Time Warner Soars on a Potential Merger and Yum! Brands Drops After Earnings

The blue chips hit another record today as Time Warner jumped on a buyout offer. Yum! Brands, meanwhile, fell after its earnings report came out.

Jul 16, 2014 at 10:00PM

Stocks finished higher today as merger news once again stole headlines and put investors in a buying mood. For the day, the Dow Jones Industrial Average (DJINDICES:^DJI) finished up 77 points, or 0.5%, hitting a new record at 17,138. The S&P 500, meanwhile, gained 0.4%, and the Nasdaq moved just 0.2% higher. 

The big M&A news today came out of Rupert Murdoch's 21st Century Fox (NASDAQ:FOXA), which made a splash with its $80 billion unsolicited stock-and-cash offer to by Time Warner (NYSE:TWX), the parent of HBO, Warner Bros., and the Turner group of cable networks. Time Warner shares jumped 17% even as management responded to the offer with an unqualified "no," refusing to even hold talks with Fox to discuss a merger. In its response to the offer, Time Warner's management said it was confident that its strategic plan would "create significantly more value" for shareholders. Media tie-ups have become popular this year as companies fight over limited spectrum and content becomes more valuable with the popularity of streaming. Among the big-name mergers this year have been AT&T and DirecTV, and Comcast and Time Warner Cable, though both deals are pending regulatory approval. A Time Warner-Fox merger would also face stiff regulatory hurdles, but investors seem to expect a second offer from Fox as reports say Murdoch has no plans to back down. Fox finished down 6% on the news.

The Federal Reserve's beige book report, or its overview of the economic conditions in its 12 districts, said that growth was "modest" to "moderate" in June and early July as consumer spending picked up. The central bank found positive growth in most individual sectors around the country, providing the latest data point to show the economy picking up speed.


After hours, shares of Yum! Brands (NYSE:YUM) were off 2% as the fast-food giant came up short of expectations in its quarterly report. The KFC parent said same-store sales continued to recover at its China locations, rising 15%, after a food-safety scare caused a sharp drop in sales last year. In India, however, comps fell 2% against an expected gain of 1.6% as the company grew its store base by 25% in the world's second-biggest country. Revenue increased 10% to $3.2 billion in the quarter, short of estimates at $3.25 billion, while earnings per share improved 30% to $0.73, but also missed expectations by a penny. CEO David Novak said the company was on its way to delivering 20% EPS growth this year and was making investments to ensure continued bottom-line growth, as the company plans to open 700 restaurants this year in China and a record 1,250 and other foreign countries, most of which are in emerging markets. Given that the long-term growth plan is fully intact, I wouldn't be too concerned about the slight miss today.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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