Today - Wednesday, March 12, 2014
- General Motors (GM -1%) will offer the 1.6M owners of the cars recalled due to an ignition switch issue a $500 cash allowance if they want to trade into a new vehicle.
- The cash allowance offer expires on April 30.
- All indications are that the automaker will be dealing with the backlash over its delayed disclosure of the issue for quite a while.
- IATA revises its outlook for airline industry profit to $18.7B, lower than a previous forecast calling for $19.7B in profits.
- The agency cites higher oil prices and a lack of international alignment of passenger rights as factors in the downward revision.
- Cargo demand is forecast to improve 4% in 2014.
- By region, North America is expect to see carriers generate the sweetest margins. The anticipated profit of $8.6B by North American airliners is more than double what counterparts in Europe will earn this year, says IATA.
- Related stocks: AAL, UAL, DAL, RYAAY, CPCAY, SINGY, CEA, ZNH, CPA, GOL, LFL, DLAKF, AIDIF, QUBSF, JBLU, RJET, SAVE, ALK, HA, AIRYY, MLYAF, AFLYY.
- Netflix (NFLX +0.3%) will have first-run rights to the science fiction series The 100 in Canada through the terms of a new distribution deal with Warner Bros. (TWX).
- The streaming service will be able to offer subscribers the show only one day after it airs on the CW network (CBS) in the U.S.
- The development follows a trend of Netflix trying to gain an edge over cable rivals outside the U.S. by airing popular U.S. shows within a tight window.
- SolarCity (SCTY +4.6%) will pitch its solar installation/electricity services to Best Buy (BBY -1.4%) customers at 60 stores in California, New York, Arizona, Oregon, and Hawaii.
- SolarCity, which already has a similar deal with Home Depot, will have onsite reps evaluate the feasibility of an installation with the help of satellite imagery, as well as discuss pricing and handle sign-ups.
- For Best Buy, the SolarCity deal is the latest in a string of store-within-a-store partnerships. Other partners include Apple, Microsoft, and Samsung.
10:17 AM| 1 Comment
- The $40-per-share offer for Safeway (SWY +0.2%) from Cerberus is the lowest valuation on a major food industry merger in the last ten years, according to Bloomberg. The deal price indicates low interest amongst major players for the struggling brand.
- The "go-shop" period of 21 days is expected to be quiet with Kroger (KR +0.5%) seemingly unwillingly to come in over the top with a bid for the whole company.
- Analyst take: Cantor Fitzgerald says the complicated Cerberus deal includes some risk for Safeway shareholders that the sale of property development centers won't generate the estimated returns. If that's the case, shareholders will earn less than the $40 bid price.
- The Chinese government is considering giving tax breaks to real estate firms which put movie theaters in shopping centers, according to The Hollywood Reporter.
- There are close to 40 Chinese exhibitors that could benefit from the initiative - including AMC Entertainment (AMC) owner Wanda. Lower development costs could also benefit IMAX (IMAX) which is in growth mode in China.
- What to watch: A booming Chinese movie industry will please Hollywood movie studios (TWX, FOXA, SNE, CMCSA, LGF, VIAB) which have been increasingly gearing their strategy around China's box office.
- General Motors (GM) plans to sell entry-level Opel models in Europe as the automaker responds to where it sees the strongest demand in the region.
- Top Opel marketing exec Tina Mueller says the brand needs a presence in the sub-€10K ($19.4K) segment.
- The development is a shift in strategy for Opel which as recently as last year was aiming for higher-end brands.
9:05 AM| Comment!
- Berkshire Hathaway (BRK.A, BRK.B) and Graham Holdings (GHC) reach agreement in principle for Berkshire to acquire a subsidiary of Graham which includes a Miami TV station, a number of Berkshire shares, and cash in exchange for about 1.6M shares of Graham Class B stock currently owned by Berkshire.
- The deal sounds like it's the result of a phone call between Buffett and Donald Graham, with the final numbers still to be worked out and nothing yet on paper.
- "I am sure this is a mutually beneficial transaction for both companies,” says Buffett. “While this transaction will greatly reduce our position in Graham Holdings, our admiration for the company and its management is undiminished.”
- Press release
8:31 AM| Comment!
- Target (TGT) saw a drop in store traffic following its data breach disclosure in December, according to data from Kantar Retail.
- The research firm reports Target's penetration of U.S. household fell to 33% in January from 43% a year ago.
- The drop was even sharper for Generation X shoppers as the penetration rate fell to 38% from 53%.
- Galaxy Entertainment (GXYEF) and Melco Crown (MPEL) are ready for phase two of Macau casino development with their properties on the Cotai Strip ready to open as early as next year.
- Cotai is expected to bring in as much as $115B a year in revenue in four years, a figure that dwarfs what the Las Vegas Strip and the current Macau properties generate.
- MGM Resorts (MGM) and Wynn Resorts (WYNN) have complexes planned for Cotai, but with later opening dates than their peers.
- Express (EXPR) reports comparable store sales increased 1% in Q4, led by a 14% rise in the e-commerce channel.
- Gross margin rate fell 300 bps to 32% due to the "intensely" promotional retail atmosphere.
- Express takes its guidance for Q1 down to $0.12-$0.18 vs. $0.41 consensus.
- Shares haven't opened trading yet, but are on watch for a slip.
- Breakfast traffic at restaurants increased 3% last year to easily outpace lunch and dinner visits which both showed declines, according to NPD data.
- Quick service restaurants accounted for close to 80% of all the breakfast visits by consumers.
- McDonald's (MCD) and Starbucks (SBUX) strengthened their breakfast market share position during the year, but a host of companies including Taco Bell (YUM) and Chipotle (CMG) are testing new formats and breakfast items.