Tag - Cc

Small-cap stocks started out the week with a whimper, unable to build on initial enthusiasm about a big stimulus plan out of China. In the end, worries about the economy, sagging financial shares and a belly flop in REITS was too much to overcome and the Russell 2000 (NYSE:IWM) lost 12.69, or 2.51%, to 493.10. Small caps remained soft relative to large-caps, consistent with investor paranoia about risk right now. The Russell finished the day down 36% for the year, while the Dow is off 33% and the S&P 500 is down 37%.

The market came in on a high after China announced plans overnight to unleash a $586-billion stimulus package, aimed primarily at infrastructure improvements. The news sparked a 7% rally in Chinese stocks, a 5.8% surge in Japan equities and a 2% jump in European shares heading into the U.S. open.  Investors here in America seemed willing at first to carry the baton, with the Russell climbing nearly 2% right off the bat before hitting a wall.

Part of that wall was likely tied to concern about just how China would really funnel money into these projects and how much they were already going to do anyhow. Fair or not, there is a general sense that getting exact numbers out of China is a very inexact science. Still, extra money to pump life into the world’s fourth largest economy is clearly a good thing, and there are other worries to deal with, which also snuffed out some of the initial buying spark.

Commodities came into today’s session on fire overseas, eager to see the China stimulus plan as a bedrock for demand for physical goods. Copper jumped 8% in Asia, gold was on a roll and crude oil climbed 4% into the U.S. open. Although commodities remained a point of strength today for equities (the Commodity Research Bureau Index rose 1.7%), even those overnight gains were difficult to sustain. Crude oil futures eventually closed up about $1 a barrel for the day.

Financial stocks clearly struggled today, and an early lift from a G20 weekend statement supporting coordinated global plans to attack the financial crisis had a very short shelf life. Citigroup Inc. (NYSE:C) climbed nearly 4% on the open, . . .

Small-cap stocks jumped higher on the opening, lifted by news of a large fiscal stimulus plan out of China, and by a surge in commodity-related shares. Today’s small-cap gainers are GeoMet (Nasdaq:GMET), Logility, Inc. (Nasdaq:LGTY) and ETEL (Nasdaq:ETEL).

Other Market Watch highlights today included:

•    Financial shares got a lift from a G20 statement over the weekend saying that a coordinated action was needed to fight the global financial crisis.  
•    At 9:54 a.m. ET, the Russell 2000 was up 5.81, or 1.15% at 511.60
•    Small-cap stocks jumped higher on the opening, lifted by news of a large fiscal stimulus plan out of China, and by a surge in commodity-related shares.
•    Overnight, China shares were up 7.4%, Japan’s Nikkei climbed 5.8%, Hong Kong was up 3.5%, India rallied 5.7%, Australia was up 1.3% and European shares were up about 2% heading toward the U.S. open.  
•    Crude oil prices were up more than $4 a barrel, while copper prices climbed 8% in Asian trading.

Small Cap Gainers:

• GeoMet up 19% ahead of its Q3 earnings release and conference call scheduled for today. See (Nasdaq:GMET).  
• Logility, Inc. up 18% on light volume. See (Nasdaq:LGTY).
• EGS Acquisition Co. commences tender offer to acquire all issued and outstanding common shares and ADSs of eTelecare Global Solutions. Shares of ETEL pop 16%. See (Nasdaq:ETEL).  
• Smith & Wesson up over 16% on no fresh news, lower-than-average volume. See (Nasdaq:SWHC).  


Small Cap Losers:

• GSK, XenoPort to withdraw and resubmit new drug application requesting Solzira approval for restless legs syndrome. XNPT shares dive 17% in pre-market. See (Nasdaq:XNPT).  
• Fuel Tech Inc. reports Q3 results, lowers FY 2008 outlook. Shares drop 9% in pre-market. See (Nasdaq:FTEK).  
• Circuit City files For Chapter 11; shares lose more than half their value, shares plummet 64% in pre-market. See (NYSE:CC).  

Small caps have plunged late afternoon after the bailout bill failed to pass in the House overshadowing the Federal Deposit Insurance Corp.’s brokered deal for Citigroup (NYSE:C) to purchase Wachovia’s (NYSE:WB) banking operations.

At 2:07 p.m. ET the Russell 2000 (NYSE:IWM) was down 5%, or 36, to 668. 

