Wednesday, July 8, 2009

Wall Street Breakfast: Must-Know News

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Wall Street Breakfast: Must-Know News

by SA Editor Rachael Granby

  • Swiss prepared to protect UBS data. The Swiss government said it would seize UBS (UBS) data to keep information about 52,000 American account holders out of the hands of the U.S. Justice Department. Claiming that any disclosures would force UBS to violate Swiss law, the Swiss government said it "will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS."
  • SEC uncovers new Ponzi scheme. The SEC charged Dallas-based Provident Royalties LLC and its three principals with running a $485M oil-and-gas Ponzi scheme, promising more than 7,700 investors returns of up to 18%. In light of the SEC's lawsuit, a federal judge agreed to freeze Provident's assets and appoint a receiver.
  • Rio workers detained in China. Rio Tinto (RTP) said four of its Shanghai-based employees have been detained by Chinese authorities, and at least one is being investigated on suspicions of espionage and stealing state secrets. Rio said it is "not aware of any evidence that would support such an investigation," and found the allegations 'surprising.' The four employees, including the general manager for China operations at Rio Tinto's iron-ore division, have been held since Sunday. Separately, Australian packaging group Amcor (AMCRY.PK) is reportedly nearing an agreement to buy some of Rio's assets in a deal that could be valued at up to $2.4B. RTP -14.3% premarket (7:00 ET).
  • NRG snubs Exelon bid. NRG Energy's board unanimously rejected an unsolicited bid from Exelon (EXC), saying the offer is "not in the best interest of NRG stockholders in that it continues to substantially undervalue NRG." Last week, Exelon raised its all-stock offer 12.4%, to $7.73B.
  • Boeing buys plant to speed Dreamliner. As rumored last week, Boeing (BA) has agreed to pay $580M for the Vought Aircraft Industries plant that makes sections of the 787 Dreamliner. When Boeing first announced plans for its distributed supply chain, it was praised for moving some of the risk off of its books, but the company now hopes its strategy reversal will give it greater control over the heavily-delayed project. Some analysts are less optimistic; Boeing may be underestimating the time it will take for FAA certification, delaying the plane into 2011.
  • SEC eyes Jobs' health disclosures. The SEC is reportedly looking into Apple's (AAPL) disclosures about Steve Jobs' health, trying to determine how Jobs' condition went from 'relatively simple' to 'more complex' in the span of nine days. At question is how much Apple's board knew about Jobs' real condition at the time of his two January announcements, and whether Apple or Jobs mislead investors with their disclosures. The SEC and Apple declined to comment.
  • Google OS takes aim at MSFT. In a direct challenge to Microsoft (MSFT), Google (GOOG) announced on its blog that it has begun development of an open-source operating system based on Chrome. The software, which will be available in the second half of 2010, will initially target netbooks but the company hopes to scale the software up to regular PCs as well. Meanwhile, Gmail and several other Google products finally dropped their beta label, which could help Google achieve wider corporate adoption.
  • AIG loses case with ex-CEO. A jury ruled that AIG's (AIG) case against former CEO Maurice 'Hank' Greenberg was 'weak' and that Greenberg didn't steal billions from a retirement fund. AIG had taken Starr International, a private company run by Greenberg, to court in an attempt to collect $4.3B in damages over millions of shares held and sold by Starr. AIG -4.9% premarket (7:00 ET).
  • Antitrust fines for E.ON, GDF Suez. E.ON (EONGY.PK) and GDF Suez were each fined €553M ($768M) for violating EU antitrust rules by colluding on natural gas sales. The gas-transport agreements "deprived customers of more price competition and more choice of supplier in two of the largest gas markets in the EU," said Competition Commissioner Neelie Kroes, so "the commission has no alternative but to impose high fines."
  • Tighter rules for U.K. banks. The U.K.'s Darling plans to outline tighter regulation for the British banking industry today, sources said, including a requirement that banks keep instructions on file for how to unwind their own businesses in order to assist regulators in the event of a potential rescue.
  • Sony joins netbook crowd. Late to the game, Sony (SNE) said it will enter the netbook market with a new laptop to be launched in August that will sell for around $500. With the exception of Apple (AAPL), nearly every other major PC maker has already rolled out a netbook.
  • MBA apps rise. Mortgage applications rose 10.9% last week, MBA reported. The average interest rate on 30-year fixed-rate mortgages was unchanged at 5.34%.
  • Retail sales. Chain store sales fell 4.3% in the five weeks of June, Redbook said, worse than the -4.1% expected. According to ICSC, weekly sales were up 0.1% vs. last week.

Earnings: Wednesday Before Open

  • Family Dollar Stores (FDO): Q3 EPS of $0.62 beats by $0.03. Revenue of $1.8B (+8.3%) in-line. (PR)
  • Pepsi Bottling Group (PBG): Q2 EPS of $0.78 beats by $0.05. Revenue of $3.3B (-7%) vs. $3.4B. (PR)

Earnings: Tuesday After Close

  • Ruby Tuesday (RT): FQ4 EPS of $0.28 beats by $0.09. Revenue of $317M (-7%) vs. $304M. Same-store sales decreased 3.2% at company-owned restaurants and 6.9% at franchised stores. Sees FY10 EPS of $0.50-0.65 vs. $0.55. (PR)

Today's Markets

  • In Asia, Nikkei -2.35% to 9,421. Hang Seng -0.8% to 17,721. Shanghai -0.3% to 3,081. BSE -2.8% to 13,769.
  • In Europe at midday, London -0.05%. Paris -0.6%. Frankfurt -0.2%.
  • U.S. futures: Dow flat. S&P flat. Nasdaq +0.1%. Crude -0.7% to $62.47. Gold -0.9% to $920.50.

Wednesday's Economic Calendar

Seeking Alpha editor Eli Hoffmann contributed to this post.

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