Ultimate Market Recap: Alcoa Inaugurates Earnings Season, Cisco Ceases ZTE Partnership

The Week Ahead: Fed Weighs In With Beige Book, Alcoa Kicks Off Earnings

This week, corporate earnings re-enter the conversation as companies report their third quarter numbers. A growth slowdown in China, Europe’s recession and fiscal challenges are likely to affect international revenue for the large multinational companies.

In addition, the third-quarter earnings season has expectations to be the worst season since 2009’s fourth quarter when the country was slowly leaving the recession, reported MarketWatch.

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Alcoa Inc. (NYSE:AA) will kick things off on Tuesday with its report after the bell and on Friday, banking’s earnings will dominate headlines.

Over in China after its holiday week, the People’s Bank of China will release its September financial statistics late in the week. Eyes will be on September’s new loan growth numbers. This should offer a picture on whether additional easing measures are coming.

On Tuesday, the International Monetary Fund will release its World Economic Outlook during its week-long annual meeting taking place in Tokyo.

From Europe, its finance ministers will likely tell the United States to get its fiscal problems together at the fiscal cliff meeting at Thursday’s G7 meeting in Tokyo.

Let’s take a look at the week ahead.

Economic Data

Tuesday: September NFIB Small Business Index

Wednesday: Federal Reserve’s Beige Book, August Wholesale Inventories and August Job Openings & Labor Turnover

Thursday: Weekly jobless claims, August U.S. trade deficit, September import prices, September Federal Budget

Friday: September Producer Price Index and October Reuters/UMich Consumer Sentiment


Monday: Angio Dynamics (NASDAQ:ANGO)

Tuesday: Alcoa Inc. (NYSE:AA), Yum Brands Inc. (NYSE:YUM)

Wednesday: Costco (NASDAQ:COST), The Progressive Corporation (NYSE:PGR), Ruby Tuesday, Inc. (NYSE:RT)

Thursday: J.B. Hunt Transport (NASDAQ:JBHT), Safeway Inc. (NYSE:SWY), Winnebago Industries, Inc. (NYSE:WGO)

Friday:  Wells Fargo (NYSE:WFC), J.P. Morgan Chase (NYSE:JPM)

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Cisco Ends Partnership With ZTE Corp. and 4 Hot Stocks Moving Now

American Express Company (NYSE:AXP): For the three months that ended on June 30, prepaid card provider Green Dot (NYSE:GDOT) revealed in August that Walmart (NYSE:WMT) accounted for 62 percent of the company’s total operating revenue, versus 60 percent for the same period during 2011. In the filing, Green Dot stated, “A credit concentration may exist if customers are involved in similar industries, economic sectors, and geographic regions. Our retail distributors operate in similar economic sectors but diverse domestic geographic regions. The loss of a significant retail distributor could have a material adverse effect upon our card sales, profitability, and revenue growth.” Green Dot shares fell 22 percent during pre-market trading following Walmart’s announcement about a prepaid card agreement with American Express. Walmart stated on today’s conference call that it will continue its program will Green Dot and it will keep growing. NetSpend (NASDAQ:NTSP), which is yet another player in the prepaid card space, fell 12 percent to $9.50 following the announcement of the Walmart and AmEx card deal.

Apple Inc. (NASDAQ:AAPL): Unwired Planet (NASDAQ:UPIP) commented in regards to a pending investigation against Apple and Research-in-Motion (NASDAQ:RIMM) in the ITC. Administrative Law Judge E. James Gildea issued a Markman order on Friday, September 28, 2012 providing the definition of disputed terms in the claims of the patents being questioned. In response to a Motion for Clarification that was filed by Unwired Planet on Monday October 1, the ALJ issued another order on Friday October 5. In these orders, all four patents in the ITC case were construed in some manner significantly weakening Apple’s infringement case. Unwired Planet continues to believe that it is important to mention that this result will not impact any patents in pending cases in Nevada, there will be no impact on any other patents in the portfolio except possible implications for the patent family members of the patents-in-suit, and it is not binding upon the Federal Judge in the pending Delaware equivalent case. These events will not show a material impact on the company’s long-term plans since this Markman decision had an effect on just a small portion of of the company’s 200 patents.

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Cisco Systems, Inc. (NASDAQ:CSCO) ended its sales partnership with Chinese firm ZTE Corp. (ZTCOY) due to an internal investigation into allegations that the company sold Cisco networking gear to Iran, according to Reuters.

Microsoft Corporation (NASDAQ:MSFT): The Microsoft Store located in Puerto Rico is scheduled to open on November 1, the Microsoft Store’s Facebook page stated.

Comcast Corporation (NASDAQ:CMCSA): On Friday, the FCC trashed rules that required cable companies to share their content with competitors, like satellite TV providers, according to a report by The Hill on Friday night. The agency is to keep deciding on a case-by-case basis whether it should continue its video distribution deals.

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BofA Is Still on Top and 4 Hot Stocks Making Market Waves

Bank of America (NYSE:BAC) continues to be top dog among U.S. banks regarding customer deposits. According to SNL Financial’s ranking of the top 50 banks by deposits which was released on Friday and is based on new data that was released last week by the Federal Deposit Insurance Corp. Bank of America continues to be No. 1 with $1.13 trillion in deposits, which is a 5.9 percent rise from 2011, according to the Charlotte Business Journal.

Facebook, Inc. (NASDAQ:FB) intends to reduce its credit line to $1.5 billion from the $3 billion it gained before its IPO, according to the Wall Street Journal. Those who are knowledgeable of the discussions claim that the company has intentions for expansion of the loan’s term to three years from one year.

