TheChek News Flow

Intel revenue growth best for six quarters

Intel’s revenue crept up by 3 per cent to $13.8bn in the final quarter of last year, its best growth in six quarters, as the slide in global PC sales showed signs of slowing. However, its profits fell short of forecasts. The chipmaker’s shares dropped back by nearly 5 per cent in after-market trading, reversing part of their recent rally, as the company failed to live up to Wall Street hopes for a stronger revival as it redoubles its efforts to break into the tablet and smartphone markets. Fourth-quarter figures were held back by a weaker than expected recovery in sales of data centre products to enterprise, or big business and government, customers. That prompted Intel to reduce its forecast for growth in this segment in 2014 and predict no revenue growth for the company overall for the year. The chipmaker’s latest figures at least brought some small rays of hope for the PC market after 36 months of declines. Sales in Intel’s core PC division edged up by 2 per cent, underpinned by a 7 per cent increase in the volume of chips sold for desktop machines. Brian Krzanich, chief executive, said the recovery appeared to reflect more than just a short-term pick-up in demand caused by companies buying new PCs after Microsoft’s announcement that it will end support for the Windows XP operating system in April, but instead showed growing demand for a new range of more versatile touchscreen machines. Sales of these so-called 2-in-1 computers have been held back by their relatively high prices, but are likely to pick up strongly at the end of 2014 as prices fall, said Patrick Moorhead, an analyst at Moor Insights & Strategy. Mr Krzanich has set a target of getting Intel’s chips into 40m tablets in 2014. The latest figures appeared to reflect the escalating costs of that ambitious plan, with losses in the segment that includes mobile jumping more than $1bn to $2.4bn for the year. With a higher tax rate than it had forecast, Intel’s earnings reached 51 cents a share in the final three months of 2013, up from 48 cents the year before. Official Wall Street forecasts had called for earnings of 52 cents a share on revenues of $13.72bn, though informal estimates had crept higher. The number of PCs shipped last year fell by around 10 per cent, according to research firms Gartner and IDC, though the rate of decline slowed in the final months and Intel executives have said they believe the market is stabilising. IDC still expects a further 4 per cent decline in 2014.

Orange and D Telekom put EE float on hold

The flotation of EE, Britain’s largest mobile operator, has been put on hold by Orange and Deutsche Telekom, after the joint owners concluded they would secure a higher valuation for the business when its 4G telephone services take off. Orange and Deutsche Telekom – which has also been linked with a sale of its US business this year – had been working on options for a partial sale of EE for more than a year. However, on Thursday, people with knowledge of the decision said a strategic review by the companies had concluded that this was not the time to sell EE – based on a belief that its valuation will rise in future as more people adopt higher margin mobile data packages in the nascent 4G market. The move to shelve what could have been London’s largest initial public offering represents an unexpected reversal for a booming market, which had attracted a growing number of companies seeking to raise capital. Analysts had estimated that EE could carry an enterprise value of more than £10bn. Last year, a strong recovery in European IPOs last year saw volumes more than double to $35bn, according to Thomson Reuters – with the UK at the forefront of the revival. But while the decision may come as a disappointment to the investors and financial advisers keen to be involved a flotation of this size, it may spark renewed interest among private equity groups that had been hoping to derail the process with bids of their own. In a statement to the FT, Deutsche Telekom and Orange said: "The shareholders have both agreed that the best option for value creation is to maintain the current ownership structure for the time being, and they look forward to continuing their co-operation in the UK market." EE executives are confident that the company can maintain its lead in the 4G market, having signed up 2m 4G customers in the UK, where it operates the Orange and T-Mobile brands. However, one person with knowledge of the situation said the potential valuations being discussed among some investors had not been as high as the owners wanted. Analysts have also said that Deutsche Telekom might be reluctant to reduce the scale of its global business too quickly through a sale of both US and UK operations. Sprint, which is owned by Japan’s SoftBank, is rumoured to be preparing a bid for a majority stake in T-Mobile US early in 2014. The German group has reduced its state in T-Mobile US to about two-thirds. EE has also been on the list of European companies linked to a bid from AT&T, although it would be second choice for the US telecoms company behind Vodafone according to many analysts following the situation.

