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I saw only the Micheal Moore speech and it was mostly booing as I said. Whether or not you like Fox News is irrelevant. There was no need for their commentary or opinion. The clip said it all. But in the end, it doesn't really matter. I don't really care about Hollywood's political opinions or their opinions about anything else for that matter. They certainly have the right to voice them but I also have the right to disregard them.
I just saw it on Fox News and it was mostly booing. Steve Martin made an excellent pun afterwards saying that the Teamsters were helping Micheal Moore into the trunk of his limo. LOL!
Wall Street Poised to Fall Sharply
Monday March 24, 5:58 AM EST
LONDON (Reuters) - Wall Street is set to open sharply lower on Monday, weighed by concerns that the U.S.-led war against Iraq may not be as brief as the market had initially anticipated.
U.S. equity index futures showed the Dow Jones industrial average (DJI) would fall some 140 points at the opening, while Nasdaq 100 futures indicated the tech-laced exchange would also open sharply weaker.
"It looks as though we just got too far ahead of ourselves, without a doubt. We could have rather a negative session today, unless the news from Iraq is more upbeat later in the day," said David Buik at Cantor Index.
Shares in the largest U.S. tobacco company Philip Morris (MO) (MO) fell sharply after a U.S. judge ruled it had deceived smokers into thinking "light" cigarettes were safer than regular cigarettes and ordered it to pay $10.1 billion in damages.
The stock was down 5.9 percent in Frankfurt at 31.15 euros ($33) from a New York close of $35.04.
But all eyes were on the conflict in Iraq, where U.S.-led troops were facing stiff resistance from Iraqi fighters, worrying some traders that the conflict could be more drawn out than they had originally anticipated.
Fierce air strikes continued to pound Baghdad on Monday, a day after U.S. and British troops suffered their heaviest combat casualties in their five-day-old war to overthrow Iraqi leader Saddam Hussein.
"The longer this goes on the bigger the drag on the economy. And the bigger the drag on the economy the less rebound in corporate profits," said Steve Previs at Jefferies International.
"The bottom line is a quick victory would be good for the market and the economy, but if this drags on for two or three months it would be disaster for the market and a disaster for the economy," Previs said.
With little corporate or economic news to chew on, traders said investors would remain glued to their television screens awaiting fresh developments in the war against Iraq.
©2003 Reuters Limited.
The house passed the President's tax cut plan by a narrow vote last night. The word I am getting is that the entire plan was passed so I am assuming that means the dividend tax elimination as well although I am not certain. There is talk that there will be more resistence in the Senate as that body will propose some changes that would cut the plan in half and I would be willing to bet part of the proposed cuts would be the dividend tax elimination. I really don't think that the President will be willing to give that up so there may be a fight in the near future. We will have to wait and see how it goes but at least it made it through the House, which is very encouraging.
BTW- The Fed did keep interest rates unchanged yesterday, although not very many people paid attention.
FBI Slaps HealthSouth with Search Warrant
Wednesday March 19, 1:21 AM EST
BIRMINGHAM, Ala. (Reuters) - HealthSouth Corp. (HRC) said on Wednesday agents of the U.S. Federal Bureau of Investigation served it with a search warrant and were given access to current and historical financial records at its headquarters.
Birmingham, Alabama-based HealthSouth -- a provider of physical therapy, diagnostic imaging and outpatient surgery -- said the agents also served it with a grand jury subpoena from the U.S. attorney's office on the evening of March 18.
Additional subpoenas have also been served "on certain company employees," HealthSouth added.
The company, which is also being probed the U.S. Securities & Exchange Commission, said it continues to cooperate fully with authorities. However, it cannot predict the course or outcome of the investigation.
The SEC has been looking into stock sales by HealthSouth Chairman and Chief Executive Richard Scrushy in May and July. HealthSouth shares ended down four cents, or 1.01 percent, at $3.91 on the New York Stock Exchange on Tuesday.
©2003 Reuters Limited.
Hi Mach! Not suprising, especially the way the market is reacting to the war. Just be careful. There will be broad based rallies but every stock doesn't deserve to go up. The key will be finding stocks that will rally and hold up.
General Mills Net Income Nearly Triples
Wednesday March 19, 7:56 AM EST
MINNEAPOLIS (Reuters) - General Mills Inc. (GIS), a leading U.S. cereal company, said on Wednesday quarterly net income nearly tripled on lower costs and easy comparisons with the year-ago period, when the integration of frozen foods maker Pillsbury disrupted shipments.
General Mills, which also raised its full-year profit outlook, said shipments climbed 5 percent in the third quarter ended on Feb. 23, benefiting from an improved cereal business and new products such as Berry Burst Cheerios and Yoplait Whips! whipped yogurt.
The maker of Wheaties cereal, Betty Crocker cake mixes, and Progresso soups said net income rose to $240 million, or 63 cents a share, from $82 million, or 22 cents a share, a year earlier.
Excluding special items in both periods, earnings rose to 67 cents a share from 28 cents. The company had forecast a profit of 65 cents to 66 cents, and analysts' estimates averaged 66 cents, according to research firm Thomson First Call.
Net sales increased 11 percent to $2.65 billion.
General Mills, which competes with Kellogg Co. (K) in the cereal business, bought Pillsbury in October 2001.
Encouraged by the higher shipments, General Mills raised its full-year earnings outlook to between $2.62 and $2.64 a share before unusual items from a prior range of $2.60 to $2.62. That compared with $1.70 a share last year.
"Our strong levels of product news and marketing innovation are driving growth in our retail sales and market shares," Chief Executive Steve Sanger said in a statement.
Third-quarter results included unusual expense associated with the Pillsbury deal. In the most recent quarter, the company had a pretax cost of $22 million. In the year-ago quarter, the company had pretax expense of $39 million. General Mills expects to record an additional $15 million to $20 million pretax expense in the fourth quarter.
Shares of General Mills closed Tuesday New York Stock Exchange trading at $44.88. The stock fell about 4 percent in the company's third quarter, outperforming the broader Standard & Poor's index of packaged foods companies, which dropped about 7 percent in that time.
©2003 Reuters Limited.
You know my dad was a southerner and quite conservative. He taught me to think for myself and was quite dismayed when I did just that :)
LOL! That is exactly the same thing I can say. My father was also conservative and while I am certainly not left wing by any standards, I do think for myself and have some beliefs that most of the people around me would consider a bit different than the norm.
The index futures are looking pretty good so far today. It looks like there will be some follow through on yesterday's rally.
Yes, I remember hearing that Berkley was a place of many protests. I wish the citizens of Alabama has a bit more social concious. I am certain that protesting a war with a Republican President wouldn't be the event that many Alabamians would choose to protest but it seems that something would spark some civil disobedience. I would like to take part in a protest at least once simply for the life experience. I saw on the news that some protesters in San Fran got arrested yesterday. Guess they got a little rambunctious.
Fed Seen Keeping Interest Rates Steady
Tuesday March 18, 3:49 AM EST
By Glenn Somerville
WASHINGTON (Reuters) - With a U.S. war in Iraq likely days away, U.S. Federal Reserve policymakers were widely expected to preserve their dwindling economic ammunition on Tuesday by holding U.S. interest rates at four-decade lows.
At most, the policymaking Federal Open Market Committee might signal an openness to future reductions by changing its assessment of the economy to one warning of the potential for future weakness. But economists see little chance of an actual cut now in the face of so many unknowns.
President Bush on Monday warned Iraqi leader Saddam Hussein that he and his sons had 48 hours to go into exile or face U.S. military action when the United States chooses.
Given the uncertainties about how the war will progress and about how much of the economy's current softness is due to those uncertainties, some economists said even a shift in the Fed's balance of risks away from the current stance that risks are evenly balanced was not a sure thing.
