Oil Slips As World Reserves Rise

By GEORGE JAHN

VIENNA (AP) – Oil prices fell below $65 a barrel Wednesday after data showed a rise in U.S. crude inventories, a sign that consumer demand remains sluggish in the world’s biggest economy.

Benchmark crude for September delivery was down $1.01 to $64.40 a barrel by noon European electronic trading on the New York Mercantile Exchange. On Tuesday, the August contract expired, rising 74 cents to settle at $64.72.

U.S. crude inventories rose 3.1 million barrels last week while gasoline supplies gained 1.3 million, the American Petroleum Institute said late Tuesday. Analysts expected the API numbers to fall 2.0 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Investors will be watching for inventory data from the Energy Department’s Energy Information Administration on Wednesday for more signs crude demand may be waning. The API numbers are reported by refiners voluntarily while the EIA figures are mandatory.

Oil prices have risen from $58.78 a barrel two weeks ago on stronger than expected second quarter corporate earnings. Some of the improved company results have been the result of cost cutting such as layoffs, which in turn is dragging on consumer demand.

Federal Reserve Chairman Ben Bernanke said Tuesday that the economy is improving, but that any recovery will be slow due to rising unemployment.

“During the last week, markets have seen a significant upward trend with oil rising almost 9 percent and stock markets by some 7 percent,” noted Vienna’s JBC Energy. “Nevertheless in our view, this is a result of the temporary positive sentiment among financial markets rather than a substantial fundamental improvement in the US economy or oil markets.”

Others also were cautious about the economy, and its effects on oil.

“The better profits is a good sign, but I want to see more macro numbers improve,” said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. “High unemployment is still a problem going forward.”

In other Nymex trading, gasoline for August delivery slipped by over 3 cents to $1.78 a gallon and heating oil dropped slightly to $1.68. Natural gas for August delivery was steady at $3.71 per 1,000 cubic feet.

In London, Brent prices fell 65 cents to $66.22 a barrel on the ICE Futures exchange.

Asian Markets Trade Mixed With Major Markets Still In The Green

By Masaki Kondo and Shani Raja

July 22 (Bloomberg) — Most Asian stocks rose, giving the MSCI Asia Pacific Index its longest streak of gains since January, as Shin-Etsu Chemical Co. sought to raise prices and BHP Billiton Ltd. pumped a record amount of crude oil.

Shin-Etsu, the world’s largest maker of silicon wafers, climbed 4.9 percent in Tokyo after saying its unit will start talks with chipmakers to boost prices. BHP, Australia’s biggest oil and gas producer, gained 2 percent as new fields helped fourth-quarter output reach an all-time high. Stocks pared gains in the afternoon as Morgan Stanley advised investors to “sell into” the global rally in equities.

Five stocks advanced for every four that fell on the MSCI Asia Pacific Index, which added 0.1 percent to 106.69 as of 7:27 p.m. in Tokyo. The gauge climbed 8.8 percent in the past seven days and has surged 51 percent from a five-year low on March 9 on speculation stimulus policies worldwide will boost global growth. The index pared an earlier 0.6 percent advance.

“The market’s taking a bit of a breather after a pretty strong rally,” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “The underlying economy is better than people anticipated and the market is pricing for a recovery.”

China’s Shanghai Composite Index rose 2.6 percent, the most in Asia today, to a 13-month high. China Petroleum & Chemical Corp. jumped 10 percent after Nomura Holdings Inc. said the company’s first-half net income may more than triple.

Japan’s Nikkei 225 Stock Average advanced 0.7 percent. Nippon Signal Co., which makes traffic signals, jumped 12 percent in Tokyo, while Nexen Tire Corp. climbed 6 percent in Seoul as brokerages set higher target prices for the stocks.

‘Tentative Signs’

Westpac Banking Corp. lost 2.4 percent, pacing gains among financial companies, as National Australia Bank Ltd. announced a share sale to help it weather bad loans. Hong Kong’s Hang Seng Index sank 1.3 percent, erasing a 0.7 percent advance.

Futures on the U.S. Standard & Poor’s 500 Index fell 0.5 percent. The gauge gained 0.4 percent yesterday as Federal Reserve Chairman Ben S. Bernanke said the country’s economy is showing “tentative signs of stabilization.”

After markets closed, Apple Inc. became the latest U.S. company to report better-than-expected profit. Hon Hai Precision Industry Co., which assembles Apple’s iPhone, gained 2.3 percent to NT$113.5 in Taipei.

Shin-Etsu Chemical climbed 4.9 percent to 4,740 yen, while closest rival Sumco Corp. rose 4.6 percent to 1,579 yen in Tokyo.

Shin-Etsu Chemical said today Shin-Etsu Handotai Co., its wholly owned subsidiary, will start negotiations with chipmakers to raise prices for silicon wafers. The Nikkei newspaper earlier said the company will seek a price increase of as much as 40 percent.

Investor Survey

Toshiba Corp., Japan’s biggest chipmaker, jumped 5 percent to 378 yen. Apple paid $500 million to Toshiba for flash memory chips, according to the transcript of Apple’s earnings teleconference.

Optimism for a rebound in corporate profits helped drive the MSCI World Index up by 6.6 percent in the week through yesterday. The first Quarterly Bloomberg Global Poll of financial investors and analysts showed more than a third of investors see greater opportunity and are taking more risk. Two- thirds of respondents say they are optimistic about India’s prospects, as are 70 percent on China.

India’s finance ministry said on July 2 the nation’s economy may grow by as much as 7.75 percent this year. China said last week its second-quarter gross domestic product expanded 7.9 percent from a year earlier, accelerating from its slowest growth in almost a decade.

Sinopec, BHP

Materials stocks posted the biggest gains among the MSCI Asia Pacific Index’s 10 industry groups today. The group is the gauge’s second-best performer this year amid speculation an economic rebound will boost commodities demand.

BHP, the world’s biggest mining company, added 2 percent to A$36.90. Fourth-quarter oil production rose 4 percent from a year earlier.

European Markets Fall

By Adam Haigh

July 22 (Bloomberg) — European stocks slipped after a seven-day rally pushed valuations on the Dow Jones Stoxx 600 Index to the highest in five years, overshadowing better-than- estimated earnings from Apple Inc. and TomTom NV.

Lonza Group AG slid 3.2 percent after reporting a 55 percent drop in first-half profit. BHP Billiton Ltd. led raw- material shares lower as metals retreated. Apple advanced 3.9 percent in Germany and TomTom, Europe’s largest maker of car- navigation devices, surged 12 percent.

Europe’s Stoxx 600 lost 0.3 percent to 214.43 as of 11:23 a.m. in London. The measure is trading at 26 times the profit of its companies, the highest since January 2004 according to Bloomberg data, after climbing 8.1 percent since July 10 as results from Goldman Sachs Group Inc. to Johnson & Johnson and Coca-Cola Co. exceeded analysts’ predictions.

“It’s all got a little bit ahead of itself,” said Ian Williams, chief executive officer of Charteris Treasury Portfolio Managers Ltd., which oversees about $142 million. “There is the scope there for disappointment on the economic numbers as they unfold over the next month,” he told Bloomberg Television.

The Dow Jones Industrial Average capped its longest stretch of gains in two years yesterday as Caterpillar Inc.’s earnings tripled analyst estimates and Federal Reserve Chairman Ben S. Bernanke said there are signs the economy is stabilizing. Futures on the Standard & Poor’s 500 Index slipped 0.4 percent today. The MSCI Asia Pacific Index advanced 0.1 percent, rising for a seventh day in the longest stretch of gains since January.

‘Sell Into’ Rally

Morgan Stanley advised investors to “sell into” the equities rally, saying “cyclical growth risks have diminished but not disappeared.”

IBM Boosts Its Relationship With JNPR

NEW YORK (Reuters) – IBM on Wednesday announced it was stepping up its partnership with Juniper Networks Inc, but said it was also boosting ties with other equipment vendors including Cisco Systems Inc, playing down suggestions it was aiming to keep an increasingly competitive Cisco at bay.

International Business Machines Corp said it had agreed with Juniper on an original equipment manufacturing (OEM) partnership, under which IBM would rebrand Juniper’s switches and routers as its own and sell them as part of its family of products.

IBM said the move was aimed at providing its customers, in particular corporate data centers dealing with increasingly high-volume network traffic, with a wider range of server, data storage, and networking equipment to choose from.

“Most of our customers want choice. They want best of breed,” said Jim Comfort, vice-president of IBM’s enterprise initiatives.

Juniper executives said the deal would help expand its distribution.

IBM said it saw partnerships as a way of helping it become a one-stop shop for a diverse set of products, making it easier for customers to buy and manage their data center equipment.

Some analysts, however, have said IBM is trying to expand relationships outside its long-standing partnership with top network equipment manufacturer Cisco, which recently announced it was entering the server market — a move seen as a direct challenge to IBM and Hewlett-Packard Co.

IBM, which sells computer servers and software and technology services including outsourcing and automation, already helps to sell products made by Juniper, and Cisco, under resale partnerships.

GE Capital Gets FDIC Approval For TLGP Exit, But Moody’s Cut Them Just Yesterday

NEW YORK (MarketWatch) — General Electric Co. /quotes/comstock/13*!ge/quotes/nls/ge (GE 11.47, -0.20, -1.71%) said Wednesday that the Federal Deposit Insurance Corp. approved an application from GE Capital Corp., positioning it to exit the Temporary Liquidity Guarantee Program, or TLGP. GE Capital will thus stop issuing government-guaranteed short-term debt and will be able to issue non-guaranteed long-term debt with maturities of 18 months to three years. The company said it will have about $14 billion remaining long-term debt capacity under TLGP.

China 2 Use Foreign Reserves For Growth

Beijing will use its foreign exchange reserves, the largest in the world, to support and accelerate overseas expansion and acquisitions by Chinese companies, Wen Jiabao, the country’s premier, said in comments published on Tuesday.

“We should hasten the implementation of our ‘going out’ strategy and combine the utilisation of foreign exchange reserves with the ‘going out’ of our enterprises,” he told Chinese diplomats late on Monday.

Mr Wen said Beijing also wanted Chinese companies to increase its share of global exports.

The “going out” strategy is a slogan for encouraging investment and acquisitions abroad, particularly by big state-owned industrial groups such as PetroChina, Chinalco, China Telecom and Bank of China.

Qu Hongbin, chief China economist at HSBC, said: “This is the first time we have heard an official articulation of this policy … to directly support corporations to buy offshore assets.”

China’s outbound non-financial direct investment rose to $40.7bn last year from just $143m in 2002.

Mr Wen did not elaborate on how much of the $2,132bn of reserves would be channelled to Chinese enterprises but Mr Qu said this was part of a strategy to reduce its reliance on the US dollar as a reserve currency.

“This is reserve diversification in a broader sense. Instead of accumulating foreign exchange reserves and short-term financial assets, the government wants the nation to accumulate more long-term corporate real assets.”

State-owned groups, particularly in the oil and natural resources sectors, have stepped up their hunt for overseas companies and assets on sale because of the global crisis.

China Investment Corp, the $200bn sovereign wealth fund, has been buying stakes in overseas resources companies and has taken a 1.1 per cent stake in Diageo, the British distiller.

In an interview published in state-controlled media, the chairman of China Development Bank said Chinese outbound investment would accelerate but should focus on resource-rich developing economies.

“Everyone is saying we should go to the western markets to scoop up [underpriced assets],” said Chen Yuan. “I think we should not go to America’s Wall Street, but should look more to places with natural and energy resources.”

Black Rocks Larry Fink Attacks The Quality of Wall Streets Earnings

Larry Fink, BlackRock’s founder and chief executive, on Tuesday took aim at the “luxurious” trading profits enjoyed by Wall Street banks, saying that they have taken advantage of reduced competition to charge their customers more for even basic trades.

“There are fewer players. There is very little capital being committed by these dealers,” Mr Fink said.

“They’re just taking the spread between the bid and the ask [the price gap between buyers and sellers] and they are making very luxurious returns,” he added.

Mr Fink, who made his comments as BlackRock reported better-than-expected second-quarter results, added that he was looking at ways to reduce that spread to save his clients money.

With the planned merger with Barclays Global Investors scheduled to close by the end of the year, BlackRock is set to become by far the largest money management firm in the world, with $2,700bn under management. Such scale should give Mr Fink even more clout as he seeks to reduce the cost of trades…..

Another Black Box Trading Scam Scandal

A paper has been going around that describes a startling new world of high-velocity computerized trading that causes volume and volatility to soar and costs ordinary investors billions of dollars.

The paper, Toxic Equity Trading On Wall Street, appears to have been published late last year by Sal Arnuk and Joseph Saluzzi from a firm called Themis Trading. (One word of caution: We have not yet verified a single assertion made in the paper, and we had not heard of Themis Trading.  We would be grateful if those of you with insight into this would help us understand the real facts here.)

The paper is embedded below (you can also download it at Themis’s web site).  Here, in brief, is the world it describes:

Many trading orders these days are executed by computers.  Like human traders, the computers break big orders into small chunks (say, 100 or 500 shares) and then match them with orders on electronic stock exchanges.  The reason the orders are broken into chunks is so they won’t move the market too much.  Stock trading is relatively illiquid, and big orders can drive the price of a stock sharply up or down.  Since the dawn of Wall Street time, clever traders have tried to hide the amount of stock they ultimately want to buy or sell to avoid having their own orders move the market sharply against them.

In recent years, such “algorithmic” electronic trading execution has grown in popularity, and a number of electronic trading strategies have sprung up to exploit it.  In one of these strategies, a program analyzes the incoming order flow on an electronic exchange to try to spot a big institutional order that is just hitting the market (apparently this is relatively easy to do).  The program then front-runs the order by modestly outbidding the institution for the stock and then turning around and selling it to the institution at a higher price than the institution would have otherwise paid.

Front-running is an age-old cheating technique: A trading firm gets a big order from a client and, before it executes it, buys some of the same stock for itself.  Front-running is, in fact, what many Wall Street insiders thought Bernie Madoff was doing before they discovered he was running a Ponzi scheme.  This new form of electronic front-running, however, is to traditional front-running as a Playstation first-person shooter 3D game is to a game of bridge…..

GE Capital Unit Cut By Moody’s

By Bryan Keogh

July 21 (Bloomberg) — General Electric Capital Corp. bonds were cut to “underweight” because the finance company’s $6.6 billion of reserves to protect against losses on its loans are “inadequate” compared with large banks such as JPMorgan Chase & Co. and Citigroup Inc, Barclays Capital said.

GE Capital, the finance arm of General Electric Co., was lowered from “market weight” as the deterioration of the quality of its loans has outpaced growth in its reserves, Barclays analysts led by Jonathan Glionna said today in a report. GE Capital’s loan-loss reserves as a percentage of finance receivables is 1.8 percent, among the worst in the financial-services industry, Glionna wrote.

“This amount increased in the past year as the economy soured and the prospect of future losses grew,” Glionna, who is based in New York, wrote in the report. “But it has not increased enough, in our opinion, and reserves are inadequate when compared with those of other large banks.”

General Electric said on July 17 that second-quarter sales dropped more than some analysts predicted, while earnings at GE Capital fell 80 percent. Fairfield, Connecticut-based GE is trying to reduce the unit to about 30 percent of total profit by selling assets and pulling back in consumer and real-estate lending.

Notes Fall

The company’s $4 billion of 5.625 percent notes due in 2018 rose 0.9 cent to 97.3 cents on the dollar for a yield of 6.03 percent as of 4:35 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The bonds lost 2.3 percent this year through yesterday, including reinvested interest, compared with a gain of 11 percent for all investment-grade bonds, according to data from Trace and Merrill Lynch & Co.’s U.S. Corporate Master index.

GE Capital, which isn’t a bank, has raised its reserves from $5.3 billion at the end of 2008, the company said July 17. Of the $6.6 billion in current reserves, $2.5 billion is for commercial allowance for losses, while $4.1 billion is for potential consumer losses.

“We believe we are appropriately reserved for our non- earning loss exposure,” GE Chief Financial Officer Keith Sherin said on a call with investors on July 17 to detail the second- quarter earnings.

GE has long contended that its asset mix differs markedly from that of a typical bank’s.

GE Capital spokesman Russell Wilkerson declined to comment further, noting that the company is hosting a meeting with investors on July 28. GE Capital’s businesses include aircraft leasing, lending to mid-size companies, real estate and consumer finance.

Mortgage Applications Rise

U.S. mortgage applications rose despite a jump in borrowing costs last week, but still bounced around the year’s lows with unemployment fears depressing demand.

The Mortgage Bankers Association’s total loan applications index rose by a seasonally adjusted 2.8 percent to 528.9 last week, even as 30-year mortgage rates rose by about 1/4 percentage point to 5.31 percent.

The measure of requests to buy homes and refinance loans was up from a seven-month low of 444.8 three weeks earlier but still less than half the level seen during the spring, when mortgage rates sank to record lows.

“The primary negatives right now are the high rate of unemployment and general uncertainty about the future path of the economy, which make people reluctant to buy,” said David Stiff, chief economist at Fiserv in Cambridge, Massachusetts, which produces the S&P/Case-Shiller and other price indexes.

