Merck tops forecasts after research budget trimmed

Merck tops forecasts after research budget trimmed

Stock Market Predictions

NEW YORK (Global Markets) - Merck & Co (MRK.N) reported higher-than-expected quarterly earnings, helped by trimming its research spending and strong sales of its drugs for diabetes, asthma and rheumatoid arthritis.

The second-largest U.S. drugmaker, whose shares were 0.3 percent higher, also slightly raised the lower end of its 2011 earnings forecast.

"Overall, we are pleased with today's results, particularly coming off a difficult fourth quarter when the company withdrew its long-term guidance," JP Morgan analyst Chris Schott said.

Merck in February yanked its 2009 to 2013 profit forecast, rather than chop research spending to meet its longtime goal of high-single-digit annual growth over the period.

However, the company did cut $350 million in expenses during the first quarter, including $107 million from research and development.

On Friday, Merck trimmed its full-year R&D forecast to between $8 billion and $8.4 billion, from its earlier view of $8.1 billion to $8.5 billion.

That still keeps Merck among the top of the pack when it comes to industry spending on drug development.

"It doesn't matter whether it's $8.4 billion or $8.5 billion. The bottom line is that its a very big number and shows how committed Merck is to research and to developing its own medicines," said Peter Jankovskis, co-chief investment officer of OakBrook Investments LLC.

Earlier this year, larger rival Pfizer Inc (PFE.N) slashed its R&D budget to deliver on profit forecasts. It remains to be seen whether big R&D cuts make sense long term for Pfizer and other companies desperate for new medicines as their key drugs lose patent protection.

Merck earned $1.04 billion, or 34 cents per share. That compared with $299 million, or 9 cents per share, a year earlier, when it took a number of big charges and a tax expense related to U.S. healthcare reform.

Excluding special items, Merck earned 92 cents per share. Analysts on average expected 84 cents, according to Thomson Global Markets I/B/E/S.

"Merck is looking quite strong" said Jankovskis, who added that surging sales of newer diabetes drugs Januvia and Janumet bode well for Merck.

"They're growing faster than expected and the high rate of diabetes onset in the United States will help them as time goes on," Jankovskis said.

Global company sales of $11.58 billion topped the analysts' average forecast of $11.37 billion.

Januvia sales jumped 45 percent to $739 million, while Janumet -- which pairs Januvia with diabetes treatment metformin --soared 52 percent to $305 million.

Sales of Merck's biggest product, asthma treatment Singulair, jumped 14 percent to $1.33 billion, helped by strong sales in emerging markets and Japan. But the pill's importance to Merck will fade in coming months, when it faces generic competition in the United States.

Sales of arthritis treatment Remicade rose 12 percent to $753 million. Merck acquired it and a newer arthritis drug, Simponi, through its purchase in late 2009 of rival drugmaker Schering-Plough.

Schering-Plough's longtime partner Johnson & Johnson (JNJ.N) had challenged Merck's right to continue selling the two arthritis drugs. But under a deal reached earlier this month with J&J, Merck retains rights to sell them in Europe and other territories that represent 70 percent of the $2.8 billion in annual sales that had been in dispute.

The company expects earnings this year of $3.66 to $3.76 per share, excluding special items -- nudging up by 2 cents the lower end of its earlier estimate. That would reflect profit growth of 7 percent to 10 percent from 2010.

(Reporting by Ransdell Pierson; Editing by Lisa Von Ahn, Derek Caney, Dave Zimmerman)

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Clearwire rallies on subs growth, MetroPCS deal talk

Clearwire rallies on subs growth, MetroPCS deal talk

Stock Market Predictions

NEW YORK (Global Markets) - Clearwire Corp reported (CLWR.O) better-than-expected subscriber numbers on Thursday, while MetroPCS Communications (PCS.N) said it is interested in spectrum deal with the wireless telecommunications company.

The numbers and Clearwire's preliminary third-quarter results, seemed to ease concerns about the company, which has been the subject of bankruptcy speculation.

Shares in Clearwire, which is majority-owned by Sprint Nextel (S.N), rose 26 percent. They had lost about a third of their value last Friday after Sprint, Clearwire's biggest customer, said it could benefit from a Clearwire bankruptcy.

This comment and Sprint's announcement that it will not sell phones that run on Clearwire's WiMax network after 2012 led to fears that Sprint no longer wants to support Clearwire.

Besides the subscriber numbers, Clearwire also reported a strong-than-expected cash position.

Also on Thursday, MetroPCS' finance chief told an investor conference that his company was "uniquely positioned" to make a spectrum deal with Clearwire.

A MetroPCS spokesman said Clearwire is just one option, but investors saw the comment as positive.

"A wholesale agreement with MetroPCS would be a significant positive for Clearwire," CreditSuisse analyst Jonathan Chaplin said in a research note.

Clearwire has said it is in talks with U.S. operators about renting space on its network, particularly where there is a high demand for services like mobile Web surfing. It has also said that it would entertain offers to buy its spectrum.

Clearwire depends almost entirely on subscriber growth from Sprint, which uses Clearwire's network for its high-speed wireless offerings. Chaplin said Clearwire needs more wholesale partners because Sprint is planning to upgrade its network to lessen its dependence on Clearwire.

Nelson said the wholesale numbers gave him confidence that Sprint will need to work with Clearwire in the future, said Mizuho analyst Michael Nelson.

STRONG GROWTH, SPECTRUM INTEREST

Clearwire expects to report 1.9 million new net wholesale customers for the third quarter, compared with the average estimate for 1.4 million from four analysts.

Clearwire, which needs about $1 billion in fresh funding to support its operations and upgrade its network, said cash and equivalents fell to $700 million on September 30 from $848 million at the end of June. That beat analyst estimates for less than $600 million.

The stronger than expected numbers should buy Clearwire some time to improve its viability, analysts said.

"The longer they can extend the runway, the more likely they can have success in raising additional capital," said Nelson.

Clearwire's forecast implied a loss of less than $54 million, according to Nelson, who had estimated a loss of $104 million before interest, tax, depreciation and amortization.

Clearwire has said it wants to raise up to $300 million to support its operations, and $600 million to upgrade its network to catch up with competitors.

Clearwire, which is finalizing its third-quarter report, estimated its subscriber count at 9.5 million at the end of the quarter. In August, it raised its 2011 year-end target to 10 million subscribers from 9.5 million.

The company expects to report third-quarter revenue of $332 million, up 126 percent from a year earlier.

Clearwire shares closed up 35 cents, or 27 percent, to $1.65 on Nasdaq. Sprint shares closed up 8 percent at $2.78 on New York Stock Exchange. MetroPCS shares closed up almost 5 percent at $8.94.

(Reporting by Sinead Carew. Editing by Lisa Von Ahn, John Wallace and Robert MacMillan)

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Goldman to face mortgage debt class-action lawsuit

Goldman to face mortgage debt class-action lawsuit

Stock Market Predictions

(Global Markets) - Goldman Sachs Group Inc was ordered by a federal judge to face a securities class-action lawsuit accusing it of defrauding investors about a 2006 offering of securities backed by risky mortgage loans from a now-defunct lender.

U.S. District Judge Harold Baer in Manhattan certified a class-action lawsuit by investors led by the Public Employees' Retirement System of Mississippi.

These investors claimed they lost money in the GSAMP Trust 2006-S2, a $698 million offering of certificates backed by second-lien home loans made by New Century Financial Corp, a California subprime mortgage specialist that went bankrupt in 2007.

Thursday's decision is a setback for Goldman, which had sought to force investors to bring their cases individually.

Class certification lets investors pool resources, which can cut costs, and can lead to larger recoveries than if investors are forced to sue individually.

Goldman spokesman Michael Duvally declined to comment.

The bank is one of many accused by Congress, regulators and others of having fueled the nation's housing crisis and 2008 financial crisis in part by having misled investors about the quality of mortgage debt they sold.

Goldman in 2010 agreed to pay $550 million to settle U.S. Securities and Exchange Commission fraud charges over a collateralized debt obligation it sold, Abacus 2007-AC1 CDO.

"CREATIVE CUTTING AND PASTING"

The Mississippi fund claimed the GSAMP offering documents were false and misleading, saying Goldman's boilerplate disclosures failed to reveal how New Century had ignored its own underwriting standards and used inflated appraisals.

It blamed Goldman's poor due diligence for the bank's failure to find these problems when it bought New Century's loans and packaged them into securities.

Goldman countered that class-action status was inappropriate given the wide range of certificates offered, the differences among the "highly sophisticated institutional investors" that bought the debt, and even that some investors might have had "storm warnings" about New Century's practices.

Baer rejected the defense, even faulting Goldman's "creative cutting and pasting" of a 200-page deposition to bolster its claim that the Mississippi fund was on notice of problems.

"In light of my finding that the common issues predominate, it does not seem likely questions regarding individual investor knowledge, statutes of limitation or any other issue will become unmanageable," Baer wrote.

David Wales, a partner at Bernstein Litowitz Berger & Grossmann, which was named lead counsel, declined to discuss Baer's ruling, but said the plaintiffs plan to proceed toward a possible October trial.

The case is Public Employees' Retirement System of Mississippi v. Goldman Sachs Group Inc et al, U.S. District Court, Southern District of New York, No. 09-01110.

