Daily Newsletter — 4/11/2008
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Market Summary
Market News
Market Analysis
Earnings
Upgrades/Downgrades




Market Summary
Stocks retreated on Friday following a disappointing first-quarter report from General Electric Co. The major indexes fell more than 1.5 percent, with the Dow Jones industrials giving up more than 250 points. GE (GE: Charts, News, Offers), often seen as a proxy for the economy, reported weaker-than-expected first quarter sales and earnings. Shares fell nearly 13% as a result of the news. The market was also hit with some disappointing earnings news from Genentech (DNA: Charts, News, Offers). The company reported that one of its key products lowered sales in the first quarter. The preliminary University of Michigan index of consumer sentiment fell to 63.2 for April, the worst result since March 1982. In corporate news, Frontier Airlines Holdings (FRNT: Charts, News, Offers) filed for Chapter 11 bankruptcy protection. Shares fell almost 66%. Advanced Micro Devices (AMD: Charts, News, Offers) announced that its chief technology officer Phil Hester is resigning. Washington Mutual (WM: Charts, News, Offers) shares lost 3.5% after a Goldman Sachs analyst said the mortgage lender could see an additional $14 billion in loan losses this year. Among commodities, oil rose 3 cents to settle at $110.14 a barrel. Gold futures fell $4.80 to settle at $927 an ounce. More Markets Data

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Market News
Normally reliable General Electric Co. (GE: Charts, News, Offers) shocked investors with a nearly 6 percent decline in its first-quarter profit and slashed its earnings forecast for the full year. That sent its own shares down 10 percent and the broader market sharply lower on renewed worries about the weakening economy. GE blamed disruptions in its financial business late in the quarter for its inability to advise Wall Street ahead of time about the deterioration in its earnings. But analysts unaccustomed to being surprised by the industrial, financial and media conglomerate were rattled by the magnitude and breadth of the decline. (Source: Yahoo! Finance) Full Story
Frontier Airlines (FRNT: Charts, News, Offers) sought bankruptcy protection Friday, the fourth carrier to do so over the past several weeks as exorbitant fuel prices eat into earnings and a weak U.S. economy keeps more people grounded. Frontier says it will continue operations as it reorganizes. Frontier Airlines Holdings Inc., the low-fare carrier’s parent, said it was forced into bankruptcy after its principal credit card processor announced it would begin withholding a greater share of proceeds from ticket sales. Denver-_base_d Frontier said it will continue to operate a full schedule of flights, pay suppliers and employees as it reorganizes. The filing in U.S. Bankruptcy Court in New York prevents the credit card processor from increasing its “holdback,” Frontier CEO Sean Menke said. (Source: MSNBC) Full Story
Home retailer Linens 'n Things is expected to file for bankruptcy protection by early next week, according to reports, a warning sign for retailers already struggling in the economic downturn. The Wall Street Journal reported Friday that the Clifton, N.J., retailer was expected to file for Chapter 11 bankruptcy-court protection by Tuesday, quoting several people close to the matter. Formerly a publicly-traded company, Linens 'n Things was acquired by private-equity group Apollo Management in Feb. 2006 for $1.3 billion. While not a complete shock to investors, the move would mark the first major retailer to seek protection. Signs of trouble for home-furnishings retailers popped up recently when competitor Bed Bath & Beyond (BBBY: Charts, News, Offers) offered a weak outlook for its fiscal first quarter. Shares of Bed Bath & Beyond were off 1.4% in early trading. (Source: TheStreet) Full Story

