Morgan Stanley reported adjusted second-quarter earnings on Thursday that narrowly beat analysts' estimates, driven by strength in its wealth management unit and equity sales and trading. Including charges, profit rose to $802 million, or 41 cents a share, from $564 million, or 29 cents a share, in the period a year earlier. But the results were affected by two big charges, one related to credit spreads and the other to Morgan Stanley's recent purchase of the remaining stake of its wealth management business. Excluding those charges, the profit was $872 million, or 45 cents a share. That beat the 43-cents-a-share average estimate of analysts polled by Thomson Reuters. A conference call to discuss the results is scheduled at 10 a.m.
SUPPORT WEAKENS FOR DELL FOUNDER'S OFFER  | A special committee of Dell's directors is likely to delay a vote on the computer company's proposed $24.4 billion sale to its founder, which is scheduled for Thursday morning, amid stronger signs of rejection by shareholders, DealBook's Michael J. de la Merced reports. “Shareholders representing roughly 30 percent of Dell shares were arrayed against the leveraged buyout as of Wednesday evening, a person briefed on the matter said. They include money management firms like BlackRock, the State Street Corporation and the Vanguard Group.†That number could rise even higher. To succeed, the deal must receive support from 42 percent of shares.
The dissent extends far beyond Carl C. Icahn and the asset management firm Southeastern Asset Management, which together own about 12.7 percent of Dell's shares, Mr. de la Merced says. “That level of opposition makes it likely that the Dell board committee will postpone the vote by several days, people briefed on the matter said. Other related matters, including the record date by which shareholders must have owned shares to participate in the vote, have not yet been settled, one of these people said.â€
On Wednesday, Mr. Icahn criticized the Dell directors who refused to endorse his proposal. “I think most of these boards are completely dysfunctional,†he said at the Delivering Alpha conference sponsored by CNBC and Institutional Investor in Manhattan. “But I've never seen one as bad as this. I really mean it - where they actually go out and scare their own shareholders.â€
JPMORGAN SEEKS TO SETTLE ENERGY CASE FOR $500 MILLION  | JPMorgan Chase is trying to avoid a showdown over accusations that it manipulated energy prices, Ben Protess and Jessica Silver-Greenberg report in DealBook. The bank is seeking to settle with the Federal Energy Regulatory Commission, the agency that oversees the energy markets, according to people briefed on the matter. The regulator found that JPMorgan devised “manipulative schemes†that transformed “money-losing power plants into powerful profit centers,†a commission document said.
The potential deal is expected to cost the bank about $500 million, DealBook reports. That would be a record for the agency, which has adopted a harder line with Wall Street. But for JPMorgan, the fine would barely dent its bottom line. The accusations against the bank surfaced in a confidential document reviewed by The New York Times that also claimed a senior JPMorgan executive, Blythe Masters, gave “false and misleading statements†under oath. “It is unclear whether Ms. Masters would be included in the potential settlement, but people close to her said that the regulator was unlikely to file a separate action against her,†DealBook reports. The bank still disputes the accusations.
ON THE AGENDA Â |Â The Blackstone Group and BlackRock report earnings this morning. Microsoft, Google and Chipotle Mexican Grill report results after the market closes. Ben S. Bernanke, the Federal Reserve chairman, testifies before the Senate Banking Committee in Washington. James P. Gorman, the chief of Morgan Stanley, is on Bloomberg TV at 11:30 a.m. Laurence D. Fink of BlackRock is on CNBC at 4:10 p.m.
PELTZ URGES MERGER OF PEPSICO AND MONDELEZ  | The activist investor Nelson Peltz said on Wednesday that he would seek a merger of PepsiCo and Mondelez International, going public with his plans after months of speculation. Mr. Peltz, whose Trian Fund Management has quietly amassed a stake of more than $2.7 billion in the two companies, urged Pepsi to merge with Mondelez and then spin off its beverage business, creating a new snack food giant that would combine the Frito-Lay brands with Cadbury, Oreo and Nabisco. Investors appeared receptive to the plan, which Mr. Peltz announced on Wednesday at the Delivering Alpha conference in Manhattan. “Pepsi is at a crossroads at this point in time,†Mr. Peltz said. “They've got a cash business, and they've got a growth business.â€
The conference on Wednesday also included appearances by the short-seller James S. Chanos, who announced a bet against Caterpillar, and Preet Bharara, the United States attorney for the Southern District of New York, who reminded those in attendance that the statute of limitations for securities fraud cases had been extended.