"Monetary policy currently is very accommodative and I think the Fed is basically in a wait-and-see mode until it is more apparent how any conflict will go," said economist Gary Thayer of A.G. Edwards and Sons Inc. in St. Louis, Missouri.
Another source of anxiety for American consumers and businesses is the possibility of retaliatory attacks once the U.S. begins its strikes on Iraq. Homeland Security Secretary Tom Ridge said on Monday he was raising the country's terror alert level to indicate a high risk of attack.
WALL STREET BETS NO CHANGE
Fully 17 of 22 Wall Street's biggest bond firms that deal directly with the U.S. central bank forecast that Fed Chairman Alan Greenspan and other members of the policymaking Federal Open Market Committee will hold their fire on rates.
FOMC members begin meeting at 9:00 a.m. EST and are scheduled to announce a decision on rates at about 2:15 p.m. EST.
Even if the Fed hangs fire on Tuesday, it will still have the option to cut rates at any time it chooses.
Some economists said policymakers could indicate they are prepared, if needed, to cut rates before their next scheduled meeting on May 6 by saying they were monitoring developments closely -- language used in statements that preceded two of the three so-called intermeeting cuts in 2001.
The key federal funds rate for overnight loans between banks is 1.25 percent after a dozen cuts since the start of 2001. It is now so near zero that policymakers have mused about other methods they could use if needed as stimulus, like buying back government securities to inject money into the economy.
Much of the recent economic data have been dismal, with 308,000 jobs scrubbed from payrolls in February, weak retail sales and a surge in prices at the gasoline pumps pushing consumer confidence in March to its lowest level in a decade.
There are some analysts who believe that more than war fears are bedeviling the economy. However, many economists think a sense of unease about how the Iraqi standoff would play out lies at the root of the economic restraint evident in recent months -- and one way or another, that was nearly past.
"I think the Fed is going to want to wait and see whether or not there is an after-war bounce in the economy, as many expect, and if not, that way they save a potential ease in rates for use later if needed," said economist Joe Keating of AmSouth Bank in Birmingham, Ala.
PRICING IN A WAR
Certainly the financial markets on Monday appeared to be turning a "war premium" into exuberant investor activity, as prices shot up in an apparent belief that a war with Iraq could be won swiftly and decisively.
The Dow Jones industrial average closed up 282 points, nearly a 4 percent gain on the day. The high tech-laden Nasdaq Composite Index rallied 51.94 points, also just shy of a 4 percent pickup on the day.
Economist Mark Vitner of Wachovia Securities in Charlotte, N.C., said he expected the Fed to keep rates on hold but possibly to shift its assessment to admit a greater risk of economic weakness amid the heightened global uncertainty.
"Greenspan has already has said the economic situation will remain murky until there is some firm resolution of the Iraqi crisis," Vitner said. "I don't think they want to muddy the waters now as the country heads into war, especially since Greenspan also has said that once we get past the war, the recovery should be able to get back on track."
©2003 Reuters Limited.
Oil futures slip as war clouds start to dissipate
By Myra P. Saefong, CBS.MarketWatch.com
Last Update: 4:10 PM ET Mar 17, 2003
NEW YORK (CBS.MW) -- Crude futures fell as much as 3 percent, to their lowest level in nearly five weeks as the U.S., Britain and Spain set the stage for conflict with Iraq.
"The market's chief worry, the outbreak of a potentially supply-disruptive U.S.-led invasion of Iraq, took another step toward certainty," wrote John Kilduff, analyst at Fimat USA.
Following a Sunday meeting on the Azores Islands with the leaders of Spain and Britain, President Bush said the world faces a "moment of truth" when it comes to disarming and unseating Iraqi leader Saddam Hussein. Bush will address the nation this evening. See Special Report: Countdown to War.
"Diplomatic efforts have been suspended -- the U.S., UK and Spain have withdrawn their resolution, the administration has called on the weapons inspectors to leave Iraq and the President will address the nation tonight," said Thorsten Fischer, an oil economist at Economy.com.
"Thus, the uncertainty that has sent prices high will be removed."
Following the news, crude for April delivery fell as low as $34 a barrel -- its lowest level since Feb. 12. It closed at $34.93 a barrel, down 45 cents, on the New York Mercantile Exchange.
The May contract for Brent crude on London's International Petroleum Exchange closed at $29.48 a barrel, down 65 cents. Anti-war protestors shut the exchange for about two hours Monday.
Gold futures ended the session modestly higher on the Iraq-related news, after tacking on as much as $7 an ounce earlier in the session. See Metals Stocks.
"We're close to resolution on Iraq," said Phil Flynn, a senior analyst at Alaron Trading in Chicago. "Some of the uncertainties are going away" and the world "won't have to guess on timing of war."
Oil traders are concerned that there could be more oil on the market once war begins, he said. The International Energy Agency has already agreed to do so in the event of war.
There has also been speculation that the U.S. will release its oil from its Strategic Petroleum Reserve, which currently stands at around 600 million barrels.
"The SPR has been instrumental in providing some assurances to the market that there are some reserves to fall back on in case of supply disruptions," said Thorsten Fischer, an oil economist at Economy.com.
"Fear" premium unraveling
Alaron's Flynn said the price fall is more of a drop in the "fear premium," which is different from the "war premium." Once bombs start dropping, prices may rise again, he said.
Still, without the actual deployment of troops, bombs and other weapons into Iraq, "there is not a war," said Michael Cavanaugh, an analyst at Peak Trading Group in Chicago.
"This means that the oil market will remain volatile, and will still try to hammer the bottom of this move," he said, adding that "the longer there is no war, the lower oil will go."
The European Commission on Monday warned that oil prices could spike up to as much as $70 a barrel if a war in Iraq were longer than expected and the conflict disrupted oil distribution. See full story.
Grady Garrett, chief trading strategist at EnergyTrendAlert.com, a commodity information provider, also pointed out reports saying that Venezuelan production has returned to about 3 million barrels per day.
"This means that the current unsustainable high price level of crude oil is now based solely on the ability of Iraqi military to keep coalition forces at bay," he said.
Looking ahead, "the outcome of a swift military operation will decide further price direction" for oil, said John Person, head financial analyst at Infinity Brokerage Services.
If the war is over in less than six weeks with minimal damage to Iraq's oil fields, then the commodity could return to the mid-$20 price range, he said. But "until the event of war, it will be hard to accurately predict where prices will be two months from now."
Garrett warned that Saddam might try a first strike to cause maximum damage to U.S. forces. If that occurs, it could have a significant impact, and possibly create a selling opportunity, but wouldn't alter the eventual outcome of the conflict, he said.
"Short and successful" scenario
The price action in the oil markets, equities and foreign exchange markets suggests investors believe "war with Iraq will be short and successful," said Michael Armbruster, an analyst at Altavest Worldwide Trading. "The markets are trying to discount a repeat of 1991," he said.
Jeff Mokychic, head analyst at Bridgeton Global Investor Services agreed. Oil prices are down on expectations that a war with Iraq "would be a quick one."
"The oil price is just a part of a broader unraveling of the war premium, even before war actually begins," he said.
Under the scenario of a "quick and sweeping victory" on the part of the U.S. and its allies, oil prices will move lower as long as there is "no bad news," said Economy.com's Fischer.
Oil field worries
Much depends on whether Saddam damages oil fields in Iraq or neighboring countries, primarily Saudi Arabia, Kuwait or the United Arab Emirates, Fischer warned.
EnergyTrendAlert.com's Garrett believes damage to Iraqi oil fields won't have much effect on the price of oil unless "very great" damage is done.
But it's difficult to guess what'll happen next because the biggest difference between now and the war in 1991 is the goal, said Fischer. The U.S. and its allies want to topple Saddam and effect a regime change, whereas in 1991, the aim was to expel Saddam's troops from Kuwait.
If the oil market believes that the oil fields are secure and Saddam is no longer a threat, oil prices will drop more sharply, he said.
