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Monthly Archives: March 2013

$RHT Beats Estimates, Investors Sell on Low End Guidance

“Red Hat (NYSE: RHT  ) results for the company’s Q1 have been released. For the quarter, revenue was $348 million, a 17% improvement over the $297 million in the same period the previous year. Non-GAAP net income came in at $70 million ($0.36 per diluted share) from Q4 2011’s red figure of just under $57 million ($0.29).

On average, analysts had been projecting revenue of $349 million and EPS of $0.30….”

Full report

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WSJ: Legal Costs for Big Banks to Top $100 Billion

“Large global banks will likely pay more than $100 billion in legal fees when all is said and done to pay for their bad behavior in the mortgage-market collapse, the financial crisis, and the Libor rate scandal, The Wall Street Journal reports.

The big four U.S. banks — Citigroup, JPMorgan Chase, Bank of America and Wells Fargo – already have doled out $61.3 billion for financial-crisis and mortgage claims over the past three years, according to SNL Financial research firm.

U.S. banks will ultimately have to fork over another $24.7 billion for the repurchase of faulty mortgage loans, according to Compass Point Research & Trading
And Libor and other settlements are expected to cost banks at least $14 billion.

While the KBW Bank Index has gained 9.6 percent so far this year, news about all the legal settlements have kept investors from driving up bank stocks further, some experts say.

“There always seems to be another negative headline, and that has kept investors on the sidelines,” Jason Goldberg, an analyst with Barclays, tells The Journal.

The issue is whether banks have sent aside enough reserves to cover their legal costs without subtracting too much from profits.

“Libor is the big unknown right now, because it’s still playing out at the preliminary stages,” Micah Green, co-chairman of the financial-services practice at law firm Patton Boggs LLP in Washington, tells The Journal.

One good piece of news for U.S. banks is the Cyprus bailout, says star bank analyst Dick Bove of Rafferty Capital….”

Full article

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Whale Depositors May Have Been Given a Heads Up on Cyprus Capital Controls & Depositor Tax

“The decision to crush Cypriot depositors (first all of them, then just the uninsured ones) came in March, without any prior hints of the carnage that was about to be unleashed upon Cypriot bank unsecured liabilities. Or so the media narrative goes, because the last thing needed is to give skeptics any indication the “ad hoc” Troika plan was not so ad hoc after all, and some individuals – notably the whale depositors – were warned in advance, sparing them the indignity of pulling a few billion at €300 per day. Alas, as just released central bank data shows, there may be cracks in the narrative because in February, at a time when the Eurozone was supposedly getting better every day and the Dow Jones was on the verge of its all time high, Cypriot depositors pulled the largest amount of cash in over three years….”

Full article and charts

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Biotech in Focus


“Much of the research coverage on Wall St. from the bulge bracket firms is concentrated on the most liquid, best known names from the S&P 500. These names are recognizable to investors and are reasonably easy to cover by their analysts from a data standpoint. In addition to Wall St. research, we make an all out effort to find other stock coverage for our readers that can prove valuable. One area that does not get the coverage it should is biotech and biopharma. The stocks in those sectors offer investors high risk, and often high reward.

PropThink is a specialty research firm that focuses its coverage on the biotech and biopharma arena. We went through their research, looking for not only their best investment ideas, but stocks that had a solid thesis. It is important for investors to remember that many of these stocks are dependent on some form of U.S. Food and Drug Administration (FDA) approval, and the delay or lack of that approval can be devastating to the stock price.


