Appaloosa's Tepper: Fed can't taper now and probably won't for some time, maybe three or four months - CNBC
Gapping down
In reaction to disappointing earnings/guidance: CWTR -32.5% (to explore strategic alternatives including sale of the company; confirmed negative comparable retail sales trend identified in the Q2 has accelerated; sees Q3 EPS below prior guidance range (equates to below consensus), TDC -15.7%, STLY -7%, (light volume), JRJC -5.5%, (thinly traded), FLIR -3.8%, DPZ -2.5%, C -1.4%.
Select metals/mining stocks trading lower: SLV -2.8%, SLW -1.8%, ABX -1.7%, GG -1.6%, GOLD -1.5%, AUY -1.4%, GLD -1.2%, GFI -1.1%.
A few India related names showing early weakness: HDB -2.8%, IBN -2.0%, TTM -1.8%.
Other news: SVNT -83.1% (commences voluntary Chapter 11 precedings; seeks to conduct auction and sale under Section 262), MCP -16.9% (disclosed would need additional capital to complete the modernization and expansion efforts; co is anticipating significantly lower than expected revenue and cash flow have therefore determined that it would be prudent to raise additional financing; intends to offer and sell, subject to market and other conditions, up to $200,000,000 of its common stock), CZR -16.5% ( disclosed it entered into a first lien credit agreement governing its new $2.769 bln senior secured credit facilities), BGC -10.8% (still checking), ALTI -6.1% (may be attributed to cautious blog mention), RSO -5% (plans to offer, subject to market and other conditions, $100.0 million aggregate principal amount of convertible senior notes due 2018 in an underwritten public offering), ALU -2.6% (still checking), SI -1.9% (plans to sell water technologies unit to PE firm for $800 mln, according to reports ), TEVA -0.9% (still checking).
Analyst comments: VECO -3% (ticking lower, downgraded to Perform from Outperform at Oppenheimer), NSM -1.2% (downgraded to Market Perform from Outperform at Wells Fargo),AAP -0.4% (initiated with an Underperform at Wedbush), RIG 0% (downgraded to Hold from Buy at Argus)
Fedex Corp Board approves 32M share buyback program (10% of shares outstanding) - Authorized a new share repurchase program of up to 32 million of its outstanding shares of common stock. These shares augment the remaining 7.4 million shares authorized for purchase under the existing share repurchase program. The
Molycorp shares trading lower by 10% in pre-market trade; co disclosed would need additional capital to complete the modernization and expansion efforts; co is anticipating significantly lower than expected revenue and cash flow have therefore determined that it would be prudent to raise additional financing
Co disclosed the following: •'In January 2013, we determined that we would need additional capital to complete the modernization and expansion efforts and certain other capital projects at our Molycorp Mountain Pass facility, to fund our operations and to fund our working capital needs, and we raised an aggregate of ~$414 mln of net proceeds from a common stock offering and a convertible notes offering. We believed, based on the assumptions set forth in the prospectus supplements for such offerings, that the proceeds of such offerings would, together with anticipated cash flows from operations and potential proceeds from equipment and revolver financings, be sufficient to fund such operating and capital expenditure needs. Subsequent to January 2013, a number of developments have occurred that have reduced our cash cushion to a level below what we view as sufficient to ensure we will have no substantial concern about our ability to finance ourselves and led us to seek to raise additional financing: The ramp-up has taken longer than expected, which has led to lower than expected production volumes, revenues and cash flows during the first nine months of 2013, and delayed our realization of the benefits of our vertical integration strategy while our other operations continued to purchase raw materials from third parties rather than accepting delivery of products from our Molycorp Mountain Pass facility. •'Production volumes of REO in the first, second and third quarter of 2013 totaled 606 mt, 756 mt and an estimated 1,139 mt at our Molycorp Mountain Pass facility, respectively. While we believe that our Molycorp Mountain Pass facility is capable of producing 19,050 mt of REO per year, to date, we have demonstrated an annualized production rate of 15,000 mt of REO over brief periods of time, but have not been able to sustain