Today - Thursday, December 12, 2013
2:32 AMAustralian unemployment rate inches higher
- As expected, Australia's jobless rate edged up to 5.8% in November from 5.7% in October as more people entered the labor force.
- However, the number of people in work rose by 21,000 - the largest increase in seven months - after a fall of 700 and topped consensus of 10,000.
- The number of full-time jobs increased by 15,500 following a drop of 31,100, while that for part-time positions grew 5,500 vs +28,900.
- The S&P/ASX 200 is -0.7%, while the AUD-USD is -0.3%. (PR)
- ETFs: FXA, EWA, AUD, AUSE, CROC, KROO, EWAS, GDAY, FAUS
12:00 AMThursday's economic calendar| Comment!
Wednesday, December 11, 2013
8:15 PMBDCs aren't our peers, says American Capital
- Don't call us a BDC, says American Capital (ACAS) CEO Malon Wilkus, presenting at the JPMorgan SMId Cap Conference. BDCs, says Wilkus - there are 63 of them out there, about half public - are finance companies with virtually 100% of their assets in third-party companies. Only about 15% of American Capital's assets are in loans to companies not under its control.
- Webcast and presentation slides
- Presentation transcript
- "We invest in the equities of the middle-market companies; virtually no other BDC has invested in that way. So those aren't really our peers, but people do perceive them as our peers, and they are paying out a sizable dividend ... we don't pay any dividend at all."
- So who do we compare you to, asks an analyst in attendance. "We look most like a diversified growth company, diversified holding company," says Wilkus. Think Roper Industries (ROP). Think Danaher (DHR) - much bigger, but in structure and operations, very similar.
- "We don't call [our investments] subsidiary companies ... we have to call it a portfolio company, but really they're operating subsidiaries of ours. We control them. As I showed, we have an operations team with 10 former Presidents and CEOs and they're constantly working in those companies to help grow them and develop them."
7:12 PMYahoo faces uproar over partial e-mail outage
- On Facebook, Twitter, and elsewhere, complaints are piling up about a two-day service outage affecting millions of Yahoo Mail (YHOO) users. Though Yahoo previously stated a fix was expected to arrive by 4:30PM ET, the issues are continuing. Moreover, a dearth of communication from Yahoo for much of the outage has made a bad PR situation worse.
- The downtime won't help Yahoo's efforts to halt Mail's share losses to Gmail. It comes two months after Yahoo provided Mail with a big revamp that included the introduction of Gmail-like conversation threads and 1TB of free storage.
6:57 PMCisco roundup: Citi downgrade, set-tops, UCS servers
- Citi's Ehud Gelblum, who just started coverage on Cisco (CSCO) with a Sell, says he's concerned about core routing competition from Alcatel-Lucent, as well as potential data center switching share loss as companies embrace non-proprietary solutions.
- Tough core/edge routing competition from Alcatel and Juniper likely contributed to 13% Y/Y service provider order drop Cisco reported last month. But the company has been maintaining its dominant position in data center switching. IDC thinks Cisco had a 62.3% share of the Ethernet switch market in Q3, and a 65.9% share in the growing 10-gig segment.
- Cisco is counting on its new Insieme platform - praised for its performance and rich feature set, criticized for its proprietary nature - to head off competition from software-defined networking platforms that enable the use of the "open" hardware Gelblum is concerned about.
- Reuters notes Cisco is facing growing pressure to unload its set-top unit, which saw a 20% Y/Y sales drop in the Oct. quarter. Cisco partly blames the drop on an IBM-like decision to shun low-margin deals, and says a stronger focus on cloud-based pay-TV video solutions will help right the ship.
- Cisco is set to roll out next-gen UCS servers that will be optimized for analytics applications and carrier cloud services, among other things.
- The UCS line, differentiated by its built-in networking gear and strong virtualization performance, has been a bright spot for Cisco. UCS sales rose 44% Y/Y in the Oct. quarter, and IDC estimates Cisco's server share is up to 5%.
6:46 PMAir Canada to buy Boeing single-aisle jets in $6.5B deal
- Air Canada says it will buy 61 new Boeing (BA) 737 Max aircraft to replace its aging fleet of Airbus single-aisle jets, a significant win for Boeing from a customer that has long operated Airbus planes.
- The deal is valued at $6.5B at list prices, before discounts customary in such large deals; in addition to the commitment for the 61 jets, Air Canada also holds options and rights to buy another 48.
- Air Canada secures early delivery positions from Boeing, with deliveries expected to begin in 2017, with the arrival of its first two jets; the 737 Max is scheduled to first enter service with Southwest Airlines earlier that year.
6:34 PMCN Rail's Mongeau: Moving dangerous goods by rail "integral to our way of life"
- Canadian National Railway (CNI) chief Claude Mongeau says he appreciates concerns about moving dangerous goods by rail through urban areas in the wake of last summer's Lac-Mégantic disaster, but he says it would be impractical to reroute the shipments because many of the goods are integral to the way we live.
- While much of the focus has been on the movement of crude oil, even more dangerous and flammable goods are moved every day - styrene to make shoes and rubber, polypropylenes that make eyeglasses and other plastics, chlorine to purify water, propane for home use.
- Despite a string of recent derailments, the CEO says CNI has one of the best safety records among large North American rails.
- "The dangerous goods we move are worth $25B... and we move them very safely," Mongeau says.
6:31 PMColdwate Creek -10.8% AH after Q3 report; plans further store closures
- Coldwater Creek (CWTR) shares reverse gains and are now down 10.8% AH following a mixed Q3 in which the retailer continued its struggle in a "highly competitive" retail environment.
