Wall Street Breakfast: Must-Know News

April 23, 2012  |   includes: AAPL, AZN, NFLX, NOK, NSRGY.PK, PFE, PHG, QQQ, RDEA, SD, SPY, VOD, WMT

Top Stories
Baby Love for Nestle as it wins $11.85B Pfizer ops. Nestle (NSRGY.PK) has won the race to acquire Pfizer's (PFE) baby food unit after agreeing to pay $11.85B in cash for the operations. The acquisition will enable Nestle to expand its infant-formula business in emerging markets, with the aim being to regain traction in China.

Sarkozy and Hollande win through to final round. Nicolas Sarkozy and left-wing challenger Francois Hollande will face off against each other in two weeks' time after they received the most number of votes in the first round of France's presidential election yesterday. Hollande, who favors toning down the austerity, is comfortably ahead in the polls, although the unexpectedly strong showing of the far-right National Front could yet affect the final outcome.
Where to go next >> SA contributor Michael Gayed asks whether growth rhetoric will "turn France around."

Wal-Mart accused of hushing up bribery probe Facing evidence of widespread corruption in Mexico, Wal-Mart (WMT) shut down an internal investigation and failed to notify officials, The New York Times reports. Wal-Mart replied by saying that many of the allegations are more than six years old, and that it's "working aggressively to determine what happened." If Avon is anything to go by, the allegations could hamper Wal-Mart for years. Shares were -2.3% premarket.

Top Equities News
Vodafone to buy C&W for $1.7B. Vodafone (VOD) has agreed to acquire Cable & Wireless Worldwide for £1.04B ($1.7B) in cash, allowing Vodafone to offload surging Internet traffic in the U.K. to a fixed network with more capacity.

SA Interview: SandRidge CEO sees major upside for shares.SandRidge's (SD) shares may have lost 44% in the past year, but CEO Tom Ward predicted in a Seeking Alpha interview that they should rise significantly over the next 3 years as the oil company executes on a plan to double oil output and triple EBITDA.
Where to go next >> SA author Devon Shire, who took part in the interview, on "key takeaways from SandRidge Energy."

AstraZeneca to buy Ardea for $1.26B. AstraZeneca (AZN) has agreed to acquire Ardea Biosciences (RDEA) for $1.26B, giving it access to a new drug for treating gout patients. Net of the existing cash held by Ardea, the $32 a share acquisition is valued at $1B and is a 54% premium to Ardea's Friday close.

Philips net profit surges. Philips Electronics' (PHG) Q1 net profit jumped over 80% to €248M as sales rose 7% to €5.6B vs. expectations of €5.42B. Philips plans to cut 4,500 jobs and to deliver €800M in savings by 2014. Shares were +4.6% premarket.

Eyes on subs as investors prepare for Netflix loss. Netflix (NFLX) is due to release Q1 results after the bell, when it is expected to report that it swung to a loss per share of 0.27 from a profit of 1.11 and that revenue climbed 21% to $868.57M. Following its blunders last year and increasing competition, investors will be looking to see if Netflix can sustain its rebound in online customers in the U.S. (Bloomberg)
Where to go next >> SA author J Mintzmyer says to "prepare for extreme spin."

TI's earnings seen falling again. Texas Instruments is today expected to report that earnings fell for the fourth quarter in a row, with EPS forecast to drop to $0.29 from $0.55 and revenue 9.8% to $3.06B. With TI a supplier to Apple (AAPL) and Nokia (NOK), Jim Cramer says analysts will try to discern the income from the two customers and make predictions about Apple's results based on what TI says. (Forbes)

Top Economic & Other News
Dutch PM to quit after budget talks collapse. Dutch Prime Minister Mark Rutte is expected to resign today, setting the stage for elections after this weekend's budget negotiation collapsed. The Netherlands has its own property bubble clean-up and debt issues, and its AAA rating is in danger. "A failure on the part of a 'true core' country to adhere to the (EU) compact's deficit limits will represent a powerful debasement of the treaty," writes Rabobank. (MarketWatch)

Eurozone looks to be sinking deeper into recesson. Eurozone factory activity continued to contract in April as PMI fell to a preliminary 46 in April from 47.7 in March and vs. expectations of 48.1. The region is "extending what appears to be a double-dip recession into a third consecutive quarter...Germany saw growth weaken to near-stagnation, while France saw a worryingly steep downturn," says Markit's Chris Williamson.

China factory activity also contracts. HSBC's flash estimate of China's PMI edged up to 49.1 from last month's 48.3, and while it's the strongest preliminary reading in the last four months, it's still below the 50 level that indicates contraction. (Reuters)

Spain continues to slump. Spain's economy shrank 0.4% in Q1 from the previous quarter in a setting of "high financial tension," while it also fell 0.5% from the year earlier period. Yields on 10-year bonds were slightly higher midday in Europe but below 6%.

Three Breakfast Reads
How Europe Could Sink Obama
U.S. Equities Remain Cheap Vs. Global Comps 
General Electric: Regaining Iconic Stature 

Today's Markets:
In Asia, Japan -0.2%. Hong Kong -1.8%. China -0.8%. India -1.6%.
In Europe, at midday, London -1.7%. Paris -2.3%. Frankfurt -2.7%.
Futures at 7:00: Dow -1%. S&P -1.1%. Nasdaq -1%. Crude -0.7% to $103.11. Gold -0.55% to $1633.80.

Monday's economic calendar:
No events scheduled.

Earnings 
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Notable earnings before Monday's open: CHKP, COP, DHI, EAT, ETN, HAS,STI, XRX
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