Democrat and Chronicle from Rochester, New York on October 23, 2015 · Page B4
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October 23, 2015

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Democrat and Chronicle from Rochester, New York · Page B4

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Rochester, New York
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Friday, October 23, 2015
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Page B4
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4B E3 USA TODAY—DEMOCRATANDCHRONICLE FRIDAY,OCTOBER23,2015 MALONE M A Y BE EYEING U.K .-BASED CABLE FIRM John Malone’s Liberty Global confi rmed it is in talks to possibly buy U .K.-based Cable & Wireless Communications, which deliver s pay TV, voice, mobile and br oadband in the Caribbean and Cen- tr al America. The deal could be worth more than $5 billion, reports “The Wall Street Journal. ” C&W has more than 5 million customers; Liberty has about 27million in 14 countries in the U.K., Europe and Latin America. LUMBER LIQUIDATORS TO PAY $13.2M FINE OVER FLOORING Flooring retailer Lumber Liquidators Holdings pleaded guilty Thursday and agreed to pay $13.2 million in fines and penalties for illegal importation of hardwood flooring. Most of the imported floorings were manufactured in China from timber that had been illegally logged in eastern Russia. The illegal cutting of Mongolian Oak threatens the habitat of the last 450 wild Siberian tigers, the Department of Justice said. EXISTING HOME SALES RISE 4.7% IN SEPTEMBER Existing home sales bounced back in September as moderating price increases coaxed prospective buy er s to close deals, the National Association of Realtors said. Sales increased 4.7% to a seasonally adjusted annual r ate of 5.55 million, solidly above the 5.39 million pace expected by economists. The median home price was $221,900 in September, up 6.1% from a year ago. ACTIVISION ADDS ESPORTS Video game publisher Activision Blizzar d is adding a corporate division devoted to competitive electronic sports, with the former chief of ESPN and NFL Network at the helm. Steve Bornstein will serve as chairman of Activision’s eSports division. Activision is entrenched in competitive gaming and created a “Call of Duty” World League this year, boasting a $3 million prize pool. According to SuperData Research, global revenue for eSports is expected to hit $6 12million. MONEYLINE USA SNAPSHOTS © A hit on social Length of average job tenure job tenure average average is the No. 1 thing recruiters notice on recruiters notice on social media social media Source Jobvite Recruiter Nation Survey of 1,404 recruiting/human resources professionals JAE YANG AND PAUL TRAP, USA TODAY INDEXCLOSECHG Nasdaq composite 4 920.05 x 7 9.93 S &P 5002052.51 x 33.57 T- note, 10-year yield 2 .03% u nch. Oil, light sweet crude$45.42 x 0.22 Euro (dollars per euro) $ 1.1113 y 0 .0224 Yen per dollar120.74 x 0.78 SOURCES USA TODAYRESEARCH, MARKETWATCH.COM DOW JONES INDUSTRIAL AVG. 320.55 17,150 17,200 17,250 17,300 17,350 17,400 17,450 17,500 9:30 a.m. 17,169 4:00 p.m. 17,489 THURSDAY MARKETS NEWS MONEY AUTOS TRAVEL SPORTS LIFE McDonald’s is getting its McRevenge. After years of being chastised for not being hip and fast-growing like burrito chain Chipotle, McDonald’s has turned the tables a nd is now the fast-casual stock i nvestors crave. Shares of McDonald’s were up about 8% to m ore than $110 Thursday — mak- i ng it a driving force of the Dow — and a stark contrast with the performance at Chipotle. Why the sudden halo on the Golden Arches? McDonald’s just nailed the third quarter, delivering adjusted quarterly profit of $1.40 a share, which topped expectations by 9.4%, S&P Capital IQ says. Contrast that with investors’ big disappointment with Chipotle’s third-quarter results t hat missed by nearly 1%. And get this: McDonald’s diluted earnings per share before extraordinary items soared 28.4% during the third quarter, topping the growth at Chipotle by the same measure at 10.6%, S&P Capital IQ says. It’s not just one lucky quarter, either. McDonald’s profit growth metrics have been improving while Chipotle’s have been sag- ging. McDonald’s diluted earnings per share before extraordinary items have grown the past two quarters while it has sagged in the past four at Chipotle. Investors seem to be getting a b igger taste for McDonald’s, as the burger chain’s stock has topped Chipotle this year, too. Shares of McDonald’s are up more than 17% this year while Chipotle’s are down 3.3%. The relationship between the two companies is fascinating: It’s a classic matchup between a massive company adapting to new tastes vs. a smaller firm that’s trendy with in- vestors and consumers. McDonald’s was an early investor in Chipotle, making the contrast that much sweeter. The food fight isn’t over yet. McDonald’s still lacks revenue growth, which will be a key ingre- d ient investors need before pronouncing the food fight over. Revenue sank 5.3% during the quarter, an improvement from the 9.5% drop in the second quarter, but still down. Chipotle, by comparison, put up 12.2% revenue growth in the third quarter. But at least now Ronald McDonald really does have something to smile about. JUSTIN SULLIVAN, GETTY IMAGES McRevenge! McDonald’s winning fast-food fight with Chipotle JEFFERSON GRAHAM, USA TODAY McDonald’s diluted earnings per share before extraordinary items growth is taking o, while it’s sagging at Chipotle. COMPARING EARNINGS GROWTH Source S&P Capital IQ FRANK POMPA, USA TODAY McDonald’sChipotle -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% Q2Q3Q2Q3Q4Q1 20142015 10.6% 28.4% Hamburger chain turns corner on growth as burrito