- Lawson to be sold for $2B. GGC Software Holdings, an affiliate of Golden Gate Capital and Infor, has agreed to buy Lawson Software (LWSN) for around $2B, or $11.25 a share. This is below Lawson's closing price yesterday of $12.12. The deal comes after Lawson received an offer from Golden Gate and Infor earlier this year and looked for alternative buyers, but didn't receive a superior proposal.
- Ford has best Q1 in 13 years. Ford's (F) Q1 2011 net profit increased to $0.61 per share from $0.50 a year earlier in its best first-quarter performance since 1998. Ford's revenues rose 18% to $33.1B, helped by sales in new vehicles such as the Explorer. The company was profitable in all regions even as commodity costs rose. Ford ended the quarter with $16.6B in debt, down $2.5B from the beginning of the year. Premarket: F +3% (7:20 ET).
- Netflix tumbles on disappointing outlook. Netflix (NFLX) shares slumped 5.3% in post-market trading after the movie-rental company said that increased streaming costs would hit Q2 2011 earnings. The firm forecast EPS of $0.93-$1.15, below analyst predictions of $1.18. In the longer term, Netflix expects 2012 streaming expenses to jump to $1.6B-$2.2B from $700M this year. The market disappointment came despite Q1 net EPS almost doubling to $1.11 from $0.59 a year earlier and revenue surging 46% to $718.6M. The number of subscribers grew 69% to 23.6M, taking Netflix past Comcast (CMCSA) and putting it in second place behind HBO (TWX) with 28.6M. (Earnings call transcript)
- UBS soars despite Q1 profit fall. UBS (UBS) shares are +7.2% premarket despite the Swiss bank reporting that Q1 2011 net profit tumbled to 1.81B Swiss francs ($2.06B) from 2.2B francs a year earlier and that revenue fell 7% to 8.34B francs due to lower income from trading and fees. However, investors are encouraged by earnings beating expectations and total net new money at UBS’s core wealth-management business rebounding to 11.1B francs from an outflow of 8B francs a year earlier and a flat performance in Q4 2010. It was the strongest inflow of cash since the final quarter of 2007. UBS CEO Oswald Gruebel attributed the increase in new funds to "the return of client trust and confidence" after customers withdrew 251.6B francs in the nine quarters through June.
- Amazon Q1 profit seen down due to investment. Analysts expect Amazon (AMZN) to today report that Q1 2011 net EPS fell to $0.61 from $0.66 a year earlier despite a 33% increase in revenue to $9.51B. The predicted disparity is because Amazon has been spending heavily in building its cloud computing infrastructure, and investing in new distribution centers to cement its position as the world's largest online retailer. Analysts believe Amazon's sales growth justifies the short-term hit to profitability, with one saying the company "will ultimately benefit." Amazon's earnings come a day after it said that all its servers were up and running after technical problems last week took down some websites that use its cloud computing services, including Foursquare.
- Sony probing whether customer data accessed. Sony (SNE) is investigating whether customer data was accessed after intruders hacked into its PlayStation Network and Qriocity online services, which have been suspended since last week. The company doesn't know when it will resume the services, and won't do so until it has learnt the "full details of what happened and what caused the trouble." The disruption has prevented 75M PlayStation 3 users from logging on to play games and watch films, while music streaming has also been halted. Separately, Sony has unveiled tablet computers that use Google's (GOOG) Android operating system as it looks to grab share in a market that Apple's (AAPL) iPad dominates. Other companies to launch tablets include RIM (RIMM), Samsung Electronics (SSNLF.PK), Motorola (MMI) and HP (HPQ). Sony's devices will go on sale in the fall.
- GOP's Boehner open to repealing oil tax breaks. Republican House Speaker John Boehner is open to President Obama's idea of cutting multi-billion dollar tax breaks and subsidies for oil companies. "It's certainly something we should be looking at," Boehner said in an ABC News interview. "We're in a time when the federal government's short on revenues. They ought to be paying their fair share." However, he also said he wants to 'see all the facts' first. Boehner's comments, which come at a time of soaring gasoline prices, signal a departure from the GOP's traditional defense of tax breaks as a way to encourage domestic oil production. Regarding the budget, the speaker said it would be "responsible to increase the debt limit," although this must be accompanied by significant spending cuts.
- Financing shortfalls increase in state pension plans. Funding gaps in some state pension plans widened in fiscal 2010, a new study from the Pew Center on the States indicates. Data from 16 states shows they had 75% of the assets needed to cover the long-term benefits owed to government workers, down from 77% in 2009. The wider gaps were driven by states continuing to book big losses from the 2008 financial crisis, although strong investment returns in fiscal 2010 prevented the situation from deteriorating further. In fiscal 2009, the latest year for which full data is available, states were $1.26T short of the amount they needed to pay out in the long term, an increase of 26%. Growing unfunded pension liabilities, along with daunting state budget gaps, are a major worry for rating agencies and investors in the $2.9T municipal bond market, especially as states use borrowing to help pay their obligations.
