Cantor Morning News | Overnight Stocks

MSFT - Microsoft Corp., whose Internet-identification service was partly shut down for an hour this morning, is looking into reports that a “limited number” of customers were able to gain access to other users’ accounts. The breach occurred when users were trying to get into their own accounts using a mobile-phone Web browser, the co. said. It wasn’t clear if the security hole was related to the shutdown, MSFT said. http://www.bloomberg.com/apps/news?pid=20601087&sid=affIdPDIbclA&pos=7#

Harvard Univ. +/- Harvard University's $26B endowment is looking to unload a portion of its $5B real-estate portfolio as it seeks better investment opportunities and to reduce its exposure to the troubled property market. The university's endowment is willing to sell any part of its $5B of real-estate assets and accompanying future capital commitments, say people familiar with the matter. That figure represents $2B in property holdings and an additional $3B in future commitments to those assets.

RIMM +

Taking aim at rivals like Apple AAPL, BlackBerry-maker Research in Motion said that smartphone manufacturers must start developing less bandwidth-guzzling products or risk choking already congested airwaves.

http://www.cnbc.com/id/35417684

Commission to Reduce Federal Deficit + President Barack Obama has picked Republican former Senator Alan Simpson and former Clinton administration official Erskine Bowles to lead a commission on reducing the federal deficit. The president plans to sign an executive order creating the bipartisan panel, an administration official said yesterday on condition of anonymity because the announcement hasn’t been made. Obama has said he wants the commission to recommend specific steps to rein in the deficit, which is forecast to hit a record $1.6T this year. http://www.bloomberg.com/apps/news?pid=20601087&sid=a_xmRaCWmMFk&pos=8#

SPG, GGWPQ + Simon Properties Group Inc., already the nation's largest shopping-mall owner, made a $10B bid to acquire rival General Growth Properties Inc., which is seeking to emerge from bankruptcy proceedings, in a takeover effort that could alter the retail landscape in hundreds of American communities.

Greece +/- The council of EU finance ministers said Athens must comply with austerity demands by March 16 or lose control over its own tax and spend policies altogether. It if fails to do so, the EU will itself impose cuts under the draconian Article 126.9 of the Lisbon Treaty in what would amount to economic suzerainty. While the symbolic move to suspend Greece of its voting rights at one meeting makes no practical difference, it marks a constitutional watershed and represents a crushing loss of sovereignty. http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7252288/Greece-loses-EU-voting-power-in-blow-to-sovereignty.html

RBS +/-

Barack Obama has scuppered Royal Bank of Scotland's plan to raise $4B (Ł2.6B) from the sale of its energy trading arm, Sempra, by discouraging the main bidder for the business from buying the entire operation for fear of the U.S. crackdown on risky trading activities. RBS, in which the taxpayer has a stake of more than 80%, has sold the European and Asian operations to U.S. bank JP Morgan and is continuing to seek a buyer for the U.S. arm, which would be hit by the Volcker rule announced by president Obama to stop U.S. banks engaging in proprietary trading.

http://www.guardian.co.uk/business/2010/feb/16/rbs-selling-sempra-jpmorgan

FIG + Hedge fund and private-equity giant Fortress Investment Group. announced that it will buy bond investor Logan Circle Partners from financial-services co. Guggenheim Partners for about $21M in cash. Logan Circle has about $12B under management. FIG manages about $32B. FIG said that depending on the bond investor's growth and performance, it could make an additional payment to Guggenheim at the end of 2011.

Energy Cos. +/- Energy co. mergers are expected to rise. Unlike the round of mergers that created today’s behemoths in the late 1990s, the current round is not expected to form new giant cos. like Exxon Mobil or ConocoPhillips. This time, cos. are focused on buying fast-growing small cos., or on acquisitions that expand their reserves in an era when it is hard for them to find new places to drill. The targets include cos. that own new fields in nations like Ghana and Sierra Leone, independent gas producers in the U.S., and cos. that control fields in the deep waters of the Gulf of Mexico.

http://www.nytimes.com/2010/02/17/business/energy-environment/17merge.html?ref=business

China +/- China sold a record amount of its U.S. Treasury holdings in Dec., relinquishing its place as the world's biggest foreign holder of U.S. debt to Japan. China pared its Treasury holdings by $34B to $755.4B in Dec., placing it second behind Japan, with $768.8B. For the first time since Aug. 2008, Tokyo took over the top spot after steadily increasing its purchases of Treasury debt over the past several years.

