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Post by Conrad Alvin Lim on Jul 12, 2006 8:55:06 GMT -4
Trade deficit widens to $63.8 billion Record petroleum imports offset record exports of U.S. goods By Rex Nutting, MarketWatch Last Update: 8:42 AM ET Jul 12, 2006
WASHINGTON (MarketWatch) -- The U.S. trade deficit widened by 0.8% in May to $63.8 billion as both imports and exports set monthly records, the Commerce Department said Wednesday.
Reflecting a growing global economy, exports increased 2.4% to $118.7 billion, the biggest percentage gain since December 2004.
Record imports for petroleum, led by record prices and record quantities, helped to push up imports by 1.8% to $182.5 billion. The non-petroleum deficit fell to $43.2 billion, its lowest level in nine months.
Economists expected the May trade deficit to widen to about $64.7 billion, according to a survey conducted by MarketWatch. The deficit in April was revised insignificantly to $63.3 billion.
In the first five months of the year, imports are up 12.3% compared with the first five months of 2005. Exports are up 12.0% year-to-date. The year-to-date deficit is up 12.8% to $317.9 billion. Last year, the deficit totaled a record $716.7 billion. Read the full government report.
Petroleum The dollar value of imported petroleum increased by 17% to a record $27.9 billion in May. The quantity of energy-related petroleum imports rose by 10.5% to a record 433.4 million barrels.
The nation imported an average of 10.5 million barrels of crude oil a day in May. The average price rose by $4.92 to a record $61.74 per barrel. It was the largest monthly price increase since September 1990.
With the surge in oil imports, the United States ran record deficits with the OPEC nations and with Mexico.
Imports from China increased 4.1% to $22.3 billion, while exports to China rose 4.6% to $4.5 billion. Exports to China are growing twice as fast as imports through the first five months of the year. However, the deficit with China has totaled $82.1 billion so far, up from $72.5 billion this time last year.
Export details U.S. exports benefited from strong global growth and a slightly weaker dollar. Exports were led by a big jump in civilian aircraft and rising exports of industrial supplies such as metals and chemicals.
U.S. producers exported record values of services, foods and feeds, industrial supplies, capital goods and consumer goods.
Exports of civilian aircraft increased about 25% to $3.5 billion, contributing about a fourth of the total increase in exports. Semiconductor exports were flat at $4.6 billion. Exports of all capital goods increased 2.4% to $34.1 billion. Exports of industrial supplies increased 3.4% to $23 billion, led by a 50% increase in precious metals.
Exports of foods and feeds increased 7.4% to $5.6 billion, led by a 46% gain in soybeans.
Exports of consumer goods rose 5.1% to $10.6 billion, led by gem diamonds and drugs.
Auto exports fell 1.4% to $8.7 billion.
Import details Imports of industrial supplies increased 7% to $52.3 billion, led by crude oil, fuel oil and metals such as copper and steel. Natural gas imports fell 20%. Imports of capital goods increased 0.1% to $34.5 billion, led by medical equipment. Imports of computers, computer accessories and semiconductors fell 3.5%.
Imports of consumer goods were flat at $35.4 billion. Apparel imports plunged Drug imports rose.
Auto imports fell 2.4% to $21.4 billion.
Imports of foods and feeds fell 2.3% to $6.1 billion.
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Post by Conrad Alvin Lim on Jul 14, 2006 1:43:24 GMT -4
Bank of Japan votes to lift rates 0.25 per cent By Chris Oliver, MarketWatch Last Update: 1:36 AM ET Jul 14, 2006
HONG KONG (MarketWatch) -- The Bank of Japan's policy board raised the unsecured overnight call rate target, its key monetary policy rate, a quarter percentage-point to 0.25% Friday, effectively ending the nation's five-year old policy of keeping interest rates near zero.
In an accompanying statement, the central bank said economic conditions were broadly in line with projections set out in its April Outlook for Economic Activity and Prices. The statement added that it judged that consumer prices had stabilized, effectively ending the nations' long bout with deflation.
"Japan's economy continues to expand moderately, with domestic and external demand and also the corporate and household sectors well in balance. The economy is likely to expand for a sustained period," the statement said. "The year-on-year rate of change in consumer prices is projected to continue to follow a positive trend."
In deciding to move ahead with its widely expected interest rate hike, the policy board was expected to cite rising inflation and an economy at risk of overheating if it does not raise rates now, according to economists.
The economy is on track to grow at its fastest pace in years, domestic consumer prices are rising and companies are planning big increases in capital spending.
"They are behind the curve and the curve appears to be moving further away from them," said Glenn Maguire, Asia economist for Societe Generale.
In its most recent economic report released Wednesday, the Bank of Japan said domestic corporate goods prices rose 3.3% in June from a year earlier, the 28th straight month of rises. This comes on top of last week's Tankan business survey, released July 3, showing large companies plan to boost capital spending by 11.6% in the current fiscal year, significantly ahead of expectations. The Tankan's benchmark large manufacturer business sentiment index rose to 21, from 20 last quarter, pointing to growing confidence among business.
Japan's gross domestic product grew at a real annualized 3.1% in the first quarter, up from preliminary estimates of 1.9% put out by the Bank of Japan. DBS bank now estimates the Japanese economy will 2.8% this year, and 2.1% in 2007.
In a widely telegraphed move, the bank's policy committee is expected to lift its target rate for the overnight call rate to 0.25% from its current target of zero. The shift would put the rate above zero for the first time since March 2001.
Along with the target rate hike to 0.25%, the official discount rate would likely be lifted from the current 0.1% to a range between 0.4% and 0.5%.
The bank's policy committee began its two day meeting Thursday, and a formal decision is expected Friday. Details of the rate hike were reported in the Nikkei daily morning edition Thursday, a frequent forum for the early release of policy from government and semi-governmental organizations.
The emerging picture clearly points to a fast growing economy where monetary policy may be out of step, says Maguire.
