MarketWatch.com - Pre-Market Indications

Tuesday, July 29, 2008

Pre MArket Trader Talk with Bob Pisani

Merrill Lynch

MERRILL LYNCH & CO INC
MER

24.33 UNCH 0
NYSE




[MER 24.33 --- UNCH (0) ] is far and away the big story today.

Two weeks after reporting huge losses, Merrill Lynch has surprised the Street with significant sales and capital raising. They are:

1) selling $30.6 b in CDOs. They were carried on the books at a value of $11.1 b; buyer Lone Star is paying $6.7 b ($0.22 on the dollar), but Merrill is financing three-quarters of the sale;

2) recording a writedown of $5.7 b;

3) will raise $8.5 b in new capital from common shareholders, including $3.4 b from Temasek, the Singapore investment arm that is already Merrill's biggest shareholder.

The capital raising was a surprise, particularly since the Street believed management had signaled that further capital raises were unlikely.

The good news here is that Merrill is actually selling assets, rather than just marking them down.

The bad news is that Merrill's peers will be under pressure to write down more assets. Indeed, Deutsche Bank lowered earnings estimates for Citigroup following the moves by Merrill.

This is a significant dilution of shareholder equity, but reaction on the Street has been generally positive. Meredith Whitney at Oppenheimer said, "the stock is getting closer to fairly valued levels" and "we applaud this purging of assets as an attempt to cut its losses and focus on stabilizing its platform and righting the franchise towards growth."

Who is the winner here? The firms who have money to buy these distressed assets at pennies on the dollar. Goldman has just raised a $10B fund to invest in distressed securities.

Merrill is up fractionally, as other financials like JP Morgan

JPMORGAN CHASE & CO
JPM

37.66 UNCH 0
NYSE




[JPM 37.66 --- UNCH (0) ]and Lehman[LEH 15.27 --- UNCH (0) ]; Citi[C 17.43 --- UNCH (0) ] however is trading down.

Elsewhere:

1) U.S. Steel

UNITED STATES STEEL CORP
X

145.33 UNCH 0
NYSE




[X 145.33 --- UNCH (0) ]up 8 percent pre-open, earning $5.65, way above expectations of $3.91, revenues also above expectations.

2) Alcatel Lucent

ALCATEL-LUCENT
ALU

5.76 UNCH 0
NYSE




[ALU 5.76 --- UNCH (0) ]CEO Patricia Russo and Chairman Serge Tchuruk stepping down; no successors named.



Merrill: Why It's The Big Story - Trader Talk with Bob Pisani - CNBC.com

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Opening View: Merrill Lynch Announces Additional Mortgage-Related Write-Downs

Merrill Lynch (MER: View sentiment for MERsentiment, chart, options) was attempting to monopolize headlines this morning, after the company announced that it will write down another $5.7 billion in mortgage-related debt in the third quarter. The financial firm stated that it plans to issue new stock to raise $8.5 billion, and stated that it will sell $30.6 billion of collateralized debt obligations (CDOs) to an affiliate of private-equity fund Lone Star Funds for about $6.7 billion, or roughly 22 cents on the dollar.

In merger-and-acquisition news, Sirius Satellite Radio (SIRI: View sentiment for SIRIsentiment, chart, options) this morning reported that it has completed its purchase of XM Satellite Radio (XMSR: View sentiment for XMSRsentiment, chart, options) ; SIRI expects costs savings from the deal of about $400 million in 2009. The new company – named Sirius XM Radio – is expected to have more than 18.5 million subscribers. The combined company will continue to trade under the ticker symbol SIRI.

In earnings news, Alpha Natural Resources (ANR: View sentiment for ANRsentiment, chart, options) reported second-quarter net income of $74.3 million, or $1.04 per share, compared to $4.7 million, or 7 cents per share, a year prior. Revenue for the quarter skyrocketed to $732.2 million, compared to $435.3 million in the period a year ago. Analysts, on average, were predicting earnings of 51 cents per share on revenue of $571 million. The company attributed the pleasant profit to strong global demand for its metallurgic coal, with coal sales surging 63% surging the quarter.

