MF Global stock, bonds fall again as clouds darken

MF Global stock, bonds fall again as clouds darken

Stock Market Predictions

(Global Markets) - Shares of MF Global Holdings Ltd hit another all-time low and bonds were in freefall on Friday as troubles intensified for the U.S. futures brokerage that is looking to sell off units in order to retain customers, and to survive.

The company run by former Goldman executive Jon Corzine has shed 62 percent of its market capitalization this week, after it posted a quarterly loss, and after two ratings agencies cut its debt rating to junk.

MF Global stock dropped as much as 27 percent in early trading to $1.04, its lowest ever, but later rebounded to $1.29 on the New York Stock Exchange.

The company's bonds were trading at distressed levels in the mid-40s, after touching a morning low of 38 cents on the dollar. That was down from Thursday when the bonds, maturing in 2016 with a 6.25 percent coupon, were at 70.

MF Global had offered the notes at par in August.

Some customers are diverting money from the New York-based brokerage, according to hedge funds, rivals and analysts, though the extent of the outflows remained unclear. (Graphic of MF Global's market share among futures commodity merchants: link.reuters.com/syz64s )

MF Global tapped Evercore to advise it on strategic options including a possible sale, said a source familiar with the situation.

A second source, who was briefed on the matter, said the company is "focused on doing a smart deal, a fair deal," and that it did not enter the talks with "specific targets and objectives."

"We believe MF could generate proceeds from sale of its customer asset portfolio or Futures Commission Merchant which frees up capital," Keefe Bruyette & Woods analyst Niamh Alexander wrote to clients.

"However, we cannot quantify the cost of wind down or exiting broker positions that could offset those proceeds and wipe out equity," she wrote.

MF Global has declined to comment on its troubles.

Corzine, who became CEO in March last year after a term as New Jersey's governor, has been trying to transform MF Global from a brokerage that mainly places customers' trades on exchanges into an investment bank that bets with its own capital.

But its bets on bonds from euro zone countries, including those issued by Italy, Spain, Portugal and Ireland, have gone bad, prompting regulators to press it to boost capital and ratings agencies to issue their warnings.

The loss of its investment grade rating could hasten the exodus of customers away from MF Global.

"Given the uncertainty around timing of the agencies' next move, management needs to move quickly in order to avoid client defections and either work on strategic options or work with the agencies to get back to stable status," Deutsche Bank analyst Michael Carrier wrote to clients.

European Union leaders stuck a deal this week to relieve the continent's sovereign debt crisis -- potentially good news for MF Global -- but many details of the EU deal still need ironing out.

In Asia, the Singapore Exchange said MF Global's unit in the city state is meeting its financial obligations as a clearing member. That echoes assurances Thursday by U.S. clearers CME Group Inc, IntercontinentalExchange Inc and options clearinghouse OCC.

(Reporting by Jonathan Spicer, John Balassi, Philip Scipio and Paritosh Bansal in New York, and Charmian Kok in Singapore; Editing by Phil Berlowitz and Matthew Lewis)

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Dillard's margins fall short, shares slump

Dillard's margins fall short, shares slump

Stock Market Predictions

(Global Markets) - Dillard's Inc's (DDS.N) quarterly net income rose 85 percent, but its shares fell 11 percent as the department store chain reported a lower retail gross margin than analysts had expected.

Key Points

- Sales at stores open at least a year, or same-store sales, rose 5 percent, besting larger rivals Macy's Inc (M.N), J.C. Penney Co Inc (JCP.N) and Kohl's Corp (KSS.N).

- Dillard's, based in Little Rock, Arkansas, had 288 stores as of October 29, down from 296 a year earlier.

MARKET REACTION

JPMorgan analyst Matthew Boss said in a note that concerns about gross margin would be a "primary" cause of investor pushback.

Dillard's shares were down 11.3 percent to $48.94 in afternoon trading.

LINKS

- Kohl's on Thursday reported higher gross margins for the quarter.

- Last week, Dillard's reported an 8 percent rise in October same-store sales.

NOTES

* Estimate based on two brokerage forecasts.

(Reporting by Phil Wahba in New York; editing by John Wallace)

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RIM caps dismal year with another profit warning

RIM caps dismal year with another profit warning

Stock Market Predictions

TORONTO (Global Markets) - Research in Motion booked a huge charge to write down inventories of its unloved PlayBook tablet on Friday, capping a dismal year with a steep profit warning that sent its shares tumbling almost 10 percent.

Waterloo, Ontario-based RIM, the company whose now ubiquitous BlackBerry created the concept of on-the-go email, said it no longer expects to meet its full-year earnings forecast due to weak sales, the PlayBook writedown and a charge related to a damaging service outage in October.

"This is a classic falling knife stock," said Eric Jackson of Ironfire Capital, who has previously bet on RIM's share price dropping but does not currently have a position in the stock.

