>>> IBM beats by $0.05, reports revs in-line; reaffirms FY15 EPS guidance

IBM beats by $0.05, reports revs in-line; reaffirms FY15 EPS guidance, raises FCF modestly

Reports Q2 (Jun) earnings of $3.84 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus of $3.79; revenues fell 13.4% year/year to $20.81 bln vs the $20.94 bln consensus.
Down 1% year-to-year adjusting for currency and the divested System x business (9 points and 4 points, respectively); down 13% as reported;
Strategic imperatives revenue up more than 30% adjusting for currency and the divested System x business; up more than 20% as reported;
Cloud revenue up more than 70% adjusting for currency and divested businesses; up more than 50% as reported;
For cloud delivered as a service, annual run rate of $4.5 bln compared to $2.8 bln in the second quarter of 2014;
Business analytics revenue up more than 20% adjusting for currency; up more than 10% as reported.
Adj. gross margin +20 bps to 50.9%
Co reaffirms guidance for FY15, sees EPS of $15.75-16.50, excluding non-recurring items, vs. $15.84 Capital IQ Consensus.
IBM now expects a modest increase in free cash flow, improved from its prior expectation of flat year-to-year performance.

>>> US Close Dow+0.08% S&P+0.08% NAsdaq+0.17% Russell-0.54%

Closing Market Summary: Nasdaq Sets Another Record Close

The stock market began the week on a higher, albeit sleepy, note with the S&P 500 (+0.1%) testing its record close from May. The benchmark index backed away from its session high into the close, settling a bit behind the Nasdaq Composite (+0.2%), which marked a fresh closing record high at 5,218.86.

Equity indices started the Monday session near their flat lines with the S&P 500 spending the initial hour in the red; however, influential sectors like technology (+0.5%), financials (+0.1%), and health care (+0.3%) displayed early strength, underpinning the broader market.

The S&P 500 was back in the green by 11:00 ET and slowly inched higher into the afternoon. Seven sectors ended the day with gains while energy (-1.3%), materials (-0.9%), and utilities (-0.5%) spent the session below their flat lines.

Notably, the energy sector retreated alongside crude oil, which fell 1.6% to $50.40/bbl. Meanwhile, the growth-sensitive sector struggled throughout the session, widening its July loss to 4.5%, even after Halliburton (HAL 40.75, +0.76) climbed 1.9% after reporting better than expected results.

On the upside, the technology sector held the lead throughout the session with gains among the likes of Apple (AAPL 132.07, +2.45), Facebook (FB 97.91, +2.94), and Visa (V 72.70, +1.82) overshadowing a 1.0% decline in the shares of Google (GOOGL 692.84, -6.78). Also of note, IBM (IBM 173.22, +0.71) gained 0.4% ahead of its quarterly report.

Interestingly, high-beta chipmakers could not keep pace with the technology sector, evidenced by a 0.7% decline in the PHLX Semiconductor Index. Similarly, high-beta transport stocks struggled (Dow Jones Transportation Average -0.4%) while the broader industrial sector (unch) settled just above its flat line. Lockheed Martin (LMT 205.13, +3.95) was in the news, spiking 2.0% after reporting better than expected results and announcing the acquisition of the Sikorsky helicopter unit from United Technologies (UTX 110.48, -0.26) for $9.0 billion in cash.

Elsewhere, Treasuries slipped into the red during overnight action and they settled near their overnight lows with the 10-yr yield rising two basis points to 2.37%.

Investor participation was relatively light today with 720 million shares changing hands at the NYSE floor.

Today's session was free of economic data and investors will not receive any data tomorrow either.
  • Nasdaq Composite +10.2% YTD 
  • Russell 2000 +4.6% YTD 
  • S&P 500 +3.4% YTD 
  • Dow Jones Industrial Average +1.6% YTD

(BFW) Ahold’s Stop & Shop Unit to Buy 25 A&P Stores in Greater N.Y.


BN 07/20 16:02 *AHOLD SAYS TRANSACTION EXPECTED TO BE CLOSED IN 2H 2015
BN 07/20 16:02 *AHOLD TO PAY $146M FOR STORES
BN 07/20 16:01 *AHOLD'S STOP & SHOP TO BUY 25 A&P STORES GREATER NEW YORK
BN 07/20 16:01 *AHOLD'S STOP & SHOP DIVISION TO ACQUIRE 25 A&P STORES IN
Ahold’s Stop & Shop Unit to Buy 25 A&P Stores in Greater N.Y.
2015-07-20 16:11:31.311 GMT


By Janet Freund
(Bloomberg) -- Ahold’s Stop & Shop division to acquire 25
A&P stores from Great Atlantic & Pacific Tea Co. in Greater New
York area for $146m.

