Appalachian Gas

Super Giant Field in the Appalachians?

A few years ago every geologist involved in Appalachian Basin oil and gas knew about the Devonian black shale called the Marcellus. Its black color made it easy to spot in the field and its slightly radioactive signature made it a very easy pick on a geophysical well log. However, very few of these geologists were excited about the Marcellus Shale as a major source of natural gas. Wells drilled through it produced some gas but rarely in enormous quantity. Few if any in the natural gas industry suspected that the Marcellus might soon be a major contributor to the natural gas supply of the United States - large enough to be spoken of as a "super giant" gas field.

Recent Surprise EstimatesIn early 2008

Terry Englander, a geoscience professor at Pennsylvania State University, and Gary Lash, a geology professor at the State University of New York at Fredonia, surprised everyone with estimates that the Marcellus might contain more than 500 trillion cubic feet of natural gas. Using some of the same horizontal drilling and hydraulic fracturing methods that had previously been applied in the Barnett Shale of Texas, perhaps 10% of that gas (50 trillion cubic feet) might be recoverable. That volume of natural gas would be enough to supply the entire United States for about two years and have a wellhead value of about one trillion dollars! [5]

U.S. Gas Shale - An Answer For Our Energy Needs

Conclusions From NCI Study

• Unconventional gas, especially shale, has ramped up sharply over the last several years,
both in terms of annual production and in terms of economically recoverable reserves.
The extent of this ramp-up has not been fully captured by many reserve estimators, in
particular the EIA.
• Based upon producer outreach responses, just the “big seven” shale plays are expected
to reach a range of 27 to 39 Bcf/day over the next 10 to 15 years, timing that coincides
with opportunities for phased expansion of natural gas use.
• Higher prices have significantly expanded the economically recoverable volumes, and
are continuing to do so.
• Some producers and analysts have very high estimates of the ultimate recoverable gas,
well in excess of U.S. Geological Survey (USGS) or Potential Gas Committee (PGC).
• The rapid escalation of unconventional production observed historically is continuing,
and the unconventional resource base appears adequate to support that escalation to
allow significantly increased volumes of unconventional production to continue for
decades.
• A conservative estimate of the total domestic proved reserves and ultimately
recoverable domestic resource base, adjusting from the most recent PGC study, reaches
1,680 Tcf, in excess of 88 years of U.S. production at current levels.
• Estimates by producers active in developing the shale resource are much larger,
reaching levels that would imply a further increase to more than 2,247 Tcf, or 118 years
at current production levels— This important resource is not constrained.

Visa 3rd Qtr 2008 Earnings Beats The Street

Visa Inc. Reports Fiscal Third Quarter 2008 Earnings Results

- GAAP net income of $422 million for the quarter

- Adjusted net income of $457 million for the quarter

- GAAP diluted class A common earnings per share of $0.51 for the quarter

- Adjusted diluted class A common earnings per share of $0.59 for the quarter

- Payment volume grew 19% over the prior year to $652 billion

- Company raises long-term outlook for adjusted operating margins

SAN FRANCISCO, July 30 /PRNewswire-FirstCall/ -- Visa Inc. (NYSE: V) today announced financial results for the Company's fiscal third quarter ended June 30, 2008. GAAP net income for the quarter was $422 million, or $0.51 per diluted class A common share. GAAP diluted class A common shares outstanding were 776 million. On an adjusted basis (reflective of a normalized tax rate and excluding certain litigation, restructuring and purchase amortization), net income for the quarter was $457 million, or $0.59 per diluted class A common share. Adjusted diluted class A common shares outstanding were 779 million.
Net operating revenue in the fiscal third quarter 2008 was $1.6 billion, driven by strong contributions from service fees, data processing fees, and international transaction fees as payment volumes and processed transactions rose across all regions worldwide.

Fiscal Third Quarter 2008 Financial Highlights:
Visa Inc.'s operational performance highlights for the fiscal third quarter, as measured by March 31, 2008 statistical data, include:
-- Payments volume grew 19% over the prior year to $652 billion;
-- Total volume, inclusive of cash volume was $1.0 trillion, an increase of 22% over the prior year;
-- Total cards carrying the Visa brands rose 14% worldwide to 1.6 billion over the prior year; and
-- Total payment transactions increased by 15% over the prior year to 10.7 billion.

Total processed transactions, which are based on current fiscal third quarter results on Visa's processing system, were 9.5 billion, a 13% increase over the prior year.

Financial Outlook:
Visa Inc. raises its financial outlook for the following metric for FY 2008:
-- Annual adjusted operating margin in the mid 40%'s range.
Visa Inc. raises its financial outlook for the following metric for FY 2009 and 2010:
-- Annual adjusted operating margin in the mid-to-high 40%'s range.
Visa Inc. reaffirms its financial outlook for the following metrics through 2010:
-- Annual net revenue growth of 11% to 15%;
-- Annual adjusted diluted class A common earnings per share growth of 20% or greater; and
-- Annual free cash flow (cash flow from operations plus cash reimbursements from litigation escrow less capital spending) in excess of $1 billion.
This outlook reflects an assumed 41% percent GAAP tax rate for fiscal year 2008. The Company's intent is to reduce this rate to a level around 35-36% over the next five years.

Clean And Green Fuel - What A Gas

The NGV
The clean burning properties of natural gas, its abundant supply and relatively low cost have made it a popular and environmentally sensitive fuel choice for drivers around the world for the past 70 years.
Natural Gas is a safer vehicle fuel than either gasoline or propane because it has a higher ignition point and is less likely to ignite accidentally. NGVs, or Natural Gas Vehicles, look like any other vehicle. The difference is, NGVs operate on natural gas as opposed to the fuel Americans typically pump into their vehicles’ tanks.

Natural Gas, Alternative Fuel
The EPA defines natural gas as an alternative fuel because it is very clean-burning. Yet when Americans - and the media - think of alternative fuels, it’s ethanol, biodiesel or even hydrogen they mention most often. The best, most economical and readily available alternative power for cars is natural gas.
The case for clean, abundant, affordable, American natural gas is very clear in the transportation sector’s NGV(natural gas vehicle). Compressed natural gas (CNG) costs less than gasoline, car emissions of 93-95% less pollutants and, thanks to natural gas lines that run to 60 million American homes, lets owners conveniently refuel at home overnight. It’s more efficient than gasoline and requires not a drop of help from OPEC (i.e., improves our national security).

There are two forms of natural gas available for vehicles:
CNG
NGVs typically use one of two varieties of natural gas: Compressed Natural Gas (CNG) or Liquefied Natural Gas (LNG). The preferred fueling method for light to medium NGVs is CNG, which fueling stations dispense at between five and ten gallons per minute.
LNG
Heavy-duty NGVs with higher weight and range requirements typically fuel up on LNG, which allows them to store more fuel on board with less tank weight. L/CNG stations can service both types of NGVs by converting LNG into CNG.

Hanesbrands2nd Qtr 2008 Earnings - Misses By A Little

Hanesbrands Inc. Reports Second-Quarter 2008 Results
WINSTON-SALEM, N.C.--(BUSINESS WIRE)--July 29, 2008--Hanesbrands Inc. (NYSE: HBI), a leading marketer of innerwear, outerwear and hosiery apparel, today reported results for the 2008 second quarter.

Noteworthy Financial Highlights
Selected highlights for the quarter and six months ended June 28, 2008, compared with the year-ago periods ended June 30, 2007, include: -- Earnings per diluted share in the quarter increased by 131 percent to $0.60, up from $0.26 a year ago. Diluted EPS for the six-month period increased by 149 percent to $0.97.

Non-GAAP diluted EPS, which excludes actions, increased by 20 percent for the quarter and 32 percent for the first six months. Non-GAAP net income, which excludes actions, increased by $10 million in the quarter, primarily as a result of lower interest expense, lower income tax expense as a result of global supply chain initiatives, and cost reductions that were offset by lower sales.

-- Operating profit in the quarter increased by 28 percent to $113.1 million and increased by 28 percent to $200.9 million in the six-month period.

The non-GAAP operating profit margin, which excludes actions, was 11.2 percent in the quarter, the same as last year's quarter. For the six-month period, the non-GAAP operating profit margin increased to 10.4 percent versus 10.0 percent a year ago. The benefits of cost-reduction efforts, including operating fewer, larger facilities in lower-cost countries, distribution center
streamlining and organization consolidation, contributed to an improved gross profit margin and flat selling, general and administrative expenses.

-- Total net sales in the quarter decreased by $50 million to $1.07 billion. Sales primarily decreased in the company's innerwear segment, with particularly soft sales for intimate apparel product categories. Later back-to-school shipments compared with a year ago also contributed to the innerwear decline.

International segment sales increased by 20 percent in the quarter as a result of favorable foreign currency exchange rates and growth. The increase in international sales more than offset sales declines in the outerwear segment, the hosiery segment and the other segment.