(Reporting By Jonathan Stempel in New York; Additional reporting by Alison Frankel; Editing by Phil Berlowitz)

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Chipmaker Micron hit by weak PC sales, stock slumps

Chipmaker Micron hit by weak PC sales, stock slumps

Stock Market Predictions

SAN FRANCISCO (Global Markets) - Memory chipmaker Micron Technology (MU.O) posted quarterly results below expectations and warned of low visibility in a weak consumer PC market, slamming its shares.

Boise, Idaho-based Micron's stock had already slumped 25 percent since the end of April due to worries about lackluster PC sales and potential steep losses in an antitrust trial against Rambus (RMBS.O).

Micron's poor results on Thursday pushed its shares down 12.9 percent in after-hours trading and compounded negative sentiment in the tech sector after Oracle (ORCL.O) also posted quarterly profit that disappointed investors.

"We've all seen a softening of the desktop and notebook PC climate, partially offset by some growth around tablets," Mark Adams, Micron's vice president of worldwide sales, told analysts on a conference call. "At this point, it's hard for us to call too much further out in the future."

Micron Chief Executive Steve Appleton said inventories of DRAM chips used in personal computers were a bit higher than normal but that inventories of NAND chips -- used in tablets -- were tight.

Sales of PCs have grown at a slower pace than expected in recent quarters as some consumers worried about a tough economy hold off on large purchases and others choose Apple's (AAPL.O) iPad and other tablets over laptops.

This month, two prominent market research firms cut their forecasts for 2011 PC sales although PC chip giant Intel (INTC.O) said it was standing by its previous guidance for the quarter ending in June.

SHOCKING

Intel says developing countries like China are driving PC growth, but computers sold there often include fewer DRAM chips than models in the United States and Europe.

"Revenue is a bit shocking," said Avian Securities analyst Win Cramer of Micron's results. "Emerging market PC growth is good but they're not DRAM dependent."

Micron said revenue from DRAM chips was 7 percent lower in the third quarter compared to the previous quarter due to lower sales volume, a bad sign for competitors like Japan's Elpida (6665.T) and South Korea's Hynix (000660.KS).

Revenue from Micron's NAND chips, used in tablets, phones and other mobile devices, declined 5 percent, with prices down 5 percent.

"This market is jittery, worried about demand and macroeconomics," Stifel Nicolaus analyst Kevin Cassidy said of the after hours sell-off of Micron's stock.

He said that with Micron now trading below book value, he would continue to recommend the shares.

NAND and DRAM chips have long been commodities whose prices depend on supply and demand.

To reduce its exposure to market volatility, Micron is increasing its sales of specialty and high-end memory chips that go into solid-state drives and network equipment.

But as Micron's rivals also move into those niches, they in turn risk becoming commodities as well.

ANTITRUST UNCERTAINTY

Adding to uncertainty in the memory chip industry, a trial got underway on Monday in which Sunnyvale, California-based Rambus accuses Micron and Hynix of restricting the availability of memory chips using its technology starting in the 1990s in favor of chips with their own technology.

Rambus claims up to $4.38 billion but analysts say Micron's stock may have been punished too much since larger memory chipmaker Samsung (005930.KS) settled antitrust claims with Rambus last year for no more than $900 million.

Micron posted fiscal third-quarter revenue of $$2.139 billion, down from $2.288 billion in the year-ago period. Analysts on average expected revenue of $2.364 billion, according to Thomson Global Markets I/B/E/S.

Micron said its net profit was $75 million, or 7 cents a share in its fiscal third quarter, compared with $939 million, or 92 cents a share, a year earlier.

Shares of Micron were down to $7.34 in post-session trading after closing up 3.18 percent at $8.43 on Nasdaq.

(Reporting by Noel Randewich, editing by Bernard Orr)

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AOL approves buyback after shares tumbled 32 percent

AOL approves buyback after shares tumbled 32 percent

Stock Market Predictions

NEW YORK (Global Markets) - AOL said on Thursday it would buy back $250 million of its stock, a move presumably intended to boost confidence in the shares, which fell 32 percent in two days.

After the announcement, the shares rose as much 22 percent.

The drop had wiped out $518 million in value, since the company reported second-quarter results on Tuesday that missed profit expectations amid weak advertising growth.

AOL Chief Executive Tim Armstrong said during a call with analysts on Tuesday that a buyback was under consideration but that the company would likely concentrate on growth.

"I believe the stock is undervalued, and I think our operational results will be the fastest way for us to bring the value of the stock up."

AOL has been in a turnaround mode since it was spun off from Time Warner in December 2009 after one of the most disastrous mergers in recent times.

The company is attempting to reshape itself into an online media and entertainment powerhouse with a growing dependence on advertising revenue as its lucrative subscription dollars from its dial-up business melts away.

AOL has had several shake-ups over the course of Armstrong's leadership, including the July ouster of its top advertising executive, one-time Google executive Jeff Levick.

It reported that second-quarter advertising revenue rose 5 percent, but analysts were expecting bigger gains in display ad revenue. The slow growth suggested rivals like Google and Facebook are taking share.

AOL's board said the company plans to repurchase shares over the next 12 months.

Shares of AOL were up 13.6 percent at $11.61 in afternoon trade on Thursday on the New York Stock Exchange.

(Reporting by Jennifer Saba; Editing by Steve Orlofsky)

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Apache quarterly profit up, tops Street

Apache quarterly profit up, tops Street

Stock Market Predictions

HOUSTON (Global Markets) - Apache Corp (APA.N) reported a better-than-expected 40 percent increase in quarterly profit on Thursday, fueled by record oil and natural gas production and higher crude prices.

Shares of Apache, which has operations in Australia, the U.S., Egypt and the North Sea, fell 7 percent, weighed down by the market's broad losses and weakness in crude oil.

Most oil and gas companies saw profits rise in the second quarter as oil and natural gas prices rose from a year ago. U.S. benchmark WTI crude prices averaged $102 in the quarter, up 32 percent, while natural gas prices rose about 6 percent.

Oil and natural gas liquids -- which bring higher prices than "dry" gas -- accounted for 48 percent of Apache's production and 78 percent of its revenue, the Houston company said.

"They have a good amount of their production tied to Brent, which is a good thing," said Mark Hanson, oil analyst at Morningstar.

European Brent oil prices averaged $117 per barrel in the second quarter, higher than WTI.

Apache's profit in the second quarter was $1.2 billion, or $3.17 per share, compared with $860 million or $2.53 per share, a year earlier.

Excluding one-time items, earnings were $3.22 per share. Analysts had expected $3.09, according to Thomson Global Markets I/B/E/S.

Oil and gas output rose 16 percent to a record 749,000 barrels of oil equivalent (boe) per day.

Apache outlined some operational bumps that might have a small affect on production in the current quarter.

Operations at the company's Forties Field in the North Sea will be shut for several days as the pipeline operator, BP Plc (BP.L)(BP.N), clears ordnance from World War II away from the system, Steve Farris, Apache's chief executive said on a conference call with analysts.

The field should restart on Friday or Saturday, the executive said.

Some analysts had expected Apache's oil and gas production be even greater. Barclay's Capital pegged it at 759,000 boe per day, while Simmons & Co expected 756,000 boe per day.

Apache also said on Thursday it had made two new oil discoveries in Egypt's Faghur Basin. The company has drilled 11 wells in the Faghur Basin this year, uninterrupted by unrest in that country.

Demand for natural gas in Egypt has not diminished and the company has seen no interruption in payments for its oil and natural gas production in that country, Farris said.

Apache shares fell $8.58 to $109.87 in late trading on the New York Stock Exchange.

(Reporting by Anna Driver; editing by Gerald E. McCormick, Dave Zimmerman, John Wallace and Andre Grenon)

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True Religion slumps after weak forecast; analysts cut ratings

True Religion slumps after weak forecast; analysts cut ratings

Stock Market Predictions

(Global Markets) - Shares of denim maker True Religion Apparel Inc (TRLG.O) lost as much as a quarter of their value on Friday after the company forecast weak 2012 results, prompting at least two brokerages to downgrade the stock.

Citigroup cut True Religion to "neutral" from "buy," and said the company's international business would weigh on earnings over the next year.

On Thursday, the company, which sells its namesake jeans for as much as $300 in specialty boutiques and upscale department stores, reported a lower-than-expected quarterly profit.

Benchmark also downgraded the stock to "hold" from "buy."

True Religion shares fell to $27.57 on Friday on the Nasdaq.

(Reporting by Mihir Dalal in Bangalore; Editing by Joyjeet Das)

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NCI shares nosedive on weak outlook

NCI shares nosedive on weak outlook

Stock Market Predictions

(Global Markets) - Shares of NCI Inc (NCIT.O) fell 33 percent to their lifetime low after the IT services provider gave a bleak full-year revenue outlook citing continued uncertainty in the United States federal sector.

The Reston, Virginia-based company, which caters to the U.S. federal government agencies, on Thursday said it expects revenue of $340 million to $360 million. Analysts on average were expecting $514 million, according to Thomson Global Markets I/B/E/S.

"A number of factors contributed to our bookings shortfall in 2011, including an unfavorable competitive environment, pricing pressures and delayed or cancelled procurements," President Brian Clark said in a statement.

Analysts at Wells Fargo said "NCIT's historic 'value' pricing for IT work is being under-cut by competitors, especially small businesses that have preferential bidding status." The analysts cut their rating on the company's stock to "underperform."

Shares of the company were down 30 percent at $8.00 in morning trading on the Nasdaq. They touched a low of $7.70 earlier in the session.

