Wall Street Breakfast: Must-Know News

• CBS scoops up CNET. CBS (CBS) agreed to acquire CNET Networks (CNET) for $11.50 per share, or about $1.8B -- shares closed Wednesday at $7.95. The acquisition will make CBS one of the 10 most popular Internet companies in the U.S., with a combined 54M unique users per month, it said. "There are very few opportunities to acquire a profitable, growing, well-managed Internet company like CNET Networks," CBS CEO Leslie Moonves said in a release. "CNET Networks will add a tremendous platform to extend our complementary entertainment, news, sports, music and information content to a whole new global audience. Together, CBS and CNET Networks will have significant additional exposure to the fastest-growing advertising sector and can accelerate our growth through a number of new content, promotion and advertising initiatives."
• Icahn readies for battle. Carl Icahn may name a 10-person proposed slate to replace Yahoo's (YHOO) board as early as this morning, after amassing a stake of about 50M shares. It's unclear whether Icahn really wants to domineer the board, or just force Yahoo back to the table with Microsoft (MSFT). Icahn, through friends, approached Microsoft about reopening negotiations, and was told Microsoft had "moved on." Daniel Loeb's Third Point hedge-fund disclosed yesterday a 1M share stake in Yahoo.
• Petrobras corners deep-sea rig market. Petrobras (PBR) has leased about 80% of the world's 21 deepest-drilling offshore rigs, forcing other producers including ExxonMobil (XOM) and BP (BP) to pay more for the remaining units. "The oil majors have their backs against the wall as Petrobras has aggressively locked up significant rig capacity," said Omar Nokta, head of maritime research at Dahlman Rose. CEO Jose Sergio Gabrielli says Petrobras began signing multiyear drilling leases as far back as 2004 after it foresaw a shortage of deepwater vessels. "We moved some of our contracts from $70,000 a day to $250,000 a day, which seemed like a very large increase back then, but now, of course, drilling rigs are $600,000 and $700,000 a day."
• Google outdraws Yahoo for first time ever. Google (GOOG) overtook Yahoo (YHOO) as the #1 U.S. web destination in April, comScore says. Google's unique audience grew 18% to 141.1M, while Yahoo's grew 7% to 140.6M. Microsoft (MSFT) was third with 121M. Yahoo still leads in page views, with 33.6B to Google's 28.7B. comScore's Jack Flanagan says Google's search dominance creates a "halo effect" that boosts other services such as Gmail, Google Finance, and Picasa.
• Ask one-ups Answers. IAC/InterActiveCorp's (IACI) Ask.com is buying Lexico Publishing, which owns Dictionary.com, Thesaurus.com and Reference.com, after Answers.com (ANSW) took back its $100M bid due to funding difficulties. IAC doesn't says how much it's paying, but sources say it's about the same as Answers.com's $100M. Lexico sites drew about 15.6M U.S. visitors in March; IAC's Ask.com and its affiliated sites drew 55.4M. Ask.com says the merger will make it the #9 web property in the world. "It is profitable, very profitable... We believe it will be accretive in the first quarter that we have it," Ask.com's Doug Leeds says of Lexico.
• Your fridge may soon be a collector's item. Sources say GE (GE) wants to sell part or all of its appliance unit, and has hired Goldman (GS) as an advisor. A sale could net up to $8B. CEO Jeffrey Immelt is shedding units he thinks will prevent GE from reaching its 10% profit growth goal. Despite the brand, GE appliances account for just 4.1% of its sales. GE plunged 13% April 11 after a weak Q1 and reduced 2008 earnings outlook.
• Barclays posts weak Q1, $3.3B writedown. Shares of Barclays (BCS) fell 3.2% in London after the number-three UK bank said Q1 earnings fell amid a £1.7B ($3.3B) writedown on credit-market losses. CDO writedowns accounted for £495M while "other credit market exposures" accounted for the rest. Analysts said the writedowns appeared relatively light, but noted the prospect of "significant further writedowns."
• Comcast buys Plaxo, goes social. Comcast (CMCSA) (no, not GOOG or Facebook) is buying its partner Plaxo, which hosts Comcast Webmail accounts. "Comcast has an exciting vision to bring the social media experience to mainstream consumers," Plaxo CEO Ben Golub says. "Together, we will be able to help users connect with all the people they care about, across all of the devices they use, with all the media they love to consume, create, and share." TechCrunch's Michael Arrington speculates the price tag is in the $150-170M area.
• Gov't wants UBS to name names. The Department of Justice is expected to subpoena UBS (UBS) for the names of U.S. clients who may have worked with UBS to evade taxes.
• New headache for migraine sufferers. Migraine medicines, including Merck's (MRK) Maxalt and GlaxoSmithKline's (GSK) Imitrex, led to adverse reactions in at least 11 people, two of them life-threatening. Researchers reported in the NEJM triptan-based medicines can lead to serotonin syndrome, leading to mental status changes, overactive reflexes, muscle spasms, fever, uncoordinated movements, heavy sweating and nausea or vomiting.
• Sweet deal. DuPont (DD) and Danish Danisco are teaming up to develop technology to produce cellulosic ethanol from corn stover and sugar bagasse, and ultimately from non-crop foods. "Our goal is to be a turn-key package supplier to ethanol makers," they said. Lowering the costs of producing cellulosic ethanol, which derives from non-edible materials but is typically expensive, is one of the $140M venture's main goals.
• Mizuho sees recovery. Japan's Mizuho (MTG) announced ¥800B in share buybacks and a 10-for-1 stock split, after posting an ¥81.8B FQ4 loss. Mizuho said profits in the coming year may rise 80% to $5.3B, short of analyst estimates. "All of the write-offs at Mizuho and other Japanese banks are over, so we expect earnings to return to the right path," a fund manager said.
• Verizon, AT&T win gov't contracts. Verizon Communications (VZ) won a contract to provide IP and security services to the U.S. Department of Homeland Security worth about $678.5M over 10 years. AT&T (T) won a $292M contract to serve as the secondary network service provider in the Eastern and Western regions.