Heard on the Street +/- Discusses General Growth's GGWPQ board should take the deal rather than rolling the dice again.

AIG, MET +/- The pending $15B sale of a large foreign life-insurance unit of American International Group Inc. to MetLife Inc. is being held up by a tax dispute that may require a ruling from the IRS, according to people familiar with the matter. The tax issue could put the Department of the Treasury, as overseer of the IRS, in an awkward situation. The Treasury is supervising AIG while trying to recoup taxpayers' $120B-odd investment in AIG and related entities.

BUD + Anheuser-Busch InBev plans to restructure its U.S. subsidiary's sales and marketing units, the Wall Street Journal reported, citing an internal memo and an interview. The report said the co. plans to restructure its brand marketing group to have more employees focused on its major beer lines. It will add three new regional sales offices in St. Louis, Denver and Charlotte, according to the report. The co. will also cut an unspecified number of jobs as part of the restructuring, the report said. http://www.reuters.com/article/idUSN1624777720100217?type=marketsNews

PACR + Pacer International posted a Q4 profit, helped by lower costs, and the logistics provider expects to be cash flow positive by the end of 2010. Shares of the co. rose 11% to $3.36 in extended trade, after closing at $3.03 Tuesday on Nasdaq. PACR said it expects gross margins for this year in the 19% range and sees an operating income compared with a loss in 2009.

http://www.reuters.com/article/idUSSGE61F0HR20100216?type=marketsNews

EBAY + EBay Inc. will launch a new online retail platform in five European countries and Russia by the end of March, spurring cross-border transactions and allowing buyers to navigate purchases in their native languages. The move comes as EBAY seeks to increase transactions on its sites by making them more user-friendly and reliable. It has been emphasizing fixed-price goods, rather than auctions, to encourage more buyers. http://www.reuters.com/article/idUSN1624027520100216?type=marketsNews

LGF +/- Billionaire financier Carl Icahn said he would tender for more shares of Lions Gate Entertainment Corp., in a move seen aimed at curbing potential purchases of studios like Miramax or Metro-Goldwyn-Mayer. Sources have listed LGF as among interested parties for Walt Disney Co's DIS Miramax or troubled studio Metro-Goldwyn-Mayer. And last week, LGF management told analysts that Miramax fits into its criteria for acquisitions. Icahn, who has amassed LGF shares since 2005 and holds an 18.9% stake in it, will become its largest shareholder if the tender is successful. http://www.reuters.com/article/idUSN1623163420100217?type=marketsNews

Reuters

Oil Futures + Oil rose towards $78 a barrel, supported by a weaker dollar and gains in stock markets on renewed investor risk appetite as concerns about a euro zone debt crisis subsided. U.S. light, sweet crude for March delivery rose, after closing 3.9% higher on Tuesday, the highest percentage gain since a 5.8% rise on Sept. 30. London ICE Brent crude for April climbed.

TM - Toyota Motor Corp. shares lagged a strong rise in other Japanese auto stocks on Wed. after the world's biggest automaker said it would shut down production at two of its U.S. factories to match slowing sales. The planned shutdown at its Kentucky and Texas plants for a total of at least 11 days comes less than two weeks after TM estimated a 100K-unit sales hit worldwide in the financial year to end-March from the fallout from a recall of millions of cars. On Tuesday, U.S. regulators added to its woes by opening an investigation into whether TM had acted in a timely fashion to recall cars for acceleration problems.

MarketWatch.com

U.K Jobless Claims - The number of British workers claiming jobless benefits rose by 23,500 in Jan., the Office for National Statistics reported, defying expectations for a decline. Economists had forecast a fall of 13,500. The total number of persons claiming Jobseeker's Allowance reached 1.64M, the highest figure since 4/97. The unemployment rate in the Oct.-to-Dec. period was 7.8%, unchanged from the previous 3 months. The number of unemployed fell by 3K over the Oct.-to-Dec. period to 2.46M, the ONS said. The number of people out of work for more than 12 months rose by 37K over the Q to 663K, the highest figure since 1997.

