TheChek News Flow

As me mentioned early this morning, Time Warner Cable to be acquired by Comcast (CMCSA) for ~$159 per share, according to reports - see 02:24 for our initial comment. CMCSA confirmed at 6:30.

• Wunderlich notes CMCSA is making a $159 per share/$45.2bn all equity friendly bid for TWC. The deal is, however, problematical, from the vantage point of the FCC and DOJ, with reservations having been expressed last year by FCC Commissioners - even with no black letter cable ownership cap. If Comcast just enabled TWC to hit its 2016 biz plan, firm would arrive at TWC fair valuation ranging from $158 to $172, sans synergies and NBCUniversal benefits. The pre-synergy deal multiple appears to be near 8.1x 2014E OCF (WSI above OCF consensus), although a supposed $1.5bn in cost savings (let alone sales growth and customer retention) lowers the multiple to 6.9x and adds $29 per share in value.
  
• RBC notes, according to multiple sources, Comcast and Time Warner Cable, the two largest cable companies with a combined 61% share of cable TV subscribers, have agreed to an all-stock purchase of TWC for $159/share. This implies an 8.3x EV/EBITDA multiple based on firm's 2014 EBITDA estimate for TWC and follows Charter's recent bid for TWC for $132.50 per share, whichTWC management rejected. RBC believes regulatory approval is possible, and have estimated annualizeds synergies in the mid $400M range.
• FBR notes reports that Comcast and Time Warner Cable have agreed to merge, rebuffing CHTR's Liberty-backed bid. The initial investor reaction could be cautionary for TV network stocks, as well as Liberty Media and SIRI. However, FBR would buy against the concerns. FBR reiterates Outperform ratings on LMCA, SIRI, TWX, DIS, DISCA, VIAB, FOXA, VIAB.

Reports Q4 (Dec) earnings of $0.74 per share, excluding non-recurring items (see below), $0.11 better than the Capital IQ Consensus Estimate of $0.63; revenues fell 5.0% year/year to $4.79 bln vs the $4.95 bln consensus.

• Goodyear's fourth quarter 2013 net income available to common shareholders was $228 million (84 cents per share), a fourth quarter record and up from breakeven in the 2012 quarter. All per share amounts are diluted. The 2013 fourth quarter included total charges of $17 million (6 cents per share) due to rationalizations, asset write-offs and accelerated depreciation; and gains of $41 million (15 cents per share) due to income and other discrete tax benefits and $2 million (1 cent per share) from asset sales.
• All amounts are after taxes and minority interest.Fourth quarter 2013 sales reflect $64 million in higher tire unit volumes; $178 million in lower sales in other tire related businesses, most notably third party chemical sales in North America; $36 million in lower price/mix, principally due to lower raw material costs; and $102 million in unfavorable foreign currency translation.
• Tire unit volumes totaled 40.7 million, up 2 percent from the fourth quarter of 2012.
• Asia Pacific's fourth quarter sales decreased 9 percent from 2012 to $537 million. Sales reflect an 8 percent increase in tire unit volume, which was more than offset by reduced price/mix, $39 million in unfavorable foreign currency translation and $7 million in lower sales in other tire-related businesses.
• Co reaffirms 2014-2016 outlook targets; The company reaffirmed its 2014-2016 financial targets, which include: - Annual segment operating income growth of between 10 percent and 15 percent, - Annual positive free cash flow from operations and, - An adjusted debt to EBITDAP ratio of 2.5x. Additionally, the company continues to expect about a 2 percent to 3 percent increase in unit volumes for 2014 over 2013.

Reports Q4 (Dec) earnings of $0.58 per share, excl items, in-line with the Capital IQ Consensus Estimate consensus of $0.58; revenues rose 3.3% year/year to $1.21 bln vs the $1.21 bln consensus.

• Co issues downside guidance for Q1, sees EPS of $0.50-0.54 vs. $0.57 Capital IQ Consensus Estimate.
• Co issues in-line guidance for FY14, sees EPS of $2.43-2.53 vs. $2.52 Capital IQ Consensus Estimate.

The Co's revised target guidance reflects a net $.21 per share, or 9.1% improvement over 2013 base earnings driven by expected modest growth in volume/mix, lower pension expense, productivity improvements and a slightly positive price/cost relationship. Partially offsetting these improvements are expected higher depreciation and other operating costs and a higher effective tax rate. Included in the above guidance is the Co's previously announced plan to repurchase ~2 million shares of common stock in 2014, which, if fully implemented, would add ~$.02 to earnings per diluted share for the year.

Reports Q4 (Dec) earnings of $0.68 per share, excluding non-recurring items, $0.04 worse than the Capital IQ Consensus Estimate of $0.72; revenues fell 0.2% year/year to $1.03 bln vs the $1.01 bln consensus.

