Citi, Merrill Estimates Cut; RiM, Nike Drop

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

U.S. stocks fell sharply after Goldman Sachs esitmated second quarter asset write down at Citigroup of $8.9 billion, Sanford Bernstein estmated a loss compared to profit at Merrill Lynch. Citigroup fell 5% and Merrill dropped 3%. Separately the final read on the first quarter economic growth was revised higher to 1% from 0.9% and existing home sales in May rose 2% and average home prices fell 6.3% in the month. The U.S. dollar edges lower and crude oil and gold rises.

[R]10:30AM New York – U.S. stocks edged lower after the release of final read on the economic growth, existing home sales in May and jobless claims data.[/R]

U.S. stocks fell in the morning trading after dollar declined and crude oil future prices increased. Analysts lowered earnings estimates for Merrill Lynch and Citigroup. After the release of earnings Research in Motion and Nike fall.

The U.S. dollar dropped to 1.5724 and gold rose $27.80 to $910.10 per ounce as rising inflation and negative interest rates in the U.S. draw investors to commodities. Crude oil futures for the front month rose $3.34 to $137.89.

The Fed kept its short term rate at 2.0% and hinted that inflationary pressures in the economy are building but risk to the slow down in the economy are receding.

Yield on 10-year bond was at 4.07% and for 30-year bond at 4.63%.

GDP Estimate Revised Higher

Final read on the first quarter economic growth was increased to 1% from the preliminary estimate of 0.9% increase. The GDP rose at 0.6% in the fourth quarter of last year. The economy grew at a rate of 2.2% in 2007 and at 2.9% in 2006. The slowest annual economic growth in the last ten years was registered in 2001 of 0.8% and economy shrank at a rate of 0.2% in 1991, the only decline in the last twenty years.

Existing Home Sales Increase

Existing home sales in May rose 2% to 4.99 million as sellers lower prices, however home market may take long time to recover as a significant imbalance exist between the annual demand and inventories of homes for sale. The inventory of unsold homes in the month fell 1.4% to 4.49 million from 4.55 million in April. The Commerce Department, a day ago said the new home sales in May rose to 512,000, only second lowest monthly sale in the last sixteen years.

Earnings Review

Bed Bath & Beyond Inc, home furnishings and appliance retailer said first quarter sales rose 6.1% to $1.65 billion from $1.55 billion a year ago. Net income in the quarter tumbled 27% to $76.8 million or 30 cents per diluted share compared to net income of $104.6 million or 38 cents per share, a year ago.

Same-store sales open at least a year rose 0.8%.

Bed Bath & Beyond Inc ((BBBY)) in the last one year traded as high as $37.61 in June 2007 and as low as $24.49 in January 2008. Based on the yesterday’s closing price the company has a market cap of $7.42 billion. Bed Bath stock rose $1.49 to $30.07.

CKE Restaurants, Inc, fast-food chain operator said first quarter revenues fell 3% to $466.2 million from $481.8 million a year ago. Net income in the quarter increased 8% to $16.6 million or 31 cents per diluted share compared to net income of $15.4 million or 23 cents per share, a year ago.

Same-store sales or sales at locations open at least a year, rose 1.8% system-wide. By brand, same-store sales rose 3.9% at Carl''s Jr. and fell 0.6% at Hardee''s.

CKE Restaurants, Inc ((CKR)) in the last one year traded as high as $21.67 in June 2007 and as low as $9.60 in May 2008. Based on the yesterday’s closing price the company has a market cap of $644.11 million.

Herman Miller, Inc, Furniture maker said fourth quarter revenues jumped 7% to $519.1 million from $485.3 million a year ago. Net income in the quarter rose 25% to $39.5 million or 71 cents per diluted share compared to net income of $31.7 million or 50 cents per share, a year ago.

North American sales rose 6% and the rest of the world sales increased 23%. For the year, profit climbed 18% to $152.3 million, or $2.56 per share, from $129.1 million, or $1.98 per share, in the prior year. Revenue rose 5% to $2.01 billion from $1.92 billion in 2007.

Herman Miller, Inc ((MLHR)) in the last one year traded as high as $35.15 in June 2007 and as low as $22.25 in April 2008. Based on the yesterday’s closing price the company has a market cap of $1.35 billion. Herman Miller stock rose 51 cents to $24.50.