"If there's any error, it's that they waited too long, there are clear signs the Japanese economy has been performing extremely strongly." Maguire said. "Japan has been a bit of a laggard in responding to inflation, its fairly clear globally inflation has a reasonable pulse."
Although few see serious risk the economy will fall back into deflation, others say there's little need for the Bank of Japan to tighten as the economy still has plenty of slack.
The nationwide core consumer price index rose only 0.6% on year in May, meaning inflation is still below the median point 0% and 2% rise in price the bank's policy board deems appropriate.
Another concern is slowing U.S. economic performance could brake the world economy, taking the heat off commodity prices and slowing Japanese economic growth with it.
Richard Jerram, Macquarie's chief Japan economist says raising interest rates at a time when the economy appears to be on the mend is another in a long line of policy mistakes by Japan's monetary authorities.
"The idea that you should be raising interest rates when you are so close to deflation after such a long period of deflation, I think you'd have to say that is not a particularly sensible thing to do," Jerram said.
He added data showing Japanese banks boosted lending 1.8% in June from a year earlier, reflected a budding recovery, rather than a runaway credit excess.
Jerram added the Bank of Japan quickly backtracked the last time it lifted rates in 2000. He says, although conditions don't necessary warrant a rate rise now, the combination of rising wage and asset prices leave the economy in a better position to withstand a rate hike.
"The banking system was still distressed in 2000 and not in a position to create credit, whereas now we think the banking system is healthy, so I think the risks involved in this policy is much less than it was six years ago," Jerram said.
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Post by Conrad Alvin Lim on Jul 20, 2006 1:15:03 GMT -4
STOCKS TO WATCH Apple, Intel, Juniper By MarketWatch Last Update: 9:31 PM ET Jul 19, 2006
Among the companies whose shares are expected to see active trade in Thursday's session are Apple Computer Inc., Intel Corp. and Juniper Networks Inc.
Broadcom Corp. (BRCM : 26.99, -0.41, -1.5% ) is expected to report earnings per share for the second quarter of 35 cents.
Continental Airlines Inc. (CAL : 30.56, +1.91, +6.7% ) is expected to post per-share income for the second quarter of $1.90.
D.R. Horton (DHI : 20.85, +0.85, +4.3% ) is expected to report per-share income of 95 cents for the third quarter.
Ford Motor Co. (F : 6.33, -0.11, -1.7% ) is expected to post second-quarter earnings per share of 12 cents.
Google Inc. (GOOG : 399.00, -4.05, -1.0% ) is expected to report income per share of $2.22 for the second quarter.
Microsoft Corp. (MSFT : 23.40, +0.66, +2.9% ) is expected to post fourth-quarter earnings per share of 30 cents.
Peabody Energy Corp. (BTU : 53.35, +1.99, +3.9% ) is expected to post earnings per share for the second quarter of 56 cents.
Pfizer Inc. (PFE : 23.30, +0.72, +3.2% ) is expected to report second-quarter per-share income of 48 cents.
Steel Dynamics Inc. (STLD : 60.63, +2.85, +4.9% ) is expected to post earnings per share for the second quarter of $1.55.
Wyeth (WYE : 44.33, +1.17, +2.7% ) is expected to post per-share income for the second quarter of 76 cents.
After Wednesday's closing bell, Apple (AAPL : 54.10, +1.20, +2.3% ) reported a fiscal third-quarter profit that rose 47.5% from a year ago as the technology giant saw higher sales of its iPod digital-media players and flagship Macintosh computers.
Intel (INTC : 18.49, +0.28, +1.5% ) said second-quarter profit tumbled 57% from a year ago on lower sales as the world's largest chipmaker faced increased competition and cut prices to clear out excess inventory.
Juniper (JNPR : 14.14, -0.18, -1.3% ) Wednesday delayed providing details on its second-quarter results, saying an ongoing probe of its stock-options grants found problems with how they were issued.
Watch list Alliance Data Systems Corp. (ADS : 54.53, +1.07, +2.0% ) said second-quarter revenue rose as net income grew to $44.8 million, or 55 cents a share, from $34.4 million, or 40 cents a share, during the same period in the prior year.
Allstate Corp. (ALL : 56.15, +0.72, +1.3% ) reported second-quarter results that beat analysts' estimates, and the company raised its full-year profit forecast after a strong performance from its auto insurance business.
Amdocs Ltd. (DOX : 33.45, -0.80, -2.3% ) reported third-quarter net earnings of $85.6 million, or 39 cents a share, up 11% from $77.1 million, or 36 cents a share, during the year-ago period. The software company posted revenue of $626.4 million vs. $507.4 million.
Stung by a $78 million merger-termination fee, casino company Aztar Corp. (AZR : 51.95, +0.07, +0.1% ) slipped into the red in the second quarter, losing $66.1 million, or $1.84 a share, a turn from the $15.5 million, or 41 cents, it earned in the same period of 2005.
Citrix Systems Inc. (CTXS : 34.77, -0.22, -0.6% ) reported second-quarter earnings of $46.5 million, or 24 cents a share, compared with $27.9 million, or 16 cents a share, in the same period last year.
Cubist Pharmaceuticals Inc.'s (CBST : 23.31, +0.86, +3.8% ) reported a second-quarter net loss of $5.07 million, or 9 cents a share, compared with a net loss of $7.74 million, or 15 cents a share, in the same period last year.
EBay Inc. (EBAY : 25.93, -0.66, -2.5% ) reported that second-quarter profit fell 14%, hurt by the cost of employee stock options, while sales surged as expected on growth in its online payment unit. San Jose, Calif.-based eBay said net income for the three months ended in June fell to $250 million, or 17 cents a share, from $291.6 million, or 21 cents, a year ago.
Endo Pharmaceuticals Holdings Inc. (ENDP : 31.43, +1.29, +4.3% ) said it has submitted a supplemental new drug application to the Food and Drug Administration for Frova for the short-term prevention of menstrual migraines.
