>>> US Notable Movers

Notable after hours earnings movers: PRTA +14.7%, NCMI +10.5%, PLOW +9.6%, ININ -13.9%, AEIS -12.8%, FN -10.2%

Companies trading higher after hours following earnings/guidance:

PRTA +14.7%, NCMI +10.5%, PLOW +9.6%, TXMD +8.1%, VVUS +6.2%, NLS +5.5%, VNO +5.3%, DATA +5.2%, ECOM +4.9%, SALE +4.7%, RGR +3.2%

Companies trading lower after hours following earnings/guidance:

ININ -13.9%, AEIS -12.8%, FN -10.2%, SGY -5.3%, LF -4.5%, YY -3.6%, BNFT -3%, SMG -2.5%, AIG -2%, CFN -1.2%, RPAI -0.3%

>>> US Close Dow+0,11% S&P+0,19% Nasdaq+0,34%

Closing Market Summary: Stocks Begin Trading Week on Quiet Note

The stock market kicked off the new trading week on a sleepy note as the major averages spent the bulk of the session near their flat lines. However, a final push during the last hour of action placed the key indices at new highs into the close. The S&P 500 added 0.2%, while the Russell 2000 (-0.1%) lagged throughout the day.

Equities began the session on their lows as renewed global growth concerns, combined with continued worries about Ukraine, conspired to ensure a cautious start. In China, the HSBC Manufacturing PMI fell to 48.1 from 48.3 (expected 48.4), signifying a slowdown in manufacturing activities. Elsewhere, the European Commission warned about slower-than-expected growth by lowering its 2014 inflation forecast to 0.8%. The commission also trimmed next year's inflation forecast to 1.2%, while lowering its 2015 GDP forecast to 1.7% from 1.8%.

Strikingly, the worries that pressured index futures overnight were cast aside once the opening bell rang. The major averages returned to their flat lines during the first 90 minutes of action, but were unable to continue their rally as financials (-0.4%) acted as a wet blanket.

The second-largest sector finished the day at the bottom of the leaderboard as JPMorgan Chase (JPM 54.22, -1.36) weighed after guiding for a 20.0% year-over-year decline in Q2 markets revenue. Shares of JPM fell 2.5%, while peers Bank of America (BAC 15.08, -0.17) and Citigroup (C 47.18, -0.55) both lost near 1.2%.

Meanwhile, the remaining top-weighed sectors finished on a mixed note. Health care (+0.6%) and technology (+0.4%) outperformed, while the discretionary sector (+0.1%) lagged.

Retailers contributed to the underperformance of the discretionary space, with Target (TGT 59.87, -2.14) falling 3.5% after announcing Chief Executive Officer Gregg Steinhafel will step down from his post. Homebuilders also factored into the relative weakness of the discretionary sector after investor Jeffrey Gundlach recommended shorting the housing sector at the Ira Sohn conference. The iShares Dow Jones US Home Construction ETF (ITB 23.66, -0.29) lost 1.2%.

Elsewhere, the two commodity-related sectors—energy (+0.5%) and materials (+0.5%)—finished among the leaders. The energy space rallied even as crude oil shed 0.4% to $99.46/bbl, while producers of basic materials drew strength from miners. The Market Vectors Gold Miners ETF (GDX 24.41, +0.09) gained 0.4%, while gold futures climbed 0.5% to $1309.60/ozt.

On the fixed income side, Treasuries finished in the red after sliding from their overnight highs. The benchmark 10-yr yield rose two basis points to 2.61%.

Participation was well below average with less than 600 million shares changing hands at the NYSE.

Economic data was limited to just one report:

* The ISM Non-manufacturing Index increased to 55.2 in April from 53.1 in March. That was the strongest reading since August 2013, while the Briefing.com consensus expected the index to increase to 54.0. Business activities/production levels improved to 60.9 in April from 53.4 in March. The increase in production was predicated on a large increase in new orders (58.2 from 53.4). There is some concern that production may not be sustainable without another influx of new orders growth. Order backlogs slipped into a contraction in April (49.0 from 51.5). The Employment Index fell to 51.3 in April from 53.6 in March, which was unusual considering the April Employment Situation Report showcased a large increase in payrolls that month. 

