Ground beef recalled: USDA Ground Beef Recall

November 3, 2015 by  
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Ground beef recalled: USDA Ground Beef Recall, A Nebraska meat supplier is recalling more than 167,000 pounds of ground beef due to possible E. coli contamination.

According to a press release from the USDA, the recalled meat was processed by All American Meats in Omaha and shipped nationwide.

The problem, according to the USDA, was discovered on Oct. 30 when a sample tested positive for the bacteria. So far, there have been no confirmed reports of illness connected with the recall.

E. coli is potentially deadly — especially to children under 5 and senior citizens — and causes dehydration, bloody diarrhea and abdominal cramps within two to eight days of exposure to the organism.

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$19B deal for SanDisk: Western Digital SanDisk

October 21, 2015 by  
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$19B deal for SanDisk: Western Digital SanDisk, Western Digital Corporation said on Wednesday that it had agreed to acquire the memory chip maker SanDisk Corporation in a cash-and-stock deal worth about $19 billion.

Under the terms of the deal, SanDisk investors would receive $86.50 a share in cash and stock for each share they hold, representing a 15 percent premium to SanDisk’s closing price on Tuesday.

“This transformational acquisition aligns with our long-term strategy to be an innovative leader in the storage industry by providing compelling, high-quality products with leading technology,” Stephen D. Milligan, the Western Digital chief executive, said in a news release.

“The combined company will be ideally positioned to capture the growth opportunities created by the rapidly evolving storage industry,” he added.

The acquisition is the latest in a flurry of deal making this year as suppliers of semiconductors and other computer components face greater pressure on pricing from device makers.

On Wednesday, Lam Research, a semiconductor equipment maker, announced that it had agreed to acquire KLA-Tencor in a cash-and-stock deal worth about $10.6 billion.

That followed an offer by Microsemi Corporation to acquire its fellow chip maker PMC-Sierra on Monday in a cash-and-stock deal valued at about $2.4 billion. Microsemi has sought to derail a competing proposal from Skyworks Solutions, a rival chip maker and supplier to Apple.

Intel, the world’s largest maker of computer chips; Avago Technologies; and NXP Semiconductors have also made multibillion-dollar acquisitions this year.

Mr. Milligan, the Western Digital chief executive, will be chief executive of the combined company, which will be based in Irvine, Calif. Sanjay Mehrotra, the SanDisk president and chief executive, is expected to join Western Digital’s board of directors after the deal closes.

The transaction is subject to shareholder and regulatory approval and is expected to close in the third quarter of 2016. It has been approved by the boards of directors of both companies.

Founded in 1988, SanDisk, based in Milpitas, Calif., manufactures flash memory chips and other digital storage for personal computers, data centers and consumer electronics, including smartphones and tablets. The company posted revenue of $6.6 billion in 2014 and had about 8,700 employees.

“Joining forces with Western Digital will enable the combined company to offer the broadest portfolio of industry-leading, innovative storage solutions to customers across a wide range of markets and applications,” Mr. Mehrotra, the SanDisk president and chief executive, said in a news release.

Under the terms of the deal, Western Digital expects to pay $85.10 a share in cash and 0.0176 shares of its shares for each share of SanDisk. That price is contingent on the closing of a separate deal by the Chinese hardware manufacturer and vendor Unisplendour to take a 15 percent stake in Western Digital for $3.78 billion.

If the Unisplendour transaction hasn’t closed or is terminated, Western Digital will pay $67.50 in cash and 0.2387 shares of its stock for each share of SanDisk.

Western Digital said it expected to finance the deal though a combination of cash, debt and stock.

Founded in 1970, Western Digital, based in Irvine, manufactures hard drives and other digital storage devices. It posted revenue of $14.6 billion in 2014 and had about 76,000 employees.

Bank of America Merrill Lynch, JPMorgan Chase, Credit Suisse and Rothschild and the law firms Cleary Gottlieb Steen & Hamilton and Baker & McKenzie advised Western Digital, while Goldman Sachs and the law firm Skadden, Arps, Slate, Meagher & Flom advised SanDisk.

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Apple Patent Lawsuit: Faces $862M In Damages

October 14, 2015 by  
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Apple Patent Lawsuit: Faces $862M In Damages, Apple is no stranger to patent lawsuits, but a more recent suit filed by the University of Wisconsin-Madison’s licensing branch may prove a costly loss for the iPhone maker.

