Daily Archives: October 1, 2007

Steel Dynamics Acquisition Helps To Rival China & India (STLD)

Steel Dynamics, Inc. (NASDAQ:STLD) has entered a definitive agreement whereby Steel Dynamics will acquire privately held OmniSource Corp. in a deal that has been approved by the board of directors of both companies.  This merger is valued at more than $1 Billion on a stock and debt basis, with $425 million going in cash and 9.7 million STLD shares.  STLD will also acquire its liabilities of roughly $210 million.

OmniSource is said to be one of North America’s largest scrap recycling companies, a privately held company based in Fort Wayne, Indiana.  This merger is expected to close in November 2007, and while it is subject to regulatory approvals it is hard to imagine this being blocked for anything obvious.

OmniSource will operate as a subsidiary of Steel Dynamics and will continue its focus on the ferrous and nonferrous scrap processing, brokerage, and industrial scrap management needs of its customers and STLD’s existing scrap operations in Virginia and Tennessee will be consolidated into OmniSource, as will its planned scrap processing facility in Indianapolis, Indiana.

We haven’t been able to rip apart the current financials and sales of OmniSource yet and the conference call isn’t until late-morning tomorrow.  OmniSource generated $2.3 Billion in revenues off of 5.3 million tons shipped in ferrous scrap and 900 million pounds in nonferrous metals in 2006.  That compares to STLD’s 4.7 million tons in 2006 on $3.2 Billion in revenues.  On the surface it sounds like the company is getting a nice bump and that at least an American company will get to give China and India some rivalry over all the major operations around scrap metal.  If you have spoken with steel industry guys, they have been saying for about three or four years how all the scrap metal is heading for China first and India second.

Steel Dynamics closed up 1.5% at $47.41 today, about 4.5% under the $49.75 high. 

Jon C. Ogg
October 1, 2007

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

Posted on: October 1, 2007 – 5:54 pm in Mergers and Buy Outs, Metals, , , , , ,

Cramer’s Stock Trades For Busting The Unions (GM, F, AXL, TTM)

On tonight’s MAD MONEY on CNBC, Jim Cramer said he believes that the market is going to go higher and is on its way to his 14,548 DJIA target, give or take a couple hundred points.  Cramer believes that Union-busting is taking place after the UAW gave in against General Motors recently.

Cramer wants to see how to profit off of the declining unions in business.  Ford (NYSE:F) is where Cramer thinks the unions will lose out in favor of business next, and they are even more leveraged to a change in pay scales.  If GM got a great deal, he thinks that Ford can get a great deal too.  Cramer thinks that since Ford is lower than when the GM-UAW deal was announced that you can buy this stock since they will all have far lower medical insurance and benefit costs.  Cramer also noted that Mulully took on the Boeing unions before and won.  This could make the Rover, Volvo, and Jaguar units jump to massively higher sales prices.  Shares of Ford rose 2.4% in after-hours trading after a 3% drop today.

American Axle & Manufacturing (NYSE:AXL) should see the same sort of win that GM saw since its UAW contract comes up for renewal in early 2008.  This one may benefit even more than GM and could see major gains as a result of new labor pacts.  This one only has a $1.35 Billion market cap and Cramer thinks it could see significant earnings upside in 2008.

In a call-in, Cramer said he cannot recommend Tata Motors (NYSE:TTM) ADR’s since it has run 30%, and he definitely does not want to see Tata be the acquirer of Rover and/or Jaguar from Ford.  You can bet that luxury car buyers don’t want that either.

Other significant previous Cramer calls worth noting:

Jon C. Ogg
October 1, 2007

Posted on: October 1, 2007 – 5:33 pm in Autos, Cramer, Labor & Unions, , , , , ,

The 52-Week Low Club

Harte-Hanks Communications, (HHS) Direct marketing company. Internet is no friend. Falls to $19.11 from 52-week high of $28.78.

Acxiom (ACXM) Private equity buyers walk out the door. Down to $14.75 from 52-week high of $28.25.

Kirklands (KIRK) Steady fall since bad earnings over a month ago. Down to $1.00 from 52-week high of $6.15

Radvision (RVSN) Warns on revenue. Falls to $13.65 from 52-week high of $24.97.

