From Briefing.com: 4:20 pm : Equity trade was somewhat choppy today. A variety of catalysts put sellers in control from the early going. Despite unfavorable macro conditions on multiple fronts, the market staged an afternoon recovery. The effort was short-lived, though.
The Treasury market reassumed its defensive stance. Yields across the curve headed higher, and the benchmark 10-year note again touched a four-year high of 4.90%. The bond market's action reflected traders' vigilance ahead of tomorrow's carefully watched employment data. In light of the persisting uncertainty within the interest rate environment, the report will garner that much more attention. It is our view that the hourly earnings and unemployment rate components will be focal points considering the concerns over wage-based inflation pressures.
As has been the case lately, the stock market initially took its trading cue from the bond market. Mid-afternoon, though, it diverged. The 10-year's yield did not budge from 4.89%, yet buyers helped the equity market pare its losses. Due to an improvement in banks and continued strength in brokers, the Financial sector (-0.3%) halved its loss. That move helped lift the lid on the major averages, but it did not support their attempt to rise.
Commodities extended their advances today; that price action helped lift the Energy and Materials sectors, which in turn helped the broader market improve. Gold hit $600 per troy ounce for the first time in 25 years, aluminum and silver each gained another 3%, and nickel and copper rose substantially. Speaking of copper, Phelps Dodge (PD 86.70 -0.88), which is one of our recommended holdings, received some attention today. The company declared a $2 per share special dividend, and it also increased its quarterly dividend. PD did not lend any upside, perhaps because of the fact that it's gained 30% since its split in Mid-March, but the Materials sector led trade with its 0.4% gain. On the energy side of the commodity aisle, crude traded at a two-month high and served as another bearish factor for the market. While that advance had resulted in some leadership from the Energy sector, it wasn't all that spirited and it didn't last.
Today's torrent of same-store sales reports contributed to the market's bearish bias. A majority of reporting retailers missed expectations. Furthermore, several of them issued profit warnings, which are receiving increased attention ahead of the first quarter earnings season's launch on Monday. Apparel retailers and specialty stores delivered some of the most uninspiring results. In light of Fed tightening concerns, the results added to concerns over a slowdown in consumer spending. Many retailers blamed the calendar for Easter's later arrival this year, though. There were some bright reports that helped offset the disappointments. For example, Gymboree (GYMB 27.96 +1.74), which is another one of our suggested holdings for active investors, checked in well ahead of expectations and raised its Q1 guidance in conjunction with its result. Bed Bath & Beyond (BBBY 40.82 +2.50) also delivered solid sales results, not to mention better than expected earnings results. Separately, the market's reaction to the data was tempered by the fact that Wal-Mart earlier in the week said it expected just a 1.3% gain.
Merck (MRK 34.84 -1.15) was another primary factor behind today's action. A New Jersey jury handed down a split verdict in the latest Vioxx suit, by which one plaintiff (of two) was awarded $4.5 million before punitive damages. More significantly, the decision paves the way for other plaintiffs, who were long-term Vioxx users, to press their cases against the drug company. Accordingly, the Healthcare sector weighed heavily on trade and Merck dragged the Dow. Helping to offset its effect were some Industrial components. Specifically, 3M (MMM 81.38 +3.92) raised its guidance and Boeing (BA 79.82 +0.71) won a $1 billion contract from a Spanish airline.
After several attempts, the Nasdaq managed to clear the flat line. A modest gain in the Tech sector (+0.1%), largely to the credit of extended strength in hardware and semiconductor equipment, was behind the Composite's gain.DJ30 -23.05 NASDAQ +1.42 SP500 -2.52 NASDAQ Dec/Adv/Vol 1552/1459/2.19 bln NYSE Dec/Adv/Vol 1862/1376/1.57 bln
4:45PM Ixia guides below consensus for Q1, cites increased competition (XXIA) 13.60 +0.03 : Co issues downside guidance for Q1 (Mar), sees EPS of $0.06-0.08, ex items vs. $0.10 Reuters Estimates consensus; sees Q1 (Mar) revs of $38-39 mln vs. $40.03 mln consensus. CEO comments, "We are confident that Ixia's business and strategy remain fundamentally sound. In some instances, however, we have encountered increased competition as we target certain accounts where our competitors have been the incumbent supplier. At some customers, we have seen the time for purchasing decisions lengthen, delaying some revenues".
