Markets & Finance

Movers: Wells Fargo, Wachovia, Citigroup, ImClone, eBay


Stocks in the news Monday

From Standard & Poor's Equity ResearchCitigroup (C) files a complaint against Wachovia (WB) and Wells Fargo (WFC) and the directors of both companies. Citi seeking more than $20 billion in compensatory damages and more than $40 billion in punitive damages from WFC for tortious interference with Citi's contract with WB. Citi is seeking relief from WB for its bad faith breach of that contract. S&P maintains hold on Citi shares.

ImClone Systems (IMCL) and Eli Lilly (LLY) announce that the boards of directors of both companies have approved a definitive agreement under which LLY will acquire IMCL through all cash tender offer of $70 per share, or about $6.5 billion. This deal represents a $10 premium to Bristol-Myers Squibb's (BMY) offer of $60 and an $8 premium to BMY's proposed tender offer price of $62.

SAP AG (SAP) falls 6.85 to 38.80 after the company says it expects third quarter 2008 U.S. GAAP software and software-related service revenues to increase 13%-14% from third quarter 2007. Says the market developments of the past several weeks have been dramatic and worrying to many businesses. These concerns triggered a very sudden and unexpected drop in business activity at the end of the quarter. S&P downgrades to hold from buy.

EBay (EBAY) expects to hit the low end of its third quarter revenue guidance, exceed GAAP and non-GAAP EPS guidance. Separately, eBay acquires U.S.-based online payments business Bill Me Later for $820 million in cash and $125 million in outstanding options. Also acquires Denmark's leading online classifieds site, dba.dk, vehicles site bilbasen.dk for $390 million cash. EBAY plans to reduce its global workforce by about 10%, affecting about 1,000 employees, expected to result in pretax restructuring charges of $70-$80 million.

Fitch downgrades National City (NCC) and National City Bank's (NCB) long- and short-term Issuer Default Ratings (IDR). NCC's LT IDR has been lowered to 'BBB+' from 'A' while NCB's LT IDR has been lowered to 'A-' from 'A'. The bank and holding company's Individual rating has been lowered to 'C' from 'B', short-term IDR was lowered to 'F2' from 'F1'. Fitch placed all ratings on Negative Rating Watch. Fitch said the near future is unlikely to offer NCC any relief and may very well result in additional asset quality problems as economy weakens.

Netflix (NFLX) expects to end the fourth quarter with 8.95-9.25 million subscribers and revenue in the range of $352-$359 million and GAAP EPS of $0.30-$0.38. Says net subscriber growth in July was in line with expectations but August was unusually weak.

Bank of America (BAC) announces the creation of a proactive home retention program that will systematically modify troubled mortgages with up to $8.4 billion in interest rate and principal reductions for nearly 400,000 Countrywide financial customers nationwide. S&P maintains buy.

Vishay Intertechnology (VSH) says, if International Rectifier (IRF) can, through good faith negotiations, demonstrate to it that a further price increase is justified, VSH would be willing to improve its previous $23.00 per share cash offer for IRF.

Rightnow Technologies (RNOW) says it expects to report negative cash flow from operations primarily due to a lengthening of payment terms and slower cash collections. As a result, the company expects to reduce its full year guidance for cash from operations.

OSI Pharmaceuticals (OSIP) and Genentech (DNA) say randomized Phase III study evaluating Avastin in combination with Tarceva in patients with advanced non-small cell lung cancer whose disease had progressed following platinum-based chemotherapy did not meet its primary endpoint of improving overall survival compared to Tarceva in combination with placebo.

Hartford Financial Services Group (HIG) announces binding a deal with Allianz SE, which provides for a $2.5 billion capital investment. It says Allianz will buy, at $31/share, $750 million of preferred shares convertible to common stock after receipt of applicable approvals, $1.75 billion of 10% junior subordinated debentures. Expects $8.50-$8.80 third quarter loss (including $7.05-$7.25 in net realized cap. losses); $1.50-$1.60 core EPS before effect of a DAC (deferred acquisition costs) unlock.

Mastec (MTZ) to acquire Wanzek Construction for $200 million in cash and the assumption of $15 million in debt. Due to several recent acquisitions, it raises 2008 guidance to $1.375-$1.395 billion revenue, EPS from continuing operations to $0.92-$0.95. Sees 2009 revenue of $1.95-$2.0 billion and EPS of $1.05-$1.15.

Vignette (VIGN) sees lower-than-expected third quarter revenue of $41-$42 million with license revenue of about 17%-19% of total revenue. Notes weak international license sales.


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