Ultimate Market Recap: RIM Names New CEO, Transportation Companies Off Track
Monday Morning’s Top Stories
Despite reporting a 36 percent increase in net earnings, shares of Halliburton Co. (NYSE:HAL) fell 2 percent in early trading. The oilfield service company report a profit of $906 million (98 cents per share), compared to $605 million (66 cents per share) a year earlier. Shares of Schlumberger (NYSE:SLB) are traded slightly higher on the news.
PetMed Express Inc.’s (NASDAQ:PETS) shares surged more than 18 percent after fiscal third-quarter beat expectations. The company reported a profit of $3.9 million (19 cents per share), compared to $4.5 million (20 cents per share) in the previous year.
Research in Motion (NASDAQ:RIMM) shares dropped 5 percent after announcing that its co-CEOs Mike Lazaridis and Jim Balsillie were stepping down from their roles. RIM continues to struggle against smartphone competition from Apple Inc. (NASDAQ:AAPL) and Google Inc. (NASDAQ:GOOG).
In response to record low natural gas prices, Chesapeake Energy Corp. (NYSE:CHK) said it will reduce drilling and cut production. Shares surged 6 percent after the announcement. “An exceptionally mild winter to date has pressured U.S. natural gas prices to levels below our prior expectations and below levels that are economically attractive for developing dry gas plays in the U.S., shale or otherwise,” said Chief Executive Aubrey K. McClendon. Shares of Devon Energy (NYSE:DVN) and BP PLC (NYSE:BP) also jumped on the news.
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Monday Morning Hot Stocks
Research In Motion Limited (NASDAQ:RIMM): The Board of Directors of Research In Motion, or RIM, announced that, acting on the recommendation of its Co-CEO to implement the succession plan they previously submitted to the Board, it has unanimously named Thorsten Heins as President and CEO. Heins was also appointed to RIM’s Board. The Board acted after conducting its own due diligence. Both appointments are effective immediately. Mike Lazaridis, former Co-Chair and Co-CEO, has become Vice Chair of RIM’s Board and Chair of the Board’s new Innovation Committee. As Vice Chair, he will work closely with Heins to offer strategic counsel, provide a smooth transition and continue to promote the BlackBerry brand worldwide. Jim Balsillie remains a member of the Board. Lazaridis said that he decided to move from Co-Chair to Vice Chair of the Board in order to return the public’s focus to what is most important: “the great company we have built, its iconic products, global brand and its talented employees. We have been impressed with his operational skills at both RIM and Siemens. I am so confident in RIM’s future that I intend to purchase an additional $50M of the company’s shares, as permitted, in the open market.” Heins said, “BlackBerry 7 has been well received. We are very excited about PlayBook 2.0 and BlackBerry 10. The reception of our products at this year’s Consumer Electronics Show was encouraging.” The company in the process of recruiting a new Chief Marketing Officer to work closely with their product and sales teams to deliver the most compelling products and services. Shares of Research In Motion Limited are trading 6.47% lower today.
Apache Corporation (NYSE:APA): Apache announced that it has agreed to acquire Cordillera Energy Partners III LLC, a privately held company with substantial operations that include approximately 254,000 net acres in the prolific Granite Wash, Tonkawa, Cleveland and Marmaton plays in western Oklahoma and the Texas Panhandle, for $2.85B. In addition to estimated proved reserves of 71.5 Mboe and current net production of 18,000 boe per day, Cordillera has assembled a leading acreage position with significant resource potential including 14,000 potential drilling locations in liquids-rich Anadarko Basin plays. The acquired acreage is characterized by high working interest and operatorship; approximately half is held by production. The acquisition is expected to be accretive to Apache’s earnings and cash flow beginning in 2012. The development drilling program is self-funding beginning in 2013. The sellers, including EnCap Investments, other institutional investors and Cordillera management will receive approximately $600M in Apache common stock subject to customary lock-up provisions. The balance of the consideration will be paid in cash to be funded with debt. The effective date of the transaction is Sept. 1, 2011, with closing anticipated in the second quarter, subject to regulatory approval and customary closing conditions. Cordillera will continue to acquire acreage in the area on Apache’s behalf through closing. Shares of Apache Corporation are trading 0.11% higher today.
