Infrastructure soars
Prospects of Obama’s infrastructure-based stimulus package spurred massive gains in companies with infrastructure-services. Some of the bigger winners today include: EMCOR Group (EME) +19.31%; Jacobs Engineering Group (JEC) +15.18%; Harsco Corporation (HSC) +11.32%; Johnson Controls (JCI) +12.96%; Caterpillar (CAT) +10.87%; Emerson Electric (EMR) 6.26%; Ingersoll-Rand (IR) +5.44%; General Electric (GE) +5.77%
Also receiving a boost was medical record companies like Cerner (CERN), up 12.18 percent, after Obama stressed the importance of adopting digital medical records to save the country billions in healthcare costs.
Internet companies rose as well in response to Obama’s plans to upgrade Internet infrastructure, calling the U.S. rank of 15th in broadband adoption “unacceptable.”
3M Company (MMM) -4.13%
MMM dropped as the company projected 2008 earnings forecast of $5.10 to $5.15, down from their previous estimate of $5.40 to $5.48 a share. The company also projected 2009 EPS that was significantly lower than the consensus estimate.
Weak economic conditions underscore the company’s downside guidance, but the U.S. dollar’s resurgence is particularly challenging for 3M’s products since about two-thirds of their revenues come from abroad.
It should be noted that MMM’s recent downturn is underpinned by a short-term slowdown in the business cycle, not long-term weakness. Instead MMM remains a solid blue chip company that stands out as a strong long-term play for value-oriented investors.
Illinois Tool Works (ITW) +1.39%
ITW issued downside earnings and revenue guidance for the fourth quarter. The company said the latest forecast reflects significant further weakening in North American and international lend markets, the negative impact from currency translation and higher than originally anticipated restructuring costs in the quarter.
Dow Chemical (DOW) +7.21%
Dow announced today that it will cut about 5,000 full-time jobs (11 percent of its work force), close 20 facilities and sell some non-strategic businesses as the company looks to speed its restructuring and cut costs. The nation’s largest chemical producer by revenue also said it will temporarily shut about 180 plants and cut about 6,000 contractor jobs in light of the reduced operations.
Once fully implemented, Dow expects the layoffs and site closures to result in roughly $700 million in annual operating savings by 2010. Those savings are anticipated to occur on top of the previously announced synergies derived from the aniticipated Rohm and Haas (ROH) acquisition.
This blog post charts a selection of job cuts by major companies in the fourth quarter.
Dell (DELL) +12.04%
Bloomberg reported that Dell (the world’s second largest computer maker) and Lenovo Group (China’s biggest computer maker) may be interested in acquiring Positivo Informatica SA, Brazil’s biggest computer maker.
The Brazilian currency’s drop, the worst in the past three months among the 16 most-actively traded currencies, has made companies in the country acquisition targets.
This would be no simple transaction because Positivo’s poison pill by-laws would value the company at seven times its current market value.
Positivo shares have outperformed the Bovespa since October 21, when the company reported net revenue rising 36 percent as laptop sales almost doubled.
AT&T (T) +6.50%
Wal-Mart Stores (WMT) is reportedly planning to offer Apple’s iPhone (which runs exclusively on AT&T’s network) by the end of December. A partnership with Wal-Mart would bring the iPhone to the world’s biggest retailer, building on a deal Apple made in September with Best Buy, the largest U.S. electronics chain.
The pricing and release date of the iPhones in Wal-Mart stores is all speculation at this point, but it is clear that Apple is aggressively attacking the smartphone and mobile computer market. AT&T should reap the benefits of customers buying iPhones, and thus switching to their network. Increasing the number of current customers using smartphones would provide AT&T with a boost since smartphone customers tend to have higher monthly bills.
Arch Coal (ACI) +19.78%
Reuters reports that ACI expects production to be flat or slightly lower while overall output for the U.S. coal industry will slow. CEO Steven Leer said, “We see there’s going to be tremendous opportunity to acquire assets…within every crisis there is enormous opportunity.”
ACI, as well as other coal stocks, surged in response to Obama’s infrastructure-based stimulus package.
Quick Hits
- Majority of Modified Loans Fail Again, Regulator Says
- Cheapest Stocks Since 1995 Show Cash Exceeds Market
- Central Bank Cash May Hamper Money Markets, BIS Says
- Obama Bonds to Give Buyers Taste of Japan Lost Decade
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Peter Lazaroff, Junior Analyst
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