• Morning News: October 25, 2012
    Posted by on October 25th, 2012 at 5:53 am

    Spain’s Bad Bank Seen as Too Big to Work: Mortgages

    UK Growth Fastest Since 2007

    Draghi Defends Bond Buying Program

    Yen Weakens Past 80 Per Dollar on Bets BOJ to Ease More

    Crude Oil Options Fall as Futures Slide Below $86 a Barrel

    Fed Keeps Rates Low, Says Growth Is Moderate

    U.S. Sues BofA Over Mortgage Sales

    Zynga, Survival at Stake, Beats Forecasts

    Facebook Shares Soar After Beating Estimates on Mobile

    Credit Suisse to Cut More Costs as Quarterly Profit Falls

    Ford Expected To Announce Southampton Transit Plant Closure

    Unilever Sales Beat Estimates as Brazil Leads Gains

    Ex-Goldman Director to Serve 2 Years in Prison on Insider Trading Case

    Phil Pearlman: Talking Facebook on Reuters TV with BuzzFeed’s Jon Steinberg

    John Hempton: CEO Dead Pool

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  • AFLAC’s Q4 Guidance
    Posted by on October 24th, 2012 at 3:42 pm

    Here are some key bits from AFLAC’s earnings call this morning:

    I was very pleased that the Board of Directors approved the 6.1% increase in the quarterly cash dividend effective with the fourth quarter payment. This marks the 30th consecutive year we’ve increased cash dividend to the shareholders. We continue to believe that we are well-positioned to achieve our stated earnings objectives of 3% to 6% increase in operating earnings per diluted share, excluding the impact of foreign currency.

    In the second quarter, we have guided toward the low end of the range. However, reflecting the lower annual effective tax rate, we now expect operating earnings for 2012 to be better. If the yen average is JPY 80 to the $1 for the last 3 months of the year, we expect reported operating earnings for the fourth quarter to be in the range of $1.46 to $1.51 per diluted share.

    Under the same exchange rate assumptions, we expect the full year operating earnings to be $6.58 to $6.63 per diluted share, which would be roughly a 4% to 5% increase on a currency-neutral basis. We believe this is reasonable and achievable. Importantly, we continue to believe that 2013’s operating earnings per share will increase 4% to 7% on a currency-neutral basis.

    In addition to operating earnings growth, we also focused on producing industry-leading return on equities. On an operating basis, the third quarter ROE was 25.2%. For 2012 and 2013, we continue to believe it’s reasonable to see operating ROE in the area of 22% to 26%. We remain focused on our vision of being the leading provider of voluntary insurance in the United States and the #1 provider of supplemental insurance in Japan. In both segments, I am confident in our brand, the fundamental needs of our products, and more importantly, the success of Aflac. Overall, I believe we had the best quarter since 2008.

    I think traders wanted a bigger dividend increase, but don’t let that fool you; AFLAC is doing very well.

  • Today’s Fed Statement
    Posted by on October 24th, 2012 at 2:39 pm

    Here it is:

    Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has advanced a bit more quickly, but growth in business fixed investment has slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation recently picked up somewhat, reflecting higher energy prices. Longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

    The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

    To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and disagreed with the description of the time period over which a highly accommodative stance of monetary policy will remain appropriate and exceptionally low levels for the federal funds rate are likely to be warranted.

  • Stocks and Oil Diverge
    Posted by on October 24th, 2012 at 12:29 pm

    Stocks and the price of oil had tracked each other closely until earlier this year as oil prices fell and stocks continued to rise.

  • Is Something Up at the New York Times?
    Posted by on October 24th, 2012 at 10:58 am

    Somebody somewhere somehow knows something. Or at least they think they do. The put-call ratio for the New York Times‘ ($NYT) stock has soared 30-fold in the last 48 hours:

    Two New York Times Co. (NYT) option trades pushed bearish wagers to the highest level ever after the publisher of the third-biggest U.S. newspaper by weekday circulation rallied to a 20-month peak.

    The ratio of outstanding puts to sell the stock versus calls increased almost 30-fold in two days to 4.1-to-1 on Oct. 22, an all-time high, according to data compiled by Bloomberg. A block of 8,500 January $10 puts changed hands that day after 10,000 traded at the end of last week, the data show. Times Co.’s shares climbed 37 percent this year through yesterday and touched its highest price since February 2011 last week.

