Wall Street’s 2% rise on lower oil and the latest Merrill Lynch funding raising and write downs overnight will help our market stabilise today, with a 1% plus rise expected on the futures market.
The 266 point jump in the Dow came as figures showed US house prices again fell in May, but the rate of decline slowed slightly.
But the rebound won’t help Aristocrat Leisure after the gaming machine maker snuck out an earnings downgrade well after trading finished yesterday.
Aristocrat (ALL) shares dropped 18 cents yesterday to $6.08% on worries about the departure of the CEO, which was announced the night before
The earnings update was lobbed into the ASX just before 6 pm and explains why the company’s CEO, Paul ONeile had suddenly decided to walk. That announcement was lodged even later on Monday night with the ASX.
The shares will find it hard to hold the $6 mark today and will test the $5.77, 52 week low, even with a rebound brought about by Wall Street.
Yesterday’s update said: "Aristocrat Leisure Limited today announced that based on preliminary unaudited results the Company is expected to report an operating profit after tax in the region of $70 million (earnings per share 15.4 cents), for the 6 months to 30 June 2008.
"For the full year, operating profit after tax is currently forecast at $190 – $200 million (earnings per share 41 – 44 cents).
"Results for the half and the full year outlook have been significantly impacted by deteriorating economic conditions in North America and Australia, the timing of new venue openings in emerging markets and the strengthening Australian dollar.
"The Company will report its audited first half earnings on 28 August 2008."
And on Monday night it said: "Aristocrat Leisure Ltd has begun a global search for a new chief executive after Paul Oneile told the company he will not seek to renew his contract.
"Mr Oneile, who became managing director and chief executive in 2003, plans to serve out his contract which expires on December 31.
"We will immediately commence a global search to identify the best candidate to succeed Mr Oneile and internal and external candidates will be considered for the position," chairman David Simpson said in a statement to the stock exchange late on Monday.
"Mr Oneile said he had appreciated the support of the board and the company over the past five years.
"I leave Aristocrat at an exciting time in its development as the industry embraces technological change and I am confident that the company is well placed to achieve its longer term objectives," Mr Oneile said."
So all friendly on Monday and no sign of any problem, but 24 hours or so later it was a different story with what is effectively an earnings downgrade of up to 23%.
The new full year guided earnings range of between $190 million and $200 million, compares with the previous guidance at the AGM earlier in the year of about $247 million. That would see little or no improvement on the 2007 figure, which in turn was only up 3.2% on 2006’s result.
In yesterday’s announcement, Aristocrat blamed the downgrade on further falls in the US market, as well as delays to casino openings in emerging markets such as Macau and Singapore, and the rising Australian dollar.
But at it’s AGM in May the company said sales to the US would be more than 20% below expectations, but now it seems they will be even lower.
