Daily Archives: June 18, 2007

Anyone Can Run Yahoo! (YHOO)

With Jerry Yang as the new CEO of Yahoo! (YHOO), one of two things is very likely to happen.

First, if investors believe the CNBC crowd, Yahoo! will be broken up or merged. Microsoft (MSFT) will buy it. It may be merged with AOL. Rupert Murdoch may buy it and merge the operation into MySpace. Maybe he will merge Yahoo! Finance with Dow Jones (DJ).

Or, the Yahoo! board’s statement will turn out to be true. No selling the company. Make it work better. Get the share price up.

Neither is likely to happen. Yahoo! has actually done very well over the last five years. The shares are up about 275%. What does Wall St. compare that to? Amazon (AMZN) is only up slightly more. Ebay (EBAY) is up much less. So is Microsoft (MSFT).

At this juncture, anyone can run Yahoo!. If the company is going to be sold, it does not need a great leader. It needs Goldman Sachs or some other solid investment bank to get shareholders the best break-up value or acquisition price.

If the company is going to be operated as is, intact, then the critical strategic decision that the company had to make in the last three or four years is already behind it. Yahoo! did not make the moves it needed to make to become the leader in search. Blaming Semel is easy. But, AOL made the same choice. So did Microsoft. Yahoo! went the route of becoming a portal, and, for a long time it worked.

Yahoo! said that the current quarter would be a little disappointing. Search advertising would be OK, so the new Panama platform must work fairly well, but it does not matter very much. Google’s lead is too great. No one is going to catch it now. And, when search advertising stops growing as quickly as it is now, Google will get kicked around by investors.

Yahoo! also said that in Q2 display advertising has been a little soft. But, overall internet display advertising is not longer growing 50% year-over-year. Go ask the people at MSN or The New York Times Digital.

Yahoo! took the wrong fork in the road. The history of business is filled up with stories about companies in industries from newspapers to automobiles to buggy whips. One day a company’s market starts to slip away. The train accelerates, and there is no catching it.

Yahoo! will do fine. It can cut costs. The famous "Peanut Butter" memo even gave management a road map for that. Revenue may grow at 15% per annum. That’s not terrible. It just isn’t what it used to be.

Yahoo! needs good management to keep costs down and do what it can with revenue.

But, a lot of people can do that.

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

Posted on: June 18, 2007 – 8:43 pm in Uncategorized

Cramer Thinks Lumps of Coal Make a Good Gift (ACI, CNX, BTU)

Stock Tickers: ACI, CNX, BTU

Tonight on CNBC’s Mad Money, Jim Cramer said that recent pushes out of Democrats are now backing new coal initiatives for coal and for converting coal to fuel.  Since we are coal rich and it is accessible easily in the US, he’s behind it and the Goldman Sachs downgrade this morning only helped this value for new investors.  His two coal producers in the sector are Arch Coal (ACI-NYSE) and CONSOL Energy (CNX-NYSE).  Archstone is riskier because their coal is somewhat uncommitted in 2008 and 2009. Cramer did say that CONSOL could even try to covert to a Master Limited partnership.

But Cramer’s favorite coal stock is Peabody Energy (BTU-NYSE).  He likes where it is placed and he thinks coal will rise to catch up to oil as far as gains.  Peabody can sell to China and India and its down over $9.00 from its highs.  The company is also going to spin off its Appalachian assets to focus on growth, and that will take the stock higher when it occurs.  He thinks it has 41 years of production in reserves.

Jon C. Ogg
June 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: June 18, 2007 – 5:20 pm in Cramer, , ,

AT&T Drops DSL Prices Closer To “Free”

AT&T (T) is now offering DSL for $9.99. The same service that has been available for $19.95.

The new pricing was part of what AT&T had to give to the FCC to get its merger with BellSouth done.

Looking at the level of adoption that cable companies are getting for the "triple play" of voice, broadband, and TV, the phone company may just want to promote $9.99 as its basic price for all customers.

Douglas A. McIntyre

Posted on: June 18, 2007 – 4:24 pm in Uncategorized

Will Cisco Systems Keep Jerry Yang On Its Board of Directors?

