Daily Archives: November 18, 2006

Barron’s Digest November 20, 2006 Issue

Stocks: (AMR)(LUV)(CAL)(SNE)(CCE)(KO)(MTG)(DD)(MDT)(STJ)(BSX)(JNJ)(ATHR)(SIRF)(BRCM)(HAL)

The US Air bid for Delta is driving up other airline shares. Lower fuel prices and low valuations may help prices of American and Continental continue to rise.

Even with the introduction of the Playstation 3, Sony faces several challenges that could hurt its stock price performance. These include laptop battery recalls and competition in flat-panel TV sales.

Coca-Cola made its bottling operations independent a number of years ago. But, it may want to buy back it former unit, Coca-Cola Enterprise. It could bring the price of the bottler up to $27 a share and help Coke with its integrated growth strategy.

MGIC is the countries No.1 mortgage insurer. But the weakening housing market may hurts its performance.The stock is at $61.50 but a rise in claims could cut earnings in half.

DuPont has been working on transforming itself from a chemical company to a biotech firm. After a number of restructurings, that promise could come true. The shares have been flat for a decade but have started to move. At $47.48, some analysts believe they could run 15% to 20% in the year ahead.

Improved results of safety studies of cardiac devices are improving sales of the manufacturers. But,shares of Medtronic, St Jude, and Boston Scientifc are still down for the year. The prices of the shares are based on slow growth due to concerns about these devices and the coated stents that some of them make. But, any accerleration in revenue growth could give the stocks a lift.

As wireless technologies like WiMax, WiFi, and BlueTooth grow in acceptance, several companies could benefit including Atheros and SiRF. However, Broadcom is entering the Bluetooth radio chip market and that could hurt smaller competitors.

Following years of decline, the value of the dollar may start to rise following the path of short-term interest rates.

The spin-off of KBR may help Halliburton present a much clearer profile to investors. The company has an international footprint and a number of  huge oil companies as customers.This is helping the company get new businesses in areas as diverse as Russia and Saudi Arabia.

Douglas A. McIntyre

Posted on: November 18, 2006 – 10:38 am in WiMAX

Media Digest 11/19/2006 NYT, WSJ, Reuters

Stocks: (SNE)(DCX)(GM)(F)(NWS)(AGN)(MNT)

According to the New York Times, the growing Chinese car market may not be large enough to support all of the sales aspirations of large international car makers and local Chinese companies. Chinese brands currently own 26% of the market. While vehicle sales in the country should hit $74 billion, a number of companies like GM, Ford, and Toyota are all chasing shaer.

The New York Times also reports that Universal Music is suing News Crop unit MySpace for copyright infringement on audio and video posted on the website.

The New York Times also writes that consumers are not always aware when cable companies and telecoms are offering access in their areas.It is also difficult for customers to sort out the array of services that often offer broadband, telephone and TV.

The New York Times reports that housing starts hit a six year low last month.

The Wall Street Journal reported that a senior manager at Yahoo! has written a memo criticizing the company’s "all things to all people" approach. The memo suggests more concentration of effort on key content areas and substantial lay-offs.

The Wall Street Journal also writes that the FDA has approved new silicon breast implants from Allergan and Mentor.

The Wall Street Journal also writes that US Air has started to build support among Delta’s credits for a takeover of the airline.

The Wall Street Journal reports that the SEC has asked Ford for more information on its recent earnings restatements.

According to Reuters, Chrysler is targetting cost cuts of $1,000 in the price of producing US vehicles. The plans may involve outsource certain goods and services overseas.

Reuters reports that sales of Playstation 3 from Sony have been brisk since it recent product introduction.

Douglas A. McIntyre

Posted on: November 18, 2006 – 10:11 am in WiMAX

Chrysler’s Slow Motion Management

Stocks:  (GM)(F)(DCX)

Chrysler has announced that it will try to cut its cost-per-vehicle-manufactured by $1,000 through methods that include outsourcing parts production to companies outside the US. The company also said that it wants to take advantage of the growing market in countries like China to improve worldwide sales.

It is little wonder that Chrysler CEO Tom LaSorda may not keep his job. He may have been out of the room nearly two years ago when the lesson on dropping margins and falling market share in North America was being given to US car executives. He was also apparently absent for the segment on making up for lost sales in the US by selling more cars in China.

No matter. Mr. LaSorda has now placed Chrysler behind GM and Ford on the timeline for streamlining operations and building business abroad. As he exits the company, which is likely, he can be thankful for the fact that Chysler’s parent, Daimler, has the size and scope to keep it in the game.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: November 18, 2006 – 8:07 am in Uncategorized

MySpace’s Legal Legions

Stocks:  (NWS)(GOOG)

It did not take long for large content companies to decide that News Corp’s bank account is a little too large. Universal Music Group is suing News Corp unit MySpace, the huge social networking site, for distribution of copywritten music and video.

The suit is the first of what will be many, many shots between the content companies and networks like MySpace and YouTube. Universal has publicly claimed that pirated content has added "hundreds of millions of dollars to the owners of MySpace." Fact is, they are probably right.

While goof balls in their underwear lip syncing songs does draw traffic to destinations like YouTube, a great deal of the popular content is simply "ripped" versions of content from TV networks, cable, and feature films. Users do not have to buy DVDs or pay cable television fees if the content is free on these large websites. The policing of how the material is posted is extremely weak. Witness the number of songs and videos that the large sites still host.

Technology to filter content owned by television and movie producers is still in its early stages. Human filtering is not possible while the number of pieces of content being submitted is in the hundreds of thousands each day.

The ugly fact is that company’s like News Corp and Google, which bought video site YouTube, may now face legal liabilities that are far in excess of what they paid for the offending websites in the first place. A billion dollar settlement will always look expensive next to a $500 million acquisition cost. News Corp may learn this the hard way with MySpace.

Douglas A. McIntyre can be reached at douglasamcintrye@247wallst.com. He does not own securities in companies that he writes about.

Posted on: November 18, 2006 – 7:46 am in Large Cap Stocks

The Blame Game Hits Yahoo!

Stocks:  (GOOG)(MSFT)(YHOO)(TWX)

The sun is setting on Yahoo! and management is pointing figures.

A memo from one of the companies senior vices presidents claims that the company has spread its efforts too thinly, like peanut butter on bread.

The memo, which as lead to the formation of a group to suggest changes at the huge internet firm, called for a large reduction in staff at Yahoo! along with extensive managment changes.

While Yahoo! remains on of the largest internet site in unique visitors, accoridng to ComScore, Google has been gaining on its older rival for several years.

While the details of the memo might be debated, the overarching theme is almost certainly correct. While internet portals like AOL, MSN, and Yahoo! have lost popularity and revenue growth, sites that are more focued on doing a few things well–from Google to MySpace to YouTube–have flourished.

While Google’s shares have run from a 52-week low of just over $331 to $499, Yahoo!’s have slumped from $43.66 to just under $27. Yahoo! has done a poot job keeping up with major trend on the internet from building large community sites to having a major presence in video.

Yahoo! is now exhibiting the kind of management ferment that often occurs at flagging companies. With long-time executives at odds about the big web operation’s future, things are likely to get much worse before they get better.

Investors have to wonder what happened to Yahoo!’s CEO. Someone must be driving the bus.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in comapnies that he writes about.

Posted on: November 18, 2006 – 7:30 am in Large Cap Stocks