Wall Street Breakfast: Must-Know News

• Wachovia, with fresh CEO, loses CFO. Just two weeks after Wachovia (WB) replaced its CEO with former U.S. Treasury Undersecretary Robert Steel, CFO Thomas Wurtz says he will leave the troubled bank once a successor is named. The company gave no explanation.
• Foreclosures more than doubled in Q2 vs. a year ago; one in every 171 U.S. homeowners lost their home, up 121% from a year ago. Falling home prices have left some owing more than their home is worth, one reason for the increase - which in turn puts further pressure on housing prices. "Rising foreclosures are putting downward pressure on prices, increasing the possibility that homeowners will go upside- down on their mortgages," Merrill economist Sheryl King says. "That will cause more losses in mortgage portfolios and less willingness from investors to securitize mortgages and therefore fewer mortgages." Pimco's Bill Gross estimates that about 25M people are at risk of owing more than their homes are worth.
After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
• Cleveland-Cliffs: suitor or target? Cleveland-Cliffs' (CLF) largest shareholder, Harbinger Capital, wants the iron-ore producer to put itself up for sale - and forget about its $10B bid for Alpha Natural Resources (ANR). With a 16% stake, Phil Falcone's fund effectively has the ability to block any transaction. He thinks CLF ($93) could fetch up to $130/share.
• Blackstone goes fishing in subprime seas - NY Post. Sources say Blackstone (BX) has earmarked $1.25B to make bets in the subprime market, in partnership with Florida firm Bayview Financial. Bayview has already put 40% of the stake to work, a source says. "Whole residential mortgage loans, including toxic subprime mortgages, are the latest in a series of assets battered by the credit crunch to be eyed by hedge funds and other vulture investors. Only a few deep-pocketed investors will likely make a go of it, however, as investing in mortgages requires access to both capital- and loan-servicing companies, which select and manage the loans. Also drooling over the downtrodden residential-mortgage market are hedge funds Fortress and Och-Ziff (OZM), as well as traditional asset manager BlackRock (BLK)."
• Infineon posts surprising loss, slashes jobs. Infineon (IFX) lost €592M, more than double what analysts predicted. It will shed about 3,000 jobs - more than 10% of its workforce. "Infineon must adapt its size to today's market conditions," it said. "Headcount reductions will be inevitable." Late yesterday QIMONDA AG (QI), in which IFX owns a 77.5% stake, posted a FQ3 loss of €401M, worse than the €287M analysts were looking for.
• Energy top concern. Swollen energy prices are the number-one issue on Americans' minds, a new poll finds. The study has political implications: Voters prefer Democratic energy policy over Republican by a ratio of 42:22. Voters in four battleground sates favor offshore drilling as the top-tier method to address the U.S. petroleum shortfall.
• Deregulation out, regulation in. Housing and financial crises are fueling a new wave of hands-on government regulation of business and the economy, a sharp about face from the deregulation movement that has defined U.S. politics since Ronald Reagan held office. On Thursday, NY Fed governor Timothy Geithner and SEC chief Christopher Cox pushed for more power, and described to the House how government regulation can be strengthened without stifling financial innovation.
• Another try at extending tax credits. Top Senate tax writer Max Baucus unveiled a revised proposal to extend billions of dollars in expiring credits for businesses Thursday night. The bill includes $16.8B in energy-related incentives.
• Europe thinks Fed, China aren't doing enough. European G7 leaders want the Fed to hike interest rates to bolster the dollar and curb global inflationary pressure, sources say. They are think a China interest rate raise would be a boon. The absence of action has some concerned the global economy could slip into a recession not seen since the 1930s. Sources say it may be wishful thinking.
• ECB talks tough. ECB council member Klaus Liebscher says policy makers have room to hike interest rates again, even amid slowing economic growth. The euro rose vs. the dollar in overnight trading, +0.55% to $1.5702. "A lot of people doubted that the poor economic data was going to spell the end of the tightening cycle," Barclays' David Woo says. "The fact that the ECB is still talking tough and oil prices are starting to stabilize is psychologically supportive for the euro."

Earnings: Before Open

• Barnes Group (B): Q2 EPS of $0.6 beats by $0.01. Revenue of $191M (+4.4%) vs. $210.5M. [PR]
• Black & Decker (BDK): Q2 EPS of $1.46 beats by $0.04. Revenue of $1.64B (-3.4%) in-line. [PR]
• Coventry Health Care (CVH): Q2 EPS of $0.55 in-line. Revenue of $2.98B (+27.7%) in-line. [PR]
• Fortune Brands (FO): Q2 EPS of $1.25 beats by $0.05. Revenue of $2.1B (-8.6%) vs. $2.05B. Shares [PR]
• Honda (HMC): Net operating profit rose 8% to ¥179.6B; analysts expected a loss of ¥135.4B. [AP]
• ITT Industries (ITT): Q2 EPS of $1.19 beats by $0.09. Revenue of $3.06B (+37.8%) vs. $2.93B. [PR]
• Netflix (NFLX): Q2 EPS of $0.42 beats by $0.02. Revenue of $338M (+11.2%) in-line. [PR]

