Wall Street Breakfast: Misconduct Probe Led To Exit Of Best Buy CEO

April 11, 2012  |  includes: AA, AAPL, AMZN, AVP, BBY, CARL, CBS, FMCC.OB, FNMA.OB, LVS, MSFT, NOK,NWSA, QQQ, SPY, T

Top Stories
Misconduct probe led to exit of Best Buy CEO. An investigation into personal misconduct led to Best Buy (BBY) CEO Brian Dunn's sudden resignation yesterday. "Certain issues were brought to the board's attention regarding Mr. Dunn's personal conduct, and an audit committee investigation was initiated. Prior to the completion of the investigation, Mr. Dunn chose to resign," a company spokesperson said. SA author Vitaliy Katsenelson explains why he's not buying Best Buy.

Adelson to invest $35B in Spanish "mini Las Vegas" Spain might be in the middle of a severe debt crisis and recession caused by a real-estate bust, but Las Vegas Sands (LVS) CEO Sheldon Adelson plans to invest $35B in building a 12-resort casino complex in the country. The "mini Las Vegas" is a 5-10-year project, by which time Adelson expects demand to have picked up significantly.

Tsunami feared after massive Indonesian earthquake Indonesia has suffered earthquakes of 8.7 and 8.8 off the coast of Aceh, prompting a tsunami warning for across the Indian Ocean. Tremors were felt in Singapore, Thailand, Malaysia and India. The devastating tsunami in 2004 was caused by a 9.1 magnitude earthquake.

Top Equities News
Alcoa shares jump after unexpected profit. Alcoa (AA) surprised Wall Street with an unexpected EPS profit of $0.10 in Q1, sending shares6.5% higher premarket even though net income fell sharply from a year earlier. Revenue also beat expectations, rising slightly to $6.01B despite a slump in aluminum prices. CNBC's Pete Najarian was encouraged by Alcoa's upbeat talk about China and its "pretty phenomenal" global demand forecast of 7%, but SA authors Robert Broens and David Silver aren't convinced, the latter noting that Alcoa beat reduced expectations.

Nokia's U.S. Lumia launch hits glitch after software bug found. First there was the inexplicable Easter launch, now, just 3 days later, Nokia (NOK) has said it's found a software bug in the Lumia 900 (MSFT) that can cause it to lose its data connection. While embarrassing, Gartner likes the way Nokia's dealing with the problem: it's pledged to fix the glitch by next week, and it will offer a $100 credit to the AT&T (T) bills of affected users. SA contributor Gutone reckons the Lumia 900 "appears (to be) a winner, for now."

Carlyle aims for IPO valuation of up to $8B. P-E firm Carlyle Group (CARL) reportedly plans to seek a valuation of $7.5B-$8B in its IPO, when it intends to offer 10% of the company. Carlyle could start its roadshow next week, but a lot depends on the success of today's scheduled listing of rival Oaktree, which is looking to raise $517.5M.

DOJ may sue Apple today over e-book price-fixing. The Department of Justice could reportedly sue Apple (AAPL) and Macmillan today over the alleged fixing of e-book prices while coming to a settlement with Simon & Schuster (CBS), Hachette and HarperCollins (NWSA). Justice wants a deal that would let Amazon (AMZN) and other retailers, not the publishers, decide what to charge customers.

Coty may revive IPO scheme as Avon alternative. Coty could resurrect a plan to carry out an IPO in the U.S. if it fails in its $10B bid for Avon (AVP), which it could increase. The company has already held initial discussions with investment banks, but placed going public on the backburner after the Avon deal started to heat up.

Top Economic & Other News
Romney on course to challenge Obama after Santorum quits. The way is open for Mitt Romney to win the GOP's nomination for President after Rick Santorum, his closest rival, yesterday suspended his bid. Santorum's exit still leaves Newt Gingrich and Ron Paul in the race, but they're way behind in the polls and delegate count.

FHFA: Freddie, Fannie could save $1.7B from loan forgiveness.Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) could save $1.7B by forgiving principal on some problem loans, Edward DeMarco, the acting director of the Federal Housing Finance Agency, said yesterday. However, the net cost to the taxpayer would be $2.1B, as the savings would come from Treasury incentives via the expanded Home Affordable Modification Program and using TARP funds.

Germany, Italy suffer poor bond auctions. Germany has experienced very weak demand at an auction of 10-year Bunds, able to move just €3.87B of paper vs. a target of €5B. The bid-cover ratio was just 1.1. The notes were priced to yield 1.77% - a record-low for an auction - but sharply higher than the 1.64% Bunds were trading at yesterday. Meanwhile, Italian yields jumped in an auction of €11B of 12- and 3-month paper as Spain's budget woes hit other vulnerable countries. Notwithstanding, yields for Italian 10-year paper in the secondary market took a dive, falling 15 bps to 5.54% premarket, while those for Spain were -13 bps at 5.85% after the ECB's Benoit Coeure said the bank could revive bond purchases.

Where To Go Next
Expectations Heading Into Earnings Season
Growth Vs. Value Investing
Why Is Spain In Such Bad Shape?

Today's Markets:
In Asia, Japan -0.8% to 9459. Hong Kong -1.1% to 20141. China +0.1%to 2309. India -0.3% to 17199.
In Europe, at midday, London +0.6%. Paris +1.5%. Frankfurt +1.3%.
Futures at 7:00: Dow +0.65%. S&P +0.8%. Nasdaq +0.7%. Crude +0.5%to $101.54. Gold -0.1% to $1659.50.

Wednesday's economic calendar:
7:00 MBA Mortgage Applications
8:20 Fed's Lockhart: 'Financial Reforms'
8:30 Import/Export Prices
9:30 Fed's George: 'Debt, Deficits and Financial Instability'
10:30 EIA Petroleum Inventories
10:30 Fed's Rosengren: 'Money Market Mutual Funds'
1:00 PM Results of $21B, 10-Year Note Auction
2:00 PM Fed's Beige Book
2:00 PM Treasury Budget
4:00 PM Fed's Bullard : 'Economic Outlook'
7:30 PM Fed's Yellen: 'The Economic Outlook and Monetary Policy'

Earnings Results: 
For full real-time earnings coverage, please click here.

Companies that beat EPS expectations last night and today include:
- Alcoa (AA)

Notable earnings before Wednesday's open: PGR (PGR)