U.S. Futures8:50 AM ET
S&P 500: +3.50; 1,540.00
NASDAQ 100: +4.75; 2114.25
Dow: +5; 13,999
NIKKEI 225: +0.36%; 16,845.96
FTSE 100: -0.05%; 6,463.30
CAC 40: -0.36%; 5,695.30
Oil: -$0.34; $81.32 (-$0.23)
Gold: -$0.80; $749.20 (+$5.60)
Natural Gas: -$0.06; $6.816
Nokia to Buy Navteq
Mobile phone manufacturer Nokia will buy navigation software maker Navteq Corp. for $78/share, or a total price of $8.1 billion., it announced Monday. Chicago-based Navteq, which has a market cap of $7.61 billion, is a leader in electronic mapping used for car navigation and mobile phone applications like shopping, emergency services and advertising. Although Nokia sells more than a third of all handsets sold around the world, it is facing mounting competition from Asian competitors who offer handsets at lower prices. To fend off that threat, Nokia has been assembling a suite of mobile services. The purchase of Navteq, which trades at 54x earnings -- substantially higher than the music and games services Nokia has already bought -- represents what the Wall Street Journal calls a "vigorous move into the mobile-services arena." Navteq posted Q2 net income of $40.9 million on revenue of $202.3 million. Its stock price has more than doubled this year; Nokia's is up almost 90%. The acquisition is expected to close in Q1 2008, and will not affect share buybacks or the company's future cash distribution strategy, Nokia said. Nokia shares are down 3.1% in pre-market trading. Navteq shares are up 1.2% to $78.80, indicating investors may be expecting a counter-bid. Nokia's bid was just $0.03 higher than Friday's close of $77.97.
Sources: Wall Street Journal
Commentary: Navteq Driven By Place and Location Services Growth • Garmin, Navteq Soaring; GPS Is Hot • Nokia Buys Cellphone Ad Firm Enpocket
Stocks/ETFs to watch: NOK, NVT. Competitors: GRMN, ERIC, MOT. ETFs: FVI, PYH, DSC
Earnings call transcript: Nokia Q2 2007, Navteq Q2 2007
Credit Suisse Still Expects Q3 Profit
Credit Suisse said Monday it still expects to report a profit in the third quarter, but admitted that results would be "adversely impacted by recent market events." The announcement came in the wake of UBS AG's report of an unexpected Q3 loss as a result of subprime write-downs (full story). Citigroup, meanwhile, forecast a 60% drop in Q3 earnings due to the weak markets (full story). Credit Suisse said it had no indication that income from continuing operations would be out of the range of plus/minus 20% of 1.3B Swiss francs, or somewhere in the area of 1.04B to 1.56B francs, noting that the results were only a preliminary prediction as it still was finalizing its numbers. Last year it earned 1.47B francs. The Swiss banking giant will report final results November 1; it said it expects earnings for the nine-month period to be a record level. Last week Credit Suisse announced plans to cut 150 mortgage-backed securities-related jobs; UBS on Monday said it would cut some 1,500 positions.
Sources: Bloomberg, AP
Commentary: How to Deal With the Current Crisis of Confidence in the Market • Ten Ways to Invest in Switzerland
Stocks/ETFs to watch: CS. Competitors: UBS, C, DB. ETFs: XLF, PGF, IYF
Citi Falls on Q3 Profit Warning
Citigroup warned early Monday it expects a "substantial decline" in Q3 net income, in the range of 60% year-over-year, due to "dislocations in the mortgage-backed securities and credit markets, and deterioration in the consumer credit environment." Citi shares were last down 2.4% to $45.55 in pre-market trading. Citi will writedown approximately $1.4B pre-tax (net of fees) on highly leveraged finance commitments, $1.3B pre-tax (net of hedges) on subprime mortgage-backed securities, and $600M pre-tax in fixed income credit trading. Citi said the write-downs were partially offset by lower expenses in Securities and Banking. Citi also reported an approximately $2.6B pre-tax increase in credit costs. In a statement, Citi called its expected Q3 results a "clear disappointment," but said its fixed income business "performed at more normalized levels" in September, and that the company regards Q3 as an "aberration." UBS AG said it will report a Q3 loss including more than $3.4B in write-downs, ahead of Citi's announcement on Monday. (See full story). Shares of Citigroup lost 0.45% to $46.67 on Friday.
