Thursday, November 30, 2017

Disney CEO Iger buys $1 million worth of Apple stock

Disney CEO Iger buys $1 million worth of Apple stock

Stock Market Predictions

(Global Markets) - Apple Inc's newest board member, Walt Disney Co Chief Executive Officer Bob Iger, bought about $1 million worth of the iPhone maker's shares earlier this week, a symbolic gesture of confidence in the prospects of the company.

Iger, who was appointed to Apple's board on November 15, bought 2,670 Apple shares on the open market on Tuesday at an average price of $375 each, according to a U.S. Securities and Exchange Commission filing.

Iger's wife also owns 75 Apple shares, the filing said.

As part of being a director of Apple, the long-time Disney executive also is entitled to the standard $50,000 annual retainer and received an initial grant of 142 restricted Apple stock units that will vest in February.

(Reporting by Poornima Gupta; Editing by Lisa Von Ahn)

Walgreen sales hit by exit from Express Scripts

Walgreen sales hit by exit from Express Scripts

Stock Market Predictions

(Global Markets) - Walgreen Co (WAG.N) is being hit by its withdrawal from the Express Scripts Inc (ESRX.O) pharmacy network and by a much-weaker-than-expected flu season, leading it to temper its expectations for the number of prescriptions it will fill this year.

Walgreen said on Friday that it now expects prescriptions filled in fiscal 2012 to be around the low end of its previous forecast of 97 percent to 99 percent of the prescriptions it filled last year.

Walgreen said January sales at stores open at least a year, or same-store sales, fell 4.6 percent as it lost business following its decision to walk away from Express Scripts after failing to come to terms on a new contract with the pharmacy benefits manager.

Analysts, on average, anticipated that sales would fall only 2.7 percent, according to Thomson Global Markets data.

Walgreen, the largest U.S. drugstore chain, stopped filling prescriptions for patients in the Express Scripts network on December 31, 2011. Chains such as CVS Caremark Corp (CVS.N) and Rite Aid Corp (RAD.N) have been advertising to woo customers who used to fill their prescriptions at Walgreen.

CVS, in particular, appears to be "the clear winner" due to the fallout between Walgreen and Express Scripts, said Jefferies & Company analyst Scott Mushkin, who has a "buy" rating on CVS and a "hold" rating on Walgreen.

CVS stands to benefit both in its stores and in its Caremark pharmacy benefits management business, analysts say.

Pharmacy same-store sales fell 7.9 percent in January, Walgreen said. Express Scripts prescriptions accounted for 12.4 percent of Walgreen prescriptions in January 2011.

"While it's no surprise (Express Scripts) had a large impact, underlying trends were also disappointing," said Credit Suisse analyst Edward Kelly.

He said that Walgreen's tone in its statement also suggested that the two parties are not close to reaching a resolution.

Walgreen is moving ahead with relationships with large and small employers, health systems, physician groups and other pharmacy benefits managers.

"With January now behind us, we are moving forward with relationships with large and small employers, health systems, physician groups and other PBMs who value Walgreen's ability to help lower overall healthcare costs," Kermit Crawford, Walgreen's president of pharmacy, health and wellness services and solutions, said in a statement.

With such relationships and once it is past the weak flu season, Walgreen expects the number of comparable prescriptions filled relative to January's result to improve in the coming months, he added.

Walgreen has administered 5.5 million flu shots so far this season, down from 6.3 million at the same time last year.

Shares of Walgreen, which operates 7,830 U.S. drugstores, were down 18 cents to $33.35 in morning trading on the New York Stock Exchange.

(Reporting by Jessica Wohl in Chicago; editing by John Wallace and Mark Porter)

Wednesday, November 29, 2017

Yahoo battle with China's Alibaba intensifies

Yahoo battle with China's Alibaba intensifies

Stock Market Predictions

NEW YORK (Global Markets) - Yahoo Inc's battle with Alibaba Group intensified on Friday as they issued contradictory statements over the Chinese company's transfer of a major Internet asset to its chief executive.

Analysts said the handover of Alipay, an online e-commerce payment system similar to eBay Inc's PayPal, to Alibaba Chief Executive Jack Ma has reduced the value of Yahoo's 43 percent Alibaba stake. Alibaba also operates China's largest e-commerce company, Alibaba.com Ltd.

Yahoo said it had been blindsided by the deal, while Alibaba countered that Yahoo was aware of the transaction by virtue of having a board seat, now held by former Yahoo Chief Executive Jerry Yang, who is also a Yahoo director.

Shares of Yahoo have fallen as much as 14 percent since the company first disclosed the transfer in a regulatory filing after markets closed on Tuesday.

The feud underscores the tense relationship between Ma and Carol Bartz, Yahoo's chief executive since January 2009.

Bartz is under pressure to boost revenue and drive more visitors to Yahoo, which is losing ground to rivals including Google Inc and Facebook. The Alibaba stake is considered one of Yahoo's most valuable assets.

Both Bartz and Yahoo Chairman Roy Bostock are in the "hot seat," said Eric Jackson, managing member of the hedge fund Ironfire Capital, which owns Yahoo stock.

"At best it makes it look like Yahoo -- Jerry Yang especially -- has been out of the loop," he said. "The Yahoo board has to be looking into the mirror and saying: 'What do we need to change to make this right?'"

In afternoon trading, Yahoo shares were down 61 cents, or 3.6 percent, at $16.56, after earlier falling as much as 7 percent to $15.96. They had closed Tuesday at $18.55.

BATTLE OVER BASICS

Yahoo invested $1 billion in Alibaba in 2005, but Alibaba has made clear it wants to buy out Yahoo's stake.

"I just don't trust them," Ma told Forbes magazine in its April 11 edition.

Bartz told Global Markets in September she has no plans to sell.

Some analysts estimate that Yahoo's Asian assets, including a 35 percent stake in Yahoo Japan Corp, represent at least half the Sunnyvale, California-based company's market value.

Yahoo and Alibaba do not agree on when Alipay was transferred to Ma, or whether Alibaba's board knew about it.

Alibaba said the board was told in July 2009 that the transfer had occurred. Yahoo said the transfer happened in August 2010, giving Ma full ownership of Alipay, and Yahoo did not learn of it until March 31, 2011.

Japan's Softbank Corp also owns a stake in Alibaba. Four directors make up Alibaba's board, including Yang and Softbank founder Masayoshi Son.

"I find it impossible to believe, as a rational matter, that a board member from Yahoo could sit through a proceeding whereby a valuable asset was transferred to the Alibaba CEO, and not object," said Manning Warren, a corporate law professor at the University of Louisville.

In a statement on Friday, Alibaba spokesman John Spelich said directors were "told in a July 2009 board meeting that majority shareholding in Alipay had been transferred into Chinese ownership."

According to Alibaba, the move was necessary to comply with Chinese law, to ensure Alipay could continue operating.

Later Friday, Yahoo stood by its earlier statement that the Alipay deal occurred "without the knowledge or approval of the Alibaba Group board of directors or shareholders."

Yahoo said it is in "active and constructive" talks with Alibaba and Softbank "to preserve the integrity" of its stake.

"It's surprising you can have that sort of communication lapse," said Ken Sena, an Evercore Partners analyst.

David Einhorn's hedge fund Greenlight Capital last week took a "significant" stake in Yahoo, saying its Alibaba interest could ultimately be worth more than Yahoo is now.

LEGAL RAMIFICATIONS

Warren said Yahoo might try to sue Ma under Delaware law, saying Ma would have to show that his acquisition of a major asset from his own company had been conducted fairly.

Meanwhile, if in fact Yahoo had been in position to stop the Alipay transfer, Yahoo itself might be sued, said Mark Rifkin, a partner at Wolf, Haldenstein, Adler, Freeman & Herz.

"It could even give rise to a Yahoo shareholder claim against Alibaba," given the 43 percent stake, he added.

Disputes such as this could dampen U.S. investors' enthusiasm for companies based in China, Ironfire's Jackson said. "I definitely think it can spook people," he said.

(Additional reporting by Aditi Sharma in Bangalore; editing by John Wallace and Gerald E. McCormick)

Schlumberger quarterly results jump, shares rise

Schlumberger quarterly results jump, shares rise

Stock Market Predictions

NEW YORK/SAN FRANCISCO (Global Markets) - Schlumberger Ltd (SLB.N) beat estimates with a 64 percent jump in profit on strong U.S. demand and deepwater drilling, while international activity showed clear signs of improvement after a long wait.

Schlumberger shares rose 3 percent in early trading, as the world's largest oilfield services company delivered its first set of market-pleasing results this year.

The stronger North American trend drove an estimate-beating 54 percent jump in earnings for rival Halliburton Co (HAL.N) this week, though Halliburton shares were little changed on Friday.

While half of Halliburton's revenue comes from Canada and the United States, the region accounts for less than a third for Schlumberger, which sees big improvements elsewhere led by a dramatic increase in Saudi Arabian activity.

"None of the other countries are executing with the speed of Saudi. So yes, it's going to come, but it's not there yet," Chief Executive Andrew Gould said on a call with analysts -- his last before he retires as CEO and hands off the top job to 44-year-old Paal Kibsgaard.

Iraq is also a key factor in the improving international outlook, along with the North Sea and East Asia, he added.

Asked about Iraq, where many oil firms have found it hard to establish a foothold, Kibsgaard said it is likely to be Schlumberger's seventh biggest out of 14 markets in the Middle East and Asia, before improving to No. 3 next year.

Oil and gas companies' spending picked up far more quickly in North America than elsewhere this year as oil prices surged and producers rushed to tap fields rich in liquids.