Tomorrow, the Trade Balance for March (Briefing.com consensus -$42.50 billion) will be released at 8:30 ET.

* S&P 500 +2.0% YTD  * Dow Jones Industrial Average -0.3% YTD  * Nasdaq Composite -0.9% YTD  * Russell 2000 -3.0% YTD

WSJ : Sotheby's, Third Point Reach Settlement

Sotheby's, Third Point Reach Settlement Sotheby's Board Expanded; Daniel Loeb, Olivier Reza, and Harry Wilson Appointed

Activist investor Daniel Loeb and auction house Sotheby's announced a settlement Monday that concludes his seven-month campaign to shake up the company a day before shareholders were to vote on his board candidates.

The pact gives Mr. Loeb three board seats by expanding the board to 15 people, rather than seeing Mr. Loeb's candidates go up against company nominees. The deal also caps Mr. Loeb's stock ownership at 15%. His hedge fund, Third Point LLC, currently owns about 9.6%, but had sought the ability to go to 20%, a request the company had blocked, leading Third Point to sue.

Sotheby's shares on Monday rose about 2%, or 95 cents, to $44.34.

Settlements, even hours before a scheduled vote, have become more common for activists and their targets, as advisers believe it is better to hammer out a deal than risk a divisive shareholder vote.

Through last week, there had been 20 settlements between companies and activists so far this year, equaling the most at this date since 2009, according to FactSet SharkWatch, a data provider.

In a joint statement Monday, Mr. Loeb said: "As of today we see ourselves not as the Third Point Nominees but as Sotheby's directors, and we expect to work collaboratively with our fellow board members to enhance long-term value on behalf of all shareholders." Sotheby's Chairman and Chief Executive William Ruprecht said the agreement "ensures that our focus is on the business."

As part of the deal, Mr. Loeb, Olivier Reza, and Harry J. Wilson have been appointed to the board and will be included in the company's slate of nominees at the 2014 annual meeting

Monday's agreement comes after a Delaware judge on Friday blessed Sotheby's so-called poison pill that limited the amount of stock Third Point could acquire. Beyond that legal issue, a court hearing last week in the suit enabled Third Point to surface internal board emails showing support for Mr. Loeb's point of view; inflammatory comments by Mr. Loeb also were revealed. The airing of the various remarks added to the drama of a campaign that had captivated both Wall Street and the art world.

Mr. Loeb is no stranger to board rooms that he has spent time publicly attacking. At Yahoo Inc. YHOO +0.11% he waged a several-month war that saw a newly hired CEO fired, before he joined the board. The shares of Yahoo rose more than 85% during the time he was on the board, which was just over a year.

Sotheby's criticized his exit at Yahoo in its presentations to shareholders, just one of the heated points that will now need to be put aside in the boardroom.

At one point, according to a Friday court ruling, Mr. Loeb emailed allies he was waging a "holy jihad" with the plan to "undermine the credibility" of Mr. Ruprecht. Mr. Loeb said the email was intended as a joke and not meant to offend.

Mr. Ruprecht referred to Mr. Loeb as "scum" to another board member and said his campaign was about "ego," the judge's ruling said.

Other directors, however, worried Mr. Loeb's criticisms were on point and raised concerns about the company's spending and Mr. Ruprecht's compensation, according to court testimony.

Putting such distractions behind the company is "good for shareholders," Stifel Nicolaus & Co. analyst David Schick wrote Monday, as it allows the company to get back to business.

That will include its spring series of Impressionist, modern and contemporary art sales that are expected to achieve at least $684 million combined during the next two weeks. Mr. Loeb has argued that Sotheby's has fallen behind rival Christie's International PLC in selling contemporary art. Christie's contemporary sale on May 13 is expected to achieve at least $500 million alone.

