- BP sues Transocean, Cameron over Gulf spill. One year after the Deepwater Horizon disaster, BP (BP) has filed suit against Transocean (RIG), seeking at least $40B in damages from the rig owner for negligence in causing the drilling rig to be 'unseaworthy.' BP is also suing Cameron (CAM) for negligence, claiming a blowout preventer made by the firm failed to stave off the disaster, which ultimately released more than 200M gallons of oil into the Gulf of Mexico. BP took a $40.9B pre-tax charge in 2010 related to the spill, and had racked up $17.7B of costs by the end of the year. Yesterday was the deadline for companies connected to the spill to file claims against one another. Premarket: BP +1.7%, RIG -4.7%, CAM +0.1% (7:00 ET).
- Apple rallies on earnings beat. Apple (AAPL) once again impressed investors, reporting a 95% jump in quarterly profit as sustained consumer demand drove FQ2 EPS to $6.40 vs. consensus of $5.36. Revenue rose 83% to $24.7B while gross margins rose to 41.4% from 38.5%. The company sold 18.65M iPhones (+113% Y/Y) and 3.76M Macs (+28%), while iPod sales continued to trend down with 9M units sold (-17%). Consumers bought 4.7M of Apple's sector-leading iPads, a number shy of analysts' 6.2M consensus, though Apple suggested the shortfall was due to supply constraints as it sold every unit it made. Looking ahead, Apple, which consistently low-balls its guidance, expects FQ3 EPS of $5.03 vs. consensus of $5.25, and said it doesn't foresee any 'unsolvable' impact from Japan's disaster in terms of its sales or supply chain. Premarket: AAPL +3.9% (7:00 ET).
- OECD cuts Japan outlook, urges tax hike. Japan's GDP is likely to grow by 0.8% in 2011, according to the OECD, down significantly from the organization's previous +1.7% estimate. The OECD recommends Japan as much as quadruple its sales tax rate from its current 5% to help offset some of the reconstruction costs from last month's earthquake and tsunami, while lowering the corporate tax rate to spur growth and showing increased fiscal discipline. Looking ahead, Japan's GDP should grow 2.3% in 2012 as reconstruction spending picks up speed.
- HSBC plans shake-up. HSBC (HBC) CEO Stuart Gulliver is reportedly planning a massive shake-up to boost the bank's profitability and revitalize its U.S. operation. Sources say the plans, to be revealed at an investor day on May 11, include slashing costs by billions of pounds, reallocating capital, refocusing the U.S. business on corporate lending instead of consumer credit, and overhauling the culture of a company that, as the Financial Times put it, "has sometimes been run as a loosely connected federation of local fiefdoms." Gulliver may also withdraw from some of the 87 markets globally in which HSBC currently operates. Premarket: HBC +2.2% (7:00 ET).
- Regulators investigating Pru's failed AIA bid. The U.K.'s Financial Services Authority is reportedly investigating insurer Prudential (PUK) and its failed $35B bid for AIA, AIG's (AIG) Asian life insurance unit. In particular, sources say regulators are focusing on Pru's investment bank advisers to see whether they carried out their duties properly; Pru was advised by Credit Suisse (CS), JPMorgan (JPM) and HSBC (HBC).
- F5 jumps on earnings, outlook. Shares of F5 Networks (FFIV) jumped in after-hours trading following the company's FQ2 earnings beat and better-than-expected outlook. The company reported earnings per share of $0.68, as weakness in Japan was offset by growth in North America and Asia-Pacific. Excluding special items, EPS was $0.88, compared to analysts' expectations for $0.85, with in-line revenue of $278M (+35% Y/Y). CEO John McAdam believes the company is in the 'sweet spot' of the big trends in tech, including mobile data growth, data center consolidation and cloud computing. F5 sees FQ3 EPS of $0.89-0.91 on revenue of $287M-292M, vs. expectations of $0.89 on $290.3M. Premarket: FFIV +13.3% (7:00 ET).
- TiVo soars on court ruling. Shares of TiVo (TIVO) climbed 29.5% yesterday, and are up another 7.4% premarket, after yesterday's Appeals Court ruling that ordered DISH Network (DISH) to disable DVR functionality in most of the units TiVo claims infringes on its technology. A later hearing will decide whether there was indeed infringement, while DISH and EchoStar (SATS) both plan to take the ruling to the Supreme Court. In yesterday's trading, DISH -1.2%, SATS +2.6%.
- Chipotle beats on earnings, to join S&P 500. Chipotle (CMG) narrowly beat earnings expectations yesterday afternoon with Q1 EPS of $1.46 on revenue of $509M (see details below). The report came shortly before an announcement that the company will replace Novell (NOVL) in the S&P 500 index. While both of these developments should have lifted the stock, shares lost 3.2% in after-hours trading, following news that U.S. authorities are widening their investigation of Chipotle for hiring illegal immigrants.