Prices will still remain in the mid- to high-$20s range until late spring or early summer because of "critically low oil inventories," he said.
If Saddam actually succeeds in destroying oil fields in Iraq, prices could rise again, until the extent of the damage and the effect on supplies becomes clear, Fischer said.
"Throughout the next days or weeks, even rumors will cause market swings, if only for a limited time until more information becomes available," he said.
Retail gasoline at record high
Meanwhile, prices for gasoline on the retail level climbed Monday to their highest level ever, according to AAA's Daily Fuel Gauge Report.
Gasoline prices at the pump averaged $1.719 a gallon -- surpassing the all-time high of $1.718 seen in May 2001. A year ago, prices stood at $1.251 a gallon.
The April gasoline contract, however, eased back 1.33 cents to close at $1.0271 a gallon, following crude prices lower.
Also on Nymex, heating fuel prices were mixed -- in tune with weather forecasts of below-normal temperatures in the western half of the nation, but above-normal temperatures in the Northeast and Southeast.
Heating oil for April delivery closed at 91.57 cents a gallon, down 2.5 cents. April natural gas rose 7.8 cents to close at $5.507 per million British thermal units.
U.S. natural-gas supplies stood at 721 billion cubic feet as of the week ended March 7, 1.01 trillion cubic feet below the year-ago level and 655 billion cubic feet lower than the five-year average, according to the Energy Department.
Meanwhile, heating-oil stocks of 98.3 million barrels are 23.6 percent below the year-ago level.
In the equities arena, the Philadelphia Oil Service Index ($OSX: news) traded modestly higher. See Energy Stocks.
The Reuters/CRB Index -- a broad-based measure of the commodity futures market -- closed at 237.4, down 1.1 percent, amid weakness in the energy futures.
Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.
Interesting. Folks in the South don't really do much protesting. At least not in Alabama anyway.
My calander says it is if I am reading it right. It has a picture of a full moon on it so I think that is what it means.
Oh and sorry it took so long to reply. I have been watching the U.N. on CSPAN today so my focus has been on that.
LOL! You won't get any complaints from me. I also think the Bush admin failed to approach the issue properly but I think when the matter went before the security council, each member had the opportunity to help resolve it and unfortunately, it didn't work out. There are many different perspectives on this issue and I think they are all valid and they are all welcome here. I believe that everyone can agree that it is unfortunate that it has come to war and we should all pray that the loss of life is as little as possible and in the end, I hope the Iraqi people will be better off afterwards than they were before. I would also like to thank you for posting your opinion. I respect your opinion very much and your participation in any discussion on this board is always appreciated.
Right now, the weekly newsletter is basically it. I am considering other options but there are a lot of issues involved. The thought of having a search engine or research mechanism of some kind that would allow surfers to research income funds, dividend funds, dividend stocks, etc. is an appealing prosect though. Due to the fact that such services do not exist, there would be significant cost in developing the programming needed to do the job properly so such a service would be well down the road. But if the demand is sufficient, services such as that will come about. The newsletter itself is a service but also a gauge of demand. Dividend stocks went out of favor during the tech run up and it is certainly not clear at this time as to whether or not there is enough demand for dividend stock info to make the cost justified.
The only way I know of is to check each individual company's website for dividend payout dates. Another way would be to invest in an income fund. I believe there are some that pay monthly dividends. If you have a full service broker, that would be who you would want to contact about setting up an income portfolio or researching income funds.
I don't think the onus lies solely on the U.S. I blame everyone involved. The entire U.N. failed and most importantly, Sadaam Hussein. Had Hussein complied with 1441, we wouldn't be where we are at today, but the diplomatic process breaking down between the 15 permanent members is what ensured war. Each and every member should shoulder the blame equally but in the end, Hussein could have complied with 1441 and avoided war if he so chose. He didn't so here we are.
Yes, it is very disturbing that the U.N. was unable to stand united and force the Iraqi regime into compliance. I am very disappointed that some countries chose to use the current environment to further their own political agendas. I believe that had all the permanent U.N. members been on the same page, the results would have been different. This conflict has and will continue to hurt international relations between countries and severely affect the U.N.'s creditability. The only positive I can see right now is that the U.S. markets are reacting positively but such a reaction is a small positive development in the face of the impending violence and loss of human life. All we can hope for now is a better Iraq for her people on the other side of this war.
Well it looks like a war with Iraq is in our very near future. I was certainly hoping against hope that it could be avoided but obviously that won't be the case. It will be interesting to see how the markets react. A lot of people are giving their two cents on what they think will happen but I don't believe that anyone can predict what will happen with the war itself or the market's reaction. I believe the best way to play the market right now is to stick with safer investments. I am still of a mind that dividend investments are the best place to be and I don't see that changing in the near term. I would suggest avoiding oil stocks though. The price of crude oil is likely to drop significantly when the conflict is resolved.
Wall Street Is Set to Drop as War Looms
Monday March 17, 9:05 AM EST
By Denise Duclaux
NEW YORK (Reuters) - Stocks were poised to fall at Monday's opening bell as the United States stood on the brink of war with Iraq, leaving investors wrestling with concerns over the fallout on the fragile U.S. economic recovery.
President Bush said on Sunday the United Nations had only one more day to find a diplomatic solution to the Iraq crisis before the United States moved to a war footing. U.N. Security Council consultations were scheduled for 10 a.m. in New York on Monday.
The chief U.N. nuclear weapons inspector said on Monday the United States advised him to pull staff out of Iraq in one of the clearest signs yet of imminent war. The United States and Britain have about 270,000 military personnel in the Gulf region prepared for an invasion of Iraq.
Investors worldwide fled equities and jumped into safe-havens like bonds and gold. Oil prices climbed, feeding worries about the impact of war on the world economy, and the dollar slumped.
"We are about to go to war. The removal of the weapons inspectors ensures that and the next step would be the president issuing a nationwide address," said Larry Wachtel, a market analyst at Prudential Securities. "So with the advent of war, all global markets are weak. All the safe-havens are being bought, and we are looking at a lower open."
Standard & Poor's 500 stock index futures for June fell 5.10 points to 828. June futures for the Dow Jones industrials skidded 65 points to 7,785, while June futures for the Nasdaq 100 lost 10 points to 1,027. The Nasdaq 100 pre-market indicator fell 0.82 percent.
WAR THREAT OVERSHADOWS FED
Prudential's Wachtel said investors are skittish ahead of a possible war but added stocks may rally on an actual military strike if Wall Street sees signs the war will be a swift one.
Many market watchers warn the week could be volatile for the stock market as investors take their cue from each headline and ponder how the crisis over Iraq will end.
The Federal Reserve's policy-setting meeting on Tuesday is expected to take a back seat as the threat of war consumes Wall Street. The U.S. central bank is widely expected to keep interest rates steady but leave the door open for monetary easing down the road.
Shares that could move during Monday's session include Lockheed Martin Corp. (LMT). The Pentagon awarded Lockheed Martin, the top U.S. defense contractor, a 6-year, $4.05 billion contract for 60 C-130J aircraft, the U.S. military said on Friday after the close. Lockheed Martin closed at $45.19.
Wal-Mart Stores Inc. (WMT), the world's largest retailer, has talked to shareholders in Britain's fourth largest supermarket chain, Safeway Plc, about buying a significant stake, the Sunday Telegraph paper reported. Wal-Mart closed at $49.36.
Wal-Mart, a Dow component, on Monday before the open stood by its March and April sales forecasts, citing strong seasonal goods sales as temperatures warmed up across the country.
Drug company Eli Lilly & Co. (LLY) said on Monday before the open an experimental lung cancer drug, exploiting so-called "antisense" technology, had failed to show significant benefit when used in combination with chemotherapy. Affinitak is being developed in partnership with biotech Isis Pharmaceuticals Inc. (ISIS). Eli Lilly closed at $53.98, while Isis ended at $4.16.
