Top 10 News Items 3/21-3/25: Communications Sector Astir as AT&T Bids for T-Mobile; Stocks Continue Bouncing Off Last Week's Lows; Fed to Hold Quarterly Press Briefings
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Here is a recap of the top news items from this week on Wall Street:
1. The Communications sector was extremely active this week as AT&T (NYSE: T) announced a $39 billion deal for Detusche Telekom's (OTC: DTEGY) T-Mobile. The news sent shares of DT surging 11% on Monday, while shares of Sprint (NYSE: S) tumbled 13%. A number of analysts were out calling Sprint the clear loser in the wireless market, well behind AT&T and Verizon (NYSE: VZ). Click here to see our full list of winners & losers from the deal.
2. Despite several overhangs seemingly looming over this market (massive rebuilding efforts in Japan which have surely not begun yet, political tension in the Middle East and Africa), stocks rallied more than 3% from last Friday's closing price and by nearly 6% from the lows set midday on Wednesday of last week.
3. The Federal Reserve announced that Chairman Ben Bernanke will hold press briefings four times per year to present the FOMC's current economic projections and to provide additional context on policy decisions. The briefings will be broadcast live on the Federal Reserve's website. For these meetings, the FOMC statement is expected to be released at around 12:30 p.m., one hour and forty-five minutes earlier than for other FOMC meetings.
4. BofA (NYSE: BAC) shares had a tough week as the company had its proposed "modest" dividend increase for the second half of this year rejected by the Fed. BofA plans to resubmit a new proposal. The news indicates the that Fed believes that the nation's largest bank is not yet steady enough to return capital to shareholders.
5. New home sales unexpectedly fell to the slowest pace on record last month, as prices slipped to an eight-year low, indicating the housing market is still a long way from recovery. The Commerce Department reported Wednesday that new-home sales plunged 16.9 percent to an annual pace of 250,000 in February, missing the economist estimate of 290,000. Despite the concerning data, the SPDR S&P Homebuilder ETF (NYSE: XHB) only closed in the red during one day this week.
6. Shares of Research In Motion (Nasdaq: RIMM) tumbled more than 11% on Friday, the sharpest fall since late June of last year, following disappoint Q4 results. The BlackBerry maker posted Q4 earnings of $1.78 per share, 3 cents better than the Street had been looking for, on sales of $5.6 billion. Given that RIM posted Q1 guidance below the Street (sees Q1 EPS of $1.47-$1.55, vs. the consensus of $1.65. See sales of $5.2-$5.6 billion, vs. the consensus of $5.64 billion), analysts questioned the company's FY12 EPS outlook which was set at over $7.50. The Street is currently looking for FY12 EPS of $6.81.
7. On the other end of the Tech world, Oracle (Nasdaq: ORCL) shares rallied following a solid Q3 report and a dividend raise. The company posted Q3 EPS of 54c, topping the Street by 5c, on sales of $8.8 billion. Oracle offered the following guidance: sees Q4 non-GAAP EPS of 69-73c on a current currency basis. On a constant currency basis, the company sees adj-EPS of 65-69c. The Street is currently looking for Q4 EPS of 66c. Sees software sales up 9-9% during the quarter.
8. Citigroup Inc. (NYSE: C) announced Monday that it has approved a 1-for-10 reverse stock split of its common stock, while the bank has also reintated a quarterly dividend of $0.01 per common share for the second quarter of 2011. Citi shares sold-off about 1.5% on Monday. Most analysts were bullish on Citi shares following the news. Interestingly, one analyst pointed out that NYSE trading volume could decline by 10% following the split.
9. The U.S. economy grew at a modestly faster pace than previously reported in the fourth quarter, as inventory building and business investment boosted activity, but oil prices will likely limit growth in 2011. The Commerce Department reported Friday that the gross domestic product grew at an annual rate of 3.1 percent for the final three months of 2010. The final reading for the fourth quarter was upwardly revised from a previously reported 2.8 percent rise. In the third quarter, real GDP increased 2.6 percent.
10. A warning from Cree (Nasdaq: CREE) brought down the LED sector across the board this week. CREE shares tumbled more than 12% on Wednesday. The company now sees sales of $215-$220 million, vs. the consensus of $254.82 million and compared to prior guidance of $245-$265 million. The company said it sees Q3 gross margin of about 43%. Cree said it expects sales to rise about 10-12% during Q4.