4:36PM Extreme Networks lowers Q3 guidance (EXTR) 5.09 +0.04 : Co sees Q3 pro forma EPS $0.00-$0.02, vs $0.05 consensus; co lowers rev guidance to $84-$85 mln (consensus $92.8 mln), vs prior guidance of $90-$95 mln. Co cites lower than anticipated revs in the U.S. and Japan, which offset rev growth in the co's European markets.
4:17PM RIMM sees Q1 subs adds approximately 675,000:
2:48PM Genesis Microchip trades at a session high, brings last week's gap resistance into play near 17.42 (GNSS) 17.18 +0.44 :
2:32PM Genesis Microchip: court of appeals rules that Genesis Microchip and Silicon Image settled patent suit (GNSS) 16.76 +0.02 : Co announces that the United States Court of Appeals for the Federal Circuit has upheld the lower court's ruling that the co and Silicon Image (SIMG) have settled their patent litigation. In today's ruling, the Court of Appeals affirmed the lower court's judgment that Genesis Microchip and Silicon Image have settled their disputes based on a Memorandum of Understanding, or M.O.U, signed on Dec 18, 2002. The M.O.U states that the co has received a license for the right to use non-necessary claims under the Digital Visual Interface Adopters Agreement and allows the co to receive a license to the non-necessary claims under the High-Definition Multimedia Interface Adopters Agreement.
4:42 pm Federated Dept. Stores (FD)
77.36 +0.71: Even though Easter is three weeks later than last year and cooler temperatures across the country weakened demand for spring fashions, Federated Department Stores reported same-store sales results that were consistent with the company's guidance. Federated's comparable sales for March, which only include Macy's and Bloomingdale's locations, were unchanged from a year ago; the Briefing.com consensus called for growth of 0.7%. For the April period, the Cincinnati-based retailer expects same-store sales to decline 2.5% to 3.5%, reflecting a late Mother's Day, which results in the shift of a major sale event into May this year from last April.
Total sales for the five weeks ending April 1st, which excluded 68 duplicate stores in clearance sale mode, as well as the soon-to-be divested Lord & Taylor and Bridal Group divisions, surged 65% year/year to $2.26 bln, boosted by last year's acquisition of May Department Stores. For the first quarter, Federated still expects same-store sales to decline 0.5% to 1.0%, which is within the range of guidance provided on Jan. 26, 2006, but it expects comps to increase 2% to 3% during 2006.
Federated shares are up 17% so far this year, outperforming the S&P Retail Index's 5.7% year-to-date gain, and trade at 19.9x estimated fiscal 2006 earnings of $3.89. Competitor Dillard's Inc. (DDS) trades at a slightly lower forward P/E multiple of 18.6x but is only expected to grow earnings 6% annually over the next five years versus an estimated 10% annual EPS growth for Federated. Saks Inc. (SKS), which is expected to grow earnings 8% annually through 2011, trades at a whopping 61x forward earnings.
-- Brian Duhn, Briefing.com
4:29 pm Gymboree (GYMB)
27.96 +1.74: In the midst of a disappointing series of same-store sales results for March from the retailers, Gymboree (GYMB), a suggested holding in our Active Portfolio, provided a better than expected report. The retailer's performance did not go unnoticed by the market, which drove Gymboree to a new 52-wk high.
The market's enthusiasm centered on the recognition that Gymboree's same-store sales increased 5.0% versus the Briefing.com consensus estimate of +0.7% and the company's indication last month that it wouldn't be surprised if comps were flat to slightly negative due to the shift in Easter from March last year to April this year. The real boon for the stock, though, was the company's upward revision to its earnings estimates for the first quarter and full year - its second increase in estimates in as many months.
