Freeport-McMoRan Copper (FCX) has invoked the force majeure clause for shipments from its Grasberg mine in Indonesia where operations have been shut down pending government investigation into the tunnel collapse that occurred last month. Force majeure is a clause in agreements with customers that allows commodity suppliers to express inability to meet obligations due to circumstances beyond their control. It allows them to avoid paying penalties for delays or cancellations.

The invocation of force majeure is causing copper futures prices to rise as the supply/demand situation is now expected to be tight in 2013, as opposed to a clear supply surplus expected earlier. The Grasberg mine is Freeport's key copper mine. Poor ore grades for more than a year have dented the company's results, but it was expected that toward the end of 2013 ore grade quality would improve to previous levels.

Importance of the Grasberg

Nokia (NOK) is gearing up for its second big smartphone announcement for this year. The Finnish handset maker is following up its May launch of Lumia 925 with another launch event scheduled for July 11 in New York, promising to "reinvent zoom" with its new device this time. While the invite teases nothing about a camera, the media is abuzz with rumors that the long-awaited 41 megapixel camera may finally be making its way into a Lumia Windows Phone.

Nokia had introduced the 41 MP camera in a Symbian-powered 808 PureView device a year ago, but with the last of the Symbian devices being shipped this summer, Nokia will be looking to carry the innovation forward in a Windows Phone. Whether that will happen next month in New York or much closer to the holiday season remains to be seen, but the addition of Nokia's high-end PureView innovation would definitely

Over the past two years, Chesapeake Energy's (CHK) profitability has been weighed down by low natural gas prices and high drilling costs. In 2012, the firm posted a sizable operating loss of around $1.7 billion. However, it has been taking steps to get back on track by concentrating on the core portions of its most important plays, boosting its liquids production, and focusing on improving drilling efficiencies. During the first quarter, Chesapeake saw marginal improvement, posting an operating profit of around $217 million. Here is a quick look at some factors that can positively impact the firm's profitability going forward.

Strong Asset Base, but Drilling and Production Efficiencies Have Room for Improvement

Chesapeake has invested heavily on building its asset base. Over the last 10 years, the company spent nearly $20 billion on leases and is now the largest U.S. onshore leasehold owner. Chesapeake is also one of

FedEx Corporation (FDX) is a holding company with subsidiaries that provide a broad range of transportation, e-commerce, and business services under the FedEx brand. It is scheduled to announce its Q4 and full-year earnings on June 19. Shares of the courier delivery services company have traded in a narrow range over the last three months after they tanked 7% after its third-quarter results. Investors realize there has been a fundamental shift in the dynamics of this industry, but the company is adjusting its operations in order to adapt to the changing environment.

Clients have now adjusted their lead times and prefer to get their items delivered through shipping mediums, which has resulted in an excess capacity in international freight. A continuing shift in freight traffic from air to sea driven by higher fuel prices is not helping the air cargo industry at all. The shift in customer demand for slower

With smartphones boosting the demand for mobile data to record levels, U.S. wireless carriers are now looking to gradually lessen the impact of smartphone subsidies on margins. Following in Verizon’s (VZ) footsteps, AT&T (T) recently announced the extension of its upgrade eligibility criteria for subsidized smartphone buyers from 20 months to a full two years of the contract period. The move will cause subscribers to push back their upgrades for a little longer, allowing AT&T to spend less on subsidies as fewer subscribers become eligible for upgrades each quarter. It is part of a broader push by carriers to improve margins as top-line growth stagnates in a wireless market that has reached saturation.

Margins In Focus In A Saturated Wireless Market

A saturated wireless market has hit AT&T hard with subscriber additions slowing down, and the company’s obvious lag in LTE coverage (as compared to Verizon) is accentuating the effect.

Quick Take

• The combined US Airways-American network will be on par with the networks of United and Delta especially in the important east coast markets of the United States.
• A strong domestic U.S. network will help the new American Airlines catalyze international growth as domestic traffic feeds in to the international network.

Among U.S. airlines, United (NYSE:UAL) and Delta Air Lines (NYSE:DAL) have the largest networks in both the U.S. and international markets. However, post the merger between American Airlines and US Airways (NYSE:LCC), the combined network of these two carriers will occupy the leadership position in several markets and overall will prove to be a formidable competitor for both United and Delta.

In 2012, United had the largest service network with flying capacity of nearly 249 billion seat miles [United’s 2012 10-K, February 25 2013, unitedcontinentalholdings.com]. Delta occupied second spot with flying capacity of around 230 billion

Quick Take

• The printer hardware market declined by 9.7% in Q1 CY13. Lexmark is focusing on high margin process management software services, laser printer hardware and managed print services.
• Revenues from MPS and Perceptive solution will increase to 30% of total revenue by 2014. MPS will drive revenue growth at the printer and supplies division as companies look to outsource their printing needs.
• Perceptive solutions will help the company in bucking the decline in the printer industry as process management industry is expected to grow at 10% annually.

