Wall Street Breakfast: Must-Know News

• Microsoft breaks things wide open. In the hopes of encouraging programmers to build add-ons to its products, Microsoft (MSFT) announced broad steps to open up its source code. Microsoft hopes the move will give it leverage against rival online software suites that make it easy to build plug-ins that enhance usability and function. Developers and regulators were pleased by the move, although some were skeptical of Microsoft's commitment to interoperability.
• Commercial property - safehaven or snare? While actual delinquencies on commercial-mortgage bonds are at all-time record lows, the CBMX index, which tracks the values of such debt, is signalling an extreme increase in the odds of future defaults. The question: Is the index foretelling a rocky future, or falsely echoing investors' jitters?
• Markets disdain commercial debt. U.S. asset-backed commercial paper fell for the fourth straight week, by $11.7B to $784B, as investors continue to shun all forms of non-government-backed short-term debt. Total debt is close to a December low of $780B, down from a July high of almost $12B. In recent days, indexes that track the cost of insuring commercial debt (credit-default swaps) have skyrocketed, a development that could trigger a chain-reaction of forced unraveling of debt products even in the absence of actual defaults.
• Homeowner rescue plans. Policy makers are listening to a variety of proposals aimed at rescuing nearly 8.8 million homeowners (10.3% of the total) whose mortgages are now higher than the worth of their homes.
• Manufacturing, leading indicators suggest weakness. The Philly Fed's manufacturing index fell to -24 from -20.9, while economists were expecting an improvement to -12; anything below 0 denotes contraction. Initial jobless claims fell by 9,000 to 349,000 -- better than the 1,000 rise expected -- while the four-week average stands at a worrisome two-year high of 360,500. The Conference Board's leading indicators fell by 0.1% to 135.8, in line with expectations. Over the past six months, the index is down 2%, or 4% annually, its worst since 2001.
• Hedge funds sail through liquidity crisis. Hedge funds may have learned their lesson. Unlike during previous market crises, fund managers have not panicked, and some have even managed to improve the terms at which they borrow money from banks. Smaller funds may have to bear the brunt of the savings lenders are forced to concede to their bigger brethren.
• Motorola's multiple miseries. LG Electronics says Motorola's (MOT) handset difficulties will allow it to increase its market share at MOT's expense. Meanwhile, the same security issues that dealt a deadly blow to a 3Com (COMS) buyout could do the same to any Asian or Middle Eastern company thinking about buying Motorola's handset unit, threatening its proposed spinoff. A lack of interest since MOT announced its intention to divest the unit has weighed on its share price, and analysts who once saw it as a business that needed fixing are now more prone to view it as unfixable.
• Chinese steelmakers reject Rio's iron ore price hike. Chinese steelmakers are refusing Rio Tinto's (RTP) demand for a 71% iron ore price increase, and will not pay more than the 65% they negotiated with Vale (RIO). Industry experts were surprised Rio could not achieve a higher price in view of its closer proximity to China, which reduces shipping costs, and said the refusal may be a face-saving ploy. Meanwhile, Rio said it is selling its 40% stake in the Cortez Hills gold mine for $1.7B to Barrick Gold (ABX), surprising analysts who thought the stake would fetch just $600M. Rio is committed to divesting $10B of assets in 2008 in hope of fending off BHP Billiton's (BHP) hostile bid for the company.
• March may be the month for China telecom overhaul. The Chinese government may announce long-awaited plans to restructure its telecom industry as early as next month, paving the way for 3G licenses. The proposed plan has China Mobile (CHL) merging with smaller China Tietong, while China Unicom (CHU) and China Netcom Group (CN) would likely join forces.
• Device makers celebrate court victory. Since Wednesday's Supreme Court ruling (.pdf) protecting medical device maker Medtronic (MDT) from personal injury lawsuits, lawyers and judges have been busily reexamining similar cases against companies like Johnson & Johnson (JNJ), Boston Scientific (BSX) and St. Jude Medical (STJ) to decide whether the suits should be closed down. Some experts say so-called 'parallel' claims may have their own conceptual problems.
• Committee to set credit crunch code. Bank regulators around the globe are developing guidelines for how banks should deal with cash-flow problems in the hope of heading off future liquidity crises.
• Syntax flirts with disaster. Shares of digital display developer Syntax-Brillian (BRLC) plunged 37% to $0.95 in AH trading after the company disclosed a letter from a group of its lenders sent to address BRLC's debt default issues. An amended credit agreement makes it clear the creditors plan to keep Syntax under a tight rein.
• Exchange merger close to done deal. The CME's (CME) proposed acquisition of the Nymex (NMX) could become official by early March.
• Intel thinks small. Intel's (INTC) developmental 25mm Diamondville CPU will mark the first time the company is using its newest production line on a low-cost chip aimed at Netbook computers that sell for $250 or less.
• JAL may buy Airbus planes after Boeing 787 delays
• Starbucks Cuts 600 Positions
• BP aims for billions more barrels from Prudhoe Bay
• Nasdaq seeks to list 'blank check' firms

Today's Markets

• In Asia, markets finished the week deep in negative territory. Nikkei -1.37%. Hang Seng -1.35%. Shanghai -3.47%.
• European markets were slightly lower at midday. FTSE -0.1%. CAC -0.4%. DAX -1.2%.
• U.S. index futures are just about flat. Dow -0.07%. S&P -0.11%. Nasdaq -0.16%.

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Comments

[Thomas Barta]

"Microsoft (MSFT) announced broad steps to open up its source code."

Gee,just a few months back, they were threatening LINUX vendors with infringement suits based on 260 imaginary MSFT patents that they never produced for anybody's inspection.

This latest ploy is 1) transparent 2) pointless; there are already zillions of MSFT collaborators in the developer community 3) unlikely to work, since MSFT has nothing to match Java or AJAX.

blog.mycintosh.com/blog_pics/open_ms_gro...