Stock futures were lower this morning as investors digested the decline in commodity prices and awaited a slew of economic readings. Data on employment, manufacturing and auto sales will be reported during the morning and throughout the day. At 2:00 p.m., the Federal Reserve's Beige Book, which gives an overall picture on the economy will be released.
Coca-Cola Co. (NYSE: KO) said it is offering $2.4 billion for China Huiyuan Juice Group Ltd., triple Huiyuan's market value. This is Coke's largest acquisition by value to date in China and gives the company a leg in the fast-growing and dynamic Chinese juice market. Coke also said that it expects to buy back a total of $1 billion of its stock for the full year. The Boeing Co.'s (NYSE: BA) workers are prepared to vote Wednesday. Union members are scheduled to cast two ballots: one regarding Boeing's latest offer, which union leaders are recommending to reject, and another on whether to begin a strike. Results of the vote are expected Wednesday night.
More information is coming out regarding Korea Development Bank interest in Lehman Brothers (NYSE: LEH). According to reports in The Chosun Ilbo, South Korea's largest mass-circulation daily, state-owned KDB has made a proposal to acquire 25% of U.S. Lehman for as much as 6 trillion won ($5.3 billion). HSBC Holdings (NYSE: HBC) and an unnamed Chinese bank are said to be vying with the KDB for the Lehman stake.
It has been exceptionally challenging this year for many companies to grow their earnings, as a number of factors continue to wreak havoc on normally profitable business models.
Higher energy costs have been squeezing almost every company's margins, none more significantly than the airline and auto industries. Raw materials costs continue to climb as large, developing nations like India and China compete for a limited supply of natural resources.
To make matters worse, the credit markets have locked up, making it very difficult for companies to secure the funding and capital so desperately needed to drive growth.
Help On The Way
But when the going gets tough, these companies know they can call upon a trusted ally to provide shelter from the storm. And that help comes in the form of consultants.
With substantial amounts of financial and reputational stress circulating through the economy, consultants are increasingly being called upon to provide a steady hand. These companies have seen a direct up tick in their business volumes as distressed companies search for methods to cut costs and save face.
Town Bankruptcy Bad Sign for Other Towns The mortgage crisis, the limping economy and a recent bankruptcy filing by Vallejo - the first municipality to do so since Desert Hot Springs, Calif., in 2001 - have hobbled this town of 120,000. Vallejo's closely watched Chapter 9 bankruptcy filing in federal court in Sacramento may be a warning sign of dangers that could befall other cash-strapped municipalities. Economy hobbles Calif. town - USATODAY.com 10 Funds Suffering the Biggest Exoduses Which mutual funds are seeing the biggest outflows in 2008? They include some very well-known popular funds like Fidelity Low-Priced Stock, American Funds Investment Company of America and the Legg Mason Value funds. The 10 Funds Suffering the Biggest Exoduses
Stocks futures are lower Tuesday morning, indicating U.S. stock markets will start on a down note following weak outlooks and disappointing financial results from several companies including Apple and American Express. With oil steady and no economic data out today, Wall Street will focus on earnings.
Apple Inc. (NASDAQ: AAPL) reported after the close Monday a record quarter that beat analyst estimates, posting a 31% surge in earnings. Mac and iPod sales satisfied investors, while iPhone sales were somewhat on the lighter side. What concerned investors most was the very weak guidance Apple gave, which was weak even by Apple's standards of lowballing. Other issues included margin squeeze and Jobs health. Apple shares were 10% lower in Frankfurt and premarket trading. American Express (NYSE: AXP), said late Monday its second-quarter results fell 38% due to the weakening economy. The company, which missed projections, caters to the more affluent who have good credit, and yet even this company felt the pains from the slowing economy. AmEx earned 56 cents per share compared to estimates of 83 cents per share. The company's stock tumbled AXP shares are down over 12% in premarket trading.
Also reporting Monday after the close were Merck & Co., Inc. (NYSE: MRK), Texas Instruments (NYSE: TXN) and SanDisk (NASDAQ: SNDK). MRK shares are down over 6.6% in premarket trading as the company said it would stop give guidance of results. TXN shares are also declining over 10.5% in premarket trading after it gave a disappointing forecast. SNDK shares are plunging over 16% in premarket trading after it swung to a Q2 loss, missing analyst estimates.
This morning we'll have another wave of earnings, and already started were DuPont and Wachovia.
