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.

  • Siemens down after trading update. Siemens (SI) shares are -3.24% premarket after it said it saw continued growth in FQ3 but that momentum in the global economic recovery was easing. The conglomerate expects new orders in the quarter to "significantly" exceed the level of about €19.2B ($27.19B) reached in the same period last year. Sales are expected to be up on year but flat compared with Q2. "The tailwind from the economic recovery is likely over. Now, increased efforts are required for continued growth," Siemens CFO Joe Kaeser told analysts.
  • Nike FQ4 tops forecasts despite price rises. Nike's (NYSE:NKE) FQ4 earnings beat expectations as net profit and revenue jumped 14% to $594M and $5.77B respectively, sending shares 4.5% higher in after-hours trading. Revenue grew in every market except Japan despite Nike increasing prices to offset higher costs, with an analyst saying the trend demonstrates the strength of Nike's brand. Heavy cost cutting and favorable currency hedges also helped boost the bottom line. Futures orders, a closely watched measure of demand for the coming months, exceeded estimates, rising 15% to $10.3B.
  • Europe on edge as Greece debates austerity. Against the background of more mass strikes, Greece's parliament has begun debating an unpopular austerity and privatization package. The EU and IMF have threatened to withhold a €12B ($17B) tranche of Greece's bailout if it doesn't pass the bill, which would leave it facing default. However, sources said EU officials are working on a contingency plan designed to ensure Greece gets the liquidity needed to avoid a default if the bill is rejected and to stop contagion spreading across Europe. The outcome of the vote, which is due tomorrow, is uncertain because some MPs from the ruling Socialists are considering voting against the measures.
  • Dish poised to win TerreStar for $1.4B. Dish Network's (NASDAQ:DISH) shopping spree of bankrupt companies looks set to continue with a $1.38B deal to buy satellite communications company TerreStar Networks (OTC:TSTRQ). The acquisition is due to go to court approval on July 7 after no competing bids to that of Dish were received by yesterday's deadline, a source said. Potential challengers had included TerreStar's senior bondholders and MetroPCS (PCS). The purchase of Terrestar, which filed for bankruptcy in October with over $1B in debt but the rights to 20 megahertz of spectrum, would add to Dish's recent acquisitions of Blockbuster and DBSD North America, another satellite communications company.
  • Roche set for crucial Avastin hearing. The FDA is due to begin a two-day appeals hearing today about its proposal in December to remove approval for Roche's (OTCQX:RHHBY) Avastin drug for treating breast cancer. Analysts said the FDA is unlikely to change its mind unless Roche provides new evidence about Avastin's ability to help patients with the cancer live longer. If the FDA confirms its decision, annual sales of Avastin, the world's best-selling cancer drug, could fall by $1B from $6B. For patients, insurance companies could stop covering the $8,000-a-month medicine to treat breast cancer, with an estimated 17,000 women likely to be affected.
  • Sony CEO takes pay cut after profit falls. Sony (NYSE:SNE) CEO Howard Stringer has taken a 16% pay cut after the company's third straight year of losses, although at a shareholders meeting he sidestepped a call for his resignation. At the event, Kazuo Hirai, a front runner to succeed Stringer, said reversing seven years of losses at the company's television division was the "most important task" facing the electronics arm, which he heads. Hirai plans to cut costs and overhaul the company's geographic and product strategies. Sony posted a net loss of ¥259.59B ($3.21B) in the year ending in March but expects to swing to a net profit of ¥80B in the current fiscal year.
  • Microsoft moves the Office into the cloud. Microsoft (NASDAQ:MSFT) CEO Steve Ballmer is today scheduled to unveil an online version of Office as the tech giant attempts to answer the success of Google Docs (NASDAQ:GOOG). Office 365 is expected to enable customers to use applications such as Word, Outlook, PowerPoint and Excel on a variety of devices over the Internet. Microsoft's shares rose 3.7% yesterday partly in anticipation of Office 365, with one money manager saying it could be a 'game changer.' Google's online software has attracted 40M users and grabbed corporate customers from Microsoft due to its lower costs and more simple implementation.