"Although people keep wanting to buy into the belief that RIM has found a bottom, I see at least six more months of pain as they keep transitioning their business."

RIM, which Canada's industry minister on Friday described as a "Canadian jewel," has fallen out of favor with investors as it struggled to keep pace in a fast-changing smartphone market. In recent years, Apple's iPhone and Google Android devices have gobbled up RIM's once mighty market share.

RIM badly needs the PlayBook, launched to scathing reviews in April, to be a success as it plans next year to launch new smartphones based on the same QNX-based operating system used in the tablet.

PlayBook is a half-baked latecomer to a market segment where Apple's iPad has established an overwhelming dominance. Yet the poor reception it has received is just one of a string of problems facing the one-time technology darling.

The company has infuriated investors with several product missteps and profit warnings and RIM faced an embarrassing global outage in October, when customers were left without email and the popular BlackBerry messaging service for several days.

And if RIM cannot convince developers to build apps for the languishing PlayBook, its new smartphones will struggle to gain traction against the iPhone and Android devices that already boast huge libraries of applications.

Bernstein Research analyst Pierre Ferragu said RIM's latest warning was not a surprise itself. But he was alarmed that management apparently fails to see the writing on the wall for its products and for its corporate structure.

"What is more worrying, of course, is the profound denial the tone of the release reflects. Although it appears obvious to us that RIM's current strategy is bound to fail rapidly, the company continues to support it vehemently," he said.

"We can only hope that this increasing dissonance will accelerate necessary changes at the top of the company."

An activist shareholder said in October that some 8 percent of RIM investors back his call for RIM's board to replace its co-chief executives and consider a break-up or sale.

PLAYBOOK PRICE CUTS

Seeking to boost anemic PlayBook sales, RIM recently slashed prices on the device and plans to expand the promotion. It sold only about 150,000 tablets in the quarter to November 26, down from 200,000 in the previous quarter - a tiny fraction of the 11 million iPads that Apple sold in its latest quarter.

"RIM is continuing to suffer from its Playbook endeavors," said CCS Insight analyst Geoff Blaber. "It hurt RIM initially by diverting focus, but muted demand is now becoming clearly visible in the financials."

RIM's Nasdaq-listed shares fell 9.7 percent to $16.77 by the close. In Canada the shares fell 9.2 percent to C$17.08.

The shares have shed some three-quarters of their value since a February peak, a meltdown that has actually prompted some analysts to raise their ratings on RIM. Goldman Sachs said last month that the current valuation already fairly captures the fundamental concerns.

Speculation has also been rife that RIM could be the target of a strategic buyout.

Canada's Industry Minister Christian Paradis declined to comment on that speculation in an interview with Global Markets in New York, but he said Canada had to support RIM. Any takeover of a Canadian company of RIM's size can be blocked by the government if it decides the deal would not bring a "net benefit" to the country.

"RIM is a Canadian jewel," Paradis said in the interview, which was conducted in his native French. "First of all what I hope for is that RIM be able to be on a path of prosperity. As for speculation (about a takeover), we'd have to see what happened and consider if the law would apply."

FULL YEAR EARNINGS

In its warning, RIM said it no longer expects to meet its full-year earnings forecast of $5.25 to $6 per share because of weaker than expected smartphone shipments, a $360 million after-tax writedown on PlayBook inventories and a $50 million charge related to the October outage.

Excluding the two charges, RIM now expects adjusted earnings in the third-quarter to be at the low to mid-point of its previously forecast $1.20 to $1.40 per share range.

Revenue, excluding the outage charge, is expected to be slightly below the previously forecast range of $5.3 billion to $5.6 billion, in part because of the PlayBook discounting.

RIM, which reports third quarter results on December 15, said it shipped about 14.1 million BlackBerry phones in the quarter, in line with its earlier forecast of between 13.5 and 14.5 million.

It said it was confident the PlayBook promotion will help boost sales and reduce its inventories.

"Early results from recent PlayBook promotions indicate a significant increase in demand across most channels," Co-Chief Executive Mike Lazaridis said in a statement.

But RIM also said it expects to ship fewer smartphones in the current quarter than in the recently-ended third quarter, despite having a lineup of updated devices on offer in the traditionally busy Christmas period.

"We do not see any sign that RIM's downward spiral is about to bottom out," Nomura analyst Stuart Jeffrey said in a note for clients. "The company has a number of new phones on the market, yet guidance for Q4 suggests that their momentum is already starting to stall."

(Additional reporting by Phil Wahba in New York and Tarmo Virki in Helsinki; Editing by Janet Guttsman and Frank McGurty)

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Clearwire shares fall on Google stake sale

Clearwire shares fall on Google stake sale

Stock Market Predictions

NEW YORK (Global Markets) - Clearwire Corp (CLWR.O) shares closed down almost 7 percent on Friday after Google Inc (GOOG.O) said it would sell its stake in the company.

