Stock Market Predictions

ThyssenKrupp $14 billion sale plan flags consolidation

Stock Market Predictions

FRANKFURT (Global Markets) - ThyssenKrupp (TKAG.DE) shares jumped on Friday after the German steelmaker unveiled a 10 billion euro ($14 billion) divestment plan that could spur consolidation in Europe's overcrowded stainless steel sector.

The restructuring will include a spin-off of the company's stainless steel division and aims to help ThyssenKrupp pay down debt and focus on its engineering business.

Analysts had expected a shake-up since the company's new Chief Executive Heinrich Hiesinger took over early this year.

But the scope of the revamp was more far-reaching than anticipated by the market.

"More surprising is the considered spin-off of Stainless Global, opening up strategic partnerships with former ArcelorMittal stainless unit Aperam or Finland-based Outokumpu," Equinet analyst Stefan Freudenreich said.

ThyssenKrupp shares jumped 7.1 percent to 31.955 euros by 0908 GMT, outpacing a 0.5 percent gain by Germany's DAX index .GDAXI.

ThyssenKrupp's stainless business is Europe's biggest with almost 3 million tonnes of output and annual sales of 5.9 billion euros. The company will examine all options for continuing the business outside the group.

"The main target is clearly to bring down debt levels," DZ Bank analyst Dirk Schlamp said.

Analysts have previously called for divestments at ThyssenKrupp, a lumbering giant that has piled up debts of 5.8 billion euros related to mammoth plants it has built in the United States and Brazil.

Analysts expect Hiesinger -- the company's first CEO who has no steel background -- to strengthen the non-steel sectors, including elevators and other technology-related activities, whose strong performance has offset start-up losses at its Steel Americas division.

Analysts estimate that the non-steel activities, which they see contributing around 70 percent to group's total value, were main growth drivers in the fiscal second quarter to end-March, along with European carbon steel operations and the global stainless business.

ThyssenKrupp is due to report quarterly results on May 13 and is expected to show its second-quarter earnings were boosted by higher steel prices and a booming German automotive industry.

OVERCAPACITY IN STAINLESS

Europe's stainless steel sector has long suffered from overcapacity and volatility. ThyssenKrupp and its rivals sounded out possible consolidation in the sector in 2009, but Germany's biggest steelmaker opted for a stand-alone strategy.

It then launched a restructuring that included a shutdown of one of its German stainless factories last year and brought forward production plans of a new stainless plant in Alabama.

Analysts have said a natural partner for ThyssenKrupp could be Outokumpu (OUT1V.HE) because the Finnish rival has a strong presence in northern Europe and the German firm is absent there.

They also have said the German company would have a clash of culture with ArcelorMittal, while No.1 stainless steel producer Acerinox (ACX.MC) is not keen to acquire assets in Europe.

This year, global steel market leader ArcelorMittal (ISPA.AS) spun off its stainless steel division, Aperam (APAM.AS) and listed it on the stock exchange, prompting speculation about possible consolidation.

Aperam will kick off a raft of steel-industry earnings next week, reporting quarterly results on Tuesday. ArcelorMittal itself follows on Wednesday, Germany's second-biggest steelmaker Salzgitter (SZGG.DE) on Thursday and ThyssenKrupp on Friday.

(Editing by Dan Lalor and Jane Merriman)

($1=0.7158 euros)

Accuray shares plunge on weak quarter

Stock Market Predictions

BANGALORE (Global Markets) - Shares of Accuray Inc (ARAY.O) sank 13 percent on Friday morning, a day after the CyberKnife system maker posted a quarterly loss that missed expectations.

The CyberKnife system, used to treat cancer, applies high doses of radiation to destroy the tumors.

"The reason for the shares slide is that the market thinks this is a distracted company," Soleil Securities' senior medical technology analyst Junaid Husain told Global Markets.

The company is in the middle of integrating rival TomoTherapy Inc (TOMO.O) which it had acquired for about $277 million in March to expand its operations in the radiation oncology field.

Analysts said the Tomotherapy deal should add to Accuray's earnings in fiscal 2012, a year earlier than previously anticipated.

"We view the TomoTherapy deal favorably as its service margins are trending in the proper direction and believe it will add significant scale to Accuray," Stephens analyst Drew Jones, who maintained his 'overweight' rating on Accuray stock, wrote in a note.

However, while providing scale and some technical and financial synergies, the combined company will still be smaller than the other three players in the space: Varian (VAR.N), Siemens (SIEGn.DE) and Elekta (EKTAb.ST), and will still face formidable competition, J.P.Morgan analyst Tycho Peterson said in a note.

Shares of California-based Accuray were down 10 percent at $8.04 on Friday afternoon on Nasdaq after falling to a low of $7.72.

(Reporting by Rajarshi Basu in Bangalore; Editing by Sriraj Kalluvila)

Timberland disappoints as margins shrink; shares plunge

Stock Market Predictions

BANGALORE (Global Markets) - Timberland Co (TBL.N) said it expects margins to remain under pressure this year as the shoemaker battles rising product and labor costs, sending its shares plunging 32 percent.

The company, known for its rugged outdoor footwear brands such as Earthkeepers, Howies and Mountain Athletics brands, also posted a quarterly profit that missed Wall Street expectations for the first time in seven quarters.

Timberland has consistently warned of margin pressures from rising leather, labor and transportation costs this year.

The Stratham, New Hampshire-based company said it delayed meaningful price increases to deal with the higher costs to the second half of 2011.

The company also said it would invest in marketing to drive sales growth over the second half of the year.

"(Timberland's) miss was pretty shocking. They surprised the market in terms of how much they are spending on investments," Wall Street Strategies analyst Brian Sozzi told Global Markets.

"One area of investment is China and the other is technology to support their store growth initiatives."

The results are in contrast to the better-than-expected earnings of rivals Wolverine Worldwide Inc (WWW.N) and Deckers Outdoor (DECK.O).

Skechers USA Inc (SKX.N), however, posted a smaller-than-expected first-quarter profit on declining demand for the once-hot toning shoes.

For the quarter ended April 1, Timberland earned 35 cents a share, missing analysts' expectations of 59 cents a share, according to Thomson Global Markets I/B/E/S.[ID:nASA022NO]

Timberland's shares dived 32 percent to a three-month low of $28.10 on Thursday on the New York Stock Exchange. The meltdown has wiped out around $650 million of the company's market value.

(Reporting by Viraj Nair in Bangalore; Editing by Maju Samuel and Saumyadeb Chakrabarty)

CenturyLink Q1 beats but forecast fails to inspire

Stock Market Predictions

BANGALORE (Global Markets) - CenturyLink Inc (CTL.N) posted a better-than-expected quarterly profit as gains at high-speed Internet customers offset those disconnecting their home phones, but the rural telephone operator forecast second-quarter earnings below market.
Regional phone companies like CenturyLink, which acquired rival Qwest for $10.6 billion last month, face the challenge of finding new ways to grow as consumers disconnect home phones in favor of Web and mobile services.

The company agreed to buy Savvis Inc (SVVS.O) for $2.5 billion last month to beef up its data center business and cash in on growing demand for cloud services.

CenturyLink forecast second-quarter earnings of 63-67 cents a share, on revenue of $4.40-$4.43 billion, including the impact from operations of its recent Qwest buy and certain other items.

Analysts, on average, had expected earnings of 72 cents per share, according to Thomson Global Markets I/B/E/S.

For full-year 2011, the company expects earnings of $2.55-$2.65 per share, while analysts were expecting $2.96.

CenturyLink's 2011 outlook looks conservative, brokerage UBS said in a note to clients.

"While the clear focus today is on updated guidance post-Qwest, we do not think investors should penalize the shares for a headline EPS guide that is below expectations," Nomura analyst Mike McCormack said.

CenturyLink shares fell nearly 3 percent as investors flagged its outlook numbers.

Nomura's McCormack said the Qwest merger has the potential to draw out meaningfully higher synergies than current estimates. "We think CenturyLink will reward patient investors."

CenturyLink said it expects to achieve about $375 million in annual run-rate synergies end of 2011 in connection with its 2009 acquisition of Embarq.

STRONG Q1 INTERNET SUBSCRIBER ADDS

During the first quarter, CenturyLink was able to slow the rate of line loss in its business and tap the demand for high-speed Internet and high-bandwidth services, Chief Executive Glen Post said in a statement.

The company lost 516,000 access line customers, ending the quarter with 6.4 million lines, down 7.5 percent from a year ago.

