Wall Street Breakfast: Must-Know News

Must-Know News for Thursday

• Asian markets closed mixed on Thursday: Nikkei +2.06%, Hang Seng -2.29%, Shanghai +1.42%, Bombay Sensex -2.18%.

  European markets moved sharply higher Thursday morning: FTSE: +2.88%. CAC: +4.12%. DAX: +4.80%.

  U.S. futures: DJIA +0.22%, S&P 500 +0.45%, Nasdaq +0.80%.

• Rogue trader costs SocGen big; CEO steps down. Societe Generale (SCGLY.PK) said it is posting a €4.9 billion ($7.16 billion) loss due to an "exceptional" case of trader fraud. It is also taking an additional €2.05 billion writedown of subprime-related assets. CEO Daniel Bouton has resigned.
• Nintendo's profits almost double. The strong performance of the Wii console has resulted in a near-doubling of Nintendo's (NTDOY.PK) profit for the first nine months of the fiscal year to 258.93 billion yen ($2.43 billion) from 131.92 billion yen. Sales were up 84.7% to 1.316 trillion yen ($12.35 billion). The company raised its full-year sales forecast to 1.63 trillion yen ($15.29 billion) from 1.55 trillion yen.
• Delta posts loss; Southwest turns profit on fuel hedges. Delta (DAL) reported a Q4 net loss of $70 million ($0.18/share) due to fuel costs. Operating revenue was up 10% to $4.7 billion. Southwest (LUV) posted a 95% increase in net income to $11 million ($0.15/share) on a 9.5% revenue gain to $2.49 billion.
• Capital One reports 42% decline in profit. Capital One Financial (COF) posted Q4 profit of $226.6 million ($0.60/share), down from $390.7 million ($1.14) a year ago. Results were in line with analyst expectations and the company's warning on January 10. Shares rose 11%.
• Netflix beats; shares fall AH on subscriber concerns. Netflix (NFLX) reported Q4 net income of $15.8 million ($0.24/share), up from $14.9 million ($0.21) a year ago. Revenue was up 9% to $302.4 million. The company gained 451,000 subscribers, shy of the 472,000 forecast by analysts. After closing up 6.5%, shares fell over 2% in AH trading.
• Sallie Mae posts big loss. Sallie Mae (SLM) reported a $1.6 billion Q4 loss versus an $18 million gain last year. The loss was exacerbated by a $1.5 billion writedown and a $575 million loan-loss provision.
• Motorola forecasts Q1 loss. The handset company (MOT) said skidding cellphone sales will lead to a loss in Q1 and stated it cannot predict when it will be able to reverse its loss of market share. The grim outlook sent shares down 18.75%.
• Toyota hasn't outsold GM just yet. Toyota (TM) sold 9.366 million vehicles in 2007, about 3,000 fewer than General Motors (GM).
• MBIA and Ambac subpoenaed by state of Massachusetts. The securities regulator of Massachusetts has demanded information from the bond insurers (MBI), (ABK) concerning their CDO exposure.
• Siemens reports Q1 earnings beat on one-time sale. The conglomerate (SI) posted Q1 net income of €6.48 billion, up from €788 million a year ago and ahead of analyst expectations of €5.37 billion. The November sale of the VDO auto-electronics unit boosted profit by €5.4 billion.
• Freeport-McMoRan reports earnings drop due to copper prices. Freeport-McMoRan Copper & Gold (FCX) said Q4 earnings fell 3% to $414 million ($1.05/share), despite a surge in sales to $4.2 billion from $1.6 billion, because of the decline in copper prices at the end of the quarter. Shares fell 5.18%.
• Starbucks tests $1 cup of coffee; shares rise. Starbucks (SBUX) shares gained 7.6% Wednesday after the company announced it will beta-test $1 cups of drip coffee with free refills.
• Wireless spectrum auction begins Thursday. AT&T (T), Verizon Wireless (VZ) and Google (GOOG) are expected to bid in an FCC auction for radio-airwave licenses -- most of which will have the open-access conditions for which Google lobbied.
• BofA to raise $6 billion. Bank of America (BAC), which reported a 95% decline in quarterly profit on Tuesday, announced that it will raise $6 billion by selling preferred shares. Shares rose 8.5%.
• AIG to bail out an SIV. AIG Financial Products, a unit of American International Group (AIG), will pay all outstanding senior debt of Nightingale Finance, a $2.2 billion SIV set up a year ago by another unit of AIG.
• Ford to announce job cuts. Ford (F) is expected to announce shortly that it has reached agreement with the UAW on buyouts that will eliminate up to 11,000 hourly jobs and 2,000 salaried jobs, further to the 44,000 jobs the company has cut since early 2006.
• Statoil Signs Deal to Survey Venezuela Reserves
• CBS to Make Internet Music Unit More Like Radio
• Yahoo Is in Talks on MP3 Service
• For Existing-Home Sales, A Slight Fall Is Good News
• Nokia Q4 profits jump, market share at 40%
• Lockheed's Earnings Edge Higher

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Comments

[mixter:]

We see no good reason as to why tax payers should bail out people who were too stupid to know they couldn't afford the houses they were buying and/or the greedy lenders who made extremely risky loans.

Let them fall on their asses and become good examples as what not to do. Pouring money down a rat hole does not stimulate the economy in the long run, it just detours the constructive use of investment money.

2008 Jan 24 11:42 AM

[Sharpcedge:]

It seems there is a slight mistake in the paragraph on SocGen and its Rogue trader. Daniel Bouton, executive chairman, and Jean-Pierre Mustier, head of the investment bank, tendered their resignations but had their offers rejected by the board. So they're still there. Just wanted to clarify.
Thank you for this daily update, always very useful !
Regards

2008 Jan 25 03:25 AM