Daily Archives: August 20, 2007

Nothing In Capital One Employee Wallets, Except Pink Slips (COF)

Capital One (NYSE:COF) is closing its wholesale mortgage unit called GreenPoint Mortgage and is lowering guidance.  The company has revised 2007 EPS guidance down by $2.15 to $5.00 per share, and will record close to $860 million in charges.  Capital One will close GreenPoint’s California- based headquarters along with 31 locations across 19 states that will result in the elimination of approximately 1,900 positions with the vast majority of these positions being eliminated by the end of the year.

Current conditions in the secondary mortgage markets create significant near-term profitability challenges, given the company’s "originate & sell" business model. Further, recent and continuing developments in the mortgage markets reduce the long- term outlook for profitability in the business, as the company expects markets for prime, non-conforming mortgage products are likely to remain challenged for the foreseeable future. GreenPoint Mortgage will cease making new loan commitments immediately, however, it will continue to meet its contractual obligations to customers for loan commitments that are in the pipeline with rates locked.

GreenPoint Mortgage became a subsidiary of Capital One in December 2006, as part of the company’s acquisition of North Fork Bancorporation. GreenPoint’s focus had long been the prime non-conforming and near-prime markets, especially the Alt-A mortgage sector. Capital One Home Loans, based in Overland Park, KS, and Capital One N.A., including its 725 local retail bank branch locations in New York, New Jersey, Connecticut, Texas, and Louisiana, are not directly affected by this decision.  Capital One intends to continue to originate and sell mortgage loans through Home Loans and its bank branches where it has direct interactions with customers.  Capital One is also retaining a substantial $12.5 Billion "held for investment" mortgages in a portfolio.

Shares closed down almost 3% at $66.72 in normal trading today.  The news initially took Capital One stock down over 10% more in after-hours trading, but shares are only down about 5% at $64.00.  The 52-week trading range is $59.49 to $83.84.  Hopefully this won’t hurt the marketing budget, because they have some of the few funny commercials left.

Jon C. Ogg
August 20, 2007

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

Posted on: August 20, 2007 – 3:43 pm in Banking, Financial Stocks, ,

Norm Wesley Transitions Out of CEO Role at Fortune Brands (FO)

Fortune Brands (NYSE:FO) is doing something we didn’t expect to see, at least not any time soon.  Its CEO & Chairman, Norm Wesley, is transitioning out of the CEO role effective January 1, 2008.  The company’s COO & President, Bruce Carbonari was elected CEO effective January 1, 2008.  What is odd is that Norm Wesley is only 57 years old, and we had just named him one of the entrenched CEO’s early this year.

Wesley is continuing to evaluate strategic initiatives, including the interest in and sale of Absolut Vodka.  Carbonari has been with Fortune Brands for 17 years and he’s been an officer since 1999, so it isn’t as though this is a newbie taking the helm from an industry leader. 

This has to make you wonder if the millions being thrown around out there in private equity didn’t lure Mr. Wesley away as a contract CEO or CEO advisor.  Carbonari has to know that Wesley has had a good reputation, and following in his footsteps will be some tough shoes to fill.

Jon C. Ogg
August 20, 2007

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

Posted on: August 20, 2007 – 3:29 pm in Management Change, ,

Cramer Talks Fannie, Freddie, Biotech

On today’s STOP TRADING segment on CNBC, Jim Cramer discussed Freddie Mac (NYSE:FRE) and Fannie Mae (NYSE:FNM) and said he just took a big profit on Fannie Mae. On Countrywide Financial (NYSE:CFC) he would watch the deposits over $100,000.00 that are FDIC insured to see if the clients are worried about the bank failing, and then he’d look for a trade if the deposits aren’t leaving the bank.

On Lamar Advertising (NASDAQ:LAMR), this one came straight down on safety concerns that moving LCD ads on highways may get some regulation over safety issues because ads are too eye catching.

