Seeking Alpha's one-page summary of this morning's key market-moving and stock-moving stories. Headlines link to the original article. Use Wall Street Breakfast as your starting point, and make sure to check the original before trading.
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MACRO AND HOUSING
AHEAD OF THE TAPE: Election Rubicon [Wall Street Journal]
Summary: The Iowa Electronic Markets, a marketplace at which people bet on election results, is offering strong odds that the Democrats will wrest control of the House from the Republicans and that the Republicans will retain control of the Senate. The latest polls confirm the odds, reassuring investors about the election's outcome and prompting a 119-point jump on the Dow yesterday. The financial implications of the election are less clear, however. In something of a historical reversal, it is now the Democrats who contend that they can restore fiscal discipline to Congress. Republican Washington's prevailing interest in domestic petroleum supplies could be overtaken by Democrats' interest in alternative energy. Republican attempts to privatize Social Security -- which have so unsettled American seniors that they might help the Democrats retake the White House in 2008 -- could give way to Democratic efforts to reduce drug prices. But as neither party is expected to gain a substantial majority in either the House or the Senate, legislative gridlock is more likely than dramatic change.
Related links: Iowa Electronic Markets: 2006 U.S. Congressional Election Markets • Elections: Market's Ready For Dems To Take One House • Larry J. Sabato's Crystal Ball: 2006 Senate • Are Higher Taxes in the Offing? [Wall Street Journal] • Election Economics [Washington Times] • Some economic issues may shift after election [Daily Bulletin] • After Losing Seniors to Republicans, Democrats Hope to Lure Them Back [Wall Street Journal]
TECHNOLOGY AND INTERNET
NTP Turns Its Attention to Palm [Business Week]
Summary: NTP Inc., a closely-held Richmond, Virginia company which successfully sued Research in Motion Ltd. (RIMM) for infringement of wireless email patents that were put to use on its BlackBerry device, said it is suing Palm Inc. (PALM), maker of the Treo smartphone (pictured) - another popular hand held email device. The lawsuit claims Palm's products have improperly used NTP's wireless email technology and asks a Virginia court to bar Palm from continuing to infringe on NTP's patents. It also seeks monetary damages for past infringements. NTP has already had a successful year in terms of patent infringement settlements; RIM agreed to pay $612.5 million to settle a four-year patent dispute though the company admitted no wrongdoing. While NTP's critics have given it the pejorative label "patent troll," NTP co-founder Donald Stout see things differently, saying, "We have attempted -- on numerous occasions -- to resolve this issue with Palm... despite our efforts, Palm has chosen to continue to unlawfully infringe on our patents."
Related links: Responses to the BlackBerry Patent Settlement: Relief, But Too Late? • Palm: Getting Squeezed by Its Competitors • NTP Files Patent Suit Against Palm [WSJ] • Palm Responds to Patent Infringement Lawsuit by NTP [EDA Geek News]
Potentially impacted stocks and ETFs: Palm (PALM), Research In Motion (RIMM), Nokia (NYSE:NOK), Motorola (MOT)
Altera Posts Higher Profit as Sales Rise [Reuters]
Summary: Altera Corp. earnings rose 12% this quarter due to strong demand for new products and record sales of its HardCopy series of products. The company announced it earned $0.24/share ($87.4M); $0.27/share excluding stock-option expenses, beating the Street's forecast of $0.25. Sales of new products were up 26% on the quarter, and 142% from this time last year. The strongest growth, however, was in computer/storage chips (+27%), while communications chips, which are the bulk of ALTR's income, declined 3% q/q. Forth-quarter sales guidance of -2 to -5% was weaker than expected; accumulating FPGA chip inventory is expected to put pressure on prices. Altera is one of over 100 companies being investigated by the SEC for options backdating, and the company had previously announced it would book $47.6M in charges because of dating discrepancies. Altera shares were up 4% during regular hours, and another 2.5% in after-hours trading.
