Ambac (NYSE: ABK) was able to keep its Moody’s Aaa rating, In the process it had to cut its dividend from $.07 to .01. The bond insurance company said it would also suspend all structured finance business for the next six months.
The company commented "Suspending structured finance writings for six months is expected to free up approximately $600 million in capital.”
Douglas A. McIntyre
Boeing (NYSE: BA) and its stockholders were counting on getting the US military contract to build new refueling tankers. The deal is worth $40 billion, and Boeing is the incumbent.
Things didn’t work out. Northrup Grumman (NYSE: NOC) and Boeing rival EADS, the parent of Airbus, won the contract.
Boeing shares are down 3.5% after hours to under $80. NOC is up 5.6% to $83.
Douglas A. McIntyre
Fremont General (FMT) Threatens more write-downs. Falls to $.73 from 52-week high of $13.80.
R H Donnelley (RHD) Downgrades after poor earnings. Hits bottom of $6.26 from 52-week high of $84.49.
MF Global (MF) Still falling after trading loss. Drops to $14 down from 52-week high of $32.20.
Sprint Nextel (S) Still being punished for earnings. Falls to $7.08 from 52-week high of $23.42.
Journal Register (JRC) Newspaper company. Falls to $.78 from 52-week high of $7.23.
Limelight Networks (LLNW) Loses patent suit. Sells off to $3.82 from 52-week high of $24.33.
IAC Interactive (IACI) Underperforming e-commerce company. Drops to $19.76 from 52-week high of $39.06.
Douglas A. McIntyre
Applera Corporation had an SEC Filing today saying its Board of Directors has authorized management to pursue a possible separation of the Celera Group (NYSE:CRA) from Applera. The completion of this proposal is subject to conditions such as final Board approval, SEC clearance of the registration, receipt of an opinion of a tax-free status, and more. One interesting issue here is that approval by Applera stockholders is not required.
This separation would be via a one-for-one redemption of the Applera Corporation-Celera Group tracking stock for new Celera Corporation shares. These will still keep the "CRA" ticker, but it would be a NASDAQ-listed stock. At Celera’s request, Applera Corporation-Celera Group tracking stock would be de-listed from The New York Stock Exchange. So it appears that Celera Corporation would become a separate, publicly-traded company, rather than a subsidiary or tracking stock as it is currently.
Kathy Ordonez, currently President of Applera Corporation-Celera Group, is expected to serve as the CEO of Celera, and the company headquarters will be located in Alameda, California.
Applera Corporation-Applied Biosystems Group (NYSE:ABI) common stock would continue to be traded on the New York Stock Exchange.
There is one potential warning flag that investors should look at closdely here. On "OUR HISTORY" on the website, the company pans part of the business:
Sirius Satellite Radio (NASDAQ: SIRI) and XM Satellite Radio (NASDAQ: XMSR) hav extended their merger agreement to May 1, 2008. As a reminder, Jim Cramer recently called out all the congressmen that he felt were unfairly holding this merger up.
Originally, the companies could walk away from the deal after March 1, 2008. After all, this has been "a pending merger" for more than a year now. These two companies are still waiting for regulatory approval from the Department of Justice and the Federal Communications Commission.
Sirius was down $0.07 to $2.85 and XM was down $0.45 to $11.65 on last look in mid-day trading. Neither company saw much movement from earnings because the real issue revolves around the merger being approved or denied at this point.
Jon C. Ogg
February 29, 2008
Point Asset Management, Inc. has filed to sell up to $250 million in an initial public offering and it will trade on the New York Stock Exchange under the symbol “PNT.” Deutsche Bank is listed as the sole underwriter as of now.
It will also be qualified as a REIT, so ownership of common stock by any person is generally limited to 9.8% in value or in number of shares. It will also be externally managed by Federated Investment Counseling, an indirect wholly-owned subsidiary of Federated Investors Inc. (NYSE:FII).
Point Asset Management, Inc. is a Maryland corporation that will invest predominantly in agency mortgage-backed securities such as Fannie Mae, Freddie Mac, or Ginnie Mae. It will also be externally managed and advised by Federated Investment Counseling as noted above.
Simultaneously with the completion of this offering, FII Holdings will purchase $25 million of our common stock at the initial public offering price per share in a private placement. So far, Federated is still down 2% at $41.31. With a $4.1 Billion market cap, there may be only so much a $250 million IPO can add even it hits all its new investments in mortgages as home runs.
We are careful in calling all of these new mortgage funds "vulture funds" but we also like to call it like we see it. We also don’t fault vulture funds, and in fact we even like them. Here are some others:
Jon C. Ogg
February 29, 2008
Google (NASDAQ: GOOG) is seeing a stock recovery after comScore (NASDAQ: SCOR) put out a clarification on its blog today. We received an email from comScore a short while ago confirming that link.
