Amazon shares dip on growth concerns

Amazon shares dip on growth concerns

Stock Market Predictions

(Global Markets) - Amazon.com Inc shares fell to their lowest level since late March on Thursday on concern about sales growth during the online retailer's crucial fourth quarter.

Goldman Sachs analysts said in a note from Wednesday that Amazon has typically bested overall online sales growth by 23 points.

comScore reported earlier this week that online holiday spending in the U.S. rose 15 percent to a record $35 billion from November 1 to December 26, versus the comparable period last year.

That would suggest a 38 percent increase in Amazon sales this season, below the 40 percent increase Wall Street expects, wrote Goldman, which expects 44 percent, including Kindle sales.

"While the comScore numbers are just one data point which does not capture international sales or breakout individual companies' sales, taken alone they seem to suggest the potential for downside risk to consensus forecasts for 4Q 2011," the analysts said.

Shares of Amazon fell as low as $166.97 in early trading on Thursday, the lowest level since late March. The stock recovered by midday to $173, down 0.5 percent.

Amazon shares reached almost $250 in October, but have dropped by about 30 percent since then. Shares of rival e-commerce company eBay have lost roughly 10 percent in the same period.

Amazon said on Thursday it has sold "well over" 1 million Kindle e-reader and tablet devices per week this month.

Goldman's 44 percent sales growth forecast for the fourth quarter, versus a year earlier, includes three to four percentage points of growth from Kindle device sales that the analysts said are not currently incorporated in Wall Street consensus estimates.

(Reporting By Phil Wahba and Alistair Barr; editing by Mark Porter and Tim Dobbyn)

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Analysis: Investors likely to wait out 2012 drug launches

Analysis: Investors likely to wait out 2012 drug launches

Stock Market Predictions

SAN FRANCISCO (Global Markets) - Burned by disappointing early sales for new, high-profile biotech medicines in 2011, healthcare investors are cautious ahead of this year's expected crop of drug launches.

Not so long ago, biotech makers could practically bank on seeing their company values jump once they obtained regulatory approval to market a drug. Now, investors are more likely to wait on the sidelines, or short a stock, ahead of proof the new treatments will be a commercial success, a process that could take months.

"People are all freaked out about product launches," said ISI Group analyst Mark Schoenebaum.

Well aware of that angst, drug developers are spending far more time laying the groundwork to get paid by insurance plans and to convince doctors and patient groups of their medicines' value as they prepare for regulatory approval.

"There was a time when products got full value prior to launch. I think we have now swung back in the other direction," said John Orwin, chief executive officer at Affymax Inc (AFFX.O), which expects U.S. regulators to decide by late March whether to approve its experimental anemia drug.

Shares of Dendreon Corp (DNDN.O), maker of the novel therapeutic prostate cancer vaccine Provenge, ended last year down 83 percent from their peak in May, while Human Genome Sciences (HGSI.O) finished with a drop of 75 percent after launching Benlysta, the first new drug for lupus in more than 50 years.

Initial sales of Provenge and Benlysta failed to live up to lofty expectations, and investors are cautious ahead of early sales results for drugs launched in 2011 by companies including Incyte Corp (INCY.O), Seattle Genetics (SGEN.O) and Savient Pharmaceuticals (SVNT.O).

Even shares of Vertex Pharmaceuticals (VRTX.O), which launched hepatitis C drug Incivek last year with record-breaking sales of $420 million for its first full quarter on the market, ended the year 44 percent below their 52-week high.

The overall sector is up so far this year, and still outperforms the wider stock market. The Nasdaq Biotech Index .NBI rose 12 percent in 2011, compared with a flat return for the Standard & Poor's 500 Index .SPX.

The growing challenges for new drugs -- reimbursement, regulatory issues and safety concerns -- were major topics here this week at the annual JP Morgan healthcare conference. "Sometimes there is a gap between customers' expectations and companies' expectations," said Yoshihiko Hatanaka, CEO of Astellas Pharma (4503.T), Japan's No. 2 drugmaker. "It is critical for us to reduce that gap."

Astellas has partnered with Medivation Inc (MDVN.O) to develop prostate cancer drug MDV3100, which could win regulatory approval as soon as late 2012.

TREND AWAY FROM BIG LAUNCHES

As the market has begun to recognize that innovative drugs have unproven real-world outcomes, companies are pursuing more niche markets.

"There is a trend away from big launches," said Ulrik Schulze, global leader for biopharma R&D at Boston Consulting Group.

In the 1990s, it typically took less than two years for a new pharmaceutical to reach peak sales, he said. That time frame is widening as companies grapple with pressure from payers and a greater focus on whether a new treatment truly improves upon existing ones.

Some drugmakers are even starting to compete on the basis of price at a drug's launch, rather than expect a premium for its novelty.

Regeneron Pharmaceuticals Inc (REGN.O), which began selling its macular degeneration drug Eylea in November, said this week that sales in the first six weeks totaled $24 million to $25 million -- well above the $5 million expected by Wall Street.

Eylea competes against Roche AG's (ROG.VX) well-established Lucentis, but is priced slightly lower on a per-dose basis and can be given less frequently.

CEO Leonard Schleifer said Regeneron was careful ahead of its launch to lay the groundwork with retinal physicians and to set up a system for reimbursement.

"If you deliver a product that physicians, payers, and patients think is an important product, your launch will be fine," he said.

Affymax also plans to undercut the price of its biggest rival for the treatment of anemia in kidney dialysis patients -- Amgen Inc's (AMGN.O) blockbuster Epogen.

"We recognize that peginesatide has to be part of a solution to lower costs," Orwin said, referring to the Affymax drug.

Amgen CEO-elect Robert Bradway said the company expects competition from Affymax sometime this year, but still anticipates less erosion in Epogen sales relative to 2011. Sales of Epogen, which totaled $2.5 billion in 2010, have waned over the last several years amid safety concerns.

Amgen expects the Food and Drug Administration to decide in late April whether to approve its bone drug Xgeva, or denosumab, for preventing the spread of prostate cancer to the bone.

"Xgeva is the biggest opportunity for us in 2012," Bradway said.

But uptake of denosumab for osteoporosis has been gradual and some Wall Street analysts are wary of Xgeva's potential relevance in the prevention of bone cancer.

The first high-profile drug that could reach the market this year is diabetes treatment Bydureon, which is being developed by Amylin Pharmaceuticals (AMLN.O) after it recently ended a long-time diabetes partnership with Eli Lilly & Co (LLY.N).

The latest deadline for an FDA decision on Bydureon is January 28.

Bydureon faces strong competition from similar drugs and Amylin will for the first time be responsible for launching a drug on its own.

"We think there is substantial uncertainty and think that there is somewhat more risk of sales falling short than of exceeding our estimates," Cowen and Co said in a research note to clients.

(Reporting by Deena Beasley, editing by Matthew Lewis)

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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)

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Newell profit tops estimates; raises dividend

Newell profit tops estimates; raises dividend

Stock Market Predictions

NEW YORK (Global Markets) - Newell Rubbermaid Inc's (NWL.N) quarterly profit beat Wall Street expectations on strength in emerging markets and price increases.

The maker of Sharpie pens and Rubbermaid storage containers said it was on track to meet its full-year outlook and will raise its quarterly dividend by 60 percent to 8 cents a share. Its shares were up 1.3 percent at $19.99 in premarket trading on Friday.

Newell has raised prices of some products to offset rising oil and resin costs. Makers of everything from soap to diapers have said they will pass on some costs to shoppers. Procter & Gamble (PG.N) sees its costs soaring about three times as much at it had anticipated earlier.

