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Tuesday, July 21, 2009

Wall Street Breakfast: Must-Know News

Wall Street Breakfast: Must-Know News

by SA Editor Rachael Granby


  • CIT confirms rescue details. CIT Group (CIT) confirmed its $3B rescue by bondholders, of which $2B is available immediately and the rest is expected to be available within ten days. The loan has a 2.5-year maturity. CIT also announced a tender for debt due August 17 where it would pay creditors $0.825 on the dollar as part of a "comprehensive restructuring of its liabilities," and canceled its Thursday earnings release. The real question now is whether the loan is anything more than a stop-gap measure and if CIT can survive without a complete overhaul.
  • California closes budget gap. California lawmakers reached an agreement over how to close a $26B budget deficit, pulling the state back from the brink of bankruptcy. The deal, which needs to be approved by the state's full Senate and Assembly, will cut spending for schools, public works, welfare programs and municipalities, will force companies and individuals to pay income taxes sooner and will make it more difficult to receive state aid. In the time it took lawmakers to close the budget gap, California issued 153,711 IOUs worth $682M.
  • TARP update. A leaked report from TARP Special Inspector General Neil Barofsky shows the country's bailouts and backstop plans total $23.7T. Of the $700B slated for TARP, $441B has been distributed. Barofsky will present a quarterly report on TARP to a congressional panel at 10:00 ET, and will criticize the Treasury for not being transparent enough about how it's spending taxpayer money. (Read Barofsky's report (.doc))
  • Deutsche's spying probe. Insiders say Deutsche Bank (DB) has fired two top executives following an internal investigation into whether the company spied on a board member and others. Meanwhile, German prosecutors have opened a preliminary probe into whether Deutsche Bank and its senior officials broke civil and criminal laws protecting individual privacy.
  • Yahoo's new homepage. Yahoo is launching a new homepage months earlier than planned, rolling out a test version in some markets today. The first homepage re-design since 2006, Yahoo is hoping to attract more users and advertisers by making its site the "center of their lives online," and will make it easier for users to access content from across the web, including from social networking sites.
  • Ameritrade reaches ARS settlement. TD Ameritrade (AMTD) reached a settlement with New York Attorney General Andrew Cuomo and will buy back $456M of auction-rate securities from around 4,000 clients. Clients with accounts under $250,000 should get their money back within 75 days, while the company aims to return the rest of the funds by March 2010.
  • Swiss banks retreat from U.S. clients. As the Justice Department's case against UBS (UBS) drags on, Swiss banks are reevaluating their U.S. business connections. Some Swiss banks are cutting off business with American clients for fear of U.S. authorities, while others are no longer accepting deposits from U.S.-based customers or allowing them to open accounts.
  • Final Opel bids. General Motors confirmed it received three binding takeover offers for its Opel unit and will consider the deals in conjunction with the European countries that will be affected. The consortium of Magna International (MGA) and Russia's Sberbank made an unexpected last-minute change to their bid to appease critics, agreeing to evenly split a 55% majority stake in Opel instead of giving 80% of the stake to Sberbank. The other two bidders are RHJ International and Beijing Automotive.
  • Wyeth okays Pfizer deal. As expected, Wyeth (WYE) shareholders approved a takeover by Pfizer (PFE), with 98% of votes cast in favor of the deal. The transaction still needs to be cleared by U.S. antitrust regulators.
  • Barnes & Noble's e-book strategy. Barnes & Noble (BKS) announced plans to launch an electronic bookstore and will debut a physical e-book reader early next year, a direct attack on Amazon (AMZN) and its Kindle. Titles bought through the eBookstore can also be read over devices like the iPhone (AAPL) and BlackBerry (RIMM) and on computers.
  • Leading indicators improve. Conference Board's Leading Indicators index rose +0.7% in June, vs. +0.5% consensus, the third increase in as many months with most components contributing positively. The index is up 2% in H1 2009 vs. -3.1% in H2 2008.

