Wall Street Breakfast: Must-Know News

Even more firms may gain access to TARP. Sources say the Treasury may use some of its $700B rescue fund to buy stakes in financing companies such as GE's (GE) GE Capital and CIT Group (CIT). Presently the program only includes publicly-traded banks and insurers, although the Treasury is already mulling opening the door to some privately-held firms. The U.S. government could eventually own even more of the American financial system than first envisioned. Yahoo, Google tone down ad tie-up....

Even more firms may gain access to TARP. Sources say the Treasury may use some of its $700B rescue fund to buy stakes in financing companies such as GE's (GE) GE Capital and CIT Group (CIT). Presently the program only includes publicly-traded banks and insurers, although the Treasury is already mulling opening the door to some privately-held firms. The U.S. government could eventually own even more of the American financial system than first envisioned. Yahoo, Google tone down ad tie-up. Yahoo (YHOO) and Google (GOOG) submitted a revised version of their search-ad pact to the Justice Department in the hope gaining approval. New provisions limit the scope of the deal, including shortening the agreement to two years from ten, and capping Yahoo's revenue from the deal to 25% of its search revenue total; previously there was no cap. The revised plan also gives Google advertisers the ability to opt out of having their ads displayed on Yahoo sites. It's unclear whether the changes will suffice to appease regulators who worry the deal will allow Google (GOOG) to monopolize online advertising. Separately, Yahoo said Monday Microsoft (MSFT) executive Jeff Dossett will take the lead position in its online media properties after veteran Scott Moore left "for other opportunities." UBS posts earnings, warnings. UBS (UBS) confirmed a Q3 profit of 296M Swiss francs ($256.3M) helped by credit and tax gains, with outflows of 49.3B francs from its wealth management unit and 34.4B francs from its asset management unit. The world's largest wealth manager, UBS had already reported much of its Q3 results last month when it announced a capital injection of 6B franc from the Swiss government and said it would unload $60B of risky assets into a central bank fund. UBS noted some positive client money flows in October, but warned 'difficult' market conditions would hurt fee-earning businesses and Q4 results would be weighed down by the accounting effects of transferring risky assets. Shares -2.6% premarket. Outlook sours for RBS. Royal Bank of Scotland (RBS) abandoned its full-year profit forecast after it wrote-down £1B in October against assets connected to Lehman Brothers and Icelandic banks and as bad loans rose. It also posted £1.4B of markdowns in Q3 before new accounting rules allowed it to claim back £1.2B. CEO Stephen Hester said the latest writedowns, coming in addition to £5.9B in H1, show the bank has too much risk and could face a full-year loss. RBS is in line for a U.K. bailout, and the government could own up to 60% of the bank unless investors buy some of the £20B of stock to be issued later this year. Shares -14.9% premarket. Goldman hedge fund down $1B. A flagship Goldman Sachs (GS) hedge fund - Goldman Sachs Investment Partners - has lost almost $1B of its $6B since its launch in January, further evidence of the crisis facing the industry. "We anticipate that these results will lead to net outflows from the hedge fund industry," managers said, although GSIC itself imposed a two-year lock-in at inception. More than half of its 13% Q3 loss was on positions in commodities, basic materials, metals, mining, energy and agriculture. Tough 2009 for JPMorgan. JPMorgan (JPM) CEO Jamie Dimon told employees the firm faces "highly challenging conditions" in 2009, but sees a possible "strong recovery" in 2010. JPM's recent acquisitions of Bear Stearns and WaMu will improve performance in the "longer term," he said. Dimon warned Asia is "going to get worse than you think" as the tidal wave that began with a collapse of the U.S. mortgage market washes over it. Still, longer-term, he sees "very substantial natural growth" in the region. iPod master leaves Apple. Tony Fadell, one of the fathers of the iPod, is leaving Apple (AAPL) for personal reasons, sources say. Former IBM (IBM) executive Mark Papermaster will take his place. During Fadell's tenure, the iPod grew from a curiosity into a major cash cow; Apple sold 54.7M iPods during its most recent fiscal year. But growth has cooled off as saturation becomes a factor in many countries. Still, Apple shows no signs of giving up any of its 70% U.S. market share. Dismal October for automakers. General Motors (GM) said October was likely the auto industry's worst month since WWII after its sales plunged 45%, Ford's (F) fell 30%, Nissan's (NSANY) declined 33%, Honda's (HMC) dropped 25%, while Toyota's (TM) declined by 23%. GM marketing chief Mark LaNeve said he believes there's plenty of pent-up demand, "but until the credit markets open up and consumer confidence improves, the entire U.S. economy, and any industry like autos that relies on financing, will suffer." U.S. auto sales are now down 14.6% YTD. "It's weaker than we were anticipating," J.D. Power's Bob Schnorbus said, warning leaders should take heed: "The auto industry is important to the economy and it should not be taken too lightly." Manufacturing paints bleak picture. The ISM's Manufacturing index fell to 38.9 in October, its lowest level since 1982, and worse than the expected 41.5. The only industries reporting growth were apparel and leather & allied products. Petroleum & coal and nonmetallic mineral products led the laggards. The weaker than expected data increases the risk the current slump will outdo the recessions of 2001 and 1991. Companies are cutting back on investments and hiring as Q3 consumer spending plunged by 3.1% - the biggest decline in 28 years. The survey "indicates a significantly faster rate of decline in manufacturing when comparing October to September," ISM director Norbert Ore said. "It appears that manufacturing is experiencing significant demand destruction as a result of recent events." Prices also rose at a much slower rate: the price index plunged to 37 from 53.5 in September - the lowest level since December 2001. Export orders dropped for the first time in 70 months. September Construction Spending fell 0.3% from August's revised numbers, better than the expected 0.8% drop. Residential private construction -1.3%; non-residential +1.2%. Earnings: Before Open Ameren (AEE): Q3 EPS of $1.17 misses by $0.08. Revenue of $2.06B (+3.2%) vs. $2.29B. Sees full-year EPS of $2.80-3.00 vs. $3.01. Shares -5.3%. (PR) Archer Daniels Midland (ADM): FQ1 EPS of $1.63 vs. consensus of $0.69. Revenue of $21.16B (+65%) vs. $15.98B. (PR) Autodesk (ADSK): Sees Q3 EPS of $0.53-0.55 vs. $0.55 consensus and revenue of $604-607M vs $624M. "The sharp downturn of the global economy is substantially impacting our business... Demand for our products fell dramatically in October in all geographies as the financial crisis worsened. (PR) Cimarex Energy (XEC): Q3 EPS of $2.19 misses by $0.07. Revenue of $576.5M (+67.7%) vs. $568M. (PR) Dean Foods (DF): Q3 EPS of $0.28 misses by $0.03. Revenue of $3.19B (+2.5%) in-line. (PR) Emerson Electric (EMR): FQ4 EPS of $0.88 beats by $0.02. Revenue of $6.7B (+11.1%) in-line. (PR) GrafTech (GTI): Q3 EPS of $0.55 beats by $0.10. Revenue of $316M (+25.7%) vs. $303M. Shares +6.7%. (PR) HCP Inc. (HCP): Q3 FFO of $0.71/share beats by $0.05. Revenue of $270M vs. $242M. Sees full-year FFO of $2.38-2.42 vs. $2.29. (PR) Holly (HOC): Q3 EPS of $1.00 beats by $0.13. Revenue of $1.72B (+42.3%) in-line. (PR) Louisiana-Pacific (LPX): Q3 EPS of -$0.38 misses by $0.08. Revenue of $390M (-17.5%) in-line. (PR) Magna International (MGA): Q3 EPS of $0.17 vs. consensus of $0.90. Revenue of $5.53B (-9%) in-line. (PR) Marvel Entertainment (MVL): Q3 EPS of $0.64 beats by $0.19. Revenue of $182.5M (+47.7%) vs. $146M. Sees full-year EPS of $2.45-2.65 vs. $1.93 and 2009 EPS of $1.00-1.35 vs. $1.94. (PR) Myriad Genetics (MYGN): FQ1 EPS of $0.30 beats by $0.16. Revenue of $74M (+52.4%) vs. $70M. (PR) NiSource (NI): Q3 EPS of $0.03 in-line. Revenue of $1.42B (+11.8%) vs. $1.36B. (PR) PPL Corp. (PPL): Q3 EPS of $0.45 misses by $0.15. Sees full-year EPS of $2.00-2.05 vs. $2.29, and 2009 EPS of $1.60-1.90 vs. $2.17. "Many of the pressures that affected our results in 2008 also are expected to continue into 2009..." (PR) Rowan (RDC): Q3 EPS of $1.00 beats by $0.13. Revenue of $527M (+5%) vs. $540M. "Continuing weakness in capital markets and commodity prices will, eventually, affect customer demand for our products and services, though we have experienced little impact thus far." (PR) St. Joe (JOE): Q3 EPS of -$0.12 misses by $0.12. Revenue of $32.8M (-57.6%) vs. $47.3M. (PR) Talisman Energy (TLM): Q3 EPS of $0.72 beats by $0.08. Revenue of $2.82B (+50.9%) vs. $2.89B. (PR) Tenneco (TEN): Q3 EPS of $0.01 misses by $0.22. Revenue of $1.5B (-3.8%) in-line. (PR) Tenet Healthcare (THC): Q3 EPS of -$0.06 misses by $0.03. Revenue of $2.14B (+5.2%) vs. $2.21B. Shares +14.1%. (PR) W&T Offshore (WTI): Q3 EPS of $0.79 misses by $0.03. Revenue of $290M (+13.6%) vs. $276M. (PR) Earnings: Monday After Close Automatic Data Processing (ADP): FQ1 EPS of $0.54 beats by $0.04. Revenue of $2.18B (+9.5%) in-line. Shares -2.5%. (PR) Coldwater Creek (CWTR): Sees Q3 sales of $225M vs. $265M consensus, and EPS of -$0.07 to -$0.09 vs. $0.03 consensus. "The overall macro-economic environment has proven to be substantially more challenging than anticipated." Shares -5.9%. (PR) Comstock Resources (CRK): Q3 EPS of $1.20 beats by $0.20. Revenue of $169M (+103.7%) vs. $158M. (PR) Embraer (ERJ): Q3 EPS of $0.32 misses by $0.07. Revenue of $1.55B (+8.1%) vs. $1.63B. (PR) EOG Resources (EOG): Q3 EPS of $2.34 beats by $0.10. Revenue of $3.22B (+226.5%). Shares +1.9%. (PR) Forest Oil (FST): Q3 EPS of $1.26 misses by $0.12. Revenue of $474M (+51.5%) vs. $465M. (PR) Herbalife (HLF): Q3 EPS of $0.89 beats by $0.03. Revenue of $M in-line. Sees Q4 EPS of $0.65-0.70 vs. $0.91, and 2009 EPS of $3.50-3.55 vs. $3.71. Shares -13.5%. (PR) MasterCard (MA): Q3 EPS of $2.47 beats by $0.22. Revenue of $1.34B (+23.7%) vs. $1.27B. Gross dollar volume rose 12.3%. "As we are not immune from the long-term effects of the current economic environment, we have significantly accelerated the focus on our cost structure..." Shares +8%. (PR) Mohawk Industries (MHK): Q3 EPS of $1.10 misses by $0.02. Revenue of $1.76B (-9%) in-line. (PR) Open Text (OTEX): Q3 EPS of $0.53 beats by $0.03. Revenue of $183M (+11.4%) vs. $179M. Shares -1.1%. (PR) Pepco Holdings (POM): Q3 EPS of $0.59 misses by $0.11. Revenue of $3.06B (+10.4%) vs. $2.73B. (PR) Pitney Bowes (PBI): Q3 EPS of $0.67 misses by $0.03. Revenue of $1.55B (+2.6%) vs. $1.6B. Sees full-year EPS of $2.75-2.82 vs. $2.85. (PR) St. Mary Land (SM): Q3 EPS of $1.20 beats by $0.08. Revenue of $324M (+31.4%) vs. $329M. Shares +1.2%. (PR) Viacom (VIA): Q3 EPS of $0.62 beats by $0.07. Revenue of $3.41B (+4.2%) vs. $3.32B. Shares +1.5%. (PR) Today's Markets Asia closed mixed Tuesday. Tokyo was the standout, +6.27% to 9,115. Shanghai -0.76% to 1,707. Hang Seng +0.28% to 14,384. BSE Sensex +2.84% to 10,631. European markets posted strong morning gains. London +1.75%. Paris +2.1%. Frankfurt +2%. U.S. futures are markedly higher at 7:00 AM. Dow +1.88% to 9506. S&P +1.96% to 988.50. Nasdaq +2.18%. Crude +1.16% to $64.65. Gold +1.49% to $737.60. Tuesday's Economic Calendar 7:45 ICSC Retail Store Sales8:55 Redbook10:00 Factory Orders5:00 PM ABC Consumer Confidence Index Notable earnings before Tuesday's open: ADM, AEE, AMSC, DF, DNR, EMR, ENTG, EXPD, FE, GTI, HCP, HL, HNT, HOC, JEC, JOE, LPX, MAC, MGA, MYGN, NI, NNN, NXG, PPL, PQ, RDC, TDC, TEN, THC, TLM, VNO, WTI, XEC Notable earnings after Tuesday's close: AMMD, BRE, CBL, DCT, FCH, HRP, JKHY, ME, NHP, PXD, UPL, USU, VTR Seeking Alpha editor Rachael Granby contributed to this post. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up. After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.

