(Source: Business Week)
Washington Mutual (WM) shares rise 0.10 to 2.93 after American Banker reports JPMorgan (JPM) is in advanced discussions to buy WM, sources said. WaMu expects its capital ratios at third quarter-end to remain significantly above the levels for well-capitalized institutions and it continues to be confident that it has sufficient liquidity and capital to support operations while it returns to profitability. Provision expected to be about $1.4 billion less than in the second quarter, but nearly 2 times the expected charge-offs. Net interest income is expected to be in line with the second quarter.
Lehman Brothers (LEH) shares fall 0.49 to 3.73 as S&P Ratings Services says its ratings on Lehman and all related entities remain on CreditWatch, but revises CreditWatch listing to developing from negative. Separately, Financial Times reports Bank of America (BAC), JC Flowers, and Chinese sovereign wealth fund China Investment Co. are considering a possible joint bid for LEH. Earlier, S&P maintained hold; said it believes a deal could be consummated over weekend. S&P says it would be in favor of possible Bank of America/Lehman combo, only with government backing. Ladenburg Thalmann believes that BAC will be a winning bidder for LEH; it says there is a "natural fit" between the two companies.
American International Group (AIG) falls 4.61 to 12.94 after the New York Times reports, "investors fear that AIG will face billions in additional losses" due to its ties to home loans whose values have plummeted. "If so, it too could need to raise capital, which Freddie Mac (FRE) and Fannie Mae (FNM), and Lehman have demonstrated can be a vexing problem in the current market environment." Meanwhile, Reuters reports that credit protection costs for financial firms rose in early trading on Friday, led by AIG, LEH, and JPMorgan (JPM), as investors awaited news on the fate of LEH. S&P maintains hold.
Compania de Telecomunicaciones de Chile S.A. (CTC) is higher on a report saying Spain's Telefonica yesterday offered to buy all shares of CTC it does not already own. The deal is reportedly worth $985 million.
General Motors (GM) and other auto makers are gaining as investors are optimistic that the auto industry will get low-cost loans of up to $25 billion from the federal government.
Chipotle Mexican Grill (CMG) falls 14.08 to 57.07 after CMG says based on third quarter results to date, the impact of the weakened economy has been greater than anticipated resulting in further sales deceleration leading to comp-restaurant sales in the low-single digits for the third quarter.
