- Walgreen looks to sell PBM unit. Walgreen (WAG) has reportedly hired Bank of America (BAC) to arrange for a sale of its pharmacy benefits management [PBM] unit, as Walgreen feels the PBM unit conflicts with its retail model. The PBM industry as a whole has also been hit hard this year by reimbursement pressures. Potential buyers were asked to submit first round bids last week, and the unit could bring in $300M-500M. Medco Health Solutions (MHS) and Express scripts (ESRX) are among the likely suitors.
- MGM favors Spyglass deal. Movie studio Metro-Goldwyn-Mayer is said to be favoring a prepackaged bankruptcy and a tie-up with Spyglass Entertainment rather than a merger plan with Lions Gate Entertainment (LGF) that Carl Icahn has been pushing for. Sources said MGM sent creditors a memo yesterday, arguing that Lions Gate's claims of synergies and cost savings through the proposed merger lacked proof. Senior debtholders are due to vote by Oct. 29 on the Spyglass plan, which would see Spyglass contribute certain assets in exchange for a 5% equity stake in a slimmed down MGM.
- Suitorless Savient sinks. Shares of Savient Pharmaceuticals (SVNT) plummeted 44% yesterday after the company said it had failed to make any progress in its plan to sell itself, despite the FDA's approval last month of Savient's key drug Krystexxa. Analysts had originally speculated that a bid could go as high as $47/share, double the high of $23.46 that shares reached in September. It's possible that Savient did receive at least one offer but deemed the bid too low; however, with shares now trading around $12, potential suitors might come back to the table and fair value may turn out to be closer to $20/share. Potential bidders could include Abbott (ABT), Pfizer (PFE), Amgen (AMGN), Bristol-Myers (BMY), Roche (RHHBY.PK) and J&J (JNJ).
- Online travel firms battle Google's ITA deal. Several major online travel firms, including Expedia (EXPE) and Kayak.com, are teaming up to oppose Google's (GOOG) planned $700M purchase of travel software firm ITA. The new coalition, called FairSearch.org, aims to convince the Justice Department that the deal should be blocked because it would give Google too much sway over the travel sector. The coalition is also launching a major lobbying campaign to convince Congress that the deal will end up "bringing consumers higher prices and less choice."
- UBS posts profit, but I-bank suffers. UBS (UBS) posted a Q3 net profit of 1.66B Swiss francs ($1.71B), a healthy turnaround from a 564M franc loss the year before. A tax credit of 825M francs helped UBS beat analyst expectations, and its wealth management unit recorded net client inflows for the first time since 2008. However, its investment banking unit posted a surprise pretax loss of 406M francs vs. expectations for a profit of 182M francs; CEO Oswald Gruebel blamed “very low levels of client activity” and a charge on the bank’s own debt for the I-banking loss. Premarket: UBS -4% (7:00 ET).
- TIPS dip into negative territory. For the first time ever, inflation-protected Treasury bonds sold with a negative yield. Investors bought $10B of five-year TIPS yesterday with a yield of negative 0.55%, in a bet that the Fed will be successful in stimulating the economy, boosting inflation and making the TIPS more valuable. If the investors turn out to be wrong and inflation doesn't appear as they expect, they could end up paying to lend money to the government.
- Foreclosure mess needs 'global solution.' The FDIC's Bair said the foreclosure mess has revealed "critical flaws" in the system that will require a "global solution," and that litigation stemming from the issue could further weaken the housing market if it "ends up unduly prolonging those foreclosures that are necessary and justified." Meanwhile, the new SIG-TARP report said the Treasury's home loan modification program is failing to meet the goal of “preserving home ownership" and is generating public anger and mistrust. HAMP's 467,000 permanent mods for homeowners seeking to avoid foreclosure is in “stark contrast” to the 5.5M homes receiving foreclosure filings and 1.7M “lost to foreclosures” since Jan. 2009.
- U.K. GDP grows twice as fast as expected. Britain's economy grew twice as fast as economists had expected in Q3, posting 0.8% growth on the back of a sustained recovery in services and construction. The higher-than-expected rate will put pressure on the Bank of England to delay additional bond purchases, though a slowdown is still expected over the next two quarters as fiscal tightening has its effect. Separately, S&P affirmed the U.K.'s AAA credit rating and revised its credit outlook to stable from negative, reflecting "our view of the country's wealthy and diversified economy, fiscal and monetary policy flexibility, and relatively adaptable product and labor markets." GBP +1% vs. USD (7:00 ET).
- Yen's strength causes exporter panic. Japanese firms are scrambling to adapt to the yen's recent strength. Nissan (NSANY.PK) COO Toshiyuki Shiga said this morning "we can't adequately express our concern about the sharp yen rise on our earnings by simply saying...we are worried about it. The company is now working with a sense of crisis." Nissan has said in the past that each one-yen fall in the dollar slashes Nissan's operating profit by ¥15B ($185M). Yesterday, Toyota (TM) said it plans to lower its dollar/yen rate assumption by ¥10, to ¥80, for the second half of its fiscal year, which translates into a reduction in earnings of around ¥150B ($1.8B) during the period. Meanwhile, Toshiba (TOSBF.PK) is preparing for the possibility the yen may rise as far as 70 to the dollar.
