Daily Archives: August 8, 2007

AIG Earnings, “Comfortable With U.S. Mortgage Market” (AIG)

American International Group, Inc. (NYSE:AIG) posted earnings ahead of estimates with $1.64 EPS on $31.15 Billion, which compares to First Call estimates of $1.61 EPS & $30.1 Billion revenues.  On an adjusted basis, the DJIA component with a massive $172 Billion market cap posted $1.77 EPS and the listed net income for the quarter was $4.626 Billion on an adjusted basis. AIG’s shares closed up 1.4% at $66.48 in regular trading ahead of the report.  In after-hours shares are up close to 2% at $67.75.

As the largest insurer in America, this was one to watch for malaise comments regarding the recent financial credit meltdown we have seen.  The company assets now claims more than $1 Trillion all said and done.  Its book value increased again, and generated an adjusted return on equity of 19.8 %.  There is ONE KEY STATEMENT here that may be the crux for the entire case that the financial markets aren’t going to implode under the current scenario: "We continue to be very comfortable with our exposure to the U.S. residential mortgage market, both in our operations and our investment activities. However, in recognition of the significant investor interest in this topic, we will provide a presentation during our earnings call, which will be available in the investor information section of AIG’s website tomorrow morning at 7:30 a.m."

As long as we don’t have excessive catastrophic losses in the insurance sector, these comments about "being comfortable with exposure to the U.S. residential mortgage market" are key.  After that, it’s all gravy as far as we are concerned.  If this isn’t noticed by the financial sector and those who are worried about a total credit and liquidity crunch even with a ‘however’ thrown in as a caveat, then very little else will be able to calm the fears.  AIG’s conference call will not be until tomorrow morning.

Jon C. Ogg
August 8, 2007

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

Posted on: August 8, 2007 – 4:14 pm in Earnings, Financial Stocks,

News Corp (NWS) Posts Strong Numbers, Interactive Unit Profitable

News Corp’s (NWS) interactive unit made money last quarter, driven by advertising and search revenue at MySpace.

For the quarter ending June 30, the entire company had net income of $890 million up 24%. Revenue rose to $7.37 billion from last year’s $6.78 billion.

Operating income from films dropped from $200 million last year to $109 million in the most recent quarter. Broadcast operating income dropped slightly to $385 million. Cable programming operating income was up $90 million to $284 million. Newspaper operating income was up slightly to $203 million.

Douglas A. McIntyre

Posted on: August 8, 2007 – 3:31 pm in Earnings,

Uranium Resources Loves Its Executive Changes (URRE)

Uranium Resources, Inc. (NASDAQ:URRE), the speculative uranium explorer and miner, has made several executive change decsions today.  The stock has been up most of the day and shares are still up more than 8%, although the actual press release for the executive switches didn’t come until this afternoon.

The company has named Dave Clark as CEO, and he is currently president.  Paul Willmott will remain as executive chairman.  The COO role has been assumed by Richard Van Horn, who has been UR’s Senior VP of Operation and has been at the company since 1997.

The company has a stated goal of becoming a 10 million pound uranium producer by 2014.  It only had $8.58 million in 2006 revenues, so if Uranium prices stay anywhere close to current nuclear levels it is saying it wants to be far larger than today.  Revenues last quarter were $4.5 million.  The current market cap for the stock is now over $500 million and shares are within a few percent of recent highs. 

Jon C. Ogg
August 8, 2007

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

Posted on: August 8, 2007 – 1:26 pm in Management Change, Nuclear, , , ,

Jupitermedia Mystery 10% Stock Rise Ahead of Earnings (JUPM, GYI)

Jupitermedia (NASDAQ:JUPM) reports earnings after the close.  The stock is actually up 11% today and it hasn’t yet reported.  First Call estimates are $0.04 EPS on revenues of just over $36.2 million, and next quarter is also $0.04 EPS on $35.8 million revenues.

Analysts have been somewhat cautious in general and the average target looks very close to the adjusted current price after today’s gains.  The chart has also been closer to the lower-end of a longer-term trading band, but the pre-earnings gain puts this one in a neutral stance with no clearread either way.  Options are hard to read with today’s gain, but it looks like options traders would be expecting a move of up to $0.45 to $0.50 in either direction.  Sorry the actual internals are hard to read today, but that is what the tea leaves are indicating.  Lastly, NASDAQ has its short interest as 2.318 million shares for July, more than 6-days average volume.

