Cantor Morning News | Overnight Stocks

AAPL +/- Apple Inc.'s CEO Steve Jobs said he prefers holding on to the co.’s cash hoard for potential acquisitions and “bold” investments, rather than paying dividends or buying back stock. “We know if we need to acquire something -- a piece of the puzzle to make something big and bold -- we can write a check for it and not borrow a lot of money and put our whole company at risk,” Jobs said today at AAPL’s shareholder meeting. “The cash in the bank gives us tremendous security and flexibility.” AAPL had almost $25B in cash and short-term investments as of Dec., near its record of $25.6B the previous year. http://www.businessweek.com/news/2010-02-25/apple-chief-jobs-prefers-holding-cash-to-dividends-update1-.html

WMT + Wal-Mart, the nation’s largest retailer, announced on Thurs. that it would cut some 20M metric tons of greenhouse gas emissions from its supply chain by the end of 2015, the equivalent of removing more than 3.8M cars from the road for a year. The co. plans to achieve that goal by focusing on popular product categories with the highest embedded carbon, milk, bread, meat, clothing, and by pressing its suppliers to rethink how they source, manufacture, package and transport those goods. Essentially, suppliers are being asked to examine the carbon lifecycle of their products, from the raw materials used in manufacturing all the way through to the recycling phase. http://www.nytimes.com/2010/02/26/business/energy-environment/26walmart.html?pagewanted=print

HNZ +/- The food maker H. J. Heinz Company said rising sales in Asia’s emerging markets helped its Q3 revenue rise 13%. But the cost of selling frozen-food businesses in the U.S. and Britain cut into its profit, which fell 6%. HNZ benefited as consumers ate at home more often in the recession.

But its sales in the U.S. fell for much of the last year, so it is marketing products more, developing new products and focusing on its emerging markets for growth. Its profit fell to $228.5M, or $.72 a/s in the quarter, which ended Jan. 27, from $242.3M, or $.76 a/s, a year earlier. http://www.nytimes.com/2010/02/26/business/26heinz.html?pagewanted=print

GS - Goldman Sachs' role in masking Greece's real debt burden is to be investigated by the U.S. Federal Reserve and the SEC. Ben Bernanke, chairman of the central bank, confirmed that Goldman Sachs and a number of other unnamed banks are the subject of two examinations. Mr Bernanke, who stopped short of saying an official inquiry had been launched by either regulator, warned that using derivative "instruments in a way that potentially destabilises a company or a country is counterproductive." The revelations, which came as ratings agencies Standard & Poor's and Moody's warned that they may downgrade the Greece's sovereign debt within a month, only serve to increase the already intense glare on the Wall Street investment bank over its involvement with the Greek government. http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7318877/Goldman-Sachs-faces-Fed-inquiry-over-Greek-debt.html

LYV +/- Live Nation Entertainment Inc. said it expects profits to be flat in 2010, disappointing some analysts who expected the co. formed by the merger of TicketMaster TKTM and LYV to ride a rebound in the global concert and music business. Analysts had expected the merger that closed in Jan. 2010 to revolutionize the concert, ticketing and artist-management business. They thought the combined co. would have more bargaining clout with artists and boost efficiency by putting ticketing under the same roof as some of the biggest concert venues.

LYV executives said its global concerts and artist-management business, inherited from concert promoter LYV, will see growth in single-digit percentages in 2010. But ticketing, TKTM's original business, will be flat to slightly down. The combined co. will see earnings before interest, taxes, depreciation and amortization flat with $445M earned in 2009, executives told analysts on a conference call. http://www.reuters.com/article/idUSN259575120100226?type=marketsNews

CROX +/- Crocs Inc. reported a narrower Q4 loss and shocked Wall Street with the sudden departure of its CEO who has served for a year, sending its shares crashing 16%. CEO John Duerden, who was appointed a year ago, said he would be resigning effective March 1 and would be replaced by COO John McCarvel. The seller of once-trendy colorful plastic shoes has spent the last year trying to right its business, which has seen plummeting sales and suffered the attendant losses.

