Daily Archives: August 10, 2007

Citigroup (C) Has $500 Million Credit Loss

Chuck Prince is likely to be on the hot seat again, but, his troubles may be worse than in the past.

According to The FT the bank "lost more than $500m in credit business in recent weeks, making it one of the biggest casualties of the crisis." The paper added "the losses were made largely in the structured credit business run by Michael Raynes."

Citi had begun to recover from two years of performance that lagged behind its rivals. Prince has not be viewed as a worthy successor to former CEO Sandy Weill.

After badly under performing the shares of JP Morgan (JPM) and Bank of American in the second half of 2006, Citi’s stock still runs well behind JPM but is comparable to BAC.

That may change now. There were rumors that Prince was in trouble. Those are likely to surface again.

Douglas A. McIntyre

Posted on: August 10, 2007 – 6:56 pm in Uncategorized, , ,

Earnings Preview: Deere & Co. (DE)

On Wednesday August 15, we’ll get earnings from Deere & Co. (NYSE:DE).  First Call estimates are $1.99 EPS and $6.65 Billion revenues.   Next quarter will mark the end of its fiscal year and estimates for next quarter are $1.23 EPS and $5.65 Billion.  If we get a preview of Fiscal 2008 estimates, First call has $8.62 EPS and $25.6 Billion revenues, which still represents a 23.4% EPS gain on revenue growth of roughly 9%. 

Analysts are still mixed on the stock, but an average target that can be used ahead is $135.00.  Shares closed down 2.3% at $117.30 on Friday, and shares traded as high as $133.96 just back on July 19. Over the last couple weeks, Deere’s chart has gone more sideways than anything, but has gotten outside of its up=trend that had been in place since the end of 2006.  We’ll follow up with options data as we get closer to the report.

As an agriculture equipment seller, this one has been in a sweet spot for a long time.  This was noted as one of Jim Cramer’s Wild Bull Market Picks at the start of summer.  Now that values have caught up and now that the stock has reached this and higher levels, it looks like it has to now do some extra proving to be taken as a winner.

Jon C. Ogg
August 10, 2007

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

Posted on: August 10, 2007 – 6:18 pm in Earnings, ,

Paint-By-Numbers: Why Newspapers Are Screwed (NYT)

From Silicon Valley Insider

It’s easy to say that the New York Times (NYT)  and other newspaper companies are screwed, but sometimes it helps to actually run the numbers.  Do you know why they’re screwed?  It’s actually not the cost of paper, ink, trucks, printing plants, and other physical distribution expenses.  Rather, it’s the cost of content creation.  continued here

Posted on: August 10, 2007 – 4:51 pm in Media,

Earnings Preview: Blackstone Group (BX)

The Blackstone Group, LP (NYSE:BX) will post earnings for its units on Monday morning, August 13.  First Call looks like the estimates were $0.46 EPS, but investors should be cautious on any set number since the data is new and probably incomplete.  This is also the first earnings report from the company since its IPO, and it has only been public since June.

The recent market malaise in credit and borrowing has wrecked havoc on private equity leveraged buyouts in the last few weeks.  Shares are also down considerably from the IPO pricing and post-IPO open.  The good news is that shares have actually held up quite well this week and shares are up close to 10% from the post-IPO lows seen last week.  Analysts are mostly favorable on the name after its quiet period and dark coverage period ended.

Also, after the company reports earnings next week it will finally be able to start speaking again (if it chooses to).  It has been in a quiet period ahead of earnings.  Just this week it closed on a huge private equity fund to the tune of some $21 Billion.

It will be interesting to see what the company says regarding the current private equity markets.  Private equity has to be licking its chops over some of the recent drops that have been seen in many value stocks, but the flip side is that the old 7X or 10X leverage has been shut off.  Now private equity will have to do more buying with its own money rather than it leveraging so much. 

