JPMorgan reaches tentative $13B settlement with authorities. JPMorgan (JPM) has reportedly agreed to pay $13B to settle various investigations into its business practices, including a $4B penalty to resolve claims by the Federal Housing Finance Agency that the bank sold questionable mortgage loans to Fannie Mae (FNMA) and Freddie Mac (FMCC). JPMorgan will also pay $4B in consumer relief and $5B to settle federal and other probes. However, the deal won't resolve a criminal investigation.
AT&T to receive $4.85B in cell-tower deal. Cashing in on consolidation among cell-phone tower operators, AT&T (T) has agreed to lease and sell such infrastructure to Crown Castle International (CCI) for $4.85B. The latter will have the rights to purchase 600 towers and lease 9,100 others for an average 28 years, after which the company will have the option to buy the infrastructure for $4.2B. AT&T will sublease space on the towers for at least 10 years and has an option to renew the arrangement up to a total of 50 years.
SAP shares climb as operating profit rises 5%. SAP's (SAP) Q3 adjusted operating profit increased 5% to €1.3B, slightly missing consensus of €1.32B, while revenue edged up 2% to €4.05B. Sales from cloud subscriptions more than doubled to €197M and revenue from SAP's Hana database software jumped 79% to €149M. SAP reiterated its July forecast for double-digit percentage growth in revenue for software and software-related services, excluding forex fluctuations. However, the company expects currency swings to hurt its overall earnings. Still, shares jumped 4.4% in Frankfurt.
Top Stock News
FHFA demands $6B from BofA over mortgage bonds. The Federal Housing Finance Agency reportedly wants Bank of America (BAC) to pay at least $6B to settle accusations that it sold faulty mortgage bonds to Fannie Mae (FNMA) and Freddie Mac (FMCC). The amount is well above the $4B that JPMorgan (JPM) has apparently agreed to pay to settle similar claims, as well as the $885M fine that UBS (UBS) accepted.
Philips net profit more than doubles. Philips' (PHG) shares leapt 6% in premarket trading after it said that Q3 net profit jumped over 140% to €281M, slaying forecasts of €209M, with growing health-care orders in China offsetting slowing demand in Europe. Revenues, though, dropped to €5.62B from €5.82B, missing consensus of €5.77B. "We remain committed to reaching our financial targets this year," said CEO Frans van Houten. "However, ongoing headwinds in the global economy are expected to continue to affect sales growth."
U.K., EDF sign $26B agreement on nuclear power plant. The U.K. government has signed an agreement for Electricite de France (ECIFF) to build the country's first nuclear power station in almost three decades in a project that will cost £16B ($25.9B) and create 25,000 jobs. The construction of the plant, which will be located in south west England, is a major test of whether nuclear power has a future in Europe.
Chinese media attacks Starbucks over prices. Starbucks (SBUX) has become the latest multinational consumer giant to come under fire in China over its business practices, with the official China Central Television (CCTV) broadcaster accusing the company of charging more in the country than elsewhere. CCTV highlighted how a medium-size latte costs 27 yuan ($4.43) at Starbucks in Beijing, a third more than in Chicago. Similar scrutiny of Apple (AAPL) prompted CEO Tim Cook to apologize.
FTC poised to OK Office Depot merger with Office Max. The Federal Trade Commission is reportedly set to give antitrust approval to the merger of Office Depot (ODP) and OfficeMax (OMX) without requiring the retailers to make divestitures. The FTC has concluded that the tie-up won't reduce competition substantially, mainly because of the size of e-commerce in the sector. The companies hope to appoint a CEO to run the merged entity once the FTC has given its authorization.
Nokia's Lumia sales rise to at least 8M in Q3. Sales of Nokia's (NOK) Lumia phones reportedly grew to at least 8M devices in Q3 from 7.4M in Q2, with the figure more than double that of Q3 2012. The speculation comes ahead of an event in Abu Dhabi tomorrow, where Nokia is set to launch six new products, including the company's first tablet computer and phablets.
Netflix's earnings seen growing strongly. Netflix's (NFLX) Q3 results are due out after the bell, with analysts projecting that EPS jumped to $0.49 from $0.13 while revenue increased 22% to $1.1B. Netflix is expected to disclose 30M paying customers in the U.S., which would put it above HBO. Netflix's monthly price "makes it very difficult for others to be in the business," says analyst Tony Wible.
Canada wary over security in BlackBerry sale. Canada would scrutinize the implications for national security if a foreign company tried to buy BlackBerry (BBRY), Prime Minister Stephen Harper has said. Harper's comments follow reports that Lenovo (LNVGF) is interested in acquiring BlackBerry, although the speculation is divided over whether the Chinese firm would try to buy all or parts of the mobile device maker.
Top Economic & Other News
Export growth slows in Japan. Japanese exports increased 11.5% on year in September, slowing from 14.6% in August and missing consensus of 15.6%. Import growth rose slightly to 16.5% from 16% but also missed expectations of 20%. The big exports miss seems to suggest that "the positive effect of the weak yen may have run its course," RBS's Junko Nishioka says.
China on course to meet annual goals - State Council. China's economy is "stable and trending for the better," and has the ability to meet the government's targets this year, the country's State Council said yesterday. However, the council warned that the foundations of the recovery are "not yet firm," and that the government needs to be "unrelenting" in applying its economic policies and reform. The emphasis on reform helped push the Shanghai Composite up 1.6%.
Italian court bans Berlusconi from holding office for two years. A court in Milan has banned former Prime Silvio Berlusconi from holding public office for two years following his conviction for tax fraud in August. The country's Senate has to approve the decision, but if it does so, Berlusconi would be expelled for six years. The affair has caused much political instability over the past few months and turmoil in the markets, although the FTSE MIB was only 0.4% lower at the time of writing.
Alpha-Rich Stock Movers and Great Calls
1) On Thursday, EnhydrisPECorp said a pending review of Vanda's (VNDA) key drug offered a short opportunity whether the drug wins approval or not. The stock is -20.3% since. Read article »
2) On August 27, Mike Arnold uncovered Steinhoff International Holdings' (SNHFY) 36% discount to net asset value despite a robust, well-diversified operating model and suggested going long. The stock is +38.4% to date. Read article »
Alpha-Rich Stocks To Watch
1) Burberry (BURBY) is trading at a discount due to a CEO change, but it's the brand that counts. Strong growth and an orderly transition could lead to 20% upside. Read article »
2) Oracle's (ORCL) competitive position is much stronger than perceived, argues value investor Eliot Murray. Priced for the worst, the company's recurring revenue and cash hoard should lead to positive returns. Read article »
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In Asia, Japan +0.9% to 14694. Hong Kong +0.4% to 23438. China +1.6% to 2229. India +0.05% to 20894.
In Europe, at midday, London +0.1%. Paris -0.3%. Frankfurt -0.1%.
Futures at 6:20: Dow +0.1%. S&P +0.05%. Nasdaq +0.2%. Crude -1% to $99.78. Gold +0.1% to $1316.30.
Ten-year Treasury Yield flat at 2.59%.
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