Sept. 24, 2013 Top Stories
Fairfax to take BlackBerry private in $4.7B deal. BlackBerry (BBRY) has signed a letter of intent to be acquired by a consortium led by Prem Watsa's Fairfax Financial for $9/share in cash, or $4.7B. Fairfax will merely roll over its existing 9.9% stake into its buyout offer, and won't invest any more cash.
Prem Watsa told Bloomberg his firm will rely on other investors to finance the rest of the deal via equity and debt. The consortium is described as "in flux," and BBRY is free to look at competing bids until due diligence is completed.
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Chrysler files for $100M IPO amid valuation dispute. Chrysler Group LLC has filed to sell up to $100M in stock, as Fiat SpA (FIATY.PK) — which owns 58.5% of the company — and the United Auto Workers union health trust can't seem to agree on the value of the latter's 41.5% stake. The trust "needs to get as much as it can … to ensure it has enough money to pay medical benefits for … current and future Chrysler retirees," WSJ notes. Ultimately the shares may never be sold, as Fiat and the trust could still reach an agreement by the time the offering comes to market. Some analysts think Fiat CEO Sergio Marchionne will look to strike a last-minute agreement after the deal prices.
Top Stock News
Red Hat tumbles on weak billings. Shares of Red Hat (RHT) fell 8% in after hours trading Monday evening, after the enterprise Linux leader reported FQ2 results. Although RHT beat on both lines, billings rose just 8% Y/Y, a marked slowdown from FQ1's 14% and well below CLSA and Stifel's estimates of 17% and 14%, respectively. The company attributed the slowdown to "modest IT spending in Europe and the impact of large deal arrangements." RHT guided for FY14 EPS of $1.36-$1.38 on revenue of $1.51B-$1.52B. Consensus is $1.35/share on sales of $1.53B.
International banks sued by credit union regulator. The National Credit Union Administration is suing JPMorgan (JPM), Credit Suisse (CS), UBS, Societe Generale (SCGLF.PK, SCGLY.PK), Lloyds Banking Group (LYG), Royal Bank of Canada (RY), and several others, on behalf of five failed credit unions. According to the suit, the banks' alleged manipulation of LIBOR caused the defunct credit unions to receive "less in interest income than they were otherwise entitled to receive."
Citigroup cuts mortgage jobs. Falling demand for refinancing spells more mortgage job cuts, as Citigroup (C) announces 1K layoffs, mostly in Las Vegas, NV and Irving, TX. At investor presentations over the past few weeks, banks have made little secret of the slowdowns in their previously booming mortgage origination businesses. These units have helped keep bank profits perky during a period of slow trading and otherwise sluggish loan growth.
South Korea shoots down Boeing's F-15 bid. South Korea has rejected Boeing's (BA) bid for a $7.7B tender to supply the country with new fighter jets. BA's F-15 Silent Eagle offer was the only under-budget bid. Earlier this month, 15 former South Korean air force chiefs signed a petition opposing the F-15s due to concerns over the planes' capabilities. Essentially, South Korea wants Lockheed Martin's (LMT) F-35s, but doesn't want to pay for them. The bidding process will now restart.
China sovereign wealth fund takes 12.5% stake in potash producer. China Investment Corporation is now the second largest shareholder in Uralkali (URALL.PK), the potash producer whose exit from one of the world's two potash cartels sparked fears of a price war and triggered a steep sell-off in the chemical's price earlier this year. The move by China's sovereign wealth fund to convert its bond holdings into a 12.5% equity stake "is part of [a] broader move to diversify its investments away from industrial commodities," FT says.
Top Economic & Other News
Business confidence rises in Germany for fifth straight month. German business confidence rose for the fifth consecutive month in September, as executives became increasingly optimistic about the prospects for the eurozone's largest economy where unemployment is sitting at a twenty-year low. The Ifo institute's business climate index rose to 107.7 this month from 107.6 (revised) in August. Economists were expecting a reading of 108. A read on the current situation fell to 111.4 in September from 112 in August, while a measure of expectations rose to 104.2 from 103.3.
China smartphone shipments to grow 25%: IDC. China's smartphone shipments should rise 25% in 2014 to 450M devices, IDC says. The research firm cites two main growth drivers: The government's issuance of 4G licenses and anticipation that China Mobile (CHL) will soon carry iPhones. As is usually the case just prior to a new product launch, Apple's (AAPL) market share in China slipped in Q2 (to 5%), but IDC sees the company's performance improving "remarkably with the launch of the new iPhone."
Goldman says Yellen nomination imminent. A Janet Yellen Fed Chair nomination could come "as soon as early next week," Goldman Sachs thinks. In a note that will please those of a dovish persuasion, the influential investment bank says the nomination might have come this week were it not for a crowded political calendar. "The Senate is apt to begin considering the nomination within a few weeks of the announcement," Goldman adds.
Alpha-Rich Stock Movers and Great Calls
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Alpha-Rich Stocks To Watch
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Today's Markets:
In Asia, Japan -0.1% to 14732. Hong Kong -0.8% to 23179. China -0.6% to 2207. India +0.1% to 19911.
In Europe, London +0.1%. Paris +0.4%. Frankfurt +0.1%.
Futures at 6:20: Dow -0.05%. S&P -0.15%. Nasdaq +0.11%. Crude -0.4% to $103.20. Gold +0.64% to $1318.70.
Ten-year Treasury yield -2 bps to 2.68%.
Today's economic calendar:
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 FHFA House Price Index
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed Mfg.
1:00 PM Results of $33B, 2-Year Note Auction
Notable earnings before today's open: CCL, KBH, KMX, LEN, NEOG
Notable earnings after today's close: AIR, ASNA, CPRT, LNDC
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