Closing Market Summary: Stocks End Mixed

Equities finished the Thursday session on a mixed note as the Dow Jones Industrial Average (-0.4%) and S&P 500 (-0.1%) settled in the red while the Nasdaq posted a slight gain of 0.1%.

The stock market began the day on the defensive after two influential sectors, consumer discretionary (-0.5%) and financials (-0.6%), were hit with a one-two punch of selling interest. The early weakness knocked the S&P 500 back to Wednesday's opening levels, but the index did not stay near its session low for long as the outperformance of consumer staples (+0.01%), energy (+0.1%), and health care (+0.2%) helped it climb back to its opening level.

Retailers were in focus once again this morning after Best Buy (BBY 26.83,-10.74) lowered its guidance due to disappointing holiday sales. The stock, which surged 236.5% in 2013, plunged 28.6% while the broader SPDR S&P Retail ETF (XRT 83.35, -0.67) lost 0.8%, widening its January decline to 5.4%.

Elsewhere, the financial sector sold off even after BB&T (BBT 38.73,-0.05), BlackRock (BLK 317.78, +5.03), Goldman Sachs (GS 175.17, -3.58),and PNC (PNC 80.93, +2.09) reported above-consensus results. Another large sector member, Citigroup (C 52.60, -2.39), fell 4.4% after missing on earnings and revenue.

Also of note, the industrial sector (-0.5%) lagged as transports retreated after rail operator CSX (CSX 27.24, -1.99) fell short of its earnings estimates. Shares of CSX tumbled 6.8% while the Dow Jones Transportation Average lost 0.6%.

The remaining three cyclical sectors—energy (+0.1%), materials (+0.1%) and technology (-0.1%)—ended little changed.

Over on the countercyclical side, all four sectors—consumer staples (+0.01%), health care (+0.2%), telecom services (+0.4%) and utilities (+0.7%)—finished ahead of the S&P 500.

Notably, biotechnology contributed to the outperformance of health case and the Nasdaq Composite as the iShares Nasdaq Biotechnology ETF (IBB 246.38, +3.24) gained 1.3%. Treasuries ended on their highs with the 10-yr yield down five basis points at 2.84%.

Trading volume was well below average as only 641 million shares (versus 200-day average of 716 million) changed hands at the NYSE floor.

Investors received several economic data points today:

* Weekly initial claims fell to 326,000 from a downwardly revised 328,000 (from 330,000) while the consensus expected the claims level to increase to 333,000. Since the end of November, the initial claims data have been plagued with biases from poor seasonal adjustments. According to the Department of Labor, those problems have now ended, and the data are giving an accurate read of current labor market trends. The continuing claims level increased to 3.030 milliom from a downwardly revised 2.856 million (from 2.865 million).  * December consumer prices increased an in-line 0.3% after a flat November reading. The move in consumer prices was primarily the result of an upward swing in energy prices. After two months of declines, energy prices rose 2.1%. The gain contributed to a 3.1% increase in gasoline prices. Food prices increased 0.1% for a second consecutive month. Excluding food and energy, core CPI increased 0.1%, down from a 0.2% increase in November. The consensus expected core CPI to increase 0.2%.  * The January NAHB Housing Market Index fell to 56 from 58. Today's'report was below the reading of 57 expected by the consensus.  * The January Philadelphia Fed Survey rose to 9.4 from 6.4 while economists polled by Briefing.com expected a reading of 8.0. 

Tomorrow, December Housing Starts and Building Permits will be released at 8:30 ET while December Industrial Production and Capacity Utilization will be reported at 9:15 ET. The day's data will be topped off with the 9:55 ET release of the preliminary University of Michigan Sentiment survey for January.