An analyst said that Google's sale of the shares at a discount could be followed by other investors ditching their shares in the wireless service provider.

Google would reap just over $47 million from the sale of the shares, implying a massive loss of $453 million for Google, which invested $500 million in Clearwire in 2008. Google has already taken impairment charges of $443 million in recent years related to the investment.

Cable operators, including Comcast Corp (CMCSA.O) and Time Warner Cable (TWC.N), also have invested in Clearwire, which is majority owned by Sprint Nextel (S.N).

Since the cable operators have recently entered an agreement to resell mobile services from Verizon Wireless, the biggest U.S. mobile service, the concern is that they will also sell their stakes in Clearwire. Before the Verizon deal the cable operators depended on Clearwire as their wholesale provider.

"With no strategic reason to hold Clearwire shares, these ownership stakes could also make their way into the market," said Evercore analyst Jonathan Schildkraut.

Time Warner Cable said it does not have any immediate plans to sell its stake in Clearwire. Comcast did not respond to requests for comment.

According to a document filed with regulators on Friday, Google said it would sell the 29.4 million shares it holds in Clearwire for $1.60 per share to Clearwire's other strategic investors, which include Intel Corp (INTC.O), or on Nasdaq.

Clearwire shares closed down 15 cents, or 6.84 percent, at $2.11 on Nasdaq after the news. If the Google sale is conducted on Nasdaq, it will start on or about February 27.

Google invested in Clearwire in November 2008 along with Intel, Comcast and others as the search giant wanted to help kick off the company's plan to build a high-speed network.

Shares in Google closed up $3.79 at $609.90 on Nasdaq.

(Reporting by Sinead Carew in New York, Alexei Oreskovic in San Francisco and Yinka Adegoke in New York; editing by Mark Porter, Phil Berlowitz)

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ConAgra made unsolicited bid for Ralcorp: report

ConAgra made unsolicited bid for Ralcorp: report

Stock Market Predictions

BANGALORE/CHICAGO (Global Markets) - Shares of Ralcorp Holdings Inc (RAH.N) jumped on Friday after CNBC said ConAgra Foods Inc (CAG.N) had made an unsolicited bid for the private-label food maker and that talks were "no longer ongoing."

ConAgra sent a letter to Ralcorp about two months ago, the cable television channel reported.

When contacted, a ConAgra spokeswoman said the company had no comment. Ralcorp, which also makes Post branded cereals, did not return calls or mails requesting comment.

ConAgra, the maker of Healthy Choice frozen meals and Slim Jim meat snacks, has been struggling with increases in costs of commodities such as gas, dairy and wheat.

Some food industry executives and analysts have said that the sector may see fewer mergers and acquisitions in 2011 compared with 2010, partly due to high commodity prices and companies' wish for the perfect right strategic buys.

Ralcorp -- which sells a wide range of products such as pasta, cereals, corn snack products, syrups and salad dressings -- has itself grown through acquisitions buying as many as 20 companies in the past 10 years including American Italian Pasta for $1.2 billion last year.

Ralcorp has a market value of over $4 billion.

Ralcorp shares, which had been halted on the New York Stock Exchange, were up 8.5 percent at $77.47 in afternoon trade after soaring to $81.19. Shares of ConAgra rose 0.2 percent to $24.40.

(Reporting by Brad Dorfman and Jessica Wohl in Chicago, Franklin Paul in New York and Mihir Dalal in Bangalore; Editing by Lisa Von Ahn and Gopakumar Warrier)

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Icahn drops push to unseat Clorox board

Icahn drops push to unseat Clorox board

Stock Market Predictions

(Global Markets) - Billionaire investor Carl Icahn abandoned his quest to take over the board of Clorox Co (CLX.N) on Friday, saying he lacked support from other major investors, sending its shares down almost 5 percent in extended trading.

Icahn, Clorox's biggest shareholder, last month nominated himself, his son and nine other people for election to the board at the company's next annual shareholder meeting.

That move came after Clorox directors twice rejected his earlier offers to buy the company.

"Several large shareholders may believe that now is not the best time to run that process, given the deteriorating conditions of the financial markets," Icahn said in a regulatory filing on Friday.

Beyond that, he said, Clorox's view is that Icahn's offer of $80 per share "substantially undervalues" the company.

Nevertheless, Icahn said he continues to believe that a sale is the best way to maximize shareholder value.

Icahn kicked off his proxy fight at Clorox on Aug 19, the day after he lost a battle to get board seats at another target, prescription drug maker Forest Laboratories (FRX.N).

The corporate raider-turned-activist, who is known to take on battles at several companies at the same time, lately has been no stranger to disappointment.

On August 30 he dumped his stake in Lions Gate Entertainment Corp (LGF.N), giving up on a lengthy battle for control of the film studio and producer of the television hit "Mad Men.

