Wall Street Breakfast: Must-Know News
by: Joseph McCafferty September 28, 2010 | about: AAPL / ACH / AOL / GLD / JPM / MCGFF.PK / MCO / MU / NSRGY.PK / ORCL / QQQQ / RIMM / SPY / SSNLF.PK / USO
* Fed mulls smaller bond buys. The Fed will likely move to a more open-ended, smaller-scale bond buying program compared with the $1.7T it bought in 2009, sources say. The final decision will depend on incoming data about economic growth and inflation - and if the economy picks up steam, officials might decide no action is needed - but the approach currently favored would announce purchases of a much smaller amount for some brief period, and monitor the economy closely to custom fit its ongoing approach to liquidity injections and reductions.
* RIM unveils the PlayBook. Research in Motion (RIMM) unveiled its first tablet computer, the PlayBook, which it hopes will compete with Apple's (AAPL) iPad. The device runs on a new operating system and has a seven-inch screen, but will not connect to a mobile phone network. RIM expects the device to be available in the U.S. early next year and elsewhere in the second half of 2011.
* JP Morgan may seek to recoup funds for WaMu claims. JP Morgan Chase (JPM) may pursue as much as $6B in funds stemming from potential losses from lawsuits related to its purchase of the banking assets of Washington Mutual. The FDIC seized Washington Mutual in September 2008 and sold its assets to JPMorgan for about $1.9B. The bank sent letters which detailed lawsuits it faces as a result of purchase of the assets of the bank, which is currently in bankruptcy, and relayed its expectation that the FDIC absorb any losses resulting from the suits.
* Oracle sues Micron for inflated pricing. Oracle (ORCL) is suing Micron Technology (MU) in federal court over claims that the chipmaker and others artificially inflated prices. Five of the world's top makers of DRAM chips, including Samsung (SSNLF.PK) and South Korea's Hynix, admitted to criminal price fixing between 2004 and 2006, but Micron received amnesty for being the first to come forward. Oracle has settled suits with some of the others involved, but under anti-trust rules Micron's cooperation could limit its liability.
* Board member says Facebook IPO could launch in 2012. Peter Thiel, a board member of the privately held social networking site Facebook, said that the company could conduct an IPO as soon as 2012 if it hit certain revenue targets and its business model developed. With more than 500M users, an IPO would be highly anticipated by those looking to capitalize on its success and would likely be in the tens of billions of dollars. Some reports put the company's 2009 revenue at $800M.
* Credit rating warning sends Irish bonds reeling. Standard & Poor's warned that it may cut Ireland's credit rating again due to the cost of recapitalizing nationalized Anglo Irish Bank (AGCPF.PK). The news comes a day after Moody's cut the rating on Irish Allied debt. S&P's warning sent Irish credit spreads to new peaks and the cost of insuring Irish debt from default hit a record high.
(Oh sure, what about yesterday)> * SEC says 'flash crash' report will restore confidence. The SEC's soon-to-be-released "flash crash" report will give the public confidence that regulators have a "very deep understanding" of stock markets, Chairwoman Mary Schapiro said Monday. "It will paint a very clear picture of how the markets operated" on May 6, when the Dow dropped 700 points and sharply rebounded, all within 20 minutes.
* Nestle to expand into healthcare. Food giant Nestle (NSRGY.PK) said it is expanding into health care and nutrition and will spend more than $500M over the next decade to develop health and wellness products to help prevent and treat such ailments as diabetes. The company said it will create a new subsidiary, Nestle Health Science, to pioneer a new industry that combines food and pharma.
* China metals company up on plans to buy rare earths. Aluminum Corp. of China (ACH), China's largest metals company, plans to invest as much as $1.5B in rare earths. The company, also known as Chalco, will take a majority stake in Jiangxi Rare Earth and Rare Metals Tungsten Group. Shares of Chalco were up 10% in Shanghai trading.
* Michelin rights issue sends shares skidding. French tire maker Michelin (MCGFF.PK) announced it had launched a heavily discounted capital increase of $1.6B to fund expansion plans into emerging markets. The offer, which makes 2 shares available for every 11 held, was discounted by 27% based on Monday's close. Investors didn't react well to the news, and shares slipped 8% in Paris trading.
* AOL in talks to buy TechCrunch. AOL (AOL) is in talks to buy TechCrunch, a high-profile Silicon Valley blog that has been rumored to be on the blocks. The move would fit into AOL's strategy of focusing on custom content. AOL has recently hired hundreds of writers to create more original news and local and entertainment content, and has introduced new technology that creates custom content based on topics advertisers are interested in. AOL and TechCrunch held acquisition talks a few years ago, but nothing materialized. Terms of any possible deal were not revealed.
Today's Markets
* In Asia, Japan -1.12% to 9496. Hong Kong -1.03% to 22110. China -0.63% to 2611. India -0.06% to 20105.
* In Europe, at midday, London -0.35%. Paris -0.09%. Frankfurt +0.25%.
* Futures: Dow +0.19%. S&P +0.13%. Nasdaq +0.40%. Crude -0.68% to $76.00. Gold -0.59% to $1290.90.
Earnings: Monday After Close
* Jabil Circuit (JBL): FQ4 EPS of $0.52 beats by $0.03. Revenue of $3.9B (+37.9%) in-line. Shares -3.8% AH. (PR)
* Paychex (PAYX): FQ1 EPS of $0.36 beats by $0.02. Revenue of $518M (+3.6%) vs. $508M. Shares -0.4% AH. (PR)
Tuesday's Economic Calendar
* 7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed Mfg.
1:00 PM Results of $35B, 3-Year Note Auction
4:30 PM Fed's Lockhart: Economic Outlook
5:00 PM ABC Consumer Confidence Index
5:30 PM Fed's Warsh: 'The Role of Capital Markets in Job Creation'
* Notable earnings before Tuesday's open: WAG
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