- Dynegy dumps Blackstone, will explore options. Takeover target Dynegy (NYSE:DYN) said it assumes shareholders will reject its merger agreement with Blackstone (NYSE:BX), and that it plans to explore strategic options, including soliciting proposals from "potentially interested parties" such as large shareholders Seneca Capital and Carl Icahn, who had vehemently opposed the $5.00/share, $600M deal. Dynegy also said it will "carefully review its standalone restructuring alternatives." Premarket: DYN +2.1% (7:15 ET).
- Three raids as insider trading probe heats up. The FBI raided three large hedge funds yesterday, seizing documents from SAC Capital spin-offs Diamondback Capital and Level Global Investors, and from Loch Capital Management, as regulators accelerate their insider trading probe. Sources said the Justice Department is intent on taking down a dozen hedge fund firms in its attempt to shake up the industry, with some suggesting this could become "one of the most far-reaching insider-trading cases ever." (More: Regulators shift approach on insider trading detection)
- Irish PM to dissolve government. Irish Prime Minister Brian Cowen said he would dissolve the government after the country passes its crucial 2011 budget in early December, paving the way for new elections that will almost certainly see Cowen voted out. The announcement came just a day after Ireland agreed to seek an estimated €80B ($110M) bailout from the EU and IMF, and adds the threat of political instability to the eurozone's financial crisis. EUR -0.5% vs. USD (7:00 ET).
- J. Crew in talks to go private. J. Crew (JCG) is nearing a deal to be taken private by a private-equity duo for $43.50/share in cash, or around $3B. The suitors, TPG Capital and Leonard Green & Partners, would divide ownership of the clothing retailer 75%-25%, with the larger stake going to TPG, a former owner of J. Crew. A deal could be announced as soon as today.
- North Korea fires rockets at South Korea. North Korea fired artillery rockets at the South Korean island of Yeonpyeong, killing two soldiers, and wounding 16 soldiers and three civilians. The news rattled markets, and temporarily boosted the dollar as a safe-haven buy; there was even some initial selling of yen, usually seen as a safe-haven currency as well, because of Japan's geographical proximity to the conflict. The dollar later pared its gains after South Korea and China appealed for calm, and as at least one major ratings agency said it was 'very unlikely' the attack would turn into full-scale hostilities. South Korea's Kospi index, which shut for the day just as reports of the shelling began to trickle in, closed -0.8% but will likely face pressure tomorrow on the news. As of 7:00 ET: South Korea's won -2.5% against the dollar on the forward market. USD +0.1% vs. JPY. London -0.6%. Paris -0.9%. S&P futures -0.8%.
- Medtronic buys Ardian. Medtronic (NYSE:MDT) agreed to buy privately-held Ardian, a developer of catheter-based therapies to relieve hypertension, for $800M in cash upfront, with commercial milestones set for the next five years. Medtronic, which considers renal denervation an 'exciting' growth market in medical devices, already held an 11% stake in Ardian. In after-hours trading, MDT +0.6% to $34.90.
- Massey Energy to review sale. Massey Energy (NYSE:MEE) said it will begin a "formal review of strategic alternatives," including selling itself. Sources said several potential suitors have approached the firm with detailed bid offers, including ArcelorMittal (NYSE:MT) and Alpha Natural Resources (ANR), with the latter said to be comfortable with a bid in the $47-50/share range. Arch Coal (NYSE:ACI), Consol Energy (NYSE:CNX) and others are also said to be interested. Massey shares gained 1.7% in AH trading to $51.36.
- J&J recalls children's medication. Johnson & Johnson (NYSE:JNJ) has recalled 4M packages of children's-strength Benadryl and 800K bottles of children's Motrin because of manufacturing problems, but stressed the products are safe for consumption. Even so, this latest quality control fumble will hurt J&J as it tries to regain consumer trust after a string of recalls.
- Thailand's PTT buys into Canadian oil sands. Thailand's PTT Exploration (OTCPK:PEXNY) agreed to pay $2.3B for 40% of Statoil's (NYSE:STO) Canadian oil sands project. Statoil will remain the majority owner and continue operating the project. The investment marks Thailand's first entry into Canada's oil sands, the largest source of crude oil outside the Middle East and the target of billions of dollars of investments by Asian state oil companies in recent years. Premarket: STO +1.3% (7:00 ET).
