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.

H-P reassesses PC strategy. H-P (NYSE:HPQ) is reconsidering its plan to spin off or sell its PC arm, as new analyses show that the costs could outweigh the benefits, The Wall Street Journal reports. In particular, the contraction in H-P's size could weaken its buying power with component makers, complicate its supply chain, and decrease profit margins on some products such as servers. However, some H-P executives still favor a spinoff, while new CEO Meg Whitman was part of the board decision to restructure the company. Whitman has said she would like to make a decision by the end of the month.

Encouraging signs in eurozone. The eurozone might be gripped by an existential debt crisis, but that didn't stop industrial production in August rising 1.2% month-on-month, confounding expectations of a 0.8% fall. Growth was driven by Italy of all places, where output increased 4.3%, while Portugal and Ireland also showed strong growth. However, Germany, usually the engine of the currency bloc, fell 1%.

Slovakia expected to OK rescue fund at second attempt. Slovakia's ruling coalition parties were due to hold talks today with the opposition about reaching a quick agreement on expanding the eurozone's EFSF rescue fund after Parliament blocked ratification yesterday in a vote that also toppled the government. A second vote, which is likely to pass, could be held tomorrow.

Economic weakness hits Alcoa. Alcoa (NYSE:AA) got the Q3 earnings season off to a poor start after reporting that EPS more than doubled to $0.15 but came in way below reduced expectations of $0.23. Shares tumbled 3.6% premarket. While revenue jumped 21% to $6.4B and beat forecasts, the aluminum maker was hit by the weakening economy, which helped cause a 12% fall in the price of the metal. Alcoa also said it didn't experience the usual September pickup in Europe, due to worries about the debt crisis, although this was being offset by demand in China.

Chevron forecasts that Q3 will beat consensus. Chevron (NYSE:CVX) expects Q3 results to beat analyst forecasts and come in at the same level as Q2, when it reported EPS of $3.85. Chevron estimates that earnings from refining and marketing increased in Q3, largely due to an asset sale gain, but dropped at its oil exploration and production business following a significant fall in output

Blackberry disruptions continue for a third day. Matters continue to deteriorate for RIM (RIMM) as disruptions to its Blackberry service extend into a third day and spread further into Asia, having mainly affected Europe and Latin America until now. The service in North America, though, is apparently still working well. The problems will only strengthen the cause of activist investor Jaguar Financial as it pushes for an executive overhaul or some sort of sale of RIM. Jaguar said yesterday it has the support of investors owning 8% of the company's stock.

Samsung looks to bypass EU Galaxy ban. Samsung (OTC:SSNLF) says it will soon release amended versions of three Galaxy smartphones to bypass temporary sales bans in some European nations on handsets that violated an Apple (NASDAQ:AAPL) patent. Samsung's announcement comes as it awaits a ruling in Australia, due tomorrow, over Apple's request to prohibit sales of the Korean firm's Galaxy Tab 10.1 tablet in the country. The battle between the companies now involves 20 cases in 10 countries.

Bain set to buy Skylark for $3.4B. Private-equity firm Bain Capital is in final negotiations to buy Japanese restaurant chain Skylark from Nomura (NYSE:NMR) for up to ¥260B ($3.4B), including debt, a source says. A deal could be sealed this month and would be one of the largest purchases in Japan by a foreign investment firm since the 2008 financial crisis.

Senate passes yuan bill. China appeared to attempt to downplay fears of retaliation after the Senate yesterday passed a bill that calls for new duties on goods from China and other countries that are perceived to manipulate their currencies. Although China's foreign ministry criticized the vote and the yuan initially fell versus the dollar, it recovered when government-controlled banks sold the greenback. The Senate measure anyway faces an uphill battle, as House Republican leaders and President Obama oppose it

Obama's jobs bill falls in the Senate. As expected, the Senate late yesterday blocked consideration of President Obama's $447B jobs plan, with the chamber voting 50-49 in favor of advancing the package, well short of the 60 needed to overcome procedural hurdles. Notably, two Democrats facing re-election in conservative states voted against the bill. Their party's leadership will now try to pass components of the plan individually.

TE Connectivity to join S&P 500. TE Connectivity (NYSE:TEL) will replace Cephalon (NASDAQ:CEPH) in the S&P 500 index after the close of trading on Friday. Cephalon is being acquired by Teva (NYSE:TEVA) in a deal that is expected to be completed within the next few days.

Today's Markets:
In Asia, Japan -0.4% to 8738.9. Hong Kong +1.0% to 18329. China +3.0% to 2420. India +2.5% to 16958.
In Europe, at midday, London +0.5%. Paris +1.6%. Frankfurt +1.4%.
Futures at 7:00: Dow +0.9%. S&P +1%. Nasdaq +1%. Crude +0.5% to $86.21. Gold +1.4% to $1685.00.

Wednesday's economic calendar:
7:00 MBA Mortgage Applications
9:00 Ceridian-UCLA Pulse of Commerce Index
1:00 PM Results of $21B, 10-Year Note Auction
1:30 PM Fed's Plosser: Economic Outlook
2:15 PM Fed's Pianalto: 'Leadership in Challenging Times'
2:00 PM FOMC minutes

Earnings Results: Companies that beat EPS expectations last night and today include Pepsico (NYSE:PEP), Neustar (NYSE:NSR). Those in line include Host Hotels & Resorts (NYSE:HST). Those that missed forecasts include Alcoa (AA). Full real-time earnings coverage here.

Notable earnings before Wednesday's open: ASML, HST, INFY, PEP, PGR

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