- Greek PM on brink as protests turn violent. Greek Prime Minister George Papandreou will reshuffle his Cabinet and seek a parliamentary vote of confidence that he could lose as he attempts to push through austerity measures that would enable the country to receive more international aid and prevent a default. The moves come in response to mass discontent in Greece, with protests yesterday sometimes turning violent. The increasing prospect of a default has rattled the euro, as well as U.S. and other markets around the world, while Greek bond yields and credit default swaps have leapt to new highs. In the U.S., bank exposure to Greek debt at the end of 2010 was $41B, although much of this appears to be indirect.
- Energy Transfer to buy Southern Union for $7.9B. Energy Transfer (NYSE:ETE) has agreed to buy Southern Union (NYSE:SUG) for $7.9B, including the acquisition of $3.7B of debt. The $33 a share offer is a 17% premium to Southern Union's $28.26 close yesterday. Energy Transfer expects the transaction to be immediately accretive to its distributable cash flow, and to create growth opportunities across the U.S. as well as the potential for affiliate joint ventures. The company has also identified approximately $100M in commercial and operational synergies and has identified an additional $25M in one-time savings.
- Citigroup: Details of 360,000 cards exposed. Citigroup (NYSE:C) said last night that hackers gained access to the details of over 360,000 North American credit cards, a far higher figure than the bank indicated when it first disclosed the breach last week. Citigroup initially said 1% of clients were exposed, suggesting the number was about 200,000. Citigroup is part of a growing list of victims of cyber attacks, the latest being the CIA. The agency's public Web site was brought down by the Lulz hacking group, although the assault was the type in which no systems are broken into. Meanwhile, outsourcing firm Automatic Data Processing (NASDAQ:ADP) has reported a data breach that affected one client.
- Foreclosures fall in May. Banks repossessed 66,879 homes in May, down 4% from April and 29% from a year earlier, data from real estate firm RealtyTrac shows. The number of foreclosure filings decreased 2% from April to 214,927. The drop in activity is due to processing delays and weak buying demand, as this gives lenders little incentive to seize new homes if they can't sell previously repossessed ones. The backlog is likely to lead to further declines in values as foreclosed homes sell at a discount, bringing prices down in the wider market. As RealtyTrac Senior VP Rick Sharga said, "it's going to take that much longer for the housing market to recover."
- Pandora bubble quickly punctures. The enthusiasm for Internet IPOs sent shares in Pandora Media (NYSE:P) soaring 63% in the first few hours of its debut yesterday; however, concerns about the Internet music company's ability to eventually make a profit and wider market negativity caused the stock to lose much of its gains and close a mere +8.9%. "Investors had their initial emotional flush with the stock," said one market observer. "Then they got a strong dose of reality." Pandora has 90M registered accounts but it has problems generating enough revenues from ads to cover the royalties it pays for music.
- Investors hoping for better news in RIM Q1 report. Research in Motion (RIMM) is expected to report EPS of $1.32 on revenues of $5.4B when it releases FQ1 results after the market closes today. However, with shares sinking after the BlackBerry maker gave a surprise profit warning in April, investors will be hoping for strong sales of its new PlayBook tablet and details of new handsets that can better compete with Apple (NASDAQ:AAPL) and Android (NASDAQ:GOOG) devices.
- Finisar sinks on disappointing outlook. Shares in Finisar (NASDAQ:FNSR) slumped 17.8% in post-market trading after the telecom components maker said it expects FQ1 EPS of $0.16-$0.20 on revenue of $221M-$236M, way below analyst forecasts of $0.36 and $251M respectively. The fall in shares came despite Q4 net profit growing 15% to $16.4M and revenue 26% to $237M. Finisar is experiencing a continued slowdown in demand from China, where it generates more than a fifth of revenue. In the wider market, expectations for companies that operate in Finisar's space are high, as wireless carriers are investing in long-term evolution networks and optical switches to cope with a surge in traffic.
- AMD spurned four times in hunt for CEO. AMD (NASDAQ:AMD) has approached at least four candidates to replace deposed CEO Dirk Meyer but has been turned down by all of them, sources said. Those who received offers include Oracle (NYSE:ORCL) Co-President and former HP (NYSE:HPQ) CEO Mark Hurd, as well as executives at Apple (AAPL), EMC (EMC) and Carlyle Group. The main task for AMD's next CEO will be to lead a turnaround at the chip maker, which has made a profit in only four of the past 10 years and remains deep in Intel's (NASDAQ:INTC) shadow.
- HSBC, Citi get OK to underwrite China corporate debt. HSBC's (HBC) and Citigroup's (C) hopes of entering the fast-growing Chinese corporate bond market gained a boost after they received initial approval to underwrite company debt, sources said. Final approval from the Bank of China, which could come within two weeks, would mark a significant breakthrough for foreign banks, analysts said, with one describing the market as offering "huge growth potential." Currently, only domestic banks are allowed to underwrite corporate debt, but the government is allowing foreign institutions in as it looks to beef up the market and turn Shanghai into an international financial center.
- Hershey interim CEO becomes permanent. Hershey (NYSE:HSY) has given interim CEO John Bilbrey the job on a permanent basis and said it is on track to meet its 2011 financial goals. Bilbrey replaces David West, who resigned last month to become CEO of Del Monte Foods (NYSE:FDP). Although West turned Hershey around after skidding sales, the chocolate company is under pressure to grow in North America and developing economies such as China, Brazil and India. Nonetheless, Hershey forecasts 2011 EPS excluding items at the top of its long-term 6%-8% goal.
- HP and Oracle: From arm-in-arm to bitter antagonists. HP (HPQ) is suing Oracle (ORCL) over the latter's decision to discontinue developing software for an Intel (INTC) microprocessor as a once close relationship deteriorates rapidly. The titans have been partners for 30 years and have about 140,000 customers in common, but as HP's lawsuit said, "In a mere eight months, Oracle has gone from arm-in-arm partnership with Hewlett-Packard to bitter antagonist." More happily for HP, it will partner with Toshiba (OTCPK:TOSBF) on cloud computing services to support public networks, including power, water, gas and information technology systems.
Earnings: Thursday Before Open
- Pier 1 Imports (NYSE:PIR): Q1 EPS of $0.12 beats by $0.01. Revenue of $334.6M (+9.2% Y/Y) in-line. (PR)
- Smithfield Foods (NYSE:SFD): FQ4 EPS of $0.85 beats by $0.03. Revenue of $3.12B (+7.1% Y/Y) misses by $0.08B. (PR)
Earnings: Wednesday After Close
- Finisar (FNSR): FQ4 EPS of $0.33 in-line. Revenue of $237M (+26% Y/Y) misses by $6M. (PR)
- In Asia, Japan -1.7% to 9411. Hong Kong -1.8% to 21953. India -0.8% to 17986.
- In Europe, at midday, London -1.2%. Paris -1.0%. Frankfurt -0.8%.
- Futures at 7:00: Dow -0.1%. S&P flat. Nasdaq -0.1%. Crude +0.2% to $95.00. Gold -0.1% to $1525.50.
Thursday's Economic Calendar
8:30 Housing Starts
8:30 Initial Jobless Claims
8:30 Current Account
10:00 Philly Fed Business Outlook
10:00 House Hearing: Financial Regulatory Reform
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
The SA Currents team contributed to this post.
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