Baxter (BAX)2Q profit rises 8 percent on margins

Specialty drug and medical device maker Baxter International Inc. (BAX-Quote) said Thursday its profit rose 8 percent in the second quarter on better margins, more than offsetting a decline in sales.

The company's broad mix of medically necessary products -- including blood plasma, kidney dialysis treatments and cancer drugs -- continued to post solid returns, leading the company to boost its 2009 earnings outlook.

"These results and also the outlook for the year validate the strength of the diversified healthcare model and reinforce our confidence in achieving longer-term objectives," said CEO Robert Parkinson.

The company earned $587 million, or 96 cents per share, up from profit of $544 million, or 85 cents per share, in the same period a year ago. Sales fell 2 percent to $3.12 billion from $3.19 billion.

Analysts polled by Thomson Reuters expected profit of 94 cents per share on revenue of $3.12 billion.

Worldwide sales fell 2 percent to $3.1 billion mainly because of a lower benefit from foreign currency exchange rates. Excluding that, the company said sales would have grown 9 percent. U.S. sales grew 7 percent to $1.3 billion.

Baxter said revenue from its largest unit, BioScience, grew 2 percent to $1.4 billion. The unit sells antibody therapies and plasma proteins, which saw sales increase more than 20 percent.

Revenue from Baxter's medication delivery business fell 3 percent to $1.1 billion. That unit includes dialysis treatments, anesthesia products and injectable drugs.

Baxter is one of a handful of companies working on a vaccine for the swine flu, which has appeared in 37,000 cases in the U.S., with more than 200 deaths.

Parkinson said the company is completing production of several batches of the vaccine which should be ready to ship by later this month or early August. Baxter expects to see a $30 to $40 million revenue boost from sales of the vaccine this year, according to Parkinson.

Looking ahead, Baxter International Inc. expects third-quarter adjusted profit between 95 cents and 97 cents per share, while analysts expect profit of 96 cents per share.

Baxter also boosted its full-year earnings-per-share outlook to a range of $3.76 and $3.80, from a prior forecast of $3.72 and $3.78. Analysts expect profit of $3.77 per share.

Company shares rose $2.12, or 4 percent, to $55.21 in morning trading.

Disclosure I am long BAX shares in Healthcare Folio.

Intel (INTC) declares quarterly dividend of 14 cents, Yielding 3.10%

Chip maker Intel Corp. declared a quarterly dividend of 14 cents per share Thursday.

The dividend, unchanged from the previous quarter, is payable Sept. 1 to shareholders on record as of Aug. 7.

Intel (INTC - News), the world leader in silicon innovation, develops technologies, products and initiatives to continually advance how people work and live. Additional information about Intel is available at www.intel.com/pressroom and blogs.intel.com.

Disclosure I am long INTC in my tech folio.

KMP Second Quarter Distribution $1.05 Per Unit

Kinder Morgan Energy Partners, L.P. (KMP - News) today declared a cash distribution per common unit of $1.05 ($4.20 annualized) payable on Aug. 14, 2009, to unitholders of record as of July 31, 2009. The distribution represents a 6 percent increase over the second quarter 2008 cash distribution per unit of $0.99 ($3.96 annualized).

KMP reported second quarter distributable cash flow before certain items of $274.2 million compared to $293.6 million for the same period last year. Distributable cash flow per unit before certain items was $0.99 compared to $1.14 per unit for the second quarter of 2008. Net income attributable to KMP before certain items was $325.8 million versus $363.3 million for the same period last year. Including certain items, net income attributable to KMP was $323.8 million compared to $362.2 million for the second quarter of 2008.

For the first six months of 2009, KMP produced distributable cash flow before certain items of $534.2 million compared to $574.1 million for the same period last year. Distributable cash flow per unit before certain items for the first two quarters was $1.95 versus $2.26 for the comparable period in 2008. Net income attributable to KMP before certain items was $607.7 million versus $712.2 million for the same period last year. Including certain items, net income attributable to KMP for the first two quarters was $587.7 million compared to $708.9 million for the same period last year.