However, it added more than 52,000 high-speed Internet customers to end the quarter with about 2.4 million.

"Access line and broadband subscriber trends were both slightly better than our forecast," Stifel Nicolaus analyst Christopher King said.

For January-March, excluding items, CenturyLink earned 76 cents a share, topping estimates of 70 cents per share.

CenturyLink shares were trading flat at $40.31 on Thursday on the New York Stock Exchange. They touched a low of $39.28 earlier in the day.

(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Unnikrishnan Nair and Joyjeet Das)

Sony defends speed of notification of data breach

Stock Market Predictions

NEW YORK (Global Markets) - Sony Corp has defended its response to a massive Internet security breach in a letter to Connecticut Senator Richard Blumenthal, who has accused the company of dragging its feet in notifying consumers.

Kazuo Hirai, president and group chief executive of Sony computer entertainment, wrote that Sony had worked as quickly as possible to notify consumers about the data theft. A copy of the letter, dated May 5, was obtained by Global Markets on Friday.

Blumenthal, a former state attorney general, has said that Sony acted too slowly in sending out 500,000 emails per hour to consumers after the breach that exposed personal data of more than 100 million of its online video game users.

Sony has said it could not rule out that some 12.3 million credit card numbers had been obtained during the hacking.

The company, under fire since the breach, noticed unauthorized activity on its network on April 19, and reported it to the U.S. Federal Bureau of Investigation on April 22.

Hirai wrote that it took longer to send notices because "these emails are not 'batch' emails. The emails are individually tailored to our consumers' accounts."

He said the company had complied with various state laws by getting word out to consumers in blog posts on its PlayStation website.

The notification was blogged by Sony on April 26.

Hirai wrote that Sony had found itself "in the cross-hairs of controversy" and that cyber crime had become a widespread problem in society. "What happened to us, though more vast in scope, has happened to many others before," he said.

Blumenthal said in a statement on Friday that Sony had taken a "strong first step."

On Thursday, Sony's Chief Executive Howard Stringer broke his silence about the hacking by apologizing in a letter to consumers posted on PlayStation's website.

(Reporting by Liana B. Baker; editing by Keiron Henderson)

(This article has been modified to correct the surname of Sony executive to Hirai as well as Hirai's job title to president and group chief executive of Sony computer entertainment)

Cigna posts higher profit, raises forecast

Stock Market Predictions

NEW YORK (Global Markets) - Cigna Corp (CI.N) posted a 52 percent jump in quarterly profit on Thursday, helped by membership growth in its healthcare plans, and the insurer raised its full-year forecast.

The first-quarter results from Cigna, which also gave a rosier full-year membership outlook, closes a strong reporting season across the board for large U.S. health insurers, which raised their profit outlooks for 2011.

The insurers have benefited from Americans using medical services at lower-than-expected rates as they grapple with the shaky economy.

Cigna's first-quarter net income rose to $429 million, or $1.57 per share, from $283 million, or $1.02 per share, a year earlier.

Excluding special items, earnings easily topped analysts' expectations, but the extent of the beat was not immediately clear, according to Thomson Global Markets I/B/E/S.

Cigna shares rose 2.4 percent.

First-quarter "results appear to be of high quality with multiple drivers of upside strength," Goldman Sachs analyst Matthew Borsch said in a research note, citing outperformance in Cigna's international, and disability and life insurance segments, as well as for healthcare.

Revenue rose 4 percent to $5.41 billion. Analysts looked for $5.45 billion.

Cigna is more heavily weighted than rivals in fee-based health plans for larger employers, rather than plans that assume insurance risk. Those fee-based plans tend to be less profitable, but also were not as targeted under last year's healthcare overhaul, making Cigna seemingly more immune to the regulatory changes.

Earnings in the healthcare segment jumped 47 percent to $246 million. Membership rose in Cigna's behavioral and dental plans, as well as in its main medical plans. Its healthcare medical claims expenses fell 6 percent.

"Mirroring the trend reported by others in the industry, Cigna's bottom line outperformance ... was primarily a result of lower than expected medical utilization," Susquehanna Financial Group analyst Chris Rigg said in a research note.

Profit in Cigna's smaller disability and life, and international segments rose 10 percent and 7 percent, respectively.

Cigna projected 2011 earnings, excluding items, at $4.65 to $5.00 per share, up from its prior range of $4.30 to $4.70. Analysts have been looking for $4.73.

"We expect there is some conservatism in operating earnings guidance as well and see opportunities for the company to further 'beat and raise' numbers as the year progresses," Sanford Bernstein analyst Ana Gupte said in a research note.

The company projects membership to rise between 1 percent to 3 percent this year, after previously saying it could be flat in 2011.

Cigna shares were up $1.09 at $47.01 in morning trading on the New York Stock Exchange. Through Wednesday, Cigna shares had climbed 25 percent this year, although that was less than a 35 percent rise for S&P Managed Healthcare index .GSPHMO of large insurers.

(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn, Dave Zimmerman and Derek Caney)

Fortress profit up but faces dividend questions

Stock Market Predictions

BOSTON (Global Markets) - Fortress Investment Group LLC (FIG.N) on Thursday said pretax distributable earnings rose 7 percent in the first quarter as assets under management increased.

But its shares fell 5.3 percent in morning trading as the company faced questions over its lack of a dividend.

Fortress, one of the first big hedge fund and private equity firms to go public, said its net loss attributable to Class A shareholders widened to $103 million from $84 million a year earlier as compensation costs and income tax expenses rose.

Pretax distributable earnings were $103 million, or 20 cents per share, up from $96 million, or 19 cents per share, a year earlier.

Fortress says pretax distributable earnings are the best way to measure its performance because the figures exclude compensation costs tied to the equity interest of principals who took the company public in 2007.

"I'd say overall our initiatives are tracking well," Chief Executive Daniel Mudd said on a conference call with investors.

Several analysts on the call mentioned the company's lack of a dividend, which it suspended during the financial crisis of 2008. Other asset managers took similar actions at the time but have since restored or increased dividends as funds have rebounded.

Mudd said he could not offer any sense of timing on when the company's board may make a decision to resume payments or not. Management has not made a recommendation to the board on the question to date, he added.

Assets under management were $43.1 billion at March 31, up from $30.2 billion a year earlier but lower than the $44.6 billion it reported on December 31, 2010.

The increase from a year ago was due mainly to the acquisition in April 2010 of Logan Capital Partners, which had $12.5 billion in assets under management at the time.

Fortress said first-quarter redemptions totaled $614 million. During the period, assets under management fell in the company's private equity funds and credit hedge funds.

Total segment revenue -- including incentive income and fees -- was $244 million in the quarter, up from $207 million a year earlier. Analysts surveyed by Thomson Global Markets I/B/E/S on average had $211 million.

(Reporting by Ross Kerber; Editing by John Wallace and Maureen Bavdek)

VOC Energy Trust up in NYSE debut

Stock Market Predictions

NEW YORK (Global Markets) - Shares of VOC Energy Trust (VOC.N), which invests in oil and natural gas production in Kansas and Texas, rose in their debut on the New York Stock Exchange on Thursday after the initial public offering priced at the top of the proposed range.

Shares were at $22, or 4.8 percent above their IPO price in early trade on the New York Stock Exchange.

VOC Energy Trust raised $232.8 million in the IPO on Wednesday, selling 11.09 million trust units for $21 each. It had planned to sell the units for $19 to $21 each.

The trust was formed by VOC Sponsor, a privately held limited partnership. The Delaware statutory trust is expected to own a term net profit interest in the limited partnership's exposure to the oil and gas production in the two states, receiving 80 percent of the net proceeds.

Net proceeds will be used to repay debt, buy back some outstanding equity interests and pay cash distributions. The trust also plans to pay cash distributions to unitholders, expected to start on August 15.

Raymond James and Morgan Stanley led underwriters on the IPO.

(Reporting by Alina Selyukh, editing by Gerald E. McCormick)

Huntsman profit beats Street; stock jumps

Stock Market Predictions

NEW YORK (Global Markets) - Chemical producer Huntsman Corp (HUN.N) posted a better-than-expected quarterly profit as it raised prices to offset increased raw material costs, sending its shares up 6.2 percent to a nearly three-year high.

The company, which makes the building blocks for auto paint, foam insulation and Spandex, said demand was strong, despite higher prices in four of its five business units.

Margins improved in only three units, though. The pigments unit saw margins jump the most -- 13 percentage points -- due to tight supplies of titanium dioxide, a key ingredient in auto paint.

