Wall Street Breakfast: Must-Know News

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
Activision Blizzard, management in $8.2B buyout. Vivendi (OTCPK:VIVHY) has announced its second major deal - or possible deal - this week, saying it has agreed to sell 85% of its stake in Activision Blizzard (NASDAQ:ATVI) to the computer-games company and its management for $8.2B. Activision will buy back 429M shares from Vivendi for $5.83B, using $1.2B of cash and debt of $4.6B, while a consortium led by Activision CEO Bobby Kotick and co-Chairman Brian Kelly will acquire 172M shares for $2.34B. Activision's shares soared 10.3% pre-market.

Amazon tells the same old story. Amazon's (NASDAQ:AMZN) Q2 earnings missed expectations as the company's massive spending on distribution and IT centers, video and much else once again hit the bottom line. Amazon swung to a net loss of $7M from a profit of $7M a year earlier, losses per share were $0.02 and revenue jumped 22% to $15.7B. While some analysts worry about spiraling costs, the bull camp still expects the spending to pay off brilliantly in the future. Shares were -2.5% pre-market.

Samsung net profit surges 50% to $6.8B. Samsung's (OTC:SSNLF) net profit jumped 50% to another record of 7.6T won (US$6.8B) in Q2 as revenue climbed 20.7% to 57.46T won. As you'd expect, Samsung's earnings were driven by its mobile unit, where operating profit rose 52% to 6.28T won, although margins dropped to 17.7% from 19.8% in Q1. Income at Samsung's chip business soared 17% and profit at the display division jumped 58%, but at the consumer-electronics operations, earnings fell 41%. Shares dropped 0.9% in Seoul.

Top Stock News
Starbucks earnings keep investors satiated. Starbucks' (NASDAQ:SBUX) shares climbed 6.3% pre-market after FQ3 profit at Wall Street's favorite coffee shop topped expectations and the company boosted its guidance. Net profit rose 25% to $417.8M, EPS came in at $0.55 and revenues increased 13% to $3.7B, boosted by broad gains across Starbucks' different geographies. Customers remained loyal, pre-loading cards faster than ever and absorbing price hikes. The news is just as rosy for FY14, with Starbucks forecasting double-digit revenue growth and operating-margin improvement of approximately 150-200 bps over FY13.

Samsung's lead over Apple in smartphone market widens. Global smartphone shipments grew 47% on year to a record 230M units in Q2, research firm Strategy Analytics estimates, with the devices accounting for 59% of all phones sold. Samsung (OTC:SSNLF) held its position as sector leader as its shipments grew 56% to 76M devices, giving it a market share of 33.1%. Apple's (NASDAQ:AAPL) volumes rose 20% to 31.2M, leaving it with a lower share of 13.6%.

UBS to pay $885M over mortgage bonds. UBS (NYSE:UBS) has agreed to pay the U.S. Federal Housing Finance Agency $885M to settle claims that the Swiss bank misrepresented mortgage-backed securities sold to Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) from 2004-2007. Not unusually, UBS was able to get away without admitting any liability or wrongdoing. The bank is one of 18 companies that the FHFA has been pursuing.

Nasdaq among victims of cyber credit-card scam. Nasdaq (NASDAQ:NDAQ) is one of a number of companies that fell victim to an East European hacking group that stole at least 160M payment-card numbers and caused combined losses of over $300M. Federal prosecutors yesterday charged five men in the largest cyber-crime case in U.S. history. Other victims include J.C. Penney (NYSE:JCP) and Dow Jones (NASDAQ:NWS). Many of the breaches were known about, although prosecutors disclosed an attack on Nasdaq that hadn't been previously publicized.

Halliburton admits to destroying evidence. Halliburton (NYSE:HAL) has agreed to plead guilty to destroying evidence in connection with the 2010 Gulf of Mexico oil spill. The oil-services company will pay the maximum possible statutory fine, which is just $200,000, although the firm is making a $55M donation to the National Fish & Wildlife Foundation. As part of the plea deal, Halliburton will be subject to three years of probation and will continue to cooperate in the government's criminal investigation.

Top Economic & Other News
Japanese inflation highest in five years. Japan's core CPI, which excludes food, rose for the first time in 14 months in June and increased a greater-than-expected 0.4%, a level that was also the highest for five years. However, the CPI reading that excludes food and energy dropped 0.2%, which, along with the weak dollar and tepid earnings, helped to send Japanese shares 3% lower. What the country needs is rising wages so that consumers can afford the higher prices.

China tells 1,400 firms to cut production. China has ordered over 1,400 companies in 19 sectors to reduce excess output this year as part of the government's strategy of re-balancing the economy. The firms affected include those in the steel, ferroalloys, electrolytic aluminum, copper smelting, cement and paper industries. "This is a real move and is very specific," says ANZ economist Raymond Yeung. "They maintain the overall tone that they're not focusing on the quantity of growth but the quality of growth."

Cash exits muni bonds as fears grow of more city bankruptcies. Municipal bond funds experienced outflows of $1.2B in the week through Wednesday amid rising concerns that other cities will follow Detroit in declaring bankruptcy. It was the ninth week in a row of net outflows, with the exit beginning after the Fed started chatting about tapering. Yesterday, U.S. Bankruptcy Judge Steven Rhodes suspended lawsuits in state courts that seek to halt Detroit's bankruptcy filing.

Alpha-Rich Stock Movers and Great Calls
1) Money Investor called out Shutterstock's (NYSE:SSTK) unenviable competitive position and its overvaluation on July 12. The stock is -10.7% since. Read article »
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Alpha-Rich Stocks To Watch
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Today's Markets:
In Asia, Japan -3% to 14130. Hong Kong +0.3% to 21969. China -0.5% to 2011. India -0.3% to 19,750.
In Europe, at midday, London -0.1%. Paris +0.4%. Frankfurt -0.5%.
Futures at 6:20: Dow -0.2%. S&P -0.2%. Nasdaq -0.3%. Crude -0.7% to $104.76. Gold -0.1% to $1328.20.

Today's economic calendar:
9:55 Reuters/UofM Consumer Sentiment

Notable earnings before today's open: ABBV, AON, ARLP, B, BPO, CLS, DLR, DRC, DTE, HMSY, HP, KKR, LEA, LEG, LYB, NS, NVE, NWL, SWK, TRP, TYC, VTR, WBC, WETF, WIT, WY

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