>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: ANGI -25.1%, TRIP -10.1%, PLCM -5.3%, DNKN -5.1%, QCOM -4.4%, TQNT -4.3%, CRUS -4.3%, BBEP -3.1%, VAR -2.9%, GM -2.4%, MNRO -2.3%, ALXN -1.8%, DHI -1.7%, T -1.4%, ETFC -1.4%, TEX -1.4%, CAKE -1.3%, CAT -1.3%, TSCO -1.1%, SGMO -1%, TER -0.9%, BSX -0.9%, GPI -0.9%, CELG -0.8%, RDWR -0.6%.

M&A news: EGAS -3.2% (responds to press release issued by Algonquin Power & Utilities and reiterates rejection of their grossly inadequate, unsolicited offers), BBEP -3.1% (acquired QR Energy LP in a unit-for-unit exchange implying a transaction value of ~ $3.0 bln).

Other news: CALI -33.9% (co said it will vigorously oppose 'grossly unfair and damaging' plan by Depository Trust Company to impose 'global lock' on its securities), GPRC -13.2% (reported receipt of notice from DTC of plans to impose 'global lock' on its securities; company says DTC plans are 'unfair and unnecessarily damaging to current shareholders and is reviewing options'), SRPT -9.2% (discloses that Arthur Krieg, Senior Vice President and Chief Scientific Officer, was terminated from his position with the company), INCY -8.1% (also announces top-line results from RELIEF trial of ruxolitinib in patients with polycythemia vera; statistical significance not achieved for the primary endpoint of symptom control; positive trends in favor of ruxolitinib versus hydroxyurea observed),MHFI -7.6% (receives Wells Notice from SEC regarding S&P's rating of six commercial mortgage backed securities transactions in 2011), GOV -5.6% (prices 13.5 mln common shares at $23.50 per share), QUNR -1.9% (following TRIP results), INO -1.5% (files for $175 mln mixed securities shelf offering).

Analyst comments: EIX -3.9% (downgraded to Neutral from Buy at Janney) STR -1.2% (downgraded to Neutral from Buy at Citigroup ), FCX -1.1% (downgraded to Neutral from Buy at BofA/Merrill), BA -1% (downgraded to Neutral from Buy at BofA/Merrill).

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: VDSI +14.9%, LOGI +14.8%, QRE +11.3%, AGEN +9.8%, FB +9.2%, TDY +9%, FTNT +8.6%, SKX +8.4%, NOK +8.2%, UA +5.6%, EGHT +5.5%, HBI +5.2%, COG +4.7%, ORLY +4.4%, RJF +4%, PTEN +3.9%, ILMN +3.5%, JBLU +3.3%, NVEC +2.9%, POT +2.9%, INFN +2.8%, CRI +2.8%, UAL +2.2%, UAL +2.2%, FFIV +2%, IMAX+1.9%, SQNS +1.8%, MMM +1.8%, BMY +1.6%, HOT +1.5%, CAM +1.5%, CTXS +1.3%, ABC +1.3%, GILD +1.1%, NURO +1%.

M&A news: QRE +11.3% (to be acquired by Breitburn Energy Partners (BBEP)), ARIA +7.1% (attributed to a positive tweet that has since been deleted; Tweet was with regards to a SHPG for ARIA rumor).

Other news: APP +8.3% (disclosed details of new Board of Directors), DARA +8.1% (cont momentum), SPNC +7.4% (announces FDA clearance of peripheral laser atherectomy devices for in-stent restenosis ), TWTR +4.1% (following FB results), JMBA +3.8% (Engaged Capital disclosed 7.0% stake in SC 13D filing; believe the Issuer possesses multiple paths to value creation, expects to continue to have discussions with the Issuer's management), KNDI +2% (following yesterday's 12% decline), P +2% (following FB results), LNKD +1.3% (following FB results), FEYE +0.9% (on FTNT results), LL +0.9% (responded to lawsuit allegations, stating, "The allegations in this lawsuit concerning our product are simply flat-out false")

Analyst comments: WIBC +3.4% (upgraded to Strong Buy from Outperform at Raymond James), RKUS +2.6% (added to Conviction Buy list at Goldman), UIS +1.4% (upgraded to Positive from Neutral at Susquehanna), ZFGN +0.6% (initiated with a Outperform at Leerink Partners)

>>> Coca-Cola Ent beats by $0.02, reports revs in-line; reaffirms FY14 guidance

Coca-Cola Ent beats by $0.02, reports revs in-line; reaffirms FY14 guidance (48.76)
Reports Q2 (Jun) earnings of $0.90 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.88; revenues rose 8.2% year/year to $2.33 bln vs the $2.34 bln consensus.

  • Total second-quarter volume grew 3½ percent, with growth in sparkling drinks of
    3.5 percent.
  • CCE affirms its guidance for full-year 2014. It continues to expect 2014 earnings per diluted share growth of approximately 10%, net sales growth in a low single-digit range, and operating income growth in a mid-single-digit range.