Mr. Loeb is among an emerging class of hedge fund collectors who frequent both auction houses, ratcheting up prices for contemporary artists and quickly turning them for a profit. The average holding period for contemporary art has shrunk from at least a decade to about two years, according to a former Sotheby's specialist.

>>> US Gapping down

Gapping down

In reaction to disappointing earnings/guidance: BSFT -8%, AUXL -6.4%, RAIL -5.2%, RLGY -2.7%, FRM -1.4%, PFE -1.1%, TREX -0.4%.

Select financial related names showing weakness: RBS -4.8%, CS -2.7%, DB -2.1%, GS -1.1%, C -0.9%.

Select momentum stocks trading lower with futures down in pre-mkt: YELP -2.1%, P -1.9%, FB -0.8%, TSLA -0.5%

Other news: SINA -3.6% (announces receipt of government notices: 'Internet Publication License and License for Online Transmission of Audio-Visual Programs would be revoked'), IRDM -3.3% (will issue 7,692,308 shares of Iridium's common stock directly to certain Baron funds at $6.50 per share), JPM -2.8% (sees Q2 markets revenue down ~20, exposure to Russia was $4.7 bln at March 31, 2014% from prior year), SAP -2.2% (Co's CTO leaving co), LNKD -2.1% (announced that Gregg Steinhafel will step down as CEO), TWTR -1.3% (IPO lockup expires today), TGT -1% (announces that the consideration to be received by shareholders is increased to $12.25, an increase of $0.50, in connection with its previously announced acquisition).

Analyst comments: NBR -1.8% (downgraded to Sell from Neutral at Guggenheim), SFY -1.8% (downgraded to Hold from Buy at Canaccord Genuity), AZN -1.6% (downgraded to Sell at Danske Bank), HP -1.6% (downgraded to Sell from Neutral at Guggenheim), SO -0.8% (downgraded to Sell from Neutral at UBS).

>>> US Gapping up

Gapping up

In reaction to strong earnings/guidance: OWW +10.8%, NSSC +4.1%, PETS +3.9%, ANV +3%, VOLC +1%, HL +1%, TSN +0.7%, .

M&A news: BEAV +7.9% ( announces it is engaged in a process to explore strategic alternatives), NDZ +6.6% (provides updates on the pending merger transaction with Tsinghua Unigroup), TXT +1.2% ( acquires TUG Technologies, terms not disclosed).

Select metals/mining stocks trading higher: IAG +2%, AG +1.9%, AUY +1.9%, ABX +1.8%, GDX +1.6%, GG +1.5%, SLW +1.4%, SLV +1.3%, NEM +1.3%, GFI +1.2%, GLD +1.2%, GOLD +1.1%.

Other news: CDZI +35.8% ( announces ruling in California Environmental Quality Act litigation against water project), HDY +27.5% (announces lifting of declaration of Force Majeure by Tullow), GWPH +4.5% (positive comments on Mad Money), RDA +3.3% (still checking), RLD +1.4% (Starboard Value reports 6.3% stake in 13D filing), EA +1.1% (Comcast (CMCSA) close to deal to stream EA games on its TVs, according to reports), WX +0.6% (FDA approves Ibalizumab for treatment of patients on expanded access).

Analyst comments: ARIA +3.7% (upgraded to Buy from Hold at Jefferies), KING +3.5% (initiated with a Outperform/Buy at several Tier 1 Firms), OZM +2.9% (upgraded to Outperform from Mkt Perform at Keefe Bruyette), BBT +1.2% (upgraded to Outperform from Neutral at Credit Suisse), ORCL +0.5% (upgraded to Outperform from Mkt Perform at Bernstein)

>>> US Early premarket gappers

Early premarket gappers

Gapping up: ANV +3.9%, HL +3.5%, BEAV +2.6%, AG +1.9%, SLW +1.9%, ABX +1.8%, KING +1.7%, GDX +1.6%, PETS +1.5%, AUY +1.3%, GOLD +1.3%, VOLC +1.2%, IAG +1.1%, TSN +1.1%, SLV +1%, GLD +1%, OXY +0.5%