Related links: Altera Q3 2006 Earnings Call Transcript • Altera was one of 54 companies threatened with delisting by Nasdaq for not filing its Q3 financial reports on time • KLA and Altera Execs Fall to Backdating Flu • WSJ Options Scandal Scorecard
Potentially impacted stocks and ETFs: Altera Corp. (NASDAQ:ALTR) • Altera's main competitor is Xilinx Inc. (NASDAQ:XLNX), also Lattice Semiconductor Corp. (NASDAQ:LSCC) • ETFs: SPDR Semiconductor (NYSEARCA:XSD), iShares Goldman Sachs Semiconductor (IGW), PowerShares Dynamic Semiconductors (NYSEARCA:PSI), Semiconductor HOLDRs (NYSEARCA:SMH)
Nvidia Bulks Up [TheStreet.com]
Summary: NVIDIA agreed to acquire PortalPlayer for $357 million ($161 million adjusting for PortalPlayer's cash), or $13.50 a share in cash. PortalPlayer's shares lost 1 cent yesterday on the news, to close at $13.35 -- the deal meant little premium for shareholders compared to last Friday's close. NVIDIA's shares meanwhile, gained 3% to close at $33.59. NVIDIA CEO Jen-Hsun Huang commented, "With the products created through this combination, we intend to drive the next digital revolution, where the mobile device becomes our most personal computer." Some are viewing the merger as one of necessity, following AMD's acquisition of NVIDIA rival ATI Technologies, which was completed last month. Note that Wedbush Morgan analyst Craig Berger questioned the NVIDIA-PortalPlayer deal saying it "... comes as a surprise to us as we believe there are other semiconductor firms that offer more technology for less money." Pacific Growth Equities analyst Satya Chillara said PortalPlayer isn't damaged goods despite the likelihood of PortalPlayer losing its remaining business with Apple. Instead, analysts (including Berger, somewhat) see NVIDIA having a better chance of finding its graphics chip in the next iPod, utilizing PortalPlayer's system-on-a-chip technology. PortalPlayer also supplies chips and software to SanDisk, for its Sansa portable music players.
Related links: Nvidia press release • Additional coverage: BusinessWeek, Reuters and WSJ • NVIDIA Buying Portalplayer; Who Knew Last Week? • Analysts Shoot Down Rumors of Intel NVIDIA Acquisition • NVIDIA Q2 2007 Earnings Conference Call Transcript • PortalPlayer Q3 Earnings Call Transcript
Potentially impacted stocks and ETFs: NVIDIA (NASDAQ:NVDA), PortalPlayer (NASDAQ:PLAY), Advanced Micro Devices (NYSE:AMD), Intel (NASDAQ:INTC), Apple (NASDAQ:AAPL), SanDisk (SNDK) • ETFs: SPDR Semiconductor (XSD), streetTRACKS Morgan Stanley Technology (NYSEARCA:MTK), First Trust NASDAQ-100-Tech Index (NASDAQ:QTEC), Rydex S&P 500 Pure Growth (NYSEARCA:RPG)
Coming to Xbox 360: Films and TV [Wall Street Journal]
Summary: In an effort to push the Xbox 360 envelope, Microsoft announced yesterday it will begin offering downloadable movies and TV shows. The service, called Xbox Live Video Marketplace, will launch Nov. 22. Partnering entertainment companies include CBS, Viacom's MTV, Paramount, and Warner Brothers. VP Peter Moore called Xbox 360 "an entertainment amplifier for the living room," but analysts say movies and TV will remain secondary to Xbox's gaming focus. Xbox competitor Sony's PS3, which should be released later this month, uses the much-touted Blu-ray optical-disc technology that Sony is looking to establish as a standard for high-def movie playback; it also plans to deliver content over the internet, although it hasn't said how. MSFT said pricing would be competitive with rival sites like iTunes Store and Cinema Now, where TV shows cost $1.99 and movie rentals from $2.99-$3.99. Users who rent a movie from Microsoft will have 24 hours from the moment they first start playing it. Some videos will be offered in high definition for a "slight premium." Xbox is already connected to a TV set, which might give it an edge over competitors, but it also pays a penalty with relatively sparse memory that would only store 16 hrs. of standard quality video, or 4.5 hrs. of high-def; Microsoft says once a user has payed to buy a video, he will be allowed to re-download it for free.
