Stock Market Predictions

Dillard's margins fall short, shares slump

Stock Market Predictions

Key Points

- Sales at stores open at least a year, or same-store sales, rose 5 percent, besting larger rivals Macy's Inc (M.N), J.C. Penney Co Inc (JCP.N) and Kohl's Corp (KSS.N).

- Dillard's, based in Little Rock, Arkansas, had 288 stores as of October 29, down from 296 a year earlier.

MARKET REACTION

JPMorgan analyst Matthew Boss said in a note that concerns about gross margin would be a "primary" cause of investor pushback.

Dillard's shares were down 11.3 percent to $48.94 in afternoon trading.

LINKS

- Kohl's on Thursday reported higher gross margins for the quarter.

- Last week, Dillard's reported an 8 percent rise in October same-store sales.

NOTES

* Estimate based on two brokerage forecasts.

(Reporting by Phil Wahba in New York; editing by John Wallace)

FDA rejects Alimera eye drug again, seeks more trials

Stock Market Predictions

The regulatory decision signaled a setback for the cash-strapped company and wiped out about three-fourths of the company's market value.

"We view this as the worst-case scenario for Alimera, since this news translates into a multi-year delay, and a very significant investment of capital that the company does not currently have at hand," Cowen & Co analyst Simos Simeonidis said.

Alimera, which focuses on diseases affecting the back of the eye, or retina, had about $38.6 million in cash as of September 30.

The company was relying on the drug Iluvien to start bringing in revenue from early 2012.

Alimera, which is pursuing approval for the drug in Europe, said it had necessary funds.

In a complete response letter to the company, the U.S. Food and Drug Administration said Iluvien's benefits did not offset the risks of adverse reactions.

Iluvien, which Alimera is co-developing with pSivida Corp (PSDV.O), is an intravitreal insert designed to provide a therapeutic effect of up to 36 months by delivering sustained release of a drug.

Shares of pSivida lost over half of their value, and fell as much as 65 percent to $1.40 -- their lowest in more than two years.

In the event of Iluvien's commercialization, pSivida gets 20 percent of net profits from the product's sales.

Alimera said it would request a meeting with the FDA to clarify the next steps.

The drug aims to treat diabetic macular edema -- the most prevalent cause of moderate vision loss in patients with diabetes.

In December, the health regulator had rejected Iluvien, citing deficiencies in current good manufacturing practices (cGMP) during facility inspections of two of Alimera's third-party manufacturers.

Shares of the Alpharetta, Georgia-based company were down 73 percent at $1.99 in afternoon trading. They touched a lifetime low of $1.71 earlier in the session.

(Reporting by Esha Dey and Shailesh Kuber in Bangalore; Editing by Maju Samuel and Sriraj Kalluvila)

Gulf airline expansion to roll on despite European turbulence

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Emirates is in talks for a hefty order of at least 30 and possibly as many as 50 Boeing 777 long-range aircraft worth $8.5 billion to $14.5 billion and Qatar Airways is expected to place a $6.5-billion order for 50 fuel-saving A320neo jets and five A380s from Airbus, industry sources said.

Heightened worry about Iran's nuclear intent after a U.N. agency said it had worked to design nuclear bombs could spur defense orders at the show. Arms makers from the United States, Europe and Russia will be displaying their latest weapons.

The last air show two years ago was muted by Dubai's own crisis, but the city state is recovering after a bailout from neighboring Abu Dhabi. Burned by its reliance on property and the financial sector, Dubai is now focusing on becoming a transport and logistics hub.

"We absolutely expect the Gulf airlines to continue on the expansion trail -- they are very into having a young fleet and are determined to be superconnectors who try and hoover up traffic flows on a global basis," said Stephen Furlong, transport analyst at Davy Research in Dublin.

"While in other parts of the world you have things like the EU emission scheme and night-time flying bans, in the Gulf, the governments and the airlines are joined at the hip -- the governments are totally in line with the growth plans."

Orders are likely to include dozens of new sales for Airbus's revamped A320neo short-haul jet, which has enabled the European planemaker to pass Boeing in the order race this year.

But the EADS subsidiary will also be under pressure to explain delays in the A350 passenger jet directly to Gulf customers whose support is crucial for Europe's answer to Boeing's carbon-composite 787 Dreamliner to succeed.

