Daily Archives: January 19, 2007

Cramer “Me Gusta Chipotle!”

Chipotle’s (CMG) CEO was interviewed on tonight’s MAD MONEY on CNBC.  The CEO said they hope to keep up with growth expectations.  They are fast food that doesn’t act like fast food.  They’ll add 20% to the store count next year, and the CEO said 95 to 105 stores.  That number is for hiring managers and locating real estate.  They are keeping their eyes on higher food costs from avocados and corn, but he said those won’t come into play until March.  They try to use top quality ingredients and they have had good comps.  Cramer said he wants people in Chipotle.

"El Cramero prefiero el Chipotle mas que Taco Bell."  I hope I didn’t butcher that too bad.

Jon C. Ogg
January 19, 2007

Posted on: January 19, 2007 – 7:09 pm in Cramer, Food

Cramer Talks Boring Retirement Yield Stocks

Consolidated Edison (ED) or Southern Co. (SO) are examples of these.  The 4.7% income on the treasury looks good, but you pay more tax on treasury income that is only abopuit 3.1% net after taxes.  ED has a 17 P/E and it now has a 4.9% dividend afterthey hiked dividend.  The after-tax yield on this is 4.1% plus you get the chance to see another dividend hike and you get upside if stocks go up.  Utilities trade up as rates come down because of longer-term leverage to rates.  SO stock has roughly a 4.3% yield and also trades at just over 17 times earnings.

Jon C. Ogg
January 19, 2007

Posted on: January 19, 2007 – 6:23 pm in Cramer, Dividend, Utilities

Cramer Previews & Pegs AeroVironment IPO Ahead of Next Week

Cramer previewed AeroViroment (AVAV) that Cramer featured ahead of the actual IPO.  This makes small unmanned aircraft drones that fit in backpacks.  The Army uses them to spy out over the next hill.  They also have something that can detect explosives.  This IPO is set for next week, and is looking for 6.7 million shares in a $14.00 to $16.00 range from Goldman Sachs as leader.  This is part of network centric warfare.  Cramer says that the growth is deceptively low because of lumpy orders and he thinks that 2006 was back-end loaded.  Cramer thinks this will open higher, and he says if you can get in under $20.00 then you should.  He won’t pay more than $25.00 based on comparing the Boeing (BA) and L-3 (LLL) as he noted.

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Jon C. Ogg
January 19, 2007

Posted on: January 19, 2007 – 6:15 pm in Cramer, Defense, IPOs

Cramer on GE and Others

On today’s STOP TRADING segment on CNBC, Cramer noted GE (GE) down 2.4% because of no more acquisitions today actually makes the stock more valuable.  He said that there was talk they’d try to the biggest deal ever, but Immelt was stopping that talk today.   Textron (TXT) and United Tech (UTX) are having a hard time getting premium multiples too.

On Citigroup (C), Cramer said that a 3% prfit growth lags in comparison and he likes others better.  He thinks Citigroup is up on hype and he doesn’t want to chase it.

On Triad (TRI), he thinks there is no reason for a research call out of Deutsche Bank saying that there will be an LBO in it next week if there wasn’t a deal really brewing.  TRI shares are up 5% at $42.50 on this today.

Jon C. Ogg
January 19, 2007

Posted on: January 19, 2007 – 2:51 pm in Cramer

Entrenched Corporate Leader: Brian Roberts of Comcast

Brian Roberts, Chairman & CEO of Comcast (CMCSA)

For starters, the dual class of A and B shares effectively gives Roberts control of the votes in the company, and if anything were to seriously need a check and balance from a popular vote he’d be able to round up support.  It is also no coincidence that Ralph Roberts was the founder.  So let’s call it the Roberts Family.  As of my brief knowledge of the family, I think Brian was the only one of the Roberts family to go deep into the company. 