Colgate 2nd Qtr 2008 Earnings Beats The Street

Colgate Announces Strong 2nd Quarter - Excellent Worldwide Sales and Volume Growth - Sales, Unit Volume and Operating Profit Up in All Divisions

New York, New York, July 29, 2008… Colgate-Palmolive Company (NYSE:CL) today announced excellent worldwide sales and unit volume growth together with higher than expected earnings growth for second quarter 2008. Worldwide sales grew 16.5% to $3,964.8 million and unit volume grew 5.0%. Global pricing increased 4.5% and foreign exchange added 7.0%. The very strong top-line growth was supported by an 18% increase in worldwide advertising spending to an all-time record level.
Second quarter 2008 results include $29.5 million of aftertax charges related to the 2004 Restructuring Program. The year ago quarter included aftertax restructuring charges of $41.7 million.
Gross profit margin as reported was 56.5% in second quarter 2008 and 56.0% in the year ago period. Excluding restructuring charges, gross profit margin decreased 30 basis points from 57.1% to 56.8%, reflecting increases in raw and packaging material costs worldwide, especially oil-related costs and agricultural commodities. These sharp increases were substantially offset by increased pricing and successful savings initiatives.
Operating profit as reported increased 17% versus second quarter 2007 to $767.0 million. Excluding restructuring charges, operating profit rose 13% to an all-time record $805.9 million.
Reported net income and diluted earnings per share in second quarter 2008 were $493.8 million and $.92, respectively. Reported net income and diluted earnings per share in second quarter 2007 were $415.8 million and $.76, respectively. Excluding restructuring charges, net income increased 14% in second quarter 2008 to a record $523.3 million and diluted earnings per share increased 17% to $.98, also a record. In second quarter 2007, net income and diluted earnings per share excluding restructuring charges were $457.5 million and $.84, respectively.
Net cash provided by operations year to date increased by 14% to $1,028.9 million. Working capital increased slightly to 3.5% of sales versus 3.3% in the comparable 2007 period, and net debt (debt less cash and marketable securities) declined versus second quarter 2007.

Consumer Confidence Index

The Conference Board Consumer Confidence Index Holds Steady
July 29, 2008

The Conference Board Consumer Confidence Index, which had declined in June, held steady in July. The Index now stands at 51.9 (1985=100), up slightly from 51.0 in June. The Present Situation Index was virtually unchanged at 65.3 versus 65.4 last month. The Expectations Index increased moderately to 43.0 from 41.4 in June.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world's largest custom research company. The cutoff date for July's preliminary results was July 22nd.
Says Lynn Franco, Director of The Conference Board Consumer Research Center: "Consumers' assessment of current conditions was little changed, suggesting there has been no significant improvement, nor significant deterioration, in business or labor market conditions. Looking ahead, while consumers remain extremely grim about short-term prospects, the modest improvement in expectations, often a harbinger of economic times to come, bears careful watching over the next few months."
Consumers' appraisal of present-day conditions remained quite bleak in July. Those claiming business conditions are "bad" increased slightly to 32.8 percent from 31.9 percent, while those claiming business conditions are "good" rose to 13.1 percent from 11.5 percent last month. Consumers' appraisal of the labor market remained negative. Those saying jobs are "hard to get" edged up to 30.3 percent from 29.7 percent in June, while those claiming jobs are "plentiful" declined to 13.5 percent from 14.1 percent.
Consumers' outlook, while slightly improved from last month, continues to be very pessimistic. Consumers anticipating business conditions to worsen over the next six months eased to 32.4 percent from 33.5 percent, while those expecting conditions to improve edged up to 9.3 percent from 8.5 percent in June.
The outlook for the labor market remains gloomy. The percent of consumers expecting fewer jobs in the months ahead increased to 37.1 percent from 35.7 percent, while those anticipating more jobs remained virtually unchanged at 8.2 percent. The proportion of consumers expecting their incomes to increase rose to 14.2 percent from 13.1 percent.

Martha Stewart Makes Money In 2nd Qtr 2008

Merchandising and Advertising Growth Lead Martha Stewart Living Omnimedia's Strong Second Quarter 2008 Results
With New Emeril Lagasse Business and Continued Focus on Costs, EBITDA Guidance Remains Unchanged

NEW YORK, July 29 /PRNewswire-FirstCall/ -- Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its results for the second quarter ended June 30, 2008, reporting a 5% increase in second quarter revenue to $77.1 million, led by strong performance in merchandising and advertising revenue growth across its media businesses.
Charles Koppelman, Executive Chairman of the Board, said, "We delivered increased topline growth and an impressive improvement in profitability, demonstrating the power of our brand and our team's ability to execute even in challenging business conditions. The reason for our success is clear. We continue to do what we do best: create original content and inspirational products and market them across our robust omni-platforms. With well-positioned media assets, expanding merchandising relationships, and a growing international presence, we remain focused on producing sustained growth and profitability."
Second Quarter 2008 Summary
Revenues rose 5% to $77.1 million compared to $73.4 million for the second quarter of 2007. Merchandising had notably strong performance in the quarter due to increased retail sales at Macy's, the expansion of MSLO's crafts line into Wal-Mart and the launch of our flowers program, with 1-800-Flowers.com. The segment also benefited from the newly acquired Emeril Lagasse franchise.

Operating income for the second quarter of 2008 was $1.7 million, compared to an operating loss of $(7.8) million for the second quarter of 2007.
Adjusted EBITDA for the second quarter of 2008 was $5.3 million, compared to $(0.8) million in the prior year period. The improvement in Adjusted EBITDA was driven by the strong contributions from merchandising and publishing, partially offset by certain non-recurring corporate costs of $1.5 million.
Other expense included a non-cash charge of $1.1 million related to the accounting impact of marking certain assets under FAS 133 to fair value.
Net income per share from continuing operations was $0.01 for the second quarter of 2008, compared to a net loss per share of ($0.13) for the second quarter of 2007. Excluding the additional corporate costs and non-cash accounting charge, net income would have been $2.9 million, or $0.05 per share.

Amgen 2nd Qtr 2008 Beats The Street - Guidance Is Up

Amgen's Second Quarter 2008 Adjusted Earnings Per Share Increased 2 Percent to $1.14

>Second Quarter 2008 Revenue Increased 1 percent to $3.8 Billion

>Second Quarter 2008 GAAP Earnings Per Share Decreased 3 percent to $0.87

>Full Year Revenue Guidance Raised from $14.2 Billion - $14.6 Billion to $14.6 Billion - $14.9 Billion

>Full Year Adjusted EPS Guidance Raised from $4.00 - $4.30 to $4.25 - $4.45

THOUSAND OAKS, Calif., Jul 28, 2008 (BUSINESS WIRE) -- Amgen (NASDAQ:AMGN) reported adjusted earnings per share (EPS), excluding stock option expense and certain other expenses, of $1.14 for the second quarter of 2008, an increase of 2 percent compared to $1.12 for the second quarter of 2007. Adjusted net income, excluding stock option expense and certain other expenses, decreased 2 percent to $1,235 million in the second quarter of 2008 compared to $1,265 million in the second quarter of 2007. Stock option expense on a per share basis totaled 1 cent and 3 cents for the second quarter of 2008 and 2007, respectively.
Total revenue increased 1 percent during the second quarter of 2008 to $3,764 million versus $3,728 million in the second quarter of 2007.

2008 Revenue and EPS Guidance Raised
The Company is raising its revenue guidance range from the previously provided range of $14.2 billion to $14.6 billion to an increased range of $14.6 billion to $14.9 billion. The Company is also raising its 2008 adjusted EPS guidance range from the prior range of $4.00 to $4.30 to an increased range of $4.25 to $4.45, excluding stock option expense and certain other expenses, based upon sales momentum and lower operating expense due to continuing efficiencies

Martha Stewart And Wal-Mart

Martha Cozies Up to Wal-Mart
Is Martha Stewart beginning a long friendship with Wal-Mart Stores (WMT)? On July 8, Martha Stewart Living Omnimedia (MSO) announced a pact with the discounter to sell craft products such as stationery supplies, jewelry-making kits, and wedding items like ring pillows. The buzz is that this will lead to a broader agreement, which analysts call a big plus for Omnimedia. Chairman Charles Koppelman says the deal will help replace the $1.5 billion in sales it got with its Kmart (SHLD) tie-in, which will expire in 2010.
"Our research suggests incremental yearly earnings before taxes and interest of at least $1.5 million," says Richard Ingrassia of Roth Capital Partners. He rates the stock, now at 7.49 a share, a buy, with a 12-month target of 18. David Kestenbaum of investment firm Morgan Joseph says the Wal-Mart link, small for now, "could lead to something bigger."
—By Gene Marcial BusinessWeek

