Disney results shine, defends sports TV deals

Disney results shine, defends sports TV deals

Stock Market Predictions

(Global Markets) - Walt Disney Co (DIS.N) unveiled strong results that trumped Wall Street's expectations as advertisers spent more at cable networks like ESPN and consumers kept going to theme parks despite a rough economy.

The operator of networks ESPN and ABC, a movie studio and theme parks reported a better-than-expected 7 percent gain in fiscal fourth-quarter revenue and a 30 percent jump in net income, spurring a 2.5 percent gain in its shares.

The results reassured investors, some of whom had been nervous about the toll that economic uncertainty would have on consumer spending, and then on the world's largest entertainment, leisure and consumer conglomerate.

Disney has produced steady gains quarter after quarter under Chief Executive Bob Iger, who announced last month he will step down as CEO after March 2015. But it reported a rare revenue miss in its May results, and spooked investors again last quarter with warnings about higher costs at ESPN and other issues.

Going forward, Disney said it plans to replace NBA games with college basketball and other live sports programing as an NBA labor dispute drags on. Any decrease in ad dollars should be more than offset by savings from not having to pay rights fees for NBA games, Chief Financial Officer Jay Rasulo said.

"I do not believe it will affect us to the negative financially if the season in fact does not end up happening," Rasulo told analysts on a conference call.

Iger, meanwhile, defended a recent deal with the National Football League to keep "Monday Night Football" on ESPN through 2021 at a cost of about $1.9 billion a year.

"There's no question it was an expensive deal," Iger said. But he added the agreement provided long-term certainty of quality content to viewers and advertisers, plus expanded digital rights. The NFL "creates value for ESPN" and "grows customer engagement," Iger said.

He also said terms for soccer's World Cup and the Olympics "didn't meet our standards" and the company "couldn't justify the costs others paid for it."

DON'T COUNT ME OUT

Calling his remaining tenure "not as brief as people suggest," Iger said a main goal was to take advantage of new technology to showcase the company's programing. "It's a huge strategic priority for us," he said.

Qaurterly results were generally solid across the company, showing strength at the media and theme park units that are sensitive to swings in the economy, analysts said.

"They were solidly in line on balance," said Janney Montgomery Scott analyst Tony Wible, adding the parks unit appeared "relatively healthy" despite concerns about consumer sentiment amid high unemployment and weak economic growth.

The parks and resorts group reported an 11 percent revenue gain to $3.1 billion.

Disney had been expected to show stronger results after rivals including Comcast Corp (CMCSA.O), Time Warner Inc (TWX.N) and News Corp (NWSA.O) reported gains propelled by a healthy advertising market.

The media networks unit, the company's largest which incorporates sports channel ESPN and the ABC broadcast network, posted a 9 percent gain in revenue to $4.8 billion.

The studio and entertainment division was the laggard among Disney's main business arms for the quarter, with revenue sliding 8 percent to just under $1.46 billion in the quarter. "The Lion King 3D" and "The Help" were hits but faced tough comparisons with last year's "Toy Story 3."

Revenue jumped 7 percent to $10.43 billion, exceeding estimates for $10.36 billion.

Net income for the quarter rose 30 percent to $1.1 billion. Earnings per share came in at 58 cents, ahead of analyst expectations of 54 cents, according to Thomson Global Markets I/B/E/S.

Disney shares rose 2.5 percent to $35.50 after hours on Thursday, up from an earlier close of $34.64 on the New York Stock Exchange.

(Reporting by Lisa Richwine, editing by Bernard Orr)

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Pratt wins $194 million for early work on F-35 engines

Pratt wins $194 million for early work on F-35 engines

Stock Market Predictions

WASHINGTON (Global Markets) - United Technologies Corp's (UTX.N) Pratt & Whitney unit has won a $194 million advanced acquisition contract for early work on 37 engines for a sixth batch of F-35 fighter jets, the Pentagon said on Friday.

The contract, which runs through September 2012, includes fixed-price line items for long lead components, parts, and materials required for engines to be built for 31 F-35s for the United States, four for Italy and two for Australia, the Defense Department said in a daily digest of major weapons contracts.

The Pentagon negotiates separate contracts with Lockheed Martin Corp (LMT.N), which is developing three variants of the F-35 Joint Strike Fighter for the U.S. military and eight partner countries; and engine maker Pratt & Whitney.

The contract includes engines for 18 conventional take-off and landing (CTOL) variants for the U.S. Air Force; 6 short take-off and vertical landing variants for the Marine Corps; 7 carrier variant for the Navy; four CTOL versions for Italy, and two CTOLs for Australia.