Sources: Press release, Wall Street Journal
Commentary: UBS to Post Q3 Loss; Cut Jobs • Citigroup, Banks Could Face Hidden Risk -- WSJ • Dow 30 Price Targets
Stocks/ETFs to watch: C, UBS. Competitors: BAC, JPM, WM
Earnings call transcript: Citigroup Q2 2007
Related: Citi Oct. 1 Call Recorded Transcript [pdf]
Adobe to Acquire Buzzword, Move Into Online Word Processing
Adobe will announce plans Monday to move into online word processing by acquiring Virtual Ubiquity Inc., which offers a collaborative authoring platform service called Buzzword, the Wall Street Journal reported. Adobe will also unveil an online document-sharing service called Share. The services will be free, although Adobe may ultimately charge for extra features. Buzzword uses Adobe technology to offer some functions that are rare among Web-based document services, including the ability to wrap text around images, and preview how printed documents will look. Separately, Microsoft said Sunday it will today introduce Office Live Workspace, which will allow corporate employees to share Word, Excel and PowerPoint documents online for free (full story). The moves highlight an industry-wide move to the Web, a trend which some say is still in its infancy: Michael Mace of Rubicon Consulting says a recent survey found that while 34% of computer owners have used web-based email services, web-based services for word processing and spreadsheets have been used by just 5% and 3% of computer users.
Sources: Wall Street Journal
Commentary: Adobe COO Narayen: “Our Strategy Is Working” • Why I'm Placing a Small Bet on Adobe
Stocks/ETFs to watch: ADBE, MSFT. Competitors: GOOG, YHOO, BITS
Earnings call transcript: Adobe F3Q07
Housing Prices Will Continue to Fall - Greenspan
Housing prices in the United States will continue to drop, as new home sales are barely even making a dent in overgrown inventories, former Federal Reserve Chairman Alan Greenspan said Monday. Greenspan conceded a global liquidity crisis may be showing signs of healing, but warned the speculative fever that drove the housing bubble must be allowed to run its course before a full recovery would be imminent. "As in similar situations of inventory excess, I would expect home price declines to continue until the rate of inventory liquidation reaches its peak," Greenspan said at Reuters, London. "There is little relevant American history to guide us in judging the ultimate extent of home price decline or the timing of a new price recovery... All that I conclude is that the process of inventory adjustment has just started, and we have a long way to go before residential housing and mortgage markets stabilize in the U.S." U.S. consumer spending would likely remain weak due to reduced household wealth, Greenspan said.
Commentary: Alan Greenspan Talks Housing • Greenspan Admits the Fed Has No Idea What It's Doing
Stocks/ETFs to watch: XHB, DIA, XLY
Walgreen Drops on Lower Q4 Net
Shares of Walgreen were last trading down by more than 9% to $42.80 in pre-market activity, following the company's report of lower fiscal Q4 earnings. Net income fell 3.8% to $396.5 million, or $0.40/share, missing analyst expectations of $0.47/share. Revenues grew over 10% to $13.42B, but also came up short of estimates of $13.54B. Despite the decline in Q4 net income, Walgreen reported its 33rd consecutive year of record earnings and sales. Same-store-sales at locations open longer than a year rose 6.3%. "This quarter was negatively impacted by lower generic drug reimbursements, combined with higher salary and store expenses, and higher advertising costs. Our expenses weren't in line with the level of reimbursements we were receiving. Managing both expenses and lower reimbursements on some generic drugs is my top priority. We're going to fix this, and at the same time continue our aggressive growth plan," said Chairman Jeffrey A. Rein. Walgreen said it estimates more than $2B in capex in fiscal 2008 for new stores, technology and a new distribution center set to open in FY2009. Shares of Walgreen lost 1.4% to $47.24 on Friday.
Sources: Press release, MarketWatch
Commentary: Walgreen Deserves A Spot In A Dividend-Yielding Portfolio • August Same-Store Sales Roundup • Walgreen Strengthens Its Specialty Healthcare Offerings With Option Care Purchase
Stocks/ETFs to watch: WAG. Competitors: CVS, RAD, LDG, ESRX, DSCM
See today's Wall Street Breakfast for more news.