Fannie Mae Cuts Dividend, Metals Down

123jump.com Staff
08 Aug, 2008
New York City

Fannie Mae, the troubled housing agency reported worst than expected results and indicated deepening problems in the housing market and for the company. The lender reported a loss of $2.3 billion or $2.54 a share compared to net income of $1.95 billion or $1.88 a share. Fannie also slashed its dividend 80% to 5 cents from 25 cents a share. In the UK, Royal Bank of Scotland reported its first loss in four decades after it wrote down

[R]10:00AM New York – Fannie Mae reported a loss and slashed its dividend. Crude oil and metals continued their slide for the third week in a row.[/R]

U.S. stocks opened higher in the morning as Fannie Mae reported a loss and slashed its dividend, crude oil and metals fell and European markets traded mixed.

Crude oil declined 1.3% in New York trading to $117.27. Metals, base and precious were on the decline as demand is expected to decline for the rest of the year. Gold dropped $12.70 to $$865.20 and silver edged 55 cents lower to $15.60. Copper dropped 2.4% or 8.25 cents to 333.55 cents a pound.

Fannie Mae, the troubled housing agency reported worst than expected results and indicated deepening problems in the housing market and for the company. The lender reported a loss of $2.3 billion or $2.54 a share compared to net income of $1.95 billion or $1.88 a share. Fannie also slashed its dividend 80% to 5 cents from 25 cents a share.

Fannie Mae in the morning trading dropped 95 cents or 10% to $9.09 and Freddie Mac rose 25 cents to $6.13.

Royal Bank of Scotland reported first half pre-tax loss of £691 million on £5.9 billion write down in assets. The loss, first ever in the last forty years on a sharp write down in the asset may help the troubled bank in averting asset sale at a discount price. Tier 1 capital ratio at the end of the first half of 8.6%. The loss attributable to shareholders was £761 million compared to £3.6 billion a year ago.

Operating revenue declined to £16.8 billion from £17 billion and the bank reported a net loss of £691 million compared to a profit of £5.115 billion. Losses per share in the period were 4.7 cents compared to earnings of 22.8 cents per share.

The U.S. worker productivity rose at 2.2% annual rate in the second quarter after rising at 2.6% in the first quarter on a rise of 1.3% in labor cost. The department also lowered its previous estimates for the years between 2005 and 2007 to 1.4% increase in productivity from an earlier estimate of 1.6% increase.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 43.42 or 0.33% to 13,168.41, Hang Seng index in Hong Kong decreased 218.99 or 0.99% closed to 21,885.21. ASX 200 index in Australia increased 2.90 or 0.06% to close 4,986.20. The KL Composite index in Malaysia decreased 9.25 or 0.82% closed to 1,120.31.

The Kospi Index in South Korea increased 4.72 or 0.30% to close at 1,568.72, SET index in Thailand closed lower 14.65 or 2.08% to 690.70 and JSE Index in Indonesia decreased 3.09 or 0.14% to 2,195.93. The Sensex index in India increased 50.57 or 0.33% to 15,167.82.

Europe Markets Review

In London FTSE 100 Index traded higher 1.60 or 0.03% to 5,479.10, in Paris CAC 40 Index increased 23.77 or 0.53% to 4,481.20 and in Frankfurt DAX index traded higher 0.58 or 0.01% to 6,544.07. In Zurich trading SMI increased 27.82 or 0.39% to 7,209.89.

Earnings Review

California Pizza Kitchen, Inc, gourmet pizza chain said second quarter revenues rose 11% to $176.6 million from $158.6 million a year ago. Net income in the quarter increased 3.8% to $6.6 million or 26 cents per diluted share compared to net income of $6.3 million or 21 cents per share, a year ago.

California Pizza Kitchen, Inc ((CPKI)) in the last one year traded as high as $21.00 in September 2007 and as low as $9.32 in January 2008. Based on the yesterday’s closing price the company has a market cap of $354.94 million.

Cogent, Inc, a provider of automated fingerprint identification systems (AFIS) said second quarter revenues declined 17% to $26.0 million from $31.3 million a year ago. Net income in the quarter decreased 32.7% to $7.2 million or 8 cents per diluted share compared to net income of $10.6 million or 11 cents per share, a year ago.

Cogent, Inc ((COGT)) in the last one year traded as high as $17.02 in October 2007 and as low as $8.28 in March 2008. Based on the yesterday’s closing price the company has a market cap of $929.34 million.