• Liberty Global pays €3.5B for Germany's Unitymedia. Liberty Global (LBTYA) agreed to acquire Germany's #2 cable operator, Unitymedia, from its private-equity owners BC Partners and Apollo Management for a total of €3.5B including debt. Liberty said it's paying 7.4x 2010e Ebitda to acquire Unity, which will complement its "existing European footprint, and has significant untapped growth potential in one of the fastest-growing cable markets in Europe." Unity's competitors include Deutsche Telekom (DT) and Sky Deutschland (NWS). Liberty's global cable footprint including Unitymedia will exceed 40M homes.
• BA, Iberia to merge. British Airways (BAIRY.PK) and Iberia (IBRLF.PK) agreed to a complex, $7B "merger of equals." BA shareholders will own 55% of the new airline, which will be the world's third-biggest by revenue. Named TopCo, it will be led by BA CEO Willie Walsh, registered in Madrid, house its main offices in London, and will not be subject to U.K. takeover laws. The pair estimate €400M in synergies by the end of year-five, and expect to close the deal in late 2010. The merger will meld BA's web of U.S. routes with Iberia's Latin America services, extending its leading trans-Atlantic position and consolidating its #3 status in Europe. Shares of both were up 3-5% in early trading.
• Europe returns to growth, at a canter. The euro zone returned to growth in Q3, but quarterly GDP came in at a weaker than expected +0.4% (consensus: +0.6%), up from -0.2% in Q2. Year-on-year GDP contraction narrowed to -4.1% (consensus: -3.9%) from -4.8% in Q2. The consensus miss was expected after France and Germany announced Q3 growth that undershot estimates - +0.7% vs. +0.8% expected for Germany, and +0.3% vs. +0.7% expected for France. Economists were underwhelmed by the results, and warned growth could reverse in coming quarters once car scrapping and other stimulus schemes fade.
• Yuan will rise with time. A top Chinese central banker told Asia-Pacific officials Friday that Beijing wants to let the yuan move more freely, but that any change will be very gradual, and that China will not bow to external pressure. The APEC meetings have been noteworthy for their focus on the weak dollar, but officials - including Tim Geithner - have refrained from pressuring Beijing to unhitch the yuan from its informal dollar peg. "The U.S. and China depend too much on each other and this has to change," the banker said.
• Dell announces first smartphone. Dell (DELL) announced it will enter the smartphone business, sealing initial partnerships with two of the world's largest mobile operators - China Mobile (CHL) and Claro (AMX). The Mini 3 smartphones will be designed around the Android (GOOG) platform. "Our entry into the smart phone category is a logical extension of Dell's consumer product evolution over the past two years," Dell said. "We are developing smaller and smarter mobile products that enable our customers to take their internet experience out of the home and do the things they want to do whenever and wherever they want."
• AMD cashes in its chips. Archrivals Intel (INTC) and Advanced Micro Devices (AMD) announced a game-changing settlement to their antitrust and patent infringement dispute, including a $1.25B payment from Intel to AMD and a five-year cross-licensing agreement. Intel also agreed not to induce competitors to shun AMD, but Intel has denied ever doing so. Numerous government lawsuits and private class-action litigation against Intel will not go away as a result of the deal, but Intel did eliminate its exposure to AMD-related charges. Intel CEO Paul Otellini called the pact a good deal for Intel shareholders, a sentiment shared by analysts who believe a court ruling could have cost it more. AMD CEO Dirk Meyer said the agreement proves to its customers, once and for all, "that AMD will survive and continue to offer them a choice of suppliers."
• White House sure of debt increase. The Treasury is confident Congress will raise the U.S. debt limit by year-end, and not allow a showdown similar to one that shuttered parts of the government in 1995. Sources say the White House is looking for a $1-1.5T increase beyond its current $12.1T limit. The request is higher than a proposed increase already passed in the House, but would get the government through the November 2010 midterm congressional elections without needing another increase. Geithner has repeatedly stressed the need to bring deficits down to sustainable levels, but in the short-term he's more worried about the need to keep up spending until unemployment recedes.
• Barofsky bets on TARP losses. TARP will "almost certainly" result in a loss to taxpayers, Neil Barofsky, the special inspector general for the $700B U.S. financial-industry bailout, said Thursday. "We need to temper or be realistic about our expectations, a dollar-for-dollar return is just highly unrealistic." Barofsky also said he's conducting 65 investigations of possible TARP fraud.
• Boeing fixes one problem, finds another. Boeing (BA) finally finished fixing the problem that postponed the maiden flight of its long-delayed 787 Dreamliner, but in doing so discovered another issue with the plane's wings. Metal bolts inside the wings of one of the six test airplanes were found to have slightly cracked the surrounding material, which engineers cited as another reason to keep the plane grounded. Still, Boeing says it's "on track to fly by the end of the year."
• Iconix gets a read on Playboy. Iconix Brand Group (ICON), owner of London Fog, is reportedly in talks to buy Playboy Enterprises (PLA), and has looked at its books. Iconix CEO Neil Cole is thought to be looking to add more brands that it can license to retailers and manufacturers. 56-year-old Playboy, which was worth about $100M before yesterday, has been looking to sell itself since Scott Flanders replaced Christie Hefner as CEO in June. Her father, Hugh, owns 70% of Playboy's voting shares and 28% of the Class B shares.
• FHA's razor-thin reserves. The FHA's capital reserves are almost depleted, making it likely the goverment-controlled housing market lender will require a taxpayer bailout. The FHA has said for months that its reserves for unexpected loan losses would fall short of the required 2% level by this fall, but an audit released Thursday showed that reserves have been depleted much faster than expected; its capital-reserve fund fell to $3.6B as of Sept. 30, down 72% from a year earlier, leaving reserves at just 0.53% of the $685B in total loans insured by the FHA.
• FDIC orders banks to prepay $45B. The FDIC's board approved Thursday $45B of bank premium prepayments that it needs after its deposit insurance fund slipped into a deficit at the end of Q3. The prepayments - which equate to three years of dues - will satisfy the fund's "need for liquidity without imposing undue burden on the industry," FDIC Chairman Sheila Bair said. A surge in failures - 120 so far this year - has pushed the industry-supported fund into a deficit for the first time since 1991.

Earnings: Fri. Before Open

• Abercrombie & Fitch (ANF): Q3 EPS of $0.30 beats by $0.10. Revenue of $765M (-14.6%) in-line. Same-store sales -18%. Shares +7.5% premarket. (PR)
• Mizuho Financial Group (MFG): FH1 profit of ¥87.8B ($974M) vs. ¥56.3B expected and -7.1% from ¥94.6B a year ago. Revenue of ¥1.49T (-21.6%). Q2 net income of ¥92.3B vs. ¥69B expected and -¥38.4B a year ago. Bad loan charges -38% to ¥85.8B. (MW, Bloomberg)
• Yingli Green Energy (YGE): Q3 EPS of $0.18 beats by $0.01. Revenue of $326M (+1%) vs. $329M. Shares +1.3% premarket. (PR)

Earnings: Thur. After Close

• Blockbuster (BBI): Q3 EPS of -$0.20 misses by $0.09. Revenue of $910.5M (-21%) vs. $1B. Shares -13.2% AH. (PR)
• Disney (DIS): FQ4 EPS of $0.46 beats by $0.05. Revenue of $9.9B (+4%) vs. $9.3B. Shares +2.2% AH. (PR)
• Nordstrom (JWN): Q3 EPS of $0.38 misses by $0.01. Revenue of $2B (-5%) vs. $1.9B. Same-store sales -1.2%. Raises full-year EPS guidance to $1.83-1.88 from $1.50-1.65, vs. $1.81 and expects full-year same-store sales down 6-7%. Shares -4.8% AH. (PR)

Today's Markets

Asia and Europe stocks were mostly higher Friday, fueling modest gains in overnight futures trading.

• H-P grabs 3Com, takes on Cisco. Hewlett-Packard (HPQ) agreed to acquire networking-equipment maker 3Com (COMS) for $2.7B, or $7.90/share - a 39% premium to Wednesday's close. With 3Com, H-P - the world's largest PC maker - gains a networking business that competes directly with Cisco's (CSCO) core business of routing and switching, and a strong foothold in China, which accounts for half of 3Com's revenue. Analysts were largely enthusiastic about the deal, saying 3Com was one of the biggest values in the networking space, second only to Cisco in the breadth of its enterprise portfolio. Cisco responded swiftly, saying on its blog that networking acquisitions "only validate the fact that networking is becoming the platform for all forms of communications and (information technology)." H-P also preannounced Q4 EPS of $1.14 vs. consensus of $1.12, and revenue of $30.8B vs. $29.8B. After hours, HPQ was -0.6%, and COMS was +35%.
• UTech buys GE Security for $1.8B. GE (GE) agreed to sell its fire alarm and security systems unit to United Technologies (UTX) for $1.82B in cash, as had been widely speculated. UTX said its customers "will see increased breadth and depth of product offerings" as a result of the deal. The unit includes Edwards Systems Technology, which GE bought for $1.4B from SPX Corp. (SPW) in 2005. The business offers building management systems that help control commercial structures during fires, earthquakes and other emergencies, and would take United "beyond just perimeter and access security," one analyst said.
• Benmosche stays put. AIG (AIG) CEO Robert Benmosche told employees Wednesday in an internal memo he remains "totally committed to leading AIG through its challenges" despite his frustrations with government curbs on compensation at the company. The reassurance came after reports Benmosche might bail after just three months at the helm, saying strict compensation rules made it almost impossible to retain talent. In the memo, he called the pay curbs a "barrier" that "stand in the way of restoring AIG's value" and repaying its debt.
• World banks prop up dollar. Central banks say they've been snapping up dollars this week in an effort to stem its slide and hold down the value of their currencies. While Geithner continues to pay lip service to maintaining a strong dollar, Washington has yet to take any concrete steps to stop the bleeding, which is beneficial to U.S. exports and tourism.
• TARP repayments reduce gov't borrowing. The U.S. will borrow "substantially less" than initially anticipated, with banks already repaying rescue funds and more "significant repayments" ahead, Treasury's Geithner says. Reduced borrowing, a narrowing of the current account deficit, and signs that Americans are saving more all contribute to global confidence that the U.S. can rein in its deficit, he said today in Singapore.
• High oil prices could derail recovery. The IEA revised its 2010 world oil demand forecast slightly higher, but warned that rising crude prices could smother the fragile economic recovery. IEA now expects global oil demand to rise to 86.2M barrels a day, up 140K from October. Rising stock markets, a weak U.S. dollar, and rebounding world economies have driven crude prices up almost 80% this year, despite a persistent overhang in oil inventory which now stands at 60 days of forward cover.
• Foreclosures fall, but for how long? Foreclosures slowed for a third straight month, but remain sharply higher than a year ago. The number of homeowners who received foreclosure notices fell 3% month-on-month to 333K, up 18.9% from the same month in 2008. Rick Sharga of RealtyTrac, which released the report, cautioned the improvement was likely temporary: “It’s good to see that foreclosures have slowed down marginally, but we don’t really think it’s a trend." The firm predicts 3.2-3.4M properties will go into foreclosure in 2009, up from 2.3M in 2008.
• Art auction smokes projections. A very positive art auction at Sotheby's (BID) has some thinking the art-market recession may be on the mend. Sotheby's brought in $134.4M at an auction of post-war and contemporary art Wednesday night in Manhattan, including a smoky sheet of dollar bills by Andy Warhol that went for $43.7M. Total proceeds blew away Sotheby's' internal estimate of $67.9-$97.7M, and also outdid its $125M sale of a year ago. 52 of the 54 works offered found buyers.
• Microsoft strikes back at modders. Microsoft (MSFT) booted as many as 1M players from its Xbox Live gaming service on suspicions they modified their consoles to play illegally downloaded games. The move comes amid this week's release of "Call of Duty: Modern Warfare 2" (ATVI), the most highly-anticipated Xbox game of the year. "All consumers should know that piracy is illegal and that modifying their Xbox 360 console to play pirated discs violates the Xbox Live terms of use, will void their warranty, and result in a ban from Xbox Live," Microsoft said in a statement. It's not clear how Microsoft detected the Xbox rigging.
• Turkeyless Thanksgiving for BofA? Bank of America (BAC) may miss its internal deadline of naming a new CEO by Thanksgiving, due in part to its inability to zero in on a clear frontrunner, and amid worries that the process must be approved by the Fed.
• Mortgage apps rise. Mortgage applications rose 3.2% from a week ago, led by a 11.3% gain in refinancing, which now accounts for 71.5% of all applications, up from 66% last week. MBA said the average 30-year mortgage rate fell to 4.9% from 4.97% in last week's survey. Freddie Mac's weekly survey of mortgage rates comes out at 10:00.

Earnings: Before Open

• AECOM Tech (ACM): FQ4 EPS of $0.48 beats by $0.02. Revenue of $1.63B (-0.2%) in-line. Sees 2010 EPS of $1.90-2.00 vs. $2.03. (PR)
• EnCana (ECA): Q3 EPS of $1.03 misses by $0.14. Revenue of $3.88B (-64.2%) vs. $3.08B. (PR)
• Kohl's (KSS): Q3 EPS of $0.63 beats by $0.02. Revenue of $4.05B (+6.5%) in-line. Sees Q4 EPS of $1.14-1.24 vs. $1.25. (PR)
• Urban Outfitters (URBN): Q3 EPS of $0.36 beats by $0.01. Revenue of $506M (+6%) in-line. Operating margin 19% vs. 17.1% in Q2. (PR)
• Wal-Mart (WMT): Q3 EPS of $0.84 beats by $0.03. Revenue of $98.66B vs. $99.88B. Sees Q4 EPS of $1.08-1.12 vs. $1.12 consensus. "The sales environment continued to be difficult this quarter, but customer traffic is up throughout the company." (PR)

Earnings: Wed. After Close

• Advance Auto Parts (AAP): Q3 EPS of $0.69 beats by $0.03. Revenue of $1.3B (+6%) in-line. Third-quarter same-store sales increased 4.7%. Shares -3.7% AH. (PR)
• Applied Materials (AMAT): FQ4 EPS of $0.13 beats by $0.10. Revenue of $1.5B (-25%) vs. $1.3B. Expects revenue growth of more than 30% in fiscal 2010. Reports "increased net sales and profitability in our semiconductor equipment business, with improved demand and financial performance in all of our segments." Shares +0.7% AH. (PR)
• Computer Sciences (CSC): FQ2 EPS of $1.40 beats by $0.05. Revenue of $4B (-5%) in-line. Shares -2.9% AH. (PR)
• Ctrip.com (CTRP): Q3 EPS of $0.44 (RMB3.03) beats by $0.12. Revenue of $80M (+47%) vs. $72M. Sees Q4 revenue of $100M-104M vs. $75M. Shares +10.5% AH. (PR)
• Green Mountain Coffee Roasters (GMCR): FQ4 EPS of $0.34 beats by $0.01. Revenue of $222M (+65%) vs. $217M. Shares -9.1% AH. (PR)

Today's Markets

Asia markets headed lower Thursday. Europe stocks are flat at midday, and futures are under some selling pressure.

• AIG steward threatens to jump ship. Just three months after taking the job, AIG (AIG) CEO Robert Benmosche has told the board he's ready to quit. Insiders say Benmosche feels compensation restrictions imposed by pay czar Kenneth Feinberg have left him in an impossible situation, without the ability to retain talent. Benmosche's own $10.5M package is the largest approved under the Treasury Department's recent curbs on executive pay. A departure could be highly disruptive, but it's not altogether clear whether the threat was serious, or was meant to ruffle feathers; insiders say Benmosche made a similar threat in August. As far as a possible replacement - how about Ken Lewis?
• Bad trades aren't criminal. A jury found two Bear Stearns fund managers did not lie by presenting an upbeat picture while their funds plunged in value, a setback for lawmakers hoping for easy convictions in the wake of bailouts and foreclosures. Investors lost $1.6B when Bear funds, managed by Ralph Cioffi and Matthew Tannin and heavily invested in mortgage-backed securities, collapsed in the summer of 2007. Jurors said that while the pair clearly made some bad investments, their salesmanship did not cross the line into fraud.
• Strong dollar critical to recovery - Geithner. Treasury Secretary Tim Geithner said Wednesday that maintaining a strong dollar is "very important" for the economy. Speaking to Japanese reporters, Geithner said, "We bear special responsibility for trying to make sure that we are implementing policy in the U.S. that will sustain confidence not just among American investors... but investors around the world" that the U.S. will fix its budgetary problems as its economy improves. Geithner also said he sees no contradiction between a strong dollar and the desire to bolster exports.
• World Bank frets U.S. joblessness. World Bank president Robert Zoellick warned Wednesday that untamed U.S. unemployment threatens to trigger loan defaults and drag on consumption, hobbling a nascent recovery. "You're going to have problems with delinquencies of credit card loans, consumer loans, people won't be able to pay their mortgages," he told reporters in Singapore. "Some banks are going to continue to be troubled by bad loans." While Zoellick concedes government stimulus spending will fuel growth through the middle of 2010, he's worried what happens afterward: "What's the other source of demand?"
• Logitech buys LifeSize, gains foothold in videoconferencing. Logitech (LOGI) agreed to buy privately-held LifeSize Communications, a developer of high-definition video systems, audioconferencing equipment, and video management software, for $405M, bolstering its position in the much-prized video communication market. LifeSize Communications has more than 9,000 video conferencing customers. On Tuesday, Cisco (CSCO) revealed that most shareholders in videoconferencing developer Tandberg had spurned its $3.1B takeover offer.
• Dodd unveils rival financial overhaul. Sen. Chris Dodd, who chairs the Senate banking committee, unveiled a 1,136 page plan to overhaul financial regulations that is substantially different from plans discussed in the House and favored by President Obama. Dodd's plan calls for removing the Fed and FDIC from day-to-day supervision of banks, opting for a new two-pronged agency, one branch to monitor and diffuse systemic risks posed by large financial companies, and the other to regulate smaller banks. Conversely, the SEC would see its power and budget increase by allowing it to keep fees it collects from Wall Street firms, instead of relying on Congress. With fewer than 20 days left in the legislative session, it's almost certain Congress will not deliver on President Obama’s request to repair the financial regulatory system by year-end.
• GM's chairman clashes with CEO. In a growing clash between GM CEO Fritz Henderson and his board, GM's chairman Ed Whitacre said he's not comfortable with management's 2010 forecasts, and indicated Henderson's timetable for an IPO - the second half of 2010 - may be too optimistic. Rather than worrying about selling shares, the former AT&T chief says the company's focused on repaying the $6.7B it owes to taxpayers. In an interview with the Wall Street Journal, he said management needs to make progress on such issues as reducing customer-sales incentives, changing perceptions about GM, and constructing a realistic business plan.
• Global confidence dips. Confidence in the world economy dropped in November after some central banks took or spoke about steps to start unwinding emergency stimulus. Bloomberg's Professional Global Confidence Index fell to 60.3 from 61.7 in October. At well above 50, optimists still outnumber pessimists, but their confidence "hinges almost entirely on the level of stability produced by extraordinary monetary support," one economist who participated in the survey said.
• United on verge of GE security purchase. United Technologies (UTX) in nearing a purchase of GE's fire alarm and security systems unit for at least $1.8B, and a deal could be announced as early as Thursday, sources say. GE's security unit includes Edwards Systems Technology, which GE bought for $1.4B from SPX Corp. (SPW) in 2005. The Edwards business offers building management systems that help control commercial structures during fires, earthquakes and other emergencies, and would take United "beyond just perimeter and access security," one analyst says.
• Blackstone, KKR prepare to sell TDC stake. Sources say Blackstone (BX), KKR and three more private-equity firms that bought an 88% stake in Denmark's TDC are preparing for an exit. The group bought the stake in 2006 with about $3B in cash and $12B in debt; it's thought to be worth about $7.4B today.
• Credit card issuer fails. Advanta (ADVNA), a large issuer of credit cards to small businesses, filed for bankruptcy after massive customer defaults led to an unsustainable capital shortfall. Advanta has assets of $363M and debts of $331 million. It said it has almost $100M in cash, but cannot meet all its obligations.
• China exports recover some more. China's exports continued to improve, falling 13.8% in October vs. a 15.2% decline in September and 20%-plus drops earlier in the year. Chinese authorities have begun urging banks to be more cautious in lending, and today the PBOC warned "definite expectations of inflation have formed in the market." The fall in China's consumer prices narrowed to 0.5% in October from 0.8% in September, and is widely expected to turn positive in coming months.
• Mortgage mod program picks up speed. The Treasury said Tuesday one-in-five eligible homeowners have now enrolled in its mortgage-modification program, although few of the trial modifications are turning into permanent fixes. Treasury's Making Home Affordable program has now initiated 650,000 loan modifications, up from 500K in late September. "The program is having a pronounced impact in areas particularly hard hit by the housing crisis," Treasury's Barr said in a statement.

Earnings: Wed. Before Open

• ING Group (ING): Q3 net profit of €778M vs. €229M last quarter and -€568M a year ago. CEO Jan Hommen said ING wants to repay the remainder of the €10B in rescue funds it received, and plans to pay back €5B before year-end. Shares +6.4% premarket. (PR)
• Macy's (M): Q3 EPS of -$0.03 beats by $0.04. Revenue of $5.28B (-3.9%) in-line. Sees Q4 EPS of $1.00-1.05 vs. $1.17 consensus. Sees Q4 SSS down 1-2% vs. -2.7% consensus. Shares -2.7% premarket. (PR)

Earnings: Tue. After Close

• A123 Systems (AONE): Q3 EPS of -$1.78 may not compare to consensus estimates of -$0.33. Revenue of $23.6M (+3%) vs. $19.2M. Shares -3.5% AH. (PR)
• Atmos Energy (ATO): FQ4 EPS of -$0.17 misses by $0.09. Revenue of $1.35B (+2%) vs. $1.32B. Shares -2.5% AH. (PR)
• Clearwire (CLWR): Q3 EPS of -$0.43. OIBDA of -$198.8M. Revenue of $69M (+13%) vs. $67M. Revenue comparison to Sprint's WiMAX business in prior year. Shares -1.2% AH. (PR)

Today's Markets

Asia stocks were mostly higher Wednesday. Europe is sitting on healthy gains, and futures are higher.