Stock Tickers: CSCO, YHOO, ADSK, NSM, WFC, BE

Good news at Yahoo! (YHOO-NASDAQ)…Jerry Yang, co-founder of Yahoo! is returning to take the CEO helm.  But this does bring up an interesting issue.  Cisco Systems (CSCO-NASDAQ) has Jerry Yang on its own Board of Directors and it is unknown if Cisco would want him on the board if he is going to stay on the board or if they would want him off.  In theory, this ‘could’ give Yang too much of an inside track on the day to day operations.  In truth, they probably want to keep him and it really probably boils down to if Yang thinks keeping his obligations to a board of directors with the likes of a Cisco is too much of a distraction for him in his new CEO role.

The board of directors does have other high-flyers and does have other current CEO’s.  So they probably wouldn’t say "you need to leave."  Yang was still on the board of Yahoo! but taking over as CEO is a new issue to consider. Here are some of the the other top dogs on the board of Cisco that serve actively at other public companies:

Carol Bartz, Executive Chairman, Autodesk, Inc. (ADSK-NASDAQ);
Brian L. Halla; Chairman & CEO, National Semiconductor Corp. (NSM-NYSE);
Richard Kovacevich; Chairman & CEO, Wells Fargo & Co. (WFC-NYSE);
Roderick C. McGeary, Chairman of the Board, BearingPoint, Inc. (BE-NYSE)

Jon C. Ogg
June 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: June 18, 2007 – 4:20 pm in Management Change, , , , , ,

The 52-Week Low Club

Lee Enterprises (LEE) Being in the newspaper business has not been this bad since the flood. Drops to $21.22 from 52-week high of $35.65, after announcing downward guidance.

US Airways (LCC) The airline business may be worse than newspapers. Oil prices moving toward $70. US Air drops to $26.78 from 52-week high of $63.27.

Warner Music Group (WMG) With crashing DVD sales, music publishing may be a worse business than airlines or newspapers. WMG drops to $15.45 from 52-week high of $30.59.

Encysive Pharmaceuticals (ENCY) Bad news on latest drug trials. Down to $1.85 from 52-week high of $7.21.

American Commercial Lines (ACLI) Marine transportation company drops guidance. Shares fall to $23.73 from 52-week high of $39.88.

Douglas A. McIntyre

Posted on: June 18, 2007 – 4:04 pm in Uncategorized

Terry Semel is Out at Yahoo!, Well….Mostly Anyhow (YHOO)

This isn’t quite as good as it COULD have been, but Yahoo! (YHOO-NASDAQ) has finally gotten Terry Semel out as Yahoo!’s CEO.  Why do we say he is ‘mostly’ out?  He is still remaining on the board of directors remaining  as non-executive Chairman.  The company is tapping co-founder Jerry Yang as CEO and is naming Sue Decker as President.

It is surprising that the company did this After the shareholder meeting when they knew what was going on.  It didn’t take a rocket scientist to to realize that Wall Street wanted Semel out.  He was a great add-on when he came in after the dot.bomb bubble burst, but that time came and passed.  This doesn’t really get rid of him entirely and he may not even need to leave entirely.  The after-hours reaction is indicating this is good enough.  If you want to know when management needs some changes, this is a prime example.  Shares closed up almost 3% in normal trading on these rumors and shares are now up almost 5% more in after-hours to $29.50.

This makes 5 of our 10 CEO list that needed to go, although not all of the picks were for outright firings nor even outright replacements.  Over the last couple of weeks it was Yang that was thought of perhaps that Yang could take that Chief Technology position.

Terry Semel noted (consolidated): "The Board and I have long talkedabout the importance of ensuring a smooth succession in Yahoo!’s seniorleadership — and more recently, about the need for a leadership teamcommitted to carrying Yahoo! through its multi-year transformation. Aswe discussed my future goals and plans, I was clear in telling theBoard of my desire to take a step back sooner rather than later. Ibelieve Jerry and Sue, with their superb talents and intense dedicationto Yahoo! and its people, are the perfect combination to carry usforward. This is the time for new executive leadership, with differentskills and strengths, to step in and drive the company to realize itsfull potential — it is the right thing to do, and the right time isnow.  Jerry and Sue will make an unbeatable team. Jerry has long beenrecognized as an Internet visionary. His incredible experience andclose involvement since founding the company 12 years ago have givenhim tremendous strategic, technical and industry insight as well asunparalleled knowledge and understanding of Yahoo! and its greatpotential. We are equally fortunate to have Sue Decker, one of the mosttalented executives in the industry, as our new President. Sue hasplayed a broad and important role in driving our strategy over theyears, and has shown even greater skills and leadership with thesuccess she’s had in taking on more operating responsibilities. BothJerry and Sue have been great partners to me and I am looking forwardto collaborating with and supporting them both, as well as the Board,in any way that I can as Chairman. I’m proud of all that we’veaccomplished over the past six years during this exciting, still earlystage of the Internet’s development, and my single goal is to ensurethat Yahoo! achieves its full potential."