Is Capitalism Dead? - From Barrons

So Long, Capitalism
By JIM MCTAGUE


LOWER THE FLAGS ALONG WALL STREET TO HALF-STAFF. Play a dirge and hang out the crepe. Market capitalism is dead. Our financial system, for all intents and purposes, has been federalized, with taxpayer-financed "backstops" stretching as far the eye can see. Bear Stearns, Freddie Mac (ticker: FRE), Fannie Mae (FNM) and their mortgage-industry brothers-in-ARMs all are beneficiaries of this corporate-welfare scheme. Other reckless lenders with sob stories almost certainly will be added to the list.
What is hard to digest is that the government's "bailout" of Fannie, Freddie and the rest of the housing market has elicited barely a whimper of protest from the famed financial district, a place that once proudly billed itself as the free-market capital of the world. Nor has there been a plausible peep from our two presidential candidates about this blow to the American way.
Wall Street -- the proud, powerful and symbolic American landmark that Osama bin Laden repeatedly has vowed to destroy -- used to be about the invisible hand, risks and rewards, and the late economist Joseph Schumpeter's "creative destruction."
It was creative, alright. Now the incubator of financial innovation turns out to be part wax works, a place where dead companies are made to look life-like by the very visible hand of the government. Move over, Madame Tussaud. Make room for Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke.
Their intention is to protect the financial system from a far larger catastrophe. But Paulson and Bernanke inadvertently are leading us to a place from which countries like Sweden are desperate to escape: a land called Socialism. History has demonstrated here and abroad that once you start down this slippery slope, it is extremely hard to reverse direction. Welfare dependence among the poor was a pathology that endured for 30 years until President Bill Clinton ended open-ended handouts. Expect our bankers to be just as reluctant to get off the dole as were the beneficiaries of those handouts.
Among the many ironies here, Paulson and Bernanke were appointed by George Bush, our very first MBA president, who seems uninterested in the credit-market catastrophe and its ramifications, and only too happy to delegate the stressful job of shoring up a collapsing economy to his more experienced minions. As far as we can tell, he took no 3 a.m. phone calls from Paulson when the Fannie and Freddie started to topple a few weekends ago.
The poor man! With just a few months left in office, Bush sees leg after leg falling from under his legacy. He was a uniter, not a divider. He was going to fix Social Security. He was going to cut spending and shrink government, not run up the deficit. And he was going to liberate Iraq, not occupy it. His lofty goals have morphed into bitter disappointments. He's become a real-life Charlie Brown, all tangled up in his kite string.
Until recently, the economy was the president's most enduring achievement. It miraculously survived and prospered through the Sept. 11 attacks, monster hurricanes, a major war -- a resiliency Bush attributes, correctly in my opinion, to his tax cuts. The economy is still managing to grow despite oil-price and commodity shocks and the bursting of a spectacular investment bubble. But the economic growth is subpar and has been sustained by a debased currency and extraordinary efforts such as stimulus checks and the recent corporate "backstops," administration- speak for bailouts. A "Mission Accomplished" banner just won't serve as a credible backdrop here.
Even more ironic, Paulson and Bernanke are being egged on by Wall Street brokers and bankers who may well be the children and grandchildren of the same Elephant plutocrats who denounced Franklin Delano Roosevelt's New Deal 70 years ago as a pinko plot. They've encouraged big government to solve our most pressing problems.
The backstops now are a political problem for the GOP, which no longer can castigate Democrats for pitching big-government solutions to most of our problems. If the Democrats win in November, as pollsters are predicting, there will be no credible opposition to: government-run health care; a tax system that redistributes wealth rather than raising essential revenue; and a command-and-control "green-power" industry, or the born-again prohibitionists who this time will take their axes to the oil barrel, sparing the contents of the whiskey barrel as a fuel resource for your car.
If you expect a spirited defense of free-market capitalism from Republican hopeful John McCain, look elsewhere. McCain recently said he doesn't believe General Motors (GM) needs a government bailout, but if conditions worsen enough for the auto maker, all options need to be considered.
R.I.P. free market, at least on this side of the Pacific.

This Week's Market Movers - Earnings

July 28 - Amgen (consensus 1.02)
July 29 - Colgate (0.94)
----------Hanesbrands (0.67)
----------Martha Stewart (0.04)
----------SAP (0.63)
July 30 - Visa (0.48)
July 31 - Aetna (0.93)
----------Altria (0.45)
----------Exxon (2.52)
----------TransCanada (0.55)
Aug 1 ----Clorox (1.11)

This Week's Market Movers - Financial Statistics

July 29 - --Consumer Confidence (consensus 50.0%)
July 31 - --Advanced Q2 GDP (2.4%)
-----------Jobless Claims (398,000)
August 1 - Employment Situation comprised of the following four items
--------------Non Farm Payrolls (-72,000)
--------------Average Hourly Earnings (0.3%)
--------------Unemployment Rate (5.6%)
--------------Average Work Week (33.7hrs)

------------Construction Spending (-0.4%)
------------ISM Mfg Index (49.2%)

Yum News

From Barrons
Yum Brands (YUM), too, recently saw second-quarter revenue rise 12% and net income improve 4%, but alas, commodity costs pushed expenses up 14%. While the operator of KFC and Taco Bell beat estimates (thanks to a lower tax bill), its weakening margins worried investors enough to knock shares down to 34, off 16% since May.
Considering the unprecedented pressure on consumers, its same-store sales look commendable, and 14% growth in China and plans to open 450 restaurants there helps Yum capitalize on the overseas consumer boom and the Third World's sad but growing hankering for American fast food. In 10 years, Yum reckons 70% of its growth will come from overseas, which makes this pullback a buying opportunity -- especially if the rabid rise in commodity costs begin to ease.

Last Week In Review

From Barrons
THE STOCK MARKET'S RALLY OFF ITS JULY 15 LOW SPUTTERED, yet Wall Street heaved a small sigh of relief.
For a start, last week's pause was just benign enough to keep the recent bounce alive, even if the bullish momentum had begun to flag. The biggest setback came Thursday when the Dow Jones Industrial Average skidded 283 points after the release of data showing sales of existing homes had plunged in June toward a decade low. Yet the blow was blunted by uninspired volume; 6.05 billion of New York Stock Exchange shares traded, compared with volume topping 7 billion when stocks turned around.
Financial stocks that had just pulled off a 31% six-day surge began to falter, absorbing a 6.7% drubbing that accounted for nearly half of the Standard & Poor's 500's Thursday decline. But a pullback like this "is not unusual following a rebound off a climactic low," notes Miller Tabak's chief technical market analyst, Philip Roth.
Most crucially, crude oil continued to burn off its recent speculative fumes and fell 4.8% to $123 a barrel. This third straight weekly slide left crude 15% off its recent peak and snapped a pernicious rise that had threatened consumers and weighed down stocks. These breaks in oil's uptrend and stocks' downtrend could still carry "enough momentum to rally the S&P 500 into the 1320-1340 range," argues Bespoke Investment Group.
The Dow ended the week down 126, or 1.1%, to 11,371, while the S&P 500 relinquished 3, or 0.2%, to 1258. The 500-stock benchmark had bounced nearly 5% from its mid-July intraday low of 1200 but remains 20% off its October peak. Technology and small stocks fared better: The Nasdaq Composite Index rallied for a second straight week after its six-week losing streak and added 28, or 1.2%, to 2311. The Russell 2000 index rose 17, or 2.5%, to 710.

Costco Outlook Cautious - Gets Slammed

Costco Wholesale Corporation Comments on Earnings Outlook for Its Fiscal 2008 Fourth Quarter and Announces Quarterly Cash Dividend and an Additional $1 Billion Stock Repurchase Authorization

ISSAQUAH, WA, Jul 23, 2008 (MARKET WIRE via COMTEX News Network) -- Costco Wholesale Corporation ("Costco") (NASDAQ: COST) today commented on its earnings outlook for its fiscal fourth quarter (16 weeks) and fiscal year ending August 31, 2008. Currently, earnings per share for the fourth quarter are expected to be well below the current First Call consensus earnings per share estimate of $1.00. Actual results for the fourth quarter and the fiscal year will be reported on October 8, 2008.

According to Richard Galanti, Chief Financial Officer of Costco: "Factors negatively affecting our fourth quarter earnings outlook arise largely from inflation, particularly as to energy costs. They include a significantly greater-than-anticipated LIFO charge; an anticipated negative swing in year-over-year profitability in our gasoline operations; and slightly lower-than-planned merchandise profits related to holding selling price points to help drive sales and maintain the confidence of our members. Our comparable sales results remain strong relative to other retailers and we believe our growth outlook remains positive, with 20 to 25 additional new units planned for our 2009 fiscal year."
Today, the Company announced that its Board of Directors has declared a quarterly cash dividend on Costco Wholesale common stock of $.16 per share, or $.64 per share on an annualized basis. The dividend of $.16 per share, declared July 21, 2008, is payable August 22, 2008, to shareholders of record at the close of business on August 8, 2008.
The Company also announced today that its Board of Directors authorized an additional common stock repurchase program of up to $1 billion. This is in addition to the aggregate $5.8 billion amount previously authorized by the Board, of which approximately $4.6 billion has been expended since June 2005, repurchasing approximately 85 million shares.

AT&T 2nd Qtr 2008 Earnings Meets The Street

AT&T Delivers Solid Second-Quarter Results Highlighted by Strong Wireless Growth, Double-Digit Increase in IP Data Revenues, Further Ramp in AT&T U-verse TV Subscribers
Dallas, Texas, July 23, 2008

>$0.63 reported earnings per diluted share, up 34.0 percent versus $0.47 in the year-earlier second quarter
>$0.76 adjusted earnings per diluted share, up 8.6 percent from $0.70 in the second quarter of 2007
>Consolidated operating income margin expansion to 21.3 percent reported from 16.8 percent in the year-earlier quarter and 25.1 percent adjusted versus 23.9 percent
>15.8 percent increase in wireless revenues with wireless data revenues from areas such as Internet access, messaging and e-mail up a robust 52.0 percent
>More than 1.3 million net gain in wireless subscribers to reach 72.9 million in service; postpaid subscriber churn down to 1.1 percent, lowest level in company's history
>16.1 percent growth in wireline IP data revenues driven by strong increases in consumer video and broadband revenues and in business services such as virtual private networks (VPNs), managed Internet services and hosting
>Significant turnaround in wholesale customer revenues, second consecutive quarter of sequential growth reflecting solid demand from wireless carriers, Internet service providers and other customers
>Further ramp in AT&T U-verseSM TV subscribers, with a net subscriber gain of 170,000 to reach 549,000 in service; on trajectory to exceed 1 million subscribers in service by the end of this year

Reported Results
For the quarter ended June 30, 2008, AT&T's consolidated revenues totaled $30.9 billion, up 4.7 percent versus reported results in the year-earlier quarter and up 3.6 percent compared with second-quarter 2007 pro forma revenues, which exclude merger-related accounting impacts on directory revenues.
Compared with results for the year-earlier quarter, AT&T's reported operating expenses for the second quarter of 2008 were $24.3 billion, down from $24.5 billion; reported operating income was $6.6 billion, up from $4.9 billion; and AT&T's reported operating income margin was 21.3 percent, up from 16.8 percent.
AT&T's reported second-quarter 2008 net income totaled $3.8 billion, up from $2.9 billion in the year-earlier quarter, and reported earnings per diluted share totaled $0.63, up from $0.47 in the second quarter of 2007.

