- Continental, United re-start merger talks. Continental Airlines (CAL) and United Airlines (UAUA) are reportedly in merger talks, leading analysts to suggest rumors of merger talks between United and US Airways (LCC) were simply meant to bring Continental back to the bargaining table. In any case, analysts believe a Continental-United merger would be superior to a US Airways-United one, but talks are still in early stages and could fall apart as they did during negotiations in 2008. In yesterday's trading: UAUA +5.3%, CAL +2.2%, LCC -0.1%.
- Icahn chases Lions Gate stake. Carl Icahn raised his offer price for Lions Gate Entertainment (LGF) by 17%, to $7/share from $6/share, giving the studio a value of $826M. Icahn is seeking at least 37M shares, which would be enough to give him a majority stake in the company when combined with his existing 19% holding. Icahn is also continuing his campaign against a poison pill that would make a hostile takeover of the company more expensive. In after hours trading, LGF +8.2%.
- Macarthur opens talks with Peabody. Australia's Macarthur Coal said today that it would begin talks with Peabody Energy (BTU) on its revised $3.8B offer, after two of Macarthur's three largest shareholders said the deal was worth considering. Macarthur also postponed Monday's vote on an acquisition of Gloucester Coal. Shares of Macarthur closed +8.25% in Australian trading, suggesting investors believe the bidding war for Macarthur will continue.
- Quadrangle settles pay-to-play probe. Private equity firm Quadrangle Group reached a settlement with the SEC and New York Attorney General Andrew Cuomo over a "pay to play" probe involving New York's largest pension fund. Quadrangle agreed to pay nearly $12M, but Quadrangle co-founder (and former car czar) Steve Rattner was excluded from the settlement and remains under scrutiny. The firm, which agreed to cooperate with Cuomo's investigation of Rattner and others, issued a statement calling Rattner's conduct "inappropriate, wrong, and unethical."
- U.S. joins H-P bribery probe. U.S. authorities have reportedly joined their German and Russian counterparts in investigating whether Hewlett-Packard (HPQ) executives paid millions of dollars in bribes to win a Russian contract. The Justice Department and SEC are looking for possible violations of the Foreign Corrupt Practices Act as part of a broader probe into the company's activities.
- Goldman real estate fund wiped out. Goldman Sachs' (GS) international real estate fund, Whitehall Street International, has lost nearly all its $1.8B in equity on troubled property investments in the U.S., Germany and Japan. According to Whitehall's annual report, the fund was down to just $30M as of the end of 2009. This is the latest disclosure of heavy real estate losses by bank-owned property funds; earlier this week, Morgan Stanley (MS) said it stands to lose $5.4B on soured real estate investments, or roughly two-thirds of the value of its real estate fund.
- Regulators exacerbated WaMu loss. A Senate subcommittee issued a report yesterday condemning regulators for fighting amongst themselves while Washington Mutual moved ever closer to collapse, deepening losses for shareholders in the process. Among other regulatory missteps, the Office of Thrift Supervision repeatedly blocked the FDIC from accessing WaMu's data and even tried to stop its own examiners in their efforts to rein in WaMu's high-risk lending. The FDIC's Sheila Bair and then-OTS director John Reich will testify before the subcommittee today. Also today: a report will be released by the inspectors general of the FDIC and the Treasury which is expected to contain similar conclusions.
- China probes iron ore pricing. China is launching an investigation into whether Rio Tinto (RTP), BHP Billiton (BHP) and Vale (VALE) are using illegal monopoly power to control global iron ore pricing. The probe reflects China's growing frustration at its inability to control the price of iron ore, a key input for its steel industry, despite being the world's largest iron ore buyer. Premarket: RTP -0.7%, BHP -0.6% (7:00 ET).
- Greece moves closer to bailout. Greece moved one step closer to asking for emergency aid, requesting a meeting with the EU, the IMF and the European Central Bank. Those talks about Greece's €45B ($61B) rescue package will begin April 19, though many believe the ultimate price tag will be higher, and a soon-to-be-published study found that Greece could rustle up around €20B ($27B) annually on its own if it found a way to cut down on bribery and corruption. Meanwhile, EU finance ministers are meeting in Madrid today to discuss ways to rein in growing budget deficits.
- Google beats on ad market rebound. Google (GOOG) reported better-than-expected earnings (see details below), providing further evidence of a rebound in the online advertising market. First-quarter earnings were up 37% and revenue rose 23% as the economy improved and "large advertisers have come back in force." Shares closed -4.9% in after hours trading, partly because the earnings beat had already been priced in and partly on investor concerns that Google plans to continue spending aggressively on obtaining talent.
- Tech hiring finds new legs. Google (GOOG) isn't the only tech company with plans to aggressively boost recruitment. As the tech industry's recovery accelerates, firms are once again looking to expand, leading to heated competition for talent and even bidding wars in some cases. A leading tech jobs website now lists over 62,000 tech positions open nationwide, a nearly 22% increase over last year, with the hiring trend present among both big names like Google, Cisco (CSCO) and Intel (INTC) as well as smaller firms.
Earnings: Friday Before Open
- Bank of America (BAC): FQ1 EPS of $0.28 beats by $0.19. Revenue of $31.9B (-10.6%) vs. $27.9B. Shares +1.1% premarket. (PR)
- Ericsson (ERIC): FQ1 net income of €21 million. Revenue of €1.4B, declined 19.5% y/y. The company maintains a forecast of slight growth in units in the global handset market in 2010. (Report)
- First Tennessee National (FHN): FQ1 EPS of -$0.12 beats by $0.04. (PR)
- GE (GE): FQ1 EPS of $0.21 beats by $0.05. Revenue of $36.6B (-4.8%) vs. $37.1B. Shares +0.1% premarket. (PR)
- Mattel (MAT): FQ1 EPS of $0.07 beats by $0.10. Revenue of $880M (+12%) vs. $860M. (PR)
Earnings: Thursday After Close
- Advanced Micro Devices (AMD): Q1 EPS of $0.09 beats by $0.16. Revenue of $1.57B (+33.7%) vs. $1.54B. Expects Q2 revenue to be down seasonally. Shares +0.9% AH. (PR, earnings call transcript)
- Google (GOOG): Q1 EPS of $6.76 beats by $0.16. Revenue ex-traffic acquisition costs of $5.1B vs. $4.95B. Average cost-per-click up 7%; aggregate paid clicks up 15%. Google-owned sites revenue up 20% to $4.44B. Shares -3% AH. (PR, earnings call transcript)
- People's United Financial (PBCT): Q1 EPS ex-items of $0.08 in-line. Net interest income of $160M (+12%). Shares -1% AH. (PR)
- In Asia, Nikkei -1.5% to 11102. Hang Seng -1.3% to 21865. Shanghai -1.1% to 3130. BSE -0.3% to 17591.
- In Europe at midday, London -0.2% to 5812. Paris flat at 4064. Frankfurt -0.1% to 6284.
- Futures: Dow -0.2%. S&P -0.3%. Nasdaq -0.3%. Crude -1.1% to $84.58. Gold -0.2% to $1157.50.
Friday's Economic Calendar
- 8:30 Housing Starts
9:00 Annual Minsky Conference
9:30 Hearing: 'Wall Street and the Financial Crisis'
9:55 Reuters/UofM Consumer Sentiment
- Notable earnings before Friday's open: BAC, FHN, GCI, GE, MAT
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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