Wednesday, November 26, 2008
Bad News For Durable Goods
Durable goods orders in October plummeted by more than double market expectations, pointing to a deep decline in the economy in the fourth quarter. Durable goods orders dropped 6.2 percent in October, following a 0.2 percent decline in September. The fall in the latest month was far worse than the market forecast for a 2.6 percent decrease. Excluding the transportation component, new orders fell 4.4 percent, after declining 2.3 percent the month before. The consensus had forecast a 1.5 percent contraction.The drop in October was led by transportation and primary metals, which fell 11.1 percent and 12.6 percent, respectively. Declines for the latest month were widespread – every major industry group fell in October. The credit crunch and gloomy economic outlook have hit business investment. The outlook for capital equipment spending is not good as nondefense capital goods orders declined 3.6 percent after a 1.0 percent decrease in September.Year-on-year, new orders for durable goods worsened to down 10.6 percent in October from down 4.6 percent the previous month. The decrease in the October headline number indicates that the current contraction may be worse than many have built in.
HP 4th Quarter 2008 Earnings
HP Reports Fourth Quarter 2008 Results
>Fourth quarter net revenue up 19%, or $5.3 billion, from a year earlier to $33.6 billion
>Fiscal 2008 net revenue up 13%, or $14.1 billion, to $118.4 billion
>Fourth quarter GAAP operating profit up 4% to $2.7 billion; $0.84 earnings per share, up from $0.81 a year earlier
>Fourth quarter non-GAAP operating profit up 21% to $3.4 billion; $1.03 earnings per share, up from $0.86 a year earlier
>Fourth quarter cash flow from operations of $3.3 billion; fiscal 2008 cash flow from operations of $14.6 billion, up 52% from a year earlier
>Closed EDS acquisition; integration on track
>Fourth quarter net revenue up 19%, or $5.3 billion, from a year earlier to $33.6 billion
>Fiscal 2008 net revenue up 13%, or $14.1 billion, to $118.4 billion
>Fourth quarter GAAP operating profit up 4% to $2.7 billion; $0.84 earnings per share, up from $0.81 a year earlier
>Fourth quarter non-GAAP operating profit up 21% to $3.4 billion; $1.03 earnings per share, up from $0.86 a year earlier
>Fourth quarter cash flow from operations of $3.3 billion; fiscal 2008 cash flow from operations of $14.6 billion, up 52% from a year earlier
>Closed EDS acquisition; integration on track
Revenue grew 17% in the Americas, 22% in Europe, the Middle East and Africa and 14% in Asia Pacific to $14.0 billion, $14.1 billion and $5.5 billion, respectively. When adjusted for the effects of currency, revenue grew 17% in the Americas, 15% in Europe, the Middle East and Africa and 12% in Asia Pacific. Revenue from outside of the United States in the fourth quarter accounted for 68% of total revenue, with revenue in the BRIC countries (Brazil, Russia, India and China) growing 23% over the prior-year period and accounting for 9% of total revenue.
Personal Systems Group
Personal Systems Group (PSG) revenue grew 10% to $11.2 billion, with unit shipments up 19%. Notebook revenue for the quarter grew 21%, while Desktop revenue declined 2%. Commercial client revenue grew 7%, while Consumer client revenue increased 15%. Operating profit was $616 million, or 5.5% of revenue, up from $589 million, or 5.8% of revenue, in the prior-year period.
Personal Systems Group (PSG) revenue grew 10% to $11.2 billion, with unit shipments up 19%. Notebook revenue for the quarter grew 21%, while Desktop revenue declined 2%. Commercial client revenue grew 7%, while Consumer client revenue increased 15%. Operating profit was $616 million, or 5.5% of revenue, up from $589 million, or 5.8% of revenue, in the prior-year period.
Imaging and Printing Group
Imaging and Printing Group (IPG) revenue declined 1% to $7.5 billion. Supplies revenue grew 9%, while Commercial hardware revenue and Consumer hardware revenue declined 10% and 21%, respectively. Printer unit shipments decreased 8%, with Consumer printer hardware units down 8% and Commercial printer hardware units down 9%. Operating profit was $1.2 billion, or 15.5% of revenue, versus $1.1 billion, or 14.5% of revenue, in the prior-year period.
Imaging and Printing Group (IPG) revenue declined 1% to $7.5 billion. Supplies revenue grew 9%, while Commercial hardware revenue and Consumer hardware revenue declined 10% and 21%, respectively. Printer unit shipments decreased 8%, with Consumer printer hardware units down 8% and Commercial printer hardware units down 9%. Operating profit was $1.2 billion, or 15.5% of revenue, versus $1.1 billion, or 14.5% of revenue, in the prior-year period.
Enterprise Storage and Servers
Enterprise Storage and Servers (ESS) reported total revenue of $5.1 billion, down 1%. Storage revenue grew 13% led by 16% revenue growth in the midrange EVA product line and 9% revenue growth in the high-end XP product line. Industry Standard Server revenue declined 3% and Business Critical Systems revenue declined 10% while ESS blade revenue increased 43%. Operating profit was $705 million, or 13.9% of revenue, down from $736 million, or 14.4% of revenue, in the prior-year period.
HP Services
HP Services (HPS) revenue increased 99% to $8.6 billion, led by $3.9 billion revenue resulting from the EDS acquisition for the period between the Aug. 26 acquisition date and Oct. 31. Excluding EDS, HPS revenue grew 10%. Revenue in Technology Services and Outsourcing Services grew 10% and 15%, respectively, with revenue in Consulting and Integration up 2%. Operating profit was $920 million, or 10.6% of revenue, compared to $515 million, or 11.8% of revenue, in the prior-year period.
HP Software
HP Software revenue grew 13% to $855 million, led by 15% growth in the Business Technology Optimization portfolio. Operating profit was $195 million, or 22.8% of revenue, up from $145 million, or 19.1% of revenue, in the prior-year period.
HP Financial Services
HP Financial Services (HPFS) reported revenue of $691 million, up 5%. Financing volume increased 5%, and net portfolio assets declined 2%. Operating margin was 7.4% of revenue, up from 7.3% in the prior-year period.
Monday, November 24, 2008
Citi Bailout
US agrees bail-out for Citigroup
By Greg Farrell and Henny Sender in New York and Andrew Ward in Washington
Published: November 24 2008 06:30 Last updated: November 24 2008 13:17
The US government rode to the rescue of Citigroup, entering an agreement to guarantee up to $306bn in problematic assets and inject $20bn in capital to restore confidence in a bank that defines the term “too big to fail”.
The 11th hour transaction, announced just before midnight on Sunday in the US, calls for Citi to absorb the first $29bn in losses it sustains from its portfolio of risky assets – from residential mortgages to commercial real estate and leveraged loans, collateralised debt obligations and auction rate securities. Federal government entities will stand behind 90 per cent of the remaining losses, which could amount to $249bn.