E-Trade Financial Corp. (ET : 22.41, +1.57, +7.5% ) reported a 52% increase in quarterly net income thanks to growth of new accounts and an increase in high-value clients, and lifted its full-year earnings forecast.
Gilead Sciences Inc. (GILD : 61.23, +0.98, +1.6% ) said it has agreed to exercise its option to purchase Corus Pharma for $365 million.
IMS Health Inc. (RX : 27.00, +0.20, +0.7% ) posted second-quarter net earnings of $62.7 million, or 30 cents a share, down from $93.2 million, or 41 cents a share, in the same period last year. Revenue rose to $486.2 million from $433.3 million.
Intersil Corp. (ISIL : 23.95, +1.14, +5.0% ) reported second-quarter net earnings of $43 million, or 30 cents a share, compared with $17.3 million, or 12 cents a share, in the year-ago period.
Kinder Morgan Inc. (KMI : 100.00, 0.00, 0.0% ) , in the midst of the biggest U.S. management-led buyout ever, posted an 11% rise in second-quarter earnings, building its results on a strong performance by its vast natural gas pipeline and storage operations and a solid contribution from a recently-acquired Canadian gas utility.
Knight Transportation Inc. (KNX : 18.50, -0.44, -2.3% ) reported second-quarter earnings of $18.1 million, or 21 cents, compared with $15 million, or 17 cents, in the same period last year. Quarterly revenue rose 24% to $165.8 million vs. $133.9 million.
Lam Research Corp. (LRCX : 44.94, +2.49, +5.9% ) said fourth-quarter revenue rose as net income reached $122.1 million, or 84 cents a share, from $66.5 million, or 47 cents a share, during the same period in the prior year.
MGI Pharma Inc. (MOGN : 21.43, +0.47, +2.2% ) said it swung to a loss in the second quarter on stock options expenses and a charge related to one of its investments.
Motorola Inc. (MOT : 19.25, +0.37, +2.0% ) said second-quarter profit jumped 46% as the company shipped a record number of wireless phones and benefited from a large one-time tax gain and a legal settlement.
Novellus Systems Inc. (NVLS : 24.43, +0.85, +3.6% ) reported second-quarter net earnings of $52.7 million, or 42 cents a share, compared with $33.2 million, or 24 cents a share, during the year-ago period. The chip-technology company posted revenue of $410.1 million, up 24% from $329.6 million a year ago.
Odyssey Re Holdings Corp. (ORH : 26.49, +0.17, +0.6% ) said Chief Financial Officer Robert Giammarco plans to resign, effective Aug. 15.
Openwave Systems Inc. (OPWV : 7.24, +0.20, +2.8% ) said it expects fiscal 2007 first-quarter revenue to be flat to modestly below the fourth-quarter level.
Owens & Minor Inc. (OMI : 30.15, +1.16, +4.0% ) posted net earnings of $10.49 million, or 26 cents a share, vs. $15.97 million, or 40 cents a share, in the same quarter last year. The results included a pre-tax charge of $11.4 million, or 17 cents a share, related to the early retirement of debt, and $1.2 million, or 2 cents a share, for stock options expensing.
Playboy Enterprises Inc. (PLA : 9.77, +0.22, +2.3% ) (PLAA : 9.50, +0.20, +2.2% ) said it expects to post a second-quarter loss in the range of 10 cents to 13 cents a share. The forecast includes a 6-cent-per-share restructuring charge. Analysts polled by Thomson First Call are currently estimating a loss of 7 cents a share for the quarter.
Qualcomm Inc. (QCOM : 36.73, -0.67, -1.8% ) said third-quarter profit climbed 15%, as demand for chips and phones based on the company's wireless technology soared yet again.
Rambus Inc. (RMBS : 16.77, -2.83, -14.4% ) said its second-quarter revenue rose 22% to $48.9 million from the previous year. The increase was mainly due to new patent licensing revenues.
RSA Security Inc. (RSAS : 27.52, -0.03, -0.1% ) , which has agreed to be acquired by EMC Corp. (EMC : 10.34, +0.19, +1.9% ) , said its quarterly profit sank 67% as higher expenses and restructuring charges more than offset a 23% increase in revenue.
Washington Mutual Inc. (WM : 46.42, +0.60, +1.3% ) reported a 9% drop in second-quarter net income on charges stemming from the sale of mortgage-servicing rights to Wells Fargo & Co. (WFC : 70.83, +2.58, +3.8% ) .
Profit growth at all three of its divisions helped Yum Brands Inc. (YUM : 49.13, +1.53, +3.2% ) push its second-quarter profit up 8%. The company said it earned $192 million, or 68 cents a share, on the period, up from the $178 million or 59 cents a share it earned in the year-ago quarter.
End of Story
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Post by Conrad Alvin Lim on Jul 28, 2006 0:40:25 GMT -4
ECONOMIC OUTLOOK GDP expected to slow in second quarter Economy slowed to 3.1% from 5.6%, economists predict By Rex Nutting, MarketWatch Last Update: 5:30 PM ET Jul 27, 2006
WASHINGTON (MarketWatch) -- The Federal Reserve has said the economy is slowing. Private-sector economists have been saying it too. Even your Aunt Amelia has been overheard muttering about a slowdown.
Now we'll see if the official government data agree.
The Commerce Department will report on second-quarter gross domestic product on Friday at 8:30 a.m. Eastern. Economists are looking for a sharp slowdown from 5.6% annualized growth in the first quarter to about 3.1% in the second quarter.
Growth probably averaged about 4.3% in the first half of the year, well above the economy's presumed trend growth, a key reason why the Federal Reserve remains concerned that inflationary pressures could build. The economy grew 3.2% in 2005.
Consumer spending, business investment, residential investment and government spending all softened during the quarter, partially offset by increases in exports and inventories.
Several economists revised their forecasts higher on Thursday following a robust report on durable goods for June. The report didn't signal any extra strength in business investment; rather, it showed greater inventory accumulation.
In other words, demand slipped in the quarter, but firms kept stockpiling any way.
Inventories add to GDP, but not to final sales, which is arguably a more important benchmark for economic performance.