Even though this is a new company, this will actually be the first chance for the company to shed light itself on the recent weakness in private equity.  Blackstone has a shot of acting as a stabilizing force Monday, or we could see more of the same.  This is obviously one to watch.

Jon C. Ogg
August 10, 2007

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

Posted on: August 10, 2007 – 2:22 pm in Earnings, Private Equity, ,

What To Expect From Wal-Mart Earnings (WMT)

The world retail behemoth that goes by the name of Wal-Mart will report earnings pre-market on Tuesday, August 14.  We just saw the July same store sales Thursday, so much of the actual sales and interpreted earnings data should already be baked into the stock.  First Call estimates are $0.77 EPS and $92.75 Billion in revenues.  The coming quarter expectations are $0.68 EPS and $92.25 Billion, and fiscal January 2008 estimates are $3.16 EPS and $378.3 Billion revenues.

Target (NYSE:TGT) is still outperforming it with a nicer overall shopping experience and it is translating to higher same-store-sales.  Targets s-s-s were up 5.9% in July, while the blue behemoth posted a 1.9% s-s-s gain.  Wal-Mart has also forecast s-s-s growth of 1% to 2% for August, although its overly aggressive back to school discounting efforts are expected to weigh on margins.

The company has seemed to be doing well in electronics sales, so it will be interesting to see if that continues. The s-s-s breakdown came as +1.3% at Wal-Mart stores and then +5.1% at Sam’s Club (ex-fuel, or +4.9% with fuel sales).

Wal-Mart stock had started a recovery going into summer, but shares didn’t continue a run in the June to early July period when the market was on highs and shares are down almost 5% from the close this Wednesday.  In short, its chart is not that great and a multiple bottom is only around $45.50 or a bit higher.  Analysts still have a mid-$50’s price target, although the ratings are mixed. 

Wal-Mart’s stock is still stuck.  But the company got a bit of a safety net and you rarely hear any calls for the termination of Lee Scott any longer.  If he’s worried about a softening economy he may want to take a long ride into the sunset, because even if he can’t control the economy he will face more pressure if that stock doesn’t get back above $50.00 in the not too distant future.  We noted him as one of the 10 CEO’s that needed to leave their posts back in December, and 5 of the 10 have come to fruition.  He’s honestly doing more shareholder friendly activity after the last analyst and shareholder meeting and we even gave him credit for this.  The company has even started some of our 10 steps for them to repair the company.  The stock would still probably rise if the company decided to make a change in leaders, although there are currently no indications that this is even remotely close.  Even I, after calling for him to leave, won’t put a weaker and weaker economy on his shoulders as long as the company keeps making more shareholder friendly initiatives.  We’ll also get to see if the company is using its available funds to buy back stock.

Jon C. Ogg
August 10, 2007

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

Posted on: August 10, 2007 – 2:00 pm in Earnings, Retail, , ,

Hewlett-Packard: Great Earnings Expectations (HPQ)

Hewlett-Packard (NYSE:HPQ) reports next week on Thursday, August 16 and Wall Street is looking for roughly 10% revenue gains and more than 20% earnings gains.  Analysts according to First Call are expecting $0.65 EPS and revenues of $24 Billion.  The year over year comparables are a little difficult because of past and even pending acquisitions and integrations, and technology analysts have show time after time how they forget to factor in acquisitions and divestitures to the level they should.

H-P usually offers guidance and estimates for next quarter are $0.78 and $26.4 Billion revenues.  This next quarter will also mark the fiscal 2007 end.  If the company is bold enough to offer long-term guidance in a highly volatile market like this estimates for fiscal October-2008 are $2.79 EPS and about $106 Billion in revenues.

Cheaper components may not come at quite the same discount as last quarter based upon what trends I have read, but they are still cheaper on a year over year basis and should still add to the bottom line along with the US Greenback.  The company is also getting evaluated more and more on service and IT contracting revenues, although we’ll still have to pay extra care to how much of H-P’s profits come from the beloved printing and imaging operations.