(Reporting by Rachana Khanzode in Bangalore; Editing by Maju Samuel)

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China's XCMG to market $1.5 billion HK share offer from Sept 5

China's XCMG to market $1.5 billion HK share offer from Sept 5

Stock Market Predictions

HONG KONG (Global Markets) - XCMG Construction Machinery Co Ltd (000425.SZ) is slated to start pre-marketing on September 5 for an up to $1.5 billion planned share listing in Hong Kong, IFR reported on Friday.

The Shenzhen-listed company, which makes bulldozers, excavators and heavy trucks, secured approval from the listing committee at Hong Kong's stock exchange on Thursday, added IFR, a Thomson Global Markets publication.

The company joins rival Sany Heavy Industry Co Ltd (600031.SS) and about 12 other companies that have announced plans to raise about $11.7 billion in September from share sales in Hong Kong, the world's biggest IPO market for two years running. XCMG plans to offer 593 million shares.

China International Capital Corp (CICC) and Morgan Stanley (MS.N) were hired as joint global coordinators for the deal, with Credit Suisse Group AG (CSGN.VX), HSBC Holdings Plc (0005.HK)(HSBA.L), Macquarie Group Ltd (MQG.AX) and BNP Paribas SA (BNPP.PA) helping to manage the offering.

(Reporting by Jing Song; Writing by Elzio Barreto; Editing by Chris Lewis)

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American Axle profit beats Street

American Axle profit beats Street

Stock Market Predictions

(Global Markets) - U.S. auto parts maker American Axle and Manufacturing Holdings Inc (AXL.N) posted a fourth-quarter profit that beat market expectations on the back of higher margins.

The company, which makes axles and other driveline components for trucks and larger vehicles, also reaffirmed its forecasts for 2012 sales and margins. Shares were up 2.4 percent in afternoon trading.

"We're seeing signs of strengths in the economy," Chief Financial Officer Michael Simonte said in a telephone interview.

"The automotive industry will continue to outgrow the overall economy in our judgment," he added. "There's a substantial amount of replacement demand for vehicles that are aging well beyond historical levels."

Simonte said the company now sees the high end of its expected range of 13 million to 13.5 million for U.S. 2012 light vehicle sales as the most probable outcome.

American Axle said it was quoting over $1 billion of potential new incremental business from 2013 to 2016, and 90 percent of this expected business would come from non-General Motors Co (GM.N) business.

American Axle has been pushing to diversify its business away from GM, which accounts for more than 70 percent of its sales. For the quarter, non-GM business grew 11 percent to $175 million.

American Axle had previously said its goal is to reduce dependence on GM to 50 percent by 2015.

Analyst Matthew Stover of Guggenheim Securities said the near-term story for American Axle is that the company does not have the European risk that other companies have but has leverage to the new GM truck program in 2013.

American Axle posted gross margins for the fourth quarter of 17.5 percent.

"The quarter's strong margin performance highlights the company's capability to continue growing profitability, in our view," Citigroup analyst Itay Michaeli said in a note.

For the quarter, the company reported adjusted earnings of 47 cents a share, compared with analysts' estimate of 39 cents a share, according to Thomson Global Markets I/B/E/S. Most of the outperformance was due to a low tax rate, analysts said.

Net sales rose 4 percent to $605.6 million.

It reaffirmed it expects 2012 sales in the range of $2.8 billion to $2.9 billion and earnings before interest, taxes, depreciation and amortization in the range of 14 percent to 14.5 percent of sales.

Shares of the Detroit-based company were up 29 cents at $12.62 in afternoon trading on the New York Stock Exchange. The stock has almost doubled since touching a year low in October.

(Additional reporting by Ben Klayman in Detroit; Editing by Hezron Selvi, Maju Samuel and Steve Orlofsky)

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Huntsman shares plunge 31 percent after profit miss

Huntsman shares plunge 31 percent after profit miss

Stock Market Predictions

NEW YORK (Global Markets) - Huntsman Corp (HUN.N) shares lost nearly a third of their value on Thursday after the chemical maker's second-quarter profit missed Wall Street's expectations because of higher supply costs.

The results confirmed what many chemical investors have feared for the past year: rising costs for crude oil and other feedstocks cannot be passed on to customers indefinitely.

Chief Executive Peter Huntsman, brother of U.S. presidential candidate Jon Huntsman, said the stock drop caught him off guard.

"Frankly, I'm very surprised," Huntsman told Global Markets. "I think that we had one of the strongest quarters in the history of our business."

(For a graphic on Huntsman results, click on: r.reuters.com/myp92s.)

Huntsman's larger rivals Dow Chemical (DOW.N) and DuPont (DD.N) for the most part were able to pass higher costs to their customers given their scale, though analysts were skeptical that the trend will continue.

Huntsman's cost of goods sold rose 24 percent from a year earlier to $2.43 billion in the second quarter.

While the company was able to boost prices for titanium dioxide, a key paint pigment, and chemicals used to make pesticides and cosmetics, price increases eroded demand for Spandex and other textile products.

The company said results will turn around.

"This is going to be one of the strongest years, if not the best year, we've had in our history," Huntsman said.

Analysts lashed out at the company's results.

Huntsman's earnings missed expectations because of "multiple missteps," said Jefferies & Co analyst Laurence Alexander.

Jeff Zekauskas, a JPMorgan analyst, was bothered because the company reported results only 90 minutes before the conference call, leaving him little time to wade through unusually complex financial tables.

"It's very difficult to reconcile all of the income statement numbers to the data that you provide," Zekauskas told Huntsman executives on a conference call.

Huntsman said he thinks his company gives the right amount of information.

"We're certainly going to be looking internally as to any changes we would make," he said. "I think we give plenty of pages of financial information."

EARNINGS MISS

The company reported quarterly net income of $114 million, or 47 cents per share, unchanged from a year earlier.

Excluding restructuring costs and one-time items, the company earned 48 cents per share. By that measure, analysts expected 49 cents, according to Thomson Global Markets I/B/E/S.

Revenue rose 25 percent to $2.93 billion. Analysts expected $2.77 billion.

Part of the earnings miss was caused by foreign currency rates.

Huntsman operates two key businesses in Switzerland. The Swiss franc has risen against the U.S. dollar in the past year, and that dented Huntsman's results by nearly $20 million.

"I can't recall another quarter when we have been so adversely affected by currency fluctuations," Huntsman said.

WHITE HOUSE RACE

Jon Huntsman, former U.S. envoy to China and son of Huntsman Corp's founder, is a Republican presidential candidate. He is also a former company executive.

The presidential run has not affected the company, Peter Huntsman said. "I've not seen us pick up any business, or lose any business, because of his candidacy."

Huntsman could not remember if his brother's "Huntsman for President" sign was on his front lawn.

"To be honest with you, I haven't been home for the past couple of months. I've been traveling," he said. "If we don't have one up by now, I'm sure we will soon."

Huntsman shares closed down 31 percent at $12.50 on Thursday. The stock has traded between $8.47 and $21.52 in the past 52 weeks.

(Editing by Derek Caney, Matthew Lewis, John Wallace and Robert MacMillan)

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Few banks to follow UniCredit share sale example

Few banks to follow UniCredit share sale example

Stock Market Predictions

LONDON (Global Markets) - Markets will breathe a sigh of relief as beleaguered Italian bank UniCredit (CRDI.MI) completes its 7.5 billion euro ($9.7 billion) rights issue on Friday, but few expect it to prompt a flurry of share sale activity from other lenders.

Some 31 European banks have been told to fill a 115 billion euro collective hole in their balance sheets by the end of June as part of moves to tackle the continent's sovereign debt crisis.

But most are finding ways to boost their capital buffers without issuing new shares.

"The fact UniCredit gets done is obviously a positive ... but I'm not sure it necessarily swings the needle in terms of other banks thinking of coming to market," said one equity capital markets (ECM) banker. "It is still a last resort."

UniCredit's offering, keenly watched as a litmus test of investor appetite to support European banks, got off to a rocky start, with its shares dropping as much as 47 percent in the four days after the 2-for-1 issue was announced.

Retail demand was stronger than expected, a source close to the deal said, with good interest coming from U.S. investors.

The sale also received a boost from a plan by Abu Dhabi's investment vehicle Aabar INPTVA.UL to raise its stake in the bank to 6.5 percent.

The bank's stock is now at around 3.82 euros, well above the 1.943 euro offer price and sources close to the deal expect take-up, due to be announced by Monday, to be above 95 percent.

Although the cash call will put its core Tier 1 capital adequacy ratio above the 9 percent of risk-adjusted assets required by the European Banking Authority, UniCredit remains vulnerable to the country's sovereign debt woes, analysts say.

A source close to Italy's largest bank by assets said it had readied a 25 billion euro Italian covered bond program which it planned to use to boost collateral available for refinancing operations, while on Wednesday it announced plans to buy back up to 3 billion euros of hybrid debt, adding to efforts aimed at strengthening its capital base.

UNDERWHELMING

"UniCredit failing would have meant the door was shut (for other banks). But the door is still open, the question is who, how much and how," said a second ECM banker.

Germany's Commerzbank (CBKG.DE), which had been among those seen as most likely to issue new shares, has instead set out a range of other steps to boost its core capital.

Bankers highlight Deutsche Bank (DBKGn.DE) along with France's BNP Paribas (BNPP.PA) and Societe Generale (SOGN.PA) as those which may be both willing and able to get a share sale done.

Analysts at Mediobanca, one of the top advisers on UniCredit's rights issue, said the French banks should consider a rights issue as a less costly alternative to deleveraging.