Earnings: After Close

• BMC Software (BMC): FQ1 EPS of $0.43 in-line. Revenue of $437.5M (+13.6%) vs. $433M. Shares -3.4%. [PR]
• Burlington Northern Santa Fe (BNI): Q2 EPS of $1.34 beats by $0.04. Revenue of $4.48B (+16.5%) in-line. Shares -0.1%. [PR]
• Celestica (CLS): Q2 EPS of $0.17 in-line. Revenue of $1.88B (-3.1%) vs. $1.93B. Shares +0.8%. [PR]
• Chubb (CB): Q2 EPS of $1.40 misses by $0.07. Net premiums written down 0.4% to $3.05B. Shares -0.6%. [PR]
• CROCS (CROX): Sees Q2 EPS of $0.04-0.08 vs. $0.41. Sees Q3 EPS of $0.01-0.05 vs. $0.57. Sees revenue of $195-205M vs. $282M. [PR]
• CyberSource (CYBS): Q2 EPS of $0.16 beats by $0.01. Revenue of $55.7M (+143.2%) vs. $54.3M. Shares +6%. [PR]
• Global Payments (GPN): FQ4 EPS of $0.52 beats by $0.01. Revenue of $344M (+22.7%) vs. $328M. Shares +0.1%. [PR]
• Ingram Micro (IM): Q2 EPS of $0.35 in-line. Revenue of $8.82B (+7.7%) vs. $8.58B. "We expect the macro-economic softness to continue into the third quarter." [PR]
• Interactive Brokers (IBKR): Q2 EPS of $0.44 misses by $0.06. Revenue of $395M (+34.2%). Shares -15%. [PR]
• Juniper Networks (JNPR): Q2 EPS of $0.28 beats by $0.01. Revenue of $879M (+32.2%) vs. $852M. Shares -3%. [PR]
• PerkinElmer (PKI): Q2 EPS of $0.35 beats by $0.01. Revenue of $529M (+20.9%) vs. $506M. Shares +0.3%. [PR]
• Rambus (RMBS): Q2 EPS of -$0.13 misses by $0.01. Revenue of $35.7M (-24.8%) vs. $34.3M. Shares -1.3%. [PR]
• Riverbed Technology (RVBD): Q2 EPS of $0.13 beats by $0.02. Revenue of $81.6M (+51.1%) vs. $77M. Shares +2.8%. [PR]
• SiRF Technology (SIRF): Q2 EPS of -$0.19 misses by $0.06. Revenue of $63M (-10.6%) vs. $62M. Shares -7.6%. [PR]
• Western Digital (WDC): FQ4 EPS of $0.94 beats by $0.12. Revenue of $1.99B (+45.8%) vs. $1.89B. Shares +1.5%. [PR]
• Wynn Resorts (WYNN): Q2 EPS of $1.11 beats by $0.18. Revenue of $825M (+20%) in-line. Shares +1.5%. [PR]
• YRC Worldwide (YRCW): Q2 EPS of $0.39 beats by $0.10. Revenue of $2.4B (-3.5%) in-line. Shares +2.3%. [PR]

Today's Markets

• Asia markets closed broadly lower Friday. Nikkei -1.97% to 13,335. Hang Seng -1.5% to 22,741. Shanghai -1.55% to 2,865. BSE -3.4% to 14,275.
• In Europe, bourses are under pressure. London -0.7%. Paris -0.8%. Frankfurt -1.1%.
• Futures are down somewhat. Dow -0.12%. S&P -0.12%. Nasdaq -0.07%. Crude +0.62% to $126.27. Gold +1% to $931.60.

Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.

Comments

[scooter-pop]

Bob Doll (the Trillion Dollar Investor) is buying Oil Producers today. The Bakken Oil Play looks to be the HOTTEST Bonafide Oil Play in the US today!

[JCCIII]

Scooter-pop, how does one play the Bakken Oil Play? Thanks.

[just knockthe hornsoff]

"Voters prefer Democratic energy policy over Republican by a ratio of 42:22."

The only strategy I have heard of is tax the evil oil company profits away. Government has already taxed ExxonMobil's record profits at the maximum corporate rate - taking $8B and leaving $10B. Go ahead and tax them at 100% and there will be no capital to invest in future exploration and alternative research. These "voters" have their collective heads in the clouds.

[notsosmart]

as a registered independent voter i have no confidence in either party but this administration has been in power for almost 8 years & nothing.they also had a friendly congress for most of that time-still nothing.so voters count for nothing & get nothing.this country,sadly,has lost its way.hello roman empire.

[RightinSanFrancisco]

Thanks taxbiggot. I thought that I had misread the article.
- On your point, last year Exxon Mobil paid federal income taxes equal to the bottom half (65 million) of US taxpayers.
- The McCain program includes medium term drilling off shore (a Democrat taboo), and a major investment in nuclear (something Harry Reid will do everything he can to block.) Both candidates are in favor of solar panels and wind farms, but you can't get from here to there without nuclear, and Obama won't take on that challenge.