Douglas A. McIntyre

Posted on: October 1, 2007 – 3:35 pm in HI/LOW, , , ,

Palm Doesn’t Want To Be Slapped, Not Too Hard Anyway (PALM, RIMM, APPL)

Palm Inc. (NASDAQ:PALM) has fallen out of favor from many long-term investors, even if it has recovered off of lows.  But after reviewing the numbers this is much better than it could been:

  • Palm posted $0.08 EPS & roughly $361 million in revenues, both slightly above the estimate of $0.08 EPS & $359+ million revenues.  It also sold 689,000 units, a gain of over 20% and in-line with estimates.  But the guidance is what is acting as a load on the shares: next quarter guidance is $0.06 to $0.08 EPS versus roughly $0.10 estimates; revenues are now expected $370 to $380 million, under the $400+ million expectation. 

Shares closed down 1.6% at $16.00 today, and that is in the middle of the $13.41 to $19.50 52-week trading range.  Its recent $100.00 Centro smart(er) phone is likely going to carry less profit per unit, but now the company is going for more volume in the lower-end phone sales were none of the smart phones participate.  This new focus is a market where Research-in-Motion (NASDAQ:RIMM) has somewhat stayed out of, although sometimes certain contract signings and promotions allow competition there.  The new iPhone from Apple (NASDAQ:AAPL) has been a threat as well.

The investment and recapitalization is all but finalized with Elevation Partners and it seems the market is somewhat waiting to see how the company performs after that.  Shares are down 4% at $15.35 after-hours trading, but this is actually a pretty good reaction when you consider its position compared to BlackBerry and iPhone now.  The news might not sound great, but it may be deemed as at least a partial win because it could have been far worse.  Now the company will just have to prove it can get this back to its prominence over a long-term horizon.

Jon C. Ogg
October 1, 2007

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

Posted on: October 1, 2007 – 3:33 pm in Consumer Electronics, Earnings, Wireless, , , , , , , ,

Bracing for Record DJIA Close (DIA, SPY, QQQQ, IWM)

Go back just one-month ago right after all the market malaise.  It was a fairly small crowd that would expect the stock market to be back at record highs in only a four to six week period.

Today the DJIA is up 190 points to 14,086.51, more than 80 points above the record close seen over the summer.  We are still shy of the intraday DJIA highs of 14,121.04, but this is more than impressive on the back of poor banking news this morning.  The DIAMONDS Trust (AMEX:DIA) is also on highs at $140.77, above the prior high of $140.46.

The NASDAQ-100 is also at recent highs, but nowhere near all-time highs.  The PowerShares QQQ (NASDAQ:QQQQ) are one of the most liquid instruments out there and these are trading at $51.95 with the prior 52-week high (and well over 5-year highs) at $51.68.

The S&P 500 Index is a different measure and deemed as more representative than the DJIA or the NASDAQ 100.  The SPRD’s Trust (AMEX:SPY) are up 1.2% at $154.40, almost 1% under the prior recent highs of $155.53.  So there is still another 1% or more of actual resistance before new highs can be claimed across the board on broader markets.  The Russell 2000 at 823.12 is also well under the prior highs of 856.46, and its iShares Russell 2000 Index (AMEX:IWM) at $81.93 are also under the $85.74 highs.

So as you can see, the DJIA may be close to new highs, and the NASDAQ 100 may be close to recent highs.  But the broader S&P 500 and the even broader Russell 2000 still have some resistance.  This is still pretty amazing considering the news tones of four to six weeks ago.  Being a contrarian at inflection points can be quite rewarding.

Jon C. Ogg
October 1, 2007

Posted on: October 1, 2007 – 1:11 pm in ETF, Economy, , , ,

Zecco Changes Gears

Zecco will move from 40 free trades a month to 10 free trades. Very few customers trade more than 10 times, according to the company’s management.

Traders who go over 10 will be charged $4.50 a trade.

Traders must keep $2,500 with Zecco or pay for trades at $4.50.

Douglas A. McIntyre

Posted on: October 1, 2007 – 12:42 pm in Brokerage Firms

Citi’s News Actually Sector Relief (! or ?) (C, UBS, BAC, WB, WFC, FITB)

After seeing Citigroup’s (NYSE:C) news this morning and listening to snippets of the conference call, it seems that at 9:00 AM when shares were down 2% would have been a much easier direction to lean towards than a rally. But shares of Citigroup are now up over 2% at $47.78 on the day.  When you hear of profits dropping 60% from a financial that has had its woes for years, it is just hard to give management the benefit of the doubt even when one-time items and special circumstances are the cause.  Chuck Prince and crew have boosted loan loss reserves by roughly $2 Billion.

