Ultimate Market Recap: Greek Debt Talks, Coinstar Climbs More Than 11%

Monday Morning’s Top Stories

Apple Inc (NASDAQ:AAPL): VentureBeat has learned that Google (NASDAQ:GOOG) has hired Simon Prakash, who worked at Apple (NASDAQ:AAPL) for over eight years and was most recently the senior director of product integrity. Prakash will be working for Google on a secret project, possibly run by Google co-founder Sergey Brin.

Also, Apple (NASDAQ:AAPL) leaped past Samsung and LG to become the best-selling U.S. handset brand in the fourth quarter of 2011, said NPD Group, a research firm. In a quarter that featured the launch of the iPhone 4S and the addition of Sprint (NYSE:S), Apple’s three available models combined to capture 43% of the U.S. smartphone market in Q4, NPD added. However, Google’s (NASDAQ:GOOG) Android operating system maintained a 48%-43% over Apple among U.S. smartphone buyers, and among the first-time smartphone buyers in Q4, 57% purchased Android phones compared to just 34% who purchased iPhones, the firm added.

Bank of America Corporation (NYSE:BAC): California is close to agreeing to the main points of a settlement reached by the Obama administration with the nation’s banks over improper mortgage foreclosure procedures, The New York Times reported yesterday. New York’s attorney general indicated that he has moved closer to signing off on the deal, the newspaper added. Shares of Bank of America Corporation are trading 0.13% higher today

Monday Morning Hot Stocks

Humana Inc. (NYSE:HUM): Individual Medicare Advantage membership was 1,640,300 at December 31, 2011, an increase of 179,600 members, or 12% from 1,460,700 at December 31, 2010. January 2012 individual Medicare Advantage membership approximated 1,813,000, up approximately 173,000 from December 31, 2011. Membership in the company’s individual stand-alone Prescription Drug Plans was 2,540,400 at December 31, 2011, up 870,100 or 52% compared to 1,670,300 at December 31, 2010. Shares of Humana Inc. are trading 5.12% lower today.

Hasbro, Inc. (NASDAQ:HAS): Says did not meet internal expectations for growth in U.S., Canada. Comments made on the Q4 earnings conference call. Shares of Hasbro, Inc. are trading 0.11% lower today.

Changyou.com Limited (NASDAQ:CYOU): Assuming no new grants of share-based awards, share-based compensation expense to be between $1.0M-$1.5M, reducing fully diluted earnings per ADS attributable to Changyou.com Limited by 2c-3c. Shares of Changyou.com Limited are trading 11.52% lower today.

Nielsen Hldg NV (NYSE:NLSN): Reports Q4 revenue $1.42B vs. consensus $1.46B. Shares of Nielsen Hldg NV are trading 3.21% lower today.

SureWest Communications (NASDAQ:SURW): Consolidated Communications (NASDAQ:CNSL) and SureWest Communications (NASDAQ:SURW) have entered into a definitive agreement under which Consolidated will acquire all the outstanding shares of SureWest in a cash and stock transaction valued at $23 per share, or a total of approximately $340.9M, exclusive of debt. Under the terms of the agreement, SureWest’s shareholders may elect to exchange each share of SureWest common stock for either $23 in cash or shares of Consolidated common stock having an equivalent value based on average trading prices for the 20-day period ending two days before the closing of the acquisition, subject to a collar. Overall elections are subject to proration such that 50% of the SureWest shares will be exchanged for cash and 50% for stock. The stock portion of the transaction will be received tax free. The transaction will be accretive to Consolidated’s free cash flow per share in the first full year following closing, excluding integration costs, and the transaction is deleveraging to Consolidated. The consideration represents a 47% premium to SureWest’s stock price as of the close on Feb. 3. The transaction is expected to generate annual operating synergies of approximately $25M and annual capital expenditure synergies of $5M-$10M, which are expected to be fully realized by the end of the first full year after close on a run-rate basis. Consolidated expects to incur merger and integration costs, excluding closing costs, of approximately $20M-$25M over the first two years following closing. In addition, Consolidated will be in a position to benefit from SureWest’s net operating losses of approximately $67M, as of Sept. 30, 2011. The merger is subject to standard closing conditions including federal and state regulatory approvals and the approval by both Consolidated and SureWest shareholders. Shares of SureWest Communications are trading 42.85% higher today.

Monday’s Trending Stocks

Coinstar, Inc. (NASDAQ:CSTR): Netflix (NASDAQ:NFLX) is retreating after Verizon (NYSE:VZ) and Coinstar (NASDAQ:CSTR) announced that they would form a movie rental joint venture. Expected to launch in the second half of 2012, the joint venture will combine the kiosks of Coinstar unit Redbox with a new video on-demand streaming and download service from Verizon. The joint venture will also sell subscriptions, the company said. In December, there was speculation that Verizon would look to acquire Netflix. Verizon subsequently denied that it had any interest in buying Netflix, but there may have still been some speculation that such a deal could take place in the future. In addition to creating more competition for Netflix, Verizon’s deal with Coinstar may have dampened speculation about an acquisition of Netflix by the telecom company. However, Yahoo executives discussed acquiring Netflix before the latter company’s stock price rallied over the last several weeks, All Things D reported today. In early trading, Netflix declined $3.81, or 3.01%, to $122.62. Meanwhile, Coinstar (NASDAQ:CSTR) added 1.10% to $50.20. Shares of Coinstar, Inc. are trading 0.13% higher today.