    “The stock has had a nice run which you may want to hedge,” Boniface “Buzz” Zaino, a money manager at Royce & Associates LLC in New York, said yesterday via phone. His firm manages about $36 billion including shares of the publisher. “You could get a near-term bearish case based on concerns about the economy for the next six months and what’s going to happen to advertising dollars.”

    The stock has had an impressive run since May. At one point, NYT was at $5.88 on May 4th. Last week, the shares got as high as $11.07. The stock certainly appears to be over-priced here. Earnings are due out tomorrow.

  • CR Bard’s Earnings Guidance
    Posted by on October 24th, 2012 at 10:53 am

    Seeking Alpha has the transcript for CR Bard‘s ($BCR) earnings call. There are lots of good details about their business, but I wanted to highlight Bard’s guidance for Q4.

    Moving to financial guidance. For Q4, we are expecting constant currency sales growth between 0% and 2%. Obviously, the sales environment is pretty challenging, particularly in the U.S. and we’re trying to be appropriately cautious in this tough environment. Our Q4 sales expectations would put our full year constant currency sales growth between 3% and 4%.

    From an EPS standpoint, excluding items affecting comparability, we see the fourth quarter in the range of $1.64 to $1.68, reflecting the $0.05 of dilution from Neomend that Tim mentioned. So with the deterioration in the U.S. market that we’ve seen during the year, we’re now aiming at the low end of our original EPS growth target for the year, excluding the new dilution from the Neomend acquisition. As for the renewal of the R&D tax credit, we likely won’t have clarity on that until the very end of the year. We still estimate that the credit is worth about $4 million, or just less than 1% of EPS.

    Q4 guidance of $1.64 to $1.68 per share is frankly lower than I was expecting, even adjusting for the five cents for Neomend.

    Before, Bard said it was expecting 3% to 4% growth for this year. Using the $6.40 per share they made last year as a base, that comes to $6.59 to $6.65 per share. Now they see full-year earnings at $6.56 to $6.60 per share not including the costs of Neomend.

    This is disappointing but still within the range of decent business operations.

  • Hudson City Earns 12 Cents Per Share
    Posted by on October 24th, 2012 at 9:55 am

    It’s almost irrelevant at this point, but Hudson City ($HCBK) reported third-quarter earnings of 12 cents per share which was two cents below expectations. No matter. M&T is still going through with the merger plans.

    Hudson City Bancorp, Inc., the holding company for Hudson City Savings Bank (the “Bank”), reported today net income of $55.9 million for the quarter ended September 30, 2012 as compared to net income of $84.2 million for the quarter ended September 30, 2011. Diluted earnings per share amounted to $0.11 for the third quarter of 2012 as compared to diluted earnings per share of $0.17 for the third quarter of 2011. Included in the 2012 third quarter earnings was $6.1 million of expenses related to the previously announced merger with M&T Bank Corporation (“M&T”). Operating earnings for the third quarter of 2012, which excludes merger-related expenses, amounted to $59.6 million or $0.12 per diluted share (non-GAAP measures).

    HCBK will also pay out another dividend of eight cents per share. The stock is currently up this morning.

  • Morning News: October 24, 2012
    Posted by on October 24th, 2012 at 5:50 am

    German Ifo Business Confidence Unexpectedly Fell in October

    Enter the Dragon

    Despite Push for Austerity, European Debt Has Soared

    China Industry Gauge Rises as Easing Prospects Abate

    Brazil Soybean Crop Estimated 47% Sold by Soybean & Corn Advisor

    Dow Falls 234 Points As Corporate Earnings Disappoint Investors

    The Fraught Fed-Chairman Choice

    Facebook Posts A Loss But Makes Gains On Mobile Ad Revenue

    Ford to Shut Belgian Plant in Shift to Spain, Union Says

    Peugeot Gets French State Backing as Debt Load Increases

    LG Electronics Posts 3rd-Quarter Profit on Phone Earnings

    Netflix Tumbles After Subscriber Growth Trails Estimates

    CFPB Issues Rules For Governing Debt Collectors

    Cullen Roche: Who Should Replace Ben Bernanke and Timothy Geithner?