This one will be interesting to report because of some overlaps with recent earnings and recent industry changes.  The Jupierimages unit was the likely reason for the buyout offer from Getty Images (NYSE:GYI).  If you subscribe to our special situation newsletter or if you read some exit updates this week regarding what we thought was going to happen to Getty Images and legacy stock photo businesses, then the run in Jupitermedia today will even be more of a headscratcher.  The good news for Jupiter is that it has other operations and has been trying to keep itself diversified in new media areas (see its last acquisition of MediaBistro.com) that will keep that major stock photo business from being such a key factor in the years ahead.

The balance sheet on this one is not one we normally we would want to give a solid evaluation to because of the large goodwill and intangibles, even if it does own the beloved Internet.com domain.  This 10% rise ahead of the numbers is more than puzzling.

Jon C. Ogg
August 8, 2007

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

Posted on: August 8, 2007 – 1:08 pm in Earnings, Internet, , , , , ,

Is Verizon (VZ) FiOS Hurting Cablevision (CVC)?

Cablevision (CVC) announced earnings today. The most notable piece of news was that Verizon’s (VZ) FiOS fiber-to-the-home business is affecting cable subscriptions at about the rate that Cablevision has been projecting for some time, according to MarketWatch. 

That comment set off a bit of a debate. MarketWatch checked with an industry expert and "Tuna Amobi, analyst at Standard and Poor’s, says it seems apparent that FiOS, now available in about 17% of Cablevision’s pool of potential customers, is having an effect. The rate of monthly cancellations, known as churn, went up in the second quarter in basic video, digital video and broadband."

Another survey of digital TV customers in Massachusetts showed that Comcast (CMCSA) and the satellite TV companies were also losing business to Verizon’s new fiber product.

All of this is good news for the big telecom. It has committed to $23 billion in expenditures to build out its fiber project and Wall St. wants some evidence that there will be a big return.

The polls are just closing, but the early results are good.

Douglas A. McIntyre

Posted on: August 8, 2007 – 12:06 pm in Uncategorized, , ,

Ford (F): Profitable Again?

Ford’s (F) Alan Mulally told an industry conference that the company should be profitable again in 2009. At about the same moment, GM (GM) was saying the its was revising its 2007 production targets downward. The larger car company also said the industry would not do as well as hoped this year.

Mr. Mullaly is still gambling on two hands in which he has not seen the last cards. One is UAW negotiations. The union may appear to be feeble and ready to roll over, but the talk of profits and selling units like Jaguar, Rover, and Volvo will probably not go unnoticed by the blue collar crowd.

Then, there is the business of unit sales. Ford and GM were both off in the neighborhood of 20% last month.That may not go one forever, but it only has to continue for another year or so and the amount of money the companies cut will become academic.

Someone needs to check Mullaly’s crystal ball. It has been recalled for repairs.

Douglas A. McIntyre

Posted on: August 8, 2007 – 11:28 am in Autos, ,

How The CheckFree Buyout Killed An ETF (FISV, CKFR, BHH, MER)

Fiserv’s (NASDAQ:FISV) proposed cash buyout of CheckFree (NASDAQ:CKFR) for some $4.2 Billion, did at least make some CheckFree shareholders whole again.  The $48.00 cash buyout price is actually a ‘takeunder’ if you purchased CheckFree stock during much of 2006, but it makes everyone whole who purchased shares over the last year.  You can analyze the merger all you want and decide the closing times and percentages of the deal closing, but this is actually going to all but kill an exchange traded fund.

Enter the B2B HOLDRs (AMEX:BHH).  HOLDRs were some of the original exchange traded funds, or ETF’s, on the market.  This particular ETF launch was a product of the dot.com craze, and by the name "B2B" you can guess that many of the old components or would-be target components have died or been delisted.  HOLDRs can differ from many ETF’s in that the basket of stocks may not change as much as other ETF’s that track either a sector a stated index, and these were originally designed to where they could be unbundled into individual shares.  Unfortunately, you also receive all the underlying shareholder materials as if you were buying each underlying company. 

The B2B HOLDRs has had enough companies that would have fit the description go by the wayside, that it now only has four components that will ultimately become three components if no changes are made.  This ETF should now actually be called the CKFR HOLDRs.  According to the Merrill Lynch (NYSE:MER) website for HOLDRs (this one in particular) this one actually has 81% of its current weighting in CheckFree shares.  As noted, most of the old B2B pure-play stocks have gone and retired.  The actual underlying stocks didn’t start out this dominated if you look at the prospectus, but you will see on page 16 and 17 of the prospectus that the component count is low any way.

