What’s the Story?

by CC January 26, 2012 9:16 am • Commentary


Stock futures continue to trade with modest strength following a couple of doses of data. Durable goods orders for December were up 3.0%, which is greater than the 2.0% increase that had been generally anticipated among economists polled by Briefing.com. Orders for the prior month were revised upward to reflect an increase of 4.3%. Excluding autos, durable goods orders were up 2.1%, which is triple the increase that had been commonly expected. Prior month orders less autos were revised upward to reflect an increase of 0.5%.

Separately, initial jobless claims for the week ended January 21 totaled 377,000, which is in stride with the 375,000 initial claims that had been expected, on average, among economists surveyed by Briefing.com. The latest tally marks a jump of 21,000 from the prior week. Meanwhile, continuing claims climbed to 3.55 million from 3.47 million.


AT&T swung to a fourth-quarter loss on several large charges, though the telecommunications giant’s revenue beat expectations due to a jump in postpaid subscriber contracts. Shares declined 2.2% to $29.55 in recent premarket trading.

Caterpillar’s fourth-quarter earnings surged 60% as the heavy-machinery maker pointed to higher sales volume and an increase in new equipment sales. Shares were recently up 2.8% at $112.13 premarket as the results beat expectations and the company offered upbeat targets for its new fiscal year.

Netflix’s fourth-quarter earnings fell 14% on the online video and DVD-rental company’s costly expansion into new geographies, but subscriber rates were solid on the whole and the company promised to lay off further expansion. Shares gained 19% to $113.10 in recent premarket trading.

SanDisk Corp.’s fourth-quarter profit fell 42% from a year-ago result buoyed by a large tax-provision benefit, while core earnings registered a slight improvement. Shares still dropped 8.3% to $48.00 in recent premarket trading as the flash-memory maker provided soft guidance.

3M Co.’s fourth-quarter earnings rose a better-than-expected 2.8% as the consumer and industrial products maker saw strong growth in its industrial and transportation segment, but its display and graphics unit continued to post weaker sales. Shares were up 1% to $87.36 premarket.

United Continental Holdings Inc. narrowed its fourth-quarter loss on stronger revenue and lighter integration costs to combine its two airlines. Shares gained 3.4% to $21.10 in recent premarket trading.

E*Trade Financial Corp. posted an unexpected fourth-quarter loss as the company boosted a portion of its loan loss allowance by $67 million and recorded write-downs of $15 million related to certain loans in the process of foreclosure. Shares of E*Trade fell 11% to $8.36 in recent premarket trading as results missed analysts’ estimates. Further, Goldman Sachs cut its stock-investment rating on E*Trade to neutral from buy.

Mellanox Technologies Ltd. swung to a fourth-quarter profit as the data-storage company reported record revenue. Shares climbed 15% to $35.76 in premarket trading.

Eaton Corp. fourth-quarter earnings rose 29%, though sales grew slower-than-expected, as the diversified industrial manufacturer also raised it quarterly dividend by 12%. The company forecast current-quarter earnings that were below consensus. Shares fell 5.1% to %47.00 premarket.

Illumina Inc. adopted a shareholder rights plan with a 15% trigger as the U.S. life sciences company tries to ward off a hostile takeover attempt from Swiss drug giant Roche Holding Ltd. Roche’s offer, made Tuesday, values Illumina at $5.7 billion. Roche is offering $44.50 a share in cash for the company. Shares fell 2.1% to $54.02 in recent premarket trading.

Teradyne Inc.’s fourth-quarter earnings more than doubled on a large tax-provision benefit as the maker of chip-testing equipment, but the company’s swung to a loss from continuing operations before taxes. Shares were up 11% at $17.95 premarket on the company’s better-than-expected outlook.

Republic Airways Holdings Inc. raised its fourth-quarter guidance for a closely watched metric in the airline industry and issued an earnings estimate that topped analyst expectations, citing stronger results from its Frontier Airlines unit.

Trius Therapeutics Inc. said it would offer an unspecified number of shares for sale and said the Securities and Exchange Commission is requesting more information about its third-quarter revenue. Shares in the antibacterial-drug company dropped 9.3% at $5.25 on the news in premarket trading.


Netflix Inc. was upgraded to a buy rating by Citigroup Thursday morning following the company’s better-than-expected earnings results for the fourth quarter. Analyst Mark Mahaney also raised his price target on the stock to $130 from $80, citing “key signs” of the company’s stabilization following a rough year in 2011. Those signs include returning growth of streaming subscribers, improved profitability of the streaming business as well as the broker’s own surveys that “established at-least stabilization in Netflix customer satisfaction with no competitive erosion,” Mahaney wrote. Netflix shares were up nearly 20% to $113.80 in pre-market trades on Thursday morning.


Ben S. Bernanke laid the groundwork for a third round of large-scale asset purchases should unemployment remain higher than the Federal Reserve would like while inflation falls below a newly-established target.

The Federal Open Market Committee “recognizes the hardships imposed by high and persistent unemployment in an underperforming economy, and it is prepared to provide further monetary accommodation,” Bernanke said yesterday at a press conference in Washington.

Stocks and Treasuries rallied after policy makers said the benchmark interest rate would stay low until at least late 2014, pushing back a previous date of mid-2013. Fed officials also lowered their projections for economic expansion and inflation for this year and next.