- Nasdaq, ICE bid for NYSE. **Breaking: Nasdaq OMX (NASDAQ:NDAQ) and IntercontinentalExchange (NYSE:ICE) offer $42.50/share in cash for NYSE Euronext (NYSE:NYX), outbidding Deutsche Boerse (OTCPK:DBOEY). Premarket: NYX +16.6% to $41 (7:15 ET). (PR)
- Office Depot restates earnings after tax ruling. Office Depot (NASDAQ:ODP) said late yesterday that it would restate its 2010 earnings after the IRS denied the company's claim to carry back certain tax losses to prior tax years. As a result, Office Depot's 2010 tax benefits will be reduced by around $80M, and its 2010 earnings will fall to a net loss of $46M from a net profit of $33M. The company also noted that the IRS ruling will impact FQ1 2011 operating cash flow, as a $63M current tax receivable related to the carry back would be removed from its balance sheet. In after-hours trading, ODP -7.1%.
- Logitech falls on lowered outlook. Logitech (NASDAQ:LOGI) lowered its FY'2011 outlook yesterday, primarily because of weakness in the Europe, Middle East and Africa sales regions. The digital device maker said it saw lower-than-expected demand for its retail products in those regions from both distribution partners and consumers. As a result, for the fiscal year that ended yesterday, Logitech expects sales of $2.35B-2.37B and operating income of $140M-150M, down from earlier projections of $2.4B-2.42B of sales and income of $170M-180M. In after-hours trading, LOGI fell 9.9% and is now -20.3% premarket (7:15 ET).
- Kocherlakota: Fed may raise rates 75bps by year-end. Narayana Kocherlakota, an FOMC voting member, indicated the central bank could raise interest rates by three-quarters of a percentage point by the end of the year. The Minneapolis Fed president noted that historically, the response of monetary policy is "to raise the target rate by even more than that increase in observed inflation;" Kocherlakota expects inflation to increase to 1.3% by year-end from 0.8% late last year. Kocherlakota also said the second round of quantitative easing has had a bigger impact on the economy than he predicted and has raised inflation expectations by more than he anticipated.
- Fed names banks that took emergency loans. The Fed released thousands of pages of data yesterday identifying the banks that utilized its discount window during the height of the financial crisis, with U.S. Bancorp (NYSE:USB), Wachovia (now part of WFC), Morgan Stanley (NYSE:MS) and several European banks among the largest users. U.S. Bancorp borrowed $3.35B on Sept. 10, 2008, Wachovia borrowed $29B on Oct. 6, Morgan Stanley borrowed over $3B on Oct. 9, and Washington Mutual took out a $2B loan on the day before it collapsed and another $2B the next day. On October 29, when lending peaked at $111B, Belgium's Dexia took $26.5B and Germany's Depfa $24.6B. Arab Banking Corp., which was then 29% part-owned by Libya, took 73 loans in an 18-month period, borrowing an aggregate of $35B.
- Live Nation angles for Warner Music's labels. Live Nation Entertainment (NYSE:LYV) has reportedly made a bid for Warner Music Group's (NYSE:WMG) recorded-music operation. The size of the bid couldn't be determined. If a deal moves forward, it would tie together the world's third-largest recorded-music company with the world's largest concert promoter, artist-management firm and events-ticketing operation. However, any tie-up would likely draw heavy regulatory scrutiny, and sources say Warner has already received other bids to buy the company in its entirety rather than as individual business units.
- Ireland to give banks another €24B. Ireland will pump another €24B ($34B) into its crippled banking sector as it again attempts to bring its three-year financial crisis to an end. The cash will come from Ireland's emergency EU-IMF credit line and adds to €46.3B that the state has already pumped in. The government, which now controls almost the entire industry, intends to consolidate its holdings into two "pillar banks" based on market leaders Bank of Ireland (NYSE:IRE) and Allied Irish Banks (AIB). The ECB, EU and IMF praised the plans but analysts were skeptical, noting that previous attempts to end the crisis had failed. Premarket: AIB +20% (7:15 ET).
- MUFG, Morgan Stanley JV to report $956M loss. A joint venture between Mitsubishi UFJ Financial Group (NYSE:MTU) and Morgan Stanley (MS) will likely report an extraordinary loss of about ¥80B ($956M) for the fiscal year that just ended due to unrealized losses from bond trading, sources say. Mitsubishi UFJ Morgan Stanley Securities, in which MUFG owns 60% and Morgan Stanley the rest, is considering issuing new shares to Mitsubishi UFJ Securities Holdings Co., the holding company for MUFG's brokerage operations, to boost its capital and strengthen its finances.