• EU casts shadow over Oracle's Sun. European antitrust authorities formally objected to Oracle's (ORCL) proposed $7.4B takeover of Sun Microsystems (JAVA), issuing a statement of objections that focuses on whether Oracle ownership of Sun's MySQL database software would reduce competition. The move doesn't necessarily mean the EU will reject the deal, but should delay the process. The U.S. Justice Department, which has already signed off on the combo, reiterated that the merger is "unlikely to be anticompetitive." Oracle, meanwhile, said the acquisition "does not threaten to reduce competition in the slightest," adding that the EC's concerns "reveal a profound misunderstanding of both database competition and open source dynamics."
• Lending standards loosen. A smaller percentage of banks tightened lending standards in Q3, according to the Fed's loan officer survey, but credit conditions remain far from a comfort zone. About 25% of banks tightened standards on good quality real estate loans, down from 75% in July 2008. Banks tightening standards for credit cards fell to 15% from 35% last quarter, the lowest percentage since April 2008. And 15% of banks tightened standards on commercial and industrial loans, down from 80% in October 2008. "We're back to just normally tight, not pathologically tight," says an economist.
• U.K. most at risk of AAA downgrade. The U.K. is most at risk among large developed economies of losing its AAA rating, Fitch said Tuesday, but the ratings service maintained its stable rating which it said "reflects our expectation that the U.K. government will articulate a stronger fiscal consolidation program next year." In response, U.K. Trade Minister Mervyn Davies insisted Britain's sovereign rating is "absolutely" safe, and said the government's "been very clear that over the next four years there's going to be a program to reduce the public debt level." In May, S&P put the U.K.'s AAA credit rating on negative outlook, saying it would make a decision after the government makes its intentions clear.
• Moody's sees AIG comeback. AIG (AIG) will be able to repay its $60B Fed credit line and "much or all" of the Treasury's $69.8B investment if financial markets stabilize, Moody's said Monday. In a vote of confidence for CEO Robert Benmosche's strategy of rebuilding some of the businesses AIG previously targeted for sale, Moody's said, "We believe that the slower approach to restructuring could help AIG to generate more favorable values from its business portfolio than would be the case under rushed asset sales."
• Employment trends turn corner. In perhaps the most bullish employment report since the onset of the recession, Conference Board reported its Employment Trends Index rose 0.7% to 89.3 in October from 88.7 last month. "The Employment Trends Index has likely turned a corner in September, and the historical relationship between the index and employment suggests that job losses will end in early 2010," the group said, adding, "While layoffs have certainly declined in recent months, we still expect to see employers adding hours to their existing workforce before hiring will strongly increase." The improvement was driven by positive contributions from measures of jobless claims, temporary hires, industrial production, and sales. Conversely, Gluskin Sheff's David Rosenberg said unemployment may hit a post-war high of 13% as growth stagnates. "This is going to be the mother of all jobless recoveries. At the beginning of the year, who was calling for unemployment to go up to 10%?"
• Hedge funds alive and well. Hedge fund assets may top the previous high of $2T by the end of 2010 as double-digit returns lure investors, Deutsche Bank says. "We fully expect to see material inflows into 2010 and beyond. The expected growth is reflective of continuing institutional demand for increased risk-adjusted returns in the face of low bond yields and disappointing passive equity performance." Global hedge funds have rebounded faster than expected, recovering to $1.53T in September from $1.33T in March, even as regulators turn up the pressure to increase scrutiny of the industry and amid some high-profile scandals.
• Barclays accused of huge Lehman heist. In a recent court filing, Lehman's creditors claim Barclays (BCS) received Lehman securities valued at $50B for just $45B in cash, accusing the U.K. bank of the "largest theft in banking history." Some Lehman executives who negotiated that deal, the complaint asserts, knew they would receive offers to work at Barclays, and received or were offered plump compensation deals. At the time, the deal was presented in bankruptcy court by Lehman's lawyers as a wash.
• Cadbury bitter at Kraft's bland offer. Kraft (KFT) took its offer for Cadbury (CBY) directly to shareholders, disappointing investors who had hoped Kraft would sweeten its original bid of 300p and 0.2589 new Kraft shares for each Cadbury share. Kraft said its proposal "offers the best immediate and long-term value for Cadbury's shareholders and for the company itself compared with any other option currently available, including Cadbury remaining independent." Cadbury, not surprisingly, recommended shareholders "emphatically" reject Kraft's (KFT) "derisory" offer, which it says "is worse than the proposal that the Board has previously rejected as fundamentally undervaluing Cadbury and its prospects," due to a drop in Kraft's share price. The cash and share offer originally valued Cadbury at £10.2B, but is now worth about £9.8B. Kraft now has 28 days to publish a prospectus on the offer for Cadbury shareholders, and 60 days to collect enough shares to clinch a deal.
• Google picks up mobile ad leader for $750M. In a push to expand its digital advertising empire to cellphones, Google (GOOG) agreed to acquire mobile advertising start-up AdMob for $750M in stock. AdMob is a leading seller of banner ads on iPhone apps and mobile-specific web pages; the acquisition could help establish Google as an early leader in the small but rapidly expanding mobile phone advertising business. Aggregate sales of mobile ads were just $160M last year.
• Madoff payback fund could swell. Settlement talks between Madoff trustee Irving Picard and lawyers for the estate of Madoff investor Jeffry Picower are making progress, with Picower's family lawyer saying discussions range between $2.4B (the amount Picower withdrew over the six-year recovery period allowed for the trustee’s claims under New York State law) and $7B (the total amount of his withdrawals over several decades). The estate is large enough to add at least several billion dollars to the $1.4B the trustee has gathered so far.

Earnings: Tue. Before Open

• HSBC (HBC): Q3 profit was "significantly ahead" of a year ago, in part due to the first drop in U.S. impairment charges in more than three years. "The more positive signals that we saw in the U.S. run-off portfolio in the first half have continued, with the result that our North American operations did not require any capital support from the group during the quarter. We should have further evidence by the year-end as to whether this is a sustainable trend." Shares +2.6% premarket. (PR, MW)
• JA Solar (JASO): Q3 EPS of $0.10 beats by $0.07. Revenue of $193M (+119.7%) vs. $136M. Shares +9% premarket. (PR)
• Tyco International (TYC): FQ4 EPS of $0.61 beats by $0.07. Revenue of $4.42B (-16.3%) vs. $4.32B. (PR)

Earnings: Mon. After Close

• Arena Pharmaceuticals (ARNA): Q3 EPS of -$0.38 misses by $0.04. Revenue of $1.7M (+20%) vs. $2.4M. (PR)
• Clear Channel Outdoor (CCO): Q3 EPS of -$0.10 misses by $0.02. Revenue of $661M (-19%) vs. $665M. Shares -0.1% AH. (PR)
• Electronic Arts (ERTS): FQ2 EPS of $0.06 misses by $0.01. Revenue of $1.15B (+2%) vs. $1.13B. Announces cost-reduction plan that will eliminate 1,500 jobs by the end of the first quarter (900 of them in development) saving $100M annually. Expects October is another down month. Shares -1.4% AH. (PR)
• Fluor (FLR): Q3 EPS of $0.89 misses by $0.01. Revenue of $5.4B (-4%) vs. $5.5B. Shares -6.2% AH. (PR)
• Hologic (HOLX): FQ4 EPS of $0.28 beats by $0.01. Revenue of $403M (-9%) vs. $400M. Sees Q1 EPS of $0.24-0.26 vs. $0.30 on revenue of $400M-405M vs. $414M, and full-year EPS of $1.15-1.19 vs. $1.24, on revenue of $1.625B-1.65B vs. $1.69B. Shares -4.4% AH. (PR)
• Lions Gate Entertainment (LGF): FQ2 EPS of $0.26 beats by $0.20. Revenue of $394M (+3%) vs. $375M. Shares +5.6% AH. (PR)
• Live Nation (LYV): Q3 EPS of $0.82 beats by $0.02. Revenue of $1.8B (+14%) vs. $1.6B. Expects Ticketmaster merger to close in Q1. Shares -1.3% AH. (PR)
• MBIA (MBI): Q3 EPS of -$3.50 misses by $2.45. Total consolidated revenue of $-620M, incorporating an $810M unrealized loss on insured credit derivatives. Shares -12.5% AH. (PR)
• McDermott International (MDR): Q3 EPS of $0.50. Revenue of $1.7B (+1%) vs. $1.5B. Shares +1.4% AH. (PR)
• Priceline.com (PCLN): Q3 EPS of $3.45 beats by $0.53. Revenue of $731M (+30%) vs. $694M. Sees Q4 EPS of $1.52-1.62 vs. $1.49 on sequential revenue gain of 24-28%. Shares +8.2% AH. (PR)
• Qiagen (QGEN): Q3 EPS of $0.26 beats by $0.03. Revenue of $260M (+13%) vs. $257M. Raises full-year EPS guidance to $0.88-0.90 vs. $0.85. Shares +3.8% AH. (PR)
• Rackspace (RAX): Q3 EPS of $0.06 misses by $0.01. Revenue of $162M (+17%) vs. $159M. Shares +0.4% AH. (PR)
• Sequenom (SQNM): Q3 EPS of -$0.24 beats by $0.04. Revenue of $9M (-21%) vs. $8.5M. Shares -4% AH. (PR)
• Silver Wheaton (SLW): Q3 EPS of $0.11 in-line. Revenue of $69.8M (+77%) vs. $76.4M. Shares +1.1% AH. (PR)

Today's Markets

Asian markets moved higher overnight following strong U.S. gains Monday. Europe markets are flat-to-slightly-higher at midday. Stock futures are slightly lower.

• Northrop unloads TASC. Northrop Grumman (NOC) agreed to sell its TASC consulting unit to a pair of private-equity firms - KKR and General Atlantic - for $1.65B. TASC unit provides engineering and consulting services to the U.S. military and state governments. Northrop said it expects the sale to generate net cash proceeds of $1.1B, which it will use to repurchase shares. The deal is the latest in a recent uptick in LBO acquisitions which have returned after a two-year dry stretch. Still, with four banks - Barclays (BCS), Royal Bank Of Canada (RY), Deutsche Bank (DB) and a lending unit of the CPP - combining to put up senior debt of well under $1B, today's deals are still a far cry from the mega-mergers of the credit boom.
• G-20 keeps drip open. G-20 leaders said it's too early to withdraw global stimulus efforts despite signs that a global economic recovery is underway. "Economic and financial conditions have improved following our coordinated response to the crisis," officials said in a communique (.pdf) following a two-day gathering in St. Andrews. "However, the recovery is uneven and remains dependent on policy support, and high unemployment is a major concern. To restore the global economic and financial system to health, we agree to maintain support for the recovery until it is assured." Stocks, commodities and futures rallied Monday: "Markets don't need to be worried that these governments and central banks are suddenly going to take away all the stimulus measures," one strategist said. "Risk appetite should remain supported into the end of the year."
• Put up or shut up day for Kraft. Kraft (KFT) could raise the cash portion of its bid for Cadbury (CBY) to 400p ahead of today's deadline, and is expected to take the bid directly to Cadbury's shareholders. Kraft has enlisted Royal Bank of Scotland (RBS), Credit Suisse (CS), Barclays (BCS) and BNP Paribas to help provide a £5.5B bridge loan. Kraft's initial bid of 300p and 0.2589 KFT shares per CBY share was valued at 745p/share, but is now worth about 720p with the decline in Kraft's stock. According to U.K. takeover rules, by launching an offer today Kraft would set in motion a 28-day deadline to publish a prospectus on the offer for Cadbury shareholders, and would have 60 days to collect enough shares to clinch a deal.
• Healthcare bill: next stop Senate. The Obama healthcare overhaul passed a House vote by a narrow margin Saturday (220-215), setting up a fractious debate in the Senate - where Democrats don't enjoy the same broad majority - this week. The bill would cost $1.05T over a decade to provide health insurance to another 36M Americans. It requires most Americans to carry insurance, creates a new exchange where they can shop for it, and gives low income earners tax credits to help them pay for it. In an appearance Sunday, Obama said he is "absolutely confident" a healthcare bill will also pass through the Senate.
• Sprint group to pour another $1.5B into Clearwire. Sources say Sprint Nextel (S) and a number of its Clearwire JV (CLWR) partners are preparing to pump another $1.5B or more into the wireless broadband provider. The Sprint group first invested $3.2B in Clearwire 18 months ago, taking a majority stake in a bet on Clearwire's version of 4G wireless broadband, WiMax. Some rivals have favored a comparable technology knows as LTE. $1B of a new infusion would come from Sprint, with Comcast (CMCSA), Intel (INTC), Time Warner Cable (TWC) and Bright House Networks kicking in another $500M. Google, a key JV partner, isn't thought to be involved in this round.
• Comcast, GE agree on CNBU valuation. After weeks of wrangling, GE (GE) and Comcast (CMCSA) reportedly agreed to value NBC Universal at about $30B, and a deal to give Comcast a 51% stake in GE's media and entertainment arm could come as early as this week, though it's still unclear whether 20% NCBU stakeholder Vivendi has signed off on the proposal. Sources say the pair met last week with debt-raters to ascertain the impact of $9B in debt a new NBCU would assume as part of the combination, and hope this week to be told it would be considered investment grade.
• Murdoch paper cleared of spy charges. The U.K. Press Complaints Commission said Monday it has found no proof journalists at Rupert Murdoch's The News of the World regularly hacked the phones of public figures to secure sensational stories. The probe was prompted after reports in The Guardian said the practice at the tabloid was widespread. In response, the Guardian described the PCC's report as complacent, saying the PCC did not have the "ability, the budget or the procedures to conduct its own investigations."
• Axa Asia Pacific shuns $10B bid from parent. Axa Asia Pacific (AXAPY.PK), the Australian unit of France’s biggest insurer (AXA -1.1% premarket), rejected an unsolicited $10B bid from its parent and AMP Ltd. (AMLTF.PK). CEO Rick Allert said Axa Asia Pacific would consider a higher offer, but called today's offer too low. Axa said today it will raise £2B through a rights offer to finance acquisitions.
• Brown backs down on transactions tax. World leaders publicly snubbed U.K. PM Gordon Brown's bold pitch for a global tax on financial transactions which would be used to fund future bailouts. Brown surprised ministers by pitching the initiative during a speech to the G-20 assembly Saturday to the dismay of his peers, who unanimously agreed with U.S. Treasury chief Tim Geithner in saying economic leaders don't think taxpayers should have to pay for future financial sector foibles. Brown backed down Sunday, though he continues to believe tighter bank regulation may not suffice to protect against future risk.
• Reynolds eyes stake in smokeless tomorrow. Cigarette giant Reynolds American (RAI) is in advanced talks to buy closely held Niconovum AB, a Swedish maker of nicotine-replacement therapies such as Zonnic pouch and Zonnic gum. A deal would be the largest move by Reynolds into nicotine products, as sales of cigarettes continue to decline. Reynolds controls about 28% of the U.S. cigarette market, second to Altria (MO) which has about 50%. Sources say the deal could be valued at €30M.

Earnings: Mon. Before Open

• DISH Network (DISH): Q3 EPS of $0.18 misses by $0.26. Revenue of $2.89B (-1.5%) vs. $2.93B. Net customers +241K to 13.85M. (PR)
• Energy Conversion Devices (ENER): FQ1 EPS of -$0.34 misses by $0.03. Revenue of $42.9M (-55.2%) vs. $56.4M. Shares -0.1% premarket. (PR)
• GTx (GTXI): Q3 EPS of -$0.35 in-line. Revenue of $3.6M (+20%) vs. $4M. (PR)
• Hospitality Properites Trust (HPT): Q3 FFO of $0.77 misses by $0.01. Revenue of $264M (-15.4%) vs. $272M. (PR)
• Nationwide Health Properties (NHP): Q3 FFO of $0.56 in-line. Revenue of $97.8M (+3.4%) vs. $94.4M. Sees full-year EPS of $2.22-2.23 vs. $2.28. (PR)
• Quicksilver Resources (KWK): Q3 EPS of $0.25 beats by $0.03. Revenue of $207M (-12.5%) in-line. (PR)
• Rockwell Automation (ROK): FQ4 EPS of $0.37 beats by $0.10. Revenue of $1.07B (-27.6%) in-line. (PR)
• Tesoro (TSO): Q3 EPS of $0.24 beats by $0.23. Revenue of $4.74B in-line. Expects to spend less than its stated capex budget of $600M. Shares +3.7% premarket. (PR)
• Warner Chilcott (WCRX): Q3 EPS of $0041 misses by $0.01. Revenue of $253M (+9%) in-line. (PR)
• Western Refining (WNR): Q3 EPS of -$0.05 beats by $0.01. Revenue of $1.83B (-40.6%) vs. $1.75B. Shares +0.5% premarket. (PR)
• Windstream (WIN): Q3 EPS of $0.24 beats by $0.03. Revenue of $734M (-7.5%) vs. $747M. (PR)

Today's Markets

Overseas markets and commodities surged Monday, and U.S. futures have gained overnight. The dollar is getting pounded in early trading.

• House dissects the bailout. The government's guarantee of $300B in corporate bonds saved a handful of giant companies up to $25B in borrowing costs, and put taxpayers at great risk, the Congressional panel charged with overseeing TARP says. In one of the first systematic efforts to analyze TARP, the panel, headed by Elizabeth Warren, found seven companies (GE, GS, C, BAC, JPM, MS, WFC) received 82% of the benefits of lower borrowing costs. The good news for taxpayers is that the bet has worked out: feds so far have collected a total of $17B in fees for all their emergency guarantees, while losing a paltry $2M. (read the COP's latest TARP report)
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• Insider probe grows tentacles. Authorities filed criminal charges against 14 people, including lawyers and an ex-Moody's (MCO) analyst, widening their crackdown on insider trading. At the center of yesterday's arrests, Zvi Goffer, a trader nicknamed "Octopussy" because his tentacles gripped so many confidential sources. Unlike the Galleon scheme, which was built on corporate insiders passing on early earnings estimates to fund operators, the newer ploy involves investors obtaining advanced information about pending deals - including Bain Capital's 2007 attempt to buy 3Com (COMS) - from people involved in them. Dow Jones has details of the 14 people arrested so far.
• Fannie wants another $15B. Fannie Mae (FNM) plans to tap emergency funds for a fourth time this year, bringing its draws of taxpayer money to $60B. According to an SEC filing late yesterday, Fannie Mae will seek $15B in Treasury financing after posting an $18.9B Q3 net loss. Analysts say the government-sponsored lender will likely tap its entire $200B lifeline, and may still need more.
• FHFA approves tax credit sale. Also buried in Fannie Mae's (FNM) SEC filing yesterday was that it agreed to sell $2.6B in unused tax credits to unnamed buyers, and received approval for the deal from its regulator, the FHFA. But the Treasury is thought to be leery of signing off on the sale, reportedly to Goldman Sachs (GS) and Berkshire Hathaway (BRK.A). In a statement (.pdf) Thursday, the FHFA said the sale "is consistent with FHFA's ongoing efforts to conserve Enterprise assets and with the Enterprise's multifamily housing mission."
• Bursting the next bubble. U.K. Chancellor of the Exchequer Alistair Darling set the agenda ahead of the G20 meetings in St. Andrews today, saying leaders needed to develop a technique to deflate asset bubbles before they explode: "We have got to make sure we don't get ourselves into a situation where some pressure starts to rise and then it becomes bigger and bigger and when the whole thing comes to an end it has catastrophic consequences," he said in an interview. Russian Finance Minister Alexei Kudrin noted Darling's concerns weren't out in the ether: "We need to be very careful with this huge amount of injected liquidity." A recent survey of investment managers by Goldman Sachs found 75% think low rates are already triggering "too-strong" climbs in assets.
• OECD registers global uptick. Signs of improvement have emerged in most major economies, with a marked recovery in the U.S. and Japan, and strong indications of growth in several European economies and China, the OECD said Friday. However the OECD warned that signals of expansion should be interpreted with caution, because it's still unclear how much of the measured increase of economic activity is due to a true improvement, and how much is due to a drop in long-term expectations, against which current activity is measured.
• Moynihan to address Congress on Merrill merger. Sources say Brian Moynihan, head of Bank of America's (BAC) consumer banking unit and a contender to succeed CEO Ken Lewis, has agreed to testify before Congress about his role in the Merrill Lynch takeover. He’ll be joined by Timothy Mayopoulos, whom Moynihan replaced as general counsel in December as the Merrill deal almost unraveled. Mayopoulos, who is now is general counsel at Fannie Mae (see above), has said he was given no reason for his dismissal. Moynihan's testimony could center on why Mayopoulos was given the boot, and what legal advice Moynihan gave to Ken Lewis prior to his meeting with the board.
• Retail sales climb for second month. U.S. retailers had their best month in more than a year, with major chains reporting a combined 1.8% year-on-year gain. In a promising note, upscale chains Nordstrom (JWN) and Saks (SKS) beat expectations, the first signs of recovery in among high-end shoppers. The big question is whether shoppers - many who are in the throes of joblessness - will turn out in force for the holidays.
• New rule cripples injured banks. A new rule that will cap the interest rates paid to depositors by banks deemed "not well capitalized" will likely accelerate the rate of bank failures. The cap - 0.75% above the U.S. average - is meant to prevent weaker banks from driving up costs for the rest of the industry.

Earnings: Fri. Before Open

• AIG (AIG): Q3 EPS of $2.85 beats by $0.87. Total equity $76.5B, up $14.4B from Q2. "Our results reflect continued stabilization in performance and market trends." Shares -4.8% premarket. (PR)
• Fortress Investment Group LLC (FIG): Q3 EPS of $0.11 beats by $0.02. Revenue of $144M (-22.4%) vs. $123M. (PR)
• Mirant (MIR): Q3 EPS of $0.38 misses by $0.78. Revenue of $454M (-79.1%) vs. $734M. (PR)
• Scripps Networks (SNI): Q3 EPS of $0.39 beats by $0.03. Revenue of $364.5M (+0.1%) in line. (PR)
• Suncor Energy (SU): Q3 EPS of C$0.23 misses by C$0.06. (PR)

Earnings: Thur. After Close

• Activision Blizzard (ATVI): Q3 EPS of $0.04 in-line. Revenue of $755M vs. $724M. Sees Q4 EPS of $0.43 vs. $0.44, on revenues of $2.22B vs. $2.3B. Sees full-year EPS of $0.63 vs. $0.64. Shares +2.8% AH. (PR)
• Atmel (ATML): Q3 EPS of -$0.01 beats by $0.01. Revenue of $318M (-21%) vs. $304M. Sees Q4 revenue up 3-7%. Shares -0.3% AH. (PR)
• CBS (CBS): Q3 EPS of $0.39 beats by $0.17. Revenue of $3.35B (flat) vs. $3.19B. Operating income before depreciation and amortization of $566M compared with year-ago loss of $13.48B. Sees full-year OIBDA of $1.725B-1.925B. Shares -1.4% AH. (PR)
• Crocs (CROX): Q3 EPS of $0.01 beats by $0.09. Revenue of $177M (+2%) vs. $156M. Shares -6.3% AH. (PR)
• EOG Resources (EOG): Q3 EPS of $0.81 beats by $0.15. Revenue of $1B (-69%) vs. $1.1B. Raises full-year production growth targets to 6% from 5.5%. Shares +0.1% AH. (PR)
• Hansen Natural (HANS): Q3 EPS of $0.60 misses by $0.03. Revenue of $308M (+8%) vs. $309M. Shares -8.2% AH. (PR)
• International Game Technology (IGT): FQ4 EPS of -$0.07 may not be comparable to estimate of $0.17. Revenue of $231M (-23%) vs. $498M. Unfavorable items affecting comparability reduce income by $0.30/share. Shares -0.3% AH. (PR)
• Intrepid Potash (IPI): Q3 EPS of $0.13 misses by $0.01. Revenue of $66M (-55%) vs. $64M. Shares -1.3% AH. (PR)
• JDS Uniphase (JDSU): FQ1 EPS of $0.04 beats by $0.02. Revenue of $298M (-21%) vs. $292M. Sees Q2 sales of $320M-345M vs. $306M. Shares +4.9% AH. (PR)
• Leap Wireless International (LEAP): Q3 EPS of -$0.85 misses by $0.33. Revenue of $600M (+21%) vs. $620M. Shares +0.5% AH. (PR)
• Nvidia (NVDA): Q3 EPS of $0.19 beats by $0.09. Revenue of $903M (+1%) vs. $838M. Sees Q4 sales up 2%. Shares +5.9% AH. (PR)
• Public Storage (PSA): Q3 FFO of $1.44 beats by $0.19. Revenue of $352M (-5%) vs. $405M. Shares -0.9% AH.(PR)
• SandRidge Energy (SD): Q3 EPS of $0.16 in-line. Operating cash flow of $85.6M (-38%). Shares -5.8% AH. (PR)
• Skyworks Solutions (SWKS): FQ4 EPS of $0.24 beats by $0.02. Revenue of $228M (-2%) vs. $222M. Shares +3.5% AH. (PR)
• Sotheby's (BID): Q3 EPS of -$0.89 misses by $0.58. Revenue of $45M (-41%) vs. $60M. Shares -3.8% AH. (PR)
• Starbucks (SBUX): FQ4 EPS of $0.24 beats by $0.03. Revenue of $2.4B (-4%) in-line. Expects full-year EPS growth of 15-20% from $0.80, and sees little net impact from commodities, with favorable coffee prices offsetting higher dairy prices. Expected capex of $500M-$550M. Shares +3.9% AH. (PR)
• Sunoco (SUN): Q3 EPS of -$0.29 misses by $0.19. Revenue of $8.7B (-43%) vs. $7.8B. Shares -0.6% AH. (PR)
• Tenaris (TS): Q3 EPS of $0.19 misses by $0.18. Revenue of $1.8B (-42%) vs. $1.9B. Shares -1.1% AH. (PR)
• VeriSign (VRSN): Q3 EPS of $0.33 beats by $0.01. Revenue of $258M (+5%) vs. $259M. Shares -4.8% AH. (PR)

Today's Markets

Asia markets headed higher Friday. Europe stocks are flat at midday, and futures are flat heading into the nonfarm payroll data on deck at 8:30.

