- BoA sells CCB stake. Bank of America (BAC) reportedly sold a 5.8% stake in China Construction Bank for around $7.3B. The 13.5B shares were sold for HK$4.20 each, 14% below yesterday's closing price, with another 25.6B shares in a lock-up period until August 2011. The sale brings Bank of America one step closer to plugging its $33.9B capital shortfall. Shares +1.2% premarket (7:00 ET).
- Trying to leave the TARP trap. Capital One (COF), U.S. Bancorp (USB), BB&T (BBT) Principal Financial Group (PFG) and Bank of New York Mellon (BK) announced plans to raise capital with an eye towards paying back TARP loans. Capital One will sell 56M shares, while U.S. Bancorp will offer $2.5B in common stock. BB&T will sell $1.5B in shares. Principal Financial Group will raise $1B in stock sales. Bank of New York Mellon will offer $1B in common shares. KeyCorp (KEY) will sell up to $750M of stock to help close a $1.8B capital hole.
- Ford's new share issue. Trying to capitalize on recent stock strength and avoid government aid, Ford (F) will issue 300M common stock shares and use at least some of the money for a union-run medical trust. The new stock, which will price today, will increase shares outstanding by 11% and raise more than $1.8B at yesterday’s closing price. This will be the first time Ford has offered common shares directly to the public. Shares -6.1% premarket (7:00 ET).
- Microsoft sells its first corporate bonds. Cash-rich Microsoft (MSFT) made its first foray into the corporate bond market yesterday, selling a $3.75B debt issue. The bond sale attracted over $10B in demand. The company said it doesn't need financing and will use the money for general corporate purposes, including working capital and buying back stock. Some analysts think the debt issue was in preparation for a major acquisition to revive growth, though sources close to the company say there is no specific target in mind.
- NYT stake rumors. Media mogul David Geffen reportedly tried to buy a stake in the New York Times Co. (NYT) from hedge fund Harbinger Capital Partners, but was rejected because Geffen wanted to buy the stake at market price, while Harbinger wanted a premium. Separately, media reports claim Times board member Scott Galloway approached Google (GOOG) co-founder Larry Page to try to get Google to buy a stake in the Times.
- Bernanke calls for internal stress tests. Speaking at a Federal Reserve conference, Bernanke called efforts by U.S. banks to raise capital 'encouraging.' However, he also noted that the "stress tests used in the assessment program should be part of a broader palette of internal stress tests conducted by firms. Indeed, we do not intend that the capital assessments should be taken as all that those firms need to do." The comments suggest the Federal Reserve and other regulators will continue to keep a close eye on banks.
- Fannie/Freddie's murky, pricey future. The Office of Management and Budget laid out overhaul options for Fannie Mae (FNM) and Freddie Mac (FRE) in a report yesterday, including the possibility of an eventual liquidation of their assets. Other options included nationalization, dissolution into several smaller companies, a return to their previous status as government-sponsored enterprises or being restructured as public utilities with the full faith and credit of the government. The OMB also projected that the mortgage giants, which have thus far received $78.8B in federal aid, will need at least $92.2B more.
- Citi lends out TARP funds. Citigroup (C) is using most of its $45B in TARP funds to make new loans. The bank approved $44.75B in lending initiatives as of March 31, up from $36.5B in February. In its report, scheduled to be released this morning, Citigroup said the loans include an additional $2B to suppliers, $1B for residential mortgages and $250M in auto loans, and that many of the loans would not have been offered if TARP funds were not available. Shares +2.6% premarket (7:00 ET).
- GM bankruptcy 'more probable.' With three weeks left to reduce its debt and costs, General Motors (GM) CEO Fritz Henderson told investors "today it’s more probable that we would need to resort to a bankruptcy process. But there’s still a possibility and an opportunity for it to be done outside of a bankruptcy." He also said bondholders were offered 10% of the firm in return for their $27B, but they refused, saying the stake was too small. With bankruptcy looking increasingly likely, chances are high that GM will lose its place in the blue-chip Dow Jones industrial average. Shares -9.7% premarket (7:00 ET).
- Sony plans debt refinancing. Sony (SNE) hired four banks to help it sell ¥100B ($1B) of bonds to refinance maturing debt. The company has ¥144.9B in bonds coming due next year and is heading for its second consecutive annual loss.