This contract covers only certain materials and parts that the company needs to start buying early. The actual contract for the engines will likely be negotiated later this year.

That means the number of jets and engines included in the advanced procurement deal may yet change, especially since the Pentagon is gearing up to restructure the program and defer work on over 120 jets as part of its fiscal 2013 budget proposal.

The Pentagon is now negotiating contracts for a fifth batch of fighter jets and engines with Lockheed Martin and Pratt, although both companies have received contracts that allow them to start billing the government for certain costs associated with those planes.

(Reporting By Andrea Shalal-Esa, editing by Carol Bishopric)

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Higher costs, stronger dollar dent Mattel's margins

Higher costs, stronger dollar dent Mattel's margins

Stock Market Predictions

(Global Markets) - Mattel Inc (MAT.O), the world's largest toy company, reported a bigger-than-expected fall in gross margins, hurt by a stronger dollar and higher costs, taking the gloss off a record jump in sales of its iconic Barbie dolls heading into the critical holiday season.

Toymakers are fighting to shield their margins from a rise in the cost of raw materials like plastics and paper, and higher wages demanded by laborers in China, where a lot of U.S. companies make their toys.

Additionally, Mattel -- which gets roughly half its sales from international markets -- said a rise in the U.S. dollar against foreign currencies like the euro in September pulled down gross margins by about 180 basis points.

A stronger dollar, which brings down the value of exported goods by U.S. companies, is also likely to affect Hasbro Inc (HAS.O) when it reports results on Monday -- though the company is less dependent on international sales.

"The only issue we see with the company's results is the gross margin, which was below expectations and did not see the typical seasonal uplift from Q2 levels," MKM Partners analyst Eric Handler said.

Gross margins in the quarter fell to 47.8 percent from 51.1 percent in the year-ago period.

"If the dollar stays at current levels against the euro, it's likely to be a headwind in the fourth quarter as well," Handler said.

While margins fell, the strong sales performance bodes well for Mattel as it heads into the crucial holiday season at a time of growing economic uncertainty.

Mattel's closely awaited toys this holiday season include "Angry Birds Knock On Wood," a tabletop version of the highly popular game app for mobile phones, and the "Monster High Dead Tired" doll line that features offspring of famous monster characters themed on a pajama party.

Wedbush Securities analyst Edward Woo cautioned that the weak economic condition in Europe -- which until now have not really been reflected in toymakers' results -- could hurt sales of toys during the holidays.

"Just because the (European) economy hasn't hurt results, does not mean that it won't in the future as well ... right now, we don't know one way or the other," Woo said.

Q3 SALES BEAT

Third-quarter net income was $300.8 million, or 86 cents a share, compared with $283.3 million, or 77 cents a share, a year ago.

Net sales rose 9 percent to $2.0 billion. Barbie sales were up 17 percent in the quarter -- their highest percentage rise in more than a decade. Sales of Other Girls Brands, which include the Monster High and Disney Princess doll lines, were up 32 percent.

Analysts, on average, had expected earnings of 86 cents a share, before special items, on revenue of $1.97 billion, according to Thomson Global Markets I/B/E/S.

The company also increased its stock repurchase program by $500 million.

Mattel's shares, which have risen 9 percent this year in contrast to a 27 percent fall in rival Hasbro, were down 1 percent at $27.52 on Friday on Nasdaq.

(Reporting by Mihir Dalal in Bangalore; Editing by Sriraj Kalluvila and Saumyadeb Chakrabarty)

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Merit Medical shares fall on fourth-quarter profit miss

Merit Medical shares fall on fourth-quarter profit miss

Stock Market Predictions

(Global Markets) - Shares of Medical Systems Inc (MMSI.O) fell 14 percent to a year low on Friday, after the medical device maker posted a quarterly profit below analysts' expectation.

On Thursday, the company reported a fourth-quarter adjusted profit of 18 cents a share, a cent below consensus estimates of 19 cents a share, according to Thomson Global Markets I/B/E/S.

The company also forecast 2012 revenue between $392 million and $402 million.

Shares of the South Jordan, Utah-based company were trading down 8 percent at $12.25. They had touched a low of $11.51 earlier in the session. (Reporting by Vidya P L Nathan in Bangalore; Editing by Sriraj Kalluvila)

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Amazon downgraded by Morgan Stanley; shares fall

Amazon downgraded by Morgan Stanley; shares fall

Stock Market Predictions

SAN FRANCISCO (Global Markets) - Amazon.com Inc shares were downgraded by Morgan Stanley analysts on Thursday on concern about competition from Apple Inc and slowing sales growth.