Home affordability has vastly improved with mortgage rates about 1-1/4 percentage less than a year ago and home prices, based on the S&P/Case-Shiller gauges, plunging an average 32 percent in the past three years.

But the fear of unemployment, with the highest rate of job loss in almost 26 years, is keeping many potential buyers unwilling or unable to commit to such a major purchase, economists said.

The MBA’s index of applications to purchase homes inched up by 1.3 percent last week to 262.1, and has been fairly range-bound for months.

Federal Reserve Chairman Ben Bernanke told Congress on Tuesday that unemployment is apt to stay uncomfortably high into 2011 and could drain consumer confidence.

A peak-to-trough average price slump of 39 percent is likely, with losses as great as 75 percent in the bubble markets, according to Fiserv.

The prospect of more price erosion keeps many buyers at bay, waiting for better bargains…..

British Factory Orders Fall @ Fastest Rate

British factories suffered a bigger-than-expected drop in orders this month raising new fears about the health of the economy.

In July, manufacturing orders fell at their fastest rate since January 1992, according to the Confederation of British Industry (CBI).

The CBI’s gauge of orders dropped from -51 to -59, far below the -45 measure expected.

However, there was some good news as factories indicated that the business environment had improved over the past three months, with the balance rising to -16, the highest since October 2007.

There was also a slowdown in the pace of decline of overall output. Some 43 per cent of businesses said output had declined in the three months to July, while just 12 per cent said their output rose. The resulting balance of -31 indicates that output is still falling, but at a slower rate than in the three months to June when the balance was -53.

Ian McCafferty, chief economic adviser to the CBI, said that the gloomy figures from the manufacturing sector, which accounts for about a sixth of the country’s total output, underlined that the country faced difficulties in the wake of the downturn: “These figures reinforce our view that the road out of recession will be long and slow,” he said.

“The further sharp decline in export orders is of particular concern as we are not seeing much of a boost from the relative weakness of sterling. There are also further indications that the inventory cycle may not be turning as quickly as many had hoped.” The measure of export orders picked up only marginally to -45 from -52 in June, indicating that orders are still declining sharply.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The CBI industrial trends survey for July disappointingly and worryingly showed a marked relapse in order books in July, thereby raising concerns about UK economic recovery prospects.”

P&G Closer To Sale Of Drug Unit

By JEFFREY MCCRACKEN and ELLEN BYRON

EMBARGOED!Procter & Gamble Co. is getting closer to a possible sale of its prescription-drug business, and several parties, including specialty drug maker Warner Chilcott Ltd., and private-equity firm Cerberus Capital Management LP, are engaged in later-stage discussions, according to people familiar with the matter.

The unit could fetch about $3 billion, these people say.

An acquisition of the P&G business would substantially boost the profile of Warner Chilcott, a New Jersey-based company that focuses on women’s health care and dermatology products. Folding in the division would triple Warner’s revenue and give it access to drugs that focus on a wide range of women’s health concerns.

Warner Chilcott didn’t return calls seeking comment.

Cerberus, which proposes acquiring the division and turning it into a stand-alone company, is more circumspect about the transaction, according to people familiar with the situation. But it has lined up preliminary financing from some Wall Street banks, a small sign that banks are getting comfortable financing acquisitions, albeit ones with low amounts of debt financing and very steady cash flows.

“Cerberus can’t get it if the strategic buyers are serious. They will pay more than Cerberus for it,” said one person familiar with the situation.

The unit — which makes roughly $800 million in operating profit — was put on the auction block late last year, in a sales process led by Goldman Sachs & Co. A deal could be wrapped up by the end of summer, according to people familiar with the discussions, though they warned final discussions could still falter.

A P&G spokesman said the company will look at all options to maximize shareholder value, including “continued operations of our strong and profitable business, as well as divestiture of some or all of our pharmaceutical assets.”

The division produces osteoporosis drug Actonel, bladder-control drug Enablex, ulcerative colitis drug Asacol and female sexual-dysfunction drug Intrinsa, which hasn’t gained approval in the U.S. but is available in some European countries.

P&G will likely focus on one bidder sometime next month, say people with knowledge of the process.

There is at least one other bidder and the situation remains fluid amid the current economic conditions, these people added.

The consumer-products giant, known for its Tide detergent, Pantene shampoo and other staples, declared its drug business a potential divestiture candidate in December and said it would further cut research and development in the division, preferring to invest instead in its over-the-counter health brands, which include Vicks, Metamucil, Crest and Oral-B.

Its best-known drug is Actonel, an osteoporosis treatment for women. The division has annual sales around $2 billion and is headquartered in Ohio.

For years P&G has struggled to gain a foothold in the pharmaceutical industry, having aborted a 2000 plan to swallow drug makers Warner-Lambert and American Home Products. The failed takeover eventually led to the ouster of P&G’s chief executive at the time, Durk I. Jager.

By 2006 the company announced plans to end most of its in-house work on drug discovery, investing instead in forging pacts with small biotech companies and universities.

In April, P&G said there had been “significant interest” in the pharmaceutical unit from potential acquirers but that it was still weighing a variety of options for the operation.

Over the past several years P&G has worked to prune slow-growing businesses, including selling off Jif peanut butter, Crisco shortening and Folgers coffee. Meanwhile, P&G has acquired brands in the personal-care and beauty industries, including its $57 billion acquisition of Gillette Co. in 2005.

Scrolling Headlines From Yahoo in Play

SNDK

SAN FRANCISCO (MarketWatch) – SanDisk Corp. /quotes/comstock/15*!sndk/quotes/nls/sndk (SNDK 19.54, +0.55, +2.90%) late Wednesday reported a second-quarter profit of $52.51 million, or 23 cents a share, compared with a loss of $73.75 million, or 33 cents a share, for the year-earlier period. Revenue was $730.57 million, down from $816.01 million for the same quarter last year. Adjusted income, which excludes such items as acquisition-related charges and share-based compensation expense, was 36 cents a share. Analysts had expected the Milpitas, Calif.-based memory chip maker to report a loss of 16 cents a share on revenue of $709.7 million, according to a consensus survey by Thomson Reuters.

EBAY

SAN JOSE, Calif.–(BUSINESS WIRE)–eBay Inc. (Nasdaq:EBAY – News) today reported financial results for the second quarter ended June 30, 2009. The ecommerce company posted second quarter revenue of $2.10 billion, a $97.7 million year-over-year decrease. The year-over-year revenue growth of PayPal and Skype was offset by the effects of the stronger dollar and a modest decline in the Marketplaces business. The company recorded net income on a GAAP basis of $327.3 million or $0.25 per diluted share, and non-GAAP net income of $478.6 million or $0.37 per diluted share.

GAAP operating margin decreased to 19.6% for the quarter, compared to 24.8% for the same period last year. Non-GAAP operating margin decreased to 28.7% for the quarter, compared to 31.9% for the same period last year. The decrease in operating margins was caused primarily by the impact of the stronger dollar and the company’s continuing shift to faster growing, lower margin businesses, partially offset by strong cost controls.

eBay Inc. generated $730.7 million of operating cash flow during the second quarter. Free cash flow during the quarter was $602.3 million.

“We drove solid second quarter results, with strong momentum and market share gains at PayPal and continued stabilization in our core eBay business,” said eBay Inc. President and CEO John Donahoe. “We are managing our business with focus and discipline, delivering on our commitments while investing in our growth priorities. I’m pleased with our pace, our progress and our performance.”

ISRG

SUNNYVALE, Calif, July 22, 2009 (GLOBE NEWSWIRE) — Intuitive Surgical, Inc. (Nasdaq:ISRG – News), the industry leader in surgical robotics, today reported second quarter of 2009 revenue of $260.6 million, compared with $219.2 million for the second quarter of 2008. Second quarter of 2009 revenue included $13.8 million of revenue that was originally deferred in the first quarter of 2009 in association with discounted offers made to certain customers to upgrade da Vinci S Surgical Systems to our recently introduced da Vinci Si Surgical Systems. The Company had deferred a total of $20.1 million of revenue in the first quarter of 2009 and expects to recognize the remaining $6.3 million in the second half of 2009.

Second quarter of 2009 instruments and accessories revenue increased to $95.8 million from $73.6 million in the second quarter of 2008. The growth in instruments and accessories revenue was primarily driven by growth in da Vinci surgical procedures of approximately 52%, partially offset by lower instruments and accessories revenue per procedure. Second quarter of 2009 instruments and accessories revenue included recognition of $1.4 million of revenue that was originally deferred in the first quarter of 2009.

Second quarter of 2009 systems revenue was $123.5 million, compared to $116.1 million during the second quarter of 2008. Second quarter of 2009 systems revenue included recognition of $12.4 million of revenue that was originally deferred in the first quarter of 2009. 76 da Vinci Surgical Systems were sold during the second quarter of 2009, compared to 85 sold during the second quarter of 2008. 47 of the 76 systems sold during the quarter were the new da Vinci Si model.

Second quarter of 2009 service revenue increased to $41.3 million from $29.4 million during the second quarter of 2008, reflecting growth in the installed base of da Vinci Surgical Systems. The Company ended the second quarter of 2009 with 1,242 da Vinci Surgical Systems installed throughout the world.

Second quarter of 2009 operating income increased to $99.5 million from $78.2 million during the second quarter of 2008, reflecting growth in revenue but also included the impact of recognizing $13.8 million of revenue that was originally deferred in the first quarter of 2009. Since there was no cost deferred in association with the deferred revenue, the $13.8 million of revenue recognized had an equal impact on total revenue, operating income and pretax income. Operating results for the second quarter of 2009 also included $24.6 million of non-cash stock-based compensation expense in accordance with the Financial Accounting Standards Board SFAS 123R, compared with $19.7 million for the second quarter of 2008.

Second quarter of 2009 net income was $62.4 million, or $1.62 per diluted share, compared with $51.2 million, or $1.28 per diluted share for the second quarter of 2008. The $13.8 million of revenue recognized in the second quarter of 2009, related to revenue deferred in the first quarter, increased second quarter 2009 net income by approximately $8.3 million, or $0.22 per diluted share.

Intuitive ended the second quarter of 2009 with cash, cash equivalents and investments of $902 million, up $80 million from the previous quarter.

Commenting on the announcement, Lonnie Smith, Chairman and CEO of Intuitive Surgical, said, “We are pleased by our continued strong procedure growth and the positive market response to our new da Vinci Si system.”

CMG

Highlights for the second quarter of 2009 as compared to the second quarter of 2008 include:

• Revenue increased 14.1% to $388.8 million
• Comparable restaurant sales increased 1.7%
• Restaurant level operating margin was 26.0%, an increase of 360 basis points
• Net income was $35.4 million, an increase of 44.7%
• Diluted earnings per share was $1.10, an increase of 48.6%

Highlights for the six months ended June 30, 2009 as compared to the prior year period include:

• Revenue increased 15.0% to $743.3 million
• Comparable restaurant sales increased 1.9%
• Restaurant level operating margin was 24.8%, an increase of 290 basis points
• Net income was $60.8 million, an increase of 45.6%
• Diluted earnings per share was $1.88, an increase of 50.4%

“We are pleased with our financial results in the second quarter, as we were able to produce industry leading margins that were the highest Chipotle has ever achieved,” said Founder, Chairman and Co-CEO Steve Ells. “But I’m even more pleased with the recent increased interest in how food in this country is raised, with the release of the critically acclaimed documentary ‘Food, Inc.’, continuing media attention to related issues, and pending legislation that would ban the sub-therapeutic use of antibiotics in livestock. Chipotle continues to be a leader on these issues, and we believe that greater curiosity and transparency about how food is raised will result in consumers becoming more discerning and more demanding about the food they eat, which ultimately will result in a greater appreciation for our Food With Integrity efforts.”

Second quarter 2009 results

Revenue for the second quarter of 2009 increased 14.1% to $388.8 million from $340.8 million in the second quarter of 2008. This growth in revenue was attributable to new restaurants not in the comparable base and a 1.7% increase in comparable restaurant sales in the second quarter. Comparable restaurant sales growth was due to the impact of menu price increases partially offset by a decline in customer visits. Chipotle opened 24 new restaurants during the second quarter of 2009.

Restaurant level operating margins increased to 26.0% in the second quarter of 2009 from 22.4% in the second quarter of 2008, primarily due to menu price increases, more efficient labor staffing, and a decrease in marketing and promotional spend. We expect marketing and promotional spend as a percentage of revenue for the full year 2009 to remain consistent with 2008.

General and administrative expenses were $25.8 million in the second quarter of 2009, or 6.6% of revenue, compared to $20.7 million in the second quarter of 2008, or 6.1% of revenue. The increase as a percentage of revenue resulted from higher performance based bonus accruals in 2009 and a reversal during the second quarter of 2008 of bonus accruals from the first quarter, partially offset by menu price increases.

Net income for the second quarter of 2009 was $35.4 million, or $1.10 per diluted share, compared to $24.5 million, or $0.74 per diluted share in the second quarter of 2008.

Results for the six months ended June 30, 2009….

ADS

Total second-quarter 2009 revenue of $460 million, adjusted EBITDA of $125 million, net income of $29.4 million, net income per diluted share of $0.51 and cash earnings per diluted share of $0.95 represented declines of 9 percent, 23 percent, 37 percent, 15 percent, and 9 percent, respectively, versus the second quarter of 2008. See “Financial Measures” below for a discussion of adjusted EBITDA, cash earnings per diluted share and other non-GAAP financial measures.

Excluding changes in the foreign exchange rate for the Canadian dollar, revenue would have been $486 million, representing a 4-percent decline; adjusted EBITDA would have been $149 million, representing an 8-percent decline; and cash earnings per diluted share would have increased 16 percent to $1.21, compared to the second quarter of 2008 in each case.

The Company’s previously issued second-quarter guidance for cash earnings per diluted share of $1.05 assumed an exchange rate of $0.80 US per Canadian dollar. Actual results reflect a significantly stronger Canadian dollar, which averaged $0.86 US per Canadian dollar for the quarter. The higher Canadian dollar benefited Canadian operations by approximately $3 million, but resulted in a $16 million foreign exchange loss on its U.S. dollar denominated investments. Thus, against guidance, results were impacted by a net $13 million foreign exchange loss, or $0.14 on a cash earnings per diluted share basis. Had the Canadian dollar tracked to the Company’s guidance of an exchange rate of $0.80 US per Canadian dollar, cash earnings per diluted share would have been $1.09, or $0.04 above guidance.

The $0.14 incremental foreign exchange loss is not expected to impact the Company’s ability to achieve its full-year guidance. It is expected that a stronger Canadian dollar will continue to benefit operations in the third and fourth quarters and mitigate the impact of the second-quarter loss.

In summary, in 2009 versus the prior year, the Company is facing three major headwinds: higher loss rates amounting to $90 million; interest only strip grow-over of $30 million related to the Company’s securitization program; and an impact of $40 million due to foreign exchange rate fluctuations. In total, these headwinds equate to $160 million, or approximately $1.75 of a negative impact to cash earnings per diluted share. The Company expects the first half of the year to be the most challenging….

QCOM

• Revenues: $2.75 billion, compared to $2.76 billion in the prior year and $2.46 billion in the prior quarter.
• Operating income: $894 million, compared to $824 million in the prior year and an operating loss of $10 million in the prior quarter.*
• Net income: $737 million, compared to $748 million in the prior year and a net loss of $289 million in the prior quarter.*
• Diluted earnings per share: $0.44, compared to $0.45 in the prior year and diluted loss per share of $0.18 in the prior quarter.*
• Effective tax rate: 25 percent for the quarter. Fiscal 2009 estimated tax rate of approximately 33 percent.
• Operating cash flow: $1.09 billion, up 47 percent year-over-year; 39 percent of revenues.
• Return of capital to stockholders: $282 million, or $0.17 per share of cash dividends paid.

* The second quarter of fiscal 2009 results reflected a $748 million litigation settlement charge related to a settlement and patent agreement with Broadcom Corporation.

Pro Forma Third Quarter Results

Pro forma results exclude the Qualcomm Strategic Initiatives (QSI) segment, certain estimated share-based compensation, certain tax items related to prior years and acquired in-process research and development (R&D) expense.

• Revenues: $2.74 billion, compared to $2.76 billion in the prior year and $2.45 billion in the prior quarter.
• Operating income: $1.12 billion, compared to $1.06 billion in the prior year and $214 million in the prior quarter.*
• Net income: $903 million, compared to $915 million in the prior year and a net loss of $46 million in the prior quarter.*
• Diluted earnings per share: $0.54, compared to $0.55 in the prior year and diluted loss per share of $0.03 in the prior quarter.* The current quarter excludes $0.02 loss per share attributable to the QSI segment and $0.08 loss per share attributable to certain estimated share-based compensation.
• Effective tax rate: 25 percent for the quarter. Fiscal 2009 estimated tax rate of approximately 29 percent.
• Free cash flow: $1.04 billion, up 23 percent year-over-year; 38 percent of revenues (defined as net cash from operating activities less capital expenditures).

* The second quarter of fiscal 2009 results reflected a $748 million litigation settlement charge related to a settlement and patent agreement with Broadcom…..

SWK

The New Britain, Conn., company also announced additional cost-cutting intended to save $50 million, half of which is to be achieved this year.

Net income of $69.5 million, or 87 cents per share, is down from $78.1 million, or 98 cents per share a year ago.