such production rates over prolonged periods of time as we work to optimize our production and operations and remedy mechanical problems that we identify during operations.' •'We are currently producing at an annualized production rate of ~10,600 mt of REO, as we continue to work on optimizing production. We are currently targeting to gradually increase our production capacity during 2014 to an annualized production rate of REO (including LREC) of ~23,000 mt during the fourth quarter of 2014, although actual production during the first half of the year is expected to be below the design capacity of 19,050 mt on an annualized basis but more than the demonstrated annualized production rate of 15,000 mt of REO (including LREC). •On October 14, 2013, we entered into an agreement with Molibdenos y Metales S.A., or Molymet, pursuant to which Molymet agreed that, at our request during the term of the agreement, Molymet would purchase $50 mln of our common stock. However, if our proposed offering of common stock is successful, we currently expect that we would not request Molymet to purchase our common stock pursuant to such agreement. As of September 30, 2013, we had ~$160 mln of cash and we estimated that we will need to spend ~$50 to $70 mln in cash to fund remaining capital expenditures at our Molycorp Mountain Pass facility, as well as $5 to $8 mln on other maintenance and expansion capital expenditures in the remainder of 2013 across all operating segments and $70 mln in 2014 for our Molycorp Mountain Pass facility, including $30 mln of maintenance capital (excluding ~$80 mln of discretionary capital expenditures) and $20 mln for capital needs across our other operating segments. •Given the current pricing environment of REEs and the other factors set forth above, we are anticipating significantly lower than expected revenue and cash flow have therefore determined that it would be prudent to raise additional financing to ensure we have adequate funding for our needs, including the capital needs outlined above, debt service and other working capital needs. Our budget reflects an assumption that will be able to sell a substantial portion of our cerium beginning in the first quarter of 2014 once our current SorbXTM testing for various uses is completed and as we qualify our cerium for use in other products. However, we continue to expect that we will be unable to sell a substantial portion of our cerium production during 2014. Accordingly, our margins, EBITDA and 2 cash flow will be negatively impacted until our sales of cerium products manufactured at our Molycorp Mountain Pass facility increase.
• Note: Related Rare Earth names include: REE, MCP, SHZ, AVL, GSM
Gapping up
In reaction to strong earnings/guidance: GTN +2.9% (light volume), JNJ +1.6%, PKG +1.3%, OMC +1.3%, KO +1%.
M&A news: TUC +5.8% (CSC ServiceWorks to Acquire Mac-Gray for $524 Million or $21.25/share).
Select mining stocks trading higher: RIO +2.4% (provides Q3 production results; global iron ore shipments +4% YoY), MT +2.2%, BHP +0.4%, BBL +0.4%.
A few solar names are trading higher on light volume: YGE +2.8%, JKS +2.5%, CSIQ +2.1%
Other news: NVGN +17.2% (may be attributed to positive blog mention),XNPT +16.7% (Clinton Group Calls on Xenoport to hire a new CEO and focus on promising drug in its Pipeline),LTBR +8.9% (B&W and Lightbridge to collaborate on metallic nuclear fuel pilot fabrication facility), CIM +4.4% (following Cooperman comments on CNBC),SD +3.4% (following Cooperman comments on CNBC),FU +2.9% (continued strength),MU +2.3% (still checking),GERN +2.3% (has been informed by Dr. Tefferi that his abstract on preliminary data from the ongoing Myelofibrosis IST has been selected by the ASH Program Committee for presentatio),S +1.7% (following Cooperman comments on CNBC),YHOO +1.5% (still checking),NOK +1.2% (still checking),TZOO +0.8% ( enters into multi-state unclaimed property settlement; co expects to record an estimated $22.0 mln charge, which will be included in its financial earnings release for the three months ended Sept 30, 2013),NFLX +0.7% (AllThingsD discusses that Vodafone is offering free Netflix subscriptions with purchase of Nokia phones; also Pac Crest comments- Q3 should be solid, but aggressive assumptions needed to justify upside in NFLX ),AMZN +0.4% (WSJ details news that Amazon (AMZN) plans to setup warehouses inside Procter & Gamble facilities and other cos),T +0.3% (U.S. Army Awards AT&T Government Solutions Place on $4.1 Billion).
