Wall Street Breakfast: Must-Know News

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Includes: ACE, AET, AFL, ANTM, AOIX, AVGO, BP, BXP, CBG, CBI, CEG, CENX, CEPH, CHRW, CVS, DIA, DIS, DWA, EA, EWBC, FISV, FMCC, FNMA, GE, GLD, GME, GOOG, GS, HES, IGT, ILMN, IP, JNY, KIM, KODK, MEE, MT, MTW, NBR, NEM, NLC, NSC, PT, PX, QQQ, QRVO, ROK, S, SII, SLB, SPY, STR, TEF, UAL, UAUA, UNH, USO, VIV, WDR, WRK, WYN
by: Rachael Granby
Rachael Granby
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.

  • Aetna makes PBM deal with CVS. Aetna (NYSE:AET) is contracting out the long-term administration of its pharmacy-benefit unit to CVS Caremark (NYSE:CVS). Financial terms weren't disclosed, but the 12-year deal will allow Aetna to pitch to new customers a medical plan that comes with a drug benefit. Aetna also disclosed Q2 earnings, reporting net income of $491M, or $1.14/share, up from $346.6M, or $0.77/share, a year earlier. Revenue fell 1.4% to $8.55B. The company raised its full-year EPS outlook to $3.05-3.15 from a previous guidance of $2.75-2.85. Premarket: AET -1.2%, CVS +2.45% (7:00 ET).
  • Telefonica reaches Vivo deal. Telefonica (NYSE:TEF) has reached an initial agreement to buy Portugal Telecom's (NYSE:PT) stake in jointly owned Vivo (NYSE:VIV), but declined to provide a price for the deal, which must still be approved by the boards of both companies. Sources close to the talks said Telefonica offered €7.5B ($9.8B), marking the third time it has raised its bid and a 32% increase from its initial offer.
  • UnitedHealth nears health firm acquisition. UnitedHealth (NYSE:UNH) is reportedly close to a deal to buy closely held Executive Health Resources, a medical services firm, for about $1.5B. Facing declining profit growth in its core insurance business, UnitedHealth is hoping acquisitions to expand its health-services units will produce meaningful growth. A purchase of Executive Health Resources would be UnitedHealth's fifth acquisition in 2010, and a deal could be announced by the end of the week. UNH closed down 2.2% yesterday.
  • Disney picks up Playdom. Disney (NYSE:DIS) announced yesterday that it would buy social-games maker Playdom in a deal worth up to $763M. It was the second social-games maker deal of the day, as hours earlier videogame retailer GameStop (NYSE:GME) had announced its acquisition of Kongregate. The social-games business generates far less revenue than the traditional console business, at least for now, but companies are bullish on the sector because of its high growth rate and its already-committed audience in the tens of millions.
  • BP takes Gulf spill tax credit. BP (NYSE:BP) said it plans to claim $9.9B in U.S. tax credits based on the $32.2B charge it reported related to costs for the Gulf oil spill. Outgoing CEO Tony Hayward said BP has "followed the IRS regulations as they're currently written," but the move will likely put more political heat on the company. Separately, India's state-run explorer Oil and Natural Gas Corp. and PetroVietnam are expected to make a formal joint offer within weeks for BP's stake in their joint Vietnamese gas project. Analysts believe the stake is worth around $966M. Premarket: BP -2.4% (7:00 ET).
  • GS Capital, P-E firm buy HGI Holdings. Goldman Sachs' (NYSE:GS) GS Capital Partners and private equity firm Clayton, Dubilier & Rice agreed to buy medical products provider HGI Holdings from rival private equity firm Jordan Company. The price of the deal was not disclosed, but is estimated to be around $850M. This is the latest in a string of secondary buyouts as private equity firms, aggressively looking for deals, buy companies from one another.
  • ArcelorMittal bounces back to profit. ArcelorMittal (NYSE:MT), the world's largest steelmaker, reported a Q2 net profit of $1.7B (see details below), beating analysts' expectations of a $1.26B profit and reversing a net loss of $792M in the same period last year. However, the company warned that Q3 results will be hurt by a seasonal dip in demand and an economic slowdown in China. Premarket: MT -2.4% (7:00 ET).
  • Google sets its sites on Facebook. Google (NASDAQ:GOOG) is said to be in talks with several makers of popular online games as it works to create a broader social-networking service that could compete with Facebook. Top developers that have been approached to offer their social games on the service Google is building include Playdom (which was just acquired by Disney (DIS), see above), Playfish (ERTS) and Zynga, in which Google recently took a financial stake, according to sources. It's unclear when Google might launch the gaming offering.
  • Hess says yes to shale. Hess Corp. (NYSE:HES) announced late yesterday that it's buying American Oil & Gas (AEZ) in an all-stock deal worth around $445M. The deal will boost Hess' strategic acreage position in the North Dakota Bakken shale oil play.
  • EU approves UAL, Continental deal. United Airlines parent UAL (UAUA) won unconditional EU regulatory approval for its $3.17B acquisition of Continental Airlines (NYSE:CAL). The deal, which will create the world's largest carrier, is still under U.S. regulatory review. The carriers also announced their combined new management team, which includes four executives from each company and Continental's Jeff Smisek as president and CEO of the merged carrier.
  • U.S. okays Schlumberger, Smith deal. Schlumberger (NYSE:SLB) and Smith International (SII) received unconditional U.S. regulatory approval for their planned merger, just a day after EU regulators cleared the deal. The merger must now be approved by Smith shareholders at their Aug. 24 annual meeting.
  • Fannie, Freddie spike on reform talks. Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) soared yesterday after the Obama administration said it's planning an August 17 conference to discuss the future of the housing finance system, with an eye to delivering a reform proposal to Congress by January. In yesterday's trading, Fannie +46.7% to $0.399, Freddie +31.3% to $0.407.
  • GE settles SEC charges. General Electric (NYSE:GE) agreed to pay $23.4M to settle SEC charges over oil-for-food kickbacks made to the Iraqi government in order to win contracts under a U.N. program. The SEC said GE "failed to maintain adequate internal controls to detect and prevent these illicit payments."