Shares in Clorox fell 4.9 percent to $66 in extended trading on Friday.

(Reporting by Phil Wahba in New York and Lisa Baertlein in Los Angeles; Editing by Andre Grenon)

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Carlyle investors should prepare for rocky ride

Carlyle investors should prepare for rocky ride

Stock Market Predictions

NEW YORK (Global Markets) - Carlyle is facing a tough market and if recent history is any guide, once it goes public, its shares will be volatile.

Investors have been shattered by recent economic turmoil, and that fate has been amplified in the share prices of publicly traded private equity firms. Shares of Blackstone Group (BX.N) have lost more than half of their value since their June 2007 IPO. Apollo Global Management (APO.N) is down about 37 percent since its March IPO.

Meanwhile, KKR (KKR.N), which transferred its listing to New York from Amsterdam in July 2010, is up by 15.5 percent. Charts of all three stocks show dramatic swings in share price.

There is no reason for Carlyle to be any different. Private equity returns are notoriously volatile and Carlyle is heavily exposed: 36 percent of its revenue comes directly from its corporate private equity business.

"Private equity companies are unique in that you either believe in the senior professionals and are along for the ride or you don't invest," said Richard Truesdell, a New York-based capital markets partner at law firm Davis Polk.

Northwestern University finance professor Yael Hochberg agreed: "This should eventually pay off, but not in the short term," she said.

Carlyle last week filed paperwork for an initial public offering of up to $100 million. It is expected to come to market in the first half of 2012 as an offering of roughly $1 billion.

TOUGH MARKET

Private equity firms' ability to realize gains is tied to the economy because economic conditions determine a firm's ability to do new deals and to exit old ones, said Steven Kaplan, a University of Chicago professor who specializes in private equity. "A KKR, a Blackstone, a Carlyle -- their stocks will be tied to the economy," he said.

Fears about Europe's sovereign debt crisis are easing but U.S. economic recovery remains disappointing. The Federal Reserve last month said it would keep interest rates ultra-low until at least the middle of 2013.

The VIX, which measures market volatility and is often used as a proxy for investors' level of worry, is over 30. Some bankers say that when the VIX climbs over 25 it can be hard to do IPOs, which is one of the major ways that firms exit their investments.

The IPO market shut down at the end of July and has yet to reopen. The spreads on leveraged loans have widened.

Carlyle declined to comment.

(Reporting by Clare Baldwin in New York, editing by Matthew Lewis)

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MF Global board meets on sale options: Bloomberg

MF Global board meets on sale options: Bloomberg

Stock Market Predictions

(Global Markets) - Members of MF Global Holdings Ltd's board of directors were meeting on Saturday to discuss options for the sale of the brokerage, Bloomberg News reported.

The talks were said to have begun in New York at 4 p.m. EDT to discuss apparent offers from five potential buyers of the company.

"We're not commenting on the record about this meeting," MF Global spokeswoman Tiffany Galvin said.

A source familiar with the situation said on Friday that MF Global was racing to sell all or part of its business this weekend, with its futures brokerage business seen as the most attractive.

MF Global stock fell over 60 percent this week and the bonds were distressed after the firm posted a $191.6 million quarterly loss and as Moody's Investors Service and Fitch Ratings cut the company's credit ratings to junk.

(Reporting by Sam Nelson in Chicago; Editing by Peter Cooney)

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D-Telekom shares drop on move to block AT&T deal

D-Telekom shares drop on move to block AT&T deal

Stock Market Predictions

FRANKFURT (Global Markets) - Shares in Deutsche Telekom (DTEGn.DE) dropped 5 percent on Thursday and were the only decliner in a 3 percent stronger German blue chip index .GDAXI on news the U.S. justice department has filed to block the sale of its T-Mobile USA unit to AT&T (T.N).

"There is talk the sale will be blocked by the justice department," a Frankfurt-based trader said.

At the same time AT&T shares dropped 3 percent in New York while competitor Sprint (S.N) gained 10 percent.

Deutsche Telekom was not available to comment.

(Reporting by Harro ten Wolde)

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LyondellBasell results miss Street; shares slump

LyondellBasell results miss Street; shares slump

Stock Market Predictions

(Global Markets) - Chemical maker LyondellBasell Industries NV's (LYB.N) quarterly operating profit fell far short of Wall Street's expectations as refining margins dropped and customers conserved cash.

Many European customers chose to draw down stockpiles rather than make new purchases amid the sovereign debt crisis. Many of the same issues affected rival Dow Chemical (DOW.N) during the fourth quarter.

"We expect overall first-quarter economic activity to remain slow in Europe and Asia for certain of our businesses," LyondellBasell Chief Executive Jim Gallogly said in a statement.

Operating profit dropped in all four of the company's operating segments, and was most pronounced in its refining and oxyfuels unit, which makes gasoline. The benchmark crude oil margin the company used slipped 41 percent.