CROX said it expects to break even in the Q1 on revenue of between $155M and $160M.

For the Q4 ended Dec. 31, CROX posted a net loss of $11.5M, or $.13 a/s, down from a loss of $34.7M, or $.42 a/s, a year earlier.

http://www.reuters.com/article/idUSSGE61N0MK20100225?type=marketsNews

Money Supply +/- U.S. M-2 money supply rose by $40.7B in the Feb. 15 week to $8526.9B, the Federal Reserve said on Thurs. The Fed said the four-week moving average of M-2 was $8487.0B vs. $8470.0B in the previous week. http://www.reuters.com/article/idUSN2512439820100225?type=marketsNews

GM +/- General Motors Co. is looking at two long-shot offers for its Hummer brand after a deal to sell the line of sport-utility vehicles collapsed this week in the auto maker's latest failed effort to unload unprofitable assets. The latest suitors previously submitted bids for Hummer, which GM turned down in favor of a deal with China's Sichuan Tengzhong Heavy Industrial Machinery, said a person familiar with the situation who declined to say who the offers are from. But the auto maker is giving the bidders a fresh look after Tengzhong failed to win approval from Chinese regulators for its bid, the person said.

Fed's Balance Sheet +/- The U.S. Federal Reserve's balance sheet grew in the latest week due to increases in its holdings of mortgage-related securities, Fed data released on Thurs. showed. The Fed's balance sheet liabilities, a broad gauge of its lending to the financial system, rose to $2.269T on Wed. from $2.259T last week. The balance sheet was not far from its record of $2.274T set on Jan 13. The Fed's holdings of debt issued by U.S. housing finance agencies, Fannie Mae FNM, Freddie Mac FRE and the Federal Home Loan Bank System, rose to $166.53B on Wed. from $165.59B a week ago. http://www.reuters.com/article/idUSNYS00780320100225?type=marketsNews

U.k. Economy + The U.K. economy expanded a revised 0.3% in the 4Q, the Office for National Statistics said, reporting much stronger growth than originally estimated. The numbers confirm the U.K. economy exited recession in late 2009, and suggest it did so with more momentum than first thought. The economic recovery, and its impact on jobs and the budget deficit, is a key issue in the U.K. elections set for later this year. The ONS said output rose 0.3% on the Q and was down 3.3% on the year. That compares with an initial estimate of 0.1% growth on the Q and a 3.2% decline on the year. The ONS said that surprisingly strong December data across the services and production industries explained the change.

http://online.wsj.com/article/SB10001424052748704625004575088702578638666.html?mod=djemalertEuropenews

Japan's Industrial Output + Japanese industrial output rose a seasonally adjusted 2.5% in Jan. from a month earlier, the Ministry of Economy, Trade and Industry said Fri., due to continuing strong demand from Asian economies. The figure beat a 1.1% increase expected by economists surveyed by Dow Jones Newswires and the Nikkei. The result marked the 11th straight month of increase. Manufacturers polled by the METI expect their output to fall 0.8% in Feb. and a 1.6% gain in March, the data showed. http://www.nni.nikkei.co.jp/e/fr/tnks/Nni20100226D26JF660.htm

Heard on the Street +/- Discusses are investors buying Sirius XM Radio SIRI aware of the deluge of dilution that they face?

The Euro +/- Some heavyweight hedge funds have launched large bearish bets against the euro in moves that are reminiscent of the trading action at the height of the U.S. financial crisis. The big bets are emerging amid gatherings such as an exclusive "idea dinner" earlier this month that included hedge-fund titans SAC Capital Advisors LP and Soros Fund Management LLC. During the dinner, a small group of all-star hedge-fund managers argued that the euro is likely to fall to "parity," or equal on an exchange basis, with the dollar, people close to the situation say.