Elsewhere, Sony Corp. (SNE: View sentiment for SNEsentiment, chart, options) announced that its quarterly profit plunged to 34.98 billion yen ($326.9 million), nearly halving itself from a year earlier and coming in well below the 52 billion yen ($486 million) analysts had predicted. The company attributed the bleak news to a stronger Japanese currency, a lack of Spider-Man 3 revenue, and price competition in the core electronics sector. The firm also reduced its full-year profit guidance to 240 billion yen ($2.24 billion) from previous guidance of 290 billion yen ($2.71 billion).

Earnings Preview

Other companies expected to step into the earnings confessional today include: General Motors (GM), Valero Energy (VLO), EOG Resources (EOG), Viacom (VIA), and RF Micro Devices (RFMD), amongst others. Keep your browser at SchaeffersResearch.com throughout the day for more.


Opening View: Merrill Lynch Announces Additional Mortgage-Related Write-Downs



Pre Market Trading Detailed Gap News

Gapping Down

In reaction to disappointing earnings/guidance: CGNX -22.6%, NWK -20.8% (also downgraded to Hold at Needham), TRID -17.1% (also downgraded to Hold at Needham), PLXT -17.1%, ZRAN -16.7% (also downgraded to Buy at Needham and downgraded to Neutral from Overweight at J.P Morgan), BANR -14.2%, IAR -13.6% (light volume), CMP -12.7%, HLIT -10.5% (also downgraded to Neutral at Merrill), XL -10.2% (also announces $2.5 bln share offering; downgraded to In Line from Outperform at Fox Pitt), SEPR -10.1%, JDAS -10.1%, ININ -8.7%, LDSH -7.5%, ATHR -6.1%, CYH -6.0% (light volume), SNE -5.4% (also in talks to buy out Sony BMG Music - Reuters), COH -5.2%, LCAV -4.7%, MSO -4.6%, PCX -3.5%, MOS -3.4%, AATI -2.3% (also downgraded to Market Perform at JMP), RCII -2.1%…

M&A news: SIRI -17.6% and XMSR -5.3% (Sirius Satellite and XM complete merger)…


Select European financials trading lower following weakness overseas: BCS -5.1% , RBS -4.1% , UBS -3.7% , AXA -1.3% , HBC -1.0%…


Other news: CPCI -24.6% (discloses that the it filed a voluntary petition in the United States Bankruptcy Court pursuant to Chapter 11), PSSI -2.4% (announces proposed offering of $200 mln of convertible senior notes)… Analyst comments: OVTI -4.0% (downgraded to Neutral at JPMorgan), CWTR -2.8% (initiated with Sell at Goldman - DJ).

Gapping Up

In reaction to strong earnings/guidance: TUNE +9.2% (light volume), PRGX +7.4%, SAP +6.9% (also upgraded to Buy at Deutsche Bank and upgraded to Buy at Jefferies), ALU +6.3%, WBSN +5.7% (also upgraded to Buy at Soleil), VECO +5.4% (light volume), X +5.3%, WMGI +5.3%, MTW +5.2%, UA +5.1%, MIG +4.7% (light volume), HIG +4.4%, WLT +4.3%, AMGN +4.2% (upgraded to Buy at Citigroup and upgraded to Buy from Neutral at Merrill), GTI +3.7%, ELNK +3.7%, AG +3.6%, BP +2.0%, CLR +2.0%, CR +1.5%, NOV +1.2%, SPNC +1.0%, AUTH +1.0%…


Select metals/mining stocks showing strength: BBL +4.5%, MT +4.0%, BHP +4.0%, AAUK +3.9%, RTP +2.7%, GOLD +2.4%…


Other monoline insurers trading higher following XL, SCA, MER news: ABK +14.9%, MBI +14.8%…


Other news: SCA +82.7% (believes that its case reserves will have increased substantially as of June 30, 2008; also announces agreement with MER related to XL settlement), CNQR +6.5% (Concur Tech and American Express enter into exclusive alliance to offer corporate clients T&E expense management services), NUE +4.0% (up in sympathy with X), STP +1.9% (30MW supply agreement with Enel.si), CMTL +1.1% (receives $7.6 million of movement tracking system orders)… Analyst comments: V +1.3% (initiated with Buy at KeyBanc).




