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Apr-15-2008

FirstFed Falls 13% as Wachovia News Hits Regional Banks, Home Builders

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CONTENTS:

Circuit City shares closed at $3.90 on Friday. (More...)
In other earnings news, shares of Eaton Corp rose 2.6 percent to $81.01 after the manufacturer reported higher quarterly profit. (More...)
NEW YORK Stocks finished a quiet session moderately lower today as investors grappled with concerns about the health of corporate profits after Wachovia bank posted disappointing quarterly results. (More...)
'The flip side is we had retail sales come in a little better than expected. (More...)
Sagging TV sales, especially in the United States, dragged down first-quarter profits, as Royal Philips Electronics NV reported net income of 219 million euros ($347 million), nearly 20 percent lower than the 273 million euros analysts had forecast. (More...)
Wachovia itself was off 8.1% to $25.55. (More...)
The Wall Street Journal reported activist investor Carl Icahn, who owns 16% of Blockbuster's shares, has agreed to finance the takeover if financing can't be found elsewhere. (More...)
Prices are 0.8 cent higher than Friday, and almost 53 cents higher than a year ago. (More...)
Out Tuesday is the April Empire State index, which measures manufacturing activity in New York and is expected to come in at a reading of negative 17, slightly better than March's negative 22.2 figure. (More...)
Dow components Bank of America declined 2.5 percent to $36.01 and Citigroup was off 3.2 percent $22.61. (More...)
The worst of the six was Tennessee banking company First Horizon ( FHN, news, msgs ), down 11% to $11.65. (More...)
The Amex Airline Index ( $XAL.X ) has fallen 88% in the same time period. (More...)
Banks and financial-services companies have written down $250 billion since the beginning of 2007, the paper reported. (More...)
Major U.S. bank reports unexpected loss, slashes dividend to preserve capital - ahead of busy week for bank results. (More...)
In afternoon trading, Britain's FTSE 100 fell 0.87 percent, Germany's DAX index fell 0.86 percent, and France's CAC-40 fell 0.65 percent. (More...)
On the economic front, the UK National Statistical Office said today that the output price index for manufactured goods rose a seasonally adjusted 0.9% in March. (More...)
The Overnight MarketWatch report is provided by SHAW Stockbroking's egoli - simple but informative market news for the everyday investor. (More...)
Wachovia (nyse: WB - news - people ) disappointed the Street with a surprise first-quarter loss. (More...)
China Mobile fell 3.7 per cent, CNOOC dropped 4.2 per cent, Lenovo slid 1.6 per cent and China Netcom lost almost 4 per cent. (More...)

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Circuit City shares closed at $3.90 on Friday. Blockbuster said it made its initial offer Feb. 17, in a letter to Circuit City CEO Philip Schoonover, and that it was taking its offer public to give Circuit City shareholders a chance to weigh in. ( Reuters ) The deal was worth up to $1.35 billion, and would create an $18 billion retail giant. "it's an odd move," said analyst Nick Bubb at Pali International in London. Wachovia, the No. 4 U.S. bank, reported an unexpected quarterly loss of $393 million and said it is cutting its quarterly dividend by 41 percent, to 37.5 cents per share. ( Reuters ) Excluding merger-related expenses, Wachovia lost 14 cents a share; analysts had expected it to earn 40 cents a share. ( AP in Yahoo! Finance ) Wachovia said it will raise about $7 billion through selling new shares to replenish its capital. The bank had been expected to report earnings at the end of this week. [1] Blockbuster announced an offer to acquire Circuit City for at least $6.00 per share, more than a 50% hike over the close on Friday. Wachovia announced a larger than expected first quarter loss, a 41% reduction of its dividend and a capital infusion of $7 billion.[2]

NEW YORK (AP) - Shares of national banks fell Monday after Wachovia Corp. (nyse: WB - news - people ) swung to a loss in the first quarter and said it would raise $7 billion and slash its dividend. NEW YORK (AP) - Shares of several auto suppliers fell Monday on worries that the current decline in demand for full-size pickup trucks and sport utility vehicles will continue through this year. NEW YORK (AP) - Analysts maintained positive views on drug distributors Monday, saying the stocks will recover to make strong gains this year. NEW YORK (AP) - Shares of most railroad operators rose Monday, as a JPMorgan analyst predicted the group will largely beat Wall Street's first-quarter earnings expectations when they begin reporting this week. NEW YORK (AP) - Early-stage and preclinical cancer treatment research dominated the American Association of Cancer Research's annual meeting this weekend.[3] While a major bank posted disappointing earnings, sending financial stocks lower, a better than expected retail sales report helped keep the negative sentiment in check. Before the markets opened, Wachovia (WB) said that it unexpectedly slipped to a loss in its first quarter, reporting a net loss of $350 million compared to net income of $2.3 billion a year ago. In order to further enhance its capital base, Wachovia slashed its dividend and said it commenced concurrent offerings of a total of $7 billion worth of common and Class A preferred stock. The Department of Commerce helped to keep selling pressure to a minimum after it released its report on retail sales in the month of March, showing that sales increased by a little more than economists had been expecting after falling in the previous month.[4] Shares of Wachovia have been down more than 9% after the company reported a surprisingly bad quarter, a loss of $393 billion. The bank says it plans to cut jobs, reduce its dividend and raise $7 billion in a stock sale. Still to come this week are earnings reports from Intel, JPMorgan Chase, IBM and Citigroup.[5] NEW YORK (Reuters) - U.S. stocks were little changed on Monday after a surprise gain in March retail sales offset news that Wachovia Corp, the fourth-largest U.S. bank, reported an unexpected quarterly loss. Wachovia said it would cut its dividend, eliminate jobs and raise capital of $7 billion after becoming the latest casualty of the global credit crunch.[6]

NEW YORK (AP) - Stocks fluctuated Monday as investors grappled with concerns about companies' earnings power after U.S. bank (NYSE:USB) Wachovia Corp. (NYSE:WB) and Dutch conglomerate Royal Philips Electronics (NYSE:PHG) NV posted disappointing quarterly results. Wachovia surprised investors with a first-quarter loss of $393 million and cut its quarterly dividend by 41 percent to 37.5 cents.[7]

Wachovia posted a first-quarter loss of 20 cents per share, vs. earnings per share of $1.20 one year earlier, on a 4.5% revenue drop. The company notes higher credit costs and the continued disruption in the capital markets. Wachovia slashed its dividend 41%. In a bid to boost its capital, the company commences concurrent offerings of common stock and preferred stock for an aggregate of $7 billion.[8] NEW YORK -- Video rental giant Blockbuster Inc. has made an unsolicited offer to buy Circuit City for at least $6 per share, or $1 billion, in cash, a 54% premium over the consumer electronic retailer's closing stock price of $3.90 on Friday.[9] Dallas-based Blockbuster Inc. offered at least $6 per share for the company, representing a 54 percent premium to Circuit City's share price at Friday's market close.[10] In merger news, video rental company Blockbuster Inc. (BBI) said that it intends to buy consumer electronics retailer Circuit City Stores Inc. (CC) for at least $6.00 per share in cash, subject to due diligence.[11] Movie-rental chain Blockbuster ( BBI, news, msgs ) said this morning that it had made an unsolicited all-cash bid for electronics retailer Circuit City ( CC, news, msgs ) for $6 to $8 per share.[12]

The deal represents a marriage of two companies in transition amid difficult competition. Blockbuster has recently pulled back from its efforts to battle Netflix (nasdaq: NFLX - news - people ) in the online video rental arena, while Circuit City has fallen behind Best Buy (nyse: BBY - news - people ) at a time when garnering a share of the dollars spent by tightfisted consumers has become a key. Investors did not appear pleased with Blockbuster's plan to use its free cash to acquire Circuit City, sending shares of the rental chain down 36 cents, or 11.5%, to $2.77.[13] Here's what I do know: You'd get a really big company with about $18 billion in combined sales. It would be saddled with a lot of real estate, and it could achieve some cost savings by shutting down some of those stores. This isn't some roll-up strategy (like Larry Ellison is doing at Oracle ) where costs can be quickly squeezed out and a bigger outfit can just roll in the cash. With this, you have two companies struggling to keep up with both more nimble (Netflix, Amazon.com) and much larger competitors (Best Buy, Wal-Mart, Comcast). It's a lousy place to be. This proposed deal may have one thing going for it: Billionaire corporate raider Carl Icahn is reportedly backing the move and is willing to finance it. He owns about 16 percent of Blockbuster's Class A shares, so I have to think he sees real value in acquiring struggling Circuit City.[14] DALLAS (AP) _ Blockbuster Inc., which has been busy trying to fix its own movie-rental business, is making a hostile takeover bid of just over $1 billion for Circuit City Stores Inc. with dreams of creating a huge chain that would sell electronic gadgets and rent movies and games. The offer is larger than Blockbuster's entire stock market value, but Chief Executive James Keyes said he was confident his company can swing the deal and that the move has the support of one of his board members, financier Carl Icahn, who could help with financing.[15]

