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Buy signal blares for cell-tower stocks in 2017

NEW YORK (Reuters) – A hitch in a proposed merger of U.S. wireless carriers Sprint Corp (S.N) and T-Mobile US (TMUS.O) has further boosted buoyant shares of cell tower stocks, which could benefit if there is no combined company to cut costs by reducing tower usage.

Shares of American Tower Corp (AMT.N), Crown Castle International Corp (CCI.N) and SBA Communications Corp (SBAC.O) all closed up more than 2 percent on Monday. Reuters on Monday reported that SoftBank Group Corp (9984.T) and Deutsche Telekom AG (DTEGn.DE) have reached an impasse in their talks to merge Sprint and T-Mobile.

Shares climbed further Tuesday after earnings reports from SBA and American Tower.

Investors had bid up shares of cell-tower stocks on news of the deal’s chances dwindling because the combined wireless company would have been expected to cut costs by reducing the number of cell-tower sites, said Nick Del Deo, analyst at MoffettNathanson Research.

“The market interpreted the lower odds of a deal as being positive for towers because of lower risk of cell site decommissionings,” Del Deo said. “They would decommission tens of thousands of cell sites if they were to get together.”

Cell-tower stocks already were surging in 2017: Crown Castle shares have climbed 23 percent, American Tower has soared 36 percent, while SBA Communications has minted a gain of more than 50 percent.

This contrasts sharply with the dour performance of telecommunications shares such as Verizon (VZ.N), down 10 percent, and ATT (T.N), which has fallen 20 percent this year, amid concerns about fierce competition.

Cell-tower growth prospects have improved as carriers seek to deploy more spectrum bands to improve their networks, which would require more hardware to be built on the towers, says RBC Capital Markets analyst Jonathan Atkin.

“Towers are more a play on wireless network spending, they’re not a play on carriers themselves,” Atkin said.

The cell-tower stocks struggled in the wake of the U.S. election of President Donald Trump last November. For example, expectations that Trump’s agenda would lead to higher inflation weighed because the cell-tower companies operate under long-term contracts, Del Deo said, but such concerns have faded somewhat.

The fear was “if inflation went up a whole bunch they wouldn’t be able to reprice their contracts for a long period of time,” Del Deo said.

The stocks continued their runs on Tuesday following results from SBA and American Tower. SBA shares gained 4.7 percent, while American Tower and Crown Castle both rose less than 1 percent apiece.

Editing by David Gregorio

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Game publisher EA’s holiday-quarter sales forecast misses estimates

(Reuters) – Electronic Arts Inc’s (EA.O) revenue forecast for the holiday quarter narrowly missed estimates on Tuesday as the game developer gears to face tough competition from rivals such as Activision.

Shares of the videogame publisher that closed up nearly 2 percent were down 3.4 percent at $115.60 in after-market trading.

The company forecast third-quarter adjusted revenue of $2 billion, a tad lower than the analysts’ average estimate of $2.01 billion, according to Thomson Reuters I/B/E/S.

“We always try to be conservative… Christmas is always the toughest time to predict how business is going to be,” Chief Financial Officer Blake Jorgensen told Reuters.

EA’s holiday quarter launches include “Star Wars Battlefront II” on Nov. 17 and “Need for Speed Payback” on Nov. 10.

The company expects “Star Wars Battlefront II” to replicate the success of the previous version that sold over 14 million units in the fiscal year 2016.

“They had two big games last year in Q3 – ”Titanfall“ and ”Battlefield“ and have ”Star Wars Battlefront“ and ”Need for Speed“ in this year’s Q3 that should result in roughly flat year-over-year performance, but they are being exceedingly conservative,” Wedbush Securities analyst Michael Pachter said.

Bigger rival Activision Blizzard Inc’s (ATVI.O) slate for the holiday season includes “Call of Duty: WWII.”

Its personal computer version of the smash hit “Destiny 2”, which was launched on Oct. 24, will also drive competition in the December quarter.

On Tuesday, EA raised its full-year adjusted revenue forecast to $5.15 billion from previously stated $5.10 billion.

“The analysts from the very start of the year have not really adjusted their numbers correctly… they tend to get ahead of themselves,” Jorgensen said.

“Our fourth quarter is larger than they (analysts) believe and the third quarter may be slightly under where they are.”

