MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Wednesday, May 23
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4:56 PM Martha Stewart (MSO -3.7%) is elected non-executive chairman of the company she founded. As part of a 2006 settlement with the SEC over insider trading charges, she was banned from serving as a corporate director or officer for five years; she rejoined MSO’s board last September. Comment!
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3:25 PM Sirius XM (SIRI -1.1%) CEO Mel Karmazin won't cede control of the company quietly, as he tells shareholders at the company's annual meeting in New York that he doesn't want to be responsible for somebody else calling the shots and would like to see any buyer pay a hefty premium. As far as that double-digit drop in SIRI shares over the last year, the usually-loquacious exec sums it up in three words. "Our stock sucks." 3 Comments
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2:50 PM Wal-Mart (WMT +1.0%) tips off in a presentation at the Morgan Stanley Retail and Restaurant Conference that it plans to add 100 supercenters in FY13 - a mark that stands below a previous estimate calling for 130 to 135. The game plan for the company has been to shift away from big-box stores to the so-called supercenters that can be filled to the gills with a wider variety of products. (webcast) Comment!
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2:15 PM Lions Gate (LGF -1.8%) isn't quite done riding The Hunger Games juggernaut yet, as the company plans a home entertainment release of the movie on DVD, Blu-Ray, and digital download with 3 hours of bonus materials sure to entice at least a few fans. In a separate announcement, the company says partner Studiocanal will distribute over 2K of its titles including the next movie out of The Hunger Games franchise. 2 Comments
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1:47 PM AMC Networks' (AMCX -0.1%) Mad Men ratings have been soaring, and Netflix (NFLX +3%), which last year struck a costly deal to carry old episodes, is taking credit. The 1.1M viewer increase seen for the debut episode of Season 5 relative to Season 4's average is the result of viewers watching earlier seasons on Netflix, suggests content chief Ted Sarandos. His comments come as many suspect Netflix is hurting ratings for Disney (DIS) and Viacom's (VIA) kids TV shows. 4 Comments
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1:08 PM A panel of sports TV execs see the prices for the rights to televise major sports events continuing to rise - a sentiment that seemingly flies in the face of word that Comcast will lose money on the London Olympics and GM will opt out of Super Bowl advertising. The rationale behind the hefty premium is that live sports programming delivers a highly-targeted audience and is fast becoming the last bastion of appointment viewing with digital recording of popular shows growing. Comment!
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12:58 PM The FCC is exploring whether online video sites such as Hulu and YouTube (GOOG) should be governed by the same rules as traditional pay-TV providers. Any move in this direction could have huge implications, potentially giving video sites the right to carry channels content owners have been unwilling to license (and thus representing major new competition for traditional providers), while also requiring them to carry less popular content. 2 Comments
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12:56 PM Car rental stocks show weakness with Avis Budget (CAR -5.3%), Dollar Thrifty (DTG -2.2%), and Hertz Global (HTZ -4.7%) giving back some gains piled up yesterday - fueled in part by a bullish sector call from Morgan Stanley analyst Adam Jones. 1 Comment
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12:45 PM McDonald's (MCD -0.6%) plans to sell $750M worth of 3-year and 7-year notes amid an aggressive plan to hire 70K workers in China and ramp up store openings. The company paid a record-low 3.70% on a 30-year issue floated earlier this year. 3 Comments
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12:36 PM Though Burger King trails restaurant chains McDonald's (MCD -0.5%) and Yum Brands (YUM -1.4%) by a wide margin in China, it's sticking to a plan to offer premium food that caters to local tastes in a bid to make a splash in the market. Truffle burgers in Hong Kong and Sichuan pepper-spiced burgers on the mainland are two products the company will offer in hopes that what it calls its "taste of royal delicacy" will resonate with consumers. Comment!
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12:21 PM Mondelez it is after Kraft (KFT -0.5%) shareholders vote to approve the new name for the company's global snack business by a resounding margin. Brands that will run under the Mondelez umbrella will include Fig Newton, Oreo, Cadbury, and Trident after the split of the company into two parts becomes official. 3 Comments
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11:31 AM Procter & Gamble (PG -1.4%) might fail to meet its EPS goal for FY13, according to analysts digesting the firm's presentation slides at the Citi Global Consumer Conference. Other tidbits from the presentation: The company didn't spend the reported $600M in Olympics advertising. It sees $4B in share buybacks in FY12. Employee headcount on track to be reduced by 3%. (webcast) 1 Comment
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11:25 AM Canadian Labor Minister Lisa Raitt warns that the government will introduce back-to-work legislation on Monday if the stoppage at Canadian Pacific Railway (CP) continues and damages the economy. The government action will depend on how the strike, which began today, affects sectors such as potash, coal and autos. Comment!
