Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
BBY a short? Maybe
By James Covert
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Circuit City Stores Inc.'s (CC) shares fell 7% Wednesday after the company announced a plan to cut about 2,000 jobs and eliminate commission-based pay for sales associates, and said its fourth-quarter earnings would fall well short of analysts' estimates.
In an effort intended to improve its sagging profitability, the Richmond, Va., consumer-electronics chain said it will cut about 1,800 sales positions at its 626 stores, or an average of about three associates per store. The company also said it will close 10 product repair centers, severing about 200 employees.
Circuit City said it expects the changes to lower fiscal 2003 earnings by about $40 million, including the impact of severance, sales disruption and other one-time costs. The company expects the compensation change to generate pretax payroll savings of about $130 million in selling, general and administrative expenses.
Suffering from a weak economy and fierce competition from the likes of rival Best Buy Co. (BBY), Circuit City also said Wednesday it expects fourth-quarter operating earnings to come in well below analysts' estimates because of an expected 2% drop in January same-store sales, which were hurt by disappointing sales of DirecTV satellite television systems and wireless phones.
As a result, the company expects to post fourth-quarter earnings from continuing operations of between 21 cents to 26 cents a share, including estimated remodeling and relocation expenses of two cents a share and one-time costs of 12 cents a share related to the change in compensation structure.
Excluding items, Circuit City predicts fourth-quarter earnings of between 35 and 40 cents a share. The mean estimate of analysts surveyed Thomson First Call was for earnings of 47 cents a share.
Circuit City posted earnings of 67 cents a share on revenue of $3.39 billion in the fourth quarter ended in January 2002.
Shares of Circuit City on the New York Stock Exchange recently changed hands at $6.13, off 47 cents, or 7%, on volume of 3.3 million. Average daily volume is 4.4 million.
(MORE) Dow Jones Newswires
02-05-03 1329ET
Rally is history......hello shorts
QQQ....Short at $24.71
Market talk....
Edited by Ray Hennessey
Of DOW JONES NEWSWIRES
(Call Us: 201-938-5354; All Times Eastern)
1:07 (Dow Jones) OmniVision Technologies (OVTI) "represents an attractive opportunity for growth-oriented investors," writes Adams Harkness & Hill, which upgrades the stock to strong buy from buy. Adams Harkness based the upgrade on the stock's recent pullback and Adams' anticipation that OmniVision could exceed the research firm's January quarter estimates. Adams Harkness says OVTI shares can trade at 35x its CY04 EPS estimate, which suggests a target price of about $26. OVTI shares are gaining $1.31, or 10%, at $14.64. (GS)
12:52 (Dow Jones) The SEC has begun a formal investigation of food distributor Nash Finch (NAFCE). In addition, its auditor, Deloitte and Touche LLP, resigned Jan. 28. The auditor reported no disagreements, but said that because of its resignation, it had been unable to investigate matters that "if further investigated may materially impact a previously issued audit report ... or financial statements issued or to be issued." The matters relate to an informal probe by the SEC that Nash Finch had previously reported. The probe involved the company's handling of promotional allowances from vendors. The informal probe began Oct. 9 and involved "count-recount charges" assessed to the company's vendors. (TC)
12:39 (Dow Jones) Legg Mason upgrades Centene (CNTE) to buy from hold for two reasons. "First, Centene stock has been under pressure over the last five weeks and is currently at a valuation level that we believe is very attractive given the risks. And secondly, we believe that Centene will be announcing solid 4Q02 and year-end results on Monday, Feb. 10 before the open." CNTE shares are gaining $1.60, or 6.6%, to $25.83. (GS)
12:25 (Dow Jones) USD recently hit session high against EUR and CHF even as Russia's Ivanov makes statements at the UN that the weapons inspectors in Iraq should have more time. EUR/USD moved as low as $1.0767, while USD/CHF went to CHF1.3623. (TDL)
12:16 (Dow Jones) Taubman Centers' (TCO) rejection of Simon Property Group's (SPG) hostile takeover bid is good news to most retailers, a new poll indicates. When asked whether such deal would be in the best interests of retailers, 45% said no, according to the survey conducted by Chain Store Age. About 23% said yes, while 32% said it doesn't matter. (JAW)
12:04 (Dow Jones) First Albany expects United Online (UNTD) to report strong fiscal 2Q03 results and raise its FY03 outlook again on Thursday. Ahead of that, the firm upgrades the stock to strong buy from buy. "We believe that a combination of effective marketing by UNTD; higher subscriber churn at premium ISPs, particulary AOL, MSN and EarthLink; and UNTD's unique position in the value segment position the company to report stronger-than-expected subscriber net adds." UNTD shares are adding 85c, or 6%, to $15.08. (GS)
