Market Report: Story Stocks^™

Eli Lilly (LLY 48.01, +0.39) reported a larger than expected increase in second quarter revenue, but its bottom line was slightly below estimates.

Revenue rose 11% year-over-year to $5.15 billion, topping the consensus estimate of $5.03 billion. The drug manufacturer enjoyed double-digit increases in sales of Cymbalta (+26%), Cialis (+24%) and Humalog (+22%).  However, antipsychotic medication Zyprexa -- LLY's top selling drug at 24% of sales -- saw sluggish 2% growth.

Eli Lilly earned $0.99 per share, excluding nonrecurring items, which fell one cent short of expectations.

The company issued downside guidance for fiscal year 2008.  The company expects to earn between $3.85 and $4.00, which is $0.05 lower than its previous forecast.  The average analyst estimate is pegged at $3.94 per share.

Drug manufacturer Bristol-Myers Squibb (BMY 22.17, +0.28) reported higher-than-expected earnings per share and revenue growth in its latest quarter.

Revenues rose 16.4% year-over-year to $5.2 billion, which topped the $5.09 billion consensus.  Earnings per share rose 16.2% to $0.43 per share, excluding one-time items, compared to the consensus estimate of $0.40.

U.S. pharmaceutical net sales increased 17% to $2.6 billion on strong sales of Plavix and its HIV and hepatitis portfolio.

International pharmaceutical net sales rose 15%, although without the favorable exchange rates growth would have only been 3%.

Dow Chemical (DOW 34.24) raised prices twice in the last few months, but hikes were unable to fully offset surging energy costs.  As a result, the Midland, Mich.-based company's net income fell 27% even as sales spiked 25%.

Dow earned $0.81 per share, which is four cents worse than expectations. Revenue came in at a record $16.40 billion, which topped the consensus estimate of $14.89 billion.

Despite missing Wall Street's estimates, Dow Chemical did do a good job limiting its profit decline in light of the spike in petroleum costs and the slowing economy, especially when considering the increase in oil prices added $1 billion in sequential costs.

Dow expects the U.S. economy will continue to weaken for the rest of 2008, but notes its strategy for diversification has allowed it to mange through "these challenging times."

It hopes to transform itself into a growth company, citing its recent $18.8 billion acquisition of specialty chemical company Rohm and Hass (ROH 74.40) and joint venture with Petrochemical Industries Company of Kuwait.

Conglomerate 3M (MMM 70.80) increased second quarter revenue by 10% compared to last year, helping to boost its earnings per share by 13%.  International sales, which account for roughly 67% of total revenue, were the driving force behind 3M's growth.

The results topped Wall Street's expectations.  Revenue came in at $6.74 billion, compared to the $6.69 billion consensus.  Earnings per share were $1.39, excluding special items, which is $0.04 better than the average analyst estimate.

3M saw revenue growth across all of its segments, with the strongest growth in Safety, Security Protection Services (+30.2%) and Display and Graphics (+15.9%).

As with other multinational companies, the weak dollar is benefiting 3M, with foreign exchange impacts adding 5.4 points to revenue growth.

The St Paul, Minn.-based company reaffirmed its 2008 outlook, forecasting earnings per share growth of 10%, which equates to at least $5.48.  The consensus calls for earnings of $5.46.

Shares of Qualcomm (QCOM 44.82) are soaring in premarket trading after the communication equipment company unexpectedly settled a lawsuit with Nokia (NOK 26.70). QCOM also reported in-line earnings for its latest quarter.

Qualcomm and Nokia entered a new agreement to cover the various wireless standards, which will result in a settlement of all litigation between the two companies.

The agreement term spans 15 years, and grants Nokia a license for all QCOM patents for use in Nokia mobile devices and infrastructure equipment.  Meanwhile, Nokia will not use its patents directly against QCOM, allowing QCOM to integrate Nokia's technology into its chipsets. Nokia has also agreed to assign ownership of a number patents to QCOM.

Wall Street is pleased with the results, sending QCOM shares 20% higher in premarket trading.  Brokerage firm Oppenheimer noted that the agreement means all companies must deal with Qualcomm to be a player in 3G and future 4G wireless technologies.

Separately, QCOM reported fiscal third quarter earnings per share of $0.55, which met estimates.  Revenue rose 19% year-over-year to $2.76 billion, compared to the $2.71 billion consensus.

The company raised its full year earnings per share outlook to between $2.11 and $2.13, from $2.04 and $2.09.  However, the raised guidance still falls short of the consensus estimate of $2.15 per share.

Ford Motor Co. (F 6.03) reported a massive $8.7 billion net loss for its second quarter due to impairment charges.  Declining truck and SUV sales continue to weigh on earnings.

The result includes an $8 billion special pretax charge, including the impairments of $5.3 billion for North American long-lived assets and $2.1 billion for Ford Motor Credit's operating lease portfolio.  As a result, Ford lost $3.88 per share.

Excluding these one-time items, Ford lost $0.62 per share, or $1.4 billion.  This fell short of the consensus estimate that called for a loss of $0.27 per share.

The loss was largely due to a 13% year-over-year decrease in revenue to $38.6 billion, which Ford partially offset with $1 billion in cost savings.

The shift in North American auto preferences away from large trucks and SUVs continues to weigh on Ford's results.  The automaker is taking steps to better position itself for the future by accelerating its transformation plan.

Ford plans to bring six of its small European cars to North America, convert three large truck and SUV plants to small cars, double hybrid production in 2009, and double four-cylinder engine plant capacity by 2011.  Ford's move to revamp its product line is a necessary shift, although like struggling peer General Motors (GM 14.62), it remains to be seen if it is too little, too late.

On a positive note, Ford is profitable in international markets.  Compared to last year, Ford's pretax profit rose 122% in Europe, 82% in Asia Pacific Africa and 52% in South America.

Shares of Ford are down 8% in premarket trading.

Online retailer Amazon.com (AMZN 70.54) posted solid second quarter results, with net income spiking 102% year-over-year.  Excluding a one-time gain related to the sale of assets, income rose 35%.

Amazon enjoyed solid growth within the North American region, but the main earnings growth came from overseas thanks to a $53 million one-time gain related to the sale of its European DVD rental assets.

North American net sales rose 35% year-over-year, compared to the 47% increase in international sales. International sales were lifted by the weak dollar -- without the favorable currency impact international sales rose 34%, which would have actually trailed North America. Total sales rose 41% to $4.06 billion, which was slightly ahead of the $3.96 billion consensus estimate.

The increased revenue in North American came at a higher cost of sales and operating expenses, with the segment's operating income margin falling to 4.4% from 5.1%. Conversely, international margin expanded to 7.9% from 6.5%. As a result, North American operating income rose 17.1% to $96 million while international operating income rose 79% to $149 million.

Amazon earned $0.37 per share in the second quarter, or $158 million, versus the prior year's earnings of $0.19. Excluding the European DVD gain, Amazon earned $0.28, which topped the average analyst estimate by two cents.

Looking ahead, Amazon expects sales of $4.2 billion to $4.4 billion in the third quarter, compared to the consensus estimate of $4.2 billion. For the full year, Amazon forecast sales of $19.4 billion to $20.1 billion, versus the consensus estimate of $19.6 billion.

AMZN is up 7.7% in premarket trading.