Drug company earnings fall off patent cliff. Q3 earnings at AstraZeneca (AZN), Novartis (NVS) and Sanofi (SNY) all fell after the expiration of patents for some of their most important drugs. AstraZeneca's pretax profit more than halved to $2B from $4.2B and Sanofi's Q3 net profit plunged 20% to €1.6B, although Novartis' net income fell only slightly to $2.48B from $2.49B.
Best Buy shakes up management, warns on profit. New Best Buy (BBY) CEO Hubert Joly is reshuffling his executive team, with U.S. Business President Mike Vitelli and EVP of U.S. Operations Tim Sheehan set to leave. With FQ3 trends following those of recent quarters, Best Buy warned that earnings will be "significantly below the prior-year period." Shares dropped 6.1% after-hours.
U.K. exits double-dip recession. The U.K. economy grew a greater-than-expected 1% on quarter in Q3, representing the fastest growth in five years and signalling the end of the country's recession after nine months. Growth was boosted by the London Olympics and the loss of a workday in Q2 - which effects the Q/Q comparison - due to the Queen's jubilee celebrations. Q4 figures may therefore provide a better idea of the underlying picture, says RLAM economist Ian Kernohan.
Top Stock News
P&G profit in line with the Street. Procter & Gamble's (PG) Q3 EPS met expectations and grew 5% to $1.06, but revenue slipped 4% to $20.74B and missed consensus. Organic sales climbed 2% on broad segment gains, with the Baby Care & Family Care Segment the best performing by volume. Higher prices helped to lift gross margin by 80 bps.
ITC judge rules in favor of Apple over patents. An ITC administrative law judge has ruled that Samsung (SSNLF.PK) infringed Apple (AAPL) touchscreen and design patents, but cleared the South Korean company of violating two other patents. The ruling will be reviewed by the full commission.
Medtronic influenced "independent" articles, says Senate. The integrity of research into Medtronic's (MDT) bone-growth protein Infuse, which is used in spine surgery, has been called into question by a Senate Finance Committee report that says the company was "heavily involved in drafting, editing and shaping the content of medical journal articles" about the product. Medtronic also paid the doctors who wrote the articles $210M for unrelated work.
Barclays Chairman plans board overhaul. Incoming Barclays (BCS) Chairman David Walker is planning to revamp the bank's board and replace most of its non-executive directors as he seeks to repair its reputation following the Libor scandal, the FT reports. Walker thinks the board needs to be more representative of the "real economy" and wants more non-bankers as directors, although some critics argue that it needs to strengthen its banking expertise.
Sun Life puts $1B U.S. annuities business on the block. Sun Life Financial (SLF) is looking to sell its U.S. annuities operations, which may bring in over $1B, Bloomberg reports. The Canadian insurer has drawn interest mainly from investment firms, including Guggenheim Partners, and could choose a potential buyer for exclusive talks within a few days.
Ex-Goldman director gets two years. Former Goldman Sachs director Rajat Gupta was been sentenced to two years in prison and ordered to pay a $5M fine for leaking boardroom secrets to Galleon Group founder Raj Rajaratnam. Non-binding federal sentencing guidelines suggested an 8-10 year term. Meanwhile, Rajaratnam will today ask an appeals court to quash his conviction for insider trading.
Analysts tweak Apple forecasts ahead of results. Apple (AAPL) is due to release its FQ4 earnings after the bell, with analysts expecting that EPS jumped to $8.81 from $7.05 a year ago as revenue soared 27% to $35.86B. However, some analysts have altered their forecasts this week following comments from CEO Tim Cook that suggested that iPad sales were below consensus, while another concern is supply issues with the iPhone 5. Still, the fears might already be baked into the share price.
Amazon seen swinging to net loss. Amazon (AMZN) is also due to release its results later, when it's likely to show that it continues to go after long-term growth at the expense of the bottom line: The company is expected to have swung to a loss per share of $0.08 from a profit of $0.14 a year ago even as sales soared 28% to $13.93B.
Top Economic & Other News
U.S. on track to pass Saudi Arabian oil output in eight years. 2020 - that’s the year U.S. oil production will overtake Saudi Arabia if current rates of production growth hold steady. U.S. output is on track to surge 7% this year to 10.9M bps - the biggest one-year gain in over 60 years. The production turnaround is pushing down imports, too: today, the U.S. buys in just over 40% of its oil, the smallest share in 20 years.
Markets start to get nervous over Japanese debt gridlock. Japanese bond dealers have called crisis talks with the finance ministry to discuss the gridlock over the passage of a bill that would enable the government to borrow ¥38.3T ($479B) to finance this year's deficit. The government has until the end of November before it runs out of money. Markets expect a resolution but are showing tension, with the spread between yields on 10- and 20-year bonds hitting 92 bps, the highest since 1999.
China optimistic about industrial output. China's Ministry of Industry & Information Technology has given an upbeat forecast for Q4, saying industrial output should grow faster than in Q3. The ministry pointed to improving PMI, monthly increases in output growth and a rise in power generation to argue its case. However, the ministry is still well aware of overseas weakness, rising costs, financing strains and falling profit margins.
In Asia, Japan +1.1% to 9055.2. Hong Kong +0.2% to 21810. China -0.7% to 2102. India +0.3% to 18759.
In Europe, at midday, London +0.3%. Paris +0.5%. Frankfurt +0.6%.
Futures at 7:00: Dow +0.4%. S&P +0.5%. Nasdaq +0.6%. Crude +0.6% to $86.27. Gold +0.8% to $1715.30.
Today's economic calendar:
8:30 Durable Goods
8:30 Initial Jobless Claims
8:30 Chicago Fed National Activity Index
9:45 Bloomberg Consumer Comfort Index
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $29B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings before today's open: ABB, AET, AUO, AVT, AZN, BEN, BG, BIIB, CAB, CCE, CELG, CL, CME, CMS, CNX, COP, CRR, CS, CVE, D, DBD, DDD, DNKN, EQT, GG, GTI, HERO, HOT, HSY, IMAX, IP, JBLU, JNS, LINE, LKQ, MCK, MJN, MO, MYL, NBL, NOV, NS, NVS, NXPI, NYT, O, ORI, OXY, PCAR, PCP, PDS, PG, PHM, POT, PTEN, RCL, ROC, RTN, RYN, S, SHW, SPG, SWI, TKR, TSM, TZOO, UA, UAL, VLY, VPHM, XEL, ZMH
Notable earnings after today's close: AAPL, AMZN, APKT, BAS, BMRN, CA, CB, CERN, CINF, CLD, CLWR, COG, CRBC, CSTR, DECK, DV, EDR, EMN, EXPE, IM, INFA, KFN, KLAC, MXIM, MXWL, N, OLN, PFG, PWER, QLIK, RGC, SPF, VAR, VRSN, WRE, WWWW
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