The following are some of the best investment ideas from PropThink…”

Full article

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Gapping Up and Down This Morning




Symb Last Change Chg %
WAC.N 37.04 +2.09 +5.98
TRLA.N 32.09 +1.52 +4.97
SBGL.N 5.71 +0.18 +3.26
AVIV.N 23.81 +0.66 +2.85
HY.N 57.24 +1.38 +2.47


Symb Last Change Chg %
CLV.N 18.14 -2.36 -11.51
SSNI.N 17.15 -1.42 -7.65
PBF.N 37.60 -1.33 -3.42
MRIN.N 16.55 -0.49 -2.88
LND.N 4.90 -0.13 -2.58



Symb Last Change Chg %
RDHL.OQ 11.50 +3.04 +35.97
RVLT.OQ 2.12 +0.45 +26.95
UEPS.OQ 7.65 +1.62 +26.87
LIVE.OQ 2.71 +0.56 +26.05
UTSI.OQ 2.78 +0.40 +16.81


Symb Last Change Chg %
EVBS.OQ 5.73 -1.61 -21.93
ISNS.OQ 4.35 -1.05 -19.44
ATOS.OQ 9.56 -1.86 -16.29
PFIN.OQ 7.41 -0.92 -11.04
RDA.OQ 9.45 -1.09 -10.34



Symb Last Change Chg %
FU.A 3.98 +0.38 +10.56
SAND.A 9.63 +0.30 +3.22
EOX.A 7.10 +0.17 +2.45
NML.A 20.54 +0.40 +1.99


Symb Last Change Chg %
SVLC.A 2.43 -0.08 -3.19
REED.A 4.14 -0.12 -2.82
BXE.A 6.49 -0.11 -1.67
ALTV.A 9.11 -0.13 -1.41
ORC.A 13.75 -0.15 -1.08

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Foreclosed Home Inventory Jumps 9% in Q1

“Foreclosure inventory was up 9 percent year-over-year (YoY) in the first quarter to 1.5 million properties, according to RealtyTrac’s foreclosure inventory report.

The increase was led by a 59 percent YoY increase in pre-foreclosure inventory.

Delinquent loans have been working their way through the pipeline after the National Mortgage Settlement was finalized last year.

“The settlement provided some closure regarding accepted foreclosure processing practices, and as a result lenders have been reviving more of these delinquent loans and pushing them into foreclosure over the past 12 months,” said Daren Blomquist vice-president of RealtyTrac in a press release.

“Particularly in states where a lengthy court process has resulted in a bigger backlog of non-performing loans still in snooze mode.”

Here are some details from the report…”

Full article

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Marc Faber Warns Excessive Bubble Blowing Will Create Chaos and Not Even Gold Will Be a Place to Hide

“…So we are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide. Even in gold, it will be difficult to hide….”

Full article


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Twitter Ad Revs Expected to Top $1B Next Year

Twitter will generate nearly $1 billion in ad revenue next year due to a surge in mobile advertising on its Web microblogging service, according to a report released on Wednesday.

Mobile ads will account for roughly half of Twitter’s advertising revenue this year and will make up more than 60 percent of the company’s ad revenue by 2015 according to research firm eMarketer.

The increasing popularity of Twitter’s mobile ads – introduced in March 2012—caused eMarketer to raise its 2014 ad revenue estimates for Twitter to $950 million, versus its previous estimate of roughly $800 million. Twitters’ ad revenue this year will total $582.8 million, according to the report, roughly double what it was in 2012.

Twitter, which allows people to share 140-character messages on its online service, is privately held and does not disclose financial results….”

Full article

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Loan Default Rises Quickly for Small Business in Europe

“MILAN/MADRID (Reuters) – Small companies struggling to repay loans in Italy and Spain signal bigger problems on the horizon for the euro zone after the dust has settled on Cyprus’s last-ditch bailout this week.

Defaults by small and medium-sized enterprises (SMEs), easily the biggest employers in Spain and Italy, are rising at a worrying clip, spelling trouble for the banks and two countries at the heart of Europe’s debt crisis.

“You can be sure that if these companies’ bad debts rise, you’re going to see more bad loans to families, and credit card bills that won’t be paid,” said Javier Santoma, finance professor at Spain’s IESE business school.

