Earnings Confusion With Fannie Mae

October 29, 2003
Brice Wightman

Stocks rose
slightly Wednesday. AT&T
(
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Bellsouth ended merger discussions. The Wall Street Journal reported
that discussions began in 2001 and had intensified over the past summer. . In other news,
Johnson & Johnson
(
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PowerRating) hit a 52-week low after the FDA warned
physicians about blood clots and other side effects associated with its newest
heart device. Halliburton’s
(
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PowerRating) revenue gained 39% but net income
fell to $58 million from $94 million in the year-ago quarter. Government work
done by its KBR subsidiary helped HAL’s revenue increase to $4.14 billion from
$2.98 billion a year ago. Boeing
(
BA |
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earning 32 cents a share or $256 million for the third quarter. BA is up
6% for the day.

The Semiconductor Index
(
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made a 52-week high, trading 34% above its 200-day moving average. So far this
month, the market is bucking the historic October trend, with the Dow up over
500 points.

Economic releases today include
Durable Orders figures of an increase of 0.8%, down from the expected 2%.
Consumer confidence index was 81.1; slightly higher than the expected forecast
of 80.

10-year Bonds were -220
at 112 185.

The dollar
was +0.06 at 91.92.

Gold was +3.60 at 386.70.

Crude Oil was -0.62 at
28.91.

Volume was
1,520,759,000 on
the NYSE, and 1,942,914,000 on the Nasdaq.

Market breadth was positive,
with NYSE advancing issues over declining issues by 1.67 and up over down volume
by 1.84. Nasdaq advancing issues over declining issues at 1.46, and down volume
over up volume at 1.62.

Top Dow stocks were:

Stocks in the news:

Mid-day, Fannie Mae
(
FNM |
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PowerRating) was
halted pending news. The company said
it corrected its third-quarter earnings release to fix
“computational errors,” but that correction would have ‘no impact’ on its income
statement. FNM closed at 73.10, down 1.80.

Aerospace giant Boeing
(
BA |
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PowerRating)
reported earnings of $256 million, down from $372 million on third-quarter
revenue of $12.2 billion. BA lowered yearly EPS by 5 cents to 90 cents to $1
per share. Revenue for 2003 is expected to be $50 billion. Despite the lowered
profit amid the airline industry downturn, BA shares are trading 6% higher for
the day as the company beat Wall Street consensus estimate of 25cents per
share. Revenue from the defense division rose 12% to 7.3%. Boeing also
announced that it would discontinue building 757s, and will still deliver close
to 300 jets this year.

OmniVision Techonologies
(
OVTI |
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PowerRating) updated earnings and revenue outlook for the second quarter of 2004
ending October 31. The company predicts it will meet or exceed 30 cents a share
on revenue at or above $65 million, as it is currently benefiting from a strong
demand from video game, cell phone and digital still camera markets. OmniVision
will report results after the close on Nov. 19, 2003. Shares are trading at
$56, a 52-week high.

Sonus Pharmaceuticals
(
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PowerRating)
is up more than 10% after announcing the FDA granted Fast Track designation for
its bladder cancer treatment drug, Tocosol. Phase II studies showing the drug’s
efficacy in treating ovarian, bladder, and non-small cell lung cancers have been
completed, with another bladder cancer trial planned.

Janus Capital
(
JNS |
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PowerRating) posted net income of $50.9 million on revenue of $256 million, up from
last year’s $131 million loss. Despite the good earnings report, the company is
in the middle of an investigation by New York Attorney General Eliot Spitzer for
alleged improper trading. According to an internal review, the company found
several frequent-trading arrangements but said they were of limited size and
duration and it expects higher liabilities in future quarters.

Gilead Sciences
(
GILD |
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PowerRating)
reported lower-than-expected third-quarter profit and revenue as its shares
plunged 10%. Third-quarter net income more than tripled but was below analysts’
expectation due to lower inventory levels of its anti-HIV drug Viread. Sales of
Viread were $115 million, up 67%. GILD earned $73 million for the quarter on
revenues of $200 million.