Frontrunning: February 12
- The Man Who Killed Osama bin Laden... Is Screwed (Esquire)
- G7 fires currency warning shot, Japan sanguine (Reuters)
- North Korea Confirms It Conducted 3rd Nuclear Test (NYT)
- Italian Police Arrest Finmeccanica CEO (WSJ)
- Legacy, political calendar frame Obama's State of the Union address (Reuters)
- China joins U.S., Japan, EU in condemning North Korea nuclear test (Reuters)
- Wall Street Fading as Emerging-Market Banks Gain Share (BBG)
- Berlin Conference 2.0: Drugmakers eye Africa's middle classes as next growth market (Reuters)
- Barclays to Cut 3,700 Jobs After Full-Year Loss (BBG)
- US Treasury comment triggers fall in yen (FT)
- ECB Ready to Offset Banks’ Accelerated LTRO Payback (BBG)
- Fed's Yellen Supports Stimulus to Spur Jobs (WSJ)
- Libor Scrutiny Turns to Middlemen (WSJ)
- Samsung Girds for Life After Apple in Disruption Devotion (BBG)
Overnight Media Digest
* North Korea appeared to have exploded a nuclear device Tuesday, its third experimental detonation in a long effort to build weapons of mass destruction that the U.S. and other countries consider a serious threat.
* Pope Benedict XVI will become the first pontiff in six centuries to resign, marking the end of a transitional papacy that focused more on theological and internal renewal and less on the broader challenges that face the Roman Catholic church at the start of its 21st century of existence.
* U.S. regulators are widening their probe of global interest-rate-rigging by scrutinizing what they claim is a pivotal role of two U.K. brokerage firms in the scandal, people close to the investigation say.
* The regulator that oversees the professional conduct of Britain's accountants has launched a probe into the past financial reports of Autonomy Corp, the U.K. software company that Hewlett-Packard Co purchased for $11 billion in 2011 and later accused of having made outright financial misrepresentations ahead of the deal.
* Hedge-fund manager David Einhorn has proposed that Apple Inc issue a special class of stock that would carry a high dividend yield.
* Nasdaq OMX Group Inc, long on the hunt for a partner, has ramped up its conversations about strategic options ranging from joint ventures to a sale, according to people familiar with the talks, as rival NYSE Euronext moves ahead with a merger that will form an even-bigger competitor.
* U.S. regulators told the world's biggest maker of insulin, Denmark's Novo Nordisk, that they couldn't approve a potential blockbuster diabetes drug, delaying its U.S. introduction and sending the company's shares tumbling.
* Hostess Brands Inc won permission to place a selection of its cake and bread assets, including the Twinkie brand, on the auction block as the baking company continues to sell off its business piece by piece.
EDF Energy is seeking state support to guarantee the new nuclear reactors it plans to build in the UK. EDF is asking the government to underwrite some of the project's financing. Nasdaq OMX Group was in talks with private equity firm Carlyle Group about taking the trans-Atlantic exchange operator private, but the talks broke down because of disagreements over valuation.
Britain's accountancy regulator said it was investigating the financial reports of British software firm Autonomy before it was bought by Hewlett-Packard, a deal that was later subject to accusations of fraud. Goldman Sachs has promoted Gregg Lemkau to jointly head its global mergers and acquisitions (M&A) team.
Telefonica has put off plans to list its Latin American business.
BlackRock sold a large stake in oil services group Saipem - a unit of Italy's Eni, in deal that is under the scrutiny of Italian and British regulators.
Lion Capital, a big investor in Findus - the UK-based frozen food company engulfed in the horse meat scandal, has called on management to explain how the adulteration took place.
Dutch retailer Ahold sold its 60 percent stake in its Nordic joint venture - ICA - to co-owner Hakon Invest for 2.5 billion euros ($3.34 billion) in cash.
* British accounting regulators said on Monday that they would investigate the financial reporting at the British software maker Autonomy before its $11.1 billion acquisition by Hewlett-Packard Co in 2011.
* Concern over the euro moved to the forefront Monday as finance ministers of the countries using the currency held their monthly meeting. But this time, with the European Union's recession continuing, the topic was the strength of the euro rather than its many weaknesses.