- Google cuts its radio effort. Google (GOOG) is giving up on its efforts to automate radio-ad sales. The foray into radio was meant to show how Google's online-ad strength could revolutionize an old-fashioned business, but instead has underscored Google's limited progress in making major profits from the sale of off-line advertisements.
- Another guilty plea in pension scheme. In his widening pension probe, New York Attorney General Andrew Cuomo is expected to announce that another key player has pleaded guilty to securities fraud and is cooperating with the investigation. Julio Ramirez, who will likely face both criminal and civil charges, was an associate of Hank Morris, the indicted political adviser at the center of the 'pay to play' pension probe.
- Goldman's subprime settlement. Goldman Sachs (GS) reached a subprime settlement with Massachusetts, and will pay $50M in relief to Massachusetts subprime-mortgage holders and $10M to the state. The state attorney general's office said it is the first time a subprime-mortgage securitizer has settled a state investigation with a payment.
- Dreier pleads guilty. New York lawyer Marc Dreier pleaded guilty to securities fraud, conspiracy, wire fraud and money laundering in running a $400M investment fraud involving fake promissory notes. Dreier will be under house arrest until his sentencing.
Earnings: Tuesday Before Open
- Warnaco Group (WRC): Q1 EPS of $1.00 beats by $0.27. Revenue of $538M (-5.2%) vs. $481M. Sees FY '09 EPS of $2.50-$2.66 vs. $2.49 consensus, sees revenue decline of 9-12% vs. prior guidance of a 9-14% decline. (PR)
Earnings: Monday After Close
- CDC Corp. (CHINA): Q1 EPS of $0.02 beats by $0.01. Revenue of $79M (-19.5%) vs. $91.3M. Shares +4.1% AH. (PR)
- Ctrip.com (CTRP): Q1 EPS of $0.26 beats by $0.05. Revenue of $59M (+18%) vs. $53.9M. Sees Q2 revenue growth of 10-15%. Shares +14.5% AH. (PR)
- Fluor (FLR): Q1 EPS of $1.12 beats by $0.19. Revenue of $5.8B (+20.6%) in-line. Lowers full-year EPS guidance by $0.01 to $3.80-4.10. Shares +3.7% AH. (PR)
- Great Plains Energy (GXP): Q1 EPS of $0.05 beats by $0.07. Revenue of $419M (+40.9%) vs. $464M. Shares -2.8% AH. (PR)
- MBIA (MBI): Q1 EPS of $3.34 beats by $3.67. Revenue of $195M. Beat was primarily the result of a $1.6B gain, mark-to-market, on insured derivatives. Shares +19.2% premarket. (PR)
- McDermott International (MDR): Q1 EPS of $0.33 beats by $0.04. Revenue of $1.49B (+3%) vs. $1.54B. Shares +1.1% AH. (PR)
- Nuance Communications (NUAN): FQ2 EPS of $0.24 beats by $0.02. Revenue of $239M (+17.5%) vs. $244M. Shares +3.5% AH. (PR)
- TW Telecom (TWTC): Q1 EPS of $0.02 beats by $0.04. Revenue of $298M (+5.3%) vs. $295M. (PR)
- Winn-Dixie (WINN): FQ3 EPS of $0.30 beats by $0.18. Revenue of $1.73B (+0.2%) in-line. Shares +13.3% AH. (PR)
Futures are flat this morning after a mixed bag overseas.
- Asia: Nikkei -1.62% to 9,299. Hang Seng +0.38% to 17,154. Shanghai +1.49% to 2,618. BSE +4.07% to 12,158.
- Europe at midday: London -0.46%. Paris -0.5%. Frankfurt +0.3%.
- Futures at 7:00: Dow +0.1% to 8414. S&P flat at 909. Nasdaq flat. Crude +1.4% to $59.30. Gold +0.6% to $918.70. 30-year Tsy -0.09%. Euro +0.4% vs. dollar. Yen flat. Pound +1.1%.
Tuesday's Economic Calendar
- 7:45 ICSC Retail Store Sales
8:20 Fed's Lockhart speaks at the Atlanta Fed's Financial Markets Conference
8:30 International Trade
2:00 PM Treasury Budget
5:00 PM ABC Consumer Confidence Index
- Notable earnings before Tuesday's open: WRC
- Notable earnings after Tuesday's close: AMAT, BMC, PAAS, SOLR
Seeking Alpha editor Eli Hoffmann contributed to this post.
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