Domestic demand Final domestic demand -- which excludes inventory growth and trade -- probably slowed to a 1.7% pace from 5.8% in the first quarter, said Brian Jones, an economist for Citigroup Global Markets. Other than the hurricane-ravaged fourth quarter, that would be the weakest domestic demand since early 2003.
"The main reason for the expected deceleration in second-quarter growth is the expected drop in consumer spending growth to about 2.5% from 5.1%," said Haseeb Ahmed, an economist for JP Morgan Chase Bank.
Residential investment, which has contributed about a half percentage point to growth in the past four years, will subtract that much in the second quarter, Jones said.
Going forward, growth is likely to remain in the 3% range for the rest of the year, Ahmed said. "Declines in residential construction and sluggish consumer spending growth are expected to be the key drivers of the moderation to a trend pace after several years of above-trend growth," Ahmed said.
The decline in housing is a key factor in the outlook ahead. Consumer spending has been propped up by the increased wealth in homes. But now home prices are leveling out, and higher interest rates mean fewer home owners are taking out home equity loans to finance current consumption.
There's an extremely tight link between GDP growth and changes in household net wealth, said Joseph LaVorgna, chief U.S. fixed income economist for Deutsche Bank. "That is why we are putting so much focus on the housing sector." And it's why he looks for a major slowdown in the next year.
Inflation The GDP figures released Friday will also include benchmark revisions dating back to 2003. Most economists don't foresee major revisions in the growth picture, but even a minor change in the inflation numbers in the report could cause a sea change in expectations about how much more the Fed will tighten.
As it is, economists expect the fastest increase in prices in 12 years. JP Morgan's Ahmed said the core personal consumption expenditure price index is expected to rise at a 2.9% annual rate in the quarter, well above the 2% ceiling on the Fed's implicit "comfort zone.
Even small revisions to previous data could alter the trajectory of core inflation. The last benchmark revision last year pushed the year-over-year growth in the core price index from 1.6% to 2%.
With the year-over-year gain now at 2.1% through May, financial markets could be in for a shock if the revision matches last year's, said Nariman Behravesh and Nigel Gault, economists at Global Insight.
"It would also deflate the euphoric mood that markets have been in since the July 19th testimony of Fed Chairman Bernanke," Behravesh and Gault said.
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Post by Conrad Alvin Lim on Aug 8, 2006 22:25:49 GMT -4
Fed finally takes a breather and holds rates steady Fed statement keeps options open By Greg Robb, MarketWatch Last Update: 2:56 PM ET Aug 8, 2006
WASHINGTON (MarketWatch) -- After 25 months and 17 straight meetings of quarter-percentage-point increases in benchmark interest rates, the Federal Open Market Committee decided to hold rates steady Tuesday. The move was seen as giving policy makers time to see whether they have raised interest rates enough to cool inflationary pressures, or whether they have put growth at risk by raising rates too much.
Fed officials have their fingers crossed that the economic picture clears a bit by their next policy meeting Sept. 20. Tuesday's decision keeps the Fed's fed funds rate at 5.25%. The FOMC had moved that rate up slowly but steadily from a 46-year low of 1% beginning in June 2004.
The fed funds rate is the interest that banks charge each other for overnight loans.
The stock market jumped after the decision, but then sold off. Bond prices rose, but then fell back.
The vote of the 10-member committee wasn't unanimous. Richmond Fed President Jeffrey Lacker dissented. He wanted the central bank to raise rates again. Lacker made comments to reporters in June signaling that he was growing increasingly worried about inflation.
In the statement, as expected, the FOMC kept all its options on the table. It repeated that any further tightening would depend on the economic data. The Fed said that "inflation risks remain," a signal that the Fed is leaning toward raising rates again.
But at the same time, the Fed said that price pressures seem likely to moderate over time "reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand." The Fed said that economic growth "has moderated," due to high energy costs and the gradual cooling of the housing market.
"The language in the statement clearly leaves the Fed plenty of room to raise rates again on Sept. 20 if they feel they need to do so," said John Norris, chief economist at Regions Financial Corp., Birmingham, Ala. How to read a Fed release.
"They are still technically in tightening mode. They just took a break," Norris said.
Some economists believe the economy will slow sharply, making any more rate hikes unnecessary, and leading the central bank to consider cutting rates by the end of the year. But others predict more rate increases will be needed to combat inflationary pressure.
Ethan Harris, chief economist at Lehman Brothers, said the Fed had been seeking the market's permission to pause in its monetary tightening program. Fed Chairman Ben Bernanke first raised the possibility of a pause in April. At the time, he emphasized in his April testimony before Congress that a pause wouldn't necessarily mean the end to rate increases. If inflation continues to accelerate beyond expectations, or growth reignites, the Fed could be raising rates again soon.
The permission came over the past six weeks as economic data showed the U.S. economy slowing in a manner that the Fed has been seeking ever since it began raising interest rates two years ago. Job growth has averaged 112,000 in the past four months. Job growth weaker than expected in July. And growth as measured by the gross domestic product, slowed to a 2.5% rate in the second quarter from a 5.6% rate in the first three months of the year.
Fed officials have said that slower growth, over time, will reduce inflation pressures and bring core inflation -- now running at an 11-year high of 2.4% -- back under the Fed's 2% ceiling.
There is some concern that the economy may be slowing too fast, particularly since the delayed impact of the Fed's past 17 rate increases hasn't been felt. Economists estimate that these lags can last up to18 months.
Before Tuesday's rate decision, financial markets estimated about a 50-50 chance the fed funds rate will rise to 5.5% at either the September or October meetings
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Post by Conrad Alvin Lim on Aug 11, 2006 22:54:11 GMT -4
Apple receives delisting warning from Nasdaq Letter follows Apple telling regulators it will delay its 10-Q By Matt Andrejczak & John Shinal, MarketWatch Last Update: 6:19 PM ET Aug 11, 2006
SAN FRANCISCO (MarketWatch) - Apple Computer Inc. said late Friday that the Nasdaq Stock Market has warned the company its decision to delay filing its most-recent quarterly financial report puts Apple in violation of Nasdaq's stock-listing requirements.