On March 15 Gymboree said it expected first quarter and full-year earnings of $0.28-0.30 and $1.16-1.20 per share, respectively, before stock-based compensation expense. With the leverage gained from the better than expected sales performance in March, the company is now forecasting first quarter earnings of $0.35-0.38 per share and full-year earnings of $1.24-1.28 per share. The current consensus estimates, according to Reuters Estimates, are pegged at $0.27 and $1.16. Gymboree also boosted its first quarter same-store sales estimate to a high-single digit increase from a mid-single digit increase.
While Gymboree will face tougher comparisons in the latter half of the year - a risk factor that we will monitor closely - it continues to post results that validate its standing in the Active Portfolio.
--Patrick J. O'Hare, Briefing.com
12:57 pm Spectrum Brands (SPC)
15.95 -5.55: Spectrum Brands on Thursday cut its earnings guidance for the fiscal second quarter, well below Wall Street's estimate, due to ongoing challenges in its consumer battery business, where sales in North America and Europe continue to stumble. The Atlanta-based company also said that it would reduce its European work force by about 24% as part of its restructuring efforts to streamline operations and boost profitability. On account of the news, shares of the company are suffering a material hit.
Recently, we expressed a positive view on Spectrum Brands given its merits as a potential turnaround story. While today's announcement clearly conflicts with our stated outlook, we still feel that there are favorable attributes in the company, and its stock, that should reward long-term, patient-minded investors. Although fundamentals in the battery business remain challenging, which have largely weighed on the stock over the past year, ongoing restructuring initiatives should help calm current investor sentiment and support the stock, which is sitting at a new 52-week low.
With respect to its updated guidance, Spectrum Brands said it expects second quarter earnings in the range of $0.03 to $0.06 per share and adjusted earnings of breakeven to $0.05 per share. Previously, the company had forecast earnings between $0.35 and $0.40 per share, excluding restructuring charges and other one-time items. Analysts on average are forecasting earnings of $0.37 per share, according to Reuters Estimates.
The substantial shortfall was largely attributed to weak battery sales in North America and Europe. Alkaline battery sales in North America fell from the prior year and missed the company's target. Meanwhile, several of the company's largest retail customers implemented steps to reduce their inventory of batteries and lawn and garden products, which is lower second quarter revenue by $25 to $30 million. European alkaline battery sales were also lower than expected during the quarter, as the company's efforts to improve battery sales growth have been offset by an unfavorable product mix shift to private label batteries. Furthermore, the company said that raw material costs have accelerated, with zinc, a key component used in making batteries, doubling over the past year and climbing more than 10% in the last month.
--Richard Jahnke, Briefing.com
11:47 am Gap, Inc. (GPS)
18.55 -0.11: It was more of the same for Gap in March, which is to say the apparel retailer, and suggested holding in our Active Portfolio, posted another negative same-store sales result. Specifically, same-store sales declined 13% versus a decrease of 4.0% in the year-ago period. Declines were registered in each of its brands, with Gap North America down 13%, Banana Republic North America down 7%, Old Navy North America down 15%, and Gap International down 16%.
The other thing that is down is Gap's stock price, but it isn't down as much as one might expect given the negative tone of the report that was highlighted with an acknowledgment that merchandise margins in March were below last year and that further margin pressure is possible in April as Gap clears out its remaining Spring merchandise.
The stock's relative strength reflects a number of considerations, one of which is that the retailer's struggles have thrust it into the spotlight as a potential buyout candidate. Additionally, there is an underlying sense that Gap's problems have largely been discounted in its stock price already, which hit a low of $15.90 last October, and is down roughly 25% from a May 2004 high. Gap has reported a decline in same-store sales in 19 of the past 22 months and said it expects total comparable store sales to remain negative in the first half of this year.
At this juncture, Gap is very much a contrarian play - a fact we noted in our recent Bargain Hunting profile. Another fact we pointed out was that Gap needs to reverse its margin trends if it wants to instill confidence in the market that its turnaround efforts are working and that its earnings estimates are credible. With the March same-store sales result, Gap has yet to do that. Nonetheless, it is our belief that the stock's risk-reward profile favors the reward side for investment-minded individuals given its healthy financial condition, easy comparisons, past history of dealing with merchandising miscues, and status as a buyout candidate.
