Wall Street Breakfast: Sony Doubles Projected Net Loss 

April 10, 2012  |  includes: AA, AMLN, BAC, C, CHK, CVX, FB, HBC, JPM, PBR, QQQ, SFLY, SNE, SPY, SVU,WFC

Top Stories
Sony loss balloons. Sony (SNE) more than doubled its projected annual net loss to ¥520B ($6.4B) from a February forecast for a ¥220B loss, the result of taking a ¥300B charge in Q4 on taxes. This will be Sony's fourth consecutive year of net loss as the company struggles with a strong yen and fierce competition. Shares -8% premarket (7:15 ET).

China's surprise trade surplus. China posted an unexpected trade surplus in March of $5.35B vs. an expected deficit of $3.15B, with imports up only 5.3% vs. expectations of +9%. Exports were a larger-than-expected +8.9%. According to associate professor Patrick Chovanec, China may be experiencing economic contraction right now, as "there's a disconnect" between China's reported economic numbers and reality on the ground. SA author Scott Sumner disagrees, and says forecasts of an impending Chinese bust are overblown.

Facebook snaps up Instagram. Facebook's (FB) Mark Zuckerberg announced via his Facebook page yesterday that the company is purchasing Instagram for $1B in cash and stock. "I think Facebookpanicked," said an observer of the Instagram acquisition. There's zero chance Instagram would have completed last week's funding round if it knew Facebook was interested, meaning Facebook saw the funding, then saw Instagram's Android app with more than 1M downloads its first day, and "decided to take out the competition before it had a chance to grow even bigger." The news sent shares of Shutterfly (SFLY) down 4.3% in regular trading (and another 3.5% in AH) as a Facebook-Instagram combo potentially poses a bigger threat to the company's fortunes than an independent Instagram.

Top Equities News
HSBC in divestment push. HSBC (HBC) says it's in talks over the possible sale of its Korean retail banking and wealth management business to Korea Development Bank. HSBC is also in preliminary talks with several firms about the possible sale of its Pakistan operations as the bank works to divest non-core assets.

Icahn sues Amylin. Just days after blasting Amylin's (AMLN) board for reportedly passing on a takeover offer from Bristol-Myers Squibb, Carl Icahn followed through on a threat to sue the drugmaker if it didn’t extend its deadline for nominating board members. He said he’ll file another suit if Amylin doesn’t respond to his demand for copies of its books and records by Wednesday.

Oil seep raises concerns. Chevron (CVX) says it found an oil seep in an offshore Brazilian oil field run by Petrobras (PBR), close to the site of a November leak that led to criminal and civil charges. No traces have been found on the surface, but droplets of oil were found leaking from the seabed. This latest leak adds to questions about the charges brought against Chevron and raises broader doubts about the safety and speed with which Brazil can develop its offshore oil fields. Geologists caution that some of these fears may be overblown, as small, naturally occurring seeps are what attracted oil companies to the deep-sea deposits in the first place.

Chesapeake sells some assets. Chesapeake Energy (CHK) announced yesterday the sale of assets worth $2.6B, and plans to use the funds to reduce debt and finance development. Shares rose 1.3% in after-hours trading, not quite enough to offset the 3.1% loss registered during regular trading. (Read SA author EconMatters' take on Chesapeake'snaked risk management.)

Top Economic & Other News
BOJ holds steady. The Bank of Japan kept monetary policy unchanged today, ignoring recent calls from lawmakers for additional easing. The story may change in the next few weeks, with more easing possible as revised price projections are likely to show a goal of 1% inflation is not in sight. Meanwhile, Japanese PM Noda said the government will start holding meetings on overcoming deflation.

Demand jumps for skilled-worker visas. Demand is up sharply for skilled-worker visas, with 25,600 H1-B petitions filed in the first week of this year's application season, nearly twice as many as were filed in the entire first month of last year's application period. In the past, lawmakers have expressed concerns that these foreign workers may be displacing qualified Americans, but the increase in visa applications this year mirrors increased activity for related businesses.

Regulators push for mortgage servicer transparency. The Consumer Financial Protection Bureau plans to propose new rules that would force mortgage servicers to be far more transparent about the costs faced by homeowners and to provide warnings before any interest rate changes. The rules, if approved, would affect such giants as Wells Fargo (WFC), Citigroup (C), BofA (BAC) and JPMorgan (JPM), as well as the smaller mortgage servicers.

Where To Go Next
Parsing Bernanke
Tuesday's ETF To Watch: United States Oil Fund
Whisper Number Impact: Earnings Preview For Alcoa, Talbots

Today's Markets:
In Asia, Japan -0.1%. Hong Kong -1.1%. China +0.9%. India +0.1%.
In Europe, at midday, London -0.8%. Paris -1.1%. Frankfurt -0.8%.
Futures at 7:00: Dow +0.3%. S&P +0.3%. Nasdaq +0.35%. Crude -0.7%to $101.76. Gold -0.04% to $1643.20.

Tuesday's economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Wholesale Trade
1:00 PM Results of $32B, 3-Year Note Auction

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

Companies set to report earnings today include Alcoa (AA) and Supervalu (SVU).