Wall Street Breakfast:
January 23, 2013 | includes: AGN, AMD, BAYZF.PK, BCS, GOOG, IBM, JNJ, MAPP, NVS, QQQ, SPY, TXN, XOM
Top Stories
Google rises after profit tops forecasts. Google (GOOG) shares were +5.05% premarket after its Q4 EPS of $10.65 beat expectations while net profit rose 7% to $2.89B. Adjusted revenue rose 39% to $11.34B and missed consensus, partly because the figure excludes $802M in sales from Motorola's set-top box division. Revenue from Google's PC search business is slowing, with cost-per-clicks falling for the fifth quarter in a row, while the company is still trying to figure out how to make more money from mobile.
IBM earnings exceed expectations. IBM's (IBM) Q4 earnings beat analyst predictions as the tech giant's software business and sales in emerging markets returned to growth. EPS came in at $5.39 and revenue slipped 0.6% to $29.30B following the sale of its retail business in Q3, while net profit grew 6.3% to $5.83B. In addition, IBM provided guidance that was above expectations, helping to send shares 4.1% higher premarket.
Apple's profit seen dropping for first time in 10 years. Apple's (AAPL) earnings are due out after the bell, with analysts expecting that EPS dropped to $13.44 from $13.87 a year ago, which would be the first profit drop since 2003 as increasing costs and competition from Samsung take their toll. Still, revenue is expected to have jumped 18.1% to $54.73B, with iPhone sales seen continuing to break records.
Top Stock News
J&J learned about problematic hip implants long before recall. Johnson & Johnson (JNJ) knew that a metal hip-replacement implant was problematic in 2008, a year before the company halted production of the product and two years before recalling it, court documents show. The documents are part of a lawsuit whose opening arguments are due to start on Friday. Overall, J&J faces 10,000 suits over the implant, for which its estimated liability is over $1B.
Earnings worsen at TI and AMD Texas Instruments (TXN) and AMD (AMD) continued to suffer from soft demand for PCs in Q4, as well as from economic concerns about the EU and China. TI's Q4 net profit dropped 11% to $264M and revenue slid 13% to $2.98B, while AMD's net loss widened to $473M from $177M as revenue plunged 32% to $1.16B. Both chip companies provided guidance that was mostly below Street consensus.
Iraq tries to tempt Exxon to stay in the country. Iraq has reportedly made an offer to Exxon (XOM) to stay in the country, although it's not clear what the proposal involves. Exxon has put its 60% stake in the huge southern West Qurna-1 oilfield up for sale after upsetting Baghdad by signing deals with the Kurdish region, which is in dispute with Iraq over oil resources. Following the offer from Baghdad, Exxon CEO Rex Tillerson met the president of Iraqi Kurdistan at the Davos conference yesterday.
Novartis Chair Daniel Vasella to step down as profit rises 3%. Novartis (NVS) Chairman Daniel Vasella will resign and will be replaced by senior Bayer (BAYZF.PK) healthcare executive Joerg Reinhardt, who was formerly COO at Novartis. The company announced the news at the same time as reporting that Q4 adjusted profit rose 3% to $3.1B while revenue was flat at $14.8B. Earnings were hurt by generic competition, which is expected to eat into revenue by up to $3.5B in 2013, although sales will stay steady compared with 2012.
Barclays cutting 2,000 investment-bank jobs. Barclays (BCS) is reportedly reducing the headcount at its investment bank by up to 2,000 out of a total of 23,000 employees as part of its strategic overhaul, which CEO Antony Jenkins is due to unveil along with the bank's 2012 results in February. The cuts are in line with Jenkins' intention not to "break up the bank or exit from whole business lines."
Allergan to buy MAP Pharmaceuticals for $958M. Allergan (AGN) has agreed to acquire MAP Pharmaceuticals (MAPP) for $958M ($25/share) in cash , with the $25-a-share offer representing a 60% premium over MAP's close yesterday. MAP's migraine drug Levadex is set to receive a regulatory decision by April 15; Botox maker Allergan, which already had rights to help market Levadex, is showing confidence that the FDA will OK the medicine.
Top Economic & Other News
Obama to back GOP debt ceiling measure. President Obama is likely to approve a GOP proposal to suspend the debt ceiling until May 19, which has the backing of Senate Majority Leader Harry Reid as well. The House is due to vote on the measure today, with the bill also requiring both chambers to pass budgets by April 15; if they don't members' salaries would be withheld.