Chief among those is Qatar Airways Chief Executive Akbar Al Baker who regularly blasts Airbus and Boeing over design decisions and delays and has abruptly canceled air show deals.

EURO ZONE THREAT?

Emirates and Qatar Airways have some 370 planes on order to be delivered over the next few years but the euro zone debt crisis could mean some orders being canceled or put on hold.

Financing is increasingly an issue as the industry's traditional backers -- European lenders and particularly French banks -- have become more risk averse and are shying away from new deals. Emirates CEO Tim Clark told Global Markets recently the airline was looking at the Islamic finance market to fund aircraft deliveries.

That said, the shake-out in Europe may bring advantages of cost for Gulf carriers.

Daniel Broby, chief investment officer at Silk Invest, said Gulf airlines could snap up bargain deals as the world waits for Europe to resolve its debt crisis and ease doubts over growth.

"The advantage of buying at the air show at this stage in the cycle is that they are bound to secure good prices, because there will be little demand from Europe or the United States."

Airlines placed around $14 billion in orders at the last biennial show in 2009, sharply down from $155 billion in 2007.

IRAN TENSIONS

The show, its tarmac bristling with the latest warplanes, missiles and defences, will also serve as a pressure gauge for regional tensions as the European Union considers new sanctions against Iran following an IAEA report which suggested Iran is seeking nuclear weapons.

The United States and Israel have refused to rule out any option to prevent Iran from acquiring a nuclear arsenal.

Iran denies trying to build atom bombs and its Supreme Leader Ayatollah Ali Khamenei said any U.S. or Israeli attack on its sites would be met with "iron fists.

"The fear of Iran is the main driver of armament in the region," said Riad Kahwaji, analyst at Institute for Near East and Gulf Military Analysis.

Although U.S. fighter jets are traditionally an important part of the show and its aerial displays, the business end of the show is likely to feature a publicity battle between the Eurofighter Typhoon (EAD.PA) and the Rafale (AVMD.PA) as they face off in a $11 billion contest for 127 aircraft in India.

The show is the first industry gathering since the Libyan conflict ended and both manufacturers will be keen to play up the performance of their combat jets in the NATO operation.

Analysts will be also be listening for any news about talks between the UAE and France over the purchase of 60 Rafale jets, estimated at $10 billion.

Others to watch are UAE early warning system orders -- with Boeing, Northrop Grumman (NOC.N) and Swedish aerospace group Saab (SAABb.ST) likely to be in competition -- and purchases by Qatar, which is modernizing its air force.

(Additional reporting by Tim Hepher in Paris, Mahmoud Habboush in Dubai and Kyle Peterson; Editing by Sophie Walker)

India's Kingfisher shares at life low, cancellations continue

Stock Market Predictions

The airline's chief executive officer Sanjay Aggarwal told television channel NDTV Profit 100 pilots had quit over the past months, but said it was part of natural attrition and the current cancellations were not on account of staff shortages.

Kingfisher, India's second-largest private airline, run by liquor baron Vijay Mallya, has struggled to raise cash to operate its cost-intensive business in a highly competitive market place.

It had canceled scores of flights daily since Sunday in an effort to cut capacity and minimize costs, leaving passengers stranded as the Indian travel season enters the peak period.

"There is no doubt in our mind as a management team or Dr Mallya as a promoter of the airline, or the UB Group, about the credibility or the future of the airline," Aggarwal said.

The Economic Times newspaper reported on Friday that some companies who have lent aircraft to the loss-making airline planned to take them back. It also said the Director General of Civil Aviation had sought an explanation from the airline for the mass cancellation.

A Kingfisher spokesman declined to provide immediate comment to Global Markets.

Six weeks ago Kingfisher had announced intentions to recast its business model by doing away with its low-cost service Kingfisher Red.

It said on Tuesday it has started reorganizing its aircraft in an effort to focus on the full-service market and that required some of its flights to be out of service for the next few weeks. Once the reconfiguration is complete the aircraft will be pressed back in service it said.

"No shutdown, only ensuring loss minimization by a flight rationalization and enhanced revenue through reconfiguration of aircraft," Chairman Vijay Mallya was quoted by Economic Times as saying on Friday.

At 1:13 p.m., Kingfisher shares were down 12.2 percent at 19.05 rupees, off a low of 17.7 rupees, while the BSE index .BSESN was down 1.28 percent. Shares of UB Holdings (UBHL.NS) were down 11.75 percent.

