- Microsoft falls as tablets start to crack Windows. Microsoft (MSFT) shares dropped 1.4% in post-market trading even though its Q3 2011 earnings comfortably beat estimates, with net EPS rising to $0.61 from $0.45 and revenue increasing 13% to $16.4B. Although sales at Microsoft's business division jumped 21%, investors were concerned by the 4.4% revenue drop in the Windows division, as the growth of tablets chips away at the sale of computers running Microsoft's operating system. The trend perhaps signals that Windows' decades-long dominance may be waning, but booming sales of Microsoft's Kinect gesture-control device may herald the beginning of a golden era in a different sphere. (Earnings call transcript)
- RIM plunges, Motorola gains ground. RIM (RIMM) shares plunged 11.1% in post-market trading after the company slashed its fiscal Q1 net EPS forecast to $1.30-$1.37 from $1.47-$1.55, while shares of Motorola Mobility Holdings (MMI) climbed 4% after it reported better-than-expected Q1 earnings. RIM attributed its reduced outlook to weak BlackBerry shipments "that are now expected to be at the lower end of the range of 13.5-14.5 million" it predicted in March, and "a shift in the expected mix of devicesshipped towards handsets with lower average selling prices." RIM reiterated that it still expects fiscal 2012 earnings of $7.50/share, but investors were skeptical, with one analyst noting that this "further damages already low credibility." Motorola, meanwhile, said its Q1 loss excluding items narrowed to $0.08 a share from $0.48 compared with estimates of $0.11 as revenue jumped 22% to $3.03B, exceeding forecasts of $2.84B.
- Total sees profit rise, taps renewables. As with other major oil companies, high crude prices helped boost Total's (TOT) earnings in Q1 2011, and also made up for lost production due to the Libyan uprising. Adjusted net profit slightly beat expectations and jumped to €3.1B ($4.6B) from €2.3B a year earlier, driven by Total's core upstream oil and gas production. Notwithstanding the strong earnings, Total yesterday announced a diversification into renewable energy with the purchase of 60% of U.S. solar-panel maker SunPower (SPWRA) for $1.37B, or $23.25/share. SPWRA closed +38% to $22.26 in post-market trading; Total fell 0.2%.
- EU opens CDS probe into 16 banks. The European Commission has opened two antitrust investigations into the market for credit default swaps. The probe includes 16 major U.S. and European banks, including JPMorgan (JPM), Barclays (BCS), HSBC (HBC) Citigroup (C) and Goldman Sachs (GS). The EU is looking at whether the banks, along with market information provider Markit, colluded or abused a dominant market position. The regulator is also examining whether competitors were damaged by preferential tariffs given by CDS clearinghouse ICE Clear Europe to nine of the 16 banks. Under EU rules, antitrust violators can be fined up to 10% of their revenues.
- Merck's Q1 net profit rises. Merck's Q1 2011 EPS excluding items rose to $0.92 a share from $0.83 a year earlier as revenues climbed to $11.6B from $11.4B. The company's pharmaceutical, animal health and consumer care divisions all contributed solid revenue growth, with earnings also helped by cost-control measures. Merck expects to earn $3.66-$3.76 a share in the full year. Premarket: MRK +1.8% (7:25 ET).
- Nasdaq-ICE could go hostile. Nasdaq OMX (NDAQ) and IntercontinentalExchange (ICE) are considering turning their $11.3B offer for NYSE-Euronext (NYX) into a hostile bid, sources said. The move would come after shareholders yesterday voiced their displeasure at the latter's refusal to sit down with Nasdaq-ICE even though their offer is higher than a $10.2B deal agreed upon with Deutsche Boerse (OTCPK:DBOEY). At NYSE's AGM, shareholders approved two proposals that the board had advised against and gave fewer votes than previously to directors who were up for election. Investors also asked NYSE to press Deutsche Boerse for a better deal, and urged the exchange to start talks with Nasdaq and ICE.
- China allows yuan to maintain its rise. The Chinese yuan has breached 6.5 to the dollar for the first time since 1993 as the government continues to let the currency appreciate in its bid to combat inflation. The yuan touched 6.4898 in Asian trading, a gain of over 5% since it was taken off a de facto dollar peg last June. "This is a signal they (the government) will continue appreciation," said one analyst, although U.S. Senator Charles Schumer yesterday said meetings with Chinese officials indicated they wouldn't "let the value of the yuan rise much higher above its present level." The yuan's strengthening comes as China’s manufacturing again expanded in April despite increased interest rates.
