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Ambac (NYSE: ABK) was able to keep its Moody's Aaa rating, In the process it had to cut its dividend from $.07 to .01. The bond insurance company said it would also suspend all structured finance business for the next six months.
The company commented "Suspending structured finance writings for six months is expected to free up approximately $600 million in capital.”
Douglas A. McIntyre
Boeing (NYSE: BA) and its stockholders were counting on getting the US military contract to build new refueling tankers. The deal is worth $40 billion, and Boeing is the incumbent.
Things didn't work out. Northrup Grumman (NYSE: NOC) and Boeing rival EADS, the parent of Airbus, won the contract.
Boeing shares are down 3.5% after hours to under $80. NOC is up 5.6% to $83.
Douglas A. McIntyre
Fremont General (FMT) Threatens more write-downs. Falls to $.73 from 52-week high of $13.80.
R H Donnelley (RHD) Downgrades after poor earnings. Hits bottom of $6.26 from 52-week high of $84.49.
MF Global (MF) Still falling after trading loss. Drops to $14 down from 52-week high of $32.20.
Sprint Nextel (S) Still being punished for earnings. Falls to $7.08 from 52-week high of $23.42.
Journal Register (JRC) Newspaper company. Falls to $.78 from 52-week high of $7.23.
Limelight Networks (LLNW) Loses patent suit. Sells off to $3.82 from 52-week high of $24.33.
IAC Interactive (IACI) Underperforming e-commerce company. Drops to $19.76 from 52-week high of $39.06.
Douglas A. McIntyre
Applera Corporation had an SEC Filing today saying its Board of Directors has authorized management to pursue a possible separation of the Celera Group (NYSE:CRA) from Applera. The completion of this proposal is subject to conditions such as final Board approval, SEC clearance of the registration, receipt of an opinion of a tax-free status, and more. One interesting issue here is that approval by Applera stockholders is not required.
This separation would be via a one-for-one redemption of the Applera Corporation-Celera Group tracking stock for new Celera Corporation shares. These will still keep the "CRA" ticker, but it would be a NASDAQ-listed stock. At Celera's request, Applera Corporation-Celera Group tracking stock would be de-listed from The New York Stock Exchange. So it appears that Celera Corporation would become a separate, publicly-traded company, rather than a subsidiary or tracking stock as it is currently.
Kathy Ordonez, currently President of Applera Corporation-Celera Group, is expected to serve as the CEO of Celera, and the company headquarters will be located in Alameda, California.
Applera Corporation-Applied Biosystems Group (NYSE:ABI) common stock would continue to be traded on the New York Stock Exchange.
There is one potential warning flag that investors should look at closdely here. On "OUR HISTORY" on the website, the company pans part of the business:
Continue reading "Applera & Celera Separation, For Real This Time (ABI, CRA)" »
Sirius Satellite Radio (NASDAQ: SIRI) and XM Satellite Radio (NASDAQ: XMSR) hav extended their merger agreement to May 1, 2008. As a reminder, Jim Cramer recently called out all the congressmen that he felt were unfairly holding this merger up.
Originally, the companies could walk away from the deal after March 1, 2008. After all, this has been "a pending merger" for more than a year now. These two companies are still waiting for regulatory approval from the Department of Justice and the Federal Communications Commission.
Sirius was down $0.07 to $2.85 and XM was down $0.45 to $11.65 on last look in mid-day trading. Neither company saw much movement from earnings because the real issue revolves around the merger being approved or denied at this point.
Jon C. Ogg
February 29, 2008
Point Asset Management, Inc. has filed to sell up to $250 million in an initial public offering and it will trade on the New York Stock Exchange under the symbol “PNT.” Deutsche Bank is listed as the sole underwriter as of now.
It will also be qualified as a REIT, so ownership of common stock by any person is generally limited to 9.8% in value or in number of shares. It will also be externally managed by Federated Investment Counseling, an indirect wholly-owned subsidiary of Federated Investors Inc. (NYSE:FII).
Point Asset Management, Inc. is a Maryland corporation that will invest predominantly in agency mortgage-backed securities such as Fannie Mae, Freddie Mac, or Ginnie Mae. It will also be externally managed and advised by Federated Investment Counseling as noted above.
Simultaneously with the completion of this offering, FII Holdings will purchase $25 million of our common stock at the initial public offering price per share in a private placement. So far, Federated is still down 2% at $41.31. With a $4.1 Billion market cap, there may be only so much a $250 million IPO can add even it hits all its new investments in mortgages as home runs.
We are careful in calling all of these new mortgage funds "vulture funds" but we also like to call it like we see it. We also don't fault vulture funds, and in fact we even like them. Here are some others:
Jon C. Ogg
February 29, 2008
Google (NASDAQ: GOOG) is seeing a stock recovery after comScore (NASDAQ: SCOR) put out a clarification on its blog today. We received an email from comScore a short while ago confirming that link.
Here is what you will want to key on first: "While we do not claim that these concerns are unwarranted, we believe a careful analysis of our search data does not lend them direct support. More specifically, the evidence suggests that the softness in Google’s paid click metrics is primarily a result of Google’s own quality initiatives that result in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur."
Google shares were down as much as $10 today and on last look shares were almost positive for the day.
At $473.00, it is still at the lower-end of the $437.00 to $747.24 trading range over the last 52-weeks. Shares were north of $500.00 before the data killed the stock on Monday.
Jon C. Ogg
February 29, 2008
Moody's is affirming the current ratings and capital ratios at Ambac Financial Group, Inc. (NYSE: ABK), although there is not a downgrade being issued. Moody's has noted that Ambac's capital is currently under its "Aaa" target level and it would review the capital plans as the situation develops. If the company gets the bailout, it should get to sneak its "Aaa" rating.
