Company News
Thursday, May 6th, 2010

Freddie Mac (FRE)

Freddie Mac (FRE) reported last night that its first-quarter loss arrived at $6.7 billion, or $2.45 per share. The per-share deficit includes a $1.3 billion dividend payment to the U.S. Treasury for its senior preferred stock. The mortgage company's credit-loss provision narrowed to $5.4 billion, down sequentially from $7.0 billion in the fourth quarter.

FRE chart

"Though more needs to be done, we are seeing some signs of stabilization in the housing market, including house prices and sales in some key geographic areas," stated CEO Charles Haldeman.

Freddie Mac requested an additional $10.6 billion in federal aid from the government. The mortgage lender hasn't asked for any Treasury funds for three consecutive quarters, but now says it's operating on net-worth deficit of $10.5 billion.

AMR Corporation (AMR

American Airlines parent AMR Corporation (AMR) announced last night that it has struck a tentative labor agreement with its mechanics. The proposed three-year deal includes a 6% lump-sum signing bonus, as well as scheduled pay increases of 3% for 2010 and 1.5% each in 2011 and 2012. The agreement, which is set to cover about 11,500 workers, is still pending approval from union members.

Massey Energy Company (MEE)

Late Wednesday, RiskMetrics Group advised Massey Energy Company (MEE) shareholders to vote against three directors who are up for re-election at the firm's May 18 annual meeting.


In its report, RiskMetrics said that its concerns "transcend" the tragic explosion at the Upper Big Branch Mine last month, and explained, "A board that is no longer responsive to shareholders and does not provide sufficient oversight to management is less able to protect or enhance shareholder value."

Specifically, RiskMetrics is asking shareholders to oppose the reelection of President Baxter F. Phillips, as well as independent directors Richard M. Gabrys and Dan R. Moore.

MEE shares have not been performing well during the past 40 sessions and are underperforming the broader S&P 500 Index (SPX) by more than 30 percentage points.

SNDK chart

SanDisk Corporation (SNDK)

SanDisk Corporation (SNDK) received a bullish note this morning, as Sterne Agee initiated coverage of the shares with a "buy" rating and a $50 price target. The new target represents a premium of nearly 20% to the stock's closing price of $41.82 on Wednesday. Most analysts agree with Sterne Agee, with Zacks reporting that the shares have notched up 10 "buy" or better ratings, compared to six "holds" and just two "strong sells."

If bearish bettors become frustrated with SNDK's consistent upward trajectory on the charts, an unwinding of pessimistic positions could translate to additional gains.

NVLS chart

Novellus Systems (NVLS)

Novellus Systems makes equipment used to manufacture semiconductors and other integrated circuits. The company’s products are sold in Europe, Asia and the U.S.

On Apr 21 Novellus Systems reported first-quarter results that included sales of just over $276 million, a 13.1% sequential improvement and almost triple the same quarter last year.

Net income came in at $42.3 million, a 17% jump since the fourth quarter. Novellus reported a $66 million loss one year ago. Adjusted earnings per share were 3 cents better than expected, at 47 cents. This was the third consecutive surprise.

All 15 analysts quickly raised full-year forecasts. Novellus is expected to earn $2.85 per share next year, up from $2.34, for another 25 percentage points of growth.

Recent weakness in the stocks has lead to a rush of profit taking following the good news. If shares remain stable this could be a nice entry point.

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Back to Stock Options Made Easy from Company News - May 6, 2010

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