Movers: Fannie Mae, Freddie Mac, Yahoo, Microsoft, Marshall & Ilsley, UBS
Reuters reports that shares of Fannie Mae (FNM) and Freddie Mac (FRE) are plunging on concern the companies need to raise more capital amid larger-than-expected losses. Lehman believes that a pending accounting change could also force FNM and FRE to boost capital by an additional $46 billion and $29 billion, respectively.
Yahoo (YHOO): In response to Carl Icahn's latest open letter to YHOO shareholders, YHOO says it "continues to stand ready to enter into negotiations with Microsoft Corp. for an acquisition of Yahoo!." YHOO also noted that Microsoft's (MSFT)Ballmer and Carl Icahn have "teamed up in an apparent effort to force" YHOO into selling to MSFT its Search business at a price to be determined in a future "negotiation" between Mr. Icahn's directors and MSFT's management. YHOO strongly believes this would not lead to outcome that would be in the best interests of its stockholders. S&P reiterates buy on Yahoo shares.
Verisign (VRSN) says CEO William Roper resigned from the company and board of directors effective June 30, 2008. It expects second quarter revenue will meet or exceed current consensus estimates. S&P upgrades to hold from sell, on valuation. Earlier, S&P reiterated sell on concerns about CEO leaving.
Marshall & Ilsley (MI) expects to take second quarter loan and lease loss provisions of up to $900 million (or $2.22 per share), due to continuing deterioration in housing market. Now sees second quarter net loss of $1.50-$1.60 per share. Expects to return to profitability in the third quarter, but also sees elevated charge-offs and loan loss provisions for the rest of 2008 in comparison to those incurred by MI prior to the current housing downturn. S&P downgrades to sell from hold. Ladenburg cuts estimates, target, keeps neutral.
UBS AG (UBS) says second quarter results are likely to be at or slightly below break-even, reflecting positive contributions from Global Wealth Management & Business Banking and Global Asset Management, offset by a loss in the Investment Bank. Says further market deterioration led to writedowns and losses on previously disclosed Investment Bank risk positions, in particular credit valuation adjustments on monoline insurance exposures. In connection with the losses to date, second quarter results include tax credit of about CHF 3B.
InBev (INBVF.PK) announces that it will file later today a preliminary consent solicitation statement with SEC seeking to remove each member of the board of directors of Anheuser-Busch Companies (BUD) and provide BUD shareholders an opportunity to have a direct voice in the proposed combination with InBev.
Cash America International (CSH) raises $0.51-$0.54 second quarter EPS guidance to $0.62-$0.64. It says its pawn lending business contributed to higher-than-expected results as revenue from pawn loans, increased gross profit dollars on the sale of merchandise exceeded expectations.
Smurfit-Stone Container (SSCC) rises after Credit Suisse raises U.S. paper and forest products sector to overweight from underweight. Upgrades SSCC and Temple-Inland (TIN) to outperform from neutral.
Lehman downgrades Disney (DIS) and CBS (CBS) to underweight from equal-weight, downgrades Time Warner (TWX) and News Corp.
(NWS) to equal-weight from overweight. Lehman also cuts its price target on Viacom (VIAB) and maintains equal-weight.
BCE Inc. (BCE) enters into a final agreement with a company formed by an investor group led by Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan, Providence Equity Partners Inc., Madison Dearborn Partners, LLC, and Merrill Lynch Global Private Equity, which sets purchase price of BCE at C$42.75 per share (unchanged). S&P maintains hold.
Catapult Communications (CATT) shares fall after CATT now expects third quarter revenue to be about $8.5 million, vs. previous forecast of $9.9 million. S&P reiterates strong sell.
Interactive Intelligence (ININ) sees $0.03-$0.05 second quarter GAAP EPS on total revenue of about $30-$31 million. It expects product revenue between $15-$15.5 million, gross margins within the range of 66%-68%.
New York Mortgage Trust (NYMT) lowers $0.20-$0.22 second quarter EPS forecast to $0.15-$0.16. Says adjustment to earnings estimate reflects its payment of about $460,000 in liquidated damages that accrued pursuant to a registration rights agreement entered into by the company in connection with its February 2008 private offering of common stock.
Bankrate (RATE) announces that as a result of the soft display advertising environment, now expects revenues of $164-$169 million and EBITDA of $54-$58 million. It says previous guidance for revenue was between $167-$172 million and EBITDA between $64-$68 million. It also sees second quarter revenue slightly above $40 million and EBITDA of $12.3-$12.7 million.
APP Pharmaceuticals (APPX) agrees to be acquired by Fresenius (FREG.DE). Terms: $23.00 cash per APPX share, plus a contingent value right (CVR) that could deliver up to an additional $970 million, or $6.00 per share, in cash, if the financial results of the company meet certain targets (payable in second quarter 2011). The deal values the fully diluted equity capital of APPX at about $3.7 billion; and with the CVR, if fully realized, at a value of $4.6 billion.
Teva Pharmaceutical Industries (TEVA) says top-line results from Phase III study designed to assess efficacy, safety and tolerability of glatiramer acetate 40mg as compared to approved Copaxone 20mg in treatment of relapsing-remitting multiple sclerosis did not demonstrate increased efficacy in reducing the relapse rate; however, the higher dose maintained the favorable safety and tolerability profile of Copaxone 20mg.
Virtusa (VRTU) expects to report revenue of $42.0-$42.5 million and GAAP EPS of breakeven to $0.03. Says its business at British Telecommunications plc was negatively impacted late in the quarter.
Canadian Solar (CSIQ) announces it signed five new sales agreements in Italy and the Czech Republic in the past three weeks.