Gapping down: AUXL -5.7%, RBS -4.8%, SINA -3.5%, CS -2.7%, AZN -2.5%, DB -2%, JPM -2%, SAP -1.8%, FRM -1.4%, FB -0.9%, PFE -0.8%

FT : SFR deal numbers add up for Numericable

SFR deal numbers add up for Numericable

Only a few months ago, mention of the name Patrick Drahi in France would probably have provoked a chorus of “Who?” The low-profile Franco-
Israeli billionaire may have spent years piecing together the country’s largest cable network, but few of its customers had ever heard of him.
That changed last month when Mr Drahi’s Numericable won a bidding war against French construction and telecoms conglomerate Bouygues to buy SFR, the country’s second-biggest mobile operator, owned by Vivendi.

The deal – Numericable has agreed to pay Vivendi €13.5bn in cash and a 20 per cent stake in the merged company – splashed Mr Drahi’s image all over the business pages. It also turned him and his company into a serious contender in one of Europe’s most competitive telecoms markets.
Assuming that the country’s competition authorities agree the deal, the new-look Numericable will be almost unrecognisable in size. Analysts’ estimates suggest that earnings before interest, taxes, depreciation and amortisation, a measure of profitability, will grow from just over €600m last year to roughly €3bn this year at the merged company.
The customer base will also swell as Numericable absorbs SFR’s almost 22m mobile subscribers, or about 28 per cent of the market.
Simon Weeden, a telecoms analyst at Citigroup, argues that synergies will come through cross-selling as Numericable offers its internet and fixed-line customers SFR’s mobile services.
A second will come from moving a chunk – 20-30 per cent initially, according to Numericable’s estimates – of SFR’s 5m internet and fixed-line customers to Numericable’s high-speed broadband service, presently available to about 5m homes in France.
SFR has to pay Orange, the market leader, about €9 per customer per month for use of the so-called “last mile” connection into people’s homes – something it would no longer have to once it can use Numericable’s infrastructure. Numericable has just over 4 per cent of France’s overall broadband market – but almost 60 per cent of its very high-speed segment.
A third will create savings as SFR’s launch of 4G services takes advantage of Numericable’s comprehensive fibre network in France’s urban areas.
“You need high-density cell towers to provide 4G and that is not cheap,” says Mr Weeden. “After the merger, SFR will be able to make use of Numericable’s existing underground cable.”
Questions remain, however. At a press conference in March, Mr Drahi said that his intention was to use SFR’s strong brand and marketing strengths to help close the gap between the €33 a month on average that it receives from each of its customers and the €42 that Numericable gets.
“We are here to create value for our company,” he said.
But doing that requires reversing the cut-throat, price-cutting backdrop that has characterised the French telecoms sector ever since Iliad, the low-cost provider controlled by billionaire Xavier Niel, began offering mobile services in January 2012.
As Mr Weeden of Citi puts it, “Numericable is making a bet that the worst of the competitive trauma is over, that the end game is approaching.”
Then there is the resulting company’s net debt, which is likely to start out at about five times ebitda – roughly twice the two or 2.5 times leverage that is typical of European telecom companies.
“Cable companies tend to be highly geared because they are growing revenues and cash flow,” explains Jerry Dellis, an analyst at Jefferies. “Life is different for telecoms companies. That means that Numericable is going to have to be disciplined.”
Influencing the extent to which Numericable rises to these challenges is whether the French telecoms sector will undergo further consolidation. Two years ago, as the government granted a fourth mobile licence to Mr Niel’s Iliad, the thinking was that the market needed more competition.
That is exactly what it got and average revenue per user has been falling ever since, hitting revenues and profits.
Today, the socialist government of President François Hollande seems to be tipping the other way, and it is no secret that Arnaud Montebourg, economy minister, would like to see three operators rather than four.
If he gets his way, and prices not only stabilise but possibly even increase, analysts think that Numericable’s outlook will improve considerably.
“Fewer competitors should cool the market and help prices,” says Mr Dellis of Jefferies.
“That would play to Drahi’s strategy.”