Frontrunning: May 7

  • Microsoft prepares U-turn on Windows 8 (FT), Microsoft admits failure on Windows 8 (MW), After Bumpy Start, Microsoft Rethinks Windows 8 (NYT)
  • China reports four more bird flu deaths, toll rises to 31 (Reuters)
  • Republicans shift stance on US budget (FT)
  • NYC Tallest Condo Corridor Gets New Entrant With Steinway (BBG)
  • U.S. Says China's Government, Military Used Cyberespionage (WSJ)
  • China rejects Pentagon charges of military espionage (Reuters)
  • Bank of China Cuts Off North Korean Bank (WSJ)
  • Libya defense minister quits over siege of ministries by gunmen (Reuters)
  • London Recruiter Says City Job Vacancies Rose 19% (BBG)
  • Colleges Cut Prices by Providing More Financial Aid (WSJ)  or, said otherwise, loans
  • Jeweler agrees to plead guilty in KPMG insider-trading case (LA Times)

 

Overnight Media Digest

WSJ

* The SEC has put local government officials on notice that it is closely monitoring the way they describe their cities' fiscal health, charging Harrisburg, Pennsylvania, with securities fraud for allegedly failing to disclose information on its financial troubles.

* Deep in the president's new budget is a plan that could transform public housing in the nation by allowing housing authorities to increasingly set time limits or work requirements for participants.

* Bank of America agreed to pay MBIA $1.7 billion to settle a dispute over soured mortgage securities, in the second-largest U.S. bank's latest bid to reduce legal risks tied to its home lending business.

* Adobe Systems, publisher of graphics software such as Photoshop, is pulling back from the packaged software business and doubling down on delivering its design tools through an online service.

* A fledgling mobile-payments system in Rwanda is both an important pilot project for Visa and a key part of the government's plan to make the country into the "Singapore of Africa."

* Americans are finding it slightly easier to get a mortgage, yet banks remain wary of lending to would-be home buyers with weaker credit histories, a potential stumbling block for the housing recovery.

* TPG is beginning the sales process for China's UniTrust Finance & Leasing Corp this week. UniTrust provides leasing services to clients in a number of industries.

* The private-equity firms buying BMC Software Inc have also discussed buying Compuware Corp and combining the two software companies, according to people familiar with the matter

 

FT

Facebook plans to incorporate video advertising in its newsfeed starting July as the company looks to new revenue streams.

IMG Worldwide this year received an unsolicited bid of over $2 billion from private equity company Colony Capital.

Bank of America and MBIA Inc have resolved a long-running legal tussle with the bank agreeing to pay the bond insurer $1.7 billion.

The European Commission said Google's Motorola Mobility was abusing its position in the market by seeking and enforcing an injunction against Apple in Germany over a wireless patent.

The U.S. Treasury plans to sell the remainder of its stake in General Motors acquired when the government bailed out the automaker.

Environmentalists have expressed their anger over a plan to build a convention center in Alabama using money given by BP to restore the Gulf of Mexico coast.

Senior officials at the U.S. Commodities Futures Trading Commission are evaluating whether cyber-currency Bitcoin could fall under their regulatory jurisdiction.

 

NYT

* Pfizer will sell Viagra, its billion dollar erectile dysfunction drug, directly to men with a doctor's prescription through its website.

* Google Glass, a wearable computer not yet formally released, is raising questions about whether it will distract drivers, upend relationships and strip people of what little privacy they still have in public.

* The electronics contractor Foxconn, known for its ties to Apple, is moving to develop its own products, like a flat-screen TV.

* YouTube, the world's largest video website, will announce this week a plan to let some video makers charge a monthly subscription to their channels.

* One of the economic mysteries of the last few years has been the bigger-than-expected slowdown in health spending, a trend that promises to bolster wages and help close the wide federal deficit over the long term - but only if it persists.

 

Canada

THE GLOBE AND MAIL

* The Ontario government will draw up new rules to make sure local residents have a say in where future power plants and other energy infrastructure is built, in a bid to avoid a repeat of the costly cancellation of two gas plants before the 2011 election.

* A New Brunswick farmer who languished for more than a year in a Beirut jail cell on allegations he shipped rotten potatoes to Algeria is suing the Canadian government, arguing it didn't protect his Charter rights.

Reports in the business section:

* The Quebec government is boosting its take from a mining sector already beset by a global downturn, introducing minimum royalty payments and other tax increases aimed at generating up to C$200 million ($198.25 million) a year.

NATIONAL POST

* The Harper government has a plan to "dismantle vital public services and drive down wages of all Canadians," according to Paul Moist, president of the Canadian Union of Public Employees (CUPE). Moist's inflated rhetoric appeared in the National Post after the government introduced plans to give Cabinet powers to oversee collective bargaining between Crown corporations and their employees.

