Podcast: Xerox Goes Whale Hunting
PG&E stock tumbles as wildfire costs cut into earnings. SeaWorld Entertainment stock rallies. And would printer company Xerox offer to buy its much bigger rival HP?
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The California utility reported a third-quarter loss—and said that this year, it will take bigger writedowns for wildfire costs than it had expected.
PG&E (ticker: PCG) has been in bankruptcy court since January. It filed to deal with the potential costs of the deadly wildfires its equipment started in 2017 and 2018.
It isn’t clear exactly how much the wildfires will cost PG&E. But those costs are what put it into the red this quarter—it took a $2.5 billion non-cash charge. The utility also raised its forecast for its total wildfire costs by 13%
A deal between the two printer companies may sound more boring than watching ink dry. But Xerox Holdings (XRX) is whale hunting here. Its market capitalization is $8.2 billion, while HP’s is more than three times that—$29 billion. That means Xerox would have to take on debt if it is serious about buying HP (HPQ).
Wall Street is split on whether the deal will happen at all. One analyst said that Xerox might actually want to get bought by HP instead of the other way around. And the offer to buy its bigger rival could be just to show that a deal makes sense.
—after it reported third-quarter results on Thursday. The theme-park company’s stock gained—and that was despite profit and sales figures that missed Wall Street’s estimates. There are a few reasons for that.
For one, investors were fine blaming the disappointing quarterly numbers on bad weather. That meant they could focus on the fact that the company’s operating costs were lower than expected.
And second, SeaWorld (SEAS) said its full-year earnings would be toward the high end of its forecasted range. And third, it announced a new CEO, less than two months after its previous one resigned. The stock is now up 29% for the year.
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