"They did extremely well," Gleacher & Co analyst Edlain Rodriguez said. "Their facilities are running at full capacity. They're able to raise prices to offset costs and demand is extremely strong."

In a February interview with Global Markets, Chief Executive Peter Huntsman warned that supply costs would jump in the first quarter.

"Demand for our largest businesses continues to improve with the global economic recovery," Huntsman said in a statement on Thursday.

(For a graphic on Huntsman, click on: r.reuters.com/sef49r.)

"We are raising prices and recapturing margin despite the headwind of increased raw material and energy costs."

For the first quarter, the company posted net income of $62 million, or 26 cents per share, compared with a net loss of $172 million, or 73 cents per share, in the year-ago period.

Excluding a charge to settle a legal dispute, a gain from currency transactions and other one-time items, Huntsman earned 47 cents per share. By that measure, analysts expected 24 cents per share, according to Thomson Global Markets I/B/E/S.

Revenue rose 28 percent to $2.68 billion. Analysts expected $2.38 billion.

The company's cost of goods sold, a key measure of raw material prices, jumped 28 percent to $2.22 billion.

Sales dropped in the company's textile effects unit, which makes clothing dyes. Customers were not as willing to pay higher prices that stemmed in part from spiking cotton costs.

Huntsman is one of the world's largest producers of titanium dioxide, which is primarily used to make automobile paint. Last month, rival DuPont (DD.N) said a Chinese company stole its titanium dioxide trade secrets.

Huntsman shares were up 6.2 percent at $20.69 in afternoon trading after hitting a nearly three-year high of $20.95 earlier in the session.

Jon Huntsman, the former U.S. ambassador to China and brother of Huntsman Corp's chief executive, is considering a run for the White House.

(Reporting by Ernest Scheyder; editing by Maureen Bavdek, John Wallace and Andre Grenon)

Atmel shares fall on weak outlook

Stock Market Predictions

(Global Markets) - Chipmaker Atmel Corp's (ATML.O) shares fell 6 percent on Thursday, a day after the company reported strong first-quarter results but gave a weak second-quarter revenue outlook.

Revenue is expected to rise 1-4 percent, sequentially, taking it to $466-$479.9 million, Atmel said in a call.

Analysts, on an average, were expecting revenue of $473.2 million, according to Thomson Global Markets I/B/E/S.

Investors were also looking for strong second quarter guidance, suggesting a linear ramp in touchscreen shipments during 2011, Capstone Investment analyst Jeff Schreiner wrote in a note.

"We believe one potential reason for less-than-stellar guidance could be some smartphone shipments occurring during the second half versus prior estimated linear acceleration through out 2011," Schreiner said.

Atmel expects gross margin to be about 51 percent in the second quarter.

First-quarter results beat estimates, helped by an increased demand for its touchscreen chips.

Shares of the company opened more than 4 percent down at $14.10 on Thursday on Nasdaq.

(Reporting by Swati Chitnis; Editing by Joyjeet Das)

Microsoft stock tumbles after Windows sales dip

Stock Market Predictions

SEATTLE (Global Markets) - Microsoft Corp shares fell as much as 5 percent on Friday, a day after the software company reported a dip in its Windows operating system sales.

The world's second-largest tech company behind Apple Inc met Wall Street's profit estimate and beat on overall sales in its earnings report on Thursday.

But investors were concerned with lower personal computer sales nagging at Windows, Xbox sales bringing down profit margins and losses in its online business.

Microsoft shares closed down 3 percent at $25.92 on Nasdaq after a late-day rally. Earlier in the session they hit a low of $25.36, a 5 percent drop which would have been the largest one-day percentage fall since July 2009, had the shares closed at that level.

The shares ended around the level they were at on Monday, before a run-up leading into quarterly earnings. The stock had risen sharply after chip maker Intel Corp forecast revenue above Wall Street estimates, feeding optimism that a dip in PC sales last quarter did not indicate a long-term trend.

"Everyone, including myself, pounded the table on the Intel trade," said BGC Partners analyst Colin Gillis. "And it just didn't happen."

PC sales fell 1 percent last quarter, according to research firm Gartner [ID:nN13301394]. Microsoft's results reflected that, although it said business demand was outpacing weak consumer demand for PCs.

The stock is down 16 percent in the last 12 months, compared to a 16 percent gain in the Nasdaq.

"There were two catalysts for the sharp decline in Microsoft," said Joe Cusick, senior market analyst at Chicago-based online brokerage firm optionsXpress. "One, the stock broke through the 200-day moving average of $26.08, and UBS lowered their price target for the stock."

UBS analyst Brent Thill on Friday cut his price target on Microsoft to $32 from $35, citing the long-term threat posed by tablets to the traditional PC business.

"Even though they had good earnings, the PC market is under scrutiny and there continues to be uncertainty on whether or not Microsoft can compete with the growing tablet and handheld devices from the likes of Samsung and Motorola," said Cusick.

Options traders, many of whom placed bets on Microsoft shares jumping earlier in the week -- perhaps as a hedge to holding the stock in case of a decline -- moved into a more critical mode.

"There is nothing too rosy in Microsoft options trading on Friday compared to some of the bullish trades we saw ahead of earnings," said Caitlin Duffy, equity options analyst at Interactive Brokers Group in Greenwich, Connecticut.

"For the most part, we are seeing call selling in near-term options," she said, indicating traders are looking to get rid of their rights to buy the stock.

Overall, Microsoft analysts kept their faith that Microsoft will survive a rough patch in PC sales. Twenty-five of 35 analysts polled by StarMine recommend buying the stock. Only one says sell.

As a result of Microsoft's decline, it is close to being eclipsed by old foe IBM in terms of market value. Apple, which overtook Microsoft last year, is the most valuable U.S. tech company at $321 billion, Microsoft is second at $225 billion and IBM is third at $207 billion.

(Reporting by Bill Rigby and Doris Frankel. Editing by Robert MacMillan, Bernard Orr)

Good times roll for auto suppliers

Stock Market Predictions

DETROIT (Global Markets) - Major auto suppliers blew past profit expectations on Friday, suggesting the recovery in the global auto market remains strong despite rising oil prices and the disaster in Japan.

Goodyear Tire & Rubber Co (GT.N), powertrain maker American Axle and Manufacturing Holding Inc (AXL.N) and Lear Corp (LEA.N), which makes seating and electrical power management systems, posted first-quarter earnings that easily exceeded Wall Street estimates on improving global demand.

"What we're seeing from these results is the volumes are significantly higher and therefore the recovery in the auto industry is gaining momentum," said Tim Ghriskey, chief investment officer with Solaris Asset Management.

"Clearly, the sales are doing well and the consumer is replacing older vehicles," added Ghriskey, who has owned auto stocks in the past and still follows the sector closely.

Shares of Goodyear, American Axle and Lear were up 10.9 percent, 3.3 percent and 2.5 percent, respectively, in morning trading.

Lear cited a 5 percent increase in global auto production in the first quarter compared with a year earlier. Demand grew around the world, offsetting a 32 percent production decline in Japan due to the earthquake and tsunami last month.

Friday's earnings reports continued a strong week for the sector, underlined by Ford Motor Co's (F.N) better-than-expected profit.

Other suppliers whose results topped expectations this week included BorgWarner Inc (BWA.N), Federal-Mogul Corp (FDML.O) and Dana Holding Corp (DAN.N).

Dealer groups -- AutoNation Inc (AN.N), Penske Automotive Group Inc (PAG.N), Asbury Automotive Group Inc (ABG.N) and Group 1 Automotive Inc (GPI.N) -- also posted strong profits, although many warned the Japanese crisis would crimp vehicle inventories on their lots.

"Obviously, it's all about volume," Morningstar analyst David Whiston said. "With a lower fixed cost and a better top line, it's not a surprise to see earnings doing so well."

While he still expects some choppiness due to the Japanese crisis, he said the industry's recovery remains in place.

David Silver, analyst with Wall Street Strategies, cautioned against exuberant expectations, however.

"I wouldn't call it a party right now. It's more of a get-together," he said. "The profitability of the North American automakers is much improved from 2007 and 2008, but the Japan disaster is an overhang."

Silver expects more of drag on automaker and supplier earnings later this year.

That squared with comments from General Motors Co (GM.N) Chief Executive Dan Akerson, who said on Thursday that the Japanese crisis was a "second-quarter event.

Akerson, like Ford CEO Alan Mulally, said the disaster in Japan was not likely to have a great impact on earnings.

