JP Morgan (NYSE: JPM) books a $2 billion trading loss, and the figure could rise by another $1 billion. (Reuters)

China’s industrial production and retail activity slow to multiyear lows. (Reuters)

Germany tells Greece it must rely on its reforms and not more bailout alterations. (Reuters)

Yahoo!’s (NASDAQ: YHOO) CEO says he never supplied its board with a resume. (Reuters)

Sony’s (NYSE: SNE) shares fall to a multidecade low after it posts a huge annual loss. (Reuters)

AT&T (NYSE: T) and Leap Wireless (NASDAQ: LEAP) are said to have discussed a buyout. (Reuters)

Chesapeake Energy (NYSE: CHK) has huge liabilities from $1.4 billion off-balance-sheet commitment. (WSJ)

China wants the Big Four auditors to turn over their local activities to native firms. (WSJ)

Credit Agricole’s earnings are hurt by positions in Greece. (WSJ)

T-Mobile says it had severe customer losses last quarter. (WSJ)

Intel (NASDAQ: INTC) says demand from corporate customers remains good. (WSJ)

Top CEOs lobby Congress on concerns about the nation’s increased debt. (WSJ)

Bank of France data shows France will have zero GDP growth in the first half. (WSJ)

An FDA advisory committee backs a new obesity drug from Arena Pharmaceuticals (NASDAQ: ARNA). (WSJ)

Mortgage rates continue to fall to all-time lows. (WSJ)

Corn prices fall as the U.S. increases estimates for crop sizes. (WSJ)

Microsoft (NASDAQ: MSFT) and Facebook join forces to create a new version of Bing to better compete with Google (NASDAQ: GOOG). (NYT)

Policy markets discover that the U.S. manufacturing industry needs subsidies to survive. (NYT)

Moody’s issues warnings about capital reserves to many global banks. (FT)

U.S. banks may be hurt by a series of credit agency downgrades that could happen in the next month. (FT)

An FTC review could delay Facebook’s deal to buy Instagram. (FT)

Spain may be given more time to handle its debt if it submits to reviews and audits of its financials. (FT)

UK consumer confidence falls, according to the National Building Society. (Bloomberg)

Douglas A. McIntyre

T-Mobile may be the current merger flavor of the day, but this is the wrong effort or at least the wrong focus.  Sprint Nextel Corporation (NYSE: S) was the most recent potential acquirer but CEO Dan Hesse was blocked by his board of directors over fears that investors were already punished excessively and that the acquisition would put further pressure on its shares.  Sprint now owns Virgin in this overlapping field of prepaid and no-contract wireless and Sprint is still losing money.

The other would-be merger in the past was with Leap Wireless International Inc. (NASDAQ: LEAP).  With this company being the direct comparable outfit, it would make sense for these two companies to try to get past their differences and consider a stock-for-stock merger again.  While it will generate less for shareholders today versus the past, it would still allow for upside if the combined efforts generate higher earnings.

AT&T Inc. (NYSE: T) recently botched the T-Mobile buyout and T-Mobile does now have a few billion more in cash to spend.  Could that make T-Mobile a true buyer?  Anything is possible.  What T-Mobile does not have going for it is a stock in the U.S. that would allow it to do a stock transaction.

Leap Wireless is worth only $456 million and MetroPCS has a market value of $2.7 billion.  Both shares surged on Wednesday and both shares are down severely from their 52-week lows.  Perhaps these companies should swallow some pride and join their millions of customers together rather than hoping that one of the larger U.S. carriers will hope to grow with a reach-down effort into no-contract and prepaid wireless.  If the companies merge in a stock for stock transaction the action will still allow the holders who are long and wrong to recoup their losses if these two companies can get their earnings higher again.

Deutsche Telekom has reportedly issued the “no comment” but we would not have expected anything different in the current climate.

JON C. OGG

T-Mobile USA is the fourth largest wireless carrier in the country, trailing Sprint Nextel Corp. (NYSE: S), AT&T Inc. (NYSE: T), and Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD). T-Mobile’s failed $39 billion merger with AT&T left the carrier with a couple of big problems: fleeing customers and no answer to either AT&T’s or Verizon Wireless’ rollout of their 4G networks.

