BNP Paribas and Credit Agricole shares tumble

BNP Paribas and Credit Agricole shares tumble

Stock Market Predictions

LONDON/PARIS (Global Markets) - Shares in French lenders BNP Paribas (BNPP.PA) and Credit Agricole (CAGR.PA) dived on Friday, underperforming the European banking sector on growing concern about the euro zone debt crisis.

BNP Paribas shed more than 8 percent, while Credit Agricole lost 4.7 percent and Societe Generale (SOGN.PA) lost 0.9 percent. That compared with a 1.1 percent gain in the STOXX Europe 600 banking index .SX7P.

Two Paris-based traders blamed the drop on expectations that the Moody's agency may cut Italy's credit rating after the market close on Friday. BNP Paribas and Credit Agricole are the two French banks most exposed to Italy.

Further dampening sentiment was talk Germany had delayed discussing the European Stability Mechanism and that legislation for the rescue fund was not likely to be in place until early 2012.

Credit Agricole in particular was being hurt by its planned exit from the Stoxx 50 index, traders said.

The declines come at the end of a week in which the heavily sold French banking sector had shown signs of rebounding, although BNP is still down on the week.

(Reporting by Dominic Lau, Juliette Rouillon, Joanne Frearson and Elena Berton; Editing by David Hulmes)

Netflix lowers U.S. subscriber forecast; shares fall

Netflix lowers U.S. subscriber forecast; shares fall

Stock Market Predictions

(Global Markets) - Netflix Inc cut its third-quarter forecast by 1 million U.S. subscribers, sending its shares down nearly 19 percent, as the company known for rapid growth expects more fallout from a price increase on its DVD service.

On Thursday, Netflix said it would have 24 million subscribers at the end of the third quarter, down from a prior forecast of about 25 million given soon after the July announcement of the price increase.

The decision by Chief Executive Officer Reed Hastings to raise rates for customers who still want DVDs by mail took effect earlier this month.

Fewer customers than expected are opting to take Netflix's DVD-only subscription package. Netflix now expects to have 2.2 million such subscribers, down from the previous forecast of 3 million. The company also cut its forecast for streaming-only subscribers, to 21.8 million from 22 million.

Lazard Capital analyst Barton Crockett expressed concern that the changes might also hurt Netflix's fourth quarter.

"Clearly, if the third quarter is slipping, there's risk to the fourth quarter, as the year-ago period was a time when everything went right for Netflix," he said in a research note.

Crockett called the price increase a "rare, large and surprising misstep" by Hastings.

The decision to increase the monthly subscription for a joint streaming and DVD rental service by as much as 60 percent caused an uproar among customers and bloggers. For U.S. customers, the price for renting one DVD at a time plus unlimited streaming increased from about $10 a month to about $16 per month.

Netflix shares have fallen nearly 40 percent since the price hike was announced.

The Los Gatos, California, company, which is under pressure from Hollywood studios and pay-TV rivals because of its aggressive pricing, has argued that it sees the future in lower-cost streaming services.

Netflix's chief content officer, Ted Sarandos, said the pricing decision gave customers a chance to choose whether to keep DVD services or move to a cheaper streaming-only option. Previously only a combined service was offered.

"Being able to precisely forecast and predict the behavior of that many people on fairly radical change is something we'll get better at all the time," Sarandos said at the Paley Center for Media's International Council meeting on Thursday.

In a statement, Netflix said "we know our decision to split our services has upset many of our subscribers, which we don't take lightly, but we believe this split will help us make our services better for subscribers and shareholders for years to come."

UNDERMINING THE ECOSYSTEM

Hastings, who is also on the boards of Microsoft Corp and Facebook, is often seen as a visionary for building Netflix into a successful competitor first to Blockbuster and then, with the introduction of streaming, to traditional cable and satellite TV distributors.

But the cable and satellite TV companies have been pressuring Hollywood studios not to allow Netflix to undermine the $100 billion pay-TV ecosystem.

Netflix also faces growing competition in the streaming market from Amazon.com Inc, Hulu and others.