Newell's first-quarter net profit rose to $75.7 million, or 25 cents a share, from $58.4 million, or 19 cents a share, a year earlier.

Excluding items, it earned 30 cents a share, beating the analysts' average estimate of 28 cents, according to Thomson Global Markets I/B/E/S.

Sales fell 0.3 percent to $1.30 billion, while analysts expected $1.33 billion. Sales in developing markets, where the company has substantially increased its investment, rose double digits in the first quarter. U.S. sales fell 4 percent as bargain-hungry shoppers traded down and the company cut back on discounts.

"While sales were a bit light, we think Newell will be able to adjust its offering relatively quickly," BMO Capital markets analyst Connie Maneaty said, highlighting Newell's plans to launch more "value-priced" options and step up promotions.

Newell repeated its 2011 profit forecast of $1.67 to $1.70 a share, excluding items. It also backed its core sales growth outlook of 4 to 5 percent and gross margin forecast calling for an improvement of 0.5 to 0.75 percentage point.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Derek Caney, Dave Zimmerman)

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Mattel 2nd-quarter profit tops Wall Street estimates

Mattel 2nd-quarter profit tops Wall Street estimates

Stock Market Predictions

NEW YORK (Global Markets) - Mattel Inc (MAT.O), the world's largest toy company, reported a higher-than-expected quarterly profit on strong sales of its Barbie dolls and toys based on the "Cars 2" movie.

The sales increase shows the growing global reach of Mattel. International sales increased 12 percent, excluding currency fluctuations.

"They're looking to have a great year," said Wedbush Securities analyst Edward Woo. "They've gained market share and they're likely to continue to maintain that momentum into the holiday season."

The shares had been up more than five percent, but they gave back some of their gains because they are getting close to their fair value, said MKM Partners analyst Eric Handler, whose price target is $28.

Now the question is whether the shares will keep rising in the run-up to the holidays.

Woo thinks that could happen and his price target is under review. The company is in a position to grow earnings by at least 10 percent on a revenue increase in the mid to high single digits, he said.

"Barbie is getting big internationally," said Handler. "The whole company has become more internationally focused."

The maker of Hot Wheels cars and Fisher-Price toys said second-quarter net profit rose to $80.5 million, or 23 cents per share, from with $51.6 million, 14 cents per share, last year.

U.S. toy companies, which make most of their toys in China, are grappling with rising costs of plastics, packaging paper, freight and labor. Mattel's gross margins fell 20 basis points.

"Costs have been rising, but it's manageable for them," Woo said.

Sales at the company, which counts Wal-Mart Stores Inc (WMT.N), Toys R Us (TOYS.N) TOY.UL and Target Corp (TGT.N) as its biggest customers, rose 14 percent to $1.16 billion.

Analysts on average expected earnings of 16 cents a share, on sales $1.11 billion, according to Thomson Global Markets I/B/E/S.

The company's shares were up nearly 2 percent at $27.29 in midday trading. They have risen 6.3 percent so far in 2011. They trade at about 13.1 times forward earnings, well above the sector average of 7.9. Rival Hasbro Inc's (HAS.O) shares trade at a multiple of about 13.9.

(Additional reporting by Dhanya Skariachan and Nivedita Bhattacharjee in Bangalore; editing by Maju Samuel, Steve Orlofsky and Andre Grenon)

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Merck to slash jobs in cost-savings drive

Merck to slash jobs in cost-savings drive

Stock Market Predictions

NEW YORK (Global Markets) - Merck & Co Inc (MRK.N) plans to cut another 12,000 to 13,000 jobs by late 2015 to wring out additional annual cost savings of up to $1.5 billion that can be plowed back into research and deal making.

The No. 2 U.S. drugmaker eliminated 12,465 positions last year, offset by almost 6,500 new hires, reducing its workforce to 91,000 employees as of June 30.

The company, which also reported quarterly earnings in line with forecasts, said on Friday it would cut its workforce by an additional 12 percent to 13 percent from the 100,000 employees it had at the end of 2009 after buying Schering-Plough Corp.

A company spokesman declined to peg the planned size of its workforce, saying the job cuts would be substantially offset by new hires in strategic growth areas, such as emerging markets.

"The new phase of restructuring will create an additional $1.3 billion to $1.5 billion in annual cost savings," company spokesman David Caouette said.

Job cuts will come largely from administrative positions, consolidation of offices and sale or closure of manufacturing sites.

Merck is streamlining operations following its $41 billion purchase of Schering-Plough.

"I think we're going to see other firms continue to expand their cost-reduction programs," Morningstar analyst Damien Conover said, pointing to increasingly difficult reimbursement environments in Europe and the United States.

"We have to remember that 10 years ago these firms were extremely bloated and in an entirely different operating mold and it's really shifted to one where you don't need the gigantic sales forces that you once needed," Conover said.

Many other big drugmakers have slashed their workforces in recent years to ensure profit growth as they face patent expirations that will subject them to generic competition, the costs of healthcare reform and efforts by insurers to keep a lid on drug prices.

Eli Lilly LLY.O, facing one of the industry's biggest "patent cliffs," said in late 2009 it would cut 5,500 employees, or 13 percent of its workforce, by the end of 2011 to create $1 billion in savings. But like Merck, its cuts have been largely offset by increased hiring in emerging markets.

Before Pfizer bought Wyeth in 2009, the world's largest drugmaker said it would cut 15 percent of the combined workforce, or almost 20,000 jobs. The company, whose Lipitor cholesterol fighter goes generic late this year, swung its ax again in February, saying it would lay off more than 2,000 researchers to deliver on a 2012 profit forecast.

Merck, unlike many of its rivals, has vowed to maintain research and development spending at stable levels, rather than slash research costs to meet earnings targets. But the company on Friday shaved the high end of its 2011 research budget by $100 million, to between $8 billion and $8.3 billion.

The drugmaker said it halted development of a treatment for migraine headaches, called telcagepant, after unfavorable data from a late-stage trial. The medicine had been linked to liver toxicity in earlier studies.

With the new job cuts, Merck's restructuring program will yield annual savings of $4 billion to $4.6 billion by the end of 2015, compared with an earlier estimate of $2.7 billion to $3.1 billion by late 2012, Merck said.

The company reported a second-quarter profit in line with Wall Street expectations, helped by big tax gains. But sales handily outpaced forecasts.

It earned $2.02 billion, or 65 cents per share, compared with $752 million, or 24 cents per share, in the year-earlier second quarter, when it took a big restructuring charge for the Schering Plough acquisition.

Excluding special items, Merck earned 95 cents per share, matching the average forecast among analysts polled by Thomson Global Markets I/B/E/S.

Global sales rose 7 percent to $12.15 billion, but would have risen only 3 percent if not for the weaker dollar. Sales exceeded Wall Street's expectations by $370 million, helped by strong sales of newer obesity drugs Januvia and Janumet, arthritis treatment Remicade and vaccines.

The company, which slightly raised the low end of its 2011 profit forecast, now expects earnings of $3.68 billion to $3.76 billion, excluding special items.

Merck shares fell 2.3 percent to $34.13 on the New York Stock Exchange, amid a 0.6 percent decline for the drug sector.

(Additional reporting by Lewis Krauskopf; editing by Derek Caney, Steve Orlofsky and Andre Grenon)

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Penney gross margin slips on price-cutting

Penney gross margin slips on price-cutting

Stock Market Predictions

NEW YORK (Global Markets) - J.C. Penney Co Inc (JCP.N) forecast weaker-than-expected third-quarter earnings as more price cutting threatened to further dent its gross margin, sending its shares down 1 percent in morning trade.