11:45 (Dow Jones) Canadian Imperial Bank of Commerce (BCM) more sensitive to capital markets than its numbers suggest, says Desjardins Securities. Analyst Michael Goldberg reduced 2003 EPS forecast to C$2.70 from C$3.00 and dropped target price to C$50.50 from C$52 as markets seen getting tougher. While earnings to recover in 2004, Goldberg says the bank is unlikely to increase dividends or buyback stock in the next two years. "As a result, we believe that a discounted valuation will persist," he said. On the NYSE, CIBC is off 24 cents to $28.07. (MAG)
11:32 (Dow Jones) Credit Lyonnais agrees with El Paso's (EP) initiatives but still downgrades the stock to reduce from hold. "We are specifically concerned about the impact of exiting the LNG [liquified natural gas] business as this was El Paso's strongest long-term prospect. ... Selling this business is selling a core asset, plain and simple. However, given the company's liquidity crisis, it appears management believes it may not have any other choice." El Paso has a chance to emerge as an attractive company, Credit Lyonnais says, but several things need to happen first. The firm would recommend the stock only in the very low single digits and only for the most aggressive accounts. EP shares losing $1.46, or 18%, to $6.54. (GS)
11:19 (Dow Jones) Cisco's (CSCO) fiscal second quarter results showed that its enterprise business is "noticeably" weak, which doesn't bode well for communication chip makers, says Ashok Kumar, an analyst at US Bancorp Piper Jaffray. Shrinking chip opportunities from the likes of Cisco should intensify the pricing battle between Broadcom (BRCM) and Marvell Technology (MRVL), he says. According to Kumar, communication chip stocks remain "trades not investments as the companies will fail to earn a return on capital that exceeds cost of capital." (DLF)
11:05 (Dow Jones) Powell has thrown down the gauntlet to the UN, saying that the security council is flirting with irrelevance if it allows Iraq to continue defying its will. (MSD)
10:59 (Dow Jones) Morgan Stanley downgrades Myriad Genetics (MYGN) because it sees increased risk to the company accomplishing its FY03 goals. The firm calls MYGN's guidance of $38 million in product revenue and a $22 million loss as "aggressive." Missing those goals, Morgan Stanley writes, likely would pressure the company's short-term prospects. Long-term, the firm remains optimistic, citing the company's strong balance sheet and emerging pipeline. MYGN shares down 3.3% to $11.36. (GS)
10:46 (Dow Jones) A distinctly hawkish Powell proceeding with presenting evidence against Iraq, playing a conversation between an Iraqi general and colonel which he says seems to suggest efforts to hide weapons. Iraq has made "no effort to disarm as required by the international community," Powell tells the Security Council. "The facts show Saddam Hussein and his regime are concealing efforts to support weapons of mass destruction." If there's any reaction in equities, it's to the upside. (GMM)
10:40 (Dow Jones) Tony Crescenzi, chief executive officer of BondTalk.com, says much of what Powell is about to say is already factored into Tsy prices. "Thus, with equities having traded lower and Treasuries having traded higher in days leading up to today, it would not be surprising to see a bit of a role reversal," Crescenzi says in written commentary. (CMN)
10:26 (Dow Jones) After Manulife Financial's (MFC) 4Q earnings surpassed most expectations, several analysts have raised earnings estimates and targets for this year. Outlook for 2003 EPS now ranges from C$3.25-C$3.26, with one brokerage forecasting earnings at C$3.34 assuming Manulife's hostile takeover of Canada Life Financial (CLU) is completed. Target prices range from C$43-C$47. But Merrill Lynch's Brad Smith reiterated his 'sell' rating on the insurance giant, citing the volatility of divisional earnings, substantial equity market exposure and high level of intangible assets. He put 2003 EPS at C$3.10. Putnam Lovell's Al Capra also cautious on "unsustainably" low tax rate and uncertain equity environment. His 2003 EPS remained C$3.15 with C$41 target. On the NYSE, Manulife is trading down 16 cents to $23.60. (MAG)
11:19 (Dow Jones) Cisco's (CSCO) fiscal second quarter results showed that its enterprise business is "noticeably" weak, which doesn't bode well for communication chip makers, says Ashok Kumar, an analyst at US Bancorp Piper Jaffray. Shrinking chip opportunities from the likes of Cisco should intensify the pricing battle between Broadcom (BRCM) and Marvell Technology (MRVL), he says. According to Kumar, communication chip stocks remain "trades not investments as the companies will fail to earn a return on capital that exceeds cost of capital." (DLF)
I don't trust this rally. It just doesn't feel right to me. I also think Powell did a good job but I'm afraid that his presentation will show very little progress as far as gaining global backing.
ENR continues higher and at a day high.
GETTY IMAGES (GYI)
Expects first-quarter earnings to be in line with or
higher than what analysts expected and raised revenue
guidance for the period; reported fourth-quarter figures
that topped expectations.