Related links: Andrew Schmitt's take on the announcement • Thomas Hawk says Xbox will soon own your living room • Davis Freeberg says the new service puts Microsoft in competition with video store rentals • Carl Howe looks at how the imminent PS3 release is likely to affect Xbox
Potentially impacted stocks and ETFs: Microsoft Corp. (NASDAQ:MSFT), Sony Corp. (NYSE:SNE), CBS Corp. (NYSE:CBS), Viacom Inc. (NYSE:VIA), Time Warner Inc. (NYSE:TWX), Apple Computer Inc. (AAPL), Blockbuster Inc. (BBI)
ENERGY AND MATERIALS
Crude Jumps on Saudi Threat [TheStreet.com]
Summary: Oil prices rose yesterday when Saudi oil minister Ali al-Naimi, unnerved by persistent sub-$60 oil prices, threatened to cut oil production at next month's OPEC meeting. His comment bolstered a similar threat issued by OPEC president and Nigerian oil minister Edmund Daukoru, who claims there is a "clear oversupply" even after OPEC's recent 1.2 million barrel a day production cut. The oil price was also boosted by an attack yesterday by Nigerian rebels on an Eni SpA oil facility in the Niger Delta. The rebels, who plan to attack 20 Nigerian oil facilities in advance of elections, have already succeeded in trimming the country's output by about 500,000 barrels. On December 14, OPEC will meet to determine whether the 1.2 million barrel a day cut was sufficient to maintain a $60/barrel floor.
Related links: OPEC to Cut Production to Halt Price Skid • OPEC's Dilemma: When and How to Cut Production • Phil Davis's Advice to OPEC: $50 Oil and Sing Kum Ba Yah • Oil Climbs Over $60 a Barrel Amid Hint of More Output Cuts [Wall Street Journal] • OPEC President: No Price Floor to Defend [Newsday]
Potentially impacted stocks and ETFs: Eni SpA (NYSE:E), Total SA (NYSE:TOT), Hess Corp. (NYSE:HES), Anadarko Petroleum (NYSE:APC), Occidental Petroleum Corp. (NYSE:OXY) • United States Oil Fund LP (NYSEARCA:USO), Oil Service HOLDRs Trust (NYSEARCA:OIH) , PowerShares Dynamic Oil Services Portfolio (NYSEARCA:PXJ), iShares Dow Jones U.S. Oil Equipment & Services Index Fund (NYSEARCA:IEZ), SPDR Oil & Gas Equipment & Services ETF (NYSEARCA:XES), iShares Dow Jones US Oil & Gas Ex Index (NYSEARCA:IEO), Vanguard Energy ETF (NYSEARCA:VDE), PowerShares Dyn Energy Exploration (NYSEARCA:PXE)
Summary: Dutch supermarket operator Royal Ahold NV, under pressure from shareholders upset by its poor performance against U.S. competition, is selling its U.S. foodservice unit and its 121 Tops superstores. The object is to raise over $5 billion and improve sales growth at its other U.S. chains. The company's supermarkets and superstores have been overshadowed by Wal-Mart and Kroger and have been hurt by the overall decline in U.S. consumer spending. The asset sales may help Ahold complete a merger with the Delhaize Group, a Belgian owner of U.S. grocery chains. Such a merger would benefit Delhaize by expanding its geographic distribution and Ahold by improving its competitive advantage against the American giants. Ahold's shares, which plummeted more than 75% in 2002 and 2003 after the revelation of a profit-inflation scandal, have climbed 32% this year and 24% over the past six months.
Related links: Troubled Retailer Ahold Reports Improved Profits • Ahold [FT.com via Yahoo Finance] • Ahold to Boost U.S. Retail Unit, Return About $2.5 Billion to Holders [Wall Street Journal] • Ahold to sell U.S. foodservice unit, cut costs [MarketWatch]
Potentially impacted stocks and ETFs: Koninklijke Ahold NV (AHO), Sysco Corp. (NYSE:SYY), Wal-Mart Stores Inc. (NYSE:WMT), Delhaize Group (DEG)
Outback Offer a Little Underdone [Motley Fool]
Summary: Motley Fool writer Nathan Parmelee picked OSI Restaurant Partners (formerly Outback Steakhouse), at $28.19 a share, to outperform the market. Shares had already been doing quite nicely when yesterday, the Tampa-based company announced that its founders, along with two private equity firms, have agreed to take the company private for $40 a share in cash, valuing OSI at about $3.2 billion, debt included. The shares shot up to nearly $40 in composite trading yesterday, closing up $7.32, or 22.5% (click chart to enlarge). The news also gave a boost to the share price of other restaurant companies, including Applebee's International and Brinker International. The deal is entirely in cash and OSI has said it will solicit and review superior proposals over the next 50 days.
