Earnings news --- Su (fast)
>> more earnings out after the close of trading today. yum! brands report its profit rose 45% in the second quarter to $178 million. earnings, excludingly,000 items items―excluding items, reported net income per share of 55 cents a share and of course, yum! brands is the operator of taco bell and pizza hut and kentucky fried chicken. the 55-cent figure was three cents ahead of what analysts expected. to the sales, sales rose 7% to 2.1 billion dollars, also ahead of estimates. shares rose .8% today ahead of the report and yum brand shares have gained eight% -- 8% so far this year. merrill lynch shares fell more than 3%. it reported revenue from stock and bond trading plunged 44% last quarter. raymond james also says a drop in trading commissions hurt its profit. su keenan is going to sum it all up.
>> slow is the word, matt. by all accounts, it has been a slow summer for trading volume on the new york mercantile exchange―new york stock exchange, and on the nasdaq, it has been at least 10 months since we’ve seen this sluggish activity. merrill lynch is the first wall street firm to show june’s slow trading is hurting profits, limiting its net income increase to less than 1%. it’s the first time in at least six quarters that merrill’s profit fell short of forecast. while net income rose 10% to $1.06 a share, that’s three cents below analysts’ estimates. merrill lynch is a passive minority investor in bloomberg lp, the parent of bloomberg news. we heard a similar story from raymond james. it says fiscal third-quarter profit rose to $29.6 million or 40 cents a share, still eight cents below the average estimate of analysts surveyed by thomson financial. raymond james stock fell more than 7% on the news before recovering just under 1% of that loss. chief executive thomas james says the impact from lower trading commissions is clear.
>> in the quarter we were off 8% in commission activity, which amounts to a fairly substantial revenue loss, most of which would fall down to pretax profits. so what i would tell you is that if the market continues as it has in the last half of the quarter and the next quarter, ited not be unusual for our profits to be roughly in the same area.
>> on the reasons for the slowdown, jack conlon with variant research gives three, the economy, the election and oil, as keeping investors on the sidelines.
>> obviously, volumes have declined sharply. people have very low conviction and i think you can expect to see lower volumes in august. so i think kind of a very quiet environment with a slightly downward bias.
>> conlon says greater clarity on the economy will help bring investors back to the market . james raphalian with schwab soundview says as many of his clients are waiting on the sidelines, waiting for signs of earnings strength.
>> interesting stuff. so i’ve taken an opportunity here to look at the stock of merrill lynch, as well as how it fares with the brokerage group here today. if i can do this, what i’d like to do, since su mentioned volume and the last sound bite referenced volume, i’ve put together a full-screen graph showing the chart. what we were looking at, minus 11%. new york stock exchange volume from may to june was 11% lighter. merrill, the last of the big brokerage to report suffered through the declines in volume, working out to 160 million shares a day lighter in the month of june for the nyse and two 70 -- 270 million aggregate for the combined, less shares traded. looking at the trough to date, march of 2003, looking at merrill lynch shares, they had a heck of a runup from march, peaking out in march of 2004. so a 12-month run and it’s been nothing but negative since, down 22%. the superlative that jumps to mind, illustrated by the yellow dotted arrow is the fact that the shares you now at a 1-year low. they’ve given back 12 months’ hard work in the span of four months declining. looking at the declines today and also one superlative will jump out, the surprise super lative, and merrill lynch down 3.2 and of the big six in the broker/dealer index, merrill the only not to meet expectations. the three-month losers, there are some big ones in the group. ameritrade down, schwab, jeffries. looking at the p.e. ratios, the most expensive stock you could buy could would be schwab followed by jeffries and then bear stearns, lehman and merrill, all trading at well below market averages. bear stearns says the market is in denial. it may be quiet now but that could change and that’s the “chart of the day.”
