- Bernanke gets second term, new challenge. Bernanke won a second term as Fed Chairman in a 70-30 Senate vote, but his fight isn't over. With another four years as chief, Bernanke must now defend the central bank itself as lawmakers consider opening up the Fed to congressional audits and stripping it of bank-supervision powers.
- Even more Toyota recalls. Toyota (TM) is busy shipping replacement parts to correct the faulty gas pedals in millions of recalled cars, but declined to say whether the parts are being shipped to factories to get production going again or to dealers to fix cars in their showrooms and on the road. Toyota also expanded its recall again, this time to an unspecified number of cars in Europe and around 75,000 cars in China. Meanwhile, lawmakers plan to hold a hearing next month to investigate "how quickly and effectively" Toyota responded to safety complaints.
- BNY Mellon angling for PNC unit. Bank of New York Mellon (BK) is said to be in advanced talks to buy a PNC Financial Services (PNC) unit for around $2.5B. PNC has reportedly been shopping its Global Investment Servicing unit for several months, and a deal would help the bank pay back its $7.6B in bailout funds.
- JPMorgan goes global. JPMorgan Chase (JPM) is going up against Citigroup (C) and HSBC (HBC) with plans to launch a global business that will sell loans and commercial banking services to multinational companies. JPMorgan hasn't yet announced the unit, but sources say it will be hiring around 300 bankers for the unit and will initially focus on rapidly growing economies like China, India and Brazil.
- RBS unit sued over development project. A U.S. real estate developer is suing the Citizens Bank unit of Royal Bank of Scotland (RBS) for $8B. The developer claims that Citizens Bank failed to follow through on its financial commitments, putting a $700M redevelopment project at risk, and that it used an "artifice" of sham defaults to try to collect $180M of loans to alleviate RBS' liquidity crisis.
- Obama's tax credit for jobs. Obama plans to announce a $33B tax credit today that aims to encourage small businesses to hire workers and raise wages. He previewed the idea in his State of the Union address, but is now ready to unveil details which include a $5,000 credit for every new worker hired in 2010 and a $500,000 cap per firm.
- EU stands by Greece. The European Union signaled it would provide last-resort backing should Greece need it, as anxious investors drove Greek bond yields up to a record 7.25%. Sources said eurozone governments and the European Commission would be involved in a back-stop but the IMF would not, while France and Germany played down the suggestion that an emergency rescue plan has already been formulated. Meanwhile, Spain is announcing its deficit-reduction plan today in an effort to avoid Greece's fate.
- AstraZeneca does a slash and burn on jobs. AstraZeneca (AZN) plans to slash 10,400 jobs over the next four years, in addition to the 12,600 jobs it already cut between 2007 and 2009. The pharmaceutical giant is initiating the cuts ahead of an expected drop in profits this year, and a continued struggle to improve revenue going forward. The cuts will save the firm $1.9B annually, against a restructuring cost of $2B.
- Samsung overtakes H-P. Samsung Electronics reported Q4 earnings this morning, swinging to an operating profit of 2.4T won ($2.1B) after sales climbed 37%, but still falling short of expectations. Sales on a consolidated basis reached a record 136.29T won ($118B), putting Samsung above H-P (HPQ) which reported FY '09 sales of $114.6B.
- Hynix snubbed by investors. Hynix Semiconductor, the world's No. 2 memory chipmaker, has failed to draw any bids for a controlling stake in the company by today's deadline. Creditors-turned-shareholders had put a 28% stake up for sale, and this is the second failed attempt to offload the stake.
- Movie Gallery headed to Ch. 11. Movie Gallery Inc., the company that owns the Hollywood Video chain, could file for bankruptcy as soon as next week, marking the movie-rental chain's second trip to bankruptcy court in just over two years. Sources say Movie Gallery, which is being hurt by changes in how consumers watch movies and television-shows, could close around two-thirds of its outlets, or 1,800 stores. The move could be a potential boon for rivals Netflix (NFLX) and Coinstar (CSTR), but may bode ill for Blockbuster (BBI).
- Windows 7 lifts MSFT. Microsoft (MSFT) posted better-than-expected quarterly results (details below), reporting a 14% rise in sales almost entirely because of the launch of its Windows 7 in October. The product did especially well in markets like Asia and Latin America, but Microsoft executives warned they're still not seeing a strong rebound in business spending. Netbooks, once seen as a threat to Microsoft's bottom line, have stabilized at around 11% of the PC market and the vast majority of them are still sold with Windows on them.
