Top Stories
Improving Chinese PMI brightens the mood. Two surveys of China's factory activity have provided further evidence that the country's economy may be picking up. The official PMI rose to 50.2 in October - its first foray into expansionary territory in three months - from 49.8 in the previous month. HSBC's reading increased to 49.5 from the flash PMI of 49.1 and 47.9 in September. The numbers have helped send up Asian and European shares, although U.S. stock futures don't seem to be too impressed (see below).
Sharp warns of "material doubt" it can survive. Sharp (SHCAY.PK), a major supplier to Apple (AAPL), warned of a "material doubt" about its ability to survive after it swung to a far larger than expected FQ2 net loss of ¥249.1B ($3.11B) from a net profit of ¥9.4B a year earlier. The company booked a special loss of ¥84.4B on restructuring costs and wrote down deferred tax assets by ¥61B. Sharp also forecast an FY net loss of ¥450B, well above previous guidance.
Barclays faces $470M fine over power trades. The Federal Energy Regulatory Commission (FERC) yesterday gave Barclays (BCS) 30 days to show why it shouldn't be fined $470M for allegedly manipulating the Californian power markets by deliberately making losses on physical electricity prices in order to profit from related swaps positions. The strategy apparently used to be fairly common, and Barclays said it will fight FERC over the issue.
Top Stock News
Lloyds adds £1B to mis-selling provisions as losses fall. Lloyds' (LYG) Q3 net loss narrowed to £361M from £501M a year earlier even though underlying revenue fell 7.3% to £4.59B. Underlying profit doubled to £840M, well above consensus. The U.K. bank put aside another £1B to cover eventual payouts for the mis-selling of payment-protection insurance - but less than the £2.3B that analysts have pegged - taking total provisions to £5.275B. Shares were +6.7% midday in London.
Netflix surges on Icahn stake. Netflix (NFLX) was -1.6% premarket after surging almost 14% yesterday following news that Carl Icahn has bought a 9.98% stake in the company, saying it holds "significant strategic value due to its dominant market position and global growth prospects". One question is whether Icahn still sees shares as undervalued now that they have run up a hefty gain lickety-split. Others include whether Reed Hastings' job is safe and if Netflix is now in play to be acquired.
Visa FQ4 profit almost doubles. Visa's (V) FQ4 earnings topped forecasts as profit almost doubled to $1.7B, EPS came in at $1.54 and revenue climbed 9% to $2.73B. The company experienced growth across all its segments, including transactions, payments volume, and services revenue. On a geographic basis, the Central Europe, Middle East & Africa region saw the fastest pace of growth. Shares rose 1.8% in AH trading.
Sony's net loss falls as revamp takes effect. Sony's (SNE) FQ2 net loss narrowed to ¥15.5B ($194M) from ¥27B last year but badly missed the consensus for a net profit of ¥15.57B. Still, the bottom line was helped by Sony's restructuring and a slight 1.9% increase in revenue to ¥1.605T. For the full year, Sony maintained its guidance for a net and operating profit, but it cut its sales outlook.
Panasonic shares collapse following massive profit warning. Panasonic (PC) plunged 20% in Tokyo today, the most in nearly 38 years, following the electronics giant's dismal FQ2 earnings report yesterday, when it forecast an FY net loss of $9.6B. Moody's said it will review the company's Baa1-rated debt for a potential downgrade, while analysts are urging Panasonic to cut yet more jobs, but the company has no plans to do so in significant numbers.
Starbucks seen continuing to march on. Starbucks is due to release its Q3 earnings later today, when it's expected to report that EPS climbed to $0.45 from $0.37 as revenue increased 11.6% to $3.38B. SA author Brian Gilmartin is a fan of the company. "There is no question Starbucks continues to execute well, with expected revenue growth of 10%-12% and earnings growth in the low 20% area," Gilmartin says.
Big things expected from LinkedIn. LinkedIn (LNKD) is also scheduled to report its Q3 earnings after the bell, with analysts predicting that EPS rose to $0.11 from $0.06 while revenue jumped almost 75% to 243.9M. LinkedIn has consistently beaten sales forecasts since its IPO, which has sent the stock flying by almost 70% this year. Cantor Fitzgerald's Youssef Squali expects strong results "despite a soft job market and uncertain macro environment."
Pentagon ending exclusive reliance on BlackBerry. The Pentagon, which has traditionally only ever used BlackBerries, has requested bids for software that can manage and enforce security for Apple (AAPL) and Android (GOOG) devices as well. RIM (RIMM) can take solace from the Pentagon's plan to continue supporting "large numbers" of BlackBerries, while the company said its Mobile Fusion product could manage Android and Apple devices.
Top Economic & Other News
Banks wary of meeting rising mortgage demand. Banks are experiencing increasing demand for mortgages but they're reluctant to provide them despite the Fed's best efforts to encourage them to do so with lots of QE. For around a third of institutions in Q3, demand for prime residential mortgages was "moderately stronger," as was demand for higher risk loans at 20% of banks. However, over 90% of firms kept their lending standards for "prime," or low-risk, mortgages unchanged.
Editors' Picks
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Today's Markets:
In Asia, Japan +0.2% to 8947. Hong Kong +0.8% to 21822. China +1.7% to 2104. India +0.3% to 18562.
In Europe, at midday, London +0.5%. Paris +0.5%. Frankfurt +0.5%.
Futures at 7:00: Dow flat. S&P -0.1. Nasdaq +0.1%. Crude +0.2% to $86.43. Gold +0.2% to $1722.80.
Today's economic calendar:
Auto sales
Chain Store Sales
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
8:30 Initial Jobless Claims
8:30 Productivity and Costs
9:00 PMI Manufacturing Index
9:45 Bloomberg Consumer Comfort Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:00 Consumer Confidence
10:30 EIA Petroleum Inventories
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings before today's open: ABC, ABX, ADP, ALKS, APA, AVP, BCE, BYD, CI, CNSL, CTRX, CVC, DLPH, DX, EL, EPD, ESV, EXC, FIRE, GAS, GNC, GTLS, HEP, HSH, INCY, ITRI, IVZ, K, LLL, MPC, NGLS, NIHD, OCN, PEG, PFE, PXP, RDN, RGLD, SE, SIRI, SNE, SPR, TDC, TE, TEVA, UPL, UTHR, VNR, WNR, WPI, XOM, XYL
Notable earnings after today's close: AIG, AIV, ALSK, ATML, BKD, BMR, CAR, CENX, CHK, DCT, DDR, DWA, EIX, EQIX, FLR, FSLR, GLUU, HAIN, HIG, HTGC, INT, ITMN, JMBA, JOE, KERX, KOG, LIFE, LLNW, LNC, LNKD, LVS, MDLZ, MELI, MNKD, NEM, NGD, NKTR, NLY, OMPI, ONNN, ONXX, OPEN, PBI, PCLN, ROVI, RSG, SAM, SBUX, SHO, SKUL, SPWR, SWKS, SWN, TRIP, UNTD, VNO, VRTX, WBMD, WIT, WPRT, YELP, ZAGG, ZIOP
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