Today - Sunday, February 1, 2015
- On procedural grounds, the Delhi high court sets aside the recent decision by the Deputy Controller of Patents and Design rejecting Gilead Sciences' (NASDAQ:GILD) patent application for its HCV drug Sovaldi.
- The patent office rejected Gilead's submission on the basis of Section 3(d) of the Patents Act which prevents evergreening of patents and states that a new version of an existing substance cannot be patented unless it is much more effective than the old version. Its position was that sofosbuvir represented a minor change to an existing molecule that did not deliver improved efficacy.
- India legal experts believed that the company's appeal would succeed because the reasoning in the controller's order was slipshod. The procedural misconduct occurred in the pre-grant opposition stage of the application review. This is the point where the reviewer examines information submitted by opposing parties before a final ruling is issued. Under Indian law, the office was required to notify Gilead, which it did not . Also, the controller maintained that he did not rely on claims made in the pre-grant opposition, but certain sections of the order appeared strikingly similar to parts of the opposition application from Indian generic firm Natco Pharma Ltd. Justice Rajiv Shakdher said the it appeared that patent office "generously took assistance from the material" filed by the opponents.
- A written order has not yet been issued by the high court but it stated that an order by the patent office cannot be passed without every opposing party being heard. In Sovaldi's case, there are four oppositions so additional review is required before a final ruling can be made.
- Previously: Gilead to fight ruling from India patent office (Jan. 16)
- Previously: India patent office slaps Gilead in the face (Jan. 14)
- As with every network that embraces the ratings spike that the NFL's championship game brings, NBC (NASDAQ:CMCSA) is hoping the Super Bowl will allow it to promote and boost key programming. This year's coveted earner of the post-game slot: James Spader-starring tentpole The Blacklist, followed by the postgame's Tonight Show Starring Jimmy Fallon featuring game stars.
- Aside from the day's saturation programming (the six-hour pregame show is under way), expect heavy use of in-game commercial time to promote not only The Blacklist, but also singing-show success The Voice and the duo of Chicago Fire and Chicago PD.
- Last year, more than 112M people tuned in to the highest-rated TV program of all time. What about this year? NBC is expecting 115M: "There would be huge disappointment if we weren't the most watched show in the history of television after Super Bowl Sunday," says coordinating producer Fred Gaudelli.
- There's reason for good expectations; Super Bowl viewership has grown every year since 2005 except one: 2013. Ratings were down a bit for the two conference title games in January.
- NBC's newly record-priced ads took until the last minute to sell out, but sell out they did, and the network thinks a lot of casual fans will tune in to the game after heavy news coverage of the New England Patriots' deflated-balls controversy.
Saturday, January 31, 2015
- Russia’s gross domestic product is expected to shrink by 3% in 2015 with oil prices at $50/bbl and an estimated capital outflow at $115B, announced Alexei Ulyukayev, the country's economy minister.
- Inflation in 2015 is now forecast to stand at 12%, up from the previous estimate of 7.5%, he added.
- The announcement comes just a day after the Russian central bank unexpectedly lowered its key interest rate by two percentage points to 15%, and almost a week after the country's credit rating was cut to "junk status" at Standard & Poor's.
- ETFs: RSX, RUSL, RUSS, RSXJ, ERUS, RBL
- JPMorgan (NYSE:JPM) has agreed to pay $99.5M to settle its portion of an antitrust lawsuit in which investors (including hedge funds, pension funds and the city of Philadelphia) accused 12 major banks of rigging prices in the $5.3T-a-day foreign exchange market.
- The settlement follows the bank's agreement last November to pay about $1B in civil penalties to resolve related claims by U.S. and European regulators.
