Wall Street Breakfast: Must-Know News

Includes: BAX, QQQ, SPY
by: Wall Street Breakfast
Wall Street Breakfast
Seeking Alpha's flagship daily business news summary, gives you a rapid overview of the day's key financial news. It is published before 7:00 AM ET every market day and delivered to over 900,000 email subscribers.

Top Stories
Baxter to acquire Sweden's Gambro for $4B. As tipped about 10 days ago, Baxter International (NYSE:BAX) has agreed to buy Sweden's Gambro for $4B in a deal that should give Baxter a more complete line of dialysis products. The company's shares leaped around 5% on the day of the initial leak of the talks, but have since given up those gains.

Qualcomm to invest $120M in Sharp. Qualcomm (NASDAQ:QCOM) has confirmed speculation it will invest in Sharp (OTCPK:SHCAY), with the U.S. company to provide $120M to the troubled Japanese firm. Qualcomm will invest an initial ¥4.93B ($59.9M) by the end of the year and receive a 2.6% stake in Sharp, while the American company will provide the rest of the money by March. The firms will also jointly develop new displays based on Sharp's IGZO technology.

Chinese firms face uncertain futures on U.S. stock markets. Yesterday's SEC suit against the Chinese units of the Big Four accounting firms could mark the beginning of the end for the U.S.-listed shares of Chinese companies, including for giants like Sina (NASDAQ:SINA) and Baidu (NASDAQ:BIDU). The accounting firms face a Catch-22: The U.S. requires them to share information from their audits in foreign countries, while China bars them from doing so.

Top Stock News
Competing bidding groups for Knight Capital coalesce. Cerberus is reportedly in negotiations to join Virtu's attempt to acquire brokerage Knight Capital (NYSE:KCG) in a deal valued at $1.5-1.6B including debt. Virtu is also in talks with Silver Lake, Credit Suisse (NYSE:CS) and other banks about financing for the bid. Meanwhile, Jefferies Group (JEF) will provide $950M to help fund Getco's rival offer for Knight in a deal worth $1.4-1.8B including debt.

News Corp looks to buy another MLB channel. Having last month agreed to acquire a 49% stake in YES, the New York Yankees' home TV network, News Corp (NASDAQ:NWS) is now reportedly attempting to buy the Cleveland Indians' SportsTime Ohio TV channel for around $230M. The deal would give News Corp's Fox Sports the rights to show the baseball team's games. Time Warner (NYSE:TWX) has also bid for SportsTime Ohio.

Microsoft opens new Office. Microsoft (NASDAQ:MSFT) has started selling Office 2013, along with new versions of Exchange, SharePoint, Lync, Project, and Visio, to businesses. Office 2013 is touch friendly and has a stronger emphasis on subscriptions. Meanwhile, Microsoft will reportedly launch three Surface models next year despite disappointing sales of the company's one and only tablet so far.

Nokia sells Finnish HQ for $221.9M. Nokia (NYSE:NOK) has signed a deal to sell and lease back its headquarters in Finland as it looks to raise cash. Nokia, which received $221.9M for the building, acknowledged that it needs to continue to sell non-core assets as opportunities arise.

H-P seeks massive damages for over-paying for LCD screens. Whether it's buying companies or hardware parts, H-P (H-P) seems to be particularly prone to overpaying. The beleaguered hi-tech giant is suing Taiwan's Chunghwa Picture Tubes and its subsidiary Tatung Company of America for causing over $1B in damages by overcharging the U.S. company for LCD screens in an alleged price-fixing scam from 1998-2006.

Big Pharma's R&D becoming less productive at critical juncture. The number of drug authorizations for the world's top 12 pharmaceuticals companies increased to 41 over the past year from 32 in the previous year, but the expected revenues from these treatments fell around 30% to $211B. The trend highlights how productivity is declining in the R&D labs of Big Pharma as it struggles to offset the latest patent cliffs.

China deepens scrutiny on Macau in anti-corruption drive. Chinese authorities are cracking down on possible corruption in Macau, the world's largest gambling hub, with police recently arresting employees from at least three of the island's largest junket operators, which extend credit to high-roller gamblers. Those detained include partners at David Star, a firm that has a presence at casinos owned by Wynn Resorts (NASDAQ:WYNN) and Las Vegas Sands (NYSE:LVS).

Apple's iTunes adds another 56 countries. Apple (NASDAQ:AAPL) has nearly doubled the geographic reach of its iTunes store by extending it to 56 countries, including Russia, India, South Africa and Turkey. The expansion takes the number of countries in which iTunes is available to 119. Prices vary considerably: a song costs 15 rubles ($0.48) in Russia but just seven rupees ($0.12) in India.

WhatsApp denies Facebook talks. WhatsApp, which provides a popular mobile messaging service, has dismissed speculation that it's in talks to be bought by Facebook (NASDAQ:FB), saying that a report in TechCrunch is a "rumor and not factually accurate." The story attracted particular interest because of Facebook's attempts to increase its mobile revenues - WhatsApp is the No. 2 paid app in Apple's U.S. store.

Study shows the extent of advantage for high-speed traders. Outgoing CFTC Chief Economist Andrei Kirilenko has highlighted the profits that high-speed traders make from traditional investors, with the average gain as much as $5.05 for each S&P 500 futures contract traded with small investors. The findings come amid increasing concerns about whether high-speed traders have an unfair advantage and whether they pose a threat to the financial system.

Top Economic & Other News
Tax hikes to drive California to $1B surplus. After voters recently approved tax hikes for the rich, California’s Legislative Analyst’s Office is forecasting that the state will enjoy a surplus of $1B by FY 2014-2015. Critics says the increases will lead to an exodus of residents, businesses and jobs, although Governor Jerry Brown's office points to a report which says that the link between tax policies and migration are untrue.

GOP, White House argue over how to cut billions from farm bill. Even when they agree, the White House and Republicans can't agree. Both sides believe that spending in the 2012 farm bill should be slashed by $32-35B, with major cuts for subsidies and soil conservation. However, the GOP wants reductions for food stamps, a move the White House is opposed to. Under the fiscal cliff, money for farm programs would fall by up to $10B.

Transport companies enjoy fruits of growing trade with Mexico. Booming trade between Mexico and the U.S. is proving a boon to railroad, trucking and logistics firms. Union Pacific's (NYSE:UNP) cross-border carloads, for example, increased 6% in the first nine months of 2012, well above its overall volume growth of 1%. Other companies that are benefiting include Kansas City Southern (NYSE:KSU), CSX (NYSE:CSX), Norfolk Southern (NYSE:NSC), J.B. Hunt (NASDAQ:JBHT), Swift Transportation (NYSE:SWFT), Celadon (NYSE:CGI) and Pacer (NASDAQ:PACR).

Editors' Picks
On The Road To The Endgame: The Farcical Cliff
Netflix Competitive Battle Heats Up
Green Mountain Remains A Short Candidate

Today's Markets:
In Asia, Japan -0.3% to 9432. Hong Kong +0.1% to 21800. China +0.8% to 1975. India +0.2% to 19348.
In Europe, at midday, London -0.1%. Paris +0.8%. Frankfurt +0.2%.
Futures at 7:00: Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude -0.4% to $88.73. Gold -0.8% to $1708.10.

Today's economic calendar:
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:45 Daniel Tarullo speaks on Industry Structure and Systemic Risk Regulation

Notable earnings before today's open: AZO, BIG, BMO, TOL

Notable earnings after today's close: AVAV, P

See full real-time earnings coverage »

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