* On the eve of what could be a critical debate on transit funding in Toronto, Mayor Rob Ford continued to lob political threats at those who dare to debate taxes and tolls.

"If 30 councillors want to put their name to implement taxes on the back of hardworking taxpayers in the city, I'll hold them accountable in the next election. I'll guarantee that," Ford said on Monday.

FINANCIAL POST

* Loblaw Cos Ltd, country's biggest grocer, debuted on Monday its new PC Plus loyalty card in Ontario and plans to roll it out nationally by the end of the year to its Real Canadian Superstore, Zehrs, Provigo, Atlantic Superstore divisions.

 

China

SHANGHAI SECURITIES NEWS

- China's cabinet issued a detailed list of reforms, including a call for a specific plan for full convertibility of the yuan under the capital account, indicating the government's determination to push forward economic reform.

- Economists expect China will post a slew of weak economic data for April in all three major fields of foreign trade, investment and consumption, due in part to weak global economic and market conditions. The data is due this week and next.

PEOPLE'S DAILY

- Data showed Beijing's suffered from serious air pollution on Monday, despite a sharp rise in temperature in the Chinese capital. Experts believe that air quality in Beijing is not likely to improve much in the near term.

- China has become Germany's third largest investor, investing in 98 projects in the European country last year, with significant investment in auto parts and machinery manufacturing.

CHINA SECURITIES JOURNAL

- The People's Bank of China is likely to let banks raise their deposit rates to up to 1.2 times the central bank's benchmark rate later this year, up from the current cap of 1.1 times the benchmark, in a further step to liberalise the country's rate regime, according to analysts and industry insiders.

- Experts believe foreign capital inflows into China's red-hot property and local-government projects were key factors that prompted the foreign exchange regulator to announce tightened rules to curb inflows on Sunday.

CHINA DAILY

- Luxury car sales in China, including Audi, BMW, and Mercedes-Benz, slowed to four percent growth in the first quarter this year, down from 13 percent annual growth last year, amid a central government clampdown on government extravagance, the China Association of Automobile Manufacturers said.

SHANGHAI DAILY

- Shanghai's government is inviting tenders for the construction of a 77,492-square-metre public transport hub, including five bus terminals, car and taxi parking lots, wash rooms, and six lounges, to serve visitors to Shanghai Diisneyland, which is scheduled to open in 2015.

 

Corporate Finance

* Antero Resources, an oil and natural gas company controlled by Warburg Pincus LLC, is preparing for an initial public offering that could value it at as much as $10 billion, three people familiar with the matter said.

* Third Point, the hedge fund run by billionaire Dan Loeb, has hired banks for an initial public offering of its reinsurer business, according to three sources familiar with the matter.

* IMG Worldwide, the marketing group put up for sale by Forstmann Little, drew an unsolicited bid from California private equity firm Colony Capital of more than $2 billion this year, the Financial Times reported.

* JPMorgan Chase & Co has yet to convince three of its largest shareholders to support the company in an upcoming vote on whether Jamie Dimon should retain both his CEO and Chairman titles, the Wall Street Journal said.

 

ANALYST RESEARCH

Upgrades

Abercrombie & Fitch (ANF) upgraded to Outperform from Market Perform at Wells Fargo
Apollo Global (APO) upgraded to Outperform from Perform at Oppenheimer
Arch Coal (ACI) upgraded to Neutral from Sell at Goldman
Brunswick (BC) upgraded to Buy from Neutral at Longbow
Gap (GPS) upgraded to Outperform from Market Perform at Wells Fargo
Noah Holdings (NOAH) upgraded to Buy from Neutral at BofA/Merrill
Tyson Foods (TSN) upgraded to Buy from Hold at Miller Tabak
Urban Outfitters (URBN) upgraded to Outperform from Market Perform at Wells Fargo

Downgrades

Aeropostale (ARO) downgraded to Sell from Hold at Brean Capital
AIG (AIG) downgraded to Neutral from Buy at Goldman
Alpha Natural (ANR) downgraded to Sell from Neutral at Goldman
American Eagle (AEO) downgraded to Market Perform from Outperform at Wells Fargo
Coach (COH) downgraded to Market Perform from Outperform at Wells Fargo
Iconix Brand (ICON) downgraded to Hold from Buy at Brean Capital
International Rectifier (IRF) downgraded to Market Perform at JMP Securities
Mettler-Toledo (MTD) downgraded to Hold from Buy at Jefferies
TJX (TJX) downgraded to Market Perform from Outperform at Wells Fargo
Tiffany (TIF) downgraded to Market Perform from Outperform at Wells Fargo

