Google’s (NASDAQ: GOOG) share of the US online ad revenue market was 23.7% in Q4. That number fell from Q3, but only by .5%.
Research group IDC said that a combination of Microsoft (NASDAQ: MSFT) and Yahoo! (NASDAQ: YHOO) would have 17% of the market.
IDC was quoted as saying "It would not quite bring Microsoft-Yahoo! to where Google is in online advertising in the U. S., but it would give them a much better fighting chance than if they went it alone."
Douglas A. McIntyre
When GM (NYSE: GM) posts earnings it will be the first look at what the company’s expense run rate will be as it moves into 2008. There may be one-time charges for employee buyouts and other restructuring charges, but the firm will at least show how it is scaled for operating expenses over the next four quarters.
The estimates from First Call for the US auto giant are -$0.55 EPS on $44.38 billion in revenues. Next quarter estimates are -$0.27 EPS on $41.99 billion in revenues. Estimates for fiscal 2008 are $1.26 EPS on $177.65 billion in revenues. Management will likely be soft on guidance, but any bullish comments should send the stock up.
The company faces a huge challenge with US car sales likely to fall by one million units in 2008 compared to 2007. GM’s comments on how it see fast-growing markets like China and South America may be the most telling part of the PR and conference call.
Analysts have an average price target of roughly $36.00. General Motors Corporation’s 52-week trading range is $21.34 to $43.20. The stock closed the day just above $27
Douglas A. McIntyre
Research-in-Motion (NASDAQ: RIMM) is reporting a critical outage for its Blackberry users this afternoon. Some outages in the past have affected some users, while others were system-wide. This outage is system-wide for enterprise clients (large companies, government agencies, and the like) and for all network users in the Americas.
RIMM shares closed up over 5% at $94.47 today, although shares are down almost 1.5% at $93.17 in after-hours trading.
It sure looks like Steve Jobs just got a new opportunity to talk about the benefits of the iPhone, although we would caution that outages in the past have not created any major customer exodus in the past. This may give that recent survey in favor of the iPhone one more leg up.
Jon C. Ogg
February 11, 2008
American International Group (NYSE: AIG) Warns about more potentia write-offs and bad financial controls. Falls to $44.52 from 52-week high of $72.97.
PNM Res (NYSE: PNM) Numbers miss Wall St. estimates. Drops to $13.31 from 52-week high of $34.28.
CNA Financial (NYSE: CNA) Profits drop on investment losses. Shares sell off to $25.17 from 52-week high of $51.96.
Prudential NYSE: PRU) Industry woes and still slipping from earnings. Down to $66.76 from 52-week high of $103.27.
UBS (NYSE: UBS), Allstate (NYSE: ALL), and HSBC (NYSE: HBC) also all hit new lows.
Neurometrix (NASDAQ:NURO) Appears one of the company’s medical devices did not get approval. Falls to $5.25 from 52-week high $12.10.
Syntax Brillian NASDAQ: BRLC) Delays filing results. Drops to $1.88 from 52-week high of $9.08.
Douglas A. McIntyre
Forum Oilfield Technologies, Inc. has just filed to withdraw its IPO application. The reason: "due to market conditions."
This was one we had previously noted that would have the NYSE ticker of "FOT" if it listed.
Things must be coming under more and more scrutiny from IPO buyers. We have seen a large number of IPO withdrawals over the last week. SPAC’s seem to be the only steady flow of IPO filings we are seeing.
Jon C. Ogg
February 11, 2008
Bank of America has release a study showing the levels of LBO write-downs that large banks and brokerages may have to take. The figures are based on a "the current series of the U.S. leveraged loan derivative index, LCDX, has fallen to 91.15 cents on the dollar on Monday," according to Reuters. Based on this calculation, the numbers stretch well into the billions of dollars
Firm LBO Exposue Potential Write-Off
Citigroup (C) $43 billion $4.3 billion
Goldman Sachs (GS) $36 billion $3.6 billion
JP Morgan (JPM) $26.4 billion $2.6 billion
Morgan Stanly (MS) $20 billion $2 billion
Merrill Lynch (MER) $19 billion $1.9 billion
Data from Reuters
Douglas A. McIntyre
Plains GP Holdings, L.P. withdrew its IPO filing this morning, stating that the withdrawal it is “consistent with the public interest and the protection of investors.” Plains originally filed its IPO paperwork on August 31, 2007 and had planned to trade on the New York Stock Exchange.