A United States jury found that Apple’s A7, A8, and A8X chips, which are present in the iPhone 5S, iPhone 6 and the new iPhone 6S (plus some models of the iPad), contain technology covered by a 1998 patent filed by the Wisconsin Alumni Research Foundation (aka WARF).

The presiding judge, U.S. District Judge William Conley, said that Apple could owe up to $862 million in damages.

Reuters reports that the case was split into three sections (liability, damages, and willful infringement), with the latter being determined at a later date and potentially upping the cost of the loss for Apple.

The patent in question, U.S. Patent No. 5,781,752 for a “Table based data speculation circuit for parallel processing computer” is meant to make computer chips more power-efficient by using a branch predictor.

And this lawsuit is hardly the end of Apple’s patent woes. WARF filed another suit last month that says Apple’s newest chips, the A9 and A9X, also violate the patent, according to Reuters.

In 2009, WARF filed a similar lawsuit against Intel for violation of the same patent, which was settled out of court.

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GE Wells Fargo: GE-Wells Fargo Deal

October 14, 2015 by  
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GE Wells Fargo: GE-Wells Fargo Deal, Wells Fargo & Co., the world’s largest bank by market value, posted a third-quarter profit that beat analysts’ estimates on gains in interest income from asset purchases and new loans.

Net income climbed 1.2 percent to $5.8 billion, or $1.05 a share, from $5.73 billion, or $1.02, a year earlier, the San Francisco-based bank said Wednesday in a statement. The average estimate of 27 analysts surveyed by Bloomberg was for earnings of $1.04 a share. Revenue also beat estimates, rising 3.1 percent to $21.9 billion.

Chief Executive Officer John Stumpf has used deposit growth — more than $250 billion in the three years through June — to support asset purchases from firms including General Electric Co. Last quarter, the bank also used derivatives to lock in higher income by converting floating rates into fixed payments to take advantage of the Federal Reserve’s delay in raising interest rates.

“They have been very proactive about going out into the market” and buying loans, Shannon Stemm, an analyst at Edward Jones & Co. in St. Louis, said in a phone interview before results were reported. “They have the flexibility and the capital strength to be able to do it.”

The bank agreed this week to purchase $32 billion in assets and take on about 3,000 employees from GE. Wells Fargo said last month that it plans to buy most of the industrial firm’s railcar- and locomotive-leasing unit, and announced an agreement in April to acquire $9 billion of GE loans and finance purchases made by other companies. The April deal was completed in the third quarter.

The purchases have helped boost Wells Fargo’s ability to generate revenue from lending and other interest payments, known as net interest income, and should make the lender’s growth rate for that line item the “highest of peers,” Deutsche Bank AG analysts wrote in a Sept. 24 report.

Wells Fargo shares fell 1.3 percent to $51.20 at 8:41 a.m. in early trading in New York. The stock slid 5.4 percent this year through Tuesday’s close, trailing the 5.1 percent decline of the 24-company KBW Bank Index.

Net interest income rose 4.7 percent to $11.5 billion from a year earlier, missing Deutsche Bank’s estimate of 6 percent. Fee income rose 1.4 percent to $10.4 billion.

The bank set aside $703 million to cover bad loans in the quarter, 91 percent more than a year earlier. The increase was spurred in part by deterioration in the energy industry, the bank said.

Asset purchases have helped augment growth in areas such as credit cards, auto loans and business financing, and counter a slump in mortgage lending.

U.S. lenders originated $363 billion of home loans in the third quarter, a 21 percent increase from a year earlier, according to forecasts from the Mortgage Bankers Association. That’s down from $395 billion in the second quarter.

Wells Fargo, the largest U.S. mortgage lender, originated $55 billion of home loans in the third quarter, and ended September with $34 billion in pending applications. The bank accounted for about 14 percent of all originations in the second quarter, according to Inside Mortgage Finance data.

The six biggest U.S. banks may see total revenue decline in the third quarter for the first time this year, according to analysts’ estimates compiled by Bloomberg. Low interest rates and a global asset rout that pinched bond trading is expected to squeeze third-quarter revenue by 2.4 percent from a year earlier to $101.1 billion, the estimates show.

JPMorgan Chase & Co., the largest U.S. bank, posted third-quarter earnings Tuesday that missed analysts’ estimates as a slump in trading and mortgage banking drove revenue lower. Bank of America Corp., the second-biggest U.S. lender, said Wednesday it swung to a profit of $4.51 billion in the quarter on lower expenses.