The Financial Select Sector SPDR (amex: XLF - news - people ), an exchange-traded fund that tracks the financial components of the S&P; 500, fell 56 cents, or 2.2%, to $24.57. Blockbuster (nyse: BBI - news - people ) went public with a $1.3 billion cash offer for Circuit City (nyse: CC - news - people ) It said it had gotten no response from the electronics retailer's management following a Feb. 17 offer letter that came after months of discussion.[13] The offer, which was made in February and is just now becoming public, is worth $6 to $8 per share--between $1 billion and $1.3 billion total. It's about a 54 percent premium above Circuit City's value before the news broke. This hybrid garbage truck unveiled Monday has a brighter future than Blockbuster/Circuit City. Now you can argue McNealy was way off base on the HP-Compaq merger, but he'd be spot on if he applied the double-garbage-truck metaphor to Blockbuster and Circuit City. As Peter Kafka at Silicon Alley Insider wrote earlier, it seems like they'd "rather be in a low-margin business than none at all." In fairness, there is some logic to what they're trying to do.[14] There have been some new developments on the M&A; front, starting with Blockbuster's (BBI) newly disclosed $1 billion offer to acquire Circuit City (CC).[16]

The mean estimate of analysts surveyed by Thomson Financial were for earnings of 40 cents a share on revenue of $7.98 billion. Circuit City Stores Inc. shares gained 54% after Blockbuster Inc. said it has offered to acquire the retailer for more than $1 billion in a move to expand beyond its movie-rental business.[17] NEW YORK -- Shares of most consumer electronics retailers are up after movie-rental chain Blockbuster offered to buy Circuit City Stores for more than $1 billion.[10]

Blockbuster took the offer public in the early Monday morning hours, saying it had sent an offer letter to Circuit City in mid-February, but hasn't been given the opportunity to conduct the necessary due diligence. It added that such due diligence could move it to offer as much as $8 per share for Circuit City.[9] The cash offer is for $6 per share, which represents a 54% premium over Circuit City's closing price of $3.90 on Friday.[18]

Blockbuster announced the offer early on Monday and said it is for at least $6 per share -- a large premium to the electronics retailer's stock closing share price on Friday.[16]

The financial forecast from Blockbuster shows a $30 million net income in the first quarter, compared to a net loss of $49 million last year. Blockbuster, whose stock has fallen nearly 60 percent in the last year, has seen its shares drop another 17 percent, to $2.60 a share, after the proposed bid was announced on Monday.[19] Investors sold off shares of financials, led by Wachovia, which fell $2.72, or 9.9 percent, to $25.09. Detrick noted that the Wachovia news compounded investors' concerns about the banking sector following a report Friday from General Electric Co. (NYSE:GE) GE, seen as a bellwether of big business, said its financial services business was challenged in the first quarter by the slowing U.S. economy and difficult capital markets.[7]

Shares of the bank fell $2.79, or 10.0%, to $25.02, pulling other financial stocks down with it. Dow components JPMorgan Chase (nyse: JPM - news - people ) and Citigroup (nyse: C - news - people ), both due to report earnings this week, were off 1.8% and 3.9%, respectively.[20] Shares of Wachovia took an 8.1% hit, falling $2.26 to $25.55. Dow components Intel (nasdaq: INTC - news - people ) and Johnson & Johnson (nyse: JNJ - news - people ) are due to report, and both sets of earnings will be closely scrutinized. Intel trimmed its first-quarter gross margin forecast in March, citing lower-than-expected pricing on flash memory chips.[21]

On average, analysts expected earnings of $0.40 a share for the quarter. The Department of Commerce released its report on retail sales in the month of March, showing that sales increased by a little more than economists had been expecting after falling in the previous month.[11] Sydney, Apr 15, 2008 (ABN Newswire) - U.S. shares ended on a moody note''as worries about Wachovia's earnings and the outlook for corporate profits overshadowed''the March retail sales report.[22] NEW YORK (CNNMoney.com) -- Stocks slipped Monday afternoon, as worries about Wachovia's earnings and the outlook for corporate profits overshadowed any relief about the better-than-expected March retail sales report.[23]

The Dow is currently up 6.03 at 12,331.45, while the Nasdaq is down 3.64 at 2,286.60 and the S&P; 500 is down 1.85 at 1,330.98. The futures for the major averages have moved off of their earlier lows on a slightly better than expected report on retail sales. Wachovia reported that it slipped to a loss in its first quarter from a profit last year.[11] The company also said it expects to turnaround to a profit of $30 million from a loss of $49 million in the first quarter of last year. AirTran Airways (AAI) may react to its financial update. The company said it is in compliance with the terms of its credit card agreements and it has no holdbacks from any of its credit card processors. The company noted that its cash and investment balance has increased to $358 million at the end of March 31st, 2008 compared to $326 million as of December 31st, 2007. From last Tuesday through Saturday, the company grounded about 3,000 flights to comply with the FAA-dictate to inspect its MD-80 fleet. Skywest (SKYW) is expected to move in reaction to its March traffic results. The company reported that its traffic rose 2.2% compared to a 3% increase in capacity.[18] The company's net income for the first quarter, which ended March 31, is expected to be $30 million, compared to a net loss of $49 million a year ago. Not great, but it's a start. Pundits already worry a Circuit City takeover could distract Blockbuster executives (they're right) and divert money that could be used elsewhere (they're right about that, too).[14]

CHARLOTTE, N.C. (AP) _ Wachovia Corp. is getting a lesson in "timing is everything." The nation's fourth-largest bank reported a $393 million first quarter loss and has been forced to cut its dividend and seek a $7 billion cash injection to make up for a poorly timed expansion of its mortgage business. The company also said it plans to cut 500 jobs in its corporate and investment bank. It's the second time this year the Charlotte-based bank has gone to the well for cash, a move analysts say more banks large and small will do to brace themselves against further loan losses.[15] Wachovia reported that it slipped to a loss in its first quarter from a profit last year, reporting a net loss of $350 million compared to net income of $2.302 billion a year ago.[24]

Philips, Europe's largest consumer-electronics maker, fell after revealing a 75% slump in first quarter earnings. KDDI in Japan fell after missing full-year profit targets and U.S. bank, Wachovia dipped ahead of U.S. trading after bringing forward its first quarter results amid rumours of a $US7 billion recapitalisation.[22] Google was off 1.3% to $451.66 because investors aren't sure it can still produce big profit growth. After earnings disappointments last week, with Alcoa ( AA, news, msgs ) and General Electric reporting profit declines and missing expectations, this week is shaping up as not much better. "Although positive things are happening in the marketplace, such as the entry of opportunistic buying in fixed income markets, the markets are not out of the woods yet," Thomson Financial said in a note to clients about the first quarter.[12]

Wachovia (WB) may remain in focus after it posted a first quarter net loss of 20 cents after the payment of preferred dividends compared to a net profit of $1.20 per share in the year-ago period.[18] Wachovia ( WB, Fortune 500 ) reported a quarterly loss of 20 cents per share versus a profit of $1.20 a year earlier.[23] Wachovia ( WB, Fortune 500 ), one of the the nation's five largest banks, reported a loss of 20 cents a share, down from earnings of $1.20 a share a year earlier.[25]

Wachovia ( WB ) will seek to raise $7 billion in capital through a stock sale to help offset a difficult quarter, the bank said. Separately, Wachovia cut its dividend to $0.375 cents a share to save an additional $2 billion.[26] Analysts surveyed by Thomson/First Call thought it would report a profit of 40 cents per share. The company also cut its quarterly dividend and said it will raise $7 billion through a share sale.[23] The camera-maker's net income may drop by as much as 35 billion yen in the three months ended 31 March, the Nikkei newspaper said on 12 April. Ricoh Co sank 4.4 per cent after a report said Japan's second-biggest office equipment maker may have missed its profit target. The world's largest maker of consumer electronics Matsushita Electric Industrial Co fell 4 per cent after a Japanese brokerage cut its rating on their shares. Banks including Mitsubishi UFJ Financial Group sank on speculation major financial companies would report asset writedowns this week.[27]

Wall Street is predicting a loss of $1.02 per share for WaMu, and the bank fell 60 cents, or 5.5%, to $10.35 Monday, while the Financial Select Sector SPDR ETF (amex: XLF - news - people ) dropped 59 cents, or 2.4%, to $24.54.[21] The bank's net loss for the quarter was $393 million, or 20 cents per share, far worse than the $2.3 billion, or $1.20 per share, the bank earned in the same period a year ago.[12] Shares of Wachovia Corp. fell nearly 11% in premarket action, according to Archipelago, after the Charlotte bank said it will raise $7 billion in capital, and posted a net loss of $350 million, or 20 cents a share, compared with year-earlier net income of $2.3 billion.[17] With oil hitting another closing record, buyers flocked to energy stocks such as Hess in another flight from the financial sector as hopes that the credit and property crisis was in its final throes faded further. Wachovia fell $2.26, or 8.1%, to $25.55 after the fifth-largest bank by market value said it would try to raise $7 billion by selling stock, while also cutting its dividend. That came as Wachovia swung to a first-quarter loss, weighed down by $2 billion in write-downs and $2.1 billion in new provisions for credit losses.[28] The place not to be was financial stocks, after Wachovia ( WB, news, msgs ) surprised Wall Street with a big loss and an announcement it needed to raise $7 billion in new capital.[12]

