Tuesday's Early Headlines
- Citigroup Works to Reduce Government Stake. - The Wall Street Journal reports that Citigroup (C - Get Report) is working on a plan that would reduce the U.S. government's 34% stake. Plans include a possible multibillion-dollar stock sale, while the Treasury Department would sell at least a portion of its Citigroup holdings, the report said, citing people familiar with the matter. While moving to rid itself of the stigma of being government-owned is a positive, the idea of massive dilution had shares of Citi trading lower early Tuesday. Separately, Bloomberg reports that the Treasury Department aims to sell its 7.7 billion shares in Citigroup over the next six to eight months, and may begin unloading its stake as soon as October.
- Chrysler Faces Tough September. - The Wall Street Journal reports that Chrysler is bracing for a steep drop in September sales after its bankruptcy organization and a summer shutdown of its plants has left its dealers with unusually lean inventories. HS Global Insight projects Chrysler's September sales will fall 30% from September 2008, compared with a 19% slide industrywide, the report said.
- J&J, Elan Revise Deal. - Elan (ELN) said Johnson & Johnson (JNJ - Get Report) will cut the value of a partnership to $885 million from $1 billion in order to repair a breach with Biogen Idec (BIIB) over its Tysabri drug for Alzheimer's treatment.
- Marfrig to Buy Cargill Brazilian Unit for $900 Million. - The Wall Street Journal reports that Brazil's Marfrig Alimentos will acquire Cargill's Brazilian business unit Seara Alimentos, for $706.2 million in cash and $193.8 million in assumed debt. Marfrig may sell new shares in order to finance the deal, which should be completed by year's end.
- August Retail Sales Top Forecasts. - Retail sales rose a better-than-expected 2.7% in August, topping economists' forecasts of a 1.9% rise. Excluding autos, which benefitted from the government's Cash for Clunkers program, increased 1.1% in August, also better than many expected. July's data was revised slightly higher as well.
- Producer Price Index Comes in Hotter Than Expected. - The Labor Department said its producer price index rose a greater-than-expected 1.7% in August, more than doubling the consensus for a 0.8% advance. The core number, which excludes food and energy, ticked up 0.2%. Economists were looking for the core PPI number to rise 0.1%. The headline PPI has fallen 4.3% year over year, while the core number has risen 2.3%.
- Manufacturing Data on the Rebound. - The New York Federal Reserve said its Empire State manufacturing index rose to a reading of 18.88 in September from 12.08 in August. That beat economists' forecasts of a reading of 15.
Tuesday's Earnings Roundup
- Best Buy (BBY - Get Report) notched a second-quarter profit of 37 cents a share, missing the Thomson Reuters consensus estimate of 42 cents a share. Sales rose 12.5% to $11.02 billion, coming in ahead of analysts' forecasts. Best Buy said it expects full-year 2010 earnings of $2.70 to $3 a share, in line with estimates. On the positive side, the retailer expects full-year revenue of $48 billion to $49 billion, better than the consensus of $47.8 billion.
- Kroger (KR - Get Report) reported second-quarter earnings of 39 cents, falling short of the Thomson Reuters average estimate of 44 cents a share. Sales slipped 2% from a year ago to $17.73 billion, also falling short of coennsus. Looking ahead, Kroger lowered its guidance for 2010, saying it expects earnings to fall in a range of $1.90 to $2.05 a share. That range is down from its previous guidance of $2 to $2.05 a share. Analysts expect full-year earnings of $2 a share, according to Thomson Reuters.