Friday, October 19, 2012
Wall Street Breakfast: Must-Know News
Top Stories
GE undershoots the Street. General Electric's (GE) Q3 earnings missed consensus despite operating EPS climbing 50% to $0.36 and revenue edging up 3% to $36.3B. GE Capital's profits rose 11% even though revenues slipped 5%, with commercial lending & leasing a particular weak spot. GE's infrastructure orders fell 5% to $21.5B, due to a decrease in bookings for wind turbines. Shares were -1.8% premarket.
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EU leaders agree to bank supervisor for 2013. EU leaders have agreed to give the ECB oversight of eurozone banks starting from next year, a critical step that will allow the ESM to begin recapitalizing troubled institutions. The ECB will start by supervising banks that received state aid and then large cross-border firms, with all of the eurozone's 6,000 banks set to come under its aegis by 2014.
Microsoft earnings drop ahead of Windows 8 launch. Microsoft (MSFT) joined Google (GOOG) in alarming investors yesterday (see below) after reporting that FQ1 net profit dropped 22% to $4.47B as sales declined 8% to $16.01B and missed expectations, as did EPS of $0.53. Earnings were hurt by a precipitous drop of 33% in sales at Microsoft's Windows division, due to deferred revenue ahead of the launch of Windows 8 and the slumping PC market. Shares were -2.15% premarket.
Top Stock News
Google heralds growth of mobile business. Google (GOOG) recovered a bit of its poise on its earnings call yesterday, saying that the run rate on its mobile business - which comprises ads and Google Play, though mostly ads - has soared to $8B a year from $2.5B a year ago. Shares were +0.7% premarket after dropping 8% in regular trading yesterday following the accidental early release of its Q3 earnings report, which badly missed expectations.
ING to sell more Asian ops for $2.14B. ING (ING) has made further headway in its program of offloading Asian assets by agreeing - as expected - to sell its insurance units in Hong Kong, Macau and Thailand to Pacific Century Group for $2.14B. PCG is owned by Hong Kong businessman Richard Li. ING expects a net gain of €1B from the deal, which follows an agreement last week to sell its Malaysian insurance operations for $1.7B.
ADM eyes GrainCorp after buying 10% stake. Archer Daniels Midland (ADM) has bought a 10% stake in Australia's GrainCorp and wants to start talks about acquiring the whole company, although analysts reckon ADM could get caught up in a bidding war. The U.S. grain trader purchased the shares in the market at A$11.75 ($12.17) each, or a 33% premium to Thursday's close, with the price giving GrainCorp a valuation of A$2.7B.
Sony restructure to save ¥30B a year. Sony (SNE) plans to lower its headcount by 3,800 in Japan by March next year as part of a previously announced restructuring in which the company is cutting staff numbers by 10,000. Sony intends to close a Japanese camera-lens and mobile-phone factory in the overhaul, which it said will save ¥30B ($378.6M) a year. Around 2,000 jobs will also go in Europe, half at Sony's former mobile joint venture with Ericsson (ERIC).
Regulator blocks BCE's $3B deal for Astral. The Canadian Radio-Television & Telecommunications Commission (CRTC) has blocked BCE's (BCE) C$3B ($3.05B) acquisition of Quebec-based Astral Media, saying the deal would give too much power to BCE, already the country's largest telecom operator and a major broadcaster. BCE plans to ask the federal government to overturn the ruling, although Heritage Minister James Moore said the CRTC's ruling will stand.
Lowe's starts CEO succession planning. Lowe's (LOW) board of directors is looking to find an heir apparent to CEO Robert Niblock in its hunt for an executive to fill the vacant post of chief merchandising officer (CMO), the WSJ reports. The idea is that the CMO would step into the top job within three years even though Niblock is only 50. Lowe's is under pressure over its revival plan to take back market share lost to Home Depot (HD).
ArcelorMittal workers OK new labor deal. Members of the United Steelworkers union at ArcelorMittal (MT) have approved a new three-year labor deal, which covers 14,000 employees and includes salary rises of 2%-2.5%. The vote came on the same day the FT reported that ArcelorMittal is exploring selling a 30% stake in its Canadian iron ore business, which could be worth a total of $8B-$10B.
A quarter of a century since Black Monday. Today is 25 years to the day since Black Monday, when the DJIA crashed 508 points, or nearly 23%. The collapse sparked fears of another depression, although a recession didn't come for two years and was relatively mild. The NYT has a retrospective blaming "portfolio insurance" and describing the crash as the "beginning of the destruction of markets by dumb computers."
Top Economic & Other News
Government to open Arctic land for drilling. The Interior Department plans to offer 4.5M acres of Arctic land for oil and gas production, including 400 tracts in Alaska's National Petroleum Reserve, next month. So close to an election, the move could be seen as President Obama's answer to persistent criticism from Mitt Romney that the government has stifled domestic oil output.
End of an era as ICE closes commodities options pits. While computers may be to blame for black Monday, that hasn't stopped the march of electronic trading. Agricultural options traders at IntercontinentalExchange's (ICE) pits in lower Manhattan will put on their distinctive jackets and badges for the last time today, the final day of "open-outcry" commodities trading on the exchange's floor. From now on, all transactions will take place via those computers.
Editors' Picks
25 Years Later: Lessons From The Crash Of '87
Inflation, Deflation, Gold And Central Banking
ARM In Servers: Be Skeptical Buying The Hype
Today's Markets:
In Asia, Japan +0.2% to 9003. Hong Kong +0.1% to 21552. China -0.2% to 2128. India -0.6% to 18682.
In Europe, at midday, London -0.2%. Paris -0.6%. Frankfurt -0.4%.
Futures at 7:00: Dow -0.1%. S&P -0.2%. Nasdaq -0.3%. Crude flat at $92.10. Gold -0.6% to $1734.90.
Today's economic calendar:
10:00 Existing Home Sales
Notable earnings before today's open: APD, BHI, BPOP, CALL, CBE, FHN, FNFG, GE, HON, IR, KSU, MCD, MMR, PH, SHAW, SLB, TCB
Notable earnings after today's close: EW
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