We have noted before, as have many others, that this is a mere dance right now that is nothing short of a game to avoid a sudden financial collapse. It's almost like the Treasury hiring out counterfeiters to print $1Trillion to put into circulation so that it doesn't have to officially count the funds as being in the money supply.
We still think some of these mergers will be mandated rather than preferred. Is there a more appropriate day than Leap Day to put this out? Maybe April 1. The good news is that Ambac stock is now up on the day. Maybe stock buyers are getting to buy stock with that counterfeit money. We don't want to see a market crash or a recession that turns into a depression either. But some serious games are being played in the system right now, and all the players know it.
Jon C. Ogg
February 29, 2008
International Brands Management Group, a SPAC, or special purpose acquisition company, has amended its IPO again. It is set to trade under the ticker "IBL.U" on the American Stock Exchange.
The company now plans to offer 10 million units compared to the previous 15 million units at $10 a piece. The filing was originally submitted on November 21, 2007.
International Brands Management Group plans to target businesses in the consumer-oriented sector in the U.S. or internationally and the lead underwriter is listed as Pali Capital. Others noted are Maxim Group, Morgan Joseph, and HCFP/Brenner Securities.
With so many SPACs still in the "pending IPO status" and with a stock market that is still mostly in the "show-me" state, you have to wonder if this is the only SPAC that will lower some terms.
Rachel Lopez
February 29, 2008
It looks like the American Stock Exchange, and ultimately the New York Stock Exchange (NYSE: NYX) after the two merge, is going to get some competition for all of the IPO's in Special Purpose Acquisition Companies (SPAC's) and Blank Check companies.
Recently, The Nasdaq Stock Market (NASDAQ: NDAQ) submitted a proposal to the SEC to get in on the SPAC IPO market. Right now, the American Stock Exchange has been the go-to vehicle for SPAC's that has allowed these blank check acquisition vehicles to list in the United States. It's hard to conceive any reasons that the SEC or any other regulatory body would block this move.
In 2007, 66 SPACs grossed over $12 billion in offerings, according to SpacAnalytics.com. And SPACS are showing no signs of stopping with almost $3 billion raised so far in 2008, comprising 53% of IPO filings this year. This cottage sector is almost like trading much smaller versions of private equity, without as much focus and diversity.
According to their release last week, Nasdaq Senior Vice President Bob McCooey recognizes the potential in the recent IPO trend, stating, "Acquisition vehicles are an increasingly common capital-raising device. We believe that listing them on NASDAQ, subject to these important investor protections, will benefit investors and issuers alike."
In its proposal, Nasdaq will require the acquisition vehicles to meet all of Nasdaq’s minimum listing requirements, as well as “stringent” SPAC specific criteria, as follows:
Currently, most SPACs usually tend to face an 18 month deadline (or 24 months) to complete a deal to become an operational company. The extension could prevent SPACs from rushing to close a not-so-hot business combination. There are some downsides as well because this could lead to many companies sitting on companies, and you could imagine that ultimately you could seem some very wide spreads to an IPO SPAC price and the market price.
Nasdaq did not specify a time frame. We would presume that the only serious issues in determining an effective date would be an SEC review of any key differences in their listing requirements and the differences in terms for such a listing. SPAC's and Blank Check companies used to be thought of poorly, but the image is being cleaned up now that many SPAC's have effected mergers and become successful post-merger operations. The share price track record for SPACs is still at least somewhat questionable and we have yet to see if this is a trend or permanent public component. Goldman Sachs avoids them, and few doubt their track record.
Jon C. Ogg
February 29, 2008
Continue reading "SPAC IPO Competition To Heat Up: AMEX vs. NASDAQ (NDAQ, NYX)" »
Consumer sentiment hit a 16-year low this month. According to Reuters "The Reuters/University of Michigan Surveys of Consumers said its main index of consumer sentiment fell to a 16-year low of 70.8."
With the market down 200 points, no one seemed to be surprised.
Douglas A. McIntyre
This morning we have another negative note out of Goldman Sachs calling for investors to be long volatility in financial stocks where the options prices are reasonable in companies that have exposure to troublesome assets like subprime CDO's, subprime RMBS, exotic mortgages, commercial real estate loans, Alt-A, and leveraged loans.
Some of the stocks noted were as follows:
Goldman Sachs expects these names with more exposure to be volatile as future write-downs should correlate with total exposure. The firm recommends buying put options and "put spreads" to position yourself for downside in the sector and these specific names. The firm is expecting more negative news in the coming months.
If you want a brief description of a put spread, we put in a link here from Investopedia.
We would note that we also expect more negative headlines for the sector as yet another wave of troubles is coming via resets and defaults in Option-ARM loans. But we'd also like to note that the worst has already been seen in "some" of the stocks. There will likely be some more failures that go into bank failures rather than mere mortgage lender failures.
Jon C. Ogg
February 29, 2008
Assured Guaranty Ltd. (NYSE: AGO) may not be the largest household name for a bond insurer or financial guarantor when you consider the woes of Ambac Financial (NYSE: ABK) and MBIA (NYSE: MBI). But the company just scored a huge win this morning after it has been announced that Wilbur Ross is investing up to $1 Billion in the company.
The initial investment will run some $250 million to be used for purchasing common stock, and then there are performance hurdles and other issues that would allow the company to have another $750 million from Wilbur Ross.
Of course we heard the announcement that another bailout has hit a snag. Just because one buyer buys a foreclosure on your street doesn't mean there won't be more housing pain. But it may at least help signal that beginning of the end is closer rather than farther away.
Assured Guaranty shares are trading up 11% at $25.39 in early pre-market trading.
Jon C. Ogg
February 29, 2008
This morning, Business Week in its "INSIDE WALL STREET" section has featured CarMax (NYSE: KMX) positively, mainly noting that Warren Buffett's Berkshire Hathaway (NYSE: BRK/A) raised his stake by another half recently to 9.6%. The article notes that this one only has a 2% market share and could become a Wal-Mart for cars, let alone it having some 28% earnings growth. This also notes that while the $20.02 level (actually closed at $19.12 yesterday), leaves a 25% upside to Lehman Brothers' $25.00 target.
