- Chevron to buy Atlas Energy. Chevron (NYSE:CVX) agreed to buy Atlas Energy (NYSE:ATLS) for $4.3B, or $43.35/share, marking a 37% premium to yesterday's close. The move will give Chevron assets in the Marcellus region, boosting the company's U.S. shale gas exposure. Premarket: ATLS +36.3% to $43.25, CVX -1.1% (9:00 ET).
- Ambac files for Ch. 11. Ambac (ABK) filed for bankruptcy yesterday, having failed to raise additional capital or arrange a structured bankruptcy agreement with senior debt holders. As of June 30, the company had $1.6B in debt and $394.5M in assets, and Ambac had warned last week that bankruptcy was likely. Among Ambac's largest creditors was BNY Mellon (NYSE:BK), which held $1.6B in unsecured notes. Premarket: ABK -63.8% to $0.188 (7:00 ET).
- Vodafone to shed Softbank interests. Vodafone (NASDAQ:VOD) is planning to sell its interests in Japanese wireless operator Softbank Corp. for £3.1B ($5B), accelerating its efforts to shed non-core assets and focus on data services and other growth areas. Vodafone also raised its full-year forecast for adjusted operating profit to £11.8B-12.2B after H1 sales climbed 3.9% to £22.6B. Premarket: VOD +0.4% (7:00 ET).
- P-E firms, Alibaba discuss buying back Yahoo stake. Jack Ma, the founder of Alibaba Group, has reportedly been in talks with private equity firms about potentially buying back Yahoo's (NASDAQ:YHOO) 40% stake in the Chinese e-commerce giant. Relations between Alibaba and Yahoo have grown contentious, and rumors that Yahoo may be a takeover target add immediacy to Alibaba's bid to separate itself from Yahoo. Sources said it was unclear whether this is a new bid attempt or the same one that AOL (NYSE:AOL) was rumored to be looking at last month. Premarket: YHOO +4% (7:00 ET).
- Morgan Stanley on track for Smith Barney buy. Morgan Stanley (NYSE:MS) CEO James Gorman confirmed the bank plans to "move forward" with its plans to buy the rest of its joint venture in Smith Barney. Morgan Stanley's deal with Citigroup (NYSE:C) was structured to provide flexibility for Morgan to be "more aggressive or less aggressive" in purchasing the rest of the Smith Barney stake, and recent media reports had suggested Morgan may delay the timetable in order to preserve cash and meet higher capital requirements. Gorman suggested this was incorrect, adding the firm plans to move forward on its May 2012 option to buy the next 14% of Morgan Stanley Smith Barney.
- Oracle faults SAP for $4B in damages. Oracle (NYSE:ORCL) chief Larry Ellison testified in court yesterday that the theft of intellectual property by a now-defunct SAP (NYSE:SAP) unit could have cost Oracle as much as $4B. SAP had offered to settle the closely-watched trial for $40M, a sum that one Oracle executive said would be a "reward for their bad behavior, frankly." An expert witness called by Oracle yesterday said SAP owes at least $1.5B in damages, but SAP lawyers are likely to contest this sum too, as only 350 customers defected to SAP as a result of the theft.
- Sanofi tells Genzyme board to get out of the way. Sanofi-Aventis (NYSE:SNY) sent Genzyme (GENZ) a letter asking the U.S. biotech firm to give shareholders a choice on Sanofi's $18.5B offer rather than engaging in defensive tactics to block a takeover. Genzyme has unanimously rejected Sanofi's $69/share offer, and has said it's open to merger discussions only if Sanofi is willing to make an offer that "appropriately recognizes Genzyme's intrinsic value and prospects."
- Panel: BP didn't put profit ahead of safety. Contrary to some prior accusations, there has been no evidence that BP (NYSE:BP) made decisions that put profit ahead of safety on its Gulf of Mexico oil rig, according to the preliminary conclusions of the National Commission on the BP Deepwater Horizon Oil Spill. However, "any time you're talking about [operating costs of] $1.5M a day, money enters in," and BP should have done more testing before going into production with the well. BP also added risk by removing a safeguard before fully sealing the well, one of several questionable judgments made by BP in the hours leading up to the spill. In yesterday's trading, HAL +4.7%. Premarket: BP +2.8%, RIG +2% (7:00 ET).
- QE2 grumbles among Fed officials. Dallas Fed's Richard Fisher called QE2 a "risky" move that can succeed only if lawmakers address the economy's root fiscal and regulatory ills. Fisher, who votes on the FOMC next year, is worried that the action could lead to a declining dollar, more speculation, commodity hoarding, and hurt savers. Separately, Fed governor Kevin Warsh said he's 'less optimistic' that QE2 will have "significant, durable benefits for the real economy," and warned of 'significant risks' associated with the program, including the potential for triggering excessive inflation later on.