"(The) UniCredit rights issue shows that the lack of private investors' appetite is no longer a good reason for French banks to ignore such an option," they said in a note.

But investor appetite remains limited.

"How do I rate the recapitalization efforts of European banking sector so far? A bit underwhelming I would suggest," said Stephen Adams, head of UK equities at Kames Capital, confirming his team's relative underweight to financials.

"I expect a lot of rights issues over the short to medium term ... Would I expect investors to support them? I think here and now probably not," he added.

EARLY BIRDS

Investors are weary of pumping yet more money into European banks and face heavy dilution. UniCredit's offering will dilute 2012 earnings per share by around 65 percent, according to analyst estimates.

While Adams predicts more rights issues by banks, he says investors will be very selective about the banks they back unless there is a significant rotation in asset allocation, out of cash and into equities.

"We have the classic situation whereby the early birds would be supported and then you would have that drag because of the sheer weight of requirement that has to come out," he said.

Smaller lenders are more likely to struggle to come to market, bankers said, as new investors are steering clear of the periphery and banks will be less keen to underwrite an offering.

But they do not rule out pursuing alternative structures.

"We have seen before major shareholders underwriting larger than their weight in the company," said the second ECM banker.

Shareholders in Austria's Raiffeisen RZB.UL have backed the option to issue new shares as part of its capital strengthening plans, while Spain's Banco Sabadell aims to raise up to 1 billion euros from a rights issue following its acquisition of rescued regional savings bank CAM.

UniCredit's smaller Italian peers Banca Monte dei Paschi (BMPS.MI), Banco Popolare (BAPO.MI) and UBI Banca (UBI.MI) are still striving to avoid cash calls.

"People will still look at their stock price and say 'I need to be very sure that I need to do it and want to do it and need to make sure that my shareholders, especially the large ones, are in the right place before I go ahead'," said the banker.

($1 = 0.7708 euros)

(Additional reporting by Sinead Cruise in London and Silvia Aloisi in Milan; Editing by David Cowell)

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Analysis: Can Zynga break free from Facebook?

Analysis: Can Zynga break free from Facebook?

Stock Market Predictions

NEW YORK (Global Markets) - "We generate substantially all of our revenue and players through the Facebook platform and expect to continue to do so for the foreseeable future," Zynga wrote in its IPO prospectus.

Technically, the admission is called a risk factor. But since Zynga, the wildly popular maker of mobile and social games such as "Mafia Wars" and "FarmVille," generates about 95 percent of its revenue through Facebook, the worry for investors is that its relationship with Mark Zuckerberg's social network is less a risk factor than a business model.

And how Zynga ultimately performs as a public company -- it is aiming to raise $925 million at a $9 billion valuation when it begins trading on the Nasdaq on Friday -- will depend in large part on its ability to break free from Facebook. Or at least its ability to convince investors that it can do so.

So far, however, the skeptics remain unconvinced. At Zynga's IPO roadshow luncheon in San Francisco on Monday, investors spent most of the question and answer time with Zynga executives asking about Facebook.

"Any time you have such a large reliance on a single company, you have to be concerned," said Dan Niles, chief investment officer of AlphaOne Capital Partners, who didn't attend the luncheon but watched one of Zynga's presentations over the Internet.

From an investment perspective, ignoring the fact that all but 5 percent of Zynga's $828 million in revenue in the first nine months of this year came from Facebook could be detrimental.

Zynga conceded that point in its IPO prospectus, noting that, "any deterioration in our relationship with Facebook would harm our business and adversely affect the value of our Class A common stock."

Facebook takes a 30 percent cut of the revenue Zynga derives from the social network, which features more than 222 million monthly active Zynga users, according to the data tracking website AppData. Zynga itself makes most of its money from less than 3 percent of its players, who buy virtual items like trucks and poker chips.

Being so dependent on one company clearly poses risks to Zynga's growth potential. If Facebook's user growth slows, for instance, Zynga's growth is likely to slow as well. Or, in an extreme case, if Facebook suddenly decided to banish games, it could harm Zynga's entire business.

Zynga is also beholden to Facebook in other ways. According to a regulatory filing on July 18, the company has to publish some of its games exclusively on Facebook before other platforms.

What's worse, Zynga may have botched one main attempt it has thus far made at trying to break away from Facebook.

When the company unveiled its new online platform "Zynga Direct" during a rare media event at its San Francisco headquarters in October, it was billed as a way for Zynga to deal directly with its consumers without an intermediary.

But when players visited Zynga's website to sign up for a user name, called a "Z Tag," they were told to first install the Zynga app on Facebook, giving the impression that it was being more closely integrated with the world's largest social network instead of being weaned off of it.

A Zynga spokesman on Wednesday declined to comment on the company's IPO.

FACEBOOK FLIPSIDE

The counter argument is that Zynga's reliance on the platform may attract investors looking to bet on Facebook's growth. With Facebook's IPO at least several months away, there currently are not many ways to gain exposure to Facebook on the stock market.

"Ahead of Facebook's IPO, Zynga is the closest proxy investors have," said Robert W. Baird & Co analyst Colin Sebastian. "As of today, Zynga is highly dependent on Facebook and could bring in investors who are looking to find ways to gain exposure to social media."

Akram Yosri, managing partner of 3i Capital Group, attended Zynga's roadshow presentation in New York and said he was satisfied with how management responded to questions about Facebook and how Zynga can grow in partnership with the social network.

"They didn't dodge the question," said Yosri, whose firm has $1.4 billion in assets under management. "As long as it's a working relationship, it's a plus for Zynga because Facebook is going to be there a long time and has a proven business model. "

Zynga also gathers lots of data on its millions of users, more than half of whom are female, which marketers could find attractive.

CHINA AND BEYOND

Still, Zynga faces a long road to a less Facebook-dependent future. According to regulatory filings, Zynga's contract with Facebook doesn't come up for review until 2015. This gives it three years to find new revenue sources outside the social network such as moving into new markets like Asia and making more games for mobile devices.

In July, Zynga entered mainland China's games market for the first time, partnering with Chinese platform Tencent for a local version of the game "CityVille."

"Zynga has at least until that time to expand its presence in Asia and it is trying to do that aggressively in mobile," said Steve Soranno, an equity analyst at Calvert Investment Management, which has $12 billion of assets under management.

Soranno added, however, that investors might find Zynga too risky to bet on while it is building out its business in these new areas since it is unclear whether the company can deliver a high enough or sustainable return on capital investment.

"That's a relative unknown for a young company in an industry that is developing this rapidly. This raises risks for going in(to the stock) that early," Soranno said.

Zynga's total expenses rose 115 percent to $747.9 million in the first nine months of the year, a sign that its international ambitions are adding to costs.

With regard to mobile, while games such as "Words With Friends" have become hits, its roughly 13 million mobile users are dwarfed by the hundreds of millions of users who play it on Facebook.

While Zynga was one of the earliest game makers on the Facebook platform, it lacks that first mover advantage on mobile. For instance, Disney released a mobile game in September called "Where's my Water" that is ranked ahead of some Zynga titles in Apple's App store.

And investors said that Zynga may already be losing market share on Facebook itself, as video game companies such as Electronic Arts make large acquisitions to compete with it. Indeed, AlphaOne's Niles pointed to EA's "The Sims Social" game, which has 28 million monthly active users, as a successful example of encroachment by another video game company on Zynga's turf.

Over time, however, there is hope the Zynga can break free from Facebook with services like "Zynga Direct." Though that service still has no date for when it will launch or which games will be available, Sterne Agee analyst Arvind Bhatia said that it "should help reduce Zynga's platform risk somewhat."

(Reporting By Liana B. Baker in New York, additional reporting by Alistair Barr; Editing by Peter Lauria and Steve Orlofsky)

(Corrects spelling of analyst's surname to Soranno from Sorrano in paragraphs 22, 23 and 24)

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FDA lifts hold on Insmed's lung disease drug

FDA lifts hold on Insmed's lung disease drug

Stock Market Predictions

(Global Markets) - Insmed Inc (INSM.O) said U.S. health regulators lifted a clinical hold on its lead drug to treat a form of lung disease that currently has no approved cure, sending the biopharmaceutical company's shares soaring 45 percent.

The U.S. Food and Drug Administration lifted a clinical hold on the drug Arikace for treating non-tuberculous mycobacteria (NTM) lung disease, paving the way for the company to continue a mid-stage study.

The regulator had put the drug on clinical hold for treating NTM lung disease and cystic fibrosis (CF) based on an initial review of results from a long-term rat carcinogenicity study.

The FDA, however, retained the hold on the drug for the treatment of CF.

Wedbush Securities analyst Gregory Wade expects health regulators to lift the hold on cystic fibrosis as well in the next 2-3 months.

Wade said NTM lung disease could represent a $400 million market, a $100 million larger opportunity than CF.

The analyst expects Insmed to restart mid-stage trials for NTM lung disease in the first half of the year, and post results from the study in 2013.

The company said it would move ahead with the drug's 9-month dog inhalation toxicity study as previously requested by FDA, to determine if the findings of the rat inhalation carcinogenicity study are also observed in a non-rodent.

NTM are mycrobacteria widely found in the environment, particularly in wet regions, and its most common manifestation is lung disease.

CF is an inherited disease that affects about 30,000 people in the United States and about 70,000 worldwide. The drug would compete against Novartis' (NOVN.VX) Tobi and Gilead's (GILD.O) Cayston for the indication.