We would note that Lehman doesn't have the highest target out there, but it looks like the average price target is under $22.00. The truth is that CarMax as a business does have a decent business model in that you can sell your car easily and you don't have all the games on the car lot like you are dealing with gypsy horse traders. But there is a real issue that very few really address here. If you have ever gone out and price shopped CarMax as a buyer or as a seller, you might think twice. The company has significantly higher priced cars than you can find elsewhere and its "guaranteed buy prices" leave a lot to be desired if you need to sell your car.
There is merit that you have an ease of the transaction here, and their cars do come with a quality assurance and some initial guarantees here. It isn't all bad. But the cost differential is substantial. There are many risks in buying and selling cars, but Business Week looks like it only did some Warren Buffett chasing here and very few have publicly addressed the key business issues at hand here. If you don't believe it, go to the lot after you have done real price comparisons as a buyer and a seller. As a strapped U.S. consumer is looking for ways to save $1,000.00 per year here and there, this is an issue that needs to be considered.
Jon C. Ogg
February 29, 2008
CNBC is reporting that ratings agencies want Ambac (NYSE: ABK) to raise more capital than it originally planned if it is to keep its credit rating.
The shares are off 7% on the news.
Douglas A. McIntyre
These are not the only analyst calls affecting shares of stock this morning, but these are the initial calls that 247WallSt.com is focusing on:
Jon C. Ogg
February 29, 2008
A big company gets in trouble. The board throws the CEO under a bus and brings back the founder. The stock market figures that the person who built the company is the ideal one to fix it.
Dell (DELL), Starbucks (SBUX), and Yahoo! (YHOO) have all gone with the popular formula for turning companies around. They must figure that if Steve Jobs did such a fine job when he came back to Apple (AAPL) that anyone with a founder pedigree can do likewise.
Unfortunately, Mr. Dell, Mr. Schultz, and Mr. Yang are not batting 1,000. They are probably not even batting .200. Perhaps that is because they caused the problems which bedevil their companies and then stood by as things got worse.
Over a year ago, Schultz sent Starbucks management a memo about what was wrong with the coffee shop chain. It had lost its neighborhood felling. That needed to be fixed. His handpicked CEO didn't listen. Another year went by, The SBUX shares fell by 50%. Now Schultz is faced with playing from behind as McDonald's (MCD) and Dunkin Donuts eat his lunch.
Yang was part of the board and management team when Yahoo! decided to go the portal route and not the search engine route five years ago. Terry Semel, a former movie company executive, was an odd choice for CEO of an internet company. Yang was one of those who approved the new chief. Semel followed the crowd, the same one that MSN and AOL were following. Google (GOOG) went down a different path and crushed them all. Now Yang is back. He has done nothing to change Semel's core decisions. Because of Microsoft's takeover bid, he is about to be very rich and out of a job,
Dell may be the most striking example of a man who backed his hand selected CEO. Mr.Dell made the direct sales model in the PC world a huge success. Buy machines on the internet and through call centers. Forget stores. PC buyers don't go to Wal-Mart (WMT). His boy, Kevin Rollins, stayed with the program, even when it stopped working. Dell kept saying what a great man Rollins was, until he bounced the man and took that CEO's chair himself.
Based on its earnings, it is clear that Dell has not brought any real innovation to his company. He move to retail sales has come very late in the game. Most electronics stores have been doing business with his competitors for years. That has given HP (HPQ), Lenovo, Acer, and Apple (AAPL) a conduit for sales which Dell simply does not have.
Not everyone can be Steve Jobs.
Douglas A. McIntyre
It is surprising that it took so long. A private equity firm is finally suing a bank that walked on a big transaction. It is only the beginning.
Wachovia (WB) skipped out on its obligation to fund the Providence Equity buy-out of Clear Channel's (CCU) TV stations. The banks reasoning was perverse. The deal terms had changed so it had the right to exit. But, the change in terms made the transaction better for the bank.
Legal eagles at the money center banks have decided that it is wiser to pay a break-up fee than to take more LBO debt onto their balance sheets. They cannot syndicate this debt to other institutions because of fear that too much leverage on the companies' balance sheets could cause defaults in a recession.
The argument has the benefit of being true, but it does no take the banks away from their obligations.
On the scales of their reasoning the banks clearly think that the litigation costs outweigh the costs of more write-offs and having to raise more capital. It is the kind of theory that is true until it is not.
Banks now may face an onslaught of suits over broken deals. They will lose some of them and find that the price of breaking their word may be more than they imagined.
Douglas A. McIntyre
Oil moved over $103. The excuse this time was that "Ecuador's state-run oil company, Petroecuador, suspended operations at a key export pipeline after a landslide damaged infrastructure," according to MarketWatch.
That has nothing to do with what is actually happening. OPEC has learned to game the system of rising oil prices by largely staying on the sidelines. It has mentioned it could drop production slightly in March but some of its ministers have said flow will stay steady.
The new psychology of oil prices is based on flooding the brain with enough unrelated pieces of information that it sets off a panic.
Much of the new information about existing oil fields points to the fact that some of the older ones, which are also the largest in many cases, have hit their peak pumping levels. That crude may not be easily replaced.
On the other side of the equation the rising price of oil is not meeting the normal economics of supply and demand. India, China, and other developing countries need more oil each year for infrastructure improvements and a growing number of cars and trucks on their highways. US consumption does not seem to be dropping. Gas at $3 has become part of the cost of living.
Unrest in Venezuela and Nigeria are enough to psyche the market about a very large, long-term interruption which could drive a sharp drop in supply.
With all of this as a backdrop, OPEC can point to enough reasons in the market to say that it is blameless. It is a convenient lie supported by facts which are not related to what the cartel can do on its own to help alleviate the problem.