©2003 Reuters Limited.
WorldCom to Write Down $79.8 Billion of Good Will
By SIMON ROMERO
http://www.nytimes.com
WorldCom, the long-distance carrier that is mired in the nation's largest bankruptcy filing, said yesterday that it was writing down $79.8 billion of its good will and other assets. The move is an acknowledgment that many areas of the company's vast telecommunications network are essentially worthless.
The company said in a statement that all existing good will, valued at $45 billion, would be written down. WorldCom also said it would reduce the value of $44.8 billion of equipment and other intangible assets to about $10 billion.
WorldCom had previously signaled that it was considering the write-downs, but the immensity of the values involved surprised some analysts. WorldCom's write-downs are second only to those of AOL Time Warner, which recently wrote down nearly $100 billion of assets.
"This raises the specter of other write-downs by competing companies like AT&T and Sprint," said Patrick Comack, an analyst at Guzman & Company in Miami. "It's basically another example of the telecom mirage, with network assets in reality worth a fraction of their past value."
The write-downs are an important step in WorldCom's effort to emerge from bankruptcy because they allow the company to reduce its depreciation and amortization expenses to $143 million, from about $480 million in December. The action has little effect on its business and no impact on its cash position.
"They're taking the big bath now with the hope that this will positively affect future profitability," said Richard Klugman, an analyst at Jefferies & Company in New York.
Still, the reduction in depreciation costs did not prevent WorldCom from posting a loss of $47 million for the month on sales of $2.2 billion. A month earlier, WorldCom had a net loss of $194 million on the same amount of revenue.
"It's a scary situation," Mr. Comack said. "They're still losing money even without paying interest and after the write-downs."
WorldCom said yesterday that it ended December with $2.5 billion in cash, an increase of about $200 million from the previous month. Its financial results for the month did not include operations at Embratel, its large Brazilian affiliate, which recently secured a respite from creditors on dollar-denominated debt obligations.
"Revenue is stable and our cash balances continue to grow," said Bradford Burns, a spokesman for WorldCom. "We feel like things are headed in the right direction."
WorldCom, the nation's second-largest long-distance carrier after AT&T and one of the largest transmitters of Internet data, completed the preliminary review of its good will and assets as KPMG is reviewing its financial statements from 2000 to 2002.
WorldCom filed for bankruptcy protection last year after a scandal involving $9 billion in accounting irregularities. The company said yesterday that it had also reported the write-downs to the Securities and Exchange Commission, which is investigating its accounting practices.
Some investors are expecting similar write-downs at other telecommunications companies. One other large company, Qwest Communications, said last October that it was writing down the reported value of its assets by $34.8 billion, reflecting the difficulty of maintaining high valuations of network investments made in recent years.
Much of the fiber optic equipment installed by carriers has plummeted in value since the late 1990's after the rapid expansion of competing networks resulted in a vast oversupply of communications capacity. Because WorldCom's network is so extensive and still so widely used, its write-downs could influence similar decisions at other large carriers.
Good info Mach. I agree with the zero interest part especially. When you do incentives like that for so long, people come to expect it. Now that sales are slowing down, it will take a serious jump in consumer buying pressure to give Ford and GM the ability to sell an adequate number of vehicles without the incentives. We'll have to wait and see what comes out in the wash but I think that $166B in debt is way too much. If Ford wants to start making money again, they need to pay down a good percentage of that debt. I can't imagine what the interest payments alone amount to but $166B at 3% is about $5B. The average rate is more than likely at least twice that so they pay several billion in interest alone every year. But with the stock price where it is and the fact that they are losing money, there is no pain free way to reduce the debt unless they can talk the debtholders into exchanging the debt for Preferred Shares. This would still most likely end up diluting common shareholders in the future but it might give the company some time to get their affairs in order. They could always do a stock buyback later. I just don't understand why some companies accept debt levels like that. The only people that will be making money are the banks. Interest bearing debt is slowly strangling many American companies, the same way those well publicized "Toxic Convertibles" are strangling the Microcap markets. The only difference is that it is a slower death. One of these days we will wise up and begin a program of abolishing interest bearing debt all together. Until then, companies must become more fiscally responsible and pay down their debt and keep it down.
Soros Predicts Brief War Rally
Friday March 14, 6:11 AM EST
By Reed Stevenson
SEATTLE (Reuters) - George Soros, the outspoken billionaire hedge fund investor and philanthropist, said a short and decisive victory in Iraq would provide brief economic relief, but warned Thursday that U.S. military policy is creating a dangerous "bubble of American supremacy."
"Removing the uncertainty (about a war in Iraq) would be a positive for the stock market and the economy. A reduction in the price of oil would be a major positive," Soros said at an event sponsored by the anti-poverty group Global Partnerships in Seattle.
Hungarian-born Soros, renowned for his bet against the British pound that ejected it from Europe's single-currency launch, said a nascent economic recovery could be choked by increased spending, which is fueling a government deficit.
"The deficit policy that we are now pursuing is a very dangerous one. Not in the near term -- because as long as the economy is languishing there is no negative effect on interest rates. But the moment the economy shows signs of life, interest rates would jump because of the budget deficit and choke off the recovery," Soros said.
He lashed out at President Bush's preparations for war with Iraq, repeating his argument published in several newspaper editorials this week that the Bush administration's willingness to use military power to assert U.S. dominance is creating a backlash that is feeding on itself.
"The current pursuit of American supremacy reminds me of the boom-bust process, or a stock market bubble," Soros said.
"A rogue regime like Saddam Hussein's does pose a threat to the rest of the world. ... But military force must remain a last resort and it must have some basis of legitimacy," Soros said.
The United States and Britain failed on Thursday to win support for a U.N. Security Council resolution to authorize a looming invasion of Iraq, as the U.S. military beefs up its presence in the Middle East in preparation for war.
Bush's closest ally, British Prime Minister Tony Blair, is facing strong anti-war sentiment in his country, while France remains steadfastly opposed to a U.N.-sanctioned ultimatum.
"Whatever the outcome in Iraq, I dare to predict that the Bush policies are bound to fail," Soros said.
Soros said that the Sept. 11 attacks on the United States have made it difficult for political opponents and public figures to voice opposition to Bush's policy on Iraq.
"I believe that President Bush is leading the United States and the world in the wrong direction, and I consider nothing short of tragic that the terrorist threat has induced the country to line up behind him so uncritically," Soros said.
©2003 Reuters Limited.
Updates, advisories and surprises
By CBS.MarketWatch.com
Last Update: 8:01 AM ET Mar 13, 2003
Stage Stores Q4 EPS ahead of forecast by 3 cents (7:47 AM ET) Stage Stores(STGS: news)said fourth-quarter net income was $16.1 million, or 81 cents per share, compared to $15.8 million, up from 77 cents per share, in the year-ago period. The figure of 81 cents beat the forecast of 78 cents per share in a survey of analysts by Thomson First Call. Total sales fell 4.4 percent to $256.9 million from $268.7 million. Comparable store sales dropped 6.8 percent. The company's first-quarter earnings forecast is 80-85 cents per share, ahead of the expectation of 75 cents per share. Shares fell 37 cents to $17.73 on Wednesday.
BMW up 3.5% after '02 pretax profit increases 1.7% (7:42 AM ET) BMW(DE:519000: news)was up 3.5 percent as it said on Thursday its full year pretax profit rose 1.7 percent to 3.29 billion euros and its net profit increased 8.3 percent to 2.02 billion euros. It left its dividend unchanged at 52 eurocents per share. The German automaker sold 1,057,344 vehicles, up 16.7 percent, the first time it broke the one million mark, the company said.