For DVDs, Coinstar Inc's Redbox kiosks offer an alternative, and Dish Network Corp's Blockbuster Inc is trying to lure disgruntled Netflix customers with a free trial offer. Coinstar shares rallied 7.2 percent to $48.49 on the Nasdaq on Thursday.

"There are other options popping up that may be attractive" to consumers, said Merriman Capital analyst Eric Wold, who has a "neutral" rating on Netflix and a "buy" on Coinstar.

Hastings now has to prepare himself for the possibility of another subscriber backlash as soon as February if Netflix loses some of its popular programing and movies.

Earlier this month, Starz ended talks to renew a deal that expires on February 28. After that, the pay-TV channel controlled by Liberty Media will stop providing its content, which includes exclusive streaming rights to first-run Sony Corp and Walt Disney Co movies such as "Toy Story 3" and "The Social Network."

Netflix "can't grow as fast as the Street thinks," said Wedbush Securities analyst Michael Pachter, who rates the company's stock at "underperform." "They can't have the perfect world where content stays cheap and people sign up at low prices."

However, Netflix maintained its third-quarter financial outlook as well as its international subscriber forecast.

The company's stock fell 19 percent to close at $169.25 on Nasdaq.

(Reporting by Yinka Adegoke in New York and Lisa Richwine in Los Angeles, additional reporting by Liana Baker in New York and Supantha Mukherjee in Bangalore; Editing by Maju Samuel, Lisa Von Ahn and Matthew Lewis)

BlackBerry bashed as questions swirl about future

BlackBerry bashed as questions swirl about future

Stock Market Predictions

(Global Markets) - Investors drove Research In Motion's stock down 20 percent on Friday as dismal quarterly results raised prospects that the BlackBerry maker will be sold, broken up, or at least placed under new leadership.

The sell-off, which wiped out $3 billion of RIM's market capitalization, underscored how bad times have become for the one-time smartphone leader, once a byword for corporate communication.

A day after the earnings report, analysts spoke of disappointment, challenges and a ticking clock.

The latest misstep increased pressure on senior executives, who have been urged to step aside by investors and analysts concerned about repeated failures to execute strategy, and criticism spread to the company's board.

"Investors are telling us that a change needs to happen very quickly. The market is saying that the management are not the right guys to lead the company going forward," said Barry Schwartz, portfolio manager at Baskin Financial Services.

Run by co-founder Mike Lazaridis and salesman sidekick Jim Balsillie, who joined Lazaridis as co-CEO well before RIM had ever shipped a BlackBerry, the company this year set it sights on bringing out a tablet computer to compete with Apple Inc's iPad.

But results of the effort -- a tablet called the PlayBook -- have so far been disappointing. In addition, the company's BlackBerry smartphone is rapidly losing market share, and RIM has issued a series of damaging profit warnings.

Lazaridis and Balsillie report to a board that includes, in addition to themselves, seven other directors, only two of whom have any obvious background in the telecommunications or technology industry: John Wetmore, who served as finance chief of IBM Canada, and Antonio Viana-Baptista, who before retiring in 2008 worked at Telefonica.

"The board is culpable. It's been a little absent in terms of strategy ... and in overseeing what management is doing," said Paul Hodgson, senior research associate for GMI, a governance ratings firm. "They are supposed to be the representatives of shareholders and they're not doing a very good job of representing shareholders' interests."

But Hodgson said RIM's directors were in an unusually difficult situation because so much power is concentrated in the hands of Lazaridis and Balsillie, who each own more than 5 percent of the company and share the roles of chief executive and chairman.

"It's not a Yahoo situation where an independent director can fire the CEO," Hodgson said. "All the independent directors would have to agree to a management change."

Balsillie gave up his role as chairman in 2007 and regulators later forced him off the board amid a scandal related to back-dated stock options. Balsillie returned to the board in 2010, and he and Lazaridis were appointed co-chairman later that year.

Calls for change are mounting in the wake of Thursday's earnings report, which was chock-full of bad news. RIM posted a sharp drop in quarterly profit, painted a dismal picture for the current quarter, and said it now expects to reach only the lower end of an already reduced full-year outlook.

