Apple torched on weak iPhone sales, outlook. Apple's (AAPL) shares plunged 6.8% premarket after FQ1 iPhone sales and the company's revenue guidance were weaker than expected. Net profit was flat at $13.1B, but EPS of $14.50 beat consensus and revenue rose 6% to $57.59B and also topped forecasts. Apple sold 51M iPhones, up from 48M in the 2012 period, 26M iPads and 4.8M Macs. Piper Jaffray analyst Gene Munster, who's always good for a quote or two, said Apple's preferences for margins over market share raises the question: "What are Apple's growth opportunities at the price point where they are at?"
FOMC seen making further cuts to QE. The FOMC is due to start the first day of a two-day policy meeting today, with WSJ Fed watcher Jon Hilsenrath believing that the bank will ignore the recent turmoil in emerging markets and cut its bond-buying program by another $10B a month to $65B. It's not clear that the sharp declines in Turkey's lira and Argentina's peso, for example, are due to the Fed's tapering, Hilsenrath says, nor that the overseas rout is a problem for the U.S. economy, which is what the Fed is mandated to consider.
Top Stock News
Seagate shares sink after weak earnings. Seagate's FQ2 profit dropped 13% to $428M as revenues declined 3.8% to $3.53B and missed expectations. Adjusted EPS of $1.32 also fell short of consensus, as did the company's FQ3 revenue guidance. The maker of hard-disk drives said enterprise shipments (higher-margin) rose 7% to 7.8M but those for desktops sank 12%. Shares slumped 6.5% premarket.
Hedge fund pushes for Cliffs to split into two. Casablanca Capital has built up a 5.2% stake in Cliffs Natural Resources (CLF), The Wall Street Journal reports, adding that the hedge fund wants the iron-ore miner to split itself up into its domestic and international operations. Casablanca's activism comes after Cliffs was the worst-performing stock in the S&P 500 in the past year and is the index's most shorted share. The sides have been in talks for a month, discussions that Cliffs said have been productive. Shares were +2.1% premarket.
Siemens net profit +20%; to delist from NYSE. Siemens' (SI) FQ1 net profit climbed 20% to €1.46B ($1.99B) after the year-earlier figure was dragged down by special charges. Revenue dropped 3% to €17.325B. Total sectors profit grew 15% to €1.79B, "highlighted by a strong performance in Infrastructure & Cities." The consensus was for €1.86B. Siemens intends to delist its American Depositary Receipts from the New York Stock Exchange in order to cut costs and lower the complexity of its financial reporting. Those ADRs were +1.6% premarket. (PR)
Smartphone shipments top 1B for 1st time; Samsung extends lead. World smartphone shipments exceeded 1B units for the first time in 2013, rising 38% to 1.004B, research firm IDC estimates. Total handset volume increased 4.8% to 1.82B. "Among the top trends driving smartphone growth are large screen devices and low cost," IDC says. Samsung's (OTC:SSNGY) shipments jumped 42.9% to 313.9M, giving it a market share of 31.3%, while those of Apple (AAPL) increased 12.9% to 153.4M for a share of 15.3%.
Philips swings to net profit but cautious about 2014. Philips (PHG) swung to a net profit of €412M in Q4 from a loss of €423M a year earlier, when its results were hurt by various one-time charges. Sales edged up 1% to €6.8B, below expectations of €6.84B. Philips warned that it remains cautious for 2014, due to macroeconomic uncertainties, currency fluctuations and weak Q4 orders. Shares were -2.3% premarket.
Top Economic & Other News
British economy grows at fastest pace since financial crisis. U.K. GDP increased 1.9% in 2013 in what was the quickest growth since 2007. However, GDP slowed a bit to +0.7% on quarter in Q4 from +0.8% in Q3 and the economy was still 1.3% below its pre-recession peak. "While the U.K. economy's performance in 2013 was well above expectations and encouraging, it needs to be borne in mind that the improvement has come from a low base," says economist Howard Archer, adding that the Bank of England places much emphasis on "headwinds that could still derail" the economy.
Turkish lira rises ahead of expected rate hike. The Turkish lira has strengthened against the dollar ahead of an emergency meeting tonight of the Central Bank of Turkey (CBRT), with Governor Erdem Basci giving a strong indication that the bank will raise rates. "We won't refrain from implementing permanent policy tightening if needed," Basci said. The CBRT refrained from action at a meeting last week, which sent the lira spiraling and it hit a fresh low yesterday before recovering on news of tonight's meeting. The USD-TRY was -0.7% at 2.664 lira at the time of writing.
Congress forges deal on farm bill. Is Congress getting functional? House and Senate negotiators have agreed to a five-year farm bill that would save up to $24B over the next ten years by reducing spending on food stamps by $8B and ending direct payments to farmers. That's the third bill that legislators have negotiated in recent weeks. However, the cut in food stamps won't make too much of a dent in the total program, which cost a record $76.1B in fiscal 2013.
Indian central bank in surprise rate rise. The Reserve Bank of India has unexpectedly increased its key policy repo rate by 25 bps to 8%, citing projections that CPI will remain high. Inflation was 9.9% in December. However, the RBI said that if prices ease as expected, it doesn't believe it will need to tighten further. The focus on CPI indicates that the RBI could adopt a proposal to set an inflation target.
Top Ideas: Movers and Great Calls
1) On January 15, buysider Terry Lally laid out the bear case for healthcare software provider Healthstream (HSTM), projecting decelerating revenue growth that would lead to 55% downside. Shares are -13.5% since. Read article »
2) Helix Investment Research saw substantial value in Germany's second bank, Commerzbank (OTCPK:CRZBY) back on November 1st, as long-held concerns surrounding shares began to fade. The stock is +36.4% to date. Read article »
Top Ideas To Watch
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In Asia, Japan -0.2% to 14980. Hong Kong -0.1% to 21961. China +0.2% to 2039. India -0.1% to 20684.
In Europe, at midday, London +0.4%. Paris +0.7%. Frankfurt +0.7%.
Futures at 6:20: Dow +0.6%. S&P +0.5%. Nasdaq -0.2%. Crude +0.5% to $96.24. Gold -0.8% to $1253.80.
Ten-year Treasury Yield +2 bps to 2.78%.
Today's economic calendar:
FOMC meeting begins
7:45 ICSC Retail Store Sales
8:30 Durable Goods
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
10:00 Richmond Fed Mfg.
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
1:00 PM Results of $32B, 2-Year Note Auction
Notable earnings before today's open: AAL, AHGP, AKS, AOS, APD, ARLP, AVX, CHKP, CIT, CMCSA, DD, DHI, DHR, F, FCFS, FMER, GLW, HMST, HRS, HUB.B, IIVI, ITW, KLIC, LXK, NEE, NUE, OSIS, OSK, PCH, PFE, PHG, PII, PNR, RDWR, TROW, WAT, WRLD
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