The company's European chemical plants, also known as crackers, use pricey crude oil-derived naphtha to produce chemicals, a process that is much more expensive than in the United States where cheap natural gas can be used to make the same products.

In Europe the company sold 5 percent less polyethylene and 10 percent polypropylene, both essential chemicals for plastics production.

The price of ethylene did rise 15 percent in North and South America, though sales of polyethylene in the region were flat and polypropylene sales edged up only slightly.

LyondellBasell reported a net loss of $218 million, or 38 cents per share, for the fourth quarter, compared with net profit of $766 million, or $1.34 per share, in the year-ago period.

Excluding one-time items, such as early debt repayment and the mothballing of a French refinery, LyondellBasell earned 41 cents per share. By that measure, analysts on average expected 76 cents per share, according to Thomson Global Markets I/B/E/S.

Revenue rose 8 percent to $11.44 billion. Analysts expected $12.04 billion.

During the quarter LyondellBasell, which is technically headquartered in the Netherlands but run out of Houston, doubled its dividend and said it would pay a separate special dividend.

The company, which emerged from bankruptcy protection in 2010, also said it would buy back nearly $2.8 billion of debt, substantially improving its balance sheet. LyondellBasell recorded a $431 million charge in the fourth quarter for the move.

Last fall LyondelBasell shut its Berre, France, refinery, which employs 370 workers. The decision sparked a strike at the plant. The company ultimately decided to put the refinery in cocoon mode, meaning it will be stopped, cleaned, and given another twos years for a potential acquirer to buy it.

Shares of LyondellBasell were down 36 cents at $44.22 on the New York Stock Exchange.

Elsewhere on Friday, Apollo Global Management LLC (APO.N), which owns a stake in LyondellBasell, reported a drop in fourth-quarter earnings due to changes in the accounting value of some assets.

(Reporting by Ernest Scheyder in New York and Swetha Gopinath in Bangalore; Editing by Don Sebastian, John Wallace and Derek Caney)

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Interpublic profit shines amid slowing ad spending

Interpublic profit shines amid slowing ad spending

Stock Market Predictions

(Global Markets) - Interpublic Group of Companies (IPG.N) posted market-beating results and stood by its full-year outlook despite global peers warning of slowing ad spend, sending shares of the second-biggest U.S. advertising and marketing group up 18 percent.

Most ad groups across the world have been under increasing pressure in recent months due to uncertainty over Europe's sovereign debt crisis and sluggish growth elsewhere.

Earlier on Friday, WPP Plc (WPP.L), the world's largest advertising company, cut its 2011 outlook on slowing growth in the United States and the euro zone debt crisis.

In contrast, Interpublic said it will meet or surpass its organic revenue growth forecast of 4-5 percent and operating margin outlook of 9.5 percent, despite macro uncertainties.

"We have seen little in the way of pullbacks among clients, despite the economic climate," Chief Executive Michael Roth told analysts on a call.

The performance of the most economically sensitive sectors -- automobiles, financial services and retail -- remained solid in the third quarter, Roth said.

He added that in 2012, Interpublic would be vigilant on costs, though it was too early to comment, given the uncertain macroeconomic environment.

Results from Interpublic and its larger U.S. peer Omnicom (OMC.N) bode well for smaller U.S. advertising companies such as Lamar Advertising (LAMR.O) and Focus Media Holding Ltd.

Earlier this month, Omnicom Group Inc (OMC.N) posted estimate-beating results as its international sales surged.

For the third quarter, Interpublic's net income jumped to $208.1 million, or 40 cents per share, from $45.3 million, or 8 cents per share, a year ago.

Excluding a benefit from the sale of about half of its holdings in Facebook, the company earned 16 cents per share.

In August, the company sold half of its 0.4 percent stake in Facebook for $133 million, recording a related pre-tax gain of $132.2 million.

Analysts expected third-quarter net income of 10 cents a share on $1.65 billion in revenue, according to Thomson Global Markets I/B/E/S.

Shares of New York-based Interpublic were trading up 14 percent at $10.16 on Thursday on the New York Stock Exchange after touching a high of $10.50 earlier in the session. (Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Gopakumar Warrier, Saumyadeb Chakrabarty)

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Satyam Computer has loose Rs 5000+ Cr - Ramalinga Raju biggest fraud in India’s History

B. Ramalinga Raju has confessed that a huge sum of money is missing from Satyam. According to a confession letter he wrote to the board this morning, somewhere between Rs 5,040 crore and Rs 7,136 crore (part of the letter is open to two interpretations) is missing from the company.

According to Raju, this sum has not been embezzled or misappropriated. Instead, it never existed. The company has been lying about its revenue and profitability for years. These lies have now become too big to sustain. As the letter puts it, “What started as a marginal gap between actual operating profits and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of the company operations grew?”

