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.

"Gangbusters" Google keeps marching on. Shrugging aside fears of a global slowdown, Google (NASDAQ:GOOG) once again slayed expectations in Q3 2011 as EPS jumped 27% to $9.72 and sales surged 33% to $9.7B. With doubts about various elements of Google's strategy, whether these be its Motorola (NYSE:MMI) acquisition, its rapidly rising costs, or Google+ - which this week received an unintentionally public pasting from a company engineer - BGC Partners analyst Colin Gillis summed up the attitude to Google pretty well. "I don’t love a lot of the things that Google’s doing," Gillis said. "(But) when they bust out revenues above expectations, all the sins are forgiven." Amen says the market as shares rise 7% premarket.

iPhone 4S sales forecast to hit 4M this weekend. As is their wont, Apple (NASDAQ:AAPL) fans have been queuing round the block in cities across the globe to buy the iPhone 4S, which today goes on sale in stores in several major countries. After record pre-orders, forecasters reckon Apple could sell 4M "iPhones 4Steve" this weekend alone. However, the roll out of Apple's (AAPL) iCloud service and iOS 5 software has been less successful, with glitches leading to problems accessing email and long installation delays. Mind, it's nowhere near as bad as RIM's (RIMM) Blackberry problems, which were finally solved yesterday.

AT&T/T-Mobile deal looking shaky as FCC plays the skeptic. AT&T (NYSE:T) has provided "almost nothing" to support its claim that its proposed $39B acquisition of T-Mobile (OTCQX:DTEGY) would create 55,000-96,000 jobs, the FCC has written in a letter to Ma Bell. The comment signals further skepticism about the merger at the FCC, which has to clear the deal for it to go through and whose chairman has already expressed "serious concerns" about the effects on competition. AT&T has been ordered to provide more details by Halloween, although any trick or treating of the transaction probably won't come for a while yet.

Fitch wields knife to the banks. Fitch went on a downgrade spree yesterday, cutting the ratings of UBS (NYSE:UBS), RBS (NYSE:RBS) and Lloyds (NYSE:LYG), and putting several other major U.S. and European institutions on credit watch negative. These include Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS). Fitch cited exposure to the European debt crisis, concern about the business model of pure-play investment banks, market volatility, and the impact of new regulations for its actions.

SAP profit charges higher. As with Google (GOOG), SAP (NYSE:SAP) was able to brush off the world's economic problems in Q3 2011 as underlying profit jumped 23% to €1.13B ($1.5B) and sales at its key software and services business rose 16% to €2.69B. "SAP's pipeline remains very strong and companies continue to invest in IT," the world's biggest maker of corporate software said. Still, the economic uncertainty is having some effect, so SAP has kept its 2011 outlook unchanged.

G20 finance chiefs meet as S&P downgrades Spain. G20 finance ministers and major central bank heads were set to meet in Paris today, when the maelstrom of the EU debt crisis was set to dominate the conversation. Spain is once again the center of attention after S&P downgraded the country's long-term debt to "AA-" from "AA" late yesterday following a similar move from Fitch last week. While the G20 communique is unlikely to contain much substance - as usual - sparks may fly over the EU's dithering reaction to the crisis, not to mention the U.S.-China currency spat.

Hulu auction called off. Like a misfiring midseason show, Hulu's auction has been cancelled, with the New York Times reporting that most of the bids didn't exceed the $2B the owners thought they could get in an IPO last year. Officially, the shareholders - which include News Corp. (NASDAQ:NWS), Disney (NYSE:DIS) and Comcast (NASDAQ:CMCSA) - have decided to keep the online video site because of its "unique and compelling strategic value. This probably includes the more than 1M subscribers to its Hulu Plus premium service.

Mixed inflation gives China little room for maneuver. China's September CPI fell to an annualized +6.1% from +6.2% in August but it rose to +0.5% from 0.3% on a monthly basis. The figures indicate that China's central bank has little room to ease policy any time soon despite the country showing increasing strains from the global downturn. This is especially the case given that food prices, which affect social harmony, remained stuck at an annualized +13.4%.

Samsung-Apple battle see-saws. It's looking good for Samsung (OTC:SSNLF) in one of its U.S. IP cases with Apple (AAPL) after a judge said that while Galaxy tablets do infringe iPad patents, Apple has a problem proving the validity of those patents. Apple wants an order prohibiting the sale of some Galaxy products in the U.S. In Australia, a court ruled in favor of Apple and granted an injunction that prevented Samsung from selling the Galaxy Tab 10.1 in the country as long as it uses the features Apple says infringe its patents.

IBM data: men should prepare for expensive Christmas. In a world where everything seems to be highly correlated, here's a new one: IBM's (NYSE:IBM) retail analytics practice has uncovered a strong connection between the VIX and jewelry sales. Big swings in the stock market, along with corresponding increases in the VIX, appear to be highly correlated with increases in jewelry sales two months later - and recent data suggests sales will be strong this holiday season. Those worth watching include Zale (NYSE:ZLC), Signet (NYSE:SIG), Tiffany (NYSE:TIF) and Harry Winston Diamond (HWD).

Today's Markets:
In Asia, Japan -0.8% to 8748. Hong Kong -1.4% to 18502. China -0.3% to 2431. India +1.2% to 17083.
In Europe, at midday, London +0.8%. Paris +0.8%. Frankfurt +0.6%.
Futures at 7:00: Dow +0.7%. S&P +0.7%. Nasdaq +0.7%. Crude +1.35% to $85.37. Gold +0.4% to $1675.70.

Friday's economic calendar:
8:30 Retail Sales
8:30 Import/Export Prices
9:55 Reuters/UofM Consumer Sentiment
10:00 Business Inventories

Earnings Results: Companies that beat EPS expectations last night and today include Google (GOOG), Mattel (NASDAQ:MAT). Those in line include JB Hunt Transport Services (NASDAQ:JBHT). Those that missed forecasts include Microchip (NASDAQ:MCHP). Full real-time earnings coverage here.

Notable earnings before Friday's open: MAT

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