Last Call: Facebook IPO Forensic Examination Begins
You know, you really don't need a forensics team to get to the bottom of this. If you guys were the inventors of Facebook, you'd have invented Facebook.
Mark Zuckerberg in “The Social Network”
-Tonight, the financial forensics teams say they want to get to the bottom of the Facebook IPO.
Robert Hum's Market Musings
- Stocks fade late in day, end mixed
- Dow & Nasdaq erase earlier gains, while S&P has first 2-day win streak since April 26-27
- Euro dips to 4-month vs. Dollar following former Greek Prime Minister Papademos’ comments
- Crude oil settles below $92 for first time since October
What Wall Street Is Saying Tonight
REGULATORS TO REVIEW MORGAN STANLEY FACEBOOK ALLEGATIONS/Reuters: “The Financial Industry Regulatory Authority's chairman said on Tuesday that regulators plan to review allegations that Morgan Stanley shared negative news before Facebook's initial public offering with institutional investors. "The allegations, if true, are a matter of regulatory concern" to FINRA and SEC, Ketchum told Reuters.”
FACEBOOK'S IPO: THOUGHTS ON MOMENTUM, PRICING AND VALUATION (IT'S STILL NO BUY)/Forbes - Aswath Damodaran: "...(The) inputs yield a value of equity for Facebook of about $70 billion, and a value per share of $29. Assuming a company will grow like Google and have margins like Apple is, by definition, optimistic and this value would be at the upper end of my range. Assuming a more rocky road to scaling up and lower profitability will deliver a value in the $20-$25 range."
FACEBOOK IPO SHOWS GALACTIC DIVIDE BETWEEN INVESTORS/Reuters - Lauren Young: "It's no surprise to anyone that big investors get preferential treatment on Wall Street. Investors expressed disappointment, skepticism and even shock on Tuesday after learning that an analyst at lead underwriter Morgan Stanley cut his Facebook revenue forecasts in the days before the company's initial public offering - information that apparently did not reach small investors before the stock went public and subsequently tumbled. The divide between the research and retail arms of big Wall Street firms has always been deep. A former Morgan Stanley broker described the relationship as being "like Venus and Mars," an allusion to a best-selling book about the inherent differences between men and women."
MOODY'S LIFTS FORD DEBT RATING/WSJ - Mike Ramsey & Nathalie Tadena: “Ford Motor achieved a key financial goal on Tuesday as Moody's Investors Service raised the auto maker's debt rating to investment grade, its second such upgrade in a month. The move by Moody's to lift Ford's debt one notch to Baa3, the lowest tier in its investment grade ranking, releases Ford's most important assets as collateral for its outstanding loans and could result in lower interest costs for new debt. Fitch Ratings also upgraded the company last month. The upgrades mean the Blue Oval, Ford's trademarked symbol, can't be seized if the company defaulted on its debts. Chairman Bill Ford Jr. signed off on a $23.5 billion package of loans in 2006 that put virtually all of the company's assets, including its trademark, up as collateral. The final vestiges of that loan have now been removed.”
TROUBLESHOOTER IN RUNNING TO SUCCEED DIMON/FT - Tom Braithwaite: "For relaxation, Matt Zames shoots things. Mostly birds. But the 41-year-old JPMorgan Chase executive does not have much free time for hunting now. He is busy mopping up his bank’s biggest mess since the financial crisis. Last week Mr Zames was appointed to replace Ina Drew as head of the bank’s chief investment office, whose London-based trading unit has wiped $30bn off its parent’s market capitalization. ... Senior insiders at JPMorgan say he is now in a strong position to eventually succeed the 56-year-old Mr Dimon."
DELL SHARES SKID AS EARNINGS, OUTLOOK DISAPPOINT/CNBC.com with Reuters: “Dell's quarterly earnings and outlook missed Wall Street's expectations on Tuesday as consumer sales fell sharply. ... The company's sales were hurt by weak sales to consumers, large enterprises and government units. PC makers have struggled with slowing demand as mobile devices such as Apple's iPad erode market share.”
SAP TO BUY ARIBA FOR $4.3 BILLION/Reuters: "SAP said it would buy smaller software maker Ariba for $45 a share, representing an enterprise value of about $4.3 billion, the latest in a string of acquisitions to help fuel revenue growth at the German technology company."
YAHOO UNDER LEVINSOHN SEEN SHIFTING TO CONTENT, ADVERTISING/Reuters - Joseph Menn: "With two of its most distracting conflicts resolved in the past week and a half, Yahoo hopes its new interim chief executive can focus on the biggest challenge of all: turning the company into a digital entertainment destination that wins back the advertising dollars flowing elsewhere. ... Those close to Levinsohn said he is committed to building out Yahoo's own video programming and striking more syndication deals in pursuit of ads that command a higher price. In one sign that Yahoo is thinking of itself as more of a media company than a technology company, Levinsohn will continue to live in the Los Angeles area instead of decamping for the company's Silicon Valley headquarters, according to a source familiar with his plans."
DOLLAR SURGES AS PAPADEMOS WARNS OF GREEK EXIT/DJ - Matthew Walter: “The dollar extended its gains against the euro and other major currencies Tuesday after a former Greek prime minister said there is a real risk his country will decide to exit from the euro zone. Lucas Papademos, who stepped down earlier this month, said that preparations are being made in case Greece leaves the monetary union, a move that he said would spark an inflationary spiral, in an interview with Dow Jones Newswires. That caused investors to sell the common currency in favor of the safety of the dollar amid worries that a Greek exit from the euro would spark another global financial panic.”
Breaking as of 830 pm ET - CNBC’s Michelle Caruso-Cabrera speaks to Greece's former Prime Minister Lucas Papademos
Papademos: "I am not aware of any specific preparations. But if such an unlikely and undesired scenario is feared, it cannot be excluded that some preparations are being made... Not in Greece, but in European countries and institutions."
Papademos: "No preparations underway in Greece for leaving the Euro."
Papademos: "Leaving Euro is "unlikely to materialize."
Papademos: "Leaving Euro is "an unwanted scenario."
Papademos: "Pressure on the banks has eased."
Papademos: "Within the week, the Greek recapitalization of banks will be underway."
Papademos: "Recapitalization will help restore confidence in Greek banking system."
Papademos: "Bank recapitalization will allow Greek banks to fund through ECB."
Before the bell:
American Eagle, Bank of Montreal, Big Lots, Hormel, Toll Brothers
After the bell:
Tomorrow's Economic Data
1000 Apr, New Home Sales
1000 Mar, FHFA HPI
1300 5-Yr Note Auction
Tomorrow on CNBC
Jeff Ettinger, Hormel Foods CEO (730a)
Roger Altman, Evercore Partners Chairman (740a)
Governor Terry Branstad, R-IA (815a)
Steve Blank, Stanford Entreprenuership Center (840a)
Thomas Lee, JP Morgan Chief US Equity Strategist (1000a)
Jeff Applegate, Morgan Stanley Chief Investment Officer (1000a)
Scott Sperling, THL Partners Co-President (1015a)
Lisa Harper, Hot Topic CEO (500p),
Mark Warner, D-VA (700p)
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