MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Friday, May 24, 2013
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6:25 PM News Corp. (NWS, NWSA) expects to write down the value of its soon-to-be-independent publishing business by $1.2B-$1.4B this quarter, according to an SEC filing. The media company says "certain of its goodwill and intangible assets were potentially impaired” at the publishing business, which includes newspapers such as the NY Post and WSJ. 1 Comment
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5:42 PM Starz (STRZA) +3.2% AH after an SEC filing reveals Berkshire Hathaway (BRK.A, BRK.B) acquired ~5.62M shares, or a 5% stake, in the company. 3 Comments
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3:25 PM Las Vegas Sands (LVS -0.6%) replaces PricewaterhouseCoopers as its auditor with Deloitte Touche amid some legal and regulatory issues the company is currently dealing with. According to a previous SEC filing, the company didn't have any notable disputes with PwC. Comment!
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3:12 PM Yahoo (YHOO +1.7%) throws its name into the Hulu hat to join a number of P-E firms as well as DirecTV and Time Warner Cable in the hunt. Owners Disney (DIS +0.1%), Comcast (CMCSA +0.2%), and News Corp (NWS, NWSA) will weigh the best offer, but will also want to position themselves on the content side to be protected. (Previous on Hulu-mania) 7 Comments
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2:51 PM Callaway Golf (ELY +6.8%) enjoys a strong session after earnings and revenue top estimates. More from the report: Strength in existing product lines (X Hot and Versa putters) fuels a 12% Y/Y increase in net sales (this excludes brands that were divested in 2012), and improvements in gross margins as well as lower operating expenses help the company post a 27% rise in GAAP EPS. Outlook: FY13 revenue guidance lowered to $830M from $850M, FY13 EPS guidance is reiterated at -$0.04 after accounting for a preferred dividend (consensus is $832M and -$0.05). (PR, CC transcript) 1 Comment
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2:39 PM Delhaize Group (DEG +0.1%) might sell two of its U.S. grocery chains as it looks to cut losses on the continent. The Belgian company is looking at options for its Harveys and Sweetbay supermarket operations. Comment!
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2:31 PM Feltl & Co. downgrades Hibbett Sports (HIBB -3.9%) to Hold from Buy (price target $60) on the heels of the company's earnings miss (previous). Comment!
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1:40 PM Add KKR and Silver Lake Management to the list of bidders for Hulu (CMCSA, DIS, NWS), according to Bloomberg. Earlier reports indicated Time Warner Cable (TWC -0.8%), Guggenheim Digital, and DirecTV (DTV -0.6%) are in the hunt. What to watch: Some analysts think Hulu could evolve into a payment authentication system for the cable industry, while others bet that a single media/tech company will snap up the firm to create a unique position for itself in video - either as a premium streaming service or an ad-supported content monster. Either way Netflix (NFLX -0.5%) is watching. 1 Comment
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1:25 PM Japanese automakers (TM, HMC, NSANY.OB, MZDAY.PK, SZKMY.PK) could see the tide turning in China as consumer demand continues to pick up. Even with rhetoric and military exercises over the islands in the East China Sea continuing, new data shows 16K cars were shipped from Japan to China in April - 3X what was exported last Oct. when the flareup started - and Japanese brands now account for 16% of the market after dipping to as low as 7%. The big picture: Though the overall pie keeps getting larger, General Motors (GM -0.1%) and Ford (F +0.1%) would just as soon that the Japanese automakers keep their slice of the China auto market small. 2 Comments
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1:02 PM General Motors (GM -0.2%) has a nice little insurance policy to help it create shareholder value just in case the forecasts for strong U.S. auto sales don't pan out. The connectivity value of the Onstar service from the automaker makes the asset worth close to a whopping $8B to $10B, according to a bullish take from Citigroup. Though speculation on an Onstar spinoff has been going on for more than a decade, the high penetration rate of communication/security services also makes the stand-alone concept more enticing than ever. 2 Comments
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12:43 PM Volkswagen (VLKAY.PK) could see a production halt in South Africa with the main automobile workers union in the nation threatening to tell members to stop working due to the dismissal of members. Ford had its own answer to high labors costs in Australia with a mass exit and a plan to import. Comment!
