Facebook to buy WhatsApp for up to $19B. The sound of jaws collectively crashing onto the floors of trading rooms was heard across Wall Street yesterday - and probably far beyond - after Facebook (NASDAQ:FB) said it has agreed to acquire WhatsApp for $19B in cash and shares. Although the mobile-messaging application has 450M monthly active users, the valuation is higher than that of 235 S&P 500 components. Still, as with Instagram, one theory seems to be that Facebook has paid heavily to head off what it sees as a potential major threat. Shares were -2.4% premarket.
Chinese factory activity contracts at faster pace. China's flash manufacturing PMI has tumbled to a seven-month low of 48.3 in February from 49.5 in January and missed consensus of 49.4. The sub-indexes for output, new orders, new export orders and employment contracted. The fall in overall PMI adds to other data that provides a mixed picture of China's economy, although the latest figures may have been hampered by the Lunar New Year holiday.
Tesla Motors tears higher as guidance supports growth story. Tesla Motors' (NASDAQ:TSLA) losses narrowed to $16.3M in Q4 from $89.9M a year earlier as revenue surged 101% to $615.29M. The figure missed consensus, although adjusted EPS of $0.33 beat by $0.12. Shares jumped 10.15%, with the electric car-maker providing an optimistic outlook for production and deliveries, especially overseas.
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Peltz renews attempt to break up PepsiCo. Nelson Peltz has sent a 37-page letter to PepsiCo's (NYSE:PEP) board renewing his call for the company to spin off its struggling beverage business - which has been battling falling soda sales in developed markets - and focus on snack brands Lays, Cheetos and Doritos. The letter comes less than a week after PepsiCo ruled out a break-up following a review.
Weak PMIs hits global equities. World stocks were lower at the time of writing following disappointing PMI data out of China and the eurozone - particularly France - and a record trade deficit in Japan. Hawkishness in the latest FOMC minutes is also not helping (see below for more details).
Merck consumer-healthcare ops attract several suitors - Reuters. Novartis (NYSE:NVS) and Bayer (OTCPK:BAYRY) are among the suitors that are exploring an acquisition of Merck's (NYSE:MRK) consumer-healthcare business, Reuters reports, adding that the unit could be worth $10-12B. Reckitt Benckiser (OTCPK:RBGPF) and Procter & Gamble (NYSE:PG) are also among the companies to have held talks with Merck about a deal. However, GSK (NYSE:GSK) is not interested.
Safeway eyes sale. Safeway (NYSE:SWY) is "in discussions concerning a possible transaction involving the sale of the company," the supermarket chain said yesterday in tandem with the release of its Q4 earnings. EPS of $0.53 beat consensus by $0.05 but revenue slumped 18% to $11.3B and missed by $180M. Safeway is also exploring options for monetizing its 49% stake in Mexican grocery store chain Casa Ley, and it has decided to distribute its 72.2% holding in Blackhawk Network (NASDAQ:HAWK) to shareholders.
BlackBerry jumps following Facebook/WhatsApp deal. BlackBerry (NASDAQ:BBRY) was +6.8% premarket following news that Facebook (FB) is acquiring WhatsApp. Investors are betting the deal will spell a higher valuation for BBM, which had added 40M+ Android/iOS users as of December to go with its BlackBerry base.
H-P sales seen falling. H-P (NYSE:HPQ) is due to report its FQ1 results after the bell, with analysts estimating that EPS rose to $0.85 from $0.82 a year earlier, while revenue slipped 4.1% to $27.19B as the company continued to struggle with sluggish corporate IT demand and the contracting PC market. "Despite some progress and stabilization, we continue to believe serious secular/competitive pressures in most of H-P's end markets are too difficult to overcome and remain concerned that the fiscal 2014 guidance...could prove optimistic," says ISI Group analyst Brian Marshall.
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Eurozone business activity softens. Eurozone flash manufacturing PMI has slipped to 53 in February from 54 in January and undershot forecasts that were also 54. German growth slowed and France's contraction accelerated. The eurozone's services print has edged up, but the composite output has fallen to 52.7 from 52.9. "A dip in the eurozone PMI provides a reminder that the region's recovery continues to be uneven and fragile," says Markit, "but it's too early to read too much into one month's data."
Japanese trade deficit soars to record, shares slump. Japan's trade deficit more than doubled to a record ¥2.79T ($27.3B) in January from ¥1.3T in December and exceeded consensus of ¥2.49T. Export growth slowed while imports soared 25%. In Q4, a large trade deficit contributed to GDP expanding at a lower-than-expected 1%. However, the latest trade figures may have been affected by a rush to purchase foreign-made goods before a sales-tax increase in April and by the Chinese New Year.
FOMC minutes: A few see chance of rate hikes "relatively soon." In the last FOMC meeting chaired by Ben Bernanke, a few policy makers saw a chance of rate hikes "relatively soon." As for forward guidance in which the Fed promised to hold Fed Funds near 0% after the 6.5% unemployment rate threshold was crossed - that's pretty much done with. The minutes also show little concern about the string of soft economic data at the start the year.
Nebraska judge's ruling threatens Keystone. In a victory for opponents of TransCanada's (NYSE:TRP) Keystone pipeline, a Nebraska judge has quashed a law that allowed Governor Dave Heineman to approve the building of the pipeline through the state. The decision now rests with the Public Service Commission. Meanwhile, at the "Three Amigos" Nafta summit in Mexico, Canadian Prime Minister Stephen Harper appears to have made little headway in persuading President Obama to speed up a decision over whether to approve Keystone.
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In Asia, Japan -2.1% to 14449. Hong Kong -1.2% to 22394. China -0.2% to 2139.
In Europe, at midday, London -0.2%. Paris -0.5%. Frankfurt -1.1%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude -0.1% to $103.17. Gold -0.5% to $1313.50.
Ten-year Treasury Yield -2 bps to 2.73%
Today's economic calendar:
8:30 Consumer Price Index
8:30 Initial Jobless Claims
9:00 PMI Manufacturing Index Flash
9:45 Bloomberg Consumer Comfort Index
10:00 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings before today's open: ACT, AER, CBB, CCO, CDE, CONE, CRIS, CRY, CVI, CVRR, CWEI, CYBX, DAN, DNR, DTV, ELOS, EXAS, FCN, FDML, FUN, HEP, HRL, HSC, HSNI, I, ICLR, ICON, IDCC, IMAX, IRC, LTM, LXP, MRGE, PAAS, PDCO, PEG, PWR, RS, SCG, SONS, SUI, THI, TK, TRP, TTC, UAN, UPL, WLK, WLT, WMT, WWE, YNDX
Notable earnings after today's close: ACTG, AGU, AHS, ANAD, ARUN, BBG, BCOR, BLDR, BLOX, CENX, COG, DTLK, DXCM, ESRX, EXEL, EXR, FLTX, FNGN, FUEL, GRPN, HNSN, HPQ, INAP, INTU, IPXL, JWN, KND, LOPE, MDRX, MHK, MRC, MRVL, MTSN, MXWL, NEM, PCLN, PEB, PPC, PSA, QLIK, SEM, SSRI, SSTK, TRMR, TS, TTS, VMI, WAGE, WBMD, WRE, XNPT
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