The B2B HOLDRs has only traded in a $1.81 to $2.46 range and it quite frequently trades fewer than 50,000 shares in a day.  If an ETF ever needed to be retired, the B2B HOLDRs is it.

Jon C. Ogg
August 8, 2007

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

Posted on: August 8, 2007 – 11:01 am in ETF, Index, Mergers and Buy Outs, , , , , , ,

Blackstone’s $21.7 Billion Fund Now Closed (BX)

If private equity is really dead, then why did a $21.7 Billion private equity fund just get closed upon.  The Blackstone Group (NYSE:BX) has sent out notice that today was the final closing of its latest global private equity fund, Blackstone Capital Partners V.  With the previously announced commitments, the total size of the fund was $21.7 Billion that will be invested in multiple sectors and multiple geographic locations. 

Blackstone has said that investments with a total enterprise value of approximately $84 Billion have already been committed to Blackstone Capital Partners V.  This is the fund that will close on the Hilton (NYSE:HLT) buyout, and it includes Nielson, Michaels Stores, Biomet, Alliance Data, Freescale, and more.  Blackstone said its commitments in this fund account for two-thirds of its available capital.

This marks roughly $67 Billion raised in funds for the company since inception.  Blackstone shares had a rough time after the IPO, but after briefly trading under $23.00 shares are up roughly 10% from the post-IPO lows.  Analysts at the bulge bracket firms that cover Blackstone mostly gave the company positive ratings just last week and Lehman this week gave the company an Overweight rating.

This is of course ‘looking in the rear view mirror’ but this certainly doesn’t sound like private equity really is dead.  We probably won’t see the 7X or 10X leverage like we did just in recent months, but there is still a lot of capital here.  Expecting deals of the prior sizes and expecting new funds of this size aren’t likely in the cards in the near future.  But counting these guys entirely down and out just yet doesn’t seem like as good of a bet as the media might have you believe.

Jon C. Ogg
August 8, 2007

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

Posted on: August 8, 2007 – 8:38 am in Private Equity, , ,

Infrastructure Earnings Scorecard (MDR, FLR, FWLT, ACM)

If you have watched the infrastructure stock news this week, you will know most of these companies have beat earnings expectations and the industry isn’t seeing any major weakness ahead.

Fluor (NYSE:FLR) posted $1.05 EPS on $4.22 Billion in revenues, and estimates were $0.95 EPS and $3.8 Billion in revenues.  The power division and oil and gas projects were mostly credited.  Its shares were up about 3% yesterday in after-hours trading and that is in-line with pre-market indications on no volume so far.

McDermott International Inc. (NYSE:MDR) posted a profit thattripled, and it even split its stock 2 for 1.  The company posted $1.31 EPS and estimates were under $1.00, and revenues were $1.42 Billion versus $1.39 Billion expected.  Shares were up almost 3% in after-hours trading yesterday and are actually indicated up over 4% for the open.

AECOM Technology (NYSE:ACM), the company that is considered the bridge design and engineering contract winner, also is trading higher pre-market.  The company posted $0.26 EPS on $1.1 Billion in revenues, and estimates were $0.25 EPS and $1.07 Billion revenues.  Aecom shares are up more than 5% pre-market.

Foster Wheeler Ltd. (NASDAQ:FWLT) is actually indicated a bit lower this morning after its earnings report.  The company posted $1.41 EPS, above the $1.33 EPS estimate (actual net results were $0.99 on items).  But revenues were $1.19 Billion, compared to estimates of $1.2 Billion. That EPS number is before a increased reserve charge for a legacy power project. The global power group unit has its highest backlog in years and it expects high bookings in engineering and construction in the second half. Foster Wheeler shares are trading down 2% pre-market.

The market cap of these companies combined is more than $30 Billion.

Jon C. Ogg
August 8, 2007

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

Posted on: August 8, 2007 – 8:14 am in Earnings, Infrastructure, , , , , , , , , ,

The Trouble With Portfolio.com

There has been a lot of press about Conde Nast’s Portfolio magazine. The magazine publishing giant wants something to compete with Fortune and Forbes. A lot of the early reaction has been negative. Recently, the magazine’s deputy editor left.

The magazine is going to come out twelve times a year, not nearly as frequently as most of its competition. That would seem to make its website very important, since it is up 24 hours a day and can compete with any of its rivals for internet viewers.