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12:38 PM Heard during Foot Locker's (FL -6.1%) earnings call: 1) Execs say products are "right" at Foot Locker stores, but due to weather patterns more sales will shift to Q2 from Q1. 2) In Q1, traffic was down, but ASPs were higher. 3) The planned acquisition of Runners Point Group appears to be a bet on Germany - not the continent as a whole. 4) The retailer says comparable store sales are flat this month. That's not great news for Nike (NKE -1.4%), Under Armour (UA -1.3%), or Finish Line (FINL -2.2%) - unless the catch-up that Foot Locker points to materializes. (webcast) Comment!
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12:20 PM Shares of Melco Crown (MPEL) shrug off a downgrade from Macquarie to trade higher than their opening level as traders bet yesterday's selloff on worries about China's economy was a bit overdone. Though it's not up and running in the Philippines just yet, Melco Crown will be more than a pure Macau play in the future. 2 Comments
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11:57 AM Gasoline prices in Minnesota are the highest in the continental U.S., a dubious honor usually reserved for California and odd considering the state borders North Dakota, now the no. 2 U.S. oil producer. Minnesota drivers were paying $4.29/gal. on May 20, $0.62 above the U.S. average. Planned and unplanned maintenance at Midwest refineries have cut into gasoline production and available supplies are depleted, the EIA says. 5 Comments
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11:14 AM Fast-casual chain Noodles files for IPO of an undetermined size. In its released financials, the company indicated revenue grew from $170M in 2008 to $300M in 2012. At current growth rates, Noodles could expand to 2.5K restaurants over the next 15 to 20 years and eventually give Panera (PNRA -0.5%), Qdoba (JACK -0.4%), and Chipotle (CMG -1.3%) something to think about. Noodles is expected to trade under the symbol NDLS. (S-1) Comment!
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11:11 AM Hibbett Sports (HIBB -4.1%) sinks after Q1 earnings and revenue miss estimates. From the report: Sales and comps rise 3% and 0.8% Y/Y respectively (Q1 2012 comps were +12%). Product margin was up during the period, but an 18 basis point rise in warehouse expenses hurt HIBB's gross margin, which fell slightly (10 basis points Y/Y). FY14 EPS outlook is reiterated at $2.85-3.05 versus consensus of $3.03. (PR) Comment!
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11:05 AM Heard during Abercrombie & Fitch's (ANF -10.1%) earnings call: 1) The biggest takeaway is that ten percentage points of the large drop in comparable store sale is attributable to inventory issues. 2) China isn't the problem behind slumping sales. Comp sales in the nation were +40% despite difficult inventory issues. 3) On share buybacks, the retailer says it will remain consistent with past policy - but will have a goal of maintaining a cash position of $350M. 4) Analysts take a pass on asking about the recent flap over the stance of CEO Michael Jefferies on plus sizes. (webcast) Comment!
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10:46 AM Luxury retail companies seem to be seeing something more than economists do as they ramp up investments and marketing on expectations for increased high-end spending in the U.S. Even with all the focus on the growth potential for the luxury sector in China and Hong Kong, by sales the U.S. market is still twice as big and has plenty of upside, according to industry insiders. A wildcard in the mix is the impact from some relaxed rules on visa approvals for wealthier tourists from emerging markets. On watch: Hermes, LVMH Moet Hennessy (MAGOF.PK), Gucci (GUCG.PK), Louis Vuitton (LVMUY.PK), Coach (COH), Tiffany (TIF), Ralph Lauren (RL), Burberry (BURBY.PK), Saks (SKS), Hugo Boss, Christian Dior (CHDRF.PK). Comment!
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10:30 AM An opinion piece titled "The Other Government Motors" from the WSJ isn't too subtle about taking apart the Q1 profit Tesla Motors (TSLA +1.4%) reported as it hitched a free ride with U.S. taxpayers. The zero-emission tax credits Tesla can sell to other automakers and the generous $7.5K federal tax credits to motivate buyers are the big two complaints. But what isn't entirely clear is why other car companies selling EVs aren't lumped into the same discourse? 55 Comments
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10:27 AM Shoe Carnival (SCVL +10%) hits a 52-week high after Q1 results top estimates. From the report: Q1 was challenging thanks to colder weather, but trends improved in April helping comps growth which, although still negative (-0.8%), was better than the company anticipated. Revenues rise 4.3% Y/Y, profit margin falls 130 basis points, SG&A falls $2.8M. Guidance: Q2 revenue of $217-220 and EPS of $0.26-0.30 against consensus of $218.88 and $0.28/share. (PR) Comment!
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