Sunday, December 8, 2013
5:25 AMSupreme Court justice blocks last-ditch try to stop AMR-US deal
- The merger of American Airlines' (AAMRQ) and US Airways (LCC) is all set to take off tomorrow after Supreme Court Justice Ruth Bader Ginsburg denied a last-minute effort by consumer groups and travel agents to prevent the deal from taking place.
- The plaintiffs fear that the deal will force prices up, hurt services and make planes more crowded.
5:15 AMFreezing weather hits airlines, freight companies
- Airlines have canceled over 1,000 flights, while freight companies and online retailers have delayed deliveries, due to severe winter weather across the U.S., particularly in the south.
- American Airlines (AAMRQ, LCC) has been especially affected after more than 400 flights from Dallas/Fort Worth, American's largest hub, were scrapped.
- FedEx (FDX) and UPS (UPS) have also felt the impact of the weather, while eBay (EBAY) has warned of shipment delays.
- Meanwhile, ice storms have cut power to over 200,000 homes from Texas to Tennessee.
- More freezing weather is predicted for tomorrow.
- It's likely to take a while for the economic cost of the storm to be calculated. Insurer Aon (AON) reckons that the losses from the tornadoes and thunderstorms that hit the U.S. last month will top $1B. Allstate (ALL) may take a large hit after towns in Illinois, where it is the second-biggest insurer, were among those to feel the full wrath of the storms.
- ETFs: KIE, IAK, KBWP, KBWI
Saturday, December 7, 2013
12:03 PMCoach may be fashionable again in 2014: Barron's
- "I have every confidence that under our leadership, [the company] will resume growth," Coach's (COH) Chairman and CEO Lew Frankfort tells Barron's, referencing an upcoming shakeup wherein he will assume the role of executive chairman, while current CCO Victor Luis will take the CEO reins.
- Investors are hoping Luis can preside over a renaissance at the company which, thanks to "pinched" consumer spending and competition from the likes of Michael Kors," is "selling for [just] 16 times forward earnings estimates."
- Analysts cited by Barron's seem generally upbeat about the prospects and with new products and designs on the way in 2014, Christopher Williams thinks "a few COH shares might make great stocking stuffers."
Friday, December 6, 2013
6:29 PMComcast retains J.P. Morgan to evaluate Time Warner Cable bid
- Comcast (CMCSA +0.4%) has tapped J.P. Morgan for advice as it evaluates a bid for Time Warner Cable (TWC -1.2%), Reuters reports.
- Sources said Comcast does not intend to make a pre-emptive bid, but may jump in if it looks like Charter Communications (CHTR +0.4%) is getting close to a deal.
- TWC, for its part, considers Comcast the best suitor given its ability to make an all-cash offer and the better nature of the geographic fit between the 2 operators.
- Previous: FCC commissioner doubts Comcast-TWC merger would be approved
5:44 PMCampbell Soup rises most in 5 years on outsized bull option bet and M&A speculation
- Campbell Soup (CPB +5.9%) shares notched the largest point and percentage gains in more than five years after a trader purchased at least 12K Dec. $43 call options in the early afternoon. An average of 2.9K options contracts are traded across all strikes and dates daily.
- The rise may have been catalyzed by the broker on the other of the side hedging the short position and rumors "that the options trade was linked to takeover speculation, leading other investors to buy shares and options in the soup maker," MoneyBeat writes.
- The trade was self-fulfilling, with the contracts in question opening trading at $0.15/share and reaching highs of $0.80/share on the day.
5:43 PMDisney acquires Indiana Jones marketing/distribution rights
- Disney (DIS) has acquired the marketing/distribution rights for future Indiana Jones films from Paramount. The media giant already had ownership rights to the films through the Lucasfilm acquisition.
- Paramount will maintain distribution rights for the first four Indiana Jones films, and will financially benefit from the release of future films.
3:36 PMSales and margin worries for KFC China
- Yum Brands (YUM -0.1%) says KFC China knocked out a modest 1% gain in comparable store sales for November, but how the company got there might be an issue.
- Though moving into positive growth after slips in September and October looks promising, KFC's comp sales growth after a promotion expired on November 10 was -8% Y/Y.
- Early channel checks for December also indicate the chain may struggle to meet last year's pace of sales at comparable stores. While higher foods costs in China which could pressure margins if KFC stays promotional are also a concern.
3:16 PMEarly signs point to strong IPO for Hilton Worldwide
- Hilton Worldwide (HLT) is scheduled to price its IPO on December 12 and start trading the next day in what will be one of the larger IPOs of the year.
- The company's emergence as a public company again is expected to go very smoothly after the Hilton story was told up and down Wall Street during a successful $13B debt recapitalization in October.