The department store chain reported second-quarter profit in line with the average Wall Street estimate as merchandise available only at Penney stores boosted sales at its stores.

But early in the quarter, Penney found itself having to offer more discounts after sales were soft, lowering gross margin by 1.1 percentage points to 38.3 percent. The company said gross margin would also take a slight hit in the current quarter.

Penney CEO Myron Ullman, who is stepping down in November, said consumers are likely to remain stressed.

"The tumultuous last 10 days or so hasn't given our core customer, the middle income family, any reason to be more confident," Ullman said on a call with the investors.

U.S. consumer sentiment worsened sharply in early August, falling to the lowest index level since 1980, according to a survey released on Friday by Thomson Global Markets/University of Michigan.

Unemployment has been above 9 percent for about two years now while wages have stagnated, curbing middle class and less affluent consumers' ability to shop.

Penney reported that second-quarter net income was little changed from a year earlier at $14 million, or 7 cents per share. That was in line with Wall Street analysts' average forecast, according to Thomson Global Markets I/B/E/S.

Net sales were down 0.8 percent to $3.91 billion, largely because of its exit from its catalog business. Same-store sales were up 1.5 percent, a slower clip than Macy's, Dillard's and Kohl's Corp.

Penney forecast earnings per share in the current quarter will range between 15 cents and 20 cents, below analysts' average forecast of 23 cents.

Penney shares were down 1 percent at $26.56, while Kohl's (KSS.N) were up 1 percent, and Macy's (M.N) slipped 0.4 percent. The S&P 500 index .SPX was up 0.5 percent.

MARGINS UNDER PRESSURE

Penney, whose shoppers are more exposed to an economic slowdown than rival Macy's Inc or higher-end chain Nordstrom Inc (JWN.N), forecast sales at stores open at least a year, or same-store sales, to rise between 2 percent and 3 percent in the third quarter, helped by exclusive merchandise.

Penney in recent years has worked to remake itself into a fashionable destination with exclusive lines such as Liz Claiborne (LIZ.N) clothing and stores-within-its-stores for cosmetics seller Sephora and Spain's fast-fashion chain Mango.

Penney suffered dramatic sales declines during the recession. Sales are recovering, in part because of those higher end lines, but are still below 2008 levels.

Exclusive lines give shoppers a reason to choose one chain over another and lowers the risk of having to slash prices to stay competitive and take a hit to their gross margin.

But Wall Street Strategies analyst Brian Sozzi told Global Markets that Penney has further to go than Macy's or even Kohl's in offering merchandise to entice shoppers to pay up.

"Penney has more exposure to selling basic items," like white T-shirts, Sozzi said.

Macy's, Kohl's and Dillard's all reported steady or higher gross margin for the second quarter.

Earlier this week, department store peers Macy's, Nordstrom and Kohl's all raised their profit outlooks and forecast strong sales for the rest of the year. Late Thursday, Dillard's Inc (DDS.N) reported quarterly profit more than doubled.

U.S. retail sales in July posted their biggest gain since March, tempering fears that the world's largest economy might be slipping back into recession. Excluding autos, sales increased 0.5 percent, well above forecasts for a 0.2 percent gain.

Penney, which is in the process of selling its outlet business, said it was offering voluntary early retirement packages to certain employees. The chain will say next quarter how many employees are eligible and what the costs might be.

In June, Penney announced that Apple Inc's (AAPL.O) senior vice president of retail, Ron Johnson, will become CEO after Ullman steps down. Ullman will become executive chairman of the board.

(Reporting by Phil Wahba, editing by Gerald E. McCormick, John Wallace, Phil Berlowitz)

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Accenture's results beat Street, shares rise

Accenture's results beat Street, shares rise

Stock Market Predictions

NEW YORK (Global Markets) - Technology outsourcing and consulting firm Accenture Plc (ACN.N) reported earnings that beat Wall Street estimates and it raised its annual earnings forecast, sending its shares higher in after-hours trading.

Its shares rose 2.5 percent to $57.30 in after-market trading.

Accenture forecast earnings of $3.36 to $3.40 per share for the year, up from $3.22 to $3.30. The new outlook was on the high end of analysts' expectations of $3.27 to $3.44 per share.

The company's net income was 93 cents per share, which surpassed analysts' average estimate of 90 cents per share, according to Thomson-Global Markets I/B/E/S.

Accenture, which helps companies cut costs and improve operations through consulting, outsourcing and other services, said revenue rose 21 percent to $6.7 billion, from $5.5 billion a year earlier. Analysts were expecting revenue of $6.43 billion.

The company said its new bookings were $7.1 billion in the quarter, with $3.7 billion coming from consulting and $3.4 billion coming from outsourcing services.

Accenture strong results contrasted sharply with Oracle's on Thursday. Oracle Corp (ORCL.O) posted disappointing quarterly results that sparked concerns about a deeper-than-expected slowdown in technology spending.

(Reporting by Liana B. Baker; Editing by Andre Grenon and Steve Orlofsky)

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Quicksilver shares jump as domestic sales rise

Quicksilver shares jump as domestic sales rise

Stock Market Predictions

(Global Markets) - Shares of Quiksilver Inc (ZQK.N) rose more than 12 percent on Friday, a day after the clothes retailer posted results that beat Wall Street expectations, buoyed by strong domestic sales.

The Huntington Beach, California-based company was the third-biggest gainer on the New York Stock Exchange on Friday, even as the bigger S&P Retail Index .RLX was down 2 percent in morning trade.

Quiksilver, which makes clothes inspired by surfing and other action sports, had seen sales weaken in the U.S. and Europe, its two key markets. But a turnaround has made analysts positive about its prospects.

"Perhaps the most encouraging data point was an accelerating 23 percent U.S. comparable sales growth against tougher sequential comparisons," Jefferies analyst TaposhBari wrote in a note.

The analyst, who holds a "buy" rating on the stock, said sales at the company is likely at an inflection point, which could trigger an upgrade cycle on the stock.

"Going forward, we are modeling gross margins to be down in the second half of the year, but see an improving European business, favorable FX currents and continued retail outperformance providing an upward bias to gross margins," analyst Bari said.

Quiksilver shares were trading at $4.94 around midday on the New York Stock Exchange.

(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Joyjeet Das)

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Chains' deals won over shoppers in June

Chains' deals won over shoppers in June

Stock Market Predictions

NEW YORK (Global Markets) - Top U.S. retailers reported better-than-expected June sales after luring shoppers with targeted bargains that they will now have to keep in place to satisfy shoppers through the summer.

The 25 chains tracked in the Thomson Global Markets sales tally reported a 6.5 percent gain in sales at stores open at least a year, beating the 4.9 percent rise that analysts expected.

"It's a good sign that the consumer is feeling good and prepared to spend appropriately," Macy's Inc (M.N) Chief Executive Terry Lundgren told Global Markets.

All but four of the chains reported increases, suggesting retailers by and large are savvier about offering discounts without the panicked price-slashing they resorted to in 2008. The level of discounting showed that retailers are seeking the right strategies as the back-to-school shopping season begins.

"They are very focused on making the right offer to the consumer, in contrast to the uneducated sales we saw during the crisis," said Janet Hoffman, global managing director for Accenture's Retail Practice. "The sales now are much more targeted."