- China Minmetals scraps Equinox bid. China's Minmetals Resources today bowed out of the battle for Canadian copper miner Equinox Minerals (EQXMF.PK) after Barrick Gold (ABX) yesterday made an offer of C$7.3B ($7.68B), topping Minmetals' C$6.3B bid. Shares in Barrick, the world's largest gold miner, are +1.2% premarket after dropping 6.8% yesterday as investors questioned whether it was overpaying for Equinox and whether a move into copper would make the stock less attractive to those seeking exposure to gold prices. However, Barrick CEO Aaron Regent sees the Equinox bid as an opportunity to gain access to the Zambian copper belt at a time of high prices.
- Saudi Arabia uneasy about oil prices. Saudi Arabia is 'not comfortable' with the cost of oil and will maintain spare production capacity to stabilize the market, Khalid al-Falih, the CEO of state-owned Saudi Arabian Oil, said today. The world's largest oil exporter is committed to keeping a 'sizable cushion' of 3M-4M barrels a day of idle capacity, he said. Oil has soared 32% in New York since the uprising in Libya began in mid-February and led to a cut in the country's output. Saudi Arabia has raised its production to make up for the shortfall. At 6:40 ET, oil was -0.1% at $112.16.
- Greek deficit exceeds forecasts. Greece's budget deficit in 2010 was 10.5% of GDP, significantly higher than estimated by either the Greek government or the EU. The latter had calculated a figure of 9.6% for 2010 and forecast the deficit would be 7.6% at the end of this year. The new number will add further pressure on Greece to cut its deficit to meet targets set under the EU-IMF rescue program. Greece's total government debt was 142.8% of GDP at the end of 2010, the highest level in the EU. At the weekend, Portugal revised up its 2010 deficit to 9.1% from 8.6%.
Earnings: Tuesday Before Open
- Coach (COH): FQ3 EPS of $0.62 beats by $0.02. Revenue of $951M (+14.4% Y/Y) beats by $4M. (PR)
- Ford (F): Q1 EPS of $0.62 beats by $0.12. Revenue of $33.1B (+17.8% Y/Y) beats by $3.41B. (PR)
- Lorillard (LO): Q1 EPS of $1.71 beats by $0.14. Revenue of $1.05B (+14.4% Y/Y) beats by $0.09B. (PR)
- Office Depot (ODP): Q1 EPS of -$0.05 vs consensus of $0.02. Revenue of $2.97B (-3.2% Y/Y) in-line. (PR)
Earnings: Monday After Close
- American Capital Agency (AGNC): Q1 EPS of $1.30 in-line. Shares +0.17% AH (PR)
- Ameriprise Financial (AMP): Q1 EPS of $1.35 beats by $0.02. Revenue of $2.6B (+22% Y/Y) misses by $1B. (PR)
- Express Scripts (ESRX): Q1 EPS of $0.66 misses by $0.03. Revenue of $11.09B (-4% Y/Y) misses by $0.46B. Shares -6.66% AH (PR)
- Health Management Associates (HMA): Q1 EPS of $0.22 beats by $0.01. Revenue of $1.43B (+12.7% Y/Y) beats by $0.02B. (PR)
- Helix Energy Solutions (HLX): Q1 EPS of $0.24 beats by $0.13. Revenue of $292M (+45% Y/Y) misses by $20M. (PR)
- Masco (MAS): Q1 EPS of -$0.05 misses by $0.08. Revenue of $1.77B (-4% Y/Y) beats by $0.02B. Shares -0.15% AH (PR)
- Netflix (NFLX): Q1 EPS of $1.11 beats by $0.03. Revenue of $719M (+21% Y/Y) beats by $16M. Shares -3.4% AH. (PR, earnings call transcript)
- Plum Creek Timber (PCL): Q1 EPS of $0.23 misses by $0.01. Revenue of $275M (-13.2% Y/Y) beats by $20M. (PR, earnings call transcript)
- Unisys (UIS): Q1 EPS of -$0.95 vs consensus of -$0.10. Revenue of $911M (-7% Y/Y) beats by $2M. Shares -0.19% AH. (PRearnings call transcript>
- Veeco Instruments (VECO): Q1 EPS of $1.33 beats by $0.12. Revenue of $255M (+89% Y/Y) beats by $8M. Shares +4.23% AH (PR)
- In Asia, Japan -1.2% to 9559. Hong Kong -0.5% to 24007. China -0.9% to 2939. India -0.2% to 19545.
- In Europe, at midday, London +0.3%. Paris +0.3%. Frankfurt +0.4%.
- Futures at 7:00: Dow +0.2%. S&P +0.4%. Nasdaq +0.3%. Crude -0.3% to $111.99. Gold -0.3% to $1504.50.
Tuesday's Economic Calendar
- 7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 Richmond Fed Mfg.
10:00 State Street Investor Confidence Index
- Notable earnings before Tuesday's open: ACI, AGCO, AKS, CE, CMI, COH, DAL, ECL, F, HSP, HSY, ITW, KO, LCC, LMT, LO, MHP, MMM, ODP, SNV, TLAB, UPS, VLO, X
- Notable earnings after Tuesday's close: ALTR, AMZN, APKT, BDX, BRCM, CBG, CBI, CHRW, EWBC, FTI, HTZ, ILMN, LIFE, NAL, NBR, NLC, QCOR, RFMD, RRC, STM, STR, SWK, TSS, UHS, WMS, WU
The SA Currents team contributed to this post.
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