Tuesday, January 24, 2012

Markets nervous over European debt negotiations

Dow fell 36, decliners over advancers 3-2 but NAZ was up 2.  The Financial Index fell 1+ to 190, still near its 6 month high.

The MLP index pulled back a fraction to just under its record 399 & the REIT index was up a smidgen in the 241s (another 6 month high).  Junk bond funds were mixed as were Treasuries following a recent sell-off.  Oil fell over concerns that the euro-zone debt crisis may spread.  Gold also lost ground, following a nice gain in Jan.

JPMorgan Chase Capital XVI (AMJ)

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Treasury yields"

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CLH12.NYM...Crude Oil Mar 12...98.68 ....Down 0.90  (0.9%)

GCF12.CMX...Gold Jan 12.......1,664.80 ...Down 13.20  (0.8%)

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Verizon Posts Loss on Pension Costs, IPhone Boosts Expenses

Photo:   Bloomberg

Verizon, a Dow stock, paid dearly to put iPhones in the hands of subscribers, holding back profits in the hope that its customers will rack up higher monthly bills & stay loyal.  Q4 saw the launch of the iPhone 4S & it  sold sold 4.3M (7.7M smartphones total).   But higher sales meant lower profits.  VZ buys iPhones from Apple (AAPL) for $600 that are sold in stores for $200.  VZ lost $2B, or 71¢ in  Q4 which compares with income of 93¢ last year.  Excluding the pension effect & another one-time item, EPS was 52¢, a penny shy of the forecast.  Revenue rose 7.7% to $28.4B, in line with analysts' expectations.  Wireless accounted for all of the revenue increase, as the wireline division saw a small decrease.  Usually, the overall revenue increase is driven by higher monthly wireless service revenues, as it gains customers.  But this time, the largest contributor to the rise in revenue was phone sales, which doubled to $2.2B.  The stock fell 64¢.

Verizon Posts Loss on Pension Costs as Rising IPhone Sales Boost Expenses

Verizon Communications Inc. (VZ)

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Johnson & Johnson another Dow stock & Dividend Aristocrat, Q4 profit was hit with a slew of charges for recalls, litigation & an acquisition dragged down income.  But revenue jumped last year, ending an unprecedented 2-year decline & profit to beat forecast. Q4 EPS was 8¢, down from 70¢ last year.  Excluding charges, EPS was $1.13.  Revenue totaled $16.3B, up from $15.6B last year.  Forecasts were for EPS of $1.09 on revenue of $16.3B.  "We delivered solid results for 2011, built on the strong growth of our recently launched pharmaceutical products, and continued the steady momentum of new product approvals across all our businesses," CEO Bill Weldon said.  Revenue fell 3.4% in the US to $7B, but jumped 10.2% in foreign countries to $9.27B.  The US decline was mostly due to an 8% drop in sales of prescription drugs.  JNJ now expects 2012 EPS of $5.05-$5.15 per share, excluding special items, below forecasts of $5.20.  The stock gained 4¢.

J&J Forecasts 2012 Profit Below Estimates

Johnson & Johnson (JNJ)

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McDonald’s Profit Increases as U.S. Same-Store Sales Gain

Photo:   Bloomberg

McDonald's, another Dow stock & Dividend Aristocrat, had a strong Q4.  Revenue surged 10% to $6.8B & EPS rose to $1.33.  Comparable store sales increased 14% during in Q4 & 14% for the full-year, with Europe up 15%, & Asia Pacific, Middle East & Africa comps gaining 27%.  France, the UK, Russia & Germany led European gains Forecasts were for EPS of $1.30 & top line results of $6.8B.  "During 2011, McDonald's continued momentum drove higher profitability and market share gains as we fortified our leadership position around the world," McDonald's CEO Skinner said . "The ongoing strength of McDonald's results is rooted in our Plan to Win with a relentless focus on what matters most to our customers. We are enhancing the customer experience – from our menu and service to our value and convenience – while giving more people more reasons to visit McDonald's more often."  MCD will spend more than $2.9B over the next 11 months opening new locations & renovating its existing footprint (remodeling 2400 stores, while opening 1300 new outlets).  Skinner expects momentum to continue through 2012, with Jan comps likely to be up 5.5%-6.5%. The stock fell 1.49.

McDonald’s Fourth-Quarter Profit Rises 11% as U.S. Same-Store Sales Gain

McDonald's Corporation (MCD)

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Markets are doing little as they watch the Greek debt mess drone on.  The biggies are meeting in Davos, Switzerland, on a paid holiday to have a good time & decide little.  Earnings reports are OK but not spectacular.  But in all fairness, Dow is hanging in there, close to 11.8K ceiling, its highest level since it plummeted in late Jul.  While the Greek talks are in limbo, markets are not expected to do much.

Dow Industrials

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