AIG +/- American International Group Inc. and its federal overseers have decided to scrap a plan to use cash flows from life-insurance policies to repay $8.5B in debt to the Federal Reserve Bank of New York, according to people familiar with the matter. The decision, which comes as AIG prepares to report Q4 results Fri., follows a market recovery over the past year that could improve the government-controlled insurer's chances of repaying its debts to U.S. taxpayers. AIG now believes it can repay the $8.5B through other means, such as with cash generated by its insurance businesses and asset sales, according to people familiar with the matter.

Reuters

BIOS + BioScrip Inc posted a better-than-expected quarterly profit, helped by the reversal of the co.'s deferred tax valuation allowance, and reaffirmed its 2010 outlook. For the 4Q, the co.y posted a net income of $40.7M, or $.99 a/s, compared with a net loss of $76.6M or $1.98 a/s, in the year-ago Q. The 4Q net income included the reversal of the co.'s deferred tax valuation allowance of $41.1M and expenses related to the pending acquisition of Critical Homecare Solutions.

http://www.reuters.com/article/idUSSGE61P0HB20100226?type=marketsNews

Greece - Eurohypo and Hypo Real Estate, the two most important German banks involved in public financing, will not subscribe to the next round of bonds issued by Greece as Athens battles a debt crisis, the Financial Times Deutschland newspaper reported. Deutsche Postbank would also not invest any new funds in Greece, the newspaper said, citing banks and sources. Greece is preparing for its second bond issue this year, possibly in February or early March. The country needs to raise about 20B euros ($26.95B) to cover maturing debt in April and May. Deutsche Bank wants to participate only as an investment bank when it comes to the placement of bonds but the bank itself will no longer buy Greek government bonds, the newspaper said.

MarketWatch.com

LYG + Lloyds Banking Group said that its '09 net profit rose to 2.83B pounds ($4.32B) from 772M pounds a year earlier due to an 11.2B pound gain linked to its acquisition of HBOS. Excluding that gains and comparing the combined operations, the pretax loss narrowed to 6.3B pounds from 6.71B pounds, while impairments rose 61% to 23.99B pounds. LYG said, however, that impairments in the second half of the year were 21% below the first half and it expects to see a similar pace of improvement throughout '10. The bank said the economy is showing signs of stabilization, with a "weak upturn" expected in '10, which it said should drive significant improvements in the performance of its continuing businesses. LYG said it's targeting high single-digit income growth from continuing businesses within 2yrs. Analysts were expecting a pretax loss of around 6.7B pounds for '09.

http://www.marketwatch.com/story/story/print?guid=C46A976D-27BB-4FA2-BC06-E8924B382FF9

CPCAF, AICAF + Cathay Pacific Airways Ltd. and Air China Ltd. have set up an air-cargo joint venture in China, according to a joint statement by the carriers on Thurs., finalizing an agreement after discussions lasting nearly four years. The joint venture will be 51% owned by AICAF and make use of the mainland Chinese carrier's existing air-cargo unit, Air China Cargo, as a platform. CPCAF will have a 25% equity stake and an indirect 24% stake through an offshore trust. Shares of CPCAF were up 2.3% in mid-morning trade while share Air China's Hong Kong-listed shares were suspended pending a "price sensitive" announcement. The agreement will see CPCAF provide 1.67B yuan ($244.6M), including aircraft and engines to the joint venture.

DSKYF + Daiichi Sankyo Co. is set to become the first major Japanese pharmaceutical firm to sell generic drugs domestically, with sales set to begin as early as this fall, according to a Nikkei news report Friday. DSKYF would develop the drug with India's Ranbaxy Laboratories Ltd. RBXZF, which it acquired in 2008. Its efforts would focus on "lifestyle-related conditions," including high blood pressure and cholesterol, the report said. It cited the co. as expecting generic-drug sales of 10B yen ($112M) annually within two to three years, eventually rising to 40B-50B yen. Shares of DSKYF rose 1.6% in early Tokyo trading Friday.

