Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:53 AM EST
S&P 500: -0.20; 1,446.80
NASDAQ 100: +4.00; 1,815.50
Dow: -1.00; 12,566.00
NIKKEI 225: +0.24%; 17,521.96 (+41.35)
HANG SENG: +0.37%; 19,765.85 (+73.21)
S&P/ASX 200: +0.65%; 5,990.70 (+38.40)
BSE SENSEX 30: -1.22%; 13,124.32 (-161.61)
FTSE 100: +0.21%; 6,353.00 (+13.60)
CAC 40: -0.20%; 5,623.65 (-11.10)
XETRA-DAX: -0.04%; 6,896.63 (-2.43)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +1.06%; $62.94 (+$0.66)
Gold: +0.46%; $660.30 (+$3.00)
Natural Gas: +0.63%; $7.32 (+$0.05)
Silver: +0.97%; $13.355 (+$0.128)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Alcatel-Lucent Inks $6 Billion Networking Deal With Verizon Wireless
Verizon Wireless and Alcatel-Lucent announced the signing of a $6 billion dollar deal Monday morning. The deal, which is for three years, calls for Alcatel-Lucent to supply a variety of networking equipment and services to support Verizon Wireless' network expansion, allowing Verizon Wireless to increase the coverage and capacity of its broadband network as well as introduce new services, including mobile video and VoIP. Shares of Alcatel-Lucent shares are trading higher in pre-market action by $0.58, or 5.03%, to $12.11 on the news.
Sources: Press Release, AP, MarketWatch
Commentary: Alcatel-Lucent: “Revenues In Free Fall” • Cramer's Take on ALU
Stocks/ETFs to watch: Verizon (VZ), Alcatel-Lucent (ALU), Vodafone (VOD)
Tiffany: Q4 Earnings In-line, Shares Trade Higher on Q1 Outlook
Tiffany & Co reported Q4 earnings in-line with analysts' expectations. Comments by CEO Michael J. Kowalski that the firm is off to a good start in Q1 and tracking ahead of expectations, sent its shares higher in pre-market trading. Q4 net income totaled $140.5 million, or $1.02/share, compared to $140.3m ($0.97/share) in its prior Q4. Revenues rose 15% to $986m, beating analysts' average estimate of $979m. Shares of Tiffany were trading up 1.32% to $46.10 in pre-market activity, at the time of publishing. If it trades this high during normal trading, it would represent a new 52-week high, approaching its highest levels in more than three years.
Sources: Press release, Associated Press, MarketWatch
Commentary: Five Outperformers That Break the Basic Laws of Economics • Tiffany: A Little Too Luxurious Now • Tiffany: Trian Frund Discloses 5.5% Stake, Believes It's Undervalued
Stocks/ETFs to watch: Tiffany & Co (TIF)
Hedge Fund Threatens Legal Action Unless ABN AMRO Listens to All Offers
Dutch daily Financieele Dagblad reported Monday morning that British hedge fund TCI has threatened to take legal action against ABN AMRO, which is currently in merger talks with Barclays, unless the Dutch banking giant considers other offers for its business. TCI (The Children's Investment Fund Management) urged ABN AMRO in February to either break up or sell itself, triggering its talks with Barclays; the funds owns about 2% of ABN. TCI insists ABN should consider all options before agreeing to the Barclays deal; Barclays and ABN have reportedly agreed to exclusive talks for 30 days. The proposition calls for a combined bank that would be listed on the London Stock Exchange and headquartered in Amsterdam; the CEOs of both companies would co-head the new bank. The merger would create the world's #5 bank with a market value of over £80 billion. Separately, Toscafund declined to comment on rumors it would accept a quick sale of its more than 1% ABN holding to Barclays.
Sources: Reuters, AFX News
Commentary: Memo to Barclays: ABN Amro's US Banks Are a Mixed Bag • Barclays To Acquire ABN : Long-term Investor Horizon Required • The Long Case for Barclays
Stocks/ETFs to watch: ABN Amro Holding N.V. (ABN), Barclays PLC (BCS). Competitors: HSBC Holdings plc ADR (HBC), Deutsche Bank AG (DB), UBS AG (UBS), Citigroup Inc. (C)
IBM Develops Chip to Break Through Bandwidth Bottleneck
IBM scientists are expected to present a prototype optical receiver chipset today at the 2007 Optical Fiber Conference in Anaheim, California. It is said to be at least 8x faster at 160 gigabits of data/second, than currently available optical components. That's fast enough to download a high definition feature-length film in one second, versus at least 30 minutes using the fastest available technology today. A report by The Wall Street Journal cites a research director who says the research was funded by the Defense Advanced Research Projects Agency and expects IBM will have commercial products available within 18 - 30 months. A researcher cited in coverage by the San Francisco Chronicle estimates IBM's 160-Gbps chip could sell for between $500 - $600, or about the same cost as a 10-Gbps transceiver today.
