Schwab Earnings Rise But Stock Falls

Elena
18 Jan, 2006
New York City

Asian-Pacific benchmarks closed deeply in the red on heavy selling pressure. The Nikkei tumbled 2.94% to 15,314.18, South Korean Kospi shed 2.64%, and Taiwan''s Weighted index fell 3.16%. European stocks were also weak on disappointing sales from Intel and rising oil. The German DAX 30 and the French CAC 40 dropped 1.5% each. Charles Schwab reported tripled Q4 earnings rise of 14 cents a share vs. 4 cents a year ago on 11% revenue growth, matching estimates.

U.S. MARKET AVERAGES

U.S. stock futures sharply dropped, pointing to a weak opening, after heavy selling sent the Nikkei down 3% and Intel Corp. and Yahoo Inc. released disappointing quarterly results, raising worries about corporate earnings.

Dow component Intel Corp., the world's top chipmaker, reported Q4 results below expectations on weak demand for the processors used in desktop computers. Piper Jaffray downgraded its rating on Intel and cut its price target.

Yahoo Inc., the world's largest Internet media company, also posted quarterly earnings that fell short of Wall Street expectations.

International Business Machines Corp., the world's biggest computer company, said quarterly profit rose higher than expected.

Standard & Poor's 500 index futures (SPH6) were down 12.30 points, well below fair value. Nasdaq 100 index futures were down 36.50 points, and Dow Jones industrial average futures down 95 points.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks closed Wednesday deeply in the red, hurt by heavy selling pressure. The Nikkei ended down for a second straight session, dropping 2.94% to 15,314.18. Tokyo Stock Exchange finished 20 minutes earlier as the number of orders and executions has increased so sharply that threatened to exceed the systems’ 4 million-order capacity. South Korea’s Kospi tumbled 2.64%, Taiwan’s Weighted index slid 3.16%.

European stocks traded weak at mid-day on disappointing sales from Intel, sharp declines in Asian markets and surging oil prices. The German DAX 30 tumbled 1.5%, the French CAC 40 slipped 1.5%, and London’s FTSE 100 dropped 0.8%.

OIL, METALS, CURRENCIES

Crude oil prices climbed over $66 a barrel amid supply concerns, raised by political tension in Nigeria and Iran. Light sweet crude for February delivery rose 47 cents to $66.78 a barrel. Heating oil gained 6 cents to $1.7978 a gallon. Gasoline added 10 cents to $1.8330. Natural gas surged 14 cents to $9.306 per 1,000 cubic feet.

European gold declined on speculations of accelerating inflation, diminishing the metal’s appeal. In London gold traded at $554.75, down from $561.70. In Zurich the precious metal traded at $545.25, down from $557.15. In Hong Kong gold fell $13.10 to close at $544.70. Silver opened at $9.04, down from $9.12.

The U.S. dollar slipped against major currencies. The euro was quoted at $1.2115, up from $1.2095. The dollar bought 115.15 yen, down from 115.51. The British pound was quoted at $1.7672, up from $1.7664.

EARNINGS NEWS

IBM, ((IBM)), computer company, reported that Q4 net profits rose 13 % to $1.99 per share, up from $1.67 per share in the year-ago period, despite unimpressive revenue, beating analysts'' estimate of $1.94 per share. Cost cuts and the sell-off of IBM''s personal-computer business boosted profit margins, while positive trends in chips and mainframes helped the hardware division. The results were pulled down 10 cents per share by a $267 million charge stemming from IBM''s recent decision to freeze its pension plan for U.S. workers in 2008, and by 2 cents per share because of an accounting change.

Yahoo Inc., ((YHOO)), Internet company, reported Q4 net earnings of 46 cents per share, up 83% from 25 cents per share at the same time in 2004. The 2005 results incorporate a $310 million gain triggered by a complex deal that left Yahoo with a 40 % stake in Alibaba.com, China''s largest e-commerce company. Excluding the gain and other accounting items unrelated to its ongoing operations, Yahoo would have earned 16 cents per share. That figure falls a penny below the analyst estimate.

CIT Group Inc., ((CIT)), leasing company, posted Q4 net profit of $1.21 a share, up 21.8% from the year-ago period, beating analyst estimate of $1.04 a share. Q4 finance income, which excludes revenue from fees and sales of leasing equipment, advanced 23.5%. The company stated that Q4 included several items, including the sale of its micro-ticket leasing unit and a reduction in Q4 income tax expense, which resulted in a 24 cents a share increase in earnings.

ASML, ((ASML)), Dutch chip equipment maker, announced that Q4 net income fell to 51.6 million euros from 109 million euros, with sales down to 548 million euros from 785 million. Both profit and sales were higher than analysts’ forecasts. On a sequential basis, Q4 profit and sales advanced, and the company booked 55 systems compared to 46 systems in Q3.

SunTrust Bank Inc., ((STI)), bank company, reported that Q4 net profit advanced to $1.41 a share, up from the comparable period last year on tight cost controls and improving credit quality trends. Income excluding expenses from the acquisition of National Commerce Financial Corp. came to $1.43 a share, in line with the analysts’ forecasts. Revenue increased 7%.

Mellon Financial Corp, ((MEL)), financial company, reported Q4 net income of 50 cents a share, up from 46 cents a share in the prior year on revenue growth, topping analyst estimate by a penny. Assets under management rose 11% to a record $781 billion.

J.P. Morgan Chase & Co, ((JPM)), banking services, reported Q4 net income of 76 cents a share, up from 46 cents a share in the year-earlier period. Excluding non-operating items, earnings were 73 cents a share, beating on that basis analysts’ expectations by a penny. Investment banking fees continued to be strong; deposits and accounts in retail banking increased.

Southwest Airlines, ((LUV)), airline company, reported that Q4 net income advanced to 10 cents a share, up 53.6% from the year-ago period. If not for the effects of unsettled derivatives transactions, net income rose 44% to 12 cents a share. Operating revenue for the quarter increased 20.1%. The company missed analysts’ expectations for earnings of 13 cents a share.

State Street Corp, ((STT)), provider of products and services for global investors, reported Q4 net income of 74 cents a share, up 35% from 55 cents a share in the year-ago period on revenue growth, beating analyst estimate by a penny. Return on stockholders'' equity from continuing operations was 15.9% in Q4, up from 11.9%.

Ethan Allen Interiors Inc., ((ETH)), home furnishings retailer, reported that Q2 profit increased to 77 cents a share, up from 63 cents in the year-ago period. Sales for Q2 rose to $276 million from $245.3 million in last year''s Q2.