Wall Street Breakfast: Must-Know News

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.

  • Apple's Jobs takes medical leave. Apple (NASDAQ:AAPL) CEO Steve Jobs unexpectedly announced that he's taking a medical leave from the company, his second in as many years and his third absence over the last decade. In characteristic form, Jobs provided no details about his health, what prompted the leave or when he expects to return to work, once again raising criticism among investors and analysts who say the company's secrecy over Jobs' health is a liability to the tech behemoth. During his absence, Jobs will retain the CEO title, while COO Tim Cook will handle day-to-day operations. News of Jobs' absence will likely mute reactions to the company's Q1 earnings report, due out after the markets close today. Premarket: AAPL -4.2% (7:00 ET).
  • Comerica buys Sterling Bancshares. Comerica (NYSE:CMA) agreed to buy Sterling Bancshares (NASDAQ:SBIB) in a stock-for-stock transaction that values Sterling Bancshares at $1.03B, or $10/share, a 30% premium to Friday's close and better than the $8/share target that sources had been discussing.
  • WikiLeaks gets Swiss bank data. In a Swiss bank's nightmare come true, former Swiss private banker Rudolf Elmer has handed over data on 2,000 offshore bank account holders to WikiLeaks founder Julian Assange. Elmer, who worked at Julius Baer (OTCPK:JBARF) until he was fired in 2002, is scheduled to go on trial in Switzerland tomorrow for breaching bank secrecy, with Assange calling Elmer a 'bona fide whistleblower' who deserves support. Assange said it will take at least two weeks to vet the new information before a possible release.
  • Approval near for Comcast-NBC deal. The FCC could approve Comcast's (NASDAQ:CMCSA) purchase of NBC Universal (NYSE:GE) as soon as today, sources said, voting 4-to-1 in favor of the deal. Justice Department approval would follow shortly afterwards, with both the FCC and DoJ expected to include conditions to protect competition in online video.
  • Glaxo takes hefty charge. GlaxoSmithKline (NYSE:GSK) will take a hefty £2.2B ($3.5B) charge in the fourth quarter to settle lawsuits and regulatory fines related to past sales practices, primarily in respect to former diabetes blockbuster Avandia; after tax deductions, the charge will be £1.8B. It marks a record payment for the pharma industry, surpassing Pfizer's (NYSE:PFE) $2.3B payment in 2009 and an earlier $2.4B charge announced by Glaxo in July 2010. Perhaps ominously, the company's press release concluded with the following warning: "...there can, therefore, be no assurance that any losses that result from the outcome of any legal proceedings will not exceed the amount of the provisions reported in the Group’s financial accounts by a material amount." Premarket: GSK -2.9% (7:00 ET).
  • Goldman blocks U.S. investors from Facebook offering. Goldman Sachs (NYSE:GS) decided it will only allow non-U.S. investors to participate in a private offering of Facebook shares, after concluding "the level of media attention might not be consistent with the proper completion of a U.S. private placement under U.S. law." The move is not only an embarrassing about-face for the firm, but could also damage its relationship with some of its most lucrative U.S. clients.
  • Eyeing growth, Obama launches regulatory review. President Obama is launching a broad regulatory review, aiming to eliminate federal rules that hamper economic growth. Writing in a WSJ op-ed, Pres. Obama highlighted the need to strip out "excessive, inconsistent and redundant regulation" that could "stifle job creation and make our economy less competitive." He's also directing federal agencies to reduce the regulatory burden on small businesses. It's the latest in an attempted rapprochement between the White House and corporate America.
  • J. Crew nears lawsuit settlement. J. Crew (JCG) is said to be close to settling a shareholder lawsuit triggered by its deal to be taken private by TPG Capital and Leonard Green & Partners. Shareholders had protested the deal's $3B price tag and argued that J. Crew CEO Millard Drexler potentially breached his fiduciary duties to investors. Sources said that J. Crew's settlement will include a $10M payment to plaintiffs and would extend the firm's window to shop for other offers to Feb. 15; the original 'go shop' period ended on Saturday and produced no rival bids.
  • Regulators miss deadlines on financial overhaul. As Pres. Obama initiates a review of existing federal rules (see above), regulators are struggling to keep up with the workload of turning the Dodd-Frank legislation into law. The SEC and CFTC have already missed or postponed several deadlines for writing final versions of certain Dodd-Frank rules, with more than 100 new rules and studies scheduled to be issued in the next 18 months.
  • OPEC, IEA see higher 2011 oil demand. The IEA raised its forecast this morning for 2011 global oil demand, pointing to better-than-expected global economic growth. The new forecast is for demand growth to expand by 1.4M barrels/day to 89.1M bpd this year. On Monday, OPEC said 2011 demand would likely be stronger than previously expected, a development that could increase pressure on the group to formally raise its production ceiling. OPEC expects 2011 demand for the group's crude oil to reach 29.4M bpd, an increase of 200,000 bpd from earlier estimates.
  • Wal-Mart's Massmart deal moves ahead. Wal-Mart's (NYSE:WMT) $2.3B takeover bid for South Africa's Massmart (OTCPK:MMRTY) is set to move ahead, after nearly 79% of Massmart shareholders approved the deal. However, immediately following the vote, COSATU, South Africa's largest labor union and a highly influential body, warned it will organize the "mother of all boycotts" in opposition to the deal. COSATU's opposition is despite Wal-Mart's promise to honor Massmart's agreements with unions and to retain South African management.
  • Blockbuster asks for more money. Blockbuster (OTC:BLOKA) has reportedly asked bondholders for another $200M-250M to help it exit bankruptcy protection. The company realized it would need more money for its turnaround following a weak holiday showing, and will also try to close more stores. It's unclear whether bondholders will agree to the request or put the chain up for sale.

Earnings: Tuesday Before Open

  • Delta Air Lines (NYSE:DAL): FQ4 EPS of $0.19 misses by $0.05. Revenue of $7.79B (+14.5% Y/Y) beats by $50M. (PR)

Today's Markets

  • In Asia, Japan +0.1% to 10519. Hong Kong flat at 24154. China +0.1% to 2709. India +1.1% to 19092.
  • In Europe, at midday, London +1.3%. Paris +0.9%. Frankfurt +1.1%.
  • Futures at 7:00: Dow +0.4%. S&P +0.3%. Nasdaq -0.4%. Crude -0.15% to $91.40. Gold +0.6% to $1368.90.

Tuesday's Economic Calendar

The SA Currents team contributed to this post.

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