He is young at under-50, so he has many years of corporate shelf life if he wants it.  If he ever thought about leaving, he’d be able to write his own ticket.  Unless he has a change of heart, it would take a series of major blunders before his position would be in jeopardy.  The stock had spent several years as dead-money to investors, but shares are up well over 50% in the last year and it has outperformed its peers.

No one can argue that the company has grown into a behemoth and is now getting more and more into the content.  The ownership of the “super-voting” stock gives them all the leverage they need.  Corporate action and shareholder groups have not been able to wrangle this away, and they have tried.  Dual and multiple stock classes are often created so that a founder or controlling partner can actually own much less of a company in stock yet maintain total control.

There was also a provision that it would take 9 of the 12 board members to oust Brian Roberts.  Upon last look that provision is in place through 2010.  If they didn’t really try to get rid of him after the failed Disney takeover attempt, then it would probably take a monumental gaff on his part to be ousted.  With shares up as much as they are, shareholders don’t want him out any time soon.

Jon C. Ogg
January 19, 2007

Posted on: January 19, 2007 – 1:19 pm in Cable Companies, Large Cap Stocks, Management Change, Shareholder Issues

Alcoa Signals Things Are Better and They Aren’t For Sale

Alcoa (AA) just fired a warning shot to any would-be acquirers. "We aren’t for sale."  There has been speculation around for some time that they could fall prey to an acquirer as other metals and mining companies have grown around the world, and this was something Cramer and others have referred to several times recently.

The company just announced a new share buyback plan, a hike to its dividend, and a debt restructuring.  It wants to repurchase up to 10% of the stock (about 87 million shares), it raised the dividend from $0.60 to $0.68, and is extending maturities on its debt.  This is not a drastic leveraging of the balance sheet, but it is still a corporate defensive mechanism.

The debt maturity extension is an exception to the "we aren’t for sale" thought, but this is effectively going to chew up more than $2.5 Billion in cash and the dividend hike will create another $70 million committed to outflows from the company. Part of the filing includes up to $2 Billion in debt.  S&P just lifted its debtrating to Stable from Negative in December and my partner Doug commented that it was undervalued at the $30 mark.

The company has improved its balance sheet, but this feels and looks like a leveraging of the balance sheet to reward CURRENT shareholders.  This tends to drive up share prices in today’s economy, yet makes the remaining company down the road have potentially a more leveraged balance sheet that a prospective buyer might shy away from.  The company still is not really expensive even on a leveraged basis, but this is one strategy that companies can use to remain independent.  Management is also signaling that they are feeling better about the future when they take actions like this, otherwise they run the risk of burning up today’s assets that might be needed on a rainy day.

Shares are now up 3% on the day at $31.25, and that is close to 25% above the $26.39 yearly low.  Alcoa’s market cap is roughly $27 Billion and it is one of the thirty components of the Dow Jones Industrial Average.

As they used to say: "You Make The Call!"

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Jon C. Ogg
January 19, 2007

Posted on: January 19, 2007 – 12:38 pm in Bait Shop, Economy, Mergers and Buy Outs, Metals, Shareholder Issues

Entrenched Corporate Leader: Michael Dell of Dell

Michael Dell, Chairman and Founder of Dell (DELL)

Despite Wall Street speculating and even calling for the ouster of Rollins, Michael Dell has been able to keep his man.  The stock’s bounce has helped and the last earnings were surprisingly better when sentiment and expectations were very low.  We did a piece on Kevin Rollins being one the 10 CEO’s that Wall Street would like to see out of the company, but this seems as though it has lessened in the expectations and has not been discussed so much now that DELL shares finally stabilized.  It is possible that this could still happen but since it didn’t happen ahead of CES and Davos is almost upon us, it is probable that there won’t be a Dell Inc. on an ex-Rollins basis any time soon.  My partner wrote a piece noting that Carty could be the CEO in waiting if the need arises, but there hasn’t been a peep on anything in a while.