Pan American Silver Corp. (NASDAQ:PAAS): Pan American Silver (NASDAQ:PAAS) and Minefinders Corporation (AMEX:MFN) are pleased to announce that they have entered into a definitive agreement (the “Arrangement Agreement”) pursuant to which Pan American will acquire all of the issued and outstanding common shares of Minefinders by way of a plan of arrangement. Under the terms of the Arrangement Agreement, Minefinders shareholders will be entitled to elect to receive, in exchange for each Minefinders share held, either: (i) 0.55 shares of Pan American and $1.84 in cash; or (ii) 0.6235 shares of Pan American; or (NASDAQ:III) $15.60 in cash, subject to pro-ration under total aggregate cash and share pools of approximately $176 million and approximately 53 million Pan American shares, respectively, on a fully-diluted basis. Assuming full pro-ration, Minefinders shareholders will receive 0.55 shares of Pan American and $1.84 in cash in exchange for each Minefinders share held. The consideration represents a total offer value of $15.60 per Minefinders share, based on the January 20, 2012 closing price of Pan American common shares on the Toronto Stock Exchange and a premium of 36% to the January 20, 2012 closing price of Minefinders shares on the Toronto Stock Exchange (33% premium based on the respective volume weighted average prices of Pan American and Minefinders on the Toronto Stock Exchange for the 20 trading days ending January 20, 2012). The proposed transaction implies a total transaction value of approximately $1.5 billion. Upon completion of the transaction, existing Minefinders shareholders will own approximately 33% of Pan American on a fully-diluted basis. Shares of Pan American Silver Corp. are trading 7.73% lower today.
Fifth Street Finance Corp. (NASDAQ:FSC): Fifth Street Financial issued 10 million shares in secondary market priced at $10.16 Credit Suisse and RBC Capital acted as joint book running managers for the offering. Shares of Fifth Street Finance Corp. are trading 3.98% lowertoday.
Monday’s Trending Stocks
In Monday trading action, the DJIA continues to trade above 12,600, the S&P 500 above 1,300 and the Nasdaq above 2,750. Here are popular stocks in trading and why they are buzzing among traders and investors today:
Halliburton Company (NYSE:HAL): We anticipate that Eastern Hemisphere margins will return to the mid- to high-teens at the end of 2012 as we gain traction on new projects while growing revenue at a higher rate than rig count growth. Our positive view of the market supports an increase in capital spending in 2012. However, we expect pressure pumping horsepower additions will not increase over 2011, and an increased proportion of horsepower will be directed to international markets, concluded Dave Lesar, chairman, president, and CEO. Shares of Halliburton Company are trading 2.79% lower today.
Chesapeake Energy Corporation (NYSE:CHK): Chesapeake plans to further reduce its operated dry gas drilling activity by 50% to approximately 24 rigs by the 2012 second quarter from 47 dry gas rigs currently in use and by 67% from an average of approximately 75 dry gas rigs used during 2011. Chesapeake’s operated dry gas drilling capital expenditures in 2012, net of drilling carries, are expected to decrease to $0.9B, a decrease of approximately 70% from similar expenditures of $3.1B in 2011. Specifically, during the 2012 second quarter, Chesapeake plans to have reduced its drilling activity in both the Haynesville and Barnett shales to six operated rigs each and to 12 operated rigs in the dry gas area of the Marcellus Shale in northeastern Pennsylvania. Second, the company plans to immediately curtail approximately 0.5 billion cubic feet per day, or 8%, of its current operated gross gas production of 6.3 bcf per day, which is about 9% of the nation’s natural gas production. If conditions warrant, the company is prepared to double this production curtailment to as much as 1.0 bcf per day. In addition, wherever possible, Chesapeake plans to defer completions of dry gas wells that have been drilled but not yet completed, and also plans to defer pipeline connections of dry gas wells that have already been completed. Shares of Chesapeake Energy Corporation are trading 3.44% higher today.
Minefinders Corp. Ltd. (NYSEAMEX:MFN): Pan American Silver (NASDAQ:PAAS) and Minefinders Corporation (AMEX:MFN) are pleased to announce that they have entered into a definitive agreement (the “Arrangement Agreement”) pursuant to which Pan American will acquire all of the issued and outstanding common shares of Minefinders by way of a plan of arrangement. Under the terms of the Arrangement Agreement, Minefinders shareholders will be entitled to elect to receive, in exchange for each Minefinders share held, either: (i) 0.55 shares of Pan American and $1.84 in cash; or (ii) 0.6235 shares of Pan American; or (NASDAQ:III) $15.60 in cash, subject to pro-ration under total aggregate cash and share pools of approximately $176 million and approximately 53 million Pan American shares, respectively, on a fully-diluted basis. Assuming full pro-ration, Minefinders shareholders will receive 0.55 shares of Pan American and $1.84 in cash in exchange for each Minefinders share held. The consideration represents a total offer value of $15.60 per Minefinders share, based on the January 20, 2012 closing price of Pan American common shares on the Toronto Stock Exchange and a premium of 36% to the January 20, 2012 closing price of Minefinders shares on the Toronto Stock Exchange (33% premium based on the respective volume weighted average prices of Pan American and Minefinders on the Toronto Stock Exchange for the 20 trading days ending January 20, 2012). The proposed transaction implies a total transaction value of approximately $1.5 billion. Upon completion of the transaction, existing Minefinders shareholders will own approximately 33% of Pan American on a fully-diluted basis. Shares of Minefinders Corp. Ltd. are trading 25.29% higher today.