Moreover, the report reinforced a growing sense that the company is in danger of falling too far behind Apple, with its iPhone and iPad, and a host of competitors making devices that run on Google Inc's Android software.

RIM's Nasdaq-listed shares were down 20 percent to $23.58 in afternoon trade on Friday, after touching a low of $22.52 earlier in the day.

That could make the company a more attractive acquisition target, sparking interest from private equity or companies who see a cheap but profitable target, analysts said.

That might sit well with investors. Just this month an activist investor said it was rallying other shareholders in a bid to empower the board to look at options including spinning off patents or selling the entire company.

Absent a sale, Lazaridis and Balsillie will likely come under pressure to find another kind of big, dramatic step to turn around RIM.

"A dividend needs to be started immediately, share buyback needs to be increased dramatically, management needs to make a change and either an acquisition ... (or) some kind of merger, being taken over," said Baskin Financial's Schwartz. "That will stop the bleeding."

(Reporting by Paul Thomasch in New York and Alastair Sharp in Toronto; additional reporting by Sinead Carew in New York; Editing by Steve Orlofsky and John Wallace)

Glencore boss Glasenberg buys shares, eyes more

Glencore boss Glasenberg buys shares, eyes more

Stock Market Predictions

LONDON (Global Markets) - Ivan Glasenberg, chief executive of commodity trader Glencore (GLEN.L), has bought 10 million pounds ($15.8 million) of shares in the group and said he would seek to buy more over coming days to add to his stake of almost 16 percent.

The company said Glasenberg, its largest single shareholder, would seek to continue buying shares up to and including September 21 and up to a total of $54 million, the value of dividends due at the end of the month in respect of his stake.

News of the purchase boosted Glencore's shares even as the broader sector pared earlier gains. At 1450 GMT on Friday, Glencore stock was trading at 449 pence, 15 percent below the offer price but up 2.7 percent on the day.

Shares in Glencore, the world's largest diversified commodities trader, have been "under water" -- below the offer price of 530 pence -- since its record market debut in May.

According to a regulatory filing, Glasenberg bought 2.25 million shares on Thursday at 435 pence each.

At current share prices, Glasenberg's shareholding in the group is worth around 4.9 billion pounds.

($1 = 0.633 British Pounds)

(Reporting by Clara Ferreira-Marques; Editing by David Hulmes)

Esprit shares tumble 20 percent after dismal earnings

Esprit shares tumble 20 percent after dismal earnings

Stock Market Predictions

HONG KONG (Global Markets) - Shares of Europe-focused fashion retailer Esprit Holdings Ltd (0330.HK) plunged for the second day in a row on Friday, falling more than 20 percent after the company reported a worse-than-expected fall in full-year profit.

A 98-percent decline in profit announced at midday on Thursday led to 17 percent decline then and to a spate of downgrades by securities houses.

Traders voiced concerns about the company's medium-term business outlook despite Esprit's plans to restructure its business and reinvigorate its brand, brokers said.

Shares of Esprit were trading at HK$12.02 on Friday morning, down more than 19 percent after sinking to HK$12, the lowest since October 2002. It was the worst performer on the benchmark Hang Seng Index .HSI on Friday, which was up more than 2 percent.

"There is definitely some liquidation of long positions, particularly from the major funds," said Jackson Wong, vice president for equity sales at Tanrich Securities. "This stock has been on a lot of people's sell list even before the results yesterday."

Esprit is also the biggest loser among Hang Seng Index components for the year, down nearly 70 percent. The losses on Thursday and Friday marked its worst two-day drop since October 1997.

CLSA said in a research note that it had cut its earning estimates for Esprit by 52-83 percent for the next two years and slashed its price target by 47 percent to HK$12.50 from HK$23.50. It downgraded the stock to sell from underperform.

TURNAROUND PLAN RISKY

Esprit on Thursday said it planned to sell its North American operations after reporting a massive slide its full-year profit.