Silver also said the European market will be weak for the year, while Ghriskey voiced concern about rising raw material costs.

(Additional reporting by Bernie Woodall; editing by John Wallace)

Storm clouds gather for RIM after profit warning

Stock Market Predictions

TORONTO (Global Markets) - Storm clouds over Research In Motion have darkened with a dismal profit warning, and the company's shares fell sharply on Friday after the company's third jolt of bad news in a month.

The BlackBerry maker, out of favor even with its fans, will need flawless execution on a promised next generation of gadgets to convince increasingly skeptical investors that it can run with mobile leaders Apple and Google.

Ontario-based RIM on Thursday slashed its sales and earnings forecasts, an unexpected blow that followed an anemic forecast in late March and last week's troubled launch of an as-yet underwhelming competitor to the red-hot Apple iPad.

"The updated guidance has substantiated a lingering concern about a growing portfolio gap in a hyper-competitive market," CCS Insight analyst Geoff Blaber said.

RIM tried to excite customers last year with an improved browser and upgraded operating system on its touchscreen and slideout keyboard BlackBerry Torch. But the response was tepid.

It promises another major upgrade and a slew of more powerful touchscreen devices at its annual BlackBerry World trade show in Florida next week.

RIM's products compete with those from Apple and with devices using Google's Android platform. Customers, are tired of waiting for RIM's innovations to kick in, are voting with their dollars for the rival phones.

RIM shares fell some 14 percent by early afternoon on Friday, in line with a late-trade fall on Thursday -- an eerily similar drop to that after its March results. The shares are around $49, their lowest level since October.

"We've heard for too long about RIM's great product roadmap. Consumers are not listening nor waiting," National Bank analysts said in a note. "RIM does not even seem to have dual cameras on its upcoming BlackBerry product line-up. The last time we checked, video is the future."

Thursday's after-market warning focused on weak sales of RIM's aging smartphones in the United States and Latin America, and the company lowered an already tepid outlook for the current quarter.

All hope seems to rest on what the Canadian company pulls out of its labs and onto center stage at BlackBerry World, starting Monday, where the company will unveil a new generation of touchscreen BlackBerrys.

LOSS OF FAITH

RIM had hoped to turn its fortunes around with the launch of its long-awaited PlayBook tablet -- a sleek tablet computer that runs on a fresh QNX platform that RIM says will transform its business.

But the PlayBook won dismal reviews and complaints it was rushed out before it was ready, despite a six-month launch pad.

"Mis-execution has undermined sentiment recovery," wrote Mike Abramsky, a longtime optimist on RIM. Abramsky kicked RIM out of his list of preferred stocks and slashed his target price to $55 from $90.

"PlayBook is a promising tablet contender, but RIM bears some responsibility for its less-than-favorable debut, confusion over its positioning and criticisms it was not fully ready for market," he wrote.

Customers and developers are eager to know when the PlayBook will run Android and BlackBerry smartphone applications, while investors want to know how many PlayBooks sold in the first week and when better phones will ship.

Jefferies analyst Peter Misek said RIM was scrambling to fix glitches in the PlayBook and integrate QNX, likely leading to delays for new handsets and flagging interest from carriers. He dropped his rating by two notches to "underperform" and cut his price target to $35 from $80.

RIM has tried to shift attention to what comes next -- a suite of phones running an upgraded (but not yet QNX-based) operating system with beefed-up hardware.

"We're cutting over to a whole new platform, a whole new set of products, a whole new set of architecture. And it's very, very powerful and very, very exciting," RIM's co-chief executive Jim Balsillie told a conference call on Thursday.

"Stay tuned, the products are truly fantastic both in terms of their style and their performance. The issue is, I would have liked to have them sooner."

The sliding stock price shows that the market is yet to be convinced.

Newell profit tops estimates; raises dividend

Stock Market Predictions

NEW YORK (Global Markets) - Newell Rubbermaid Inc's (NWL.N) quarterly profit beat Wall Street expectations on strength in emerging markets and price increases.

The maker of Sharpie pens and Rubbermaid storage containers said it was on track to meet its full-year outlook and will raise its quarterly dividend by 60 percent to 8 cents a share. Its shares were up 1.3 percent at $19.99 in premarket trading on Friday.

Newell has raised prices of some products to offset rising oil and resin costs. Makers of everything from soap to diapers have said they will pass on some costs to shoppers. Procter & Gamble (PG.N) sees its costs soaring about three times as much at it had anticipated earlier.

Newell's first-quarter net profit rose to $75.7 million, or 25 cents a share, from $58.4 million, or 19 cents a share, a year earlier.

Excluding items, it earned 30 cents a share, beating the analysts' average estimate of 28 cents, according to Thomson Global Markets I/B/E/S.

Sales fell 0.3 percent to $1.30 billion, while analysts expected $1.33 billion. Sales in developing markets, where the company has substantially increased its investment, rose double digits in the first quarter. U.S. sales fell 4 percent as bargain-hungry shoppers traded down and the company cut back on discounts.

"While sales were a bit light, we think Newell will be able to adjust its offering relatively quickly," BMO Capital markets analyst Connie Maneaty said, highlighting Newell's plans to launch more "value-priced" options and step up promotions.

Newell repeated its 2011 profit forecast of $1.67 to $1.70 a share, excluding items. It also backed its core sales growth outlook of 4 to 5 percent and gross margin forecast calling for an improvement of 0.5 to 0.75 percentage point.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Derek Caney, Dave Zimmerman)

Merck tops forecasts after research budget trimmed

Stock Market Predictions

NEW YORK (Global Markets) - Merck & Co (MRK.N) reported higher-than-expected quarterly earnings, helped by trimming its research spending and strong sales of its drugs for diabetes, asthma and rheumatoid arthritis.

The second-largest U.S. drugmaker, whose shares were 0.3 percent higher, also slightly raised the lower end of its 2011 earnings forecast.

"Overall, we are pleased with today's results, particularly coming off a difficult fourth quarter when the company withdrew its long-term guidance," JP Morgan analyst Chris Schott said.

Merck in February yanked its 2009 to 2013 profit forecast, rather than chop research spending to meet its longtime goal of high-single-digit annual growth over the period.

However, the company did cut $350 million in expenses during the first quarter, including $107 million from research and development.

On Friday, Merck trimmed its full-year R&D forecast to between $8 billion and $8.4 billion, from its earlier view of $8.1 billion to $8.5 billion.

That still keeps Merck among the top of the pack when it comes to industry spending on drug development.

"It doesn't matter whether it's $8.4 billion or $8.5 billion. The bottom line is that its a very big number and shows how committed Merck is to research and to developing its own medicines," said Peter Jankovskis, co-chief investment officer of OakBrook Investments LLC.

Earlier this year, larger rival Pfizer Inc (PFE.N) slashed its R&D budget to deliver on profit forecasts. It remains to be seen whether big R&D cuts make sense long term for Pfizer and other companies desperate for new medicines as their key drugs lose patent protection.

Merck earned $1.04 billion, or 34 cents per share. That compared with $299 million, or 9 cents per share, a year earlier, when it took a number of big charges and a tax expense related to U.S. healthcare reform.

Excluding special items, Merck earned 92 cents per share. Analysts on average expected 84 cents, according to Thomson Global Markets I/B/E/S.

"Merck is looking quite strong" said Jankovskis, who added that surging sales of newer diabetes drugs Januvia and Janumet bode well for Merck.

"They're growing faster than expected and the high rate of diabetes onset in the United States will help them as time goes on," Jankovskis said.

Global company sales of $11.58 billion topped the analysts' average forecast of $11.37 billion.

Januvia sales jumped 45 percent to $739 million, while Janumet -- which pairs Januvia with diabetes treatment metformin --soared 52 percent to $305 million.

Sales of Merck's biggest product, asthma treatment Singulair, jumped 14 percent to $1.33 billion, helped by strong sales in emerging markets and Japan. But the pill's importance to Merck will fade in coming months, when it faces generic competition in the United States.

Sales of arthritis treatment Remicade rose 12 percent to $753 million. Merck acquired it and a newer arthritis drug, Simponi, through its purchase in late 2009 of rival drugmaker Schering-Plough.

Schering-Plough's longtime partner Johnson & Johnson (JNJ.N) had challenged Merck's right to continue selling the two arthritis drugs. But under a deal reached earlier this month with J&J, Merck retains rights to sell them in Europe and other territories that represent 70 percent of the $2.8 billion in annual sales that had been in dispute.