Revenue for the quarter was $919.2 million, down 20 percent from $1.15 billion in the same period last year.

The results included a repurchase of $103 million in debt issued in November 2005 for $59 million in cash on May 1. The transaction resulted in a pretax gain of $44 million, or 34 cents per share positive impact in the quarter.

Analysts surveyed by Thomson Reuters expected earnings of 54 cents per share on revenue of $979.4 million. Analysts typically do not account for special charges.

Revenue for Stanley Works’ industrial tools business fell 40 percent over the previous year due to continuing weakness in markets in Europe and the U.S., the company said. Foreign exchange rates also helped reduce revenue from Europe by 8 percent, it said.

Stanley Works said that due to steeper than expected declines in volume during the quarter, it will cut costs that are expected to generate annual savings of $50 million, or 24 cents per share this year. The total 2009 benefit will be $2.27 per share, including benefits of $2.03 announced last year and the first quarter of 2009.

The company increased its outlook for full-year earnings, to between $2.34 per share and $2.84 per share, from $2 per share to $2.50 per share. Stanley Works said it expects a gain of 34 cents per share on eliminating debt and said sharp declines in volume should begin to ease in the second half of the year.

SU

CALGARY, July 22 /PRNewswire-FirstCall/ – Suncor Energy Inc. today reported a second quarter 2009 net loss of $51 million ($0.06 per common share), compared to net earnings of $829 million ($0.89 per common share) in the second quarter of 2008. Excluding unrealized foreign exchange gain on the company’s U.S. dollar denominated long-term debt, mark-to-market accounting losses on commodity derivatives, and costs related to start-up or deferral of growth projects, second quarter 2009 earnings were $185 million ($0.20 per common share), compared to $920 million ($0.99 per common share) in the second quarter of 2008. Cash flow used in operations was $342 million in the second quarter of 2009, compared to cash flow from operations of $1.405 billion in the second quarter of 2008.

The decrease in earnings and cash flow was primarily due to lower price realizations, as benchmark commodity prices were significantly weaker in the second quarter of 2009 compared to the same period in 2008, and operating expenses were higher at oil sands due to increased production and sales. These were partially offset by the increased production in our oil sands business segment, reduced natural gas royalty expense due to lower benchmark commodity prices, and increased refined product sales in our downstream business segment.

Net loss for the first six months of 2009 was $240 million, compared to net earnings of $1.537 billion for the same period in 2008. Excluding unrealized foreign exchange impacts on the company’s U.S. dollar denominated long-term debt, mark-to-market accounting losses on commodity derivatives, and costs related to start-up or deferral of growth projects, earnings for the first six months of 2009 were $410 million, compared to $1.725 billion in the same period for 2008. Cash flow from operations for the first six months of 2009 was $137 million, compared to $2.566 billion in the first six months of 2008. The year-to-date decreases in earnings and cash flow from operations were primarily due to the same factors that impacted second quarter results.

Suncor’s total upstream production averaged 336,100 barrels of oil equivalent (boe) per day during the second quarter of 2009, compared to 212,300 boe per day in the second quarter of 2008. Oil sands production contributed an average 301,000 barrels per day (bpd) in the second quarter of 2009, compared to second quarter 2008 production of 174,600 bpd. The increased production was primarily due to improved upgrader reliability in the second quarter of 2009. In addition, in the comparative quarter of 2008 a planned maintenance shutdown of one of our upgraders and a regulatory cap on our Firebag in-situ operations impacted production. Natural gas production this most recent quarter averaged 211 million cubic feet equivalent (mmcfe) per day, compared to 226 mmcfe per day in the second quarter of 2008.

Oil sands cash operating costs averaged $31.30 per barrel in the second quarter of 2009, compared to $50.85 per barrel during the second quarter of 2008. The decrease in cash operating costs per barrel was primarily due to increased production and a decrease in natural gas input prices.

“During the second quarter, we saw the fruits of last year’s labour,” said Rick George, president and chief executive officer. “For the second quarter in a row, we experienced very good reliability at oil sands, which is clearly illustrated through our production results during the first half of 2009. As we look to the second half of the year, we are confident that we are well-positioned to take advantage of any improvement in commodity prices with more reliable operations.”

Merger and growth update……

ATI

PITTSBURGH (AP) — Allegheny Technologies Inc. said Wednesday reported a loss for the second quarter as the specialty metals producer struggled with weak titanium demand from aerospace customers.

The company lost $13.4 million, or 14 cents per share, compared with a profit in last year’s second-quarter of $168.9 million, or $1.66 per share.

Excluding one-time items, net income attributable to common shareholders was $3.6 million, or 3 cents per share.

Analysts polled by Thomson Reuters expected, on average, earnings per share of 3 cents. Such expectations typically exclude one-time items.

Revenue fell to $710 million from $1.46 billion, less than the $816.6 million Wall Street anticipated. Allegheny cited lower raw material surcharges, reduced base selling prices and weaker volume.

“Demand for our titanium alloys and our nickel-based alloys from the aerospace market was at significantly lower levels as the supply chain adjusted to aircraft production schedule pushouts and reduced demand from the ‘aero-engine’ aftermarket,” CEO L. Patrick Hassey said.

MS

NEW YORK–(BUSINESS WIRE)–Morgan Stanley (NYSE: MS – News) today reported a loss from continuing operations applicable to Morgan Stanley for the second quarter ended June 30, 2009 of $159 million, or $1.37 per diluted share (reflective of preferred dividends and other adjustments),¹ compared with income from continuing operations applicable to Morgan Stanley of $689 million, or $0.61 per diluted share, a year ago. Net revenues for the quarter were $5.4 billion, compared with $6.1 billion in last year’s second quarter. Non-interest expenses were $6.0 billion, compared with $5.2 billion a year ago. Compensation expenses were $3.9 billion, compared with $3.1 billion a year ago. Non-compensation expenses increased slightly from a year ago. Comparisons of current quarter results to prior periods are impacted by the results of the Morgan Stanley Smith Barney joint venture (MSSB), which closed on May 31, 2009.

Morgan Stanley’s results for the three months ended June 30, 2009 reflect a number of significant items, including, among others:

• Negative revenue of $2.3 billion, or $1.32 per diluted share, related to the continued tightening of Morgan Stanley’s credit spreads on certain of its long-term debt (MS debt-related credit spreads).²
• A negative adjustment of $0.74 per diluted share for the accelerated amortization of $850 million related to the issuance discount on the Company’s Series D Preferred Stock resulting from the repurchase of capital issued under the Capital Purchase Program (TARP).

For the first six months of 2009, loss from continuing operations applicable to Morgan Stanley was $345 million, or $2.00 per diluted share, compared with income from continuing operations applicable to Morgan Stanley of $2,084 million, or $1.85 per diluted share, a year ago. Net revenues decreased 40 percent to $8.4 billion and non-interest expenses decreased 10 percent to $9.9 billion.

Net income for the quarter was $33 million, compared with $1,159 million in the second quarter of 2008. Net income applicable to Morgan Stanley for the quarter was $149 million, or a loss of $1.10 per diluted share, compared with net income applicable to Morgan Stanley of $1,143 million, or $1.02 per diluted share, in the second quarter of 2008. Net loss for the first six months of 2009 was $157 million, compared with net income of $2,591 million a year ago.³ For the first six months of 2009, net loss applicable to Morgan Stanley was $28 million, or $1.71 per diluted share, compared with net income applicable to Morgan Stanley of $2,556 million, or $2.28 per diluted share a year ago.

Business Highlights…..

WFC

• Another quarter of record earnings
  • Record Wells Fargo net income of $3.17 billion, up 81 percent from last year; $6.22 billion for six months ended June 30, 2009, up 66 percent from last year
  • Net income applicable to common stock of $2.58 billion, up 47 percent from last year; $4.96 billion for six months ended June 30, 2009, up 32 percent from last year
  • Diluted earnings per common share of $0.57, up 8 percent from last year, after $700 million credit reserve build ($0.10 per common share), FDIC special assessment of $565 million ($0.08 per common share) and merger-related and restructuring expenses of $244 million ($0.03 per common share)
• Record revenue
  • Record revenue of $22.5 billion, up 28 percent (annualized) from first quarter
  • Legacy Wells Fargo revenue of $13.6 billion, up 19 percent from last year; year-to-date legacy Wells Fargo revenue of $25.9 billion, up 18 percent
  • Wachovia contributed 39 percent of consolidated revenue
  • $206 billion of credit extended to customers in the quarter
  • Average checking and savings deposits up 20 percent (annualized) from first quarter
  • Net interest margin of 4.30 percent, up 14 basis points from first quarter
  • Cross-sell ratio for legacy Wells Fargo a record 5.84 for retail bank households and 6.4 for wholesale and commercial customers
  • Broad-based revenue contribution from diverse businesses, with particular strength in regional banking, commercial banking, mortgage banking, investment banking, asset-based lending, auto lending, student lending, debit card, merchant card, wealth management, securities brokerage, retirement services and international
  • Pre-tax pre-provision profit¹ of $9.8 billion, up 27 percent (annualized) from $9.2 billion in prior quarter

SBUX

LOS ANGELES (Reuters) – Starbucks Corp (NasdaqGS:SBUX – News) ground out an expectations-topping profit on Tuesday as the coffee chain began reaping rewards from slashing costs and closing stores, and its shares gained 9.9 percent.

Starbucks started the restructuring after Chief Executive Howard Schultz retook the helm in early 2008, and the latest results may finally signal a turn-around for a company that hurt its own profits by building too many stores.

“It seems like everything is really starting to click for them in a way that we haven’t seen in over 18 months,” said William Blair & Co analyst Sharon Zackfia, who added that she saw improvement across the board, including on profitability.

Net income for its fiscal third quarter ended June 28 was $151.5 million, or 20 cents per share. A year earlier, Starbucks reported a net loss of $6.7 million, or 1 cent per share — its first quarterly net loss as a public company.

Excluding restructuring charges, Starbucks earned 24 cents a share in the latest quarter, besting analysts’ average forecast of 19 cents, according to Reuters Estimates.

The results were helped by cost cuts, eliminating unproductive stores, lower tax rates and higher interest income, Edward Jones analyst Jack Russo said.

“One quarter is not a trend, but to me it could be perceived as an inflection point by investors” who want to get in early, said Greg Schroeder, analyst at Wisco Research LLC, an independent research firm.

For fiscal 2010, Starbucks expects earnings per share to grow 13 to 18 percent, excluding restructuring charges, which equates to earnings of 84 to 89 cents per share, RBC Capital Markets analyst Larry Miller said.

Chief Financial Officer Troy Alstead, in an interview with Reuters Television, forecast fourth-quarter earnings of 19 to 20 cents per share, excluding items.

Russo, of Edward Jones, said the forecast for the current quarter was roughly in line with expectations.

“The guidance for next year was a little a bit above where most consensus estimates were, but not that much,” Russo said.

THE MCDONALD’S EFFECT

As Starbucks scrambled to shrink its overbuilt U.S. store base, rivals like McDonald’s Corp (NYSE:MCD – News) and Dunkin’ Donuts targeted its customers with lattes and other fancy coffee drinks.

Despite significant concerns among some analysts, Starbucks is not seeing its market share dented by lower-cost rivals such as fast-food giant McDonald’s, Chief Executive Howard Schultz said on a conference call with analysts…..

USB

MINNEAPOLIS–(BUSINESS WIRE)–U.S. Bancorp (NYSE: USB – News) today reported net income of $471 million for the second quarter of 2009. Diluted earnings per common share of $.12 in the current quarter were lower than the $.53 and $.24 diluted earnings per common share in the second quarter of 2008 and the first quarter of 2009, respectively. Significant items impacting the second quarter of 2009 results included an FDIC special assessment equal to $.05 per diluted common share and the accelerated amortization of the discount associated with the TARP preferred stock (“deemed dividend”) redeemed on June 17, 2009, equal to $.08 per diluted common share. In addition, the Company recorded a provision for credit losses in excess of net charge-offs equal to $.20 per diluted common share. Results for the second quarter were driven by record total net revenue of $4.2 billion due to strong year-over-year growth in net interest income and record mortgage banking revenue. Highlights for the second quarter of 2009 included:

• Strong average loan growth of 12.8 percent (5.3 percent excluding acquisitions) over the second quarter of 2008, driven by average retail loan growth of 11.1 percent, led by credit card balances, home equity lines and student loans. New lending activity during the second quarter included:
  • $8.9 billion of new commercial and commercial real estate commitments
  • $16.6 billion of commercial and commercial real estate commitment renewals
  • $2.5 billion of lines related to new credit card accounts
  • $4.1 billion of other retail originations
• Strong average deposit growth of 20.2 percent (11.2 percent excluding acquisitions) over the second quarter of 2008, including:
  • Average noninterest-bearing deposits growth of 34.2 percent
  • Average total savings deposits growth of 19.7 percent
• Net interest income growth of 10.3 percent over the second quarter of 2008, driven by average earning assets growth of 10.5 percent
• Stable net interest margin percentage of 3.60 percent for the second quarter of 2009, compared with 3.59 percent in the first quarter of 2009 and 3.61 percent in the second quarter of 2008
• Record mortgage banking revenue for the quarter, driven by:
  • Record mortgage loan production volume of $16.3 billion
  • Loan applications totaling $21.6 billion
• Credit costs, as expected, trended higher and the allowance for credit losses increased:
  • Provision for credit losses exceeded net charge-offs by $466 million, or approximately 50 percent of net charge-offs for the quarter, resulting in an increase to the allowance for credit losses
  • Net charge-offs and nonperforming assets increased, but the rate of growth moderated to 17.9 percent and 17.8 percent, respectively, on a linked quarter basis
  • Allowance to period-end loans increased to 2.51 percent at June 30, 2009, compared with 2.23 percent at March 31, 2009
  • Allowance to nonperforming assets was 114 percent at June 30, 2009, compared with 120 percent at March 31, 2009
• Strong capital ratios at June 30, 2009:
  • Tier 1 capital ratio of 9.4 percent
  • Total risk-based capital ratio of 13.0 percent
  • Tier 1 common equity ratio of 6.7 percent

GSK

Europe’s largest drugmaker, said its second-quarter profit rose 11% to 1.46 billion pounds ($2.39 billion), as revenue rose 15% to 6.75 billion pounds. Excluding restructuring charges, its adjusted earnings per share rose 14% to 31 pence, which was above analyst estimates of 30 pence. It lifted its dividend by 8% to 14 pence a share, or 46.09 cents per U.S.-listed share. Glaxo also said it expects to have an annual production capacity of Relenza, to treat H1N1, of 190 million treatment courses by the end of the year, a more than a threefold increase to its previously announced maximum capacity of 60 million courses. Last month, it started production of an H1N1 adjuvanted vaccine.

CSL

CHARLOTTE, N.C.–(BUSINESS WIRE)–Carlisle Companies Incorporated (NYSE:CSL – News) reported net sales from continuing operations of $618.5 million for the quarter ended June 30, 2009, a 28% decline from $863.0 million in the second quarter of 2008. Sales were down across all segments, with organic sales decreasing by 28% from the second quarter of the prior year. The Applied Technologies segment’s acquisition of the Carlyle interconnect solutions business in April 2008, contributed additional sales of $7.3 million in the second quarter of 2009. The impact of foreign currency exchange rates on net sales was a reduction of approximately 1% in the second quarter of 2009.

Net income from continuing operations declined 2.1% to $55.7 million, or $0.90 per diluted share, in the second quarter 2009 compared with $56.9 million, or $0.93 per diluted share, in the second quarter of 2008. 2009 net income was positively impacted by a $15.2 million after tax gain from a fire insurance recovery, selling price increases, favorable raw material pricing, efficiencies gained through the Carlisle Operating System and additional income contributed from the Carlyle acquisition. 2009 net income was negatively impacted by lower sales volume as well as restructuring and senior management severance expenses of $8.3 million.

Comment

David A. Roberts, Chairman, President and CEO, said, “Our end market conditions continue to be a challenge. However, despite a 28% decline in our second quarter sales, we were able to increase our operating margins. We were especially pleased with results at our Construction Materials segment which increased their operating margin to 16.3%, as compared to 12.2% for the same period last year, despite a 29% decline in sales. Within our Transportation Products segment, we recorded a $24.5 million pre-tax gain from insurance recoveries related to the fire at our tire and wheel facility in Bowdon, Georgia. This gain was partially offset by company-wide plant restructuring and change in management expenses of $11.0 million in the quarter.

“In addition to the margin improvement, we continued our strong cash flow performance in the quarter generating $205 million in net cash from operations. The improvement in operating margins and cash flow is a sign that our efforts related to the implementation of the Carlisle Operating System are paying off.

DAL

ATLANTA (Reuters) – Delta Air Lines Inc (NYSE:DAL – News), the world’s biggest carrier, reported a quarterly loss on Wednesday and said it was not planning for any meaningful rebound this year as the recession hurts air travel.

Delta, which became the leading airline when it acquired Northwest in October, said its second-quarter loss was $257 million, or 31 cents a share.

Excluding merger expenses of $58 million, Delta said it lost $199 million.

Operating revenue was $7 billion.

The airline industry is straining to cut capacity to adjust to lower demand. Delta has announced plans to cut international capacity by 15 percent starting in September.