The letter came on the same day Apple officially notified federal securities regulators that it would delay filing its quarterly report, or 10-Q, for the quarter ended July 1, until an outside legal counsel completes an investigation into how the company accounted for employee stock options.
The company reiterated to the Securities and Exchange Commission in Friday's filing what it had already revealed on Aug. 3, when it also said it would restate some past financial results based on an internal inquiry into options granted to executives and other employees between 1997 and 2001.
The technology giant said it hasn't determined how big a charge it will take related to the options issue, nor for which periods it will restate results.
"The company is focused on resolving these issues as quickly as possible," Apple said in Friday's SEC filing, which was made before the open of U.S. markets.
In a separate statement released after U.S. markets closed, Apple said it has requested a hearing with a Nasdaq panel on the matter of delisting. Public companies that don't file timely financial reports with the SEC risk having their shares delisted by the Nasdaq.
The maker of Macintosh computers and iPod music players is arguably the most high-profile technology company ensnared in the scandal over the backdating of employee options. The SEC and federal prosecutors in New York and Northern California are investigating dozens of companies over discrepancies between when their options were actually granted and when they were priced.
In some cases, executives reaped immediate financial windfalls from grants that were priced just before huge run-ups in their company's shares. More than 70 companies have said they are conducting internal reviews of their past options practices, and some, like Apple, have said they plan to restate results based on those inquiries.
Apple said on June 29 one of the grants it investigated went to Chief Executive Steve Jobs. That option grant was later canceled and resulted in no financial gain for him.
Companies that find evidence that past stock option grants made to executives and other employees were backdated will be required to restate results to reflect higher compensation expenses for the periods in which the options were granted, according to Albert Meyer, an analyst with Bastiat Capital in Plano, Texas.
"If you back-date, you essentially issue in-the-money options and have to account for it as a compensation expense," Meyer said.
One-time charges to cover those expenses will then need to be accounted for on the income statements of restated financial reports, thereby reducing profit for the period covered by the restatement.
Confusion about restating the July quarter Apple's Friday filing with the SEC contained language that was confusing enough to prompt some Wall Street analysts to attempt to clarify the issue in notes written for their clients.
The technology giant said in the filing "there will be significant changes in the results of operations for the quarter ended July 1, 2006 compared to the quarter ended June 25, 2005, including significant increases in the Company's revenue and expenses."
While some interpreted that to mean Apple will restate results for the June quarter in a significant way, analysts said they don't believe there will be any changes to Apple's fiscal third-quarter results.
Instead, because the SEC won't recognize the earnings report Apple filed last month as official until it files its 10-Q, Apple was using that language merely to describe its results for the quarter, one analyst wrote.
"The reference to significantly higher revenues and expenses was merely a qualitative statement of fact, not a signal that results will differ from the recent earnings release," wrote J.P. Morgan analyst Bill Shope, who reiterated his overweight rating on Apple shares.
Apple spokeswoman Katie Cotton told MarketWatch in an interview that the phrase "has nothing to do with our internal (options) investigation or the restatements."
Still, when asked whether the company had ruled out restating results for its most recent quarter, Cotton referred to Friday's regulatory filing, which states that Apple "has not determined...which periods may require restatement." In two cases, federal prosecutors have brought criminal fraud charges against company executives over backdating options.
On Thursday, both the former chief executive officer and the human resources officer at Brocade Communications Inc. (BRCD : 5.20, +0.06, +1.2%) were indicted for a scheme to backdate stock options. Federal prosecutors said the executives gave employees favorably priced options without recording necessary compensation expenses.
This week, former executives at Comverse Technology Inc. (CMVT : 19.80, +0.32, +1.6%) were also charged with options-related securities fraud.
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Post by Conrad Alvin Lim on Aug 14, 2006 5:36:34 GMT -4
Range-bound trading on slow-growth fears Are investor getting used to slowdown scenario? By Carla Mozee, MarketWatch Last Update: 9:00 PM ET Aug 13, 2006
SAN FRANCISCO (MarketWatch) -- U.S. equities are likely to tread water this week as investors brace for a fresh wave of inflation and economic reports that arrive at a time when investors are focusing on the apparent slowdown in the economy.
The long list of data on tap will be anchored by the influential producer price and consumer price reports, due from the Labor Department on Tuesday and Wednesday.
"I think we'll be stuck in a little bit of a trading range," said James Park, managing director at Rodman and Renshaw. "The bias will be toward the safety side, and volume will dry up more than usual and people will be out there trying to enjoy the rest of the summer."
The Commerce Department said in late July that U.S. economic growth slowed in the second quarter to a 2.5% annual rate following a 5.6% pace in the first quarter. The GDP reading was weaker than the 3.1% gain expected by economists surveyed by MarketWatch.
Owen Fitzpatrick, managing director of private wealth management at Deutsche Bank, believes the market is set for gains over the next couple of weeks because investors are becoming "more comfortable" with a slower growth rate for the economy as it is still in positive territory.
"We've posted another very strong quarter on the earnings and the market hasn't moved much," said Fitzpatrick. "We're really starting to position ourselves for a move up in the market as more of those earnings starts to filter down and have more of an impact on the bottom line."
The second-quarter earnings growth rate will finish above 10%, according to Thomson Financial. It will be the 12th consecutive quarter of double-digit earnings growth for the S&P 500 index.
"On a fundamental basis, the stock market looks attractive," said John Caldwell, chief investment strategist at McDonald Investments. "What you worry about is ... how do some of these growth concerns play out, and figure out if this is a pause [in interest rate-tightening] from the Fed or are they done raising rates."
Reports on factory activity from the Philadelphia Federal Reserve, and figures on industrial production and housing starts could play key roles in determining the direction of stocks, he said.
