Reuters - JC Penney tumbles on cut earnings forecast

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JC Penney tumbles on cut earnings forecast

Friday, Mar 28, 2008 3:38PM UTC

By Nicole Maestri

NEW YORK (Reuters) - Department store operator JC Penney Co Inc <JCP.N> on Friday cut its first-quarter earnings forecast and said it expects the environment to remain difficult throughout 2008, stoking fears that the second half of the year will not bring relief to struggling U.S. retailers.

"We believe that investors had generally anticipated weak performance from retailers in the first half" of 2008, wrote Sanford C. Bernstein analyst Uta Werner.

"However, we expect that JC Penney's commentary regarding its expectation of persistent weakness throughout the full year will be viewed as an incremental negative for the stock and the sector," she wrote in a research note.

Penney's shares were off more than 9 percent in early New York Stock Exchange trading. The warning also dragged down shares of competitors like Kohl's <KSS.N>, Macy's Inc <M.N> and Dillard's Inc <DDS.N>.

Department store operators like Penney that cater to middle-income Americans have been hit hard by the slowdown in consumer spending as these shoppers forgo purchases of clothes, jewelry and home furnishings amid fears of a U.S. recession.

But even upscale department store chains like Nordstrom <JWN.N> and Neiman Marcus Inc are starting to feel the strain of the spending slowdown, and investors are losing hope that the later part of the year, marked by the holiday shopping season, will offer much reprieve from current struggles.

"I'm hearing more and more that people are just assuming that things are going to stay pretty much difficult for the whole year," said Jason Asaeda, a retail analyst with Standard & Poor's Equity Research. "In doing so, they're planning a lot more conservatively."

CONFIDENCE AT A MULTI-YEAR LOW

Penney now expects first-quarter earnings of approximately 50 cents per share, down from its previous view of 75 to 80 cents per share.

It also expects a low-double-digit decline in March sales at stores open at least a year, known as comparable store sales, and a high-single-digit decline in comparable-store sales for the first quarter. Its previous view was for comparable store sales in March and the first quarter to decline in the low single digits.

"Consumer confidence is at a multi-year low," Myron "Mike" Ullman, chairman and chief executive officer, said in a statement.

"JC Penney counts half of American families as its customers, and they are feeling macro-economic pressures from many areas, including higher energy costs, deteriorating employment trends and significant issues in the housing and credit markets," he said.

In February, Penney reported a nearly 10 percent decline in quarterly profit and said there was no clear indication the consumer environment would improve in 2008.

It also posted a 6.7 percent drop in February sales at stores open at least a year while analysts, on average, were expecting a decline of just 1.9 percent.

Those disappointing February sales figures prompted JP Morgan analyst Charles Grom to downgrade his rating on the retailer's shares to "neutral" from "overweight," and he said at the time that the company's outlook for its March sales was "too aggressive."

Shares of Penney were down $3.86, or 9.5 percent, at $36.66.

(Additional reporting by Aarthi Sivaraman)

(Reporting by Nicole Maestri, editing by Mark Porter and Gerald E. McCormick)

Bear dips

We suck

Reuters - Bear Stearns shares fall after chairman sells stock

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Bear Stearns shares fall after chairman sells stock

Friday, Mar 28, 2008 3:20PM UTC

NEW YORK (Reuters) - Bear Stearns Cos <BSC.N> shares fell nearly 5 percent on Friday after Chairman James Cayne, who was seen as opposing JPMorgan Chase & Co's <JPM.N> acquisition of the investment bank, sold his stock.

"It is symbolic that he's selling," said David Dreman, chief investment officer of Dreman Value Management LLC, a New Jersey based fund manager that has over $18 billion under management. "It lessens the potential enormously for a long drawn out battle."

"I think he knows that they're not going to get much more," said Dreman, whose firm owns JPMorgan shares.

In a filing on Thursday, Cayne, who stepped down as chief executive of Bear in January after nearly 15 years at the helm, disclosed that he sold all of the 5.6 million Bear shares he directly held. His wife also sold all of her nearly 46,000 shares.