- Mattel-Bratz ruling due today. A federal jury will share its verdict today on the closely-watched copyright infringement and trade secrets case between Mattel (MAT) and MGA Entertainment over the popular billion-dollar Bratz doll line. The case has dragged on since 2004 and cost both companies millions of dollars in legal fees; however, the costs thus far pale in comparison to the stakes, with the loser likely to face hundreds of millions of dollars in potential damages while the winner will walk away with the rights to the blockbuster toy.
- Nokia Siemens cleared for Motorola unit purchase. Chinese regulators approved Nokia Siemens Networks' (NOK, SI) planned acquisition of Motorola Solutions' (MSI) telecom network gear business for $975M. It was the last major hurdle that the deal needed to clear, after being delayed twice because of a lengthy review by Chinese regulators and a renegotiated price tag (down from $1.2B). With the deal moving forward, Nokia and Siemens may now move ahead with talks to sell a minority stake in their NSN venture.
- Air Lease eyes ILFC. Air Lease (AL), the aircraft leasing business that went public earlier this week, 'absolutely' wants to buy rival ILFC from AIG (AIG). Air Lease CEO Steven Udvar-Hazy founded ILFC before selling it to AIG and then leaving the unit in early 2010. While AIG has acknowledged ILFC isn't a core unit and is unlikely to remain part of the company in the long-term, ILFC executives have said the unit is not explicitly for sale at the moment.
Earnings: Thursday Before Open
- Air Products and Chemicals (APD): FQ2 EPS of $1.41 beats by $0.03. Revenue of $2.50B (+11% Y/Y) beats by $0.07B. Shares (PR)
- BB&T (BBT): Q1 EPS of $0.32 beats by $0.01. Revenue of $2.03B (-7% Y/Y) misses by $0.15B. (PR)
- Biogen Idec (BIIB): Q1 EPS of $1.43 beats by $0.02. Revenue of $1.20B (+8.5% Y/Y) beats by $0.02B.(PR)
- Covidien (COV): FQ2 EPS of $0.93 beats by $0.04. Revenue of $2.80B (+10% Y/Y) beats by $0.06B. (PR)
- Danaher (DHR): Q1 EPS of $0.65 beats by $0.08. Revenue of $3.35B (+11% Y/Y) beats by $0.02B. (PR)
- DuPont (DD): Q1 EPS of $1.52 beats by $0.16. Revenue of $10.03B (+18% Y/Y) beats by $0.84B. (PR)
- Fifth Third Bancorp (FITB): Q1 EPS of $0.27 beats by $0.01. (PR)
- GE (GE): Q1 EPS of $0.31 beats by $0.03. Revenue of $38.44B (+6.2% Y/Y) beats by $3.8B. Shares +2.84% premarket(PR)
- Newmont Mining (NEM): Q1 EPS of $1.04 beats by $0.05. Revenue of $2.46B (+10% Y/Y) beats by $0.02B.(PR)
- Patriot Coal (PCX): Q1 EPS of -$0.17 misses by $0.04. Revenue of $577M (+23% Y/Y) beats by $24M.(PR)
- PNC Financial Services (PNC): Q1 EPS of $1.57 beats by $0.20. Revenue of $3.60B (-5.3% Y/Y) beats by $0.01B. (PR)
- Schlumberger (SLB): Q1 EPS of $0.71 misses by $0.05. Revenue of $8.71B (+56% Y/Y) misses by $0.11B. Shares-1.77% premarket(PR)
- Travellers (TRV): Q1 EPS of $1.89 beats by $0.38. Revenue of $5.43B (+3.5% Y/Y) beats by $0.12B. (PR)
- Tyco Electronics (TEL): Q1 EPS of $0.71 misses by $0.01. Revenue of $3.47B (+17% Y/Y) misses by $0.52B. (PR)
- UnitedHealth (UNH): Q1 EPS of $1.22 beats by $0.33. Revenue of $25.43B (+9.7% Y/Y) beats by $0.48B. (PR)
- Weatherford International (WFT): Q1 EPS of $0.10 misses by $0.08. Revenue of $2.85B (+22% Y/Y) beats by $0.03B. Shares -3.08% premarket (PR)
Earnings: Wednesday After Close
- American Express (AXP): Q1 EPS of $0.97 beats by $0.04. Revenue of $7.03B beats by $50M. Shares -1.2% AH. (PR, earnings call transcript)
