>>> IBM : Color on quarter - Stock -3% in Pre-Mkt 75k shares traded

--> IBM is trading ~3% lower in pre market at $182.30.

IBM: Color on qtr
  • Stifel notes 4Q EPS of $6.13 beat consensus ($5.99) on lower revenue ($27.7bn down 3% cc, consensus $28.0bn) and tax rate (11%). The lower tax rate contributed $0.62 to EPS, although IBM has always viewed the tax rate as an operational lever and telegraphed the lower rate. Core issues were continued weakness in the Growth Markets (GMU's down 6% versus -5% in September), China remained particularly weak (down 23% y/y), hardware was down 25% as expected due to the anniversary of the mainframe product cycle and known product transitions. Software grew in its target range (+4%); Services was consistent with 3Q, which was modestly below their expectations as cyclical and perhaps some customer specific issues continue to impact GTS growth.
  • ISI notes the Dec-13 again highlighted challenges IBM is facing to revive its business (e.g., Software only up ~3% y/y, Services down y/y and systems down 26% y/y). In its view, the core of IBM's old playbook has been based primarily on: 1) large share buybacks, 2) highly disciplined expense management, 3) portfolio rationalization with a focus on services/software, and 4) tuck-in m&a. While this strategy historically produced consistent double-digit EPS growth, ISI believes a new strategy is required as large portions of IBM's highly profitable software/services business is under threat from SaaS and cloud migration. Maintaining relevance in large accounts will require bigger/bolder m&a in ISI's view, even if dilutive to EPS in the early years.
  • RBC notes IBM was able to beat Street EPS expectations during the quarter largely due to a lower tax rate and share buyback benefits. RBC believes EPS guidance for FY14 is achievable and positions the firm well toward achieving its $20 EPS target by FY15.

>>> US Early premarket gappers

Early premarket gappers

Gapping up: SMCI +16.8%, NUAN +9.1%, GERN +6.9%, PSTI +5.5%, ASML +4.4%, KOOL +4.3%, ZLCS +4.2%, HURN +4.2%, NOVB +3.9%, GALE +3.4%, YRCW +3.1%, TPLM +3.1%, CA +3%, TWI +2.6%, WWD +2.6%, LEDS +2.5%, GTE +2.4%, HIMX +2.3%, GOLD +1.9%, CREE +1.9%, TA +1.5%, RIO +1.5%, RNO +1.1%, STM +0.9%

Gapping down: AMD -11.3%, KERX -5.1%, NKTR -4.8%, IBKR -4.6%, BOBE -4.3%, XLNX -3.7%, IBM -3.4%, FNB -2.7%, NBG -2.6%, TEL -2.3%, ING -2.1%, SPLK -1.8%, AU -1.8%, VMW -1.6%, DB -1.5%, FE -1.4%, ONVO -1.2%, HPQ -1%, TXN -1%, JE -0.9%, MTW -0.9%, EMC -0.7%

(BFW) Shire Has Scope for More M&A, Barclays Says

+------------------------------------------------------------------------------+

Shire Has Scope for More M&A, Barclays Says 2014-01-22 10:24:01.314 GMT

By Sheela Sharma Jan. 22 (Bloomberg) -- Shire has scope for more M&A; expect additional corporate activity, most likely Rare Disease pipeline strengthening, to be announced during 2014, Barclays (overweight, PT 3,275p vs 2,800p previously) writes in note. * Acquisition of Viropharma limits size of future near-term deals, though with strong free cash flow generation (>$2b pa) this can be paid off within 2-3 yrs * Viropharma will add ~12% to 2015 EPS, divestment of loss- making Dermagraft adds 3%-5% to EPS; * Leaves stk on ~14x PE in 2015, 11% discount to mid-cap peers despite superior long-term EPS growth * Yday: JPMorgan said bolt-ons seen as main use of cash for EU large pharma; highlights Shire * Nov. 11: Shire announced plan to buy Viropharma for $50-shr * Jan. 17: Shire sells Dermagraft, sees impairement of ~$650m in 4Q * NOTE: Shire cash, near cash items at Sept. 30 was $1.7b: Bloomberg data

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

--Editor: James Ludden

To contact the reporter on this story: Sheela Sharma in London at +44-20-7392-0395 or ssharma145@bloomberg.net

