>>> Carl Icahn sends letter to CEO; calls on the company to be split; discloses

Carl Icahn sends letter to CEO; calls on the company to be split; discloses large stake - Icahn: 

AIG should immediately:Pursue tax free separations of both its life and mortgage insurance subsidiaries to create three independent public companies. Each would be small enough to mitigate and avert the Systemically Important Financial Institution (SIFI) designation.

Embark on a much needed cost control program to close the gap with peers.

FT : GE and Alstom emerge as frontrunners for India rail contracts

GE and Alstom emerge as frontrunners for India rail contracts

GE Transportation, a division of General Electric of the US, and Alstom, the French engineering company, are frontrunners to win multibillion-dollar contracts to build and sell train locomotives as part of India’s ambitious railway modernisation programme, officials familiar with the bidding process said.
The two companies have been selected from a shortlist of seven — which included Bombardier, Siemens and Electro-Motive Diesel — to supply at least 1,800 diesel and electric locomotives over 11 years from two factories that are due to be built in the Indian state of Bihar, the officials said.

They declined to give financial details of the bids, which remain subject to final confirmation. Nevertheless, executives at Indian Railways, the state-owned rail authority, estimated that the total investment needed to build the factories could be as much as $3.4bn for an electric locomotive plant and $3.1bn for a diesel locomotive plant.
The initiative to lure multinational engineering companies to India to make advanced locomotives is part of a broader initiative to modernise the country’s congested and creaking railway system.
“This is the most ambitious rail modernisation project in decades,” said Suresh Prabhu, India’s minister of railways, in an interview. “These [manufacturing] projects will bring the best rail technology to India and show that our ‘make in India’ programme is not a dream,” he added, referring to a national policy to boost manufacturing investment.
The two factories are due to be built as public private partnerships, with Indian Railways contributing land and some facilities for a 26 per cent share in each plant; GE Transportation and Alstom will take the remaining 74 per cent stakes. Indian Railways is set to buy locomotives produced at each of the plants.

The diesel locomotive factory, likely to be operated by GE Transportation, is expected to supply 1,000 locomotives, Indian Railways executives said. The electric locomotive plant, expected to be run by Alstom, is to manufacture 800 train engines.
In addition to the plan to manufacture advanced locomotives, India also intends to commercialise roughly 400 of its 8,000 or so railway stations, selling long-term leases to companies to operate shopping malls, restaurants, offices and other businesses on station premises, Mr Prabhu said.
“About 27m people travel by train every day so you have a lot of people passing through the station ready to buy things,” he said. “In Japan, more than 30 per cent of the income of railways comes from the non-rail business, but in India this is only 2 per cent at the moment.”
Mr Prabhu also reiterated that the “dedicated freight corridor” project, under which India plans to build two new rail lines for freight from Delhi to Mumbai and Delhi to Kolkata at a total cost of $12.5bn, would be finished by 2019.

>>> Gapping down

Gapping down
In reaction to disappointing earnings/guidance: AKAM -18.6%, TWTR -10.6%, GNMK -9.6%, KKR -7.9%, (announces $500 mln buyback; sets quarterly distribution at $0.16/unit), BGFV -5.4%, LYG -4.4%, BKFS -3.8%, SMED -3%, BBOX -2.6%, STO -2.6%, HSY -2.6%, RUBI -2.5%, CMC -2.3%, KTCC -1.8%, VRSK -1.7%, (is exploring strategic alternatives for its healthcare data analytics business, Verisk Health ), WBA -1.7%, SNCR -1.3%, ESRX -1.2%, CARB -1.2%, GILD -1.1%, GRMN -1.1%, LMAT -1%, SKT -0.8%

M&A news: RAD -8.1% (after 40%+ move higher yesterday on WSJ report that Walgreens Boot Alliance is near a deal to acquire Rite Aid; WBA/RAD confirmed news after the close), WBA -1.8% (jumped 6% yesterday on WSJ report that Walgreens Boot Alliance is near a deal to acquire Rite Aid; WBA/RAD confirmed news after the close)