Co announced a 16 percent increase in its dividend for the first quarter of 2014 and reported 0.2 percent lower underlying after-tax income for the fourth quarter 2013, due to a higher underlying effective tax rate. Underlying fourth quarter pretax income increased 6.5 percent, driven by improved performance in the U.S. and Europe, along with less underlying interest expense versus a year ago. U.S. GAAP net income from continuing operations attributable to MCBC for the fourth quarter increased 118.3 percent due to lower U.S. GAAP income tax expense and higher non-core gains, along with improved financial results in the U.S. and Europe. Worldwide beer volume increased 0.1 percent. Net sales declined 0.2 percent in the fourth quarter of 2013, driven by unfavorable foreign exchange.

Reports Q4 (Dec) earnings of CC$0.24 per share, CAD$0.07 better than the Capital IQ Consensus Estimate of CAD$0.17; revenues rose 6.2% year/year to CAD$567 mln vs the CC$553.11 mln consensus, mainly because of higher international and U.S. drilling activity and higher pricing in Canadian contract drilling partially offset by lower turnkey activity in the United States.

OUTLOOK

Contracts

Our portfolio of term customer contracts provides a base level of activity and revenue and, as of February 12, 2014, we have term contracts in place for an average of 57 rigs in Canada, 53 in the United States and eight internationally for the first quarter of 2014 and an average of 51 rig contracts in Canada, 41 in the United States and seven internationally for the full year. In Canada, term contracted rigs normally generate 250 utilization days per year because of the seasonal nature of well site access. In most regions in the United States and internationally, term contracts normally generate 365 utilization days per year.

Drilling Activity

In the United States, our average active rig count in the quarter was 90 rigs, up three rigs over the fourth quarter in 2012 and up nine rigs over the third quarter of 2013. We currently have 95 rigs active in the United States. In Canada, our average active rig count in the quarter was 89 rigs, the same as the fourth quarter in 2012 and up six rigs over the third quarter of 2013. We currently have 144 rigs active in Canada and expect the strength of drilling activity in the first quarter to be driven in large part by weather. We expect to benefit from the fleet enhancements made over the past few years when compared to the prior year period. Internationally, our average active rig count in the quarter was 11 rigs, up three rigs over the fourth quarter in 2012 and in line with the third quarter of 2013. We currently have 11 rigs active internationally and expect our active rig count to grow over the next two quarters as two new build rigs for the Kuwait market are delivered late in the second quarter, and we see potential for additional rigs going to work in Mexico.

Reports Q4 (Dec) earnings of $1.05 per share, excluding non-recurring items, $0.04 better than the Capital IQ Consensus Estimate of $1.01; revenues rose 0.8% year/year to $20.12 bln vs the $20.21 bln consensus.

• Organic revenue grew 4.1% primarily reflecting effective net pricing. Reported net revenue grew 1%. Structural changes, principally the refranchising of the company's beverage operations in Vietnam, negatively impacted reported net revenue performance by 1%age point and foreign exchange translation had a 3-percentage-point unfavorable impact on reported net revenue in the quarter. Core constant currency operating profit rose 1% reflecting the impacts of revenue growth and productivity savings, offset by operating cost inflation, negative geographic mix and $56 million of incremental investments.

Co issues in-line guidance for FY14, sees EPS of 7% (core constant FX growth) to ~$4.68 -- $4.69 Capital IQ Consensus. The co expects 7% core constant currency EPS growth in 2014 versus its fiscal 2013 core EPS of $4.37, consistent with its long-term target of high-single-digit core constant currency EPS growth. Based on the current foreign exchange market consensus, it currently expects foreign exchange translation to have an unfavorable impact of ~4%age points on full year core EPS performance in 2014. Excluding the impact of structural changes and foreign exchange translation, organic revenue is expected to grow mid-single digits versus 2013, consistent with the company's long-term target. Based on the current foreign exchange market consensus, the company currently expects foreign exchange translation to have an unfavorable impact of ~3 % points on full year net revenue growth.

As a reflection of management's confidence in the company's strong and sustainable cash flow generation capacity, and consistent with its commitment to disciplined capital allocation, the company announced a 15% increase in its annualized dividend to $2.62 per share from $2.27 per share, to take effect with the June 2014 payment. The increase will be the 42nd consecutive annual increase in dividends per share. It also anticipates increasing share repurchases in 2014 to ~$5 billion. Combined, these programs are expected to return a total of $8.7 billion to shareholders in 2014, a 35% increase from 2013 levels.

The co announced a new 5-year, $5 billion productivity program (2015-2019). The savings are expected to come from accelerating investment in manufacturing automation, further optimizing the company's global manufacturing footprint, including closing of certain manufacturing facilities, re-engineering go-to-market systems in developed markets, expanding shared services and implementing simplified organization structures to drive efficiency. As a result of these actions, it expects to sustain ~$1 billion in annual productivity savings through 2019. The extended targets reflect a continuation of the benefits of the investments made and actions taken in recent years by the company to harmonize processes and systems and to drive greater global coordination across its businesses. The company remains on track to achieve its previously announced 3-year, $3 billion productivity target for 2012-2014, with ~$2 billion in savings realized through the end of 2013 and ~$1 billion in productivity savings expected for 2014.