Wall Street Breakfast: Must-Know News

by: SA Editor Yigal Grayeff
SA Editor Yigal Grayeff
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.

  • Airbus seals $17B deal with AirAsia. In one of the biggest ever orders for civilian aircraft, Airbus (OTCPK:EADSY) has received a $17B booking from low-cost Malaysian airline AirAsia (OTCPK:AIABF) for 200 A320neo jets plus an option for 100 more. The latest deal adds to a $16B order Airbus received yesterday for 180 of the fuel-efficient planes from India's Indigo as Airbus enjoys a highly successful Paris Air Show. The aircraft maker has this week secured 730 aircraft orders and commitments worth $72.2B at list prices, and it now has 1,029 orders and commitments for the A320neo. Industry analysts say the bookings for the jet may pressure Boeing (NYSE:BA) to decide more quickly whether to re-engine its competing 737 or build a new plane, which would take longer.
  • Pfizer and Bristol-Myers blood thinner successful in trial. Pfizer (NYSE:PFE) and Bristol-Myers Squibb (NYSE:BMY) plan to file for regulatory approval of their apixaban drug by the end of the year after a successful Phase III trial involving 18,206 patients. The study showed that in people with irregular heartbeats, the blood thinner prevented more strokes with less major bleeding than traditional treatments. Following the news, Bristol-Myers' shares jumped 6% in premarket trading while those of Pfizer rose 2.6%. An ISI Group analyst said that as "apixaban looks very likely to be the only blood thinner with superior efficacy and safety," it could take as much as 50% of a market worth $7B.
  • Shares fall as Fed expectations worsen. U.S. stocks and crude oil fell after the Fed cut its forecast for 2011 GDP growth to 2.7%-2.9% from a 3.1%-3.3% prediction in April. Following a meeting of the FOMC yesterday, the Fed also increased its unemployment and core inflation projections. Ben Bernanke said the Fed doesn't "have a precise read on why this slower pace of growth is persisting," adding that weak housing and problems in the banking system might be "more persistent than we thought." At the meeting, the FOMC kept rates at 0%-0.25% and said it would maintain this level for an 'extended period.' The Fed also confirmed it would end its bond-buying program on schedule, sending the dollar higher.
  • EU leaders to reiterate commitment to Greece. EU heads of government are meeting today and tomorrow in Brussels, where they are expected to agree to transfer a €12B tranche of Greece's bailout package to help the country avoid a default. Meanwhile, officials in France and Germany have been meeting with banks and insurers that hold Greek bonds to discuss how they would shoulder some of the cost of a second Greek bailout without the country being declared in default, sources said. The issue is of such concern that ECB President Jean-Claude Trichet believes the potential spillover of a default is color code 'red.' The fears have led U.S. money market mutual funds to cut their exposure to eurozone banks.
  • EA in talks to buy PopCap for $1B. Video game company Electronic Arts (ERTS) is in late-stage discussions to buy PopCap Games for over $1B, sources said. The acquisition would enable EA to break into mobile and social gaming, where the company has fared less well than in the console arena. In contrast, PopCap has developed what TechCrunch called 'powerhouse' games 'Bejeweled' and 'Plants vs Zombies.' PopCap's revenues are around $100M-150M. The prospective price would represent a large chunk of EA's market cap of $7.49B.
  • Bed Bath goes Beyond expectations. Bed Bath & Beyond's (NASDAQ:BBBY) FQ1 earnings beat forecasts as net profit rose to $180.6M from $137.6M and revenue increased 9.7% to $2.11B. Same-store sales at the department store company climbed 7%. Bed Bath increased its forecast for fiscal-year growth to 15%-20% from a prediction in April of 10%-15%. In a conference call, Bed Bath said it continues to improve the productivity of its existing branches by evolving its offerings, and by "expanding, renovating and/or relocating stores to enhance our customer shopping experience."
  • Oracle earnings seen rising. Oracle (NYSE:ORCL) is expected to report that FQ4 EPS excluding items grew to $0.71 from $0.60 a year earlier when it releases its earnings after the close of trade today. Sales are estimated to have increased to $10.76B from $9.51B, with a key metric for analysts being revenue from new software licenses, as this is an important measurement of the company's ability to lock in new sources of income. Oracle is a bellwether for the state of business spending on IT, as it targets a wide range of corporations, including banks, airlines and retailers.
  • GM stock price stalling government exit. GM's (NYSE:GM) disappointing share performance is delaying the sale of the government's remaining 27% stake in the automaker. The shares have fallen from GM's IPO price of $33 in November to close yesterday at $29.97. Sources said GM wants the Treasury to sell its shares as soon as possible, but the government wants to wait until August or September, after the release of the company's next quarterly results. By selling at $30, the taxpayer would lose about $12B on GM's 2009 rescue, while at $40, the loss would be $7B. So far the government has recouped $27B of the $50B it spent on the bailout.
  • Viacom, Time Warner Cable press pause on lawsuits. Viacom (NYSE:VIA) and Time Warner Cable (TWC) have halted their lawsuits against each other as they attempt to settle litigation over broadcasting rights on portable electronic devices. TWC had sought a ruling that its contract with Viacom allows it to deliver the latter's channels, including MTV and Comedy Central, to customers’ iPads and other devices. Viacom asked for an order blocking TWC from distributing its programming in such a way and for damages. The halted lawsuits are one element of a wider battle to distribute TV shows and movies on the Internet and mobile devices.
  • House OKs bill to speed up permits for Arctic drilling. The GOP-controlled House has passed a bill that would require the EPA to approve or deny applications to drill for oil and gas in the Arctic within six months. The measure, designed to speed up the approvals process, would also end the authority of the EPA's appeals board to have a say over the permits. The board blocked Shell's (NYSE:RDS.A) plans to drill in the Beaufort Sea this year when it revoked a key air authorization. The bill may face a more difficult passage in the Democrat-controlled Senate, while the White House has expressed its opposition.

Earnings: Thursday Before Open

  • Lennar (NYSE:LEN): FQ2 EPS of $0.07 beats by $0.02. Revenue of $764.5M (-6.1% Y/Y) beats by $96.9M. (PR)

Earnings: Wednesday After Close

  • Bed Bath & Beyond (BBBY): Q1 EPS of $0.72 beats by $0.10. Revenue of $2.11B (+9.7% Y/Y) beats by $0.04B. Shares +1.7% AH. (PR, earnings call transcript)
  • Paychex (NASDAQ:PAYX): FQ4 EPS of $0.33 in-line. Revenue of $523M (+5.3% Y/Y) beats by $8M. Shares +0.5% AH. (PR)
  • Red Hat (NYSE:RHT): Q1 EPS of $0.24 beats by $0.02. Revenue of $265M (+27% Y/Y) beats by $11M. Shares +4.3% AH. (PR, earnings call transcript)

Today's Markets

  • In Asia, Japan -0.3% to 9597. Hong Kong -0.5% to 21759. China +1.4% to 2688. India +1.0% to 17727.
  • In Europe, at midday, London -1.0%. Paris -1.5%. Frankfurt -1.1%.
  • Futures at 7:00: Dow -0.4%. S&P -0.6%. Nasdaq -0.5%. Crude -2.25% to $93.26. Gold -0.8% to $1540.70.

Thursday's Economic Calendar

The SA Currents team contributed to this post.

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