Shares of American Axle & Manufacturing Holdings Inc. (NYSE: AXL) soared more than 2% on Thursday on speculation that the company could be acquired. Stay tuned for more.
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Thursday, February 10, 2011
Apple Shares Slump On Rumor About Jobs' Health
Shares of Apple Inc. (NASDAQ: AAPL) dropped more than 1% on unconfirmed rumor that Steve Jobs has been hospitalized. Stay tuned for more.
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Dish Network Rallies On Takeover Chatter
Shares of Dish Network Corp. (NASDAQ: DISH) jumped as much as 6% on Thursday after Credit Suisse Group AG said AT&T Inc. (NYSE: T) may make a bid to buy the company.Stay tuned for more.
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Wynn Resorts Ltd. (NASDAQ: WYNN): Q4 Earnings Preview 2010
Wynn Resorts Ltd. (NASDAQ: WYNN) is scheduled to release its fourth-quarter earnings after the closing bell on Thursday, February 10, 2011. Analysts, on average, expect the company to report earnings of 65 cents per share on revenue of $1.13 billion. In the year ago period, the company reported earnings of 8 cents per share on revenue of $809.33 million.
Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts. It owns and operates two destination casino resorts Wynn Las Vegas, on the Strip in Las Vegas, Nevada, Encore at Wynn Las Vegas located adjacent to Wynn Las Vegas, and Wynn Macau, located in the Macau Special Administrative Region of the People’s Republic of China (Macau).
In the preceding third-quarter, the Las Vegas, Nevada-based company's net loss was $33.5 million, or 27 cents a share, compared to a profit of $34.2 million, or 28 cents a share, in the year-ago quarter. On an adjusted basis, the company earned 39 cents a share in the latest quarter. Revenue jumped to $1 billion from $773.1 million in the same quarter last year. Analysts, on average, expected the company to report earnings of 39 cents per share on revenue of $990.83 million.
The company has benefited from continuing growth in Asia and signs of life in Las Vegas. Meanwhile, more positive data in the US, including improved optimism in the gambling hotbed of Nevada, has sent stocks for casino companies with larger America presences up. Macau's gambling revenue in December surged 66% from a year earlier, capping a year in which the territory's revenue from casino gambling soared 58%, well above forecasts made by analysts and officials earlier in 2010. Gambling revenue in December totaled MOP18.88 billion (US$2.36 billion), up sharply from MOP11.35 billion a year earlier, according to data from Macau's Gaming Inspection and Coordination Bureau.
A strong Chinese economy, burgeoning middle class and increasing population of high net worth individuals is facilitating the rise of Macau's growing gaming industry. Ongoing infrastructure developments in Macau, such as the recently inaugurated rail link between Zhuhai and Guangzhou, are expected to further bolster the region's gaming industry.
Wynn Macau’s contribution to the company’s earnings has increased significantly in the last few years. At present, the Macau region contributes approximately 60% to Wynn's gross revenues. VIP gaming currently represents two-thirds of Macau's gross gaming revenues. Approximately 30% of Wynn's revenues comes from the VIP segment. The company opened Encore Macau in April, doubling its presence in the world’s biggest casino market. Wynn plans to build a major resort on the Cotai strip in Macau. The resort will likely cost $2 -$3 billion and is expected to have 1,300 slot machines, 500 gaming tables and 1,500 hotel rooms. Construction is targeted for completion by 2014-2015. . Wynn is strongly positioned to benefit from its established brand image, as its reputation will help lure high-rollers to its existing casinos as well as its planned resort on the Cotai strip.
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Sirius XM Radio Inc. (NASDAQ: SIRI): Q4 Earnings Preview 2010
SIRIUS XM Radio Inc. (NASDAQ: SIRI) is scheduled to release fourth-quarter earnings before the market open on Tuesday, February 15, 2011. Analysts, on average, expect the company to report earnings of breakeven per share on revenue of $739.18 million. In the year-ago period, the company reported earnings of breakeven per share on revenue of $676.17 million.
Sirius XM Radio Inc. provides satellite radio services in the United States and Canada. The company offers a programming lineup of approximately 135 channels of commercial-free music, sports, news, talk, entertainment, traffic, weather, and data services to 20 million subscribers in cars, trucks, boats and aircraft, and through a wide range of mobile devices.
