Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:20 AM EST
S&P 500: +1.00; 1,432.20
NASDAQ 100: +3.25; 1,794.00
Dow: +0.00; 12,440.00
NIKKEI 225: -1.50%; 17,028.41 (-259.24)
HANG SENG: +0.04%; 19,809.70 (+8.77)
S&P/ASX 200: -1.32%; 5,915.80 (-79.20)
BSE SENSEX 30: -4.72%; 12,455.37 (-616.73)
FTSE 100: +0.24%; 6,323.10 (+15.10)
CAC 40: -0.02%; 5,633.01 (-1.15)
XETRA-DAX: +0.32%; 6,939.19 (+22.16)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.56%; $65.50 (-$0.37)
Gold: -0.12%; $668.20 (-$0.80)
Natural Gas: -0.26%; $7.71 (-$0.02)
Silver: -0.52%; $13.38 (-$0.07)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
KKR To Buy First Data For $29 Billion; Shares Jump 25%
In the second biggest LBO of the year, Credit card processing company First Data has agreed to be taken private by Kohlberg Kravis Roberts for a reported $29 billion. The $34-per-share offer represents a 26% premium to the shares' $26.90 close on Friday. Shares are higher by $6.60, or 24.54%, to $33.50 in pre-market trading. First Data processes checks, as well as ATM, debit-card and credit-card transactions. Last year, the company reported $7.08 billion in revenue and net income of $1.51 billion. Growth is slowing, however, as it becomes harder to convince card-laden Americans that they need another one. Banks are also increasingly handling some of their own card processing operations. First Data recently spun off Western Union, its fastest-growing unit, and announced in February that it will streamline its business by exiting the official-check and money-order business. It is also expanding its network and data analysis capabilities through acquisitions -- four over the past two months -- and announced last week that it is purchasing a Polish card firm for $325 million as part of a drive into Central and Eastern Europe.
Sources: Press Release, Bloomberg, Wall Street Journal, Reuters, MarketWatch, New York Times
Commentary: First Data Corp. Exits the Check and Money Order Business • First Data Corp. Insecure Following Western Union Spinoff • First Data Corp. Undervalued?
Stocks/ETFs to watch: First Data Corp. (NYSE:FDC). Competitors: Fidelity National Information Services Inc. (NYSE:FIS), Fiserv Inc. (NASDAQ:FISV), Total System Services, Inc. (NYSE:TSS). ETFs: iShares Dow Jones U.S. Financial Services (NYSEARCA:IYG), Rydex S&P Equal Weight Financial Services (NYSEARCA:RYF)
Nokia Siemens JV Cuts '07 Market Outlook
In a press release today, Nokia announced Nokia Siemens Networks began operations yesterday, as the world's third largest communications infrastructure company -- based on '06 pro-forma revenues of €17.1 billion. Its market outlook however, was disappointing, as growth is expected to be "very slight" for mobile and fixed infrastructure/services in euro terms in '07. The press release notes, "... over the last couple of months, there has been a narrowing of visibility and indications of a slowdown in spending in some regions." Nokia had previously forecast "slight growth" for '07 and says starting yesterday, financial results of the joint venture will be consolidated to Nokia. By 2010 the combined entity expects cost synergies of approximately €1.5b annually. Separately, MarketWatch reports Goldman Sachs upgraded the European communications technology sector today to "attractive" from "neutral." It cited consistent underperformance since April '04. Positive factors seen boosting earnings include Europe's comparatively large exposure to fast-growing emerging markets and the benefits of industry consolidation, among other things. Its top picks include Nokia and NDS.