Jon C. Ogg
June 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: June 18, 2007 – 3:36 pm in Management Change,

Sterlite From India: US Market Stock Offering

On Tuesday, we’ll have a special offering that is not a true IPO but is a chance for US investors to be able to invest directly in India without having to leave the US-shores. 

Sterlite Industries India Ltd. will list shares on the NYSE under the ticker "SLT" in what technically a secondary offering for the company but an initial public offering in the U.S.   This is a subsidiary unit of Vedanta Resources Plc, which has other interests in metals and mining in non-ferrous metals.  Sterlite is selling 125 million shares in a public offering of up to $2.1 Billion, and the price will be determined based upon the closing price on the Bombay Stock Exchange.  Merrill Lynch, Morgan Stanley, Citigroup, and Nomura Securities are handling the underwriting, and the underwriters will have the option to purchase up to 18.75 million shares in an overallotment option.

Jon C. Ogg
June 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: June 18, 2007 – 2:31 pm in ADR, IPOs, Secondary Offering,

Cramer Reiterates Alcoa Won’t Be On Its Own

On today’s STOP TRADING segment, Cramer said that the Bear Stearns call on FedEx (FDX) is a gutsy call ahead of the quarter.  On Wendy’s (WEN) Cramer said now is not the time to sell because things are bad and McDonald’s (MCD) is doing so much better; they even ran Baja Fresh into the ground at the time McDonalds made Chipotle (CMG) a huge success. 

As far as the Alcoa (AA) three-way on reports today with BHP Bilitton (BHP) and even on Alcan (AL), Cramer said he is reiterating that Alcoa will not be a public company on its own in the future.

Jon C. Ogg
June 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: June 18, 2007 – 1:52 pm in Cramer, , , , , , ,

Wendy’s Is For Sale, But Is There Any Value?

Stock Tickers: WEN, THI, YUM, BKC, MCD

When companies announce they will finally start accepting offers to be acquired, it usually creates at least some interest in the stock.  When Wall Street has been hoping for it and that is the final answer the same day it has to issue an earnings warning then it mutes the impact.  This is Wendy’s International (WEN-NYSE).  James Pickett, the company’s Chairman, noted that a sale remains only one option.  After all, it has been ‘exploring ways to drive value’ since April 25.  Shares are actually up from the low $30’s before a review was made.  On May 15, it announced it had hired JP Morgan as lead advisor and Lehman as co-advisor.

Wendy’s revised range for EBITDA is $295-315 million, down from previous guidance of $330-340 million.  The revised range for EPS is $1.09 to $1.23 per share, down from prior guidance of $1.26 to $1.32 issued on March 20.  The primary reasons given for the revised outlook are lower-than-planned same-store sales and higher commodity costs. Same-store sales were up 3.8% at U.S. company restaurants in the 2007 first quarter and are up 0.7% in the 2007 second quarter through June 15.  More issues ahead are now unknown: in view of the strategic review process now under way, it is suspending its previous earnings guidance for 2008 and 2009, and does not plan to provide additional details on its earnings guidance or to update it.

If we take the mid-point of 2007 earnings at $1.16 and apply it to Friday’s close from before the news, we end up with a forward P/E ratio of 34.25.  If we take the adjusted price today down 3% around $38.50 then we get a forward P/E of 33.18.  Neither of these are cheap.  Sure there are issues and it could be turned around, but this puts the company in a predicament.  You can’t base a value on earnings alone, but that is where Joe Q. Public is going to start; and the conclusion is almost certainly going to be that the company is expensive.

Maybe a company such as Yum Brands (YUM-NYSE) would consider trying to make the company fit in with an A&W All American Food unit for burgers, but it might be a stretch the company doesn’t want to take and that is meant solely as conjecture.  Also, what is possible doesn’t mean it’s likely.  It has already spun off Tim Hortons Inc. (THI-NYSE), so that value has basically been realized.   It is hard to imagine that a Burger King (BKC-NYSE) or a McDonald’s (MCD-NYSE) would want  to take on the task of turning a company around  that would be either helping out competition or a risk of cannibalizing their existing franchises.

It is also seeking a securitization financing that could be used by a buyer or in a recapitalization.  The problem is that these may get harder and harder to sell as Wall Street has figured out most of the private equity tricks. 