1. The Communications sector was extremely active this week as AT&T (NYSE: T) announced a $39 billion deal for Detusche Telekom's (OTC: DTEGY) T-Mobile. The news sent shares of DT surging 11% on Monday, while shares of Sprint (NYSE: S) tumbled 13%. A number of analysts were out calling Sprint the clear loser in the wireless market, well behind AT&T and Verizon (NYSE: VZ). Click here to see our full list of winners & losers from the deal.
2. Despite several overhangs seemingly looming over this market (massive rebuilding efforts in Japan which have surely not begun yet, political tension in the Middle East and Africa), stocks rallied more than 3% from last Friday's closing price and by nearly 6% from the lows set midday on Wednesday of last week.
3. The Federal Reserve announced that Chairman Ben Bernanke will hold press briefings four times per year to present the FOMC's current economic projections and to provide additional context on policy decisions. The briefings will be broadcast live on the Federal Reserve's website. For these meetings, the FOMC statement is expected to be released at around 12:30 p.m., one hour and forty-five minutes earlier than for other FOMC meetings.
4. BofA (NYSE: BAC) shares had a tough week as the company had its proposed "modest" dividend increase for the second half of this year rejected by the Fed. BofA plans to resubmit a new proposal. The news indicates the that Fed believes that the nation's largest bank is not yet steady enough to return capital to shareholders.
5. New home sales unexpectedly fell to the slowest pace on record last month, as prices slipped to an eight-year low, indicating the housing market is still a long way from recovery. The Commerce Department reported Wednesday that new-home sales plunged 16.9 percent to an annual pace of 250,000 in February, missing the economist estimate of 290,000. Despite the concerning data, the SPDR S&P Homebuilder ETF (NYSE: XHB) only closed in the red during one day this week.
6. Shares of Research In Motion (Nasdaq: RIMM) tumbled more than 11% on Friday, the sharpest fall since late June of last year, following disappoint Q4 results. The BlackBerry maker posted Q4 earnings of $1.78 per share, 3 cents better than the Street had been looking for, on sales of $5.6 billion. Given that RIM posted Q1 guidance below the Street (sees Q1 EPS of $1.47-$1.55, vs. the consensus of $1.65. See sales of $5.2-$5.6 billion, vs. the consensus of $5.64 billion), analysts questioned the company's FY12 EPS outlook which was set at over $7.50. The Street is currently looking for FY12 EPS of $6.81.
7. On the other end of the Tech world, Oracle (Nasdaq: ORCL) shares rallied following a solid Q3 report and a dividend raise. The company posted Q3 EPS of 54c, topping the Street by 5c, on sales of $8.8 billion. Oracle offered the following guidance: sees Q4 non-GAAP EPS of 69-73c on a current currency basis. On a constant currency basis, the company sees adj-EPS of 65-69c. The Street is currently looking for Q4 EPS of 66c. Sees software sales up 9-9% during the quarter.
8. Citigroup Inc. (NYSE: C) announced Monday that it has approved a 1-for-10 reverse stock split of its common stock, while the bank has also reintated a quarterly dividend of $0.01 per common share for the second quarter of 2011. Citi shares sold-off about 1.5% on Monday. Most analysts were bullish on Citi shares following the news. Interestingly, one analyst pointed out that NYSE trading volume could decline by 10% following the split.
9. The U.S. economy grew at a modestly faster pace than previously reported in the fourth quarter, as inventory building and business investment boosted activity, but oil prices will likely limit growth in 2011. The Commerce Department reported Friday that the gross domestic product grew at an annual rate of 3.1 percent for the final three months of 2010. The final reading for the fourth quarter was upwardly revised from a previously reported 2.8 percent rise. In the third quarter, real GDP increased 2.6 percent.
10. A warning from Cree (Nasdaq: CREE) brought down the LED sector across the board this week. CREE shares tumbled more than 12% on Wednesday. The company now sees sales of $215-$220 million, vs. the consensus of $254.82 million and compared to prior guidance of $245-$265 million. The company said it sees Q3 gross margin of about 43%. Cree said it expects sales to rise about 10-12% during Q4.
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