- Barclays profit takes a spill. Barclays' (NYSE:BCS) Q3 pretax profit fell 76% to £327M ($537M), while its investment bank posted a pretax loss of £182M from a profit of £369M in the year-earlier period. The bank said "capital, leverage and liquidity ratios remain strong," with Core Tier 1 ratio unchanged from H1 at 10%. Bad loan provisions were down 27% to £1.2B. Analysts were mixed as to whether the numbers indicate the bank will continue to underperform as momentum slows at its I-bank, or whether the numbers were indeed 'resilient' given the challenging economic environment. Investors seemingly think the latter, as shares are +1.5% premarket (7:00 ET).
- Gold hits a fresh high. Economic fears helped push gold to a new high yesterday, with gold for December delivery settling at a record $1,403.20 per ounce. Some analysts think gold could hit $1,500/oz. by the end of the year as worried investors resort to safe-haven buying. As of 7:00 ET, gold futures are up 1.15% to $1,419.30.
- Rolls-Royce limits engine fault. The American depositary receipts of Rolls-Royce Group (OTCPK:RYCEY) climbed 3.9% yesterday after the company said the recent Qantas engine failure is specific to the Trent 900 engine, and unconnected to a prior test-bed incident with a different engine. The company is working with Airbus (OTCPK:EADSY) and airlines including Qantas, Lufthansa and Singapore Airlines on checks and inspections. Separately, Rolls-Royce announced a $1.2B engines contract from China Eastern Airlines, and Qantas is reviewing the way it operates its A380 planes following reports it works its Rolls-Royce engines harder than other airlines.
- Hedge funds make a comeback. Risk appetite is starting to recover, as hedge funds saw their collective assets climb to more than $1.6T last month, the highest level in more than two years. It was also the fourth consecutive month of positive returns, with gains of 2.3%, and gains of 7.3% over the last ten months.
Earnings: Tuesday Before Open
- Covidien (NYSE:COV): FQ4 EPS of $0.84 beats by $0.10. Revenue of $2.7B (+3.1%) vs. $2.6B. (PR)
- Tyco International (NYSE:TYC): FQ4 EPS of $0.74 beats by $0.08. Revenue of $4.5B (+4%) vs. $4.4B. (PR)
Earnings: Monday After Close
- Hologic (NASDAQ:HOLX): FQ4 EPS of $0.30 in-line. Revenue of $428M (+6.3%) vs. $419M. (PR, earnings call transcript)
- LDK Solar (NYSE:LDK): Q3 EPS of $0.72 beats by $0.29. Revenue of $676M (+19.5%) vs. $628M. Shares +5.6% AH. (PR)
- McDermott International (NYSE:MDR): Q3 EPS of $0.26 misses by $0.02. Revenue of $732M (-27.7%) vs. $799M. Shares +1.8% AH. (PR)
- Priceline.com (NASDAQ:PCLN): Q3 EPS of $5.33 beats by $0.36. Revenue of $1B (+37.1%) vs. $974M. Shares +6.4% AH. (PR, earnings call transcript)
- Qiagen (NASDAQ:QGEN): Q3 EPS of $0.25 beats by $0.02. Revenue of $274M (+5.6%) vs. $277M. (PR)
- Rackspace Hosting (NYSE:RAX): Q3 EPS of $0.09 in-line. Revenue of $200M (+23%) vs. $198M. Shares -1.9% AH. (PR)
- UDR Inc. (NYSE:UDR): Q3 EPS of $0.28 beats by $0.01. (PR)
- In Asia, Japan -0.4% to 9694. Hong Kong -1.0% to 24711. China -0.8% to 3135. India +0.4% to 20932.
- In Europe, at midday, London +0.8%. Paris +0.8%. Frankfurt +0.7%.
- Futures at 7:00: Dow +0.3%. S&P +0.2%. Nasdaq +0.4%. Crude +0.3% to $87.35. Gold +1.15% to $1419.30.
Tuesday's Economic Calendar
- 7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 IBD/TIPP Economic Optimism
10:00 Wholesale Trade
1:00 PM Results of $24B, 10-Year Note Auction
7:00 PM CFTC's Gensler: Issues Facing the Economy
- Notable earnings before Tuesday's open: COV, DF, INCY, JASO, MMC, SRE, TYC
- Notable earnings after Tuesday's close: AONE, IGT, MBI
Seeking Alpha's Market Currents team contributed to this post.
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