Wall Street Breakfast: Must-Know News

March 15, 2012  |  includes: AAPL, BANR, CSCO, FFCH, GOOG, GS, MSFG, NWS, QCOM, QQQ, SBCF, SPY,SSNLF.PK, UBS, WIBC, WSFS

 
After banker's tirade, what next for Goldman? The buzz yesterday centered on Greg Smith's very-public resignation letter from Goldman Sachs (GS), in which Smith used The New York Times as a platform to launch a blistering attack on Goldman's "toxic and destructive" culture. Also making the rounds was a blog post by James Whittaker explaining why he left Google (GOOG). If you haven't read the two letters yet, you should (Smith, Whittaker). In their own ways, each is going after his ex-employer for no longer putting its customers first. But now that ex-Goldman exec Smith has had his Jerry Maguire moment, the real question is whether his letter to the masses will have any effect on Goldman's business.

Cisco in talks with NDS. Cisco (CSCO) is in advanced talks to buy NDS for $5B, according to a report in Israel's Calcalist financial newspaper. That purchase price is roughly a 35% premium to NDS' value when it delisted from the stock exchange in 2009. NDS, which develops software for multi-channel television networks, is jointly owned by News Corp. (NWS) and P-E firm Permira.

Treasury to sell some bank holdings. The Treasury said yesterday it plans to sell its preferred stock position in six community banks as it works to unwind bailout programs. The Treasury will conduct public auctions to sell its stock in Banner Corp (BANR), First Financial Holdings (FFCH), MainSource Financial (MSFG), Seacoast Banking (SBCF), Wilshire Bancorp (WIBC) and WSFS Financial (WSFS).

UBS cuts bonus pool. UBS (UBS) cut its 2011 bonus pool by 40% to 2.6B Swiss francs ($2.8B) to reflect tough market conditions that hurt results at its investment bank. CEO Sergio Ermotti's overall compensation was 6.35M Swiss francs, of which 4.6M francs was a bonus.

China's hard landing. China is already in a hard landing, according to Adrian Mowat, JPMorgan's chief Asian and emerging-market strategist. "If you look at the Chinese data, you should stop debating about a hard landing... Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact." Separately, inside sources said China is easing lending curbs at three of the nation's four biggest banks after data showed new loan growth at a four-year low.

Apple keeps climbing. Apple (AAPL) gained another 3.8% yesterday, hitting a new high of $589.58. The behemoth is now worth almost $550B, nearly twice as much as Microsoft. In addition to a bullish Morgan Stanley note early yesterday, shares also got a boost from Canaccord's Mike Walkley, who reported shipping wait times for the new iPad have risen to 2-3 weeks. Walkley now expects Apple to sell 65.6M iPads this year, and 90.6M next year.

Samsung claim rejected by court. A Dutch court rejected an attempt by Samsung (SSNLF.PK) to get the iPhone and iPad banned, stating the patents Samsung was asserting must be licensed on FRAND terms. Of interest is the court's claim that Apple (AAPL) doesn't need a FRAND license since it uses Qualcomm (QCOM) chips, and Qualcomm has licensed Samsung's patents. Such a ruling could give Apple motivation to continue using Qualcomm chips in future iPhones and iPads.

Gartner raises chip estimates. Gartner expects chip sales to rise 4% in 2012 to $316B. That's above a prior forecast for 2.2% growth, and is the result of growing optimism that demand will begin rebounding in Q2 following a tough inventory correction. DRAM sales are expected to rise slightly after falling 25% last year, while NAND flash memory sales are expected to rise 18%.

Corporate cash pile grows. U.S. companies are sitting on a massive $1.2T cash pile, Moody’s said in a new report, and more than half of it is stashed overseas. The tax code is to blame and it will get worse without “permanent tax reform that lowers taxes on overseas profits,” Moody’s wrote. Apple (AAPL) is a major factor: In 2011, overall corporate cash would actually have decreased by $6B if not for Apple’s $46B increase.

Fitch affirms U.K. rating. Fitch affirmed the U.K.'s credit rating at AAA, but revised its outlook to negative from stable. The agency had mostly positive things to say about the country's attempts at budget reform, but cautioned there is "very limited fiscal space to absorb further adverse economic shocks."

SNB holds rates steady. The Swiss National Bank held rates steady at 0-0.25%, as expected, and said it "will continue to enforce the minimum exchange rate of CHF 1.20 per euro with the utmost determination." The SNB cautioned that in the "Swiss mortgage and real estate market for residential property there are growing signs of imbalances. Should these imbalances increase further, this could lead to considerable risks to financial stability."

RBI leaves rates unchanged. The Reserve Bank of India kept its repurchase rate at 8.5%, as expected, after inflation accelerated. RBI reiterated that future actions will be toward lowering rates, though remaining inflation risks "will influence both the timing and magnitude of future rate actions.”

Feedback or story tip? Please direct message SA Editor Rachael Granby »

Today's Markets:
In Asia, Japan +0.7% to 10123. Hong Kong +0.2% to 21354. China-0.7% to 2374. India flat at 17676.
In Europe, at midday, London -0.1%. Paris flat. Frankfurt +0.3%.
Futures at 7:00: Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude flat at $105.46. Gold +0.1% to $1644.50.

Thursday's economic calendar:
8:30 Producer Price Index
8:30 Initial Jobless Claims
8:30 Empire State Mfg Survey
9:00 Treasury International Capital
10:00 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Notable earnings before Thursday's open: AMCX, ROST

Wall Street Breakfast: seekingalpha.com