But, the web activity does not appear to be going very well. Portfolio.com has an Alexa ranking of 93,461 among all websites around the world, Even one-man market blog Infectious Greed ranks 46,752. Forbes.com is ranked 482.

Why would so few people visit the Portfolio website? For starters, the lead stories are old. A look at the top five stories on the site at 8.30 AM has pieces based on news that is 12 hours to 24 hours old. The site has articles on the conviction of the Brocade CEO, the Fed holding rates, one of Fidelity’s top managers leaving, Microsoft’s patent progress against Alcatel-Lucent, and one on the government’s productivity numbers.

No one is going to visit Portfolio for current news anyway. There are dozens of places from WSJ.com to FT.com where web readers will go first. And, the news is current. A piece on Cisco’s quarter would be good.

Also on the home page at Portfolio.com is a piece on Microsoft cutting the price of the Xbox. That is fairly dated.  Readers will also find a piece on why James Cayne, the CEO at Bear Stearns, has not resigned. The reason seems to be that he is on the company’s board and Warren Spector, who did get fired due to the recent problems at the investment bank, is not.

There is nothing wrong with any of these stories, but there is nothing right with them either. Most of it is stuff readers can get at Yahoo! Finance or Reuters.com. Going to Portfolio’s website doesn’t add much.

The Conde Nast management may want to have a look at TheStreet.com or some other site that has a lot of original content. It might help

Douglas A. McIntyre

Posted on: August 8, 2007 – 7:48 am in Uncategorized

Hansen Chugging Earnings (HANS)

Hansen Natural Corp. (NASDAQ:HANS) is gapping up pre-market after the company exceeded earnings estimates.  The company was expected to post $0.36 EPS on $217.65 million in revenues, but the 54% revenies gain put results over the top with $0.47 EPS before items (and still $0.39 net) with revenues topping $280 million.

Its Monster drinks are continuing to score new users, and its Java Monster(TM) brand non-carbonated dairy based coffee drinks (introduced in April 2007) and Monster® M-80 energy drinks (introduced in March 2007) appear to be adding additional growth machines ahead.  It looks like even the Anheuser-Busch (NYSE:BUD) distribution pact is now being viewed as a good thing. 

The company will hold an investor conference call at 2:30 PM EST today, and that will probably be a focus for more of what to expect ahead.  Shares are now up over 12% in pre-market trading around $47.00.  If this level holds, this will actually be a new 52-week high (although not an all-time high of $50+).  hansen no longer has that ludicrous P/E ratio as well, and if you add the results today and only give it a "meet guidance ahead" you’d end up with a forward P/E ratio for fiscal 2007 of roughly 31.  That’s for you to decide if it is worth it or not, but that is much more realistic than in the past.

Jon C. Ogg
August 8, 2007

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

Posted on: August 8, 2007 – 7:44 am in Earnings, Food, ,

Pre-Market Stock News (August 8, 2007)

(ABTL) Autobytel -$0.12 EPS vs -$0.16 est.
(AGU) Agrium $1.70 EPS vs $1.58 est.
(ALLT) Allot -$0.01 EPS vs $0.01 est.
(BNI) Burlington got an additional 1.6 million shares purchased by Berkshire Hathaway, about a 5% add to the stake held.
(BRCD) Brocade lowered GAAP EPS revenue targets for Q3; stock was down 3% but now up 2% as GAAP estimates look higher on the low-end.
(BRCM) Broadcom chipsets chosen by Nokia for EDGE phones.
(BRL) Barr Pharma $0.84 EPS vs. $0.72 est.
(CRZO) Carrizo Oil & Gas $0.23 EPS vs $0.20 est.
(CSCO) Cisco Systems trading up 6% above $31.00 after beating estimates and raising growth rates for fiscal 2008.
(DELL) Dell will sell PC’s that can run Linux and Windows simultaneously next year.
(ELOS) Syneron won FDA approval for its Vela platform for temporary reduction of circumference.
(FWLT) Foster Wheeler $1.41 EPS vs. $1.33 est.
(HANS) Hansen Natural $0.47 EPS vs $0.37 est.
(HLYS) Heelys traded down 30% after lowered guidance ahead.
(IWA) Iowa Telecom $0.20 EPS vs. $0.23 est.
(JASO) JA Solar $0.21 EPS vs $0.18 est.; raised guidance.
(KWK) Quicksilver Resources $0.38 EPS vs $0.31 est.
(LAMR) Lamar Advertising $0.19 EPS vs $0.20 est.
(LEAP) Leap Wireless traded down 15% after soft revenues and lowered guidance; lower subscriber growth and higher churn rates.
(MEK) Metretek $0.02 EPS vs $0.08 est.
(REGN) Regenron granted priority review by FDA over Rilonacept for CAPS treatment.
(S) Sprint NexTel $0.25 EPS vs $0.22 est.; was $0.01 after items.
(SKYW) SkyWest $0.62 EPS vs $0.60 est.
(TOL) Toll Brothers showed drops in orders and backlogs.
(UN) Unilever noted as good core defensive stock by Cramer on Mad Money.
(UPL) Ultra Petroleum $0.31 EPS vs. $0.28 est.
(VMED) Virgin Media reported results overseas; no indications seen.
(WR) Westar $0.36 EPS vs $0.33 est.

