Stock Market Predictions

LinkedIn jumps on surge in paying users

Stock Market Predictions

The company's shares, which have gained about 35 percent in value since hitting a year-low of $56.51 in November, rose to $89.69 in midday trade on the New York Stock Exchange.

They were, however, far below the $121.97 touched during their debut last May.

On Thursday, the company, which makes money by selling paid subscriptions to its members and by helping companies with hiring and marketing, said revenue from premium subscriptions surged 87 percent during the fourth quarter.

LinkedIn's performance and outlook is keenly watched by investors as an indication of whether the business model of Internet companies is solid -- especially in light of the upcoming Facebook IPO.

"We view LNKD as arguably one of the strongest assets arising out of the 2011-2012 Internet IPO cycle," Citigroup said in a research note to clients on Thursday.

The brokerage raised its price target on the stock to $90 from $83.15, but maintained its "neutral" rating saying it did not find the company's current valuation compelling.

LinkedIn -- started in the living room of ex-PayPal executive Reid Hoffman in 2002 and officially launched in May 2003 -- is similar to Facebook in trying to connect people with each other but is much smaller and geared towards professionals.

Canaccord Genuity raised its price target on the stock by $10 to $95 and has a "buy" on the stock.

(Reporting by Rachana Khanzode and Sayantani Ghosh in Bangalore; Editing by Joyjeet Das, Sreejiraj Eluvangal)

Diamond Foods may breach debt covenants: analysts

Stock Market Predictions

"Diamond's (earnings) restatements will cause debt covenant default and ultimately raise interest expense," Janney Capital Markets analyst Mitchell Pinheiro said in a note, adding that Diamond's proposed purchase of Pringles potato chips from Procter & Gamble Co (PG.N) was "finished."

The company will most likely have to renegotiate the terms of its debt and pay a higher interest rate, KeyBanc Capital Markets analyst Akshay Jagdale said.

The restatement of results would change the ratio of debt to earnings -- one of the terms of Diamond's debt agreements.

Diamond -- which had debt of $531.7 million and just $3.1 million of cash as of July 31, 2011 -- did not have an immediate comment.

On Wednesday, Diamond, maker of Pop Secret popcorn and Kettle chips, said its audit committee found the company had improperly accounted for payments to walnut growers. It said it would restate results for fiscal years 2010 and 2011.

Diamond removed Chief Executive Michael Mendes and named a director, Rick Wolford, as acting CEO. It also replaced Chief Finance Officer Steven Neil with Michael Murphy of consulting firm Alix Partners.

SunTrust Robinson Humphrey's William Chappell, who previously backed the company's accounting practices, cut his rating on the stock to "neutral" from "buy," admitting that he had been wrong.

"This is the worst-case scenario, not only creating uncertainty around the financial statements and removing a senior management team that directed the solid growth of the past few years, but also likely rendering dead the pending Pringles deal," Chappell said in a note.

The company's stock was down 37 percent at $23.31 Thursday afternoon. Earlier in the session the shares fell to $21.44, their lowest in almost three years. More than 26 million shares were traded -- nearly 13 times the stock's 10-day moving average.

Using figures from Data Explorers, about 80 percent of Diamond shares that are available to be borrowed are already on loan, indicating a high number of short sellers.

LOW ENOUGH?

Some observers said Diamond's stock is a good buy at its current range of $22 to $24, because the company still has strong brands.

"They still have good businesses -- Pop Secret, Kettle and (Emerald) nuts," a Diamond investor who declined to be named told Global Markets. "When cooler heads prevail, the stock should trade back up somewhere in the 30s, probably after a couple of quarters."

KeyBanc's Jagdale said Diamond's various businesses were together worth about $44 a share. Janney's Pinheiro said number is $31 a share.

Pinheiro said Diamond should earn about $1.70 a share in fiscal 2012. The company previously forecast adjusted earnings of $3.05 to $3.15 a share.

However, RBC Capital Markets analyst Edward Aaron suspended his earnings estimates and said it was difficult to stick a value on Diamond, with the company going through so many changes and multiple lawsuits and investigations still in progress.

PRINGLES DEAL

After the company said it would restate results, P&G started going through the merger documents to make sure it can cancel the sale of Pringles without triggering a breakup fee, a source familiar with the matter said.

P&G has been approached about a possible Pringles deal, but it has not held substantial talks, the source said.

"P&G wants to structure the deal as a reverse Morris Trust so it can minimize taxes for shareholders, and it also has to find a good fit for the brand. It is going to be a challenge for them to find a buyer (for Pringles) given these conditions," Morningstar analyst Lauren Desanto told Global Markets.