Other news: MCUR -66.7% ( Announces Results for Phase III Clinical Trial of CureXcell(R) in Diabetic Foot Ulcers; Trial did did not meet its primary endpoint, did not meet the secondary endpoints), ICPT -11% (announces results of Phase 2 Trial of OCA in NASH patients in Japan), FRED -3.7% (late boost following analyst comments suggesting potential takeover), HCLP -3.1% (cont weakness), BA -1.6% (loss of Long Range Strike-Bomber contract to Northrop Grumman), LMT -0.7% (loss of Long Range Strike-Bomber contract to Northrop Grumman)

Analyst comments: YELP -3.9% (initiated with a Sell at ROTH Capital; tgt $17.50), CMI -2% (downgraded to Underweight from Equal-Weight at Morgan Stanley), MRVL -2% (downgraded to Sell from Neutral at Citigroup), HIG -0.5% (downgraded to Neutral from Overweight at Atlantic Equities
)

>>> Smartphone Shipments Reach Second Highest Level for a Single Quarter as Worl

Smartphone Shipments Reach Second Highest Level for a Single Quarter as Worldwide Volumes Reach 355.2 Million in the Third Quarter - IDC 

Vendors shipped a total of 355.2 million smartphones worldwide in the third quarter of 2015 (3Q15), up 6.8% from the 332.6 million units in 3Q14, marking the second highest quarter of shipments on record. The 3Q15 shipments were slightly below IDC's previous forecast of 363.8 million units, largely due to slightly lower than expected iPhone shipments, as well as Android flagship introductions from several top-tier OEMs with price points outside the consumer sweet spot.

Samsung once again remained the overall leader in the worldwide smartphone market with 84.5 million units shipped, up 6.1% from last year. Samsung remained focused on premium handsets with the launch of two new flagship devices, the Galaxy S6 edge + and Note5. Beating Apple to the punch with an untraditional August launch for the Note series (and new S6 edge +), Samsung saw stronger than normal September shipments as the new iPhone was yet to be released. Outside of the key flagship models, sub-$200 devices (Galaxy Core/Grand Prime, J-Series) drove a majority of shipments in many key emerging markets.

Apple's newest iPhones helped drive third quarter shipments of 48.0 million units, up 22.2% from the 39.3 million units last year. With a record-breaking 13 million iPhone 6S and 6S Plus units shipped during launch week, the two new models continue to capture upgraders and Android converts alike in many key markets such as China and the United States. The arrival of the new "S" models brings a new Rose gold color to the table along with Force Touch, improved camera, and a faster processor. Older iPhone 5S, 6, and 6 Plus models also sold vigorously during the quarter thanks to recent price cuts across all models. Apple's recently launched upgrade plan should also help drive handset upgrades in developed markets where smartphone saturation continues to increase.

Huawei shipped 26.5 million units, up an impressive 60.9% from last year. Huawei once again focused its efforts on the mid-to-high range as nearly a third of the quarterly shipments were in this price range. Devices like the Honor 6 Plus and Ascend P8 helped grow the mid-to-high range 25% from last year according to Huawei. Despite the rapid growth in China and Europe, Huawei will need to focus on the United States where its presence remains relatively low. The recent launch of the new premium Nexus 6P device could signal that Huawei is finally ready to seriously compete in the U.S.

Lenovo continued to fight its way to the top of the smartphone market with help from its acquired assets in Motorola. In the third quarter, combined shipments of Lenovo and Motorola-branded smartphones reached 18.8 million, which was up 11.1% from a year ago. Lenovo-branded smartphones have predominantly been a China play, although recently growth has taken off in Middle East & Africa, as well as Central & Eastern Europe. Motorola's strong markets continue to be North America and Latin America, where its variants of Moto X, G, and E hit on attractive price tiers.

