Apple Q4 miss overshadows "insane" forecast. The Apple (NASDAQ:AAPL) juggernaut continued unabated in FQ4 as net profit jumped 54% to $6.62B, or $7.05 a share, and revenue climbed 39% to $28.3B. However, shares tumbled 5.1% post-market as the results missed analyst forecasts for the first time in years. While speculation about the timing of the new iPhone may have held back shipments, traders seem to have ignored what MG Siegler on TechCrunch called jaw-dropping holiday-quarter projections of a record $37B in revenue and $9.30 in EPS. "Where this really gets insane is when you realize that Apple always lowballs their projections," Siegler gushed.
Intel defies PC fears as profit sails past forecasts. Laptop demand in emerging markets and continued strong corporate spending helped Intel (NASDAQ:INTC) to shrug off worries about the softening PC market and post Q3 results that topped expectations. EPS rose 17% to $0.65 a share and revenue surged 28% to a record $14.2B, with production woes at AMD (NASDAQ:AMD) probably helping as well. Intel also gave Q4 guidance that one analyst described as "well above consensus estimates, but below seasonality," and boosted a stock buyback program by $10B. Shares rose 3.9% premarket.
EU probes banks over Euribor rates. EU regulators have seized documents from several major banks as part of an investigation into how Euribor rates are set, The Wall Street Journal reports. The probe adds to a long-running inquiry into the suspected fixing of the Libor rate, an investigation that involves regulators in the U.S., Europe and Japan. The banks concerned are not yet known, but past reports have named Barclays (NYSE:BCS), UBS (NYSE:UBS), Deutsche Bank (NYSE:DB), Lloyds (NYSE:LYG), Citigroup (NYSE:C), JPMorgan (NYSE:JPM), and Bank of America (NYSE:BAC).
Speculation of impending foreclosure deal rumbles on. Reuters becomes the latest to report that a deal between U.S. states and major banks over inappropriate foreclosure practices is close. The settlement could be worth $25B - up from previous speculation of $20B - and could be finalized by the end of the month. The banks will get immunity from further lawsuits but will refinance underwater loans, a provision that could lure California back into the talks. The state has 2M residents in negative equity.
Yahoo's struggles continue. Shares in Yahoo (YHOO) rose 2.7% post-market after Q3 EPS before items came in at $0.21 and beat estimates, but this couldn't hide the company's continuing woes. Sales, excluding revenue passed on to partner sites, fell 4.6% to $1.07B, extending what AP described as the "financial mediocrity" that led to Carol Bartz's firing as CEO. In contrast, Google's (NASDAQ:GOOG) net revenue jumped 37%. Still, Yahoo's haplessness appears to be supporting the share price, as investors reckon it could make a sale more likely, with the Web portal's Asian investments and worldwide audience of 700M giving the company some luster.
Inflation expected to have eased. September inflation data is due out this morning, with economists estimating that CPI dropped to +0.3% M/M from +0.4% in August. This would be in line with the Fed's view that consumer prices will "decline moderately over time." Core CPI is seen at 0.2% for the third month in a row.
Moody's becomes latest to cut Spain's rating. Moody's yesterday downgraded Spain two notches to A1 from Aa2 with a negative outlook, citing the obvious suspects of weaker growth prospects, the EU debt crisis and the "continued vulnerability of Spain to market stress," which is driving up the cost of borrowing. Moody's is a bit late to the show, with the country having already been downgraded by S&P and Fitch in the past two weeks.
Deja vu all over again in Greece. In a rerun of events in the summer, Greek workers have begun a 48-hour general strike as parliament prepares to vote on further austerity measures tonight and tomorrow to appease the country's EU overlords. The ruling PASOK party remains divided, but the bill should go through, possibly with the opposition's help.
Alcatel-Lucent to sell Genesys unit for $1.5B. Alcatel-Lucent (ALU) intends to sell its Genesys unit, which provides customer-service software, to P-E group Permira for $1.5B, although it will keep the rest of its Enterprise business after initially considering selling it. The deal gives Alcatel a welcome cash boost as CEO Ben Verwaayen looks to complete a three-year turnaround program at the end of this year.
Samsung, Google unveil latest smartphone. Samsung (OTC:SSNLF) and Google (GOOG) have introduced their Galaxy Nexus device, which includes facial recognition for unlocking the handset. The Nexus also runs on the latter's latest "Ice Cream Sandwich software", an Android platform that, like Apple's iOS (AAPL), can run on tablets and smartphones. Yesterday, RIM (RIMM) again disappointed analysts by unveiling what it called its "next generation platform" for BlackBerry smartphones and tablet, but was little more than a rebranding. "Underwhelming is a good word," one analyst told The New York Times.
P-E firms line up for TransUnion. Carlyle, Bain and Advent are in the hunt to acquire credit-reporting firm TransUnion, which could sell for over $2B, Reuters reports. The owner, Madison Dearborn, is deciding whether to sell the company or float it after TransUnion filed for a $325M IPO in July. However, the financial uncertainty has affected both options.
Williams to spin off exploration unit. Williams (NYSE:WMB) has decided to spin off its exploration-and-production business as a public company owned by Williams shareholders rather than float it in an IPO. The firm had planned to launch an offering by the end of 2011, but the stock market volatility has made a valuation difficult to gauge.
UAW authorizes Ford contract. Ford (NYSE:F) workers have ratified a new four-year labor contract that the automaker agreed with the UAW. The deal covers the company's 41,000 workers in the U.S., and promises a balanced approach between benefits, plant improvements and labor costs.
In Asia, Japan +0.3% to 8773. Hong Kong +1.3% to 18309. China -0.3% to 2378. India +2.0% to 17085.
In Europe, at midday, London +1.2%. Paris +1.0%. Frankfurt +1.4%.
Futures at 7:00: Dow +0.3%. S&P +0.25%. Nasdaq -0.4%. Crude +0.5% to $88.75. Gold +0.2% to $1656.00.
Wednesday's economic calendar:
7:00 MBA Mortgage Applications
8:30 Consumer Price Index
8:30 Real Earnings
8:30 Housing Starts
9:00 Fed's Lockhart: 'Achieving Latin America's Growth Potential'
10:30 EIA Petroleum Inventories
2:00 PM Fed's Beige Book
4:30 PM Fed's Lockhart: 'Leadership and Career'
Earnings Results: Companies that beat EPS expectations last night and today include Crown Holdings (CCK), Intel (INTC), United Rentals (URI), Yahoo (YHOO). Those in line include Juniper Networks (JNPR). Those that missed forecasts include Apple (AAPL), Cree (CREE), CSX (CSX), Linear Technology (LLTC). Full real-time earnings coverage here.
Notable earnings after Wednesday's close: AMLN, AXP, CAKE, CBST, CRUS, CVA, CYS, EBAY, ETFC, EW, EWBC, FNF, KMP, LHO, LRCX, NE, NFX, PLCM, RJF, RVBD, SLM, SYK, UMPQ, WDC, WYNN, XLNX
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.