- IBM has approved a 2015 compensation package for CEO Ginni Rometty that includes a $1.6M base salary (up from 2014's $1.5M), $13.3M in restricted stock units (up from 2014's $12.75M), and a potential $5M bonus (up from 2014's $4M, of which $3.6M was earned). The stock units, whose granting is tied to hitting EPS and cash flow targets, will be distributed in 2018. (8-K)
- The pay hike follows a 2014 in which IBM's dividend-adjusted stock price fell 12%, and its EPS and free cash flow respectively declined 1% and 18% amid top-line pressures that cut across hardware, software, and services. The year also saw Big Blue pull its $20 2015 EPS target.
- After factoring dividends, IBM's shares are down 11% since Rometty became CEO at the beginning of 2012.
- Playing hardball with Greece's new leftist government, Germany's Angela Merkel ruled out a debt writedown for Greece on Saturday, while a ECB policymaker threatened to cut off funding to Greek banks if Athens does not agree to renew its bailout package.
- Prior to his election, Prime Minister Alexis Tsipras pledged to renegotiate agreements with the troika and write off much of Greece's €320B debt, saying that five years of austerity, "humiliation and suffering" were over.
- Europe's bailout program for Greece, part of a €240B rescue package also involving the IMF, expires on Feb. 28.
- Greek banks: NBG, OTCPK:ALBKY, OTCPK:EGFEY, OTCPK:BPIRY
- ETFs: GREK
- While Dish Network had the most strategically interesting outcome in the FCC's wireless spectrum auction, AT&T (NYSE:T) dropped the biggest bomb, with its $18.2B bid package surpassing the auction's reserve price all by itself.
- The high bid for a single license: about $2.8B for a primary New York license, won by AT&T.
- AT&T's challenge now: With about $4.5B in the bank, and $18.2B due to go to the FCC by March 2, the telecom giant will need to scramble a bit for funds.
- The company displayed confidence via a statement about its bid: It "expects that with this spectrum investment and other pending acquisitions, in the near term it may go above its 1.8x net-debt-to-EBITDA target. The company will use excess cash — after paying its dividend — over the next three years to pay down debt, and expects to return to historical debt ratios."
- It's not just the auction bid that's changing AT&T from a low-leverage investment to a high-leverage one; a $49B acquisition of DirecTV (NASDAQ:DTV) and its purchases of Mexico's Iusacell and Nextel are putting pressure on its purse (and possibly its single-A rating). AT&T recently entered into $11B in credit pacts.
- After learning which way AT&T (NYSE:T) went (high) and which way Verizon Wireless (NYSE:VZ) went (low) in the 11-week FCC wireless spectrum auction, most attention focused on Dish Network (NASDAQ:DISH): What are they up to?
- The satellite firm took just short of half of the available licenses (and saved over $3B by cannily working through small-business partners) but doesn't offer mobile service -- yet.
- Dish's fortunes in this auction were linked to those of Verizon, which is widely considered a potential buyer or lessee of Dish's spectrum assets. But Dish's Charlie Ergen has pursued wireless firms before (MetroPCS and Sprint (NYSE:S)) and may see wireless mobile as the next path forward from a slower-growing business.
- “I think [Ergen's] strategy is built around a confidence that spectrum will only become more valuable going forward,” says former FCC commissioner Robert McDowell.
- DISH closed the day out down 4.3%, slightly below where it was sitting before the auction results were released.
- The FDA approves Shire's (NASDAQ:SHPG) Vyvanse (lisdexamfetamine dimesylate) for the treatment of adult patients with binge-eating disorder, a condition characterized by recurrent episodes of compulsive overeating even when the patient does not feel hungry.
- Binge-eating disorder can lead to weight gain and health problems related to obesity, but it is not approved or recommended for weight loss.
- Vyvanse was approved for sale in the U.S. in 2007 for the treatment of attention deficit hyperactivity disorder (ADHD) in patients at least six years old.
- The FDA approves Zogenix's (NASDAQ:ZGNX) Zohydro ER (hydrocodone bitartrate) Extended-Release Capsules, CII, with BeadTek, a formulation technology that provides abuse-deterrent features without changing the release properties of hydrocodone.
