- Pre-Market Indications

Friday, July 18, 2008

Opening View: Citigroup Beats Forecast, Merrill Lynch Posts Hefty Loss

Citigroup (C: View sentiment for Csentiment, chart, options) , following in the footsteps of Wells Fargo (WFC) and J.P. Morgan Chase (JPM), this morning reported stronger-than-expected earnings. The financial firm reported that it lost $2.5 billion, or 54 cents per share, in the second quarter, better than the 66-cent-per-share loss analysts were expecting. The company reported write-downs of about $8 billion – significantly lower than the write-downs recorded in the first and fourth quarters. However, the banking behemoth said that credit costs jumped to $7.2 billion in the wake of more consumers defaulting on their loans.

Meanwhile, Merrill Lynch (MER: View sentiment for MERsentiment, chart, options) after the close yesterday reported a second-quarter loss of $4.89 billion, or $4.97 per share. Analysts, on average, were predicting a loss of $1.91 per share. What's more, the company reported nearly $40 billion in write-downs related to failed investments. Since stepping into the earnings spotlight, the firm has been bombarded by analysts. Moody's Investment Services downgraded the senior long-term debt of MER to "A2" from "A1;" Fox-Pitt cut the firm's rating to "underperform" from "in line;" Goldman Sachs cut the company's 6-month price target to $33 from $38; Bernstein reduced its price target on the equity to $30 from $45; and Banc of America cut its price target to $47 from $55, among others.

Rounding out the earnings trifecta is Microsoft (MSFT: View sentiment for MSFTsentiment, chart, options) , which reported fiscal fourth-quarter earnings of $4.3 billion, or 46 cents per share – 3 pennies below the average analyst estimate. Revenue, however, jumped 18% to $15.8 billion, just ahead of the Street's forecast for revenue of $15.7 billion. For the fiscal year, earnings rose 26% to $17.7 billion, or $1.87 per share, while sales came in at $60.4 billion. For the current quarter, MSFT predicted earnings of 47 cents to 48 cents per share on revenue of $14.7 billion to $14.9 billion – just shy of the Street's projections for earnings of 49 cents per share on $15.1 billion in sales.

Opening View: Citigroup Beats Forecast, Merrill Lynch Posts Hefty Loss

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