Wall Street Breakfast: Must-Know News

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 |  Includes: AA, AAPL, AR, CAKFF, DISH, FIG, FRX, GILT, IBM, INXN, M, MCK, MRK, NVS, QQQ, SPY, T, TEVA, TMUS, VZ
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
Novartis, Merck in talks to swap operations. Novartis (NYSE:NVS) is reportedly in discussions with Merck (NYSE:MRK) for the Swiss pharmaceuticals company to trade its animal-health and human-vaccines businesses for the U.S. drug maker's over-the-counter health-products unit. The deal would involve each company swapping around $5B in assets and would fit in with their strategies - and with an industry trend - of focusing on their main strengths and of divesting non-core operations.

Teva names Erez Vigodman as CEO. Teva (NYSE:TEVA) has appointed board director Erez Vigodman as CEO to replace Jeremy Levin, who resigned in October. Since 2010, Vigodman has been CEO of generic agrochemicals company MA Industries, where he has led a return to profitability. Prior to that, Vigodman headed food company Strauss Group, whose sales doubled under his tenure. The challenges Vigodman faces at Teva include Copaxone's upcoming patent expiration and the implementation of a $2B cost-reduction program.

Chinese CPI drops more than expected. China's inflation fell to 2.5% on year in December from 3% in November and came in below forecasts of 2.7%. PPI dropped for the 22nd month in a row - the longest streak since the 1990s - with a decline of 1.4%. "Inflation pressures remain modest, which will allow policy makers to continue focusing on policies to support growth while implementing structural reform measures in 2014," says HSBC economist Xiaoping Ma.

Top Stock News
McKesson nears deal with Elliot over Celesio. McKesson (NYSE:MCK) is reportedly close to agreeing a deal with hedge fund Elliott Capital Advisors over the U.S. drug distributor's offer for German peer Celesio. The agreement would involve McKesson paying €23.50 a share for Celesio (OTCPK:CAKFF), up from its initial bid of €23, which Elliot had rejected. The fund owned a 22.7% voting stake in Celesio as of late December; McKesson has made its proposal conditional on obtaining at least 75% of Celesio's shares by tonight.

Dish pulls $2.2B LightSquared bid. Dish (NASDAQ:DISH) has reportedly withdrawn its $2.2B offer for bankrupt wireless-telecommunications firm LightSquared and could disclose a letter of termination today. However, LightSquared's creditors want Dish to go forward with the deal and believe that the satellite TV operator would be in breach of contract if it didn't do so. LightSquared has opposed Dish's offer and prefers a $4B restructuring proposal led by Fortress Investment Group (NYSE:FIG).

Alcoa EPS seen holding steady in Q4. As ever, Alcoa (NYSE:AA) is due to get the latest earnings season under way after the bell today, with analysts estimating that the aluminum company's Q4 EPS held steady at $0.06 even as revenue declined 8.8% to $5.38B. "Despite low aluminum prices in 2013, the company still managed to turn a profit in each of the past four quarters and EPS has been growing year over year," notes SA author Leigh Drogen.

Novartis faces criminal probe in Japan. Japanese health regulators have taken the unprecedented step of asking Tokyo prosecutors to begin a criminal investigation into whether Novartis violated advertising regulations by exaggerating the effectiveness of its Diovan hypertension drug in marketing materials. The alleged breach involves claims of fabricated data related to the treatment, and could lead to fines and jail terms.

Tim Cook to meet Samsung CEO over patent claims. Apple (NASDAQ:AAPL) CEO Tim Cook and his Samsung (OTC:SSNLF, OTC:SSNGY) counterpart Oh-Hyun Kwon have agreed to attend a mediation session to see if they can't sort out their patent spat without resorting to another court clash. The meeting is due to take place on February 19, ahead of a prospective court date in San Jose in March. This one is over Apple's claims of IP violations by Samsung.

IBM to invest over $1B in Watson business unit. IBM (NYSE:IBM) plans to invest more than $1B to establish a new business unit for its Watson supercomputer, which the company apparently hopes will generate $10B within 10 years. The money will include $100M for a venture-capital fund to spark more activity at Watson Developers Cloud. The news follows a report that IBM has had trouble making money from Watson - the initiative had brought in less than $100M as of October.

Macy's to close stores, lay off 2,500 staff. Macy's (NYSE:M) was +5.2% premarket after it said that it would save $100M a year by closing stores and cutting 2,500 jobs. The retailer also forecast FY 2015 EPS of $4.40-$4.50, above consensus of $4.36.

T-Mobile adds subs in Q4. T-Mobile USA (NASDAQ:TMUS) added 1.645M total subscribers and 869,000 branded postpaid subs in Q4, above consensus of 1.2M and 653,000 respectively. The numbers put an exclamation mark on T-Mobile's 2013 turnaround after it bled market share for years to AT&T (NYSE:T) and Verizon (NYSE:VZ). The carrier has engineered the recovery with the help of iPhone sales, no-contract/subsidy-free postpaid plans, and its Jump smartphone upgrade plan.

Top Economic & Other News
FOMC: QE benefit declining over time. The majority of Fed policy makers argued that the marginal efficacy of QE was declining over time at the FOMC's last meeting in December, the minutes show, with a few wanting a larger-than-announced taper. However, those concerned about a potential unintended tightening of financial conditions won out and the FOMC ultimately decided to proceed cautiously with the QE exit.


Top Ideas: Movers and Great Calls
1) Mike Arnold wrote on December 17 that shares of Gilat Satellite Networks (NASDAQ:GILT) had seen an unwarranted sell-off based on delayed, not lost, revenues. The stock has rebounded well and is +14.3% to date. Read article »
2) On October 3, Buddy Lyons, CFA said it was time for investors to jump back into drugmaker Forest Laboratories (NYSE:FRX), as the company was nimbly managing its upcoming "patent cliff." Shares soared after an acquisition of Aptalis yesterday and are +61.3% since Buddy Lyons' call. Read article »

Top Ideas To Watch
1) Energy specialist firm Drill Capital says oil & gas explorer Antero Resources (NYSE:AR), which recently carried out an IPO, should have strong production growth and cash flow. That should lead to the company outperforming sell-side estimates and rewarding investors. Read article »
2) The cloud computing space in Europe is far more attractive than North America, leading to potential upside of 50% for shares of data center provider InterXion Holding (NYSE:INXN), writes Alpha Gen Capital. Read article »

Top Ideas are the best long and short ideas on Seeking Alpha. SA PRO subscribers receive early access to these Top Ideas, which often move markets. For more information about SA PRO and becoming a subscriber, click here.


Today's Markets:
In Asia, Japan -1.5% to 15880. Hong Kong -0.9% to 22787. China -0.8% to 2028. India -0.1% to 20713.
In Europe, at midday, London +0.3%. Paris +0.2%. Frankfurt +0.4%.
Futures at 6:20: Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude +0.4% to $92.71. Gold +0.05% to $1226.10.
Ten-year Treasury Yield flat at 2.99%.

Today's economic calendar:
Chain Store Sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Notable earnings before today's open: AYI, FDO, SVU

Notable earnings after today's close: AA, ANGO, PSMT, SNX

See full real-time earnings coverage »

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