"Measures of consumer activity are going to become more important as investors worry about has the Fed not just cooled the housing market but if it has kind of thrown it over the cliff, and what will that do to consumer confidence and consumer spending."
Wal-Mart Stores Inc. (WMT : 44.69, -0.20, -0.4%) and Home Depot Inc. (HD : 33.27, -0.34, -1.0%) should offer insight on how the consumer is reacting to higher energy prices, a slowing housing market and an interest rate-sensitive environment. The nation's two largest retailers will unveil their second-quarter reports this week.
"Anything above expectations is going to be viewed as a negative and is going to be reflected immediately in terms of fed funds futures," said Fitzpatrick.
That was the case on Friday after the Commerce Department said U.S. retail sales surged 1.4% in July, the biggest gain in six months. Sales were higher for automobiles, gasoline, electronics, clothing and durable goods. Excluding both autos and gas, retail sales were up 0.7%, the highest increase since January.
"The reports of the consumers' demise appear to be premature," said Joel Naroff, president of Naroff Economics. See more on July retail sales.
Retail sales represent about a third of final U.S. demand. But the good news that people haven't been keeping their wallets closed failed to move stocks higher Friday because it reignited speculation that the Fed will raise rates once again, perhaps as soon as its next rate policy meeting scheduled on Sept. 20. The report was also offset by an unexpectedly large rise in business inventories because of slower sales.
The odds of an interest rate hike in September increased slightly after the data. The September contract implied a 36% chance that the Federal Reserve will raise its target on overnight rates to 5.5% from 5.25%, compared with a 24% chance late Thursday.
The constant stream of contradictory data has left stocks looking vulnerable, said Park. "A lot of people have gotten whipped around this summer and the sentiment out there seems to be, 'Let's just put this one behind us and start looking towards fall.'"
Friday's wrap-up Friday ended on a down note for the benchmark indexes as market strategists combed through the retail sales and business inventories numbers.
The Dow Jones Industrial Average ($INDU : 11,088.03, -36.34, -0.3%) closed down 36 points to 11,088. The S&P 500 ($SPX : 1,266.74, -5.07, -0.4%) fell 5.07 points to 1,266.74 and Nasdaq Composite ($COMPQ : 2,057.71, -14.03, -0.7%) closed with a loss of 14 points, to 2,057.71.
The decision on Tuesday by the Fed to hold interest rates steady at 5.25% wasn't enough to lift equities higher for the week. The Dow lost 1.4%; the S&P 500 fell 1%; and the Nasdaq Composite dropped 1.3%. Treasury prices declined Friday, sending yields higher. The benchmark 10-year Treasury note closed with a yield of 4.958%, up from 4.92% on Thursday.
Crude for September delivery ended higher on Friday, up 35 cents to $74.35 a barrel on the New York Mercantile Exchange. The contract fell just 0.5% in a volatile week which included a disruption of crude deliveries from Alaska through a BP Plc (BP : 69.32, -0.44, -0.6%) pipeline and a foiled terror plot targeting U.S-bound planes.
Gold futures fell $1.60 to $644.40 an ounce on Friday and were down 1.8% on the week.
The U.S. dollar rose to two-week highs versus the euro and yen Friday. For the week, the dollar rose 1.2% versus the euro and 1.6% against the yen. See Currencies.
Inflation data to come; second-quarter earnings growth now 16.3% The Labor Department will release its producer price report for July on Tuesday, and economists surveyed by MarketWatch expect an increase of 0.3% in the index, down from a 0.5% increase in June. Excluding volatile food and energy prices, the core PPI is seen remaining unchanged at 0.2%.
Economists expect Wednesday's consumer price index for July to have increased by 0.4% from 0.2% in June. The core PPI is seen unchanged at 0.3%. Housing starts for July is expected to show continued cooling of the housing market. The housing data will be released at the same time as the CPI on Wednesday.
The 11% of companies on the S&P 500 index that haven't released results will do over the next five weeks, said Thomson Financial. The growth rate for the second-quarter is now 16.3%. That's above the projection of 10.9% when the quarter started. In addition, 69% of companies have posted earnings that beat Wall Street expectations, compared with 60% since 1994 in a typical quarter, according to Thomson's research group. The percentage of companies that have reported earnings in line with estimates is 12%, below the average of 20%; and 19% have missed projections, slightly less than the average of 20%.
Results from three Dow components - Wal-Mart, Home Depot and Hewlett-Packard Co. - (HPQ : 33.05, +0.04, +0.1%) are slated for next week. Hewlett-Packard Co.'s fiscal third-quarter results are due Wednesday. During the period, the company announced its biggest acquisition since the Compaq Computer deal. Computer maker Dell Inc. (DELL : 21.07, +0.08, +0.4%) will deliver its second-quarter results on Wednesday.
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Post by Conrad Alvin Lim on Aug 23, 2006 6:56:36 GMT -4
U.S. stock futures ease on microchip pressure Gateway may rise after ex-executive offers to buy retail operations By Steve Goldstein, MarketWatch Last Update: 5:48 AM ET Aug 23, 2006
LONDON (MarketWatch) -- U.S. stock futures on Wednesday were pointing to a slight decline with National Semiconductor's lowered sales guidance casting a cloud on some microchip makers, though Gateway Inc. could be in for further gains after the former owner of one of its divisions said he'd contemplate buying the computer maker.
S&P 500 futures fell 2.3 points at 1,299.70 and Nasdaq 100 futures slipped 4 points at 1,562.00. Dow industrial futures declined 17 points.
On Tuesday, the Dow industrials slipped 5 points while the Nasdaq Composite and S&P 500 indexes posted slight advances. A Federal Reserve official warned the central bank may need to raise interest rates again to combat inflation.
Rate direction will be pondered again once existing home sales data is released.
Already down 9% in the past year, sales of existing homes are expected to decline further in July, economists say. Economists surveyed by MarketWatch are forecasting a 0.9% drop to a seasonally adjusted annual rate of 6.56 million in July.