Analyst comments: TSLA +2.5% (upgraded to Outperform from Neutral at Wedbush ),MYCC +2% (initiated by several analysts),FEYE +1.1% (initiated by several analysts),FUEL +1% (initiated by several analysts), MSFT +1% (upgraded to Buy from Hold at Jefferies),FB +0.8% (tgt raised to $60 from $45 at Evercore),QCOM +0.4% ( initiated with a Buy at Stifel)
Warren Buffett has been whitewashing his spotty role in the Benjamin Moore fiasco.
That’s the charge against the folksy billionaire from a number of the paint brand’s independent dealers — including a Big Apple-based operator that has smacked the company with an explosive lawsuit.
Gus and Andrea Giannopoulos, whose Brooklyn-based Capital Paint Supply began selling Benjamin Moore products in 1995, say Buffett turned a blind eye as the upscale label used ruthless, underhanded tactics to milk them for cash during the Great Recession.
“Everybody is talking like Warren Buffett is the good guy here, swooping in to fix this problem,” Gus Giannopoulos told The Post. “But all of this started happening on his watch.”
In addition to breaking contracts for inventory-financing programs, the suit filed in New Jersey Superior Court charges that Benjamin Moore execs demanded payments for advertising that never materialized.
Company reps even bad-mouthed Giannopoulos to clients behind his back as they opened competing stores nearby and tried to steal away wholesale accounts, the suit alleges.
Officials at Benjamin Moore and Berkshire Hathaway, Buffett’s Omaha, Neb.-based investment vehicle, didn’t respond to requests for comment about the suit, filed in January.
In a February response, Benjamin Moore’s lawyers denied the charges and countered that Capital Paint Supply had violated financing and advertising agreements.
Forced to shutter four of its nine locations in New York and New Jersey as it scrambled for cash, Capital Paint Supply isn’t alone, said Harold Goldmeier, a Harvard-trained professor of finance at American Jewish University. He said his family faced a similar clampdown in 2008 as Benjamin Moore dealers in Chicago, forcing them to exit.
“That’s the flip side to being a hands-off manager,” Goldmeier said, referring to Buffett. “I know people who went to Omaha and tried to see him. Their response was, ‘We don’t mix with the daily operations.’”
Since the recession, Goldmeier estimates that more than 60 family-owned stores closed throughout the Midwest, formerly a stronghold for the brand.
After acquiring the 130-year-old, Montvale, NJ-based company in 2000 for $1 billion, Berkshire Hathaway began extracting a yearly dividend of about $150 million, insiders said.
Pressure to deliver the cash mounted after the credit crisis in 2008, and ex-CEO Denis Abrams opted for hardball tactics, severing old dealer relationships as he squeezed the century-old distribution network, dealers say.
“They did everything on a handshake, and eventually they took advantage of it,” said Mike Fleck, whose New Jersey-based Flexpaint stores saw Benjamin Moore pulled abruptly from their shelves four years ago.
The strategy backfired as dealers switched to other brands and an initiative to expand company-owned stores flopped. Last year, excluding acquisitions, annual revenue was about half the 2005 peak of $1.1 billion, sources said.
“I used to call them the ‘Paint Nazis,’” said Frank Harrelson, a Charlotte, NC-based dealer who ended a 32-year relationship with Benjamin Moore this spring after reps demanded that he throw competing brands out of his store. “You hate to see them coming in the front door.”
General Cable Corp Due to certain accounting errors, certain revenue recognition in 2008-12 period should not be relied upon - filing - On October 10, 2013, the Audit Committee of the Companys Board of Directors, upon the recommendation of the Companys executive officers, concluded that due to certain accounting errors, in the aggregate, related to i) value added tax (VAT) and ii) revenue recognition in connection with historical bill and hold transactions for aerial transmission projects in Brazil as further described below, the Companys previously issued consolidated financial statements for the fiscal years 2008 through 2012 (and the related reports of its independent registered public accounting firm) and the interim periods during those years, and the financial statements as of, as well as for, the three fiscal months ended March 29, 2013 should no longer be relied upon.
