by Rachael Granby and the Market Currents team
Lloyds posts a loss. Lloyds (LYG) reported a £3.5B pre-tax loss this morning, better than the £4B loss expected. The figure includes a £3.2B one-off provision for repaying mis-sold payment protection insurance. Core Tier 1 capital ratio +60 bps to 10.8%. Income -10% to £21.1B, and expected to fall again in 2012. The company expects 2012 to "remain challenging," citing the "subdued" economy, regulatory scrutiny and market uncertainty. Shares rose at first, reflecting the bank's underlying performance when one-time charges were stripped out, but subsequently sold off as investors took profits. Shares -1.3% premarket (7:15 ET).
AIG profit climbs on tax benefit. AIG (AIG) reported Q4 EPS of $0.82, beating expectations by $0.21. Its net income of $19.8B included tax benefits of $17.7B for Q4 related to the reversal of write-downs it had taken to lower the value of its deferred-tax assets. The company noted it had returned to “sustainable operating profit” as its biggest unit, property-casualty insurer Chartis, and its plane-leasing business both swung to operating profits in Q4. Shares +10% premarket (7:00 ET).
Apple mulls cash uses. At its shareholder meeting yesterday, Apple (AAPL) announced it will require directors to be elected via a majority shareholder vote, meeting the demand of a non-binding resolution passed last year. CEO Tim Cook said the company’s $98B cash hoard is "more than we need to run a company" and reiterated an earlier statement that he is engaged in "active discussions" about what to do with the cash. Cook nixed prospects for a subscription video service or a stock split.
Salesforce.com rises after earnings. Salesforce.com (CRM) reported Q4 EPS of $0.43, beating expectations by $0.03, and revenue of $631.9M, beating expectations by $7.9M. Deferred revenue reached $1.38B, +48% Y/Y and soothing concerns about slowing growth. Unbilled deferred revenue +47% to $2.2B. Sales & marketing expenses +40% to $327.6M. Free cash flow was $195.7M, well above net income of $61.6M. On its earnings call, Salesforce mentioned it won 100 7-figure deals during the quarter (up 4x Y/Y), and nine 8-figure deals, evidence that its efforts to secure enterprise-wide deployments are bearing fruit. Shares +9.8% premarket (7:15 ET).
Apollo nears El Paso deal. Apollo Global Management (APO) is leading a group that is close to buying El Paso's (EP) oil-exploration business for around $7B, sources say, with a deal announcement possible as soon as today. Kinder Morgan (KMI), which has a $38B deal in place to buy El Paso, wants to sell the exploration and production business to help pay for its El Paso acquisition.
Glimmers of reform in China. China should accelerate the loosening of capital controls, says the PBOC in a report that outlines the path to a freely tradable currency and more open capital markets. The timing of the report suggests reform-minded officials may be trying to build momentum ahead of a leadership transition announcement later this year.
No surprises from U.K., German GDP. The latest figures put the U.K.'s Q4 GDP at an unrevised -0.2%, with the year-on-year figure revised down slightly to +0.7% from +0.8%. The full-year 2011 GDP was +0.8%. In Germany, figures were similarly unchanged from preliminary estimates. Q4 GDP was an expected -0.2% M/M, a contraction the government termed a "little setback." On a year-on-year basis, price-adjusted GDP was +1.5% for Q4, and +2% in calendar-adjusted terms.
Moody's warns on Japan. Moody's said it will review Japan's credit rating if the country's plans to double its sales tax are delayed any further. For the time being, Moody's doesn't plan to change Japan's Aa3 rating with a stable outlook because the country's current account surplus helped offset its public debt.
Mead Johnson, Danone team up on bid. Mead Johnson (MJN) and Danone (DANOY.PK) landed permission to jointly bid for Pfizer's (PFE) $10B infant nutritionals business, sources said. The two firms will go up against Nestle (NSRGY.PK) in the next auction round which closes March 5.
Policymaker targets Fed's dual mandate. Rep. Kevin Brady, a prominent House Republican, says he will introduce legislation to focus the Fed on a single mandate to fight inflation and protect the dollar's value, stripping the central bank of its jobs mandate. The "Sound Dollar Act" will be formally introduced in early March.
Citigroup sells Indian lender stake. Citigroup (C) exited its investment in Housing Development Finance Corp., India's largest mortgage lender, for $1.9B. Citi sold 145.3M shares at 657.56 rupees apiece, a 6% discount to HDFC’s closing price yesterday.
P&G to cut jobs, costs. Procter & Gamble (PG) plans to cut 5.7K jobs in 2013 and reduce its costs by $10B by 2016, according to CEO Bob McDonald. The company also reduced its earnings estimates for FQ3 and FY12 based on the impact of the sale of the Pringles brand to Kellogg.
Wynn Macau dumps Okada. Wynn Macau's board voted to oust co-founder Kazuo Okada, effective immediately, due to his "unacceptable conduct" and bribery allegations. Okada is still on the board of parent Wynn Resorts (WYNN) as it will take a special shareholder vote to unseat him.
Crude keeps climbing. Crude oil rose toward $109 this morning, on its way to a third week of gains, as Iranian concerns continue to dominate and some upbeat U.S. data lifted demand outlook. Crude +0.5% to $108.40 (7:00 ET).
In Asia, Japan +0.5% to 9647. Hong Kong +0.1% to 21407. China +1.3% to 2440. India -0.9% to 17924.
In Europe, at midday, London +0.1%. Paris +0.5%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.2%. S&P +0.3%. Nasdaq +0.2%. Crude +0.5% to $108.40. Gold -0.25% to $1781.80.
Friday's economic calendar:
9:55 Reuters/UofM Consumer Sentiment
10:00 New Home Sales
10:45 2012 US Monetary Policy Forum
Notable earnings after Friday's close: AWK
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.
Discussion of today's news is here.