Microsoft suffers first loss as a public company. Microsoft (MSFT) swung to a net loss of $492M in FQ4 from a net profit of $5.87B a year earlier, due to the $6.2B writedown of its 2007 aQuantive acquisition. However, adjusted EPS of $0.73 and a 7% revenue increase to $18.6B beat consensus. As ever, Microsoft experienced joy in corporate sales, stagnation in the Windows division, and the black hole of pain in the Online Services arm.
Google profit tops expectations. Google's (GOOG) adjusted EPS rose to $10.12 from $8.74 last year and beat Street forecasts, while revenue jumped 21% to $8.36B and slightly missed consensus. Google site and ad-network revenue enjoyed healthy gains, although ad-click prices slumped 16%. Motorola lost $233M on sales of $1.25B - "frightening" is the word analysts used to describe the unit's results. Will Motorola be a perennial loss-maker like Microsoft's online business? Shares were +2.9% premarket.
GE benefits from GE Capital dividend. GE's (GE) profit from continuing operations rose 2.5% to $3.66B in Q2 and revenue 2% to $36.5B, with good demand in the U.S. for equipment used in energy production and a payout from GE Capital helping to outweigh the impact of the struggling European economy. Revenue missed forecasts, but EPS of $0.38 topped expectations. GE Capital earned $2.1B (+31%) and returned $3B to the parent company, which raised its 2012 operating cash expectations to $17B-$19B based upon the restart of the GE Capital dividend.
Top Stock News
Banks mull group Libor deal. Several banks that are being investigated in connection with the Libor affair are reportedly considering pushing for a group settlement with regulators rather than going it alone and risking a Barclays-like backlash. Discussions over joint negotiations are still preliminary, and it's unclear if regulators will enter into talks.
DirecTV and Viacom kiss and make up. DirecTV (DTV) has agreed to restore Viacom's (VIA) networks to its 20M U.S. subscribers after a programming blackout that lasted more than a week in a dispute over fees. The details of the agreement weren't disclosed.
Yahoo gives Mayer bumper salary package. New Yahoo (YHOO) CEO Marissa Mayer will receive up to $141M in compensation over the next 5 years, comprising a $1M-a-year base salary, and a mix of performance bonuses, restricted stock units and options. Bloomberg Businessweek provides the background story of Mayer's surprise hiring: two secret meetings held away from Yahoo's campus - the second involving Dan Loeb and the rest of Yahoo's board - closed the deal.
Palo Alto Networks, Kayak price IPO above target ranges. Palo Alto Networks (PANW) and Kayak (KYAK) are due to today begin trading after they priced their IPOs above their target ranges, although iconic guitar maker Fender withdrew its offering due to market conditions. Palo Alto, a provider of firewalls, sold 6.2M shares at $42 each, giving it a market cap of $2.8B. Travel website Kayak sold 3.5M shares at $26 each.
Court to consider gene patent case. A federal appeals court is today due to again deliberate on whether it's possible to patent isolated human genes in a case that will probably have wide ramifications for the development of medical tests and treatments. The case involves Myriad Genetics (MYGN), which holds patents - at the moment - that allow it to genetically screen those at risk of breast or ovarian cancer.
SEC indicts STEC CEO with insider trading. The SEC has charged STEC (STEC) CEO Manouchechr Moshayedi with insider trading, alleging that he withheld information in 2009 about an upcoming decline in orders from EMC (EMC) in order to profit from a secondary offering. Moshayedi then struck a side deal with EMC to guarantee that STEC's near-term guidance remained solid while the offering occurred. STEC provides flash solid-state drives for enterprise-storage systems.
Top Economic & Other News
Government speeds up asset sales. The government is accelerating plans to sell the billions of dollars in assets it acquired during the bailout of the financial system four years ago. The assets include the preferred shares of over 300 small and midsize banks held by the Treasury, and mortgage bonds held by the New York Fed. Blackstone (BX) is among those interested in what's on offer, the WSJ reports.
Eurozone poised to OK details of Spain bank rescue. Eurozone finance ministers are today expected to approve the draft terms of Spain's €100B bank rescue, although the country won't know exactly how much it will need until the results of deep-dive assessments of the sector, which are due in September. Yesterday, Spain's parliament authorized €65B in savings, while hundreds of thousands of anti-austerity demonstrators marched in Madrid.
Drought set to hit crop insurers. The drought could cause crop insurers - such as Ace (ACE), QBE (OTCPK:QBEIF) and Wells Fargo (WFC) - to suffer their first underwriting losses in ten years. However, with the government providing subsidies and reinsurance, taxpayers may have to foot 50%-80% of the bill. The severity of the drought is making it tempting for farmers to give up on their crops and claim the insurance rather than try to save their products.
"Subprime lending" helps send student defaults higher. Defaults on private student loans topped $8B last year, a government report released yesterday said. The amount has risen over the last ten years due to aggressive marketing by lenders to borrowers, some of whom couldn't afford the debt. "Subprime-style lending went to college and now students are paying the price," Education Secretary Arne Duncan said.
In Asia, Japan -1.4%. Hong Kong +0.4%. China -0.7%. India -0.7%.
In Europe, at midday, London -0.5%. Paris -0.8%. Frankfurt -0.2%.
Futures at 7:00: Dow -0.3%. S&P -0.4%. Nasdaq -0.1%. Crude -1.2% to $91.56. Gold +0.1% to $1581.70.
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