T-Mobile’s 33 million customers are not enough to threaten either Verizon Wireless or AT&T and neither MetroPCS nor Leap would do a lot to change that. Each has fewer than 10 million subscribers. Sprint, with 56 million customers of which about 60% are lower-margin pre-paid customers, could tie up with either MetroPCS or Leap, both of which claim pre-paid subscribers as a majority of their customers. But neither T-Mobile nor Sprint could swallow the other, which is the only combination that could threaten Verizon Wireless or AT&T.

A merger between T-Mobile and MetroPCS would not really solve either of T-Mobile’s biggest problems. The largest benefit would be the addition of a lot of pre-paid customers, which could put a lot of pressure on Leap and the other pre-paid providers. But as a counterweight to the two big players, this deal doesn’t offer much.

MetroPCS’s shares are up 20.4% at $7.90, after posting a new 52-week low of $6.32 earlier this morning. The prior range was $6.38-$18.79. Leap Wireless’ shares are also up 20.4% at $6.19 in a 52-week range of $4.68-$17.66.

Paul Ausick

Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), wanted the additional spectrum to accommodate future growth. That was no particular show-stopper as other wireless companies have been allowed to accumulate spectrum against prospective future needs. SpectrumCo, jointly owned by Comcast Corp. (NASDAQ: CMCSA) and Time Warner Inc. (NYSE: TWX) among others, and Verizon Wireless had also agreed to a cross-licensing deal where the two cable providers would be able to bundle Verizon Wireless’ service and the wireless carrier would be able to sell the cable companies’ content in a bundle.

Smaller rival wireless providers like MetroPCS Communications Inc. (NYSE: PCS), Sprint Nextel Corp. (NYSE: S), Deutsche Telekom AG’s (OTC: DTEGY.PK) T-Mobile USA division, and Leap Wireless International Inc. (NASDAQ: LEAP) complained about the hoarding of spectrum. As a result, the Federal Communications Commission (FCC) is considering requiring Verizon Wireless to divest some of its current spectrum before the deal is approved. A report at Bloomberg News cites “people familiar with the matter” for the information.

The FCC and the US Department of Justice, which must also approve the deal, want to maintain competition in the wireless and cable markets to protect consumer choice and prevent monopolistic pricing. But depending on how much spectrum Verizon Wireless must shed, there may be only one potential buyer — big rival AT&T Inc. (NYSE: T), which has stayed out of the fray so far, probably because it has equally big plans now that its $39 billion deal for T-Mobile has been killed.

The cross-licensing deals are also being investigated by the DoJ to determine if they threaten competition. The threat to competition and monopolistic pricing for consumers may be greater here than in the actual spectrum purchase. The nationwide reach of wireless networks and consumer demand for mobile resources opens up a whole new profit potential for Comcast and Time Warner. At the same time Verizon gets to offer programming that makes the company’s network a more attractive option, particularly if it can undercut competitive pricing.

The nuts and bolts of this acquisition and its fallout are nearly impossibly arcane. But the government’s decision will touch nearly everyone in the US. And that’s why the deal is so important.

Paul Ausick

We get more evidence of the switchover today from Charter Communications Inc. (NASDAQ: CHTR), which reported results this morning including miss on an already awful estimated EPS loss of -$0.57. Charter’s EPS loss came in at -$0.95. The company added a scant 20,000 customers for video in the first quarter compared with 141,000 new customers for Internet service.

As we noted last week in our look at earnings from Comcast Corp. (NASDAQ: CMCSA), bundling of services and content is becoming the new way of doing business in the space once dominated by cable providers. For example, Time Warner Cable Inc. (NYSE: TWC) and Comcast both have long-term deals with Walt Disney Co. (NYSE: DIS) to offer WatchESPN, the online and mobile version of Disney’s ESPN network. The cable providers are hoping that the offer of free mobile content will stem the flow of unsubscribers.

Verizon Communications Inc. (NYSE: V) and AT&T Inc. (NYSE: T) also offer high-speed digital content and are working on deals to offer new bundles to customers. Verizon’s attempt to acquire more wireless spectrum in its $3.6 billion deal for SpectrumCo gives the company’s wireless carrier, Verizon Wireless, the opportunity to bundle programming from Comcast and Time Warner Cable along with access to mobile broadband.