--Patrick J. O'Hare, Briefing.com
11:08 am Lehman Bros. (LEH)
150.22 +1.76: In their most recently completed quarters, Merrill Lynch (MER), Goldman Sachs (GS), Morgan Stanley (MS), Lehman Brothers (LEH) and Bear Stearns (BSC) all handily beat analysts' forecasts. In turn, they validated our bullish outlook on the investment banks that is based on strong levels of M&A and increased trading activity in the capital markets.
The average gain in the aforementioned stocks is 18.8% this year, matching the year-to-date gain on the AMEX Securities Broker/Dealer Index (XBD) which is at historic highs. Some investors believe that much of the good news is already priced into the stocks. After all, three of the five brokerages (e.g. GS, BSC and LEH) have price tags of more than $140 a share which, for purely psychological reasons, look very expensive and underscore our inference a few weeks ago that it would not surprise us to hear some stock split announcements.
Wasting little time playing into that assumption, Lehman Bros., which is trading at a historic high above $150 a share, announced that its board approved a 2-for-1 stock split. Under the approved proposal, which will come in a 100% common stock dividend and is payable April 28 to shareholders of record on April 18, Lehman will increase the number of its authorized shares to 1.2 bln from 600 mln. In its most recent record quarter, Lehman repurchased 7 mln shares and raised its dividend 20%.
While splitting a company's stock increases liquidity, it does not alter Lehman's fundamentals whatsoever. Nonetheless, today's split announcement, which is a psychological boost, has helped Lehman continue its tear to new heights.
-- Brian Duhn, Briefing.com
10:21 am 3M (MMM)
80.39 +2.93: 3M Co., a diversified manufacturer whose brands include Scotch tape and Post-It Notes, on Thursday raised its sales and earnings guidance for the fiscal first quarter, citing continued momentum in its industrial safety, consumer and electronics-related businesses. The St. Paul, Minnesota-based company also credited the results of accelerated growth investments which began in the second half of 2005. The announcement, which underscores our Overweight rating on the Industrials sector, has sent shares of the company more than 3% higher in early trading activity.
For the first quarter, 3M now expects organic local-currency sales growth of approximately 8%, up from its previous guidance range of 4% to 7%. Including the CUNO acquisition, the St. Paul, Minnesota-based company sees sales growth of more than 10%. Quarterly earnings are projected to be between $1.15 and $1.16 per share, including a stock option cost of $0.02 per share, versus the prior range of $1.10 to $1.14 per share. According to Reuters Estimates, analysts had been looking for earnings of $1.12 per share, including stock option expense, and revenue of $5.52 billion.
Earlier this week, 3M said it was exploring strategic alternatives for its global branded pharmaceuticals business, which develops, manufactures, and sells branded drug products related to dermatology, women's health, cardiology, and respiratory medicines, which should allow it to focus on other opportunities outside of the volatile drug business and build on its iconic brands, such as Thinsulate and Scotchgard.
--Richard Jahnke, Briefing.com
09:45 am Gold Tops $600 Per Ounce
Gold prices increased to $600 per ounce for the first time since 1981 as investors hedge their bets against inflation. With oil prices rising and political uncertainties lingering, investors are seeking out gold as a safe haven investment. Since gold typically moves in times of political unrest, or economic worry, on the idea the metal will holds its value compared to other assets, the price ascent is notable and certainly speaks to the mood of the market.
Investors are the driving force behind the upsurge, betting the commodity will outperform other asset classes like stocks and bonds. Investor purchases have outpaced the jewelers, which accounted for 73% of demand last year, according to the World Gold Council. With investors looking to spread their risk against inflation, a slowing US economy, and political unrest in hot spots like Nigeria, Iran, and Iraq, demand for gold as an alternative investment has regained its allure. The historical inverse relationship the dollar has with gold decoupled quarters ago, as the greenback has actually strengthened as interest rates continue to rise.
The momentum this week is being propelled in part by the rise in oil. Crude prices are nearing the seventy dollar mark once again on concerns over gasoline supplies. Analysts are now forecasting average prices to set a record of $63 per barrel this year.