Panera Bread 'comfortable' with Q1, 2003 earns outlook (7:42 AM ET) Panera Bread(PNRA: news)said it continues to remain "comfortable" with first-quarter and full-year 2003 earnings projections of 24 cents and 99 cents a share, respectively, as a decline in February sales was in line with expectations. For the four weeks ended Feb. 22, system-wide comparable bakery-café sales decreased 1.9 percent. The stock closed Wednesday down 33 cents at $25.77.
Dick's Sporting Goods grows profit (7:30 AM ET) Dick's Sporting Goods(DKS: news)reported fourth-quarter net income of $19.1 million, or 82 cents per share, up from $12.9 million or 67 cents per share in the year-ago period. Excluding previously reported charges, net income would have been $20.5 million or 88 cents per share, ahead of the forecast of 86 cents per share in a survey of analysts by Thomson First Call. Sales increased 16 percent to $395.2 million. Comparable store sales increased 4.9 percent. The company expects to report EPS for the full year in line with the current First Call consensus estimate of $1.95. Shares fell 92 cents to $22.05 on Wednesday.
Urban Outfitters' Q4 earns exceed expectations (7:28 AM ET) Urban Outfitters(URBN: news)reported fiscal fourth-quarter net income of $8.4 million, or 42 cents a share, up from 33 cents a share in the year-earlier period. The results, boosted by a 3.6 percentage point increase in gross profit margins to 37.2 percent of net sales, were above the average analyst estimate compiled by Thomson First Call of 38 cents a share. Total sales for the quarter ending January increased 13 percent to $117.6 million, and same-store sales rose 1 percent. The stock closed Wednesday down 44 cents at $18.40.
Entergy affirms 2003 earnings outlook (7:19 AM ET) Entergy(ETR: news)affirmed its prior forecast for 2003 operating earnings of $3.75 to $3.95 a share, surrounding the average analyst estimate compiled by Thomson First Call of $3.85. For the first quarter, the integrated energy company said reported and operational earnings are expected to be "materially higher" than prior year results due to strength at its Entergy-Koch unit, and should be "at least" $1.65 and $1.05 a share, respectively. Reported results include a non-recurring item, reflecting the impact of the implementation of new accounting standards. The stock closed Wednesday up 38 cents at $45.68.
Claire's Stores' Q4 earns rise above expectations (7:07 AM ET) Claire's Stores(CLE: news)reported fiscal fourth-quarter net income from continuing operations of $42.5 million, or 87 cents a share, up from 61 cents a share in the year-earlier period, and 6 cents a share better than the average analyst estimate compiled by Multex. Total sales for the quarter ending February increased 15 percent to $322.4 million, matching analyst forecasts. Same-store sales rose 9 percent. Looking ahead, the costume jewelry retailer expects mall traffic to remain weak due to a continued "challenging" geopolitical and economic environment, but expects same-store sales for the current fiscal year to grow 3 to 4 percent. The stock closed Wednesday up 18 cents at $23.55.
Bayer sees '03 increase in growth (2:50 AM ET) Bayer(BAY: news)(DE:575200: news)said it expects to see an increase in its operating result from continuing operations in 2003. "To achieve this we are relying mainly on the steps we have taken to improve our earning power," said Chairman Werner Wenning. He said the growth prediction is conditional on the present economic situation not "radically" deteriorating. The sales and operating result in the first two months of 2003 are encouraging and "grounds for cautious optimism," he said. Bayer plans to reduce net debt from 8.9 billion euros to about 7 billion euros by year end, and set as a goal 21 percent EBITDA growth by 2006, from 20 percent in 2002.
Corus: Appeals ruling on Pechiney at 9:30 a.m. London (2:49 AM ET) Corus Group(UK:CS: news), the Anglo-Dutch steel and metals group, said it expects a decision the Enterprise Chamber of the Amsterdam Court of Appeal at 9:30 a.m. London time Thursday. Corus appealed to the court after its Supervisory board voted down an $830 million sale of a division to Pechiney. "The court has indicated that it will be making its judgement known at 9.30am UK time today (10.30am Dutch time). Accordingly, Corus will be making an announcement as soon as practicable thereafter," Corus said.
Bayer says 8,400 Baycol lawsuits; paid 140 mil euros (2:43 AM ET) Bayer(BAY: news)(DE:575200: news)said on Thursday that there are currently 8,400 lawsuits pertaining to the Lipobay/Baycol drug. It has settled with 500 individuals and paid a total of approximately 140 million euros. "Where serious side effects are involved, Bayer is continuing its efforts to reach out-of-court settlements on a case-by-case basis and is currently in settlement negotiations for several hundred further cases," the company said.
Philips: US fab closures to cut capacity 20%, charges (2:40 AM ET) Philips Electronics(PHG: news), the largest electronics maker in Europe, on Thursday said it expects to reduce overall CMOS capacity by about 20 percent by closing two semiconductor fabrication operations in the U.S. in Albuquerque, New Mexico and in San Antonio, Texas fab in 2003. Philips previously announced plans to shutter the New Mexico plant. It expects the capacity cuts to lead to a utilization rate that is expected to deliver "positive operating results in the fourth quarter and still include capacity for growth." Philips plans at 200 million euro restructuring charge for the Texas fab; 30 million of which will be taken in the first quarter.
Bayer '02 net income up 10%, 1% revenue fall (2:38 AM ET) Bayer(BAY: news)(DE:575200: news), the German chemical and pharmaceutical company, said on Thursday its 2002 net profit increased 10 percent to 1.1 billion euros on a 1 percent decline in revenues to 29 billion euros. The proceeds from its divestures were the primary source for the increase in profits, Bayer said. It left its dividend unchanged at 90 eurocents per share.
Philips to close Texas fab, cut 1,600 jobs in chips (2:34 AM ET) Electronics and semiconductor maker Philips Electronics(PHG: news)said it planned to close its San Antonio, Texas fab in 2003 to cut capacity as part of a restructuring that includes cutting a total of 1,600 jobs by the end of 2003. Philips said it's aiming to return its Semiconductor division to profitability in the fourth quarter of this year. It expects cost-savings of 200 million euro, leading to 240 million euro per quarter R&D spending rate by Q4 2003, excluding the Mobile Display Systems business.
Laura Ashley warns of loss for Jan-ending year (2:28 AM ET) U.K. retailer Ashley Holdings(UK:ALY: news), or Laura Ashley, warned it expects a a pre-tax loss before exceptional items of about 5 million pounds for the year ending Jan. 25. In January, the retailer said it expected to "in the range of break-even" for the period. It blamed lower sales and margins in January 2003 than had been anticipated, a higher write-down of stock arising and an increase in accruals and other accounting year end adjustments.
Fortis '02 profit down 79%; pays cash dividend (2:27 AM ET) Dutch-Belgian bank and insurer Fortis(NL:30086: news)said on Thursday it saw a 2002 net profit of 532 million euros, down 79 percent from 2001 because of a 1.78 billion euro loss in its equity portfolio. The company said the total 2002 dividend will be unchanged at 88 eurocents per share, paid in cash, despite rumors affecting minority owner Suez(SZE: news)that it would pay that dividend in Fortis shares. Excluding the equity portfolio, said its net operating profit in its banking division increased 7 percent to 1.32 billion euros and its insurance division lost 10 percent to 1.09 billion euros.
Thales posts '02 net income of 111m euros (2:15 AM ET) The French defense contractor Thales(FR:012132: news)on Thursday said it saw a net income of 111 million euros in 2002, from a 2001 loss of 366 million euros, on an 8.2 percent increase in revenue to 11.1 billion euros. Its EBIT was 512 million, compared with 471 million euros in 2001. Those numbers were lower than some analysts had expected, even as the 65 million euro charge for covering a settlement with Euromissile is figured in. The company, which on Wednesday won a 2 billion pound IT contract with the British army, said revenues and operating income are expected to increase in 2003, "notably as a result of the performance of the Group's defense business."
Copyright ©1998-2003 MarketWatch.com Inc.