  • Wall Street Breakfast: Must-Know News

    Stress tests may reveal banks' capital needs. As the May 4 reveal date for stress tests draws closer, officials are considering releasing assessments for each of the 19 banks and may require those that need more capital to disclose how they plan to raise additional funds. Under that scenario, lenders would have to specify whether they want to convert government preference shares, issue more stock or rely on an additional bailout. The push for disclosure is meant to help the public better discern between the health of individual banks. Sources say regulators want the banks to have at least 3% tangible common equity. Lewis: Fed, Treasury urged Merrill silence. According to a recently obtained copy of CEO Ken Lewis' February testimony to New York's attorney general, Bernanke and then-Treasury chief Paulson pressured Bank of America (BAC) to stay silent on its increasingly troubled deal to acquire Merrill Lynch. Despite an obligation to disclose any material financial hits to shareholders, officials pressed Lewis to keep quiet during government-funding negotiations to ensure important financial institutions wouldn't fail. Publicizing Merrill's losses would have allowed Bank of America's shareholders the opportunity to stop the deal and let Merrill collapse. Counter-counter-offer on Chrysler debt. After rejecting a too-rich counter-offer from Chrysler creditors, the Treasury has reportedly raised its own offer in an effort to reach a deal with lenders by the end of the month. The new deal would see lenders get $1.5B of first-lien debt and a 5% equity stake in a restructured Chrysler in exchange for the $6.9B of debt they now hold. The Treasury had previously suggested lenders write off all but $1B of the debt and receive no stock. GM to miss debt payment, idle plants. Trying to avoid bankruptcy ahead of the government's June 1 deadline, General Motors (GM) may rush to close dealerships, scrap models and could idle most of its plants for around two months this summer. The moves could help GM break even with annual sales as low as 10M vehicles. Meanwhile, CFO Ray Young said the company doesn't plan to pay off $1B of debt due June 1, and will instead swap the debt for shares or rely on bankruptcy protection. The tougher public stance towards bondholders is meant to lay the groundwork for what promises to be an ugly debt-for-equity swap GM expects to launch by next week. Hard times for Hartford. Hartford Financial Services (HIG) is said to be seeking bids from rivals including Travelers Companies (TRV) for its flagship property insurance business. Sources said Hartford has been shopping the unit after losses in its life division led to credit downgrades, and that damage from the financial crisis may ultimately lead to a breakup of the insurer. The property unit is estimated to be worth $4B-$8B. Obama meets with credit card chiefs. Obama will meet with executives from the credit card industry today, one day after a congressional panel approved legislation to curb credit card fees and limit consumer penalties. The American Bankers Association is concerned such restrictions will tighten the availability of consumer credit and make it more expensive. Bank of America (BAC), American Express (AXP), Citigroup (C), Wells Fargo (WFC), JPMorgan Chase (JPM), Capital One (COF), Visa (V) and Mastercard (MA) will be among the 13 companies represented. NY cracks down on pension agents. New York State's public pension fund will ban the use of middlemen who help private-equity funds and other investors secure its business. The state is investigating whether these middlemen, called placement agents, were involved in a scheme to receive illegal payments from firms trying to win state business. As one of the nation's largest public pension funds, New York's decision could prompt other states to follow suit. Morgan mulls TARP repayment. Despite reporting a larger-than-expected quarterly loss, Morgan Stanley (MS) CFO Colm Kelleher said the company will 'consider' repaying $10B to the government. The statement comes less than a month after CEO John Mack told employees 'it's the wrong time' to return the money. Morgan Stanley had a Tier 1 ratio of 16.4% at the end of March, or 12.9% if the bank repays TARP funds. Shares +2.9% premarket (7:00 ET). Credit Suisse profit beat. Credit Suisse (CS) posted a better-than-expected Q1 profit, bouncing back from several quarterly losses in 2008. The bank saw a net profit of 2B Swiss francs ($1.72B), more than double analysts' forecasts. Though short on details for its 2009 outlook, the bank said it is "in a position to weather the storms and perform well when market opportunities arise." Shares +10.5% premarket (7:00 ET). Apple shines on iPhone sales. Apple's (AAPL) quarterly earnings easily beat consensus estimates (see details below) as strong sales of iPods and iPhones held up despite the weak economy. Profit was also helped by declining commodity prices for key product components like aluminum and memory chips. This was the company's first quarter since CEO Steve Jobs went on medical leave. eBay gets okay on Gmarket buy. eBay (EBAY) won regulatory approval from South Korea's antitrust watchdog to proceed with its planned purchase of Gmarket (GMKT). A majority of Gmarket shareholders have already agreed to the cash tender offer. Glaxo to release study after long delay. GlaxoSmithKline (GSK) will release the first study comparing its cervical cancer vaccine with Merck's (MRK) blockbuster Gardasil at a May 10 medical meeting. The fact that the results are being released 14 months after the study concluded and at a relatively unknown meeting have left investors and analysts puzzled. Freddie CFO takes his own life. Acting CFO of Freddie Mac (FRE) David Kellerman was found dead in his home in what appears to be a suicide. Kellerman had worked at the mortgage giant for 16 years. House prices rise slightly (.pdf). FHFA's House Price Index showed U.S. home prices rose 0.7% in February M/M, bringing the twelve-month total to -6.5%. January's previously reported 1.7% gain was revised down to 1.0%. Earnings: Thursday Before Open AmerisourceBergen (ABC): FQ2 EPS of $0.95 beats by $0.06. Revenue of $17.31B (-2.5%) vs. $17.93B. Sees full-year EPS of $3.18-3.30 vs. $3.19. (PR) Alexion Pharmaceuticals (ALXN): Q1 EPS of $0.16 beats by $0.02. Revenue of $81M (+78.7%) vs. $82M. (PR) AU Optronics (AUO): Q1 EPS of -$0.71 misses by $0.04. Revenue of $1.5B (-66.7%) in-line. Expects utilization rates to improve substantially in Q2. (PR) AutoNation (AN): Q1 EPS of $0.23 beats by $0.07. Revenue of $2.47B (-35.6%) vs. $2.74B. Says it reduced debt by $500M in Q1, and remains in compliance with all debt covenants. Sees sales improving in H2. (PR) Black & Decker (BDK): Q1 EPS of $0.22 beats by $0.14. Revenue of $1.07B (-28.2%) vs. $1.16B. Sees full-year EPS of $1.50-1.90 vs. consensus of $1.79. (PR) Bunge (BG): Q1 EPS of -$1.76 misses by $2.25. Revenue of $9.2B (-26.2%) vs. $11B. (PR) Canadian Pacific Railway (CP): Q1 EPS of C$0.39 misses by C$0.09. Revenue of C$1.07B (-6.6%) vs. C$1.04B. "The unprecedented temporary decline in traffic in some of our key markets (as measured by carloads), particularly potash (-70%), Canadian coal (-30%), and automotive (-43%) has resulted in more than 2,400 employee layoffs to date." (PR) Celestica (CLS): Q1 EPS of $0.13 beats by $0.04. Revenue of $1.47B (-20%) vs. $1.51B. Q2 guidance in line. (PR) CIT Group (CIT): Q1 EPS of -$1.30 misses by $0.84. Tier-1 capital ration 9.3%. (PR) CME Group (CME): Q1 EPS of $3.20 in-line. Revenue of $647M (+3.5%) vs. $656M. Average rate per contract increased 12% to $0.83. (PR) ConocoPhillips (COP): Q1 EPS of $0.56 beats by $0.14. Revenue of $30.7B (-44.1%) vs. $26.34B. Shares +4.3% premarket. (PR) CONSOL Energy (CNX): Q1 EPS of $1.08 beats by $0.15. Revenue of $1.22B (+18.8%) in-line. "Energy companies with less than stellar financial positions could find it very difficult to obtain reasonable financing terms to maintain their operations. We believe that this will impact supply and could set the stage for higher coal and natural gas prices as early as '10." Shares +3.5% premarket. (PR) Cooper Industries (CBE): Q1 EPS of $0.47 beats by $0.01. Revenue of $1.26B (-18.7%) vs. $1.32B. Sees Q2 EPS of $0.50-0.60 vs. $0.60 and full-year EPS of $2.30-2.60 vs. $2.40. (PR) Danaher (DHR): Q1 EPS of $0.72 misses by $0.01. Revenue of $2.63B (-13.2%) vs. $2.67B. (PR) Diamond Offshore Drilling (DO): Q1 EPS of $2.51 beats by $0.29. Revenue of $886M (+12.7%) vs. $878.5M. (PR) EMC (EMC): Q1 EPS of $0.16 in-line. Revenue of $3.15B (-9.2%) vs. $3.25B. Sees global IT spending down in the low-double-digits for 2009. Expects $450M in cost reductions, up from a previous estimate of $350M, but says margins will decline due to weaker IT spending. (PR) ENSCO International (ESV): Q1 EPS of $1.56 beats by $0.04. Revenue of $514M (-9.6%) in-line. (PR) Exelon (EXC): Q1 EPS of $1.20 beats by $0.07. Revenue of $4.75B (+3.6%) vs. $4.62B. Reaffirms full-year EPS guidance. Shares +0.4% premarket. (PR) Fifth Third Bancorp (FITB): Q1 EPS of -$0.04 beats by $0.23. Tier 1 capital ratio of 10.9%. Tangible equity ratio of 7.9%. (PR) Goodrich (GR): Q1 EPS of $1.35 beats by $0.28. Revenue of $1.7B (-2.8%) in-line. Sees full-year EPS of $4.50-4.75 vs. $4.63, and revenue of $6.9B vs. $7.1B consensus. (PR) Hershey Foods (HSY): Q1 EPS of $0.38 beats by $0.03. Revenue of $1.24B (+6.5%) vs. $1.19B. Reaffirms 2009 net sales growth of 2-3%. Sees EPS increasing at less than its long-term objective of 6-8%. (PR) JetBlue Airways (JBLU): Q1 EPS of $0.08 beats by $0.05. Revenue of $793M (-2.8%) vs. $810M. Operating margin of 9.3% vs. 2.2% a year ago. First profitable Q1 since 2005. Shares +9.9% premarket. (PR) L-3 Communications (LLL): Q1 EPS of $1.66 beats by $0.03. Revenue of $3.64B (+3.7%) in-line. Reaffirms full-year guidance. (PR) Logitech (LOGI): FQ4 EPS of -$0.20 misses by $0.26. Revenue of $408M vs. $496M. Gross margin fell to 25% from 35.6% last quarter. "Our sales were negatively impacted by the combination of weak consumer demand and the accelerating reset by our channel partners of their weeks of supply." Shares -11.3% premarket. (PR) Marriott International (MAR): Q1 EPS of $0.24 beats by $0.10. Revenue of $2.5B (-14.8%) in-line. Issues downside EPS guidance for Q2 of $0.20-0.23 vs. $0.26 consensus. Maintains guidance for FY '09 of $0.88-1.02 EPS. (PR) Marshall & Ilsley (MI): Q1 EPS of -$0.44 misses by $0.11. Revenue of $M in-line. Q1 loan-loss provision of $478M. Shares +5.6% premarket. (PR) National-Oilwell Varco (NOV): Q1 EPS of $1.13 beats by $0.07. Revenue of $3.48B (+29.6%) vs. $3.29B. "Though the pace of new capital equipment orders has slowed in the short run, we believe investment in drilling equipment will resume, to enable the industry to explore new oil and gas frontiers. Nevertheless market conditions remain very challenging, and the timing of a recovery is uncertain." Shares -4.4% premarket. (PR) NII Holdings (NIHD): Q1 EPS of $0.43 beats by $0.07. Revenue of $M (+961%) in-line. Shares +2.3% premarket. (PR) Novartis (NVS): Q1 earnings of $1.96B ($0.87/share) vs. consensus of $1.89B. Sales fell 2% to $9.71B. Sees drug sales up mid-to-high single-digits. Shares +4.7% premarket. (Bloomberg) Occidental Petroleum (OXY): Q1 EPS of $0.50 beats by $0.13. Revenue of $3.07B (-49%) vs. $3.18B. Production was up almost 8% in Q1. (PR) Philip Morris (PM): Q1 EPS of $0.74 beats by $0.05. Revenue of $5.6B (-5.5%) vs. $5.48B. Reaffirms full-year guidance of $2.85-3.00 vs. consensus of $3.02. (PR) PNC Financial Services (PNC): Q1 EPS of $1.03 beats by $0.61. Revenue of $3.9B (+112.6%) vs. $3.5B. (PR) Potash (POT): Q1 EPS of $1.02 beats by $0.16. Revenue of $922.5M (-51.2%) vs. $975.5M. Issues downside EPS guidance for Q2 of $1.10-$1.50 vs. $2.21 consensus, and FY '09 EPS of $7.00-$8.00 vs. $9.65. (PR) RadioShack (RSH): Q1 EPS of $0.34 beats by $0.12. Revenue of $1B (+5.6%) vs. $0.94B. Comps were up 5% vs. Q1 2008. (PR) Raytheon (RTN): Q1 EPS of $1.11 beats by $0.10. Revenue of $5.88B (+9.9%) vs. $5.6B. Full-year guidance in line. Shares +2.4% premarket. (PR) Royal Caribbean Cruises (RCL): Q1 EPS of -$0.17 beats by $0.17. Revenue of $1.33B (-7.2%) in-line. Sees full-year EPS of $1.35 vs. consensus of $0.97. Shares +13.5% premarket. (PR) Sigma-Aldrich (SIAL): Q1 EPS of $0.68 beats by $0.04. Revenue of $519M (-8.8%) vs. $532M. Full-year guidance in line. (PR) Suncor Energy (SU): Q1 EPS of $0.24 beats by $0.12. The decrease in earnings was primarily from lower price realizations, with benchmark commodity prices significantly weaker in Q1 '09 vs. Q1 '08. (PR) SunTrust Banks (STI): Q1 EPS of -$0.46 beats by $0.19. Revenue of $2.24B (+16.3%) vs. $2.06B. Majority of loss was due to a $715M goodwill impairment charge. Tier-1 ratio estimated at 11%, up 13 points from last quarter. (PR) Supervalu (SVU): FQ4 EPS of $0.87 beats by $0.08. Revenue of $10.82B (+4.2%) in-line. (PR) Thermo Fisher (TMO): Q1 EPS of $0.62 misses by $0.08. Revenue of $2.26B vs. $2.42B. Sees full-year EPS of $2.80-3.10 vs. $3.15, and revenue of $9.6-9.9B vs. $10.14B. "Our customers are clearly delaying their capital purchases in the current environment." Shares -7.6% premarket. (PR) Union Pacific (UNP): Q1 EPS of $0.72. beats by $0.06. Revenue of $3.42B (-20%) vs. $3.55B. "The difficult economic conditions continue to affect our business volumes. During this challenging time, we are reducing costs across the board..." Shares +2.7% premarket. (PR) UPS (UPS): Q1 EPS of $0.52 misses by $0.04. Revenue of $10.94B (-13.7%) vs. $11.44B. Sees Q2 EPS of 0.45-0.55 vs. consensus of $0.65. "Economic indicators tell us recovery in the U.S. might begin late this year, but more likely not until 2010." Shares -3.7% premarket. (PR) US Airways (LCC): Q1 EPS of -$2.28 beats by $0.10. Revenue of $2.46B (-13.6%) in-line. "Our first quarter loss reflects the weakness in the global economy that has negatively impacted revenues throughout our industry. The steps we have taken to adapt to this environment are having a significant positive impact, though, as evidenced by our significant improvement in earnings excluding special items and fuel hedges." Shares +6% premarket. (PR) Zimmer (ZMH): Q1 EPS of $0.95 beats by $0.01. Revenue of $993M (-6.3%) vs. $1B. Sees full-year EPS of $3.85-4.00 vs. $3.88. (PR) Earnings: Wednesday After Close Apple (AAPL): FQ2 EPS of $1.33 beats by $0.24. Revenue of $8.16B vs. $7.96B. Sees FQ3 EPS of $0.95-1.00 vs. consensus of $1.12, and revenue of $7.7-7.9B vs. $8.28B. Mac sales of 2.22M (-3% Y/Y). iPod sales 11M (+3%). iPhone sales 3.79M (+123%). (PR) Alliance Data Systems (ADS): Q1 EPS of $1.19 beats by $0.09. Revenue of $480M (-3.8%) vs. $488M. Sees Q2 EPS of $1.05 vs. $1.22. (PR) eBay (EBAY): Q1 EPS of $0.39 beats by $0.05. Revenue of $2.02B (-7.8%) vs. $1.94B. (PR) Equifax (EFX): Q1 EPS of $0.58 beats by $0.04. Revenue of $453M (-10%) vs. $448M. (PR) F5 Networks (FFIV): FQ2 EPS of $0.38 in-line. Revenue of $154M (-3.1%) in-line. Says Feb. sales were particularly slow, but March improved significantly. (PR) Leggett & Platt (LEG): Q1 EPS of $0.06 misses by $0.01. Revenue of $718M (-28.1%) vs. $807M. Sees full-year EPS of $0.60-0.90 vs. $0.72, and revenue of $2.9-3.3B vs. $3.39B. (PR) Lam Research (LRCX): FQ3 EPS of -$0.71 misses by $0.05. Revenue of $174.4M (-71.6%) vs. $175.9M. (PR) Noble (NE): Q1 EPS of $1.62 beats by $0.16. Revenue of $896M (+4%) in-line. (PR) Novellus Systems (NVLS): Q1 EPS of -$0.47 beats by $0.04. Revenue of $98.9M (-68.6%) vs. $101.7M. Says it's cautiously optimistic order activity has stabilized. (PR) Pactiv (PTV): Q1 EPS of $0.69 beats by $0.23. Revenue of $766M (-5.2%) vs. $732.5M. Sees Q2 EPS of $0.54-0.58 vs. $0.51 and full-year EPS of $2.15-2.25 vs. $1.89. "Compared with the first quarter of last year, we benefited from lower raw material costs, as well as lower logistics costs, and improved productivity." (PR) Robert Half International (RHI): Q1 EPS of $0.06 in-line. Revenue of $823M (-32.8%) vs. $844M. (PR) SLM Corp. (SLM): Q1 EPS of -$0.03 vs. consensus of $0.12. Loss was partly the result of ongoing dislocation in the commercial paper market. (PR) VMware (VMW): Q1 EPS of $0.25 beats by $0.05. Revenue of $470M vs. $474M. Sees Q2 revenue flat to down vs. a year ago. (PR) Xilinx (XLNX): FQ4 EPS of $0.26 beats by $0.08. Revenue of $395M (-17%) vs. $383M. (PR) Yum! Brands (YUM): Q1 EPS of $0.48 beats by $0.08. Revenue of $2.22B (-8.1%) vs. $2.33B. Sees full-year EPS of $2.10 vs. $2.08. Says Q2 likely to be its most challenging quarter. (PR) Today's MarketsOverseas markets moved higher Thursday, giving a boost to futures.