Lexmark International (LXK) is well positioned as a leader in managed print services (MPS) according to industry analysts, Gartner, IDC and U.K. based Quocirca. (Lexmark again named a leader in Quocirca MPS Vendor Landscape, May 16, 2013, www.lexmark.com) The company is in the middle of transforming its business from a hardware-centric business to an end-to-end printing solutions provider. Since 2010,

Cliffs Natural Resources (CLF) has finally been forced to acknowledge the extent of its problems at the Ring of Fire chromite project in Ontario, Canada. The company announced that it is temporarily stopping the environmental assessment for the $3.3 billion project due to unresolved land rights and unfinished agreements with the provincial government. Without substantive progress on these fronts, it is reluctant to move forward with the project, especially at a time when its resources are strained due to a difficult business environment. Cliffs sought to emphasize that it remains excited about the project and will continue working with the government and other stakeholders it is negotiating with. [1]

The company’s chromite properties are located approximately 155 miles north of the town of Nakina and about 50 miles east of the First Nations community of Webequie. It has a controlling position in three chromite deposits that occur in close proximity

Quick Take

• Exide Technologies filed for bankruptcy on Monday, June 10, due to unsustainable cost-structures and increased competition, especially from Johnson Controls.
• Johnson Controls on the other hand is investing to grow footprint in the emerging markets, build manufacturing capacity for start-stop batteries and expand margins through a lead recycling facility in South Carolina.
• Through benefits arising from these strategic investments, the company expects to grow its auto battery sales in double-digits per year through 2017.

Exide Technologies (XIDE) filed for bankruptcy on Monday, June 10, attributing Wal-Mart‘s (WMT) decision to stop buying its products as a reason. [1] This is the second time in about a decade that the battery maker, which employs around 10,000 people, has filed for bankruptcy. In its filings, Exide said that Wal-Mart’s decision to source automotive batteries from its arch rival, Johnson Controls (JCI) led to a significant loss in annual revenues. Thus, as

Improving LED market dynamics and increasing LED adoption driven by the launch of new innovative products has enabled Cree (CREE) to witness top-line growth despite the slow macro environment. The company witnessed a 23% y-o-y increase in revenues last quarter and showed significant year-on-year improvement in its gross margins.

With widespread awareness about the economic and environmental benefits of LEDs, its global adoption is bound to increase in the future. As one of the leading players, we believe Cree is in a strong position to benefit from this growth in the LED market. The company claims to have a strong order backlog, which should help drive revenue growth in the future.

Cree witnessed a significant decline in gross margins in 2011 due to decreasing LED selling prices and higher expenses. However, despite a very competitive market environment, gross margins in 2012 improved due to better factory utilization, process improvements and

LDK Solar (LDK) released its first quarter earnings on June 11, posting a lackluster set of numbers. Quarterly revenues stood at around $104 million down by almost 50% year-over-year while operating losses narrowed to around $93 million from $135 million. While there were some positive developments such as a smaller decline in selling prices as well as progress on the cost reduction front, the company’s debt situation and deteriorating financials continue to be a worry. Here are some of the key takeaways for the company’s earnings release and how it could impact its stock going forward.

Prices Decline At A Slower Pace, But Under-Utilization and Write-downs Hit Margins

Like most other Chinese photovoltaics manufacturers, LDK’s average selling prices (ASP) for panels and wafers declined at a slower rate compared to the previous quarter and its production costs fell at a faster pace than the ASP. However, gross margins remained weak

MasterCard’s (MA) stock has rallied on strong first quarter earnings and signs of improvement in the U.S. economy. The stock has gained 5% since the company reported a 9% year-on-year increase in gross revenues for the first three months of 2013. Nearly 40% of MasterCard’s revenue comes from the U.S. and given the nature of the company’s business, MasterCard’s performance is closely linked to the country’s economic condition.

MasterCard charges data processing fees from its banking clients on the basis of the total number of transactions processed for the client and assessment fees as a percentage of the gross dollar value (GDV) of transactions processed for the client. Assessment fees account for 30% of the company’s revenue and data processing or transaction fees account for 30%. The company also charges cross-border fees for transactions where the issuer or cardholder’s bank and the acquirer or merchant’s bank are based in different

Apple (AAPL) recently announced its Internet radio service that will directly compete with Pandora Media (P). Under the name iTunes Radio, Apple will offer many features similar to that of Pandora, including personalized radio stations, free ad-supported service, as well as the ad-free subscription option. While Pandora has over 1 million songs in its library, Apple's service will give its users access to its entire iTunes catalog, which boasts over 26 million songs. In addition, the subscription fee for iTunes Radio (at $24.99 per year) is lower than that for Pandora, which charges $36 per year for its Pandora One service. While it appears as if Pandora is going to face strong competition from Apple in the near future, there are certain areas where the company can still be a clear winner. These include a wider device reach and a strong sales force that focuses on local advertisement opportunities.

