>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: PANW +12.9%, ANF +7.2%, SAFM +4%, PLKI +2.4%, PLL +2.2%, VTL +2%, ENS +1%, UHAL +0.9%, .

M&A news: SNN +4.9% (cont M&A speculation), TMUS +1.7% (Kyodo report suggesting Deutsche Telekom (DTEGY) approved Softbank (SFTBY) deal), AVGO +1.1% (Seagate (STX) to acquire LSI's flash businesses from Avago for $450 mln in cash), IHG +0.9% (Marcato Capital Management comments on rumors regarding IHG).

Other news: XGTI +23.5% (announces second new U.S. Patent award this week for Interference Mitigation Techniques), XXII +9.8% (LOI for production of nicotine-free tobacco cigarettes), NBS +8.2% (presents five-year survival data for Autologous Melanoma Immunotherapy targeting cancer stem cells), STEM +7.2% (CEO updates investors in Letter to Shareholders), ICPT +6% (FDA fast track designation to obeticholic acid for the treatment of patients with primary biliary cirrhosis), ONTY +6% (Co and and Celldex Therapeutics (CLDX) announce collaboration for combination immunotherapy clinical trial of ONT-10 and varlilumab), BCRX +3.7% (priced public offering of 10 mln shares of common stock at $10 per share), BBRY +2.9% (following exec appearance on CNBC -- expects to be cash flow positive or breakeven by year-end), RCAP +2.1% (announced proposed public offering of 15 mln shares of Class A common stock; RCAP Holdings, the controlling stockholder of RCAP, proposing to offer and sell 5 mln shares), KNDI +1.9% (Several US states may introduce electric vehicle incentive plan, according to reports), EROC +1.4% (announced credit facility amendments and new upstream borrowing base), JNPR +1.1% (Juniper Networks Announces Settlement of Patent Litigation With Palo Alto Networks), LOCK +0.9% (Okumus Fund Management discloses 8.67% passive stake in 13G filing).

Analyst comments: CLNE +4.6% (initiated with a Overweight at Morgan Stanley), MELI +4.1% (upgraded to Overweight from Neutral at JP Morgan), TWTR +2.3% (upgraded to Buy from Hold at Cantor Fitzgerald), DO +2.3% (upgraded to Equal-Weight from Underweight at Morgan Stanley), BIIB +2% (upgraded to Overweight from Neutral at JP Morgan), VMW +1.3% (upgraded to Overweight from Neutral at Piper Jaffray), EXAM +1.2% (initiated with a Buy at Deutsche Bank), CSG +1% (initiated with a Outperform at Wells Fargo), QIHU +0.9% (upgraded to Outperform from Underperform at Standard Chartered), DLTR +0.9% (upgraded to Buy from Neutral at Sterne Agee)

>>> US Gapping down


Gapping down

In reaction to disappointing earnings/guidance: TLYS -27.7%, GMAN -15.4%, DLIA -11%, SOL -10.4%, FRED -6.2%, CPRT -3.6%, SB -2.5%, QSII -0.8%, .

Select metals/mining stocks trading lower: GFI -1.7% (Gold Fields provides update on recent fatalities at South Deep and outcome of safety review; DMR issued a Section 54 order, placing a moratorium on all workshop-related activities across the mine), AUQ -1.4%, AG -1.3%, SLV -1%, HMY -0.8%, GLD -0.5%, GDX -0.5%.

Other news: SPEX -27.7% (cont volatility), DARA -8.3% (pulling back after +98% yesterday), FN -7.5% (announces secondary offering of 3.15 mln shares by selling shareholder), LIVE -6.3%, CZR -5.1% (Apollo (APO) plans to align with some CZR creditors, according to reports), AIRI -5.1% (enters into definitive agreements with certain investors to sell an aggregate of 1,170,000 shares of its common stock in a registered direct offering), STON -3.8% (announces public offering of 2.6 mln common units ), RXN -3.4% (prices 15 mln shares of common stock by selling shareholders at $25.50 per share), BAH -3.1% (announces sale of 10 mln shares of common stock by an affiliate of the Caryle Group), CSTE -1.5% (announces offering of 5.5 mln shares by selling shareholder), INFY-1.4% (cont weakness following -8% in Indian mkt hrs), .