Citigroup reports Q3 (Sep) results, misses on revs
Reports Q3 (Sep) earnings of $1.02 per share, may not be comparable to the Capital IQ Consensus Estimate of $1.03;C reported net income for Q3 of $3.2 billion, or $1.00 per diluted share, on revenues of $17.9 billion. This compared to net income of $468 mln, or $0.15 per diluted share, on revenues of $13.7 billion for 3Q12. CVA/DVA was a negative $336 million in Q3 resulting from the tightening of Citi's credit spreads in the quarter, compared to a negative $776 million in the prior year period. Third quarter 2013 results also included a $176 million tax benefit related to the resolution of certain tax audit items, compared to a $582 million tax benefit in the prior year period; Revenues fell 7.8% year/year to $17.88 bln vs the $18.8 bln consensus. •Michael Corbat, Chief Executive Officer of Citi, said, "We performed relatively well in this challenging, uneven macro environment. While many of the factors which influence our revenues are not within our full control, we certainly can control our costs and I am pleased with our expense discipline and improved efficiency year-to-date. Citicorp •Citicorp revenues of $16.6 billion in Q3 included a negative $332 million of CVA/DVA reported within Securities and Banking. Excluding CVA/DVA, Citicorp revenues of $17.0 billion decreased 7% from the prior year period. Securities and Banking revenues declined 2%, or 10% excluding CVA/DVA, and Global Consumer Banking (GCB) revenues declined 7%, while Transaction Services (CTS) revenues were roughly flat, all versus the prior year period. Citi Holdings •Citi Holdings revenues of $1.3 billion in the third quarter 2013 included a negative $4 million of CVA/DVA. Excluding CVA/DVA and the third quarter 2012 MSSB loss, Citi Holdings revenues increased 28% versus the prior year period, mainly driven by the absence of repurchase reserve builds for representations and warranty claims in the third quarter 2013. Total Citi Holdings assets of $122 billion declined $49 billion, or 29%, from the third quarter 2012. Citi Holdings assets at the end of the third quarter 2013 represented approximately 6% of total Citigroup assets. Citigroup's net income increased to $3.2 billion in the third quarter 2013 from $468 million in the prior year period. Excluding CVA/DVA and the tax benefit in both periods, as well as the third quarter 2012 MSSB loss, Citigroup net income of $3.3 billion was roughly flat compared to the prior year period, as lower operating expenses and lower credit costs were offset by the decline in revenues and a higher tax rate.
Operating expenses of $11.7 billion were 4% lower than the prior year period. Citigroup's cost of credit in the third quarter 2013 was $2.0 billion, 25% below the prior year period, reflecting a $1.5 billion improvement in net credit losses partially offset by a $827 million decline in net loan loss reserve releases.
Citigroup's capital levels and book value increased versus the prior year period. As of the quarter end, book value per share was $64.49 and tangible book value per share was $54.52, 1% and 3% increases respectively versus the prior year period. At quarter end, Citigroup's Basel I Tier 1 Capital Ratio was 13.6% and its Tier 1 Common Ratio was 12.6%, while its Basel III Tier 1 Common Ratio was estimated at 10.4%. Citigroup's estimated Basel III Supplementary Leverage Ratio for the third quarter 2013 was 5.1%.
