Late-Night Headlines
Bloomberg:
- Google Inc.(GOOG), owner of the most popular Internet search engine, reported fourth-quarter profit that beat analysts’ estimates as more companies used the Web to promote products over the holidays. Net income was $382.4 million, or $1.21 a share, the company said today. Leaving out some costs, profit was $5.10 a share, beating the $4.96 estimated by analysts in a Bloomberg survey. “This was a pretty decent quarter considering all the fear and loathing out there in the market,” said Christa Quarles, an analyst with Thomas Weisel Partners in San Francisco. Google added $4.50, or 1.5 percent, to $311 in extended trading after closing at $306.50 on the Nasdaq Stock Market.
- Intuitive Surgical, Inc. (ISRG), the industry leader in surgical robotics, today reported fourth quarter 2008 revenue, consistent with its pre-release of January 7, 2009, of $231.5 million, increasing 22% from $189.4 million for the fourth quarter of 2007. Fourth quarter 2008 revenue growth was driven by continued robotic procedure adoption. Fourth quarter 2008 instruments and accessories revenue increased 45% to $81.6 million from $56.1 million during the fourth quarter of 2007. Fourth quarter 2008 da Vinci(r) Surgical Systems revenue increased 5% to $113.7 million from $108.6 million during the fourth quarter of 2007. Fourth quarter 2008 service revenue increased 46% to $36.2 million from $24.7 million during the fourth quarter of 2007. Revenue for the year ended December 31, 2008 totaled $874.9 million, increasing 46% from $600.8 million for the year ended December 31, 2007.
- A House panel today approved spending an estimated $54 billion in economic stimulus funds for environmentally friendly energy projects, including improving the transmission of wind-generated electricity and expanding conservation projects. The energy plan, approved 34-17 by the House Energy and Commerce Committee, includes about $54 billion in spending for power lines, efficiency projects, and insulating low-income homes, according to a summary provided by House Speaker Nancy Pelosi. The measure would provide $8.4 billion in renewable- energy loan guarantees.
- Democrats in charge of the House Ways and Means Committee are poised to approve a $275 billion tax cut as part of the $825 billion economic stimulus bill sought by President Barack Obama. The panel’s action today would send the tax plan, providing $500 in payroll tax cuts to individuals and $1,000 to families, to the full House. It will be merged with $358 billion in public- works spending that passed the House Appropriations Committee yesterday, plus another $192 billion in mandatory spending increases.
- The House approved two measures that would make it easier for U.S. workers to win pay-discrimination lawsuits, overriding business groups’ opposition. The measures would let employees sue on a claim they are underpaid because of years-old discrimination, lift a cap on damages in pay-bias suits and restrict defenses that can be raised by employers.
- The Bank of Japan may intervene and purchase US dollars if the yen strengthens to 85 per dollar, as deflation becomes a concern, according to the Bank of Tokyo-Mitsubishi UFJ Ltd. The central bank cut its growth forecasts until the year starting April 2010 and signaled a return to deflation in a quarterly review of the outlook today. The world’s second-largest economy will shrink 1.8% in the year ending March 31 and 2% next year, according to the median estimate of the bank’s eight members.
- China’s economic slowdown, already the deepest in seven years, is set to worsen as the global recession pummels its exports, darkening the outlook for suppliers from Australia to Taiwan.
- Billionaire Warren Buffett said he is “not opposed to buying back stock” in a television interview scheduled to air today, adding that a company should repurchase shares only if they’re “significantly undervalued.”
- PT Aneka Tambang, Indonesia’s second- largest nickel producer, expects global consumption to fall 30 percent this year as European steel mills reduce output and the global recession slows demand.
- Aluminum may plunge another 17% before prices reflect an expanding surplus, according to Jorge Vazquez, senior analyst for the metal at HARBOR Intelligence. “Don’t try to catch a falling knife,” Vasquez, founder of the Laredo, Texas-based group’s aluminum unit, wrote in a report. Stockpiles in warehouses monitored by the LME are at their highest since 1978. Coupled with contractions in global manufacturing and insufficient cuts by producers, prices are unlikely to rebound any time soon, Vasquez said.
- U.S. brokerages that also manage money for clients are facing additional scrutiny by industry regulators after investigators failed to spot Bernard Madoff’s use of such a company to operate an alleged $50 billion fraud.
- General Electric Co.(GE) and Caterpillar Inc.(CAT) are among U.S. exporters that oppose “Buy American” provisions in the $825 billion stimulus legislation.
Wall Street Journal:
- Chrysler LLC announced a major new incentive program Thursday aimed at clearing out dealers' inventories of unsold vehicles and jump starting revenue for the ailing auto maker. The new incentives will offer customers the same price Chrysler normally only offers its own employees, plus 0% auto loans for up to 48 months. Also available will be additional rebates of up to $6,000 off the employee price on 2008 models and up to $3,500 on 2009 models, Chrysler said in a statement. The offers are effective Jan. 26.
- President Barack Obama will issue an order restoring U.S. funding for international family-planning groups involved with abortion. But he chose not to do so on Thursday, the anniversary of Roe v. Wade. Charmaine Yoest, president of Americans United for Life, thinks the change in policy amounts to U.S. tax dollars funding abortion and sees no positive outcome. But she called the delayed timing "a politically savvy move" by the White House.