Analyst comments: PT -1.9% (downgraded to Hold from Buy at Berenberg), DG -1.1% (downgraded to Neutral from Buy at Sterne Agee), CS -0.6% (downgraded to Neutral from Buy at BofA/Merrill).

(Pimco) Seeing Opportunities in a New Neutral for Equities

Seeing Opportunities in a New Neutral for Equities

It’s a low-rate, low-growth world. But even as China slows and dynamics are set to shift for equity markets over the next three to five years, PIMCO sees opportunities for investors. Virginie Maisonneuve, Deputy Chief Investment Officer and global head of equities at PIMCO, discusses her long-term outlook for markets, sharing key conclusions from our annual Secular Forum in which investment professionals gather from our global offices for a detailed examination of markets and economies. Following this May’s Forum, PIMCO defined the global economy as approaching a New Neutral.

Q :
What are the implications for equities if the Fed’s neutral policy rate is close to zero in real terms and 2% nominally in the years ahead as described in PIMCO’s New Neutral worldview?
A:
Maisonneuve: There are several implications for equity investors of the low rate, low growth environment that we expect over the secular horizon. The combination of high leverage in the global economy (mostly due to elevated government debt, which is in turn due to actions undertaken during the crisis to ease systemic risk) and slack in the global economy (as shown by relatively elevated output gaps) is constraining the ability of central banks to normalize monetary policy quickly – therefore it is likely to come at a very measured pace. In other words, the patient is healing, but that doesn’t mean he can be taken off life support overnight! In addition, the combination of this environment together with key long-term trends that affect global supply and demand – namely the need to adjust to competitiveness in a lower-carbon economy, important demographic shifts globally and continued shifts in emerging markets – supports the case for lower long-term economic growth globally.
Overall, however, the low rate environment will be supportive for stocks provided inflation remains subdued, as companies can take advantage of historically cheap financing. While bank lending remains constrained, particularly in Europe, good companies – such as Apple recently – are good examples of how companies are using low rates to tap the market for liquidity. This access to financing is particularly helpful to companies in sectors or activities with attractive demand profiles relative to overall demand in an otherwise slow growth world. This outlook means that investors should look for alpha and stock-picking skills as opposed to equity beta in the years to come. Strong teams with strong processes and proven ability to exploit market inefficiencies are key.
Also, current valuations are fair. Globally, they are not cheap, but neither are they expensive. And, in a world headed toward low real policy rates, equity risk premiums are exhibiting unusual characteristics relative to historical levels. I believe that in a relatively stable environment, equity markets exhibit attractive expected-returns-to-valuations ratios, especially when considered versus other sources of investment returns, such as cash. In emerging markets (EM), valuations are in fact inexpensive, but there are other issues in EM, including the difficulties in Russia and the steep slowdown in growth in China. Those pressures are mostly priced in, however, and underweight investors should consider adding to their positions. While emerging markets have been hurt by the prospects of tapering and policy normalization in the U.S., the “New Neutral” outlook may help reverse some of those fears. The extent to which EM countries can use interest rates to manage their economies and limit upward pressure on their currencies will likely be the key differentiator in secular EM performance.
Volatility is another important consideration, and here, one must understand the relationship between a stable economic environment (low growth, low inflation, low rates) and equity markets volatility. While volatility as measured by the VIX index has come down sharply recently, we should expect bouts of volatility surges that coincide with unexpected pressures, political or otherwise, that might appear in a world with a delicate economic and geopolitical balance.

