Wednesday's Earnings Calendar
- Intel Blows Past Estimates. - Chipmaker Intel (INTC) late Tuesday posted an adjusted profit of $1 billion, or 18 cents a share, which is down from the 28 cents in the year-ago period but more than twice the 8-cent-a-share target of analysts polled by Thomson Reuters. Sales and gross margin for the quarter were also better than many expected. Looking ahead, Intel says it expects further margin expansion to 53% in the third quarter. The chip shop also expects sales to be in the range of $8.5 billion, that's well above the $7.8 billion Wall Street was expecting.
- Abbott Laboratories Matches Estimates - Abbott Laboratories (ABT) reported second-quarter earnings, excluding items, of 89 cents a share, matching the Thomson Reuters average estimate. Revenue rose 2.5% from a year ago to $7.5 billion, compared to Wall Street's forecast of $7.6 billion. Abbott said it expects third-quarter adjusted earnings between 88 cents to 90 cents a share, compared to the Thomson Reuters average estimate of 90 cents a share.
- Chipmaker ASML Posts Loss As Sales Drop. - ASML (ASML) a European maker of semiconductor equipment, swung to a second-quarter loss of 104 million euros ($145.4 million) as sales fell to 277 million euros from 844 million euros a year earlier. Analysts expected ASML to report a second-quarter loss of about 109 million euros.
- Yum! Delivers Second-Quarter Profit. - Fast-food restaurateur Yum! Brands (YUM) exceeded Wall Street earnings targets for its second quarter, but ratcheted down guidance for same-store sales growth for the rest of the year. In a separate "guidance update" press release, the company said it now expects Chinese same-store sales to come in flat for 2009, as opposed to original targets of a 5% gain year-over-year. For its U.S. division, Yum said same-store sales will likely be "down slightly" compared with early guidance of a 3% increase.
- Other Earnings Reports Expected - Gannett (GCI) and Commerce Bancshares (CBSH) are set to report results before the start of trading. During the trading session, AMR Corp. (AMR) is expected to release results. Semiconductor maker Xilinx (XLNX) will headline the spate of reports due out after the closing bell.
Wednesday's Early Headlines
- CIT Could Get Temporary Government Loan. - CIT Group (CIT) could receive a temporary government loan from the Treasury Department and Federal Reserve to allow the lender breathing room to strengthen its balance sheet, Reuters reports, citing a source familiar with regulators' thinking. Other options being considered include access to the Fed's discount window and asset transfers, Reuters notes. The Wall Street Journal reports an outline of an aid package for CIT was being worked out late Tuesday.
- Franklin Reportedly Drops Bid for AIG Unit. - Franklin Templeton Investments, the lead bidder for AIG's (AIG) asset-management unit, has dropped out, according to a report in The Wall Street Journal. The unit of Franklin Resources (BEN) and its lead adviser in the buyout effort, Charles E. "Chuck" Johnson, a former executive of the mutual-fund company, dropped out over the weekend from two-month exclusive talks to buy AIG Investments. Irreconcilable strategic differences within the bidding group were said to be the reason, the Journal reported, citing people familiar with the matter.
- Calpers Sues Ratings Agencies. - The California Public Employees Retirement System, or Calpers, a public fund known for its shareholder activism, has filed suit in California state court in connection with $1 billion in losses that it says were caused by "wildly inaccurate" credit ratings from the three leading ratings agencies, according to The New York Times. The AAA ratings on structured investment vehicles Calpers bought in 2006 given by the agencies "proved to be wildly inaccurate and unreasonably high," according to the suit, which also said that the methods used by the rating agencies to assess these packages of securities "were seriously flawed in conception and incompetently applied," according to the report.
- Boeing Plans 1,000 Defense Division Cuts. - The head of Boeing's (BA) Integrated Defense Systems division has told employees the division will have to cut about 1,000 jobs because of Pentagon budget reductions, according to The Associate Press. In an internal memo, Boeing's Jim Albaugh said the job reductions are needed to keep the company competitive.
- Coalition to Fight Obama Plan to Add to Fed Powers. - The Financial Times reported Wednesday that the Obama administration's plan to give the Federal Reserve extensive powers over all large U.S. financial groups will be attacked by a coalition of investors, analysts and ex-regulators who say the Fed's credibility has been "tarnished" by its role in contributing to the crisis.
Wednesday's Economic News
- Latest Read on Consumer-Level Inflation - The Labor Department will post its consumer price index at 8:30 a.m. EDT. The headline number, which measures inflation on the consumer level, is expected to have risen 0.6% in June after a 0.1% increase in May. The core figure, which excludes food and energy, should rise 0.1%, according to economists polled by Reuters.
- Empire State Manufacturing Index, Industrial Production Reports Due - Also at 8:30 a.m. EDT, the New York Fed bank will release its Empire State manufacturing index, which should improve to a -5 reading this month from -9.41 in June. Shortly after, at 9:15 a.m. EDT, the Fed will post capacity utilization and industrial production data for June, which aren't expected to change much from May's levels.
- Latest FOMC Meeting Minutes Due at 2 p.m. EDT - Wednesday afternoon, the Federal Open Market Committee, the policy-making arm of the central bank, will release the minutes from its June meeting. At that meeting, the FOMC said the pace of economic contraction is slowing, and that conditions in financial markets have generally improved in recent months. At the meeting, the Fed maintained the target range for the fed funds rate at zero to 0.25%.