The National Association of Realtors will release July sales data at 10 a.m. The dollar saw minor losses against the euro and the Japanese yen ahead of those figures.
Shortly after the existing home sales figures, data on weekly inventory supplies are due, with crude-oil and gasoline inventories expected to drop.
October-dated crude oil futures slipped 43 cents to $72.67 a barrel.
Gateway (GTW : 1.72, +0.19, +12.4% ) will be in renewed focus after the computer and technology producer and retailer said it received an unsolicited inquiry to acquire its retail operations. In a separate statement, Lap Shun (John) Hui, owner of Joui International and a former owner of e-Machines, said he offered to buy the retail operations for $450 million. Hui said he also would consider buying all shares of Gateway.
Gateway rallied as much as 12% on Tuesday after a hedge fund disclosed it's bought 10.2% of the company.
National Semiconductor (NSM : 22.58, -0.13, -0.6% ) dropped 5% in Frankfurt trading after it lowered its quarterly sales target due to reduced shipments of chips used in mobile phones.
Texas Instruments (TXN : 32.49, -0.22, -0.7% ) shares also edged lower in Frankfurt.
STMicroelectronics (STM : 16.08, -0.17, -1.0% ) , which also makes chips for mobile phones, dropped over 1% in Paris.
Nokia (NOK : 21.41, +0.09, +0.4% ) , the world's top mobile phone maker, dropped 1.6% in Helsinki.
Medtronic (MDT : 45.36, -0.21, -0.5% ) rose in German trading after reporting an 87% quarterly profit rise, though it lowered its annual profit goal. Books retailer Borders Group (BGP : 20.26, -0.04, -0.2% ) could be pressured after reporting a second-quarter loss and warning that third and fourth quarters would come up short of Wall Street's expectations.
KB Home (KBH : 43.19, +0.17, +0.4% ) could be in focus after the company's spokeswoman told The Wall Street Journal the firm is reviewing the stock option grants given to its chief executive.
Overseas, BHP Billiton (BHP : 43.46, -0.26, -0.6% ) met expectations by reporting a 63% rise in annual profits and a $3 billion stock buyback. Shares declined by nearly 3% in London trade on the in-line announcement from the world's largest miner.
Nestle, the Swiss food conglomerate, reported a better-than-forecast 11% profit rise, helped by its best sales performance in Western Europe in four years and by instant coffee sales.
International stock markets were little moved. Japan's Nikkei 225 ended 0.1% lower, and the U.K. FTSE 100 slipped 0.2% in late morning trading.
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Post by Conrad Alvin Lim on Aug 27, 2006 20:55:20 GMT -4
Data deluge coming on Ben Bernanke Day Payrolls, core inflation and FOMC minutes cap a very busy week By Rex Nutting, MarketWatch Last Update: 6:01 AM ET Aug 27, 2006
WASHINGTON (MarketWatch) -- Friday will be Ben Bernanke Day in the Federal Reserve chairman's hometown of Dillon, S.C.
But on Wall Street, it'll be Economic Indicator Deluge Day, with no less than six economic news releases, including the August nonfarm payrolls report and the August manufacturing survey from the Institute for Supply Management.
It'll be one of the busiest weeks for economic news of the whole year, including the release of the minutes of the last Fed meeting, revisions to second-quarter gross domestic product, the latest inflation numbers, July spending figures, August consumer sentiment surveys, August auto sales and a look ahead at August's home sales.
It's a good thing the Bond Market Association is giving traders a half day on Friday ahead of the Labor Day weekend; they'll be exhausted, especially if Ernesto strengthens in earnest.
"At the end of the week, we expect that the deluge of data will do little to change anybody's mind" about inflation, growth and the Federal Open Market Committee's next move, said Stu Hoffman, chief economist for PNC.
As of this writing, most economists believe the Fed will hold rates steady at the Sept. 20 meeting, but then raise rates once more this year. The fed funds futures market, however, is pricing in no further upward moves and looks for the first cut in mid-2007.
The crucial nuggets for Fed watchers will be the August payrolls report (including the wage figures), the FOMC minutes and the core consumer inflation figures for July.
Payrolls The payroll figures will gain the most attention. Economists think job growth accelerated slightly to 130,000 or so in August after four months of tepid growth averaging 112,000. The unemployment rate likely ticked down to 4.7% after a surprising jump to 4.8% in July. The figures will be released at 8:30 a.m. Eastern on Friday.
Payroll growth has been below expectations for four months in a row and in nine of the past 12 months, notes Credit Suisse economist Jay Feldman, who expects a "soft" 100,000 in August.
The housing slowdown is being felt in the labor market, Feldman said. Housing-related jobs have slowed from a trend of about 25,000 per month to declines in three of the past four months, he said. "We expect this weakness will persist or possibly worsen."
Other economists think hiring was a bit stronger.
"Payroll employment growth probably quickened in August," said Brian Jones, an economist for Citigroup Global Markets, who's predicting a gain of 160,000. The hiring occurred in the manufacturing, transportation, financial, health and business services sectors, he said.
Hourly wages probably rose 0.3% in August, after 0.4% gains in June and July, economists say. That would push the year-over-year gain to 4%, "which would likely prompt additional concerns regarding emerging wage pressures," said Drew Matus, an economist for Lehman Bros. A 4% gain would be the largest since mid-2001, but still shy of the 4.1% increase in consumer prices through July.
Core inflation The big inflation news of the week will come Thursday morning at 8:30 in the personal income and spending report, which includes the core personal consumption expenditure price index. That's the Fed's preferred gauge of consumer inflation. Economists are forecasting a fourth-straight 0.2% increase in core inflation in July.
Even trend-like growth of 0.2% would push the year-over-year gain to 2.5%, the most since January 1995. The Fed would like to keep core inflation between 1% and 2%.
A significant number of economists are predicting a 0.1% gain in core prices, given the large drop in apparel prices in the consumer price index.
FOMC minutes How markets react to the July inflation numbers might depend on what's in the FOMC minutes from the Aug. 8 meeting, where Richmond Fed President Jeffrey Lacker dissented from the decision to hold rates steady for the first time in more than two years.
