Goodyear shares soar as profit beats Street

Goodyear shares soar as profit beats Street

Stock Market Predictions

DETROIT (Global Markets) - Goodyear Tire & Rubber Co (GT.N) reported a profit more than four times as high as Wall Street had expected on strength in its home market of North America, and its shares jumped to a 19-month high.

Excluding one-time items, the Akron, Ohio-based tire maker earned 51 cents a share in the first quarter, easily topping analysts' average estimate of 12 cents, according to Thomson Global Markets I/B/E/S.

Goodyear's first-quarter sales of $5.4 billion were up 27 percent from a year earlier. Sales set quarterly records for each of the company's four global regions, including a 30-percent increase in its North American business to $2.3 billion.

Sales in its Europe region were up 28 percent to $2 billion.

Goodyear's shares rose as high as $18.68, up 15.3 percent, their highest level since September 2009. They pared gains and closed at $18.15. Goodyear's trading volume was more than triple its normal daily average on Thursday.

Earnings of two other major automotive suppliers, Lear Corp (LEA.N) and American Axle and Manufacturing Holding Inc (AXL.N), also blew past Wall Street's profit expectations on Friday, a sign that the auto industry recovery is gaining momentum globally, and particularly in North America.

"Nowhere is (Goodyear's) momentum clearer than in our North American business," said Goodyear Chief Executive Officer Richard Kramer on a conference call with analysts.

"North American profitability is essential to reaching our 2013 target" of $1.6 billion in global operating income in 2013, he said.

Operating income in 2010 was $917 million.

RAW MATERIALS COST RISING

Goodyear was able to offset higher raw materials costs, including natural rubber and carbon black, in the first quarter by selling its products for higher prices, such as a 15-percent increase in price per tire, Kramer said.

But the company will face stiffer challenges in meeting raw materials costs that will show "unprecedented" price spikes in the second half of the year, Chief Financial Officer Darren Wells said on the call.

Goodyear expects a 25- to 30-percent rise in raw material costs for the rest of 2011.

Wells said raw materials costs will produce more than $500 million in "headwinds" in the third quarter and again in the fourth quarter.

Kramer said that the company will over time make up for the lofty price spikes for natural rubber and carbon black and synthetic rubber later this year.

Goodyear said it was not greatly hurt by the earthquake in Japan. It has a plant that makes heavy machinery tires in southern Japan that was not damaged.

The main impact to Goodyear of the Japan crisis was a rise in commodity prices that hit every company with heavy reliance on those costs, Wells said.

Kramer also cautioned about pressure on company and overall auto industry financial performance later in the year.

"While we expect a strong year, we do not expect to see the same level of industry growth that we saw in the first quarter," Kramer told analysts.

Sales in the industry, including Goodyear's, were boosted in the first quarter, he said, as dealers made large purchases of tires ahead of announced price increases and as they perceived tightness of industry supply.

Wells said that Goodyear expects it can offset second-quarter raw materials price gains within that quarter.

The company's net income of $103 million, or 42 cents per share, compares with a year-earlier net loss of $47 million, or 19 cents per share.

Goodyear shares closed up 12 percent at $18.15 in trading on the New York Stock Exchange.

(Reporting by Bernie Woodall; Editing by Gerald E. McCormick, Lisa Von Ahn, Tim Dobbyn and Bernard Orr)

Read More

Barclays appeals $4 billion owed to Lehman trustee

Barclays appeals $4 billion owed to Lehman trustee

Stock Market Predictions

NEW YORK (Global Markets) - Barclays Plc (BARC.L) is appealing a judge's ruling that handed the trustee for Lehman Brothers Holdings Inc's (LEHMQ.PK) brokerage arm about $4 billion related to the rushed purchase of the failed investment bank's North American business.

In court papers filed Friday, Barclays said it will appeal to Manhattan federal court the ruling reached by Judge James Peck in U.S. Bankruptcy Court in Manhattan in February.

The ruling entitled the Lehman estate to about $4 billion in so-called margin assets, including the return of roughly $2 billion that trustee James Giddens had already delivered to Barclays.

A Barclays spokesman said in June the company would likely appeal.

Barclays attorney Jonathan Schiller said Peck "erred" in his decision.

"Barclays was expressly promised certain assets, and relied upon receiving them when making the decision to move forward with this historic acquisition," Schiller said in a statement Friday.

Barclays has argued in the past it should be entitled to the margin assets -- collateral Lehman had posted to cover outstanding derivatives trades -- because it took on significant risk when acquiring Lehman's exchange-traded derivatives at the height of the financial crisis. Barclays has said it never would have taken on that risk if not for the margin held to secure those derivatives.

