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Stocks to Watch, Oct. 11: Apple, Genentech

By MarketWatch
Published | Updated

SAN FRANCISCO – Among the companies whose shares are expected to see active trade in Tuesday's session are Alcoa Inc., Apple Computer Inc., Genentech Inc. and SigmaTel Inc.

Apple Computer Inc. (AAPL) is expected to report fourth-quarter earnings of 37 cents a share, according to analysts polled by Thomson First Call.

Gannett Co. Inc. GCI (GCI) is seen reporting a per-share profit of $1.13 a share.

After Monday's closing bell, Genentech Inc. (DNA) reported that third-quarter net earnings rose to $359.4 million, or 33 cents a share, from $230.9 million, or 21 cents a share, for the comparable period in 2004. Excluding one-time items, earnings totaled 35 cents a share. The company was expected to earn 30 cents a share, on revenue of $1.64 billion, according to a Thomson First Call analyst survey.

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Alcoa Inc. (AA) , the world's biggest aluminum maker and unofficial first mover in the quarterly earnings rush, handed in a narrowly higher third-quarter profit, beating its own latest earnings forecast.

Arch Capital Group (ACGL) said catastrophes in the third quarter, including Hurricane Katrina, will cost it $252 million, after taxes, reinsurance and reinstatement premiums. Katrina may cost $173 million, while Hurricane Rita could cost $48 million, the Bermuda-based reinsurance and insurance company said. Hurricanes Dennis and Emily, and flooding in Europe during the third quarter, will cost $18 million and $13 million respectively, Arch added. The company's reinsurance business will take about 64% of the hit to third-quarter operating earnings, while its insurance unit will take the rest, Arch said.

Comstock Homebuilding Cos. Inc. (CHCI) revised its third-quarter earnings forecast to 80 cents a share from its previously forecasted range of 77 cents to 80 cents a share. The Reston, Va.-based company also revised its 2005 earnings forecast to $2.75 from a range of $2.68 to $2.73. For 2006, Comstock said it expects per-share earnings of $3.95 to $4.05.

Dominion Resources Inc. (D) said it has restarted 130 million cubic feet of natural gas equivalent a day in production in the Gulf of Mexico and south Louisiana after the recent hurricanes. The Richmond, Va.-based company said its facilities weren't significantly damaged by the storms, but that production capability of 570 MMcfe a day is still shut-in, primarily due to hurricane damage to downstream facilities it does not own. Prior to Hurricane Katrina, Dominion's production in the area was 435 MMcfe a day, and it had forecast production increases to 700 MMcfe a day during October.

EBay Inc.'s (EBAY) PayPal has agreed to acquire VeriSign Inc.'s (VRSN) payment gateway business for $370 million in cash and/or stock, the companies said. The acquisition is expected to close in the fourth quarter. PayPal expects the business to generate $100 million in revenue in 2006. In another agreement, VeriSign will provide eBay and PayPal with security services, including the deployment of two-factor authentication, a security system that gives customers a one-time password or digital certificate to help protect against online identity theft.

EP MedSystems Inc. (EPMD) said President, Chief Operating Officer and Chief Executive Reinhard Schmidt was fired statements the company filed in connection with a federal investigation. The Commerce Department and the U.S. Attorney's Office are investigating certain company sales to Iran, in violation of U.S. law. The West Berlin, N.J.-based cardiac electrophysiology product maker said it determined that some of the statements the company filed with authorities - that Schmidt certified - were inaccurate or incomplete. EP MedSystems named David Jenkins as Schmidt's replacement.

International Rectifier Corp. (IRF) lowered its first-quarter revenue forecast to $273 million and its gross margin forecast to 40.5%. The power management technology company also forecast first-quarter earnings of 35 cents to 37 cents a share, or 40 cents to 42 cents a share on a pro forma basis.

K2 Inc. (KTO) lowered its 2005 earnings forecast to 66 cents to 68 cents a share from its previously forecasted range of 77 cents to 81 cents a share. The Carlsbad, Calif.-based sports equipment and apparel maker also lowered its 2005 pro forma earnings forecast to 75 cents to 77 cents a share, from 87 cents to 91 cents a share. K2 expects 2005 net sales of $1.29 billion to $1.32 billion. For the third quarter, the company sees earnings of 32 cents a share, and in the fourth quarter it expects a per-share profit of 23 cents to 25 cents.

Mattel Inc. (MAT) said it's consolidating its Mattel and Fisher-Price brands into a single division.

MeadWestvaco Corp. (MWV) said its facilities in Texas and Louisiana have resumed production after a 10-day shutdown due to Hurricane Rita. As a result of the production downtime and costs related to the hurricanes, the company expects third-quarter earnings to be reduced by 7 cents to 10 cents a share, excluding adjustments for insurance reimbursement.

Phoenix Cos. Inc. (PNX) said it has acquired a 35% minority interest in Kayne Anderson Rudnick Investment Management LLC. The company said the acquisition will be paid in three installments including $10 million at closing, $10 million on Jan. 2, 2006, and $60 million on Jan. 2, 2007. Phoenix Cos. said it expects the transaction to add to its earnings. Additionally, the company said it expects to incur charges of $8 million, after taxes, related to the restructuring of its West Coast asset management operations.

Potlatch Corp. (PCH) said it expects third-quarter earnings to be "significantly below" the 50 cents a share currently forecast by analysts polled by Thomson First Call. The Spokane, Wash.-based forest products company blamed the earnings shortfall on the high cost of energy, exacerbated by petroleum and natural gas supply curtailments following the recent Gulf Coast hurricanes.

SigmaTel Inc., which makes components for Apple Computer's (AAPL) iPod and other MP3 media players, warned of lower-than-expected quarterly earnings.

Universal Forest Products (UFPI) reported third-quarter net earnings of $19.2 million, or $1 a share, vs. $14.6 million, or 78 cents a share, during the same period a year ago. The Grand Rapids, Mich.-based wood and wood-alternative products manufacturer posted revenue of $721.5 million vs. $709.3 million. The company said it now expects 2005 earnings growth of 22% to 27%, up from its previous forecast of 15% to 20% growth.