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IHeartMedia Files for Bankruptcy Protection as It Reaches Deal to Cut Debt in Half

1:30 PM, Mar 15, 2018 — Radio station owner iHeartMedia, the parent of advertising company Clear Channel Outdoor (CCO), filed for Chapter 11 bankruptcy protection, reaching a deal with creditors to cut its $20 billion debt in half as it restructures its balance sheet.

San Antonio, Texas-based iHeartMedia said it has filed with the US Bankruptcy Court in Houston a series of motions to maintain business-as-usual operations. It also said that Clear Channel didn’t file for bankruptcy protection.

“The agreement we announced today is a significant accomplishment, as it allows us to definitively address the more than $20 billion in debt that has burdened our capital structure,” said Bob Pittman, the company’s chairman and chief executive officer. “Achieving a capital structure that finally matches our impressive operating business will further enhance iHeartMedia’s position as America’s #1 audio company.”

Reuters reported that iHeartMedia’s creditors will receive the company’s 89.5% stake in Clear Channel, which it said was the largest billboard company in the world.

“iHeartMedia believes that its cash on hand, together with cash generated from ongoing operations, will be sufficient to fund and support the business during the Chapter 11 proceedings,” the company said.

The bankruptcy filing comes after Pink Sheets-listed iHeart said it wouldn’t make a cash interest payment of $106 million that was due Feb. 1 and said it would utilize a 30-day grace period to make payments on the 14% senior unsecured notes due 2021.

Also last month, Liberty Media Corporation (FWONA) submitted a term sheet for restructuring iHeartMedia unit iHeartCommunications, proposing to buy a 40% stake for $1.16 billion.

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Retailers May Absorb Wage Pressure to Avoid Staff Losses in Fight Against E-Commerce, Barclays Says

2:02 PM, Mar 13, 2018 — Retailers might have to absorb rising wage pressures rather than cut staffing levels in a bid to preserve customer service to fight off the rising tide of e-commerce, Barclays said in an equity research note on Tuesday.

“Wage inflation has been an active investor discussion topic in recent months as strong employment trends have resulted in healthy wage growth across the US in general, and the retail sector specifically,” said analyst Chethan Mallela. There have also been “high profile” increases by companies including Target (TGT) and Walmart (WMT), he said.

Of the 19 retailers tracked by Barclays, 13 cited recent or prospective wage pressures in their fourth quarter earnings calls, with the impact most acutely felt among hourly workers, Mallela said.

Retailers have been facing rising pressure from online commerce companies like Amazon.com (AMZN), and Barclays said it might be harder than in the past to offset the wage level issues with staff changes because the median employee per square foot across a broad range of companies has decreased 11% over the last decade.

“Recent industry commentary has highlighted in-store service as a critical defense against share loss to e-commerce,” Mallela said. Companies may opt to absorb the impact “of higher wages going forward rather than sacrifice customer service levels.”

Walmart in January said it was lifting the starting wage for hourly workers to $11, while Target said in September it was boosting its minimum to $11 with a commitment to reach $15 by the end of 2020.

Michael Kors (KORS), Ralph Lauren (RL) and Tapestry (TPR) didn’t cite wage pressures on their earnings calls, Barclays said. While it’s less clear why Gap (GPS) and others “might also not be seeing wage pressure, we would caution that wages are a function of many idiosyncratic factors that can be difficult to externally evaluate,” the analyst said.

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Apple Buys Magazine App Texture, Touting Commitment to ‘Trusted Sources’

12:57 PM, Mar 12, 2018 — Apple (AAPL) is buying digital magazine subscription company Texture and its parent, Next Issue Media, for terms that weren’t disclosed on Monday as the information technology giant touted its commitment to “trusted” news sources.

Next Issue Media is currently held by Vanity Fair and Wired owner Conde Nast; Elle and Good Housekeeping owner Hearst; Meredith (MDP), a Des Moines, Iowa-based media and marketing firm; Toronto-based Rogers Media, a branch of Rogers Communications (RCI); and investment firm KKR (KRR).