Schlumberger said onshore U.S. strength and demand from the world's deepwater regions drove second-quarter earnings, while Gulf of Mexico activity was improving after the drilling halt that followed last year's BP Plc (BP.L) Macondo oil spill.

PROFIT PLEASES WALL ST.

Second-quarter profit rose to $1.34 billion, or 98 cents a share, from $818 million, or 68 cents a share, a year earlier.

Leaving out one-time items, Schlumberger earned 87 cents a share from continuing operations, topping the analysts' average forecast of 85 cents as compiled by Thomson Global Markets I/B/E/S.

Revenue rose 62 percent to $9.6 billion, topping the $9.2 billion that analysts had expected.

The strong North American performance offset disappointing earnings in Europe, the former Soviet states and the Middle East, UBS analyst Angie Sedita said, though she also saw high energy prices eventually driving those businesses as well.

"Schlumberger offers the best play on the international ... and deepwater markets, which should slowly start to improve later this year, with greater gains in 2012," Sedita said in a note to investors.

Gould expressed optimism about deepwater in particular, a view supported by the dozens of new rigs in the pipeline.

"There have never been so many deepwater rigs on order. So to the extent that we have exploration success in deepwater ... I think that the exploration cycle can be a lot more sustained than it was last time, when it was abruptly terminated by the financial crisis and by the Macondo incident," he said.

Gould also said the steep ramp-up in demand for services in the U.S. market and elsewhere is straining the sector, making it difficult to get equipment and staff to customers.

Shares in Schlumberger climbed 3.3 percent to $93.93 in morning trading. At Thursday's close, the stock had gained 9 percent so far this year, lagging a near-12 percent rise in the Philadelphia Stock Exchange Oil Service Index .OSX.

The improving global outlook gave a 2.6 percent boost to shares of Weatherford International Ltd (WFT.N), which is making a big push outside the United States, while U.S.-geared Baker Hughes Inc (BHI.N) fell 0.8 percent.

(Additional reporting by Krishna N Das in Bangalore; Editing by Derek Caney and Gerald E. McCormick)

Tuesday, November 28, 2017

Atmel shares fall on weak outlook

Atmel shares fall on weak outlook

Stock Market Predictions

(Global Markets) - Chipmaker Atmel Corp's (ATML.O) shares fell 6 percent on Thursday, a day after the company reported strong first-quarter results but gave a weak second-quarter revenue outlook.

Revenue is expected to rise 1-4 percent, sequentially, taking it to $466-$479.9 million, Atmel said in a call.

Analysts, on an average, were expecting revenue of $473.2 million, according to Thomson Global Markets I/B/E/S.

Investors were also looking for strong second quarter guidance, suggesting a linear ramp in touchscreen shipments during 2011, Capstone Investment analyst Jeff Schreiner wrote in a note.

"We believe one potential reason for less-than-stellar guidance could be some smartphone shipments occurring during the second half versus prior estimated linear acceleration through out 2011," Schreiner said.

Atmel expects gross margin to be about 51 percent in the second quarter.

First-quarter results beat estimates, helped by an increased demand for its touchscreen chips.

Shares of the company opened more than 4 percent down at $14.10 on Thursday on Nasdaq.

(Reporting by Swati Chitnis; Editing by Joyjeet Das)

Bank of America says it has spent $2.1 billion on share exchange

Bank of America says it has spent $2.1 billion on share exchange

Stock Market Predictions

(Global Markets) - Bank of America Corp (BAC.N) has issued about $2.1 billion in common stock and senior notes as part of a previously announced swap for outstanding securities held by institutional investors, according to a filing Thursday.

The second largest U.S. bank said two weeks ago that it planned to issue up to 400 million common shares and $3 billion in debt to retire existing preferred shares and trust preferred securities. The move improves a measure of the bank's capital and eliminates interest payments, but dilutes the holdings of common shareholders.

Bank of America Chief Executive Officer Brian Moynihan has repeatedly said the bank does not need to issue common stock to meet new international capital standards. At an investor conference on Tuesday, he said the exchange was a "prudent way to manage capital."

According to the filing, the bank has issued investors 185.5 million common shares, worth about $1.1 billion at Thursday's closing price of $5.80, and $998.1 million of senior notes. In return, the bank received preferred stock and trust preferred securities worth about $2.7 billion.

Bank of America said in the filing that it expects the exchange will increase a type of capital known as Tier 1 common by $1.88 billion.

Bank spokesman Jerry Dubrowksi declined to comment on whether the bank will issue the entire 400 million shares or $3 billion in debt.

Bank of America shares on Thursday closed down 1.7 percent at $5.80 amid continuing concern about the ability of European countries to pay their debts. The shares on Wednesday fell below $6 for the first time since early October.

(Reporting by Rick Rothacker in Charlotte, North Carolina; Editing by Bernard Orr)

Monday, November 27, 2017

Investors brace for European hit on earnings

Investors brace for European hit on earnings

Stock Market Predictions

NEW YORK (Global Markets) - Investors are about to find out if the economic woes in Europe are going to deliver a deep wound to U.S. company earnings instead of the mere scratch that many expect.

The fourth-quarter reporting period kicks off next week, and all eyes will be on erosion in sales in Europe, where the debt crisis has propelled the region toward a recession. This could dent positive sentiment just as investors start to focus on strong U.S. growth.

Analysts believe that low U.S. stock market valuations already factor in weakness from Europe for the fourth quarter, but there are concerns that earnings forecasts for 2012 have yet to account for deeper fallout.

"There's some unhealthy optimism that thinks somehow the U.S. can decouple from the rest of the world," said Shawn Hackett, president at Hackett Financial Advisors in Boynton Beach, Florida. "That is highly unlikely."

Companies including tech heavyweights Texas Instruments and Hewlett Packard and others like insurer MetLife have already cited fallout from Europe for reduced expectations. Analyst forecasts for fourth- and even first-quarter earnings have tumbled since the summer despite steady improvement in U.S. economic demand.

While all 10 S&P 500 sectors have seen profit estimates cut,

materials and financials have been the hardest hit. Other sectors that could get dragged down by Europe's problems include the industrial, consumer and technology sectors.

The overall S&P 500 forecast for fourth-quarter earnings growth has already been slashed, down to growth of 7.9 percent from 17.6 percent previously.

EUROPE'S STRUGGLE

Some 14 percent of all Standard & Poor's 500 company sales come from Europe, which would have a sure impact on results, said Standard & Poor's earnings analyst Howard Silverblatt.

"In earnings, when you're talking about pennies beating it or not, 14 percent of the number makes a difference."

The euro zone debt crisis has engulfed much of the continent as major institutions have found themselves exposed to debts in struggling nations such as Greece, Portugal, Italy and Spain. The latter two are the third- and fourth-largest economies in the euro zone and are struggling to reduce debt through severe spending cuts and higher taxes.

These problems are affecting economic growth. Italy grew just 0.2 percent in the third quarter from the previous year. Economists in a December Global Markets poll forecast the euro zone will contract by 0.3 percent in the fourth quarter, followed by a further 0.2 percent contraction in January-March, before a meager recovery in subsequent quarters.

Global companies with more than 50 percent of their sales in Europe and with a market cap greater than $5 billion underperformed other major averages in 2011, according to Thomson Global Markets data.

An index of 161 names meeting that criteria lost 13 percent in 2011, compared with a 5 percent drop for the MSCI World Index. Cisco Systems, which gets 56 percent of sales from Europe, is the largest U.S. name in this group.

Many other U.S. companies have less exposure to Europe than Cisco, but still generate a substantial portion of their sales - 20 to 30 percent - there. In these cases, it would take a more severe recession to hurt their revenues.

In a report on Thursday examining a number of industrial equipment companies, Morgan Stanley analysts pointed out that many executives were "cautiously optimistic" with expectations for a mild recession in Europe. Companies in that industry are expecting 4 to 6 percent revenue growth in 2012, but Morgan Stanley said "short-term trends" suggest estimates could fall short of that if world growth slows.

Companies including Dover Corp and Illinois Tool Works would be hurt, they wrote. Dow component 3M would also be hit in a "deep recession" in Europe.

"If we're dealing with organic revenue growth, you're going to be seeing earnings declines," said Hackett.

"In some cases, in the more cyclical businesses, it could be very severe, and I do not believe the stock market has priced in what the likely reality is."

Google's stock on Thursday was downgraded by brokerage Benchmark Co, whose analysts expect Google to suffer a decline in European advertising revenue.

PROFITS EYED FOR REBOUND

A drumbeat of negative preannouncements is also raising some concerns.

The ratio of negative to positive preannouncements over the last four weeks is at 3.3, and it hit a 10-year high late in December. The long-term average is 2.3, according to Thomson Global Markets data.

"The number of companies issuing negative guidance during the fourth quarter has increased, and this perhaps has flown a little under the radar screen over the last few weeks in our judgment," Morgan Stanley analysts wrote in a 2012 outlook. The firm expects the S&P 500 to end 2012 at 1,167, which would be an 8.8 percent decline from the current level.

The euro zone's weakness has another detrimental effect. Strength in the dollar against the euro will increase headwinds for earnings, because it makes U.S. goods more expensive in Europe.

"Each 1 percent appreciation in the U.S. dollar corresponds to an expected 0.97 percent decline in aggregate earnings," Morgan Stanley wrote.

Still, many stock strategists are hoping healthy sales from the United States, where the economy is slowly improving, will more than offset the negative impact of Europe.