Esprit, whose competitors include Swedish clothing retailer Hennes & Mauritz AB (HMb.ST), U.S. group GAP Inc (GPS.N) and Spain's Inditex (ITX.MC), said the business outlook for the next six months was challenging, citing weak consumer sentiment in Europe, which is embroiled in a worsening debt crisis.

Europe generated about HK$26.7 billion ($3.4 billion) in sales, or 79.1 percent of Esprit's total, for the year to June 2011, down from 83.1 percent a year ago.

"Since the restructuring and transformation needs three to four years to complete, there is still a long, tough way to go, a lot of uncertainty ahead," said UOB Kay Hian director Steven Leung, adding that the stock would come under more selling pressure.

Esprit, which also competes with Japan's Fast Retailing (9983.T) in Asia, said on Thursday it would invest more than HK$18 billion in the company until its year ending 2015.

Analysts said the plan was fraught with risks.

"Management announced a HK$18.5 billion investment plan for the next four fiscal years to rejuvenate the brand, which in our view is risky," Credit Suisse said in a research note.

"The additional operating cost will affect Esprit's near to medium-term profitability and the large investment will further burden Esprit's cash flow," it said.

Credit Suisse also downgraded Esprit to underperform from neutral and cut its share price target to HK$9.65 from HK$25.15.

Some analysts are more upbeat about the firm's future.

"We view Esprit's decision to invest in its brand as the right decision. The real question boils down to whether the brand is impaired to a level where it cannot be turned around," Gary Pinge, a Macquarie Equities Research analyst, said in a research note.

"We think that Esprit has a good brand which can be turned around," he said. He reiterated he had an outperform rating on the stock, but cut his target price by 42 percent to HK$19.50.

Esprit said on Thursday it is ramping up investment in its brand. It is investing an extra HK$1.7 billion a year over the next four years to promote its brand, with marketing spending expected to reach 6-8 percent of revenue in the new fiscal year. The ratio will drop to 4-5 percent from financial year 2014/15, it said.

($1=7.791 HK dollars)

(Additional reporting by Clement Tan; Editing by Charlie Zhu and Matt Driskill)

Trading loss latest headache for UBS brokers

Trading loss latest headache for UBS brokers

Stock Market Predictions

NEW YORK (Global Markets) - Just when advisers at UBS Wealth Management Americas thought their troubles were behind them, the Swiss bank on Thursday announced a loss that raised more questions about its ability to safeguard money.

The $2 billion loss stemming from a London trader's unauthorized dealing could wipe out the company's third quarter profits. It also undermines UBS' three-year effort to put losses from the financial crisis and a devastating U.S. tax-evasion scandal behind it.

The news also could undermine confidence in UBS and create more headaches for financial advisers who once again must defend their employer.

"They are reaching a point where they can't handle any more negative publicity," said Ron Edde, a recruiter for search firm Armstrong Financial Group in Carlsbad, California, who spoke with some UBS advisers after UBS announced the loss. "They are expressing grave concerns about how they will be perceived."

UBS (UBSN.VX) (UBS.N) said the trader was arrested in London Wednesday night on suspicion of fraud. Sources close to the situation identified the trader as Kweku Adoboli.

Officials at the bank told advisers that the loss would not harm the bank's health.

"I want to reassure all of you and your clients that UBS remains strong, stable and well-capitalized," UBS Wealth Management Americas CEO Robert McCann said in a memo to the bank's U.S. advisers Thursday. "No client positions were affected by these trades and we continue to have one of the highest Tier 1 capital ratios in the industry."

UBS was one of the first global banks slammed by the downturn in mortgage markets, and ultimately had tens of billions of dollars in credit losses. The bank needed a bailout from the Swiss government.

Just as the financial crisis faded, the U.S. government accused UBS of helping Americans hide assets overseas in order to evade taxes. The Swiss bank, forced to identify thousands of customers, quickly suffered an exodus of client assets.

UBS brokers were the largest sellers of auction rate securities that became impossible to sell when credit markets seized up in 2008. The firm also sold so-called structured notes backed by Lehman Brothers debt throughout 2008, just months before the U.S. investment bank collapsed.