In the preceding third-quarter, the New York-based company's net income was $67.6 million, or 1 cent a share, compared to a loss of $151.5 million, or 4 cents a share, in the year-ago quarter. Revenue increased to $717.5 million from $618.7 million. Adjusted revenue rose 15% to $722.5 million from $629.6 million in the same quarter last year. Analysts, on average, expected the company to report breakeven per share on revenue of $718.69 million.
At its last earnings call in November, the company said that it now anticipates full-year 2010 adjusted EBITDA of approximately $600 million versus previous guidance of approximately $575 million. The company now expects adjusted revenue for 2010 will exceed $2.8 billion and free cash flow will exceed $150 million. The company also projected that its year-end subscriber base will be approximately 20.1 million.
Late in November, Sirius XM announced that it surpassed 20 million subscribers, a record number of subscribers in satellite radio history. Mel Karmazin, SIRIUS XM's Chief Executive Officer, stated, "Reaching and surpassing 20 million subscribers is a significant milestone for us. We have added the last 10 million subscribers faster than the first 10 million -- despite a tremendously competitive environment -- representing a strong endorsement of our service and our programming by discerning consumers who want and demand the best in audio entertainment. As a leader in audio entertainment, SIRIUS XM has assembled the best content, personalities, and entertainers that satisfy our subscribers' diverse interests."
Also in November, Sirius XM and The National Football League announced a five-year extension of their satellite broadcasting and marketing agreement. SIRIUS XM, the Official Satellite Radio Partner of the NFL since 2004, will continue to broadcast every NFL game live nationwide from the preseason through the Super Bowl in 2016 as well as SIRIUS NFL Radio, channel 124, the first and only 24/7 radio channel dedicated entirely to the NFL.
In December, Star radio host Howard Stern signed a new five-year deal with Sirius XM, in a deal that includes distribution to mobile devices for the first time. In a statement, Stern noted that the company’s subscriber rolls have swollen to 20 million from the 600,000 who had signed up by 2006, when he began work for the satellite radio provider. There had been speculation that Stern might return to CBS (NYSE: CBS) Radio, where he held court in morning drive time for more than 20 years.
In December, BMW Motorcycles announced that beginning with January 2011 production, BMW Motorcycles will offer SIRIUS as standard equipment on new radio-equipped Model Year 2011 R 1200 RT, K 1600 GT, and K 1600 GTL Touring Motorcycles. BMW Motorcycle will include an introductory one-year subscription to the "SIRIUS Everything" package with the purchase of every new radio-equipped RT, GT and GTL Touring Motorcycles produced from January 2011. After the introductory one-year subscription, the SIRIUS service will be subject to the standard rates.
Also in December, Standard & Poor's raised the corporate credit rating on Sirius XM to BB- from B+ on improved operations. The outlook is stable. "The action reflects the company's improving operating performance, declining debt leverage, and the prospects for continued improvement in credit measures for full-year 2010 and 2011," said Hal Diamond, an S&P credit analyst, in a statement.
Last month, Manchester United Football Club, and Sirus XM reported a multi-year agreement to make SiriusXM the official U.S. radio broadcaster of Manchester United. Sirius and XM subscribers would have access to live play-by-play of every Manchester United English Premier League match and would hear the official Manchester United club broadcast. The agreement also gives SiriusXM the rights to stream Manchester United Premier League matches to Sirius and XM subscribers online at www.sirius.com and www.xmradio.com and through website access via the SiriusXM App. In addition to SiriusXM's expansive play-by-play coverage of Manchester United, fans can also hear comprehensive soccer talk on SiriusXM's The Football Show, the daily talk program hosted by striker Giorgio Chinaglia and soccer expert Charlie Stillitano.
The future of radio such as SIRIUS XM Radio Inc. and CBS Corporation looks much brighter now that the FCC's latest net neutrality ruling has limited the viability of unlimited free radio over wireless internet, helping out pre-existing broadcast radio companies by eliminating the potentially harmful competition. The FCC has allowed companies to charge fees for services that consume large amounts of bandwidth, like radio over the internet would. This is a big victory for subscription radio companies because it will ensure they do not cede a large portion of their market share.
One area in particular where this will benefit the Broadcast Radio sector is in the new car market where automakers were beginning to add Wi-Fi to their new cars. In response to the potential loss, subscription radio services had begun making deals with manufacturers to offer free trial-subscriptions to their service each time a new car is purchased. Much of Sirius XM's subscriber growth comes from buyers of new cars that have the radios installed. Nearly half of the trial customers become full-paying subscribers after their promotions end.