• Fed stays put. The Fed Open Market Committee left target rates unchanged at 0-0.25% by unanimous vote, saying conditions are still "likely to warrant exceptionally low levels of the federal funds rate for an extended period." The Fed acknowledged an ongoing pickup in economic activity, but warned things are likely to remain weak for a while. It noted "substantial" resource slack will continue to dampen cost pressures, and it continues to believe "inflation will remain subdued for some time." It also pared its expectations for buying agency debt and agency MBS to $175B compared to a former maximum of $200B, to wrap up by the end of Q1. Here's a side-by-side comparison of Wednesday's statement with the previous one. Stocks surged after the statement, but a late-day selloff sent major indexes back to breakeven.
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• Dodd's drastic detour on bank regulation. Senate Banking Committee Chairman Christopher Dodd is reportedly readying legislation that would strip the Fed and FDIC of almost all their bank-supervision powers, creating in their place a new agency in charge of supervising all banks and bank-holding companies. Dodd's proposal would also create a council of regulators, overseen by the White House, to monitor systemic risks to the financial system. The suggestion is in stark contrast to approaches taken by the House and favored by the Obama administration, which have pushed to expand the Fed's powers. Dodd's model is likely to face heavy resistance, particularly from the banking industry, which is ironic since Dodd has been criticized for being too cozy with Wall Street bankers.
• Skype deal almost done. The private-equity investors that agreed to buy 65% of Skype from eBay (EBAY) for about $2.1B are on the verge of settling their dispute with Skype's founders in a deal that will give them 10% of Skype and a presence on its board, in exchange for giving up rights to the peer-to-peer technology they control and a significant amount of cash. An official announcement could come as soon as this morning.
• Senate shuffles taxes. The Senate passed legislation Wednesday that would give tax breaks to big companies impacted by the recession; increase taxes on multinational firms; extend and expand the homebuyers tax credit; and lengthen unemployment benefits. The proposed tax increases are aimed at offsetting the cost of the breaks, which business leaders worry may be a harbinger of more tax increases to come.
• Chambers sounds all clear. Cisco's (CSCO) net profit dropped 19% on lower sales (see data below), but CEO John Chambers gave an optimistic outlook on the economy and said businesses were ready to resume spending on technology. On Cisco's Q3 earnings call, Chambers told analysts the recovery "is well underway" and that economic improvements were "gaining momentum" worldwide. He also predicted Cisco's revenue would grow in Q4 after a year of contraction.
• Junk default rate hits post-Depression high. The global speculative-grade default rate rose to 12.4% in October, surpassing the record set in 1991 for the highest proportion of defaults since the Great Depression, Moody's said in a report this morning. Moody's believes the default rate may peak in November at 12.5%, noting the total number of defaults declined to eight in October, the lowest count this year.
• Big bonuses are back. Wall Street incentive pay is set to rise by about 40% according to a closely-watched survey to be released today, as stronger markets collide with the backlash over bonuses. Johnson Associates predicts incentive-based payouts will surge by as much as 60% from 2008, led by employees in rebounding businesses like fixed income and equities. In contrast, the firm predicts declines of 15-30% at hedge funds, private-equity firms and prime-brokerage operations which have seen a marked drop in AUM.
• Consumer bankruptcy strikes new high. Consumer bankruptcy filings hit 135,913 in October, an 8.9% jump from September, and 27.9% higher than a year ago, according to a study by the American Bankruptcy Institute. "The debt overhang from literally a decade or more of really high consumer spending and low savings rates has put families in a particularly vulnerable spot," ABI's Samuel Gerdano said. The rise outpaced a 7% month-on-month increase in business filings.
• Downgrade dominance declines. S&P said it downgraded only one more nonfinancial firm in October than it upgraded (24-23), a marked improvement considering the downgrade/upgrade ratio from Sept. 2008 to Aug. 2009 was 835-115. S&P said the large drop "supports our belief that aggregate credit quality, although weak, is stabilizing," and noted that the number of companies with a negative ratings outlook or on watch for downgrade has declined steadily. Meanwhile, more than $4B in new corporate bonds were offered Wednesday, including a $2B sale by DuPont (DD).
• BOE boosts bond buying: The Bank of England kept its target bank rate at 0.5%, as expected, but raised its bond buying program to £200B from £175B, which it expects to complete in about three months. "Banks’ funding conditions have improved, though financial conditions remain fragile," the Bank said, and noted "a number of indicators of spending and confidence, however, suggest that a pickup in economic activity may soon be evident."
• Private-sector jobs still sliding. ADP's October employment report showed private U.S. payrolls declined by 203,000, while revising September's loss to 227K from 254K - the seventh straight month of declining job losses. ADP's report comes two days before the government's official nonfarm payroll data, and has been reasonably well correlated with NFP data in recent months. Consensus estimates suggest 150–175K job losses in October and an unemployment rate of 9.9%.
• Online job seeking rises slowly. Monster's index of online job advertising inched up to 120, vs. 119 in Sept and 150 a year ago. Healthcare and public administration demonstrated solid growth, but retail and hospitality hiring retracted. "The rise in the October Index, along with an improvement in the annual rate, indicate a mild expansion in the underlying employer demand for workers," Monster said. "While the decline in consumer confidence has likely contributed to reduced job demand in the retail and hospitality sectors, employers are actively recruiting in the healthcare and public sectors, resulting in stability of the overall Index."

Earnings: Thur. Before Open

• Allied Capital (ALD): Q3 EPS of $0.02 misses by $0.05. Revenue of $M in-line. Shares -1.3% premarket. (PR)
• Biovail (BVF): Q3 EPS of $0.44 beats by $0.04. Revenue of $212M in-line. (PR)
• Cardinal Health (CAH): FQ1 EPS of $0.54 beats by $0.11. Revenue of $24.8B (+5.9%) vs. $24B. (PR)
• Canadian Natural Resource (CNQ): Q3 EPS of C$1.21 misses by C$0.04. Revenue of C$2.82B (+2.7%) vs. C$2.99B. (PR)
• CenturyTel (CTL): Q3 EPS of $0.90 beats by $0.09. Revenue of $1.87B (+188.3%) in-line. (PR)
• CIGNA (CI): Q3 EPS of $1.13 beats by $0.10. Revenue of $4.52B (-6.9%) in-line. (PR)
• CVS Caremark (CVS): Q3 EPS of $0.65 beats by $0.01. Revenue of $24.6B (+17.7%) in-line. Shares +1% premarket. (PR)
• Delta Petroleum (DPTR): Q3 EPS of -$0.35 misses by $0.24. Revenue of $23.9M (-66.8%) vs. $21.9M. "We are extremely disappointed with the results of the Gray well, but exploration drilling carries with it significant risks." Shares -12.8% premarket. (PR)
• DirecTV Group (DTV): Q3 EPS of $0.37 misses by $0.02. Revenue of $5.47B in-line. (PR)
• Dr Pepper Snapple (DPN): Q3 EPS of $0.54 beats by $0.05. Revenue of $1.43B (-4%) in-line. Sees full-year EPS of $1.92-1.96 vs. $1.97. ""While the economy is showing some signs of recovery, it's still too early to see this translate into higher beverage sales. For the quarter, liquid refreshment beverage trends remained negative." Shares +0.7% premarket. (PR)
• Dynegy (DYN): Q3 EPS of -$0.10 misses by $0.13. Revenue of $673M (-61.7%) vs. $877M. (PR)
• Frontier Oil (FTO): Q3 EPS of -$0.26 misses by $0.11. Revenue of $1.1B (-45.4%) in-line. (PR)
• King Pharmaceuticals (KG): Q3 EPS of $0.29 beats by $0.02. Revenue of $463M (+19.3%) vs. $445M. (PR)
• Lamar Advertising (LAMR): Q3 EPS of -$0.05 beats by $0.11. Revenue of $167M (-13%) vs. $164M. (PR)
• Macerich (MAC): Q3 FFO of $0.97 beats by $0.05. Revenue of $201M (+49.8%) in-line. (PR)
• Manulife Financial (MFC): Q3 EPS of C-$0.12 misses by C$0.32. Revenue of C$13.75B. (PR)
• MGM Mirage (MGM): Q3 EPS of $0.02 beats by $0.10. Revenue of $1.71B (-12.7%) vs. $1.47B. Las Vegas Strip RevPAR fell 21%. Amends credit facility to refinance existing debt and provide more debt of up to $1B. Shares +5.7% premarket. (PR)
• MetroPCS Communications (PCS): Q3 EPS of $0.21 beats by $0.12. Revenue of $895M (+30.4%) vs. $869M. (PR)
• MF Global (MF): FQ2 EPS of $0.01 misses by $0.03. Revenue of $493M (-40.9%) vs. $273M. (PR)
• Nasdaq (NDAQ): Q3 EPS of $0.42 in-line. Revenue of $691M (+3.3%) vs. $355M. (PR)
• Petrohawk Energy (HK): Q3 EPS of $0.14 beats by $0.02. Revenue of $238M (-22%) vs. $305M. (PR)
• Plains Exploration & Production (PXP): Q3 EPS of $0.30 misses by $0.23. Revenue of $313M (-56.5%) vs. $376M. Shares -0.6% premarket. (PR)
• Sara Lee (SLE): FQ1 EPS of $0.24 beats by $0.08. Revenue of $2.59B (-7.4%) vs. $3.16B. Shares +0.2% premarket. (PR)
• Sirius XM Radio (SIRI): Q3 EPS of $0.00 beats by $0.02. Revenue of $630M (+2.8%) vs. $609M. Ends quarter with 18,515,730 subscribers, +102,295 from Q2. Shares +3.9% premarket. (PR)
• Spectra Energy (SE): Q3 EPS of $0.30 beats by $0.04. Revenue of $933M (-13.6%) vs. $986M. (PR)
• Teradata (TDC): Q3 EPS of $0.38 beats by $0.09. Revenue of $425M (-3.2%) in-line. (PR)
• Thomson Reuters (TRI): Q3 EPS of $0.43 beats by $0.03. Revenue of $3.21B (-3.6%) in-line. "While the weak year-to-date net sales experienced in recent quarters are now flowing through into revenues, we expect this dip to be shallow and limited to the next few quarters." (PR)
• Time Warner Cable (TWC): Q3 EPS of $0.76 beats by $0.01. Revenue of $4.5B (+3.6%) in-line. (PR)
• Watson Wyatt (WW): FQ1 EPS of $0.84 beats by $0.12. Revenue of $401M (-5.8%) vs. $394M. Sees FQ2 EPS of $0.81-0.86 vs. $0.89 (PR)
• Wendy's Arby's Group (WEN): Q3 EPS of $0.06 in-line. Revenue of $903M vs. $916M. Shares +3.8% premarket. (PR)

Earnings: Wed. After Close

• Allstate (ALL): Q3 EPS of $0.99 misses by $0.02. Revenue of $7.6B (+4%) vs. $8.5B. Shares -2.1% AH. (8-K)
• Amdocs (DOX): FQ4 EPS of $0.53 beats by $0.04. Revenue of $707M (-14%) vs. $679M. Sees Q1 EPS of $0.51-0.55 vs. $0.50, on revenue of $705M-725M vs. $676M. Shares +6.2% AH. (PR)
• Cisco Systems (CSCO): Q3 EPS of $0.36 beats by $0.05. Revenue of $9B (-13%) vs. $8.7B. Shares +2.8% AH. (PR)
• Corrections Corp. of America (CXW): Q3 EPS of $0.39 beats by $0.07. Revenue of $426M (+6%) vs. $423M. Shares -2.7% AH. (PR)
• Eagle Bulk Shipping (EGLE): Q3 EPS of $0.06 beats by $0.03. Revenue of $42M (-19%) in-line. Shares -5.7% AH. (PR)
• Evergreen Solar (ESLR): Q3 EPS of -$0.40 misses by $0.32. Revenue of $78M (+251%) vs. $74M. Shares +2.1% AH. (PR)
• Goldcorp (GG): Q3 EPS of $0.19 beats by $0.03. Revenue of $692M (+25%) vs. $614M. Shares +2.1% AH. (PR)
• Goodrich Petroleum (GDP): Q3 EPS of -$0.87 misses by $0.70. Revenue of $24M (-61%) vs. $52M. Shares -7% AH. (PR)
• Health Care REIT (HCN): Q3 FFO (normalized) of $0.77 in-line. Revenue of $145M (+4%) vs. $143M. Sees full-year EPS of $3.10-3.12 vs. $3.13. Shares +1.6% AH. (PR)
• ION Geophysical (IO): Q3 EPS of -$0.06 misses by $0.03. Revenue of $102.4M (-53%) vs. $102.6M. Shares -8.4% AH. (PR)
• Microchip Technology (MCHP): FQ2 EPS of $0.29 beats by $0.08. Revenue of $227M (-16%) vs. $218M. Sees FQ3 EPS of $0.33-0.35 vs. $0.24, on revenue of $236M-245M vs. $224M. Shares +1.6% AH. (PR)
• Murphy Oil (MUR): Q3 EPS of $0.98 misses by $0.01. Revenue of $5.2B (-37%) vs. $4.4B. Sees Q4 EPS of $0.75-0.90 vs. $1.18. Shares -2% AH. (PR)
• News Corp. (NWS): FQ1 EPS of $0.22 beats by $0.04. Revenue of $7.2B (-4%) in-line. Shares +3% AH. (PR)
• ON Semiconductor (ONNN): Q3 EPS of $0.16 beats by $0.06. Revenue of $473M (-19%) vs. $455M. Shares +4% AH. (PR)
• Prudential Financial (PRU): Q3 EPS of $1.59 beats by $0.26. Revenue of $6.6B (+4%) vs. $6.65B. Shares +0.4% AH. (PR)
• Qualcomm (QCOM): FQ4 EPS of $0.48 misses by $0.04. Revenue of $2.7B (-19%) vs. $2.8B. Sees Q1 revenue of $2.55B-2.75B vs. $2.84B. Shares +1% AH. (PR)
• Sunstone Hotel Investors (SHO): Q3 FFO of $0.14 in-line. Revenue of $176M (-20%) vs. $180M. Shares +2% AH. (PR)
• THQ (THQI): FQ2 EPS of -$0.08 beats by $0.40. Revenue of $101M (-39%) vs. $92M. Shares +11.5% AH. (PR)
• Whole Foods Market (WFMI): FQ4 EPS of $0.20 beats by $0.02. Revenue of $1.8B (-2%) in-line. Same-store sales down 0.9%. Shares -7.7% AH. (PR)

Today's Markets

Asian markets were mixed Thursday. Europe is lower at midday, and futures are flat.

• GM U-turn on Opel sparks German road rage. German officials were outraged by GM's surprise decision to keep Opel, its European arm, abandoning a long-expected sale to a Magna- (MGA) led group that the German government had agreed to back with €4.5B of state aid. GM said improving business conditions and the strategic importance of Opel had prompted the move, which came after the EU forced GM's board to revisit the deal over concerns Germany had influenced its decision. GM expects restructuring Opel to cost about €3B; it's unclear whether the German government will help it restructure.
• Buffett joins Goldman in bid for tax credits. Sources say Berkshire Hathaway (BRK.A) has joined Goldman Sachs (GS) in a bid to buy $3B in tax credits from Fannie Mae (FNM), adding a twist to a politically sensitive deal. The credits are virtually worthless to Fannie Mae, and require it to take losses each quarter as their value declines, while profitable companies could use them to offset taxes. The government, which controls Fannie, is thought to be reluctant to approve a deal that would allow Goldman to save on taxes, given the firm's already tenuous standing with lawmakers and on Main Street; taking widely-respected Buffett as a partner could reduce the tension.
• Berkshire bets big. Warren Buffett says his $100/share bid for Burlington Northern Santa Fe (BNI) was his first and only offer, stressing that the deal is "not a bet on next month or next year. We're going to own it forever." Berkshire (BRK.A) will pay about 60% cash and 40% stock for the railroad, taking on $8B in debt and depleting its cash store to about $20B, leaving it almost fully-invested according to its standards, which analysts say could result in strategic divestments in the future. Berkshire will split its so-called Baby Berkshire shares (BRK.B) by 50 to enable small Burlington stakeholders to participate in the share swap, which will help bring its famously pricey stock within the means of retail investors.
• Obese healthcare premiums. A Senate probe found U.S. health insurers (AET, CI, CVH, HUM, UNH, WLP) are spending considerably less of their premiums on medical care than official industry estimates - an average of $0.70/dollar instead of the $0.87 cited by industry group AHIP. The report also singled out Cigna for mis-categorizing $5B worth of clients. "The American people and I are asking a serious question and one that deserves a straight answer – why are health insurance costs going up each year?" Sen. Jay Rockefeller said. "While health-care costs are spiraling upwards, consumers are paying more and getting less, and the health insurance industry doesn't want anyone to know what they are up to."
• Regulators fret Asia bubble. The World Bank warned Tuesday that the sudden reappearance of billions of dollars in investment capital in East Asia is "raising concerns about asset price bubbles," while the IMF cited "a risk" that surging Hong Kong asset prices are being driven by a flood of capital "divorced from fundamental forces of supply and demand." About $53B has gone into emerging-market stock funds this year.
• China backs Shanghai Disney. Beijing gave Disney (DIS) the go-ahead to build a $4B theme park in Shanghai, allowing the media giant to establish a presence in a massive market that has presented substantial hurdles to foreign entertainment companies. The park has been discussed for close to a decade. Disney already operates a theme park in Hong Kong.
• Oracle awaits EU veto. Oracle (ORCL) is expecting a formal objection to its planned $7.4B acquisition of Sun Microsystems (JAVA) from the EU Commission within days, sources say. Despite concerns over the deal's impact on the database market, Oracle has refused to make any concessions to European regulators.
• Bain in exclusive talks to buy Citi's Bellsystem. Private-equity group Bain Capital is reportedly in exclusive negotiations with Citigroup (C) to buy its Japanese telemarketer Bellsystem24 in a deal that could be worth more than $1B. A team of CVC Capital and Blackstone (BX) also made an offer in the final round of bidding, which closed last Friday. Citigroup put Bellsystem24 up for sale as part of its efforts to raise cash; it has already sold its retail broker Nikko Cordial Securities and asset management firm Nikko Asset Management in Japan.
• Car sales show spark. U.S. vehicle sales declined less than 1% in October, the first signs of a recovery without the aid of government incentives. The drop made October the year's strongest month aside from August, which received a lift from the cash-for-clunkers program. The seasonally adjusted annual sales rate was 11.2M. "Thinking of where we've come from, it's certainly a positive signal," J.D. Power's Jeff Schuster said. GM's sales rose 5% - the first gain since Jan. 2008. Ford's (F) grew 3%.
• Second IPO nixed. Aviv REIT Inc. (AVI) became the second U.S. company in less than a week to pull its IPO after pricing and demand failed to meet investors' expectations, dealers said. September and October's 18 IPOs have collectively beaten the S&P 500 by just 0.3% during their first month of trading - the worst showing on record.
• Mortgage apps rise. Mortgage applications increased 8.2% from a week ago, MBA said, led by a 14.5% jump in refinancing. The average rate for 30-year fixed mortgages declined to 4.97% from 5.04%.
• Oct. Challenger Job-Cut Report: Announced layoffs fell to 55,679 vs. 66,404 in September, the lowest total since March 2008. As recently as October 2008, the number stood at 113K.

