JPMorgan posts record profit of $6.5B. JPMorgan's (JPM) net income rose to a record $6.5B in Q1 from $4.9B a year earlier as EPS of $1.59 beat forecasts, but revenue slipped to $25.8B from $26.8B and missed consensus. Earnings received an $0.18-a-share benefit from reduced loan-loss reserves in mortgages and credit cards, but the business of banking - loan growth - slowed "across the industry." Shares were -0.6% premarket.
JAB to buy DE Master Blenders for €7.5B. A consortium led by Joh A Benckise (JAB) has agreed to acquire Dutch Sara Lee spin-off D.E. Master Blenders 1753 for €12.50 a share in a deal that values the maker of Douwe Egberts coffee and Pickwick tea at €7.5B. The price is lower than the €12.75 mentioned when the sides first disclosed talks about a transaction in March. The purchase would add to JAB's stakes in Peet's (PEET) and Caribou Coffee (CBOU).
San Bernardino to restart paying Calpers but not bondholders. San Bernardino in California has proposed restarting bimonthly $1.2M employer contributions to Calpers almost a year after the city suspended the payments, although it will continue to renege on its commitments to other creditors, including bondholders. The decision highlights the battle over who should take most of the pain when a city goes bankrupt - the bondholders or the public servants.
Top Stock News
J.C. Penney seeks to raise $1B. J.C. Penney (JCP) has reportedly brought in bankers at Blackstone (BX) to provide the struggling retailer with advice on how to shore up its fast-eroding stockpile of cash. The company is looking to raise $1B, with one option being to sell a minority stake. JCP has contacted possible investors, including private-equity firms, to gauge their interest.
Former Home Depot unit HD Supply files for $1B IPO. HD Supply, a former division of Home Depot (HD) with annual sales of over $8B, has filed for a $1B public offering of its shares. The company plans to use the proceeds to retire debt and for general corporate purposes.
Judge blocks severance package for AMR CEO. A judge has denied the $19.9M severance package for American Airlines (AAMRQ.PK) CEO Tom Horton as part of the merger of the carrier with US Airways (LCC). The ruling won't stop the deal, though, which will create the nation's largest airline.
Eli Lilly to axe almost a third of U.S. sales force. Eli Lilly (LLY) reportedly plans to cut 30% of its U.S. sales force, or about 1,000 positions. Most of the affected workers are part of the company's bio-medicines division, as six of its blockbuster products are set to lose their patent exclusivity over the next four years. That will allow low-priced generic competitors to enter the market and grab over $13B in potential business.
Pressure to increase on banks to split - bank analysts. A break-up of the big banks is on the minds of none other than analysts at the banks themselves. Wells Fargo reckons shareholders might "intensify demands" for it, especially as the likes of Bank of America (BAC), Citigroup (C) and JPMorgan (JPM) trade at discounts of 25-30% to more-focused rivals. JPM's analysts have questioned the viability of running an investment bank "as part of a universal banking business."
Time Warner closes in on $1B of Turkish Delight. Time Warner (TWX) is reportedly the frontrunner to buy Turkish TV network ATV from Turkey's Calik Holdings with a $1B bid. Dubai-based Abraaj Capital is also said to be in the running in a sales process that has taken almost a year. Time Warner has been hungry to grow its international operations as it carries out a spinoff of its somewhat U.S.-focused Time Inc. unit.
TI, Hutchison eye mobile tie-up in Italy. Telecom Italia's (TI) board has formed a committee to review a possible merger of its cellular operations with Hutchison Whampoa's 3 Italia mobile unit. TI's board has also ordered management to study the feasibility of spinning off its Italian wireline business. Regulators will undoubtedly take a close look at TI's and Hutchison's combined 45% share of the Italian market, easily eclipsing Vodafone's (VOD) 32% and Wind's 23%.
Dell looks to salvation in China from PC slump. Notwithstanding its potential buyout, Dell (DELL) plans to double its sales outlets in China to 20,000 over the next 2-3 years as it looks to overcome the sharp slowdown in the global PC market. And as Lenovo has done, Dell intends to focus on smaller "tier 4 through 6" cities where sales are still rising. The company is also exploring designs for different tablet sizes.
Top Economic & Other News
Eurogroup meets as Cyprus fears hit stocks. Eurozone finance ministers are meeting today and tomorrow in Dublin, when Ireland, Portugal, Cyprus and even Slovenia will or could be on the agenda. Fears about Cyprus, which needs €6B over and above the €17B that was originally estimated, have helped send the euro, European shares and possibly U.S. stock futures lower. Cyprus wants extra help from the eurozone, although the bloc has made it clear that it won't provide any more than the €10B it has already pledged.
Eurozone industrial output remains volatile. Eurozone industrial production recovered to increase 0.4% on month in February from a slump of 0.6% in January and beat consensus of +0.1%. On year, output was -3.1% vs -2.4% and -2.5%. The growth in production, which has been fairly volatile over the past few months, was driven by a 2.6% rise in energy production and a 1.3% increase in durable consumer goods.
Gazprom pushes use of natural gas in cars. With Russia awash in cheap natural gas, Gazprom is leading a push to massively expand the use of the fuel in vehicles. A 1998 Lada sedan can drive 140 miles on as little as 120 rubles ($3.80) of natural gas, or around the cost of a gallon of gasoline in the U.S. The Toyota Prius would need three gallons to make the trip. Problems abound, though, including a lack of filling stations and fears of the cars blowing up.
In Asia, Japan -0.5% to 13485. Hong Kong -0.1% to 22089. China -0.6% to 2207. India -1.6% to 18243.
In Europe, at midday, London -0.4%. Paris -1%. Frankfurt -1.4%.
Futures at 7:00: Dow -0.2%. S&P -0.2%. Nasdaq -0.3%. Crude -1.3% to $92.30. Gold -1.1% to $1547.70.
Today's economic calendar:
8:30 Producer Price Index
8:30 Retail Sales
9:55 Reuters/UofM Consumer Sentiment
10:00 Business Inventories
12:30 PM Bernanke Press Conference
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