Earnings: Wednesday After Close

• Acxiom (ACXM): FQ4 EPS of $0.15 misses consensus of $0.16. Revenue of $350M vs. consensus of $349M. Acxiom said it will restate results from 2006 and 2007 to correct accounting-related issues. Shares: flat.
• Aegean Marine (ANW): Q1 EPS of $0.18 in-line. Revenue of $532M vs. consensus of $553M. Shares: -0.1%.
• Agilent (A): FQ2 EPS of $0.51 beats consensus of $0.48. Revenue of $1.52B vs. consensus of $1.43B. Shares: +4.8%.
• Ctrip.com (CTRP): Q1 EPS of $0.27 beats $0.18. Revenue of $49M vs. consensus of $46.5M. Ctrip said it has not yet determined the impact of this week's earthquake in China's Sichuan province. Shares: -9.6%.
• Sina.com (SINA): Q1 EPS of $0.33 beats $0.27 consensus. Revenue of $71.3M vs. $67.4M consensus. Sees Q2 revenue of $88-90M vs. $81.6M consensus.
• Spartan Stores (SPTN): FQ4 EPS of $0.36 beats consensus of $0.33. Revenue of $571M vs. consensus of $587M. Shares: -0.1%.
• Stanley (SXE): FQ4 EPS of $0.33 beats consensus of $0.31. Revenue of $173.5M vs. consensus of $169M. Sees Q1 EPS of $0.30-0.32, better than consensus of $0.29, and 2009 EPS of $1.26-1.34, short of consensus of $1.33. Sees 2008 Revenue of $665-695M vs. consensus of $701.5M. Shares: -0.6%.
• Steak n Shake (SNS): FQ2 EPS of -$0.10 misses consensus of $0.01. Revenue of $190.5M vs. consensus of $189M. Shares: -3%.

Earnings: Thursday Before Open

• Blockbuster (BBI): Q1 EPS of $0.21 beats consensus of $0.15. Revenue of $1.39B vs. $1.44B consensus. Same-store revenue gained 2.9% Y/Y.
• InterOil Corp (IOC): Q1 EPS of -$0.08 beats consensus of -$0.29. Revenue of $192M vs. consensus of $194M.
• Illinois Tool Works (ITW): Q1 revenues grew 11.5%. Sees Q2 EPS of $0.94-1.00, in-line. Sees Q2 revenue growth of 9-12%. Sees 2008 EPS of $3.35-3.49, short of $3.64 consensus.
• J.C. Penney (JCP): Q1 EPS of $0.54 beats consensus of $0.49. Revenue of $4.13B vs. consensus of $4.17B. Sees Q2 EPS of $0.38, better than $0.37 consensus.
• Melco PBL Entertainment (MPEL): Q1 EPS of $0.10 beats consensus of $0.09. Revenue of $483M vs. consensus of $538M.
• Prestige Brands (PBH): Q1 EPS of $0.21 beats consensus of $0.19. Revenue of $80M vs. consensus of $81M.
• Teekay Shipping (TK): Q1 EPS of $0.83 misses consensus of $0.96. Revenue of $568M vs. $635M consensus.
• Urban Outfitters (URBN): Q1 EPS of $0.25 beats consensus of $0.23. Revenue of $394M vs. consensus of $3921M. Q1 SSS gained 10%.
• Yingli Green Energy (YGE): FQ4 EPS of $0.27 beats consensus of $0.17. Revenue of $227.5M vs. consensus of $204M.

Today's Markets

• The Nikkei gained 0.94% to 14,251. Elsewhere in Asia: Hang Seng -0.08% to 25,514. Shanghai -0.55% to 3,637. BSE Sensex +2.21% to 17,354.
• Europe at midday: FTSE +0.28% to 6,234. CAC -0.19% to 5,046. DAX -0.21% to 7,068.
• U.S. futures are up at 7:15 AM. Dow +0.16% to 12,900. S&P +0.12% to 1,409.50. Nasdaq +0.25% to 2,001.
• Gold is flat at $866.30. Oil is up 0.61% to $125.

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Comments

[stockczar]

US manufacturing economy stalling per today's news. "Manufacturing activity in the New York area deteriorated slightly in May, the New York Federal Reserve Bank said Thursday. The bank's Empire State Manufacturing index fell to negative 3.2 in May from 0.6 in April. This is the third month in the last four that the index has been negative. Readings below zero indicate contraction. The report was weaker than expected. Economists were expecting to be essentially flat in April. "

Expect Basic Materials IYM to pull back. Higher costs for Basic Materials companies due to energy price spike matched with inability to raise prices in a near-recessionary environment.

[Robt1947]

stockczar, i wish i had an adviser on the ball like you seem to be...keep the info coming..cheers

[wsigler]

"Expect Basic Materials IYM to pull back. Higher costs for Basic Materials companies due to energy price spike matched with inability to raise prices in a near-recessionary environment. "

Were that true, we'd not have to worry about inflation, now would we...

[RichardSchweitzer]

There is more to the "Empire State" picture and that is relocation. NY is not a good state to be in; and, as people said of Ark. during the depression, "It's a good state to be FROM."