What to Watch in the Day Ahead - Thursday, Jan. 29

Wed Jan 28, 2015 3:00pm EST
 
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(The Day Ahead is an email and PDF publication that includes the day's major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) Google Inc is set to release fourth-quarter results and is facing a variety of challenges as it begins 2015, beset by a wave of turnover in its executive ranks, growing regulatory entanglements in Europe and ongoing erosion in its ad prices due to the shift from PCs to mobile devices. With CEO Larry Page having recently announced his intention to focus less on day-to-day operations, investors will be eager for the company to lay out its plan for keeping its advertising business growing and fending off various regulatory and competitive threats. Chinese e-commerce juggernaut Alibaba Group Holding Ltd releases its third-quarter report card. The company has built up lofty expectations for its holiday quarter with a torrid "Singles Day" performance. Investors will scrutinize its margins after a slight miss last time, partly the result of an unprecedented acquisition spree intended to build up its mobile services and get new users. Also in focus will be company's plans on sustaining its pace of growth. Visa Inc, the world's largest credit and debit card company, is expected to post a higher fourth-quarter profit as it benefits from a rise in consumer sales during the holiday period and falling gas prices, which also helped boost consumer spending. However, the company's growth in the United States, its largest market, may be hampered by the strong dollar though the volatility in foreign exchange rates is expected to boost its cross-border volumes. Investors will be looking at Visa's plans to operate in China, which recently opened up its card market. Amazon.com is expected to report skimpy margins in its fourth quarter as sales growth is trumped by investments in China, cloud computing, video content and logistics. The stronger U.S. dollar could also pinch the tech giant's profit, which is expected to be 18 cents per share, according to analysts. RBC Capital Markets predicts that Amazon's operating margins will eventually rise to almost 5 percent by 2016 from nonexistent in the third quarter. About one percentage point of that increase will be due to the hike in Prime membership fees to $99 from $79 last spring. Ford Motors Co reports fourth-quarter results. Analysts will look for comments on whether the automaker's profit margins will suffer because U.S. consumers aren't eager to pay extra for fuel-saving technology when gas is so cheap. The company's December sales were up just 1.2 percent, missing expectations. Colgate-Palmolive's fourth-quarter revenue is expected to miss analysts' estimates, according to Thomson Reuters StarMine. With three-quarters of sales coming from outside the United States, the company is likely to be hit by a stronger dollar. Colgate has been facing weak demand in emerging markets such as China and Brazil. It had already lowered full-year earnings forecast in October. Any strategies by the board to stem falling sales and targets for the coming year will be of interest to investors. Abbott Laboratories is expected to report higher fourth-quarter earnings, helped by re-introduction in China and Vietnam of pediatric milk formula brands that had been recalled in 2013 due to contamination fears. Investors will look for details on how Abbott can further bolster its nutritional products, including its Similac infant formula and Ensure beverages for adults, and whether it may make acquisitions of medical devices to improve other major business. Deutsche Bank faces a punishing fourth quarter as legal costs depress an improving operating performance, pushing Germany's largest bank into the red for the second quarter running, according to analyst predictions. The bank will likely remain mum on its ongoing strategic review, which is expected to result in a dramatic overhaul of group strategy including a flotation of its retail network. ConocoPhillips, the largest independent oil and gas company, is expected to report lower fourth-quarter earnings as a steep drop in crude oil prices hurt results. ConocoPhillips, which said in December it plans to slash spending by about 20 percent, is expected to address the oil price collapse and its effect on operations. U.S. biotech Biogen Idec Inc's report fourth-quarter report is expected to contain information on the launch of its new hemophilia drugs and data to see whether sales of its high profile multiple sclerosis drug Tecfidera are still growing fast or beginning to level off. The company will also likely provide its first forecasts for 2015 with potential insight into the expected impact of foreign exchange rates on 2015 results. As Dow Chemical's plastics business continues to benefit from low raw material costs, the company is estimated to report a higher fourth-quarter profit according to analysts. The focus this quarter will be on the plans to raise $7.5-$8 billion from the sale of its low-margin assets by mid-2016. Investors will want to know how low oil prices will affect the company's integrated structure. Labor Department releases weekly data for initial jobless claims after it fell to 307,000 in the prior week from a seven-month high, pointing to continued improvement in labor market conditions. (0830/1330) Separately, National Association of Realtors issues Pending Home Sales Index for December. (1000/1500) Oil and gas producer Occidental Petroleum Corp is expected to report a drop in fourth-quarter profit, according to analysts, amidst slumping commodity prices. Transatlantic exchange operator Nasdaq OMX Group is expected to report a rise in fourth-quarter earnings as trading volumes increased on the back of more volatility in the markets. Executives may comment on Nasdaq's plan to take on CME Group and Intercontinental Exchange Inc in the energy derivatives markets. EMC Corp, a data storage equipment maker, is expected to report fourth-quarter results in line with analyst estimates, according to Thomson Reuters StarMine. However, the company's shares have been lagging as enterprise clients hold off on spending on storage products, the company's core business. Analysts expect the declining external storage sales to be offset in the coming quarters by diversification of its products. Time Warner Cable Inc, the No. 2 U.S. cable TV operator, is expected to post revenue marginally below expectations in the fourth quarter. The company has been losing video subscribers as more customers opt for internet streaming services offered by companies like Netflix. Analysts are looking for video subscription numbers for the quarter and any news from its pending acquisition by Comcast Corp. Viacom, which owns the Paramount movie studio and cable network MTV and Comedy Central, is expected to report first-quarter revenue above estimates, , according to Thomson Reuters