Wall Street Breakfast: Must-Know News

by: Wall Street Breakfast
Wall Street Breakfast
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.

Top Stories
Dish gives up on Sprint to focus on Clearwire. Dish (NASDAQ:DISH) has all but abandoned its bid for Sprint (NYSE:S) after saying SoftBank's (OTCPK:SFTBF) revised deal made it "impracticable" for the satellite-TV provider to submit a new offer by Sprint's deadline yesterday. Dish will now focus on its proposal for Clearwire (CLWR). It looks as if SoftBank will end up with Sprint and Dish with a big minority stake in Clearwire that it could use to obtain a 4G network/spectrum deal.

Global stocks mixed ahead of FOMC. U.S. stock futures were flat-to-higher and European shares (NYSEARCA:FEZ) mixed ahead of the FOMC's policy announcements later today, with investors seeming to be increasingly confident that the Fed won't signal the end of its QE program. "There is a lot of slack in the economy and there is no inflation pressure," says Standard Chartered's Ned Rumpeltin in explanation.

Bidding war breaks out for Kabel Deutschland. Vodafone (NASDAQ:VOD) has reportedly raised its preliminary bid for German cable company Kabel Deutschland (OTCPK:KBDHY) to €7.5B ($10B), or €85 a share, matching a proposal recently made by Liberty Global (NASDAQ:LBTYA). Vodafone is studying Kabel's books "before it presents an official offer in the coming weeks." Vodafone's bid is in cash while Liberty's consists of assets as it looks to skirt anti-trust concerns - the U.S. company already owns Unitymedia, Germany's second-largest cable operator.

Top Stock News
Alcatel-Lucent to slash costs, sell assets in "Shift Plan." Alcatel-Lucent's (ALU) shares rose 4.8% premarket after it unveiled the "Shift Plan," which is designed to turn the company around with a refocus on IP networking and ultra-broadband access. Alcatel-Lucent intends to cut costs by €1B and sell €1B of assets within two years as it looks to become cash-flow positive by 2015. At that point, the telecom-equipment company plans to slash its debt by €2B by selling shares or more assets.

Boeing continues to win deals in Paris. Boeing (NYSE:BA) has won an order for 30 of its next-generation 737 MAX aircraft from air-leasing firm CIT Group (NYSE:CIT) in a deal worth $3B at list prices. The plane maker intends to bring the MAX into service in Q3 2017, a quarter earlier than previously planned, but still somewhat later than the rival Airbus (OTCPK:EADSF) A320neo. Meanwhile, Korean Air has agreed to purchase five 747 aircraft and six 777 jets in an agreement valued at $3.6B.

Adobe shares jump as cloud service grows. Adobe's shares surged 5.2% premarket after its adjusted FQ2 EPS of $0.36 beat expectations, although net profit dropped to $76.5M from $223.9M a year earlier and revenue fell 10% to $1.01B. Still, demand rose for Creative Cloud, the online version of Adobe's flagship software product, with subscriptions rising by 221,000 paid members to 700,000.

Verizon eyes Canada's Wind Mobile. Verizon (NYSE:VZ) is interested in acquiring Canadian peer Wind Mobile, the U.S company has said. Verizon has reportedly held talks to buy Wind, which is a relatively new entry into the Canadian market and is struggling. VimpelCom (VIP), Wind's largest owner, wants around $500M, although Verizon may then have to pump in another $1-2B for spectrum purchases, network upgrades and consolidation costs.

SEC to reduce "no admit, no deny" deals. The SEC plans to alter the somewhat cozy relationship it has with Wall Street and force companies to admit wrongdoing in some settlements or face the risk of going to court instead. That's not to say that the agency will abandon the "no admit, no deny" approach, new Chairwoman Mary Jo White said yesterday, but it does mark her first big policy change.

Empire State Building subject of $2B offer. The Malkin family has received a $2B proposal for the Empire State Building from New York company Cammeby's International. The bid is below the $2.33B after-debt value that an appraisal last summer placed on the iconic 102-story building. The proposal comes three weeks after the tower's investors authorized a plan to put it in a REIT called Empire State Realty Trust (ESB) with 17 other properties and take it public.

