July 28, 2008

Movers: Freddie Mac, Fannie Mae, Wachovia, Crocs, Juniper, Netflix

S&P's Ratings Services said it may cut the preferred-stock and subordinated debt ratings on Freddie Mac (FRE) and Fannie Mae (FNM), warning that capital levels and bottom-line results will continue to be stressed for at least several more quarters. Earlier today, FRE released its monthly volume summary for June.

Wachovia (WB) announces Thomas Wurtz plans to leave company as chief financial officer [CFO] after successor is named to the role. Separately, S&P downgrades to strong sell from sell. Earlier, Morgan Keegan downgraded to market perform from outperform, saying the stock's valuation is stretched.

Crocs (CROX) cuts second quarter revenue guidance to $218-$223 million from $247-$258 million and EPS guidance to $0.03-$0.07, including a portion of the previously announced pre-tax charge associated with the shutdown of co.'s Canadian manufacturing operations, from $0.42-$0.47. Now sees modest revenue decline for full-year '08, EPS of about breakeven. Baird reportedly downgrades to neutral from outperform.

Juniper Networks (JNPR) posts $0.28, vs. $0.20, second quarter non-GAAP EPS on 32% higher revenue. Friedman Billings upgrades to outperform from market perform.

Delta Air Lines (DAL) rises 0.37 to 7.17 afte Merrill upgrades DAL to buy from neutral, believes DAL best positioned to benefit from the industry's planned capacity rationalization, which is due to commence this fall.

Fortune Brands (FO) posts $1.25, vs. $1.51 a year ago, second quarter EPS from continuing operations [excluding one-time items] on 8.6% sales drop. For 2008, it expects EPS before charges/gains to be down at a high-single-digit-to-high-teens percentage rate compared to $5.06 in 2007. Raises $1.68 annual dividend by 5% to $1.76.

YRC Worldwide (YRCW) posts $0.62, vs. $0.95 a year ago, second quarter EPS [incl. items] on about 4.0% revenue decline. Sees third quarter EPS of $1.05-$1.15, including curtailment gain of approximately $0.70 and increased union health and pension costs of approximately $0.15 attributable to contractual increases that take effect on August 1.

Black & Decker (BDK) reports second quarter earnings of $1.46 per share, excluding non-recurring items, $0.04 better than the First Call estimate; revenues fell 3.4% year-over-year to $1.64 billion, vs, the $1.6 billion consensus. Company issues in-line guidance for third quarter -- sees EPS of $1.30-1.40 vs. $1.34 consensus. It also issues in-line guidance for fiscal year 2008, sees EPS of $5.25-5.45, excluding non-recurring items, vs. $5.27 consensus.

Netflix (NFLX) posts $0.42, vs. $0.37, second quarter GAAP EPS on 11% revenue rise. Cites 25% year-over-year growth in subscriber adds. Sees $0.26-$0.34 third quarter GAAP EPS on $343-$348 million revenue, $1.19-$1.31 2008 [up from $1.16-$1.29] on $1.364-$1.379 billion revenue [tightened from $1.35-$1.39 billion].

American Axle & Manufacturing (AXL) posts $12.49 second quarter loss per share, vs. $0.66 EPS a year ago, on sharp sales drop. Results include combination of charges related to Intl UAW strike, special charges, asset impairments and other non-recurring operating costs.

Arch Coal (ACI) posts $0.78, vs. $0.26, second quarter EPS on 31% revenue rise. Raises 2008 EPS guidance to $2.50-$2.80 range, adjusted EBITDA to $767-$853 million range.

Western Digital (WDC) posts $0.94, vs. $0.94, fourth quarter EPS as higher costs, expenses, charge, absence of income tax benefit offset 46% revenue rise.

Affymetrix (AFFX) posts $0.05 second quarter loss, vs. $0.02 EPS, on 1.6% total revenue decline. Due to predicted ongoing weakness in AFFX's pharmaceutical revenue, company now expects 2008 revenue of $455-$460 million, including a one-time $90 million payment, gross margin of about 65%. Announces its plan to consolidate manufacturing to 3 locations.

ITT Corp. (ITT) posts $1.22, vs. $1.08, EPS from continuing operations on 38% revenue rise. Raises 2008 adjusted EPS from continuing operations forecast to $4.11-$4.17 2008 on $11.6-$11.7 billion revenue.

Ceradyne (CRDN) reports second quarter earnings of $1.25 per share, $0.12 better than the First Call estimate; revenues fell 0.2% year-over-year to $185 million, vs. the $179.7 million consensus. Company tightens guidance range for 2008, sees EPS of $4.70-4.80, compared to previous guidance of $4.55-5.05, vs. $4.74 consensus; sees 2008 revenues of $740-750 million, compared to previous guidance of $715-836 million, vs. $757.69 milllion consensus.

Synovus Financial (SNV) posts $0.04 second quarter EPS from $0.32 EPS from cont. ops. on 5.2% lower net interest income, narrowed net interest margin. Says ratio of nonperforming assets to loans, impaired loans held for sale, and other real estate was 3.00%, compared to 2.49% last quarter and 0.87% in second quarter '07. Nonperforming loans were $627M, a q/q increase of $111M. S&P maintains strong sell; lowers estimate, target.See Pg. 4

Ingram Micro (IM) posts $0.35, vs. $0.30, second quarter EPS on 8% revenue rise. Sees third quarter sales of $8.5-$8.8 billion, EPS of $0.31-$0.36. Says it is evaluating additional expense-reduction opportunities, which could result in related costs and savings beyond the current program.