Xiaomi shipped 18.3 million smartphones in 3Q15, bringing its 2015 total to 52.1 million. While the company continues its pursuit of branching off into Southeast Asia, India, and Brazil, China still remains the sweet spot for the company. Within China, Xiaomi launched the Redmi Note 2, Redmi 2A+, as well as the Mi 4c in the third quarter. The Redmi Note 2 was the most popular model among Chinese consumers and drove volumes through Xiaomi's retail location known as the Mi Home

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: VCRA +22.2%, CLD +18.1%, SSE +14.2%, INFN +13.4%, PEGA +9.4%, SLCA +9.2%, SONS +6.4%, WNC +6.3%, CSS +6%, BBSI +5.2%, AAC +5%, WCIC +4.5%, LVLT +4.3%, TRU +4.2%, BSX +4%, BLDP +4%, MDLZ +4%, ZLTQ +3.9%, CKH +3.8%, IPHI +3.6%, RGC +3.1%, VDSI +3.1%, GNRC +3.1%, EXAC +2.9%, NOV+2.9%, BXMT +2.8%, LFUS +2.8%, NSC +2.8%, NVMI +2.6%, RSYS +2.2%, RRTS +2.2%, ATRC +2.1%, GD +2.1%, HLT +1.9%, VLO +1.9%, VLO +1.7%, ETH +1.5%, AAPL +1.4%, NMIH +1.3%, CNI +1.1%, (will purchase common shares under specific share repurchase plans during the term of its Normal Course Issuer Bid for up to $33 mln common shares )

M&A news: CBI +14% (to sell all outstanding equity interests in its nuclear construction business to Westinghouse Electric Company LLC for $229 mln; co will incur $1.0-1.2 bln charge; provided mixed Q3 guidance), DMND +5.8% (to be acquired by Snyder's-Lance (LNCE) for ~$1.91 bln), BT +3.2% (The Competition and Markets Authority has provisionally cleared BT's anticipated acquisition of EE Limited), BUD +1.5% (SABMiller plc and Anheuser-Busch InBev (BUD) announce an extension of deadline for BUD to make a formal offer from today until November 4)

Select metals/mining stocks trading higher: AG +3.6%, SAND +2.2%, NEM +1.8%, GFI +1.4%, GDX +1.4%, ABX +1.3%, CLF +1.1%

Other news: WGBS +6.3% (receives a notice of patent grant and allowance for methods and systems utilizing multi-well chips), NOC +5.2% ( awarded Air Force contract for the Long Range Strike Bomber, also reported earnings), ABCB +4% (to replace MKTX in the S&P SmallCap 600), CORE +2.9% (signed a five year supply agreement to service ~900 7-Eleven stores in three western regions), RRTS +2.2% (following 40%+ move lower yesterday), ASML +2.2% (AAPL supplier), SWKS +2.1% (AAPL supplier), ARMH +1.9% (AAPL supplier), GHL +1.8% (CEO disclosed purchase of 202.5K shares, worth total of $5.04 mln ), HUN +1.2% (authorizes an accelerated share repurchase agreement to repurchase $100 mln of its common stock), GPRO +1.2% (slightly higher pre-mkt following yesterday's decline)

Analyst comments: BABA +1.1% (target raised to $95 at RBC Capital Mkts), AIXG +0.5% (upgraded to Hold at Kepler)

>>> US Early premarket gappers

Early premarket gappers

Gapping up: VCRA +22.2%, CLD +18.1%, SSE +14.2%, INFN +13.1%, PEGA +9.4%, CBI +7.8%,SONS +6.4%, WNC +6.3%, NOC +5.9%, BBSI +5.2%, AAC +5%, WCIC +4.5%, TRU +4.2%, ABCB+4%, BSX +4%, BLDP +4%, CKH +3.8%, ATML +3.2%, RGC +3.1%, CORE +2.9%, EXAC +2.9%,BXMT +2.8%, HOT +2.8%, VDSI +2.7%, ZLTQ +2.6%, NVMI +2.6%, VLO +2.4%, RRTS +2.2%, RSYS+2.2%, RRTS +2.2%, ATRC +2.1%, NCR +1.9%, GHL +1.8%, IPHI +1.8%, SKYW +1.6%, AAPL +1.6%,WBA +1.4%, NMIH +1.3%, CNI +1.1%

