Wal-Mart (WMT) +1.34 %
WMT continued its recent outperformance as it topped its expectations on increased store traffic and transaction size. November U.S. same-store-sales, excluding gasoline, grew 3.4 percent amid a 3.4 percent increase at its namesake chain and 3.5 percent rise at Sam’s Club.
Even drug-store chains, which generate about two-thirds of revenue from prescription sales, are suffering. Walgreen reported a 0.9 percent drop for November, its first decline since at least 1997, blaming the calendar shift and the introduction of cheaper generic drugs the past year.
Overall, retailers are reporting some of the weakest sales figures in years as they release their data for November. Excluding Wal-Mart, the drop in Thomson Reuter’s same-store-sales index was 7 percent.
Merck (MRK) +5.52%
MRK projected 2009 earnings below analysts’ expectations, but reiterated its 2008 profit target. The company also trimmed its five-year sales view, but its earnings view for the five-year period was unchanged. CFO Peter Kellogg said the company’s projected 2009 results and “strong” balance sheet should allow Merck to keep its dividend at current levels, repurchase stock and “take advantage of strategic opportunities.”
MRK in October announced it would but another 7,200 jobs as the company, like other big pharma, deals with looming patent expirations and pipelines that aren’t seen as being able to offset that pending lost revenue.
AT&T (T) -3.13%
AT&T announced that it will slash 12,000 jobs, or about 4 percent of its workforce, citing economic pressures, a changing business mix and a more streamlined organizational structure. The company said it also plans to reduce its 2009 capital expenditures.
DuPont (DD) +0.34%
Earlier this year, DuPont was able to offset spiking energy costs with price increase. The recent sharp drop in energy prices, however, is not expected to offset the slowing world economy. As a result, DuPont announced this morning it expects a loss in the fourth quarter and issued 2009 earnings guidance that was below estimates.
The company also announced a restructuring plan that includes 2,500 job cuts, or 4.2 percent of its workforce, primarily related to motor vehicle and construction markets in Western Europe and the U.S.
Energy Sector crushed
The hardest-hit stocks today were the oil names, reacting to another sharp decline in the price of oil, and expectations that this trend could continue. Oil prices settled below $44 a barrel, their lowest finish since January 2005.
Some analysts are calling for oil prices to reach $25 a barrel, and other anticipate year-over-year earnings declines of more than 20 percent (due in part to the tough comparisons with recent quarters).
Oil drillers were hit particularly hard since many of the future projects these companies were hired for assumed oil priced between $60 and $70 a barrel, at least. With oil prices below those levels, it is likely that a significant number of projects will be canceled. Noble (NE) declined 11.96 percent today and Transocean (RIG) fell 11.18 percent.
International Business Machines Corp. (IBM) -4.00%
IBM introduced a “Microsoft-free” virtual desktop with a complete suite of applications that run on a backroom server and don’t require Microsoft software.
IBM estimates that a corporate customer licensing the software would save $500 to $800 a year per user, compared with buying a license for Microsoft’s Vista operating system, Office suite and collaboration tools. The hardware required to run IBM’s software package could save $250 in hardware costs and between $60 and $220 a year on electricity and air conditioning, compared to a PC that runs Vista.
Technology companies are focusing on products to lower their customer’s costs, since cost-cutting has become a much bigger priority for many corporate computer managers.
Quick Hits
- Calls for $1 Trillion Stimulus Package Grow as Economy Tumbles
- Bank of America job-cut total coming ‘soon’
- I highly recommend checking out this article published on November 22 in the New York Times.
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Peter Lazaroff, Junior Analyst
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