* Upon completion, Stop & Shop plans to convert Waldbaums,
Pathmark, A&P stores that are part of agreement into Stop &
Shop stores
* Deal expected to close in 2H15
* NOTE: Earlier, A&P to File for Bankruptcy; Has Bidders for
120 Stores: WSJ
Link to Statement:Link

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

To contact the reporter on this story:
Janet Freund in New York at +1-212-617-8408 or
jfreund11@bloomberg.net
To contact the editors responsible for this story:
Arie Shapira at +1-212-617-1488 or
ashapira3@bloomberg.net
Janet Freund

(MS) Earnings Season Summary - 2Q 2015

While it is very early in the European results season, with just 82 companies tracked to date, below are four initial conclusions from results so far:

1) Earnings season has started in reasonable shape, very similar to 1Q.
It is far too early to draw definitive conclusions about the shape of European 2Q results, but what we have seen from one week of results has been more comforting than the recent deterioration in earnings momentum may have initially suggested. We have tracked 82 companies, or 5% of market cap. 35% of companies have beaten earnings estimates, while 29% have missed, giving a net beat of 6% of companies. On these figures, 2Q results are tracking at very similar levels to last quarter (which saw a 6% net beat). Although earnings have come in 18% below expectations on a weighted basis (given a large miss from Investor AB), given the very small sample size at present this figure is largely irrelevant. In contrast, the median stock has beaten estimates by 0.9%, which is far less susceptible to distortion from the low sample size. Weighted earnings are on track to grow 4%, with the median stock growing at 11%.

2) Revenue beats have slowed from recent quarters.
While earnings beats have largely matched 1Q, there has been a slowdown in top-line beats. The last three reporting seasons have seen, on average, 19% more companies beating revenue estimates than missing. 2Q sales results to date have on balance come in ahead of expectations, with 42% beating while 34% missed sales estimates. While still positive, the 8% net beat would mark a significant slowdown against recent quarters. We suspect this slowdown in revenue beats has been largely driven by the stabilisation in the euro given that revenue results tend to be more volatile than earnings around FX moves (due to the offsetting impact of offshore costs). After three successive quarters of euro declines (8% in 3Q14, 4% in 4Q14 and 11% in 1Q15), the stabilisation in the euro in 2Q (up 3%) has seemingly already started to be reflected in sales results.

3) Earnings estimates have been downgraded sharply ahead of results, but results and guidance provide more cause for optimism. As we discussed in European Equity Strategy: 2Q Earnings Preview - Downgrade Risks May Be Rising (13 Jul 2015), Europe saw a renewed period of consensus earnings downgrades in the run-up to earnings season, after a two-month period of net upgrades. Currently Energy and Utilities are the only two sectors seeing net upgrades, and when compared to the equivalent week during the quarter, the earnings revisions ratio
is now currently tracking at the worst pace in a year (see page 5). This has occurred despite 1Q earnings coming in ahead of expectations and guidance revisions having been largely positive during the last results season. The combination of the positive breadth of earnings results and a number of guidance upgrades (see page 6), on balance, do make us more hopeful of seeing earnings momentum improve from the current lackluster trajectory.

4) Stock reaction to results has been largely positive.
On page 9, we illustrate some initial data looking at how stocks have performed around results. Clearly we need to be cognisant of the fact that we are still very early on in results season, but in general there has been a positive skew in how stocks have reacted to results. Across every metric we track, stocks beating estimates have outperformed on the day of results by more than those that missed underperformed. The most extreme
example is for net income, where stocks missing on net income have actually, on average, outperformed the market on the day of results.

>>> TSLA - Cash burn rate is rising, Tesla may need to raise more funds - tech b


Cash burn rate is rising, Tesla may need to raise more funds - tech blog 

"In its most recent quarter, Tesla Motors reported negative free cash flow of $558 million, raising alarms from analysts that the company could run out of cash by years end. Even the announcement of a new $500 million credit facility last month has not quieted speculation that the company will need more money.

"Teslas cash burn - its stockpile has dropped from $2.7 billion to $1.5 billion in the last three quarters - has drawn gawkers on Wall Street and in the press. Most of the attention has been on its massive capital expenditures, which capture the imagination and are indeed the major driver. The company has said it plans total capital expenditures of $1.5 billion this year, including its Gigafactory battery plant in Nevada and a paint shop being touted as the worlds most advanced."

