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.

Zynga poised to debut as IPO raises $1B. Zynga (NASDAQ:ZNGA) is set to debut on the Nasdaq today after pricing its IPO at the top end of its range at $10 a share, giving the company a market cap of $8.9B. The IPO is raising $1B for Zynga's insiders, although not for the firm itself. With Zynga relying on Facebook for 95% of its $1B annual revenue, the IPO provides an opportunity to invest in the latter's growth and a tea-leaf reading on its own potential offering.

EFSF draft warns of euro breakup. The eurozone's EFSF bailout fund is debating whether the final version of its investor prospectus should include "risk factors;" the most recent draft warns that a country might leave the eurozone, or that the euro might cease to be a "lawful currency" altogether. Just to put off investors even more, Italy and Spain are due to contribute 32% to the fund. The debt can also be used "for repos with commercial banks to support the EFSF's liquidity management" - i.e., it can be borrowed against over and over.

Congress reaches $1T deal to avoid shutdown. Congress is expected to vote today on a tentative $1T deal that was reached yesterday, and would fund several federal agencies through the end of September next year and avoid a government shutdown this weekend. Separately, legislators continue to work on an agreement to extend the payroll tax cut and long-term unemployment benefits.

Fitch wields knife to banks. Fitch has downgraded the credit ratings of eight major Western banks to A from either A+ or AA-, including Bank of America (BAC), Barclays (BCS), Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS). Fitch said it made the decision because the banks' business models are "particularly sensitive" to economic and regulatory challenges.

RIM plunges on dismal forecast. The misery continues for RIM (RIMM), whose shares sunk 7.6% postmarket after it gave FQ4 EPS, revenue and BlackBerry shipment forecasts below analyst expectations. Adjusted FQ3 EPS fell 27% to $1.27 as revenue slipped 5.5% to $5.17B, and RIM took a big charge on its woeful PlayBook tablet launch. One bright spot was a 35% lift in RIM's subscription base, a sign that it's still attracting new customers for its core product, especially in emerging markets.

Amgen CEO Kevin Sharer to step down. Amgen (NASDAQ:AMGN) CEO Kevin Sharer will retire in May and be replaced by company President and COO Robert Bradway. Annual revenue at the biotech has risen to $16B from $3.6B in 2000, when Sharer took over, but the share price is 4.9% lower. RBC Capital analyst Michael Yee says the new CEO will need to "reinvigorate a focus of innovation for new products and a focus on cutting expenses." Are both those possible?

United Rentals to buy RSC in $4.2B deal. In a transction that will create a leader in the North American equipment rental industry, United Rentals (NYSE:URI) is to acquire RSC Holdings (NYSE:RRR-OLD) in a cash-and-stock deal for a total enterprise value of $4.2B, including $2.3B in net debt. The $18 a share price represents a 58% premium to RSC's closing price of $11.37 yesterday.

Sony confident ahead of Vita launch. The handheld PlayStation Vita is due to hit stores in Japan tomorrow in Sony's (NYSE:SNE) biggest product launch since the PlayStation 3 about five years ago. A Sony executive confirmed pre-launch orders have exceeded estimates, but how the Vita will hold up against the popularity of casual iPhone and Android games is a major question.

Tame inflation is forecast. November CPI data is due out this morning, with falling gasoline prices and large discounting by retailers in the run-up to Christmas expected to have kept inflation in check. Economists predict that CPI climbed a monthly 0.1%, or an annual 3.5%, after falling 0.1% in October. Core CPI is forecast at +0.1%, the same as in the prior month.

Russia to join WTO today. After 18 years of negotiations, Russia is due to join the WTO today, a move economists estimate will add 3% to its economy in the medium-term and 11% in the long run.

Lehman sues to stop $1.33B Archstone stake sale. Lehman is suing Bank of America (NYSE:BAC) and Barclays (NYSE:BCS) for breach of contract and is seeking an injunction preventing them from selling a 26.5% stake in apartment company Archstone to rival Equity Residential (NYSE:EQR) for $1.33B. Lehman, which owns 47% of Archstone, wants to gain control of the firm so it can divest it for at least $6B.

EA to become EA. Electronic Arts (ERTS) will change its Nasdaq ticker to "EA," effective from Tuesday morning.

Today's Markets:
In Asia, Japan +0.3% to 8402. Hong Kong +1.4% to 18285. China +2.0% to 2225. India -2.2% to 15491.
In Europe, at midday, London +0.5%. Paris -0.1%. Frankfurt -0.1%.
Futures at 7:00: Dow +0.4%. S&P +0.5%. Nasdaq +0.5%. Crude -0.2% to $93.68. Gold +1.05% to $1593.70.

Friday's economic calendar:
8:30 Consumer Price Index
8:30 Real Earnings
9:30 Hearing: "The Euro Crisis and the U.S. Economy" (Dudley)
12:00 PM Fed's Fisher: Economic Outlook
4:15 PM Fed's Evans: "Econometric Tools for Policy Making" (.pdf)

Earnings Results: Companies that beat EPS expectations last night and today include Accenture (NYSE:ACN), Adobe (NASDAQ:ADBE), Research In Motion (RIMM).

For full real-time earnings coverage, please click here.

Notable earnings before Friday's open: DRI

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