Chairman and CEO Richard D. Kinder said, “We are very pleased with our overall second quarter results considering the ongoing recessionary environment and economic headwinds that we anticipated and have been experiencing all year. In fact, we are better positioned at mid-year than we expected to be just last quarter. Strong operational performance from the Products Pipelines business segment and increased oil production at SACROC, combined with reduced costs and lower interest rates, helped offset budget shortfalls created by lower refined products transportation volumes, decreased steel handling at our bulk terminals and lower crude oil prices. Given this environment, we are proud that our stable, cash-generating assets are expected to generate growth for the year above our 2008 results in all five of our business segments. We remain confident that we will achieve our budget target of $4.20 per unit in cash distributions for the year, which would represent 4.5 percent growth over the 2008 distribution. We also continue to make progress in executing our multi-billion dollar capital investment program which will drive future growth at KMP.”


Outlook

As previously announced, KMP expects to declare cash distributions of $4.20 per unit for 2009, which would represent a 4.5 percent increase over 2008. “While various macroeconomic factors continue to put pressure on our financial results, we have made great progress in offsetting potential shortfalls and we remain confident that we will meet our published annual distribution target,” Kinder said. He noted that most of the $2.1 billion in distributable cash that was forecast in KMP’s 2009 budget is secure and not subject to volatile market conditions.

KMP’s 2009 budget, which was initially announced in November 2008, assumes an average West Texas Intermediate (WTI) crude oil price of $68 per barrel for the year. The majority of cash generated by KMP is fee based and is not sensitive to commodity prices. In its CO2 segment, the company hedges the majority of its oil production, but does have exposure to unhedged volumes, most of which are natural gas liquids. For full year 2009, every $1 change in the average WTI crude oil price per barrel is expected to impact the CO2 segment by approximately $6 million (or about 0.2 percent of our combined business segments’ anticipated distributable cash flow).

Kinder Morgan Management, LLC ( KMR - News) also expects to declare distributions of $4.20 per share for 2009.


Disclosure I am long KMR shares in my Oil and Gas Folio.

Time to keep a close eye on Silver ETFs (SLV)

Some say that the price of silver could be ready for a renaissance. If that’s true, it may be time to keep a close eye on silver exchange traded funds (ETFs).

Are we nearing the end of the great silver depression? Theodore Butler for SilverSeek thinks that the days of the silver price depression are just about gone and that the metal could be headed for its true free market price. That’s a price much higher than what it is now, Butler points out. What’s his argument?

An apparent liquidation cycle taking place on the COMEX for silver and gold futures.Historically, low-risk entry points are presented when liquidation cycles have exhausted themselves

As for now, the drop in metals prices have removed a lot of risk from the market. There is no way to tell how deep silver sell-offs may go, and when, but the prices are giving a signal that times are conducive to buying sometime soon.

Alas, silver is below its trend line. Will this prediction come to fruition? Keep your eye on the 200-day moving average, and be prepared with an entry and an exit strategy before investing in a fund.

Two Silver ETFs:

iShares COMEX Silver Trust (SLV): up 11.6% year-to-date
PowerShares DB Silver (DBS): up 12.1% year-to-date

Disclosure I am long SLV in my commodities folio.

Warren Buffett's Financial Rules to Live By Video

Billionaire investor Warren Buffett believes that the U.S. will emerge from the current economic recession "stronger than ever," but he said the behavior of the American consumer may be forever changed.
The billionaire shares investment advice for average Americans.

"We were on a binge before," the CEO of Berkshire Hathaway told "Good Morning America" in an exclusive interview. "I mean, we are not saving extraordinary sums now but the savings behavior has changed. ... I don't necessarily think that we will go back to behaving the way that we were two years ago."

Warren Buffett's VIDEO here!~!