- BeadTek incorporates pharmaceutical excipients that immediately form a viscous gel when crushed and dissolved in liquids or solvents.
- The company intends to transition all Zohydro strengths to the BeadTek version in Q2. In H2, it expects to submit the results from its ongoing Human Abuse Liability Studies, which will further characterized the abuse-deterrent properties of the BeadTek formulation, to the FDA.
- Related tickers: (NYSE:MNK) (NYSE:ACT) (NYSE:TEVA) (NYSE:ABBV) (NYSE:LCI) (NASDAQ:ALKS) (NYSE:PFE)
- Automakers need to address the issue of how to sell to millennials, according to data from TrueCar.
- The group is projected to purchase 4.24M vehicles in 2015 to account for close to 25% of the total new car market in the U.S. That's a percentage that will stay on the rise over time.
- A few things to keep in mind about millennials.
- They have an indie spirit that can veer away from dominant brands. Just ask McDonald's or Anheuser-Busch InBev.
- They are early adopters of new technology. Just ask the cable companies.
- They don't take their marching orders from Madison Avenue on what products are on-trend. Just ask Abercrombie & Fitch.
- Millennials are likely to have a lot to say with the critical question on if electric batteries or hydrogen fuel cells (Tesla vs. Toyota) emerge as the dominant alternative energy source for the industry.
- Automaker stocks: GM, F, TM, HMC, OTCPK:NSANY, TSLA, OTCQX:VLKAY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXY, OTCPK:MMTOF, TTM, OTCPK:MMTOF, OTCPK:SZKMY, OTCPK:FUJHY, OTCPK:GELYF, FCAU.
- CEOs are far more pessimistic about corporate earnings than any time since the financial crisis, according to research from Bespoke.
- The percentage of companies lowering earnings forecasts during this reporting cycle has led those with upward revisions by 8.6 percentage points, the widest margin since Q4 2008, according to data compiled by the firm.
- The consumer staples group has seen the highest percentage of companies lowering guidance at 37.5%, while 17%-20% of health care and consumer discretionary companies have lowered; surprisingly, energy is among the sectors that are cutting guidance the least.
- Analysts now expect per-share earnings from S&P 500 companies to fall 2.1% in Q1 and slip another 1.1% in Q2, Bloomberg calculates; if correct, it would be the first back-to-back profit contractions since 2009.
- ETFs: SPY, IVE, SH, SSO, SDS, VOO, IVV, SPXU, UPRO, SPXL, RSP, RWL, EPS, SPYG, IVW, RPG, RPV, SPYV, VOOG, VOOV, SPLX
Friday, January 30, 2015
- News that Spotify is tapping Goldman Sachs to seek $500M in financing -- a move likely to relieve pressure for its IPO -- has put beleaguered Pandora (P -1.6%) in the spotlight.
- Pandora has lost more than 50% off its share price in the past 12 months amid worries that it might not be able to keep up with intense competition from a cash-rich Spotify, not to mention major players like Apple and Google.
- Investors like Guy Adami figure Spotify's fundraising is probably good for Pandora, but SA contributor Orange Peel Investments notes a rising tide doesn't lift all streaming boats.
- Meanwhile, a which-should-you-buy piece examines the two firms' mirror-image business models (subscription-heavy at Spotify; ad-heavy at Pandora) and comes out pro-Spotify.
- Credit Suisse maintains a Neutral rating on Pandora and has lowered its price target to $24/share. Wedbush previewed Pandora's earnings by maintaining its Outperform rating and a $35 target.
- Previously: Pandora -5.3%; Sony partners with Spotify (Jan. 28 2015)
- Viacom (VIA, VIAB) closed Friday down 4.4% after missing slightly on fiscal Q1 revenues the previous day, but with a few more stormy concerns popping up -- including ad inventory worries and a planned reduction in stock buybacks.