Delta has said it might need to cut more jobs. In May it offered pilots a voluntary separation package in hopes of reducing expenses. But only 215 of the 9,400 pilots eligible for the package signed up, the union that represents them said last week.

BA

— Second-quarter revenue rose 1 percent to $17.2 billion — Earnings per share of $1.41 rose 22 percent — Operating cash flow increased to $1.0 billion — Backlog at $328 billion – nearly five times current annual revenues — 787 side-of-body technical solution identified; schedule assessment ongoing

CHICAGO, July 22 /PRNewswire-FirstCall/ –The Boeing Company’s (NYSE: BA – News) second-quarter earnings per share increased 22 percent to $1.41 per share, as revenues rose 1 percent to $17.2 billion, driven by growth in defense programs and strong performance in defense and commercial airplanes (Table 1). Year-ago results included a $0.22 per share charge on the Airborne Early Warning & Control (AEW&C) program.

MO

RICHMOND, Va. (AP) — Altria Group, owner of Philip Morris USA, says its second-quarter profit rose 9 percent partly on lower corporate expenses, an acquisition and improved cigarette sales.

The seller of Marlboro cigarettes and Black & Mild cigars earned $1.01 billion, or 49 cents per share, compared with $930 million, or 45 cents per share, in last year’s second quarter. Excluding exit costs and other items, adjusted earnings were 50 cents per share.

Revenue grew 33 percent to $6.72 billion.

Analysts forecast profit of 47 cents per share on sales of $5.35 billion.

Altria also raised its full-year guidance for income from continuing operations.

PEP

6:59AM PepsiCo beats by $0.06, misses on revs; reaffirms guidance for FY09 (PEP) 56.40 : Reports Q2 (Jun) earnings of $1.06 per share, $0.06 better than the First Call consensus of $1.00; revenues fell 3.2% year/year to $10.59 bln vs the $10.99 bln consensus. The company reaffirms its full-year 2009 guidance for both net revenue and core EPS of mid- to high-single-digit constant currency growth over its 2008 core EPS of $3.68.

PFE

Pfizer Inc. (NYSE: PFE – News) today reported financial results for second-quarter 2009. Revenues were $11.0 billion, a decrease of 9% compared with the year-ago quarter and flat on a constant currency basis. Foreign exchange unfavorably impacted revenues by approximately $1.1 billion or 9%. For second-quarter 2009, U.S. revenues were $4.5 billion, a decrease of 5% compared with the year-ago quarter. International revenues were $6.5 billion, a decrease of 12% compared with the prior-year quarter, and reflected operational growth of 2%, which was more than offset by the unfavorable impact of foreign exchange of 14%. U.S. revenues represented 41% of the total compared with 39% in the year-ago quarter, while international revenues represented 59% of the total compared with 61% in the year-ago quarter.

For first-half 2009, revenues were $21.9 billion, a decrease of 9% compared with the same period in 2008 and a decrease of 2% on a constant currency basis. Foreign exchange unfavorably impacted revenues by approximately $1.7 billion or 7%. U.S. revenues were $9.5 billion, a decrease of 7% compared with first-half 2008. International revenues were $12.4 billion, a decrease of 10% compared with the same period last year, and reflected operational growth of 2%, which was more than offset by the unfavorable impact of foreign exchange of 12%. U.S. revenues represented 43% of the total and international revenues represented 57% of the total, comparable with first-half 2008. In addition to foreign exchange, other factors that negatively impacted first-half 2009 revenues in comparison with first-half 2008 included the loss of U.S. exclusivity for Zyrtec in January 2008 and Camptosar in February 2008, the loss of exclusivity in Japan for Norvasc in July 2008, as well as the revenue declines for Lipitor, as a result of continued intense competition, and for Chantix/Champix, mainly due to label changes.

Business Revenues

Effective January 1, 2009, Pfizer expanded its operating model within the Pharmaceutical business to include five customer-focused units, in addition to its Animal Health business. During second-quarter 2009, all Pharmaceutical units and Animal Health generated revenue growth on a constant currency basis with the exception of the Established Products unit, which manages a portfolio of products that have generally lost patent protection or marketing exclusivity and that have an expected decline in revenues at this stage in their lifecycle.

LLY

• Increased Volume Drives Revenue Growth Despite Unfavorable Foreign Exchange Impact
• Foreign Exchange Movements Lead to Improved Gross Margin Percent
• Earnings Rise 20% to $1.06 (reported); 19% EPS Growth to $1.12 (pro forma non-GAAP)
• Full-Year 2009 Reported EPS Guidance Range Revised to $4.14 to $4.24 per share
• Pro forma non-GAAP EPS Guidance Range Raised to $4.20 to $4.30 per share

Eli Lilly and Company (NYSE: LLY – News) today announced financial results for the second quarter of 2009, revised its full-year 2009 earnings per share guidance range to $4.14 to $4.24 on a reported basis, and raised its full-year 2009 pro forma non-GAAP earnings per share guidance range to $4.20 to $4.30 per share.

    $in millions, except per share data         Second Quarter
                                                --------------
                                                2009       2008     % Growth
                                                ----       ----     --------
    Total Revenue - Reported                $5,292.8   $5,150.4           3%
    Net Income - Reported                    1,158.5      958.8          21%
    EPS - Reported                              1.06        .88          20%

    Total Revenue - Pro forma                5,292.8    5,251.2           1%
    Net Income - Pro forma non-GAAP          1,226.7    1,023.4          20%
    EPS - Pro forma non-GAAP                    1.12        .94          19%
                                                ----       ----

Due to significant strategic actions taken by the company, financial results for 2009 and 2008 are presented on both a reported and a pro forma non-GAAP basis. Reported results were prepared in accordance with generally accepted accounting principles (GAAP) and include all revenue and expenses recognized during the period. Pro forma non-GAAP results exclude significant items described in the reconciliation tables and also assume the ImClone acquisition was completed January 1, 2008. The pro forma non-GAAP results are presented in order to provide additional insights into the underlying trends in the company’s business. The company’s 2009 financial guidance is also being provided on both a reported and a pro forma non-GAAP basis.

BK

NEW YORK, July 22 /PRNewswire-FirstCall/ — The Bank of New York Mellon Corporation (NYSE: BK – News) today reported second quarter income from continuing operations applicable to common shareholders of $267 million, or $0.23 per common share, compared with $303 million, or $0.26 per common share, in the second quarter of 2008 and $363 million, or $0.31 per common share, in the first quarter of 2009.

“Overall, revenue has stabilized, we continue to gain market share, remain profitable, and have among the best capital levels in our industry. However, investment losses remain stubbornly high primarily due to continued deterioration in the residential housing market. We will continue to focus on maintaining exceptional client service levels and reducing risk and expenses,” said Robert P. Kelly, chairman and chief executive officer of The Bank of New York Mellon Corporation.

On June 30, 2009, we adopted discontinued operations accounting for Mellon United National Bank located in Florida. Accordingly, all income statements in this release have been restated.

Net income applicable to common shareholders, including discontinued operations, totaled $176 million, or $0.15 per common share, in the second quarter of 2009, compared with $309 million, or $0.27 per common share in the second quarter of 2008 and $322 million, or $0.28 per common share in the first quarter of 2009.

Second Quarter Highlights Unless otherwise noted, all comments begin with the results of the second quarter of 2009 and are compared to the second quarter of 2008. Please refer to the Quarterly Earnings Review for detailed business segment information.

Total revenue was $2.957 billion, comprised of $2.257 billion of fee and other revenue and $700 million of net interest revenue. Total revenue included a pre-tax charge for the write-down of investment securities ($256 million) in fee and other revenue.

KEY

Net loss from continuing operations of $.69 per common share

– Loan loss reserve increased to $2.5 billion, or 3.53% of total loans

– Raised $1.8 billion of Tier 1 common equity; fulfilled stress test requirement

– $8.2 billion in new or renewed loans and commitments originated

– Costs well controlled; Keyvolution initiative underway

KeyCorp (NYSE: KEY – News) today announced a second quarter net loss from continuing operations attributable to Key of $236 million, or $.69 per common share. Per share results for the current quarter are after cash and deemed preferred stock dividends of $164 million, or $.28 per common share. These dividends include a noncash deemed dividend of $114 million related to the exchange of Key common shares for Key’s Series A Preferred Stock as part of the company’s efforts to raise an additional $1.8 billion of Tier 1 common equity, and a cash dividend payment of $31 million made to the U.S. Treasury Department under the Capital Purchase Program. Results for the current quarter compare to a net loss from continuing operations of $1.128 billion, or $2.71 per common share, for the second quarter of 2008.

The loss for the current quarter is largely the result of an increase in the provision for loan losses. During the second quarter, Key continued to build its loan loss reserves by taking an $850 million provision for loan losses, which exceeded net charge-offs by $311 million. As of the end of the quarter, Key’s allowance for loan losses was $2.5 billion, or 3.53% of total loans, up from $1.4 billion, or 1.87% one year ago. The loss for the year-ago quarter was largely attributable to a $1.011 billion after-tax charge recorded as a result of an adverse federal tax court ruling that impacted Key’s accounting for certain lease financing transactions.

“Our results continue to reflect the weak economic environment and the aggressive steps we’ve taken to address credit quality, strengthen our capital position and control costs as we manage through this difficult credit cycle,” said Chief Executive Officer Henry L. Meyer III.

During the second quarter, Key successfully raised more than $1.8 billion in new Tier 1 common equity as required by the Supervisory Capital Assessment Program (“SCAP”) initiated by the U.S. Treasury and, as of today, is well on its way to further supplement that amount through an additional offer to exchange common shares for retail capital securities, which is currently in progress. The additional capital will serve as a “buffer” in the event the U.S. economy worsens considerably through 2010. Throughout the current financial crisis, Key’s capital ratios have remained in excess of the “well-capitalized” levels established by the federal regulators. At June 30, 2009, Key had a Tier 1 risk-based capital ratio of 12.42% and a Tier 1 common equity ratio of 7.27%.

Meyer continued: “Key’s fortified capital position will also enable us to support our clients’ borrowing needs and benefit from other business opportunities when the economy recovers. During the second quarter, Key originated approximately $8.2 billion in new or renewed loans and commitments to consumers and businesses…..

WHR

BENTON HARBOR, Mich. (AP) — Whirlpool, the world’s largest maker of major home appliances, says its second-quarter profit fell 33 percent as consumer demand for its products significantly weakened.

The company, whose brands include Maytag, KitchenAid and its namesake, earned $78 million, or $1.04 per share, for the period ended June 30. That’s down from $117 million, or $1.53 per share, a year earlier.

Analysts expected profit of 51 cents per share.

Revenue dropped 18 percent to $4.17 billion on the stronger dollar, missing Wall Street’s expectations.

Benton Harbor, Mich.-based Whirlpool Corp. lifted the low end of its full-year profit outlook. It now expects earnings of $3.50 to $4 per share. Prior guidance was for profit of $3 to $4 per share.

STI

By David Mildenberg

July 22 (Bloomberg) — SunTrust Banks Inc., the seventh- largest U.S. bank by assets and deposits, reported its third straight quarterly loss as it charged off more real-estate loans because of weak economies in the Southeast.

The net loss was $183.5 million, or 41 cents a share, in the second quarter, compared with a profit of $540.4 million, or $1.52, in the same period a year earlier, when SunTrust had fewer outstanding shares, the Atlanta-based lender said today in a PRNewswire statement. The per-share loss, which includes preferred-stock dividends, beat the average 63-cent loss estimate of 20 analysts surveyed by Bloomberg.

SunTrust declined 5.4 percent yesterday after rival Regions Financial Inc. cited worsening economic conditions in Florida and Georgia as it reported a $188 million loss. SunTrust ranks first in deposit market share in Georgia and third in Florida, two states where unemployment rates and home foreclosures are among the highest in the U.S.

“It seems unlikely that this bank will return to profitability until the middle of 2010,” Dick Bove, analyst at Rochdale Securities, wrote in a July 9 report. “SunTrust has fallen on hard times.”

Regulators in May told SunTrust to add $2.2 billion in capital in case of a more prolonged recession. The bank sold $1.8 billion in new common shares and said it would take a $70 million after-tax gain from selling shares in Visa Inc. It previously sold $2.75 billion of two- and three-year bonds backed by the Federal Deposit Insurance Corp.

Credit Quality

SunTrust’s credit quality is “lower than industry averages,” Standard & Poor’s Corp. analyst Erik Oja said in a July 18 report. The bank needs to boost its allowance for loan losses to be more comparable with peers, he said.

Home mortgages and home-equity loans make up 27 percent of SunTrust’s total assets, up from 20 percent five years ago, Bove said in his report. Mortgages and home-equity loans made up 54 percent of the bank’s nonperforming loans as of March 31, with Florida loans accounting for more than half of the problem assets, SunTrust said in a June 2 investor presentation.

SunTrust declined 86 cents to $15.18 yesterday in New York Stock Exchange composite trading. The shares declined 49 percent this year through yesterday, compared with a 21 percent drop in the KBW Bank Index.

I’m unable to verify the source of this article. It comes from a website that is well lets say suspect.

Here is another source for this article.

Given the recent Rolling Stone Article; Inside The Great American Bubble  Machine, which has stirred up controversy, I thought this was an interesting side bar to the suggestions made in Rolling Stone.

Discuss amongst yourselves:

Russia Reports Massive $18 Trillion Theft Of US Funds By Israeli Backed Network

By: Sorcha Faal, and as reported to her Western Subscribers (Traducción al Español abajo)

A stunning FSB report circulating in the Kremlin today states that the largest theft in World history has been engineered by the Israel Security Agency (ISA) under the direction of current Israeli Prime Minister Benjamin Netanyahu, Australian media oligarch Rupert Murdoch and the US investment bank giant Goldman Sachs that has stolen from American mutual and pension fund account holders over $18 Trillion through a device known as “the Doomsday box”.

According to these reports, Israeli opposition leader, and former Mossad agent, Tzipi Livni [photo 2^nd left next to Netanyahu] has turned over to the Obama administration the “complete dossier” of the ISA’s crimes against the American government and people after having the leadership of Israel “stolen” from her by Netanyahu, who through the ISA’s use of intimidation and massive bribes forced upon the Israelis the most right-wing government they have ever known.

These reports have come to light since last weeks arrest of a Mossad agent named Sergey Aleynikov by the United States, who these reports say stole from Goldman Sachs the most “complex and secretive stock manipulating programme ever created” and turned it over to Livni, and who in turn then gave copies of it to Russia, China and Germany.

Western news reports on the arrest of Aleynikov state that upon learning of the theft of their “Doomsday Programme”, Goldman Sacks ordered the US Government to arrest him, but as noted by the Bloomberg News Service, “what was Goldman doing with this programme to begin with”?

“Never let it be said that the Justice Department can’t move quickly when it gets a hot tip about an alleged crime at a Wall Street bank. It does help, though, if the party doing the complaining is the bank itself, and not merely an aggrieved customer.

Another plus is if the bank tells the feds the security of the U.S. financial markets is at stake. This brings us to the strange tale of Goldman Sachs Group Inc. and Sergey Aleynikov.

Aleynikov, 39, is the former Goldman computer programmer who was arrested on theft charges July 3 as he stepped off a flight at Liberty International Airport in Newark, New Jersey. That was two days after Goldman told the government he had stolen its secret, rapid-fire, stock- and commodities-trading software in early June during his last week as a Goldman employee. Prosecutors say Aleynikov uploaded the program code to an unidentified Web site server in Germany.

It wasn’t just Goldman that faced imminent harm if Aleynikov were to be released, Assistant U.S. Attorney Joseph Facciponti told a federal magistrate judge at his July 4 bail hearing in New York. The 34-year-old prosecutor also dropped this bombshell: “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”

How could somebody do this? The precise answer isn’t obvious — we’re talking about a black-box trading system here.”

To the power that the ISA led Goldman Sachs bank has had over the US in allowing them to steal nearly the entire wealth of that Nation has been devastatingly detailed by the Rolling Stone Magazine News Service in their report titled “The Great American Bubble: How Goldman Sachs Has Engineered Every Major Market Manipulation Since The Great Depression”.

Even worse for the witless American people is that their new President Barak Obama has so filled his administration with former Goldman Sachs executives and lobbyists that Russian economists are now calling Wall Street the “Fourth Branch Of The US Government”, and which includes their current Treasury Secretary, his Chief of Staff, the former Treasury Secretary under President Bush (who engineered the $700 Billion bailout of US banks), and the former Treasury Secretary under President Clinton (who allowed the deregulation of US banks allowing them to loot the American public of their wealth in the first place).

Most important to note in this report are the details describing how Goldman Sachs “Doomsday Programme” was “created” by ISA programmers working under the Chairman of the Israeli National Security Council, Dr. Uzi Arad, his wife, Dr. Ruth Arad, Vice President and Chief Risk Officer of Bank Leumi, and Jacob Ezra Merkin, who bought the Bank Leumi from the Israeli government headed by then Prime Minister Ariel Sharon and finance minister Ehud Olmert, who became Israel’s Prime Minister after Sharon but was forced to step down while under corruption charges allowing Netanyahu to steal the Premiership from Livni.

