- Roche gets rare FDA hearing. The FDA has granted Roche Holding (RHHBY.PK) a rare public meeting to defend the effectiveness of its Avastin drug for treating breast cancer. Avastin is the world's best-selling cancer drug and is approved for several types of colon, lung, kidney and brain cancer, but FDA officials ruled in December that the drug is ineffective for treating breast cancer and began proceedings to revoke Avastin's approval for breast cancer treatment. Roche's decision to challenge the FDA is unusual, and the two-day hearing scheduled for June 28-29 will be the first of its kind.
- Fannie, Freddie still bleeding red. Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) both posted narrowed quarterly losses yesterday evening. Fannie Mae reported a Q4 loss of $2.1B and a full-year loss of $21.7B, and asked for another $2.6B in federal aid. Freddie Mac reported a Q4 loss of $1.7B and a full-year loss of $19.8B, and asked for another $500M in federal aid, up from $100M in aid the previous quarter. All told, the bailouts of Fannie and Freddie are expected to cost taxpayers as much as $259B.
- AIG profits despite messy quarter. AIG (AIG) reported net income of $11.2B in Q4, but it was an uneven quarter for the firm, which was buoyed by profits from large asset sales but saw weakened performance from its core insurance businesses. In particular, Chartis, AIG's global property and casualty insurance business, reported a $4B operating loss for the quarter after taking a $4.2B net reserve charge to cover sharply higher claims estimates for certain types of insurance policies sold in previous years. At the end of 2010, as a result of the asset sales, AIG and its subsidiaries had 63,000 employees, down from 96,000 a year ago. AIG will host its first earnings conference call in two years this morning; it can be heard here at 8:00 ET.
- Oil keeps gaining as uncertainty remains. After a high-flying week, oil futures are still rising (+0.6% to $97.87 at 7:00 ET), but uncertainty remains. Rumors that Libyan leader Muammar Gaddafi had been shot sent oil down more than $2 in minutes yesterday afternoon, though the U.S. said it couldn't confirm the rumor. Gaddafi opponents are consolidating their control of the country’s oil-rich east, amid concerns that toppling Gaddafi and leaving a power void could pose a significant terror threat as extremists may try to take advantage of the government's disintegration. Some analysts believe oil production in Libya will be shut down completely and for a prolonged time. The IEA reports less than 1% of global oil consumption has been removed from the market so far and says its members have 145 days of emergency stocks at their disposal, but "the concept of a barrel for barrel replacement is not a correct one" says Barclays, as the grades and quality of crude available from Saudi Arabia are different from Libya, and the time it takes to bring those Saudi barrels to market likely will be significantly longer compared to ongoing Libyan production.
- Boeing wins Pentagon contract. The Pentagon surprised investors by awarding a $30B tanker program contract to Boeing (BA), continuing Boeing's streak as the sole supplier of Air Force refueling aircraft since 1948. Many analysts had expected the Pentagon to favor a bid by EADS North America (EADSY.PK), and several lawmakers had come out in support of the EADS bid as well. Boeing's victory will likely ease the sting from its endlessly delayed Dreamliner efforts, but could potentially re-open a trans-Atlantic political controversy over whether the U.S. defense market has largely closed itself off from European defense suppliers. In after-hours trading, BA +3.9%.
- Lloyds returns to profit. Lloyds (LYG) posted a £2.2B ($3.55B) pre-charge, pre-tax profit, better than the £2B pre-tax profit analysts had expected and a significant improvement from the £6.3B loss recorded the year before. The improvements were driven by strength in Lloyds' wholesale and retail-banking divisions, while its Wealth and International division saw losses grow on higher bad loans to Irish customers. Lloyds also substantially cut its reliance on central-bank funding, to £97B during Q4 from £157B at the end of 2009. Premarket: LYG -5% (7:00 ET).
- PerkinElmer: We're not for sale. PerkinElmer (PKI) CEO Robert Friel flatly denied reports that the company is putting itself up for sale, and said the issue hasn't even been discussed by the board. Friel was responding to comments by unidentified sources who claimed PerkinElmer was trying to decide whether it should put itself up for sale or find another large company to buy after coming up short in its long pursuit of Beckman Coulter (BEC). Shares of PKI jumped 7% yesterday on more than four times average volume because of the sale rumors, before losing 1.3% in after-hours trading.
- Mortgage exec pleads guilty. The former treasurer of bankrupt Taylor Bean & Whitaker Mortgage Corp. pleaded guilty yesterday to conspiracy, marking the first plea in one of the largest fraud cases to come out of the mortgage meltdown. Desiree Brown is expected to cooperate with prosecutors as they pursue criminal charges against Lee Farkas, the former chairman of Taylor Bean & Whitaker.
- Huawei to U.S.: We're not a threat. In a 2,000-word public letter released this morning, China's Huawei Technologies urged the U.S. to investigate the company, hoping that a thorough probe will finally quash ongoing suspicions that Huawei has ties to China's government and military and poses a threat to U.S. national security. The company has been trying to make inroads into the U.S. market for years but has repeatedly faced regulatory resistance; most recently, Huawei agreed to unravel its deal to buy the assets of 3Leaf Systems after the Committee on Foreign Investment in the U.S. objected to the purchase.
- YouTube eyes U.K. movie service. Google (GOOG) is reportedly eager to launch a streaming movie service that would compete with Netflix (NFLX) and Amazon (AMZN), and is considering debuting the service overseas to cut down on the competition. According to media reports, Google's YouTube is looking to launch the service in Europe, particularly in the U.K., before bringing it over to the U.S. Amazon acquired a U.K. streaming movie service last month, and Netflix hasn't yet launched in Europe.
