- Another obesity drug bites the dust. The FDA rejected Vivus' (VVUS) obesity drug Qnexa, asking the company for an assessment of Qnexa's potential to cause birth defects and for evidence proving the drug doesn't increase heart-related risks. Vivus said it remains confident in the "efficacy and safety" of Qnexa, and will have the requested documents ready for submission to the FDA in around six weeks; investors are seemingly still bullish on the drug, as shares of Vivus are +28% premarket (7:00 ET). The decision wasn't a surprise, as an FDA advisory panel had voted in July against approving Qnexa, but it's the second time in less than a week that the FDA has refused to approve a drug to treat obesity, after rejecting Arena Pharmaceuticals' (ARNA) lorcaserin drug. Contrave, an obesity drug from Orexigen Therapeutics (OREX), is up for FDA review in December, but the high bar set so far for obesity drugs casts doubts on whether Contrave can make it through the approval process.
- Verizon to pay record fine. Verizon Wireless (VZ) agreed to pay a record $25M fine and refund more than $52M to customers as part of a settlement with the FCC for inaccurate billings involving "mystery fees." Verizon said it "made inadvertent billing mistakes [and] accepts responsibility for those errors." Verizon had announced earlier in the month that it would provide refunds of around $2-6 to roughly 15M customers because of the billing mistakes.
- Halliburton faulted in Deepwater Horizon disaster. The presidential commission investigating the Deepwater Horizon disaster has put Halliburton (HAL) back in the hotseat. Investigators found that Halliburton was aware of problems with the cement it was planning to install in BP's (BP) Macondo well but used it anyway, possibly without alerting BP. The results of practical testing "strongly suggest" the cement mixture was unstable; though the findings don't exonerate BP, they do incriminate Halliburton, which had escaped much of the blame for the disaster until now. Halliburton issued a statement late yesterday defending its cement mix and its procedures, but shares are down another 3.7% premarket (7:00 ET) after losing 8% in yesterday's trading.
- Carlyle continues buying streak. Carlyle Group continued its latest buying streak, announcing plans to take Syniverse Holdings (SVR) private for $2.6B in cash, or $31/share. The deal comes just one day after Carlyle said it would buy CommScope (CTV) for $3.9B. In July, Carlyle announced a $3.8B deal to buy U.S. nutritional supplements maker NBTY. Shares of Syniverse closed +28% to $30.50 in yesterday's trading.
- Lions Gate sues Icahn. Lions Gate Entertainment (LGF) has filed suit against Carl Icahn, claiming the activist investor interfered with the company's earlier efforts to merge with studio Metro-Goldwyn-Mayer. The lawsuit said that Icahn, who has reversed course and is now pushing for a merger of the two firms, was "secretly plotting to merge the two studios - but only after he had acquired a sufficiently large position in both companies at depressed prices to ensure that he maximized his own profits." Icahn called the lawsuit "completely without merit."
- Sanofi gets busy with buy, bid efforts. Sanofi-Aventis (SNY) agreed to buy Chinese drug marketer BMP Sunstone (BJGP) for $521M in cash, or $10/share, sending shares of BMP up 28% to $9.83. Sanofi said the deal will expand its footprint in China, where BMP markets two leading consumer health care brands. Separately, Sanofi offered to set up a "working group" to examine Genzyme’s (GENZ) experimental drug for multiple sclerosis, Campath, given the drug’s uncertain sales prospects. The limited due diligence Sanofi proposes appears to be an effort to break the impasse in its $18.5B hostile bid for Genzyme, as Sanofi has shown no interest in raising the price of its bid. Sanofi also reported better-than-expected Q3 earnings, with net profit up 13% to €1.61B ($2.2B) and revenue +5.7% to €7.82B. Shares of Sanofi closed +1.2% yesterday; SNY -0.4% premarket (7:00 ET).
- KKR likely to leave Seagate deal. KKR (KKR) will probably withdraw from a group considering buying Seagate Technology (STX), sources said. Several other P-E firms, including TPG Capital and Bain Capital, were reportedly interested in the tech firm, but KKR became discouraged by the $4B of equity that would have been required to complete the deal. News that KKR may be pulling out of talks sent shares of Seagate down 8.4% in yesterday's trading.
