AIG to resume dividend payments; net profit rises. AIG (AIG) has declared its first dividend since the depths of the financial crisis and its $182B government bailout in a move that indicates the strength of the insurer's turnaround. AIG will pay $0.10 a share, while its board has also authorized a $1B stock buyback. The dividend announcement came after AIG's net profit rose to $2.73B in Q2 from $2.33B a year earlier, while EPS of $1.12 beat by $0.26. Shares were +6% pre-market.
LinkedIn shares spike as growth continues to speed ahead. LinkedIn (LNKD) shares jumped 7.3% pre-market after its Q2 earnings topped consensus and the company added 20M members during the quarter to take the total to 238M. Net profit rose 32% on year to $3.7M, while adjusted profit more than doubled to $44.5M. EPS came in at $0.38 and revenue soared 59% to $363.7M, boosted by strong growth in Talent Solutions (jobs) sales. LinkedIn's outlook was below forecasts, but the company tends to give conservative guidance.
Toyota FQ1 net profit surges to $5.6B. Toyota's (TM) FQ1 net profit almost doubled to ¥562.19B ($5.6B) and topped consensus of ¥441.5B as revenue climbed 13.7% to ¥6.255T. Toyota benefited from the weaker yen, cost cuts, and an improvement in its product mix and pricing. However, the car giant's North American operations took a loss of ¥20.9B on interest rate swaps. Still, Toyota raised its fiscal year outlook and it now expects net profit of Y1.48T vs prior guidance of ¥1.37T.
Top Stock News
RBS names insider as CEO; swings to profit. As expected, RBS (RBS) has appointed Ross McEwan, the head of its retail bank, as CEO to replace the outgoing Stephen Hester. In H1, the bank swung to a net profit of £535M from a loss of £2.03B a year earlier despite revenue dropping to £10.61B from £11.69B. Shares sank 5.3% pre-market, possibly on profit-taking and/or because of what was described as a "lackluster" report.
Dell investors set to vote on buyout - or not. Dell (DELL) shareholders are due to convene yet again today to decide whether to accept Michael Dell's and Silver Lake's buyout proposal. The offer to be voted on is the $13.65-a-share bid rather than the higher $13.75 proposal, which is contingent on abstentions not being counted as "no." Dell's special committee has rejected that condition but has offered to change the date of record, which could benefit Michael Dell.
AIG remains in talks to sell aircraft leasing unit. AIG (AIG) is reportedly still in negotiations to sell its aircraft leasing unit, International Lease Finance Corp (ILFC), to a Chinese consortium for $4.8B even though the sides have missed the deadline of July 31 to close the deal. With the parties now being able to scrap the transaction, AIG is keeping its options open, including listing ILFC or selling it to a different buyer.
BofA faces government lawsuits over mortgage bonds. Bank of America (BAC) is facing a number of civil lawsuits from regulators over mortgage debt. The Department of Justice intends to move against BofA over one or two "jumbo" bonds that comprised loans which were too big to be guaranteed by Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC). The SEC and New York Attorney General's office are also sizing up lawsuits against BofA.
Pentagon plays down speculation it could cancel F-35. The Defense Department has stressed there are no plans to scrap Lockheed Martin's (LMT) F-35 program or a project for a new long-range stealth bomber. Leaked documents had shown that canceling the programs were among the options under review as the Pentagon copes with huge budget cuts. On Wednesday, Defense Secretary Chuck Hagel had said that the cost reductions would require tradeoffs between maintaining the size of the military and high-end weapons programs.
GSK suffers patent blow in India. India's Intellectual Property Appellate Board (IPAB) has voided a GlaxoSmithKline (GSK) patent for the company's Tykerb breast cancer drug, although IPAB has affirmed the intellectual property on the treatment's active pharmaceutical ingredient, lapatinib. IPAB's decision follows a supreme court ruling in April that disallowed patents for incremental innovation. The verdict is the latest blow to Big Pharma in India, where patents granted to Novartis (NVS), Pfizer (PFE) and Roche (OTCQX:RHHBY) have been invalidated in the last year or so.
Top Economic & Other News
Job growth seen slowing. U.S. July unemployment data is due out this morning, with economists estimating that nonfarm payrolls rose by 185,000 vs 195,000 in June and that the jobless rate inched down to a four-year low of 7.5% from 7.6%. The data will come after figures yesterday showed that weekly jobless claims fell to a 5 1/2 year low. As usual, the numbers will be scrutinized for what they could mean for the Fed's QE program.
"Fabulous Fab" found liable in GS bond fraud. Former Goldman Sachs (GS) trader Fabrice Toure has been found liable on six out of seven counts of civil fraud for his role in a sub-prime mortgage bond that cost investors $1B. "Fabulous Fab" sold the security in 2007 without disclosing that hedge fund Paulson & Co, which helped construct the deal, also bet it would fail. While the verdict is a major victory for the SEC, some wonder why other bigger fish have been left untouched.
Alpha-Rich Stock Movers and Great Calls
1) On Tuesday, Wall Street Advisors suggested that investors go short on Uranium Resources (URRE) and long on Energy Fuels (EFRFF.PK), as their relative valuations had gone drastically out of whack. Uranium Resources is -16.7% and Energy Fuels is +11.1% to date. Read article »
2) On June 3, Ashraf Eassa argued that Marvell's (MRVL) strong operating position should outweigh its patent case concerns. The stock is +20% since. Read article »
Alpha-Rich Stocks To Watch
1) Dundee Corporation (OTCPK:DDEJF) recently spun off a key unit that could help the company unlock value, as it trades at a 30% discount to its fair value. Read article »
2) CommVault's (CVLT) stock keeps going higher even as its growth appears to be slowing. A careful look at the conference call suggests the shares should be trading in the 60s vs yesterday's close of $87.72. Read article »
In Asia, Japan +3.3% to 14466. Hong Kong +0.5% to 22191. China flat at 2029. India -0.8% to 19,164.
In Europe, at midday, London -0.1%. Paris +0.3%. Frankfurt +0.1%.
Futures at 6:15: Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude flat at $107.87. Gold -1.95% to $1285.60.
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