But, with hundreds of billions of dollars hitting OPEC bank accounts each year, denying the obvious becomes part of the game.
Douglas A. McIntyre
Sony's (NYSE: SNE) PS3 may have a better year in 2008 than it did in 2007. That would not be hard. The game console was beaten like a red-headed mule by the Nintendo Wii and Microsoft (NASDAQ: MSFT) Xbox 360.
Sony's hope for improvement rests on the fact that production quantities will allow it to bring down component costs and retail prices. There are also several "hot' new games coming that will run on the PS3. Reuters writes "2008 will be a turning year for the PS3," said iSuppli analyst Pamela Tufegdzic. "Sony is offering a better forthcoming software pipeline with blockbuster titles like "Gran Turismo 5", which will boost PS3 sales this year."
The optimism seems misplaced. Microsoft still has the most popular game in the market with its "Halo 3" game. Nintendo has introduced the new Wii Fit and expects to sell over one million units of the new product in the US this year.
The leads that Microsoft and Nintendo have are formidable and may even be insurmountable. Sony should learn to rely on its TV business and movie studio operations. Its two rivals will do everything they can to keep the PS3 out of the game.
Douglas A. McIntyre
No one in Redmond wants to admit this, but Apple's (NASDAQ: AAPL) new Leopard OS may be getting the better of Vista, at least in enough cases to make it hurt. Almost all evidence points to the fact that Mac sales, although still a modest part of the overall market, are growing faster than PC sales.
Word has also leaked out the the specs for Vista were set in a way that lead users to believe that it would work well on low-end machines with weak processing power. Microsoft (NASDAQ: MSFT) knew that, but went ahead with its marketing, perhaps to gain additional sales. The standard may have been dropped to help Intel (NASDAQ: INTC) to hit sales targets
The world's largest software company has decided to drop the prices on the consumer version of Vista. Some of this may be due to pressure from PC companies. As the prices of their machines come down, Vista becomes a bigger portion of the total cost of owning a computer. Firms like Dell (NYSE: DELL) and HP NYSE: HPQ) would like to see that changed so that they can keep unit sales as high as possible.
The net effect of Microsoft's move may be bad for its earnings. It is rare that a drop in price, especially software, does not hurt gross margins. The company may want to help its PC and processor partners, but Vista may simply be lemon.
The best way to get rid of a lemon is to drop the price.
Douglas A. McIntyre
According to Reuters, Paulson believes that the current proposal to help homeowners is too broad and may help speculators.
Reuters writes that Microsoft (NASDAQ:MSFT) has cut the price of Vista to encourage upgrades.
Reuters writes that AIG (AIG) posted a $5.3 billion loss.
Reuters reports that ad company WPP believes that 2008 will be a better year than 2007.
Reuters writes that the Sony (SNE) PS3 should have a strong year due to lower retail prices and new games for the console.
The Wall Street Journal writes that the net at Dell (DELL) slipped as the company tries to deal with costs.
The Wall Street Journal says that Microsoft knew that lowering the requirements on PCs that run Vista was a mistake.
The Wall Street Journal reports that Bain will resubmit its offer to buy 3COM (COMS).
The Wall Street Journal writes that Ebay (EBAY) has settled a major patent dispute.
The Wall Street Journal reports that "the Financial Accounting Standards Board will re-examine rules that allow banks to keep assets in special financing vehicles, off the books."
The Wall Street Journal writes that Providence Equity has sued Wachovia (WB) over closing a deal to by TV stations from Clear Channel (CCU)
The Wall Street Journal writes that the surge in oil makes it more likely that OPEC will hold production steady.
The New York Times writes that Viacom (VIA) profits rose on the strength of it studio results.
The FT reports that private equity firms are raising tens of billion of dollars despite a tough economy.
Bloomberg reports that auction-rate bond failures have lead to the worst month for munis since 2003.
Douglas A.McIntyre
Continue reading "Media Digest 2/29/2008 Reuters, WSJ, NYTimes, FT, Bloomberg" »
Markets in Asia were mixed.
The Nikkei fell 2.3% to 13,603. Casio fell 3.6% to 137. Honda (HMC) fell 3% to 3260.
The Hang Seng fell 1.1% to 24,332. China Unicom (CHU) fell 4.3% to 17.14. PetroChina (PTR) fell 1.8% to 11.84.
The Shanghai Composite rose 1.1% to 4,385.
Data from Reuters
Douglas A. McIntyre
On tonight's MAD MONEY on CNBC, Jim Cramer wanted to feature agriculture by interviewing Deere & Co. (NYSE: DE). If you want to own a company that wins off of food for fuel and the that wins off of agricultural machinery, Cramer said you want Deere & Co. (NYSE: DE). He noted that this is up 149% since he started recommending it in 2005, and the company outperformed on last earnings. Last night he discussed some of this in a Hillary Clinton interview, and he also gave his five favorites earlier this week to profit off of agriculture. He interviewed Bob Lane, CEO of Deere, and here are the paraphrased answers:
Why is there sustainability this time in a boom and bust historical business?
People around the world are doing better and when they do better they eat better.
As far as emerging markets?
The company can help improve and can deliver ag equipment to many, and there is a secular change of people wanting to eat better. There will be ups and downs, but the change is here to stay.
As far as alternatives and the price of grain, are you concerned that prices can only go down?
There will be changes in price, many down, but one-quarter of the world is doing significantly better and demand will stay strong.
As far as twin tailwinds from ethanol and worldwide rising up of people who want better food, which is more important?
The growing demand for food is more important, but biodiesel and other food for fuel matter.
As far as candidates not liking NAFTA, are you not concerned that NAFTA could change?
The large combine in Illinois ships one-quarter of the units outside of the U.S., and without global markets many customers are not prospering any more.