Earnings: Wed. Before Open

• Agrium (AGU): Q3 EPS of $0.16 in-line. Revenue of $1.84B (-40.8%) vs. $2.07B. (PR)
• Ambac (ABK): Q3 EPS of $7.58 vs. consensus of -$4.43. Revenue of $23.6M (-24.6%) vs. $23.4M. Says results "reflect significant unrealized mark-to-market gains in the credit derivatives portfolio and gains resulting from reinsurance cancellations during the quarter." Shares +30% premarket. (PR)
• Automatic Data Processing (ADP): FQ1 EPS of $0.56 beats by $0.06. Revenue of $2.1B (-3.6%) in-line. (PR)
• Aqua America (WTR): Q3 EPS of $0.25 in-line. Revenue of $181M (+2.1%) vs. $189M. Increases quarterly dividend by $0.01 (7.4%) to $0.145. Says results were negatively impacted by eighth wettest summer in 137 years. (PR)
• Baker Hughes (BHI): Q3 EPS of $0.26 misses by $0.10. Revenue of $2.23B (-26%) in-line. Says international results were negatively impacted by price discounting. Expects to complete acquisition of BJ Services (BJS) in Q1 2010. (PR)
• Becton Dickinson (BDX): FQ4 EPS of $1.25 beats by $0.01. Revenue of $1.9B (+5%) in-line. (PR)
• Comcast (CMCSA): Q3 EPS of $0.33 beats by $0.08. Revenue of $8.8B (+3%) in-line. Declares quarterly dividend of $0.0675. (PR I, II)
• Devon Energy (DVN): Q3 EPS of $1.10 beats by $0.20. Revenue of $2.1B (-64.9%) in-line. O&G production is up 8% YTD. Shares +4.3% premarket. (PR)
• Diedrich Coffee (DDRX): FQ1 EPS of $0.07 beats by $0.02. Revenue of $15.8M (+52%) vs. $13.2M. Diedrich is being acquired by Peet's Coffee & Tea (PEET). (PR)
• Foster Wheeler (FWLT): Q3 EPS of $0.71 beats by $0.08. Revenue of $1.22B (-29.2%) vs. $1.29B. (PR)
• Garmin (GRMN): Q3 EPS of $1.02 beats by $0.03. Revenue of $781M (-10.2%) vs. $704M. Gross margin 52%. Operating margin 30% from 25% last year. (PR)
• Huntsman (HUN): Q3 EPS of -$0.24 misses by $0.16. Revenue of $2.11B (+13%) vs. $1.95B. Says expansion of Asian ops "has allowed us to take advantage of markets less affected by the ongoing global recession." Anticipates economic recovery will continue. (PR)
• IAMGOLD (IAG): Q3 EPS of $0.18 beats by $0.08. Revenue of $235M (+3.7%) vs. $224M. Shares +3.5% premarket. (PR)
• Liz Claiborne (LIZ): Q3 EPS of $0.43 misses by $0.23. Revenue of $770B (-24.1%) vs. $790B. Says it's seeing "significantly improved comparable store sales results" Q4 to date. (PR)
• Marsh & McLennan (MMC): Q3 EPS of $0.48 beats by $0.22. Revenue of $2.52B (-10.5%) vs. $2.6B. (PR)
• Martha Stewart Living Omnimedia (MSO): Q3 EPS of -$0.22 misses by $0.13. Revenue of $49.8M (-25.1%) vs. $51.3M. Shares -8.1% premarket. (PR)
• MFA Finanacial (MFA): Q3 EPS of $0.25 misses by $0.01. Shares +0.3% premarket. (PR)
• Molson Coors (TAP): Q3 EPS of $1.14 beats by $0.16. Revenue of $854M (-7.3%) vs. $834M. (PR)
• Pulte Homes (PHM): Q3 EPS of -$1.15 misses by $0.46. Revenue of $1.09B (-30%) vs. $1.23B. Says results "reflect a homebuilding industry that continues its transition toward more stable market conditions as lower prices and historically low mortgage rates are helping to support homebuyer demand. Challenges remain, however, as economic weakness, foreclosures, rising unemployment and recent uncertainty over the expiration of the federal tax credit continue to influence buyer behavior." (PR)
• Quanta Services (PWR): Q3 EPS of $0.32 beats by $0.11. Revenue of $781M (-25.6%) vs. $858M. (PR)
• R.R. Donnelley & Sons (RRD): Q3 EPS of $0.54 beats by $0.09. Revenue of $2.5B vs. $2.4B. (PR)
• Time Warner (TWX): Q3 EPS of $0.61 beats by $0.08. Revenue of $7.13B (-5.9%) in-line.(PR I, II)
• Transocean (RIG): Q3 EPS of $2.65 misses by $0.02. Revenue of $2.82B (-11.6%) in-line. (PR)
• TRW Automotive (TRW): Q3 EPS of $0.68 beats by $0.52. Revenue of $3.11B (-13.5%) vs. $2.87B. Sees Q4 revenue of $3.2B vs. $3B. "The cautious optimism that has emerged for the industry is supported by the increasing vehicle production forecasts. Although it appears the bottom of the financial crisis has been reached, full recovery will be a long and gradual process." (PR)
• Tyco Electronics (TEL): Q3 EPS of $0.30 beats by $0.03. Revenue of $2.7B (-24.6%) vs. $2.6B. (PR)
• Watson Pharmaceuticals (WPI): Q3 EPS of $0.66 beats by $0.01. Revenue of $662M (+3.3%) vs. $688M. (PR)
• XTO Energy (XTO): Q3 EPS of $0.86 beats by $0.02. Revenue of $2.29B (+7.7%) in-line. (PR)

Earnings: Tue. After Close

• Anworth Mortgage Asset (ANH): Q3 EPS of $0.27 misses by $0.04. Interest income of $63M (-14%). Shares +2% AH. (PR)
• CBL & Associates Properties (CBL): Q3 FFO of $0.50 beats by $0.03. Revenue of $263M (-8%) vs. $255M. Shares -0.8% AH. (PR)
• Con-Way (CNW): Q3 EPS of $0.39 misses by $0.20. Revenue of $1.1B (-18%) in-line. Shares +0.1% AH. (PR)
• Crown Castle International (CCI): Q3 EPS of -$0.13 misses by $0.09. Revenue of $429M (+12%) vs. $419M. Sees full-year EPS of -$0.58 to -$0.49 vs. -$0.45, on revenue of $1.54B vs. $1.66B. Shares -6.3% AH. (PR)
• Digital River (DRIV): Q3 EPS of $0.42 beats by $0.01. Revenue of $99.4M (+3%) vs. $98.3M. Sees Q4 EPS of $0.30-0.34 vs. $0.42. Shares -1.3% AH. (PR)
• Discovery (DISCA): Q3 EPS of $0.22 misses by $0.05. Revenue of $854M (+1%) vs. $850M. Shares -0.1% AH. (PR)
• Excel Maritime (EXM): Q3 EPS of $0.81 beats by $0.68. Revenue of $174M (-25%) vs. $101M. Shares +6% AH. (PR)
• Exco Resources (XCO): Q3 EPS of $0.20 misses by $0.02. Revenue of $131M (-70%) vs. $229M. Shares -0.5% AH. (PR)
• Hartford Financial (HIG): Q3 core EPS of $1.56 beats by $0.45. Results exclude highly variable realized gains/losses. Raises full-year EPS guidance to $0.85-1.05 from $0.00-0.20, vs. $0.50. Shares +4.8% AH. (PR)
• Kraft (KFT): Q3 EPS of $0.55 beats by $0.07. Revenue of $9.8B (-6%) vs. $10.3B. "Our volume/mix, profit margin and cash flow trends are strengthening as we successfully execute our growth plan." Shares -2.9% AH. (PR)
• Onyx Pharmaceuticals (ONXX): Q3 EPS of $0.35 beats by $0.13. Revenue of $69M (+36%) vs. $65M. Shares -0.7% AH. (PR)
• Pioneer Natural Resources Company (PXD): Q3 EPS of -$0.06 misses by $0.13. Revenue of $410M (-32%) vs. $400M. Shares -0.2% AH. (PR)
• STEC (STEC): Q3 EPS of $0.50 beats by $0.03. Revenue of $98M (+54%) vs. $97M. Shares -31.9% AH. (PR)
• Unum Group (UNM): Q3 EPS of $0.64 in-line. Revenue of $2.52B (+3%) vs. $2.56B. (PR)
• Vivus (VVUS): Q3 EPS of -$0.30 beats by $0.01. Revenue of $4.3M (-2%) vs. $5.3M. Shares -3.7% AH. (PR
• Yamana Gold (AUY): Q3 EPS of $0.12 misses by $0.01. Revenue of $333M (+50%) vs. $358M. Shares -2% AH. (PR)

Today's Markets

Overseas markets posted solid gains Wednesday after U.S. markets rebounded from early weakness to finish off Tuesday flat. Futures are higher in moderate overnight trading.

• Buffett buys Burlington for a cool $44B. Berkshire Hathaway (BRK.A) announced it will acquire the 77.4% of Burlington Northern (BNI) it doesn't already own for $100/share in cash and stock - a 30% premium to Monday's close of $76.07. The transaction is worth $44B, including $10B in outstanding debt. Here's what Warren Buffett had to say: "Our country's future prosperity depends on its having an efficient and well-maintained rail system. Conversely, America must grow and prosper for railroads to do well. Berkshire's $34B investment in BNI is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry. Most important of all, however, it's an all-in wager on the economic future of the U.S. I love these bets."
• Stocks slide; futures fall. Global stock markets painted a gloomy picture Tuesday, with bourses in Asia and Europe taking 2%-plus losses as risk appetite took a breather and investors clamored for safe-haven assets, sending the dollar and U.S. Treasurys climbing and futures tumbling (see data below in Today's Markets). "The basis for the correction seems to rest on three legs," Merrill economist Bill O'Neill said. "Worries over prospects for holders of equity in banks; concern that interest-rate hikes are imminent; and paradoxically, that recovery in 2010 will be crippled by a U.S. consumer unwilling or unable to open his or her wallet." Others took the recent downturn as a sign equity prices had gotten ahead of real improvements in the economy.
• Stanley, B&D craft $8.4B merger. Stanley Works (SWK) agreed to buy rival Black & Decker (BDK) for $4.5B in stock, the culmination of a courtship that spanned 27 years and three other attempts. The bid values B&D at about $57.57/share, a 22% premium to Monday's close. "The more we talked, the more we felt like these were two very complementary and unique companies," BDK CEO Nolan Archibald said, adding both CEOs were "totally swayed" by potential synergies of $350M. Stanley shareholders will own about 50.5% of the combined company; B&D shareholders will get 49.5%.
• Lloyds, RBS diverge on aid. Lloyds (LYG) and Royal Bank of Scotland (RBS) unveiled agreements with the U.K. Treasury over their participation in its program to insure toxic assets, and detailed the divestments they will need to make to satisfy EU regulators. Lloyds opted out of the expensive U.K. asset-protection scheme, saying it would raise £21B, including a £13.5B rights issue; the government will maintain its 43% stake in the bank. The move subjects Lloyds to more modest EU demands: Lloyds said it will dispose of "a retail banking business" with a 4.6% market share and about 19% of its mortgage portfolio; sell £180B in noncore assets; and limit acquisitions over the next 3-4 years. RBS will enter the asset-protection scheme to insure £282B of its illiquid loans, with the first £60B in losses borne by RBS. The government will inject another £25.5B into RBS, raising its stake to 84.4%. RBS will sell its RBS retail network in England and Wales and NatWest branches in Scotland; RBS insurance; Global Merchant Services; and its stake in RBS Sempra Commodities. LYG +2.8% premarket. RBS -8%.
• Outflows continue to plague UBS. Shares of UBS (UBS) are -7% premarket after the Swiss bank said it doesn't expect client inflows to recover anytime soon due to its mangled reputation as a result of its tax dispute with the IRS. UBS posted a fourth straight quarterly loss of 564M francs (-$552M), worse than the 207M loss expected by the Street. Total client outflows rose to 36.6B francs ($35.8B), led by a doubling of outflows at its Americas wealth-management division. On a media call, CFO John Cryan cited UBS's "residual reputational issue" along with "some morale issues among advisers" that it needs to face, and said UBS expects "modest outflows from Swiss clients until we return to profit."
• EU sees gradual recovery. The EU lifted its 2010-2011 growth forecast to 0.75% and 1.5% respectively, but cautioned its outlook is "highly uncertain" given that "significant fiscal and monetary policy measures" are supporting the recovery. Predicting government deficits will swell to 7.5% of GDP, the Commission said a "protracted period of fiscal consolidation will have to follow at some stage to put public debt back on a sustainable footing."
• RBA hikes rates again. Australia's central bank, the first G-20 member to break from super-loose monetary policy, raised interest rates for the second time in two months - to 3.5% - amid a rapidly improving economic outlook. The bank hinted it may not boost rates again in December, saying the rises in October and November would work to temper inflation and ensure a sustainable upswing in the economy, which sent the Aussie dollar (ETF: EWA) lower. The central bank has never hiked rates three months in a row.
• CRE breaks death spiral. Prices of investment-grade commercial real estate rose 4.4% in Q3, according to the MIT CRE's transaction-based index, possibly signaling an end to the sector's year-long downward spiral. "One quarter does not a trend make and we are still well below normal trading volume," David Geltner, director of research at MIT/CRE, said. "Nevertheless, this is the strongest sign of a bottom that we've had in two years." The positive news comes in stark contrast to gloomy remarks from the Fed's John Greenlee, who said Monday (.pdf) that regional banks building up "unprecedented concentrations of CRE loans" will suffer the impact of worsening conditions in real estate markets, and warned, "Poor loan quality, subpar earnings, and uncertainty about future conditions raise questions about capital adequacy for some institutions."
• Hat trick of upside surprises. U.S. manufacturing activity hit its highest level in 3.5 years and pending home sales contracts unexpectedly surged, reducing fears the economy's budding recovery would falter. ISM's manufacturing index climbed 3.1 points to 55.7 (vs. 53.3 consensus) as companies began rebuilding inventories. "Overall, it appears that inventories are balanced and that manufacturing is in a sustainable recovery mode," ISM said. Pending home sales rose for the eighth straight month, the longest streak on record, with NRA's index gaining 6.1% (vs. +0.7% consensus) to 110.1. The index is now at its highest since Dec. 2006. And construction spending (.pdf) rose 0.8% (vs. -0.3% consensus) to an annual $940B, though the gain was offset by a large downward revision to August's number.
• Pensions bulge while market caps shrink. Pensions rose an average of 19% for top executives in 2008, even as their companies' stock prices fell by 37% amid a global downturn, according to an analysis of SEC filings. The growth was largely due to arcane pension formulas that have received little scrutiny.

Earnings: Tue. Before Open

• Alpha Natural Resources (ANR): Q3 EPS of $0.47 beats by $0.09. Revenue of $729M (+5.9%) in-line. Shares -0.9% premarket. (PR)
• American Tower (AMT): Q3 EPS of $0.17 in-line. Revenue of $444M (+8.5%) vs. $430M. (PR)
• AmerisourceBergen (ABC): FQ4 EPS of $0.44 beats by $0.04. Revenue of $18.27B (+9.7%) vs. $18.06B. Shares +5.5% premarket. (PR)
• Archer Daniels Midland (ADM): FQ1 EPS of $0.77 beats by $0.20. Revenue of $14.9B (-29.5%) vs. $17.9B. Shares +0.1% premarket. (PR)
• Cameron International (CAM): Q3 EPS of $0.58 beats by $0.05. Revenue of $1.23B (-18.1%) in-line. Shares -0.3% premarket. (PR)
• Cognizant Technology Solutions (CTSH): Q3 EPS of $0.45 beats by $0.04. Revenue of $853M (+16.2%) vs. $806M. Sees Q4 EPS of $0.45 vs. $0.42 and revenue of at least $880M vs. $830M. Shares +6.9% premarket. (PR)
• Emerson Electric Company (EMR): FQ4 EPS of $0.67 beats by $0.07. Revenue of $5.32B (-20.5%) in-line. Sees 2010 revenue of $19.45-19.87B vs. $20.21B. "We are well positioned for economic recovery, but the shape and speed of the recovery remains unknown and we expect weakness to continue in the near-term." Shares -1% premarket. (PR)
• Expeditors International of Washington (EXPD): Q3 EPS of $0.27 misses by $0.02. Revenue of $1.04B (-33.7%) in-line. "There certainly were significant challenges during the latter part of this quarter as both air and ocean carriers imposed capacity reductions in order to implement very aggressive price increases. While we wouldn't call it 'The Perfect Freight Storm,' the rapidity of these carrier moves created a pricing environment that resulted in our experiencing single digit airfreight yields out of Asia during the first several weeks of September. Ocean yields were also significantly impacted." (PR)
• Frontier Communications (FTR): Q3 EPS of $0.17 beats by $0.02. Revenue of $527B (-5.6%) in-line. Shares -0.3% premarket. (PR)
• Gaylord Entertainment (GET): Q3 EPS of -$0.32 misses by $0.21. Revenue of $199M (-12.2%) vs. $202M. (PR)
• IntercontinentalExchange (ICE): Q3 EPS of $1.18 beats by $0.03. Revenue of $256M (+27.3%) in-line. Shares +0.2% premarket. (PR)
• Marathon Oil (MRO): Q3 EPS of $0.61 beats by $0.04. Revenue of $14.48B (-37.9%) vs. $13.7B. Shares +1.3% premarket. (PR)
• Marvel Entertainment (MVL): Q3 EPS of $0.26 beats by $0.02. Revenue of $106M (-42.1%) vs. $92.5M. Disney (DIS) is due to acquire Marvel by year-end. (PR)
• MasterCard (MA): Q3 EPS of $3.48 beats by $0.54. Revenue of $1.36B (+1.9%) in-line. Gross dollar volume +0.3%. Purchase volume +0.4%. Shares +3.3% premarket. (PR)
• Medco Health Solutions (MHS): Q3 EPS of $0.75 beats by $0.03. Revenue of $14.79B (+17.8%) in-line. Shares +2.5% premarket. (PR)
• Northgate Minerals (NXG): Q3 EPS of $0.03 misses by $0.01. Revenue of $120M. (PR)
• Oshkosh Truck (OSK): FQ4 EPS of $0.27 beats by $0.11. Revenue of $1.49B (-19.8%) vs. $1.4B. "We expect to be solidly profitable in fiscal 2010, led by significant revenue growth in our defense business, which should more than offset anticipated low demand at our construction-related businesses." Shares +3.8% premarket. (PR)
• Petroquest Energy (PQ): Q3 EPS of $0.07 misses by $0.06. Revenue of $50.3M (-35.8%) vs. $52.2M. Shares -6.5% premarket. (PR)
• Polo Ralph Lauren (RL): FQ2 EPS of $1.75 beats by $0.44. Revenue of $1.37B (-3.8%) vs. $1.31B. "We are raising our sales expectations for the remainder of the year, but we continue to be cautious with our outlook and are planning accordingly." Shares +2.7% premarket. (PR)
• Rockwell Collins (COL): FQ4 EPS of $0.84 misses by $0.03. Revenue of $1.19B (-7%) in-line. Shares -2.7% premarket. (PR)
• Royal Caribbean Cruises (RCL): Q3 EPS of $1.07 beats by $0.07. Revenue of $1.8B (-14.5%) in-line. Sees "a slight loss" in Q4 vs. consensus of +$0.04. "Like many other travel companies, we saw more strength than we expected during our peak season but have been experiencing more pricing pressure on some of our traditionally softer fall season sailings." Shares -3.2% premarket. (PR)
• St. Joe Company (JOE): Q3 EPS of -$0.08 misses by $0.02. Revenue of $43.2M (+30.1%) vs. $28.9M. (PR)
• Teva Pharmaceutical Industries (TEVA): Q3 EPS of $0.89 beats by $0.01. Revenue of $3.55B (-7.6%) vs. $3.63B. Shares -2% premarket. (PR)
• Viacom (VIA): Q3 EPS of $0.69 beats by $0.12. Revenue of $3.32B (-2.7%) in-line. Shares +0.7% premarket. (PR)
• Vornado (VNO): Q3 FFO of $1.25 beats by $0.08. Revenue of $671M (-0.7%) vs. $637M. Shares -0.5% premarket. (PR)

Earnings: Mon. After Close

• Anadarko (APC): Q3 EPS ex-items of $0.40 may not compare to estimate of -$0.33. Gains that may affect comparability, including reversed accrual and unrealized derivatives loss, of $0.51/share. Revenue of $2.7B (-55%) vs. $2B. Shares +0.7% AH. (PR)
• Avis Budget Group (CAR): Q3 EPS of $0.54 misses by $0.01. Revenue of $1.5B (-14%) vs. $1.6B. Shares +6.5% AH. (PR)
• Axis Capital (AXS): Q3 EPS of $1.05 beats by $0.33. Revenue of $452M (-29%) vs. $581M. (PR)
• Chesapeake Energy (CHK): Q3 EPS of $0.70 beats by $0.05. Revenue of $1.8B (-76%) vs. $2B. Shares -1.1% AH. (PR)
• Forest Oil (FST): Q3 EPS of $0.48 misses by $0.04. Revenue of $177M (-50%) vs. $252M. Shares -1.8% AH. (PR)
• Hecla Mining (HL): Q3 EPS of $0.09 beats by $0.09. Revenue of $95.2M (+39%) vs. $68.7M. Shares +2.4% premarket. (PR)
• Kinross Gold (KGC): Q3 EPS of $0.00 misses by $0.12. Revenue of $582M (+16%) vs. $578M. Shares +0.4% AH. (PR)
• MannKind (MNKD): Q3 EPS of -$0.42 beats by $0.06, on no revenues. "While we continue to be fully engaged in the task of navigating our NDA through the FDA review process, we are continuing to run additional studies of AFRESA." Shares +4.5% AH. (PR)
• Republic Services (RSG): Q3 EPS of $0.32 misses by $0.04. Revenue of $2.07B (+149%) in-line. Sees full-year EPS of $1.46-1.48 vs. $1.46. Shares -0.2% AH. (PR)
• Principal Financial Group (PFG): Q3 EPS of $0.74 beats by $0.09. Revenue of $2.3B (-9%) vs. $2.5B. Shares +2.4% AH. (PR)
• St. Mary Land (SM): Q3 EPS of $0.23 beats by $0.03. Revenue of $186M (-43%) vs. $187M. (PR)

Today's Markets

China was the lone gainer on an otherwise dismal Tuesday in Asia. Europe shares are getting pummeled. Stock futures are under severe pressure. Treasurys and the dollar are up strongly.