Earnings: Wednesday Before Open

  • ArcelorMittal (MT): Q2 EPS of $1.13 beats by $0.43. Revenue of $21.65B (+42.7%) vs. $23.54B. Shares -2.4% premarket. (PR)
  • Constellation Energy Group (NYSE:CEG): Q2 EPS of $0.71 misses by $0.04. Revenue of $3.30B (-14.4%) vs. $4.16B. (PR)
  • Eastman Kodak (EK): Q2 EPS of -$0.51 misses by $0.19. Revenue of $1.56B (-11.2%) vs. $1.67B. (PR)
  • International Paper (NYSE:IP): Q2 EPS of $0.42 beats by $0.01. Revenue of $6.12B (+5.4%) vs. $6.18B. (PR)
  • Jones Apparel Group (NYSE:JNY): Q2 EPS of $0.45 beats by $0.11. Revenue of $860M (+7%) vs. $832M. (PR)
  • Meadwestvaco (MWV): Q2 EPS of $0.35 beats by $0.02. Revenue of $1.55B (+8.4%) vs. $1.57B. (PR)
  • Newmont Mining (NYSE:NEM): Q2 EPS of $0.77 misses by $0.07. Revenue of $2.15B (+34.4%) vs. $2.20B. Shares -0.2% premarket. (PR)
  • Praxair (NYSE:PX): Q2 EPS of $1.19 beats by $0.05. Revenue of $2.52B (+18.2%) vs. $2.46B. (PR)
  • Rockwell Automation (NYSE:ROK): Q2 EPS of $0.83 beats by $0.03. Revenue of $1.26B (+25.5%) vs. $1.21B. (PR)
  • Sprint Nextel (NYSE:S): Q2 EPS of -$0.15 beats by $0.05. Revenue of $8.02B (-1.4%) in-line. (PR)
  • Waddell & Reed Financial (NYSE:WDR): Q2 EPS of $0.40 misses by $0.01. Revenue of $257.3M (+28.9%) vs. $250.9M. (PR)
  • WellPoint Health Networks (WLP): Q2 EPS of $1.67 beats by $0.12. Revenue of $14.22B (-6.8%) vs. $14.61B. (PR)
  • Wyndham (NYSE:WYN): Q2 EPS of $0.51 beats by $0.11. Revenue of $963M (+4.7%) vs. $940M. (PR)

