Archive for April, 2006

  • Bed Bath & Beyond Earns 67 Cents a Share
    , April 5th, 2006 at 4:21 pm

    Hey Linens ‘n Things, STFU!

    Home goods retailer Bed Bath & Beyond Inc. on Wednesday reported a 9 percent rise in quarterly earnings, beating both its own and Wall Street’s expectations, due in part to strong sales at established stores.
    The company’s stock rose more than 5 percent in after-hours trade following the announcement.
    Net income for the fourth quarter ended February 25 rose to $197.9 million, or 67 cents per share, from $181 million, or 59 cents per share, a year ago.
    Wall Street analysts had expected the company to report earnings of between 64 cents and 67 cents per share with an average view of 65 cents per share, according to Reuters Estimates.
    Bed Bath & Beyond in December forecast fourth-quarter earnings of 64 cents a share.
    Sales for the quarter rose 14.8 percent to $1.69 billion. Analysts had been expecting sales of $1.637 billion, according to Reuters Estimates. Sales at stores open at least a year, a key retail measure known as same-store sales, rose 6.3 percent.
    Bed Bath & Beyond shares were up $1.93, or over 5 percent, at $40.25 on the Inet electronic brokerage. The stock closed at $38.32 on Nasdaq.

    Up to $40.37 after-hours.

  • Got My Mind on My Lawyer’s Money, My Money on My Lawyer’s Mind
    , April 5th, 2006 at 3:18 pm

    nice braclet.jpg
    Suge Knight files for Chapter 11.
    On the bright side, personal bankruptcy filings are at a 20-year low.

    The quarter’s filings fell 73 percent to 102,949 compared with 381,743 in the year-ago period, according to data released Tuesday by Lundquist Consulting Inc., a financial research outfit based in Burlingame, Calif.
    That means, on an annualized basis, one in every 261 households filed bankruptcy in the quarter, as opposed to one in every 73 households a year ago.

    In other bankruptcy news, Bill Ford rules it out.

    Ford Motor Co. Chairman and CEO Bill Ford said Wednesday that bankruptcy isn’t an option for the nation’s No. 2 automaker, which is struggling to return its North American division to profitability.
    Ford said the company has strong liquidity — with about $20 billion in cash — and that regions outside North America are performing well. Ford earned $2 billion last year, down 42 percent from a year earlier but still its third consecutive yearly profit.
    Nonetheless, Ford’s North American division lost $1.6 billion last year, and the automaker’s debt rating has been slashed to below investment grade. Ford also is steadily losing U.S. market share. The company now has around 18 percent of the U.S. market, down from 26 percent a decade ago.

    And finally, GM’s Wagoner: Now is not time to panic.

    When asked whether anybody had been disciplined for the new accounting problems, he said, “I’ve never been a big believer in public executions. Having said that, we have a pretty proactive woodshed.”
    However, no executives have lost their jobs, GM spokesman Jerry Dubrowski said.

  • Sorry Florida….
    , April 5th, 2006 at 3:03 pm

    Your homes are too Florida-y. Atlantic Preferred Insurance will cancel coverage for 140,000 homeowners this summer.
    I blame global warming.

  • Another Good Day
    , April 5th, 2006 at 2:12 pm

    Today is shaping up to be another good day. If the S&P 500 (^SPX) holds up, we’ll finish at our highest close since May 21, 2001. The Nasdaq Composite (^IXIC) will close at its highest level in over five years. Of course, the index is less well less than of peak its value of six years ago. Thanks to a big small-cap rally this decade, the Wilshire 5000 Total Return Index (^DWCT) is now only about 2% from a new all-time high.
    The S&P 400 Mid-Cap Index (^MID) made a new all-time high today, and the S&P 600 Small-Cap Index and Russell 2000 (^RUT) are just short of new all-time highs.
    From our Buy List, Brown & Brown (BRO), Expeditors (EXPD) and Danaher (DHR) are all at new highs.
    Over the last 10 weeks, the yield curve has started to widen. In late January, the five-year Treasury was yielding only two basis points more than the 90-day T-Bill Today, it’s about 27 points higher.
    Two years ago, the 10-year Treasury was over 100 basis points higher than the five-year note. Today, they’re virtually tied. In fact, for a few days in February and March, the five-year yield was higher.
    The change is that the long-end of the yield curve has been rising faster than the Fed has been lifting the short end. Perhaps the economy is stronger than people think. The Cyclical Index (^CYC) has roughly doubled the S&P 500 over the last six months.

  • The Snarkiness of Crowds
    , April 5th, 2006 at 12:44 pm

    Chevrolet thought it had a brilliant marketing idea, or at least, it was going to borrow someone else’s brilliant marketing idea. Just turn over the marketing of the Chevy Tahoe to the public.
    Hey, if viral marketing worked for other companies, why not a powerful multinational corporation trying to sell an SUV?