Sources: Press release, MarketWatch [i, ii]
Commentary: Nokia Siemens JV Finalized; Starting Operations April 1 • Nokia-Siemens Telecom JV Delayed, But Not Dead • Motorola: Forget Palm, Think Nokia
Stocks/ETFs to watch: Nokia Corp. (NYSE:NOK), Siemens AG (SI), NDS Group plc (NNDS). Competitors: Telefon AB LM Ericsson (NASDAQ:ERIC), Alcatel-Lucent (ALU), Motorola Inc. (MOT). ETFs: Wireless HOLDRs (WMH), Morgan Stanley Technology ETF (MTK)
Conference Call Transcripts: Nokia Q4'06
Starwood Hotels' CEO Quits After Losing Support of the Board
Starwood Hotels & Resorts Worldwide released a statement saying CEO Steve Heyer had resigned after losing the support of the company's board. The Wall Street Journal termed the move an "abrupt and unexpected management shakeup." Heyer became CEO of the nation's third largest hotel chain, with 870 properties under its belt, after quiting Coca Cola in 2004 when the company failed to promote him to CEO (he was President at the time of his resignation). Starwood manages several well-known hotel names including St. Regis and Sheraton. Chairman Bruce Duncan will replace Heyer as interim CEO until a permanent replacement can be found. In the press release, Starwood reaffirmed its earnings guidance and quoted Stephen R. Quazzo, Chairman of the Governance and Nominating Committee of the Starwood Board, as saying, "Given the Company's deep management team and Bruce Duncan's willingness to serve as interim CEO on a full-time basis as long as he is needed, the Board is confident Starwood's performance will not miss a beat."
Sources: Press Release, Bloomberg, Wall Street Journal, MarketWatch
Commentary: Some Like it Hot: Pirate Capital Initiates Stake in Starwood Hotels & Resorts • Investing in China's Tourism Industry • Cramer's Take on HOT
Stocks/ETFs to watch: Starwood Hotels & Resorts Worldwide (HOT). Competitors: Hilton Hotels Corporation (NYSE:HLT), Marriott International (NYSE:MAR), InterContinental Hotels Group PLC (NYSE:IHG). ETFs: PowerShares Dyn Leisure & Entertainment (NYSEARCA:PEJ)
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Fall, Led by Steelmakers, Nippon Steel on Tankan; India Drops Asian stocks dropped after the Bank of Japan's Tankan survey of business confidence showed a worsening outlook among steelmakers and as India's central bank unexpectedly lifted borrowing costs.
• U.S. Reaches Free Trade Agreement With South Korea That May Reduce Deficit The U.S. and South Korea reached a free-trade accord worth as much as $29 billion that if ratified would be the largest for the U.S. since the 1994 North American Free Trade Agreement.
• China Netcom Profit Growth Slows as Fixed-Line Users Opt for Mobile Phones China Netcom Group Corp. (Hong Kong) Ltd. (NYSEARCA:CN), the nation's second-largest operator of fixed-line telephones, reported its smallest increase in annual profit after losing subscribers for the first time.
• Xstrata's Sartain Says China's Growth in Commodity Demand Is `Phenomenal' Charlie Sartain, chief executive for copper at Xstrata Plc, the world's fifth-largest miner, said the growth in China's demand for all commodities ``is just phenomenal,'' and prices may rise for the next few years.
European Headlines (via Bloomberg.com)
• Stocks in Europe Rise; Telecom Italia, DaimlerChrysler Gain on Bid Outlook European stocks rose, led by telephone service providers after Telecom Italia SpA's (NYSE:TI) holding company received offers.
• European Manufacturing Growth Unexpectedly Slowed in March, Led by Germany Europe's manufacturing growth unexpectedly slowed in March after demand for exports cooled and a tax increase in Germany reduced consumer spending in the region's largest economy.
• Aeroflot, UniCredit Will Bid Jointly for Alitalia, May Get Third Partner OAO Aeroflot, Russia's largest airline, will join UniCredit SpA in bidding for Alitalia SpA and a third partner may join later, UniCredit's investment banking head said. Alitalia shares were suspended from trading in Milan.
• Swiss Manufacturing Growth Unexpectedly Slows; Economic Expansion May Cool Swiss manufacturing growth unexpectedly slowed last month, suggesting the country's economic expansion is cooling from the fastest pace since 2000.