- BP continues attempts to thaw frozen Arctic deal. BP (NYSE:BP) said it is continuing talks that will enable it to proceed with a $16B share swap and Arctic exploration deal with Rosneft despite a second deadline for finalizing the co-operation expiring last night. The agreement has stalled because of the opposition of AAR, BP's partner in its TNK-BP Russian joint venture. Negotiations have taken place in which BP and Rosneft would buy out AAR's stake in TNK-BP in a $30B deal. However, a source said that Rosneft will now look for new partners to search an area that could contain over 40B barrels of oil.
- Eurozone may be open to extending Greece's debt repayments. Eurozone finance ministers have for the first time floated the idea of 'reprofiling' Greek debt whereby it would extend its repayment schedule with the agreement of bondholders. However, although Luxembourg's Jean-Claude Juncker said he wouldn't exclude reprofiling, France's Christine Lagarde and Belgium's Didier Reynders voiced opposition. In addition, Juncker said restructuring remains taboo. The comments came yesterday during a day of meetings between IMF officials and finance ministers, who also approved Portugal's €78B bailout and endorsed Bank of Italy Governor Mario Draghi as the ECB's next president. All this was achieved despite the absence of IMF chief Dominique Strauss-Kahn, who was denied bail by a New York judge following his arrest on sex-assault charges.
- HP expects tough Q3 even as Q2 rises. HP's (NYSE:HPQ) FQ2 net profit excluding items rose to $1.24 a share from $1.09 in the same period last year, beating estimates, as revenues edged up to $31.6B from $30.85B. However, HP brought the report forward by a day after a memo was leaked in which CEO Leo Apotheker warned that "Q3 is going to be another tough quarter," with the company's headcount plans "unaffordable given the pressures on our business." The leak sent HP's shares tumbling in after-hours trading; premarket, they are -4.3%.
- Paulson buys $1B stake in HP. John Paulson bought 25M shares in HP (HPQ) in the last quarter at a value about $1B billion, his $36B hedge fund said in a regulatory filing. Paulson also bought 17.3M shares in Transocean (NYSE:RIG), lifting its stake to 7.7%. The disclosure comes as Transocean is being sued by BP (BP) for billions of dollars for its role in the Gulf of Mexico oil rig explosion.
- Vodafone says FY net profit fell but gives bullish outlook. Vodafone's (NASDAQ:VOD) fiscal year net profit dropped 7.8% but the cellular operator surprised investors with an upbeat forecast for 2012. Vodafone was expected to be cautious about its prospects after weak updates from rivals, but the company instead said it was gaining or holding share in most of its major markets and leading the switch to higher tariff smartphones. Notwithstanding, a £6.15B ($10B) impairment charge on its southern Europe operations because of tough economic conditions and strong competition in Spain led net profit to fall to £7.97B. However, revenue rose 3.2% to £45.9B, beating market expectations. Vodafone declared a final dividend of 6.05 pence a share to give total dividends for the year of 8.90 pence, up 7.1% year-on-year. Shares are +2.7% premarket.
- Home Depot Q1 revenues miss forecasts. Home Depot's (NYSE:HD) FQ1 revenues missed expectations and fell 0.2% to $16.82B, due to harsh weather hurting demand for seasonal goods at the start of the spring season. However, lower expenses helped net income rise to $812M from $725M and beat Street forecasts. Based on its year-to-date performance, Home Depot raised its fiscal 2011 EPS guidance and now expects income to be up approximately 11.4% at $2.24 for the year.
- Google raises $3B in bonds. Despite sitting on $37B of cash, Google (NASDAQ:GOOG) yesterday issued bonds for the first time, selling $3B worth as it took advantage of low corporate interest rates to obtain what one portfolio manager called 'free money.' With orders exceeding $10B, Google issued one-year, three-year, and 10-year bonds, all within a tight range of the U.S. Treasurys against which corporate bonds are priced. Another portfolio manager said large tech companies are using debt to "buy a very cheap, long-term insurance policy that gives them flexibility for whatever the economy throws at them."
- New York AG investigates banks on mortgage bonds. New York Attorney General Eric Schneiderman has become the latest public official to start investigating the packaging of mortgage loans into securities. Schneiderman plans to meet with executives of several major banks, including Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS), sources said. The AG has a potent legal tool at his disposal: under the 1921 Martin Act, prosecutors don't have to prove intent to defraud, in contrast to federal securities laws. The act has been used to prosecute firms for securities manipulation, improper allocation of initial public offerings of stock and misleading stock research.
- Toshiba near to buying Landis+Gyr for $2B. Toshiba (OTCPK:TOSBF) is in final talks to acquire Swiss-based smart metering company Landis+Gyr from Australia's Bayard Capital and other investors for about $2B, a source said. The transaction would help Toshiba enhance its power-infrastructure business as grids become more sophisticated, giving the company what an analyst said would be 'a good foothold in a promising market.' The negotiations come as Toshiba's important nuclear power operations face a more uncertain outlook following Japan's nuclear disaster.
- U.S. hits debt ceiling. The Treasury is dipping into federal pension funds as one of several emergency measures that should postpone a default after the U.S. yesterday hit its $14.3T debt limit. The White House and Congressional leaders have been in talks about how to reduce the deficit in return for increasing the ceiling, but Paul Ryan, the House's top budget writer, has expressed a tougher line than that laid out by his GOP colleagues. He said any deal would have to include reductions that are larger than the amount of the debt-ceiling increase. The sides have until August 2 to reach a deal.
Earnings: Tuesday Before Open
- Home Depot (HD): Q1 EPS of $0.50 beats by $0.01. Revenue of $16.82B (-0.2% Y/Y) misses by $0.2B. (PR)
- Vodafone (VOD): Full year profit of £7.97B ($12.9B), down 7.8% on £6.15B of impairment losses related to some of its European businesses. Full year revenue of £45.9B (+3.2%) vs. £45.5B expected. Sees FY'12 adjusted operating profit of £11B-11.8B. Shares +2% in London. (PR)
Earnings: Monday After Close
- Urban Outfitters (NASDAQ:URBN): Q1 EPS of $0.23 misses by $0.01. Revenue of $524M (+9% Y/Y) beats by $2M. Shares +1.1% AH. (PR, earnings call transcript)
- In Asia, Japan +0.1% to 9567. Hong Kong -0.3% to 22901. China +0.1% to 2853. India -1.1% to 18137.
- In Europe, at midday,London +0.3%. Paris +0.1%. Frankfurt -0.6%.
- Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq 0.3%. Crude +0.3% to $97.65. Gold +0.2% to $1493.90.
Tuesday's Economic Calendar
- 7:45 ICSC Retail Store Sales
8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:15 Industrial Production
5:00 PM Geithner: 'Economy and our Fiscal Challenge'
- Notable earnings before Tuesday's open: DKS, HD, HPQ, SKS, TJX, VOD, WMT
- Notable earnings after Tuesday's close: ADI, DELL
The SA Currents team contributed to this post.
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