STRUGGLING TO SURVIVE

Kingfisher shares have lost more than 67 percent of value so far this year. The airline, which started business as a full service carrier in 2005 and listed when it bought out budget airline, Air Deccan in 2008, has never made a profit.

Its auditors noted in the annual report this year that the firm needs extra cash to survive in a challenging market.

Kingfisher had aimed to raise $250-$350 million through an issue of global depositary receipts in January but did not follow through on the plan. It also tried to attract private equity investment in 2008 and 2009 but no deal was forthcoming.

Earlier this year, Kingfisher cut its debt through a restructuring by issuing shares to 14 banks, including State Bank of India (SBI.NS) and ICICI Bank (ICBK.NS). But its problems continue.

Just last week it said it had written to banks for further help by substituting high-cost rupee borrowings with lower cost foreign currency debt and asked them to consider the weakening rupee and high international fuel prices when appraising its working capital requirements.

"The only way out is they sell a stake to a foreign airline company if the government passes the rule anytime soon, which I think they can, given the circumstances of the whole industry," said Sharan Lillaney, analyst at Angel Broking.

India currently allows foreign investment of up to 49 percent in Indian carriers, but foreign airlines are not allowed to invest directly or indirectly in domestic carriers.

But India's industry secretary said last month that the government was likely to approve a plan to allow foreign airlines to buy stakes in Indian carriers.

(Reporting by Aniruddha Basu and Sanjeev Choudhary; Editing by Rosemary Arackaparambil)

Olympus shares untraded at open, overwhelmed by sell orders

Stock Market Predictions

Its shares were notionally quoted at 468 yen, down 3.3 percent from its Thursday close of 484 yen.

On Thursday, its shares were overwhelmed by sell orders and remained untraded, ending down 17 percent by their daily trading limit.

Olympus will remain a component of the Nikkei average .N225 for the time being, the Nikkei publisher said on Thursday.

(Reporting by Lisa Twaronite; Editing by Edmund Klamann)

Falcon's UAE AUM hits $1 billion as investors bring cash home

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"People in this region don't go by default to Switzerland anymore," Eduardo Leeman, said, speaking on the sidelines of the Abu Dhabi Formula One Grand Prix.

"People want to diversify geographically their assets so the default is now Singapore and Dubai."

Leeman told Global Markets in April that it aimed to achieve $1 billion AUM in the United Arab Emirates by the end of the year, a target which the bank would meet "after the race," he added.

However, the bank was still waiting to receive an investment advisory license from the UAE Central Bank, Leeman said.

The Zurich-based bank is not one of the four banks under investigation by the Swiss financial regulator FINMA regarding their conduct in relation to the assets of dictators, Leeman added.

"We are not part of the four. Everyone has their suspicions but I know it's not me, that's for sure," he said.

Falcon was the private banking unit of American International Group (AIG) before Aabar bought it in April 2009.

(Reporting by David French; Editing by Jason Benham)

SBI, ICICI shares drop on worries over Kingfisher troubles

Stock Market Predictions

Kingfisher, India's second-largest private airline, has canceled a large number of flights since Sunday in a bid to cut capacity and minimize costs, and media reports said leasing companies were planning to take planes back and pilots were leaving.

ICICI Bank shares fell as much as 5.3 percent on Wednesday to the day's low of 816.7 rupees -- its biggest fall in single day in more than a month -- while SBI fell as much as 4.3 percent.

Investors were concerned that the provisioning requirement for banks will increase, hitting profitability, if loans to Kingfisher turned bad, traders said.

A senior executive at SBI said Kingfisher was still a "standard asset," which meant there has not been any defaults yet. She declined to comment further. Other executives at the bank were not immediately available for a comment.

A source familiar with loans to Kingfisher at ICICI Bank, which has lent 4.3 billion rupees to the carrier, also said there has not been any payment default yet.

India's civil aviation minister Vayalar Ravi on Friday said he would talk to Finance Minister Pranab Mukherjee to get banks' assistance for Kingfisher.

The source at ICICI Bank said there was no proposal to provide any financial assistance to the carrier.

Kingfisher has already restructured part of its debt to forego about a quarter of its equity to a consortium of 13 banks led by SBI.