Related links: Pirate Capital Dumps Stake in OSI Restaurant • Major Stakeholder Opposed to Lone Star Steakhouse Merger • Restaurant Stocks: Gross & Operating Margins • Outback Steakhouse Parent to Go Private for $3.2B [MarketWatch]
Potentially impacted stocks and ETFs: OSI Restaurant Partners (OSI), Applebee's (APPB), Brinker International (NYSE:EAT), Ruth's Chris Steak House (NASDAQ:RUTH), O'Charley's (NASDAQ:CHUX), Sonic Corporation (NASDAQ:SONC), Ryan's Restaurant Group (RYAN), Lone Star Steakhouse & Saloon (NYSE:STAR), Texas Roadhouse (NASDAQ:TXRH)
Summary: Toyota's Q2 net income jumped 34% to 405.7 billion yen ($3.45b), smashing the Y350b median estimate of analysts surveyed by Bloomberg. Sales grew 17.3% to Y5.83 trillion ($49.4b). Toyota raised its full-year guidance for net income by 18% to Y1.55t ($13b), sales +4% to Y23.2t ($197b) and operating profit +16% to Y2.2t ($19b). Year-to-date through October, Toyota added 2% to its market share in the U.S. to 15.2%, as its sales grew 12% -- General Motors market share fell 1.8% and Ford lost 0.8%. Its sales were strongest in N. America in Q2, gaining 19%. Toyota raised its first-half dividend by more than 40% to Y50/share. Toyota's ordinary shares gained 1% to close at Y7,100 ($120.48 ADR equivalent at Y117.86/US$1) ahead of its earnings announcement. Its ADRs closed yesterday at $119.73.
Related links: Toyota press releases: Toyota H1 Earnings • Share Repurchase Update • Collaboration Agreement Signed with Isuzu • Additional earnings coverage: Forbes-AP and Washington Post-Reuters • Honda: Sales Surge, But Earnings Hurt By Derivatives Losses • Nissan's Earnings Surprise to Upside; Sales Hurt Again by Lack of New Models • GM Posts Q3 Loss But Beats Street -- Shares Rise • Ford Bleeds $5.8 Billion in Q3; SUV's, Foreign Competition To Blame • DaimlerChrysler Might Spin Off Chrysler After Division Posts $1.5 Billion Q3 Loss
Potentially impacted stocks and ETFs: Toyota (NYSE:TM), Honda (NYSE:HMC), Nissan (OTCPK:NSANY), General Motors (NYSE:GM), Ford (NYSE:F), DaimlerChrysler (DCX) • ETFs: BLDRS Asia 50 ADR Index (NASDAQ:ADRA), BLDRS Developed Markets 100 ADR Index (NASDAQ:ADRD), iShares NYSE Composite Index (NYSEARCA:NYC)
UBS Embraces the Buy Side [TheStreet.com]
Summary: The New York arm of Swiss financial services firm UBS is introducing a curious animal into stock research: internally generated buy-side research that competes with the firm's own sell-side research. The brokerage firm is assembling a group of 10 to 20 analysts who will compile stock recommendations, ostensibly intended to supplement the recommendations put together by the firm's existing staff of sell-side analysts. In putting together their recommendations, the new group would be at liberty to consult research conducted by other Wall Street firms. Three years ago, it was alleged that research analysts at UBS and nine other firms were conspiring with internal investment bankers to manipulate stock ratings. The ten firms had to pay a collective fine of $1.4 billion. Though the new initiative is a clear attempt by UBS to put that stain behind them, the timing is awkward: it is being rolled out concurrently with fresh allegations that at least one UBS employee sold traders and hedge fund managers advance notice of changing stock recommendations.
Related links: UBS, Credit Suisse Under SEC Investigation for Bonds Trading Irregularities • UBS says cooperating in U.S. Treasury bonds probe [Reuters]
Potentially impacted stocks and ETFs: UBS (NYSE:UBS) • Europe 2001 HOLDRs (NASDAQ:EKH), streetTRACKS Dow Jones STOXX 50 (NYSEARCA:FEU), BLDRS Europe 100 ADR Index (NASDAQ:ADRU), iShares MSCI EAFE Value Index (NYSEARCA:EFV)
McKesson to buy Per-Se for $1.23 billion [Reuters]
Summary: San Francisco-based drug distributor McKesson will acquire Per-Se Technologies for $1.23 billion. Per-Se markets health administration software to hospitals, physicians, and pharmacies. The acquisition will expand McKesson's technological capabilities and customer base. McKesson will be paying $28 per share in cash, a premium of 14.5% over Friday's closing price of $24.45. McKesson will also assume the software company's outstanding debt. The news perked up both companies' shares on Monday: Per-Se's shares rose $3.05 to $27.50 on the Nasdaq and McKesson's rose 55 cents to $49.07 on the NYSE. Analyst sentiment is in favor of the acquisition, stating a preference for McKesson's acquisition of a strong software platform, rather than developing one on their own.