The man known as the "Oracle from Omaha" because of his history of successful investments, shared his top three pieces of advice for average Americans who want to grow their savings and keep their money safe.

Number one: "If it seems too good to be true, it probably is."

Number two: "Always look at how much the other guy is making if he is trying to sell you something."

Number three: Don't go into debt.

"Stay away from leverage," he said. "Nobody ever goes broke that doesn't owe money."

The "binge," he said, was fueled largely by over-borrowing by both individuals and companies.

"The U.S. public as a whole has gotten into problems from leverage, financial institutions have gotten into problems through leverage," he said. "A long, long time ago a friend said to me about leverage, 'If you're smart you don't need it, and if you're dumb, you got no business using it.'"

At a time when many college graduates face uncertain futures and are struggling to find jobs, Buffett said he still believes that "investing in yourself is the best thing you can do. Anything that improves your own talents. And I always advise students to do that, high school students, college students and obviously investing in your children is, in some ways, investing in yourself."

No matter what happens in the economy, "if you have true talent yourself, and you have maximized your talent, you have a terrific asset."

Deutsche Bank (DB) brings ETFs to Hong Kong

After listing four exchange-traded funds in Singapore earlier this year, Deutsche Bank listed six ETFs on the Hong Kong Stock Exchange. The ETFs are branded as db x-trackers, and they offer investors a range of underlying assets. Thorsten Michalik, global head of Deutsche Bank's db x-trackers, said he expects to list 20 or more ETFs in Asia.

The six ETFs in Hong Kong offer investors a variety of underlying assets cutting across varying markets and indices. They are the MSCI USA Total Return Net (TRN) Index ETF, FTSE/Xinhua China 25 ETF, S&P CNX Nifty ETF, MSCI Korea TRN ETF, MSCI Taiwan TRN Index ETF, and FTSE Vietnam ETF.

In Singapore, the db x-trackers include the S&P 500 Short ETF, which is Asia's first "inverse" ETF. This tracks the S&P500 Index, but in the opposite direction. Investors who expect the S&P500 Index to fall can buy this ETF, as it is based on the short index which will rise when the main index falls. The other ETFs are the MSCI Taiwan TRN Index ETF, the FTSE/Xinhua China 25 ETF, and the S&P CNX Nifty ETF.

ETFs are traded on an exchange just like a stock. An ETF holds assets such as stocks or bonds and trades at around the same price as the net asset value of its underlying assets over the course of the trading day. Some ETFs track an index, while others are custom-made to track specific assets. Investors usually like ETFs for their low costs and stock-like features -- cheap, liquid beta -- although in Asia, their uses as sophisticated portfolio construction tools have yet to catch on.

Disclosure None

Roth IRA beats 401(k) Hands Down in key ways

our ability to contribute to a Roth IRA account in 2008 is determined by your income. Here's what IRS Publication 590, "Individual Retirement Arrangements," has to say about the income restrictions:

For 2008, your Roth IRA contribution limit is reduced (phased out) in the following situations.

• Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $159,000. You cannot make a Roth IRA contribution if your modified AGI is $169,000 or more.
• Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2008 and your modified AGI is at least $101,000. You cannot make a Roth IRA contribution if your modified AGI is $116,000 or more.
• Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more.

The modified AGI, or MAGI, limits for the 2009 tax year will be a few thousand dollars higher than the 2008 numbers. The publication "IRS Announces Pension Plan Limitations for 2009" puts a finer point on it if you're bumping up against these MAGI limits.

Assuming you're eligible to contribute to a Roth IRA, you still have to decide if the Roth is the better choice. Both the Roth IRA and the 401(k) plan are tax-advantaged accounts. With the Roth, you contribute after-tax dollars today, and qualified distributions coming out of the account aren't subject to federal income taxes.

With a 401(k) plan, you contribute pretax dollars today, and qualified distributions out of the account are subject to federal income tax at your ordinary income rate. Being able to borrow money from the plan is an advantage to the plan versus the Roth IRA, but the loan has to be repaid if you leave your company. Otherwise, it is counted as a distribution from the plan and subject to income tax and possibly a penalty tax if it is an early distribution.