I agree with Investorman and would also mention the fact that all the zero or low interest financing the big auto makers did and are still doing has a big affect on future earnings. Basically, they are taking a risk on each customer they finance. But with a very low or a zero interest rate, they are not getting much in the way of rewards. So the upfront profit on the sale is basically all they get. The back end profits on financing makes up a significant portion of revenues for all auto makers that offer financing, including Ford and GM. With the economy where it is, I would think the risk in financing vehicles right now is pretty high so over the next 2 to 3 years, the bad loans may become very detrimental. I am in the camp that the economy is slowly improving due to solid GDP numbers but it is still very iffy and the war may complicate things. I would aviod both GM and Ford for the time being.
OT- I got this in an email and thought it was pretty funny.
Have you noticed anything fishy about the inspection teams who have arrived in Iraq? They're all men!
How in the name of the United Nations does anyone expect men to find Saddam's stash? We all know that men have a blind spot when it comes to finding things. For crying out loud! Men can't find the dirty clothes hamper. Men can't find the jar of jelly until it falls out of the cupboard and splatters on the floor.... and these are the people we have sent into Iraq to search for hidden weapons of mass destruction?
I keep wondering why groups of mothers weren't sent in. Mothers can sniff out secrets quicker than a drug dog can find a gram of dope. Mothers can find gin bottles that dads have stashed in the attic beneath the rafters. They can sniff out a diary two rooms and one floor away. They can tell when the lid of a cookie jar has been disturbed and notice when a quarter inch slice has been shaved off a chocolate cake. A mother can smell alcohol on your breath before you get your key in the front door and can smell cigarette smoke from a block away. By examining laundry, a mother knows more about their kids than Sherlock Holmes. And if a mother wants an answer to question, she can read an offenders eyes quicker than a homicide detective.
So... considering the value a mother could bring to an inspection team, why are we sending a bunch of old men who will rely on electronic equipment to scout out hidden threats?
My mother would walk in with a wooden soup spoon in one hand, grab Saddam by the ear, give it a good twist and snap, "Young man, do you have any weapons of mass destruction?" And God help him if he tried to lie to her.
She'd march him down the street to some secret bunker and shove his nose into a nuclear bomb and say, "Uh huh, and what do you call this, mister?"
Whap! Thump! Whap! Whap! Whap! And she'd lay some stripes across his bare bottom with that soup spoon, then march him home in front of the whole of Baghdad. He'd not only come clean and apologize for lying about it, he'd cut every lawn in Baghdad for free for the whole darn summer.
You want the job done? Call my mother.
Stocks to Watch Tuesday
Tuesday March 11, 7:20 AM EST
NEW YORK (Reuters) - Stocks to watch:
H.J. HEINZ CO. (HNZ)
Heinz, one of the world's biggest food producers, on Tuesday reported lower fiscal third-quarter net earnings. Excluding special items, earnings rose, surpassing the average estimate of analysts polled by Thomson First Call. Heinz shares ended Monday at $29.44 on the NYSE.
NOKIA CORP (NOK)
Nokia, the world's No. 1 mobile phone maker, warned on Tuesday that sales and earnings in the first quarter would be weaker than expected due to poor sales of networks and weak consumer demand. U.S.-listed shares of Nokia, based in Finland, ended Monday at $12.67 on the NYSE.
UNITED STATES STEEL CORP. (X)
U.S. Steel said after Monday's market close that it expects to report net and operating losses for the first quarter, hurt by higher pension and other post-retirement benefit costs and higher natural gas prices. It also said fourth-quarter and full-year 2003 results were $1 million lower than previously reported. Its shares ended at $11.13 on the NYSE.
SHERWIN-WILLIAMS CO. (SHW)
Sherwin-Williams, the nation's biggest maker of paint, on Monday cut its first-quarter earnings forecast, citing bad winter weather and weak sales of product finishes and industrial maintenance products. Its shares ended Monday at $25.60 on the NYSE.
PROCTER & GAMBLE CO. (PG)
Procter & Gamble is about to launch an offer for German hair care group Wella AG amid signs of interest from other buyers, according to a report on Tuesday in financial newspaper Handelsblatt. The families controlling Wella (WADG) are prepared to sell the company at a price valuing it at roughly six billion euros, industry sources told Reuters on Tuesday. Procter & Gamble shares ended Monday at $79.79 on the NYSE.
KROGER CO. (KR)
Kroger was to report fourth-quarter earnings before Tuesday's opening bell. Analysts expect the grocery chain operator to post earnings of 49 cents a share -- the consensus estimate of analysts polled by Thomson First Call -- versus 47 cents a year earlier. Kroger shares ended Monday at $12.13 on the New York Stock Exchange.
©2003 Reuters Limited.
3 Years Later, Investors Crave Safety
By FLOYD NORRIS
http://www.nytimes.com/2003/03/10/business/10PLAC.html?ex=1047963600&en=3314c1480aa99f37&ei=...
Exactly three years ago today, all seemed bright to investors. Now there is little to cheer about, as investors who once were able to see only the positive now seem transfixed by what could go wrong.
It was on March 10, 2000, that the Nasdaq composite index hit a peak of 5,048.62. It had doubled since the previous summer, and those who had warned of a bubble in technology stocks had been so wrong for so long that few listened to them any longer.
But they were about to be proved right. Within little more than a month, the Nasdaq had lost a third of its value, and while it temporarily rebounded after that, it has never come close to its old highs.
Then, in March 2001, a recession began. Six months after that, two planes hit the World Trade Center, and another slammed into the Pentagon. The recession probably ended in late 2001, but the after-effects of the bubble continue to plague the economy. The telecommunications industry — whose bubble was far larger than the Internet's, at least as measured by dollars invested and lost — remains depressed, and the term "jobless recovery" is popular.
No wonder it is the one-time bears who are now most likely to get a respectful hearing from investors. Jack B. Grubman and Frank P. Quattrone, who three years ago could dole out millions in initial public offering profits, are now more likely to be spending time with their lawyers than with speculators seeking their wisdom and favors. The I.P.O. market is all but dead.
"The striking difference between now and then is that the supreme confidence that things would work out has been replaced by a ghoulish fascination with what could go wrong," said Robert J. Barbera, the chief economist of ITG/Hoenig. A bear then, Mr. Barbera now thinks prices are depressed by concerns about Iraq, and expects a rally if a war goes well from the American perspective.
Warren E. Buffett repeatedly issued bearish pronouncements when stocks were nearing their peak, and he refused to buy technology stocks for the portfolio at Berkshire Hathaway, the company he runs. As a result, investors gradually concluded that he had lost his touch. From mid-1998 through the peak three years ago, the price of Berkshire Hathaway shares fell 47 percent, while the Nasdaq composite was rising 166 percent. Since then, Berkshire is up 56 percent, while the Nasdaq composite index is down 74 percent.
Mr. Buffett remains unimpressed by valuations. In his annual letter to shareholders, released last week, he said he could find very few stocks that seemed worth buying. "That dismal fact is testimony to the insanity of valuations reached during the Great Bubble," he wrote. "Unfortunately, the hangover may prove to be proportional to the binge."
Mr. Buffett's core holdings of eight stocks — the largest being Coca-Cola and American Express — declined 2 percent last year, far better than the 23 percent decline registered by the Standard & Poor's 500. Those holdings ended the year valued at $23 billion.
Despite his bearishness, the annual report issued over the weekend showed that Berkshire had put $350 million into the stock market during the year, selling $1.4 billion worth of stocks and buying $1.75 billion. But that amount paled against the $10 billion Berkshire put into the bond market. The report did not disclose which securities Berkshire bought or sold.
At the market's peak, Mr. Hoenig noted, Alan Greenspan, the Federal Reserve chairman, was comparing Internet stocks to lottery tickets. To an economist, lotteries and casinos are interesting because people pay to take risks even though they know that the odds are against them.