J.C. Penney (JCP.N) was a notable exception, missing estimates and cutting its quarterly earnings forecast after it had to do too much discounting. Its shares fell 1.5 percent.

For a graphic with the sales results, see r.reuters.com/caq52s

BACK-TO-SCHOOL BARGAIN HUNTING

Shoppers have some economic momentum pushing them to open their wallets. Gasoline prices have retreated from recent highs and the job market appears to be improving.

U.S. private employers added far more jobs than expected in June, bouncing back from a surprise slump the month before, a report by a payrolls processor showed.

The International Council of Shopping Centers expects retailers to keep their momentum in July, forecasting a same-store sales jump of 4.5 percent to 5.5 percent.

But many analysts caution against reading too much into the strong numbers from June, since that is when retailers typically cut prices on spring and summer items to make room for back-to-school and fall merchandise.

Stores will probably have to keep offering discounts during back-to-school, which accounts for about one-sixth of total retail sales and is the most important shopping period after the holiday season.

"July is where consumers can pull back and think about where they can get bargains," said David Bassuk, a managing director at consulting firm AlixPartners.

Shoppers said early deals prompted them to spend.

Lizzie Widhelm, a 33-year-old mother of three from Pacific Palisades, California, already has bought uniforms and backpacks. "There were such good early sales," she said.

Only three of 24 chains that Wall Street tracks missed expectations.

The Standard & Poor's Retail Index .RLX rose as much as 2.8 percent to a new high, outpacing the S&P 500's .SPX 1 percent increase. Target Corp (TGT.N) shares rose 7 percent and Hot Topic (HOTT.O) jumped 13 percent, while Dillard's hit an all-time high. Shares of Macy's and Nordstrom reached peaks not seen since late 2007.

DEPARTMENT STORE BATTLE

Macy's Lundgren said the fight was still on for middle-class shoppers.

"All boats are rising in the luxury segment of the business, but I think the middle market is much more of a market share game," Lundgren said.

Macy's, continuing a streak of strong gains, said same-store sales rose 6.7 percent in June, and raised its quarterly sales forecast.

Penney conceded that it had to use more promotions to try to win over its shoppers, who have more modest incomes than patrons of Macy's and are more exposed to the economy's ups and downs.

Penney now expects quarterly same-store sales to rise about 1 to 2 percent, down from its prior forecast of 3 to 4 percent. It forecast quarterly earnings of 6 cents per share, including charges, down from May's outlook of 20 to 24 cents, including about 6 cents in charges.

Penney rivals Kohl's Corp (KSS.N) and Dillard's (DDS.N) fared much better. Kohl's, where same-store sales were up 7.5 percent, has benefited by having exclusive merchandise that accounts for half of its sales. Its shares were up nearly 7 percent.

Macy's got help from its upscale Bloomingdale's chain. High-end department store chains Saks Inc (SKS.N) and Nordstrom Inc (JWN.N) easily beat Wall Street forecasts.

Retailers are starting to raise clothing prices to reflect higher cotton costs. At least at Macy's, shoppers have not pushed back so far, Lundgren said.

(Additional reporting by Jessica Wohl and Eunju Lie in Chicago, Dhanya Skariachan and Martinne Geller in New York, Nivedita Bhattacharjee in Bangalore and Mary Slosson in Los Angeles; Editing by Lisa Von Ahn and Matthew Lewis)

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Newell beats; outlook not as bad as feared

Newell beats; outlook not as bad as feared

Stock Market Predictions

NEW YORK (Global Markets) - Newell Rubbermaid Inc (NWL.N) beat Wall Street's lowered quarterly profit and sales expectations as strength in Latin America and Asia Pacific offset weak demand in United States and Europe, sending its shares up almost 9 percent.

The results echoed those from other consumer products makers. Big gains in Latin America covered up U.S. declines at Colgate-Palmolive (CL.N) and Avon Products (AVP.N) as well.

Newell, the maker of Sharpie markers and Rubbermaid storage containers, had already lowered the bar for its new chief executive officer -- former Unilever (ULVR.L) executive Michael Polk. In early June, it predicted a weak second quarter and slashed its 2011 forecast, prompting a 12 percent slide in its shares.

On Friday, investors overlooked the consumer product maker's second profit warning in two months, pushing the stock up 8 percent to $15.51. The stock is still trading below where it was before the June 3 warning.

"The revised guidance is not a surprise in the current economic environment," BMO Capital Markets analyst Connie Maneaty said, adding that the new CEO would likely want to have achievable targets.

The company now expects to earn $1.55 to $1.62 a share this year, excluding items, down from the lowered forecast of $1.60 to $1.67 given just eight weeks ago.

The latest forecast is "slightly above" the $1.50 to $1.55 or so that many analysts were anticipating, said JPMorgan analyst John Faucher.

The average Wall Street forecast is $1.58 per share, according to Thomson Global Markets I/B/E/S.

SHOWTIME FOR NEW CEO

Polk, who joined Newell in mid-July, was not responsible for the second-quarter performance.

Now he is trying to set the company's future tone, including some price increases that Newell asserts are necessary even as shoppers contend with economic woes.

"The consumer environment remains very tough," Polk said. "The debt crisis in the U.S. and across many countries in Europe could further stress consumer confidence."

Despite the uncertain sales climate, the company -- which counts Target Corp (TGT.N), Staples Inc (SPLS.O) and Williams-Sonoma (WSM.N) as customers -- raised its prices again in July as it pays more for oil, resin and other necessities.

As prices have gone up, the company is seeing some consumers buy less, as it expected, Polk said.

The company is well-positioned for the back-to-school season, Polk said. However the "key uncertainty is whether the consumer will show up and spend."

TAKING DOWN SALES EXPECTATIONS

Oppenheimer analyst Joe Altobello was more skeptical about Newell's sales prospects for the rest of the year and concerned about rising commodity costs. He rated Newell's shares at "perform" despite what he called a "reasonable" valuation.

Newell forecast core sales growth of 1 percent to 3 percent, down from its previous forecast of 3 percent to 4 percent. Core sales exclude foreign currency impact.

Net income rose to $146.7 million, or 49 cents a share, in the second quarter, from $130.4 million, or 41 cents a share, a year earlier.

Excluding items, the company earned 46 cents a share, beating the analysts' average estimate of 42 cents, according to Thomson Global Markets I/B/E/S.

Net sales rose 5.1 percent to $1.57 billion, while analysts expected $1.55 billion.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Derek Caney and Gunna Dickson)

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Cablevision's profit miss drags down entire sector

Cablevision's profit miss drags down entire sector

Stock Market Predictions

(Global Markets) - Cablevision Systems Corp's quarterly earnings widely missed Wall Street estimates, as it dealt with a weak economy, high programing costs and competition from phone companies offering TV services.

The disappointing earnings report sent Cablevision shares plunging as much as 16 percent and dragged down other stocks in the sector, including Comcast, Time Warner Cable, Dish Network and DirecTV.

Shares in those companies fell between 3.5 percent and 4 percent on Friday.

Cablevision missed Wall Street's consensus by 14 cents on Friday and its earnings report raised questions among analysts about the company's growth prospects, as its faces mounting costs and a shrinking user base.

"The earnings miss is a big and ugly one," said Bernstein Research analyst Craig Moffett in a research note. "The key issue is growth. Without growth, it's hard to grow margins."

Cable companies have been losing video customers to phone companies such as Verizon Communications, which offers FiOs TV, as well as to Internet companies such as Netflix Inc and Hulu.

Cablevision was the second cable company in two days to report disappointing earnings and then have its shares fall by double digits. On Thursday, Time Warner Cable lost more video customers than expected and its shares fell 10 percent.

