Wall Street Breakfast: Must-Know News

• WiMax spreads its wings. Comcast (CMCSA) and Time Warner Cable (TWC), #1 and #2 U.S. cable suppliers, are in talks to fund a WiMax-based wireless carrier that will be run by Sprint Nextel (S) and Clearwire (CLWR), sources say. Cable companies are dying for a wireless foothold to combat the onslaught of phone companies like AT&T (T) and Verizon (VZ) who have entered the pay-TV business and may soon offer quadruple-plays (landline, wireless, web and cable). Sprint and Clearwire are in the midst of raising $3B to rollout WiMax, which Sprint says will cost $5B by 2010. Additional funding for the proposed new venture is like this: Comcast: $1B. Time Warner: $500M. Bright House Networks: $100-200M. Intel (INTC): $1B or more. Google (GOOG): hundreds of millions. Companies helping to fund the JV will receive a stake in the business and wholesale access to the network.
• Deutsche Bank warns. Deutsche Bank (DB) said this morning challenging conditions may prevent it from hitting its 2008 pretax profit target of €8.4B ($12.9B). Its leveraged finance exposure was $55.7B at year-end, and it said it expects further writedowns based on current market conditions. Shares are down 2.65% in Frankfurt.
• Clear Channel's foggy future. The proposed $19B-plus-debt deal to take Clear Channel Communications (CCU) private is on the verge of collapse, sources say, despite CCU's exuberance. Here's the problem: The private-equity buyers (Thomas H. Lee and Bain) have already raised the required $4B and say they're ready to go. But banks (C, MS, DB, CS, RBS and WBC), who agreed to put up another $22B, face losses of $2.7B if the deal closes and their debt is written down by a now common 15%. The private-equity firms will probably try to saddle the banks with the $600M breakup fee.
• $1.3B... $2B... $2.65B! Latest reports say Ford (F) will get a much higher than expected $2.65B from Tata Motors (TTM) for its Land Rover and Jaguar brands. Too bad Ford paid BMW almost $3B for Land Rover in 2000. The sale will supposedly be announced today.
• How to swallow a Bear. Hundreds of JPMorgan (JPM) bankers have moved their offices into Bear Stearns' (BSC) headquarters as the bank pushes to integrate Bear's prime brokerage and global clearing businesses. There is lots of wheeling and dealing to try and pin down Bear's most productive employees, although early reports say JPMorgan's stay-on incentives are falling short of typical deals offered by rival firms. Meanwhile, two pension funds who own stakes in BSC are asking Delaware courts to issue a temporary restraining order against the "grossly inadequate" $10/share deal.
• Whitney prunes Citi. Outspoken Oppenheimer analyst Meredith Whitney thinks Citigroup (C) will lose $0.15/share in 2008, vs. a previous estimate of +$0.75/share. She now thinks Citi will lose $1.15/share in Q1, not $0.28. "This will not be our last reduction in 2008," she adds. "We anticipate further downside to both estimates and stock prices." She also reduced sector-wide earnings estimates by 84%. Citi fell 1.3% in early Europe trading.
• Goldman's first SPAC: Doing it their way. In its very first "blank check" SPAC (special-purpose acquisition company) deal, Goldman (GS) will underwrite the $350M IPO of Liberty Lane Acquisition. Just 7.5% of the firm's equity will go to management (SPACs normally allocate 20%), a move it says increases shareholder value and gives management greater incentive to hunt the killer deal -- which it has two years to do. Some of the founders warrants also carry a higher-than-normal strike price.
• $1T Lockheed contract in jeopardy. The Pentagon is reconsidering whether it's ready to spend up to $1T to buy and maintain 2,458 F-35 Lightening II plane from Lockheed Martin (LMT) in coming decades; the contract was granted in 2001 and is seen as crucial for Lockheed. United Technologies (UTX) makes one of the plane's proposed engines; a second is made by General Electric (GE) and Rolls Royce.
• Final hurrah? Besides collapsing, Bear Stearns (BSC) also rolled out the very first actively managed ETF yesterday. Bear Stearns Current Yield Fund (YYY), which will aim to beat money-market funds by investing in a range of fixed-income products, will eventually be rebranded to reflect its new daddy. PowerShares it set to launch three actively managed equity ETFs in early April, and Vanguard plans to actively manage four fixed-income ETFs based on its mutual funds.
• Fortune finds friend. Fortune Brands (FO) is joining forces with private-equity group Nordic Capital in its bid to acquire Absolut Vodka distiller Vin & Sprit from Sweden, sources say. Fortune will keep Absolut, while Nordic will get Distillers and Wines. Bids for V&S are due tomorrow; there are at least five bidders, and the company is expected to fetch $6-7B.
• Circuit City eyeing sale? NY Post found a March 11 note from Circuit City (CC) advisor Goldman Sachs (GS) that explains Goldman removed its rating and price target from the firm because it is "acting as a financial adviser in connection with a strategic transaction that is fundamental to the reasonable analysis" of its share price. A CC spokesman downplayed the comment, but wouldn't comment on whether it has been approached by potential suitors.
• Home prices plummet. U.S. home prices fell 11.4%, the steepest drop since S&P/Case-Shiller started keeping track 20 years ago. Prices have now fallen for 19 straight months.
• Condo crisis could crush Corus. Corus Bankshares (CORS) has an almost deadly level of exposure to condo lending, the WSJ says, and is likely to face increasing regulatory scrutiny over the coming months as massively undersold projects complete and borrowers start to forfeit. Its cash cushion of $300M might not last for long once things start to unravel, and it doesn't seem to be doing much to brace itself for a storm, the Journal says.
• Vale, Xstrata part ways. Brazilian miner Vale (RIO) is no longer in merger talks with Swiss Xstrata (XSRAF.PK). The two have been in discussions since December. Xstrata rejected Vale's initial bid of $76B; it is said a price of $90B was being tossed around.

Today's Markets

• Asian markets were a mixed bag Wednesday. Nikkei -0.3% to 12,707. Hang Seng +0.68% to 22,617. Shanghai -0.63% to 3,607. BSE -0.81% to 16,087.
• In Europe, markets are weaker at midday. FTSE -0.45% to 5,664. CAC -0.12% to 4,687. DAX -0.19% to 6,512.
• U.S. futures are down on light volume at 7:10 AM. Dow -0.18% to 12,482. S&P -0.33% to 1,347. Nasdaq -0.18% to 1,822.75.
• Gold futures are up 1.35% to $947.60. Oil is up 1.25% to $102.47.

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Comments

[2old2care]

WRT BCS rolling the 'very first' actively managed ETF. Come on now. Has not Powershares been doing that for some time now?

[Indexor]

"Bear Stearns Current Yield Fund (YYY), which will aim to beat money-market funds by investing in a range of fixed-income products..." Somehow this doesn't give me a sense of security for any of my client's capital. It would be similar to giving money to Eliot Spitzer for an IPO based on dating services.