- Wachovia reported a Q1 loss of $0.14/share on revenue of $7.9B after taking a market-disruption valuation loss of $2B. "The precipitous decline in housing market conditions and unprecedented changes in consumer behavior prompted us to update our credit reserve modeling and rely less heavily on historical trends to forecast losses," it said. Analysts had expected a $0.40/share profit on revenue of $7.91B. Wachovia (WB-OLD) significantly increased its provision for credit losses in the quarter. It plans to raise $7B in a stock offering, and lowered its quarterly dividend to $0.375/share from $0.64, which will save it $2B/year. Wachovia's woes are mainly a result of two factors: Its $25B purchase of Golden West, with a huge California ARM portfolio, and $20B in exposure to leveraged loans and subprime securities. Shares are up 2% in early pre-market trading.
- Airline combo queued for takeoff. Delta (NYSE:DAL) and Northwest (NWA) may announce a merger as early as Tuesday. The two have yet to settle with their pilots' unions, who threatened Sunday to oppose the combination. The deal may value NWA at $3B, well below its Feb. 1 market value of $4.6B -- seen as a reflection of the declining state of the air-travel industry amid soaring fuel costs and a softening economy.
- DB looks to sell LBO debt. Deutsche Bank (NYSE:DB) is in talks to unload $20B in LBO debt to a group of investors. Last week it emerged Citigroup (NYSE:C) was in the midst of selling $12B of its leveraged debt. Deutsche Bank and Citi, with $55B and $43B in LBO debt respectively, are among the most exposed banks.
- Blockbuster makes pass at Circuit City. Blockbuster (BBI) made public a Feb. 17 unsolicited $6-8/share ($1-$1.35B) bid for Circuit City (CC), as much as double Circuit City's Friday close of $3.90. "It's an odd move," Pali's Nick Bubb says. "Synergies between a video store and an electronics store aren't that obvious." Here's how Blockbuster sees it: "The combination of the two companies would result in an $18 billion global retail enterprise uniquely positioned to capitalize on the growing convergence of media content and electronic devices." Circuit City has not yet provide the requested due diligence. (Blockbuster's letter to Circuit City)
- Philips Electronics said Q1 profits fell 75%, due largely to a stake sale last year, but also amid reduced license income, weak TV margins and acquisition-related charges. Net income of €265M on revenue of €5.97B fell short of analyst estimates of €293M on revenue of €6.03B. Looking ahead, Philips (NYSE:PHG) sees 10-11% margin growth in 2010, and annual sales growth above 6%. It expects return on invested capital to hit 12-13%, "significantly above" current levels.
- AOL grabs Verizon ad exclusive. AOL (NYSE:TWX) landed a contract as the sole ad representative for Verizon's (NYSE:VZ) online ad inventory. The deal is said to be a "coup" for AOL, wrestled from larger rivals Microsoft (NASDAQ:MSFT) and Yahoo (NASDAQ:YHOO), who are battling for stakes in online display ad sales. It's somewhat ironic that Verizon sued AOL parent Time Warner last week, accusing it of false advertising related to Verizon's FiOS broadband internet and TV service.
- China Mobile tones down acquisition policy. China Mobile (NYSE:CHL) says it wants to take only small stakes in global telecom firms, after taking controlling stakes has become too expensive. "In the past, the only policy was: we have to get majority shares," CEO Wang Jianzhou said. "We are changing the policy." Shares were down 3.7% in Hong Kong at midday.
- Another $5B writedown for Credit Suisse? Credit Suisse (NYSE:CS) could announce further writedowns of up to $5B when it reports Q1 results later this month, sources say. Credit Suisse previously warned it was unlikely to post a profit in Q1.
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