- China unofficially ends unofficial export ban. Industry officials said China abruptly ended yesterday its unofficial embargo of exports of rare earth minerals to the U.S., Europe and Japan. Though the resumption of the exports should go some way to alleviating strained trade relations, shipments to Japan are still encountering some difficulties and foreign companies still face shortages of the much-demanded minerals. Shares of rare earth producers outside of China had climbed during the embargo, but took a hit yesterday: REE -11.5%, MCP -12.1%.
- Windows, Office drive Microsoft profit beat. Microsoft (MSFT) reported better-than-expected quarterly earnings yesterday (see detail below), with all of its divisions showing double-digit revenue growth. Analysts also noted that business spending on PCs exceeded expectations. One weak spot was Microsoft's online division, which reported an operating loss of $560M on $527M revenue; the numbers are worse than a year ago and represent a burn rate of $2B annually. Premarket: MSFT +3.1% (7:00 ET).
- Defect prompts Nissan recalls. Nissan (NSANY.PK) is recalling 747,000 trucks and SUVs in the U.S. because of the risk of electrical system failure that could cause vehicles to stall. The recall includes 2004-06 Armadas and Titans, 2005-06 Infiniti QX56s and 2003-06 Frontiers, Pathfinders and Xterras. Globally, Nissan is recalling 2.2M vehicles with similar potential for failure.
- General Motors preps for IPO. General Motors said it will take steps to reduce its financial leverage by $11B ahead of its public offering next month. The moves include contributing at least $6B to its pension plans, buying back $2.1B in shares from the Treasury, and paying back $2.8B borrowed from the UAW. Despite GM's progress in cleaning up its balance sheet, the company's problems haven't been addressed in their entirety, and it will be up to investors to gauge the new GM's value.
- AIA gains post-IPO. AIA gained 17% in its market debut today, following its record Hong Kong IPO last week. The successful IPO will ramp up competition with insurers like Prudential (PRU) for marketshare in Asia's fast-growing life insurance business. It will also allow AIG's (AIG) management to refocus on its core business, and bring in as much as $20.5B for AIG if the bailed-out insurer chooses to exercise its over-allotment option.
Earnings: Friday Before Open
- Alliant Energy (LNT): Q3 EPS of $1.31 beats by $0.25. (PR)
- Amerigroup (AGP): Q3 EPS of $1.68 beats by $0.87. Revenue of $1.5B (+392%) in-line. (PR)
- Aon (AON): Q3 EPS of $0.61 misses by $0.05. Revenue of $1.8B (+1.2%) in-line. (PR)
- Barnes Group (B): Q3 EPS of $0.27 beats by $0.01. Revenue of $290M (+11.4%) vs. $287M. (PR)
- Capital Source (CSE): Q3 EPS of $0.24 beats by $0.18. (PR)
- CIGNA (CI): Q3 EPS of $1.10 beats by $0.04. Revenue of $5.3B (+16.6%) in-line. (PR)
- Constellation Energy Group (CEG): Q3 EPS of $0.48 misses by $0.16. Revenue of $4B (-1.5%) in-line. (PR)
- Magellan Health Services (MGLN): Q3 EPS of $1.31 beats by $0.39. Revenue of $750M (+12.4%) vs. $756M. (PR)
- Newell Rubbermaid (NWL): Q3 EPS of $0.42 beats by $0.01. Revenue of $1.5B in-line. (PR)
- NiSource (NI): FQ2 EPS of $0.04 misses by $0.02. (PR)
- Quality Systems (QSII): FQ2 EPS of $0.46 misses by $0.03. Revenue of $81.5M (+13.6%) vs. $85.7M. (PR)
- Wabco (WBC): Q3 EPS of $0.71 beats by $0.21. Revenue of $545M (+42%) vs. $481M. (PR)
Earnings: Thursday After Close
- Acme Packet (APKT): Q3 EPS of $0.20 beats by $0.01. Revenue of $56.6M (+56%) vs. $55M. Shares -4.5% AH. (PR, earnings call transcript)
- Ancestry.com (ACOM): Q3 EPS of $0.24 beats by $0.05. Revenue of $79M (+39%) in-line. Shares +3% AH. (PR)
- Ariba (ARBA): FQ4 EPS of $0.20 in-line. Revenue of $95M (+12.8%) vs. $92M. Shares -1.1% AH. (PR)
- BioMarin Pharmaceutical (BMRN): Q3 EPS of $0.06 may not be comparable to consensus of $0.01. Revenue of $98M (+21%) in-line. Shares -0.4% AH. (PR)
- BMC Software (BMC): FQ2 EPS of $0.82 beats by $0.12. Revenue of $502M (+8.8%) vs. $483M. Shares +4.6% AH. (PR, earnings call transcript)
- Cephalon (CEPH): Q3 EPS of $2.27 beats by $0.48. Revenue of $717M (+30.5%) vs. $720M. Shares +0.7% AH.(PR, earnings call transcript)
- Cerner (CERN): Q3 EPS of $0.76 beats by $0.02. Revenue of $463M (+13%) vs. $466M. Shares -4.2% AH. (PR, earnings call transcript)
- Cliffs Natural Resources (CLF): Q3 EPS of $2.18 misses by $0.40. Revenue of $1.3B (+102%) vs. $1.4B. Shares -2.6% AH. (PR)
- Coinstar (CSTR): Q3 EPS of $0.66 beats by $0.16. Revenue of $380M (+42%) vs. $382M. Shares +15.4% AH. (PR)
- Curtiss-Wright (CW): Q3 EPS of $0.60 beats by $0.02. Revenue of $466M (+6.9%) vs. $449M. Shares +0.9% AH. (PR)
- Deckers Outdoor (DECK): Q3 EPS of $1.07 beats by $0.14. Revenue of $278M (+21.7%) vs. $265M. Shares +6% AH. (PR)
- Dresser-Rand Group (DRC): Q3 EPS of $0.46 misses by $0.01. Revenue of $483M (-21%) vs. $509M. (PR)
- Eastman Chemical Company (EMN): Q3 EPS of $2.33 beats by $0.10. Revenue of $1.7B (+29%) in-line. (PR)
- Eldorado Gold (EGO): Q3 EPS of $0.09 misses by $0.01. Revenue of $190M (+133%) vs. $186M. Shares -0.9% AH. (PR)
- Endurance Specialty Ltd (ENH): Q3 EPS of $2.14 beats by $0.76. Revenue of $531M (+6.5%) vs. $417M. (PR)
- Expedia (EXPE): Q3 EPS of $0.66 beats by $0.08. Revenue of $988M (+15.9%) vs. $944M. Shares +7.4% AH. (PR, earnings call transcript)
- Extra Space Storage (EXR): Q3 EPS of $0.24 beats by $0.01. Revenue of $72M (+1.2%) vs. $65M. (PR)
- Federated Investors (FII): Q3 EPS of $0.42 beats by $0.04. Revenue of $242M (-17.5%) vs. $244M. Shares +2.7% AH. (PR)
- First Solar (FSLR): Q3 EPS of $2.21 beats by $0.26. Revenue of $798M (+66%) vs. $779M. Shares -6.8% AH. (PR, earnings call transcript)
- Gen-Probe (GPRO): Q3 EPS of $0.57 beats by $0.07. Revenue of $133M (+8.1%) vs. $135M. Shares -8.3% AH. (PR)
- Genworth Financial (GNW): Q3 EPS of $0.06 misses by $0.19. Shares -5.1% AH. (PR)
- Great Plains Energy (GXP): Q3 EPS of $0.96 beats by $0.16. Revenue of $729M (+24%) vs. $660M. (PR)
- Healthsouth (HLS): Q3 EPS of $0.42 beats by $0.02. Revenue of $491M (+4.3%) in-line. (PR)
- Highwoods Properties (HIW): Q3 EPS of $0.58 misses by $0.01. Revenue of $116M (+2.6%) vs. $113M. (PR)
- Maxim Integrated Products (MXIM): FQ1 EPS of $0.43 beats by $0.06. Revenue of $626M (+39.4%) vs. $614M. Shares +4.6% AH. (PR)
- Microsoft (MSFT): FQ1 EPS of $0.62 beats by $0.07. Revenue of $16.2B (+25.3%) vs. $15.8B. Shares +2.1% AH. (PR, earnings call transcript)
- NetLogic Microsystems (NETL): Q3 EPS of $0.40 beats by $0.04. Revenue of $100M (+137%) in-line. (PR)
- NeuStar (NSR): Q3 EPS of $0.39 beats by $0.01. Revenue of $131M (+11.3%) in-line. Shares +0.2% AH. (PR)
- NuVasive (NUVA): Q3 EPS of $0.46 beats by $0.04. Revenue of $120M (+26.8%) vs. $122M. Shares -23.8% AH. (PR)
- Power-One (PWER): Q3 EPS of $0.40 beats by $0.17. Revenue of $314M (+214%) vs. $265M. Shares -0.1% AH. (PR, earnings call transcript)
- Quest Software (QSFT): Q3 EPS of $0.39 beats by $0.04. Revenue of $193M (+13%) vs. $189M. (PR)
- Regal Entertainment Group (RGC): Q3 EPS of $0.07 misses by $0.01. Revenue of $696M (+3.4%) vs. $710M. (PR)
- ResMed (RMD): FQ1 EPS of $0.36 beats by $0.04. Revenue of $282M (+14.6%) vs. $280M. (PR)
- Rovi (ROVI): Q3 EPS of $0.55 beats by $0.07. Revenue of $138M (+20.5%) vs. $130M. (PR)
- SBA Communications (SBAC): Q3 EPS of -$0.30 misses by $0.06. Revenue of $158.6M (+13.9%) vs. $157.3M. (PR)
- SS&C Technologies Holdings (SSNC): Q3 EPS of $0.23 beats by $0.01. Revenue of $83M (+20.5%) in-line. (PR)
- SolarWinds (SWI): Q3 EPS of $0.21 beats by $0.03. Revenue of $41M (+27.4%) vs. $38M. Shares +2.3% AH. (PR)
- Southwestern Energy (SWN): Q3 EPS of $0.46 beats by $0.01. Revenue of $682M (+35.6%) vs. $509M. Shares -1.1% AH. (PR)
- Sunoco (SUN): Q3 EPS of $0.22 misses by $0.19. Revenue of $20.7M (+2.3%) vs. $21.1M. Shares -4% AH. (PR, earnings call transcript)
- Thoratec (THOR): Q3 EPS of $0.32 beats by $0.04. Revenue of $91M (+39.7%) vs. $89M. Shares -0.3% AH. (PR)
- United Stationers (USTR): Q3 EPS of $1.45 beats by $0.02. Revenue of $1.3B (+1.9%) in-line. (PR)
- Varian Medical Systems (VAR): FQ4 EPS of $0.87 beats by $0.03. Revenue of $652M (+1.6%) vs. $667M. Shares -0.1% AH. (PR, earnings call transcript)
- Vistaprint (VPRT): FQ1 EPS of $0.36 beats by $0.05. Revenue of $171M (+17.5%) vs. $163M. Shares +2% AH. (PR)
- VeriSign (VRSN): Q3 EPS of $0.27 beats by $0.01. Revenue of $173M (+10%) in-line. Shares -1.4% AH. (PR, earnings call transcript)
- Varian Semiconductor Equipment Associates (VSEA): FQ4 EPS of $0.79 beats by $0.05. Revenue of $259M (+120%) vs. $257M. Shares +0.3% AH. (PR, earnings call transcript)
- Westar Energy (WR): Q3 EPS of $1.02 beats by $0.07. Revenue of $644M (+21.9%) vs. $613M. (PR)
- In Asia, Japan -1.8% to 9202. Hong Kong -0.5% to 23096. China -0.5% to 2979. India +0.5% to 20032.
- In Europe, at midday, London -0.3%. Paris -0.4%. Frankfurt -0.2%.
- Futures at 7:00: Dow -0.3%. S&P -0.4%. Nasdaq -0.2%. Crude -0.8% to $81.52. Gold -0.3% to $1338.20.
Friday's Economic Calendar
- 8:30 GDP Q3
8:30 Employment Cost Index
8:30 ISM New York Business Index
9:45 Chicago PMI
9:55 Reuters/UofM Consumer Sentiment
10:30 ECRI Leading Index
3:00 PM USDA Ag. Prices
- Notable earnings before Friday's open: ACI, AEE, AGP, AIV, ALE, AON, B, BPO, CEG, CI, CMC, CNX, COL, CSE, CVX, D, DTE, EIX, EL, HMSY, HSIC, IPG, ITT, LNT, LPNT, MDC, MGLN, MRK, NDAQ, NEE, NI, NWL, PGN, PNM, POM, QSII, SHPGY, SNE, UFS, WBC, WY
Seeking Alpha's Market Currents team contributed to this post.
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