May 22, 2008

Thursday, May 22, 2008

Pre Market Trading Indications

Gapping down in reaction to disappointing earnings/guidance: BCSI -26.6%, WSTL -17.2%, DKS -14.3%, CEDU -10.7%, NTAP -10.2%, BRS -8.1%, JTX -7.7% (also reports prepared 3.45 mln tax returns in 2008, a decline of 5.3% compared to the prior year), SMRT -6.7% (light volume), NTES -6.2%, GME -5.6%, CHINA -5.4% (also downgraded to Neutral at Piper), PDCO -4.0% (light volume), PETM -2.8%, SNPS -2.3%, CTRN -1.2%...

M&A news: BCE -14.1% (buyout blocked in Canada court - WSJ)...

Other news: NRF -4.2% (announces private offering of up to $75 mln exchangeable senior notes due 2013), TBSI -2.6% (prices a 3.4 mln share common stock offering at $51/share), HUGH -2.5% (prices a 2.23 mln share common stock offering at $50/share), RAD -2.2% (announces proposed offering of convertible notes)...

Analyst downgrades: SOLF -5.2% (downgraded to Sell at tier 1 firm), AKAM -5.0% (downgraded to Sell at tier 1 firm), AATI -3.2% (downgraded to Buy from Strong Buy at Needham), MER -2.5% (downgraded to Sell at Ladenburg Thalmann), LEH -2.3% (downgraded to Sell at Ladenburg Thalmann), ASH -2.3% (downgraded to Neutral at from Positive Susquehanna), KFY -2.3% (downgraded to Sell at Merrill), AA -2.3% (downgraded to Neutral at Merrill), GS -1.8% (downgraded to Sell at Ladenburg Thalmann).

Gapping up in reaction to strong earnings/guidance: STP +6.7%, NDSN +9.7%, FLO +6.0%, PLCE +4.9%, SMTC +4.4%, BONT +4.0%, PERY +3.3% and SAFM +1.2% (light volume)...

Select metals/mining stocks showing strength: RTP +5.2%, BHP +4.8%, AAUK +4.1%, HMY +2.5%, LMC +2.2%...

Select airlines modestly rebounding after yesterday's decline: LUV +4.6%, UAUA +4.2%, AMR +3.7%, CAL +1.5%...

A handful of small cap oil & gas names are ticking higher in pre-mkt in a continuation of recent momentum: CRED +9.1%, PDO +8.8%, LEI +7.8%, FPP +6.9%...

Other news: BTRX +20.5% (announces agreement with Procter & Gamble), CPN +10.9% (Harbinger Capital Partners recommends Calpine review NRG Energy's proposed merger of equals), TASR +5.7% (receives 'significant' follow-on order from Australia), EAC +5.7% (to explore strategic alternatives), VOD +4.2% (still checking), ESE +2.0% (announces contract award at PTI; annual revenue expected to be approx $10-$15 mln), EPAX +1.9% (acquires BookRags for $18 mln; expected to be accretive in the first twelve months following the acquisition), WYE +1.6% (Wyeth and Progenics announce preliminary clinical trial results for Relistor oral and intravenous formulations), ENS +1.4% (Cramer makes positive comments on MadMoney; also prices a 3.4 mln share common stock offering at $29/share), FLIR +1.1% (receives $358.4 mln IDIQ contract modification from the U.S. Army)...

Analyst upgrades: SPLS +2.9% (initiated with Buy at Citigroup), LVLT +2.9% (upgraded to Market Perform at Wachovia), LACO +2.4% (initiated with Buy at Morgan Joseph), PNRA +2.3% (initiated with Buy at Jefferies), ANR +1.9% (upgraded to Buy at Merrill), ROST +1.7% (upgraded to Buy at Piper).

Gapping up: STP +10.8%, NDSN +9.7%, RTP +5.2%, BHP +4.8%, SMTC +4.4%, LDG +4.2%, AAUK +4.1%, EAC +3.9%, LTD +3.7%, ENS +3.0%, ESE +2.0%, FLIR +1.1%...

Gapping down: CEDU -16.8%, BCE -16.7%, NTAP -11.6%, NTES -9.8%, JTX -7.7%, PETM -3.5%, RAD -3.0%, SNPS -2.3%, LEH -1.6%, PFE -1.4%, CTRN -1.2%, MER -1.1%.

Pre Market Trader Talk: Higher Oil Prices Grounding Airline Merger? - Trader Talk with Bob Pisani - CNBC.com

Want to know what the influence $130 a barrel oil has on airline M&A? The original bid for Alitalia by Air France-KLM was based on an oil price of $86 a barrel, according to the Deputy CEO of Air France, in an interview on CNBC Europe.

