FT : Twitter losses widen ahead of IPO

Twitter losses widen ahead of IPO

Twitter revealed its losses had widened in the third quarter in an updated filing for its $1bn initial public offering, which it said would take place on the New York Stock Exchange. The decision to choose NYSE dealt a blow to rival Nasdaq, which had hoped to claim the social media company listing as it recovers from its botched debut of Facebook last year. It will make Twitter the largest consumer internet IPO to take place on NYSE, which has steadily grown its share of technology listings and now challenges Nasdaq in attracting the business of start-ups. Twitter also provided updated numbers for the first nine months of the year. It said total revenues rose 106 per cent to $422.2m, from the same period the previous year. But net losses also widened significantly to $133.8m from $70.7m a year earlier. The number of monthly users rose from 218m in June to 232m in September, for a rise of 39 per cent year-on-year. The portion of revenue that Twitter generated from mobile devices rose to 70 per cent in the third quarter, from 65 per cent in the previous quarter. For a company dependent on internet advertising such as Twitter, mobile presents opportunities as a faster-growing platform than desktop PCs, and challenges, in the limit of advertisers’ spending and the number of ads that can be shown. Some 76 per cent of Twitter’s users accessed the service from a smartphone or tablet in the most recent quarter, up from 69 per cent a year ago. Twitter was still hiring at a rapid clip, with an 87 per cent rise in staff over the year to 2,300 full-time employees. Certain changes to Twitter’s product, which over the period have included a new way to display conversations between a group of people that a user follows, caused a 1 per cent decrease in the number of times a user loaded their feed during the quarter. This is an important detail as Twitter limits the amount of advertising it shows in a single "timeline view". However, the change did not affect growth in Twitter’s advertising yields. Advertising revenue per timeline view, the metric which the company says it watches most closely as an indicator of business performance, increased in the US to $2.58 in the third quarter from $2.17 in the previous quarter, and rose from 30c to 36c in the rest of the world, where Twitter’s ad business is less developed. The decision by Twitter to list on NYSE came in spite of an appearance by Nasdaq executives including chief executive Robert Greifeld at the company’s San Francisco offices earlier this month, fuelling speculation that the exchange was making a last-ditch effort to win the offering. NYSE said in a statement: "This is a decisive win for the NYSE. We are grateful for Twitter’s confidence in our platform and look forward to partnering with them." Nasdaq said it wished Twitter well as it pursued its IPO. Rich Repetto, exchange analyst at Sandler O’Neill, said: "This event is more about branding than revenue, since that is minimal. But this is a high-profile technology name." Through the first dotcom boom Nasdaq was the dominant venue for most technology and internet listings but NYSE has closed that gap in recent years, gaining the business of LinkedIn, Yelp and Pandora. The bungled Facebook offering on Nasdaq last May and more recent mishaps have led some investors to question the exchange’s technology-savvy venue Twitter Rich ListThe latest Twitter filing details the holdings of Twitter’s largest shareholders. Four investors stand to make more than $1bn from their Twitter shares, based on a valuation of between $12bn-$15bn, but only one, Evan Williams, is a co-founder.The largest shareholder is not one of the three founders but entities affiliated with Rivzi Traverse, an investment group with a 17.5 per cent stake which could be worth between $2.1bn to $2.7bn. Suhail Rivzi, the head of the group, is also an investor in Twitter co-founder Jack Dorsey’s other company, Square, and Flipboard, the news reader application. JPMorgan is the next largest outside shareholder in Twitter, holding more than 10 per cent of the messaging platform through various entities, a stake worth between $1.2bn-$1.5bn.The venture capital firms which backed Twitter when it was a start-up are the next largest shareholders, with Spark Capital owning a stake which could be worth $820m-$1bn and Benchmark Capital holding shares worth an estimated $790m-$990m.Its executive officers and directors own more than a quarter of Twitter, with stakes which could be worth a total of $3.1bn-$3.8bn on listing.