PetMed Express, Inc. (NASDAQ:PETS): Reports revenue $50.5M vs. consensus $44.75M. Shares of PetMed Express, Inc. are trading 14.91% higher today.
Twin Disc, Incorporated (NASDAQ:TWIN): Dividend is payable on March 1, 2012, to shareholders of record on February 10, 2012. Shares of Twin Disc, Incorporated are trading 19.31% lower today.
Markets closed up on Wall Street today: Dow -0.09%, S&P +0.05%, Nasdaq -0.09%, Oil +1.47%, Gold +0.81%.
On the commodities front, Oil (NYSE:USO) rose slightly to $99.78 a barrel. Precious metals were also up, with Gold (NYSE:GLD) rising to $1,677.50 an ounce while Silver (NYSE:SLV) rose 1.93% to settle at $32.29.
Today’s markets were up because:
1) Greece. Greek debt talks are said to be progressing, but so far officials have not announced a deal to cut debt — a key condition for Greece to receive additional bailout funds from the European Union and International Monetary Fund. At issue is an agreement to write down the value of Greek bonds owned by the private sector by 50 percent. Without the bailout money, there is little doubt that Greece will be unable to make the 14 billion-euro payment it owes on bonds that will reach full maturity on March 20, in which case Greece would enter into a disorderly default.
2) Fed. With no major economic news today, and few major companies slated to report quarterly results, all three major indexes hovered around breakeven throughout most of the day. While Europe will remain in focus, particularly Greece, this week will be busy with U.S economic news as the Federal Open Market Committee meets. The Federal Reserve plans to introduce changes to its communications policies to the public following its two-day meeting, a move that would make it easier for the central bank to push through another round of asset purchases later this year. The government also releases its first estimate of fourth-quarter economic growth on Friday.
3) Oil and gas. Oil and gas companies were among the day’s biggest gainers after Chesapeake Energy (NYSE:CHK) announced it would cut natural gas production in order to drive up prices. NRG Energy (NYSE:NRG) and Consol Energy (NYSE:CNX) added around 3 percent, Chesapeake Energy and Cabot Oil and Gas (NYSE:COG) were up more than 6 percent, and Southwestern Energy (NYSE:SWN) jumped more than 10 percent.
After Hours Radar Stocks
VMware Inc. (NYSE:VMW) shares surged more than 5 percent in late market trading. The company reported a 67 percent jump in net income for the fourth quarter. The company earned $200.4 million (46 cents per share), compared to $119.9 million (28 cents per share) in the previous year.
Shares of CSX Corp. (NYSE:CSX) fell almost 2 percent after reporting fourth quarter results. Profits increased 6 percent to $457 million (43 cents per share). Analysts were expecting net earnings of 44 cents per share. Shares of Norfolk Southern Corp. (NYSE:NSC) and Union Pacific Corp. (NYSE:UNP) also fell after the results.
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Although net income declined, Texas Instruments Inc. (NYSE:TXN) traded higher after the closing bell. The company still reported fourth quarter revenues of $3.42 billion, compared to estimates of $3.25 billion. Shares of Qualcomm Inc. (NASDAQ:QCOM) are also trading higher.
Western Digital Corp. (NYSE:WDC) jumped 4.4 percent after reporting fiscal second quarter results. The company earned $145 million (61 cents per share), compared to $225 million (96 cents per share) in the previous year. Although analysts expected earnings of 65 cents, the company would have reported earnings of $1.51 per share if it did not incur Thailand flooding and acquisition costs of Hitachi Global Storage Technologies.
Zions Bancorp (NASDAQ:ZION) declined 4 percent late Monday. The bank reported net income of $44.4 million (24 cents per share) in the fourth quarter, compared to a loss of $110.3 million in the previous year. Meanwhile, non-accrual loans decreased 15 percent. Major banks such as Bank of America (NYSE:BAC) and JP Morgan (NYSE:JPM) also declined late Monday.
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