Another growth area radio companies are working to take advantage is the smartphone market. Companies are lobbying hard to get their broadcast chips installed in new models, allowing consumers to access the radio through their phone. The actions in the car and smartphone market are both key signs that the radio sector is looking for ways to survive in the new secularly shifting market environment.
Full Disclosure: None.
Nvidia Corp. (NASDAQ: NVDA): Q4 Earnings Preview 2010
Nvidia Corp. (NASDAQ: NVDA) is scheduled to release its fourth-quarter earnings after the market close on Wednesday, February 16, 2011. Analysts, on average, currently expect the company to report earnings of 21 cents a share on revenue of $894.42 million. In the year ago quarter, the company reported earnings of 23 cents per share on revenue of $982.49 million.
Nvidia Corporation provides visual computing technologies that generate interactive graphics on workstations, personal computers, game consoles, and mobile devices. NVIDIA serves the entertainment and consumer market with its GeForce graphics products, the professional design and visualization market with its Quadro graphics products, the computing market with its Tesla computing solutions products, and the mobile computing market with its Tegra system-on-a-chip products.
In the preceding third quarter, the Santa Clara, California based company's net income was $84.9 million, or 15 cents a share, compared with a profit of $107.6 million, or 19 cents a share, in the year-ago quarter. Revenue decreased to $843.9 million from $903.2 million. Analysts, on average, expected the company to report earnings of 14 cents per share on revenue of $844.04 million.
At its last earnings call in November, the chip designer said that it expects fourth-quarter revenue to grow sequentially by 3% to 5%, which translates to a range of roughly $869.2 million to $886.10 million. The GAAP gross margin is expected to be flat. Operating expenses on a GAAP basis are expected to be approximately $300.0 million.
Given robust growth in the core GeForce and Quadro businesses, it appears that NVIDIA has been regaining market share.
Meanwhile, the company has continued to introduce new products at regular intervals. Nvidia stands to benefit from growing demand for handheld devices like smartphones and tablets. The company's Tegra product, designed to serve the fast growing tablet PC market, is already gaining traction among manufacturers. At the Consumer Electronics Show in Las Vegas in early January, the Tegra chips appeared in several new tablets and smartphones running Google's (NASDAQ: GOOG) Android operating system, giving the company a lead against competitors like Qualcomm (NASDAQ: QCOM) and Texas Instruments (NYSE: TXN). Recently, Nvidia announced a strategic partnership with San Mateo-based Glu Mobile Inc. (NASDAQ:GLUU) aimed at developing games that showcase the Android software and Tegra 2 mobile computer chip on tablet devices and mobile phones.
Early in January, said it will begin designing central processors for personal computers, pushing back against growing pressure from Intel (NASDAQ: INTC) and Advanced Micro Devices (NYSE: AMD). Nvidia said the processors will be integrated on the same chip as its graphic processor. The company, which is developing the product under the code name "Project Denver," said it had obtained the rights to develop the CPU using ARM Holdings (NASDAQ: ARMH). The move comes as Intel Corp expands into Nvidia territory with its latest chips, which closely integrate central and graphics processing.
Last month, Nvidia announced that the company has signed a new cross-licensing agreement which gives Intel the right to use Nvidia technologies until March 31, 2017. In order to license the technology, Intel will have to pay 1.5 billion dollars in licensing fees, paid in five annual installments of around $300 million each. The existing agreement is to expire March 31, 2011. Pursuant to U.S. GAAP, a portion of the proceeds will be accounted for and attributed to the settlement of prior legal claims. This amount, which NVIDIA anticipates to be less than $100 million, will be included in the company’s fourth-quarter results. The balance of the licensing fees will be accounted for on a straight-line basis over the six-year term of the agreement. Accordingly it is anticipated that this would amount annually to approximately $233 million of operating income and an increase in net income of $0.29 per diluted share, on a full year basis.
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Genzyme Corp. (NASDAQ: GENZ): Q4 Earnings Preview 2010
Genzyme Corp. (NASDAQ: GENZ) is scheduled to release fourth-quarter earnings before the opening bell on Wednesday, February 16, 2011. Analysts, on average, expect the company to report earnings of 86 cents per share on revenue of $1.17 billion. In the year ago quarter, the company reported earnings of 31 cents per share on revenue of $1.08 billion.
Genzyme Corporation operates as a biotechnology company worldwide. The Company’s product and service portfolio is focused on rare genetic disease disorders, renal diseases, orthopaedics, cancer, transplant and immune disease.