A reverse Morris Trust deal saves on capital gains taxes that a parent company otherwise would have to pay in a straight sale of a unit or asset.

P&G declined to comment.

(Reporting by Mihir Dalal in Bangalore; additional reporting by Jessica Hall in Philadelphia, Jessica Wohl in Chicago and David Gaffen in New York; Editing by Don Sebastian, Viraj Nair, John Wallace and Steve Orlofsky)

GE holds dividend steady, analysts see December hike

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The largest U.S. conglomerate had raised its payout four times in 18 months, with the last hike coming in December and representing a cumulative 70 percent increase from the 10 cent per share level the company had slashed it to during the financial crisis.

The rapid pace of increases was intended as a signal that the company had regained its confidence after its GE Capital business had been hard hit by the downturn. But Chief Executive Jeff Immelt has said the Fairfield, Connecticut-based company eventually intends to return to its historical practice of raising its dividend once per year.

Analysts, on average, expect a 2-cent-per-share hike to 19 cents in the fourth quarter 2012, according to Thomson Global Markets I/B/E/S.

The company is also waiting for the Federal Reserve, which last year became GE Capital's regulator, to give it the go-ahead to resume paying a share of GE Capital's earnings back to the parent company in the form of a dividend. Analysts have said that approval could clear the way for a larger dividend increase.

GE shares currently have a dividend yield of 3.6 percent, the fifth-highest in the Dow Jones industrial average .DJI, which has a 2.6 percent average yield.

(Reporting By Scott Malone)

True Religion slumps after weak forecast; analysts cut ratings

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Citigroup cut True Religion to "neutral" from "buy," and said the company's international business would weigh on earnings over the next year.

On Thursday, the company, which sells its namesake jeans for as much as $300 in specialty boutiques and upscale department stores, reported a lower-than-expected quarterly profit.

Benchmark also downgraded the stock to "hold" from "buy."

True Religion shares fell to $27.57 on Friday on the Nasdaq.

(Reporting by Mihir Dalal in Bangalore; Editing by Joyjeet Das)

GSV Capital offers shares at deep discount

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The company said its common stock offering was priced at $15 apiece, a discount of 23 percent to its Thursday close.

In June, the company said it had bought 225,000 shares in Facebook at an average price of $29.28 each and that the $6.6 million investment in Facebook represents about 15 percent of GSV's total portfolio.

Citigroup Global Markets Inc is acting as sole book-running manager for the offering.

Shares of the Woodside, California-based company were trading down 20 percent at $15.48 in late morning trade on the Nasdaq.

(Reporting by Tanya Agrawal in Bangalore; Editing by Anil D'Silva)

AllianceBernstein disappoints again

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Shares of the New York-based company, which is controlled by French insurer AXA (AXAF.PA), were down 6 percent in morning trading.

Since becoming chairman and chief executive in December 2008, Peter Kraus, a former Goldman Sachs partner, has struggled to revive a company that was reeling when he arrived. AllianceBernstein's assets under management and stock price are down 12 percent and 14 percent, respectively, during his tenure.

"In a year of extremely volatile markets and risk aversion on the part of investors, it was a difficult year for active managers to outperform," Kraus told analysts and investors on a conference call on Friday. "Performance in our largest equity services disappointed and we ended up with greater net outflows in 2011 than in 2010."

The company also took a noncash charge of $587 million related to unrecognized deferred incentive compensation.

Earnings excluding one-time items dropped to $37 million from $139 million a year earlier. That gave the company earnings per unit of 7 cents. Analysts on average had expected 19 cents, according to Thomson Global Markets I/B/E/S.

Net revenue fell 20 percent to $625 million. Analysts had expected $650 million.

Sandler O'Neill analyst Michael Kim said the stock seemed to be reacting to the earnings miss driven by the revenue shortfall. Though he had forecast earnings of just four cents per share and said AllianceBernstein's flow trends were a touch better than he expected, Kim said the firm still has work to do to bring investors back to its stock funds.

"They're still dealing with performance issues on the large-cap core equities franchise, and that is likely to remain a real drag on overall growth," Kim said in an interview.

The company reported $406 billion in assets under management at the end of 2011, compared with $478 billion at the end of 2010. Net outflows in the fourth quarter were $13.2 billion.

Assets under management rose 1 percent from the end of the third quarter, and showed a 4 percent improvement in January from the end of 2011.

Shares of AllianceBernstein were down six percent to $15.53 in morning trading.