Analysts still have north of a $50.00 price target on H-P and some of the buy targets are north of $55.00.  This one held up rather well with the crummy market, and its longer-term up-trend pattern still hasn’t been violated.  Options are too far out for an effective read, and the recent volatility hasn’t helped with options pricing as a guage for predicting expected price changes.

H-P will also likely be a harbinger for its arch-rival Dell (NASDAQ:DELL).  Keep in mind that these estimates could easily change as there are essentially four trading days before the report, and options expiration is only one-day after the report.  We’ll follow up with any material changes mid-week ahead of the expected earnings.

Jon C. Ogg
August 10, 2007

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

Posted on: August 10, 2007 – 1:11 pm in Earnings, PC Companies, Software, Technology Companies, , , ,

Previewing Applied Materials Earnings; They Didn’t Get The Down Market Memo (AMAT, KLAC, NVLS, LRCX, ASML)

Applied Materials (NASDAQ:AMAT) reports on Tuesday, August 14.  This will be interesting for chip equipment stocks as this is the largest chip equipment stock out there, but the main reason this will be even more interesting than normally is thatthis has held up incredibly well in what has become quite a crummy stock market.  As of today, First Call estimates are $0.32 EPS and $2.53 Billion in revenues.  Next quarter is also its fiscal year-end and analysts expect it to post $0.30 EPS on revenues of $2.46 Billion. 

Analysts are mixed on the stock, but average targets from analysts are between $24.00 and $25.00. The chart has been quite hard to not notice.  Bets have been that despite a weak cap-ex market that it will change or at least not deteriorate.  The stock so far hasn’t gotten the down market memo, because it has been in an up-trend and its shares are just down about 3% from recent highs of $23.00.  In fact, that recent $23.00 high is within 10% of a 5-year high.  We are not going to comment on option trader expectations today because of the volatile market and time value compression with options expiration being next Friday.

Interestingly enough, one of the things that has been helping Applied out is its new and upcoming solar operations.  After a couple of recent solar and silicon related purchases and with the extra capacity that Applied has in its capacity arsenal, this solar operation is becoming a business that has the potential of becoming a dominant player in the coming years.  It is even feasible that this could become its own entity to unlock shareholder value down the road, although that is far too soon to predict or target.

Outside of almost everyone in the chip equipment sub-sector, the main US chip equipment and cap-ex names to watch for secondary movement are KLA-Tencor (NASDAQ:KLAC), Novellus (NASDAQ:NVLS), LAM Research (NASDAQ:LRCX), and ASML Holdings NV (NASDAQ:ASML) in Europe.

Jon C. Ogg
August 10, 2007

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

Posted on: August 10, 2007 – 12:36 pm in Earnings, Semiconductor, , , , , ,

RIMM (RIMM) Goes Wi-Fi

The new RIMM (RIMM) Blackberries, called the 8310, 8820, and Pearl 2, will have Wi-Fi capability and will be able to switch back and forth between the wireless standard and EDGE .

As The Inquirer points out, consumers are unlikly to use the Pearl 2 in place of an Apple (AAPL) iPhone. But the new RIMM device is much less expensive.

More important to the company is to keep the iPhone out of the business market, which is RIMM’s core market. Adopting Wi-Fi and GPS in the new devices along with the standard best-of-breed e-mail capabilities should do that.

Douglas A. McIntyre

Posted on: August 10, 2007 – 12:23 pm in Uncategorized, ,

IPO Filing: CreditCards.Com…Is This Ironic Or What?

This morning we have had an IPO filing with the SEC from a company called CreditCards.com.  If this is not ironic because of the current credit meltdown and liquidity squeeze, then irony no longer exists.  The company filed to raise up to $115 million with underwriters listed as Credit Suisse, Citigroup, and Thomas Weisel Partners.  The ticker for NASDAQ listing has not been dedicated as of yet.