Barclays is also appealing Peck's ruling that it is not unconditionally entitled to about $769 million in Lehman's customer accounts.

Giddens said the matter should be closed.

"More than four months after the Court's opinion on these issues, we believe that clarity and finality have been reached," Giddens said in a statement on Friday.

Barclays won aspects of the case, including Peck's overall ruling validating its hurried purchase of Lehman's brokerage in the days following its filing of the largest bankruptcy in U.S. history.

Barclays also prevailed in a scuffle with the trustee over which side was entitled to $1.1 billion in "clearance box" assets, money held to facilitate the clearance of securities trading. A spokesman for the trustee declined to comment on whether Giddens will appeal that element of the case.

Lehman filed for bankruptcy protection on September 15, 2008, listing $639 billion in assets, six times more than any other bankrupt U.S. company.

The case is In re Lehman Brothers Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.

(Reporting by Nick Brown; editing by Gary Hill and Andre Grenon)

Read More

Shares of miners surge as gold price hits new high

Shares of miners surge as gold price hits new high

Stock Market Predictions

TORONTO (Global Markets) - Shares of North American gold miners were among the biggest gainers on Friday morning, as the price of gold rose to a record of $1,877 an ounce on growing concerns over slowing economic growth and sovereign debt.

The ARCA Gold Bugs Index .HUI, whose components include some of the world's largest producers, rose more than 3 percent on Friday, lifted by gains in the shares of majors like Barrick (ABX.TO), Newmont Mining (NEM.N) and Goldcorp (G.TO).

The price of gold, often viewed by investors as a safe haven during turbulent times, has risen more than 30 percent this year, as investors worry about a double-dip recession and U.S. and European sovereign debt levels.

A surge in the number of gold and silver ETFs -exchange-traded funds that invest in the precious metals - has also helped drive bullion prices higher.

Shares of Barrick were up C$1.09, or 2.2 percent at C$50.39 on the Toronto Stock Exchange, while Newmont and Goldcorp were up 2.8 percent and 2.5 percent, respectively.

Shares of smaller rival Agnico-Eagle (AEM.TO) were among the biggest net gainers on the TSX on Friday morning, up 3.1 percent at C$64.97.

The price of spot silver also rose more than 3 percent to $41.65 an ounce on Friday, sending shares of top silver producers higher.

Pan American Silver (PAA.TO) rose 3.97 percent to C$30.13, while Silver Wheaton (SLW.TO) was up 4 percent at C$38.00 on the Toronto Stock Exchange. Coeur d'Alene (CDE.N) climbed 7 percent to $26.54 on the New York Stock Exchange.

(Reporting by Euan Rocha and Julie Gordon)

Read More

DragonWave cuts revenue view on shipment delays

DragonWave cuts revenue view on shipment delays

Stock Market Predictions

(Global Markets) - Telecom equipment maker DragonWave Inc (DWI.TO) (DRWI.O) cut its first-quarter revenue forecast by 27 percent to $11 million, mainly due to a shipment delay by a North American customer, sending its shares down 8 percent in morning trade.

The company, hit hard as its key customer Clearwire has been struggling to raise cash to complete a high-speed wireless network in the United States, had last month forecast revenue of $15 million.

DragonWave, however, did not name the North American customer in its statement on Friday.

The company, which makes radio transmitters used in cellular networks, said the customer deferred a significant shipment of equipment.

DragonWave said regulatory delays also affected revenue from a customer in the Middle East.

Shares of Ottawa-based DragonWave were down 7 percent at C$5.63 on the Toronto Stock Exchange in morning trade. Its Nasdaq-listed shares were down 8 percent at $5.76.

(Reporting by Amruta Sabnis in Bangalore; Editing by Saumyadeb Chakrabarty and Gopakumar Warrier)

Read More

Sonoco cuts Q4 profit outlook on weak demand

Sonoco cuts Q4 profit outlook on weak demand

Stock Market Predictions

(Global Markets) - Packaging material maker Sonoco Products Co (SON.N) cut its earnings forecast for the fourth quarter, hurt by weakness in its North American and European tube and paper operations.

The company said it is implementing additional restructuring actions to cut costs and keep them in line with lower demand.

In the quarter, the company, which makes consumer and industrial packaging products, expects to record an after-tax charge of 10 cents a share from its previously announced and additional restructuring actions in the quarter.

Sonoco now expects fourth-quarter adjusted earnings of 45 cents to 47 cents a share, down from its prior forecast of 59 cents to 63 cents a share.

