S&P Boosts Disney’s rating to A+ from A

#S&P Global Ratings said today that it raised its long-term corporate credit rating and debt ratings on The Walt Disney $DIS disneyto A+ from A. At the same time, S&P raised short-term corporate credit rating on the company to A-1+ from A-1. The rating outlook is stable.

“We recently completed an extensive peer review of the major U.S. investment-grade and high-speculative grade media, telecommunications, and cable companies we rate… As a result of this review, we have a more favorable view of Disney’s long-term business prospects relative to its peers. We believe Disney will continue to successfully tap its deep reservoir of intellectual property to generate high demand content through its film and television studios… The stable rating outlook on Disney reflects our expectation that the company’s overall business performance will remain strong, particularly at its film and TV studio division and at the cable networks, despite secular pressures in the U.S. We also expect that management will maintain its current financial policy, with adjusted leverage of less than 2x,” the ratings agency and its analysts said.

The rating directly affects how much Disney will be paying on its Corporate debts

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Fed says labor market strengthened even as economic activity slowed

The Federal Reserve said in today’s statement, “Information received since the Federal Open Market Committee met in Marcropped-527178_434502233267150_400064991_n.jpgch indicates that the labor market has continued to strengthen even as growth in economic activity slowed. Job gains were solid, on average, in recent months, and the unemployment rate declined. Household spending rose only modestly, but the fundamentals underpinning the continued growth of consumption remained solid. Business fixed investment firmed.

Inflation measured on a 12-month basis recently has been running close to the Committee’s 2 percent longer-run objective. Excluding energy and food, consumer prices declined in March and inflation continued to run somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.”

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#FOMC #Inflation #Rates #Trade

China Woes Send Optical Communication Shares Lower!

Investors have been skittish on the prospects for RMB#optical communication companies since late last year, mostly centered on a slowdown in #China spending.

IHS Markit pointed out in a report from December 2016 that the pace of China’s spending on optical network equipment slowed in Q3 of 2016. Sales in China dropped more than 19% sequentially, according to the report. Operators in the country still spent 14% more than in Q3 of 2015, thanks to deployments of 100G infrastructure led by China Mobile.

A recent report from MKM Partners on #Oclaro $OCLR peer #Finisar $FNSR noted concerns on a number of fronts, “including China, for all products and 10G Datacom and Fibre Channel/SAN in the U.S. and Europe.” The analyst saw Q4 demand in China weak due in part to lower demand from Huawei with weakness in product demand across the board, including WSS,10G Datacom and Telecom, and CFP2.

According to the note, FiberHome and ZTE are also sluggish for Finisar. Oclaro CEO Greg Dougherty expanded on China during the company’s earnings call on Tuesday night. “In April, we were informed by both of our major Chinese customers that demand would be even slower than previously anticipated for Q4. While both customers have signaled a slowdown for demand in the China market, the majority of the projected Q4 impact is coming from one customer. This slide-dark-fibercustomer cited both the reduction in demand for the Chinese market as well as in inventory correction,” the CEO said.

On a positive note, #Dougherty sees the fundamental demand drivers in China still intact, and believes growth will return later this year from metro and provincial networks deployment.

ANALYSTS WEIGH IN: In a report out Wednesday morning, Jefferies analyst James Kisner said he believes the post-earnings selloff in shares of Oclaro brings a compelling entry point. The analyst was pleased with the gross margin performance and thinks the outlook suggests “healthy industry dynamics and product differentiation.” He lowered his price target for the shares to $12 from $14 and reiterated a Buy rating on the name. In a separate note out Wednesday, Needham analyst Alex Henderson pointed out that a C-Suite mandate to improve cash flow at Huawei is causing a more dramatic inventory correction than expected and that there was a “modest” amount of inventory to mop up at #ZTE.

OPTICALS DOWN: Shares of other companies in the space are also lower, including Finisar (FNSR), #Lumentum $LITE , #NeoPhotonics $NPTN , #Acacia Communications $ACIA , #Viavi $VIAV , and Applied Optoelectronics $AAOI .

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Straight Path Receives Superior Offer

#StraightPath Communications $STRP announced that its board of directorsresize_StraightPath determined that a revised offer from an unnamed “multi-national telecommunications company” to acquire 100% of the issued and outstanding shares of Straight Path for $135.96 per share, reflecting an enterprise value of approximately $2.3B, which will be paid in bidder stock in an all-stock transaction constitutes a “Superior Proposal” as defined in Straight Path’s previously announced definitive agreement and plan of merger with #AT&T $T and Switchback Merger Sub Inc., dated as of April 9.
The bidder previously submitted an unsolicited offer on April 24 to acquire 100% of the issued and outstanding shares of Straight Path for $104.64 per share, reflecting an enterprise value of $1.8B, which has been superseded by the revised offer announced today.
Under the terms of the AT&T Merger Agreement, AT&T agreed to acquire Straight Path in an all-stock transaction in which Straight Path stockholders would receive $95.63 per share, reflecting an enterprise value of $1.6B, which would be paid using AT&T stock.
Under the AT&T Merger Agreement, Straight Path is required to pay a $38M termination fee to AT&T if the Straight Path Board terminates the AT&T Merger Agreement in order to enter into an agreement with the Bidder. The bidder has agreed to pay the termination fee to AT&T on Straight Path’s behalf in such event. Straight Path would be required to repay the bidder for the AT&T termination fee under certain circumstances in connection with a termination of the Bidder’s merger agreement.
At this time, Straight Path remains subject to the AT&T Merger Agreement and the Straight Path board has not changed its recommendation in support of the AT&T transaction, the existing AT&T merger agreement, or its recommendation that Straight Path’s stockholders adopt the AT&T merger agreement.