The House of Representatives failed to pass the $700 bailout bill, shocking markets and sending the S&P to its lowest level since 1997. After the bill failed, a motion was made for reconsideration of the bill; however attempts to revive it failed. Uncertainty looms around what comes next.

"Right now the market is extremely disappointed,” Andy Busch, global foreign exchange strategist of BMO Capital Markets, said. “It’s a huge embarrassment to both the Democratic and Republican leadership in the U.S. House. This bill shouldn’t have been brought to the floor if they couldn’t have passed it in its current form. I firmly believe that this was the gun to everyone’s head that they needed to see what was out there for the people who voted against it. I believe they will bring back this bill in another form and vote on it again. It’s dead for now…but I think it’s pretty clear they want to get something done because of the disastrous affect it’s had.”

In an attempt to battle the burgeoning credit crisis globally, the Federal Reserve along with the central banks of other countries said they will work together to inject cash into the global financial system to provide relief for debilitated banks. The U.S. central bank has also received authority to pay interest on reserves held by the Fed.

“This should encourage banks to leave funds at the bank while they receive 2%,” Busch said in an email. “This will allow the Fed to expand its balance sheet without forcing Fed Funds to zero. This means they can potentially pump up the liquidity by massive amounts to assist with the credit crunch.”

In the latest chapter of the credit crisis, Citigroup will act as Wachovia’s white knight under the direction of the FDIC and acquire its banking operations. Under the terms of the deal, Citigroup will assume $42 billion in losses and provide the FDIC with $12 billion in preferred stock and warrants, while the FDIC will absorb the remaining losses. The deal also contains a provision that protects Wachovia debtholders. To finance the deal, Citigroup said it will offer $10 billion in stock and cut its quarterly dividend by half to $0.16 per share. The sale follows the Charlotte, N.C.-based bank’s . . .

Blockbuster Inc. (NYSE:BBI) shares rose 12% Wednesday after announcing it would abandon its efforts to buy out Circuit City Stores Inc. (NYSE:CC). Shares of Circuit City dropped 13% Wednesday on the news. Blockbuster said in a release late Tuesday it would end its unsolicited bid of $6 to $8 per share, totaling more than $1 billion; the offer was announced in April of this year. Dallas-based Blockbuster said current market conditions were not conducive to the purchase of the Richmond, Va.-based electronics chain.

Blockbuster shares rose to $2.83 apiece, up $0.32 from Tuesday’s close, while Circuit City’s shares sunk to $2.21, down $0.34.

Blockbuster Inc. (NYSE:BBI) CEO Jim Keyes said the movie rental company will not buy Circuit City Stores (NYSE:CC) unless the deal makes financial and strategic sense and “also returns significant value for our shareholders.” Keyes made the comments during a morning conference call with investors and Wall Street analysts.

“We remain confident that our core business is healthy and we remain confident in our ability to transform Blockbuster with or without this transaction,” Keyes said. “We see it as a potential accelerator for our stated strategy but the transaction is not critical to our continued transformation.”

On April 14, Blockbuster disclosed its offer to buy Circuit City for up to $1.3 billion. Circuit City said it plans to evaluate Blockbuster’s unsolicited offer. On May 9, Circuit City said it would open its books to Blockbuster and billionaire investor Carl Icahn, Blockbuster’s largest shareholder.

“We’re all interested in a timely resolution of this process,” Keyes said. “It is our hope that due diligence will validate the strength we see in the possible combination but if it does not, I can assure you we will move on and focus on the continued improvement of our store and our online businesses.”

The Dallas-based company reported early Thursday that it swung to a first-quarter profit of $45.4 million, or $0.20 per share, versus a year-earlier loss of $49 million, or $0.27 per share. Wall Street analysts expected earnings of $0.15 per share. The movie rental company attributed the improved performance to strength in its core . . .

After opening sharply lower, the Russell 2000 (NYSE:IWM), along with other major indices, remains besieged midday Friday after the credit crisis continued to ravage Wall Street.

At 1:45 p.m. ET, the Russell 2000 was down 1.91, or 0.27%, at 717.64, while the Dow sunk 136.54, or 1.06%, to 12,730.24

Credit concerns were reignited after insurance juggernaut AIG (NYSE:AIG) reported a record loss after Thursday’s close, signaling that outside of Wall Street credit conditions have tightened further and the credit tempest isn’t showing signs of letting up.