Lennar Corporation, one of the nation''s largest homebuilders reported second quarter revenues fell 61% to $1.13 billion from $2.88 billion a year ago. Net loss in the quarter was $120.9 million or 76 cents per diluted share compared to net loss of $244.2 million or $1.55 per share, a year ago.

Lennar Corporation ((LEN)) in the last one year traded as high as $38.76 in June 2007 and as low as $11.98 in January 2008. Based on the yesterday’s closing price the company has a market cap of $2.34 billion. Lennar stock fell 66 cents to $13.91.


NIKE, Inc, athletic shoe and apparel company said fourth quarter revenues grew 16% to $5.1 billion from $4.4 billion a year ago. Net income in the quarter rose 12% to $490.5 million or 98 cents per diluted share compared to net income of $438 million or 86 cents per share, a year ago.

U.S. revenues grew just 4%. In the Asia Pacific region, Nike''s second largest market, revenue jumped 39% to $828 million. Changes in currency exchange rates increased revenue by 13% points in the region. In Europe revenue grew 19% and 30% in the Americas region.

The company also reported on Wednesday that its net income for the fiscal year 2008 jumped 26% to $1.9 billion, up from $1.5 billion last year. Earnings per share for the year grew 28% to $3.74, up from $2.93 for 2007.

NIKE, Inc ((NKE)) in the last one year traded as high as $70.60 in June 2008 and as low as $51.50 in June 2007. Based on the yesterday’s closing price the company has a market cap of $32.50 billion. Nike stock fell $6.02 to $59.98.

Oracle Corporation, an enterprise software company said fourth quarter revenues rose 24% to $7.24 billion from $5.83 billion a year ago. Net income in the quarter rose 27% to $2.04 billion or 39 cents per diluted share compared to net income of $1.6 billion or 31 cents per share, a year ago.

Oracle''s new software licenses in the quarter were up 27%. Excluding acquisition and stock compensation costs, Oracle expects its first-quarter earnings to be 26 cents or 27 cents per share.

Oracle Corporation ((ORCL)) in the last one year traded as high as $23.57 in June 2008 and as low as $18.20 in March 2008. Based on the yesterday’s closing price the company has a market cap of $116.17 billion. Oracle stock fell 76 cents to $21.79.

Red Hat, Inc, the provider of open source solutions said first quarter revenues rose 32% to $156.6 million from $118.8 million a year ago. Net income in the quarter rose 7% to $17.3 million or 8 cents per diluted share compared to net income of $16.2 million or 8 cents per share, a year ago.

Red Hat, Inc ((RHT)) in the last one year traded as high as $24.84 in May 2008 and as low as $16.53 in March 2008. Based on the yesterday’s closing price the company has a market cap of $4.25 billion. Red Hat dropped $1.35 to $20.95.

Research In Motion Limited, wireless device maker said first quarter revenues jumped 52% to $2.24 billion from $1.08 billion a year ago. Net income in the quarter rose 54% to $482.5 million or 84 cents per diluted share compared to net income of $223.2 million or 39 cents per share, a year ago.

Research In Motion Limited ((RIMM)) in the last one year traded as high as $148.13 in June 2008 and as low as $53.05 in June 2007. Based on the yesterday’s closing price the company has a market cap of $80.26 billion. Research in Motion stock fell $16.81 to $125.55.

Xyratex Limited, U.K. based computer storage products company said second quarter revenues rose 25% to $266.5 million from $213 million a year ago. Net income in the quarter rose 10% to $2.2 million or 7 cents per diluted share compared to net income of $2 million or 7 cents per share, a year ago.

Xyratex Limited ((XRTX)) in the last one year traded as high as $24.01 in July 2007 and as low as $13.34 in January 2008. Based on the yesterday’s closing price the company has a market cap of $538.12 million. Xyatek stock fell $1.72 to $16.70.

Asian Markets Review

In Tokyo Nikkei 225 Index closed lower 7.60 or 0.05% to 13,822.32, in Hong Kong Hang Seng index decreased 179.49 or 0.79% closed to 22,455.67. In Australia ASX 200 index higher 69.20 or 1.32% to close 5,307.00. In Malaysia KL Composite index decreased 5.22 or 0.43% closed to 1,203.89.

In South Korea Kospi Index decreased 0.13 or 0.01% to close at 1,717.66, in Thailand SET index closed lower 4.03 or 0.52% to 774.39 and Indonesia JSE Index edged increased 9.53 or 0.41% to 2,350.89. Sensex index in India increased 201.75 or 1.42% to 14,421.82.