Jon C. Ogg
August 8, 2007

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

Posted on: August 8, 2007 – 7:23 am in Pre-Market Activity

Dell Increasing Virtualization (DELL, MSFT, APPL, EMC, VMW)

Dell (NASDAQ:DELL) is apparently boosting PC offerings with Linux and is going after more virtualization.  The company released some data that it will have PC’s that run multiple versions of Microsoft’s (NASDAQ:MSFT) Windows and Linux simultaneously.  It is already selling PC’s with the Ubuntu Linux system on it.  This came out of the LinuxWorld conference.

Dell is working with the VMware (NYSE:VMW; t.b.a.) unit of EMC Corp. (NYSE:EMC) for virtualization, along with other partners.  Everyone is getting into the virtualization game it seems.  Imagine when Apple (NASDAQ:AAPL) offers out its operating systems to PC-makers, rather than just Macs allowing virtualization with other PC’s.

PC companies in the past had not been too crazy about virtualization.  But now they either really want to offer virtualization or they just will have to offer it.  With the new dual-core and quad-core processors (and the even greater multi-core offerings down the road) and perpetually lower DRAM costs, this is going to become easier and easier and cheaper and cheaper to offer.  Virtualization is coming on strong, like it or not.

Jon C. Ogg
August 8, 2007

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

Posted on: August 8, 2007 – 7:10 am in PC Companies, Software, , , , , , , , , ,

McDonald’s (MCD) Same Store Sales Jump

Starbucks (SBUX) must feel like someone is walking over its grave. McDonald’s (MCD) same-store sales rose 6.5% in July. The company said the the improvement in the US was due to the appeal of McDonald’s popular breakfast menu, new food offerings, value and convenient late night hours. McDonald’s is also beginning to open most of its stores at 5 AM to get the coffee and breakfast crowd.

Overseas activity was particularly strong. Comparable sales were up 9.9% in Asia/Pacific, Middle East and Africa, driven by ongoing sales strength in Japan, Australia and China. Breakfast and extended hours contributed to the segment’s July performance. 

Douglas A. McIntyre 

Read More »

Posted on: August 8, 2007 – 7:06 am in Food, ,

Pre-Market Analyst calls (August 8, 2007)

ACLS raised to Equal Weitght at Lehman.
AEG cut to Peer Perform at Bear Stearns.
ALXN cut to Neutral at Credit Suisse.
CSC raised to Hold at Jefferies.
CSCO raised to Outperform at Bear Stearns.
DKS cut to Hold at Citigroup.
ENN raised to Outperform at Baird.
GNEt started as Buy at Oppenheimer.
GNW raised to Buy at UBS.
HLYS downgraded at JPMorgan, Wachovia, Baird, CIBC.
HS started as Neutral at B of A.
IPGP raised to Overweight at Lehman.
LEAP cut to Mkt Perform at Wachovia.
OVTI raised to Overweight at JPMorgan.
PCLN raised to Positive at Susquehanna.
PCS cut to Mkt Perform at Wachovia.
PSPT raised to Outperform at Piper Jaffray.
RDN cut to Hold at Citigroup.
TRLG raised to Outperform at FBR.
WMG raised to Buy at Citigroup.

Jon C. Ogg
August 8, 2007

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

Posted on: August 8, 2007 – 6:34 am in Analyst Calls, , , , , , , ,

Sprint (S) Revenue Rises 2%

Sprint’s (S) net operating revenues of $10.2 billion in the second quarter were 2% above the year-ago period

For the second quarter, diluted earnings per share (EPS) from continuing operations was 1 cent, compared to 10 cents in the second quarter of 2006.

Free cash flow fell from $761 million to $183 million. Capex rose from $1.359 billion to $1.666 billion as the company continued to build out its national WiMax network.