In each case, events outside the brokerage unit put U.S. financial advisers on the defensive with clients.

"They cannot seem to get out of their own way. Just when you think a crisis is over, some new problem always seems to pop up," said Andy Bodner, a former UBS broker who in January 2010 formed Double Digit Investment Group, an independent investment adviser in Parsippany, New Jersey.

Bodner said every new piece of bad news forces advisers to defend or explain the actions of their employers to anxious customers. "It's not the sort of thing you want to talk about, to have to call your clients and say 'Your money is still safe'."

UBS Chief Executive Oswald Gruebel, hired in 2009 to turn UBS around, recruited former Merrill Lynch executive McCann to revive the U.S. brokerage. Since then UBS has slowed and then reversed the defection of clients and financial advisers.

"We understand that you have already had to contend with unfavorable, volatile markets for some time now," Gruebel told employees in an internal memo. "While the news is distressing, it will not change the fundamental strength of our firm."

Still, The $2 billion trading loss mars what has been a year of regrowth, advisers and recruiters said. Some advisers, particularly those already on the fence, are more likely to explore making a move.

"There's no positive way to spin this: it's either fraud or incompetence. Clients will demand answers," Edde said. A UBS spokeswoman declined to comment in response.

One UBS adviser, who is not authorized to speak publicly, played down the news and said he had not received client calls. In these cases, he said, he reminds investors that their stocks and bonds are safe regardless of what happens to UBS, the bank.

Charles Huebner, a former UBS senior vice president who left the firm in 2010 after 20 years, said crises at the global bank didn't impact client relationships.

"You had these overarching things come out of the blue, but I didn't see any movement at all where people said 'I don't want to deal with this firm anymore," said Huebner, who now runs Pointe Capital Management LLC, an independent investment adviser in Gross Pointe, Michigan.

Still, some advisers and recruiters said the latest news, piled up on top of all the other missteps, will not help UBS restore its reputation as a safe harbor for the world's rich.

"We know they have new management trying to turn things around, but this reinforces the perception that UBS has a lot more challenges ahead of them," said Darin Manis, chief executive of Colorado Springs recruiting firm RJ & McKay.

(Reporting by Joe Giannone; Additional reporting by Suzanne Barlyn; Editing by Jennifer Merritt and Walden Siew)

Carlyle investors should prepare for rocky ride

Carlyle investors should prepare for rocky ride

Stock Market Predictions

NEW YORK (Global Markets) - Carlyle is facing a tough market and if recent history is any guide, once it goes public, its shares will be volatile.

Investors have been shattered by recent economic turmoil, and that fate has been amplified in the share prices of publicly traded private equity firms. Shares of Blackstone Group (BX.N) have lost more than half of their value since their June 2007 IPO. Apollo Global Management (APO.N) is down about 37 percent since its March IPO.

Meanwhile, KKR (KKR.N), which transferred its listing to New York from Amsterdam in July 2010, is up by 15.5 percent. Charts of all three stocks show dramatic swings in share price.

There is no reason for Carlyle to be any different. Private equity returns are notoriously volatile and Carlyle is heavily exposed: 36 percent of its revenue comes directly from its corporate private equity business.

"Private equity companies are unique in that you either believe in the senior professionals and are along for the ride or you don't invest," said Richard Truesdell, a New York-based capital markets partner at law firm Davis Polk.

Northwestern University finance professor Yael Hochberg agreed: "This should eventually pay off, but not in the short term," she said.

Carlyle last week filed paperwork for an initial public offering of up to $100 million. It is expected to come to market in the first half of 2012 as an offering of roughly $1 billion.

TOUGH MARKET

Private equity firms' ability to realize gains is tied to the economy because economic conditions determine a firm's ability to do new deals and to exit old ones, said Steven Kaplan, a University of Chicago professor who specializes in private equity. "A KKR, a Blackstone, a Carlyle -- their stocks will be tied to the economy," he said.

Fears about Europe's sovereign debt crisis are easing but U.S. economic recovery remains disappointing. The Federal Reserve last month said it would keep interest rates ultra-low until at least the middle of 2013.

