The Dawn Patrol – 25.07.12 – As usual… Apple, the Fed, Greece, Earnings. Read the NYT article on Avenue Capital…

Bonjour,

Markets down today on poor Apple/tech numbers, risks coming back on Greece, poor South Korean consumer confidence data. We’ll watch the ECB lending survey, German IFOs, US new home sales and many earnings…

ARM HOLDINGS post strong Q2 numbers (may suffer from Apple though).

PEUGEOT CITROEN posts EU4m Operating Profit; auto unit loss is EU662m; Rev. EU29.6b, est. EU29.0b.; 1H Op. Profit Eu4m vs. est. Loss Eu38m; Net debt EU2.4b; FCF -EU954m ex-items; plans cost cuts worth EU1.5Bln by 2015

DAIMLER posts high level of earnings; 2Q rev. grows by 10% EU28.9b, est. EU27.9b ; 2Q Ebit Eu2.24 Bln vs. est. Eu2.2 Bln; Net profit of EU1.515 bn; Total unit sales increase by 8% to 570,300 vehicles; Confirms 2012 forecast

Wacker Chemie2Q Ebitda Beats; Rev. EU1.22b vs est. EU1.27b; 2Q Ebitda EU241m vs est. EU229.4m; says 2012 forecast “more cautious;” sees sales “slightly below the prior-year level”, Ebitda “well below prior-year figure amid lower prices”; Sees Poly Terminations Risk, Cuts Forecast

AFTER HOURS

AAPL: trading at 571$, -4.9% – 3Q EPS, Rev. Miss Est.; Sees 4Q EPS, Rev. Below Est. 3Q rev. $35.02b vs est. $37.25b. Apple posts 3Q EPS $9.32 vs est. $10.37. Sees 4Q EPS $7.65 vs est. $10.27. Sees 4Q rev. about $34b vs est. $38.01b. 3Q Mac units 4m, est. 4.3m, iPod 6.8m, est. 6.6m, iPad 17m vs est. 15.4m and iPhones at 26m vs 28m expected. Apple Suppliers Fall as Apple 4Q Forecast Misses Ests: CRUS -5%, SWKS -2.5%, OVTI -2.3% AVGO -2%, SNDK -1.7%.

What do we do with the stock? The main worry comes from margins which were weaker than expected and the hit on sales in France and Germany which has to do with macro obviously, but also probably to the Samsung S3 which is a better phone (I’m a part time geek and tried it extensively). Apple is still cheap on revised earnings (see chart, blue line: reveised Q4 post event) and will remain a key holding but it will suffer from downside pressure as people will be left wondering if it still has the same mojo with growing competition from Samsung, a less exciting design and no real new new things… The pressure will alleviate ahead of the iPhone 5 launch which is coming soon. It always performed well ahead of iPhone launches… So maybe worth keeping if you’re not a very short term trader.

NFLX: -14% – Sees 3Q Loss/Shr 10c-EPS 14c Range vs Est. 11c. In 4Q, Netflix says “we will launch our next international market, which will drive us temporarily back into the red.

JNPR: +5% – Juniper 2Q adj. EPS 19c vs est. 16c, rev. $1.07b vs est. $1.05bSees 3Q EPS 15c-18c incl 3c dilution vs est. 21c, sees rev. $1.04b-$1.075b vs est. $1.1b.

BRCM: +2% – Broadcom 2Q adj. EPS 72c, est. 67c; rev. $1.97b, est. $1.95b. Sees 3Q rev. $2b-$2.15b, est. $2.11b. Sees 3Q rev. $2b-$2.15b, est. $2.11b

CURRENT THEMES

on Apple
I guess you’ve already read everything about it. Disappointing iPhone sales, Q3 numbers and guidance but better on the iPads.

On the Fed
The unofficial official Fed spokeperson/journalist, Jon Hisenrath, wrote in the WSJ that the Fed is moving closer to action to boost the economy and reduce employment… Fed Sees Action if Growth Doesn’t Pick Up Soon – WSJ.com http://on.wsj.com/OYFhn3

On Greece
Articles on Reuters saying that more Greek debt restructuring will be needed and in the Telegraph : “Greece may run out of money by Aug 20,” according to a senior UK government source”

Earnings (as of the 23rd)

Sector Reported/Total % reported Share weighted
% Change
Mkt cap weighted
% change
Sector EPS
CONSUMER DISCRETIONARY: 22/81 27.2% -0.5% 6.8% $2.25
CONSUMER STAPLES: 10/41 24.4% 0.4% 4.2% $2.34
ENERGY: 6/44 13.6% 3.8% 3.0% $3.30
FINANCIALS: 31/81 38.3% -3.0% -1.1% $4.07
HEALTH CARE: 10/52 19.2% 2.1% 6.4% $3.16
INDUSTRIALS: 16/61 26.2% 15.0% 18.1% $2.76
INFORMATION TECH: 22/70 31.4% 3.3% 13.2% $5.07
MATERIALS: 7/30 23.3% -24.4% -4.3% $0.95
TELECOM SVCS: 1/8 12.5% 13.1% 12.3% $0.54
UTILITIES: 1/32 3.1% 6.1% 5.5% $0.80
UNIVERSE: 126/500@ 25.2% 1.0% 8.7% $25.24

