Futures dropped 10 points as jobless claims were higher than anticipated (448,000, the highest since Apr '03), while second quarter GDP, at 1.9 percent,was a bit below the expectations of 2.3 percentage growth. GDP is particularly disappointing given that the tax rebate did give the economy a one-time shot in the arm. Dollar dropped, oil rallied.
Two oil stories:
1) ExxonMobilhad a record quarter for revenue, but earnings were below expectations, $2.22 vs. $2.52 expected. Production volumes were a bit light, possibly due to a strike in Nigeria and other issues. Remember total revenues for Exxon are very much tilted toward the downstream side, but profit margins are much higher on the upstream side.
2) Marathon is up 7 percent pre-open after announcing it is evaluating separating the company into two parts, one focused on Exploration and Production, the other on Refining and Marketing. But look, this is mostly a refining company: 86 percent of 2007 revenues were from refining and marketing; only 14 percent from E&P. Their stock has suffered as refining margins have dropped on the high oil prices.
1) Bristol Myersmaking an offer to buy the rest of ImClone for $60 a share, which would give it control of the cancer drug Erbitux. They currently own 17 percent. This is another attempt to take over a biotech company, following on the heels of the Roche-Genentch deal.
2) Motorolahad a smaller than expected loss,guidance was breakeven to $0.02, vs. estimate of $0.01. The handset business looks more stable, but is still losing money. Up 13 percent pre-open.
3) Visa came in above expectations. Yes, the economy is slowing, and the volume growth is not quite as great as it was, but the company is still growing, as Buckingham noted: "growth of payments volume, transactions, and revenues are likely to slow, but even at mid teens growth rates, are still very high relative to GDP."
4) As for Disney, they beat slightly, and while everyone thought their theme parks would be slow, they surprised here: park revenues were up 5 percent; Morgan Stanley attributed the relatively strong performance to international attendance and positive foreign exchange. Park bookings were flat, and while that may be disappointing to some, flat is no disaster in this economy. On top of that, the cable networks were strong, particularly ESPN, and even ABC did fairly well. A slowdown in advertising remains a concern.
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