Thursday's Early Headlines
- Swiss Government to Sell Stake in UBS. - The Swiss government is set to begin selling its stake in UBS (UBS). A consortium of banks has been asked to place the government's 332.2 million mandatory convertible notes with institutional investors.
- White House to Project Fiscal 2009 Deficit of $1.58 Trillion. - The Obama administration is expected to say next week that the federal budget deficit for 2009 will total $1.58 trillion, according to various reports citing administration officials, less than what many had expected. Earlier this year, the administration had predicted a deficit for fiscal 2009, which ends Sept. 30, of $1.84 trillion. The drop comes mostly thanks to the lower cost of a financial-sector bailout, with the White House dropping $250 billion in additional aid for the financial sector.
- Spain's BBVA Winning Bidder for Guaranty Financial. - Spain's Banco Bilboa Vizcaya Argentaria has won the bidding for Texas lender Guaranty Financial (GFG), according to a Bloomberg report that cited people familiar with the matter. Last month, Guaranty said it would probably fail after it was unable to raise capital. The acquisition, arranged by the Federal Deposit Insurance Corp., will become BBVA's sixth U.S. purchase in the last five years.
- FDIC to Soften Private Equity Rules Next Week. - Reuters reports that the FDIC will meet next week to vote on a policy that would force private equity companies to maintain high capital levels and put a large amount of their own money at stake when investing in distressed banks. The meeting, scheduled for Aug. 26, will likely see the FDIC soften the guidelines it issued in July. Those initial guidelines faced backlash from private equity groups, who called the proposed rules too harsh, the report said.
- Cash For Clunkers Coming to an End. - The Wall Street Journal reports that the Obama administration will wind down its popular "cash for clunkers" incentive program on auto sales as early as September, as auto dealers fear that the program's $3 billion in funding will be depleted before they are reimbursed for discounts given to customers.
Thursday's Earnings Roundup
- Sears Holding (SHLD) reported a second-quarter adjusted loss of 17 cents a share, surprising analysts that expected the retailer to post a profit of 35 cents a share. Sales fell 10.3% to $10.55 billion, also worse than expectations. The company said the decline in revenue came mostly due to lower same-store sales as well as the impact of foreign currency exchange rates.
- Dick's Sporting Goods (DKS) reported second-quarter earnings of 36 cents a share, a nickel better than the Thomson Reuters average estimate. Sales rose 3.7% to $1.13 billion, in line with estimates. Dick's issued in-line guidance for the third quarter, as same-store sales are expected to decline, although the retailer issued strong guidance for full-year 2010.
- Tech Data (TECD) said it had second-quarter earnings of 70 cents a share, well ahead of the Thomson Reuters consensus estimate of 45 cents a share. Revenue fell nearly 16% from a year ago to $5.18 billion, also ahead of estimates. Tech Data said that while demand in the Americas region appears to be stabilizing, demand in Europe may decline further. In addition, due to the current economic conditions, the company said it expects net sales in the third quarter to decline year over year.
- HJ Heinz (HNZ) posted fiscal first-quarter earnings of 67 cents a share, a nickel better than estimates. Sales dipped 4.5% to $2.47 billion, in line with estimates. The company also reaffirmed its guidance for full-year 2010.