"Europe is clearly the caboose on the train...(but) I don't think the caboose is as bad as most people think it is," said Ken Fisher, a billionaire investor whose money management firm oversees $40 billion in assets.

"At a time when people have been fearful of a weak Europe, the economy in America has been consistently stronger than people have though it would be," he added.

Several blue-chip companies with heavy exposure to Europe performed well in 2011. McDonald's, for instance, derives 42 percent of its sales from Europe, and it was the Dow's best performer last year, rising 31 percent.

Kraft Foods generates 32 percent of sales in Europe, and its stock rose 19 percent in 2011. And Apple gets 26 percent, according to Thomson Global Markets data, and its stock was up 25.6 percent.

Those gains would be in danger if Europe's fundamentals worsen.

Big-cap multinationals have "become a bit of a darling here in the last couple of months...they're probably more vulnerable to disappointments," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

(Reporting By Caroline Valetkevitch; Editing by Leslie Adler)

Time Warner Cable to buy back more stock, shares up

Time Warner Cable to buy back more stock, shares up

Stock Market Predictions

(Global Markets) - Time Warner Cable Inc (TWC.N) raised its quarterly dividend and surprised Wall Street by announcing plans to buy back $4 billion of its stock, sending shares up more than 8 percent on Thursday.

The No. 2 U.S. cable provider also posted a higher quarterly profit as it added more customers than expected for its broadband services and stemmed the decline in its video business.

The company raised its quarterly dividend by 17 percent to 56 cents a share, which means its shares now carry a 3.2 percent dividend yield based on Wednesday's closing price.

While Collins Stewart analyst Thomas Eagan said he was expecting a dividend increase, he was surprised the company increased its share buyback so soon. He said he did not expect such a move until the third quarter of 2012 and that it signals a strong outlook for future cash generation.

"It is notable and speaks to their confidence to their cash flow growth," he said.

The high end of the company's forecast range for 2012 earnings per share was slightly above Wall Street estimates. It now expects earnings per share in the range of $5.25 to $5.50, compared with the average estimate of $5.48, according to Thomson Global Markets I/B/E/S.

Time Warner Cable, which competes with Comcast Corp (CMCSA.O) and Cablevision Systems Corp (CVC.N), said fourth-quarter profit rose to $564 million, or $1.75 a share, from $392 million or $1.09 a share a year earlier.

Its revenue rose 4 percent to $5 billion, topping analysts' average estimate of $4.97 billion, according to Thomson Global Markets I/B/E/S.

It added 117,000 broadband Internet residential customers, beating analysts' estimates for 87,000.

The company lost 129,000 video residential subscribers, compared with analysts' expectations for a loss of 130,000, according to StreetAccount data. Bernstein Research analyst Craig Moffett wrote in a research note that "video subscribers continue to trend better."

Time Warner Cable and its peers have been losing video customers to phone and satellite providers and Internet companies such as Netflix Inc (NFLX.O) and Hulu. On Wednesday, Netflix surprised Wall Street by adding 610,000 net new subscribers in the United States in the latest quarter.

AT&T Inc (T.N), which has a TV service called U-Verse, said in its quarterly earnings report on Thursday that it added 208,000 TV subscribers in its fourth quarter.

Time Warner Cable shares were up 7.8 percent at $74.50 at midmorning on the New York Stock Exchange, off an earlier high at $74.88.

(Reporting by Liana B. Baker in New York; Additional reporting by Saqib Iqbal Ahmed in Bangalore; editing by John Wallace and Matthew Lewis)

Sunday, November 26, 2017

Achillion shares fall on concerns over hep C drug's future

Achillion shares fall on concerns over hep C drug's future

Stock Market Predictions

(Global Markets) - Achillion Pharmaceuticals' (ACHN.O) shares fell 12 percent on Friday, shedding some of their recent gains amid concerns raised by an investment website on the future of the company's key hepatitis C drug.

On Thursday, investment website Seeking Alpha said the company was at a disadvantage as none of its hepatitis drugs in development were nucleosides.

While Brean Murray Carret analyst Brian Skorney felt the investor reaction was a fallout of the article, he didn't think the article was "fundamentally meaningful," or raised any new concerns.

Achillion's experimental hepatitis C drug, ACH-1625, is expected to compete with rival drugs from Vertex Pharmaceuticals Inc (VRTX.O) and Merck & Co (MRK.N), but must be taken with commercially manufactured interferon, and is seen facing a big threat from nucleotide drugs.

Most hepatitis C drugs used now are combination therapies, and these new drugs -- nucleosides -- could be a game changer for both patients and physicians.

Inhibitex (INHX.O), Pharmasset VRUS.O and Idenix (IDIX.O) are all developing a promising new type of hepatitis C medicine called nucleotide polymerase inhibitors, which work by targeting polymerase -- an enzyme essential for replication of the hepatitis C virus.

"The Seeking Alpha comment that Achillion's pipeline is a long shot could have had some negative effect. Also the stock has run up ... so some people are taking profit. Those are the potential possibilities," said William Blair & Co analyst Katherine Xu.

Since the beginning of the year, Achillion's stock has risen 39 percent, sparked by M&A activity in the hepatitis C treatment space.

"On the fundamental side, I don't think the company has changed anything since the last week," Xu added.

Shares of the New Haven, Connecticut-based company were down 9.5 percent at $9.54. They fell to a low of $9.40 earlier in the session. (Reporting by Shailesh Kuber in Bangalore; Editing by Editing by Sriraj Kalluvila)

Netflix lowers U.S. subscriber forecast; shares fall

Netflix lowers U.S. subscriber forecast; shares fall

Stock Market Predictions

(Global Markets) - Netflix Inc cut its third-quarter forecast by 1 million U.S. subscribers, sending its shares down nearly 19 percent, as the company known for rapid growth expects more fallout from a price increase on its DVD service.

On Thursday, Netflix said it would have 24 million subscribers at the end of the third quarter, down from a prior forecast of about 25 million given soon after the July announcement of the price increase.

The decision by Chief Executive Officer Reed Hastings to raise rates for customers who still want DVDs by mail took effect earlier this month.

Fewer customers than expected are opting to take Netflix's DVD-only subscription package. Netflix now expects to have 2.2 million such subscribers, down from the previous forecast of 3 million. The company also cut its forecast for streaming-only subscribers, to 21.8 million from 22 million.

Lazard Capital analyst Barton Crockett expressed concern that the changes might also hurt Netflix's fourth quarter.

"Clearly, if the third quarter is slipping, there's risk to the fourth quarter, as the year-ago period was a time when everything went right for Netflix," he said in a research note.

Crockett called the price increase a "rare, large and surprising misstep" by Hastings.

The decision to increase the monthly subscription for a joint streaming and DVD rental service by as much as 60 percent caused an uproar among customers and bloggers. For U.S. customers, the price for renting one DVD at a time plus unlimited streaming increased from about $10 a month to about $16 per month.

Netflix shares have fallen nearly 40 percent since the price hike was announced.

The Los Gatos, California, company, which is under pressure from Hollywood studios and pay-TV rivals because of its aggressive pricing, has argued that it sees the future in lower-cost streaming services.

Netflix's chief content officer, Ted Sarandos, said the pricing decision gave customers a chance to choose whether to keep DVD services or move to a cheaper streaming-only option. Previously only a combined service was offered.

"Being able to precisely forecast and predict the behavior of that many people on fairly radical change is something we'll get better at all the time," Sarandos said at the Paley Center for Media's International Council meeting on Thursday.

In a statement, Netflix said "we know our decision to split our services has upset many of our subscribers, which we don't take lightly, but we believe this split will help us make our services better for subscribers and shareholders for years to come."

UNDERMINING THE ECOSYSTEM

Hastings, who is also on the boards of Microsoft Corp and Facebook, is often seen as a visionary for building Netflix into a successful competitor first to Blockbuster and then, with the introduction of streaming, to traditional cable and satellite TV distributors.

But the cable and satellite TV companies have been pressuring Hollywood studios not to allow Netflix to undermine the $100 billion pay-TV ecosystem.

Netflix also faces growing competition in the streaming market from Amazon.com Inc, Hulu and others.

For DVDs, Coinstar Inc's Redbox kiosks offer an alternative, and Dish Network Corp's Blockbuster Inc is trying to lure disgruntled Netflix customers with a free trial offer. Coinstar shares rallied 7.2 percent to $48.49 on the Nasdaq on Thursday.

"There are other options popping up that may be attractive" to consumers, said Merriman Capital analyst Eric Wold, who has a "neutral" rating on Netflix and a "buy" on Coinstar.

Hastings now has to prepare himself for the possibility of another subscriber backlash as soon as February if Netflix loses some of its popular programing and movies.

Earlier this month, Starz ended talks to renew a deal that expires on February 28. After that, the pay-TV channel controlled by Liberty Media will stop providing its content, which includes exclusive streaming rights to first-run Sony Corp and Walt Disney Co movies such as "Toy Story 3" and "The Social Network."

Netflix "can't grow as fast as the Street thinks," said Wedbush Securities analyst Michael Pachter, who rates the company's stock at "underperform." "They can't have the perfect world where content stays cheap and people sign up at low prices."

However, Netflix maintained its third-quarter financial outlook as well as its international subscriber forecast.

The company's stock fell 19 percent to close at $169.25 on Nasdaq.