Wall Street has even come to deal with the fact that the company is behind in regulatory filings and is involved with the SEC.  So far it doesn’t even look like the 50% drop at one point over the last two years matters; shares are up more than 25% in recent months and new headlines about H-P taking back more ground aren’t punishing the stock.  Those are short-term numbers and Michael Dell grew this from a company from the ground up (literally).

Michael Dell is the company, and that will probably be the case for a long time.  He’s not quite 42, so in today’s terms and with medical developments now it is impossible to calculate his future corporate years; maybe 30 to 50 years.  Could you imagine what would happen to DELL shares if Michael Dell walked in one day and said, “I have my billions and I am cashing out.”  I don’t know for sure what the exact share price reaction would be, but presumably it would be a 10% haircut to the share price.  Likely even more.  No one expects this, so please don’t turn this into a rumor. 

On the last look, Michael Dell held more than 200 million shares of DELL.  With a tad more than 2 Billion shares outstanding, trust me when I tell you that he can easily pick up the phone and secure whatever votes he needs if something is controversial that needs some convincing.  The exact number of shares doesn’t really matter, it’s the sphere of influence that matters.

Hewlett-Packard has taken back the lead as far as computer sales, and others have been able to catch up by being able to replicate much of their business model on just-in-time supply chains and requiring plants or distribution centers to physically be near-by.  But the competitors can copy, replicate, or duplicate all they want.  Michael Dell is one in the industry that will almost always be a leader, and he’ll likely be able to keep whichever managers in place he wants to.  He has essentially even said this.

As a reminder, here is the link back to the introduction of this CEO segment with the guidelines.

Jon C. Ogg
January 19, 2007 

Posted on: January 19, 2007 – 12:02 pm in Large Cap Stocks, Management Change, PC Companies, Technology Companies

Entrenched Corporate Leader: Norman Wesley of Fortune Brands

Norman Wesley, Chairman & CEO of Fortune Brands (FO)

Norman Wesley of Fortune Brands (FO) is probably as dug in as a CEO could be without having any controlling interests.  He doesn’t even own anywhere close to 1% of the stock, yet he is extremely well respected on Wall Street.  As a matter of fact, if he ever decides to leave for private equity or if he wanted to retire prematurely, you would probably see as much as 5% of the value of Fortune Brands disappear on the departure.  He is only 57 or 58 years old, so he is expected to have another 18 to 22 years in running companies and doing deals.  That assumes he wants to.

Fortune Brands isn’t just the liquor and wine company most people think of.  They have the home building products unit, and the Titleist golf brand.  They spun-out the ACCO unit of office products, and that was deemed a win.  They own Jim Beam, Moen, and probably a hundred others.  How does a guy get Absolut vodka essentially for free?

Wesley took the Chairman & CEO role in 1999, and was president and COO before then.  He is also on the board of directors in the outside companies R.R.Donnelley & Sons, ACCO, and Pactiv.  So he gets to see quite a bit of diverse trends in the economy, and Wall Street trusts him.  The stock has been in a slower phase over the last two years, but shares are up more than 100% since he took over and that doesn’t include the ACCO value.  Forbes ranked him as number 150 as far as their 2006 compensation list, and Wall Street would say that he is worth every penny.

It is surprising that private equity firms have not been able to snatch him away from Fortune Brands, particularly since he is supposed to know how to do acquisitions as well as almost anyone.  They could certainly afford him.

As a reminder, here is the link back to the introduction of this CEO segment with the guidelines.

Jon C. Ogg
January 19, 2007

Posted on: January 19, 2007 – 10:46 am in Consumer Goods, Food, Management Change, Mergers and Buy Outs

Yahoo! Finance Tries To Widen Its Lead

Yahoo! (YHOO) is already the leader in financial website visitors and has a massive lead in page views with 606 million in December, more than double the next site, MSN Money (MSFT) at 274 million. But, Yahoo! wants to try to widen the lead.