H&R Block (NYSE: HRB), whose colleagues include Intuit (NASDAQ: INTU) and Jackson Hewitt (NYSE: JTX), reported Q4 and full-year earnings on Monday. The numbers looked pretty good to me. For Q4, revenues increased 11% to $2.6 billion and earnings per diluted share from continuing operations increased 17% to $2.11. According to this article, analysts' expectations were beat by $0.08. For the full year, the top line expanded by 10%, coming in at $4.4 billion. Earnings per diluted share from continuing operations jumped 21% to $1.39.
The tax specialist said it worked with 23.5 million clients, the most ever in its corporate history. That's a nice indication of health for the company, I suppose, but here's a better one. The board decided to juice the dividend. The annual payment will now be $0.60 per share, translating to a 5% increase. Okay, 5% isn't too exciting, I'll grant you, but H&R Block has now increased its payments to shareholders every year for over a decade.
But, as the company stated in its release, although it intends on repurchasing shares over the next few years, it will remain "particularly disciplined" about the subject in the next fiscal year. Essentially, that means shareholders should not expect a lot of share repurchases for a while. H&R Block is reacting to the fact that it is still rebooting itself after being victimized by the subprime mortgage crisis. I'd rather hear a more aggressive stance in terms of buyback plans, but I'd say there is prudent motive in such posture given the company's state.
Given that it's the end of the quarter, as well as the U.S. Independence Day holiday on Friday, next week looks to be pretty quiet as far as earnings go. But there are a few things of note.
Tax preparation company H&R Block (NYSE: HRB) is scheduled to report its fiscal fourth-quarter results Monday after market close. Analysts surveyed by Thomson Financial on average expect the company to report net income of $2.03 per share on revenue of $2.5 billion. That's an increase of more than 10% over EPS a year ago. H&R Block has tended to fall short of estimates recently, and rival Jackson Hewitt (NYSE: JTX) missed its EPS estimates earlier this month. Still, analysts recommend buying HRB. Shares have risen 12.1% year to date, and the long-term EPS growth forecast is 11.7%.
Alcoholic beverage maker and distributor Constellation Brands (NYSE: STZ) is scheduled to report its fiscal first-quarter results Tuesday morning. Analysts are looking for earnings of 31 cents per share, up 32.3% from the same period of the previous year, on revenue of $906.1 million. Constellation has tended toward positive surprises recently, by 8 cents, or 33.8%, in the previous quarter. However, analysts recommend holding STZ and have for more than 90 days., even though the long-term EPS growth forecast is 12.3%. Although shares have risen 9.0% in the past three months, they are down 16.8% year to date.
Phoenix-based education company Apollo Group (NASDAQ: APOL) is scheduled to report its fiscal third-quarter results late Tuesday. Analysts on average are expecting the company to report net income of 78 cents per share -- the same as in the year ago period -- on revenue of $806.9 million. When it comes to meeting expectations, lately Apollo has a mixed record -- it fell short by 11 cents, or more than 20%, in the previous quarter. Analysts recommend buying APOL and have for more than 90 days. The long-term EPS growth forecast is 14.0%. Though shares have risen 4.2% in the past three months, they are down 31.6% year to date.
MOST NOTEWORTHY: H&R Block, Talbots and SunPower were today's noteworthy upgrades:
Oppenheimer believes H&R Block (NYSE: HRB) has shown several catalysts over the past few months, most importantly the sale of its mortgage business. The firm, which upgraded shares to Outperform from Perform, believes the company's strong 2008 tax season will lead to future growth, and they think the stock can appreciate 20%+, as catalysts are not yet fully reflected in the stock.
Friedman Billings upgraded Talbots (NYSE: TLB) to Outperform from Market Perform as they believe the company has several sources of cash to avoid a liquidity crisis, charge card EPS contribution provides good visibility, improved merchandise margins, and better merchandising.
Credit Suisse raised SunPower (NASDAQ: SPWR) to Outperform from Neutral citing strength in Italy and other geographies.
OTHER UPGRADES:
Agco (NYSE: AG) was raised at Wachovia to Outperform from Market Perform.
UBS upgraded Metso Oyg (OTC: MXCYY) to Buy from Neutral.
JMP Securities upgraded SanDisk (NASDAQ: SNDK) to Market Perform from Underperform.
Stifel upgraded eBay (NASDAQ: EBAY) to Buy from Hold.
Think the credit crisis is a bad thing? Well, Wilbur Ross doesn't. He's a maestro restructuring expert – having decades of experience on highly complex deals. In fact, he was prescient with key roll-ups in sectors like steel (where he made billions).
