JPMorgan beats the Street as earnings rise. JPMorgan's (NYSE:JPM) Q3 earnings beat forecasts as EPS rose to $1.40 from $1.02, net profit climbed to $5.7B from $4.3B, and revenue increased 6% to $25.9B. The bank said it experienced continued momentum in all its businesses, with strong lending in commercial, business and mortgage banking, as well as a good performance in asset management. Shares were +0.8% premarket.
Softbank seeks $23B loan to fund Sprint bid as shares plunge. Softbank (OTCPK:SFTBF) is in negotiations with three major Japanese banks - Mizuho (NYSE:MFG), Sumitomo Mitsui (NYSE:SMFG) and Mitsubishi UFJ (NYSE:MTU) - about borrowing $23B to fund its bid for Sprint (NYSE:S), Reuters reports. MetroPCS (PCS) or Clearwire (CLWR) could also be part of any deal, according to speculation. Japanese investors aren't happy - Softbank's shares tumbled 17% in Tokyo.
Japan, China agree to talks to reduce tension. Japan and China have agreed to hold talks to reduce the tension in their dispute over the Senkaku/Diaoyu islands, which has already hurt Japanese businesses. Perhaps in a sign of a thaw, the IMF said today that PBOC Deputy Governor Yi Gang will give a lecture at the fund's annual meeting in Tokyo; his boss, Zhou Xiaochuan, canceled his appearance earlier this week.
Top Stock News
Feds probe CVS Caremark over Medicare breaches. CVS Caremark (NYSE:CVS) is reportedly under investigation from federal officials looking into whether the company violated Medicare laws. One of the allegations is that CVS routinely refilled prescriptions without receiving prior approval from patients.
Workday raises $637M after pricing IPO above range. Workday (NYSE:WDAY) is raising $637M by selling 22.75M shares in its IPO at $28 each, above a prior range of $24-$26. The price gives the fast-growing cloud business-software firm a valuation of $4.49B, or about 20x sales. Between the hype surrounding this offering and the way other enterprise tech IPOs have fared lately, shares could experience a healthy pop on their debut today.
AMD dives following Q3 warning. AMD (NYSE:AMD) shares sank 8.1% premarket after the company cut its Q3 revenue guidance to -10% on quarter from a prior forecast of -4% to +2%, and lowered its gross margin outlook to 31% from 44%, partly due to a $100M inventory write-down. The chipmaker is experiencing weak demand across all its product lines - slumping PC sales are having an effect but the size of the drop also suggests share losses to Intel (NASDAQ:INTC) and/or Nvidia (NASDAQ:NVDA).
Bezos: Amazon makes no money from Kindle. Jeff Bezos has confirmed what Wall Street has long suspected - that Amazon (NASDAQ:AMZN) makes no money from the Kindle. "We sell the hardware at cost," Bezos has told the BBC. "We want to make money when people use our devices, not when they buy them." I.e., the idea is that Amazon earns its profits from the books, apps, films and other products that Kindle users buy.
EU may postpone implementation of Basel rules. The EU could delay the phasing in of tough new Basel rules on banks by a year from the international start date of January 1, 2013, Bloomberg reports. Banks have said that the date is "wholly unreasonable" given that the EU still hasn't finalized how it will implement the measures.
WellPoint restructures into four units. Health insurer WellPoint (NYSE:WLP) is reorganizing into four business groups in a move that interim CEO John Cannon said will smooth the integration of Amerigroup (AGP), which WellPoint is acquiring for $4.9B. The units will be Medicare, Medicaid, commercial & individual, and dental, vision & disability coverage. Amerigroup CEO James Carlson is set to take charge of the Medicaid division.
Larry Ellison eyes $10B AEG. Oracle (NYSE:ORCL) CEO Larry Ellison is interested in acquiring AEG from Anschutz, which wants $10B for the sports and entertainment unit, Reuters reports. If true, Ellison has a sizable credit facility to help him, having pledged 139M Oracle shares - valued at $4.3B - as "collateral to secure personal indebtedness."
Telefonica chips away at debt mountain with €1B sale. Telefonica (NYSE:TEF) has agreed to sell call-center unit Atento to Bain Capital for €1.04B ($1.34B) as part of its strategy of divesting assets to cut its massive €57B debt mountain. News of the sale comes just over a week after Telefonica said it plans to list its German mobile O2 subsidiary.
AMR creditors offer $1B-$2B in financing. A group of AMR (AAMRQ.PK) bondholders has offered to provide $1B-$2B in financing to the bankrupt airline in exchange for large stakes in the carrier as part of its restructuring, the WSJ reports. The creditors, which include JPMorgan (JPM), Pentwater and Litespeed, are also open to US Airways' (LCC) proposal of a merger.
Merchants hope to scupper $6B credit-card settlement. Ten of 19 retailers named in a class-action lawsuit against Visa (NYSE:V), MasterCard (NYSE:MA) and banks over processing fees are planning to object to a $6B settlement that was reached in July. A motion requesting preliminary approval of the deal is expected to be filed next week in New York. Those opposed include the National Retail Federation, while Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) have also criticized the agreement.
Top Economic & Other News
Japan gets ever more pessimistic about economy. Japan has cut its economic assessment for the third month in a row, the longest streak of downgrades since a five-month stretch that ended in February 2009. The government has also lowered its outlook on industrial production and business conditions. "I have an extreme sense of crisis," Economy Minister Seiji Maehara said.
Eurozone manufacturing unexpectedly grows. Eurozone industrial production rose 0.6% on month in August vs. consensus of -0.4%, boosted by demand for food and French car manufacturing. Output of durable consumer goods increased 4% and non-durable goods 1.3%. However, overall production fell 2.9% on year. August production is volatile due to the summer vacation, so analysts will be looking to the September data and onwards for a better idea of the economy.
Renminbi hits fresh highs. The yuan reached a record high for the second day in a row today, touching an intra-day peak of 6.2654 vs. the dollar in early trade. The PBOC set the yuan's midpoint at 6.3264, marginally higher than 6.3391 yesterday. "Clients' dollar sales are the key factor for the yuan to rise this week," says a dealer at a U.S. bank.
In Asia, Japan -0.1% to 8534. Hong Kong +0.7% to 21136. China +0.1% to 2105. India -0.7% to 18675.
In Europe, at midday, London -0.1%. Paris -0.2%. Frankfurt -0.1%.
Futures at 7:00: Dow +0.2%. S&P +0.3%. Nasdaq +0.1%. Crude flat at $92.11. Gold -0.1% to $1769.40.
Today's economic calendar:
8:30 Producer Price Index
9:55 Reuters/UofM Consumer Sentiment
12:35 PM Fed's Lacker: 'Challenges to Economic Growth'
2:00 PM Treasury Budget
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