Sales at EA’s high-margin digital business rose 21.7 percent to $689 million in the second quarter ending Sept. 30 as more gamers bought their titles online instead of purchasing physical copies from retail stores.

The game company’s net loss narrowed to $22 million, or 7 cents per share, from $38 million, or 13 cents per share, a year earlier.

EA’s revenue rose nearly 7 percent to $959 million in the quarter, driven by higher sales of its latest editions of popular sports titles such as “Madden NFL” and “FIFA”.

On an adjusted basis, the company reported a revenue of $1.18 billion.

Videogame companies are required to defer some revenue from certain online-enabled games following a tweak to the U.S. accounting rules.

Reporting by Aishwarya Venugopal in Bengaluru; Editing by Arun Koyyur

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Pfizer expects broad interest for consumer health business

NEW YORK (Reuters) – Pfizer Inc, the largest U.S. drugmaker, expects no shortage of suitors for its consumer health business and said it would decide whether to sell, spin off or retain the unit next year.

The business, with brands such as pain drug Advil, Centrum multivitamins and Chapstick lip balm, had sales of about $3.4 billion in 2016.

“We expect broad interest from potential acquirers,” Chief Executive Ian Read said on Tuesday after the company reported its third quarter results.

Supply problems related to sterile injectable products acquired in Pfizer’s purchase of Hospira, along with steep declines in sales of off-patent products, contributed to an 11 percent drop in third quarter revenue from the Essential Health unit to $5.05 billion.

Pfizer said the supply challenges would have a negative impact of “several hundred million dollars” this year, moderating in 2018.

Pfizer shares were off 0.7 percent at $34.90 shortly after midday.

SunTrust Robinson Humphrey analyst John Boris said Essential Health was “under pressure” and that investors were concerned about new competitors grabbing sterile injectables market share before Pfizer’s manufacturing challenges are fully addressed.

Pfizer said all of its 2,000 Puerto Rico-based employees were safe and that it had made significant progress in dealing with damage to its three manufacturing plants on the island devastated by hurricane Maria last month.

Chief Financial Officer Frank D‘Amelio said the revenue impact from the storm was “expected to be insignificant.”

Innovative Health sales rose 11 percent in the quarter to $8.12 billion with strong contributions from its blockbuster pneumonia vaccine Prevnar and breast cancer drug Ibrance.

Prevnar sales declined 1 percent to $1.52 billion, but topped analysts’ estimates of about $1.46 billion.

Ibrance sales surged nearly 60 percent to $878 million but fell short of lofty Wall Street expectations for $914 million.

Sales of rheumatoid arthritis drug Xeljanz rose 48 percent to $348 million but were held back in Europe, where the company is still negotiating reimbursement with several countries.

Pfizer sees additional sales growth with an expected approval in psoriatic arthritis and said it still expected new eczema cream Eucrisa to eventually reach annual sales exceeding $2 billion.

It also said it hoped a potential approval for Xtandi in non-metatstatic prostate cancer based on recent data would provide a new growth ramp for that key medicine from its 2016 acquisition of Medivation.

The company raised the midpoint of its full-year adjusted earnings forecast by 3 cents to a range of $2.58 to $2.62 per share. It tightened its 2017 revenue forecast to $52.4 billion to $53.1 billion, from $52 billion to $54 billion.

Excluding items, Pfizer earned 67 cents per share for the quarter, beating analysts’ average estimates by 3 cents, according to Thomson Reuters I/B/E/S.

“We view these results as refreshingly boring. We think boring is a good thing right now,” Credit Suisse analyst Vamil Divan said in a client note.

The lack of drama was welcomed after several drugmakers this quarter spooked investors with new concerns over critical growth products, including Merck Co, Celgene Corp and Gilead Sciences Inc.

Reporting by Bill Berkrot in New York and Akankshita Mukhopadhyay and Ankur Banerjee in Bengaluru; Editing by Savio D’Souza and Richard Chang

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Wall Street inches higher on gains in techs, consumer staples

(Reuters) – Gains in technology stocks and a jump in shares of consumer companies Mondelez and Kellogg on Tuesday put the three major Wall Street indexes on track for their best monthly gains since February.

Apple (AAPL.O) rose 1.4 percent to a record high after positive reviews of its much-anticipated iPhone X. The stock provided the biggest boost to all the three major indexes.