  • Wall Street Breakfast: Must-Know News

    Apple: What recession? Apple (AAPL) customers continued to buy up iPhones and Mac computers, seemingly ignoring the recession and helping the company's Q4 results shine. "We are thrilled to have sold more Macs and iPhones than in any previous quarter," Steve Jobs said. Apple easily exceeded analysts' Q4 earnings expectations as back-to-school promotions drove sales: revenue grew 25% to $9.87B versus last year's quarter, while net income surged 47% to $1.67B (see more numbers below). Apple shares rose 7.2% to $203.43 in after-hours trading; the stock has more than doubled this year. Read Apple's earnings call. Lehman's Europe unit readies $90B claim. Lehman's European arm, now managed by PricewaterhouseCoopers, is preparing a new $90B claim against the U.S. parent of the failed bank - bringing the unit's total claims against various Lehman entities globally to $208B. PwC fees for managing the wind-down so far: €168M ($253M). Icahn targets CIT. Corporate raider Carl Icahn turned up the heat on CIT Group (CIT) Monday, slamming the company for unfairly favoring large bondholders with its revised debt exchange offer and saying he was prepared to offer a better deal by lending the company $6B and saving it $150M in fees. In a letter to CIT's board, Icahn said the proposed alternative $6B loan package is "the latest example of incompetent and unconscionable behavior" from CIT's board. Prospective lenders, he says, would get well in excess of what the current syndicated loan market should dictate, in exchange for voting their debt in favor of the company's reorganization plan. Morgan confirms Van Kampen sale to Invesco. Morgan Stanley (MS) confirmed Monday that it's selling its retail asset-management business, including the Van Kampen fund unit, to Invesco (IVZ), for $1.5B in stock and cash, including a 9.4% stake in Invesco. "By taking a minority interest in Invesco, Morgan Stanley will be able to realize significant value in partnership with a world-class player," co-president James Gorman said. The deal, rumored for months and expected to close in mid-2010, will remove some sales limits that Van Kampen managers faced since Morgan's JV with Smith Barney closed. Bernanke warns U.S., Asia to mind the gap. Fed chairman Ben Bernanke called on U.S. and Asian leaders to "avoid ever-increasing and unsustainable imbalances in trade and capital flows," saying the U.S. financial system is currently "overwhelmed" by an inflow of capital. Speaking Monday at a San Fran. Fed conference on Asia, Bernanke warned that while the U.S. trade deficits with developing countries are not as onerous as they were two years ago, they are still a threat to the global economy. World leaders believe global economic growth must begin to depend less on the U.S. consumer. Fed tests exit tool... As global central banks begin to weigh inflation risks, the Fed confirmed Monday it has begun experimenting with "triparty" reverse repo agreements, but says their actual use is not imminent. In a reverse repo, the Fed pledges mortgage-backed securities and Treasurys it bought as collateral for short-term loans, thereby draining cash from the financial system. Reverse repos are normally the domain of the 18 primary dealers; the experiment involves extending that to deals with the $2.5T money-market mutual fund business. ... while Australia says inflation risk looms. The Reserve Bank of Australia believes that the risk to global economic growth is passing, and that the bigger threat is now inflation. "Keeping interest rates at very low levels for an extended period could therefore threaten the achievement of the inflation target over the medium term," according to minutes from its Oct. 6 meeting, released Tuesday. At the meeting, the RBA unexpectedly raised its policy rate by 0.25% to 3.25% - its first such hike since March 2008, and the first in a major developed economy since the start of the financial crisis last year. Galleon faces massive withdrawals. Clients of hedge-fund giant Galleon jumped ship Monday after Friday's arrest of co-founder Raj Rajaratnam, forcing Galleon to unload some of its holdings, including tech stocks. So far, investors have requested $1.3B of the total $3.7B Galleon manages, and two of its brokerage firms - Bank of America (BAC) and Barclays (BCS) - have cut off relations with the firm. In a letter to investors and employees Monday evening, Rajaratnam said the charges "are, without exception, entirely baseless," and vowed to defend the firm. Financial sector fraud on the rise. Fraud is increasing twice as fast in the financial sector as in other sectors, according to Kroll's annual Global Fraud Report, released Monday. In a survey, senior executives said North America had been particularly hit hard by the financial crisis: the average financial services company lost over $15M to fraud over the past three years. The report comes as sources say investigators plan to charge 10 more securities dealers with insider trading, some linked to Galleon Group, which is at the center of one of the biggest-ever undercover operations into illegal trading (see above). Bair speaks up for small banks. FDIC head Sheila Bair warned Monday small community banks are struggling to compete against their too-big-to-fail rivals. "Too big to fail has become worse," she said, "it's become explicit when it was implicit before." Bair contends government guarantees create competitive disparities between large and small banks, because "everybody knows small institutions can fail," making it more expensive for them to raise capital and secure funding. China fires new salvo in trade tussle. In the latest in a series of China-U.S. trade disputes, China's Ministry of Commerce took preliminary measures Monday to impose tariffs of as much as 36% on certain nylon imports from the U.S., saying the imports have damaged the domestic industry. The ruling affects imports of Nylon 6, used to manufacture a variety of products, including toothpaste and chiffon. Affected U.S. firms include BASF's (BASFY.PK) U.S. arm and Honeywell (HON). Group support for Microsoft/Yahoo tie-up. In an open letter, advertising industry heavyweights urged the Department of Justice to fast-track approval of a Microsoft (MSFT) / Yahoo (YHOO) tie-up, saying the potential benefits for advertisers, marketing services agencies, Web site publishers and consumers are "too important to wait for." Google (GOOG) remained more circumspect, perhaps because it doesn't want to alienate customers. Earnings: Before Open Bank of New York Mellon (BK): Q3 EPS of $0.54 beats by $0.06. Revenue of $3.33B (+3.7%) vs. $3.18B. Provision for credit losses goes to $147M from $61M last quarter. (PR) Biogen Idec (BIIB): Q3 EPS of $1.12 beats by $0.08. Revenue of $1.12B (+2.8%) in-line. Shares -1.9% premarket. (PR) BlackRock (BLK): Q3 EPS of $2.10 beats by $0.17. Revenue of $1.14B (-13.2%) in-line. "Improving investor sentiment was the most important factor in third quarter results. Clients are putting money back to work in the markets, driving inflows in equities and bonds, and outflows in money market funds industry-wide." Shares +0.9% premarket. (PR) Brinker International (EAT): FQ1 EPS of $0.17 beats by $0.02. Revenue of $778M (-20.9%) vs. $766M. Cost of sales fell to 28.2% from 28.4% last quarter. (PR) Caterpillar (CAT): Q3 EPS of $0.64 beats by $0.58. Revenue of $7.29B vs. $7.49B. "We believe the third quarter marked the low point for Caterpillar sales and revenues in what has been the toughest recession since the 1930s. We are seeing encouraging signs that indicate a recovery may be underway." Shares +4.4% premarket. (PR) China Mobile (CHL): Q3 net profit of 28.6B yuan ($4.2B), up 2.6% from 27.9B last year, short of consensus of 29.2B. Sales rose 9% to 114.1B yuan. Ebitda rose 5% to 57.8B yuan, short of 58.1B consensus. (Bloomberg) China Telecom (CHA): Q3 profit of 2.39B yuan ($350M), down from 4.6B last year, and well short of consensus of 3.68B. Ebitda profit margin slipped to 41.1% from 42.3%. (Reuters) Coach (COH): FQ1 EPS of $0.44 beats by $0.05. Revenue of $761M (+1.1%) vs. $754M. (PR) Coca-Cola (KO): Q3 EPS of $0.82 in-line. Revenue of $8.04B (-4.2%) vs. $8.11B. "We expect the consumer to continue facing economic uncertainties into 2010 and for consumer sentiment to recover slowly.: Shares -1.2% premarket. (PR) Comerica (CMA): Q3 EPS of -$0.10 beats by $0.43. $311M provision for loan losses, unchanged from Q2. (PR) Diamondrock Hospitality (DRH): Q3 FFO of $0.19 beats by $0.02. Revenue of $138M (-14.6%) vs. $134M. (PR) DuPont (DD): Q3 EPS of $0.45 beats by $0.12. Revenue of $5.96B (-18.3%) vs. $6.14B. Sees full-year EPS of $1.95-2.05 vs. $1.83. "We see overall sequential improvement in our industrial businesses as market conditions begin to firm." (PR) Forest Laboratories (FRX): FQ2 EPS of $0.85 misses by $0.01. Revenue of $963M (+4%) vs. $1B. (PR) Great Atlantic & Pacific Tea Company (GAP): FQ2 EPS of -$1.18 misses by $0.47. Revenue of $2.06B (-5.4%) vs. $2.13B. "The current challenging economy continues to impact our business. The macro headwinds including rising unemployment, intensifying price competition and now also deflation are creating an even more difficult short-term economic environment." Shares -9.7% premarket. (PR) Illinois Tool Works (ITW): Q3 EPS of $0.60 beats by $0.07. Revenue of $3.58B (-19.8%) in-line. Operating margin 13.5% up from 9.9% last quarter. (PR) Invesco (IVZ): Q3 EPS of $0.24 in-line. Revenue of $706M vs. $687M. Shares +3.6% premarket. IVZ announced yesterday it would acquire Morgan Stanley's (MS) retail asset management business, including Van Kampen Investments." (PR) Jefferies Group (JEF): Q3 EPS of $0.42 beats by $0.14. Revenue of $M (+154.5%) in-line. Shares +6.1% premarket. (PR) Journal Communications (JRN): Q3 EPS of $0.02 misses by $0.06. Revenue of $105M (-22.9%) vs. $108M. (PR) LaBranche (LAB): Q3 EPS of -$0.22 misses by $0.27. Revenue of $M in-line. Shares -4.9% premarket. (PR) Lockheed Martin (LMT): Q3 EPS of $2.07 vs. consensus of $1.83. Revenue of $11.06B (+4.5%) vs. $11.4B. (PR) Lexmark (LXK): Q3 EPS of $0.65 beats by $0.20. Revenue of $958M (+6%) vs. $901M. Gross margin 32.7% vs. 32.5%. Sees Q4 EPS of $0.50-0.60 vs. $0.47, revenue "up slightly." Stronger than expected customer demand drove better than expected growth. (PR) Marshall & Ilsley (MI): Q3 EPS of -$0.68 in-line. Average loans and leases fell 6% to $47.1B. "There are some encouraging early signs that credit quality is improving, but we realize it will take a few more quarters to fully address our problem loans." Announces $775M common stock offering. (PR) Parker-Hannifin (PH): FQ1 EPS of $0.45 beats by $0.28. Revenue of $2.24B (-27%) vs. $2.17B. Shares +4.9% premarket. (PR) Pfizer (PFE): Q3 EPS of $0.51 beats by $0.03. Revenue of $11.62B (-2.9%) vs. $11.41B. Sees full-year EPS of $2.00-2.05 vs. $1.98. (PR) Precision Castparts (PCP): FQ2 EPS of $1.54 misses by $0.09. Revenue of $1.3B (-27.6%) vs. $1.4B. "From a top-line perspective, overall sales declines seem to be bottoming out in the second quarter." (PR) Regions Financial (RF): Q3 EPS of -$0.37 misses by $0.12. Revenue of $1.62B (-20.3%) vs. $1.58B. Allowance for credit losses +2.9% to $1.025B. Shares +0.35% premarket. (PR) Sherwin Williams (SHW): Q3 EPS of $1.51 beats by $0.16. Revenue of $2B (-12%) in-line. Sees Q4 EPS of $0.35-0.55 vs. $0.61, and revenue down 8-12% Y/Y. (PR) State Street (STT): Q3 EPS of $1.05 beats by $0.01. Revenue of $2.24B (-19.3%) in-line. Shares -0.75% premarket. (PR) UAL (UAUA): Q3 EPS of -$0.43 beats by $0.51. Revenue of $4.43B (-20.3%) in-line. Shares +8.1% premarket. (PR) UnitedHealth (UNH): Q3 EPS of $0.89 beats by $0.12. Revenue of $21.7B (+7.6%) vs. $21.56B. (PR) United Technologies (UTX): Q3 EPS of $1.14 beats by $0.02. Revenue of $13.38B (-11.3%) in-line. "Order rates for most of our businesses have largely stabilized, although the shape of recovery is still uncertain." (PR) Western Union (WU): Q3 EPS of $0.33 beats by $0.01. Revenue of $1.31B (-4.6%) in-line. Says recent stabilization trends are encouraging. (PR) Earnings: Mon. After Close Apple (AAPL): FQ4 EPS of $1.82 beats by $0.40. Sales of $9.87B vs. $9.2B. Sees FQ1 EPS of $1.70-1.87 vs. consensus of $1.91 on sales of $11.3-11.6B, in line. Sold 3.05M Macs, 10.2M iPods, and 7.4M iPhones during quarter. Gross margin 36.6%. Shares +5.9% AH. (PR) Atheros Communications (ATHR): Q3 EPS of $0.46 beats by $0.08. Revenue of $157M (+13%) vs. $147M. Shares +2.1% AH. (PR) Boston Scientific (BSX): Q3 EPS of $0.19 beats by $0.05. Revenue of $2.03B (+3%) vs. $2.04B. Sees Q4 EPS of $0.17-0.21 vs. $0.17. Expects full-year adjusted EPS of $0.75-0.79 vs. $0.56. Shares -7% AH. (PR) JDA Software Group (JDAS): Q3 EPS of $0.40 beats by $0.04. Revenue of $96M (-3%) vs. $92M. Shares -2.8% AH. (PR) Lincare (LNCR): Q3 EPS of $0.53 beats by $0.01. Revenue of $393M (-3%) vs. $391M. Shares -0.8% AH. (PR) Packaging Corp. of America (PKG): Q3 EPS of $0.25 in-line. Revenue of $554M (-11%) vs. $549M. Sees Q4 EPS of $0.13 vs. $0.17. Shares -7.4% AH. (PR) Steel Dynamics (STLD): Q3 EPS of $0.30 beats by $0.07. Revenue of $1.2B (-54%) vs. $1.1B. Shares +2.6% AH. (PR) Texas Instruments (TXN): Q3 EPS of $0.42 beats by $0.03. Revenue of $2.9B (-15%) vs. $2.8B. Sees Q4 EPS of $0.42-0.50 vs. $0.40. "Our balance sheet is strong and has allowed us to opportunistically make investments in Analog and Embedded Processing throughout this downturn that should provide returns for years to come." Shares +2% AH. (PR) UDR Inc. (UDR): Q3 FFO of $0.31 beats by $0.01. Rental income of $150M (+2%) vs. $149M. Lowers full-year FFO guidance to $1.14-1.20 from $1.23-1.35, vs. consensus of $1.27. Shares -0.5% AH. (PR) Volterra Semiconductor (VLTR): Q3 EPS of $0.19 misses by $0.01. Revenue of $29.7M (-3%) in-line. Shares -10.3% AH. (PR) Werner (WERN): Q3 EPS of $0.26 beats by $0.06. Revenue of $429M (-27%) vs. $428M. Shares +3.3% AH. (PR) Zions Bancorp (ZION): Q3 EPS of -$1.41 misses by $0.17. Revenue of $753M (+29%) vs. $633M. Shares -1.1% AH. (PR) Today's MarketsAsian markets were mostly higher Tuesday, while Europe stocks were mostly lower. Nasdaq futures are well higher on the strength of Apple's (AAPL) blowout Q4; other indexes are flat.

  • Wall Street Breakfast: Must-Know News

    Skype to get new owner. eBay (EBAY) is expected to announce this morning that it has reached a deal to sell its Skype unit to a group of private investors. The investment group likely includes new venture capital firm Andreessen Horowitz, as well as early Skype investor Index Ventures and private-equity firm Silver Lake Partners. The price of the deal is still unknown, but eBay has said previously that it wants around $2B for Skype. Shares +2% premarket (7:00 ET). BoA ready to repay? Bank of America (BAC) is reportedly offering to repay part of its bailout money, and the U.S. is pressuring the bank to pay at least $500M to cancel a potential loss-share deal with the government. Sources said both sets of discussions relate to extra aid Bank of America received to complete its acquisition of Merrill Lynch. If Bank of America repays the additional $20B it was given in January, it will no longer be considered an 'exceptional' aid recipient and therefore won't be subject to the intense scrutiny of Congress and pay czar Kenneth Feinberg. Shares -2.4% premarket (7:00 ET). Disney's marvelous acquisition. Disney (DIS) agreed to acquire Marvel Entertainment (MRVL) in a stock-cash transaction worth around $4B, a 29% premium for Marvel shareholders. Disney will begin to feature Marvel's portfolio of over 5,000 characters in Disney movies, theme park rides, TV shows and merchandise, a move which may help Disney better target the demographic of boys from their preteen years into young adulthood. S&P warned it may downgrade Disney because the relatively expensive acquisition, combined with stock buyback plans and the potential for continued recession-related declines, could lead to "debt leverage remaining above our threshold for an extended period." The deal is a setback for Paramount (VIA), which will be able to complete but not extend a recent distribution deal with Marvel, and for Electronic Arts (ERTS), which some analysts had thought might be acquired by Disney, a deal that no longer seems likely in the short term. (Read Disney's press release) AIG loses Starr case. A federal judge ruled against AIG (AIG) in its efforts to win $4.3B in damages from Starr International, the company run by former AIG chief Hank Greenberg. The judge affirmed a jury verdict that found no breach of trust by Starr for selling AIG stock rather than using its AIG shares to fund an executive retirement program for generations of the insurer's employees. Separately, AIG, Greenberg and former CFO Howard Smith agreed to enter binding arbitration by October 15 to settle various outstanding legal disputes. Shares -6.9% premarket (7:00 ET). Citi sheds credit card portfolios. As part of its effort to shed weak businesses, Citigroup (C) said it sold three credit card portfolios representing $1.3B in managed assets, but didn't disclose the terms of the deal. Though the sale is relatively small, the lack of transparency didn't sit well with critics, who noted the taxpayer-funded bank "said it had sold undisclosed assets to an undisclosed buyer for an undisclosed price, resulting in an undisclosed profit or loss." Sources said the buyer is likely U.S. Bancorp (USB). C -3.6% premarket (7:00 ET). PetroChina buys Canadian oil stake. PetroChina (PTR) moved forward in its quest for overseas expansion, agreeing to pay C$1.9B ($1.7B) to closely-held Athabasca Oil Sands Corp. for a stake in a Canadian oil sands project. PetroChina's deals represent around 20% of China's $17B in spending on overseas energy assets since December, and this is PetroChina's largest North American acquisition to date. Icahn offloads Yahoo shares. Activist investor Carl Icahn disclosed in a regulatory filing that he sold 12.7M shares of Yahoo (YHOO) at the end of August, bringing his stake down to 4.48%. Icahn said he remains 'optimistic' about Yahoo's long-term outlook and the sales were only meant to 'provide a more desired balance' in his portfolios. Sony goes Chrome. Sony (SNE) plans to put Google's (GOOG) Chrome browser on Vaio laptops in the U.S., the first such deal for Chrome since it was announced last year. Google declined to disclose details of the deal, which went into effect this summer, and said it's looking to reach similar arrangements with other computer makers. Without those partnerships, Google's Sony deal may be too small to matter. Apple may opt for more carriers, face SEC probe. Piper Jaffray analyst Gene Munster wrote in a research note that Apple (AAPL) is likely to add new U.S. carriers for its iPhone within a year. Repeated speculation points to Verizon (VZ) as a likely addition, while AT&T (T) faces questions about how much it really gained from its role as exclusive carrier. Separately, the Huffington Post reported the SEC is investigating possible insider-trading offenses in shares of Apple, including whether anyone was given enhanced insight into Steve Jobs' health condition or if some investors had advanced notice of iPod sales results. Both Apple and the SEC declined to comment. AAPL -1.3% premarket (7:00 ET). JetBlue, Lufthansa to share codes. JetBlue (JBLU) and Lufthansa announced a code-sharing agreement allowing the airliners to expand their networks through connecting flights. Lufthansa holds a 19% stake in JetBlue, but the relationship has raised some concerns among rivals and this latest move will likely exacerbate those concerns. The deal must be approved by the Department of Transportation. Big Tobacco files free speech suit. Tobacco company R.J. Reynolds (RAI) joined other tobacco makers in suing the FDA, challenging the regulator's new authority over tobacco. The companies say their First Amendment rights to free speech have been violated and the law's provisions "severely restrict the few remaining channels we have to communicate with adult tobacco consumers." Charities scammed by Madoff face clawbacks. Madoff liquidator Irving Picard said he may sue charities that were Madoff clients to reclaim the fake profits they withdrew. By law, Picard must file clawback suits against investors that profited from Madoff's scam, even if they did so unknowingly. Picard, who until now hadn't outlined his strategy for dealing with charities, said charitable organizations aren't exempt from such 'avoidance actions.' Cities are gloomy on shrinking revenues. City revenues fell in FY '09 for the first time in seven years, according to a report by the National League of Cities to be released later today. Weak growth in property taxes and sharp declines in sales taxes, income taxes and state aid contributed to a 0.4% decline in city revenues even as expenses rose 2.5%, creating the worst outlook in the 24 years since surveying began. Nor is relief in sight, as tax revenue is expected to lag any economic recovery. European leaders target bank pay. German Chancellor Angela Merkel and French President Nicolas Sarkozy promised to fight excessive pay in financial firms and to toughen regulation of the financial sector. The U.K.'s Gordon Brown echoed those sentiments, saying excessive pay must be reined in and compensation should be based on long-term success rather than short-term speculative gains. The comments come ahead of a G-20 meeting in Pittsburgh on Sept. 24-25. Commercial mortgage defaults rising. The commercial mortgage default rate more than doubled in Q2 as compared to the year before, reaching 2.88% of outstanding balances. Commercial mortgage-backed securities [CMBS] account for 22% of the $3.4T in commercial real estate debt, and researchers believe defaults on CMBS could pass 7% by the end of the year. Chicago business activity improves (.pdf). The Chicago Purchasing Managers Index registered at 50 in August, better than the consensus of 48 and up from 43.4 in July. This is the index's highest level since September 2008. New orders were up 4.5 to 52.5, while prices paid jumped 15 points to 50. European joblessness climbs (.pdf). Unemployment in the 16-nation eurozone climbed to a new ten-year high of 9.5% in July even as the economy began to signal a recovery. Across the entire 27-nation European Union, unemployment rose to 9% in July. Spain leads the bloc in joblessness, with nearly one in five workers without a job. Earnings: Monday After Close Benihana (BNHN): FQ1 EPS of $0.05 misses by $0.05. Revenue of $96M (+2%) vs. $97M. Sees full-year EPS of $0.40-0.45 vs. $0.46, and full-year revenue of $305M-310M vs. $323M. (PR) Culp (CFI): FQ1 EPS of $0.15 beats by $0.03. Revenue of $46M (-23%) vs. $45M. Sees Q2 revenue down 5%. (PR) Sina (SINA): Q2 EPS of $0.29 in-line. Revenue of $90M (-1%) vs. $88M. Sees Q3 revenue of $91M-94M vs. $96M. (PR) Today's MarketsIn Asia, stocks managed to pull back into positive territory after yesterday's selloff. European markets and U.S. futures are slipping.

