- Coinstar plummets on Q4 guidance. Coinstar (CSTR) pre-announced below-guidance Q4 revenue and earnings, pointing to expected Q4 revenue of $391M compared with its previous guidance of $415M-440M. CEO Paul Davis candidly admitted that "this was redbox's first holiday season with 28-day delayed titles, and we underestimated the impact that the delay would have on demand during the fourth quarter." The company also experienced difficulties with inventory management. Looking ahead, Coinstar expects 2011 revenue of $1.7B-1.85B vs. consensus of $1.87B. Shares fell 24% in after-hours trading.
- Sterling Bancshares hits the auction block. Sterling Bancshares (SBIB) has reportedly put itself up for sale and a deal could come as soon as next week. A sale is expected to value the company at around $825M, or $8/share, marking just a 7% premium to the lender's closing price yesterday; shares subsequently rose 8.3% to $8.10 in after-hours trading. Possible bidders include BB&T (BBT) and Comerica (CMA).
- SEC probes banks over sovereign funds. The SEC is reportedly investigating whether certain banks and private-equity firms violated bribery laws in their dealings with sovereign wealth funds. Targets of the inquiry are said to include Citigroup (C) and Blackstone (BX), and as many as ten firms received letters from the SEC in the past week alone. The investigation appears to be in an early stage, and seems to be focused on whether firms paid placement agents to win access to state-owned money.
- Sanofi eyes $76/share for Genzyme. Sanofi-Aventis (SNY) hopes to reach a deal to buy Genzyme (GENZ) for $76/share, reports the French daily Le Figaro, which would break down to $70-71 per share in cash combined with a contingent value right to make up the difference. Sanofi's current offer of $69/share has been deemed too low and the companies are looking to move past a months-long stalemate. Premarket: SNY -1.1% (7:00 ET).
- China raises reserve ratio. China raised its reserve ratio for the fourth time in two months, ordering banks to increase their reserves by 50 bps effective Jan. 20. The country is trying to rein in liquidity after lending exceeded its targets and foreign-exchange holdings rose by a record.
- Google's travel deal may face antitrust challenge. The Justice Department is reportedly preparing an antitrust challenge to Google's (GOOG) $700M acquisition of travel software firm ITA Software. Google pressed the issue last month by invoking a federal law that forced the government to decide on a challenge within 30 days. Separately, South Korean police referred charges against Google to government prosecutors yesterday, accusing Google of breaking national laws with its Street View mapping service.
- Intel's earnings beat. Intel (INTC) beat earnings expectations yesterday (see details below) with its best quarterly and yearly results ever, and set a positive tone for the year ahead, forecasting a further 10% increase in sales this year from 2010's record levels. The forecast seems to indicate that rising demand for server chips is compensating for the company’s delayed entry into the tablet computer market. Intel also intends to boost production spending by as much as 79% this year, another bullish indicator for the company's future growth prospects. Shares rose 2.1% in after-hours trading.
- SIGTARP warns on moral hazard, TBTF. TARP Special Inspector General Neil Barofsky released a report yesterday that provided an overview of Citigroup's (C) 2008 bailout and struck a cautious tone on the continued risks associated with the financial system. The report said Citigroup's bailout was 'strikingly ad-hoc' and "based as much on gut instinct and fear of the unknown as on objective criteria." Moreover, an assertion by Treasury's Geithner that exceptional future circumstances could be cause for additional bailouts prompted Barofsky to warn against a 'TARP legacy' and "the moral hazard associated with the continued existence of institutions that remain ‘too big to fail.’”
- Muni bond market in turmoil. The market for municipal bonds is coming under growing pressure, as borrowers scramble to refinance tens of billions of dollars of debt and investors show lukewarm interest. Most recently, a New Jersey agency was forced yesterday to cut the size of a bond issue by 40% and pay a higher rate than expected because of tepid demand; the news sent the muni bond market to its lowest level since the financial crisis. Vanguard Group also shelved plans for three new muni bond funds, citing market turmoil.
- Lehman bankruptcy plan delayed. Lehman Brothers (OTC:LEHMQ) won't have a court approved bankruptcy plan in place this quarter, as it had previously hoped, and instead is aiming for court approval "well before the end of the year." Lehman also projects that it will ultimately end up paying out around $60.1B as it tries to come to agreements with creditors owed six times that amount. The firm, which has been in bankruptcy for 28 months, plans to file its amended reorganization plan in the next ten days.
Earnings: Friday Before Open
Earnings: Thursday After Close
- Intel (INTC): Q4 EPS of $0.59 beats by $0.06. Revenue of $11.4B (+8.4% Y/Y) beats by $86M. Shares +1.5% AH. (PR, earnings call transcript)
- In Asia, Japan -0.9% to 10499. Hong Kong +0.2% to 24283. China -1.3% to 2791. India -1.7% to 18860.
- In Europe, at midday, London -0.7%. Paris -0.2%. Frankfurt -0.3%.
- Futures at 7:00: Dow -0.2%. S&P -0.2%. Nasdaq +0.05%. Crude -1.1% to $90.39. Gold -1.3% to $1368.80.
Friday's Economic Calendar
- 8:30 Consumer Price Index
8:30 Retail Sales
8:30 Real Earnings
9:15 Industrial Production
9:55 Reuters/UofM Consumer Sentiment
10:00 Business Inventories
10:30 ECRI Leading Index
12:00 PM Fed's Lacker: Economic Outlook
- Notable earnings before Friday's open: JPM
The SA Currents team contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.