• CIT makes it official. CIT Group (CIT) filed for bankruptcy protection Sunday with broad support from its debtholders, but taxpayers will lose the $2.3B invested in CIT, marking the first definitive loss in the government's rescue of the financial system. Nearly 90% of CIT's bondholders voted in favor of the prepackaged bankruptcy, which CIT says will enable it to reduce total debt by $10B, significantly reduce its liquidity needs over the next three years, enhance its capital ratios and accelerate its return to profitability. Bondholders will receive about $0.70 on the dollar, a number that could have fallen as low as $0.06 had CIT entered a freefall bankruptcy. With $71B in assets and $65B in liabilities, CIT's bankruptcy ranks among the largest in corporate history. (CIT's bankruptcy filing)
• Goldman wants Fannie's credits. Goldman Sachs (GS) is in talks to buy up to $1B in tax credits from Fannie Mae (FNM) for an undisclosed amount. But the government - which controls Fannie - is reluctant to approve a deal that would allow Goldman to reduce its tax bill "given the animus held by many lawmakers toward big Wall Street firms in general, and Goldman in particular." Fannie and its rival Freddie Mac (FRE) loaded up with billions of dollars in the credits - which were created to spur investment in low-income housing - during the boom years, but now have no use for them.
• Comcast/GE near deal. Sources say a deal giving Comcast (CMCSA) control of GE's (GE) NBC Universal could be announced as soon as next week after a tentative agreement was reportedly reached Friday. GE would contribute $12B in debt to the new entity, and retain 49% ownership, while Comcast would kick in "several billion dollars" and its stable of cable networks for its 51%. Talks with Vivendi, which owns 20% of NBCU, continue to center on how to arrive at a mutually acceptable valuation - and are currently the main roadblock to a deal.
• Denbury picks up Encore of $4.5B. Denbury Resources (DNR) agreed to acquire Encore Acquisition Co. (EAC) in a transaction worth $4.5B including the assumption of $1.25B in debt. Denbury will pay $50 for each share of EAC - $15 in cash and $35 in stock - a 35% premium to Friday's close. "All of our operations are in the Gulf Coast. It is good to expand to another area, to get a footprint in another location like the Rockies," Denbury CEO Phil Rykhoek said, noting the combo will have one of the largest reserves of crude among independents. Denbury plans to sell off some non-core oil and gas assets next year to pay down its debt. JPMorgan (JPM) will provide Denbury with a new $1.6B line of credit and another $1.25B in bridge financing.
• Lupus drug passes critical 2nd trial. Human Genome Sciences's (HGSI) experimental lupus drug Benlysta was successful in a second large clinical trial, paving the way for approval of the first new treatment for the disease in 50 years. While not as strong as the results from an initial study, the results released Monday should be enough to secure FDA's go-ahead. Hopes for Benlysta have been growing since initial results were released in July, surprising many experts who had been sceptical given the previously poor track record of new lupus treatments. HGSI +41% premarket.
• Pfizer eyes Protalix. Pfizer (PFE), is reportedly considering a JV with Israel's Protalix, and may even buy the company. Protalix developed the ProCellEx system for producing medical proteins through genetically engineering carrot cells; the method is up to 90% cheaper than other methods. Last month Protalix said its experimental drug to treat Gaucher's disease, Uplyso, was successful in a late-stage clinical trial. If approved, it would compete with Genzyme (GENZ) blockbuster Cerezyme.
• The cost of doing better. UAW rank-and-file dealt Ford (F) a fatal blow, overwhelmingly rejecting proposed contract concessions that would bring its costs in line with GM and Chrysler. "This was a tough sell from the beginning," a professor who specializes in labor issues said. "Ford was caught in between doing better and advertising that, and the UAW already giving Ford concessions." Sources say Ford will continue talks with the union to find ways to cut costs, but may look to move some production to lower-cost locations if it can't remain competitive in the U.S.
• Goldman secretly bet on the housing crash. In 2006 and 2007, Goldman Sachs (GS) sold more than $40B in mortgage-backed securities to pension funds, insurance companies, labor unions and foreign financial institutions, while failing to disclose it was betting heavily on a sharp drop in U.S. housing prices. While some say the omission may be a violation of securities laws, Goldman says it had no obligation to disclose its internal hedges.
• Kelly tells BofA 'no thanks.' Bank of New York Mellon (BK) CEO Robert Kelly was reportedly asked to become Bank of America's (BAC) next CEO, but said he's not interested in the position. While BofA's search committee hasn't ruled out hiring an insider - with Gregory Curl and Brian Moynihan the current favorites - the Kelly feelers reflect the board's growing interest in outside candidates.
• Nest egg keeps growing. U.S. companies are holding on to more cash than in any time during the last 40 years, according to a study by the WSJ. In Q2, the 500 largest nonfinancial companies held 9.8% of their assets ($994B) in cash and short-term investments, up from 7.9% ($846B) a year earlier. Firms are hoarding cash to ensure they can cover day-to-day costs after credit markets froze up last year, catching many off guard; their unwillingness to spend during the downturn is another factor increasing the bulge. In the short-term, large cash balances are a curse for the economy, but analysts say a strong cash position will enable companies to transition more quickly into growth mode when reinvestment begins.
• Full speed ahead in Asia. Asian factory activity grew again in October, with China hitting an 18-month high, suggesting the region is on an economically solid footing and will likely lead the global recovery. In comments released along with the official version of China's PMI, a government researcher said China's economy could grow 9.5% in Q4.

Earnings: Mon. Before Open

• Cooper Tire & Rubber (CTB): Q3 EPS of $0.77 beats by $0.11. Revenue of $794M (-1.1%) vs. $715M. (PR)
• Dean Foods (DF): Q3 EPS of $0.34 beats by $0.01. Revenue of $2.77B (-13.2%) vs. $2.94B. (PR)
• Ford (F): Q3 EPS of $0.26 beats by $0.38. Revenue of $30.9B (-2.5%) vs. $28.3B. U.S. market share +2.2% Y/Y. Expects full-year 2009 U.S. industry sales of 10.6M, consistent with previous guidance. Shares +4.3% premarket. (PR)
• Humana (HUM): Q3 EPS of $1.78 beats by $0.01. Revenue of $7.72B (+8%) in-line. (PR)
• Loews (L): Q3 EPS of $1.08 beats by $0.19. Revenue of $3.74B (+25.9%) vs. $3.35B. (PR)

Today's Markets

Asian markets were mostly lower Monday. Europe shares are trading higher at midday, and U.S. futures have moved higher overnight.

• Economy surges back to growth. Stocks logged their best one-day gain in three months on Thursday after the U.S. economy returned to growth in Q3. The government's first estimate of GDP showed the economy expanded at an annual rate of 3.5%, the first growth quarter in more than a year, and well ahead of Street estimates of 3%, sending Treasury prices and the dollar lower as traders exited safe havens. As recently as last week economists had called for a 3.3% gain, but they pared their estimates in the past couple days after week durable goods sales data came up short. "The economy has emerged with gusto from the deepest recession since WWII," one economist said. "The short-term prospects for the economy remain good."
• Private sector must lead the way - Geithner. The return to GDP growth is encouraging but the recovery is still fragile, Treasury Secretary Timothy Geithner said at a Q&A session Thursday evening following yesterday's Q3 GDP announcement. "The number today was really encouraging... it was broad and strong and it wasn't just cash-for-clunkers and it wasn't just economic stimulus... but it's important to remember that it's very early," he said. Geithner stressed that a robust recovery would have to be led by the private sector, saying the U.S. can't borrow-and-spend its way to health.
• Repsol strikes again. Repsol (REP), long derided as the oil company with no oil, will today announce a "fairly sizeable" discovery in the Gulf of Mexico's Shenzi field that it says will help reduce U.S. dependence on foreign oil. Today's discovery comes on top of big finds in Brazil and West Africa, and leaves Repsol with the unexpected challenge of developing a sudden surge in oil and gas resources. "We've had some success in exploration," CEO Antonio Brufau said.
• CIT, Goldman adjust $3B credit line. CIT Group (CIT) reached an agreement with Goldman Sachs (GS) to amend a $3B loan facility, ending their dispute over a $1B "make whole" payment CIT would have owed Goldman if it files for bankruptcy. Goldman will reduce the loan size to $2.13B, wiping out the unused portion of the facility, for which CIT will pay Goldman a $285M penalty, and post an additional $250M of collateral. The announcement, made in an 8-K filing, comes two days after CIT raised an additional $4.5B to bolster its restructuring.
• Rio Tinto doubles capex. A confident Rio Tinto (RTP) doubled its planned 2010 capital spend to at least $5B after it cut debt and saw signs of economic recovery. Rio had planned to cut capex to $2.5B - just enough to sustain current mines. "We will continue our program of cost reduction and debt repayments, but our renewed strength enables us to focus on disciplined capital expenditure on premier growth options," CEO Tom Albanese said. Rio, the world's #3 mining group, said it had cut its debt by 42% so far this year to $22.3B. (statement)
• EDF/Constellation deal at risk. State-owned nuclear power operator EDF is facing pressure from the French government to abandon its $4.5B deal to buy 49.9% of Constellation Energy Group's (CEG) nuclear assets and build four reactors with the U.S. company. "For us, the priority strategy for EDF is indeed in Europe, notably the U.K. and Italy, and everything outside Europe is less essential to EDF's expansion," an unnamed government official said.
• Credit crunch continues. Loan defaults by small and medium-sized U.S. businesses rose in September to 0.85% from 0.81% in August, according to risk management firm PayNet, but accounts in moderate (30 days plus) and severe (90 days plus) delinquency decreased to 4.22% (from 4.35%) and 1.4% (from 1.48%) respectively, the lowest since January. PayNet's Small Business Lending Index, which measures the volume of financing, is down 22% from a year ago, a sign lenders remain reluctant to extend credit to small and medium-sized businesses. "It's hard to imagine a robust recovery when you see numbers like this," PayNet founder Bill Phelan said.
• BoJ holds steady. The Bank of Japan left its key rate unchanged at 0.1%, but said it would discontinue its corporate bond and commercial paper purchase program at the end of December, as scheduled - "given that issuing conditions in the CP and corporate bond markets have been improving markedly, and thus the purpose of the purchases to restore market functioning has been achieved." Still, the BoJ stressed that this doesn't signal the beginning of its exit strategy, and extended its special lending facility to provide three-month funds at 0.1% until the end of March. Remarking on the decision to scrap its corporate funding support, Japan's PM Yukio Hatoyama remarked that it's hard to be as optimistic as the BoJ. (statement)
• House Energy and Commerce Committee OKs consumer agency. A second House panel voted Thursday to create a Consumer Financial Protection Agency to oversee mortgages, credit cards and other financial products, with a full House vote expected in November. The House bill falls short of the administration's original proposal, exempting auto dealers, credit, mortgage and title insurers and banks with less than $10B in assets, among others - exceptions some worry will weaken the agency's power.
• Sands gets OK for $2-3B IPO. Sources say Las Vegas Sands (LVS) has received approval from the Hong Kong stock exchange for a $2-3B IPO of its Macau unit. Sands will kick off pre-marketing next week, and launch its roadshow on Nov. 9, with a trading debut set for the end of November. Goldman Sachs (GS), Citigroup (C) and UBS (UBS) are coordinating. LVS rose 12% Thursday after posting a surprise Q3 profit; shares are up another 12% premarket.
• Junk bond rally becomes self-fulfilling. Demand for junk bonds hit record highs last week, with investors pouring another $207M into junk bond funds, pushing YTD inflows to a record $27.8B. Junk bond indexes are up more than 50% YTD, as investors become more comfortable with risk. The growing cash flow enables shaky companies to head off default - adding more fuel to the rally.
• AIG won't sell Japan units. AIG (AIG) says it will not sell its two Japanese insurers, AIG Edison Life Insurance and AIG Star Life Insurance, reversing its decision from a year ago at the height of the crisis. AIG said in a statement it now believes it would improve its corporate value to keep the two Japanese units, which have a very firm financial base and strong sales network.
• Energy IPO runs out of steam. Former Enron unit AEI, which operates power and gas distribution lines in Latin America, canceled its IPO Thursday hours after it slashed the size of the deal by two-thirds in the face of weak demand. The IPO, managed by Goldman Sachs (GS), Credit Suisse (CS), Citigroup (C) and JPMorgan (JPM), is the first U.S.-listed IPO this year to be withdrawn after an attempt to price the offering. AEI faulted market conditions for the withdrawal, but analysts say its debt load, risk exposure and expected payout to its private-equity owners also raised concerns.
• ChiNext soars on debut. China's Nasdaq-lookalike ChiNext stock market launched trading Friday with strong gains. An initial 28 companies listed, and shares gained 46-123% from their IPO prices, in line with expectations. The listees priced their IPOs at a hefty 56x 2008 earnings.

Earnings: Fri. Before Open

• Alcatel-Lucent (ALU): Q3 net loss of €182M vs. -€174.4M consensus. Sales of €3.69B (-9.3%) vs. €3.88B consensus. Says it has achieved 80% of its goal to reduce annual expenses by €750M. Shares -2.9% premarket. (PR)
• Ameren (AEE): Q3 EPS of $1.16 beats by $0.13. Revenue of $1.82B (-11.9%) vs. $2.1B. (PR)
• American Axle & Manufacturing (AXL): Q3 EPS of -$0.18 beats by $0.20. Revenue of $410M (-22.4%) vs. $420M. Shares -1.4% premarket. (PR)
• Aon (AOC): Q3 EPS of $0.65 misses by $0.01. Revenue of $1.81B (-2.1%) in-line. (PR)
• Apartment Investment and Management Company (AIV): Q3 FFO of -$0.35 in-line. Revenue of $319M (-7.3%) vs. $313M. (PR)
• Arch Coal (ACI): Q3 EPS of $0.16 beats by $0.12. Revenue of $615M (-20.1%) vs. $605M. Shares +3.9% premarket. (PR)
• Chevron (CVX): Q3 EPS of $1.72 beats by $0.25. Revenue of $46.63B (-40.9%) vs. $47.84B. "In our downstream operations, we continued to experience weak margins on the sale of gasoline and other refined products. Weak demand and plentiful supply affected all our major markets." Shares +0.7% premarket. (PR)
• CMS Energy (CMS): Q3 EPS of $0.32 misses by $0.02. (PR)
• Constellation Energy Group (CEG): Q3 EPS of $1.23 beats by $0.16. Revenue of $4.03B vs. $4.48B. Sees full-year EPS of $3.25-3.45 vs. consensus of $3.10. (PR)
• Coventry Health Care (CVH): Q3 EPS of $0.68 beats by $0.14. Revenue of $3.44B (+17.7%) in-line. Shares +2.4% premarket. (PR)
• Cummins (CMI): Q3 EPS of $0.56 beats by $0.19. Revenue of $2.53B (-31.5%) in-line. “While we saw improvement in some markets in the third quarter, we expect the economic climate to remain challenging until late 2010 - especially in the U.S. and Europe.” (PR)
• Dominion Resources (D): Q3 EPS of $0.99 beats by $0.09. Revenue of $3.65B (-16.4%) vs. $3.94B. Sees Q4 EPS of $0.55-0.65 vs. $0.67. (PR)
• Duke Energy (DUK): Q3 EPS of $0.40 beats by $0.02. Revenue of $3.4B (-3.2%) vs. $3.8B. "Industrial sales volumes continued to show signs of stabilization." (PR)
• Estee Lauder (EL): FQ1 EPS of $0.85 beats by $0.51. Revenue of $1.83B (-3.7%) in-line. Shares +4.5% premarket. (PR)
• ITT Industries (ITT): Q3 EPS of $1.03 beats by $0.13. Revenue of $2.7B (-6.3%) in-line. (PR)
• NYSE Euronext (NYX): Q3 EPS of $0.53 beats by $0.07. Revenue of $1.05B (-9.6%) in-line. Announces equity investment in its U.S. futures exchange by Citadel, GETCO, Goldman Sachs (GS), Morgan Stanley (MS) and UBS (UBS), with NYX to remain largest shareholder. (PR I, II)
• Penske Auto Group (PAG): Q3 EPS of $0.34 beats by $0.06. Revenue of $2.59B (-12.9%) in-line. Shares (PR)
• Progress Energy (PGN): Q3 EPS of $1.22 beats by $0.03. Revenue of $2.82B (+4.7%) in-line. (PR)
• Regency Centers (REG): Q3 FFO of $0.69 in-line. (PR)
• Simon Property Group (SPG): Q3 FFO of $1.38 beats by $0.06. Revenue of $925M (-1.1%) vs. $892M. Shares -0.4% premarket. (PR)
• Sony (SNE): FQ2 net loss of ¥26.3B ($287.5M) vs. consensus of -¥40.4B. Revenue of ¥1.66T (-20%). Sees full-year net loss of ¥95B, up from a previous forecast of -¥120B and -¥98.9B last year. Sees sales -5.6%, unchanged. (PR)
• Tim Hortons (THI): Q3 EPS of C$0.34 misses by C$0.12. Revenue of C$564M (+10.7%) vs. C$552M. (PR)
• Ultra Petroleum (UPL): Q3 EPS of $0.57 beats by $0.05. Revenue of $155M (-47.8%) vs. $239M. (PR)
• Weyerhaeuser (WY): Q3 EPS of -$0.26 beats by $0.19. Revenue of $1.41B (-33.2%) in-line. (PR)

Earnings: Thur. After Close

• AllianceBernstein (AB): Q3 EPS of $0.67 beats by $0.22. Revenue of $806M (-5%) vs. $737M. AUM down 16% Y/Y to $498B. Shares +3.8% AH. (PR)
• Bally Technologies (BYI): FQ1 EPS of $0.53 in-line. Revenue of $197M (-17%) vs. $206M. Shares +0.6% AH. (PR)
• BMC Software (BMC): FQ2 EPS of $0.66 beats by $0.08. Revenue of $462M (-1%) vs. $463M. Raises full-year EPS guidance to $2.55-2.65 vs. $2.51. Shares +1.8% AH. (PR)
• Callaway Golf Company (ELY): Q3 EPS of -$0.25 misses by $0.01. Revenue of $191M (-11%) in-line. Sees full-year EPS of -$0.30 to -$0.35, vs. -$0.21. (PR)
• Cliffs Natural Resources (CLF): Q3 EPS of $0.45 may not compare to estimate of -$0.07. Revenue of $666M (-44%) vs. $535M. Shares +4.5% AH. (PR)
• DTE Energy Company (DTE): Q3 EPS of $0.96 misses by $0.03. Revenue of $2B (-16%) vs. $2.1B. Sees full-year EPS of $2.75-3.05 vs. $3.19. Shares -7.7% AH. (PR)
• Eldorado Gold (EGO): Q3 EPS of $0.08 beats by $0.01. Revenue of $82M (-20.3%) vs. $85M. Shares +0.7% AH. (PR)
• Genworth Financial (GNW): Q3 net income available to common shareholders of $0.04 beats by $0.06. Revenue of $2.4B (+10%) vs. $2.5B. Shares +9.7% AH. (PR)
• Hertz Global Holdings (HTZ): Q3 EPS of $0.15 misses by $0.09. Revenue of $2B (-16%) in-line. Raises full-year EPS guidance to $0.21-0.23 from $0.12-0.15, vs. $0.20. Shares +2.9% AH. (PR)
• Human Genome Sciences (HGSI): Q3 EPS of -$0.32 misses by $0.01. Revenue of $19M (+61%) vs. $24M. Shares +0.9% AH. (PR)
• Ingram Micro (IM): Q3 EPS of $0.25 beats by $0.05. Revenue of $7.4B (-11%) vs. $6.7B. Shares +2.4% AH. (PR)
• KLA-Tencor (KLAC): FQ1 EPS of $0.15 beats by $0.13. Revenue of $343M (-36%) vs. $332M. Shares +0.8% AH. (PR)
• Las Vegas Sands (LVS): Q3 EPS of $0.03 beats by $0.04. Revenue of $1.1B (+3%) in-line. Shares +8.4% AH. (PR)
• Manitowoc (MTW): Q3 EPS of -$0.04 misses by $0.12. Revenue of $882M (-20%) vs. $934M. Shares -7.2% AH. (PR)
• Maxim Integrated Products (MXIM): FQ1 EPS of $0.13 beats by $0.01. Revenue of $449M (-12%) vs. $438M. Shares -4% AH. (PR)
• McAfee (MFE): Q3 EPS of $0.62 beats by $0.01. Revenue of $485M (+19%) vs. $487M. Shares -5.8% AH. (PR)
• MetLife (MET): Q3 EPS of $0.87 in-line. Revenue of $12.4B (-1%) vs. $12.3B. Shares -2.3% AH. (PR)
• Mohawk Industries (MHK): Q3 EPS of $0.64 beats by $0.08. Revenue of $1.4B (-22%) in-line. Sees Q4 EPS of $0.28-0.38 vs. $0.45. Shares -5.3% AH. (PR)
• PEPCO Holdings (POM): Q3 EPS of $0.44 beats by $0.01. Revenue of $2.5B (-17%) vs. $2.9B. (PR)
• PerkinElmer (PKI): Q3 EPS of $0.30 beats by $0.03. Revenue of $437M (-9%) vs. $430M. Sees full-year EPS of $1.23-1.26 vs. $1.22. (PR)
• RealNetworks (RNWK): Q3 EPS of $0.00 beats by $0.06. Revenue of $140M (-8%) vs. $141M. (PR)
• Regal Entertainment Group (RGC): Q3 EPS of $0.05 misses by $0.02. Revenue of $674M (-11%) vs. $702M. Shares +0.3% AH. (PR)
• SBA Communications (SBAC): Q3 EPS of -$0.43 misses by $0.17. Revenue of $139M (+17%) in-line. Sees 2010 sales of $512M-532M vs. $604M. Shares -1.3% AH. (PR)
• Southwestern Energy Company (SWN): Q3 EPS of $0.34 in-line. Revenue of $503M (-26%) vs. $387M. Shares +0.2% AH. (PR)
• Standard Pacific (SPF): Q3 EPS of -$0.01 beats by $0.06. Revenue of $327M (-18%) vs. $285M. Shares +3.4% AH. (PR)
• Varian Medical Systems (VAR): FQ4 EPS of $0.78 beats by $0.04. Revenue of $642M (+8%) vs. $593M. Sees Q4 EPS of $0.52-0.56 vs. $0.60, and full-year EPS of $2.65-2.75 vs. $2.61. Shares -2.3% AH. (PR)

Today's Markets

Overseas markets were mixed Friday, with strong gains in Japan and China, but some weakness in Europe early on. Futures have moved lower overnight.

