Friday, April 26, 2013

Wall Street Breakfast: Must-Know News


Top Stories
Wall Street Breakfast picture
Amazon's profit falls as investment glut continues. Amazon's (AMZN) Q1 net profit dropped 37% to $82M as EPS of $0.18 beat forecasts and revenue jumped 22% to $16.07B but missed expectations. It's the same old story for Amazon, with the company continuing to spend prodigiously in order to fuel its sales growth. While shares dropped 3.2% premarket, Stifel Nicolaus analyst Jordan Rohan says investors were encouraged by Amazon's comments that it's not suffering from weakness in Europe as much as eBay (EBAY).
Samsung's profit jumps 42%. Samsung's (SSNLF.PK) Q1 net profit jumped 42% to a record high KRW7.15T ($6.4B), while sales increased 16.8% to KRW52.9T as the company cemented its domination in the cellular phone market (see below). With the Galaxy S4 going on sale today in South Korea and tomorrow in other countries, analysts expect Samsung's profit to keep rising.
ADM to acquire GrainCorp for A$3B. Australian grain exporter GrainCorp (GRCLF.PK) has accepted an increased takeover offer of A$3B ($3.1B) from Archer Daniels Midland (ADM) following a six-month courtship. ADM has agreed to pay A$12.20 a share and a dividend of A$1 a share. Should the company buy GrainCorp - the deal is subject to due diligence - ADM will gain control of seven out of eight ports that facilitate the bulk shipping of grain from Australia's east coast.
Top Stock News
Japan to lift 787 ban. Japan's Ministry of Transport plans to lift the ban on commercial flights of Boeing (BA) 787s after the FAA officially signs off on the resumption of operations, which is expected later today. Japanese officials will ask Japan Airlines and All Nippon Airways to carry out extra safety measures over and above those required by the FAA, including the remote monitoring of battery data. Ethiopian Airlines will reportedly become the world's first airline to resume 787 operations tomorrow.
Starbucks' profit rises but shares fall as revenues miss. Starbucks' (SBUX) shares fell 3% premarket after the company's FQ2 net earnings rose to $390.4M from $309.9M a year earlier but revenues of $3.56B missed expectations despite growing 12%. EPS of $0.48 was in line. U.S. sales improved despite an industry wide slump in February because of the increase in U.S. payroll taxes.
Samsung remains world's leading smartphone company. Samsung (SSNLF.PK) strengthened its lead as the world's top vendor of mobile phones and of smartphones in Q1, IDC estimates. The South Korean giant increased its market share in the latter category to 32.7% from 28.8 a year earlier and shipped more smartphones than the next four providers combined. Apple's (AAPL) share slipped to 17.3% from 23%. The global cellular phone market grew 4% on year to 418.6M devices.
Alcatel-Lucent makes fourth straight quarterly loss. Alcatel-Lucent (ALU) swung to a Q1 net loss of €353M from a profit of €259M a year earlier as revenues rose 0.6% to €3.23B and beat consensus, helped by a 4.2% increase in sales at the company's Networks & Platforms business. North American growth was strong, Japan showed good traction and China stabilized, but Europe slumped. Alcatel-Lucent plans to unveil details of strategic review by the early summer. Shares were -1.9% at midday in Paris.
Soros reports stake in J.C. Penney. What is it about billionaire hedge fund titans and J.C. Penney (JCP)? The beleaguered retailer's shares were +7.15% premarket after George Soros' investment vehicle reported a 7.91% stake in the company, adding to William Ackman's 17.8%. Unlike Ackman, Soros doesn't look like he'll take an active role in JCP, as his holding is passive.
Honda's profit rises as recovery takes hold in China. Honda's (HMC) FQ4 net profit rose 5.8% to ¥75.7B ($765M) but missed consensus of ¥99.51B, while revenues increased 14% to ¥2.745T as the weakening yen helped exports. Honda forecast strong growth for this fiscal year and said its business in China is nearly back to normal after sales swooned due to anti-Japan sentiment in the nation. The claim is a bit of a surprise, as most indicators have shown that Japanese automakers are still suffering in China.
Yahoo Chairman Amoroso steps down. Yahoo (YHOO) Chairman Fred Amoroso has resigned and will be replaced on an interim basis by Board member and bestselling author Maynard Webb while the company searches for a permanent successor. Amoroso said he would only serve for a year when he became Chairman in May 2012 "in order to help Yahoo during a critical time of transformation." Since then, the company has hired Marissa Mayer as CEO.
Judge sets payment standards for mobile industry standard IP. The latest victory in the global technology IP wars has gone to Microsoft (MSFT) after a Seattle judge ruled that it only has to pay $1.8M a year to Motorola for the latter's industry standard media-streaming and WiFi patents rather than the almost $1B that the Google (GOOG) unit was demanding. The decision has established for the first time how much a patent holder can charge for industry standard IP.
Top Economic & Other News
U.S. economy seen growing 3%. GDP data for Q1 is due out this morning, with economists expecting that the U.S. expanded by a 3% annual rate after almost coming to a halt at +0.4% in Q4. A major factor that is expected to have boosted the economy is farmers filling up silos following the drought last summer, which badly damaged their crop output. Excluding farming inventories, growth may well have been just 2%.
Senate Oks bill to pay for air traffic controllers. Moving faster than a speeding plane and foregoing debate, the Senate last night unanimously voted to approve a bill that allows the Department of Transportation to bypass the impact of sequestration by using unspent funds to cover the costs of air traffic controllers and end the furloughs that have caused widespread flight delays. The House could take up the legislation today and is expected to approve it.
Japan remains firmly stuck in deflation... Japanese consumer prices dropped in March for the fifth consecutive month, with CPI falling by a slightly sharper-than-expected 0.5%. Prices for furniture, culture and recreation, and food showed the largest declines.
...but BOJ holds off from further easing. As expected, the Bank of Japan held off from adding to its liquidity blitz at a policy meeting today, having announced a plan earlier this month to increase its monetary base by ¥60T ($607B) to ¥70T a year. In its semi-annual economic outlook, the BOJ forecast that inflation won't hit 2% in the next two years, as Governor Haruhiko Kuroda has predicted, but could reach that level by March 2016. At the time of writing, the dollar was -0.6% at ¥98.69.
China well aware of risks. China's Politburo Standing Committee has warned that the country needs to "guard against potential risks in the financial sector" but still "cement its domestic economic growth momentum." Concern has increased about rising loans in the shadow-banking industry and the "explosive" expansion in municipal debt. China "isn't going to pursue the old way of stimulus to push up growth at the expense of long-term structural reform," says Citigroup's Ding Shuang.
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