Analysts led by Scott Devitt lowered their rating on Amazon shares to "equal weight" from "overweight." Amazon's shares fell 4.1 percent to $176.97 in morning trading.

(Reporting By Alistair Barr; Editing by Maureen Bavdek)

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China's Shaanxi Coal Industry plans $2.7 billion IPO

China's Shaanxi Coal Industry plans $2.7 billion IPO

Stock Market Predictions

SHANGHAI (Global Markets) - Shaanxi Coal Industry plans an initial public offering in Shanghai to raise up to 17.3 billion yuan ($2.7 billion) in what could be China's biggest IPO this year.

The China Securities Regulatory Commission (CSRC) said late on Thursday that it would review Shaanxi Coal's IPO application on August 29.

Shaanxi Coal would issue up to 2 billion shares in the offering, according to a draft prospectus posted on the CSRC website.

A successful IPO would make the company the country's third-largest publicly traded coal miner by output after China Shenhua Energy Co Ltd (1088.HK)(601088.SS) and China Coal Energy Co Ltd (1898.HK)(601898.SS), Shaanxi Coal said, adding that the proceeds would fund mining activity and replenish working capital.

It would also be the biggest IPO in the mainland market this year, surpassing Sinohydro Group Ltd's planned $2.5 billion offering.

China's IPO market slowed by a fifth in the first half, lacking the big deals of the year before, with fundraising dominated by smaller companies. [ID:nL3E7JG0X6]

In the first six months, only about a tenth of the companies seeking listings chose to do so on the Shanghai Stock Exchange, with the rest going to the smaller Shenzhen bourse, which houses the Nasdaq-style ChiNext market, Thomson Global Markets data showed.

State-owned Shaanxi Coal and Chemical Industry Group Co Ltd SHAANB.UL owns 71 percent of Shaanxi Coal.

China is the world's biggest coal-producing country, with output at 3 billion tonnes in 2009, accounting for about 46 percent of total global production that year.

Shaanxi Coal is headquartered in Xi'an, in the northern Chinese province of Shaanxi, which had known coal reserves of about 170 billion tonnes, the company said.

CICC, BOC International (China) Ltd and Citic Securities are joint underwriters of the IPO.

($1 = 6.390 yuan)

(Reporting by Soo Ai Peng; Editing by Chris Lewis)

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Teva gets okay to buy Cephalon with conditions

Teva gets okay to buy Cephalon with conditions

Stock Market Predictions

WASHINGTON (Global Markets) - Teva Pharmaceutical Industries (TEVA.TA) won U.S. antitrust approval to buy specialty drugmaker Cephalon (CEPH.O) after agreeing to conditions aimed at preserving competition in the market for sleep disorder medicine Provigil and two other drugs.

Teva said on Friday that it expects to close the deal, valued at nearly $7 billion, by October 14, subject to approval by the European Commission. The commission has said it would have a decision by October 13.

To win antitrust approval for the deal, Teva agreed to supply rival generic drug maker Par Pharmaceuticals (PRX.N) with Provigil, which is used to combat drowsiness, for one year, the Federal Trade Commission said.

Provigil has annual U.S. sales of about $1.1 billion, Teva and Cephalon said in a statement.

The FTC also required Teva to sell Par the rights and assets of a cancer pain drug developed by Cephalon and sold as Actiq, and a muscle relaxant, known chemically as cyclobenzaprine hydrochloride.

According to IMS Health data, annual U.S. sales for the two drugs are $298 million, the companies said.

The Cephalon/Teva deal, which was announced in May, was arranged to boost the brand-name business of Israel-based Teva, best known as the world's largest maker of generic drugs.

Cephalon's pain, sleep and cancer drugs will help Teva reduce its reliance on the big-selling Copaxone treatment for multiple sclerosis medicine, which faces increasing competition.

While primarily a generic maker, Teva has recently bought Barr Pharmaceuticals and Ratiopharm to boost its branded segment.

Cephalon's top-selling Provigil is set to lose patent protection next year, while adoption of a newer version, Nuvigil, has been disappointing.

The FTC sued Cephalon in 2008, saying it broke the law by paying generic drug makers, including Teva, to keep copycat versions of Provigil off the market. That lawsuit continues.

(Reporting by Diane Bartz; Editing by Tim Dobbyn, Berard Orr)

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