MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Wednesday, May 23
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7:14 PM Clobbered over the last week due to Facebook's (FB) less-than-stellar IPO, GSV Capital (GSVC +4.9%) is now trying to downplay its Facebook exposure. Facebook only makes up 4% of GSV's overall holdings, says CEO Michael Moe, and 2013 IPO candidate Twitter is actually the company's largest position. Meanwhile, fellow Facebook owner SVVC has seen its price fall below its net asset value. [Tech, Financials] Comment!
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7:03 PM Jim Cramer suspects Facebook's (FB +3.2%) reported guidance leak to analysts is the result of its May numbers being "really bad." His reasoning: Facebook is seeing a rapid shift in user activity from PCs to mobile devices, and mobile monetization remains very limited for now. (more on FB) [Tech] Comment!
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7:01 PM The latest patch for Europe's woes, the Eurobond, may be hailed by some as the "Kentucky do-all" solution for fixing the Greek debt crisis, but don't count on it. The very thought of issuing bonds backed by 17 fiercely nationalistic and independent-minded European nations simply reeks of potential problems. Off the top, issues such as duration, how they're guaranteed and getting them to market without violating euro zone membership requirements - will all prove to be a tough sell. [Global & FX] Comment!
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6:48 PM Trimble (TRMB), the world's biggest maker of GPS/positioning hardware for commercial applications, has acquired mobile GPS software firm Spime, VentureBeat reports. Spime's MapMan positioning software is used by smartphone app developers, though its products could also be used in commercial hardware. [Tech, M&A] Comment!
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6:39 PM VSE Corp. (VSEC) says it's been awarded a contract by the National Institutes of Health, an agency of the Department of Health and Human Services, that could be worth up to $20B over the next 10 years. Under the terms of the agreement, VSEC will provide IT integration and outsourcing support services to the agency's Information Technology Acquisition and Assessment Center. [Tech, Healthcare] Comment!
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6:35 PM During his latest presentation (previous), Verizon CFO Fran Shammo said his company isn't looking to buy another carrier (ed: perhaps because the FCC wouldn't be thrilled with the idea), but suggests the mobile industry needs more consolidation. He also claims Verizon's sprectrum purchases from cable providers remain on track in spite of regulatory scrutiny, and predicts Euro weakness will hurt growth for two more quarters. [Tech] 1 Comment
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6:29 PM Though shares are down 18.1% AH thanks to the weak FQ1 guidance accompanying its FQ4 report, along with a lack of FY13 guidance, NetApp (NTAP) insisted on staying positive during its earnings call, and only blamed the guidance on macro issues and EMEA/public sector demand. Execs became defensive when asked about share loss, pointing to the limited growth seen by rivals while ignoring the fact FQ1 guidance implies the same for NetApp, in spite of its focus on some faster-growing segments. [Tech] Comment!
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6:25 PM Courtesy of corporate insiders, the bull market may have dodged a bullet, based on the historical ratio of the number of shares insiders have sold to the number they've bought. The average level for the ratio over the last four decades is between 2-to-1 and 2.5-to-1; the ratio was just 1.63-to-1 last week after reaching 6.56-to-1 in March. [Quick Ideas] 1 Comment
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6:16 PM Royal Gold (RGLD) acquires a 3.0% net smelter return royalty on the Ruby Hill gold mine from International Minerals for $38M. The Ruby Hill mine is located in Nevada and operated by Barrick Gold (ABX). Shares -0.8% AH. [Commodities] Comment!
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6:15 PM In spite of its huge commitment to Windows Phone, Microsoft (MSFT) appears to be readying a major iOS/Android product rollout. BGR reports Microsoft will release versions of Office that run on the iPad and Android tablets in November, and AppleInsider claims the company plans to release iOS apps for its Outlook/Exchange and Lync platforms by October. The iPad/Android versions of Office will arrive around the same time as the Office 15 and Windows 8 launches. [Tech] Comment!
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6:10 PM Approving the Keystone XL (TRP) pipeline could boost U.S. global warming emissions by as much as 0.3%/year, a CRS report says - not exactly "game over" for the climate but still like putting 4M extra passenger cars on the road. But it's not just Keystone XL; there are plans to send 3.1M bbl/day of oil sands from Alberta to export markets, ~5x as much as Keystone XL. [Energy] 1 Comment
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6:00 PM H&R Block (HRB) names Gregory Macfarlane as the tax preparer's new CFO, replacing Jeff Brown. Macfarlane, who starts in the position on June 4, most recently served as chief financial officer of Ceridian from 2007 to 2011. Shares -0.8% AH. [Financials] Comment!
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6:00 PM On the hour: S&P flat. 10-yr +0.01%. Euro +0.04% vs. dollar. Crude +0.22% to $90.58. Gold -0.03% to $1561.45. Comment!
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5:51 PM Dish Network (DISH) is partnering with web set-top box vendor Roku to offer a streaming service that features over 50 international channels, many of them from Asia. The service, offered to U.S. consumers (whether or not they're Dish TV subscribers), starts at $20/month. [Tech, Consumer] Comment!
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5:41 PM Analog chipmaker Intersil (ISIL) discloses its board has approved a restructuring plan that will reduce its workforce by 11%, and lower its annual operating expense rate by $40M by Q3. The plan is expected to result in $9M in restructuring charges. Intersil is currently expected to see its revenue fall 9.3% Y/Y; that's worse than what's expected for many rivals, and implies some share loss. [Tech] Comment!
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5:38 PM An FDA advisory panel recommends against approval of Johnson & Johnson's (JNJ) Xarelto blood thinner to reduce life-threatening blood clots. JNJ already markets the pill to treat irregular heartbeat and patients undergoing hip or knee replacement surgery. [Healthcare] Comment!
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5:34 PM More on Synopsys (SNPS): FQ2 comes in mixed , beating on revenue but coming up shy on a per share basis. Net earnings plummeted 74% Y/Y on acquisition-related charges, masking actual revenue growth. The company is raising its FY12 guidance based on the robustness of its business base and the rapid integration of its Magma Design Automation acquisition earlier this year. It now expects FY earnings of $2.03 - $2.07 per share on revenue of $1.74B - $1.76B. [Earnings, Tech] Comment!
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5:30 PM Some positives from H-P's FQ2 earnings call (webcast): The company passed Dell to become the world's #1 enterprise PC vendor; PC ASPs rose; the 3PAR storage unit again saw 100%+ Y/Y growth; Gen 8 server ramp strong; Americas revenue was flat Y/Y (-4% in FQ4). Some negatives: EMEA revenue fell 7% Y/Y (6% in FQ1), Asia-Pac fell 1% (+3% in FQ1); services margins expected to remain relatively weak; both demand and mix issues hurting printer margins. HPQ now +10.4% AH. [Tech] Comment!
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5:21 PM MediciNova (MNOV) -45.1% AH after announcing preliminary results from a Phase 2b clinical study failed to show significant improvement for patients treated with its MN-221 asthma treatment. [Healthcare, On the Move] Comment!
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5:15 PM Are railroads the new way to play the oil sands boom? Rail sports several advantages over pipelines, thus the weekly number of carloads of oil products in North America has been surging since early 2011. But there are disadvantages too: it costs ~2x as much to move oil on rails than through a pipe, and the boom in oil traffic for trains merely replaces part of what’s being lost in coal traffic. [Energy, Quick Ideas] 4 Comments
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5:12 PM Celldex Therapeutics (CLDX) takes a hit in the post session after releasing mixed preliminary results from randomized Phase 2b tests of CDX-011 antibody drug conjugate in patients with advanced, heavily pretreated breast cancer. Shares -8.5% AH. [Healthcare] 2 Comments
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5:11 PM More on NetApp's FQ4: No explanation is provided for the soft FQ1 guidance in the earnings release. The guidance is another indication (I, II) of a tough IT spending environment, though the possibility of additional market share losses to EMC and others is also strong. Sales & marketing expenses only rose 3% Y/Y, but R&D expenses rose 26%. NTAP -22.1% AH. EMC -3.6%. STEC -1.2%. Earnings call starts at 5:30 PM ET (webcast). (PR) [Tech, Earnings, On the Move] Comment!
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5:00 PM On the hour: S&P -0.11%. 10-yr +0.01%. Euro -0.81% vs. dollar. Crude +0.09% to $90.46. Gold -0.04% to $1561.15. Comment!
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4:56 PM Martha Stewart (MSO -3.7%) is elected non-executive chairman of the company she founded. As part of a 2006 settlement with the SEC over insider trading charges, she was banned from serving as a corporate director or officer for five years; she rejoined MSO’s board last September. [Consumer] Comment!
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4:52 PM More on Phillips-Van Heusen (PVH): Q! beats across the board on a 4% Y/Y increase in total revenue. Net earnings jumped 60% Y/Y on continued momentum in its Calvin Klein and Tommy Hilfiger brands. For Q2, the company guides to the high end of the range, now expecting an EPS Of $1.18 - $1.20, versus expectations of $1.18 per share. For the full year, EPS is seen in the range of $6.15 - $6.25 per share. THe Street view is for $6.18 per share. Shares +1.8% AH. [Earnings, On the Move] Comment!
