Keith, et.al.:
And just when you think they've pulled themselves free they go and do this:
cbs.marketwatch.com
Calpine warns, plans share issue
Shares slump; Company blames economic woes for miss
By Russ Britt, CBS.MarketWatch.com
Last Update: 6:28 PM ET April 23, 2002
SAN JOSE, Calif. (CBS.MW) - Calpine Corp. warned late Tuesday it would fall short of analysts' estimates for first-quarter earnings.
The energy generating company also said it would issue up to 69 million new shares of stock. The deal includes 60 million shares plus 9 million in an over-allotment issuance. Proceeds will be used to repay debt and for general corporate purposes.
Shares surged $1.42, or 12 percent to $13.33 during regular trading, but fell back to around $12.25 in the after hours session.
The company said it expects fully diluted earnings for the first quarter to be 10 cents a share vs. the average analyst estimate of 13 cents. For the year the company now expects to make $1.50 to $1.60 a share, including dilution for the share offering.
The company blamed continued economic weakness for the earnings shortfall.
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Initial market reaction in AH is obviously bad, since it's back down in the high $11's. But to my mind, longer term this doesn't appear to be a bad thing. For instance here's Merrill's read via Dow Jones Newswire:
=DJ Calpine Rides On Calif Contract News To Sell $60M Shares
By Jessica Berthold
Of DOW JONES NEWSWIRES
LOS ANGELES (Dow Jones)--Calpine Corp.'s (CPN) aftermarket announcement Tuesday that it will sell $60 million in common stock was timed to take advantage of postive market reaction to its reworking of long-term power contracts with California, analysts said.
Wall Street responded favorably to the news late Monday that Calpine reached a final deal with California that included the state's dropping all pending legal challenges against the company. Calpine's stock price Tuesday closed at $13.33 a share, up $1.42, or 12%, after trading as high as $13.55 intraday.
"Calpine is taking advantage of the fact that it has put to rest the issue of the California contracts," said Elizabeth Parrella, analyst for Merrill Lynch & Co. (MER). "It's clear they need to do an equity issuance, whether now or later, to address their high degree of leverage and to give people further comfort on the liquidity front," she said.
Calpine's debt has been downgraded by rating agencies to junk-bond status, and the company has had to pull back on building power plants
Commerzbank (G.CBK) analyst Andre Meade said he believed Calpine's stock has been fairly valued as of late, so Tuesday's announcement makes sense.
"Our last target price is $12, so the stock was slightly overvalued at (Tuesday's) close," Meade said. "Issuing shares at fair value is not dilutive. Calpine is recognizing that their stock has appreciated off its lows and it's a good time to raise cash."
If Calpine uses the cash to pay down debt and deleverage, investors will react favorably, Meade said. If the company continues to build new power plants, that would probably be viewed negatively, since all regions except California appear to be overbuilt.
Calpine still needs to issue as much as $120 million in additional stock to address its liquidity crunch, Parrella said.
No one at the company could immediately be reached for comment. In its negotiations with California, Calpine agreed to shorten the lengths of its contracts and reduce prices in exchange for the state dropping refund requests and lawsuits.
Calpine shares were down 11.5%, or $1.53, at $11.80 a share in afterhours trading Tuesday.
-By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com
(END) DOW JONES NEWS 04-23-02
07:35 PM
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One thing's for sure. Tomorrows intraday is bound to be all over the place....
Anyone have any thoughts on this?
John~ |
