Wall Street Breakfast: Must-Know News

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 |  Includes: BTUUQ, BX, CTJHF, DRE, EIX, GE, GLD, MACDF, MSFT, MT, NDAQ, NWSA, PKX, QQQ, SPY, USO
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.

Microsoft hits profit forecasts as Windows decline halts. Microsoft's (NASDAQ:MSFT) FQ1 EPS grew 6.1% to $0.68 and met analyst expectations as revenue topped predictions with a 7% increase to $17.37B. Income rose throughout Microsoft's product line-up, including at its Windows division, where strong corporate sales helped end three straight quarters of declines. Shares slipped 0.5% pre-market, although Seeking Alpha author Adam Muller reckons Microsoft is trading at low multiples given its huge cash generation - almost $8B in FQ1 - and "the scope of its opportunities over the next few years."

GE profit meets expectations too. Like Microsoft, GE (NYSE:GE) has reported profit that was in line with forecasts and revenue that exceeded predictions, although while Q3 EPS rose to $0.31 from $0.29, revenue dipped slightly to $35.4B. The conglomerate ended the quarter with a record-high order backlog of $191B and predicted double-digit operating EPS growth for next year.

Merkozy division stalls deal on EU bailout. France and Germany yesterday pledged to forge another definitive eurozone rescue scheme not by an EU summit on Sunday - as originally planned - but by Wednesday. The delay follows an inability to agree on a package by the weekend meeting. The major contention is over how to scale up the €440B rescue fund, with Paris fearing for its AAA credit rating. S&P added to those worries today by warning of a downgrade should the EU slip into recession. Notwithstanding, EU shares rose this morning on hopes of a deal, bringing to mind Peter Pan: "Do you believe in fairies?…If you believe clap your hands."

Gaddafi's death has little impact on oil prices. Reaction in the oil market was muted yesterday following the death of Muammar Gaddafi, as efforts to revive Libyan oil output have been underway for months. Still, getting back to regular production won't be easy, as the government is still in its infancy and infighting could spark a second uprising. "We just think the bigger problem might be the 'game of thrones' between various factions within the rebel ranks," said Barclays Capital analyst Helima Croft.

Groupon cuts IPO to $540M. Groupon has lowered the amount of money it intends to raise in its IPO to a maximum of $540M from an initial plan of $750M. The daily discounts company, which aims to sell 30M shares at $16-$18 each, is due to launch a roadshow next week, when it will attempt to overcome concerns about the weak equity market, management departures, and questions over its accounting and business model. With 633M shares outstanding, the IPO could give Groupon a market cap of $10.76B; valuation estimates have ranged from $25B early this year to as low as $3B-$5B earlier this month.

Murdochs likely to ride out investor fireworks. The Murdoch clan is set to face much investor unrest at the News Corp. (NASDAQ:NWSA) shareholders meeting in LA today due to the phone-hacking scandal, but with the family controlling 40% of voting shares, they are expected to face down calls for a major management and board overhaul. Murdoch bete noir, U.K. parliamentarian Tom Watson, has promised new revelations that "will leave people in no doubt that there will be huge reputational harm to the company in months, possibly years to come."

Nasdaq hackers spied on company directors. A cyber attack last year on Nasdaq (NASDAQ:NDAQ) was more serious than the exchange has let on, Reuters reports, with hackers installing software that enabled them to view confidential documents and the communications of board directors at publicly held companies. However, it's unclear how long Nasdaq's system was compromised before the attack was discovered last October. In February, Nasdaq said there was no evidence the intruders accessed client data.

Blackstone to buy $1.08B property portfolio from Duke. Duke Realty (NYSE:DRE) has agreed to sell a portfolio of 82 suburban office complexes to Blackstone (NYSE:BX) for $1.08B as a continuation of its plan to reduce its investments in such assets. For Blackstone, the acquisition is part of its strategy to increase its real-estate portfolio: the P-E firm has invested over $7B in property this year, and hopes to raise more than $10B for its latest real-estate fund, having already attracted $4B.

Peabody, Arcelor Mittal close in on Macarthur Peabody Energy (BTU) and Arcelor Mittal (NYSE:MT) have received a major boost in their quest to buy Macarthur Coal (OTC:MACDF) after China's Citic Resources (OTC:CTJHF) said it will support the two companies' A$4.9B ($5B) bid for the Australian miner. Citic's 25.2% stake in Macarthur will give Peabody and Arcelor Mittal over 49% of the company; winning over South Korea's POSCO (NYSE:PKX), a holder of 7% in Macarthur, would seal the deal and provide control of the world's biggest producer of pulverized coal at a time of increased demand.

Fiscal bills fall in Senate. Senate Democrats and Republicans continued to block each others' fiscal plans in Congress last night. The chamber voted down a $35B Democrat measure to raise taxes on millionaires, and create or protect 400K public sector jobs, as well as a GOP bill to repeal a 3% corporate withholding tax. However, the parties were able to agree on the appointment of John Bryson as Commerce Secretary with an overwhelming majority of 74-26. Bryson is a former CEO of Californian utility Edison (NYSE:EIX).

Today's Markets:
In Asia, Japan flat at 8679. Hong Kong +0.2% to 18026. China -0.6% to 2317. India -0.9% to 16786.
In Europe, at midday, London +0.6%. Paris +0.8%. Frankfurt +0.4%.
Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq +0.5%. Crude +0.4% to $86.39. Gold +0.8% to $1626.10

Friday's economic calendar:
1:00 PM Fed's Kocherlakota: 'Making Monetary Policy'
1:20 PM Fed's Fisher: Economic Outlook

Earnings Results: Companies that beat EPS expectations last night and today include Capital One Financial (COF, shares +0.5%), Chubb (CB), SanDisk (SNDK +2.3%), Seagate Tech (STX +13%). Those in line include GE (GE +0.4%), Microsoft (MSFT -0.5%), Flextronics (FLEX +0.65%). Those that missed forecasts include Altera (ALTR -0.1%), Schlumberger (SLB -2.35%) Full real-time earnings coverage here.

Notable earnings before Friday's open: APD, DOV, GE, HAR, HON, KCI, KSU, MAN, MCD, SLB, STI, VZ

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