Wireless Operational Highlights
AT&T delivered strong wireless growth in the second quarter with solid subscriber gains, continued rapid growth in wireless data revenues and improved margins. Highlights include the following:
>15.8 Percent Wireless Revenue Growth. Total wireless revenues increased 15.8 percent to $12.0 billion in the second quarter, and wireless service revenues, which exclude handset and accessory sales, grew 14.8 percent to $11.0 billion. Wireless revenue growth was driven by solid subscriber gains and a greater number of customers choosing more advanced smartphones and integrated devices, spurring increased usage of data services. Retail postpaid subscriber ARPU (average monthly revenues per subscriber) was up 3.5 percent versus the year-earlier second quarter.
>Wireless Data Services Up 52.0 Percent. Wireless data revenues grew 52.0 percent versus the year-earlier quarter to $2.5 billion, reflecting continued strong adoption of services such as Internet and data access, e-mail and messaging. Wireless Internet access revenues more than doubled versus results for the year-earlier second quarter, while revenues from e-mail, messaging and data access all delivered greater than 50 percent growth. Text messaging volumes tripled versus totals for the year-earlier quarter, and multimedia message volumes increased more than 170 percent. At the end of the second quarter, approximately 18 percent of AT&T's postpaid wireless subscribers had an integrated device, up from 8 percent one year earlier. On average, these subscribers have ARPUs roughly double the company average. AT&T expects continued strong growth in wireless data services as more customers choose data plans and advanced wireless devices such as the new iPhone 3G, which was launched as an AT&T U.S. exclusive on July 11. In the first 12 days following launch, sales of the iPhone 3G were nearly double levels achieved in AT&T's 2007 iPhone launch.
>Solid Wireless Subscriber Growth with Reduced Postpaid Churn. AT&T's second-quarter net gain in total wireless subscribers exceeded 1.3 million, down 123,000 versus results in the second quarter of 2007 and up 38,000 compared with the first quarter of this year. Retail postpaid net adds totaled 894,000, down 2.0 percent versus the year-earlier second quarter and up 26.8 percent from results in the first quarter of this year. This sequential postpaid improvement was achieved despite reduced iPhone sales ahead of the early July iPhone 3G launch. Retail postpaid churn moved down to 1.1 percent in the second quarter, the lowest level in the company's history.
>Wireless Operating Income Growth. On a reported basis, AT&T's second-quarter wireless operating expenses totaled $9.0 billion, and operating income was $3.1 billion, up 91.0 percent from $1.6 billion in the second quarter of 2007. Adjusting for merger integration costs, wireless operating expenses totaled $8.4 billion, and operating income was $3.6 billion, up 38.9 percent from $2.6 billion in the second quarter of 2007.
>Continued Strength in Wireless Margins. Strong revenue growth, network efficiencies and operational improvements continue to drive strong wireless margins. AT&T's reported wireless operating income margin in the second quarter was 25.5 percent, up from 15.4 percent in the year-earlier quarter, and its adjusted wireless operating income margin was 29.9 percent, up from 24.9 percent in the year-earlier quarter. AT&T's second-quarter wireless OIBDA service margin was 41.2 percent, up from an unadjusted 35.8 percent and an adjusted 37.5 percent in the year-earlier quarter. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

McDonald's 2nd Qtr 2008 Earnings Beats The Street

Global Comparable Sales Drive Strong Second Quarter Results at McDonald's

OAK BROOK, IL — McDonald’s Corporation today announced strong operating results for the second quarter, driven by global comparable sales growth of 6.1%."Our strategic focus on putting the customer first in everything we do continues to yield outstanding operating results," said Chief Executive Officer Jim Skinner. "For the quarter, we grew comparable sales and guest counts across all geographic segments and delivered increased profitability. These results are a testament to the strength and resilience of McDonald’s Plan to Win."McDonald’s reported the following second quarter highlights:
>Global comparable sales increased 6.1%
>Growth in consolidated Company-operated and franchised restaurant margins for the tenth consecutive quarter
>Earnings per share from continuing operations of $1.04, a 44% increase (35% in constant currencies) over the prior year, after adjusting for the impact of the 2007 Latin America transaction. Second quarter 2008 earnings include a $0.10 per share gain from the previously announced sale of the Company’s minority interest in Pret A Manger
>The Company repurchased 13.3 million shares of its stock for $788 million and paid $422 million in quarterly dividends

Jim Skinner continued, "Our ongoing performance demonstrates that McDonald’s is a trusted and familiar brand offering value, convenience and choice worldwide. We’re operating from a position of strength with double-digit operating income growth in Europe and Asia/Pacific, Middle East and Africa and solid quarterly results in the U.S."For McDonald’s U.S., comparable sales were up 3.4% and operating income increased 6% for the quarter. The U.S. business continues to increase sales and guest counts through initiatives that provide value and variety to the consumer.

The four key growth strategies of chicken, breakfast, beverages and convenience drove results with the nationwide launch of the Southern Style Chicken Biscuit and Sandwich and locally relevant beverage promotions. In Europe, comparable sales increased 7.4% and operating income rose 29% (13% in constant currencies) as emphasis on delivering an improved customer experience along with unique marketing and signature menu options drove performance. Europe’s three-tier menu offerings, innovative new products and restaurant reimaging continue to give customers even more reasons to visit McDonald’s. Asia/Pacific, Middle East and Africa delivered strong results, led by Australia and China along with broad-based strength throughout the segment. Second quarter comparable sales increased 8.8%, driving operating income up 37% (22% in constant currencies). Throughout Asia/Pacific, Middle East and Africa, McDonald’s everyday value, convenience and appealing product offerings are fueling results.

Pepsico 2nd Qtr 2008 Earnings Beats The Street

PepsiCo Reports Second-Quarter 2008 Results

>Strong Net Revenue Growth of 14 Percent
>Operating Profit Increased 12 Percent and Net Income Grew 9 Percent
>EPS Increased to $1.05; Excluding Mark-to-Market Gains,
EPS Was up 11 Percent to $1.03
>PepsiCo Confirms Full-Year Earnings Per Share Guidance of at Least $3.72, excluding Mark-to-Market Gains/Losses
>Company Raises Intended 2008 Share Repurchases by at Least $1 Billion

PURCHASE, N.Y., July 23 /PRNewswire-FirstCall/ -- PepsiCo, Inc. (NYSE: PEP) today reported strong second-quarter operating results, with 14 percent net revenue and 12 percent operating profit growth. The Company delivered earnings per share of $1.05. Excluding current and prior year mark-to-market gains on commodity positions included in corporate unallocated expenses, earnings per share would have totaled $1.03, up 11 percent.

UnitedHealth Group 2nd Qtr 2008 Earnings Beats The Street

UNITEDHEALTH GROUP REPORTS SECOND QUARTER RESULTS
• Revenues Increased 7% to $20.3 Billion
• People Served Increased 2 Million to 73 Million
• Adjusted Operating Margin of 7.2%
• Adjusted Net Earnings of $0.67 Per Share

UnitedHealth Group said profit for the three months ended June 30 fell to $337 million in the second quarter, or 27 cents a share, down from $1.23 billion or 89 cents a share a year ago.
Excluding special charges totaling 49 cents a share tied to the legal settlements and employee severance, along with a 9-cent gain from asset sales, second-quarter 2008 earnings were 67 cents a share, the Minnetonka, Minn.-based insurer said. Consensus expectations were for earnings of 64 cents, according to analysts surveyed by FactSet Research.

Shares were up 8% in recent action to $25.72.
The company said it still expects full-year 2008 earnings of $2.95 to $3.05 a share, and plans to continue its share-repurchase program, buying back more than $3 billion in repurchases over the full year. This is after considering cash payments for legal settlements.
"Health insurers have flexibility in reporting medical-expense estimates and earnings per share, so the second-quarter beat also signals comfort with 2008 guidance," Citigroup's Charles Boorady wrote in a morning note to clients.
Analysts also noted that the company's reported medical-loss ratio, or the cost of providing health care, rose 290 basis points to 83.2% for the quarter, but that was well below what many analysts had forecast. The company expects its full-year cost ratio to come in at 82.5%.

Outlook
The Company continues to anticipate full year 2008 net earnings per share in the range of $2.95 to $3.05 per share and cash flows from operations approaching $5 billion1, as adjusted. The Company expects to continue its substantive share repurchase program over the course of 2008, with a total of more than $3 billion in repurchase activity planned for the full year, after considering cash payments for legal settlements.

DuPont 2nd Qtr 2008 Earnings Beats The Street

Agriculture Leads DuPont to Solid Second Quarter Growth
Company Increases Lower End of 2008 Earnings Outlook Range

Highlights
• Second quarter 2008 earnings per share grew 13 percent to $1.18, up from $1.04 in the second
quarter of 2007. Earnings benefited $.07 per share from a litigation settlement and a lower
base tax rate.
• Sales increased 12 percent to $8.8 billion, reflecting 7 percent higher local selling prices,
5 percent currency benefit, 1 percent higher volumes and a 1 percent reduction from portfolio
changes. Sales outside the United States grew 18 percent, while sales in the United States grew
5 percent despite weakness in housing and automotive markets.
• Local selling prices increased 7 percent, partially offsetting a 15 percent increase in energy,
raw materials and freight costs in the second quarter.
• Agriculture & Nutrition sales grew 23 percent, reflecting strong global demand for the
company’s corn, soybean and crop protection products.
• Fixed costs as a percentage of sales improved 200 basis points from the prior-year quarter,
reflecting the company’s continued cost productivity improvement programs.
• DuPont increased the lower end of its full year 2008 earnings outlook, narrowing the range to
$3.45 to $3.55 per share.

