Dell vote looks to be nail-bitingly tight. Dell (DELL) is due to hold a shareholders vote this morning that will determine whether Michael Dell and Silver Lake will be allowed to take the company private for $24.4B. It's all looking very close, with Vanguard, State Street (STT) and BlackRock (BLK) reportedly joining Carl Icahn in coming out against the deal. Michael Dell needs over 42% of shares; so far the opposition appears to have 30% plus 15% in absentee shares, which count as no votes. It's no wonder Dell could reportedly delay the ballot.
Detroit nearing Chapter 9 filing. Detroit could reportedly file for bankruptcy within days should emergency manager Kevyn Orr fail to reach agreement with the city's bondholders, pension funds and other debtees over restructuring long-term liabilities of $20B. The plan is to offer secured creditors much of what they're owed but to provide pennies on the dollar to unsecured bondholders, unions and pension funds. Municipal-worker retirees would be especially hard hit, receiving less than 10% of what they thought was coming to them.
IBM net profit -17% but shares up after it lifts guidance. IBM's (IBM) Q2 net profit dropped 17% to $3.2B as the company took a restructuring charge of $1B, although adjusted EPS of $3.91 beat expectations. Revenue slipped 4.2% to $24.92B and missed forecasts as IBM's hardware division continued to struggle. However, software was strong, profit margins rose, and new contract signings at the company's major services, such as data analysis, grew sharply. IBM also boosted its FY EPS guidance by $0.20 to at least $16.90. Shares were +2.6% premarket.
Top Stock News
Intel falls following weak Q2 report. Intel (INTC) shares dropped 3.3% pre-market after the chip company's Q2 earnings missed expectations and it cut its FY revenue forecast amid the global slump in PC sales and the slowdown in China. Net profit dropped 29.3% to $2B, EPS came in at $0.39 and revenue slipped 5.2% to $12.81B. On a downbeat earnings call, the company said H2 visibility is limited, although it's banking on improving macro conditions and a flurry of launches of Intel-powered mobile devices to lift sales.
Nokia breaks even as sales slump. Nokia's (NOK) revenue dropped 24% to €5.7B in Q2, although the mobile-phone company broke even. Lumia Q2 volumes increased 32% on quarter to 7.4M units, "reflecting strong demand from customers for a broadened...product range." Shares were -3.5% premarket.
Google, Microsoft earnings seen growing. Google (GOOG) and Microsoft (MSFT) are expected to report increased earnings when they release their results after the bell today. Google's Q2 EPS is expected to have risen to $10.78 from $10.12 as revenue jumped 50% to $14.42B. Microsoft's Q4 EPS is seen climbing to $0.75 from $0.67 and revenue 14.8% to $20.73B.
SAP net profit +10% but cuts outlook on Asian difficulties. SAP's (SAP) Q2 net profit climbed 10% to €724M and revenue 4% to €4.06B, but the software giant's shares sank 2.3% after it lowered its outlook due to difficult conditions in Asia. Sales of software licenses fell 3% to €982M for the first decline in over three years, with Asian revenues dropping 9%. "The slowdown in China impacts many countries in Asia and you see that in our numbers," co-CEO Jim Hagemann Snabe said.
eBay shares slump after weak guidance. eBay's (EBAY) Q2 net income fell 8% to $640M in Q2, hurt by higher expenses, while adjusted EPS of $0.63 was in line with forecasts and revenues increased 14% to $3.87B. PayPal added 4.7M active registered accounts, taking the number to 132M users. However, eBay's Q3 outlook was short of Street expectations and shares fell 6.1% premarket.
Lilly to freeze wages to cope with patent cliff. Eli Lilly (LLY) is set to suspend base-pay increases in 2014 in order to offset the impact of patent expirations that are expected to cost the company 20% of its revenues in the coming year. A company spokesperson called the decision "difficult but necessary" as Lilly faces "the most significant challenges in (its) history."
Asian shares mixed, Europe rises. Japanese stocks (DXJ) rose 1.3% as the yen (FXY) fell - it was -0.6% vs the dollar at the time of writing - following Ben Bernanke's Goldilocks testimony to Congress yesterday, when he said the Fed is still set to taper but could back away if necessary. Chinese (FXI) and Hong Kong (EWH) shares dropped after a rise in Chinese house prices sparked renewed fears about an overheating property market. European shares were higher and U.S. stock futures flat ahead of Bernanke Day 2.
ArcelorMittal consigns plan for Indian steel mill to scrap heap. In another major blow to India's hopes of attracting foreign investment, ArcelorMittal (MT) has ended plans to build a 12M-ton-a-year steel factory in the country, citing delays in purchasing land, uncertain iron-ore supplies and deteriorating market conditions. ArcelorMittal is the second global steelmaker this week to announce that it's dropping a multi-billion dollar project in India, with South Korea's Posco (PKX) pulling a $5.3B 6M-ton mill.
Top Economic & Other News
Moody's slashes Chicago's rating. Moody's has cut Chicago's general-obligation debt rating by three notches to A3, with the outlook negative, citing a retirement-fund deficit of $36B and "unrelenting public safety demands" on the budget. "Absent significant growth in the city's operating revenues, escalating pension funding requirements will increasingly strain the city's operating budget, as pension outlays compete with other spending priorities, including debt service and public safety," Moody's said.
Greece's parliament OKs latest cuts. Greece's parliament has narrowly approved the latest set of Troika-mandated austerity plans, paving the way for the country to receive the next tranche of its bailout. Held against the background of a general strike and nationwide protests, the program includes wage cuts for 25,000 civil servants and putting them into a "mobility plan" prior to forced transfers or layoffs.
Alpha-Rich Stock Movers and Great Calls
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In Asia, Japan +1.3% to 14808.5. Hong Kong -0.1% to 21345. China -1.1% to 2023. India +1% to 20151.
In Europe, at midday, London +0.4%. Paris +0.3%. Frankfurt flat.
Futures at 6:20: Dow flat. S&P +0.1%. Nasdaq -0.1%. Crude -0.2% to $106.31. Gold +0.2% to $1281.20.
Today's economic calendar:
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 Bernanke delivers semi-annual monetary policy testimony
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings before today's open: AN, APH, BAX, BBT, BLK, BPOP, BX, CHKP, CY , CYS, DGX, DHR, DOV, ERIC, FCS,FITB, GPC, HBAN, HLSS, JCI, KEY, MS, NOK , NUE, OMC, ORB, PM, PPG, SAP, SHW, SNA, SON, SVU, SWY, TSM, TZOO, UNH , UNP, VZ
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