• CIT snags $4.5B lifeline. A group of hedge funds including many of its bondholders offered to lend CIT Group (CIT) $4.5B to build creditor support for a controversial debt exchange, pitting them against activist investor Carl Icahn, who wants the swap voted down. The lifeline comes as CIT's lenders must decide by midnight tonight whether to support its proposed debt exchange, a pre-packaged bankruptcy plan, or neither. Sources say the funds bought up CIT debt last summer on a bet the government would bail out the troubled lender, and stand to lose from a freefall bankruptcy, which Icahn is pushing for.
• Mutual funds use Fed bucks to buy bonds. Mutual funds - including those run by T. Rowe Price (TROW) and BlackRock (BLK) - are using Fed financing to reap 15%-plus returns with limited risk. The Fed's TALF (Term Asset-Backed Securities Loan Facility) offers low-cost financing to buy AAA-rated bonds backed by consumer and business loans, as well as commercial mortgages. Investors can borrow up to 95% of the bonds' value by pledging the securities and some additional collateral, and have no obligation to repay the loan beyond the collateral - in essence shifting most of the potential losses to the government. In the words of one fund manager: "This is one of those opportunities that, as an investor, we have to take advantage of."
• IMF boosts Asia growth outlook. The IMF raised its 2009-2010 growth forecast for Asia's economy, but warned that a fragile recovery in advanced economies and lingering problems in the global financial system still pose risks. IMF now sees Asia growth of 2.8% and 5.8% this year and next, up from previous estimates of 1.2% and 4.3% - far higher than the 1.25% growth expected from G-7 economies, but well short of the region's 6.66% average. The report says the region is outpacing other parts of the world, with 'green shoots' of recovery appearing earlier and taking firmer root than elsewhere. (IMF Asia Outlook)
• U.S.-China trade talks open on sour note. China/U.S. trade talks opened on a discordant note Thursday as fresh frictions surfaced after China announced plans to investigate dumping allegations against Detroit's Big Three automakers. Punitive measures are unlikely to cause much harm since most of the vehicles they sell are made in China, but another row - on top of disputes over steel pipes, chicken, movies and music - could further stress their tenuous relationship ahead of Obama's Nov. 15 visit.
• Economists shave GDP estimates after weak orders. Durable goods orders rose 1% in September, short of the 1.5% gain economists expected, but a reverse of August's 2.4% drop. Following the weaker-than-expected gain, Goldman Sachs economist Ed McKelvey dropped his Q3 GDP growth estimate - due out this morning - to 2.7% from a previous 3%. "The headline gain in orders was in line with expectations but not as firm as we had thought," he said. Later, Morgan Stanley and Merrill Lynch followed suit, with Morgan shaving its outlook to 3.8% from 3.9%, and Merrill to 2.3% from 2.5%.
• AIG recoups CDS losses. AIG (AIG) is seeing billions of dollars in inflows from recovering credit-default swaps - the very securities that helped level the insurer. Q2 inflows may have topped $3B, including at least $1B from Goldman Sachs (GS). Credit-default swaps - a type of insurance policy on securities backed by assets such as mortgages - required AIG to put up huge amounts of collateral when the investments they backed fell in value. Many of the sour trades were closed out last year by the government, a move that saved AIG, but may have deprived it of billions of dollars.
• Homebuyer credit extension nears approval. Key senators voiced support for extending and expanding the soon-to-expire homebuyer tax credit, and a vote on the measure could come next week. The current plan would see the $8,000 first-time homebuyer tax credit, set to expire at the end of November, extended through April 2010, and would allow for people who have been in their home for at least five years to receive a $6,500 tax credit if they purchase a new primary residence. The income limit on the credit would also rise to $125,000 from $75,000.
• House panel approves credit rating rules. The House Financial Services Committee signed off (49-14) on legislation aimed at ratings agencies, including barring them from consulting for companies they're also rating, and requiring raters to have outsiders on their boards. The bill also enables investors to sue firms for failing to carry out their duties.
• Fed: To grow or to shrink? A draft bill of new financial-regulation legislation moving through Congress would give the Fed substantial new powers, including the authority to force large firms to shrink if their size threatens the broader economy. The view is likely to conflict with the Senate's, where financial regulation is moving at a much slower pace, and members of both parties remain wary of offering the Fed - seen by many as partially responsible for the collapse - any new authority.
• New home sales flatline. New home sales fell 3.6% in September to an annual rate of 402K, well short of economist consensus of 440K and last month's downward-revised 417K. Months' supply rose to 7.5 from 7.3 in August. Sales were down 7.8% year-over year, and, from the peak of the residential construction boom back in mid-2005, sales are down 71.1%. After adjusting for population growth since the pre-2009 all-time low in 1981, sales are now 15% below previous records. (Census Bureau's New Home Sales (.pdf))
• Norway tightens rates. Norway became the first European country to hike interest rates post-crisis, lifting its key rate by 25 bps to 1.5%. Governor Svein Gjedrem noted inflation is higher than expected, while unemployment was "considerably lower than previously projected," and indicated rates would rise gradually. On Oct. 6, Australia became the first G-20 nation to tighten. (Norges Bank statement)

Earnings: Thur. Before Open

• ABB Ltd. (ABB): Net income of $1.03B (+12%). Sales $7.9B (-10%). Orders $7.06B (-21%). "It remains unclear when and how quickly capital investments by customers will recover from the downturn. In addition, the volatility of raw material prices and the limited availability of project funding continue to influence the timing of many power and industrial investment decision." ABB preannounced on Oct. 19. Shares -2.1% premarket. (PR)
• Aetna (AET): Q3 EPS of $0.69 beats by $0.03. Revenue of $8.72B (+14.4%) in-line. Sees full-year EPS of $2.75 vs. $2.86 consensus. (PR)
• Allegheny Energy (AYE): Q3 EPS of $0.59 beats by $0.06. Revenue of $794M (-6.6%) vs. $952M. (PR)
• Allergan (AGN): Q3 EPS of $0.70 in-line. Revenue of $1.13B (+4.2%) vs. $1.08B. Shares +0.8% premarket. (PR)
• American Electric Power Company (AEP): Q3 EPS of $0.93 beats by $0.08. Revenue of $3.5B (-16.7%) vs. $3.97B. (PR)
• AstraZeneca (AZN): Q3 EPS of $1.46 beats by $0.06. Revenue of $8.2B (+5.5%) vs. $7.9B. Sees full-year core EPS of $6.20-6.40 vs. consensus of $5.99. Shares +0.7% premarket. (PR)
• AutoNation (AN): Q3 EPS of $0.36 beats by $0.01. Revenue of $2.92B (-13.2%) vs. $3.13B. "Cash for Clunkers was a highly effective stimulus program that provided a much needed lift in auto sales and has set the stage going forward for a gradual recovery of new vehicle sales." Says CARS boosted Q3 EPS by $0.07. Approves $250M buyback. (PR)
• Avon (AVP): Q3 EPS of $0.42 beats by $0.02. Revenue of $2.55B (-3.5%) in-line. (PR)
• Barrick Gold (ABX): Q3 EPS of $0.54 beats by $0.07. Revenue of $2.1B (+11.6%) in-line. Significantly reduced gold hedges, and will eliminate within 12 months. (PR)
• BioCryst Pharmaceuticals (BCRX): Q3 EPS of -$0.28 misses by $0.06. Revenue of $10.5M (+18%) vs. $4.6M. BioCryst recently received FDA approval to use its flu I.V. drug peramivir as an emergency treatment against H1N1. (PR)
• Brookfield Properties (BPO): Q3 FFO of $0.34 in-line. Revenue of $657M (-7.1%) vs. $580M. (PR)
• Burger King (BKC): FQ1 EPS of $0.34 misses by $0.03. Revenue of $637M (-5.4%) vs. $653M. Expects the unpredictable consumer environment will persist in fiscal 2010. (PR)
• Brunswick (BC): Q3 EPS of -$1.53 misses by $0.19. Revenue of $666M (-35.9%) vs. $701M. Shares -5.1% premarket. (PR)
• CME Group (CME): Q3 EPS of $3.35 beats by $0.06. Revenue of $650M (-17.4%) in-line. "As the economy continues to stabilize, there is room for further organic growth in our core business. At the same time, we are actively working to ensure that the benefits our business model brings to the financial system are communicated to the legislators and regulators who are charged with regulatory reform." (PR)
• CNOOC (CEO): Q3 revenue of 23.8B yuan ($3.47B, -23.1%) vs. estimate of 21.6B. Avg. selling price -36.6% to $67.83/barrel. Net daily production +18.4% to 647K. Capital expenditure +10.3% to 11.24B yuan. Shares -0.9% premarket. (Bloomberg, PR)
• Colgate-Palmolive (CL): Q3 EPS of $1.12 beats by $0.01. Revenue of $4B (+0.3%) in-line. (PR)
• Corinthian Colleges (COCO): FQ1 EPS of $0.37 beats by $0.09. Revenue of $388M (+34.2%) vs. $378M. Total student population +25% to 93.5K. Sees full-year EPS of $1.55-1.60 vs. $1.35. Shares +5% premarket. (PR)
• Cott (COT): Q3 EPS of $0.18 beats by $0.02. Revenue of $405M (-3.7%) in-line. To sell $200M in senior notes due in 2017, and use proceeds to fund a previously announced tender offer for notes due in 2011. (PR)
• Deutsche Bank (DB): Q3 net profit €1.4B from €414M a year ago. Pre-tax profit of €1.3B from €93M. Net writedowns of €300M. Risk provision of €544M, up from €236M a year ago, but down from €1B in Q2. Return on equity 15% vs. 1% last year. Says it reduced levels of trading risk, "even at the expense of short-term revenue gains." DB released preliminary results last week. Shares -2.6% premarket. (PR)
• Digital Realty Trust (DLR): Q3 FFO of $0.74 beats by $0.02. Revenue of $163M (+14.9%) in-line. Shares (PR)
• Eastman Kodak (EK): Q3 EPS of -$0.23 misses by $0.04. Revenue of $1.78B (-25.9%) vs. $1.89B. Sees revenue decline at high-end of previous 12-18% range. (PR)
• Expedia (EXPE): Q3 EPS of $0.48 beats by $0.05. Revenue of $852M (+2.3%) vs. $829M. "Travelers are clearly responding to our improving value proposition, as we broaden our fee cuts and increase the depth and breadth of our global supply." Shares +6.8% premarket. (PR)
• ExxonMobil (XOM): Q3 EPS of $0.98 misses by $0.05. Revenue of $82.3B (-40.3) vs. $85.2B. Shares -1.5% premarket. (PR)
• France Telecom (FTE): Q3 Ebitda of €4.56B (-8%), in line with consensus. Revenue of €12.69B (-6.4%) vs. €12.85B. Expects Q4 to be similar to Q3, and will thus continue to implement cost savings plans to prevent its Ebitda margin from declining further. Shares -0.5% in Paris. (PR, WSJ)
• GrafTech International (GTI): Q3 EPS of $0.15 beats by $0.09. Revenue of $165M (-47.8%) vs. $162M. (PR)
• Kellogg Company (K): Q3 EPS of $0.94 beats by $0.10. Revenue of $3.28B (-0.3%) in-line. "The current economic environment has placed significant pressure on our consumers." (PR)
• KBR Inc. (KBR): Q3 EPS of $0.45 beats by $0.04. Revenue of $2.84B (-5.9%) in-line. (PR)
• Mack-Cali Realty (CLI): Q3 FFO of $0.81 beats by $0.05. Revenue of $194M (-5.3%) vs. $175M. (PR)
• Monster Worldwide (MWW): Q3 EPS of $0.01 beats by $0.01. Revenue of $215M (-35.2%) vs. $223M. (PR)
• Moody's (MCO): Q3 EPS of $0.43 beats by $0.05. Revenue of $452M (+4.2%) vs. $417M. Declares quarterly dividend of $0.10. (PR I, II)
• Motorola (MOT): Q3 EPS of $0.01 beats by $0.01. Revenue of $5.45B vs. $5.54B. Appoints Edward Fitzpatrick as CFO. Sees Q4 continuing operations EPS of $0.07-0.09 vs. $0.06. Shares +4.3% premarket. (PR)
• MPS Group (MPS): Q3 EPS of $0.06 beats by $0.04. Revenue of $408B (-29.4%) vs. $403B. MPS is being acquired by Adecco. (PR)
• Mylan Laboratories (MYL): Q3 EPS of $0.32 beats by $0.05. Revenue of $1.26B (-23.7%) in-line. Sees 2010 EPS of $1.24-1.28 vs. $1.17. (PR)
• Newmont Mining (NEM): Q3 EPS of $0.79 beats by $0.24. Revenue of $2.05B (+49.5%) vs. $1.72B. (PR)
• Nintendo (NTDOY.PK): H1 net profit of ¥69.5B ($768M, -52%). Sales of ¥548B (-34.5%). Cuts H1 dividend by 37% to ¥270. Sold 5.75M Wii consoles (-43%) and 11.7M DS hand-held player sales (vs. 13.7M last year). Sees full-year net income of ¥230B vs. ¥270B consensus, full operating profit of ¥370B (-33%), sales of ¥1.5T (-18%), and Wii sales of 20M (vs. previous 26M). (PR I, II, III, Bloomberg)
• Noble Energy (NBL): Q3 EPS of $1.10 beats by $0.28. Revenue of $621M (-43.4%) vs. $657M. (PR)
• NRG Energy (NRG): Q3 EPS of $1.02 misses by $0.12. Revenue of $2.92B vs. $2.18B. (PR)
• Office Depot (ODP): Q3 EPS of -$0.08 beats by $0.02. Revenue of $3.03B (-17.2%) in-line. (PR)
• OfficeMax (OMX): Q3 EPS of $0.08 misses by $0.06. Revenue of $1.83B (-12.6%) in-line. Same-store sales -11.5%. Continues to anticipate macro employment trends will not turn positive until well into 2010. (PR)
• Patterson-UTI Energy (PTEN): Q3 EPS of -$0.12 beats by $0.04. Revenue of $176M (-71%) vs. $163M. (PR)
• PG&E (PCG): Q3 EPS of $0.93 beats by $0.02. Revenue of $3.23B (+12.3%) vs. $3.48B. (PR)
• PPL Corp. (PPL): Q3 EPS of $0.52 beats by $0.07. Revenue of $1.8B vs. $3B. (PR)
• Procter & Gamble (PG): FQ1 EPS of $1.06 beats by $0.07. Revenue of $19.8B (-6%) in-line. (PR)
• Shell (RDS.A): Adjusted net income of $2.62B vs. consensus of $2.5B. Revenue of $75B, down from $131.6B a year ago. "Q3 results were affected by the weak global economy. Upstream and downstream profitability has been sharply reduced compared to year-ago levels. We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery." Shares -3.5% in London. (PR)
• Smith International (SII): Q3 EPS of $0.07 misses by $0.08. Revenue of $1.88B (-34.1%) in-line. (PR)
• Sprint Nextel (S): Q3 EPS of -$0.17 misses by $0.02. Revenue of $8.04B (-8.8%) in-line. Net subscribers -135K. Post-paid churn 2.17% vs. 2.05% in Q2, due to seasonality and heightened competition. Pre-paid churn 6.65% vs. 6.38% in Q2. (PR)
• Taiwan Semi (TSM): Q3 EPS of $0.18 in-line. Revenue of $2.74B (-8.1%) in-line. Gross margin +1.5 points from Q2 to 47.7%. Sees Q4 revenue of NT$90-92B vs. consensus of NT$85.8B. (PR)
• Ventas (VTR): Q3 EPS of $0.66 beats by $0.03. Revenue of $236M (+0.3%) vs. $230M. (PR)
• Virgin Media (VMED): Q3 operating cash flow of £348M (+7%) vs. consensus of £337M. Ebitda of £348M. Revenue of £953M (+1.3%) vs. £942M. Net additions of 8,100 vs. 8,000. (PR)
• Williams Companies (WMB): Q3 EPS of $0.24 beats by $0.05. Shares +2.2% premarket. (PR)
• Xcel Energy (XEL): Q3 EPS of $0.48 misses by $0.02. Revenue of $2.31B (-18.8%) vs. $3.01B. (PR)

Earnings: Wed. After Close

• AFLAC (AFL): Q3 EPS of $1.25 beats by $0.05. Revenue of $4.5B (+23%) vs. $4.7B. Shares -0.2% AH. (PR)
• Agnico-Eagle Mines (AEM): Q3 EPS of -$0.11 vs. estimate of $0.20; results include foreign exchange loss and other items accounting for cost of $0.14/share. Revenue of $159M (+91%) vs. $183M. Shares -8.3% AH. (PR)
• Akamai Technologies (AKAM): Q3 EPS of $0.38 beats by $0.03. Revenue of $207M (+5%) vs. $199M. Shares +9.6% AH. (PR)
• Annaly Mortgage Management (NLY): Q3 EPS of $0.75 beats by $0.03. Net interest income of $436M (+24%). Shares +2.3% AH. (PR)
• AvalonBay Communities (AVB): Q3 FFO of $1.09 beats by $0.01. Revenue of $224M (+0.3%). Sees Q4 FFO of $0.61-0.64 vs. $0.97 and full-year FFO of $3.86-3.90 vs. $4.19. (PR)
• Brandywine Realty Trust (BDN): Q3 FFO of $0.44 beats by $0.08. Revenue of $147M (+2%) vs. $141M. Raises full-year FFO guidance to $1.82-1.85 from $1.75-1.80, vs. $1.78. Sees fiscal 2010 FFO of $1.23-1.34 vs. $1.38. Shares -1.9% AH. (PR)
• Cadence (CDNS): Q3 EPS of $0.03 beats by $0.04. Revenue of $216M (-7%) vs. $215M. Sees Q4 EPS of $0.02-0.04 vs. $0.01, and full-year EPS of -$0.08 to -$0.10 vs. -$0.14. (PR)
• Cerner (CERN): Q3 EPS of $0.61 in-line. Revenue of $409M (-3%) vs. $421M. Sees Q4 EPS of $0.68-0.74 vs. $0.74. Shares -1.9% AH. (PR)
• CB Richard Ellis Group (CBG): Q3 EPS of $0.08 misses by $0.02. Revenue of $1B (-23%) in-line. Shares -4% AH. (PR)
• Duke Realty (DRE): Q3 FFO of $0.32 beats by $0.01. Revenue of $224M (+4.1%) vs. $219M. (PR)
• Equity Residential (EQR): Q3 FFO of $0.53 beats by $0.01. Revenue of $493M (-4%) vs. $487M. Sees Q4 FFO of $0.49-0.53 vs. $0.49. (PR)
• Express Scripts (ESRX): Q3 EPS ex-items of $0.99 beats by $0.19. Revenue of $5.6B (+3%) vs. $5.5B. Sees full-year EPS of $3.76-3.82 vs. $3.49. Shares +0.8% AH. (PR)
• First Solar (FSLR): Q3 EPS of $1.79 beats by $0.05. Revenue of $481M (+38%) vs. $529M. Shares -15.9% AH. (PR)
• Genco Shipping & Trading (GNK): Q3 EPS of $1.09 beats by $0.08. Revenue of $93M (-14%) vs. $91M. Shares -2.9% AH. (PR)
• Helix Energy Solutions Group (HLX): Q3 EPS of $0.04 misses by $0.01. Revenue of $216M (-65%) vs. $249M. Shares -0.3% AH. (PR)
• LSI Logic (LSI): Q3 EPS of $0.18 beats by $0.14. Revenue of $578M (-19%) vs. $556M. Sees Q4 EPS of $0.07-0.13 vs. $0.06 and Q4 revenue of $605M-645M vs. $587M. Shares +7% AH. (PR)
• Lincoln National (LNC): Q3 EPS of $0.84 beats by $0.08. Revenue of $2.1B (-8%) vs. $2.4B. Shares +9.2% AH. (PR)
• O'Reilly Automotive (ORLY): Q3 EPS of $0.63 beats by $0.07. Revenue of $1.26B (+13%) vs. $1.23B. Comparable store sales up 5.3%; "Continued improvement in our gross margin results fueled by improved acquisition costs as the result of our increased purchasing power." Shares -0.2% AH. (PR)
• Owens-Illinois (OI): Q3 EPS of $0.74 misses by $0.19. Revenue of $1.9B (-7%) in-line. Shares -6% AH. (PR)
• Questar (STR): Q3 EPS of $0.60 beats by $0.09. Revenue of $600M (-21%) vs. $542M. Raises full-year EPS guidance to $2.45-2.55 from $2.35-2.45, vs. $2.57. (PR)
• Realty Income (O): Q3 FFO of $0.47 beats by $0.01. Revenue of $82M (flat) in-line. Sees full-year FFO of $1.86-1.92 vs. $1.83. Shares +2.3% AH. (PR)
• Ryland Group (RYL): Q3 EPS of -$1.20 misses by $0.31. Revenue of $328M (-40%) vs. $352M. Shares -0.5% AH. (PR)
• Symantec (SYMC): FQ2 EPS of $0.36 beats by $0.03. Revenue of $1.48B (-3%) vs. $1.43B. Shares +6.1% AH. (PR)
• Teck Resources (TCK): Q3 EPS of $0.59 beats by $0.09. Revenue of $2.1B in-line. Sees 2009 coal sales of 19.5-20.5M tons, slightly higher than previous guidance. Shares +4.1% AH. (PR)
• Teradyne (TER): Q3 EPS of $0.14 beats by $0.03. Revenue of $262M (-12%) vs. $256M. Sees Q4 EPS of $0.12-0.17 vs. $0.12 on Q4 revenue of $255M-270M vs. $252M. Shares +2.2% AH. (PR)
• Trinity Industries (TRN): Q3 EPS of $0.29 beats by $0.04. Revenue of $557M (-52%) vs. $564M. Sees Q4 EPS of $0.08-0.13 vs. $0.06. Shares -1.3% AH. (PR)
• XL Capital (XL): Q3 EPS of $0.89 beats by $0.26. Revenue of $1.5B (-15%) vs. $1.7B. Shares +5.2% AH. (PR)

Today's Markets

Asia markets moved sharply lower Thursday, but losses in Europe were mild and U.S. futures have moved higher overnight following Wednesday's losses.

• GMAC needs third lifeline. GMAC Financial Services and the Treasury are reportedly in advanced talks to prop up the auto-lender with its third helping of taxpayer money, making it the first of the stress-tested banks to need additional government capital. Treasury will likely inject another $2.8-5.6B into GMAC in exchange for preferred shares, bringing its total investment in GMAC thus far to $15.3-18.1B, for which it currently owns 35.4% of the firm. Sources say the FDIC has also agreed to backstop another $2.9B of GMAC's debt to facilitate day-to-day lending. The government's willingness to deepen taxpayer exposure to GMAC reflects the troubled lender's importance to the revival of the auto industry.
• Consumer confidence dips. A lower-than-expected consumer confidence reading sent a chill through markets Tuesday. Conference Board's index came in at 47.7, down from 53.4 a month ago, and lower than consensus estimates of 53.2. A plunge in expectations (65.7 vs. 73.3 in Sept.) led the way down. "Consumers' assessment of present-day conditions has grown less favorable, with labor market conditions playing a major role in this grimmer assessment," the group said, noting its Present Situation Index is now at a 26-year low. Analysts struggled to find an obvious explanation for the decline, but noted the drop didn't bode well for recovery hopes.
• Risk appetite withers. State Street's investor confidence index fell 10 points to 108.4, the lowest since April, with the most pronounced decline seen among North American investors (-12.8 to 101.1). European investors were also much more subdued (-9.3 to 101.8), but confidence rose among Asian investors, albeit to a level that still trails the U.S. and Europe (+2.4 to 95.3). "Institutional investors have paused to take stock," index co-developer Ken Froot said. "While the U.S. earnings season has been relatively robust so far, the number of positive surprises that have been observed in employment, retail sales, manufacturing and trade figures has diminished considerably, and this may be influencing investor risk appetite."
• Easing Hilton's towering debt load. Sources say Blackstone (BX) is in talks with lenders to shave about $5B off Hilton Worldwide's $20B debt load. Specifically, Blackstone is considering coughing up another $800M in equity to buy back debt at a discount (on top of its $5.6B original investment), and would like to extend debt maturing in 2013 to 2016. With capital markets reopening over the past six months, private-equity firms are using a variety of schemes (exchange offers, repurchases, tender offers) to refinance and extend the maturities on highly-leveraged debt taken on during the heyday, staving off default.
• Panel backs hedge-fund clampdown. The House Financial Services Committee overwhelmingly passed a bill that would require advisers to hedge funds, private equity and offshore funds to register with regulators, bringing some transparency to the loosely-policed industry. The bill, however, exempts venture capital funds and funds with less than $150M - which SEC chief Mary Schapiro warned "could come back to haunt investors in later years."
• Tackling too-big-to-fail. Rep. Barney Frank unveiled legislation to monitor and dissolve systemically critical financial institutions. Under the proposal, costs for taking over and euthanizing a failed bank would be paid for by shareholders and bondholders, with taxpayers temporarily covering the overflow until an assessment is rendered against the failed bank's surviving peers. A council of regulators - including the FDIC, Treasury, Fed and SEC - would be in charge of monitoring the conglomerates and invoking a wind-down if necessary.
• That's a good czar. While so-called pay czar Kenneth Feinberg's new rules for TARP backed firms cut compensation by about half, they also boosted base salaries by 14% to an average of $438K/year after executives complained, according to an analysis in today's WSJ. The move appears to contradict Feinberg's stated goal of tying pay to long-term performance, and "deepens the confusion and skepticism" surrounding the types of pay systems the government is promoting.
• Ford shows why it's #1. Consumer Reports' much-awaited yearly car reliability survey held few surprises, with foreign automakers dominating its top-10 list, and domestic brands prominently featured on its least-reliable tally. Scion took top spot, followed by Honda (HMC), Toyota (TM) and Infiniti (NSANY). Ford (F), at #10, was the only U.S. carmaker to make the grade. Least reliable brands were Chrysler, Cadillac, Dodge and Jeep. Media reports yesterday claimed Fiat models will drive Chrysler's turnaround efforts, but with new cars not due until 2012, it's unclear whether Chrysler has enough staying power in its balance sheet.
• Ruiz pegged as AMD insider. Sources say former AMD (AMD) CEO Hector Ruiz is the insider government officials have identified as providing nonpublic information to Galleon's insider trading scheme. Prosecutors released fragments of recorded conversations between an unnamed AMD executive and a Galleon employee in which they allegedly discuss the timing of the spinoff of AMD’s plants before the deal was announced in Sept. 2008. Ruiz hasn’t been charged, and prosecutors don’t say he profited from insider trading.
• Gloom on economy spreads. Americans are growing increasingly pessimistic about the economy after a mild upswing in September, according to WSJ/NBC's monthly poll released Wednesday. For the first time during the Obama presidency, a majority of those polled now see the country as being on the wrong track. Fifty-eight percent think the economic slide still has a ways to go, up from 52% in September, while only 29% think we've hit bottom, down from 35%.
• Mortgage apps drop for second straight week. Mortgage applications fell another 12.3% following a 13.7% drop last week, even as the average rate for 30-year mortgages inched down to 5.04% from 5.07% a week ago. Refinancing was 16.2% lower.
• Ford picks Geely. Ford (F) selected a group led by China's Geely as the preferred bidder for its Volvo unit, a senior Geely executive said. Geely and Ford will now enter into exclusive negotiations over Volvo.

