July 21, 2008

Movers: eBay, JPMorgan, Fannie Mae, Freddie Mac, Nokia, United Technologies

EBay (EBAY) posts $0.43, vs. $0.34 a year ago, second quarter non-GAAP EPS on 20% revenue rise. Non-GAAP operating margin decreased to 31.9% primarily due to EBAY's faster growing, lower-margin businesses, such as PayPal and Skype. Sees 2008 revenue of $8.8-$9.05 billion, non-GAAP EPS of $1.72-$1.77. For third quarter, sees revenue of $2.1-$2.15 billion, non-GAAP EPS of $0.39-$0.41. Thomas Weisel, Goldman reportedly downgrade.

JPMorgan Chase & Co. (JPM) posts $0.54, vs. $1.20 a year ago, second quarter EPS on 2.7% revenue drop. Street was looking for $0.44. Notes effect of merger-related items amounting to net loss of $540 million [after-tax] related to acquisition of Bear Stearns Cos, which closed on May 30, 2008. S&P maintains strong buy.

Fannie Mae (FNM) rises 1.68 to 10.93 after Fitch Ratings affirms FNM's long-term Issuer Default Ratings [IDR] at 'AAA+'. Fitch also downgraded FNM's prfd stock rating to 'A+' from 'AA-'. Fitch said today's affirmation of FNM's long-term IDR and sr. deb rating reflect the high probability of external support becoming available and the co.'s importance to the U.S. housing market. S&P upgrades to sell from strong sell.

Freddie Mac (FRE) rises 1.50 to 8.33 after Fitch Ratings affirms FRE's long-term Issuer Default Rating [IDR] at 'AAA.' Also, Fitch places FRE's 'A+' prfd stock on Rating Watch Negative. Fitch said the affirmation of FRE's long-term IDR, sr. debt rating reflects high probability of external support, co.'s importance to US housing market. S&P upgrades to sell from strong sell.

Safeway (SWY) is down 3.23 to 26.78 after SWY posts $0.53 vs. $0.49 Q2 EPS on 1% higher identical-store sales [adj. to exclude estimated impact of the Easter holiday shift]. S&P says Q1 rise in identical-store sales below its 2% growth forecast; reiterates buy.

Bank of New York Mellon (BK) posts $0.26, vs. $0.62, second quarter GAAP EPS from continuing operation, which includes charges, writedown of certain investment securities. S&P cuts estimate, target, maintains hold.

ValueClick (VCLK) is down 2.76 to 11.01 after VCLK cuts $166-$170 million second quarter revenue guidance to $163-$164 million, raises $0.15-$0.16 EPS guidance to $0.17-$0.18. Notes expense management initiatives in Q2 resulted in profitability above previously-issued guidance. No longer sees seasonal strength in ad spending it typically sees in the second half. Cuts $730-$745 million 2008 revenue guidance to $655M-$675M, $0.81-$0.83 EPS to $0.69-$0.71. S&P cuts estimates, but reiterates buy. Citigroup downgrades to hold.

BlackRock (BLK) posts $2.05, vs. $1.69, second quarter EPS on 26% revenue rise. Says Merrill Lynch (MER) has decided not to sell any of its stake in the company. S&P maintains hold.

Nokia (NOK) posts 0.36, vs. 0.32 a year ago, second quarter EPS [excluding special items] on 4.5% sales rise. Sees industry mobile device volumes in third quarter up sequentially, its mobile device market share at about the same level sequentially. NOK now expects industry mobile device volumes in 2008 to grow 10% or more from 2007, an update to its earlier estimation that industry mobile device volumes would grow about 10% in 2008. NOK continues to target an increase in its market share in mobile devices in 2008. S&P maintains buy.

United Technologies (UTX) posts $1.32, vs. $1.16, second quarter EPS on 13% revenue rise. Based on strong first half 2008 performance, it raises 2008 EPS forecast to $4.80-$4.95 on revenue of more than $60 billion.

