Wall Street Watch: Post-Apple Earnings Tsunami, Big Banks Face Scary Downgrade
After jitters surrounded its earnings reports thanks to AT&T’s (NYSE:T) first quarter iPhone sale numbers, Apple’s (NASDAQ:AAPL) shares closed down two percent on Tuesday. But things changed after the company subsequently reported its fiscal quarter two earnings report after the bell. Earnings topped forecasts with earnings per share almost doubling to $12.30 and revenue jumping 59 percent to $39.2 billion. iPhone shipments surged 88 percent to 35.1 million units and iPad sales jumped over 150 percent to 11.8 million. In premarket trading, shares are up nearly 10 percent.
Five of the big banks are facing a potential Moody’s downgrade, along with $22 billion in additional costs. The CEOs are aggressively pushing back against the ratings agency with efforts last seen before the financial crisis, reported The Wall Street Journal. Sources have said Bank of America’s (NYSE:BAC) president and CEO Brian Moynihan and Citigroup’s (NYSE:C) CEO Vikram Pandit have gone so far as to publicly argue against the downgrades.
The U.K. has slipped back into a recession for the second time since the financial crisis. Its first quarter GDP declined a preliminary 0.2 percent on a quarterly basis after a fourth quarter drop of 0.3 percent. According to Markit’s Chris Williamson, the “underlying strength of the economy is probably much more robust,” but that the data will still affect confidence and the U.K. will tumble into a real recession.
In March, China’s foreign exchange reserves fell $4.69 billion to $3.305 trillion, representing the first monthly contraction since December. Credit Agricole CIB analyst Dariusz Kowalczyk said this drop showed increased efforts to curb the yuan’s value. He added that the People’s Bank of China had intervened to diminish the currency’s value through monthly yuan sales in the first quarter, reversing a pattern in the previous three months when intervention supported the currency.
6 Early Buzzing Stocks: Apple Blows Away Critics, Boeing and Delta Soar Higher
Apple Inc. (NASDAQ:AAPL) shares surged more than 9 percent in early trading to recapture the $600 level. The tech giant report strong quarter, earning $11.62 billion ($12.30 per share), compared to $5.99 billion ($6.40 per share) a year earlier. Apple also increased its cash pile by $12.6 billion to $110 billion. Apple: We’re Unstoppable!
Shares of Eli Lilly and Co. (NYSE:LLY) gained 1.4 percent before the opening bell. Net income for the company decreased to $1.01 billion (91 cents per share), compared to $1.06 billion (95 cents per share) a year earlier. Eli Lilly reported adjusted net income of 92 cents per share. By that measure, the company beat the mean estimate of 78 cents per share.
Caterpillar Inc. (NYSE:CAT) shares slipped 1.2 percent early Wednesday, despite reporting a 29 percent rise in first-quarter profit. The company earned a record $1.59 billion ($2.37 per share), compared to $1.23 billion ($1.84 per share) a year earlier.
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Boeing Co. (NYSE:BA) shares soared 2.5 percent after releasing first-quarter results. The company reported a profit of $923 million ($1.22 per share), compared to $586 million (78 cents per share) a year earlier. Revenue also jumped 30 percent to $19.38 billion.
Shares of Delta Air Lines Inc. (NYSE:DAL) increased 1.8 percent in early morning trading. The airliner reported a profit of $124 million (15 cents per share) for the first quarter, compared to a loss of $318 million a year earlier.
The Coca-Cola Co. (NYSE:KO) shares gained .67 percent before the opening bell. The beverage giant said its board of directors approved a plan to issue a two-for-one stock split. The split will be subject to a shareholder vote held on July 10. It would be the first stock split for Coca-Cola in 16 years.
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Active Stocks: GeoResources, Iconix, Kindred Healthcare, Diebold April 25th
GeoResources, Inc. (NASDAQ:GEOI): Halcn Resources Corporation (NYSE:HK) and GeoResources (NASDAQ:GEOI) announced that they have entered into a definitive merger agreement in which GeoResources will merge into a wholly-owned subsidiary of Halcn Resources in a cash and stock transaction that values GeoResources at approximately $1B, based on the closing price of Halcn Resources common stock on April 24, 2012. Under the terms of the merger agreement, Halcn Resources will acquire all outstanding shares of GeoResources common stock. GeoResources stockholders will receive $20.00 in cash and 1.932 shares of Halcn Resources common stock for each share of GeoResources common stock they hold, representing consideration to GeoResources stockholders of $37.97 per share based on the closing price of Halcn Resources common stock on April 24, 2012. The transaction is subject to the approval of the stockholders of both companies, as well as other customary approvals. The board of directors of each company has unanimously approved the merger agreement, which is subject to customary closing conditions, including approval of listing of the Halcn Resources shares to be issued in the merger on the New York Stock Exchange and regulatory clearance. The companies anticipate completing the transaction in the third quarter of 2012. Shares of GeoResources, Inc. are trading 18.17% higher today.
Iconix Brand Group, Inc. (NASDAQ:ICON): The 2012 guidance revision is primarily related to the continued softness of the men’s brands, specifically Rocawear, Ecko and Ed Hardy, and certain international initiatives that the company no longer expects to complete in 2012. The company is still waiting on government approval for its joint venture in India and therefore the transaction did not close in the first quarter as expected. If it had closed, it would have contributed $5M-6M in revenue or 4c-5c in EPS. However, the company believes this is purely a timing issue and expects the deal to close in the second quarter. Shares of Iconix Brand Group, Inc. are trading 11.22% lower today.