UPS 2nd Qtr 2008 Earnings Meets The Street Estimates

UPS Releases 2Q Results

Press Release
Earnings Decline Caused by Economic Weakness, Fuel Costs; Supply Chain & Freight Continues to Exceed ExpectationsATLANTA, July 22, 2008 - UPS (NYSE:UPS) today reported a 6.7% revenue increase in the second quarter but an 18.3% decline in diluted earnings per share to $0.85 compared to $1.04 the prior year. Increasing fuel costs and a stagnant U.S. economy caused the earnings decline in both the U.S. Domestic and International Package segments.
In contrast, the Supply Chain and Freight segment posted a substantial improvement in profitability.
"Although operating conditions in the second quarter were challenging, UPS firmly believes the long-term growth fundamentals for our company and for our industry are very favorable," said Scott Davis, UPS chairman and CEO. "We are helping our customers manage through this difficult period while doing everything we can inside UPS to adapt to current conditions."
Consolidated Results---------- 2Q 2008----- 2Q 2007
Revenue--------------------- $13.00 B----- $12.19 B
Operating profit--------------- $1.45 B------- $1.77 B
Operating margin-------------- 11.2%--------- 14.5%
Average volume per day------- 15.0 M------- 15.0 M
Diluted earnings per share----- $0.85-------- $1.04

For the three months ended June 30, 2008, UPS delivered consolidated volume of 959 million packages, essentially unchanged from the second quarter last year. Revenue rose to $13.0 billion and revenue per piece increased 5.9%. Results were negatively affected by a 67% increase in fuel expense, a reduction in premium product volumes and weakness in U.S. imports.
Cash Position
For the first six months of 2008, free cash flow remained strong at $3.4 billion, including approximately $1 billion in U.S. federal cash tax benefits related to the company's withdrawal from the Central States Pension Plan. The company also:
>Purchased 34.8 million shares at a cost of $2.4 billion.
>Paid dividends totaling $1.3 billion.
>Invested $1.4 billion in capital expenditures.
>Ended the quarter with $1.7 billion in cash and short-term investments.

U.S. Domestic Package-------- 2Q 2008----- 2Q 2007
Revenue---------------------- $7.71 B------ $7.58 B
Operating profit--------------- $0.90 B----- $1.19 B
Operating margin-------------- 11.7 %------- 15.7 %
Average volume per day------- 13.1 M------- 13.2 M

The slow U.S. economy caused average daily volume in the United States to decline 1.3% in the quarter and also contributed to a more pronounced reduction in premium products than in the previous quarter. Volumes per day declined 6.1% for Next Day Air®, 2.3% for deferred air and 0.7% for ground. Consolidated revenue per piece rose 3.1%, increasing for all services.
These factors, along with the rapid increase in fuel cost and the impact of the two-month lag in the application of the fuel surcharge, were responsible for the declines in second quarter operating results. During the quarter, UPS and DHL announced they were working on a 10-year agreement through which UPS would provide air lift for DHL's express, deferred and international volume within the U.S. and between the U.S., Canada and Mexico.

International Package---------- 2Q 2008----- 2Q 2007
Revenue----------------------- $2.95 B------ $2.50 B
Operating profit---------------- $407 M------ $475 M
Operating margin--------------- 13.8 %------- 19.0 %
Average volume per day-------- 1.93 M------- 1.80 M

International results were negatively impacted by higher fuel costs, declining U.S. import volume and slower growth in premium services in the major regions of the world.
Export volume increased an industry-leading 10.2%, aided by the calendar effect of an early Easter, which boosted growth rates by approximately 2%. However, volume growth slowed significantly through the quarter.
During the period, UPS continued its global investments. In the United Kingdom, the company completed network integration of Tamworth, its largest ground hub outside the U.S. In Asia, UPS announced construction of an intra-Asia hub in Shenzhen, China; initiated five weekly flights to Nagoya, Japan, and concluded the buyout of its joint venture partner in Korea.

Supply Chain and Freight------- 2Q 2008----- 2Q 2007
Revenue------------------------ $2.34 B------ $2.11 B
Operating profit----------------- $148 M------- $98 M
Operating margin----------------- 6.3 %--------- 4.6 %

Segment revenue increased almost 11% with operating profit climbing more than 50%. Results were driven by the continued strong performance of the Forwarding and Logistics businesses. During the quarter, UPS announced an expansion of its logistics campus in Burlington, Ontario, to address healthcare and high-tech customers' needs.
UPS Freight LTL revenue grew 7.2%, but shipments declined 2.3% as a consequence of the stagnant U.S. economy. UPS Freight expanded its reliability guarantee on shipments to and from Canada and introduced time-in-transit enhancements to 1,000 lanes in the United States.
Outlook"Slow U.S. economic activity and fuel price increases hit us and our customers during the quarter," said Kurt Kuehn, UPS's chief financial officer. "Even though economists do not predict a recovery until 2009, we anticipate that the second half of 2008 will generate modestly better results than the first half, assuming business conditions do not worsen. Therefore, we are providing earnings-per-share guidance for 2008 within a range of $3.50 to $3.70. This translates to a range of $1.78-to-$1.98 for the second half compared to $1.72 for the first half."

Caterpillar 2nd Qtr 2008 Earnings Beats The Street

Caterpillar Reports All-Time Record Quarter
Driven by Strong Growth Outside North America
Sales and revenues up 20 percent and profit per share up 40 percent
compared with the second quarter of 2007

PEORIA, Ill.— Driven by robust growth in emerging markets and strength in key industries like energy and mining, Caterpillar Inc. (NYSE: CAT) today reported all-time records for sales and revenues and profit per share. Profit per share for the second quarter of 2008 was $1.74(consensus was $1.54), a 40 percent increase from $1.24 per share in the second quarter of 2007. Sales and revenues of $13.624 billion were 20 percent higher than second quarter 2007 sales and revenues of $11.356 billion. “Team Caterpillar has delivered another remarkable quarter,” said Chairman and Chief Executive Officer Jim Owens. “While North America remains depressed and we’ve seen softening in Western Europe and Japan, Caterpillar continues to grow in emerging markets and in global industries like energy and mining … and we continue to see good growth in our integrated service businesses. It’s gratifying to see the positive impact of being such a diverse company in terms of products, services, geography and the industries we serve,” Owens said.

Sales and revenues were up $2.268 billion from the second quarter of 2007. Sales volume improved $1.402 billion, price realization was up $398 million, the impact of currency added $384 million and Financial Products revenues were $84 million higher. The geographic mix of sales continued to shift outside North America with sales and revenues increasing 30 percent outside North America compared with 7 percent inside North America. Sales and revenues outside North America represented 60 percent of total sales and revenues in the second
quarter—up from 55 percent of the total a year ago.

Second-quarter profit of $1.106 billion was up $283 million, or 34 percent, from second quarter 2007 profit of $823 million. The increase was primarily a result of improved price realization and higher sales volume, partially offset by higher material and freight costs and increases in Selling, General and Administrative (SG&A) and
Research and Development (R&D) expenses. While SG&A and R&D costs increased to support growth and product development, they were both lower as a percent of sales. “We are seeing significant improvements in safety and quality from the deployment of the Caterpillar
Production System (CPS) with 6 Sigma, and I am confident that CPS will improve product delivery, inventory turnover, plant capacity and manufacturing costs as we continue to aggressively deploy it throughout the company,” Owens said.

Outlook
The full-year outlook for 2008 reflects sales and revenues of about $50 billion and profit of about $6.00 per share. The previous outlook expected 2008 sales and revenues of $47.2 to $49.5 billion and profit per share of $5.64 to $6.18. “Never in my 35 plus years with the company have I seen Caterpillar do so well in the face of such a difficult economic climate in the United States,” Owens said. “We are on track to deliver our fifth straight year of record
profits despite very tough conditions in the United States, declines in Europe and significantly higher material costs, particularly in the second half of the year. Still, for many of our products, supply is very tight, and we are producing as much as we can. That’s why in June we announced capacity expansions in the United States, China and India. We need to bring additional capacity on line to support world demand for infrastructure, energy and mining, and to be prepared for the upturn in the United States when it comes. Together with the best dealer network in our industry, Team Caterpillar is well positioned to meet our goals for 2010 and beyond.”

Keystone Pipeline Expansion

Keystone Pipeline to expand to serve the U.S. Gulf Coast

CALGARY, July 16, 2008 – TransCanada Corporation (TransCanada) (TSX, NYSE: TRP), on behalf of the Keystone Pipeline partnerships (Keystone) between TransCanada and ConocoPhillips (NYSE: COP), today announced plans to expand the Keystone crude oil pipeline system and provide additional capacity of 500,000 barrels per day from Western Canada to the U.S. Gulf Coast in 2012. The expansion is expected to cost approximately US$7.0 billion. When completed, the expansion will increase the commercial design of the Keystone Pipeline system from 590,000 barrels per day to approximately 1.1 million barrels per day and result in a total capital investment of approximately US$12.2 billion.

Plans to expand to the U.S. Gulf Coast follow successful negotiations with several prospective shippers who have agreed, subject to regulatory approvals, to make shipping commitments of approximately 300,000 barrels per day to the U.S. Gulf Coast for an average term of 18 years during a binding open season which begins today. In addition, prospective shippers have also agreed to commit another 35,000 barrels per day to Wood River and Patoka, Illinois during a future open season expected in the third or fourth quarter of 2008. With these commitments Keystone has now secured long-term commitments for approximately 830,000 barrels per day for an average term of 18 years. These commitments represent approximately 75 per cent of the commercial design of the system.
“The Keystone expansion will be the first direct pipeline to connect a growing and reliable supply of Canadian crude oil with the largest refining market in North America,” says Hal Kvisle, TransCanada president and chief executive officer. “The Keystone Pipeline will be constructed and operated as an integrated system with delivery points in the U.S. Midwest and U.S. Gulf Coast.”
The Keystone expansion includes an approximate 3,200-kilometre (1,980-mile), 36-inch crude oil pipeline starting at Hardisty, Alberta and extending south to a delivery point near existing terminals in Port Arthur, Texas and, subject to shipper support, will include an additional approximate 80-kilometre (50-mile) pipeline lateral to the Houston, Texas area. With the addition of incremental pumping facilities, the Keystone Pipeline system could be further expanded from 1.1 million barrels per day to 1.5 million barrels per day.