Cameron pledges referendum on U.K.'s membership of EU. Maybe it will be the U.K., not Greece exiting the EU. In a move dubbed "the gamble," British Prime Minister David Cameron will offer citizens a referendum on the U.K.'s EU membership if his government is reelected in 2015. Designed to get better terms from Berlin and Paris, the policy might just have the effect of prompting other governments to do the same. European officials probably don't want citizens voting on this sort of thing.
The great and the good descend on Davos. "These Google guys, they want to be billionaires and rock stars and go to conferences and all that...Let's see if they still want to run the business in 2-3 years." That was Bill Gates at Davos in 2003. Martin Wolf: "Every year there is a Davos consensus, and every year the Davos consensus is wrong." The World Economic Forum in the Swiss ski resort is taking place this week.
Editors' Picks
Apple Earnings Preview: Can Shares Rebound?
Japan's Economic Woes Are Good For Gold
Johnson & Johnson Looks To Get Ahead With Blocking And Tackling
Today's Markets:
In Asia, Japan -2.1% to 10487. Hong Kong -0.1% to 23635. China +0.3% to 2321. India +0.2% to 20027.
In Europe, at midday, London +0.1%. Paris -0.3%. Frankfurt +0.3%.
Futures at 7:00: Dow flat. S&P -0.1%. Nasdaq +0.15%. Crude +0.1% to $96.82. Gold flat at $1692.60.
Today's economic calendar:
7:00 MBA Mortgage Applications
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 FHFA House Price Index
Notable earnings before today's open: ABBV, ABT, APD, ATI, BHI, CHKP, COH, DGX, FNFG, GD, LCC, MCD, MSI, NVS, PX, RES, SAP, STJ, TEL, TXT, UTX, WLP
Notable earnings after today's close: AAPL, ALTR, AMGN, BKW, CBST, CCI, FBC, FFIV, HXL, INVN, JEC, LOGI, LRCX, LSI, MIPS, MLNX, NE, NFLX, PLCM, SWFT, SNDK, SYK, SYMC, TER, URI, VAR, WDC
January 23, 2013 | includes: AGN, AMD, BAYZF.PK, BCS, GOOG, IBM, JNJ, MAPP, NVS, QQQ, SPY, TXN, XOM
Top Stories
Google rises after profit tops forecasts. Google (GOOG) shares were +5.05% premarket after its Q4 EPS of $10.65 beat expectations while net profit rose 7% to $2.89B. Adjusted revenue rose 39% to $11.34B and missed consensus, partly because the figure excludes $802M in sales from Motorola's set-top box division. Revenue from Google's PC search business is slowing, with cost-per-clicks falling for the fifth quarter in a row, while the company is still trying to figure out how to make more money from mobile.
IBM earnings exceed expectations. IBM's (IBM) Q4 earnings beat analyst predictions as the tech giant's software business and sales in emerging markets returned to growth. EPS came in at $5.39 and revenue slipped 0.6% to $29.30B following the sale of its retail business in Q3, while net profit grew 6.3% to $5.83B. In addition, IBM provided guidance that was above expectations, helping to send shares 4.1% higher premarket.
Apple's profit seen dropping for first time in 10 years. Apple's (AAPL) earnings are due out after the bell, with analysts expecting that EPS dropped to $13.44 from $13.87 a year ago, which would be the first profit drop since 2003 as increasing costs and competition from Samsung take their toll. Still, revenue is expected to have jumped 18.1% to $54.73B, with iPhone sales seen continuing to break records.
Top Stock News
J&J learned about problematic hip implants long before recall. Johnson & Johnson (JNJ) knew that a metal hip-replacement implant was problematic in 2008, a year before the company halted production of the product and two years before recalling it, court documents show. The documents are part of a lawsuit whose opening arguments are due to start on Friday. Overall, J&J faces 10,000 suits over the implant, for which its estimated liability is over $1B.
Earnings worsen at TI and AMD Texas Instruments (TXN) and AMD (AMD) continued to suffer from soft demand for PCs in Q4, as well as from economic concerns about the EU and China. TI's Q4 net profit dropped 11% to $264M and revenue slid 13% to $2.98B, while AMD's net loss widened to $473M from $177M as revenue plunged 32% to $1.16B. Both chip companies provided guidance that was mostly below Street consensus.