- Chrysler to repay $7.5B loan. Chrysler plans to soon repay $7.53B in loans that it took from the U.S. and Canadian governments during its bankruptcy in 2009. To fund the repayment, the automaker intends to sell bonds and take out a credit line from several banks, and will likely obtain far lower interest rates in the capital markets than the rates it's currently paying. In addition, Fiat (OTCPK:FIATY) intends to add to its 30% stake in Chrysler by purchasing a 16% stake for $1.27B. Despite the proposed repayment, Geithner said the government expects to make a loss on its $80B bailout of the car industry but that the jobs saved justified the expense.
- Eurozone inflation rises to 2.8%. Eurozone inflation unexpectedly rose in April to 2.8% from 2.7% in March, the highest level since October 2008. The increase will give strength to those who believe the ECB should continue tightening monetary policy, but comes as data showed that the jobless rate in March stayed unchanged at 9.9%. Other figures released today signaled a souring of business and consumer sentiment, and showed that bank lending remains sluggish. The eurozone's recovery has been hindered by weak lending, particularly to businesses.
- Not much love expected at Buffett's 'Woodstock for capitalists.' Warren Buffett is expected to face a tougher-than-usual reception at Berkshire Hathaway's (BRK.A) AGM this weekend as tens of thousands of shareholders descend on Omaha for what has been dubbed the 'Woodstock of Capitalism.' The meeting comes three days after a Berkshire audit committee report gave a far harsher critique of David Sokol than Buffett did when he disclosed that the former executive had bought shares in Lubrizol (LZ) shortly before recommending that Berkshire buy the specialty chemicals company. The episode has raised concerns about Buffett's judgement and even sparked questions about whether Berkshire should be broken up.
Earnings: Friday Before Open
- Aon Corporation (AON): Q1 EPS of $0.80 in-line. Revenue of $2.75B (+45% Y/Y) beats by $0.02B. (PR)
- Calpine (CPN): Q1 EPS of -$0.61 vs consensus of -$0.13. (PR)
- Newell Rubbermaid (NWL): Q1 EPS of $0.30 beats by $0.02. (PR)
- Weyerhaeuser (WY): Q1 EPS of $0.18 vs consensus of $0.15. Revenue of $1.57B (-5.2% Y/Y) misses by $0.09B. (PR)
Earnings: Thursday After Close
- Amdocs (DOX): FQ2 EPS of $0.58 beats by $0.01. Revenue of $789M (+6% Y/Y) beats by $7M. Shares +1.1% AH. (PR)
- Amkor (AMKR): Q1 EPS of $0.10 beats by $0.01. Revenue of $665M (-11% Y/Y) misses by $7M. (PR, earnings call transcript)
- Ariba (ARBA): FQ2 EPS of $0.19 in-line. Revenue of $108M (+41% Y/Y) in-line. (PR)
- Cavium Networks (CAVM): Q1 EPS of $0.32 beats by $0.04. Revenue of $64M (+53% Y/Y) beats by $1M. Shares +1.6% AH. (PR)
- CBL & Associates (CBL): Q1 EPS of $0.63 beats by $0.12. Revenue of $268M (+3% Y/Y) beats by $6M. Shares +0.4% AH. (PR)
- Cliffs Natural Resources (CLF): Q1 EPS of $3.11 beats by $0.89. Revenue of $1.18B (+62.6% Y/Y) misses by $220M. Shares +2.5% AH. (PR)
- Coinstar (CSTR): Q1 EPS of $0.46 beats by $0.24. Revenue of $424M (+31% Y/Y) beats by $15M. Shares +8.6% AH. (PR)
- Crocs (CROX): Q1 EPS of $0.24 beats by $0.04. Revenue of $227M (+36% Y/Y) beats by $10M. Shares -6% AH. (PR, earnings call transcript)