The limited partnership generates cash through its interests in Plains All American Pipeline, L.P. (NYSE: PAA). PAA, a publicly traded master limited partnership, or MLP, transports, stores, and markets crude oil, refined products, and liquefied natural gas. PAA, with its 50% interest in PAA/Vulcan Gas Storage also develops and operates natural gas facilities.
Despite the tax benefits associated with MLP’s and the advantages of being involved in the energy sector, Plains GP is yet another recent example of a failed IPO. Interestingly enough, Plains All American Pipeline, L.P. (NYSE: PAA) units are actually up almost 1% today.
Rachel Lopez
February 11, 2008
JWL Partners Acquisition Corp., a SPAC, or special purpose acquisition company, submitted an IPO filing on Friday. The filing shows $200 million proceeds targeted at $10.00 per unit, each unit will consist of one share of stock and one warrant. The total proposed maximum aggregate amount in securities is listed as $230,000,000 after the overallotments. The underwriting group is listed as Credit Suisse and Ladenburg Thalmann & Co. Inc. They have applied to list under the ticker “JWL.U” on the American Stock Exchange.
The filing states that the blank check corporation intends to acquire or acquire control of one or more businesses although a particular industry or geographic region has not been targeted. The filing did state, however, that they will NOT compete with any asset management firm, hedge fund, or other financial institution. JWL Partners will evaluate potential targets on the following criteria:
JWL Partners intends to capitalize on the 40 years of strong experience of their chairman, Jerry W. Levin. He is currently the Chairman and CEO of JW Levin Partners LLC, an investment firm through which Mr. Levin serves as Chairman of Sharper Image (NASDAQ: SHRP) and as the director of Wendy’s International, Inc. (NYSE: WEN). He is currently the Vice Chairman of the Clinton Group. Past experience includes high level management at the Pillsbury Company, The Coleman Company, Inc., Revlon, Inc. (NYSE: REV), and American Household, Inc. During his tenure at American Household, Mr. Levin restructured American Household’s operations and when it was sold to Jarden Corporation in 2005, the company’s businesses were leaders in their respective markets.
We’d normally throw up a red flag because of the ties to Sharper Image. The difference is that Mr. Levin came in after the meltdown problems surfaced at Shaper Image, and that situation may have been close to untenable from the start.
Rachel Lopez
February 11, 2008
Discovery Laboratories Inc. (NASDAQ: DSCO) shares are up after a report that their drug Surfaxin, a respiratory distress syndrome treatment for premature infants, should gain FDA approval by May. In pre-market trading, the shares rose 6% to $2.08. Since opening, shares are up almost 13% to $2.21 in mid-morning trading. The 52 week range is $1.75 to $3.75.
Genta Incorporated (NASDAQ: GNTA) shares are down over 22% to $0.53 per share after news this morning that they have entered into an agreement to sell 6 million shares of common stock to institutional investors for $3.1 million in proceeds.
IDM Pharma, Inc. (NASDAQ: IDMI) shares are recovering today after last week’s plunge due to a delisting threat from the Nasdaq Stock Market. The company has until August 4, 2008 to close at over $1 for 10 consecutive days. Shares are up over 30% this morning to $2.20. The 52 week range is $0.57 to $10.75.
Labopharm Inc. (NASDAQ: DDSS) shares continue to rise after Friday’s announcement that late-stage clinical trials for Trazodone once-daily antidepressant showed improvement in patients’ quality of sleep. The drug has FDA approval for a twice-daily treatment and the company expects to apply for the FDA approval of the once-daily version later this year. Shares are up over 15% in early morning trading to $2.68.
Stockholder approval for Point Therapeutics, Inc. (NASDAQ: POTP) pending merger with DARA BioSciences, Inc. is expected this afternoon. Assuming the merger closes February 12 as expected, the new entity will trade under “DARA” on Nasdaq. Shares rose up over $0.06 in early morning trading but have slipped back down to opening price ranges to $0.14 in mid-day trading on relatively high trading volume.
Rachel Lopez
February 11, 2008
American International Group, Inc. (NYSE: AIG) is spooking the financial markets over what is once again another point of the markets not being able to price anything in. AIG in an SEC Filing this morning disclosed that it should clarify and expand upon its prior disclosures relating to its methodology and data inputs used to determine the fair values of the super senior credit default swap portfolio in respect of multi-sector collateralized debt obligations. 247WallSt.com’s translation: "We are expanding valuation to include a ‘mark to concept’ because there is no real market for CDO’s."
