TheChek News Flow

In reaction to disappointing earnings/guidance: ASML -5.7%, CS -3%, LLTC -1.9%, BAC -0.9% (and despite Barron's profiling positive view on Bank of America), INTC -0.1%, (also downgraded to Neutral from Buy at B. Riley & Co).

Metals/mining stocks trading lower: HMY -1.9%, AU -1.3%, ABX -0.5%, SLV -0.5%, GDX -0.5%, GLD -0.2%.

Other news: CRDC -9.6% ( priced an underwritten public offering of ~32.5 mln shares of its common stock, offered at a price to the public of $0.85/share), ATHL -1.2% (announces 11 mln share public offering of common stock, launches proposed $500 mln senior notes offering; announced first quarter 2014 production), HSBC -0.4% (following CS results).

Analyst comments: NTAP -1.3% (downgraded to Neutral from Buy at UBS), UNH -0.5% (downgraded to Neutral from Buy at Citigroup)

Co announced it has reached a definitive agreement with the Canada Pension Plan Investment Board to acquire its Air Distribution Technologies business, one of the strongest and largest independent providers of air distribution and ventilation products in North America, for approximately $1.6 billion.

In reaction to strong earnings/guidance: YHOO +7.9% (also upgraded to Outperform from Market Perform at Wells Fargo), IBKR +6.2%, PNC +2% (light volume), CSX +0.6%, STJ +1.5% (light volume), USB +0.2%.

M&A related: ANN +0.2% (after late spike on Deal.com story suggesting LBO interest ), ZLCS (Zalicus and Epirus Biopharmaceuticals enter into a definitive agreement under which Epirus will merge with a wholly-owned subsidiary of Zalicus in an all-stock transaction).

Select oil/gas related names showing strength: WFT +1.5% (positive Barclays comments suggesting potential upside), BP +0.9%, STO +0.8%, LPI +0.8% ( initiated with an Outperform at Robert W. Baird)

China internet names higher -- boosted by Alibaba results and near-term IPO: DANG +4.5%, YOKU +3.8% ( upgraded to Neutral from Sell at Goldman; removed from Asia Pacific Sell list ), QIHU +2.2%, BIDU +1.6%, SINA +1.5%, YY +1.2%, WUBA +1.1%, VIPS +0%,

A few large cap pharma/drug names modestly higher: TEVA +1.8% (positive MadMoney mention), NVS +1.4%, SHPG +0.9%

Battery related names highs: BLDP +6% (confirmed earnings release date on April 29 before the open), PLUG +2.7% ( will hold a business update call on April 21 at 10:00; Q1 call May 14 at 10:00), TSLA +2.2% (Tesla Motors and Sinopec to discuss charging station deal, according to reports), FCEL +2.2%

Other news: WAVX +21.4% (continued strength), CBLI +16.7% (Announces the Successful Completion of a Phase 1 Study of CBL0102; study successfully achieved both the primary and secondary objectives), ZGNX +13.2% (confirmed ruling preventing the implementation of Massachusetts Governor's order that prevented access to Zohydro ER), EGLE +11.8% ( announces extension to waiver and forbearance agreement), CANA +11.5% (appoints Munjit Johal Treasurer & Chief Financial Officer), SODA +8% ( speculation of stake sale), YGE +7.2% (Yingli Green Energy signs cooperation agreement with Sailing Capital to jointly form a one billion RMB Renewable Energy Fund), DXCM +5.4% (positive MadMoney mention), KING +5% (King Digital and and Tencent announce the launch of Candy Crush Saga in China), RGEN +3.3% (to join the S&P SmallCap 600), SPLK +2.5% (continued strength following yesterday's 6%+ move higher), WWE +2.2% (announced that WrestleMania launch update; reached record 1 mln households in the U.S.), ATRS +2.1% (Announces additional patent coverage for OTREXUP), JCP +1.5% (still checking), DAL +1.2% (positive MadMoney mention), JCI +1.1% ( to acquire Air Distribution Technologies for $1.6 billion; expected to close by the end of July), GOOG +1% (following YHOO results), TGA +0.9% (announces postponement of Annual and Special Meeting of Shareholders), NOK +0.9% (has increased on cell touch panel orders, according to reports), TM +0.9% (Japan automakers plan 30% increase in production, according to reports ), JNJ +0.5% (modestly higher following positive Barron's mention), BHP +0.4% (BHP Billiton reports 9-month operations update), HLF +0.3% (following late move higher on NY Times story that is a small defense of the investigation).

Analyst comments: VE +3.2% (upgraded to Neutral frpm Underperform at Exane BNP Paribas), YELP +3.1% (upgraded to Buy from Neutral at Citigroup), NMBL +3% (upgraded to Buy from Neutral at UBS), CREE +2.3% (upgraded to Buy from Hold at Needham), TWTR +1.5% (upgraded to Neutral from Underperform at Sterne Agee), AMZN +1.3% (upgraded to Buy from Hold at Argus , Dash getting positive early reviews, according to reports), CTRL +1% (Control4 upgraded to Strong Buy from Outperform at Raymond James), GPC +0.9% (upgraded to Neutral from Sell at Goldman), SBGL +0.8% (Sibanye Gold initiated with an Outperform at Imperial Capital)

Reports Q1 (Mar) earnings of $0.41 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $0.36; co guided for EPS of $0.34-0.36; revenues fell 2.5% year/year to $5.24 bln vs the $5.29 bln consensus.