The company expects earnings this year of $3.66 to $3.76 per share, excluding special items -- nudging up by 2 cents the lower end of its earlier estimate. That would reflect profit growth of 7 percent to 10 percent from 2010.

(Reporting by Ransdell Pierson; Editing by Lisa Von Ahn, Derek Caney, Dave Zimmerman)

ConAgra made unsolicited bid for Ralcorp: report

Stock Market Predictions

BANGALORE/CHICAGO (Global Markets) - Shares of Ralcorp Holdings Inc (RAH.N) jumped on Friday after CNBC said ConAgra Foods Inc (CAG.N) had made an unsolicited bid for the private-label food maker and that talks were "no longer ongoing."

ConAgra sent a letter to Ralcorp about two months ago, the cable television channel reported.

When contacted, a ConAgra spokeswoman said the company had no comment. Ralcorp, which also makes Post branded cereals, did not return calls or mails requesting comment.

ConAgra, the maker of Healthy Choice frozen meals and Slim Jim meat snacks, has been struggling with increases in costs of commodities such as gas, dairy and wheat.

Some food industry executives and analysts have said that the sector may see fewer mergers and acquisitions in 2011 compared with 2010, partly due to high commodity prices and companies' wish for the perfect right strategic buys.

Ralcorp -- which sells a wide range of products such as pasta, cereals, corn snack products, syrups and salad dressings -- has itself grown through acquisitions buying as many as 20 companies in the past 10 years including American Italian Pasta for $1.2 billion last year.

Ralcorp has a market value of over $4 billion.

Ralcorp shares, which had been halted on the New York Stock Exchange, were up 8.5 percent at $77.47 in afternoon trade after soaring to $81.19. Shares of ConAgra rose 0.2 percent to $24.40.

(Reporting by Brad Dorfman and Jessica Wohl in Chicago, Franklin Paul in New York and Mihir Dalal in Bangalore; Editing by Lisa Von Ahn and Gopakumar Warrier)

Caterpillar profit surges as demand recovers

Stock Market Predictions

BOSTON (Global Markets) - Caterpillar Inc recorded a fivefold profit surge and raised its 2011 profit forecast as customers bought new heavy equipment to replace old machines that aged during the economic downturn.

The world's biggest maker of earth-moving gear said on Friday that strong demand for equipment used in mining helped revenue rise, while demand for construction equipment has been slower to recover -- a trend that it said allows it plenty of room to grow sales and profit in the coming years.

It raised its full-year profit forecast to a range of $6.25 to $6.75, a range that at its midpoint is 24 cents above Wall Street's prior forecast and suggests growth of about 57 percent from last year.

"If you really look at what's happening in the United States, it's a very slow recovery from very low numbers," said Chief Executive Doug Oberhelman on a conference call with analysts. "When construction activity rebounds in the developed world, call it the United States and Western Europe, we're going to be ready."

Still, given that the company beat analysts' first-quarter profit expectations by 53 cents per share, the full-year forecast suggests the company will not continue its torrid pace through the rest of the year, said Edward Jones analyst Jeff Windau.

"They have had a strong recovery but now the comparables get a little tougher," Windau said. "I would expect the growth is going to moderate through the rest of 2011."

RISING ROLE FOR COMMODITIES

The report comes a day after government figures showed that economic growth in the United States slowed sharply in the first quarter, with higher food and gasoline prices starting to weigh on consumer spending and sparking concern about inflation.

Commodity inflation is not necessarily bad news for companies including Caterpillar and General Electric Co that make equipment used in energy production and commodity extraction. Rising demand for and prices of metals, coal and oil are spurring demand for Caterpillar's heavy equipment -- its sales to miners and other resource companies nearly doubled in the quarter, outpacing its construction equipment business.

"The strong commodity markets for us are a net positive based on the demand they drive for our mining business," offsetting margin pressure from higher raw materials costs, said Chief Financial Officer Ed Rapp in an interview.

Caterpillar's exposure to commodities including metals and coal will only increase when it closes on its $7.6 billion acquisition of mining equipment maker Bucyrus International by the middle of this year.

The better-than-expected results get the company closer to its goal of being able to close that deal without issuing additional equity, Rapp said. When the takeover was first announced, Caterpillar said it might need to issue up to $2 billion of stock to cover the purchase.

PROFIT TOPS STREET VIEW

Caterpillar reported first-quarter profit of $1.23 billion, or $1.84 per share, compared with $233 million, or 36 cents per share, a year earlier. Analysts expected profit of $1.31 per share, according to Thomson Global Markets I/B/E/S.

Revenue rose 57.2 percent to $12.95 billion, above expectations of $11.69 billion.

"It's a huge number on huge volume, that's the simplest way of describing it," said Longbow Research analyst Eli Lustgarten. He said revenue came in more than $1 billion above forecasts.

Caterpillar joins a string of strong earnings reports from industrials ranging from 3M Co to Komatsu Ltd.

Its shares were up 2.6 percent at $115.58 on the New York Stock Exchange; earlier they hit a lifetime high of $116.25. As of Thursday's close, they had risen 63 percent over the past year, more than four times the pace of the rise in the Dow Jones industrial average, of which Caterpillar is a component.

Caterpillar said the aftermath of the Japan earthquake in March would lower its full-year results, pulling down revenue by about $300 million and operating profit by $100 million.

(Reporting by Scott Malone; editing by Robert MacMillan, John Wallace and Dave Zimmerman)

Goodyear shares soar as profit beats Street

Stock Market Predictions

DETROIT (Global Markets) - Goodyear Tire & Rubber Co (GT.N) reported a profit more than four times as high as Wall Street had expected on strength in its home market of North America, and its shares jumped to a 19-month high.

Excluding one-time items, the Akron, Ohio-based tire maker earned 51 cents a share in the first quarter, easily topping analysts' average estimate of 12 cents, according to Thomson Global Markets I/B/E/S.

Goodyear's first-quarter sales of $5.4 billion were up 27 percent from a year earlier. Sales set quarterly records for each of the company's four global regions, including a 30-percent increase in its North American business to $2.3 billion.

Sales in its Europe region were up 28 percent to $2 billion.

Goodyear's shares rose as high as $18.68, up 15.3 percent, their highest level since September 2009. They pared gains and closed at $18.15. Goodyear's trading volume was more than triple its normal daily average on Thursday.

Earnings of two other major automotive suppliers, Lear Corp (LEA.N) and American Axle and Manufacturing Holding Inc (AXL.N), also blew past Wall Street's profit expectations on Friday, a sign that the auto industry recovery is gaining momentum globally, and particularly in North America.

"Nowhere is (Goodyear's) momentum clearer than in our North American business," said Goodyear Chief Executive Officer Richard Kramer on a conference call with analysts.

"North American profitability is essential to reaching our 2013 target" of $1.6 billion in global operating income in 2013, he said.

Operating income in 2010 was $917 million.

RAW MATERIALS COST RISING

Goodyear was able to offset higher raw materials costs, including natural rubber and carbon black, in the first quarter by selling its products for higher prices, such as a 15-percent increase in price per tire, Kramer said.

But the company will face stiffer challenges in meeting raw materials costs that will show "unprecedented" price spikes in the second half of the year, Chief Financial Officer Darren Wells said on the call.

Goodyear expects a 25- to 30-percent rise in raw material costs for the rest of 2011.

Wells said raw materials costs will produce more than $500 million in "headwinds" in the third quarter and again in the fourth quarter.

Kramer said that the company will over time make up for the lofty price spikes for natural rubber and carbon black and synthetic rubber later this year.

Goodyear said it was not greatly hurt by the earthquake in Japan. It has a plant that makes heavy machinery tires in southern Japan that was not damaged.

The main impact to Goodyear of the Japan crisis was a rise in commodity prices that hit every company with heavy reliance on those costs, Wells said.

Kramer also cautioned about pressure on company and overall auto industry financial performance later in the year.

"While we expect a strong year, we do not expect to see the same level of industry growth that we saw in the first quarter," Kramer told analysts.

Sales in the industry, including Goodyear's, were boosted in the first quarter, he said, as dealers made large purchases of tires ahead of announced price increases and as they perceived tightness of industry supply.

Wells said that Goodyear expects it can offset second-quarter raw materials price gains within that quarter.

The company's net income of $103 million, or 42 cents per share, compares with a year-earlier net loss of $47 million, or 19 cents per share.

Goodyear shares closed up 12 percent at $18.15 in trading on the New York Stock Exchange.