State-run IDBI Bank (IDBI.NS) holds 3.5 percent stake in Kingfisher, while Bank of India (BOI.NS), UCO Bank (UCBK.NS) and Punjab National Bank (PNBK.NS) hold more than 1 percent each, according to data on the Bombay Stock Exchange website.

Earlier this month Kingfisher said it had sought further cushion from banks to ease its debt burden but denied it was seeking another debt restructuring.

State Bank of India's shares took a beating when it announced quarterly earnings on Wednesday despite better-than-expected profits, because of its worsening asset quality.

India's dominant lenders, along with over 20 more banks, are also in talks with ailing state run carrier Air India AIN.UL to restructure $4 billion of working capital debt.

(Reporting by Swati Pandey and Abhishek Vishnoi; Editing by Rosemary Arackaparambil)

Mizuho Financial to cut 3000 jobs: report

Stock Market Predictions

The merger will help cut the combined bank's annual expenses, which currently stands at about 800 billion yen ($10.38 billion), by about 40 billion yen ($519 million) by fiscal 2015, the business daily said.

The financial group's board is set to approve the merger on Monday, where Mizuho Corporate Bank will absorb its retail counterpart and the combined entity will be known as Mizuho Bank, the Nikkei said.

($1 = 77.070 Japanese Yen)

(Reporting by Sunayan Bhattacharjee in Bangalore; Editing by Supriya Kurane)

Olympus dumped by major shareholder as Japan steps up probe

Stock Market Predictions

Japanese authorities are investigating Olympus after the company admitted this week that it hid investment losses for decades using funds from M&A payments. Media reports on Saturday said police and regulators were joining forces in a rare collaborative effort to examine the cover-up.

GIC GIC.UL, which is the acronym for Government of Singapore Investment Corp, was the 10th biggest shareholder in Olympus, with 2.17 percent as of the end of March, according to the latest Olympus annual report.

"GIC disposed of almost all of its investments on first suspicion of possible wrongdoing in Olympus," the Singapore fund said in a statement.

GIC added it had only an insignificant holding under a portfolio managed by an external fund manager. It said the majority of its investment was made in the midst of the global financial crisis.

The Tokyo District Public Prosecutors Office's special investigations unit, the Tokyo Metropolitan Police Department and the Securities and Exchange Surveillance Commission (SESC) will team up to investigate the Olympus cover-up of investment losses, Japanese media reported on Saturday.

Nikkei has said the concealment could have exceeded 130 billion yen ($1.68 billion) at its peak, and said the company's creditors were likely to press for a change in lending terms.

Lenders will confront Olympus next week to demand an explanation on its accounting, a banking source said on Friday, though he denied reports they would seek more security over their loans.

Tokyo's stock exchange has told Olympus it will be delisted if it fails to report earnings by December 14, which could effectively leave the 92-year-old company cut off from equity capital markets at a time when its shares have already lost more than three-quarters of their market value since the scandal erupted on October 14.

Olympus plans to correct 20 years of its financial statements and submit them to financial authorities, the Mainichi newspaper reported on Saturday.

Delisting would take effect on January 15 in principle if Olympus does not meet the reporting deadline. Even if Olympus meets the deadline, the bourse could still decide to delist the company, depending on the scale of its past misreporting.

The bourse placed Olympus on its supervisory list on Thursday, which means short-selling of its shares is restricted. But such trading had already been suspended by Japan Securities Finance, the processor of margin transactions.

"LOSING MONEY"

Sixteen investment trusts managed by Nomura Holdings Inc. (8604.T) group member Nomura Asset Management Co. have recently held Olympus in their portfolios, Nikkei also reported.

Eleven stock-index-linked mutual funds held a total of roughly 1.9 billion yen in Olympus shares as of Wednesday, and five more "fund of funds" owned shares as of September 30. The asset manager disclosed the information because of the possibility that Olympus will be delisted, Nikkei said.

Nomura Holdings, Japan's largest investment bank, said Olympus was its client but that it wasn't involved in any of the transactions at the center of the scandal.

Nikkei reported separately, quoting sources, that a majority of the 100-plus businesses acquired during former Olympus President Tsuyoshi Kikukawa's tenure are losing money. Kikukawa stepped down on October 26.

Most of the acquired firms, in areas such as pet care services, DVD production and others with little apparent connection to core Olympus operations, were unlisted and therefore not required to make their financial details public, Nikkei said.

