Wall Street Breakfast: Must-Know News

Today's Markets

• Asian markets were broadly higher Monday. Nikkei: +2.7%. Hang Seng: +3.8%. Shanghai: +8.1%.
• In Europe gains were milder. FTSE: +0.7%. CAC: +0.7%. Dax: +1.2%.
• U.S. index futures were up mildly from Friday's close. Dow: +0.1%. S&P 500: +0.1%. Nasdaq: +0.2%.

Must-Know News for Monday

• Googleaid. Google (GOOG) CEO Eric Schmidt offered to help Yahoo! (YHOO) CEO Jerry Yang thwart Microsoft's (MSFT) unsolicited $44.6B bid. Yahoo's board has yet to take a position on the matter, and thus far no rival bids have emerged. Google's assistance could come either by helping another company to outbid Microsoft, or by guaranteeing Yahoo revenue in exchange for Yahoo outsourcing its search to Google. In a blog post, Google said the proposed deal "raises troubling questions" about whether it would give Microsoft too much power.
• LBO debt buyers 'on strike.' Bankers say the leveraged loan market is in disarray after efforts to syndicate $14B of the debt used to finance the $30B buyout of Harrah’s failed. Bankers now face potentially larger losses on upcoming buyouts such as that of BCE (BCE) and Clear Channel (CCU). Most LBO-related debt is already trading below $0.90 on the dollar. One market insider says the last 10 days have been the worst ever. "There is a complete buyers’ strike."
• Bond insurer rescue suffers setback. Leading private equity firms consider monoline bond insurers too risky to invest in, putting even more pressure on banks to rescue Ambac (ABK), MBIA (MBI) and others. Sources say eight banks, including Royal Bank of Scotland (RBS), SocGen (SCGLY.PK), Wachovia (WB), Barclays (BCS), UBS (UBS) and Citigroup (C) have joined to formulate a rescue plan.
• Regulators scrutinize rating agencies. Financial regulators from the world’s leading economies will meet to discuss how to clamp down on credit rating agencies, whose deficiencies many say are partly to blame for the current credit- and subprime-market turmoil.
• Humana posts healthy earnings. Health benefit company Humana (HUM) reported Q4 EPS of $1.43 vs. consensus estimates of $1.32. Q4 revenue of $6.34B was better than the Street's $6.22B. For 2008, HUM sees EPS of $5.35-$5.55 vs. consensus of $5.46.
• Ericsson to provide mobile broadband for Lenovo notebooks. Ericsson (ERIC) will provide mobile broadband modules for Lenovo ThinkPad notebooks. Lenovo (LNVGY.PK), the world's #3 PC maker, is Ericsson's first announced mobile broadband module customer.
• Ryanair earnings drop, warns of weak 2008. Shares of Ryanair (RYAAY) plunged 15% in Dublin after the company said profits fell for the first time in seven quarters to €35M ($2.35/share), and warned earnings may be 50% lower next year due to weak consumer spending and soaring fuel costs. "The current outlook for the coming fiscal year is poor," Ceo CEO Michael O'Leary said.
• Probe of UBS, Merrill notches up. The SEC recently upgraded its probes of UBS (UBS) and Merrill Lynch (MER) into formal investigations, a step that gives it broad subpoena power. The probes are looking at whether firms intentionally misled buyers of their repackaged mortgage securities.
• Rio rises as stake-takers spark hopes of higher bid. Shares of Rio Tinto (RTP) traded at a 12% premium to BHP's (BHP) buyout price Monday after Chinese-government-owned Aluminum Corp. of China (ACH) and Alcoa (AA) teamed up to take a 9% stake in the mining giant at a price 23% higher than BHP's bid.
• Freddie Mac looks to expand its business. Freddie Mac (FRE) is looking for approval to sell bonds backed by apartment unit mortgages, a sharp departure from its current policy of keeping the loans it buys on its own books.
• Yahoo to move Music Unlimited users to Rhapsody. Yahoo (YHOO) will close its flat-fee ($8.99) unlimited music site, migrating existing Music Unlimited subscribers to Rhapsody, which is jointly owned by RealNetworks (RNWK) and Viacom (VIA). The decision was due to the complexities of allowing users of the service to listen to music away from their PCs.
• Amazon couples with Lovefilm. Amazon (AMZN) is using a cash investment to make it the largest shareholder of UK DVD-by-mail company Lovefilm, bringing together the two firms' competing UK film rental businesses.
• Stents stem fall. New data suggest that after a worst-ever Q4 for drug-coated heart stents, the device's market share has stopped falling. Manufacturers include Boston Scientific (BSX), Johnson & Johnson (JNJ), and soon Medtronic (MDT) and Abbott Laboratories (ABT).
• Amgen sells off experimental drugs. Amgen (AMGN) will sell the rights to as many as 13 of its experimental drugs to Japan's Takeda in an effort to raise funds, cut costs, and bring experimental drugs to market without overloading its staff.
• ADM quarterly profit rises
• Platinum continues record breaking run

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