The cable providers, in turn, are able to offer a bundle to their customers that now includes Verizon’s high-speed mobile broadband. It should be no surprise that smaller carriers like MetroPCS Communications Inc. (NYSE: PCS), Leap Wireless International Inc. (NASDAQ: LEAP), and Frontier Communications Corp. (NASDAQ: FTR) are struggling.

Research firm Convergence Consulting recently released studies on broadcast and cable TV and bundling. Between 2000 and 2009, cable TV subscriber additions averaged 2 million a year. In 2010 additions totaled 272,000 and in 2011 additions totaled just 112,000. The firm estimates that 2.65 million cable subscribers “cut the cord” between 2008 and 2011, choosing instead to rely on “over-the-top” services from Netflix Inc. (NASDAQ: NFLX) and others. By the end of this year, the firm estimates there will be 3.58 million cord cutters.

Convergence Consulting estimates that the audience for free online/mobile viewing has plateaued at 19% of all TV viewing. But that seems low, especially in light of the cross-licensing deals between the wireless carriers and the content providers like Disney and the cable networks.

The other thing that could raise that plateau is another technological wonder from Cupertino. Rumors of an “insanely great” Internet TV box from Apple Inc. (NASDAQ: AAPL) have been rampant for months, if not years. There are already several options available for these ‘over-the-top’ boxes, but if Apple were to come up with a killer piece of hardware, the ground could shift in a hurry.

Of course the TV and movie industries have learned from the music industry that Apple drives a hard bargain, and they can’t let themselves give up currently large broadcast revenues in exchange for much smaller online sales. What Apple should hope for is that a game-changing device with one or two significant content partners will convince consumers to force the rest of the media moguls to toe the line.

The transition from wired high-speed broadband connections to wireless connections is just starting. There are lots of different companies involved and the one or two with the deepest pockets or that are able to discern what the future holds will prosper. As for the rest, who knows?

Paul Ausick

What’s killing shares today is the same thing that drubbed MetroPCS Communications Inc. (NYSE: PCS) and Leap Wireless International Inc. (NASDAQ: LEAP): subscriber growth is either weak or non-existent. Verizon Wireless, the joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD) and AT&T Inc,. (NYSE: T) are adding subscribers, especially to wireless offerings, but even they are not growing as fast as before. Sprint Nextel Corp. (NYSE: S) and T-Mobile USA, a division of Deutsche Telekom AG (OTC: DTEGY) face the same problems.

It’s worse for the smaller guys, though, because they either cannot offer the hottest products, like the iPhone from Apple Inc. (NASDAQ: AAPL) or because they’re stuck with a lot of legacy wireline business that is continuing to erode. CenturyLink Inc. (NYSE: CTL), which reports earnings on Wednesday, is expected to post EPS of $0.58, down more than -22% from the same period last year and down about -6.5% sequentially. CenturyLink, though much larger than Frontier or the others, owns a lot of wireline business.

Frontier’s residential subscriber number dropped from 3.34 million in the first quarter of last year to 3.04 million this year. Wireline revenue was also down, from $589 million to $535 million. Business services revenues also fell, from $591 million to $585 million, and the number of business subscribers also fell, from about 333,400 to 302,100. The number of broadband subscribers rose, as did the number of video subscribers. Consequently the revenue figures per customer rose as well. Just not very much.

Growth prospects for Frontier and the other small players are quite dim as they are spectrum-limited and face stiff competition from the big players. Worse, perhaps, is that there is not likely to be any competition among the big players to pick up these smaller competitors. If anything, Verizon and AT&T would prefer to abandon their dwindling wireline businesses. But CenturyLink is still absorbing its acquisition of Qwest and none of the others can — or probably should — to add to their wireline holdings.

Frontier’s shares are down about -58% just after noon today, at $3.67 after posting a new 52-week low of $3.49 earlier today. The prior range was $3.81-$8.97.

Paul Ausick

Annie’s, Inc. (NYSE: BNNY) Started as Overweight at JPMorgan; Started as Outperform at William Blair.

Cabela’s, Inc. (NYSE: CAB) named Bull of the Day at Zacks.

Carnival Corporation (NYSE: CCL) Cut to Neutral at Goldman Sachs.

Citi Trends, Inc. (NASDAQ: CTRN) named Bear of the Day at Zacks.

Dr. Pepper Snapple (NYSE: DPS) Raised to Equal-weight at Morgan Stanley.