The cost of insuring Citi’s debt almost halved on Monday as the rescue package was seen to lessen the risk of default. Its five-year credit default swap tightened from close to 500 basis points on Friday to 255bp, or $255,000 a year to protect $10m of debt.
The news also sent Citi’s shares in Germany as much as 55 per cent higher at €4.60.
Under the terms of the arrangement, the US Treasury will invest $20bn in Citi preferred stock under the federal government’s troubled asset relief programme (Tarp) and receive dividends at a rate of 8 per cent annually. On top of that amount, Citi is receiving an additional $7bn in return for preferred shares issued to both the Treasury and the Federal Deposit Insurance Corporation for their roles in guaranteeing the risky assets.
In addition to the $27bn capital infusion, the reconstruction of Citi’s balance sheet in effect frees up an additional $13bn, so the total capital benefit to Citi will be $40bn.
Following the agreement Citi promised to cut its dividend to 1 cent a share and to abide by restrictions on certain types of executive compensation.
Gary Crittenden, Citi’s chief financial officer, said that last week’s plunge in the bank’s share price, from $9.36 last Monday to $3.77 at Friday’s close, was “very concerning.” At Friday’s share price, the bank’s market capitalisation stood at a mere $20.5bn, according to Bloomberg.
By Greg Farrell and Henny Sender in New York and Andrew Ward in Washington
Published: November 24 2008 06:30 Last updated: November 24 2008 13:17
The US government rode to the rescue of Citigroup, entering an agreement to guarantee up to $306bn in problematic assets and inject $20bn in capital to restore confidence in a bank that defines the term “too big to fail”.
The 11th hour transaction, announced just before midnight on Sunday in the US, calls for Citi to absorb the first $29bn in losses it sustains from its portfolio of risky assets – from residential mortgages to commercial real estate and leveraged loans, collateralised debt obligations and auction rate securities. Federal government entities will stand behind 90 per cent of the remaining losses, which could amount to $249bn.
The cost of insuring Citi’s debt almost halved on Monday as the rescue package was seen to lessen the risk of default. Its five-year credit default swap tightened from close to 500 basis points on Friday to 255bp, or $255,000 a year to protect $10m of debt.
The news also sent Citi’s shares in Germany as much as 55 per cent higher at €4.60.
Under the terms of the arrangement, the US Treasury will invest $20bn in Citi preferred stock under the federal government’s troubled asset relief programme (Tarp) and receive dividends at a rate of 8 per cent annually. On top of that amount, Citi is receiving an additional $7bn in return for preferred shares issued to both the Treasury and the Federal Deposit Insurance Corporation for their roles in guaranteeing the risky assets.
In addition to the $27bn capital infusion, the reconstruction of Citi’s balance sheet in effect frees up an additional $13bn, so the total capital benefit to Citi will be $40bn.
Following the agreement Citi promised to cut its dividend to 1 cent a share and to abide by restrictions on certain types of executive compensation.
Gary Crittenden, Citi’s chief financial officer, said that last week’s plunge in the bank’s share price, from $9.36 last Monday to $3.77 at Friday’s close, was “very concerning.” At Friday’s share price, the bank’s market capitalisation stood at a mere $20.5bn, according to Bloomberg.
Hanesbrands 3rd Quarter 2008 Earnings
WINSTON-SALEM, N.C.--(BUSINESS WIRE)--Oct. 29, 2008--Hanesbrands Inc. (NYSE: HBI), a leading marketer of innerwear, outerwear and hosiery apparel, today reported results for the 2008 third quarter.
Total net sales in the quarter were unchanged at $1.15 billion. Earnings per diluted share in the quarter were $0.17. Excluding actions and the previously announced impact of a retailer bankruptcy, non-GAAP earnings per diluted share increased by 17 percent to $0.56 as a result of reduced long-term debt, lower base interest rates, and lower income tax expense as a result of the company's global supply chain strategy.
"We continued our strategic execution in the third quarter and delivered comparable sales and solid earnings per share in a difficult environment," Hanesbrands Chief Executive Officer Richard A. Noll said. "We remain optimistic about our earnings potential for the fourth quarter due to favorability of expenses that may more than offset the challenges of higher commodity costs and an uncertain sales environment."
Noteworthy Financial Highlights
Selected highlights for the quarter and nine months ended Sept. 27, 2008, compared with the year-ago periods ended Sept. 29, 2007, include:
Total net sales in the quarter held steady at $1.15 billion, increasing slightly. Sales increases in the innerwear and international segments were offset primarily by declines in the sheer hosiery segment and the other segment. The 2 percent sales increase in the innerwear segment was driven by strong Hanes male underwear sales. In the outerwear segment, Champion activewear sales increased by double-digits.
Total net sales for the nine-month period were down 3.1 percent to $3.21 billion.
GAAP earnings per diluted share in the quarter decreased by $0.23 to $0.17. This includes a $0.35 reduction per diluted share for restructuring and related charges and $0.04 per diluted share for the bankruptcy of Mervyn's, a regional retailer, which announced its liquidation plans after the end of the third quarter.
Excluding actions and the previously announced Mervyn's bankruptcy impact, non-GAAP diluted EPS increased by $0.08 to $0.56. Excluding actions only, non-GAAP diluted EPS increased by $0.04 to $0.52.
For the nine-month period, non-GAAP diluted EPS, excluding actions, increased by 23 percent to $1.59.
Exxon 3rd Quarter 2008 Earnings
October 30, 2008 09:11 AM Eastern Time
Exxon Mobil Corporation Announces Estimated Third Quarter 2008 Results
Exxon Mobil Corporation Announces Estimated Third Quarter 2008 Results
"ExxonMobil’s strong results in the third quarter of 2008 demonstrate the continued success of our disciplined business approach. Third quarter earnings excluding special items were a record $13,380 million, up 42% from the third quarter of 2007. Earnings per share excluding special items were up 52% reflecting the benefit of the share purchase program. Record net income for the third quarter of $14,830 million was up 58% from the third quarter of 2007. Net income included an after-tax special gain of $1,620 million from the sale of a natural gas transportation business in Germany and an after-tax special charge of $170 million reflecting a provision for interest related to the Valdez punitive damages award. Earnings for the first nine months of 2008 excluding special items were $36,240 million, an increase of 25% over the first nine months of 2007. Net income for the first nine months of 2008 was $37,400 million, up 29% versus 2007.
Whole Foods Update
From Barrons -
Shares in the nation's largest organic grocer, with more than 275 stores, have plunged by a sickening 80% since, to a new 52-week low of $8.38 a share. We first wrote positively about Whole Foods (ticker: WFMI) in March 2003, and the stock subsequently ran up 210% to $79, before beginning its long descent.