The sale of the shares, which were worth about $1 billion last year when the stock peaked at over $170 a share, were sold for $61 million.

Last week, the New York Post reported that Cayne, together with Bear's biggest shareholder Joe Lewis, was quietly searching for a bidder to top JPMorgan.

But on Monday, JPMorgan agreed to raise its bid and said that board members agreed to vote their shares in favor of the deal. With a stake of about 5 percent, Cayne had by far the largest holding among Bear board members.

JPMorgan plans to lock up about 39.5 percent of the vote, when it closes a deal to buy 95 million new Bear shares around April 8.

Bear shares fell 55 cents to $10.68 in morning trade on the New York Stock Exchange. Despite the fall, they are still trading above JPMorgan's all-stock offer of about $9.35 a share at current prices.

Bear, which until recently ranked as the fifth-largest U.S. investment bank, suffered a liquidity crisis as declining confidence prompted a run on the bank.

(Reporting by Chris Reiter)

North Korea gets testy

What you looking at?

Reuters - North Korea raises tensions with missile launch

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North Korea raises tensions with missile launch

Friday, Mar 28, 2008 3:35PM UTC

By Jon Herskovitz

SEOUL (Reuters) - North Korea test-fired a battery of short-range missiles on Friday in what analysts saw as a show of the reclusive state's anger at Washington and the new conservative government in Seoul.

The launch comes a day after the North expelled South Korean officials from a joint industrial complex north of the border, after Seoul told its destitute neighbor to clean up its human rights and stop dragging its feet in nuclear disarmament talks if it wants to receive aid to keep its economy afloat.

A South Korean presidential spokesman told a news briefing that the North had fired short-range missiles as a part of a military exercise. Local news reports said the three were ship-to-ship missiles launched into the sea off the west coast.

"We believe the North does not want a deterioration of relations between the South and the North," spokesman Lee Dong-kwan told reporters.

In Washington, White House spokesman Gordon Johndroe called for an end to the missile testing, which he said was "not constructive."

"North Korea should focus on the denuclearization of the Korean Peninsula and deliver a complete and correct declaration of all its nuclear weapons programs, and nuclear proliferation activities and to complete the agreed disablement," Johndroe said.

New South Korean President Lee Myung-bak has said he wants to end the free ride given to North Korea under 10 years of left-leaning presidents who gave billions in aid while asking for little in return, seeing it as the price to pay for stability.

Lee's government has said it is ready to invest heavily, provided the North meets conditions such as scrapping its nuclear arms program or returning the more than 1,000 South Koreans it kidnapped or kept in the country after the 1950-53 Korean War.

DUAL MESSAGE FROM NORTH

Pyongyang was basically sending two messages with the launch, Keio University Korea expert Masao Okonogi said in Tokyo.

One was aimed at the United States after talks in Geneva, showing the North's dissatisfaction with Washington's pressure to come clean on uranium enrichment and ties with Syria, he said. The other was a riposte to the Lee government's shift in stance.

"They are warning Seoul not to go back on things agreed between the North and the South," Okonogi said.

North Korea has more than 1,000 missiles, at least 800 of them ballistic, that can hit all of South Korea and most parts of Japan, experts have said. Its launches are often timed to coincide with periods of political tension.

At about the same time as the launch, North Korea's official media fired a rhetorical volley at the United States, blaming it for pushing into deadlock six-country talks aimed at ending the North's nuclear arms plans.

"If the United States continues to delay the resolution of the nuclear problem by insisting on something that doesn't exist, it could have a grave impact on the disablement of the nuclear facility that has been sought so far," the North's KCNA news agency quoted a Foreign Ministry spokesman as saying.

Pyongyang began disabling its Soviet-era nuclear plant at the end of last year, as its side of a deal with regional powers in return for aid and an end to international isolation.

The process has reached a stage where it would likely take North Korea at least a year to get its Yongbyon nuclear plant running again, according to South Korean officials.