  • Wall Street Breakfast: Must-Know News

    New proposals to rein in banks. With its healthcare reform under siege, the White House is once again taking aim at the banking sector. Obama will propose new rules today to limit the size of financial firms and their trading activities, specifically addressing firms' proprietary trading in order to reduce excessive risk-taking. Sources say the new regulations will be reminiscent of Depression-era curbs, and could significantly impact big banks' bottom lines. JPMorgan edges in on RBS Sempra. JPMorgan (JPM) is reportedly in exclusive talks to buy the RBS Sempra (RBS, SRE) commodities joint venture. JPMorgan, Deutsche Bank (DB) and Australia's Macquarie (MQBKY.PK) had all submitted bids of around $4B, but JPMorgan was reportedly willing to pay the most and RBS is looking for a transaction that can close quickly. A deal would make JPMorgan the fourth key bank in commodities trading, along with Goldman Sachs (GS), Morgan Stanley (MS) and Barclays (BCS). Sun shines on Oracle deal. EU antitrust regulators unanimously approved Oracle's (ORCL) purchase of Sun Microsystems (JAVA) this morning, saying they're "satisfied that competition and innovation will be preserved on all the markets concerned" and "Oracle's acquisition of Sun has the potential to revitalise important assets and create new and innovative products." Premarket: ORCL +1%, JAVA +0.2% (7:00 ET). More on AIG's data non-disclosure. New details continue to surface about AIG's (AIG) non-disclosure of counterparty payments. Apparently, the insurer submitted four rounds of regulatory filings over the course of six months, with more than 1,000 redactions, as the New York Federal Reserve pushed AIG to withhold data. The final version included more than 400 redactions, with the omitted data sealed until 2018. Meanwhile, the New York Fed has provided over 250,000 pages of documents in response to a subpoena, but lawmakers say the submission is "incomplete" and is missing key documents on AIG's credit-default swaps. Alcon fights back on Novartis deal. Alcon's (ACL) directors publicly slammed Novartis' (NVS) offer to acquire remaining Alcon shares, calling the proposal "grossly inadequate" and "offensive." Under the terms of the offer, Novartis would pay Nestle (NSRGY.PK) 20% more for its Alcon stake than minority shareholders would receive for theirs. A prolonged battle will likely ensue. Gen Re pays up for AIG fraud. The SEC charged reinsurer General Re (BRK.A) for its role in accounting frauds by AIG (AIG) and Prudential Financial (PRU). General Re will pay $12.2M to settle the charges, $19.5M to a fraud fund as part of a non-prosecution agreement and $60.5M to settle a class-action lawsuit on behalf of injured AIG shareholders. General Re will also forfeit $5M in fees it received for helping AIG falsify its financial statements. Buffett unhappy with Cadbury deal. Warren Buffett came out staunchly against Kraft's (KFT) $19.6B acquisition of Cadbury (CBY), calling it a "bad deal" and raising questions about how Kraft CEO Irene Rosenfeld planned to pay for it. Buffett plans to maintain Berkshire Hathaway's (BRK.A) 9.4% stake in Kraft, but said Kraft's recent moves have left him feeling "poorer." Pension fund takes aim at corporate governance failures. A pension fund that campaigns against corporate governance failures is taking aim at some high profile companies, including Citigroup (C), Goldman Sachs (GS) and IBM (IBM). All told, the pension fund will attend the upcoming annual shareholder meetings of 33 firms and has submitted proxy proposals on issues including bank bonuses, splitting the chairman and CEO positions and giving shareholders a "say on pay" for executives. World Bank sees mixed forecast. In its latest report (.pdf), the World Bank acknowledged that the global economy is recovering more quickly than anticipated but warned a double-dip recession is possible "if the private sector continues to save in order to restore balance sheets." The global growth forecast for 2010 was raised to 2.7% from 2%, with the 2011 forecast left unchanged at 3.2%. Estimates of the contraction in 2009 were lowered to 2.2% from 2.9%. NYT: No longer free. The New York Times (NYT) unveiled a plan to start charging readers for online content using a metered model, in which readers can access several free articles per month but must pay a monthly or annual fee for additional access. The plan, which will go into effect in 2011, is potentially risky, as a rise in subscription revenue may be overshadowed by a fall in viewers and, by extension, a fall in advertising revenue. China's economy boils and bubbles. China's economy grew 10.7% in Q4 from the year before, while consumer prices accelerated rapidly, rising 1.9% in December Y/Y vs. a 0.6% increase in November. Overall, the economy grew 8.7% in 2009, beating the 8% target Beijing had set. The new data points make it more likely that Chinese officials will crack down to keep the economy from overheating. iPhone may dump Google for MSFT. Apple (AAPL) is reportedly in talks with Microsoft (MSFT) to replace Google (GOOG) as the default search engine on the iPhone. Sources say the two firms have been negotiating for weeks, a reflection of the growing rivalry between Apple and Google. Icahn bets on Las Vegas. Activist investor Carl Icahn made the winning bid to purchase the bankrupt and unfinished Fontainebleau Las Vegas Resort. Icahn offered $156.5M, betting that the Las Vegas Strip will eventually experience a turnaround. Exxon deal raises concerns. Exxon Mobil (XOM) has come under fire for its planned $30B purchase of XTO Energy (XTO). Lawmakers are concerned about reduced-competition issues and a possible increase in the controversial technique of hydraulic fracturing, a method that would be central to the combined company's efforts. Nokia: Never get lost again. Taking a cue from Google (GOOG), Nokia (NOK) will begin offering free maps on its cellphones, including turn-by-turn directions covering 74 countries in 46 languages. The move is bad news for makers of personal navigation devices, but a Nokia executive said simply that "having this as a free functionality is inevitable for the industry." MGM mulls bankruptcy. MGM has received several first-round bids to sell itself, but is considering a prepackaged bankruptcy along with the sale to help clean up a balance sheet weighed down by $3.7B in debt. Initial bids, which are non-binding, have come in under $2B. Russia diversifies into Canadian dollar. Russia's central bank announced yesterday that it has begun buying Canadian dollars and securities as part of its efforts to diversify its foreign exchange reserves. Analysts believe other emerging market central banks may follow suit in diversifying away from the U.S. dollar and into other commodity-linked currencies and assets, including the Australian dollar. As of December, Russia's forex reserves stood at $439B and were evenly split between dollars and euros. Housing starts decline. Housing Starts fell 4% in December to 557K, short of the 573K expected and the 574K registered last month. Permits rose 10.9% to 653K vs. 590K expected and 589K last month. Producer prices inch up. The Producer Price Index rose 0.2% in December vs. 0% expected and +1.8% in November. The Core PPI was flat vs. +0.1% expected and +0.5% last month. Earnings: Thursday Before Open Continental (CAL): Q4 EPS of -$0.03 beats by $0.04. Revenue of $3.2B (-8%) in-line. Shares +0.6% premarket (7:00 ET). (PR) Fifth Third Bancorp (FITB): Q4 EPS of -$0.20, may not be comparable to first call consensus of -$0.31. Tangible common equity ratio of 6.45%. Tier 1 common ratio of 7%. (PR) Knight Capital Group (NITE): Q4 EPS of $0.33 beats by $0.02. Revenue of $302M (-4%) vs. $293M. (PR) UnitedHealth (UNH): Q4 EPS of $0.81 beats by $0.08. Revenue of $21.7B (+6.5%) in-line. (PR) Earnings: Wednesday After Close eBay (EBAY): Q4 EPS of $0.44 beats by $0.04. Revenue of $2.4B (+16%) vs. $2.3B. Payments business unit grows revenue 28%; Marketplaces unit +15%. Sees 2010 EPS of $1.63-1.68 vs. $1.60. (PR) Logitech (LOGI): FQ3 EPS of $0.32 beats by $0.05. Revenue of $617M (-2%) vs. $603M. "Improved sell-through in all of our retail regions ... We are also very pleased with our return to year-over-year profitability growth in Q3, driven by the substantial improvement in gross margin." (PR) Seagate Technology (STX): FQ2 EPS of $1.03 beats by $0.38. Revenue of $3B (+33%) vs. $2.85B. (PR) Skyworks Solutions (SWKS): FQ1 EPS of $0.27 beats by $0.02. Revenue of $245M (+17%) vs. $241M. Sees FQ2 EPS of $0.21 vs. $0.19, on revenue of $225M vs. $215M. (PR) SLM (SLM): Q4 EPS of $0.60 may not be comparable to estimate of $0.44. Net interest income after provision for loan losses of $320M (+99%). (8-K) Starbucks (SBUX): Q4 EPS of $0.32 beats by $0.04. Revenue of $2.7B (+4%) vs. $2.6B. Raises 2010 EPS outlook to $1.05-1.08. “Solid comparable store sales growth, combined with our continuing focus on controlling operating costs, drove significant operating margin improvement in both our U.S. and International business segments.” (PR) Total System Services (TSS): Q4 EPS of $0.31 beats by $0.01. Revenue of $431M (flat) vs. $435.5M. Sees FY10 EPS of $0.95-0.97 vs. $1.21, on revenues of $1.61B-1.65B vs. $1.76B. (PR) Xilinx (XLNX): FQ3 EPS of $0.38 beats by $0.03. Revenue of $513M (+12%) vs. $492M. Sees Q4 revenue up 3% to down 1%. (PR) Today's Markets In Asia, Nikkei +1.2% to 10,868. Hang Seng -2% to 20,863. Shanghai +0.2% to 3,159. BSE -2.4% to 17,051. In Europe at midday, London +0.1%. Paris +0.5%. Frankfurt +0.3%. Futures: Dow -0.1%. S&P flat. Nasdaq -0.15%. Crude -0.05% to $77.70. Gold -0.8% to $1,103.10. Thursday's Economic Calendar 8:30 Jobless Claims 10:00 Leading Indicators 10:00 Philly Fed Business Outlook 10:30 EIA Natural Gas Inventory 11:00 EIA Petroleum Inventories 4:30 PM Fed Balance Sheet 4:30 PM Money Supply Notable earnings before Thursday's open: APH, CAL, CMA, ESI, FCS, FITB, FNFG, GS, KEY, LM, LUV, NITE, PCP, PNC, PPG, SBIB, TCB, UNH, UNP, XRX Notable earnings after Thursday's close: ACS, AMD, AXP, BNI, BXS, COF, ED, ELX, GOOG, IGT, ISRG, PBCT, WDC Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.