As this point of time, nothing can be said about the real state of affairs. As it turns out, Raju and others at Satyam have been telling lies for years. For all we know, this letter may be just be another layer of lies that is hiding more than it reveals. Certainly, the letter can’t be taken at face value.

The biggest question that arises is actually not on the role of Raju, but that of the company’s auditors, PricewaterhouseCoopers. Interestingly, PricewaterhouseCoopers, which is a USD 28 billion (2008 revenues) professional services firm headquartered in New York, appears to have actually started attempts to divert attention from its role a few days ago. Three days ago, some newspaper reports started that PwC will ‘review its continuance with Satyam Computer’. However, few would be willing to believe that such a huge, multi-year scam could have taken place without complete co-operation and connivance of the auditor.

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Cablevision's profit miss drags down entire sector

Cablevision's profit miss drags down entire sector

Stock Market Predictions

(Global Markets) - Cablevision Systems Corp's quarterly earnings widely missed Wall Street estimates, as it dealt with a weak economy, high programing costs and competition from phone companies offering TV services.

The disappointing earnings report sent Cablevision shares plunging as much as 16 percent and dragged down other stocks in the sector, including Comcast, Time Warner Cable, Dish Network and DirecTV.

Shares in those companies fell between 3.5 percent and 4 percent on Friday.

Cablevision missed Wall Street's consensus by 14 cents on Friday and its earnings report raised questions among analysts about the company's growth prospects, as its faces mounting costs and a shrinking user base.

"The earnings miss is a big and ugly one," said Bernstein Research analyst Craig Moffett in a research note. "The key issue is growth. Without growth, it's hard to grow margins."

Cable companies have been losing video customers to phone companies such as Verizon Communications, which offers FiOs TV, as well as to Internet companies such as Netflix Inc and Hulu.

Cablevision was the second cable company in two days to report disappointing earnings and then have its shares fall by double digits. On Thursday, Time Warner Cable lost more video customers than expected and its shares fell 10 percent.

Cablevision, which mainly serves the New York area but now has operations in Montana and Wyoming, said it lost 19,000 video subscribers in the third quarter.

Verizon competes with Cablevision in the greater New York area and in the same period it added 131,000 video customers. Earlier this month, Verizon said it expects to add 200,000 FiOS TV customers in the fourth-quarter.

Brean Murray analyst Todd Mitchell said Friday's results show that Cablevision is "having trouble in their New York clusters."

Cablevision executives also blamed the weak economy for stunting housing growth and hurting its business. If people are not moving into new homes, they will not sign up for new TV service. The company's chief operating officer called it a "cyclically challenging time."

"You have a situation currently where you have pretty slow housing growth, virtually no housing growth, and actual reduction in household formation," said Cablevision's COO Tom Rutledge on the conference call.

Cablevision said it took a hit of $16 million because of Hurricane Irene, a storm that affected the New York area in August.

One bright spot for Cablevision was its Internet additions. Analysts were expecting it to add 5,000 new Internet customers and it added 17,000 in the quarter.

Cablevision posted a profit of $39.3 million, down from $112.1 million a year earlier.

Adjusted for various charges, the company reported earnings per share of 17 cents, which missed analysts' expectations of 31 cents per share.

Cablevision, which is controlled by the Dolan family and also owns a newspaper and TV networks, saw its total revenue increase 8 percent to $1.67 billion. The revenue was in line with estimates.

The company's shares were down 12.5 percent at $15.14 in afternoon trading on the New York Stock Exchange, after falling as low as $14.50 earlier in the session.

(Reporting by Liana B. Baker in New York, editing by Gerald E. McCormick, Dave Zimmerman and Carol Bishopric)

Corrects attribution for quotes in 11th and 12th paragraphs, to Cablevision's Chief Operating Officer Tom Rutledge and not the company's CFO Gregg Seibert. Also corrects year ago earnings figure to $112.1 million.

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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)

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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)

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AllianceBernstein disappoints again

AllianceBernstein disappoints again

Stock Market Predictions

(Global Markets) - Money manager AllianceBernstein LP (AB.N) turned in another disappointing financial report on Friday, with fourth-quarter profit and revenue falling short of Wall Street expectations as clients continued to pull money out of its stock funds.

Shares of the New York-based company, which is controlled by French insurer AXA (AXAF.PA), were down 6 percent in morning trading.

Since becoming chairman and chief executive in December 2008, Peter Kraus, a former Goldman Sachs partner, has struggled to revive a company that was reeling when he arrived. AllianceBernstein's assets under management and stock price are down 12 percent and 14 percent, respectively, during his tenure.

"In a year of extremely volatile markets and risk aversion on the part of investors, it was a difficult year for active managers to outperform," Kraus told analysts and investors on a conference call on Friday. "Performance in our largest equity services disappointed and we ended up with greater net outflows in 2011 than in 2010."

The company also took a noncash charge of $587 million related to unrecognized deferred incentive compensation.

