Cisco dives on guidance; to slash 4,000 jobs. Cisco's (CSCO) shares slumped 8.5% premarket after the company provided FQ1 guidance that compared unfavorably with analyst expectations and said it is axing 4,000 jobs as it looks to cope with a "challenging" global environment. Cisco forecast FQ1 revenue growth of 3-5% and EPS of $0.50-0.51 vs consensus of 4.9% and $0.51 respectively. Still, FQ4 earnings topped Street estimates, with EPS coming in at $0.52 and sales rising 6% to $12.42B, while profit increased to $2.27B from $1.92B last year.
Japan plays down prospects of corporate tax cut. Reducing Japan's corporate tax wouldn't have an immediate impact on the economy, Finance Minister Taro Aso has said, as only around 30% of firms pay such taxes. Rather, the government should consider tax breaks to promote capex. Economics Minister Akira Amari echoed the remarks. The government has reportedly been considering the cut to offset the effect of a planned rise in sales tax. The Nikkei fell 2.1% following the comments, while the USD-JPY was -0.2% at the time of writing.
Nelson Peltz buys into Du Pont. Activist investor Nelson Peltz has reportedly taken a 2.2% stake worth $1.3B in DuPont (DD). Peltz's Trian Fund Management owns 21M shares, well above the publicly disclosed figure of 5.8M as of June 30. Trian recently met with Du Pont CEO Ellen Kullman to discuss the hedge fund's proposals about how to boost growth. This follows flat sales in H1 and an increase of just 3.6% in 2012.
Top Stock News
China Mobile Chairman upbeat about possible Apple deal. China Mobile's (CHL) negotiations with Apple (AAPL) over a deal for the Chinese company to sell iPhones and iPads have been progressing well and both companies are optimistic about coming to an agreement, China Mobile Chairman Xi Guohua has said. However, the sides still need to resolve "some commercial and technology issues." The deal is important for Apple, especially after sales in Greater China slumped 43% in FQ3.
AMR-US Airways merger set to go before judge. AMR's (AAMRQ.PK) program to exit bankruptcy protection by merging with US Airways (LCC) is due for a court hearing today, just two days after the Department of Justice and some states sued to block the deal. The hearing was supposed to have been the final episode in AMR's bankruptcy, with Judge Sean Lane having already given preliminary approval. Lane could still authorize it, pending a settlement with the DOJ, or he could postpone the proceedings.
Amgen, Onyx $9.5B acquisition talks hit a bump. Discussions over Amgen's (AMGN) proposed $9.5B purchase of Onyx Pharmaceuticals (ONXX) have stalled due to the latter's unwillingness to turn over data from an ongoing study of its blood-cancer treatment Kyprolis. Obtaining the results before the trial is completed could slow the approval process, which is why Onyx is wary. Still, the company is willing to accept Amgen's offer of $130 a share. Onyx was -0.9% at $123.10 premarket.
Exxon to sell Iraq stake to PetroChina. ExxonMobil (XOM) has given Iraq's government formal notice that it wants to sell part of its 60% stake in the West Qurna-1 oilfield to PetroChina (PTR). The request, subject to a review by Iraq's cabinet, comes amid government anger over Exxon's separate exploration deals with semi-autonomous Kurdistan in northern Iraq. Exxon and partner Shell (RDS.A, RDS.B) have made progress in developing the $50B project - West Qurna-1 now produces 510,000 bpd and could hit 600,000 bpd by the end of the year.
JPMorgan braces for fines from U.S., U.K. over London Whale. JPMorgan (JPM) reportedly expects fines from multiple authorities for its "London Whaling" trading fiasco, with the SEC, the Department of Justice, the Commodity Futures Trading Commission and the U.K.'s Financial Conduct Authority seen imposing penalties. The speculation comes after the DOJ yesterday filed criminal charges over the losses against two former JPMorgan traders, although not the man himself, Bruno Iksil, who is cooperating with prosecutors. Iksil's supervisors are also expected to escape charges.
Icahn ups stake in Transocean to nearly 6%. Carl Icahn has increased his stake in offshore driller Transocean (RIG) to almost 6% after he bought around 1.3M shares in Q2, taking his total to 21.5M. Based on yesterday's closing price of $46.98, the holding is worth just over $1B. Icahn has been agitating to get Transocean to pay a $4-a-share dividend, but shareholders have rebuffed the proposal.
Top Economic & Other News
Monthly inflation seen slowing. July CPI data is due out this morning, with economists expecting that inflation slowed to 0.2% on month from 0.5% in June. Core CPI is seen holding steady at 0.2%. An especially low reading could give the Fed further pause for thought as it considers when to start winding down its bond-buying.
Bullard makes case to delay QE taper. The St. Louis Fed's Jim Bullard didn't disappoint yesterday, arguing that the FOMC needs more data before deciding whether to commence the QE taper. Unemployment is down and payroll growth is generally strong, but GDP and other measures remain weak, while inflation is tame. Bullard suggested that the start of the taper could center around the FOMC's September meeting, as a Bernanke press conference will follow. The uncertainty about when tapering will begin hit markets around the world today.
China mulls investigations into more sectors. China's suddenly vigorous enthusiasm for investigations into corporate behavior could strengthen further, with the National Development & Reform Commission (NDRC) reported to be considering probes into the petroleum, telecommunications and banking sectors. The idea is to scrutinize industries that affect the lives of ordinary Chinese. The healthcare sector is already under well-publicized scrutiny, while the NDRC has also asked for information about the prices of foreign cars.
Alpha-Rich Stock Movers and Great Calls
1) On Monday, Ashraf Eassa argued that Imagination Tech (OTCPK:IGNMF) was ready for a rebound as its licensing model powered it to stable growth. The stock is +15.9% since. Read article »
2) On April 8, Whopper Investments made the case for Cache (CACH) as a deep value play. Following a strong earnings report this week, shares are +58% since the article was published. Read article »
Alpha-Rich Stocks To Watch
1) Greenbrier Companies (GBX) should benefit from the secular tailwind that is America's energy boom, keeping its growth story on track. Read article »
2) Receptos' (RCPT) MS treatment has better tolerability and the potential for clinically meaningful activity for ulcerative colitis. Biotech expert Stephen Simpson sees 50% upside to fair value. Read article »
Alpha-Rich articles are the best long and short ideas on Seeking Alpha. SA Pro subscribers receive early access to these Alpha-Rich articles, which often move markets. For more information about SA Pro and becoming a subscriber, click here.
In Asia, Japan -2.1% to 13753. Hong Kong flat at 22539. China -0.9% to 2082. India closed.
In Europe, at midday, London -0.5%. Paris -0.3%. Frankfurt -0.5%.
Futures at 6:20: Dow -0.2%. S&P -0.2%. Nasdaq -0.4%. Crude +0.8% to $107.75. Gold +0.4% to $1339.20.
Today's economic calendar:
8:15 James Bullard: Economic and Monetary Policy
8:30 Consumer Price Index
8:30 Empire State Mfg Survey
8:30 Initial Jobless Claims
9:00 Treasury International Capital
9:15 Industrial Production
9:45 Bloomberg Consumer Comfort Index
10:00 NAHB Housing Market Index
10:00 E-Commerce Retail Sales
10:00 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
See full real-time earnings coverage »
Wall Street Breakfast is sent out by email for free -- Get it now »