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Pre-Market: Netflix Soars On Earnings; Ebay Rebuffs Icahn's Call To Spin Off PayPal

By: Minyanville
Posted: 1/23/2014 8:55:00 AM
Referenced Stocks: EBAY;IBM;MCD;NFLX;TWX

Stocks are poised to fall for the third straight day after jobless claims rose and disappointing manufacturing data from China was released. Internet stocks such as Netflix ( NFLX ) and Ebay ( EBAY ) also rose after reporting strong earnings.

After a mixed trading day, stock futures are mostly lower ahead of the starting bell. Dow (INDEXDJX:.DJI) futures were down 0.35% at 16,260. S&P 500 (INDEXSP:.INX) futures fell 0.32% to 1,832.70, and futures on the Nasdaq Composite (INDEXNASDAQ:.IXIC) declined 0.08% to 3,617.75.

Jobless claims in the US ticked up by 1,000 to 326,000. Economists had expected claims to fall to 330,000.

In earnings news, Netflix reported a bumper fourth quarter. Net profit rose to $48 million from $8 million in the same period a year ago. Earnings per share came in at $0.79, far surpassing estimates. The number of Netflix subscribers in the US also rose by 2.3 million to 31.7 million, making it more popular than HBO ( TWX ). The video streaming service predicts $48 million in profit for the current quarter as well, as 2.25 million new subscribers are expected to sign up. On the earnings call, CEO Reed Hastings discussed the possibility of charging users for sharing their account passwords. Shares surged 17% on the news.

Ebay shares were up 1.9% after its earnings report. The auction site's earnings per share came in at $0.81, beating consensus. Revenue grew by 13.5% to $4.5 billion, but fell short of analyst projections. Activist investor Carl Icahn, who has an 0.8% stake in Ebay, has proposed that it spin off PayPal. Ebay disagreed. The company also announced that it will buy back $5 billion of its own shares.

McDonald's Corporation ( MCD ) reported slow growth in the last quarter. Earnings per share of $1.40 beat expectations by a penny, but revenue of $7.09 billion fell short. Global comparable store sales rose just 0.1%, while US sales fell 1.4%. Analysts had anticipated that US traffic had fallen just 0.5%. Europe, a key market for the fast food company, fared better, as sales rose by 1%.

IBM ( IBM ) announced that it will sell its low-end server business to Lenovo Group (OTCMKTS:LNVGY). Lenovo will pay $2.3 billion in cash and stock. The Chinese company is expected to take on as many as 7,500 IBM employees in the deal.

This month, China's manufacturing sector declined for the first time in half a year. The HSBC flash PMI for January fell to 49.6 from 50.5 in December. (Readings under 50 indicate a contraction.)

Later today, we will get more insight into the health of housing and manufacturing in America. Markit's January US manufacturing PMI, due for release later this morning, is expected to rise to 55 from 54.4. Existing home sales in December are likely to have kept a steady annualized pace of 4.9 million. The Federal Housing Finance Agency's home price index is expected to show another month of gains in November, rising 0.4%.

Twitter: @vincent_trivett