In biotech-land, Jim Cramer also discussed the news out of PDL Biopharma (NASDAQ:PDLI) after the CEO finally quit after endless pressure to leave and this one could now finally be acquired for much higher.  Shares are up about 5% today now that he is finally out of the way.

Jon C. Ogg
August 20, 2007

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

Posted on: August 20, 2007 – 1:49 pm in Cramer, , , ,

Earnings Preview: Target (TGT, WMT, SHLD)

Target Corp. (NYSE:TGT) will report earnings Tuesday morning with a conference call to follow.  Shares closed up Friday but are down with the market today.  First Call is expecting EPS to be $0.80 on revenues of $14.7 Billion.  As far as the next quarter, estimates are $0.67 EPS on $15 Billion in revenues. 

Wal-Mart (NYSE:WMT) has already warned on its forecast after earnings.  With the huge wide back-to-school price cuts it instigated it is hard to imagine that Target is not entirely immune.   Analysts are still favorable on the stock and the average stock target is $72.00 or so.  Its chart has been weak with the broad market, with the key difference being that so far even with today’s weakness it hasn’t pierced that $57 to $58 support line.  Options traders are now prepared for an underlying stock move of up to $3.25, and that is compared to what appeared to be up to $3.00 in either direction just on Friday.  Target has been taking business from Wal-Mart, but Tuesday will show if its slightly more upscale customers and cleaner format stores are more immune or subject to the same weakness seen at Wal-Mart.

Just last month, an activist investor unexpectedly came into Target’s wings.  On August 9, Target posted same store sales for July were +6.1% on a total sales gain of 10.8%.  They already gave us the $.363 Billion in total July sales so now it really just boils down to how close analysts can get to the raw EPS number with all the revenue numbers in for the quarter.  Sears Holdings (NASDAQ:SHLD) showed recently that it wasn’t doing too well either, and it would have traded lower had it not used the share buyback game as the offsetting announcement.

Jon C. Ogg
August 20, 2007

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

Posted on: August 20, 2007 – 1:40 pm in Earnings, Retail, , ,

More on Pending Merger Arb Spreads (FRK, LEND, ACXM, DJ, NWS, VMC, APPB, IHP)

Earlier today, we sent out a couple pieces discussing some of the pending mergers and spreads still having wide ranges.  This can be indicative of a deal at risk, but some will close and will offer significant opportunities for those willing to tread where others fear. Our first list included some of the larger names out there (ACS, URI, FDC, CCU) and then we covered a second batch (TXU, TRB,SLM, CEN).  We’ll be sending out some specific calls to subscribers of our Special Situation Investing Newsletter ahead of Labor Day.

The Dow Jones (NYSE:DJ) buyout by Rupert Murdoch’s News Corp (NYSE:NWS) isn’t aprivate equity transaction, but it might as well be.  With a $60.00buyout, the current $58.70 price does not signal much perceived risk inthis deal closing.  Rupert wants it and he has won the deal.  There isa reason Murdoch made the list of entrenched leaders, and the fact that he gets his way is the largest part of it.

Florida Rock (NYSE:FRK) shareholders have already agreed to the buyoutby Vulcan Materials (NYSE:VMC), but at $61.00 this is well under the $68.03cash and stock deal.  This was at a large 40+% premium, so the VMCshare price being lower not act as a hurdle and that old price and thisone should be expected to close.

Acxiom’s (NASDAQ:ACXM) $27.10 buyout offer from SilverLake and Value Actcurrently has only a $23.25 price, giving it a 14% discount to thebuyout price, or actually a 16.5% return from the current price for themerger-arbs.

Accredited Home Lenders Holding Co. (NASDAQ:LEND) is still a deal completelyat risk as the Lone Star buyout has been extended and no one expectsthat $15.10 price to be done. LEND is suing Lone Star to close thedeal, but if this one gets done at all it would be only logical that itwould close at a far lower price.