The big web portal announced that it would open a personal finance website for retirement planning, household budgeting and other functions outside the realm of investing. The current Yahoo! Finance is used primarily for following investment markets and stocks.

The new site will pull content from on line sites like CNNMoney and Consumer reports and already has advertising commits from big marketers.

The significance of the move is two-fold. Other large portals would like to take away some of Yahoo! Finance’s share. But, more important for Yahoo!, which is being attacked by Wall St. for slowing growth, financial advertisers pay large premiums to reach investors and those with savings. These "eyeballs" have more value than the typical Yahoo! customer looking for driving directions. If Yahoo! can up its finance audience, better ad revenue from a critical category should follow.

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

Posted on: January 19, 2007 – 10:45 am in Internet

Entrenched Corporate Leader: Rupert Murdoch of News Corp.

Rupert Murdoch, Chairman & CEO
News Corp. (NWS)   

It doesn’t really matter if shareholders like what billionaire Rupert Murdoch does or not.  The only day shareholders get any say is on the day of the annual shareholder meeting, and that is just for posterity.  Fortunately for shareholders Mr. Murdoch loves making money, loves having media properties, and is not afraid of doing high profile deals. 

He rolled out Fox as a public company and then rolled it back up into News Corp; he made what can only be considered one hell of a buy with MySpace; he will replace family in the company with others (or even other family); he took it from being Australian-based company into being a US-based company so the company wouldn’t be limited or barred from certain television and media ownership regulations barring foreign entities from controlling our media; he arguably won the better side of a DirecTV swap for a 19% voting stake in News Corp with Liberty’s John Malone; and how much more can be said.  He has also been able to withstand all criticism from other media sources of having more of a conservative bias instead of being "unbiased."

Murdoch is nearly 76, and does deals and runs the company like he is 36.  He built News Corp after inheriting of “The News” in Adelaide in the early 1950’s, and started gobbling up media properties from there.  The stock had spent a considerable amount of time as being dead money, but now shares are up roughly 60% in 18-months.  He has the majority vote and controlling interest.  He wouldn’t be able to be ousted even if it had remained a dead money stock, but now he can show he has strong returns for new shareholders.  If you own News Corp stock, you are betting on Rupert Murdoch and his legacy more than you are betting on the pieces inside the company.  Many of those will come and go at the will of Mr. Murdoch.  Imagine how different the company would be if he just decided to punt the shares over a 3-year period and opened the company properties up for sale.  Imagine as much as you want, but taking the under is probably more in line.

As a reminder, here is the link back to the introduction of this CEO segment with the guidelines.

News Corp. is Rupert Murdoch, and he is News Corp.

Jon C. Ogg
January 19, 2007 

Posted on: January 19, 2007 – 10:01 am in Management Change, Media, Old Media

Goldman Sachs Research Summary (JAN 19, 2007)

This morning, Goldman Sachs started 3M (MMM) and International Paper (IP) with Neutral ratings. 

Rite Aid (RAD) was downgraded from a Neutral to Sell rating after the recent stock gains.  As a reminder, this was Cramer’s #2 speculative play for 2007.  Goldman trimmed the current fiscal estimates from $0.07 to $0.03.  This was added to Goldman’s Americas Investment SELL List.

TRW Automotive (TRW) was also downgraded from a Neutral rating down to a Sell rating.  This was added to Goldman’s Americas Investment SELL List.

JDSU (JDSU) estimates were raised from $0.21 EPS up to $0.26 EPS for the current year; this after the company raised guidance last night.

Knight Capital Group (NITE) saw its estimates trimmed at Goldman Sachs from $1.32 EPS down to $1.15 for the current year and the coming year estimates were trimmed from $1.45 to $1.26.

Xilinx (XLNX) estimates were also trimmed after the company lowered guidance; Goldman cut next fiscal year from $1.22 EPS to $1.10.