[Norm theFed-up]

I can't believe I have this many people agreeing with me this morning. Hello Roman Empire is precisely the quote I made yesterday morning to a co-worker. This "administration&q... is a disgrace only compounded by the fact that WE (and I use the term loosely...I didn't vote for this clown) actually elected him TWICE. We HAVE terms limits. Want to change the government? Do your homework, go to the voting booth, and vote against every incumbent. Voila....it's a done deal....but 1/2 of the American populace are a certified idiots living from week to week.

Tax the hell out of the oil companies...the biggie....WHY............ Next time you need gas, despite the cost over which they have NO control either, just drive about 1/4 mile and GET IT. They provide us all with reliable, easy to find, never seems to run out, service and product. Yeah...tax the hell out of them....and watch gas in 5 years because they haven't got the money to...as the White House Idiot has put it: "...drill ourselves out of this problem." Morons.

[TapD]

McCains off shore drilling proposal is too late for Americans to survive to-day.He was a Senator for 25 years. What has he accomplished in energy policy?None.Depending on carbon based economy in 21st century, is nothing but insanity. Most progressive countries who believe in innovation, are ahead of us in energy independent. Examples are Sweden, France and Brazil. Russia and MiddleEast want us to be Petroleum dependent (including our some Republican friends).Definition of insanity is doing the same thing but expecting different results. I think either we innovate or vegetate. There is no other alternative solution.

[Monty23]

Voters prefer Dem Energy policy? Something is wrong here. Taxbigot is absolutely right but he forgot their other policy; force oil producers to drill on all leases even though most of them have no oil. Do they realize how much it costs to drill. Here in my area [ Baaken Shale] it costs at least $5M. You don't drill many dry holes at that price. We never get a good energy policy because of partisan politics. Normthefedup has the right idea; Vote the bums out. But replace with what?

[User 197935]

can anyone explain to me why the drop in value of a property would translate to a foreclosure, which seems to be more a function of the ability to service the existing mortgage debt. I can understand an increase in delinquency/foreclosur... rate in an job stressed economy which affects the ability to meet payments. But absent that the value of a property declining to less than current value is affects asset value only.

[nibbs17]

Voters prefer democrat's energy policy over republican's policy by a 42 to 22 edge, according to your nameless poll. Other than doing nothing, and opposing all intelligent steps to benefit energy users, exactly what is the democrat's energy policy? Your poll report is pure BS. Democrats have no energy policy! Democrats screw up everything they touch!

[AJ30]

To User197935, the problem arises when ARMs are adjusted sharply upward. Usually the homeowner was lulled into thinking if this happened, they could either refi or do a Home equity line to take up the slack until their income caught up. Needless to see with the air pushed out of the valuation balloon, this can't be done. Valuation decline slammed the escape hatch. Voila delinquency!

[msgtb]

RightinSanFrancisco

You say we can't get from here to there without nuclear? I disagree! Until we can dispose of the waste already produced we should not create more. The negative will never succeed. We should be building wind turbines at the rate we produced tanks in WWII. If the government had an energy policy that would reduce our dependence on foreign energy suppliers that would be helpful.

We can do it but we have to have direction. The only one who seems to have a clue is T. Boone Pickens.

We need to go to wind power for electrical production and use the freed up natural gas to fuel our vehicles. I recently returned from Thailand and they have Compressed Natural Gas (CNG) refiling stations in most provinces in their country. This is equivalent to Texas having a CNG refiling station is every county. They are converting all types of vehicles large trucks, small trucks, buses and private cars. I would guess that over 100,000 plus vehicles have been converted. They are also using E20 at all refilling stations. If third world country's can do it why can't we? We should be ashamed out ourselves and out country. If we don't want to become a looser on the world stage we must take strong action. We should have an Apollo project for energy.

And always remember what your mother told you, that can't never did anything.

[the hand]

i cut my teeth in the nuclear industry, and there is not a chance in hell (even if we were willing) to put a nuke plant on line in ten years if we were willing to do so and started today. the engineers and manufacturing ability were wiped out in the 80's. and even then, the next plant we wanted to build may be many years beyond that. it really would be 15 years before any real benefit would be seen. and since the last generation of nukes were built, the ones on the drawing boards are a vast improvement in the area of safety.

as far as disposal of nuke waste is concerned - you have to want to have a solution before you can have one.

for an form of energy to really be economically viable, the energy must be able to be provided 24 hours per day. i am aware of only one solar project which meets this test, and no wind project currently do. without being able to provide 24 hours per day, you must still build the conventional electrical generating stations - and then just produce less power when the alternate energy sources can contribute. this is a double whammy for consumers - we pay to build the conventional plants, and we subsidize the alternative plants.

the road to hell is paved with good intentions,

[User 218405]

Why don't we begin building bullet trains in our country? This would create new jobs and give the prisoners something to do besides work out in the gym and read law books. The electricity for the trains could be generated by wind, solar and nuclear, and help releive the necessity of some of the imported oil used to make jet fuel for the airline industry.