(Reporting by Bernie Woodall; Editing by Gerald E. McCormick, Lisa Von Ahn, Tim Dobbyn and Bernard Orr)

Buffett believes reputation after Sokol still intact

Stock Market Predictions

OMAHA, Nebraska (Global Markets) - Warren Buffett believes his reputation is intact, the U.S. economy needs more jobs and that Donald Trump is not going to be the next president.

He offered those and dozens of other opinions in a wide-ranging news conference on Sunday that capped off the annual meeting weekend for Berkshire Hathaway, his ice-cream-to-insurance conglomerate.

Buffett also told Global Markets Insider in an interview that none of the people on Berkshire's secret CEO succession list know they are on the list -- but the top candidate for the job will not need any convincing to take it.

The succession issue was bound to be the front-and-center topic this weekend given the scandal surrounding David Sokol, the former head of two Berkshire businesses who was once seen as Buffett's heir apparent. He resigned in March and is now being probed by the U.S. Securities and Exchange Commission for his purchases of stock in a company he pushed Buffett to buy.

Buffett is known for his honest dealings and folksy manner, an image he has cultivated and one he believes is untarnished despite defending Sokol and then referring him to the SEC.

"Everything I do is out there for the people to judge," Buffett said. "I don't hold myself to a standard of perfection or I'd have committed suicide a long time ago."

Buffett headed into this year's annual meeting faced with tough questions from the global media and shareholders looking for his thoughts on the Sokol affair, a succession plan and the economy at large. He did not disappoint.

Considering the tone before the meeting, Buffett seem to emerge relatively unscathed. Most questions sought his opinion rather than press him on misdeeds perceived or alleged.

And after the meeting, many of the reporters swarmed Buffett like a rock star, hankering for pictures and autographs on their dollar bills.

OUTSIDER 'IMPOSSIBLE'

With Sokol out of the picture, Buffett has a preferred successor in mind, one who will not need convincing in his estimation. Many shareholders assume it will be Berkshire reinsurance boss Ajit Jain.

Buffett said "it would be almost impossible" to consider a CEO from outside Berkshire.

One man who seemingly will not be under consideration -- or on a Berkshire Christmas card list any time soon -- is businessman and reality TV star Donald Trump, who is very publicly mulling a run for president.

The biggest laughs of the day came from a question on Trump's prospects for the White House.

"Obviously, I think he's a jerk," Berkshire's Vice Chairman Charlie Munger said, with Buffett adding in a more diplomatic way that he did not expect Trump to win the presidency.

INTERNATIONAL FAVORITES

With a largely international audience, Buffett took questions on a range of countries and their business prospects.

Buffett said Brazil was on Berkshire's radar, and that the company was actively making and looking at smaller bolt-on deals in Canada. Munger spoke admiringly of the Korean business community and praised the way the Chinese government has managed its currency.

But there was criticism too. Munger saved some of his harshest words for poverty and corruption in India, and Buffett questioned whether the Eurozone could survive the strain of the sovereign debt crisis.

As he has been of late, Buffett remained solidly in the corner of the United States, saying the Obama administration was rightly focusing on jobs and that the dynamics of the economy would change when excess housing inventory was depleted.

A reporter from China asked Buffett what he would do if he was running that country's giant sovereign wealth fund.

His answer was no surprise: he'd buy stocks -- especially American ones.

(Reporting by Ben Berkowitz in Omaha, writing by Ben Berkowitz and by Jennifer Saba in New York; Editing by Bernard Orr)

Sony shares up after it says PlayStation network to restart

Stock Market Predictions

TOKYO (Global Markets) - Shares of Sony rose on Monday, a day after the firm said it would resume some services on its PlayStation Network this week and offer customer incentives following the theft of personal information from 78 million user accounts.

Many PlayStation users around the world were frustrated that the first warning of one of the largest Internet security break-ins ever came a week after Sony detected a problem with the network on April 19.

Analysts said it was too early to say whether the measures the consumer electronics giant unveiled on Sunday would be enough to stop disgruntled gamers leaving the network and warned restoring faith in its security system would take time.

Sony has touted online services as a way of leveraging the synergies between its unique combination of hardware and content, including films and music as well as games.

"Damage has been done to Sony whatever the scale of the content giveaway at this point, and Sony is facing a prolonged effort to regain customer trust," said Jay Defibaugh, director of equities research at MF Global in Tokyo.

"Anything that undermines consumer willingness to divulge credit card details to Sony is a problem for the network strategy," he added.

Sony said on Sunday it would offer some free content, including 30 days of free membership to a premium service to existing users and in some regions pay credit card-renewal fees, but added compensation would only be paid if users suffered damage.

The news sparked thousands of comments on the official PlayStation fan page on Facebook, some of them from users who said they would switch to Microsoft's Xbox Live games network.

Shares in Sony were up 2 percent to 2,305 yen, after falling 4.5 percent on Thursday, ahead of a holiday on Friday. But analysts said concerns about the leak would weigh on investor sentiment.

"At minimum, having to suspend the service, fix its problems and deal with the aftermath, looks set to cost (Sony) tens of billions of yen," said analyst Nobuo Kurahashi of Mizuho Investors Securities.

"I don't think anyone knows where they will be able to absorb this loss, nor how much it will be, and that'll weigh on share prices going ahead," he added.

The incident has sparked legal action and investigations by authorities in North America and Europe, home to almost 90 percent of the users of the network, which enables gamers to download software and compete with other members.

Sony is the latest Japanese company to come under fire for how it has disclosed bad news.

Tokyo Electric Power Co was criticized for how it handled the nuclear crisis after the March 11 earthquake. Last year, Toyota Motor Corp was slammed for being less than forthright about problems over a massive vehicle recall.

(Reporting by James Topham and Isabel Reynolds; Editing by Edwina Gibbs and Joseph Radford)

Newell profit tops estimates; raises dividend

Stock Market Predictions

NEW YORK (Global Markets) - Newell Rubbermaid Inc's (NWL.N) quarterly profit beat Wall Street expectations on strength in emerging markets and price increases.

The maker of Sharpie pens and Rubbermaid storage containers said it was on track to meet its full-year outlook and will raise its quarterly dividend by 60 percent to 8 cents a share. Its shares were up 1.3 percent at $19.99 in premarket trading on Friday.

Newell has raised prices of some products to offset rising oil and resin costs. Makers of everything from soap to diapers have said they will pass on some costs to shoppers. Procter & Gamble (PG.N) sees its costs soaring about three times as much at it had anticipated earlier.

Newell's first-quarter net profit rose to $75.7 million, or 25 cents a share, from $58.4 million, or 19 cents a share, a year earlier.

Excluding items, it earned 30 cents a share, beating the analysts' average estimate of 28 cents, according to Thomson Global Markets I/B/E/S.

Sales fell 0.3 percent to $1.30 billion, while analysts expected $1.33 billion. Sales in developing markets, where the company has substantially increased its investment, rose double digits in the first quarter. U.S. sales fell 4 percent as bargain-hungry shoppers traded down and the company cut back on discounts.

"While sales were a bit light, we think Newell will be able to adjust its offering relatively quickly," BMO Capital markets analyst Connie Maneaty said, highlighting Newell's plans to launch more "value-priced" options and step up promotions.

Newell repeated its 2011 profit forecast of $1.67 to $1.70 a share, excluding items. It also backed its core sales growth outlook of 4 to 5 percent and gross margin forecast calling for an improvement of 0.5 to 0.75 percentage point.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Derek Caney, Dave Zimmerman)

Caterpillar profit surges as demand recovers

Stock Market Predictions

BOSTON (Global Markets) - Caterpillar Inc recorded a fivefold profit surge and raised its 2011 profit forecast as customers bought new heavy equipment to replace old machines that aged during the economic downturn.

The world's biggest maker of earth-moving gear said on Friday that strong demand for equipment used in mining helped revenue rise, while demand for construction equipment has been slower to recover -- a trend that it said allows it plenty of room to grow sales and profit in the coming years.

It raised its full-year profit forecast to a range of $6.25 to $6.75, a range that at its midpoint is 24 cents above Wall Street's prior forecast and suggests growth of about 57 percent from last year.

"If you really look at what's happening in the United States, it's a very slow recovery from very low numbers," said Chief Executive Doug Oberhelman on a conference call with analysts. "When construction activity rebounds in the developed world, call it the United States and Western Europe, we're going to be ready."