(Reporting by Yinka Adegoke in New York and Lisa Richwine in Los Angeles, additional reporting by Liana Baker in New York and Supantha Mukherjee in Bangalore; Editing by Maju Samuel, Lisa Von Ahn and Matthew Lewis)

Saturday, November 25, 2017

Cardinal wins order lifting DEA suspension in Florida

Cardinal wins order lifting DEA suspension in Florida

Stock Market Predictions

BOSTON/WASHINGTON (Global Markets) - Cardinal Health Inc (CAH.N) won an order on Friday blocking the U.S. Drug Enforcement Administration's suspension of its license to distribute potentially addictive medicines from its Florida facility.

The DEA ordered suspension because Cardinal knew, or should have known, that the pharmacies were inappropriately filling prescriptions for oxycodone by physicians for illegitimate reasons, the company said.

Cardinal filed a request in federal court in Washington for a temporary restraining order to block the DEA order, saying it unfairly affected all shipments of all controlled substances to about 2,700 pharmacies, hospitals and other customers.

U.S. District Judge Reggie Walton responded quickly in granting Cardinal's request, noting the company had already suspended shipments to the four pharmacies in question, two independent and two CVS outlets.

The DEA suspension order "is unnecessary to address the problem the DEA alleges because the plaintiff is not currently supplying controlled substances to the four pharmacies identified," Walton wrote in a brief order.

Cardinal "has also pledged to terminate sales of controlled substances to any pharmacy or customer that the DEA believes is likely engaging in illegal activity or diversion."

He noted the suspension would have disrupted supplies to thousands of hospitals, pharmacies and healthcare providers.

On a conference call with Wall Street analysts, Cardinal Chief Executive George Barrett said he was "outraged" at the imperial way in which the DEA suspended its license, saying the agency had not contacted the company beforehand or given it the "opportunity to be heard."

He also said the order will not affect its financial forecasts and that, if necessary, the company was prepared to ship medicines from its Mississippi facility.

A spokesman for the U.S. Justice Department, which oversees DEA and represents it in court, declined to comment. A DEA spokesman was not immediately available for comment after normal business hours.

The dispute highlights a growing rift between the DEA and companies that make painkillers, stimulants, tranquilizers and other potentially addictive medicines at a time of increased prescription drug abuse. Florida is one of states most affected by the problem.

Cardinal said the DEA suspended the company's license based on increased shipments made to four pharmacies, but the company said volume alone is not sufficient evidence to assume products are being diverted for recreational use.

The needs of pharmacies are varied, and higher volumes might be appropriate based on factors such as pharmacy size, patient demographics and proximity to acute care centers, the company said.

PREVIOUS SUSPENSION

In 2007, the DEA suspended Cardinal's license to distribute controlled substances from the same Lakeland center and another center, in Auburn, Washington, saying the company failed to maintain effective controls of its distribution to retail pharmacies.

The DEA at the time cited the sale of the painkiller hydrocodone to pharmacies that allegedly dispensed the drug based on improper prescriptions from Internet pharmacy websites.

Barrett said the company has since taken significant steps to rebuild its systems and hire new personnel to oversee the process. He said it already scans for potential misappropriation of the drugs and that a spike in volume is one red flag.

He blamed the DEA for not sharing information that would make it easier to prevent drugs from being diverted and added today's action "does nothing to solve the problem."

Cardinal's shares closed down 0.4 percent at $42.05 in regular trading on the New York Stock Exchange.

The case is Cardinal Health Inc v. Holder, U.S. District Court, District of Columbia, No. 12-185.

(Reporting By Toni Clarke in Boston; Additional reporting by Jeremy Pelofsky in Washington; Editing by Matthew Lewis, Tim Dobbyn editing by Andre Grenon)

Yum plans to buy out Little Sheep for $586 million

Yum plans to buy out Little Sheep for $586 million

Stock Market Predictions

HONG KONG (Global Markets) - Yum Brands Inc (YUM.N), parent of the KFC, Taco Bell and Pizza Hut fast-food chains, has offered to buy out China's Little Sheep (0968.HK) for $586 million, paying a premium to introduce the popular hot pot chain to a global audience and sending the Chinese restaurant shares to a record.

Analysts said the deal was positive for both Yum Brands as it expands in China and for Little Sheep, which has more than 300 hot-pot restaurants, primarily in China, as it would help save costs.

Little Sheep said China's highly fragmented restaurant industry had seen competition intensify in recent years, and going private would reduce its exposure to market volatility and give it quicker access to growth capital.

"The deal is a positive for both parties," said Ample Capital analyst William Lo.

"It has synergy for both Yum and Little Sheep as they can share and save costs on logistics. (Little Sheep) can share costs with Yum's other operations such as Pizza Hut in China."

Lo said there was still room for Little Sheep to grow in China.

Yum offered to buy out most of the shares of Little Sheep that it does not already own at HK$6.50 each in cash for up to HK$4.56 billion, taking its stake to 93.2 percent from 27.2 percent. The price represents a 30 percent premium over the previous close.

"It is positive to Little Sheep with a premium of 30 percent, while Yum can increase product diversity," said Pacific Epoch retail analyst Marie Jiang.

Global food operators wanting to enter the China market have had to tread carefully in the past few years.

Coca-Cola Co (KO.N) launched a $2.4 billion bid for Chinese juice producer China Huiyuan Juice Group Ltd (1886.HK) in 2008 but the deal was blocked the following year by the government on competition concerns.

Little Sheep is seen differently in terms of brand-name effect and the deal with Yum is expected to have a higher chance of receiving regulatory approval, Jiang said.

Yum had said earlier that it would wait for approval from regulators before making a formal offer for the remaining shares in the chain.

SHARES AT RECORD HIGH

News of the deal lifted Little Sheep shares to an all-time high of HK$6.38 on Friday. The stocks ended up 24.5 percent at its record close at HK$6.14. This was compared to a 0.88 percent gain in the benchmark Hang Seng Index .HSI.

"The (offer) price is fair and is not expensive as it represents about 30 times P/E, which is similar to other restaurant operators such as Ajisen (China) Holdings Ltd (0538.HK)," said Lo from Ample Capital.

Analysts said the deal also reflected a strategy by global food operators, such as McDonald's Corp (MCD.N), in tapping the China market by localizing their products to suit local tastes.

Based in China's Inner Mongolia province, the Little Sheep chain is known for its fresh mutton and beef, colorful restaurants. It is also known for its environmentalist consciousness in using paper less offices, energy-saving electrical appliances and discouraging the use of disposable utensils.

"China is an important market for Yum Brands," said Sam Su, chairman and chief executive of Yum's China Division.

"In the long term, with its global business network and successful brand-building experience, Yum will work with Little Sheep to explore effective ways of introducing the hot pot concept and the Little Sheep brand to a wider global audience," Su said, without giving a timetable.

Chinese hot pot is meat and vegetables cooked in a variety of broths at one's table. Popular with families and groups, diners order raw chicken, fish, other meats and vegetables they cook themselves in a central pot or individual pots at each seat.

Little Sheep would stick to its plan of opening 40 outlets this year in China, Chairman Zhang Gang told a news conference.

Zhang and another founder Chen Hongkai will hold 6.8 percent of the company after completion of the proposed deal.

The China division of Yum Brands opened more than 500 new restaurants in 2010. KFC continues to be the number one fast-food brand in the mainland with more than 3,200 outlets in more than 700 cities. It also has 520 Pizza Hut restaurants in more than 130 cities.

(Additional reporting by Terril Jones in Beijing; Editing by Chris Lewis and Dhara Ranasinghe)

Friday, November 24, 2017

U.S. bank shares fall on Europe, stress test concerns

U.S. bank shares fall on Europe, stress test concerns

Stock Market Predictions

(Global Markets) - Bank stocks took a nose-dive on Wednesday on concerns about the European debt crisis and rigorous stress tests unveiled by the Federal Reserve on Tuesday, analysts said.

Bank of America Corp (BAC.N) shares fell 4.3 percent to $5.14, near a 52-week low of $5.13 touched in early October. It was the lowest closing price for the bank since March 2009.

Other banks whose shares declined were Citigroup (C.N), down 3.8 percent, and Morgan Stanley (MS.N), down 3.6 percent.

Among regional banks, Regions Financial Corp (RF.N) shares slumped more than 5 percent. The KBW Bank Index .BKX closed down 3.4 percent, a steeper decline than the broader market.

The stress tests announced by the Fed are more rigorous than those a year ago, said Jefferson Harralson, an analyst with Keefe, Bruyette & Woods Inc.

"Investors are worried that we won't see a normal resumption of dividends and share buybacks at healthier banks, and for more stressed banks, this could force them to raise capital," Harralson said.

Despite some signs of improvement in the economy and in the health of banks, investors remain worried about factors outside the United States such as the European debt crisis, said Frank Barkocy, director of research at Mendon Capital Advisors.

"There are signs that fundamentals look better, but we have to get these external clouds of concern to dissipate," Barkocy said. "That may take some time."

The cost to insure U.S. bank debt with credit default swaps jumped on Wednesday after a weak German bond sale added to fears that contagion from Europe's debt crisis could spread globally.

Bank of America's CDS costs rose the most, jumping 34 basis points to 471 basis points, or $471,000 per year to insure $10 million in debt, according to data by Markit.

In the stress tests, Bank of America and five other large banks will be measured for their ability to withstand further deterioration in the European debt crisis.

Banks will also be examined for their exposure to investor requests to buy back soured mortgage loans, Harralson noted.

"Obviously, Bank of America is the bank that stands out there," he said.

Bank of America Chief Executive Brian Moynihan has taken steps in recent months to settle claims related to mortgage-backed securities, although his most significant initiative, an $8.5 billion agreement with major institutional investors, still needs court approval.

