By Eli Hoffmann and the Market Currents team
Facebook files for historic IPO. Facebook (ahem, FB) finally filed its much-anticipated S-1 filing. As expected, Facebook plans to raise $5B through its IPO. Facebook reported 2011 revenue of $3.7B (+88% Y/Y), operating income of $1.8B, and net income of $1B. 85% of its revenues were from ad sales, but "payments and other fees," including virtual-goods sales, rocketed 425% to $557M. While many believe Facebook's anticipated $75-100B valuation is inflated, analyst A.B. Mendez thinks Facebook will end the year above that range.
Xstrata, Glencore in merger talks. Glencore (OTCPK:GLCNF) is in talks to acquire the 66% of Swiss miner Xstrata (OTC:XSRAY) it doesn't already own. Based on yesterday's close, the stake would be worth about $35B. One analyst described the synergies: "On one end you have great mining expertise, on the other you've got great marketing expertise. Two and two together should make five." Glencore is +5.1% in London; Xstrata is +9.3%.
Progress in Greece talks; hurdles remain. Greece is rushing to finalize the details in talks with lenders on its second, €130B, bailout in order to unlock the funds ahead of large bond redemptions due in March. Sticking points include wages, pensions, and the recapitalization of banks.
European debt costs drop. Spain's borrowing costs dove at a €4.56B euro auction of mid-term debt today as investors apparently cheered the ECB's liquidity plan and EU's fresh commitment to budget discipline. Yields on 3-year bonds fell to 2.86% from 3.38% just three weeks ago. A French €8B auction this morning also saw solid demand.
Worst yet to come for China. Downward risks lie ahead for China, and growth could hit a trough in Q2, according to a top government think tank. The group suggests China cut taxes and slash bank reserve requirements to support growth.
Sony loses and warns. Sony (NYSE:SNE) shed more than $2B in FQ3 and now predicts a full-year loss of ¥220B, up from ¥90B in November. Weak TV sales, a strong yen, and internal disarray have plagued Sony.
Shell underdelivers, promises growth. Shell (NYSE:RDS.A) unveiled ambitious new growth plans amid tepid Q4 results. Adjusted Q4 net income of $4.85B missed consensus of $5.17B. Shell projects production, currently 3.215M boe/d (down 3% Y/Y), will rise to 4M by 2017-2018; production has fallen in every year since 2002 except 2010. Shares were -2.2% in London.
Deutsche Bank earnings tumble. Deutsche Bank (NYSE:DB) swung to a Q4 pretax loss of €351M, missing consensus of €572M, on Greek debt writedowns and trading losses. Tier 1 ratio improved to 9.5% from 8.7% a year ago. Shares -1.2% premarket.
Green Mountain sticks it to naysayers. Shares of Green Mountain Coffee (NASDAQ:GMCR) soared 21% AH after it blew away FQ1 estimates. Green Mountain's results were fueled by increases of 115% and 76% in K-Cup and brewer/accessory sales, and a 410 bps Y/Y increase in its gross margin to 29.1%. Also of note is a 10% Q/Q drop in Green Mountain's inventories, whose growth was seen as a red flag.
Banks backpedal on bearish bent. Just weeks after advising caution, bank strategists are capitulating on their bearish forecasts after the best January for global stocks since 1994. Analysts cited surprising emerging-market outperformance, confidence the euro will survive, and China easing as key growth levers.
Car comeback continues. U.S. auto sales surged another 11% in January to a four-year high of 14.18M vehicles/year. Key gainers included Ford (NYSE:F) (+7.3%), Toyota (NYSE:TM) (+7.5%), Honda (NYSE:HMC) (+8.8%) and Chrysler (+44%). GM's (NYSE:GM) sales fell 6.1%, including a halving of Volt sales.
Google doubles mobile ad sales. Google's (NASDAQ:GOOG) mobile search ad requests more than doubled in Dec. 2011 from the year-ago period, according to a company exec. Google has a dominant share of the mobile ad market, which Cowen estimates could reach $5.8B in sales this year, and $17.4B by 2015.
Bellwether shipping index hits new lows. The Baltic Dry Index fell another 2.6% to 662 on Wednesday, the lowest reading in more than 25 years. Rates for Capesizes - the largest carriers of iron ore and coal - have plunged 84% in just 7 weeks, and owners are idling vessels instead of accepting the low price. In the meantime, ships continue to be built even as Asian demand for raw materials slows.
First reading of Dec. jobs shows big gains. Private-sector payrolls grew by 297K in December, almost tripling the 100K consensus, ADP said Wednesday, a positive omen for Friday's payroll data. The pace of job growth was "well above what is usually associated with a declining unemployment rate... After a mid-year pause, employment seems to have accelerated," ADP said.
In Asia: Japan +0.8%. Hong Kong +2%. China +2%. India +0.8%.
Europe at midday: London -0.1%. Paris flat. Frankfurt +0.2%.
Futures at 7:00: S&P +0.03%. 10-yr -0.02%. Euro -0.21% vs. dollar. Crude -0.78% to $96.85. Gold +0.03% to $1750.05
Thursday's Economic Calendar
Chain Store Sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Productivity and Costs
8:30 ISM New York Business Index
10:00 Hearing: 'The State of the Economy' (Bernanke)
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
7:15 PM Fed's Fisher: Economy and Monetary Policy
Notable earnings before Thursday's open: ACM, ADS, AGN, ALKS, AZN, BCO, BSX, BX, CAH, CAM, CI, CMI, CME, DB, DO, DOW, GR, HOT, IP, K, LEA, MA, MD, MDC, MRK, MSCI, NOV, NUS, NYT, PHM, PTEN, RCL, RDEN, RGLD, ROP, SBH, SE, SLE, SNE, SXC, TE, TEN, VIA.B, WBC, WEC, XEL
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