- Cumulus in talks to buy Citadel. Citadel Broadcasting (CDELA.PK) is reportedly in exclusive negotiations to sell itself to Cumulus Media (CMLS) for $37 per share, or around $2.4B. Citadel had rejected a $31/share offer from Cumulus in December. The highly-leveraged deal would require Cumulus, with a $200M market cap, to finance a cash payment of more than $1B. In yesterday's trading, CMLS +10.9%, CDELA.PK +18.2% to $35.45.
- Ford, Sollers plan JV. Ford (F) and Sollers OJSC signed a memorandum of understanding to launch a 50-50 joint venture called Ford Sollers which will produce and distribute Ford vehicles in Russia. In 2002, Ford became the first foreign automaker to enter the Russian market, and expects the partnership to accelerate its growth and brand recognition among Russian consumers. Premarket: F +0.8% (7:00 ET).
- SEC probes mutual funds over muni pricing. The SEC is reportedly investigating whether some mutual funds overstated the value of thinly-traded and risky municipal bonds. Regulators are worried that investors may have been misled about the true value of their holdings, especially given the weakness in the muni market over the last few months and the fact that many fund managers have had to sell high-quality liquid assets to meet investor redemptions, leaving many portfolios heavily-weighted with junk-rated bonds.
- Apple draws antitrust scrutiny, again. Apple (AAPL) is once again in the antitrust hotseat, this time over the terms it set for media companies who want to sell their content on its iPad and other devices. Sources said enforcement agents from the Justice Department and Federal Trade Commission have only just begin to look into Apple's new subscription service, while a spokeswoman for the European Commission said the commission was aware of the new subscription service and was "carefully monitoring the situation." On this side of the ocean, the concern is that Apple may be violating antitrust law by funneling media companies' customers into the iTunes payment system and taking a 30% cut. Premarket: AAPL -1% (7:00 ET).
- Nasdaq, ICE in advanced talks. Nasdaq OMX Group (NDAQ) and IntercontinentalExchange (ICE) are said to be in 'critical stage' talks about a potential partnership. Nasdaq has hired Bank of America (BAC) to explore possible tie-ups following this week's deal announcement from NYSE Euronext (NYX) and Deutsche Boerse (DBOEY.PK), and last week's announcement from the London Stock Exchange (LDNXF.PK) and TMX Group (TMXGF.PK).
- Court to U.S.: Decide on drilling. A federal judge gave the Obama administration 30 days to decide whether or not to grant five permits for deepwater drilling projects in the Gulf of Mexico. The White House lifted a months-long drilling moratorium last fall, but has yet to grant any permits to drill new wells at depths greater than 500 feet; Judge Martin Feldman called the government's inaction 'increasingly inexcusable.' All five permit applications came from Ensco (ESV).
- Hedge funds, insurers may face 'systemic risk' label. A large outflow of hedge fund investors could "cause activity in some markets to freeze," according to a recently obtained report by the Financial Stability Oversight Council, while the failure of a large insurance company could “result in dramatic and destabilizing actions being taken by investors.” The comments are part of an 80-page draft report the council is preparing to help regulators decide which non-bank financial firms pose a systemic risk. The report, at least in its preliminary draft, didn't make any specific recommendations.
- G-20 finmins meet. G-20 finance ministers will meet in Paris today and tomorrow, but are unlikely to reach a consensus on some of the agenda's major topics. Speaking hours before the start of the meeting, Japan's finance minister Yoshihiko Noda said the G-20 was split down the middle over how to measure imbalances in the global economy and how to avert future financial crises. However, with economies on the mend and stock markets rising, many investors seem content to see little progress from the G-20 meetings, and are eager to avoid G-20 consensus that could be "a heavy-handed attempt to subjugate domestic priorities for the sake of external balance."
- Dodd-Frank tensions bubble up. In a Senate hearing yesterday, the heads of major regulatory agencies made it clear to lawmakers that unless their budgets are increased, they won't be able to fully implement the Dodd-Frank financial reform law. Meanwhile, Republican lawmakers escalated their push to delay and derail the planned reforms. However, few see yesterday's actions as more than posturing, and while the implementation of some of the new rules may be delayed, little change is expected to the substance of the reforms. (More: Regulators soften on debit card fees)
- Foreign banks grab Dodd-Frank loophole. Foreign banks with U.S. operations are latching onto a loophole that allows them to avoid some of the capital-buffer requirements of the Dodd-Frank law. Rather than pumping billions of dollars into their U.S. subsidiaries to reach 'well-capitalized' levels, several banks are reportedly considering changing the legal classification of their U.S. operations so that the units are no longer subject to federal bank-capital requirements. Barclays (BCS) did so quietly in November, a move it disclosed this week in a footnote on page 91 of its annual financial statements.