(BN) Toshiba to Restate 152 Billion Yen of Past Profits After Probe

Toshiba to Restate 152 Billion Yen of Past Profits After Probe
2015-07-20 13:02:22.952 GMT


By Pavel Alpeyev and Takashi Amano
(Bloomberg) -- Toshiba Corp. must correct 152 billion yen
($1.2 billion) of past earnings after an internal accounting
probe revealed the company overstated profits under pressure
from management.
The amount is almost triple the 55 billion yen writedown
the Tokyo-based company estimated earlier. Toshiba announced
summary findings from a third-party committee investigation
Monday and President Hisao Tanaka is scheduled to hold a
briefing the following day.
Toshiba has lost $3.6 billion in market value since May 8,
when it withdrew its earnings forecasts, canceled the year-end
dividend and widened the accounting probe.

For Related News and Information:
Toshiba Declines After Report Probe May Lead to Asset Sales (2)
Toshiba Rises as Accounting Probe Target Less-Than-Expected
Japan’s Shame Index Earns Its Title With Toshiba: Opening Line
Toshiba profitability: 6502 JP <Equity> FA PROF <GO>
Toshiba earnings surprises: 6502 JP <Equity> SURP <GO>
Top stories: TOP <GO>
Biggest technology stories: TTOP <GO>

To contact the reporters on this story:
Pavel Alpeyev in Tokyo at +81-3-3201-2137 or
palpeyev@bloomberg.net;
Takashi Amano in Tokyo at +81-3-3201-2423 or
tamano6@bloomberg.net
To contact the editors responsible for this story:
Robert Fenner at +61-3-9228-8705 or
rfenner@bloomberg.net
Suresh Seshadri, Dave McCombs

>>> US Gapping Up

Gapping up
In reaction to strong earnings/guidance: HZNP +7.9%, EXAS +3.2%, HAL +3.2%, MS +3.1%, LMT +1.4%, HAS +1%

M&A news: VSLR +42.9% (SunEdison (SUNE) to acquire Vivint Solar for ~$2.2 bln; under the merger agreement, Vivint Solar stockholders will receive $16.50/share), UTX +1.1% (Lockheed Martin confirms it will acquire Sikorsky Aircraft from UTX for $9.0 billion)

Other news: EXEL +33% (announces positive top-line results from METEOR, the Phase 3 pivotal trial of Cabozantinib vs. Everolimus in patients with metastatic renal cell carcinoma), DCTH +23% (confirms receipt of Orphan Drug Designation From FDA For Melphalan to treat Cholangiocarcinoma), HCLP +10.3% (Barron's profiles positive view on the MLP space), AMRS +8.8% (cont strength), FRO +7.5% (likely due to clearer outlook for Greece), VLTC +4.4% (cont strength), DRYS +3.7% (likely due to clearer outlook for Greece), NBG +3.5% (Greek banks open up today), GPRO +3.3% (cont strength), GRFS +2.7% (announces a $700 mln contract through 2026 with Abbott (ABT) for the production of antigens), NVO +1.3% (still checking), MT +1.2% (positive Barrons article), CLF +1% (may be in tandem with MT), YHOO +0.8% (announces the initial filing with the SEC for the planned spin-off of its Alibaba (BABA) stake)

Analyst comments: CLVS +4.1% (added to Conviction Buy List at Goldman), GRNT +3.8% (initiated with a Buy at UBS), EMES +3.1% (upgraded to Neutral at Robert W. Baird), CLLS +3.1% (initiated with a Buy at BofA/Merrill), AMZN +1.7% (upgraded to Outperform at Cowen), STNG +1.6% (upgraded to Overweight from Neutral at JP Morgan), UPL +1.6% (upgraded to Buy from Accumulate at KLR Group), TXN +1.1% (upgraded to Buy from Neutral at UBS), SLB +1% (upgraded to Outperform from Market Perform at Wells Fargo)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: CALM -10.9%, NEWP -4.8%, CNX -3%

Select metals/mining stocks trading lower: AU -6.4%, GFI -6.1%, SLW -4.5%, NEM -4.1%, EGO -3.8%, GG -3.7%, GDX -3.5%, ABX -3.5%, AEM -3.4%, RGLD -3.3%, AUY -3.3%, GOLD -3.2%, AG -3.1%, SSRI -3%, GLD -1.8%, FCX -1.6%, SLV -0.6%


Other news: CRMD -11.8% (announced an update on strategic transaction process; To seek CEO successor, expects to initiate its first Phase 3 study for its lead product Neutrolin in Q4), MSB -5.6% (decreases distribution to $0.04 form $0.32 prior), FIT -1.5% (cont vol post IPO)

Analyst comments: BRCD -2.5% (downgraded to Sell from Neutral at UBS), YELP -1.9% (downgraded to Equal Weight at Barclays ), Z -1.7% (downgraded to Underweight at Barclays), PUK -1% (downgraded to Hold from Buy at Jefferies), FOXA -0.5% (downgraded to Neutral from Outperform at Macquarie)