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4:46 PM In tandem with its market-pleasing FQ1 report, H-P has announced its expected restructuring plan. The company plans to cut 27K jobs (8% of its workforce), a little above expectations, and says it will achieve $3B-$3.5B in annual cost savings by the end of FY14. The company expects to record a $1.7B pre-tax charge in FY12 related to the move (expect most of these costs to be excluded from non-GAAP EPS). HPQ +5.8% AH. (previous) [Tech] Comment!
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4:45 PM It's got to be some sort of bottom (or top depending on point of view) when bond fund managers hit the WSJ en masse to talk about how they've cut exposure to Europe and bulked up their holdings of "safe" Treasurys. [U.S. Economy, Global & FX] Comment!
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4:38 PM ONEOK (OKE) CEO John Gibson predicts net income will grow 18%/year during 2012-14, with dividends growing 40% during the period. If 2013-14 prices for crude oil, natural gas and nat gas liquids remain at levels assumed in 2012 guidance, he says his earnings growth projections would be reduced by just one percentage point annually. [Energy] Comment!
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4:36 PM More on Valence Technology (VLNC): FQ4 misses on all counts as total revenue declines 4.3% Y/Y. Operating losses increased to $9.6M, compared to a loss of $9.0M in the year ago period. Gross margin also fell to 17% compared to 21% last year. [Earnings, Tech] Comment!
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4:35 PM Goldman doubts a "credible" pan-eurozone deposit scheme can be introduced in short order. Forgetting how unpopular the move would be in Germany, the country's constitutional court has limited the scope for Germany to widen its financial obligations to the EU. Then there's the rest of the eurozone, which would have to accept a substantial loss of sovereignty. (earlier) [Global & FX] Comment!
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4:32 PM More on H-P's FQ2: PC division sales flat Y/Y, much better than Dell's numbers and a big improvement from FQ1's 15% drop. Enterprise hardware -6% (-10% in FQ1) as server declines offset modest networking/storage increases. Software +22% Y/Y (+30% in FQ1), though Autonomy saw a significant license revenue drop. Printing -10% (-7% in FQ1) as mobile/Internet photo sharing take a toll. Services -1% (+1% in FQ1). $350M in shares repurchased. HPQ +5.7% AH. Earnings call just started. (PR) [Tech, Earnings, On the Move] Comment!
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4:29 PM There's little new in Chesapeake's (CHK) latest letter to shareholders, rehashing "numerous" actions its board has taken to enhance corporate governance - cutting directors' and CEO compensation, et. al. The letter is said to address issues raised by NYC Comptroller John Liu, who is calling for the rejection of two board members in upcoming elections. [Energy] Comment!
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4:19 PM More on Pandora's FQ1: The company expects FQ2 revenue of $99M-$101M and EPS of -$0.03 to -$0.05 vs. a consensus of $99.9M and -$0.03. However, it's guiding for FY13 revenue of $420M-$427M and EPS of -$0.07 to -$0.11, above a consensus of $415.9M and -$0.17. Listener hours +14% Q/Q and +92% Y/Y to 3.09B. Active users +10% Q/Q and +53% Y/Y to 51.9M. 5.95% share of U.S. radio listening, up from 5.55% in FQ4, 3.11% in year-ago period. P +8.8% AH. (PR) [Tech, Earnings, On the Move] Comment!
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4:10 PM Market recap: Stocks snapped back sharply from lows after France's Hollande and Italy's Monti voiced support for euro bonds and the Fed's Kocherlakota said a fall off the fiscal cliff would argue for new QE. But the move could just as easily be explained by short covering after a period of weakness. Crude oil ended below $90 for the first time since October. NYSE gainers beat losers seven to six. [Top Stories] 3 Comments
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4:10 PM Hewlett-Packard (HPQ): FQ2 EPS of $0.98 beats by $0.07. Revenue of $30.69B (-3% Y/Y) beats by $770M. Expects FQ3 EPS of $0.94-$0.97, below $1.02 consensus. Expects FY12 EPS of $4.05-$4.10, above $4.03 consensus. Shares +7.1% AH. (PR) [Tech, Earnings, On the Move] 2 Comments
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4:00 PM At the close: Dow -0.07% to 12495. S&P +0.15% to 1319. Nasdaq +0.39% to 2850.
Treasurys: 30-year +0.37%. 10-yr +0.15%. 5-yr +0.09%.
Commodities: Crude -1.52% to $90.45. Gold -0.97% to $1561.25.
Currencies: Euro -0.66% vs. dollar. Yen -0.59%. Pound +0.33%. Comment! -
3:57 PM BP, the EPA and Indiana regulators reach a settlement that will allow the use of Canadian tar sands crude oil at the company’s 405K bbl/day Whiting, Ind., refinery; in return, BP will install ~$400M of pollution control equipment at the refinery. BP is within a year of finishing a $4B upgrade to enable the refinery to run crude from Canadian tar sands. [Energy] Comment!
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3:57 PM Take it for what it's worth, but chatter across the wires says Angela Merkel has made a verbal bank deposit guarantee for the entire eurozone. [Global & FX, Breaking News] 8 Comments
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3:54 PM The ITC judge who in April declared Microsoft's (MSFT) Xbox 360 to be infringing 4 Motorola Mobility (GOOG) patents has now ruled the 360 should face a U.S. import and sales ban. However, the ruling can only be enforced following a review by the full commission, and Microsoft has its own ITC victory as a card to play in the dispute. Motorola has asked for a 2.25% royalty on sales of the 360 and other Microsoft products. [Tech] 1 Comment
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3:49 PM Facebook (FB) is considering a proposal from the NYSE for the company to list its stock there, reports Reuters, citing a source familiar with the situation. [Tech, Breaking News] Comment!
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3:42 PM Kinder Morgan Partners (KMP -0.4%) reduces the size of its planned $4.1B Trans Mountain pipeline expansion in Canada after signing fewer contracts with shippers than expected. The contracts call for 510K bbl/day capacity, but that's ~150K less than KMP had previously announced, due to a few shippers failing to obtain their boards’ approvals. [Energy, On the Move] Comment!
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3:37 PM A little green pokes out from the major averages after a panicky morning. The Nasdaq +0.1%. The S&P -0.1% after being down about 1.5%. Chatter about movement towards eurobonds as well as the Fed's Kocherlakota mentioning QE may be helping the mood. Comment!
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3:32 PM Pimco's Total Return ETF (BOND) gains $1B in AUM less than 3 months after launch. BOND is the ETF version of Bill Gross' $250B Total Return Fund, and its still relatively small size is allowing Gross to do some open-field running and trounce the returns on its far larger big brother. Comment!
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3:25 PM Sirius XM (SIRI -1.1%) CEO Mel Karmazin won't cede control of the company quietly, as he tells shareholders at the company's annual meeting in New York that he doesn't want to be responsible for somebody else calling the shots and would like to see any buyer pay a hefty premium. As far as that double-digit drop in SIRI shares over the last year, the usually-loquacious exec sums it up in three words. "Our stock sucks." [Consumer] 7 Comments
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3:21 PM Coeur d'Alene Mines (CDE +1.9%) temporarily shuts down its Palmarejo mine in Mexico after access was blocked by a "small, unorganized group of employees," but does not expect the move to have a material impact on 2012 production. The mine produced 9M oz. of silver and 125K oz. of gold ounces in 2011. [Commodities, On the Move] Comment!
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3:18 PM Taking questions after a speech, the usually hawkish Minneapolis Fed chief Kocherlakota says a fall off the so-called fiscal cliff would argue for additional QE. The "fiscal cliff" refers to the 2013 expiration of tax cuts and other benefits that some argue could throw the U.S. into recession. [U.S. Economy] 10 Comments
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3:07 PM Mostly a compendium of conventional wisdom, Freddie Mac's May Economic Outlook contains some interesting data about the refinance boom. One in three borrowers took advantage of low rates to reduce the term of their loan from 30 years to either 20 or 15. Four out of five either paid down their balance or kept it roughly the same. A full 95% chose a fixed rate loan. [U.S. Economy] 1 Comment
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3:06 PM Newmont Mining (NEM +2.6%) says it will cut capital spending on a controversial gold mine project in Peru to $440M from a previously budgeted $1.5B over the next 18 months due to delays caused by government and environmental reviews. NEM is expected to make a final decision by the end of June on whether to go ahead with the project. [Commodities, On the Move] Comment!
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3:00 PM On the hour: Dow -0.75%. 10-yr +0.28%. Euro -0.88% vs. dollar. Crude -1.78% to $90.22. Gold -1.01% to $1560.65. Comment!
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2:58 PM Baker Hughes (BHI -0.4%) CFO Peter Ragauss says the U.S. oil-directed rig count would need to double to more than 2,500 rigs if analyst estimates of a 2M bbl/day increase in U.S. oil production by 2017 are correct. A rapid shift to oil production would ultimately favor BHI because of its technology, Ragauss says. [Energy] Comment!
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2:58 PM Zynga (ZNGA -1.8%) plans to announce an advertising deal with DreamWorks (DWA +2.1%) later today, according to CNBC. All eyes will be on Draw Something to see if the game lands a chunk of the ad revenue after costing the company a pretty penny to acquire. [Tech] Comment!