What I head from Prince was "I am obviously very disappointed in our results this quarter. I know we can do much better…..Looking ahead to Q4, while we obviously cannot predict market movements or other unforeseeable events that may affect our businesses, we expect to return to a more normal earnings environment as the year progresses."    I do not believe this is one-time or that the bad news is all suddenly going to be over, at least not in the manner it was stated.  But more important than my opinions and beliefs, Wall Street does believe him.  If not, Wall Street is at least relieved that this wasn’t far worse and that the company wasn’t bracing the world for far longer malaise.  One-time charges and events are forgiveable and the current environment is one where this is likely more systematic than company specific.

So we won’t be using this as another platform to ask Chuck Prince to resign or face a board revolt.  We still think he should go, but he can’t be blamed if the other corporate leaders aren’t getting beheaded too.  We still have a lot of mortgage resets coming next year and the FOMC has to watch being too generous with its interest rate policy at the risk of a currency crisis creating problems that are too hard to unwind.

UBS AG (NYSE:UBS/ADR) shares are actually up 3% in mid-day trading, despite forecasts of a loss.  Bank of America (NYSE:BAC) shares are up 0.4%, Wachovia (NYSE:WB) shares are up 1.4%, and Wells Fargo (NYSE:WFC) shares are up close to 2%.  Another stock that could be noted of interest now is that  of Fifth Third Bancorp (NASDAQ:FITB) with its $18+ Billion market cap.  That has been hitting the screen of 52-week lows  on recent trading days and was being hit harder than the overall sector.

It seems that if you are a bank holding back some baggage or some skeletons and want to go ahead and release your bad news, then today or tomorrow would seem to be when you want to throw out everything including the kitchen sink.  Wall Street might even pat you on the back for it.

Jon C. Ogg
October 1, 2007

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

Posted on: October 1, 2007 – 11:55 am in Banking, Earnings Warning, , , , , ,

Acxiom’s Hopes Of Another Offer Seem Dim (ACXM)

It is of little surprise that shares of Acxiom Corp. (NASDAQ:ACXM) are hitting new 52-week lows today.  That isn’t a first, but this after the fears have come true and the private equity acquisition is terminated.  Shares are down 24% at $15.05 on the day, well under the $18.75 to $28.25 trading range over the last 52-weeks.  ValueAct and Silver Lake were even able to negotiate a lower $65 million termination pact (under the $110 million stated at the merger announcement).  Both of these firms are astute in technology and turnaround growth plays.

Based upon current and forward P/E ratio’s this one still isn’t cheap yet.  That may keep a lid on any hopes of a rival bid or white knight coming in.  The truth is that Acxiom has been crushed as a stock now but it doesn’t really need a white knight.  Shareholders won’t agree with this at all because now shares are at a two-year low.  Charles Morgan, its chairman and corporate leader has also announced that he will retire and search for a successor.  Shareholders might not be happy now, but they probably think a new leadership team may be in order.

If you look at the company, the first thing that comes to mind is the ability for unit separations down the road.  Acxiom’s own description is as follows: integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom’s innovative solutions are Customer Data Integration (CDI) technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership.  Acxiom could quite easily end up being two or even more separate entities.  Just don’t expect it any time in the immdeiate future until new leadership can come in.

You know that the market isn’t able to adequately factor in events on a permanent basis when you see this. If you have been a reader of our work or of others covering M&A, you would wonder why the market wasn’t able to price this in.

Jon C. Ogg
October 1, 2007

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

Posted on: October 1, 2007 – 10:10 am in Mergers and Buy Outs, Private Equity, , , ,

Garmin Feeling Immediate Nokia-NAVTEQ Pressure (GRMN, NVT, NOK, TRMB)

We have already covered the Nokia (NYSE:NOK/ADR) buyout of NAVTEQ Corp. (NYSE:NVT).  It is somewhat interesting that NAVTEQ would have allowed itself to be acquired in a no-premium buyout, even if shares are up 200% from the lows over the last 52-weeks.  NVT is trading down almost 2% at $76.50, and it appears that with the market liquidity and deal-making down that Wall Street doesn’t think that a premium buyout is likely.  NVT has a $7.5 Billion market cap.

