General Motors (GM) - WSJ reports that as talks between GM and Chrysler LLC continued over the weekend, "a harsh reality has emerged: Without a merger and possibly an assist from the federal government," two of Detroit's Big 3 auto makers "could run out of cash within a year." The article also says, "Though GM and Chrysler dismiss the notion, analysts and investors have begun to question whether one of the companies -- locked out of the credit markets and burning cash rapidly -- might have to seek bankruptcy protection."
Verizon Communications (VZ) rises 2.11 to 27.19 after the telecom company posts $0.66, vs. $0.63, third quarter adjusted EPS on 5.4% revenue rise, cites continued strong performance, accelerating numbers of new FiOS customers, and continued increase in sales of strategic business services. S&P maintains buy.
Embarq (EQ) agrees to be acquired by CenturyTel (CTL) in a deal with an enterprise value of about $11.6 billion, including the assumption of $5.8 billion of EQ's debt. Terms: 1.37 CTL shares for each EQ share. Separately, EQ posts $1.11, vs. $1.01 a year ago, third quarter EPS despite 4.3% revenue drop. Separately, CTL posts $0.82, vs. $0.97, third quarter EPS (excluding items) on 8.2% revenue drop. CTL sees fourth quarter revenues of $635-$645 million and EPS of $0.78-$0.83. Raises, narrows range of anticipated 2008 EPS from $3.20-$3.30 to $3.28-$3.33.
BE Aerospace (BEAV) posts $0.54, vs. $0.48, third quarter EPS on 37% revenue rise. Sees 2008 EPS of $2.19 excluding acquisition, integration, transition costs of about $0.06 per share, debt prepayment costs of about $0.03 per share. Sees 2009 revenues increasing to about $2.5 billion and EPS of $2.00 excluding acquisition, integration and transition costs of about $0.10 per share. Sees 2010 revenues and EPS higher than 2009.
Dillard's (DDS) rises 1.07 to 4.41. In a letter to DDS Class B directors, Barington Capital Group LP and Clinton Group Inc. say they want the Class B directors to work with the DDS board's other directors to immediately begin looking for a new CEO, and to replace other DDS managers as well. The groups cite the "poor performance" of the current management team. They also note that they previously had requested that DDS buy back all of its Class B shares. S&P upgrades to hold from sell.
Liz Claiborne (LIZ) falls 0.51 to 6.44 after S&P Ratings Services places its ratings on the company, including the 'BB+' corporate credit rating, on CreditWatch with negative implications. The CreditWatch placement follows LIZ's pre-announcement and downward earnings revision for the nine months ended September and the full-year 2008.
Savient Pharmaceuticals (SVNT) falls 8.49 to 3.09 after the company reports data from its pegloticase (Puricase) pivotal clinical studies in treatment-failure gout patients. Cowen downgrades SVNT to underperform from outperform based on its lack of conviction that Puricase will receive a first-pass FDA approval, and its view that the market opportunity for Puricase is significantly smaller than current Street expectations.
After the market close on Friday (Oct. 24), Thoratec (THOR) issued an Urgent Medical Device Correction notice. The company says, over time, wear and fatigue of percutaneous lead connecting HeartMate II LVAS blood pump with System Controller may result in damage that could interrupt pump function, require reoperation to replace the pump and potentially result in serious injury or death.
Humana (HUM) posts $1.09, vs. $1.78, third quarter EPS on 13% revenue rise. Cuts $1.17 fourth quarter EPS guidance to $1.07, and $4.35 2008 forecast to $3.85. It sees 2009 EPS of $5.90-$6.10.
Sohu.com (SOHU) posts $1.02, vs. $0.25, third quarter EPS on sharply higher revenues. Sees fourth quarter revenues of $118-$122 million and non-GAAP EPS of $1.20-$1.25. Sets $150 million stock buyback.
Alberto-Culver (ACV) posts $0.31, vs. $0.26, fourth quarter EPS from continuing operations on 7.3% revenue rise.
Huntington Bancshares (HBAN) rises 1.27 to 9.27 after HBAN says the U.S. Treasury has given preliminary approval for HBAN's application to participate in its Capital Purchase Program. Upon final Treasury approval, the U.S. Treasury will buy $1.4 billion of newly issued HBAN preferred shares, with a coupon of 5.0% for 5 years, and 9.0% thereafter, and will also receive warrants, expiring in 10 years, to buy HBAN common stock. As a result, HBAN expects its Tier-1 capital ratio will increase to 11.9%, from 8.9% S&P maintains buy.