- Treasury has Citi sale plan. The Treasury reportedly plans to sell its 27% stake in Citigroup (C) according to a pre-established plan that will lock the government into a specific timeline for offloading the shares. The program, which may be announced next month, is meant to prevent accusations that the sales are based on non-public information. Several firms are said to be in the running to manage the offering, including JPMorgan (JPM), Goldman Sachs (GS) and Morgan Stanley (MS). Citigroup apparently offered to manage the sale at a discount, but is unlikely to be selected because of the appearance of a conflict of interest. C +0.5% premarket (7:00 ET).
- Ambac may turn to bankruptcy protection. Ambac (ABK), the troubled bond insurer that delayed its earnings release last week, said it's open to restructuring its debt though a prepackaged bankruptcy. The company also said it will transfer certain liabilities of its Ambac Assurance Corp. unit to a separate account following a directive from the Wisconsin insurance regulator. Ambac doesn't believe the segregated account rehabilitation constitutes a default, and management expects to have enough liquidity to meet the company's needs through Q2 2011. Ambac rose over 9% in trading yesterday as insurers surged across the board, but fell 0.75% in after hours trading.
- Schlumberger buys Geoservices. Schlumberger (SLB) agreed to buy analysis firm Geoservices from private-equity group Astorg for just over $1B. The acquisition follows a deal last month in which Schlumberger bought Smith International (SII), as flat energy demand and weak margins spur an industry consolidation.
- Dubai offers Dubai World new funds. Dubai will provide $9.5B to support Dubai World's debt restructuring. The state-owned holding company has asked creditors to wait as long as eight years to get all of their money back, and the new cash injection brings Dubai's investment in Dubai World to $20B since November, when the company first said it would delay repaying debt. The funds include $5.7B remaining from a loan Abu Dhabi had made earlier, but no new money from Abu Dhabi.
- Aussie concerns over BHP-Rio JV. Australia's competition watchdog raised concerns over a proposed iron ore joint venture between Rio Tinto (RTP) and BHP Billiton (BHP). Regulators plan to examine whether the JV can control iron ore supply and whether it can coordinate supplies with Vale (VALE), the world's top producer. The findings will likely be released by the end of April. Premarket: RTP +0.8%, BHP +0.9% (7:00 ET).
- China Unicom drops Google search. China Unicom (CHU) has decided to remove Google's (GOOG) search function from phones using Google's Android operating system. Instead, China's second-largest mobile operator will choose which search engines it wants to use. "We are willing to work with any company that abides by Chinese law... we don’t have any co-operation with Google currently," said a Unicom official. This is the first concrete backlash against Google from its internet censorship showdown with China.
- Greek debt looms over EU summit. As an EU summit kicks off today, leaders are still divided as to how best to help Greece, and whether to offer a safety net at all. As of late yesterday, efforts to arrange a special meeting among the 16 eurozone nations had failed, as "Germany does not want to have a meeting of eurozone leaders unless there is a definite chance for a deal." Meanwhile, the chief European economist at Goldman Sachs (GS) has forecast that Greece may ask the IMF for aid within weeks, or "very likely" in the next few months, and the IMF may hand over up to €20B ($27B) over 18 months.
- Icahn, Lions Gate continue to spar. Carl Icahn and Lions Gate (LGF) continue to square off. A day after Lions Gate rejected Icahn's purchase offer, Icahn spared no feelings in an open letter to Lions Gate management, saying "hand-picked boards let self-proclaimed 'visionary' CEOs chase their vision indefinitely, even when years pass and their vision is clearly a delusion... The road to bankruptcy is littered with companies whose CEOs - under the banner of 'vision' - have been permitted by lax board oversight to gamble their companies into oblivion." Lions Gate responded that "Mr. Icahn is simply attempting to distract shareholders from the obvious - his offer price is woefully inadequate."