Cablevision, which mainly serves the New York area but now has operations in Montana and Wyoming, said it lost 19,000 video subscribers in the third quarter.

Verizon competes with Cablevision in the greater New York area and in the same period it added 131,000 video customers. Earlier this month, Verizon said it expects to add 200,000 FiOS TV customers in the fourth-quarter.

Brean Murray analyst Todd Mitchell said Friday's results show that Cablevision is "having trouble in their New York clusters."

Cablevision executives also blamed the weak economy for stunting housing growth and hurting its business. If people are not moving into new homes, they will not sign up for new TV service. The company's chief operating officer called it a "cyclically challenging time."

"You have a situation currently where you have pretty slow housing growth, virtually no housing growth, and actual reduction in household formation," said Cablevision's COO Tom Rutledge on the conference call.

Cablevision said it took a hit of $16 million because of Hurricane Irene, a storm that affected the New York area in August.

One bright spot for Cablevision was its Internet additions. Analysts were expecting it to add 5,000 new Internet customers and it added 17,000 in the quarter.

Cablevision posted a profit of $39.3 million, down from $112.1 million a year earlier.

Adjusted for various charges, the company reported earnings per share of 17 cents, which missed analysts' expectations of 31 cents per share.

Cablevision, which is controlled by the Dolan family and also owns a newspaper and TV networks, saw its total revenue increase 8 percent to $1.67 billion. The revenue was in line with estimates.

The company's shares were down 12.5 percent at $15.14 in afternoon trading on the New York Stock Exchange, after falling as low as $14.50 earlier in the session.

(Reporting by Liana B. Baker in New York, editing by Gerald E. McCormick, Dave Zimmerman and Carol Bishopric)

Corrects attribution for quotes in 11th and 12th paragraphs, to Cablevision's Chief Operating Officer Tom Rutledge and not the company's CFO Gregg Seibert. Also corrects year ago earnings figure to $112.1 million.

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Microsoft stock tumbles after Windows sales dip

Microsoft stock tumbles after Windows sales dip

Stock Market Predictions

SEATTLE (Global Markets) - Microsoft Corp shares fell as much as 5 percent on Friday, a day after the software company reported a dip in its Windows operating system sales.

The world's second-largest tech company behind Apple Inc met Wall Street's profit estimate and beat on overall sales in its earnings report on Thursday.

But investors were concerned with lower personal computer sales nagging at Windows, Xbox sales bringing down profit margins and losses in its online business.

Microsoft shares closed down 3 percent at $25.92 on Nasdaq after a late-day rally. Earlier in the session they hit a low of $25.36, a 5 percent drop which would have been the largest one-day percentage fall since July 2009, had the shares closed at that level.

The shares ended around the level they were at on Monday, before a run-up leading into quarterly earnings. The stock had risen sharply after chip maker Intel Corp forecast revenue above Wall Street estimates, feeding optimism that a dip in PC sales last quarter did not indicate a long-term trend.

"Everyone, including myself, pounded the table on the Intel trade," said BGC Partners analyst Colin Gillis. "And it just didn't happen."

PC sales fell 1 percent last quarter, according to research firm Gartner [ID:nN13301394]. Microsoft's results reflected that, although it said business demand was outpacing weak consumer demand for PCs.

The stock is down 16 percent in the last 12 months, compared to a 16 percent gain in the Nasdaq.

"There were two catalysts for the sharp decline in Microsoft," said Joe Cusick, senior market analyst at Chicago-based online brokerage firm optionsXpress. "One, the stock broke through the 200-day moving average of $26.08, and UBS lowered their price target for the stock."

UBS analyst Brent Thill on Friday cut his price target on Microsoft to $32 from $35, citing the long-term threat posed by tablets to the traditional PC business.

"Even though they had good earnings, the PC market is under scrutiny and there continues to be uncertainty on whether or not Microsoft can compete with the growing tablet and handheld devices from the likes of Samsung and Motorola," said Cusick.

Options traders, many of whom placed bets on Microsoft shares jumping earlier in the week -- perhaps as a hedge to holding the stock in case of a decline -- moved into a more critical mode.

"There is nothing too rosy in Microsoft options trading on Friday compared to some of the bullish trades we saw ahead of earnings," said Caitlin Duffy, equity options analyst at Interactive Brokers Group in Greenwich, Connecticut.

"For the most part, we are seeing call selling in near-term options," she said, indicating traders are looking to get rid of their rights to buy the stock.

Overall, Microsoft analysts kept their faith that Microsoft will survive a rough patch in PC sales. Twenty-five of 35 analysts polled by StarMine recommend buying the stock. Only one says sell.

As a result of Microsoft's decline, it is close to being eclipsed by old foe IBM in terms of market value. Apple, which overtook Microsoft last year, is the most valuable U.S. tech company at $321 billion, Microsoft is second at $225 billion and IBM is third at $207 billion.

(Reporting by Bill Rigby and Doris Frankel. Editing by Robert MacMillan, Bernard Orr)

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Agricultural demand fuels Deere results, outlook

Agricultural demand fuels Deere results, outlook

Stock Market Predictions

(Global Markets) - Deere & Co (DE.N) reported a 46 percent rise in quarterly earnings and projected "substantial growth" for 2012 amid strong global farming conditions and higher prices, sending its shares higher in an otherwise weak stock market.

The world's largest farm machinery maker said hefty incomes of the world's farmers -- driving record 2011 results -- are expected to be stable in 2012. Demand for agricultural commodities, such as grain, will remain high.

The company solidly outpaced analyst expectations in the fourth quarter as agricultural and turf equipment sales were stronger than expected. Those results offset a slightly disappointing result on construction and forestry margins.

Deere's projection of 2012 net income of about $3.2 billion, compared with $2.8 billion in 2011, was also higher than Wall Street's expectations.

During a conference call, the company said it plans to more tightly manage inventory of combines, which is a closely watched indicator of company health.

Moline, Illinois-based Deere's strong earnings and positive outlook come during particularly good times for U.S. farmers. Farmland prices in the United States surged to the highest level in three decades in the July-to-September period, even as major crop prices have fallen from peaks earlier this year.

Deere said it has continued investing in its product line to meet demands from farmers.

"Our success reflects a continued pattern of strong customer response to our innovative lines of equipment," Chief Executive Samuel Allen said, adding that Deere remains well positioned to carry out its extensive growth plans and capitalize on positive long-term economic trends.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a graphic on Deere earnings results: link.reuters.com/qax25s

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

RECORD 2011

Deere posted net income of $669 million, or $1.62 per share, for the fiscal fourth quarter that ended October 31, compared with $457 million, or $1.07 per share, a year earlier. Revenue rose 20 percent to $8.61 billion.

Wall Street expectations called for Deere to earn $1.43 a share, according to Thomson Global Markets I/B/E/S.

For full-year 2011, Deere's net income reached a record $2.8 billion, and the company generated $3.6 billion in cashflow from operations.

Sales, positively affected by currency translation and price increases, topped $32 billion in 2011, helping the company offset a $665 million increase in raw material costs, which are expected to rise another $500 million in 2012.

During the fourth quarter, Deere continued its pace of double-digit growth in both established and emerging markets. In the United States and Canada, equipment sales rose 14 percent, while sales outside that region grew at more than twice that pace -- posting a 31 percent equipment sales rise.