maker stalls Matt Krantz @mattkrantz USA TODAY Shares of Valeant Pharmaceuticals International plunged again Thursday as a regulator called all egations surrounding the Canada-based drugmaker “worrying” a nd ananalyst downgraded the stock. After steeper intra-day drops, the shares closed down 7.37% at $109.87. The decline continued Wednesday’s rout that saw Va- leant sharesclosedown nearly 2 0%, erasing billions of dollars in market value. The drop signaled continuing i nvestor concern over a Wednesday report by short-seller Citron R esearch that focused on Va- leant’s ties to a network of phar- m acies and accused the company of creating “phantom accounts” as part of a purported “fraud to c reate invoices to deceive the au- d itors and book revenue.” T he drugmaker denied the allegations, saying they “appear to be an attempt to manipulate the market in an e ort to drive down Valeant’s stock price.” Valeant also said it would hold an investor conference call Monday to “lay out the facts.” BMO Capital Markets none- t heless downgraded Valeant from Outperform to Market Perform w ith a target price of $141 per share. The report by the investment banking arm of Canada’s Bank of Montreal said it “cannot defend” Valeant’s financial ties to anetwork of specialty pharmacies that account for an estimated 1 0% of the drugmaker’s revenue. “While other companies also use specialty pharmacies, the s tructure of Valeant’s network seems di erent,” wrote BMO C apital analyst Alex Arfaei. “Va- leant’s structure may not be ille- g al, but we find it aggressive and questionable.” D espite Valeant’s e ort to re- b ut the Citron charges, “there is residual uncertainty that may not be fully resolved unless there is an investigation,” Arfaei wrote. The securities regulator for firms based in Canada’s Québec province is “watching very seri- o usly the evolution of the situation,” Autorité Des Marchés Financiers spokesman Sylvain T héberge wrote in an email. While he declined to comment o n the charges, he added, “These allegations are, however, worry- i ng, and our goal is to make sure that there was no negligence re- garding our securities regula- t ion.” S eparately, Valeant disclosed l ast week that federal prosecutors in Massachusetts and New York have subpoenaed the firm seeking information about its drug pricing and distribution policies, as well ashow it helps patients pay for medications. The new allegations involve Valeant’s Philidor RX Services u nit, a Pennsylvania-based pharmacy that said it processes pre- s criptions and dispenses medications while providing administrative services to a network of other pharmacies. The network includes R&O Pharmacy, aCalifor- nia company suing Valeant over a $69million payment invoice f rom the drugmaker. Adding new information to the controversy, Philidor said it “does n ot currently have a direct equity ownership in R&O Pharmacy or t he a liated pharmacies but does have a contractual right to ac- q uire the pharmacies now or in the future.” Valeant shares continue to slump Drugmaker denies fraud accusations Kevin McCoy @kmccoynyc USA TODAY BLOOMBERG VIA GETTY IMAGES Valeant’s stock has fallen more than 25% in two days. Stocks surged Thursday as investors were encouraged by a su- persized profit beat by fast-food giant McDonald’s and signals from European bankers that more stimulus may be on the way. The Dow Jones industrial average rose 321 points, or 1.9%, to 17,489, helped by a 8.1% gain in McDonald’s. The gains were held down by an earnings miss from fi- nancial services firm American Express, whose shares were down more than 5%. Heavy-equipment maker Caterpillar also fell shy of profit estimates, but its stock was up 2.9%. The Dow is now trading at its highest level since Aug. 18. The b lue-chip gauge’s last 300-plus p oint gain came Oct. 5. T he broader Standard & Poor’s 5 00 index gained 34 points, or 1 .7%, to 2,053 and moved back a bove the key 2,040 level. It came within striking distance of its 2 014 close of 2,058.90. The Nasdaq composite rose 80 points, or 1.7%, to 4,920. Thursday was a busy day for earnings, with Dow component Caterpillar missingearnings-per- share forecasts by 3 cents, although investors shrugged o the miss, pushing the stock up 2.9% to $70.88. That earnings miss was o set, however, by a solid earnings beat from McDonald’s, another Dow stock, which topped earnings forecasts by 13 cents. The burger and fries giant also beat revenue forecasts, sparking a big rally in McDonald’s shares. A lso giving stocks a boost: The E uropean Central Bank hinted that more stimulus might be on t he way later this year to o set e conomic weakness caused by the fallout of slowing growth in China and emerging markets. The S&P 500 was also helped by news that the Freedom Caucus (hard-line conservatives in Congress) would support Wisconsin Congressman Paul Ryan for speaker, which is viewed as a constructive development in the debt ceiling debate, Bespoke Investment Group told clients in an e arly-morning note. Stocks were trending sharply higher in Europe, where the European Central Bank left interest rates unchanged and did not rule out more market stimulus. Germany’s DAX was up 2.5% and the CAC 40 in Paris was 2.3% higher. ECB chief Mario Draghi said the ECB would reassess the financial situation in December. Dow beefs up 321 Hits highest mark in two months; S&P 500 back above key level Adam Shell @adamshell USA TODAY The Dow is no w trading at its highest level since Aug. 18. The blue-chip gauge’s last 300-plus point gain came Oct. 5. BLOOMBERG John Malone ACTIVISION/TREYARCH Ascreen shot from Call of D uty: Black Ops III .

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