StarMine, driven by the success of its movies such as "Teenage Mutant Ninja Turtles" and "Interstellar". Federal Reserve Board Governor William Powell and Federal Reserve Bank of Kansas City President Esther George answer questions regarding the "Federal Reserve Payments Improvement Initiative" in a webcast. (1300/1800) U.S. weapons maker Raytheon is expected to report higher fourth-quarter sales and profit, despite increased pressure on U.S. defense spending, boosted by higher demand from international customers, who account for about 27 percent of total sales. Northrop Grumman Corp is expected to report higher earnings in the fourth quarter despite a drop in revenues, reflecting large scale share buybacks and cuts in overhead costs. Chocolate maker Hershey Co reports fourth-quarter earnings. The company had cut its full-year earnings and revenue growth forecasts in October, citing higher dairy prices, a stronger dollar and weak sales growth in some markets. North American cocoa grindings, an indicator of demand for chocolate's key ingredient, fell 1.95 percent in the quarter, its first drop in two years, indicating that higher chocolate prices could be hurting demand. Hershey hiked chocolate prices in July for the first time in three years, in response to soaring cocoa and dairy prices. Coach Inc, which has been struggling to keep up with its affordable luxury competitors such as Kate Spade & Co and Michael Kors Holdings Ltd, reports second-quarter earnings. The accessories retailer said earlier this month it would buy privately held women's luxury shoe company Stuart Weitzman Holdings LLC for about $574 million to better compete with its fast-growing rivals. Broadcom releases fourth-quarter results as the mobile chipmaker refocuses on chips for networking and WiFi after shuttering its money-losing cellphone baseband chip business last year. Investors expect mostly flat revenue for the December quarter but a handsome increase in profitability thanks to less R&D spending on advanced baseband technology. U.S. refiners Valero Energy Corp and Phillips 66 are likely to post better-than-expected fourth-quarter profit helped by higher refining margins and gasoline demand, according to Thomson Reuters StarMine. Investors will be looking for any commentary on the impact of the fall in crude oil prices and the effect of narrowing of WTI-Brent differential on exports and margins. Potash Corp of Saskatchewan, the world's biggest fertilizer company, is expected to report a profitable fourth quarter. Investors will be looking for developments in new CEO Jochen Tilk's review of phosphate operations and the company's equity stakes in fertilizer companies Sinofert, SQM, Israel Chemical and Arab Potash Company. Analysts expect asset manager Invesco Ltd to earn 62 cents a share in the fourth quarter, up from 58 cents a share a year earlier. The Atlanta, Georgia-based money manager oversees PowerShares, the fourth-largest provider of exchange-traded funds. Scientific instruments maker PerkinElmer is expected to report higher fourth-quarter sales and profit. The company will issue its first forecast for 2015, which is likely to include the impact of the strong U.S. dollar on overseas sales. Blackstone Group LP, the world's largest alternative asset manager, is expected to report a 32 percent decline in fourth-quarter profit as it failed to match the strong asset sales that resulted in record earnings a year earlier, according to analysts. Change is on the horizon for the New York-based carrier JetBlue Airways and investors will look for color on new developments when the company reports fourth-quarter results and gives an outlook for the coming year. Transitions include a new CEO in February, transformed products and execution of November announcement that fees for low-fare customers' first checked bags will be charged in line with industry practices. Property and casualty insurer Chubb's fourth-quarter results are expected to beat estimates, according to Thomson Reuters StarMine, as there were no major catastrophe losses during the period to benefit results. Rival Travelers Companies Inc reported a rise in quarterly net profit last week, helped by higher underwriting gains and lower natural disaster losses. Canada's largest mobile network operator Roger Communications reports fourth-quarter earnings after the company fell behind its biggest rivals on subscriber growth last quarter. The Toronto-based company has used promotional pricing to hold onto cable customers, spent heavily to launch its coverage of National Hockey League games and launched on-demand video service in partnership with Shaw Communications. Strong December U.S. auto sales are expected to drive demand for car audio products, boosting Harman International Industries' second-quarter earnings. The audio product maker is expected to report profit above estimates, according to Thomson Reuters StarMine. Harman had earlier reaffirmed its full-year revenue and profit forecast as automakers' U.S. sales rose, aided by falling gasoline prices. The company, which recently bought two privately-held software firms, is trying to make a push towards creating the "connected car", where technology connects everything through the Internet. Motorcycle maker Harley-Davidson will report fourth-quarter results after the iconic bike maker surprised the market with a big beat in last quarter, despite series of recalls. Investors will be watching to see if recalls affected the latest quarter, how oil price impacted sales in its home market and how weak economies affect sales outside the United States. Royal Caribbean Cruises, the world's second-largest cruise operator, is expected to post better-than-expected fourth-quarter results, according to Thomson Reuters StarMine. The company's full-year profit forecast was below analysts' estimates in October due to stiff competition in the Caribbean, its biggest market, and a stronger U.S. dollar. The company is however expected to show stronger growth in 2015 as pricing issues in the Caribbean are expected to ease after April. The central bank of Brazil will release the minutes of its last rate decision meeting that will likely shed some light on the future of monetary policy. At that meeting the bank decided to keep the aggressive pace of monetary tightening, but left the door open for another rate increase. Analysts are divided on whether policymakers will opt for a third straight 50 bps rate increase or go for a smaller hike as the economy risks falling into recession this year. The minutes will be key for the market to set its inflation expectations as the government embarks on an austerity drive to regain investor confidence. Mexico's central bankers meet for the first time this year to decide interest rates and analysts expect the rates to be unchanged at a record low of 3 percent. (1400/1900) (All analysts' estimates are according to Thomson Reuters I/B/E/S) (Compiled By Astha Rawat in Bengaluru; Editing by Savio D'Souza)