Major U.S. stocks indexes closed lower Monday following sharp declines in the preceding session. The market, already reeling from General Electric's ( GE ) weaker than expected earnings report Friday, slipped further when Wachovia ( WB ) unexpectedly reported a quarterly loss and cut its dividend, while also confirming a $7 billion recapitalization plan.[8] The bank, which analysts had expected to post a profit, also said it plans to raise $7 billion through a stock offering. In a sign that the slumping U.S. economy is hurting companies overseas, Royal Philips Electronics reported a sharp drop in first-quarter profits as a decrease in television sales in North America offset growth in its health care and lighting industries.[7] Circuit City jumped $1.07, or 27 percent, to $4.97, while Blockbuster fell 32 cents, or 10.2 percent, to $2.81. In a sign that the slumping U.S. economy is hurting companies overseas, Royal Philips Electronics reported a sharp drop in its first-quarter profit as a decrease in television sales in North America offset growth in its health care and lighting industries.[29] Royal Philips Electronics, Europe's largest consumer electronics firm, reported a 75 percent drop in quarterly profits, to $344 million. The larger-than-expected decline was attributed to disappointing sales of TV sets, but year-ago profits were also inflated from the sale of a semiconductor unit. ( Bloomberg ) Philips said last week it was quitting its unprofitable TV production for the U.S. and Canadian markets, instead licensing its brand there to Japan's Funai.[1]

The fourth fiscal quarter, thanks to $65 million in reduced costs, did show signs of improvement, with a modest $4.5 million profit on $3.65 billion (sales were down 7.7 percent from same quarter a year ago). This is not exactly a company with a long line of suitors. Bring this troubled pair together and what do you get? Well, I'm not sure, to be honest.[14]

After Friday's sharp fall in the wake of General Electric's poor profit figures,''concerns were revived Monday by Wachovia, America's fourth biggest commercial bank, which reported weak figures including a $350 million loss and $7 billion in new capital raisings.[22] Stocks ended a back and forth session on Monday with just slight losses on the Dow after Wachovia reported a first-quarter loss and $7 billion stock sale.[16] The Nasdaq dipped 14 to 2276, and the S&P; 500 ended down 5 at 1328. Traders were reserved after Wachovia said it would try to raise $7 billion through the sale of stock in an effort boost its capital ratios after an unexpectedly rough quarter.[26]

The nation's fourth-largest bank posted a loss of $393 million. It will raise $7 billion through a stock sale to make up for a poorly timed expansion in the mortgage business.[30]

Separately, Deutsche Bank will try to rid itself of up to $20 billion in debt in a sale to private-equity firms, The Wall Street Journal reported. That was enough to put financials in a hole. Those losses were largely offset by gains in the energy sector, as oil prices rose again.[26] Deutsche Bank (DB) placed a For Sale sign on up to $20 billion of debt tied to leveraged buyouts, The Wall Street Journal reported Monday.[16]

Load factor eased 0.6 percentage points to 79.2%. Deutsche Bank (DB) is also likely to be in the spotlight after the Wall Street Journal reported that the German bank may sell about $20 billion of its debt related to leveraged buyouts to investors, including private equity firms.[18]

Deutsche Bank ( DB ) is aiming to sell up to $20 billion of debt, according to a Wall Street Journal report.[8]

The results from Wachovia, which came five days earlier than previously expected, kick off a busy week for results from banks and Wall Street firms that is expected to bring another round of bad news, with Citigroup ( C, Fortune 500 ), Merrill Lynch ( ML ) and Washington Mutual ( WM, Fortune 500 ) all expected to report losses later in the week. One Wall Street firm reporting bad news late Friday was Bear Stearns ( BSC, Fortune 500 ), which said in a Securities and Exchange Commission filing that its assets under management shrunk 20% since the end of November, and stock and fixed income trading has plummeted to "well less" than half of activity levels in 2007 during the first three months of this year.[25] Much of Monday's action was muted, with volume on the New York Stock Exchange substantially below average and many investors awaiting more earnings reports and inflation data due out later in the week. "It feels very quiet out there today," said Steve Sachs, head of trading for Rydex Investments.[31] Investors are hoping that some company -- maybe Intel ( INTC, news, msgs ), IBM Corp. ( IBM, news, msgs ) or perhaps Google ( GOOG, news, msgs ) -- will offer a bullish outlook in an earnings report this week that will give stocks a lift.[12]

Crude oil hits a new closing high. Will Intel and IBM earnings move markets this week? After Wachovia's big loss, financial stocks probably won't help.[12]

If the recent run of disappointing earnings continues the market could be in store for another tumble. Wachovia (nyse: WB - news - people ) reported an unexpected first-quarter loss of 20 cents a share on Monday, just one trading day after General Electric stunned Wall Street with an earnings miss and a cut to its 2008 guidance.[21] News out of the financial sector was dour Monday, after Wachovia (nyse: WB - news - people ) reported a surprise first-quarter loss of 20 cents a share.[20]

In other earnings news, shares of Eaton Corp rose 2.6 percent to $81.01 after the manufacturer reported higher quarterly profit. [6] Merrill Lynch (MER) fell 1.8% after an analyst at JPMorgan Chase (JPM) reportedly predicted a lower 2008 profit and more writedowns for Merrill. According to Dow Jones, JPMorgan now sees Merrill earning $1.46 per share in 2008, down from its previous forecast of $2.75.[16] Excluding certain charges, Eaton's profit rose to $1.70 per share from $1.62. Those results beat estimates from analysts polled by Thomson Financial calling for $1.66 per share.[16]

The result came in well below analyst expectations of a profit of US40c per share. Wachovia, the fourth largest U.S. bank, also cut its quarterly dividend and said it was looking to raise US$7 billion through a share sale.[27] The sale is for $24 a share, a discount to Friday's closing price of nearly $28 per share. In another move to help its balance sheet, Wachovia said it is cutting its dividend to 37.5 cents a share from 64 cents.[16] Revenue fell 4.5% to $7.89 bil. Wachovia ( WB ) will slash its dividend by 41% to 37.5 cents a share and raise $7 bil in a share sale.[32] Revenue fell 5% to $7.9 billion in the quarter. Wachovia slashed its quarterly dividend to 37.5 cents a share from 64 cents to save $2 billion annually.[12]

Investors sold off shares of financials, led by Wachovia, which fell $2.26, or 8 percent, to $25.55.[29] Shares of Circuit City jumped $1.19, to $5.09, while Blockbuster investors appeared displeased with the move, sending shares down 50 cents, or 16.0%, to $2.63.[20] Blockbuster is prepared to offer at least $6 a share, subject to due diligence, and decided to make the bid public "because it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company," Blockbuster said in a statement.[19] As Circuit City failed to provide the necessary diligence for a definitive proposal from Blockbuster, the world's largest movie rental chain decided to go public with the bid, saying it can provide an offer ranging from $6 to $8 a share.[19]

Video retailer Blockbuster ( BBI, Fortune 500 ) announced Sunday that it had made an unsolicited bid for electronics retailer Circuit City Stores ( CC, Fortune 500 ) that would pay at least $6 a share. That would represent a 54% premium over Friday's closing price of $3.90 for Circuit City.[25] Blockbuster, the largest movie renter, made an unsolicited bid for No. 2 U.S. consumer electronics retailer Circuit City, offering $6 to $8 a share in cash.[1]

Circuit City shares rose $1.22, or 31.3 percent, to $5.12 during midday trading.[10] Circuit City shares, of course, jumped more than 30 percent to $5.12 in afternoon trading.[14]

In afternoon trading Monday, Blockbuster shares were down 14 percent to $2.69 per share.[14]

The company also announced concurrent offerings of common stock and non-cumulative perpetual convertible Class A preferred stock, with a liquidation preference of $1000 per share for an aggregate of $7 billion. The company also lowered its quarterly cash dividend to $0.375 per share.[18] The results were impacted by significantly higher provisions for credit losses and lower revenues, which reflected a severe deterioration in the residential housing market. In order to further enhance its capital base and operational flexibility, the company slashed its dividend and said it commenced concurrent offerings of common and Class A preferred stock for a total of $7 billion.[11]

The market reacted negatively to first a report and then a confirmation from Wachovia that it will need to raise $7 billion in fresh capital in a common and preferred stock offering.[16]

The index closed at its worst level in eight years. Wachovia led the bank sector lower after the company reported that it slipped to a loss in its first quarter from a profit last year, slashed its dividend and said it commenced concurrent offerings of common and Class A preferred stock.[4] Stocks fell sharply at the open and continued lower throughout much of the trading session. Before the start of trading, GE reported weaker than expected first quarter earnings and lowered its full year guidance due in part to weakness in its financial services business.[11] Including the financials - and let's not pretend we can just take the lima beans out of the vegetable special and still call it succotash - and the forecasts look a little more dire: earnings are expected to decline by some 14% for the period, which makes the loss about three times as wide as what the experts were forecasting for the first quarter when the year got started.[33]

