MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Tuesday, May 21, 2013
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7:39 PM Amazon's (AMZN) ad ambitions pose a threat to Google (GOOG), thinks ReadWrite's Derek Brown. In addition to Amazon's vision/ambition, obsession with customer satisfaction, and willingness to forgo near-term profits, the e-commerce giant's mountains of consumer purchase data stand to give it an edge as it pushes ads on its sites, on Kindles, and through a targeted display ad network. Moreover, Amazon could provide customers/partners with "relevant online transaction activity that might follow [its ads], effectively offering a closed loop marketing environment unlike any other." Of course, Google isn't standing still either. Comment!
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5:06 PM "We are designing Xbox One to enable customers to trade in and resell games. We’ll have more details to share later," says Microsoft (MSFT). GameStop (GME), whose shares were drubbed on concerns the One's requirement to install games on its 500GB hard drive (and tie them to an Xbox Live account) would eliminate used game sales, must be pleased. Microsoft also refutes rumors its next-gen console will need a Web connection to work, though developers using Azure cloud services can insist on it. Xbox 360 games won't be supported, and (unlike Sony with the PS4) there are no plans for a streaming service that can offer older titles. (earlier) 1 Comment
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4:30 PM Lorillard (LO) says its board has authorized and additional $500M to its share repurchase program, bringing the aggregate amount up to $1B of its outstanding stock. The original $500M share repurchase program was announced on March 8. Purchase decisions will be as determined by company management. Comment!
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4:18 PM Herbalife's (HLF +2.7%) naming of PricewaterhouseCoopers as its new outside auditor puts an end to a six-week search, which turned out to be an unusually difficult and drawn out process - the company actually had to seek counsel from the SEC to avoid conflict of interest issues - and was intensely scrutinized because of the bitter public battle between Ackman and Icahn over HLF's business model. The news is a positive for the shares today, if only because the company has been blocked temporarily from raising money in the markets because of its lack of an auditor. 1 Comment
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4:13 PM Saks (SKS +11.1%) has hired Goldman to explore strategic alternatives, "including a possible sale of the company," the NY Post reports. P-E firms, including KKR and Leonard Green, are seen as likely bidders. Shares +15.8% AH, adding to today's big post-earnings gains. 2 Comments
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3:30 PM Shares of GameStop (GME -6%) trade lower after the Microsoft Xbox One is unveiled (I, II, III). The new gaming console won't be friendly to the used game business with the game disc mostly useless after the initial install. The system also appears to be another step toward cloud processing and storage, although not the giant leap some forecast. 1 Comment
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2:59 PM Battle back on: 19 retailers say they will opt out of a $7.25B settlement with Visa (V +0.2%) and MasterCard (MA +0.7%) over interchange fees and will consider additional legal action against the companies. The highly-anticipated move from the heavyweight retailers (WMT, GPS, COST, NKE) comes about a week before a court deadline in the case. 1 Comment
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2:49 PM Five cars from a Canadian Pacific (CP -0.2%) train derailed earlier today in Saskatchewan, and one leaked crude oil; there is no estimate of the amount of oil spilled. CP already has suffered two derailments involving crude oil this year, one in Ontario and the other in Minnesota. CP denies any link between the accidents and defends its safety record. Comment!
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2:42 PM eBay (EBAY -0.9%) continues to look for more ways to grow the use of PayPal. New initiatives include RadioShack (RSH -2.7%) setting up PayPal as a payment option at its stores beginning this month and working with Jamba Juice (JMBA +0.7%) to find a way for its customers to pre-order drinks and pick them up in a separate line. The big picture: PayPal will be in an estimated 2M merchant locations by the end of the year, but the company still has some major work to do to break the swipe habits of consumers. Comment!
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2:25 PM Alaska Airlines (ALK -2.9%) says only a few of its flights in and out of Alaska are being affected by the increased volcanic activity in the region. 2 Comments
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2:09 PM Neiman Marcus says it will close a warehouse in China and start fulfilling orders from the U.S. in what the retailer believes will prove to be a better business model. The cautious approach by Neiman Marcus to China comes with the company reported to be exploring strategic alternatives including a possible IPO. Comment!
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1:54 PM Though MSO operators (TWC, CVC, CMCSA, CHTR) all offer subscribers a broadband-only subscription, so far the group seems to be doing an adequate job upselling customers to bigger packages to prevent wide-scale cord cutting on pay TV services. The trend is not without an assist from broadcasters that are only allowing authenticated consumers from pay TV providers to watch their series online and on mobile devices. Still, execs do acknowledge that cities with younger consumers tend to favor broadband-only packages meaning the industry could see a problem sometime in the future keeping its finger in the dike. Comment!
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1:53 PM Shares of Sony (SNE +8.5%) move higher amid ongoing chatter that the company is considering peeling off its entertainment arm in a spinoff a la Dan Loeb's suggestion. What to watch: Most analysts and traders seem to like the idea of a Sony business split, meaning if CEO Kazuo Hirai reiterates next week during a scheduled presentation that he supports the company staying together as one then shares could see a rapid-fire drop. 2 Comments
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1:17 PM Disney (DIS -0.2%) laid off employees at ESPN as part of a company-wide trimming process, according to Deadspin. The number of fired employees accounted for less than 6% of the sport channel's total workforce. 6 Comments
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12:51 PM Netflix (NFLX -1.5%) could pass all cable networks and perhaps even a major network this summer in terms of hours watched per month as the streaming service launches Arrested Development just as the traditional network season winds down. The feat is fairly impressive when it's considered that the service is only 28M homes - compared to the +100M penetration of cable networks. Q1 scorecard of viewer hours/month (via BTIG): CBS 3.3B; ABC 2.6B; NBC 2.3B; Fox 1.9B; Disney Channel 1.3B; Netflix 1.2B. 3 Comments
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12:31 PM News Corp (NWS, NWSA) continues to be one of the most popular consumer service stock picks of hedge funds, according to Insider Monkey. The inside take is that despite a decent YTD 26% runup in share price, valuation is still reasonable with a pending split of the company looking promising. The latest hedgie to take a bite is Lone Pine Capital with an increased in its position to 22M shares. (13F) Comment!
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12:21 PM Beazer Homes (BZH -2.9%) slips on a downgrade to Neutral at Sterne Agee. The firm cites headline risk, saying its management is pursuing a strategy of reducing underperforming communities, and the culling will likely result in negative Y/Y community count growth. Order comparisons will likely be -5.0% in F3Q13 versus its current estimate of 20.5% growth. If order estimates prove out, the share price could be pressured from below-average operating comp comparisons. Comment!
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12:03 PM The bird flu in China has cost the local poultry industry 40B yuan ($6.25B), according to estimates from the China Animal Agriculture Association. What to watch: An increased focus on safety in the region could help life sales for producers Tyson Foods (TSN +1.3%), Sanderson (SAFM +0.6%), and Pilgrim's Pride (PPC -0.3%) after they have been snubbed in the region in the past partially due to cost. Comment!
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11:55 AM American Airlines (AAMRQ.PK) continues to shed jobs, according to the latest paperwork the carrier filed. For the 12-month period ending March 31, American cut jobs by close to 10% as it continues to get lean and mean in front of its merger with U.S. Airways (LCC -3.2%). What to watch: Analysts will get their hands on more numbers on the American-U.S. Airways plans shortly which should help generate estimates on synergies the deal will kick up over the next few years. Comment!
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