The Keystone Pipeline Project - Oil From Canada

Project OVERVIEW

The 3,456-kilometre (2,148-mile) Keystone Pipeline will transport crude oil from Hardisty, Alberta to U.S. Midwest markets at Wood River and Patoka, Illinois and to Cushing, Oklahoma. The Canadian portion of the project involves the conversion of approximately 864 kilometres (537 miles) of existing Canadian Mainline pipeline facilities from natural gas to crude oil transmission service and construction of approximately 373 kilometres (232 miles) of pipeline, pump stations and terminal facilities at Hardisty, Alberta. The U.S. portion of the project includes construction of approximately 2,219 kilometres (1,379 miles) of pipeline and pump stations.

The Keystone Pipeline will have an initial nominal capacity of 435,000 barrels per day in late 2009 and will be expanded to a nominal capacity of 590,000 barrels per day in late 2010. Keystone has contracts with shippers totalling 495,000 barrels per day with an average term of 18 years.

Facts and Figures
>The total length of the Keystone Pipeline is 2,148 miles (3,456 kilometres). Approximately 1,379 miles (2,219 kilometres) of new pipeline will be constructed in the U.S.
>The Canadian portion of the project includes the construction of approximately 232 miles (373 kilometres) of new pipeline and the conversion of approximately 537 miles (864 kilometres) of existing TransCanada pipeline from natural gas to crude oil transmission.
>The new pipeline will be 30 inches (76 centimetres) in diameter to Illinois and 36 inches (91 centimetres) from the Nebraska/Kansas border to Cushing, Oklahoma.
>The pipeline will be buried with a minimum depth of cover of four feet (1.2 metres), depending on land use.
>The estimated operating pressure of new pipeline sections will be 1,440 psi (9,930 kPa). The existing pipeline proposed for conversion to crude oil transportation will be operated at its current approved allowable operating pressure of 880 psig (6,067 kPa).

Does it strike everyone odd that Canada has no problem in exploring and drilling for more oil but the United States puts a stranglehold on any new development of oil? The question is why?(Tim)

Oracle A Buy?

From Barrons

After delivering record-breaking earnings and revenue on June 25 for its fiscal fourth quarter, the business-software giant's shares got dinged -- dropping almost a full point, to around 21.68 -- because an overly bullish Morgan Stanley analyst had created unrealistic expectations just days before earnings were released. Profit and sales trends suggest Oracle's shares could still be worth $30.

Since then, the shares have been volatile, much like the market, settling in around 20.86 on Thursday. But little has happened at Oracle (ticker: ORCL) to change our minds since our cover story ("Larry's Payoff," May 19), which suggested the company's bold acquisition strategy was working and that the stock could trade as high as 30.
The empirical evidence and mostly positive commentary -- save for some caution about the economy -- from the earnings call only solidified our bullish premise. Cowen software analyst Peter Goldmacher is maintaining his Outperform recommendation after Oracle reported a 27% gain in quarterly earnings on a 24% increase in sales. Both beat the Street consensus.
Chief Executive Larry Ellison and Chief Financial Officer Safra Catz basically reiterated the fiscal 2009 outlook for profits, which Goldmacher estimates will rise about 16%. His forecast implies new license revenue -- a key measure of software growth -- will rise about 9% for the fiscal year and may prove "overly conservative."
"While the Street still struggles with Oracle's merger and acquisition strategy, customers appear to be embracing it," Goldmacher says. With Oracle shares trading at about 12 times estimated fiscal 2009 earnings, they appear attractive compared with those of German rival SAP (SAP), which trade around 15, he adds.
So why did the shares drop? Morgan Stanley software analyst Adam Holt, formerly of JPMorgan Chase, initiated bullish coverage of Oracle on June 23 -- two days before the earnings call -- with aggressive fiscal-year 2009 earnings estimates of $1.52 a share, compared with the Street's consensus of $1.50. Then he repeated his forecast in a research note published the day of the earnings call. His enthusiasm prompted traders to jump into the stock. Oracle beat the fourth-quarter 2008 consensus, but expressed caution about the first quarter of fiscal 2009 and didn't increase its earnings outlook for 2009.
Such noise and trading aren't unusual in earnings season, and they haven't dulled Holt's enthusiasm. He thinks the shares should hit 29 within 12 months.

This Week's Market Movers - Indicators

July 24 - Jobless Claims (consensus 375,000)
----------Existing Home Sales (4.940m)
July 25 - Durable Goods Orders (-0.4%)
----------Consumer Sentiment (56.4)
----------New Home Sales (505,000)

This Week's Market Movers - Earnings

July 21 - Apple (consensus $1.08)
----------Merck ($0.83)
----------Bank Of America ($0.53)
July 22 - Caterpillar ($1.54)
----------United Parcel ($0.85)
----------DuPont ($1.07)
----------United Health Group ($0.65)
July 23 - AT&T ($0.76)
----------ConocoPhillips ($3.40)
----------Pepsico ($1.02)
----------McDonalds ($0.86)
----------Boeing ($1.32)
----------Amazon ($0.26)
July 24 - Occidental Petroleum ($2.71)
----------3M ($1.35)
----------Burlington Northern ($1.30)
----------Dow Chemical ($0.85)

Honeywell 2nd Qtr 2008 Beats The Street

Honeywell Reports Second Quarter Sales Up 13% To $9.7 Billion And Earnings Up 23% To $0.96 Per Share
Company Raises 2008 EPS Guidance to $3.75 - 3.85
MORRIS TOWNSHIP, N.J., July 18, 2008 -- Honeywell (NYSE: HON) today announced second quarter 2008 sales increased 13% to $9.7 billion from $8.5 billion last year. Earnings were up 23% to $0.96 per share, versus $0.78 per share last year. Cash flow from operations was $1,042 million versus $983 million in the second quarter of 2007 and free cash flow (cash flow from operations less capital expenditures) was $853 million, compared to $820 million last year. Year to date the company has generated cash flow from operations of $1,763 million versus $1,561 million in the same period last year and free cash flow (cash flow from operations less capital expenditures) of $1,424 million, compared to $1,278 million in 2007.“Honeywell delivered a strong second quarter,” said Honeywell Chairman and CEO Dave Cote. “These results reflect our diverse and global business portfolio and the strength of Honeywell’s operating disciplines. Aerospace continued to win significant new contracts, Automation and Control Solutions made acquisitions in key adjacent markets, Transportation Systems added new platform wins to its turbo technologies leadership position, and Specialty Materials had sales growth in all businesses and regions.”“We expect double digit earnings growth in the second half,” continued Cote. “Our businesses are well positioned with long-term macro trends, such as safety, security, energy efficiency, and energy generation. We believe that our great positions in good industries and continued flawless execution on productivity initiatives – Honeywell Operating System, Velocity Product Development, and Functional Transformation – will help us deliver consistent and profitable growth even in this tough global economic environment.”

Honeywell is increasing its previously stated 2008 sales guidance to $37.6 – 38.2 billion and full-year earnings per share to $3.75 - 3.85. EPS guidance does not include the expected gain on the sale of the Consumables Solutions (CS) business. The company expects a gain on the sale of CS in the third quarter, which may be significantly offset by repositioning or other actions.

Yum Brands 2nd Qtr 2008 Beats The Street

Yum! Brands Inc. Reports Second-Quarter 2008 EPS of $0.45 per share,
16% Growth Excluding Special Items;
Raises Full-Year EPS Growth Forecast to 12% from 11%, Excluding Special Items
Louisville, Ky. (July 16, 2008) — Yum! Brands Inc. (NYSE: YUM) today reported results for the second quarter ended June 14, 2008.

SECOND-QUARTER HIGHLIGHTS
• Very strong system-sales growth of +43% in mainland China and +15% in Yum! Restaurants
International (YRI), fueled by broad-based unit development, same-store-sales growth, and favorable
foreign currency translation.
• Worldwide same-store-sales growth of +4%, including +14% in mainland China, +4% in YRI, and +2% in the U.S. (all figures are system-wide).
• Operating profit growth of +38% in China Division and +18% in YRI, with a 12% decline in the U.S.
• Lower effective tax rate versus prior year.
• Increased quarterly dividend by 27% with our yield now about 2%.


• EPS results as outlined below:
-------------------------------------Second Quarter----------------- Year-to-Date
-------------------------------2008---- 2007---- % Change-- 2008---- 2007---- % Change
EPS Excluding Special Items---- $0.45--- $0.39----- +16%----- $0.87---- $0.74 -----+17%
Special Items1--------------- ($0.00)--- – NM---------------- $0.08--- – NM
EPS--------------------------- $0.45--- $0.39----- +15%----- $0.95---- $0.74----- +28%

1 In the second quarter, special items totaled less than a $0.01 negative impact to EPS and included $4 million of pre-tax charges
related to U.S. restructuring partially offset by $1 million of pre-tax U.S. refranchising gains.

FULL-YEAR OUTLOOK
The Company, for the second time, raised its full-year 2008 EPS forecast. We expect to generate $1.89 per share or 12% growth, a $0.02 increase from our previous guidance in our first-quarter earnings release. This is prior to full-year net gains from special items of up to $0.06 per share as previously announced in the Company’s full-year 2007 earnings release on February 4, 2008. Full-year reported EPS, including all items, is expected to total up to $1.95, or 16% growth.

The Potential Of Oil Shale

Oil Shale

For decades, there has been talk about finding and developing alternative energy sources to solve the problems of a significant and worldwide energy crisis. Today, more than ever, momentum is building as key factors align to make it economically feasible to pursue domestic solutions to the energy problem. Oil Shale is one of the most abundant and accessible energy resources in the country.

