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.
  • Wachovia, with fresh CEO, loses CFO. Just two weeks after Wachovia (NASDAQ:WB) replaced its CEO with former U.S. Treasury Undersecretary Robert Steel, CFO Thomas Wurtz says he will leave the troubled bank once a successor is named. The company gave no explanation.
  • Foreclosures more than doubled in Q2 vs. a year ago; one in every 171 U.S. homeowners lost their home, up 121% from a year ago. Falling home prices have left some owing more than their home is worth, one reason for the increase - which in turn puts further pressure on housing prices. "Rising foreclosures are putting downward pressure on prices, increasing the possibility that homeowners will go upside- down on their mortgages," Merrill economist Sheryl King says. "That will cause more losses in mortgage portfolios and less willingness from investors to securitize mortgages and therefore fewer mortgages." Pimco's Bill Gross estimates that about 25M people are at risk of owing more than their homes are worth.
  • After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
  • Cleveland-Cliffs: suitor or target? Cleveland-Cliffs' (NYSE:CLF) largest shareholder, Harbinger Capital, wants the iron-ore producer to put itself up for sale - and forget about its $10B bid for Alpha Natural Resources (ANR). With a 16% stake, Phil Falcone's fund effectively has the ability to block any transaction. He thinks CLF ($93) could fetch up to $130/share.
  • Blackstone goes fishing in subprime seas - NY Post. Sources say Blackstone (NYSE:BX) has earmarked $1.25B to make bets in the subprime market, in partnership with Florida firm Bayview Financial. Bayview has already put 40% of the stake to work, a source says. "Whole residential mortgage loans, including toxic subprime mortgages, are the latest in a series of assets battered by the credit crunch to be eyed by hedge funds and other vulture investors. Only a few deep-pocketed investors will likely make a go of it, however, as investing in mortgages requires access to both capital- and loan-servicing companies, which select and manage the loans. Also drooling over the downtrodden residential-mortgage market are hedge funds Fortress and Och-Ziff (NYSE:OZM), as well as traditional asset manager BlackRock (NYSE:BLK)."
  • Infineon posts surprising loss, slashes jobs. Infineon (IFX) lost €592M, more than double what analysts predicted. It will shed about 3,000 jobs - more than 10% of its workforce. "Infineon must adapt its size to today's market conditions," it said. "Headcount reductions will be inevitable." Late yesterday QIMONDA AG (QI), in which IFX owns a 77.5% stake, posted a FQ3 loss of €401M, worse than the €287M analysts were looking for.
  • Energy top concern. Swollen energy prices are the number-one issue on Americans' minds, a new poll finds. The study has political implications: Voters prefer Democratic energy policy over Republican by a ratio of 42:22. Voters in four battleground sates favor offshore drilling as the top-tier method to address the U.S. petroleum shortfall.
  • Deregulation out, regulation in. Housing and financial crises are fueling a new wave of hands-on government regulation of business and the economy, a sharp about face from the deregulation movement that has defined U.S. politics since Ronald Reagan held office. On Thursday, NY Fed governor Timothy Geithner and SEC chief Christopher Cox pushed for more power, and described to the House how government regulation can be strengthened without stifling financial innovation.
  • Another try at extending tax credits. Top Senate tax writer Max Baucus unveiled a revised proposal to extend billions of dollars in expiring credits for businesses Thursday night. The bill includes $16.8B in energy-related incentives.
  • Europe thinks Fed, China aren't doing enough. European G7 leaders want the Fed to hike interest rates to bolster the dollar and curb global inflationary pressure, sources say. They are think a China interest rate raise would be a boon. The absence of action has some concerned the global economy could slip into a recession not seen since the 1930s. Sources say it may be wishful thinking.
  • ECB talks tough. ECB council member Klaus Liebscher says policy makers have room to hike interest rates again, even amid slowing economic growth. The euro rose vs. the dollar in overnight trading, +0.55% to $1.5702. "A lot of people doubted that the poor economic data was going to spell the end of the tightening cycle," Barclays' David Woo says. "The fact that the ECB is still talking tough and oil prices are starting to stabilize is psychologically supportive for the euro."