To contact the editor responsible for this story: James Ludden at +44-20-7673-2645 or jludden@bloomberg.net

SKY Deutschland lower - see Cbk comment on Ebitda

Sky Deutschland May Forecast 2014 Ebitda Down ~25%: Commerzbank

Sky Deutschland expected to guide the market ~25% lower regarding 2014 Ebitda amid start of Vodafone’s SNAP platform and too-high ARPU expectations, Commerzbank says in note.
  • Commerzbank says 4Q results, due Feb. 6, expected to be “rather subdued”
    • While subscriber gains likely to accelerate due to shift of DT customers in 2H, this seems already taken fully into account
    • Doesn’t see any positive catalysts for the stock in S/T
    • Reiterates hold
  • 12 buys, 9 holds, 7 sells; avg. PT EU7.6 implies upside of 5.7%: data compiled by Bloomberg
    • Shares up as much as 0.7% today; down 10% since start of Jan., up 94% in 2014
  • NOTE: Co. said Nov. 5 3Q Ebitda rose 19% to EU29.2m, said expects FY 2013 Ebitda to be positive, to grow strongly thereafter
  • NOTE: Current estimates have 2014 Ebitda at EU116.7m:

(Manager.de) Vodafone Germany chief urges protection against hedge funds

Vodafone Germany chief urges protection against hedge funds

Link to translation : {http://bit.ly/1mroPxg}
Link to original in German : {http://bit.ly/1mroPxg}

The head of Vodafone Germany, Jens Schulte-Bockum, calls for new laws to better protect businesses in this country against activist hedge funds. Thus, the U.S. fund Elliott can prevent about to squeeze out the remaining shareholders of the acquired cable Germany.

Hamburg - "maximizing profits for hedge funds without regard to business and economic damage is generally a very questionable business model," Jens Schulte-Bockum said in an interview with the Hamburg business newspaper manager magazin (Release date: January 24). "This should be stopped," demanded the boss of Vodafone Germany, which is currently under attack by the U.S. hedge fund Elliott.

AD

The British telecom giant Vodafone Show Charthas in the past year the majority of the competitors cable Germany acquired (KDG). 11.09 percent of KDG holds but still a major investor Elliott. In order that this may prevent squeeze out the remaining shareholders.
Elliott is known to participate in company to drive in a takeover, the purchase price in the amount. Recently, only the Americans had the takeover of the pharmaceutical producers torpedoed Celesio .

Vodafone is expected to award proceedings, will be at the decision on compensation to minority shareholders. The fact that Elliott could act so aggressively in Germany, was "in any case, the result of a loophole in the German stock corporation law," criticized Schulte-Bockum.

(BofA-ML) US/Europe Strategy : Expect more global alpha in 2014

* Alpha proved elusive post-crisis, but set to return in 2014
Across the globe, adding alpha and beating market indexes proved very challenging over the last few years. After the financial crisis struck and government intervention in markets became commonplace, correlations among stocks surged and investors became less willing to differentiate among individual names. This translated to a tough environment for active managers. So much so that investors began to question whether active strategies pay off over the long haul, resulting in increasing redemptions from active funds, and significant inflows into ETFs over recent years.

* Correlation is falling as markets become less macro-driven
However, as some of the major macro risks have dissipated, earnings volatility has plummeted, valuations have normalized and correlations have fallen close to their long-term averages. In the US, pair-wise correlations among those stocks in the S&P 500 finished the year at 30%, down from the recent high of 70%, while in small caps the figure came in at 21%. As for Europe, the number came in at 43% after peaking at 77% and averaging 56% over the last six years. This is increasing the importance of company-specific fundamentals and should create a better environment for active managers to add alpha in 2014, both in the US and Europe.

* Lower returns, higher-quality outperforming = better alpha
2013 was a strong year for equities globally and our strategy teams are optimistic about 2014; however, we expect a more measured rally this year. Historically, when equity performance is strong, small cap and low quality stocks tend to outperform. However, our 2014 targets of 2000 for S&P 500 and 3400 for EuroStoxx 50 imply index returns closer to their long-term averages. As performance normalizes, we expect a transition in leadership towards higher quality stocks that are still undervalued — this tends to favor active managers who typically have a bias toward higher quality, more liquid names. Moreover, an increase in volatility which might be expected given the VIX’s low levels could exacerbate the underperformance of lower quality names — adding to the improving backdrop for active managers.

