Wall Street Breakfast: Must-Know News

by: SA Eli Hoffmann
SA Eli Hoffmann
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.
  • Just the money, sir. Washington is pushing sovereign-wealth funds of Abu Dhabi and Singapore to confirm that they have no intentions of using their stakes in U.S. companies for political means. With about $3 trillion in assets worldwide, the move signals a desire to encourage SWF investment while avoiding political backlash.
  • Earnings fall 27% at Home Depot.
  • Home Depot (NYSE:HD) missed Q4 EPS estimates of $0.43 by $0.03 as earnings plummeted 27%. Revenue was up 1.5% to $17.66B, short of analysts' consensus of $18.02B. For 2008, HD sees a total sales decline of 4-5%, and falling same-store sales in the mid to high single-digits. EPS should fall 19-24%, it said. Shares are off 1.3% in early pre-market trading.
  • IBM's new mainframe could challenge servers. Analysts say IBM's (NYSE:IBM) new-generation Z10 mainframes will boost its hardware and software revenues. IBM says the Z10 may cannibalize its low-end server sales, not to mention challenging those of rivals Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ). The machines house 64 CPUs and start at about $1 million. IBM says they handle 70% more work than current models, while reducing energy consumption by up to 85%.
  • S&P backs bond insurers. S&P Ratings affirmed bond-insurer Ambac's (ABK) AAA rating, and took peer MBIA (NYSE:MBI) off CreditWatch, sending their shares up 15.9% and 19.7% respectively. S&P said Ambac's current $400M capital shortfall is "relatively modest" and praised MBIA management for its recent moves to secure its balance sheet. MBIA also ceased its quarterly dividend and said it would stop taking on new structured finance business for about half a year. Separately, a major Fitch report on exposure to financial guarantors concluded: 1) Bank/broker exposure to insurers is manageable. 2) Their restructuring will improve things. 3) Citi (NYSE:C), Merrill (MER) and UBS AG (NYSE:UBS) could still see downgrades due to their heavy exposure.
  • Margin improvement boosts RadioShack earnings. RadioShack (NYSE:RSH) beat estimates by $0.05 with EPS of $0.77. Revenue fell 6.4% to $1.36 billion, in line with consensus. Gross margin jumped 0.9% to 44.8%, a possible sign that the restructuring efforts of new CEO and turnaround specialist Julina Day are succeeding.
  • Ouch. Citigroup (C) disclosed its traders lost $100M in one day on 15 separate occasions in 2007. Shares fell 1.5% yesterday, helped along by Oppenheimer analyst Meredith Whitney, who cut her earnings forecast for Citi from $2.70 to $0.75, and said shares ($24.74) could fall below $16.
  • JV with Sharp gives Sony access to LCD panels. Sony (NYSE:SNE) and Sharp have agreed to produce LCD TV panels together at Sharp's new western Japan plant. Sharp will retain a 66% controlling stake in the JV; Sony's 34% stake will cost it about $1B. The deal gives Sony reliable access to a healthy supply of panels at attractive prices.
  • Key GM supplier, hit with strike. Workers at American Axle & Manufacturing (NYSE:AXL) are on strike after talks with the UAW broke down. GM (NYSE:GM), AXL's biggest customer, could find itself short of parts if the strike drags out.
  • Nordstrom beats, sees tough 2008. Nordstrom (NYSE:JWN) posted Q4 EPS of $0.92, beating consensus estimates of $0.88. Revenue fell 4.4% to $2.51B, just short of the $2.53B consensus. Looking ahead, Nordstrom sees Q1 EPS of $0.49-0.54 (vs. $0.59 consensus) and full-year EPS of $2.75-2.90 (vs. $2.98 consensus). Same-store sales will be flat to -2%, it said. "Certainly, it's a difficult environment. ... The higher-end consumer is slowing spending a bit," analyst Dan Geiman said.
  • LDK Solar tops targets. LDK Solar's (NYSE:LDK) $0.44/share beat EPS estimates by $0.03. Revenue rose 21.5% to $192.8 million vs. consensus of $183.1M. Looking ahead, LDK sees Q1 EPS of $0.41-0.45 vs. $0.40 consensus and revenue of $210-220M vs. $219.7M consensus. For 2008 it sees revenue of $960M to $1B, below estimates of $1.06B. Shares gained 4.5% and added 1.85% in extended trading.
  • Home resales, prices drop. Existing home sales fell 0.4%, while median prices fell 4.6% from a year ago. Economists said the numbers, including a rise in single-family home purchases, may indicate the beginnings of a housing-market bottom. Meanwhile, foreclosures were up 57% in January as another 45,327 homes were repossessed by banks.
  • Nielsen: U.S. search share for January: Google (NASDAQ:GOOG) 56.9%; Yahoo (NASDAQ:YHOO) 19%; MSN (NASDAQ:MSFT) 12.1%; AOL (NYSE:TWX) 4.7%.
  • New record for online ads. Online ad revenues were more than $21 billion in 2007, a new record. However, preliminary data suggest growth may be slowing.
  • Merrill restates cash flow
  • FCC ready to act on net neutrality
  • CME and Nymex extend exclusive talks
  • Qwest's "billion-dollar opportunity"
  • CME and Nymex extend exclusive talks

Today's Markets

  • Asia Tuesday. Nikkei -0.65%. Hang Seng +1.92%. Shanghai +1.09%.
  • Europe at midday. FTSE +0.98%. CAC +0.73%. DAX +1.22%.
  • U.S. index futures are almost flat. Dow +0.01%. S&P +0.04%. Nasdaq +0.41%.

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