Sohu.com Inc. (NASDAQ:SOHU): Sees Q1 total revenue $219M-$225M vs. consensus $238.15M. Assuming no new grants of share-based awards, Sohu estimates that compensation expenses and income tax expenses relating to share-based awards to be around $3M-$4M. The estimated impact of this expense is expected to reduce Sohu’s fully diluted EPS for Q1 of 2012 under US GAAP by 8c-10c. Shares of Sohu.com Inc. are trading 13.94% lower today.

Lazard Ltd (NYSE:LAZ): Lazard’s financial position remains strong and low risk with approximately $1B in cash and cash equivalents at December 31, 2011, the majority of which is invested in U.S. Government and agency money market funds. Shares of Lazard Ltd are trading 5.23% lower today.

HCA Holdings Inc (NYSE:HCA): Reports Q4 revenue $7.77B vs. consensus $8.42B. EPS includes a pretax gain on the acquisition of a controlling interest in an equity investment of $1.522B or $3.13 per diluted share, and pretax gains on sales of facilities of $145M, or 18c per diluted share Shares of HCA Holdings Inc are trading 5.33% higher today.

O’Charley’s Inc. (NASDAQ:CHUX): Fidelity National Financial (NYSE:FNF), a leading provider of title insurance, mortgage services and diversified services, today announced the signing of a definitive agreement to acquire all of the outstanding common stock of O’Charley’s (NASDAQ:CHUX) that it does not currently own for $9.85 per share in cash. FNF currently owns 2,079,542, or 9.5%, of the outstanding shares of common stock of O’Charley’s, which operates more than 340 full-service restaurants under the O’Charley’s, Ninety Nine and Stoney River concepts. Under the terms of the definitive agreement, FNF intends to commence a tender offer for all of the outstanding shares of common stock of O’Charley’s that it does not currently own on or about Feb. 24. The initial tender is expected to expire on April 2, and to close shortly thereafter, assuming that shares that, combined with FNF’s existing 9.5% ownership stake, represent more than a majority of the outstanding shares of O’Charley’s are properly tendered and not withdrawn. Closing of the tender is also contingent on customary closing conditions, including the expiration of the HSR waiting period. The back-end, cash-out merger under Tennessee law is expected to take place no earlier than May 2, and is also subject to customary closing conditions, including the successful completion of the tender offer. Shares of O’Charley’s Inc. are trading 42.12% higher today.

Market Recap

Markets closed down on Wall Street today: Dow -0.13%, S&P-0.04%, Nasdaq -0.13%, Oil -0.67%, Gold -0.25%.

On the commodities front, Oil (NYSE:USO) fell to $97.18 a barrel. Precious metals were also down, with Gold (NYSE:GLD) falling to $1,723.10 an ounce while Silver (NYSE:SLV) fell 0.99% to settle at $33.67.

Hot Feature: More Than Half of Wall Street Says Bonuses Met Expectations

Today’s markets were down because:

1) Greece. Stocks slipped lower today investors awaited a Greek government decision on budget cuts that are key to securing a second bailout needed to avoid a disorderly default when 14.5 billion in bond payments come due on March 20. No deal was reached over the weekend on austerity measures and financial reforms necessary to secure the bailout package from the European Union, International Monetary Fund, and European Central Bank. Furthermore a formal offer for a debt swap with private creditors must be made by February 13 if all procedures are to be completed in time for the troika to release the bailout funds before the bond redemption next month.

2) Companies. A relative absence of major news, unfortunate in the instance of Greece, allowed companies to take the fore on Monday. Micron Technologies (NASDAQ:MU) was trading down after CEO and chairman Steve Appleton died in a small-plane crash on Friday. Mark Duncan was appointed over the weekend to take his place. Coinstar (NASDAQ:CSTR), Verizon (NYSE:VZ), and Netflix (NASDAQ:NFLX) all climbed higher today after Coinstar, the parent of video rental company Redbox, announced that it had formed a joint venture with Verizon to compete against rival Netflix.

3) Earnings. Earnings season is still in full force, and results are being looked to as economic indicators. Hasbro (NYSE:HAS) shares climbed after fourth-quarter earnings beat forecasts by a penny a share, though sales fell short, while Humana (NYSE:HUM) shares dropped nearly 5 percent after reporting that fourth-quarter profit rose from a year earlier while providing upbeat guidance for 2012. Yum! Brands (NYSE:YUM), which owns KFC, Taco Bell, and Pizza Hut, also rose Monday in anticipation of results due after the bell.

BONUS: Obama Orders Tighter Sanctions on Iran

After Hours Radar Stocks

Coinstar Inc. (NASDAQ:CSTR) shares surged more than 11 percent in late trading.  The media company reported that fourth quarter earnings more than doubled as its Redbox business continues to perform well.  The company also announced on Monday it will be teaming up with Verizon (NYSE:VZ) to challenge Netflix (NASDAQ:NFLX) and Amazon(NASDAQ:AMZN) in the streaming video industry.

Shares of Yum! Brands Inc. (NYSE:YUM) jumped 2.55 percent after the closing bell.  The food company reported earnings of $356 million (75 cents per share) for the fourth quarter.  Analysts were expecting earnings of 74 cents per share).  Shares of McDonald’s Corp. (NYSE:MCD) also increased in extended trading.

Don’t Miss: IMF Halves Growth Forecast for China in 2012

Financial companies such as Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) are edging lower in late trading.  Greece has yet to reach a deal to take austerity measures in order to receive more bailout funds.

Despite reporting a $358 million loss for the fourth quarter, shares of Anadarko (NYSE:APC) increased 1.3 percent in extended trading hours.  The company’s profit was affected by a $4 billion payment to BP as part of legal claims for the 2010 Deepwater Horizon oil disaster.

Investor Insight: Unemployment Rate Drops, Should You Sell Gold?

To contact the reporter on this story: Stella Mariz at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com