The highly sanitized summary of the meeting will be released on Tuesday at 2 p.m. Eastern.
Since the Aug. 8 meeting, much of the economic data have been weak or have shown benign inflation, which has led the market to expect no further rate hikes. The minutes could reveal more internal dissension about the Fed's decision to pause and more ongoing concern about inflationary pressures, mirroring comments made by Fed Presidents Jack Guynn and Michael Moskow in the last week.
A hawkish tone to the minutes could "prompt markets to rethink the path of Fed policy," Lehman's Matus said. Lehman expects two more rate hikes this year.
On the other hand, market may be "unperturbed even by further signs of dissension" because the benign data have supported the Fed's decision to wait, said Mickey Levy, chief economist for Bank of America. Levy is predicting two more rate hikes as well.
The income and spending report on Wednesday should also show a healthy rise in spending as the third quarter began. Economists are forecasting a 0.7% rise in nominal spending, the biggest since January. The strong consumer spending in July could go ease worries that the housing slowdown and high energy costs are flattening the consumer.
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Post by Conrad Alvin Lim on Sept 3, 2006 9:10:52 GMT -4
Shortened week holds chance for more gains By Carla Mozee, MarketWatch Last Update: 6:11 AM ET Sep 2, 2006
SAN FRANCISCO (MarketWatch) - U.S. stocks are expected to climb again next week as investors return from their summer vacations to a holiday-shortened trading week that will feature a light lineup of economic data, strategists said.
"Usually the market does well the week before the Labor Day holiday and the Tuesday after Labor Day," said Al Goldman, chief market strategist at AG Edwards. "The trend in place is modestly higher."
Robert Pavlik, portfolio manager at Oaktree Asset Management, said because the market has been driven forward lately by consumer staples including healthcare and utilities stocks, "we might get a small rally in some of the stocks that have lagged behind once Wall Street comes back to work next week and the week after."
Financial markets will be closed on Monday for the Labor Day holiday.
Pavlik said he has focused his efforts on consumer staples and that there are companies in the sector he's still interested in owning "if the stock price moves down some," including CVS Corp. (CVS : 33.96, +0.41, +1.2% ) , Procter & Gamble Co. (PG : 61.91, +0.01, +0.0% ) , and Walgreen Co. (WAG : 49.85, +0.39, +0.8% ) .
Investors and the data-dependent Federal Reserve will have a few reports to study, including wholesale inventories, an update on activity in the services sector by the Institute for Supply Management, and a revision of productivity in the second quarter.
The Fed will also release its own set of numbers via its Beige Book survey of current economic conditions around the country.
Pavlik said equity traders will watch the Beige Book for signs of growth and "to see if the economy is still on track to come into a soft landing."
The condition of the economy after 17 consecutive rate increases as well as the level of inflation is "the major concern on most everyone's mind," said Pavlik, who noted that the coming week's report won't add much more information to the inflation picture.
"Productivity revised for the second quarter is after the fact. We know where [gross domestic product] came in for the second quarter."
Real gross domestic product for the second quarter was revised to 2.9% annualized from an earlier estimate of 2.5%, the Commerce Department said earlier this week. The economy grew 5.6% in the first quarter.
If stocks do move higher next week, they had a running start on Friday after the August employment report showed wage inflation was milder than expected last month. Wage inflation is known to be a factor in the central bank's list of considerations in setting monetary policy.
In addition, job growth continued at a steady but lackluster pace with 128,000 jobs created last month. The figure was in line with expectations of analysts polled by MarketWatch.
On Friday, the Dow Jones Industrial Average ($INDU : 11,464.15, +83.00, +0.7% ) and the S&P 500 Index ($SPX :1,311.01, +7.19, +0.6% ) reached their highest levels in three and half months after the release of the jobs data, while the Nasdaq Composite Index ($COMPQ : 2,193.16, +9.41, +0.4% ) ended at its best level since June.
The jobs report may help keep rates unchanged at 5.25% at the Fed's next meeting on Sept. 20. Also, other data released on Friday showed that factory activity was healthy and consumers are optimistic.
While that may bode well for stocks in the short term, Goldman said as long it's unclear where the economy is headed in 2007 "the market is going to churn around, be rather volatile and not start any dramatic moves up or down."
Goldman also said as the month moves along equities are vulnerable to investors looking to take money off of the table after one of the best August performances in many years.
For the month, the Dow rose 1.7%, the S&P 500 gained 2.1% and the Nasdaq Composite finished 4.4% higher to break a four-month losing streak.
"The market handled a lot of political and economic question marks in a very positive fashion. After a strong August, we should be prepared to pause and refresh in September."
Friday's market Ahead of the long weekend, the Dow closed up 83 points at 11,464.15. The S&P 500 rose 7.19 points to 1,311.01, putting both at their highest closing levels since May 11. The Nasdaq gained 9.41 points to 2,193.16, its best finish since June 2.
For the week, the Nasdaq Composite rose 2.5%, the S&P 500 gained 1.2% and the Dow advanced 1.6%.
Treasury prices reversed earlier losses to close higher, pushing the yield on the benchmark 10-year note a new five-month low of 4.725%.
"The 10-year Treasury is almost acting like the Fed's next move will be cutting interest rates with the way it's been declining," said Pavlik.
In commodities action, natural-gas futures closed at their lowest level since January 2005 to mark a loss of 20% for the week, as traders worried about hefty U.S. supplies and expectations for a near-term decline in demand for the fuel.
Meanwhile, crude-oil futures closed at a five-month low, with rising U.S. petroleum inventories outweighing traders' uncertainty surrounding what may be next in the standoff between Iran and Western nations over Tehran's nuclear activities.
"Over the weekend and into next we ought to have some new developments out of Iran," said Goldman. "Right now, Iran is thumbing their nose at the U.N. But what the United States does is another question."
Gold futures also fell on Friday but gained nearly $2-an-ounce for the week.
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