H-P shares rise as earnings top consensus. Hewlett-Packard's (HPQ) FQ1 earnings beat Street forecasts as the company stemmed a decline at its PC operations. Net profit rose 16% to $1.4B and adjusted EPS was $0.90, although revenue slipped 0.6% to $28.2B. PC sales grew 4% after dropping 2% in FQ4 and contributed to the revenue beat. CEO Meg Whitman was upbeat on HP's European business, as well as on India and Mexico, while China stayed largely flat, better than H-P's rivals. Shares were +2% premarket.
Groupon shares plunge on worries about margins. Groupon's (GRPN) Q4 earnings beat expectations but shares dived 14.3% premarket on fears about the company's slumping margins. Groupon's Third Party & Other sales (daily deals-dominated) fell 3% in Q4 to $401.7M, while its direct sales (e-commerce-dominated) rose 50% to $366.8M. The former business posted an 86.9% gross margin and the latter just 7.9%. Q4 EPS was $0.04 and revenue climbed 20.4% to $768.4M.
Ukraine close to deal to end violence; S&P downgrades country. S&P has cut Ukraine to CCC from CCC+ and kept the country's outlook at negative, saying that it is likely that the government will default. S&P's move has come after a week of violent anti-government protests has left almost 80 people dead. Russian-backed President Viktor Yanukovich has accepted an agreement to solve the crisis, with measures including a transitional government, a reduction of presidential powers, and fresh elections by the end of 2014. However, the pro-EU opposition wants changes to the deal.
Top Stock News
Juniper unveils dividend, $2B+ in buybacks, $160M/year in cost cuts.As promised, new Juniper (JNPR) CEO Shaygan Kheradpir has rolled out an "Integrated Operating Plan" that checks off many items on the wish lists of activist investors Elliott Management and Jana Partners. Juniper will initiate a dividend of $0.10 a share, spend $2B+ on buybacks through Q1 2015 and slash expenses by $160M a year. The plan follows a report yesterday that Nokia (NOK) is looking at acquiring Juniper, whose market cap is $13.8B.
Shell to sell Australian downstream ops for $2.6B. Shell (RDS.A, RDS.B) has agreed to sell Australian downstream assets to Dutch-owned oil trader Vitol for $2.6B. The deal excludes Shell's aviation-fuel operations. The company is selling the business, which includes a refinery, import terminals and 870 service stations, as part of a $15B global-divestment program. Yesterday, Shell said it is offloading its downstream business in Italy to Kuwait Petroleum International.
RBS to cut headcount by tens of thousands in major revamp. Royal Bank of Scotland (RBS) is reportedly planning to shed 20,000-30,000 jobs out of a total of 120,000 as part of an overhaul in which it would focus on U.K. retail and commercial lending, and further cut its investment-banking and international operations. Much of the headcount reduction will come from the divestment of assets, with the disposal of RBS's U.S. business Citizens accounting for 18,500 positions.
Energy Future set to file for Ch. 11 with $40B+ in debt - WSJ. Energy Future Holdings is preparing to file for bankruptcy protection after creditors failed to agree on how to restructure the Texas power utility's $40B+ of debt despite months of talks, the WSJ reports. The filing would probably lead to a break-up of Energy Future's two largest operating units, with the company trying to organize bankruptcy loans of over $4B for its main regulated and unregulated subsidiaries.
Anixter considers selling itself - Bloomberg. Anixter International (AXE), which makes cable and specialty wiring, is working with Goldman Sachs to find a buyer, Bloomberg reports. One bidder is French electrical-equipment distributor Rexel (OTCPK:RXEEY), although Carlyle Group (CG) and U.K. engineering firm Melrose Industries (OTC:MLSPY) are among firms that have had a look and passed. Anixter's market cap is $3.45B
InterOil shares spike on takeover speculation. InterOil (IOC) jumped 5.2% in post-market trading, apparently due to speculation that Teck Resources (TCK) is lining up a bid of over $4B after reaching an agreement with InterOil's 19.8% shareholder Chandler Corp. Shell (RDS.A, RDS.B) is also mentioned as a potential bidder; it would have plenty of cash given that it's selling billions of dollars in assets.
Russell Stover Candies up for sale, could fetch $1B+. The family that owns Russell Stover Candies is looking to sell the company, the WSJ reports, adding that the U.S.'s third-largest candy producer could fetch over $1B. Russell Stover is best known for its boxed chocolates, which made a cameo in "Forrest Gump" with the title character's line about life being "like a box of chocolates, you never know what you're gonna get." The firm generates annual EBITDA of $60M on revenue of $600M.
Top Economic & Other News
Obama looking to limit corporate tax avoidance in budget. President Obama reportedly intends to propose changes that would limit the ability of multinational companies to avoid paying tax by exploiting the differences between countries' tax rates and regulations. The changes are expected to be part of the president's 2015 budget, which he is due to unveil in March. The White House is also set to drop a proposal to restrict pension spending by altering how inflation is accounted for.
Top Ideas: Movers and Great Calls
1) On February 4, Dennis Beaudet said the market was undervaluing the core strengths of Canadian oil developer Bankers Petroleum (OTCPK:BNKJF), including solid production growth and increasing reserves. Shares are +15.9%since. Read article »
2) Money Investor wrote in September that home-builder William Lyon Homes (WLH) was set to smash analyst estimates due to rising prices and increased community counts. After a second consecutive earnings beat on Friday, the stock is +46% since Money Investor's article. Read article »
Top Ideas To Watch
1) A complicated REIT structure obscures a simple thesis at Resource America (REXI): operating leverage will drive substantial earnings growth, writes Alpha Gen Capital. Read article »
2) Wall Street Advisors writes that junior miner Midway Gold (MDW) should be trading at half its valuation, with a possible secondary offering a key downward catalyst. Read article »
Top Ideas are the best long and short ideas on Seeking Alpha. SA PRO subscribers receive early access to these Top Ideas, which often move markets. For more information about SA PRO and becoming a subscriber, click here.
In Asia, Japan +2.9% to 14866. Hong Kong +0.8% to 22568. China -1.2% to 2114. India +0.8% to 20701.
In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt flat.
Futures at 6:20: Dow +0.2%. S&P +0.1%. Nasdaq +0.1%. Crude -0.1% to $103.21. Gold +0.3% to $3121.
Ten-year Treasury Yield +1 bps to 2.76%.
Today's economic calendar:
10:00 Existing Home Sales
1:10 PM Fed's Bullard: U.S. Economic Outlook and Monetary Policy
1:45 PM Fed's Fisher: Economic Outlook
Notable earnings before today's open: AEE, B, BCC, CHTR, DCI, DISH,ECL, EGO, PNW, RUTH, SATS, STRA, STRZA, TFX, LBY
See full real-time earnings coverage »
Wall Street Breakfast is sent out by email for free -- Get it now »