In nearly two years as CEO, Moynihan has worked to shed assets, streamline operations and build capital to cover mortgage losses and meet new international standards. He has also suffered a number of setbacks, including the Fed's rejection of a dividend increase in March and a backlash this fall over a now-canceled debit card fee.

"I think Brian's trying to get things done and is making good progress," Barkocy said. "Sometimes he says things when he's not on firm ground, and it comes back to bite him in the behind, so to speak."

Mike Mayo, an analyst with CLSA, said the bank's management needs to improve confidence in the company after past miscues. The bank should consider shedding more assets to make it easier to manage, he said, without offering any specific examples.

"There should be no sacred cows in the analysis," Mayo said.

(Reporting by Rick Rothacker and Joe Rauch in Charlotte, N.C.; Additional reporting by Karen Brettell in New York; Editing by Maureen Bavdek, Steve Orlofsky, Gary Hill)

Toyota forecasts 35 percent profit slide after quake

Toyota forecasts 35 percent profit slide after quake

Stock Market Predictions

TOKYO (Global Markets) - Toyota Motor Corp forecast a larger-than-expected 35 percent fall in annual profit on Friday and warned that the strong yen was making it difficult to justify keeping production in Japan.

Toyota has struggled to restore output after a massive 9.0 earthquake in March rocked northeastern Japan and forced automakers to slash output. The ensuing nuclear disaster and power shortages have compounded their woes.

The production disruption will likely see Toyota lose its title as the world's largest automaker this year.

"This is probably another conservative estimate from Toyota, but it's predicting a loss in the fiscal first half so we can tell how serious the damage from the earthquake was," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo, adding that shares in the company may fall on Monday.

Toyota reiterated its plan to restore output to pre-quake levels by November, helped by a recovery in the supply chain for key parts, and expressed confidence it could claw back market share lost as a result of the quake.

In an encouraging sign for automakers, chipmaker Renesas Electronics Corp said on Friday it now expected to restore supply capacity lost due to quake damage by the end of September, one month earlier than previously planned.

Renesas, the world's biggest maker of microcontrollers, had become one of the biggest bottlenecks in the automotive supply chain that forced car firms to curb production.

"Once our product supply is back to normal, we can compete with no problem. We have the resources and are fully charged," Toyota Chief Financial Officer Satoshi Ozawa said at a briefing in Tokyo.

But Ozawa warned that Toyota was getting hammered by the strong yen and called on the Japanese government to take action to rein it in.

The Japanese currency hit a one-month high against the dollar this week and is now about 5 yen stronger than the 85 per dollar level that Toyota sees as the break-even point for profiting on production in Japan.

STRUCTURAL WEAKNESS

Toyota said it expects operating profit to fall 35 percent to 300 billion yen ($3.7 billion) in the financial year to March 2012, well short of the consensus for a 434 billion yen profit in a poll of 23 forecasts by Thomson Global Markets I/B/E/S.

The forecast, which the company would have announced in May along with its annual results if not for the earthquake, incorporates a 100 billion yen negative impact from the strong yen.

"Structural weakness remains for Toyota, as it has a higher portion of domestic production than Honda and Nissan, which makes it vulnerable to the yen's strength," said Park Sang-Won, an analyst at Eugene Investment & Securities in Seoul.

Toyota forecast global sales would fall 1 percent to 7.24 million vehicles in the year to March. The figures include sales at truck maker Hino Motors Ltd and compact car maker Daihatsu Motor Co.

The drop is expected to place Toyota behind General Motors and possibly Volkswagen AG in the global vehicle sales rankings this year, and reflects a loss of share to smaller rivals such as South Korea's Hyundai Motor Co, which has been nipping at its heels for years.

Toyota played down the possibility.

"We don't see it as necessary to be the largest automaker in the world," Ozawa said. "The most important thing is creating a stable business base."

Toyota said on Friday it expects the dollar to average 82 yen in the current financial year to next March 31, against an average currency rate of 86 yen per dollar last year.

The yen's persistent strength has raised questions about the rationale of Toyota's commitment to producing at least 3 million cars in Japan each year.

Ozawa said it was possible that Toyota President Akio Toyoda was rethinking his position.

"We are in a situation where it's becoming impossible for Japan's manufacturing industry to do business," Ozawa said.

"Our president has been saying that he would never want to see Japan's manufacturing fading from view, but he also said recently that he was unable to respond when someone made the comment that Toyota's production should not be handled only in Japan."

Toyota's shares have fallen 7.5 percent since the disaster, underperforming the benchmark Nikkei 225 average, which has lost 6.5 percent. Its shares on Friday rose 0.9 percent to close at 3,300 yen before the company released the profit forecast.

(Editing by Matt Driskill and Edmund Klamann)

Thursday, November 23, 2017

WellCare says whistleblower withdraws objection to settlement

WellCare says whistleblower withdraws objection to settlement

Stock Market Predictions

(Global Markets) - WellCare Health Plans Inc said a whistleblower withdrew his objection to a proposed $137.5 million settlement in a health care fraud case, paving the way for a deal to end a federal investigation.

In 2010, WellCare agreed to pay $137.5 million to the U.S. Department of Justice and other federal agencies to settle lawsuits accusing the health insurer of overcharging for its Medicaid and Medicare programs.

However, the settlement could not be executed as it was opposed by the whistleblower, which led to a hearing by a U.S. federal court to determine the fairness of the settlement.

In a regulatory filing, WellCare said the whistleblower expects to sign the settlement agreement in a move to dismiss his claims against the company after the Civil Division has given final approval to a pending share award agreement.

Shares of the company were up 4 percent at $69.90 on Friday on the New York Stock Exchange.

(Reporting by Anand Basu in Bangalore; Editing by Gopakumar Warrier)

DOJ seeks trustee in Solyndra bankruptcy

DOJ seeks trustee in Solyndra bankruptcy

Stock Market Predictions

(Global Markets) - The U.S. Department of Justice is seeking to give control of Solyndra's estate to a bankruptcy trustee, citing the refusal by executives at the solar power company to answer questions about its operations.

Just days after the company's September 6 bankruptcy filing, the Federal Bureau of Investigation raided Solyndra's headquarters in Fremont, California. And Congress is investigating the role political connections played in securing a government loan guarantee for Solyndra, which was visited by U.S. President Barack Obama last year.

Solyndra Chief Executive Brian Harrison and CFO W.G. Stover refused to answer several questions about the company at a Congressional hearing last week.

A Chapter 11 trustee is responsible for management of an estate's property, operation of the business and possibly the filing of a reorganization plan.

In a court filing on Friday, the Justice Department's bankruptcy representative said it was not making any allegations of wrongdoing.

Still, executives have a fiduciary duty to provide information about the company's operations, it said. Executives should reveal whether the company paid bonuses after management realized the company's poor financial condition, it said, as well as whether financial information submitted to creditors was accurate.

"Transparency and disclosure are the linchpins of the bankruptcy system," the DOJ filing said.

In addition to Harrison and Stover's appearance before Congress, a Solyndra lawyer declined to provide information about the extent and nature of Solyndra's contracts with customers to the DOJ bankruptcy representative, the filing said.

A Solyndra representative, along with attorneys for Harrison and Stover, could not immediately be reached for comment on Friday.

Solyndra executives' assertion of their right to avoid self-incrimination is "incompatible" with their duty to act in the best interests of the estate and its creditors, the department said in its filing.

As an alternative to the appointment of a Chapter 11 trustee, the Justice Department asked the Delaware bankruptcy court to convert the Solyndra bankruptcy to a Chapter 7, or liquidation.

Separately, Stirling Energy Systems filed for Chapter 7 liquidation last week, yet another in a string of solar companies to seek bankruptcy protection.

The Scottsdale, Arizona-based company was working on technology that concentrates the sun's rays onto an engine that creates electricity. The technology was to run in two solar plants under development from Tessera Solar, a company that shared a majority owner, NTR, with Stirling.

Tessera sold both those plants.

Stirling had assets in the $1 million-$10 million range and liabilities in the $50 million-$100 million range, it said in court filings.

(Reporting by Dan Levine and Sarah McBride in San Francisco; editing by Andre Grenon and Richard Chang)

Wednesday, November 22, 2017

Analysis: Biogen investors place bets ahead of MS drug trial

Analysis: Biogen investors place bets ahead of MS drug trial

Stock Market Predictions

BOSTON (Global Markets) - Over the past year, Biogen Idec Inc has given investors little to complain about. The biotechnology company, operating under new management, has restructured its operations, reported promising clinical trial data and seen its shares rise 72 percent.

The question is: can it hang onto its gains?

Much depends on the results, to be released within weeks, of a second, late-stage clinical trial of its experimental multiple sclerosis drug, BG-12.

Results from the first trial, known as DEFINE, were unexpectedly strong. If data from the second trial, known as CONFIRM, are similarly positive, Biogen's shares could rise as much as 10 percent, analysts say. If it falls short of expectations, they could fall as much as 20 percent, according to some estimates.

Multiple sclerosis is a chronic, often disabling disease that attacks the central nervous system and can lead to numbness, loss of vision and paralysis. BG-12 is designed to treat relapsing-remitting MS, in which flare-ups are followed by periods of remission. About 85 percent of people with MS are initially diagnosed with this form of the disease.

Results of the DEFINE trial showed BG-12 cut the annualized relapse rate by 53 percent at two years versus those treated with a placebo. That compares favorably with the efficacy of a drug made by Novartis AG, Gilenya, that has shown a reduction in annualized relapse rates of about 54 percent.

Unlike most MS drugs, which are given by injection or infusion. Gilenya and BG-12 are both taken orally. Gilenya, given once a day, was approved in 2010. BG-12 will probably be given twice a day, but may have a more benign safety profile. That could help it gain an edge in the market if approved.

