Thursday, April 16, 2015

Wall Street Breakfast: Netflix Shares Hit All-Time High On Subscriber Growth


Economy
Following a series of disappointing data releases, China reported its inbound FDI stayed robust in the first quarter of 2015, while outbound flows posted a milder rise. Foreign direct investment in the country rose 2.2% on year in March, bringing Q1 inbound FDI up 11.3% to $34.88B. China's other data reports this week displayed flagging domestic fixed asset investment, including property and slowing industrial activity. Shanghai Composite Index+2.7%.
Standard & Poor's has downgraded Greece's credit rating to CCC+ with a negative outlook, citing a substantial risk of a default due to the country's drawn out negotiations with its creditors. "No one has a clue how we can reach agreement on an ambitious program," Germany's finance minister said on Wednesday, adding that Greece's new leftist government had "destroyed" all the economic improvements achieved by Athens since 2011.
Just a day after the ECB pledged to fulfill its €1T bond-buying program, eurozone government borrowing costs slid to new lows on Thursday, while regional stocks took a step back from this week's multi-year peaks. "We see no end in sight to any of these trends," said Ciaran O'Hagan, rates strategist at Societe Generale in Paris. Germany's 10-year yield fell almost a basis point to 0.087% in early trade, while yields on all German government debt out to January 2024 were negative. Other notable levels include France's 30-year yield, which fell below 1%, and the yield on two-year Portuguese bonds, which is on its way below zero.
According to forecasts for the country’s 2016 budget proposal, Brazil’s economy will contract 0.9% in 2015 and grow 1.3% in 2016. "Our goal is to get the economy to recover as soon as possible," Budget Minister Nelson Barbosa said. "We expect recovery to start as soon as in the second half of this year." The government also forecast an inflation rate of 8.2% for 2015 and 5.6% for next year.
Stocks
Netflix +12.3% premarket after announcing a Q1 report which beat earnings, but sacrificed some profits to keep up with its aggressive international expansion. Investors heavily cheered subscriber growth, which rose 22% Y/Y to 4.88M in the March quarter, bringing the company's total global streaming membership to 62.3M. Netflix (NASDAQ:NFLX) expects to sign up 600K more U.S. customers in the current quarter, plus 2.5M worldwide.
SanDisk forecast a larger-than-expected fall in full-year revenue and announced plans to reduce costs as it struggled to meet demand for its flash-based memory products. SanDisk (NASDAQ:SNDK) further outlined it would slash 5% of its non-factory headcount and merge its enterprise product, mobile and client SSD teams. The moves come after the company faced a tough quarter, with net income falling nearly 86% to $39M and revenue dropping for the first time in two years. SNDK -7.3% premarket.