Global Consumer Banking •GCB revenues of $9.2 billion declined 7% from the prior year period, as significantly lower U.S. mortgage refinancing activity and continued spread compression globally more than offset the ongoing volume growth in most international businesses. Revenues declined 12% in North America GCB to $4.7 billion, while international GCB revenues declined 1% to $4.5 billion on a reported basis (grew 2% on a constant dollar basis). GCB net income declined 23% versus the prior year period to $1.6 billion, reflecting the decline in revenues and lower loan loss reserve releases, partially offset by lower operating expenses and lower net credit losses. Operating expenses of $5.0 billion declined 4% versus the prior year period due to lower legal and related expenses in North America and repositioning savings. Total credit costs increased 14% compared to the prior period, driven by lower loan loss reserve releases in the North America cards business and reserve builds in international GCB, which were partially offset by lower net credit losses. Securities and Banking • Securities and Banking revenues declined 2% from the prior year period to $4.7 billion. Excluding the impact of the negative $332 million of CVA/DVA in the third quarter 2013 (compared to a negative $799 million impact in the prior year period), Securities and Banking revenues were $5.1 billion, 10% lower than the prior year period. • Investment Banking revenues of $839 million were 10% below the prior year period, driven primarily by declines in debt underwriting and advisory revenues, partially offset by growth in equity underwriting. Debt underwriting revenues declined 16% to $498 million and advisory revenues declined 15% to $167 million, while equity underwriting revenues increased 22% to $174 million. • Equity Markets revenues of $710 million in the third quarter 2013 (excluding a negative $39 million of CVA/DVA) were 36% above the prior year period, reflecting market share gains as well as improved derivatives performance. • Fixed Income revenues of $2.8 billion in the third quarter 2013 (excluding a negative $287 million of CVA/DVA) decreased 26% from the prior year period, reflecting lower volumes and a more uncertain macro environment. Lending revenues increased 38% to $230 million from the prior year period, mostly reflecting lower losses on hedges related to accrual loans of $147 million (compared to a $252 million loss in the third quarter 2012) as credit spreads tightened less significantly during the third quarter 2013 compared to the prior year. • Securities and Banking net income was $989 million in the third quarter 2013, down 16% from the prior year period. Excluding CVA/DVA, net income declined 29% to $1.2 billion from the prior year period, primarily reflecting the lower revenues and higher credit costs, driven by loan loss reserve builds, partially offset by a 3% decline in operating expenses, reflecting the impact of headcount reductions and lower performance-based compensation.
Johnson & Johnson beats by $0.04, reports revs in-line; raises FY13 EPS, in-line
Reports Q3 (Sep) earnings of $1.36 per share, $0.04 better than the Capital IQ Consensus Estimate of $1.32; revenues rose 3.1% year/year to $17.57 bln vs the $17.41 bln consensus. Operational results increased 4.7% and the negative impact of currency was 1.6%. Domestic sales increased 1.7%. International sales increased 4.2%, reflecting operational growth of 7.1% and a negative currency impact of 2.9%.
•Worldwide Consumer sales of $3.6 billion for the third quarter represented an increase of 0.8% versus the prior year consisting of an operational increase of 2.0% and a negative impact from currency of 1.2%. Domestic sales increased 0.9%. International sales increased 0.8%, which reflected an operational increase of 2.6% and a negative currency impact of 1.8%. •Worldwide Pharmaceutical sales of $7.0 billion for the third quarter represented an increase of 9.9% versus the prior year with operational growth of 10.9% and a negative impact from currency of 1.0%. Domestic sales increased 7.9%. International sales increased 12.0% which reflected an operational increase of 14.0% and a negative currency impact of 2.0%. •Worldwide Medical Devices and Diagnostics sales of $6.9 billion for the third quarter represented a decrease of 2.0% versus the prior year consisting of an operational increase of 0.3% and a negative currency impact of 2.3%. Domestic sales decreased 4.2%. International sales decreased 0.1%, which reflected an operational increase of 4.2% and a negative currency impact of 4.3%.
Co issues in-line guidance for FY13, raises EPS to $5.44-5.49 from $5.40-5.47 vs. $5.46 Capital IQ Consensus.
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Numericable Enterprise Value Could Be EU5-7b, L’Agefi Says 2013-10-15 11:53:42.91 GMT
By Steve Rhinds Oct. 15 (Bloomberg) -- Co. began presentations to potential investors yesterday to determine price range for IPO, financial daily L’Agefi says. The enterprise value estimate cited by L’Agefi is from unspecified financial analysis documents.
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To contact the editor responsible for this story: Steve Rhinds at +33-1-5365-5072 or srhinds@bloomberg.net