Iraq tries to tempt Exxon to stay in the country. Iraq has reportedly made an offer to Exxon (XOM) to stay in the country, although it's not clear what the proposal involves. Exxon has put its 60% stake in the huge southern West Qurna-1 oilfield up for sale after upsetting Baghdad by signing deals with the Kurdish region, which is in dispute with Iraq over oil resources. Following the offer from Baghdad, Exxon CEO Rex Tillerson met the president of Iraqi Kurdistan at the Davos conference yesterday.
Novartis Chair Daniel Vasella to step down as profit rises 3%. Novartis (NVS) Chairman Daniel Vasella will resign and will be replaced by senior Bayer (BAYZF.PK) healthcare executive Joerg Reinhardt, who was formerly COO at Novartis. The company announced the news at the same time as reporting that Q4 adjusted profit rose 3% to $3.1B while revenue was flat at $14.8B. Earnings were hurt by generic competition, which is expected to eat into revenue by up to $3.5B in 2013, although sales will stay steady compared with 2012.
Barclays cutting 2,000 investment-bank jobs. Barclays (BCS) is reportedly reducing the headcount at its investment bank by up to 2,000 out of a total of 23,000 employees as part of its strategic overhaul, which CEO Antony Jenkins is due to unveil along with the bank's 2012 results in February. The cuts are in line with Jenkins' intention not to "break up the bank or exit from whole business lines."
Allergan to buy MAP Pharmaceuticals for $958M. Allergan (AGN) has agreed to acquire MAP Pharmaceuticals (MAPP) for $958M ($25/share) in cash , with the $25-a-share offer representing a 60% premium over MAP's close yesterday. MAP's migraine drug Levadex is set to receive a regulatory decision by April 15; Botox maker Allergan, which already had rights to help market Levadex, is showing confidence that the FDA will OK the medicine.
Top Economic & Other News
Obama to back GOP debt ceiling measure. President Obama is likely to approve a GOP proposal to suspend the debt ceiling until May 19, which has the backing of Senate Majority Leader Harry Reid as well. The House is due to vote on the measure today, with the bill also requiring both chambers to pass budgets by April 15; if they don't members' salaries would be withheld.
Cameron pledges referendum on U.K.'s membership of EU. Maybe it will be the U.K., not Greece exiting the EU. In a move dubbed "the gamble," British Prime Minister David Cameron will offer citizens a referendum on the U.K.'s EU membership if his government is reelected in 2015. Designed to get better terms from Berlin and Paris, the policy might just have the effect of prompting other governments to do the same. European officials probably don't want citizens voting on this sort of thing.
The great and the good descend on Davos. "These Google guys, they want to be billionaires and rock stars and go to conferences and all that...Let's see if they still want to run the business in 2-3 years." That was Bill Gates at Davos in 2003. Martin Wolf: "Every year there is a Davos consensus, and every year the Davos consensus is wrong." The World Economic Forum in the Swiss ski resort is taking place this week.
Editors' Picks
Apple Earnings Preview: Can Shares Rebound?
Japan's Economic Woes Are Good For Gold
Johnson & Johnson Looks To Get Ahead With Blocking And Tackling
Today's Markets:
In Asia, Japan -2.1% to 10487. Hong Kong -0.1% to 23635. China +0.3% to 2321. India +0.2% to 20027.
In Europe, at midday, London +0.1%. Paris -0.3%. Frankfurt +0.3%.
Futures at 7:00: Dow flat. S&P -0.1%. Nasdaq +0.15%. Crude +0.1% to $96.82. Gold flat at $1692.60.
Today's economic calendar:
7:00 MBA Mortgage Applications
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 FHFA House Price Index
Notable earnings before today's open: ABBV, ABT, APD, ATI, BHI, CHKP, COH, DGX, FNFG, GD, LCC, MCD, MSI, NVS, PX, RES, SAP, STJ, TEL, TXT, UTX, WLP
Notable earnings after today's close: AAPL, ALTR, AMGN, BKW, CBST, CCI, FBC, FFIV, HXL, INVN, JEC, LOGI, LRCX, LSI, MIPS, MLNX, NE, NFLX, PLCM, SWFT, SNDK, SYK, SYMC, TER, URI, VAR, WDC