  • Wall Street Breakfast: Must-Know News

    Six banks fall short on capital. As news of the preliminary stress test results continues to leak out, sources say at least 6 of the nineteen largest U.S. banks will need additional capital. Some may get extra money from the government, but most of the capital will likely come from the conversion of preferred shares to common equity. The Federal Reserve is in the process of hearing appeals from banks (including Citigroup (C) and Bank of America (BAC)) that were told they need a larger capital cushion. Final test results are due to be released next week. Citigroup tries to plug capital hole. Citigroup (C) is trying to convince the government that the bank doesn't need more capital beyond recent plans to shore up its balance sheet and cut costs. However, executives have also told regulators that a capital shortfall identified in the stress tests could be filled by selling large businesses (potentially including core business units), further reducing its balance sheet or asking more investors to convert preferred shares into common stock. In short, anything but accepting additional government aid. Separately, Citigroup has reportedly asked the Treasury for permission to pay bonuses to many key employees. Shares +6.6% premarket (7:00 ET). Lewis on the line. Bank of America (BAC) holds its annual meeting today, and shareholders will vote on whether CEO Ken Lewis should be re-elected as the company's chairman of the board. Though Lewis is likely to win re-election to the board by a wide margin, a separate shareholder proposal forcing Lewis to give up his position as chairman is still too close to call. The votes come amid news that the company could require up to $70B in extra capital as a result of the government's stress tests. Shares +3.9% premarket (7:00 ET). New mortgage mod rules. The White House unveiled new guidelines in its foreclosure-prevention program to address borrowers with home-equity loans and other second mortgages. The original plan didn't address this group of borrowers, despite the fact that roughly half of seriously delinquent borrowers have a second mortgage. Under the revised plan, companies participating in the loan modification program must automatically modify the second mortgage when the first is reworked. The government will share in the cost of reducing the interest rate on second mortgages for five years. Chrysler reaches debt deal. Chrysler's largest lenders and the government reached a major breakthrough on debt reduction, agreeing to write down $6.9B in debt to just $2B ahead of Chrysler's bankruptcy deadline tomorrow. Despite the progress, "there is still some way to go in the negotiations," said a White House spokesman, "so I wouldn't rule anything in or out." SEC's fraud-fighting team. After a series of high-profile failings, the SEC is creating a team of specialists to focus on fighting fraud and to make the agency "more smart, more swift and more successful." The idea is a major shift for the SEC, which traditionally has relied on enforcement personnel who were generalists. Details of the new plan are not yet finalized. AIG tries to lower default risk. Less than a month after resigning, senior AIG (AIG) executive James Shephard has reportedly decided to stay on as the deputy chief of Paris-based Banque AIG. Insiders say Shephard was pressed to stay in order to help stave off the risk of default on $234B of derivatives; his continued presence at the unit will likely deter several European banks that bought derivatives from taking legal action to force AIG to repay them. Verizon, MSFT team up on iPhone rival. Verizon (VZ) is said to be holding talks with Microsoft (MSFT) over a touch-screen music-playing mobile phone that could compete with Apple's (AAPL) iPhone. Talks are still in the early stages, but a phone could be introduced next year. Verizon is also reportedly in talks with Apple about selling a version of the iPhone. Falling demand, prices hurt ArcelorMittal. ArcelorMittal (MT) posted a wider-than-expected quarterly loss (see details below) as demand slumped and falling metals prices forced the company to lower the value of its inventories. Steel consumption is expected to drop another 15% in 2009, and the company is bracing for market conditions to 'remain challenging.' Shares -2.0% premarket (7:00 ET). Dendreon shares yo-yo on prostate drug. Dendreon's (DNDN) shares plunged dramatically yesterday, falling 45% before trading was halted. The sudden drop was in advance of a meeting at which the company presented data on prostate cancer drug Provenge. As it turns out, Dendreon executives reported that Provenge extended the median survival of prostate cancer patients by 4.1 months and improved 3-year survival by 38%. The findings raise fresh expectations of FDA approval, and sent the stock soaring in premarket trading (+127% at 7:00 ET). IBM boosts dividend. IBM (IBM) raised its dividend by 10%, and authorized another $3B in stock buybacks. Despite losing Sun Microsystems (JAVA) to Oracle (ORCL), IBM executives said the company absolutely still has the flexibility to make a major acquisition. Retail sales. Retail chain store sales fell 0.7% from a week ago, ICSC reported, and dropped 1.7% Y/Y. Consumer traffic fell for most segments, including grocery, drug, department stores and discounters. Redbook recorded that chain store sales gained 1.6% in the first three weeks of April, better than the 1.3% rise expected. Strong seasonal sales drove the improvement. Home prices fall (.pdf). S&P/Case-Shiller's 20-city home price index fell 18.6% in February from a year ago, slightly better than the 19% drop seen last month. All 20 areas were still lower from a month ago, but 16 of the 20 saw an improvement in their annual returns. It's the first time since Oct. 2007 that the index didn't post a record annual decline. Confidence ticks up. Conference Board's Consumer Confidence Index improved considerably in April, rising to 39.2 from March's 26.9. Expectations rose to 49.5 from 30.2. "The sharp increase in the Expectations Index suggests that consumers believe the economy is nearing a bottom, however, this Index still remains well below levels associated with strong economic growth." Mfg contraction slows. The Richmond Fed's Manufacturing Index contracted more slowly in April, rising to -9 from March's -20. Shipments gained twelve points to -3, new orders rose eighteen points to -2, and the jobs index edged up two points to -26. Mortgage apps fall. Mortgage applications fell 18.1% from a week ago, MBA reported. The average interest rate on 30-year fixed-rate mortgages inched down to 4.62% from 4.73%. Earnings: Wednesday Before Open Aetna (AET): Q1 EPS of $0.96 beats by $0.03. Revenue of $8.6B (+10.5%) vs. $8.5B. Reaffirms FY '09 EPS guidance of $3.85-$3.95. (PR) American Tower (AMT): Q1 EPS of $0.15 beats by $0.01. Revenue of $409M (+6.9%) vs. $408M. Issues in-line guidance for FY '09, see revenue of $1.64-$1.77B vs. $1.68B consensus. (PR) ArcelorMittal (MT): Q1 EPS of -$0.78 misses by $0.39. Revenue of $15.1B (-49.3%) vs. $15.9B. (PR) Baker Hughes (BHI): Q1 EPS of $0.82 beats by $0.06. Revenue of $2.7B (-0.1%) vs. $2.6B. (PR) Burger King (BKC): FQ3 EPS of $0.34 in-line. Revenue of $600M (+1.0%) vs. $607M. Sees FY '09 EPS of $1.39-$1.42. (PR) Endo Pharmaceuticals (ENDP): Q1 EPS of $0.67 beats by $0.04. Revenue of $335M (+15.5%) vs. $338M. (PR) FTI Consulting (FCN): Q1 EPS of $0.60 beats by $0.08. Revenue of $348M (+13.3%) vs. $341M. (PR) General Dynamics (GD): Q1 EPS of $1.54 beats by $0.08. Revenue of $8.3B (+18%) vs. $7.8B. (PR) Hess (HES): Q1 EPS of -$0.18 beats by $0.09. Revenue of $6.9B (-35.8%) vs. $5.6B. (PR) IAC/InterActiveCorp (IACI): Q1 EPS of -$0.02 misses by $0.02. Revenue of $332M (-10.4%) vs. $330M. (PR) Jones Apparel Group (JNY): Q1 EPS of $0.28 beats by $0.18. Revenue of $891M (-8.6%) vs. $875M. (PR) MeadWestvaco (MWV): Q1 EPS of -$0.46 misses by $0.22. Revenue of $1.35B (-10.8%) vs. $1.44B. (PR) MedcoHealth Solutions (MHS): Q1 EPS of $0.63 in-line. Revenue of $14.8B (+14.4%) vs. $13.7B. Sees FY '09 EPS of $2.67-$2.77 vs. $2.73 consensus. (PR) MGIC Investment (MTG): Q1 EPS of -$1.49 misses by $0.12. Revenue of $435M (+2.7%) vs. $436M. (PR) Moody's (MCO): Q1 EPS of $0.41 beats by $0.07. Revenue of $409M (-5.1%) vs. $393M. Declares a quarterly dividend of $0.10/share. (PR) PepsiAmericas (PAS): Q1 EPS of $0.20 beats by $0.04. Revenue of $1.1B (-3.7%) in-line. Issues upside guidance for FY '09, sees EPS of $1.83-$1.90 vs. $1.80 consensus. (PR) Praxair (PX): Q1 EPS of $0.93 beats by $0.01. Revenue of $2.1B (-20.3%) vs. $2.4B. Sees FY '09 EPS of $3.85-$4.15, revenue of around $9B. (PR) Qwest Communications International (Q): Q1 EPS of $0.12 beats by $0.04. Revenue of $3.2B (-6.6%) in-line. (PR) Reynolds American (RAI): Q1 EPS of $1.00 beats by $0.05. Revenue of $1.92B (-6.6%) vs. $1.97B. Sees FY '09 EPS guidance of $4.15-$4.45. (PR) Rockwell Automation (ROK): FQ2 EPS of $0.29 in-line. Revenue of $1.1B (-24.8%) in-line. (PR) Royal Dutch Shell (RDS.A): Q1 EPS of $0.54 misses by $0.54. Revenue of $58.2B vs. $55.2B. Q1 dividend +5% to $0.42/share. "Industry conditions remain challenging, and our focus is on capital discipline and costs." (PR) SAP AG (SAP): Q1 EPS of $0.22 misses by $0.07. Revenue of $2.4B (-4%) vs. $2.6B. (PR) Sealed Air (SEE): Q1 EPS of $0.33 beats by $0.05. Revenue of $988M (-16.3%) vs. $1.03B. (PR) Siliconware Precision Industries (SPIL): Q1 EPS of $0.01 beats by $0.01. (PR) Southern Company (SO): Q1 EPS of $0.42 beats by $0.01. Revenue of $3.7B (-0.3%) vs. $3.5B. (PR) SPX (SPW): Q1 EPS of $0.81 beats by $0.06. Revenue of $1.2B (-13.9%) in-line. (PR) Talisman Energy (TLM): Q1 EPS of $0.30 beats by $0.16. Revenue of $1.8B (-21.5%) vs. $1.7B. (PR) Time Warner (TWX): Q1 EPS of $0.45 beats by $0.07. Revenue of $6.9B (-7%) vs. $6.8B. Reaffirms FY '09 guidance of $1.98 EPS. (PR) Time Warner Cable (TWC): Q1 EPS of $0.75 beats by $0.14. Revenue of $4.4B (+4.9%) in-line. (PR) Tyco Electronics (TEL): FQ2 EPS of $0.14 beats by $0.10. Revenue of $2.5B (-32.9%) vs. $2.4B. Sees FQ3 EPS of $0.01-$0.06, revenue of $2.35B-$2.45B. (PR) United Microelectronics (UMC): Q1 EPS of -$0.09 beats by $0.04. Revenue of $319M (-59.6%) vs. $337.5M. (PR) ViroPharma (VPHM): Q1 EPS of -$0.77 misses by $0.93. Revenue of $60M (+18.2%) vs. $65M. (PR) Waste Management (WMI): Q1 EPS of $0.42 beats by $0.01. Revenue of $2.8B (-14.1%) vs. $3.0B. (PR) Wyeth (WYE): Q1 EPS of $0.89 beats by $0.01. Revenue of $5.4B (-5.8%) vs. $5.5B. Reaffirms FY '09 guidance, sees EPS of $3.33-$3.53 vs. $3.50 consensus. (PR) Wyndham Worldwide (WYN): Q1 EPS of $0.41 beats by $0.06. Revenue of $901M (-11%) vs. $839M. Reaffirms FY '09 EPS guidance of $1.61-$1.85, FY '09 revenue of $3.5-$3.9B. (PR) Earnings: Tuesday After Close Ace Ltd. (ACE): Q1 EPS of $1.99 beats by $0.03. Shares flat AH. (PR) Buffalo Wild Wings (BWLD): Q1 EPS of $0.47 beats by $0.01. Revenue of $131.6M (+35.3%) vs. $129.1M. Shares -11.1% AH. (PR) Cabot Oil & Gas (COG): Q1 EPS of $0.41 beats by $0.03. Revenue of $234M (+6.5%) vs. $213M. Shares +4% AH. (PR) Carter's (CRI): Q1 EPS of $0.19 beats by $0.03. Revenue of $357M (+33.6%) vs. $335M. Sees Q2 EPS of $0.07-0.10 vs. $0.10. Shares -5.3% AH. (PR) Cemex (CX): Q1 operating income of $36M (-29%). Revenue of $3.7B (-32%) vs. $4.03B consensus. (PR)Dreamworks Animation SKG (DWA): Q1 EPS of $0.68 beats by $0.23. Revenue of $263.5M (+67.6%) vs. $211.5M. Shares +14.6% AH. (PR) Cerner (CERN): Q1 EPS of $0.52 beats by $0.01. Revenue of $392M (+1.9%) vs. $418M. Full-year guidance in-line. Shares -3.5% AH. (PR) Chicago Bridge & Iron (CBI): Q1 EPS of $0.51 beats by $0.06. Revenue of $1.3B (-10%) vs. $1.25B. Shares +17.9% AH. (PR) CommScope (CTV): Q1 EPS of $0.14 beats by $0.04. Revenue of $742M (-26.1%) vs. $753M. Q2 revenue guidance in-line. Shares +3.8% AH. (PR) E*TRADE Financial (ETFC): Q1 EPS of -$0.41 misses by $0.01. Revenue of $497M (+6%) in-line. Allowance for loan losses increased $120M to $1.2B. Says it will need to further boost its capital position, through selling shares and/or a private cash injection. Shares -27.6% AH. (PR) Hertz Global (HTZ): Q1 EPS of -$0.25 misses by $0.03. Revenue of $1.56B (-23.3%) vs. $1.8B. (PR) Jones Lang LaSalle (JLL): Q1 EPS of -$0.47 misses by $0.40. Revenue of $494M (-12.4%) vs. $541M. Decreases semi-annual dividend to $0.10 from $0.25. Assets under management fell 11% to $41B. Shares flat AH. (PR) Life Technologies (LIFE): Q1 EPS of $0.72 beats by $0.15. Revenue of $785M (+124.1%) vs. $749M. Shares -0.7% AH. (PR) Massey Energy Company (MEE): Q1 EPS of $0.51 misses by $0.02. Revenue of $768M (+19.2%) vs. $739M. Says it has taken meaningful action to cut costs, and expects positive cash flow this year. Shares +0.6% AH. (PR) Nalco (NLC): Q1 EPS of $0.17 misses by $0.02. Revenue of $868M (-13.1%) vs. $933M. "We are pushing aggressively on productivity to help offset the impacts of weaker end markets." Shares flat AH. (PR) Psychiatric Solutions (PSYS): Q1 EPS of $0.50 beats by $0.01. Revenue of $450M (+6.3%) in-line. Sees full-year EPS of $2.24-2.32 vs. $2.21. Shares +8.5% AH. (PR) RF Micro Devices (RFMD): FQ4 EPS of -$0.10 misses by $0.05. Revenue of $172.3M (-21.9%) vs. $166.1M. Sees FQ1 EPS of flat vs. consensus of -$0.02. Shares -4.15% AH. (PR) Stericycle (SRCL): Q1 EPS of $0.47 beats by $0.01. Revenue of $277M (+8.8%) in-line. Shares flat AH. (PR) Sun Microsystems (JAVA): FQ3 EPS of -$0.07 beats by $0.12. Revenue of $2.61B (-20%) vs. $2.86B. Shares -0.2% AH (company is being acquired by Oracle (ORCL)). (PR) Superior Energy Services (SPN): Q1 EPS of $0.72 beats by $0.04. Revenue of $437M (-1%) vs. $418M. Shares +1.7% AH. (PR) Textron (TXT): Q1 EPS of $0.26 beats by $0.25. Revenue of $2.53B (-23.6%) vs. $2.78B. Sees full-year EPS of $0.45-0.75 vs. $0.97 consensus, and revenue of $11B vs. $11.8B. Launches sale of 19M shares, and $300M in convertible senior notes. Shares -5% premarket. (PR I, II) Total System Services (TSS): Q1 EPS of $0.26 misses by $0.04. Revenue of $409M (-2.6%) vs. $474M. Sees full-year revenue of $1.63-1.66B vs. $1.95B consensus. Sees net income down 11-13% vs. a previous 0-3%. Cardholder transaction volume was down 4.3%. Shares -8.3% AH. (PR) Trimble Navigation (TRMB): Q1 EPS of $0.28 beats by $0.02. Revenue of $289M (-18.7%) vs. $297M. Sees Q2 EOS of $0.32 vs. $0.35 and revenue of $285-315M vs. $320M. Shares -3.6% AH. (PR) Trustmark (TRMK): Q1 EPS of $0.41 beats by $0.12. (PR) V.F. Corp. (VFC): Q1 EPS of $0.91 misses by $0.03. Revenue of $1.72B in-line. Sees full-year EPS of $4.70-5.00 vs. consensus of $5.31. Shares -8.2% AH. (PR) Today's MarketsOverseas markets were broadly higher Wednesday, fueling gains in overnight futures trading.