"Gilenya has the advantage of first-arrival and once-daily administration, but there is still some anxiety about the possibility of safety issues yet to emerge," said Harry Tracy, a pharmaceutical industry consultant and publisher of NeuroPerspective, a monthly publication focusing on central nervous system disorders.

"Neurologists are going to be reluctant to switch people off injectables, but over the next few years, I expect Gilenya and BG-12 to become the preferred first drug options to be tried with newly diagnosed patients," he said.

Some analysts expect BG-12 to generate more than $1 billion in annual sales.

"In our view, the biggest threat to BG-12 becoming a blockbuster is an unforeseen safety issue," said Eric Schmidt, an analyst at Cowen and Company in a recent research note. He expects, however, that the CONFIRM safety profile will "remain essentially clean."

TRIAL DESIGN

The design of the CONFIRM trial is similar to that of DEFINE. DEFINE had 1,200 patients while CONFIRM has 1,400. The studies were run more or less contemporaneously and were conducted in similar geographies with the same entry criteria.

The main difference is that CONFIRM has a third arm -- a group of patients taking Copaxone, a drug made by Teva Pharmaceutical Industries. In a pivotal trial, Copaxone, which was approved in the United States 15 ago, was shown to reduce the annualized relapse rate by 29 percent. Analysts expect that rate to have improved over the years, potentially confounding results from CONFIRM.

"We expect comparator Copaxone to perform better than expected," said Jim Birchenough, an analyst at BMO Capital Markets, who advised clients in a recent research note to sell Biogen shares in advance of the results.

"We believe commercial expectations for Biogen Idec's multiple sclerosis franchise, in particular for BG-12, have been overestimated and that risk to upcoming CONFIRM data has been underestimated."

Weston, Massachusetts-based Biogen also makes the multiple sclerosis drugs Avonex and Tysabri.

Biogen's shares have risen 72 percent over the past 12 months and have roughly doubled since George Scangos took over as chief executive in July last year. By April this year, shortly before news emerged that results of the BG-12 trial were positive, they had risen to about $73, helped in part by a restructuring program. By the end of June they touched$109.52.

The stock has fallen back since then and was trading at about $99.40 on Thursday. The decline partly reflects concerns among some investors that CONFIRM may not live up to the promise of DEFINE.

Michael Yee, an analyst at RBC Capital Markets, said most analysts are expecting "generally good data" from CONFIRM though perhaps not as strong the 53 percent relapse rate reduction reported in DEFINE."

"People expect a mid-40s percent reduction in annualized relapse rate," he said. "If the number comes in above that consensus, the stock could go $10 higher."

The best case scenario, to which he assigns a 20 percent probability, would be for the drug to show a relapse rate of 50 percent or higher versus placebo, and for Copaxone to show a relapse rate of 30 to 35 percent.

The most likely scenario, he says, and one to which he ascribes a 60-70 percent probability, is for BG-12 to show a relapse rate of between 40 and 49 percent versus placebo and for Copaxone to show a relapse reduction of 35 to 40 percent.

Yee assigns a 10 percent probability of BG-12 showing surprisingly negative data, but if it did, the stock could drop to below BG-12 levels, he said.

Douglas Williams, Biogen's head of research and development, feels "confident going into the study, or as confident as you can feel without the data in your back pocket."

Options traders are sounding an optimistic note too.

Traders have been purchasing Biogen calls -- which give investors the right to buy stock at a fixed price up to a certain date -- at a greater pace than puts, which give investors the right to sell at a preset price.

"This suggests there are some bullish bets coming in on Biogen ahead of the event," said Ryan Detrick, senior technical analyst at Schaeffer's Investment Research.

Over the past 10 trading days, investors have bought 1.94 calls for every put as a new position on three U.S. options exchanges, according to Schaeffer's. That ratio is greater than 72 percent of the readings over the past year. (For a related graphic click on r.reuters.com/pus73s)

Biogen hopes to file for approval of BG-12 early next year.

(Additional reporting by Doris Frankel in Chicago, editing by Dave Zimmerman)

Slim's America Movil slumps on regulation worries

Slim's America Movil slumps on regulation worries

Stock Market Predictions

MEXICO CITY (Global Markets) - Shares in billionaire Carlos Slim's America Movil fell to their lowest price since March 2010 on Friday following a report that suggested a regulator might make the telecommunications firm cut fees in Mexico.

Shares in America Movil lost 4.01 percent to 28.67 pesos, their biggest one-day drop in 17 months.

Bloomberg News reported that Mony de Swaan, head of telecommunications regulator Cofetel, said America Movil could face "a mix of different measures having to do with fees, information and quality."

Bloomberg said regulations could affect America Movil's fixed-line unit Telmex but it did not provide any comment from de Swaan to substantiate the assertion.

Telmex shares fell 1.59 percent to 9.93 pesos.

Representatives of America Movil and Cofetel declined any immediate comment.

"America Movil is falling because the whole market is down and Mony de Swaan came out to say there could be new regulations," said Martin Lara, an analyst at brokerage Actinver in Mexico City.

Weak U.S. employment data weighed on the broader Mexican market. America Movil is the most liquid stock in Mexico and investors use it as a proxy for the market as a whole, Lara said.

Investors knocked down America Movil's share price in a double-digit rout since April after the Federal Competition Commission fined the company $1 billion for abusing its market position. Investors were concerned of further action by regulators.

The stock had recently found support just below 29 pesos.

Lara said the drop in its share price had exaggerated the potential impact of further regulations on America Movil's business.

"We like the stock at current levels and we do not think additional regulations will have a significant impact in the stock price," Lara said.

(Reporting by Michael O'Boyle, additional reporting by Tomas Sarmiento; Editing by Kenneth Barry)

Tuesday, November 21, 2017

Priceline profit higher as bookings jump

Priceline profit higher as bookings jump

Stock Market Predictions

NEW YORK (Global Markets) - Online travel agency Priceline.com on Thursday posted a higher quarterly profit that topped analysts' expectations as strong growth at its overseas markets boosted bookings.

Priceline also forecast third-quarter profit above Wall Street expectations and its shares jumped 10 percent in after-hours trading to $532.56.

"People plan their summer travel in advance and they are taking their trips now even if they are somewhat concerned about the economy," Priceline Chief Executive Jeffery Boyd told Global Markets in an interview.

Boyd said he was seeing a slowdown in the rate of increase in hotel rates and airfare in the United States.

"Pricing is not as firm as it was a few months ago though it is still up year over year," said Boyd.

Last month, rival Expedia Inc posted a higher second-quarter profit as bookings increased by 19 percent. The company noted strong growth in hotel bookings.

Priceline's second-quarter earnings were $256.4 million, or $5.02 a share -- up from $115.0 million, or $2.26 a share, a year earlier.

Excluding some items, profit was $5.49 a share, above analysts' view of $4.91, according to Thomson Global Markets I/B/E/S.

Revenue rose 44 percent to $1.1 billion, mostly in line with expectations of $1.08 billion.

Bookings at Priceline, which runs Booking.com, Agoda.com and TravelJigsaw in addition to its namesake website, jumped 70 percent to $5.8 billion.

The company forecast third-quarter profit, excluding some items, of $9.10 to $9.30 a share and revenue growth of 37 to 42 percent.

It expects total travel bookings to grow 47 to 52 percent. This is slower than the 70 percent growth seen in the second quarter.

CEO Boyd said the moderating growth was due to tough comparisons with year-ago figures.

He also said as the business gets bigger, growth would slow over time.

Earlier on Thursday, JP Morgan assumed coverage of Priceline with an "overweight" rating and a $610 price target citing strength in the company's international business.

Priceline shares closed at $483.34 Thursday on Nasdaq.

The brokerage said there is still room for strong growth in Europe and a significant opportunity in South America and Asia.

(Reporting by A. Ananthalakshmi; Editing by Gary Hill)

Glencore boss Glasenberg buys shares, eyes more

Glencore boss Glasenberg buys shares, eyes more

Stock Market Predictions

LONDON (Global Markets) - Ivan Glasenberg, chief executive of commodity trader Glencore (GLEN.L), has bought 10 million pounds ($15.8 million) of shares in the group and said he would seek to buy more over coming days to add to his stake of almost 16 percent.

The company said Glasenberg, its largest single shareholder, would seek to continue buying shares up to and including September 21 and up to a total of $54 million, the value of dividends due at the end of the month in respect of his stake.

News of the purchase boosted Glencore's shares even as the broader sector pared earlier gains. At 1450 GMT on Friday, Glencore stock was trading at 449 pence, 15 percent below the offer price but up 2.7 percent on the day.

Shares in Glencore, the world's largest diversified commodities trader, have been "under water" -- below the offer price of 530 pence -- since its record market debut in May.

According to a regulatory filing, Glasenberg bought 2.25 million shares on Thursday at 435 pence each.

At current share prices, Glasenberg's shareholding in the group is worth around 4.9 billion pounds.

($1 = 0.633 British Pounds)

(Reporting by Clara Ferreira-Marques; Editing by David Hulmes)

Monday, November 20, 2017

Deckers, Crocs slide on weak first-quarter profit outlooks

Deckers, Crocs slide on weak first-quarter profit outlooks

Stock Market Predictions

(Global Markets) - Shares of shoemakers Deckers Outdoor Corp (DECK.O) and Crocs Inc (CROX.O) slumped in morning trade on Friday, after they forecast disappointing first-quarter earnings on rising costs of raw materials.