Goldman Sachs also reiterated a BUY rating on J&J (JNJ) and said it sees 11% upside to its 6-month target of $75.00.  This replaces Stryker (SYK) on the Americas Conviction Buy List.

Posted on: January 19, 2007 – 9:28 am in Analyst Calls

Pre-Market Stock Notes (JAN 19, 2007)

(C) Citigroup $1.03 EPS vs $0.98e.
(COF) Capital One reported EPS $1.14 versus $1.24 est; stock fell almost 2%.
(CREE) Cree $0.06 EPS vs $0.06e; stock down 3% on lower LCD sales.
(CREL) Corel $0.52 EPS vs $0.44e.
(CWTR) Coldwater Creek fell 20%after lowering earnings guidance.
(DNA) Genentech has a bear case of $104.00 and a bullish case of $140.00.
(EMA) eMagin lowered guidance and CEO stepped down.
(ETFC) E*Trade traded down 1.5% after beating estimates.
(GE) GE down 1.5% after meeting expectations.
(IBM) IBM trading down almost 5% after beating estimates but service revenues disappointed; company is comfortable with 2007 expectations from Wall Street.
(IMA) Inverness Medical filed to sell 5 million shares of stock.
(JCI) Johnson Controls $0.85 EPS vs $0.84e.
(JDSU) JDSU traded up 12%afterraising guidance.
(KEY) Key Corp $0.76 EPS vs $0.74e.
(LCC) USAir positive at BusinessWeek.
(LLY) Lilly ICOS said with results that Cialis posted almost $1 Billion in sales.
(LXP) Lexington Properties filed to sell 39 million shares.
(MOT) Motorola $0.26 EPS vs $0.25e; company had already warned and number was $0.21 after items; took 1% market share; guides Q1 Sales $10.4 to $10.6 Billion, estimate is $10.5 Billion.
(MSCC) Microsemi filed to sell 1.88 million shares of common stock.
(MVO) MV Oil Trust 7.5 million share IPO priced at $20.00; mid-point of range.
(NAVI) Navisite 8.6+ million share secondary priced at $4.50.
(PHM) Pulte Homes down almost 1% after lowering guidance.
(RF) Regions Financial $0.65 EPS vs $0.72e; unsure if comparable.
(SLB) Schlumberger $0.92 EPS vs $0.85e.
(STI) SunTrust $1.46 EPS vs $1.46e.
(UB) UnionBancal $1.06 EPS vs $1.06e.
(UCBH) UCBH Holdings, a Chinese American bank, is set to expand according to BusinessWeek.
(VNDA) Vanda Pharma 3.8 million share secondary priced at $27.29.
(VOLC) Volcano positive in BusinessWeek.
(XLNX) Xilinx posted 8% EPS gains but guided lower.

Cramer said on his SELL BLOCK that it is time to sell these: Coldwater Creek (CWTR); Guess? (GES); XM Satellite (XMSR); Interpublic (IPG); Deere (DE).

Posted on: January 19, 2007 – 8:24 am in Pre-Market Activity

Analyst Calls (JAN 19, 2007)

ABT raised to Neutral at UBS.
CAI cut to Neutral at B of A.
CHKP cut to Underperform at FBR.
CRA started as Outperform at Piper Jaffray.
DCX raised to Overweight at Morgan Stanley.
EQIX started as Outperform at RBC.
ETP cut to Equal Weight at Morgan Stanley.
FO cut to Neutral at JPMorgan.
GRMN & NVT started as Outperform at JMP Securities.
IMCL started as Peer Perform at Bear Stearns.
IP started as Neutral at Goldman Sachs.
JDSU reiterated Buy at Citigroup.
JNJ added to Goldman Sachs Conviction Buy List.
LF raised to Outperform at Piper Jaffray.
LAMR cut to Neutral at B of A.
LVLT started as Neutral and $7.00 target at UBS.
MMM started as Neutral at Goldman Sachs.
MO cut to Hold at Deutsche bank.
NITE raised to Outperform at Oppenheimer.
NFX cut to Equal Weight at Morgan Stanley.
NTRI started as Buy at BB&T.
ODSY raised to Buy at Deutsche Bank.
RAD cut to Sell at Goldman Sachs.
RATE started as Peer Perform at Bear Stearns.
RHT raised to Outperform at CIBC.
SWK cut to Underweight at JPMorgan.
SYK removed from Goldman Sachs Conviction Buy List.
TRW cut to Sell at Goldman Sachs.
TWCAV started as Buy at Soleil.
TXN raised to Accumulate at ThinkEquity.
WBS raised to Sector Perform at RBC.