The VIX, which measures market volatility and is often used as a proxy for investors' level of worry, is over 30. Some bankers say that when the VIX climbs over 25 it can be hard to do IPOs, which is one of the major ways that firms exit their investments.

The IPO market shut down at the end of July and has yet to reopen. The spreads on leveraged loans have widened.

Carlyle declined to comment.

(Reporting by Clare Baldwin in New York, editing by Matthew Lewis)

Analysis: Biogen investors place bets ahead of MS drug trial

Analysis: Biogen investors place bets ahead of MS drug trial

Stock Market Predictions

BOSTON (Global Markets) - Over the past year, Biogen Idec Inc has given investors little to complain about. The biotechnology company, operating under new management, has restructured its operations, reported promising clinical trial data and seen its shares rise 72 percent.

The question is: can it hang onto its gains?

Much depends on the results, to be released within weeks, of a second, late-stage clinical trial of its experimental multiple sclerosis drug, BG-12.

Results from the first trial, known as DEFINE, were unexpectedly strong. If data from the second trial, known as CONFIRM, are similarly positive, Biogen's shares could rise as much as 10 percent, analysts say. If it falls short of expectations, they could fall as much as 20 percent, according to some estimates.

Multiple sclerosis is a chronic, often disabling disease that attacks the central nervous system and can lead to numbness, loss of vision and paralysis. BG-12 is designed to treat relapsing-remitting MS, in which flare-ups are followed by periods of remission. About 85 percent of people with MS are initially diagnosed with this form of the disease.

Results of the DEFINE trial showed BG-12 cut the annualized relapse rate by 53 percent at two years versus those treated with a placebo. That compares favorably with the efficacy of a drug made by Novartis AG, Gilenya, that has shown a reduction in annualized relapse rates of about 54 percent.

Unlike most MS drugs, which are given by injection or infusion. Gilenya and BG-12 are both taken orally. Gilenya, given once a day, was approved in 2010. BG-12 will probably be given twice a day, but may have a more benign safety profile. That could help it gain an edge in the market if approved.

"Gilenya has the advantage of first-arrival and once-daily administration, but there is still some anxiety about the possibility of safety issues yet to emerge," said Harry Tracy, a pharmaceutical industry consultant and publisher of NeuroPerspective, a monthly publication focusing on central nervous system disorders.

"Neurologists are going to be reluctant to switch people off injectables, but over the next few years, I expect Gilenya and BG-12 to become the preferred first drug options to be tried with newly diagnosed patients," he said.

Some analysts expect BG-12 to generate more than $1 billion in annual sales.

"In our view, the biggest threat to BG-12 becoming a blockbuster is an unforeseen safety issue," said Eric Schmidt, an analyst at Cowen and Company in a recent research note. He expects, however, that the CONFIRM safety profile will "remain essentially clean."

TRIAL DESIGN

The design of the CONFIRM trial is similar to that of DEFINE. DEFINE had 1,200 patients while CONFIRM has 1,400. The studies were run more or less contemporaneously and were conducted in similar geographies with the same entry criteria.

The main difference is that CONFIRM has a third arm -- a group of patients taking Copaxone, a drug made by Teva Pharmaceutical Industries. In a pivotal trial, Copaxone, which was approved in the United States 15 ago, was shown to reduce the annualized relapse rate by 29 percent. Analysts expect that rate to have improved over the years, potentially confounding results from CONFIRM.

"We expect comparator Copaxone to perform better than expected," said Jim Birchenough, an analyst at BMO Capital Markets, who advised clients in a recent research note to sell Biogen shares in advance of the results.

"We believe commercial expectations for Biogen Idec's multiple sclerosis franchise, in particular for BG-12, have been overestimated and that risk to upcoming CONFIRM data has been underestimated."

Weston, Massachusetts-based Biogen also makes the multiple sclerosis drugs Avonex and Tysabri.

Biogen's shares have risen 72 percent over the past 12 months and have roughly doubled since George Scangos took over as chief executive in July last year. By April this year, shortly before news emerged that results of the BG-12 trial were positive, they had risen to about $73, helped in part by a restructuring program. By the end of June they touched$109.52.

