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.
  • HSBC makes things sound rosy. HSBC (HBC) reported a rise in Q1 earnings, and said it has made a strong start in 2008. HSBC set aside a less-than-expected $3.2B against U.S. credit losses. Shares were up 2.7% in London after Chairman Stephen Green said he's seen a lull in U.S. delinquencies. Analysts had expected loan losses of $4.6B. HSBC also wrote down $2.6B on asset-backed securities, leveraged debt, exposure to bond insurers, and credit trading. But it booked a $2.7B gain on appreciation in the value of its own debt."It seems increasingly likely that the U.S. will enter a recession in 2008, the length and depth of which is uncertain. The timing of any recovery in the U.S. housing market, which is likely to be the primary stimulus in restoring confidence to the U.S. economy, is also unclear," Green said.
  • Plane-leasing unit may fly from AIG. AIG's (NYSE:AIG) recent financial foibles have executives at its airplane leasing unit, International Lease Finance Corp., so worried they're considering splitting off from the parent. Sources say ILFC officials were surprised by the magnitude of AIG's $7.8B Q1 loss last Thursday, which saw ILFC's credit rating downgraded together with AIG's. ILFC's earnings have been exceptional despite the massive losses at AIG. Possibilities include a spinoff or sale, or that the two sides agree to continue to work together. Bear in mind that ILFC CEO Steven Udvar-Hazy is a major AIG shareholder, so he's unlikely to shoot himself in the foot. On Friday, former CEO Hank Greenberg filed a lawsuit that alleges AIG management concealed $4B in losses in its credit default swap portfolio.
  • Bold new BlackBerry. Research In Motion (RIMM) unveiled the 3G BlackBerry Bold, which it hopes will defend its flagship product against a threat from Apple's (NASDAQ:AAPL) iPhone. AT&T (NYSE:T) has the U.S. exclusive on the Bold, although it is designed to work on all 3G networks. Features include added CPU power, easier web-browsing and video watching, and the ability to synch with iTunes software. Bold goes on sale in Europe this summer and in the U.S. later this year. RIM is also announcing a $150M JV venture capital fund with Royal Bank Of Canada (NYSE:RY) and Thomson Reuters (RTRSY) to invest in BlackBerry apps and services and mobile platforms.
  • Cablevision likely winner of Newsday. Cablevision (NYSE:CVC) is closing in on signing a deal to acquire Newsday for $650M after News Corp. (NASDAQ:NWS) revoked its informal agreement to acquire the newspaper for $580M. Despite previous speculation about the deal including Newsday's real estate, the current one does not. Newsday will allow Cablevision to cross-sell ads and promote its services in the NY area. Some analysts are skeptical about the deal; there has been speculation it is an attempt by the Dolan family to further devalue CVC shares after a previous takeover attempt was thwarted.
  • Citi may sell Japan consumer finance business. Citigroup (NYSE:C) is mulling paring down or selling its Japanese consumer-finance company, CFJ KK as part of its global restructuring plan.
  • Infrastructure fund exceeds plans. Morgan Stanley (NYSE:MS) raised more than $4B for a new infrastructure fund, surpassing an original target of $2.5B. "People want to diversify away from traditional equity markets and fixed income into alternative assets," said global head of Morgan Stanley Infrastructure Sadek Wahba, adding infrastructure investments are seen as "more stable, and more long-term."
  • American Axle turns up heat on UAW. Negotiations between the UAW and American Axle (NYSE:AXL) took a turn for the worse; Axle is now considering closing a third plant. UAW President Ron Gettlefinger called the move an insult. "If the company continues down this road, it's going to make the talks increasingly more difficult," he said. "I don't know how they can call themselves American Axle anymore. To me it's more like Axle Mexico."
  • CW sells prime-time slot. The CW network, jointly owned by CBS (NYSE:CBS) and Time Warner (NYSE:TWX), is selling a three-hour Sunday night prime-time block to independent studio Media Rights Capital. MRC will create the programming in consultation with the CW, and both will sell ads for the slot. The move is highly unusual, and indicitive of network TV's struggle post the writers' strike. Nielsen says broadcast network viewership is down 9.6%. As networks enter their annual Upfront week, ad spending is likely to soften.
  • Victory for tennis fans. ESPN (NYSE:DIS) is signing the United States Tennis Association to a six-year deal to telecast live weekday U.S. Open coverage for 11 hours a day.
  • HP looks to buy BT's UK datacenters for £1.5B. BT Group (NYSE:BT) is in talks to sell its British data centers to Hewlett-Packard (NYSE:HPQ) for £1.5B. Part of the deal will see BT assuming global management of HP's voice and data networks (it already runs them in Europe).

Today's Markets

  • In Asia, markets closed to the upside Monday. The Nikkei gained 0.64% to 13,743. Shanghai +0.37% to 3,626. BSE Sensex +0.74% to 16,861. Hang Seng was closed.
  • European markets are higher at midday. FTSE +0.44% to 6,231. CAC +0.71% to 4,996. DAX +0.55% to 7,041.
  • U.S. futures are up at 7:20 AM. Dow +0.23% to 12,773. S&P +0.29% to 1,393. Nasdaq +0.22% to 1,967.50.
  • Gold is down 0.2% to $884. Oil is down 0.58% to $125.22.

Earnings: Monday Before Open

  • Cogent (COGT-OLD): Sees Q1 EPS of $0.09, better than consensus of $0.08. Sees revenue of $24.6M vs. consensus $23M. Raises full-year revenue view to $125M vs. consensus $118.8M.
  • Emmis Broadcasting (NASDAQ:EMMS): FQ4 EPS of -$0.28 misses consensus of -$0.17. Revenue of $85.8M vs. consensus $76.5M.
  • Holly Corp. (HOC): Q1 EPS of $0.17 beats consensus of $0.15. Revenue of $1.48B vs. consensus of $1.35B.
  • IMAX Corp (NYSE:IMAX): Q1 EPS of -$0.25 misses consensus of -$0.14. Revenue of $23.5M vs. consensus of $25.4M.
  • IndyMac (IMB): Q1 EPS of -$2.27 misses consensus of -$1.92.
  • MBIA (NYSE:MBI): Q1 EPS of -$3.01 misses consensus of -$0.19. Revenue of -$2.96B vs. consensus of $718.62M. MBIA said it has $3.58B of unrealized losses from derivatives.
  • PMI Group (PMI): Q1 EPS of -$3.37 misses consensus of -$1.96. Revenue of $316M vs. consensus $289M.
  • Sprint Nextel (NYSE:S): Q1 EPS of $0.04 beats consensus of $0.02. Revenue of $9.33B vs. consensus of $9.41B. Sprint Sees improved post-paid customer churn rate in Q2, and sees net post-paid subscriber losses improving marginally vs. Q1.
  • Stifel Financial (NYSE:SF): Q1 EPS of $1.03 beats consensus of $0.89. Revenue of $211.5M vs. consensus of $197M.

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