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How to Make Poison Pills Palatable  | Under a method proposed by professors Eric Posner and Glen Weyl of the University of Chicago, when an outside shareholder starts a takeover attempt, existing shareholders would have the right to buy votes for or against the takeover. DealBook '
J.C. Flowers Said to Be in Talks for Northern Rock Loans  | The private equity firm J.C. Flowers is in advanced talks to buy £450 million ($684.8 million) of Northern Rock loans from the British government, the Times reported in London. THE TIMES
A Lifeline to a Brazilian Billionaire Would Be Risky  | Christopher Swann of Reuters Breakingviews asks: Is the state development bank throwing good money after bad in reportedly easing debt terms for Eike Batista? REUTERS BREAKINGVIEWS
Shoemaker Allen Edmonds Said to Consider Sale  |Â
REUTERS
Gupta Barred From Serving on Public Company Boards  | Rajat K. Gupta, the former Goldman Sachs director convicted of passing secret information to a trader, was ordered to pay $13.9 million to settle a regulatory lawsuit and has been permanently barred from being an officer or director of a public company, the Securities and Exchange Commission said. BLOOMBERG NEWS
Hear That? It's Your Financial Adviser Tweeting. Â |Â Raymond James plans to announce an extensive effort to help its thousands of financial advisers harness social media when contacting clients. DealBook '
Entertaining Clients at the Gym  | Bloomberg News writes: “Wall Street's salesmen and deal makers, whose expense accounts help fill downtown chophouses and box seats at ballparks, are now treating clients to a different kind of entertainment: high-end workouts.†BLOOMBERG NEWS
Bank of America Reports 63% Gain in Net Income  | In the bank's second-quarter financial report, net income rose 63 percent and while revenue rose, it received a lift from much lower expenses. DealBook '
Billabong Creditors Revise Refinancing Proposal  | The creditors, Centerbridge Partners and Oaktree Capital Management, are trying to persuade Billabong to abandon a rival refinancing agreement with a group including Altamont Capital Partners, The Wall Street Journal reports. WALL STREET JOURNAL
Hedge Funds Commit to Bets on a Weaker Yen  | Despite volatility in the yen, many hedge funds focused on foreign exchange continue to bet that the Bank of Japan will succeed in weakening the yen over time, Reuters writes. REUTERS
Former Soros Employee Starts Firm in Hong Kong  |Â
BLOOMBERG NEWS
London Stock Exchange Reports Gain in Revenue  | The results, which beat analysts' forecasts, were helped by an increase in companies being listed, Reuters reports. REUTERS
Alibaba Builds Momentum for a Possible I.P.O. Â |Â
BLOOMBERG NEWS
SoftBank Forms Fuel-Cell Venture With Start-Up  | SoftBank of Japan is setting up a joint venture with a Silicon Valley start-up, Bloom Energy, to bring what it calls “energy servers†to Japan, helping the start-up break into its first overseas market, The New York Times reports. NEW YORK TIMES
New Venture Capital Perk: Image Buffing  | Several former journalists have recently joined venture capital firms, and each is “expected to spend part of their time helping their firm's entrepreneurs be viewed as thought leaders,†Fortune's Dan Primack writes. FORTUNE
In Tourre Trial, S.E.C. Wages Battle Against Its Own Witness  | The S.E.C.'s plan in its lawsuit against a former Goldman Sachs trader was thrown into disarray in several hours of combative testimony on Wednesday. DealBook '
In Audience at Tourre Trial, a Familiar Face  | Brian Stoker, a former midlevel Citigroup executive who beat a government fraud case, has joined the spectators at the trial of Fabrice Tourre. DealBook '
Judge Rejects S.&P.'s Defense in Civil Case  | A judge, allowing the Justice Department's lawsuit against Standard & Poor's Ratings Services to proceed, said the company's defense that its statements were “puffery†was “deeply and unavoidably troubling,†The Wall Street Journal reports. WALL STREET JOURNAL
Setback for Google in Europe  | The European Commission said on Wednesday for the first time that Google's proposal for addressing antitrust concerns did not go far enough, The New York Times reports. NEW YORK TIMES
Bernanke Reaffirms Fervor for Stimulus  | The chairman of the Federal Reserve, Ben S. Bernanke, said on Wednesday that the central bank remained committed to supporting the economy. NEW YORK TIMES
Barclays Vows to Fight Energy Trading Fine  | United States regulators have demanded that Barclays pay a record $470 million penalty for suspected manipulation by some traders of energy markets in California and other Western states. DealBook '
Heartening Moves Toward Real Progress in Bank Regulation  | From Jesse Eisinger of ProPublica, a look at promising proposals to strengthen capital ratios and regulate the derivatives market. The Trade '
China Bars Glaxo Executive From Leaving During Bribery Inquiry  | The New York Times reports: “Chinese authorities have barred a British finance executive at the pharmaceutical giant GlaxoSmithKline from leaving the country while they carry out an investigation into bribery and corruption at the British company, the company confirmed on Wednesday.†NEW YORK TIMES
