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.

  • Google posts profit, loses CEO. Along with a healthy earnings beat (see details below), Google (NASDAQ:GOOG) unexpectedly announced that CEO Eric Schmidt would be resigning as chief executive and assuming the new role of executive chairman. Schmidt said the company's "outlook is bright" and that his resignation reflects the fact that Google has grown substantially so "managing the business has become more complicated" under the firm's current triumvirate management structure. Co-founder Larry Page will become CEO as of April 4, while fellow co-founder Sergey Brin will focus on "strategic projects." Analysts were generally positive about the management change, as were investors, who sent shares +1.3% in after-hours trading.
  • H-P shakes up board. Hewlett-Packard (NYSE:HPQ) announced that four directors would be leaving its board, a move that H-P chairman Ray Lane characterized as 'voluntary.' Lane said the departures "had nothing to do with" controversy over former CEO Mark Hurd's departure, though many believe the shake-up was meant to purge directors loyal to Hurd. The five incoming directors, including former eBay (NASDAQ:EBAY) CEO Meg Whitman, bring an interesting mix of private-equity experience and tech savvy.
  • Warner Music considers a sale. Warner Music Group (NYSE:WMG) has reportedly hired Goldman Sachs (NYSE:GS) to explore a sale of all or part of the company. Goldman's efforts could result in the break-up of the world's third-largest music company, and a partial sale could leave behind a significantly slimmer Warner that would lack the cushioning provided by its lower-risk publishing business. However, it could also position Warner to more easily buy most or all of EMI Group. Warner has already been approached by at least two possible suitors. News of the possible sale sent shares +11.65% in after-hours trading.
  • GE's Immelt to head jobs panel. President Obama will tap Jeffrey Immelt, GE's (NYSE:GE) chief executive, to head a new White House panel aimed at finding ways to spur private-sector job growth. The panel will be called the President's Council on Jobs and Competitiveness, and will replace the President's Economic Recovery Advisory Board, which had been led by former Fed chairman Paul Volcker.
  • Lawmaker questions BP-Rosneft deal. Representative Edward Markey asked Treasury's Geithner yesterday to initiate an immediate investigation of BP's (NYSE:BP) planned $16B share-swap with state-owned Russian oil firm Rosneft. Markey said he believes "there is clearly sufficient evidence that this deal may pose an unacceptable threat to U.S. national security, noting that BP is the country's largest producer of oil and natural gas, and the largest supplier of fuel to the U.S. military. Meanwhile, Rosneft says it hasn't ruled out the possibility of raising its stake in BP above the 5% it already agreed to buy.
  • T-Mobile eyes tower sale. T-Mobile USA (OTCQX:DTEGY) said it may sell its 7,000 broadcast cellular towers, with the beginning of Q2 seen as the likely sale window. The proceeds, which sources say could reach $2B, would be used for investments like buying additional wireless airwaves, and would improve T-Mobile's financial self-sufficiency at a time when it has been a drag on parent Deutsche Telekom's results.
  • SEC requires ABS disclosures. As expected, the SEC adopted new rules yesterday that will require firms selling securities tied to mortgages, credit cards and student loans to publicly report information on the loans that back them. The new rules for asset-backed securities are meant "to restore investor confidence," said the SEC's Mary Schapiro, and will go into effect in January 2012.
  • Taxpayers may recoup AIG bailout. Taxpayers may actually be repaid in full for the bailout of AIG (NYSE:AIG), according to a report from the Government Accountability Office. The recovery rate on the insurer's $182B bailout depends on the strength of AIG's business plan and its stock price, as much of the government's stake is now in the form of AIG common shares. However, "federal assistance appears to be facilitating a more orderly restructuring of the company" and "AIG’s financial condition has generally remained relatively stable or showed signs of improvement since GAO’s last report in April 2010." The timing of the report's release was unintentionally ironic, as shares of AIG fell 15.4% in yesterday's trading.
  • Verizon appeals net neutrality. Verizon (NYSE:VZ) filed a legal challenge yesterday in federal appeals court to overturn the FCC's new net neutrality rules. Verizon has long insisted that the FCC doesn't have the jurisdiction to enforce net neutrality, and its lawsuit is the first of several challenges expected to be filed against the rules. Taking fault with the FCC for the opposite reason, public interest groups continue to insist that the net neutrality regime doesn't go far enough.
  • ABB cleared for Baldor deal. ABB Ltd. (NYSE:ABB) received regulatory clearance yesterday to buy Baldor Electric (BEZ) for $3.1B, or $63.50/share. ABB's tender offer will expire on Jan. 25; as of Jan. 10, 86.4% of Baldor's shares had already been tendered.
  • Intel-McAfee deal poised for EU approval. Intel (NASDAQ:INTC) is expected to get EU approval next week for its $7.7B purchase of McAfee after offering additional concessions to ease antitrust concerns. Most of the concessions are said to relate to interoperability features that will allow products from McAfee's competitors to function on Intel products without restrictions. The FTC has already cleared the deal.

