- Blockbuster files for chapter 11 bankruptcy. Blockbuster (OTC:BLOKA) announced earlier today that it has filed voluntary chapter 11 bankruptcy. The company said that it reached an agreement with a large group of bondholders to restructure its debt. The recapitalization plan would reduce the company’s debt from $1B to $100M, according to the statement. Blockbuster says it will continue normal operations while it moves through bankruptcy proceedings.
- Novartis wins approval for MS drug. Swiss pharmaceutical giant Novartis (NVS) won approval from the FDA for its Gilenya drug used to treat multiple sclerosis. It is the first oral drug that will be available to treat the disease. Until now, typical treatments consisted of cumbersome injections and infusions. The market for MS treatments is estimated to be around $8.6B.
- Abbott recalls bug-tainted baby formula. Abbott Laboratories (ABT) said it is recalling millions of units of its Similac powdered baby formula after two instances of contamination with beetles were found. The recalled products, which were fewer than 5M units, were produced in the company’s Sturgis, Michigan, plant, where beetles or their larvae were also found. The recall could cost the company as much as $100M in lost revenue.
- Microsoft uploads $4.75B in bonds on the cheap. Microsoft (MSFT) sold $4.75B in debt, smashing the lowest borrowing rate on record for three-year unsecured corporate bonds and approaching record-low coupons for five-, 10- and 30-year bonds. The three-year debt at 0.875% yields 25 basis points more than similar-maturity Treasuries. But investors were disappointed in the software giant's quarterly dividend hike to $0.16/share, less than expected and sending shares down 2.15% in Wednesday trading.
- Starbucks plans 'targeted' price increases. Starbucks (SBUX) said it will raise the price of "labor-intensive and larger-sized beverages" in response to surging green arabica coffee costs. The coffee chain said it expects to keep the price of a brewed, tall coffee at $1.50 and should maintain or lower the price of some of its most popular drinks. Starbucks backed its fiscal 2011 earnings outlook of $1.36-$1.41/share.
- GM share price must accelerate for Treasury to break even. The U.S. government needs to sell all its General Motors stock at an average $133.78/share to fully recoup the $49.5B spent to rescue the automaker, according to inspector general Neil Barofsky. The comments came in response to an August letter from Sen. Charles Grassley asking for an analysis of GM's planned IPO and the government's chances of getting back the money it put into the company. That price is $39.15 greater than the highest level old GM shares ever reached.
- Facebook likes the smartphone market. And the latest entrant into the smartphone market is… Facebook. The privately held company is reportedly teaming up with INQ Mobile to create two smartphone devices. The phones, which will carry the site's popular social networking service, are expected to be launched in Europe in the first half of 2011 and in the United States in the second half of 2011. AT&T (T) may have a network exclusive on the U.S. version of the device.
- Virgin to check into hotels with $500M bet. Richard Branson’s Virgin Group is forming a partnership to spend as much as $500M to launch a chain of luxury hotels over the next three years. The venture will start in North America and wants to expand globally in the future. It will cater to high-income, well-educated customers and hopes to have as many as 25 hotels in the next decade.
- Petrobras share offering is ‘comfortably oversubscribed.’ Plans for Brazilian state-owned oil company Petrobras (PBR) to offer new shares are creating quite a buzz among investors. The offer, worth as much as $79B, is reportedly “comfortably oversubscribed” with strong investor demand and high participation from state pension funds and institutional investors. The issue, one of the biggest ever, includes a $42.5B oil-for-shares swap between Petrobras and the government. The offer is expected to be priced after markets close on Thursday.
- Citigroup expands in Asia. Citigroup (C) is expanding its presence in Asia. It recently opened a brokerage operation in Malaysia and is now considering plans to expand into Vietnam. It opened a brokerage branch in Indonesia last month. The bank says it wants to take advantage of a rising flow of funds into Southeast Asia.
- Electrolux CEO swept out. Hans Straberg, CEO of Swedish appliance maker Electrolux (OTCPK:ELUXY), is stepping down as president and CEO. Vice president Keith McLoughlin will take over at the start of next year. Straberg said in a statement that after nine years it was time to do something new. Shares were down 1.5% in mid-day trading in Stockholm.
- In Asia, Japan -0.37% to 9566. Hong Kong +0.21% to 22048. China +0.11% to 2592. India -0.48% to 19847.
- In Europe, at midday, London -0.65%. Paris -0.90%. Frankfurt -0.74%.
- Futures: Dow -0.37%. S&P -0.46%. Nasdaq -0.24%. Crude -0.79% to $74.12. Gold +0.06% to $1292.90.
Earnings: Wednesday After Close
- Bed Bath & Beyond (BBBY): Q2 EPS of $0.70 beats by $0.07. Revenue of $2.1B (+11.6%) in-line. Shares +5% AH. (PR, earnings call transcript)
- Red Hat (RHT): Q2 EPS of $0.19 beats by $0.01. Revenue of $219.8M (+19.7%) vs. $211.5M. Shares +3.9% AH. (PR, earnings call transcript)
Tuesday's Economic Calendar
- 8:00 Congressional Briefing: Tapping Tax Time
8:30 Initial Jobless Claims
9:00 Chicago Fed: International Banking Conference
10:00 Existing Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
- Notable earnings before Thursday's open: RAD
- Notable earnings after Thursday's close: NKE, TIBX
Seeking Alpha's Market Currents team contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.