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2:56 PM Italy's Mario Monti has joined France's Hollande and climbed aboard the eurobond train, according to a Dow Jones report. If so, he would join Spain's Rajoy who has also offered guarded support for same and establish a solid bloc to counterbalance German opposition to jointly issued bonds. Maybe this news, maybe not, but stocks are bouncing, S&P -0.7%. [Global & FX] 2 Comments
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2:50 PM Wal-Mart (WMT +1.0%) tips off in a presentation at the Morgan Stanley Retail and Restaurant Conference that it plans to add 100 supercenters in FY13 - a mark that stands below a previous estimate calling for 130 to 135. The game plan for the company has been to shift away from big-box stores to the so-called supercenters that can be filled to the gills with a wider variety of products. (webcast) [Consumer] Comment!
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2:46 PM Though it didn't come cheap, UBS and Nomura are praising SAP's (SAP -0.7%) $4.3B acquisition (I, II) of Ariba (ARBA). The former notes the kind of B2B transactions handled by Ariba's network cover 63% of all trade, and the latter argues the deal will help SAP achieve its goal of obtaining €2B in cloud revenue in 2015. Smaller Ariba rival SciQuest (SQI +6.2%) is rallying for the second straight day. [Tech, M&A, On the Move] Comment!
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2:45 PM In its Investor Day today, Armstrong Worldwide (AWI -0.2%) reaffirms FY12 revenue guidance that brackets to the high end of Street estimates, saying revenue should be between $2.9B - $3B. Street expectations are for $2.93B. Sees FY12 EBITDA margin should be around 14% - 16%. (webcast) [On the Move] Comment!
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2:40 PM Cove Energy (CNVGF.PK) shares end +11.2% in London to 249p, above the new 240p/share bid from Thailand's PTT and indicating investors think Royal Dutch Shell (RDS.A -2%) may raise the offer. Heard On The Street's Andrew Peaple calculates Shell could yet pay up to $2.5B for Cove; it also has more firepower than PTT, with net debt to equity of 9.9% vs. PTT's 33%. [Energy, M&A, Global & FX, On the Move] Comment!
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2:30 PM The jury presiding over Oracle's (ORCL) patent suit against Google (GOOG) finds Google innocent of all 8 infringement claims. Oracle has been seeking huge damages over Android's use of APIs related to the Java programming language. There's a good chance Oracle will appeal. [Tech] 1 Comment
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2:25 PM Zale Corp.'s (ZLC +9%) jumps after beating FQ3 earnings estimates this morning. Losses narrowed as the company continues to post same-store sales growth, led by its domestic business. The company says momentum is continuing into the current quarter, with May month-to-date comp store sales currently up about 15%. [Earnings, On the Move] Comment!
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2:24 PM S&P cuts its credit rating on Patriot Coal (PCX +17.4%) for the second time in seven days and says it's on watch for yet another downgrade, citing doubts about PCX's ability to meet near-term obligations amid the company's "highly uncertain" proposed refinancing. The rating is cut two notches to CCC, which denotes highly speculative credit, from B-. [Energy, On the Move] 1 Comment
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2:19 PM The Angry Birds are flying into Facebook. Angry Birds Friends, the first Facebook (FB) offering for Rovio's absurdly popular franchise, is out of beta and filled to the brim with "social" features such as tournaments. The game, which features in-app purchases, is good news for Facebook Credits, but not for Zynga (ZNGA), which has seen daily users fall for a number of hit games as competition grows. [Tech] Comment!
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2:15 PM Lions Gate (LGF -1.8%) isn't quite done riding The Hunger Games juggernaut yet, as the company plans a home entertainment release of the movie on DVD, Blu-Ray, and digital download with 3 hours of bonus materials sure to entice at least a few fans. In a separate announcement, the company says partner Studiocanal will distribute over 2K of its titles including the next movie out of The Hunger Games franchise. [Consumer] 2 Comments
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2:08 PM Alcoa (AA -0.6%) again postpones expansion of an alumina refinery in Australia in the face of continued pressure on aluminum prices. AA has already planned to cut refining capacity in the Atlantic region, which contributes to almost half its 18M tons of production capacity. Shares hit 52-week lows before rebounding. [Commodities] 1 Comment
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2:04 PM Splunk (SPLK +6.8%) is rallying for the third straight day ahead of this afternoon's FQ1 report. The analyst commentary (I, II) that has followed the machine data software vendor's strong April IPO has largely been positive, in spite of its rich valuation. [Tech, On the Move] Comment!
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2:00 PM On the hour: Dow -0.98%. 10-yr +0.28%. Euro -0.89% vs. dollar. Crude -2.1% to $89.92. Gold -1.84% to $1547.55. Comment!
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2:00 PM Warnaco (WRC -0.6%) fares slightly better than the overall market after Brean Murray upgraded the shares to Buy on valuation earlier today. Brean says the company has turned a corner and the worst may be over for them. [On the Move] Comment!
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1:57 PM Alcatel-Lucent (ALU +4.7%), down ~40% since February, outperforms with the help of bullish commentary regarding its 7950 XRS core router line, launched yesterday. Deutsche thinks the products offer "meaningful improvements" over rival offerings, and could take 5%-10% of the U.S. core router market simply by leveraging Alcatel's mobile carrier relationships. Goldman thinks the hardware could cause some headaches for Juniper (JNPR -4.8%). (previous) [Tech, On the Move, Quick Ideas] Comment!
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1:51 PM Incyte (INCY -2.7%) slips after Morgan Stanley says current consensus estimates don't reflect myelofibrosis competition, which could impact Incyte's Jakafi sales. [Healthcare, On the Move] Comment!
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1:47 PM AMC Networks' (AMCX -0.1%) Mad Men ratings have been soaring, and Netflix (NFLX +3%), which last year struck a costly deal to carry old episodes, is taking credit. The 1.1M viewer increase seen for the debut episode of Season 5 relative to Season 4's average is the result of viewers watching earlier seasons on Netflix, suggests content chief Ted Sarandos. His comments come as many suspect Netflix is hurting ratings for Disney (DIS) and Viacom's (VIA) kids TV shows. [Tech, Consumer] 4 Comments
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1:30 PM Though many tech names are selling off following Dell's (DELL -17.8%) FQ1 miss, Apple (AAPL +0.5%) is outperforming again. The iPad is undoubtedly the biggest culprit behind the tablet cannibalization partly blamed for Dell's weak notebook sales, and the fact Dell suggests this trend is also affecting enterprise sales a bit has to be spooking investors. Meanwhile, it's reported a court-suggested meeting between Apple and Samsung's (SSNLF.PK) CEOs "yielded no compromise." [Tech, On the Move] 6 Comments
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1:29 PM "More than a whiff of deflation out there. Investors put on your gas masks," tweets Bill Gross as stocks and commodities dive and bond yields fall to unheard of levels. "Love to buy assets when people scream deflation, love to sell when they scream inflation," responds a trader. 1 Comment
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1:17 PM Treasurys trim strong gains slightly after a so-so five-year note auction; the 30-year yield now -0.07 to 2.79%; 10-year -0.05 to 1.72%; five-year -0.02 to 0.734%. [U.S. Economy] Comment!
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1:16 PM Morgan Stanley (MS -2.6%) has offered a price adjustment to Facebook (FB +2.5%) investors in the event they overpaid due to order execution problems, Dow Jones reports. The news comes as lawsuits fly, politicians huff and puff, and sources tell the WSJ MS and other underwriters have made a $100M profit through "greenshoe" short positions on Facebook shares (Felix Salmon recently explained the arrangement in detail). [Tech, Financials] 6 Comments
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1:12 PM Aflac (AFL) is among the names that pop up when DividendChannel screens its top ranked dividend stocks for those which have also seen insider buying over the past 6 months. Insiders sell for a variety of reasons. They buy because they they want to make money. The stock currently yields 3.4%. [Financials, Quick Ideas] 8 Comments
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1:08 PM A panel of sports TV execs see the prices for the rights to televise major sports events continuing to rise - a sentiment that seemingly flies in the face of word that Comcast will lose money on the London Olympics and GM will opt out of Super Bowl advertising. The rationale behind the hefty premium is that live sports programming delivers a highly-targeted audience and is fast becoming the last bastion of appointment viewing with digital recording of popular shows growing. [Consumer] Comment!
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1:04 PM The Treasury sells $35B in five-year notes at 0.748%. Bid-to-cover ratio of 2.99, vs. a recent average of 3.0; indirect bidders take 42.6%, vs. a recent 43.7%. Direct bidders take 6.5%, vs. a recent 12.2%. [U.S. Economy] 1 Comment
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1:00 PM On the hour: Dow -1.36%. 10-yr +0.31%. Euro -0.99% vs. dollar. Crude -2.55% to $89.5. Gold -2.06% to $1544.05. Comment!
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12:59 PM Movado Group (MOV +8.7%) raises its full-year guidance, saying it expects Q1 profit to soar on a double-digit increase in sales of its accessible luxury and licensed brand categories. It now expects to earn around $29M - $29.7M, or $1.15 per share, compared with previous guidance of $27M - $28M, or $1.10 per share. Sales are expected to increase around 9% to $505M - $510M, up from prior estimates of $500M - $505M. [Earnings, On the Move] Comment!