This is actually punishing shares of Garmin Ltd. (NASDAQ:GRMN) on additional competitive and pricing pressure fears.  Garmin shares are down 12% at $105.00 in early trading.  Garmin is roughly three-times the size of NAVTEQ in size of market cap and it is up roughly 150% from 52-week lows.  This company has been a winner so far, and we expect analysts to come out mixed with some defending shares and some saying Nokia will be tough.

What is interesting is that Nokia is also down over 2.5% at $36.85.  The reason is not likely the dilution as much as the fact that this "could" stress some carrier relationships.  Sure the dilution to the stock will matter, but if Nokia hasn’t anticipated at least some pushback Wall Street would have reason for concern.  Keep in mind that it is a "big IF" because you know they thought this through and through.

We have been reviewing another lesser-known beneficiary of the major growth in GPS systems and in GPS for guidance in cell phones as a potential buyout candidate for the Special Situation Investing Newsletter, although the current position is unclear because of relative values and the valuation of intellectual property as far as the real worth versus the perceived worth.

Trimble Navigation Ltd. (NASDAQ:TRMB) is not seeing any pressure based upon the merger, although arguably it is because that company may be deemed as more protected despite having the lowest market cap and valuations in thr group. But that is another story.

Jon C. Ogg
October 1, 2007

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

Posted on: October 1, 2007 – 9:37 am in Mergers and Buy Outs, Satellite, Wireless, , , , ,

First Solar Wins On Analyst Target Hike (FSLR)

Analyst coverage on First Solar Inc. (NASDAQ:FSLR) has been updated by Sanjay Shrestha, Managing Director, Senior Analyst, Alternative Energy & Industrials at Lazard Capital Markets:

  • Today Lazard has maintained its Buy rating on First Solar shares, although the research note discusses a higher target and higher estimates: price target raised from $115 to $125, which reflects 30x modestly raised 2010E EPS of $5.00 and discounted back 20% for a year.

First Solar recently announced the signing of 625MW of long-term contracts worth approximately $1.1 billion between 2007 and 2012; FSLR now has visibility on 2.8GW or about $5.5 billion in sales or average annual sales visibility of 565MW per year till 2012.  This research note follow’s last week’s news that it was building a new plant in Malaysia and follows last week’s note on how the company was a beneficiary of quarter-end Window Dressing.  Shares are actually up about 4% at $123.00 after the open.

Jon C. Ogg
October 1, 2007

Posted on: October 1, 2007 – 9:00 am in Alternative Energy, Analyst Calls, ,

eBay Loses Skype CEO and Takes Charges (EBAY)

eBay Inc. (Nasdaq:EBAY) has announced this morning that Niklas Zennstrom has stepped down as CEO of Skype. Zennstrom, who co-founded Skype in 2003, will become non-executive chairman of the Skype Board of Directors. Michael van Swaaij, eBay’s Chief Strategy Officer, will become acting CEO until a permanent successor is found.  Henry Gomez, Skype’s President, who remained a Senior Vice President at eBay during his two-year tenure at Skype, will return to eBay as Senior Vice President for Corporate Affairs, reporting to President and CEO Meg Whitman.

eBay also announced that it has paid approximately $530 million (in Europe) to settle all of its future obligations under the earn-out agreement signed with certain Skype shareholders when eBay acquired Skype in 2005.  eBay expects that the approximately $530 million payment, together with an additional amount of approximately $900 million, will be taken as an impairment charge to be recorded as part of its Q3 financial results.

This likely won’t impact non-GAAP earnings per share by anything drastic but will create a change to analysts’ cash flow expectations and to GAAP net income expectations for the quarter.  Interestingly enough, eBay lists over $6.9 Billion in Goodwill of its entire $14.36 Billion assets.  The good news is that it only listed $2.8 Billion in total liabilities at the end of last quarter (before these charges of course), so the online auction king can quite easily ride this one out.

Jon C. Ogg
October 1, 2007

Posted on: October 1, 2007 – 8:35 am in Internet, Law, , ,

China TechFaith Scores on CDMA Pact (CNTF, QCOM, BRCM, NOK)

China Techfaith Wireless Communication Technology Ltd. (NASDAQ:CNTF) is seeing shares up drastically in early pre-market trading. 

Qualcomm Inc. (Nasdaq: QCOM) has granted TechFaith Wireless Technology Group Limited, a British Virgin Islands corporation and wholly-owned subsidiary of CNTF, a global royalty-bearing license under Qualcomm’s patent portfolio to develop, manufacture and sell subscriber units and modem cards implementing the WCDMA and TD-SCDMA standards.