Jon C. Ogg
June 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: June 18, 2007 – 12:03 pm in Food, Mergers and Buy Outs, , , , ,

Encysive Pharmaceuticals (ENCY): Another Microcap Biopharma Implodes

U.S. regulators again declined to approve its drug Thelin as a treatment for a life-threatening lung disease. Encysive (ENCY) said it may have to cut costs and staff.

The company’s shares took at 50% haircut, and fell as low at $1.85. The company’s 52-week high is $7.21. Encysive’s market cap has dropped to $154 million.

The event highlight the dangers of investing in tiny "one trick pony" biopharma companies. In Q1, the company had sales of $5.4 million and an operating loss of $28.7 million.

With current cash on hand at $52.7 million and a large debt load, the company does not appear to have much time to improve its future prospects.

Douglas A. McIntyre

Posted on: June 18, 2007 – 9:30 am in Uncategorized

Yahoo! Up on ‘Semel Is Out’ Rumors

Yahoo! (YHOO-NASDAQ) is trading up about 2% in early trading on market rumors that Terry Semel is either out or on his way out.  Is this true?  Well, he didn’t give this impression just last week and the company would have probably kept him from speaking too much if it was going to force Semel out.  We have been pretty vocal about Terry Semel needing to leave. There was actually a point where he was the right guy at the right time, but that was a temporary issue and his value to the company was in the past.  Semel came in at a time when the company needed someone with tenure and real world experience.

But now the company has been getting clocked by Google (GOOG-NASDAQ) and the new Panama platform has yet to show any real recapture of relative lost ground.  If Semel is out, you can see that the ‘hope of him leaving’ is worth 2% alone to the stock.  Based on the comments and attitude at the meeting last week this seems probably premature, although the writing has been on the wall for long enough.

Jon C. Ogg
June 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: June 18, 2007 – 9:05 am in Internet, Management Change, ,

The Slaughter House, Q2 Earnings Bleeders: Advanced Micro Devices (AMD)

AMD’s (AMD) problems seem to get worse by the day. Intel (INTC) sales of its Xeon sales have improved at the expense of the AMD Opteron. Jon Peddie Research reports that AMD’s presence in the workstation market shrank in Q1.

Intel also cut the price of one of its best-selling chips, the Core 2 Duo, by 50%. BusinessWeek.com speculates the move may be to undercut sales of AMD’s new Barcelona chip, sales that AMD desperately needs to turn its fortunes around. There have also been media reports that Barcelona may be late to market.

Intel’s shares were also upgraded recently by Goldman Sachs on the supposition the AMD would have to begin to outsource its chip manufacturing. According to MarketWatch: Goldman said such a move by AMD would make it easier for Intel to "retain a sustainable product advantage," given the difficulty AMD will face in optimizing technology.

It is fairly rare that so many signs in such a short period point to more rough news in upcoming quarters. But, Wall St. does not like to look foolish. AMD’s shares have fallen from $15.75 to $13.52 in the last month, a drop of 14%.

"It’s an ill wind that blows no good."

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

Posted on: June 18, 2007 – 9:01 am in Uncategorized

IPO Filing: MAP Pharmaceuticals, the New Inhaler

A new inhaled-molecule company named MAP Pharmaceuticals, Inc. has filed for an IPO.  Underwriters are listed as Merrill lynch, Morgan Stanley, and Deutsche Bank.  It has a proposed stock ticker of "MAPP" on NASDAQ.

Here is the self-description of the company: We use our proprietary inhalation technologies to enhance the therapeutic benefits and commercial attractiveness of proven drugs while minimizing risk by capitalizing on their known safety, efficacy and commercialization history. We have several proprietary product candidates in clinical development which address large market opportunities, including our two most advanced product candidates, Unit Dose Budesonide, or UDB, for pediatric asthma and MAP0004 for migraine. We have announced positive results from Phase 2 clinical studies of UDB and MAP0004, and anticipate initiating Phase 3 clinical programs for both product candidates in early 2008. We hold worldwide commercialization rights for each of our product candidates, and intend to market UDB and MAP0004 in the United States through our own focused sales force targeting pediatricians and neurologists.

The company also has MAP0001 as a proprietary formulation of insulin for the treatment of Type 1 and Type 2 diabetes via pulmonary delivery using our Tempo inhaler, whichh was active in Phase Ia clinical studies.  The company is in development stages, so has no real revenues to speak of.  When you look through the 5% stockholder list you’ll see some familiar names: Perseus-Soros; Pequot; Brookside.  If the company’s inhaled smaller molecules are as promising as they sound, this will be a company to watch.