His next stop? He likes US banks. In fact, according to a piece in Bloomberg, Ross is putting together a $4 billion fund to capitalize on the opportunity. Apparently, he's talking to a variety of investors in Abu Dhabi. Hey, sovereign wealth funds have already shown their alacrity for US financial institutions, with investments in mega firms like Merrill Lynch (NYSE: MER) and Citigroup (NYSE: C).
Ross' strategy makes a lot of sense; that is, he wants to buy 100 to 200 banks. Thus, by building some heft, he should realize economies of scale – and ultimately build more value for his investors. Simply put, it's a formula he has refined.
Actually, Ross has already been aggressive in the financial services sector. For example, he recently spent $1.1 billion on Option One Mortgage, which was purchased from H&R Block (NYSE: HRB).
Shares of U.S.'s largest tax preparer H&R Block Inc. (NYSE: HRB) are surging today after the company announced last night better-than-expected third-quarter earnings results. H&R also issued encouraging earnings guidance and showed optimism about successful negotiations for its remaining Option One Mortgage sale.
H&R announced its quarterly loss narrowed to $47.4 million, or 14 cents per share, helped by higher sales and smaller losses from its subprime mortgage lending subsidiary, up from its loss of $60.3 million, or 18 cents per share in the same period last year.
Included in the company's earnings was a $26.3 million pretax charge related to staff reductions expenses and executive departures. Excluding that, H&R Block's earnings numbers would have come at 8 cents per share. Analysts' estimates (which typically exclude one time items) was for 6 cents per share in the quarter.
Stock futures were lower early in the morning, indicating another low start on Wall Street as concerns remain about the economic slowdown and the credit crisis. The dollar hitting a new low against the euro and oil reaching new record highs didn't boost investors' sentiment. Upcoming interest rate decision by the Bank of England and the European Central Bank will likely have an impact this side of the pond.
On Wednesday stocks started with significant declines only to rebound late getting a boost from the technology sector. The Dow Jones Industrial Average posted its first rise in five sessions of 41 points, or 0.34%, the S&P 500 added nearly 7 points, or 0.52%, and the Nasdaq composite climbed 12 points, or 0.55%.
Not much economic data is to be released today. At 8:30 a.m., weekly jobless initial claims is due and at 10:00 a.m., January pending home sales will be reported.
What investors may watch closely is monthly sales figures that many retailers should report today. Economists expect February same-store sales in the U.S. to rise 0.5% to 1%, according to the International Council of Shopping Centers, the worst since 2003, when sales rose 0.9%. High gas prices combined with a weak housing and credit market influenced consumers' decision. While Costco (NYSE: COST) and Wal-Mart (NYSE: WMT) may have benefited from consumers being price conscious, most other retailers have not.
So far, tax season as not been kind to the number two tax preparer in the U.S., Jackson Hewitt Tax Service Inc. (NYSE: JTX). A slow start to the season led to a sharp decline in fiscal third-quarter earnings, the company reported today. Net income in the quarter ended January 31 fell 34% to $18.2 million, or 61 cents per share, from the year-ago period. Revenue was down 15% to $97.6 million. Analysts surveyed by Thomson Financial had expected profit of 99 cents per share on revenue of $118.4 million.
Jackson Hewitt shares dropped more than 30% on Tuesday, reaching a new multi-year low of $13.51, and closed at $13.68.
The leading U.S. tax preparer, H&R Block Inc. (NYSE: HRB), is scheduled to report fiscal third-quarter results tomorrow. It has missed earnings estimates in three of the past four quarters. For the current quarter, analysts polled by Thomson Financial expect earnings of 6 cents per share, compared to 8 cents in the year-ago quarter.
H&R Block's earnings per share growth forecast for this year is 19.5%, better than the industry average of 13.7%, as well as Jackson Hewitt's 16.3%. The analysts' consensus recommendation is to buy HRB. Shares have risen from the 52-week low of $16.89 in January, but today continued their recent slide to close at $17.82.
Stock futures were lower this morning as investors digested the decline in commodity prices and awaited a slew of economic readings. Data on employment, manufacturing and auto sales will be reported during the morning and throughout the day. At 2:00 p.m., the Federal Reserve's Beige Book, which gives an overall picture on the economy will be released.
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Think the credit crisis is a bad thing? Well, Wilbur Ross doesn't. He's a maestro restructuring expert – having decades of experience on highly complex deals. In fact, he was prescient with key roll-ups in sectors like steel (where he made billions).
and 
. He also operates 
Shares of U.S.'s largest tax preparer 
So far, tax season as not been kind to the number two tax preparer in the U.S., 
H&R Block
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