First Solar, Inc. (NASDAQ: FSLR) Cut to Hold at Argus.

Illumina Inc. (NASDAQ: ILMN) Raised to Outperform and $55 target at Credit Suisse.

Leap Wireless International Inc. (NASDAQ: LEAP) Raised to Neutral at Piper Jaffray.

Newell Rubbermaid Inc. (NYSE: NWL) Raised to Outperform at Oppenheimer.

Pepsico (NYSE: PEP) Raised to Overweight at Morgan Stanley.

Procter & Gamble (NYSE: PG) Cut to Market Perform at Wells Fargo.

Time Warner Inc. (NYSE: TWX) Reiterated Buy with $46 target at Argus.

Western Digital Corporation (NYSE: WDC) named Value stock of the day at Zacks.

If you enjoyed the top analyst upgrades and downgrades, you can join our free email newsletter that includes analyst summaries each morning sent right to your inbox.  We also cover top issues such as IPOs, special financial exclusives, mergers and more. Sign up in the box below.

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JON C. OGG

Comcast posted EPS of $0.45 versus an estimate of $0.42. Revenue grew nearly 23% year-over-year to $14.89 billion, again higher than the consensus estimate of $14.43 billion.

The cable companies are losing subscribers to Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone plc (NASDAQ: VOD) and AT&T Inc. (NYSE: T) both of which offer high speed wireline broadband service in addition to voice and mobile services. And the competition is about to get even keener.

Verizon Wireless’ $3.6 billion bid for additional wireless spectrum from SpectrumCo LLC, a joint venture of Comcast, Time Warner Cable, and privately-held Bright House Networks and Cox Communications Inc., is about to change the landscape. The additional spectrum is what the other wireless carriers and the Federal Communications Commission are examining with a fine-toothed comb, but the cross-licensing agreements that give Verizon and Comcast and Time Warner Cable the ability to sell each other’s products are, perhaps, the bigger deal.

Although the FCC has not yet ruled on Verizon’s acquisition, the companies are acting like the deal is done. A Verizon-Comcast cross-licensing deal in San Francisco adds digital TV to its standard triple-play offer. AT&T, which offers its wireline U-verse high-speed service in San Francisco, has no comparable offer.

Similar deals between Comcast and Verizon are already in place in Portland, Oregon, and Seattle and Spokane, Washington. Verizon and Time Warner have launched a similar bundle in Raleigh, North Caroline, Kansas City, and Columbus and Cincinnati, Ohio. Subscribers can bundle cable services with Verizon Wireless mobile phone service and get the same deal from either the cable company or Verizon.

Cable-like companies such as Netflix Inc. (NASDAQ: NFLX), Dish Network Corp. (NASDAQ: DISH), and DirecTV (NASDAQ: DTV) will also find the going getting tougher. Netflix is at the mercy of content providers like Comcast and Time Warner, which are likely to drive Netflix’s costs higher while lowering their own. Verizon could throttle network speeds for Netflix streaming videos, and although the carrier would eventually be stopped, it might be too late for Netflix. The satellite companies, likewise, could find themselves paying more for content.

As for AT&T’s U-verse and Verizon’s FiOS, neither is as valuable nor has as well-defined a growth path as wireless services. Comcast’s Xfinity broadband service will disappear eventually and be subsumed by the Verizon wireless network.

People want mobility and that means wireless services. At first, the deals between Comcast and Verizon and Time Warner and Verizon will be appealing because the companies will be offering free or low-priced smartphones as well as the convenience of a single provider for all of a customer’s communications needs. But as smaller competitors like MetroPCS Communications Inc. (NYSE: PCS), Leap Wireless International Inc. (NASDAQ: LEAP), and even T-Mobile USA, the US arm of Deutsche Telekom AG (OTC: DTEGY) fall by the wayside, large markets will have at most two choices, Verizon or AT&T, and small markets will not get even that.

The new cross-licensing services launched too late to have any impact on first quarter results, but the deals should make some kind of showing on second quarter results. The smart money says that the deals will be winners.

Comcast’s shares are down -2.7% this morning at $29.76 in a 52-week range of $19.19-$30.88.

For those interested in the Verizon-SpectrumCo deal, the FCC web site has all the relevant documents under Docket Number WT 12-4. To date 539 comments have been filed and thousands of pages of documents.