Last month, Deere rival Agco Corp (AGCO.N) posted stronger-than-expected third-quarter results and raised its full-year outlook for the fourth time. CNH Global (CNH.N), which also outpaced analysts' forecasts, said full-year revenue growth would be at the upper end of its prior forecast of 15 percent to 20 percent.

Deere's shares rose about 3.3 percent to $75.28 in morning New York Stock Exchange trading. The wider market slumped on concerns over unemployment, consumer spending and the economy in Europe.

"SUBSTANTIAL GROWTH"

Deere executives remain bullish on its ability to thrive.

"In spite of an unsettled global economy, demand for John Deere products is expected to experience substantial growth in fiscal year 2012," Deere said in a press release.

The company said momentum is expected to be strong in the current November-to-January period, with sales seen rising as much as 16 percent to 18 percent compared with the same period a year ago. Full-year equipment sales growth will moderate in coming quarters, settling in at 15 percent for all of 2012.

In Europe, sales are expected to be flat next year "as a result of general economic concerns" there. South America industry sales, which were strong in 2011, are expected to be flat as well.

Increased availability of financing and higher crop production in China and high agricultural commodity prices in India are expected to be key factors fueling Deere's momentum in Asia.

(Reporting by John D. Stoll in Detroit, editing by John Wallace and Maureen Bavdek)

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Time Warner Cable to buy back more stock, shares up

Time Warner Cable to buy back more stock, shares up

Stock Market Predictions

(Global Markets) - Time Warner Cable Inc (TWC.N) raised its quarterly dividend and surprised Wall Street by announcing plans to buy back $4 billion of its stock, sending shares up more than 8 percent on Thursday.

The No. 2 U.S. cable provider also posted a higher quarterly profit as it added more customers than expected for its broadband services and stemmed the decline in its video business.

The company raised its quarterly dividend by 17 percent to 56 cents a share, which means its shares now carry a 3.2 percent dividend yield based on Wednesday's closing price.

While Collins Stewart analyst Thomas Eagan said he was expecting a dividend increase, he was surprised the company increased its share buyback so soon. He said he did not expect such a move until the third quarter of 2012 and that it signals a strong outlook for future cash generation.

"It is notable and speaks to their confidence to their cash flow growth," he said.

The high end of the company's forecast range for 2012 earnings per share was slightly above Wall Street estimates. It now expects earnings per share in the range of $5.25 to $5.50, compared with the average estimate of $5.48, according to Thomson Global Markets I/B/E/S.

Time Warner Cable, which competes with Comcast Corp (CMCSA.O) and Cablevision Systems Corp (CVC.N), said fourth-quarter profit rose to $564 million, or $1.75 a share, from $392 million or $1.09 a share a year earlier.

Its revenue rose 4 percent to $5 billion, topping analysts' average estimate of $4.97 billion, according to Thomson Global Markets I/B/E/S.

It added 117,000 broadband Internet residential customers, beating analysts' estimates for 87,000.

The company lost 129,000 video residential subscribers, compared with analysts' expectations for a loss of 130,000, according to StreetAccount data. Bernstein Research analyst Craig Moffett wrote in a research note that "video subscribers continue to trend better."

Time Warner Cable and its peers have been losing video customers to phone and satellite providers and Internet companies such as Netflix Inc (NFLX.O) and Hulu. On Wednesday, Netflix surprised Wall Street by adding 610,000 net new subscribers in the United States in the latest quarter.

AT&T Inc (T.N), which has a TV service called U-Verse, said in its quarterly earnings report on Thursday that it added 208,000 TV subscribers in its fourth quarter.

Time Warner Cable shares were up 7.8 percent at $74.50 at midmorning on the New York Stock Exchange, off an earlier high at $74.88.

(Reporting by Liana B. Baker in New York; Additional reporting by Saqib Iqbal Ahmed in Bangalore; editing by John Wallace and Matthew Lewis)

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Microsoft Windows fizzles as PC fears loom

Microsoft Windows fizzles as PC fears loom

Stock Market Predictions

SEATTLE (Global Markets) - Sales of Microsoft Corp's flagship Windows software disappointed for the third straight quarter, taking the gloss off better-than-expected earnings that were aided by an unusually low tax rate.

The results failed to excite a market already wary about growth prospects for the company and PC industry as netbook sales give way to tablets. The stock was flat in after-hours trading.

"All eyes are on Windows and how they are ultimately going to extend this franchise in the future, as the PC business continues to lose share to the tablets," said Josh Olson, technology analyst at money manager Edward Jones. "Microsoft is really a show-me story in terms of its ability to extend its core flagship products to these new growth platforms."

On Wednesday, chipmaker Intel Corp warned that PC sales will not be as strong as it had expected this year.

Microsoft is expected to enter the tablet market in earnest next year with the launch of its next operating system -- code-named Windows 8 -- which will be compatible with the low-power chips designed by ARM Holdings favored by tablet and mobile phone makers.

Despite the Windows dip, Microsoft managed to ease past Wall Street's earnings estimates, helped by strong sales of its Office software and Xbox game console, as well as a dramatic drop in its tax bill.

The world's largest software maker follows Google Inc, Apple Inc and International Business Machines Corp in reporting surprisingly good results as technology spending holds up relatively well in an uncertain economy.

BIG BEAT

The Redmond, Washington-based company on Thursday posted net profit of $5.87 billion, or 69 cents per share, up from $4.52 billion, or 51 cents per share, in the year-ago quarter.

That easily beat Wall Street's average estimate of 58 cents, according to Thomson Global Markets I/B/E/S. Microsoft has beaten the average profit estimate for each of the last nine quarters.

Microsoft was helped by an unusually low tax rate of 7 percent in the quarter, which cut its tax bill by more than $1 billion from the year before, to $445 million. The company, which gets most of its revenue from overseas, said the savings were due to a one-time tax gain and more business flowing through its regional centers in the low-tax jurisdictions of Ireland, Singapore and Puerto Rico.

Sales rose 8 percent to $17.37 billion, ahead of analysts' average estimate of $17.23 billion, boosted chiefly by sales of Office, Xbox and server software behind Microsoft's push into Internet-centric, or "cloud" computing.

Microsoft shares fluctuated after the results were announced in after-hours trading, settling close to their closing price of $27.09 on Nasdaq. The stock is up 8 percent over the past 12 months, compared to a 30 percent rise in the Nasdaq composite index. The shares are stuck at a level first hit in 1998, adjusted for stock splits.

"These numbers are good. The question is, what will make Microsoft break this range in which it is stuck, between $25 and $28?" said Trip Chowdhry, managing director at Global Equities Research. "I don't see these numbers giving an indication that the stock is going to break away."

OFFICE, XBOX STAR

Spending by businesses on technology has generally outstripped cash-strapped consumers since the worldwide economic downturn.

Microsoft's business division, which last month rolled out online versions of its popular Office suite of programs such as Outlook, SharePoint and Excel, was the company's biggest seller in the quarter, racking up a 7 percent increase in sales to $5.8 billion.

The server and tools business, which sells software used by datacenters -- an essential building block of cloud computing -- posted a 12 percent increase in sales to $4.6 billion.

The entertainment and devices unit, which sells the company's video game and phone products, posted a 30 percent increase in sales to $1.5 billion, mostly due to the popularity of the Xbox and the new hands-free gaming Kinect add-on.

Sales at the Windows unit fell 0.8 percent to $4.7 billion. PC sales grew only 2.3 percent in the second quarter, according to tech research firm Gartner, well below earlier projections, as economic uncertainty hangs over consumers and Apple's iPad and other tablets eat into the market.