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11:11 AM Disney (DIS -0.8%) CEO Robert Iger says the firm will pull the plug on programming if Dish Network's (DISH -1.0%) commercial-skipping service takes off as he dangles Dancing with the Stars as a potential high-profile casualty. While it's very early in the fight, the question of the survivability of commercial-laced TV programming has to be raised with the coming onslaught of original programming from players such as NetFlix, Amazon, Yahoo, Google, Hulu, and others that go lighter on the ads. 4 Comments
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11:00 AM Ford (F +1.8%) trades higher after making its celebrated return to investment grade with a boost from Moody's. The action is more than symbolic, as the company now reclaims its iconic blue oval logo, Mustang trademarks, and plant and machinery assets pledged against a $23.5B loan taken out during the recession. 1 Comment
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10:51 AM Talbots (TLB +7.7%) pops higher as word breaks that the company has extended again its exclusivity agreement with Sycamore Partners, this time to May 24. Shares of TLB are now trading hands at $2.50 a pop - still well-below the $3.05 offer price Sycamore has on the table. Comment!
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10:44 AM Starbucks (SBUX +1.2%) catches an upgrade from BofA to Buy from Neutral with an improved price target of $68, as analysts see the recent 14% pullback in shares as overdone. The action seems to be tipping over to hold a bit of sway over sector rivals. GMCR +0.6%, CBOU +0.6%, PEET +1.4%. 2 Comments
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10:34 AM Shares of Ralcorp (RAH) move down 5.1% after the firm's twice-delayed FQ2 report finally gets released. The company missed the consensus EPS estimate of analysts, reporting $0.72 vs. $0.85, while knocking out in-line sales of $1.06B that marked a 16% Y/Y gain. In a separate announcement, Ralcorp says it snapped up privately-held Petri Baking Products for an undisclosed amount. Comment!
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10:01 AM Diamond Foods (DMND +2.4%) back on the rise after locking in a $225M recapitalization investment from Oaktree that had buzzed on Monday. The deal has new senior notes and warrants for 4.4M shares that could be canceled depending on walnut crops. Comment!
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9:46 AM Delta Air Lines (DAL -1.1%) will offer more premium seats on flights longer than 750 miles starting on June 7. While the carrier grabs a little extra seat revenue at $19-$99 a pop, customers signing on nab an extra three to four inches of legroom and can board flights earlier. 5 Comments
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9:16 AM Macy's (M) plans to invest $15M in Chinese online retailer VIpStore and sell products through the firm's website. Though it's a relatively small investment, it falls in line with the company's goal of making strategic plays in China through collaborations, joint ventures, and partnerships - instead of a large-scale all-in bet. 1 Comment
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9:06 AM Shares of Big Lots (BIG) slip 6.1% in premarket trading after the company misses with its Q1 report on weak same-store sales and offers lower guidance for the full year. The company says it will purchase up to an additional $200M worth of its stock, although inquiring minds are wondering if buybacks are the best strategy. 1 Comment
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9:05 AM Veolia Environnement (VE) is in advanced talks to sell its ailing bus division to the Afikim group, according to reports. The French conglomerate is seeking to sell off its various transportation businesses all over the world. VE -1.5% premarket. Comment!
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8:55 AM With rumors flying about RailAmerica (RA) and the company disclosing that it's considering strategic alternatives, Wells Fargo takes the line that there is some meat on the bone. Analysts reiterate an Overweight rating on RA, citing strong fundamentals and the potential for bidding action. Shares +10.2% premarket to $24.50, after jumping 2.7% yesterday in a late afternoon rally. Comment!
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8:38 AM Needham wades into the carnage that has been Facebook's (FB) IPO and initiates coverage with a buy rating and a price target of $40 a share vs. yesterday's close of $31. "With over 900M monthly users, we believe Facebook is an option on the World" is the cheese-filled explanation. Facebook is enjoying a bit of a bounce premarket and is +2%. 3 Comments
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8:29 AM Comcast's (CMCSA) NBCUniversal plans to boost its online coverage of the London Olympics by 3K hours as it moves off of a strategy of holding back from broadcasting events until prime-time slots. NBC execs now see live streaming during the morning and afternoon hours as helping to promote evening programming - instead of cannibalizing it by providing spoilers for the results of key events. The big picture: The latest forecasts still tag Comcast with a loss over its $1.18B investment in the London Games. Comment!