Earnings: Wed. Before Open

• ArcelorMittal (MT): Q3 income of $1.59B vs. consensus of $1.78B. Sees Q4 income of $2-2.4B. "We have seen the first signs of recovery in Q3... We should continue to see further gradual improvement through 2010, although the operating environment remains challenging." Shares -0.8% premarket. (PR)
• Ashland (ASH): FQ4 EPS of $0.96 beats by $0.06. Revenue of $2.11B (-4.6%) in-line. "Demand appears to be showing some signs of growth in many end markets." (PR)
• BorgWarner (BWA): Q3 EPS of $0.15 beats by $0.05. Revenue of $1.03B (-22%) in-line. "We continue to be cautiously optimistic about Q4." (PR)
• ConocoPhillips (COP): Q3 EPS of $1.00 beats by $0.06. Shares -0.1% premarket. (PR)
• Enterprise Products Partners L.P. (EPD): Q3 EPS of $0.36 misses by $0.06. Revenue of $4.6B (-27%) vs. $4.73B. (PR)
• CenterPoint Energy (CNP): Q3 EPS of $0.31 misses by $0.01. Revenue of $1.58B (-37.3%) in-line. (PR)
• Coca-Cola Enterprises (CCE): Q3 EPS of $0.51 beats by $0.05. Revenue of $5.57B (-3%) vs. $5.71B. (PR)
• General Dynamics (GD): Q3 EPS of $1.48 beats by $0.08. Revenue of $7.72B (+8.1%) in-line. (PR)
• Goodyear Tire & Rubber (GT): Q3 EPS of $0.45 beats by $0.05. Revenue of $4.38B (-15.2%) in-line. Shares +1.8% premarket. (PR)
• Hess (HES): Q3 EPS of $1.05 vs. consensus of $0.55. Revenue of $7.27B vs. $7.75B. Shares +1.8% premarket. (PR)
• Jones Apparel Group (JNY): Q3 EPS of $0.46 beats by $0.19. Revenue of $856M (-11.3%) vs. $867M. "We are cautiously optimistic that the holiday season will generate better financial results across the industry." Shares -13.8% premarket. (PR)
• International Paper (IP): Q3 EPS of $0.37 beats by $0.13. Revenue of $5.92B (-13.1%) in-line. "At the end of Q3, we began to see some modest improvements in demand in some segments of our paper and packaging businesses." Shares +3.8% premarket. (PR)
• Lazard (LAZ): Q3 EPS of $0.41 beats by $0.04. Revenue of $431M (-1.3%) vs. $400M. Believes corporate defaults will remain at high levels, on a more global scale than during the last cycle, and therefore expects that its restructuring business will continue to be very active. (PR)
• Level 3 Communications (LVLT): Q3 EPS of -$0.10 in-line. Revenue of $916M (-14.4%) vs. $926M. Shares -4.4% premarket. (PR)
• MeadWestvaco (MWV): Q3 EPS of $0.50 beats by $0.23. Revenue of $1.63B (-10.2%) in-line. "Given continued global economic uncertainty, future results are difficult to predict." (PR)
• Newell Rubbermaid (NWL): Q3 EPS of $0.38 beats by $0.03. Revenue of $1.45B (-17.7%) in-line. (PR)
• New York Community Bancorp (NYB): Q3 EPS of $0.26 in-line. "Although certain economic data suggests that the recession has ended, the Metro New York region we serve continues to be under duress." (PR)
• Nexen (NXY): Q3 EPS of C$0.23 beats by C$0.08. Revenue of C$1.1B (-50.4%) vs. $924M. Shares -0.1% premarket. (PR)
• Nomura (NMR): Q2 net income of ¥27.7B ($303M) vs. consensus of ¥11.5B. Revenue of ¥355B vs. ¥258B last year. Resumes ¥4/share dividend. (Bloomberg)
• Owens Corning (OC): Q3 EPS of $0.61 beats by $0.22. Revenue of $1.35B (-17.2%) in-line. On track to surpass $160M in cost savings this year. Shares +1.5% premarket. (PR)
• Praxair (PX): Q3 EPS of $1.02 beats by $0.02. Revenue of $2.29B (-19.8%) in-line. "Business conditions stabilized globally during the quarter... The strongest pick-up was in Asia and South America, where government stimulus programs have increased domestic demand and industrial production." (PR)
• Qwest Communications International (Q): Q3 EPS of $0.09 beats by $0.02. Revenue of $3.05B (-9.6%) in-line. Shares +3.5% premarket. (PR)
• SAP AG (SAP): Q3 net income of €435M vs. consensus of €454M. Sales of €2.51B vs. €2.63B. "While we are seeing signs of stabilization in the general environment, the market remains difficult. Q3 software and software-related service revenues came in lower than we expected mainly because of a particularly challenging environment in the emerging markets and Japan." Shares -7.6% premarket. (PR)
• Southern Company (SO): Q3 EPS of $0.99 beats by $0.01. Revenue of $4.68B (-13.8%) vs. $5.5B. (PR)
• SPX Corp. (SPW): Q3 EPS of $ beats by $. Revenue of $1.17B (-20.8%) in line. Sees full-year EPS of $3.80-4.00 vs. $3.96 consensus. "The global economic environment remains difficult and continues to impact our performance. Although some macroeconomic trends appear to be pointing toward a recovery, we expect our recovery to lag the broader economy." (PR)
• United Microelectronics (UMC): Q3 EPS of $0.08 beats by $0.04. Revenue of $853M (+11.1%) vs. $809M. (PR)
• WellPoint (WLP): Q3 EPS of $1.78 beats by $0.40. Revenue of $15.21B (+784%) in-line. Medical enrollment fell 1.5M to 35.3M, primarily due to the recession and a rise in unemployment. Shares -14.3% premarket. (PR)
• Wyndham (WYN): Q3 EPS of $0.58 beats by $0.02. Revenue of $1.02B (-17.1%) in-line. Shares +1% premarket. (PR)

Earnings: Tue. After Close

• Ace (ACE): Q3 EPS of $2.07 beats by $0.10. Revenue of $3.39B (-6%) vs. $3.33B. Expects meaningfully stronger revenue growth in Q4. Shares +2.3% AH. (PR)
• Amkor Technology (AMKR): Q3 EPS of $0.12 misses by $0.07. Revenue of $616M (-14%) vs. $604M. Sees Q4 EPS of $0.17-0.23 vs. $0.16. Shares -1.5% AH. (PR)
• Apollo Group (APOL): FQ4 EPS of $1.06 beats by $0.02. Revenue of $1.08B (+30%) vs. $1.03B. Announces an informal SEC inquiry into revenue recognition practices. Shares -19.8% AH. (PR)
• Boston Properties (BXP): Q3 FFO of $1.13 beats by $0.03. Revenue of $359M (+6%) vs. $353M. Sees Q4 FFO of $1.04-1.06 vs. $1.09. (PR)
• Century Aluminum Company (CENX): Q3 EPS of $0.45. Revenue of $229M (-59%) vs. $225M. Results impacted by $55.6M net after-tax benefit related to contract replacement. Shares +3.8% AH. (PR)
• Cephalon (CEPH): Q3 EPS of $1.62 beats by $0.21. Revenue of $549M (+10%) vs. $559M. Sees full-year sales of $2.125B-2.175B vs. $2.22B. Shares +1.4% AH. (PR)
• Chicago Bridge & Iron (CBI): Q3 EPS of $0.42 beats by $0.03. Revenue of $1B (-38%) vs. $1.1B. Shares +5.4% AH. (PR)
• Dreamworks Animation (DWA): Q3 EPS of $0.23 beats by $0.07. Revenue of $135M (-10.6%) vs. $129M. Shares +0.4% AH. (PR)
• E*TRADE Financial (ETFC): Q3 EPS of -$0.05 beats by $0.01. At-risk delinquencies declined by 10% and provision for loan losses decreased by $57M to $347M. Shares +0.6% AH. (PR)
• Fiserv (FISV): Q3 EPS of $0.92 in-line. Revenue of $992M (-5%) vs. $1.05B. Shares -2.6% AH. (PR)
• Harris (HRS): FQ1 EPS of $0.83 beats by $0.06. Revenue of $1.2B (-3%) in-line. Shares +5.4% AH. (PR)
• Illumina (ILMN): Q3 EPS of $0.17 misses by $0.03. Revenue of $158M (+5%) vs. $167M. Shares -14.8% AH. (PR)
• Integrated Device Technology (IDTI): FQ2 EPS of $0.07 beats by $0.05. Revenue of $140M (-30%) vs. $131M. Shares +4.2% AH. (PR)
• Massey Energy Company (MEE): Q3 EPS of $0.19 beats by $0.01. Revenue of $642M (-16%) vs. $677M. Shares -7.4% AH. (PR)
• McKesson (MCK): FQ2 EPS of $1.11 beats by $0.09. Revenue of $27.1B (+1.9%) vs. $26.75B. Sees full-year EPS of $4.45-4.60 vs. consensus of $4.29. Shares +1.9% AH. (PR)
• Molex (MOLX): FQ1 EPS of $0.18 beats by $0.03. Revenue of $674M (-20%) vs. $661M. Sees Q2 EPS of $0.11-0.15 vs. $0.19, including pretax restructuring charge of about $0.07 after tax. Shares -1% AH. (PR)
• Nalco Company (NLC): Q3 EPS of $0.20 misses by $0.05. Revenue of $957M (-14%) vs. $961M. (PR)
• Norfolk Southern (NSC): Q3 EPS of $0.81 beats by $0.03. Revenue of $2.1B (-29%) in-line. Shares +1.8% AH. (PR)
• Panera Bread Company (PNRA): Q3 EPS of $0.61 beats by $0.03. Revenue of $335M (+6%) vs. $334M. Same-store sales increased 3.3%. Sees Q4 EPS of $0.85-0.87 vs. $0.85, and full-year EPS of $3.05-3.15 vs. $3.04. Shares +5.2% AH. (PR)
• Pharmaceutical Product Development (PPDI): Q3 EPS of $0.32 in-line. Revenue of $341M (-13%) vs. $334M. Sees full-year EPS of $1.38-1.40 vs. $1.34, on revenue of $1.29B-1.32B vs. $1.34B. Shares +0.2% AH. (PR)
• RF Micro Devices (RFMD): FQ2 EPS of $0.13 beats by $0.04. Revenue of $255M (-6%) vs. $234M. Shares +7.1% AH. (PR)
• ValueClick (VCLK): Q3 EPS of $0.15 beats by $0.01. Revenue of $130M (-12.1%) vs. $129M. Sees Q4 EPS of $0.15-0.16 vs. consensus of $0.17 on revenue of $128-138M vs. $142M. Shares +1.8% AH. (PR)
• Visa (V): FQ4 EPS of $0.74 beats by $0.02. Revenue of $1.9B (+10%) vs. $1.8B. Sees 2010 revenue growth at lower end of 11-15% range. Sees 2011 growth of more than 20%. Shares +1.9% AH. (PR)

Today's Markets

Overseas markets moved lower Wednesday and futures are under pressure.

• Goldman defends dark pools, status quo. In a letter to the SEC (.pdf), Goldman Sachs (GS) dispelled five common myths about so-called 'dark pool' anonymous trading exchanges, saying the venues benefit both institutional and retail traders by reducing transaction costs and increasing competition. The rest of the 56-page document - which summarizes a Sept. 24 SEC/Goldman gettogether - sheds light on industry practices of short selling, high-frequency trading, flash trading and naked access, which have come under varying levels of criticism in recent months.
• India begins exit. With inflation pressures building, the Reserve Bank of India took the first step toward withdrawing its record fiscal stimulus by ordering lenders to keep more cash in government bonds. "It may be appropriate to sequence the 'exit' in a calibrated way," governor Duvvuri Subbarao said today after boosting the liquidity ratio to 25% from 24%. BofI kept its benchmark rates unchanged, and maintained its 6% GDP growth forecast. "We will start to see G-20 economies exiting now, starting with the emerging ones and then the advanced countries," economist Mridul Saggar said. India's BSE Sensex was down 2.3% amid a broad Asia pullback. (ETF: INP)
• New IRS group targets ultra-rich. A new IRS unit will target the ultra-wealthy by helping decode partnerships, offshore trusts and other complex techniques used to hide earnings. Speaking to an accountants' trade group Monday, IRS commissioner Doug Shulman said the new Global High Wealth Industry group will begin its first audits next month, honing in on individuals with assets or income in the tens of millions - for whom, he said, you cannot assess compliance "by looking only at their 1040s."
• Gross sees weaker U.S., pressure on Treasurys. Influential bond manager Bill Gross warned Monday that an end to the Fed's debt buyback schemes could add selling pressure to several credit markets, including U.S. Treasurys. Gross also said he believes emerging economies will grow faster than the U.S.: "The emerging world, whether it's in Asia, Australia or other associated countries, will do much better from the standpoint of growth, and that's where money should eventually move to. It moves there because of higher profits and it moves there actually because of higher real interest rates."
• China predicts more growth ahead. China reported a 190% jump in overseas investment (to $20.5B in Q3), and forecast industrial production would rise 16% in Q4 after a 13.9% gain in Q3. Analysts say Beijing may be encouraging Chinese companies to invest abroad to ease upward pressure on the yen. Last week, China reported an 8.9% gain in Q3 GDP, leading to speculation about an imminent exit from its super-loose monetary stance. This morning, Morgan Stanley's Stephen Roach said investors are wrong to bet on China reining things in: "The Chinese really are fixated on one thing and one thing alone which is social stability - they don’t want to take a risk of another negative growth surprise." (ETFs: FXI, PGJ)
• Japan's Fujii criticizes BOJ. Japan's finance minister lashed out at its central bank Tuesday, calling its view of the economy too rosy and narrowly informed. "The BOJ has repeatedly said the economy is getting better, but they are dealing with different people," Hirohisa Fujii said at a meeting. The BOJ has a developed a reputation of allowing its jawboning to push it to act in a contrary way just to demonstrate its independence. (ETF: EWJ)
• UBS hires McCann to rebuild Americas unit. UBS (UBS) named Robert McCann - former chief of Merrill Lynch's brokerage unit - to head its Americas wealth management businesses. UBS has been hurt by a tax dispute with the U.S. government, not to mention bad bets on auction-rate securities, writedowns, and capital outflows. McCann dispelled rumors the unit may be up for sale: "I had to go to court against two of my former employers to be able to work with UBS. I would have not done that if the whole goal was to sell the company." Analysts say the unit remains 'strategically challenged,' and are skeptical a new helmsman can combat the negative implications of UBS's loss of its status as banker to the ultra-secretive.
• Utex leads bidders for GE Security. Sources say United Technologies (UTX) has emerged as the frontrunner for GE's (GE) fire alarm and surveillance systems unit, which it put on the block earlier this year. A deal would bolster United's strategy of locking in revenue streams by offering multi-year service contracts for equipment and systems in commercial buildings. GE is thought to want about $2B for the unit.
• EU approves Pepsi bottlers merger. PepsiCo (PEP) received the European Commission's blessings for its $7.8B deal to buy Pepsi Bottling Group (PBG) Tuesday, despite some overlap in their businesses. "The proposed transaction would not significantly change the market structure. Consequently, the Commission concluded that the transaction would not raise competition concerns," it said.
• Europe lending dries up. Euro zone private-sector loans fell 0.3% from a year ago, the first contraction on record, but economists said a slight rise in month-over-month lending was a sign credit in the area was slowly beginning to flow again. "The year-on-year fall is going to catch everyone's imaginations, but that's a lagging indicator of what's been going on," Fortis's Nick Kounis said. Loans to households rose by €14B from August, the fifth sequential increase.
• Data point to bumpy recovery. Regional reports Monday suggested the economy is approaching levels associated with the end of recession, but isn't exactly surging to new highs. Chicago Fed's national activity index (.pdf) fell to -0.81 from -0.65 in August, with production/income making the only positive contribution. Still, the index's three-month moving average makes quite a strong case for a V-shaped recovery. Dallas Fed said Texas-area factory activity declined, and its production index moved into negative ground after leveling the month before. The Chicago Fed's manufacturing index (.pdf) rose 1% to 82.3, but remains 15.7% lower than a year ago.

Earnings: Tue. Before Open

• ACGO Corp. (AGCO): Q3 EPS of $0.13 beats by $0.09. Revenue of $1.4B (-32.7%) in-line. (PR)
• AK Steel (AKS): Q3 EPS of $0.06 beats by $0.05. Revenue of $1.04B (-51.7%) in-line. Shares +1.1% premarket. (PR)
• Avery Dennison (AVY): Q3 EPS of $0.82 beats by $0.25. Revenue of $1.55B (-10.2%) vs. $1.47B. "While the rate of volume decline in the third quarter improved compared with the first half of the year, this was largely due to a slowdown in inventory reductions. Our end-markets remain soft, and we continue to be cautious about the pace of their recovery." (PR)
• BE Aerospace (BEAV): Q3 EPS of $0.36 beats by $0.04. Revenue of $460M (-21.8%) in-line. Expects a substantial increase in earnings and revenue in 2011. (PR)
• Boyd Gaming (BYD): Q3 EPS of $0.09 misses by $0.01. Revenue of $398M (-6.6%) vs. $411M. "While visitation levels remained fairly constant, spend per visitor continues to be down significantly year-over-year, as consumers are still being cautious with their spending." (PR)
• BP (BP): Q3 earnings of $4.67B (-47%) vs. consensus of $3.25B. Sees 2009 costs down by $4B vs. a previous $3B. Total production +6.9%. Shares +5% premarket. (PR)
• Canadian Pacific Railway (CP): Q3 EPS of $0.85 beats by $0.07. Revenue of $1.09B (-14%) in-line. (PR)
• Celanese (CE): Q3 EPS of $0.58 beats by $0.15. Revenue of $1.3B (-28.5%) in-line. (PR)
• CommScope (CTV): Q3 EPS of $0.61 beats by $0.05. Revenue of $750M (-29.4%) vs. $784M. (PR)
• Convergys (CVG): Q3 EPS of $0.27 beats by $0.04. Revenue of $765M (+13.2%) vs. $653M. (PR)
• Corn Products International (CPO): Q3 EPS of $0.70 beats by $0.07. Revenue of $971M (-10.5%) vs. $983M. (PR)
• EarthLink (ELNK): Q3 EPS of $0.28 beats by $0.03. Revenue of $174M (-24.4%) in-line. Net subscriber losses of 146K, down from 149K in Q2 and 275K a year ago. Shares +3.8% premarket. (PR)
• Del Monte (FDP): Q3 EPS of $0.61 beats by $0.24. Revenue of $766M vs. $819M. (PR)
• FirstEnergy (FE): Q3 EPS of $1.11 beats by $0.06. Revenue of $3.4B (-12.8%) vs. $2.96B. (PR)
• FPL Group (FPL): Q3 EPS of $1.38 misses by $0.03. Revenue of $4.47B vs. $4.96B. Shares -3.1% premarket. (PR)
• Honda (HMC): FQ2 profit of ¥54B (-56%) beats consensus by ¥11B. U.S. vehicle sales -25% to 300K. Sees full-year net income of ¥155B, almost triple its previous forecast, and global sales of 3.4M, up 3.2%. (Bloomberg)
• Hospira (HSP): Q3 EPS of $0.90 beats by $0.21. Revenue of $1.01B (+8.9%) vs. $0.94B. Shares +3.7% premarket. (PR)
• IAC/InterActiveCorp (IACI): Q3 EPS of $0.34 beats by $0.21. Revenue of $337M (-8.9%) in-line. Shares +1.3% premarket. (PR)
• Iconix Brand Group (ICON): Q3 EPS of $0.31 beats by $0.03. Revenue of $59.4M (+7.7%) vs. $53.9M. Shares -1.3% premarket. (PR)
• Johnson Controls (JCI): FQ4 EPS of $0.52 beats by $0.01. Revenue of $7.87B (-15.5%) in-line. (PR)
• L-3 Communications (LLL): Q3 EPS of $2.12 beats by $0.27. Revenue of $3.84B (+4.9%) in-line. (PR)
• Life Technologies (LIFE): Q3 EPS of $0.73 beats by $0.11. Revenue of $805M (+2.7%) vs. $791M. Shares +4.1% premarket. (PR)
• Sonic Automotive (SAH): Q3 EPS of $0.21 misses by $0.03. Revenue of $1.52B (-5.9%) in-line. (PR)
• TD Ameritrade (AMTD): Q3 EPS of $0.26 beats by $0.04. Revenue of $658M (+1.3%) vs. $630M. Avg. client trades +35% to 411K/day. Used 70% of net income to buy back shares at average of $11.94/share. Shares +1.4% premarket. (PR)
• Textron (TXT): Q3 EPS of $0.12 vs. consensus of -$0.03. Revenue of $2.55B (-26.6%) in-line. Sees full-year EPS of $0.33-0.63 vs. consensus of -$0.06. (PR)
• Under Armour (UA): Q3 EPS of $0.52 beats by $0.08. Revenue of $270M (+16.2%) vs. $250M. Shares +1.6% premarket. (PR)
• United States Steel (X): Q3 EPS of -$2.11 beats by $0.76. Revenue of $2.82B (-61.5%) vs. $2.72B. Shipment volumes and operating rates increased significantly from the very low levels of Q2. Remains cautious in its outlook for end-user demand, as customer order rates have decreased from Q3. Shares +4.4% premarket. (PR)
• Valero (VLO): Q3 EPS of -$0.39 misses by $0.06. Revenue of $19.5B (-45.8%) vs. $18.8B. Refining margins continued to suffer from a combination of weak demand for refined products and high inventories. Shares +0.6% premarket. (PR)
• Wynn Resorts (WYNN): Q3 EPS of $0.33 beats by $0.18. Revenue of $773M vs. $743M. Shares +1.9% premarket. (PR)

Earnings: Mon. After Close

• Arris Group (ARRS): Q3 EPS of $0.25 beats by $0.01. Revenue of $276M (-7%) vs. $274M. Shares +0.7% AH. (PR)
• Baidu.com (BIDU): Q3 EPS of $2.16 beats by $0.35. Revenue of $187M (+39%) vs. $188M. Sees Q4 revenue of $174M-180M vs. $203M. Shares -13.1% AH. (PR)
• Cabot Oil & Gas (COG): Q3 EPS of $0.41 beats by $0.05. Revenue of $207M (-15%) vs. $205M. (PR)
• DryShips (DRYS): Q3 adjusted EPS of $0.27 beats by $0.07. Revenue of $228M (-30%) vs. $210M. Shares -0.3% AH. (PR)
• Flextronics International (FLEX): FQ2 EPS of $0.13 beats by $0.04. Revenue of $5.8B (+1%) in-line. Sees Q3 EPS of $0.14-0.16 vs. $0.13. Shares +2.7% AH. (PR)
• Health Management Associates (HMA): Q3 EPS of $0.10 beats by $0.01. Revenue of $1.1B (+6%) in-line. Shares -1.1% AH. (PR)
• Masco (MAS): Q3 EPS of $0.08 misses by $0.01. Revenue of $2.1B (-17%) vs. $2B. Sees full-year adjusted EPS of $0.12-0.22 vs. $0.07. Shares -0.1% AH. (PR)
• Plum Creek Timber (PCL): Q3 EPS of $0.12 beats by $0.04. Revenue of $294M (-29%) vs. $274M. Sees Q4 EPS of $0.12-0.17 vs. $0.12, and full-year EPS of $1.39-1.44 vs. $1.35. Shares +0.6% AH. (PR)
• SL Green Realty (SLG): Q3 EPS of $0.98 in-line. Revenue of $250M (-7%) vs. $224M. (PR)
• Vertex Pharmaceuticals (VRTX): Q3 EPS of -$0.71 beats by $0.10. Revenue of $25M (-21%) vs. $30M. (PR)
• VF Corp. (VFC): Q3 EPS of $1.94 misses by $0.01. Revenue of $2B (-5%) in-line. Shares -7% AH. (PR)

Today's Markets

Asia's markets dropped strongly on Tuesday, but Europe is above breakeven at midday, and futures are flat after a U.S. pullback Monday.