As you can tell by the name, this isn’t exactly a coffee shop.  The company is a credit card marketplace connecting consumers with multiple credit card issuers via the www.creditcards.com website.  This enables consumers to search for, compare, and apply for credit cards; and offers credit card issuers an online channel to acquire qualified applicants. CreditCards.com allows credit card issuers to seek and receive credit card applications online on what it hopes is and believes is more efficient and cost effective than traditional offline channels.

The company was founded only in 2005 to buy an online financial firm, and it bought the creditards.com, LP operations and domain name in 2006.  It obviously hasn’t paid attention to headlines about the credit markets in the last 2 or 3 weeks. 

The company shows revenue growth year over year.  In the first half of 2006 it posted $18.736 million in revenues and in the first half of 2007 it posted $27.358 million.  The company also spent over 80% of our total online advertising expenses in 2006 with Google and Yahoo!. 

It specifically warns that if it gets outbid or can’t compete on the amount it will pay for online ad placements that it believes it will not be able to replace the traffic that comes from those two sites.  To see how this worked I did a search on both Google and Yahoo! under the querie "credit card", and this was the top placement on Google search sponsored results and was the second sponsored result on a Yahoo! search.

Jon C. Ogg
August 10, 2007

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

Posted on: August 10, 2007 – 10:07 am in Financial Stocks, IPOs, Internet, ,

Five Winning DJIA Components On a Bad Day (August 10, 2007) (IBM, JNJ, PG, XOM, UTX)

The DJIA is down more than another 150 points today, although it had been down 200 in pre-market activity before the Fed added liquidity this morning.  We have been down actually less than triple digits before the last slide took us lower.  Usually the market just shoots first and asks questions later, but right now there are actually some DJIA components that are either holding up quite well and some that are actually positive on the day.  If the market slides further or tanks again you can kiss these gains here goodbye as well.

IBM          IBM                       $111.36 +$0.63 (+0.5%)
JNJ         J&J                        $60.88 +$0.05 (+0.1%)
PG          P&G                       $65.23 +$0.26 (+0.4%)
UTX        UNITED TECH    $72.73 +$0.36 (+0.50%)
XOM        EXXON MOBIL    $84.14 +0.54 (+0.65%)

Here were our defensive stocks for a crummy market from last week.

Jon C. Ogg
August 10, 2007

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

Posted on: August 10, 2007 – 9:44 am in Defensive Stocks, HI/LOW, , , , , ,

Sun’s (SUNW) Fall: A New 52-Week Low

Sun Microsystems (SUNW) sold off today and hit a 52-week low at $4.50. Its 52-week high is $6.78.

The company put out mediocre numbers on July 30, so this is a bit of a delayed reaction. The company’s revenue was flat for the quarter, at about $3.5 billion. The company had an operating profit of $325 million compared with a loss of $335 million the year before. Most of the improvement was due to lay-offs and other cost controls.

Sun said that it plans to cut more expense in the quarters ahead. But, that leaves the mixed message of whether the company wants to downsize more due to lack of revenue growth.

In May, Sun said it would buy back $3 billion worth of shares, which is over 15% of the outstanding. The move clearly has not pushed up the price.

There is no single issue keeping the stock price down. One school of thought is that the company cannot grow because it faces too much competition from companies like IBM (IBM) and Hewlett-Packard (HPQ).  As Morningstar points out, Sun does not have the "depth and breadth" of produccts to compete across a wide range of markets. Another theory is that Sun’s embracing of open source software is not likely to increase its customer base.

Whatever the reason, it looks like Sun will be stuck at the bottom of its trading range for some time

Douglas A. McIntyre

Posted on: August 10, 2007 – 8:53 am in Technology Companies, , ,

Central Banks Step In: Injecting Liquidity Rather than Cutting Rates

There are more reports of world central bank interventions today.  The European Central Bank stepped in and providing added liquidity.  The Associated Press put today’s figure at $83.9 Billion and Bloomberg put the figure at $83.6 Billion.  The exact number isn’t as important as the scale and the fact that it is substantial. That makes over $200 Billion out of Europe alone depending on which reports you read that has been injected into the system if you include yesterday.