Earnings excluding one-time items dropped to $37 million from $139 million a year earlier. That gave the company earnings per unit of 7 cents. Analysts on average had expected 19 cents, according to Thomson Global Markets I/B/E/S.

Net revenue fell 20 percent to $625 million. Analysts had expected $650 million.

Sandler O'Neill analyst Michael Kim said the stock seemed to be reacting to the earnings miss driven by the revenue shortfall. Though he had forecast earnings of just four cents per share and said AllianceBernstein's flow trends were a touch better than he expected, Kim said the firm still has work to do to bring investors back to its stock funds.

"They're still dealing with performance issues on the large-cap core equities franchise, and that is likely to remain a real drag on overall growth," Kim said in an interview.

The company reported $406 billion in assets under management at the end of 2011, compared with $478 billion at the end of 2010. Net outflows in the fourth quarter were $13.2 billion.

Assets under management rose 1 percent from the end of the third quarter, and showed a 4 percent improvement in January from the end of 2011.

Shares of AllianceBernstein were down six percent to $15.53 in morning trading.

The company has been hurt somewhat by moves made by AXA.

During 2011, AXA sold its Canadian and Australian businesses. AllianceBernstein managed about $16 billion for them and expects to lose most of these assets over time.

In the fourth quarter, it had outflows associated with those dispositions of nearly $4 billion, representing about $5 million in revenue.

The company said it expects to see another $6 billion in outflows related to the AXA asset sales in the first half of 2012.

(Reporting by Tim McLaughlin in New York and Ross Kerber in Boston; Editing by Lisa Von Ahn, John Wallace and Phil Berlowitz)

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Ackman raises exposure to Penney

Ackman raises exposure to Penney

Stock Market Predictions

(Global Markets) - Billionaire investor William Ackman's Pershing Square Capital Management said it entered into a kind of swap that has increased its exposure to department store chain J.C. Penney Co Inc's stock. (JCP.N)

Pershing Square, Penney's largest shareholder with 18.3 percent of common stock, or 39 million shares, said in filing on Friday it entered into cash-settled total return swaps that give it economic exposure to another 16.6 million Penney shares.

All in all, Pershing Square's total exposure is now 55.6 million shares, or 26.1 percent of Penney's outstanding shares. That is the maximum number of shares Ackman's firm can own in Pershing, according to its agreement with Penney.

The swaps were entered into on Thursday.

Penney shares were up 0.5 percent to $25.50 in late trading.

(Reporting by Phil Wahba in New York; editing by Andre Grenon)

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BofA CEO faces investors, shares plumb lows

BofA CEO faces investors, shares plumb lows

Stock Market Predictions

(Global Markets) - Bank of America Chief Executive Officer Brian Moynihan will have his work cut out for him next week when he speaks at an investor conference in New York, despite a recent uptick in his bank's stock price.

Shares of the second largest U.S. bank have bounced around a 52-week low and threatened to fall below $5 earlier this week, before central banks pumped more liquidity into the financial system and bank stocks surged.

Moynihan has been shedding assets to build capital and working to cut expenses to improve profits. But investors remain worried about the bank's mortgage liabilities and the strength of its balance sheet.

About the time Moynihan speaks on Tuesday, the bank will also make two top executives available for private meetings with investors.

The bank has notified hundreds of institutional investors about the meetings but only a few are expected to attend, a person familiar with the matter said. It often holds such meetings around investor conferences, the person added.

At least two of the investors invited to the private meetings with co-Chief Operating Officer Tom Montag and Chief Financial Officer Bruce Thompson have been selling Bank of America shares short, a trade that profits if the bank's shares drop. The bank may be trying to charm skeptics, one of the investors said.

Any communication with investors is a positive, said Jon Finger, a Houston-based Bank of America investor, who has been a vocal critic of the bank's recent acquisitions.

"There's a lot of fear and concern about the stock," said Finger, who was not invited to the meetings. "To the extent, the bank communicates with investors and reduces fear, the stock could perform better."

In one email obtained by Global Markets, the bank said it had room for eight to 10 investors to attend a one-hour meeting with Montag at the bank's New York headquarters. The former Merrill Lynch and Goldman Sachs executive runs the bank's global banking and markets unit and added the title of co-chief operating officer after a management shake-up in September.

Executives cannot give investors material nonpublic information, but they can reiterate comments that the bank has already said.

Bank stocks in general have been buffeted by concerns about the European debt crisis and the economy, but Bank of America's shares have been particularly susceptible to wild swings amid concerns about its capital levels.

Bank of America's shares closed at $5.08 on Tuesday, their lowest point since March 2009, but were at $5.63 in late afternoon trade on Friday. As of Thursday, the shares were down 58 percent this year, compared to 27 percent decline in the KBW Bank Index.

This year, Moynihan has made a number of efforts to lay out his strategy for investors but hasn't been able to assuage their concerns about the bank's mortgage liabilities and its ability to meet new capital standards.

