Wall Street Breakfast: Must-Know News

• MGM mulls Manhattan. MGM Mirage (MGM) and Dubai World may join to buy Harry Macklowe's Drake Hotel site. The partners would assume $580M in defaulted debt and interest, and probably pay another $200M for the East 56th and Park Ave. site. "A Park Avenue address is prestigious and well regarded from a global perspective, and a globally recognized brand would be a good combination," hotel investment broker Mark Gordon says.
• Can Icahn seize Yahoo? Carl Icahn unveiled his Yahoo (YHOO) proxy slate (including Dallas Mavericks owner Mark Cuban), while Yahoo defended its board and its handling of the Microsoft (MSFT) bid. Paulson & Co. hedge fund said it bought 50M shares of Yahoo during Q1, and plans to back Icahn's dissident slate. Some think the group may already control as much as 30% of the proxy vote.
• Yahoo pressing Google alliance. Yahoo (YHOO) is in a big rush to seal a search-advertising pact with Google (GOOG), in part due to the pressure of Carl Icahn's play for its board. The companies say their planned "open platform" will allow others to serve up ads tied to keyword searches (this in order to overcome regulatory issues). But some analysts think the deal's structure creates a false sense of a level playing field that will in fact be dominated by Google.
• Weak data won't go away. Thursday's economic data kept recessionary concerns on the front burner. Industrial production fell 0.7% amid a 8.2% drop in motor vehicle output. Capacity utilization at manufacturers fell to 79.7% from 80.4% a month ago. The Empire State Manufacturing Survey fell to -3.23 from +0.63, while the Philly Fed's general business-conditions index improved to -15.6 from -24.9, although it remains in contractionary territory. Initial claims fell 1,000 to 365,750. Homebuilder confidence fell to 19 from 20 the past three months.
• More scrutiny at American Airlines. The FAA wants to know why American Airlines (AMR) mechanics were told to skimp on safety checks for damage due to lightening. American seems confident the move was permissible; if it's wrong, it could face stiff fines.
• Macy's banks on child's play. Macy's will announce plans to open FAO Schwarz toy boutiques in each of the 685 stores that carry kids clothing. Macy's says the deal will drive traffic. The big question is can FAO retain its exclusive image amid such huge expansion?
• Carmakers settle with CAW. GM (GM) and Chrysler (DIA) settled with the Canadian Auto Workers union in a deal very similar to the one hammered out by Ford (F) two weeks ago -- even though the two initially said Ford got the short shrift. CAW president Buzz Hargrove says he moved quickly, because things are only going to get worse from here on.
• Libor in focus. Fed officials and London traders who play a role in setting the Libor are in contact amid concerns the ubiquitous rate is lowballing the true rate banks are borrowing at.
• Lockheed locks up $1.5B gov't deal. As had been speculated, Lockheed Martin (LMT) won a $1.4B U.S. Air Force contract to build the next-generation Global Positioning System Space System program, known as GPS III. ITT (ITT) and General Dynamics (GD) are also participating in the project.
• Bernanke urges banks to borrow. Fed Chairman Bernanke is happy banks are having an easier time of raising funds, and wants them to keep doing so to repair their balance sheets and support new economic expansion. The most recent Treasurys offered by the Fed's new program drew just $7.24B in bids on an offer of $25B.
• Rio Tinto faces China censure. Chinese steelmakers may boycott Rio Tinto (RTP) amid accusations Rio is limiting contract-supplied iron ore in order to force them to buy at higher spot-market prices. A boycott could open up the door for smaller firms to break the virtual China iron-ore monopoly of Rio, BHP Billiton (BHP) and Vale (RIO).

Earnings: Thursday After Close

• Advance Auto Parts (AAP): Q1 EPS of $0.86 beats consensus of $0.78. Revenue of $1.53B in-line. Announces $250M share repurchase program to replace a $500M program which had $105M remaining. Shares: +8.75%.
• Autodesk (ADSK): Q1 EPS of $0.50 beats consensus of $0.48. Revenue of $599M vs. consensus of $589M. Sees Q2 EPS of $0.52-0.54 vs. consensus of $0.52. Shares: -0.4%.
• Beazer Homes (BZH): Q1 EPS of -$3.59 misses consensus of -$2.05. Revenue of $503M vs. consensus of $528M. Sees Q2 EPS of -$5.93, short of consensus of -$1.01, and revenue of $405M vs. consensus of $483M. Shares: -5.2%.
• BMC Software (BMC): FQ4 EPS of $0.63 beats consensus of $0.51. Revenue of $467M vs. consensus of $460M. Sees full-year 2009 EPS of $2.10-2.20, better than consensus of $2.09. Shares: +4.3%.
• Compuware (CPWR): FQ4 EPS of $0.23 beats consensus of $0.21. Revenue of $339M vs. consensus of $332M. Shares: -2.7%.
• General Steel (GSI): Q1 EPS of $0.06 misses consensus of $0.13. Revenue of $292M vs. consensus of $282M. Shares: -21.8%.
• Giant Interactive (GA): Q1 EPS of $0.20 beats consensus of $0.16. Revenue of $67.3M vs. consensus of $63.1M. Shares: -3.9%.
• Kohl's (KSS): Q1 EPS of $0.49 beats consensus of $0.44. Revenue of $3.6B in-line. Sees Q2 EPS of $0.70-0.74, in-line, and full-year EPS of $2.95-3.15, short of consensus of $3.11. Shares: -1%.
• Nordstrom (JWN): Q1 EPS of $0.54 beats consensus of $0.49. Revenue of $1.88B in-line. Sees full-year EPS of $2.65-2.80, short of consensus of $2.76 and down from a previous $2.75-2.90. Shares: +1.2%
• Quantum (QTM): FQ4 EPS of -$0.08 misses consensus of $0.04. Revenue of $229M vs. consensus of $241M. Shares: -10.1%.
• UTStarcom (UTSI): Q1 EPS of $0.21 beats consensus of -$0.10. Revenue of $586M vs. consensus of $550M. Shares: +4.6%.

Earnings: Friday Before Open

• Abercrombie & Fitch (ANF): Q1 EPS of $0.69 beats consensus of $0.65. Revenue of $800M vs. consensus of $808M. Same-store sales were down 3% from a year ago.
• Fairpoint (FRP): Q1 EPS of $0.19 beats consensus of $0.00. Revenue of $282M vs. consensus $143M.

Today's Markets

• In Asia Friday: Nikkei -0.23% to 14,219. Hang Seng +0.41% to 25,619. Shanghai -0.36% to 3,624. BSE Sensex +0.47% to 17,435.
• European markets are broadly higher at midday. FTSE +1.43% to 6,341. CAC +0.74% to 5,095. DAX +1.79% to 7,202.
• U.S. futures are up slightly from Thursday's close. Dow +0.11% to 13,009. S&P +0.18% to 1,427. Nasdaq +0.14% to 2,038.50.
• Gold is 0.98% higher to $888.40. Oil is up 1.78% to $126.35.

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