Jon C. Ogg
June 18, 2007

Posted on: June 18, 2007 – 8:37 am in Biotech, IPOs,

Apple’s (AAPL) Better Battery

Apple’s (AAPL) iPhone battery will not be a bust. Expect the stock to get another kick upstairs.

Rumors have been circulating for months that one of the problems with the iPhone is that it would draw the life out of it battery too quickly, making it less attractive than other multimedia phones.

Not so, say Apple. iPhone will feature up to 8 hours of talk time, 6 hours of Internet use, 7 hours of video playback or 24 hours of audio playback. That would make it comparable to high-end phones from companies including handset leader Nokia (NOK).

The iPhone once looked like an expensive toy, but with surveys showing that customers from Sprint (S) and T-Mobile may move to AT&T Wireless because it has an exclusive on the phone, the industry has begun to take it very seriously.

With battery problems off the table, the only problem with the iPhone may be whether Apple can make enough of them.

Douglas A. McIntyre

Posted on: June 18, 2007 – 8:08 am in Uncategorized

Gannett’s (GCI) Dark May

Gannett’s (GCI) revenue declines as numbers for The New York Times (NYT) and other newspaper companies appear to be quicken their downward movement.

Gannett was no exception. Total revenue for the month of may fell 6% to $606.3 million. The decline was paced by classified advertising which was off 8% to $164.3 million.

The hope that internet revenue will begin to offset the collapse in print sales does not seem to be working. It would be perverse if the only way that this happened is if the sales for print fell so far that internet dollar growth would fill the hole. As badly as things are going, the could happen.

Douglas A. McIntyre

Posted on: June 18, 2007 – 7:49 am in Uncategorized

Finish Line Acquires Genesco; Too Much Diversity? (GCO, FINL)

It is always a bit puzzling when you see a $600 million company make an acquisition of a company for $1.5 Billion.  This morning, Finish Line (FINL-NASDAQ) has announced that it will acquire Genesco (GCO-NYSE) for $54.50 per share in cash valued at a total $1.5 Billion.  The Finish Line expects the transaction to be accretive to its net income, before consideration of incremental amortization resulting from the transaction, in the first full year after closing.

It will also now move from a sporting apparel company to having positions across multiple footwear and apparel categories, including athletic, sport casual, lifestyle, brown shoe and headwear: Finish Line, Man Alive and Paiva as well as Journeys, Journeys Kids, Shi by Journeys, Underground Station, Jarman, Johnston & Murphy, Hat World, Lids, Hat Shack, Hat Zone, Head Quarters, Cap Connection and Lids Kids.

The Finish Line expects the transaction to be funded through approximately $11 million in cash on hand and up to $1.6 billion in financing provided by UBS, consisting of a Revolving Credit Facility, a Senior Secured Term Loan and a Senior Bridge Facility.

Genesco is up 9% pre-market and Finish Line has not yet traded.  By the looks of the brands involved, it is possible that the company may turn around and sell some of the units to widdle down the debt used to finance the buyout.

Jon C. Ogg
June 18, 2007

Posted on: June 18, 2007 – 7:26 am in Apparel, Bait Shop, Mergers and Buy Outs, ,

Pre-Market Stock News (June 18, 2007)