- Buffett taps potential CIO successor. Warren Buffett has put an investment manager into pole position to succeed him as chief investment officer at Berkshire Hathaway (BRK.A), hiring Todd Combs, of small fund Castle Point Capital, to oversee a significant portion of a roughly $100B portfolio. Buffett said Combs is "not going to take over the whole investment function as long as I'm around." Two candidates, including Li Lu, took themselves out of the running for the job.
- AIG CEO diagnosed with cancer. AIG CEO Robert Benmosche has cancer and is undergoing "aggressive" chemotherapy. "The good news is that I feel fine," Benmosche said, "and I continue to work according to my normal schedule." He said more will be known about his long-term prognosis in the next few months, but that he remains "absolutely committed" to his job. In after-hours, shares of AIG -0.7%.
- Apollo, CVC buy Brit Insurance. Apollo Global Management and CVC Capital agreed to buy Brit Insurance Holdings for up to £888M ($1.4B). It took four months of takeover negotiations and four previous approaches for the private equity firms to seal the deal. Brit CEO Dane Douetil said shareholders indicated they would be comfortable with a deal at this price, a 47-51% premium to the stock before deal talks were announced, but added "there's no doubt this is a low point in the sector’s cycle and businesses are selling for a lot less than their intrinsic worth."
- ArcelorMittal (MT): Q3 EPS of $0.89 may not be comparable to consensus of 0.41. Revenue of $21B (+30%) vs. $21.3B. Shares -5.8% premarket. (PR)
- CIT Group (CIT): Q3 EPS of $0.66 beats by $0.17. (PR)
- Coach (COH): Q3 EPS of $0.63 beats by $0.08. Revenue of $912M (+19.7%) vs. $847M. Shares +0.5% premarket. (PR)
- DuPont (DD): Q3 EPS of $0.40 beats by $0.06. Revenue of $7B (+13.7%) vs. $6.7B. Shares +0.7% premarket. (PR)
- Enterprise Products Partners L.P. (EPD): Q3 EPS of $0.47 beats by $0.02. Revenue of $8.1B (+18.8%) vs. $7.1B. (PR)
- Wyndham (WYN): Q3 EPS of $0.68 beats by $0.05. Revenue of $1.1B (+4.8%) in-line. Shares +0.8% premarket. (PR)
- Amgen (AMGN): Q3 EPS of $1.36 beats by $0.09. Revenue of $3.8B (+0.1%) in-line. Shares -0.9% AH. (PR, earnings call transcript)
- Atheros Communications (ATHR): Q3 EPS of $0.67 in-line. Revenue of $247M (+57.8%) vs. $248M. Shares -2.3% AH. (PR)
- Cabot Oil & Gas (COG): Q3 EPS of $0.31 beats by $0.05. Revenue of $219M (+5.9%) vs. $220M. Shares -0.5% AH. (PR)
- Developers Diversified Realty (DDR): Q3 EPS of $0.14 misses by $0.10. Revenue of $199M (+1.6%) vs. $203M. (PR)
- Edwards Lifesciences (EW): Q3 EPS of $0.40 misses by $0.02. Revenue of $349M (+7.1%) vs. $353M. Shares -0.6% AH. (PR)
- Masco (MAS): Q3 EPS of $0.11 misses by $0.01. Revenue of $2B (-4.8%) vs. $2.1B. Shares -4.5% AH. (PR)
- Plum Creek Timber (PCL): Q3 EPS of $0.20 misses by $0.04. Revenue of $259M (-11.9%) vs. $273M. Shares -4.1% AH. (PR, earnings call transcript)
- Synovus Financial (SNV): Q3 EPS of -$0.25 misses by $0.03. Shares -2.5% AH. (PR)
- Texas Instruments (TXN): Q3 EPS of $0.71 beats by $0.02. Revenue of $3.7B (+29.9%) in-line. Shares -1% AH. (PR, earnings call transcript)
- Veeco Instruments (VECO): Q3 EPS of $1.46 beats by $0.20. Revenue of $277M (+271%) vs. $275M. Shares -9.4% AH. (PR)
- Vertex Pharmaceuticals (VRTX): Q3 EPS of -$1.04 misses by $0.11. Revenue of $23.8M (-4.8%) vs. $29.9M. (PR)
- In Asia, Japan -0.3% to 9377. Hong Kong -0.1% to 23601. China -0.3% to 3042. India -0.4% to 20221.
- In Europe, at midday, London -0.7%. Paris -0.5%. Frankfurt -0.1%.
- Futures at 7:00: Dow flat. S&P flat. Nasdaq flat. Crude flat at $82.50. Gold -0.1% to $1337.
- 7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 FHFA Housing Price Index
10:00 State Street Investor Confidence Index - Notable earnings before Tuesday's open: AGCO, AKS, AMTD, ARG, ATI, BIIB, BMY, CE, CIT, CMI, COH, DD, ECL, EPD, FE, FIS, HL, HSP, JCI, KMB, KSU, LXK, MHP, MT, MYL, NOV, PCAR, RCL, RF, TLAB, VLO, WYN, X
- Notable earnings after Tuesday's close: AFL, BRCM, BXP, CBG, CENX, CHRW, DV, EQIX, FFIV, FISV, ILMN, LIFE, MCK, MEE, MOLX, NBR, NVLS, PXD, RFMD, STM STR, WLT, WU
Seeking Alpha's Market Currents team contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.
No comments:
Post a Comment