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12:58 PM The FCC is exploring whether online video sites such as Hulu and YouTube (GOOG) should be governed by the same rules as traditional pay-TV providers. Any move in this direction could have huge implications, potentially giving video sites the right to carry channels content owners have been unwilling to license (and thus representing major new competition for traditional providers), while also requiring them to carry less popular content. [Tech, Consumer] 2 Comments
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12:56 PM Car rental stocks show weakness with Avis Budget (CAR -5.3%), Dollar Thrifty (DTG -2.2%), and Hertz Global (HTZ -4.7%) giving back some gains piled up yesterday - fueled in part by a bullish sector call from Morgan Stanley analyst Adam Jones. [Consumer, On the Move] 1 Comment
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12:48 PM Major brokerage reforms underway in China point to the desire to nurture its own investment banks to compete with the Goldman's and Morgan's of the world. Previously limited to trading and underwriting, brokerages will be allowed to expand into derivatives (CDO squared for Chinese mortgages!), asset management, and private equity. [Global & FX, Financials] 3 Comments
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12:45 PM McDonald's (MCD -0.6%) plans to sell $750M worth of 3-year and 7-year notes amid an aggressive plan to hire 70K workers in China and ramp up store openings. The company paid a record-low 3.70% on a 30-year issue floated earlier this year. [Consumer] 3 Comments
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12:41 PM Peabody Energy (BTU -1.3%) says workers at its Wambo and Wilpinjong Mines in New South Wales approved new labor agreements covering more than two-thirds of its thermal coal exports from Australia. [Energy] Comment!
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12:41 PM An L.A. Times article about a 2010 game-development contract between Activision (ATVI) and developer Bungie suggest the next Xbox (MSFT) will be called the Xbox 720, and arrive in fall 2013. Past rumors (I, II, III) have suggested the device will sport an ARM-based (ARMH) CPU and AMD graphics processor, and will be accompanied by a low-end model focused on Kinect play. [Tech] 3 Comments
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12:40 PM Hormel Foods (HRL +2.4%) moves higher on a mixed Q2, beating on its EPS but missing on revenue. Net earnings rose 17% as strong demand for turkey burgers and Spam helped offset lower sales of refrigerated foods and pork products. While operating profit increased in four of five units, volumes were down in its grocery products and refrigerated foods divisions - a sign brand-name food makers continue to struggle after raising prices throughout 2011. [Earnings, On the Move] Comment!
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12:36 PM Though Burger King trails restaurant chains McDonald's (MCD -0.5%) and Yum Brands (YUM -1.4%) by a wide margin in China, it's sticking to a plan to offer premium food that caters to local tastes in a bid to make a splash in the market. Truffle burgers in Hong Kong and Sichuan pepper-spiced burgers on the mainland are two products the company will offer in hopes that what it calls its "taste of royal delicacy" will resonate with consumers. [Consumer, Global & FX] Comment!
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12:26 PM Up yesterday after delivering its Q1 report, Chinese browser developer Qihoo 360 (QIHU -7.5%) is now selling off. Though results beat estimates and the company's guidance for Q2 revenue of $72M-$73M is above a $67.3M consensus, investors might be worried about Qihoo's decision to name finance VP Jue Yao the company's co-CFO, alongside existing CFO Alex Xu. Qihoo has been hit by allegations of accounting misdeeds from Citron Research and others. [Tech, On the Move, Earnings] 1 Comment
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12:23 PM Angela Merkel hits the wires saying eurobonds would not contribute to growth and EU treaties forbid such joint liabilities. No decisions are expected at today's summit (other than scheduling the next one, of course). Fiscal union, she says, remains a long way off ... "roughly another 500-600 S&P points," snipes ZH, giving us the laugh of the day. [Global & FX, Breaking News] 1 Comment
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12:21 PM Mondelez it is after Kraft (KFT -0.5%) shareholders vote to approve the new name for the company's global snack business by a resounding margin. Brands that will run under the Mondelez umbrella will include Fig Newton, Oreo, Cadbury, and Trident after the split of the company into two parts becomes official. [Consumer] 5 Comments
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12:19 PM SNC-Lavalin (SNCAF.PK) reportedly receives the go-ahead to work on the Cobre Panama copper mining contract worth ~$355M in fees for a group led by the Canadian engineering and construction company. The overall cost of the project is expected at ~$6.2B, including $3.2B of infrastructure to be overseen by the SNC-led group. [Commodities, Global & FX] Comment!
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12:18 PM WTI crude dips below $90/barrel for the first time since October, now off a 2008-like 15% during the month of May. USO -1.5% for the day, -10.9% YTD. [Commodities] 6 Comments
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12:10 PM Suntech Power (STP -4%) slides after posting a mixed Q1 this morning on a 53% slump in total revenue. Net profit swung to a loss on slumping sales and provisions for U.S. antidumping duties. Looking ahead however, the company sees a reversal in the decline in shipments, forecasting an increase by more than 20% in the current quarter. [Tech, Earnings, On the Move] Comment!
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12:08 PM 46 hours. That's the amount of time from a Friday NYC close to Monday's Wellington, NZ open - the amount of time Greece's (and Europe's) leaders will have to handle the issues surrounding a Greek exit from EMU. From calming civil unrest to recapitalizing the banks to getting a new currency going, "leaving is messy," says a former ECB member. [Global & FX] Comment!
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12:06 PM Ametek (AME), Danaher (DHR), Honeywell (HON) and Carlyle (CG) are among those interested in buying Bartec, a German provider of safety systems that prevent explosions in oil and gas production, Reuters reports. Bartec's owner, Swiss P-E firm Capvis, hopes to fetch ~€600M ($765M) in an auction. [M&A] 1 Comment
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12:03 PM Though Ross Levinsohn is still officially Yahoo's (YHOO) "interim CEO," he has been instructed to run the company as if he's the permanent CEO, sources tell BI. This isn't too surprising, given chairman Fred Amoroso reportedly wants Levinsohn to stay on, and Yahoo's board hasn't yet formed a CEO search committee (and they seem to love forming committees). Also, Dan Loeb appears to be a Levinsohn fan. (previous) [Tech] Comment!
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12:00 PM On the hour: Dow -1.34%. 10-yr +0.28%. Euro -0.91% vs. dollar. Crude -1.85% to $90.16. Gold -2.55% to $1536.35. Comment!
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11:59 AM Agreements signed by India and Pakistan to begin an estimated $7.6B project to pipe natural gas from Turkmenistan's massive Galkynysh field through Afghanistan mark a milestone in regional relations. But given Taliban control of large areas along the planned route and a separatist rebellion in southwest Pakistan, security problems make the timeline for construction a bit unclear. [Energy, Global & FX] 1 Comment
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11:57 AM Trina Solar (TSL +0.6%) hovers in the green despite missing Q1 estimates earlier this morning. Profit swung to a wider-than-expected loss as margins were squeezed, falling to 5.8% from 27.5% as lower selling costs and provisions for anti- dumping duties hit bottom line performance. [Tech, Earnings, On the Move] Comment!
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11:55 AM While Dell (DELL -17.5%) crashes in part due to the weak PC sales mentioned in its FQ1 report, Chinese rival Lenovo (LNVGY.PK) has reported another strong quarter. FQ4 sales rose 54% Y/Y to $7.5B, and PC shipments grew 44%. Moreover, Lenovo's PC sales within developed markets surged 85% to $3.4B, the result of both an acquisition and share gains. Dell admitted on its earnings call that in addition to tablet cannibalization, price competition was hurting its PC sales. [Tech] Comment!
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11:55 AM Siemens (SI -2.3%) expects sales in Germany to grow more slowly in FY H2 than in H1, with Chinese demand continuing to be sluggish but business in the U.S. doing better than expected. Siemens confirms its FY 2012 outlook, saying it expects "a good year." (See also) Comment!
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11:48 AM Brazil's HRT says it has hired a semi-submersible drill rig from Transocean (RIG -1.7%) to drill prospects later this year or early next year off the coast of Namibia. The rig will be on charter for 280 days, “enough to drill at least four exploration wells." HRT estimates it has 28B bbl of potential oil and natural gas resources in the African country. [Energy, Global & FX, On the Move] 1 Comment
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11:47 AM CAE (CAE -2.9%) plans to cut ~300 jobs, or ~4% of its workforce, due to expectations of falling defense spending in Europe. CAE will take a charge of C$25M in the restructure, which it announced with its FQ4 earnings. Net profit rose to C$53.2M from C$45.5M. [Earnings] Comment!
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11:39 AM Trying to stoke a weak Android tablet market, Nvidia (NVDA) has introduced a reference platform called Kai, which it boasts can enable $199 tablets running on its quad-core Tegra 3 chips. Interestingly, it was reported in March that Google (GOOG) has decided not to use the Tegra 3 in its upcoming Nexus tablet out of a desire to bring the tablet's price down to the $149-$199 range. [Tech] Comment!
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11:39 AM Europe closes sharply lower as the momentum towards a Greek exit builds. Not to be discounted are ideas of EU leaders playing chicken to push Grecians into voting for establishment parties in June. Stoxx 50 -2.7%, Germany -2.3%, France -2.5%, Italy -3.5%, Spain -3.4%, U.K. -2.5%. The euro hits a 2-year low, -0.9% to $1.2565. [Global & FX] 2 Comments
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11:38 AM Genesco (GCO -2.8%) suffers a bout of profit taking after beating Q1 estimates this morning on a 24% jump in total revenue over the year ago period. Net earnings rose 39% on stronger-than-expected sales growth. The company also raised its FY13 earnings estimates, now expecting to earn between $4.70 - $4.82. Street estimates are for an EPS of $4.69. [Earnings, On the Move] Comment!
