What’s the Story

by CC August 16, 2012 9:04 am • Commentary


The number of Americans filing new claims for jobless benefits edged higher last week although a trend reading fell close to a four-year low, pointing to ongoing healing in the labor market.

Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 366,000, the Labor Department said on Thursday. That was in line with economists’ forecasts in a Reuters poll.

The prior week’s figure was revised up to 364,000 from the previously reported 361,000. A Labor Department official said there was nothing unusual in the state-level data.

Claims data, which swung wildly in July due to shifts in seasonal auto plant shutdowns, are now giving a clearer picture of improvement in the labor market.

The four-week moving average for new claims, a better measure of labor market trends, dropped 5,500 to 363,750. That was the lowest since March – and the second lowest since April 2008.


U.S. home building slipped in July after a strong gain last month while new permits rose to their highest level in four years, a possible sign of confidence for construction going forward.
Housing starts decreased 1.1% last month from June to a seasonally adjusted annual rate of 746,000, the Commerce Department said Thursday. Compared with a year ago, new construction was up 21.5%.
The results were weaker than forecast. Economists surveyed by Dow Jones Newswires expected July housing starts to fall to a seasonally adjusted annual rate of 756,000, a 0.5% decrease from June’s figures.
June starts were revised down slightly to a rate of 754,000, reflecting a 6.8% increase from the prior month.
Construction of single-family homes, which made up more than two-thirds of housing starts last month, fell 6.5% in June to a rate of 502,000 units. Single-family construction was up 17% from last year.
This year’s housing starts, while up from a low of 478,000 in April 2009, are still below the historical average. Builders have started construction on about 1.5 million new homes per year since 1959.
In an indication of future construction, the number of new housing permits rose by 6.8% to an annualized level of 812,000 in July, the highest number since August 2008. That was above economists’ estimates for a rate of 770,000, up 1.3% from June.


Brazil’s president Dilma Rousseff has launched a R$133bn ($65.6bn) stimulus package to spur investment in the country’s creaking infrastructure and shore up ailing investor confidence in the world’s second-largest emerging market economy.

In the first of what are expected to be a series of announcements in the coming weeks, Ms Rousseff said the government would sell concessions in nine highways and 12 railways before moving onto other areas of infrastructure.


GameStop Corp. (GME) posted second-quarter consolidated net incomeattributable to GameStop of $21.0 million or $0.16 per share versus $30.9 million or $0.22 per share a year ago.

On average, 18 analysts polled by Thomson Reuters expected the company to report earnings of $0.15 per share. Analysts’ estimates typically exclude special items.

Net sales declined to $1.55 billion from $1.74 billion in the prior-year quarter. Analysts estimated revenues of $1.61 billion.

Consolidated comparable store sales decreased 9.3% compared to last year. As expected, slow traffic due to a lack of new game releases caused sales of new software and hardware to decline sharply. While outperforming the new category as well as the overall market, pre-owned sales were down 11.2%.

Moving ahead, for the third quarter, GameStop expects comparable store sales to range from -10.0% to -5.0%. Earnings per share are expected to range from $0.28 to $0.36. Analysts expect earnings of $0.41 per share.

Based on the current number of shares outstanding, the company is maintaining its previously announced full-year earnings per share guidance range of $3.10 to $3.30. Full year comparable store sales are now expected to range from -10.0% to -2.0%. Analysts expect earnings of $3.14 per share.

Previously, the company anticipated full-year comparable store sales to range from -5 percent to flat.

GameStop’s board of directors also declared a quarterly cash dividend of $0.25 per common share payable on September 12, 2012 to shareholders of record at the close of business on August 28, 2012.


Sales at Walmart U.S. stores open at least a year, or same-store sales, rose 2.2 percent in the second quarter. The discount retailer has notched four consecutive quarters of same-store sales growth at Walmart U.S., by far its largest unit.

Same-store sales, a key measure, came in just ahead of analysts’ expectations of a 2.1 percent increase, according to Thomson Reuters I/B/E/S. The rise was within the company’s forecast.

Same-store sales rose at its international division and Sam’s Club warehouse chain.

The company forecast a 1 percent to 3 percent rise in U.S. same-store sales in the third quarter, compared with a 1.3 percent increase a year ago.

But Chief Executive Mike Duke said international growth has slowed and that the company is cutting back spending on new stores in some emerging markets to focus on increasing sales at existing stores. The company is facing government probes into allegations of bribery at its Mexican unit.