Initiations

Ann Inc. (ANN) initiated with a Market Perform at Wells Fargo
BioMarin (BMRN) initiated with a Buy at Goldman
Carpenter Technology (CRS) initiated with an Outperform at Credit Suisse
Chico's FAS (CHS) initiated with an Outperform at Wells Fargo
Chimerix (CMRX) initiated with an Outperform at William Blair
EverBank Financial (EVER) initiated with an Outperform at Credit Suisse
Evertec (EVTC) initiated with a Buy at Deutsche Bank
Infinity Pharmaceuticals (INFI) initiated with a Neutral at Goldman
J.C. Penney (JCP) initiated with an Underperform at Wells Fargo
Kohl's (KSS) initiated with a Market Perform at Wells Fargo
lululemon (LULU) initiated with a Market Perform at Wells Fargo
Macy's (M) initiated with a Market Perform at Wells Fargo
Michael Kors (KORS) initiated with an Outperform at Wells Fargo
Nordstrom (JWN) initiated with a Market Perform at Wells Fargo
Ocwen Financial (OCN) initiated with an Outperform at Wells Fargo
Omthera (OMTH) initiated with an Overweight at Piper Jaffray
Pharmacyclics (PCYC) initiated with a Neutral at Goldman
Pinnacle Foods (PF) initiated with an Outperform at BMO Capital
Pinnacle Foods (PF) initiated with an Outperform at Credit Suisse
Rally Software (RALY) initiated with a Buy at Deutsche Bank
Rally Software (RALY) initiated with an Outperform at JMP Securities
rue21 (RUE) initiated with a Market Perform at Wells Fargo
Sanchez Energy (SN) initiated with a Buy at SunTrust
T-Mobile USA (TMUS) initiated with an Underperform at BofA/Merrill
Walter Investment (WAC) initiated with a Market Perform at Wells Fargo

HOT STOCKS

Crest Financial, Clearwire’s (CLWR) largest minority stockholder, urged Clearwire holders to reject proposed merger with Sprint Nextel (S)
Baidu (BIDU) acquired PPS online video business for $370M
Disney (DIS), Electronic Arts (EA) announced multi-year Star Wars games agreement

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Vitamin Shoppe (VSI), Forest Oil (FST), Alleghany (Y), CUI Global (CUI), Plains All American (PAA), Hologic (HOLX), Nautilus (NLS)

Companies that missed consensus earnings expectations include:
Cimarex Energy (XEC), Cinemark (CNK), Regis (RGS), Liberty Global (LBTYA), Midstates Petroleum (MPO), Skilled Healthcare (SKH), First Solar (FSLR)

Companies that matched consensus earnings expectations include:
RDA Microelectronics (RDA), Endeavour Silver (EXK)

NEWSPAPERS/WEBSITES

  • Some of the world's biggest handset makers and telecom carriers are embracing alternative mobile operating systems this year in an attempt to become credible challengers to smartphones run by Apple (AAPL) and Google (GOOG), the Wall Street Journal reports
  • JPMorgan Chase (JPM) has yet to persuade three of its largest shareholders--BlackRock (BLK), Vanguard Group and Fidelity Investments--to back the company in a coming vote over whether James Dimon should retain his dual role of chairman and CEO, the Wall Street Journal reports
  • SoftBank (SFTBF) President Masayoshi Son said he will go to the U.S. today to meet Sprint Nextel’s (S) major shareholders about the Japanese company's takeover bid, after rival bidder Dish Network (DISH) said a U.S. company would make a better suitor, Reuters reports
  • Microsoft (MSFT) has sold 100M Windows 8 licenses in the six months since launch, but wants to combat sputtering interest in its flagship software with a substantial update to make it easier to use, and compatible with smaller tablets, Reuters reports
  • Rio Tinto (RIO) will likely pursue a $5B expansion of its iron ore output in Australia, CEO Sam Walsh said, according to two people present at a meeting with investors and analysts, Bloomberg reports
  • Saudi Arabia, home to the biggest Arab bourse, seeks to boost institutional investments in its $390B stock market as the top OPEC producer weighs plans to allow foreigners to buy shares directly, Bloomberg reports


SYNDICATE

Colfax (CFX) files to sell 10M shares of common stock
Franklin Street (FSP) files to sell 15M shares of common stock
Generac (GNRC) files to sell 9M shares of common stock for holders
General Growth (GGP) files to sell 23.4M shares for Blackstone Group funds
Golub Capital (GBDC) files to sell 5.5M share of common stock
Hertz Global (HTZ) announces sale of 49.8M shares of common stock by holders
Local (LOCM) files to sell 4.57M shares of common stock for holders
Parametric Sound (PAMT) files to sell $75M of common stock and warrants
Stemline (STML) files to sell common stock
Teekay LNG (TGP) files to sell $100M in common units representing limited partners
Vantiv (VNTV) to offer 38.6M shares of Class A common stock for holders
Velti (VELT) files to sell up to 16.53M ordinary shares for holders

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