Produce Prices Up Modestly; Target Earnings Off the Mark; Coal Shortage in China; Icahn's Yahoo Battle Gains Support; Whitney Slashes U.S. Bank Outlooks; Sacked Earnings for Saks; Merck's Vioxx Settlement; Fed on Pause, Says Kohn
Target, the nation's second-largest discount retailer said softer-than-expected sales and higher costs caused the profit fall 8% for the quarter that ended May 3, the Associated Press reported. Target reported a profit of $602 million, or 74 cents per share, in the three months ended May 3, down from $651 million, or 75 cents per share, during the same period last year. Revenue rose 5% to $14.8 billion.
Chinese power plants are running out of coal, with less than a three-day supply in some areas, the Associated Press reported yesterday (Tuesday). It is the second time in three months that Chinese power plants have run short of coal, an unintended effect of government price controls to shield the public from rising global energy costs. About 32 power plants have already shut down due to lack of fuel, the State Electricity Regulatory Commission said in a report.
Carl Icahn's proxy gambit with Yahoo Inc. (YHOO) was given a boost yesterday, when Third Point LLC, a $5.7 billion hedge fund with more than 5 million Yahoo shares, announced its support for Icahn, Reuters reported, citing a source familiar with the matter. Last week, another hedge fund, Paulson & Co., announced its support of Icahn's plan. Paulson & Co. owns 50 million shares in Yahoo.
Oppenheimer & Co. analyst Meredith Whitney, who has famously slashed forecasts for leading U.S. banks in the past year, again cut her earnings outlook for several top banks, citing a "far from over" credit crisis, Reuters reported. She cut her outlooks for Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and Wachovia Corp. (WB).
Luxury department store operator Saks Inc. (SKS) announced yesterday (Tuesday) that its first-quarter net income increased 66% to $18.3 million, or 13 cents a share, from $11 million, or 7 cents a share, for the same period in the prior year. Analysts had expected earnings of 17 cents per share, causing Saks stock to shed 93 cents, a decline of over 6%, to close at $13.20.
New Jersey-based Merck & Co. Inc. (MRK) has agreed to pay $58 million to 30 states to settle complaints that it made deceptive claims about its Vioxx-brand arthritis drug and painkiller. Attorneys claimed Merck played down the drug's health risks in advertising. Shares dropped 28 cents yesterday (Tuesday) to close at $39.74.
U.S. Federal Reserve Vice Chairman Donald Kohn indicated the Fed intends to pause in its rate-cutting campaign. "With the information now in hand, it is my judgment that monetary policy appears to be appropriately calibrated for now to promote both rising employment and moderating inflation over the medium term," Kohn said yesterday (Tuesday), while speaking before a business group in New Orleans, MarketWatch reported.