- Borders bankruptcy imminent. Borders (BGP) plans to file for bankruptcy and close at least 150 stores as soon as the middle of the month, according to unidentified people familiar with the situation. The company is working to finalize some of the details in its restructuring plan, and is said to be in talks with Bank of America (NYSE:BAC) and GE's (NYSE:GE) finance arm about $500M-550M in debtor-in-possession financing. In yesterday's trading, Borders plummeted 35.6% (and is down another 10.6% premarket), while rival Barnes & Noble (NYSE:BKS) gained 7.4%.
- Citigroup wrests control of EMI. Citigroup (NYSE:C) seized control of EMI Group from Terra Firma, Guy Hands' private-equity firm, and completed a recapitalization of the debt-laden music company that cut EMI's debt to £1.2B from £3.4B. The move ends a long-running battle between Terra Firma, which bought EMI in 2007 for £4B ($6.4B), and Citigroup, which underwrote the debt associated with the deal; Hands claimed the purchase price was deceptively high and ultimately sued Citigroup over the matter. Though the move was expected, the timing was a surprise, as many in the music industry expected Citigroup to wait until Terra Firma defaulted on its loan before seizing control. Sources say Citigroup will now look for a buyer for the music group, with Warner Music Group (NYSE:WMG) said to be a potential suitor.
- Amazon to take on Netflix. Amazon (NASDAQ:AMZN) is said to be developing a streaming online movie service that would compete directly with Netflix (NASDAQ:NFLX). Sources say Amazon has been in talks with Hollywood studios and several independent companies about acquiring library content, and has already signed the rights to some independent films. However, the field could get crowded quickly as Amazon is not the only web company reportedly looking to take on Netflix. Premarket: NFLX -1.2% (7:00 ET).
- S&P cuts Ireland. S&P cut Ireland's credit rating to A-/A-2 from A/A-1 this morning, and maintains a negative outlook uncertainty over how much additional capital the country's banks will need. S&P plans to reassess the rating by April, when Ireland's central bank will have completed a review of the banks' liquidity and capital requirements.
- Credit reprieve for American Apparel. American Apparel (APP) rose 5.8% in yesterday's trading after disclosing some lenders had extended a credit agreement, and as a result the company won't need to maintain a minimum consolidated EBITDA level from January 31 through February 10. American Apparel also said it was discussing the possibility of making the waiver permanent. However, the company still faces a possible default which could jeopardize its ability to continue as a going concern.
- U.K. court rules against BP. A U.K. court found in favor of TNK-BP's Russian shareholders, and issued an injunction barring BP (NYSE:BP) from proceeding with a planned Arctic oil venture with Rosneft. BP said it will enter court-ordered expedited arbitration to resolve the matter by Feb. 25, and oil sector analysts believe the two sides will reach an agreement that allows the deal to proceed. Shares of BP rose 1.1% yesterday.
- SEC probes Computer Sciences Corp. Computer Sciences Corporation (NYSE:CSC) disclosed yesterday that the SEC had opened a formal investigation into the company's "previously disclosed accounting adjustments in the company’s Managed Services Sector segment, primarily in Europe’s Nordic region." The unit in question makes up 40% of CSC's revenue and posted $1.58B in sales in Q2. Despite the disclosure, shares closed +1.9% in yesterday's trading.
- Senate to vote on healthcare reform. The Senate is expected to push ahead today with a vote to repeal recent healthcare reform legislation, following a second court ruling that the new law is unconstitutional. The vote will almost certainly fail, but Republican lawmakers say it sends an important message. The healthcare reform law will likely end up before the Supreme Court, possibly during the 2011-2012 term.
- Fed passes China on Treasury holdings. The Federal Reserve is now the top holder of Treasury securities, pushing China to the number two slot. According to recent data, the New York Fed's holdings of Treasurys in its System Open Market Account total $1.1T vs. China's $896B holdings and Japan's $877B. The gap will likely continue to grow, as the Fed is less than halfway through its latest round of quantitative easing.
- Increased risks tied to Roche's Avastin. Roche Holding's (OTCQX:RHHBY) cancer drug Avastin is linked to a higher rate of life-threatening side effects, according to a new analysis in this week's Journal of the American Medical Association. The report shows that 2.5% of patients being treated with Avastin plus chemotherapy died because of a side effect tied to the treatment vs. a death rate of 1.7% for patients being treated with chemotherapy alone. The move is a further blow for top-selling Avastin, after U.S. regulators in December moved to revoke the drug's approval for treating cancer, though some doctors believe the new data will have limited impact on the approved use of Avastin.