The offer has received the full backing of Blockbuster's board. Citing strong performance in its domestic same store revenues, Blockbuster also said it expects first quarter 2008 adjusted earnings before interest, tax, depreciation and amortization of $110 million, almost five times that of the year-ago results.[18]

A weekend report in The Times of London said that more write-downs are coming from Merrill and Citigroup. Citigroup will write down an additional $10 billion in the first quarter, the newspaper reported, bringing its quarterly loss to $3 billion.[12] Late today, The Wall Street Journal reported that crude oil production in Russia "has begun to stagnate and even slump." Russian supply in the first quarter of 2008 fell for the first time this decade, averaging 10 million barrels a day, The Journal said. That is a 1% drop from the year-earlier period, according to the International Energy Agency. That is dismal news for a country that saw double-digit-percentage output growth earlier this decade.[12] The news added to recent worries that first quarter corporate results will be even worse than anticipated. The lower guidance from GE raised some concerns about the outlook for the economy as whole, as results from GE are seen by some as an indicator of the overall strength of the economy due to its diversified businesses. Some additional negative sentiment was generated by a report from the University of Michigan showing that its consumer sentiment index fell to a 26-year low of 63.2 in April.[11]

Stocks dropped in Europe and Asia after Philips profit missed estimates, banks were hit, industrial shares fell after general Electric's bad first quarter figures and the Group of Seven finance ministers said economic prospects have deteriorated.[22] Microsoft, one of the 30 Dow stocks, fell 22 cents to close at $28.06 a share.[29] The deal would go off at something between $6 and $8 a share (pretty wide range) for a stock that finished at $3.90 in Friday's trading.[33] Trading on the New York Stock Exchange during the first two hours totaled 1.2 billion shares.[5] On the New York Stock Exchange, losers topped winners 3 to 2 on volume of 1.17 billion shares.[23] Declining issues outpaced advancers by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 3.42 billion shares, compared with 3.59 billion shares traded Friday.[15]

Shares of Petroleo gained 7.7% during the session. It's clear money is still being left on the sidelines on Wall Street as volume on the New York Stock Exchange was nearly 600 million shares below a typical day.[16] Declining issues outnumbered advancers by about 5 to 4 on the New York Stock Exchange, where volume came to 331.6 million shares.[7]

NEW YORK Stocks finished a quiet session moderately lower today as investors grappled with concerns about the health of corporate profits after Wachovia bank posted disappointing quarterly results. [29] NEW YORK (AP) _ Stocks finished a quiet session moderately lower Monday as investors grappled with concerns about the health of corporate profits after Wachovia Corp. posted disappointing quarterly results. Investors paused following a sell-off Friday and ahead of a raft of quarterly results and economic data arriving this week.[15]

Stocks slumped Friday after GE's weaker-than-expected profit report magnified fears about the outlook for corporate earnings amid the economic slowdown. Such concerns were revived Monday by Wachovia at the start of a busy week for bank earnings.[23] Before the market could recover from GE's weaker than expected profit report, news of a quarterly loss at Wachovia further fuelled fears of an economic downturn and a slump in corporate earnings.[27] Ahead of a week-long series of critical corporate earnings reports, stock-market benchmarks slipped Monday as investors considered the implications of a first-quarter loss at Wachovia and oil and gasoline futures closed at new highs.[34]

A better-than-expected retail sales report also helped take the edge off the earnings news Monday and in the afternoon, stocks briefly posted gains.[23] Stocks had gained some traction earlier in the session after a report that U.S. retail sales rose 0.2% in March, while the ex-auto component was up 0.1% -- stronger than expected.[8] While the unexpected loss reported by Wachovia is contributing to notable weakness in the banking sector, selling pressure has remained subdued following the release of a report showing slightly better than expected retail sales growth in March.[11]

Several first-tier economic reports are scheduled to be released in the upcoming week, including the Commerce Department's retail sales report for March, the Labor Department's consumer and producer price inflation reports for March, the March housing starts report of the Commerce Department, the Federal Reserve's industrial production report for March and the results of the April manufacturing surveys of the New York Federal Reserve and the Philadelphia Federal Reserve.[18] In economic news, retail sales crept up in March after falling the month before, but the relatively flat reading offered little reassurance in the face of near-record energy prices and low consumer sentiment. Separately, a new poll showed one in seven mortgage owners are concerned they might miss a payment, the Associated Press reported.[26]

Market participants may take heart from an increase in March retail sales and the optimism behind the offer for consumer electronics retailer Circuit City (CC).[18] Blockbuster highlighted that the combined company would be "uniquely positioned to capitalize on the growing convergence of media content and electronic devices." It would also benefit from the revenue growth generated by their complementary products and cost savings, it added. "Our proposal offers Circuit City a significant premium to its existing stock price and creates a game-changing retail concept with a sustainable competitive advantage," Blockbuster chairman and CEO Jim Keyes said.[9] The company said in the same letter that the combination of Blockbuster and Circuit City would result in an $18 billion retail enterprise.[19] The offer, made Feb. 17, values Circuit City at between $1.01 billion and $1.35 billion. Blockbuster this morning said that it will take the offer directly to shareholders.[12] Blockbuster Inc. made an unsolicited proposal to acquire Circuit City Stores Inc, the second largest U.S. electronic retailer, in a bid said to worth around $1 billion.[19] In deal-making news, Blockbuster said it is taking an unsolicited $1 billion-plus bid for Circuit City directly to shareholders.[29] Wal-Mart Stores added 0.6 per cent, while Target edged 0.1 per cent lower, and Sears fell 0.8 per cent. In M&A; related news, Blockbuster said it would take its unsolicited bid for Circuit City to shareholders after failing to make progress with the company's board and management.[27] Merger news. Blockbuster ( BBI, Fortune 500 ) said it will take its unsolicited bid for Circuit City ( CC, Fortune 500 ) to shareholders after failing to make progress with the company.[23]

Shares of electronics retailer Circuit City (nyse: CC - news - people ) soared 28.0% on an unsolicited takeover offer from Blockbuster (nyse: BBI - news - people ).[35] Circuit City (nyse: CC - news - people ) bucked the day's stagnant trend, shooting 30.5% higher on an unsolicited takeover offer from Blockbuster (nyse: BBI - news - people ).[20]

Shares of Circuit City surged 27.4% on Monday while Blockbuster slumped 10.2% in response to the offer. Another merger deal could be announced as early as Tuesday as well.[16] The offer, which is worth $6 to $8 a share, was sent to Circuit City Chairman and Chief Executive Officer Philip Schoonover on February 17 but has not elicited a warm response.[26] The cash offer represents a 35 percent premium over Circuit City's closing price of $3.90 on Friday.[11]

Shares of Circuit City were up 27% to $4.97; shares of Blockbuster were down 10% to $2.81.[12] Circuit City has struggled amid share losses and declining sales, while Blockbuster has faced competition from on-line movie rental services.[17] Monday, the movie rental chain announced they made an all cash offer to buy the electronics retailer for six to eight dollars a share in cash. Blockbuster says they made the offer back in February. They say after not receiving a response from Circuit City they decided to make the offer public to drum up share holder support.[36] Richmond, Va. -based Circuit City Stores Inc. said it is reviewing the offer, but questioned Blockbuster's ability to finance the deal.[10] Stifel Nicolaus analyst David A. Schick wrote in a note to investors on Monday that the deal will be difficult to complete amid the current weak consumer and credit environment. "We believe combining two companies in the midst of their own necessary and difficult transitions adds significant risk to the transaction working or happening," wrote Schick, who rates Circuit City "Hold." "While real estate is a big Circuit City problem, we don't think traffic driven by Blockbuster closings would drive much rub-off business," he added.[10] Circuit City ( CC ) and investors have doubts, especially over financing. Billionaire Carl Icahn, a Blockbuster ( BBI ) holder, said he's willing to help fund the bid.[32]

Non-performing assets jumped 62% in the quarter over the fourth quarter last year, and 356% over the levels of a year ago. The marriage of a media distribution retailer with the operations of a hardware merchant might sound like one of those mythical beasts of Norse legend, like a griffin or an alce or a New York City waiter who isn't really an actor. And, goodness knows, a union of a video chain and an electronics peddler certainly sounds like doubling down on two nags that pulled up lame in their last race. That hasn't hardened the heart of Blockbuster (BBI), which is telling the world it would like nothing more than to play Westley to Circuit City's Buttercup.[33] If Blockbuster really is developing a set-top box that could allow movie downloads from another Blockbuster acquisition, Movielink, the Blockbuster/Circuit City hookup moves from the realm of the insane to the "nice idea if it were operating in a vacuum" category. At least that's the theory. Here's the reality: Apple has around 200 retail stores and can meticulously control what is sold in them and how they are run. Apple retail employees go to a veritable boot camp before they're allowed to sell in Apple stores. By comparison, the combined Blockbuster and Circuit City would have 9,300 retail stores, with 5,500 in the United States (though I have to think more than a few of them would be shut down). Quality control? They're going to have to bring in a logistics expert from the military for that one. Wall Street already hates this. Blockbuster was in the middle of a modest turnaround, after several years of suffering at the hands of Netflix's lightweight mail distribution business and various forms of digital distribution such as on-demand television from Comcast.[14]

