Wall Street Breakfast: Must-Know News

by: SA Editor Yigal Grayeff
SA Editor Yigal Grayeff
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.

Steve Jobs quits. It wasn't unexpected but it still feels like a bombshell: Apple (NASDAQ:AAPL) co-founder Steve Jobs has resigned as CEO and is being replaced by COO and interim CEO Tim Cook. But Jobs, who has been on medical leave since January, is staying on as Chairman. What Apple has done, said Jeff Gamet of The Mac Observer, is make official what they've been doing for a while, "which is Tim runs the show and Steve...makes sure the products come out to meet the Apple standard." Still, Apple shares dropped 4.6% postmarket and helped wipe $52B off the value of the S&P 500.

German court: Apple's Galaxy request valid; Samsung cites Kubrick. A German court today said Apple's (AAPL) request to stop Samsung (OTC:SSNLF) from selling the latest version of its Galaxy tablet in the country appeared valid because of its similarity to the iPad. The court still has to provide a final verdict, and to decide whether it has jurisdiction for the whole of the EU. In a U.S. court filing, Samsung argued that the iPad can be traced back to the 1968 film "2001: A Space Odyssey." Yesterday, a Dutch court prevented Samsung units in Holland from selling several smartphone models in much of Europe due to patent infringement.

Applied Materials warning overshadows FQ3 growth. Applied Materials' (NASDAQ:AMAT) FQ3 results beat analyst forecasts as EPS quadrupled to $0.36 and revenue climbed 11% to $2.79B. However, shares tumbled 4.05% post-market after the company cut its FQ4 guidance to below expectations amid slowing PC sales and a weakening economy. Applied Materials also slashed about $1B from its estimate for industry-wide spending on wafer-fabrication equipment for 2011, and said "uncertainties about demand are causing a number of our customers to reassess their investment plans and push out orders."

Gold extends losses after CME increases margins. Gold futures were -2.7% at $1710.10 an ounce midday in Europe after the CME hiked margins 27%, with the metal extending yesterday's plunge of 5.6%. The price is now around $200 below Tuesday's all time high of $1,911.46. The declines on Wednesday began in early trading following a strong durable goods reports, and accelerated quickly as volume spiked. A Citigroup analyst attributed the plunge to profit taking and gold's rally being "too much in too short a time." However, technical charts suggest a medium-term uptrend for gold is intact, a Reuters analyst said.

FCC requests further information about AT&T/T-Mobile deal. The FCC has asked AT&T (NYSE:T) for more details about why it needs to acquire T-Mobile (OTCQX:DTEGY) following the accidental disclosure earlier this month that the U.S. carrier could widen its high-speed wireless service to 97% of the country for $3.8B, less than one-tenth of the $39B it would pay for T-Mobile. AT&T's central argument to regulators about why they should approve the deal is that it would allow the company to increase its coverage to the vast majority of Americans.

Government mulls massive mortgage refinancing. To spark the housing market back into life and stimulate the economy, the White House is reportedly considering a proposal to allow millions of homeowners with government-backed mortgages to refinance their loans at today’s lower interest rates of about 4%. The move could save borrowers an estimated $85B a year and it wouldn't need congressional approval. However, it could face opposition from regulators and investors in bonds tied to the mortgages. The report comes as data from RealtyTrac shows that Q2 sales of bank-owned U.S. homes rose 6.5% from Q1.

Halliburton to recruit 11,000 in 2011. While major corporations slash thousands of employees, Halliburton (NYSE:HAL) is bringing a bit of cheer with plans to hire 11,000 workers in North America in 2011. Much of the recruitment will be at the company's Bakken shale in North Dakota, one of the largest oil finds in U.S. history. And Halliburton is hiring across the board - from MBAs to unskilled workers.

Barclays CEO: Banks far more secure than in 2008. Barclays (NYSE:BCS) CEO Robert Diamond yesterday told CNBC that large U.S. and U.K. banks "are much safer and much sounder" than before the financial crisis in 2008. Barclays, for example, now has cash on the balance sheet of £140B-£150B every day vs. £25B-£50B at the end of 2007. As for Europe, much of the company's exposure is via a retail bank in Spain and Italy, while it has none to Greece.

Diageo upbeat about future as profit rises. Diageo's (NYSE:DEO) FY EPS excluding items rose 16% to £0.836 ($1.37), beating forecasts of £0.789, with strong growth in emerging markets but continuing difficulties in Europe. Despite the fragile economy, the world's largest spirits group said it's targeting underlying sales growth of 6%, improving margins by two percentage points to 31% in the next three years, and double-digit percentage earnings growth in the medium term. Diageo's upbeat outlook followed a profit warning from Heineken (HINKY.PK) yesterday, which hit shares in its U.S. peers. Diageo +4.8% premarket.

Watchdog probes SEC officials over destruction of records. The SEC's Inspector General is reportedly looking at whether officials misled the National Archives & Records Administration last year by saying the regulator was "not aware" of the destruction of preliminary investigations. The probe is part of a wider investigation into whether the SEC improperly destroyed documents relating to over 9,000 "matters under inquiry," or MUIs.

SEC requests information about fracking. The SEC is asking oil and gas companies to provide information about the controversial fracking process used to obtain natural gas trapped in rocks. The request includes details about the chemicals involved and efforts to minimize the environmental impact. While companies are spending billions of dollars on shales where fracking is employed, the procedure has come under fire on concerns that natural gas and toxins may contaminate air and water. The SEC's interest is to ensure full disclosure about the risks a company may face related to lawsuits, compliance costs and other uncertainties.

Google to pay $500M in drug ads deal. Google (NASDAQ:GOOG) has agreed to pay $500M to settle a criminal investigation into ads from Canadian pharmacies that led to the illegal import of prescription drugs into the U.S., the Justice Department said yesterday. In May, Google disclosed it had set aside the money for a possible deal over its advertising practices, but didn't say what it was for.

Today's Markets:
In Asia, Japan +1.5% to 8772. Hong Kong +1.5% to 19752. China +2.9% to 2615. India -0.8% to 16146.
In Europe, at midday, London +0.1%. Paris +0.9%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.3%. S&P +0.2%. Nasdaq -0.3%. Crude +0.7% to $85.77. Gold -2.7% to $1710.10.

Thursday's economic calendar:
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
11:00 KC Fed Manufacturing
1:00 PM Results of $29B, 7-Year Bond Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Earnings Results: Companies that beat EPS expectations last night and today include Applied Materials (AMAT shares -4.05%), TiVo (TIVO +4.8%), Collective Brands (PSS +33.3%), Guess? (GES -4.5%). Full real-time earnings coverage here.

Notable earnings before Thursday's open: HRL, PDCO, SDRL, SIG

Notable earnings after Thursday's close: ARUN, OVTI, P

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