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11:31 AM CVC Capital Partners is planning to raise as much as $13.5B for a European buyout fund, according to sources, joining a wave of investors (CG, BX, among others) looking to pick up cheap assets on the continent. [Financials] Comment!
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11:31 AM Procter & Gamble (PG -1.4%) might fail to meet its EPS goal for FY13, according to analysts digesting the firm's presentation slides at the Citi Global Consumer Conference. Other tidbits from the presentation: The company didn't spend the reported $600M in Olympics advertising. It sees $4B in share buybacks in FY12. Employee headcount on track to be reduced by 3%. (webcast) [Consumer] 1 Comment
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11:30 AM Anadarko Petroleum (APC -2.3%) says an exploration well drilled at its Spartacus prospect in the Gulf of Mexico has turned up dry. The unsuccessful well is a small setback for APC amid a string of major discoveries in the Gulf, an area where the company sees huge potential and plans to drill 6-8 exploration and appraisal wells this year. [Energy, On the Move] Comment!
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11:29 AM Apple (AAPL) single-handedly bought $23B worth of chips last year, estimates IHS' Dale Ford, and he sees its purchases growing to $27B in 2012 and $29B in 2013 (ed: those figures might be conservative, given revenue growth forecasts). That helps put into numbers the huge impact Apple's earnings reports have on chip stocks. Rival/top component supplier Samsung (SSNLF.PK) bought $15B in chips last year, and H-P (HPQ) bought slightly less. [Tech] Comment!
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11:26 AM Today's decline puts the S&P red on a Y/Y basis, -1.1% vs. +29.6% for everyone's favorite hated asset class (TLT). SPY is +4% YTD, but being threatened by Treasurys, +2.4%. On this day in 2000, the S&P opened 7% higher than its current level, notes Pattern Traders. 2 Comments
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11:25 AM Canadian Labor Minister Lisa Raitt warns that the government will introduce back-to-work legislation on Monday if the stoppage at Canadian Pacific Railway (CP) continues and damages the economy. The government action will depend on how the strike, which began today, affects sectors such as potash, coal and autos. [Consumer, Global & FX] Comment!
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11:20 AM Shocker from Ernst & Young's new Global Fraud Survey: 15% of CFOs worldwide are willing to make cash payments to win or retain business. E&Y says companies are talking the talk but not walking the walk: “Even if management is strongly communicating that bribery and corruption isn’t OK, they don’t ever see anyone being punished for that.” [Global & FX] 2 Comments
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11:19 AM America Movil (AMX -2.1%) slips after being downgraded to Neutral from Overweight on valuation at JPMorgan. The firm also lowers its price target to $27 from $28. [On the Move, Global & FX] Comment!
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11:11 AM Disney (DIS -0.8%) CEO Robert Iger says the firm will pull the plug on programming if Dish Network's (DISH -1.0%) commercial-skipping service takes off as he dangles Dancing with the Stars as a potential high-profile casualty. While it's very early in the fight, the question of the survivability of commercial-laced TV programming has to be raised with the coming onslaught of original programming from players such as NetFlix, Amazon, Yahoo, Google, Hulu, and others that go lighter on the ads. [Consumer] 4 Comments
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11:03 AM Cash-rich Seagate (STX -2.2%) is acquiring French external hard drive/low-end storage vendor LaCie for $186M. Seagate declares the companies' offerings to be "highly complementary" (in spite of moderate overlap), and touts LaCie's ability to bolster its European and Japanese presence. Seagate might also be interested in the potential to boost LaCie's margins by having the company rely on Seagate's hard drives. [Tech, M&A] Comment!
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11:02 AM Express Scripts (ESRX) CEO George Paz tells the WSJ that he would "love to do a deal with Walgreen (WAG)" to revive their contract, which expired a few months ago, "if they're willing to offer rates in line with everybody else." Of the Medco merger, Paz said that while Express Scripts is frugal, Medco "had a different culture with respect to spending money." [Healthcare] 4 Comments
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11:00 AM On the hour: Dow -1.29%. 10-yr +0.31%. Euro -0.78% vs. dollar. Crude -1.53% to $90.44. Gold -2.26% to $1540.95. Comment!
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11:00 AM Ford (F +1.8%) trades higher after making its celebrated return to investment grade with a boost from Moody's. The action is more than symbolic, as the company now reclaims its iconic blue oval logo, Mustang trademarks, and plant and machinery assets pledged against a $23.5B loan taken out during the recession. [Consumer] 2 Comments
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10:51 AM Talbots (TLB +7.7%) pops higher as word breaks that the company has extended again its exclusivity agreement with Sycamore Partners, this time to May 24. Shares of TLB are now trading hands at $2.50 a pop - still well-below the $3.05 offer price Sycamore has on the table. [On the Move, Consumer] Comment!
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10:51 AM The American Trucking Association's seasonally adjusted Truck Tonnage Index fell 1.1% in April after increasing a revised 0.6% in March. April’s decrease "matches with an economy that is likely to grow slightly slower in the second quarter than in the first quarter," ATA chief economist Bob Costello says. [U.S. Economy] Comment!
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10:46 AM More on Cree: Wunderlich's Theodore O'Neill suggests the company is the First Solar (FSLR) of the LED world. He notes both Cree and First Solar rely on exotic materials few others in in their respective industries use, and argues each company's competitive edge is withering as the materials typically used by rivals - polysilicon for First Solar's competitors, sapphire for Cree's - get cheaper. Meanwhile, Digitimes reports LED prices have stabilized in Q2 thanks to strong demand. (also) [Tech, Quick Ideas] 1 Comment
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10:46 AM Dow Chemical (DOW -2.3%) issues some cautious comments out of Goldman's Basic Materials Conference this morning, warning that it sees a turbulent operating environment through the second half of this year. While demand in the U.S. shows signs of improvement, especially in its building, electronics and transport sectors, growth in Europe remains weak and China has stalled. [On the Move] Comment!
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10:44 AM Starbucks (SBUX +1.2%) catches an upgrade from BofA to Buy from Neutral with an improved price target of $68, as analysts see the recent 14% pullback in shares as overdone. The action seems to be tipping over to hold a bit of sway over sector rivals. GMCR +0.6%, CBOU +0.6%, PEET +1.4%. [Consumer] 2 Comments
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10:42 AM In the wake of the PCX disaster, is there any bottom in sight for trashed coal stocks (KOL -1.8%)? Not yet, chartist Robert Sinn writes. "A stock like ANR at $11/share has almost turned into a call option on the Chinese economy and thermal coal prices," Sinn says, but "just like a call option, it will bleed time premium if China continues to deteriorate and thermal prices continue lower." [Energy, Quick Ideas, On the Move] Comment!
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10:40 AM German bond yields continue to fall to astonishing lows, the 30-year off 11 bps to 1.99% - the first-ever time with a one handle (Japan's is 1.82%). The 10-year is off 9 bps to 1.38% (Japan 0.87%). The 2-year yields all of 5 basis points, towering over Japan at 11 bps. [Global & FX] Comment!
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10:39 AM Cree (CREE -5.1%) adds to the losses seen yesterday on news of CFO John Kurtzweil's plans to leave for Extreme Networks (EXTR -2.1%). Not helping is a downbeat assessment from Canaccord, which views the move as a "momentum killer" that while drive Cree shares lower over the near-term. The firm speculates Kurtzweil's departure is linked to a shift in Cree's business model to selling LED lighting fixtures instead of LED chips. [Tech, On the Move, Quick Ideas] Comment!
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10:34 AM Shares of Ralcorp (RAH) move down 5.1% after the firm's twice-delayed FQ2 report finally gets released. The company missed the consensus EPS estimate of analysts, reporting $0.72 vs. $0.85, while knocking out in-line sales of $1.06B that marked a 16% Y/Y gain. In a separate announcement, Ralcorp says it snapped up privately-held Petri Baking Products for an undisclosed amount. [On the Move, Consumer, Earnings] Comment!
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10:32 AM Europe rapidly deteriorates, the Stoxx 50 -3%, led by Italy, -3.8%, and Spain, -3.2%. The euro goes bidless, sliding under $1.26 for the first time since August 2010. S&P 500 -1.1%. [Global & FX, On the Move, Top Stories] 7 Comments
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10:31 AM Siemens (SI) is testing in Germany an "eHighway of the Future" in which hybrid disel-electric trucks are fitted with pantographs so that they can be powered by overhead power cables, similar to trams and railway trains. 2 Comments
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10:28 AM For whom the Dell tolls: As the IT giant's FQ1 miss and commentary lead to a tech selloff, PC-related names get hit harder than most, no doubt thanks to the 10% drop seen in Dell's (DELL -15.8%) notebook sales. Rival H-P (HPQ -4.4%), due to report this afternoon, is among the biggest losers. Also selling off: INTC -3.1%. MSFT -3.2%. AMD -3.1%. LOGI -3.3%. (more on DELL) [Tech, On the Move] 3 Comments
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10:24 AM Goodrich Petroleum (GDP +0.2%) announces the completion of the Encana-Anderson 17H-1 well in the Tuscaloosa Marine Shale with a 72-hour production rate of 1,082 boe/day. GDP also says it is participating with Encana (ECA) for a ~25% working interest in another Tuscaloosa well. [Energy] Comment!