Nvidia follows ARM's direction. In a strategy shift, Nvidia (NASDAQ:NVDA) is offering to license its Kepler architecture, as well as its "visual computing" IP, to other chipmakers looking to power mobile hardware. Kepler serves as the foundation for much of Nvidia's PC/workstation lineup, as well as the graphics processing unit within its next-generation Tegra 5 (Logan) processor. Nvidia's move puts it into competition with the likes of Imagination (OTCPK:IGNMF) and ARM (NASDAQ:ARMH).

Obesity now a disease. The American Medical Association has voted to recognize obesity as a disease, a move that could prompt more insurers to pay for it - and define a third of Americans as being ill. SA author Spencer Osborne points out that companies that could benefit include Arena (NASDAQ:ARNA), Vivus (NASDAQ:VVUS) and Orexigen (NASDAQ:OREX), although it's worth noting that the AMA's decision has no legal standing.

News Corp publishing shares drop on debut. Shares in new News Corp (NASDAQ:NWS), which will hold the company's publishing assets when it splits on June 28, fell 3% to $14.55 on their trading debut in Sydney after opening at a lower-than-expected $15. Due to the split, shares in 21st Century Fox, the entertainment business that comprises the other half of News Corp and is still trading under the parent company's name for now, dropped 6.9% to $30.53.

Kodak looks to raise $406M. Kodak (EKDKQ.PK) is seeking a court order to approve a $406M rights offering, which the bankrupt company intends to use to fund distributions. A number of creditors have agreed to backstop the offering of 34M shares for $11.94 each.

Top Economic & Other News
Japanese exports jump 10.1%. The weak yen helped Japanese exports grow at the fastest rate since 2010 in May, with sales abroad jumping 10.1% on year vs +3.8% in April and consensus of +6.5%. However, volume dropped 4.8%, hurt by the economic situation in China and the EU. With imports climbing 10%, Japan generated a trade deficit for the 11th consecutive month as the figure widened 13% on month to ¥993.9B ($10.4B).

Spot oil market subject to rigging - WSJ. The WSJ carries an expose of how traders manipulate the spot market for oil by selling a small amount at a loss to drive down the benchmark price and then buy shiploads at the lower cost. McGraw Hill Financial (MHFI) unit Platts, which sets the benchmark by relying on information that traders provide about their deals, said that it's not aware of such manipulation.

Alpha-Rich Stock Movers and Great Calls
1) Cray (NASDAQ:CRAY) is +7.5% since Vince Martin said Monday that the Q1 sell-off was well overdone.
2) A.T. Cross (NASDAQ:ATX) is +34% since Alan Brochstein cited strategic alternatives that could unlock value for the sunglasses company in February.

Alpha-Rich Stocks To Watch
1) The recent meltdown in Premier Exhibitions (NASDAQ:PRXI) is a buying opportunity, as shares are "a dollar trading for $0.75" under extremely conservative assumptions.
2) The market doesn't fully appreciate Penn Virginia's (PVA) transformational Eagle Ford acquisition. It's a potential double or triple in the next 2-3 years.

Alpha-Rich articles are the best long and short ideas on Seeking Alpha. SA Pro subscribers receive early access to these Alpha-Rich articles, which often move markets. For more information about SA Pro and becoming a subscriber, click here.

Today's Markets:
In Asia, Japan +1.8% to 13245. Hong Kong -1.1% to 20987. China -0.7% to 2143. India +0.1% to 19246.
In Europe, at midday, London -0.4%. Paris -0.7%. Frankfurt +0.2%.
Futures at 7:00: Dow flat. S&P +0.1%. Nasdaq +0.2%. Crude +0.2% to $98.77. Gold flat at $1367.40.

Today's economic calendar:
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:00 PM FOMC Forecast
2:30 PM Bernanke Press Conference

Notable earnings before today's open: FDX

Notable earnings after today's close: FNSR, JBL, MU, RHT

See full real-time earnings coverage »

Wall Street Breakfast is sent out by email for free -- Get it now »