(BN) *TYSON FOODS REPORTS $50.00-SHR ALL-CASH PROPOSAL TO BUY

 BN 05/29 12:31 *TSN SEES DEAL ADDING TO EPS IN FIRST FULL YEAR AFTER COMPLETION
BFW 05/29 12:30 *TYSON REPORTS $50.00/SHR ALL-CASH PROPOSAL TO BUY HILLSHIRE
 BN 05/29 12:30 *TYSON REPORTS $50.00/SHR ALL-CASH PROPOSAL TO BUY HILLSHIRE
 BN 05/29 12:30 *TYSON FOODS REPORTS $50.00-SHR ALL-CASH PROPOSAL TO BUY
Tyson Foods Announces $50.00 Per Share All-Cash Proposal to Acquire Hillshire Brands
2014-05-29 12:30:16.483 GMT

Tyson Foods Announces $50.00 Per Share All-Cash Proposal to Acquire Hillshire
Brands

     $6.8 Billion Proposal Provides 35% Premium to Hillshire Shareholders

Represents Superior Alternative to Hillshire's Announced Agreement to Acquire
                                Pinnacle Foods

  Combination of Well-Recognized Brands Creates a Clear Leader in the Retail
                       Sale of Branded, Prepared Foods

SPRINGDALE, Ark., May 29, 2014 (GLOBE NEWSWIRE) -- Tyson Foods, Inc.
(NYSE:TSN), ("Tyson") today announced that it proposes to acquire The
Hillshire Brands Company ("Hillshire") (NYSE:HSH) for $50.00 per share in
cash.

The Tyson proposal would provide Hillshire shareholders with an immediate and
significant return on their investment in Hillshire and constitutes a
significantly superior alternative to Hillshire's previously announced
agreement to acquire Pinnacle Foods Inc. ("Pinnacle"). Tyson's proposed price
represents a 35% premium to the unaffected closing price per share of the
Company's common stock on May 9, 2014, the day prior to the announcement of
Hillshire's proposed agreement to acquire Pinnacle.  At a total value of $6.8
billion, the Tyson proposal represents a multiple of 13.4x Hillshire's
trailing LTM adjusted EBITDA.

  * The combination of Tyson and Hillshire would reposition Tyson as a clear
    leader in the retail sale of prepared foods, with a complementary
    portfolio of well-recognized brands and private label products, including
    Tyson®, Wright Brand®, Jimmy Dean, Ball Park, State Fair and Hillshire
    Farm. In particular, we believe that the strength of Hillshire's products
    in the breakfast category would allow Tyson to capture opportunities from
    shifting consumer trends in this attractive and fast-growing daypart where
    Tyson has little presence today.
      
  * The transaction provides Tyson with the chance to realize significant
    synergies through the combination of the two companies' talented Sales and
    Marketing teams, significant Distribution and Supply Chain resources and
    alignment of Shared Service functions.
     
  * Tyson will realize substantial benefits from full integration of the
    protein value chain, as stable and consistent demand for protein products
    will enable Tyson to best utilize its industry-leading position and
    resources to maximize shareholder value.
     
  * Tyson expects that the proposed transaction would be accretive to EPS in
    the first full year after completion.

"We believe that there is a strong strategic, financial and operational
rationale for the combination of Tyson and Hillshire," said Donnie Smith,
Tyson Foods President and Chief Executive Officer. "Our proposal provides
Hillshire shareholders with an immediate cash premium for their shares that we
believe is both greater and more certain than what can be attained in the near
term by the Company either on a standalone basis or in combination with any
other food processing company."

Smith continued, "Tyson's shareholders will benefit from the considerable new
opportunities that come with this extraordinary strategic fit. We stand ready
to work together with Hillshire's leadership to quickly reach an acceptable
definitive merger agreement, and look forward to being able to welcome
Hillshire's communities, employees and business partners to the Tyson family."

There is no financing condition to the proposal, as Tyson has secured a fully
committed bridge facility from Morgan Stanley Senior Funding, Inc., which
Tyson expects will be joined by JP Morgan Securities LLC in the very near
future.  This proposal has the unanimous support of the Tyson Board of
Directors and is subject to the termination of Hillshire's merger agreement
with Pinnacle.