• First-quarter 2014 worldwide sales of $5.2 billion increased 0.5% on an operational basis and decreased 2.5% on a reported basis, including an unfavorable 3.0% effect of foreign exchange. International sales, which comprise more than 70% of total Abbott sales, increased 1.8% on an operational basis and decreased 2.3% on a reported basis in the first quarter. The August 2013 sales disruption in International Nutrition and the timing of supply of key products in Established Pharmaceuticals, primarily related to an expected plant shutdown for capacity expansion purposes, are estimated to have reduced Abbott's international sales growth by ~2.6 % points.
• Nutrition sales -4%; Diagnostics sales +2.6%; Established Pharma -6.6%; Medical Devices -1.2%.

Co reaffirms guidance for FY14, sees EPS of $2.16-2.26, excluding non-recurring items, vs. $2.19 Capital IQ Consensus.

• Pacific Crest notes YHOO outpaced expectations. EPS upside came from equity interest (Alibaba- Ticker: ALBCF.PK) and a lower than- expected non-GAAP tax rate. After missing expectations in Q2 and Q3, Alibaba Q4 revenue of $3.06 billion was better than estimates of $2.76 billion. It is a great result for Alibaba due to its public offering, although those two things may be related. Operating income was relatively in-line. Alibaba's growth accelerated, which sets YHOO up for more near-term optimism. Pac is still not seeing a turn in core EBITDA, which would indicated a turnaround in the core.
• RBC Capital couches the YHOO results as 'generally in-lineish'. Positives: 1) Stabilizing Display Trends; 2) Share Repo's; 3) Leaning Positive User Metrics; & 4) $301MM Earnings In Equity Interests highlights value. Negatives: 1) Search Results A Bit Tentative; 2) Back-End Loaded '14 Profitability; & 3) Mobile, Social, and Video are still not material for YHOO. Maintains $44 tgt.
• Stifel notes the salient point of Yahoo's 1Q14 results was the very strong December quarter results from Alibaba. Revenue growth at Alibaba reaccelerated to 66% growth ($3.1bn), well above the 51% growth in the previous quarter. Investors had been concerned over continued revenue deceleration. The 66% growth was well ahead of any estimates and 54% operating margins were the highest reported margins to date. RBC maintained valuation assumptions for Yahoo's stake at $120bn at IPO and $200bn post IPO, this quarter gives firm decent conviction that the valuation will ultimately be higher than $200bn. On the operational side, Yahoo's results/guide are showing modest improvements. Firm reiterates Buy rating and $49 target.
  

Reports Q1 (Mar) loss of $0.05 per share, $0.10 worse than the Capital IQ Consensus Estimate of $0.05; revenues fell 2.7% year/year to $22.77 bln vs the $22.1 bln consensus. Excluding the impact of net debit valuation adjustments (DVA) in both periods, revenue was down 4 percent from the year-ago quarter to $22.7 billion.

• The results for the first quarter of 2014 include $6.0 billion in litigation expense related to the previously announced settlement with the Federal Housing Finance Agency (FHFA), and additional reserves primarily for previously disclosed legacy mortgage-related matters.
• Net interest income, on an FTE basis, fell 5 percent from the year-ago quarter to $10.3 billion. The decline was driven by lower yields on debt securities due to an approximate $540 million swing in market-related premium amortization expense. Net interest margin, excluding market-related adjustments, was 2.36 percent in the first quarter of 2014, compared to 2.30 percent in the first quarter of 2013.
• Noninterest income was flat compared to the year-ago quarter, as lower mortgage banking income and lower trading account profits were largely offset by year-over-year increases in investment and brokerage income, equity investment income and gains on the sale of debt securities.
• The provision for credit losses declined 41 percent from the first quarter of 2013 to $1.0 billion, driven by improved credit quality. Net charge-offs declined 45 percent from the first quarter of 2013 to $1.4 billion, with the net charge-off ratio falling to 0.62 percent in the first quarter of 2014 from 1.14 percent in the year-ago quarter. During the first quarter of 2014, the reserve release was $379 million, compared to a reserve release of $804 million in the first quarter of 2013.
• Settlement with FGIC and BK
• Bank of America reached a settlement with FGIC,as well as separate settlements with The Bank of New York Mellon (BK), as trustee, for certain second-lien residential mortgage-backed securities (RMBS) trusts for which FGIC provided financial guarantee insurance. The agreements resolve all outstanding litigation between FGIC and the company, as well as outstanding and potential claims by FGIC and the trustee related to alleged representations and warranties breaches and other claims involving second-lien RMBS trusts for which FGIC provided financial guarantee insurance. Seven of the trust settlements have already been completed, and the two remaining trust settlements are subject to additional investor approvals in a process that is expected to be completed within the next 45 days.

