MBIA (MBI) posts $18.61 fourth quarter loss per share, vs. $1.32 EPS a year ago; posts $3.30 fourth quarter operating loss vs. $1.31 operating EPS. It says it's disappointed in its operating results for 2007 as performance of its insured prime, second-lien mortgage portfolio, three insured CDO-squared transactions led to unprecedented loss reserving, impairment activity. MBIA's CEO said the company will have real and significant losses, but nothing to justify the 80% decline in share price since last year. The CEO noted the company's capital plan will exceed all AAA rating requirements. The stock turned higher on the news.
Amazon.com (AMZN) posts fourth quarter EPS of $0.48, vs. $0.23 a year ago, on 42% sales rise. It sees first quarter sales of $3.95-$4.15 billion and 2008 sales of $18.75-$19.75 billion. It expects 2008 operating income of $785-$985 million, including $240 million for stock-based compensation and amortization of intangible assets. Separately, Amazon agrees to acquire Audible (ADBL) for about $300 million, or $11.50 per share. S&P upgrades to hold from sell. Bear Stearns ties the weakness in the stock to margin disappointment.
Starbucks (SBUX) posts first quarter EPS of $0.28, vs. $0.26 a year ago, on 1.0% higher same-store sales, 17% higher total sales. It views fiscal year 2008 as a "year of refocus and renewal." Expects low double-digit EPS expansion for fiscal year 2008.
Procter & Gamble (PG) posts second quarter EPS of $0.98, vs. $0.84 a year ago, on 9% sales rise. It sees $0.79-$0.81 third quarter EPS. For fiscal year 2008, it expects organic sales to grow 4%-6%, sees EPS of $3.46-$3.50. Plans to separate its coffee business and create an independent company named The Folgers Coffee Co. Assuming a split-off transaction, expects deal to be dilutive to EPS by $0.03-$0.05 on an annual basis. S&P maintains strong buy.
Pulte Homes (PHM) posts $3.54 fourth quarter loss per share from continuing operations, vs. $0.03 loss a year ago, on 34% lower revenue. Fourth quarter 2007 loss included $1.28/share of charges tied to inventory impairments, other land-related charges and impairment of goodwill; also, a $2.46/share non-cash charge to eliminate a tax loss-related asset on PHM's balance sheet. The home builder sees $0.15-$0.30 first quarter net loss from continuing operations, exclusive of a tax benefit and any add'l impairments or land-related charges. S&P narrows 2008 loss estimate, raises target price; reiterates hold.
Mattel (MAT) posts $0.89, vs. $0.75 a year ago, fourth quarter EPS on 3.8% revenue rise. S&P maintains strong buy.
AnnTaylor Stores (ANN) plans to cut 13% of staff at its headquarters and close 117 stores as part of a restructuring aimed at increasing its operating margin by more than 200 basis points over the next three years. Also says it is taking a conservative approach to new store growth in fiscal 2008, given the ongoing macroeconomic weakness and uncertainty in the retail sector.
Alliance Data Systems (ADS) posts $0.42, vs. $0.48 a year ago, fourth quarter EPS as merger, other costs offset 15% revenue rise. On purely organic basis, sees 2008 adjusted EBITDA in excess of $700 million, with operating EBITDA expected to be a minimum of $30 million greater than adjusted EBITDA and cash EPS of $4.30. Yesterday, ADS filed lawsuit against the Blackstone entities that are parties to the merger agreement. Wachovia reportedly upgrades to outperform from market perform.
Colgate-Palmolive (CL) posts $0.91, vs. $0.78 a year ago, fourth quarter operating EPS on 13% sales rise. It expects 2008 gross profit margin, excl. restructuring charges, to be up within targeted range of 75 basis points to 125 basis points. S&P maintains strong buy.
Bristol-Myers Squibb (BMY) posts $0.07 fourth quarter GAAP loss per share, vs. $0.09 loss on 33% revenue rise [including 5% favorable forex]. It revises 2008 GAAP EPS guidance to $1.36-$1.46 from $1.44-$1.54, primarily reflecting impact from sale of the Medical Imaging business. Notes guidance includes estimated charges of about $500 million related to implementation of the Productivity Transformation Initiative, which will be dependent on timing of implementation and accounting treatment.
MasterCard (MA) posts $2.26 [including after-tax gain of $1.37], vs. $0.30 a year ago, fourth quarter EPS on 28% revenue rise.
Cadence Design Systems (CDNS) posts fourth quarter EPS [non-GAAP] of $0.46 vs. $0.38 a year ago, on 6.2% revenue rise. It sees first quarter non-GAAP EPS of $0.03-$0.05 on revenue of $280-$290 million and fiscal year 2008 EPS of $1.11-$1.19. JP Morgan reportedly downgrades to underweight from neutral.