* Some sectors offer more alpha opportunity than others
Not all sectors are created equal, and in some groups we find more differentiated performance than in other sectors. Whereas groups that are more rates driven, like Financials, or more tied to commodity prices, like Energy and Materials, others are more diversified and see wider spreads between stock performance. For US investors, Consumer Discretionary, Health Care, and Information Technology have been the most fertile grounds for active managers from this standpoint. Meanwhile in Europe, Banks, Autos, Healthcare, Staples and Retail offer the best rewards for stockpickers. These sectors have above average valuation dispersion and should see declining correlations.

(BFW) Numericable Valuation Justified on Possible M&A Boost, Citi Says

+------------------------------------------------------------------------------+

Numericable Valuation Justified on Possible M&A Boost, Citi Says 2014-01-22 08:33:02.210 GMT

By Blanche Gatt Jan. 22 (Bloomberg) -- Numericable is “strategic asset” in a mkt that needs consolidation, Citi says in note; initiates coverage with neutral rating, PT EU29.5. * Citi says co.’s premium valuation at 10x est. 2014 EV/adj. Ebitda, 23.1x est. 2014 EV/OpFCF is justified given est. 60% probability of merger with SFR, with SFR spin-off in 1H as catalyst * Sees potential cost savings upside of EU2.8b, post integration costs, from any merger between SFR and Numericable * Says as standalone business Numericable offers limited growth with not much scope for price increases amid “fierce” competition * Shares up 0.8% today; up 10% since start of Jan., up 17% since IPO on Nov. 8 * Stock has 10 holds, 1 sell; avg. PT EU28.3 implies downside of 2.3%: data compiled by Bloomberg * NOTE Jan. 21: Vivendi Is Said to Explore Sale of SFR to Numericable Owner * Jan. 21: Vivendi’s Potential SFR Unit Sale Report Raises Hopes: Liberum

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

--Editor: James Cone

To contact the reporter on this story: Blanche Gatt in London at +44-20-7392-0351 or bgatt@bloomberg.net

To contact the editor responsible for this story: James Ludden at +44-20-7673-2645 or jludden@bloomberg.net

FT : Goldman insider to cash on Twitter fame with exposé book deal

What is good news for Kate Upton, Vanilla Ice and Bette Midler might make grim reading for Goldman Sachs executives as the anonymous author behind the @GSElevator Twitter profile has agreed a deal to turn his allegedly insider observations into a tell-all book about life at the bank.
Tentatively entitled Straight to Hell: True Tales of Deviance and Excess in the World of Investment Banking, the book is due for an October 2014 publication and, according to its anonymous author, is intended to be “the definitive exposure of investment banking culture . . . shedding new light on a world that is far more abhorrent, and yet, way more entertaining than people can imagine.”

The @GSElevator Twitter profile began tweeting some three years ago, tapping into a wave of anti-bank sentiment with messages such as “My garbage disposal eats better than 98 per cent of the world,” and “I really do hope they have golf in Hell.” @GSElevator has since attracted more than 600,000 followers on the social media network, dwarfing the number of followers of Goldman’s own official profile.
The comical tweets, supposedly conversational nuggets overhead while riding the lifts at Goldman, became compulsory reading for bankers, their clients and celebrities – with senior Goldman executives such Anthony Noto, who helped the firm nab the coveted lead position on Twitter’s initial public offering last year, also joining the ranks of GSElevator subscribers.
The book has been picked up by Simon & Schuster, one of the “big four” publishers, after being touted by literary agency Waxman Leavell.
Matthew Benjamin, senior editor of Simon & Schuster, declined to comment on how much @GSElevator’s anonymous author will be paid for the book.
Straight to Hell will be published under the pseudonym “J.T. Stone”, and will chart the career of @GSElevator, from his first steps as a junior analyst through to his work in the world of fixed income in New York, London and Hong Kong.
News of the book deal will come as a disappointment to Goldman, which has been attempting to redefine its relationship with social media and revamp the bank’s public image in the wake of the financial crisis.
In early 2012 Goldman sought a “community manager/social media strategist” to handle the its presence on Facebook, Twitter and LinkedIn, after a wave of negative publicity – including a scathing op-ed by former employee Greg Smith.
Mr Smith published his own book after signing a deal worth a reported $1.5m, but his narrative of his time at Goldman failed to make as big a splash as the op-ed.
Worryingly for Goldman, “J.T. Stone” considers Mr Smith’s account of his time at the bank to be “all bark and no bite,” according to a book pitch seen by the Financial Times. A spokesman for Goldman Sachs declined to comment.
Straight to Hell may prove different to the current reality of Goldman Sachs.
Bonuses at the bank have fallen to their lowest in four years, and Goldman has discouraged junior investment banking analysts from working on weekends and also launched a firm-wide initiative to improve its relationship with its customers.
“The man in the GS Elevator is the wonderfully belligerent flag bearer of pre-recession Wall Street,” said Mr Benjamin, of Simon & Schuster. “This only adds to the humour and escapism. We’re drawn to books like Liar’s Poker and the Wolf of Wall Street because they tell of a moment that has passed – that we can’t experience, but we’d like to.”