* Nasdaq +1.0% YTD  * Russell 2000 +0.9% YTD  * S&P 500 -0.1% YTD  * DJIA -1.0% YTD

Fed ‘needs to do more’ to stimulate economy

The US Federal Reserve is being complacent by planning for years of below-target inflation warned Minneapolis Fed President in a clarion call for more economic stimulus. "We’re running the risk of being content with inflation running consistently below our target. That’s inappropriate," said Narayana Kocherlakota, who votes on Fed monetary policy this year, in an interview with the Financial Times. "Right now we’re sitting with an outlook for inflation that even by 2016 . . . is not getting back to 2 per cent." Mr Kocherlakota’s remarks illustrate the growing anxiety about low global inflation that led Christine Lagarde, head of the International Monetary Fund, to warn this week that "rising risks of deflation" could be disastrous for the world’s economic recovery – calling it the "ogre that must be fought decisively". They also underscore the challenges ahead for incoming chairwoman Janet Yellen, who will take over a Federal Open Market Committee that has begun to slow its monetary easing, but must still deal with a weak economy. Prices are up just 1.5 per cent on a year ago, data on Thursday showed. The Fed targets an annual inflation rate of 2 per cent. Mr Kocherlakota said the Fed should improve its communication about how it will behave once the unemployment rate falls below its existing threshold of 6.5 per cent. He said the pledge made in December of low rates "well past" that point is not sufficient. "The problem with what’s in the statement right now is its going to become increasingly less useful once we fall below 6.5 per cent," said Mr Kocherlakota. Rather than lower the 6.5 per cent threshold, he said the Fed could bring in new guidance about how it will behave until unemployment hits 5.5 per cent, perhaps with a tighter get out clause on inflation. "We would say we intend to keep the Fed funds rate extraordinarily low in that interval between 6.5 and 5.5 per cent as long as the medium-term outlook for inflation stays sufficiently close to 2 per cent," he said. "I definitely feel it is important to be numerical about it. Words are always subject, I think, to multiple interpretations." Mr Kocherlakota is respected as one of the FOMC members with the deepest background in economics, but he is currently at the dovish extreme of the committee, so Fed policy may not reflect his ideas in the short term. Mr Kocherlakota said he would not fight the Fed’s decision to taper asset purchases by about $10bn a month. "My point is simply we need to do more. If the committee chose to do that through more asset purchases that’d be fine with me. But we have to be doing more." Another policy option would be to cut the interest that the Fed pays to banks on their reserves from the existing level of 25 basis points. Mr Kocherlakota said he would even be interested in making that return negative. "Doing something as surprising and drastic as cutting interest on excess reserves below zero – I think that would be a very powerful signal of the seriousness with which we take the 2 per cent target for inflation," he said. Mr Kocherlakota said he expects the worlds-largest economy to expand around 3 per cent in 2014, with inflation coming in at around 1.5 per cent. "I think the real challenge is on the unemployment front and forecasting that given what’s happening with labour force participation," he said. But before changing policy because of the slide in participation, "you’d want to be seeing evidence that what’s going on the employment side was putting upward pressure on inflation," Mr Kocherlakota said. Where you’d start to see that is in wage data. Even in the [Minneapolis] ninth district – which arguably has one of the healthiest labour markets in the country – we’re just not seeing evidence of significant wage pressures." The Minneapolis Fed was recently hit by turmoil that led to the departure of two top economists from its research department but Mr Kocherlakota declined to comment on personnel matters.

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BN 01/16 17:48 EU Weighs Ban on Proprietary Trading at Biggest Banks From 2018

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EU Weighs Ban on Proprietary Trading at Biggest Banks From 2018 2014-01-16 17:51:10.998 GMT

By Jim Brunsden Jan. 16 (Bloomberg) -- The largest banks in the EU would face a “narrowly” defined ban on proprietary trading from 2018 under draft plans by Michel Barnier, the EU’s financial services chief. * Regulators would also have until then to gauge whether some banks should split off their trading activities into separately capitalized units, according to the document obtained by Bloomberg News * Banks would be caught by the proprietary-trading ban if they are identified by regulators as “systemically important” at a global level or if they surpassed certain financial thresholds, according to the undated document * Bloomberg Story Link:NSN MZI9HB6K50Z3<GO>

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

To contact the reporter on this story: Greg Chang in San Francisco at +1-415-617-7076 or gchang1@bloomberg.net

