Wall Street Breakfast: Must-Know News

April 18, 2012    includes: AAPL, AMZN, BRK.A, BRK.B, CHSI, GOOG, IBM, ILMN, INTC, MMI, NSRGY.PK, PFE,QQQ, RHHBY.PK, SSNLF.PK, SXCI, YHOO, YPF

Top Stories
Buffett to stay at helm despite cancer. Warren Buffett will continue to run Berkshire Hathaway (BRK.A, BRK.B) despite being diagnosed with Stage I prostate cancer, which he said is "not remotely life-threatening or even debilitating in any meaningful way." Still, the development will probably increase questions about the succession at Berkshire. (Source - NYT)

Bad loans at Spanish banks hit 18-year record. Non-performing loans at Spanish banks rose to an 18-year high of 8.16% in February from 7.91% in December, reaching a total of €143.82B. The latest figures contrast with a rate that was below 1% in the years prior to the collapse of the property market in 2008, and will only exacerbate fears that the banks, if not the government, will need a bailout. (Source - MarketWatch)

Pfizer nears $9B sales of infant nutrition unit. Pfizer (PFE) is reportedly closing in on a deal to sell its infant nutrition business to winning bidder Nestle (NSRGY.PK) for at least $9B. A deal could be announced as soon as next week. (Source - WSJ)

Top Equities News
SXC to acquire Catalyst for $4.4B. SXC Health (SXCI) has agreed to buy Catalyst Health (CHSI) for about $4.4B in cash and stock, with the $81.02 a share offer representing a premium of roughly 28% to the latter's close yesterday. The PR spiel, which you can read here, said the merger will combine "two of the country's fastest growing, innovative and highly complementary" pharmacy benefit management companies.

IBM's earnings continue to diverge. IBM's (IBM) habit of producing profit growth but anemic revenue continued in Q1, as EPS rose to $2.78 from $2.41 and beat forecasts while revenue stayed flat at $24.67B and missed consensus. The IT giant also increased its 2012 EPS guidance to $15, which is above consensus of $14.93. The earnings trend reflects IBM's strategy of focusing on more profitable businesses while cutting costs, although regular share buybacks also help the EPS growth. To read reviews of IBM's results from SA authors, click here and here. Shares were -1.9% premarket. (Source - NYT)

Intel looks to mobile and servers to help reverse earnings fall. Intel (INTC) beat expectations in Q1 even though EPS fell to $0.53 from $0.56 while revenue was flat at $12.91B. Sales at the chip giant's PC CPU division slipped 2% on year, due to hard drive shortages, but it predicted that inventory replenishment will begin in Q2 and accelerate in Q3. Intel also forecast that chips for smartphones and servers in Q2 will provide "a tremendous foundation for growth in 2012 and beyond." SA author Valuentum applauded the results, the analysis of which you can readhere. (Source - NYT)

Shares rise as Yahoo at long last provides some cheer. Yahoo (YHOO) shares were +3.4% premarket after its Q1 results handily topped forecasts as EPS rose to $0.24 from 0.17 and sales edged up 1% to $1.08B. This was despite display and search ad revenues continuing to fall. On the earnings call, CEO Scott Thompson said Yahoo is shutting down 50 properties as part of its restructuring, although he didn't specify which ones. Thompson added that he wants Yahoo to grow ad sales "at or above the market rate."

D-Day for Illumina in fight for independence, or a higher offer.Today is a big day for Illumina (ILMN) in its battle to fend off Roche's (RHHBY.PK) $6.7B bid, with shareholders due to vote on new directors at the company's annual meeting. Roche has made six nominations, which would give it control of the board, although three proxy advisory services have backed Illumina's four candidates. (Source - Bloomberg)

Google looking to spin off Motorola's set-top box ops. Google (GOOG) plans to divest Motorola's (MMI) set-top box business after cable operators, terrified of the company's online video ambitions, "threatened war" unless it ditched the operations, Business Insider reports. And despite promises to keep Motorola's phone business at arm's length, Google wants to hold onto it because it "wants to have its own iPhone business." Unsurprisingly, Android partners are "furious."

Court seeks to play peace maker between Apple and Samsung.Apple's (AAPL) and Samsung's (SSNLF.PK) CEOs will participate in a patent settlement conference overseen by a U.S. Magistrate Judge. However, as Florian Mueller noted, the conference is "only semi-voluntary," having been orchestrated by the court. Moreover, even if Apple and Samsung somehow resolve all existing U.S. litigation, that could still leave outstanding disputes in Germany, Holland, Australia, South Korea, and some other places. (Source - Foss Patents)

Amazon acquires license to kill. Amazon (AMZN) has added a new weapon in its battle to attract readers, acquiring the exclusive North American rights to publish the James Bond spy titles in both print and digital form. Amazon will make the paperback editions available to all retailers, while the digital titles initially will be available only via the Kindle e-book store. (Source - WSJ)

Top Economic & Other News
Mario Monti not-so super as Italy set to miss budget target. Italy has delayed by one year its plan to reach a balanced budget in 2013, Reuters reports, citing a weakening economic outlook, according to a draft document due to be approved by prime minister Mario Monti today. Meanwhile, Portugese PM Pedro Passos Coelho has written in theFinancial Times that the country can't definitively promise that it will meet its commitment to return to capital markets before September 2013.

U.K. jobless rate in surprising fall. The U.K. unemployment rate for December-February unexpectedly dropped to 8.3% from 8.4% prior and vs. expectations of 8.4%. The number of jobless declined 35,000 to 2.65M. The figures may justify the 8-1 vote of the BOE's Monetary Policy Committee to leave its QE program at £325B ($426.4B) at its meeting earlier this month, and its unanimous decision to maintain interest rates at a record low of 0.5%.

Three Breakfast Reads
What Are The Insiders Buying?
Betting Against Chinese Banks Is Harder Than It Looks 
IMF: Mediocre Growth, High Risks, And The Long Road Ahead

For more informed opinion and analysis, go to seekingalpha.com.

Today's Markets:
In Asia, Japan +2.1%. Hong Kong +1.1%. China +2.0%. India +0.2%.
In Europe, at midday, London -0.4%. Paris -1.6%. Frankfurt -0.8%.
Futures at 7:00: Dow -0.2%. S&P -0.3%. Nasdaq -0.3%. Crude flat at $104.17. Gold -0.2% to $1647.40.

Wednesday's economic calendar:
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories

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

Companies that beat EPS expectations last night and today include:
- IBM (IBM)
- Intel (INTC)
- Halliburton (HAL)
- Seagate Technology (STX)
- United Rentals (URI)
- Yahoo (YHOO)

Notable earnings before Wednesday's open: : ABT, AMLN, ASML, BK, HAL,HBAN, NYB, PNC, STJ, TXT
Notable earnings after Wednesday's close: AXP, CCK, CVBF, CYS, EBAY,FFIV, LRCX, MAR, NE, QCOM, SLM, STLD, SWK, VMW, WLT, YUM