Merger Mayhem As Qualcomm, AT&T And TD Ameritrade Get Bigger; Citizens Financial Group Provides An Interest Rate Option

by: Tusk Media


Oil, Gas and Coal (1:32 - 5:21) US commodity producers are going bankrupt; why production isn’t falling.

QCOM-NXPI, caveat emptor ( 5:23 - 9:16) NXPI’s weak negotiating strategy has us wondering why.

T-TWX, Hasty Blockbuster Offer (9:18 - 13:25) AT&T has rushed into this deal and is seeing political blow-back.

AMTD-Scottrade, more broker for more money (13:25 - 15:52) Technology is the driving factor behind AMTD’s latest acquisition.

CFG earnings (20:19 - 24:55) The call option on the Fed reports earnings; what to expect next.

It's a busy Monday in Marietta as Andrew joins Analyst Ben Nye in today's market run-down. In a wide-ranging discussion, the duo discuss commodities, mergers and an under-followed bank name that's up more than 30% in three months.

First, the pair talk bankruptcies. Andrew demonstrates how commodity production can continue at the ex ante rate after a company has entered bankruptcy proceedings. With more than $100 billion of cash on the sidelines, waiting to be deployed into the distressed debt of energy companies, it is easy to see how production is not falling despite far weaker energy prices. Keep an eye out for Peabody Energy (BTUUQ), the coal producer that has struggled because of weak prices, high costs, and competition with natural gas and alternative forms of energy.

Next, this morning we have a litany of large deals. Andrew leads off with Qualcomm's (NASDAQ:QCOM) acquisition of NXP Semiconductors (NASDAQ:NXPI). The mega-cap cell phone chip maker has agreed to purchase NXPI for $110/share in cold hard cash. The pair think this is a good deal for QCOM because they need an acquisition in order to continue to drive growth on top of a maturing revenue base. What they can't understand is why NXPI would agree to a deal when they (seemingly) have all the cards. Why wouldn't NXPI force QCOM to put all its chips on the table? Pro tip: check the golden parachute offers for the NXPI executives.

The AT&T (NYSE:T) - Time Warner (NYSE:TWX) deal is next in the line-up. TWX is well-known for its content but just how durable is it? Couldn't T produce the content themselves for perhaps much less money?

Later, we hit on TD Ameritrade's (NASDAQ:AMTD) acquisition of Scottrade, the retail brokerage outfit. The team talks about their experience with the products and how Scottrade's technology edge makes this a defensive acquisition for AMTD, rather than an offensive one.

Finally, Ben's favorite bank stock reported earnings last week. After spending time reviewing the quarter, he provides an update on where the company is, where it is going, and how it acts as a call option on the Federal Reserve's interest rate prognostications.

Later this week we will be unveiling a series of earnings preview vignettes. We will of course hit AAPL, but check out the rest for the potential to pick up some undervalued and underfollowed names. It is our first stab at these previews so let us know what you think or if you would like to see us cover other stocks.

Disclosure: I am/we are long T, TWX, NXPI, QCOM, CFG, VZ.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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