Top 10 News Items for 10/01 - 10/05: Unemployment Drops in Sept.; Romney Routs Obama; H-P Cuts Outlook, Again; MetroPCS Gets a Bid
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The following are the top ten news items from October 1st to 5th:
- The U.S. Labor Department said that 114,000 jobs were added in September, just about flat to Wall Street estimates calling for adds of 115,000 jobs. The economic survey data for September showed job gains in healthcare, transportation, and financial activities, while manufacturing jobs edged down.
In addition, the unemployment rate made a substantial drop to 7.8 percent, from 8.1 percent in August. This is the first time that unemployment has been below 8 percent in about four years and comes just ahead of November elections.
For more on the numbers, click here.
- Wednesday, President Barack Obama and GOP candidate Mitt Romney held their first presidential debate. Though both made fair arguments for their respective viewpoints, most would agree that Romney had a stronger performance.
Key points Romney covered wee on healthcare, job creation, and managing th budget deficit. Obama seemed to be distracted and unmotivated during the event.
For a brief wrap and what stocks might move following elections, click here.
(Side note: The Reuters/Ipsos poll after the event had Romney being viewed positively by 51 percent of voters and Obama at 56 percent.)
- Hewlett-Packard (NYSE: HPQ) snapped back to reality during an analyst day event this week. CEO Meg Whitman highlighted the challenges H-P would face moving forward and, low, they were many.
In general, H-P is expected to keep trimming, nipping, and tucking next year, really not seeing a notable gain and acceleration until 2014 and into 2015. For fiscal 2013, H-P EPS is expected to be $3.40 to $3.60, down from $4.00 to $4.05 in previous guidance.
For a rundown of H-P's plan, click here.
- Deutsche Telekom and MetroPCS Communications, Inc. (NYSE: PCS) signed a definitive agreement to combine T-Mobile USA and MetroPCS.
Details from the deal: "The transaction is structured as a recapitalization, in which MetroPCS will declare a 1 for 2 reverse stock split, make a cash payment of $1.5 billion to its shareholders (approximately $4.09 per share prior to the reverse stock split) and acquire all of T-Mobile’s capital stock by issuing to Deutsche Telekom 74% of MetroPCS’ common stock on a pro forma basis. Deutsche Telekom has also agreed to roll its existing intercompany debt into new $15 billion senior unsecured notes of the combined company, provide the combined company with a $500 million unsecured revolving credit facility and provide a $5.5 billion backstop commitment for certain MetroPCS third-party financing transactions."
But, Sprint Nextel (NYSE: S) may launch a counterbid as soon as next week. Should be an exciting event.
- Yes, his name is a verb now. At the Value Investing Congress this week, Greenlight Capital's David Einhorn sent a little fear through Chipotle Mexican Grill (NYSE: CMG) investors' veins when he said he was short the fast-casual, Mexican food restaurant. He said the biggest challenge will come from Yum! Brands' (NYSE: YUM) Taco Bell segment, though he wouldn't clarify whether he was invested in Yum! or not. For more, click here.
- Zynga (Nasdaq: ZNGA) issued preliminary third-quarter numbers on Thursday. The company said the adjustment, "primarily reflect weakness of certain games in our web "invest and express" category, and include an estimated impairment charge between $85 million and $95 million (excluding any income tax impact) related to the intangible assets previously acquired in connection with the company's purchase of OMGPOP."
For the quarter, Zynga sees revs of $300 million to $305 million and adjusted net loss of flat to down 1 cent per share. The Street was at sales of $275.9 million and a flat net loss.
More importantly, Zynga trimmed fiscal 2012 expectations. Bookings are projected to be in the range of $1.085 billion to $1.100 billion (compared to previous expectations of between $1.150 billion to $1.225 billion). Adjusted EBITDA is projected to be in the range of $147 million to $162 million (compared to previous expectations of between $180 million to $250 million).
- The ISM had a busy and satisfying week. First, its Manufacturing Index rose to 51.5 percent in September, from 49.6 percent the prior month. Expectations called for a reading of 49.7 percent.
Then, the ISM Services Index rose 1.4 points to 55.1 percent in September. The ISM quoted some respondents as saying that the business environment remained steady and there is fourth quarter optimism. The U.S. drought over the summer put some pressure on food costs while some note that the general slowdown in March is now showing some signs of reversal.
- U.S. auto sales were mixed again in September, with some of the bigger Asian automakers making the biggest gains. Toyota (NYSE: TM) said sales rose 42 percent from last year while Honda (NYSE: HMC) sales popped 31 percent. Ford (NYSE: F) sales dipped about 0.1 percent, General Motors (NYSE: GM) rose 1.5 percent, and Chrysler fared the best, with sales moving just over 12 percent higher.
German automaker Volkswagen reported a 34 percent increase from last September.
Autodata said September light-vehicle sales rate rose to 14.94 million, the highest rate since March 2008.
- Facebook (Nasdaq: FB) said it surpassed the 1 billion user milestone in September, just months after hitting 955 million at the end of the second quarter. Despite the number, analysts and investor are still questioning whether it will be able to convert users into revenue, particularly with many accessing the site via mobile devices.
Facebook ended the week a few points lower from last Friday.
- The next generation of iPad is upon us, now in a smaller, more manageable form. Reports out this week have Apple (Nasdaq: AAPL) telling Asian suppliers to "make it so" on a smaller version of its uber-popular tablet device. As previously reported, the device will boast a 7.85-inch liquid-crystal, though it will have a lower resolution than the current iPad models.
The iPad largely remains the world's number one tablet PC and Apple has all the key ingredients to dominate the smaller tablet market. For more, click here.
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