Ford to Cut Capacity and Staff

123jump.com Staff
23 Jan, 2006
New York City

After a steep sell-off in the large cap and tech stocks in the previous, market opened higher in the morning. Ford and General Motors closed higher by 5% and 9% respectively on initial market reaction to the Ford restructuring plan. Supreme Court refused to hear patent dispute case between RIMM, maker of BlackBerry, and NTP.

U.S. MARKET AVERAGES

After last week of sell-off triggered by weaker than expected earnings from Intel, Yahoo, eBay, Citigroup and General Electric; market was hoping that more earnings news will support rally today.

Earnings from Bank of America, Eaton Corp and American Express failed to excite the market. Traders were in the mood to buy after a steep sell-off in large cap stocks in the previous week.

Ford Motor Company released restructuring plan and announced to lay-off staff of up to 30,000 people by the year 2012 and cut production and assembly capacity by 2008. Traders reacted to the plan with cautious optimism and company stock closed up 42 cents at $8.32, up 5.3%. General Motors stock rose 9% in sympathy.

Markets in Europe closed lower and in Tokyo Nikkei average was down more than 2%.

MOVERS AND SHAKERS

Albertsons Inc. ((ABS)) agreed to be acquired by a group including grocery store operator Supervalu Inc ((SVU)) and drug store chain CVS Corp. ((CVS)) for $17.4 billion in cash and stock. Albertson’s stockholders will receive $26.29 in cash. The company’s shares rose 4.4%.

YAHOO ((YHOO)) was upgraded at Bear Stearns to outperform from peer perform. The stock gained 1.11%.

Citigroup ((C)) was downgraded at UBS to neutral from buy. The stock gained 1.1%.

The Sports Authority Inc ((TSA)) agreed to be acquired by private equity firm Leonard Green & Partners and members of the company''s senior management team for roughly $1.3 billion in cash and assumed debt. The deal values Sports Authority shares at $37.25 each and the transfer is expected to close in the second quarter. The company’s shares soared 20%.

Datawatch Corp ((DWCH)) reported Q1 earnings of $64,000, or a penny a share, on revenue of $4.7 million, missing estimates of 3 cents a share. The company’s shares dropped 26.4%.

The U.S. Supreme Court rejected Research In Motion’s ((RIMM)) appeal to reverse a lower-court ruling that found its BlackBerry wireless email device violated patents held by NTP Inc., a Virginia patent-holding firm. The case now moves to a federal district court in Virginia, where a judge will decide whether to reinstate an injunction against the U.S. sale of BlackBerries. RIM’s shares fell 2.6%.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks fell across the region, reflecting an oil price rise to $69 a barrel and cautiousness following the steep declines on Wall Street. The Nikkei recovered from earlier lows to close down 1.2%. Among other regional markets, Taiwan’s Weighted index dropped 1.7%, Hong Kong’s Hang Seng slipped 1.4%, and South Korea’s Kospi fell 1%.

European stocks finished weak but off intraday lows, supported by the strong opening of U.S. markets. The German DAX 30 finished flat at 5,349, the French CAC 40 dropped 0.45%, and London’s FTSE 100 fell 0.2%.

OIL, METALS, CURRENCIES

Crude oil prices retreated on Saudi Oil Minister’s assurance that there is enough supply to meet demand. Light sweet crude for March delivery fell 43 cents to $68.05 a barrel. Heating oil fell nearly 3 cents to $1.8420 a gallon. Gasoline slightly fell to $1.8460. Natural gas dropped 73 cents to $8.55. London Brent declined 55 cents to $65.88.

European gold prices declined after hitting fresh 25-year highs Friday. In London gold traded at $555.70, down from $559.80. In Zurich the precious metal traded at $558.25, down from $561.35. In Hong Kong gold fell $1 to close at $556. Silver closed at $8.92, down from $9.06. In New York gold rose $4.70 to $558.70 per ounce.

The U.S. dollar traded lower against other major currencies. The euro was quoted at $1.2278, up from $1.2075. The dollar bought 114.64 yen, down from 115.40. The British pound was quoted at $1.7848, up from $1.7638.

EARNINGS NEWS

Ford Motor Co., ((F)), automotive company, reported Q4 earnings of 8 cents a share, up from 6 cents a share a year-ago, beating analyst estimate for a profit of penny a share. If not for a number of items, the company posted earnings from continuing operations of 26 cents a share, down from a year-earlier equivalent profit of 28 cents a share.

Bank of America Corp, ((BAC)), banking services, reported that its Q4 profit dropped to 93 cents a share, down from 94 cents a share in the year-ago period on costs related to its recent acquisition on credit card firm MBNA, increased provision expense and lower trading results. If not for merger and restructuring costs, it gained 94 cents a share, missing analyst estimate of $1.02 a share. The company earned $3.85 billion, or 94 cents a year ago in the year ago quarter. Quarterly revenue was $14.12 billion, up 3%.

Pilgrim''s Pride Corp., ((PPC)), chicken producer, reported Q1 net income fell 47% to 39 cents a share, down from 73 cents in the year-ago period on 1.8% lower sales. Sales dropped to $1.34 billion from $1.37 billion. The company cited weakness at its Mexico operations plus higher energy costs and lower sales prices for the decline.

Provident Financial Holdings Inc., ((PROV)), holding company, reported Q2 net income rose 67% to $1.23 a share, up from 77 cents a share in the year-ago period. In the latest period, the banking company sold a commercial office building, prompting an increase of 53 cents to earnings.

Energizer Holdings Inc., ((ENR)) batteries manufacturer, reported that Q1 profit was $1.77 a share, up vs. $1.60 in the year- ago period, topping analysts’ forecasts of $1.61 a share. Earnings included a 5-cent restructuring charge related to the company''s European supply chain. Sales for Q1 advanced to $882.4 million from $875.9 million in last year''s first quarter.

TD Banknorth, ((BNK)), banking services company, reported Q4 earnings of 32 cents a share, up from 12 cents a share in the year-ago period. Aside from non-recurring items, earnings would have been 62 cents a share, up from 59 cents in the same period last year and in line with the analyst estimate. Net interest income was flat with last year’s, while non-interest income fell to $60.1 million from $72.5 million.

Insteel Industries Inc., ((IIIN)), wire products manufacturer, reported Q1 net income of 81 cents a share, up from 54 cents a share in the year-ago period. Sales in Q1 advanced 12% to $83.5 million from $74.7 million.

Carpenter Technology, ((CRS)), specialty metals and engineered products producer, reported Q2 earnings of $1.65 a share, up vs. $1.28 a share in the year-ago period, topping analyst estimate of $1.60 a share. Revenue advanced to $345.7 million from last year''s $312.1 million as strength in the aerospace markets helped improve demand for alloys, titanium and ceramic materials.