OTHER STUFF

Avenue Capital Hedge Fund Takes Chance on Euro Zone – NYTimes.com http://nyti.ms/M7bFcM

BBC News – Spain’s regional governments: How they got into trouble http://bbc.in/NTvekv

EUROPEAN EQUITIES

FINANCIALS

News

Banca Popolare di Milano Scarl said it plans to reduce costs and eliminate jobs as the lender seeks to boost profit

Deutsche Bank says it will reduce risk to meet a 2013 capital-ratio goal after 2Q profit missed analysts’ est.

Reco

Deutsche Bank PT Cut 24% to Eu28.7 at Exane; Kept at Neutral

Buy Klepierre on Potential for Simon Mandatory Offer: UBS

Nomura Still Prefers UBS Over Credit Suisse

INDUSTRIAL/MINERS/SERVICES

Results

ARCELORMITTAL 2Q Ebitda Beats Estimates, Sales In-Line; 2Q sales $22.5b vs est. $22.8b;2Q Ebitda $2.4 Bln vs. est. $2.1 Bln; Net debt cut by $1.6b during 2Q to $22b; Arcelor 2012 capex seem at ~4.5b; Expects Further Disposals in Coming Quarters

DAIMLER posts high level of earnings; 2Q rev. grows by 10% EU28.9b, est. EU27.9b ; 2Q Ebit Eu2.24 Bln vs. est. Eu2.2 Bln; Net profit of EU1.515 bn; Total unit sales increase by 8% to 570,300 vehicles; Confirms 2012 forecast

PEUGEOT CITROEN posts EU4m Operating Profit; auto unit loss is EU662m; Rev. EU29.6b, est. EU29.0b.; 1H Op. Profit Eu4m vs. est. Loss Eu38m; Net debt EU2.4b; FCF -EU954m ex-items; plans cost cuts worth EU1.5Bln by 2015

News

– The French government will present its plan to boost the country’s automobile sector.

– France is to lift bonus for buying electric cars, Les Echos says

Air France says that its cabin-crew unions are likely to reject the cuts package

Siemens Supervisory Board Chairman Gerhard Cromme is considering resigning his position, Bloomberg reports

Reco

BHP Billiton & Rio Tinto look cheap as commodity concern drags, JPMorgan Says

Norsk Hydro PT Cut 4% to Nok27 at Exane; Kept at Underperform

UTILITIES/OIL/HEALTHCARE/CHEMICALS

Results

Wacker Chemie 2Q Ebitda Beats; Rev. EU1.22b vs est. EU1.27b; 2Q Ebitda EU241m vs est. EU229.4m; says 2012 forecast “more cautious;” sees sales “slightly below the prior-year level”, Ebitda “well below prior-year figure amid lower prices”; Sees Poly Terminations Risk, Cuts Forecast

News

EDF, Areva, along with other French nuclear operators, may not be setting aside enough funds to pay for future dismantling of reactors, treatment and storage of atomic waste, according to parliamentary report

Bayer hired Credit Suisse to sell its diabetes unit, Financial Times Deutschland said

Snam reaches EU9b in credit-line contracts with banks. The aggreement will allow the co. to meet its capital requirements, including repayment of current debt to Eni, Bloomberg reports

RWE is to defer until next year a decision on its biggest off-shore wind park project ( Innogy Nordsee 1 Project), Bloomberg said

Reco

Croda Intl PT Raised 2% to Gbp20.6 at Exane; Kept at Neutral

Enagas PT Cut 3% to Eu16 at Exane; Kept at Outperform

ENI Cut to Neutral From Overweight at HSBC

Fortum Raised To Overweight From Underweight at HSBC

OMV Raised to Neutral From Underweight at HSBC

Terna PT Cut 3% to EU2.85 at Exane on Dividend Payment, Kept at underperform

TMT

Results

BT 1Q Sales Miss Ests., Ebitda in Line; 1Q Adj. Ebitda 1.46 Bln Pounds vs. est. 1.45 Bln Pounds

News

Spain austerity tax set to accelerate Telefonica’s sales drop

Ericsson closes its office in Syria, Bloomberg reports

Reco

KPN Cut to Hold vs Buy at ING; PT to EU7.50 vs EU9; dividend risk to be removed, visibility Still limited at Nomura

Mobistar PT Cut 3% to Eu29 at Exane; Kept at Neutral

Philips at Start of Upgrade Cycle, PT Raised to EU20: Nomura

Publicis Raised To Overweight From Neutral at HSBC

STMicro PT Cut to Eu4.5 VS Eu5.8 at JPMorgan, Kept at Neutral; PT Cut to EU3.75 at Barclays, Kept at Equalweight; PT Cut to Eu3.8 VS Eu4.35 at UBS, Kept at Neutral; PT Cut to Eu5.7 VS Eu6 at Goldman, Kept at Buy

Ziggo Cut To Neutral VS Buy at UBS

RETAIL/CONSUMER/LUXURY

Results

BAT 1H Adj. Op. Profit GBP2.84b vs. est. GBP2.83b

News

There is a likelihood of Heineken taking control of APB High, ING Says

Reco

Carlsberg Raised to Hold vs Sell at SocGen

Electrolux PT Raised 7% to Sek160 at Exane; Kept at Neutral

SMALL/MIDCAPS

Results

Acciona 1H Net EU79.9 Mln; Analyst Estimate EU68 Mln

EDP Renovaveis 1H Net Rises 12% to EU100m

KRONES 1H rev. rises 2.6% to EU1.29b; 1H Profit EU44.2m; Krones 1H pretax margin fell to 5%; On track to achieve substantial increase in consolidated FY earnings; Confirms FY Target

Lonza 1H Ebit Beats Est.; Debt Reduction Key Priority 2012; Rev. SF1.96b vs est. SF1.84b; 1H Ebit SF168m vs est. EU154.6m.; Net debt SF2.53m, gearing 108% ; Sees 2012 Ebit growth 10%-15% Y/y

NEXANS says production situation improved markedly in 2Q ; says 1H sales EU2.4b vs EU2.37b est. at constant non-ferrous metals prices, sales organic growth 3.4% excluding Transmission, +0.2% for group; 1H operating profit EU74m; 1H group share of net income EU13m; CEO expects slight organic sales growth in sales for year, 2H operating margin should increase significantly

Sartorius 1H Rev. EU422m ; 1HEbita EU56.5m ; 1H adj. profit EU29.5m; raises FY guidance

Technicolor 2Q, 1H Rev From Cont Ops Rise ; 2Q rev. from cont ops EU846m; 1H rev from cont ops EU1.65b; 1H net loss EU26m; 1H free cash flow EU2m; TCH FP sticks to 2012 targets for adj. ebiotda EU475m- EU500m, positive free cash flow

News

Almirall says the European Medicines Agency approved its aclidinium bromide treatment for people with chronic lung disease, Bloomberg reports

Hamburger Hafen Cuts 2012 Profit Forecast on Macro Outlook; Sees 2012 ebit in EU170m-EU190m range, saw at least EU200m, est. EU191.8m; Still sees 2012 rev in range of EU1.1b, est. EU1.12b; Sees no 2012 growth in container throughput, saw 5% growth; Conducting review of Capex

Lundbeck deniesis blockinggeneric drugs from EU market, reports Reuters

PagesJaunes says decline in Printed directories business accelerated in 2Q, will translate into slight decrease in 2012 revenues; co. confirms objective for expected gross operating margin at low end of previously announced EU470-485m range.

Pop. Milano plans job cuts in a plan to boost profit

Software reaffirms forecast

Transgene & Jennerex say that the first patient treated in Phase 2 clinical trial of intravenous treatment with JX594/TG6006 for patients with advanced hepatocellular carcinoma (HCC), or liver cancer, who have not received treatment with sorafenib

Reco

Aperam PT Cut 12% to Eu14 at Exane; Kept at Outperform

Clariant Cut To Hold From Buy at ING

Comdirect Rated New Buy At Deutsche Bank, PT Eu9

Derwent London PT Raised 5% to 1,910p at Exane, Kept at underperform

Dab Bank Rated New Hold At Deutsche Bank, PT Eu3.5

Jefferies Keeps DiaSorin at Hold, Sees Positive QoQ Trends

Faiveley PT Raised 11% to Eu50 at Exane; Kept at Neutral

Faurecia Cut To Neutral From Buy at Oddo

UBS Keeps Finmeccanica at Buy, Looks for Signs of Turnaround

Great Portland Estates PT Raised 8% to 410p at Exane, Kept at underperform

Stratec Biomedical Raised To Overweight From Neutral at HSBC

Transmode Cut To Neutral VS Buy at UBS

Wereldhave Cut To Hold at ABN

Max Kamir

Louis Capital Markets UK,LLP

Authorised and regulated by the FSA and Banque de France

39-41 rue Cambon

75001 Paris

T +33 (0)1 53 45 10 74

E mkamir
I http://www.louiscapital.com

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