- Budget shortfall hampers CFTC monitoring. The CFTC has suspended development of a technology program meant to flag suspicious trading because its technology budget was cut by $11M. The funding shortfall is causing a partisan rift in the agency, as Democrats and Republicans put forth competing visions of what the CFTC should do with its limited funding. Republican commissioner Scott O'Malia would like to direct the CFTC's budget toward major investments in technology, while Democrats, led by CFTC chairman Gary Gensler, want to use the available funds to increase staff by 46%.
- Banks push back against mortgage settlement. Disagreement among various regulators and the country's top lenders is slowing progress on a broad settlement that would force banks to modify mortgages. Though banks haven't yet seen the White House's interim proposal, executives argue that the mortgage mod approach is all wrong, and will fail to help individual borrowers or the broader housing market. Mortgage strategists also note that even as much as $20B in penalties is just a drop in the bucket, since borrowers currently owe $744B more on their mortgages than their homes are worth.
- Myspace preps to open its books. News Corp. (NWS) appears to be making progress in its efforts to sell Myspace, as the struggling social networking site is reportedly lining up meetings with suitors. Around 20 companies, including some financial firms, are said to be interested, and will get a first look at Myspace's books in early to mid March.
- Toyota's production falls. Toyota's (TM) global production fell for the fifth consecutive month in January as sales slumped in Japan. Production was down 4.7% Y/Y to 613,831 vehicles last month. The continued slump is further bad news for Toyota, which yesterday recalled an additional 2.2M vehicles in the U.S. to address accelerator pedals that could become entrapped in floor mats or jammed in carpeting. Toyota has now recalled more than 14M vehicles worldwide over safety problems since 2009.
Earnings: Friday Before Open
- Warner Chilcott (WCRX): Q4 EPS of $0.81 beats by $0.07. Revenue of $694.4M (+1.2% Y/Y) beats by $20.6M. (PR)
Earnings: Thursday After Close
- AIG (AIG): Q4 EPS of $16.6 may not be comparable with consensus of -$16.98. Shares +1% AH. (PR)
- Applied Materials (AMAT): FQ1 EPS of $0.36 beats by $0.03. Revenue of $2.7B (+45% Y/Y) beats by $0.08B. Shares +0.4% AH. (PR, earnings call transcript)
- Autodesk (ADSK): Q4 EPS of $0.35 beats by $0.01. Revenue of $528M (+15.8% Y/Y) beats by $13.2M. Shares +2% AH. (PR, earnings call transcript)
- Brigham Exploration Company (BEXP): Q4 EPS of $0.21 beats by $0.03. Revenue of $67M (+195% Y/Y) beats by $3M. Shares -2.9% AH. (PR)
- Community Health Systems (CYH): Q4 EPS of $0.76 beats by $0.03. Revenue of $3.4B (+10% Y/Y) in-line. Shares +0.3% AH. (PR)
- Crocs (CROX): Q4 EPS of $0.05 beats by $0.03. Revenue of $179M (+32% Y/Y) beats by $13M. Shares +4.4% AH. (PR, earnings call transcript)
- Deckers Outdoor (DECK): Q4 EPS of $2.27 beats by $0.28. Revenue of $430.1M (+23.6% Y/Y) beats by $36.62M. Shares +5% AH. (PR)
- First Solar (FSLR): Q4 EPS of $1.80 beats by $0.04. Revenue of $610M (-4.8% Y/Y) misses by $38M. Shares -4.4% AH. (PR, earnings call transcript)
- Gap (GPS): Q4 EPS of $0.60 beats by $0.03. Revenue of $4.36B (+2.9% Y/Y) beats by $0.1B. Shares +0.9% AH. (PR, earnings call transcript)
- Goldcorp (GG): Q4 EPS of $0.57 beats by $0.10. Revenue of $1.31B (+70% Y/Y) beats by $0.07B. Shares +0.7% AH. (PR)
- Human Genome Sciences (HGSI): Q4 EPS of -$0.46 misses by $0.08. Revenue of $21.3M (-60% Y/Y) in-line. Shares -0.9% AH. (PR)
- Liberty Global (LBTYA): Q4 EPS of $0.22 misses by $0.01. Revenue of $2.43B (+18% Y/Y) in-line. (PR)
- Mentor Graphics (MENT): Q4 EPS of $0.48 beats by $0.02. Revenue of $308M (+30% Y/Y) beats by $16M. Shares +4.9% AH. (PR, earnings call transcript)
- Salesforce.com (CRM): Q4 EPS of $0.31 beats by $0.05. Revenue of $456M (+29% Y/Y) in-line. Shares +8.2% AH. (PR, earnings call transcript)
- SandRidge Energy (SD): Q4 EPS of -$0.07 beats by $0.01. Shares +7.9% AH. (PR)
- SBA Communications (SBAC): Q4 EPS of -$0.34 misses by $0.12. Revenue of $166M (+14.1% Y/Y) beats by $3M. Shares -0.6% AH. (PR)
- Southwestern Energy (SWN): Q4 EPS of $0.43 beats by $0.01. Revenue of $480M (+2% Y/Y) beats by $18M. (PR)
- In Asia, Japan +0.7% to 10527. Hong Kong +1.8% to 23012. China flat. India +0.4% to 17701.
- In Europe, at midday, London +0.3%. Paris +1.4%. Frankfurt +0.5%.
- Futures at 7:00: Dow +0.55%. S&P +0.6%. Nasdaq +0.7%. Crude +0.6% to $97.87. Gold -0.9% to $1403.20.
Friday's Economic Calendar
- 8:30 GDP Q4
9:55 Reuters/UofM Consumer Sentiment
10:15 Conference: U.S. Monetary Policy Forum
10:30 ECRI Leading Index
- Notable earnings before Friday's open: IPG, JCP, POM RDC, THC, WCRX
The SA Currents team contributed to this post.
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