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NYSE Arca Morning Update

Stocks trading on NYSE Arca at a price more than 15% away from the previous trade day's consolidated close price. (As of 08:30:00 ET)

Stock
Monday's Close Current Price Pct Chng Current NYSE Arca Vol
CGNX

$22.00

$16.99

( 23%)

6,510

NWK

$3.74

$3.00

( 20%)

4,065

PLXT

$6.96

$5.60

( 20%)

7,300

ZRAN

$9.60

$7.86

( 18%)

32,500

CMP

$69.90

$59.10

( 15%)

400

10 Most Active stocks on NYSE Arca as of 08:30:00 ET

Based on Dollar Volume: Based on Share Volume:
Stock
Dollar Volume
SPY
$140,392,376
MER
$87,348,714
XLF
$35,020,929
QQQQ
$22,038,874
XL
$21,916,013
IWM
$17,349,849
X
$14,271,396
C
$10,282,468
SKF
$9,485,705
SAP
$9,273,811
Stock
Share Volume
MER
3,546,986
SIRI
2,434,092
XLF
1,743,384
XL
1,301,261
SPY
1,131,969
C
601,290
QQQQ
493,636
IWM
248,491
ALU
203,101
SAP
161,536


NYSE Arca Morning Update

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Pre-Market Trading Most Active Stocks - NASDAQ Premarket

NASDAQ - Pre-Market Ten Most Advanced

Active Share Volume Declined

Symbol

Company Name

Market
Close
Last Sale (Pre-Market) % Change
(Pre-Market)
Share
Volume

(Pre-Market)

Concur Technologies, Inc.
$36.05 $41.15 14.15% 29,697

Websense, Inc.
$18.71 $20.80 11.17% 26,410

FX Energy, Inc.
$6.50 $7.05 8.46% 5,700

Alexion Pharmaceuticals, Inc.
$79.95 $85.30 6.69% 11,394

BE Aerospace, Inc.
$24.83 $26.49 6.69% 5,862

UAL Corporation
$7.01 $7.46 6.42% 76,640

Amedisys Inc
$60.91 $64.50 5.89% 7,350

Steel Dynamics, Inc.
$30.27 $31.90 5.38% 5,900

Amgen Inc.
$60.48 $63.18 4.46% 1,276,483

Acergy S.A.
$15.80 $16.50 4.43% 7,800

As of 7/29/2008 9:23:41 AM

NASDAQ - Pre-Market Ten Most Declined

Active Share Volume Advanced

Symbol

Company Name

Market
Close
Last Sale (Pre-Market) % Change
(Pre-Market)
Share
Volume

(Pre-Market)

Cognex Corporation
$21.94 $16.98 22.61% 31,711

Trident Microsystems, Inc.
$3.86 $2.99 22.54% 141,800

PLX Technology, Inc.
$6.97 $5.45 21.81% 242,860

Zoran Corporation
$9.60 $8.21 14.48% 108,561

Harmonic Inc.
$9.64 $8.26 14.32% 141,506

Sepracor Inc.
$20.41 $18.23 10.68% 102,883

LCA-Vision Inc.
$5.97 $5.50 7.87% 11,155

Atheros Communications, Inc.
$30.68 $28.85 5.96% 34,913

Advanced Analogic Technologies, Inc.
$4.26 $4.06 4.69% 4,700

OmniVision Technologies, Inc.
$11.35 $10.86 4.32% 11,965

As of 7/29/2008 9:23:45 AM



Pre-Market Most Active Stocks - NASDAQ Premarket

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Pre Market Movers - Futures Trading - Nasdaq - NYSE

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