Facebook shares soar as mobile ad revenue jumps. Teenagers, who needs 'em? Amid concern that users aged 13-19 are turning off Facebook (FB), the social network's Q4 net profit surged to $523M from $64M a year earlier as mobile ad revenue jumped fourfold. Results easily beat expectations, with EPS $0.31 and overall sales jumping 63% to $2.58B. "They've cracked the code on mobile," says analyst Arvind Bhatia. "Within a little over a year's time, mobile has taken over desktop," in terms of ad revenue. Facebook shares were +12.8% premarket following its results, which also boosted other Internet plays.
Shell confirms profit slump; targets $15B of asset sales. In line with its warning two weeks ago, Shell (RDS.A, RDS.B) has confirmed a sharp fall in Q4 earnings. Net-profit equivalent slumped 71% to $2.2B, while revenue dropped to $109.24B from $116.51B. Shell plans to cut capex to $37B in 2014 from $46B in 2013 and it is scrapping its troubled exploration program in Alaska. Shell also intends to sell $15B worth of assets in 2014 and 2015 as it looks to increase the rate of divestments. The company's shares were +2.1% premarket.
Global equities mixed after Fed confirms more tapering. Asian and European shares have mostly fallen after the Fed said that, as expected, it would reduce its bond-buying by another $10B a month to $65B. What was notable was that the Fed made no mention of the turmoil in emerging markets in its statement. U.S. stock futures were up after Wall Street suffered notable losses yesterday, while the greenback has strengthened as well, with the dollar index +0.45%.
Top Stock News
Google to sell Motorola to Lenovo for $2.91B. Did Google (GOOG) acquire Motorola just for the patents after all? Two years after Google bought the loss-making smartphone maker, the company has agreed to sell Motorola to Lenovo (OTCPK:LNVGY) for $2.91B. However, Google will keep the "vast majority" of Motorola's IP. The deal also removes a point of friction between Google and its Android partners. Lenovo, meanwhile, will expand its presence in the U.S. and it will gain Motorola's respected hardware-engineering teams.
Roche net profit climbs 18%. Roche's (OTC:RHHBF) 2013 net profit rose 18% to 11.4B Swiss francs ($12.7B) but missed expectations, while revenues increased 3% to 46.8B francs and topped estimates. Roche's earnings were boosted by sales of its oncology, immunology and ophthalmology products, as well as of its diagnostic offerings. Roche forecasts that 2014 revenue will rise by a low- to mid-single-digit percentage at constant currencies and that core EPS will grow at a faster rate.
MasterCard dealt blow in Europe over fees. Paolo Mengozzi, the Advocate General of the European Court of Justice, has recommended that Europe's top court reject an appeal by MasterCard (MA) against an EU ban on its cross-border card fees. Judges at the court usually follow the recommendations of the Advocate General. The EU argues that the fees, which are imposed on retailers' credit- and debit-card transactions, breach the bloc's antitrust regulations.
Strong Amazon, Google growth seen continuing. Amazon (AMZN) and Google (GOOG) are among the standout Q4 earnings reports that are due to be released after the bell today. Analysts reckon that Amazon's EPS jumped to $0.66 from $0.21 a year earlier while revenue surged again, rising 22.5% to $26.06B. Google's EPS is seen increasing to $12.26 from $10.59, with sales thought to have grown 38% to $16.75B.
Top Economic & Other News
U.S. growth expected to have slowed in Q4. GDP data is due out this morning, with economists estimating that economic growth softened to 3.2% on year from 4.1% in Q3. Consumer spending is expected to have driven the expansion, with a spike in housing starts helping also. However, inventories are likely to have been a drag on the economy.
Chinese HSBC PMI shows contraction. Chinese manufacturing activity contracted for the first time in six months in January as HSBC PMI fell to 49.5 from 50.5 in December. The growth of output eased to a marginal pace and jobs were cut at the fastest rate since March 2009, HSBC says, while there were also "marked falls" in input costs and output charges. "A soft start to China's manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities," HSBC says.
German jobless rate unchanged in January. Germany's seasonally adjusted unemployment rate has held steady at 6.8% in January, coming in slightly below forecasts of 6.9%. The number of people out of work fell by 28,000 to around 2.93M, surpassing consensus for -5,000. Germany's labor market is benefiting from structural reforms implemented ahead of the financial crisis, says fixed-income strategist Annalisa Piazza. The changes "have helped to create a more resilient and more flexible labor market that is not affected much by cyclical swings."
Spanish recovery firms up a bit. As expected, Spain's GDP growth strengthened to 0.3% on quarter in Q4 from 0.1% in Q3. Rising exports helped lift the economy, while there were also signs of a recovery in domestic demand. "These are positive elements which, to some extent, show we've left the recession behind, but we still have a great deal to do," Economy Minister Luis de Guindos said. "The path ahead is full of obstacles, which, above all, includes an unemployment rate of 26%."
Top Ideas: Movers and Great Calls
1) On December 4, Brian Smith Jr. recommended that investors turn down the dance music and short concert promoter SFX Entertainment (SFXE), which was seeing an unrealistic valuation and an expiring IPO lockup. Shares are -17.1% since. Read article »
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In Asia, Japan -2.5% to 15007. Hong Kong -0.5% to 22035. China -0.8% to 2033. India -0.7% to 20498.
In Europe, at midday, London -0.3%. Paris -0.1%. Frankfurt -0.5%.
Futures at 6:20: Dow +0.1%. S&P +0.2%. Nasdaq +0.3%. Crude +0.5% to $97.82. Gold -0.7% to $1253.30.
Ten-year Treasury Yield +1 bps to 2.69%.
Today's economic calendar:
8:30 Initial Jobless Claims
8:30 GDP Q4
9:45 Bloomberg Consumer Comfort Index
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
1:00 PM Results of $35B, 5-Year Note Auction
1:00 PM Results of $29B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings before today's open: ABFS, ABMD, ADT, AIT, ALXN, AN, ARG, ATK, BC, BEAV, BEN, BLL, BMS, BTU, BX, BZH, CAH, CAM, CARB, CELG, CEVA, CL, CMS, COP, CRR,CRS, DFT, DGX, DOV, DST, EPD, ERIC, ESI, HAR, HGG, HOG, HP, HSH, HSY, IVZ, KELYA, KEM, KMT, LLL, LLY, MAN, MD, MMM, MO, NOC,NVO, OSTK, OXY, PBI, PHM, PLD, POT, RGLD, RTN, RYL, SHW, TE, TEN, TKR, TMO, TWC, UA, UPS, UTEK, V, VIAB, VLY, WCC, WHR, XEL, XOM, ZMH
Notable earnings after today's close: ABAX, AFG, ALGN, AMZN, ARAY, AVNW, AZPN, BCOV, BCR, BRCM, CB, CLS, CMG, CNI, CPHD, CPSI, CPT, CSC, CTCT, CYT, DLLR, ELX, EMN, ESS, GDOT,GOOG, JDSU, LSTR, MCHP, MCK, MCRS, MTW, N, NATI, NEU, NGVC, PFPT, PKI, PMCS, RGA, RHI, RVBD, SIMG, SYA, TSYS, TUES, UIS, VR, WYNN
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