TurboChef Technologies (OVEN) says one of its customers announced modification of its North America food program which utilizes TurboChef ovens, which will reduce that customer's previously anticipated contribution to OVEN's 2008 results. OVEN says it comfortable with its previously announced commercial revenue guidance for 2008.
Advanced Medical Optics (EYE) says it has entered into deal with Bausch & Lomb, Inc. regarding AMO's patent relate to peristaltic pump fluidics used in phacoemulsification systems. Bausch & Lomb will pay AMO a royalty under the agreement. All other terms of the agreement are confidential.
JK Acquisition (JKA) postpones a special meeting of its stockholders from 10:00 a.m. CDT today to 5:00 p.m. CST today, in order to give JKA more time to solicit proxies and its stockholders more time to consider and vote on JKA's proposed merger with Multi-Shot LLC.
Starwood Hotels & Resorts Worldwide (HOT) posts $0.74, vs. $0.93 a year ago, fourth quarter EPS despite 2.4% revenue rise. Adjusts guidance to reflect economic uncertainty, possibility of slowdown in U.S. lodging demand. Now sees $0.22-$0.26 first quarter EPS, $2.32-$2.57 2008 EPS [both before special items].
ImClone Systems (IMCL) posts $0.23 fourth quarter loss per share, vs. $0.53 EPS a year ago, as patent litigation settlement expense, other items offset 14% rise in revenue. Posts $0.41 non-GAAP EPS [excluding items].
Cirrus Logic (CRUS) posts lower-than-expected $0.05, vs. $0.04 a year ago, third quarter EPS on 8.0% revenue rise. It says third quarter gross margin narrowed to 56% vs. 61% in the year-ago quarter. Sets $150 million stock buyback. It sees $44-$47 million fourth quarter revenue, gross margin of 55%-58%.
Alliant Techsystems (ATK) posts $1.65, vs. $1.53 a year ago, third quarter EPS on 17% sales rise. Based on continued strength in all three business groups, increasing visibility, ut raises fiscal year 2008 EPS guidance to $6.25-$6.35, expects sales in excess of $4.1 billion. It sees fiscal year 2009 EPS of $7.10-$7.30, expects sales of approximately $4.5 billion.
credted by: BusinessWeek.com
2008-02-03
The Billion-Dollar Losers
Big-name U.S. CEOs have taken a bath, but not the kind that leaves you feeling warm and relaxed.
As the bears took over Wall Street, chief executives, rewarded handsomely in years past with stock options, have seen the value of their holdings plummet.
The continuing financial crisis and fears of a U.S. recession have sent the broad Standard & Poor's 500-stock index down 15% since its peak in October. BusinessWeek asked financial information provider Capital IQ to analyze how this stock market correction has affected CEOs of major U.S. companies. [Capital IQ, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP).]
The resulting data show that market forces have chewed up the portfolios of even the savviest chief executives. Capital IQ estimates that since October, five CEOs have lost more than $1 billion through holdings of their companies' stock: Larry Ellison of Oracle (ORCL), Michael Dell of Dell (DELL), Micky Arison of Carnival Corp. (CCL), Jeffrey Bezos of Amazon.com (AMZN), and Rupert Murdoch of News Corp. (NWS).
More than 20 CEOs on the list have lost more than $100 million. The pain is widespread, too. Of the 450 major company CEOs analyzed, only about 60 escaped the last three months without losses. The markets were so difficult that only five of that group were able to achieve what these CEOs would typically take for granted -- gains of more than $10 million each.
The methodology: Capital IQ analyzed the change in the value of CEO holdings in their firms' stock from the market peak on Oct. 11, 2007, through Jan. 29, 2008. The estimates are based on each company's annual disclosures of CEO stock holdings, so it does not reflect any buying and selling by CEOs since their last reports.
But the estimates do show how quickly CEO fortunes have shrunk in three months. In total, the bear-trapped CEOs identified by Capital IQ lost a combined $16.1 billion.
The Financial Storm
The U.S. economy's troubles began in the financial sector last summer, as bad mortgage debt caused havoc in the credit markets. As a result, some of the biggest losers are CEOs in the financial sector. The portfolio losses of top financial CEOs on the list total $1.8 billion.
Those at the center of the financial storm have been hit hardest.
Countrywide Financial (CFC) CEO Angelo Mozilo has seen his stock lose nearly two-thirds of its value, costing him more than $100 million. [Mozilo will step down as Countrywide's chief after the planned acquisition of the company by Bank of America (BAC) is completed.] Politicians, including Senator Hillary Clinton [D-N.Y.], have called Countrywide, the U.S.'s largest mortgage lender, a major culprit in the loose lending standards that led to the subprime crisis.