Now, what is really interesting in these reports is that Jacob Ezra Merkin allowed his longtime business partner Bernard Madoff the “personal use” of the “Doomsday Programme” which he then used to enrich himself, Dr. Arad and his wife, and Madoff to the tune of over $65 Billion they stole largely from the wealthiest Jewish Families in America, and who they knew would not testify against ISA agents in any US Court.

However, the outcry over the billions lost by America’s richest Jewish families necessitated the scapegoating of Madoff, who received a sentence of 150 years in exchange for the US not prosecuting Dr. Arad, his wife or Merkin, all who remain free and uncharged for their crimes. More astoundingly, Dr. Arad, who was banned from ever entering the United States due to the massive Israeli spy network he headed in that country, was granted a visa by Obama who sided with his Goldman Sachs allies against his own intelligence services.

Also interesting to note in these reports is the role played in the vast Israeli criminal network by the Australian media oligarch Rupert Murdoch, who these reports say has used his vast media holdings in the United States and Britain to collect personal data on “high government officials” which was then used by Dr. Arad’s ISA network to blackmail these officials against conducting any investigation into the crimes they have committed.

Though the United Kingdom has announced an investigation into Murdoch’s vast ISA spy network set up in their country, there remains no evidence of the United States doing the same.

To the utterly stupefying theft of the American people of their wealth by these criminals it is only eclipsed by the fact that those elements and forces that robbed these people blind have, literally, come out from the shadows and are now openly running the entire government of the United States.

But to the most incomprehensible fact about these Americans is that as these criminals now operate within their highest corridors of government they could not care less, as instead of seeing the truth of these things they have chosen to keep their attention upon the news reports about a 50-year-old self admitted pedophile rock singer who recently died of a massive self inflicted drug overdose.

Though the word idiot’s comes readily to mind in attempting to describe these Americans, there can be no other word than insane to describe what they’ve really become.

© July 9, 2009 EU and US all rights reserved

[Ed. Note: Western governments and their intelligence services actively campaign against the information found in these reports so as not to alarm their citizens about the many catastrophic Earth changes and events to come, a stance that the Sisters of Sorcha Faal strongly disagrees with in believing that it is every human beings right to know the truth. Due to our missions conflicts with that of those governments, the responses of their ‘agents’ against us has been a longstanding misinformation/misdirection campaign designed to discredit and which is addressed in the report “Who Is Sorcha Faal?”.]

Translation to Spanish by: Sister Maru Barraza, Mazatlán, Mexico

More From Bernanke Testimony

By Mark Felsenthal and Alister Bull

WASHINGTON (Reuters) – Federal Reserve Chairman Ben Bernanke on Tuesday said the outlook for the long-suffering U.S. economy was improving but that supportive policies would be needed for some time to prevent rising unemployment from undercutting recovery.

Delivering the Fed’s semiannual report on the economy to Congress, Bernanke also sought to dispel concerns the central bank’s aggressive monetary easing could end up fueling inflation, saying he was confident the central bank could pull back its extraordinary stimulus when the time was right.

“Better conditions in financial markets have been accompanied by some improvement in economic prospects,” Bernanke told the House of Representatives Financial Services Committee. “Despite these positive signs, the rate of job loss remains high.”

While signs of stabilization in housing and household spending have emerged, unemployment was likely to remain uncomfortably high into 2011 and could sap fragile consumer confidence, he warned.

“The (Fed) believes that a highly accommodative stance of monetary policy will be appropriate for an extended period,” Bernanke said.

The Fed chief’s sober assessment of a sluggish recovery weighed on stocks and gave safe-have bonds a boost. The blue-chip Dow Jones industrial average gave up initial gains to trade lower, while prices for government debt rose and the U.S. dollar extended losses against the yen.

“The Fed has zero intention of tightening monetary policy any time in the near future. They want to keep the conditions in place to sustain this fragile economic recovery,” said Boris Schlossberg, director for currency research at GFT Forex in New York.

‘WE HAVE THE NECESSARY TOOLS’

The Fed has cut interest rates to almost zero and doubled the size of its balance sheet to around $2 trillion as it pumped money into the economy to fight a severe recession after a financial panic last year cracked global credit markets.

Some economists, including some policy-makers, have worried that this dramatic expansion of Fed liquidity and lending may have sown the seeds for inflation to blossom as the recovery gains traction.

Bernanke, however, said the central bank had an array of weapons at its disposal to withdraw monetary stimulus when the time was right, even with a bloated balance sheet.

“The (Fed) has been devoting considerable attention to issues relating to its exit strategy, and we are confident that we have the necessary tools to implement that strategy when appropriate,” he said, echoing comments he made in an article published late on Monday on the Wall Street Journal’s website.

“Should economic conditions warrant a tightening of monetary policy before this process of unwinding is complete, we have a number of tools that will enable us to raise market interest rates as needed,” Bernanke said.

Paying interest on the reserves banks hold at the Fed — a tool used by other central banks — is chief among these devices, he said. By raising the amount of interest it pays, the Fed can encourage banks to park excess cash at the central bank.

The Fed’s monetary policy report also detailed a number of other measures that Bernanke also outlined in his newspaper piece.  Continued…

CIT Sees Losses Mounting & May Still file For Bankruptcy

By Caroline Salas, Pierre Paulden and Linda Shen

July 21 (Bloomberg) — CIT Group Inc., the 101-year-old commercial lender seeking to avoid collapse, said it expects to report a loss of more than $1.5 billion for the second quarter and may need to file for bankruptcy if it’s unable to tender for notes maturing next month.

CIT’s “existing liquidity” isn’t enough to repay the $1 billion of floating-rate notes maturing on Aug. 17, the New York-based lender said today in a regulatory filing. CIT, which announced a $3 billion rescue financing from its bondholders yesterday, has asked holders of the August notes to swap their claims for 82.5 cents on the dollar.

“The company is right on the precipice,” said Ricardo Kleinbaum, a credit analyst at BNP Paribas SA in New York. “We have a coercive tender where bondholders are being asked to participate and cross their fingers there isn’t a bankruptcy down the road. It’s not clear what the end game will be.”

CIT, led by Chief Executive Officer Jeffrey Peek, was brought to the brink of failure after reporting $3 billion of losses in the last eight quarters. The company turned to its bondholders for funding after it was unable to obtain a second government bailout. CIT, which hasn’t had access to the corporate bond market in more than a year, said today it needs to repay $7 billion of unsecured debt through June 30.

Pre-tax items contributing to the quarterly loss include a $693 million goodwill and intangible assets impairment expense, an approximately $500 million provision for credit losses and a $185 million loss on a $1 billion sale of receivables that were “sold for liquidity purposes,” CIT said in the filing.

Denied FDIC Backing

The lender, which converted to a bank in December and received $2.33 billion in funds from the U.S. Treasury, has been denied access to the Federal Deposit Insurance Corp.’s Temporary Liquidity Guarantee Program to sell U.S.-backed debt…..

A Key Tell in Earnings

While market participants are busy snatching up stocks in anticipation of earnings (something we planned for weeks ago), focusing on the all unimportant Goldman market upgrade and the CIT news – we are focused on a little publicized event that is, in my opinion, far more important than anything else reported today: Eaton’s earnings.  Although they are not a huge company ($10B market cap) they serve as a pivotal component of the economic supply chain.  Plus, they are a magnificently managed company and their earnings have always served as a clear sign of economic strength or weakness.  I am not going to get into the details of revenues and net income compared to analyst estimates.  Cutting right to the chase, the financials are increadibly weak though “better than expected”.  The focus should be on the guidance and Chairman Cutler’s comments:

Alexander M. Cutler, Eaton chairman and chief executive officer, said, “Our sales in the second quarter were only slightly higher than in the first quarter of 2009, reflecting little improvement in the challenging global economic conditions. Despite the sluggish revenues, which came in $100 million lower than projected in our initial quarterly guidance, we were successful in substantially lowering our cost structure, which allowed us to generate earnings about equal to our guidance for the quarter.

“Sales in the second quarter declined 32 percent compared to the second quarter of 2008, with a decline of 6 percent from exchange rates and a decline of 26 percent in core sales,” said Cutler. “Our end markets declined 26 percent in the quarter. It is clear that significant destocking and inventory liquidation continued in virtually all of our segments during the quarter.

“Despite the challenging market conditions, our operating cash flow for the quarter was $361 million, just slightly lower than last year, and our free cash flow was $313 million, $68 million higher than last year,” said Cutler. “In the last three quarters, our operating cash flow has totaled $1.1 billion. We are maintaining our dividend for the second quarter at $0.50 per share, to be distributed in mid August.

“As we survey our end markets, the year is shaping up to be considerably weaker than we had forecast in April,” said Cutler. “We now anticipate our overall end markets will decline by between 21 and 22 percent versus our earlier forecast of a decline between 15 and 16 percent. We see our U.S. markets declining by 25 percent, while our non-U.S. markets are expected to decline by 19 percent.

“We anticipate net income per share for the third quarter of 2009 to be between $0.80 and $0.90,” said Cutler. “Operating earnings per share, which exclude charges to integrate our recent acquisitions, are anticipated to be between $0.90 and $1.00 in the third quarter of 2009.

“We are lowering our guidance for the full year due to the further reduction in our expectations for market growth, which we expect to be partially offset by an additional $120 million of savings from our cost-reduction initiatives. Accordingly, we now anticipate 2009 net income per share of between $1.65 and $1.85, and 2009 operating earnings per share of between $2.00 and $2.20,” said Cutler.

Naturally, the stock closed up higher because the estimates were simply too low, however, it is quite clear, from the comments above, that the economic recovery is tepid at best and perhaps at risk of retrenching….

A Close Look @ The Recovery

Believe it or not, the economy actually seems to be on the road to recovery (see the slideshow below).

The bulls think the recovery will come in Q3.  The (mainstream) bears like Roubini and Shilling think it will come in Q1.  And the consensus thinks it will come in Q4.

Almost everyone agrees, meanwhile, that the recovery will be feeble.

Why?

Because the US consumer, who accounts for more than 70% of spending, is still buried in debt and joblessness, and our biggest industries–housing and finance–are still struggling.

Now, the consensus is almost always wrong (which is why the market goes up and down instead of progressing in a straight line).  So your job is to figure out HOW today’s consensus is wrong.

• Will the recovery actually be stronger than expected?
• Will the indicators that are forecasting an imminent recovery be wrong this time?
• Will “feeble recovery ” not even begin to describe the decade or more of malaise that will now overcome us as we struggle to dig ourselves out of this massive hole?

You be the judge.

In the meantime, have a look through the facts the have persuaded Northern Trust’s Paul Kasriel that we’re headed toward a feeble Q4 recovery.  (And bear in mind that Paul was predicting this last winter, when the the world was ending, when he was a voice in the wilderness, and when the consensus thought he was out of his mind.)

START >

A Look @ MS Commercial Real Estate Portfolio

How large is Morgan Stanley’s exposure to commercial real estate? It’s very difficult to tell, actually.

As we learned during the horrors of 2008, there are so many ways for banks to hide their exposure to certain asset classes. In fact, many banks were so good at concealing their exposure that their own management had no idea what they owned.

This morning’s Wall Street Journal notes that Morgan Stanley has about $18 billion in exposure in just one unit–the institutional securities unit–to commercial real estate. Some of that might be hedged, although until we know how Morgan Stanley is hedging these risks that’s no much to go on. The days have long since passed when banks could simply announce a position was “hedged” or “hedged with CDS” and expect investors to feel reassured.

Brad Hintz, the Sanford C. Bernstein analyst who everone listens to because he was a bigshot at Lehman a decade or so ago, expects “modest” write-downs. Credit Suisse analyst Howard Chen says that institutiional securities unit will write-down around $300 million. The struck us a suspiciously low when we’re talking about a basis of $18 billion, but the Wall Street Journal says that many of the loans in this unit have already been written down by 50%. . The company has said its net exposure was $4 billion in the first quarter.

The federal government certainly thinks that Morgan Stanley’s commercial real estate portfolio is loaded with junk. It tested Morgan Stanley’s financial health under an assumption of losses as high as 45% on its commercial real estate loans, the steepest of any bank that underwent the tests. To translate: the government suspects that Morgan Stanley’s commercial real estate assets are more toxic than those at any other financial firm.

But Morgan Stanley’s exposure to commercial real estate is not confined to that institutional unit. It’s asset management unit is loaded up with commercial real estaet also. “Much of the $1.5 billion in losses in Morgan Stanley’s asset-management unit in past year came from commercial real-estate investments,” the Journal reports.

No Room For Small Business in a Oligarchy

By Edward McAllister and Donna Smith

NEW YORK/WASHINGTON (Reuters) – U.S. small businesses say they feel slighted by the Obama administration and efforts to shore up the economy, with large companies taking much of the government’s attention and stimulus cash.

The government decision last week against bailing out small business lender CIT Group raised fears of thousands of companies left without funding for day-to-day operations, and the lack of support showed big corporations can get bailout cash but small business interests are less pressing, some say.

With only some potential relief buried in the healthcare reform proposals in Congress, small businesses feel pushed aside in the stimulus and recovery efforts, they say.

“There has been nothing really in all the stimulus package that has really helped small business in general,” said Kelli Glasser, president of Exhibit Concepts in Dayton, Ohio, whose 87 employees build trade show and museum exhibits.

“Most of the help has been in the form of supporting loans, but we’re not looking for loans right now,” she said. “We’re not looking to heavily invest in equipment. We’re just trying to keep our doors open.”

Small business is not that small, representing 99.7 percent of all U.S. employer firms.

The U.S. Small Business Administration got $730 million this year to recharge the small business lending market, nearly doubling its budget. However, some say the package was not well structured and dwarfed by the $180 billion the government committed to save insurer American International Group.

‘HAVING A TOUGH TIME’

“Only $730 million going to the SBA didn’t really help the small business owners,” said James Tracy, president of America’s Best Companies in Illinois, which represents small businesses nationwide.

“Small business owners are having a tough time financing themselves today because I believe that the stimulus plan should have allowed for more loans to small business owners,” he said.

A $15 billion administration plan to buy small business loans for resale on the secondary lending market has not taken effect, in part because market activity picked up after the plan was announced in March, the administration says.

The Obama administration wants small businesses to come out ahead in the reform effort, said Melody Barnes, a domestic policy advisor at the White House.

“We absolutely want to make sure that small business owners and small business can continue to thrive,” she said in an interview with Reuters Television.

But applying for a small business loan can be more trouble than it’s worth, said Joe Olivo, owner of Perfect Printing in Moorestown, New Jersey, who said his bank advised against it.

“The paperwork was so onerous that my bank told me it was not worth my effort to try and get that money,” Olivo said.  Continued…

Bernanke Sees Improvement in U.S. Economy

WASHINGTON (Reuters) – Federal Reserve Chairman Ben Bernanke on Tuesday said the outlook for the long-suffering U.S. economy appears to be improving and the U.S. central bank was carefully reviewing ways to withdraw its massive monetary policy stimulus when conditions permit.

But Bernanke cautioned that unemployment was likely to remain high into 2011, and he warned that this could sap fragile consumer confidence and potentially undermine what is expected to anyway be a very gradual recovery.

“The FOMC believes that a highly accommodative stance of monetary policy will be appropriate for an extended period,” Bernanke, referring to the policy-setting Federal Open Market Committee, told U.S. lawmakers in remarks prepared for delivery in semi-annual congressional testimony.

“However, we also believe that it is important to assure the public and the markets that the extraordinary policy measures we have taken in response to the financial crisis and the recession can be withdrawn in a smooth and timely manner as needed, thereby avoiding the risk that policy stimulus could lead to a future rise in inflation,” he said.

U.S. Futures Rise on CAT Outlook

By Sarah Jones

July 21 (Bloomberg) — U.S. stock futures rose, indicating the Standard & Poor’s 500 Index will rally above yesterday’s eight-month high, as Caterpillar Inc.’s profit that was three times analysts’ estimates spurred bets the recession is ending.

Caterpillar, the biggest maker of earthmoving equipment, jumped 7.9 percent. More than 79 percent of S&P 500 companies have beaten earnings projections for the second quarter, the highest proportion in Bloomberg data stretching back to 1993. Coca-Cola Co., DuPont Co. and Merck & Co. increased more than 1 percent after they also topped forecasts.

S&P 500 futures expiring in September added 0.3 percent to 952.20 at 7:40 a.m. in New York. Dow Jones Industrial Average futures advanced 0.4 percent to 8,840. Europe’s Dow Jones Stoxx 600 Index gained for the seventh straight day, the longest streak since the financial crisis began in 2007, rising 0.9 percent. The MSCI Asia Pacific Index climbed 1.4 percent.

“The information we have been seeing has been fairly positive,” said Nick Skiming, who helps oversee about $2 billion at Ashburton Ltd. in Jersey. “We need to see more from the earnings season to give us some kind of guidance on the future direction of the market. I am cautiously optimistic.”

Per-share earnings beat projections by an average of 14 percent for S&P 500 companies that have reported quarterly results since July 8, according to data compiled by Bloomberg. Analysts forecast profits fell an average 33 percent in the second quarter and will decrease 20 percent from July through September, according to data compiled by Bloomberg.

