July 15, 2014
Put on your classiest Vineyard Vines tie and shave that thing you call a beard. Tuesday was all about the quarterly earnings from America's two biggest branded banks -- and one hefty tobacco acquisition -- as the Dow Jones Industrial Average
) (DJINDICES: ^DJI
) inched up 6 points.
1. Reynolds buys Lorillard in major tobacco acquisition ...
Smoke on this. The U.S. tobacco industry got shaken up like a tin of Skoal as Reynolds American
) agreed to buy its smaller competitor Lorillard
) for $27.4 billion. Shares of both companies suffered inflammation, falling more than 6% because investors think the cigarette industry is a dying one -- but Reynolds believes being big will help it stay relevant.
This is no simple "roll-it-up" acquisition, because a whole bunch of tobacco companies got in for a puff. Imperial Tobacco Group spent $7 billion as part of the deal to buy brands Kool, Salem, and Winston and a North Carolina manufacturing plant from Lorillard. Plus, British American Tobacco, which owns 42% of Reynolds, spent another $4.7 billion to maintain control of the company.
The big surprise is that Reynolds was willing to sell off blu e-cigarettes as part of the deal. Reynolds now owns major brand names Newport and Camel, but the e-cigarettes market has been on fire ever since convincing a whole new generation that water vapors coming out of your mouth look cool.
The takeaway is that the deal has taken over a year to close, but it's the most significant event to happen to tobacco giants since Cosmo Kramer sued on Seinfeld
. The new tobacco company is expected to give some competition to Altria Group
(owner of Philip Morris), whose Marlboro brand makes up nearly half the cigarette sales in the United States.
2. ... And Goldman's earnings looked really good, too
Shares of Goldman Sachs
) rose over 1% Tuesday after the company reported solid earnings -- clearly, the summer interns and associates at the New York-based investment bank have been doing a good job getting their bosses quality coffee.
What were the numbers? Solid (gold). Second-quarter revenue rose 6% to $9.13 billion, crushing the $7.97 billion Wall Street expected, with a hefty profit of just over $2 billion. Although trading revenue from fixed income, currencies, and commodities fell 10% from last year, that's less than the drop JPMorgan and Citibank experienced.
Leaked: Apple's next smart device (warning -- it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee that its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are even claiming that its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts that 485 million of these devices will be sold per year. But one small company makes this gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and to see Apple's newest smart gizmo, just click here!