If you're still in the stock, it's probably best just to swallow hard and hold on. Admittedly, the current economic environment works more to the advantage of Wal-Mart-Stores (WMT) and Costco (COST) groceries, but longer-term shifts in consumer appetites should restore Whole Foods to better health.
The company's $700 million cash-and- debt acquisition of rival Wild Oats, with 109 stores, which we applauded at the time ("Oats: A Natural Fit for Whole Foods," March 5, 2007), has given the company indigestion. As John Mackey, founder and CEO of Whole Foods, said of the Oats purchase on a recent earnings conference call: "If I could get my money back, I'd take it back" -- wishful thinking not only for him but for his shareholders.
Beyond the difficulty the company has had in integrating Oats' smaller stores, only 55 of which remain, Whole Foods has had to wage intermittent antitrust fights with the government. The company estimates these skirmishes will cost it six to eight cents a share in fiscal 2009, which began Sept. 29.
Nevertheless, the $1.2 billion-market-cap company has started to include Wild Oats' stores in its comparable-store-sales numbers. For the last four weeks of its fiscal fourth quarter, Oats' comparable-store sales rose 4.6%, versus 0.4% for its total comparable-store tally.
Whole Foods expects sales to grow sales 4.4% this fiscal year to about $8.3 billion, and recently said it was raising $425 million by selling preferred shares to Green Equity Investors. These are convertible into a 17% stake in the company at $14.50 a share, a hefty premium to current levels.
Jackson Robinson, manager of the Winslow Green Growth Fund (WGGFX) and an early bull on the stock, said he sold almost all of his position in Whole Foods when the shares were in the high teens. But Robinson still believes that Whole Foods is "a stock that belongs on one's shopping list."
He cites the growing popularity of natural and organic foods, consumers' rising interest in buying locally grown food -- something Whole Foods has long championed -- and the company's renewed focus on cost containment, decentralized management and value-oriented, private- label products. Besides, the shares now trade at a nearly 30% discount to book value per share.
"If the market were anywhere near normal I believe we'd be beyond the bottom" for Whole Foods, says Robinson. Value shoppers, take note.
Shares in the nation's largest organic grocer, with more than 275 stores, have plunged by a sickening 80% since, to a new 52-week low of $8.38 a share. We first wrote positively about Whole Foods (ticker: WFMI) in March 2003, and the stock subsequently ran up 210% to $79, before beginning its long descent.
If you're still in the stock, it's probably best just to swallow hard and hold on. Admittedly, the current economic environment works more to the advantage of Wal-Mart-Stores (WMT) and Costco (COST) groceries, but longer-term shifts in consumer appetites should restore Whole Foods to better health.
The company's $700 million cash-and- debt acquisition of rival Wild Oats, with 109 stores, which we applauded at the time ("Oats: A Natural Fit for Whole Foods," March 5, 2007), has given the company indigestion. As John Mackey, founder and CEO of Whole Foods, said of the Oats purchase on a recent earnings conference call: "If I could get my money back, I'd take it back" -- wishful thinking not only for him but for his shareholders.
Beyond the difficulty the company has had in integrating Oats' smaller stores, only 55 of which remain, Whole Foods has had to wage intermittent antitrust fights with the government. The company estimates these skirmishes will cost it six to eight cents a share in fiscal 2009, which began Sept. 29.
Nevertheless, the $1.2 billion-market-cap company has started to include Wild Oats' stores in its comparable-store-sales numbers. For the last four weeks of its fiscal fourth quarter, Oats' comparable-store sales rose 4.6%, versus 0.4% for its total comparable-store tally.
Whole Foods expects sales to grow sales 4.4% this fiscal year to about $8.3 billion, and recently said it was raising $425 million by selling preferred shares to Green Equity Investors. These are convertible into a 17% stake in the company at $14.50 a share, a hefty premium to current levels.
Jackson Robinson, manager of the Winslow Green Growth Fund (WGGFX) and an early bull on the stock, said he sold almost all of his position in Whole Foods when the shares were in the high teens. But Robinson still believes that Whole Foods is "a stock that belongs on one's shopping list."
He cites the growing popularity of natural and organic foods, consumers' rising interest in buying locally grown food -- something Whole Foods has long championed -- and the company's renewed focus on cost containment, decentralized management and value-oriented, private- label products. Besides, the shares now trade at a nearly 30% discount to book value per share.
"If the market were anywhere near normal I believe we'd be beyond the bottom" for Whole Foods, says Robinson. Value shoppers, take note.
Tuesday, November 18, 2008
GE Gets Airbus Contract
GE Awarded A350XWB Wing Trailing Edge Package
HAMBLE, United Kingdom--(BUSINESS WIRE)--
HAMBLE, United Kingdom--(BUSINESS WIRE)--
GE Aviation today announced a contract award with Airbus for the design and manufacture of composite and metallic sub assemblies and components for the A350XWB wing trailing edge. GE’s facility in Hamble will provide the design and development, and the manufacturing will be carried out with GE in Hamble and Suzhou China.
“With this award for the A350XWB, GE builds on its solid reputation as a supplier to Airbus for trailing edge sub assemblies and components for A340, A380 and A400M. We are providing an all-around solution to Airbus for major structural components,” said Lorraine Bolsinger, president and CEO for GE Aviation Systems. “This program takes advantage of GE’s global infrastructure in support of Airbus’ already successful A350XWB.”
The A350XWB package consists of the trailing edge details & the trailing edge secondary structures. These components and sub assemblies interface with the rear spar, wing skins and the movable portion of the wing to form a major part of the wing.
All components are designed using the latest computer technology and manufacturing techniques, and utilize GE’s investment in extended facilities including thin wall high speed machining, advanced composites and determinate assembly methods, to achieve the best possible optimization.
“With this award for the A350XWB, GE builds on its solid reputation as a supplier to Airbus for trailing edge sub assemblies and components for A340, A380 and A400M. We are providing an all-around solution to Airbus for major structural components,” said Lorraine Bolsinger, president and CEO for GE Aviation Systems. “This program takes advantage of GE’s global infrastructure in support of Airbus’ already successful A350XWB.”
The A350XWB package consists of the trailing edge details & the trailing edge secondary structures. These components and sub assemblies interface with the rear spar, wing skins and the movable portion of the wing to form a major part of the wing.
All components are designed using the latest computer technology and manufacturing techniques, and utilize GE’s investment in extended facilities including thin wall high speed machining, advanced composites and determinate assembly methods, to achieve the best possible optimization.