AIG also provided a table showing the net value write-downs from September 30 to November 30. In September these write-downs were $352 million, and in November these write-downs were listed as $5.964 Billion. AIG similarly noted that it has not yet determined the amount of declines in fair value of AIGFP’s super senior credit default swap portfolio to be included in its December 31, 2007 financial statements. PricewaterhouseCoopers is its independent auditor and it has concluded that AIG "had a material weakness in its internal control over financial reporting and oversight relating to the fair value valuation of the AIGFP super senior credit default swap portfolio."
AIG shares are down some 10% at $45.20 and has traded as low as $44.75 earlier today. With a 52-week trading range of $49.40 to $72.97 before today, that makes for a new 52-week low.
The beatings will continue until disclosure improves. These negative headlines are nowhere from being over in the financial sector. At some point these will be factored into prices, but as of this morning that isn’t the case.
Jon C. Ogg
February 11, 2008
Darden Restaurants, Inc. (NYSE: DRI) is seeing shares surge Monday in early trading activity after the company gave an updated guidance to its quarter. While Darden expects its EPS growth to be adversely affected by its acquisition of RARE Hospitality International, Inc, it offered dilued EPS guidance after the purchase of $0.78 to $0.80, compared to $0.83 to $0.85 without the acquisition. Earnings estimates for the quarter are $0.77 EPS.
The company expects combined U.S. same-restaurant sales growth for fiscal May-2008 to be 2% to 3%. Without the acquisition, growth would be over 7%, demonstrating that “guests continue to show their loyalty to Darden brands,” according to Chairman and CEO Clarence Otis.
The company is still maintaining a 2% to 4% EPS growth for fiscal May-2008, which is consistent with guidance given in December 2007. Darden owns and operates roughly 1,700 casual dining restaurants including Red Lobster, Olive Garden, and LongHorn Steakhouse. This is substantial when you consider all of the concerns about casual dining and tightening consumer spending. Maybe everyone determined how bad of a job they do cooking their own food new after a few short weeks.
Darden’s third quarter earnings will be released Tuesday, March 10, after market close. Shares are up more than 8% to $29.19 in early trading. Its 52-week trading range is $20.89 to $47.60, so it hasn’t even recovered half of its share losses from highs over the last year.
Jon C. Ogg
February 11, 2008
The US is Motorola’s (NYSE: MOT) handset stronghold. While the company does not do terribly well overseas, it has held a market share lead on it home turf. Nokia NYSE: NOK) has already said it has a strategy to up its US sales, probably at Motorola’s expense.
Now, handset company Sony Ericsson wants more share in the US. According to The Wall Street Journal "Sony Ericsson’s new Chief Executive Hideki Komiyama says he is stepping up the company’s efforts to boost its small U.S. presence."
With everyone wanting a bigger piece someone is going to have a bad year. Any guesses?
Douglas A. McIntyre
It’s been a while since we have seen any serious changes to the Dow Jones industrial Averages components, with 2004 being the last change and 1999 before that. This morning there are some announced changes to the components:
There will probably be some criticism here for "changing an index to populist trends." The DJIA is also a price-weighted index, although this will not result in massive changes to the index components elsewhere. We’ll follow up with more if we make any serious determinations:
It is interesting that despite the problems in the financial sector that the DJIA chose to include bank of America. Perhaps that is a solid vote of confidence if there ever was one. Interestingly enough, Chevron used to be a component and was replaced in the 1990’s.
Honeywell is a bit of a surprise. But Altria is actually not that surprising when you consider that it completely unloaded Kraft Foods (NYSE: KFT), is about to unload Phillip Morris International as a separate unit, and will probably retire quite a bit of stock in a share buyback.
As large as the DJIA is for "the market," it is far smaller in index weightings for money managers than the S&P 500 Index, and this will not have any direct impact on their weightings in the S&P 500 index.
Jon C. Ogg
February 11, 2008
As if banks and brokerages had not written off enough money for the subprime mistakes, the G7 experts think the figure could go as high as $400 billion.
According to the FT "this is sharply higher than the $120bn credit losses that Wall Street banks and other institutions have revealed in recent weeks – and also far bigger than the US Federal Reserve’s estimates for subprime losses last year of $100bn-$150bn."
Yes, that would be about a quarter of a trillion higher.
Douglas A. McIntyre
The Cheesecake Factory (NASDAQ: CAKE) is being added to Goldman Sachs CONVICTION BUY LIST. This call is reflecting a view of early cycle casual diners and a fundamental view on recent strategic changes. Goldman Sachs likes the more disciplined spending and plans for slower growth in an effort to yield better operating results. There is also a belief that share repurchases for close to 10% of its float can be driven by free cash flows.