Earnings: Tuesday Before Open

  • Autoliv (ALV): Q2 EPS of -$0.24 beats by $0.18. Revenue of $1.19B (-37%) vs. $1.15B. (PR)
  • BJ Services (BJS): FQ3 EPS of -$0.11 misses by $0.11. Revenue of $787M (-40.8%) vs. $868M. (PR)
  • Comerica (CMA): Q2 EPS of -$0.10 beats by $0.35. Tier 1 capital ratio of 11.57%. Net credit-related charge-offs of $248M, or 2.08% of average total loans. (PR)
  • Continental Airlines (CAL): Q2 EPS of -$1.36 misses by $0.01. Revenue of $3.1B (-22.7%) in-line. (PR)
  • EI DuPont de Nemours (DD): Q2 EPS of $0.61 beats by $0.08. Revenue of $6.9B (-22.4%) vs. $7.15B. Shares +1% premarket (6:40 ET). (PR)
  • Elan (ELN): Q2 EPS of -$0.14 beats by $0.01. Revenue of $281M (+14.4%) vs. $262M. (PR)
  • Lexmark International (LXK): Q2 EPS of $0.55 misses by $0.05. Revenue of $905M (-20.6%) vs. $916M. (PR)
  • Merck & (MRK): Q2 EPS of $0.83 beats by $0.06. Revenue of $5.9B (-2.5%) vs. $5.8B. (PR)
  • Quest Diagnostics (DGX): Q2 EPS of $1.00 beats by $0.05. Revenue of $1.9B (+3.5%) in-line. (PR)
  • Regions Financial (RF): Q2 EPS of -$0.28 misses by $0.06. Loan origination volume of $3.1B vs. $2.8B in Q1. Net loan charge-offs increased to $491M, or an annualized 2.06% of average loans. (PR)
  • Schering-Plough (SGP): Q2 EPS of $0.46 beats by $0.01. Revenue of $4.6B (-5.6%) in-line. (PR)
  • United Technologies (UTX): Q2 EPS of $1.21 beats by $0.17. Revenue of $13.2B (-17.2%) vs. $13.9B. (PR)
  • Unitedhealth Group (UNH): Q2 EPS of $0.73 beats by $0.03. Revenue of $22B (+6.8%) in-line. (PR)
  • Western Union (WU): Q2 EPS of $0.32 beats by $0.02. Revenue of $1.25B (-6.9%) in-line. (PR)

Earnings: Monday After Close

  • Allscripts-Misys Healthcare Solutions (MDRX): Q4 EPS of $0.16 beats by $0.01. Revenue of $166M (+71%) vs. $160M. (PR)

  • Boston Scientific (BSX): Q2 adjusted EPS of $0.20 beats by $0.07. Revenue of $2.1B (-2.4%) vs. $2B. Sees Q3 EPS of $0.17-0.21 vs. $0.15 and Q3 revenue of $2B-2.1B vs. $2B. Sees FY09 EPS of $0.82-0.86 vs. $0.57 and FY09 revenue of $8.1B-8.4B vs. $8.2B. (PR)

  • Canadian National Railway Company (CNI): Q2 EPS of C$0.82 beats by C$0.14. Revenue of C$1.8B (-15%) vs. C$1.7B. (PR)

  • Legg Mason (LM): Q1 EPS of $0.35 beats by $0.13. Revenue of $613M (-42%) in-line. (PR)

  • Lincare (LNCR): Q2 EPS of $0.49 beats by $0.02. Revenue of $380M (-11%) vs. $389M. (PR)

  • Packaging Corp. of America (PKG): Q2 EPS of $0.28 beats by $0.12. Revenue of $549M (-11%) vs. $535M. (PR)

  • Texas Instruments (TXN): Q2 EPS of $0.20 beats by $0.02. Revenue of $2.5B (-27%) vs. $2.4B. Sees Q3 EPS of $0.29-0.39 vs. $0.27 and Q3 revenue of $2.5B-2.8B vs. $2.5B. (PR)

  • Werner (WERN): Q2 EPS of $0.18 in-line. Revenue of $403M (-30%) vs. $435M. (PR)

  • Zions Bancorp (ZION): Q2 EPS of -$0.35 beats by $0.67. Taxable-equivalent revenue of $1.1B (+93%). (PR)

Today's Markets

Asian markets closed mixed, European markets are moderately higher and U.S. futures show little movement.

  • In Asia, Nikkei +2.7% to 9,652. Hang Seng flat. Shanghai -1.6% to 3,213. BSE -0.85% to 15,062.
  • In Europe at midday, London +0.6%. Paris +0.8%. Frankfurt +0.8%.
  • Futures: Dow +0.1%. S&P +0.1%. Nasdaq flat. Crude +0.4% to $64.27. Gold -0.1% to $947.90.

Tuesday's Economic Calendar

Seeking Alpha editor Eli Hoffmann contributed to this post.


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