Monster, Wynn Rise; Cummins, Barclays Drop

123jump.com Staff
01 Nov, 2008
New York City

Casino stocks rallied after Wynn Resorts reported higher than expected revenue. Macau, China based casino performed better than expected. Airline rallied on the hopes that recent fuel price declines and cut in industry capacity will lift earnings in the sector. Carnival Corp dropped its dividend.

[R]12:20 p.m. New York – VeraSun Energy files bankruptcy protection. Casino stocks rally on Wynn Resorts earnings. Carnival plunged after it suspended dividend.[/R]

AMR Corporation, ((AMR)) the parent of American Airlines rose 11% or $1.01 to $10.21 after the recent decline in jet fuel prices and capacity cuts are expected to boost yields and profits at airlines. Southwest Airlines Company ((LUV)) gained 5% or 54 cents to $11.78, U.S. Airways Group, Inc. rose ((LCC)) 81 cents or 8.7% to $10.14 and UAL Corp ((UAL)) rose 11% or $1.38 to $14.56

Barclays PLC ((BCS)) plunged 21% or $2.90 to $10.73 after it agreed to capital raising plan that will raise £7.05 billion or $11.6 billion. The deal will raise £4.05 billion through convertible notes and £3 billion of securities named Reserve Capital Instrument that will pay interest of 14% through 2019 and will have higher claim than common stock.

Sheikh Mansour Bin Zayed Al Nahyan and Qatar will invest £1.5 billion each in exchange of RCI and warrants will allow up to £3 billion Barclays share purchase. If warrants are exercised the stake will rise to 16.7% for Sheikh Mansour and that of Qatar Holdings to 12.7% and 2.8% for Challenger Universal Ltd., Qatar controlled fund. The news was first reported in Wall Street Journal.

Barclays also reported pre-tax profit for nine months ending in September better than in the same period a year ago.

Carnival Corporation ((CCL)) dropped 11.5% or $3.31 to $25.40 and fell as much as 24% after is suspended the dividend payment after the 40 cents a share payment in December. The dividend suspension is expected to save the company $1.3 billion a year. The company also lowered its earnings outlook between $2.50 and $3 a share in 2009 and guided between $2.81 and $2.82 a share in 2008. The company also plans to issue as many as 19.2 million shares to repurchase shares of Carnival Plc in the U.K.

Cummins Inc ((CMI)) fell 17% or $5.53 to $26.15 after it reported 24.5% increase in third quarter net to $229 million or $1.17 a share from $184 million or 9 cents a share in the year ago. Cummins lowered its sales outlook to 12% in the current year from 15% estimate in July. The company declined to give sales and earnings guidance for 2009 but indicated demand for truck engines is expected to remain weak and sounded optimistic for power supply units and international sales.

Dillard’s, Inc ((DDS)) closed up 70 cents or 15.1% to $5.33 after the company assured investors that it has sufficient capital to meet its short and long term debt requirements. The company in a statement said it has $1.2 billion in credit facility with JP Morgan Chase surpassing its peak requirement in November of $500 million. The company will slow new store openings and reduce its capital expenditure need to $120 million from $204 million and has closed 20 stores in the year so far saving $50 million in operating expenses.

Electronic Arts ((ERTS)) fell 17.9% or $4.95 to $22.78 after it reported fiscal second quarter sales increase of 40% to $894 million. In the quarter the company lost $310 million or 97 cents a share compared to a net loss of $195 million or 62 cents a share a year ago. The company plans to lay off 6% of its staff to stem the rising developments costs. The company lowered its annual earnings per share forecast between $1 and $1.40 from $1.30 and $1.70 after adjusting for certain items but left its revenue guidance unchanged.

Huntsman Corporation ((HUN)) dropped 26.1% or $3.55 to $10.10 after a New York judge rejected the Apollo Management controlled Hexion Specialty Chemicals’ request to extend banks commitment deadline to fund $6.5 billion purchase of Huntsman Corp. The commitment letters signed by Credit Suisse Group and Deutsche Bank AG at the height of the leverage buyout booms on July 11, 2007 expired on November 1, 2008 at 11:59 p.m.

Hexion argued that the commitment for funding should be extended but banks argued that they had serious reservations on the viability of the combined entity Hexion-Huntsman. Hexion will not appeal the decision but pursue a separate case with banks and force them to fund the purchase. Apollo agreed to purchase Huntsman Corp at $28 a share and if it fails to do so it will be liable for damages to Huntsman.

Massey Energy ((MEE)) rose 13.2% or $2.70 to $23.09 after it reported third quarter earnings of $54 million or 64 cents a share compared to $21.4 million or 27 cents a share and coal production increase of 28% to $666.4 million. In the quarter the operating cash margin per ton surged 111% to $15.82 from $7.49 a ton.

Monster Worldwide, Inc, ((MNST)) rose 11% or $1.37 to $14.24 after it reported third quarter profit increased to $42.7 million or 35 cents a share compared to $33.3 million or 25 cents a share. Monster sales in the quarter were $332 million compared to $330 million a year ago.

Sun Microsystems, Inc ((JAVA)) fell 13% or 69 cent to $4.60 after it reported a quarterly loss of $1.7 billion or $2.24 a share in the fiscal first quarter. The loss included $1.45 billion write down of past acquisitions and $63 million related to layoffs. Excluding the charges the loss in the quarter would have been $65 million or 9 cents a share.

VeraSun Energy Corporation ((VSE)) declined 16% or 9 cents 48 cents and filed for prepackaged bankruptcy and arranged $250 million in financing to keep it operating. The ethanol producer’s ill timed bet on high corn prices came at a time when ethanol prices fell along with crude oil prices in the last three months. The company reported third quarter ending in September loss of $63 million compared to $103 million a year ago and canceled its $20 million stock offering recently.

Wynn Resorts Limited ((WYNN)) surged 30% or $13.90 to $60.40 after the company reported third quarter profit increased14% to $51.1 million or 49 cents a share from $44.7 million or 41 cents a share. Net revenues increased 18% to $769.2 million on better than expected increase in revenue in Macau, China. The company plans to open Encore resort in December in Las Vegas and has $1.7 billion in cash and credit line of $500 million.

Casino stocks rallied on the Wynn Resort earnings. Las Vegas Sands ((LVS)) surged 37% or $3.81 to $14.19 and International Game Technology ((IGT)) rose 17% or $1.99 to $14.