It turns out that Mr. Greenspan had something of a point. Most of the initial offerings near the peak turned into disasters, with the ones that doubled and tripled the first day of trading being among the worst. An exception is the Hotel Reservations Network, since renamed Hotels.com. It rose 62 percent on its first day of trading a couple of weeks before the peak and has more than doubled since March 2000. Unlike most of its peers in the late-bubble class of new offerings, that company is reporting growing profits.
For most investors, safety has become a watchword. Perhaps the safest investment one can think of is a Treasury bond with inflation protection, and investors have flocked to them. Over all, Lehman Brothers calculates, investors in inflation-protected Treasuries have seen gains of 46 percent over the last three years.
Conventional Treasuries have also done well, as the yield on 10-year Treasuries, at 6.39 percent when the stock market peaked, has fallen to 3.62 percent, producing substantial profits for investors.
Stocks that pay dividends have done better than those that do not, and there is a small trend toward paying dividends, with Microsoft issuing its first payment last week. Three years ago Microsoft was the stock market's most valuable company. It still is, but its shares are down 53 percent.
On the market's way up, the belief in stocks spread to most parts of the world. But it turned out that there was little safety to be found from international diversification. Japan's market had been depressed for years, but even it put on a rally in the months before the United States market peaked. Since then the Nikkei 225 is down more than 60 percent, measured in dollars. The markets in France and Germany have lost more than half their value, and Britain has done almost as badly.
Among American companies, some shares have done well since March 2000. Seven of the 30 stocks in the Dow industrials are up, led by Altria, the former Philip Morris, which has gained 88 percent. Cigarette litigation did not kill Altria, and its dividend remains high. Johnson & Johnson, Procter & Gamble and 3M, all deemed boring at the peak and all losers in the final six months of the Nasdaq run, are each up at least 50 percent over the last three years.
The strongest part of the American economy has been the housing market, and indexes of home-building stocks have doubled since the overall market peaked. NVR, a company that builds and finances homes, trades for nearly seven times what it was worth three years ago.
But another industry that has benefited from surprisingly strong sales — autos — has not won favor on Wall Street. Detroit has kept sales high, but only with big discounts, and recently there have been signs that sales may be starting to weaken. Since the peak, Ford is down 68 percent and General Motors is off 60 percent.
What is most amazing is just how many substantial companies have lost a huge part of their value since the peak. The list of companies that are down at least 90 percent includes Lucent, Qwest, JDS Uniphase, Gateway, LSI Logic, Corning and Sun Microsystems. Meanwhile, Cisco, Yahoo, EMC, El Paso, AMR, Delta, Motorola, Texas Instruments, Nextel and AOL have lost at least 80 percent.
It is a performance that seemed unthinkable three years ago, when it was taken for granted that big risks brought big returns. Although the risks must certainly be lower now, far fewer investors are willing to take them.
DividendPlays.com Weekly Newsletter 02/28/2003
Weekly Market Brief (02/28/2003)
The major market indices lost some ground this week on war worries, which have been dominating investor psychology over the last several weeks. The market did make a couple of up moves on good economic news, as it did Thursday on the 3.3% jump in Durable Orders, and as it did again Friday on the better than expected GDP data. Overall, the rallies have proven to be short term blips in what is pretty much a sideways market.
The energy sector remained strong as coal, oil and oil drilling companies were among the week's best performers due to the high prices of crude oil and natural gas. Tobacco, retail-apparel, casino, mining and consumer electronic stocks also outperformed the overall market. Losers were paced by the precious metal, computer, airline, aerospace, software and trucking industries.
Investor attention will most likely be focused again on the geopolitical scene next week. Several earnings reports are anticipated out of the battered retail group. Among the retailers scheduled to release results are PSUN, CHS, BJ, MSO, OMX, GYMB, KSS, SKS, TOY and MIK. Other non-retail names of note include NSM, NEM and GT.
The economic calendar is a little more interesting with the Auto Sales, ISM, Construction Spending and Employment data set to be reported.
Index Started Week Ended Week Change % Change YTD
DJIA 8018.11 7891.08 -127.03 -1.6 % -5.4 %
Nasdaq 1349.02 1337.54 -11.48 -0.9 % 0.2 %
S&P 500 848.17 841.14 -7.03 -0.8 % -4.3 %
Russell 2000 364.36 360.52 -3.84 -1.1 % -5.9 %
http://www.dividendplays.com
Company Spotlight
This week's company spotlight is on Cummins Inc. (NYSE: CUM). Cummins currently has a dividend yield of 5%. While this yield is somewhat lower than most of our previous spotlight companies, it is our mission to expose our subscribers to companies in many different sectors in order to allow our subscribers the opportunity to diversify thier portfolios. With the last trade at $23.97, Cummins is trading near the 52 week low of $19.69. Unlike most of the analysts and television gurus, DividendPlays.com is firmly comitted to the notion of buying low and selling high. Instead of profiling companies that are nearing thier 52 week highs like these so called gurus, we generally try to uncover stocks that are at or near the low end of thier trading range. With Zack's average earnings estimates of $1.57 and $3.24 for the Fiscal Years ending 2003 and 2004 respectively, there is significant upside potential in the long term. Using the current price to earnings multiple of 13.2 times the 2004 estimate of $3.24 we get a year ending 2004 target price of $42.76. There can certainly be no assurances that the 2004 estimate will be achieved, but if the company can get anywhere near that figure the share price appreciation could be significant. Obviously, the 2003 estimate of $1.57 multiplied by the current multiple of 13.2 would give us a 2003 target of $20.72 which is lower than the current price. Therefore, it is our opinion that a potential investor may wish to simply watch the stock over the next quarter or two in order to see if a better entry price might be possible. The bottom line here is that earnings are predicted to improve significantly for the year ending 2004 and the lower estimate for the year ending 2003 may very well provide the opportunity to lock in a better entry price and a slightly higher dividend yield in the near future. However, it is not our intention to instruct our subscribers on how to trade thier account. It is the responsibility of the subscriber to decide if and/or when to invest in any company we profile. Our mission is to expose our subscribers to dividend paying stocks that may provide the possibility of solid returns and we believe that Cummins fits into this mold.
Cummins Inc. designs, manufactures, distributes and services electric power generation systems, engines and related products, including fuel systems, controls, air handling, filtration, and emissions solutions. Cummins sells its products to original equipment manufacturers (OEMs) distributors and other customers worldwide. The Company has manufacturing facilities worldwide, including major operations in Europe, India, Mexico, China and Brazil. Parts distribution centers in Brazil, Mexico, Australia, Singapore, China, India and Belgium are strategically located to supply service parts to Cummins extensive customer base. Cummins supports its customer base with a significant global distribution system of more than 500 independent distributors and nearly 5,000 dealers in 131 countries.
Cummins Inc. is a worldwide designer and manufacturer of diesel engines, and also produces natural gas engines and engine components and subsystems. For the fiscal year ended 12/31/02, net sales rose 3% to $5.85 billion. Net income applicable to Common before acctg. change totaled $70 million vs. a loss of $102 million. Revenues reflect increased demand for heavy duty engines. Net income also benefited from the absence of $125 million in restructuring and asset impairment charges.
Cummins Dividend History
Dividend Summary for ticker CUM
Cummins Inc.