Intel (INTC.O) hit a 17-year high following a report that Apple has designed iPhones and iPads that would drop chips supplied by Qualcomm (QCOM.O). Qualcomm plunged 7.3 percent and was the biggest drag on the SP and the Nasdaq.

Strong earnings from Mondelez and Kellogg helped the SP consumer staples index .SPLRCS gain 0.85 percent.

Mondelez (MDLZ.O) jumped 5.73 percent after the Oreo cookie maker reported better-than-expected profit and revenue, while Kellogg (K.N) surged 6 percent following its first sales increase in more than two years.

“Earnings have been the key driver,” said Jeff Carbone, managing partner at Cornerstone Financial Partners. “We’re going through a period without any major pullbacks and that must be warranted to the economic data and earnings.”

Third-quarter earnings are being closely tracked to justify stretched valuations in stocks and the results so far have been largely above expectations.

With more than half the SP 500 components reported, earnings are estimated to have climbed 7 percent in the quarter, up from an expectation of a 5.9-percent growth at the start of October, according to Thomson Reuters I/B/E/S.

Investors are also waiting for an announcement on the next Federal Reserve chair. President Donald Trump is likely to pick Fed Governor Jerome Powell, who is seen as more dovish, as the next head, sources have told Reuters.

The Federal Open Market Committee starts its two-day meeting in Washington on Tuesday to discuss interest rates where it is widely expected to leave rates unchanged.

At 12:25 p.m. ET, the Dow Jones Industrial Average .DJI was up 27.68 points, or 0.12 percent, at 23,376.42, the SP 500 .SPX was up 3.41 points, or 0.13 percent, at 2,576.24 and the Nasdaq Composite .IXIC was up 20.10 points, or 0.3 percent, at 6,719.06.

Nine of the 11 major SP indexes were higher, with losses only in healthcare .SPXHC and real estate .SPLRCR sectors.

“I wouldn’t be surprised to see some rotational changes as we’re over the worst period,” said Carbone.

Pfizer (PFE.N) fell 1 percent after results.

Under Armour Inc (UAA.N) slumped about 18 percent after the company slashed 2017 forecasts and reported its first quarterly fall in revenue since going public.

Advancing issues outnumbered decliners on the NYSE by 1,737 to 1,090. On the Nasdaq, 1,788 issues rose and 1,028 fell.

Reporting by Sruthi Shankar; Editing by Sriraj Kalluvila

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ADP, ISS reject Ackman’s claims they exchanged non-public data

(Reuters) – Automatic Data Processing Inc rejected as “false and misleading” on Tuesday the accusation by billionaire investor William Ackman that the company gave proxy adviser Institutional Shareholder Services non-publicly disclosed information.

Ackman, who is aiming to win three seats on ADP’s board in a vote next week, on Monday said the company had given ISS misleading and incorrect claims and asked ISS to reconsider its recommendation that shareholders largely vote for ADP’s slate.

“ADP has not disclosed any material non-public information in its meetings with ISS or any other party,” the company said, adding that it would file a complaint with the Securities and Exchange Commission (SEC).

ISS, which has supported Ackman’s election, said its policy was to not elicit, receive or use non-public information in its research.

“ISS has carefully reviewed the arguments made by Pershing Square in their October 30 letter to ISS and continues to stand by the analysis and conclusions set forth in our October 25 report issued to clients,” ISS said in a emailed statement.

Ackman unveiled his stake of 8.3 percent, including 2 percent in common shares, in the human resources outsourcing company in August.

He has since criticized the company for what he calls sluggish earnings and inefficient operations.

Reporting by Munsif Vengattil in Bengaluru and Svea Herbst in Boston; Editing by Savio D’Souza

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PARIS/LONDON (Reuters) – Telecoms giant Orange (ORAN.PA) launches its own bank on Thursday, aiming to win 25 percent of France’s online banking market by capitalizing on the rising use of smartphones to steal share from established lenders with inferior technology.

The launch is part of a push by the French firm to find alternative revenue streams and retain clients in the face of a price war in the telecommunications sector.

It is also a test for the telecoms and banking industry, marking the first attempt in a major developed market by a telecoms company to launch a standalone bank.

“We are targeting 2 million clients in ten years. That would represent 25 percent of the (online banking) market, but I hope we will not stop there … and we will be the market leader in several years,” Andre Coisne, chief executive of Orange Bank, told Reuters in an interview.