For the full fiscal year, which ended February 29, Circuit City lost $321 million on $11.7 billion on revenue.[14] Wachovia's first-quarter net loss was $350 million, compared to net income of $2.302 billion a year ago.[11] According to the Eindhoven, Netherlands-based company,. Wachovia Corp, the fourth largest banking chain in the United States based on total assets, announced Monday that due to its first-quarter loss of $350 million (20 cents a share), it decide to reduce.[19] Hampered by the credit crunch the bank reported a loss of $350 million, or 20 cents a share.[13] The firm said it swung to a first-quarter loss of $350 million, or 14 cents a share, down from $2.3 billion, or $1.20 a share, in the year-ago period.[26]

The FTSE 100 finished 63.90, or 1.08 per cent lower at 5,831.60. Friends Provident dropped nearly 11 per cent as buyout group JC Flowers said it had no intention of raising its bid. Many banks were lower after U.S. lender Wachovia said it would raise $7 billion of capital and slash its dividend.[27] Shares in China Construction Bank sank 5.8 per cent despite meeting forecasts with a 51 per cent jump in second-half earnings. The result was boosted by higher fee income and margins, despite booking losses on its U.S. subprime-related holdings.[27] Analysts surveyed by First Call had forecast earnings of 40 cents a share. The Charlotte-based bank, which made the ill-timed purchase of mortgage lender Golden West Financial in 2006, also slashed its dividend by 41% to 37.5 cents a quarter, in an effort to preserve capital, and announced plans to raise additional capital through a public offering.[25]

The bank reported losses amounting to 20 cents a share in the quarter, versus forecasts that it was going to earn - as in "post a profit" earn - some 40 cents a share for the quarter.[33] Shares in fellow Swiss bank UBS lost 2.4 per cent. Philips Electronics reported a first-quarter core profit fall of 28 per cent and dropped 3.3 per cent to its lowest close since mid-July 2006.[27]

Among other financial stocks, Citigroup dropped 3.6 per cent after Merrill Lynch said a slowdown in consumer finance and capital markets would hurt profits. For its part, Merrill Lynch slipped 1.8 per cent, while Bank of America Corporation, dropped 3.7 per cent.[27] Financial stocks fell, with HSBC dropping 1.6 per cent and Ping An plunging 5.1 per cent.[27]

On the upside, shares in Dutch mail company TNT rose 2.5 per cent. Traders said the result was aided by Goldman Sachs upgrading its rating on the stock to buy from neutral.[27] Around the continent, Germany's DAX fell 49.08, or 0.74 per cent to 6,554.49, while France's CAC 40 sank 31.44, or 0.66 per cent to 4,766.49. Credit Suisse shares lost 3.3 per cent after weekend newspaper reports that it could announce further writedowns of up to 5 billion Swiss francs when it posts first-quarter results later this month.[27] Shares in Lonmin slipped 1.9 per cent after platinum prices fell 2.5 per cent. Rio Tinto eased 1.3 per cent despite suggestions that BHP Billiton, down 2.3 per cent, could add a cash sweetener to its existing all-stock offer.[27] Miners were a drag on the market, with shares in copper miners Antofagasta and Xstrata down more than 2.7 per cent each as copper prices fell 1.1 per cent.[27]

Shares of Royal Bank of Scotland, Barclays, HSBC, Standard Chartered and Lloyds TSB were all down between 2 per cent and 2.9 per cent. Not helping mattters were notes from Morgan Stanley, which cut its price target for RBS, Barclays and Lloyds.[27]

Weak economic data coming out of Beijing and a near-6 per cent dive in China Construction Bank also weighed on the market. A release of mainland China consumer price data this week dampened sentiment.[27]

Whitbread declined to comment. Retailer Tesco was up 0.8 per cent despite a price cut from Dresdner, as traders positioned themselves ahead of its preliminary full-year earnings on Tuesday.[27]

Many of the personal-care products it sells are seen as staples that consumers should purchase even during a recession. Analysts are expecting $1.20 in first-quarter earnings from the company, which saw its shares slip 26 cents, or 0.4%, to $65.74 Monday.[21] Four big tech companies will be reporting first-quarter earnings, and Wall Street is bullish only on IBM. IBM, which was up 1.1% to $117.28 today, is expected to report a 20% increase in earnings to $145 a share, largely because it gets more than half of its business outside the United States.[12] A better than expected report on retail sales helped take some of the sting out of another weak earnings report on Wall Street on Monday, but the broader market was caught in negative figures after a brief foray into positive territory.[20] Wall Street sounded another retreat Monday, as an uptick in retail sales failed to overcome more disappointing earnings news.[35]

'The flip side is we had retail sales come in a little better than expected. It seems like they kind of negated each other.' In late morning trading, the Dow Jones industrial average fell 1.46, or 0.01 percent, to 12,323.96. [7] S&P; 500 index futures were down 10 points before release of March retail sales. Better than expected retail sales helped futures to recover part of their decline. They currently are down 4 points.[2] On the positive side, retail sales unexpectedly rose in March, pushed up by a jump in gasoline sales, a government report showed. Oil companies gave the S&P; 500 its biggest boost.[6] The report showed that retail sales rose 0.2 percent in March following a revised 0.4 percent decrease in the previous month.[11] The reports preceded the Commerce Department's reading on March retail sales, which showed a modest 0.2 percent rise after February's 0.6 percent decline.[29] The Commerce Department reported Monday that retail sales edged up 0.2 percent in March after a 0.4 percent decline in February.[15]

The Commerce Department's retail sales report for March showed that retail Sales, which measures the dollar receipts at the stores that sells durable as well as non-durable goods, rose 0.2%.[18] Stocks may have fallen further on Monday had it not been for a better-than-expected retail sales report, showing sales rebounded in March.[16] Stocks finished just below the line on more signs of desperation from the ailing financial sector and uninspiring retail sales data.[26]

Wachovia surprised investors by posting a first-quarter loss, but investors appeared to find some encouragement in the session from a better-than-expected report on retail sales.[15] Overall sales gained 0.2 per cent, versus a decline in the previous month and above economists' forecasts. Although, without both auto and gas sales, retail sales were up just 0.1 per cent. Retailers couldn't sustain their advance with the sector's majors closing on both sides of the gain line.[27] Retail sales came in a bit stronger than forecast, as a government report showed 0.2% gain, topping the 0.1% rise forecast by economists surveyed by Briefing.com.[25]

Sagging TV sales, especially in the United States, dragged down first-quarter profits, as Royal Philips Electronics NV reported net income of 219 million euros ($347 million), nearly 20 percent lower than the 273 million euros analysts had forecast. [15] Building maintenance supply company W.W. Grainger Inc posted a 12 percent rise in first-quarter profit, beating analysts' forecasts. Its stock rose 2.7 percent to $82.16.[6]

Oil services stocks rose as the price of the raw commodity rebounded above $111 a barrel.[23] Oil prices, meanwhile, rose to a record settlement and are within striking distance of last week's trading record of $112.21 a barrel as the dollar fell and crude supplies were disrupted in the U.S. and overseas.[15] The Amex Oil Index closed 2.8 percent higher, while the Philadelphia Oil Services Index gained 2.4 percent. Oil chased its record levels again on Monday in U.S. trading and closed above $111 a barrel for the first time ever.[4]

In other Nymex trading Monday, May gasoline futures rose 1.45 cents to settle at $2.8218 a gallon, and May heating oil futures rose 0.54 cent to settle at $3.2029 a gallon.[15] Commodity prices : May crude oil futures''rose $US1.62 to settle at $US111.76 a barrel''on the New York Mercantile Exchange. That was a record close. Comex June gold futures''rose 70 cents to $US927.70 an ounce: a weaker greenback drove both gold and oil higher.[22] U.S. light crude oil for May delivery rose $1.62 to settle at $111.76 a barrel on the New York Mercantile Exchange.[23]

NEW YORK (AP) - Near-month crude oil futures rose to a new record of $111.76 a barrel.[30]

NEW YORK (AP) _ Steve Tarpin can bake a graham cracker crust in his sleep, but explaining why the price for his Key lime pies went from $20 to $25 required mastering a thornier topic: global economics. He recently wrote a letter to his customers and posted it near the cash register listing the factors _ dairy prices driven higher by conglomerates buying up milk supplies, heat waves in Europe and California, demand from emerging markets and the weak dollar. The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due on Wednesday to show it's getting worse. That's putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.[15] NEW YORK (AP) _ Gas prices fluctuated over the weekend but appear poised to resume their seemingly relentless trek toward a record high milestone of an average $3.50 a gallon.[15]

At the pump, the national average price of a gallon of gas edged lower overnight to $3.373 a gallon, 0.1 cent shy of a new record set Sunday, according to a survey of stations by AAA and the Oil Price Information Service.[15]

The banking giant said that it is going to have to raise some $7 billion through the issue of new equity. To stuff the offering into the maw of the market, it's going to have to pony 'em up at a 15% discount to Friday's close, so figure pricing somewhere in the $23 or $24 a share range. That's not all. In order to save about $2 billion in capital, it's cutting its dividend by 41%.[33] The video rental chain made an all-cash offer of between $6 and $8 a share, worth up to $1.3 billion, for the struggling retailer, whose management has come under fire of late from activist investor Wattles Capital Management.[35]