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AT&T, Inc. (NYSE:T): Frontier Communications Corporation (NYSE:FTR) has stated that customers in select markets have the ability to use mobile voice and data services encompassing a wide range of AT&T smartphones, as well as having access to the company’s mobile broadband network.

Raytheon (NYSE:RTN) obtained a $349 million, five-year contract under which it is to provide heavy anti-tank, wireless precision-assault missiles for the U.S. government. The company gained this award during its Q3, and it requires Raytheon to deliver 6,676 of the new wireless TOW (tube-launched, optically tracked, wireless-guided) missiles receiving commands from the gunner via a wireless guidance link, which is intended to eliminate the wire connection in early generations of the missile.

Zynga (NASDAQ:ZNGA) continues to be a big loser in premarket trading due to Wall Street’s response regarding its most recent preliminary Q3 earnings along with a reduced outlook.  The results were released following Thursday’s market close, and it influenced Sterne Agee to reduce its estimates on the game. The firm also made the decision to cut its Zynga estimates and Evercore Partners reduced Zynga’s price target to $1.70 from $2. Zynga shares saw a 12 percent drop last week, and they were down 2.82 percent to $2.41 before market open.

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Afternoon Buzzers: Netflix Jumps on Upgrade, Facebook Sinks After Downgrade

Shares of Netflix (NASDAQ:NFLX) jumped more than 10 percent today. The online entertainment company received an upgrade to Overweight from Equal-weight at Morgan Stanley (NYSE:MS) with a price target of $85. The bank explains, “Our upgrade is based on our view that Amazon.com (NASDAQ:AMZN) is not a direct threat to Netflix’s U.S. business. We believe the primary driver of content revaluation was Netflix’s own success. Netflix is poised to leverage its domestic cost structure and potentially become the global video platform.”

Apple (NASDAQ:AAPL) shares fell over 2 percent this afternoon, despite reports indicating that the company is ordering up to 10 million units of a highly anticipated iPad Mini for the fourth quarter. However, Bloomberg reports that Foxconn, an Apple supplier in China, had to stop production for the second time in only a couple weeks due to employee protests.

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UnitedHealth Group (NYSE:UNH) shares attracted attention on Monday. The company announced it would purchase a 90 percent stake in Amil Participacoes SA, Brazil’s largest health insurer and hospital operator, at a cost of $4.9 billion.”Brazil’s growing economy, emerging middle class and progressive policies toward managed care make it a high- potential growth market,” UnitedHealth Chief Executive Stephen Hemsley explained in a statement.

Shares of Facebook (NASDAQ:FB) dropped more than 1 percent today. The company received a downgrade to Sell from Neutral by BTIG with a price target of $16. BTIG explains, “We see a growing tension between the Facebook user experience and monetization, particularly as the collapse of payment revenues has left Facebook with only one major lever to pull – advertising.”

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Navistar Announces Board Appointments and 4 Hot Stocks Buzzing Now

Vringo (AMEX:VRNG) reported that its wholly-owned subsidiary, Vringo Infrastructure, Inc., has filed a patent infringement lawsuit against the United Kingdom subsidiary of ZTE Corporation in the High Court of Justice, Chancery Division, Patents Court. The lawsuit claims infringement of European Patents 1,212,919; 1,166,589; and 1,808,029. ZTE’s cellular network elements are within the scope of all three of the patents, and the subsidiary’s GSM/UMTS multi-mode wireless handsets fall within the scope of the ‘029 patent as well. Vringo is seeking a declaration that its patents have been infringed by ZTE’s activities and also that the court should use its full legal, equitable and injunctive power to cease ZTE’s activities as may be applicable to the circumstances.

Wal-Mart Stores (NYSE:WMT) and American Express on Monday introduced Bluebird, which is an alternative to debit and checking accounts, to target “unbanked, underbanked and unhappily banked” customers. This new product extends a pilot program launched late in 2011 in a move that seemed to directly respond to customer backlashes against bank fees. Bank of America Corporation and JPMorgan Chase & Co. along with other banks had to withdraw proposals to charge fees accompanying the use of debit cards after customers threatened to close their accounts and take them business to credit unions.

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Navistar International Corp. (NYSE:NAV) says that Vincent Intrieri and Mark Rachesky have been appointed to its board while it also agreed to add a third director who will be named and mutually agreed upon by Icahn Partners and its affiliated entities along with MHR Fund Management and its affiliated entities. Intrieri and Rachesky will replace Eugenio Clariond and Steven Klinger who are stepping down. The three new directors will later stand for election at Navistar’s 2013 Annual Meeting of Shareholders.

Marathon Petroleum Corporation (NYSE:MPC) will acuire BP’s (NYSE:BP) 451,000 barrel per day Texas City refinery, three intrastate NGL pipelines which originate at the refinery, four terminals, an allocation of BP’s Colonial Pipeline Company shipper history, retail marketing contract assignments for about 1,200 branded sites and a 1,040 megawatt cogeneration facility. The base purchase price amounts to $598 million in addition to inventories estimated to be worth $1.2 billion. The transaction also contains an earnout provision through which Marathon could pay as much as an additional $700 million over six years under certain conditions. The acquisition should be accretive to earnings in the first year of operation and is expected to be funded with cash on hand, closing early in 2013.

Green Dot Corporation (NYSE:GDOT) reported in early August that business with Wal-Mart for the three months ended June 30 represented 62 percent of its total operating revenue versus 60 percent year-over-year in 2011. Green Dot shares are down about 20 percent in mid-day trading.

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