Eurozone economy contracts as German growth slows. Eurozone GDP fell a quarterly 0.2% in Q2, which was in line with forecasts but was down from unchanged in Q1. Germany's GDP growth slowed to 0.3% from 0.5%, with the meager growth helped by exports and private and public consumption. However, the Bundesbank said there are signs of a "certain decrease in growth" for H2. Meanwhile, France continued to stagnate as GDP stayed unchanged in Q2 for the third quarter in a row.
Groupon shares slammed as revenue growth hits a wall. Groupon (GRPN) shares plummeted 19% premarket after the company's once exponential revenue growth slowed almost to a standstill in Q2 and despite the daily deals company recording its first ever quarterly profit. Groupon's net income was $28.4M vs. a loss of $107.4M a year earlier, EPS of $0.08 beat consensus and revenue jumped 45% on year to $568.3M. However, Groupon's quarterly growth for the last six quarters was 72%, 97%, 10%, 14%, 14% and 2%.
Agrium fends off Jana pressure to split. Agrium (AGU) has said it won't spin off its retail operations, as the move would lead to "substantial risk with no sustainable benefit." Agrium was responding to a WSJ report that activist investor Jana, which has already effected major change at McGraw-Hill (MHP), has bought a stake of just under 5% in the fertilizer company and was agitating for the firm to split, as well as to cut costs.
Top Stock News
Home Depot increases guidance after profit rises. Home Depot's (HD) EPS rose to $1.01 from $0.86 a year earlier and beat Street forecasts, and the company increased its FY outlook to above analyst expectations. However revenue edged up just 1.7% to $20.6B and missed consensus. Still, the home-improvements retailer enjoyed "continued demand for core products" as average ticket and transaction volumes rose slightly. Shares climbed 2.5% premarket.
Nevada joins LVS investigation bandwagon. The Nevada Gaming Control Board is looking at whether Las Vegas Sands (LVS) broke bribery laws in its dealings in mainland China, Reuters reports. Nevada, which joins the SEC and Department of Justice in probing LVS, could theoretically revoke the company's casino license, although matters rarely get that far.
Elpida creditors offer alternate rescue plan. A group of Elpida Memory's (ELPDF.PK) bondholders have offered to lend the bankrupt chipmaker ¥30B ($383M) in an alternative restructuring plan for the company as they look to push Micron (MU) to increase its bid for the firm. Micron has offered to buy Elpida's equity for ¥60B and pay creditors ¥140B, while the bondholders value the company at over ¥300B.
Verizon's $3.9B spectrum deal nears approval. The FCC and Department of Justice are preparing to authorize Verizon Wireless' (VZ) $3.9B acquisition of airwaves from several cable companies, including Comcast (CMCSA) and Time Warner Cable (TWC), the WSJ reports. In return, the companies will limit the scope and length of agreements to sell each other's services in deals that had raised concerns that the companies wouldn't compete for Internet subscribers.
Goodwill outweighs market caps at six major firms. Six companies could be set for writedowns, the WSJ reckons, as they are carrying more goodwill than they are worth. For example, Nasdaq OMX's (NDAQ) market cap is $3.9B but it has goodwill of $5.1B following its 2008 purchase of OMX for $4.4B. The other companies include Frontier Communications (FTR) and Republic Services (RSG).
Toshiba plans sale of stake in U.S. nuclear company. Toshiba (TOSYY.PK) intends to sell a 16% holding in U.S. nuclear power company Westinghouse Electric as it looks to prioritize its nuclear business in emerging markets. In October 2006, Toshiba paid about $4.2B for 77% of the company, and is looking to sell a piece to nuclear technology firms that have strong ties to emerging markets. A U.S.-based suitor is reportedly among the preferred buyers.
Kodak extends patent auction. Unsurprisingly, Eastman Kodak (EKDKQ.PK) has extended the deadline for bidding on its patent portfolio after the first round from two consortia of tech companies proved fairly disappointing. It's not looking good for Kodak's hopes of emerging from bankruptcy protection.
Peregrine's Wasendorf faces 155 years after indictments. Russell Wasendorf Sr., the former head of bankrupt commodities firm Peregrine Financial Group, has been indicted on 31 counts of lying to regulators. Wasendorf, who allegedly stole as much as $215M from customers over a 20-year period, was arrested in early July after attempting suicide, and is facing up to 155 years in prison and a $7.8M fine.
Top Economic & Other News
Greece's life support extended in debt sale. There's no such thing as bad debt, just debt at bad prices. Greece is able to sell €4.063B in 13-week Treasury bills priced to yield a whopping 4.43%. "Simply an extension of life support," says a rate strategist for TD Securities.
Government proposes restricted drilling for Alaska. Interior Secretary Ken Salazar yesterday proposed opening 12M acres of Alaska's National Petroleum Reserve for oil and natural-gas drilling but restricting production on the remaining 11M acres due to conservation reasons. The area for drilling is thought to contain 550M barrels of economically recoverable oil and 8.7T cubic feet of natural gas.
RBI: India should sacrifice growth to lower inflation. India is in a bind: growth is slowing, inflation is high and the government's large deficit gives it little room for stimulus. "Some sacrifice in growth is inevitable and an unavoidable cost in bringing inflation down," Reserve Bank of India Governor Duvvuri Subbarao said late yesterday. "There is just no space for a fiscal or monetary response."
U.S. stores up trouble as fertility rate drops. It turns out the U.S. is more like Japan and Scandinavia than realized, as its fertility rate has dropped to 1.9, below France and England. The U.S. had been considered one of the few rich Western countries with a total fertility rate above the replacement rate, but if the troubling new trend continues, the repercussions for America’s health and fiscal policies would be enormous.
In Asia, Japan +0.5%. Hong Kong +1.1%. China +0.3%. India +0.6%.
In Europe, at midday, London +0.4%. Paris +0.2%. Frankfurt +0.7%.
Futures at 7:00: Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +0.2% to $92.90. Gold +0.1% to $1614.00.
Today's economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:30 Retail Sales
8:30 Producer Price Index
8:55 Redbook Chain Store Sales
10:00 Business Inventories
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