The stock has fallen back since then and was trading at about $99.40 on Thursday. The decline partly reflects concerns among some investors that CONFIRM may not live up to the promise of DEFINE.

Michael Yee, an analyst at RBC Capital Markets, said most analysts are expecting "generally good data" from CONFIRM though perhaps not as strong the 53 percent relapse rate reduction reported in DEFINE."

"People expect a mid-40s percent reduction in annualized relapse rate," he said. "If the number comes in above that consensus, the stock could go $10 higher."

The best case scenario, to which he assigns a 20 percent probability, would be for the drug to show a relapse rate of 50 percent or higher versus placebo, and for Copaxone to show a relapse rate of 30 to 35 percent.

The most likely scenario, he says, and one to which he ascribes a 60-70 percent probability, is for BG-12 to show a relapse rate of between 40 and 49 percent versus placebo and for Copaxone to show a relapse reduction of 35 to 40 percent.

Yee assigns a 10 percent probability of BG-12 showing surprisingly negative data, but if it did, the stock could drop to below BG-12 levels, he said.

Douglas Williams, Biogen's head of research and development, feels "confident going into the study, or as confident as you can feel without the data in your back pocket."

Options traders are sounding an optimistic note too.

Traders have been purchasing Biogen calls -- which give investors the right to buy stock at a fixed price up to a certain date -- at a greater pace than puts, which give investors the right to sell at a preset price.

"This suggests there are some bullish bets coming in on Biogen ahead of the event," said Ryan Detrick, senior technical analyst at Schaeffer's Investment Research.

Over the past 10 trading days, investors have bought 1.94 calls for every put as a new position on three U.S. options exchanges, according to Schaeffer's. That ratio is greater than 72 percent of the readings over the past year. (For a related graphic click on r.reuters.com/pus73s)

Biogen hopes to file for approval of BG-12 early next year.

(Additional reporting by Doris Frankel in Chicago, editing by Dave Zimmerman)

Trucker YRC shares plummet as company restructures

Trucker YRC shares plummet as company restructures

Stock Market Predictions

OVERLAND PARK, Kansas (Global Markets) - Shares of long-troubled U.S. trucker YRC Worldwide (YRCW.O) plunged more than 65 percent on Friday as the company completed a financial restructuring that essentially wiped out shareholder equity.

At a meeting Friday morning, a group of lenders, bondholders and labor union members took control of Overland Park, Kansas-based YRC, merging it into a new formed subsidiary as part of a sweeping financial restructuring that gives YRC about $100 million in new capital.

"When you consider that as part of the merger they are issuing ... about 4 billion in incremental shares... there really is no equity value in the company," said Morgan Keegan & Co analyst Arthur Hatfield.

"We were unsure of the timing of when the market would recognize this. But this is the final stages of the restructuring," Hatfield said.

YRC has been struggling to stay afloat for the last few years after acquisitions loaded the company down with debt, and the recession ate into revenues.

As part of its restructuring, YRC has appointed new management and is working to reclaim market share lost to rivals.

YRC shares fell as low as 7 cents on Friday, down from a Thursday close at 30.7 cents. Trading volume exceeded 100 million shares at midday.

(Reporting by Carey Gillam; editing by John Wallace)

Shares of video game companies swing on reviews

Shares of video game companies swing on reviews

Stock Market Predictions

NEW YORK (Global Markets) - Want to know why video game stocks pop or drop? Check the reviews.

For years, investors have turned to video game reviews to help make buy or sell decisions, moving the share prices of some video game companies higher or lower.

They consult the website Metacritic, which tracks a large amount of reviews and comes up with an average score, as well as reviews from top video game outlets such as News Corp's IGN.com and GameStop Corp's Game Informer.

And with the holiday shopping season approaching, when companies in the $64 billion video game industry generate the bulk of their sales and earnings, investors will be scouring reviews more closely than usual.