The company has been hurt somewhat by moves made by AXA.

During 2011, AXA sold its Canadian and Australian businesses. AllianceBernstein managed about $16 billion for them and expects to lose most of these assets over time.

In the fourth quarter, it had outflows associated with those dispositions of nearly $4 billion, representing about $5 million in revenue.

The company said it expects to see another $6 billion in outflows related to the AXA asset sales in the first half of 2012.

(Reporting by Tim McLaughlin in New York and Ross Kerber in Boston; Editing by Lisa Von Ahn, John Wallace and Phil Berlowitz)

LyondellBasell results miss Street; shares slump

Stock Market Predictions

Many European customers chose to draw down stockpiles rather than make new purchases amid the sovereign debt crisis. Many of the same issues affected rival Dow Chemical (DOW.N) during the fourth quarter.

"We expect overall first-quarter economic activity to remain slow in Europe and Asia for certain of our businesses," LyondellBasell Chief Executive Jim Gallogly said in a statement.

Operating profit dropped in all four of the company's operating segments, and was most pronounced in its refining and oxyfuels unit, which makes gasoline. The benchmark crude oil margin the company used slipped 41 percent.

The company's European chemical plants, also known as crackers, use pricey crude oil-derived naphtha to produce chemicals, a process that is much more expensive than in the United States where cheap natural gas can be used to make the same products.

In Europe the company sold 5 percent less polyethylene and 10 percent polypropylene, both essential chemicals for plastics production.

The price of ethylene did rise 15 percent in North and South America, though sales of polyethylene in the region were flat and polypropylene sales edged up only slightly.

LyondellBasell reported a net loss of $218 million, or 38 cents per share, for the fourth quarter, compared with net profit of $766 million, or $1.34 per share, in the year-ago period.

Excluding one-time items, such as early debt repayment and the mothballing of a French refinery, LyondellBasell earned 41 cents per share. By that measure, analysts on average expected 76 cents per share, according to Thomson Global Markets I/B/E/S.

Revenue rose 8 percent to $11.44 billion. Analysts expected $12.04 billion.

During the quarter LyondellBasell, which is technically headquartered in the Netherlands but run out of Houston, doubled its dividend and said it would pay a separate special dividend.

The company, which emerged from bankruptcy protection in 2010, also said it would buy back nearly $2.8 billion of debt, substantially improving its balance sheet. LyondellBasell recorded a $431 million charge in the fourth quarter for the move.

Last fall LyondelBasell shut its Berre, France, refinery, which employs 370 workers. The decision sparked a strike at the plant. The company ultimately decided to put the refinery in cocoon mode, meaning it will be stopped, cleaned, and given another twos years for a potential acquirer to buy it.

Shares of LyondellBasell were down 36 cents at $44.22 on the New York Stock Exchange.

Elsewhere on Friday, Apollo Global Management LLC (APO.N), which owns a stake in LyondellBasell, reported a drop in fourth-quarter earnings due to changes in the accounting value of some assets.

(Reporting by Ernest Scheyder in New York and Swetha Gopinath in Bangalore; Editing by Don Sebastian, John Wallace and Derek Caney)

Court upholds $371 million CR Bard patent award

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The U.S. Federal Circuit Court of Appeals in Washington, D.C. said there was "substantial" evidence to support a 2007 Arizona jury verdict that Gore, the maker of Gore-Tex, willfully infringed a Bard patent through its sale of the grafts.

Shares of Bard rose as much as 3.7 percent after the decision.

Prosthetic vascular grafts are used to bypass or replace blood vessels to ensure sufficient blood flow to various parts of the body.

Bard's patent had been issued in 2002, 28 years after an application was first filed, and sued Gore for infringement the following year.

The Arizona jury had awarded Bard $185.6 million for lost profit and unpaid royalties, an award that trial judge Mary Murguia later doubled.

"This should be the final curtain of the saga," Judge Arthur Gajarsa wrote for a 2-1 Federal Circuit panel. "We cannot revisit the facts anew, nor meander through the record and select facts like our favorite jelly beans, nor characterize the facts as the Bard would in a Shakespearean tragedy."

The $371.2 million award exceeds C.R. Bard's total reported net income of $328 million for all of 2011. It is unclear whether Gore will appeal the decision to the entire Federal Circuit or to the U.S. Supreme Court.

Neither company responded to requests for comment. Each said it generates close to $3 billion of annual revenue. Bard is based in Murray Hill, New Jersey, and privately held Gore in Newark, Delaware.

