Eurozone economic gloom deepens. Eurozone flash manufacturing PMI fell to 45.3 in October from 46.1 in September, with activity in Germany declining sharply. While eurozone GDP may have dropped modestly in Q3, "a steeper fall looks to be on the cards" in Q4, said Markit. "Sentiment about prospects for the year ahead are now the gloomiest since early-2009, when the post-Lehman Brothers crisis was in full swing."
Facebook soars as it begins to crack mobile. Facebook's (FB) shares surged 13% premarket after the company's Q3 earnings beat expectations and Mark Zuckerberg said the social network is "just getting started" in making money from mobile. While Facebook swung to a net loss of $59M from a profit of $227M a year ago, adjusted EPS came in at $0.12 and revenue soared 32% to $1.26B. Ads from mobile devices now account for 14% of Facebook's advertising revenues, which isn't too shabby given that the firm only began to sell such promotions this year.
Dow to slash jobs as net profit plunges. Dow Chemical's (DOW) Q3 net profit dropped 35% to $582M as sales declined 10%, with price falls of 9% on average in all regions outweighing a 2% increase in volume. Dow plans to slash 2,400 jobs, or 5% of its staff, and shut down around 20 manufacturing facilities as part of an effort to save $500M a year by the end of 2014. "Difficult conditions may have extended staying power," said CEO Andrew Liveris.
Top Stock News
Ford to shut Belgian plant. Ford (F) plans to close its factory in Genk in Belgium at the end of the current production cycle in 2014, with the loss of 4,300 jobs. The move is part of Ford's restructuring of its European operations as it attempts to match capacity to demand - which has plunged 20% in Western Europe since 2007 - and "return to profitable growth."
SAP revenue jumps 16%. SAP's (SAP) Q3 net profit fell to €618M from €1.25B last year, which was boosted by the release of provisions worth €723M. Revenue climbed 16% to €3.95B, while software license sales rose 17% to €1.03B, above consensus of €993M. SAP has changed its corporate structure to "On Premise" for traditional operations with software on the customer's hardware, and "Cloud" for online business. The company also raised its software and services revenue growth forecast. Shares were +3% premarket.
Netflix plummets as profit dives 88%, subscriber guidance cut. Netflix's (NFLX) Q3 net profit sank 88% to $7.68M, and while adjusted EPS of $0.13 beat forecasts, 10.1% sales growth to $905M missed consensus. Shares tumbled 17% premarket after CEO Reed Hastings slashed Netflix's guidance for subscriber growth, and admitted that competition from Amazon (AMZN), Hulu and others is a matter of concern. Hastings also predicted that HBO (TWX) will launch a streaming-only U.S. service.
France helps with Peugeot rescue. The French government will provide Peugeot (PEUGY.PK) with up to €7B in guarantees for new bond issues over the next three years. In return, Peugeot will add an "independent" director and a workers' representative to its board, as well as suspend dividends, buybacks and performance bonuses for top executives. Peugeot's Q3 sales fell 4.2% to €12.58B as automotive volume slumped 13% in Europe.
Sirius CEO bows to the inevitable. Sirius XM Radio's (SIRI) board has formed a search committee to find a replacement for CEO Mel Karmazin, who is leaving as Liberty Media (LMCA) closes in on control of Sirius. The quick read through by RBC Capital analyst David Bank is that Sirius could take on more debt and increase its leverage, the game plan Liberty's John Malone used with DirecTV (DTV).
EU runs out of patience with Microsoft over browsers. The EU has charged Microsoft (MSFT) with failing to comply with a 2009 order to offer a choice of web browsers on its Windows 7 operating system. Microsoft had agreed to the order to settle an antitrust investigation and blamed technical issues for not fulfilling it. The company could face fines of up to 10% of its global revenues.
Zynga to cut jobs, Q3 loss expected. Zynga (ZNGA) plans to cut 5% of its workforce (around 140 employees), CEO Mark Pincus has disclosed in a company memo, All Things D reports. Pincus also said that the online gaming company is "sunsetting" 13 older titles and reducing other costs. The speculation comes ahead of Zynga's Q3 results today, when it's expected to report a loss per share of $0.01 and revenue of $259.9M. Shares rose 1.8% premarket on the back of Facebook's (FB) results.
Hackers attack Barnes & Noble. Hackers have stolen credit card information from 63 Barnes & Noble (BKS) stores across the U.S., including in New York, San Diego, Miami and Chicago. The hackers have made unauthorized purchases, but activity has dropped off in recent weeks. The FBI is on the case.
Cash mountains get bigger. As earnings season crashes upon us, it's become glaringly apparent that corporations are sitting on record piles of cash, reluctant to invest in their businesses or hire new workers in an uncertain economic outlook. At present, cash balances have swelled by 14% and are on track to reach $1.5T at S&P 500 companies, which would be a historic high.
Top Economic & Other News
Chinese factory activity improves but still shrinking. China's October HSBC flash PMI rose to a three-month high of 49.1 from 47.9 in September, with continued gradual improvement in New Orders bringing that sub-index to a six-month high. However, it's still below 50 and in contraction.
Fed seen staying the course. Analysts are expecting pretty much more of the same when the Fed issues a policy statement today following a two-day FOMC meeting, especially with the election so close. That includes open-ended bond-buying until employment improves significantly, and the Fed saying it will keep interest rates near zero until at least mid-2015. "Look for a statement that has no more than marginal language changes," says Pierpont economist Stephen Stanley.
Japan, China met over island dispute. Japanese Vice Foreign Minister Chikao Kawai met with Chinese officials in Shanghai last week to try to reduce the tension sparked by the countries' dispute over the Senkaku/Diaoyu islands in the East China Sea, which has hit their economies. Nikkei reports that Kawai met with his Chinese counterpart, Zhang Zhijun. Although the islands are uninhabited, at stake are rights to an area rich in fish, oil and natural gas.
In Asia, Japan -0.7% to 8954.3. Hong Kong +0.3% to 21764. China +0.1% to 2116. India -0.4% to 18710.
In Europe, at midday, London +0.2%. Paris +0.3%. Frankfurt +0.2%.
Futures at 7:00: Dow +0.1%. S&P +0.3%. Nasdaq +0.2%. Crude flat at $86.60. Gold +0.1% to $1710.40.
Today's economic calendar:
7:00 MBA Mortgage Applications
9:00 PMI Manufacturing Index
10:00 New Home Sales
10:30 EIA Petroleum Inventories
1:00 PM Results of $35B, 5-Year Note Auction
2:15 PM FOMC Announcement
Notable earnings before today's open: AEP, ALXN, ATI, BA, BMY, CP, DAL, DPS, DTE, EAT, ECA, ELN, EMC, GD, GLW, HCBK, IACI, KMB, LCC, LL, LLY, LMT, LO, LVLT, MSI, NDAQ, NEE, NOC, NYB, OC, PVR, PX, RCI, REGN, RES, SAP, T, TMO, TROW, WYN
Notable earnings after today's close: AB, ACOM, AEM, AKAM, AMP, CCI, CDNS, CLF, CMO, CROX, CTXS, EGHT, ENTR, EQR, FFIV, FIO, IDCC, INFN, KBR, LOGI, LSI, OI, ORLY, RRC, RYL, SGMO, SIMO, SPN, SRCL, SYMC, SYNC, TAL, TER, TEX, TLAB, TQNT, TRN, TSCO, TWI, WLL, WYNN, XNPT, ZNGA
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