the midday decliners in the DAX 30 index with a fall of 3.14% to 87.60 euros followed by losses in Deutsche Bank of 1.89% to 62.91 euros, in Deutsche Lufthansa of 1.88% to 15.67 euros, in Commerzbank AG of 1.81% to 19.54 euros and in Deutsche Borse of 1.61% to 83.95 euros.

Asian markets decline

In Tokyo Nikkei 225 Index closed lower 308.06 or 2.13% to 14,181.38, in Malaysia KL Composite index decreased 17.59 or 1.41% closed to 1,230.98. Market of Hong Kong and Australia were closed today.

In South Korea Kospi Index decreased 23.35 or 1.27% to close at 1,808.96, in Thailand SET index closed lower 11.75 or 1.44% to 805.58 and Indonesia JSE Index edged increased 7.84 or 0.33% to 2,410.08. Sensex index in India decreased 506.08 or 3.25% to 15,066.10.