The net loss available to common stockholders was $0.20 per share versus net income of $1.20 per share in the previous year.[24] Wachovia reported a quarterly loss of US20c per share versus a profit of US$1.20 a year earlier.[27]

Wachovia surprised Wall Street by reporting a first-quarter operating loss of 14 cents a share, well below expectations for a 40-cent gain from analysts polled by Thomson Financial. Wachovia, like so many of its peers, was heavily involved in marketing and packaging subprime mortgages -- most infamously through its "pick a payment" program, which allowed borrowers to decide how much they wished to pay on their mortgage month to month.[16]

Most of the major sector indices are showing relatively modest moves, although financial stocks have come under pressure after Wachovia (WB) unexpectedly reported a first quarter loss.[24] Stocks took a sharp tumble on Friday when economic bellwether General Electric Co reported an unexpected 6 percent drop in earnings. "Bad news is the standard order of the day, and the market is not going to jump through hoops for these numbers. I don't think anyone's shocked Wachovia is having to grapple with this," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.[6] Because of Wachovia and General Electric's ( GE, news, msgs ) earnings miss on Friday, the six worst performers in the S&P; 500 were financial stocks.[12]

Stocks were treading water in New York on Monday, with a poor earnings report out of the banking sector and another big takeover bid.[13]

Stocks to Watch Today is a daily update on the stocks and market conditions that investors should know about today, written by Barron's Online stocks columnist Bob O'Brien. O'Brien updates this blog and provides video reports several times each trading day with information and analysis. O'Brien is a 14-year veteran of Dow Jones & Co., having most recently worked at Wall Street Journal Television, where he appeared daily on CNBC Television under the Journal's content-sharing agreement with NBC Television.[33] ExxonMobil ( XOM, news, msgs ) was the top performer among the 30 Dow stocks with a 1.2% gain to $89.70.[12] If you believe in stocks, the place to be today was energy, with crude oil reaching that new closing high of $111.76 a barrel.[12]

The deal, worth about $3.1 billion, was announced late Monday and came after stocks had ended slightly lower for the day.[12] The deal could value Northwest at $3 billion, according to the Journal.[16] While that formula gives the deal a value of about $3.1 billion, Delta said the combined companies would have an enterprise value of $17.5 billion.[12]

A $1 billion bid from Blockbuster''for Circuit City''was seen as an act of desperation by a company whose basic video and DVD rentals and sales business is being overtaken by the internet and direct downloads.[22] The market had been expecting a fall but after car and petrol sales were taken out, the figure was only up 0.1% (after an upward revision to February's drop). Wachovia also cut its dividend to save $US2 billion, another sign of the strain it is under.[22]

The U.K. Times is even more skittish, reporting that, between 'em, Merrill and Citigroup (C), which reports on Friday, are going to post $15 billion in write-downs. Is there anything more heart-wrenching than the phrase "what might have been"? In the case of Wachovia (WB) the regrets are going to be laid at the fecklessness of its $25 billion purchase of Golden West two years ago. That's when it seemed like a good idea to amp up exposure to the California mortgage business.[33] Wachovia's exposure to the mortgage meltdown increased when it bought Golden West Financial -- a company that specialized in nontraditional mortgages -- for $24.2 billion in May 2006.[12] The company noted that it recorded a market disruption-related loss of $2 billion.[18]

"The combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as cost synergies." Keyes also said Blockbuster expects to report a first-quarter profit of $30 million, compared with a loss of $49 million in the year-ago period, arguing that this is testimony to his firm's recent turnaround.[9] Aided by exports, Eaton's profit jumped to $274 million from $234 million a year ago.[16] Net profit was down 75 percent from 875 million euros in same period last year _ a quarter boosted by a 733 million euro sale of a semiconductor manufacturer.[15]

Adding to earnings concerns was a lowered forecast for, Standard & Poor's 500 companies earnings. Wall Street analysts expect them to show a 13.8 percent decline in quarterly profits compared with an 11.8 percent drop projected one week ago, according to Reuters Estimates.[6] There's something to be said of wide-eyed optimists. It's thus: as pointed out Keith Lerner at SunTrust Robinson Humphrey, quoting data from Bespoke Investment Group, there is a mildly positive bias to the broad market in the wake of a GE stock hit, with the SP typically higher in the wake of a GE setback. (It didn't work in 2002, when the SP lost a quarter of its value following a sharp selloff in GE shares.) Is GE the sign of a market bottom? The answer to that question probably turns on just how the earnings prove out this week. Speaking of which. what trading day would be complete without another revision to banking forecasts? Merrill Lynch (MER) takes its turn as the target in the shooting gallery, as JPMorgan eyes more conspicuously disappointing losses in the quarter that's going to be reported Thursday.[33] With traders reacting negatively to weaker than expected earnings from General Electric (GE), the U.S. stock markets saw substantial weakness during trading on Friday.[11] U.S. stocks pulled back sharply in late trading on Monday as traders expressed apprehension over the health of corporate profits against the backdrop of an impending recession.[18]

European stocks fell for a fifth day after Philips reported lower profits than expected, the surprise loss and early profit statement from''Wachovia Corp and the Group of Seven finance ministers said prospects for the economy deteriorated.[22] Posco slumped 6.54%, as traders sold the stock on fears of future profit growth. Samsung Electronics pared back most of its earlier loss before ending down 0.29%.[18]

Brokerage stocks were also hurt by the loss from Wachovia, with the Amex Securities Broker/Dealer Index closing down 2.8 percent.[4] Bank stocks turned in some of the worst performances on Monday, hurt by a steep decline by Wachovia. The S&P; Bank Index closed down 4.5 percent, extending its recent downward move.[4]

The news sent the stock down 8.1% Monday, and sparked a 4.7% decline in the S&P; Diversified Banks index.[8]

The Philadelphia Housing Index dropped 2.2 percent to close at its worst level since mid-March. Other stocks that ended the session notably lower include semiconductor, disk drive and steel stocks.[4]

Wachovia itself was off 8.1% to $25.55. It was the worst performer among S&P; 500 stocks for most of the day. It recovered a bit, however, and closed as the sixth-worst S&P; performer. It's down 58% since February 2007. [12] The Select SPDR Financial ( XLF, news, msgs ) exchange-traded fund, which mimics the financial sector of the S&P; 500, was off 2.4% to $24.54. The ETF is down 15.2% this year.[12] The S&P; 500 dropped 4.5 points, while the Nasdaq lost 14 points. NEW YORK (AP) - Shares of Wachovia lost 8% of their value.[30] Shareholders of Northwest would receive 1.25 shares of Delta for each Northwest share, The New York Times reported.[12]

Blockbuster shares fell 15% on the news. Introgen Therapeutics Inc. shares gained 44% after the company said its Advexin drug, in a Phase III clinical trial, showed patients with recurrent head and neck cancer benefited from the medication.[17] Oil and gas explorer Arc Energy was a bright spot, jumping 11.2% to $1.385 after it said it is in talks with Australian Worldwide Exploration (AWE) about a possible takeover bid by AWE. AWE shares fell 6.9% to $3.35.[22] Shares of the bank slid $2.76, or 9.9%, to $25.05 by midday and the broader financial sector followed suit.[13] Northwest shares added 2.4% to $11.22 in regular trading and an additional 0.3% to $11.25 in after-hours trading.[12] Shares of Wachovia plunged more than 10% in pre-market trading following the report.[25]

A first-quarter loss and slashed dividend for Wachovia translated into a selloff in shares of smaller regional banks, while a gain in oil futures lifted shares of small-cap energy and drilling companies.[31] Wachovia shares ended down 10% after falling 17% at one stage and setting off a tremor across financials.Citigroup, Bank of America''and Washington Mutual were all weak.[22]

The Wall Street Journal reported activist investor Carl Icahn, who owns 16% of Blockbuster's shares, has agreed to finance the takeover if financing can't be found elsewhere. [16] The offer has the backing of activist investor Carl Icahn, who has offered to provide financing for the deal if Blockbuster can't get financing elsewhere, The Wall Street Journal reported.[12]

The offer mystified Wall Street. "It's an odd move," Nick Bubb, a retail analyst at Pali International in London, told Bloomberg News.[12]

Sun Microsystems CEO Scott McNealy had a colorful assessment of the planned merger between Hewlett-Packard and Compaq: it's like two garbage trucks, he said, backing into each other in slow motion. (Beep, beep, beep. thunk.) That brings me to Monday's rather stunning news that Blockbuster, the giant video chain that's seen better days, is trying to buy Circuit City, the giant consumer electronics retail chain that's also seen better days.[14] "We are also willing to pursue alternative structures which would enable Circuit City shareholders to receive stock and participate in what we believe would be an exciting future for the combined enterprise," Blockbuster also said.[19] Video rental chain Blockbuster says it will take an unsolicited bid worth more than a billion dollars directly to Circuit City shareholders.[5] Blockbuster ( BBI ) has taken an unsolicited billion-dollar bid for Circuit City ( CC ) directly to shareholders, the firm said.[26]