Commodities are in hot demand. Whether it's gold or crude, the momentum is clear. It seems like we see the metals markets setting new price records almost on a daily basis, from copper to silver, as the bull market cycle continues. We remain convinced the momentum remains to the upside for gold and suggest investors have some exposure to the sector. Gold for immediate delivery rose as much as 1.4% to $596.9 per ounce, according to Bloomberg. Gold for June delivery rose as much as $9.40 per ounce, or 1.6% to $601.90 on the Comex division of the New York Mercantile Exchange.
--Kimberly DuBord, Briefing.com
09:26 am Merck (MRK)
35.99: Merck shares are trading lower in pre-market action, after a jury on Wednesday found Merck liable for the heart attack suffered by John McDarby, one of two former Vioxx users, and ordered it to pay $4.5 million in damages. In a split verdict, the New Jersey state jury also rejected a claim that the now withdrawn painkiller had been a significant cause of a heart attack suffered by a second plaintiff, Thomas Cona.
Although the jury found the drug maker misrepresented and concealed the heart risks of Vioxx in both cases, it said the drug was a contributing cause in only one of the men's heart attacks. According to a press release issued by the company, the trial will now move into the punitive phase in the case of McDarby.
The month-long trial had been closely watched because it marked the first pair of lawsuits involving patients who claim to have used Vioxx for more than 18-months, and raises questions about the company's defense of the thousands of cases it still faces. The verdict is the second court loss for the company, against an equal number of victories. Merck still faces nearly 10,000 lawsuits related to the withdrawn drug, and the number continues to rise. This legal overhang is a primary reason why we aren't recommending Merck at this time.
--Richard Jahnke, Briefing.com
08:53 am Bed Bath & Beyond (BBBY)
38.32: The last time Bed Bath & Beyond posted quarterly results, the home furnishings retailer ended its streak of 15 consecutive quarters of reporting better than expected earnings. With expectations running high for a market leader so accustomed to beating the Street, merely matching analysts' forecasts coupled with disappointing Q4 and FY05 (Feb) guidance erased nearly $1.5 bln in market capitalization. The retailer closed down 12% at $36.27 just three days before Christmas.
Last night, however, the seller of everything from quilts and comforters to towels and toiletries reminded investors that things weren't as bad as previously thought. For its fiscal fourth quarter, the company reported a 13.6% year/year increase in net earnings of $0.67 per share. That was two cents better than the Reuters Estimates consensus of $0.65, which was revised from $0.66, and three cents better than management's lowered guidance of $0.64. The company had nearly 4% fewer shares outstanding than it did last year, completing its $600 mln stock buyback program during the fourth quarter. Net sales rose 14.8% year/year to $1.69 bln, also better than forecasts (consensus $1.64 bln), while comparable store sales for the quarter increased by about 6.3%. That was on top of 5.1% growth in last year's fourth quarter.
While fiscal 2005 was the 14th consecutive year of record earnings since the company went public in 1992, management reassured shareholders that the double-digit growth they have been used to seeing remains intact. During its conference call, the company forecasted fiscal 2006 earnings of $2.17 per share, which implies 13% year/year growth and was above the Reuters Estimates consensus of $2.14. For the first and second quarter, management projected earnings of $0.35 and $0.51 per share, which are in line with analysts' estimates. Co-Chairman Leonard Feinstein also said the company expects to some day have 1,300 of its flagship stores throughout the U.S. Since the beginning of the current fiscal year on February 26, 2006, the company operates a total of 813 stores, including 746 Bed Bath & Beyond stores, 17 of which were opened during Q4 and four of which have been opened so far in Q1.
-- Brian Duhn, Briefing.com
08:39 am Pier 1 Imports (PIR)
11.87: The losses continued into the fourth quarter for the largest US retailer of imported home furnishings, Pier 1 Imports. The company reported a net loss of 11 cents per share on charges related to the sale of its UK-based unit and a drop in same-store sales. The Forth Worth-based company lost $9.98 mln in the quarter, compared to earnings of $18.8 mln in the year prior. During the period, comparable store sales fell 2.9%. The quarter marks the end of a very challenging year for Pier 1, which culminatied in a net loss of $27.5 mln, or 32 cents per share, as same-store sales declined 7.1%.