HP 4th Quarter 2008 Preliminary Earnings
HP Announces Preliminary Fourth Quarter Results; Provides 2009 Outlook
--Fourth quarter net revenue up 19%, or $5.3 billion, from a year earlier to $33.6 billion
--Fourth quarter GAAP earnings per share of $0.84, up 4% from $0.81 a year earlier
--Fourth quarter non-GAAP earnings per share of $1.03, up 20% from $0.86 a year earlier
--Fiscal 2008 net revenue up 13%, or $14.1 billion, to $118.4 billion
PALO ALTO, Calif., Nov 18, 2008 (BUSINESS WIRE) --HP (NYSE:HPQ) today announced preliminary results for the fourth fiscal quarter 2008 with revenue of $33.6 billion, a year-over-year increase of 19% or 16% when adjusted for the effects of currency. Excluding the impact of the EDS acquisition, HP revenue grew 5% year over year or 2% when adjusted for the effects of currency.
In the fourth quarter, preliminary GAAP and non-GAAP diluted earnings per share (EPS) were $0.84 and $1.03, respectively. Non-GAAP EPS estimates exclude after-tax adjustments related to amortization of purchased intangibles, restructuring, in-process R&D and other acquisition-related charges of approximately $0.19 per share.
"HP delivered another solid quarter as it continues to benefit from its global reach, diverse customer base, broad portfolio and numerous cost initiatives," said Mark Hurd, HP chairman and chief executive officer. "Our ability to execute in a challenging marketplace differentiates HP, enabling it to increase share, expand earnings and emerge from the current economic environment as a stronger force."
Fiscal 2009 outlook
In providing its outlook for the first fiscal quarter and the full fiscal year 2009, the company has taken into consideration the current economic environment and the relative strength of the U.S. dollar. Based on current currency exchange rates, the company now expects an unfavorable year-over-year currency impact on revenue of approximately 5 percentage points in the first quarter and roughly 6 - 7 percentage points for the full year and this impact is reflected in its outlook.
For the first fiscal quarter of 2009, HP expects revenue of approximately $32.0 billion to $32.5 billion, GAAP diluted EPS in the range of $0.80 to $0.82, and non-GAAP diluted EPS in the range of $0.93 to $0.95. Q109 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.13 per share, related primarily to the amortization of purchased intangibles.
For the full fiscal year 2009, HP expects revenue of approximately $127.5 billion to $130.0 billion, GAAP diluted EPS in the range of $3.38 to $3.53, and non-GAAP diluted EPS in the range of $3.88 to $4.03. FY09 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.50 per share, related primarily to the amortization of purchased intangibles.
--Fourth quarter net revenue up 19%, or $5.3 billion, from a year earlier to $33.6 billion
--Fourth quarter GAAP earnings per share of $0.84, up 4% from $0.81 a year earlier
--Fourth quarter non-GAAP earnings per share of $1.03, up 20% from $0.86 a year earlier
--Fiscal 2008 net revenue up 13%, or $14.1 billion, to $118.4 billion
PALO ALTO, Calif., Nov 18, 2008 (BUSINESS WIRE) --HP (NYSE:HPQ) today announced preliminary results for the fourth fiscal quarter 2008 with revenue of $33.6 billion, a year-over-year increase of 19% or 16% when adjusted for the effects of currency. Excluding the impact of the EDS acquisition, HP revenue grew 5% year over year or 2% when adjusted for the effects of currency.
In the fourth quarter, preliminary GAAP and non-GAAP diluted earnings per share (EPS) were $0.84 and $1.03, respectively. Non-GAAP EPS estimates exclude after-tax adjustments related to amortization of purchased intangibles, restructuring, in-process R&D and other acquisition-related charges of approximately $0.19 per share.
"HP delivered another solid quarter as it continues to benefit from its global reach, diverse customer base, broad portfolio and numerous cost initiatives," said Mark Hurd, HP chairman and chief executive officer. "Our ability to execute in a challenging marketplace differentiates HP, enabling it to increase share, expand earnings and emerge from the current economic environment as a stronger force."
Fiscal 2009 outlook
In providing its outlook for the first fiscal quarter and the full fiscal year 2009, the company has taken into consideration the current economic environment and the relative strength of the U.S. dollar. Based on current currency exchange rates, the company now expects an unfavorable year-over-year currency impact on revenue of approximately 5 percentage points in the first quarter and roughly 6 - 7 percentage points for the full year and this impact is reflected in its outlook.
For the first fiscal quarter of 2009, HP expects revenue of approximately $32.0 billion to $32.5 billion, GAAP diluted EPS in the range of $0.80 to $0.82, and non-GAAP diluted EPS in the range of $0.93 to $0.95. Q109 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.13 per share, related primarily to the amortization of purchased intangibles.
For the full fiscal year 2009, HP expects revenue of approximately $127.5 billion to $130.0 billion, GAAP diluted EPS in the range of $3.38 to $3.53, and non-GAAP diluted EPS in the range of $3.88 to $4.03. FY09 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.50 per share, related primarily to the amortization of purchased intangibles.
October PPI - Down Big Time
The Producer Price Index for Finished Goods fell 2.8 percent in October, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease followed a 0.4-percent decline in September and a 0.9-percent fall in August. At the earlier stages of processing, prices received by manufacturers of intermediate goods moved down 3.9 percent in October after declining 1.2 percent in September, and the crude goods index dropped 18.6 percent subsequent to a 7.9-percent decrease in the previous month. Among finished goods in October, prices for energy goods fell 12.8 percent compared with a 2.9-percent decline a month earlier. The index for consumer foods edged down 0.2 percent following a 0.2-percent increase in the prior month. Prices for goods other than foods and energy rose 0.4 percent for the second consecutive month.
Monday, November 17, 2008
Costco October 2008 Sales
ISSAQUAH, WA, Nov 06, 2008 (MARKET WIRE via COMTEX News Network) -- Costco Wholesale Corporation ("Costco") (NASDAQ: COST) today reported net sales of $5.30 billion for the month of October, the four weeks ended November 2, 2008, an increase of two percent from $5.21 billion in the same four-week period last year.
For the first nine weeks of its reporting period ended November 2, 2008, the Company reported net sales of $11.97 billion, an increase of six percent from $11.26 billion during the similar period last year.
For the first nine weeks of its reporting period ended November 2, 2008, the Company reported net sales of $11.97 billion, an increase of six percent from $11.26 billion during the similar period last year.
Costco 4th Quarter 2008 Earnings
ISSAQUAH, WA, Oct 08, 2008 (MARKET WIRE via COMTEX News Network) -- Costco Wholesale Corporation (NASDAQ: COST) announced today its operating results for the 16 weeks (fourth quarter) and the 52 weeks (fiscal year) ended August 31, 2008, and its September sales results.