- A capital-light plan by Hilton to expand through franchising is also seen as taking some risk off the table.
3:04 PMCanaccord: Gap's Nov. comps indicative of "greater promotional activity"
- Canaccord Genuity chimes in on Gap's (GPS -2.2%) estimate-topping Nov. comps, noting "The company turned in a better-than-expected performance despite weaker retail traffic and a later Thanksgiving that negatively impacted other apparel retailers."
- That said, the results seem to suggest "greater promotional activity," which "drove sales for GPS given the challenging climate." The natural conclusion: "We continue to project yr./yr. gross margin contraction of 190bps." The firm has a Hold rating on shares.
2:32 PMEU raids Philips, Samsung offices in price-fixing probe
- The E.C. has raided Philips (PHG +2.1%) and Samsung's (SSNLF, SSNGY) local offices, as well as those of electronics store chain Media-Saturn.
- The Commission says it has raided several companies who are either making or selling consumer electronics and domestic appliances, in order to probe whether the firms had conspired to drive up prices by limiting the online sale of certain goods.
- The E.C. is already probing Samsung's use of standards-essential mobile patents in its legal battles. Samsung made a settlement offer in October.
2:16 PMGeneral Mills gains traction in key categories| 3 Comments
2:05 PMTiffany in China: Build the brand before the stores
- Tiffany (TIF -0.1%) says it will spend more money on marketing in China than any other region next year
- Execs with the company expect to see double-digit sales growth in China and the Tiffany brand further entrenched with wealthy consumers.
- What Tiffany won't do is blow out its Chinese investment budget on store expansion. Only 3 stores are slated to be opened next year.
1:56 PMHeineken and Anheuser-Busch InBev go toe-to-toe in Mexico
- Heineken (HINKY) expects to see solid growth in Mexico next year as the economic situation in the nation improves.
- The Dutch brewer and Anheuser-Busch InBev (BUD +1.9%) control 99% of the beer market in Mexico, a level of domination which has kept Mexican regulators busy.
- Despite the extra attention from antitrust officials, Heineken expects to grow its market share even higher next year at A-B's expense - led by its Mexican brands such as Tecate, Dos Equis, Indio, and Sol.
12:14 PMAnalysis: Lands' End has some questions marks of its own
- A quick look at the financials of Lands' End (SHLD) isn't blowing away analysts.
- ISI Group says the value is roughly half of what it thought it would be.
- The retailing unit's momentum is also going in the wrong direction as net income has dropped each of the last two years.
- Another concern is that Lands' End will have some embedded risk as a stand-alone with over 15% of its sales tied to Sears stores.
- Lands' End SEC Form 10
11:45 AMBarnes & Noble lower after disclosing SEC probe
- Shares of Barnes & Noble (BKS -5.2%) are under selling pressure after the company discloses it is the subject of a SEC probe on its accounting practices.
- The company was notified on October 13 that the SEC would investigate the restatement of earnings announced on July 29, 2013. A different matter related to allegations of an ex-employee on how IT expenses are reported for Nook and the retail segment will also be looked into.
- SEC Form 10-K
11:31 AMLumber Liquidators trades up, Wedbush sees resolution to sourcing overhang
- Shares of Lumber Liquidators (LL +4.7%) climb after Wedbush initiates the stock at Outperform with a $125 PT.
- Analyst Seth Basham believes "CEO Rob Lynch has transformed LL into a best-in-class vertically-integrated grwoth retailer with enormous tailwinds supporting a medium-term 30% EPS growth rate on top of 63% growth in 2013."
- Shares have taken a beating, off 30.4% at their lows from highs notched in Nov., after regulatory concerns over wood sourcing and a short call by Whitney Tilson pressured shares. Basham sees a "resolution to the sourcing issue overhang in due course ... We spent considerable time investigating these operations and suppliers by consulting experts ... We found no evidence of widespread negligence and believe this issue will be resolved in isolation, with minimal repercussions ... if there was illegal sourcing, it is extremely unlikely that it was a significant driver of gross margin expansion for LL as potentially illegally sourced wood types represent a small portion of LL sales."
11:21 AMMaria and the Von Trapps help NBC score ratings win
- NBC's (CMCSA) gamble to broadcast The Sound of Music live appears to have paid off as the show dominated network ratings last night.
- The singing Von Trapps even beat out last week's comparable show for NBC when it had a hyped prime-time NFL game.
- Variety reports NBC landed some premium ad rates for the show which didn't shy away from taking some breaks for commercials.
11:10 AMHot target Time Warner Cable hires a new M&A exec| 1 Comment