It looks like FTU will continue to slide. It is expected to open down $5 a share. OUCH!
FIRST UNION (FTU) $49 15/16: For the second, consecutive quarter, First Union is warning of an earnings shortfall, saying that it expects Q2 earnings to fall in the range of $770 mln to $800 mln, or $0.80 to $0.83 per share. This is roughly 14%-17% below consensus estimates of $0.96 per share. In addition, the banking company expects FY99 operating earnings also to fall short of the First Call estimate of $3.98 per share, and its own outlook of $4.00 per share. Company now
anticipates operating earnings to be in the neighborhood of $3.40 to $3.50 per share. In explaining the impending disappointment, First Union cited the impact of substantial 1998 unusual, noncore earnings items, major acquisition integration, and acceleration of spending for major new strategic initiatives as it deploys a new business model (i.e. as it pumps $500 mln into First Union Capital Markets, Capital Management, Futures Bank, and the Internet). No doubt, company's emphasis on an accelerated Internet expansion strategy is raising analyst eyebrows as the market is well aware of the necessity to build brand awareness in the Internet space, and the huge marketing expenses that often accompany such an undertaking. In any event, this banking giant, which calls itself, "The Mountain," will look more like a molehill today as it is indicated nearly 5 points lower in pre-market trading as the company's plan to buy back up to 50 mln common shares
and its estimate of a 20% return on shareholders' equity is proving to be little consolation to investors. |