Net sales for the 16-week fourth quarter ended August 31, 2008 increased 13%, to $22.63 billion from $20.09 billion during the 16-week fourth quarter ended September 2, 2007. Comparable warehouse sales during the 16-week fourth quarter of fiscal 2008 increased 9% over the corresponding 16-week period last year.
Net sales for fiscal 2008, the 52 weeks ended August 31, 2008, were $70.98 billion, an increase of 13% from $63.09 billion during the prior 52-week fiscal year ended September 2, 2007. Comparable warehouse sales increased 8% over the corresponding 52-week period of the prior year.
Excluding gasoline price inflation, U.S. comparable sales would have been up 6 percent for the 16-week fourth quarter and up 4 percent for the 52-week fiscal year, both ended August 31, 2008.
Net income for the 16-week fourth quarter of fiscal year 2008 was $397.8 million, or $.90 per diluted share, compared to net income of $372.4 million, or $.83 per diluted share, during the fourth quarter of fiscal 2007. The increase of $.07 per diluted share represents an increase of 8% year-over-year. The fiscal year 2008 fourth quarter results were negatively impacted by a non-cash pre-tax LIFO charge of $32.3 million ($21.2 million, or $.05 per diluted share, after-tax), primarily resulting from price increases in various food and grocery items and gasoline in the Company's U.S. merchandise inventories. The fourth quarter results also include a $15.9 million pre-tax charge ($10.4 million, or $.02 per diluted share, after-tax) recorded in connection with a litigation settlement. The fiscal year 2007 fourth quarter results were negatively impacted by a non-recurring, non-cash pre-tax charge of $56.2 million ($35.8 million, or $.08 per diluted share, after-tax) to increase the Company's deferred membership revenue liability (and reduce membership fee revenue). Excluding these charges, fourth quarter fiscal 2008 net income per diluted share of $.90 would have been $.07 higher, and the fourth quarter fiscal 2007 net income per diluted share of $.83 would have been $.08 higher.
Net sales for the 16-week fourth quarter ended August 31, 2008 increased 13%, to $22.63 billion from $20.09 billion during the 16-week fourth quarter ended September 2, 2007. Comparable warehouse sales during the 16-week fourth quarter of fiscal 2008 increased 9% over the corresponding 16-week period last year.
Net sales for fiscal 2008, the 52 weeks ended August 31, 2008, were $70.98 billion, an increase of 13% from $63.09 billion during the prior 52-week fiscal year ended September 2, 2007. Comparable warehouse sales increased 8% over the corresponding 52-week period of the prior year.
Excluding gasoline price inflation, U.S. comparable sales would have been up 6 percent for the 16-week fourth quarter and up 4 percent for the 52-week fiscal year, both ended August 31, 2008.
Net income for the 16-week fourth quarter of fiscal year 2008 was $397.8 million, or $.90 per diluted share, compared to net income of $372.4 million, or $.83 per diluted share, during the fourth quarter of fiscal 2007. The increase of $.07 per diluted share represents an increase of 8% year-over-year. The fiscal year 2008 fourth quarter results were negatively impacted by a non-cash pre-tax LIFO charge of $32.3 million ($21.2 million, or $.05 per diluted share, after-tax), primarily resulting from price increases in various food and grocery items and gasoline in the Company's U.S. merchandise inventories. The fourth quarter results also include a $15.9 million pre-tax charge ($10.4 million, or $.02 per diluted share, after-tax) recorded in connection with a litigation settlement. The fiscal year 2007 fourth quarter results were negatively impacted by a non-recurring, non-cash pre-tax charge of $56.2 million ($35.8 million, or $.08 per diluted share, after-tax) to increase the Company's deferred membership revenue liability (and reduce membership fee revenue). Excluding these charges, fourth quarter fiscal 2008 net income per diluted share of $.90 would have been $.07 higher, and the fourth quarter fiscal 2007 net income per diluted share of $.83 would have been $.08 higher.
Boeing's Strike Is Officially Over
SEATTLE, Nov. 14, 2008 -- The tentative agreement reached today between Boeing [NYSE: BA] and the Society of Professional Engineering Employees in Aerospace (SPEEA) offers market-competitive wages and improved benefits over the four-year duration of the proposed contracts.
SPEEA is recommending that nearly 21,000 employees in Washington, Oregon, California and Utah vote to ratify the agreement.
"Our goal was to negotiate contracts that reward our employees for their hard work and the success they helped create," said Doug Kight, Boeing vice president of Human Resources. "This agreement provides market-competitive pay and benefits that enable us to attract and retain the best talent, remain on the leading edge of technology and continue to win business in uncertain times."
The proposed contracts reward engineering and technical employees for their role in the company's success with:
SPEEA is recommending that nearly 21,000 employees in Washington, Oregon, California and Utah vote to ratify the agreement.
"Our goal was to negotiate contracts that reward our employees for their hard work and the success they helped create," said Doug Kight, Boeing vice president of Human Resources. "This agreement provides market-competitive pay and benefits that enable us to attract and retain the best talent, remain on the leading edge of technology and continue to win business in uncertain times."
The proposed contracts reward engineering and technical employees for their role in the company's success with:
>Five percent annual salary adjustment funds in each year of the contract.
>Continued participation in the Employee Incentive Plan (EIP), which paid individual employees >41 days of extra pay over the past three years.
>Health care benefit improvements, including enhanced wellness and preventive care coverage at slight cost increases.
In addition, Boeing addressed SPEEA concerns about the use of non-Boeing labor and subcontracting, while providing the company flexibility to make business decisions.
"We recognize that Boeing's direct technical and engineering team is the foundation of our competitiveness, and we've agreed that it is in the best interest of the company, the union and employees to understand the nature of Boeing's business strategies and plans regarding the use of non-Boeing labor and subcontracting," said Kight.
If ratified, the new contracts will go into effect Dec. 2, 2008, and will expire Oct. 6, 2012.
Boeing 3rd Quarter 2008 Earnings
Boeing Posts Lower Third-Quarter Results on Reduced Commercial Deliveries
􀂄 Third-quarter revenues declined to $15.3 billion from $16.5 billion as labor strike
and supplier production problems pushed airplane deliveries out of the quarter
􀂄 EPS declined to $0.96 per share, reduced by an estimated $0.60 on the lower
deliveries and by $0.08 due to tax adjustments
􀂄 Backlog grew to a record $349 billion as near-term demand remains strong
􀂄 Updated financial guidance to be provided after strike concludes
The Boeing Company’s [NYSE: BA] third-quarter net
income declined 38 percent, to $695 million, while earnings per share declined 33
percent to $0.96 per share, both reflecting an ongoing machinists' strike and supplier
production challenges on customer-furnished galleys for certain wide-body airplanes.
