Wall Street Breakfast: Must-Know News

by: SA Eli Hoffmann
SA Eli Hoffmann
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.

  • Dell buys Perot for $3.9B. Dell (NASDAQ:DELL) said early Monday it will acquire Perot Systems (NYSE:PER) for $3.9B, or $30/share, creating a "comprehensive, customer-focused IT-solutions company." Perot will become Dell's services unit, to be headed by Perot CEO Peter Altabef; Dell directors will 'consider' chairman Ross Perot Jr. for appointment to its board. Over the past year, the two have produced a combined $16B in enterprise-hardware and IT-services revenue, with half of that coming from enhanced services and support. Shares of Perot closed at $17.91 on Friday.
  • Building a more robust global economy. Ahead of this week's Pittsburgh summit, G-20 leaders are scrambling to finalize a framework that will promote stable global growth in part by correcting imbalances in the U.S. and China. The U.S.-led proposal, known as the Framework for Sustainable and Balanced Growth, involves broad changes to economic policies in the U.S., Asia, and Europe, including the U.S. saving more and reducing its deficit, and China relying less on exports. Potential sticking points include China's reluctance to participate, how to enforce any commitments, and a divergence of opinions on how to estimate future world growth.
  • BofA forced to spill the beans. A House panel has told Bank of America (NYSE:BAC) it cannot use attorney-client privilege to keep details of its purchase of Merrill Lynch out of Congress. Panel chairman Edolphus Towns wants Bank of America to reveal information it's kept secret for months, which could impact a range of ongoing probes into the merger, including one by the SEC, another by NY AG Andrew Cuomo and a third by the DoJ. Towns has given BofA until noon today to provide answers and documentation.
  • Fed rejects public review. Sources say the Fed has rejected a request by Treasury Secretary Tim Geithner for a public review of its structure and governance. Fed officials say the review - which would have examined the Fed's ability to accomplish its existing and proposed functions, and the role of regional Fed banks - could have threatened its independence.
  • FCC to push for open internet. The FCC will today recommend broad new rules that aim to force internet carriers to treat all traffic equally. Currently, some providers block and/or slow the transfer of large files such as videos and music, which they say hogs bandwidth. Sources say FCC chief Julius Genachowski will also push to expand net equality to wireless internet access, a concept fiercely opposed by wireless carriers like AT&T (NYSE:T). If implemented, net neutrality could drastically impact how ISPs and wireless carriers charge for access, and could encourage internet companies to launch new data-intensive services.
  • RBS weighs huge share sale. Royal Bank of Scotland (NYSE:RBS) is in talks with shareholders to gauge the appetite for a £5B ($8.1B) share issue in an attempt to stop the British government's stake in the bank from creeping higher. The U.K.'s stake in RBS is set to reach more than 80% under the terms of its toxic asset insurance program. Last June, RBS raised £12.3B in a disastrous takeover of ABN Amro.
  • Ka-boom! Walt Disney's (NYSE:DIS) $4B acquisition of Marvel Entertainment (MVL) hit a snag Sunday after heirs to revered comic book artist Jack Kirby, creator of many of Marvel's mainstays, filed claims challenging Marvel's long-term rights to some of its superheros. In a statement, Disney said the claims are an attempt to terminate Marvel's rights 7-10 years from now, and "were fully considered in the acquisition."
  • Santander to raise $7.35B in Brazilian IPO. Santander (STD) plans to raise almost €5B ($7.35B) through the previously announced IPO of 16% of its Brazilian unit. The target is well above the €2.5B analysts expected. The bulk of the proceeds will be spent opening another 600 branches in Brazil.
  • Heading off say on pay. A group of companies including AT&T (T), Cisco (NASDAQ:CSCO), H-P (NYSE:HPQ) and Tyco (NYSE:TYC) will announce today a joint effort to voluntarily change their pay practices, a move aimed at heading off potentially more onerous restrictions out of Washington. The group, led by the Conference Board, will endorse principles that tie incentives to long-term success rather than short-term gains, and advocates doing away with 'overly generous' golden parachutes, but stops short of signing off on 'say on pay' legislation that would give shareholders a vote on executive pay.
  • The return of risk appetite. Global and emerging-markets bond funds, and global stock funds and sector funds, saw the highest inflows this year in the latest week, while money-market funds had their second-biggest weekly outflows. Risk appetite is clearly on the rise, although the move remains cautious, with bond funds growing at a faster clip than stock funds.
  • One more chance. The IRS will announce today it's extending its amnesty program, giving wealthy Americans with secret offshore accounts another 22 days, until Oct. 15, to come forward. The program, which began in March as a way of luring UBS (NYSE:UBS) clients of out of the woodwork, has attracted 3,000 taxpayers so far, compared with just 80 last year.

Earnings: Before Open

  • Lennar (NYSE:LEN): Q3 EPS of -$0.97, including $0.42 charge for valuation adjustments and writeoffs and another $0.34/share charge, vs. consensus of -$0.46. Revenue of $721M (-34.9%) vs. $774M. New home deliveries decreased to 2,660 from 3,694 last year. Backlog grew 19% from Q2 to $647M. (PR)

Today's Markets

Asia markets, only partially open, were mixed overnight, but Europe has turned lower, as have futures.

  • Asia: Hang Seng -0.7% to 21,473. Shanghai +0.15% to 2,967. Nikkei and BSE closed.
  • Europe at midday: London -0.7%. Paris -0.8%. Frankfurt -1.3%.
  • Futures at 6:30: Dow -0.6% to 9675. S&P -0.7% to 1053. Nasdaq -0.7%.
    Crude -2.3% to $70.80. Gold -0.9% at $1,001.50.
    30-year Treasury flat. 10-year +0.12%. Euro -0.3% vs. dollar. Yen -0.7%. Pound -0.4%.

Monday's Economic Calendar

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