Sources: Market Wire press release, The Wall Street Journal, San Francisco Chronicle
Commentary: IBM To Announce Major Challenge To Intel-Dominant DRAM Technology • Intel, IBM Take Moore's Law to the Next Level • IBM Keeps the Drum Beating for SOA
Stocks/ETFs to watch: International Business Machines (IBM). ETFs: Internet Architecture HOLDRs (IAH), iShares Goldman Sachs Technology (IGM), Vanguard Information Technology (VGT)
Morgan Stanley to Spin Off Discover in Q3
In a long-awaited announcement, Morgan Stanley said Friday it would spin off its Discover credit card operation. Its S-1 filing didn't say how many "generally tax-free" Discover shares each Morgan Stanley shareholder would get. It is also unclear how much money Morgan Stanley stands to raise from the IPO. The spin off will allow both companies' management to focus on their respective firm-wide strategic priorities and enhance their competitive positions, Discover said. Discover earned $1 billion in 2006 on revenue of $5.1 billion; receivables were almost $50 billion. It is the fourth biggest credit card in the U.S., with 50 million cardholders. Rival Visa International also plans on a 2007 IPO, and MasterCard Inc. (MA) completed a hugely successful IPO in June 2006. The spin off is slated for Q3, and shares will trade under the ticker DFS.
Sources: Wall Street Journal, MarketWatch
Commentary: Cashing in on Credit Card IPOs: Morgan Stanley to Spin-off Discover • Closing Out My Mastercard Position: I'd Rather Be Early Than Worried • Morgan Stanley : A Solid Long Term Opportunity
Stocks/ETFs to watch: Morgan Stanley (MS), MasterCard Inc. (MA), Discover (DFS)
Conference call transcript: Morgan Stanley F1Q07 (Qtr End 2/28/07)
Beckman Coulter to Acquire Biosite Inc. for $1.55 Billion
Beckman Coulter will enhance its presence in the diagnostic test market by acquiring Biosite Inc. for $1.55 billion. Beckman is purchasing all Biosite's stock in a cash tender offer of $85 per share, a 53% premium over Biosite's Friday close of $55.38. San Diego-based Biosite manufactures specialized immunoassay tests that detect conditions like cancer and congestive heart failure. The merger will thus give Beckman, which sells chemical and automated biomedical test kits, a strong foothold in cardiac diagnostics. Beckman's global presence should broaden sales of Biosite's tests beyond American shores; at present, 85% of Biosite's sales are in the U.S. The companies have already worked together on B-type Natriuretic Peptide, or BNP, a test for heart failure that runs on an automated platform. Biosite will also give Beckman a pipeline of new tests, including several for acute coronary syndrome, sepsis, and abdominal pain. Biosite's net income fell 26% in 2006 to about $40 million ($2.20/share) on revenue of $308.6 million. Beckman had revenue of $2.53 billion. The deal should close in Q2 2007.
Sources: Press release, Reuters, Wall Street Journal
Commentary: The Great Independent Research Debate --- A Buy Sider Weighs In
Stocks/ETFs to watch: Beckman Coulter, Inc. (BEC), Biosite Inc. (BSTE). Competitors: Abbott Laboratories (ABT), Dade Behring Holdings Inc. (DADE), Thermo Fisher Scientific, Inc. (TMO). ETFs: Rydex S&P Smallcap 600 Pure Growth (RZG)
Conference call transcripts: Biosite Q4 2006
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Asian Headlines (via Bloomberg.com)
• Asian Resources Stocks Gain on Oil Price Rise, Cnooc Upgrade; Posco Falls Asian resources stocks rose, led by BHP Billiton (BHP) after oil prices climbed to a three-month high and Deutsche Bank AG increased its rating on Cnooc Ltd (CEO).
• Macquarie-Led Group Makes Highest Alinta Bid at $5.9 Billion, People Say A Macquarie Bank Ltd.-led group bid more than A$7.4 billion ($5.9 billion) in cash and stock for Alinta Ltd., Australia's biggest owner of gas pipelines and power grids, three people with knowledge of the offer said.
• Citigroup Was Concerned About Insider Trading Probe, Federal Court Told Citigroup Inc. (C) was concerned about a possible insider-trading probe after the bank traded shares of Patrick Corp., Australia's federal court was told today.
• Garuda Indonesia Plans to Buy 25 New Boeing 737 Planes to Expand Network PT Garuda Indonesia, the nation's biggest carrier, plans to buy 25 Boeing Co. 737-800 planes valued at as much as $1.87 billion, to replace aging planes.
European Headlines (via Bloomberg.com)
• European Commodity Stocks Rise, Led by Shell; Volkswagen, Barclays Decline European commodity stocks rose, led by Royal Dutch Shell Plc (RDS.A), Total SA (TOT) and BHP Billiton (BHP), after the price of oil and metals gained. Benchmarks in the region were little changed.
• Enel, Acciona Plan Endesa Takeover Offer to Trump E.ON's $56.2 Billion Bid Enel SpA (EN), Italy's biggest utility, and Acciona SA said they will offer at least 41 euros ($54.37) a share for the stock they don't already own of Spanish power company Endesa SA (ELE), trumping a rival bid by E.ON AG (EON).
• Porsche Raises Stake in Volkswagen to 31 Percent, Triggering Takeover Bid Porsche AG boosted its stake in Volkswagen AG (OTCQX:VLKAY) to 30.9 percent and said it plans to defend Europe's largest carmaker against possible influence from hedge funds and buyout firms.
• Wimpey, Taylor Woodrow to Merge, Creating $9.8 Billion U.K. Homebuilder George Wimpey Plc and Taylor Woodrow Plc agreed to merge to create Britain's biggest homebuilder as a slumping U.S. property market erodes earnings. Shares of both companies surged to a record.
• Xstrata Agrees to Buy LionOre Mining of Canada for $4 Billion in Cash Xstrata Plc, the world's fifth- largest mining company, agreed to buy Canada's LionOre Mining International Ltd. for $4 billion, increasing nickel production by 36 percent at a time of record-high metal prices.