MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Thursday, June 20, 2013
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4:26 AM Sony (SNE) CEO Kazuo Kirai told the company's shareholders meeting that it will take its time in considering Daniel Loeb's proposal to partially spin off its successful entertainment division and use the funds to boost its struggling hardware operations. "The entertainment business plays an important role in Sony’s future growth" and so shouldn't be let go. Hirai said. "This proposal strikes at the heart of what kind of company Sony ultimately will become in the future." Comment!
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Wednesday, June 19, 2013
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8:09 PM Five Below (FIVE) sinks in the post session after announcing an 8.6M share secondary offering. All of the shares are being offered by selling shareholders, including certain members of Five Below's management team and Board of Directors. The underwriters are expected to have a 30-day option to purchase an additional 1.3M shares to cover over-allotments. FIVE won't receive any proceeds from the sale. Goldman Sachs, Barclays, Jefferies, Credit Suisse and Deutsche Bank are joint book-running managers. Shares -6% AH. Comment!
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6:33 PM For the first time in its 27-year history, the prestigious World Food Prize for enhancing the global food supply has gone to a creator of genetically modified crops, a top scientist at Monsanto (MON). The prize has some PR value for MON, potentially aiding the case for bio-engineered food and deflecting some criticism of one of the world's most controversial companies. 1 Comment
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6:17 PM Some S&P 600 changes: CalAmp (CAMP) is replacing Palomar Medical as of the June 24 close, WageWorks (WAGE) is replacing National Financial Partners as of the June 25 close, and Associated Estates (AEC) is replacing Websense as of the June 25 close. Palomar, NFP, and Websense are all being acquired.camp. CAMP +1.5% AH. WAGE +1.5%. AEC +3%. Comment!
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5:12 PM As the result of Safeway's (SWY) sale of its Canadian operations to Empire/Sobeys for C$5.8B in cash, strong 2013 free cash flow and the 2013 Blackhawk IPO, it plans to repay or retire a total of $2.8B in debt compared to debt balances at the end of fiscal 2012. The $2.8B price tag include $2B to be paid down as soon as practicable after the transaction closes, and approximately $0.8B from 2013 free cash flow and 2013 Blackhawk IPO proceeds. Comment!
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5:05 PM Microsoft (MSFT) does an about-face, dropping the Xbox One's Internet verification requirements and all of its used game restrictions. GameStop (GME) investors are very pleased, shares +7.8% AH. Microsoft's change-of-heart follows a major backlash from gamers (they were far from appeased by Redmond's initial response), and plenty of gamer enthusiasm being shown for the PlayStation 4 (SNE), both due to its lack of similar restrictions and its lower price. 11 Comments
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4:57 PM It seems likely that KeyBanc would view today's post-earnings sell-off in shares of La-Z-Boy (LZB) as a buying opportunity. Analyst Bradley Thomas has quite a few good things to say about the company including a positive take on revenue growth, market share gains, and margin expansion. In fact, the "under-appreciated" stock is one of the bank's "top picks for the year." Comment!
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3:08 PM Urban Outfitters (URBN -1.6%) continues to impress retail watchers with the steady growth of its direct-to-consumer channels (24% of total sales). Management's acumen at expanding online and catalog sales is one of the reasons the company's revenue and growth rates has beat peers Aeropostale, American Eagle Outfitters, Buckle, and Abercrombie & Fitch. Comment!
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2:46 PM Orchard Supply (OSH -59%) says the U.S. Bankruptcy Court has approved all of the First Day Motions related to its voluntary Chapter 11. The motions collectively will enable the company to continue operating its business as usual as it completes its Chapter 11 case. Comment!
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2:26 PM WatchESPN (DIS) and HBO Go (TWX) have been added to the Apple TV for paying subscribers in a move that will significantly increase the reach of the streaming services. The development also represents another small leak for the cable/satellite industry (CHTR, TWC, CMCSA, DTV, DISH) as it tries to keep its content dike in place. Comment!
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2:19 PM Shares of Sonic (SONC +1.8%) skate higher on the back of a Morgan Stanley upgrade to Equalweight from Underweight. Comment!
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2:03 PM Analysts weren't surprised by the when-issued trading in Australia of the new companies emerging from the split of News Corp. (NWS, NWSA). In their debut in Sydney, 21st Century Fox (Fox movie, pay TV and free TV busines, Sky Deutschland, Sky Italia, part of BskyB ) rose over 5% while the new News Corp. (Wall Street Journal, The Sun, Barron's, Australian media assets) dropped 3%. Comment!
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1:33 PM Procter & Gamble (PG +0.2%) announces a new licensing agreement with Alexander McQueen. Under the terms of the deal, P&G will be able to immediately market fragrances under the Alexander McQueen brand name. What to watch: During last week's presentation (slides) at the Deutsche Bank Global Consumer Conference, execs said the company will increase its focus on making "value and performance" claims on its large stable of brands. On that note, a fragrance fit for a future queen could be an upcoming tag line. Comment!
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1:06 PM The mystery behind the ouster of Men's Wearhouse (MW -1.9%) founder George Zimmer lies behind the doors at the company where the exec had significant difficulty giving up control, according to Stifel Nicolaus. The investment firm backs its Buy rating on the retailer, noting current management including creator director Joseph Abboud are on the right track. Comment!
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12:59 PM The AMA officially endorses a policy to limit how caffeinated beverages are marketed to consumers under the age of 18 and calls for a temporary ban on youth marketing until more studies are completed. Shares of Monster Beverage (MNST -0.4%) are only off moderately with the risks of legislation on energy drink marketing already baked in. 1 Comment
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12:58 PM Lunch service is a good thing if you're a restaurant, something BofA analyst Joseph Buckley reinforces Wednesday, upping his price target on Bloomin' Brands (BLMN +1.9%) to $29 from $25, citing a positive outlook for the introduction of lunch service at Outback locations. "Weekday lunch … is expected to be in 34% of Outback restaurants by YE 2013 and eventually in 50%-60% of the chain," Buckley notes. Comment!
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12:45 PM Shares of Buffalo Wild Wings (BWLD +0.4%) cross into triple digits for the first time ever as investors continue to buy into the restaurant operator's growth potential. What to watch: The company's Q2 comparable-store sales and margins will be in focus to see the impact on results from an against-the-grain menu strategy to move to selling a quantity (small, medium, or large) of wings instead of letting consumers choose a specific number of wings. Comment!
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11:36 AM Smithfield Foods (SFD +0.3%) made an interesting disclosure yesterday in a SEC filing. The company was considering a "potentially significant acquisition" of a large business in the packaged meats sector. The speculation from dealReporter is that it was Hillshire Brands (HSH +1.5%) in the crossfires, an acquisition which makes sense and could be on the table again if regulators stop the Shuanghui International purchase of Smithfield. 1 Comment
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11:27 AM BTIG downgrades News Corp. (NWS, NWSA) to Neutral from Buy after doing a fresh sum-of-the-parts analysis on the company. The math on the new News Corp. suggests a when-issued trading price of around $15 per share ($3.72 per current NWS/NWSA share) which could drift to $20 if the newspaper business performs better than expected. (full research report) Comment!
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