Gapping down: MCUR -71.6%, AKAM -18.5%, TWTR -10.5%, GNMK -9.6%, RAD -7.8%, KKR -6%,BGFV -5.4%, AFL -4.7%, BKFS -3.8%, FRED -3.7%, STO -3.1%, SMED -3%, BBOX -2.6%, RUBI-2.5%, NBR -2.2%, VRSK -1.7%, BA -1.6%, XOMA -1.5%, GILD -1.3%, LMT -1.2%, CARB -1.2%,LMAT -1%, GRMN -0.9%, NUVA -0.7%, FSP -0.7%, TRMK -0.7%

>>> Arrow Elec misses by $0.06, reports revs in-line; guides Q4 EPS below consen

Arrow Elec misses by $0.06, reports revs in-line; guides Q4 EPS below consensus, revs below consensus

  • Reports Q3 (Sep) earnings of $1.40 per share, excluding non-recurring items, $0.06 worse than the Capital IQ Consensus of $1.46; revenues rose 1.5% year/year to $5.7 bln vs the $5.75 bln Capital IQ Consensus.
  • Co issues downside guidance for Q4, sees EPS of $1.75-1.91 vs. $2.02 Capital IQ Consensus Estimate; sees Q4 revs of $6.15-6.55 bln vs. $6.67 bln Capital IQ Consensus Estimate.
  • "Both our global components and enterprise computing solutions businesses continued to experience strong demand in Europe, while our Americas businesses broadly performed as we had anticipated. In Asia, the economic deterioration was worse than we expected..."

>>> Mondelez Int'l beats by $0.01, reports revs in-line; reaffirms guidance; cre

Mondelez Int'l beats by $0.01, reports revs in-line; reaffirms guidance; creates Chief Commercial and Growth roles

  • Reports Q3 (Sep) earnings of $0.42 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.41; revenues fell 17.8% year/year to $6.85 bln vs the $6.88 bln Capital IQ Consensus.
    • Organic rev +3.7%, +17.4% in LatAm, +3.1% in Asia Pac, +6.3% EMEA, -1.6% Eu, +0.6% N. Am.
  • Reaffirms FY15: Double digit constant FX adj. EPS growth, Organic net rev +3%, adj. operating margin ~14%
  • Reaffirms FY16 adj. operating income margin 15-16%.
  • Mondelez International also announced that it has named Mark Clouse, 47, to the newly created position of Chief Commercial Officer (CCO), and Tim Cofer, 46, as Chief Growth Officer (CGO), as the company continues to sharpen its focus on cost savings, growth and commercial execution.

(Exane) Luxury - dwg of Swatch & LVMH- note attached

EU Luxury Stocks Don’t Price in Risk of Recession


The prospect of more subdued global GDP growth is the “big elephant in the room” that may affect luxury growth in 2016, Exane says in note.

  • Global GDP growth consensus of 3.4% suggests luxury industry would expand 5% in 2016; however, GDP growth consensus falling
  • FX may become “trickier” for European luxury cos.
  • Sees more limited retail space growth possibilities and softer price inflation for sector; luxury cos. need to adapt to “new normal” growth of 3%-5% vs recent 7%-8%; this requires more cash discipline, focus on efficiency, smarter M&A
  • Luxury stock prices have moderated, aren’t pricing in “tail risk” of global recession
  • In “high quality” stocks prefers Richemont (outperform) over LVMH, which is cut to neutral
  • In “high beta” prefers Kering (outperform) over Swatch, cuts to neutral
  • “Defensives” such as Hermes, Luxottica look pricey
  • Cuts PTs on Burberry, Hugo Boss, Kering, Luxottica, LVMH, Prada, Swatch