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8:23 AM Guess? (GES) edged expectations for Q1 earnings and revenues but cut Q2 and full-year guidance, partly on worries over Europe, which generates ~38% of profits. But shares +8% premarket, perhaps sparked by Bloomberg talking up the stock as a takeover target; it's valued at a mere 3.5x EBITDA, there's lots of free cash flow, low debt, and $500M cash on the books. Comment!
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8:18 AM More on American Eagle Outfitters' (AEO) Q1: Comparable-store sales up 17%. Inventory 14% higher Y/Y on a cost per foot basis. Gross margin flat compare to last year, while SG&A expenses fell to 25.2% from 25.8%. Expects Q2 EPS of $0.13-$0.15 and FY12 EPS of $1.16-$1.22. Shares -2.5% premarket. (PR) Comment!
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8:07 AM More on Toll Brothers (TOL) FQ2: swings to a net profit of $16.9M from a loss of $20.8M last year, helped by lower inventory writedowns. Homes delivered +14% to 671, net signed contracts +47%, cancellation rate falls to 2.4% from 3.9%. "It appears that the housing market has moved into a new and stronger phase of recovery," CEO Douglas Yearley says. Comment!
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7:56 AM Industry analysts see the move by Sears Holdings (SHLD) to reduce its stake in Sears Canada to 51% as clearing the path for a host of U.S. retailers to jump in to take advantage of the void as Sears Canada trims its operations. Both Nordstrom (JWN) and Saks (SKS) could jump into a Canadian market that boasts 50% higher sales per square foot at malls than in the U.S., while Target (TGT) might accelerate its own expansion plans. 2 Comments
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7:48 AM Following Dell's (DELL) poor showing yesterday, the attention now switches to H-P (HPQ), which is due to release its FQ2 earnings after the bell. Analysts forecast that EPS fell to $0.91 from $1.24 and that revenue declined 5.4% to $29.9B. H-P is also expected to unveil a restructuring plan that will include laying off over 25K workers. Comment!
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7:27 AM Bill Ackman has an immediate challenge at Canadian Pacific (CP) with a strike by workers that has shut down a number of railroad lines. Union officials say that worker rules and the company's plans to slash a pension plan are major negotiating points. Comment!
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7:10 AM A two-year boom in sales of running shoes still has legs and could propel sellers Nike (NKE), Foot Locker (FL), and Dick's Sporting Goods (DKS) even higher, according to analysts. In the last year sales jumped 14% to reach $6.46B, fueled by the increasing appetite of consumers to pay up for comfort and fashion with more sophisticated lines of running shoes. Comment!
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7:01 AM Piper Jaffray reiterates an Overweight rating on Expedia (EXPE) and raises it price target to $53 from $44. Analysts with the firm base stay bullish on EXPE after digesting the latest data dump from comScore showing strength in the travel site's Europe-based web traffic. Comment!
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6:47 AM Mazda (MZDAF.PK) and Fiat (FIATY.PK) join forces for the first time with plans to develop a lightweight sports car and explore strategic opportunities in Europe. The linkup between the two automakers leaves Ford (F) with one less partner as a longstanding relationship with Mazda peters out. 2 Comments
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6:40 AM The CFPB plans to announce the first set of rules for reloadable prepaid cards, including standards for fee disclosure and limits on consumer liability if cards are used without authorization. Major banks and companies such as Green Dot (GDOT) have been increasingly pushing the cards on consumers because under the current framework they can charge higher fees. Comment!
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4:36 AM Horrible retail figures out of the U.K.: Sales fell 2.3% M/M in April, far exceeding the expected 0.8% drop. Sales -1.1% Y/Y vs. expectations of +1%. Comment!
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4:13 AM Sony (SNE) and Samsung (SSNLF.PK) are trying to force retailers to rein in discounts on televisions, a move that could not only save profit margins at two of the world's largest TV makers but also help retail chains like Best Buy (BBY) and Target (TGT) remain competitive against online discounters. Comment!
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