Filed under: Before the bell, Earnings reports, Deals, Hewlett-Packard (HPQ), Wal-Mart (WMT), Market matters, International Business Machines (IBM), Toll Brothers (TOL), Electronic Data Systems (EDS), Economic data, Federal Reserve

U.S. stock futures fell Tuesday morning even after (or perhaps because) Wal-Mart reported a 7% profit rise, slightly above analyst estimates. But investors also awaited several economic indicators due out this day as well as speeches from several of the Federal Reserve members.

U.S. stocks completed the day with strong gains Monday thanks to a drop in crude oil futures and several deal speculations that hit the Street. The Dow industrials went up 130 points, or 1.02%, the Nasdaq Composite was up 42 points, or 1.76%, and the S&P 500 completed the day 15 points, or 1.10%, higher.

At 8:30 a.m. EDT April export and import prices as well as retail sales data are due. Economists expect retail sales to have declined 0.2%, and excluding autos, they expect sales to have increased 0.2% in the month. The difference in the two gauges isn’t surprising as higher gasoline prices were bound to put consumers off buying vehicles.
At 10:00 a.m. EDT, March business inventory levels are due.

But other than raw data, seven Fed members are also scheduled to give speeches, including one from Fed Chairman Ben Bernanke in Atlanta on the central bank’s liquidity measures.

Oil prices dropped below $124 a barrel Tuesday as trader may have taken profit following the recent records set daily last week and Monday. The dollar, meanwhile, managed to mostly keep its current level.

Corporate news this morning includes, of course, Wal-Mart Stores Inc. (NYSE: WMT) earnings.
The world’s largest retailer, reported a 7% rise in quarterly profit. It seems that the current economic climate benefited the giant discount retailers as U.S. shoppers were out in droves looking for bargains even on necessities like food and pharmacy items.

Late Monday we also heard that Hewlett-Packard (NYSE: HPQ) could be near a deal to purchase Electronic Data Systems Corp. (NYSE: EDS). Many view this deal as a sign to come in the industry, anticipating it to spark a round of consolidation in the technology outsourcing sector around the globe. Just as this move is seen as an attempt by HP to better compete with International Business Machines (NYSE: IBM) in technology services, other deals would be an attempt to keep competitive.

And from the housing sector, luxury home builder Toll Brothers (NYSE: TOL) stated its homebuilding revenue likely fell 30% in its fiscal second quarter, and continued to refer to “challenging times” ahead.

Permalink | Email this | Linking Blogs | Comments

Share This

Share This

Filed under: Earnings reports, Deals, XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), Marketing and advertising

Sirius Satellite Radio Inc. (NASDAQ: SIRI) Chief Executive Officer Mel Karmazin seems exasperated that the Federal Communications Commission has yet to rule on his company’s merger with XM Satellite Radio Holdings Inc. (NASDAQ: XMSR) which was filed more than a year ago.

“We share the reasonable frustration that many of our investors feel regarding the time it has taken,” stated the loquacious CEO during yesterday’s earnings conference call (via SeekingAlpha). “We also share the outrage that some have expressed to me regarding press reports of opportunistic celebrations trying to take advantage of the process and extract value for themselves that properly belongs to SIRIUS subscribers and shareholders.”

Karmazin has a point. The FCC review of the satellite radio merger has moved at a glacial pace because of the opposition of the terrestrial radio industry which figures that any medium that employs Howard Stern needs to be stopped at all costs. As yesterday’s earnings report indicates, the industry isn’t large enough to support two companies.

Sirius reported a first-quarter net loss of $104.1 million, or 7 cents a share, narrower than $144.7 million, or 10 cents a share, a year earlier. Revenue rose 33% to $270.4 million. The results, which matched Wall Street expectations, were helped by a drop in SAC per gross subscriber addition to $91 in the first quarter from $101 a year earlier. The company ended the quarter with 8.64 million subscribers, up 31% from a year earlier. Average revenue per subscriber was tiny changed at$10.42,

The results at XM were worse. The Washington-based company had a net loss of $129.3 million, or 42 cents, on sales of $308.5 million. Janco Partners analyst April Horace told Bloomberg News that “the company is retaining more customers after a free introductory period and is putting its radios into a more massive variety of automobile models.”

Good thing too since subscriber acquisition costs rose to $73 in the quarter from $65 a earlier. Conversion and churn rates both improved year-over-year, according to the company’s earnings release.

My colleague Douglas McIntyre, like many observers, is pretty pessimistic about the merger, writing “It is now too late for the proposed merger to do either company any good, so, the merger has fundamentally failed before it was consummated.”

I’m not sure I would go that far but I agree that satellite radio at best is a niche medium with an uncertain future,

Share This

Share This