(JPM) China Won’t Have Financial Crisis in Next 3-5 Years

China Won’t Have Financial Crisis in Next 3-5 Years: JPMorgan

China won’t have a banking or financial crisis in the next three or five years as its aggregate debt as a percentage of GDP isn’t very high, most of the debt is domestic and the nation has a large trade surplus, Zhu Haibin, chief China economist at JPMorgan, says at a conference in Hangzhou * Still, if credit growth expands too fast, China will be in the danger zone in coming years

>>>US After Hours

After Hours Summary: MLNK +7.2%, YHOO +0.8%, CSX +0.7%, WTSL -8.9%, LBY -4.1%, INTC -2.1% following earnings/guidance After Hours Gainers: Companies trading higher in after hours in reaction to earnings: - MLNK +7.2%, - YHOO +0.8%, - CSX +0.7%, - PNFP +0.1%

Companies trading higher in after hours in reaction to news: - OXGN +17.8% (announced it will present preclinical data demonstrating antitumor activity of ZYBRESTAT in pancreatic neuroendocrine tumor model), - RIG +0.9% (announced 5-year contract for newbuild ultra-deepwater drillship; contract is expected to commence in Q4 of 2016, contributing an estimated revenue backlog of ~$1.1 billion), - GPI +0.8% (Eminence Capital disclosed 5.4% passive stake), - MNTG +0.8% (co responded to unsolicited non-binding proposal from Jacobs Entertainment (JEC); Board plans to evaluate the proposal and additional information that the Board has requested from JEC)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: - WTSL -8.9%, - JOEZ -7.6%, - LBY -4.1%, - GY -3.8%, - LLTC -3.2%, - INTC -2.1%, - OCZ -0.8%

Companies trading lower in after hours in reaction to news: - GDP -2.0% (announced increased 2013 and preliminary 2014 capital budget, including accelerated TMS drilling program), - NDAQ -1.0% (Twitter confirmed it will list on the NYSE)

FT : Fund industry’s ‘biggest beast’ on the prowl

Fund industry’s ‘biggest beast’ on the prowl

Neil Woodford has long been recognised as one of the City’s leading fund managers, with a large following of loyal investors. The 53-year-old has built up a strong reputation within the UK fund management industry on the back of years of successful stockpicking and shrewd – if occasionally contrarian – investment decisions. Mr Woodford began managing Invesco Perpetual’s High Income fund in October 1988, and since then has delivered total returns of 2,191.95 per cent. This would have seen a £1,000 investment soar to £22,919.51 today. He is lauded by peers and industry experts for avoiding the TMT boom and bust of the late 1990s, and for staying clear of the banking sector in the run-up to the collapse of Lehman Brothers and the financial crisis. He has tended to favour defensive, cash-generative sectors such as tobacco and pharmaceuticals instead. "Neil has been on the right side of two of the biggest macro calls of my financial services career, which to me just shows how he stands out," says Darius McDermott, managing director at Chelsea Financial Services, a fund research group. Mr Woodford is known for picking stocks for long-term reasons rather than for short-term gains. Low portfolio turnover and long holding periods were among the reasons that Mr Woodford was last year singled out in the government-commissioned Kay report on the UK equity markets as the ideal fund manager. As his reputation grew within the industry, so did the amount of savers’ money entrusted to him. He is the biggest individual manager of assets in the UK fund management industry, with about £33bn of assets spread across open-ended funds and investment trusts. Hundreds of thousands of private investors hold money in Mr Woodford’s funds through their pensions, Isas and other accounts. Adrian Lowcock, investment manager at Hargreaves Lansdown, says: "He has a unique ability to see through short-term market momentum to identify where the long-term opportunities lie." As head of UK equities at Invesco Perpetual, Mr Woodford made headlines over his defiant stand against the planned tie-up last year between BAE Systems, the UK defence company and EADS, Europe’s biggest civil aerospace group. Advisers say recent performance of Mr Woodford’s flagship funds has been good but not outstanding. His High Income funds has returned about 75 per cent over the past five years, according to Lipper, the data provider, only just beating returns from the wider UK equity income sector. Jason Hollands, of adviser Bestinvest, says: "The news that Neil Woodford, the biggest beast in the UK equity income sector, is to leave Invesco Perpetual sets the seal on 2013 being a year of major moves among leading fund managers." In June, Anthony Bolton, one of the UK’s best-known and most successful fund managers, announced he was to retire from running the Fidelity China Special Situations investment trust, admitting it had proved more difficult to make money from China than he had anticipated. "We have seen the retirements announced for Jupiter’s Tony Nutt and Fidelity’s Anthony Bolton, the defection of Richard Buxton from Schroders to Old Mutual and the exit of Fidelity’s Sanjeev Shah from managing money," says Mr Hollands. Mr Woodford’s departure will be a significant blow for Invesco Perpetual, which is likely to see billions of pounds move to Mr Woodford when he opens his new venture in April next year. Invesco said his responsibilities would shift to Mark Barnett, a longstanding member of Invesco’s UK equities team. However, this is not likely to appease investors, according to experts, who noted that about £1.5bn followed Richard Buxton out of Schroders’ UK Alpha fund when he left. Chelsea Financial Services immediately downgraded the Invesco Perpetual High Income and Income fund to a hold following the news. It said while there was no urgent need for investors to switch out of these funds, it advised against investing any new money. The price of Edinburgh Investment Trust, which is quoted on the stock market, fell about 5 per cent following the news. "The two equity income funds have been the core of many investors’ portfolios for years now and it will be a huge blow to thousands of investors that Neil is leaving. I think you will see a lot of investors follow Neil when he launches his new venture," says Mr McDermott.