Yesterday the Federal Reserve injected liquidity into the financial system twice yesterday.  Today the Federal added $19 Billion buy buying mortgage-backed securities.  The amount tendered was $31 Billion and that $19 Billion is what was accepted.  The Fed also left the window open again, and I believe they can step in twice more if they choose to.  But this tender is interesting because this gets those mortgage backed securities off the books of some chartered banks.  The bad news is that if you assume that these are Freddie-Mac or Fannie-Mae conforming loans and gave them an average home loan face of $250,000.00 this represents only 76,000 homes if you wanted to look at this on a nominal face value basis.  I admit that this is not how the real calculations are made, but it is a very loose representative figure that can put some things in perspective.  A Billion dollars just isn’t what it used to be.  But this is a start.  It probably isn’t enough by the tone, but nonetheless it is a start.

What is interesting is that the malaise yesterday gave the chance for a September meeting rate cut at 100% and some are pointing that Fed Fund futures are showing that there is basically a 100% chance of an emergency rate cut.  We have spoken with numerous traders, analysts, and a good old fashioned economist this week.  The verdict is that the liquidity crunch and credit issues need to be fueled right now rather than actual rate cuts that further weaken the greenback.  A rate cut won’t actually help a subprime borrower that is inverted in the housing price that no longer qualifies for a mortgage even at a 2% rate.  The credit criteria has tightened to the point that some more housing pain has to come either way and there probably won’t be any solid fix for some of the funny money mortgages.  This liquidity will help the institutions right here and right now.  Sometimes protecting the system rather than all the participants is more important, and this is one of those instances.  The pain is not yet over, but if this continues it will minimize the fallout and will lower the chances of a collapse in the financial system. 

Now for the real question: Is this a $500 Billion problem, or is it a $3 Trillion problem to fix?

Jon C. Ogg
August 10, 2007

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

Posted on: August 10, 2007 – 8:29 am in Economy, , , ,

Wyeth (WYE): More Bad News

Wyeth’s (WYE) shares are off 10% over the last three months, and trade near their 52-week low.

The stock is about to go lower. The company disclosed the receipt of an action letter from the (FDA) in response to the New Drug Application for bifeprunox, an antipsychotic that was reviewed for the acute treatment of schizophrenia, as well as the maintenance of stable adult patients

Last month the FDA declined to approve that company’s new antidepressant drug Pristiq.

It look like the beginning of a pattern.

Douglas A. McIntyre

Posted on: August 10, 2007 – 8:05 am in Pharmaceuticals,

Pre-Market Stock News (August 10, 2007)

(BDY) Bradley Pharma said its special committee has received bid indications in its attempt of exploring strategic alternatives.
(CFC) Countrywide Financial down over 10% after disclosures in SEC Filing.
(DISH) Echostar $0.50 EPS vs $0.50 est.
(INTC) Intel noted positively by Cramer on MAD MONEY.
(LGF) Lions Gate acquires Mandate Pictures.
(ME) Mariner Energy $0.38 EPS vs $0.41 est.
(MYL) Mylan announced final FDA Approval for Verapamil Hydrochloride extended-release capsules.
(NTRI) Nutrisystem announced its CFO is leaving in a planned departure.
(NVDA) NVIDIA trading down 6% despite beating earnings expectations; Merrill Lynch downgraded it to Neutral.
(NVS) Novartis gets an additional 6 months exclusivity from FDA for its Diovan for high blood pressure.
(NWS) News Corp.
(PENN) Penn National Gaming is acquiring Rosecraft Raceway from Cloverleaf Enterprises (CEI).
(SNDK) SanDisk CEO given positive interview by Cramer on MAD MONEY.
(SPF) Standard Pacific now has Value Act activist investor with a 5.2% stake in the company.
(WCRX) Warner Chilcott $0.30 EPS vs $0.21 est.