- Two of this year's buzziest Super Bowl ads are taking the tradition of game-day marketing stunts to new heights: They will air in 3-D. But their success will depend as much on logistics as on the appeal of their messages.
- Federal Reserve officials are likely next week to stick closely to their approach for handling the financial crisis -- near-zero interest rates and a focus on special lending programs -- despite internal rifts about some of their tactics.
- Federal agents raided two small Pennsylvania defense contractors that were given millions of dollars in federal funding by Rep. John Murtha, chairman of the defense appropriations committee and one of the most powerful men in Congress. Kuchera Industries and Kuchera Defense Systems shut down for the day after the raid by officers from the Defense Criminal Investigative Service, the Federal Bureau of Investigation and an Internal Revenue Service criminal unit.
- U.S. Ambassador Ryan Crocker said that a precipitous withdrawal of American troops from Iraq could give al Qaeda in Iraq a chance to regenerate and leave the country vulnerable to possible negative interference from neighboring nations.
CNBC.com: Exxon(XOM) has told Brazilian officials it discovered oil in deep water off Rio de Janeiro, near massive fields that could hold as much as 80 billion barrels of oil.
NY Times:
- Problems involving taxes and a household employee surfaced during the vetting of Caroline Kennedy and derailed her candidacy for the Senate, a person close to Gov. David A. Paterson said on Thursday, in an account at odds with Ms. Kennedy’s own description of her reasons for withdrawing.
- The emergence of a former Guantánamo Bay detainee as the deputy leader of Al Qaeda’s Yemeni branch has underscored the potential complications in carrying out the executive order President Obama signed Thursday that the detention center be shut down within a year. The militant, Said Ali al-Shihri, is suspected of involvement in a deadly bombing of the United States Embassy in Yemen’s capital, Sana, in September. He was released to Saudi Arabia in 2007 and passed through a Saudi rehabilitation program for former jihadists before resurfacing with Al Qaeda in Yemen.
CNNMoney.com: One of the nation's largest builders is trying to shock the flatlining new-home market into action with an incentive plan that will slash monthly mortgage payments for qualified buyers. Luxury homebuilder Toll Brothers Inc., said Wednesday that it will offer buyers of its existing new-home inventory a 30-year, fixed-rate mortgage at an interest rate of 3.99% with no points paid up-front. That contrasts with a rate of 5.59% for the average 30-year, fixed-rate mortgage with 0.3 up-front point, as reported this week by Bankrate.com.
- Instant infomercials: Making millions from YouTube ads. Web media startup TurnHere churns out 1,000 corporate videos every month. That might just be the future of Web advertising.
IBD:
- At American defense giant Raytheon (RTN), they must love the law of unintended consequences. As countries like Iran and North Korea spout hostility and pursue nuclear development, their neighbors turn to American weapons suppliers like Raytheon to fortify their defenses.
Gallup Poll:
- More Americans say the prison at Guantanamo Bay military base in Cuba should not be closed (45%) than say it should (35%), but 20% have no opinion on the matter.
USA Today.com:
- The government said Thursday it has distributed an additional $1.5 billion to 39 banks nationwide as part of the $700 billion financial rescue program. The latest capital infusions, which were made on Jan. 16, bring the total amount used to buy bank stock to $193.8 billion. Nearly 300 banks in 43 states and Puerto Rico have received support through the program.
Reuters:
- The House Energy and Commerce Committee backed including about $3 billion in grants to expand Internet service as part of a larger economic stimulus bill, including a provision requiring "open access" in wireless service and on the Internet.
Financial Times: The cost of credit for high-rated companies is expected to drop over the next few months, especially in the US, according to credit portfolio managers at financial institutions around the world. They believe the panic that followed the bankruptcy of Lehman Brothers is slowly receding and US federal bail-outs are boosting liquidity in the markets.
Nikkei:
- Tokyo
The Australian:
- Kevin Rudd has warned that the sudden collapse in China's economic growth reported yesterday will wipe $5 billion off Australia's annual exports and destroy domestic jobs. Dramatically hardening his rhetoric on the depth of the global economic crisis, the Prime Minister warned that 2009 could be "one of the most troubled years of our age". Economists now fear Chinese economic growth will slow to just 4.8 per cent this year, compared with a record 13.9 per cent pace during 2007. Speaking in Melbourne, Mr Rudd said the figures indicated China's GDP would be $200billion less than previously expected - a drop equivalent to one third of the Australian economy.
BusinessLine:
- Even as the Indian Government is finding it difficult to appoint a full-fledged Board of Directors for the troubled Satyam Computers Services, about 70 companies have reported that some of their directors, many of them independent ones, have resigned after the infamous Satyam episode.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (AVT), target $22.
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Economic Releases
10:00 am EST
- Leading Indicators for December are estimated to fall .3% versus a .4% decline in November.
- Existing Home Sales for December are estimated to fall to 4.4M versus 4.49M in November.
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Other Potential Market Movers
BOTTOM LINE: Asian indices are lower, weighed down by commodity and technology stocks in the region. I expect US equities to open lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
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