WOLWF + Woolworths Ltd. said its fiscal first-half profit rose 11% to 1.1B Australian dollars ($976M) from 983.3M Australian dollars in the same period a year earlier. Sales rose 6%, excluding fuel, to 27.2B Australian dollars. Analysts polled by Dow Jones Newswires had expected the supermarket and retail giant to post a profit of 1.09B Australian dollars during the six months ended Jan. 3. WOLWF also said it plans to buy up to 400M Australian dollars worth of co. stock back from investors. Shares of WOLWF rose nearly 2% Fri. morning in Sydney trading.

U.K. Consumer Confidence + British consumers grew more upbeat in Feb., taking the consumer confidence index produced by research firm GfK NOP higher by three points to -14. The index is up 21 points from Feb. 2009, said GfK NOP, which conducts a monthly survey of 2000 U.K. consumers on behalf of the European Commission. The sub-index measuring consumers' assessment of the economic situation over the last 12 months rose to -50 from -57 in Jan., while expectations for the general economic situation over the next 12 months rose to 4 from -2. The index measuring the "climate for major purchases" was unchanged at -16.

IPG - The Interpublic Group of Companies Inc. said its 4Q net income fell to $129.4M, or $.24 a/s, from $209.8M, or #.39 a/s, in the year-ago period. The advertising holding co.'s revenue fell 5% to $1.8B, compared to $1.90B in the 4Q. FactSet expected earnings of $.24 a/s.

http://www.marketwatch.com/story/interpublic-grouop-net-income-falls-38-2010-02-26

U.K. Housing Prices - Nationwide Building Society said Friday that U.K. house prices fell 1.0% month-on-month in February, the first fall in 10 months. The mortgage provider said that snow and the expiry of a tax holiday may have been behind the drop and it's "too early to say" whether this is the start of a new trend. In January, house prices rose 1.2%, bringing annual gains to 8.6%.

http://www.marketwatch.com/story/uk-house-prices-drop-1-in-february-nationwide-2010-02-26

Gold Futures + Gold prices gained some ground on Friday, adding to Thursday's gains, as the U.S. dollar fell versus the euro and traders noted a sense of returning willingness among investors to buy risky assets, including commodities. Gold futures for April delivery inched up $1.30 to $1,109.80 an ounce. "The metal is likely to continue to track the euro and broad risk sentiment in the coming sessions; however, dips are expected to draw further strong support from both jewelry and investment players and should provide a floor," said analysts at TheBullionDesk.com.

CHLKF +/- Shanghai Pudong Development Bank Co. plans to sell a 20% stake to telecom giant China Mobile Ltd., as part of a private placement worth as much as 40B yuan ($5.86B), according to a report Fri. The bank will issue 2.2B shares to CHLKF, according to Dow Jones Newswires, which cited a research report by mainland Chinese brokerage Guotai Jun'an Securities. The private placement will help the bank to boost its core capital adequacy ratio to more than 10% and its capital adequacy ratio to near 14%. Shanghai Pudong Development Bank's shares were suspended from trading Friday pending an announcement. Citigroup Inc. qC owns a 3.8% stake in the mid-sized lender.

WYNN + Wynn Resorts Ltd. said that its Q4 loss narrowed to $5.2M or $.04 p/s, from $159.6M or $1.49 p/s, in the year-ago period. Excluding one-time costs, the casino operator would have reported earnings of $.08 p/s. Revenue rose to $809.3M from $614.3M a year ago. Analysts surveyed by FSR estimated a profit of $.15 p/s on revenue of $789.9M.

PEP + PepsiCo Inc. and bottlers Pepsi Bottling Group Inc. PBG and PepsiAmericas Inc. qPASsaid that the FTC ended its antitrust waiting period early. As a result, the combination of the cos. is expected to close after the bell Fri. PEP also said the FTC accepted a consent decree to keep confidential information the co. will receive from Dr Pepper Snapple Group Inc DPS after the deal closes.

