Shell names head of refining ops as CEO. Shell (RDS.A) has unexpectedly appointed Ben van Beurden, the head of its Downstream business, as CEO to replace Peter Voser, who had already announced he is leaving the company. Van Beurden will take over in January next year. He joined Shell in 1983 and has held a number of technical and commercial positions across the company, although he's not well known. "The question is, who is this guy?" says RBC analyst Peter Hutton. Shares were +0.8% premarket.
Microsoft set to unveil reorganization on Thursday. Microsoft (MSFT) is reportedly poised to announce its restructuring on Thursday. While it moves a lot of people around, it (intentionally?) doesn't throw up an obvious heir apparent to Steve Ballmer. The CEO is toying with changing how Microsoft reports its earnings so that it would shield integral but money losing operations such as Bing from complaints; however, it could also make the P&L less transparent.
Barnes & Noble CEO William Lynch pays for Nook failure. Barnes & Noble (BKS) shares slumped 4.9% in post-market trading after the resignation of CEO William Lynch, who is leaving following the failure of Nook to compete in the tablet market. Maxim Group analyst John Tinker says the next step is for Chairman Leonard Riggio to decide whether to follow through on a plan to bid for B&N's retail division. "From that they'll then decide what to do with the Nook," says Tinker.
Top Stock News
Alcoa starts earnings season with an EPS beat. Alcoa's (AA) adjusted earnings topped Wall Street forecasts in Q2, but the aluminum company's net loss widened to $119M from $2M a year earlier as it took charges of $195M for restructuring and legal expenses. Excluding those items, EPS came in at $0.07, while revenue slipped 2% to an expected $5.85B. Alcoa reiterated its prediction that global demand for aluminum will grow 7% this year, led by an increase of 10% in the aerospace sector. Shares were +1.4% premarket.
Hulu receives multiple bids. Hulu has reportedly received acquisition offers from DirecTV (DTV) and a consortium comprising Guggenheim Digital Media and private-equity firm KKR (KKR), as well as from a group made up of AT&T (T) and Chernin. Time Warner Cable (TWC) offered to purchase a stake and become an investor alongside Hulu's owners, 21st Century Fox (FOXA), Disney (DIS) and Comcast (CMCSA). There's little word on bid amounts, although DirecTV has offered over $1B in the past.
Mylan's $1.6B Indian acquisition held up. India's Foreign Investment Promotion Board has reportedly delayed the approval of Mylan's (MYL) $1.6B acquisition of Agila Specialties, which provides injectable cancer medicines, from Bangalore-based Strides Arcolab, due to concerns that Mylan will ship Agila's treatments to the U.S. and not leave enough in India at affordable prices. Barclays analyst Douglas Tsao reckons the deal will go through but might be delayed, with Mylan having to grant concessions.
Intuitive Surgical warns on Q2, shares skid. Intuitive Surgical's (ISRG) shares plummeted 11.3% in the post-market session after the company warned of a big Q2 miss, with sales expected to rise 7% to $575M but to undershoot the $630M projected by analysts. The medical-equipment company also forecast net income of $160M vs $155M last year. Intuitive cited reduced hospital admissions and insurance firms that are "encouraging conservative management and treatment in outpatient settings" for dragging on its earnings.
Wynn to escape censure over $135M Macau donation. The SEC doesn't intend to recommend enforcement action against Wynn Resorts (WYNN) following an informal investigation into the casino's Macau operations. The probe included a review of a $135M donation Wynn made to the University of Macau Development Foundation. Earlier this year, co-founder Kazuo Okada resigned from the board, alleging CEO Steve Wynn had targeted him unfairly for speaking out against what Okada said were the company's corrupt practices in the region.
Top Economic & Other News
Chinese inflation edges up. China's annual inflation rose to 2.7% in June from 2.1% in May, coming in slightly above estimates of 2.5%. However, the deflation in the PPI at China's factories continued, although it slowed to 2.7% from 2.9%. "It is worrying to see the Chinese producer price index remain in deflationary territory," says BNP's Chi Lo. "It is the internal weakness in the Chinese economy that has been producing this deflationary pressure on the wholesale price level."
White House cuts GDP, deficit forecasts. The Obama administration has trimmed its economic outlook, predicting that GDP will grow 2% this year vs a prior forecast of 2.3%, and 3.1% in 2014 vs 3.2%. The White House's Office of Management & Budget cited "serious headwinds" for the reduced estimate, such as sequestration, European austerity and China's slowdown. The government also cut its deficit prediction to what would be the lowest level in five years, $759B, or 4.7% of GDP. The forecast in April was $973B.
Alpha-Rich Stock Movers and Great Calls
1) First Marblehead (FMD) closed +16% after Jonathan Verenger yesterday highlighted significant upside ahead as the company reenters the securitization market. Read article »
2) AdCare Health Systems (ADK) is -26% since May 14, when portfolio manager Benjamin Mackovak laid out the short case. Read article »
Alpha-Rich Stocks To Watch
1) HudBay Minerals (HBM). HBM has been overly punished by mining sector fears. With a revised debt covenant, a new cash inflow, and increasing production, the shares have a 65% upside. Read article »
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In Asia, Japan +2.6% to 14472.9. Hong Kong +0.5% to 20683. China +0.4% to 1965. India +0.6%
In Europe, at midday, London +0.9%. Paris +0.6%. Frankfurt +1.1%.
Futures at 6:10: Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude -0.2% to $102.98. Gold +1.25% to $1250.30.
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