We still view the old Applebee’s (NASDAQ:APPB) acquisition by IHOP (NYSE:IHP) being a takeunder, and we didn’t see much premium value when that had spiked up earlier this year in hopes of a deal.

This is a mere sample of pending mergers we are covering to look for opportunities in the Special Situation Investing Newsletter our paid subscribers access.  We will be covering some of these and others with exact plays ahead of the Labor Day holiday.

Jon C. Ogg
August 20, 2007

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

Posted on: August 20, 2007 – 1:25 pm in Mergers and Buy Outs, , , , , , , ,

Merger Arb Spreads Remain (TXU, TRB,SLM, CEN)

There are over 150 pending mergers out there that have not yet closed.  After last week’s Fed actions, there are still some deals out there that are perceived to be at risk as far as the deals closing or if the deals can close at the announced buyout price. Some of these spreads have tightened in merger-arb scenarios, but there are quite wide spreads on many pending deals.   We’ll be sending out a few selected deals we expect to go through without issue before Labor Day to our Special Situation Investing Newsletter subscribers.  Earlier we covered ACS, URI, FDC & CCU merger-arb spreads.

The buyout of student loan giant SLM Corp, or Sallie Mae (NYSE:SLM), is alsostill at risk. Sallie Mae holders have already approved the $25 Billiondeal for $60.00/share last week, but the buyout by J.C. Flowers still faces regulatory and credit market risks.With shares trading down again and under $48.00 today, this wouldrepresent a 25% gain for merger-arbs now if the deal is able to close.Shares traded close to $60.00 on their own back in early 2006.

The $5.3 Billion buyout of Ceridian (NYSE:CEN) by Thomas H. LeePartners has a wide enough merger-arb spread to make you scratch yourhead. The $36.00/share buyout for Ceridian is now seeing shares tradeunder $33.00, giving roughly an 8% merger-arb spread.

Sam Zell’s $8.2 Billion buyout of Tribune Co. (NYSE:TRB) is still ahighly leveraged deal that in fact is only a quasi-buyout and one thatmany are not giving the highest marks.  Shareholders are set to votetomorrow.  With shares at $26.50, they are at least higher and closerto that $34.00 buyout price.  The prevailing thought here seems to be that this buyout price may be lowered.

There also remains speculation that the near-$45 Billion (afterdebt) acquisition led by KKR& TPG of TXU (NYSE: TXU) may still not becompletely done.  TXU is an interesting one, because the company hastelegraphed that it will split into three units if this merger fails.Shareholders vote September 7 for the $69.25 buyout price, and some keyshareholders have already signaled they are against the merger.  Withshares at $64.00, that is a 7.5% discount.  The good news here is thatbefore the Fed intervened with a discount rate cut, shares got as lowas about $61.00 last Thursday. Here was a large list of competitors that were thought at the time it was announced that could also be under review.

Maybe Warren Buffett will finally get off his wallet and do that whale of a deal he said he’d love to do.

Jon C. Ogg
August 20, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he is editor of the 24/7 Wall St. Special Situation Investing Newsletter and he does not own securities in the companies he covers.

Posted on: August 20, 2007 – 1:16 pm in Mergers and Buy Outs, , , ,

Pending Merger Arb Spreads Remain (Part 1) (ACS, URI, FDC, CCU)

There are still over 150 pending mergers out there that have not yet closed.  After the Fed’s recent actions, there are still some deals out there that are perceived to be at risk as far as the deals closing or if the deals can close at the announced buyout price. Some of these spreads have tightened in merger-arb scenarios, but there are quite wide spreads on many pending deals.  We have included most of the proposed closing prices or what discount the pending deals are to the actual price. 