Earnings: Tuesday After Close

  • Ace (NYSE:ACE): Q2 EPS of $2.01 beats by $0.17. Shares -0.4% AH. (PR, earnings call transcript)
  • AFLAC (NYSE:AFL): Q2 EPS of $1.35 beats by $0.02. Revenue of $5B (+15.5%) in-line. Shares +0.2% AH. (PR)
  • Boston Properties (NYSE:BXP): Q2 EPS of $1.13 beats by $0.13. Revenue of $396M (+1.7%) vs. $367M. (PR)
  • Broadcom (BRCM): Q2 EPS of $0.52 may not be comparable to consensus of $0.62. Revenue of $1.6B (+54%) in-line. Shares +1.2% AH. (PR, earnings call transcript)
  • CB Richard Ellis Group (NYSE:CBG): Q2 EPS of $0.18 beats by $0.09. Revenue of $1.2B (+22.6%) vs. $1.1B. Shares +3.8% AH. (PR)
  • C.H. Robinson Worldwide (NASDAQ:CHRW): Q2 EPS of $0.59 beats by $0.04. Revenue of $2.5B (+27.4%) vs. $2.3B. Shares +2.5% AH. (PR, earnings call transcript)
  • Century Aluminum Company (NASDAQ:CENX): Q2 EPS of $0.05 may not be comparable to consensus of $0.25. Revenue of $288M (+52.2%) vs. $292M. Shares -5.2% AH. (PR, earnings call transcript)
  • Cephalon (NASDAQ:CEPH): Q2 EPS of $2.20 beats by $0.43. Revenue of $727M (+32.7%) vs. $694M. Shares -2.7% AH. (PR)
  • Chicago Bridge & Iron (NYSE:CBI): Q2 EPS of $0.47 beats by $0.04. Revenue of $916M (-24.4%) vs. $948M. Shares -0.9% AH. (PR, earnings call transcript)
  • Dreamworks Animation SKG (NASDAQ:DWA): Q2 EPS of $0.27 beats by $0.05. Revenue of $158M (+19.8%) vs. $139M. Shares -0.4% AH. (PR)
  • East West Bancorp (NASDAQ:EWBC): Q2 EPS of $0.21 beats by $0.03. (PR)
  • Fiserv (NASDAQ:FISV): Q2 EPS of $1.00 beats by $0.04. Revenue of $1B (+0.2%) in-line. (PR)
  • Illumina (NASDAQ:ILMN): Q2 EPS of $0.26 beats by $0.03. Revenue of $212M (+31.2%) vs. $194M. Shares +5.4% AH. (PR, earnings call transcript)
  • International Game Technology (NYSE:IGT): FQ3 EPS of $0.21 in-line. Revenue of $490M (-5.3%) vs. $502M. Shares -3.4% AH. (PR)
  • Kimco Realty (NYSE:KIM): Q2 EPS of $0.31 beats by $0.04. Revenue of $214M (+13.7%) vs. $218M. (PR)
  • Manitowoc (NYSE:MTW): Q2 EPS of $0.12 beats by $0.06. Revenue of $877M (-15.3%) vs. $870M. Shares +2.4% AH. (PR)
  • Massey Energy (NYSE:MEE): Q2 EPS of -$0.02 misses by $0.33. Revenue of $810M (+16.1%) vs. $805M. Shares -2.2% AH. (PR)
  • Nabors Industries (NYSE:NBR): Q2 EPS of $0.15 misses by $0.03. Revenue of $905M (+4.3%) vs. $876M. Shares -0.6% AH. (PR)
  • Nalco Company (NYSE:NLC): Q2 EPS of $0.41 beats by $0.07. Revenue of $1.1M (+19%) vs. $990M. (PR)
  • Norfolk Southern (NYSE:NSC): Q2 EPS of $1.04 beats by $0.05. Revenue of $2.4B (+30.9%) in-line. Shares -1.2% AH. (PR, earnings call transcript)
  • Questar (NYSE:STR): Q2 EPS of $0.20 misses by $0.08. Revenue of $201M (+8.4%) vs. $291M. Shares -0.4% AH. (PR)
  • RF Micro Devices (RFMD): FQ1 EPS of $0.16 beats by $0.01. Revenue of $274M (+28.8%) vs. $264M. Shares -2.5% AH. (PR, earnings call transcript)

Today's Markets

  • In Asia, Japan +2.7% to 9753. Hong Kong +0.6% to 21091. China +2.3% to 2634. India -0.7% to 17957.
  • In Europe, at midday, London -0.6%. Paris +0.1%. Frankfurt -0.6%.
  • Futures: Dow -0.1%. S&P -0.1%. Nasdaq flat. Crude -0.35% to $77.23. Gold +0.3% to $1161.80.

Wednesday's Economic Calendar

Seeking Alpha's Market Currents team contributed to this post.


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