Analysts estimated that the litigation could ultimately result in more than $800 million of payments to Bard, including accumulated royalties.

Friday's decision is "a positive milestone," Leerink Swann analyst Rick Wise wrote. "Although Gore still has several possible levels of appeals ... the court's ruling today will likely be very much what the final ruling will look like."

Wise has a "market perform" rating for Bard.

Writing for the Federal Circuit majority, Gajarsa said the Arizona jury had more than enough evidence to conclude that Gore "knew or should have known of the objectively high likelihood" that its grafts infringed Bard's patent.

He also said Murguia acted within her discretion in doubling the damage award, citing the jury finding of willfulness and the "extensive litigation" between the parties, in which Gore had "repeatedly lost yet continued to infringe" the patent.

Judge Pauline Newman dissented.

Murguia last year joined the 9th U.S. Circuit Court of Appeals. She was appointed by President Barack Obama.

In afternoon trading, Bard shares were up $2.67, or 2.9 percent, at $94.98, after earlier rising to $95.68.

The case is W.L. Gore & Associates Inc v. C.R. Bard Inc et al, U.S. Federal Circuit Court of Appeals, No. 2010-1510.

(Reporting By Jonathan Stempel in New York; Additional reporting by Debra Sherman in Chicago; Editing by Lisa Von Ahn and John Wallace)

Massachusetts subpoenas Bank of America documents

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Local investors lost about $150 million in investment vehicles structured by the company's affiliate Banc of America Securities LLC, said William Galvin, the state's top securities regulator.

Now his office is asking the Charlotte, North Carolina-based bank to supply documents for its activities involving collateralized loan obligations.

The CLOs include LCM VII Ltd and Bryn Mawr CLO II Ltd, which were structured by the bank and sold to investors in 2007.

Bank of America spokesman Bill Halldin said the bank doesn't comment on regulatory inquiries, except to say that it cooperates fully with them.

Galvin, who has been especially aggressive in looking into how big banks hurt small investors during the housing crisis and financial crisis, said he wanted to find out whether the issuer "was knowingly overvaluing assets in the portfolio to get them off their books and onto investors."

The news comes one day after Bank of America and other large lenders agreed to a $25 billion settlement over alleged foreclosure abuses.

The company's shares were down 1.3 percent at $8.07 in afternoon New York Stock Exchange trading.

(Reporting By Svea Herbst-Bayliss and Rick Rothaker; Editing by Lisa Von Ahn and Gerald E. McCormick)

First Solar project loan delay hits stock

Stock Market Predictions

The DOE loan delay threatens to cancel a sale of the project to Exelon Corp (EXC.N), potentially leaving First Solar on the hook for $75 million.

In September, the DOE had finalized a $646 million loan guarantee to support the 230-megawatt Antelope Valley Solar Ranch One project in northern Los Angeles County.

If initial funding for the project does not come by February 24, it will have to buy the project back from Exelon, First Solar said in a regulatory filing on Thursday.

The DOE's loan program has faced intense scrutiny after the high-profile collapse of Solyndra, a solar panel maker that was the first company to receive funding under the program.

"We believe Exelon will not exit (the Antelope project) over minor issues like a construction permit," Auriga USA analyst Hari Chandra Polavarapu wrote in a note to clients.

First Solar, which developed and sold the Antelope project to Exelon for $75 million, said it can buy back the project with its existing cash and resources.

"We note the DOE loan/loan guarantee itself is not under any threat," Polavarapu said.

First Solar had secured DOE loan guarantees for three major projects last year. They were then sold to NextEra Energy (NEE.N), NRG Energy (NRG.N) and Exelon.

GERMANY PRODUCTION CUT

The world's most valuable solar company, which has been hit by falling renewable energy subsidies in top market Europe, also said it will idle half of its production capacity in Frankfurt (Oder), starting March 1.

"To minimize the impact on our 1,200 associates there, we plan to evenly divide shifts amongst the workforce and have applied to German authorities for temporary short-time support. We intend to meet demand in the EU with production from our German factory," a First Solar spokesman said in Germany.

The German factory's capacity is about 500 megawatt (MW). About 46 percent of the company's 2010 net sales came from the country.

Shares of the Tempe, Arizona-based company were down 9 percent at $44.65 in morning trading on the Nasdaq. The stock has dropped more than 66 percent in the past year.

(Reporting by Krishna N Das in Bangalore, Ernest Scheyder in New York and Christoph Steitz in Frankfurt; Editing by Anil D'Silva, Dave Zimmerman, Sriraj Kalluvila)