Apple, Coronavirus, Walmart, Legg Mason and Pier 1 - 5 Things You Must Know Tuesday

Stock futures point lower after Apple issues a revenue warning because of the coronavirus outbreak in China; Walmart reports earnings; Franklin Resources reportedly is close to buying rival Legg Mason.
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Here are five things you must know for Tuesday, Feb. 18:

1. -- Stock Futures Slump After Apple Issues Sales Warning

Stock futures pointed to a lower open for Wall Street on Tuesday and Asian shares declined after Apple  (AAPL) - Get Report issued a revenue warning because of the coronavirus outbreak in China and Walmart  (WMT) - Get Report said fiscal 2021 earnings would come in below estimates.

Contracts tied to the Dow Jones Industrial Average fell 182 points, S&P 500 futures declined 16.90 points and Nasdaq futures slumped 72.75 points.

Governments in Asia have taken measures to prop up economic growth amid the outbreak, but Apple's outlook served as a warning those measures might not be enough.

With the death toll from the virus rising to 1,868 and confirmed cases jumping to 72,436, China moved to postpone its biannual auto show, one of the industry’s biggest international events, and could postpone its annual congress, the biggest political meeting of the year. 

The standing committee for the National People’s Congress will meet Feb. 24 to deliberate postponing the meeting that is set to begin March 5, according to the Associated Press.

2. -- Apple's Revenue to Take a Hit From Coronavirus

Apple said it wouldn't meet previous guidance for its fiscal second quarter because of the coronavirus outbreak in China, and noted that iPhone shortages would affect its near-term sales.

Apple said manufacturing sites in China that had been closed by government officials following the coronavirus outbreak were coming back on line, but added it was experiencing "a slower return to normal conditions than we had anticipated."

Apple said iPhone supplies will be constrained temporarily by the outbreak, and said demand in China also would be hit by the spread of the coronavirus and the subsequent store and factory closures.

"As a result, we do not expect to meet the revenue guidance we provided for the March quarter," Apple said in a statement. 

"The situation is evolving, and we will provide more information during our next earnings call in April," the company added. "Apple is fundamentally strong, and this disruption to our business is only temporary. 

"Our first priority - now and always - is the health and safety of our employees, supply chain partners, customers and the communities in which we operate. Our profound gratitude is with those on the front lines of confronting this public health emergency," the tech giant said.

Apple shares fell 3.28% to $314.30 in premarket trading Tuesday.

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3. -- Franklin Resources Nears Buy of Legg Mason

Franklin Resources  (BEN) - Get Report is in talks to buy rival asset manager Legg Mason  (LM) - Get Report and the all-cash deal could be announced Tuesday, according to reports.

Bloomberg reported the deal would value Legg Mason at $50 a share, or a 23% premium to the company’s share price of $40.72 on Friday. The report cited people familiar with the matter.

Legg Mason’s market value is more than $3.5 billion; it has assets under management of $800 billion. Franklin Resources has a market cap of about $12 billion and it manages nearly $700 billion.

Bloomberg noted the potential deal is complementary because Legg Mason
primarily focuses on retail investors, while Franklin Resources caters to institutional investors.

Activist investor Trian Fund Management last year took a 4.5% stake in Legg Mason, and Trian CEO Nelson Peltz secured a position on the board. Trian had been pushing Legg Mason to cut costs and increase revenue growth.

Legg Mason shares jumped 10.76% to $45.10 in premarket trading. Franklin Resources closed Friday at $24.36 and was inactive in premarket trading.

4. -- Walmart, Medtronic and Groupon Report Earnings Tuesday

Walmart  (WMT) - Get Report posted earnings of fourth-quarter adjusted earnings of $1.38 a share, 5 cents below estimates and said it expects 2021 earnings of $5 to $5.15 a share, below Wall Street forecasts.

The stock was down 0.81% to $116.94 in premarket trading.

Earnings reports are also expected Tuesday from Medtronic  (MDT) - Get Report, Groupon  (GRPN) - Get Report, Herbalife  (HLF) - Get Report, Tivo  (TIVO) - Get Report, La-Z-Boy  (LZB) - Get Report and Advance Auto Parts  (AAP) - Get Report.

Later in the week reports are expected from Zillow  (ZG) - Get Report, ViacomCBS (VIACA) - Get Report, Domino's Pizza  (DPZ) - Get Report, Dropbox  (DBX) - Get Report and Deere  (DE) - Get Report.

The economic calendar in the U.S. Tuesday includes the Empire State Manufacturing Index for February at 8:30 a.m. ET and the National Association of Home Builders Housing Market Index for February at 10 a.m.

5. -- Pier 1 Imports Files for Bankruptcy Protection

Pier 1 Imports PIR, the home-goods retailer, filed for Chapter 11 bankruptcy protection on Monday, and said it would look to sell the company.

Pier 1 said it has received commitments from lenders of about $256 million in debtor-in-possession financing so it can continue its operations while in bankruptcy.

“(Monday's) actions are intended to provide Pier 1 with additional time and financial flexibility as we now work to unlock additional value for our stakeholders through a sale of the company,” Pier 1 CEO and Chief Financial Officer Robert Riesbeck said in a statement. 

Pier 1 said it has been in talks with multiple potential buyers. The deadline for bids is March 23, Pier 1 said.