>>> 3M reports EPS in-line, revs in-line; reaffirms FY14 EPS guidance (144.69)

3M reports EPS in-line, revs in-line; reaffirms FY14 EPS guidance (144.69)
Reports Q2 (Jun) earnings of $1.91 per share, in-line with the Capital IQ Consensus Estimate of $1.91; revenues rose 4.9% year/year to $8.13 bln vs the $8.09 bln consensus. Co reaffirms guidance for FY14, sees EPS of $7.30-7.55 vs. $7.47 Capital IQ Consensus Estimate.
  • Co paid $556 million in cash dividends to shareholders and repurchased $1.4 billion of its own shares during Q2.
  • "Our businesses continued to execute very well in the Q2...Organic sales growth was again positive across all businesses and geographic regions which helped drive double-digit growth in EPS. Strong productivity fueled increased growth investments, and operating margins increased year-on-year to nearly 23%."
  • "In addition to a strong operating performance, we are also deploying capital more aggressively to both improve the business and to enhance shareholder returns. On July 16, we announced the acquisition of the remaining 25% of our Sumitomo 3M subsidiary in Japan for a purchase price of $885 million. And during the second quarter we paid $2.0 billion to shareholders via a combination of cash dividends and gross share repurchases. My thanks to the 3M team for the results thus far in 2014."

>>> US Early premarket gappers

Early premarket gappers
Gapping up: LOGI +13.3%, FTNT +8.6%, SKX +8.5%, NOK +8.1%, FB +7.7%, SPNC +7.3%, VDSI +6.7%, APP +5.5%, EGHT +5.5%, HBI +5.2%, QRE +4.5%, ORLY +4.4%, RJF +4%, POT +4%, INFN +3.9%, JMBA +3.8%, NVEC +2.9%, CRI +2.8%, TWTR +2.4%, GILD +1.9%, SQNS +1.8%, P +1.6%, HOT +1.5%, CTXS +1.3%, PTEN +1.3%, PHM +1.3%, ALXN +1.1%, FEYE+0.9%, LL +0.9%, SUSQ +0.9%, WFT +0.9%, SWKS +0.7%, AF +0.7%, ALSN +0.7%, LNKD +0.6%

Gapping down: CALI -33.9%, ANGI -25.3%, GPRC -13.2%, TRIP -9.8%, INCY -8.1%, MHFI -7.6%, GOV -5.6%, QCOM -5%, TQNT -4.3%, CRUS -4.3%, PLCM -4.2%, VAR -2.9%, KNDI -2.4%, ILMN -2.4%, QUNR -1.9%, TSCO -1.6%, DNKN -1.6%, INO -1.5%, INO -1.5%, ETFC -1.4%, TEX -1.4%, CAKE -1.3%, PCLN -1.1%, BBEP -1.1%, DO -1.1%, SGMO -1%, TER -0.9%, T -0.8%,RDWR -0.6%

>>> Eli Lilly beats by $0.03, reports revs in-line; reaffirms FY14 EPS guidance,

Eli Lilly beats by $0.03, reports revs in-line; reaffirms FY14 EPS guidance, revs guidance (64.25)
Reports Q2 (Jun) earnings of $0.68 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.65; revenues fell 16.8% year/year to $4.93 bln vs the $4.9 bln consensus.
  • In the second quarter of 2014, worldwide total revenue was $4.936 billion, a decrease of 17 percent compared with the second quarter of 2013. The revenue decrease was due to a 17 percent decline in volume; the impact of changes in price and foreign exchange rates on worldwide revenue was negligible. The decrease in worldwide volume was driven by the loss of U.S. patent exclusivity for Cymbalta, and to a lesser extent Evista®, partially offset by volume gains for several other products. Total revenue in the U.S. decreased 30 percent to $2.380 billion, driven by lower demand for Cymbalta and Evista following their patent expiration. Total revenue outside the U.S. increased 1 percent to $2.556 billion, driven by higher volume, including the impact of the acquisition of Lohmann Animal Health in the second quarter of 2014, partially offset by lower prices.
Co reaffirms guidance for FY14, sees EPS of 2.72-2.80, excluding non-recurring items, vs. $2.78 Capital IQ Consensus Estimate; sees FY14 revs of $19.4-20.0 bln vs. $19.74 bln Capital IQ Consensus Estimate.