(AA) An ALCOA bid from BHP may be kindled according to numerous M&A reports.
(ADVNA) Advanta trades ex-split to reflect a 3-2 stock split.
(AGU) Agrium said earnings will be at or above the upper end of its $1.45 to $1.55 range.
(BBI) Blockbuster is going to favor the Blu-Ray HD discs.
(BNHNA) Benihana $0.35 EPS vs $0.30e.
(BWLD) Buffalo Wild Wings trades ex-split to reflect a 2-1 stock split.
(CEPH) Cephalon received FDA Marketing approval of Nuvigil for excessive sleepiness.
(CVTX) CV Therapeutics traded up on Cramer recommendation.
(DJ) Dow Jones may get a rival bid from Pearson and General Electric.
(ECIL) ECI Telecom in discussions for potential takeovers at $10.00 per share.
(ENCY) Encysive Pharma trading down 50%; announced third ‘approvable’letter from FDA for Thelin for treating pulmonary arterial hypertension, but it did not demonstrate the evidence of effectiveness needed for approval and may have to drastically cut costs.
(ESC) Emeritus Corp announces a 10.5 million share common stock offering; 9 million shares were from the company and 1.5 million from selling shareholders.
(FRN) Friendly Ice Cream going private at $15.50.
(FTEK) Fuel-Tech gets two orders totaling $2 million.
(GCO) Genesco gets $54.50 per share offer and buyout from Finish Line.
(KERX) Keryx Bio announced its CFO is resigning.
(LXRX) Lexicon Pharma secured a major investment in the company as a two part investment: $205 million and $60 million.
(MSFT) Microsoft making investment in Chinese television and media makers to change IPTV to Mediaroom.
(NVDA) NVIDIA noted as speculative chip play by Cramer.
(OBAS) Optibase won encoder pact from Huawei for IPTV.
(PAY) Verifone announced a $275 million senior convertible note offering.
(THRM) Thermage says FDA clears indication for Thermacool system.
(VICL) Vical licensee AnGes MG announces positive results of Phase 3 angiogenesis trial in Japan.
(VRAZ) Veraz platform chosen by Golden Telecom for an upgrade of its TDM network to a next-generation network.
(XFML) Xinhua Finance Media wins contract to re-brand Hebei Movie & Drama TV channel.

Jon C. Ogg
June 18, 2007

Posted on: June 18, 2007 – 6:53 am in Pre-Market Activity, , , , , , , , , , , , , , , , , , , , , , , , ,

Earlybird Analyst Calls (June 18, 2007)

ADP started as Sector Perform at CIBC.
ANDW cut to Neutral at B of A.
ASN cut to Sector Perform at RBC.
CKFR raised to Outperform at CIBC.
CPS cut to Sector Perform at CIBC.
EFD cut to Sell at Citigroup.
ENCY cut to Underperform at Rodman & Renshaw.
FCS raised to Outperform at RWBaird.
FIS started as Outperform at CIBC.
FISV raised to Sector Perform at CIBC.
GME raised to Overweight at JPMorgan.
GPN started as Sector Perform at CIBC.
KDN raised to Buy at KeyBanc/McDonald.
KYPH cut to Market Perform at Wachovia.
NATI raised to Overweight at JPMorgan.
TEK raised to Overweight at JPMorgan.
WDC cut to Neutral at JPMorgan.

Jon C. Ogg
June 18, 2007

Posted on: June 18, 2007 – 6:23 am in Analyst Calls, , , , , , , , , , , , , , , , ,

Europe Markets 6/18/2007

Europe markets were mixed at 6.45 AM New York time.

The FTSE fell .1% to 6,728. Barclays (BCS) was up 1.1% to 749. British Airways (BAB) was up 1.5% to 446. Pearson (PSO) was up 1.2% to 873. Unilever (UL) was up 3% to 1594.

The DAXX was up .5% to 8,068. Deutsche Bank (DB) was up 1.1% to 113.16. SAP (SAP) was up 3.1% to 37.69. Siemens (SI) was off 1.6% to 106.45.

The CAC 40 was down .1% to 6,098. France Telecom (FTE) was down .7% to 21.28.

Data from Reuters

Douglas A. McIntyre

Posted on: June 18, 2007 – 5:49 am in Uncategorized

Big Business and Unions Try To Kill Quarterly Guidance

With the aid of the Aspen Institute, a number of large corporations and unions are trying to get big American companies to kill the institution of issuing quarterly guidance. Backers of the initiative include Pfizer (PFE), Xerox (XRX) and the AFL-CIO. The proposal also suggests that management compensation be focused on long-term goals and not quarterly results. Of course, the companies mentioned as supporting the proposal have not done all that well in recent years.

For some odd reasons, the group thinks that the move will keep hedge-funds and short-term investors from taking large positions in public companies.

According to FT.com: "Hedge funds and other short-term investors tend to like guidance because the discrepancies between actual and forecast earnings offers them lucrative trading opportunities." But, that would be to assume that hedge funds do not have access to other data on company performance. It also would have to be based on the belief that Wall St. research operations would halt the practice of issuing their own guidance for corporate earnings. Without this kind of work, research businesses would certainly lose much of their value to investors.

The proposal is naive for another reason. Forecasts from large investment houses, buy-side analysts, and research firms area often as accurate, if not more accurate, than forecasts from the companies themselves.

The Aspen Institute and friends are simply wasting time. They don’t have much of a bully pulpit.

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

Posted on: June 18, 2007 – 5:29 am in Uncategorized