WALLSTREET BREAKFAST - MUST KNOW NEWS! WEDNESDAY JANUARY 22,2014
Top Stories
IBM's shares slump as hardware woes continue. IBM's (IBM) net profit rose 6% to $6.19B in Q4, but shares dropped 3.4% after revenue fell a greater-than-expected 5.5% to $27.7B, hurt by a continuing slump in hardware sales. IBM's adjusted EPS came in at $6.13, although the figure was lifted by $5.8B of buybacks. The company, which has already carried out a string of job cuts in recent quarters, expects to record a fresh workforce re-balancing charge of $1B in Q1.
Top Stock News
Chinese shares jump 2.2% on PBOC moves. Chinese shares have led Asian shares higher today, with the Shanghai Composite rising 2.2% as stocks built on yesterday's gains following the injection of liquidity into money markets by the People's Bank of China in order to avert a cash crunch. The PBOC is expected to add more funds in operations tomorrow. "The cyclicals and the blue chips are leading the rebound today, which usually points at policy relief," says analyst Cao Xuefeng.
ASML shares jump as net profit soars. ASML's (ASML) Q4 net profit jumped 62% to €481M and sales climbed to €1.85B from €1.02B a year earlier, with earnings topping forecasts and boosted by the acquisition of light-source manufacturer Cymer. ASML, which provides equipment for making semiconductors, said it's on track with the development of its EUV technology for producing smaller chips. The company has already delivered its first EUV scanners and expects to ship another eight in 2014.
Mayer: Yahoo mobile traffic to overtake PC visits. Yahoo (YHOO) CEO Marissa Mayer has told the World Economic Forum's annual meeting in Davos - which has officially opened today - that by the end of this year, the company "will have more mobile traffic than PC traffic." If Mayer's forecasts are fulfilled, it would represent a major turnaround from the neglected state of Yahoo's mobile efforts when she first joined the company in mid-2012.
FCC to carry out major auction of spectrum. The Federal Communications Commission is today due to hold its first major auction of wireless spectrum in six years, kicking off a series of sales that could bring in $46B from the leading service providers over the next 24 months. Dish (DISH) is expected to win today's auction - which is projected to raise at least $1.6B - as the major carriers have declined to participate.
ABB to take major charges, shares tumble. ABB (ABB) will book $260M in charges on its Q4 earnings, due to delays to offshore wind projects because of winter storms and "some operational issues" at the engineering group's Power Systems (PS) division. Additional restructuring-related charges at the PS operations will also hit net income. The company expects EPS to fall to $0.23 from $0.26 a year earlier and vs consensus of $0.40. Shares were -4.5% in Stockholm at the time of writing.
Top Economic & Other News
U.K. unemployment falls towards BOE threshold. U.K. unemployment has dropped ever closer to the Bank of England's 7% threshold for raising interest rates, falling to 7.1% in the three months to November from 7.4% previously. However, the BOE is pulling a Fed: the U.K. central bank said it sees no immediate need to raise interest rates if the threshold is reached. The pound spiked after the jobless rate was released and was +0.35% at $1.6534 at the time of writing.
Morgan Stanley looks to raise $2B for Puerto Rico - NYT. Morgan Stanley (MS) has contacted large investors to see how interested they would be in providing $2B in financing to Puerto Rico in return for yields as high as 10%, the NYT reports. The Commonwealth hasn't actually hired Morgan Stanley, which is acting on its own to put together a proposal that the bank can take to the government. Puerto Rico is struggling with high unemployment and massive debt, and is facing a downgrade into junk territory from Moody's.
Top Ideas: Movers and Great Calls
1) On December 26, Ashleigh Rogers called out Signature Bank (SBNY) as a serial outperformer, and predicted it would continue to beat estimates and raise guidance in its earnings reports. Signature soared on Tuesday after a blowout Q4 release; shares are +14.9% since Rogers' call. Read article »
2) BPD Research cited OncoMed (OMED) in October as a rare newly public biotech that traded below its IPO price, and listed a number of catalysts for explosive gains. The stock is +151% to date. Read article »
Top Ideas To Watch
1) Energy expert Steve Zachritz says the selloff at oil and gas operator Rex Energy (REXX) has been overdone, with current commodity prices leading to substantial cash flow and upside for the stock. Read article »
2) Canadian mineral driller Orbit Garant Drilling (OTC:OBGRF) trades at a 20% discount to its working capital, which allows investors to buy in at the point of maximum pessimism and with a strong downside cushion, writes Steven Reiman. Read article »
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Today's Markets:
In Asia, Japan +0.2% to 15821. Hong Kong +0.2% to 23082. China +2.2% to 2052. India +0.4% to 21338.
In Europe, at midday, London -0.1%. Paris -0.3%. Frankfurt -0.5%.
Futures at 6:20: Dow -0.3%. S&P -0.2%. Nasdaq -0.1%. Crude +1% to $94.88. Gold -0.2% to $1239.60.
Ten-year Treasury Yield +2 bps at 2.85%.
Today's economic calendar:
7:00 MBA Mortgage Applications
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
Notable earnings before today's open: ABT, APH, ASML, ATI, COH, EAT, FCX, GD, MSI, NSC, NTRS, PGR, PH, STJ, TEL, TXT, USB, UTX, VIVO, XRS
Notable earnings after today's close: BXS, CCI, EBAY, EGHT, ETH, EWBC, FBC, FFIV, FIO, HRC, JEC, LOGI, NE, NFLX, PLCM, RJF, RLI, SNDK, SUSQ, SYK, TCBI, TER, UMPQ, URI, VAR, WDC
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