Economic Rebound

The S&P 500 yesterday rallied to its highest level since Nov. 5 as a gauge of future economic growth topped projections and speculation grew that CIT Group Inc. will avoid bankruptcy. The benchmark for U.S. equities last week advanced 7 percent as companies from Goldman Sachs Group Inc. to Intel Corp. reported results that topped analysts’ estimates….

Asian Markets Gain on Recovery Hopes

By Masaki Kondo and Paul Gordon

July 21 (Bloomberg) — Asian stocks rose, lifting the MSCI Asia Pacific Index to a nine-month high, after Australia’s treasurer said the global economy may have bottomed and Goldman Sachs Group Inc. raised its Standard & Poor’s 500 Index forecast.

Fairfax Media Ltd., Australia’s No. 2 newspaper owner, surged 5.9 percent, while James Hardie Industries NV, the biggest seller of home siding in the U.S., climbed 6.5 percent in Sydney as Treasurer Wayne Swan said he wasn’t planning more cash handouts to households. Mitsubishi Corp., a Japanese trading company that gets more than half its revenue from resources, jumped 5.5 percent as oil and metals prices advanced.

“I think the recession is clearly over. Confidence is back,” Chong Yoon Chou, Singapore-based investment director at Aberdeen Asset Management Asia Ltd., which has $27 billion of assets, said in an interview on Bloomberg Television. “What we’ve seen in the last quarter is that things are getting started again and orders are coming back.”

The MSCI Asia Pacific Index added 1.4 percent to 106.30 as of 7:25 p.m. in Tokyo, a sixth consecutive gain and the highest level since Oct. 2. The gauge has climbed 51 percent from a five-year low on March 9 amid optimism stimulus policies worldwide will revive the global economy.

The Nikkei 225 Stock Average climbed 2.7 percent in Japan, where stock markets were closed yesterday, while South Korea’s Kospi Index rose 0.7 percent. Hyundai Motor Co. gained 3.6 percent after Morgan Stanley lifted its share-price estimate.

New Zealand’s NZX 50 Index advanced 1.9 percent. Sky City Entertainment Group Ltd., the country’s biggest casino operator, surged 6.6 percent after saying annual profit more than doubled.

Harvey Norman

Australia’s S&P/ASX Index closed little changed. Harvey Norman Holdings Ltd., the nation’s largest electronics retailer, sank 6.1 percent, the sharpest decline on the MSCI World Index, after reporting sales growth that missed analyst estimates.

Futures on the S&P 500 dipped 0.1 percent. The gauge climbed 1.1 percent to 951.13 in New York yesterday as David Kostin, Goldman Sachs’ U.S. strategist, boosted his year-end estimate for the measure to 1,060 from 940. Commercial lender CIT Group Inc. soared 79 percent on speculation the company had reached a financing agreement with bondholders.

Fairfax surged 5.9 percent to A$1.345 in Sydney, and rival West Australian Newspapers Holdings Ltd. jumped 9.8 percent to A$5.37 as Treasurer Swan told reporters today that the worst of the global recession “may be behind us.” Australia’s benchmark interest rate at a half-century low of 3 percent is helping drive economic growth, the central bank said.

U.S. Sales….

European Stocks Rise

By Adria Cimino

July 21 (Bloomberg) — European stocks advanced for a seventh day, the longest stretch of gains since August 2007, as companies from Caterpillar Inc. to DuPont Co. and UnitedHealth Group Inc. reported earnings that beat analysts’ estimates.

William Morrison Supermarkets Plc jumped 10 percent after saying earnings will beat its forecasts. Actelion Ltd., Switzerland’s biggest biotechnology company, added 3.9 percent after raising its sales and profit outlook for the year. Nokia Oyj slipped 2.9 percent after Morgan Stanley recommended selling shares of the world’s largest maker of mobile phones.

Europe’s Dow Jones Stoxx 600 Index rose 0.9 percent to 215.17 at 12:40 p.m. in London, heading for a close at the highest level since November. The measure has climbed 9.1 percent since July 10 as companies from Goldman Sachs Group Inc. to Johnson & Johnson posted better-than-estimated results and the Conference Board’s gauge of the U.S. economic outlook increased for a third straight month.

“Going forward, we should make gains,” said Jeremy Beckwith, who oversees $9.9 billion as chief investment officer at Kleinwort Benson in London. “Data is showing that later this year and next year economic growth is returning.”

Futures on the Standard & Poor’s 500 Index added 0.4 percent today as Caterpillar, the world’s biggest maker of construction equipment, reported second-quarter profit that beat analysts’ estimates and lifted its 2009 forecast….

Bernanke Confident The FED Can Curb Inflation

By Scott Lanman

July 21 (Bloomberg) — The U.S. Federal Reserve is “confident” of its ability to stem inflation after what’s likely to be an “extended period” for policies aimed at restarting lending, Chairman Ben S. Bernanke said.

“When the economic outlook requires us to do so,” the central bank will employ a series of tools to tighten policy, Bernanke said, writing in an opinion piece in the Wall Street Journal.

Bernanke outlined five ways the central bank will be able to prevent the record reserves that banks have accumulated from causing money supply and inflation to surge. Officials will use the interest rate on banks’ deposits with the Fed as a principal tool, which they can supplement with other means, including reverse-repurchase agreements and term deposits, he said.

The opinion piece, published late yesterday, before Bernanke’s semiannual monetary-policy testimony to Congress today, signals he’s seeking to reassure investors that the Fed will contain consumer prices when the economy recovers.

“Bernanke is preparing the market by communicating at an early stage,” said Seiji Shiraishi, chief economist for Japan at HSBC Securities Japan Ltd. in Tokyo. “Whether they can do that will depend on the strength of the cyclical recovery and the soundness of the banks.”

The 10-year note yield fell three basis points to 3.58 percent at 12:53 p.m. in Tokyo, according to data compiled by Bloomberg.

‘Top Priority’

The Fed said in minutes of last month’s policy meeting that making sure it has the ability to tighten credit at some point is a “top priority.” Officials discussed their options at the session, even as most policy makers judged the economy at risk to further shocks, the minutes showed last week.

“We are confident we have the necessary tools to withdraw policy accommodation, when that becomes appropriate, in a smooth and timely manner,” Bernanke said in the opinion article.

Since March 2008, the Fed has taken steps to combat the credit crisis that included expanded emergency lending to banks, support for the commercial-paper market and a lifeline to insurer American International Group Inc. Total assets on the Fed’s balance sheet now stand at $2.07 trillion, up $1.16 trillion over the past year. The central bank has also cut the benchmark lending rate to a range of zero to 0.25 percent.

Need for Strategy

Without an exit strategy, the increase in bank reserves could cause inflation because banks would be able to lend on the money, potentially fueling a surge in money growth. The Fed, then, must either shrink the amount of reserves or find a way to keep banks from lending them for bigger yields.

“We will calibrate the timing and pace of any future tightening, together with the mix of tools to best foster our dual objectives of maximum employment and price stability,” Bernanke said.

To keep interest rates low and credit flowing to housing markets, the Fed plans this year to buy as much as $1.75 trillion of mortgage-backed securities, housing-agency debt and Treasuries. The last exit option, “if necessary,” would be to sell some of the securities on the open market, Bernanke said.

In a term reverse-repurchase agreement, the central bank would enter into a longer-term contract to sell securities to primary dealers, in effect removing money from the banking system temporarily, and repurchase them at a later date.

Term Deposits

The Fed’s proposed term deposits would be similar to banks’ certificates of deposit for customers, and funds held at the Fed would not be available to lend in the overnight federal funds market, Bernanke said.

Another option would be for the Treasury to sell bills and deposit the funds with the Fed, Bernanke wrote.

“Although the Treasury’s operations are helpful, to protect the independence of monetary policy, we must take care to ensure that we can achieve our policy objectives without reliance on the Treasury,” the Fed chief said.

The Fed received legislative authority to begin paying interest on reserves in October as part of legislation creating the $700 billion financial-rescue fund.

Fed officials hoped that would help keep the benchmark interest rate stable while the central bank flooded the banking system with cash. The authority failed to keep the main federal- funds rate from declining almost to zero before the Fed officially lowered it that far. The Fed currently pays 0.25 percent on required and excess reserve balances.

Banks’ deposits with the Fed increased to $772 billion in June from $9.3 billion a year earlier.

Bernanke said the deposit rate will work better “under more normal financial conditions” and limit the gap between that and the federal funds rate. “If that gap persists,” the Fed will use the other tools, he said.

Hedge Funds See A Surge in Investments

Hedge funds have seen a huge increase in investment in the second quarter, as investors rush to capitalise on the industry’s resurgence.

More than $142.5bn has been allocated to hedge funds over the past three months, one of the industry’s biggest inflows of client money to date, according to data published on Tuesday by Hedge Fund Research, a leading provider of industry data.

Hedge funds have enjoyed strong performance over the year to date, with the average strategy returning around 9 per cent. Many larger funds have performed even better, with some delivering returns of up to 30 per cent on clients’ investments.

Net, more than $100bn has flowed into funds since the industry’s nadir in March, bringing the current industry capital – the amount of money invested in funds – to $1,430bn.

The number is still far lower than its peak of $1,930bn, however.

Funds have yet to recover the funds withdrawn by panicked investors after the collapse of Lehman Brothers in September 2008.

Hedge funds saw their worst ever outflows in the quarter following the investment bank’s collapse as clients withdrew more than $152bn, in turn triggering panic in global markets as hedge funds rushed to quit trades and cut leverage.

Around $42.5bn of redemptions were effected over the past quarter – although many of these reflect the market situation earlier this year. Many funds stipulate a minimum notice period of several months for client withdrawals.

Drug Companies Expect To Make Billions From Swine Flu

Some of the world’s leading pharmaceutical companies are reaping billions of dollars in extra revenue amid global concern about the spread of swine flu.

Analysts expect to see a boost in sales from GlaxoSmithKline, Roche and Sanofi-Aventis when the companies report first-half earnings lifted by government contracts for flu vaccines and antiviral medicines.

CIT Crushes Small Business Loan Market- Pod Cast

Jack Albin

Minimizing risk and maximizing returns: All investors try it but only few truly succeed.  That’s where Jack Ablin’s new book comes into play. In this clip, Aaron talks to the Chief Investment Officer at Harris Private Bank and author of Reading Minds and Markets about navigating the market in volatile times.

Ablin says there’s five keys to a winning portfolio and gives us his current take on each of them.

1. Fundamentals and Valuations:  Ablin currently thinks the U.S. stock market is “fairly valued” but at the same time there’s “certainly not a lot of risk in owning stocks at these levels.”
2. The Economy:  Things are looking up. “Near term there are some factors in the economy that are improving,” he says, thanks to an active Fed and the stimulus bill.
3. Liquidity:  For now it’s a bullish indicator.  He sees high levels of cash in money market funds as potential “fuel to push a rally higher.”
4. Psychology:  Not as extreme as it once was, “we’ve moved from widespread panic to broad skepticism.” And, “Generally, if people are slightly negative that’s actually a good thing,” he states.
5. Momentum: “The trend is your friend,” as the saying goes.  And as far as Ablin’s concerned, that trend favors stocks right now.  He tells us he’s “likely to add to equities probably in the beginning of next month” and expects to be overweight stocks “well into 2010.”

Interestingly, Ablin recommends retail investors stay away from stock picking.  He’d prefer investors trade on big themes through index funds or ETFs.

A Closer Look @ Earnings

CNBC, Bloomberg, Yahoo Finance, etc are all reporting that companies reported “better than expected” earnings this morning. Let’s take a look at these great earnings:

Coke – $8.27B in revenues vs estimates of $8.66B.   A $400MM MISS.

Caterpillar – $7.98B in revenues vs estimates of $8.86B.    Nearly a $1B MISS.

DuPont – $7B in revenues vs estimates of $7.15B.  A $150MM MISS.

United Technologies – $13.2B vs estimates of $13.92B.  A $700MM MISS.

I can’t ever remember a market where investors turned such a blind eye to top line growth.  It’s truly astonishing.  These are phenomenally bad revenue figures.  There is just no two ways around it.  This trend of rising stock prices on poor underlying earnings cannot and will not last.

Scrolling Headlines From Yahoo In Play

AAPL

CUPERTINO, Calif., July 21 /PRNewswire-FirstCall/ — Apple® today announced financial results for its fiscal 2009 third quarter ended June 27, 2009. The Company posted revenue of $8.34 billion and a net quarterly profit of $1.23 billion, or $1.35 per diluted share. These results compare to revenue of $7.46 billion and net quarterly profit of $1.07 billion, or $1.19 per diluted share, in the year-ago quarter. Gross margin was 36.3 percent, up from 34.8 percent in the year-ago quarter. International sales accounted for 44 percent of the quarter’s revenue.

n accordance with the subscription accounting treatment required by GAAP, the Company recognizes revenue and cost of goods sold for iPhone(TM) and Apple TV® over their estimated economic lives. Adjusting GAAP sales and product costs to eliminate the impact of subscription accounting, the corresponding non-GAAP measures* for the quarter are $9.74 billion of “Adjusted Sales” and $1.94 billion of “Adjusted Net Income.”

Apple sold 2.6 million Macintosh® computers during the quarter, representing a four percent unit increase over the year-ago quarter. The Company sold 10.2 million iPods during the quarter, representing a seven percent unit decline from the year-ago quarter. Quarterly iPhones sold were 5.2 million, representing 626 percent unit growth over the year-ago quarter.

“We’re making our most innovative products ever and our customers are responding,” said Steve Jobs, Apple’s CEO. “We’re thrilled to have sold over 5.2 million iPhones during the quarter and users have downloaded more than 1.5 billion applications from our App Store in its first year.”

“We’re extremely pleased to report record non-holiday quarter revenue and earnings and quarterly cash flow from operations of $2.3 billion,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the fourth fiscal quarter of 2009, we expect revenue in the range of about $8.7 billion to $8.9 billion and we expect diluted earnings per share in the range of about $1.18 to $1.23.”

Apple will provide live streaming of its Q3 2009 financial results conference call utilizing QuickTime®, Apple’s standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PDT on July 21, 2009 at http://www.apple.com/quicktime/qtv/earningsq309/ and will also be available for replay for approximately two weeks thereafter.

*Non-GAAP Financial Measures

During fiscal 2007, the Company began selling iPhone and Apple TV. Because the Company may provide unspecified features and additional software products to iPhone and Apple TV customers in the future free of charge, in accordance with GAAP the Company recognizes revenue and cost of goods sold for these products on a straight-line basis over their economic lives, with any loss recognized at the time of sale. Currently, the economic lives of these products are estimated to be 24 months. This accounting treatment, referred to as subscription accounting, results in the deferral of almost all of the revenue and cost of goods sold during the quarter in which the products are sold to the customer. Other costs related to these products, including costs for engineering, sales, marketing and warranty, are expensed as incurred. Further, the costs to develop any future unspecified features and additional software products that may eventually be provided to customers also are expensed as incurred. In contrast, the Company generally recognizes revenue and cost of goods sold for its other products, such as Macs and iPods, at the time of sale, as the Company does not provide future unspecified features or additional software products to those customers free of charge.

In July 2008, the Company began selling iPhone 3G, the second-generation iPhone, and at that time significantly expanded distribution by establishing carrier relationships in over 70 countries. Unit sales of iPhone 3G have been significantly greater than sales of the first-generation iPhone. During the first quarter of iPhone 3G availability ended September 27, 2008, 6.9 million units were sold, exceeding the 6.1 million first-generation iPhone units sold in the prior five quarters combined.

In June 2009, the Company began selling iPhone 3GS, the third-generation iPhone. Unit sales of iPhones continued to be significant in the quarter ended June 27, 2009, with 5.2 million iPhones sold. As a result, the amount of revenue and product cost related to those iPhone sales that the Company deferred for recognition in future periods under subscription accounting was substantial. While the GAAP results provide significant insight into the Company’s operations and financial position, management continues to supplement its analysis of the business using financial measures that look at the total sales, related product costs and resulting income for iPhones and Apple TVs sold to customers during the period. The presentation at the end of this press release includes the following non-GAAP measures: “Adjusted Sales,” “Adjusted Cost of Sales,” “Adjusted Gross Margin,” “Adjusted Operating Margin,” “Adjusted Net Income” and “Adjusted Diluted Earnings per Share.” These financial measures are not consistent with GAAP because they do not reflect the deferral of revenue and product costs for recognition in later periods. The above-mentioned non-GAAP measures are generated by adjusting the related GAAP measures solely to reverse the effect of subscription accounting. The Company uses these financial measures, along with other measures discussed below, to provide additional insight into current operating and business trends not readily apparent from the GAAP results.

