Under The Radar News - Monday

by: SA Eli Hoffmann
  • Biofuel bias. GM (NYSE:GM) CEO Rick Wagoner says a UN report linking biofuel production to rising food prices is "shockingly misinformed." Skyrocketing oil prices, he says, are a "far bigger driver" of increased food prices than the corn used for ethanol production. He bemoaned the lack of more ethanol stations in the U.S. Wagoner thinks China will be the first country to build the necessary infrastructure for clean cars -- which he says could give it a strategic advantage. GM is a leading advocate of E85 use.
  • Buongiorno 3G iPhone. An unlocked, untethered 3G iPhone will being selling in Italy "in a matter of weeks." The move would be a radical departure from Apple's (NASDAQ:AAPL) insistence on a revenue-sharing model. The phone will be sold through Italy's Telecom Italia Mobile for a higher price than in other European countries. Italians are the #1 consumer of pre-paid wireless contracts.
  • Bloomberg denies he's interested in NY Times. New York mayor Michael Bloomberg is being encouraged by aides to merger Bloomberg LP with the troubled New York Times (NYSE:NYT). The idea was floated in the May issue of Vanity Fair by Michael Wolff. "It's the most logical idea in the newspaper business," Wolff said yesterday. "The New York Times is vulnerable, and Bloomberg is a potential buyer who has the money, the credibility, the interest and the chops." Chatter of a rumor is growing louder as a redesigned WSJ (NASDAQ:NWS) prepares to take on the Times. CNBC says Bloomberg categorically denied the report, saying he's "not a buyer of other people's problems."
  • Whitney whacks Citi, Wells Fargo. Influential Oppenheimer analyst Meredith Whitney tripled her 2008 loss estimate for Citigroup (NYSE:C) to $0.45/share and predicted Citi would further cut or even eliminate its dividend. She also said Wells Fargo (NYSE:WFC) may soon face a $4.5B reserve shortfall. At 11:15 AM, Citi is down 2.35%; WFC is off 3.5%.
  • Influential union looks for Citi split. The American Federation of State County and Municipal Employees, one of America's largest unions, plans to call for a breakup of Citigroup's (C) investment banking and commercial banking units at tomorrow's shareholder meeting.
  • Traders bet on bank failures. Put buying on large financial institutions has increased in recent weeks despite a recent bounce in share prices. Puts on Lehman Brothers (LEH) jumped 13% for the month to last Thursday; puts on Morgan Stanley (NYSE:MS) were up 8%; for Merrill Lynch (MER) they climbed 20% over the same period.
  • Are we better off now than five years ago? According to a recent Pew summary, only 41% of Americans think so -- a 44 year low.
  • Microsoft / Google prepping for regulatory battle. Microsoft (NASDAQ:MSFT) has hired a lobbyist firm to lobby federal regulators to approve the not-yet-agreed-upon Yahoo (NASDAQ:YHOO) merger. Meanwhile Google (NASDAQ:GOOG), which opposes the deal, recently took on lobbyists to help with "competition issues in the Internet industry."
  • Five-year notes claim sweet spot. Five-year Treasurys are trading at five-year high spreads relative to two-year notes as bond traders grow increasingly wary of further Fed rate cuts amid accelerating inflation. Experts say the five-year notes are presently the fixed-income "sweet spot"; two year notes are "horrifically rich," while 10 and 30-year Treasurys "look awful generally." (Government bond ETFs)
  • All aboard. GE Rail Services (NYSE:GE) is for sale. The sale process is in the first round of bids.
  • DellShack? RadioShack (NYSE:RSH) jumped on speculation of a Dell (NASDAQ:DELL) buyout.
  • Sources say Michael Dell's MSD Capital is one of the private-equity investors in a rumored $6-7B cash infusion being finalized by National City (NCC).
  • India BlackBerry to roll out sans government blessings. India's Tata Teleservices is rolling out Research In Motion's (RIMM) BlackBerry without waiting for governmental approval. Tata told the government the delay was costing it "significant loss of business opportunity and recurring revenues."
  • Tech M&A to stand firm. M&A activity in the recently-hot tech sector will remain strong, notwithstanding the credit crunch and a broad M&A pullback. "Current activity levels and deal pipelines suggest strategic and transformational deals are still very much on the boardroom agenda of technology companies, and the demise of the leveraged buyout has been overplayed in the sector," a PricewaterhouseCoopers report says. Overall, global M&A is down by 1/3.
  • MySpace turns analysts off. Analysts are cutting ratings and earnings estimates on News Corp. (NWS) after recent warnings highlight Rupert Murdoch's inability to turn social-networking powerhouse MySpace into a profitable enterprise. "When you have such a powerful asset as MySpace and you can't successfully monetize it, that's a problem for investors," National City's Daniel Poole says. They say marketers are reluctant to place their ads next to unpredictable user-generated content.
  • YRC hit by credit crunch fallout. Shares of YRC Worldwide (NASDAQ:YRCW) are down after the company said in an SEC filing it expects an interest expense increase of $1.5-4M per year due to a rate hike on its $950M revolving facility and a $150M term loan. YRC will have to pledge physical assets to the credit line if its credit rating [BB] falls any further.