(APW) Obama Wants Limits on US Company Mergers Abroad

Obama Wants Limits on US Company Mergers Abroad
2014-07-24 10:01:15.430 GMT


Los Angeles (AP) -- President Barack Obama is tapping into
growing misgivings about tax-driven overseas mergers by U.S.
corporations, issuing a new call to end the practice quickly and
questioning the patriotism and citizenship of those companies.
The push comes amid a developing trend by companies to
reorganize with foreign entities partly to reduce their tax
payments in the U.S.
But Obama's election-year drive also coincides with
increased attention to the issue by congressional Democrats, who
are seeking to draw contrasts with Republicans and to portray
them as too corporate-friendly.
Obama was scheduled to address the issue in remarks
Thursday at a technical college in Los Angeles. Though he
included a proposal to rein in such mergers and acquisitions in
his 2015 budget, this marks a new, more aggressive focus on the
issue by the president.
His administration began to ramp up attention to these
transactions last week with a letter from Treasury Secretary
Jacob Lew to House and Senate leaders. Lew said such deals,
known as "inversions," ''hollow out the U.S. corporate income
tax base."
In his remarks, Obama was expected to call for "economic
patriotism." White House officials said Obama would declare that
those companies that engage in inversions are in effect
renouncing their U.S. citizenship in order to shift their
profits overseas.
Obama is urging Congress to enact legislation that is
retroactive to May, arguing that will stop companies from
rushing into deals to avoid the law.
Republicans and some Democrats, however, prefer to make
those changes as part of a comprehensive overhaul of the
corporate tax code that would also lower corporate tax rates and
reduce the incentive for companies to seek out countries with
lower levels of taxation.
Under such inversion deals, U.S.-based, multinational
companies can lower their tax bills in part by combining with a
foreign company and reorganizing in a country with a lower tax
rate. The United States has a 35 percent income tax rate, the
highest in the industrialized world, and it also taxes income
earned overseas and then brought home.
Republicans such as Sen. Orrin Hatch of Utah say the U.S.
first must change its policy of taxing income earned abroad.
Under current law, shareholders of a U.S. company that
merged with an offshore entity would have to own less than 80
percent of the combined entity to take advantage of a lower
foreign tax rate. Obama's budget proposes slashing that cutoff
to 50 percent.
Administration officials estimate the deals, if allowed to
continue, will cost the U.S. Treasury $17 billion in lost
revenue over the next decade.
"We should not be providing support for corporations that
seek to shift their profits overseas to avoid paying their fair
share of taxes," Lew said in the letter.

-0- Jul/24/2014 10:01 GMT

NY Post : Is HBO itself worth more than Fox’s TW bid?

“HBO GO” is taking on new meaning inside Time Warner as the media giant contemplates a possible defense against 21st Century Fox.
The idea being bandied about is an initial public offering of HBO — billed as “the world’s most successful pay-TV service” — in order to showcase the value embedded in that single Time Warner division.
HBO is considered the crown jewel of the company with watercooler hits like “Game of Thrones” and “Girls.” The HBO GO streaming service is available to the pay-TV network’s subscribers.
This doesn’t mean HBO would actually GO via an IPO, according to sources familiar with Time Warner’s thinking. It means, rather, that a valuation of HBO would invite comparisons to video-streaming service Netflix, which sees itself as the new HBO and isn’t above poking fun at its more established rival.
It doesn’t hurt, of course, that Wall Street is in another of its Netflix-mania phases. Stock of the self-styled Internet television network closed Wednesday at $427.90 per share, up 18 percent for the year.
More relevant here is how the market values Netflix in relation to its Ebitda, or earnings before interest, taxes, depreciation and amortization.
It turns out Netflix’s enterprise value, which includes outstanding debt, is 60.3 times the $416 million in Ebitda that the company reported for its trailing 12 months.
Slap that same multiple on HBO’s Ebitda for the most recent year — namely, $1.9 billion — and the comparable value for Time Warner’s most coveted division is pushing $115 billion.
That’s even greater than the $93 billion the market accords Time Warner in its entirety.
What’s more, because HBO owns so much of the content it broadcasts, it’s arguably worth much more than a Netflix that leases almost all of its content and only recently started amassing a video library of its own.
Small wonder, then, sources believe Time Warner will soon take its “HBO GO” case to its shareholders.
Some even expect it to serve as the linchpin in Time Warner’s defense against Fox, which initially offered $80 billion for a company whose lead division is theoretically worth 44 percent more than Fox’s opening bid.
Time Warner’s board took its first step toward warding off a takeover by eliminating a provision in its bylaws that lets shareholders call special meetings.
Still, as convenient as it is to trot out the “HBO GO” argument now, insiders report the idea was being mulled even before Fox started rattling Time Warner’s cage.
“It was to be a 2015 event,” a source said of the gambit designed to unlock HBO’s value regardless of whether the entire company was in play.
Part of its beauty, the same source explained, is that an HBO IPO of less than 20 percent of the division would allow parent-company Time Warner to continue consolidating HBO’s robust results with its own financials.
Yet the market’s appreciation for HBO — as well as the value it adds to all of Time Warner — would be highlighted in the price of HBO shares released to the public.
A Time Warner spokesman declined to comment.