  • Wall Street Breakfast: Must-Know News

    Chrysler Ch. 11 imminent. Talks between Chrysler lenders and the Treasury broke down Wednesday, making it all but certain that the automaker will file for bankruptcy today. Government officials say everything is in place to ensure the company makes it through court quickly, possibly in as little as a few weeks. Even as the automaker prepares for a likely bankruptcy, Obama said he's hopeful Chrysler will be able to push forward with a Fiat alliance. GM bondholders prep counteroffer. General Motors' (GM) bondholders plan to reject GM's April 27 debt exchange offer, and to present a counteroffer that would give them control of the automaker. Sources say the counteroffer proposes that bondholders and a UAW retiree medical fund both exchange all their claims for equity stakes of 58% and 41% respectively. Common shareholders would be left with 1% ownership. A committee representing bondholders will present the alternative plan to the auto task force today. Shares +3.9% premarket (7:00 ET). FOMC: recession is easing. As expected, the FOMC kept rates steady at 0-0.25%. The committee pointed to signs of economic improvement, and forecast a gradual recovery amid market weakness: "Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability." Even as the FOMC took note of some 'green shoots' in markets, it left the door open to boosting emergency financial programs if necessary. (Read the FOMC statement) 100+ PPIP applications. More than 100 firms applied to participate in PPIP, the Treasury's toxic-asset purchase program. At least five will get preliminary approval by May 15, at which point they can begin raising the expected minimum of $500M in private capital. (Read the Treasury's statement) Lewis ousted as chairman. A shareholder proposal removed Bank of America (BAC) CEO Ken Lewis from his position as chairman of the board, a possible precursor to his eventual replacement as CEO. The proposal passed narrowly, with 50.34% of the vote. Board member Walter Massey will assume the chairman's post. State Street probed over mortgage securities. Massachusetts' top securities regulator launched a probe into whether State Street Corp (STT) misled pension funds over the risk level of certain investments. In particular, regulators are investigating whether State Street represented mortgage-backed securities as low-risk vehicles, and whether funds marketed as safe held 'potentially inappropriate' derivatives, swaps and other securities. A State Street spokeswoman declined to comment. FBI probes Freddie losses. The FBI is reportedly investigating possible accounting violations at Freddie Mac (FRE), trying to determine whether the mortgage giant improperly delayed the recognition of billions of dollars of losses. The losses, incurred from 2001-2004, were connected to derivatives contracts and are due to be gradually recognized in quarterly earnings statements over the next several years. IBM offers pre-stimulus financing. IBM (IBM) is offering $2B in financing to customers who want to invest in broadband and healthcare technologies but are waiting to receive government stimulus funds. Since much of the government funding won't reach companies until 2010 or later, IBM sees this as a way to "jump-start those investments and jump-start the benefits." Budget approved. Congress approved a $3.5T budget outline for 2010, which includes special funds to pay for sweeping changes in health care, education and energy. Democrats said their budget outline will cut the deficit by more than 50% in five years. Republicans argued the reduced deficit projections omit costs, such as disaster relief, from future-year expenditures. IACI goes match-making. IAC/InterActiveCorp (IACI) is in talks to buy Yahoo Personals, Yahoo's (YHOO) online dating service. Yahoo has considered selling the matchmaking site in the past, and CEO Carol Bartz has expressed her interest in selling or shuttering non-core businesses. The dating site could be worth around $500M. Time Warner, AOL prepare to part. Time Warner (TWX) said it's preparing to move ahead with a spinoff of all or part of its struggling AOL unit, and a decision is expected 'very soon.' The company also plans to buy back Google's (GOOG) 5% stake in AOL. Visa beats forecast on cost cuts, debit use. Visa (V) posted better-than-expected quarterly results (see details below) as the company increased prices and cut costs. The company also benefited from consumers' increased reliance on debit cards The number of Visa-branded cards grew 8% globally to more than 1.7B, while the number of transactions processed on its network climbed 9%. Starbucks to focus on value. Starbucks (SBUX) narrowly beat expectations for quarterly earnings (see details below) on cost cuts. Trying to re-brand itself for the economic times, Starbucks plans to launch a multimillion dollar campaign challenging the view that coffee is an expensive luxury. The company will also selectively lower prices on some of its popular drinks while slightly raising prices on larger, more complex beverages. MGM finds project financing. MGM Mirage (MGM) and Dubai World reached an agreement with lenders to fully finance their $8.5B CityCenter project in Las Vegas, and Dubai World dismissed its lawsuit against MGM. The project is on track to open in December 2009. Apple builds chip-design team. Apple (AAPL) is shifting strategy with plans to build its own team for chip design. The company hopes the move will shield Apple's work from rivals and lead to the development of exclusive features for its gadgets. GDP worse than expected. Advanced Q1 GDP was -6.1% vs. consensus of -4.7% and last quarter's -6.3%. Personal consumption increased 2.2% vs. consensus of +0.9% and prior -4.3%. The price index rose 2.9% vs. consensus of +1.8% and prior +0.5%. BoJ holds rates steady. Bank of Japan kept its benchmark rate unchanged at 0.1%. The bank will release its economic outlook today, and will likely forecast a deeper contraction than the 2% drop predicted three months ago. Earnings: Thursday Before Open Alliant Energy (LNT): Q1 EPS of $0.30 misses by $0.24. (PR) Ashland (ASH): FQ2 EPS of $0.64 beats by $0.34. Revenue of $2.0B (-3.4%) vs. $2.1B. (PR) BorgWarner (BWA): Q1 EPS of -$0.12 beats by $0.08. Revenue of $819.5M (-45.3%) vs. $854M. (PR) Cardinal Health (CAH): FQ3 EPS of $0.97 beats by $0.02. Revenue of $24.9B (+8.9%) vs. $24.0B. (PR) Celgene (CELG): Q1 EPS of $0.44 beats by $0.01. Revenue of $601M (+29.9%) vs. $602M. (PR) CIGNA (CI): Q1 EPS of $0.69 misses by $0.22. Revenue of $4.8B (+4.5%) in-line. (PR) CMS Energy (CMS): Q1 EPS of $0.30 in-line. Revenue of $2.1B (-3.6%) in-line. (PR) Colgate-Palmolive (CL): Q1 EPS of $0.97 beats by $0.01. Revenue of $3.5B (-5.7%) vs. $3.6B. (PR) Comcast (CMCSA): Q1 EPS of $0.27 beats by $0.04. Revenue of $8.4B (-5%) vs. $8.8B. (PR) Covidien (COV): FQ2 EPS of $0.69 misses by $0.16. Revenue of $2.7B (+11.3%) vs. $2.6B. (PR) Digital Realty Trust (DLR): Q1 EPS of $0.70 beats by $0.03. Revenue of $149M (+30.2%) vs. $147M. (PR) Dominion Resources (D): Q1 EPS of $0.97 beats by $0.09. Revenue of $4.8B (+9.8%) vs. $4.1B. (PR) Dow Chemical (DOW): Q1 EPS of $0.12 beats by $0.33. Revenue of $9.1B (-38.7%) vs. $11.7B. Shares +1.4% premarket (6:50 ET). (PR) Eastman Kodak (EK): Q1 EPS of -$1.34 misses by $1.01. Revenue of $1.5B (-29.4%) vs. $1.6B. (PR) Entegris (ENTG): Q1 EPS of -$0.34 misses by $0.09. Revenue of $59M (-60.2%) vs. $71M. (PR) EQT Corp. (EQT): Q1 EPS of $0.55 misses by $0.01. Revenue of $260M (-1.6%) vs. $310M. (PR) ExxonMobil (XOM): Q1 EPS of $0.92 misses by $0.03. Revenue of $64.03B (-45.2%) vs. $54.03B. Shares +0.6% premarket. (AP) GrafTech International Ltd (GTI): Q1 EPS of $0.04 beats by $0.03. Revenue of $134M (-53.8%) vs. $153M. (PR) International Paper (IP): Q1 EPS of $0.08 beats by $0.12. Revenue of $5.7B (+0%) vs. $6.3B. (PR) Iron Mountain (IRM): Q1 EPS of $0.20 beats by $0.08. Revenue of $723M (-3.5%) vs. $722M. (PR) KBR (KBR): Q1 EPS of $0.48 beats by $0.05. Revenue of $3.2B (+27%) vs. $2.9B. (PR) Kellogg (K): Q1 EPS of $0.89 beats by $0.10. Revenue of $3.2B (-2.7%) in-line. (PR) Kimco Realty (KIM): Q1 EPS of $0.43 misses by $0.01. Revenue of $194M (+2.7%) vs. $191M. (PR) LKQ Corp. (LKQX): Q1 EPS of $0.23 beats by $0.02. Revenue of $518M (+5.3%) vs. $523M. (PR) LM Ericsson Telephone (ERIC): Q1 EPS of $0.54 misses by $0.17. Revenue of $49.6B (+12.2%) vs. $42.3B. Shares -5.8% premarket (6:50 ET). (PR) Motorola (MOT): Q1 EPS of -$0.10 beats by $0.01. Revenue of $5.4B (-27.9%) vs. $5.55B. Shares -16% premarket (7:00 ET). (PR) Mylan Laboratories (MYL): Q1 EPS of $0.33 beats by $0.05. Revenue of $1.2B (+12.6%) in-line. (PR) Newell Rubbermaid (NWL): Q1 EPS of $0.20 beats by $0.12. Revenue of $1.2B (-16%) in-line. (PR) Newmont Mining (Holding Company) (NEM): Q1 EPS of $0.44 beats by $0.02. Revenue of $1.55B (-20.1%) vs. $1.40B. (PR) Noble Energy (NBL): Q1 EPS of $0.59 beats by $0.15. Revenue of $441M (-57%) vs. $598M. (PR) NRG Energy (NRG): Q1 EPS of $0.70 beats by $0.25. Revenue of $1.7B (+27.3%) vs. $1.2B. (PR) NYSE GROUP (NYX): Q1 EPS of $0.43 beats by $0.04. Revenue of $1.1B (+0.2%) in-line. (PR) OfficeMax (OMX): Q1 EPS of $0.23 beats by $0.07. Revenue of $1.91B (-17%) vs. $1.95B. (PR) Omnicare (OCR): Q1 EPS of $0.64 beats by $0.03. Revenue of $1.6B (+0.3%) in-line. Shares +3.3% premarket (8:10 ET). (PR) Oshkosh Corporation (OSK): FQ2 EPS of -$0.24 misses by $0.04. Revenue of $1.3B (-26.9%) vs. $1.5B. (PR) Owens Corning (OC): Q1 EPS of $0.04 beats by $0.08. Revenue of $1.1B (-20.6%) vs. $1.2B. (PR) Patterson-UTI Energy (PTEN): Q1 EPS of $0.11 misses by $0.03. Revenue of $296M (-41.3%) vs. $319M. (PR) Pennsylvania Real Estate Investment Trust (PEI): Q1 EPS of $0.71 beats by $0.03. Revenue of $73M (-0.8%) vs. $67M. Shares +1.2% premarket (8:10 ET). (PR) Pride International (PDE): Q1 EPS of $0.87 beats by $0.01. Revenue of $549M (+1.7%) vs. $555M. (PR) Procter & Gamble (PG): FQ3 EPS of $0.84 beats by $0.04. Revenue of $18.4B (-8%) vs. $18.9B. Shares +2.1% premarket (8:00 ET). (PR) Rayonier (RYN): Q1 EPS of $0.33 beats by $0.04. Revenue of $274M (-0.3%) vs. $286M. (PR) Regal Entertainment Group (RGC): Q1 EPS of $0.14 misses by $0.02. Revenue of $666M (+6.2%) vs. $651M. (PR) Sepracor (SEPR): Q1 EPS of $0.85 beats by $0.16. Revenue of $330M (+2.9%) vs. $329M. (PR) Spirit AeroSystems (SPR): Q1 EPS of $0.45 beats by $0.05. Revenue of $887M (-14.4%) vs. $859M. (PR) Starwood Hotels & Resorts Worldwide (HOT): Q1 EPS of $0.14 beats by $0.10. Revenue of $1.1B (-23.7%) in-line. (PR) Taiwan Semiconductor Manufacturing (TSM): Q1 EPS of $0.01 beats by $0.02. Revenue of $1.2B (-57.9%) vs. $1.1B. Shares +4.5% premarket (8:00 ET). (PR) The Travelers Companies (TRV): Q1 EPS of $1.34 beats by $0.03. Revenue of $5.7B (-8.0%) vs. $6.1B. (PR) Tyco International (TYC): FQ2 EPS of $0.55 beats by $0.14. Revenue of $4.15B (-14.7%) vs. $4.2B. (PR) Viacom(B): Q1 EPS of $0.29 beats by $0.03. Revenue of $2.9B (-6.8%) vs. $3.0B. (PR) Watson Pharmaceuticals (WPI): Q1 EPS of $0.58 beats by $0.09. Revenue of $667M (+6.5%) vs. $638M. Shares +6.0% premarket (8:05 ET). (PR) Xcel Energy (XEL): Q1 EPS of $0.38 beats by $0.01. Revenue of $2.7B (-11%) vs. $3.1B. (PR) Earnings: Wednesday After Close AFLAC (AFL): Q1 EPS of $1.22 beats by $0.06. Revenue of $4.82B (+12%) in-line. Total investments and cash of $61.7B down 1.7% Y/Y. Shares -2% AH. (PR) Agnico-Eagle Mines (AEM): Q1 EPS of $0.35 beats by $0.26. Revenue of $111M (-10.5%) vs. $72M. Shares +1.7% AH. (PR) Akamai Technologies (AKAM): Q1 EPS of $0.43 beats by $0.03. Revenue of $210M (-1%) in-line. Announces $100M share repurchase. Shares +5.1% AH. (PR) Annaly Capital Management (NLY): Q1 EPS of $0.56 beats by $0.01. Shares +1.1% AH. (PR) Assurant (AIZ): Q1 EPS of $1.17 misses by $0.26. Revenue of $2.09B (-4.1%) vs. $2.24B. Shares -3.7% AH. (PR) Biomed Realty Trust (BMR): Q1 FFO of $0.51 beats by $0.06. Revenue of $94M (+39.4%) vs. $85M. (PR) Boston Properties (BXP): Q1 FFO of $1.36 beats by $0.11. Revenue of $377M (+1.6%) vs. $366M. (PR) CB Richard Ellis Group (CBG): Q1 EPS of -$0.03 misses by $0.05. Revenue of $890M (-27.7%) vs. $983M. Shares -0.15% AH. (PR) Cliffs Natural Resources (CLF): Q1 EPS of -$0.07 beats by $0.07. Revenue of $465M (-6%) vs. $528M. Shares -2.5%. (PR) Citrix Systems (CTXS): Q1 EPS of $0.32 beats by $0.01. Revenue of $369M (-2.1%) vs. $359M. Announces up to $300M share buyback. Shares +5.1% AH. PR) Covance (CVD): Q1 EPS of $0.63 beats by $0.02. Revenue of $441M vs. $429M. Sees full-year EPS of $2.50-2.70 vs. consensus of $2.88. Shares flat AH. (PR) Crown Castle International (CCI): Q1 EPS of $0.02 beats by $0.08. Revenue of $403M (+8.7%) vs. $392M. Shares +7% AH. (PR) Duke Realty (DRE): Q1 FFO of $0.50 in-line. Revenue of $238M (+5%) vs. $219M. Sees full-year FFO of $1.85-2.15 vs. $1.81. Shares flat AH. (PR) Equity Residential (EQR): Q1 FFO of $0.57 beats by $0.02. Revenue of $515M (+2.5%) vs. $523M. Shares flat AH. (PR) Express Scripts (ESRX): Q1 EPS of $0.86 beats by $0.04. Revenue of $5.42B (-1.2%) in-line. Full-year guidance in-line. Shares +1.3% AH. (PR) First Solar (FSLR): Q1 EPS of $1.99 beats by $0.48. Revenue of $418M (+112.4%) vs. $403M. Shares +13.4% premarket. (PR) Flextronics International (FLEX): FQ4 EPS of $0.03 misses by $0.01. Sees FQ1 revenue of $5-6B vs. $6.2B consensus. Shares -3.3% AH. (PR) Genco Shipping (GNK): Q1 EPS of $1.32 beats by $0.06. Revenue of $96.7M (+5.4%) vs. $96M. Shares +0.5% AH. (PR) Green Mountain Coffee Roasters (GMCR): FQ2 EPS of $0.50 beats by $0.14. Revenue of $193M (+60%) vs. $178M. Sees full-year EPS of $1.47-1.53 vs. $1.31. Shares +20.4% AH. (PR) Harman International (HAR): FQ3 EPS of -$0.84 misses by $0.40. Revenue of $598M (-42.1%) vs. $668M. Suspends dividend. Shares -4.7% AH. (PR) JDS Uniphase (JDSU): FQ3 EPS of -$0.03 in-line. Revenue of $281M vs. $285M. Sees FQ4 revenue of $265-285M vs. consensus of $290M. Shares -12% AH. (PR) Kaiser Aluminum (KALU): Q1 EPS of $0.81 vs. consensus of $0.42. Revenue of $266M (-33.4%) vs. $277M. Shares +1.7% AH. (PR) LSI Logic (LSI): Q1 EPS of -$0.03 beats by $0.01. Revenue of $482M vs. $469M. Shares -0.2% AH. (PR) Northeast Utilities (NU): Q1 EPS of $0.60 beats by $0.05. Revenue of $1.59B (+4.8%) in-line. Shares -4.9% AH. (PR) Oceaneering International (OII): Q1 EPS of $0.80 beats by $0.12. Revenue of $435M (-0.2%) vs. $461M. Shares flat AH. (PR) O'Reilly Automotive (ORLY): Q1 EPS of $0.47 beats by $0.07. Revenue of $1.16B (+80.1%) in-line. Shares +3% AH. (PR) Owens-Illinois (OI): Q1 EPS of $0.55 beats by $0.19. Revenue of $1.52B (-22.5%) vs. $1.66B. Shares +11.3% AH. (PR) ProLogis (PLD): Q1 EPS of $0.66 misses by $0.04. Revenue of $455M vs. $245M. Shares -3.5% AH. (PR) Realty Income (O): Q1 EPS of $0.45 misses by $0.01. Revenue of $82.9M vs. $81.9M. (PR) Ryland Group (RYL): Q1 EPS of -$1.76 misses by $0.74. Revenue of $265M (-36.3%) vs. $235M. Shares -1.8% AH. (PR) Skechers (SKX): Q1 EPS of $0.18 beats by $0.27. Revenue of $343M (-10.8%) vs. $333M. "We are continuing to monitor our expenses and inventory levels to ensure maximum profitability in this soft economic environment, which we believe will continue to negatively impact our business." Shares +5.6% AH. (PR) Smith & Nephew (SNN): Q1 EPS of $0.13 misses by $0.49. Revenue of $865M (-5%) vs. $902M. Shares +0.45% premarket. (PR) Starbucks (SBUX): FQ2 EPS of $0.16 beats by $0.01. Revenue of $2.3B in-line. Shares +1.5% AH. (PR) STMicroelectronics (STM): Q1 EPS of -$0.31 beats by $0.02. Revenue of $1.66B (+33%) in-line. (PR) Taubman Centers (TCO): Q1 EPS of $0.70 beats by $0.12. Revenue of $158M (+0.2%) vs. $146M. Shares -0.3% AH. (PR) Teradyne (TER): Q1 EPS of -$0.38 beats by $0.02. Revenue of $121M (+59.4%) in-line. Shares +3.7% AH. (PR) Unum Group (UNM): Q1 EPS of $0.62 beats by $0.02. Revenue of $2.45B vs. $2.57B. Shares -0.1% AH. (PR) Visa (V): FQ2 EPS of $0.73 beats by $0.09. Revenue of $1.65B (+13.4%) in-line. Affirms full-year outlook - high-single digits in 21009 and the lower range of 11-15% in 2010. Volume growth of $675B down 1% Y/Y. Shares -0.1% AH. (PR) Walter Industries (WLT): Q1 EPS of $1.36 beats by $0.51. Revenue of $290M (+20.7%) vs. $316M. Shares +6.6% AH. (PR) Whiting Petroleum (WLL): Q1 EPS of -$0.92 misses by $0.20. Revenue of $164M in-line. (PR) Today's MarketsOverseas markets posted strong gains Thursday, and futures are sharply higher.

