- Blankfein to testify on insider trading. Goldman Sachs (GS) CEO Lloyd Blankfein has reportedly agreed to testify as a government witness in the upcoming insider-trading trial of hedge fund magnate Raj Rajaratnam. Rajaratnam, the founder of Galleon Group, has been charged with 14 counts of securities fraud and conspiracy in the biggest insider-trading case in a generation, and 19 of 26 defendants in the case have already pleaded guilty. Blankfein's testimony is expected to serve as a bridge linking private information about Goldman with former Goldman director Rajat Gupta; Gupta allegedly passed the information to Rajaratnam, who then used it for trading.
- KeyCorp lifted by deal rumors. Regional lender KeyCorp (KEY) gained 3.3% in yesterday's trading following reports the company had held talks with Toronto Dominion (TD) about a possible deal. Analysts estimate KeyCorp could be bought for $10-11 per share, which would be a 7-18% premium to yesterday's close. KeyCorp could attract other bidders as well, possibly including U.S. Bancorp (USB). Shares of Toronto Dominion closed +4.2% in yesterday's trading.
- BSkyB investors push for higher deal price. Now that U.K. regulators have approved News Corp.'s (NWS) purchase of British Sky Broadcasting (BSYBY.PK), BSkyB investors are pulling together to force News Corp. to pay 'a full and fair price' for the 61% of the satellite television firm it doesn't yet own. Shareholders made it clear that News Corp.'s bid last June of 700 pence per share, or £7.8B ($12.7B), is far below their expectations. Though one major shareholder said it would be 'premature' to say top investors had banded together to agree on a minimum price, the investor suggested that 1,100 pence/share would be a reasonable offer, while sources familiar with News Corp.'s strategy said the firm was unlikely to pay more than 800 pence/share at most.
- Mystery deepens on Renault espionage case. Renault (OTC:RNSDF) COO Patrick Pelata said late yesterday the company was no longer sure its electric-car development program was the target of corporate espionage. The high-profile claims of espionage, which have never been fully explained, have already cost three executives their jobs and led the Chinese Foreign Ministry to issue an angry denial of any involvement. According to Pelata, the company may have been 'tricked' into bringing allegations against the executives, an admission that will certainly lend weight to the claims of the three executives that they decidedly did not take bribes in exchange for sharing information about Renault's economic model for electric vehicles.
- Tablets eat into PC market. The explosive growth of the tablet market is eroding PC sales, according to technology research firm Gartner, making Steve Jobs' (AAPL) claim that the tech industry is in a 'post-PC' device era seem a little less farfetched. Global PC shipments are expected to grow 10.5% this year to 387.8M units, down from an earlier forecast of 15.9% growth. The biggest decline will be in consumer laptops, a category where shipments are now expected to increase 14.6% in 2011 instead of 25.1%. Tablets, on the other hand, could reach sales of 40M this year, dominated by Apple's iPad; this is remarkable growth considering how young the sector is. It's too soon to call the tablet a PC killer, but Gartner says the device "is obviously one of the biggest challenges the PC has ever faced."
- Judge approves GM payment to creditors. A federal judge said yesterday he would approve the bankruptcy plan for "Old GM," paving the way for the distribution of General Motors (GM) stock and warrants to creditors. Motors Liquidation Company's Chapter 11 case has been one of the most complicated bankruptcies in U.S. history, but nearly 85% of the $275B in claims filed against the company have been resolved. The bankruptcy plan will see bondholders and creditors of the original GM receive a 10% stake in the new GM as well as warrants that can be exercised for another 15%.
- Dresser-Rand buys Grupo Guascor. Dresser-Rand (DRC) agreed to buy Spanish diesel engine supplier Grupo Guascor for an enterprise value of €500M ($690M) in cash and stock. The deal also includes the assumption of about $172M in net debt.
- Oil panel co-chair faults regulators. William Reilly, co-chairman of the presidential panel that investigated last year's Gulf of Mexico oil spill, said the 'regulatory apparatus' that oversees offshore drilling "is not one we can rely on." Reilly is concerned the regulators tasked with overseeing the industry and inspecting offshore oil rigs are 'undertrained and overworked,' and that status quo will "change slowly or not at all." Despite those serious flaws, Reilly is working with regulators in the U.S. and Mexico to craft shared drilling-safety standards which could possibly lead to a global agreement on best practices for offshore drilling safety.
- High food prices may be here to stay. Elevated food prices may be part of the new reality, says the IMF, as it will take years for farmers to expand production enough to meet increased demand and drive down prices. "The main reasons for rising demand for food reflect structural changes in the global economy that will not be reversed," including higher demand for meat in developing countries, and increased demand for biofuels is contributing to a tightened supply.
Earnings: Friday Before Open
- New Gold (NGD): Q4 EPS of $0.19 beats by $0.06. Revenue of $189.4M (+43.7% Y/Y) misses by $8.7M. (PR)
Earnings: Thursday After Close
- Kodiak Oil (KOG): Q4 EPS of $0.00 may not be comparable with consensus of $0.02. Revenue of $11M (+130% Y/Y) misses by $2.5M. Shares -4.4% AH. (PR)
- Marvell Technology Group (MRVL): Q4 EPS of $0.40 misses by $0.02. Revenue of $901M (+7% Y/Y) misses by $24M. Shares -0.3% AH. (PR, earnings call transcript)
- Novell (NOVL): FQ1 EPS of $0.07 in-line. Revenue of $191M (-5.4% Y/Y) misses by $8M. Shares -0.3% AH. (PR)
- In Asia, Japan +1.0% to 10694. Hong Kong +1.2% to 23409. China +1.4% to 2942. India flat at 18486.
- In Europe, at midday, London +0.5%. Paris +0.2%. Frankfurt +0.6%.
- Futures at 7:00: Dow +0.2%. S&P flat. Nasdaq flat. Crude +0.6% to $102.54. Gold +0.1% to $1418.20.
Friday's Economic Calendar
- 8:30 Nonfarm payrolls
10:00 Hearing: TARP's Impact on Financial Stability
10:00 Fed's Yellen: 'Improving the International Monetary and Financial System'
10:00 Factory Orders
10:30 ECRI Leading Index
- Notable earnings before Friday's open: NGD
The SA Currents team contributed to this post.
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