Wal-Mart earned $1.18 per share in the quarter, up from $1.09 per share a year earlier. Analysts, on average, expected $1.17 per share, according to Thomson Reuters I/B/E/S.

Consolidated net sales rose 4.5 percent to $113.53 billion.

Wal-Mart raised and narrowed its full-year earnings per share forecast. It now expects to earn $4.83 to $4.93 a share, versus a prior target of $4.72 to $4.92.

Analysts’ average target is $4.93.


Cisco Systems Inc. (CSCO) reported a jump in quarterly profit and said it would pay a bigger dividend, continuing the networking-equipment giant’s transformation from a fast-growing upstart to a more mature company. Shares climbed 7.2% to $18.62 in premarket trade.

Videogame maker Electronic Arts Inc. (EA) is exploring a sale as the company struggles against competition from free online gaming sites, the New York Post reported, citing sources. The paper said EA has been approached by private-equity giants KKR and Providence Equity Partners about a potential deal. Representatives for EA weren’t immediately available for comment. Shares jumped 11% to $14.55 premarket.

Wal-Mart Stores Inc.’s (WMT) fiscal second-quarter earnings rose 5.7% on strong international sales and same-store-sales growth in the U.S., but the retailer continues seeing tough economic conditions. Shares dropped 2.2% to $72.80 premarket.

PetSmart Inc.’s (PETM) shares surged after the retailer turned in a better-than-expected profit for its fiscal second quarter and again boosted its earnings expectations for the year. The latest period marks the 10th straight quarter that PetSmart has reported double-digit profit growth–mostly in the range of 20%–driven by high-margin prescriptions, “super-premium” pet foods and hard goods. Shares rose 6% to $71.50 premarket.

Agilent Technologies Inc.’s (A) fiscal third-quarter profit fell 26% as the testing-and-measuring equipment maker reported higher expenses and weaker margins. Shares fell 7.4% to $37.50 premarket as results missed Agilent’s expectations and the company lowered its full-year guidance.

Coinstar Inc. (CSTR)–the parent of struggling movie-rental-kiosks company Redbox–has been exploring the possibility of selling itself to an undisclosed private-equity firm for several months, the New York Post reported, citing sources. Representatives of Coinstar couldn’t immediately be reached for comment. Shares jumped 8.2% to $52.15 premarket.

Dollar Tree Inc.’s (DLTR) fiscal second-quarter earnings rose 26% as the discount retailer posted higher sales. Still, shares were recently trading 6.2% lower at $46.93 premarket as the company issued a typically cautious outlook for the current quarter.

Applied Materials Inc.’s (AMAT) fiscal third-quarter profit fell 54% as the semiconductor-equipment maker recorded lower sales and restructuring charges. Shares slumped 4.3% to $11.29 premarket as the company said it sees an even deeper slowdown for chip-production gear spending in the current period and issued guidance below analyst expectations.

NetApp Inc.’s (NTAP) fiscal first-quarter profit fell 54%, but largely in-line results and guidance from the data-storage company helped alleviate some worries about spending by business users. Shares rose 4.8% to $33.28 premarket as adjusted earnings topped the company’s weak projections from May.

NetEase Inc.’s (NTES, K3MD.SG) second-quarter earnings increased 13% as the Internet company posted stronger revenue from online games and advertising. However, its American depositary shares fell 8.9% to $53 premarket as results missed analyst expectations.

New York Mortgage Trust Inc. (NYMT) unveiled an offering of 10 million shares, saying it wants to raise money to buy mortgage-backed securities. Shares were off 3.9% to $6.67 premarket.

Sina Corp.’s (SINA) second-quarter surged higher, as the Chinese Internet company’s results were boosted by an equity investment, masking sharply higher costs. Shares rose 7% premarket to 54.47 after the company posted a surprise adjusted profit.

AFC Enterprises Inc.’s (AFCE) fiscal second-quarter earnings jumped a better-than-expected 20% as the restaurant operator saw same-store sales continue to climb, especially in the U.S.

Hot Topic Inc.’s (HOTT) fiscal second-quarter loss narrowed as the teen-apparel retailer’s revenue and margins strengthened.

Limited Brands Inc.’s (LTD) fiscal second-quarter profit fell 38% on fewer one-time gains and slightly weaker sales. But the company’s adjusted earnings and sales edged out expectations, and Limited raised its full-year outlook.

Ross Stores Inc. (ROST) said it approved a new management succession plan, under which Chief Executive Michael Balmuth will transition to the role of executive chairman in 2014.