- Short-sellers to suffer further setback. Wall Street watchers believe the SEC will extend its short-selling limits beyond the current 19 companies now covered before Tuesday's expiration. An extension could be for 60 days or more, and could incorporate insurance, housing-industry and more financial stocks - or perhaps even be extended to all stocks. Until Friday, an extension was considered unlikely. Broadening the restrictions to all stocks would require an extensive implementation delay, and could be costly to comply with - especially for smaller firms.
- KKR going public, with a twist. Buyout firm Kohlberg Kravis Roberts & Co. will rescue its struggling Amsterdam-traded affiliate, KKR Private Equity Investors, by offering its shareholders 21% of KKR in exchange for shares in the affiliate. The move would put a $12-15B valuation on the parent. No additional capital would come KKR's way, nor would its partners immediately profit from the deal, unlike when peer Blackstone (BX) went public in June 2007.
- Wash sale. Unilever (UL) is selling its North American laundry business (All, Snuggle, Wisk, Surf) to Huish Detergents parent Vestar for $1.075B and shares worth another $375M. It will merge the business with its existing operation, Huish Detergents, to form a new company, The Sun Products Corporation. Unilever CEO Patrick Cescau, who plans to leave within the year, says the deal puts its North American laundry lineup with a company focused on the sector, and that outside of North America laundry remains important to the company. [PR]
- Toyota trims targets. Toyota (TM) shaved its global 2008 sales forecast amid crumbling U.S. demand for its trucks and SUVs. It now sees 2008 sales of 9.5M, down by 350,000. It also trimmed its global production plan for this year to 9.5M vehicles from 9.95M.
- Amgen soars on solid results from bone drug trial. Amgen (AMGN) said ts experimental osteoporosis drug (denosumab) significantly reduced the risk of bone fracture in post-menopausal women in a large trial. The positive result "almost guarantees denosumab a place in the osteoporosis market," Morgan Stanley's Steven Harr told clients. He sees peak yearly sales of $2-3B. Amgen posts Q2 earnings after the bell today. Shares are up 18% in pre-market trading.
- The best things in life are free; banks need money. I-bank deleveraging is not helping to reduce elevated borrowing costs. At Lehman (LEH), borrowing costs jumped to 7.7% from 5.2% a half-year ago, making it the worst of the big four. A lack of access to reasonable funds is undermining I-banks' business model, and destroying their balance sheets. "This is far beyond just your basic slowdown," fixed-income strategist Joseph Balestrino says. Wall Street firms have not yet had to borrow significant amounts, because they stocked up on cash when it was cheap. They may have to soon, and it could significantly change their profitability.
- Victory for net neutrality. The FCC will rule Comcast (CMCSA) violated federal policy by crimping the bandwidth of heavy-traffic users. If upheld, a ruling would set an important precedent in determining how much control phone and cable carriers have over monetizing their networks. FCC Chief Kevin Martin said Friday all users deserve "unfettered access to the Internet."
- Jobs phone call settles health issues. Apple (AAPL) CEO Steve Jobs revealed to NY Times journalist Joe Nocera in an 'off-the-record' phone call that "while his health problems amounted to a good deal more than 'a common bug,' they weren’t life-threatening and he doesn’t have a recurrence of cancer." Nocera's reaction? After he hung up the phone, it occurred to me that I had just been handed, by Mr. Jobs himself, the very information he was refusing to share with the shareholders who have entrusted him with their money. You would think he’d want them to know before me. But apparently not."
- IBM buys Ilog for $340M. IBM (IBM) is buying French software developer Ilog (ILOG) for €215M ($340M). Ilog is a leading provider of pre-built software development components that focus on business rules, resource optimization, and data services. The purchase fits with IBM's strategy to make bolt-on acquisitions of intellectual companies to which it can give scale.
- Ryanair nose dives. Ryanair (RYAAY) said FQ1 profit fell 85% due to soaring fuel prices. On the year, it expects to break even, or post a small loss. Average fares fell by 8%. Costs excluding fuel also fell by 8%; including fuel they gained 18%. "We believe that oil prices of approximately $130 per barrel are unsustainable over the medium term, but we don't know when they are going to fall," the company said. Markets were spooked by the €90.5M Q1 net loss including one-time costs and warning, selling shares down 26% in overseas trading.
- Feds shutter two more banks. Federal regulators closed down two more banks Friday, bringing to seven the number of bank failures so far this year. The FDIC was appointed receiver of Reno-based First National Bank of Nevada and First Heritage Bank of Newport Beach, Calif. - both units of First National Bank Holding Co. The Treasury department said FNB Nevada was "undercapitalized and had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices."
Earnings: Before Monday's Open
- Kraft (KFT): Q2 EPS of $0.58 beats by $0.08. Revenue of $11.18B (+21.4%) vs. $10.7B. [PR]
- Lorillard (LO): Q2 EPS of $1.25 misses by $0.10. Revenue of $1.07B (+1.3%) in-line. [PR]
- Metavante Tech. (MV): Q2 EPS of $0.36 beats by $0.02. Revenue of $425M (+7.4%) vs. $419M. [PR]
- Simon Property Group (SPG): Q2 EPS of $1.56 beats by $0.07. Revenue of $923M (+7.8%) vs. $885M. [PR]
- Sohu.com (SOHU): Q2 EPS of $0.92 beats by $0.25. Revenue of $102M (+161.6%) vs. $96.5M. Shares +12.3%. [PR]
- Verizon (VZ): Q2 EPS of $0.67 beats by $0.02. Revenue of $24.12B (+3.7%) in-line. Shares +0.7%. [PR]
- Asia markets were mostly higher Monday. Nikkei +0.14% to 13,354. Hang Seng -0.24% to 22,687. Shanghai +1.32% to 2,903. BSE +0.43% to 14,336.
- In Europe, markets are lower at midday. London -0.35%. Paris -0.8%. Frankfurt -1%.
- Futures are down slightly. Dow -0.1%. S&P -0.2%. Nasdaq -0.15%. Crude +1.3% to $124.86. Gold +0.35% to $930.
- Monday's economic calendar:12:00 PM Fed's Mishkin speaks on Fed Communications Strategy
- Notable earnings before Monday's open: ACV,BOH, CNA, KFT, MV, SOHU, SPG, TSN, VZ, WWY
- Notable earnings after Monday's close: AMGN, ARNA, ATHR, CF, CHH, EDS, EVVV, HIG, HLIT, MOS, MTW, PCL, PCU, RAH, RCII, SCUR, SLG, SSCC, STR, UHS, WLT
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