Earlier this week, peer MeadWestvaco Corp (MWV.N) warned of lower volumes and production in the fourth quarter.

Sonoco said demand dropped off in the last six weeks of the October-December period. The company took down its North American paperboard mill system for about 178 machine operating days during the quarter.

Tube and core volumes fell 7 percent in North America and in Europe, on a same-day basis, the company said in a statement.

Sonoco also narrowed its 2011 earnings forecast to $2.28 to $2.30 per share, from $2.41 to $2.46 per share.

The company plans to change the number of reporting segments to four from three, starting from the fourth quarter, following its $550 million acquisition of protective-packaging maker Tegrant Corp last year.

The company expects to announce the fourth-quarter results on February 9.

Shares of the Hartsville, South Carolina-based company were down 4 percent at $32.34 in early trading on the New York Stock Exchange. Earlier in the session, they touched a one-month low of $32.10.

(Reporting by Ritika Rai in Bangalore; Editing by Maju Samuel)

Read More

Schlumberger quarterly results jump, shares rise

Schlumberger quarterly results jump, shares rise

Stock Market Predictions

NEW YORK/SAN FRANCISCO (Global Markets) - Schlumberger Ltd (SLB.N) beat estimates with a 64 percent jump in profit on strong U.S. demand and deepwater drilling, while international activity showed clear signs of improvement after a long wait.

Schlumberger shares rose 3 percent in early trading, as the world's largest oilfield services company delivered its first set of market-pleasing results this year.

The stronger North American trend drove an estimate-beating 54 percent jump in earnings for rival Halliburton Co (HAL.N) this week, though Halliburton shares were little changed on Friday.

While half of Halliburton's revenue comes from Canada and the United States, the region accounts for less than a third for Schlumberger, which sees big improvements elsewhere led by a dramatic increase in Saudi Arabian activity.

"None of the other countries are executing with the speed of Saudi. So yes, it's going to come, but it's not there yet," Chief Executive Andrew Gould said on a call with analysts -- his last before he retires as CEO and hands off the top job to 44-year-old Paal Kibsgaard.

Iraq is also a key factor in the improving international outlook, along with the North Sea and East Asia, he added.

Asked about Iraq, where many oil firms have found it hard to establish a foothold, Kibsgaard said it is likely to be Schlumberger's seventh biggest out of 14 markets in the Middle East and Asia, before improving to No. 3 next year.

Oil and gas companies' spending picked up far more quickly in North America than elsewhere this year as oil prices surged and producers rushed to tap fields rich in liquids.

Schlumberger said onshore U.S. strength and demand from the world's deepwater regions drove second-quarter earnings, while Gulf of Mexico activity was improving after the drilling halt that followed last year's BP Plc (BP.L) Macondo oil spill.

PROFIT PLEASES WALL ST.

Second-quarter profit rose to $1.34 billion, or 98 cents a share, from $818 million, or 68 cents a share, a year earlier.

Leaving out one-time items, Schlumberger earned 87 cents a share from continuing operations, topping the analysts' average forecast of 85 cents as compiled by Thomson Global Markets I/B/E/S.

Revenue rose 62 percent to $9.6 billion, topping the $9.2 billion that analysts had expected.

The strong North American performance offset disappointing earnings in Europe, the former Soviet states and the Middle East, UBS analyst Angie Sedita said, though she also saw high energy prices eventually driving those businesses as well.

"Schlumberger offers the best play on the international ... and deepwater markets, which should slowly start to improve later this year, with greater gains in 2012," Sedita said in a note to investors.

Gould expressed optimism about deepwater in particular, a view supported by the dozens of new rigs in the pipeline.

"There have never been so many deepwater rigs on order. So to the extent that we have exploration success in deepwater ... I think that the exploration cycle can be a lot more sustained than it was last time, when it was abruptly terminated by the financial crisis and by the Macondo incident," he said.

Gould also said the steep ramp-up in demand for services in the U.S. market and elsewhere is straining the sector, making it difficult to get equipment and staff to customers.

Shares in Schlumberger climbed 3.3 percent to $93.93 in morning trading. At Thursday's close, the stock had gained 9 percent so far this year, lagging a near-12 percent rise in the Philadelphia Stock Exchange Oil Service Index .OSX.

The improving global outlook gave a 2.6 percent boost to shares of Weatherford International Ltd (WFT.N), which is making a big push outside the United States, while U.S.-geared Baker Hughes Inc (BHI.N) fell 0.8 percent.

(Additional reporting by Krishna N Das in Bangalore; Editing by Derek Caney and Gerald E. McCormick)

Read More