FT : BMW family gave €690,000 to Merkel party

BMW family gave €690,000 to Merkel party

Angela Merkel’s political party received three donations totalling €690,000 from the family that in effect controls BMW just as the German chancellor was lobbying fellow EU leaders to block tougher exhaust emission standards for big cars, it emerged on Tuesday. Details of the contributions – the largest private gifts to any German political party in election year – were published on the Bundestag website just a day after the German government successfully delayed a decision on the new standards at a meeting of EU environment ministers. The German parliament revealed that Johanna Quandt, widow of Herbert Quandt, who transformed BMW into one of the country’s most successful carmakers, and her children Stefan and Susanne, each gave the Christian Democratic Union €230,000 on October 9. The three jointly own 46.7 per cent of shares in the Munich-based company. They have been supporters of the party for many years, according to a statement from CDU headquarters in Berlin. Ms Quandt and her children donated €450,000 immediately after the previous election campaign in 2009. "The donations are not connected with any single political decision," the statement said. The same message was repeated by a spokesman for the publicity-shy family: "The donations are in no way connected to industrial policies," he said. "They are not involved in political talks about emission regulations or anything like that." He said the donations were made after the election was over to ensure they did not become part of the election campaign. But LobbyControl, an organisation campaigning for greater transparency in political financing in Germany, said the timing of the gifts was "extremely problematic". Quite apart from choosing to pay the money after the campaign was over, the choice of timing was "highly explosive" because of its proximity to the latest delay in agreement on the new EU standards for CO2 in car exhausts, said Christina Deckwirth, Berlin representative of the organisation. Ms Merkel personally intervened to delay the Brussels decision, which would benefit small car manufacturers from countries such as France and Italy, but penalise the bigger cars in which Germany specialises. She sent her chief of staff, Roland Pofalla, to Paris last week for high-level talks, and contacted many of the other EU leaders, including those with big industries supplying parts to the German manufacturers. She was seeking a solution that would both protect the environment and jobs in the motor industry, and did not suggest trade-offs with other countries that would mix the emissions issue with other unrelated questions such as banking regulation, as suggested in some UK reports, a senior official said. In a front-page report on Tuesday, the business newspaper Handelsblatt dubbed her the "car chancellor", underlining her frequent and intensive contacts with senior motor industry executives. It reported that she had invited various senior managers more than 65 times to the chancellor’s office during the last four-year parliamentary term, not simply for big events, but also for one-on-one meetings. The German car industry is a mainstay of the German economy, accounting for around 715,000 employees and 600 manufacturers and suppliers, according to the VDA car industry association. One in every seven German university graduates starts a career in the industry. Ensuring its car companies flourish is therefore of high importance for any government in Berlin. The issue of political financing remains a bone of contention in Germany, with Transparency International, the anti-corruption campaign, calling for a ceiling of €50,000 a year for any personal or company donation. Christian Humborg, executive director of TI in Germany, said the Berlin government was lagging behind standards proposed by the Council of Europe, although it now required publication of details of donations over €50,000 within six days. He said that Joachim Gauck, state president, should convene a new party finance commission to regulate donations more strictly.

