Wall Street News
GSK executive confirms bribery claims. A high-level Chinese executive at GlaxoSmithKline (GSK) has confirmed bribery allegations against the company in an interview on Chinese TV. Liang Hong, one of four senior managers detained as part of a probe into the company, described how staffers would allegedly organize conferences that never happened and divert the money to bribe government officials, hospitals and medical personnel to get them to use the company's products.
Top Stock News
Novartis upgrades FY outlook. Novartis' (NVS) Q2 adjusted income slid 2% to $3.23B and EPS dropped 4% to $1.30, although net sales edged up 1% to $14.49B. Income and revenue topped forecasts but EPS missed consensus. Novartis raised its FY guidance due to Ranbaxy's failure to launch a generic version of the Swiss company's Diovan blood-pressure drug, and now expects core earnings to decline in the low single-digits, and sales to grow in the low single-digits. Shares were -1.3% at midday in Zurich.
Yahoo's ad problems continue. Yahoo's (YHOO) net profit jumped 46% to $331M in Q2, boosted by the growth in its investment holdings, especially Alibaba, whose own FQ1 net profit surged 203% to $669M. However, Yahoo's Q2 revenue dropped 7% to $1.14B and missed expectations, hurt by sharp declines in the company's two key sources of income - display and search advertising - despite new leadership, new formats and a revamp of the homepage. Shares were -0.4% premarket.
Dell would let deal "blow up" rather than pay more. Michael Dell and Silver Lake are reportedly "prepared to see (their) deal blow up" rather than raise their bid for the company to above $13.65 a share. Concerns about Dell's (DELL) PC business and rising borrowing costs are underpinning their reluctance to pay more. Dell's special committee believes around 15% of shares will qualify as absentees, which are effectively "no" votes.
Differing fortunes seen for tech giants. IBM (IBM), Intel (INTC) and eBay (EBAY) are due to release their Q2 results after the bell. IBM's EPS is expected to have risen to $3.77 from $3.51 even though revenue may have slipped 1.6% to $25.37B; Intel's Q2 EPS is seen falling to $0.40 from $0.54 and revenues 4.5% to $12.9B; however, eBay's (EBAY) EPS is forecast to have climbed to $0.64 from $0.56 as revenue grew 14.5% to $3.89B.
EU credit-card fee limit could cost €4.5B. In a move "broadly based on proposed antitrust deals" with Visa (V) and MasterCard (MA), the EU has proposed a cap of 0.2% on credit and debit card processing fees, to be implemented after a two-year "transition period" during which the ceiling will only apply to cross-border charges. The move is expected to result in a €4.5B reduction in fees.
Liberty leaves Kabel to Vodafone. Liberty Global (LBTYA) won't try to one-up Vodafone's (VOD) €7.7B offer for Kabel Deutschland (KBDHY.OB), John Malone said yesterday, confirming media reports. Instead, Liberty will turn its sights on Southern Europe for growth opportunities. "We're getting to the point where in northern Europe, we're pretty much as far as we can go," Malone said. "If southern Europe sort of hits the bottom, as it were, there are things we can do."
Iron ore majors boost output despite China slowdown. BHP Billiton's (BHP) iron ore output rose 9% in FY 2013 to a record 187M tons, a figure that should grow this year as the company maintains plans to boost annual capacity to 220M tons by December. The increase at BHP, as well as at Rio Tinto (RIO), comes despite the economic slowdown in China. The strategy of the majors is to tighten their grip on the market and maximize economies of scale while other miners struggle.
Barclays, traders fined $487.9M. The Federal Energy Regulatory Commission (FERC) has ordered Barclays (BCS) and four of its traders to pay $487.9M in penalties and "unjust profits" for "manipulating electric energy prices in California and other western markets between November 2006 and December 2008." Barclays and the traders are accused of fixing indexes to benefit swap positions.
Chevron signals return of Big Oil to Argentina. Chevron (CVX) has become the first global oil company to commit to new investment in Argentina since the nationalization of YPF (YPF) last year, with the U.S. group forming a deal with YPF to develop shale oil and gas assets in the Vaca Muerta formation. The firms will invest $1.24B in the project's first phase, which will include drilling 100 wells. Chevron said the deal gives it a chance to increase production to beyond its 2017 target of 3.3M barrels a day.
Judge allows lawsuit against S&P to proceed. U.S. District Judge David Carter yesterday ruled that the federal government can press ahead with its $5B civil fraud lawsuit against S&P for allegedly misleading investors with its credit ratings. The government has accused the McGraw Hill (MHFI) unit of inflating its ratings so it could win more fees from the customers that pay for them. It's all "puffery," says S&P.
MetLife on road to being labeled "systemically important." The Financial Stability Oversight Council, which is led by Treasury chief Jacob Lew, has voted to move MetLife (MET) into the third and final round of evaluation to decide whether the insurer should be designated as systemically important. "Not only does exposure to MetLife not threaten the financial system, but I cannot think of a single firm that would be threatened by its exposure to MetLife," said CEO Steven Kandarian.
China cracks down on drug sector. China's State Food & Drug Administration is carrying out a six-month crackdown on the sale of illegal medicines and tightening regulation, increasing pressure on the sector amid probes into bribery and price-fixing. "Corruption is so entrenched... (that) to get things done you have to bribe officials," says pharmaceuticals watcher Yanzhong Huang. That's despite China executing its chief drug regulator six years ago for taking bribes to approve fake medicines.
Top Economic & Other News
Bernanke goes to the Hill. Ben Bernanke is due to give his semi-annual monetary policy report to Congress today, when he can probably expect lots of questions about tapering. The prepared remarks will be released 90 minutes ahead of the usual time - 8:30 ET instead of 10 ET. The early release will give House Financial Committee Members the opportunity to review the testimony, with the hearing and Q&A session set to begin at the normal time of 10. Maybe we'll get some better questions?
BOE voted 9-0 to leave QE as is, sterling rises. The Bank of England's Monetary Policy Committee voted unanimously against more quantitative easing at a meeting earlier this month, as well as to keep interest rates at 0.5%, the minutes show. This was Mark Carney's first vote after he became BOE Governor. The pound spiked following the release of the minutes and was +0.2% at $1.5183 at the time of writing, while the FTSE took a dive and was -0.5% after being well into the green earlier.