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Stocks To Watch: Apple, Bear Stearns, Dow Jones, Time Warner, Whole Foods Market


Wednesday's top stories and some stocks with potential to move...


Stocks to watch for Wednesday, August 1:

  • Aon (AOC) said it's considering strategic options for its Combined Insurance Company of America (CICA) business. That could include a sale or a spin off to shareholders, Greg Case, Aon's chief executive, said in a statement. "We are making preparations for a spin-off of the company to our shareholders, but we anticipate receiving inquiries from potential buyers and are prepared to respond accordingly," Case explained. CICA and its subsidiaries, including Sterling Life Insurance Company, provide accident, health and life insurance coverage, mainly through more than 7,000 agents. Aon said it has hired Credit Suisse, Merrill Lynch and Aon Capital Markets to advise on any deal.
  • Apple (AAPL) was upgraded to buy from hold by Citigroup (C), citing Tuesday's 7% pullback in the shares. The broker left its price target unchanged at $160. It said that iPhone and iPod production cuts rumored in Asia should not be a surprise to investors and reflect normal channel inventory clearance ahead of new product introductions in Aug. and Sept. More specifically, Citigroup said it expects higher-capacity iPod Shuffles and Nanos at lower prices for the memory size provided as well as a video iPod with an iPhone-like 3.5 inches diagonal screen and touch-screen controls. The broker added that while iPod margins will decline as a result of these refreshes, it believes this is fully reflected in its current estimates and consensus forecasts for the second half of the calendar year.
  • The Bear Stearns (BSC) Asset-Backed Securities Fund isn't leveraged, which means there's little pressure for the fund to sell positions. The fund also has less than 0.5% of its assets in subprime securities. The asset-backed fund isn't related to two other funds from Bear Stearns that have nearly collapsed.
  • Chipotle Mexican Grill's (CMG) second-quarter net income jumped 85% to $20 mln, or 60 cents a share, from $10.8 mln, or 33 cents a share, a year earlier, due to more new stores and higher menu prices. The restaurant chain said revenue increased 34% to $274.3 mln from $204.9 mln as comparable restaurant sales grew 11.6%.
  • Dow Jones' (DJ) sale to Rupert Murdoch's News Corp. (NWS) appeared all but certain, as more than half the total voting stock in the hands of Dow Jones' controlling Bancroft family now supports the deal, The Wall Street Journal reported.
  • Deutsche Bank (DB) CFO Anthony di Iorio cautioned on Wednesday that revenue from the bank's leveraged finance business is set to fall as investor interest cools. "Investor appetite for the business in terms of buying paper from us is down significantly from the first and second quarter," he told analysts on a conference call.
  • Box-office revenue from "Shrek The Third" helped quadruple second-quarter net income for DreamWorks Animation (DWA) to $61.8 mln, or 60 cents a share, compared with $13.7 mln, or 13 cents a share, for the same period a year ago. Sales for the animation studio were $222.5 mln vs. last year's $74.9 mln.
  • Energen (EGN) said its oil and gas exploration and production subsidiary, Energen Resources, has increased its 2008 hedge position to 62% of its total estimated production of 98 bln cubic feet equivalent. The company also said that Energen Resources has begun hedging its 2009 natural gas and oil production.
  • The Computer and Communications Industry Association, a group representing companies including Google (GOOG), Microsoft (MSFT) and other technology heavyweights, plans to file a complaint with the Federal Trade Commission, alleging that several content companies, ranging from sports leagues to movie studios to book publishers, are overstepping bounds with their warnings on copyright infringement.
  • RealNetworks (RNWK) saw revenue surge more than 50% for the second quarter while earnings slid from the year-ago period, which was skewed by a large settlement with Microsoft (MSFT).
  • Southwestern Energy's (SWN) second-quarter net income grew 29% to $47.6 mln, or 28 cents a share, from $37 mln, or 22 cents a share, a year earlier, as revenue rose 75%. The natural gas company's revenue climbed to $270.1 mln from $154 mln in the year-ago period.
  • Time Warner (TWX) said its quarterly net income rose 5.2% amid continued strength at its cable operations and the company also announced a $5 bln stock buyback.
  • Whole Foods Market (WFMI) said fiscal third-quarter profit fell 9%, hurt by expenses related to store openings, but results beat Wall Street estimates and shares jumped in after-hours trading.

Market Update:

  • Asian trading closed with the Hang Seng -3.15%, Nikkei -2.19%, Sensex -3.96%, Taiwan -4.26% and Shanghai -3.81%.
  • A quick look across the pond finds the CAC -1.79%, DAX -1.28%, FTSE -1.50%, ATX -1.87% and Stockholm -1.95%.
  • Crude oil is trading lower -0.55 to 77.66 and gold is also down -5.9 to 673.4.
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No position in stocks mentioned.

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