Deckers shares slipped more than 12 percent on Friday, while those of Crocs fell 8 percent.

Deckers stock has lost almost a third of its value since October 2011, when it raised it full-year revenue outlook due to increased demand of its sheepskin boots.

The world's biggest athletic shoe maker Nike (NKE.N) has also faced higher costs of raw materials and labor, but has managed to pass these on to its customers by hiking prices.

Goleta, California-based Deckers expects first-quarter earnings per share to halve from last year due to rising sheepskin prices.

"With guidance clearly disappointing, we acknowledge shares could be in the penalty box near term," Susquehanna Financial analyst' Christopher Svezia wrote in a client note.

However, Svezia said he believes in Deckers' main UGG Brand and expects the forecast to prove conservative.

(Reporting by Chris Jonathan Peters & Meenakshi Iyer in Bangalore; Editing by Viraj Nair)

Wynn withdraws Macau announcement, shares climb

Wynn withdraws Macau announcement, shares climb

Stock Market Predictions

LOS ANGELES (Global Markets) - Wynn Resorts Ltd (WYNN.O) retracted an announcement that it had advanced a major project in Macau, saying it had been made in error after its shares surged on the news.

The stock, halted after that initial run-up, resumed trade shortly after and closed up 4.27 percent at $127.27.

Earlier on Friday, Wynn said a land concession contract had been published in the official gazette of Macau, a step toward allowing the company and a partner to develop a long-envisioned luxury hotel and casino resort in the world's largest gambling market.

But the company then back-pedalled, saying an "agent" had erred and had not been authorized to file that statement. Wynn's lawyers Skadden, Arps, Slate, Meagher & Flom apologized via a statement later for their error, blaming the slip-up on a clerk in their filing department without elaborating further.

"Many are speculating this (Macau project) is ready to go. The stock is reacting on that view," said David Bain, managing director with Sterne, Agee & Leach.

Friday's unusual turn of events come as Steve Wynn, the mogul who runs Wynn resorts, is embroiled in a bitter battle with Japanese billionaire and former friend Kazuo Okada.

Last month, Wynn Resorts redeemed Okada's nearly 20 percent stake in the company and accused him of violating U.S. anti-corruption laws, citing a report produced after an internal probe. Okada said the report is based on "false and misleading assertions.

Okada has said he is seeking to file a lawsuit for a temporary restraining order and preliminary injunction to protect the interest of his subsidiary, Aruze USA Inc, in Wynn Resorts, and to prevent the redemption of its shares.

"As of right now, we don't see a huge risk of Wynn being negatively affected by the whole Okada saga," Morningstar analyst Chad Mollman said. "Where they are at risk is if they were to give back Okada's shares. That would be a huge negative on the stock."

For now Mollman is maintaining his fair value estimate of $175 per share, noting that if Okada is unsuccessful in blocking the redemption of the shares at a steep discount, the redemption stands to increase his fair value estimate by $25 per share or more.

While casino companies in the past have forcibly redeemed shares of shareholders deemed unsuitable, historically this has occurred following an outside regulatory finding. Analysts say this appeared to be the first time a casino company is redeeming shares ahead of such a finding.

MACAU BOOM

Wynn is proposing the development of 51 acres of land in the Cotai area of Macau for development into its third resort in the city, encompassing a five-star hotel, gaming areas, retail, entertainment, food and beverage, spa and convention offerings.

Analysts have been keen to pin down a specific timeline on that project, which Chief Executive Steve Wynn has said will house 500 game tables; 1,500 rooms, mostly suites; restaurants and stores, and a theater.

The "report regarding the gazetting of the Cotai Land Concession Contract on Form 8-K ... was filed by mistake by the Company's agent," Wynn said in a filing after withdrawing its statement on Friday.

"The filing was not authorized by the Company. The Cotai Land Concession Contract has not been gazetted. The purpose of this filing is to retract the Land Concession 8-K in its entirety."

Subsidiary Wynn Macau (1128.HK) said in September it had formally accepted the terms and conditions from the government regarding land for the complex.

Prior to the trading halt, Wynn shares were up $7.70, or 6.3 percent, at $129.76 on Nasdaq.

(Additional reporting By Jonathan Stempel and Edwin Chan; Editing by Mark Porter, Tim Dobbyn and Richard Chang)

Sunday, November 19, 2017

Microsoft Windows fizzles as PC fears loom

Microsoft Windows fizzles as PC fears loom

Stock Market Predictions

SEATTLE (Global Markets) - Sales of Microsoft Corp's flagship Windows software disappointed for the third straight quarter, taking the gloss off better-than-expected earnings that were aided by an unusually low tax rate.

The results failed to excite a market already wary about growth prospects for the company and PC industry as netbook sales give way to tablets. The stock was flat in after-hours trading.

"All eyes are on Windows and how they are ultimately going to extend this franchise in the future, as the PC business continues to lose share to the tablets," said Josh Olson, technology analyst at money manager Edward Jones. "Microsoft is really a show-me story in terms of its ability to extend its core flagship products to these new growth platforms."

On Wednesday, chipmaker Intel Corp warned that PC sales will not be as strong as it had expected this year.

Microsoft is expected to enter the tablet market in earnest next year with the launch of its next operating system -- code-named Windows 8 -- which will be compatible with the low-power chips designed by ARM Holdings favored by tablet and mobile phone makers.

Despite the Windows dip, Microsoft managed to ease past Wall Street's earnings estimates, helped by strong sales of its Office software and Xbox game console, as well as a dramatic drop in its tax bill.

The world's largest software maker follows Google Inc, Apple Inc and International Business Machines Corp in reporting surprisingly good results as technology spending holds up relatively well in an uncertain economy.

BIG BEAT

The Redmond, Washington-based company on Thursday posted net profit of $5.87 billion, or 69 cents per share, up from $4.52 billion, or 51 cents per share, in the year-ago quarter.

That easily beat Wall Street's average estimate of 58 cents, according to Thomson Global Markets I/B/E/S. Microsoft has beaten the average profit estimate for each of the last nine quarters.

Microsoft was helped by an unusually low tax rate of 7 percent in the quarter, which cut its tax bill by more than $1 billion from the year before, to $445 million. The company, which gets most of its revenue from overseas, said the savings were due to a one-time tax gain and more business flowing through its regional centers in the low-tax jurisdictions of Ireland, Singapore and Puerto Rico.

Sales rose 8 percent to $17.37 billion, ahead of analysts' average estimate of $17.23 billion, boosted chiefly by sales of Office, Xbox and server software behind Microsoft's push into Internet-centric, or "cloud" computing.

Microsoft shares fluctuated after the results were announced in after-hours trading, settling close to their closing price of $27.09 on Nasdaq. The stock is up 8 percent over the past 12 months, compared to a 30 percent rise in the Nasdaq composite index. The shares are stuck at a level first hit in 1998, adjusted for stock splits.

"These numbers are good. The question is, what will make Microsoft break this range in which it is stuck, between $25 and $28?" said Trip Chowdhry, managing director at Global Equities Research. "I don't see these numbers giving an indication that the stock is going to break away."

OFFICE, XBOX STAR

Spending by businesses on technology has generally outstripped cash-strapped consumers since the worldwide economic downturn.

Microsoft's business division, which last month rolled out online versions of its popular Office suite of programs such as Outlook, SharePoint and Excel, was the company's biggest seller in the quarter, racking up a 7 percent increase in sales to $5.8 billion.

The server and tools business, which sells software used by datacenters -- an essential building block of cloud computing -- posted a 12 percent increase in sales to $4.6 billion.

The entertainment and devices unit, which sells the company's video game and phone products, posted a 30 percent increase in sales to $1.5 billion, mostly due to the popularity of the Xbox and the new hands-free gaming Kinect add-on.

Sales at the Windows unit fell 0.8 percent to $4.7 billion. PC sales grew only 2.3 percent in the second quarter, according to tech research firm Gartner, well below earlier projections, as economic uncertainty hangs over consumers and Apple's iPad and other tablets eat into the market.

Microsoft's perennial money-losing online services unit, which runs the Bing search engine and MSN Internet portal, posted a 16.5 percent increase in sales to $662 million, but its loss widened to $728 million from a loss of $688 million a year ago, as Microsoft continues to pour money into attacking Google. The unit has now lost almost $6.5 billion in the last three fiscal years.

(Additional reporting by Alexei Oreskovic in San Francisco and Liana Baker in New York; Editing by Richard Chang)

Monster soars as CEO mulls "strategic alternatives"

Monster soars as CEO mulls "strategic alternatives"

Stock Market Predictions

(Global Markets) - Monster Worldwide Inc Chief Executive Sal Iannuzzi told investors on Thursday that the operator of the job-search website was considering all "strategic alternatives," sending the company's shares up more than 17 percent.

"Our shareholders deserve a better return," Iannuzzi told an investor conference. "The board and the management is also focused on pursuing all strategic alternatives to increase shareholder value."

Iannuzzi did not specify what alternatives the company was considering. However, investors typically interpret discussions of "strategic alternatives" as an indication a company is considering selling all or part of itself.

A Monster spokeswoman declined to elaborate on Iannuzzi's statements.

Prior to Thursday's rally Monster shares had tumbled about 61 percent over the past year, a far steeper slide than the 21 percent fall of the Thomson Global Markets United States Employment Services Index.

One analyst cautioned that there were no signs that a deal for Monster was imminent.

"We know of no buyer poised to scoop up MWW," James Janesky of Avondale Partners wrote in a note to clients. He said that the company could sell for $10 to $13 per share, but held steady his "market perform" rating and $8 target price on the stock.

