Microsoft rises following earnings beat. Microsoft's (MSFT) shares increased 3.2% premarket after the company's FQ2 earning beat expectations, helped by strong hardware sales and enterprise growth. Net profit rose 3% to $6.56B, adjusted EPS came in at $0.78 and revenue climbed 14.3% to $24.52B. Microsoft sold 7.4M Xbox consoles, while revenue from the once derided Surface tablet more than doubled on quarter to $893M, although it's worth noting that gross profit from hardware fell.
Samsung profit growth decelerates; warns on Q1. Samsung's (OTC:SSNLF) Q4 net profit rose 5.4% on year to 7.3T won ($6.7B), but that represented a sharp slowdown from growth of 25.6% in Q3. Sales increased 5.7% from a year earlier to 59.3T won. Profit was hurt by the release of new iPhones, the strength of the Korean won and staff bonuses. Operating income at Samsung's mobile unit was flat on year at 5.47T won but down from a record 6.7T won in Q3. The company warned that it will be "challenging" to improve its earnings in Q1.
McKesson finally seals deal to acquire Celesio. McKesson (MCK) has agreed to buy Celesio (OTCPK:CAKFF) just 10 days after the U.S. drug distributor's tender offer for its German peer failed. McKesson will acquire the entire holding of Celesio majority owner Franz Haniel & Cie for €23.50 a share and purchase Celesio convertible bonds from hedge fund Elliott Management; the moves will provide McKesson with over 75% ownership in Celesio, whose market cap was €4.3B at the time of writing.
Top Stock News
Equities hurt by data from China - except in China. Global stocks were mostly lower at the time of writing amid tepid earnings results and continuing concerns about China following weak manufacturing PMI data yesterday. Investors are apparently even wondering whether losses this week signal the start of a rout. The one place where the PMI data didn't seem to have an effect today was China, where the Shanghai Composite closed +0.6%. Stocks were partly boosted by money market rates falling again following a $42B+ injection of cash this week from the central bank ahead of the Lunar New Year.
Starbucks net profit leaps 25%. Starbucks' (SBUX) FQ1 net profit jumped 25% to $540.7M and EPS of $0.71 beat consensus, while revenue climbed 11.6% to $4.24B but missed expectations, as did same-store sales growth of 5%. "It's hard to really be critical, especially when you compare what we’ve seen and what we're about to see in the coming weeks," says analyst Jack Russo, referring to disappointing earnings from restaurants and retailers in general. "Growth is hard to find." Notwithstanding, Starbucks raised its FY EPS forecasts; shares were +1.3% premarket.
Platinum miners, union in talks to end massive strike. South Africa's Association of Mineworkers & Construction Union has started government-brokered pay talks with the world's three largest platinum producers - Anglo American Platinum (OTCPK:AGPPY), Impala Platinum (OTCQX:IMPUY, OTC:IMPUF) and Lonmin (OTC:LNMIF, OTCPK:LNMIY) - in order to end a strike of up to 100,000 workers. The strike, which is affecting over half of the world's platinum output, is in its second day and has been threatening to turn violent. Platinum futures were -1.1% at $1,446.60 an ounce at the time of writing.
Jana enters the fray at Juniper with large stake. Jana Partners has become the second activist investor to buy into Juniper Networks (JNPR), saying it has built up a large stake. Jana wants Juniper to cut $300M in costs and start paying dividends, demands that echo those made by Elliot Management, which has a 6.2% interest. Jana's disclosure comes after Juniper yesterday reported Q4 earnings that beat consensus, with EPS $0.43 and revenue rising 12.3% to $1.28B. Shares were +3.6% premarket.
FBI warns retailers to expect more hacker attacks. The FBI has discovered about 20 cyberattacks against retailers in the past year similar to the one against Target (TGT) and has warned companies to prepare for more attempts to breach their systems. "Everybody we work with in the retail space is scared to death," says a cyber-security consultant. "They don't have a lot of defenses to prepare against these types of attacks."
GM looks to axe 1,100 jobs at South Korean plant. GM (GM) is looking to cut 1,100 out of 2,200 jobs at its Gunsan factory in South Korea ahead of the sharp scaling back of Chevrolet sales in Europe, Reuters reports. GM has told the labor union that it wants to reduce the number of shifts from two to one at the factory. The union, though, "wants to maintain two shifts, and instead cut the number of cars produced per hour," says a source.
NYT: Health Management's scheme to boost payments. The NYT profiles Health Management Associates (HMA), which is facing multiple lawsuits in several states over claims that it would admit patients into hospitals even if they didn't need treatment so that it could receive more money from Medicare and Medicaid. The problem from the authorities' point of view is that settlements are relatively small. Penalties would only act as a deterrent, says analyst Sheryl Skolnick, if they were at least $500M.
Top Economic & Other News
Argentina's problems go from bad to worse. Argentina's peso suffered its worst fall since the country's crisis 12 years ago yesterday, plummeting 11% to an official rate of around 7.9 to the dollar. The black-market rate is about 13. The collapse in the peso came after the central bank appeared to have stopped defending the currency amid a deepening of Argentina's current economic woes, which include inflation of 25% or more.
Fitch affirms Germany's AAA rating. Fitch has reiterated Germany's rating at AAA and the country's stable outlook, citing its falling debt-GDP ratio and the growing economy. "Germany has a high-value added economy with a competitive manufacturing sector and effective political, civil and social institutions," Fitch says.
Top Ideas: Movers and Great Calls
1) On December 23, Nassarius Capital said cloud vendor Callidus Software (CALD) could be the next potential acquisition target in the space. Callidus remains independent, but shares have gained 19.1% since. Read article »
2) Stephen Simpson covered the bull case for semiconductor equipment maker Mattson Technology (MTSN) in late August, predicting gains as chip spending rebounded. The stock is +55% to date. Read article »
Top Ideas To Watch
1) A pending rights offering is putting a near-term ceiling on shares of medical-control manufacturer Pro-Dex (PDEX), but improving fundamentals and insider interest signal triple-digit upside, writes Valuable Insights. Read article »
2) Inflection Point Investing says measurement- and inspection-solutions provider Perceptron (PRCP) should see 75% gains as new, disruptive technology combines with earnings leverage to boost its stock price. Read article »
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In Asia, Japan -1.9% to 15392. Hong Kong -1.3% to 22450. China +0.6% to 2054. India -1.1% to 21134.
In Europe, at midday, London -0.8%. Paris -1.4%. Frankfurt -0.8%.
Futures at 6:20: Dow -0.7%. S&P -0.7%. Nasdaq -0.7%. Crude -0.6% to $96.71. Gold -0.2% to $1259.90.
Ten-year Treasury Yield -4 bps to 2.73%.
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