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Dollar General cuts about 255 jobs in corporate restructuring plan: Dollar General Corporate Cuts

October 14, 2015 by  
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Dollar General cuts about 255 jobs in corporate restructuring plan: Dollar General Corporate Cuts, Goodlettsville-based Dollar General announced a corporate restructuring Tuesday that will eliminate 255 jobs, including about 115 vacant positions.

The discount retailer is restructuring its corporate support to improve efficiency and reduce expenses, according to a news release.

“Over the last several months, we have taken a hard look at our cost structure and are streamlining our support functions to improve our financial flexibility while positioning us to better serve our customers and to capitalize on long-term growth opportunities,” Dollar General CEO Todd Vasos said in a statement. “This restructuring should allow us to continue strengthening our market leadership position and deliver long-term value for our shareholders.”

Employees have been notified of the job cuts, which are effective immediately. Positions at the store level will not be impacted, according to the release.

The company employs 105,500 people, including more than 1,100 at its Goodlettsville headquarters.

Dollar General reported a net income of $282 million in the second quarter of 2015, up from $251 million the year prior. Same-store sales increased 2.8 percent.

As of July 31, Dollar General operated more than 12,198 stores in 43 states. Earlier this year, Dollar General announced plans to accelerate the pace of its store openings as the discount chain competes with a new larger rival: a merged Dollar Tree-Family Dollar company. A total of 730 new Dollar General stores have been planned for 2015.

Dollar General failed in its attempt to acquire rival Family Dollar for $9.1 billion after a nearly yearlong takeover battle. Family Dollar shareholders in January overwhelmingly approved an $8.5 billion deal with Dollar Tree.

Dollar General and Family Dollar sell items across a range of price points, while Dollar Tree prices items at $1 or less.

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Ferrari IPO: Ferrari Goes Public

October 13, 2015 by  
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Ferrari IPO: Ferrari Goes Public, The new Ferrari 488 Spider at the 2015 IAA Frankfurt Auto Show September 16, 2015 in Frankfurt, Germany.
The IPO market is starting to get exciting, but why?

Suddenly, things are heating up in IPO land. Ferrari surprised by announcing proposed terms of its IPO and beginning its road show.

And the biggest IPO of the year is coming in the middle of the week.

But why? It sure isn’t because IPOs have been doing well.

Last week, 11 IPOs were scheduled to price. Only five made it through the door. And, on average, the five priced 19 percent below the midpoint of the price range, according to Renaissance Capital.

And the only to price at the midpoint – Pure Storage , which priced at $17 – is trading today at $17 and change.

Hardly an IPO rally.

But Ferrari said they would float 17.2 million shares at $48-$52, which is about $1 billion at the midpoint. That’s about 10 percent of the company, so Ferrari is being valued at about $10 billion.

The Ferrari family owns another 10 percent. Fiat Chrysler owns the remaining 80 percent; they have announced they will distribute the remaining 80 percent to shareholders early next year.

While a trading date has not been announced, I am told the deal will likely price on Oct. 20, with trading at the NYSE to begin on Oct. 21.

But before that happens, we have to get through the biggest IPO of the year: payment processor First Data is scheduled to price its IPO this Wednesday for trading Thursday, 160 million shares at $18-$20, which is about $3 billion at the midpoint.

Another huge deal, food and drug retailer Albertson’s is seeking to raise 65.3 million shares at $23-$26, which at the midpoint would make it a $1.6 billion offering, also among the biggest of the year. Albertson’s is the No. 3 food retailer in the country, after Kroger and Wal-Mart.

And that would happen on the same day as First Data!

Why? Why dump all this stock on an already jittery IPO market?

In the case of First Data and Albertson’s, it’s a case of necessity. These deals have been around a long time. They have a lot of debt, much of it floating-rate. Credit spreads on high yield has widened, so the cost of rolling over debt has increased.

In other words, the companies are understandably very motivated to go public to pay down debt.

But what about Ferrari? The pressure on it is not nearly as intense. It’s a different story.

1) After a poor third quarter, the markets have improved in October, so while buyers are picky, the timing is clearly better than a month ago;

2) Ferrari is profitable; and

3) Ferrari is a unique product with one of the most recognizable brand names in the world, and something else: it oozes sexiness.

Don’t laugh at the last one. A recognizable brand name is one thing, but a recognizable name that is synonymous with sexy is a very rare combination.

And Ferrari has that, in spades. The stock symbol: RACE.

But Ferrari is a one-off, a unique product. IPO watchers will be much more focused on demand for First Data and Albertson’s and whether they will get within the price range they are asking.

Recent history is not working in their favor.

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