Microsoft's perennial money-losing online services unit, which runs the Bing search engine and MSN Internet portal, posted a 16.5 percent increase in sales to $662 million, but its loss widened to $728 million from a loss of $688 million a year ago, as Microsoft continues to pour money into attacking Google. The unit has now lost almost $6.5 billion in the last three fiscal years.

(Additional reporting by Alexei Oreskovic in San Francisco and Liana Baker in New York; Editing by Richard Chang)

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Tyson shares up on profit beat, beef outlook

Tyson shares up on profit beat, beef outlook

Stock Market Predictions

(Global Markets) - Tyson Foods Inc's (TSN.N) first-quarter profit blew past Wall Street estimates and the meat processor said it expects beef margins to recover in the back half of the year, helping to send its shares up more than 5 percent.

The U.S. cattle herd shrank for the fifth straight year in 2011, to a 60-year low, as a devastating drought and record-high feed costs hit production.

The shrinking beef supply has raised costs for buyers like Tyson, the No. 1 U.S. meat processor, and McDonald's Corp (MCD.N). At the same time, slack consumer demand has made it difficult to pass on the full extent of those cost increases, putting pressure on margins.

"Our beef segment is experiencing a rough patch as a result of challenging market fundamentals," said Tyson Chief Executive Donnie Smith on Friday.

He later joked with reporters that "rough patch" was a euphemism for "margin compression."

"Although we are still outperforming industry indexes, if current conditions continue, our beef results will be pressured in our second quarter," Smith added.

Still, Tyson said beef would be profitable for the full fiscal year, due to expectations that beef margins will return to a "normalized range" in the second half.

That forecast was surprising considering that beef industry trends have been worsening, said JP Morgan analyst Ken Goldman. But he also praised Tyson's diversity of business, selling chicken, beef, pork and prepared foods.

"Today's results illustrate why Tyson deserves a premium multiple, in our opinion, to many of its protein peers," Goldman said in a research note.

"When one segment suffers, others can come to the rescue, leading to much smoother and less volatile earnings" than those of other meat companies like Smithfield Foods (SFD.N), Pilgrim's Pride (PPC.N) and Sanderson Farms (SAFM.O).

Beef is Tyson's largest unit, accounting for nearly 42 percent of sales in the latest quarter, followed by chicken with 33 percent of sales.

While beef was the biggest sales contributor, it delivered the lowest operating profit as a percentage of sales among Tyson's four units. Beef operating income was $31 million, or 0.9 percent of first-quarter beef sales. Pork operating income was $165 million, or 11.2 percent of pork sales.

Tyson shares were up 5.2 percent at $19.58 on Friday afternoon on the New York Stock Exchange.

PROFIT BEATS EXPECTATIONS

Tyson also said its chicken segment returned to profitability in the quarter, despite higher feed costs. It also cited strong performance in its prepared foods business.

Tyson reported on Friday that net income fell to $156 million, or 42 cents per share, in its fiscal first quarter, ended December 31, from $298 million, or 78 cents per share, a year earlier.

Analysts on average were expecting 33 cents per share, according to Thomson Global Markets I/B/E/S.

Sales rose 9.4 percent to $8.33 billion, matching analysts' estimates. Sales volume fell 5 percent as the company processed less meat in anticipation of reduced demand.

Average prices rose 14.6 percent due to price increases meant to offset higher commodity costs and increased sales of higher-priced items.

The company stood by its 2012 forecast calling for sales to exceed $34 billion, helped by price increases related to tighter meat supplies and higher raw materials costs. Still, the company expressed caution about its prior earnings forecast, which called for full-year profit in excess of $2 per share.

"We still feel pretty good about coming in around the $2 mark, but we think it would be overly optimistic to say 'in excess of' at this point, because of the headwinds we're facing in beef, not to mention the volatility in the grain markets," Smith said.

Because exports are likely to remain strong, Tyson expects total domestic availability of meat -- including chicken, beef, pork and turkey -- to be down 2 percent to 3 percent from 2011, which it said should support higher prices.

(Reporting By Martinne Geller in New York; Editing by Lisa Von Ahn, John Wallace and Matthew Lewis)

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Google jumps as investors cheer mobile growth

Google jumps as investors cheer mobile growth

Stock Market Predictions

SAN FRANCISCO (Global Markets) - Google Inc's free Android smartphone software, already a big hit with consumers, is starting to win the hearts of investors.

The world's No. 1 Internet search company offered a peek at its mobile business during quarterly results on Thursday, revealing that the business was generating revenue at an annual run rate of $2.5 billion, up from $1 billion last year.

That helped Google sail past third-quarter financial targets set by analysts, sending its shares up nearly 6 percent to $591.68 on Friday and easing some of Wall Street's concerns that mobile returns might not justify the investment.

"People just haven't given them any credit for that division. I think it could be a huge part of the overall company," said Pat Adams, portfolio manager at the Dunham Loss Averse Growth Fund, which owns Google shares.

"There are so many more mobile devices out there than there are PCs," Adams said. "What they did was brilliant to give that operating system away to get the search part of it," he added.

Google lets phone makers such as Samsung Electronics, LG Electronics and HTC Corp use its Android software for free, banking on consumers using those phones to visit Google's advertising-supported website to search for information.

The booming popularity of smartphones has frustrated many of the established giants of the computer industry, from Microsoft Corp to Hewlett-Packard Co.

For Google, whose business is built upon people using its search engine, making the transition from the personal computers to mobile devices is crucial.

The company has stepped up investments in its mobile business, which competes with iPhone-maker Apple Inc. Google's Android mobile software -- already the world's most-used smartphone platform -- powers 190 million devices, up from 135 million in mid-July.

The explosion of Android devices, as well as the availability of Google search on Apple's iPhones, has made Google even more dominant in mobile search than on the desktop PC, according to JP Morgan analyst Doug Anmuth who pegged Google's mobile search market share at 90 percent.

That strong position accounts for the sharp, 28 percent uptick in paid clicks on search ads that Google experienced during the third quarter, Anmuth said in a note to investors.

Those ads appear to command lower rates than PC search ads, analysts noted. But some analysts said they expect that to change over time, especially as Google creates new forms of advertising that take advantage of a user's location.

Mobile advertising sales is but one component of what analysts believe could be a broader wireless opportunity for Google. The company has begun offering coupon deals, and could make money through retailer loyalty programs and its recently launched Google Wallet, a free service which allows shoppers to use their mobile phones to pay for purchases.

MOTOROLA BET

More concerning for some investors is Google's plan to acquire mobile phone maker Motorola Mobility Holdings for $12.5 billion.

The deal will give Google access to one of the largest patent libraries in the wireless industry, as well as hardware manufacturing operations that will allow it to develop its own line of smartphones.

But some worry that Google is entering a low-margin hardware business in which it has no experience, and that the move could jeopardize its relationships with other phone makers that use Android.

BGC Partners analyst Colin Gillis said he did not think Google's increase in mobile ad revenue would make investors feel any better about the Motorola deal, which is expected to close this year or early in 2012.

"You could argue the Motorola deal puts some of that revenue at risk," he said, noting that some current Android phone makers might see Google as a competitor once it acquires Motorola and reduce their support for Google products. Google has said it plans to operate Motorola as a separate business.

Gillis also noted that the $2.5 billion annual run rate in Google's mobile business, while impressive, remains less than 10 percent of the company's overall revenue.

And he added that Google may not necessarily have based the $2.5 billion run rate on one quarter's worth of revenue, which would have suggested that Google made $625 million in mobile revenue in the third quarter.