- The company closed 1 retail store, 1 factory store, and 1 spa in Q3, ending with 343, 36, and 7 respectively. Coldwater expects to close up to 10 more retail stores by the end of the fiscal year.
- CEO Jill Dean observed: "In response to the disappointing performance of our fall merchandise, we took swift action early in the third quarter to adjust our holiday assortment, and we experienced a meaningful improvement in full-priced selling as holiday product flowed into stores starting in mid-October. During the quarter we also implemented a cost reduction program, which is expected to generate $20-$25 million in expense savings next year."
- As of Nov. 2, cash totaled $6.8M, down from $31.3M in Oct. 2012, while inventory decreased 5.6% Y/Y (and 1.6% Y/Y per square foot) to $152.7M. The company burned $23M in operating cash in the past 3 quarters.
6:22 PMWabtec expands share repurchase program by $50M
- Wabtec's (WAB) board authorizes a $50M expansion to the company's share buyback program to $200M.
- The program had $45M remaining under the previous authorization, with Wabtec having repurchased $38M in shares in 2013.
- If executed, the expansion would reduces shares outstanding by 0.8% as of today's closing price.
6:18 PMComputer Sciences receives Wells notice from SEC
- Computer Sciences (CSC), which has already seen certain non-U.S. employees and ex-employees receive Wells notices from the SEC's enforcement division, discloses the company itself received a Wells notice today. (8-K)
- As CSC states, a Wells notice indicates the SEC plans a civil action or administrative proceeding against a company or individual, but doesn't amount to a formal accusation or wrongdoing. The company says it remains in talks with the SEC about a possible settlement.
- The SEC began probing CSC's accounting in 2011. The IT services firm paid $97.5M earlier this year to settle a shareholder suit related to its accounting issues.
6:05 PMOnline coupon/promo site Ebates reportedly planning 2014 IPO
- Bloomberg reports Ebates, a provider of digital coupons and other promotional services for online retailers (the company gets paid via affiliate fees), has hired JPMorgan (lead underwriter) and BofA/Merrill to take it public next year.
- The report comes shortly after many online retailers posted solid strong Black Friday and Cyber Monday sales. It also comes five months after Ebates rival RetailMeNot (SALE) delivered a strong IPO.
6:00 PMOn the hour
- S&P +0.08%.
- 10-yr -0.05%.
- Euro +0.01% vs. dollar.
- Crude +0.17% to $97.57.
- Gold flat% to $1251.9.
5:54 PMChevron unveils $39.8B 2014 capex program, ~$2B less than 2013
- Chevron (CVX) announces plans for a $39.8B capital spending budget next year, ~$2B less than expected for 2013, which it says was a relative peak year for such spending.
- The bulk of the new capex program is budgeted for upstream crude oil and natural gas exploration and product projects, with only 8% of spending planned for downstream businesses that manufacture, transport and sell gasoline and other fuel products.
- CVX also expects 2014 will represent a peak year for spending on its Australian liquefied natural gas projects as they move closer to starting production.
- Separately, former Utah governor and U.S. ambassador to China Jon Huntsman is named to the company's board.
5:53 PMOld Dominion, Brunswick replacing Arch Coal, Regis in S&P 400
- Old Dominion (ODFL) and Brunswick (BC) will be replacing Arch Coal (ACI) and Regis (RGS) in the S&P MidCap 400 following the Dec. 20 close. The latter companies will take the positions held by the former ones in the S&P SmallCap 600.
- Also: Teradyne, which is getting kicked out of the S&P 500 to make room for Facebook, will replace Scholastic (SCHL) in the S&P 400. Scholastic, in turn, will replace Lincoln Educational (LINC) in the S&P 600.
- ODFL +0.7% AH. ACI +0.9%.
5:47 PMProthena +5.3% AH, inks collaboration deal with Roche for Parkinson's antibodies
- Prothena (PRTA) shares jump 5.3% AH after the company enters a worldwide collaboration deal with Roche to develop and commercialize antibodies targeting alpha-synuclein, including PRX002, Prothena's Parkinson's treatment (expected to enter Phase I trials in 2014).
- In the U.S., the companies will share all development and commercialization costs, as well as profits, on a 70%-30% basis in favor of Roche. Outside America, Roche will have sole development responsibility and pay Prothena "up to double-digit royalties."
- Under the agreement, Prothena will receive an upfront payment of $45M, with the company eligible for additional payments of up to $380M contingent on development/sales milestones and up to $175M in ex-U.S. commercial milestone payments.
5:43 PMReuters: Morgan Stanley launches sale of U.S. oil terminal business
- Morgan Stanley (MS) has launched a formal effort to sell its controlling stake in U.S. oil terminal and transport business TransMontaigne (TLP), Reuters reports, in what appears to be its first definitive step toward disassembling its vast energy trading group.
- The TransMontaigne MLP includes 48 fuel terminals with nearly 24M barrels of storage capacity on the Gulf coast, in Florida, the Midwest and across the Southeast, including along the strategically important Colonial Pipeline that ships gasoline and diesel from the Gulf to the East Coast.
- Stanley's trading division accounts for ~60% of the MLP's revenues due to long-term contracts to use its terminals, and some of these contracts could be sold as part of the package.
- A number of potential buyers including Qatar, a Chinese oil major and Russia's Rosneft have been rumored in the past year, but this report says likely potential buyers include MLP subsidiaries of major refiners or midstream companies.