Wall Street Breakfast: Must-Know News

• Jitters trigger Freddie, Fannie selloff. Shares of Freddie Mac (FRE) and Fannie Mae (FNM) fell 18% and 16% Monday as investors dumped shares, sending the GSEs to their lowest levels in more than 14 years. The selloff may have been triggered by any number of factors: A Lehman note saying accounting rule changes could force the two to raise a combined $75B in new capital (although many expect the two to be exempted); rumors a major shareholder was dumping his stake; larger than expected exposure to private mortgage insurers; the failure of FRE to raise $5.5B by quarter-end after saying in May it would do so.
• Icahn, Microsoft attack Yahoo board. Activist shareholder Carl Icahn and recent Yahoo (YHOO) courter Microsoft (MSFT) published concurrent letters Monday aimed at turning shareholder sentiment against Yahoo's current board. Icahn says recent discussions with CEO Steve Ballmer have convinced him MSFT is still interested in YHOO, but is under no circumstances willing to negotiate with its present board. MSFT backed up the contention, maintaining it would still consider buying YHOO's search business, or even the whole company, if the board were replaced. It welcomes Icahn's interest. YHOO responded by repeating its contention MSFT isn't serious about a deal, and if Icahn has anything more to add other than hoping MSFT might come back to the table, they'd like to hear it. YHOO shares gained 12% - apparently an indication of renewed hopes of a new board, and a full-fledged deal.
• IndyMac to slash jobs, shrink operations. IndyMac (IMB) said late Monday it has stopped accepting most types of loan applications, and will slash more than half of its work force amid massive losses from home-mortgage defaults. IndyMac is one of the largest originators of Alt-A loans. This morning it disclosed its banking division is experiencing higher levels of deposit withdrawals after Senator Charles Schumer urged federal regulators last week to keep a close eye on the company. -35% in the pre-market.
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• Siemens slashes workforce. Siemens (SI) will cut almost 17,000 jobs in an effort to cut costs and boost margins. Siemens earned just $13K per employee in 2007 - vs. $68K for GE (GE). Shares are down 36% YTD.
• Confidential copper. Sources quoted in a Dow Jones report say secret stockpiles of copper are sitting in Chinese warehouses as merchants and hedge funds try to squeeze the market. (CPU, IVN, FCX)
• Studio stiffs AMD. Dreamworks Animation (DWA) chose Intel (INTC) to supply the chips for its computer-animation projects. DWA has been one of AMD's (AMD) highest-profile clients. Hewlett-Packard (HPQ) will continue to supply the workstations. "For our artists, the impact is going to be really nothing less than monumental," CEO Jeffrey Katzenberg said. Disney's (DIS) Pixar unit still uses AMD chips.
• Pepsi Bottling beats. Pepsi Bottling Group (PBG) posted Q2 EPS of $0.78, beating by $0.03. Price increases more than offset a decrease in volume. "In the most difficult environment for non-alcoholic beverages in recent memory, Pepsi Bottling Group appears to be toughing it out," Credit Suisse analyst Carlos Laboy said. Shares +2.9% in the pre-market.
• AU Optronics sees cutbacks, weak demand. AU Optronics (AUO), the third-largest manufacturer of LCD displays, fell 4.3% in Asia after saying it may shut production lines and cut capital spending this year because of lower-than-expected demand for LCD monitors and TVs.
• Eagle unit may fly from AMR. AMR Corp. (AMR) shared financial data on its American Eagle regional unit with interested parties in early May. It says it still expects to finish a deal on the unit by year-end. A spinoff is more likely, analysts say, given the deflated value of airline stocks.
• Never too cheap. While investors may be wondering whether the time is ripe to pick up shares of Freddie (FRE) and Fannie (FNM) on the cheap, WSJ's Heard on the Street wonders if common shares will be worth anything by the end of the housing crisis. "How bad could it get? The best worst-case scenario looks to be large capital raises in which millions of new common shares are issued, diluting the holdings of existing shareholders."

Today's Markets

• Asia markets were mainly lower - much lower. Nikkei -2.45% to 13,033. Hang Seng -3.16% to 21,221. Shanghai +0.81% to 2,815. BSE Sensex -1.3% to 13,350.
• In Europe, markets are down at midday. London -1.14%. Paris -1.65%. Frankfurt -1.65%.
• At 8:20, futures indicate a weak open: Dow -0.4% S&P -0.42%. Nasdaq -0.33%.
• Crude -1.3% to $139.50. Gold -0.8% to $921.50.

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Comments

[Scully:]

"Disney's (DIS) Pixar unit still uses AMD chips. " ...

Incorrect, Pixar is an Intel house. They switched from Sun to Intel based render/servers in 2003. Google is your friend.

Intel was the driving force behind Monsters, Inc., Finding Nemo, The Incredibles, Cars and most recently Wall.E
www.intel.com/pressroo...
news.cnet.com/2100-100...

2008 Jul 09 02:24 AM