Insmed shares, which have lost about 55 percent of their value since the hold in August, were up 34 percent at $5.09 in midday trade, making them the top percentage gainers on the Nasdaq.

(Reporting by Balaji Sridharan in Bangalore; Editing by Sriraj Kalluvila, Viraj Nair)

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Adani Power lists at Rs 105

Bombay Stock Exchange’s Sensex was trading at 15023, up 203 points. National Stock Exchange’s Nifty was trading at 4400, higher by 33 points on 20th August 2009.

Adani Power Ltd , whose IPO powered the primary market space with good response from investors, opened at Rs 105, at a premium of Rs 5 from its issue price of Rs 100 as the company made its debut on the bourses on first day of this trading.

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Timberland disappoints as margins shrink; shares plunge

Timberland disappoints as margins shrink; shares plunge

Stock Market Predictions

BANGALORE (Global Markets) - Timberland Co (TBL.N) said it expects margins to remain under pressure this year as the shoemaker battles rising product and labor costs, sending its shares plunging 32 percent.

The company, known for its rugged outdoor footwear brands such as Earthkeepers, Howies and Mountain Athletics brands, also posted a quarterly profit that missed Wall Street expectations for the first time in seven quarters.

Timberland has consistently warned of margin pressures from rising leather, labor and transportation costs this year.

The Stratham, New Hampshire-based company said it delayed meaningful price increases to deal with the higher costs to the second half of 2011.

The company also said it would invest in marketing to drive sales growth over the second half of the year.

"(Timberland's) miss was pretty shocking. They surprised the market in terms of how much they are spending on investments," Wall Street Strategies analyst Brian Sozzi told Global Markets.

"One area of investment is China and the other is technology to support their store growth initiatives."

The results are in contrast to the better-than-expected earnings of rivals Wolverine Worldwide Inc (WWW.N) and Deckers Outdoor (DECK.O).

Skechers USA Inc (SKX.N), however, posted a smaller-than-expected first-quarter profit on declining demand for the once-hot toning shoes.

For the quarter ended April 1, Timberland earned 35 cents a share, missing analysts' expectations of 59 cents a share, according to Thomson Global Markets I/B/E/S.[ID:nASA022NO]

Timberland's shares dived 32 percent to a three-month low of $28.10 on Thursday on the New York Stock Exchange. The meltdown has wiped out around $650 million of the company's market value.

(Reporting by Viraj Nair in Bangalore; Editing by Maju Samuel and Saumyadeb Chakrabarty)

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RELIANCE-RPL merger: Swap ratio fixed at 1:16

Mukesh Ambani-controlled Reliance Industries Limited (RIL) and Reliance Petroleum Limited (RPL) have been merged into one entity. According to a release issued by Reliance to the BSE, the company's board approved a Scheme of Amalgamation("the Scheme") of Reliance Petroleum Ltd (RPL) (the "Transferor Company") with the company under the provisions of Sections 391 to 394 of the Companies Act, 1956.

The merger ratio is slightly in favour of RPL, and RIL said the merger will be effective from April 1, 2008. The boards have decided the swap ratio at 1:16, which implies that RPL shareholders will get one RIL share for every 16 shares held in RPL. RIL has decided to extinguish its treasury stock.

The merged company, Agarwal added, will be able to use cash flow in a better manner. He said the company sees significant cash flow from RPL in the first year of operations. He also doesn’t see additional depreciation benefits from RPL. Back in 2002, when RPL was merged with RIL, the swap ratio was fixed at 1:11, that is for every one share of RIL, 11 RPL shares.

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Groupon shares surge but concerns linger

Groupon shares surge but concerns linger

Stock Market Predictions

NEW YORK/SAN FRANCISCO (Global Markets) - Shares of Groupon Inc surged as much as 56 percent on Friday, a solid debut aided by a small number of shares sold, yet still fell short of the first-day performances of recent Internet IPOs.

Groupon's stock closed up 31 percent but the first day pop paled in comparison to LinkedIn, the professional social network that went public in May, whose shares doubled in their debut. Real estate website Zillow also nearly doubled in its debut in July.

Groupon sells Internet coupons for everything from spa treatments to nose jobs and is one of this year's most closely watched IPOs. It has won plaudits for its phenomenal growth, but its ability to sustain that expansion in the face of intense competition from the likes of Google Inc has been questioned.

Still, a strong first few trading days could help other private Web companies -- such as Angie's List, social gaming firm Zynga and even Facebook -- pursue their own IPOs.

Groupon's offering, the largest by a U.S. Internet company since Google's in 2004, is the first major IPO since the market descended into a slump in August. There remains a huge backlog of companies that filed to go public earlier this year, then put their plans on hold.

"They wanted to have a decent pop on the stock so they didn't take that much public," said David Berman, a consumer technology and retail specialist at hedge fund firm Durban Capital. "They created demand by limiting supply, and they got the pop."

After a grueling year of preparing for the IPO, Chief Executive Andrew Mason -- now worth $1.2 billion with ownership of over 46 million shares -- and Chairman Eric Lefkofsky rang the opening bell on the Nasdaq, then hugged in Times Square.

Dozens of people involved in the IPO -- including bankers, investors, current and former employees -- painted a picture of the excruciating path the three-year-old Web phenom took to become the first daily deals site to go public in the United States.

"We continue to be concerned about Groupon's model, especially given the low barrier for entry into this space," said Michael Yoshikami, head of money-management firm YCMNET Investment Committee. "But it's a familiar name and investors tend to gravitate to familiar names at first."

The shares rose as high as $31.14, or 56 percent above the IPO price, at one point pushing the market value of the company to $19.9 billion. They closed at $26.11, 31 percent above their $20 IPO price and granting Groupon a value of $16.7 billion.

CRACKLE AND POP

Groupon put up the third-highest trading volume on the Nasdaq Friday, with nearly 50 million shares changing hands.

A spokeswoman for Deutsche Boerse AG's International Securities Exchange said it expects to list options on Groupon on November 14, with other major exchanges expected to follow suit. Options can be used to bet on the direction of stocks, or to hedge stock positions.

Groupon was founded in October 2008 and has never been profitable. In the nine months ended September 30, it posted a net loss attributable to common stockholders of $308.1 million on revenue of $1.1 billion.

Employees at company headquarters in Chicago donned lime green T-shirts emblazoned with the company's ticker symbol "GRPN" printed in old, ticker-tape-style lettering.

Some analysts and investors warn that Groupon's early surge could be a short-term phenomenon and its shares could reverse course and trade down like those of Internet radio station Pandora Media Inc.

There are still lingering questions about Groupon's business model and about competition from better-funded rivals such as Amazon.com Inc and Google.

Groupon has lost two chief operating officers in the past year and had to adjust its accounting twice under regulatory pressure.

Still, a small float helped drum up demand.

On Thursday, Groupon upsized its IPO and sold 35 million shares for $20 each. But that stake amounts to only about 5 percent of the company. Underwriters on the IPO were led by Morgan Stanley, Goldman Sachs and Credit Suisse.

The $700 million raised was on the larger side for a U.S. IPO, but the 5.5 percent represented the second-smallest share float in the United States in the past decade, according to capital markets data provider Ipreo.

"There's a lot of excitement around the shares. But we should put this in context. The company sold 35 million shares and almost 29 million traded in less than an hour," Morningstar analyst Rick Summer said. That suggested heavy "flipping", or investors selling stock they got in the IPO.

"We don't think they can have 50 percent growth and make money at the same time," Summer said. "They have to pay to launch new categories, get new merchants and new customers. They have to spend to grow."

(Reporting by Clare Baldwin, Brendan McDermid, Rodrigo Campos, Edward Krudy and Phil Wahba in New York, Alistair Barr in San Francisco and James Kelleher and Doris Frankel in Chicago; editing by Derek Caney, Gerald E. McCormick, Steve Orlofsky, Andre Grenon and Bernard Orr)

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Sports Prediction by Astrology18.com

Sports Prediction is not easy for everybody. It is very difficult to predict who will win the FIFA world cup 2010 South Africa. However, Astrology18.com has been doing this serious job with marvelous accuracy.

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Asia Cup 2010 is the benchmark of accuracy. Asia Cup 2010 has predicted by Astrology18.com with 100% accuracy. Through out the series tension was very high. We remembered on match that is between India vs Pakistan in Asia Cup 2010 was very tough match to predict, because every match between India and Pakistan is like Final match of tournament, but Astrology18.com has handle this series very nicely and got remarkable success.

Astrology18.com is the most accurate in predicting Sports Astrology and current event astrological analysis. Astrology18.com has been working in Sports Prediction since 2002.

Astrology18.com is using Indian Vedic Astrology, Western Astrology and various branches of astrology in delivering Sports Predictions. Astrology18.com is currently working on Sports Prediction, Stock Market Prediction and Election Prediction. Astrology18.com is also delivering a personalized prediction related to Career, Business, Finance, Money, Job, Love, Education, Health, Property, Yearly Report, Marriage Report, Gems Stone Suggestion for the valuable Customers of Astrology18.com.

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Newell beats; outlook not as bad as feared

Newell beats; outlook not as bad as feared

Stock Market Predictions

NEW YORK (Global Markets) - Newell Rubbermaid Inc (NWL.N) beat Wall Street's lowered quarterly profit and sales expectations as strength in Latin America and Asia Pacific offset weak demand in United States and Europe, sending its shares up almost 9 percent.

The results echoed those from other consumer products makers. Big gains in Latin America covered up U.S. declines at Colgate-Palmolive (CL.N) and Avon Products (AVP.N) as well.