We’ll be sending out a few selected deals we expect to go through without issue before Labor Day to our Special Situation Investing Newsletter subscribers.  Here is a partial list of some of the larger mergers out there that are still pending, and the total consideration pending here out of all the names we are covering today is more than $175 Billion:

The MBO of Affiliated Computer Services (NYSE:ACS) for some $8.2 Billion is also though of at risk or at least at the original terms because of the debt involved.  Chairman & founder Darwin Deason partnered with Cerberus Capital Management to offer $59.25 per share back in March, and shares at $49.90 are only 10% above 52-week lows and are roughly at a 16% discount to the acquisition price.

The buyout of United Rentals (NYSE:URI) by Cerberus at $34.50/share is seeing shares trade at $30.60 mid-morning, has a merger-arb spread of roughly 11%.  United Rentals is a municipal infrastructure player that is viewed to still have value on its own, and shares traded close to $40.00 on their own back in early 2006.

This $26 Billion buyout of First Data (NYSE:FDC) from KKR has been one of the cornerstone mergers that the skeptics are watching to see how strong deals can remain. The huge size of the deal makes it an esy one to target for being at risk, even though shareholders have already approved the buyout.  The $34.00 buyout price was looking at risk last week when shares dipped to under $30.50, but now shares are at $31.85.  That is still north of a 6% premium today.

Clear Channel (CCU) is one of those long-term at risk mergers that hasbeen ongoing.  The buyout price led by Bain Capital and Thomas H. Lee Partners LP for $39.20 is still well above today’s $35.40price.  Its shareholder vote is scheduled for September 25.

Jon C. Ogg
August 20, 2007

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

Posted on: August 20, 2007 – 1:05 pm in Mergers and Buy Outs, , , ,

IPO FILING: Orion Energy Systems, Energy Efficient Lighting Backed By GE (GE, OESX)

A lighting-efficiency company named Orion Energy Systems, Inc. has filed to come public via an IPO.  For filing purposes, it has a proposed $100 million stock offering and will trade under the ticker "OESX" on NASDAQ.  Orion lists Thomas Weisel Partners, Canaccord Adams, and Pacific Growth Equities as the underwriters.

Orion’s designs and manufactures energy management systems consisting primarily of high-performance, energy efficient lighting systems, controls and related services. It delivers energy savings and efficiency gains to commercial and industrial customers with the aim of the same quantity or quality of light. The core of its energy management system is its high intensity fluorescent, or HIF, lighting system with a goal to cut electricity costs by approximately 50% while increasing quantity of light by approximately 50%.  Orion said in the filing that it has sold and installed high-performance HIF lighting systems in over 1,800 facilities across North America, including at 73 Fortune 500 companies like General Electric, Kraft Foods, Newell Rubbermaid, OfficeMax, SYSCO, and Toyota Motor Corp.  So by description this isn’t a clean energy or alternative energy company, but it is more green or less brown so to speak.

Its annual revenue has increased nearly four-fold from $12.4 million in fiscal 2004 to $48.2 million in fiscal 2007; and in the last three months ended June 30, 2007, it recognized revenue of $16.7 million, compared to $9.7 million for the three months ended June 30, 2006. It also estimates that cumulative electricity cost savings for its customers of approximately $224 million and has reduced base and peak load electricity demand by approximately 243 megawatts, or MW, through June 30, 2007. It goes further to estimate that the reduced electricity consumption has reduced associated indirect carbon dioxide emissions by approximately 2.8 million tons over the same period.

If the company can capture more and more business from all the entities that have mandated energy savings in the coming years, it sounds like it is in the right spot.  It was a bit surprising to see GE (NYSE:GE) listed as a site customer, until seeing that GE’s GE Energy Financial Services, Inc. (GEEFS) indirect affiliate, GE Capital Equity Investments, Inc. owns 9.2% of the company.  According to the DOE, lighting accounts for 22% of electric power consumption in the United States, with commercial and industrial lighting accounting for 65% of that base amount. 