Those items reduced third-quarter commercial airplane deliveries by approximately 35
units and net earnings by an estimated $0.60 per share. Revenues for the quarter
declined 7 percent, to $15.3 billion.
The 787 Dreamliner made progress during the quarter despite the labor strike.
Key milestones included a successful hydraulic system test, landing gear test, and
pressurization test of the static airframe – the last, a key step in validating the structural
integrity of the airplane. The program also began testing the flight controls and began
final assembly of the fourth flight-test airplane. To date, the program has won 895 net
airplane orders from 58 customers.
Key milestones included a successful hydraulic system test, landing gear test, and
pressurization test of the static airframe – the last, a key step in validating the structural
integrity of the airplane. The program also began testing the flight controls and began
final assembly of the fourth flight-test airplane. To date, the program has won 895 net
airplane orders from 58 customers.
Onion Spoof - Bring Yourself To Work Day
Americans Celebrate 10 Millionth 'Bring Yourself To Work Day'
October 30, 2006 WASHINGTON, DC—In workplaces as diverse as a Payless ShoeSource in Andover, NH, to Tyson Foods' largest plant in Emporia, KS, American workers joined their international counterparts Monday in commemorating the 10 millionth "Bring Yourself To Work Day" with brief, mandatory celebrations.
Bring Yourself To Work Day is a special workplace event observed five times weekly, and sometimes more, in every factory, office, warehouse, restaurant, and retailer of goods or services worldwide. The event has been used for generations in the U.S. and other industrialized nations as a way to instill in the workforce a sense of responsibility through repeated exposure to a largely unfulfilling work environment. It also introduces otherwise inactive adults to the benefits of steady employment and the importance of punctuality.
"This is really a positive experience for everyone involved," said Secretary Of Labor Elaine Chao in a special ceremony at her own Washington office, during which her staff ate slices of cake as they stared at their computer screens. "Each day is a chance for employees across America to reacquaint themselves with the particulars of their jobs, whether they consist of grading papers or unloading bags of dog food off wooden pallets. What's more, many of them get compensated for it."
That the 10 millionth celebration occurred on a Monday, the traditional start of the work week, was not lost on many American workers during their morning commute.
"Ten millionth, huh?" said San Diego systems analyst Alex Bass, 34, who commutes an average of three hours a day. "Sounds about right."
"It's too bad I'm not awake enough to fully appreciate such a great milestone," said Jewel-Osco Drug cashier Alecia Wallace, a 29-year-old Milwaukee, WI mother of two.
Bring Yourself To Work Day events include special presentations, conference calls, and various deadlines. But there's time for leisure, too, including having short non-work-related conversations with coworkers, eating lunch, and going to the bathroom.
If the employer feels an attendee has adequately brought himself to work, the participant may be invited to join in a broader series of activities, where he can learn more about the importance of being a team player, what to do during meetings, and how to patiently await a cost-of-living pay increase.
The mood was palpable as commuters set out to mark the historic occasion.
"I've been coming to Bring Yourself To Work Day since I was 16," said Chicago resident Nancy Kordich, 27. "Sometimes I get the urge to not bring myself to work, but I always relent, because if I don't go, I might end up not getting to participate in the celebration again for a long time."
Although some participants choose to mark the occasion at a single location for many years, others prefer to bring themselves to several different affiliated job sites successively over the course of one lifetime. Studies suggest that millions of especially enthusiastic Americans regularly enjoy bringing themselves to two or three jobs each day.
At one time, virtually all Americans were encouraged to participate, until legislation passed in 1938 limited the celebration to people over the age of 14.
While the vast majority of those taking part in Bring Yourself To Work Day are rewarded with a modest cash gift from the employer, some complain that there is little correlation between the dollar amounts given and the amount of time spent celebrating.
Still, many admit they have grown quite attached to the daily occasion.
"I don't know where I'd be if it weren't for this event," said drywall installer Donald Simmons, 42. "Probably at the beach, or sleeping in. Or at one of my son's T-ball games."
Added Simmons, "You know, for a big celebration, Bring Yourself To Work Day goes awfully slow."
Although archaeological evidence shows that Bring Yourself To Work Day has been an observed human event for at least 30,000 years, several historians theorize that the day could stretch back as far as the time of Homo erectus, when early humans first realized that antelope would not willingly allow themselves to be eaten.
October 30, 2006 WASHINGTON, DC—In workplaces as diverse as a Payless ShoeSource in Andover, NH, to Tyson Foods' largest plant in Emporia, KS, American workers joined their international counterparts Monday in commemorating the 10 millionth "Bring Yourself To Work Day" with brief, mandatory celebrations.
Bring Yourself To Work Day is a special workplace event observed five times weekly, and sometimes more, in every factory, office, warehouse, restaurant, and retailer of goods or services worldwide. The event has been used for generations in the U.S. and other industrialized nations as a way to instill in the workforce a sense of responsibility through repeated exposure to a largely unfulfilling work environment. It also introduces otherwise inactive adults to the benefits of steady employment and the importance of punctuality.
"This is really a positive experience for everyone involved," said Secretary Of Labor Elaine Chao in a special ceremony at her own Washington office, during which her staff ate slices of cake as they stared at their computer screens. "Each day is a chance for employees across America to reacquaint themselves with the particulars of their jobs, whether they consist of grading papers or unloading bags of dog food off wooden pallets. What's more, many of them get compensated for it."
That the 10 millionth celebration occurred on a Monday, the traditional start of the work week, was not lost on many American workers during their morning commute.
"Ten millionth, huh?" said San Diego systems analyst Alex Bass, 34, who commutes an average of three hours a day. "Sounds about right."
"It's too bad I'm not awake enough to fully appreciate such a great milestone," said Jewel-Osco Drug cashier Alecia Wallace, a 29-year-old Milwaukee, WI mother of two.
Bring Yourself To Work Day events include special presentations, conference calls, and various deadlines. But there's time for leisure, too, including having short non-work-related conversations with coworkers, eating lunch, and going to the bathroom.
If the employer feels an attendee has adequately brought himself to work, the participant may be invited to join in a broader series of activities, where he can learn more about the importance of being a team player, what to do during meetings, and how to patiently await a cost-of-living pay increase.
The mood was palpable as commuters set out to mark the historic occasion.
"I've been coming to Bring Yourself To Work Day since I was 16," said Chicago resident Nancy Kordich, 27. "Sometimes I get the urge to not bring myself to work, but I always relent, because if I don't go, I might end up not getting to participate in the celebration again for a long time."
Although some participants choose to mark the occasion at a single location for many years, others prefer to bring themselves to several different affiliated job sites successively over the course of one lifetime. Studies suggest that millions of especially enthusiastic Americans regularly enjoy bringing themselves to two or three jobs each day.