Newell, the maker of Sharpie markers and Rubbermaid storage containers, had already lowered the bar for its new chief executive officer -- former Unilever (ULVR.L) executive Michael Polk. In early June, it predicted a weak second quarter and slashed its 2011 forecast, prompting a 12 percent slide in its shares.

On Friday, investors overlooked the consumer product maker's second profit warning in two months, pushing the stock up 8 percent to $15.51. The stock is still trading below where it was before the June 3 warning.

"The revised guidance is not a surprise in the current economic environment," BMO Capital Markets analyst Connie Maneaty said, adding that the new CEO would likely want to have achievable targets.

The company now expects to earn $1.55 to $1.62 a share this year, excluding items, down from the lowered forecast of $1.60 to $1.67 given just eight weeks ago.

The latest forecast is "slightly above" the $1.50 to $1.55 or so that many analysts were anticipating, said JPMorgan analyst John Faucher.

The average Wall Street forecast is $1.58 per share, according to Thomson Global Markets I/B/E/S.

SHOWTIME FOR NEW CEO

Polk, who joined Newell in mid-July, was not responsible for the second-quarter performance.

Now he is trying to set the company's future tone, including some price increases that Newell asserts are necessary even as shoppers contend with economic woes.

"The consumer environment remains very tough," Polk said. "The debt crisis in the U.S. and across many countries in Europe could further stress consumer confidence."

Despite the uncertain sales climate, the company -- which counts Target Corp (TGT.N), Staples Inc (SPLS.O) and Williams-Sonoma (WSM.N) as customers -- raised its prices again in July as it pays more for oil, resin and other necessities.

As prices have gone up, the company is seeing some consumers buy less, as it expected, Polk said.

The company is well-positioned for the back-to-school season, Polk said. However the "key uncertainty is whether the consumer will show up and spend."

TAKING DOWN SALES EXPECTATIONS

Oppenheimer analyst Joe Altobello was more skeptical about Newell's sales prospects for the rest of the year and concerned about rising commodity costs. He rated Newell's shares at "perform" despite what he called a "reasonable" valuation.

Newell forecast core sales growth of 1 percent to 3 percent, down from its previous forecast of 3 percent to 4 percent. Core sales exclude foreign currency impact.

Net income rose to $146.7 million, or 49 cents a share, in the second quarter, from $130.4 million, or 41 cents a share, a year earlier.

Excluding items, the company earned 46 cents a share, beating the analysts' average estimate of 42 cents, according to Thomson Global Markets I/B/E/S.

Net sales rose 5.1 percent to $1.57 billion, while analysts expected $1.55 billion.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Derek Caney and Gunna Dickson)

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Siga shares soar as co allays concerns on government contract

Siga shares soar as co allays concerns on government contract

Stock Market Predictions

(Global Markets) - Shares of Siga Technologies Inc (SIGA.O) jumped 34 percent on Friday, a day after board member Fran Townsend responded to allegations of unfair practices in the awarding of a multi-billion dollar government contract to the pharmaceutical company.

In May, Siga was awarded a $433 million contract to supply 1.7 million doses of its ST-246 smallpox drug for the strategic national stockpile by the U.S. Department of Health and Human Services.

However, in June two Congressional committees started probing allegations that Siga shareholder and financier Ron Perelman's political connections helped the company secure the deal.

"There has been a lot of political overhang on the stock because of all the news that has come out and I think the stock is up because Fran was able to address some of those issues," said Noble Financial Capital Markets analyst Nathan Cali.

In an interview with CNN on Thursday, Siga director Townsend said the contract was given in a competitive process, but rival Chimerix did not met the requirements at the time of the contract award.

Siga's ST-246 smallpox drug works by blocking the ability of the virus to spread to other cells and is seen as a protection against a potential biodefense threat.

Siga shares were up 34 percent at $2.46 on Friday on Nasdaq.

(Reporting by Anand Basu in Bangalore; Editing by Sreejiraj Eluvangal)

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Banks, brokers plunge as Twist reality sinks in

Banks, brokers plunge as Twist reality sinks in

Stock Market Predictions

NEW YORK (Global Markets) - Shares in Citigroup, Morgan Stanley and other big banks fell to their lowest levels in more than two-and-a-half years over growing concerns about their profitability in a deteriorating global economy.

Wednesday's bleak economic outlook from the Federal Reserve, combined with its plan to lower long-term interest rates, raised fears that banks and brokerages are at risk for a prolonged period of depressed earnings.

The Fed's aim with Operation Twist is to make credit cheaper for consumers, thereby stimulating borrowing and the economy. The problem is that banks and brokerage firms generally borrow short-term and lend long-term, meaning that if Twist works they are squeezed.

"Nearly every line is being marked down from our prior forecasts, which were not particularly optimistic to begin with," Barclays banking analyst Roger Freeman said in a note on Thursday.

In afternoon trading, Goldman Sachs shares fell 5.5 percent to $92.48, their lowest level in two-and-a-half years. On Wednesday the stock closed below $100 for the first time since March 2009.

Morgan Stanley shares were down 6.3 percent to $12.95, at one point touching their lowest level since December 2008. Since its mid-February peak, the stock has lost 59 percent of its value.

Goldman has fared a little bit better, but not much. The stock is down 13 percent in the last five sessions and down 44 percent from its mid-January peak.

Banks have been hammered in recent weeks by deepening fears about slowing markets. Barclays analysts said on Thursday they expect Goldman to report a third-quarter loss, the second in its history.

Broader markets sank as well, with the Dow down 373 points at mid-afternoon. Shares in Citi fell 7.1 percent to a March 2009 low, and J.P. Morgan Chase dropped 4.7 percent to an April 2009 low. Bank of America fell 5 percent and Wells Fargo dropped 2.7 percent.

IN THE LINE OF FIRE

Brokers may fare little better, analysts said. Many brokers are having to waive fees on mutual funds, given their limited returns, while others are also getting hurt by a squeeze on margin lending.

"Generally speaking, earnings growth for (brokers) is at risk to a prolonged, low-rate environment," Bernstein Research analyst Brad Hintz said on Thursday.

Hintz singled out three names at risk -- Charles Schwab, TD Ameritrade and LPL -- and cut 2012 earnings estimates for all three by at least 10 percent.

Schwab shares fell 2 percent in afternoon trading, while TD Ameritrade fell 1.1 percent and LPL dipped 0.8 percent.

Banks and brokers are not the only ones that are going to suffer the effects of Twist. Insurance companies and pension funds are also in the line of fire.

Life insurers rely on strong rates of return to meet their long-term obligations, both to insurance customers and to retirees who rely on annuities for income. Some actuaries say insurers may have to rethink their business models if rates stay low for years.

The nation's largest pension funds, already being battered by equity market weakness, will also be hurt by persistently low bond yields. The 100 largest pension plans already face an asset shortfall relative to obligations, which could get much worse in the next two years.

One brighter spot -- or at least a less-dark spot -- may be retail banks such as Bank of America and Wells Fargo, among others. Though they have lamented the low-interest-rate environment like everyone else, analysts say their profile puts them at somewhat less risk.

"Where banks live is the 2-to-5-year period. The margin isn't driven primarily by the long end of the curve," said Jefferson Harralson, bank analyst with Keefe, Bruyette & Woods.

But even so, Harralson said, "the overall rate environment is a really tough one right now, and if you layer Operation Twist on top of that, it becomes tough to make decent spreads."

(Reporting by Ben Berkowitz in New York; Additional reporting by Joe Rauch in Charlotte; Editing by John Wallace and Tim Dobbyn)

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Mitsubishi Estate to invest up to $2.47 billion in Tokyo

Mitsubishi Estate to invest up to $2.47 billion in Tokyo

Stock Market Predictions

(Global Markets) - Mitsubishi Estate Co (8802.T) will spend 150-200 billion yen ($1.85-$2.47 billion) to redevelop an area in Tokyo's Otemachi business district, the Nikkei business daily reported.

The developer plans to build skyscrapers on a plot adjacent to the Bank of Japan headquarters. It currently owns four of the five buildings that stand on the approximately 33,000 sq. meter plot, the newspaper said.

Mitsubishi Estate is likely to buy the remaining building and start work on the plot, which houses the headquarters of JX Holdings Inc (5020.T), in 2018, Nikkei reported.

The project will be central to the company's goal of expanding its area of office space for rent by 40 percent to about 2.15 million sq. meters by 2020, the paper said.

($1 = 80.930 Japanese Yen)

(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Joyjeet Das)

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Diamond Foods slides on report of criminal inquiry

Diamond Foods slides on report of criminal inquiry

Stock Market Predictions

(Global Markets) - Shares of Diamond Foods Inc (DMND.O) fell as much as 11 percent on a report that federal prosecutors have launched a criminal inquiry into the company's walnut payments.

The Wall Street Journal said on Thursday that the Justice Department has launched a criminal inquiry into the snack maker's accounting of payments to walnut growers while it was in talks to buy Pringles from Procter & Gamble (PG.N).

"It is prudent to go to the sidelines until the audit committee investigation is complete ... and we have more clarity on the outcome of these additional inquiries," KeyBanc Capital Markets analyst Akshay Jagdale wrote in a note to clients.

He downgraded the stock to "hold" from "buy."

Shares of the company were down 9 percent at $30.03 in early trade on the Nasdaq, after touching a two-week low of $29.36.