Posted on: January 19, 2007 – 8:22 am in Analyst Calls

GE Beats, By A Little (GE)

GE’s Q4 earnings were alright. But, that was about it.

The company had revenue of $44.62 billion and EPS of $.64. Wall St. was looked for that $.64 and had revenue targets of $44.18 billion.

Nothing to write home about.

Douglas A. McIntyre

Posted on: January 19, 2007 – 6:56 am in Conglomerates

Detroit’s New Best Friends: Toyota And The Oil Companies

Detroit has been in so much trouble for the last two years that its problems have seemed insoluble. Labor and benefit costs could not be cut fast enough and North American market share kept plunging.

But, sometimes the best luck is hanging on. At least until help comes.

Toyota had yet another recall. A big one. It will total 533,000 SUVs and pick-ups. Eleven accidents have been reported due to the defect. Sound like Detroit in the old days.

According to Reuters, Toyota recalled over one million cars in Japan and 760,000 in the US. The big Japanese auto maker’s CEO said that a return to high-quality production is one of his primary goals, even if it means delaying certain model launches.

One analyst thinks that Toyota has bought itself some time after years of putting out nearly defect-free cars. "Toyota has a lot of goodwill built up," said Christopher Richter, an auto analyst at CLSA Asia-Pacific Markets (Reuters).

But, good will only goes so far. Ford is already running ads making favorable comparisons between its cars and Toyota’s. Recalls may just give the argument some bite.

To add some more glee to the gloomy Detroit winters, gas prices have fallen to $2 a gallon in some parts of the US following the plunge in oil prices.

Detroit has been furiously trying to replace gas guzzling SUVs and pick-ups with smaller crossover vehicles and sedans, but the Big Three still make more money on vehicles like the Ford flagship F-150 than they do on little four cylinder light cars. The drop in gas prices may well allow them to increase sales of the less fuel efficient but more profitable models while they change over production to more Japan-like models.

Who would have thought that Toyota (TM) and Exxon (XOM) would ride to Ford’s (F) rescue.

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

Posted on: January 19, 2007 – 6:19 am in Autos

Europe Markets 1/19/2007 British Air And Alcatel Down

Markets in Europe were lower at 5.55 AM New York time.

The FTSE was down .2% to 6,195. Barclays was down .3% to 743.5. BP was up .4% to 538.5. British Air was down 1.1% to 541.5 BT was down .7% to 307.5. GlaxoSmithKline was down .4% to 1408. Prudential was down .9% to 716.5. Reuters was down .7% to 445.75. Unilever was down .7% to 1402. Vodafone was down .5% to 147.

The DAXX was off .3% to 6,669. Bayer was down .4% to 43.51. Daimler was up 1.6% to 47.73. DeutscheBank was up .3% to 103.97. Deutsche Telekom was down .2% to 14.47. Siemens was down .7% to 77.69.

The CAC 40 was down .2% to 5,544. Alcatel-Lucent was down 1.3% to 11.04. AXA was down .1% to 32.62. France Telecom was down .7% to 21.7. ST Micro i down .9% to 14.32. Vivendi is up .7% to 32.

Data from Reuters.