While there is no loan program available for a Roth IRA account, you contributed after-tax dollars, so no income tax is due on withdrawals of your contributions. You can withdraw your original contributions for any reason and at any time without taxes or penalties.

However, early distribution of investment earnings can be subject to income taxes and may be subject to a 10 percent penalty tax. The age of the account matters. Distributions from accounts less than 5 years old are treated differently than accounts that are more than 5 years old.

In addition, different tax rules apply if the money is withdrawn early (before age 59½) for certain reasons, such as to pay for qualified education expenses or to buy a home for the first time, or if the account holder has died or is disabled. When in doubt about the rules, work with your tax professional.

Most people in their 20s are in a lower marginal federal income tax bracket than they will be when they retire. If you expect your tax rate is lower today than it will be when you retire, contributing to a Roth IRA can make sense versus contributions to a 401(k) plan. The Bankrate article "Traditional IRA vs. Roth IRA" can help you make the right decision.

Another advantage to the Roth IRA account is that you can control where the account is held. Being able to do this lets you have some control over account fees and expenses and lets you pick a custodian that offers the types of investments you want for the account.

A lot of workers complain about the investment choices offered in their employer's 401(k) plans. You can finesse these issues by picking your custodian based on how you want the funds invested.

Disclosure I have a Roth IRA and a 401K.

Commodities move higher as risk appetite grows

Investors moved money back into commodities Thursday, sending prices for gold, copper and soybeans higher as they stepped up their willingness to take on risk.

Better-than-expected results from aluminum maker Alcoa Inc. late Wednesday are stirring hopes that the economy is indeed healing and that other companies might also report improved earnings in the coming weeks. That made beaten-down commodities, which are closely tied to the economy's health, more appealing.

Optimism about an impending recovery has waned in recent weeks as economic data, including record unemployment and a drop in consumer confidence, suggests a rebound could take longer than hoped. As a result, prices for commodities have faltered since mid-June.

A weaker dollar and modest gains in stocks — other signs of increased appetite for risk — also helped push commodity prices higher Thursday. Commodities tend to benefit when the dollar falls against other currencies because it makes them cheaper for foreign buyers.

"Today things were a little bit stable, and that drew out some of the buyers," said Edward Meir, senior commodities analyst at MF Global in New York. But, he added: "People are not as impressed with this recovery as they were several weeks ago."

There is still an abundance of evidence showing that the economy continues to struggle. Weak sales reports from retailers out Thursday and another record high in the number of people receiving jobless benefits curbed gains in stocks and energy futures.

September copper futures jumped 3.6 percent on the New York Mercantile Exchange, gaining 7.85 cents to $2.2375 a pound. Aluminum prices gained 2.1 percent.

Among precious metals, gold for August delivery added $6.90 to $916.20 an ounce, while September silver rose 8.3 cents to $12.9350 an ounce. July platinum rose $8.70 to $1,104 an ounce.

Even oil managed to eke out a small gain, reversing six straight days of losses. Investors have been sending crude prices sharply lower on fears that a delay in the economic recovery will keep demand for energy low.

Light, sweet crude for August delivery rose 27 cents to settle at $60.41 a barrel after hovering around $60 for much of the day. Oil has been steadily losing ground since early last week, when it hit an eight-month high of $73.

In other Nymex trading, heating oil fell less than a penny to settle at $1.5344 a gallon, while gasoline for August delivery rose 3.05 cents to $1.6638 a gallon.

Natural gas for August delivery rose 5.5 cents to $3.408 per 1,000 cubic feet.

Grain prices moved higher on the Chicago Board of Trade.

September wheat futures rose 5 cents to $5.2225 a bushel, while corn for September delivery gained 4.25 cents to $3.2950 a bushel.

August soybeans soared 32.5 cents to $10.4750 a bushel.

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