Jon C. Ogg
August 20, 2007

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

Posted on: August 20, 2007 – 9:29 am in Alternative Energy, IPOs, ,

How Bad Does Michael Eisner Want A Baseball Card Empire? (TOPP, DIS)

The Committee to Enhance Topps announced today that independent proxy advisory firm Institutional Shareholder Services, or "ISS," has recommended that stockholders of The Topps Company, Inc. (NASDAQ:TOPP) vote against the Michael Eisner and Madison Dearborn Partners merger offer at the Special Meeting of the Company’s stockholders scheduled to be held on August 30, 2007. 

The offer was $9.75 and the stock traded above that even before the Upper Deck offer came into play.  This deal has been long running and has been controversial from the start.  There were concerns that a Upper Deck & Topps company may turn the sports card and memorabilia operation into mostly a one-player dominated industry again.  Arthur Shorin has been accused of more conflicts here and not having shareholder interest in mind, and the company had felt that competing offers were more of a distraction than they were in good faith. 

It’s hard to tell how this one is going to end now.  Topps stock is at $10.05 after the open, still above that $9.75 offer.  Shares are down from highs though, and the 52-week trading range has been $8.37 and $10.75.  As the sports card industry has been flooded with product for longer than any relatively new collector would like to imagine, Topps stock has been mostly dead money since 1999 after it recovered off the mid to late 1990’s lows.  Given that Michael Eisner was the original bidder here, it’s almost surprising that Disney (NYSE:DIS) didn’t ever take any interest here.

Jon C. Ogg
August 20, 2007

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

Posted on: August 20, 2007 – 8:48 am in Entertainment, Mergers and Buy Outs, ,

Yamana’s Offer For Meridian Gold Appears Inadequate (MDG, AUY, GLD)

Meridian Gold Inc. (NYSE:MDG) has announced that its Board of Directors unanimously recommends that shareholders reject the amended unsolicited offer by Yamana Gold Inc. (NYSE:AUY) and not tender any of their shares after it determined that the amended offer still fails to provide full value for Meridian Gold shares.

The company officer quotes signal an inadequate offer and that the company is continuing to execut on its own.  It also has received written opinions from each of its financial advisors, BMO Capital Markets and Goldman Sachs, that the consideration offered under the amended Yamana offer was inadequate.

Meridian Gold’s Board of Directors also reviewed its reasons for rejecting the original offer: the C$0.85 increase in the cash portion of the consideration represents only a 2.9% increase in the total consideration as of the announcement date of the amended offer; the cash has increased only from 10.9% to 13.4% of the total consideration as of the announcement date of the amended offer, and the offer still consists overwhelmingly of Yamana shares; if the Meridian shares had tracked the rise in the Philadelphia Gold & Silver Index (XAU) since Yamana’s original June 27 announcement, the amended offer would represent a one day premium of only 8.3%.

Meridian Gold is actually toward the lower-end of its 52-week trading range: Its Canadian ADR’s closed at $24.12 Friday in US trading and its range over the last year is $21.58 to $32.53.  It also has a $2.4 Billion market cap and trades more than 1 million shares per day on average.  The streetTRACKS Gold Shares (GLD) ETF that tracks gold ounces at 1/10 the price minus management fees, closed at $64.94 on Friday, and its 52-week trading range is $55.55 to $68.73.

Jon C. Ogg
August 20, 2007

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

Posted on: August 20, 2007 – 8:27 am in ADR, Mergers and Buy Outs, Metals, , ,

After More Than 90% Plunges, Investors May Be Nibbling In Mortgage Land (LUM, LEND, NLY)

Luminent Mortgage Capital Inc. (NYSE:LUM) and Arco Capital Corporation Ltd. have entered into a Letter of Intent outlining current and proposed transactions intended to address Luminent’s current liquidity issues that arose due to unanticipated disruptions in mortgage credit markets.  There are conditions of course, but ARCO will repurchase approximately $65 million in mortgage securities, has been issued warrants by Luminent to purchase up to a 49% voting equity stake and 51% economic interest in Luminent (at $0.18 per common share exercisable over a 5-year period).  The Board of Directors of Luminent will resolve to elect four new members to the Board of Directors and four existing directors will submit their resignations from the Board, conditioned upon the newly elected members agreeing to serve on the Board.