- Deckers Outdoor (DECK): Q1 EPS of $0.49 beats by $0.04. Revenue of $205M (+31% Y/Y) beats by $3M. Shares -9% AH. (PR)
- Eastman Chemical (EMN): Q1 EPS of $2.52 beats by $0.59. Revenue of $1.76B (+28.3% Y/Y) beats by $230M. Shares +6.5% AH. (PR)
- Expedia (EXPE): Q1 EPS of $0.25 misses by $0.01. Revenue of $822M (+15% Y/Y) beats by $27M. Shares -3.1% AH. (PR, earnings call transcript)
- GSI Commerce (GSIC): Q1 EPS of -$0.20 beats by $0.12. Revenue of $324M (+19% Y/Y) beats by $12M. Shares +1.1% AH. (PR)
- Harmonic (HLIT): Q1 EPS of $0.09 in-line. Revenue of $133M (+57% Y/Y) in-line. (PR)
- Ingram Micro (IM): Q1 EPS of $0.34 misses by $0.14. Revenue of $8.72B (+7.8% Y/Y) misses by $0.1B. (PR)
- KLA-Tencor (KLAC): FQ3 EPS of $1.31 beats by $0.07. Revenue of $834M (+75% Y/Y) beats by $24M. Shares -0.8% AH. (PR)
- Leggett & Platt (LEG): Q1 EPS of $0.30 beats by $0.10. Revenue of $896M (+75% Y/Y) beats by $62M. Shares +5.3% AH. (PR)
- Manitowoc (MTW): Q1 EPS of -$0.06 misses by $0.10. Revenue of $732M (+7% Y/Y) misses by $53M. Shares -7.2% AH. (PR)
- Microsoft (MSFT): EPS of $0.61 beats by $0.05. Revenue of $16.4B beats by $0.20B. Shares -0.6% AH. (PR, earnings call transcript)
- Monster Worldwide (MWW): Q1 EPS of $0.05 beats by $0.02. Revenue of $264M (+31% Y/Y) beats by $2M. Shares -1.6% AH. (PR)
- Motorola Mobility (MMI): Q1 EPS of -$0.08 beats by $0.04. Revenue of $3.0B (+22% Y/Y) beats by $0.2B. Shares +2.1% AH. (PR)
- NCR Corp (NCR): Q1 EPS of $0.27 beats by $0.04. Revenue of $1.1B (+22% Y/Y) beats by $0.02B. Shares +0.5% AH. (PR)
- PMC-Sierra (PMCS): Q1 EPS of $0.13 beats by $0.01. Revenue of $157M (+3% Y/Y) beats by $2M. Shares +6.7% AH. (PR)
- Regal Entertainment (RGC): Q1 EPS of -$0.11 misses by $0.04. Revenue of $571M (-21% Y/Y) misses by $24M. Shares +0.2% AH. (PR)
- Republic Services (RSG): Q1 EPS of $0.42 beats by $0.01. Revenue of $1.96B (+0.4% Y/Y) beats by $0.02B. (PR)
- ResMed (RMD): Q1 EPS of $0.35 in-line. Revenue of $313M (+12% Y/Y) in-line. (PR)
- SBA Communication (SBAC): Q1 EPS of -$0.30 vs consensus of -$0.21. Revenue of $167M (+13% Y/Y) beats by $1M. (PR)
- Skyworks (SWKS): FQ2 EPS of $0.41 beats by $0.02. Revenue of $325M (+37% Y/Y) beats by $10M. Shares +11.6% AH. (PR, earnings call transcript)
- Southwestern Energy (SWN): Q1 EPS of $0.39 in-line. Revenue of $676M (+1.2% Y/Y) beats by $80M. Shares +0.5% AH. (PR)
- Varian Semiconductor (VSEA): FQ2 EPS of $1.07 beats by $0.01. Revenue of $330M (+62% Y/Y) beats by $9M. Shares -2.2% AH. (PR, earnings call transcript)
- VeriSign (VRSN): Q1 EPS of $0.32 in-line. Revenue of $182M (+12% Y/Y) in-line. Shares +6.5% AH. (PR, earnings call transcript)
- In Asia, Japan +1.6% to 9850. Hong Kong -0.4% to 23721. China +0.9% to 2912. India -0.8% to 19136.
- In Europe, at midday, London closed. Paris -0.1%. Frankfurt +0.3%.
- Futures at 7:00: Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude -0.15% to $112.69. Gold +0.4% to $1537.20.
Friday's Economic Calendar
- 8:30 Personal Income and Outlays
8:30 Employment Cost Index
9:45 Chicago PMI
9:55 Reuters/UofM Consumer Sentiment
10:30 ECRI Leading Index
3:00 PM USDA Ag. Prices
- Notable earnings before Friday's open: AIV, AON, CAT, CPN, CVX, DHI, ETR, GT, ITT, LEA, MRK, NEE, NVE, NWL, PBI, SPG, TOT, WY
The SA Currents team contributed to this post.
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