- Microsoft comes calling for Skype. Microsoft (NASDAQ:MSFT) is said to be close to buying Internet phone company Skype for $7B-8B, with an announcement possible as soon as this morning. A deal, which would be worth around $8.5B including debt, would be Microsoft's largest acquisition to date and could help Microsoft with its effort to gain more traction in the consumer market, particularly in the area of mobile phones. It would also represent significant growth for Skype, as it was less than 2 years ago that eBay (NASDAQ:EBAY) sold most of its Skype stake in a deal that valued the company at $2.75B. Premarket: MSFT +0.5% (7:00 ET).
- China trade surplus blows away expectations. China's trade surplus in April came in at $11.4B, the largest surplus in four months and far above expectations of $3B. Exports were up 29.9% Y/Y, with imports up 21.8% Y/Y. The data comes as the U.S. and China wrap up a two-day strategic and economic dialogue, and could prompt additional calls for a faster appreciation of the yuan.
- Crude pulls back after CME margin hike. Crude futures are -1.1% this morning to $101.43 (7:00 ET) after the CME raised margins on crude by around 25%. It's the first such increase for oil after several margin hikes for silver, and could force speculators and small investors to close out their positions. The increased margin requirement will likely add to crude's volatility in the short-term, as some investors look for an exit and others try to buy the resulting dip.
- Community Health abandons Tenet bid. Yesterday evening, Community Health Systems (NYSE:CYH) withdrew its revised offer to acquire Tenet Healthcare (NYSE:THC), after Tenet rejected the $7.25/share offer earlier in the day. The $4.1B bid would have joined together two of the country's largest hospital companies. It was the third time that Tenet had rejected Community Health's overtures, calling the offers inadequate and not in the best interest of Tenet shareholders.
- Mortgage bond investors go after H&R Block. H&R Block (NYSE:HRB) sank 7.6% in yesterday's trading following news that a group of mortgage bond investors are trying to force Block's defunct subprime lending unit to repurchase billions in bad loans. The group of investors are calling on other bond investors to step forward, with the goal of amassing 25% of many of the bonds. This would give them the contractual right to make demands on the trustee, and ultimately the lender. The lending unit in question, formerly known as Option One and now called Sand Canyon, was sold by HRB in 2008, but the company retained some of its liability.
- Google to launch online music service. Google (NASDAQ:GOOG) is preparing to unveil as soon as today a new online music service, using a 'passive' locker system in which users will be able to stream songs they have uploaded to the service but won't be able to download files. Amazon (NASDAQ:AMZN) recently unveiled a similar service, and competition in the market is heating up, though neither Google nor Amazon have managed yet to secure licenses from the four major recorded-music companies. Apple (NASDAQ:AAPL) is also trying to work out a deal with record companies, which would position it to offer a much more robust service than either Amazon or Google.
- BofA takes aim at bad loan book. Bank of America (NYSE:BAC) plans to cut its $850B portfolio of troubled home loans in half over the next three years as it tries to move past the financial crisis and its ill-timed purchase of Countrywide Financial. The bad loans are in a 'legacy' unit run by Terry Laughlin, who also heads BofA's mortgage mod and foreclosure programs. Laughlin said he's been given significant leeway to act quickly, including selling some loans at discounted prices and streamlining the modification process.
- FDIC's Bair announces departure date. The FDIC's Sheila Bair announced she will step down on July 8. Bair had previously signaled her intention to leave the agency when her five year term as chairman expires this summer. FDIC Vice Chairman Martin Gruenberg is widely expected to be named as Bair's successor.
- Japan saddled with Tepco aid request. Tokyo Electric Power Co., now infamous because of the ongoing crisis at the Fukushima Daiichi nuclear plant, formally presented the Japanese government with an aid request, saying it "would like to pay compensation quickly to those who have suffered losses." In addition to direct compensation costs, which could run into the tens of billions of dollars, Tepco also faces ¥750B ($9.3B) of debt repayments this year and ¥1T of additional costs due to the outages of its nuclear units. There's almost no chance the company will be able to raise these sums in the markets.
