Daily Archives: February 3, 2008

Google (GOOG) Plays The Cry Baby Over Microsoft’s (MSFT) Bid For Yahoo! (YHOO)

No one thought that Google (GOOG) would like Microsoft’s (MSFT) bid for Yahoo!.(YHOO). While Google will still be the world leader in search, the new combined company proposed by Redmond would be No.2. According to comScore data, Google had 62% of worldwide searches in December. Yahoo! had 12% and Microsoft about 3%. The figures in the US are better for Yahoo! and Microsoft, but search is a global business.

According to The Wall Street Journal, in an essay posted on the internet Google Senior Vice President David Drummond, asks whether Microsoft could "now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC." With Google at 4x the share of global search that a Microsoft/Yahoo! roll-up would have, it needs to take the crying towel somewhere else.

Douglas A. McIntyre

Posted on: February 3, 2008 – 4:32 pm in Internet, , ,

Endorsers Wants Brady & Patriots Super Bowl Victory (NKE, MOV, GPS, KO, GPS, KFT, DIS, TM)

We are constantly looking for the business angle of current events, and what could be more pressing than the Super Bowl today.  More people watch the Super Bowl than watch live coverage of presidential elections.  So if we wanted to look at who the endorsement crowd wants to win the game, we’d simply look at the endorsements of team leaders.  The Patriots’ Brady as QB trumps the Giants’ Eli Manning on the endorsement roster.

Sports Illustrated estimated a $9 million endorsement take-home from Tom Brady.  Eli Manning’s endorsements were "only" estimated at $5 million.

Brady has Nike (NYSE: NKE), Movado (NYSE: MOV) and Glaceau Smart Water, part of Coca-Cola (NYSE: KO). He has also appeared in ads for Gap Inc. (NYSE: GPS) as well at Stetson Cologne by Coty.

Eli Manning has appeared in commercials for Oreo’s, owned by Kraft Foods (NYSE: KFT).  He also has a deal with Citizen Watch Co., Reebok (part of Adidas) and ESPN Radio, part of Disney (NYSE: DIS).  His endorsement from Toyota of New Jersey appears to be local rather than national, although maybe Toyota Motors (NYSE: TM) would jump on his coat tails if Manning-lite scores an underdog victory.

The Patriots are favored by the odds-makers, and their leader is still favored by endorsers.  If you prefer the stock market over football, using history would mean you’d prefer the Giants to win for the stock market.  Someone will make up a statistic for anything.

Jon C. Ogg
February 3, 2008

Posted on: February 3, 2008 – 12:24 pm in Entertainment, Media, , , , , , ,

Apple (AAPL) OS Picks Up Ground

Microsoft (MSFT) kept the Linux desktop people at bay for years. The open source operating systems wanted a piece of Redmond’s huge Windows PC franchise.

The problem with Linux software is that moving it in any direction is like, to use a hackneyed saying "herding cats." Linux programmers work, for the most part, for free. It shows.

Apple (AAPL), on the other hand, knows how to build software and it has been able to take a share of the Windows franchise because of the popularity of the Mac. After years of having a tiny share of the computer market it now has, by some measures, up to 5%.

New data shows that the Mac OS hit 7.6% market share in January, eating into the Windows franchise. According to Fortune "the really good news for Apple, according to Net Applications, came in the last two days of the month, when Mac OS X hit 8.01%.."

Vista is quaking in its boots.

Douglas A. McIntyre

Posted on: February 3, 2008 – 10:37 am in Software, ,

M&A Blows Up

The IPO and M&A markets have gone to pieces. No one would be surprised but the extent of the decline is shocking.

Global IPO activity is lower than it has been at any time in the last four years. M&A transactions are as far down as at any time since November 2004.

The Telegraph reports that "worldwide takeover activity slowed to $164bn, despite a large rise in sovereign wealth funds from the Middle East and Asia taking stakes in European and US companies on the cheap."

The employment at investment banks is likely to plummet and Wall St. firms cannot count on underwriting and mergers to offset the debacle in their subprime investments.

The beatings will continue until morale improves.

Douglas A. McIntyre

Posted on: February 3, 2008 – 10:20 am in Mergers and Buy Outs

Bankrate Earnings Will Be Closely Watched By Traders (RATE, MOVE, TSCM)

On Tuesday, we’ll get to see earnings out of Bankrate Inc. (NASDAQ:RATE). The estimates from First Call for the internet-based consumer banking company are $0.39 EPS on $26.84 million in revenues.  Estimates for fiscal 2008 are $1.96 EPS on $142.76 million in revenues.

Analysts have an average price target north of $56.00, which is right in line with current share prices.   If Friday’s closing prices are any indicator and if the earnings were coming out immediately, it appears that options traders would be pricing in a move of up to $4.00 in either direction.

It will be interesting to see if the company even mentions the new competition coming soon from TheStreet.com (NASDAQ: TSCM) as it pursues its new MainStreet.com push in 2008.  We still think it was wiser for the company to partner with Move.com (NASDAQ: MOVE) like it did rather than to acquire it, and this will be the first quarter to reflect any of those efforts.

Bankrate’s 52-week trading range is $32.70 to $56.04 and this one has been doing incredibly well considering its market.  In fact, Friday was yet another 52-week high.

Jon C. Ogg
February 3, 2008

Posted on: February 3, 2008 – 7:51 am in Earnings, Financial Stocks, Internet, , ,

BHP Investors Braced For Earnings (BHP, RTP, AA)

On Tuesday (actually late Monday night in the U.S.), we’ll get to see earnings out of BHP Billiton Ltd. (NYSE: BHP). The estimates from First Call for the metal and mining giant were not calculated in dollars as it is based in Australia and might as well just be considered its own country.

This has been one of the more complicated companies to cover because of the global waves of mergers in metals and mining, plus it has been a huge winner in the global growth trade.  The fact that all these metals and miners are getting so large could even lead one to believe they are forming an international cartel or syndicate that controls supply to keep prices high. 

If Friday’s closing prices are any indicator and if the earnings were coming out immediately, it appears that options traders would be pricing in a move of up to $2.40 to $3.10 in either direction.  The problem is that options in this one and other global metals and miners have a huge added premium to them because of mergers.   Goldman Sachs recently made some gold changes on its Conviction Buy List.

Alcoa (NYSE: AA) taking a stake in Rio Tinto plc (NYSE: RTP) is just one more wrench in the machine there. 
We already noted how China didn’t want a BHP-RTP merger.

BHP Billiton’s 52-week trading range is $40.34 to $87.43, so it is still well off of highs even after a big run up on Friday.  The Lord Giveth, and The Lord Taketh Away."  This one recently fell 10% too, and  saw a 9% rise on Friday.

Jon C. Ogg
February 3, 2008

Posted on: February 3, 2008 – 7:35 am in Earnings, Metals, , ,