Texture was launched in 2010 and has over 200 magazines in its portfolio. Users get “unlimited access to their favorite titles for one monthly subscription fee,” according to a statement from Apple and Next Issue on Monday.

“We are committed to quality journalism from trusted sources and allowing magazines to keep producing beautifully designed and engaging stories for users,” said Eddy Cue, Apple’s senior vice president of internet software and services.

On its website, Texture is currently touting a free trial and a $9.99 a month fee after that. The company and its current owners “could not be more pleased or excited with this development,” said John Loughlin, chief executive officer of Next Issue Media/Texture. “We could not imagine a better home or future for the service.”

Companies: Apple Inc.
Price: 181.845 Price Change: +1.865 Percent Change: +1.036

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Cigna Set to Acquire Express Scripts for $54 Bn in Cash and Stock Deal

8:39 AM, Mar 8, 2018 — Health care company Cigna (CI) has agreed to purchase Express Scripts (ESRX), a provider of pharmacy benefit management services, in a cash and stock transaction aimed at creating an expanded portfolio of health services

The deal, which is expected to be completed by December 31 this year, will see a transaction consideration of $48.75 in cash and 0.2434 shares of stock of the combined company per Express Scripts share, or $54 billion in the aggregate. Including Cigna’s assumption of approximately $15 billion in Express Scripts debt, the transaction is valued at approximately $67 billion.

Upon closing of the transaction, Cigna shareholders will own approximately 64% of the combined company and Express Scripts shareholders will own approximately 36%. Cigna said that the combination is expected to deliver first year double-digit earnings per share accretion and enhance Cigna’s revenue and earnings growth.

“Cigna’s acquisition of Express Scripts brings together two complementary customer-centric services companies, well-positioned to drive greater quality and affordability for customers,” David Cordani, chief executive of Cigna, said.

“This combination accelerates Cigna’s enterprise mission of improving the health, well-being and sense of security of those we serve, and in turn, expanding the breadth of services for our customers, partners, clients, health plans and communities,” he added.

Price: 183.80 Price Change: -10.43 Percent Change: -5.37

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US Federal Reserve

Economy Continued to Expand From November Through December, Outlook Remains `Optimistic,’ Fed Says

3:51 PM, Mar 7, 2018 — The economy continued to expand from late November through the end of 2017 as 11 of the Fed’s 12 districts reporting modest to moderate gains and the 12th — the Dallas district — recording a “robust” increase, according to the Federal Reserve’s Beige Book released on Wednesday.

“The outlook for 2018 remains optimistic for a majority of contacts across the country,” the Fed said. “Most districts reported that non-auto retail sales expanded since the last report and that auto sales were mixed. Some retailers highlighted that holiday sales were higher than expected. Residential real estate activity remained constrained across the country.”

Home sales were constrained by limited inventories, and non-residential activity continue to experience slight growth. Manufacturers also reported modest growth in overall business conditions, the Beige Book said.

Some manufacturers raised capital expenditures in the reporting period, and growth was noted in transportation activity, the Fed said. Loan volumes were steady, agricultural conditions were mixed and energy respondents described a slight uptick in activity.

Employment grew at a modest pace since the prior report with most districts citing tightness in labor markets and challenges finding qualified workers that constrained growth.

“Several districts noted elevated demand for manufacturing and construction labor,” the Fed said. “Most districts said that wages increased at a modest pace. A few districts observed that firms were raising wages in a broader range of industries and positions since the previous report. Some districts reported that firms expect wages to increase in the months ahead.”

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NYSE Trading Floor_Equities

Stocks Fluctuate as Energy, Tech Shares Firm; Utilities and Consumer Names Slide

10:58 AM, Mar 6, 2018 — Equities were mixed on Tuesday, with the Dow Jones Industrial Average and the Standard & Poor’s 500 giving back their early gains while the Nasdaq Composite held in the green on strength in technology shares.