Cray Inc. (NASDAQ:CRAY): Cray announced it signed a definitive agreement to sell its interconnect hardware development program and related intellectual property to Intel Corporation (NASDAQ:INTC) for $140M in cash. Highlights of the agreement include: Cray to receive $140M in cash at closing; Cray will continue to develop, sell and support current product lines, as well as the Company’s next-generation supercomputer code-named “Cascade”; Cray has opportunities to leverage important differentiating features of certain future Intel products; Cray to retain certain rights to use the transferred assets and intellectual property in Cray products; and up to 74 Cray employees will join Intel. The transaction is expected to close relatively quickly, but in any event before the end of the current quarter, subject to customary closing conditions. Cray anticipates that the lower headcount resulting from this transaction will yield cost savings in future periods from what they would have been, with a relatively modest amount of the benefit expected in 2012. Shares of Cray Inc. are trading 27.56% higher today.
Kindred Healthcare, Inc. (NYSE:KND): Avondale upgraded Kindred Healthcare to Outperform from Market Perform. The firm said the Centers for Medicare and Medicaid Services FY13 proposal for long-term acute care hospitals was better than expected. Note Jefferies also upgraded shares today citing the proposal. Shares of Kindred Healthcare, Inc. are trading 20.24% higher today.
Diebold Incorporated (NYSE:DBD): Raises FY12 revenue view to up 7%-10% from previous up 3%-6% versus consensus $2.97B. Shares of Diebold Incorporated are trading 9.39% higher today.
Corning, Codexis, Motorola Solutions, Rockwell, Timken Attact High Trading Interest Wednesday
Corning Incorporated (NYSE:GLW): Expects to have ample financial flexibility for share repurchases, M&A, or to increase the dividend. Says the global oversupply of poly combined with the decline in subsidies for two of the world’s biggest markets for poly — Germany and Italy — continue to impact poly pricing and solar demand. Does not expect pricing to improve until supply demand levels return to balance and the current over capacity situation subsides. Shares of Corning Incorporated are trading 5.73% higher today.
Codexis, Inc. (NASDAQ:CDXS): Codexis announced that the FDA has approved a new process co- developed by Codexis for the manufacture of sitagliptin, the active pharmaceutical ingredient in Merck’s Januvia. Shares of Codexis, Inc. are trading 10.11% higher today.
Motorola Solutions Inc (NYSE:MSI): Motorola Solutions reports Q1 adjusted EPS 59c, consensus 54c Reports Q1 revenue $1.96B versus consensus $1.93B. Shares of Motorola Solutions Inc are trading 5.03% higher today.
Rockwell Automation (NYSE:ROK): Net income for the industrial automotive-robotics rose to $167.8 million ($1.16 per share) vs. $166.4 million ($1.14 per share) in the same quarter a year earlier. This marks a rise of 0.8% from the year-earlier quarter. Revenue rose 6.6% to $1.56 billion from the year-earlier quarter. Shares of Rockwell Automation are trading 2.11% lower today.
The Timken Company (NYSE:TKR): Timken now expects FY12 sales growth of 7%-10% , with the following: Mobile Industries sales expected to be flat to up 5% for the year, reflecting improved off-highway and rail demand and the impact of acquisitions, offset by reduced light-vehicle business; Process Industries sales up 10%-15%, projecting increased global industrial distribution demand, new product sales and the full-year impact of acquisitions; Aerospace and Defense sales up 10%-15%, driven by increased demand across most end markets, led by the defense and civil aerospace sectors; and Steel sales up 5%-10% percent, driven by demand in the energy markets as well as pricing. Shares of The Timken Company are trading 5.77% higher today.
6 Late Movers Hitting Radars: H&R Block Cutting 350 Jobs, Oil Giants Hike Dividends
Apple Inc. (NASDAQ:AAPL) shares finished 8.9 percent higher today. The tech giant reported strong earnings late Tuesday and received several price target upgrades on Wednesday. Shares continued to edge slightly higher in late trading.
Shares of H&R Block Inc. (NYSE:HRB) plummeted more than 13 percent after the closing bell. The company announced it plans to cut 350 full-time jobs and close about 200 under-performing offices. H&R Block is also looking for a new chief financial officer.
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Crocs Inc. (NASDAQ:CROX) shares fell 8.3 percent in extended-trading. The company reported a profit of $28.3 million (31 cents per share) for the first quarter, compared to $21.5 million (24 cents per share) a year earlier. However, Crocs issued a disappointing outlook for the second-quarter.
After closing 4.2 percent higher on Wednesday, shares of Las Vegas Sands Corp. (NYSE:LVS) edged lower in late trading. The casino company announced first quarter profits of $498.9 million (61 cents per share), compared to $289.3 million (28 cents per share) a year earlier.
Shares of oil giants Chevron Corp. (NYSE:CVX) and Exxon Mobil Corp. (NYSE:XOM) climbed higher after announcing dividend hikes. Chevron is raising its quarterly dividend by 11.1 percent to 90 cents per share, while Exxon hiked its dividend by 21 percent to 57 cents per share. Exxon’s new annual dividend of $2.28 will result in a $10.7 billion payment.
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