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10:24 AM Siemens (SI) is interested in making acquisitions of around a "couple of billion" euros in the area of industrial software, CEO Peter Loescher tells an investor conference. "The core focus of Siemens is organic growth with bolt-on acquisition opportunities if they make sense," Loescher says. [M&A] Comment!
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10:24 AM The XHB pops, but then drops on the better-than-expected new home sales print. Obviously, the overall market is struggling, but also of interest was the earlier MBA Mortgage Application report. The reported gain was nearly all from refinance activity, while purchase activity remains flat. XHB -0.8%. [U.S. Economy] Comment!
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10:16 AM Ivanhoe Mines (IVN -2.7%) says it will launch a rights offering open to all its existing shareholders that would raise ~$1.8B in proceeds as part of its plan to finance development of the Oyu Tolgoi copper-gold project in Mongolia. Rio Tinto (RIO -2.9%), which owns 51% of IVN, plans to buy the maximum shares permitted by the terms of the offering. [Commodities, On the Move] 1 Comment
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10:14 AM Ingersoll Rand (IR -0.3%) CEO Mike Lamach says that he held a "constructive" meeting with Nelson Peltz's Trian Fund, which this month disclosed a 7% stake and said it would push for changes at Ingersoll. Lamach also says that the firm is receiving "solid" orders and that it could spend $300M-$800M on buybacks in H2. Comment!
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10:13 AM The SPDR Gold Trust (GLD) recorded $897M in outflows yesterday, the largest decline since August 2011. Commerzbank wants to see more days of outflows, but says it's surely a negative if even ETF investors are caught up "in the selling pull." More: Central GoldTrust (CTU) now trades at a discount to NAV vs. an average 3.4% premium over the past year. [Commodities] 15 Comments
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10:12 AM "What we’re working on now feels like the most important and the best work we’ve done," newly knighted Apple (AAPL) design chief Jony Ive cryptically tells The Telegraph. Rumors abound regarding a bigger iPhone, smaller iPad, and Apple TV set. Ive also evangelizes about Apple's philosophy: "What preoccupies us is that sense of care ... what our products will not speak to is trying to respond to some corporate or competitive agenda." (previous) [Tech] 16 Comments
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10:11 AM Share of Coinstar (CSTR +4.5%) spike higher against a weak tape after the company announces that it signed a deal with Wal-Mart Canada to bring its movie rental kiosks to stores in the country. [On the Move] Comment!
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10:06 AM April New Home Sales: +3.3% to 343K vs. 335K expected, 328K (revised) prior. Median prices +0.7% to $235,700. [U.S. Economy] Comment!
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10:04 AM Mar. FHFA Housing Price Index: +1.8% month-on-month, vs. +0.3% in Feb. [U.S. Economy] Comment!
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10:03 AM India hikes gasoline prices 11.4%, effective tomorrow as the rupee at all-time lows just adds to cost pressures for the nation's refiners. The price of crude is off 15% this month alone, but a weakened currency may be negating much of the salutary effects. [Energy] Comment!
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10:02 AM More on the class-action suit against Facebook and Morgan Stanley: The firm handling the suit previously won $7B from Enron. Its complaint alleges remarks made in Facebook's S-1 about its ad outlook were "untrue statements" in light of reports an exec told analysts to lower their forecasts. Particularly incriminating, if true, are reports institutional demand fell due to the disclosure. That would make Facebook's situation the polar opposite of what may have recently happened with Groupon. [Tech, Financials] 4 Comments
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10:01 AM Diamond Foods (DMND +2.4%) back on the rise after locking in a $225M recapitalization investment from Oaktree that had buzzed on Monday. The deal has new senior notes and warrants for 4.4M shares that could be canceled depending on walnut crops. [Consumer, On the Move] Comment!
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10:00 AM On the hour: Dow -0.59%. 10-yr +0.22%. Euro -0.30% vs. dollar. Crude -0.68% to $91.22. Gold -1.53% to $1552.55. Comment!
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9:57 AM Despite announcing his resignation, NRC chair Gregory Jaczko may be around for a while longer. Jaczko plans to stay on the job until the Senate confirms a successor, and Majority Leader Harry Reid sounds like he's in no hurry to take action; he says he’d be fine if his former aide stays until his term expires in June 2013. [Energy] Comment!
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9:53 AM Shares of Zale (XLC) soar 10.6% off of its narrower-than-forecast FQ3 loss, helped in part by the firm's 10.9% Y/Y increase in U.S. fine jewelry sales. Rival Signet Jewelers (SIG) +1.8% on Zale's back. [On the Move, Consumer] Comment!
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9:53 AM The ECB has set up a working group to focus on worsening financial conditions due to Greece, reports Die Welt, citing sources. Leading the panel is Germany's Joerg Asmussen. Further market deterioration is likely to instigate new anti-crisis measures from the ECB, they say. [Global & FX] Comment!
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9:46 AM Delta Air Lines (DAL -1.1%) will offer more premium seats on flights longer than 750 miles starting on June 7. While the carrier grabs a little extra seat revenue at $19-$99 a pop, customers signing on nab an extra three to four inches of legroom and can board flights earlier. [Consumer] 5 Comments
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9:46 AM More on Dell: Though lowering its PT, Stifel tries to make a bull case for the company. It views a growing mix shift to non-PC enterprise solutions (now 31.4% of revenue) as a positive, as well as its guidance for stable FQ2 gross margins. Overall, it sees "an improved/cleaner 2H2012 story" driving shares higher. Also of note: Dell, which has a market cap of $22.9B now has $8.2B in net cash and investments. (transcript) [Tech, Quick Ideas] Comment!
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9:45 AM Microsoft (MSFT) and WPP (WPPGY) agree a 3-year deal that will allow them to place and sell online ads for the brands and Internet publishers they work. The aim is to better match the supply and demand of ad inventory, with Microsoft partners AOL and Yahoo (YHOO) also set to benefit, especially in gaining access to premium ads. [Tech] Comment!
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9:41 AM Patriot Coal (PCX +6.4%) shares enjoy a decent rebound after yesterday's disaster, and the company sends a letter to employees saying "operations are performing well." A bit late after yesterday's 28% drubbing, Deutsche Bank downgrades PCX to Hold from Buy, citing the uncertainty of the company's financing arrangements. [Energy, Quick Ideas, On the Move] Comment!
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9:35 AM Sell-side commentary on Dell (DELL -14.1%) is predictably bleak following its huge FQ1 miss (I, II) and admission it's suffering from tablet cannibalization, soft enterprise demand, Asian competition, and sales issues, among other things. Deutsche is downgrading shares to Neutral, while Brean Murray voices concerns about the impact of Dell's sales problems on its efforts to lower its PC exposure. Sterne Agee, which upgraded Dell last week, wishes it kept its Underperform rating. (transcript) [Tech, Quick Ideas, On the Move] Comment!
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9:31 AM At the open: Dow -0.67% to 12420. S&P -0.67% to 1308. Nasdaq -0.86% to 2815.
Treasurys: 30-year +0.54%. 10-yr +0.19%. 5-yr +0.09%.
Commodities: Crude -0.65% to $91.25. Gold -1.13% to $1558.75.
Currencies: Euro -0.16% vs. dollar. Yen -0.7%. Pound +0.2%. Comment! -
9:29 AM BlackBay trader Todd Schoenberger says the market has it all wrong over Linkedin (LNKD -0.5%), which has been dragged down of late by Facebook. The site has well-balanced global breadth and an advantegous business model. "I would buy it now even if it goes up 20% or down 20%...It's a buy and hold," says Schoenberger. [Top Stories, On the Move] 1 Comment
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9:27 AM Amazon (AMZN) announces a licensing agreement with Paramount Pictures that will bring hundreds of well-known movies to its Prime Instant Video service over the next few years. The service now has over 17K titles in its arsenal after counting movies and individual TV episodes. (PR) [Consumer] Comment!
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9:20 AM A day after archrival SAP spent $4.3B on Ariba, Oracle (ORCL) is reportedly spending over $300M to buy Vitrue, developer of a cloud-based social media marketing platfrorm. Vitrue, which competes with Constant Contact (CTCT) and Bazaarvoice (BV), complements the cloud customer support solutions Oracle obtained through its purchase of RightNow. Of course, the effectiveness of social media marketing has become a hot-button subject lately. [Tech, M&A] Comment!
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9:19 AM Uranium giant Cameco's (CCJ) planned effort to raise as much as $1B through a combination of securities may signal an upcoming acquisition, BMO Capital suggests, citing falling uranium equity valuations in recent weeks and CCJ's ample funding capability. Potential targets: Paladin Energy (PALAF.PK), Denison Mines (DNN), UEX Corp. (UEXCF.PK) [Energy, Commodities, M&A] 2 Comments
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9:16 AM Macy's (M) plans to invest $15M in Chinese online retailer VIpStore and sell products through the firm's website. Though it's a relatively small investment, it falls in line with the company's goal of making strategic plays in China through collaborations, joint ventures, and partnerships - instead of a large-scale all-in bet. [Consumer] 1 Comment
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9:15 AM Market preview: U.S. stock futures track EU shares lower as fears of a Greek euro exit flare up again ahead of an EU summit in Brussels, with the S&P benchmark -0.8%. Dell (-13.4%) is taking a battering following a fairly woeful earnings report, while Big Lots is -6.1% for a similar reason, although Facebook (+2.6%) gets a bit of light relief following its IPO carnage. Later: New Home Sales, H-P earnings [Top Stories, On the Move] Comment!