Consumer & Business Banking

• Consumer and Business Banking reported net income of $1.7 billion, up $210 million, or 15 percent, from the year-ago quarter. Noninterest income of $2.5 billion increased $88 million primarily due to a portfolio divestiture gain.
• • Consumer Real Estate Services reported a net loss of $5.0 billion for the first quarter of 2014, compared to a net loss of $2.2 billion for the same period in 2013, reflecting a $3.8 billion increase in litigation expense. Revenue declined $1.1 billion from the first quarter of 2013 to $1.2 billion, driven primarily by a $548 million decline in servicing revenue, reflecting a smaller servicing portfolio and a $542 million decline in core production revenue due to lower loan originations.
  • CRES first-mortgage originations declined 65 percent in the first quarter of 2014 compared to the same period in 2013, reflecting the decline in the overall market demand for refinance mortgages. Core production revenue decreased in the first quarter of 2014 to $273 million from $815 million in the year-ago quarter due to lower volume and a reduction in margins.

Global Wealth & Investment Management

• Global Wealth and Investment Management reported net income of $729 million, up slightly from the first quarter of 2013, reflecting continued strong revenue performance and low credit costs. Revenue increased 3 percent from the year-ago quarter to a record $4.5 billion, driven by higher noninterest income related to improved market valuation and long-term AUM flows. Return on average allocated capital was 24.7 percent in the first quarter of 2014, down from 29.4 percent in the year-ago quarter, reflecting earnings stability coupled with increased capital allocations.

Global Banking

• Total revenue, net of interest expense, on an FTE basis excluding net DVA, and net income (loss) excluding net DVA are non-GAAP financial measures. Net DVA gains (losses) were $112 million, $(617) million and $(145) million for the three months ended March 31, 2014, December 31, 2013 and March 31, 2013, respectively.
• Sales and trading revenue, excluding net DVA, remained relatively flat from the first quarter of 2013 at $4.1 billion.
• Equities sales and trading revenue, excluding net DVA was solid compared to the year-ago period. The company continued to increase market share compared to the year-ago quarter.
• Return on average allocated capital, excluding net DVA, was 14.8 percent in the first quarter of 2014, compared to 16.3 percent in the first quarter of 2013, reflecting stable net income combined with an increase in allocated capital compared to the year-ago quarter.

Global Markets

• Global Markets reported net income of $1.3 billion in the first quarter of 2014, compared to $1.1 billion in the year-ago quarter. Excluding net DVA, net income was $1.2 billion in the first quarter of 2014, an increase of 3 percent compared to the year-ago quarter. Global Markets revenue increased $235 million, or 5 percent, from the year-ago quarter to $5.0 billion. Excluding net DVA, revenue decreased $22 million to $4.9 billion as declines in Rates and Currencies were partially offset by stronger performance in Credit and Equities.
• Fixed Income, Currency and Commodities sales and trading revenue, excluding net DVA, was $3.0 billion in the first quarter of 2014, a decrease of $51 million, or 2 percent, from the year-ago quarter, as credit markets remained strong but Rates and Currencies declined on lower market volumes and volatility. Adjusting the year-ago quarter to exclude this negative impact, FICC revenue, excluding net DVA, declined 15 percent from the first quarter of 2013.
• • Equities sales and trading revenue, excluding net DVA(H), was $1.2 billion, in line with results from the year-ago quarter. The current quarter benefited from continued gains in market share and higher client financing balances.

Capital

• Tangible common equity ratio 7.00% compared to 7.20% in Q4; Common equity ratio 10.17% compared to 10.43% in Q4.
• On March 26, the company announced that it plans to increase its quarterly common stock dividend to $0.05 per share, beginning in the second quarter of 2014. Also, the Board of Directors authorized a new $4.0 billion common stock repurchase program. This authorization, which covers both common stock and warrants, replaces the prior year's common stock repurchase program that expired on March 31, 2014.
• Tangible book value per share was $13.81 at March 31, 2014, compared to $13.79 at December 31, 2013 and $13.36 at March 31, 2013. Book value per share was $20.75 at March 31, 2014, compared to $20.71 at December 31, 2013 and $20.19 at March 31, 2013.

BAC reported a net loss of $276 million, or $0.05 per diluted share, for Q1, compared to the +$0.05 consensus and +$0.10 last year.

• Revenue, net of interest expense, on an FTE basis(A) declined 3 percent from the first quarter of 2013 to $22.8 billion. Excluding the impact of net debit valuation adjustments (DVA) in both periods, revenue was down 4 percent from the year-ago quarter to $22.7 billion.
  
• The results for the first quarter of 2014 include $6.0 billion in litigation expense related to the previously announced settlement with the Federal Housing Finance Agency (FHFA), and additional reserves primarily for previously disclosed legacy mortgage-related matters.