- Amgen (AMGN): Q1 EPS of $1.34 beats by $0.05. Revenue of $3.7B in-line. Shares +0.6% AH. (PR, earnings call transcript)
- Apple (AAPL): FQ2 EPS of $6.40 beats by $1.04. Revenue of $24.67B beats by $1.33B. Sees FQ3 EPS of $5.03 vs. consensus of $5.25, revenue of $23B vs. $23.8B consensus. Shares +1.9% AH. (8-K, earnings call transcript)
- Boston Scientific (BSX): Q1 EPS of $0.01 vs. consensus of $0.04. Revenue of $1.92B (-2% Y/Y) in-line. Shares +3.8% AH. (PR)
- Cheesecake Factory (CAKE): Q1 EPS of $0.34 beats by $0.01. Revenue of $418.80M (+3.3% Y/Y) in-line. (PR, earnings call transcript)
- Chipotle Mexican Grill (CMG): Q1 EPS of $1.46 beats by $0.02. Revenue of $509M beats by $14M. Shares -3.3% AH. (PR, earnings call transcript)
- Covanta Holding (CVA): Q1 EPS of -$0.10 misses by $0.02. Revenue of $377M (+2% Y/Y) beats by $1M. (PR)
- E*TRADE (ETFC): Q1 EPS of $0.16 beats by $0.04. Revenue of $421M (+57% Y/Y) beats by $31M. Shares +3.6% AH. (PR, earnings call transcript)
- F5 Networks (FFIV): Q1 EPS of $0.88 beats by $0.03. Revenue of $278M (+35% Y/Y) in-line. Shares +7% AH. (PR)
- Gilead Sciences (GILD): Q1 EPS of $0.87 misses by $0.10. Revenue of $1.93B (+% Y/Y) misses by $110M. Shares -3.1% AH. (PR)
- Lam Research (LRCX): Q3 EPS of $1.45 beats by $0.09. Revenue of $809M (-7.1% Y/Y) beats by $5M. Shares +0.1% AH. (PR, earnings call transcript)
- Marriott International (MAR): Q1 EPS of $0.26 misses by $0.01. Revenue of $2.8B (+5.6% Y/Y) misses by $1B. Shares -2.8% AH. (PR)
- Newfield Exploration (NFX): Q1 EPS of $0.98 beats by $0.04. Revenue of $545M (+19% Y/Y) beats by $49M. (PR)
- Noble Corp. (NE): Q1 EPS of $0.15 misses by $0.02. Revenue of $579M (-31% Y/Y) beats by $21M. (PR)
- People's Bank (PBCT): Q1 EPS of $0.15 vs. consensus of $0.12. Shares +1.1% AH. (PR, earnings call transcript)
- Qualcomm (QCOM): FQ2 EPS of $0.86 beats by $0.06. Revenue of $3.87B beats by $250M. Shares +4.8% AH. (PR, earnings call transcript)
- RSC Holdings (RRR): Q1 EPS of -$0.49 vs. consensus of -$0.22. Revenue of $327M (+25% Y/Y) beats by $13M. (PR)
- SLM (SLM): Q1 EPS of $0.48 beats by $0.08. Shares +10.6% AH. (PR)
- Western Digital (WDC): FQ3 EPS of $0.66 in-line. Revenue of $2.25B (-15% Y/Y) in-line. Shares -3% AH. (PR, earnings call transcript)
- Yum! Brands (YUM): Q1 EPS of $0.63 misses by $0.01. Revenue of $2.42M (+% Y/Y) beats by $20M. Shares +3.4% AH. (PR)
- In Asia, Japan +0.8% to 9686. Hong Kong +1.0% to 24138. China +0.7% to 3027. India +0.7% to 19602.
- In Europe, at midday, London +0.2%. Paris +0.7%. Frankfurt +0.7%.
- Futures at 7:00: Dow +0.5%. S&P +0.7%. Nasdaq +1.1%. Crude +0.6% to $112.13. Gold +0.6% to $1508.30.
Thursday's Economic Calendar
- 8:30 Initial Jobless Claims
10:00 Leading Indicators
10:00 Philly Fed Business Outlook
10:00 FHFA Housing Price Index
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
- Notable earnings before Thursday's open: [ADS]], AEP, APD, BAX, BBT, BIIB, BX, COF, COL, COV, CY, DD, DHR, DO, DOV, ENTG, ESI, FHN, FITB, FNFG, GE, GNTX, GR, IR, JBLU, JNS, KSU, LH, LUV, MCD, MS, NEM, NOK, NUE, NYT, PCX, PM, PNC, PPG, RAI, SLB, STI, TCB, TEL, TPX, TROW, TRV, UAL, UNH, VZ, WFT, XRX
- Notable earnings after Thursday's close: AMD, ASBC, ATHR, CB, IGT, INFA, MXIM, PLCM, RHI, SNDK
The SA Currents team contributed to this post.
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