Additional transactions in the letter of intent would provide Luminent with access to up to approximately $60 million in additional capital through repurchase agreements or secured credit arrangements with the intention of addressing current or impending margin calls and financing maturities.

While additional notices of default and margin calls remain a possibility in the current environment, as of August 17, 2007, Luminent has outstanding notices of default for unfunded outstanding margin calls totaling approximately $30.9 million, with approximately $6.1 million of cash being held to effectuate refinancing, for a net total current need of approximately $24.8 million. As Luminent previously announced, a default occurred under the indenture relating to $90 million of Luminent’s 8.125% Convertible Senior Notes due 2027. The trustee under the indenture has subsequently notified Luminent of an event of default, but has not yet declared those notes to be immediately due and payable.

According to the Letter of Intent, going forward, Luminent’s business strategy is expected to include acting as a multi-channel manager for asset- backed securities.  So investors are starting to snap up more and more assets on the cheap it looks like.  A letter of Intent is not binding per se because the conditions would allow it to back out, but maybe the buying on the cheap will come up more.  Luminent shares closed at $0.75 on Friday, and its 52-week trading range is $0.36 to $10.84.

Elsewhere, Accredited Home Lenders Holding Co. (NYSE:LEND) shares are up another 3% pre-market at $6.97.  If you will recall, just on Friday we showed how this Chimera IPO filing with Annaly Mortgage (NASDAQ:NLY) was actually a vulture fund set up to buy mortgage and loan assets on the cheap.

Jon C. Ogg
August 20, 2007

Posted on: August 20, 2007 – 7:23 am in Financial Stocks, Housing, , ,

Google Fights Back In China

Reuters is reporting that Google (GOOG) has taken a stake in Chinese Chinese community Web site Tianya.cn, a move into social networking there. GOOG has stayed out of the business in the US but has advertising sales ties to News Corp (NWS) MySpace.

GOOG currently runs well behind search enginer leader Baidu (BIDU) in China. How entering the social network business will help that is unclear.

Several reports indicate that GOOG is considering buying an interest in several of China’s large portals. It that Chinese government does not get miffed, that is.

Douglas A. McIntrye

Posted on: August 20, 2007 – 7:03 am in Uncategorized, , ,

Pre-Market Stock News (August 20, 2007)

(AXP) American Express is selling its private banking unit.
(CFC) Countrywide is laying off loan originators and support staff as applications are down and to cut costs.
(CHINA) CDC Corp. announced a $225 million share stock offering.
(CLWR) Clearwire has insiders from debt conversion selling $369 million in stock.
(CRYP) Cryptologic gets a pact from World Poker Tour.
(EMC) EMC could be worth 20% more in a year according to Barron’s.
(GOOG) Google took a stake in Chinese community Web site Tianya.cn for social networking.
(KFN) KR Financial has shareholders selling 16 million shares; and will have a public rights offering up to $270 million; principals of Kohlberg Kravis Roberts will purchase up to approximately $100 million of common shares at $14.40 if not fully subscribed.
(KNSY) Kensey Nash $0.11 EPS vs $0.15 est.
(LLNW) Limelight Networks announced that MyVideo.de video delivery service in Germany has selected Limelight as its exclusive provider of CDN services.
(LOW) Lowe’s trading up 4% after $0.67 EPS vs. $0.61 estimates; same store sales fell 2.6% for the quarter.
(LYV) Live Nation may win Madonna from Warner Music in a $100 million deal.
(MHP) McGraw Hill down on JPMorgan downgrade.
(NDAQ) NASDAQ is reviewing alternatives to divest its stake in London Stock Exchange; says $1 Billion will be used to retire debt and buyback stock.