TechFaith is now licensed by Qualcomm for 3G subscriber units and modem cards that implement the CDMA2000®, WCDMA/UMTS and/or TD-SCDMA standards. The royalties payable by TechFaith are at Qualcomm’s standard worldwide rates and are the same irrespective of the CDMA standard implemented by the subscriber unit or modem card.

First Call shows that estimates are just over $143 million for all of 2007 and almost $219 million for all of 2008.  Shares are up roughly 50% at $10.00 compared to a $6.69 close on Friday; and the 52-week range is $4.01 to $11.28.  While this says "global" you have to always keep in mind the Broadcom (NASDAQ:BRCM) win over Qualcomm inside the U.S. as an issue, and you have to wonder how Nokia’s (NYSE:NOK) perpetual onslaught will affect the bullish bias in this deal as the European Union goes into mnore formal investigations against Qualcomm. 

CNTF did only have a $290 million market cap before this huge pop, so any real jump in orders might be a huge help.  TechFaith also has the China boost to it and it is no secret that it has been red hot lately.  So far that is what traders are betting on pre-market.

Jon C. Ogg
October 1, 2007

Posted on: October 1, 2007 – 7:47 am in Wireless, , , ,

Pre-Market Stock News (October 1, 2007)

(ACXM) Acxiom’s buyout is unwinding according to reports, although this was evident if you watched trading.
(AMLN) Amylin Pharma announced FDA Approval for SYMLIN pen-injectors.
(ANX) ADVENTRX Pharma said results from Phase IIb clinical trial of ANX-510 did not demonstrate statistically significant improved safety in the trial’s primary endpoint.
(AWR) American States Water announced a privatization contract for Fort Bragg, NC Water.
(C) Citigroup has issued an earnings warning; shares down 2% pre-market.
(CNTF) A China Techfaith unit has reached an agreement with Qualcomm in a royalty-bearing global license under Qualcomm’s patent portfolio to manufacture and sell subscriber units and modem cards using WCDMA & TD-SCDMA.
(HOLL) Hollywood Media announced a $10 million stock buyback plan.
(HWCC) Houston Wire & Cable raised its share buyback plan to $50 million.
(JASO) JA Solar filed to sell 6.3 million ADR’s.
(JRJC) China Finance Online formed a strategic alliance with China Center for Financial Research of Tsinghua University.
(NTBK) NetBank’s customers left reportedly being taken over by ING, although this won’t necessarily help NetBank.
(NVT) NAVTEQ in talks to be acquired by Nokia.
(QCOM) Qualcomm has had formal antitrust measures taken by the European Union.
(REGN) Regeneron announced positive primary endpoint results from a Phase II study of VEGF Trap-Eye in age-related macular degeneration.
(RVSN) RADvision lowered guidance.
(SRZ) Sunrise Senior Living said it found no evidence of options backdating.
(TASR) Taser had another liability suit dismissed.
(TWPG) Thomas Weisel announced an agreement to acquire Westwind Partners to go into energy and mining research.
(YHOO) Yahoo! signed mobile search pact with Telefonica in Europe and Latin America.

Jon C. Ogg
October 1, 2007

Posted on: October 1, 2007 – 7:15 am in Pre-Market Activity

Qualcomm (QCOM) To Be Probed By EU

According to Bloomberg, Qualcomm "is being investigated by the European Union over allegations it overcharges Nokia Oyj, Ericsson AB and other handset manufacturers." One of the issues is whether the US company still has enough patented technology in newer 3G handsets. Customers claim it does not and, therefore, should charge lower licensing rates. 

The news adds to the company’s trail of woes. Qualcomm has already been sanctioned for infringing Broadcom’s (BRCM) patents by both the ITC and a federal district court.

The company has just hired a new general counsel, who should have his work cut out for him

Douglas A. McIntyre

Posted on: October 1, 2007 – 7:11 am in Law, , ,

Nokia (NOK) Buys Navteq (NVT)

Nokia (NOK) has indeed bought Navteq (NVT) for $78 a share. If so, it is close to a "zero premium" deal.

