Wall Street Breakfast: Must-Know News

• UBS downsizing? Shares of Swiss bank UBS (UBS) fell more than 4% after sources "with direct knowledge" told Reuters it is mulling a sale of its U.S. wealth management business Paine Webber, which it bought eight years ago for about $10B. "Two years ago, it was almost unthinkable that they would sell it," analyst Peter Thorne said. "It is not exactly the family silver but almost. In my mind, it has been slated for disposal ever since the crisis broke."
• France Telecom, TeliaSonera part ways. France Telecom (FTE) abandoned its $42B bid for Nordic telecom carrier TeliaSonera. The two boards were unable to see eye-to-eye. France Telecom opened up 8.8% in Paris this morning; Telia opened down 14% in Stockholm. FTE was reluctant to substantially raise its bid after shareholders sold its shares down 20% since it announced the offer on June 5.
• ArcelorMittal mulls joining the iron ore skirmish. Global steel producer ArcelorMittal (MT) is thinking about taking a stake in Rio Tinto (RTP) in order to secure more iron ore, possibly by purchasing shares on the open market. A more prudent course might be to wait things out until antitrust authorities weigh in on BHP Billiton's (BHP) $160B bid for Rio Tinto, and possible buy some of Rio's iron ore assets that regulators will likely force it to sell.
After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
• Rhapsody goes DRM-free. Yet another company hopes to dethrone Apple's (AAPL) iTunes store. Like Amazon.com's (AMZN) online music store, RealNetworks' (RNWK) Rhapsody is doing away with DRM (digital rights management), which limits what buyers can do with the tunes they buy - a move that will enable users to play their music on their iPods. "We're no longer competing with the iPod," VP Neil Smith says. "We're embracing it." It is also partnering with Yahoo (YHOO), MTV (VIA), Verizon (VZ) and others to distribute its music. Rhapsody's MP3 store will allow buyers to preview an entire track (vs. 30 seconds) before paying. Prices will be about $0.99/song and $9.99/album. The first 100,000 to sign up get $10 in credits.
• Forced teamwork. Sources say Citigroup (C) is changing its management bonus system to incentivize department managers to work together to win business. If senior managers see their compensation tied to the performance of other parts of the bank, they may do a better job of risk management, CreditSights' David Hendler says. "People will give more thought to the impact of their actions not just on their group, but on the whole company."
• Google recreates mass media. Google (GOOG) is partnering with Family Guy creator Seth MacFarlane to launch an innovative internet syndication initiative. Google will use its AdSense network to broadcast 50 two-minute internet-only episodes of "Seth MacFarlane’s Cavalcade of Cartoon Comedy" to thousands of targeted websites. Ad clips will include prerolls, banners, or simple 'brought to you by' notices. The initiative, which it calls Google Content Network, "will surely send shock waves through the entertainment business" if successful.
• Stormy future for property insurers. U.S. bad weather has already cost property insurers more than $5B this quarter - equal to about 3/4 of 2007's total catastrophe claims. A lull in insurance pricing continues to reduce the companies premiums, which could leave them in an even worse situation by the time the storm season subsides. 40% of insurers reported losses and expenses ate up virtually all their premium in Q1. (ALL, AIG, BRK.A, TRV)
• Delek goes bargain hunting. Israel-based Delek U.S. Holdings (DK) is in negotiations with a yet-unknown partner to buy a $1B U.S. refinery which produces 75,000-100,000 barrels/day.
• Paulson: Don't blame the speculators. Supply and demand, not speculators, are behind high oil prices, U.S. Treasury Secretary Henry Paulson said again Monday in Russia. There are no quick solutions to burdensome oil prices, he said.
• Eurozone inflation hit a record 4% in June, outdoing May's 3.7%, which was also a record. ECB officials have signalled they may bump interest rates to 4.25% from 4% to try and cool prices.

Today's Markets

• Asia markets were mainly lower Monday. Nikkei -0.46% to 13,481. Hang Seng +0.27% to 22,102. Shanghai -0.45% to 2,736. BSE Sensex -2.68% to 13,432.
• Europe: London +0.82%. Paris +0.13%. Frankfurt -0.82%.
• Futures at 7:15 AM: Dow -0.17%. S&P +0.04%. Nasdaq -0.25%. Crude +1.73% to $142.60. Gold +0.14% to $932.60.

Earnings: Before Open

• H&R Block (HRB): FQ4 EPS of $2.11 beats by $0.08. Revenue of $2.62B vs. $2.5B. Sees full-year EPS of $1.60–1.70, better than consensus of $1.58. Announces $2B, four-year share buyback. [PR]
• Mesa Air (MESA): Q2 EPS of -%0.15 misses by $0.10. Revenue of $320M (+8.1%) vs. $325M consensus. [PR]

Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.

Comments

[mariposa]

Citi's plan is a big part of what led to the 2000-2002 problem, rating high who they serve. I did learn to ignore any analyst recommendation from this type of institution, and quit using Morgan Stanley as a brokerage.
Wish I had followed the advice of an investing buddy who said he didn't buy what he didn't understand.

[paul b]

Myriad's Alzheimer's drug, Florizan, fails pIII trial; will be discontinued.

[JennH1310]

Paulson and his boss BUSH will never admit they are wrong on Oil... Paulson is an absolute idiot to say Speculation isn't contributing to higher oil... Speculation may not be the SOLE FACTOR, but it is a cause for higher oil.. Our goverment should at least step and control that aspect of the problem..But, first they (GOVT) must admit there is a problem.

[User 30121]

Paulson is a putz! I would be more emphatic, but writing what he REALLY is would be too profane for this medium.

[tom1234]

AT&T is less than honorable ---on their website two weeks ago they offered $100 towards the purchase of 3g phone----now they say because of the huge responce they changed their position and withdrew the offer to first time buyers of the iphone last yr.so no upgrade insentive for aapl

[tom1234]

incentive

[von Murgenthal]

@ Mariposa: I sold C in 2004 for 57.00 , being ridiculed by friends and
family ! Why: my brother-in-law works for C.
Today I buy Wachovia! Take one of their employees to lunch,
they'll convince you !

Jenn: get 6 jack-ups in the gulf and have them drill 50 holes
off our coast, east or west ! Report on wildcatter activity
around the country : within 60 days , the wild-out-of-order
speculating will subside.

@user :" Paulson is a putz" : he is also a schlep, a schlingel ,
and a lot of more !
G.W. just has no idea who can do the job !