- Japan raises level of nuclear crisis to match Chernobyl. Continued radiation leaks at the Fukushima Daiichi nuclear power station have led Japan to raise the severity of the crisis at the plant from five to seven, the same as that of the Chernobyl disaster in 1986 and the highest ranking possible. Officials said that while the Daiichi plant had discharged only 10% of the radiation that escaped from the Ukrainian facility, the total amount may eventually exceed the Chernobyl figure if the leaks aren't halted. Also today, the Daiichi plant suffered another fire, which was extinguished, while Japan was struck with two earthquakes stronger than magnitude 6. The Nikkei closed -1.7%.
- Community Health plummets on Tenet accusations. In a lawsuit aimed at stopping Community Health Systems' (CYH) $7.3B takeover of Tenet Healthcare (THC), the latter has accused Community Health of overcharging Medicare by at least $280M. Investors took fright and Community Health's shares plummeted 36% to $25.89 yesterday while those of Tenet fell 14.7% to $6.44. Community Health could be “subject to liability and damages of well over $1B” for its Medicare admissions practices from 2006 and 2009, said Tenet, which accused its rival of using 'liberal' criteria to decide whether to admit a patient or treat the person less expensively on an outpatient basis. An analyst at Oppenheimer said the claims could open Community Health and the industry to federal scrutiny, although Community Health described Tenet's accusations as 'baseless.'
- Alcoa swings to net profit. Alcoa (AA) matched profit expectations in Q1 2011 with EPS of $0.27 (see details below), up from a $0.20 loss in the same period last year. Revenue missed forecasts despite climbing 22% to $5.96B. The world's largest aluminum company said continued strong growth in China and emerging markets, and in the aerospace and auto industries, are expected to fuel a 12% increase in demand for the metal this year. This should help support a growth in prices, which have risen 14% in 2011 so far. However, headwinds include higher raw-material costs as well as a possible increase in production expenses due to the Middle East unrest and Japan's earthquake. Premarket: AA -3.3% (7:00 ET). (Earnings call transcript)
- Merck and Integra products get FDA approval. The FDA has approved the use of Merck's (MRK) Sylatron drug to treat skin cancer in patients with node-positive melanoma following the removal of the affected part. The regulator has also authorized the marketing of three spinal implants from Integra (IART). Teva (TEVA), meanwhile, said an experimental oral multiple sclerosis drug reduced the disease's relapse rate by 23% over a placebo in a late stage study. The drug, laquinimod, also displayed other benefits. Teva is expecting the results from another late stage laquinimod study by the middle of the third quarter, at which point it may go to the FDA for approval.
- Chevron expects higher profit despite lower output. Chevron (CVX) has predicted that its Q1 2011 earnings will rise from Q4 2010 as increased crude oil prices offset lower production. However, the company expects to post after-tax charges at the high end of a range of $250M-$350M. Chevron earned Q4 2010 EPS profit of $2.64 on revenue of around $54B.
- Google invests $168M in massive solar energy project. Google (GOOG) has provided $168M to BrightSource Energy for the construction of the world’s largest solar-thermal plant, taking the search giant's total renewable energy investments to over $250M. BrightSource has also secured a $1.6B loan guarantee from the Energy Department for the 392-megawatt Ivanpah project in southern California. Google joins NRG Energy (NRG), which has already committed as much as $300M to the facility. Google has an energy unit that it set up to procure energy, specifically clean energy, to power its huge data centers. The subsidiary also has approval to buy and sell power on the wholesale markets.
- Nokia expects continued fall in smartphone marketshare. Nokia (NOK) expects to suffer more losses in smartphone marketshare before it enjoys gains from its radical change in strategy, said Chairman Jorma Ollila. This change is the replacement of Symbian with Windows, which CEO Stephen Elop believes will enable Nokia to "participate in advertising revenue" in a way it has been unable to in the past. Elop also said that Nokia is giving 'a turbo boost' to its basic mobile phone business in developing markets by investing in attempts to reach 'the next billion' users. Despite the company's conversion to Windows, it launched two new Symbian smartphones today. Premarket: NOK -0.7% (7:00 ET).
- Intel launches chips for tablets. Intel (INTC) has introduced new chips for tablet devices as it attempts to benefit from a market that has shown high growth but is dominated by ARM (ARMH). Intel's latest products include a new model of its Atom microprocessor and a companion chip that handles functions important for tablets, such as enabling longer battery life. The new offering, code-named Oak Trail, has been selected for 35 products, including from Lenovo (OTC:LNVGY), Fujitsu (OTC:FJTSY) and lesser-known brands. Most of the products are business-oriented tablets that run Windows. However, while Oak Trail improves Intel's position, analysts said the company faces a difficult task.
- BofA finance execs didn't see dividend update prior to release. Bank of America's (BAC) internal auditors are reviewing why CFO Chuck Noski and Chief Accounting Officer Neil Cotty weren't shown an investor filing, prior to its release, that regulators had rejected a dividend increase, sources said. While BofA complied with regulations, the failure in communication has raised questions about how decisions are made and the management style of CEO Brian Moynihan. Because a proposed dividend increase is at the heart of what BofA does, said a corporate governance expert, "leaving them (the execs) out of the loop is a little odd."
Earnings: Monday After Close
- Alcoa (AA): Q1 EPS of $0.28 beats by $0.01. Revenue of $6.0B (+22% Y/Y) misses by $0.1B. (PR, earnings call transcript)
- In Asia, Japan -1.7% to 9555. Hong Kong -1.3% to 23976. China +0.0% to 3023. India closed.
- In Europe, at midday, London -1.0%. Paris -1.1%. Frankfurt -1.0%.
- Futures at 7:00: Dow -0.4%. S&P -0.55%. Nasdaq -0.4%. Crude flat at $109.93. Gold -0.3% to $1464.00.
Tuesday's Economic Calendar
- 6:15 Fed's Dudley: Financial Reform
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:30 Trade Balance
8:30 Import/Export Prices
8:55 Redbook Chain Store Sales
9:15 Fed's Hoenig: Regulating Financial Institutions
10:00 IBD/TIPP Economic Optimism
1:00 PM Results of $32B, 3-Year Note Auction
2:00 PM Treasury Budget
2:45 PM Hearing: Derivatives and Regulatory Framework
2:55 PM Conference: Economic Growth (Fed's Fisher)
- Notable earnings before Tuesday's open: FAST
- Notable earnings after Tuesday's close: ADTN
The SA Currents team contributed to this post.
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