Earnings: Friday Before Open

  • Air Products and Chemicals (NYSE:APD): FQ1 EPS of $1.35 beats by $0.01. Revenue of $2.40B (+10% Y/Y) beats by $0.05B. (PR)
  • BB&T (NYSE:BBT): Q4 EPS of $0.30 beats by $0.04. (PR)
  • GE (GE): Q4 EPS of $0.36 beats by $0.04. Revenue of $41.38B (+0.8% Y/Y) beats by $1.48B. Shares +1.5% premarket. (PR)
  • Schlumberger (NYSE:SLB): Q4 EPS of $0.85 beats by $0.07. Revenue of $9.07B (+57.9% Y/Y) beats by $0.37B. Shares +1.2% premarket. (PR)
  • SunTrust Banks (NYSE:STI): Q4 EPS of $0.23 beats by $0.16. Revenue of $2.33B (+0.6% Y/Y) beats by $0.14B. (PR)

Earnings: Thursday After Close

  • Advanced Micro Devices (NYSE:AMD): Q4 EPS of $0.14 beats by $0.03. Revenue of $1.6B (+0.2% Y/Y) beats by $20M. Shares -0.2% AH. (PR)
  • Associated Banc-Corp (ASBC): Q4 EPS of $0.04 misses by $0.01. Shares -0.1% AH. (PR)
  • Capital One (NYSE:COF): Q4 EPS of $1.52 beats by $0.18. Revenue of $3.7B (-16% Y/Y) misses by $179M. Shares -0.9% AH (PR)
  • Flextronics International (NASDAQ:FLEX): FQ3 EPS of $0.25 beats by $0.01. Revenue of $7.9B (+20% Y/Y) beats by $219M. Shares -0.5% AH. (PR, earnings call transcript)
  • Google (GOOG): Q4 EPS of $8.75 beats by $0.66. Revenue of $6.4B (+29% Y/Y) beats by $315M. Shares +1.9% AH. (PR)
  • International Game Technology (NYSE:IGT): FQ1 EPS of $0.21 beats by $0.01. Revenue of $465M (-10% Y/Y) misses by $25M. Shares -5.8% AH. (PR)
  • Maxim Integrated Products (NASDAQ:MXIM): FQ2 EPS of $0.44 beats by $0.03. Revenue of $613M (-2.1% Y/Y) beats by $5M. Shares +2.5% AH. (PR)
  • People's Bank (NASDAQ:PBCT): Q4 EPS of $0.10 in-line. Shares -2.1% AH. (PR)
  • Skyworks Solutions (NASDAQ:SWKS): FQ1 EPS of $0.45 beats by $0.01. Revenue of $335M (+37% Y/Y) in-line. Shares -2.4% AH. (PR)

Today's Markets

  • In Asia, Japan -1.6% to 10275. Hong Kong -0.5% to 23877. China +1.4% to 2716. India -0.2% to 19008.
  • In Europe, at midday, London +0.8%. Paris +1.2%. Frankfurt +0.7%.
  • Futures at 7:00: Dow +0.3%. S&P +0.35%. Nasdaq +0.3%. Crude +0.5% to $90. Gold -0.4% to $1341.50.

Friday's Economic Calendar

The SA Currents team contributed to this post.

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