• The United States is dependent on foreign oil

• The U.S. imports about 56% of its oil per year and this number is growing

•World demand for oil is growing by almost one billion barrels per year

•The U.S. consumes more than 7 billion barrels of oil per year

•Crude oil prices topped $138.00 per barrel in June of 2008

Part of the solution to our energy problem can be found right here in America—the development of our vast domestic resources of oil shale.Oil shale is one of the most abundant and accessible energy sources in the country.The U.S. geologic survey estimates there are 2.5 to 3 trillion barrels of proven resources of shale oil throughout the world. This is equivalent to one to two times the total world crude oil reserves.Studies show that 72% of the world’s recoverable shale oil lies within the boundaries of the United States, in comparison to only 5% of the world’s recoverable crude oil. The United States’ largest oil shale reserves are located in the Green River Formation, the area composed of southern Colorado, eastern Utah, and western Wyoming. It is estimated that the Green River Valley contains approximately 1.5 trillion barrels of proven resources from oil shale.That is enough oil to meet the United States’ present energy demands for the next 200 years.

Oil Shale Exploration - A No Brainer

Hatch and Bennett say one-year ban hurts U.S. energy independence
Utah senators slam congressional oil-shale development moratorium
By Patty Henetz The Salt Lake Tribune

A congressional moratorium on oil shale leasing and development hurts an established industry's efforts to find investors and imperils the nation's hopes for energy independence, Utah's senators said Tuesday. Sens. Orrin Hatch and Bob Bennett, supporting a Bush administration proposal to enhance U.S. fossil-fuel energy production, said during a news conference at the Utah Capitol that the moratorium imposed on the Bureau of Land Management means no one knows what the rules will be for oil shale and tar sands development. And that, in turn, means too few investors in what would be a multibillion-dollar industry that would enhance the nation's energy security, Bennett said. "It is irresponsible, it is malicious, for us not to proceed to open it up," he said. Bush tied his push for more fossil-fuel drilling and development to high gas prices. Hatch, however, said that while the companies hoping to develop oil shale "are our nation's energy Minutemen," they cannot bring down the price of oil today. "But they are going to do what it takes today to get our nation this energy in the future," Hatch said.

The BLM, acting according to requirements in the Energy Policy Act of 2005, has launched a broad oil shale and tar sand environmental analysis. Most of the oil shale is in western Colorado; all of the tar sands are in
eastern Utah. But last year, Sen. Ken Salazar, D-Colo., managed to attach a rider to the appropriations bill that set aside the BLM's leasing program for a year to figure out how extensive leasing and development would affect the environment and the communities in the oil shale and tar sands region. Attempts to overturn the moratorium have been unsuccessful. Salazar and Rep. Mark Udall, D-Colo., hope to extend the moratorium another year in hopes the resource can be developed with economic stability and environmental protection in mind. During the news conference Tuesday, however, industry representatives said they are ready to go, and Lt. Gov. Gary Herbert dismissed those who say the unconventional energy can't be developed sensitively. Oil Shale Exploration Co., the only Utah firm to receive one of six research, development and demonstration leases from the BLM, announced a partnership with Petrobras of Brazil and Mitsui & Co. Ltd. of Japan to study the feasibility of Petrobras' Petrosix technology on Utah oil shale on 40,000 acres of private land in eastern Utah.

OSEC's federal lease so far has allowed it to export waste rock left over from the 1980s shale bust to Alberta, Canada, for testing a different process. Both methods, however, use retorts to roast kerogen - the waxy hydrocarbon that hasn't undergone the geologic heat and pressure necessary to create petroleum - out of the shale. Amy Hansen, an OSEC spokeswoman, said the 300 tons of shale shipped to Canada yielded 9,000 gallons of kerogen, which can be further refined into kerosene or diesel fuel. Last year, a RAND Corp. study estimated that the region held the equivalent of 2 trillion barrels of oil, with 800 billion barrels recoverable. That is more than triple the proven oil reserves of Saudi Arabia. With current U.S. consumption of oil at 21 million barrels per day, the Rocky Mountain resource could last 400 years, the RAND study concluded.

Oil shale development requires huge amounts of water and electricity and emits tremendous amounts of carbon dioxide, the greenhouse gas emission most responsible for global climate disruption. The Utah Division of Water Resources has said Utah's share of the Colorado River could soon be fully allocated, so where the water would come from is unclear. Questions also remain regarding what oil-shale extraction would do to surface and groundwater quality. In March, 26 conservation groups wrote a letter to the U.S. Bureau of Land Management claiming the Bush administration's rush to develop oil shale and tar sands failed to include adequate public information about potential environmental, social and economic harm. The letter called on the BLM to focus on energy efficiency and renewable energy. Herbert said developing Utah's oil shale and tar sands would "unleash the power of the private sector." "We can do it reasonably in an environmentally sensitive way," Herbert said. Anyone disputing that "is not thinking clearly," he said. Gov. Jon Huntsman Jr., in Jackson, Wyo., for the Western Governors Association annual conference, supports oil shale and tar sands development. But he also joined other Western governors, including those who favor the moratorium, in addressing how to meet future energy demands in a clean manner that won't aggravate climate change.

Things Go Better With Coke

THE COCA-COLA COMPANY REPORTS SECOND QUARTER AND HALF YEAR 2008 RESULTS

>Second quarter EPS of $0.61; and $1.01 after considering items impacting comparability, an increase of 19 percent.
>Second quarter net revenue growth of 17 percent.
>Worldwide unit case volume increased 3 percent in the quarter, led by 5 percent growth in International while maintaining unit case volume in North America in a difficult operating environment.
>Operating income up 18 percent on a reported basis in the quarter; increased 20 percent after considering items impacting comparability.
>$400 to $500 million of annualized savings targeted by year-end 2011 from productivity initiatives.

ATLANTA, July 17, 2008 -- The Coca-Cola Company today reported second quarter earnings per share of $0.61, a decrease of 24 percent versus the prior year on a reported basis, and $1.01 after considering items impacting comparability, an increase of 19 percent. Earnings per share for the quarter included a net charge of $0.40 per share primarily related to a non-cash impairment charge at Coca-Cola Enterprises Inc. ("CCE"), an equity investee. Earnings per share for the second quarter of 2007 were $0.80 and included a net charge of $0.05 per share, primarily related to restructuring charges and a non-cash impairment charge at an equity investee.

Microsoft's 4th Qtr 2008 Earnings Off By $.01

Redmond, Wash. – July 17, 2008 – Microsoft Corp. today announced revenue of $15.84 billion for the fiscal fourth quarter ended June 30, 2008, an 18% increase over the same period of the prior year. Operating income and diluted earnings per share for the quarter were $5.68 billion and $0.46, representing growth of 42% and 48%, respectively, over the same period of the prior year.
For the fiscal year ended June 30, 2008, Microsoft announced revenue of $60.42 billion, an 18% increase over the prior year. Operating income and diluted earnings per share for the year were $22.49 billion and $1.87, representing yearly growth of 21% and 32%, respectively.
The growth rates for operating income and diluted earnings per share were impacted by a $1.1 billion charge in the fourth quarter of fiscal year 2007 related to the expansion of the company’s Xbox 360 warranty coverage.
“Delivering $60 billion in annual revenue is an outstanding accomplishment and a testament to the powerful combination of great technology solutions and strong execution by our partners and global sales and marketing teams,” said Kevin Turner, chief operating officer at Microsoft. “The outlook for fiscal year 2009 is positive given the breadth of our impressive technology portfolio and the expanding collection of online services we are bringing to market.”
This fiscal year marked the launch of Microsoft’s flagship server products: Windows Server 2008, SQL Server 2008 and Visual Studio 2008. Revenue growth was primarily driven by continued customer demand for all products, including Windows Vista, which has sold over 180 million licenses since launch, the 2007 Microsoft Office system, server software, and Xbox 360 consoles and games.
“We had a strong finish in the fourth quarter, which capped off an impressive year for the company. We grew revenue 18% for the year with earnings per share significantly outpacing that,” said Chris Liddell, chief financial officer at Microsoft. “Looking forward, despite difficult economic conditions, we will build upon the momentum exiting fiscal year 2008 and expect to deliver another year of double-digit revenue and earnings growth in fiscal year 2009.”

Business Outlook
Microsoft management offers the following guidance for the quarter ending September 30, 2008:
>Revenue is expected to be in the range of $14.7 billion to $14.9 billion.
>Operating income is expected to be in the range of $5.9 billion to $6.0 billion.
>Diluted earnings per share are expected to be $0.47 or $0.48.
>Management offers the following guidance for the full fiscal year ending June 30, 2009:
>Revenue is expected to be in the range of $67.3 billion to $68.1 billion.
>Operating income is expected to be in the range of $26.3 billion to $26.9 billion.
>Diluted earnings per share are expected to be in the range of $2.12 to $2.18.

What Is "Insured Unemployment Rate"

Some people think that to get these figures on unemployment the Government uses the number of persons filing claims for unemployment insurance (UI) benefits under State or Federal Government programs. But some people are still jobless when their benefits run out, and many more are not eligible at all or delay or never apply for benefits. So, quite clearly, UI information cannot be used as a source for complete information on the number of unemployed.
The number of unemployed persons in the United States and the national unemployment rate are produced from data collected in the Current Population Survey (CPS), a monthly survey of over 60,000 households. A person's unemployment status is established by responses to a series of questions on whether they have a job or are on layoff, whether they want a job and are available to work, and what they have done to look for work in the preceding 4 weeks. The unemployment rate is the number of unemployed persons as a percent of the labor force (employed and unemployed persons). See "Who is counted as unemployed?" for more information.
Statistics on persons receiving unemployment insurance benefits (sometimes called insured unemployment) in the United States are collected as a byproduct of unemployment insurance programs. Workers who lose their jobs and are covered by these programs typically file claims which serve as notice that they are beginning a period of unemployment. Claimants who qualify for benefits are counted in the insured unemployment figures. More information about the Unemployment Insurance program is available from the Department of Labor's Employment and Training Administration, including weekly data on UI claims.