After a long wait, Rio Tinto (NYSE:RIO) will finally commence copper shipments from the Oyu Tolgoi mine on Friday, June 14. The company has been producing copper at Oyu Tolgoi since February, but had said that it wouldn't start shipping until it resolved disputes with the Mongolian government over royalties, costs, management fees, and project financing. While Rio hasn't issued any statements to announce the resolution of these disputes, the commencement of shipping is an indicator that all major issues have been sorted out. [Source]

The Oyu Tolgoi mine is important to both Rio Tinto and Mongolia. The mine is expected to eventually account for one-third of Mongolia's economy and will be a major component of its Gross Domestic Product (GDP). Also, Rio has been struggling with setbacks at its Bingham Canyon copper mine in Utah and the Grasberg copper mine in Indonesia. If shipments of copper

Tobacco companies have introduced almost no new cigarettes in the U.S. for more than two years now because of the restrictions imposed by the federal government. This issue adds to the existing woes of the tobacco industry, which has been fighting consistently declining shipment volumes with a very small degree of freedom. However, there appears to be some respite coming to the industry as the Food and Drug Administration says it is "very close" to deciding on some of the 4,000 new product applications it has. This should be seen as a positive sign for companies such as Altria Group (MO), which has witnessed an acceleration in consistently declining cigarette volumes of late.

What Led to the Slump in New Products?

The Family Smoking Prevention and Tobacco Control Act that became a law on June 22, 2009, gave the FDA the authority to regulate the manufacturing, distribution and marketing

The shares of Daimler AG (DDAIF.PK) have rallied about 20% in the last month on strong American and Chinese sales. The cars and vans sold under the Mercedes brand contribute almost 70% to the stock price, as per our estimates.

We expect the automaker to perform better in the second half of the year than the first half due to a slew of model refreshments and new introductions that are lined up. However, due to ongoing weakness within the company and uncertainty in the macroeconomic environment, the level of improvement might not be as significant as the market might be hoping. The low profitability remains an issue for the automaker, and management's guidance is based on optimistic assumptions on which the company could have difficulty delivering.

Low Profitability

Operating margins have been declining sequentially with each quarter and fell to 3.4% in the first quarter. On the other hand, the

American Eagle Outfitters (AEO) is a leading apparel retailer in the U.S. and operates under its namesake and Aerie brands. As of 2012, the company has more than 1,000 stores in North America, operates 49 international franchise stores and ships directly to 81 countries.

In this analysis, we’ll discuss some important business drivers for American Eagle Outfitters’ stock including its revenue per square feet (RPSF) and the number of stores. We’ll follow up this analysis with another one which will focus on profit margins (measured by EBITDA) and its direct-to-consumer revenues. Let’s take a look at the long-term outlook for these drivers and our price estimate’s sensitivity to them.

Rising Revenue Per Square Feet

This refers to the average annual revenue per square feet of retail store space for American Eagle stores. This metric is indicative of the retailer’s comparable store sales. Since the recession, the brand’s RPSF

Quick Take

• Ann’s Q1 fiscal 2013 results remained weak due to the impact of cold weather and disappointing product performance from LOFT
• This was partially offset by strong growth in Ann Taylor brand and e-commerce business
• We remain optimistic on the company’s long-term outlook due to strength in Ann Taylor, the improvement in LOFT, growth in online business and brand specific marketing strategies
• With strong product offerings, a balanced pricing strategy and attractive store remodels, Ann Taylor is likely to continue performing well
• LOFT’s results can improve with balanced product mix and market specific expansion plans
• Going forward, online growth is likely to continue backed by the company’s multichannel initiative

Ann (ANN) reported weak results for its Q1 fiscal 2013 due to the impact of prolonged cold and poor performance from LOFT brand. This was partially offset by strong growth in Ann Taylor brand

The past week has been an eventful one for the U.S. telecom sector. The battle for Clearwire heated up with DISH Network (DISH) offering a $4.40 bid per share for the carrier, topping Sprint’s (S) already increased bid by nearly 30%. Verizon (VZ) extended its existing four-year contract with the National Football League by another four years, agreeing to pay $250 million per year for the rights to live stream all the NFL matches to its subscriber’s smartphones. With Verizon winning the initial LTE war, AT&T (T) is stepping up efforts to shore up subscriber adds in a saturated wireless market by offering promotional offers and schemes that will have an impact on margins in the near term.

Sprint-Clearwire-DISH

DISH raised its buyout offer for Clearwire to $4.40 per share late last week valuing the wireless service provider at $6.5 billion and topping the offer Sprint had made the previous

Investors were quite wary of the equity market over the larger part of the week as they waited anxiously for the Friday releases of U.S. jobs data for the month of May. As the Fed’s stimulus package is linked to unemployment figures, investors fear that strong employment figures will result in the Fed shrinking, or “tapering,” its asset purchase plan over the coming months – a sentiment that lowered the overall market for the week. The situation is no doubt ironic, as an improvement in the country’s job environment points to an improving economy. But then the biggest factor behind this improvement has arguably been the Fed’s diligent efforts to stick to its plan, to purchase assets worth $85 billion each month to ensure liquidity in the financial market and stimulate growth.

The financial sector also had to contend with more bad news from across the Atlantic, when the European