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.

Colgate buys Unilever's Sanex. Colgate-Palmolive (NYSE:CL) agreed to pay $940M in cash to buy the Sanex personal care brand from Unilever (NYSE:UL). Colgate also agreed to sell its laundry detergent unit in Colombia to Unilever for $215M. The two transactions will deliver a combined 4% increase to Colgate's 2011 earnings.

Jabil climbs on earnings, outlook. Jabil Circuit (NYSE:JBL) jumped 10.2% in after-hours trading following the company's better-than-expected FQ2 earnings report (see details below). Excluding one-time items, earnings rose to $0.54 per share from $0.29 a year earlier, beating both analysts' expectations and the company's own rosy forecast of $0.49-0.53. Jabil also expects results from the current quarter to come in higher than previously estimated, although it cautioned that the outlook excludes the still-uncertain impact of Japan's natural disasters on Jabil's supply chain.

Japan disaster costs threaten GDP contraction. The Japanese government said today that damage from the earthquake and tsunami could be as high as ¥25T ($309B) over the next three fiscal years. The figure compares with ¥10T of damages from 1995's Kobe earthquake, and raises the possibility that Japan's economy may contract in the first half of the fiscal year that starts April 1. Meanwhile, further radiation leaks remain a threat at the Fukushima plant, Tokyo authorities said city tap water may be unsafe for infants because of elevated levels of radioactive iodine, and the U.S. became the first country to ban food from Japan, blocking the import of milk, vegetables, and fruit from regions nearest the Fukushima plant.

Banks targeted over credit union failures. The National Credit Union Administration is threatening to sue several investment banks unless they agree to refund over $50B of mortgage-backed securities sold to five wholesale credit unions. The NCUA is blaming the banks for the collapse of five of the credit unions considered central to the nation's credit-union industry, marking one of the broadest accusations to date that Wall Street helped cripple financial institutions during the crisis. Sources said the accused banks are Goldman Sachs (NYSE:GS), Merrill Lynch (NYSE:BAC), JPMorgan (NYSE:JPM) and Citigroup (NYSE:C), all of which allegedly misrepresented the risk of the MBS to the credit unions.

Judge rejects Google settlement. A U.S. federal judge rejected a $125M settlement that would have allowed Google (NASDAQ:GOOG) to create the world’s biggest digital book library. The settlement, reached in 2008, would have given Google immunity from copyright laws, allowing the company to distribute millions of books on the internet in exchange for sharing the revenue it would generate. The judge ruled the settlement would allow Google to 'exploit' books without the permission of copyright owners, and "would arguably give Google control over the search market" for books.

Energy Transfer, Regency Energy form natgas JV. Energy Transfer Partners (NYSE:ETP) and Regency Energy Partners (RGNC) announced the formation of a joint venture, and will together pay $1.92B to buy some natural gas liquid storage and transportation assets from Louis Dreyfus, one of the world's top commodity firms. The acquisition gives the JV a stake in the sought-after Texas shale region, and allows the firms to tap into growing demand for natural gas liquids.

NRG sees uncertain future for reactors. NRG Energy (NYSE:NRG) CEO David Crane acknowledged that the company's plans to build two big reactors at its South Texas nuclear plant could be delayed, or even canceled, following the nuclear crisis in Japan. NRG is facing pressure from multiple directions; its project depends on getting support from the likes of Tokyo Electric Power, which is currently dealing with the Fukushima Daiichi plant in Japan; potential customers may feel uncomfortable with nuclear energy at the moment, and at least one client has suspended talks with NRG; and, NRG also needs to secure U.S. regulatory approval as well as federal loan guarantees. A setback for NRG would be the most tangible fallout thus far from Japan's nuclear disaster.

Howard Stern sues Sirius. Howard Stern sued his employer, Sirius XM Radio (NASDAQ:SIRI), accusing Sirius of failing to pay stock bonuses due for exceeding subscriber targets. The suit claims that Stern's 2006 signing helped Sirius exceed targets by at least 2M subscribers in each year of his contract, triggering a new stock award each time. Stern has a five-year, $500M contract with Sirius. In after-hours trading, SIRI -2.6%.

Rare earth miners spike. Rare earth miners posted impressive gains yesterday, following reports that Molycorp was on track to hit its Q1 sales targets and buoyed by both sharp price increases and a collapse in volume from China. In yesterday's trading, Molycorp (MCP) +17.7%, China GengSheng Minerals (NYSEMKT:CHGS) +63.45%, China Shen Zhou Mining & Resources (NYSEMKT:SHZ) +28.7%, Rare Element Resources (NYSEMKT:REE) +24.1%, Avalon Rare Metals (NYSEMKT:AVL) +13.2%, rare earth ETF REMX +3.7%.

Egyptian trading resumes, briefly. Egypt reopened its stock market this morning for the first time since Jan. 27, and promptly closed it again just minutes later after stocks fell 9.9% and triggered a circuit breaker. Egyptian Finance Minister Samir Radwan said "the closure was necessary... we had a revolution... we have to put things into perspective," referring to the protests that eventually led to the downfall of President Hosni Mubarak. Keep an eye on Egypt ETF EGPT, which has sold off sharply over the last two days.

Ticker change for QQQQ. The widely-followed 'Nasdaq-100' ETF is changing its ticker to QQQ from QQQQ, effective today.

Earnings: Wednesday Before Open

  • General Mills (NYSE:GIS): FQ3 EPS of $0.56 in-line. Revenue of $3.65B (+2% Y/Y) misses by $0.04B. Company reaffirms FY'11 EPS guidance of $2.46-2.48. (PR)

Earnings: Tuesday After Close

  • Adobe (NASDAQ:ADBE): FQ1 EPS of $0.58 beats by $0.01. Revenue of $1.02B (+20% Y/Y) in-line. Shares -0.4% AH. (PR, earnings call transcript)
  • Cintas (NASDAQ:CTAS): FQ3 EPS of $0.41 beats by $0.05. Revenue of $938M (+9% Y/Y) beats by $30M. Shares +6% AH. (PR)
  • Discover Financial Services (NYSE:DFS): FQ1 EPS of $0.84 beats by $0.27. Shares +2.3% AH. (PR, earnings call transcript)
  • Jabil Circuit (JBL): FQ2 EPS of $0.54 beats by $0.03. Revenue of $3.92B (+31% Y/Y) in-line. Shares +10.2% AH. (PR, earnings call transcript)

Today's Markets

  • In Asia, Japan -1.6% to 9449. Hong Kong -0.1% to 22825. China +1.0% to 2949. India +1.2% to 18206.
  • In Europe, at midday, London +0.5%. Paris +0.5%. Frankfurt +0.3%.
  • Futures at 7:00: Dow +0.2%. S&P +0.3%. Nasdaq flat. Crude +0.5% to $105.53. Gold +0.3% to $1432.40.

Wednesday's Economic Calendar

The SA Currents team contributed to this post.

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