- Nestle invests in 'medical food.' Nestle (OTCPK:NSRGY) will announce today that it has bought CM&D Pharma, a U.K.-based pharmaceutical start-up testing a chewing gum to help kidney-disease sufferers. Nestle has been trying to break into the 'medical food' sector since the late 1980s, and hopes to finally see success as it is now operating its medical-food business as a separate company. The chewing gum in question, called Fostrap, wouldn't be considered a drug and therefore wouldn't necessarily need a prescription in the U.S. and wouldn't need FDA approval; sales could begin within a year.
Earnings: Wednesday Before Open
- Mattel (NASDAQ:MAT): Q4 EPS of $0.89 beats by $0.03. Revenue of $2.12B (+8.7% Y/Y) beats by $0.04B. (PR)
- Suncor Energy (NYSE:SU): Q4 EPS of $0.60 beats by $0.10. (PR)
- Thermo Fisher (NYSE:TMO): Q4 EPS of $1 beats by $0.05. Revenue of $2.78B (-2.1% Y/Y) misses by $0.02B. (PR)
- Whirlpool (NYSE:WHR): Q4 EPS of $2.11 misses by $0.15. Revenue of $5.04B (+3.6% Y/Y) beats by $0.2B. (PR)
Earnings: Tuesday After Close
- Acme Packet (NASDAQ:APKT): Q4 EPS of $0.26 beats by $0.03. Revenue of $70.2M (+70% Y/Y) beats by $9.4M. Shares +4.4% AH. (PR)
- AFLAC (NYSE:AFL): Q4 EPS of $1.33 misses by $0.02. Revenue of $5.3B (+15% Y/Y) misses by $0.3B. Shares -0.7% AH. (PR)
- Boston Scientific (NYSE:BSX): Q4 EPS of $0.15 beats by $0.06. Revenue of $2B (-3.7% Y/Y) in-line. Shares +1% AH. (PR)
- Broadcom (BRCM): Q4 EPS of $0.58 may not be comparable with consensus of $0.74. Revenue of $1.9B (+45% Y/Y) beats by $0.05B. Shares -6.1% AH. (PR, earnings call transcript)
- C.H. Robinson Worldwide (NASDAQ:CHRW): Q4 EPS of $0.62 misses by $0.01. Revenue of $2.3B (+16% Y/Y) in-line. Shares -6% AH. (PR, earnings call transcript)
- Crown Holdings (NYSE:CCK): Q4 EPS of $0.42 beats by $0.04. Revenue of $1.9B (+1.7% Y/Y) in-line. (PR)
- Electronic Arts (ERTS): FQ3 EPS of $0.59 beats by $0.02. Revenue of $1.4B (+5% Y/Y) in-line. Shares +8.7% AH. (PR, earnings call transcript)
- Leggett & Platt (NYSE:LEG): Q4 EPS of $0.21 misses by $0.02. Revenue of $802M (+4% Y/Y) beats by $24M. (PR)
- MEMC Electronic Materials (WFR): Q4 EPS of $0.05 misses by $0.26. Revenue of $850M (+138% Y/Y) misses by $50M. Shares +3.4% AH. (PR, earnings call transcript)
- United Rentals (NYSE:URI): Q4 EPS of $0.16 misses by $0.02. Revenue of $597M (+7% Y/Y) beats by $22M. Shares -3.7% AH. (PR)
- Western Union (NYSE:WU): Q4 EPS of $0.38 beats by $0.03. Revenue of $1.3B (+3.3% Y/Y) beats by $0.03B. Shares +0.3% AH. (PR, earnings call transcript)
- In Asia, Japan +1.8% to 10457. Hong Kong +1.8% to 23909. China +0.3% to 2799. India +0.4% to 18091.
- In Europe, at midday, London +0.7%. Paris -0.2%. Frankfurt -0.1%.
- Futures at 7:00: Dow flat. S&P flat. Nasdaq -0.1%. Crude +0.15% to $90.91. Gold -0.3% to $1335.
Wednesday's Economic Calendar
7:00 MBA Mortgage Applications
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
9:00 Treasury Quarterly Refunding
10:30 EIA Petroleum Inventories
5:30 PM Fed's Duke: 'From Community Banker to Central Banker'
- Notable earnings before Wednesday's open: AGN, CAM, GNW, HSP, HSY, IACI, LVLT, MAT, MRO, NDAQ, SU, TMO, TWX, WHR
- Notable earnings after Wednesday's close: ACE, AMP, BMC, CDNS, EQR, GMCR, HIG, ICO, ISIL, LNC, NETL, NWSA, SOLR, TSO, UNM, V, VMC, YUM
The SA Currents team contributed to this post.
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