Morgan Stanley and JP Morgan are acting as financial advisors to Tyson and
Davis Polk & Wardwell LLP is acting as its legal counsel.

Following is the text of the letter that was sent today to Sean M. Connolly,
Hillshire's President and Chief Executive Officer:

May 29, 2014

Mr. Sean Connolly
President and Chief Executive Officer
The Hillshire Brands Company
400 South Jefferson Street
Chicago, IL 60607

Dear Mr. Connolly:

On behalf of Tyson Foods, Inc. ("Tyson"), I am pleased to formally propose to
acquire 100% of the issued and outstanding shares of common stock of The
Hillshire Brands Company ("Hillshire" or the "Company") for $50.00 per share
in cash. This proposal has the unanimous support of the Tyson Board of
Directors.

This price represents a 35% premium to the unaffected closing price per share
of the Company's common stock on May 9, 2014, the day prior to the
announcement of Hillshire's proposed agreement to acquire Pinnacle Foods Inc.
("Pinnacle"). At a total value of $6.8 billion, our proposal represents a
multiple of 13.4x Hillshire's trailing LTM adjusted EBITDA. We believe that
your shareholders would welcome the opportunity to realize an immediate and
significant premium for their shares, and accordingly hope to work with you to
reach mutual agreement as to a proposed transaction on the basis outlined in
this letter.

We have followed Hillshire and its predecessor companies with great interest
over the years and have been impressed by the progress your team has made in
improving core business fundamentals, managing costs, and increasing operating
margins. Moreover, we have great respect for Hillshire's commitment to
innovation, and to the strong brand presence the Company has built across all
the categories in which it operates.

There is no financing condition to our proposal, as we have secured a fully
committed bridge facility from Morgan Stanley Senior Funding, Inc., which we
expect will be joined by JP Morgan Securities LLC in the very near future. We
expect to maintain our investment grade credit rating following the proposed
transaction, and are prepared to issue equity as a financing mechanism if it
is determined to be prudent.

We believe that there is a strong strategic, financial and operational
rationale for the proposed transaction. Accordingly, our proposed price
reflects the considerable value we see in such a combination, providing your
shareholders with a higher return on their Hillshire investment than we
believe can be attained in the near term by the Company either on a standalone
basis or in combination with any other food processing company.

With respect to your agreement to acquire Pinnacle, we believe that our
proposed transaction constitutes or is reasonably expected to lead to a
Superior Proposal (as defined in the Pinnacle merger agreement). Accordingly,
we believe that your board of directors can and should, consistent with its
fiduciary duties and its obligations under Section 5.4 of the Pinnacle merger
agreement, make a determination to that effect and authorize the Company to
provide us with a draft of an Acceptable Confidentiality Agreement (as defined
in the Pinnacle merger agreement) as soon as possible. Both Tyson and its lead
financial and legal advisors (Morgan Stanley and Davis Polk & Wardwell LLP,
respectively) stand ready to engage in discussions regarding the proposed
transaction without delay.

Our interest is in the Company on its own, and not as combined with
Pinnacle. Accordingly, the termination of the Pinnacle merger agreement would
be a condition to our proposed transaction.

Notwithstanding anything to the contrary contained herein, nothing in this
letter constitutes or will be deemed to constitute a binding obligation of
Tyson to proceed with, or consummate, the proposed transaction. Any potential
transaction between Tyson and the Company will be subject to approval by our
board of directors of the final terms and conditions of the transaction and
the execution and delivery by Tyson of acceptable definitive agreements for
the transaction.

We would have preferred to make this proposal to you privately, but in light
of current circumstances we believe that it is in the best interests of your
and our shareholders to have current and accurate information about our
proposal and the reasons we believe that it is a compelling opportunity for
both of our companies. For this reason, we are making this letter public
simultaneously with my sending it to you.