Declared Record Payable Amount Type
4/3/01 6/1/01 6/15/01 $0.30 Regular Cash
2/13/01 3/1/01 3/15/01 $0.30 Regular Cash
10/10/00 12/1/00 12/15/00 $0.30 Regular Cash
7/11/00 9/1/00 9/15/00 $0.30 Regular Cash
4/4/00 6/1/00 6/15/00 $0.30 Regular Cash
2/8/00 3/1/00 3/15/00 $0.30 Regular Cash
10/11/99 12/1/99 12/15/99 $0.30 Regular Cash
7/13/99 9/1/99 9/15/99 $0.275 Regular Cash
4/6/99 6/1/99 6/15/99 $0.275 Regular Cash
2/9/99 3/1/99 3/15/99 $0.275 Regular Cash
10/13/98 12/1/98 12/15/98 $0.275 Regular Cash
7/9/98 9/1/98 9/15/98 $0.275 Regular Cash
4/7/98 6/1/98 6/15/98 $0.275 Regular Cash
2/10/98 3/2/98 3/16/98 $0.275 Regular Cash
10/14/97 12/1/97 12/15/97 $0.275 Regular Cash
Note: Unfortunately, the dividend history above is not up to date. Cummins recently announced a regular quarterly dividend of .30 per share in Feb. 2003. Please see the link below for more information.
http://biz.yahoo.com/bw/030211/112363_1.html
Financial Highlights as of Dec. 2002
Shares Outstanding- 41,500,000
Market Cap- $994,755,000
Cash & Eqv.- $311,000,000
Total Assets- $4,835,000,000
Total Liabilities- $3,972,000,000
Goodwill/Intangibles- $344,000,000
Net Tangible Assets- $519,000,000
Net Tangible Book Value- $12.50
Note: The financial data above is for the year ending Dec. 2002 and was taken from the company's website. A link to the company's investor relations website is provided below for reference.
2003 Company Guidance
Due to the continued weakness in Power Generation markets, the Company is setting its guidance for 2003 at $1.80 to $2.00 per share. The Company still expects revenue growth of 5 to 10 percent above 2002 levels, assuming modest economic recovery in the second half of the year. Free cash flow for the year is expected to be in the range of $70 million to $80 million, after capital expenditures of approximately $130 million.
As reported previously, Cummins has adopted a strategy to provide additional funding into our pension plans over a several-year period, including approximately $30 million in incremental funding in 2003. Cummins has also taken a more conservative view of asset performance going forward by reducing return assumptions in the U.S. from 10 percent to 8.5 percent. These changes, which have been factored into our guidance for 2003, were reported in the third quarter of 2002 and have not been revised.
Non-Cash Accounts Payable Adjustment
The Company also announced that it believes that it will need to make a non-cash adjustment concerning an understatement of accounts payable from 1998 through 2002 of $30 million to $40 million. This was primarily related to the implementation of a new enterprise resource planning system in one of its plants. This adjustment does not affect the Company's operations going forward. The Company has advised the Securities and Exchange Commission (SEC) of this matter, and will work closely with the SEC and the Company's auditors, PricewaterhouseCoopers LLP, to determine the appropriate accounting treatment and any potential impact on the Company's historical financial statements for the affected years. PricewaterhouseCoopers replaced Arthur Andersen as Cummins auditors in April 2002.
Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana, (USA) Cummins serves its customers through more than 500 company-owned and independent distributor locations in 131 countries and territories. With 24,900 employees worldwide, Cummins reported sales of $5.9 billion in 2002. Press releases by fax can be requested by calling News On Demand (toll free) at 888-329-2305. The Cummins home page can be found at www.cummins.com.
Information provided and statements on the webcast and in this release that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the company's expectations, hopes beliefs and intentions on strategies regarding the future. It is important to note that the company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to, general economic, business and financing conditions, labor relations, governmental action, competitor pricing activity, expense volatility and other risks detailed from time to time in Cummins Securities and Exchange Commission filings.
Links to third party information
Company Investor Website
http://investor.cummins.com/ireye/ir_site.zhtml?ticker=CUM&script=2100&layout=7
Yahoo Company Profile
http://biz.yahoo.com/p/c/cum.html
MSN Company Report
http://moneycentral.msn.com/investor/research/profile.asp?Symbol=CUM
Zacks Report
http://my.zacks.com/reports/reports.php3?ticker=CUM&type=100
DividendPlays.com strongly advises any investor who is considering purchasing the above mentioned security to use the links provided above to obtain more detailed information and to verify the numbers provided in this newsletter. We try our best to be completely accurate but we firmly believe that when considering buying stock in a given company, the prospective investor would be wise to verify all information with a registered securities broker/dealer and/or registered investment adviser, and the SEC before investing. DividendPlays.com is not a registered investment advisor or broker/dealer. Please see our Terms of Service/ Disclaimer for more information about our policies.(http://www.DividendPlays.com/TOS.html) As an additional disclaimer, DividendPlays.com is not compensated by the companies it profiles and does not take positions in said companies in order to avoid any conflict of interest issues. Our sole compensation for producing and distributing our weekly newsletter is derived from our subscribers.
Thanks for stopping by Sara and for the pick! I have heard of TEVA before but haven't really looked at it. I will now.
I'm with you all the way on the low debt and companies that are agressively paying down debt. Those interest payments can severely limit earnings.
Doing great Mach. Thanks for stopping by!
I am fairly bullish except for the fact that it is trading well above net tangible book value. Since you stated that this isn't very important to you, it seems like a decent investment. They have lost money the last two years but as you mentioned, they seem to be poised for a turn around in 2003. Zacks has the 5 year EPS growth rate at 10.4% which is good for a company this size. I've got average EPS esitmates of $1.66 and $1.96 for 2003 and 2004 respectively. The debt to equity ratio of .53 is significantly lower than the industry average and I think this figure is one that some investors don't give enough weight. The only question I have is "Can they actually turn it around in 2003? The cost cutting measures they took in 2002 are supposed to save about $400M so if this is on target, the answer should be yes. If they can reach the $1.66 estimate in 2003, then we could expect the stock to move up moderately and a decent dividend yield to go along with that makes it attractive. For the long term investor, the 2004 $1.96 estimate makes it very attractive but such long term estimates must be taken with a grain of salt. I guess the bottom line here is that over the next two years, expectations are for an improving bottom line and I see no reason why they would cut or eliminate the dividend. If you aren't bothered by the $6B+ in goodwill and intangible assets they carry on the balance sheet, then it looks like a good play.
Thanks rager! I appreciate the compliment.
I don't have time to look at it right now but will check it out tomorrow morning when I do my weekly research. But I can tell you that from your initial brief, I like it. I haven't done any in depth research into Honeywell but it is a big name stock with a strong management team.
Wow, that's a lot of reading between the lines. The purpose of this board is to discuss high dividend stocks and any trading system that a given poster chooses to put forth is valid in my opinion. You seem to think that I am saying that my system is the only system and nothing could be further from the truth. I believe I stated that clearly in the very post you replied to but apparantly the point didn't get across. If your system of investing works for you, that is outstanding! Each investor is different and usually has different goals and therefore different means of valuating stocks. If you took the below statement to mean that I don't value others opinions, then you couldn't be more mistaken. I appreciate everyone's opinion and welcome them to post it here. I am not here simply to promote my system but I will post my opinion whenever I see fit. If that opinion is contrary to yours, please don't take offense. Healthy debate is the most efficient means of learning and everyone including me should never stop learning or we will surely fail in our common goal of growing our wealth effectively.
But there is really no need to argue systems. Each investor has his own way of finding stocks he believes are undervalued. If you system works for you, that's great. Mine has worked extremely well for me during this bear market. To each his own my friend.
I use many factors when valuating a stock as well. In many cases you are correct. High dividend yields often do mean high risk. I have a knack for finding high yield stocks that pose less risk and have significant upside potential. Most companies do not start out paying a high yield. The yield rises due to downside pressure from any number of factors. The key is to find those gems that will rebound or at the very least hold up. I must disagree with you on net tangible value though. If you don't know what a company's actual value is, it is difficult to valuate it properly. It shouldn't be the only factor you consider but it should be one of the factors. Actually, if you take a look at the chart for ACAS, you will see that it has appreciated significcantly over the past several months and there are many insiders buying the stock. But there is really no need to argue systems. Each investor has his own way of finding stocks he believes are undervalued. If you system works for you, that's great. Mine has worked extremely well for me during this bear market. To each his own my friend.