ADCT raised to Outperform at Baird.
ALVR started as Mkt Perform at Piper Jaffray.
AMSC cut to Underperform at RBC.
DTV raised to Neutral at Credit Suisse.
EAT raised to Overweight at JPMorgan.
ELX raised to Outperform at FBR.
EQR cut to Neutral at B of A.
FLS cut to Mkt Perform at FBR.
GET started as Neutral at UBS.
GRFF started as Sector Perform at CIBC.
MANH raised to Outperform at Bear Stearns.
MGLN raised to Outperform at Credit Suisse.
MRO raised to Buy at Citigroup.
MTG cut to Underweight at JPMorgan.
NE raised to Outperform at Credit Suisse.
RSTO cut to Hold at BB&T.
SAPE cut to Mkt Perform at Piper Jaffray.
SYMM cut to Hold at Cantor Fitzgerald.
TSO raised to Hold at Citigroup.
VLO raised to Hold at Citigroup.
ZRAN raised to Overweight at JPMorgan.

Jon C. Ogg
August 10, 2007

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

Posted on: August 10, 2007 – 7:34 am in Pre-Market Activity

Pre-Market Analyst Calls (August 10, 2007)

ADCT raised to Outperform at Baird.
ALVR started as Mkt Perform at Piper Jaffray.
AMSC cut to Underperform at RBC.
DTV raised to Neutral at Credit Suisse.
EAT raised to Overweight at JPMorgan.
ELX raised to Outperform at FBR.
EQR cut to Neutral at B of A.
FLS cut to Mkt Perform at FBR.
GET started as Neutral at UBS.
GRFF started as Sector Perform at CIBC.
MANH raised to Outperform at Bear Stearns.
MGLN raised to Outperform at Credit Suisse.
MRO raised to Buy at Citigroup.
MTG cut to Underweight at JPMorgan.
NE raised to Outperform at Credit Suisse.
RSTO cut to Hold at BB&T.
SAPE cut to Mkt Perform at Piper Jaffray.
SYMM cut to Hold at Cantor Fitzgerald.
TSO raised to Hold at Citigroup.
VLO raised to Hold at Citigroup.
ZRAN raised to Overweight at JPMorgan.

Jon C. Ogg
August 10, 2007

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

Posted on: August 10, 2007 – 7:08 am in Analyst Calls

Intel (INTC): A Safe Haven Stock

Intel (INTC) is supposed to be a growth stock. It has been winning its market share battle with rival AMD (AMD). Its shares are up 36% in the last year.

But, it may also be one of the safest stocks to own in a rapidly falling market. The company has about 80% of the global x85 market. That means it dominants chip supplies for both PCs and servers. The business may be slowing in the US, but in places like India and China, sales of these products are in a rapid growth cycle.

Intel is also beginning to create low-power, low-complexity chips. These will end up in smartphones that run Windows and other operating systems. They could be a very important part of the growing global use of WiMax and city-wide WiFi.

Intel has about $9 billion in cash and marketable securities and very little debt. It has long-term investments that it carries on its balance sheet for almost $4 billion.

Last quarter, the company’s revenue rose from $8 billion in the period a year ago to almost $8.7 billion and operating profit rose from $1.072 billion to $1.35 billion.

Safe.

Douglas A. McIntyre

Posted on: August 10, 2007 – 6:41 am in Uncategorized, ,

News Corp’s Wall Street Journal Will Give NYT And Yahoo! Fits

Rupert Murdoch, head of News Corp (NWS), has spoken about some of his plans for The Wall Street Journal. At least one of his ideas could do severe damage to two companies which are already on the ropes. Perhaps that is why he wants to target them

Murdoch is taking about, among other things, increasing coverage of non-financial news and perhaps allowing on line readers to have free access to WSJ.com which is now available by paid subscription.