Stocks came out of the gate on a stronger note, following Monday’s surge higher after it emerged that North and South Korean leaders will meet at a summit next month, the first of its kind since Kim Jong-un became head of the reclusive northern nation.

The gains were scaled back after January factory orders came in at a decline of 1.4%, the first contraction since July. Investors are keeping a close eye on the week’s economic data ahead of ADP private payrolls Wednesday and the key non-farm jobs report Friday.

In company news, Target (TGT) sank 3.3% after reporting fourth quarter adjusted earnings that were below analysts’ expectations, while revenue beat views. J.C. Penney (JCP) slid 4.6%.

GrubHub (GRUB) shed 4.2% after it was downgraded to neutral from buy at Bank of America Merrill Lynch. Ciena (CIEN) jumped 9.6% after fiscal first quarter results beat Wall Street views.

Among the S&P’s sectors, the energy was up the most, rising 0.8% as oil prices firmed, and Chevron (CVX) rose 1.4% on the Dow as CEO Michael Wirth told an analyst meeting that the company intends to “grow free cash flow in 2018 and thereafter.”

Tech shares were up 0.6% while on the downside, utilities lost 1% and consumer staples slipped 0.5%.

In morning trading, the Dow was down 0.2%, the S&P 500 was little changed, and the Nasdaq was up 0.2%.

Globally, the Hang Seng jumped 2.1%, the Nikkei 225 rose 1.8%, the Shanghai Composite was up 1% and the FTSE 100 gained 0.8%.

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Equities Slide Fourth Straight Day in US on Continued Trade War Worries

10:40 AM, Mar 2, 2018 — The US benchmarks extended their run of losses into a fourth straight day as fears grew that President Donald Trump was sparking a trade war with tariffs on some metal imports.

In a Friday morning tweet a day after he pledged to impose 25% tariffs on steel imports and 10% on aluminum, the president said “when a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.”

Markets had recovered much of their February losses but the week’s volatile trading sent them back down to multi-week lows. Losses on Friday were led by the Standard & Poor’s 500 financials, consumer discretionary and materials sectors while defensive sectors were higher, with utilities and telecoms rising.

On the Dow Jones Industrial Average, more than two thirds of the blue chips were losing ground, led by a 4% drop in McDonald’s (MCD) after RBC cut its price target on the stock by $20 to $170 and slashed expectations for US same-store sales.

The Nasdaq Composite was dented by JD.com’s (JD) 7.4% loss after its fourth quarter adjusted profit declined.

Also in company news, J.C. Penney (JCP) fell 10% after the apparel and home furnishings retailer posted fourth quarter results which missed analysts’ estimates on revenue but beat on earnings. Park Hotels & Resorts (PK) fell 4.8% after the real estate investment trust reported a year-on-year drop in fourth quarter adjusted funds from operations.

Gap (GPS) rose 6.7% after the clothes retailer said late Thursday fourth quarter results topped analysts’ views. Microsemi (MSCC) gained 4.5% after Microchip Technology (MCHP) said it would acquired the semiconductor company for $68.78 a share. Microchip was up 2.7%.

In morning trading, the Dow was down 1.2% while the S&P 500 and Nasdaq both lost 0.6%.

Globally, the Nikkei 225 dropped 2.5%, the Hang Seng dropped 1.5%, the FTSE 100 lost 1.2% and the Shanghai Composite fell 0.6%.

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Peugeot Maker PSA Group of France Reports Surge in Revenue Helping Absorb Hit From Opel

10:31 AM, Mar 1, 2018 — France’s PSA Group (UG.FP), the maker of Peugeot and Citroen cars, said Thursday a surge in revenues helped the company absorb losses at newly acquired Opel and post a surge in profit last year.

Sales climbed for the fourth year in a row to 65.2 billion euros ($90.3 billion) in 2017, from 54 billion euros in the previous year, a 13% jump in constant currency terms, PSA, which acquired Opel Vauxhall subsidiaries from General Motors (GM) in March 2017, said in a statement. The number of vehicles sold also soared 15% to 3.63 million.