* The Swedish investment company Hakon Invest agreed on Monday to buy the remaining stake in the Nordic retailer ICA it did not already own for $3.1 billion.
* A new 24-hour news and entertainment channel, Fusion, has powerful backers in Univision and ABC News, a unit of the Walt Disney Co, and underscores the growing influence of the burgeoning Hispanic audience.
* Mary Jo White, who has been nominated to run the U.S. Securities and Exchange Commission, has also disclosed that her husband would relinquish his partnership at Cravath, Swaine & Moore, converting his interest in the firm from an equity to non-equity status.
* Pope Benedict XVI's surprise announcement on Monday that he will resign on Feb. 28 sets the stage for a succession battle that is likely to determine the future course of a church troubled by scandal and declining faith in its traditional strongholds around the world.
* It will be four years on Tuesday since the last fatal crash in the United States, a record unmatched since propeller planes gave way to the jet age more than half a century ago. Globally, last year was the safest since 1945, with 23 deadly accidents and 475 fatalities, according to the Aviation Safety Network, an accident researcher.
THE GLOBE AND MAIL
* The Harper government will not resurrect its controversial Internet surveillance bill, and will not introduce new legislation to monitor the activities of people on the web.
* Former school trustee Liz Sandals inherited one of Ontario's most difficult files Monday, taking on the post of Education Minister and the ambitious task of resolving a dispute with Ontario's teachers and restoring sports teams, clubs and other after-school activities.
Reports in the business section:
* Genivar Inc, one of Quebec's biggest engineering firms, uncovered "inappropriate conduct" after investigating the company's role in financing political parties and bidding on municipal contracts, another sign of corruption in the province's engineering and construction industry.
* A federal report on military procurement to be released Tuesday will recommend bidders be required to explicitly outline how they will spur innovation and long-term economic growth in Canada, a source familiar with the file told the National Post.
* WestJet Airlines Ltd will launch its new regional carrier Encore in Western Canada this summer starting on June 24, the company said Monday.
* Following the grilling in London last week, outgoing Bank of Canada governor Mark Carney may be in for a second round of tough questioning Tuesday, this time from Canadian Ministers of Parliament.
Fly On The Wall 7:00 AM Market Snapshot
Alexandria Real Estate (ARE) upgraded to Overweight from Equal Weight at Evercore
Boston Properties (BXP) upgraded to Outperform from Sector Perform at RBC Capital
DCT Industrial (DCT) upgraded to Market Perform from Underperform at Wells Fargo
Digital Realty (DLR) upgraded to Overweight from Equal Weight at Evercore
Gold Fields (GFI) upgraded to Neutral from Sell at Citigroup
J.M. Smucker (SJM) upgraded to Outperform from Market Perform at Bernstein
Nortel NetApp (NTAP) upgraded to Buy from Hold at Brean Capital
Novo Nordisk (NVO) upgraded to Buy from Neutral at Nomura
Royal Gold (RGLD) upgraded to Buy from Neutral at UBS
Suburban Propane (SPH) upgraded to Buy from Neutral at BofA/Merrill
Walgreen (WAG) upgraded to Buy from Neutral at Mizuho
Boyd Gaming (BYD) downgraded to Sell from Neutral at Goldman
Capstead Mortgage (CMO) downgraded to Market Perform from Outperform at JMP Securities
Corporate Office (OFC) downgraded to Equal Weight from Overweight at Evercore
Cubic (CUB) downgraded to Hold from Buy at Benchmark Co.