Coca-Cola Company (KO) posts $1.01 [excluding $0.40 non-cash impairment charge], vs. $0.80 second quarter EPS on 17% revenue rise. Says Worldwide unit case volume increased 3% in quarter, led by 5% growth in International. Notes company targeting $400-$500 million in annualized savings from productivity initiatives by yearend 2011 to provide additional flexibility to invest for growth.

PNC Financial Services Group (PNC) posts $1.44, vs. $1.22, second quarter EPS on 32% rise in net interest income. Says increase in net interest income primarily due to the benefit of declining interest rates on PNC's liability balance sheet that resulted in lower funding costs.

Yum! Brands (YUM) posts $0.45, vs. $0.39, second quarter non-GAAP EPS on 4% worldwide same-store sales growth. Raises 2008 non-GAAP EPS guidance to $1.89 from $1.87. Stifel Nicolas analyst Steve West looks for shares to come under pressure on "low-quality" quarter. Mr. West continues to believe a second half 2008 consumer "rebound" is overrated. Will be listening on call for company comments on the impact of high inflation rate in China.

Johnson Controls (JCI) posts $0.73, vs. $0.66, third quarter EPS on 11% sales rise. Sees $0.72-$0.74 fourth quarter EPS, $2.32-$2.34 fiscal year 2008.

Baxter International (BAX) posts $0.85, vs. $0.65, second quarter EPS on 13% sales rise. Sees third quarter EPS of $0.81-$0.83 [excluding items]. Raises 2008 EPS forecast to $3.28 [excluding items], sees 6%-8% sales growth, excluding forex.

Continental Airlines (CAL) posts narrower-than-expected $0.03 second quarter loss, vs. $2.03 EPS a year ago, despite 9% revenue rise. Says record high fuel prices, weakening economic conditions, weak dollar has resulted in worst financial environment for U.S. network carriers since the September 11 terrorist attacks.

Harley-Davidson (HOG) posts better-than-expected $0.95, vs. $1.14 a year ago, second quarter EPS on 2.9% revenue decline. Street was looking for $0.76. Sees $3.00-$3.18 2008 EPS. It expects to ship 74,000-78,000 motorcycles during third quarter, 303,500-307,500 units for 2008.

Fairchild Semiconductor International (FCS) posts $0.17, vs. $0.14, second quarter adjusted EPS on 2% higher sales. Expects third quarter revenue to be up 2%-5%. Says at start of third quarter, it had more than 90% of this sales guidance booked, scheduled to ship. Expects gross margin to increase 150-225 bps sequentially as it benefits from higher factory loadings, better product mix, more assembly, test in-sourcing.

Catalyst Semiconductor (CATS) agrees to be acquired by ON Semiconductor (ONNN) in all stock deal whereby CATS holders will get 0.706 shares of ONNN for each share held. This represents an equity value of about $115 million and enterprise value of about $85 million.

Xilinx (XLNX) posts $0.30, vs. $0.28, first quarter GAAP EPS on 9% revenue rise. Net income declined to $83.9 million from year ago's $84.3 million, and fourth quarter fiscal year 2008's $96.5 million. Expects second quarter revenues to be between up 1% to down 3% sequentially, gross margin in the range of 63%-64%.

Orbital Sciences (ORB) posts $0.43, vs. $0.23, second quarter EPS on 15% revenue rise. Updates 2008 guidance to reflect sale of its TMS business, related second quarter 2008 tax benefits, improved profit outlook, now sees $0.93-$0.97 adjusted 2008 EPS vs. previous forecast for $0.84-$0.89.

Huntsman (HUN) says it expects its adjusted earnings before interest, taxes, depreciation and amortization [EBITDA] for second quarter to increase by about 10% sequentially. Also estimates that net debt, including amounts outstanding under its accounts receivable securitization program, was about $4.3 billion in second quarter 2008, vs. about $4.1 billion in second quarter 2007. In addition, says its estimated total cash and unused borrowing capacity at June 30, 2008 was in excess of $550 million.