Most of Monday had a feel-good vibe, with the Nasdaq heading back into the black for the first time since August on big-name M&A news in the tech and managed-care industries. But the clouds gathered after the bell when Netflix (NASDAQ:NFLX) reported earnings.
The beleaguered streaming video and DVD rental company actually beat revenue expectations of $812 million for the third quarter, with revenue increasing 49% to $822 million. But that good news was greatly overshadowed by CEO Reed Hastings’ warning about plummeting DVD subscriptions in the fourth quarter, as well as expansion into the United Kingdom that would put Netflix in the red for Q1 2012.
NFLX shares were pummeled on the news, losing more than a quarter of their value to trade around $87 by 5:30 p.m. Monday. The stock is at its lowest point since April 2010.
Before the bell Monday, Oracle (NASDAQ:ORCL) made an aggressive move into cloud computing when it announced it was buying RightNow Technologies (NASDAQ:RNOW), which provides cloud-based customer service — for about $1.5 billion. RightNow was purchased at a 20% premium over its $36-per-share closing price Friday.
RightNow could have to pay a $60 million termination fee if it accepted another suitor’s bid, but such a deal seems unlikely. According to Reuters, Pacific Crest analyst Brendan Barnicle said, “RightNow got a very good price from Oracle. I don’t see other bidders. Not at this valuation.” RightNow, which competes with SalesForce.com (NYSE:CRM), finished the day at $42.87, and ORCL shares ended Monday up 2.33% at $32.87.
Also making big waves in the tech world was a Wall Street Journal report that said Google (NASDAQ:GOOG) might help finance a deal by private investors to buy out Internet search competitor Yahoo (NASDAQ:YHOO). Shares of YHOO — which also has rumored interest from Alibaba Inc. and Microsoft (NASDAQ:MSFT) — surged 3.66% to finish Monday at $16.71.
Health insurer and service company Cigna Corp. (NYSE:CI) gained about 1.5% to $45.34 after its pre-trading announcement that it would buy fellow insurer HealthSpring (NYSE:HS) for $3.8 billion, bolstering the company’s seniors and Medicare segment. A report in Forbes said, “Cigna is paying about $500 per customer for HealthSpring’s nearly 800,000 Medicare Prescription Drug Plan customers, and about $10,000 per member for its 340,000 Medicare Advantage ones.”
At $55 per share, Cigna is buying HealthSpring at a 37% premium over its Friday closing price. HS shares finished Monday at $53.71.
Three Up
- Melco Crown Entertainment (NASDAQ:MPEL): Up 9.62% (97 cents) to $11.05.
- Sina Corp. (NASDAQ:SINA): Up 9.37% ($7.91) to $92.37.
- Green Mountain Coffee Roasters (NASDAQ:GMCR): Up 8.67% ($5.88) to $73.73.
Three Down
- Kimberly-Clark (NYSE:KMB): Down 4.59% ($3.35) to $69.65.
- Marathon Petroleum (NYSE:MPC): Down 4.02% ($1.50) to $35.85.
- Colgate-Palmolive (NYSE:CL): Down 2.85% ($2.68) to $91.24.
As of this writing, Kyle Woodley did not own a position in any of the aforementioned stocks. Check out recaps from previous trading days here.