Olympus President Shuichi Takayama on Tuesday blamed Kikukawa, Vice-President Hisashi Mori and internal auditor Hideo Yamada for the cover-up, and said he would consider criminal complaints against them. Mori was dismissed on Tuesday, and Hamada offered to resign.

The SESC, Japan's securities regulator, plans to take voluntary testimony from Kikukawa and two other current and former officials said to be involved in the investment cover-up, Nikkei said.

The report said the regulator also plans to hear as early as next week from former Olympus head Michael Woodford, who was ousted on October 14 - six months after being made president and just two weeks after becoming CEO - due to what the company said were management issues. Woodford subsequently made public some of the contentious M&A deals.

A third-party panel is now examining those acquisitions, and accounting experts have said the investigation could lead to asset writedowns of more than 70 billion yen, though Olympus' big and profitable medical business is likely to emerge unharmed.

The independent panel's head, retired Supreme Court justice Tatsuo Kainaka, told Global Markets his team may recommend criminal charges in its report, to be completed early next month.

(Editing by Robert Birsel)

Disney results shine, defends sports TV deals

Stock Market Predictions

The operator of networks ESPN and ABC, a movie studio and theme parks reported a better-than-expected 7 percent gain in fiscal fourth-quarter revenue and a 30 percent jump in net income, spurring a 2.5 percent gain in its shares.

The results reassured investors, some of whom had been nervous about the toll that economic uncertainty would have on consumer spending, and then on the world's largest entertainment, leisure and consumer conglomerate.

Disney has produced steady gains quarter after quarter under Chief Executive Bob Iger, who announced last month he will step down as CEO after March 2015. But it reported a rare revenue miss in its May results, and spooked investors again last quarter with warnings about higher costs at ESPN and other issues.

Going forward, Disney said it plans to replace NBA games with college basketball and other live sports programing as an NBA labor dispute drags on. Any decrease in ad dollars should be more than offset by savings from not having to pay rights fees for NBA games, Chief Financial Officer Jay Rasulo said.

"I do not believe it will affect us to the negative financially if the season in fact does not end up happening," Rasulo told analysts on a conference call.

Iger, meanwhile, defended a recent deal with the National Football League to keep "Monday Night Football" on ESPN through 2021 at a cost of about $1.9 billion a year.

"There's no question it was an expensive deal," Iger said. But he added the agreement provided long-term certainty of quality content to viewers and advertisers, plus expanded digital rights. The NFL "creates value for ESPN" and "grows customer engagement," Iger said.

He also said terms for soccer's World Cup and the Olympics "didn't meet our standards" and the company "couldn't justify the costs others paid for it."

DON'T COUNT ME OUT

Calling his remaining tenure "not as brief as people suggest," Iger said a main goal was to take advantage of new technology to showcase the company's programing. "It's a huge strategic priority for us," he said.

Qaurterly results were generally solid across the company, showing strength at the media and theme park units that are sensitive to swings in the economy, analysts said.

"They were solidly in line on balance," said Janney Montgomery Scott analyst Tony Wible, adding the parks unit appeared "relatively healthy" despite concerns about consumer sentiment amid high unemployment and weak economic growth.

The parks and resorts group reported an 11 percent revenue gain to $3.1 billion.

Disney had been expected to show stronger results after rivals including Comcast Corp (CMCSA.O), Time Warner Inc (TWX.N) and News Corp (NWSA.O) reported gains propelled by a healthy advertising market.

The media networks unit, the company's largest which incorporates sports channel ESPN and the ABC broadcast network, posted a 9 percent gain in revenue to $4.8 billion.

The studio and entertainment division was the laggard among Disney's main business arms for the quarter, with revenue sliding 8 percent to just under $1.46 billion in the quarter. "The Lion King 3D" and "The Help" were hits but faced tough comparisons with last year's "Toy Story 3."

Revenue jumped 7 percent to $10.43 billion, exceeding estimates for $10.36 billion.

Net income for the quarter rose 30 percent to $1.1 billion. Earnings per share came in at 58 cents, ahead of analyst expectations of 54 cents, according to Thomson Global Markets I/B/E/S.

Disney shares rose 2.5 percent to $35.50 after hours on Thursday, up from an earlier close of $34.64 on the New York Stock Exchange.

(Reporting by Lisa Richwine, editing by Bernard Orr)