To contact the editor responsible for this story: Greg Chang at +1-415-617-7076 or gchang1@bloomberg.net

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BN 01/16 17:47 *JB CAPITAL, SOCIEDAD DE VALORES MANAGING BANKIA SALE: TERMS BN 01/16 17:46 *BANKIA SELLING 10% STAKE IN NH HOTELES, TERMS SHOW

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Bankia Selling 10% Stake in NH Hoteles, Terms Show 2014-01-16 17:59:54.796 GMT

By Alexis Xydias Jan. 16 (Bloomberg) -- Bankia selling 30.8m shrs in accelerated bookbuilding, according to terms obtained by Bloomberg News. * JB Capital, Sociedad de Valores are sole bookrunners * Bankia Bolsa, Sociedad de Valores are co-bookrunners

Link to Company News:{BKIA SM <Equity> CN <GO>} Link to Company News:{NHH SM <Equity> CN <GO>}

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

To contact the reporter on this story: Alexis Xydias in London at +33-1-5365-5019 or axydias@bloomberg.net

To contact the editor responsible for this story: Cecile Vannucci at +44-20-3525-7032 or cvannucci1@bloomberg.net

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Golden Ocean Offers Up to $200m Conv Bond 2014-01-16 18:12:30.765 GMT

By John Simpson Jan. 16 (Bloomberg) -- Bonds expected to have annual coupon of 2.75%-3.375%. * Proceeds to be used to acquire vessels, partly to finance newbuilds and general corp. purposes, co. says * Final terms of bonds to be announced Jan. 17

Link to Statement:NSN MZIA1N3PWT1D <GO> Link to Company News:GOGL NO <Equity> CN <GO>

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

To contact the editor responsible for this story: John Simpson at +1-416-203-5726 or jsimpson12@bloomberg.net

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BN 01/16 17:21 *BOLSAS Y MERCADOS STAKE SALE MANAGED BY CITIGROUP: TERMS BN 01/16 17:20 *CAIXABANK SELLING 5% STAKE IN BOLSAS Y MERCADOS: TERMS BN 01/16 17:20 *CAIXABANK SELLING STAKE IN BOLSAS Y MERCADOS: TERMS

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*CAIXABANK SELLING 5% STAKE IN BOLSAS Y MERCADOS: TERMS 2014-01-16 17:21:39.640 GMT

--ANDREA SNYDER

-0- Jan/16/2014 17:21 GMT

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BN 01/16 17:07 *KKR, PERMIRA HOLD THEIR PROSIEBEN SHARES IN LAVENA HOLDING BFW 01/16 17:06 *PROSIEBEN SHARE SALE BEING MANAGED BY BAML, DEUTSCHE BANK BN 01/16 17:05 *PROSIEBEN SHARE SALE BEING MANAGED BY BAML, DEUTSCHE BANK BN 01/16 17:04 *LAVENA HOLDING SELLING 36.3M SHARES IN PROSIEBENSAT.1 BN 01/16 17:03 *LAVENA HOLDING SELLING 16.6% STAKE IN PROSIEBENSAT.1

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Lavena Holding Selling 16.6% Stake in ProSiebenSat.1 2014-01-16 17:18:03.354 GMT

By Ruth David and Andrea Snyder Jan. 16 (Bloomberg) -- Lavena Holding selling 36.3m shrs in ProSiebenSat.1, according to e-mailed statement from Bank of America. * BAML, Deutsche Bank managing shr sale * NOTE: KKR, Permira hold their Prosieben shrs in Lavena Holding * NOTE: Nov. 13, KKR, Permira Sell ProSiebenSat.1 Media Stake Worth $1.5 Billion {NSN MW70LW6JTSEQ <go>}

Link to Company News:{727032Z LN <Equity> CN <GO>} Link to Company News:{KKR US <Equity> CN <GO>} Link to Company News:{PSM GR <Equity> CN <GO>} Link to Company News:{BAC US <Equity> CN <GO>} Link to Company News:{DBK GR <Equity> CN <GO>}

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

To contact the editor responsible for this story: Andrea Snyder at +1-202-624-1831 or asnyder5@bloomberg.net