Futures are down slightly, but have been stable throughout the morning, despite rather downbeat commentary from Alcoa and AMD . Metals a bit weaker (the IMF sold 12 percent of its gold stake, so gold is down 1 percent), dollar fairly stable, Europe down about 1 percent on average.
Alcoa reported adjusted profits of $0.44, several cents below expectations. Several analysts noted that the result was disappointing given the strong aluminum price seen in the quarter; the main problems seemed to be 1) higher than expected costs, 2) lower-than-expected realized price for aluminium, and 3) production a bit below expectations. Many analysts have lowered 2008 estimates.
Chip maker AMD down about 4 percent pre-open; they said that revenues for the first quarter (ending in March) would be below expectations because sales were down across all business segments. They are expecting first quarter revenue to be about $1.5 billion, compared to consensus of $1.61 billion. They're planning to lay off 10 percent of the workforce by the end of the third quarter. Earnings will be reported April 17.
The question is, is this a company-specific problem or is there some kind of problem with the whole industry slowing down? Not entirely clear, but several analysts noted that AMD has had considerable delays in a number of products, supporting the idea that it is company specific.
Goldman upgrades brokers and asset managers like American Express and Franklin Resources.
Lehman upgraded Fannie Mae and Freddie Mac, noting that capital requirements are coming down for them, enabling them to play an even bigger role in the housing markets. They are indeed gaining market share. Of course, no one wants to talk about the considerable additional credit risk they are taking on.
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