- Ken Lewis, RIP. Ken Lewis lost his battle to stay in control of Bank of America (BAC), leaving the board and its new chairman Walter Massey three months to find a replacement with no heir apparent. The fact that BofA isn’t announcing a successor now is indicative of the chaos within the bank, and suggests Lewis’s departure isn’t entirely voluntary. BAC +1% premarket.
- So long, Saturn. Late yesterday, Penske (PAG) canned what was thought to be a done deal to buy Saturn, citing concerns about the future supply of vehicles beyond the supply period it had negotiated with GM. Another (unknown) carmaker was supposed to take over manufacturing of Saturn-branded cars after two years, and its board nixed the deal, according to Penske. Afterwards GM said it’s pulling the plug on Saturn, putting 357 U.S. dealerships and 13,000 jobs at risk. PAG -7.6% AH.
- One step closer to domination. Cisco Systems (CSCO) agreed to buy Tandberg, a Norwegian manufacturer of videoconferencing systems, for about $3B in cash – an 11% premium to Wednesday’s close and 25.2% higher than its three-month average price. The move indicates how serious Cisco is about video conferencing; Tandberg’s smaller conferencing units will give Cisco a cheaper option to its expensive, room-sized TelePresence systems. In an interview last week, Cisco CEO John Chambers boasted the company has managed to move into 30 new markets through acquisitions and internal product development. “We are involved in things that may shock you.” Keep an eye on Polycom (PLCM), Tandberg’s key rival.
- IMF: recovery faster than expected. In its twice-yearly World Economic Outlook this morning, IMF boosted its 2010 world growth outlook to 3.1% from a previous 2.5%, and adjusted 2009’s expected contraction to 1.1% from 1.4%. But it warned against premature withdrawal of stimulus efforts and said uncertain growth in developed countries could leave governments with the uncomfortable choice of extending stimulus programs at the risk of inflation, or cutting them short and risking a double dip.
- CIT raises stakes in bondholder discussion. CIT Group (CIT) upped the ante with its creditors by drawing up a prepackaged bankruptcy plan Wednesday, sources say. The move pressures CIT’s bondholders to buy into a proposed debt restructuring, or take their chances in bankruptcy court. CIT will ask shareholders to vote on both options when it unveils the proposed debt exchange, which is thought to give bondholders control of the company in exchange for wiping out 30-40% of its debt and extending the rest.
- CNOOC pursues Uganda oil stake. Sources say Chinese state-owned oil company CNOOC (CEO) has entered talks with Uganda over a $5B Tullow Oil-led project. Earlier this week, the Nigerian government confirmed reports CNOOC was looking to enter Nigerian oil blocks underused by major international oil companies.
- Euro-zone joblessness hits decade high. Euro-zone unemployment rose to 9.6% in August from 9.5%, the highest rate in over 10 years and in line with consensus. Spain was worst off at 18.9%, while Netherlands’ 3.5% and Austria’s 4.7% were the least severe.
- Global deflation abates. Consumer prices in developed economies fell 0.3% in the 12 months to August after falling 0.6% in the 12 months to July, OECD said. June marked the first Y/Y episode of deflation since the OECD began compiling data in 1971; as recently as July 2008, the rate stood at an 11-year high of 4.8%.
- Creeping toward growth. BEA’s final reading of Q2 GDP came in at -0.7%, substantially better than the -1.2% economists expected and a preliminary reading of -1%. The much smaller decrease than in Q1 (-5.5%) reflects improvements in nonresidential fixed investment and in exports, an upturn in federal government spending, an upturn in state and local government spending, and a smaller decrease in residential fixed investment, BEA said.
- Job losses narrow. ADP reported 254,000 job losses in September, far worse than the 200K forecasted, while revising August to -277,000 from -298,000. September’s losses were the least severe since July 2008, as job cuts have diminished significantly over the last two quarters. “Nevertheless, employment, which usually trails overall economic activity, is likely to decline for at least several more months, with losses continuing to diminish,” ADP said.
- Chicago ISM disappoints. Business activity in the U.S. Midwest failed to return to growth in September, with ISM’s business barometer dropping unexpectedly to 46.1 vs. consensus of 52 after an even 50 (above 50 indicates growth) in August. New orders dipped to 46.3 from 52.5.
Earnings: After Close
- Diamond Foods (DMND): FQ4 EPS of $0.25 beats by $0.07. Revenue of $114M (+1%) in-line. Shares -0.5% AH. (PR)
- Lawson Software (LWSN): FQ1 EPS of $0.09 beats by $0.04. Revenue of $169M (-11%) vs. $162M. Shares +9% AH. (PR)
- Xyratex (XRTX): FQ3 EPS of $0.36 beats by $0.22. Revenue of $246M (-12%) vs. $239M. Shares +7.5% AH. (PR)
Asia stocks were mixed Thursday, while Europe has turned lower taking U.S. futures along.
- Asia: Nikkei -1.53% to 9,979. BSE +0.05% to 17,135. Hong Kong and Shanghai were closed.
- Europe at midday: London -0.6%. Paris -0.7%. Frankfurt -0.5%.
- Futures at 7:00: Dow -0.4% at 9611. S&P -0.6% to 1047. Nasdaq -0.6%. Crude -0.9% at $70. Gold -0.4% to $1,005. Treasurys are flat. Euro -0.6% vs. dollar. Yen -0.45%.
Thursday’s Economic Calendar
- 4:00 Monster Employment Index
7:30 Challenger Job-Cut Report
8:30 Jobless Claims
8:30 Personal Income and Outlays
9:00 Bernanke testifies on regulatory reform
9:30 225-day progress report on Recovery Act
10:00 Construction Spending
10:00 ISM Manufacturing Index
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
12:00- PM Sep. Auto Sales
4:45 PM Geithner speaks
5:30 PM Fed’s Pianalto speaks on current economic issues
5:30 PM Fed’s Lockhart speaks on the economy