In the preceding third-quarter, the Cambridge, Massachusetts-based company's net income was $68.95 million or $0.26 per share compared to $16 million or $0.06 per share in the prior year. Excluding items such as stock compensation expenses and acquisition-related costs, non-GAAP net income rose to $111.5 million or $0.42 per share from $77.9 million or $0.28 per share in the same period last year. Revenue rose to $1 billion from $923.77 million. Analysts, on average, expected the company to report earnings of $0.53 per share on revenue of $1.10 billion.
Last month, Genzyme cut its non-GAAP forecast for fourth quarter and full-year 2011. The company said that fourth-quarter non-GAAP earnings per share is now expected to be $0.80 to $0.85, compared to its previous guidance in the range of $0.90 to $0.95. Preliminary fourth-quarter revenue grew 23% to $1.15 billion from $0.93 billion in the fourth quarter last year. Preliminary earnings were below the company’s guidance mainly due to lower than expected Cerezyme revenue and gross margins which were impacted by manufacturing costs.Cerezyme revenue for the quarter was lower than anticipated and gross margins were reduced due to costs associated with manufacturing operation improvements. Cerezyme revenue was impacted by the delay of orders in Brazil; a late lot release that was exacerbated by shipping delays due to December weather issues in Europe; and the loss of a specific lot for Japan. Fourth quarter revenues from Genzyme’s Personalized Genetic Health segment increased 46% to $508 million. However, full year revenues declined 10% to $1.7 billion. The Personalized Genetic Health segment was most adversely affected by the temporary shutdown of the company’s Allston Landing facility in June 2009. The production and supply of two products – Cerezyme and Fabrazyme - were mainly affected by the temporary shutdown. Cerezyme sales came in at $224 million in the fourth quarter, significantly above $105 million sales reported in the year-ago quarter. For the full year, Cerezyme sales were $722 million, down 8.9%. Fabrazyme sales increased 6.9% to $62 million in the fourth quarter. For the year, sales declined from $430 million to $188 million. Genzyme reported that full supply is available to patients on Cerezyme therapy. Meanwhile, Fabrazyme allocation has increased 82% in the fourth quarter on a sequential basis. Genzyme should be able to provide full supply of Fabrazyme in the second half of 2011 following the regulatory approval of Fabrazyme production at the company’s Framingham manufacturing facility. Other segments like Renal & Endocrinology, Biosurgery and Hematology and Oncology continued to grow during the fourth quarter. While Renal & Endocrinology grew 13% to $291 million, Biosurgery grew 10% to $157 million. The Hematology and Oncology segment increased 6% to $179 million.
As far as Genzyme’s cost reduction program (Value Improvement Program) is concerned, the company said that it achieved savings of $26 million during the fourth quarter of 2010. This program should help Genzyme reduce operating costs and improve margins over the next 15 months. The full impact of this program is expected to materialize by 2012. The company expects to achieve savings of $275 million in 2011 and $385 million in 2012.
In January, Genzyme also provided an update on its pipeline that will help drive growth beyond 2011. Some of the pipeline candidates that show promise include mipomersen for familial hypercholesterolemia (filing in 2011), alemtuzumab for multiple sclerosis (phase III ongoing; US approval expected in 2012) and eliglustat tartrate for type 1 Gaucher disease (phase III ongoing; US approval expected in 2013). In December,the company said that analyses of its alemtuzumab for multiple sclerosis against competing products showed that therapy switching would be a strong growth driver. Genzyme expects rapid adoption and peak sales of $3 billion -3.5 billion within 5 years of launch.
For the fiscal year 2011, Genzyme now expects non-GAAP earnings per share in the range of $4.10 to $4.35; and approximately $5.0 billion in revenue. Previously, the company estimated earnings per share in the range of $4.30 to $4.60 and revenue of $5.1 billion. The company expects to divest or partner its non-core businesses in the first half of 2011.
For the first quarter of 2011, earnings per share is expected to be similar to the fourth quarter of 2010.
For the three-year period from 2008 to 2011, the company expects the compound annual growth rate of its non-GAAP earnings per share to be approximately 30%.