U.S. and South Korean officials said most of the work to disable the reactor, a plant that makes nuclear fuel and another that turns spent fuel into arms-grade plutonium is complete, but a few elements have been delayed due to technical reasons.

The agreement calls for the North to make a complete declaration of its nuclear weapons arsenal and answer U.S. suspicions of proliferating nuclear technology and having a clandestine program to enrich uranium for weapons.

"To make it clear, we have not enriched uranium or cooperated with any other country on nuclear projects. We have not even dreamed about it," the North's spokesman was quoted as saying.

North and South Korea held separate talks on Friday without incident on energy and economic aid the communist state receives in return for complying with the nuclear deal.

(Additional reporting by Rhee So-eui, Lee Jiyeon and Jack Kim in Seoul, Linda Sieg in Tokyo and Matt Spetalnick in Washington; Editing by Jonathan Thatcher and Alex Richardson)

Basra

I found my rocket launcher

CNN - Baghdad on lockdown as rockets, bombs fly

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Baghdad on lockdown as rockets, bombs fly

Baghdad was on virtual lockdown Friday as a tough new curfew ordered everyone off the streets of the Iraqi capital and five other cities until 5 p.m. Sunday.

That restriction didn't stop someone from firing rockets and mortar rounds into the capital's heavily fortified International Zone, commonly known as the Green Zone. One slammed into the office of one of Iraq's vice presidents, Tareq al-Hashemi, killing two guards.

An American government worker also was killed in rocket and mortar attacks Thursday in the International Zone.

U.S. warplanes pounded Baghdad's Sadr City neighborhood Friday, killing six people and wounding 10.

Other U.S. planes bombed Shiite militia positions overnight in the southern city of Basra, a British military spokesman said.

The British military said the firings were the first by coalition forces since the Iraqi army launched an operation Tuesday in Basra, Iraq's second largest city.

At least 120 militia fighters have been killed and 240 wounded in Basra since the military operation started, said an Iraqi Defense Ministry official on condition of anonymity.

Iraq's parliament called a special session for Friday to address the crisis. The Interior Ministry on Thursday imposed a curfew through the weekend in Baghdad, Hilla, Kut, Diwaniya, Simawa and Basra. Officials banned pedestrian, motorcycle and vehicular traffic through 5 a.m. Sunday (10 p.m. ET Saturday.)

Meanwhile, the Iraqi government on Friday offered cash to people who surrender medium and heavy weapons by April 8.

New clashes erupted Friday in the southern Iraqi city of Nasiriya, a stronghold of Shiite cleric Muqtada al-Sadr, killing at least four people, an Iraqi Interior Ministry official said.

Thousands of al-Sadr's supporters took to the streets in Sadr City and another Shiite neighborhood in Baghdad to protest the crackdown launched by Prime Minister Nuri al-Maliki in Basra this week. The protesters called al-Maliki the country's "new dictator" and demanded his dismissal.

The fighting threatens to end al-Sadr's seven-month-long suspension of his Mehdi Army militia, regarded as a key factor in Iraq's dramatic drop in violence in recent months. The cleric, whose militia launched two uprisings against U.S. troops in 2004, has kept his cease-fire edict in place for now, but his supporters accuse the government of singling them out for raids by security forces in recent weeks.

In Baghdad, the U.S. Embassy warned employees to remain indoors until there's an end to the rocket and mortar fire.

U.S. State Department official Richard Schmierer said the rocket attacks appeared to be coming from fighters affiliated with al-Sadr who were "trying to make a statement" about the government offensive in Basra. He blamed the violence on "marginal extremist elements" who have associated themselves with the Sadrist movement.

In Friday's special session, lawmakers were to discuss the security situation around the country, specifically in Basra, where al-Maliki was leading operations against what government officials called "rogue" or "outlaw" militia elements.

President Bush on Friday praised the Iraqi government's military push into Basra as "a defining moment in the history of a free Iraq," saying the regime is fighting criminals.

"It was just a matter of time before the government was going to have to deal with it," he said, emphasizing that the decision to mount the offensive was al-Maliki's.