FT : US rating put on negative watch on default fears

US rating put on negative watch on default fears

Fitch Ratings on Tuesday placed the triple A credit rating of the US on negative watch, as efforts to strike a deal to end the impasse in Washington faltered in Congress. As the chances of the US missing the deadline to raise its $16.7tn borrowing limit increased, top House Republicans were scrambling to rally their conservative rank-and-file around a plan to raise the debt ceiling until February and reopen the government until mid-December. The move came as America faced a Thursday deadline when it will not be able to borrow more money to pay all its bills. The decision by House Republicans to pursue their own legislation caught the Senate off guard, and prompted the suspension of discussions on a compromise in the upper chamber between Republicans and Democrats. Earlier in the day, John Boehner, Republican House speaker, emerged from a closed-door meeting with his party members without any concrete plan to solve the crisis. "There are a lot of opinions about what direction to go – there have been no decisions about what exactly we will do but we’re going to continue to work with our members on both sides of the aisle," Mr Boehner told reporters. Later in the afternoon, Mr Boehner and House leaders finally converged on a bill – though it was still unclear whether it would have the votes to pass. If it misses the October 17 deadline to raise the debt ceiling, the Treasury would be left with $30bn in cash to pay its bills, and would have to manage its finances as best it could with income revenue. At some point in the next few weeks, it could potentially default on its debt. One-month Treasury bills maturing on October 31 shot up 21 basis points to a new debt ceiling peak of 53bps late on Tuesday, as investors grew alarmed by the lack of a deal so close to the Treasury’s self-imposed deadline of Thursday. "We are seeing a lack of liquidity in the bill market and that is exacerbating the move in yields," said John Brady, senior vice-president at RJ O’Brien. "People are stepping away from the market." The rise in T-bills sparked a rebound in gold with the precious metal up 0.7 per cent to $1,281 an ounce, after it had touched a low of $1,251. Major banks have been escalating their preparations for the US missing the deadline, with Citigroup outlining contingency measures with its results on Tuesday. John Gerspach, Citi’s chief financial officer, said the bank no longer held US Treasuries maturing before November 1, and had minimal exposure to US debt maturing before November 16. "Hope is not a plan, therefore we’ve been preparing for different contingencies over the recent weeks. As with any potential crisis that means managing our risk prudently and ensuring that we’ve got immediately liquidity on hand," he said. The bill floated by Republican leaders closely resembled compromise legislation being drafted in the Senate, with some modifications. It would reopen government agencies on December 15, instead of mid January. As was the case in the Senate, it would raise the US debt limit until February 7, meaning that the sides were not too far apart in principle. On Tuesday afternoon, House Republicans decided to strip out language delaying a medical devices tax that pays for the 2010 health reform bill. They are also not seeking tougher income verification for recipients of subsidies under "Obamacare". But they are demanding the end to federal subsidies for the healthcare coverage of members of Congress and their staff. In addition, the House bill would strip the Treasury department’s authority to use "extraordinary measures" to manage its cash and fend off default, which the White House and Democrats are resisting. The White House called the initial plan floated in the House "a partisan attempt to appease a small group of Tea Party Republicans who forced the government shutdown in the first place", according to Amy Brundage, a spokeswoman for President Barack Obama. "Democrats and Republicans in the Senate have been working in a bipartisan, good-faith effort to end the manufactured crises that have already harmed American families and business owners. With only a couple days remaining until the United States exhausts its borrowing authority, it’s time for the House to do the same," Ms Brundage added.