"Given that the company is engaged in layoffs of 7 percent of its work force and other restructuring, any kind of deal might be a ways off," Janesky wrote.

COMPETITIVE THREATS

Slow hiring as a result of the weak U.S. economy and rising competition from the social media sites including Facebook and LinkedIn Corp have taken a toll on Monster's traditional business model -- job ads on its Monster.com website.

When the company reported financial results in January, it warned investors that it expected first-quarter profit to be lower than analysts expected and that it planned to cut its staff by about 7 percent, or 400 jobs.

Iannuzzi said his company regards itself as sharply undervalued compared with its peers, which also include Dice Holdings Inc, Manpower Group and CareerBuilder.com, partly owned by Microsoft Corp.

"The stock price is not where it should be," Iannuzzi said at a R.W. Baird conference. "If you compare us to our competition, any company in our space, our multiple is severely below them."

Shares of LinkedIn have nearly doubled since the company's May initial public offering.

He said Monster has no interest in pursuing takeovers of its own.

"We have no acquisitions in mind," Iannuzzi said. "So if anyone's concerned about where our money is going to go, we don't have acquisitions. Any excess cash will be returned to the shareholders via stock purchase."

The New York-based company has $250.3 million in cash and equivalents on its balance sheet and a market value of $828.4 million, according to Thomson Global Markets Data.

Options traders piled on Monster in the wake of the news, with volume surging 32 times higher than a typical day, according to options analytics firm Trade Alert.

"The positive comments spurred a rush into Monster Worldwide options," said Interactive Brokers Group options analyst Caitlin Duffy.

Shares of Monster were up $1.21, or 17.4 percent, at $8.15 in late trading on the New York Stock Exchange.

(Reporting By Scott Malone in Boston, additional reporting by Doris Frankel in Chicago; editing by Andre Grenon and Mark Porter)

Saturday, November 18, 2017

Mongolia, Ivanhoe, Rio agree on mine; shares rise

Mongolia, Ivanhoe, Rio agree on mine; shares rise

Stock Market Predictions

LONDON/TORONTO (Global Markets) - The Mongolian government, Ivanhoe Mines (IVN.TO) and partner Rio Tinto (RIO.L) have agreed to back a 2009 investment agreement for the Oyu Tolgoi copper-gold deposit, ending discussions over possible changes and sending shares of Ivanhoe up as much as 18 percent.

The news calmed investors, who had sold off the stock last month after Mongolia's finance minister told local media that the government was discussing changes to the terms and conditions of the agreement.

The 2009 deal gave a 66 percent stake in the massive Oyu Tolgoi project in Mongolia's South Gobi region to Canadian miner Ivanhoe, in which mining giant Rio Tinto (RIO.AX) now owns a 48.5 percent stake.

The Mongolian government holds the remaining 34 percent stake and can increase its stake to 50 percent after 30 years.

Some politicians had hoped Mongolia could increase its stake in the project faster than outlined in the existing agreement, but investors warned that populist policies could slow the country's mining boom.

Wednesday's joint statement said that "all parties have reaffirmed their continued support for the investment agreement and its implementation." It sent Ivanhoe's shares up as high as C$18.81 on the Toronto Stock Exchange. The stock was 11.52 percent higher at C$17.33 in the afternoon.

Rio Tinto's UK-listed shares closed up 7.6 percent.

The statement said the shareholders were "united in their commitment to secure the necessary project finance and bring the Oyu Tolgoi project to completion and full production."

Dahlman Rose mining analyst Adam Graf said the news was positive for the development of Oyu Tolgoi and for future mining projects in Mongolia.

"It shows that the contracts have held and that Mongolia honors contracts," he said, noting that the government's move may have been based more on politics than a real desire to change the pact.

Ivanhoe and Rio Tinto have already sunk billions of dollars into Oyu Tolgoi, which is expected to begin initial production in 2012.

They expect average annual output during its first 10 years of commercial production to exceed 650,000 ounces of gold, 3 million ounces of silver and 1.2 billion pounds (544,000 tonnes) of copper.

(Reporting by Clara Ferreira-Marques in London and Julie Gordon in Toronto; editing by Janet Guttsman)

BofA sued by shareholder over $10 billion AIG loss

BofA sued by shareholder over $10 billion AIG loss

Stock Market Predictions

NEW YORK (Global Markets) - A Bank of America Corp (BAC.N) shareholder sued the bank on Friday for what he said was a failure to disclose it potentially owes more than $10 billion to American International Group Inc (AIG.N) in connection with mortgage-backed securities.

The lawsuit, filed in U.S. District Court in Manhattan, seeks class action status on behalf of purchasers of Bank of America stock between February 25 and August 5 this year.

AIG, which was bailed out by the government in the 2008 financial crisis, suffered losses of more than $10 billion from the securities, known as RMBS, between 2005 and 2007. The losses occurred after Bank of America and two companies it bought -- Countrywide Financial Corp and Merrill Lynch -- and subsidiaries sold AIG more than $28 billion in RMBS.

"Throughout the class period, defendants repeatedly informed investors about the claims of other entities for RMBS losses but not about the massive losses suffered by AIG," the lawsuit said.

Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, said he had not seen the lawsuit and declined to comment.

The court document said the shareholder losses occurred on August 8 as Bank of America's stock dropped more than 20 percent to $6.51 per share from $8.17 per share after AIG sued the bank in New York state court seeking to recover the RMBS losses.

"This decrease was a result of the artificial inflation caused by the defendants' misleading statements coming out of the price," Friday's lawsuit said.

In a footnote, the court document adds that the plaintiff, shareholder David Lawrence, "asserts only that BofA should have disclosed AIG's losses and potential claims to investors and takes no position on whether those claims will ultimately be found to have merit."

Lawrence asks the court to declare the lawsuit a class action under anti-fraud provisions of federal securities law and seeks unspecified damages for all members of the class.

The case is David Lawrence et al v Bank of America Corp, U.S. District Court for the Southern District of New York, No. 11-6678.

(Editing by Steve Orlofsky)

Friday, November 17, 2017

Research in Motion stock: the next PALM?

Research in Motion stock: the next PALM?

Stock Market Predictions

NEW YORK (Global Markets) - Some investors are betting Research in Motion's stock is in for more pain, even after a rough three years.

Shares of the BlackBerry maker have lost more than 38 percent since February. Investor attempts to pick a bottom in the stock have been run over by a slide dating from June 2008, when it peaked at $148.

Some in the options market don't see the trend arresting itself, making long-term bearish bets that RIM shares will fall to the mid-$30s by January 2012.

"There is a major divergence of opinion on the stock," said Bret Jensen, chief investment strategist at Simplified Asset Management, a hedge fund based in Miami, Florida.

"While some argue that it's somewhat like Apple before the big comeback, considering the cash flow and the attractive P/E ratio, others are asking, 'Is this going to be the new Palm?'"

Palm was another high-flying maker of handheld computers whose shares dropped dramatically as the market for smartphones became competitive. It is now owned by Hewlett-Packard Co.

RIM has been disappointing investors in recent months. Sales and earnings forecasts have been cut.

Its BlackBerry smartphone lineup has steadily lost market share, especially in the hyper-competitive U.S. market, to devices such as Apple Inc's iPhone and those running Google Inc's Android software.

Since early March, RIM shares have struggled to hold above their 10-day moving average, seen as buffering against further losses. The stock fell 1.1 percent at $43.74 on Friday.

Short interest is currently at a five-month high at 6 percent of the outstanding float, according to Nasdaq.

But a Thomson Global Markets StarMine analysis puts the stock's intrinsic value at $99.44, assuming a 10-year cumulative annual growth rate of 7.3 percent, below the industry average.

The stock's trajectory since February is ugly. Since hitting a 52-week high of $70.54, the pattern has been: Drop sharply, attempt a rebound, and get whacked again.

More disturbingly, volume has ticked up of late as the share slide has picked up speed.

For the stock to turn around, it would need to rally and sustain gains at what technical strategists call a "gap" in its price -- the sharp decline that occurred in late April from the mid-$50s to the $40s.

"The bottom of that gap is at the $50 area, so the stock would need to rally sharply from current levels just to begin that process," said Bryant McCormick, an independent quantitative analyst at optionMonster.com.

THE BEARISH BUTTERFLY EFFECT

Earlier this week, RIM recalled some of its Playbook tablet computers due to an operating system flaw. The company had hoped the launch of the long-awaited tablet could revive its fortunes, but the product garnered poor reviews and complaints it had been rushed out before it was ready.

Due to the recall, RIM's Nasdaq-listed shares fell as low as $42.61, just 9 cents above an August 2010 trough.

On the same day, an options trader bought 3,500 puts at the January 2012 $40 strike for an average premium of $3.77 each, sold 7,000 puts at the January 2012 $37.5 strike at an average premium of $2.83, and picked up 3,500 puts at the January $35 strike for an average premium of $2.10 each.

The strategy, known as a bearish put butterfly spread, implies an average break-even share price of $39.79 by expiration in January.

Maximum profits will be made if RIM shares plunge nearly 15 percent from the current price to settle at $37.50 at expiration, according to Caitlin Duffy, options analyst at Interactive Brokers Group.

A butterfly put spread involves a bet shares will fall, but only to a specific level. One profits by selling puts at a strike price that is between purchases at strike prices on each side, or the "wings" of the butterfly.

"Butterfly spreads on the stock suggest some options players expect RIM's losing streak to continue into next year," she said.

(Additional reporting by Doris Frankel in Chicago; Editing by Andrew Hay and Richard Chang)