Video rental company Blockbuster (BBI) could be in focus after it announced that it intends to buy consumer electronics retailer Circuit City (CC).[18] I suspect Circuit City's ownership also has no idea, since the Blockbuster offer has been on the table since February 17.[14] The larger Circuit City stores would have movie-rental stores inside, and Blockbuster locations would offer a limited selection of electronics.[15]

Mark Wattles, who has nominated five people to the board of Circuit City Stores, said that Carl Icahn would be willing to help fund Blockbuster's attempted buyout of the electronics chain. "I did get confirmation that he supported the transaction and (was) willing to put up capital to get the transaction done," Wattles said in an interview for the CNBC network. In a letter sent to Circuit City Stores on February 17, Blockbuster said "both companies would benefit from complementary products, marketing, management strengths, technology and distribution," and it would all greatly benefit them financially.[19]

Circuit City is facing lackluster sales and an investor group that is pressuring for change.[10] Circuit City has been stumbling along as the retail and housing slowdowns have battered sales. It has been sacking staff and closing stores to try and keep in the game.[22]

Retail sales ticked 0.2% higher in March, coming as a nice surprise to a market hungry for good news.[20] Retail sales rose 0.2% in March, rebounding from a revised February decrease of 0.4%, the Commerce Department said.[26] On the economic data front, the Commerce Department said retail sales rose by just 0.2% in March, a rebound from February's 0.4% decline.[16]

The Commerce Department says retail sales rose more than expected last month.[5]

Consumer confidence plunged to the lowest reading in 26 years in early April, according to the University of Michigan's consumer sentiment index, underscoring the pressures that households are facing and raising the likelihood that retail sales will remain depressed in coming months.[15] Even with the 0.2% March rebound, retail sales are up just 2% from a year ago -- the weakest year-to-year gain since November 2002.[16] The market fell sharply, but then retracted after the 0.2% rise in march retail sales.[22] Consensus for March retail sales was a decline of 0.4% versus a decline of 0.6% in February.[2]

Excluding a 1.1 percent rise at gasoline service stations, retail sales would have been flat last month -- and possibly negative when adjusted for inflation.[7] Retail sales may see a weak trend going forward, given the food and energy price inflation, which exerts a downward impact on consumers' purchasing power. Tightening lending standards and falling home prices have made it difficult for homeowners to tap into their equity.[18]

A modest but surprising increase in retail sales helped cap Wall Street losses and even allowed the market to dabble above the gain line in the early afternoon.[27] The caveat in Monday's retail sales report is that gasoline station sales, which jumped 1.1%, accounted for a disproportionate amount of the increase.[16] "The flip side is we had retail sales come in a little better than expected. It seems like they kind of negated each other."[29] Meanwhile retail sales, excluding auto sales, were up 0.1%, smaller than the 0.2% growth expected by economists.[18]

Economists had expected sales to edge up 0.1 percent compared to the 0.6 percent decrease originally reported for February.[11]

Ex the financials, SP earnings are expected to increase nearly seven percent for the first quarter.[33] Philips is Europe's largest consumer-electronics maker and it revealed a 75% drop in first quarter earnings before trading started.[22]

JPMorgan reportedly predicted Merrill will have to write down the value of another $3 billion of subprime-related assets and $2.7 billion in commercial mortgages in the first quarter. Berkshire Hathaway (BRK) announced a change at the top of its reinsurer General Re.[16] A tax benefit meant it reported a small first quarter profit last week. The merger proposal is considered a last attempt by two companies to maintain their relevance.[22] Eaton reported higher than expected first quarter results and offered positive guidance for the remainder of the year.[2]

Prices are 0.8 cent higher than Friday, and almost 53 cents higher than a year ago. The Energy Department recently predicted gas prices could average as much as $3.60 a month this summer, and said the daily national average could rise as high as $4 a times. [15] May natural gas rose 15.2 cents to $10.053 per mil Btu. Clinton called his remarks "elitist." McCain hailed small towns as the "heart and soul of this country." A poll showed Clinton leading Obama by 20 points in Pa., which holds its primary April 22. Tensions were heightened as a judge rejected the opposition's bid to seek the full results of the March 29 election they claim Mugabe lost.[32] May natural gas futures rose 15.2 cents to settle at $10.053 per 1,000 cubic feet.[15]

Northwest rose 20 cents to $11.15, while Delta advanced 37 cents, or 3.6 percent, to $10.38.[7]

After advancing $3.91 or 3.7 percent to $110.14 a barrel last week, the price of oil is currently up $0.87 at $111.01 a barrel.[11] The conglomerate's disappointing first-quarter sent the major indexes down by more than 2 percent Friday. "This is just more bad news for financials. It just confirms that the financials are by no means out of the woods yet," Detrick said of Wachovia. He contends many investors are holding off any major moves ahead of corporate results and economic figures on inflation due later in the week.[29] "GE and Wachovia have kind of set the tone for the earnings reporting period," said Peter Cardillo, chief market economist at Avalon Partners. Wachovia's news was having less of an effect than GE's did Friday, because a weak earnings reporting period has already been anticipated by investors, he said.[23] Wachovia's result was brought forward four days and released at 6 am New York time, a move that worried some investors.[22]

NEW YORK (CNNMoney.com) -- An unexpected loss from Wachovia could be the latest drag on U.S. markets Monday.[25]

Light, sweet crude rose $1.24 to $111.38 a barrel on the New York Mercantile Exchange.[7] Energy stocks like ExxonMobil (XOM) and Hess (HES) jumped 2% on Monday, fueled by another new record closing price on the New York Mercantile Exchange.[16] Decliners on the New York Stock Exchange hold a 17 to 13 lead over advancers.[5]

Out Tuesday is the April Empire State index, which measures manufacturing activity in New York and is expected to come in at a reading of negative 17, slightly better than March's negative 22.2 figure. [21] In Australia, the ASX 200 index fell 96.9 points to 5342.4, adding to last week's 3.2% decline. It's now down 15.7% since the start of the year, but is still up 6% from the 2008 low seen on March 18. That gain is narrowing.[22] London's FT 100 index fell as the UK reported the worst producer price index numbers since 1991 in March.[22] Looking ahead to Tuesday, Wall Street will be watching the producer price index for March for signs that inflation is piocking up steam.[8] The March Producer Price index (PPI) and the April NY Empire State index are the two big economic reports on tap.[23]

The markets may also tune in to the February business inventories report of the Commerce Department, the Treasury International Capital report for February, the Conference Board's leading index for March, the housing market index of the National Association of Homebuilders and the regularly scheduled weekly oil inventory and jobless claims reports.[18]

May WTI crude oil futures last traded up $1.60 per barrel at $111.74, after ranging between $110.30 and $111.99 in N.Y. dealings, reports Action Economics.[8] June gold futures were up $1.90 to $928.90 per ounce in COMEX trading.[8] The next likely merger candidate, United Airlines parent UAL ( UAUA, news, msgs ), jumped 3.1% to $23.61 in regular trading and an additional 1.7% to $24 in after-hours trading.[12] Before the deal was announced, Delta had closed up 4.7% to $10.48 and was up an additional 3.1% to $10.80 in after-hours trading.[12] Deal or No Deal: College students compete for $1 million in a two-hour special.[26]

Dow components Bank of America declined 2.5 percent to $36.01 and Citigroup was off 3.2 percent $22.61. [6] The Dow posted a weekly loss of 2.3 percent, while the Nasdaq and the S&P; 500 fell 3.4 percent and 2.7 percent, respectively.[11] The Dow Industrials fell 2.25% in the week ended April 11th compared to a 2.74% drop by the S&P; 500 Index and a 3.41% decline by the Nasdaq Composite Index.[18] The Standard & Poor's 500 index fell 4.51 to 1,328.32, and the technology-laden Nasdaq composite index fell 14.42 to 2,275.82. Investors appeared to be pausing after a sell-off Friday and ahead of a raft of quarterly results and economic data arriving this week.[29]

Among the other sub-indexes, the Dow Jones Transportation lost 3.27% over last week, while the Amex Airline Index fell 8.68%.[18] The Dow Jones Euro Stoxx 50, a index tracking the 50 largest companies of Europe, fell 28.71 points, or 0.78%, to 3671.28.[16]

The Dow closed 23.36 points, or 0.19 per cent lower at 12302.06, while the broader S&P; 500 shed 4.51, or 0.34 per cent to 1328.32.[27] British shares fell for a fifth straight day, ending more than 1 per cent lower on Monday.[27] Gainers included Exxon Mobil, Sunoco and ConocoPhillips, whose shares climbed 1.2 per cent, 1.8 per cent and 1.6 per cent respectively.[27]

On the downside, Sage Group slipped 3.1 per cent after Britain's biggest software company issued a trading statement that disappointed analysts.[27] The benchmark Hang Seng Index ended 856.59, or 3.47 per cent lower at 23811.20.[27] Whitbread, the owner of Britain's biggest hotel and coffee-shop chains, Premier Inn and Costa Coffee, added 2.4 per cent as traders cited market talk of a bid from a Dubai investor.[27] Some said the firm's operational and acquisition risk remained high. British Airways slipped 3.6 per cent after Morgan Stanley cut its rating on the airline to underweight from equal weight and slashed its price target.[27]

