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Wall Street Breakfast: RadioShack Declares Bankruptcy After Years Of Losses

Seeking Alpha

Feb. 6, 2015

Economy

The dollar gained some ground against other major currencies today, as markets eyed January's employment report which will likely show nonfarm payrolls increasing 234K last month after advancing by 252K in December - the longest stretch of job gains above 200K since 1994. Ahead of the news, the U.S. dollar index is up 0.25% to 93.90, while U.S. futures are all higher by 0.1%. The unemployment rate is forecast to hold steady at a 6-1/2 year low of 5.6%.

The United Steelworkers union has rejected the latest offer from U.S. refiners, as 3,800 employees continue their strike which began last Sunday at plants accounting for 10% of U.S. refining capacity. Despite the walkout, refineries say they have been mostly able to operate at normal levels by relying on non-union labor. Crude futures +3.3% to $52.12, after an extremely volatile week.

Stocks

As widely expected, RadioShack has filed for Chapter 11 bankruptcy in Delaware, saying it has $1.2B in assets and $1.39B in debts. The plan reportedly includes an asset-buy deal with Standard General (its largest shareholder) and Sprint (NYSE:S) for a "store-in-store" model that would allow the RadioShack (NYSE:RSH) name to exist in some of the acquired shops.

Twitter +9.1% premarket after the company beat expectations on earnings and revenue, despite disappointing user growth figures, which just grew 1.4% Q/Q. On the company's earnings call, CEO Dick Costolo blamed quarter-specific issues for the weaker than expected number, pointing to seasonality and Apple's (NASDAQ:AAPL) iOS 8 release. Costolo also confirmed Twitter’s (NYSE:TWTR) agreement with Google (GOOG, GOOGL) which will allow tweets to be searched as soon as they’re posted.

GoPro reported strong fourth-quarter results, with net income almost tripling to $122M, as strong demand for its wearable cameras got a boost during the holiday season. Shares got stung, however, after the company's earnings call. GoPro (NASDAQ:GPRO) announced the resignation of its COO Nina Richardson and projected an unexpectedly weak first-quarter profit estimate of between $0.15-$0.17 a share, below a $0.17 consensus at the midpoint. GPRO -12.8% premarket.

The SEC and the Ontario Securities Commission are investigating whether a recent Reuters report about a possible $7.5B purchase of BlackBerry (NASDAQ:BBRY) by Samsung Electronics (OTC:SSNLF) was sparked by investor intent on pumping the Canadian smartphone maker’s stock. BlackBerry shares, which closed on Jan. 13 at $9.71, shot up 30% on the news to close at $12.60 on Jan. 14, its biggest one-day gain in years. Shortly after the rumor, both companies denied holding talks for such a deal.

Verizon has confirmed its plan to sell wireline assets in California, Florida and Texas to Frontier Communications (NASDAQ:FTR) for $10B. That deal, combined with the just-announced sale of cell towers to American Tower (NYSE:AMT), will soon see $15B going Verizon's (NYSE:VZ) way. The two agreements are a vital step for the company, which must pay the FCC $10B this month to cover its bids in the AWS-3 spectrum auction. FTR +4.9%, VZ +1.1% premarket.

LinkedIn reported solid revenue gains across segments in the fourth quarter as the social network continued its shift to mobile and international expansion, with nearly 70% of its members now outside the U.S. Adjusted net income in 2014 came in at $254M, compared to $192M in 2013. "The fourth quarter capped another successful year for LinkedIn (NYSE:LNKD), which was marked by steady member growth and strong financial results," announced CEO Jeff Weiner. LNKD +7.7% premarket.

Investors tuned out of Pandora after a pullback in mobile advertising caused the internet radio company to miss revenue targets, and its sales outlook for the Q1 and 2015 missed Wall Street’s views. The forecasts caused the stock to plunge over 20% in after-hours trade. Shareholders remained disappointed with Pandora (NYSE:P) this whole past year, with the stock more than halving in 2014.

Alcatel-Lucent showed further signs that its turnaround plan was bearing fruit as the French network-equipment maker reported a steep rise in quarterly profit and better than expected margins due to cost cuts. Net income rose to €271M from €134M a year ago, while sales fell 6% to €3.68B, in line with expectations. The company also pledged to continue to improve its gross margins this year and carry out a flotation of its submarine-cable unit in the second half. ALU +1.4% premarket.

Chairman of Hyundai Motor Chung Mong-Koo and his eldest son Chung Eui-sun have raised $1.1B through the sale of their stakes in the car group’s logistics arm, Hyundai Glovis. The automaker said the company was relaunching the stake sale to comply with the government’s strengthened antitrust rules. Meanwhile, Hyundai (OTC:HYMLF) also announced that it bought back $422.4M worth of its own shares as part of its efforts to enhance shareholder value.

Reporting a sharp slide in fourth-quarter profits, Statoil (NYSE:STO) became the latest oil company to slash spending this year and signal project delays after the plunge in crude prices. The company will raise spending cuts by 30% to $1.7B from 2016 and lower capex to $18B this year from previous guidance of $20B. Net loss for the three months through December was 8.9B kroner ($1.18B) compared with a net profit of 14.8B kroner a year earlier. STO +3.3% premarket.

Anthem stored the social security numbers of 80M customers without encrypting them to make it easier for employees to track health care trends and share data with states and health providers, WSJ reports. Health insurers don’t always encrypt members’ data, and aren’t required to do so under the federal Health Insurance Portability and Accountability Act. ANTM -3% premarket.

Completing a wide-ranging restructuring of the company, Siemens (OTCPK:SIEGY) has announced that it will cut 7,800 jobs worldwide, saving about €1B which will be invested in growth initiatives. "Our Vision 2020 concept will enable us to get our company back on a sustainable growth path and close the profitability gap to our competitors," said Chief Executive Joe Kaeser. About 3,300 of the jobs lost will be in Germany, where the company's trains-to-turbines unit employs 115K people.

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Today's Markets:

In Asia, Japan +0.8% to 17649. Hong Kong -0.4% to 24679. China -1.9% to 3077. India -0.5% to 28718.

In Europe, at midday, London -0.3%. Paris -0.5%. Frankfurt -0.8%.

Futures at 6:20: Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +3.3% to $52.12. Gold +0.2% to $1265.20.

Ten-year Treasury Yield +1 bps to 1.81%

Today's economic calendar: