Here is what you need to know.
Lam Research is buying KLA Tencor. Semiconductor Lam Research is buying KLA Tencor for about $US10.6 billion. The merger will create a $US19 billion behemoth that will rival Applied Materials, according to Reuters. The offer of $US67.02 per KLA Tencor share represents a 24% premium to Tuesday’s closing price.
Chipotle earnings were light. The fast-casual burrito chain earned $US4.59 per share, missing the $US4.62 that was forecasted. Revenue climbed 12.2% to $US1.22 billion, matching analyst expectations. Same-store sales growth of 2.6% edged out the 2.5% gain that Wall Street was anticipating, according to Bloomberg. Co-CEO Steve Ells said in a statement, “As we have grown our restaurants through the year, we are able to push our standards higher in what we can accomplish with our food culture.” He continued, “We have currently returned carnitas to 90% of our restaurants, and will look to bring it back to 100% of restaurants during the fourth quarter.”
Yahoo missed on the top and bottom lines. The search giant earned $US0.15 per share, missing analyst estimates by a penny. Revenue sank 8.3% versus last year to $US1.00 billion, which was shy of the $US1.03 billion that Wall Street was anticipating. CEO Marissa Meyer noted, “As we move into 2016, we will work to narrow our strategy, focusing on fewer products with higher quality to achieve improved growth and profitability.”
Syngenta’s CEO quit. Mike Mack has stepped down as CEO of Swiss-based Syngenta. The surprise move comes just two months after Syngenta rejected a $US47 billion takeover offer from US rival Monsanto. Current CFO John Ramsey will serve as Interim CEO until a replacement is found. Reports suggest Monsanto could make another takeover attempt now that Mack is out, but Reuters says Ramsey probably won’t become a board member and the board isn’t expected to change its stance.
Ferrari IPOs on Wednesday. The luxury automaker reportedly priced its initial public offering at $US52 per share, the upper end of the $US48 to $US52 range that was expected. At this pricing, Ferrari raises $US890.5 million and is valued at approximately $US9.82 billion. The stock will trade under the ticker ‘RACE.’
The IMF warned on the Middle East. The International Monetary Fund’s assessment of the MENAP region (Middle East, North Africa, Afghanistan and Pakistan) is a dire one. According to the IMF, growth will slow to 3.25% this year and 2.75% in 2016. Saudi Arabia, the region’s largest economy, and most of the other countries in the region will run out of financial assets in “less than five years” as a result of their ballooning deficits. In the region, only Kuwait, Qatar and the United Arab Emirates can hold out for longer, according to the IMF.
Japan’s trade data was worrisome. Japan’s trade deficit narrowed to ¥114.5 billion (previous ¥569.7 billion deficit), missing the ¥84.4 billion surplus that was expected. The export data was the real worry as growth slowed to just 0.6% compared to last year, which was well short of the 3.4% growth that was forecasted. Imports slid 11.1% year-over-year, slightly outpacing the 11.7% drop that was expected. The Japanese yen is little changed near 120.00.
China got hit hard but most markets are higher. China’s Shanghai Composite tumbled 3.1% to lag in Asian trade while Japan’s Nikkei (+1.9%) led. In Europe, Germany’s DAX (+0.5%) paces the advance. S&P 500 futures are higher by 8.75 points at 2029.25.
US economic data remains light. Crude oil inventories will be released at 10:30 a.m. ET. The US 10-year yield is down 2 basis points at 2.04%.
The number of companies reporting continues to grow. Baker Hughes, Boeing, Coca Cola, EMC and General Motors highlight the names reporting before markets open. American Express, EBay, Las Vegas Sands and Texas Instruments are among the companies releasing their quarterly results after markets close.