"They probably took the last month and multiplied it by 12. It could be the last day," he noted. "We have no idea what that number really is."

Whatever the number though, Google's mobile revenue is clearly growing quickly, and for many on Wall Street, that's good enough for now. Many brokerages raised their price targets on Google on Friday, some by as much as 10 percent.

"We think mobile is near a massive volume inflection point," wrote Susquehanna Financial Group analyst Herman Leung in a note to investors on Friday.

"At these growth rates, we think mobile revenue could be larger than display (advertising revenue) by 2012."

(Reporting by Alexei Oreskovic; Additional reporting by Sayantani Ghosh, Tenzin Pema and Rachana Khanzode in Bangalore; Editing by Richard Chang)

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Apple stock looks cheap ahead of results

Apple stock looks cheap ahead of results

Stock Market Predictions

SAN FRANCISCO (Global Markets) - Apple Inc (AAPL.O) should deliver yet another bumper quarter, but some investors are holding out for a monstrous second half when the new iPhone hits and a new online content service takes wing.

Solid numbers from the company's quarterly report this week could snap the malaise that has hung over its once unstoppable shares, which have been in limbo since Chief Executive Steve Jobs took leave last January for unspecified medical reasons.

Apple's stock has found itself relatively immobile after quadrupling over the past two and a half years. The share price is up 11 percent on the year, but remain a far cry from brokerage price targets of $450 or more.

The stock rose 2 percent again on Friday in anticipation of stronger second-quarter revenue and profit with component shortages easing for the iPad and momentum accelerating in international markets.

"This stock is still very attractively priced, especially relative to the overall market," said Channing Smith, co-manager of the Capital Advisors Growth Fund, which owns Apple shares.

"About once a year, you get an opportunity when the stock is in a funk and some of the short-term concerns crop up... that's your window to step up," said Tony Ursillo, analyst with Loomis Sayles & Co, which owns Apple shares.

Apart from Jobs -- a survivor of a rare form of pancreatic cancer and the inspiration behind many of Apple's most iconic products -- Wall Street is worried about Google's (GOOG.O) rising prominence in high-end mobile and intensifying competition in digital content with Google and Amazon.com (AMZN.O).

But the world's largest technology company by market value is expected to present a positive short-term picture when it reports Tuesday.

Solid sales of the aging iPhone in international markets and strong demand for new, thinner iPad 2s likely buoyed the second quarter, which also saw an easing in the supply crunch that previously held back sales of the tablet.

The two mobile products were instrumental in contributing to an expected 60 percent increase in Apple's revenue during the fiscal third quarter, according to analysts and investors.

Lower component costs -- owing to an easing of supply shortage of crucial components from Japan -- is another plus that could boost gross margins to as high as 41 percent.

"I am expecting a strong quarter," Ursillo said. "The concern on the street seems to be more about the outlook for the third quarter, ongoing supply constraints for the iPad and the timing of the iPhone introduction."

BIG SECOND HALF

Wall Street expects that the outlook for the second half of the year will be enormous for Apple as it may include the launch of a new iPhone, its best-selling product, and one that accounts for about 40 percent of its revenue.

Apple is famously conservative with its forecasts, but investors will pick apart executives' comments to figure out how much the new iPhone will boost revenue.

The California company typically introduces a new iPhone during the summer, but it has yet to reveal any details on the next model. The new smartphone featuring a faster processor will begin shipping in September, sources have told Global Markets.

Apple will also roll out its new cloud-based iCloud music storage service in the fall along with updates to its operating systems for mobile devices and computers.

"With our expectation for a big second-half new product ramp, combined with growing challenges at smartphone competitors and potential new carrier arrangements, we believe Apple has plenty of upside left in the stock price," said Ticonderoga Securities analyst Brian White.

Anticipation of a new iPhone may have caused some slowdown in sales during the June quarter, but analysts still expect shipments to be in the healthy 17 million range when the consumer electronics giant reports results on Tuesday.

Wall Street estimates that Apple sold about 8 million new iPads along with about 4 million Macintosh computers.

Apple rolled out its popular iPad 2 tablet in 36 countries in the last three months despite supply being backlogged. Wait times for the iPad ordered online have fallen to 3-5 days from two weeks in United States as Apple ramped up production to meet roaring global demand.

Apple is expected to report earnings of $5.83 a share on revenue of $24.9 billion, according to Thomson Global Markets I/B/E/S. Apple has beaten Wall Street estimates for 13 straight quarters.

According to StarMine's SmartEstimate, which places more weight on recent forecasts by top-rated analysts, Apple should post EPS of $6.007 on revenue of $25.3 billion.

(Editing by Robert MacMillan)

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Tiffany raises forecast as sales rise worldwide

Tiffany raises forecast as sales rise worldwide

Stock Market Predictions

NEW YORK (Global Markets) - Tiffany & Co (TIF.N) raised its full-year profit outlook as more shoppers worldwide bought its jewelry during the bridal season, helping it overcome rising gold and diamond costs and sending its shares up more than 5 percent.

Tiffany's sales gains were strong across the board during the quarter ended July 31, a period that includes the Mother's Day and bridal seasons, which are second in sales only to the end-of-year holidays for jewelers.

Chief Executive Stephen Kowalski said that sales so far in the current quarter are outpacing Tiffany's own forecasts despite continuing economic uncertainty.

The company said it expects sales to rise by a high teen percentage for the year ending in late January, up from a previous forecast of a mid-teen percentage increase.

At its flagship store on Manhattan's Fifth Avenue, where it gets about a tenth of its business, sales rose 41 percent, helped by international tourists.

In Asia, outside of Japan, revenue rose 45 percent excluding the effect of a weak dollar, thanks to the appetite of China's emerging middle class for Western luxury brands.

Sales also rose by double digits in Europe, where wealthy Russian and Chinese tourists account for as much as a quarter of total luxury spending by some estimates. Sales also rebounded in Japan, which is still recovering from the debilitating earthquake and tsunami in March.

Overall, Tiffany sales, excluding the effect of currency translations, rose 24 percent to $872.7 million in the second quarter, while sales at stores open at least one year rose 22 percent.

Tiffany said its gross margins rose 1.2 percentage points to 59 percent of sales, with revenue increasing enough for the retailer to absorb higher costs for gold, diamonds and silver.

Tiffany's price increases, which faced little consumer resistance, have "a recipe for success," Wall Street Strategies analyst Brian Sozzi said in a note.

Signet Jewelers Ltd (SIG.N) (SIG.L), operator of the Kay Jewelers and the more upscale Jared chains, on Thursday reported similarly strong sales and profit gains, saying it was able to raise prices. Signet's same-store sales rose 12.2 percent during its second quarter.

The price increases and strong sales helped Tiffany handily beat Wall Street's profit forecasts. It reported net income of $90 million, or 69 cents per share, for the quarter, up from $67.7 million, or 53 cents per share, a year earlier.

Excluding one-time items, such as the cost of relocating its New York staff to new offices, Tiffany earned 86 cents a share, far above the 70 cents Wall Street expected, according to Thomson Global Markets I/B/E/S.

Tiffany raised its full-year profit outlook range by 20 cents, to between $3.65 and $3.75 per share, above the $3.56 analysts were expecting.

Tiffany shares rose $3.39 to $66.50 in pre-market trading. Through Thursday's close, Tiffany shares had fallen 25.3 percent since hitting an all-time high on July 7, on concerns that market volatility might prompt luxury spenders to pull back.

(Editing by Derek Caney, John Wallace and Steve Orlofsky)

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