Earnings: Before Open

  • Barnes Group (NYSE:B): Q2 EPS of $0.6 beats by $0.01. Revenue of $191M (+4.4%) vs. $210.5M. [PR]
  • Black & Decker (BDK): Q2 EPS of $1.46 beats by $0.04. Revenue of $1.64B (-3.4%) in-line. [PR]
  • Coventry Health Care (CVH): Q2 EPS of $0.55 in-line. Revenue of $2.98B (+27.7%) in-line. [PR]
  • Fortune Brands (FO): Q2 EPS of $1.25 beats by $0.05. Revenue of $2.1B (-8.6%) vs. $2.05B. Shares [PR]
  • Honda (NYSE:HMC): Net operating profit rose 8% to ¥179.6B; analysts expected a loss of ¥135.4B. [AP]
  • ITT Industries (NYSE:ITT): Q2 EPS of $1.19 beats by $0.09. Revenue of $3.06B (+37.8%) vs. $2.93B. [PR]
  • Netflix (NASDAQ:NFLX): Q2 EPS of $0.42 beats by $0.02. Revenue of $338M (+11.2%) in-line. [PR]

Earnings: After Close

  • BMC Software (NASDAQ:BMC): FQ1 EPS of $0.43 in-line. Revenue of $437.5M (+13.6%) vs. $433M. Shares -3.4%. [PR]
  • Burlington Northern Santa Fe (BNI): Q2 EPS of $1.34 beats by $0.04. Revenue of $4.48B (+16.5%) in-line. Shares -0.1%. [PR]
  • Celestica (NYSE:CLS): Q2 EPS of $0.17 in-line. Revenue of $1.88B (-3.1%) vs. $1.93B. Shares +0.8%. [PR]
  • Chubb (NYSE:CB): Q2 EPS of $1.40 misses by $0.07. Net premiums written down 0.4% to $3.05B. Shares -0.6%. [PR]
  • CROCS (NASDAQ:CROX): Sees Q2 EPS of $0.04-0.08 vs. $0.41. Sees Q3 EPS of $0.01-0.05 vs. $0.57. Sees revenue of $195-205M vs. $282M. [PR]
  • CyberSource (CYBS): Q2 EPS of $0.16 beats by $0.01. Revenue of $55.7M (+143.2%) vs. $54.3M. Shares +6%. [PR]
  • Global Payments (NYSE:GPN): FQ4 EPS of $0.52 beats by $0.01. Revenue of $344M (+22.7%) vs. $328M. Shares +0.1%. [PR]
  • Ingram Micro (NYSE:IM): Q2 EPS of $0.35 in-line. Revenue of $8.82B (+7.7%) vs. $8.58B. "We expect the macro-economic softness to continue into the third quarter." [PR]
  • Interactive Brokers (NASDAQ:IBKR): Q2 EPS of $0.44 misses by $0.06. Revenue of $395M (+34.2%). Shares -15%. [PR]
  • Juniper Networks (NYSE:JNPR): Q2 EPS of $0.28 beats by $0.01. Revenue of $879M (+32.2%) vs. $852M. Shares -3%. [PR]
  • PerkinElmer (NYSE:PKI): Q2 EPS of $0.35 beats by $0.01. Revenue of $529M (+20.9%) vs. $506M. Shares +0.3%. [PR]
  • Rambus (NASDAQ:RMBS): Q2 EPS of -$0.13 misses by $0.01. Revenue of $35.7M (-24.8%) vs. $34.3M. Shares -1.3%. [PR]
  • Riverbed Technology (NASDAQ:RVBD): Q2 EPS of $0.13 beats by $0.02. Revenue of $81.6M (+51.1%) vs. $77M. Shares +2.8%. [PR]
  • SiRF Technology (SIRF): Q2 EPS of -$0.19 misses by $0.06. Revenue of $63M (-10.6%) vs. $62M. Shares -7.6%. [PR]
  • Western Digital (NYSE:WDC): FQ4 EPS of $0.94 beats by $0.12. Revenue of $1.99B (+45.8%) vs. $1.89B. Shares +1.5%. [PR]
  • Wynn Resorts (NASDAQ:WYNN): Q2 EPS of $1.11 beats by $0.18. Revenue of $825M (+20%) in-line. Shares +1.5%. [PR]
  • YRC Worldwide (NASDAQ:YRCW): Q2 EPS of $0.39 beats by $0.10. Revenue of $2.4B (-3.5%) in-line. Shares +2.3%. [PR]

Today's Markets

  • Asia markets closed broadly lower Friday. Nikkei -1.97% to 13,335. Hang Seng -1.5% to 22,741. Shanghai -1.55% to 2,865. BSE -3.4% to 14,275.
  • In Europe, bourses are under pressure. London -0.7%. Paris -0.8%. Frankfurt -1.1%.
  • Futures are down somewhat. Dow -0.12%. S&P -0.12%. Nasdaq -0.07%. Crude +0.62% to $126.27. Gold +1% to $931.60.

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