Cramer said you have his blessing to BUY Deere stock anywhere below $100.00, because you'll keep making money with this one long after the show. Deere shares closed up 0.8% today at $86.97, and shares were up marginally at $87.40 after the interview. Its 52-week trading range is $51.59 to $94.77.
Jon C. Ogg
February 28, 2008
Gap, Inc. (NYSE: GPS) is seeing a 5% rise after the ailing casual apparel retailer reported earnings. The company posted $0.25 EPS with a 5% revenue drop to $4.67 Billion, and First Call estimate was $0.35 EPS on $4.7 Billion in revenues. For fiscal targets a year out it gave a range of $1.20 to $1.27 EPS, and First Call has estimates of $1.23 EPS. It looks like the worst part of plummeting earnings may be behind the company, even if the news is not yet great.
Perhaps the driving force rather than the real earnings results was more of the company's keeping costs down, a dividend hike, and a share buyback. Gap gave word it would repurchase up to another $1 Billion, with about 16% of that coming from Fisher founding family members. Its annual dividend was also being raised from $0.32 to $0.34.
We still think that the company's best shot here is to divest Old Navy as its worst image brand. We have noted how it needs to get rid of this pig. The company's market cap at the close today was $14.6 Billion, and that is one of the few initiatives it can take that would actually make an immediate dent.
Shares are up 5% at almost $20.50 on relief that things are no longer looking like they just continue to get worse and worse and worse. This one still has a lot to prove before "it's back" as far as Wall Street and main Street are concerned. The 52-week trading range is $15.20 to $22.02, and the highs in the late-1990's and early in 2000 were north of $40.00.
Jon C. Ogg
February 28, 2008
Dell Inc. (NASDAQ: DELL) posted earnings of $0.34 EPS outside of charges on revenues of $15.99 Billion, while First Call had estimates at $0.36 EPS on revenues of $16.27 Billion. After items, Dell's net was $0.31 EPS. Those numbers had already come in come in slightly by since its last earnings report, but that was too low to please Wall Street after a different message from Hewlett-Packard.
We didn't get formal guidance, although the hints all pointed to the PC-giant being more cautious. Estimates for next quarter are $0.35 EPS and $15.8 Billion in revenues. The company said it was returning to growth, but the company noted a slowing US-Customer and a slowdown in financial firms. The company also noted that the retail in-store push came too late to add enough to past results.
The stock closed at $20.87, up 0.5% today, and the 52-week Trading range is $18.87 to $30.77. Dell shares had been down almost 4% in after-hours trading, but shares are currently down 1.5% at $20.55.
Wall Street really wanted more than this, particularly in light of much stronger comments from H-P with its earnings. Dell's turnaround might be taking hold, but it's not yet back to beating H-P.
Jon C. Ogg
February 28, 2008
Nortel (NT) Nine-to-one this dog never hits bottom. Down to $9.05 from 52-week high of $30.
Mylan (MYL) Market unhappy about quartery results. Sells off to $12 from 52-week high of $22.90.
Gannett (GCI) Newspaper companies in flat spin. Drops to $30.26 from 52-week high of $61.68.
Sprint (S) drops dividend and loses a ton of money. Dips to $7.75 from 52-week $23.42.
Journal Register (JRC) Another newspaper down for the count. Sell down to $1.07 from 52-week high of $7.23.
EpiCept (EPTC) Europe drug authority turns down product. Drops to $.87 from 52-week high of $4.89.
Neurogesx (NGSX) Bad trial data. Falls to $3.62 from 52-week high of $10.99.
Borland Software (BORL) Rough earnings. Down to $1.93 from 52-week high of $6.22.
Douglas A. McIntyre
Deutsche Bank AG (NYSE: DB) has launched three new Exchange Traded Notes (ETN's) that will track the performance of certain index moves inside the Deutsche Bank Liquid Commodity Index - Optimum Yield Gold (tm). What is great is that these three ETN's can be used in IRA's for long or short trading styles because of some immediate inverse in the ETN's. Investors can also make leveraged strategies based on the ETN's.
The ETN's listed by Deutsche Bank will now trade on NYSE Arca under the following ticker symbols:
Prior to this, the normal gold ETF from the Deutsche Bank index was PowerShares DB Gold (AMEX: DGL).
Investors will now have more select exchange traded vehicles outside of the streetTRACKS Gold Shares (NYSE: GLD) ETN that tracks the raw price of gold on a 1:10 price ratio, and outside of the ETF called the Van Eck's Market Vectors Gold Miners ETF (AMEX: GDX) that tracks some of the major gold mining stocks rather than the commodity.
"Thar's gold ETN's in them thar hills."
Jon C. Ogg
February 28, 2008
eBay Inc. (NASDAQ:EBAY) has agreed to a settlement with MercExchange, L.L.C. to dismiss all claims and appeals in the patent lawsuit filed by MercExchange in September of 2001.
These two companies had been involved in litigation over MercExchange’s patents and eBay’s online auctions and fixed price-related e-commerce operations. eBay is purchasing all three patents involved in the lawsuit, and it is also buying some additional related technology and inventions and a license to another search-related patent portfolio. These other items were not a part of the long-standing lawsuit.
The full financial terms of the settlement were not disclosed, although eBay noted that it does not expect the settlement to affect its 2007 results or its 2008 financial guidance issued on January 23, 2008.
This is good news in the sense that eBay won't have an NTP type issue like we saw over the BlackBerry, but might have gotten off scott-free if it decided to fight. Sometimes it is just cheaper to move on down the road. Shares are down about 1.5% with the overall market today to $27.17. This is still very close to its 52-week lows of $25.64.
Jon C. Ogg
February 28, 2008
We have yet another blank check company or SPAC (special purpose acquisition company) that has filed to come public via an IPO. United Services Management has filed for an initial public offering of up to 16 million units, or a total of 18.4 million units if overallotment is taken, at the traditional $10.00 unit price. Each unit will consist of one share of common stock and a warrant with a strike price of $7.50.
