Wall Street Breakfast: Must-Know News

by: Wall Street Breakfast
Wall Street Breakfast
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.

By Yigal Grayeff and the Market Currents team

Eastman Chemical to buy Solutia in $4.7B deal. Eastman Chemical (NYSE:EMN) has agreed to acquire Solutia (NYSE:SOA) for $4.7B, including debt, with the $27.65 a share deal representing a 42% premium to Solutia's close yesterday. Eastman said the purchase is part of its strategy to expand into emerging markets, particularly Asia Pacific, and will "be immediately accretive to earnings."

Ford profit falls, revenues rise. Ford's (NYSE:F) Q4 operating EPS fell by a third to $0.20, although revenue rose 6% to $34.6B and beat expectations.

Starbucks produces another strong brew. Starbucks' (NASDAQ:SBUX) FQ1 EPS climbed 10% to $0.50 and revenue 16% to $3.4B, with earnings beating analyst expectations as the company benefited from growth at its Americas stronghold and smaller Asian operations, and a strong start for sales of products for Green Mountain's (NASDAQ:GMCR) Keurig machines. However, Starbucks' guidance was more conservative than Street estimates due to higher commodity costs, helping to push shares down 2.1% post-market.

Samsung's smartphones help boost profit 17%. Samsung Electronics' (OTC:SSNLF) Q4 net profit rose 17% to KRW4T ($3.57B) as record smartphone sales relieved some of the pressure from the firm's other businesses, which have been hit by plunging demand globally. Despite the strong smartphone numbers, the overall results fell below analyst expectations.

3M indecisive over CEO contract. 3M's (NYSE:MMM) board is split over whether to extend the contract of CEO George Buckley, which expires in a month when he turns 65, or let COO Inge Thulin take over. Buckley "loves his job," a source says, but some directors fear Thulin will quit if the CEO is asked to stay. On an earnings call yesterday, Buckley said the board is still deciding.

Growth may have picked up in Q4. Q4 GDP figures are due out this morning, with economists expecting increased growth of 3% vs. 1.8% in Q3, boosted by stronger consumer spending and companies rebuilding inventories. If correct, 3% would be the fastest quarterly expansion since mid-2010, but it wouldn't be enough to make up for the growth "lost" during the recession.

Execs at bankrupt firms earn millions. A Wall Street Journal analysis shows how executives at large companies going through bankruptcy receive millions of dollars in compensation while slashing tens of thousands of jobs. At 21 firms, the CEOs received a combined total of over $350M, with the median amount $8.7M. However, lawyer Richard Levin argues that the firms "need to attract the best people and compensate them for the tough work they have to perform."

California snubs $15B mortgage deal. California has turned down a reported $15B offer from five lenders over problematic mortgage practices, as the proposals did not contain "transparency, real relief for distressed homeowners and strong enforcement mechanisms." Other states involved in negotiations with the banks might be unhappy that California was offered a guaranteed minimum while they weren't. The lenders involved are Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC) and Ally Financial.

Honda forecasts sales of 4M for first time. Honda (NYSE:HMC) President Takanobu Ito has predicted that the automaker's FY 2013 business results will rebound to levels achieved before the Lehman collapse as volume surpasses 4M vehicles for the first time. The growth will be led by sales of a new Accord model and Civics in North America.

Wells Fargo eyes $11B BNP debt portfolio. BNP Paribas (OTC:BNOBF) is reportedly attempting to sell up to $11B of loans to oil and gas companies as it looks to bulk up its capital buffers. BNP has received interest from Wells Fargo (WFC) and other U.S. banks, and has been getting offers with a discount of under 5%. The debt has also attracted potential Canadian buyers.

Japan retail sales grow but deflation threatens. Japan’s retail sales grew at the fastest pace in more than a year, rising 2.5% in December vs. forecasts of +2.1%. A resurgence in household demand could be temporary, though, as recent declines in exports and production may weaken employment and incomes. In addition, core CPI fell an annualized 0.1% in December - the third straight fall - rekindling fears of sustained deflation.

Today's Markets:
In Asia, Japan -0.1% to 8841. Hong Kong +0.3% to 20502. China closed. India flat at 17234.
In Europe, at midday, London -0.2%. Paris -0.4%. Frankfurt +0.3%.
Futures at 7:00: Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude +0.4% to $100.14. Gold -0.25% to $1722.40.

Friday's economic calendar:
8:30 GDP Q4
9:55 Reuters/UofM Consumer Sentiment

Earnings Results: Companies that beat EPS expectations last night and today include Celestica (NYSE:CLS), Delphi Automotive (NYSE:DLPH), Freescale Semiconductor (NYSE:FSL), Hub Group (NASDAQ:HUBG), Motorola Mobility (NYSE:MMI), Starbucks (SBUX), Timken Company (NYSE:TKR), D.R. Horton (NYSE:DHI), Altria (NYSE:MO), Procter & Gamble (NYSE:PG).

Those in line include Chubb (NYSE:CB), Juniper Networks (NYSE:JNPR), American Electric Power Company (NYSE:AEP).

Those that missed forecasts include Amgen (NASDAQ:AMGN), Eastman Chemical (EMN), Robert Half International (NYSE:RHI), Sunoco Logistics Partners (NYSE:SXL), Ford (F).

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

Notable earnings before Friday's open: AEP, ARLP, CVX, D, DHI, F, HON, LM, MO, NEE, PG, TROW

Notable earnings after Friday's close: SCCO

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