Wall Street Breakfast: Must-Know News

• Soft sales hurt Oracle. Shares of Oracle (ORCL) fell more than 8% in extended trading despite in-line Q3 profits and revenue ($0.30/share and $5.37B) because sales of new software (+16% vs. +15-25% outlook), particularly of business applications (+7%), were lower than expected. New license revenue is considered a more accurate barometer of corporate IT spending than total revenue because it excludes money spent to maintain existing software bases. "Customers got a little more cautious toward the end of the quarter," CFO Safra Catz said during Oracle's conference call.
• Motorola to split itself. For wont of a buyer, Motorola (MOT) said it will spin off its cellphone unit, sending its shares up 2.7% and eliciting cautious cheers from analysts and even activist shareholder Carl Icahn. What Icahn wants to know is: Why will it take until "sometime in 2009"? Why do you only listen to threats? And will you keep your word? Meanwhile Nokia's (NOK) moving quietly but stealthily to try and capitalize on its rival's weakness.
• Merrill, UBS to post losses amid massive writedowns. Influential Oppenheimer analyst Meredith Whitney says Merrill Lynch (MER) will lose $3/share in Q1 (vs. previous estimate of $0.45 profit) on a $6B asset writedown (up from $2B). Swiss bank UBS (UBS) will write down $11B and post a Q1 loss of $2.75/share, she said in a report.
• Banks must fund Clear Channel deal. A Texas judge ordered six banks to fund Thomas H. Lee and Bain's $19B-plus-debt buyout of Clear Channel Communications (CCU), saying the banks (Citigroup (C), Morgan Stanley (MS), Credit Suisse (CS), Royal Bank of Scotland (RBS), Deutsche Bank (DB) and Wachovia (WB)) illegally reneged on the deal. (Wow! Do courts really rule this quickly?) The banks face losses of about $2.7B if the deal closes and the $22B of debt is written down by about 15%. The private-equity groups also allege Citi threatened to stonewall Bain's buyout of 3Com (COMS), which later fell through for other reasons, if it didn't reduce Citi's exposure to the CCU buyout.
• Ford sells luxury brands for $2.3B. Ford (F) finally sold its Jaguar and Land Rover brands to India's Tata Motors (TTM). The final price tag? About $2.3B. The deal leaves Ford with about $1.7B of much-needed cash, after paying $600M into the companies' pension plans, which it hopes will help it focus on core products and return to profitability by 2009. Shares fell 2.2%, not surprising when you consider Ford paid $2.5B for Jaguar in 1989 and $2.75B for Land Rover in 2000.
• Google's paid clicks fall short, again. Google (GOOG) shares were down 3% after the latest data from comScore showed paid-clicks were up just 3.1% from a year ago. While way short of its 25% growth in Q4, Google's gains beat the industry, who saw paid clicks up just 0.9% Y/Y. Yahoo's (YHOO) paid clicks were up 5.3%; Microsoft's (MSFT) fell a painful 13.1%. Meanwhile, Nielsen said Google now owns 58.7% of the U.S. search market, up slightly, while Yahoo was down a bit to 17.6%.
• Take-Two bucks EA offer. Take-Two Interactive (TTWO) told its shareholders to refuse EA's (ERTS) $2B/$26-per-share offer, telling them it would look at other alternatives, including a merger. Its board braced for a battle by adopting a 180-day poison pill that kicks in if anyone takes a 20% stake in the company.
• ConAgra beats. ConAgra Foods (CAG) posted FQ3 EPS of $0.63, beating consensus estimates of $0.39, despite higher energy prices. Sales were up 21% to $3.53B billion, better than the $3.18B analyst consensus. Looking ahead, CAG sees 2008 EPS of $1.80-$1.85 (consensus $1.60) and 2009 EPS of at least $1.55 (consensus $1.61). ConAgra also said it was selling its commodity trading and merchandising business, ConAgra Trade Group, to private investors for $2.1B.
• Lennar posts Q1 net loss. Lennar (LEN) lost $0.56/share; revenue fell 62% to $1.06B. Analysts had expected a loss of $1.27/share on sales of $1.1B. "Market conditions have remained challenged and continued to deteriorate throughout our first quarter of 2008," Lennar said. Deliveries were down 60% to 3,596; new orders dropped 57% to 3,045; and its Q1 cancellation rate was 26%.
• Schwab bond fund spurs suit
• CNet Networks to cut 120 U.S. jobs
• Moody's takes axe to CDO ratings
• Bank of England likely to cut rates
• Shell subject of U.S. probe

Today's Markets

• Markets were mixed in Asia; China got clobbered. Nikkei -0.8%. Hang Seng +0.2%. Shanghai -5.4%. BSE -0.4%.
• In Europe, markets were up in midday trading. FTSE +0.7%. CAC +1.1%. DAX +1%.
• U.S. futures are higher at 8:35 AM. Dow +0.7%. S&P +0.8%. Nasdaq +0.2%.

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