>>> Intel sees 4Q rev. $13.2b-$14.2b,est. $13.99b.

Intel sees 4Q rev. $13.2b-$14.2b,est. $13.99b. * Sees 4Q gross margin 61%, plus or minus a couple of percentage points, est. 60.9% * 3Q GAAP EPS 58c, est. 54c * 3Q rev. $13.48b, est. $13.45b * 3Q gross margin 62.4%, est. 60.9% * Shrs up 2.2% post-market * Sees yr capex $10.8b, plus or minus $300m, prev. saw $11b, plus or minus $500m * Call 5pm 877-303-7005 pw 59585116 * See preview: Some Analysts See Risk to 4Q Forecasts

>>>US Close Dow-0,87% S&P-0,71% Nasdaq-0,56%

Closing Market Summary: Stocks Slump as Budget Deal Remains Elusive

The S&P 500 settled lower by 0.7% after contradicting headlines from Washington fostered volatile price action throughout the session. Equity indices displayed modest losses at the open, but were able to turn positive by late afternoon. The rebound was predicated on optimism associated with budget talks in Washington after Senate Majority Leader Harry Reid was quoted as saying ‘tremendous progress' had been made. However, contradicting headlines from House Republicans began pouring in during the early afternoon, and House Speaker John Boehner called the Senate proposal a ‘hand grenade' during a closed-door meeting with Republican lawmakers. To counter this ‘hand grenade,' the House is expected to vote on its own bill later today. Selling pressure intensified during the final 90 minutes of the session amid headlines indicating the Senate has halted its negotiations pending the outcome of the House vote. California Senator Dianne Feinstein weighed in on the situation, saying budget talks have ‘all fallen apart.'

All ten sectors ended in the red with countercyclical consumer staples (-0.9%) and utilities (-1.4%) leading to the downside. Among staple stocks, Coca-Cola (KO 37.66, -0.25) lost 0.7% following its in-line earnings report.

Elsewhere, the industrial sector slid 0.9% as the underperformance of defense contractors outweighed the relative strength of transports. FLIR (FLIR 28.59,-4.58) tumbled 13.8% after announcing restructuring plans and issuing below-consensus guidance while the broader PHLX Defense Index slumped 2.3%. Meanwhile, the Dow Jones Transportation Average ended with a modest loss of 0.2%, drawing strength from the 4.1% gain in the shares of FedEx (FDX 120.08, +4.71) after the company authorized a 32 million share buyback program.

Also of note, the financial sector (-0.8%) underperformed the broader market after Citigroup (C 48.86, -0.74) reported a 7.8% year-over-year decline in revenue. With regard to commodities, crude oil fell 1.3% to $101.08 per barrel while gold futures added 0.3% to $1281.00 per troy ounce. Treasuries ended near their lows with the 10-yr yield up four basis points at 2.73%. More notably, short-term debt was pressured with traders dumping the paper amid the increased probability of a default. The 4-week yield ended higher by 6.5 basis points at 0.317% while both the 3-month (+3 bps to 0.09%) and 6-month (+5 bps to 0.124%) bills were the subject of some selling.

Trading volume was below average as 690 million shares changed hands on the floor of the New York Stock Exchange. On the economic front, today's data pointed to a bit of a slowdown in manufacturing growth in the New York Fed region as The Empire Manufacturing Survey for October registered a reading of 1.5. This was down from the prior month's reading of 6.3 while economists polled by had expected that the survey would slip to 4.5. As a result of today's decline, the S&P 500 trimmed its year-to-date gain to 19.1%.