• ING drops on spin-off, rights issue. Dutch financial services company ING Group (ING) said Monday it will raise up to €7.5B ($11.3B) in a share issue, and split up its insurance and banking businesses, after reaching a deal to repay the government half of its €10B bailout loan ahead of schedule. ING has until the end of January to repurchase government-owned shares, and will launch the share issue on Nov. 25. "We appreciate the ongoing support of the Dutch state," CEO Jan Hommen said, "but fully recognize that it is in the best interest of all parties that we get back on our own feet as quickly as possible." Shares -8.1% premarket.
• Peltz takes a foothold in Legg Mason. Legg Mason (LM) will name activist investor Nelson Peltz to its board after he quietly accumulated a 4.3% stake; in exchange for the board seat, Peltz's Trian will agree to accumulate no more than 9.9% of the company over the next two years, and will vote its share in favor of the company's slate of nominees during that period. "We welcome Nelson," Legg CEO Mark Fetting said in a statement. "We look forward to benefiting from his insights and experience as we work together to build greater value for our clients and our shareholders." Peltz prefers to think of himself as a 'constructivist investor,' though he is known to pepper management with 'idea' phone calls and emails at late hours and on weekends.
• BofA's TARP exit hits snag. Sources say Bank of America's (BAC) plans to repay its TARP loans have fallen into question due to a dispute over how much more capital it needs to raise in order to exit government oversight. Having raised $40B in new equity since May, BofA thinks it's ready to return the government's $45B investment. But some officials say it should be required to raise more than the $40B determined by government stress tests, to give it the ability to deal with any potential economic relapses. Until it exits government assistance, BofA remains bound by pay czar Kenneth Feinberg's compensation limitations, which bank executives fear will hamper its abilities to recruit talent.
• NABE survey offers cheery outlook. U.S. companies expect to hire and invest more over the next six months, according to a survey released this morning by the National Association for Business Economics, and for the first time in a year more businesses reported a rise in capital spending over the previous quarter than a decline. All 78 panelists said business decisions are being made with expectations of positive GDP growth in 2010; of those, 73% see real GDP expanding 1-3%. The survey "provides new evidence that the U.S. recovery is underway," Chicago Fed's William Strauss said. "Improving credit conditions might be part of the explanation, with respondents indicating that credit remains tight but less so than earlier in the year."
• Capmark goes under. Not unexpectedly, troubled commercial real estate lender Capmark filed for bankruptcy protection on Sunday, wiping out the private-equity investments of KKR, Goldman Sachs (GS) and Five Mile Capital, which bought 75.4% of Capmark for $1.5B in cash and more than $7B in debt in 2006; GMAC owns the remainder. Capmark is negotiating the terms of the bankruptcy with its creditors, including Citigroup (C) and JPMorgan (JPM), but they have not yet reached an agreement over a prepackaged bankruptcy. U.S. banks hold more than $1T worth of mortgages backed by commercial property, on which analysts predict they could suffer losses in the neighborhood of $150B. Bad commercial property debts have played a pivotal role in the demise of many of the 106 banks that have failed so far this year.
• FDA OKs BioCryst's swine flu drug. The FDA approved emergency use of BioCryst Pharmaceuticals' (BCRX) experimental intravenous antiviral drug peramivir to treat severe cases of H1N1. "Based upon the totality of scientific evidence available, it is reasonable to believe that peramivir IV may be effective in certain patients," it said in a letter. The authorization is only for hospitalized patients who are not responding to either oral or inhaled antiviral treatments, or for whom nonintravenous drug delivery is not feasible.
• China: undertones of an exit. China's economic growth is likely to speed up this quarter, but the government will stay the course with its loose fiscal policy, senior officials said today. Still, analysts say the "unmistakable shift" in official statements signal Beijing is starting to think about how to unwind its pro-growth policies. China set itself a goal of 8% GDP growth this year, which officials say it's on track to fulfill.
• Lloyds eyes outsourcer CPA Global. Lloyds' (LYG) private-equity arm LDC is reportedly in talks to acquire legal outsourcing company CPA Global for £400M ($652M). Lloyds is stepping up its buyout activity, aiming to become a dominant player in Britain's dwindling private-equity deal market.
• Blackstone hopes for magic from Merlin. Looking to take advantage of buoyant equity markets, Blackstone (BX) is reportedly preparing to float its theme park operator Merlin Entertainments next year. Citigroup (C), Goldman Sachs (GS), Deutsche Bank (DB), UBS (UBS) and Nomura (NMR) are advising on what could be a $3.3B IPO. Merlin - which owns the London Eye, Madame Tussauds and the Sea Life centers - is the world's number-two park operator, after Disney (DIS).
• Madoff crony found dead. Jeffrey Picower, alleged to have extracted $7.2B from Madoff's Ponzi scheme, was found dead at the bottom of his Palm Beach pool Sunday. Madoff trustee Irving Picard alleges Picower and a group of longtime Madoff investors knew or should have known of the fraud, because they requested and received oversized returns of up to 950% on their investments.

Earnings: Mon. Before Open

• Alberto-Culver (ACV): FQ4 EPS of $0.33 beats by $0.01. Revenue of $358M (-7.2%) vs. $387M. (PR)
• Corning (GLW): Q3 EPS of $0.42 beats by $0.03. Revenue of $1.48B (-4.9%) vs. $1.42B. (PR)
• Lorillard (LO): Q3 EPS of $1.44 misses by $0.08. Revenue of $1.42B (+26.1%) vs. $1.32B. (PR)
• McGraw-Hill Companies (MHP): Q3 EPS of $1.07 beats by $0.02. Revenue of $1.88B (-8.4%) vs. $1.94B. Avg. daily volume for major exchange-traded derivatives fell 23.2% from a year ago. (PR)
• National-Oilwell Varco (NOV): Q3 EPS of $0.95 beats by $0.16. Revenue of $3.09B (-14.5%) vs. $2.9B. "While difficult credit market conditions have led to order rates below our expectations so far this year, we continue to pursue new rig opportunities aggressively, and seek and execute strategic internal growth and acquisition opportunities." (PR)
• RadioShack (RSH): Q3 EPS of $0.30 misses by $0.01. Revenue of $990M (-3.1%) vs. $961M. (PR)
• Tellabs (TLAB): Q3 EPS of $0.07 beats by $0.01. Revenue of $389M (-8.3%) vs. $394M. Shares +2.1% premarket. (PR)
• Verizon (VZ): Q3 EPS of $0.60 beats by $0.01. Revenue of $27.27B (+10.2%) in-line. Shares +2.4% premarket. (PR)
• Weingarten Realty Investors (WRI): Q3 FFO of $0.50 misses by $0.04. Revenue of $145M (-6.2%) vs. $143M. Sees full-year FFO of $2.08-2.16 vs. $2.26 consensus. Overall occupancy increased to 91.1% from 90.9% in Q2. "Conditions across most of the existing portfolio appear to be stabilizing as retailers are learning to adapt to current market conditions by managing inventories." (PR)

Today's Markets

Overseas markets were mostly higher Monday.

• Feinberg unveils pay cuts. So-called pay czar Kenneth Feinberg outlined much-awaited compensation rules for seven TARP recipient firms; top executives at firms such as Citigroup (C), AIG (AIG) and Bank of America (BAC) will have a pay cap of $500K - for many a 90%-plus reduction. Also, rather than cash, the rules require that the majority of salaries be paid in stock held for the long-term. The rules are only valid for two months - November and December - but will also form the basis for next year's reviews. Feinberg said the rulings are significant, and hopes his standards, which seek to strike a balance between compensation and risk-taking, will be "voluntarily picked up in the marketplace." In a brief statement, Treasury Secretary Tim Geithner said he hopes the new framework will encourage these companies to "return taxpayer dollars as soon as possible."
• Fed proposes compensation checks. While Feinberg was busy administering to TARP recipient firms, the Fed proposed a framework to crack down on pay packages that encourage bankers to take excessive risks by subjecting executives, traders and dealmakers' compensation to regulatory scrutiny. Instead of pay limits, the Fed's plan is to monitor pay practices at the nation's 28 biggest institutions, making sure compensation structures reward executives for long-term performance and discourage excessive risk-taking. Skeptics worry firms will continue to outsmart regulators in finding inventive ways to circumvent restrictions. (read the Fed's press release, proposal (.pdf), and Q&A (.pdf))
• Britain mired in recession. U.K. GDP dropped a surprising 0.4% in Q3, according to the Office for National Statistics, the sixth straight quarter of contraction. Economists had expected the British economy to move back to timid growth of 0.2%. Six quarters is the longest string of declines on record, while the 5.9% peak-to-trough drop in output is just short of the 6% contraction recorded in the recession of the early 1980s. The pound (ETF: FXB) fell like a stone following the report (-1% at 5:00 a.m.), retreating from a six-week high. (read ONS's preliminary GDP estimate (.pdf))
• CIT, Goldman near deal. After a week of tense negotiations, sources say CIT Group (CIT) and Goldman Sachs (GS) have reached an agreement over a $1B "make whole" payment CIT would owe Goldman if it files for bankruptcy, connected to a $3B credit facility Goldman extended it last year. The deal calls for Goldman to reduce the facility to just over $2B, and for CIT to pay Goldman $300M if it files for bankruptcy. An agreement opens the door for CIT to strike a deal with its bondholders, who were waiting on the outcome of the Goldman talks; it could also reduce CIT's need for financing from $6B to $4B.
• Nokia wants Apple to pay its dues. Nokia (NOK) filed a patent suit against Apple (AAPL) Thursday, claiming the iPhone violates 10 patents for GSM, UMTS and wireless LAN technologies. Nokia said it has repeatedly asked Apple to license its patents, which it developed as part of a consortium of global telecommunications companies, and says Apple is "attempting to get a free ride" on the back of its innovation. Cellphone royalties typically run at 1-2% of the wholesale price, estimated at $600 for the iPhone; a 2% royalty would put $12 per iPhone in Nokia's pockets.
• Book price-war under review. The American Booksellers Association asked the Department of Justice to investigate this week's book price-war between Amazon.com (AMZN), Wal-Mart (WMT) and Target (TGT), claiming it constitutes illegal predatory pricing that is damaging to the book industry and harmful to consumers. If the trio is allowed to continue selling hot-item books for under $10, the net result "will be the closing of many independent bookstores and a concentration of power in the book industry in a very few hands," it said. While mega-retailers can use book sales as a loss leader to drive traffic, independent bookstores rely almost entirely on profits from books. (read the ABA's letter to the DoJ)
• Amazon: emerging juggernaut. Amazon (AMZN) announced Q3 results that exceeded expectations, including a 28% jump in sales, and offered Q4 guidance that was well above analyst consensus, sending shares up over 14% in after-hours trade (see below). Electronics and other general merchandise (EGM) now accounts for 43% of Amazon's sales, vs. 54% for media. The rate of EGM growth (44%) versus that of media (17%) signifies the online retailer's rapid and successful transition from a bookseller to an "everything store," which will become even more pronounced once it completes acquiring Zappos in Q4. (read Amazon's Q3 earnings call transcript)
• Merck/Schering merger wins EC approval. The European Commission cleared Merck's (MRK) bid to buy Schering-Plough (SGP) in a deal worth more than $41B. "The proposed transaction would not significantly impede effective competition in the European economic area or any substantial part of it," the EC said. Merck agreed to sell its half of the Merial animal health business to Sanofi-Aventis (SNY), its JV partner, for $4B in order to meet antitrust requirements. The merged companies will cut 15% of their combined workforces.
• Fed's Evans warns of weak recovery: The Fed will be in no rush to withdraw fiscal stimulus, Chicago Fed president Charles Evans said yesterday, warning the recovery "is going to be very unsatisfactory in 2010." With weak labor markets and plenty of idle factory capacity, there is a sufficient slack in the economy to set aside inflation fears, he said. If anything, low levels of inflation are a concern.
• BP mulls rival bid for Jubilee. Sources say BP (BP) has hired Goldman Sachs (GS) to advise it on a rival bid to ExxonMobil's (XOM) $4B deal to purchase Kosmos Energy's stake in Ghana's Jubilee field. Goldman reportedly advised Cnooc (CEO) on a potential bid for the same stake. Cnooc's attempt is thought to have been hampered by its relative inexperience in developing such a large field, and Goldman's switch to advising BP implies a Cnooc bid is not forthcoming, analysts say.
• Sept. Leading Indicators: The Conference Board's Leading Indicators Index came in at +1%, vs. +0.6% in August and consensus of +0.8%. With the sixth consecutive increase, the six-month growth rate is now at the highest pace since 1983. The numbers suggest a strong recovery is developing, the group says, but notes "the continued downtrend in employment is keeping this index of current economic conditions from rising faster."

Earnings: Fri. Before Open

• Cache (CACH): Q3 EPS of -$0.43 misses by $0.23. Revenue of $44.9M (-22.7%) vs. $48.3M. (PR)
• Dover (DOV): Q3 EPS of $0.58 beats by $0.10. Revenue of $1.5B (-23.7%) in-line. (PR)
• Honeywell (HON): Q3 EPS of $0.76 beats by $0.04. Revenue of $7.7B (-17%) vs. $7.88B. (PR)
• Ingersoll-Rand (IR): Q3 EPS of $0.70 beats by $0.09. Revenue of $3.48B (-19.2%) vs. $3.56B. Sees 2010 EPS of $2.00-2.40 vs. consensus of $1.98. "The outlook for the strength and timing of the global economic recovery and the performance of our end markets remains cloudy. A preliminary review of our internal cost reduction and productivity improvement actions for next year gives us confidence that we can grow our earnings for 2010 even if our markets remain weak." (PR)
• Schlumberger (SLB): Q3 EPS of $0.65 beats by $0.02. Revenue of $5.43B (-25.2%) in-line. (PR)
• Whirlpool (WHR): Q3 EPS of $1.15 beats by $0.38. Revenue of $4.5B vs. $4.28B. Continues to see uncertain and volatile demand levels in many markets. (PR)

Earnings: Thur. After Close

• Amazon.com (AMZN): Q3 EPS of $0.45 beats by $0.12. Revenue of $5.5B (+28%) vs. $5B. Sees Q4 sales of $8.12B-9.12B vs. consensus of $8.11B. Shares +14.5% AH. (PR)
• American Express (AXP): Q3 EPS of $0.44 beats by $0.06. Revenue of $6B (-16%) vs. $5.9B. Consolidated provisions for losses down 13% to $1.2B. Tier one risk-based capital ratio 9.7%. Sees "broad-based improvements in credit quality" and encouraging trends in spending. Shares -0.5% AH. (PR)
• Broadcom (BRCM): Q3 EPS of $0.16 beats by $0.05. Revenue of $1.25B (-.35%) vs. $1.16B. Sees Q4 revenue flat sequentially. Shares -8.3% AH. (PR)
• Bucyrus International (BUCY): Q3 EPS of $1.21 beats by $0.35. Revenue of $676M (+5%) vs. $623M. (PR)CA Inc. (CA): FQ2 EPS of $0.42 beats by $0.02. Revenue of $1.07B (+1%) in-line. Shares +2.3% AH. (PR)
• Burlington Northern Santa Fe (BNI): Q3 EPS of $1.48 beats by $0.20. Revenue of $3.6B (-27%) in-line. Shares -1.9% AH. (PR)
• Capital One (COF): Q3 EPS of $0.94 beats by $0.80. Revenue of $$4.6B (+11.7%) vs. $4.11B. "We are successfully weathering the storm, but the storm is not over." Shares +8.5% AH. (PR)
• Cheesecake Factory (CAKE): Q3 EPS of $0.29 beats by $0.05. Revenue of $401M (-1%) vs. $397M. Comparable same-store sales down 2.8%. Shares +2.4% AH. (PR)
• Chubb (CB): Q3 EPS of $1.56 beats by $0.29. Total net written premiums of $2.7B (-7%). Raises full-year EPS guidance to $5.90-6.00 from $5.20-5.50, vs. $5.51. Shares -1.74% AH. (PR)
• Compuware (CPWR): FQ2 EPS of $0.12 beats by $0.04. Revenue of $218M (-19%) vs. $201M (one estimate). Shares +5.3% AH. (PR)
• Developers Diversified Realty (DDR): Q3 FFO of $0.44 beats by $0.01. Revenue of $202M (-9%) vs. $194M. Shares +1.1% AH. (PR)
• Eastman Chemical Company (EMN): Q3 EPS of $1.38 beats by $0.25. Revenue of $1.3B (-27%) in-line. Sees Q4 EPS of $0.85 vs. $0.79. Shares +3.2% AH. (PR)
• Emulex (ELX): FQ1 EPS of $0.08 beats by $0.02. Revenue of $86M (-23%) vs. $81M. Sees Q2 revenues of $88M-92M vs. $87M. Shares +2% AH. (PR)
• Informatica (INFA): Q3 EPS of $0.22 beats by $0.02. Revenue of $123M (+8%) vs. $120M. Shares -2.1% AH. (PR)
• Interactive Brokers (IBKR): Q3 EPS of $0.20 misses by $0.11. Revenue of $272M (-45.3%) vs. $298M. Market making income -47% Q/Q and -74% Y/Y due to tighter bid/offer spreads on options. Shares -7.2% AH. (PR)
• Juniper Networks (JNPR): Q3 EPS of $0.23 beats by $0.03. Revenue of $824M (-13%) vs. $797M. Shares +1.6% AH. (PR)
• Lattice Semiconductor (LSCC): Q3 EPS of $0.00 beats by $0.02. Revenue of $49M (-15%) vs. $47M. Shares +5.6% AH. (PR)
• Leggett & Platt (LEG): Q3 EPS of $0.34 beats by $0.06. Revenue of $810M (-28%) vs. $840M. Raises full-year EPS guidance to $0.65-0.75 from $0.55-0.70, vs. $0.64. Shares +0.5% AH. (PR)
• MEMC Electronic Materials (WFR): Q3 EPS of -$0.29 misses by $0.23. Revenue of $310M (-43%) vs. $302M. Shares -3.8% AH. (PR)
• Netflix (NFLX): Q3 EPS of $0.52 beats by $0.06. Revenue of $423M (+3.6%) vs. $420M. Subscriber acquisition cost $26.86 per addition vs. $32.21 a year ago. Churn was 4.4% vs. 4.2% a year ago. Shares -3.3% AH. (PR)
• PMC Sierra (PMCS): Q3 EPS of $0.15 beats by $0.01. Revenue of $131M (-6%) in-line. Shares -0.6% AH. (PR)
• Rambus (RMBS): Q3 EPS of -$0.26 misses by $-0.02. Revenue of $28M (-5%) vs. $27.6M (one estimate). Shares -0.3% AH. (PR)
• Riverbed Technology (RVBD): Q3 EPS of $0.19 beats by $0.04. Revenue of $103M (+18%) vs. $97M. Shares +0.8% AH. (PR)
• Sunpower (SPWRA): Q3 EPS of $0.42 beats by $0.02. Revenue of $466M (+23%) vs. $420M. Shares -11.4% AH. (PR)
• Synaptics (SYNA): FQ1 EPS of $0.48 beats by $0.06. Revenue of $120M (+3%) vs. $116M. Expects Q2 revenue of $128M-134M vs. $137M. Shares +10.1% AH. (PR)
• Synovus Financial (SNV): Q3 EPS of -$1.27 misses by $0.60. Net interest income of $758M (-8%). Shares -7.6% AH. (PR)
• Western Digital (WDC): FQ1 EPS of $1.25 beats by $0.31. Revenue of $2.2B (+4.3%) vs. $2.06B. Says demand remains strong. Shares +1.3% AH. (PR)

Today's Markets

Overseas markets echoed U.S. gains Friday. Futures are marginally higher in light overnight action.