Jon C. Ogg
August 20, 2007

Posted on: August 20, 2007 – 7:03 am in Pre-Market Activity, , , , , , , , , , ,

Lowe’s Beats, Up In Pre-Market

Lowe’s (LOW) beat Wall St. forecasts and is trading up over 5% in the pre-market. LOW  reported net earnings of $1.02 billion for the quarter ended August 3, 2007, a 9.0 percent increase over the same period a year ago. Diluted earnings per share increased 11.7 percent to $0.67 from $0.60 in the second quarter of 2006.

LOW revenue for the quarter increased 5.8 percent to $14.2 billion, up from $13.4 billion in the second quarter of 2006.

LOW Business Outlook
    Third Quarter 2007 (comparisons to third quarter 2006)
    — The company expects to open 40 new stores reflecting square footage
       growth of approximately 10 percent
    — Total sales are expected to increase 7 to 8 percent
    — The company expects approximately flat comparable store sales
    — Operating margin (defined as gross margin less SG&A and depreciation)
       is expected to decline approximately 140 basis points driven by bonus,
       retirement and insurance expenses that had significant leverage in last
       year’s third quarter
    — Store opening costs are expected to be approximately $47 million
    — Diluted earnings per share of $0.43 to $0.45 are expected
    — Lowe’s third quarter ends on November 2, 2007 with operating results to
       be publicly released on Monday, November 19, 2007

    Fiscal Year 2007 (comparisons to fiscal year 2006)
    — The company expects to open 150 to 160 stores in 2007 reflecting total
       square footage growth of approximately 11 percent
    — Total sales are expected to increase approximately 6 percent
    — The company expects comparable store sales to decline approximately 2
       percent
    — Operating margin (defined as gross margin less SG&A and depreciation)
       is expected to decline 70 to 80 basis points
    — Store opening costs are expected to be $135 to $140 million
    — Diluted earnings per share of $1.97 to $2.01 are expected for the
       fiscal year ending February 1, 2008

Douglas A. McIntyre

Posted on: August 20, 2007 – 6:55 am in Retail,

Pre-Market Analyst Calls (August 20, 2007)

AGP raised to Buy at Jefferies.
CCO raised to Outperform at Bear Stearns.
DELL started as Buy at WRHambrecht.
DLTR raised to Outperform at Wachovia.
DRI raised to Outperform at CIBC.
EQT started as BUy at Deutsche Bank.
FLS raised to Outperform at RBC.
FSLR raised to BUy at Deutsche Bank.
JBHT raised to Outperform at wachovia.
LAMR raised to Outperform at Bear Stearns.
MHP cut to Neutral at JPMorgan.
MPEL raised to Buy at Citigroup.
OATS cut to Peer PErform at Bear Stearns.
RIMM target raised to $295 at Goldman Sachs.
TSM raised to Buy at UBS.
WST started as Neutral at UBS.

Jon C. Ogg
August 20, 2007

Posted on: August 20, 2007 – 6:48 am in Analyst Calls, , , , , , , , , , ,

Is AT&T Cutting Blackberry Features?

Late word from The Inquirer is that AT&T (T) may cut the GPS function from the new RIMM (RIMM) Blackberry so that it will not steal from Apple (AAPL) iPhone sales.

AAPL’s iPhone is supposed to be the driver of AT&T’s efforts to get new wireless customers. The wireless company’s fears are that the new Blackberry 8820 will have both GPS and WiFi functions at a price well below the iPhone.

AT&T almost certainly makes more money from the $500 iPhone and its high-priced call plans that its does from the RIMM Blackberry.

RIMM’s shares are up over 160% over the last year, outpacing the AAPL rise of about 80%.

If the news about AT&T blocking the new Blackberry function are true, RIMM’s magnificent rise could be coming to an end.

Douglas A. McIntyre

Posted on: August 20, 2007 – 4:54 am in Wireless, , , , , ,

Europe Markets 8/20/2007

Markets in Europe were higher at 5,40 AM New York time.