    In theory, the company was hoping that visitors to its Web site would e-mail their own videos around the Web, generating interest for the Tahoe through what is known as viral marketing. By the measure of Chevrolet Tahoe videos circulating the blogosphere and the video-hosting Web sites like YouTube, that goal was achieved. But the videos that were circulated most widely like the commercial that attacked the S.U.V. for its gas mileage, may not be what Chevrolet had in mind.
    Nor was the ad using a sweeping view of the Tahoe driving through a desert. “Our planet’s oil is almost gone,” it said. “You don’t need G.P.S. to see where this road leads.”
    Another commercial asked: “Like this snowy wilderness? Better get your fill of it now. Then say hello to global warming.”

    NPR has more (audio link).

  • Bed Bath & Beyond Earnings Preview
    , April 5th, 2006 at 10:08 am

    After the close today, Bed Bath and Beyond (BBBY) will report its fourth quarter earnings. Here’s a preview from AP:

    EXPECTATIONS: The company, which, as of the end of November 2005, operated 793 superstores selling better-quality home merchandise, forecast in December fourth-quarter earnings of 64 cents a share, and sales in stores open at least one year — a key performance gauge called same-store sales — to rise between 3 percent to 5 percent.
    Wall Street expects earnings of 65 cents per share, the mean estimate of 27 analysts surveyed by Thomson Financial, on $1.64 billion in sales.
    ANALYST TAKE: “While Bed Bath & Beyond remains a best-in-class operator with strong cash flow generation, its slowing growth across a tougher home spending backdrop with increased competition makes for a range-bound stock in the near term,” Goldman Sachs analyst Adrianne Shapira wrote in a March 13 client note.
    The investment bank also lowered its fourth-quarter estimate to 65 cents from 66 cents per share, and scaled down its same-store sales estimate for the quarter to 3 percent from 3.5 percent.
    QUARTER DEVELOPMENTS: Bed Bath & Beyond in January approved a $200 million increase to its previously announced $400 million stock buyback program. The company said it didn’t expect the new $600 million authorization would have a material impact on fourth-quarter earnings.
    The retailer in January also named its chief merchant, Arthur Stark, as its new president, and named Eugene A. Castagna, a vice president of finance, as chief financial officer and treasurer. Castagna succeeded Ronald Curwin, who was named senior vice president of investor relations, a new post.
    COMPETITORS: Bed Bath & Beyond competes with other home-focused retailers like Target Corp., Linens N Things, and Pier 1 Imports Inc.
    Target in mid-February reported its fourth-quarter earnings rose 14 percent, above analysts’ estimates, and forecast earnings per share growth in the mid-teens range in 2006. Pier 1, which is trying to engineer a turnaround amid several months of flagging sales, in March said it would sell its British subsidiary to Iceland-based Palli Ltd. for about $15 million.
    Linens N Things agreed to be taken private in a $1.3 billion buyout by an investment group in January.
    STOCK PERFORMANCE: Bed Bath & Beyond shares have gained about 6 percent so far this year and touched a 52-week low of $35.85 on Jan. 6. It is down 19 percent from a year-high of $46.99 it hit in July 2005.

  • The Morning Market
    , April 5th, 2006 at 9:48 am

    It’s a quiet morning so far. The major indexes are up slightly. On CNBC, David Faber followed-up on yesterday’s news that Biomet (BMET) had hired Morgan Stanley. Faber said that the stock’s move was perhaps a bit overdone. Many firms are holding to their price targets. The last big deal in the sector was Zimmer’s deal for Centerpulse, which went for 15 times “enterprise value.” Just because the Biomet hired Morgan doesn’t guarantee that it will be sold. Perhaps the CEO simply wants to have the company looked over thoroughly.
    In other news, Apple (AAPL) released a patch that let its Intel-based Macs run Windows. The new software is called “Boot Camp.” For the record, my suggestion was “Band Camp.” Samsung said that it will sell the thinnest cellphone in the U.S., just 9.8 millimeters wide.
    Autodesk (ADSK) backed its 2007 view of $1.12 to $1.17 a share. Also, St. Jude Medical (STJ) cut its first-quarter estimate. The company says that Guidant (GDT) is to blame. Monsanto (MON) reported record earnings of $1.60 a share, nine cents more than estimates.
    Commodities continue to soar. Zinc and Copper are at all-time highs. In China, the yuan made another post-revaluation high.
    And lastly, Katie Couric is leaving the “Today” show to take over the CBS evening news.

  • The Wacky FOMC
    , April 4th, 2006 at 6:10 pm

    Ever wonder what it’s like at a Fed policy meeting? Me neither.
    Well, we’re in luck. Today, the Fed released the transcripts of its meetings from 2000. I never knew these economists were such cut-ups. I’d like to share with you some my favorite moments. (These are all actual quotes taken from the transcripts.)
    #11

    MR. PRELL. It may just be that we are wild and crazy guys here.
    MS. MINEHAN. I love it when you say that.

    #10: After being elected unanimously chairman of the FOMC:

    CHAIRMAN GREENSPAN. I always appreciate the democratic process.

