Wall Street Breakfast: Must-Know News

by: Judith Levy

Today's Markets

  • Asia: Nikkei: -0.70%, Hang Seng: +2.85%, Shanghai: -1.43%.

    Europe: FTSE: +1.28%, DAX: +1.10%, CAC: +1.45%.

    U.S. futures: DJIA: +0.95%, S&P 500: +1.01%, Nasdaq: -1.49%.

Must-Know News for Friday

  • Yahoo!! Microsoft (NASDAQ:MSFT) said it has proposed to acquire Yahoo! (YHOO) in a proposed cash and stock deal valued at $44.6 billion. The deal values Yahoo at $31/share, a 62% premium to Thursday's close. Microsoft says it believes the proposed combination would receive regulatory approval, and expects the deal could close in the second half of 2008. Yahoo shares are up 60.3% in pre-market trading; Microsoft is down 2.3%.
  • Google misses; shares continue slide. Google (NASDAQ:GOOG) reported Q4 earnings of $1.21 billion ($3.79/share), a 17% rise from last year -- the first time its quarterly profit has ever risen by less than 25%. Excluding items, EPS were $4.43; revenue was $3.39 billion. Analysts were expecting EPS of $4.44 on revenue of $3.45 billion. Google shares, which have fallen almost 20% in a month on concerns that the economic slowdown will affect the company, shed 6.54% after hours.
  • Chinalco, Alcoa take 12% stake in Rio Tinto. Chinese-government-owned Aluminum Corp. of China (NYSE:ACH) and Alcoa (NYSE:AA) teamed up to take a $14.05B, 12% stake in mining giant Rio Tinto (RTP). The stake is significant for two reasons: 1) It is the largest overseas acquisition ever by a Chinese company; China is one of the world's biggest consumers of iron ore. 2) The 12% stake throws a major wrench into BHP Billiton's (NYSE:BHP) plans to acquire RTP, as it will likely vote in opposition should the proposal be put to shareholders. Share prices Friday: RTP +8.9%, BHP +7.8%.
  • Hedge fund casts doubt on Countrywide buyout. Monaco-based hedge fund SRM Global Fund, which holds 5% of Countrywide Financial (CFC), said the $4.1 billion offer "considerably undervalued" the lender. It also plans to lobby other large shareholders to nix the deal.
  • Profits plunge at Ericsson; plans layoffs. Ericsson AB (NASDAQ:ERIC) reported its largest profit-drop 2003, and said it will cut as many as 4,000 jobs globally. Shares were down as much as 5.4% in Stockholm.
  • Amazon buys Audible . The online retailer (NASDAQ:AMZN) said Thursday it will pay $300 million, or $11.50 per share, for online audiobook seller Audible Inc. (ADBL). The price represents a 23% premium to Wednesday's close. Audible shares shot up 22.4% on the news. Amazon shares reversed earlier losses, closing up 4.7%.
  • Court rules for TiVo, against EchoStar. EchoStar Communications (NASDAQ:DISH) has been found guilty of infringing a TiVo (NASDAQ:TIVO) patent and must pay $73,991,964 in damages. Tivo stock skyrocketed 33% to a 52-week high.
  • Motorola might put cellphone business on block. Motorola (MOT) said Thursday it is considering selling or spinning off its handset business, sending its shares up nearly 11% after hours.
  • OPEC maintains current output. The oil cartel agreed Friday to keep current quotas unchanged but might consider a supply cut to boost prices at its meeting in March. "If prices continue to fall...then we'd probably be prepared to propose a cut," said Venezuelan Oil Minister Rafael Ramirez. Oil is down 9% from a record $100.09 a barrel set on January 3.
  • MBIA defends itself in marathon call; investors reassured. Shares of the beleaguered bond insurer (NYSE:MBI) rose 11% after it said on a four-hour call with analysts that it has enough cash to meet its obligations even after its worse-than-forecast quarterly loss. Shares of rival Ambac (ABK) shares also jumped 9.2%.
  • S&P downgrades FGIC; MBIA could be next. Standard & Poor's downgraded bond insurer Financial Guaranty Insurance from its AAA rating and said it might do the same against the insurance units of MBIA (MBI). "Although MBIA has succeeded in accessing $1.5 billion of additional capital, the magnitude of projected losses underscores our view that time is of the essence in the completion of capital-raising efforts," S&P said.
  • Sprint warns of large writeoff. Sprint Nextel (NYSE:S) said Thursday it might write off up to $31 billion connected to its 2005 merger with Nextel Communications. The amount of the write-off will be announced together with quarterly results on February 28.
  • MasterCard immune to slowdown so far. Shares of MasterCard (NYSE:MA) rose 9.5% to within 6% of their all-time high Thursday after the company reported a Q4 profit increase to $304.2 million ($2.26/share) from $40.9 million ($0.30).
  • Maybe they're buying their Whoppers with MasterCard. In contrast to the flat comps just reported by rival McDonald's (NYSE:MCD), Burger King Holdings (BKC-OLD) reported that same-store sales in the U.S. and Canada rose 4.2% last month. Earnings were up 29% to $49 million ($0.36/share), ahead of analyst forecasts of $0.32. Revenue rose 10% to $613 million. "We have not and are not seeing a slowdown," said Burger King CEO John Chidsey.
  • Electronic Arts swings to loss; lowers guidance. EA (ERTS) posted a fiscal Q3 loss of $33 million (-$0.10/share) against earnings of $160 million ($0.50) a year ago. The company is now forecasting a full-year loss of $1.48-1.67 a share, wider than earlier guidance of a loss of $0.91-1.60. EA also narrowed full-year revenue guidance to $3.46-3.59 billion from $3.35-3.65 billion. Shares fell 3% after hours.
  • Airwaves auction triggers availability provision. The FCC's auction of radio-spectrum airwaves has passed the $4.6 billion mark, triggering a requirement that the winner make the spectrum available to any handset and any software application to be used over the network.
  • JetBlue partners with Aer Lingus. JetBlue Airways (NASDAQ:JBLU) is expected to announce a partnership with Irish carrier Aer Lingus Group that will allow passengers to fly from Ireland to 40 U.S. destinations with connections at JetBlue's JFK hub.
  • Mortgage rates rise after a month of declines. The 30-year fixed-rate mortgage averaged 5.68% this week, up from last week's 5.48%.
  • Jobless claims rise; spending slows down. Initial jobless claims rose 69,000 to a seasonally adjusted 375,000 last week, their steepest one-week climb in over ten years. Consumer spending in December rose 0.2% from the previous month versus a 1% gain in November.
  • Semel steps down as Yahoo's chairman, after leaving CEO post
  • Anheuser-Busch Net Trails Estimates on Corona Exports
  • Wyeth's Profit Rises 19%; Bristol-Myers Posts Loss
  • New York Times Swings to Profit, But Advertising Slump Takes Toll

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