- KKR in talks to buy Del Monte. KKR (KKR) is said to be in advanced talks to buy Del Monte Foods (DLM) and has reportedly made an offer of $18.50/share, valuing the company at $3.6B. Sources said the two hope to finalize a deal by Dec. 2 when Del Monte reports its quarterly earnings. If a deal falls through, other private-equity firms, including Apollo, could be interested in the company. In yesterday's trading, DLM rose 8.3%, and shares are up another 9.8% to $17.25 in premarket trading.
- Bernanke defends QE2, criticizes China. Bernanke is in Frankfurt today for the ECB's Central Banking Conference, and is using the opportunity to mount a defense of the Fed's QE2 decisions and implicitly criticize China for keeping its currency weak. In prepared comments, Bernanke doesn't name China directly, but takes issue with "large, systemically important countries with persistent current-account surpluses" and says "both growth and trade are unbalanced" globally. He also warns that the world's post-crisis "sense of common purpose has waned" and "tensions among nations over economic policies have emerged and intensified, potentially threatening our ability to find global solutions to global problems."
- Ambac joins putback calls. Ambac Assurance, whose parent company filed for bankruptcy earlier this month, says certain banks that put together a dozen poor performing mortgage bonds that Ambac insured need to pay for some of those losses. The demand comes as Ambac reviews loans in residential mortgage-backed securities issued by Bank of America's (BAC) Countrywide unit, affiliates of Citigroup (C), and others. According to its regulatory filing, Ambac "believes, based on its review, that the sponsors of these securities are obligated to pay sums, which may in certain cases be material." Ambac has also sued in connection with 17 RMBS, most of which were structured by Countrywide.
- GM gains modestly in debut. General Motors (GM) posted a gain in its first day of trading, but couldn't sustain its initial momentum; shares closed +3.6% to $34.19, after climbing as high as $35.99. Still, some analysts called it 'an excellent debut,' noting first-day profit-taking is common and too much of a bounce would have prompted criticism that the government was handing out a quick profit to stock flippers.
- China raises reserve ratio. China raised its reserve ratio by another 50 bps, effective Nov. 29, marking the fifth increase this year as China tries to tighten liquidity and rein in inflation. State media reported that the PBOC may have ordered select banks to set aside even more reserves, which officials have neither confirmed nor denied.
- Meredith Whitney takes on ratings firms. Bank analyst Meredith Whitney plans to challenge Moody's (MCO), S&P (MHP) and Fitch by setting up her own credit-rating agency. Whitney said her agency is in the process of applying for a license, and will rely on the status quo business model in which issuers of debt pay for credit ratings. Whitney, who plans to rate global structured products and corporate bonds, dismissed the problem of potential conflicts of interest: "If you run a good business and you have compliance in place, there should not be problems."
- Cisco launches stock buyback. Cisco (CSCO) is taking advantage of its recent drop in share price, announcing plans for up to $10B in additional stock repurchases. Cisco's stock is down 19% this year, and 14% this month; shares +1% premarket (7:00 ET).
- Dell's earnings beat. Dell (DELL) posted better-than-expected quarterly results yesterday (see details below), and saw record profitability in its key enterprise solutions and services business. Sales came in somewhat lower than expected at $15.4B vs. $15.8B consensus, but Dell's closely-watched gross margins figure was around 20% for the quarter vs. an expected 17.5%. Dell benefited from falling prices for components and now expects full-year revenue near the middle of the 14-19% range it set earlier in the year. Shares +4.3% premarket (7:00 ET).
- SEC to vote on hedge fund supervision. The SEC will meet later today to vote on a proposal requiring the registration of hedge funds and private-equity funds with more than $150M in assets under management. The SEC hopes the increased supervision will better enable the agency to uncover fraud in the $1.6T hedge fund industry.
- Airbus seeks compensation from Rolls-Royce. Airbus (OTCPK:EADSY) said it plans to seek full compensation from Rolls-Royce (OTCPK:RYCEY) for extra logistical costs after the failure of Rolls' Trent 900 engine on an Airbus plane operated by Qantas. Airbus said it's "making extra efforts to keep our production flow going and to help our customers maintain their operations," adding that Airbus's A380 delivery schedule has been 'challenged' by the engine problem and Rolls still hasn't disclosed details of its plan for replacing engines in already-operational aircraft.
- P-E firms circle Denmark's ISS. Several private-equity teams, including a group led by Blackstone (BX), are reportedly preparing bids for ISS, the $7B Danish cleaning giant owned by Goldman Sachs (GS) Capital Partners and Sweden's EQT. CVC and Apollo Management are among the firms who are interested, and sources said indicative offers are due next week; an IPO is possible if bids come in too low. ISS refused to comment, other than to reiterate that it's exploring 'strategic alternatives.'
Earnings: Friday Before Open
- Yingli Green Energy (YGE): Q3 EPS of $0.44 beats by $0.08. Revenue of $491M (+50.6%) vs. $477M. (PR)
Earnings: Thursday After Close
- Autodesk (ADSK): Q3 EPS of $0.32 in-line. Revenue of $477M (+14.3%) vs. $471M. Shares -5.7% AH. (PR,earnings call transcript)
- Blue Coat Systems (BCSI): FQ2 EPS of $0.38 beats by $0.01. Revenue of $121M (+0.5%) in-line. Shares -5.5% AH. (PR,earnings call transcript)
- Dell (DELL): Q3 EPS of $0.45 beats by $0.12. Revenue of $15.4B (+19.4%) vs. $15.8B. Shares +4.5% AH. (PR,earnings call transcript)
- Foot Locker (FL): Q3 EPS of $0.33 beats by $0.16. Revenue of $1.3B (+5.4%) vs. $1.2B. Shares +9.5% AH. (PR)
- Gap (GPS): Q3 EPS of $0.48 in-line. Revenue of $3.7B (+1.8%) vs. $3.6B. Shares -2.4% AH. (PR)
- Intuit (INTU): FQ1 EPS of -$0.12 in-line. Revenue of $532M (+12.2%) vs. $520M. Shares -3.9% AH. (PR,earnings call transcript)
- Marvell Technology Group (MRVL): Q3 EPS of $0.45 beats by $0.02. Revenue of $959M (+19.4%) vs. $950M. Shares -2.9% AH. (PR,earnings call transcript)
- Salesforce.com (CRM): Q3 EPS of $0.32 beats by $0.01. Revenue of $429M vs. $410M. Shares +10.4% AH. (PR,earnings call transcript)
- In Asia, Japan +0.1% to 10022. Hong Kong -0.1% to 23606. China +0.8% to 2889. India -1.7% to 19585.
- In Europe, at midday, London -0.8%. Paris -0.5%. Frankfurt -0.1%.
- Futures at 7:00: Dow -0.2%. S&P -0.2%. Nasdaq -0.3%. Crude +0.3% to $82.12. Gold +0.3% to $1357.40.
Friday's Economic Calendar
- 5:15 Bernanke: Global Rebalancing
9:30 CFTC Hearing: Proposed Rules Under Dodd-Frank
10:30 ECRI Leading Index
- Notable earnings before Friday's open: ANN, HNZ, YGE
Seeking Alpha's Market Currents team contributed to this post.
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