The ability of Italy and Spain, which account for 28 percent of the euro zone economy compared with Cyprus’s 0.2 percent, to pull themselves out of crisis and avoid full-blown bailouts depends on the health of their banks; weak banks conserve capital rather than lend to get the economy moving.

Profits at Spain’s top three lenders Santander , BBVA and Caixabank fell an average 60 percent in 2012 due to steep government-enforced provisions for property losses. Writedowns of nearly 24 billion euros at state-owned Bankia led to a record 19.2 billion euro loss.

In Italy, the two biggest banks, Intesa Sanpaolo and UniCredit , set aside a combined 14 billion euros in 2012 to cover bad loans. Smaller lenders also had to increase provisions after the central bank conducted simultaneous audits of around 20 institutions.

Banco Popolare , Italy’s fourth biggest, issued a profit warning after the audit prompted 684 million euros of loan loss provisions in the fourth quarter, more than the total it set aside in the first nine months of the year.


Full article

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The Z10 Helps $BBRY to Beat Estimates

“TORONTO (Reuters) – BlackBerry announced an unexpected quarterly profit on demand for the new touchscreen device that holds the key to its successful turnaround, but revenue remained far below year-earlier levels.

The smartphone maker said on Thursday that it had sold about 1 million of the new Z10 devices during the fourth quarter ended March 2. It shipped roughly 6 million smartphones in that period.

Net income in the quarter was $98 million, or 19 cents a share, compared with a year-earlier loss of $125 million, or 24 cents a share.

Shares of the Waterloo, Ontario-based company fell 1.1 percent to $14.40 in premarket trading after the results were released…”

Full report

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Initial Claims and Third Estimates for GDP

Initial Claims: Prior 336k, market expects 338k, actual 357k ….last week’s number was upped to 341k

GDP up 0.4%, market expected up 0.5%

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Au Circle Jerks the Flat Line as Funds See Liquidations

“Gold swung between gains and losses in London, heading for a second quarterly decline, as holdings in exchange-traded products fell by the most on record and investors weighed the euro-area’s debt crisis against prospects for a U.S. recovery.

Holdings in ETPs contracted 6.9 percent this quarter amid speculation that the U.S. Federal Reserve will rein in stimulus. The Dollar Index (DXY), a gauge against six major counterparts, rose 4.3 percent this quarter, the biggest gain since the three months ended September 2011, amid signs the U.S. economy is improving. Banks in Cyprus planned to open for six hours today with capital restrictions in place after shutting for almost two weeks as the nation faced financial collapse.

“The gold market is strongly polarized,” said Filip Petersson, a commodities strategist at SEB AB in Stockholm. “There is one large group that thinks things are heading in the right direction and that it is time to get out of gold, and one that thinks it is just going to get worse and you need gold as an insurance. The substantial ETF outflows are very worrying, though, a major bear trigger.”

Bullion for immediate delivery fell less than 0.1 percent to $1,603.88 an ounce by 10:14 a.m. in London after gaining as much as 0.2 percent and falling 0.1 percent. Gold for June delivery fell 0.2 percent to $1,604.20 an ounce on the Comex in New York….”

Full article

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Italian Business Confidence Unexpectedly Rises

“Italian business confidence unexpectedly rose in March even after inconclusive elections last month produced a political gridlock in the nation mired in its fourth recession since 2001.

The manufacturing-sentiment index rose to 88.9 from a revised 88.6 the previous month, Rome-based national statistics institute Istat said today. Economists had predicted a reading of 88, according to the median of 12 estimates in a Bloomberg News survey.

Italy’s Feb. 24-25 vote failed to produce a clear majority, raising concerns the next government may fail to address the country’s economic issues.

Outgoing Prime Minister Mario Monti said last week that gross domestic product will fall 1.3 percent this year as exports may fail to offset the effect of shrinking domestic demand….”