NOVL +/- Novell Inc. said its fiscal Q1 net income rose to $20.2M or $.06 p/s, from $10.7M or $.03 p/s in the same period a year earlier. Revenue fell to $202.4M from $214.9M. Analysts polled by TR had expected NOVL to post earnings of $.07 p/s, and $207.6M in revenue.

GPS + Gap Inc. said its Q4 net income rose to $352M, or $.51 p/s, from $243M or $.34, a year earlier. Sales rose 4% to $4.24B. GPS also forecast profit of $1.70 to $1.75 p/s this year, which was above the $1.68 estimate of analysts surveyed by FSR. The co., which also owns Old Navy and Banana Republic chains, plans to buy back additional $1B in stock and increased its annual dividend by 18% to $.40 p/s.

AGO + Assured Guaranty reported that it swung to a Q4 net income of $216.7M or $1.27 p/s, from a net loss of $243.8M or $2.66 p/s, in the same period last year. The bond insurer said operating income, which excludes net realized investment gains and losses and other items, totaled $155.9M or $.91 p/s, compared with $3.5M or $.04 p/s, a year earlier. Analysts surveyed by FSR had forecast earnings of $.80 p/s on revenue of $419.3M.

FLR - Fluor Corp. reported Q4 net income fell to $149M or $.82 p/s, from $190M or $1.03 p/s, a year ago. Revenue fell 10% to $5.48B. Analysts polled by FSR were looking for earnings of $.89 p/s on sales of $5.45B. For the full year, the engineering and construction giant lowered its full-year earnings estimate to $2.80 to $3.20 p/s from its previous estimate of $3.20 to $3.60 p/s. Wall Street was looking for a 2010 profit of $3.40 p/s.

VMW + VMware Inc. said it would acquire "certain software products and expertise" from EMC Corp.'s EMC Ionix IT management business in a deal valued at $200M. VMW will acquire software solutions used to improve the deployment and management of servers and applications. The deal is expected to close in the Q2 of this year.

BLK + BlackRock Inc. said that its board raised the quarterly dividend 28% to $1 from $.78. The dividend is payable March 23 to shareholders of record as of March 8.

MGLN + Magellan Health Services said that its 4Q net profit rose 85% to $43.7M, or $1.25 a/s, from $23.6M, or $.61 a/s, a yr earlier. Revenue for the Q rose 8.6% to $718.9M. FactSet had expected earnings of $1.03 a/s on sales of $697.9M. MGLN confirmed its guidance for 2010 revenue of between $3B and $3.2B and EPS in the range of $2.73 to $3.29.

U.S. Stock Futures + U.S. stock futures edged higher as markets continue their herky-jerky path as issues surrounding the economy's health, interest-rate policy and sovereign debt continue.

S&P 500 futures rose 3.3pts to 1,105.60 and Nasdaq 100 futures rose 2.75pts to 1,816.20. Futures on the DJIA rose 20pts.

http://www.marketwatch.com/story/story/print?guid=B0FABC14-A8FA-4E1C-BDC0-EA47B0979A1A

ARM + ArvinMeritor Inc. announced a public offering of 17.35M shares of common stock priced at $10.50 p/s. The transportation and industrial equipment supplier said the size of the offering was increased from a previously announced 15M shares. The offering is expected to close March 3. Proceeds will be used to repay debt and for general corporate purposes, ARM said.

AES - AES Corp. said that its 4Q net loss widened to $48M, or $.07 a/s, from $47M, or $.07 a/s, a year ago. On an adjusted basis, EPS increased to $.22, from $.21 last year. FactSet had been expecting EPS of $.21. Revenue rose to $3.82B, from $3.44B last year. "Operational improvements in Chile, the Philippines and Brazil helped offset unfavorable foreign currency impacts as well as reduced demand and lower electricity prices in North America," the firm said. The firm expects adjusted EPS in a range of $1.00 to $1.05 a/s for '10 and between $1.15 and $1.25 in '11.

