Ford, GM, Textron, Satyam Fall; Red Hat Rises

Mayank Mehta
23 Dec, 2008
New York City

U.S. automakers fell again after rating agencies lowered debt rating on the expectations of weak sales. Satyam continues to slide. Of the stocks in S&P 500 index, 290 declined, 201 rose and 9 are unchanged. Ford Motor led decliners in the S&P 500 index with a loss of 16.7%.

[R]2:00PM New York – U.S. automakers fell again after rating agencies lowered debt rating on the expectations of weak sales. Satyam continues to slide.[/R]

Stocks are weak in the early hours of trading. Of the stocks in S&P 500 index, 290 declined, 201 rose and 9 are unchanged.

Ford Motor led decliners in the S&P 500 index with a loss of 16.7% followed by losses in Textron Inc of 16.4%, in General Motors of 13.9%, Jones Apparel of 10% and in Covidien Ltd of 5.8%.

Prologis led gainers in S&P 500 index with a rise of 16.3% followed increase in Prudential Financial of 7%, in CIT Group Inc of 4.7%, in Lincoln National Corp of 4.6% and Starwood Hotels of 4.6%.

Other Movers

American Greetings Corporation ((AM)) fell 27.3% or $2.69 to $7.10 after the Cleveland, Ohio based greeting-card company reported third quarter sales fell 6.5% to $454.1 million from $485.8 million a year ago. Net loss in the quarter was $193.3 million or $4.25 per diluted share compared to net income of $29 million or 52 cents per share a year ago.

AMAG Pharmaceuticals, Inc ((AMAG)) declined 5.3% or 66 cents to $33.41 after biopharmaceutical company, Amag said it received a second complete response letter from the Food and Drug Administration, ahead of the agency's expected approval decision date of Dec. 30. The company is seeking FDA approval for a treatment for iron-deficiency anemia in patients with chronic kidney disease.

CIT Group Inc ((CIT)) rose 5.7% or 24 cents to $4.42 after the commercial lender was approved by The Federal Reserve Board to become a bank holding company. The approval clears the path for the company to access billions in capital from the federal rescue program.

Covidien Ltd ((COV)) declined 5.1% or $1.94 to $35.22 after the supplier of health-care products that the board of directors has unanimously approved moving the company’s principal executive office from Bermuda to Ireland. The new company will be named Covidien plc.

Ford Motor Company ((F)) decreased 14.6% or 37 cents to $2.21 after the Moody's Investors Service lowered the corporate debt rating by two notches and liquidity rating by several notches.

Bruce Clark, Senior Vice President with Moody's said, ""In return for its loans to GM and Chrysler, Washington is going to demand that all stake holders step up and make sacrifices. This will mean wage and benefit concessions from the UAW, and haircuts to debt for creditors.""

Clark added, ""Even if Ford ends up not needing government loans because of its stronger liquidity position, the company must have UAW parity with GM and Chrysler. But, the UAW is unlikely to make concessions to Ford unless Ford's creditors also bear some pain in the form of a debt restructuring.""

General Motors Corporation ((GM)) lost 15.3% or 54 cents to $2.99 after the largest U.S. automaker debt was lowered by Standard & Poor's and indicated that lenders can expect negligible recovery of funds in the event of default.

ProLogis ((PLD)) climbed 19.9% or $1.83 to $10.99 after the world’s largest warehouse owner signed a binding agreement to sell its operations in China and property fund interests in Japan, to the real estate affiliate company of the Government of Singapore Investment Corporation, for cash of $1.3 billion plus liabilities.

Red Hat, Inc ((RHT)) added 14.2% or $1.71 to $13.68 after the Linux software provider said third quarter sales rose 22% to $165.3 million from $135.4 million a year ago. Net income in the quarter rose 20% to $24.3 million or 12 cents per diluted share compared to net income of $20.3 million or 10 cents per share a year ago.

Satyam Computer Services Limited ((SAY)) fell 17.3% or $1.43 to $6.83 after India’s third- largest software services provider was barred from doing business with the World Bank.

Local media in India are speculating that company founder may have asked board to accept his resignation after a failed bid to convince the software company to buy infrastructure company controlled by him for $1.6 billion.

Satyam's shares have tumbled 28% since the failed bid last week.

TIBCO Software Inc ((TIBX)) gained 2.0% or 10 cents to $4.90 after the business software maker said fourth quarter revenues fell 0.3% to $185.5 million from $186.1 million a year ago. Net income in the quarter rose 17% to $32.3 million or 18 cents per diluted share compared to net income of $27.6 million or 14 cents per share a year ago.

Textron Inc ((TXT)) decreased 18.5% or $2.84 to $12.47 after the defense contractor and the maker of Bell helicopters and Cessna aircraft lowered its fourth-quarter outlook. Management also cut 2,200 jobs or 5% of workforce in the last five months.

Washington Federal, Inc ((WFSL)) slid 21.7% or $3.53 to $12.73 after The Seattle- based bank announced a quarterly cash dividend of 5 cents per share. The dividend will be payable on January 16, 2009 to common stockholders of record on January 2, 2009.

This will be Washington Federal's 104th consecutive quarterly cash dividend. This cash dividend of 5 cents per share is a decrease of 16 cents or 76% compared to the 21 cents a share paid by the company in October 2008.