Full article

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U.K. Banks are Not Expected to Issue Shares to Raise Capital

“U.K. banks including Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc (LLOY)may avoid the need to sell new shares to bolster their balance sheets after the Bank of Englandused more lenient rules than those advocated by European regulators.

Lenders were yesterday told they need to raise 25 billion pounds ($38 billion) of additional capital, of which they have already laid out plans to cover about half. By targeting a core Tier 1 capital ratio of 7 percent by the end of 2013, rather than the 10 percent by 2019 required by theBasel Committee on Banking Supervision, firms don’t need to raise as much. Government-owned RBS and Lloyds have already sold assets to help bolster their balance sheets.

“They’ve chosen a core Tier 1 ratio that’s quite generous,” said Gary Greenwood, an analyst at Shore Capital Ltd. in Liverpool,England. “The problem is they still need the banks to lend, and the U.K. government doesn’t want to put more money in. If these were all still shareholder-owned businesses they’d be told to have rights offers.”

Britain’s lenders have been selling units and detailing plans to bolster their businesses since the central bank said in November it was concerned they hadn’t fully recognized future loan losses and may be using inappropriate risk models to assess how much capital they hold. BOE Governor Mervyn King said the shortfall “is not an immediate threat to the banking system” and won’t require additional government investment in banks. RBS and Lloyds received a total of about 65.5 billion pounds of taxpayer aid during 2008 and 2009.

Ratio Lowered…”

Full article

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European Markets Rise on a Calm Cyprus and an Uptick in German Retail Sales

“European stocks climbed, extending their third consecutive quarterly gain, as a report showed retail sales unexpectedly increased in Germany last month. U.S. index futures were little changed, while Asian shares declined.

D.E Master Blenders 1753 NV surged the most since its initial public offering last June after the coffee and tea company spun off by Sara Lee Corp. said Joh. A. Benckiser has held talks to take it over. Ziggo NV rose to its highest price in two weeks as Liberty Global Inc. bought a 12.65 percent stake in the Dutch cable-television operator.

The Stoxx Europe 600 Index added 0.5 percent to 293.76 at 10:52 a.m. in London. The equity benchmark has still dropped 0.1 percent this week, paring its gain in March to 1.3 percent. The Stoxx 600 is heading toward a quarterly advance of 5 percent. Futures on the Standard & Poor’s 500 Index added 0.1 percent today, while the MSCI Asia Pacific Index slid 0.6 percent.

“German retail sales are a positive for market participants ahead of the Easter break,” said Norman Villamin, who helps oversee about $44 billion as European (SXXP) chief investment officer at Coutts & Co. “But they just reinforce the idea that Europe is running a two-speed economy. In Cyprus, banks open for the first time since the onset of its crisis today, and we will focus not on what are likely to be long lines, but rather whether the capital controls are extended beyond the four days proposed.”

Germany’s Economy…”

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Cyprus Banks Reopen, Customers Said to Be Civilized

“Cyprus’s banks opened for the first time in almost two weeks, with new rules curbing access to cash preventing an initial panic to withdraw deposits.

“We expected much more people,” said Argyros Eraclides, manager of a Bank of Cyprus branch in the Stavrou area of Nicosia. “Fortunately there are only some people who needed cash for the day, but customers reacted fantastically. We expected some people to be more aggravated.”
Banks opened at midday local time today, with lines of about 15 to 20 people waiting to enter branches in the Cypriot capital. The Central Bank of Cyprus’s money controls include a 300-euro ($383) daily limit on withdrawals and restrictions on transfers to accounts outside the country.
Cyprus’s lenders have been closed since March 16, when the European Union presented a proposal to force losses on all depositors in exchange for a 10 billion-euro bailout. That plan touched off protests and political upheaval on the island, and was rejected by the country’s parliament. A subsequent agreement shut Cyprus Popular Bank Pcl (CPB), the second-largest lender, and imposed larger losses on uninsured depositors.
Call for Calm….”

Full article

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