BNP Paribas SA + BNP Paribas SA said it swung to 4Q net income of 1.37B euros ($1.89B) from a yr-earlier loss of about the same amount, as revenue more than doubled to 10.06B euros from 4.85B. The group's board proposed a dividend of 1.5 euros a/s, and said it might pay the dividend in shares. French retail banking revenue rose 4.4%, with what BNP called balanced growth between net interest income, up 4%, and fees, up 5%. Operating earnings in the division rose 7.2% to 463M euros.

DE + Deere & Co. said that its fiscal 1Q net profit rose 19% as it also lifted its profit forecast for the year. DE said its 1Q profit was $243.2M, or $.57 a/s, compared to $203.9M, or $.48 a/s, a yr earlier. Revenue for the Q declined 6% to $4.84B from $5.15B. Sales at its equipment operations declined 7% to $4.24B. FactSet had been expecting earnings of $.21 a/s for the Q on sales of $4.22M. The co. said its equipment arm benefited from lower raw materials costs and improved price realizations, while profit from its financial services unit nearly doubled due to improved financing spreads. The co. lifted its profit forecast for fiscal 2010 to around $1.3B and said it expects equipment sales to rise between 6% and 8%.

ING - ING Groep NV said its 4Q loss totaled 712M euros ($980M), or 0.33 euro a/s, narrowing from a loss of 3.71B euros, or 1.82 euro a/s, in the same Q a yr before. The financial major's result was worse than analysts' average expectation for a 323M euro loss, according to DJ Newswires. Gross premium income for the Q was 6.67B euros, falling 25.7% from 8.97B euros in the yr-ago period.

CPB - Campbell Soup Co. cut its guidance for '10 sales growth to a range of 2.5% to 3.5% from a range of 4% to 5%. The co. said it still expects adjusted EBIT and taxes to rise between 6% and 7% and adjusted EPS to rise between 9% and 11% from $2.21 a/s in '09. CPB also announced a plan to boost the performance of its condensed soup portfolio in the U.S. The co. said it will enhance more than 60% of its condensed line with product improvements, further sodium reduction, more contemporary packaging and new marketing.

European Banks - Morgan Stanley downgraded its view of the European banking sector to cautious from in-line & also cut its rating on several firms, saying elevated sovereign funding risks pose multiple threates to the sector. The broker said it sees 5 main risks, including materially higher funding costs; rising provisions; restrictions on loan growth; higher tax rates and a higher cost of equity. Morgan Stanley downgraded Santander qSTD , BBVA and EFG Eurobank to equal weight from overweight and Piraeus Bank to underweight from equal weight. It also upgraded BNP Paribas to overweight from equal weight, saying the decision was "a straightforward play on the French economy without major uncertainties on group balance sheet or capital base."

DHR + Danaher Corp. said it expects Q1 adjusted earnings of $.77 to $.82 p/s. DHR also expects the closure of the AB SCIEX deal will add to its earnings in 2010 by $.05 to $.07 p/s, excluding the impact of fair-value adjustments and transaction costs of about $.15 p/s. Wall Street is projecting the co. to report quarterly earnings of $.82 p/s.

CCE + Coca-Cola Enterprises said its board raised the quarterly dividend by 12.5% to $.09 a/s from $.08. The dividend will be paid March 26 to shareholders of record on March 12.

BRKB +/- Warren Buffett's Berkshire Hathaway Inc. significantly lowered its stake in two of the largest U.S. based oil cos. according to a SEC filing Tues. Berkshire lowered its stake in Exxon Mobil Corp. XOM by 67% to 421,800 shares, and its share in ConocoPhillips COP by 34% to 37.7M shares over the Oct.-Dec. period.

CSTR + Coinstar Inc. said that it sees Q1 earnings of $.08 to $.14 p/s. The outlook includes the effect of the co.'s settlement between its DVD rental kiosk unit Redbox and Time Warner Inc.'s TWX Warner Home Video to not carry Warner DVD titles until 28 days after the release date. CSTR also sees Q1 revenue of $315M to $335M.

WINN - Winn-Dixie Stores reported a Q2 profit of $2.1M or $.04 p/s, down from $16.1M or $.30 p/s, a year ago as "the challenging economic environment and deflationary pressures" continued to weigh on the broader supermarket industry. The co. said the decrease was due mostly to a non-recurring gain on an insurance settlement of $22.4M in a year earlier. Sales fell by 3.3% to $2.2B. The grocery chain affirmed its full-year earnings target of $140M to $160M.