“[AIG’s earnings] underscore that the credit crunch is ongoing,” said Andy Busch, foreign exchange strategist for BMO Capital Markets, in an interview. “I think we had gone through a period in which the earnings didn’t seem so bad and [now] we are getting earnings that are much larger as far as write downs go. People get nervous … when you have an earnings shock to any company.”

Compounding concerns, oil continued its skyward climb, hitting $126 a barrel midmorning on concerns that Venezuela could cut oil exports. Since then, oil has pulled back slightly to roughly $125 a barrel midday. Over the course of the . . .

Shares of Circuit City Stores, Inc. (NYSE:CC) are rocketing ahead of the opening bell after the consumer electronics retailer said this morning that it is considering a bid from Blockbuster Inc. (NYSE: BBI) to acquire Circuit City for at least $6.00 per share in cash.

Shares soared 56%, or $2.20, to $6.10 ahead of the bell. For detailed price information and recent news stories about Circuit City Stores, click CC.  

The string of bad news continues for Circuit City Stores, Inc. (NYSE: CC). After reporting after Monday’s close that December sales declined, the consumer electronics retailer was downgraded today by Cowen and Co. to “neutral” from “outperform” on account of no time table for a turnaround.

“We believe the turnaround will be challenging in the near-term due to maturing product cycles, a lack of compelling new product cycles on the horizon and a difficult consumer backdrop,” Cowen and Co. analyst Jonathan Cramer wrote in a research note today.

The analyst says value is present; but that there’s no time horizon for when an external catalyst, will “unlock that value.”

Cramer put together a top 10 list of catalysts, which if they occurred, would stimulate positive stock performance. The list includes the necessity for differentiation from competitors, maintaining or reducing store count, reversing a negative comp trend, stabilizing gross margins, implementation of cost controls, consistent store experience, divestiture of Canadian operations and an external cash infusion.

On account of the indefinite delay in the company’s turnaround, Cramer is lowering his estimates to a net loss of $1.38 per share for fiscal 2008 and a net loss of $1.27 per share for fiscal 2009. The mean estimate of 21 analysts surveyed by Thomson Financial is for a net loss of $1.21 for 2008 and a net loss of $0.55 for 2009.

Circuit City reported Monday after the close that total net sales decreased 8.9% to $1.92 billion from $2.1 billion in December 2006 and that consolidated comparable store sales declined 11.4%, driven by a 12.2% decrease in domestic segment comparable store sales.

Shares of Circuit City (CC) edged up $0.18, or 4.28%, to $4.39 at 12:46 p.m. ET. Shares of Circuit City have been trading in the range of $3.61 to $22.02 for the past 52 weeks.

American consumers are in love with cutting-edge electronics and appliances to enhance their lifestyles. Witness the crowds that piled into stores at the wee hours of Nov. 23, “Black Friday,” through closing time on Christmas Eve.

Heightening the demand for big-screen, flat-panel televisions is the coming age of high-definition television and the switch to digital from analog signals in February 2009.

Despite the potential potholes in a field crowded with some better-known competitors, Midwest chain hhgregg, Inc. (NYSE: HGG) decided to make the leap and became a public company last summer.

The competition among big-box retailers is intense, forcing stores to slice their profit margins razor thin. In addition to sector leaders Best Buy Co., Inc. (NYSE: BBY) and Circuit City Stores, Inc. (NYSE: CC), along with home-improvement chains like The Home Depot, Inc. (NYSE: HD) and Lowe’s Companies, Inc. (NYSE: LOW), there are thousands of independent retailers that are struggling to survive.

For hhgregg, it was a long journey to the New York Stock Exchange for a family-operated company that began selling appliances in its hometown of Indianapolis in 1955. Not limiting its product mix to what can be found elsewhere, hhgregg targets customers who want competitive prices on higher-end goods, ranging from electronics and appliances to office equipment and Serta bedding.

Now a chain of 84 stores, hhgregg reported $1.1 billion in sales, earnings per share of $0.73 and same-store sales growth of 5.5% for its 2007 fiscal year. Unlike many other retailers, hhgregg boasts a mostly full-time sales force that works on commission.

As a result, analysts covering hhgregg mostly offer favorable opinions about its potential. In a Thomson Financial tally of six analysts, five have hhgregg at “buy” or “strong buy,” with a median price target of $19.25. On Thursday, hhgregg closed at $13.41.