Think about what that would do to The New York Times company, which is already in deep trouble. News Corp could suck the life right out of the newspaper firm. According to the NYT 10-Q, revenue last quarter dropped from $820 million to $789 million. The company’s operating profit fell from $86 million to $43 million. The company’s little internet operation, About.com, grew revenue 27% to $25 million, or the numbers would have been worse.

NYT internet revenue rose 23.4% in the second quarter to $80.9 million. But, that includes About.com. The New York Times Digital sites ranked 11th in the US during June according to ComScore. They had 42.7 million unique visitors. So the revenue yield for an audience that size is modest.

If WSJ.com becomes free, its 800,000 plus subscribers could easily rise by a large multiple. If Dow Jones increases domestic news coverage and overseas business coverage, the website could easily take readers from NYTimes.com. And, the additional internet advertising inventory for WSJ.com could drive CPMs for high income traffic down.

Yahoo! (YHOO) has a problem, but for a different reason. The company had almost no revenue growth in the second quarter and operating income dropped from $230 million to $184 million. Yahoo! Finance is likely to be one of the big drivers of revenue at the online company. It is the largest financial site in the US, and it carries high cost-per-thousand advertisers including E*Trade and Schwab. These companies are willing to pay to get high net worth customers. LowerMyBills is probably paying less to be at Yahoo! Sports. If Yahoo! Finance readers had access to an improve version of The Wall Street Journal online, some of them would make it their first read.

A free WSJ.com could cost Murdoch a lot of money while he waits for ad revenue to replace what customers pay to access the website now. But, he can afford to wait. Yahoo! and The New York Times Company cannot. Their stocks are already off about 30% over the last two years.

Douglas A. McIntyre

Posted on: August 10, 2007 – 5:52 am in Uncategorized, , , ,

Toyota’s (TM) US Problem

Toyota (TM) says that its growth in the US will slow over the next several years. Toyota has 17% of the market, so that may have something to do with the law of large numbers. The company plans to introduce some smaller cars for younger drivers and those living in urban areas. That may keep growth rates up.

But, the announcement by the Japanese company may signal something else. In June 2000, GM (GM) had a 34% share of the US market. Toyota is at half of that, so why should its sales slow.

There may be several reasons. At Toyota has grown, it quality control may have slipped. The company has had several recalls in the US over the last two years.

Toyota may be hitting a "Buy American" wall. With tens of thousands of workers being pushed out at the Big Three, there are bound to be some people who read the headlines and decide that buying a Japanese car is not patriotic.

US car quality has risen sharply. In the new JD Powers reliability survey, Buick tied Toyota luxury brand Lexus for the top spot. Buicks sell for a good deal less than the Japanese brand.

Toyota’s sales in the US are not slowing because the car company has too much market share, They rate is dropping off because the company is hitting more than one head wind.

Douglas A. McIntyre

Posted on: August 10, 2007 – 5:20 am in Uncategorized, ,

Man Group Cancels IPO

In another sign that very few will make it public in a troubled market, Man Group, the largest publicly traded hedge-fund is cancelling its plans to have an IPO of Man Dual Absolute Return Fund  on the NYSE.

At least Man has $60 billion in assets, which should help the firm make it through a cold winter.

Douglas A. McIntyre

Posted on: August 10, 2007 – 5:09 am in Financial Stocks

Europe Markets 8/10/2007 Slide Continues

Markets in Asia were down sharply at 6 AM New York time.

The FTSE fell 1.8% to 6,159. Barclays (BCS) was down 4.1% to 653.5. BHP Billiton (BHP) was off 3% to 1311. Vodafone (VOD) was down 3% to 1554.

The DAXX was off 1.5% to 7,345. Daimler (DCX) was down 4.4% to 59.91. DeutscheBank (DB) was off 4.3% to 94.36.

The CAC 40 was down 1.8% to 5,522. BNP Paribas was off 3.1% to 80. Danone was up 3% to 56.44.

Data from Reuters

Douglas A. McIntyre

Posted on: August 10, 2007 – 5:04 am in Uncategorized