Coisne has previously launched online banks in France for ING Direct and Credit Agricole’s BforBank.

Orange is starting from a small base – Coisne says it has 25,000 customers have expressed interest ahead of the launch, a tiny fraction of the company’s 21 million mobile clients. But the timing of its entry gives some room for optimism.

In France, 793.4 million online banking e-payments were made last year according to the European Central Bank, up from 586.2 million in 2014.

Consultancy Ernst Young predicts the number of customers going online to open an account in France will surge nearly six-fold to 17 million in the next ten years.

The regulatory environment is also becoming more favorable – next year new European Union rules will start to force banks to allow customer data to be made available to other companies, if the customers agree. That will help the likes of Orange to identify potential customers and offer them better deals than their current lenders.

“This is a good start,” said Coisne, who will also face competition from telecoms rival Altice, which launches its bank in 2019.


Orange has beefed up financial services across its networks over the past ten years under several brands, such as Orange Money and Orange Cash, and Orange Finanse in Poland, which uses a platform created by Polish lender mBank.

It targets 400 million euros in revenues for its financial services unit by 2018, out of which half would come from Africa.

Africa is the world leader in mobile banking. Around 12 percent of adults there have a mobile money account against 2 percent globally, according to a 2014 World Bank survey.

Telecoms operators have long hoped to repeat their banking success in Africa and other developing markets in advanced economies, but until now have only done so by relying on partnerships with existing banks, with little success.

So far most telecoms operators have sought to retain customers by offering media content such as free access to music streaming apps like Spotify or movie streaming platform Netflix, as well as exclusive sports broadcasts.

But a minority investor in Orange told Reuters that diversification through banking could prove smarter because these services are essential and sticky.

“To me, it is smarter than spending millions on sport rights that expire every two or three years”, the investor said.

There is no clearly successful precedent in major Western markets, which makes Orange’s move so brave, said Tom Levine, global head of telecoms practice at Allen Overy.

“I hope their ambition goes beyond retaining customers through bundles because there is a real opportunity for telcos in banking to be a platform, thanks to the trust they inspire, their strong brand, and large customer base”.

Orange is betting on a wide range of services – mobile, internet, TV, videos and music, and now banking – to help generate enough revenue to offset costs on infrastructure investments.

“Our ambition is to offer everything, we are a complete bank,” Coisne said.

From Nov. 2, Orange customers can use an instant mobile payment service as well as a free debit card, current account and savings accounts. Its online app will also allow users to transfer money via text message to another Orange account, and use Apple or Android wallets.

Other products, such as loans and insurance, are expected next year.


Orange is not the only new entrant. Established banks such as BNP Paribas, Societe Generale and Credit Agricole are competing with new online low-cost banks such as N26, and retailers such as Carrefour.

Some French banking executives have expressed concern about the entry of Orange Bank into the market and the impact on profit margins.

Orange is “potentially a very important competitor”, Philippe Brassac, chief executive of Credit Agricole, said in May.

Banks are making investments to increase the appeal of their services to smartphone users, while also cutting branches to keep costs down.

France’s BNP Paribas upgraded its mobile app this year and hired a former marketing and digital executive at Bouygues Telecom to head its online Hello Bank! in France, while Credit Agricole is set to announce a new online banking offer in November.

If Orange meets its target of 2 million customers in the next 6 to 10 years, it would likely be at the expense of these rival online businesses. But for Orange, banking would remain a small business relative to its overall size, says Bengt Nordstrom, CEO of telecoms consulting firm Northstream.

“This would only bring a very small stream of additional revenue relative to the scale of Orange,” he said.

Reporting by Sophie Sassard in London, Maya Nikolaeva, Gwenaelle Barzic, Mathieu Rosemain and Noemie Olive in Paris; editing by Giles Elgood

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Trump says he is not looking to phase in corporate tax cut

WASHINGTON (Reuters) – President Donald Trump said on Tuesday that he was not looking for the corporate tax rate reduction that the White House is seeks to be phased in over time.

“Hopefully not,” Trump told reporters when asked about the issue during a meeting on tax reform at the White House.

Trump said he wanted lawmakers to pass a tax reform bill by the U.S. Thanksgiving holiday in late November.