- Jobless claims fall. Initial jobless claims declined 8K to 470K vs. 450K consensus. Continuing claims declined 57K to 4,602,000.
- Chicago Fed Index still weak (.pdf). The Chicago Fed National Activity Index registered -0.61 in December vs. -0.39 in November. The three-month moving average was -0.61 vs. -0.68 last month. Most of the weakness continued to stem from consumption and housing. The level of activity remains in a range historically consistent with the early stages of a recovery following a recession.
- Signs of recovery from KC Fed. The Kansas City Fed Manufacturing Index registered 13 in January, vs. a revised 7 in December. The six-month expectations index came in at 35 vs. a previous 17. Growth slowed, though, at durable goods producers, especially computers and electronics. Production is nearly back to year-ago levels. Price indexes have moved up, but pass-through to finished goods prices is limited.
Earnings: Friday Before Open
- Arch Coal (ACI): Q4 EPS of $0.11 misses by $0.06. Revenue of $725M (-0.6%) vs. $728M. Shares -6% premarket. (PR)
- Autoliv (ALV): Q4 EPS of $1.39 beats by $0.59. Revenue of $1.67B (+40%) vs. $1.58B. Shares +5% premarket. (PR)
- Dover (DOV): Q4 EPS of $0.55 beats by $0.06. Revenue of $1.5B (-13%) vs. $1.45B. (PR)
- Fortune Brands (FO): Q4 EPS of $0.66 beats by $0.14. Revenue of $1.79B (+0.6%) vs. $1.67B. Shares -0.4% premarket. (PR)
- Honeywell (HON): Q4 EPS of $0.91 beats by $0.01. Revenue of $8.07B (-7%) vs. $8.14B. (PR)
- Mattel (MAT): Q4 EPS of $0.81 beats by $0.13. Revenue of $1.95B (+0.8%) vs. $1.97B. (PR)
- Newell Rubbermaid (NWL): Q4 EPS of $0.27 misses by $0.01. Revenue of $1.4B (-2%) in-line. (PR)
- PACCAR (PCAR): Q4 EPS of $0.10 beats by $0.03. Revenue of $1.9B (-24%) vs. $2B. Shares +0.3% premarket. (PR)
Earnings: Thursday After Close
- Amazon.com (AMZN): Q4 EPS of $0.85 beats by $0.13. Revenue of $9.5B (+42%) vs. $9B. "Millions of people now own Kindles ... And Kindle owners read, a lot. When we have both editions, we sell six Kindle books for every 10 physical books. This is year-to-date and includes only paid books." Sees Q1 revenue of $6.45B-7B vs. $6.36B. Announces $2B stock repurchase program. Shares +2.5% AH. (PR, earnings call transcript)
- Applied Micro Circuits (AMCC): FQ3 EPS of $0.04 in-line. Revenue of $54M (+13%) vs. $53M. Shares +3.7% AH. (PR)
- AsiaInfo (ASIA): Q4 EPS of $0.38 beats by $0.07. Revenue of $76M (+42%) vs. $72M. Sees Q1 EPS of $0.19-0.20 vs. $0.22, on sales of $61M-63M vs. $63.8M. Shares -7.4% AH. (PR)
- C.R. Bard (BCR): FQ3 EPS of $1.39 beats by $0.05. Revenue of $677M (+7%) vs. $675M. (PR, earnings call transcript)
- CA Inc. (CA): FQ3 EPS of $0.43 beats by $0.01. Revenue of $1.1B (+8%) in-line. Names William McCracken new CEO. Shares -0.5% AH. (PR, earnings call transcript)
- Chubb (CB): Q4 EPS of $1.66 beats by $0.20. Net premiums written of $2.8B (-4%). Shares +0.14% AH. (PR)
- Compuware (CPWR): FQ3 EPS of $0.12 beats by $0.02. Revenue of $230M (-14%) vs. $214M. Shares +1.4% AH. (PR, earnings call transcript)
- Genworth Financial (GNW): Q4 EPS of $0.19 beats by $0.09. Revenue of $2.46B (-6%) vs. $2.53B. Shares -1.7% AH. (PR)