"The review scores are a first indicator of how a game will perform commercially," said Jesse Divnich, a consultant and analyst for EEDAR, a research firm focused on the video game industry. "Investors will keep a close eye on them to measure potential success of a game."

Shares of Electronic Arts fell 6 percent last October after review scores for "Medal of Honor," a military game in which EA had invested millions of dollars, came in below rival shooter games such as Microsoft's "Halo" and Activision Blizzard's, "Call of Duty."

In March, "Homefront," a first-person shooter game from THQ Inc received weaker-than-expected reviews and scored 75 out of a possible 100 on the website Metacritic. Analysts called the scores disastrous, sending THQ shares down 20 percent that day.

Just as negative reviews can harm video game stocks, positive reviews can boost them. Shares of Take-Two Interactive surged 10 percent over three sessions and reached a 52-week high in May after its crime solving game, "L.A. Noire," received glowing reviews and achieved a high score on Metacritic.

One of the reasons why video game reviews carry so much weight with investors is because avid gamers tend to rely on them to help make purchasing decisions.

Case in point: Eric Choi, a 23-year-old Chicago resident who buys between 10 and 15 games a year. After having fond memories of playing the action shooter title "Duke Nukem" growing up, he was happy to spend $60 on the latest edition of the game, which Take-Two released in June. That was until the reviews changed his mind.

"When the reviews came in about how it was apparently a terrible game, it influenced my opinion and my decision not to buy," Choi said.

Investors also took note. Take-Two shares fell as much as 5 percent on June 14 after the game scored in the low 50s out of 100 on Metacritic.

Reviews have become so influential on sales, Divnich said, that his firm has been hired by major video game companies to write mock ones so that they can anticipate what real reviews might say.

Divnich, who said he consults for about 90 percent of video game companies, brought in a former video game critic from a top website to both play the game and write the review, which is designed to look like a review coming from a large video game publication. The reviews are then sent to video game makers and never appear in print.

"We'll type up a review as if it would be in a magazine," he said. "It's critical for them to know how well their game is going to be received before they launch a title."

While Frank Gibeau, president of EA Labels, agrees that game critics and reviews play an important role in consumers' buying decisions, he also said that they are not always indicative of a game's success.

"There is a correlation between the critical index and sales of any given game, but there are exceptions to the rule - games that don't score high marks in reviews but sell well and others that critics love but gamers ignore," Gibeau said.

For example, THQ has said "Homefront," which received poor reviews, may end up selling 3 million copies, which would make it a commercial success.

THQ and Take-Two declined to comment on this story.

A poor review of a highly anticipated game may not be enough to convince an investor to sell off shares of a company entirely either, said Ted Pollak, portfolio manager of the San Francisco-based Electronic Entertainment Fund, which focuses on video game investments.

Besides reviews, Pollak does other research to figure out if a game might sell well, including beta testing or monitoring early versions of games. He also considers the development teams behind the game and even looks at what type of technology was used in its creation.

"If I was in a situation where I needed to trim a position, reviews could have an influence. But I wouldn't completely dump a company because one game didn't score well," he said.

HOLIDAY SPOTLIGHT ON REVIEWS

When publishers release their biggest games of the year -- the games that are expected to have a major impact on a company's bottom line -- the importance of reviews is heightened.

"If 'Call of Duty,' which is half of Activision's earnings, gets a poor review this year, it will be bad," said Wedbush Securities analyst Michael Pachter, referring to the possible impact on Activision's stock.

Activision will release the latest version of the game, its biggest video game franchise on consoles, in November. Last year, the game set a new record by selling 5.6 million copies, or $360 million worth, on its first day.

Pachter says he considers review scores on websites Metacritic and Gamerankings.com, which are both owned by CBS Corp, for his investment recommendations.

EA is mounting a challenge to Activision with its own first-person shooter game, "Battlefield 3," which comes out in October.

Divnich, from EEDAR, expects Activision's game to sell twice as many copies as EA's game. But, he added, "if EA can gain higher review scores, it shifts the momentum in EA's favor."

(Reporting by Liana B. Baker; Editing by Peter Lauria, Dave Zimmerman)