At one time, virtually all Americans were encouraged to participate, until legislation passed in 1938 limited the celebration to people over the age of 14.
While the vast majority of those taking part in Bring Yourself To Work Day are rewarded with a modest cash gift from the employer, some complain that there is little correlation between the dollar amounts given and the amount of time spent celebrating.
Still, many admit they have grown quite attached to the daily occasion.
"I don't know where I'd be if it weren't for this event," said drywall installer Donald Simmons, 42. "Probably at the beach, or sleeping in. Or at one of my son's T-ball games."
Added Simmons, "You know, for a big celebration, Bring Yourself To Work Day goes awfully slow."
Although archaeological evidence shows that Bring Yourself To Work Day has been an observed human event for at least 30,000 years, several historians theorize that the day could stretch back as far as the time of Homo erectus, when early humans first realized that antelope would not willingly allow themselves to be eaten.
Sunday, November 16, 2008
Offset Some Capital Gains With Capital Losses
To determine if you have a capital gain or capital loss, you must know the tax basis of the asset you sold. If you are unsure of your tax basis, refer to IRS Publication 551, Basis of Assets.
You fully deduct capital losses against capital gains on Form 1040, Schedule D. If capital losses exceed capital gains you can deduct the excess on your tax return as follows. Your allowable capital loss tax deduction on your tax return for any tax year, figured on Form 1040, Schedule D, is limited to the lesser of:
$3,000 ($1,500 if you are married and file a separate tax return), or
Your capital loss as shown on Form 1040, line 18 of Schedule D.
If you have a capital loss on Form 1040, line 18 of Schedule D that is more than the yearly limit on capital loss tax deductions, you can carry over the unused part of the tax deductible capital loss to later tax years until it is completely used up.
If your capital losses exceed your capital gains, the excess is subtracted from other income on your tax return, up to an annual limit of $3,000 ($1,500 if you are married filing separately).
Capital losses can also be carried over. If net long-term capital loss exceeds net short-term capital gain, the excess becomes long-term capital loss in the following year. If net short-term capital loss exceeds net long-term capital gain, the excess becomes short-term capital loss in the following year.
A capital loss that is not deductible in the current year because it exceeds the annual capital loss ceiling, but may be deductible in future years. In general, only $3000 in capital losses can be claimed in any one year, but the excess loss can be carried over indefinitely. also called loss carryover.
You fully deduct capital losses against capital gains on Form 1040, Schedule D. If capital losses exceed capital gains you can deduct the excess on your tax return as follows. Your allowable capital loss tax deduction on your tax return for any tax year, figured on Form 1040, Schedule D, is limited to the lesser of:
$3,000 ($1,500 if you are married and file a separate tax return), or
Your capital loss as shown on Form 1040, line 18 of Schedule D.
If you have a capital loss on Form 1040, line 18 of Schedule D that is more than the yearly limit on capital loss tax deductions, you can carry over the unused part of the tax deductible capital loss to later tax years until it is completely used up.
If your capital losses exceed your capital gains, the excess is subtracted from other income on your tax return, up to an annual limit of $3,000 ($1,500 if you are married filing separately).
Capital losses can also be carried over. If net long-term capital loss exceeds net short-term capital gain, the excess becomes long-term capital loss in the following year. If net short-term capital loss exceeds net long-term capital gain, the excess becomes short-term capital loss in the following year.
A capital loss that is not deductible in the current year because it exceeds the annual capital loss ceiling, but may be deductible in future years. In general, only $3000 in capital losses can be claimed in any one year, but the excess loss can be carried over indefinitely. also called loss carryover.
Wednesday, November 12, 2008
DOW 30 Taxes and Profits
There's a lot of talk about cutting the corporate tax rate from 35% to 25%. The following is a list of the DOW 30 companies and their effective tax rate and net profit margin for 2007. I believe that a lower tax rate will create jobs but at the same time we should eliminate most of not all tax loopholes.
Loopholes create an uneven playing field and distort the financial picture of companies.
Tuesday, November 11, 2008
Stock Pick Of The Week - Emerson
DESPITE A GLOOMY ECONOMIC ASSESSMENT BY ITS CHIEF EXECUTIVE, Emerson Electric posted record fiscal 2008 results Tuesday, and boosted its dividend 10%.
The new quarterly will be 33 cents a share, up from 30 cents, giving the stock (ticker: EMR) a 4.21% yield. Disbursement is scheduled for Dec. 10 to holders of record Nov. 14, and the ex-dividend date is Nov. 12. This is the 118-year-old St. Louis industrial conglomerate's 52nd consecutive year of enhanced payouts. Dividends have been ongoing since 1947.
In fiscal 2008, ended Sept. 30, Emerson returned 63% of its operating cash flow to investors via $940 million in dividends and $1.1 billion in stock buybacks.
Emerson's fiscal 2008 earnings per share from continuing operations grew 17% from the 2007 level, to $3.11, while net advanced 15%, to $3.06. Sales climbed 12%, to $24.8 billion. Operating cash flow rose 9%, to $3.3 billion, and Emerson achieved a 21.8% return on total capital. The company's record performance in 2008 "demonstrates again just how well-positioned we are...to deliver high levels of profit margin and returns over the long term," said CEO David N. Farr.
In a post-earnings conference call with analysts, Farr said that Emerson is leaving fiscal 2008 "very strong" and "going into 2009 ready for a very uncertain and challenging year." He added that the U.S. is already "at or near a recession," while Europe and Japan are "right there coming behind us." However, Farr thinks emerging economies, although slowing like everywhere else, will hold up relatively well.
For fiscal 2009, Farr expects Emerson's underlying sales to rise or fall by up to 4%. In 2008, they climbed 8%. Underlying sales exclude the impact of currency fluctuations and acquisitions. He forecast earnings from continuing operations of $2.80 to $3.20 a share, on sales of $23.5 billion to $25.5 billion.
Traded on the Big Board, Emerson's shares recently were quoted at 31 and change. Their 52-week range is 59.05-29.44. Standard & Poor's rates Emerson a Buy. Merrill Lynch, however, last week downgraded it to Neutral from Buy. New Constructs gives Emerson a risk/reward rating of Very Attractive "because the stock offers much more upside potential than downside risk, in our opinion."
EMERSON IS ONE OF S&P's Dividend Aristocrats. These are concerns (including predecessors) that have hiked their payouts for at least 25 consecutive years and are in the S&P 500. There are currently 59 Dividend Aristocrats (the list is available at http://www.dividendaristocrats.standardandpoors.com/).
About Emerson
Emerson (NYSE: EMR) is a diversified global manufacturing and technology company. We offer a wide range of products and services in the areas of process management, climate technologies, network power, storage solutions, professional tools, appliance solutions, motor technologies, and industrial automation. Recognized widely for our engineering capabilities and management excellence, Emerson has more than 140,000 employees and approximately 265 manufacturing locations worldwide.
The new quarterly will be 33 cents a share, up from 30 cents, giving the stock (ticker: EMR) a 4.21% yield. Disbursement is scheduled for Dec. 10 to holders of record Nov. 14, and the ex-dividend date is Nov. 12. This is the 118-year-old St. Louis industrial conglomerate's 52nd consecutive year of enhanced payouts. Dividends have been ongoing since 1947.
In fiscal 2008, ended Sept. 30, Emerson returned 63% of its operating cash flow to investors via $940 million in dividends and $1.1 billion in stock buybacks.
Emerson's fiscal 2008 earnings per share from continuing operations grew 17% from the 2007 level, to $3.11, while net advanced 15%, to $3.06. Sales climbed 12%, to $24.8 billion. Operating cash flow rose 9%, to $3.3 billion, and Emerson achieved a 21.8% return on total capital. The company's record performance in 2008 "demonstrates again just how well-positioned we are...to deliver high levels of profit margin and returns over the long term," said CEO David N. Farr.
In a post-earnings conference call with analysts, Farr said that Emerson is leaving fiscal 2008 "very strong" and "going into 2009 ready for a very uncertain and challenging year." He added that the U.S. is already "at or near a recession," while Europe and Japan are "right there coming behind us." However, Farr thinks emerging economies, although slowing like everywhere else, will hold up relatively well.
For fiscal 2009, Farr expects Emerson's underlying sales to rise or fall by up to 4%. In 2008, they climbed 8%. Underlying sales exclude the impact of currency fluctuations and acquisitions. He forecast earnings from continuing operations of $2.80 to $3.20 a share, on sales of $23.5 billion to $25.5 billion.
Traded on the Big Board, Emerson's shares recently were quoted at 31 and change. Their 52-week range is 59.05-29.44. Standard & Poor's rates Emerson a Buy. Merrill Lynch, however, last week downgraded it to Neutral from Buy. New Constructs gives Emerson a risk/reward rating of Very Attractive "because the stock offers much more upside potential than downside risk, in our opinion."
EMERSON IS ONE OF S&P's Dividend Aristocrats. These are concerns (including predecessors) that have hiked their payouts for at least 25 consecutive years and are in the S&P 500. There are currently 59 Dividend Aristocrats (the list is available at http://www.dividendaristocrats.standardandpoors.com/).
About Emerson
Emerson (NYSE: EMR) is a diversified global manufacturing and technology company. We offer a wide range of products and services in the areas of process management, climate technologies, network power, storage solutions, professional tools, appliance solutions, motor technologies, and industrial automation. Recognized widely for our engineering capabilities and management excellence, Emerson has more than 140,000 employees and approximately 265 manufacturing locations worldwide.
Monday, November 3, 2008
Last Week
From Barrons
THE STOCK MARKET SALVAGED its worst month in 21 years with a rousing rally in October's final week, eking out the month's first back-to-back sessions of gains only in its final two days. But how long might this reprieve last?
Among the encouraging signs: The pitiless liquidation of early October has at least subsided. Stocks even climbed on Thursday in the face of the bad news that the U.S. economy shrank 0.3% last quarter. Buyers returned gingerly to the market for commercial paper, or short-term business loans, and rates there eased as governments continued to flood the financial system with liquidity. The U.S. central bank cut benchmark interest rates to 1% from 1.5%, and the International Monetary Fund earmarked $100 billion for countries caught in the vise of the credit crunch.
Last week's rallies unfurled slowly, with the buying picking up only as each session wore on without setbacks -- a sign bullish money managers who believe stocks are cheap still sought the comfort of the herd. Some of the buying was driven by short covering and the reluctance to miss any meaningful rallies. The conclusion of tax-loss selling by mutual funds whose fiscal year ends in October also helped stocks find their footing. So did the flow of money from bonds to stocks, as institutional investors rebalanced their portfolios to maintain target exposure to each asset class following bonds' recent rise and stocks' plunge.
The Dow Jones Industrial Average ended last week up 946, or 11.3%, to 9325. It was the Dow's biggest one-week point gain ever and its best percentage rise since 1974, but the blue chips are still down 29.7% this year. The Standard & Poor's 500 jumped 92 to 969, and that 10.5% rise was its best since 1974. The Nasdaq Composite Index enjoyed its best week since April 2001 in point or percentage terms as it rallied 169, or 10.9%, to 1721. The Russell 2000 had its best week ever, rising 66, or 14.1%, to 538.
That merely limited October's carnage. The Dow's 14.1% slide was its worst monthly loss since 1998. The S&P 500 absorbed its biggest monthly beating since October 1987 as it fell 16.9%. The Nasdaq skidded 17.7%; the Russell 20.9%.
THE STOCK MARKET SALVAGED its worst month in 21 years with a rousing rally in October's final week, eking out the month's first back-to-back sessions of gains only in its final two days. But how long might this reprieve last?
Among the encouraging signs: The pitiless liquidation of early October has at least subsided. Stocks even climbed on Thursday in the face of the bad news that the U.S. economy shrank 0.3% last quarter. Buyers returned gingerly to the market for commercial paper, or short-term business loans, and rates there eased as governments continued to flood the financial system with liquidity. The U.S. central bank cut benchmark interest rates to 1% from 1.5%, and the International Monetary Fund earmarked $100 billion for countries caught in the vise of the credit crunch.
Last week's rallies unfurled slowly, with the buying picking up only as each session wore on without setbacks -- a sign bullish money managers who believe stocks are cheap still sought the comfort of the herd. Some of the buying was driven by short covering and the reluctance to miss any meaningful rallies. The conclusion of tax-loss selling by mutual funds whose fiscal year ends in October also helped stocks find their footing. So did the flow of money from bonds to stocks, as institutional investors rebalanced their portfolios to maintain target exposure to each asset class following bonds' recent rise and stocks' plunge.
The Dow Jones Industrial Average ended last week up 946, or 11.3%, to 9325. It was the Dow's biggest one-week point gain ever and its best percentage rise since 1974, but the blue chips are still down 29.7% this year. The Standard & Poor's 500 jumped 92 to 969, and that 10.5% rise was its best since 1974. The Nasdaq Composite Index enjoyed its best week since April 2001 in point or percentage terms as it rallied 169, or 10.9%, to 1721. The Russell 2000 had its best week ever, rising 66, or 14.1%, to 538.
That merely limited October's carnage. The Dow's 14.1% slide was its worst monthly loss since 1998. The S&P 500 absorbed its biggest monthly beating since October 1987 as it fell 16.9%. The Nasdaq skidded 17.7%; the Russell 20.9%.
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