The bank held its first investor day in four years in March, but Moynihan's comments about a possible increase in the

bank's dividend came back to haunt him when the Fed denied the request. In August, Moynihan participated in an unusual public conference call with fund manager Bruce Berkowitz but the bank's shares have continued to slide.

Next week, he will be one of a number of bank CEOs to give presentations at the annual Goldman Sachs Financial Services Conference. It will be Moynihan's first conference since his bank's board held a strategy retreat last month.

(Reporting by Rick Rothacker in Charlotte, North Carolina, and Lauren Tara LaCapra in New York, Editing by Dan Wilchins)

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Orsus says website has errors, can't explain share move

Orsus says website has errors, can't explain share move

Stock Market Predictions

NEW YORK/BEIJING (Global Markets) - Officials from a small, U.S.-listed Chinese mobile phone distributor on Friday said inaccuracies on its website that prevented people from contacting the company were mistakes that would be corrected.

Orsus's stock has seen an unprecedented spike in volatility and trading action after Interactive Brokers listed the stock more than a week ago as being one of 160 Chinese securities with "elevated risk concerns."

The moves, which at one point after the Interactive Broker rule drove up the stock more than 300 percent within a week on some of its highest-ever volume, prompted Global Markets to try to contact the company at both its Beijing headquarters and New York offices, attempts that were unsuccessful.

The website of Beijing-based Orsus-Xelent (ORS.A) listed phone numbers that were disconnected and addresses that belonged to other businesses, including Orsus's former investor relations firm in New York.

Li Yinsheng, the personal secretary to Orsus Chief Executive Liu Guoji, noted that the contact information given on the website "has some mistakes," adding that the errors had been corrected.

However, the information hadn't been changed as of Friday afternoon, and the site listed a different chief executive, Xavier Xin Wang, on its management page.

Li gave a new Beijing address for the company, on a different floor in the same building listed on the website, and the new address was verified by Global Markets.

The company, however, could not comment on the dramatic gyrations in its shares, which were down 24.6 percent to $3.18 on Friday, again on heavy volume. While the stock has dropped for each of the past three sessions, it remains up about 120 percent from a recent low of $1.25.

"We've gotten calls about the price, but we don't have any idea why the price is so unusual," said Orsus Chief Financial Officer Chen Hua. "But I don't pay attention to the trading volume or the stock price."

Commenting on the inaccuracies of the website, Hua said he didn't know too many details about the company because he hadn't been there that long -- in his current position for a little more than a year.

(Editing by Chizu Nomiyama)

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Estee Lauder raises ad spending

Estee Lauder raises ad spending

Stock Market Predictions

(Global Markets) - Cosmetics company Estee Lauder Cos Inc (EL.N) forecast quarterly earnings far below Wall Street estimates, saying it suffered because of foreign exchange rates and would increase investments in advertising, sending its shares down as much as 8 percent.

This would be the first profit miss in more than a year for the company, whose full-year outlook also fell short of analysts' expectations.

Estee Lauder said on Friday that it expected to earn between 28 cents and 32 cents a share after taking a restructuring charge in the third quarter, while analysts on average were expecting the company to earn 41 cents a share, according to Thomson Global Markets I/B/E/S.

The maker of Bobbi Brown, MAC and Clinique brands of beauty products said it would raise global advertising spending by about $80 million, or 14 cents a share, as it introduces new products during the quarter.

"While some of this step-up was likely already anticipated in guidance, we note significant reinvestment in the second half of the year has led to strong first half sales results in recent years, a trend we expect to continue," said Stifel Nicolaus analyst Mark Astrachan.

Chief Executive Fabrizio Freda said on a conference call that Clinique makeup sales in North America grew 13 percent in the second quarter, confirming that its advertising was able to draw new consumers.

For the full year, New York-based Estee Lauder forecast earnings of $2.16 to $2.23 a share, while analysts were expecting $2.26.

"We recommend that investors buy on any weakness tied to the third-quarter guidance, as investment spending in this quarter should lead to stronger sales and earnings growth in the future," BMO Capital Markets analyst Connie Maneaty wrote in a note to clients.

For the second quarter ended December 31, the company posted a higher profit as strong demand for its makeup and skin-care products lifted sales.

Net income at the company, which competes with L'Oreal SA (OREP.PA) and Avon Products Inc (AVP.N) among others, rose to $396.7 million, or $1.00 a share, from $343.9 million, or 86 cents a share, a year earlier.

Excluding special items, the profit of $1.01 a share was in line with the analysts' average forecast.

Estee Lauder shares were trading down 4 percent at $56.41 Friday morning on the New York Stock Exchange.

(Reporting by Phil Wahba in New York and Nivedita Bhattacharjee in Chicago; Editing by John Wallace, Lisa Von Ahn, Phil Berlowitz)

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