(BFW) TF1 Likely to Pay Special Div. With Eurosport Proceeds: Goldman

+------------------------------------------------------------------------------+

TF1 Likely to Pay Special Div. With Eurosport Proceeds: Goldman 2014-01-22 07:50:30.446 GMT

By Blanche Gatt Jan. 22 (Bloomberg) -- TF1 expected to use proceeds of sale of further 31% of Eurosport to Discovery, announced yday, for special div. to shareholders, Goldman Sachs says in note. * Goldman says proceeds, amounting to EU253m, would result in special div. of EU1.2/shr * Sale of 31% stake implies 10% dilutive effect on 2014 EPS est., Goldman says * Sees potential upside from French ad recovery, ameliorating competitive outlook, possibility of more cost savings, cash returns; reiterates buy * NOTE today: TF1 Gets Good Deal in Eurosport Control Sale to Discovery: JPM

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

To contact the reporter on this story: Blanche Gatt in London at +44-20-7392-0351 or bgatt@bloomberg.net

To contact the editor responsible for this story: James Ludden at +44-20-7673-2645 or jludden@bloomberg.net

(BofA-ML) Equity Client Flow Clients Surge into stocks

* Biggest week of net buying since May 2009
Last week, during which the S&P 500 was down 0.2%, BofAML clients were big net buyers of $5.1bn of US equities—the largest week of inflows since May ‘09. All three client groups were buyers, led by institutional clients who bought stocks for the fifth consecutive week. This follows capitulation from US stocks by this group last year. Flows at extremes often signal shifts in trends, suggesting the recent short-term net buying trend by this group could be sustainable. Private clients continued their net buying streak last week and have now bought stocks in all but three of the last 34 weeks (since late May). Hedge funds were net buyers after two weeks of net selling.

* Record Tech inflows; clients get cyclical
Seven of the ten sectors saw net buying by our clients last week, led by record inflows into Tech (see below). Discretionary, Health Care and Materials all saw near-record inflows as well, with the second, third, and third-largest net buying in our data history, respectively. The largest net sales were of ETFs and Energy, while bond-like Utilities and Telecom also saw outflows. Tech currently has the longest net buying trend at four consecutive weeks, while no sector has a multi-week net selling trend. The cyclical sectors of Discretionary, Industrials, Tech and Materials saw net buying by all three client types last week, while no sector saw net sales by all three. We expect clients to continue rotate out of defensives and into cyclicals as growth reaccelerates in 2014.

* Other notable flows: Broad-based buying of large & mid caps
- Institutional clients’ net buys last week were the largest since May 2009, and private clients’ net buys were the largest since January 2013.
- Large and mid caps saw net buying by all three client types last week; no size segment saw net sales by all three.
- BofAML pension fund clients were net sellers of US stocks last, but remain cumulative net buyers in 2014 thus far following large net sales by this group last year. Net sales last week were chiefly in ETFs, while seven of the ten sectors saw net buying, led by Health Care and Discretionary. See pg 9 for details.

* Chart of the week: Record Tech inflows
Tech saw the largest inflows in our data history last week, with all three client types buying Tech. Net buying was chiefly in large caps, though mid caps also saw inflows. We expect inflows to continue into Tech and other globally-oriented cyclical sectors— which are trading near record low valuations—as global growth picks up in 2014