The company recently confirmed that it is in expanded talks with French pharma giant, Sanofi-Aventis (NYSE: SNY), which is looking to acquire Genzyme. The Wall Street Journal recently reported that Sanofi-Aventis and Genzyme are inching towards a deal, with the French pharma company proposing to pay around $74 per share for the Boston biotech plus additional payments linked largely to the performance of a potential MS treatment. A so-called contingent value right could be worth upwards of $6 a share depending on the regulatory and sales success of Campath, an anti-leukemia drug also being tested for use against the neurological disease, the WSJ says. Genzyme is seeking a higher cash payment up front and a smaller CVR.
During the quarter in review, the biotechnology company agreed to sell its diagnostic products business to Japan-based Sekisui Chemical Co. for $265 million in cash. The company agreed to its pharmaceutical intermediates unit to International Chemical Investors Group of Luxembourg for an undisclosed amount.
Full Disclosure: None.
CBS Corp. (NYSE: CBS): Q4 Earnings Preview 2010
CBS Corp. (NYSE: CBS), owner of the most-watched U.S. broadcast network, is scheduled to release its fourth-quarter earnings after the closing bell on Wednesday, February 16, 2011. Analysts, on average, expect the company to report earnings of 44 cents per share on revenue of $3.85 billion. In the year ago period, the company reported earnings of 25 cents per share on revenue of $3.50 billion.
CBS Corporation operates as a mass media company in the United States and internationally. The Entertainment segment consists of the CBS Television Network, CBS Television Studios, CBS Studios International, CBS Television Distribution, CBS Films and CBS Interactive.
In the preceding third-quarter, the New York, NY United States-based company's net income was $317.3 million, or 46 cents a share, compared to $207.6 million, or 30 cents a share, in the year-ago period. On an adjusted basis, the company earned 35 cents a share in the third quarter. Revenue decreased to $3.3 billion from $3.35 billion. Analysts, on average, expected the company to report earnings of 31 cents a share on revenue of $3.35 billion.
Aty its last earnings call in November, the company said that strong pacing is continuing into the fourth quarter. CBS said that political advertising will contribute significantly to its fourth quarter results.
For 2011, management provided a laundry list of positives including the strong network upfront and still strengthening scatter, lower programming costs in primetime and for sports, higher retransmission revenues, better Outdoor contracts, expense savings from 2010 restructuring actions, and lower interest expense.
CBS also announced that its board has approved a $1.5 billion share repurchase program. The company intends to use the program to repurchase CBS Corp. Class B common stock, beginning in January 2011.
CBS Corp Chief Executive Leslie Moonves is optimistic about 2011 advertising trends and expects the brisk pacing of ad revenue growth to continue in the first quarter. Moonves said that CBS is anticipated to have an "extremely strong" upfront market this spring, the annual period when advertisers book the bulk of commercial time for the year.
The company has benefited from improving trends in advertising due to renewed strength in the auto and financial services sectors. The company stated in its recent earnings call that it has benefited from improved upfront advertising and scatter pricing in 2010. Upfront advertising is when advertisers buy their advertising time at the start of a season or a set advertising sales period. Scatter pricing is when advertisers buy time during a season or based on specific targets or events.
Among other developments, the U.S. Tennis Association and CBS signed a 3-year agreement that will keep the U.S. Open on the network through 2014. The U.S. Open has aired on CBS every year since 1968. The network’s current deal with the USTA ends after the 2011 tournament.
Full Disclosure: None.
Devon Energy Corp. (NYSE: DVN): Q4 Earnings Preview 2010
Devon Energy Corp. (NYSE: DVN), the third-largest U.S. independent oil and natural-gas producer by market value, is scheduled to release fourth-quarter earnings before the opening bell on Wednesday, February 16, 2011. Analysts, on average, expect the company to report earnings of $1.39 per share on revenue of $2.40 billion. In the year ago quarter, the company reported earnings of $1.33 per share on revenue of $2.44 billion.
Devon Energy Corporation, together with its subsidiaries, engages in the exploration, development, and production of natural gas and oil; transportation of oil, gas, and natural gas liquids (NGLs); and processing of natural gas.
In the preceding third-quarter, the Oklahoma City, Oklahoma-based company's net earnings surged to $2.09 billion or $4.79 per share from $499 million or $1.12 per share in the year ago quarter.Excluding such special items, the company earned $628 million or $1.44 per share in the quarter. Revenues for the quarter were $2.35 billion, up from $1.85 billion in the prior-year quarter. Analysts, on average, expected the company to report earnings of $1.29 per share on revenue of $2.35 billion.