Despite a slow start to U.S. IPO debuts in 2015, three big companies are soon to go public. Chief among them is Etsy (Pending:ETSY), which has priced its 16.7M-share IPO at $16, valuing the company at $1.78B. Shares in the craft/vintage goods marketplace will begin trading today. Others include Virtu Financial (Pending:VIRT), which has priced shares at $19, and Party City (Pending:PRTY), which will begin trading at $17 per share.
Target has agreed to reimburse about $19M to financial institutions which had issued MasterCard-branded cards that were a part of its massive data breach in 2013. The amount under the settlement with MasterCard (NYSE:MA) covers the costs that banks incurred to reissue credit and debit cards to customers as a result of Target's (NYSE:TGT) breach.
Starwood Hotels & Resorts has unveiled its first new brand in nine years, the biggest initiative the lodging giant has announced since its chief executive, Frits van Paasschen, left in February. The company will spend $20M to launch the Tribute portfolio, which will be made up of independent hotels that affiliate with Starwood (NYSE:HOT), and will receive about 10% of the hotels' room revenue.
Loss-making electronics firm Sharp and its main banks will meet today to agree on a rescue and overhaul plan, marking the retailer's second big bailout since 2012. The lenders will inject a combined ¥200B ($1.7B) in a debt-for-equity swap, while Sharp (OTCPK:SHCAY) will cut 5,000 jobs, scale back its North American television operations and likely agree to spinning off its LCD unit.
Bombardier has hired UBS and Citigroup to advise on a potential IPO or sale of its rail unit, which could be valued at about $5B, Bloomberg reports. Splitting off the rail unit would allow management to focus on turning around Bombardier's (OTCPK:BDRAF) aerospace division, which posted a 2014 loss of $995M. The rail business - whose products include locomotives, subway cars and signaling equipment - is the healthier part of the company, with 2014 earnings of $429M.
More investor discontent is being heard over Macerich's (NYSE:MAC) recent rejection of Simon Property Group's (NYSE:SPG) $16.8B takeover proposal. Macerich's fourth largest shareholder, Cohen & Steers (NYSE:CNS), asked the shopping mall company on Wednesday to produce a plan that would deliver as much value as the takeover offer by Simon. "At least give us a plan of how Macerich will exceed Simon's offer over time," Executive Chairman Martin Cohen told Reuters on the sidelines of the NYU REIT Symposium.
As part of a cost-cutting strategy by Chief Executive A.G. Lafley, Procter & Gamble (NYSE:PG) may soon offload $10B-$12B worth of its beauty brands. Personal care and cosmetics companies Henkel (OTCPK:HENKY), Revlon (NYSE:REV) and Coty (NYSE:COTY) are preparing bids for P&G's haircare business, cosmetics division and fragrance unit, respectively, sources told Reuters. CEO Lafley said last August he would reverse the company's strategy of aggressive expansion and shed more than half of its brands.
The BP fund created to compensate people and businesses claiming they were harmed by the 2010 Gulf of Mexico oil spill has now paid out more than $5B to 62K-plus claimants, according to the fund's administrator. BP (NYSE:BP) originally said it expected to pay $7.8B to resolve claims under the settlement but raised its estimate to $9.9B in February.
Carlyle Group has enlisted Mike Duke, former Chief Executive of Wal-Mart (NYSE:WMT), to the executive team the asset management firm taps for advice on consumer products and retail deals. The position as Carlyle (NASDAQ:CG) operating executive will allow Duke to still continue as a member of Wal-Mart's board, where he has served since his retirement in early 2014 after five years in the top job.
To ensure that all possible causes were properly addressed, the FAA now says it will carefully review the Orbital ATK-led investigation into October's Antares rocket disaster. "We eagerly look forward to seeing what they have to say...and agree with it before allowing them to go ahead with future launches," a top FAA official said. Orbital (NYSE:OA) has blamed the explosion on excessive wear in the bearings of the rocket's AJ-26 engine, although GenCorp (NYSE:GY), the refurbisher of the engine, maintains the root cause to be debris.
The jumbo jet may be slowly heading off the assembly line, after a slump in sales raised questions over how long manufacturers can sustain production. Last year, there were zero orders placed by commercial airlines for new Boeing (NYSE:BA) 747s or Airbus (OTCPK:EADSY) A380s, reflecting a fundamental shift in the industry toward smaller, twin-engine planes. A sustained upturn in air freight traffic may secure the 747 a longer future, but the large availability of leases and cheap smaller planes may take its toll on production.

Today's Markets:
In Asia, Japan +0.1% to 19886. Hong Kong +0.4% to 27740. China +2.7%to 4195. India -0.5% to 28666.
In Europe, at midday, London -0.4%. Paris -0.5%. Frankfurt -1.4%.
Futures at 6:20: Dow -0.2%. S&P -0.2%. Nasdaq -0.1%. Crude -1% to $55.82. Gold +0.4% to $1206.10.
Ten-year Treasury Yield flat at 1.9%
Notable earnings before today's open: ADS, BLK, BX, C, FCFS, FCS, FRC,GS, GWW, HOMB, KEY, PBCT, PM, PPG, PVTB, SHW, SON, TSM, TZOO, UNH,WBS
Notable earnings after today's close: AMD, ASB, AXP, CCK, CE, CYT, EGP,MAT, NOW, SLB
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)