United Services Management Corporation is a newly organized blank check company formed for the purpose of acquiring (or merging, etc.) with one or more businesses or assets. It noted that prospective target businesses will not be limited to a particular industry or to any geographic location, although it intends to focus initial efforts to a company that provides services to the government and commercial markets, with a particular emphasis on communications, information technology, or IT, and consulting.
No stock ticker has been taken, although Citigroup is listed as the underwriter for the IPO.
Its chairman and CEO is Joseph Wright, who is Chairman of Board of Intelsat Ltd. He was CEO of PanAmSat from 2001 until selling that business in 2004. In 2005, he led the company with its IPO and it noted that this combined of Intelsat/PanAmSat operation was acquired by BC Partners for some $16.5 Billion this month. Other officers are listed as follows:
Jon C. Ogg
February 28, 2008
Dell Inc. (NASDAQ: DELL) is set to report quarterly and fiscal earnings after the close of trading today. on last look, First Call had estimates at $0.36 EPS on revenues of $16.27 Billion. Those numbers have come in slightly since its last earnings report. Estimates for next quarter are $0.35 EPS and $15.8 Billion in revenues, and Fiscal Jan-2009 estimates are $1.56 EPS on $65.26 Billion. This translates to an estimated roughly 13% EPS growth on roughly 6% revenue growth.
For starters, this will mark the one-year return as far as quarterly earnings reports are concerned with the return of Michael Dell. We have seen the company get its SEC filings in order, and we have seen a more retail oriented offering of Dell PC's in-store at many major retailers. So far, the turnaround has not grabbed Wall Street and shares are lower than upon the return of Michael Dell. The company is still growing and the new initiatives are still in an infancy stage. Bloomberg has noted how computers are not selling well at Wal-Mart and Best Buy already guided sales lower for 2008.
At $20.70 in late morning trading, shares are at the bottom-end of a trading range of $18.87 to $30.77 over the last 52-weeks. Analysts still have an average target of roughly $29.00 per share. The stock has recovered off of a double-bottom around $19.00. We'd note that the 50-day moving average is only $21.32, and the stock has traded under that moving target since early November. Options traders appear to be braced for a move of up to $1.00 to $1.11 today in either direction.
We'll also get to see how much stock the company has retired in that recent $10 Billion share buyback plan. We'd also note that Dell had roughly 52.3 million shares listed in its most recent short interest.
With shares down one-third, this one has fared far worse than Hewlett-Packard Co. (NYSE: HPQ) that is only about 10% lower than its 52-week highs. H-P also set the bar far higher for the company after it posted earnings and slightly raised guidance last week. The same can be said for the freshly hiked guidance from IBM (NYSE: IBM), which was essentially really a net "reaffirmed guidance" as a result of the new fresh giant share buyback plan. Despite the sell-off being worse at Dell than elsewhere, Wall Street likely will demand good news.
Jon C. Ogg
February 28, 2008
BP plc (NYSE: BP) announced that it has moved into full construction of Phase One of the Sherbino Wind Farm, a 150 megawatt renewable wind energy project that is roughly 30 miles east of Ft. Stockton, Texas. BP also valued its green businesses in wind, hydrogen, bio-mass, and solar as being worth $5 to $7 Billion, and said it will look at how best to realize that growing value for shareholders. This may be a sale or spin-off, if not look for joint-ventures or partnerships.
General Electric (NYSE: GE) disclosed that it entered into a more than $700 million supply pact for more than 500 megawatts of renewable wind energy with Renewable Energy Systems Americas Inc., an Austin, Texas, wind developer, with wind turbines for projects in 2009 and 2010.
We'd also note that last night Jim Cramer interviewed presidential candidate Hillary Clinton, and they briefly discussed "all renewables" as a solution to dependence upon foreign oil. No mention was made of nuclear though.
We saw some key downgrades in the solar sector yesterday out of Banc of America.
Raser Technologies, Inc. (NYSE Arca: RZ) signed a memorandum of understanding with Tecstar, LP and Wheel to Wheel, LLC, outlining their intent to work together with Raser to manufacture plug-in hybrid electric vehicles (PHEV) for utility, government, and other fleets.
Clean Coal Technologies, Inc. (Pink Sheets:CCTC) signed an agreement with The Benham Companies, LLC, a subsidiary of Science Applications International Corporation or SAIC, inc. (NYSE: SAI) to support commercialization of CCTI's coal cleaning plants in China.
Ascent Solar Technologies Inc. (NASDAQ: ASTI) and ITOCHU Corporation of Japan announced that the companies will begin work toward the development of one or more strategic cooperation relationship in machinery for Ascent Solar's planned 100 MW manufacturing facility, raw materials for solar modules, future distribution of Ascent Solar products in Japan, and more.
Tetra Tech, Inc. (NASDAQ:TTEK) was awarded three wind energy projects for engineering, procurement, and construction services totaling about $150 million by western utility PacifiCorp. Work on the three projects will begin immediately and is expected to end in December 2008.
As a reminder, whether you prefer the term "Global Warming" or "Climate Change" is not the issue as far as 247WallSt.com covers it. Green business has become big business, and this affects many public companies today.
Jon C. Ogg
February 28, 2008
Evidence, anecdotal or stronger, is emerging that Dell (NASDAQ: DELL) machines are selling poorly at retailers like Wal-Mart (NYSE: WMT) and Best Buy (NYSE: BBY).
The lines of people looking for a new PC have probably shortened considerably. If PCs ran on gas, they would be even worse. But, Dell's stuff is also being pushed off the front shelves by products from HP (NYSE: HPQ) and Sony (NYSE: SNE). Walter Price, a portfolio manager who helps oversee $3 billion at RCM Capital Management told Bloomberg ``Dell doesn't have the broad product lineup of H-P. Dell doesn't have the deep relationships with their partners that H-P has, and Dell's effort in retail is unsophisticated.''