- Wells Fargo buys GMAC unit. As previously rumored, Wells Fargo (WFC) agreed to buy GMAC's factoring unit, one of the world's largest accounts-receivable management businesses. The move is part of GMAC's efforts to refocus on auto lending. Terms of the deal were not disclosed.
- Tougher liquidity rules for UBS, Credit Suisse. UBS (UBS) and Credit Suisse (CS) may face stricter liquidity requirements than their global rivals, said a key Swiss official. Swiss National Bank vice-chairman Thomas Jordan said the country is still grappling with how to solve the too-big-to-fail problem, and since "Switzerland is a small country with a disproportionally large financial sector... Switzerland may need measures that go beyond the international efforts." Premarket: UBS -0.1%, CS -0.5% (7:00 ET).
- Daimler, Renault near tie-up. Daimler (DAI) and Renault are said to be in the final stages of talks that would see the firms take "symbolic" minority stakes in one another as part of a broader strategic alliance. The stakes would be around 3%, just above the threshold where holdings need to be made public. The alliance will likely be announced in April.
- Dividends making a comeback. Companies are starting to focus on dividends again. Yesterday, Raytheon (RTN) said it will raise its annual dividend by 21% to $1.50 and authorized a repurchase of up to $2B in stock. Starbucks (SBUX) announced its first-ever dividend, of $0.10/share, and authorized a repurchase of another 15M shares. So far this year, S&P 500 companies have announced $4.4B in combined dividend increases, the best figure since Q4 2007.
- IPO showings raise hopes. Three initial public offerings, one for a bank holding company and two for telecom equipment makers, blew past expectations yesterday, raising hopes for the IPO market. Bob Greifeld, CEO of Nasdaq OMX Group (NDAQ), said he's seeing an increase in both the number of IPOs and the "types of companies that are worthy of that investment."
- SEC probes hedge fund bets. The SEC is investigating bets made against stocks before new offerings, looking for violations of an "anti-manipulation rule" that bars investors from shorting a stock five days before a new issuance. The probe is reportedly focused on hedge funds including Appaloosa Management and Carlson Capital.
Earnings: Thursday Before Open
- China Automotive Systems (CAAS): Q4 EPS of $0.21 beats by $0.04. Revenue of $83.8M (+119%) vs. $63.6M. Shares +1% premarket. (PR)
Earnings: Wednesday After Close
- CKE Restaurants (CKR): Q4 EPS of $0.28 beats by $0.22, may not be comparable. Revenue of $312M (-4.8%) vs. $312M. Shares +0.1% AH. (PR)
- Paychex (PAYX): Q3 2010 EPS of $0.34 beats by $0.01. Revenue of $508M (-3.9%) vs. $509M. Guides FY10 revenue in-line. Shares +0.2% AH. (PR)
- Red Hat (RHT): Q4 EPS of $0.19 beats by $0.03. Revenue of $196M (+17.9%) vs. $193M. Announces $300M stock repurchase program. Shares -3.3% AH. (PR, earnings call transcript)
- In Asia, Nikkei +0.1% to 10829. Hang Seng -1.1% to 20768. Shanghai -1.2% to 3019. BSE +0.6% to 17559.
- In Europe at midday, London +0.3% to 5693. Paris +0.6% to 3973. Frankfurt +0.6% to 6077.
- Futures: Dow +0.2%. S&P +0.3%. Nasdaq +0.3%. Crude +0.3% to $80.88. Gold +0.5% to $1094.50.
Thursday's Economic Calendar
- 8:30 Initial Jobless Claims
9:10 Fed's Pianalto: Market Pulse event
10:00 Hearing: Unwinding Emergency Federal Reserve Liquidity Programs
10:30 EIA Natural Gas Inventory
11:00 KC Fed Manufacturing
1:00 PM 7-Yr Note Auction
1:30 PM Hearing: Treasury International Programs
4:30 PM Fed Balance Sheet
4:30 PM Money Supply
- Notable earnings before Thursday's open: CAAS, CAG, BBY
- Notable earnings after Thursday's close: ACN, ORCL, TIBX, WTSLA
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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