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Friday, November 07, 2008
Stocks In Focus For Monday
MarketWatch
MarketWatch
SAN FRANCISCO -- Among the companies whose shares are expected to see active trade in Monday's session are American International Group Inc., Starbucks Corp., and Tyson Foods Inc.
American International Group Inc. (AIG) is expected to report third-quarter loss of 90 cents a share, according to analysts surveyed by Thomson Reuters.
Starbucks Corp. (SBUX) is forecast to post earnings of 13 cents a share in the fiscal fourth quarter, according to analysts surveyed by FactSet Research.
Tyson Foods Inc. (TSN) is estimated to report a profit of 18 cents a share in the fiscal fourth quarter, according to analysts surveyed by Thomson Reuters.
Rockwell Automation (ROK) is expected to report earnings of 99 cents a share in the fiscal fourth quarter, according to analysts surveyed by FactSet Research.
Sempra Energy (SRE) is projected to post a third-quarter profit of $1.08 a share, according to analysts surveyed by FactSet Research.
Dish Network Corp. (DISH) is likely to report a third-quarter profit of 57 cents a share, according to analysts surveyed by FactSet Research.
After Friday's closing bell, Berkshire Hathaway (BRKA) (BRKB) said that third-quarter net income came in at $1.06 billion, or $682 per class A share, down 77% from a year earlier when the insurance-focused conglomerate made $4.55 billion, or $2,942 per class A share. Operating earnings, which exclude net realized investment gains and losses, were $2.07 billion, or $1,335 per class A share, in the latest period. The net result included net investment and derivative losses of $1.01 billion, Berkshire said.
Watch list
AT&T Inc. said (T) it will buy Centennial Communications Corp. (CYCL) for $944 million in cash. The acquisition will broaden AT&T's wireless coverage for customers in largely rural areas of the Midwest and Southeast United States and in Puerto Rico and the U.S. Virgin Islands.
Consolidated Edison Inc.'s (ED) third-quarter net income fell to $182 million, or 66 cents a share, from $312 million, or $1.15 a share, in the third quarter of last year. Operating revenue totaled $3.86 billion, up from $3.58 billion a year earlier, the utility company said Friday in a 10-Q regulatory filing.
Dillard's Department Stores Inc. (DDS) had its ratings lowered by Standard & Poor's because of weak consumer spending. S&P cut its corporate credit rating on Dillard's to B+ from BB-. The outlook is stable. "The rating change reflects our belief that the company will be more challenged than previously expected by the current weak economic environment in the U.S., and that credit metrics will deteriorate more than we had originally projected as a result of a deepening spending pull-back by consumers," said Diane Shand, an S&P credit analyst, in a statement.
General Motors Corp. (GM) had its ratings lowered by Standard & Poor's to CCC+ from B- because of cash loss, and had its ratings put on review for a possible downgrade by Fitch after the ailing automaker posted a $2.5 billion loss earlier in the day.
Genworth Financial Inc. (GNW) had its long-term counterparty credit rating lowered to A- from A by Standard & Poor's. S&P also revised its outlook on Genworth's insurance subsidiaries to negative from stable and affirmed the companies' AA- counterparty credit and financial strength ratings. "The GNW downgrade reflects its increased funding needs to meet debt maturities in 2009, reduced fixed-charge coverage, and contraction in diversified cash flows," said S&P credit analyst Kevin Ahern.
Las Vegas Sands Corp. (LVS) said it appointed Kenneth Kay as the company's chief financial officer. The appointment is effective Dec. 1. Kay comes to Sands from CB Richard Ellis Group Inc., where he has served as chief financial officer since 2002.
MBIA Inc. (MBI) said it disagrees with Moody's methodology on capital modeling for mortgage-related losses after the ratings agency lowered the insurance financial strength of its subsidiary MBIA Insurance to Baa1 from A2. "We disagree with Moody's approach to capital modeling for mortgage-related losses, particularly its 'stress on stress' methodology. Nonetheless, the downgrade has very little direct impact on MBIA," said Chief Executive Jay Brown in a statement. Moody's Investors Service downgraded the insurance financial strength rating of MBIA Insurance Corp. and supported insurance companies to Baa1 from A2. Moody's also lowered MBIA Inc.'s debt ratings to non-investment grade rating of Ba1 from Baa2.
Whole Foods Markets Inc. (WFMI) had its corporate credit rating lowered to BB- from BB by Standard & Poor's. "The downgrade reflects our expectation that profitability and credit metrics will most likely be unchanged in the next year," said Charles Pinson-Rose, an S&P credit analyst. "Currently, we expect the company to be effectively cash flow neutral in 2009 but in a situation where sales at the company's existing stores declined sharply, the company would be cash flow negative and now has the excess liquidity," he added. The outlook is stable.
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Think telemarketer. Except, it's much worse because you can't avoid this call. Instead, when you get one, it's time to pay up, because the bet you placed with borrowed money is eating itself.
Buying stocks on margin is risky because you're essentially "playing" with someone else's money. If the shares you purchased tank, your losses will likely be more than if you had bought the shares with your own cash. This is why the New York Stock Exchange and the Nasdaq impose certain restrictions on the practice.
Initially, you¿re only allowed to borrow half of the money from your broker when buying on margin. You set up a margin account and from then on must keep a maintenance balance of at least 25% of the market value of your stocks.
If the market value of your investment falls below this minimum, you're required to make up the difference by either depositing money into your account or selling some of the stock. If your broker notifies you that you've dipped below this minimum, it's called a margin call.
If you fail to adjust your account accordingly, the broker is authorized to sell shares in your account to make up the difference. The broker can even sell other stock in your margin account to make up for the loss that selling the shares didn't cover.
As an example, say you buy $8,000 in stocks of any given company. You borrow the maximum $4,000 from your broker and pay the rest yourself. Now, if and when the total value of these shares changes, you must make sure you maintain at least $2,000 (25%) in equity. In other words, if the total value were to drop below $6,000, you¿d be in trouble since you only put in $4,000 of your own money to begin with.






