09:55 am Citi (C)
Confirming earlier media reports, Citigroup
(C 3.08, +0.03) announced today that it reached a
definitive agreement to sell its Japanese securities
business to Sumitomo Mitsui Banking for 774.5
billion yen, which is equivalent to $7.9 billion at
the exchange rate cited in the news release of 97.75
yen per dollar.
Citi expects to generate $2.5 billion in tangible
common equity at the closing, though an after tax
loss of $0.2 billion is expected. Citi expects
to increase its Citi's Tier 1 capital ratio by 27
basis points.
At the end of the first quarter, Citi had a Tier
1 ratio of 11.8%, ahead of its major competitors JPMorgan
Chase (JPM 33.48, +0.48), 11.3%, Bank of
America (BAC 8.89, -0.05), 10.1%, and Wells
Fargo (WFC 20.26, +0.25), 8.3%. But Citi's
Tangible Common Equity to Risk-weighted Assets ratio
is well below its peers at 1.8% -- JPMorgan Chase,
7.2%, Bank of America, 3.1%, and Wells Fargo, 3.8%.
Concerns regarding Citi's capital position were
raised following a Wall Street Journal report
earlier this week that early results of the
government's stress tests indicate that Bank of
America and Citigroup may need to raise more
capital.
09:22 am Chevron (CVX)
Chevron (CVX 66.10) reported a sharp drop
in first quarter revenue and earnings as the decline
in oil prices took a toll on upstream profit.
Similar to results seen yesterday from Exxon
Mobil, the decline in revenue was
less-than-expected. Revenues fell 45.2%
year-over-year to $36.1 billion, versus the $21.14
billion consensus.
Chevron earned $1.84 billion, or $0.92 per share, including
a $0.20 per share gain on downstream asset
sales, so the result may not be comparable to the
First Call consensus of $0.81. In first
quarter 2008, Chevron earned $2.48 per share.
Production was up slightly by 64,000 barrels per
day to 2.66 million.
The company's average sales price per barrel of
crude oil and natural gas liquids was $36 in the
2009 quarter, down 62% from the prior year.
Chevron said "Operationally, we had an
excellent quarter, with oil production and refinery
inputs both higher than a year ago and operating
expenses lower. However, upstream earnings declined
sharply on lower prices for crude oil and natural
gas. Downstream profits improved mainly on gains
from asset sales, while margins on the sale of
refined products recovered only slightly from a
depressed level in last year's first quarter."
09:08 am MasterCard (MA)
Transaction processor MasterCard (MA
183.45) reported Q1 revenue that was slightly below
estimates, while earnings per share topped
expectations. But MA is known for
handily beating the bottom line estimate, so shares
are still coming under pressure in premarket trading
as investors take some profits from the 62% rise
seen from the stock's 52-week low.
Revenue fell 2.2% year-over-year to $1.16 billion
versus the $1.21 billion consensus. The headwinds
facing the top line were expected, due to weak
volume and currency headwinds as the dollar is much
stronger year-over-year. On top of the currency
headwinds, MasterCard cited higher rebates and
incentives as reasons for the revenue decline.
Specifically, gross dollar volume rose just 0.3%
and the number of processed transactions increased
5.8% year-over-year to 5.1 billion.
MA reported first quarter earnings of $2.80 per
share, which is $0.19 better than the First Call
consensus of $2.61. The bottom line beat was
due to cost cutting measures by MasterCard, with
operating expenses decreasing 10.8% year-over-year.
Shares are down 5.1% in premarket trade.
08:47 am Hartford (HIG)
Hartford Financial (HIG 11.47) reported a
wider-than-expected first quarter loss and guided
fiscal year 2009 earnings per share below the
consensus estimate.
Hartford posted a net loss of $1.2 bln, or $3.77
per share, $0.72 worse than the First Call consensus
that called for a loss of $3.05. The first quarter
net loss includes the impact of a $1.5 billion
after-tax charge, or $4.66 per share, due to lower
estimates of future gross profits in its life
operations as a result of the sharp decline in the
stock market.
The company issued downside guidance for fiscal
year 2009, forecasting earnings per share of $0.05
to $0.45 versus the $0.98 consensus estimate. The
2009 guidance includes the impact of the $1.5
billion after-tax charge, and assumes that the U.S.
stock markets produce an annualized return of 9.0%
-- 7.2% stock appreciation and 1.8% dividends --
from the S&P 500 level of 874 on April 29, 2009.
Hartford has decided to suspend writing all new
business in Japan beginning June 1, and suspend
writing all business in the United Kingdom. Hartford
said it plans to make near-term changes in its U.S.
variable annuity business, such as price increases
on the lifetime income rider with required asset
allocation and eliminating the rider without
investment restrictions.
Shares of HIG are down 8.2% in premarket trading.
At yesterday's closing level, the stock was 244%
above its 52-week low, but down 85% from its 52-week
high.
08:32 am MetLife (MET)
MetLife (MET 29.75) reported first quarter
earnings and revenue that came up short of
expectations as variable investment income declined.
MetLife posted first quarter earnings of $0.20
per share, $0.14 worse than the First Call consensus
of $0.34. Revenue fell 12.1% year-over-year to
$10.22 billion versus the $11.93 billion consensus.
Net investment income declined to $3.3 billion
from $4.3 billion in the year-ago quarter. The lower
variable investment income was mostly due to
negative returns from corporate joint ventures and
real estate funds.
For the quarter, the company had net realized
investment losses, net of income tax, of $618
million. The net realized investment losses were
across a broad range of asset classes, including
corporate credits and hybrid securities, and
included $584 million, net of income tax, in
credit-related losses and impairments.
Note that MetLife is the only insurer involved in
the governments stress test, although it is unclear
when the results of the test will be released.
Shares are down 2.4% in premarket trading.
08:10 am McAffe (MFE)
Computer security company McAfee (MFE
37.54) reported first quarter earnings results that
topped the consensus estimate and offered second
quarter earnings guidance that leaves room for an
upside surprise.
For the first quarter McAfee reported earnings of
$0.54 per share, including $0.02 per share dilution
resulting from the acquisition of Secure Computing
and excluding a $0.03 benefit from an insurance
reimbursement. McAfee's results were $0.06
better than the First Call consensus of $0.48.
Revenues rose 21.1% year-over-year to $447.7
million; the consensus expected $448.5 million.
McAfee said the quarterly revenue figure represents
a new record for the company.
Looking ahead, McAfee said it expects second
quarter earnings to range from $0.54 to $0.58 per
share, including $0.01 to $0.02 of dilution from the
Secure Computing acquisition. McAfee's
projections are in-line with the First Call
consensus of $0.54 with room for an upside surprise.
The company forecasts second quarter revenues of
between $455 million and $475 million. The
outlook brackets the $466.02 million consensus.
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