General Electric (GE) -5.62%
Barclays said in a research note that General Electric’s fourth-quarter profit may be at the low end of its forecast. The note also predicted that tax benefits at GE Capital will contribute a “substantial” portion to per-share results, and thus earnings quality will be weak.
Also hurting sentiment for the company was news that Vivendi SA, NBC Universal’s 20 percent venture partner, said it may write down its stake in the company because of declining media values. GE does not expect to take a writedown on its majority stake of NBC Universal.
S&P cut GE’s outlook on Dec. 18, giving the company a one-in-three chance of losing its top rating over the next two years. S&P said an example that would lead to the re-examination of their opinion would be if GE failed to generate free cash flow after dividends and assets sales in 2009 or 2010. Moody’s may follow suit and cut their outlook on GE’s AAA credit rating if earnings results disappoint. Both ratings companies are unlikely to base any change on the fourth quarter itself, unless, of course, there is a material change in GE’s outlook.
Pfizer (PFE) +1.32%
Bloomberg reports that Pfizer wants to sell 100 experimental medicines to rivals as it shifts its research efforts to medicines to treat cancer, brain disorders and pain. The report also notes that Pfizer will fire 800 researchers, eight percent of its scientists, as part of a research reshuffling.
There is wide speculation that Pfizer is hunting for acquisitions that will help replace revenues from products losing patent protection in the next several years.
J.P. Morgan Chase (JPM) +5.78%
JPM’s announcement that it would move up its earnings release to Thursday from a scheduled report next week has created a minor stir in amongst the media. This normally would not be a big deal, but any unforeseen event – no matter how big or small – in the financial industry is going to cause a bit of commotion.
Some are taking it as a sign that they have bad results and need to raise more capital, while others see it as a sign that JPM has great earnings that they can’t wait any longer to tell the world about. There is also growing speculation that JPM has gotten involved in the bidding for Smith Barney, Citigroup’s brokerage unit, either with the intent to buy the unit or just get involved in the joint venture.
Energy
Oil gained on Saudi Arabia’s plan to make deeper production cuts, lifting energy shares including:
- Chevron (CVX) +1.41%
- ExxonMobil (XOM) +1.80%
- Transocean (RIG) +2.93%
- Noble (NE) +2.61%
- Arch Coal (ACI) +5.00%
- Peabody Energy (BTU) +4.90%
Quick Hits
- Bernanke Says Stimulus May Be Inadequate, Signals Asset Buying, Guarantees
- Bank of America to Use Merrill Lynch Name, Bull Logo
- From Advisors’ Perspectives: Our examination of the 69 naming deals by publicly traded companies shows that the performance of companies that purchase naming rights trails the S&P 500 index by 4.7% over the course of the deal. If you invested in a company the day it announced a naming agreement and sold when the agreement was done (or still held onto it for current name holders), your portfolio would be down 9.1%, as compared to -4.5% for the S&P 500.
Peter Lazaroff, Junior Analyst
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