Michael Dell, founder and CEO-for-life, may be much further from getting the company back on its feet than investors had hoped. Over the last six months, Dell shares are down over 20% while rival HP is up 5% for the period.
Dell made a habit of saying how fabulous his former CEO Kevin Rollins was. At the end of January 2007, he threw Rollins under a bus and offered him no first aid after he had been run over. With the company's shares well down from that day, the stock market gods have got their revenge.
Douglas A. McIntyre
CardioNet, Inc. has set the terms for its IPO in an amended SEC filing. The systems provider for monitoring real-time patient information intends to sell some 6.6 million shares in a price range of $22 to $24 per share.
3.0 million shares will be from the company while 3.6 million of the shares will be from selling stockholders. The use of proceeds from the IPO will be to repay a term loan and to pay a fee to Silicon Valley Bank, part of SVB Financial (NASDAQ: SIVB); and the rest to make payments to former stockholders of PDSHeart Inc., a cardiac monitoring company CardioNet bought last March. The company has raised over $200 million in capital and initial efforts are focused on the diagnosis and monitoring of cardiac arrhythmias that is marketed as the CardioNet System. Since introduction of the CardioNet System in January 2003, physicians have enrolled over 109,000 patients.
Citigroup is the lead underwriter, with Lrhman, Leerink Swann, and Thomas Weisel also in the underwriting.
CardioNet will trade under the ticker "BEAT" on NASDAQ.
Jon C. Ogg
February 28, 2008
XM Satellite Radio just posted earnings of a net loss of $239 million on a 20% rise in revenues to $308 million. The net loss on an EPS basis was -$0.78 EPS, but that included $0.25 for certain merger and settlement related charges. If we back that out we would get a -$0.53 EPS. First Call was looking for -$0.63 EPS on $303.1 million in revenues, so this was a narrower loss on slightly better revenues.
XM Surpassed 9 Million total subscribers in 2007 and XM-equipped new car production rose 64% in 2007. 1.4 million of the total net subscriber adds came in the quarter out of the 3.5 million adds for 2007.
As a reminder, Sirius Satellite Radio (NASDAQ: SIRI) said it would provide guidance "after it secures merger approval" earlier this week.
XMSR shares are up almost 1.5% at $12.62 in early pre-market trading, and the 52-week trading range is $9.62 to $16.44. This one looks like it too is not trading on its earnings. All eyes are looking for merger approval news.
Jon C. Ogg
February 28, 2008
CVR Partners, LP has filed to come public via an initial public offering, and it will have the proposed ticker of "CVE" on the NYSE. The prospectus calls for a sale of 5.25 million units, and that is before a 787,500 unit overallotment.
CVR partners is a limited partnership formed by CVR Energy, Inc. to own and operate a nitrogen fertilizer facility and develop a diversified portfolio of assets that are complementary to its business and CVR Energy’s refining business. Its nitrogen fertilizer business produces ammonia and urea ammonia nitrate fertilizers.
This is a spin-off of CVR Energy, Inc. (NYSE: CVI), which it is reliant upon for management and for many key areas of operation. Upon the closing of this offering, CVR Energy will indirectly own approximately 87% of the outstanding units.
The company generated net sales and operating income of $173.5 million and $71.0 million for 2005, $170.0 million and $43 million for 2006, and $187.4 million and $48 million for 2007.
Jon C. Ogg
February 28, 2008
These are not all of the calls affecting stocks, but these are the top analyst calls that 247WallSt.com is looking at this Thursday morning:
Jon C. Ogg
February 28, 2008
Sprint (NYSE: S) announced consolidated net operating revenues in the quarter were $9.8 billion, compared to $10.4 billion in the fourth quarter of 2006. The net loss for the quarter was $29.5 billion or $10.36 diluted loss per share compared to net income of $261 million or 9 cents diluted earnings per share in the fourth quarter a year ago
As previously reported, wireless subscribers declined 108,000 in the fourth quarter
Sprint Nextel is currently assessing a reorganization of its business model, associated sales, distribution and marketing plans, and its financial outlook. The company expects to provide an update when these plans are finalized. In the first quarter of 2008, Sprint Nextel currently expects to report a sequential increase in post-paid churn and a decline in Wireless post-paid subscribers of approximately 1.2 million customers, which is unlikely to improve in the second quarter.
Sprint's new CEO said "in light of current capital market conditions, we are taking steps to increase our financial flexibility and mitigate refinancing risk by borrowing funds from a revolving credit facility and discontinuing declaring a dividend for the foreseeable future."
Douglas A. McIntyre
Stocks fell in Europe at 6.55 AM New York time.
The FTSE was off .8% to 6,033. Whitbread rose 7.1% to 1313. Vodafone (VOD) fell 1.1% to 162.4.
The DAXX dropped .8% to 6,941. Bayer (BAY) fell 3.4% to 52.26. Siemens (SI) fell 2.3% to 89.98.
The CAC 40 sold off .8% to 4,929. AXA (AXA) fell 2.5% to 23.25. EADS dropped 2.9% to 18.25.
Data from Reuters
Douglas A. McIntyre
Sears (SHLD) spent all of its money on stock buy-backs, which leaves it low on cash.
Sears reported net income of $426 million, or $3.17 per diluted share, for the fourth quarter ended February 2, 2008, compared with net income of $811 million, or $5.27 per diluted share, for the fourth quarter ended February 3, 2007 For the quarter, domestic comparable store sales declined 4.5% in the aggregate, with Sears Domestic comparable store sales declining 4.0% and Kmart comparable store sales declining 5.2%.
For the quarter, total revenues decreased $1.1 billion to $15.1 billion for the 13 weeks ended February 2, 2008, as compared to total revenues of $16.2 billion for the 14 weeks ended February 3, 2007
We had cash and cash equivalents of $1.6 billion at February 2, 2008 (of which $743 million was domestic and $879 million was at Sears Canada) as compared to $3.8 billion at February 3, 2007, a decline of $2.2 billion. For the year, the significant uses of our cash included $2.9 billion for share repurchases.
