Wall Street Breakfast: Argentina To Default, BSkyB Acquisition, Glaxo Investigation

by: Wall Street Breakfast
Wall Street Breakfast
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Argentine representatives have concluded that the best option for their country is to default next week, says a spokesperson from NML Capital - one of the holdout investors involved in the negotiations. Holdouts and Argentina met yesterday for about three hours with a court-appointed mediator in New York to try to reach an understanding before the country's July 30 default deadline.

Ukraine’s Prime Minister Arseniy Yatseniuk has resigned, after two parties quit the ruling coalition government to trigger early parliamentary elections. The dissolution of the coalition was expected following President Petro Poroshenko's promise to call elections after he won the presidential vote in May. Yatseniuk expressed his concerns of Ukraine's inability to vote on crucial laws, paying soldiers, buying rifles and restocking its much needed gas.

Russia's ambassador declares that the July 16 U.S. sanctions imposed on Rosneft (OTCPK:RNFTF), Novatek (OTC:NOVKY) and Gazprombank (OTCPK:OGZPY) violate World Trade Organization rules and may force Moscow into a destabilizing trade dispute. The accusation comes after the U.S. condemned Russia for firing artillery across the border into Ukraine. A European sanctions proposal against Russia is still being drafted following yesterday's EU summit.

India has opposed the World Trade Organization's new global customs agreement, infuriating fellow member countries which have tried to seal India's trade facilitation deal since it was agreed to at talks in Bali last December. Despite demanding global trade reform, India says it will veto the deal until it secures rights linked to its system of subsidizing and stockpiling crops. WTO members state that Delhi's veto will be costly, economically and politically.

British Sky Broadcasting has agreed to a £4.9B ($8.3B) deal to acquire 21st Century Fox's (NASDAQ:FOX) Sky Italia and 57% stake of Sky Deutschland (OTC:SKDTF), creating a European pay-TV giant with approximately 20M subscribers. BSkyB's (OTCQX:BSYBF) deal will be financed through cash, debt and by a placing of shares that represents around 10% of the firm's issued share capital.

GlaxoSmithKline is now facing corruption claims in Syria, where it has been accused of bribery to secure business. The drugmaker is investigating the claims which date back to 2010 after a whistleblower's email was sent to the company. Syria is now the sixth country to be investigated by Glaxo (NYSE:GSK) for smaller-scale bribery claims compared to the $480M Chinese allegations which have plagued the company since last July.

The European Commission has announced that EU antitrust regulators will determine whether to clear Oracle's (NYSE:ORCL) $5.3B bid to buy Micros (NASDAQ:MCRS) by August 29. Oracle is looking to continue its fast-expanding cloud business through the new acquisition, and it will be the company's biggest purchase in five years.

After agreeing to an $8.9B fine last month for U.S. sanctions violations, BNP Paribas (OTCPK:BNPZY) has come under the spotlight again - this time with the U.S. Department of Agriculture. A Federal court has entered an $80M judgment against the bank for cheating a program which covers the losses of American commodities exporters in cases where their import partner failed to make a payment.

Amazon's North America revenue rose 26% Y/Y in Q2 to $12B, and international revenue 18% to $7.3B. The growth rates are even with Q1 levels. North America had a $438M segment operating profit, and an international $34M segment operating loss. Amazon (NASDAQ:AMZN) is now expecting Q3 revenue of $19.7B-$21.5B (an increase of 15%-26% Y/Y) vs. a $20.8B consensus. Operating loss is expected to total $410M-$810M, up from just $25M a year earlier.

Visa's FQ3 net income climbed 11% Y/Y up to $1.4B, and EPS of $2.17 grew by 15%; net operating revenue rose 7% to $3.2B on constant dollar basis. Payments volume growth in FQ3 was up 11% to $1.2T on a constant dollar basis (was up 12% in FQ2). Visa's (NYSE:V) total processed transactions rose 11% to 16.7B, while total operating expenses reached $1.1B. Full-year outlook was affirmed with revenue growth at 9-10% with an expectation of 200 basis points of negative foreign currency impact and EPS growth at 17.5-18.5%.

U.S. District Judge Denise Cote has outlined her concerns of Apple's (NASDAQ:AAPL) recent $450M e-books settlement which charged the company of conspiring with five publishers to fix e-book prices. If Apple's appeal is successful, and the 2nd Circuit returns the case to Cote, a clause will require the tech-giant to pay $70M, with only $50M going to consumers. As the verdict stands now, $400M is to be paid to consumers.

Boeing has agreed to conditions for it to be able to sell aircraft spare parts to Iran, a move that could lead to the first sale of products by a U.S. aerospace company to Iran since 1979. In a 10-Q filing, Boeing (NYSE:BA) said it had "entered into an agreement and engaged in related discussions with Iran Air," setting general conditions by which it would sell airplane parts and other safety-related equipment.

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Today's Markets:
In Asia, Japan +1.1% to 15458. Hong Kong +0.3% to 24216. China +1% to 2127. India -0.6% to 26127.
In Europe, at midday, London -0.1%. Paris -0.8%. Frankfurt -0.6%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq -0.3%. Crude +0.1% to $102.15. Gold +0.2% to $1295.30.
Ten-year Treasury Yield flat at 2.51%

Today's economic calendar:
8:30 Durable Goods

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