Paul Ausick

The unofficial closing bells put the DJIA up nearly 114 points to 13,204.70 (0.87%), the NASDAQ rose nearly 21 points (0.69%) to 3,050.61, and the S&P 500 rose 0.67% or more than 9 points to 1,399.99.

There were several analyst upgrades and downgrades today, including General Dynamics Corp. (NYSE: GD) cut to ‘equal-weight’ at Morgan Stanley; ABB Ltd. (NYSE: ABB) cut to ‘neutral’ at JPMorgan; Harley-Davidson Inc. (NYSE: HOG) raised to ‘overweight’ at Barclays; ConocoPhillips (NYSE: COP) raised to ‘neutral’ at Macquarie; and Sprint Nextel Corp. (NYSE: S) maintained as ‘hold’ at Argus.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Alcatel-Lucent S.A. (NYSE: ALU) is down -16.9% at $19.71 (our coverage here); Altria Group Inc. (NYSE: MO) is up 0.9% at $31.96 (our story here); Pepsico (NYSE: PEP) is down -0.3% at $66.44 (our story here); Tellabs Inc. (NASDAQ: TLAB) is down -5.1% at $3.83 (our coverage here); Exxon Mobil Corp. (NYSE: XOM) is down -0.8% at $86.13 (our coverage here); Aetna Inc. (NYSE: AET) is down -8.4% at $45.22; Bristol-Myers Squibb Co. (NYSE: BMY) is down -1.7% at $33.72; Bunge Ltd. (NYSE: BG) is down -2.6% at $65.69; JetBlue Airways Corp. (NASDAQ: JBLU) is down -0.1% at $4.64; Liz Claiborne Inc. (NYSE: LIZ) is up 9.4% at $13.87; Mead Johnson Nutrition Co. (NYSE: MJN) is up XX% at $XX; Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) is up 4% at $86.38 after posting a new 52-week high of $87.26n earlier today; Safeway Inc. (NYSE: SWY) is down -2.8% at $21.00; Stillwater Mining Co. (NYSE: SWC) is down -4.6% at $10.69; TASER International Inc. (NASDAQ: TASR) is up 5.7% at $4.39; United Parcel Service Inc. (NYSE: UPS) is down -1.8% at $78.25; and Yandex N.V. (NASDAQ: YNDX) is down -5% at $23.31.

Other standouts from today include the following stocks:

Inergy L.P. (NYSE: NRGY) is up 17% at $19.71. The company is being acquired by Suburban Propane Partners LP (NYSE: SPH). More coverage here.

Leap Wireless International Inc. (NASDAQ: LEAP) is down -20.2% at $6.16. The wireless carrier fell sharply on disappointing quarterly results. More coverage here.

Akamai Technologies Inc. (NASDAQ: AKAM) is down -14.8% at $33.03. The technology provider beat estimates but issued weak guidance.

Stay tuned for Friday. We have noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – GDP report
• 8:30 a.m. – Employment cost index
• 9:55 a.m. – Reuters/University of Michigan consumer sentiment index

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Paul Ausick

MetroPCS added fewer subscribers and phone subsidies increased its operating costs. Net income fell by more than half to $21 million and that translated to a mere $0.06 in earnings per share, but revenue did rise 7% to about $1.27 billion for the quarter.  We had a Thomson Reuters consensus target of $0.17 EPS and $1.29 billion in sales.  That is a poor showing on earnings even if revenue was only a miss worth a footnote. The subscriber additions of just over 131,000 gave MetroPCS 9.4 million subscribers at the end of the quarter, but that was only about half of the add-on subscribers expected.  MetroPCS offers no iPhone.  Can you imagine a no-contract or prepaid iPhone?  Maybe overseas, but not so much here in America.

Leap Wireless posted a wider loss than expected at -$1.28 EPS and its revenue was only up 6% to $825.6 million. Thomson Reuters had estimates of -$0.98 EPS and about $831.7 million in sales. Leap added about 258,000 subscribers in the quarter rather than about 280,000 to 290,000 expected.  Leap is facing higher churn and a slower gain in the average revenue per user.

Leap Wireless shares are down a whopping 23% at $5.90 against a 52-week range of $5.50 to $17.66; MetroPCS shares are down almost 12% at $7.00 at a new 52-week low as the prior 52-week range was $7.51 to $18.79.

JON C. OGG