Covered IDPH at $31.05 for a small loss.
IDPH....Added to the short at $30.98
Yup....the 34 area needs to hold.
SFA is also surging
TEVA weak again
OMG is surging here to a day high.
JBL....Interesting move here.
OVTI upgraded and active. I like this co.
Shorted IDPH at $30.79......lets see what happens.
Thanks Joe.....Yes, its on my short list.
IDPH may break down here. Watching
>>>Gosh, you're great day to day. But not so great near and long term. FACE IT!<<<
Day to day is where its at buddy. Instead of creating drama why don't you contribute?
NEW YORK (Dow Jones)--Get ready for some Enron-style accounting surprises.
New rules designed to crack down on the use of off-the-books partnerships -- an accounting gimmick Enron Corp. (ENRNQ) used to hide billions of dollars of debt and inflate profits -- may uncover similar schemes at other companies over the next several weeks.
No one's predicting another case as egregious as the Enron debacle, where revelations of myriad of improperly accounted-for, off-the-books entities helped topple the former energy giant.
But similar accounting blowups can't be entirely ruled out, especially given the lack of disclosure previously required of companies using off-the-books partnerships, also known as special-purpose entities. As the stricter rules go into effect, accounting specialists are cautioning investors to expect the unexpected.
"We may be in for some surprises over the course of the next few weeks and months as companies provide more information on these entities and investors digest the impact," says David Zion, an accounting analyst with Credit Suisse First Boston in New York. "Some things may come back on the balance sheet that investors aren't prepared for."
Off-balance-sheet partnerships are widespread across a broad swath of industries. Companies typically set up such entities to hold financial assets, including loans or receivables, and real estate and other property. A power company, for example, may set up a special-purpose entity, or SPE, for a new plant, while an airline might use such vehicles to lease a fleet of airplanes. The entities usually are laden with debt.
Under the new rules approved two weeks ago by U.S. accounting regulators, many companies will be forced to start bringing off-balance-sheet debt onto their books, a process known as consolidation.
Under the old rules, a company could keep a special-purpose entity off its books if an independent third party had at least a 3% stake in that entity. The new rule bumps up the guideline to 10%.
More importantly, the new rules specify that an entity should be brought on to a company's books if the company bears the majority of the risk or reward in the entity. Previously, a company would include another entity in its consolidated financial statements only if it controlled the entity through voting interests.
For companies operating on a calendar year, any existing transactions that fall under the new guidelines must be consolidated for the period beginning July 1.
Identifying exactly which companies may suddenly find themselves with mounds of debt on their books under the new rules, however, has many accounting analysts and other industry observers scratching their heads.
"This isn't like employee stock options where all of the information is in the footnotes," says Robert Willens, accounting specialist with Lehman Brothers. "We don't have a feel for the magnitude of this at all."
Adding to the confusion is that the new rules are vague compared with previous standards. That means they could be interpreted in a variety of different ways by companies and their auditors.
As the new rules loomed, a handful of companies, such as construction services company Fluor Corp. (FLR) and semiconductor-equipment maker Novellus Systems (NVLS), volunteered to investors that they may need to consolidate certain off-the-books entities.
But for most companies that employ or may employ off-the-books entities, the potential impact on their balance sheets remains largely a mystery, analysts say.
Many financial-services companies are obvious candidates for consolidation, analysts say. Credit card and mortgage securitizations are exempt from the new rule. But there are plenty of other cases where financial-services companies use off-the-books partnerships, such as in the asset-backed commercial paper market.
A wide range of other industries, such as healthcare, technology, and energy, also may have a high level of exposure to such vehicles, analysts say.
Investors and analysts will get a big sense of how the rules may affect individual companies when they release their 2002 annual reports and quarterly reports over the coming weeks.
In those reports, companies now must disclose their use of off-the-books entities if they believe they may need to be consolidated under the stricter guidelines.
"They need to disclose the nature, purpose, size and activities, and the maximum potential for losses," says Ron Lott a manager behind the implementation of the new rules at the FASB. "We tried to give investor a heads-up without being overly burdensome to companies."
In a sign of what's to come from other companies, Microsoft Corp. (MSFT) disclosed in a quarterly filing Tuesday that it may be on the hook for more than $500 million in debt belonging to an unnamed company in which the software giant owns an equity stake.
The initial disclosures are "the warm up," says Jim Mountain, a partner at accounting firm Deloitte & Touche "Most of what the disclosures will be talking about will be things that investors will see pretty clearly for the first time. You can't speculate, but investors may hear some fairly dramatic numbers in narrow, isolated circumstances."
The taint on such entities in the wake of Enron's collapse means that companies are likely to err on the side of caution in their initial disclosures, accounting analysts say.