- "Layoffs on the way" is the message observers took from CEO Philippe Dauman's warning of "substantial net cost savings throughout our organization" and that the company would "pull all the levers" to achieve them. Even Chairman Sumner Redstone has taken a pay cut, with total comp reduced to $13.2M in 2014 compared to a prior $36.2M.
- The absence of Redstone on the company's earnings call loomed large, raising concerns about his health in the context of the firm's not-quite-transparent succession plans.
- Constant Contact (CTCT -3.5%) was caught in the market's downdraft despite a solid earnings beat Thursday and some positive takes from analysts Friday.
- National Securities initiated coverage of the stock at Buy, with a price target of $50, based on the belief that Constant Contact should trade at a 50% discount to comparable firms' estimated average enterprise value/EBITDA ratio of 23x, as compared to the current 60% discount.
- Meanwhile, Oppenheimer reiterated their Outperform on the shares with a price target of $43.
- CTCT closed Friday at $37.82.
- Previously: Constant Contact operating numbers gain for Q4 (Jan. 29 2015)
- Previously: Constant Contact up 1.9% on Credit Suisse upgrade (Jan. 27 2015)
- Twitter (NYSE:TWTR) chairman Jack Dorsey and fellow co-founder Evan Williams let employees know at a recent meeting they and the board are "super supportive" of embattled CEO Dick Costolo, Kara Swisher reports. Dorsey also recently defended Costolo on (drumroll...) Twitter.
- Sources state this show of support comes amid "growing worries about potential attacks from activist shareholders." The WSJ ran a column in November highlighting shareholder discontent with Costolo, and Twitter's shares spiked on Dec. 22 thanks to speculation Costolo could be on his way out.
- Swisher reports "a number of former employees are getting pinged by hedge funds about Costolo, who appear to be doing extensive research on him." Stephen Mandel's Lone Pine Capital is said to be among the firms.
- Working against would-be activists: Twitter can issue preferred shares with special voting rights (i.e. a poison pill) without shareholder approval, and shareholders can't call a special meeting to make changes. Working in their favor: Twitter (unlike Google or Facebook) doesn't have a dual-class share structure.
- Twitter's Q4 numbers (due in six days) could either ease the pressure facing Costolo or heighten it.
- Airline stocks took a beating in late trading today as crude oil futures surged 8% to pass $48/bbl, caused by a big drop in U.S. working rigs in the past week and a spike in ISIS attacks on oil-rich northern Iraq.
- SKYW -7.8%, VA -7.6%, SAVE -7.1%, AAL -6%, DAL -5.8%, RJET -5.7%, UAL -5.6%, ALK -4.5%, LUV -3.8%, LFL -3.6%, JBLU -2.1%.
- Dex Media (NASDAQ:DXM) fell 7% in trading today, hitting levels last seen in April. Shares fell 24% over the whole of January.
- Earlier today, Dex filed a Q4 report for one-time merger partner SuperMedia, done to comply with the reporting requirements of the Delaware court that handled Dex/SuperMedia's 2013 Chap. 11 filing. The report states SuperMedia had cash/equivalents of $64.7M at the end of December, $270.4M in cash available, and $2.49B in notes receivable.
- Chevron (NYSE:CVX) recovered much of its earlier losses prompted by a halt in its stock buyback program, as perhaps investors were somewhat reassured when CEO John Watson stressed that the company's dividend, currently $1.07/quarter, remained the "highest priority."
- The buyback freeze and announced 13% capex cut for 2015 are part of CVX's efforts to curb spending, with "significant cost-reduction efforts underway," Watson said during today's earnings conference call, adding that layoffs are possible.
- As part of that effort, CVX will significantly slow spending on the Kitimat liquefied natural gas project in Canada, although it will continue to develop gas fields in B.C.’s Liard Basin to support the export facility, secure permits and reach agreements with aboriginal groups.
- CVX does not plan to make final decisions on any projects this year other than for its Tengiz field in Kazakhstan, Watson said.
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