Douglas A. McIntyre

Posted on: January 19, 2007 – 5:54 am in International Markets

Sandisk On Sony-Ericsson Coattails

Sandisk (SNDK) provides a lot of the guts for Sony-Ericsson (SNE)(ERIC) phones. And, Sony-Ericsson seems unstoppable in the handset market. Its net profit tripled in Q4.

Most of Sony-Ericsson’s strength is in the music and camera enable handset market. Margins in these higher priced phones have not been squeezed the way Nokia and Motorola have been hit because more of their product mix is low cast handsets.

Sandisk needs some help. Its stock has been hammered. It traded near $75 last January. It now changes hands at below $43.

The company had hoped that its portable media player could challenge the Apple (AAPL) iPod, but the the Microsoft (MSFT) Zune hitting the market, the air went out of that balloon.

And, being a supplier to the one large handset company that is doing well could improve Sandisk’s fortunes. But, for how long?

Apple is coming after the high-end cell market with the iPhone. Motorola and Nokia can read the Sony-Ericsson earnings press release as well as anyone else. The money is in more expensive handset.

If Sandisk does better because it is a major supplier to Sony-Ericsson, it better hope that the handset manufacturing joint venture continues to do well. And, that is not a lock.

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

Posted on: January 19, 2007 – 5:40 am in Technology Companies

A Burger With That Gas? McDonald’s In China

McDonald’s (MCD) has cut a deal in China to build drive thru restaurants at Sinopec petrol stations. The company has 30,000 gas stations, but some are probably small and don’t have rest rooms.

The deal is genius. And, it is exclusive.

The big burger company has over 700 stores in China and plans to add over 100 stores a year. Half of those will be at drive thru locations.

McDonald’s just announced that December same-store sales worldwide rose 7.2%. The company indicated that this would boost Q4 numbers.

It is hard to believe that in late 2002 and early 2003 almost no one on Wall St. thought McDonald’s could still expand at a rapid pace. The stock fell as low as $12.44. But, that theory turned out to be terribly flawed. The stock is now just below $45.

And, it could go higher.

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

Posted on: January 19, 2007 – 5:23 am in International Markets

AT&T’s Free Call Plan Won’t Save It From Cable

At this point, Big Telecom will do almost anything to keep cable companies from taking more of their phone customers. The latest idea from AT&T is to let its cellphone customers call AT&T (T) land line phones for free.

The plan is complicated, which means most customer will not be able to figure it out. For starters, the user has to have a 900 minute a month cellphone plan. And, they have to have AT&T’s unlimited long distance plan as well. It appears that the two programs cost about $100 a month when taken together.

Cable-based VoIP phones from companies like Time Warner Cable (TWX) and Comcast (CMCSA) have monthly plans for $20 to $30, so its is hard to see why the AT&T plan is attractive.

Maybe it is a sign that AT&T is having a hard time keeping customers.

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

Posted on: January 19, 2007 – 5:11 am in Telecom

Catastrophe Now The Key To Oil’s Bull Case

Wall St. players who think oil is headed back to $70 are running out of arguments. Recently, T. Boone Pickens, who made a fortune on rising oil last year, repeated that oil is heading up.

But the Saudis want no more of cutting supplies further and are blocking an OPEC meeting on the subject.

One last problem, and it is a very large one. Consumption of oil in the in the 30 countries that are part of the Organization for Economic Cooperation and Development actually fell almost 1% last year. It has been 20 years since that last happened. Oil now trades just above $50 a barrel and gas is below $2 in some spots in the US.

That leaves major catastrophes as the last, really big reason for oil prices to rise. Oil bull have to hope for hurricanes, terrorists and coupes in countries that pump large amounts of the world’s petro output. Perhaps the Saudi royal family will leave and let pandemonium reign.

But, maybe not. Stocks like Conoco (COP) aren’t looking so good.

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

Posted on: January 19, 2007 – 5:00 am in Oil & Gas