Earnings: Tuesday Before Open
- Amarin (NASDAQ:AMRN): Q1 EPS of -$0.05 beats by $0.02. Revenue flat as expected. (PR)
- ATP Oil & Gas (ATPG): Q1 EPS of -$0.96 misses by $0.57. Revenue of $166.5M (+79% Y/Y) beats by $10.10M. Shares -4.6% premarket. (PR)
- Carmike Cinemas (NASDAQ:CKEC): Q1 EPS of -$1.44 misses by $0.95. Revenue of $96.2M (-22% Y/Y) misses by $7.3M. (PR)
- Dean Foods (NYSE:DF): Q1 EPS of $0.14 beats by $0.08. Revenue of $3.05B (+3% Y/Y) misses by $0.02B. Sees Q2 EPS of $0.15-0.20 vs. $0.13 consensus. (PR)<
- Enterprises Products Partners L.P (NYSE:EPD): Q1 EPS of $0.49 beats by $0.05. Revenue of $1.02B (+19.2% Y/Y) beats by $0.15B. (PR)
- Invesco Mortgage Capital (NYSE:IVR): Q1 EPS of $1.01 beats by $0.01. Revenue of $53M (+269% Y/Y) misses by -$0.5M. (PR)
- James River Coal Company (JRCC): Q1 EPS of -$0.28 misses by $0.55. Revenue of $164.6M (-10.8% Y/Y) misses by $10.5M. (PR)
- Warner Music Group (NYSE:WMG): FQ2 EPS of -$0.25 beats by $0.03. Revenue of $682M (+2.4% Y/Y) beats by $84M. (PR)
Earnings: Monday After Close
- A123 System (AONE): Q1 EPS of -$0.51 misses by $0.05. Revenue of $18.1M (-26% Y/Y) in-line. Shares +1.5% AH. (PR)
- Activision (NASDAQ:ATVI): Q1 EPS of $0.13 beats by $0.05. Revenue of $755M (+6% Y/Y) beats by $87M. Shares +1.2% AH. (PR, earnings call transcript)
- Assured Guaranty (NYSE:AGO): Q1 EPS of $1.33 beats by $0.47. Shares -0.1% AH. (PR)
- Avanir Pharmaceuticals (NASDAQ:AVNR): FQ2 EPS of -$0.12 beats by $0.02. Shares -1.9% AH. (PR, earnings call transcript)
- Blackboard (NASDAQ:BBBB): Q1 EPS of $0.28 beats by $0.01. Revenue of $119M (+18% Y/Y) in-line. Shares flat AH. (PR)
- Clean Energy Fuels (NASDAQ:CLNE): Q1 EPS of -$0.05 beats by $0.04. Revenue of $65M (+67% Y/Y) beats by $2M. Shares -1.7% AH. (PR, earnings call transcript)
- Eagle Bulk Shipping (NASDAQ:EGLE): Q1 EPS of -$0.09 beats by $0.01. Revenue of $87M (+60% Y/Y) beats by $26M. Shares +2.3% AH. (PR)
- Integrated Device Technology (NASDAQ:IDTI): FQ4 EPS of $0.13 beats by $0.02. Revenue of $147M (+7% Y/Y) beats by $2M. Shares +4% AH. (PR)
- MannKind (NASDAQ:MNKD): Q1 EPS of -$0.34 misses by $0.05. Shares -8.2% AH. (PR, earnings call transcript)
- Rackspace Hosting (NYSE:RAX): Q1 EPS of $0.10 vs. consensus of $0.12. Revenue of $230M (+29% Y/Y) beats by $4M. Shares -2.4% AH. (PR)
- Universal Display (NASDAQ:PANL): Q1 EPS of -$0.31 misses by $0.28. Revenue of $9.6M (+126% Y/Y) in-line. Shares -4.1% AH. (PR, earnings call transcript)
- In Asia, Japan +0.3% to 9819. Hong Kong closed. China +0.6% to 2890. India -0.2% to 18499.
- In Europe, at midday, London +1.2%. Paris +1.4%. Frankfurt +1.5%.
- Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq +0.6%. Crude -1.1% to $101.43. Gold +0.9% to $1516.10.
Tuesday's Economic Calendar
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:30 Import/Export Prices
8:55 Redbook Chain Store Sales
9:15 U.S.-China Strategic and Economic Dialogue
9:30 Fed's Duke: Community Development Finance
10:00 Wholesale Trade
12:45 PM Fed's Lacker: Economic Outlook
1:00 PM Results of $32B, 3-Year Note Auction
- Notable earnings before Tuesday's open: DF, EPD, IVR, JASO, NOG, WEN
- Notable earnings after Tuesday's close: DIS, GSS, MBI, MCP, MDR, NUAN, ROVI, SRX, STEC
The SA Currents team contributed to this post.
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