  • Wall Street Breakfast: Must-Know News

    NY AG mulls bonus pullback. Sources say New York Attorney General Andrew Cuomo may demand the return of $4B in early bonuses paid to Merrill Lynch employees just before being acquired by Bank of America (BAC). The AG's office is also looking into how much BoA CEO Ken Lewis knew about the accelerated bonuses, whether the companies' shareholders had all the necessary information about Merrill's finances and whether federal bailout loans to BoA were used properly. "No longer will this country stand for wasteful spending of tax dollars on bonuses for executives whose companies have taken huge losses and required taxpayer bailouts," Cuomo said. Obama echoed the sentiment, calling Wall Street bonuses 'shameful' and 'the height of irresponsibility.' Pfizer's pull-out fee. Two days after Pfizer (PFE) announced its plans to buy Wyeth (WYE) for $68B, Pfizer shares are trading near a 12-year low. Perhaps, as one analyst put it, it's because "people seem underwhelmed by the deal, maybe thinking Pfizer made a safe move with Wyeth rather than trying to shoot the lights out with a more aggressive company better able to produce blockbuster drugs." Pfizer is moving forward with the deal full-force, and has committed to paying Wyeth $4.5B as a breakup fee if the lenders pull out of the deal. The lenders could choose to act if Pfizer's operations or credit rating decline significantly. Wyeth will have to pay $2B if it drops the deal to accept a higher bid from a different company. Fannie tries for fewer foreclosures. Fannie Mae (FNM) has reached an agreement with former critic Neighborhood Assistance Corp. of America to help prevent foreclosures by modifying home loans. Bruce Mark, CEO of NACA, had previously called Fannie a 'major roadblock' to foreclosure-prevention efforts, but is now working to reach a similar agreement with Freddie Mac (FRE). NACA, which serves as an intermediary between borrowers and lenders and works with such major lenders as Bank of America (BAC) and Wells Fargo (WFC), helped modify over 20,000 mortgages last year. Madoff transfers. Bank of New York Mellon (BK) will transfer $301.4M to Irving Picard, the trustee liquidating Madoff's brokerage, and JPMorgan Chase (JPM) will transfer $233.5M. In exchange, the banks will be indemnified against any claims brought as a result of the transfers. The move is part of Picard's efforts to gather assets to be returned to defrauded investors. Roche lowers DNA bid. Roche Holding (RHHBY.PK) lowered its bid price for the 44.2% of Genentech (DNA) it doesn't already own to $86.50 per share from $89 per share, and will take the offer directly to shareholders within two weeks. Genentech had previously rejected Roche's $89/share offer as too low, and though the new bid is lower, it still marks a 2.9% premium on Genentech's recent closing price. A full takeover would allow Roche to cut costs, boost earnings and expand in the U.S. market. Amazon profit beat. Amazon (AMZN) reported better-than-expected earnings yesterday (see details below), showing a 9% growth in Q4 profits and 18% growth in sales. The growth has much to do with Amazon's strategy of aggressive discounting, free shipping offers and continued product expansion at a time when most other retailers are scaling back, and CEO Jeff Bezos cited heavy demand for Amazon's Kindle electronic reader. Amazon also forecast strong sales for the current quarter. Toshiba tossed by global recession. Toshiba (TOSBF.PK) fell the most in 34 years in Japanese trading after the company forecast its largest ever annual loss. Facing an industry glut and falling prices as the global economic downturn worsens, Toshiba's net loss will probably reach ¥280B ($3.1B) in the fiscal year ending March 31 vs. earlier estimates of a ¥70B net income. To save ¥300B in the next fiscal year, the company is delaying construction of new factories, firing temporary workers, slashing output and cutting research spending. In light of the lower earnings outlook and the possibility Toshiba might have to seek equity financing, Goldman Sachs cut its rating to Sell from Neutral. Shares -17.4% in Japan. Dell smartphone? Dell (DELL) may move into the smartphone market as soon as next month, sources say, as a way to boost sales while its core PC business gets hit by the recession. At least one of Dell's models includes a touchscreen and no physical keyboard, like the iPhone (AAPL), while another has a keypad that slides out from beneath the screen. Going up against Apple and Research in Motion (RIMM) in the smartphone market would be a bold move, one that Dell has yet to confirm. "We haven't committed to anything," said one spokesman. Japan's recession deepens. Japan's recession showed signs of deepening Friday, with closely watched industrial production plunging 9.6% in December, the second straight month of record decline, and projections of steep drops continuing into 2009. "I've never seen such a steep production fall," Economy Minister Kaoru Yosano said. Meanwhile, joblessness rose to 4.4% from 3.9%, and household spending fell by 4.6%. On Thursday, the government said Japan's economy entered a recession in November 2007, meaning it's been in recession for 14 months. Japan's recent expansion was fueled by exports, and economists say its current recession is being driven by the global downturn rather than domestic factors. The Shedlock-Schiff Affair: A Chronicle. Popular econoblogger Michael "Mish" Shedlock triggered a firestorm this week when he took down outspoken investment advisor Peter Schiff, claiming that although Schiff may have been right about the U.S. economy imploding, clients who had invested in his funds in the hopes of profiting from his prophecies had seen their accounts decimated. Big Picture author Barry Ritholtz predicted Shedlock's post would set off fireworks "via a major media outlet." He was right. Today, WSJ's Right Forecast by Schiff, Wrong Plan? does exactly that. "Peter Schiff predicted a collapse of the U.S. financial system. The bust-up he didn't foresee was the one that made mincemeat of investors who took his advice in 2008." Meanwhile, Schiff responds, saying that "the crisis is just beginning and the movements thus far in the dollar, commodities, and foreign stocks, are mere head fakes. Once the speculators have been flushed from the markets, the underlying long-term trends I have been following should return in earnest." More joblessness. Initial jobless claims remained elevated, with 588,000 this week after last week's (revised) 585,000 - vs. consensus of 575,000. Continuing claims +66.5K to 4.63M. Durables drop. Durable Goods Orders -2.6% in December, worse than the 2% drop expected. November's numbers were revised to -3.7% from -1%. Ex-transport: -3.6% vs. -2.7% consensus. It's the fifth consecutive monthly decrease. Inventories +0.4% to $343.5B, the highest on record, and up 17 of the last 18 months. Fewer new home sales. New home sales in December fell 14.7% to 331,000 from Nov. - well short of the 397,000 consensus. November was revised to 388,000 from 407,000. Median price $206,500 vs. $246,900 a year ago. Total new home sales for 2008: 482K down 37.8% from 776K last year. Earnings: Friday Before Open AMETEK (AME): Q4 EPS of $0.66 in-line. Revenue of $624M (+6.9%) vs. $660M. Sees Q1 EPS of $0.54-0.58 vs. $0.59. (PR) Cemex (CX): Q4 revenue of $4.5B vs. $4.79B consensus. Majority net loss of $707M vs. +$538M a year ago. (PR) Honeywell (HON): Q4 EPS of $0.97 in-line. Revenue of $8.71B (-6.1%) vs. $8.97B. Reaffirms 2009 guidance. (PR) Honda (HMC): FQ3 net profit sagged 90% to ¥20.24B vs. consensus of ¥19.75B. Operating profit of ¥102B down from ¥276B a year ago. Sales of ¥2.533T (-17%). Lowers full-year net profit outlook to ¥80B from ¥185B. Shares -9.2% in Tokyo. (DJ) Earnings: Thursday After Close Amazon.com (AMZN): Q4 EPS of $0.52 beats by $0.13. Revenue of $6.7B (+18.2%) vs. $6.44B. "We're particularly grateful for the unusually strong demand for Kindle in the fourth quarter." (PR) Ariba (ARBA): FQ1 EPS of $0.21 beats by $0.08. Revenue of $86.1M (+11.8%) vs. $86.8M. (PR) Broadcom (BRCM): Q4 EPS of $0.08 misses by $0.19. Revenue of $1.13B (+9.7%) vs. $1.07B. Sees Q1 revenue of $800-875M vs. $953M. (PR) CA Inc. (CA): FQ3 EPS of $0.43 beats by $0.05. Revenue of $1.04B (-5.3%) vs. $1.07B. While customers are closely scrutinizing all IT investments, we are seeing considerable interest in our enterprise software as it enables them to increase the effectiveness and cost efficiency of their IT infrastructures..." (PR) Chubb (CB): Q4 EPS of $1.58 beats by $0.06. Revenue of $M in-line. Sees 2009 EPS of $4.80-5.20 vs. $5.62. "We are encouraged by the improved rate environment in the fourth quarter... and there are good reasons to believe that this trend will continue into 2009." (PR) Eastman Chemical Company (EMN): Q4 EPS of $0.05 misses by $0.30. Revenue of $1.35B (-22.5%) vs. $1.4B. "Capacity utilization likely reached its lowest point in December. We anticipate that our capacity utilization will improve through the first quarter due to a modest increase in demand." (PR) Juniper Networks (JNPR): Q4 EPS of $0.321 in-line. Revenue of $923M (+14.1%) vs. $936M. (PR) KLA-Tencor (KLAC): FQ2 EPS of -$0.12 misses by $0.06. Revenue of $397M (-37.6%) vs. $394M. (PR) Monster Worldwide (MWW): Q4 EPS of $0.27 in-line. Revenue of $291M vs. $312M. (PR) PerkinElmer (PKI): Q4 EPS of $0.48 beats by $0.06. Revenue of $495M (+3%) vs. $516M. (PR) PMC-Sierra (PMCS): Q4 EPS of $0.07 misses by $0.01. Revenue of $120.8M (-2.3%) vs. $119.7M. (PR) Rambus (RMBS): Q4 EPS of -$0.10 beats by $0.13. Revenue of $37.6M (-7.2%) vs. $29.9M. (PR) SunPower (SPWRA): Q4 EPS of $0.70 beats by $0.13. Revenue of $401M (+78.7%) vs. $397M. "Long-term solar market fundamentals remain in place and we are encouraged by the commitment to renewable energy by President Obama and Congressional leadership." (PR) Varian Medical Systems (VAR): FQ1 EPS of $0.56 beats by $0.05. Revenue of $509M (+12.8%) vs. $501M. Sees FQ2 EPS of $0.59-0.62 vs. $0.64. (PR) Today's Markets Asia markets closed mixed Friday. Nikkei -3.1% to 7,994. Hang Seng +0.9% to 13,278. Shanghai closed. BSE +2% to 9,424. Europe is lower at midday. London -0.45%. Paris -1.1%. Frankfurt -1.1%. U.S. futures have moved back into negative territory. Dow -0.3% to 8086. S&P -0.4% to 839.50. Nasdaq -0.35%. Crude +0.8% to $41.77. Gold +1.7% to $920.50. 30-year Treasurys -0.2%. 10-year +0.11%. 5-year +0.04%. 2-year +0.03%. Friday's Economic Calendar 8:30 GDP Q4 Advance 8:30 Employment Cost Index 9:45 NAPM Chicago Business Barometer 9:55 University of Michigan Consumer Sentiment 3:00 PM Farm Prices Notable earnings before Friday's open: ACI, AME, AXL, CVX, GCI, HON, IVZ, PCAR, PG, SPG, XOM Notable earnings after Friday's close: none. Seeking Alpha editor Eli Hoffmann contributed to this post.

  • Wall Street Breakfast: Must-Know News

    BHP subject of corruption probe. BHP Billiton (BHP) said today that following an information request from the SEC the company has found "possible violations of applicable anti-corruption laws involving interactions with government officials." The company didn't disclose the location of the projects in question, but said it wasn't related to business in China and that the firm is cooperating fully with authorities. The SEC couldn't “confirm or deny the existence or non-existence of any investigation,” but sources said an investigation began in August 2009. BHP -1.6% premarket (7:00 ET). TARP watchdog probes Goldman role in AIG losses. Neil Barofsky, the special inspector general for TARP, plans to investigate whether securities sold by Goldman Sachs (GS) led to losses at AIG (AIG) and, by extension, if U.S. taxpayers were the victims of fraud. Barofsky is in touch with the SEC and may coordinate with the Justice Department as well. Separately, Barofsky said he may also launch a broader audit of BlackRock's (BLK) role in TARP. Premarket: GS -0.3%, AIG +0.2% (7:00 ET). Regulators may rethink repo accounting. The Financial Accounting Standards Board, which is in charge of setting U.S. accounting rules, may change repo accounting methods after the SEC finishes its examination of the accounting practices at the 19 largest U.S. banks. In a letter to the House Financial Services Committee, FASB Chairman Robert Herz said the board will "work closely" with the SEC on determining whether any changes are necessary. Repo accounting has recently been in the spotlight after a bankruptcy examiner said the accounting trick led to the collapse of Lehman Brothers (LEHMQ.PK). SEC could bring Lehman charges. Former SEC chairman Christopher Cox said the SEC could potentially file charges against Lehman Brothers (LEHMQ.PK) after a bankruptcy examiner's report showed the firm "filed misleading financial reports and failed to disclose material accounting information." Cox, who was chairman of the SEC when Lehman filed for bankruptcy in September 2008, also said that neither the SEC nor the Federal Reserve were aware of Lehman's use of Repo 105 transactions. SEC may create new debt rules for banks. Testifying before lawmakers yesterday, the SEC's Mary Schapiro said the agency is considering new rules that would prevent financial firms from temporarily lowering their debt levels immediately before quarterly reporting deadlines as a way to mask their true risk exposure. If done intentionally, the practice violates existing guidelines, but the SEC may require stricter disclosures, and could extend the rules to all companies instead of just to banks. Recent media reports have shown that 18 large banks lowered a specific kind of debt at the end of each of the past five quarters by an average of 42% from quarterly peaks. Banks boost lobbying ahead of reform legislation. Banks are spending more money on donations and lobbying as lawmakers prepare to vote on financial reform legislation as soon as this week. Six of the top ten U.S. banks, including Goldman Sachs (GS), JPMorgan (JPM) and Morgan Stanley (MS), increased their donations to lawmakers in the last month. Goldman, Bank of America (BAC) and U.S. Bancorp (USB) were among seven banks that increased their lobbying in the first three months of the year, and the U.S. Chamber of Commerce doubled its lobbying spending in the first quarter. IMF calls for taxes on banks. The IMF advised G-20 nations to tax the balance sheets, profits and compensation of financial firms in order to reduce the likelihood of another financial crisis and to cover the costs should a crisis occur. The IMF recommended that the tax, called a "Financial Stability Contribution," seek to raise between 2-4% of GDP over time, or roughly $1T-2T if all G-20 nations adopt the tax. Additionally, the IMF revised its forecast for global bank losses from the financial crisis. It now expects losses to total $2.28T, a drop of $533B from the estimate it made in October. Live Nation faces breach-of-contract claim. In an 8-K filing, Live Nation Entertainment (LYV) disclosed that it faces a breach-of-contract claim by German ticketing firm CTS Eventim. Live Nation said the claims are "without merit and inconsistent with the terms of the CTS agreement," but warned that if the matter is resolved in CTS' favor, it could prevent the recently merged company from realizing "the full operational efficiencies that the combined company might otherwise obtain." LYV shares closed -3.15% in after hours trading. EADS takes on Boeing in tanker bid. Airbus parent EADS (EADSF.PK) plans to compete directly against Boeing (BA) for a $50B U.S. military refueling plane contract. Ralph Crosby, chairman of EADS North America, called it "a hell of an opportunity," but analysts warn it will likely be an uphill fight for EADS, as "Boeing has put significant political capital into securing this win." Google may buy travel software firm. Google (GOOG) is said to be in talks to acquire airline IT and services provider ITA Software Inc. in a deal that could cost as much as $1B. Negotiations may still fall apart, but a successful purchase would allow Google to use ITA Software's tools to help users find online flight information, helping Google compete with travel-search features offered by Microsoft (MSFT). Hedge fund assets back on top. Assets managed by the global hedge fund industry are just 2% below their previous all-time high reached in October 2007. Hedge funds collectively manage around $1.67T of assets, and the average hedge fund saw compounded gains of 24.55% last year, making 2009 the industry's best year in a decade. Volcano flight ban draws to an end. London's Heathrow airport became the last major European terminal to re-open after a six-day flight ban following the eruption of a volcano in Iceland. The ash cloud that shut down air travel has cost airlines an estimated $1.7B in lost revenue, and more than 100,000 flights were canceled. Confidence dips down. ABC's Consumer Comfort Index dropped 3 points to -50, matching a 2010 low and not far above its all-time low of -54. Positive ratings of the national economy held steady at 8%, but those who think it's a good time to buy things slipped to 24% and positive ratings of personal finances slipped to 43% from 47%. Earnings: Wednesday Before Open Covidien (COV): Q1 EPS of $0.88 beats by $0.05. Revenue of $2.7B (-4.9%) in-line. (PR) Elan (ELN): Q1 EPS of $0.00 beats by $0.04. Revenue of $310.5M (+26.7%) vs. $298.6M. (PR) EnCana (ECA): Q1 EPS of $0.39 beats by $0.07. Revenue of $3.5B (-3.7%) vs. $1.7B. (PR) Huntington Bancshares (HBAN): Q1 EPS of $0.00 beats by $0.15. (PR) KeyCorp (KEY): Q1 EPS of -$0.11 beats by $0.19. (PR) Knight Capital Group (NITE): Q1 EPS of $0.30 misses by $0.04. Revenue of $284.2M (+15.8%) vs. $302.1M. (PR) Lockheed Martin (LMT): Q1 EPS of $1.45 beats by $0.11. Revenue of $10.6B (+2.5%) in-line. (PR) Earnings: Tuesday After Close Altera (ALTR): Q1 EPS of $0.50 beats by $0.10. Revenue of $402M (+52.0%) vs. $397M. Guides Q2 revenue above consensus. Shares +0.1% AH. (PR) Apple (AAPL): FQ2 EPS of $3.33 beats by $0.88. Revenue of $13.5B vs. $12B. Sees Q2 EPS of $2.28-2.39 vs. $2.70, on revenue of $13B-13.4B vs. $12.97B. Sold 2.94M Macs (up 33%), 8.75M iPhones (up 131%), 10.89M iPods (down 1%). Shares +5.4% premarket (7:00 ET). (8-K) Cree (CREE): Q3 EPS of $0.47 beats by $0.03. Revenue of $234M (+78.5%) vs. $223M. Shares -5.0% AH. (PR) Fulton Financial (FULT): Q1 EPS of $0.13 in-line. Net interest income of $138.5M (+12%). Shares +0.2% AH. (PR) Gilead Sciences (GILD): Q1 EPS of $0.99 beats by $0.03. Revenue of $2.09B (+36%) vs. $2.07B. (PR) Juniper Networks (JNPR): Q1 EPS of $0.27 beats by $0.01. Revenue of $913M (+19.4%) vs. $906M. Shares -6.6% AH. (PR) Nabors Industries (NBR): Q1 EPS of $0.21 in-line. Revenue of $906M (-20.1%) vs. $878M. (PR) NuVasive (NUVA): Q1 EPS of $0.21 in-line. Revenue of $109M (+36.4%) vs. $108M. Shares -3.5% AH. (PR) Seagate Technology (STX): FQ3 EPS of $1.03 beats by $0.09. Revenue of $3.05B (+4.8%) in-line. Shares +3.4% AH. (PR) South Financial (TSFG): Q1 EPS of -$0.40 beats by $0.09. Non-performing loans down; potential problem loans up to $944M from $936M Q/Q, $554 Y/Y. Shares -27.6% AH. (PR) Stryker (SYK): Q1 EPS of $0.80 beats by $0.02. Revenue of $1.8B in-line. Shares +0.1% AH. (PR) Synovus Financial (SNV): Q1 EPS of -$0.47 beats by $0.02. Net charge-offs down $46M, non-performing assets up $11.5M from Q4 2009. Shares -8.4% AH. (PR) Total System (TSS): Q1 EPS of $0.26 beats by $0.03. Revenue of $415M (+1.6%) vs. $407M. Shares +2.1% AH. (PR) VMware (VMW): Q1 EPS of $0.32 beats by $0.04. Revenue of $634M (+34.7%) vs. $592M. Sees Q2 revenue of $635-665M vs. $608M consensus. Shares +0.4% AH. (PR) Yahoo (YHOO): Q1 EPS of $0.22 beats by $0.13. Revenue of $1.16B vs. $1.18B net of traffic acquisition costs. Shares +0.5% AH.(PR) Today's Markets In Asia, Nikkei +1.7% to 11090. Hang Seng -0.5% to 21511. Shanghai +1.8% to 3033. BSE +0.1% to 17473. In Europe at midday, London -0.9% to 5730. Paris -0.8% to 3996. Frankfurt -0.3% to 6244. Futures: Dow -0.3%. S&P -0.2%. Nasdaq +0.3%. Crude +0.4% to $84.16. Gold +0.5% to $1144.50. Wednesday's Economic Calendar 7:00 MBA Mortgage Applications 10:30 EIA Petroleum Status Notable earnings before Wednesday's open: AAI, ABT, AMB, BA, CMA, COV, DGX, ECA, ELN, EMC, FCX, GENZ, HBAN, KEY, LH, LMT, MAN, MCD, MCO, MO, MS, NITE, NYB, STI, STJ, T, TIN, UTX, WFC Notable earnings after Wednesday's close: ACF, ADS, AFFX, AMGN, CPX, CTXS, CVA, CYH, EBAY, ETFC, FFIV, FNF, HCBK, ISIL, LEG, LRCX, MEE, NE, NFLX, NVLS, PLCM, PTV, QCOM, SBUX, SLM, SNDK, TER, TEX, URI, VRTX Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.

