Movers: Countrywide, Delta Air Lines, Capital One, Target, Gap

Countrywide Financial (CFC) shares surge 48% on a Wall Street Journal report that Bank of America (BAC) is close to buying the struggling mortgage lender.

Delta Air Lines (DAL) rises after the Wall Street Journal reports DAL board to consider formal merger talks with Northwest Airlines (NWA) and UAL (UAUA). S&P reiterates hold on DAL.

Gap (GPS) falls after posting 6% December same-store sales drop, 6% total sales drop.

Capital One Financial (COF) sees fourth quarter EPS of about $0.60, 2007 EPS of about $3.97, below its prior expectation of about $5.00. It says the reduction in expected EPS is driven primarily by increased provision expense, additional legal reserves established in the fourth quarter.

Target (TGT) posts 5% lower December same-store sales (reported basis), 0.1% higher total sales. On adjusted basis, December same-store sale rose 0.6%. Says Decmber sales were in line with mid-month update provided on Decmber 24; as a result, it continues to believe that fourth quarter EPS will not meet last year's performance.

Wal-Mart Stores (WMT) expects January same-store sales to run at about 2%. It anticipates fourth quarter EPS guidance within previously stated guidance of $0.99-$1.03 from continuing operations, however, notes fourth quarter EPS will be pressured by higher interest expense vs. last year. Posts 2.4% higher Decmber total U.S. comp-store sales (excluding fuel), 8.4% higher total sales.

Alcoa (AA) posts $0.74 (including $0.38 gain from restructuring adjustment and a tax benefit) vs. $0.29 a year ago, fourth quarter EPS from continuing ops despite 5.4% revenue decline, due to lower LME prices and the exclusion of results from the soft alloy extrusion business.

Freddie Mac (FRE) falls after Moody's Investors Services places FRE A-Bank Financial Strength Rating (BFSR) on review for possible downgrade reflecting the rating agency's view that it may experience higher credit losses than Moody's previous expectations.

The Wall Street Journal reports that Citigroup (C) and Merrill Lynch (MER) are in talks to get additional capital infusions from investors, primarily foreign governments. Citigroup could get as much as $10 billion, while Merill is expected to get $3-$4 billion.

Huntington Bancshares (HBAN) sees fourth quarter loss of $0.65 per share, which reflects net negative impact from significant items of $1.00 consisting of costs associated with Franklin Credit Management Corp., market-related losses, merger-related costs, VISA indemnification charge, additions to litigation reserves on existing cases.

Men's Wearhouse (MW) cuts $0.43-$0.48 fourth quarter EPS guidance to $0.16-$0.18, bringing the fiscal year 2008 view to $2.60-$2.62 (from previous estimate of $2.87-$2.92). It says "substantially" lower traffic levels in Decmber at all of its retail stores, in both U.S. and Canada, drove weaker-than-planned comparable store sales results. It expects continued weak traffic trends this month.

GameStop (GME) posts a 35% rise in total sales for 2007 holiday period, 20% rise in comp-store sales.

posts 9% lower November/Decmber (holiday selling period) same-store sales, 10% lower revenue. For the second quarter, it now expects same-store sales to decrease approximately 8%-9%, EPS from continuing operations are expected to be between $1.08-$1.13.

Dillard's (DDS) posts 5% higher Decmber same-store sales, 5% higher total sales.

Gymboree (GYMB) raises guidance, now sees fourth quarter same-store sales up in mid-to-high single digits. It raises fourth quarter EPS guidance by $0.10 to $0.88-$0.90; it sees fiscal year 2008 EPS of $2.64-$2.66.

AnnTaylor Stores (ANN) posts 9.4% Decmber same-store sales drop, 3.8% total sales drop. Based on year-to-date business results through Decmber and its current outlook for January, it now sees fiscal year 2008 EPS of $1.80-$1.85.

Limited Brands (LTD) posts 8% lower Decmber same-stores sales, 14% lower total sales. Although there is still a month left in its fourth quarter, as a result of 8% drop in comps, it now expects to report fourth quarter EPS at low-to-mid point of its previously announced range of $0.90-$1.05.

Chico's FAS (CHS) posts 14% lower company-owned same-store sales, 5.6% lower total sales. With the lower than anticipated sales, combined with the higher markdowns and additional promotions required to move the merchandise in the fourth quarter, now expects a loss of $0.13-$0.16 for the fourth quarter.

Electronics for Imaging (EFII) sees lower-than-expected fourth quarter non-GAAP EPS of $0.22-$0.24 on revenue of about $152 million. It cites weak demand for its high-margin Fiery products, which resulted in increased pressure on gross margin. Also notes higher-than-expected operating expenses of about $72 million. It sees first quarter revenue of $133-$137 million; it notes continued weakness in the Fiery business, compounded by normal seasonality coming off a lower fourth quarter.

Pfizer (PFE) says New York state court ruled in favor of PFE on motion relating to litigation over the company's Celebrex medication, ruling that the plaintiffs failed to present reliable scientific evidence necessary to prove that Celebrex can cause heart attacks and strokes at 200 mg daily -- the most commonly prescribed dosage of the Pfizer pain medication.

Morton's Restaurant Group (MRT) cuts $0.46-$0.48 fourth quarter EPS guidance to $0.36-$0.39 on lower-than-expected revenue of about $100.4 million; it expects decline of about 0.7% in fourth quarter same-restaurant revenues, down from previous guidance of +2% to +3%. It cites "challenging and uncertain macroeconomic environment" in U.S. and industry headwinds, which resulted in weaker guest traffic throughout the industry.

Charming Shoppes (CHRS) sees $0.17-$0.20 fourth quarter loss, vs. previous $0.06-$0.08 loss guidance. It says revised guidance includes net sales in range of $790-$795 million, vs. $874 million reported last year.