- Informatica (INFA): Q4 EPS of $0.25 misses by $0.03. Revenue of $151M (+21%) vs. $139M. Shares +0.97% AH. (PR, earnings call transcript)
- International Coal Group (ICO): Q4 EPS of $0.00 (breakeven) in-line. Revenue of $246M (-5%) vs. $281M. Shares +1.5% AH. (PR)
- Juniper Networks (JNPR): Q4 EPS of $0.32 beats by $0.06. Revenue of $942M (+2%) vs. $885M. Shares +3.7% AH. (PR, earnings call transcript)
- KLA-Tencor (KLAC): FQ2 EPS of $0.28 beats by $0.01. Revenue of $440M (+11%) vs. $438M. Shares +2.6% AH. (PR, earnings call transcript)
- Leggett & Platt (LEG): Q4 EPS of $0.30 beats by $0.06. Revenue of $770M (-13%) vs. $723M. Shares +1.8% AH. (PR)
- Maxim Integrated Products (MXIM): FQ2 EPS of $0.19 beats by $0.01. Revenue of $474M (+15%) vs. $459M. Shares +4.6% AH. (PR)
- Microsoft (MSFT): FQ2 EPS of $0.60 beats by $0.01. Revenue of $19B (+14%) vs. $17.8B. Windows 7 sales - more than 60M licenses through end of Q2 - led to record Windows sales, and the 14% gain to record revenues overall. Sees full-year operating expense of $26.2B-26.5B. "Our continuing commitment to managing costs allowed us to drive earnings performance ahead of the revenue growth.". Shares -0.7% AH. (PR, earnings call transcript)
- PMC - Sierra (PMCS): Q4 EPS of $0.17 beats by $0.02. Revenue of $140M (+16%) vs. $137M. Shares +6.7% AH. (PR, earnings call transcript)
- Quantum (QTM): FQ3 non-GAAP EPS of $0.07 misses by $0.02. Revenue of $182M (-11%) vs. $180M. Shares -13% AH. (PR, earnings call transcript)
- Rambus (RMBS): Q4 EPS of -$0.22 beats by $0.04. Revenue of $31M (-18%) vs. $28M. Shares -0.9% AH. (PR, earnings call transcript)
- Robert Half International (RHI): Q4 EPS of $0.09 beats by $0.04. Revenue of $737M (-26%) vs. $704M. Shares -0.6% AH. (PR, earnings call transcript)
- SanDisk (SNDK): Q4 EPS of $1.18 beats by $0.49. Revenue of $1.24B (+44%) vs. $1.16B. Shares -6% AH. (PR, earnings call transcript)
- Synovus Financial (SNV): Q4 EPS of -$0.54 beats by $0.05. Net interest income of $1B (-6%). Shares +4.4% AH. (PR)
- Tessera Technologies (TSRA): Q4 EPS of $0.31 beats by $0.18. Revenue of $56.5M (-18%) vs. $56M. Shares -2.7% AH. (PR, earnings call transcript)
- Thoratec (THOR): Q4 EPS of $0.27 beats by $0.05. Revenue of $105M (+22%) vs. $94M. Shares -0.9% AH. (PR)
Asia markets drifted lower Friday, but Europe stocks are up and U.S. futures have reversed earlier losses and now suggest a firm open.
- Asia: Nikkei -2.1% to 10198. Hang Seng -1.1% to 20122. Shanghai -0.2% to 2989. BSE +0.3% to 16358.
- Europe at midday: FTSE +0.9% to 5190. CAC +0.9% to 3721. DAX +1.1% to 5600.
- Futures at 7:00: Dow +0.2%. S&P +0.2% to 1082. Nasdaq +0.2%. Crude +0.4% to $73.90. Gold +0.1% to $1,084.60. Treasury futures are flat, as is the dollar against most currencies.
Friday's Economic Calendar
- 8:30 Employment Cost Index
8:30 GDP Q4
8:30 Personal Income and Outlays
9:45 Chicago PMI
9:55 Reuters/UofM Consumer Sentiment
3:00 PM USDA Ag. Prices
- Notable earnings before Friday's open: ACI, ALV, AVY, CVX, DOV, FO, HON, MAT, NWL, PCAR
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