  • Google faces $418M lawsuit in France. The scrutiny over Google's (GOOG) conduct towards rivals has been ratcheted up a notch after French competitor 1plusV said it would sue the U.S. company for €295M ($417.7M) in lost profits. 1plusV, which runs the Ejustice.fr legal website and search engine, said that from 2007-2010, Google black-listed 30 'vertical' search engines the French firm created and crippled its ability to generate business and advertising. 1plusV is one of four companies, including Microsoft (MSFT), to accuse Google of abusing its dominant position. Concerns about the latter's actions have triggered antitrust investigations in the EU and the U.S.
  • SEC widens Stifel probe. The SEC has broadened its investigation into Stifel Financial (NYSE:SF) to see whether mortgage bonds it sold to five Wisconsin school districts were suitable for them. The schools set up trusts that invested around $200M into collateralized debt obligations created by Royal Bank of Canada (NYSE:RY) but are now nearly worthless. The schools lost $45M of their own money and have received demands to pay back the rest of the cash, which was borrowed from German lender Depfa Bank. The investigation marks the first time that an SEC probe into mortgage bonds has focused on suitability.
  • Lagarde set to be named as new IMF chief. The IMF's 24-strong board is due to meet today, when they are expected to appoint French Finance Minister Christine Lagarde as the fund's first ever female Managing Director. The only other candidate is Mexico Central Bank Governor, Agustin Carstens. The U.S., which holds almost 17% of the vote, is thought likely to back Lagarde, who is certain to receive the 40% of the vote that European nations hold. One stumbling block, though, to Lagarde's appointment could be an investigation into her role in a 2008 arbitration payout to a French business. A top French court will decide on the matter on July 8.
  • Congress may increase self-regulation of investment advisors. Congress is considering replacing the SEC with the Financial Industry Regulatory Authority in overseeing almost 12,000 investment advisers who manage about $40T. The move would be a cheaper alternative to increasing the SEC's resources, as Finra’s $877M budget is paid for by the brokers it regulates. A former Texas regulator called the idea "very bad," pointing out that the fines Finra imposes are usually a fraction of the damages suffered. Last year, Finra fined members almost $43M, while the SEC issued more than $1B in penalties. However, only about 9% of advisers registered with the SEC were scrutinized in 2010 because of a decrease in the number of agency examiners.
  • FCC sits firmly on the fence. Those hoping for a major indication about how the FCC might rule on AT&T's (NYSE:T) proposed $39B acquisition of T-Mobile USA from Deutsche Telekom (OTCQX:DTEGY), which is pending before the agency and the Justice Department, were probably disappointed by the FCC's latest report on the cellular market. The regulator stayed neutral on the deal, as well as on whether the mobile industry is competitive. The only sliver of a clue it gave was to say that the wireless phone market has grown more concentrated, the second year in a row it has said this.
  • Cable & Wireless Worldwide plunges after profit warning. Shares in Cable & Wireless Worldwide (OTC:CBWWF) have collapsed 16.4% in U.K. trading after the communication and network services company issued its third profit warning in the last year, announced a 50% dividend cut and said it had replaced its CEO. C&W Worldwide now expects EBITDA for 2011/12 to be as much as 10% below market expectations. Chairman John Pluthero will become CEO following the resignation of Jim Marsh, with Independent Director John Barton appointed chairman. Given the sell-off, analysts at Investec Securities said this might be the moment to buy.
  • Accenture to join S&P 500. Accenture (NYSE:ACN) will join the S&P 500 after the July 5 session, when it will replace Marshall & Ilsley (NYSE:MI), which is in the process of being acquired by Bank of Montreal (NYSE:BMO).

Earnings: Monday After Close

  • Nike (NKE): FQ4 EPS of $1.24 beats by $0.08. Revenue of $5.77B (+13.6% Y/Y) beats by $0.24B. Shares +4.5% AH. (PR)

Today's Markets

  • In Asia, Japan +0.7% to 9649. Hong Kong +0.1% to 22062. China +0.1% to 2760. India +0.4% to 18492.
  • In Europe, at midday, London +0.4%. Paris +0.5%. Frankfurt -0.2%.
  • Futures at 7:00: Dow -0.1%. S&P -0.2%. Nasdaq -0.1%. Crude +0.5% to $91.09. Gold +0.4% to $1502.90.

Tuesday's Economic Calendar

  • Notable earnings after Tuesday's close: SHAW

The SA Currents team contributed to this post.

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