- JPMorgan's Dimon gets bonus boost. JPMorgan (JPM) CEO Jamie Dimon was granted a stock and options bonus worth $17M, 22% higher than his 2010 bonus. The move comes one month after the company handily beat earnings expectations. Dimon was granted 251,415 restricted stock units, half of which vest in January 2013 and the rest the following year. He also received 367,377 stock appreciation rights, which have a 10-year term and become exercisable in five installments staring next January.
- Convergys may be takeover target. Convergys (CVG), a customer relationships company, may find itself a takeover target as technology giants and private-equity firms look for acquisitions. Sources said the company reviewed strategic options last summer, including a possible sale of the company, but bids came in too low and Convergys shelved the idea of a sale without making the review public. However, with a rebounding economy, an activist shareholder, a new CEO, and an improving business model within a consolidating industry, some insiders now see a takeover as extremely likely. Shares rose as much as 3% yesterday, before closing +1.75%.
- China hikes reserve requirements. China raised its reserve requirements by 0.5% to 19.5%, the second hike this year. China raised its key interest rate by 0.25% last week, and is trying to tamp down inflation that appears to be accelerating.
- Obama's Silicon Valley meeting. President Obama sat down last night with the heads of a dozen high-profile tech companies, including Google (GOOG), Apple (AAPL), Yahoo (YHOO), Netflix (NFLX) and Oracle (ORCL), and tried to get the executives to back his push for continued spending on high-tech initiatives. Obama's tech spending goals face resistance from deficit hawks in Congress, and fly in the face of Obama's own budget proposal which proposes a sweeping five-year freeze on various areas of domestic spending.
Earnings: Friday Before Open
- Calpine (CPN): Q4 EPS of -$0.38 may not be comparable with consensus of $0.09. Revenue of $1.47B (-4.7% Y/Y) beats by $0.13B. (PR)
- Yingli Green Energy (YGE): Q4 EPS of $0.52 beats by $0.08. Revenue of $616M (+66% Y/Y) beats by $70M. (PR)
Earnings: Thursday After Close
- Aruba Networks (ARUN): FQ2 EPS of $0.14 beats by $0.01. Revenue of $93.9M (+50% Y/Y) beats by $6M. Shares +8.8% AH. (PR, earnings call transcript)
- Brocade Communications Systems (BRCD): FQ1 EPS of $0.12 beats by $0.02. Revenue of $546M (+1.3% Y/Y) beats by $3M. Shares +5.5% AH. (PR, earnings call transcript)
- Bucyrus International (BUCY): Q4 EPS of $1.71 beats by $0.40. Revenue of $1.23B (+92% Y/Y) beats by $0.09B. Shares +0.2% AH. (PR)
- CF Industries (CF): Q4 EPS of $2.78 may not be comparable with consensus of $2.56. Revenue of $1.2B (+137% Y/Y) in-line. Shares -1.6% AH. (PR)
- Clearwire (CLWR): Q4 EPS of -$0.53 beats by $0.01. Revenue of $181M (+126% Y/Y) misses by $12M. Shares +3.7% AH. (PR, earnings call transcript)
- Developers Diversified Realty (DDR): Q4 EPS of -$0.17 may not be comparable with consensus of $0.26. Revenue of $204M (+% Y/Y) misses by $5M. (PR)
- EOG Resources (EOG): Q4 EPS of $0.36 beats by $0.10. Revenue of $1.79B (+1.6% Y/Y) beats by $0.28B. Shares +2.4% AH. (PR)
- Key Energy Services (KEG): Q4 EPS of $0.01 may not be comparable with consensus of $0.04. Revenue of $350M (+23% Y/Y) beats by $14M. (PR)
- Intuit (INTU): FQ2 EPS of $0.32 beats by $0.02. Revenue of $878M (+4.9% Y/Y) misses by $6M. Shares +2.9% AH. (PR, earnings call transcript)
- Nordstrom (JWN): Q4 EPS of $1.04 beats by $0.04. Revenue of $2.8B (+11% Y/Y) in-line. Shares -3% AH. (PR, earnings call transcript)
- SunPower (SPWRA): Q4 EPS of $1.36 beats by $0.31. Revenue of $937M (+71% Y/Y) beats by $6M. Shares +7.3% Pre-market. (PR)
- Sunstone Hotel Investors (SHO): Q4 EPS of $0.20 beats by $0.02. Revenue of $184M (+8.4% Y/Y) beats by $6M. (PR, earnings call transcript)
- In Asia, Japan +0.1% to 10842.8. Hong Kong +1.3% to 23595. China -0.9% to 2900. India -1.6% to 18212.
- In Europe, at midday, London -0.6%. Paris -0.1%. Frankfurt -0.1%.
- Futures at 7:00: Dow flat. S&P -0.1%. Nasdaq -0.1%. Crude -0.2% to $86.17. Gold +0.1% to $1386.60.
Friday's Economic Calendar
- 8:00 Bernanke speaks on global imbalances and financial stability
10:30 ECRI Leading Index
- Notable earnings before Friday's open: CPB, CPN, DLR, EGO, NVE, PGN, UPL, YGE
The SA Currents team contributed to this post.
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