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9:10 AM Facebook (FB), CEO Mark Zuckerberg, and the IPO underwriters face a class-action suit by shareholders over accusations they concealed from investors "a severe and pronounced reduction" in the company's revenue growth forecasts. [Tech, Breaking News] 19 Comments
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9:06 AM Shares of Big Lots (BIG) slip 6.1% in premarket trading after the company misses with its Q1 report on weak same-store sales and offers lower guidance for the full year. The company says it will purchase up to an additional $200M worth of its stock, although inquiring minds are wondering if buybacks are the best strategy. [On the Move, Consumer] 1 Comment
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9:05 AM Veolia Environnement (VE) is in advanced talks to sell its ailing bus division to the Afikim group, according to reports. The French conglomerate is seeking to sell off its various transportation businesses all over the world. VE -1.5% premarket. [Consumer, Global & FX] Comment!
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9:02 AM Emerging from a meeting with Spain's Rajoy, French President Hollande says he's unaware of any call for EU states to come up with contingency plans for a Greek exit. Putting a slight bid into European shares are sketchy comments over the wires about Greece getting more lenient bailout terms from the EU. Stoxx 50 -2%. S&P futures well off session lows, -0.5%. [Global & FX, Breaking News] 1 Comment
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9:00 AM On the hour: S&P -0.51%. 10-yr +0.18%. Euro -0.08% vs. dollar. Crude -0.42% to $91.46. Gold -0.94% to $1561.75. Comment!
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8:55 AM With rumors flying about RailAmerica (RA) and the company disclosing that it's considering strategic alternatives, Wells Fargo takes the line that there is some meat on the bone. Analysts reiterate an Overweight rating on RA, citing strong fundamentals and the potential for bidding action. Shares +10.2% premarket to $24.50, after jumping 2.7% yesterday in a late afternoon rally. [Consumer, M&A, On the Move] Comment!
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8:55 AM GSK (GSK) ammends the conditions of its $2.6B tender offer for Human Genome (HGSI), requiring that the latter redeem or invalidate its poison pill. [Healthcare, M&A] Comment!
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8:53 AM Eaton Vance (EV): FQ2 EPS of $0.45 misses by $0.03. Revenue of $305M (-3.4% Y/Y) beats by $5M. (PR) [Earnings, Financials] Comment!
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8:43 AM Italian May consumer confidence falls to 86.5 from 88.8 previously, and against expectations for a rise to 90. It's the worst print since 1996. A gauge of unemployment expectations rises to 113 from 106. Milan -3%. [Global & FX] Comment!
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8:42 AM Adidas (ADDYY.PK) files a criminal complaint against former officers of its India division. The company says it found "commercial irregularities" and expects to take a 8.7B rupee ($155.35M) charge related to the matter. [Global & FX, Consumer] Comment!
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8:41 AM Recon Technology (RCON) +67.3% premarket on news it signed a contract to provide China National Petroleum with Emerson PCS & SIS systems in its South Yolotan Gas Field Project located in Turkmenistan. The total contract value exceeds $3M. [Tech, Energy, On the Move] Comment!
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8:38 AM Needham wades into the carnage that has been Facebook's (FB) IPO and initiates coverage with a buy rating and a price target of $40 a share vs. yesterday's close of $31. "With over 900M monthly users, we believe Facebook is an option on the World" is the cheese-filled explanation. Facebook is enjoying a bit of a bounce premarket and is +2%. [Tech, Consumer] 3 Comments
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8:35 AM Each eurozone country must draw up its own contingency plan should Greece leave EMU, decides the Eurogroup Working Group (EWG). It's a significant step as nothing like this has previously been ordered for fear of leaks. Among the elements to consider are what support the EU/IMF should give. [Global & FX] 1 Comment
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8:32 AM An MKS Instruments (MKSI) employee has been arrested on charges he smuggled equipment into China that could be used to enrich uranium and produce weapons-grade uranium. MKS says it is cooperating with U.S. authorities, but the disruption could adversely affect its Shanghai sales office. MKSI -3.3% premarket. [Tech, On the Move] Comment!
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8:29 AM Comcast's (CMCSA) NBCUniversal plans to boost its online coverage of the London Olympics by 3K hours as it moves off of a strategy of holding back from broadcasting events until prime-time slots. NBC execs now see live streaming during the morning and afternoon hours as helping to promote evening programming - instead of cannibalizing it by providing spoilers for the results of key events. The big picture: The latest forecasts still tag Comcast with a loss over its $1.18B investment in the London Games. [Consumer] Comment!
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8:27 AM An E&Y survey of 400 CFOs around the world finds that 15% are willing to make cash payments to obtain or retain business, up from 9% last year. And 5% said they would misstate financial results vs. 3% last time. "One of the most troubling findings of the survey is the widespread acceptance of unethical business practices," E&Y says. 3 Comments
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8:24 AM Amidst the commotion over what the sell-side told favored clients ahead of the Facebook IPO, Jeff Matthews points out the company's revenue growth (publicly available) has been sliding sharply for over a year. Maybe a bigger warning sign, Zynga - the equivalent of a hot-dog vendor in Yankee Stadium (FB is The Stadium) - is slowing at an even sharper rate. "People wanted to buy Facebook, no matter what." [Tech] 3 Comments
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8:23 AM Guess? (GES) edged expectations for Q1 earnings and revenues but cut Q2 and full-year guidance, partly on worries over Europe, which generates ~38% of profits. But shares +8% premarket, perhaps sparked by Bloomberg talking up the stock as a takeover target; it's valued at a mere 3.5x EBITDA, there's lots of free cash flow, low debt, and $500M cash on the books. [Consumer, On the Move] Comment!
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8:18 AM More on American Eagle Outfitters' (AEO) Q1: Comparable-store sales up 17%. Inventory 14% higher Y/Y on a cost per foot basis. Gross margin flat compare to last year, while SG&A expenses fell to 25.2% from 25.8%. Expects Q2 EPS of $0.13-$0.15 and FY12 EPS of $1.16-$1.22. Shares -2.5% premarket. (PR) [Earnings, Consumer] Comment!
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8:12 AM The Gallup Economic Confidence Index rises to -16, the highest-ever level in the 4+ year history of the survey. The index has two components - current conditions and economic outlook, and the economic outlook - though still negative - is the highest since January 2008 despite a brutal few weeks for the stock averages. [U.S. Economy] 1 Comment
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8:07 AM More on Toll Brothers (TOL) FQ2: swings to a net profit of $16.9M from a loss of $20.8M last year, helped by lower inventory writedowns. Homes delivered +14% to 671, net signed contracts +47%, cancellation rate falls to 2.4% from 3.9%. "It appears that the housing market has moved into a new and stronger phase of recovery," CEO Douglas Yearley says. [Consumer, U.S. Economy] Comment!
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8:02 AM Analysts are out with calls on PetSmart (PETM) after the company smashes through estimates with its Q1 report and raises full year guidance. RW Baird lifts its price target to $62 from $57, while RBC Capital aims even higher with a $69 PT. Shares +9.7% premarket. [Consumer, On the Move] Comment!
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8:00 AM On the hour: S&P -0.57%. 10-yr +0.16%. Euro -0.13% vs. dollar. Crude -0.67% to $91.23. Gold -0.99% to $1561.05. Comment!
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8:00 AM If Greece exits the eurozone, writes The Tell, the EU should consider replacing it with Turkey. The country's speedy growth and youthful demographics would help a union sorely in need of both. One wonders if the reason Turkey's economy is perky (even overheating) is because it's not part of the eurozone. The EU may want the country, but has anybody checked with Ankara? [Global & FX] 3 Comments
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7:56 AM Industry analysts see the move by Sears Holdings (SHLD) to reduce its stake in Sears Canada to 51% as clearing the path for a host of U.S. retailers to jump in to take advantage of the void as Sears Canada trims its operations. Both Nordstrom (JWN) and Saks (SKS) could jump into a Canadian market that boasts 50% higher sales per square foot at malls than in the U.S., while Target (TGT) might accelerate its own expansion plans. [Consumer, Global & FX] 2 Comments
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7:48 AM Following Dell's (DELL) poor showing yesterday, the attention now switches to H-P (HPQ), which is due to release its FQ2 earnings after the bell. Analysts forecast that EPS fell to $0.91 from $1.24 and that revenue declined 5.4% to $29.9B. H-P is also expected to unveil a restructuring plan that will include laying off over 25K workers. [Earnings, Tech, Consumer] Comment!
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7:47 AM The rupee hits an all-time low for the 6th consecutive day, now requiring 56.18 of them to purchase one dollar. Traders believe the RBI intervened, temporarily sending the rupee as high as 55.52, but the currency soon weakened anew. Given global risk aversion at the moment, the RBI doesn't have a shot. [Global & FX] Comment!
