- Frenzy for LinkedIn as shares more than double on debut. LinkedIn (LNKD) had an astonishing debut on the NYSE yesterday as its shares rose 109% to $94.25, giving the company a market capitalization of $8.9B, or 584 times 2010 earnings and 37 times revenue. Demand was fueled by the small number of shares sold and by LinkedIn being the first major social network to go public, with the IPO probably a harbinger of listings for Facebook and Groupon among others. LinkedIn's debut was in contrast to that of the record $11B London IPO of Glencore, whose shares closed unchanged. LinkedIn's massive gains brought back memories of 1990s tech bubble, although its debut appears paltry compared with the 1998 IPO of TheGlobe.com, which climbed 600% on its first day of trading but is now a shell company.
- BP to receive $1B from MOEX for Gulf oil spill Mitsui unit MOEX Offshore has agreed to pay BP (BP) $1.065B to settle all claims between the companies over the accident at the Deepwater Horizon well, in which MOEX (OTC:MITSY) held a 10% stake. BP will put the money into its $20B compensation fund. The company will also continue to pursue another minority partner, Anadarko (APC), rig operator Transocean (RIG) and contractor Halliburton (HAL) to pay their shares of the costs. Given that Anadarko held 25% of the well, it could have to pay a larger bill than MOEX.
- ECB threatens to stop lending to Greek banks. The ECB's chief economist has said the Eurozone's central bank won't be able to lend money to Greek banks that use government bonds as collateral if the country alters its debt repayment terms. Juergen Stark's comments come despite the increasingly public discussions of a "soft" restructuring of the debt, whereby repayment terms are extended. A Royal Bank of Scotland economist said Greece's banking system would collapse if the ECB fulfilled its threat, although many observers don't think it will. The ECB fears that a Greek restructure could lead to a chain reaction in Europe's financial system, while the bank would also face losses on the bonds it holds, which amount to up to €50B ($71.3B).
- Liberty bids $1.02B for Barnes & Noble. John Malone's Liberty Media (LCAPA) has proposed to buy Barnes & Noble (BKS) for $1.02B nine months after the U.S.'s largest bookseller put itself up for sale. Liberty's offer of $17 a share represents a 20.5% premium on B&N's closing price yesterday and sent its stock soaring almost 25% in after-hours trading. Liberty fell 2.1%. B&N's gains suggest that investors believe it may receive other offers despite the auction process taking so long, or that shareholders will demand more money. B&N said its special board committee has yet to evaluate Liberty's bid, but declined to say whether it has received any other offers.
- Gap becomes unfashionable as Q1 profit slumps. Shares in Gap (GPS) plunged 15% in post-market trading after the clothing retailer reported that Q1 2011 net profit dropped 23% to $233M and it slashed its full-year guidance to $1.40-$1.50 from $1.88-$1.93. Analysts had expected $1.84. While Q1 revenue only slipped 1% to $3.29B, Gap said escalating costs are hitting its bottom line, with the company spending about 20% more than a year ago on items it plans to sell. Gap CEO Glenn Murphy said the cost rise was a 'near-term' challenge, and noted that the all-important cotton prices are already retreating. (Earnings call transcript)
- Apple secures music deals for iTunes Cloud Service. Apple (AAPL) has reached licensing agreements with Sony (SNE), EMI (C) and Warner Music (WMG) to let users of a new music service access their song collections from handheld devices via the Internet rather than having to load the music onto those devices, sources said. Apple is also close to a deal with Universal Music Group (OTC:VIVEF), but would still need agreements with music publishers, which control different rights to the labels. Licenses would eliminate the need for Apple to store separate copies of a song for each customer. Amazon (AMZN) and Google (GOOG) have unveiled similar services but didn't secure licensing deals before doing so.
- Goldman braces for subpoenas. Goldman Sachs (GS) expects to soon receive subpoenas from the Justice Department seeking more information about the bank's mortgage-related operations, sources said. Executives anticipate that the subpoenas will be related to a Senate subcommittee report that was scathing about Goldman's actions and was referred to prosecutors. An analyst said any moves towards criminal charges "would be bad news for Goldman's stock price," but didn't believe that these charges will be brought. This is because the Justice Department has probably already seen information amassed by the SEC during a civil investigation into Goldman. Criminal fraud cases are more difficult to win than civil cases as prosecutors have to prove that a defendant intentionally committed fraud.