We are very excited about this opportunity and hope to work with you toward
the completion of a successful transaction. Should you have any questions
regarding our proposal or wish to discuss it in greater detail, please contact
me or our lead financial advisor, Morgan Stanley. As we consider the proposed
transaction to be a time-sensitive matter, we would appreciate your timely
response.

Very truly yours,

Donnie Smith
President and Chief Executive Officer
Tyson Foods, Inc.

Conference Call Information

Tyson Foods executives will discuss the proposed transaction with analysts on
a conference call today at 9 a.m. Eastern (8 a.m. Central). To listen via
telephone, call 888-455-8283. International callers dial 1-210-839-8865. The
pass code "Tyson Foods" will be required to join the call. The conference call
also will be webcast on the company's website at http://ir.tyson.com.  A
replay of the webcast will be available approximately one hour after the
completion of the call. Slides referenced during the conference call will be
available on the company's website.

About Tyson Foods

Tyson Foods, Inc. (NYSE:TSN), with headquarters in Springdale, Arkansas, is
one of the world's largest processors and marketers of chicken, beef and pork,
the second-largest food production company in the Fortune 500 and a member of
the S&P 500. The company was founded in 1935 by John W. Tyson, whose family
has continued to be involved with son Don Tyson leading the company for many
years and grandson John H. Tyson serving as the current Chairman of the Board
of Directors. Tyson Foods produces a wide variety of protein-based and
prepared food products and is the recognized market leader in the retail and
foodservice markets it serves. The company provides products and services to
customers throughout the United States and approximately 130 countries. It has
approximately 115,000 Team Members employed at more than 400 facilities and
offices in the United States and around the world. Through its Core Values,
Code of Conduct and Team Member Bill of Rights, Tyson Foods strives to operate
with integrity and trust and is committed to creating value for its
shareholders, customers and Team Members. The company also strives to be
faith-friendly, provide a safe work environment and serve as stewards of the
animals, land and environment entrusted to it.

Forward-Looking Statements

Certain information contained in the press release may constitute
forward-looking statements, such as statements relating to the potential
benefits of a transaction with The Hillshire Brands Company. These
forward-looking statements are subject to a number of factors and
uncertainties which could cause our actual results and experiences to differ
materially from the anticipated results and expectations expressed in such
forward-looking statements, including those factors listed under Item 1A.
"Risk Factors" included in our September 28, 2013, Annual Report filed on Form
10-K.

CONTACT: Investors:
         Jon Kathol, 479-290-4235, jon.kathol@tyson.com
        
         News Media:
         Gary Mickelson, 479-290-6111, gary.mickelson@tyson.com
         Worth Sparkman, 479-290-6358, worth.sparkman@tyson.com

Tyson Foods, Inc. Logo

-0- May/29/2014 12:30 GMT

>>> Palo Alto Net (PANW) +14% - read across for all Security sect. (FTNT)

--> PANW is flirting with all time highs near the $80 level; now +14% just below the $79 level in the premarket.

Palo Alto Networks: Color on Quarter (69.51)
  • Oppenheimer upgrades PANW to Outperform from Perform and lowers their tgt to $80 from $85 based on: The settlement of its longstanding IP litigation with Juniper for $175 mln represents a significant risk removal and is viewed as a positive outcome considering prior draconian scenarios; Solid quarterly results and guidance supporting continued healthy double digit growth rates; and Potential margin expansion as the model continues to scale.
  • Needham raises their PANW tgt to $95 from $87. F3Q results were strong, and the revenue beat was accompanied by a very strong billings performance of +46% y/y. A number of datapoints from the call support firm's thesis that PANW is increasingly viewed as a "platform" in next-gen security and is getting invited to larger deals; Buy.
  • Topeka reiterates their Buy rating and $98 tgt following two important developments: 1) 3QF14 results that surpassed consensus/guidance while also guiding 4Q (at the mid-point) above consensus and; 2) the settlement of the 3-year patent suit with Juniper (JNPR) that sees PANW making (in their opinion) a modest cash/stock payment of $175mm plus $30mm in warrants. Most likely, investors will react more favorably to the legal settlement than the better-than-expected 3Q results or 4Q guidance.
  • FBR Capital believes the combination of solid F3Q results/F4Q guidance and the removal of the litigation overhang represents a strong "one-two punch" that should unlock more shareholder value over the coming quarters as investors become more comfortable with the co's improved risk profile. Palo Alto clearly continues to fire on all cylinders despite intense competition from other vendors in the network security market, and they expect it to benefit from the rapidly growing next-generation firewall (NGFW) market with the Juniper litigation now in the rearview mirror; $90 tgt.