Devon Energy continued construction of the second phase of Jackfish development in Canada during the third quarter of 2010. The company estimates that phase two is 90% complete and should start production by the end of 2011
At its last earnings call in November, Devon said that it expects to grow production 10% from the fourth quarter of 2009 to 625-635 MBoe/d in fourth quarter of 2010. For 2011, Devon expects overall production growth of 68% led by a roughly 20% growth in oil and NGL volumes. The company also said that spending on exploration and production will fall in 2011. Spending will be $4.5 billion to $4.9 billion, down from as much as $5.8 billion this year. About 90 percent of next year’s spending will be for oil and gas liquids, driving up liquids output by 20 percent and total production by as much as 8 percent. Devon may sell all or part of 17,000 acres in the Haynesville Shale region of east Texas that won’t be as profitable as other holdings. It has locked in drilling rights on 110,000 acres in the gas-rich region that will generate sufficient profit at prices of $5.50 to $6 per million British thermal units.
The company has benefited from higher energy prices and a rising output in the North America fields. Devon shifted its strategy last year to focus on its North American land assets and shed offshore fields and properties outside the continent.
In December, the oil and gas company was forced to cut its production by roughly 10,000 barrels per day due to outages at Enbridge Inc.’s (NYSE: ENB) pipeline network. As a result, the company said that it expects Canadian oil volumes in the fourth quarter to reduce by 300,000 barrels, representing about 0.5% reduction in the company’s estimated total production for the fourth quarter.
Full Disclosure: None.
Abercrombie & Fitch Co. (NYSE: ANF): Q4 Earnings Preview 2010
Abercrombie & Fitch Co. (NYSE: ANF) is scheduled to release fourth-quarter earnings before the opening bell on Wednesday, February 16, 2011. Analysts, on average, expect the company to report earnings of $1.32 per share on revenue of $1.14 billion. In the year ago quarter, the company reported earnings of 91 cents per share on revenue of $935.99 million.
Abercrombie & Fitch Co., through its subsidiaries, operates as a specialty retailer of casual apparel for men, women, and kids. Abercrombie & Fitch Co. (A&F) through its subsidiaries, is a specialty retailer that operates stores and direct-to-consumer operations. At the end of fiscal 2010, the company operated a total of 1,069 stores. The Company operated 316 Abercrombie & Fitch stores, 181 abercrombie kids stores, 502 Hollister Co. stores and 18 Gilly Hicks stores in the United States. The Company also operated nine Abercrombie & Fitch stores, four abercrombie kids stores, 38 Hollister Co. stores and one Gilly Hicks store internationally.
In the preceding third-quarter, the New Albany, Ohio-based company's net income was $50 million, or 56 cents a share, compared to $38.8 million, or 44 cents a share, in the year-earlier quarter. Revenue climbed 18% to $885.8 million from $753.7 million. Analysts, on average, expected the company to report earnings of 51 cents per share on revenue of $881.26 million.
The company has cut prices to lure shoppers and increase market share in highly competitive apparel market. The company has benefited from aggressive promotions. However, few analysts fear that higher-than-usual discounting coupled with aggressive promotions could put pressure on margin.
The teen retailer registered robust comparable store sales growth during the third quarter. Comparable store sales increased 13% for the quarter. For the fiscal quarter ended January 29, 2011, the Company reported net sales of $1.149 billion, a 23% increase from net sales of $936.0 million last year.
The teen retailer's biggest strengths recently have been in direct-to-consumer sales - chiefly online - and international sales. For the fourth quarter, total company direct-to-consumer net merchandise sales increased 43% to $133.4 million. For the quarter, total Company international net sales, including direct-to-consumer net sales, increased 61% to $230.3 million.
As a result of its fiscal year-end review of long-lived store-related assets, the company expects to record an impairment charge for the quarter. The charge will include a substantial portion of the approximately $58 million net book value associated with Gilly Hicks stores, as well as certain other store-related assets. The Gilly Hicks charge relates to the stores constructed using the original large format store of around 10,000 gross square feet. The Company expects that future stores will be constructed using the new smaller format of approximately 5,000 gross square feet. In addition, for the fiscal quarter ended January 29, 2011 the company expects to record exit charges associated with the closure of 56 domestic stores during the quarter. These closures are in addition to the 8 permanent closures that occurred in prior quarters during the fiscal year. Fourth quarter net pre-tax charges associated with these closures are expected to be approximately $4 million, primarily related to lease obligations.
Full Disclosure: None.
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