    Joshua Brown: Where Did All The Finance Bloggers Go? My Theories.

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  • AFLAC Beats, Guides Higher and Raises Its Dividend for the 30th Year in a Row
    Posted by on October 23rd, 2012 at 5:21 pm

    AFLAC’s ($AFL) earnings are out and they were very good. The company is raising full-year guidance and implying an increase to next year as well. If that isn’t enough, AFLAC raised its dividend for the 30th year in a row.

    Now let’s look at some numbers.

    Revenues rose 14.4% to $6.8 billion. Operating earnings, which is what we want to watch for with insurance companies, rose to $831 million which is $1.77 per share. Wall Street had been expecting $1.66 per share, so this was an impressive beat. Interestingly, the yen/dollar rate had no impact on operating earnings. Three months ago, AFLAC told us to expect earnings to be between $1.64 and $1.69 per share, so Q3 was much better than expectations.

    The quarter was helped by two items:

    In the quarter, the company revised its estimate of the full-year effective tax rate, which increased operating earnings by $17.5 million, or $.04 per diluted share. In addition, the company recognized an income tax benefit of $29.5 million, or $.06 per diluted share, primarily resulting from the favorable outcome of a routine tax exam for the years 2008 and 2009. Together, the impact from these items benefited operating earnings by $47 million, or $.10 per diluted share.

    For the first three quarters of this year, revenues were up 17.3% to $19.0 billion, and operating earnings were $2.4 billion or $5.12 per share.

    AFLAC is also raising its quarterly dividend by two cents per share or 6.1%. The dividend will rise from 33 cents to 35 cents per share. This is the 30th year in a row the company has increased its dividend. Going by today’s close, AFL yields 2.82%.

    AFLAC expects Q4 operating earnings (assuming no impact from currency) to range between $1.46 and $1.51 per share. That means the full-year number will range between $6.58 and $6.63 per share. The previous full-year guidance was for $6.45 to $6.52 per share.

    The company also revised higher its full-year sales forecast for AFLAC Japan to a growth rate of 30% to 35%.

    AFLAC expects operating earnings for 2013 to rise by 4% to 7% (on a currency neutral basis). Working off the higher base for 2012, that implies $6.84 to $7.09 for next year. Wall Street currently expects 2013 EPS of $6.88.

  • CR Bard Earns $1.64 Per Share
    Posted by on October 23rd, 2012 at 4:12 pm

    One of the few stocks that was up today, CR Bard ($BCR) just reported Q3 earnings of $1.64 per share. That beat the Street’s forecast by one penny per share. Three months ago, Bard told us to expect earnings to range between $1.60 and $1.64 per share.

    C. R. Bard, Inc. today reported 2012 third quarter financial results. Third quarter 2012 net sales were $722.9 million, an increase of 1 percent over the prior-year period on a reported basis. Excluding the impact of foreign exchange, third quarter 2012 net sales increased 3 percent over the prior-year period.

    For the third quarter 2012, net sales in the U.S. were $483.4 million, a decrease of 1 percent from the prior-year period. Net sales outside the U.S. were $239.5 million, an increase of 3 percent over the prior-year period on a reported basis. Excluding the impact of foreign exchange, third quarter 2012 net sales outside the U.S. increased 11 percent over the prior-year period.

    For the third quarter 2012, net income was $129.3 million and diluted earnings per share available to common shareholders were $1.50, a decrease of 1 percent and an increase of 3 percent, respectively, as compared to third quarter 2011 results. Adjusting for items that affect comparability between periods as detailed in the tables below, third quarter 2012 net income was $141.4 million and diluted earnings per share available to common shareholders were $1.64, a decrease of 2 percent and an increase of 1 percent, respectively, as compared to third quarter 2011 results.

    Timothy M. Ring, chairman and chief executive officer, commented, “We delivered adjusted earnings per share at the top end of our guidance range this quarter, despite significant headwinds in the United States. Our international investments are shifting the mix of our portfolio to faster growing markets, which remains a key focus for us as we continue to improve our growth profile by investing in geographic and product markets with superior growth opportunities.”