"One of the consequences is that this first round of disclosures might very well be breathtakingly large," says Mountain. "Everyone I've talked to desperately wants to do the right thing."
In the scramble to get into compliance with the new rules, many companies may initially overstate their exposure.
By the time it comes for companies to actually consolidate the entities under the new rules in the third quarter, however, things may change. A number of companies, for instance, may have adjusted the vehicles so they won't need to be consolidated or otherwise determined that they don't need to go on their books.
"The bottom line is, until the disclosures come out, it's obviously going to be an unknown negative risk," says David Bianco, who heads UBS Warburg's U.S. accounting group. "We're just going to have to wait and see how big it is. I imagine there might be surprises."
Some accounting analysts estimate that the tougher rules set by the Financial Accounting Standards Board could add hundreds of billion dollars of debt on to corporate balance sheets this year.
"Consolidating what was once "off-balance sheet" could have an impact on most every line in the financial statements," affecting performance measures such as earnings per share, earnings before interest, taxes, depreciation and amortization, or EBITDA, and free cash flow, along with many financial ratios -- particularly leverage ratios, Zion and analyst Bill Carcache of CSFB, warned in a recent research note.
Companies saddled with higher debt-to-equity ratios may see lenders restrict capital, increase rates or add more onerous conditions to loan covenants. Credit agencies, meanwhile, could lower their ratings, raising a company's cost of borrowing.
-Janet Whitman; Dow Jones Newswires; 201-938-5248; janet.whitman@dowjones.com
Maybe a short term rally until Thurs afternoon. I've been thinking that the general market would sell off during Powell's incrimination, but now I'm thinking we could see an unexpected rally develop if some hard core facts come out. What we need is for the whole world to jump out of their chairs in shock. We need them to all back us up. Maybe this incrimination will do the trick. The market would really like a global unity.
The Fri employment reports should put the brakes on any short term rally. Thurs afternoon selling seems likely to me.
>>>*DJ Cisco CFO: 3Q Gross Margins Seen Between 68% And 70%>CSCO
+DJ Cisco CEO: Seeing More Conservative Spending Attitudes
*DJ Cisco CEO: 3Q Has Historically Been Most Challenging>CSCO
*DJ Cisco CEO: Downside Risk To 3Q Due To Geopolitical Events
*DJ Cisco CEO Sees Customers Being Even More Cautious>CSCO
*DJ Cisco CEO Sees 3Q Rev Flat To Down Slightly>CSCO
*DJ Cisco CFO: 3Q Revenue Seen Flat To Down As Much As 3% <<<
Don't worry, the spin doctors at CNBC will spin the CSCO numbers to look good. Cramer and his brother Kudlow should be funny tonight. Watch, I bet they will be screaming that CSCO has bottomed.
CSCO....The stock is trading at about 25 times this year's projected profit and 24 times next year's, and yet the company is expected to grow by less than 10 per cent this year and perhaps slightly more next year.
Because many stocks are breaking down. No reason for many to go long into Wed. Then on Fri we have the employment report so many will move to the sidelines on Thurs afternoon. I think we're going to see a very weak report for Dec. As for CSCO the Proforma king, I think a warning going forward may be in the cards.
Teva Pharmaceutical Industries Ltd., headquartered in Israel, is among the top 35 pharmaceutical companies and among the largest generic pharmaceutical companies in the world. Over 80% of Teva's sales are in North America and Europe.
>>>bearmove or anybody any idea why teva is down so? I play teva all the time and am out right now, but just wondering if there is any news<<<
I think it may be bewcause of where TEVA is based out of. I personally like this company alot.
I'm looking for a move back to the days low if not lower by the close.
EMC surging to a day high
TEVA needs to stay above this level or else.
BLUD seeing buyers...
>>>Good! It also seems according to the news I have seen that Bush is willing to put off the war 6 weeks if Blix can get what he wants from Saddam.... I favor that provided the issues of 1M gallons of VX nerve gas , etc,. can be accounted for and verified.
This should take some of the war pressure off the market.<<<
Can't agree......First of all, the market won't like it if its put off til then. Second, the N.Korea drama will now hang over the market. Third, techs are going into their slow season and many are still to bullish.
Adding to my long term position in LU. Will keep cost averaging in buying small blocks.
Yes, my favorite is HYGS. GM owns about 22-25%. PLUG is my 2nd choice.
Thanks, will check it out. I like PLUG, HYGS and BLDP.
Will now watch fuel cell stocks again. Looking to re-buy.
Joe, CVS is at it again.
>>>Saddam going to exile in Syria?? Is this true I just heard this rumour coming off the floor. have a friend who works on the floor in Phila...<<<
That rumor has been around for two weeks. Besides, you did say on Monday that any noise outside of the market wasn't important. Todays market move proves my point from Monday. Good luck
INTC....Covered at $15.39 after shorting at $15.81.