Wall Street Rumors - May 20, 2008

Daily rumors covering the global markets. Subscribe to the update feed here.

Microsoft Sees Yahoo Being Split in New Offer
Microsoft Corp.’s (NASDAQ: MSFT) proposed alternative to acquiring Yahoo Inc. would involve a breakup of the Internet giant that people close to Yahoo (NASDAQ: YHOO) said is unlikely to win favor with its board.

Home Depot’s Net Falls 66% As Homeowners Cut Projects
Home Depot Inc. (NYSE: HD) reported a 66% drop in fiscal first-quarter net income, thanks in part to restructuring charges, as it continues to suffer amid economic conditions that have been discouraging homeowners from spending on home-improvement projects.

Staples’s Earnings Edge Higher But Current Quarter’s Outlook Dull
Staples Inc. (NASDAQ: STPL) reported a 1.5% rise in fiscal first-quarter net income and issued a cautious outlook for the current quarter, citing expectations for “the weak economic climate to continue throughout 2008.”

Concerns Over Consumer Spending And Oil Prices Send Futures Lower
U.S. stock futures dropped Tuesday, after Home Depot’s (NYSE: HD) disappointing earnings underscored concerns over the impact record oil prices and housing-market woes are having on consumer spending and the retail sector.

Wholesale Prices Climbed in April
WASHINGTON — U.S. wholesale prices climbed modestly in April, given relief by subdued food and energy costs, but the core rate of inflation rose at twice the rate expected on Wall Street.

Citigroup Hedge-Fund Loss
The downward spiral of a Citigroup Inc. (NYSE: C) hedge fund has caused steep losses for at least three large U.S. banks that hoped it would rev up returns on a controversial type of employee life insurance.

Medtronic Sales Rise 18%
Medtronic Inc. (NYSE: MDT) posted flat fiscal fourth-quarter net income on prior-year tax gains as the company benefited from the launch of its Endeavor drug-eluting stent at the beginning of the quarter and an acquisition in its spinal segment.

U.S. Producer Prices, Minus Food, Energy, Rise 0.4%
May 20 (Bloomberg) — Prices paid to U.S. producers, excluding food and fuel, rose more than forecast in April, reflecting increases in automobile and furniture costs.

AIG Increases Plan to Raise Capital to $20 Billion
May 20 (Bloomberg) — American International Group Inc. (NYSE: AIG) increased the amount of capital it plans to raise to $20 billion after two quarterly losses tied to the subprime mortgage collapse, Chief Executive officer Martin Sullivan said.

TED Spread Falls to 9-Month Low, Signaling Credit Crunch Easing
May 20 (Bloomberg) — Lending confidence at banks rose to the highest level in more than nine months, according to a key market indicator, signaling the global credit crunch is easing.

Ranieri’s Franklin Faces SEC Inquiry, May Seek Buyer
May 20 (Bloomberg) — Franklin Bank Corp., (NASDAQ: FBTX) the Texas bank led by mortgage bond pioneer Lewis Ranieri, may seek a buyer after an internal probe of lending practices led to the removal of a top executive and sparked an inquiry by federal regulators.