The operation is an effort to restore order amid disputes among the Sadrists, the Islamic Supreme Council of Iraq and the Fadhila Party. The fighting has been concentrated in areas controlled by al-Sadr's supporters and has spread north to Baghdad and other cities.

Al-Maliki's guns-for-cash program was an attempt to stem the violence.

"We call on all those who hold medium and heavy weapons to surrender their weapons to the security forces in exchange for cash award starting from March 28th until April 8, 2008," al-Maliki said in a statement.

It follows a call by al-Sadr to end the fighting.

"Muqtada al-Sadr calls on all groups to adopt a political situation and peaceful protest and to stop shedding Iraqi blood," senior aide Hazem al-Araji said.

Meanwhile, Iraqi security forces and U.S. soldiers killed eight militants after an attack on an Iraqi army checkpoint Thursday in northern Baghdad, a military statement said. One Iraqi soldier died and seven were wounded.

The militants hit the checkpoint with rocket-propelled grenades and small-arms fire, according to the military, and coalition forces responded with an airstrike that killed the eight.

American military operations targeting al Qaeda in Iraq killed eight suspected terrorists in northern Iraq on Thursday and led to the detention of 17 people, the U.S. military said.

The operations focused on al Qaeda in Iraq's "propaganda network" in the Tuz, Samarra and Mosul areas, the military said.

U.S. Air Strike in Basra

Got to get me a rocket launcher

Reuters - U.S. forces drawn deeper into Iraq crackdown

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U.S. forces drawn deeper into Iraq crackdown

Friday, Mar 28, 2008 1:32PM UTC

By Peter Graff

BAGHDAD (Reuters) - U.S. forces were drawn deeper into Iraq's four day-old crackdown on Shi'ite militants on Friday, launching air strikes in Basra for the first time and battling militants in Baghdad.

The fighting has exposed a rift within the majority Shi'ite community and put pressure on Prime Minister Nuri al-Maliki, whose forces have failed to drive fighters loyal to cleric Moqtada al-Sadr off the streets of Iraq's second-largest city.

Defense Minister Abdel Qader Jassim acknowledged at a news conference in Basra that Iraqi security forces had been caught off-guard by the strength of the opposition.

"We supposed that this operation would be a normal operation, but we were surprised by this resistance and have been obliged to change our plans and our tactics," he said.

Journalists attending the conference had to be escorted by Iraqi military vehicles. When the briefing was over they were unable to leave because of clashes taking place in the vicinity.

Lawmakers, including Sadr loyalists, were due to meet in an emergency session of parliament to seek an end to the impasse.

Iraqi authorities shut down Baghdad with a strict curfew on Friday but there was little let-up in the rocket and mortar barrages that have wreaked havoc in the capital this week.

The U.S. embassy ordered its staff in the "Green Zone" diplomatic and government compound to stay under cover when possible and wear body armor and helmets when in the open. A salvo of missiles exploded in the zone at 2.30 p.m. (7:30 a.m. EDT).

The Green Zone office of Vice President Tareq al-Hashemi, was hit in a missile attack but he was not there at the time. One security guard was killed, an official in his office said.

The government says it is fighting "outlaws", but Sadr's followers say political parties in Maliki's Shi'ite-led government are using military force to marginalize their rivals ahead of local elections due by October.

The Iraqi ground commander in Basra, Major-General Ali Zaidan, told Reuters his forces had killed 120 "enemy" fighters and wounded around 450 since the campaign began on Tuesday.

But Reuters television footage from Basra showed masked gunmen from Sadr's Mehdi Army still in control of the streets, openly carrying rocket launchers and machine guns.

A British Ministry of Defense spokesman said U.S. warplanes had opened fire in Basra for the first time, dropping bombs in support of Iraqi units on the ground.

British ground troops which patrolled Basra until December have so far remained on a base outside the city, but British or U.S. controllers would have been needed to call the air strikes.

The fighting has trapped many Basra residents in their homes, raising fears of a humanitarian emergency. The United Nations said its aid agencies were standing by with supplies including blood bags, trauma kits, 200 metric tons of emergency food and 39 million water purification tablets.