The FTSE rose 1% to 6,126. BHP Billiton (BHP) was up 4.4% to 1278. GlaxoSmithKline (GSK) was up 1% to 1284.

The DAXX rose .6% to 7,422. Deutsche Telekom (DT) was up 1.1% to 13.34. Siemens (SI) was up 1.6% to 89.56.

The CAC 40 rose 1.2% to 5,427. Alcatel-Lucent (ALU) was up 2.6% to 7.93. AXA (AXA) was up 2% to 29.59.

Data from Reuters.

Douglas A. McIntyre

Posted on: August 20, 2007 – 4:42 am in International Markets, , , , , ,

Nasdaq Flees London

The Nasdaq Stock Exchange (NDAQ) appears ready to dump its 31% holding in the London Stock Exchange and has hired JP Morgan (JPM) and UBS to find a buyer. According to MarketWatch, the NDAQ stake in London is worth about $1.56 billion. NDAQ would use about $1 billion of the proceeds "to retire senior-term debt and would use the remainder to repurchase shares."

The overseas retreat is beginning to look like a pattern at NDAQ. The US-base exchange though it had a lock on buying the Nordic exchange operator OMX . But Borse Dubai has topped that offer with a $4 billion one of its own. The new NDAQ deal to get into Europe is clearly in trouble.

Nasdaq tried its best to buy the London Stock Exchange, but the UK operator kept turning NDAQ down, and all that the US exchange had to show at the end of the day was a big piece of London that had no strategic value. Contrast that to the merger that created the two continent NYSE Euronext (NYX), and the Nasdaq attempts in Europe appear even more misguided.

The overseas missteps have cost investors something. NDAQ shares are down almost 5% over the last six months. And, all the exchange has to show for its efforts is a planned share buy-back.

Douglas A. McIntyre

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Posted on: August 20, 2007 – 4:33 am in Exchange News, , ,

Media Digest 8/20/2007 Reuters, WSJ, NYTimes, FT, Barron’s

According to Reuters, the spotlight in an investigation of Dell’s (DELL) accounting practices will fall on whether company founder and CEO Michael Dell had any role in the restatement of numbers.

Reuters writes that the Whole Foods (WFMI) merger with Wild Oats (OATS) could pave the way for other mergers that are pending.

The Wall Street Journal writes that Countrywide (CFC) has begun to lay off employees involved in originating loans.

The Wall Street Journal writes that crude prices should stay high this year as a strong supply will an abundant supply begins to drop.

The New York Times writes that a slowdown in advertising growth at AOL may hurt the chances for turning around the Time Warner (TWX) unit.

The New York Times writes that Hewlett-Packard (HPQ) has introduced a feature that allows PCs to print documents on almost any printer.

The New York Times writes that business and political interest in Europe are waiting for a September ruling on the EU’s huge antitrust suit against Microsoft (MSFT).

According to the FT, AOL says its slow ad growth is a "hiccup".

Barron’s writes that Sony (SNE) PS3 could face more sales problems due to poor sales of Electronic Arts (ERTS) new Madden NFL .08 for the game platform.

Douglas A. McIntyre

Posted on: August 20, 2007 – 3:12 am in Press Digest, , , , , , , ,

Asia Markets 8/20/2007 Huge Rally

Markets in Asia were sharply higher.

The Nikkei rose 3% to 15,732. Canon (CAJ) was up 7.2% to 5810. NEC (NIPNY) was up 4.8% to 528. Toyota (TM) was up 4.2% to 6450.

The Hang Seng was up 4.8% to 21,366. China Mobile (CHL) was up 5.6% to 85.6. HSBC (HBC) was up 2.6% to 139.3.

The KOSPI was up 5.7% to 1,731.

The Shanghai Composite rose 5.3% to 4,905.

Data from Reuters

Douglas A. McIntyre

Posted on: August 20, 2007 – 2:43 am in International Markets, , , ,