Wall Street Breakfast: Must-Know News

by: SA Editors
SA Editors
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.

  • Quake hits TI's quarter. Texas Instruments (NYSE:TXN) reported earnings of $0.55/share, vs. consensus of $0.58, on revenue of $3.4 billion, saying it faced production setbacks due to the March 11 earthquake and tsunami in Japan, which damaged two factories and threw off demand. In its earnings call, CEO Richard Templeton forecast growth in the second quarter and a good second half despite continued pressure.
  • S&P puts U.S. credit on notice. With the conversation in Washington all about cutting the budget this year and next, S&P took the step of putting a negative outlook on the United States' top-notch AAA credit rating, lowering it from "stable" for the first time. Stocks opened sharply lower and finished Monday with their worst tumble in a month, in apparent reaction; the ratings firm clarified in a news conference that there's a one-in-three chance of a downgrade, as it monitors events over six months to two years. Later, though, Treasury prices rebounded from an initial fall as observers hoped the news might encourage a deficit-cutting deal. Still ahead and closing fast: the debt ceiling.
  • Greece puts focus back on European credit. With the S&P downgrade not exactly a shock, many attributed stocks' blue Monday to continued European credit problems, as Greece's finance ministry denied a report it had asked the IMF and EU to start talks on restructuring its debt. The country's credit-default swaps soared further into record territory and its two-year note yield crested 20%. Investors might be careful what they wish for, as a Greek default could reignite a continental debt crisis, starting with Spain. Meanwhile, Moody's downgraded Irish banks.
  • Housing still sagging.. A pickup of housing starts in March probably failed to make up the ground lost in February, when starts sunk 23%. Analyst consensus figures last month's gains at 8.6%; the Commerce Department is set to report the new number at 8:30 a.m. The National Association of Home Builders reported builder confidence slipped a touch, to 16 on its index vs. an expected 17. And a shadow inventory of some 1.8 million homes delinquent or in foreclosure is set to add to the 3.5 million homes already on the market.
  • U.S. hits accelerator on sale of GM stake. The government could step up the pace on unloading its 33% stake in General Motors (NYSE:GM) in June, August and September - though the automaker's disappointing stock performance means that might deepen U.S. losses on its bailout. GM shares closed at $29.97, 9.2% below its IPO price; to break even the U.S. would have to sell the remaining shares at $53. Meanwhile, GM says it's raising prices by an average of $123/vehicle - not due to the Japan earthquake, but because of the rising cost of raw materials like petroleum. Toyota (NYSE:TM) has also recently raised prices.
  • Buffett reluctantly accepts Goldman's billions. Right on schedule, Goldman Sachs (NYSE:GS) repurchased $5 billion in preferred shares it sold Berkshire Hathaway (NYSE:BRK.A) in fall 2008, and threw in a 10% dividend ($500 million) besides. But Warren Buffett has joked if he knew they were calling to pay him back, he'd avoid answering the phone; he'd been drawing a continuous stream of 10% annual dividends on the deal (about $1,369,863/day). Goldman reports earnings with new breakouts today at 8 a.m.; consensus estimates are EPS of $0.82 on revenue of $10.18 billion. The quarter will reflect the Buffett repayment, which will hit earnings to the tune of about $2.84/share.
  • AIG asset sales touch on rails. In the middle of a stream of divestitures, rescued insurer AIG reached a deal reported at $600 million to sell its rail-car leasing unit to Perella Weinberg - which already owns Infinity Transportation, a manager of rail and trucking assets. AIG, which got a $182.3B bailout, has disclosed divestitures valued at more than $50 billion.
  • Apple charges Samsung with aping success. Apple (NASDAQ:AAPL) adds to the web of litigation around smartphones and tablets with a patent and trademark suit against fast-growing Samsung Electronics, saying the latter's Galaxy phones and tablets "slavishly" copy the iPhone and iPad. Apple and Nokia (NYSE:NOK) have sued each other in recent months as well; what's really at stake may be the foothold of Google's (NASDAQ:GOOG) Android (Samsung's operating system of choice). "If Apple fails to fend off Android, it will within a year or two find itself in a situation like Research in Motion (RIMM)," says one specialist.
  • Citi shambles to a narrow beat. Citigroup (NYSE:C) stock was unchanged at $4.42 Monday as it tried to point to a few signs of improvement in an earnings report that showed profits sank 32% on revenue that dropped 22%. Per-share earnings of $0.10 beat by a penny, and losses from delinquent loans showed improvement, but the bank is still struggling toward recovery, burdened by legacy holdings of toxic debt. The zombie's still walking: It was a fifth straight profitable quarter. Elsewhere in banking: Zions Bancorp (NASDAQ:ZION) swung to an unexpected profit on a narrow loan-loss provision.

Earnings: Monday After Close

  • Texas Instruments (TXN): Q1 EPS of $0.55 misses by $0.03. Revenue of $3.4B (+6% Y/Y) in-line. Shares -1.4% AH (PR)
  • Zions Bancorp (ZION): Q1 EPS of $0.08 may not be comparable with consensus of -$0.18. Shares +4% AH. (PR)

Today's Markets

  • In Asia, Japan -1.2%. Hong Kong -1.3%. China -1.9%. India +0.2%.
  • In Europe, at midday, London +0.6%. Paris +0.6%. Frankfurt +0.5%.
  • Futures at 7:00: S&P flat. 10-yr -0.09%. Euro +0.27% vs. dollar. Crude -0.97% to $106.65. Gold +0.14% to $1495.00.

Tuesday's Economic Calendar

Jason Aycock contributed to this post.

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

After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.