Oil and Gasoline Pile up

Elena
01 Feb, 2006
New York City

Stocks opened mixed Friday with the Nasdaq posting weakness on disappointing quarterly results from Google, while the Dow gained on strong earnings release from Boeing. The aircraft maker beat expectations, posting more than doubled Q4 profit of 58 cents a share. The company also raised its 2006 guidance. Time Warner posted Q4 income rise of 29 cents a share, above estimates. Jones Lang LaSalle''s Q4 profit rose 34% on 21% revenue growth.

U.S. MARKET AVERAGES

Stock opened mixed, following Fed Reserve’s decision to raise interest rates, disappointing quarterly results from Google and better-than-expected earnings report from Dow component Boeing.

Earnings reports drew back the attention of investors. Google's disappointing Q4 performance raised concerns among investors and in particular, those investing in Internet companies.

Google ((GOOG)) tumbled 16%, citing a higher-than-expected tax rate as the reason why its profit missed the consensus forecast. UBS lowered its rating on Google to neutral from buy.

Boeing Co. ((BA)) said Q4 more than doubled earnings of 58 cents a share vs. 23 cents a year ago on 7% revenue growth, exceeding estimates of 44 cents a share. The company also raised its profit outlook for 2006, citing better operating performance.

Among other major companies releasing strong quarterly results, Time Warner Inc. ((TWX)) posted 21.2% profit rise on strong results from the company's cable TV, movie studios and cable networks businesses, beating estimates. Power company Duke Energy Corp. ((DUK)) posted a 69% rise in fourth-quarter profit. Tribune Corp ((TRB)) announced 38% net income drop in Q4 on 4.5% revenue decline, missing estimates.

In economic news, the Institute for Supply Management said manufacturing in January grew at a slower pace than December, economist expectations. The group said deliveries of goods are slowing and prices are increasing.

The HMO space stood out as one of the best performers in the early going with an advance of 1.4% which took the sector to a new high. Molina Healthcare ((MOH)), which helped lead the group higher on Tuesday, rose by nearly 13% on guidance released after Tuesday''s close.

The airline sector moved to the downside, dragged by JetBlue ((JBLU)), which fell more than 6% on disappointing quarterly results and guidance. Google''s disappointing quarterly results sent Internet stocks in the negative.

The Dow rose 37.23, or 0.34%. The Standard & Poor's 500 index rose 0.41, or 0.03%, and the Nasdaq composite index fell 5.13, or 0.22%, with Google's decline pushing the tech-dominated index lower.

Bonds fell, with the yield on the 10-year Treasury note rising to 4.54 percent from 4.52% late Tuesday.

MOVERS AND SHAKERS

Monster Worldwide Inc ((MNST)) said Q4 net income jumped 49% to $36.5 million, or 29 cents a share, from the year-ago quarter, on strong international growth. Sales climbed 24% to $266.6 million. The company said it sees 2006 earnings from continuing operations in the range of $1.21 to $1.26 a share on revenue of $1.165 billion to $1.215 billion. The company’s shares climbed 13.4%.

Jones Lang LaSalle ((JLL)), real estate and money management services provider, reported Q4 net earnings of $66.9 million, or $2.11 a share, up 34% from $50 million, or $1.62 a share. Revenue rose 21% to $499 million from $412.4 million a year ago, said the real estate and money management services provider. The stock rose 12.5%.

Phoenix Cos ((PNX)), life insurance and asset management company, posted Q4 profit rise to $50.2 million, or 48 cents a share, from $48.3 million, or 48 cents, a year ago. Total segment income was $27.6 million, or 27 cents a share, up from $26 million, or 26 cents, in last year's fourth quarter, beating estimates of 21 cents a share. The company affirmed its fiscal 2006 view for a double-digit percent gain in earnings growth. The stock gained 4.7%.

