ABB makes $1B bet on moribund solar sector. Swiss industrial group ABB (ABB) has agreed to acquire Power-One (PWER) for $1.03B, with the offer of $6.35 a share representing a 57% premium to the latter's close on Friday. ABB is buying Power-One, the world's second-largest maker of inverters for allowing solar power to be fed into electricity grids, despite over-capacity and slumping demand in the solar industry - ABB expects growth in emerging markets and Japan to help revive the sector.
Boeing starts installing new 787 battery system. Boeing (BA) has begun to install the new battery system for the 787 in five All Nippon Airways Dreamliners, which should allow the jets to restart flying in about a week. However, commercial passenger flights probably won't begin until June, as ANA intends to make 100-200 test flights first. The installations come after the FAA approved the 787's modified battery system on Friday.
Top Stock News
Hasbro beats the Street. Hasbro's (HAS) Q1 earnings topped Wall Street expectations, with adjusted EPS coming in at $0.05 and revenue edging up 2.3% to $663.7M. A strong performance by Hasbro's Games and Girls categories helped the toymaker offset sluggishness with boys' products. As a result of implementing cost cuts, the company expects 2013 gross savings of $45-48M.
Falling Apple demand limits LG earnings. LG Display (LPL) swung to a net profit of 3.49B won ($3.1M) in Q1 from a loss of 129B won a year earlier, but badly missed consensus of 76B won, while sales rose 10% to 6.8T won. Operating profit plunged 74% on quarter to 151B won, hurt by falling seasonal demand and weaker sales to Apple (AAPL), which accounts for a large part of LG's business and is due to report its results tomorrow.
Elan rejects Royalty Pharma's latest bid. Elan (ELN) has rebuffed Royalty Pharma's reduced $11.25-a-share takeover offer, saying the bid "grossly undervalues" the Irish pharmaceuticals company. Royalty cut its proposal last week from $12 following a $1B stock buyback by Elan, the results of which suggest that the company's investors support the view that Royalty's bid is too low - 73% of shares excluding those of Johnson & Johnson were not tendered in the pre-announced price range of $11.25-$13.00. Elan closed at $11.95 on Friday, giving it a market cap of $7.11B.
Netflix seen swinging back to profit. Netflix (NFLX) is due to report Q1 earnings after the bell, with analysts expecting that the company swung to an EPS profit of $0.18 from a loss per share of $0.08 a year earlier as revenue jumped 17% to $1.02B. The results will be the first after the company released its first major original series, "House of Cards," and it's expected to report strong subscriber growth.
Senate to vote on Internet sales tax. The Senate is expected to vote this week on a bill that would allow states to force Internet retailers to collect sales tax. The Senate has already voted 75-24 in favor of a non-binding resolution that backs the idea, helped by increasing support from GOP governors who like the thought of billions of dollars of more revenue. Amazon (AMZN) is in favor of the legislation, although eBay (EBAY) opposes it, saying it will add extra burdens to small businesses.
Top Economic & Other News
Hopes raised for end to Italian stalemate. Milan shares were +1.9% at midday in Europe and 10-year bond yields were -9 bps at 4.13% after Italian parliamentarians voted to re-elect 87-year-old Giorgio Napolitano as President at the weekend. Speculation exists that Napolitano only agreed to take on the role again on the condition that a coalition government will at last be formed. However, a new election can't be ruled out following the resignation of the leader of the center-left Democratic Party after its candidates for president were rejected.
PBOC: Slower growth is price of reform. People's Bank of China Governor Zhou Xiaochuan has played down his country's disappointing Q1 growth of 7.7%, indicating that the slower expansion is the price for overhauling the economy. "China's undergoing economic restructuring, which sometimes is not in lockstep with growth," Zhou said. "We need to sacrifice short-term growth for the purposes of reforms and structural adjustments."
U.S. economy set to grow 3% - due to accounting change. The U.S. economy will become 3% larger in July as the government becomes one of the first to use a new international standard for GDP accounting. Among other things, statisticians will now take into account R&D investment, which will add just over 2%, and creative works, which will add another 0.5%. The government will backdate the alterations to 1929, so there are unlikely to be changes in trends or cycles.
Japan receives backing for aggressive monetary policy. Japan's turbo-charged monetary easing received further international acceptance over the weekend, with the country allowed into pan-Pacific free-trade talks. A day earlier, the G-20 continued to buy into Japan's arguments that its monetary policy is designed to lift the economy out of deflation, not to weaken the yen to gain an unfair advantage. Increasing international trade is Prime Minister Shinzo Abe's "third arrow" in his strategy to revive Japan's economy.
In Asia, Japan +1.9% to 13568. Hong Kong +0.1% to 22044. China -0.1% to 2242. India +0.8% to 19170.
In Europe, at midday, London +0.7%. Paris +0.6%. Frankfurt +0.9%.
Futures at 7:00: Dow +0.5%. S&P +0.5%. Nasdaq +0.7%. Crude +0.8% to $88.71. Gold +2.6% to $1431.80.
See full real-time earnings coverage »
Wall Street Breakfast is sent out by email for free -- Get it now »