Management uses Adjusted Sales to evaluate the Company’s growth rate, revenue mix and performance relative to competitors. Given the impact of iPhone unit sales during the quarter ended June 27, 2009, Adjusted Sales provides a meaningful measurement of the Company’s growth by reflecting amounts generally due to Apple at the time of sale related to products sold within the period. Further, eliminating the effects of deferred revenue (current sales deferred to future periods and prior sales being recognized currently) provides more transparency into the Company’s underlying sales trends. Management uses the non-GAAP measures of “Adjusted Cost of Sales,” “Adjusted Gross Margin” and “Adjusted Operating Margin” to measure the Company’s operating performance based on current period iPhone and Apple TV sales and to facilitate ongoing operating decisions. Additionally, because the Company recognizes engineering, sales, and marketing expenses as incurred, including expenses related to iPhone and Apple TV, management uses Adjusted Sales to evaluate returns on those costs, to manage year-over-year operating expense growth, and to budget future expenses. Furthermore, because they are considered meaningful indicators of current business performance, the non-GAAP measures “Adjusted Sales” and “Adjusted Operating Margin” are metrics that factor into the determination of management compensation beginning in fiscal year 2009. Finally, management uses the non-GAAP measures of “Adjusted Net Income” and “Adjusted Diluted Earnings per Share” to measure the Company’s operating performance based on current period iPhone and Apple TV sales, to facilitate ongoing operating decisions, and compare performance relative to competitors.

Management believes that these non-GAAP financial measures, when taken together with the corresponding consolidated GAAP measures and related segment information, provide incremental insight into the underlying factors and trends affecting both the Company’s performance and its cash generating potential. Management believes these non-GAAP measures increase the transparency of the Company’s current results and enable investors to more fully understand trends in its current and future performance.

Cautions on Use of Non-GAAP Measures

As noted previously, these non-GAAP financial measures are not consistent with GAAP because they do not reflect the deferral of revenue and product costs for recognition in later periods. These non-GAAP financial measures do not adjust for the costs associated with the Company’s intention to provide unspecified new features and software to purchasers of iPhone and Apple TV products. These costs are expensed as incurred under GAAP’s subscription accounting model, and are not adjusted in these non-GAAP financial measures. As such, these non-GAAP financial measures are not intended to reflect in a given period all of the costs of sales made in that period. Rather, the non-GAAP financial measures presented below are intended for the limited purpose of presenting performance measures that include the total sales, related product costs, and resulting income for iPhones and Apple TVs in the period those products are sold to customers.

Management believes investors will benefit from greater transparency in referring to these non-GAAP financial measures when assessing the Company’s operating results, as well as when forecasting and analyzing future periods. However, management recognizes that:

• these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company’s GAAP financial measures;
• these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company’s GAAP financial measures;
• these non-GAAP financial measures should not be considered to be superior to the Company’s GAAP financial measures;
• these non-GAAP financial measures were not prepared in accordance with GAAP and investors should not assume that the non-GAAP financial measures presented in this earnings release were prepared under a comprehensive set of rules or principles;
• these non-GAAP financial measures are not presented with comparable non-GAAP financial measures for prior periods, although management intends to continue to track and present these non-GAAP financial measures for future periods; and
• until management presents comparable non-GAAP financial measures for additional periods, these non-GAAP financial measures do not provide any information regarding trends in the Company’s performance and, as such, investors should not assume that the presentation of these non-GAAP financial measures reflects any positive or negative trends in the Company’s performance.

Further, these non-GAAP financial measures may be unique to the Company, as they may be different from non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company’s results to the results of other companies.

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure or measures appears at the end of this press release.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; potential litigation from the matters investigated by the special committee of the board of directors and the restatement of the Company’s consolidated financial statements; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; the Company’s reliance on the availability of third-party digital content and applications; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the effect that product and service quality problems could have on the Company’s sales and operating profits; the Company’s reliance on sole service providers for iPhone in certain countries; war, terrorism, public health issues, and other circumstances that could disrupt supply, delivery, or demand of products; the continued service and availability of key executives and employees; unfavorable results of other legal proceedings; and the Company’s dependency on the performance of distributors and other resellers of the Company’s products. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 27, 2008, its Form 10-Q for the quarter ended December 27, 2008, its Form 10-Q for the quarter ended March 28, 2009, and its Form 10-Q for the quarter ended June 27, 2009 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone….

BXP

Funds from Operations (FFO) for the quarter ended June 30, 2009 were $166.7 million, or $1.33 per share basic and $1.32 per share diluted. This compares to FFO for the quarter ended June 30, 2008 of $141.0 million, or $1.18 per share basic and $1.16 per share diluted. FFO for the quarter ended June 30, 2009 includes (1) $0.10 per share on a diluted basis related to lease termination income, (2) a non-cash impairment charge of $0.05 per share on a diluted basis related to the Company’s investment in its Value-Added Fund, specifically its Mountain View, CA and San Carlos, CA properties, and (3) additional non-cash interest expense of $0.06 per share on a diluted basis related to the Company’s adoption of FSP No. APB 14-1. FFO for the quarter ended June 30, 2008 includes $0.03 per share on a diluted basis related to the additional non-cash interest expense associated with the Company’s adoption of FSP No. APB 14-1. The weighted average number of basic and diluted shares outstanding totaled 125,266,846 and 127,080,589, respectively, for the quarter ended June 30, 2009 and 119,752,889 and 122,775,797, respectively, for the quarter ended June 30, 2008. The weighted average number of basic and diluted shares outstanding for the quarter ended June 30, 2009 includes the impact of the Company’s public offering of 17,250,000 shares of common stock on June 10, 2009, as discussed below.

In the second quarter ended June 30, 2009, the Company recognized a non-cash impairment charge of approximately $7.4 million, or $0.05 per share diluted, representing the other-than-temporary decline in the fair value below the carrying value of the Company’s investment in its Value-Added Fund, which is an unconsolidated joint venture. In accordance with Accounting Principles Board Opinion No. 18 “The Equity Method of Accounting for Investments in Common Stock” (APB No. 18), a loss in value of an investment under the equity method of accounting, which is other than a temporary decline, must be recognized. As a result, the Company recognized a non-cash impairment charge on its investment in its Value-Added Fund.

Net income available to common shareholders was $67.2 million for the quarter ended June 30, 2009, compared to $75.5 million for the quarter ended June 30, 2008. Net income available to common shareholders per share (EPS) for the quarter ended June 30, 2009 was $0.54 basic and $0.53 on a diluted basis. This compares to EPS for the second quarter of 2008 of $0.63 basic and $0.62 on a diluted basis. EPS includes $0.03 and $0.04, on a diluted basis, related to gains on sales of real estate for the quarters ended June 30, 2009 and 2008, respectively.

The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the quarter ended June 30, 2009. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.

As of June 30, 2009, the Company’s portfolio consisted of 146 properties comprising approximately 49.1 million square feet, including 7 properties under construction totaling 2.3 million square feet and one hotel. The overall percentage of leased space for the 138 properties in service as of June 30, 2009 was 92.0%.

Significant events during the second quarter included:

• On April 1, 2009, the Company placed in-service One Preserve Parkway, an approximately 184,000 net rentable square foot Class A office property located in Rockville, Maryland. The property is 20% leased.
• On April 21, 2009, the Company obtained construction financing totaling $215.0 million collateralized by its Atlantic Wharf development project located at 280 Congress Street in Boston, Massachusetts. Atlantic Wharf, formerly known as Russia Wharf, is a mixed-use project totaling approximately 815,000 net rentable square feet. Wellington Management Company, LLP has leased approximately 450,000 square feet of the office space in the development. The construction financing bears interest at a variable rate equal to LIBOR plus 3.00% per annum and matures on April 21, 2012 with two, one-year extension options.
• On April 30, 2009, Lehman Brothers, Inc., then the Company’s tenth largest tenant (by square feet) with approximately 437,000 net rentable square feet in the Company’s 399 Park Avenue property, rejected its lease in bankruptcy. The Company had previously established a reserve for the full amount of the Lehman Brothers, Inc. accrued straight-line rent balance in the third quarter of 2008. Lehman Brothers, Inc. paid rent through the month of April 2009 for all of its space and continued to occupy approximately 180,000 net rentable square feet through June 22, 2009, for which the Company received an aggregate of approximately $6.5 million in the quarter ended June 30, 2009. In addition, the Company has signed leases with tenants for approximately 37,000 net rentable square feet of the vacated space. Lehman Brothers, Inc. had contributed approximately $44.9 million per year on a contractual basis to the Company’s revenues from this lease.
• On May 31, 2009, a consolidated joint venture in which the Company has a 66.67% interest placed in-service the Offices at Wisconsin Place, an approximately 299,000 net rentable square foot Class A office property located in Chevy Chase, Maryland. The property is 91% leased.
• On June 1, 2009, General Motors Corporation filed a petition under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. At that time, the Company leased approximately 120,000 square feet of office space to General Motors Corporation at 601 Lexington Avenue (formerly known as Citigroup Center). Rent commencement for the lease at 601 Lexington Avenue began on June 1, 2009 and the lease was to expire on May 31, 2019. However, on June 12, 2009, General Motors Corporation rejected the lease in bankruptcy effective as of June 30, 2009. The contribution from this lease, on a contractual basis, from July 1, 2009 through December 31, 2009, was projected to be approximately $6.6 million.In addition, the unconsolidated joint venture that owns the General Motors Building (of which the Company owns 60%) currently leases approximately 101,000 square feet of space to General Motors Corporation. General Motors Corporation currently occupies the space (other than approximately 7,000 square feet that is subleased to a third party) and the lease expires on March 31, 2010.

• On June 9, 2009, the Company used available cash to repay the mortgage loan collateralized by its Reservoir Place property located in Waltham, Massachusetts totaling approximately $47.8 million. There was no prepayment penalty associated with the repayment. The mortgage loan bore interest at a fixed rate of 7.00% and was scheduled to mature on July 1, 2009.
• On June 10, 2009, the Company completed a public offering of 17,250,000 shares of its common stock (including 2,250,000 shares issued as a result of the exercise of an overallotment option by the underwriters) at a price to the public of $50.00 per share. The proceeds from this public offering, net of underwriters’ discounts and offering costs, totaled approximately $842.0 million. The Company used a portion of the net proceeds to repay the outstanding balance of its revolving credit facility totaling $100.0 million and to repay its mortgage loan totaling approximately $30.1 million collateralized by its Ten Cambridge Center property, discussed below.
• On June 17, 2009, the Company announced that its Board of Directors declared a regular quarterly cash dividend of $0.50 per share of common stock for the period April 1, 2009 to June 30, 2009 payable on July 31, 2009 to shareholders of record as of the close of business on June 30, 2009.
• On June 26, 2009, the Company used available cash to repay the mortgage loan collateralized by its Ten Cambridge Center property located in Cambridge, Massachusetts totaling approximately $30.1 million. The Company paid a prepayment penalty totaling $0.5 million in connection with the repayment. The mortgage loan bore interest at a fixed rate of 8.27% and was scheduled to mature on May 1, 2010.

On July 16, 2009, the Board of Directors appointed Alan J. Patricof to the Nominating and Corporate Governance Committee. Mr. Patricof, who will continue to serve as the Chairman of the Company’s Audit Committee, joins Zoë Baird (Chair) and David A. Twardock as members of the Nominating and Corporate Governance Committee……

AMD

AMD reported revenue for the second quarter of 2009 of $1.184 billion. Second quarter 2009 revenue was flat compared to the first quarter of 2009 and decreased 13 percent compared to the second quarter of 2008.

“The AMD Product Company successfully executed its product and technology roadmaps in the first half of the year, including introducing the Six-Core AMD Opteron™ processor months ahead of schedule. While we increased cash, exceeded our revenue plan and reduced operating expenses in the second quarter, gross margin was disappointing,” said Dirk Meyer, AMD president and CEO. “New platform, microprocessor and graphics introductions planned for the second half of 2009 position us well to improve margins and meet our financial goals for the year.”

In the second quarter of 2009, AMD reported a net loss attributable to AMD common stockholders of $330 million or $0.49 per share, which includes the net favorable impact of $86 million, or $0.13 per share, primarily from the sale of inventory written-down in the fourth fiscal quarter of 2008 as described in the table below². AMD’s operating loss was $249 million.

In the first quarter of 2009, AMD had revenue of $1.177 billion, a net loss attributable to AMD common stockholders of $416 million and an operating loss of $298 million. In the second quarter of 2008, AMD had revenue from continuing operations of $1.362 billion, a net loss attributable to AMD common stockholders of $1.195 billion and an operating loss of $569 million.

In the second quarter of 2009, AMD Product Company reported a non-GAAP net loss of $244 million and a non-GAAP operating loss of $205 million. In the first quarter of 2009, AMD Product Company reported a non-GAAP net loss of $189 million and a non-GAAP operating loss of $123 million³.

Second quarter 2009 AMD gross margin was 37 percent, including a positive impact of 8 percentage points due to a $98 million benefit from the sale of inventory written down in the fourth quarter of 2008. First quarter 2009 AMD gross margin was 43 percent, including a positive impact of 5 percentage points due to a $64 million benefit from the sale of inventory written down in the fourth quarter of 2008. Second quarter 2009 AMD Product Company non-GAAP gross margin was 27 percent compared to 35 percent in the prior quarter.

Current Outlook

AMD’s outlook statements are based on current expectations. The following statements are forward looking, and actual results could differ materially depending on market conditions and the factors set forth under “Cautionary Statement” below.

Considering current macroeconomic conditions, limited visibility and historical seasonal patterns, AMD expects its Product Company revenue to be up slightly for the third quarter of 2009…..

YHOO

SUNNYVALE, Calif.–(BUSINESS WIRE)–Yahoo! Inc. (NASDAQ:YHOO – News) today reported revenues of $1,573 million for the quarter ended June 30, 2009, a decrease of 13 percent from the second quarter of 2008. Excluding the impact of currency rate fluctuations, revenues for the second quarter of 2009 would have declined 8 percent from the second quarter of 2008.

Net income per diluted share for the second quarter of 2009 was $0.10, compared to $0.09 for the second quarter of 2008. Non-GAAP net income per diluted share for the second quarter of 2009 and 2008 was $0.16.

“I’m pleased with our results this past quarter. We established a clear, simple vision to be the center of people’s lives online, and we’re backing that vision with important initiatives to create ‘wow’ experiences for our users,” said Yahoo! chief executive officer Carol Bartz. “We’re confident that this vision will put us on the right path to growth and profitability long term. Our new homepage is a perfect example of our efforts to create innovative products aimed at increasing user engagement while offering the most compelling advertising proposition in the industry.”…..

AMLN

SAN DIEGO, July 21 /PRNewswire-FirstCall/ — Amylin Pharmaceuticals, Inc. (Nasdaq: AMLN – News) today reported financial results for the quarter ended June 30, 2009. The Company reported total revenue of $209.4 million for the quarter ended June 30, 2009, which includes net product sales of $197.5 million. Net loss, excluding a charge of $11.4 million associated with the Company’s sales force reduction in the second quarter, was $51.0 million, or $0.36 per share. Non-GAAP operating loss was $22.4 million for the quarter ended June 30, 2009, compared to $40.3 million for the same period in 2008. GAAP net loss was $62.4 million, or $0.44 per share, for the quarter ended June 30, 2009, compared to $66.6 million, or $0.49 per share, for the same period in 2008. At June 30, 2009 the Company held cash, cash equivalents and short-term investments of $644.4 million……

GILD

Gilead Sciences Announces Record Second Quarter 2009 Financial Results

– Record Total Revenues of $1.65 Billion, Up 29 Percent over Second Quarter 2008 –

– Record Product Sales of $1.57 Billion, Up 29 Percent over Second Quarter 2008 –

– Second Quarter EPS of $0.61 per Share –

– Second Quarter Non-GAAP EPS of $0.69 per Share –

• Press Release
• Source: Gilead Sciences, Inc.
• On Tuesday July 21, 2009, 4:05 pm EDT

• Buzz up! 0
• Print

• Companies:

  • Gilead sciences inc.

FOSTER CITY, Calif.–(BUSINESS WIRE)–Gilead Sciences, Inc. (Nasdaq:GILD – News) announced today its results of operations for the quarter ended June 30, 2009. Gilead’s operating results include the results of CV Therapeutics, Inc. (CV Therapeutics) beginning on the acquisition date of April 15, 2009. Total revenues for the second quarter of 2009 were $1.65 billion, up 29 percent compared to total revenues of $1.28 billion for the second quarter of 2008. Net income attributable to Gilead for the second quarter of 2009 was $571.4 million, or $0.61 per diluted share. Net income attributable to Gilead for the second quarter of 2008 was $434.8 million, or $0.45 per diluted share. Non-GAAP net income attributable to Gilead for the second quarter of 2009, which excludes after-tax acquisition-related expenses, restructuring expenses and stock-based compensation expenses, was $648.9 million, or $0.69 per diluted share. Non-GAAP net income attributable to Gilead for the second quarter of 2008, which excludes after-tax stock-based compensation and purchased in-process research and development (IPR&D) expenses of $34.2 million, was $469.0 million, or $0.48 per diluted share…….

SYK

Second Quarter Highlights

• Net sales of $1,634 million were flat (0.1% decrease) on a constant currency basis (4.6% decrease as reported)
• Orthopaedic Implants sales increased 5.1% on a constant currency basis (0.2% decrease as reported)
• MedSurg Equipment sales decreased 7.7% on a constant currency basis (11.0% decrease as reported)
• Net earnings decreased 4.7% from $306 million to $291 million
• Diluted net earnings per share were unchanged at $0.73

“In a challenging environment, we were very pleased with the growth of our U.S. Orthopaedic Implant businesses, which accelerated from last quarter and showed strong year-over-year gains. This performance, combined with our heavy focus on controlling costs across the company preserved our diluted earnings per share results in the face of the steep short term slowdown in our MedSurg businesses, and the foreign currency headwinds in the quarter,” commented Stephen P. MacMillan, President and Chief Executive Officer.