Initial Unemployment Claims Up Slightly

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT
SEASONALLY ADJUSTED DATA

In the week ending July 12, the advance figure for seasonally adjusted initial claims was 366,000, an increase of 18,000 from the previous week's revised figure of 348,000. The 4-week moving average was 376,500, a decrease of 4,500 from the previous week's revised average of 381,000.
The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending July 5, a decrease of 0.1 percentage point from the prior week's unrevised rate of 2.4 percent.
The advance number for seasonally adjusted insured unemployment during the week ending July 5 was 3,122,000, a decrease of 81,000 from the preceding week's revised level of 3,203,000. The 4-week moving average was 3,142,750, an increase of 16,500 from the preceding week's revised average of 3,126,250.
The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 2.934 million.

June Housing Construction Up

NEW RESIDENTIAL CONSTRUCTION IN JUNE 2008

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residential
construction statistics for June 2008:

BUILDING PERMITS
Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,091,000. This is 11.6 percent (±1.2%) above the revised May rate of 978,000, but is 23.9 percent (±1.3%) below the revised June 2007 estimate of 1,433,000.
Single-family authorizations in June were at a rate of 613,000; this is 3.5 percent (±1.4%) below the May figure of 635,000. Authorizations of units in buildings with five units or more were at a rate of 446,000 in June.

HOUSING STARTS
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,066,000. This is 9.1 percent (±10.3%)* above the revised May estimate of 977,000, but is 26.9 percent (±5.9%) below the revised June 2007 rate of 1,458,000.
Single-family housing starts in June were at a rate of 647,000; this is 5.3 percent (±9.6%)* below the May figure of 683,000. The June rate for units in buildings with five units or more was 400,000.

HOUSING COMPLETIONS
Privately-owned housing completions in June were at a seasonally adjusted annual rate of 1,167,000. This is 1.2 percent (±11.9%)* above the revised May estimate of 1,153,000, but is 21.7 percent (±8.0%) below the revised June 2007 rate of 1,491,000. Single-family housing completions in June were at a rate of 859,000; this is 2.9 percent (±10.9%)* below the May figure of 885,000. The June rate for units in buildings with five units or more was 289,000.

CPI Increases More Than Expected - Blame It On Gasoline And Food

On a seasonally adjusted basis, the CPI-U advanced 1.1 percent in June, following a 0.6 percent increase in May. The index for energy rose sharply for the second straight month, increasing 6.6 percent in June following a 4.4 percent increase in May. The increase in the energy index accounted for around two-thirds of the overall increase in the all items index in June. The index for petroleum-based energy advanced 10.0 percent and the index for energy services rose 1.5 percent. The food index rose 0.8 percent in June after rising 0.3 percent in May. The index for food at home went up 1.0 percent in June, with indexes for four of the six major grocery store food groups sharply accelerating.

The index for all items less food and energy increased 0.3 percent in June, following a 0.1 percent rise in April and a 0.2 percent increase in May. Larger increases in the indexes for shelter and for tobacco and smoking products and an upturn in the apparel index contributed to the larger increase.

Abbott Labs 2nd Qtr 2008 Earnings Beats The Street

Abbott Reports Stronger-than-Expected Sales and Earnings Growth in Second Quarter and Raises Full-Year Outlook

Worldwide Sales Increased 14.8 Percent
Adjusted EPS Growth of 21.7 Percent (GAAP up 34.9 Percent)
Worldwide Pharmaceutical Sales Increased 16.7 Percent
Worldwide Medical Products Sales Increased 14.7 Percent
Eight New Regulatory Approvals Received Year-to-Date
Company Raises Full-Year Sales and EPS Forecast

Abbott Park, Illinois (NYSE: ABT) — Abbott today announced financial results for the second quarter ended June 30, 2008.

Diluted earnings per share, excluding specified items, were $0.84, above Abbott's previously announced guidance range of $0.78 to $0.80, reflecting 21.7 percent growth. Diluted earnings per share under Generally Accepted Accounting Principles (GAAP) were $0.85, up 34.9 percent. This outperformance was driven by higher sales performance across the company, an improved gross margin, and higher ongoing income related to the recently concluded TAP joint venture.
Worldwide sales increased 14.8 percent to $7.3 billion, including a favorable 5.9 percent effect of exchange rates.
Worldwide pharmaceutical sales increased 16.7 percent driven by double-digit growth in HUMIRA®, Niaspan®, and Kaletra®. Today, Abbott is raising its forecast for global HUMIRA sales to more than $4.3 billion in 2008.
Worldwide medical products sales increased 14.7 percent, driven by 17.2 percent growth in global diagnostics sales, and 15.7 percent growth in global vascular sales.
Worldwide nutritional products sales growth was led by 21.3 percent growth in international nutritionals, with continued strong performance in emerging markets.
Year-to-date, Abbott has received eight major regulatory approvals, including the XIENCE V™ drug-eluting stent.

"Abbott achieved another quarter of strong performance across our diverse mix of global businesses, with particularly strong results internationally," said Miles D. White, chairman and chief executive officer, Abbott. "Based on our first-half results, as well as our outlook for the remainder of the year, we're raising our 2008 forecast for both sales growth and earnings-per-share. We're also confirming our expectation for continued double-digit earnings-per-share growth in 2009."

Wells Fargo Beats The Street - Raises Dividend

WELLS FARGO EARNS $1.8 BILLION ON RECORD REVENUE; INCREASES DIVIDEND 10%

>Net income of $1.8 billion compared with $2.3 billion a year ago
>Diluted earnings per share of $0.53 compared with $0.67 a year ago
>Record revenue of $11.5 billion, up 16 percent from prior year and 34 percent (annualized) from prior quarter
>Record cross-sell for both retail and commercial customers
>Provision for credit losses of $3.0 billion (including reserve build of $1.5 billion)
>Positive operating leverage (revenue growth of 16 percent; expense growth of 2 percent from prior year)
>Average loans up 18 percent from prior year and 8 percent (annualized) from prior quarter
>Average earning assets up 20 percent from prior year and 15 percent (annualized) from prior quarter
>Net interest margin of 4.92 percent, up 23 basis points from prior quarter
>Tier 1 capital of 8.24 percent, up from 7.92 percent at March 31, 2008, and 7.59 percent at December 31, 2007

SAN FRANCISCO — Wells Fargo & Company (NYSE:WFC) reported diluted earnings per common share of $0.53 for second quarter 2008 compared with $0.60 in first quarter 2008 and $0.67 in second quarter 2007. Net income was $1.75 billion compared with $2.00 billion in first quarter 2008 and $2.28 billion in second quarter 2007. The Company also announced a quarterly common stock dividend of 34 cents per share, up 10 percent from the previous dividend of 31 cents per share. "Wells Fargo continued to strengthen its franchise during the second quarter," said President and CEO John Stumpf. "Earnings per share were 14 cents below that of last year due to $2.3 billion of higher provision expense, including a credit reserve build of $1.5 billion (30 cents per share). We were able to lend more to current customers where we believed it was prudent and properly priced. We grew core deposits while reducing funding costs. We achieved record cross-sell results with our retail and commercial customers — a testament to our relationship-based strategy and our 160,000 team members who serve our customers. We are open for business and getting lots of it. We also continued to benefit from opportunities in this environment to gain new business and customers through selective acquisitions. We maintained a strong balance sheet and, for the 21st consecutive year, increased our dividend. We're still affected by the weak economy, but we believe we're one of the best positioned in financial services to grow through this adversity and to build an even stronger company for our team members, customers, communities and shareholders."
Financial Performance
“Wells Fargo continued to profitably build its franchise this quarter, at a time when many in our industry are primarily focused on fixing rather than growing their companies,” said Chief Financial Officer Howard Atkins. “Despite a $3 billion provision for loan losses in the quarter — including a $1.5 billion credit reserve build — the Company earned a $1.8 billion quarterly profit, generated a return on equity of 14.6 percent, increased Tier 1 capital in the quarter by 32 basis points to 8.24 percent, and increased the combination of capital and loan loss allowance to 9.7 percent of average earning assets from 9.1 percent linked quarter. The continued profitable growth in our franchise is reflected in the growth of our pre-tax pre-provision income to $5.6 billion, up $1.4 billion, or 34 percent, from a year ago, driven by a 20 percent increase in earning assets, a 16 percent increase in revenue, a 10 percent increase in noninterest income, record cross-sell of 5.64 products in our retail business and 6.3 products in our commercial business, an increase in the net interest margin to 4.92 percent, up 23 basis points linked quarter, and an increase in operating leverage, with expenses up only 2 percent versus 16 percent revenue growth. “In broad terms, the credit crisis has created incremental earnings opportunities for Wells Fargo largely offsetting our incremental charge-offs from the crisis. Year-to-date total net interest income, for example, was up $1.8 billion from the first half of 2007, roughly equal to the increase in net charge-offs for the same period, even after adjusting charge-offs for the impact of our National Home Equity Group’s new charge-off policy. Few other large financial institutions have had the capacity to realize the opportunities generated by the credit crisis, and if opportunities to add attractive assets, add new customers and gain market share and wallet share continue, the long-term benefits could very well last beyond the peak in credit costs.”As a result of the Company’s performance and confidence in long-term growth, the Board of Directors increased the Company’s third quarter common stock dividend to $0.34 per share, an increase of 10 percent from the second quarter dividend of $0.31 per share.

The current earnings from companies reporting so far are great. The Wells Fargo news is especially upbeat news. Maybe a market bottom has been reached. Afterall, earnings should be the driving force behind whether the market moves up or down (Tim).