Jon C. Ogg
February 11, 2008
These are not the only analyst calls affecting stocks this morning, but these are the top calls that 247WallSt.com is focusing on:
Jon C. Ogg
February 11, 2008
Markets in Europe were down slightly at 6.45 AM New York time.
The FTSE was off 4% to 5,760. BP (NYSE: BP) was up 1% to 552.5. GlaxoSmithKline (NYSE: GSK) was up 2.5% to 1,097.
The DAXX was down .2% to 6,755. Commerzbank was down 2.9% to 19.27. SAP (NYSE: SAP) was off .5% to 32.62.
The CAC 40 fell .6% to 4,683. Alcatel-Lucent (NYSE: ALU) fell 2.4% to 4.04. Societe Generale fell 3.2% to 75.26
Data from Reuters
Douglas A. McIntyre
After booking billions of dollars in losses because of actions by a rogue trader and write-offs in its CDO portfolio, Societe Generale went to the market with a rights offering for almost $8 billion. It had to price the package at a 39% discount to where its stock had closed the previous day. ”It’s a very, very low price. We were not expecting such a discount. It reflects the lack of demand in the market,” one Paris-based share dealer at a foreign bank said according to the FT. It is the kind of haircut which is closer to having your head cut off by the barber.
It also speak volumes about what will happen if big US money center banks and brokerage houses have to go back to the market for money this year. The value of LBO debt on the balance sheets of these firms is falling. As The Wall Street Journal points out "nervous buyers also have retreated in recent days from the market for securities backed by student loans and municipal bonds." All of that has raised the very real possibility of another round on bountiful write-offs this year and the need for more capital at American financial institutions.
If Citigroup (NYSE:C) had to offer 39% off to get more money, the price point would be below $16, down from its current price of $26 and its 52-week high of $55.55. Merrill Lynch (NYSE: MER) would have to go all the way down to $32 from $52 now and a 52-week high of $95.
American banking stocks, on sale for a third of what they fetched a year ago. What a sad state of affairs.
Douglas A. McIntyre
Nortel (NYSE: NT) and Motorola (NYSE: MOT) are in negotiations about putting together their wireless telecom equipment businesses. According to The Wall Street Journal "If consummated, the talks will create a joint venture that likely will have sales of about $10 billion."
Nortel has total revenue of just over $11 billion, so half of its assets would go into the JV. But, Nortel has $3.8 billion in long-term debt and had operating losses in two of its last four quarters. The unit that houses Motorola’s network equipment operation had revenue of $2.7 billion last quarter, but its operating income fell to $192 million down from $223 million in the quarter a year ago.
Wall St. does not think much of Nortel. Its stock has fallen from a 52-week high of 31.79 to its current price of just above $11. Over the last year its shares have done worse than shareholder-bleeding Alcatel-Lucent (ALU). By comparison, Motorola’s stock performance has been excellent.
The telecom equipment business is not terribly attractive now. Not only has Alcatel-Lucent (NYSE: ALU) done poorly but the division of Ericsson (NASDAQ:ERIC) which operates in the industry has had a bad year as has the JV between Nokia (NYSE: NOK) and Siemens (NYSE: SI).
Desperation clouds the mind. Motorola wants to get shareholders, especially Carl Icahn off its back. Perhaps it will sell its largest operation, handsets, and get a good price. But, a merger of two weak operations yields no one any benefit.
Douglas A. McIntyre
Yahoo! (NASD: YHOO) is about to approach Time Warner (NYSE: TWX) about a tie-up with AOL. That is according to The Times in the UK.
And, why not? Almost every other possible combination of big web portals is on the table now that Microsoft (NASDAQ: MSFT) had made a $31 bid for Yahoo!, which the company will turn down as too low.
AOL does have a search advertising deal with Google (NASD: GOOG). Since Google does not want to have Yahoo! in the hands of Redmond, it might waive that obligation. Yahoo! together with AOL is not much of a threat to Google. Together the two companies might have 22% of the search market to Google’s 60%. Unlike Microsoft, AOL and Yahoo! would not use their platform to launch server-based software against Google’s word processing and spreadsheet businesses.
A minority position in Yahoo! would solve a problem for Time Warner. Now that it has decided to get rid of AOL’s internet service provider dial-up business, it has a large internet portal with no search engine capacity of its own. While locked inside Time Warner, the value of AOL is hidden. That would not be true if Time Warner owned, say, 40% of Yahoo!.
There are enough odd-ball combinations in play among the portals that an AOL tie-up with Yahoo! just might work.
Douglas A. McIntyre
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