PPL Corp ((PPL)) said Q4 net income rose to $185 million, or 49 cents a share, from $177 million, or 47 cents a share, with revenue up 2.4% to $1.5 billion. Earnings from continuing operations of 53 cents a share topped analyst earnings forecasts of 50 cents a share. PPL confirmed its 2006 guidance of earnings of $2.15 to $2.25 a share and said it expects 11% compound annual earnings per share growth through 2010. The company’s shares rose 3.8%.

SigmaTel Inc ((SGTL)), semiconductor company, reported Q4 net earnings of $4.65 million, or 12 cents a share, down 76% from $19.5 million, or 52 cents a share, last year. Pro forma net income was $6 million, or 16 cents a share, while revenue rose to $82 million from $78.6 million. Analysts expected earnings of 15 cents a share on revenue of $84 million. The company forecast a Q1 loss of 10 cents to 17 cents a share, or a penny to 8 cents a share on a pro forma basis, on revenue of $52 million to $60 million. The stock slipped 11.5%.

Pixelworx Inc ((PXLW)), integrated circuits maker, posted Q4 net loss of $35.9 million, or 75 cents a share compared with a profit of $4 million, or 8 cents a share a year ago. Its loss on a pro forma basis was $32 million, or 67 cents a share. Revenue rose to $43.3 million from $38.5 million last year. Pixelworks projected Q1 net loss of 19 cents to 22 cents a share and a pro forma loss of 8 cents to 11 cents a share on revenue of $39 million to $43 million and a net gross profit margin of 40% to 42%. The company’s shares dropped 19.8%.

ECONOMIC NEWS

Crude oil inventories showed an advance in the latest week, according to government statistics released Wednesday, reversing a portion of the previous week's decline. Stocks of gasoline recorded a sharp rise, while inventories of distillate fuel oil ticked down.

The Department of Energy's Energy Information Administration revealed that crude oil inventories climbed by 1.9 million barrels for the week ended January 27, rising to 321.0 million barrels from the prior week's level of 319.1 million barrels. This followed a decline of 2.3 million barrels in the previous week. Oil inventories were 11.4% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week increase of 4.2 million barrels, the government said, adding to the previous week's increase of 3.2 million barrels. Gasoline stocks were 0.1% above their levels of last year, the first time they have shown a year-over-year increase in some time. Inventories of distillate fuel oil ticked down by 200,000 barrels in the most recent week.

The Department of Commerce released its report on construction spending in the month of December on Wednesday, showing that spending rose much more than economists had anticipated. The growth reflected a notable increase in spending on private construction.

The report showed that construction spending rose 1 percent in December after an upwardly revised increase of 0.5 percent in November. Economists had expected spending to increase 0.3 percent compared to the 0.2 percent increase originally reported for November.

With the growth in December, the value of construction spending came in at a record $1.12 trillion for 2005, which is up 8.9 percent from the $1.03 trillion spent in 2004.

As mentioned above, spending on private construction saw notable growth, increasing by 1.1 percent in December to a seasonally adjusted annual rate of $904.3 billion. Residential construction increased by 1 percent while non-residential construction rose by 1.3 percent.

Public construction spending also increased in December, rising by 0.7 percent to a seasonally adjusted annual rate of $256.3 billion. The growth came as a 1.5 percent increase in education construction spending more than offset a 0.6 percent decrease in highway construction spending.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks ended mostly lower on volatile trade, reflecting heavy corporate news release and growing uncertainty over the direction of U.S. interest rates. A 13% drop of Google’s shares overnight also weighed on sentiment. The Nikkei ended its winning streak, falling 1% for the first time after six strong sessions. South Korea’s Kospi extended losses to drop 1.7%, Hong Kong’s Hang Seng fell 0.3%, while Singapore Straits Times gained 0.8%.