Still, given that the company beat analysts' first-quarter profit expectations by 53 cents per share, the full-year forecast suggests the company will not continue its torrid pace through the rest of the year, said Edward Jones analyst Jeff Windau.

"They have had a strong recovery but now the comparables get a little tougher," Windau said. "I would expect the growth is going to moderate through the rest of 2011."

RISING ROLE FOR COMMODITIES

The report comes a day after government figures showed that economic growth in the United States slowed sharply in the first quarter, with higher food and gasoline prices starting to weigh on consumer spending and sparking concern about inflation.

Commodity inflation is not necessarily bad news for companies including Caterpillar and General Electric Co that make equipment used in energy production and commodity extraction. Rising demand for and prices of metals, coal and oil are spurring demand for Caterpillar's heavy equipment -- its sales to miners and other resource companies nearly doubled in the quarter, outpacing its construction equipment business.

"The strong commodity markets for us are a net positive based on the demand they drive for our mining business," offsetting margin pressure from higher raw materials costs, said Chief Financial Officer Ed Rapp in an interview.

Caterpillar's exposure to commodities including metals and coal will only increase when it closes on its $7.6 billion acquisition of mining equipment maker Bucyrus International by the middle of this year.

The better-than-expected results get the company closer to its goal of being able to close that deal without issuing additional equity, Rapp said. When the takeover was first announced, Caterpillar said it might need to issue up to $2 billion of stock to cover the purchase.

PROFIT TOPS STREET VIEW

Caterpillar reported first-quarter profit of $1.23 billion, or $1.84 per share, compared with $233 million, or 36 cents per share, a year earlier. Analysts expected profit of $1.31 per share, according to Thomson Global Markets I/B/E/S.

Revenue rose 57.2 percent to $12.95 billion, above expectations of $11.69 billion.

"It's a huge number on huge volume, that's the simplest way of describing it," said Longbow Research analyst Eli Lustgarten. He said revenue came in more than $1 billion above forecasts.

Caterpillar joins a string of strong earnings reports from industrials ranging from 3M Co to Komatsu Ltd.

Its shares were up 2.6 percent at $115.58 on the New York Stock Exchange; earlier they hit a lifetime high of $116.25. As of Thursday's close, they had risen 63 percent over the past year, more than four times the pace of the rise in the Dow Jones industrial average, of which Caterpillar is a component.

Caterpillar said the aftermath of the Japan earthquake in March would lower its full-year results, pulling down revenue by about $300 million and operating profit by $100 million.

(Reporting by Scott Malone; editing by Robert MacMillan, John Wallace and Dave Zimmerman)

Goodyear shares soar as profit beats Street

Stock Market Predictions

DETROIT (Global Markets) - Goodyear Tire & Rubber Co (GT.N) reported a profit more than four times as high as Wall Street had expected on strength in its home market of North America, and its shares jumped to a 19-month high.

Excluding one-time items, the Akron, Ohio-based tire maker earned 51 cents a share in the first quarter, easily topping analysts' average estimate of 12 cents, according to Thomson Global Markets I/B/E/S.

Goodyear's first-quarter sales of $5.4 billion were up 27 percent from a year earlier. Sales set quarterly records for each of the company's four global regions, including a 30-percent increase in its North American business to $2.3 billion.

Sales in its Europe region were up 28 percent to $2 billion.

Goodyear's shares rose as high as $18.68, up 15.3 percent, their highest level since September 2009. They pared gains and closed at $18.15. Goodyear's trading volume was more than triple its normal daily average on Thursday.

Earnings of two other major automotive suppliers, Lear Corp (LEA.N) and American Axle and Manufacturing Holding Inc (AXL.N), also blew past Wall Street's profit expectations on Friday, a sign that the auto industry recovery is gaining momentum globally, and particularly in North America.

"Nowhere is (Goodyear's) momentum clearer than in our North American business," said Goodyear Chief Executive Officer Richard Kramer on a conference call with analysts.

"North American profitability is essential to reaching our 2013 target" of $1.6 billion in global operating income in 2013, he said.

Operating income in 2010 was $917 million.

RAW MATERIALS COST RISING

Goodyear was able to offset higher raw materials costs, including natural rubber and carbon black, in the first quarter by selling its products for higher prices, such as a 15-percent increase in price per tire, Kramer said.

But the company will face stiffer challenges in meeting raw materials costs that will show "unprecedented" price spikes in the second half of the year, Chief Financial Officer Darren Wells said on the call.

Goodyear expects a 25- to 30-percent rise in raw material costs for the rest of 2011.

Wells said raw materials costs will produce more than $500 million in "headwinds" in the third quarter and again in the fourth quarter.

Kramer said that the company will over time make up for the lofty price spikes for natural rubber and carbon black and synthetic rubber later this year.

Goodyear said it was not greatly hurt by the earthquake in Japan. It has a plant that makes heavy machinery tires in southern Japan that was not damaged.

The main impact to Goodyear of the Japan crisis was a rise in commodity prices that hit every company with heavy reliance on those costs, Wells said.

Kramer also cautioned about pressure on company and overall auto industry financial performance later in the year.

"While we expect a strong year, we do not expect to see the same level of industry growth that we saw in the first quarter," Kramer told analysts.

Sales in the industry, including Goodyear's, were boosted in the first quarter, he said, as dealers made large purchases of tires ahead of announced price increases and as they perceived tightness of industry supply.

Wells said that Goodyear expects it can offset second-quarter raw materials price gains within that quarter.

The company's net income of $103 million, or 42 cents per share, compares with a year-earlier net loss of $47 million, or 19 cents per share.

Goodyear shares closed up 12 percent at $18.15 in trading on the New York Stock Exchange.

(Reporting by Bernie Woodall; Editing by Gerald E. McCormick, Lisa Von Ahn, Tim Dobbyn and Bernard Orr)

ConAgra made unsolicited bid for Ralcorp: report

Stock Market Predictions

BANGALORE/CHICAGO (Global Markets) - Shares of Ralcorp Holdings Inc (RAH.N) jumped on Friday after CNBC said ConAgra Foods Inc (CAG.N) had made an unsolicited bid for the private-label food maker and that talks were "no longer ongoing."

ConAgra sent a letter to Ralcorp about two months ago, the cable television channel reported.

When contacted, a ConAgra spokeswoman said the company had no comment. Ralcorp, which also makes Post branded cereals, did not return calls or mails requesting comment.

ConAgra, the maker of Healthy Choice frozen meals and Slim Jim meat snacks, has been struggling with increases in costs of commodities such as gas, dairy and wheat.

Some food industry executives and analysts have said that the sector may see fewer mergers and acquisitions in 2011 compared with 2010, partly due to high commodity prices and companies' wish for the perfect right strategic buys.

Ralcorp -- which sells a wide range of products such as pasta, cereals, corn snack products, syrups and salad dressings -- has itself grown through acquisitions buying as many as 20 companies in the past 10 years including American Italian Pasta for $1.2 billion last year.

Ralcorp has a market value of over $4 billion.

Ralcorp shares, which had been halted on the New York Stock Exchange, were up 8.5 percent at $77.47 in afternoon trade after soaring to $81.19. Shares of ConAgra rose 0.2 percent to $24.40.

(Reporting by Brad Dorfman and Jessica Wohl in Chicago, Franklin Paul in New York and Mihir Dalal in Bangalore; Editing by Lisa Von Ahn and Gopakumar Warrier)

Good times roll for auto suppliers

Stock Market Predictions

DETROIT (Global Markets) - Major auto suppliers blew past profit expectations on Friday, suggesting the recovery in the global auto market remains strong despite rising oil prices and the disaster in Japan.

Goodyear Tire & Rubber Co (GT.N), powertrain maker American Axle and Manufacturing Holding Inc (AXL.N) and Lear Corp (LEA.N), which makes seating and electrical power management systems, posted first-quarter earnings that easily exceeded Wall Street estimates on improving global demand.

"What we're seeing from these results is the volumes are significantly higher and therefore the recovery in the auto industry is gaining momentum," said Tim Ghriskey, chief investment officer with Solaris Asset Management.

"Clearly, the sales are doing well and the consumer is replacing older vehicles," added Ghriskey, who has owned auto stocks in the past and still follows the sector closely.

Shares of Goodyear, American Axle and Lear were up 10.9 percent, 3.3 percent and 2.5 percent, respectively, in morning trading.

Lear cited a 5 percent increase in global auto production in the first quarter compared with a year earlier. Demand grew around the world, offsetting a 32 percent production decline in Japan due to the earthquake and tsunami last month.