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Market Analysis
They're talking more about Chapter 9 municipal bankruptcy in Jefferson County, Alabama, the home of the largest city in the state, Birmingham. Who can blame them? The county is now being whipsawed by an ill-thought-out debt policy and the collapse of the bond insurers. Credit-rating downgrades all around have triggered a series of events that are no longer in the county's control, leaving it at the mercy of securities firms that have little room for maneuver themselves. This has produced a steady series of stories in my new favorite newspaper, the Birmingham News, all about how the county is preparing to declare bankruptcy any day. Perhaps the best article ran on Sunday, April 6. It began: "Jefferson County officials have laid the groundwork for the largest municipal bankruptcy in the nation's history while publicly saying they have no imminent plans for a filing.'' (Source: Bloomberg) Full Story
Big sales of stock by hard-hit banks have been greeted gladly by investors, but we are far too early in the cycle of writedowns and cash calls to think this represents a bottom. Since the Federal Reserve orchestrated the takeover of Bear Stearns by JP Morgan in March, investors have taken a new tone towards financial shares, as some reason that strong action from a creative authority with the power to print money represents the ultimate insurance policy. Washington Mutual Inc (WM: Charts, News, Offers), for example, got $7 billion in new capital this week from private equity firm TPG Inc and others, while at the same time doubling to $3.5 billion its allowance for loan losses this quarter and slashing its dividend to a nominal penny a share. (Source: Reuters) Full Story
Alan Greenspan was once known for his inscrutable pronouncements, but his penchant for self-justification is now plain for all to see. Bristling at charges he fueled the housing bubble by being loose with interest rates and lax with bank regulation, Greenspan has launched a media crusade of sorts. This week alone he has penned an opinion piece in the Financial Times, participated in a front-page profile in The Wall Street Journal and conducted a live interview with CNBC. Greenspan once was the master of obfuscatory "Greenspeak," the man who in 1995 counseled senators that "if I say something which you understand fully ... I probably made a mistake." But shorn of that ambiguity, his message - that the Fed's role in fostering an unprecedented run-up of house prices has been vastly overstated, and that regulators aren't up to the task of preventing financial crises anyway - sounds almost willfully obtuse. (Source: CNN Money) Full Story
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Market Overview


DJIA
12,325.42


-256.56
S&P
1,332.83


-27.72
NASDAQ
2,290.24


-61.46
10Yr
3.471%


-0.061
More market statistics


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On This Date
April 11, 2001: Motorola posts a net loss of $533 million, its first quarterly loss in 16 years.



Notable Quotable
There are two things you are better off not watching in the making: sausages and econometric estimates. - Edward Leamer




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Previous Newsletters
April 10, 2008
April 9, 2008
April 8, 2008
April 7, 2008
April 4, 2008






Today ;s Reported Earnings

Company (Symbol)
Reported
Expected
Last Year

Fastenal Company (FAST)
$0.46
$0.43
$0.36


General Electric Company (GE)
$0.44
$0.51
$0.44

View more earnings releases by date or by company here



Tomorrow ;s Expected Earnings

Company (Symbol)
Expected
Last Year

Amylin Pharmaceuticals (AMLN)
-$0.48
-$0.38

BlackRock (BLK)
$2.05
$1.59

Eaton (ETN)
$1.66
$1.49

Infosys Technologies (INFY)
$0.54
$0.40

J.B. Hunt Transport Services (JBHT)
$0.30
$0.30

W.W. Grainger (GWW)
$1.36
$1.17

Werner Enterprises (WERN)
$0.14
$0.21



Top Analyst Upgrades

Company
Analyst
Rating

Comerica
S&P Equity Research
Hold

Crown Castle
Soleil Securities Group
Buy

SBA Communications
Soleil Securities Group
Buy

SBA Communications
Soleil Securities
Overweight

EuroBancshares
Keefe Bruyette & Woods
Outperf

Northwest Airlines
Credit Suisse
Outperform

Ross Stores
J.P. Morgan
Overweight

Atlas America
Friedman Billings
Outperform

BP
J.P. Morgan
Overweight

Wright Medical Group
J.P. Morgan
Overweight

Diamond Offshore
J.P. Morgan
Overweight



Top Analyst Downgrades

Company
Analyst
Rating


Cisco Systems
S&P Equity Research
Hold


General Electric
Citi
Hold


CIT Group
S&P Equity Research
Strong Sell


Power-One
S&P Equity Research
Hold


General Electric
Deutsche Bank
Hold


Ixia
Ferris, Baker Watts
Neutral


Seaspan Corp.
Cantor Fitzgerald
Hold


Pinnacle Entertainment
KeyBanc
Underperform


General Electric
Credit Suisse
Neutral


General Electric
Goldman Sachs
Hold


Smith International
Citi
Hold


Ensco International
Citigroup
Hold However


BlackRock, Inc.
Goldman Sachs
Neutral citing valuation


Grupo Aeroportuario del Centro Norte
Morgan Stanley
Underweight


BlackRock
Wachovia
Market Perform


Grupo Aeroportuario del Pacifico
Morgan Stanley
Underweight


Garmin
Oppenheimer
Perform


Red Robin Gourmet Burgers
Wachovia
Market Perform


Genentech
Thomas Weisel
Market-Weight


IDACORP
J.P. Morgan
Underweight


Abercrombie & Fitch
J.P. Morgan
Neutral


Seagate Technology
Goldman Sachs
Neutral


Valspar
J.P. Morgan
Neutral


Cohen & Steers
Merrill Lynch
Sell


TOTAL
J.P. Morgan
Neutral


Zoran
Jefferies & Co
Underperform


Cintas
Lehman Bros.
Equalweight


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