Thursday's Early Headlines
- Weekly Jobless Claims Above Consensus -- The Labor Department said initial jobless claims dipped to 444,000 last week from a revised 448,000, although that was above the consensus for a decline to 440,000 claims. The four-week moving average of claims was 450,500, a decrease of 9,000 from the previous week's revised average of 459,500. In a separate release, the Bureau of Labor Statistics said import prices rose 0.9% in April compared with a revised 0.5% increase in March.
- New York AG Expands Probe to 8 Banks -- Reuters and The Associated Press both report that New York Attorney General Andrew Cuomo is opening an investigation into whether eight banks misled rating agencies, citing sources familiar with the matter. Four U.S. banks, including Citigroup (C), Morgan Stanley (MS), Goldman Sachs (GS) and Bank of America's (BAC) Merrill Lynch were served Wednesday with subpoenas, the report said. Regulators are also probing four European lenders for misleading ratings agencies about mortgage securities, including Credit Agricole, Credit Suisse (CS), Deutsche Bank (DB) and UBS (UBS).
- Criminal Probe of Wall Street Banks Widens -- Meanwhile, The Wall Street Journal reported separately that federal prosecutors, working with securities regulators, are conducting a preliminary criminal probe into whether several major banks including JPMorgan Chase (JPM), Citigroup, Deutsche Bank and UBS, misled investors about their roles in mortgage-bond deals. The Wall Street banks also have received civil subpoenas from the Securities and Exchange Commission as part of a probe of banks' selling and trading of mortgage-related deals, according to a person familiar with the matter, the Journal reports. Goldman Sachs and Morgan Stanley are also part of the probe.
- SAP Confirms $5.8 Billion Deal for Sybase -- German software giant SAP (SAP) confirmed market rumors late Wednesday that it will acquire Sybase (SY) in a $5.8 billion deal. Shares of Sybase surged 35% Wednesday and were up another 15% Thursday to $64.45.
- Transocean Tries to Cap Oil Spill Liability -- Transocean (RIG) is planning to file a federal court petition on Thursday to put a cap on its legal liability for the oil spill in the Gulf of Mexico to slightly under $27 million, according to a report by Dow Jones Newswires.The filing is being made with the U.S. District Court in Houston under a law dating back more than a century and a half, originally created to help U.S. ship owners compete with foreign vessels, the report said.
Thursday's Earnings Roundup
- Sony (SNE) recorded a 40.8 billion yen ($439 million) loss for its fiscal year, narrowing from the previous year's 98.9 billion yen loss. Sony expects to be profitable in the year through March 2011, forecasting a net profit of 50 billion yen on revenue of 7.6 trillion yen.
- Cisco Systems (CSCO) late Wednesday reported fiscal third-quarter adjusted earnings of 42 cents a share, up from a year-ago profit of 30 cents and better than analysts' estimates for earnings of 39 cents a share, according to Thomson Reuters. Revenue rose 27% to $10.4 billion, above the consensus estimate for $10.2 billion.
- Kohl's (KSS) reported first-quarter earnings of 64 cents a share on sales of $4 billion, compared to the Thomson Reuters average estimate for a profit of 62 cents a share on revenue of $4 billion. Kohl's now expects to earn in the range of $3.57 to $3.75 a share for the full year, up from the prior guidance range of $3.40 to $3.63 a share but still below the Thomson Reuters consensus for $3.77 a share.
- Wendy's/Arby's Group (WEN) reported a first-quarter adjusted profit of 2 cents a share on sales of $837.4 million, compared to the Thomson Reuters average estimate for a profit of a penny a share.