Wall Street Breakfast: Netflix Jumps Following Earnings Beat

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Includes: AMZN, AXP, AYA, BAC, BBRYF, C, DIS, DKS, EIHDF, HAS, IBM, IDKOF, INTX, JPM, NFLX, QQQ, RANKF, RDS.A, SPY, TACBY, TTSLF, TWTR, UAL, V, WFC, WIMHF, WMT
by: Wall Street Breakfast
Wall Street Breakfast
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Netflix's shares soared 19% premarket after Q3 earnings at the online video provider topped forecasts. EPS came in at $0.12, profit rose to $51.5M from $29.4M and revenue jumped 32% to $2.3B. Netflix (NASDAQ:NFLX) added 3.2M subscribers internationally, way more than expected, and hit a total global number of 86.74M, helped by original shows such as "Stranger Things."

Economy

Global equities were higher at the time of writing as a weakening dollar helped strengthen oil prices, thereby boosting global sentiment, and ahead of U.S. CPI data this morning. Inflation is expected to have risen to 1.5% on year in September from 1.1% in August. The figures will come after Fed Vice-Chair Stanley Fischer said yesterday that the central bank is "very close" to its targets of full U.S. employment and 2% inflation. Fischer also expressed concerns about low interest rates.

U.K. CPI reached its highest level in almost two years in September, rising to +1% on year from +0.6% in August and topping consensus of +0.9%. The U.K.'s Office of National Statistics says it hasn't seen explicit evidence that the pound's weakness has been affecting CPI, although it has had an impact on producer prices. "Even though 1% is still some way off the Bank of England's 2% inflation target, the impact of currency changes works with a lag so further rises in CPI should be expected," said Fidelity investment director Tom Stevenson. The pound was +0.4% at $1.2238 at the time of writing.

Stocks

IBM's earnings fell in Q3 but topped estimates as EPS was $3.29, net profit sank 4% to $2.9B and revenue slipped 0.4% to $19.2B. On the upside, revenue from areas that IBM (NYSE:IBM) calls "strategic imperatives" rose 16% to $8B, with cloud sales jumping 44%. Mobile revenues grew 19% and security 11%. Shares were -2.6% premarket.

Charlie Scharf is stepping down as CEO of Visa (NYSE:V), effective December 1, with Scharf saying he can no longer spend enough time in San Francisco to do his job effectively. Scharf, whose family lives in New York, will be replaced by Alfred Kelly, a board member at Visa and CEO of Intersections (NASDAQ:INTX). Kelly's also a former president of American Express (NYSE:AXP).

Disney decided against buying Twitter recently partly due to concerns that the hate speech that's rampant on the social network would undermine Disney's (NYSE:DIS) family friendly image, Bloomberg reports. Another reason is that although Twitter (NYSE:TWTR) has a market cap of almost $12B, it continues to lose money, which sparked opposition to the purchase among some of Disney's largest investors.

Dick's Sporting Goods is set to make an offer for the U.S. operations of bankrupt Golfsmith, Reuters reports, although it didn't say how much Dick's (NYSE:DKS) would bid. The latter faces competition for Golfsmith from Worldwide Golf Shops, although Golfsmith's lenders could enable it to restructure its debt and emerge from bankruptcy without a merger. Golfsmith has suffered from competition from discount retailers Wal-Mart (NYSE:WMT) and Amazon (NASDAQ:AMZN), as well as from fading interest in golf among younger consumers.

Shell's sale of a 33% stake in Japanese refining partner Showa Shell to domestic rival Idemitsu Kosan (OTC:IDKOF) in a $1.6B deal could be held up because of a wider plan for a total merger of the Japanese companies, analysts warn. Any delay in the smaller transaction would do no good for Shell's (NYSE:RDS.A) plans to sell $30B of assets by 2018 as it looks to slash its $75B of debt, a large chunk of which the company took on after it bought British peer BG Group for $50B in January. By June, Shell had sold just $1.5B in assets.

Online gambling company Amaya (NASDAQ:AYA) and the U.K.'s William Hill (OTC:WIMHF) have called off merger talks, saying they would be better off separate. The news comes after opposition from a leading shareholder in the British bookmaker to a deal with Amaya, which has a market cap of $2.24B. The failure of the negotiations follows William Hill's rejection of takeover approaches from online rival 888 (OTCPK:EIHDF) as well as from casinos and bingo halls operator Rank (OTCPK:RANKF).

Burberry's Q2 comparable retail sales rose for the first time in four quarters, growing 2% and topping expectations for a 1% increase. The U.K. luxury fashion retailer was helped by the slump in the pound following the Brexit vote in June, with sales jumping 30% in its home market. However, Burberry's (OTCPK:BBRYF) underlying H2 sales fell 4% to £1.16B, hurt by a drop in wholesale and licensing revenues, as well as weak sales in Hong Kong and the U.S. Shares were -7.5% in London at the time of writing.

Leading Australian betting firms Tatts (OTCPK:TTSLF) and Tabcorp (OTCPK:TACBY) are in negotiations to create a A$9.34B ($7.1B) combined operator as they look to fend off online rivals that have eaten into their market share. Any deal is set to receive scrutiny from Australia's competition regulator, due to "a range of potential issues and areas of overlap." The talks come after the companies failed to merge in 2015.

Monday's Key Earnings

JPMorgan (NYSE:JPM) closes -0.5% despite earnings beat
Citigroup (NYSE:C) finishes flat after results top forecasts
Bank of America (NYSE:BAC) closes +0.25% following strong quarter
Wells Fargo (NYSE:WFC) ends -0.5% even though topped estimates
Hasbro (NASDAQ:HAS) finishes +5.7% following earnings beat
United Continental (NYSE:UAL) -0.3% AH despite earnings beat

Today's Markets

In Asia, Japan +0.4% to 16964. Hong Kong +1.55% to 23394. China +1.3% to 9758.4. India +1.9% to 28051.
In Europe, at midday, London +1%. Paris +1.1%. Frankfurt +1.2%.
Futures at 6:20, Dow +0.4%. S&P +0.5%. Nasdaq +0.6%. Crude +1.1% to $54.49. Gold +0.5% to $1263.3.
Ten-year Treasury Yield -1 bps to 1.76%.

Today's Economic Calendar
8:30 Consumer Price Index
8:55 Redbook Chain Store Sales
10:00 NAHB Housing Market Index
4:00 PM Treasury International Capital Companies reporting earnings today »