Facebook (FB) downgraded to Market Perform from Outperform at Bernstein
General Growth (GGP) downgraded to Underperform from Sector Perform at RBC Capital
Macerich (MAC) downgraded to Sector Perform from Outperform at RBC Capital
Piedmont Office (PDM) downgraded to Underperform from Outperform at RBC Capital
Qualcomm (QCOM) downgraded to Neutral from Overweight at JPMorgan
Questar (STR) downgraded to Neutral from Buy at UBS
Cincinnati Bell (CBB) initiated with a Hold at Deutsche Bank
CyrusOne (CONE) initiated with a Buy at Deutsche Bank
CyrusOne (CONE) initiated with a Neutral at BofA/Merrill
Idenix (IDIX) initiated with a Neutral at RW Baird
Legacy Reserves (LGCY) initiated with an Overweight at Barclays
Manchester United (MANU) initiated with an Outperform at Raymond James
Navios Maritime Partners (NMM) initiated with a Buy at Citigroup
Theravance (THRX) initiated with an Outperform at RW Baird
Barclays (BCS) to reduce headcount by at least 3,700 this year
Rexnord (RXN) hired Goldman Sachs (GS) to explore possible sale
JANA Partners rejected Agrium's (AGU) settlement offer, director appointments
Arris (ARRS), Google (GOOG) received second DOJ request for more information about Arris' proposed acquisition of Motorola Home business from Google
American Express (AXP), Twitter signed online purchasing agreement
Procter & Gamble (PG), Verix Business initiated strategic partnership
VMware (VMW) acquired Virsto, terms not disclosed
Groupon (GRPN) acquired MashLogic, terms not disclosed
Laclede Group (LG) announced sale of New England Gas Co. (SUG) to Algonquin Power
Masco (MAS) sees “repair and remodel” to grow modestly in FY13
Titan International (TWI) announced offer for Wheels of India
Nielsen (NLSN) initiated dividend policy, declared 16c per share dividend
Companies that beat consensus earnings expectations last night and today include:
Otter Tail (OTTR), American Financial Group (AFG), Masco (MAS), Nielsen (NLSN), Tesoro Logistics (TLLP), Lionsgate (LGF)
Companies that missed consensus earnings expectations include:
Owens & Minor (OMI), Dun & Bradstreet (DNB), Rexnord (RXN), Danaos (DAC), tw telecom (TWTC), Cubic (CUB)
Companies that matched consensus earnings expectations include:
- Fed Vice-Chairwoman Janet Yellen offered a vigorous defense of the central bank's easy-money policies, suggesting she favors continuing them amid a slow economic recovery and disappointing job market, the Wall Street Journal reports
- Behind David Einhorn's protestations on Apple (AAPL) is a novel way to return cash to shareholders. Einhorn, of hedge fund Greenlight Capital, proposed that Apple issue a special class of stock, which he called "perpetual preferred," that would carry a high dividend yield. But with some investors feeling more confident about the future, shareholder pressure is growing to put that cash to work, the Wall Street Journal reports
- The NTSB is investigating whether tiny fiber-like formations, known as dendrites, inside lithium-ion batteries could have played a role in battery failures on two Boeing (BA) 787 Dreamliners last month, Reuters reports
- The shifting nature of Africa’s disease burden is luring Big Pharma (SNY, GSK) as new opportunities open up for treating chronic diseases afflicting the middle classes, rather than just fire-fighting infection.European companies, in particular, hope to reap rewards by investing early in a region where many of them already have historic commercial ties, Reuters reports
- Global investment banks based in Europe and the U.S., facing regulatory and cost-cutting pressures at home, are losing market share (CS, MS, C) in emerging economies to smaller domestic competitors, Bloomberg reports
- In 2007, Wal-Mart Stores (WMT) planned to open as many as 2,000 in-house medical clinics by mid-2012. Today, they have fewer than 130 clinics and is closing locations faster than it’s opening them. CVS Caremark (CVS) has about 630 MinuteClinics and aims to have 1,500 within four years, Bloomberg reports
ARCA Biopharma (ABIO) files to sell 3.48M shares of common stock for holders
American Capital Mortgage (MTGE) to offer 18M shares of common stock
ConnectOne Bancorp (CNOB) 1.6M share IPO priced at $28.00
DryShips (DRYS) announces offering of 5M common shares of Ocean Rig UDW
Gulfport Energy (GPOR) 7.75M share Secondary priced at $38.00
HCA Holdings (HCA) files to sell 50M shares of common stock for holders
Kosmos (KOS) commences offering of 30M shares of common stock
Motricity (MOTR) requests withdrawal of registration statement
Newcastle Investment (NCT) files to sell 20M shares of common stock
Team Health (TMH) files to sell 9.63M shares of common stock for holders
Warburg Pincus agrees to sell 2.5M shares of Primerica (PRI)