Post-paid net additions increased more than 235,000 from the first quarter and were a positive 16,000 for the quarter.

Post-paid churn for the quarter was a little more than 2.0%, compared to 2.3% in the first quarter 2007 and a little more than 2.1% in the year-ago second quarter.

Douglas A. McIntyre

Posted on: August 8, 2007 – 6:09 am in Earnings,

Europe Markets 8/8/2007

Markets in Europe were broadly higher at 6.40 AM New York time.

The FTSE rose 8% to 6,349. BHP Billiton (BHP) was up 1.8% to 1388. Vodafone (VOD) rose .3% to 158.8.

The DAXX rose.6% to 7,557. Bayer (BAY) rose 3.8% to 53.19. Daimler (DCX) fell 1.9% to 62.88. Siemens (SI) rose 1.2% to 94.42.

The CAC 40 was up .9% to 5,675. Alcatel-Lucent (ALU) was up 1.5% to 8.29. AXA (AXA) was up 2.7% to 29.82.

Data from Reuters

Douglas A. McIntyre

Posted on: August 8, 2007 – 5:45 am in Uncategorized, , , , , ,

Verizon (VZ) Goes After DirecTV (DTV) And Echostar (DISH)

In a recent survey reported on at GigaOm, thirty-four towns were tracked for TV and broadband customer activity in the initial 90 days that Verizon’s (VZ) fiber optics product was available.

Verizon picked up almost 12,000 new customers over the period. Just over 5,000 came from Comcast (CMCSA), but that was only about 2% of its base in the regions.

Over 4,500 of Verizon’s new subscribers came from DirecTV (DTV) and EchoStar (DISH). That was an extremely high 40% of their total bases.

It is not really surprising. Verizon’s product offers voice, broadband, and digital TV. Comcast has a similar product. But, satellite TV cannot package broadband or phone service as part of its service.

Perhaps the markets are already beginning to sense the vulnerability of sat TV. Over the last three months, Verizon shares are up 6%.  Shares in Comcast are down about 2%. But DTV’s stock is off 14% and DISH is down closer to 18%.

The satellite TV stocks may have seen their best days.

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

Posted on: August 8, 2007 – 5:28 am in Satellite, , , ,

Vodafone’s (VOD) Vote Of Confidence For Verizon (VZ)

Vodafone (VOD) will not sell part of its 45% stake in Verizon Wireless to Verizon (VZ) for $10 billion. It has the contractual right to do so, but that ends this week. According to Reuters, some analysts believe that position is worth $45 billion.

Vodafone clearly thinks Verizon Wireless has a bright future. In the latest quarter, According to its 10-Q, Verizon’s wireless business had revenue of $10.8 billion and $3 billion in operating income. Both numbers were significant increases over the figures in the same quarter last year.

Verizon has a market cap of $125 billion. If the Vodafone piece of Verizon Wireless is worth $45 billion, that would give the entire operation an enterprise value of $100 billion, or 80% of Verizon’s total.

Vodafone knows it has a card to play. It can either hold out to get substantially more money for its piece, or use it as a bargaining chip to own a large equity stake in Verizon. Since Verizon does not have $45 billion to buy-out Vodafone, it should be an interesting dance.

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

Posted on: August 8, 2007 – 5:10 am in Wireless, ,

Apple (AAPL): Steve Jobs Pipe Dream

"A lot of Windows customers are going to switch because of this stuff," Mr. Jobs said. He was referring to new programs that will be available on Apple’s (AAPL) iMac computers. These will include a feature called Numbers that can do that same things that Windows Excel can.

The Mac now has 5% of the market for US personal computers, and the team at Apple dreams that one day that number could be 10%. Dream on.

While attacking the MP3 market was not terribly difficult for Apple’s iPod, further growth of the Mac is up against the core interests of Microsoft (MSFT), Dell (DELL), and Hewlett-Packard (HPQ). And, they are not likely to let go of more share easily.

One of the weapons that the PC proponents have is the pervasiveness of the Windows OS. Getting Macs to inter-operate with computers loaded with Windows is by no means easy. It is hard to imagine almost any large enterprise taking on new software across thousands of computers. It is also unlikely that most consumers are interested in leaving the familiar Windows-based PCs which have been part of the computing experience for years.

Apple may get its Mac market share to 6%, but it won’t get much higher than that.

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

Posted on: August 8, 2007 – 4:55 am in PC Companies, , , ,