Reporting by Jeff Mason; Editing by Chizu Nomiyama

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Pfizer beats profit estimates, raises 2017 earnings forecast

(Reuters) – Pfizer Inc’s quarterly profit beat market estimates, partly helped by higher-than-expected sales of its blockbuster pneumonia vaccine Prevnar, and the company also raised its full-year earnings forecast.

Shares of the largest U.S. drugmaker were up marginally at $35.24 in premarket trading on Tuesday.

Pfizer sold $1.52 billion worth of Prevnar in the third quarter, down nearly 1 percent from a year earlier, but ahead of analysts’ estimate of $1.46 billion, as compiled by Barclays.

The vaccine, which accounted for 11.5 percent of Pfizer’s total revenue, has fueled Pfizer’s growth until the last few quarter, when its sales has shrunk.

“Prevnar was a notable beat this quarter,” Credit Suisse analyst Vamil Divan said in a client note.

“We view these results as refreshingly boring and, given how biopharma stocks have reacted this quarter to disappointing results or product announcements, we think boring is a good thing right now.”

Pfizer has been under increasing pressure from investors and Wall Street to pull off a large deal to help reignite growth and the Street will look for commentary on acquisitions during the company’s conference call, analysts said.

Sales of Pfizer’s breast cancer treatment, Ibrance, surged nearly 60 percent to $878 million, but fell short of market estimates of $914 million. Ibrance faces competition from Novartis’ recently approved drug Kisqali.

Pfizer’s total revenue rose 1 percent, increasing for the first time in four quarters, to $13.17 billion, in line with market estimates.

Net income more than doubled to $2.84 billion, or 47 cents per share. Excluding one-time items, Pfizer earned 67 cents per share, beating analysts average estimate of 64 cents per share, according to Thomson Reuters I/B/E/S.

The company raised the midpoint of its full-year adjusted earnings forecast by 3 cents to a range of $2.58 to $2.62 per share. It tightened its revenue forecast to $52.4 billion to $53.1 billion, from $52 billion to $54 billion.

Reporting by Akankshita Mukhopadhyay and Ankur Banerjee in Bengaluru; Editing by Sayantani Ghosh and Savio D’Souza

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Mastercard posts record profit on higher global spending

(Reuters) – Mastercard Inc (MA.N) on Tuesday posted a record profit and trounced Wall Street expectations, as it battled for consumers and global market share over other payment channels including its bigger rival Visa Inc (V.N).

More people used credit, debit and commercial prepaid cards across Mastercard’s global network – pushing the value of transactions processed – known as ‘gross dollar volume’, up 11 percent to $1.35 trillion.

“In the U.S., we continue to see steady economic growth, low unemployment and inflation,” said Ajay Banga, chief executive officer of Mastercard, on a post-earnings call.

“Consumer sentiment is favourable.”

Last month, consumer spending in the United States had its largest increase in eight years, aiding payment processors such as Mastercard and Visa, which generate revenue by facilitating credit- and debit-card transactions.

Visa also beat market expectations last week, posting an 11 percent rise in quarterly profit on healthy consumer spending.

Mastercard shares hit a record earlier but lost ground and were down 1.3 percent at $147.02 mid-day. The drop was attributed to profit taking after a 20 percent rise from the previous quarter, according to Thomas McCrohan, managing director of Americas Research at Mizuho.

Mastercard has risen nearly 44 percent this year, as of Monday’s close, outpacing Visa, which was up 41 percent over the same period.

Mastercard’s net income rose 21 percent to $1.43 billion or $1.34 per share in the third quarter ended Sept 30. Analysts on average were looking for $1.23, according to Thomson Reuters I/B/E/S.

Cowen analyst George Mihalos called the results “very strong” and said the company has “exceeded our expectations every quarter this year.”

Mastercard is taking measures to bolster security on its network and said safety remains a key priority. Many American companies are investing heavily in securing their systems against hackers.

“Our investments in technologies like biometrics, tokens, encryption and artificial intelligence are redefining the way both consumers and transactions are protected,” Banga said.

Mastercard has already started the process when it announced this month it would forgo signatures after purchases.

Total operating expenses rose 20.4 percent to $1.46 billion in the quarter, partly from costs related to buying digital payments company Vocalink.

Net revenue rose 18 percent to $3.40 billion and topped estimates of $3.28 billion.

Reporting By Aparajita Saxena in Bengaluru; Editing by Bernard Orr

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