By Yigal Grayeff and the Market Currents team
Apple's net profit passes $13B. Apple (AAPL) exceeded most analysts' wildest fantasies in FQ1 as its net income rocketed 118% to $13.06B, or $13.87 a share, making it one of the most profitable quarters ever for any U.S. company. Revenue surged 73% to $46.3B as Apple sold 37M iPhones, 15.4M iPads, and 5.2M Macs. Apple said earnings could have been higher if it could have kept up with demand, and forecast FQ2 figures that top Street estimates. Apple now has $97.6B in cash and could once again be the U.S.'s most valuable company during trading today, with shares +7.6% premarket.
Roche bids $5.7B for Illumina. Roche (RHHBY.PK) has made a hostile $5.7B bid for gene-therapy company Illumina (ILMN), with the offer of $44.50 a share representing a 64% premium to the latter's stock price on December 21, when the takeover rumors began flying. Any deal would help Roche maintain its leadership in the field of targeted treatments.
Boeing, Airbus share $21.5B Nordic order. Nordic budget carrier Norwegian Air Shuttle has split a $21.5B booking for 222 narrow-body aircraft between Boeing (BA) and Airbus (EADSF.PK), with the U.S. plane maker receiving an $11.4B order for 122 737 craft and its EU rival tapped to provide 100 A320 neo jets.
Obama targets Wall Street and millionaires. President Obama kicked off his re-election campaign for 2012 with a populist State of the Union address last night, when he called for a minimum 30% tax rate on those earning at least $1M and promised fresh investigations into the mortgage crisis. Obama's other proposals included a minimum rate on companies' overseas profits, a tax credit for firms moving jobs back home, and help for homeowners to get mortgage relief.
Yahoo's decline continues. While Apple prospers, Yahoo (YHOO) continues to flounder, with Q4 EPS slipping 5% to $0.24 and revenue 3% to $1.17B. EPS beat Street forecasts but sales missed expectations as revenue dropped at Yahoo’s display and search advertising businesses, and the company continued to lose market share. Shares were -0.9% after hours.
Citi mulls more layoffs. Citigroup (C) may this year cut more jobs at its securities and banking arm, which includes investment banking, if revenue doesn't pick up at the division. Citi has already announced cuts of 5,000 across the whole company. The firm invested almost $1B in its investment bank last year, but last week reported a 29% drop in revenues at the parent unit.
Fed set to launch new communications strategy. The FOMC is due to wind up its two-day meeting today, when it is expected to put into practice its new strategy of releasing projections for the path of interest rates and its views on when the first changes should occur. The Fed may also break new ground with an inflation target, which would probably be 1.7%-2%. However, with Operation Twist having been launched only four months ago, few expect new stimulus.
UniCredit to raise €25B in bonds. UniCredit (UNCFF.PK) is planning to raise up to €25B ($32.6B) by issuing covered bonds, with proceeds to be used "for general funding purposes, including the funding of the mortgage loans business of the group." The money would add to the €7.5B share issue the Italian bank has been carrying out to cover a massive cash hole.
Japan posts first trade deficit in 31 years. As expected, Japan has posted its first annual trade deficit since 1980, reporting a wider-than-forecast ¥205B ($2.6B) gap for December. Should deficits become a regular occurrence, the JGB market could be threatened. "Japan has relied on its trade surplus...to preserve calm even as public debt (has) ballooned to reach 238% of GDP," Ambrose Evans-Pritchard wrote. "Confidence in Japan's debt trajectory could evaporate fast."
Kubota looks to boost growth outside Japan with $2.6B deal. Leading Japanese tractor maker Kubota (KUB) is negotiating to buy a foreign farm equipment manufacturer in a transaction that could exceed ¥200B ($2.6B). The purchase would be part of an attempt to boost Kubota's growth outside of stagnating Japan and exploit the worldwide boom in commodities. Any deal would also be part of a trend of Japanese companies buying overseas firms as they look to overcome the strong yen.
HSBC continues it global retrenchment. HSBC (HBC) is reportedly looking for buyers for its Japanese consumer banking unit but may shut down the auction if offers aren't sufficiently attractive. The bank yesterday said that it was selling operations in Costa Rica, El Salvador and Honduras to Colombia's Banco Davivienda for $801M.
Moynihan defends size of big banks as Davos opens. The World Economic Forum's annual meeting in Davos has opened today, with over 2,500 business and political leaders set to attend. While a group of consumer advocates, academics and economists plan to file a petition with the Fed and other regulators to carve up Bank of America (BAC), company CEO Brian Moynihan said in Switzerland that the size and power of large banks reflects the magnitude of the economies in which they're operating.
In Asia, Japan +1.1% to 8884. Hong Kong and China closed. India +0.5% to 17077.
In Europe, at midday, London -0.7%. Paris -0.8%. Frankfurt -0.7%.
Futures at 7:00: Dow -0.3%. S&P -0.3%. Nasdaq +0.5%. Crude -0.7% to $98.27. Gold -0.5% to $1656.30.
Wednesday's economic calendar:
7:00 MBA Mortgage Applications
10:00 FHFA Housing Price Index
10:00 Pending Home Sales
10:30 EIA Petroleum Inventories
12:30 PM FOMC Announcement
1:00 PM Results of $35B, 5-Year Note Auction
2:15 PM Bernanke Press Conference
Earnings Results: Companies that beat EPS expectations last night and today include Advanced Micro Devices (AMD), Apple (AAPL), CA (CA), Norfolk Southern (NSC), SAP (SAP), Yahoo (YHOO), Dover (DOV), US Airways (LCC), United Technologies (UTX).
For full real-time earnings coverage, please click here.
Notable earnings before Wednesday's open: ABT, ADP, ATI, BA, BPOP, COP, DAL, DOV, ERIC, EXC, GD, GLW, GWW, HCBK, HES, IGTE, LCC, MSI, MWV, NVS, NYB, OXY, PII, PX, RES, ROK, SAP, SO, STJ, TEL, TXT, UTX, WLP, XRX
Notable earnings after Wednesday's close: : AMLN, CCI, CTXS, DRE, ETFC, JEC, LRCX, LSI, MUR, NE, NFLX, OI, PMTC, SNDK, SUSQ, SWK, SYMC, TER, URI, ZNGA
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