February 11, 2015 / 7:54 PM / 3 years ago

What to Watch in the Day Ahead - Thursday, Feb. 12

(The Day Ahead is an email and PDF publication that includes the day's major stories and
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Insurer American International Group Inc will release fourth-quarter results after the market
closes. Analysts on average expect the company to report earnings of $1.04 per share. This will
also be the first full quarter under Chief Executive Peter Hancock, who took over from Bob
Benmosche in September.
CBS Corp is expected to report higher earnings for the December quarter as the company continues
to diversify its revenue beyond advertising. Analysts expect the owner of the most-watched U.S.
broadcast network to report earnings of 76 cents per share.
Retail sales in January likely fell for a second straight month, after posting the largest drop
in nearly a year in December. The Commerce Department is expected to announce that sales were
down 0.5 percent, compared with a 0.9 percent decline in December. However, sales excluding
automobiles, gasoline, building materials and food services likely increased in January.
Meanwhile, U.S. Labor Department issues weekly number of Americans filing new claims for
unemployment. (0830/1330) Separately, the Commerce Department is expected to report a 0.2
percent rise in inventories in December. (1000/1500)
McGraw Hill Financial Inc is expected to report a fourth-quarter profit below the average
analyst estimate, according to Thomson Reuters StarMine data. Revenue at McGraw Hill's ratings
unit, its main business, is expected to decline due to a fall in global debt activity and legal
Global miner Rio Tinto Plc is set to report its full-year results. The company is expected to
return billions of dollars in capital to shareholders. Investors are eager to see the size of
the capital return and gauge whether it can be funded from cash flows rather than debt at a time
when prices for most of the products that Rio mines are languishing at five-year lows.
Credit Suisse Group AG reports earnings for the fourth-quarter and the full year. Credit Suisse
became the largest bank in decades to plead guilty to a U.S. criminal charge and agreed to pay
more than $2.5 billion in penalties for helping Americans evade taxes.
Cereal maker Kellogg Co is likely to report fourth-quarter revenue above analysts' expectations,
according to Thomson Reuters StarMine data, bucking the trend in the past four quarters.
Kellogg's revenue beat is likely to come from international growth, as the company has been
struggling with falling sales in its cereal and snacks business in the United States due to
tough competition from healthier breakfast options and cheaper private-label brands. Investors
will be looking for comments on how Kellogg plans to grow outside the United States and if it
could look at making further acquisitions.
Kraft Foods Group Inc, the maker of Jell-O desserts and Velveeta cheese, is expected to report
fourth-quarter profit and sales above analysts' estimates, according to Thomson Reuters StarMine
data. Kraft has been struggling with low demand for its packaged products as price hikes aimed
at offsetting high commodity costs drive consumers towards cheaper alternatives. Investors will
look for 2015 forecasts, industry commentary, information on price cuts and comments from new
CEO John Cahill.
Hospira Inc, which is in the process of being acquired by Pfizer Inc, is expected to post lower
fourth-quarter earnings as generic competition erodes market share from its injectable sedative,
Precedex, a long-time growth driver. Analysts are banking on the potential of its biosimilar
pipeline, as Pfizer has, to pay off in the long term.
Telus Corp reports fourth-quarter earnings. Rogers Communications has been shedding customers
that BCE Inc has picked up, but investors expect Telus to also score well in terms of overall
market share gains.
Oil sands developer Cenovus Energy Inc reports results for the fourth quarter. The company has
already slashed capital spending twice, deferring some future projects and limiting conventional
drilling and the report may outline additional steps to cope with weak oil prices.
Canada's largest diversified miner Teck Resources Ltd is expected to report a decline in revenue
and profit for the fourth quarter, reflecting low prices for the metallurgical coal and copper
that the company mines. Investors will be interested in any outlook on the steel-making coal
market and how that impacts the Vancouver-based company's mining plans for 2015. Any update on
the viability of the Fort Hills oils sands project will also be a focus.
Time Inc is expected to report fourth-quarter revenue slightly above analysts' estimates,
according to Thomson Reuters StarMine data. The publisher has cut its full-year revenue forecast
twice, citing falling circulation and weak print advertising. Investors will be looking for 2015
forecast and positive circulation numbers.
Cosmetics maker Avon Products Inc will report fourth-quarter results amid a controversy in
China, a key market. The China unit of Avon pleaded guilty in connection with a bribery scheme
in December. The direct seller of beauty products has been cutting jobs and undergoing
restructuring in an attempt to stem losses and turn around. Investors will be looking for