GUNMEN SEIZE NASSIRIYA

Sadr, who helped install Maliki in power after an election in 2005 but later broke with him, has called for talks with the government. But Maliki has vowed to battle what he calls criminal gangs in Basra "to the end".

The clashes have all but wrecked a truce Sadr declared last year, which Washington had said helped curb violence.

A Reuters witness said Mehdi Army gunmen had seized control of Nassiriya, capital of the southerly Dhi Qar province. Mehdi Army fighters have held territory or fought with authorities in Kut, Hilla, Amara, Kerbala, Diwaniya and other towns throughout the Shi'ite south over the past several days.

In Baghdad there have been clashes in at least 13 mainly Shi'ite neighborhoods, especially Sadr City, the vast slum which is named after the cleric's slain father and where his followers maintain their power base.

"There have been engagements going on in and around Sadr City. We've engaged the enemy with artillery, we've engaged the enemy with aircraft, we've engaged the enemy with direct fire," said Major Mark Cheadle, a spokesman for U.S. forces in Baghdad.

In one strike before dawn, a U.S. helicopter fired a hellfire missile at gunmen firing from the roof of a building, killing four of them, Cheadle said. A Reuters photographer there filmed windows blown out of cars and walls pocked with shrapnel.

Later in the day cars were engulfed in flames after an apparent air strike on a Sadr City parking lot.

U.S. forces said they killed 27 fighters in operations in the capital on Thursday.

In Nassiriya, a Reuters reporter said he could see groups of fighters with machineguns and rocket-propelled grenade launchers. The sound of sporadic gunfire echoed through the streets. Police appeared to be staying in their stations.

Militants have also taken control of the town of Shatra, 40 km to the north, he said, citing witnesses.

On Wednesday Maliki gave militants in Basra 72 hours to surrender. With that deadline looming, he said on Friday they would now be given until April 8 to hand over weapons for cash.

Oil exports from Basra of more than 1.5 million barrels a day provide 80 percent of Iraq's government revenue. An explosion at a pipeline damaged exports on Thursday, but they were back to normal on Friday.

(Additional reporting by Ross Colvin, Randy Fabi and Waleed Ibrahim in Baghdad and Aref Mohammed in Basra; Editing by Dominic Evans)

Reuters - Senator Casey endorses Obama

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Senator Casey endorses Obama

Friday, Mar 28, 2008 11:43AM UTC

By Matthew Bigg

NEW YORK (Reuters) - Sen. Bob Casey of Pennsylvania endorsed on Friday Barack Obama's campaign for the Democratic nomination for president in a boost for the Illinois senator.

Obama aides said Casey would appear later at an Obama campaign event in Pennsylvania, where the candidate is vying with New York Sen. Hillary Clinton for support in the April 22 primary election.

Casey also would join part of Obama's six-day bus tour across the state, due to start in Pittsburgh, they said.

Endorsements by politicians state can bolster a candidate's credibility in a state with a specific section of the electorate, although their precise impact on voters is often unclear.

"The endorsement comes as something of a surprise," Dan Pfeiffer, Obama deputy communications director, said in a statement. "Casey ... had been adamant about remaining neutral until after the April 22 primary. He said he wanted to help unify the party."

"Obama strategists hope Casey can help their candidate make inroads with the white working-class men who are often referred to as 'Casey Democrats,'" Pfeiffer said, adding that the group is liberal on economic issues, supportive of gun rights and opposed to abortion.

Obama's campaign has spent $1.6 million in television advertising in the state in the past week, the statement said.

Clinton leads in polls in Pennsylvania and has the endorsement of the state's governor, Ed Rendell, and other prominent Democrats.

Obama leads Clinton by more than 100 in the count of pledged delegates won in the state-by-state voting since January. Neither candidate is on track to win the 2,024 delegates needed to clinch the nomination, which could result in an intra-party fight at the Democrats' convention in August.

The Democratic nominee likely will face Republican John McCain in November's general election to succeed President George W. Bush.

(Editing by Bill Trott)