Facebook shares fly after earnings beat. Facebook's (NASDAQ:FB) shares stormed 17% higher pre-market after the company's Q2 earnings trounced forecasts on the back of unexpectedly strong mobile ads. Adjusted profit jumped 65% to $488M, EPS of $0.19 beat by $0.05 and revenue soared 53% to $1.81B. Income from mobile advertising grew from almost nothing last year to 41% of Facebook's total ad sales of $1.6B. "Soon we'll have more revenue on mobile than desktop," Mark Zuckerberg predicted.
China boosts railway budget to keep growth on track. China has reportedly increased its 2010-2015 budget for railway spending by 500B yuan (81.48B) to 3.3T yuan as the government looks to accelerate construction as part of a bid to prevent GDP growth from slowing too much. In addition, the State Council has approved tax breaks for small firms and a cut in export fees. "It's a small stimulus" that will have a limited impact on demand, says Bank of America's Lu Ting.
Top Stock News
Visa swings back to profit. Visa (NYSE:V) swung to a profit of $1.23B in FQ3 from a loss of $1.84B a year earlier, when the credit-card company took a $4.1B litigation provision. EPS of $1.88 beat by $0.07, while revenue rose 16% and also topped forecasts. Visa has been benefiting from the improving economy, with payment volumes rising 13% to $1.1T and transaction volume 14% to $15B. Shares rose 2% pre-market.
Unilever's profit rises despite tough conditions. Unilever's (NYSE:UL) H2 net profit rose 13% to €2.7B and sales edged up 0.4% to €25.5B, helped by product innovations such as compressed deodorants and a spray version of its Vaseline brand, and despite a tougher economy and increasing competition. "Growth is slowing in emerging markets, as macro-economic headwinds influence consumer behavior," Unilever said. "Developed markets remain sluggish with little sign of any recovery in North America or Europe." Shares were -2.2% pre-market.
Orange net profit plunges 38%, to pay massive tax bill. Orange's (NYSE:ORAN) H1 net profit slumped 38% to €1.07B and revenue dropped 9.9% to €20.60B as the telecom carrier suffered from a severe price war in France. Orange, formerly known as France Telecom, has been ordered to pay French tax authorities €1.95B at the end of this month and a further €190M in September in a case related to the restructuring of a holding company in 2005. Shares were -4.5% at midday in Paris.
Amazon, Starbucks earnings seen rising. Amazon (NASDAQ:AMZN) and Starbucks (NASDAQ:SBUX) are among the big beasts in today's thick jungle of earnings reports. Analysts estimate that Amazon's Q2 EPS rose to $0.05 from $0.01 while revenue jumped 22.6% to $15.73B; Starbucks' FQ3 EPS is seen rising to $0.53 from $0.43 and and its revenue is forecast to have climbed 12.5% to $3.72B.
GSK to pay $229M to settle Avandia claims. GlaxoSmithKline (NYSE:GSK), enmeshed in bribery allegations in China, has got rid of a headache in the U.S. by agreeing to pay $229M to settle lawsuits with eight states that accused the company of the deceptive marketing of its diabetes treatment Avandia. The deal adds to a $90M settlement with 37 other states and the District of Columbia over Avandia, not to mention a $3B agreement with Federal authorities over the drug and other pharmaceuticals.
Top Economic & Other News
Either Yellen or Summers will lead Fed - report. The race to replace Ben Bernanke as Fed chief looks increasingly to be down to Janet Yellen and Larry Summers, the WSJ reports. The speculation appears to mark a big catch-up for Summers, as Yellen had been thought of as the lone front-runner for months. Summers has been a member of the Obama administration, so provides a comfort level, while Yellen is a key Fed insider.
Spanish jobless rate drops for first time in two years. Spanish unemployment surprisingly fell for the first time in two years in Q2, dropping to 26.26% from 27.16% previously and vs consensus for a rise to 27.3%. A strong tourist season helped improve employment, although there were still 5.98M people without a job, half of whom haven't worked for over a year. Notwithstanding, Spanish shares (NYSEARCA:EWP) were +0.3% at midday in Europe, bucking the global trend.
U.K. growth speeds up. As expected, U.K. GDP growth accelerated to a quarterly 0.6% in Q2 from 0.3% in Q1 as all the main sectors of the economy expanded for the first time in almost three years. Still, critics say living standards remain stagnant, while GDP is 3.3% below its peak. The pound (NYSEARCA:GBB) fell following the data but was +0.1% at $1.5332 at the time of writing.
German business confidence improves slightly. Germany's closely watched Ifo index of business confidence has risen for a third consecutive month in July, edging up to 106.2 from 105.9 in June and topping consensus of 106.1. The current assessment reading also rose, although the six-month outlook slipped a bit.
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8:30 Durable Goods
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $29B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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Notable earnings after today's close: ACGL, AIR, AMZN, AWAY, BAS, BCOV, BLDR, BMRN , CB, CBG, CERN, CINF, CLF, CPSI,CPT, CRUS, CTCT, DECK, DLB, DOLE, DTLK, ECHO , ELY, EPR, EW, EXPE, FII, FLEX,FR, FSL, GILD, GPN, HLS, HTCH, IDTI, INAP , INFA, KBR, KEG, KLAC, LOGM, LSCC,MCK, MITK, MOH, MSCC, MXIM, N, NBIX, NEM , NR, NTGR, OLN, OUTR, PFG, QLGC,QLIK, RGC, RJET, RSG, SBUX, SPF, SWI, TCO , TGI, THRX, TPX, TSRO, TSYS, UHS,VRSN, WOOF, ZNGA
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