Tuesday's Early Headlines
- Fed Reportedly Asks Banks for TARP Plans -- Bloomberg reports that the Federal Reserve this month asked nine U.S. banks which were part of this year's stress tests to submit plans including a timetable to repay funds from the Troubled Asset Relief Program, citing a person familiar with the situation. The nine banks are Bank of America (BAC), PNC (PNC), Citigroup (C), Fifth Third Bancorp (FITB), GMAC, KeyCorp (KEY), Regions Financial (RF), SunTrust (STI) and Wells Fargo (WFC). These banks received a combined $142 billion in TARP funds out of the total $700 billion Congress authorized in 2008, Bloomberg noted.
- U.S. Officials Want Pay Czar to Ease AIG Compensation Curbs -- The Wall Street Journal reports that federal officials have been urging pay czar Kenneth Feinberg to ease the compensation restrictions at American International Group (AIG) for 2010, arguing that the taxpayer would ultimately bear the burden if the restrictions are too severe. Federal Reserve and Treasury officials told Feinberg that tough restrictions ultimately could jeopardize the government's ability to recoup its roughly $90 billion in loans because key employees would leave.
- Citigroup Sells Diners Club to BMO -- Citigroup will sell its Diners Club North American franchise to BMO Financial (BMO). Citigroup said the sale would reduce its assets in Citi Holdings by about $1 billion and isn't expected to have a material impact on Citigroup's net income or capital ratios. The transaction is expected to close by March 31, 2010. BMO said the agreement represents net receivables of almost $1 billion and about 7.8 billion in card transactions.
- E.U. Drops Qualcomm Antitrust Probe -- The European Commission closed a two-year investigation against chipmaker Qualcomm (QCOM) after companies that complained dropped their charges. Companies such as Broadcom, Nokia and Ericsson claimed that Qualcomm broke agreements among patent holders of third-generation cellphone equipment to keep costs at reasonable levels
- Lloyds Plans U.K.'s Biggest Rights Issue -- Lloyds Banking Group (LYG) will issue a total of 36.5 billion new shares on the basis of 1.34 new shares for every one existing ordinary shares as on the record date of Nov. 20. Lloyds expects to raise a record $22.3 billion (13.5 billion pounds) and avoid taking part in the government's asset protection scheme which would have increased public ownership from 43% to above 60%.
Tuesday's Earnings Roundup
- Medtronic (MDT) posted fiscal second-quarter adjusted earnings of 77 cents a share, beating the Thomson Reuters average estimate of 74 cents a share. Revenue climbed 7.5% to $3.84, also ahead of consensus. Looking ahead, Medtronic raised its guidance for 2010, saying it now expects earnings in a range of $3.17 to $3.22 a share, compared with its previous range of $3.10 to $3.20 a share and the consensus target of $3.15.
- HJ Heinz (HNZ) reported a fiscal second-quarter adjusted profit of 76 cents a share, better than the Thomson Reuters average estimate of 70 cents a share. Sales were up 2.5% from a year earlier to $2.67 billion, in line with consensus. Heinz raised its guidance for 2010, saying it is now forecasting full-year adjusted earnings of $2.72 to $2.82 a share, up from the previous range of $2.60 to $2.70 share and in line with the $2.75-a-share analyst target.