    #9

    MR. KOHN. Actually, I think it could occur if we put the third derivative negative. That is, productivity could still be accelerating but if it were accelerating more slowly over time, the same mechanism would work slowly.
    CHAIRMAN GREENSPAN. I grant you your algebra.

    #8

    CHAIRMAN GREENSPAN. I would not want to be in the position of adopting a hard asymmetric statement of the balance of risks toward rising inflation and then see the economy weaken from under us. That would make us look really unimaginative.

    #7

    MR. MOSKOW. I would like to speak first because those of us in Chicago know how to handle recounts!
    CHAIRMAN GREENSPAN. I’ve heard that if you rig the numbers in the beginning, you won’t have to do a recount.

    #6

    CHAIRMAN GREENSPAN. Let me indicate that the next meeting is going to be a rather long one because our agenda is quite lengthy. We will be meeting at 9 a.m. on both Tuesday and Wednesday, which is longer than usual, so I’ll give you all a heads up. Let’s go to lunch.
    MR. KOHN. The announcement?
    CHAIRMAN GREENSPAN. Oh, I’m sorry. That tells you how hungry I am.

    #5
    From the meeting on March 21, 2000, right before the Nasdaq went kablooey.

    MR. BROADDUS…It’s almost as though we have too much credibility, in a sense.

    #4

    CHAIRMAN GREENSPAN. Governor Ferguson.
    MR. FERGUSON. I support both halves of your recommendation. And since we are confessing, I will confess that my heart is pure.
    MR. GRAMLICH. You’re obviously not a Catholic.
    MR. FERGUSON. That is also true. I do think a 25 basis point move is appropriate today. As I said earlier, a 50 basis point move may be appropriate later.
    VICE CHAIRMAN MCDONOUGH. You know what happens to those whose hearts are pure? Their strength is as the strength of ten.
    MR. FERGUSON. He has to turn his collar around the other way.

    #3:

    MR. POOLE…I’m reminded that a couple of weeks ago I had the very pleasant experience of touring the Boeing F-18 assembly plant and had about thirty minutes in the simulator for an F-18. I must say I’m a lot happier sitting around this table than I am in an F-18! But in the process of trying to land that plane in the simulator of the aircraft carrier, I ended up producing what the instructor called “pilot-induced oscillation.” That means finding oneself wobbling first one way and then the other way. And I think we have some of the same concerns about monetary policy. We don’t want to overreact–
    CHAIRMAN GREENSPAN. Let me ask–did you land or didn’t you land?
    MR. POOLE. Well, I did not end up in the drink! I had some helping hands, although on one occasion the instructor forgot to put the hook down, so there was no catch on the deck, and we pushed the throttle forward and took off again. What it amounts to is a $20 million video game and it’s a lot of fun.

    #2

    MR. BROADDUS. I would recommend and would hope that the press statement that accompanies our announcement includes language making it clear that we are not yet panicking–that it’s not a foregone conclusion that we’re necessarily going to ease further. I guess that comment was predictable.
    MS. MINEHAN. “We are not yet panicking.”
    VICE CHAIRMAN MCDONOUGH. I don’t think we will make you our press secretary.

    #1

    MS. MINEHAN. What do they say about consistency being the hobgoblin of something?

  • The Market Today
    , April 4th, 2006 at 5:08 pm

    Today was the day for Biomet (BMET). The Morgan Stanley news caused the stock to shoot up 9.7% today. (Check out this chart for the day.) Over the last year, the stock had traded in a fairly narrow range. This afternoon, Biomet finally made a new 52-week high.
    Today was also a good day for many financial stocks. The Federal Reserve Bank of New York finally took Citigroup (C) off double-secret probation. The company had not been allowed to make any acquisitions until it got its financial house in order. Not being a fan of acquisitions, I wouldn’t mind seeing this applied to many other companies.
    Now that the ban has been lifted, I don’t expect Citi to go on a massive buying spree. Chuck Prince, the new CEO, is far more conservative than Sandy Weill. Bear in mind, Citigroup is a gigantic company with assets of $1.5 trillion, so it’s still going to be a major dealmaker. To see the power and influence of Citigroup, today’s news lifted the entire financial sector. The stock currently yields about 4.1%. Interestingly, many of the international financial stocks were particularly strong.
    The transports also did well today, as the Dow Transportation Average (^DJT) and Expeditors (EXPD) both hit new highs. Hey, someone has to move all those expensive commodities around.
    We also had good news for AFLAC (AFL) which was upgraded today. Bed Bath & Beyond (BBBY) will report its earnings tomorrow. The current estimate is for 65 cents a share. In December, the company said it was going to 64 cents a share for this quarter. BBBY said it’s expecting to make $2.08 to $2.10 a share this year.
    The 30-year Treasury yield is now within striking distance of 5%. Today, the S&P 500 was up 0.63%, and the Buy List was up 0.97%.

  • The Fortune 500
    , April 4th, 2006 at 2:51 pm

    The new Fortune 500 list is out. Congratulations to Fiserv (FISV) which arrived at #488. Google (GOOG) is #353.
    Here’s the full list.