Net sales were $1,634 million for the second quarter of 2009, representing a 4.6% decrease compared to net sales of $1,713 million for the second quarter of 2008, and were $3,236 million for the first half of 2009, representing a 3.3% decrease compared to net sales of $3,347 million for the first half of 2008. On a constant currency basis, net sales decreased 0.1% for the second quarter and increased 1.6% for the first half.

Net earnings for the second quarter of 2009 were $291 million, representing a 4.7% decrease compared to net earnings of $306 million for the second quarter of 2008. Diluted net earnings per share for the second quarter of 2009 were unchanged at $0.73 compared to the second quarter of 2008. Net earnings for the first half of 2009 were $572 million, representing a 4.0% decrease compared to net earnings of $596 million for the first half of 2008. Diluted net earnings per share for the first half of 2009 increased 0.7% to $1.44 compared to $1.43 for the first half of 2008.

Sales Analysis

Domestic sales were $1,047 million for the second quarter of 2009, representing a decrease of 0.5%, as a 9.1% increase in shipments of Orthopaedic Implants was offset by an 11.0% decrease in shipments of MedSurg Equipment. Domestic sales were $2,089 million for the first half of 2009, representing an increase of 0.2%, as a result of a 7.5% increase in shipments of Orthopaedic Implants offset by an 8.0% decrease in shipments of MedSurg Equipment.

International sales were $587 million for the second quarter of 2009, representing a decrease of 11.0%. The impact of foreign currency comparisons to the dollar value of international sales was unfavorable by $77 million in the second quarter of 2009. On a constant currency basis, international sales increased 0.6% in the second quarter of 2009, as a result of a 0.4% increase in shipments of Orthopaedic Implants and a 1.1% increase in shipments of MedSurg Equipment. International sales were $1,146 million for the first half of 2009, representing a decrease of 9.1%. The impact of foreign currency comparisons to the dollar value of international sales was unfavorable by $164 million in the first half of 2009. On a constant currency basis, international sales increased 3.9% in the first half of 2009, as a result of a 3.3% increase in shipments of Orthopaedic Implants and a 5.2% increase in shipments of MedSurg Equipment……

SBUX

SEATTLE–(BUSINESS WIRE)–Starbucks Corporation (NASDAQ: SBUX – News) today reported financial results for its third quarter ended June 28, 2009, provided its FY09 EPS target and introduced FY10 targets.

Fiscal Third Quarter 2009 Highlights include:

• EPS of $0.20 compared to $(0.01) in Q308
• Non-GAAP EPS of $0.24 compared to $0.16 in Q308, a 50% year-over-year increase
• Operating margin of 8.5% vs. negative 0.8% in Q308; Non-GAAP operating margin of 10.6% vs. 6.9% in Q308
• U.S. operating margin of 11.2% vs. negative 1.4% in Q308; Non-GAAP U.S. operating margin of 13.4% vs. 8.8% in Q308
• Net revenues of $2.4 billion, compared to $2.6 billion in Q308
• Cost savings of approximately $175 million, exceeding Q3 target of $150 million
• Comparable store sales decline of 5%, a sequential improvement from a decline of 8% in Q209

“The transformation of Starbucks business – including the success of our consumer-facing initiatives and the permanent changes to our cost structure – is delivering improvements in comparable store sales trends and is beginning to be reflected in our financial performance,” said Howard Schultz, chairman, president and ceo. “The entire Starbucks organization is committed to continually improving our customer experience as the roadmap to renewed growth and increasing profitability. At the same time, we will continue to innovate and differentiate, two perennial hallmarks of the Starbucks brand,” added Schultz.

“Excellent execution throughout our organization contributed significantly to our performance this quarter,” commented Troy Alstead, executive vice president and cfo. “Our store partners have embraced the cost disciplines and efficiency initiatives that are enabling us to expand our operating margin. In doing this, they have also delivered increased service speed, measurably improved customer service, customer satisfaction, and an overall enhanced Starbucks Experience.”

Consolidated company revenues for Q309 were $2.4 billion, compared to $2.6 billion in Q308. The sales decline resulted primarily from a five percent decline in comparable store sales.

Restructuring charges, nearly all due to previously announced store closures, impacted operating income and operating margin in Q309 by $51.6 million and 210 basis points, respectively. As a result, Q309 operating income totaled $204.0 million, representing an operating margin of 8.5 percent, compared to an operating loss of $21.6 million, and an operating margin of negative 0.8 percent in Q308. On a non-GAAP basis (excluding restructuring charges), Q309 operating income totaled $255.6 million, representing an operating margin of 10.6 percent, compared to non-GAAP operating income of $177.6 million and a non-GAAP operating margin of 6.9 percent in Q308. Non-GAAP results in Q308 exclude $199.2 million of restructuring charges specifically related to asset impairments for 600 underperforming company-operated stores in the U.S., and transformation-related costs.

Net earnings in Q309 totaled $151.5 million, compared to a net loss of $6.7 million in Q308, and diluted EPS for Q309 was $0.20, compared to $(0.01) in Q308. Non-GAAP net earnings totaled $179.9 million, and non-GAAP EPS was $0.24 for Q309, compared to non-GAAP net earnings of $115.8 million and non-GAAP EPS of $0.16 in Q308. Non-GAAP results for Q308 exclude approximately $0.17 per share in restructuring charges and transformation-related costs.

Cost Reduction Initiatives….

SY

DUBLIN, Calif. (AP) — Business-software maker Sybase Inc. said Tuesday its second-quarter profit climbed 26 percent, helped by lower costs and expenses.

The company also lifted its full-year earnings forecast, citing its better-than-expected results for the first half of the year.

Sybase earned $37.6 million, or 43 cents per share, compared with $29.8 million, or 33 cents per share, a year ago.

Excluding a stock-based compensation expense, restructuring costs and other items, profit was $49.4 million, or 56 cents per share.

Analysts surveyed by Thomson Reuters, whose estimates generally exclude one-time items, predicted net income of 52 cents per share.

Total costs and expenses dropped to $214.7 million from $231.6 million.

Revenue for the period ended June 30 dipped 2 percent to $278 million from $282.7 million mostly on the stronger dollar and a decline in services revenue.

The results managed to beat Wall Street’s estimate of $273.1 million.

Sybase increased its full-year earnings guidance to $1.67 to $1.71 per share, up from $1.64 to $1.68 per share. The company also raised its adjusted profit outlook to a range of $2.23 to $2.27 per share. Its prior forecast was for adjusted earnings of $2.20 to $2.24 per share.

In addition, Sybase boosted its yearly revenue outlook to a range of $1.11 billion to $1.12 billion, up from its previous forecast for revenue of about $1.1 billion.

Analysts expect full-year profit of $2.23 per share on revenue of $1.12 billion.

Shares of Sybase jumped $1.44, or 4.5 percent, to $33.83 in morning trading.

BLK

By Sree Vidya Bhaktavatsalam

July 21 (Bloomberg) — BlackRock Inc., the U.S. money manager that’s acquiring Barclays Global Investors, said second- quarter earnings dropped 20 percent because market losses reduced fees tied to the value of clients’ investments.

Net income fell to $218 million, or $1.59 a share, from $274 million, or $2, a year earlier, the New York-based company said today in a statement. Excluding some items, BlackRock beat the $1.56 per-share estimate of nine analysts surveyed by Bloomberg.

Fees from managing funds have fallen along with financial markets, which lost 31 percent from a year earlier as measured by the MSCI World Index. Income has increased at the BlackRock Solutions unit, which advises clients such as the U.S. government on asset values. Laurence Fink, BlackRock’s chairman and chief executive officer, agreed last month to buy Barclays Global, a deal that will double assets to $2.7 trillion and make the company the world’s biggest money manager.

“Earnings for asset managers are still down substantially from their peaks in 2007,” Robert Lee, an analyst with Keefe, Bruyette & Woods Inc. in New York, said in an interview before the results were announced. “For BlackRock, we’re seeing a continuation of the momentum exhibited in the past year.”

Lee expected BlackRock to earn $1.66 a share. He rates the shares “market perform.”

Net Deposits

BlackRock said it attracted $15.2 billion in net deposits into funds. Assets rose 7 percent from the prior quarter to $1.37 trillion. Revenue fell 26 percent from a year earlier to $1.03 billion, in line with analysts’ estimates.

Their estimates for BlackRock usually exclude items such as changes in the market value of co-investments the company makes with its clients and seed investments in its own funds….

BJS

HOUSTON (AP) — BJ Services Co. on Tuesday posted a net loss for its fiscal third quarter, citing declining demand for oil and natural gas amid economic weakness.

The oil services company reported a fiscal third-quarter loss of $32.3 million, or 11 cents per share, compared with earnings of $141.8 million, or 48 cents per share, during the same period last year.

The latest quarter’s results include $10 million in non-cash inventory write-downs, asset impairment charges of $7.2 million and about $6.4 million of employee severance costs.

Analysts polled by Thomson Reuters estimated a profit of less than a penny per share for the quarter ended June 30. Analysts typically exclude one-time items from their estimates.

Revenue slid 41 percent to $786.9 million from $1.33 billion. Analysts forecast revenue of $868 million.

BTU

NEW YORK (MarketWatch) — Peabody Energy Corp. /quotes/comstock/13*!btu/quotes/nls/btu (BTU 33.34, -1.49, -4.28%) said on Tuesday that its net income available to common shareholders was $79.2 million, or 29 cents a share in the second quarter, compared to $233 million, or 85 cents a share a year ago. Revenue in the quarter fell to $1.34 billion, from $1.53 billion a year ago. The company reported adjusted earnings per share of 49 cents, versus 50 cents a year ago. Analysts polled by Thomson Reuters had expected the company to earn 49 cents a share.

CAT

MORE on CAT

DD

DOVER, Del. (AP) — Lower sales and restructuring charges helped drive chemical giant DuPont Co.’s profit down 61 percent in the second quarter, overshadowing a strong showing by its agriculture and nutrition business.

Its adjusted earnings still beat Wall Street expectations. DuPont shares rose 30 cents to $28.63 in premarket trading Tuesday.

The chemical maker, one of the nation’s biggest, called its performance as solid given current economic conditions, and CEO Ellen Kullman said the company’s efforts to reduce costs and increase productivity were paying off.

“Most markets remain dynamic and challenging, but the actions we are taking position DuPont well for the eventual economic recovery,” she said.

Wilmington-based DuPont said it earned $417 million, or 46 cents per share, in the three months ended June 30, down from $1.08 billion, or $1.18 per share a year earlier.

Overall revenue fell 24 percent to $7 billion from $9.3 billion a year ago and slightly below analysts’ forecast of $7.1 billion.

Excluding one-time items, adjusted earnings were 61 cents per share, beating Wall Street’s estimate of 53 cents a share.

The results reflected a $340 million pre-tax charge related to DuPont’s ongoing restructuring efforts. Dupont said in May that it would cut another 2,000 jobs, on top of 2,500 layoffs and elimination of about 10,000 contractor jobs it announced last fall.

DuPont said it has achieved about $600 million in cost reductions so far this year, more than half of its $1 billion goal. The company reaffirmed its 2009 earnings outlook range of $1.70 to $2.10 per share, excluding significant items.

But second-quarter results reflect continued weak demand in the automobile, construction and general industrial markets. Volumes declined in all major business segments and were down by double digits across all geographic regions.

Volume was down 27 percent in Europe, where negative currency effects helped push sales down by 38 percent. Higher local selling prices were unable to offset the negative effects of currency exchange rates in all overseas markets.

Sales declined by more than 20 percent in all business segments excluding the agriculture and nutrition unit, where higher selling prices led to a 3 percent increase in sales. The performance and material unit saw sales decline by 40 percent, which the company attributed to weak demand in major markets in all regions.

On the other hand, DuPont said the agriculture and nutrition unit’s earnings increased 15 percent to a record $580 million, driven by a 21 percent in seed sales.

FCX

• Net income attributable to common stock for second-quarter 2009 was $588 million, $1.38 per share, compared with $947 million, $2.25 per share, for second-quarter 2008. Net income attributable to common stock for the first six months of 2009 was $631 million, $1.54 per share, compared with $2.1 billion, $4.89 per share, for the first six months of 2008.
• Consolidated sales from mines for second-quarter 2009 totaled 1.1 billion pounds of copper, 837 thousand ounces of gold and 16 million pounds of molybdenum, compared with 942 million pounds of copper, 265 thousand ounces of gold and 20 million pounds of molybdenum for second-quarter 2008.
• Consolidated sales from mines are expected to approximate 3.9 billion pounds of copper, 2.4 million ounces of gold and 56 million pounds of molybdenum for the year 2009, including 910 million pounds of copper, 550 thousand ounces of gold and 15 million pounds of molybdenum for third-quarter 2009.
• Consolidated unit net cash costs (net of by-product credits) averaged $0.43 per pound for second-quarter 2009 compared with $1.25 per pound in the second quarter of 2008. Assuming average prices of $900 per ounce for gold and $8 per pound for molybdenum for the second half of 2009, consolidated unit net cash costs are estimated to average approximately $0.70 per pound for the year 2009.
• Operating cash flows totaled $1.2 billion for second-quarter 2009 and $896 million for the first six months of 2009, net of $973 million in working capital uses (principally related to customer settlements on provisionally priced prior year copper sales). Using estimated sales volumes and assuming average prices of $2.25 per pound for copper, $900 per ounce for gold and $8 per pound for molybdenum for the second half of 2009, operating cash flows for the year 2009 are expected to approximate $3.0 billion, net of $0.5 billion in working capital requirements.
• Capital expenditures totaled $375 million for second-quarter 2009 and $894 million for the first six months of 2009. Capital spending is expected to decline in the second half of 2009, reflecting the substantial completion of the Tenke Fungurume project. FCX currently expects capital expenditures to approximate $1.4 billion for the year 2009, including sustaining capital of $0.6 billion and $0.8 billion for major projects.
• Construction activities for the Tenke Fungurume project are substantially complete. Copper production commenced in March 2009 and 26 million pounds of copper cathode were sold during the second quarter. Commissioning of the cobalt circuit began during the second quarter. FCX expects to ramp up to full annual capacity approximating 250 million pounds of copper and 18 million pounds of cobalt in the second half of 2009.
• Total debt approximated $7.2 billion and consolidated cash was $1.3 billion at June 30, 2009…..

LMT

WASHINGTON (AP) — Lockheed Martin Corp. says it’s second-quarter earnings fell nearly 17 percent, as large pension expenses created by the financial crisis continued to dig into the defense contractor’s bottom line.

The Bethesda, Md.-based maker of fighter jets earned $734 million, or $1.88 per share. It made $882 million, or $2.15 per share last year.

Revenue rose about 2 percent to $11.24 billion.

Pension costs lowered earnings by 19 cents per share this period while one-time gains a year ago added 19 cents. The company said in January that pension expenses would be higher each quarter this year because of a drop in the retiree fund’s value.

The results still beat analyst expectations of $1.81 per share and revenue of $11.14 billion.

MRK

TRENTON, N.J. (AP) — Drugmaker Merck & Co. on Tuesday posted a 12 percent drop in second-quarter profit, due to lower sales of its cholesterol drugs and several vaccines, but still beat Wall Street’s conservative expectations.

The maker of asthma and allergy treatment Singulair and cervical cancer vaccine Gardasil said its net income was $1.56 billion, or 74 cents per share. A year earlier, net income was $1.77 billion, or 82 cents per share.

The company said it had restructuring charges and expenses related to its acquisition of Schering-Plough Corp. that totaled 9 cents per share. Excluding those one-time charges, earnings per share would have been 83 cents.

Merck said the strong dollar also was a factor, lowering revenue abound 6 percentage points to $5.9 billion. That was down from $6.05 billion in the second quarter of 2008.

Analysts polled by Thomson Reuters were expecting earnings per share of 77 cents and revenue of $5.84 billion.

The company said it still expects earnings per share this year of $2.84 to $3.09, or $3.15 to $3.30 excluding one-time items. That forecast includes pretax charges of roughly $500 million for restructuring and $300 million of costs related to the Schering-Plough deal.

Merck said its plan to acquire Schering-Plough, for $41.1 billion, is progressing as planned and on track to close in the fourth quarter.

The two companies already jointly sell the cholesterol drugs Vytorin and Zetia, both of which have seen sales steadily decline since January 2008, when concerns about their effectiveness and safety first surfaced. The drugs’ combined sales dropped 10 percent in the quarter, to $1 billion.

Merck’s top seller, Singulair, saw sales jump 16 percent to $1.3 billion. Two newer products, Januvia for type 2 diabetes and HIV drug Isentress, saw sales rise as well, to $462 million and $172 million, respectively.

Most other products, though, posted sales declines, including Gardasil, which has seen sales slide now that many adolescent girls have been inoculated, and two other vaccines, Rotateq for rotavirus and Zostavax for shingles.

For the first six months, net income was down 41 percent at $2.98 billion, or $1.41 per share. In the first half of 2008, net income totaled $5.07 billion, or $2.34 per share.

The first half of this year included a total of 16 cents worth of charges for restructuring and merger expenses.