Subprime debt has also devastated the holdings of CEOs of bond insurers. Gary Dunton of MBIA (MBI) lost 76% of his holdings during the survey period, or $24.7 million, while Ambac Financial Group (ABK) CEO Michael Callen took an 82% haircut, bringing the value of his holdings in company stock down to little more than $400,000.
Performance Pay
Don't reach for the Kleenex just yet. Despite the recent market turbulence, CEOs are still quite wealthy in company stock. Capital IQ identified 16 CEOs who still own more than $1 billion in their firm's shares, and 73 who owned more than $100 million.
In the past, base salary was a much larger part of executive compensation, but starting in the 1990s corporate boards began to add a lot more stock to pay packages. Shareholder groups had argued that the interests of CEOs and shareholders weren't properly aligned, says David Leach, managing director of compensation consulting firm Strategic Apex Group. "Conventional wisdom says an owner is going to take care of something better than someone who is renting," he says.
By paying CEOs in stock or stock options, "the concept is they get paid for the performance of the organization overall," says Don Lindner of WorldatWork, a human resources nonprofit.
But this doesn't always work perfectly. When the economy is booming and the stock market is rising, even lackluster CEOs get rewarded. But now, while a recession threatens, CEOs of even top performers are hurt. For example, Amazon.com's Bezos has doubled profits in the past year, yet he has lost $1.6 billion since October. Bezos didn't fare too well when the company reported fourth-quarter results on Jan. 30 [BusinessWeek.com, 1/31/08]. Investors' concerns about the impact of an economic slowdown sent the stock tumbling 12%, to $65.29.
Tech Losses
The poor performance of technology holdings is a prime example of how broadly the stock market gloom has spread from its origins in the financial sector. While a few tech CEOs, such as Steven Ballmer of Microsoft (MSFT), have resisted the undertow, in total, top tech CEOs have lost more than $5.6 billion since October. The average U.S. tech CEO's portfolio has fallen 19% since October, according to the Capital IQ screen, not much better than the 20% drop for financial CEOs.
Part of the problem for these CEOs is Silicon Valley's love of stock options. Tech firms have typically used much more equity in pay packages than other companies. Tech chiefs have lost a lot, but past bull markets have made billionaires of Bezos, Ellison, and many tech executives. Also, tech losses are exaggerated a bit by the time frame of the analysis. Tech companies have faltered lately, but most had put in stellar 2007 performances up until November or so.
Still, the huge tech losses show there has been nowhere to hide from the recent stock market turbulence. Investors fled even from sectors that are traditionally havens in a tough economy. CEOs of health-care and consumer staples firms have also lost money -- an average of 6% and 7%, respectively -- though not nearly as much as in other sectors.
The Biggest Losers [and Winners]
Take a look at the accompanying slide shows for examples of CEOs who have won or lost big lately in the stock market. The biggest losers include some of the world's best known executives, including Apple's (AAPL) Steve Jobs, Howard Schultz of Starbucks (SBUX), and Google's (GOOG) Eric Schmidt. Concern about the U.S. economy and online ad spending pummeled Google's shares when it reported fourth-quarter earnings on Jan. 31 [BusinessWeek.com, 2/1/08].
The list of CEOs includes a variety of executives who have somehow found a way to make money in a tough market. Their outperformance usually reflects extraordinary circumstances: Surprisingly strong results that bucked an industry trend, or an outlook that suddenly turned from poor to favorable.
Of course, in today's volatile markets, the current winners could wind up in the company of their unlucky brethren in a heartbeat.
Check out the BusinessWeek.com slide shows for more about the CEOs who have lost the most and CEOs who have gained the most.
credted by: BusinessWeek.com
As the bears took over Wall Street, chief executives, rewarded handsomely in years past with stock options, have seen the value of their holdings plummet.
The continuing financial crisis and fears of a U.S. recession have sent the broad Standard & Poor's 500-stock index down 15% since its peak in October. BusinessWeek asked financial information provider Capital IQ to analyze how this stock market correction has affected CEOs of major U.S. companies. [Capital IQ, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP).]
The resulting data show that market forces have chewed up the portfolios of even the savviest chief executives. Capital IQ estimates that since October, five CEOs have lost more than $1 billion through holdings of their companies' stock: Larry Ellison of Oracle (ORCL), Michael Dell of Dell (DELL), Micky Arison of Carnival Corp. (CCL), Jeffrey Bezos of Amazon.com (AMZN), and Rupert Murdoch of News Corp. (NWS).
More than 20 CEOs on the list have lost more than $100 million. The pain is widespread, too. Of the 450 major company CEOs analyzed, only about 60 escaped the last three months without losses. The markets were so difficult that only five of that group were able to achieve what these CEOs would typically take for granted -- gains of more than $10 million each.