- Tepco posts $15.28B loss. Tokyo Electric Power (OTC:TKECY), the operator of the stricken Fukushima Daiichi nuclear plant, has posted a net loss of ¥1.25T ($15.28B) for the fiscal year ended in March. The result is the biggest annual loss in Japanese corporate history outside the financial sector, with the company hammered by the massive costs of battling the nuclear accident that followed the Japan earthquake and tsunami in March. As expected, company President Masataka Shimizu will step down to take responsibility for the company's much-criticized handling of the disaster and will be replaced by Toshio Nishizawa, a 36-year Tepco veteran.
- BOJ leaves rates at rock bottom. The Bank of Japan has kept its key interest rate unchanged at zero to 0.1% as it looks to shore up the country's earthquake-battered economy. The BOJ warned that Japan faces "strong downward pressure" due to tumbling production and falling exports following the disaster in March. The bank's decision comes a day after the government reported that the country slipped back into recession in Q1 2011, when GDP fell an annualized 3.7%.
- Chrysler on course to repay loans. Chrysler could return most of its government loans as early as next week after raising $7.5B in bank loans and bond sales. The automaker plans to issue $3.2B worth of bonds in two tranches, and take out $4.3B in new bank loans consisting of a $3B term loan and a $1.3B revolving credit facility. Chrysler will also use a $1.3B investment from Fiat (OTC:FIATY), which owns 46% of the Detroit company, to return its debt. The refinancing will allow Chrysler to pay $5.9B to the U.S. and $1.6B to the governments of Canada and Ontario. The firm will then still owe the U.S. around $2B.
- U.S. likely to back European for IMF. While Timothy Geithner would only say yesterday that he wants an 'open process' to select the IMF's next managing director, sources close to the organization and the U.S. Treasury said the country will back a European for the job. This is because the U.S. doesn't want to jeopardize its captaincy of the World Bank, which would anger U.S. legislators who control contributions to the bank as well as to the IMF. Under an informal agreement, an American leads the World Bank and a European the IMF, although some emerging market countries have been calling for an end to this status quo.
Earnings: Friday Before Open
- Yingli Green Energy (YGE): Q1 EPS of $0.38 misses by $0.01. Revenue of $527.3M (+46.9% Y/Y) misses by $46.16M. Shares -0.1% premarket. (PR)
Earnings: Thursday After Close
- Aeropostale (ARO): Q1 EPS of $0.20 in-line. Revenue of $469M (+1% Y/Y) misses by $9M. Shares -10.7% AH. (PR)
- Aruba network (ARUN): FQ3 EPS of $0.16 beats by $0.01. Revenue of $105M (+53% Y/Y) beats by $7M. Shares -1.8% AH. (PR, earnings call transcript)
- Autodesk (ADSK): Q1 EPS of $0.40 beats by $0.03. Revenue of $528M (+11% Y/Y) beats by $5M. Shares -0.2% AH. (PR, earnings call transcript)
- Brocade Communications Systems (BRCD): FQ2 EPS of $0.13 beats by $0.03. Revenue of $550M (+10% Y/Y) beats by $1M. Shares -0.2% AH. (PR, earnings call transcript)
- Foot Locker (FL): Q1 EPS of $0.60 beats by $0.16. Revenue of $1.5B (+13% Y/Y) beats by $0.1B. Shares +9.2% AH. (PR)
- Gap (GPS): Q1 EPS of $0.40 beats by $0.01. Revenue of $3.3B (-1% Y/Y) in-line. Shares -15% AH.(PR, earnings call transcript)
- Intuit (INTU): FQ3 EPS of $2.33 beats by $0.05. Revenue of $1.84B (+15% Y/Y) in-line. Shares -2.5% AH. (PR, earnings call transcript)
- Salesforce.com (CRM): Q1 EPS of $0.28 beats by $0.01. Revenue of $504M (+34% Y/Y) beats by $21M. Shares +7.4% AH. (PR, earnings call transcript)
- In Asia, Japan -0.1% to 9607. Hong Kong +0.2% to 23199. China -0.0% to 2858. India +1.0% to 18326.
- In Europe, at midday, London +0.5%. Paris -0.3%. Frankfurt flat.
- Futures at 7:00: Dow -0.3%. S&P -0.3%. Nasdaq -0.2%. Crude +0.6% to $99.05. Gold +0.6% to $1501.90.
Friday's Economic Calendar
The SA Currents team contributed to this post.
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