Those talks were shelved a month ago, but at $120 to $130, the Deputy CEO said that Air France-KLM would have to come up with a more "difficult and demanding" business plan. That's an understatement. Air France-KLM reported a 16 percent decline in profit this morning.

Elsewhere:

1) Given the current retail environment, retailers this morning are announcing earnings that, while clearly down from last year, are at least not missing lowered estimates, and more importantly they are not dramatically lowering earnings expectations for the year.

Ann Taylor

AnnTaylor Stores Corp

ANN

26.77 UNCH 0%

NYSE

Quote | Chart | News | Profile

[ANN 26.77 --- UNCH (0%)

] reported earnings slightly above expectations. Sales decreased 11 percent, comp store sales were down 11.5 percent, but that is not unusual in this environment. The guidance for the current quarter is $0.42 to $0.47, consensus is $0.47.

Limited

Limited Brands Inc

LTD

18.31 UNCH 0%

NYSE

Quote | Chart | News | Profile

[LTD 18.31 --- UNCH (0%)

] reported earnings slightly above expectations, and actually raised full year guidance, from a prior $1.35-$1.55 to $1.38-$1.58, vs. consensus estimates of $1.42.

Barnes and Noble

Barnes & Noble Inc

BKS

29.95 UNCH 0%

NYSE

Quote | Chart | News | Profile

[BKS 29.95 --- UNCH (0%) ] reported earnings in line with expectations. They did lower their comparable store guidance for the current quarter, but they are maintaining their full year guidance.

Aeropostale

Aeropostale Inc

ARO

32.75 UNCH 0%

NYSE

Quote | Chart | News | Profile

[ARO 32.75 --- UNCH (0%)

] and Gap [GPS 18.07 --- UNCH (0%)

] report after the bell.

2) As expected, UBS

UBS AG

UBS

29.34 UNCH 0%

NYSE

Quote | Chart | News | Profile

[UBS 29.34 --- UNCH (0%)

] raised additional capital, in the form of a rights offering that will raise roughly $15.1 b. The offering will entitle investors to 7 new shares for each 20 held. The shares are being sold at 31 percent discount to Wednesday's close. The CEO has said he does not not think more capital raising will be necessary, that there may be further sales of subprime products and that there are a large number of parties interested in purchasing them.

3) Indonesia indicated higher fuel prices were coming. The government subsidies fuel prices, but they indicated today that fuel prices could go up by about 28 percent to prevent a budget deficit from getting out of control.

4) Alcoa

Alcoa Inc

41.7 UNCH 0%

NYSE

Quote | Chart | News | Profile

[AA 41.7 --- UNCH (0%) ] downgraded to neutral from by at Merrill, saying shares have risen due to take out speculation and this is a good opportunity to take money off the table. Actually, all material stocks have risen recently.

Bob Pisani's Trader Talk: Higher Oil Prices Grounding Airline Merger? - Trader Talk with Bob Pisani - CNBC.com

Opening View: NetApp, Suntech Power, Limited Brands in Earnings Limelight

Shares of NetApp (NTAP: sentiment, chart, options) are off about 11% in electronic trading following weaker-than-expected guidance. For the fiscal fourth quarter, NTAP logged a profit of $90 million, or 26 cents per share, on $938 million in revenue. Excluding one-time items, the company would have earned $131 million, or 38 cents per share. Analysts were expecting a profit of 36 cents per share on $938.4 million in sales. Looking ahead, NetApp expects first-quarter earnings of 20 cents to 23 cents per share, excluding items, on revenue between $845 million and $875 million.

Elsewhere in tech, Computer Sciences (CSC: sentiment, chart, options) reported fiscal fourth-quarter profit of $181.7 million, or $1.15 per share. Excluding special items, CSC earned $221.3 million, or $1.44 per share. Revenue reached $4.48 billion from $4.04 billion. Analysts had forecast a profit of $1.46 per share on $4.41 billion in sales.

In the solar sector, Suntech Power Holdings (STP: sentiment, chart, options) reported first-quarter earnings of $55.8 million, or 33 cents per share, doubling from last year's $26.1 million, or 16 cents. Analysts were looking for a profit of 29 cents per share. Revenue for the quarter rose to $434.5 million from $246.7 million.

Finally, in the retailing sector, Limited Brands (LTD:

sentiment, chart, options) reported that first-quarter net income rose to $97.8 million, or 28 cents per share, from $52.9 million, or 13 cents, last year. Excluding items, LTD's profit would have been 11 cents per share. Revenue fell to $1.93 billion from $2.31 billion. Looking ahead, LTD expects earnings of 16 cents to 20 cents per share in the second quarter and earnings of $1.38 to $1.58 per share in 2008
Opening View: NetApp, Suntech Power, Limited Brands in Earnings Limelight