(Reporting by Arpita Mukherjee in Bangalore; Editing by Unnikrishnan Nair)

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HMV equity issue not on playlist

HMV equity issue not on playlist

Stock Market Predictions

LONDON (Global Markets) - British entertainment retailer HMV (HMV.L), grappling with waning demand in its core CD and DVD markets, said an equity issue was not on the agenda -- in the short term at least -- as it posted a further slump in sales.

"It is not on the table today, we do not have an equity story today," chief executive Simon Fox told reporters Friday when asked about analyst speculation of a rights issue early in 2012.

He said such a move would only be considered when HMV had demonstrated "a sharply improved business performance, and the initiatives we are putting in place work in a convincing way."

The 90-year-old group, famous for its Nipper the dog trademark, said sales at stores open more than a year plunged 15.1 percent in the 18 weeks to September 3, which spans its fiscal first quarter.

That compared with a like-for-like sales fall of 14.5 percent in the year to April 30 and was broadly in line with analysts' expectations.

Total retail sales in the first quarter, including the impact of 29 store closures, slumped 21.8 percent. Including the firm's HMV Live business, total sales fell 19.4 percent.

"Entertainment markets have changed rapidly and we've got to move really fast, we've got to change our business," said Fox.

HMV has issued four profit warnings this year as a downturn in consumer spending exacerbated the long-term challenges of intense competition from supermarkets and internet retailers, as well as the increasing popularity of digital downloading.

In June, the group secured its immediate future with a 220 million pounds ($354 million) refinancing deal with banks. It has also sold the Waterstone's book chain and its Canadian arm to cut debt.

REVAMP

HMV has been shifting its emphasis from CDs and DVDs to the growth markets of entertainment-related technology products such as MP3 players, headphones, speaker docks and tablet computers, as well as live music and event ticketing.

It is spending 6 million pounds refitting 150 stores by early October to focus 25 percent of selling space on the new product areas.

It said like-for-like technology sales in its initial six "Fast Forward" stores have continued to more than double.

Extrapolating that uplift across 150 stores would deliver a 6-7 percent improvement in like-for-like sales from current run rates, said Fox.

The firm said HMV Live fared well during the summer festival season, with attendances up 23 percent on a like for like basis.

Fox said a strong product line-up at Christmas gave him some confidence, highlighting releases of all six Star Wars films on Blu-ray discs, and new albums from Coldplay and The X Factor artists.

HMV shares, which have lost 90 percent of their value over the last year, were unchanged at 6.4 pence at 1058 GMT, valuing the business at about 26 million pounds.

HMV made an underlying pretax profit of 28.9 million pounds in the year to April 30. However, analysts expect little or no profit in 2011-12 and, despite the refinancing, believe the firm, which employs about 4,500, faces an uncertain future.

Seymour Piece analyst Freddie George forecast a 2011-12 pretax profit of 2 million pounds. "We maintain our sell recommendation as we continue to believe that the business is a value trap and management will struggle to grow profitability."

Thursday, Home Retail's (HOME.L) Argos business reported an 8.6 percent plunge in second-quarter underlying sales, while Wednesday, Dixons Retail (DXNS.L), the UK's largest electricals retailer, posted a 10 percent fall in first-quarter UK like-for-like sales.

($1 = 0.622 pound)

(Editing by Rhys Jones, Sophie Walker and David Hulmes)

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Citi reinstates quarterly dividend at 1 cent

Citi reinstates quarterly dividend at 1 cent

Stock Market Predictions

NEW YORK (Global Markets) - Citigroup Inc (C.N) declared its first dividend in more than two years on Friday, announcing it will pay a penny per share on June 17, but analysts said the bank could take a while to pay the kinds of dividends that its rivals do.

The third-largest U.S. bank, which needed $45 billion in U.S. government bailouts to survive the financial crisis, said in March it planned to reinstate its dividend after shrinking its number of shares outstanding with a 1-for-10 reverse stock split.

The bank's payout pales in comparison to stronger rivals, amounting to a dividend yield of a tenth of a percent for the shares, compared with JPMorgan Chase & Co's (JPM.N) 2.3 percent.

Citigroup Chief Executive Vikram Pandit has said the bank will likely wait until 2012 to increase the amount of capital it returns to shareholders, through increased dividends or share buybacks.

The bank has posted five consecutive quarterly profits but it has struggled to generate the same level of earnings as rivals like JPMorgan Chase.

Bank investors are skeptical that the company will boost its flagging revenues enough to significantly increase payouts by next year.

"I'll believe it when I see it," said Matt McCormick, a portfolio manager at Cincinnati-based Bahl & Gaynor Investment Counsel, which specializes in dividend-paying stocks.

The bank shrank its outstanding share count on Monday, to 2.9 billion from 29 billion, through the reverse share split. Citigroup's share count ballooned during the financial crisis, as the U.S. government stepped in three separate times to rescue the bank and then started selling off its resulting one-third common share stake.

In December, the government finished selling all of the common shares it took in the bank as part of its bailouts, but Citigroup is still struggling to grow its revenues.

Investors, who see reverse splits as cosmetic fixes to what are often fundamental problems, have not rewarded Citigroup. The bank's shares are down more than 7 percent since they started trading on a split-adjusted basis on Monday. They were down 1.7 percent at $41.71 on Friday afternoon.

Citigroup last paid a 1-cent dividend in February 2009 as it teetered on the brink of collapse during the crisis. The dividends it will pay out now amount to about $116 million a year, or about 1 percent of its full-year 2010 net income.

JPMorgan, which pays a dividend of a quarter per share, is paying out closer to a quarter of its 2010 net income in dividends.

In 2006 Citigroup paid out $10 billion of dividends, amounting to about 45 percent of its full-year earnings.

The bank first said it would reinstate a dividend in March, after a slew of stronger rivals received regulatory authorization to lift their dividends by as much as 20 cents a share and buy back stock.

The Federal Reserve concluded a second round of stress tests of the largest U.S. banks then, and gave some the green light to boost shareholder profits. But the Fed restricted 2011 dividend payouts to 30 percent of each company's expected earnings for the year.

(Reporting by Maria Aspan; Editing by Gerald E. McCormick, John Wallace and Richard Chang)

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Oshkosh shares up 16 percent as Icahn seeks talks

Oshkosh shares up 16 percent as Icahn seeks talks

Stock Market Predictions

NEW YORK (Global Markets) - Shares of Oshkosh Corp (OSK.N) shot up 16 percent on Friday after billionaire investor Carl Icahn reported a 9.5 percent stake and said he was seeking talks with the specialty truck maker to enhance shareholder value.

Oshkosh, which makes tactical vehicles for the military and specialty trucks for construction, is the latest diversified industrial and defense company to be targeted by activist investors for a potential breakup, at a time when defense stocks languish on fears of softening military spending.

Shares of Wisconsin-based Oshkosh, which also makes fire and emergency equipment and cement mixers, were 16 percent higher at $33.62 on the New York Stock Exchange in afternoon trading, valuing the firm at more than $3 billion.

Analysts said a split of its defense and commercial businesses is a possibility, but some said profits from any sale of assets could remain subject to hefty taxation unless Oshkosh could find a way to spin off the entities.

"Given Icahn's history and the fact Oshkosh is a relatively small company, we believe there may be a better than average chance that OSK may get carved up in a future strategic action," said Peter Skibitski, analyst at SunTrust Robinson Humphrey.

"We estimate a potential carve up value for Oshkosh at roughly $35 (a share)," he said.

Ralph Whitworth's Relational Investors LLC, which pressured industrial conglomerate ITT Corp (ITT.N) to split up its defense and water purifying businesses earlier this year, last week reported a stake in L-3 Communications and urged the contractor to divest low-performing units.

"While near-term end market concerns continue, an activist shareholder could unlock significant value, in our view," Jefferies & Co. analyst Stephen Volkmann said of Oshkosh in a note to clients on Friday.

Oshkosh said in a statement late on Thursday it is open to dialogue with shareholders, adding that the firm believes Icahn's investment is "evidence of his belief in the value of the company."

Icahn, who has agitated for big changes at companies, held 9.51 percent of Oshkosh shares as of June 20, according to a Securities and Exchange Commission filing on Thursday.

A tough U.S. defense spending outlook and uncertainty over state and local budgets has weighed on Oshkosh shares this year, which are still down about 6 percent year to date despite Friday's rally.

"Currently Oshkosh is essentially trading at a depressed defense multiple with the market giving almost no credit for the construction and specialty truck related business," Jefferies' Volkmann wrote.

He added that the company's military truck business "could be attractive" as defense budget limits trigger some consolidation.

It is not clear if any defense contractors would find the defense part of the company attractive, especially at a time when the United States winds down wars in Iraq and Afghanistan, people familiar with the industry said. But private equity firms could potentially be interested in different parts of the company, they added.

(Reporting by Roy Strom and Soyoung Kim in New York, and Karen Jacobs in Atlanta; Editing by Tim Dobbyn, Dave Zimmerman)

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Shares of video game companies swing on reviews

Shares of video game companies swing on reviews

Stock Market Predictions

NEW YORK (Global Markets) - Want to know why video game stocks pop or drop? Check the reviews.

For years, investors have turned to video game reviews to help make buy or sell decisions, moving the share prices of some video game companies higher or lower.

They consult the website Metacritic, which tracks a large amount of reviews and comes up with an average score, as well as reviews from top video game outlets such as News Corp's IGN.com and GameStop Corp's Game Informer.

