Caterpillar’s Accounting Scandal and Apple’s Next iPhone: Morning Buzzers
The U.S. equity markets are closed on Monday in honor of Martin Luther King, Jr. Day. Investors are free to take a break, come up for air, and look ahead to this week’s battery of big earnings reports.
The markets were mixed in Asia overnight, as the Nikkei fell 1.5 percent ahead of a two-day policy meeting at the Bank of Japan regarding the country’s proposed 10.3 trillion yen ($115 billion) stimulus package. The Hang Seng was off fractionally and the S&P/ASX 200 rose about 0.13 percent. In Europe at mid-day, the Stoxx 50, FTSE 100, and DAX were about 0.35 percent higher.
Boeing (NYSE:BA) won’t fall off the front page until battery and electrical system issues with its 787 Dreamliner are resolved. Investigators and engineers have examined every nook and cranny of the aircraft after fleets around the globe were grounded last week, and it seems like the fundamental issue is with a lithium-ion battery made by Yuasa Corp. of Japan, and/or the battery’s control system, made by Thales of France. The auxilary power unit that houses the battery is produced by United Technologies Corp (NYSE:UTX). All three companies are reportedly cooperating with the investigations.
Nokia Siemens Networks — the multinational networking and telecom equipment joint venture owned by Nokia (NYSE:NOK) and Siemens (NYSE:SI) — is reportedly seeking as much as 700 million euros ($930 million) from the public markets in a Spring-time high-yield bond offering. The company has struggled in past years to maintain its competitive edge against giants like Huawei and ZTE, but consensus is that Nokia Siemens has strengthened its position recently and now looks like “an attractive proposition,” according to some reports.
Caterpillar (NYSE:CAT) — due to release its fourth-quarter results on January 28 before the markets open — announced on Friday that it will take a non-cash charge of approximately $580 million and fire several senior managers because of “deliberate, multi-year, coordinated accounting misconduct concealed at Siwei, located in Zhengzhou, China,” a mining-equipment manufacturer that Caterpillar bought last year. The charge amounts to $0.87 per share, but investors rallied behind the stock after the announcement, bidding shares of 2 percent. Partially on the back of Chinese growth prospects, Caterpillar is now up 11 percent over the past month.
Dell’s (NASDAQ:DELL) courtship of private-equity firms pulled the stock up nearly 18 percent last week. The PC maker, struggling along with most of its industry in the face of a rapidly changing market, has reportedly hired Evercore Partners, an independent investment bank advisory firm, to evaluate incoming bids from firms such as Silver Lake Management. Dell wants to shop offers are thoroughly as possible in order to avoid fallout from shareholders, which the company owes a fiduciary duty to.
Apple (NASDAQ:AAPL) rumors are a dime a dozen, and the most recent round coming out of Asian newspapers suggests that the company could be working on a 4-inch iPhone 5S and a 4.8-inch “iPhone Math.” BrightWire sources the information from a China Times report that cites a Commercial Times article, casting a dubious light on credibility, but an iPhone 5S and a 4.8-inch phone would not be very surprising. The report suggests that the phones could hit the markets by the end of June.
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