  • Wall Street Breakfast: Must-Know News

    TARP watchdog to probe NY Fed over AIG. According to prepared testimony, TARP Special Inspector Neil Barofsky launched two new investigations into the New York Federal Reserve's actions during AIG's (AIG) bailout. Barofsky will look at whether there was any misconduct related to the public disclosure of the $62.1B paid to counterparties, and will also investigate the NY Fed's level of cooperation with a previous audit of the counterparty payments. In a further development, Geithner, who was head of the NY Fed at the time of AIG's bailout, has said counterparties weren't a consideration in structuring AIG's rescue. However, emails have subsequently shown that counterparties were indeed discussed, and buying out banks' AIG contracts was deemed better "from a financial-stability perspective" than other AIG rescue options being considered. AIG holds onto ILFC unit. AIG (AIG) has decided not to sell its aircraft-leasing unit, International Lease Finance Corp., after concluding the potential profit wouldn't justify the sale of such a key asset. AIG will now have to continue funding the unit's large balance sheet either through cash or new debt-financing while it also works to repay billions of dollars in federal bailout funds. It's unclear whether AIG's decision is connected to reports that Steven Udvar-Hazy, a founder and CEO of ILFC, is planning on leaving the company this week. Merger approved for Live Nation, Ticketmaster. The Justice Department approved the merger of Live Nation (LYV) and Ticketmaster (TKTM), on the condition that Ticketmaster sells its Paciolan unit to a unit of Comcast (CMCSA), that the combined company licenses its primary ticketing software and that it doesn't retaliate against venues that use another provider. The new Live Nation Entertainment will own more than 140 concert venues across the world, and will sell roughly 140M tickets per year to 22,000 concerts. The news sent shares climbing yesterday, with LYV closing up 14.7% and TKTM +15.8%. U.K. exits recession. The U.K. emerged from recession, barely, reporting GDP growth (.pdf) of 0.1% in Q4 2009 vs. the previous quarter. However, the growth rate was far less than the +0.4% expected and has raised concerns that the economy could fall back into contraction. Japan outlook turns negative. Earlier this morning, S&P revised its outlook on Japan to "negative" from "stable," potentially putting at risk Japan's AA long-term rating. The ratings firm cited concerns over "the Japanese government's diminishing economic policy flexibility" and over growing "fiscal and deflationary pressures." Japan's government debt is already among the highest for rated sovereigns, and S&P thinks the debt burden will continue to rise, peaking at 115% of GDP over the next few years. Moody's and Fitch Ratings kept their grades unchanged today, calling Japan's debt burden 'relatively moderate' and expressing confidence that "the market will finance this without putting big upward pressure on yields." Deal will create massive printer firm. Privately held Quad/Graphics Inc. is expected to buy Canadian rival World Color Press for $1.3-1.4B, creating the second-largest commercial printer in North America and posing a threat to industry giant R.R. Donnelley & Sons (RRD). Sources said the firms hope to close the deal this summer, and estimate combined 2010 earnings would be around $875M. Fed mulls new benchmark rate. Federal Reserve officials begin a two-day FOMC meeting today, and one of the items on the agenda is whether to adopt a new benchmark interest rate to replace the one that's been used for the last two decades. Instead of the federal funds rate, officials may choose to use the interest paid on excess bank reserves. Porsche sued by VW short sellers. Porsche is being sued by short sellers of Volkswagen (VLKAY.PK) stock. The group of short sellers claim that Porsche misled investors by denying it planned to acquire Volkswagen and by using manipulative trades to hide its stock positions, and then sent the stock rocketing as short sellers tried to cover their positions. The plaintiffs are seeking to recover more than $1B in damages. White House aims for stimulus, and reduced spending. Gearing up for the State of the Union address tomorrow, the White House released details on a series of initiatives meant to help middle-class families, including a set of tax credits and an automated-IRA system for workplaces. Obama also proposed a three-year freeze on domestic spending accounting for one-sixth of the federal budget. The freeze would save $250B by 2020. In addition, Democratic lawmakers are considering an $80B jobs-stimulus package that would provide tax credits to small and medium-sized businesses that hire workers. Apple's healthy earnings beat. Apple (AAPL) posted better-than-expected quarterly results (see details below), buoyed by strong sales across most of its product lines. However, Apple's results were also helped by new accounting rules allowing the firm to recognize all the revenue for iPhone sales at the time the devices are sold, rather than having to defer that revenue over 24 months. (Read Apple's earnings call transcript) GM's Whitacre chooses himself for CEO. Edward Whitacre, chairman and interim CEO of General Motors, said he will assume the position of permanent chief executive. Whitacre said staying on as CEO hadn't been his original intention but that the firm needs stability and he felt increasingly comfortable in the job. Separately, GM acknowledged it held advanced talks with Spyker Cars, but said it's still moving forward with plans to wind down its Saab unit. China raises select reserve ratios. Asian markets traded heavily down (see details below) following reports that China moved forward today with a planned increase in required reserves for some of its banks. Some banks were also told to suspend new lending for the rest of the month. In another move that surprised markets, the central bank left yields unchanged in its closely watched one-year bill sale, though analysts think this is just a pause in tightening policy and not a reversal. More cyber-attacks. A Chinese human-rights group said it and four other advocacy and news organizations were targeted in cyber-attacks over the weekend. The group said that the hackers were "of unknown origin" but hinted the Chinese government might be to blame. Goldman caps U.K. pay. Goldman Sachs (GS) is capping compensation at £1M ($1.6M) for the company's partners in London, in response to the one-time 50% bonus tax announced by U.K. Prime Minister Gordon Brown last month. Most other firms subject to the tax are spreading the penalty out across a wider swathe of employees, sometimes across their entire workforces. Home sales drop. Existing Home Sales fell 16.7% to 5.45M in December, vs. expectations of 5.78M. The supply of homes rose to 7.2 months. NAR chief economist Lawrence Yun said there were no surprises in the data, but noted that although "sales are on track to rise again in 2010," the labor market "remains a concern and could dampen the housing recovery – job creation is key to a continued recovery in the second half of the year.” Earnings: Tuesday Before Open Baker Hughes (BHI): Q4 EPS of $0.43 beats by $0.08. Revenue of $2.4B (-24%) vs. $2.3B. (PR) Corning (GLW): Q4 EPS of $0.44 beats by $0.02. Revenue of $1.5B (+41%) vs. $1.4B. (PR) DuPont (DD): Q4 EPS of $0.44 beats by $0.03. Revenue of $6.4B (+10%) vs. $6.1B. (PR) MGIC Investment (MTG): Q4 EPS of -$2.25 beats by $1.1. Revenue of $406M (-2%) vs. $394M. (PR) Regions Financial (RF): Q4 EPS of -$0.51 misses by $0.17. (PR) Tellabs (TLAB): Q4 EPS of $0.09 beats by $0.02. Revenue of $389M (-5%) in-line. (PR) Travellers (TRV): Q4 EPS of $2.12 beats by $0.63. Revenue of $6.4B (+11%) vs. $5.2B. (PR) Weatherford International (WFT): Q4 EPS of $0.02 misses by $0.09. Revenue of $2.4B (-8%) vs. $2.3B. (PR) Earnings: Monday After Close Amgen (AMGN): Q4 EPS of $1.05 misses by $0.08. Revenue of $3.8B (+2%) vs. $3.85B. Expects fiscal 2010 capex of about $600M. (PR) Apple (AAPL): FQ1 EPS of $3.67 beats by $1.60. The company elected to adopt required accounting standards changes related to revenue recognition, retrospectively. Revenue of $15.7B (+32%) vs. $12B. Sees Q2 EPS of $2.06-2.18 vs. $1.77, on sales of $11B-11.4B vs. $10.4B. Gross margin of 40.9% vs. year-ago 37.9%. Sold 3.36M Macintosh computers, up 33% from year ago. Sold 8.7M iPhones, up 100% from year prior. Sold 21M iPods, an 8% decline. (10-Q, PR) Atheros Communications (ATHR): Q4 EPS of $0.62 beats by $0.09. Revenue of $186M (+89%) vs. $175M. (PR) Olin (OLN): Q4 EPS of $0.28 may not be comparable to estimates of -$0.05. Net income of $21.8M incorporates $37M of pretax recoveries of environmental costs expensed in prior periods and $1.2M pretax gain from sale of a manufacturing facility. Revenue of $351M (-19%) vs. $330M. (PR) Packaging Corp. of America (PKG): Q4 EPS of $0.16 beats by $0.03. Revenue of $532M (-3%) vs. $510M. Sees Q1 EPS of $0.12 vs. $0.17. (PR) SL Green Realty (SLG): Q4 FFO of $0.87 misses by $0.01. Revenue of $247M (-8%) vs. $239M. (PR) Texas Instruments (TXN): Q4 EPS of $0.52 beats by $0.03. Revenue of $3B (+21%) in-line. Expects Q1 EPS of $0.44-0.52 vs. $0.43, on revenues of $2.95B-3.19B vs. $2.83B. (PR) VMware (VMW): Q4 EPS of $0.31 beats by $0.05. Revenue of $608M (+18%) vs. $554M. Sees Q1 revenue of $580M-600M vs. $530M. (PR) Zions Bancorp (ZION): Q4 EPS of -$1.26 beats by $0.38. Net interest income of $457M (-10%). Net loan charge-offs of $292.1M vs. $381.3M in Q3. (PR) Today's Markets In Asia, Nikkei -1.8% to 10,325. Hang Seng -2.4% to 20,109. Shanghai -2.4% to 3,019. BSE closed. In Europe at midday, London -0.5%. Paris -0.6%. Frankfurt -0.4%. Futures: Dow -0.4%. S&P -0.55%. Nasdaq -0.2%. Crude -1% to $74.49. Gold flat at $1,095.20. Tuesday's Economic Calendar FOMC Meeting, Day 17:45 ICSC Retail Store Sales8:55 Redbook Chain Store Sales9:00 S&P Case-Shiller Home Price Index10:00 Consumer Confidence10:00 FHFA Housing Price Index10:00 State Street Investor Confidence Index10:00 Richmond Fed Mfg.5:00 PM ABC Consumer Confidence Index Notable earnings before Tuesday's open: ABC, BHI, CVG, CBE, GLW, DAL, DD, EMC, FPL, JNJ, MHP, MTG, NVS, NUE, BTU, RF, SHW, TLAB, TRV, X, VZ, WFT Notable earnings after Tuesday's close: ALTR, BXP, CNI, ELY, GILD, IDTI, MCK, MOLX, PTV, QLGC, RFMD, STLD, STM, SYK, TSFG, YHOO Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.

  • Wall Street Breakfast: Must-Know News

    Management shake-up at Fannie. Fannie Mae (FNM) announced broad changes to its top financial management in an attempt to create an executive team that can stem growing credit losses and conserve capital. Stephen Swad, formerly the CFO, was replaced, as was the chief risk officer, and Peter Niculescu, the chief business officer, will have expanded responsibilities. Daniel Mudd will retain his position as CEO. Fannie Mae shares were up on Wednesday for the third day in a row as investor fears about a government bailout abated. Dollar intervention planned, abandoned. The U.S., Europe, and Japan created a dollar rescue plan in March when the currency was plummeting, reports the Nikkei business newspaper. The officials did not choose which exchange rate would trigger the plan, but were prepared to aggressively buy dollars and sell yen in the event of strong dollar weakness. The intervention was never put into action, but makes some investors wonder whether a future fall in the dollar could spark a new multi-governmental rescue plan. After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long. U.S. companies might start using international accounting rules. The SEC proposed a tentative timeline on Wednesday that could require U.S. companies to switch to international accounting standards by 2014. Until now, the U.S. has used Generally Accepted Accounting Principles [GAAP], which are considered less flexible and more clearly defined than the international financial reporting standards [IFRS] used in Europe and in dozens of other countries. The timeline fits with a global plan to converge GAAP and IFRS, a move that would be welcome to many in the accounting industry. Sears seared by frugal consumer. Sears (SHLD) posted worse-than-expected Q2 earnings (see below) as shoppers cut back on appliances and clothing purchases. The results "reflect the continued effects of a slowing economy which contributed to the earnings declines we have experienced since the third quarter of 2007," it said. Inventories fell by $500M, which should allow it to reduce markdowns and boost its margins. Gross margin fell 1.2% to 26.5%. Same-store sales fell 6.2% - less than Q1's 8%+ drop. "Despite the difficult economic environment, we remain focused on long-term value creation and continue to invest in the future of the company," CEO Bruce Johnson said. Toyota slashes sales targets, production. Toyota Motor (TM) cut its 2009 growth forecast for auto sales to 2.1% from 5.6%. Toyota, the world's second-largest carmaker, will reduce production in the U.K. and Poland, and has already announced cuts in the U.S., its biggest market, where it has lowered its growth target by 10%. iTunes sees music label backlash. A growing number of record companies are trying to avoid Apple's (AAPL) iTunes store, arguing that selling individual songs is hurting overall music sales and is less profitable than selling complete albums. iTunes sells at least 90% of U.S. digital downloads, and it is widely believed in the industry that downloads will eventually replace CDs. Still, not everyone is ready to switch to the new model. Says one holdout manager, iTunes is "part of the death knell of the music business." Signs of a music piracy crackdown. The FBI arrested a man for copyright-infringement after he posted songs from a not-yet-released commercial album on his website, possibly signalling a new, more aggressive stance in the battle against online music piracy. The Recording Industry Association of America [RIAA] says that a lack of deterrents has allowed online piracy to flourish and that a more aggressive approach would be welcome. MBIA to reinsure FGIC municipals. MBIA (MBI) has agreed to backstop $184B in FGIC municipal bonds. FGIC's future remains uncertain and the reinsurance agreement allows it to focus on other problems connected to mortgage securities. MBIA will receive a $741M premium. Mortgage apps climb slightly. MBA Mortgage Applications rose 0.5% to 421.6, the first increase in three weeks. The 30-yr. fixed mortgage rate fell to 6.44% from 6.47%. Bankruptcies soar. Bankruptcy filings shot upwards in the year ending June 30, to nearly 1M total. Business filings were up 41% and personal filings rose 28% on the previous year. Filings are expected to reach 1.2M this year. Job market confidence same as 2001. in the A new survey shows worker confidence at a low last seen during the 2001 recession. With unemployment at a four-year high, 65% of respondents said this is a bad time to find a quality job, and 33% of workers said they don't always have enough money to make ends meet. Durable goods show surprise growth. July durable goods orders rose an unexpected 1.3% on strong transportation equipment demand vs. a consensus 0.2%. Excluding transportation, orders rose 0.2%. U.S. Treasury debt prices fell as the report suggested resilience despite the deep housing correction and credit crunch. Lockhart: Fed prepared to raise rates when needed. Federal Reserve Bank of Atlanta President Dennis Lockhart said Wednesday that the Fed's interest rate is consistent with slowing inflation, and signalled readiness to raise borrowing costs if such a move is needed. UK housing woes continue. UK home prices fell 10.5% in August, the biggest annual drop in 18 years. The 1.9% drop from July was the 10th straight monthly decline. Including inflation, residential real estate could lose 1/5 of its value in 2008. Europe retail sales contract, again. Euro-region retail sales fell for the third straight month amid high inflation and economic weakness. "Inflation is squeezing disposable incomes and the outlook for consumer spending and for retailers is gloomy," economist Ken Wattret said. HK exports bounce back. Hong Kong's exports grew 11.1% in July vs. last year after slipping 0.6% in June. Economists expected a 5.5% gain. "The weakness in the U.S. economy is expected to continue to drag down Hong Kong's export performance," the government said. HK's economy "stayed in a good shape, virtually unscathed by the global credit market turbulence." (ETF: EWH) Earnings: Thursday Before Open Diageo (DEO): FH2 profits fell 8.1% to £546M ($1B). Sales rose 9.9% to £3.8B. Full-year profit climbed 2.1% to £1.52B, just short of the £1.56B consensus. DEO sees 2009 operating profit growth of 7-9%, vs. this year's 9%. Shares -0.9% in London. [Bloomberg] Sears (SHLD): Q2 EPS of $0.21 misses by $0.12. Revenue of $11.8B (-4.1%) vs. $11.7B. [PR] Vimpel-Communications (VIP): Q2 EPS of $0.46 misses by $0.15. Revenue of $2.61B (+52%) vs. $2.65B. [PR] Earnings: Wednesday After Close Benihana (BNHN): FQ1 EPS of $0.12 misses by $0.04. Revenue of $94.5M (+5.1%) vs. $92.7M. [PR] Coldwater Creek (CWTR): Q2 EPS of $0.04 beats by $0.03. Revenue of $241M (-0.9%) vs. $242.5M. [PR] FuelCell Energy (FCEL): FQ3 EPS of -$0.39 misses by $0.12. Revenue of $27.9M (+106.7%) vs. $21.1M. [PR] Giant Interactive Group (GA): Q2 EPS of $0.2 in-line. Revenue of $73.6M (+36.3%) vs. $72.2M. [PR] Greif Bros. (GEF): FQ3 EPS of $1.18 beats by $0.05. Revenue of $1.0B (+18.3%) vs. $927M. [PR] Heico (HEI): FQ3 EPS of $0.47 beats by $0.01. Revenue of $147M (+10.6%) in-line. [PR] Jo-Ann Stores (JAS): Q2 EPS of -$0.47 beats by $0.19. Revenue of $403M in-line. [PR] Men's Wearhouse (MW): Q2 EPS of $0.72 beats by $0.02. Revenue of $545M vs. $556M. Sees Q3 EPS of $0.36-0.40 vs. $0.53. [PR] TiVo (TIVO): Q2 EPS of $0.03 beats by $0.05. Revenue of $53.5M vs. $55.3M. Sees Q3 revenue of $49-51M vs. 57M. [PR] Today's Markets Asia markets closed mixed. Nikkei +0.1% to 12,768. Hang Seng -2.3% to 20,972. Shanghai +0.3% to 2,350. BSE -1.7% to 14,048. In Europe at midday, London -0.3%. Paris -0.5%. Frankfurt -0.6%. U.S. index futures are largely unchanged at 7:00 AM, with light overnight volume. Dow -0.03%. S&P -0.04%. Nasdaq -0.14%. Crude +1.18% to $119.55. Gold +0.94% to $841.80. Thursday's Economic Calendar Thursday's economic calendar: 8:30 Corporate Profits 8:30 GDP (preliminary) 8:30 Jobless Claims 10:35 EIA Natural Gas Report 11:00 Kansas City Fed Mfg Survey 4:30 PM Money Supply Notable earnings before Thursday's open: DLM, ENER, SHLD, TIF, VIP, WSM Notable earnings after Thursday's close: DELL, MRVL, NOVL, OVTI, PETM, SIGM, WIND Seeking Alpha editor Eli Hoffmann contributed to this post.

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