Market briefing --- Matt (slow)
NYSE --- Bob (fast)
Mcdonald's --- Su (fast)
well, first-quarter earnings fell 34% at kraft, the company sold fewer cookies as consumers switched to more healthy snacks. also, kraft faced restructuring and other charges. all totaled, 33 cents a share was if take for the quarter. the company says it wourve 12 cents a share higher if not for the special charges. kraft says its growth plan is on track and it’s sticking with its forecast for the year, but the company has been facing higher prices for raw materials. in response, kraft has eliminated 6,000 jobs and closed as many as 20 plants. little bit of a roller coaster ride today for the dow, at least. bob bowdon down at the big board with a wrap-up of the action. little change but more interesting when you dig deeper, right, bob?
>> indeed, matt. we had a rally that started about 2:45 p.m. eastern time and went through about 3:30 p.m. eastern time but fizzled finishing ultimately down about 14 points on the day. a morgan stanley analyst wrote in a note to clients that he believes the current gillette chairman and c.e.o. is the leading candidate to become chairman and c.e.o. of the coca-cola company. the leading economic indicators is up .3% from february numbers, a drag on financial stocks today because people took that number to mean maybe interest rates would be raised sooner rather than later. we saw wells fargo, bank one, u.s. bancorp and p.n.c. financial down between zero and 2% on the day. even though wachovia was down despite reporting earnings above estimates and sales beating estimates, as well, for the last quarter for wachovia, its shares down 10 cents on the day. the biggest loser was hasbro shares after the company reported sales of only $474 million, less than the $480 million analysts expected for hasbro. and lexmark reported earnings and we saw on the day lexmark shares were down as well. back to you in the studio.
>> bob, thanks very much. appreciate the update as always. pfizer is going to report its earnings before the market opens tomorrow. rising sales of the cholesterol drug lipitor are expected to help boost first-quarter profits. analysts surveyed by thomson financial expect the world’s biggest drugmaker to earn 51 cents a share. revenue could rise 50% over $12 billion, that’s helped by the acquisition of pharmacia early last year. one analyst says pfizer is posting faster growth than most of its peers.
>> when we come to quarterly earnings, it is comforting to know the earnings will be there and there’s a good chance pfizer can beat earnings by some degree.
>> investors say they’re counting on rising sales of lipitor and the impotency drug, viagra, to drive earnings while the company comes up with new blockbuster medications. out tomorrow, general motors, the company expected to report a decline in earnings. buick and saturn are largely to blame. these models are posting the biggest sales declines in the u.s. among g.m.’s six biggest brands, and even with incentives such as a $3,000 discount and no-interest loans, analysts say the saturn-l series and buick century continued to suffer in the first quarter. they cut north american production by 7.3% this quarter. it all circles back in part to those models. analysts say buick appeals to a shrinking base of older buyers and saturn hasn’t kept pace with changing consumer tastes.
>> saturn is i think also one that was a great niche product when it came out and had an interesting business model as far as the way they sold vehicles and dealt with customers. think it got a little bit lost. i think they let products linger a little bit too long, and now they’re trying to play catch-up.
>> investors say general motors needs to spark new interest in the brand to reverse declining market share. mcdonald’s moved swiftly for a successor after jim cantalupo died suddenly of a heart attack early this morning. su keenan has the latest.
>> mcdonald’s choice, matt, of a hands-on insider, the number-two executive at mcdonald’s is seen as key to maintaining the company’s turnaround strategy. they chose president and chief operating officer charlie bell as their new chief executive. the native australian had been groomed for the top job, beginning his career with the company at the age of 15 and assuming the top job in asia five years ago. prior to that, bell had run mcdonald’s australia, where he almost doubled in number restaurants to almost 880. charlie bell’s leadership will continue to advance jim cantalupo’s goals.
>> jim’s genius was recognizing the fact that we need to fix what we’ve got first, slow the growth, get―improve the quality of service, straighten the menu out. just make it all in all a better experience, clean up the stores. so, that is in place and i don’t think there’s anybody within mcdonald’s at this point who would argue with that strategy.
>> mcdonald’s board also elected outside director andrew mckenna as nonexecutive chairman. that’s effective immediately. mckenna is 74 years old. jeffrey sonen feld, the associate dean of the yale school of management, is one of many on wall street applauding the company’s apparent succession plan. he says mcdonald’s action today could serve as a model for corporate crisis decisionmaking.
>> i’d to say i was not surprised, but to tell you the truth, i was surprised. boards in companies in times of crisis and trauma usually don’t act this quickly.
>> and later in this half-hour, we’ll have more on the legacy of jim cantalupo in the oakbrook, illinois, headquarters of mcdonald’s. the flag is flying at half-staff.
>> interesting question, no question about it. sad, no doubt about that. well, you know, by some measures, we talked about mcdonald’s shares down about 2.5%, but by some measures the stock appears to be oversold following a 9% drop that started more than a week ago. take a look at a couple graphs i’ve put together here. this is a resistance chart, folks, and that simply shows its five years. you can see the decline we’ve seen in the stock. this is approximately where jim cantalupo became c.e.o., very close to the bottom. so, clear r clearly he had a good run, but this is where the resistance comingses in, at about $30 a share. if i can zoom this in, you’ll see it a little bit better. also worth looking at are the 9 9% decline, again, on a technical basis. you’re going to notice that the stock has not only broken below here, below that lower trading envelope, but you can see on a relative strength basis that the stock is trading very close to this bottom line, this green line along the bottom, very close to that oversold level. i’ll also point out it was overbought up here when we hit that high before this 9% decline started. so, just a quick look at the technicals for shares of mcdonald’s. eileen leary manages about $1.5 billion for state street research and is forecasting grealter than expected price hikes in energy. when we come back, she’ll tell us which companies are poised to benefit the most.