NBR +/- Nabors Industries Ltd. reported it narrowed its Q4 loss to $47.3M or $.17 p/s, from $106.7M or $.38 p/s, a year ago. Adjusted to exclude writedowns and one-time items, co. .had earnings from ongoing operations of $51.5M or $.18 p/s. Operating revenue fell to $834.5M from $1.48B a year ago. Analysts polled by FSR had forecast co. would earn $.16 p/s on $820M in revenue.

WFMI + Whole Foods reported Q1 net income of $55.1M or $.32 p/s, compared to $32.3M or $.20 p/s, in the year-earlier quarter. Sales rose 7% to $2.6B. Analysts had forecast co. to earn $.26 p/s on sales of $2.6B, according to FSR. Identical-store sales rose 2.5%. Analysts had forecast 2.4% growth. WFMI lifted its forecast for identical-store sales, earnings, and sales for its fiscal year that ends in Sept.

Wall Street - Pali Capital, the boutique investment firm that gave jobs to dozens of traders and stock brokers displaced amid the financial crisis, has gone under. After suffering a wave of employee and CEO defections and struggling to find a buyer, Pali officially shut its doors today, leaving the 130 employees without a job. Is Pali the canary in the coal mine of the boutique firms that bulked up after the financial crisis int he belief that the Wall Street stalwarts were too wounded to compete? According to one former Pali employee, the firm lavished employees, who totaled 250 at the peak last year, with guaranteed cash compensation. Pali had to make good on these guarantees, regardless of performance, even as the firm was hemorrhaging cash, this person said. Pali has been competing in a crowded field of small start-up firms that also promised large bonuses to lure employees from big name banks like Lehman Brothers, Merrill Lynch and Jefferies. Meantime, many of the big Street institutions have capped one of their strongest years on record.

http://blogs.wsj.com/deals/2010/02/01/pali-capital-a-wall-street-life-boat-hits-an-iceberg/

YHOO +/- Supermarket magnate Ron Burkle has opted to leave the board of directors at Internet giant Yahoo Inc. in order to "devote more time to his other business interests," according to a co. statement Tues. Burkle, who joined YHOO's board of directors in Nov. 2001, will not stand for re-election at the co.'s annual shareholders' meeting, the co. said. "Yahoo and its stockholders have benefited greatly from the counsel, insights and objectivity Ron has brought to the company during his nine years on the board," YHOO Chairman Roy Bostock said in a statement.

HST - Host Hotels & Resorts Inc. qHST said Wed. that it swung to a 4Q net loss available to common stockholders of $73M, or $.12 a/s, from a profit of $107M, or $.18 a/s, a yr earlier. Revenue for the Q dropped 17% to $1.33B. The group said its earnings took a $.07 a/s hit from one-off items, including an accrual for potential litigation costs. Funds from operations for the Q were $.18 a/s, compared to $.52 a/s a yr earlier. Comparable hotel revenue per available room was down 14.6% from a year earlier. HST said it plans to reinstate dividend payments from the 1Q of 2010, starting with a $.01 dividend in the Q. For '10, the co. said it is expecting a loss of $.32 to $.49 a/s. FactSet had been expecting a loss of $.09 a/s in the latest Q and had been forecasting a loss of $.41 a/s for '10.

XEC + Cimerex Energy said that it swung to a net profit of $104.6M, or $1.23 a/s, in the 4Q of '09. First Call had been expecting EPS of $.98. Last yr, the firm posted a loss of $1.1B, or $13.01 a/s, after taking a $1.0B write-down charge and a $68.3M after-tax litigation charge. Sales rose to $328.8M, from $298.8M a yr ago, primarily due to higher oil and gas prices. The firm said that, it's lifting its production guidance, with 1Q production now projected in a range of 560-575M cubic ft equivalent per day. In 2010, production is projected to be in the range of 540-570 MMcfe/d, or a 17-23% increase over 2009.

IFF + International Flavors & Fragrances Inc. said that its non-executive Chairman Douglas Tough will assume the role of Chairman and CEO effective from March 1. Tough joined the board of IFF in Oct. '08 and was previously CEO of Australia's Ansell for nearly 6yrs.

