By Yigal Grayeff and the Market Currents team
Intel a growth story as revenue tops $50B. Intel (INTC) has continued to defy the critics who berate it for not conquering the mobile markets, with annual revenue topping $50B for the first time in 2011, rising from $40B a year earlier. The milestone came as Q4 sales jumped 21% to $13.9B and EPS 14.3% to $0.64. And despite the pessimism of Microsoft (see below), Gartner and others about the PC market, Intel has its eye on the huge room for growth in China, where penetration is just a third. Shares were +0.2% premarket.
Google dives on rare earnings miss. Google's shares sunk 7.9% premarket after its Q4 results missed Street estimates, although EPS rose 8.6% to $9.50 and net revenue jumped 25% to $10.58B. Google's earnings were affected by a 35% increase in costs to $3.38B, unfavorable forex rates, alterations to its ad formats, and the sale of more mobile ads, which cost less. Jefferies said the sharp stock decline "is an over-reaction to actually a decent quarter, buried under a lot of noise."
GE's profit rises but revenue falls. GE's (GE) Q4 EPS rose 11% to $0.39 and beat expectations, although revenue fell 8% to $37.97B and missed forecasts. GE Capital's income surged 58% and the conglomerate received record infrastructure orders of $28.6B, leading to a year-end backlog of $200B, the largest in the company's history. GE finished 2011 with $85B of cash and cash equivalents. Shares were -3.3% premarket.
Vodafone escapes $4.4B tax bill in India. India's top court has ruled that Vodafone (VOD) isn't liable for up to $4.4B in back-taxes and penalties. In addition to Vodafone, the decision is good news for other firms fighting similar tax cases in India, including GE (GE), SABMiller (OTCPK:SBMRF), Cadbury (KFT), AT&T (T) and Sanofi-Aventis (SNY).
IBM's strength reassures about IT market. IBM (IBM) gave strong guidance for 2012 after its Q4 EPS rose 11% to $4.71 a share and exceeded consensus estimates, although it was boosted by share buybacks last year. Revenue edged up 2% to $29.5B but missed forecasts. IBM predicted EPS will grow 10.5% this year - above Street predictions - with its strong pipeline for software and services providing reassurance about global corporate IT spending and confidence. IBM shares were +2.15% premarket.
Microsoft offsets Windows weakness. Robust sales from Microsoft's (MSFT) Office, Xbox and server software products in FQ2 helped the company offset continued weakness at its Windows division, which, unlike Intel, is suffering from the sluggishness in the PC market. But like IBM, Microsoft's performance does indicate strong business demand for IT. The company's EPS edged up 1.3% to $0.78, beating analyst forecasts, while revenues grew 5% to $20.89B, as expected. Shares were +2.1% premarket.
UniCredit poised for success with €7.5B share sale. UniCredit's (OTCPK:UNCFF) closely watched €7.5B ($9.7B) stock offering, which has caused a plunge in its share price, looks set to succeed despite the market turmoil, with underwriters expecting a 90%-95% take-up by shareholders. This will allow the bank's Tier 1 capital adequacy ratio to rise above the EBA's target of 9% and fill the second-largest cash hole in the eurozone's bank sector.
Fed to hold off on printing more money. Fed policy makers want further clarity on the direction of the economy and inflation before deciding on whether to go ahead with QE3, with visibility not strong enough to make a move now. Those open to adding to the $2T+ of bonds the bank has bought so far include John Williams, Dennis Lockhart and Sandra Pianalto, although they haven't shown eagerness to do it soon. The FOMC is due to meet next week.
Chinese manufacturing improves slightly. The flash estimate for January's HSBC China PMI came in at 48.8, a slight improvement over December's 48.7 final reading. Manufacturing is still sluggish, but there are some early signs that a downward drift in factory activity is slowing.
U.S. firms vie for €2B Deutsche Bank unit. State Street (STT), JPMorgan (JPM) and Ameriprise Financial (AMP) are said to be among the finalists bidding for Deutsche Bank's (DB) global asset management division. Deutsche expects the sale to fetch over €2B ($2.6B).
Moody's downgrades Sony and Panasonic. Moody's has cut its debt ratings on Sony (SNE) and Panasonic (PC), citing concerns about continued losses at their TV divisions. Panasonic's financial profile had deteriorated since it bought out two major subsidiaries in April 2011. Sony will find it hard to restore its TV profitability in the next two years amid tough competition and a strong yen.
EU to order safety tests on superjumbos. The EU will reportedly order airlines to conduct safety checks on almost 20 Airbus (OTCPK:EADSF) A380 planes, or a third of the existing fleet, following the discovery of new wing cracks. Airbus insists the planes are safe, although Aussie engineers checking the superjumbos flown by Qantas (OTCPK:QUBSF) are less sanguine, noting these so-called "tiny" cracks have a way of growing very quickly.
In Asia, Japan +1.5% to 8766. Hong Kong +0.8% to 20110. China +1.0% to 2319. India +0.6% to 16739.
In Europe, at midday, London -0.1%. Paris -0.5%. Frankfurt -0.4%.
Futures at 7:00: Dow -0.2%. S&P -0.3%. Nasdaq +0.1%. Crude -0.6% to $99.77. Gold -0.4% to $1648.00.
Friday's economic calendar:
10:00 Existing Home Sales
Earnings Results: Companies that beat EPS expectations last night and today include American Express (AXP), IBM (IBM), Intel (INTC), Microsoft (MSFT), GE (GE), SunTrust Banks (STI), Schlumberger (SLB).
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