Wall Street Breakfast: Must-Know News
Loeb mulls options after Sony rejects spin-off plan. Third Point plans to continue talks with Sony (SNE) and look at "further options to create value" for shareholders after the latter's board unanimously rejected a proposal from Daniel Loeb's fund to partially list its entertainment arm. Sony asserted that 100% ownership of the operations is crucial to the company's success, as a spin-off would harm synergies between its content and hardware businesses. Sony's shares dropped 4.6% in Tokyo.
German factory orders destroy expectations. German factory orders jumped 3.8% on month in June, coming in well above consensus of +1% and showing a big improvement from a fall of 0.5% in May. On year, orders surged 4.3% in June vs -2% in May and forecasts of -0.2%. German shares (EWG) spiked following the data and were +0.3% at the time of writing. The euro also rose and was +0.2% vs the dollar.
Jeff Bezos buying Washington Post newspaper ops for $250M. Amazon (AMZN) CEO Jeff Bezos has agreed to acquire The Washington Post's (WPO) newspaper publishing business for $250M in a deal that includes the flagship and other titles. The question is whether Bezos will be able to find a way of turning around the Post, which has seen its circulation and ad revenues slump. If he can, maybe there will be hope yet for the newspaper industry.
Top Stock News
IBM furloughs U.S. workers at struggling hardware unit. IBM (IBM) is requiring a majority of its U.S. hardware workers to take a week off at lower pay as the company tries to slash costs in the face of weak sales. IBM's hardware sales slumped 17% on year in Q1 and 12% in Q2, with the company having to cope with plunging UNIX server demand and a shift in IT hardware spending towards cloud-service companies.
NSA revelations costing U.S. cloud providers. U.S. cloud-computing companies could miss out on $21.5B-$35B of revenues over the next three years, the Information Technology & Innovation Foundation think tank estimates, due to concerns about how American authorities have been accessing the firms' user data. With evidence increasing that foreign customers have been canceling orders and limiting their use of U.S. cloud service providers, companies that could be affected include Amazon (AMZN), Google (GOOG) and Microsoft (MSFT).
Neiman Marcus appoints banks to lead IPO. Neiman Marcus has hired Credit Suisse (CS), Bank of America (BAC) and JPMorgan (JPM) to lead a potential IPO, sources tell Reuters, indicating that the high-end department-store retailer might be leaning towards a listing as opposed to a sale. Sources had previously said that Neiman had appointed Credit Suisse to run a sales process, but the company has not yet found a buyer. Neiman was taken private in 2005 for $5.1B.
Toshiba denies Nikkei report about new fab with SanDisk. Toshiba (OTCPK:TOSBF) has said that it has no plans to build a new NAND flash-memory manufacturing plant at its Yokkaichi facility in Japan, where the company is investing ¥30B ($304M) to expand Fab 5. Toshiba was responding to a Nikkei report that along with SanDisk (SNDK), it would invest ¥400B ($4.1B) in a new plant at Yokkaichi.
China seeks recall of two Abbott infant formula products. China has asked Abbott Laboratories (ABT) to recall some infant formula products after the New Zealand embassy said that two batches produced by the company could have been tainted by bacteria that can cause botulism. The warning is tied to the disclosure of Kiwi company Fonterra Co-Operative that some of its products might contain such bacteria.
Icahn buys 4M extra shares in Dell. Carl Icahn bought 4M more Dell (DELL) shares last week, taking his total holding to 156.5M shares. Icahn, who is battling Michael Dell and Silver Lake for control of the company, purchased the stock a day before the buyout group sweetened their offer to $13.75 a share plus a $0.13 special dividend. Icahn acquired the shares at $12.94 each, meaning he'd make a profit on the transaction if he loses and Michael Dell wins.
Top Economic & Other News
Industrial output, retail data add to U.K.'s growth picture. U.K. industrial production and retail-sales data have added to the positive picture of the U.K. economy, which grew 0.6% in Q2. Industrial output expanded 1.1% on month in June and comfortably topped consensus of +0.7%, boosted by a 1.9% increase in manufacturing. Comparable retail sales rose 2.2% on year in July and also exceeded forecasts. Today's figures add to strong PMI readings for last month.
Australia cuts rates to record low. The Reserve Bank of Australia has reduced its key interest rate by a quarter of a percentage point to a record low of 2.5%. RBA Governor Glenn Stevens cited below-trend growth - the economy has suffered from falling mining investment - and the strength of the Australian dollar in his statement. The Aussie was +0.75% vs the USD at the time of writing, as the rate cut had been expected.
Alpha-Rich Stock Movers and Great Calls
1) Last Friday, Nitin B. Sharma said that after speaking with Smith & Wesson's (SWHC) management and analyzing the company, he saw 100% upside for shares. The stock is +8.7% to date. Read article »
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Alpha-Rich Stocks To Watch
1) Renewable Energy Group (REGI). Despite a big move this year, Renewable Energy Group has great upside. Analysts' estimates greatly lowball the company's 2014 earnings potential, while recent acquisitions should fuel another upwards move. Read article »
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In Asia, Japan +1% to 14401. Hong Kong -1.3% to 21924. China +0.5% to 2061. India -2.3% to 18,736.
In Europe, at midday, London -0.1%. Paris +0.2%. Frankfurt +0.3%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq flat. Crude +0.4% to $107. Gold -0.8% to $1292.40.
Today's economic calendar:
7:45 ICSC Retail Store Sales
8:30 International Trade
1:00 PM Results of $32B, 3-Year Note Auction
Notable earnings before today's open: ACM, ADM, AFSI, AKRX, ALLT, ARCC, ARCO, AYR, BPI, CCC, CHTR, CMLP, CNK, CTSH, CVS, D, DBD, DISH, DNR, DWRE, EMR, END, ENDP, EXPD, FBN, FE, FOSL, GGS, HAR, HCN, HPT, HSIC, ICE, IFF, ISIS, KORS, KWK, LIOX, LPX, MGM, NRGY, OAK, OMX, OXF, PH, POZN, PQ, RDC, REGN, RIGL, SATS, SE, SEP, SMG, SPR, SRE, STWD, TA, TAP, TDG, TDW, TECD, TGH, THC, TICC, TRGT, VSI, WMC, ZTS
Notable earnings after today's close: ALJ, AMTG, ANDE, ATO, AVNR, BID, BIO, BMR, CAR, CF, CHRW, CHUY, CSC, CSOD, DGI, DGIT, DIS, DPM, DVA, ENOC, ENPH, EOG, EXEL, FSLR, FST, FURX, G, GA,GDP, GEOS, GEVO, GIVN, GLUU, GPOR, JAZZ, LQDT, LYV, MCEP, MED, MRO, NUAN, OAS, ONTY, ORA, PRI, PZZA, QUAD, REXX, SD, SLTM, SNTS, SPRD, SYNC, TESO, TWO, URS, VSAT, XNPT, Z
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