Comcast to buy Time Warner Cable for $45B - reports. Comcast (NASDAQ:CMCSA) has reportedly agreed to acquire Time Warner Cable (TWC) for $45B in stock, above a $38B offer from Charter Communications (NASDAQ:CHTR). The merger would create a cable TV behemoth with 32M subscribers, so it wouldn't be a surprise if it were to face huge, if not insurmountable, regulatory hurdles. The companies are set to announce the merger this morning.
Cisco net profit plummets, shares tumble. Cisco's (NASDAQ:CSCO) FQ2 earnings beat Street forecasts, but net profit slumped 55% to $1.4B after the company took a $655M charge because of memory-chip problems. Adjusted EPS was $0.47 while revenue fell 7.4% to $11.2B, and Cisco forecast that sales would decline another 6-8% in FQ3. Edward Jones analyst Bill Kreher believes that increasing competition will help make it more difficult for Cisco to return to growth this year. "There was some hope, but now it appears that that's evaporating," Kreher says. Shares were -3.9% premarket.
Italy sinks back into political crisis - again. Italy's FTSE MIB stock index was -1.2% at the time of writing amid renewed political instability after what appeared to be a bit of calm - to some in the outside world at least - for all of about ten minutes. In the latest drama, Prime Minister Enrico Letta is trying to reject pressure to resign in favor of Matteo Renzi, the leader of their center-left Democratic Party.
Top Stock News
Rio Tinto underlying profit climbs 10%. Rio Tinto's (NYSE:RIO) 2013 underlying profit rose 10% to $10.2B and topped consensus of $9.7B, boosted by $2.3B in cost cuts. The mining giant also swung to a net profit of $3.7B from a loss of $3B in 2012, although the latest results were hit by non-cash exchange losses of $2.9B and impairments of $3.4B, notably on Rio's Mongolian Oyu Tolgoi copper project. Shares were -0.8% premarket.
CBS results beat the Street. CBS's (NYSE:CBS) shares climbed 4.4% in post-market trading after the company's Q4 earnings exceeded Street forecasts, with EPS coming in at $0.78 and revenues climbing 14.3% to $3.91B. Net income rose to $470M from $393M. An impressive run of CBS shows with strong ratings has started to pay dividends, and content licensing and distribution revenue rose 28%. That helped CBS overcome softer advertising trends.
Bids for Merck's consumer business could top $10B - WSJ. Merck's (NYSE:MRK) plan to sell its portfolio of popular consumer brands, including Coppertone sun screen and Claritin allergy pills, is kicking into high gear, with the WSJ reporting that consumer and healthcare companies are expected to put in bids that could top $10B. Merck has already received preliminary offers for the business and final proposals could come in by late next month.
Avon nears bribery settlement - WSJ. Avon Products (NYSE:AVP) is in advanced talks to settle a bribery probe in a deal that could cost the cosmetics company at least $50M, the WSJ reports. Avon is eager to come to terms to end the investigation, which has dragged on since 2008.
Lenovo Q3 net profit +29%; warns on earnings. Lenovo's (OTCPK:LNVGY) FQ3 net profit climbed 29% to $265.3M as sales increased 15% to $10.79B, the first time revenues have topped $10B. Interestingly, laptop sales rose 11% and those of desktops 12%. However, Lenovo warned that its acquisitions of Motorola Mobility from Google (NASDAQ:GOOG) and of IBM's (NYSE:IBM) low-end server unit could hurt profitability in the short term. Still, Lenovo reckons it can turn Motorola around within three-to-five quarters.
Nestle net profit slips; expects sales to remain constrained. Nestle's (OTCPK:NSRGF) 2013 net profit dropped slightly to 10.02B Swiss francs ($11.12B) and missed consensus, dragged down by the cost of portfolio restructuring, currency fluctuations, and price pressure in Europe. Sales rose 2.7% to 92.2B francs and undershot forecasts, with organic growth +4.6%. Nestle expects such growth of 5% this year vs its long-term goal of 5-6%. "Last year was challenging and 2014 will likely be the same," Nestle said.
Top Economic & Other News
German CPI in deflation territory. As expected, German CPI fell 0.6% on month in January following an increase of 0.4% in December. The drop in prices comes amid increasing concern that the eurozone faces the threat of deflation, although European Central Bank chief Mario Draghi has so far been sanguine about the prospect. Still, Barclays says the risks "are significant," far greater than markets or policy makers have acknowledged.
Weather delays Yellen testimony. Janet Yellen's appearance before a Senate panel, which was due to take place today, has been postponed, due to a storm that is expected to drop heavy snow on the East Coast. The latest weather patterns have already badly hit the southeast, with over 360,000 customers losing power. Around 6,700 flights were canceled or delayed yesterday and another 3,700 have been scrubbed for today.
Obama set to sign debt-ceiling measure after Senate approval. As with the House on Tuesday, the Senate yesterday approved an extension to the government's borrowing authority until March 16, 2015, although not without much handwringing from Republicans. The legislation is now due to be sent to President Obama for his signature.
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In Asia, Japan -1.8% to 14535. Hong Kong -0.5% to 22166. China -0.55% at 2098. India -1.25% at 20193.
In Europe, at midday, London -0.7%. Paris -0.5%. Frankfurt -0.3%.
Futures at 6:20: Dow -0.4%. S&P -0.5%. Nasdaq -0.5%. Crude -0.7% to $99.70. Gold -0.4% to $1290.40.
Ten-year Treasury Yield -1 bps at 2.75%.
Today's economic calendar:
8:30 Retail Sales
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Business Inventories
10:30 Yellen delivers semi-annual monetary policy testimony (Postponed)
10:30 EIA Natural Gas Inventory
1:00 PM Results of $16B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings before today's open: ABB, ABX, ACOR, AFSI, APA, ASPS, AVP, BBW, BG, BKW, BWA, CAB, COR, CPN, CRNT, CVE, DBD, DISCA, ECA, EQM, EQT, FAF, GG, GNC, GNRC, GT, HIMX, HOT, IFF, JAH, LPX, LYG, MFA, MFC, MPEL, NGLS, NLSN, NTWK, O, OAK, OMG, ONE, ORB, OWW, PAG, PDS, PEP, PES, PVR, Q, RTIX, SHPG, SKYW, SON, STC, SYNT, TAP, TCK, TRGT, VNDA, VNTV, WBC, WSO
Notable earnings after today's close: A, AIG, ALNY, ALSN, BRCD, CGNX, CLD, CLF, CRAY, ELLI, ENOC, GRT, IM, JCOM, KEG, KONA, KRFT, LBTYA, LLNW, LOGM, MASI, MOVE, NR, RATE, RGC, SAAS, STMP, TRLA, WOOF, WRI, WTW
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