Douglas A. McIntyre

Posted on: October 1, 2007 – 7:06 am in Uncategorized, ,

Pre-Market Analyst Calls (October 1, 2007)

AMR cut to Hold at Citigroup.
ALVR raised to positive at Susquehanna.
CHTR started as Overweight at JPMorgan.
CME raised to Outperform at Wachovia.
COMS cut to Neutral at UBS.
COP cut to Sell at Deutsche Bank.
CTXS cut to Neutral at B of A.
HAR reinstated as Overweight at Lehman.
IDTI cut to Equal Weight at Lehman.
ISIL raised to Equal Weight at Lehman.
KRC raised to Buy at Citigroup.
LKQX started as Hold at Deutsche Bank.
LUV cut to Hold at Citigroup.
MRVL cut to Equal Weight at Lehman.
NCC cut to Underperform at Bear Stearns.
NETL cut to Equal Weight at Lehman.
PCL cut to Neutral at Merrill Lynch.
PRX cut to Underperform at FBR.
RIMM cut to Outperform at RBC.
RYN cut to Sell at Merrill Lynch.
SVU started as Sell at B of A.
SXCI raised to Buy at UBS.
TEN started as Underperform at Bear Stearns.
VSTA cut to Sell at Deutsche Bank.

Jon C. Ogg
October 1, 2007

Posted on: October 1, 2007 – 6:46 am in Analyst Calls, , , , , , , , , , , , , , , , , ,

First UBS (UBS), Then Citi (C): Who Owns The Next Shoe?

UBS (UBS) and Citi (C) have both announced huge write-downs on their fixed income portfolios due to tight credit and deteriorating credit markets.

Watch all of the big money center banks and investment banks get pressured at the open. Wall St. does not know which big global financial institution will be next, but it will bet that their is a third, a fourth, and, perhaps a fifth.

The dip in financial stock in late August may just be the beginning.

Douglas A. McIntyre

Posted on: October 1, 2007 – 6:46 am in Financial Stocks, ,

Citigroup (C) Sees Large Q3 Earnings Fall

According to MarketWatch, Citigroup (C) expects to report that third-quarter earnings will drop about 60% from a year earlier due to "dislocations in the mortgage-backed-securities and credit markets, and deterioration in the consumer-credit environment." The decline "was driven primarily by weak performance in fixed-income credit-market activities, write-downs in leveraged loan commitments, and increases in consumer-credit costs," Chairman and Chief Executive Charles Prince said in a statement.

Douglas A. McIntyre

Posted on: October 1, 2007 – 6:34 am in Earnings,

MarketWatch Launches Community Tools Package

Dow Jones (DJ) MarketWatch launched a new series of features that allows its readers to organize news and other features from the website and share them with others.

MarketWatch Community provides a live view of the business stories, stocks and financial topics that are resonating most with users. In addition to letting readers directly add comments, recommendations and tags to articles, the service allows users to build networks of friends, find other users based on their level and nature of community participation, and gain points for correctly predicting share price movements.

“MarketWatch Community highlights the voice and lens of the user while providing a robust interaction with our award-winning editorial content,” said Jim Bernard, general manager of MarketWatch.com. “In beta we’ve experienced increases in user loyalty, satisfaction and length of visits. This service extends our innovative approach to news and user engagement, and opens exciting new possibilities for our advertisers.”

Douglas A. McIntyre

Posted on: October 1, 2007 – 5:58 am in Research,

Private Equity Walks Out On Acxiom (ACXM): Class Action Lawyers March In?

The trail of broken shareholder hearts does not seem to be coming to an end. Data management company Acxiom (ACXM) is in talks with ValueAct Capital and Silver Lake about breaking off their plans to take the company private. The price was to be $27.10 in cash. The stock is trading at under $20, so that markets had doubts about the deal already.

All Acxiom may end up with is a break-up fee.

But, the private equity interests may have to argue that there was an important change in the company’s fortunes–material adverse-effect. The company did lose money in the last quarter, but that may not be enough to prove a major change.

Acxiom’s board may not sue the two private equity firms. But, the company’s shareholders may. The side-effect of all of these buy-out walk-offs could well be a series of class action lawsuits brought by company shareholders. This certainly went on when a number of internet companies lost their value and investors blamed management and Wall St. research firms. Suing when the share price drops is a time-honored tradition among public company stock holders.

No, private equity does not have to fear the rational and conservative members of America’s public company boards. Their risk is from rabid and unreasonable individual shareholders and institutions. The ones who lost their money.

Douglas A. McIntyre

Posted on: October 1, 2007 – 5:54 am in Mergers and Buy Outs,