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Canaccord Genuity on Apple, Procter & Gamble, and PVH


Commentary on Apple's war with Motorola, insider selling at Procter & Gamble, and PVH's solid earnings.

The following are excerpts from Canaccord Genuity analysts' commentaries.

Apple (AAPL): Bringing Out the Peace Pipe?
While the Apple/Samsung (SSNLF) patent battle has captured headlines over the past few days, Motorola Mobility's war with Apple took an unexpected turn this week. A filing Monday showed that Motorola has agreed to license some of its patents to Apple in Germany. No specific details of the licensing agreement, including timeline or royalty rates, have been disclosed at this point.

Tech site notes that the agreement has Apple admitting that it is liable for past damages relating to the patents and that the terms of the agreement seem to include "cellular standard-essential" patents, which means Motorola's claims regarding WiFi and video codecs could still be used in future patent suits. Motorola's complaints with the International Trade Commission have targeted syncing technologies and bookmarking media playback on one device to resume on another.

Procter & Gamble (PG): Don't Be Distracted by Shiny Things – Stay Focused.
While Bill Ackman and Pershing Square get more engaged with General Growth Properties (GGP) and Brookfield Asset Management (BAM-A), shares of Procter & Gamble have quietly reached multi-year highs -- this, despite some notable insider selling. On August 14, according to insider filings, PG CEO Bob McDonald, sold 131,521 shares at an average price of $66.61. The total value of the transaction was $8,760,614.

Following the sale, McDonald still holds more than 219,000 shares of PG. On July 12, Pershing disclosed its new position in PG and shares have risen over 9.3% since then. Ackman hasn't been the only catalyst for the recent rise in PG share price. The company did report Q4/12 results and offered some soft guidance. Roughly 25% of Pershing's total listed US equity holdings are in PG. Pershing holds 21,916,208 shares in PG, and all options for an additional 8,387,700 worth of PG shares.

We note that Ackman has liquidated or reduced a number of Pershing's positions in order to fund its investment in PG. Ackman sold stakes in Citigroup (C), Kraft (KFT) and Family Dollar (FDO) in Q2/12. Ackman has a history of taking large positions in companies, then aggressively pushing for changes that he believes will add value for investors. In July, Ackman, speaking at a conference in New York City, said that he believes he can influence PG management even though Pershing owns just 1% stake in PG. Asked if he supports McDonald, Ackman said, "I look forward to meeting him." With PG and the row over GGP, Pershing's Q2/12 Shareholder Letter should make for some interesting reading.

PVH (PVH): Tommy Boy.
Clothing maker PVH, parent of Calvin Klein and Tommy Hilfiger, was in the green Tuesday after raising its full-year earnings outlook for the third time this year on anticipated strength in Europe. On the back of solid Q2 results, management boosted its 2012 earnings guidance to a range of $6.25- $6.32 per share, topping the consensus estimate of $6.22. Its second quarter earnings came in at $1.25 per share versus the average analyst estimate of $1.20 while revenue of $1.34 billion was in line with expectations. Revenue from its Tommy Hilfiger business, which makes up more than half of its total revenue, rose 4% to $721.9 million.

PVH's profitability has been on the rise over the past several quarters as its 2010 acquisition of Tommy Hilfiger has helped fuel high margin, international growth.

Editor's note: For more information on Canaccord Genuity, click here.
No positions in stocks mentioned.
Canaccord Financial and its affiliated companies may have a Corporate Finance or other relationship with the companies mentioned and may trade in any of the Designated  Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage herein.
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