Friday's earnings reports continued a strong week for the sector, underlined by Ford Motor Co's (F.N) better-than-expected profit.

Other suppliers whose results topped expectations this week included BorgWarner Inc (BWA.N), Federal-Mogul Corp (FDML.O) and Dana Holding Corp (DAN.N).

Dealer groups -- AutoNation Inc (AN.N), Penske Automotive Group Inc (PAG.N), Asbury Automotive Group Inc (ABG.N) and Group 1 Automotive Inc (GPI.N) -- also posted strong profits, although many warned the Japanese crisis would crimp vehicle inventories on their lots.

"Obviously, it's all about volume," Morningstar analyst David Whiston said. "With a lower fixed cost and a better top line, it's not a surprise to see earnings doing so well."

While he still expects some choppiness due to the Japanese crisis, he said the industry's recovery remains in place.

David Silver, analyst with Wall Street Strategies, cautioned against exuberant expectations, however.

"I wouldn't call it a party right now. It's more of a get-together," he said. "The profitability of the North American automakers is much improved from 2007 and 2008, but the Japan disaster is an overhang."

Silver expects more of drag on automaker and supplier earnings later this year.

That squared with comments from General Motors Co (GM.N) Chief Executive Dan Akerson, who said on Thursday that the Japanese crisis was a "second-quarter event.

Akerson, like Ford CEO Alan Mulally, said the disaster in Japan was not likely to have a great impact on earnings.

Silver also said the European market will be weak for the year, while Ghriskey voiced concern about rising raw material costs.

(Additional reporting by Bernie Woodall; editing by John Wallace)

Merck tops forecasts after research budget trimmed

Stock Market Predictions

NEW YORK (Global Markets) - Merck & Co (MRK.N) reported higher-than-expected quarterly earnings, helped by trimming its research spending and strong sales of its drugs for diabetes, asthma and rheumatoid arthritis.

The second-largest U.S. drugmaker, whose shares were 0.3 percent higher, also slightly raised the lower end of its 2011 earnings forecast.

"Overall, we are pleased with today's results, particularly coming off a difficult fourth quarter when the company withdrew its long-term guidance," JP Morgan analyst Chris Schott said.

Merck in February yanked its 2009 to 2013 profit forecast, rather than chop research spending to meet its longtime goal of high-single-digit annual growth over the period.

However, the company did cut $350 million in expenses during the first quarter, including $107 million from research and development.

On Friday, Merck trimmed its full-year R&D forecast to between $8 billion and $8.4 billion, from its earlier view of $8.1 billion to $8.5 billion.

That still keeps Merck among the top of the pack when it comes to industry spending on drug development.

"It doesn't matter whether it's $8.4 billion or $8.5 billion. The bottom line is that its a very big number and shows how committed Merck is to research and to developing its own medicines," said Peter Jankovskis, co-chief investment officer of OakBrook Investments LLC.

Earlier this year, larger rival Pfizer Inc (PFE.N) slashed its R&D budget to deliver on profit forecasts. It remains to be seen whether big R&D cuts make sense long term for Pfizer and other companies desperate for new medicines as their key drugs lose patent protection.

Merck earned $1.04 billion, or 34 cents per share. That compared with $299 million, or 9 cents per share, a year earlier, when it took a number of big charges and a tax expense related to U.S. healthcare reform.

Excluding special items, Merck earned 92 cents per share. Analysts on average expected 84 cents, according to Thomson Global Markets I/B/E/S.

"Merck is looking quite strong" said Jankovskis, who added that surging sales of newer diabetes drugs Januvia and Janumet bode well for Merck.

"They're growing faster than expected and the high rate of diabetes onset in the United States will help them as time goes on," Jankovskis said.

Global company sales of $11.58 billion topped the analysts' average forecast of $11.37 billion.

Januvia sales jumped 45 percent to $739 million, while Janumet -- which pairs Januvia with diabetes treatment metformin --soared 52 percent to $305 million.

Sales of Merck's biggest product, asthma treatment Singulair, jumped 14 percent to $1.33 billion, helped by strong sales in emerging markets and Japan. But the pill's importance to Merck will fade in coming months, when it faces generic competition in the United States.

Sales of arthritis treatment Remicade rose 12 percent to $753 million. Merck acquired it and a newer arthritis drug, Simponi, through its purchase in late 2009 of rival drugmaker Schering-Plough.

Schering-Plough's longtime partner Johnson & Johnson (JNJ.N) had challenged Merck's right to continue selling the two arthritis drugs. But under a deal reached earlier this month with J&J, Merck retains rights to sell them in Europe and other territories that represent 70 percent of the $2.8 billion in annual sales that had been in dispute.

The company expects earnings this year of $3.66 to $3.76 per share, excluding special items -- nudging up by 2 cents the lower end of its earlier estimate. That would reflect profit growth of 7 percent to 10 percent from 2010.

(Reporting by Ransdell Pierson; Editing by Lisa Von Ahn, Derek Caney, Dave Zimmerman)

Storm clouds gather for RIM after profit warning

Stock Market Predictions

TORONTO (Global Markets) - Storm clouds over Research In Motion have darkened with a dismal profit warning, and the company's shares fell sharply on Friday after the company's third jolt of bad news in a month.

The BlackBerry maker, out of favor even with its fans, will need flawless execution on a promised next generation of gadgets to convince increasingly skeptical investors that it can run with mobile leaders Apple and Google.

Ontario-based RIM on Thursday slashed its sales and earnings forecasts, an unexpected blow that followed an anemic forecast in late March and last week's troubled launch of an as-yet underwhelming competitor to the red-hot Apple iPad.

"The updated guidance has substantiated a lingering concern about a growing portfolio gap in a hyper-competitive market," CCS Insight analyst Geoff Blaber said.

RIM tried to excite customers last year with an improved browser and upgraded operating system on its touchscreen and slideout keyboard BlackBerry Torch. But the response was tepid.

It promises another major upgrade and a slew of more powerful touchscreen devices at its annual BlackBerry World trade show in Florida next week.

RIM's products compete with those from Apple and with devices using Google's Android platform. Customers, are tired of waiting for RIM's innovations to kick in, are voting with their dollars for the rival phones.

RIM shares fell some 14 percent by early afternoon on Friday, in line with a late-trade fall on Thursday -- an eerily similar drop to that after its March results. The shares are around $49, their lowest level since October.

"We've heard for too long about RIM's great product roadmap. Consumers are not listening nor waiting," National Bank analysts said in a note. "RIM does not even seem to have dual cameras on its upcoming BlackBerry product line-up. The last time we checked, video is the future."

Thursday's after-market warning focused on weak sales of RIM's aging smartphones in the United States and Latin America, and the company lowered an already tepid outlook for the current quarter.

All hope seems to rest on what the Canadian company pulls out of its labs and onto center stage at BlackBerry World, starting Monday, where the company will unveil a new generation of touchscreen BlackBerrys.

LOSS OF FAITH

RIM had hoped to turn its fortunes around with the launch of its long-awaited PlayBook tablet -- a sleek tablet computer that runs on a fresh QNX platform that RIM says will transform its business.

But the PlayBook won dismal reviews and complaints it was rushed out before it was ready, despite a six-month launch pad.

"Mis-execution has undermined sentiment recovery," wrote Mike Abramsky, a longtime optimist on RIM. Abramsky kicked RIM out of his list of preferred stocks and slashed his target price to $55 from $90.

"PlayBook is a promising tablet contender, but RIM bears some responsibility for its less-than-favorable debut, confusion over its positioning and criticisms it was not fully ready for market," he wrote.

Customers and developers are eager to know when the PlayBook will run Android and BlackBerry smartphone applications, while investors want to know how many PlayBooks sold in the first week and when better phones will ship.

Jefferies analyst Peter Misek said RIM was scrambling to fix glitches in the PlayBook and integrate QNX, likely leading to delays for new handsets and flagging interest from carriers. He dropped his rating by two notches to "underperform" and cut his price target to $35 from $80.

RIM has tried to shift attention to what comes next -- a suite of phones running an upgraded (but not yet QNX-based) operating system with beefed-up hardware.

"We're cutting over to a whole new platform, a whole new set of products, a whole new set of architecture. And it's very, very powerful and very, very exciting," RIM's co-chief executive Jim Balsillie told a conference call on Thursday.

"Stay tuned, the products are truly fantastic both in terms of their style and their performance. The issue is, I would have liked to have them sooner."

The sliding stock price shows that the market is yet to be convinced.