updates on sales in North America, where it faces competition from inexpensive beauty items at
drugstores or from chains such as Sephora.
Groupon Inc releases fourth-quarter results amid reports it plans to sell its South Korean
mobile e-commerce company, Ticket Monster, for $1 billion. The online commerce company, which
began as a purveyor of discount coupons, updates Wall Street on its turnaround efforts.
Social and mobile game maker King Digital Entertainment Plc is expected to report fourth-quarter
profit slightly above estimates, according to Thomson Reuters StarMine data. Sales from the
company's marquee game "Candy Crush Saga" title have been shrinking. Investors are closely
examining whether King can deliver a portfolio of consistent and long-lasting hits as its other
popular titles, "Diamond Digger Saga" and "Candy Crush Soda Saga", have been steadily gaining
share. When the company reports fourth-quarter results, investors will also be looking for more
visibility on future games in the pipeline.
Mobile gaming company Zynga Inc is expected to report fourth-quarter revenue below analysts'
estimate, according to Thomson Reuters StarMine data, as it struggles to recreate the success of
FarmVille. Investors will be looking at bookings as they indicate the company's future revenue.
Canada's largest drilling contractor Precision Drilling Corp is expected to be hurt by fewer
contracts and falling demand for its rigs as a sharp drop in oil prices forces producers to cut
back on spending. Precision said in December that it expected rig building activity to be idled
until the commodity price environment improves. When the company reports its fourth-quarter
results, investors will look for an update on its outlook and cost-saving initiatives as it
continues to suffer from steep fall in demand for its products.
Alpha Natural Resources Inc is expected to report its thirteenth straight quarterly loss as
prices for both steel-making and thermal coal remain depressed amid slowing demand. The Bristol,
Virginia-based miner, which has been cutting costs, idled some of its mines in West Virginia and
laid off employees last month. Unlike its peers, who have slashed their budgets for 2015, Alpha
Natural forecast higher spending for the year in October. When the company reports its
fourth-quarter results, investors will be looking for comments on spending cuts, any cuts in
dividend, and the company's forecasts for production and pricing.
Rig contractor Hercules Offshore Inc is expected to report a quarterly loss, versus a
year-earlier profit, hurt mainly by lower utilization of its offshore rigs, driven by a 50
percent drop in global prices. Hercules, which has already scrapped 15 percent of its workforce,
removed five drilling rigs in the Gulf of Mexico and said it expected to write off $117 million
in asset value in the fourth quarter. Investors will be looking out for industry specific
comments on demand and operations going forward. Investors will also seek information on whether
the company's efforts to cut costs have had any impact on its balance sheet.
Shares of healthcare analytics company Inovalon Holdings Inc are expected to start trading on
the Nasdaq. The initial public offering of 22.2 million class A shares is expected to raise
$533.3 million. The offering is expected to be priced at $21-$24 per share, valuing the company
at about $3.5 billion at the higher end.
Innovative retail brokerage firm Charles Schwab Corp, which does not hold quarterly analyst
calls, gives its three-hour semi-annual update on Thursday. Executives will talk about investor
sentiment and product developments but institutional investors will listen for any indications
that short-term rates will rise, allowing Schwab to make big profits investing cash lying fallow
in client accounts.
Prominent hedge fund managers Bill Ackman, Larry Robbins and Ray Dalio will be the main act in
Harbor Investment Conference 2015, where the managers will present some of their best investment
ideas and outlooks for the year.
Automotive industry executives gather in Toronto ahead of the Canadian auto show. While Canadian
sales have been strong, the country has been struggling to win new investment as automakers plan
new facilities in Mexico and parts of the United States, lured by cheaper labor and aggressive
government incentives.
Canadian new home prices are expected to have edged up by 0.1 percent in December, maintaining
the same growth pace as the month before. (0830/1330) Separately, the Teranet-National Bank
Composite House Price Index, which measures price changes for repeat sales of single-family
homes, is also scheduled to be released.
Brazil's central bank releases its IBC-Br index of economic activity, a monthly proxy for gross
domestic product data, for December. The numbers are expected to show Brazil's sluggish economy
is losing momentum and may have even contracted in the fourth quarter, in a prelude to a broader
economic recession in 2015. (0530/1030)
Chile's central bank meets to set the benchmark interest rate. The rate is widely expected to be
kept on hold at 3.0 percent, especially after higher-than-expected inflation last week.
(All analysts' estimates are according to Thomson Reuters I/B/E/S)

 (Compiled by Sourav Bose in Bengaluru; Editing by Kirti Pandey)
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