- Pre-Market Indications

Wednesday, June 18, 2008

Opening View: Morgan Stanley Reports Earnings, Fifth Third Slashes Dividend

Following up yesterday's earnings report from Goldman Sachs, Morgan Stanley (MS: View sentiment for MSsentiment, chart, options) reported a profit from continuing operations of 95 cents per share, versus expectations for a profit of 92 cents per share. Revenue fell 38% from last year to $6.5 billion. Following the news, MS shares fell more than 2% in electronic trading.

Also in earnings, shipping specialist FedEx (FDX: View sentiment for FDXsentiment, chart, options) reported a fourth-quarter loss of 78 cents per share, compared to last year's gain of $1.96 per share. Excluding items, the speedy-delivery firm banked a profit of $1.45 per share, just shy of expectations for a profit of $1.47. Revenue rose 8% to $9.87 billion. Looking ahead, FDX expects first-quarter earnings of 80 cents to $1.00 per share, versus the consensus estimate for $1.35 per share.

In banking, Cincinnati, Ohio-based Fifth Third Bancorp (FITB: View sentiment for FITBsentiment, chart, options) announced late last night that it will cut its dividend and raise $1 billion in new capital from convertible preferred shares. FITB is lowering its second-quarter cash dividend to 15 cents per share, down from 44 cents per share the prior quarter. Fifth Third also announced that it has replaced chairman George Schaefer, Jr. with CEO Kevin Kabat, effective Tuesday. The new dividend is payable on July 22 to holders of record on June 30.

Finally, the travel-and-leisure sector could take a big hit today after ABN Amro placed several firms under the ratings knife. The group cut its 2009-2010 earnings forecast for the sector by 16%, bringing it 15% below the consensus estimate. "We find it hard to believe that demand (volume or price) from the business and/or leisure consumer will not reduce over the next 12 months; western GDP trends are slowing, business activity is softening, the credit cycle has turned, and consumer balance sheets are in many cases over-leveraged."

Accompanying the research note, ABN Amro downgraded Carnival (CCL: View sentiment for CCLsentiment, chart, options) , Enterprise Inns (ETINF), Martsons, and Ladbrokes (LDBKY) to "hold from "buy." The brokerage firm also downgraded Royal Caribbean ( RCL: View sentiment for RCLsentiment, chart, options) to "sell" from "buy," and lowered J.D. Wetherspoon (JDWPY) and Accor (ACRFF) to "sell" from "hold."

Opening View: Morgan Stanley Reports Earnings, Fifth Third Slashes Dividend

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