The increase in sales was mainly driven by the product mix as well as volume growth linked to the global “success” of new models, the company said. In addition, it noted a strengthening of its European leadership in the light commercial vehicles category for Peugeot and Citroen, with a 20% market share.

Group net profit climbed to 1.93 billion euros from 1.73 billion euros despite higher raw material costs and exchange-rate headwinds.

The French auto group said Opel, which posted an operating loss of 179 million euros, is in the midst of a product “offensive” in the Middle East and Africa after launching the Insignia and Crossland X and the unveiling of Grandland X slated for this year.

Excluding Opel Vauxhall, the company said it aims to deliver 10% revenue growth this year relative to its 2015 sales and target an additional 15% jump by 2021. The company is anticipating a stable automotive market this year in Europe but sees growth of 4% in Latin America, 10% in Russia and 2% in China.

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Macy’s Fourth Quarter Earnings Beat Estimates Helped by Strong Consumer Spending

9:24 AM, Feb 27, 2018 — Shares in Macy’s (M) were sharply higher in recent trade on Tuesday after the department store operator reported better-than-expected earnings for its fourth quarter and guided for full year earnings per share which straddled Wall Street’s expectations.

On an adjusted basis, the company reported a profit of $2.82 per share during the quarter ended February 3, up from $2.02 per share the same quarter last year and above the Capital IQ consensus estimate of $2.68 per share. The earnings per share reading was positively impacted by 7 cents due to the change in the effective annual tax rate implemented in the tax reform at the end of last year.

Total revenue increased by 1.8% to $8.67 billion from $8.52 billion a year ago but was slightly below the $8.7 billion forecast by analysts. On a comparable basis, which excludes the additional week in the fourth quarter of 2018 when compared to the prior-year period, sales were up by 1.3%.

For fiscal year 2018, the company is targeting adjusted earnings of between $3.55-and-$3.75 per share, straddling the consensus estimate of $3.62 per share. Total sales are expected to be down by between 0.5% and 2%.

“Macy’s, Inc. had a solid fourth quarter, including strong performance in January, and the full year exceeded our expectations for annual comparable sales and adjusted earnings per diluted share,” Jeff Gennette, Macy’s chief executive officer, said. “Consumer spending was strong in the fourth quarter, and we were ready with improved execution and great products across all categories.”

Macy’s shares were 9.6% higher at the time of writing.

Price: 29.82 Price Change: +2.37 Percent Change: +8.63

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General Mills Snaps Up Blue Buffalo Pet Products for $8 Bn in All-Cash Deal

9:05 AM, Feb 23, 2018 — Food production company General Mills (GIS) has agreed to buy Blue Buffalo Pet Products (BUFF) for approximately $8 billion in an all-cash deal which aims to capitalize on the lucrative pet food market and boost General Mills’ net sales growth.

The transaction, which is expected to close by the end of General Mills’ fiscal 2018 year, will see the Minneapolis-headquartered company acquire the producer of pet foods for $40.00 per share using a combination of debt, cash in hand and equity.

It marks General Mills’ first foray into the pet food market – estimated to be worth approximately $30 billion in the US alone – via the the sector’s fast-growing ‘wholesome natural’ category. Wilton, Connecticut-headquartered Blue Buffalo, which was founded in 2002, has seen its net sales grow consistently over the past three years, most recently rising by 10.9% to $1.27 billion in 2017.

Post-completion, the deal is expected to be immediately accretive to General Mills’ net sales growth, be neutral to cash earnings per share in fiscal 2019 and accretive in fiscal 2020, according to a joint statement issued by the two companies. The food producers’ combination is also projected to lead to revenue synergies over time and $50 million in anticipated cost savings opportunities.

“The transaction establishes General Mills as the leader in the US Wholesome Natural pet food category, the fastest growing portion of the overall pet food market, and accelerates its portfolio reshaping strategy,” Jeff Harmening, chief executive of General Mills said.

Companies: General Mills, Inc.
Price: 53.25 Price Change: -1.70 Percent Change: -3.09

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