Related links: Fitch: McKesson's 'BBB+' Rating Not Affected by Acquisition [Business Wire] • McKesson to Purchase Per-Se For $1.1 Billion, Adding Clients [WSJ]
Potentially impacted stocks and ETFs: McKesson (NYSE:MCK), Per-Se Technologies (NASDAQ:PSTI) • Competitors: Amerisourcebergen Corp (NYSE:ABC), Cardinal Health Inc. (NYSE:CAH) • ETFs: iShares Dow Jones U.S. Healthcare Index (NYSEARCA:IYH), Healthcare Select Sector SPDR (NYSEARCA:XLV)
Summary: Abbott Laboratories reported it is purchasing Kos Pharmaceuticals for 3.7 billion, or $78 a share, 56% higher than Kos's November 3rd closing price. Abbott acquires the most potent drug available for raising HDL, or good cholesterol . Bruce Cranna, an analyst with Leerink Swann & Co., commented: "It gains Abbott critical mass'' in the cholesterol drug market, which is a $20 billion a year industry. Kos' s medicine, called Niaspan, which uses the vitamin niacin to attack HDL cholesterol, is at the cutting-edge of heart drugs. On news of the acquisition Kos's shares rose 54% to $76.99 after a decline of 18% this past year, while Abbott's stock fell 15 cents to $47.49. Although Abbott's sales are expected to rise with the addition of Niaspan, many patients complain about facial flushing; the company is working on a new version of the Niaspan which will reduce this complaint, as well as Simcor, a generic form of Zocor, a top-selling cholesterol drug produced by competitor Merck.
Related links: Herb Greenberg's take on the merger: Kos Bought By Abbott Labs • The news answer's BioBlogger's question: Should Pfizer Acquire Kos Pharmaceuticals?
Potentially impacted stocks and ETFs: Abbott Laboratories (NYSE:ABT), Kos Pharmaceuticals (KOSP) • Competitors: Merck (NYSE:MRK), Pfizer (NYSE:PFE), Sanofi-Aventis (NYSE:SNY)
Optimistic Broadcast From XM Satellite Radio [TheStreet.com]
Summary: XM Satellite Radio Holdings Inc. reported a much better quarter than analysts expected yesterday and the news sent the shares up $1.78 to $13.17 - a gain of almost 16%. Analysts were expecting an average per-share loss of 46 cents, yet XM was able to shrink its net loss to $83.8 million, or 32 cents a share, from $131.9 million, or 60 cents, a year earlier. Sales rose 57% to $240.4 million, beating the $235.2 million average estimate of analysts, on decreased subscriber acquisition costs of $60 and increased profits of $11.36 per user. In another plus for the company, it now expects to end the year with 7.7 million to 7.9 million subscribers. The prior range was 7.7 million to 8.2 million, and while few felt the company could hit the high end of that range, there was relief the low end didn't have to be set even lower. The company ended the quarter with 7.2 million subscribers. During its earnings call (see first related link), the company declined to address speculation that it may merge with or acquire satellite radio competitor Sirius Satellite Radio.
Related links: XM Satellite Radio Q3 2006 Earnings Call Transcript • Why The Big Jump in XM Satellite Radio? • XM Satellite, Sirius Leave Investors Skeptical • Is a Sirius-XM Satellite Radio Merger In the Works? • Cramer's Take on XMSR • XM & Sirius Satellite Radio: Paying Subscribers Needed • Car-based iPods Threaten Sirius Satellite Radio, XM • Listeners Happy With Sirius' Free Radio Offer • XM Shares Reach Higher Orbit [Business Week]
Potentially impacted stocks and ETFs: XM Satellite Radio Holdings (XMSR), Sirius Satellite Radio (NASDAQ:SIRI), Clear Channel Communications (NYSE:CCU)
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