Higher gasoline prices, which averaged around $3.30 per gallon in March, and a continued surge in food prices could lead to higher consumer price inflation in March.[18] After advancing $3.91 or 3.68% to $110.14 a barrel last week, the black gold is gaining $1.06 to $111.20 a barrel. Gold prices are adding to their gains from the previous week.[18] The stock has traded between $3.44 and $19.12 during the past 52 weeks.[10] On the charts, the stock is expected to test resistance at $87 at the opening.[2] Stocks were battered Friday by much weaker than expected earnings and a cut in guidance from corporate bellwether General Electric ( GE, Fortune 500 ).[25] Stocks give up midday recovery attempt and resume the decline on Wachovia and worries about first-quarter earnings.[23]

U.S. stock futures turned sharply lower following the financial results from Wachovia, pointing to another rough start for stocks.[25]

'We obviously came out with more bad financial news,' said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, referring to the Wachovia report.[7] Fears about the health of the British mortgage and banking sectors were added to by the Wachovia news and financials across the region eased.''[22]

The worst of the six was Tennessee banking company First Horizon ( FHN, news, msgs ), down 11% to $11.65. [12] Oil company Hess ( HES, news, msgs ) was the S&P; leader today with a 9% gain to $101.19.[12] Crude oil closed at a new high of $111.76 a barrel today, up 1.5% from Friday.[12]

The Amex Airline Index ( $XAL.X ) has fallen 88% in the same time period. Both companies were forced to seek Chapter 11 bankruptcy protection in recent years to cope with higher fuel costs and a tough economy after the Sept. 11, 2001, terror attacks. Both emerged from Chapter 11 a year ago. [12] Tokyo's Nikkei Index fell 2.8% and Australian shares shed 1.8% to a two-week low. Other markets were lower, but the damage was greatest in China.[22] Shares of the financial institution fell 8.1 percent to set a seven-year closing low.[4]

The drop stunned the Street, which had been calling for profits of 40 cents a share in the quarter.[20] The firm said Mother Merrill will admit to a loss of $1.98 for the quarter, which is considerably steeper than the loss of 68 cents that JP had been anticipating, and even a little more dramatic than the concensus of $1.90.[33]

Banks and financial-services companies have written down $250 billion since the beginning of 2007, the paper reported. [12] A week ago it was Washington Mutual, America's biggest savings and loan, which received a $US7 billion capital injection, cut dividend, closed 180 offices and sacked 3,000 people.[22] JP said it expected to see $3 billion in write-downs tied to CDOs and subprime, and another $2.7 billion losses timed to Merrill's commercial portfolio.[33]

The banks all fell, after a brief respite in the previous session with the NAB down 1.8% to $28.50 and Commonwealth Bank 2.3% to $40.49.[22] As the housing market worsens and the credit crisis deepens into mortgages beyond subprime consumers to include even prime borrowers and commercial real estate, Vickrey said others like Midwestern bank National City Corp. and regional bank holding company Chemical Financial Corp. are at risk for an earnings miss due to the rate of growth in nonperforming loans and charge-offs.[15] After another surprising first-quarter report depressed Wall Street on Monday, investors will be looking to see whether earnings reports from two blue-chips Tuesday get traders' engines revving.[21] The news was ill-received by the market, already disappointed by an uninspiring fourth-quarter earnings report.[21] The dollar index was down 0.52 to 71.52 on nervous selling before more earnings reports are released.[8] While Wachovia's report came as a major disappointment, it might have sparked an even worse sell-off if earnings expectations had not been reined in of late.[20]

Major U.S. bank reports unexpected loss, slashes dividend to preserve capital - ahead of busy week for bank results. [25] Crude settled at $111.76 per barrel on supply disruptions and an earlier fall for the U.S. dollar.[16] The greenback lost 0.5 percent against the yen to 100.98 yen, while it declined 0.5 percent against the euro before ending the week at $1.5810 versus the common currency.[11] In the previous week, the precious metal gained $13.80 or 1.5 percent to $927 an ounce.[11]

In afternoon trading, Britain's FTSE 100 fell 0.87 percent, Germany's DAX index fell 0.86 percent, and France's CAC-40 fell 0.65 percent. [7] The MSCI World Index fell 0.6% in European trading, China's CSI 300 Index plunged 6.5%, the most since late January and the Australian market fell almost 2%.[22]

On the economic front, the UK National Statistical Office said today that the output price index for manufactured goods rose a seasonally adjusted 0.9% in March. [18] U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture.[15]

Economic concerns pulled down banking and finance stocks and mining shares were also hit as metal prices largely went downward.[27] Enterprise value includes market capitalization -- the value of a company's shares outstanding, preferred stock, debt and cash.[12]

After California-based ForeclosureS.com said that lenders repossessed nearly 71 percent more homes in the first three months of 2008, housing stocks fell sharply lower.[4] Overall, Asian stocks fell the most in a month, led by banks and consumer electronics makers.[22] UK stocks declined for the fifth day, led by Rio Tinto Group and other miners after copper dropped more than 2% in London and nickel, lead, zinc and aluminium prices fell.[22]

The March retail report may have kept stocks from more significant losses, even though it was only modestly positive.[35] A government report showed that sales were up in March, although rising gas prices and the slumping economy continued to take a toll.[27]

The Overnight MarketWatch report is provided by SHAW Stockbroking's egoli - simple but informative market news for the everyday investor. [27] Investors believe it is most likely to cut a deal with Continental Airlines ( CAL, news, msgs ).[12]

Wachovia (nyse: WB - news - people ) disappointed the Street with a surprise first-quarter loss. [13] Wachovia (nyse: WB - news - people ) got the day off to a rough start, reporting a surprising first-quarter loss prior to the opening bell.[35]

China Mobile fell 3.7 per cent, CNOOC dropped 4.2 per cent, Lenovo slid 1.6 per cent and China Netcom lost almost 4 per cent. [27] Movie rental chain Blockbuster Inc said on Monday that it had offered to buy struggling electronics retailer Circuit City Stores Inc. ID:nN14325109.[6]

SOURCES

1. World Business News and world finance at THEWEEKDaily.com
2. U.S. retail sales, Blockbuster, Wachovia ''' Vialoux - FP Trading Desk
3. Sector Roundup: Banks, Auto Suppliers - Forbes.com
4. Wall Street Closes Modestly Lower After A Choppy Trading Day [] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
5. 21 News Now, More Local News for Youngstown, Ohio - Stocks lower after Wachovia surprise
6. Investing | Africa - Reuters.com
7. Stocks fluctuate amid earnings worries
8. Stocks Finish Lower
9. Blockbuster makes play for Circuit City
10. Sector Snap: Electronics Retailers Rise | Chron.com - Houston Chronicle
11. RTTNews - Realtime Stock Market News, Market Trends, Stock Alerts, Stock Information.
12. Market Dispatches - MSN Money
13. Street Flat On Wachovia Miss, Circuit City Bid - Forbes.com
14. Blockbuster/Circuit City: OK, I don't get it either | Tech news blog - CNET News.com
15. Business Highlights | Chron.com - Houston Chronicle
16. Stocks Zig-Zag to Red; Wachovia Pushes Banks Lower
17. MarketBeat Blog - WSJ.com : Premarket: Wachovia Slumps, Circuit City Bounces
18. RTTNews - Financial News Analysis, Coverage Reiterated, Sector/Indices Articles, Stock Market News, Broker Ratings .
19. Blockbuster Shares Dip Further on Attempted Circuit City Deal
20. Retail Better, Wachovia Worse - Forbes.com
21. Blue-Chip Earnings, PPI In Spotlight Tuesday - Forbes.com
22. Markets End Mixed To Lower
23. CNNMoney.com Market Report - Apr. 14, 2008
24. RTTNews - Realtime Stock Market News, Market Trends, Stock Alerts, Stock Information.
25. CNNMoney.com Pre-Market Report - Apr. 14, 2008
26. Stocks End on a Downbeat (Blockbuster Inc. Cl A (BBI),Circuit City Stores Inc. (CC),Delta Air Lines Inc. (DAL),DEUTSCHE BANK AG ORD SHS (DB),Northwest Airlines Corp. (NWA),Wachovia Corp. (WB)) at SmartMoney.com
27. Overnight MarketWatch
28. Free Preview - WSJ.com
29. Business & Technology | Stocks fall on Wachovia's quarterly results | Seattle Times Newspaper
30. 21 News Now, More Local News for Youngstown, Ohio - Business Minute: Stocks slide. Wachovia loss weighs. Oil at new record
31. Free Preview - WSJ.com
32. IBDs Top 10 - Monday
33. Stocks To Watch Today : GE Hangover, Regrets At Wachovia, A Circuit City Blockbuster
34. Free Preview - WSJ.com
35. Stocks Ease On Wachovia Weakness - Forbes.com
36. Blockbuster Makes Bid To Buy Circuit City | Breaking News, Weather, Sports and Entertainment for Georgia and South Carolina | Business

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