And with the holiday shopping season approaching, when companies in the $64 billion video game industry generate the bulk of their sales and earnings, investors will be scouring reviews more closely than usual.

"The review scores are a first indicator of how a game will perform commercially," said Jesse Divnich, a consultant and analyst for EEDAR, a research firm focused on the video game industry. "Investors will keep a close eye on them to measure potential success of a game."

Shares of Electronic Arts fell 6 percent last October after review scores for "Medal of Honor," a military game in which EA had invested millions of dollars, came in below rival shooter games such as Microsoft's "Halo" and Activision Blizzard's, "Call of Duty."

In March, "Homefront," a first-person shooter game from THQ Inc received weaker-than-expected reviews and scored 75 out of a possible 100 on the website Metacritic. Analysts called the scores disastrous, sending THQ shares down 20 percent that day.

Just as negative reviews can harm video game stocks, positive reviews can boost them. Shares of Take-Two Interactive surged 10 percent over three sessions and reached a 52-week high in May after its crime solving game, "L.A. Noire," received glowing reviews and achieved a high score on Metacritic.

One of the reasons why video game reviews carry so much weight with investors is because avid gamers tend to rely on them to help make purchasing decisions.

Case in point: Eric Choi, a 23-year-old Chicago resident who buys between 10 and 15 games a year. After having fond memories of playing the action shooter title "Duke Nukem" growing up, he was happy to spend $60 on the latest edition of the game, which Take-Two released in June. That was until the reviews changed his mind.

"When the reviews came in about how it was apparently a terrible game, it influenced my opinion and my decision not to buy," Choi said.

Investors also took note. Take-Two shares fell as much as 5 percent on June 14 after the game scored in the low 50s out of 100 on Metacritic.

Reviews have become so influential on sales, Divnich said, that his firm has been hired by major video game companies to write mock ones so that they can anticipate what real reviews might say.

Divnich, who said he consults for about 90 percent of video game companies, brought in a former video game critic from a top website to both play the game and write the review, which is designed to look like a review coming from a large video game publication. The reviews are then sent to video game makers and never appear in print.

"We'll type up a review as if it would be in a magazine," he said. "It's critical for them to know how well their game is going to be received before they launch a title."

While Frank Gibeau, president of EA Labels, agrees that game critics and reviews play an important role in consumers' buying decisions, he also said that they are not always indicative of a game's success.

"There is a correlation between the critical index and sales of any given game, but there are exceptions to the rule - games that don't score high marks in reviews but sell well and others that critics love but gamers ignore," Gibeau said.

For example, THQ has said "Homefront," which received poor reviews, may end up selling 3 million copies, which would make it a commercial success.

THQ and Take-Two declined to comment on this story.

A poor review of a highly anticipated game may not be enough to convince an investor to sell off shares of a company entirely either, said Ted Pollak, portfolio manager of the San Francisco-based Electronic Entertainment Fund, which focuses on video game investments.

Besides reviews, Pollak does other research to figure out if a game might sell well, including beta testing or monitoring early versions of games. He also considers the development teams behind the game and even looks at what type of technology was used in its creation.

"If I was in a situation where I needed to trim a position, reviews could have an influence. But I wouldn't completely dump a company because one game didn't score well," he said.

HOLIDAY SPOTLIGHT ON REVIEWS

When publishers release their biggest games of the year -- the games that are expected to have a major impact on a company's bottom line -- the importance of reviews is heightened.

"If 'Call of Duty,' which is half of Activision's earnings, gets a poor review this year, it will be bad," said Wedbush Securities analyst Michael Pachter, referring to the possible impact on Activision's stock.

Activision will release the latest version of the game, its biggest video game franchise on consoles, in November. Last year, the game set a new record by selling 5.6 million copies, or $360 million worth, on its first day.

Pachter says he considers review scores on websites Metacritic and Gamerankings.com, which are both owned by CBS Corp, for his investment recommendations.

EA is mounting a challenge to Activision with its own first-person shooter game, "Battlefield 3," which comes out in October.

Divnich, from EEDAR, expects Activision's game to sell twice as many copies as EA's game. But, he added, "if EA can gain higher review scores, it shifts the momentum in EA's favor."

(Reporting by Liana B. Baker; Editing by Peter Lauria, Dave Zimmerman)

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Groupon shares climb above $20 IPO price

Groupon shares climb above $20 IPO price

Stock Market Predictions

(Global Markets) - Groupon Inc shares rose above their $20 initial public offering price on Friday.

Groupon stock slumped below $20 last month on concern about competition from rival LivingSocial and how the European debt crisis might affect overseas growth.

However, Groupon released strong early holiday sales numbers this week and executives said international growth remains strong.

Groupon shares rose more than 7 percent to an intraday high of $20.82 on Friday. The stock was up 5.5 percent to $20 in late-morning trading.

(Reporting by Alistair Barr. Editing by Robert MacMillan)

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FDA says no need to recall Enfamil formula

FDA says no need to recall Enfamil formula

Stock Market Predictions

(Global Markets) - U.S. health officials said they found no trace of potentially deadly bacteria that killed two infants in recent weeks in sealed cans of Enfamil baby formula, and that a recall was unnecessary, providing relief for the product's manufacturer, Mead Johnson Nutrition Co.

The death of one baby, 10-day-old Avery Cornett in Missouri on December 18, is what led chains including Wal-Mart Stores Inc, Walgreen Co and Kroger to pull some cans of Enfamil Newborn from shelves in an effort to protect consumers from Cronobacter, which can cause severe illness in newborns and has been found in powdered milk-based formula.

The death of a second baby, in Florida, was not known until an update from the U.S. Food and Drug Administration and the Centers for Disease Control and Prevention late on Friday following the testing of samples taken from the infected babies' homes and company facilities.

"Parents may continue to use powdered infant formula, following the manufacturer's directions on the printed label," the agencies said in a joint statement.

"We're pleased with the FDA and CDC testing, which should reassure consumers, healthcare professionals and retailers everywhere about the safety and quality of our products," Tim Brown, Mead Johnson's general manager for North America, said in a statement.

Two other babies, one in Illinois and one in Oklahoma, were also reported with infections in recent weeks, but they both recovered.

The agencies said they found Cronobacter in an open container of infant formula, an open bottle of nursery water and prepared infant formula.

They said it was unclear how the contamination occurred, which suggests that it could have happened after the packages were opened. The agencies also said there was no evidence indicating that the infections were related.

"There is currently no evidence to conclude that the infant formula or nursery water was contaminated during manufacturing or shipping," said an FDA spokesman.

These findings basically clear Mead Johnson, whose shares have fallen 10 percent since the issue surfaced, said personal injury and product liability lawyer William Marler of the firm Marler Clark.

"It would be difficult to prove that this formula caused this child's death," said Marler, who has years of experience handling foodborne illness cases, including one in 2009 against Mead Johnson involving Cronobacter. That case was dismissed after no sealed cans tested positive, robbing the prosecution of the proverbial "smoking gun."

Officials for the CDC, Mead Johnson and Wal-Mart could not immediately be reached for comment.

MOVING FORWARD

Mead Johnson's name may be cleared, but the company will likely take some time to fully heal, experts say, given how serious the situation is and how sensitive people are about what they feed their babies.

"Bad news is bad news," said Robert Passikoff, president of research firm Brand Keys Inc. He said the negative publicity has already damaged Enfamil's brand equity and could have cost the company one cycle of new parents, who might feed their children formula for about a year.

Goldman Sachs lowered its earnings estimates for Mead Johnson last week for 2012 through 2014 by 3 percent on average, citing the risk of damage to consumers' trust in the Enfamil brand. It lowered its price target to $74 from $80.

Despite the costs of retesting its formula and the likely hit to earnings from something that is not its fault, Mead Johnson has little legal recourse against either the public health department, the victims' families or Wal-Mart, which pulled its product in the absence of a definite link.

"Could a lawyer cook up legal theories to sue? They can. Would that be a very wise move? I think it would be really, really stupid," Marler said, for two reasons.

"'We didn't know for sure and we wanted to protect our customers' is a pretty good defense," he said, adding that "Suing somebody isn't really the likely way you're going to get your product in their store."

Enfamil is the leading milk-based formula in the United States, controlling nearly 44 percent of the $4.29 billion market, according to Euromonitor International. No. 2 is Abbott Laboratories Inc's Similac, with a 24-percent share, followed by Nestle's Good Start with 10 percent and private label, or store brands, with 9 percent.

Still, the United States makes up less than 30 percent of Mead Johnson's sales, and is not what had been driving the company's shares, said RBC Capital Markets analyst Edward Aaron.

Until its latest troubles, the stock had more than tripled since its February 2009 spin-off from Bristol Myers Squibb, fueled by growth from emerging markets.

In the latest quarter, the company's sales rose 15 percent to $933.9 million, driven by a 30 percent jump in Asia and Latin America.

But Mead Johnson has done many things well in this crisis and should be forgiven quickly, said Mike Rozembajgier, vice president of recalls for Stericycle ExpertRECALL, a consulting and logistics firm.

"There's an understanding by the public that recalls are going to happen," Rozembajgier said. "How forgiving they might be with regard to a particular brand ... comes down to how the company manages the recall."

Mead Johnson has not had a recall, but has gone through many of the same steps, he said, such as working with the government,

being transparent and communicating with retailers and the press.

(Reporting By Martinne Geller in New York and Anna Yukhananov in Boston; Editing by Bob Burgdorfer, Steve Orlofsky, Gary Hill)

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