Heavy promotional activity contracted margins considerably, which was expected, as Pier 1 rolled out its "new look." Merchandise margins declined 400 basis points from the year-ago period. The company is accelerating store closings, totaling 38 in fiscal year 2006, followed by an additional 35 scheduled for the following year. The rationalization of its store base resulted in asset write-offs in the quarter, as well as lease terminations.
The market has already discounted Pier 1 struggles, including an abysmal Q4, and is focusing instead on results from the company's turnaround plan which includes the launch of its new "modern craftsman" look. During the company's conference call today, analysts will be listening for any initial results from its new advertising campaign, which we view as notable, and possible new store closures. March sales also released today were below par, slipping 2% compared to the Briefing.com consensus of -0.8%. Shares have run considerably to date, up almost 36%. Therefore, any near-term initial disappointment could cause profit taking. We wouldn't be chasing the stock here, but would note the downside appears limited.
--Kimberly DuBord, Briefing.com
09:35 am Novavax: RBC Capital Mkts downgrades Sector Perform to Underperform . Target $3. Firm is saying they believe that NVAX's run from under $2 to the current $6-$7 range over the last 6 months is based on fear of an avian flu outbreak, not sound fundamental valuation of the company. The firm says the expectations for NVAX are way ahead of the co's ability to deliver a safe functioning vaccine that has been tested in humans with validated commercial scale manufacturing. From their perspective all these are essential minimum requirements that must be met before the co can reap a profit from its newly found focus on the flu. Moreover, the firm believes the valuation is running so far in front of so many other small companies with a focus on flu and other vaccines that the stock has the potential for a significant sell-off when the bird flu scare cools.
09:34 am Foundry Ntwks: RBC Capital Mkts reiterates Outperform. Target $17 to $20. RBC also raises FY06-07 EPS estimates, citing strong product momentum. Firm says the co's March qtr should be strong, but this is reflected in the stock, so they would use a buy on the dips approach. Beyond $20, firm says that JNPR's entry into the switch market may keep FDRY's multiple from further expanding. Firm also says that FDRY may be gaining market share from EXTR and the now defunct Enterasys Networks.
09:33 am Viasys Health: Brean Murray reiterates Strong Buy. Target $33 to $35. Firm ups target based on the results of checks with a number of industry sources support their above-consensus 1Q06 estimate and their contention that VIASYS's sales continue to be strong. Moreover, the firm expects the co to announce another solid quarterly performance when it reports at the end of April.
09:32 am LIFE TIME Fitness: UBS reiterates Buy. Target $50 to $58. Firm is saying they recently traveled with mgmt to meet investors. The firm finds no fundamental flaws or signs of weakness in the operations at LTM. They are more confident in the prospects for LTM than in those of any co in their coverage universe.
09:31 am Regis: KeyBanc Capital Mkts / McDonald upgrades Hold to Buy. Target $41. Firm upgrades after ACV's Board announced it was withdrawing its recommendation for the proposed merger with RGS, and RGS subsequently terminated the proposed merger agreement. Although firm liked the deal based on the previous terms, they are not surprised by this development because their modeling assumptions made it apparent that there was little room for RGS to sweeten the deal without producing dilution for shareholders. Firm believes that investors have been concerned by the potential outcome of this deal and will applaud the latest developments. Additionally, firm thinks that RGS is attractively valued.
09:31 am Activision: Lazard Captial initiates Buy. Target $17. Firm is saying the co is well positioned heading into the next-generation video game cycle, with a balanced and diverse product portfolio, multiple hit video game franchises and strong development resources. The firm suggests that investors use any transition-related stock volatility as a buying opportunity ahead of the new cycle. The firm expects revs and EPS to accelerate in F2008.
09:30 am Electronic Arts: Lazard Captial initiates Buy. Target $65. Firm is saying the co is well positioned for growth in next console cycle. They believe EA is in a strong competitive position for the next console cycle with the leading video-game franchises and the clear top market position. The firm says it could ultimately capture additional market-share gains as it leverages products across a broad base of new console, handheld, and mobile platforms.