- H-P shines on earnings beat. Hewlett-Packard (NYSE:HPQ) handily beat earnings expectations (see details below) on increased global sales and profit growth in the company's core PC business. Operating margins narrowed to 9.9% from 10.2%, but were up slightly on an adjusted basis. H-P also raised its guidance for the coming year to EPS of $5.16-5.26 on revenue of $132B-133.5B; analysts had expected $5.11 and $132.42B. New CEO Leo Apotheker, making his first public appearance since being appointed, gave little indication of his strategy for the company, other than to say he plans to invest more in the company's research and software. H-P's strong results suggest Cisco's (NASDAQ:CSCO) troubles are company-specific, not industry-wide. Premarket: HPQ +1.85%, CSCO -0.5% (7:00 ET).
- BP comp fund should cover spill costs. Kenneth Feinberg, the administrator of BP's (NYSE:BP) $20B oil spill compensation fund, said he has paid out $2B to 125,000 people and approved 'less than half' of the claims made. Though the fund will also be used for government clean-up costs and to cover lost-income claims, Feinberg said "based on what I’ve seen so far I’m cautiously optimistic that $20B is more than enough" to cover BP's spill-related expenses. Premarket: BP -0.7% (7:00 ET).
- NHTSA to review Honda claims. The National Highway Traffic Safety Administration will decide whether to open a full investigation into claims of possible sudden acceleration problems with Honda's (NYSE:HMC) Accord hybrid. Around 25,000 vehicles would be affected by the probe.
- Lehman bankruptcy costs top $1B. Lehman Brothers (OTC:LEHMQ) is dead, but its bankruptcy bill continues to grow. Law firms, consultants and other advisers working on unwinding the firm's operations and derivatives contracts were paid $40.6M in October, bringing the total bankruptcy bill to $1.02B so far.
Earnings: Monday After Close
- Analog Devices (NASDAQ:ADI): FQ4 EPS of $0.73 beats by $0.03. Revenue of $770M (+34.7%) vs. $755M. Shares -0.5% AH. (PR, earnings call transcript)
- Brocade Communications Systems (NASDAQ:BRCD): FQ4 EPS of $0.14 beats by $0.01. Revenue of $550M (+5.4%) vs. $537M. Shares -5.3% AH. (PR, earnings call transcript)
- Focus Media (NASDAQ:FMCN): Q3 EPS of $0.35 beats by $0.02. Revenue of $137.4M (+39.8%) vs. $142.8M. Shares -5.6% AH. (PR)
- Hewlett-Packard (HPQ): FQ4 EPS of $1.33 beats by $0.06. Revenue of $33.2B (+8.1%) vs. $32.8B. Shares +1.5% AH. (PR, earnings call transcript)
- Nuance Communications (NASDAQ:NUAN): FQ4 EPS of $0.33 beats by $0.01. Revenue of $325M (+17.8%) vs. $320M. Shares -3.3% AH. (PR, earnings call transcript)
- In Asia, Japan +0.9% to 10115. Hong Kong -2.7% to 22896. China -1.9% to 2828. India -1.3% to 19692.
- In Europe, at midday, London -0.6%. Paris -0.9%. Frankfurt -0.2%.
- Futures at 7:00: Dow -0.65%. S&P -0.8%. Nasdaq -0.6%. Crude -0.5% to $81.35. Gold +0.4% to $1363.20.
Tuesday's Economic Calendar
7:45 ICSC Retail Store Sales
8:30 GDP Q3
8:30 Corporate Profits
8:55 Redbook Chain Store Sales
10:00 Mass Layoffs
10:00 Regional and State Employment
10:00 Existing Home Sales
10:00 Richmond Fed Mfg.
11:00 Financial Stability Oversight Council Meeting
1:00 PM Results of $35B, 5-Year Note Auction
2:00 PM FOMC minutes
- Notable earnings before Tuesday's open: CPB, MDT
- Notable earnings after Tuesday's close: GES, JCG, TIVO
Seeking Alpha's Market Currents team contributed to this post.
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