- FCC official wary of AT&T/T-Mobile deal. As expected, AT&T's (NYSE:T) proposed $39B purchase of T-Mobile USA (OTCQX:DTEGY) is starting to generate regulatory pushback. Michael Copps, the senior Democratic commissioner at the FCC, said the merger would be a tough sell and "may be an even steeper climb" than the Comcast-NBCU merger, which he voted against. The deal, which would consolidate 80% of U.S. wireless contract customers into the hands of just two companies (AT&T/T-Mobile and Verizon Wireless (VZ, VOD)), is a "paradigm-altering transaction," Copps said, that at the very least would require AT&T to make market-by-market divestitures and commit to preserving the openness of the Internet.
- EU files appeal against WTO Boeing ruling. The EU Commission today filed an appeal against the WTO's ruling yesterday that Boeing (NYSE:BA) has received illegal subsidies of at least $5.3B from the U.S. The move will force the U.S. to lodge its own appeal more quickly in order to comply with WTO rules. The EU was itself last year the subject of a WTO condemnation for subsidies to Airbus (OTCPK:EADSY).
- SEC probing Sokol over Lubrizol stock purchases The SEC is investigating David Sokol for possible insider trading for his purchase of 96,000 Lubrizol (LZ) shares less than two weeks before recommending that Berkshire Hathaway (NYSE:BRK.A) buy the specialty chemicals company, a source says. Sokol, who resigned on Wednesday, was a leading candidate to take over Berkshire's leadership when Warren Buffett ultimately steps down. Yesterday, Sokol defended his actions, while legal experts said that he may not have broken insider-trading laws.
- Unemployment seen unchanged at 8.9% in March. Economists expect nonfarm payroll data, due out at 8:30 ET this morning, to show that March unemployment was unchanged at 8.9% and that the economy added 185,000 jobs during the month. This would follow February's gain of 192,000. If the forecasts are accurate, February and March will represent the best two-month period for private-sector recruitment since the recession began in December 2007. Analysts predict the economy will add 2.5M new positions during the rest of the year, although this would still be well short of the 7.5M jobs that have been lost since the start of the recession.
- GNC raises $360M in IPO. GNC (NYSE:GNC) shares will debut on the NYSE this morning after it raised $360M in its IPO. The health-food products retailer sold 22.5M shares for $16 each, which was in the midpoint of expectations.
- Ally Financial files for IPO. Auto and mortgage lender Ally Financial, which the U.S. government bailed out during the financial crisis with $17B, yesterday filed for an IPO. The number of shares to be offered, the price range, and timing have not yet been determined, although a source says the company could ultimately raise $5B. The listing will allow the government to begin divesting its 73.8% stake in the firm, having already recovered $4.9B of taxpayer money through repayments and dividends.
- Specter of 'flash crash' as 10 ETFs tumble. Ten new ETFs experienced mini flash-crashes yesterday, prompting Nasdaq OMX Group to cancel certain trades that took place between 9:54 ET and 9:56 ET. Some of the new ETFs, all of which are sponsored by Scottrade affiliate FocusShares, plunged as much as 98% before recovering. The incident casts additional doubt on the efficacy of recent protective measures put in place to protect against extreme stock moves.
- Old GM drives out of bankruptcy. Motors Liquidation Company (OTC:MTLQQ), the company more informally known as 'Old GM,' officially exited Chapter 11 yesterday and was divided up into four trusts, one of which will be responsible for resolving the claims of unsecured creditors. Old GM's bankruptcy exit brings to an end one of the most complicated Chapter 11 cases in the country's history.
- In Asia, Japan -0.5% to 9708. Hong Kong +1.2% to 23802. China +1.3% to 2967. India -0.1% to 19420.
- In Europe, at midday, London +0.8%. Paris +0.8%. Frankfurt +1.0%.
- Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq +0.5%. Crude +0.3% to $107.06. Gold -0.35% to $1434.80.
Friday's Economic Calendar
- Auto sales
8:15 Fed's Plosser: 'From Recession to Expansion'
8:30 Nonfarm payrolls
9:00 Fed's Fisher: 'Global Influence of Business in North Texas'
10:00 Fed's Dudley: 'Export Trade Basics'
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 ECRI Leading Index
The SA Currents team contributed to this post.
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