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7:34 AM Bank of Montreal (BMO): FQ2 EPS of $1.44 beats by $0.09. Revenue of $3.96B beats by $60M. (PR) [Earnings, Financials] 1 Comment
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7:31 AM Spanish PM Rajoy will use the occasion of a meeting of EU leaders today to ask the ECB to purchase his country's bonds, reports El Mundo. "Enough is never enough," says Adam Johnson, recalling Spanish banks took down 47% of the recent LTRO. Madrid -2.1%. [Global & FX] 1 Comment
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7:27 AM Bill Ackman has an immediate challenge at Canadian Pacific (CP) with a strike by workers that has shut down a number of railroad lines. Union officials say that worker rules and the company's plans to slash a pension plan are major negotiating points. [Consumer] Comment!
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7:21 AM Constant chants of "catastrophe" should Greece exit EMU "borders on political blackmail," writes Ambrose Evans-Pritchard. It will only be so if the EU and IMF choose that path, thus making catastrophe not a fait accompli, but a political decision. The catastrophe, he says, comes from those clinging to failed ideology (fixed exchange rate). [Global & FX] 1 Comment
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7:10 AM A two-year boom in sales of running shoes still has legs and could propel sellers Nike (NKE), Foot Locker (FL), and Dick's Sporting Goods (DKS) even higher, according to analysts. In the last year sales jumped 14% to reach $6.46B, fueled by the increasing appetite of consumers to pay up for comfort and fashion with more sophisticated lines of running shoes. [Consumer] Comment!
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7:10 AM Annaly (NLY) CEO Mike Farrell has completed his treatment program and his cancer is in remission. "I feel good and have been given an encouraging prognosis," he says. (PR) [Financials] 7 Comments
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7:06 AM The euro hits a new low for 2012 and the lowest level since the summer of 2010 as panic once again hits the continent. The common currency touched $1.2615 earlier, now buying $1.2655, -0.2% for the session. The euro bottomed at about $1.25 during the financial crisis and $1.19 in the summer 2010 bear market. [Global & FX] Comment!
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7:05 AM MBA Mortgage Applications: +3.8% vs. +9.2% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) decreased to 3.93% from 3.96%. [U.S. Economy, Breaking News] 1 Comment
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7:01 AM Piper Jaffray reiterates an Overweight rating on Expedia (EXPE) and raises it price target to $53 from $44. Analysts with the firm base stay bullish on EXPE after digesting the latest data dump from comScore showing strength in the travel site's Europe-based web traffic. [Consumer] Comment!
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7:01 AM Germany sells €4.56B of 2-year notes carrying a coupon of 0%, and priced to yield 0.07%. There was strong demand for the paper as investors see value even at these prices. How low can the yield go? Well, Swiss 2-year paper currently yields -0.10%. [Global & FX] Comment!
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6:47 AM Mazda (MZDAF.PK) and Fiat (FIATY.PK) join forces for the first time with plans to develop a lightweight sports car and explore strategic opportunities in Europe. The linkup between the two automakers leaves Ford (F) with one less partner as a longstanding relationship with Mazda peters out. [Consumer, Global & FX] 1 Comment
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6:40 AM The CFPB plans to announce the first set of rules for reloadable prepaid cards, including standards for fee disclosure and limits on consumer liability if cards are used without authorization. Major banks and companies such as Green Dot (GDOT) have been increasingly pushing the cards on consumers because under the current framework they can charge higher fees. [Consumer, Financials] Comment!
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6:31 AM U.S. stock futures point lower after European markets drop off ahead of a summit meeting of leaders in Brussels. S&P -0.7%, Dow -0.7%. [U.S. Economy] Comment!
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6:08 AM Iran expects "good news" from the latest talks with the P5+1 group of World Powers - which are due to take place today in Baghdad - although the U.S. says Iran won't receive relief from sanctions. News yesterday of an agreement between the IAEA and Iran over the inspection of nuclear sites sent oil prices lower. [Energy] 1 Comment
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6:00 AM Overseas: Japan -2.0%. Hong Kong -1.3%. China -0.4%. India -0.6%. London -1.8%. Paris -2.1%. Frankfurt -1.8%. Comment!
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5:56 AM EU leaders are due to meet in Brussels today as Germany comes under increasing pressure to agree to a softening of austerity and to eurobonds, ideas favored by Francois Hollande. However, as an EU diplomat says: eurobonds are "the equivalent of ringing the bell for a happy hour so the inebriated can postpone their hangover indefinitely." [Global & FX, Top Stories] 3 Comments
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5:30 AM P-E firm Hellman & Friedman is reportedly considering selling or listing Getty Images, the world's biggest provider of stock photos, video and other digital content. The company could be valued at $4B, up from the $2.4B that H&F paid to acquire the firm four years ago. [M&A] Comment!
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5:19 AM Barclays (BCS) raised a net $5.5B from the divestment of its 19.6% stake in BlackRock (BLK), selling 26.2M shares to money managers for $160 each and 6.38M shares to BlackRock for $156.80. There's also a greenshoe option of 2.6M shares. The sale will increase Barclays' Tier 1 capital ratio by about five basis points as it looks to meet Basel III requirements. [Financials, M&A] Comment!
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5:11 AM Toll Brothers (TOL): FQ2 EPS of $0.10 beats by $0.07. Revenue of $374M (+17% Y/Y) misses by $3M. (PR) [Earnings, Breaking News] Comment!
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4:41 AM European stocks extend their losses following ugly U.K. retail numbers and BoE minutes. London -1.4%. Paris -1.8%. Frankfurt -1.5%. [Global & FX, On the Move] Comment!
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4:36 AM Horrible retail figures out of the U.K.: Sales fell 2.3% M/M in April, far exceeding the expected 0.8% drop. Sales -1.1% Y/Y vs. expectations of +1%. [Breaking News, Global & FX, Consumer] Comment!
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4:32 AM BoE minutes show members voted 8-1 to keep QE total at £325B in April; David Miles voted for an increase to £350B. Interest rate vote was 9-0. [Breaking News] Comment!
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4:30 AM Golden Star Resources (GSS) is bewildered by the 32% fall in its stock price since its May 17 announcement of a debenture purchase and exchange agreement; "there are no undisclosed material events at the company that would support the recent deterioration in the stock price." Q2 guidance unchanged at 83K-87K ounces of gold. [Commodities] Comment!
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4:22 AM BofA (BAC) will buy back $330M of home loans from Freddie Mac (FMCC.OB) after flaws were found in how the loans were created. Though a relatively small re-purchase, the bank's overall costs tied to defective home loans have totaled more than $42B so far. [Financials] 8 Comments
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4:13 AM Sony (SNE) and Samsung (SSNLF.PK) are trying to force retailers to rein in discounts on televisions, a move that could not only save profit margins at two of the world's largest TV makers but also help retail chains like Best Buy (BBY) and Target (TGT) remain competitive against online discounters. [Consumer, Tech] Comment!
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3:29 AM Thailand's PTT Exploration and Production trumps Shell's (RDS.A) bid for Cove Energy (CNVGF.PK), offering £1.22B ($1.9B) for the Mozambique-focused explorer. Cove's management says it now backs PTT's bid, with the reversal coming just hours ahead of a deadline for investors to accept Shell's $1.8B offer. Shell -1.2% in London. [M&A, Energy, Top Stories] Comment!
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3:13 AM Ahead of its investor conference today, MetLife (MET) outlines its strategic value plan. Highlights: By 2016, increase its ROE to 12-14% from 10.3% last year, grow emerging markets business to 20% or more of operating earnings, shift its product mix toward protection products and away from more capital-intensive products, and re-focus its U.S. business. [Financials] Comment!
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2:55 AM Some blunt eurozone truths from Jin Liqun, chairman of CIC's supervisory board: Eurozone leaders have demonstrated a "lack of leadership" on the region's debt crisis, "too much time has been wasted on endless bargaining... for piecemail bailouts," and the core eurozone nations will have to "keep an eye out for possible copycats should the Greeks be allowed to escape from the crisis unscathed." [Global & FX] 2 Comments
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2:50 AM Asian stocks are heavily down, and Japan is the big loser of the bunch, sinking 2% on BOJ inaction, a widening trade deficit and the never-ending eurozone drama. Hong Kong -1.3%. China -0.6%. India -0.9%. [Global & FX, On the Move] Comment!
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2:48 AM The Bank of Japan keeps its monetary policy unchanged, leaving rates in the 0-0.1% band and holding asset purchases steady at a total of ¥70T ($880B). Analysts expect an increase in asset purchases to come soon, either during a meeting next month ahead of Greek elections, or in July, when the bank gives its updated inflation forecast. [Global & FX] Comment!
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2:38 AM Japan's trade deficit widened to ¥520.3B ($6.5B) in April from a shortfall of ¥84.5B in March, as exports rose a less-than-expected 7.9%. Finmin Jun Azumi calls for the Bank of Japan to "take appropriate steps in a timely manner;" analysts believe BOJ may boost asset purchases in the coming months. [Global & FX, Top Stories] 3 Comments
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12:00 AM Wednesday's economic calendar:
7:00 MBA Mortgage Applications
10:00 New Home Sales
10:00 FHFA House Price Index
10:30 EIA Petroleum Inventories
1:00 PM Results of $35B, 5-Year Note Auction
2:00 PM Fed's Kocherlakota: Monetary Policy Comment!
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