European stocks gained ground Wednesday, lifted by solid sales growth for Roche Holding and bid speculations involving Lloyds TSB. Inspired by the positive news, stock markets ignored Wall Street weakness and the disappointing report from Google. The German DAX 30 added 0.1%, the French CACV 40 gained 0.4%, and London’s FTSE 100 rose 0.5%.

OIL, METALS, CURRENCIES

Crude oil prices slightly declined on OPEC’s decision to keep production levels. The slide was limited by concerns over Iran’s standoff with the West. Light sweet crude for March delivery fell 12 cents to $67.80 a barrel. Heating oil lost 1 cent to $1.8406 a gallon, while gasoline inched down to $1.7970. Natural gas gained 17 cents to $9.487 per 1,000 cubic feet. London Brent lost 2 cents to $65.97.

European gold prices declined on strengthening dollar. In London gold traded at the fixed price of $567.20 bid per troy ounce, down from $569. In Zurich the precious metal traded at $567.60, down from $569.80. In Hong Kong gold rose $7.45 to close at $567.05. Silver opened at $9.76, down from $9.82.

The U.S. dollar grew stronger against other major currencies. The euro was quoted at $1.2110, down from $1.2160. The dollar bought 117.68 yen, up from 117.23. The British pound stood at $1.7757, down from $1.7805.

EARNINGS NEWS

Duke Energy, ((DUK)), energy company, posted Q4 net income of 63 cents a share, up vs. 36 cents a share in the year ago period, beating analyst estimate for earnings of 36 cents a share. Earnings from continuing operations were 43 cents a share, compared to 30 cents a share.

American Electric Power, ((AEP)), utility company, reported a Q4 loss of 38 cents a share, down from a profit of 45 cents a share a year-ago. On an ongoing basis, the company generated quarterly earnings of 29 cents a share, down from the previous year''s 42 cents, beating on that basis analyst views for earnings of 25 cents a share. American Electric stated it incurred $261 million in one-time charges during the 2005 quarter. Revenue dropped to $2.9 billion from $3.5 billion.

Devon Energy Corp, ((DVN)), oil and gas company, reported Q4 net earnings of $2.14 a share, up from $1.35 a share in the same period last year, missing analyst estimate of $2.29 a share. On an adjusted basis, the company announced it would have earned $2.33 a share for Q4. Revenue reached nearly $3.22 billion from $2.47 billion. On a combined basis, daily oil, gas and natural-gas liquids output averaged 619,000 barrels of oil equivalent in 2005, down 10% from company''s 2004 average daily production as a result of hurricane-related disruptions.

Greater Bay Bancorp, ((GBBK)), financial-services holding company, announced that Q4 net income increased 8.2% to 39 cents a share, up from 33 cents in the year-ago. Revenue from interest on loans in the quarter dropped 0.5% to $67.7 million from $68.1 million. Annualized return on equity for the quarter advanced to 13.5% from 12.69% while return on assets was 1.27% against 1.19%.

Time Warner Inc, ((TWX)), media company, reported Q4 net income of 29 cents a share, up from 24 cents in the year-ago period on 7% revenue growth. On an adjusted basis, the latest quarter''s profit was 25 cents a share, topping analysts view for earnings of 22 cents a share. Time Warner''s operating income came in at $2.2 billion, up from the previous year''s $1.6 billion.

Tribune Co, ((TRB)), media group, reported that Q4 net income dropped 38% to 43 cents a share on 4.7% revenue decline, missing analysts’ forecasts for earnings of 56 cents a share. Tribune''s profit figures incorporated net charges of 10 cents a share for eliminating 900 positions and closing a printing facility and a net non-operating loss of 4 cents a share.

PepsiAmericas Inc, ((PAS)), Pepsi bottler, reported that Q4 net income advanced 6.2% to 28 cents a share, up from 25 cents in the year-ago period on 9.9% higher sales, in line with analyst forecasts. Sales advanced to $894.3 million from $814.1 million. In Q4, a number of special items taken together cut 1 cent from per-share earnings.