09:29 am Boyd Gaming: Bear Stearns reiterates Outperform. Target $57 to $61. Firm ups target given their expectations of continued strong rev growth and EBITDA margin trends from its Louisiana (Treasure Chest, Delta Downs) and Indiana (Blue Chip expansion) properties.The firm says BYD's LA properties are still benefiting from a lack of nearby competing casinos (despite Harrah's New Orleans's opening in February) and lower staffing expenses in the Hurricane impacted Gulf region.
09:28 am Station Casinos: Bear Stearns reiterates Outperform. Target $79 to $89. Firm is saying that they believe the co has developed an off Strip casino in Red Rock Resort that can optimize the proper mix for Las Vegas local patrons and resort-seeking-out-of-town visitors. Firm believes the quality of the casino, hotel rooms, and restaurants is comparable/near the quality of the major Las Vegas Strip casino properties like Wynn, Bellagio, and Venetian. Firm thinks co could receive approvals for moving its gaming entitlement rights to its preferred site in Reno in 2Q06 and that the co could commence developing this potentially high ROIC project soon after. Furthermore, firm thinks co's Durango site in Southwest LV could be the next development post Aliente & Reno.
Gapping down: FLSH -3.8% (terminates agreement with Samsung), ONNN -2.9% (stock offering)
7:02AM Novellus: Provides 'State of the Company' update in letter to shareholders; requests 31-day extension of credit agreement waiver to complete financial (NVLS) 24..44 : In a "State of the Company" letter to its shareholders, NVLS provided an update on its business strengths and transformation initiatives, including its strategic direction and priorities for 2006. The co also announced that it is requesting a 31-day extension of the compliance filing waiver from its bank group to complete its financial review of the first and second qtrs of 2005 and finalize its financial statements for the third quarter of 2005. "We recognize that we can't yet provide you with a definitive financial story, as our accounting review is not yet complete. We apologize that the review and restatement process has taken as long as it has. However, we expect the overall results, subject to the completion of the review of adjustments made to the opening balance sheet, to be immaterial to prior-year financial results. In fact, at this time we expect the restatements to result in a gain to net income of approximately $5 million in the aggregate for the first two quarters of 2005... The Board of Directors will appoint William T. Monahan as its new non-executive Chairman upon the retirement of J.E. Newall following the Annual Meeting. Bill is a recognized "change agent," an experienced leader who most recently served as Chief Executive Officer of Imation following its spin-off from 3M... We have also begun the process of exploring the sale of our non-core Brazilian upstream operations (mining, energy, and smelting), as well as selling our 25% stake in the Petrocoque calcined coke facility."
6:54AM LSI Logic confirms it will sell Gresham Fab to ONNN for $105 mln (LSI) 11.66 : Co confirms it will sell Gresham Fab to ONNN for $105 mln. The securing of a suitable buyer and closing of the transaction had been previously expected to take as long as one year from the date of the September 2005 announcement. LSI now however anticipates completing this transaction within the next 45 days. LSI does not expect to record a loss associated with the sale of the Gresham manufacturing facility.
6:45AM ON Semiconductor signs agreement to purchase LSI's wafer fabrication facility and reiterates 1Q06 guidance (ONNN) 7.31 : Co announces that its primary operating subsidiary, Semiconductor Components Industries, has executed a definitive agreement with LSI Logic (LSI) to purchase LSI's Gresham, Ore., wafer fabrication facility and certain other semiconductor manufacturing equipment for a total of approximately $105 mln in cash. The co paid LSI Logic a deposit of $10.5 mln concurrently with the execution of the definitive agreement, is currently obligated to pay $79.5 mln at closing, and expects to pay the remaining balance within 90 days after closing. The transaction is expected to be neutral to ONNN's EPS in 2006, and be EPS positive in 2007 as the co ramps production of its own products in the facility. The transaction is also expected to result in a slight reduction (approximately 100 basis points) in the co's 2006 gross margin. Over the long term, the co believes the purchase of the Gresham wafer facility will have a positive effect on gross margins for the company as it develops a higher mix of high-performance analog and digital power products. Co also reiterates Q1 guidance, sees revs of approx $330 mln (consensus $330.6 mln).
finance.yahoo.com
I agree with you Michael!
RtS |