>>> Apple: Color on Beats acquisition

Apple: Color on Beats acquisition

  • RBC ntoes Apple announced that it will acquire Beats, Inc for $3 billion ($2.6B immediate and $400M vesting over time). While this is the largest deal completed by Apple, they think the acquisition is a positive as Apple attempts to build larger recurring revenue streams. Highlights from the deal are: i) Talent -- Mr. Iovine and Dr. Dre become full-time AAPL employees; ii) Beats Music -- AAPL gets access to what it believes is a leading subscription music service; iii) High-margin hardware -- AAPL acquires headphones and speaker assets of Beats, which they estimate are sustaining >70% gross margins.
  • FBR Capital notes that in a highly anticipated move, Apple announced the acquisition of Beats Electronics for $3B. The deal will be financed with $2.6B in cash, while the $400M balance will be in AAPL shares. This is Apple's largest acquisition on record - one that is likely to bring the co closer to the attractive yet competitive music streaming business. They would not be surprised to see Apple also get more involved in music and other forms of content publishing as a way to further diversify its revenue stream. Although they do not perceive the much larger headphone and speaker segment of Beats Electronics to fit well into Apple's traditional product strategy, they do see a subscription service that could add a much needed touch of "soul" to Apple's distinctive product line. They believe Beats' current business model has the potential to add nearly $2B to revenue and $1.00 to their EPS estimate in FY15. In addition, at a very low take rate (~5%) across Apple's substantial user base (445M devices sold since 2011), the acquisition could quickly create a recurring revenue stream to eclipse the aggressive price at which the deal was cut.
  • ISI Group notes that while this transaction is the single largest acquisition AAPL has consummated to date, it only represents ~2.2% of total net cash on the balance sheet as of March 31, 2014 (or ~10% of AAPL's domestic cash pro forma the most recent debt raise). Admittedly, the Beats deal by AAPL is a little bit of a "head scratcher" for them. However, they note this deal is simply a great way to add ~100bps (or ~$1.8bil) of incremental annual revenue to AAPL's base. They think this transaction makes sense for AAPL and our key concern is talent retention. They believe the highly anticipated iPhone 6 in 2H14 will be the "mother lode of all Apple upgrade cycles" $675 tgt.
  • Oppenheimer notes the Beats acquisition has been widely anticipated for several weeks, so it won't be a surprise to any investors and its likely already worked into investor thinking and the share price. The keys to the deal are likely the creative leadership Apple is adding with Jimmy Iovine, brand-equity, and the streaming music service. Mr. Iovine's industry credibility and connections could be an asset as Apple works on content deals going forward and as it potentially enters new market segments. Beats Music is still emerging (small subs-base (<1M)/unproven monetization potential), but the technology/content could enhance Apple's own iTunes Radio platform. Apple has quickly ramped the number of iTunes Radio users, but it is yet to take much mind-share from competitors such as Spofity (~10M paying subs) and Pandora (~70M active users).

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BN 05/29 11:40 *SOFTBANK SPOKESWOMAN HIROE KOTERA SPOKE BY PHONE

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*SOFTBANK DECLINES TO COMMENT ON KYODO REPORT 2014-05-29 11:40:44.709 GMT

--ROBERT FENNER

-0- May/29/2014 11:40 GMT