DPS + Dr Pepper Snapple Group Inc said Martin Ellen will join the co. as executive VP and CFO on April 1. Ellen is expected to bring considerable experience in franchising, operations and the beverage industry.

COST + Standard & Poor's said that it raised the corporate credit rating on Costco Wholesale Corp. to A+ from A because of its profitability in a difficult business environment. The rating outlook is stable. "Although Costco experienced declining sales during its fiscal year ended August 2009, its profitability and credit metrics remained very strong," S&P said in a statement.

HIG + Hartford Financial Services Group Inc said that it has named Christopher Swift as executive VP and CFO, effective March 1. Swift will succeed Lizabeth Zlatkus who was appointed chief risk officer.

Dow Jones News Service

Spain +/- Spain's intelligence service is not investigating foreign media over recent stock market losses, a person close to the situation was quoted by DJ Newswires as saying. The source was referring to a report in El Pais on Sunday that said a unit of the National Intelligence Center (CNI) that deals with economic intelligence has been discussing recent heavy periods of selling on Spain's IBEX-35 with Spanish companies and the stock exchange. The newspaper said the probe was looking at possible collusion between investors and hostility seen between U.K. and some Spanish press. The source said the CNI, "does not infringe on the freedom of expression of any of newspaper, foreign or domestic." The source could not confirm whether the intelligence service was investigating the selling in any regard, but said it did have the authority to carry such a probe out, according to Dow Jones Newswires.

Business Week

WAG + Walgreen Co. and NY-based drugstore chain Duane Reade Holdings, Inc. today announced a definitive agreement under which WAG will acquire Duane Reade from affiliates of Oak Hill Capital Partners in a cash transaction for a total enterprise value of $1.075B, which includes the assumption of debt. The transaction is subject to customary conditions, including receiving regulatory approvals and would include all 257 Duane Reade stores located in the NYC metropolitan area, as well as the corporate office and two distribution centers. WAG will fund the purchase with existing cash and anticipates the transaction will close in its current fiscal year, which ends Aug. 31.

Bloomberg.com

Treasuries - Treasuries fell for the first time in 3 days before U.S. reports that economists said will show industrial production and housing starts rose last month. 10- and 30yr securities led the decline as concern abated that Greece’s debt problems will hurt global growth and stocks climbed, helping erode demand for the relative safety of government debt. Greek Finance Minister George Papaconstantinou said yesterday that the nation won’t need a bailout. The yield on the 10yr note gained 3bps to 3.69% at 6:35 a.m. in N.Y., according to Bloomberg. The 3.625% security due in Feb. '20 dropped 7/32, or $2.19 per $1,000 face amount, to 99 14/32.

http://www.bloomberg.com/apps/news?pid=20601009&sid=a0P0LqwMmheo

Associated Press

Mortgage Payments - The percentage of homeowners late with mortgage payments hit another record during the last three months of 2009, and the pace at which they fell behind took a turn for the worse, a new report says. For the 4Q, 6.89% of mortgage payments were 60 or more days past due, according to TransUnion. That's up from 4.58% in the final 3 months of '08. The previous record delinquency rate was 6.25% in the 3Q of '09. The latest report marked the 12th consecutive Q equal to 3 full yrs, that delinquency rates have risen from the previous yr. More worrisome was that the Q-to-Q trend swung higher after declining in each of the previous 3 quarters.

http://finance.yahoo.com/news/Mortgage-delinquencies-tick-apf-2448222343.html?x=0

AFX News

The Dollar - The euro continued recent gains against the dollar in Asian trading Wed., as investors absorbed details of European aid to Greece that emerged in the previous session. Although the European finance officials "avoided discussions of the details of potential aid to Greece and focused on excessive fiscal deficit/debt reductions, both euro/U.S. dollar and euro/yen broke above their trend resistances as Greece expressed confidence in its fiscal consolidation efforts," said Tomoko Fujii, a rates and currency strategist at Bank of America Securities-Merrill Lynch, in a note to clients. The euro rose to $1.3780, from $1.3768 in late North American trading on Tuesday. The dollar index, which tracks the greenback against a trade-weighted basket of six major currencies, slipped to 79.591, from 79.634 late Tuesday. The dollar rose to 90.36 yen from 90.10 yen late Tuesday.