ATHN +/- Athenahealth said it needs more time to complete a year-end audit and an internal review of its policy related to the timing of amortization for deferred implementation revenue. The co. is the developer a Web-based system that helps doctors process insurance claims.

Ca. Health-Insurance Providers - California Attorney General Edmund "Jerry" Brown subpoenaed records from seven health insurers in a probe concerning potentially illegal claim denials and rate hikes. Brown subpoenaed financial records and other documents from Aetna Inc. AET, Cigna Corp. CI, Anthem Blue Cross, Health Net HNT, Blue Shield of California, Kaiser Permanente and PacifiCare. The probe follows reports that Ca.'s five largest health-insurance providers were denying nearly 40% of claims and hiking rates by up to 40%.

FRO +/- Oil tanker operator Frontline said its 4Q profit dropped to $3.92M from $51.55M, with revenue dropping to $262.1M from $451.5M. Analysts expected a $10M profit on revenue of $208M. The board expects improved results for the 1Q of 2010 compared to the 4Q of 2009. It's keeping its quarterly dividend at $.25 a/s.

http://www.marketwatch.com/story/frontline-profit-slumps-92-2010-02-26

Financial Times

EQY + Britain's Liberty International is in advanced talks to sell its $560M U.S. shopping center business to Equity One, the Financial Times reported, citing people close to the negotiations. Liberty is believed to be structuring the deal to trade the properties in return for equity in the U.S. group, rather than cash. Liberty has previously stated its desire to reduce its U.S. exposure.

http://www.marketwatch.com/story/liberty-in-talks-to-sell-us-centers-report-2010-02-26

Bloomberg.com

U.S. Treasuries + Treasuries headed for a second weekly gain as the threat of a default by Greece fueled demand for the safety of U.S. debt and Fed Chairman Ben S. Bernanke pledged to hold interest rates at a record low. A rally yesterday pushed the yield on the 10-year bond to a two-week low as an unexpected increase in first-time claims for jobless insurance indicated the labor market is still struggling to recover. S&P’s and Moody’s Investors Service both said this week that Greece faces potential debt downgrades.

http://www.bloomberg.com/apps/news?pid=20601009&sid=aXDKMIo4wK7k#

Europe + Europe’s economy may be coming unstuck from the global recovery as governments to the south of the region struggle to reverse budget deficits and consumers in the north pull back spending. After the 16-nation euro economy almost stagnated in the 4Q, data this week showed the weakness reaching into 2010. Confidence among households and companies worsened unexpectedly, French consumer spending fell and bank loans to the private sector slid for a fifth month. At the same time, S&P’s said it may soon downgrade Greece again as the country grapples with the region’s largest budget shortfall.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aD6mJGvUqkRE&pos=3#

The Dollar - The dollar fell for a third day against the euro and the yen weakened as signs the global economy is recovering and gains in Asian stocks boosted demand for higher-yielding assets. The U.S. currency declined versus 14 of its 16 major counterparts after Japanese retail sales unexpectedly rebounded, industrial production expanded and Australian bank lending rose for a third month. South Korea’s won strengthened for the first time in four days after an increase in manufacturers’ confidence bolstered optimism the economic recovery is gathering pace.

http://www.bloomberg.com/apps/news?pid=20601083&sid=aV0EjcwzgXVM#

AFX News

Californa - California’s Assembly passed a bill allowing it to delay payments to programs including schools to avoid running out of cash, a move aimed at boosting confidence in bonds sold by the most-populous U.S. state. The passage comes a day after Treasurer Bill Lockyer told lawmakers the bill was needed to send a signal to investors that California is taking steps to adequately manage its cash as it faces budget deficits through June 2011. Lockyer postponed a $2B sale that was initially scheduled for next week.

http://globaleconomicanalysis.blogspot.com/2010/02/california-delays-payments-ponders-ious.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29