The methodology: Capital IQ analyzed the change in the value of CEO holdings in their firms' stock from the market peak on Oct. 11, 2007, through Jan. 29, 2008. The estimates are based on each company's annual disclosures of CEO stock holdings, so it does not reflect any buying and selling by CEOs since their last reports.
But the estimates do show how quickly CEO fortunes have shrunk in three months. In total, the bear-trapped CEOs identified by Capital IQ lost a combined $16.1 billion.
The Financial Storm
The U.S. economy's troubles began in the financial sector last summer, as bad mortgage debt caused havoc in the credit markets. As a result, some of the biggest losers are CEOs in the financial sector. The portfolio losses of top financial CEOs on the list total $1.8 billion.
Those at the center of the financial storm have been hit hardest.
Countrywide Financial (CFC) CEO Angelo Mozilo has seen his stock lose nearly two-thirds of its value, costing him more than $100 million. [Mozilo will step down as Countrywide's chief after the planned acquisition of the company by Bank of America (BAC) is completed.] Politicians, including Senator Hillary Clinton [D-N.Y.], have called Countrywide, the U.S.'s largest mortgage lender, a major culprit in the loose lending standards that led to the subprime crisis.
Subprime debt has also devastated the holdings of CEOs of bond insurers. Gary Dunton of MBIA (MBI) lost 76% of his holdings during the survey period, or $24.7 million, while Ambac Financial Group (ABK) CEO Michael Callen took an 82% haircut, bringing the value of his holdings in company stock down to little more than $400,000.
Performance Pay
Don't reach for the Kleenex just yet. Despite the recent market turbulence, CEOs are still quite wealthy in company stock. Capital IQ identified 16 CEOs who still own more than $1 billion in their firm's shares, and 73 who owned more than $100 million.
In the past, base salary was a much larger part of executive compensation, but starting in the 1990s corporate boards began to add a lot more stock to pay packages. Shareholder groups had argued that the interests of CEOs and shareholders weren't properly aligned, says David Leach, managing director of compensation consulting firm Strategic Apex Group. "Conventional wisdom says an owner is going to take care of something better than someone who is renting," he says.
By paying CEOs in stock or stock options, "the concept is they get paid for the performance of the organization overall," says Don Lindner of WorldatWork, a human resources nonprofit.
But this doesn't always work perfectly. When the economy is booming and the stock market is rising, even lackluster CEOs get rewarded. But now, while a recession threatens, CEOs of even top performers are hurt. For example, Amazon.com's Bezos has doubled profits in the past year, yet he has lost $1.6 billion since October. Bezos didn't fare too well when the company reported fourth-quarter results on Jan. 30 [BusinessWeek.com, 1/31/08]. Investors' concerns about the impact of an economic slowdown sent the stock tumbling 12%, to $65.29.
Tech Losses
The poor performance of technology holdings is a prime example of how broadly the stock market gloom has spread from its origins in the financial sector. While a few tech CEOs, such as Steven Ballmer of Microsoft (MSFT), have resisted the undertow, in total, top tech CEOs have lost more than $5.6 billion since October. The average U.S. tech CEO's portfolio has fallen 19% since October, according to the Capital IQ screen, not much better than the 20% drop for financial CEOs.
Part of the problem for these CEOs is Silicon Valley's love of stock options. Tech firms have typically used much more equity in pay packages than other companies. Tech chiefs have lost a lot, but past bull markets have made billionaires of Bezos, Ellison, and many tech executives. Also, tech losses are exaggerated a bit by the time frame of the analysis. Tech companies have faltered lately, but most had put in stellar 2007 performances up until November or so.
Still, the huge tech losses show there has been nowhere to hide from the recent stock market turbulence. Investors fled even from sectors that are traditionally havens in a tough economy. CEOs of health-care and consumer staples firms have also lost money -- an average of 6% and 7%, respectively -- though not nearly as much as in other sectors.
The Biggest Losers [and Winners]
Take a look at the accompanying slide shows for examples of CEOs who have won or lost big lately in the stock market. The biggest losers include some of the world's best known executives, including Apple's (AAPL) Steve Jobs, Howard Schultz of Starbucks (SBUX), and Google's (GOOG) Eric Schmidt. Concern about the U.S. economy and online ad spending pummeled Google's shares when it reported fourth-quarter earnings on Jan. 31 [BusinessWeek.com, 2/1/08].
The list of CEOs includes a variety of executives who have somehow found a way to make money in a tough market. Their outperformance usually reflects extraordinary circumstances: Surprisingly strong results that bucked an industry trend, or an outlook that suddenly turned from poor to favorable.
Of course, in today's volatile markets, the current winners could wind up in the company of their unlucky brethren in a heartbeat.
Check out the BusinessWeek.com slide shows for more about the CEOs who have lost the most and CEOs who have gained the most.
credted by: BusinessWeek.com
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