That does not leave much extra cash to hold the company through another bad year.
Douglas A. McInyre
The captain of a commercial airline is in charge, no matter what. If things don't work out, the blame often falls to him. Airline pilots have taken that principle all the way to controlling the management of the airlines they work for.
Delta (DAL) and Northwest (NWA) watched their shares fall by 6% yesterday as the chances for a merger of the two companies fell. One of the major reasons is that the airlines' pilots cannot agree on seniority in a merged group of fly boys. A senior pilot at the merged company may not be as senior as he was at Northwest. He won't get to pick which flights he wants or the routes he wants to fly. The burden of the new system would simply be too much for him.
In the meantime, the management and boards of the two airlines had presented the merger as a fait accompli. The stocks rallied accordingly. The dreams of cost cutting due to firing redundant people and cutting redundant routes simply fell away.
Since the benefits of airline mergers are dubious because they disrupt customer service and do nothing to cut fuel prices, the captains may have done stockholders an unintended favor.
Douglas A. McIntyre
As The Wall Street Journal points out, the DJIA is up 6% in a month. That is because, if results from financial firms in the index are backed out, the rest of the companies are doing OK, The paper writes "The best-performing sectors have been utilities, industrials, technology and health."
That opens the door, ever so slightly, to the question of whether the economy is in full recession or if the slowdown is going on in big pockets where a firewall might be built to keep trouble from spreading. The argument against this is that the economy is now global and industries are more dependent on one another than they once were, but that is a rule and not a regulation.
Results from firms including Microsoft (MSFT) and HP (HPQ) have indicated that the tech sector has not been torpedoed. Consumer goods companies like P&G (PG) and Colgate have done well enough. Media companies including CBS (CBS) and News Corp (NWS) have said that they see no slowdown in their core businesses. Metals, agriculture, and energy companies have done unusually well.
There is still hope that the "recession" is substantially contained in the financial, housing, retail, auto, and airline sectors. Earnings for Q1, most of them out in late April will confirm whether or not that is true.
If the economy does not move into full retreat it is because industries are less interdependent than economists would have Wall St. believe. But, economists are almost always wrong, half of the time.
Douglas A. McIntyre
One of the nice things about writing down assets is that they often get to be written up later. Big banks and insurance companies have something to look forward to beyond these dismal days of low stock prices and sacked CEOs.
Since much of what financial companies hold cannot be valued exactly, there is no telling what the benefit might be if the holdings come back to their par value sometime down the road.
According to The Wall Street Journal "In the big picture the key question, of course, is when the drops in value might reverse if firms are correct in their predictions that there will be minimal actual losses on the instruments they have sold."
The benefit of this is dubious, but it does exist. A bank which has written down $15 billion in subprime mortgage paper and LBO loans may get say $5 billion of that back if and when the value of these securities recovers.
This dynamic leads to a perverse reason to own or buy financial stocks at their current lows. These shares may not recover for a year or two, but write-ups in assets in the mid-term future could make earnings appear to be unusually robust.
It is not a game for the weak of heart, but the odds are that banks, brokerages, and insurance firms will get a pop in earnings a few quarters out, the harvest of a black period when they could do nothing right.
Douglas A. McIntyre
Henry Paulson, head of Treasury, has decided that legislation to help homeowners with mortgage problems is too broad and will actually help bail out irresponsible people who were careless with their personal finances. It is the kind of perspective that a multi-millionaire former CEO of Goldman Sachs might have.
According to The Wall Street Journal "Treasury Secretary Henry Paulson branded many of the aid proposals circulating in Washington as "bailouts" for reckless lenders, investors and speculators, rather than measures that would provide meaningful relief to deserving, but cash-strapped, mortgage borrowers."
The chances that Paulson is right are better than 100%. No program as broad as the one the Administration and Congress are working on will be perfect. As a matter for fact, it will be very imperfect. Some people who should get money will fall between the cracks and rank speculators may end up getting assistance. That is the nature of programs from a government which serves over 300 million people. Paulson is no idiot. He knows that.
Paulson wants it to appear that the Administration is not after a program which will cost tax-payers any more than it has too. Saving money for the over-taxed and under-served is hard to fault, but a major fight with Congress will delay, perhaps for months, getting an aid package out the door. All of this happens as housing gets worse and defaults mount.
This is Paulson's hour in the spotlight, his moment of fame. There will almost certainly be no larger challenge which he will face as head of Treasury. He has the chance to lead an initiative which could save millions of homeowners from losing their houses. By doing this he could also help troubled banks, bond insurers, and insurance companies which hold mortgage-related paper.
Paulson's other option is to fight with Congress in the closing year of a lame-duck Administration and bollix up a chance to put a safety net under housing and, perhaps, the entire economy.
Paulson may be worried that the housing rescue plan will help some of the evil and irresponsible, but for the 99% of the people who genuinely need a hand his delay will deepen a disaster.
Douglas A. McIntyre
The short interest for stocks traded on the Nasdaq as of February 15 shows that investors made very big bets against telecom and technology stocks. The numbers compare to those on January 21.
Short interest in Level 3 (LVLT) soared 48.7 million shares to 209.2 million. Short interest in Microsoft (MSFT) moved up 22.6 million to 112.3 million. Short interest in Yahoo! (YHOO) jumped 12.7 million to 55.2 million.
Shares sold short in Intel (INTC) moved up 6 million to 69.9 million. Short interest in Dell (DELL) jumped 7.5 million to 52.3 million.
Largest Short Positions
Company Shares sold short.
Level 3 209.2 million shares short
Sirius (SIRI) 121.5 million
Microsoft 112.3 million
E*Trade (ETFC) 96.5 million
Charter (CHTR) &n