Here is what you will want to key on first: "While we do not claim that these concerns are unwarranted, we believe a careful analysis of our search data does not lend them direct support. More specifically, the evidence suggests that the softness in Google’s paid click metrics is primarily a result of Google’s own quality initiatives that result in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur."
Google shares were down as much as $10 today and on last look shares were almost positive for the day.
At $473.00, it is still at the lower-end of the $437.00 to $747.24 trading range over the last 52-weeks. Shares were north of $500.00 before the data killed the stock on Monday.
Jon C. Ogg
February 29, 2008
Moody’s is affirming the current ratings and capital ratios at Ambac Financial Group, Inc. (NYSE: ABK), although there is not a downgrade being issued. Moody’s has noted that Ambac’s capital is currently under its "Aaa" target level and it would review the capital plans as the situation develops. If the company gets the bailout, it should get to sneak its "Aaa" rating.
We have noted before, as have many others, that this is a mere dance right now that is nothing short of a game to avoid a sudden financial collapse. It’s almost like the Treasury hiring out counterfeiters to print $1Trillion to put into circulation so that it doesn’t have to officially count the funds as being in the money supply.
We still think some of these mergers will be mandated rather than preferred. Is there a more appropriate day than Leap Day to put this out? Maybe April 1. The good news is that Ambac stock is now up on the day. Maybe stock buyers are getting to buy stock with that counterfeit money. We don’t want to see a market crash or a recession that turns into a depression either. But some serious games are being played in the system right now, and all the players know it.
Jon C. Ogg
February 29, 2008
International Brands Management Group, a SPAC, or special purpose acquisition company, has amended its IPO again. It is set to trade under the ticker "IBL.U" on the American Stock Exchange.
The company now plans to offer 10 million units compared to the previous 15 million units at $10 a piece. The filing was originally submitted on November 21, 2007.
International Brands Management Group plans to target businesses in the consumer-oriented sector in the U.S. or internationally and the lead underwriter is listed as Pali Capital. Others noted are Maxim Group, Morgan Joseph, and HCFP/Brenner Securities.
With so many SPACs still in the "pending IPO status" and with a stock market that is still mostly in the "show-me" state, you have to wonder if this is the only SPAC that will lower some terms.
Rachel Lopez
February 29, 2008
It looks like the American Stock Exchange, and ultimately the New York Stock Exchange (NYSE: NYX) after the two merge, is going to get some competition for all of the IPO’s in Special Purpose Acquisition Companies (SPAC’s) and Blank Check companies.
Recently, The Nasdaq Stock Market (NASDAQ: NDAQ) submitted a proposal to the SEC to get in on the SPAC IPO market. Right now, the American Stock Exchange has been the go-to vehicle for SPAC’s that has allowed these blank check acquisition vehicles to list in the United States. It’s hard to conceive any reasons that the SEC or any other regulatory body would block this move.
In 2007, 66 SPACs grossed over $12 billion in offerings, according to SpacAnalytics.com. And SPACS are showing no signs of stopping with almost $3 billion raised so far in 2008, comprising 53% of IPO filings this year. This cottage sector is almost like trading much smaller versions of private equity, without as much focus and diversity.
According to their release last week, Nasdaq Senior Vice President Bob McCooey recognizes the potential in the recent IPO trend, stating, "Acquisition vehicles are an increasingly common capital-raising device. We believe that listing them on NASDAQ, subject to these important investor protections, will benefit investors and issuers alike."
In its proposal, Nasdaq will require the acquisition vehicles to meet all of Nasdaq’s minimum listing requirements, as well as “stringent” SPAC specific criteria, as follows:
Currently, most SPACs usually tend to face an 18 month deadline (or 24 months) to complete a deal to become an operational company. The extension could prevent SPACs from rushing to close a not-so-hot business combination. There are some downsides as well because this could lead to many companies sitting on companies, and you could imagine that ultimately you could seem some very wide spreads to an IPO SPAC price and the market price.
Nasdaq did not specify a time frame. We would presume that the only serious issues in determining an effective date would be an SEC review of any key differences in their listing requirements and the differences in terms for such a listing. SPAC’s and Blank Check companies used to be thought of poorly, but the image is being cleaned up now that many SPAC’s have effected mergers and become successful post-merger operations. The share price track record for SPACs is still at least somewhat questionable and we have yet to see if this is a trend or permanent public component. Goldman Sachs avoids them, and few doubt their track record.
Jon C. Ogg
February 29, 2008
Consumer sentiment hit a 16-year low this month. According to Reuters "The Reuters/University of Michigan Surveys of Consumers said its main index of consumer sentiment fell to a 16-year low of 70.8."
With the market down 200 points, no one seemed to be surprised.
Douglas A. McIntyre
This morning we have another negative note out of Goldman Sachs calling for investors to be long volatility in financial stocks where the options prices are reasonable in companies that have exposure to troublesome assets like subprime CDO’s, subprime RMBS, exotic mortgages, commercial real estate loans, Alt-A, and leveraged loans.
Some of the stocks noted were as follows:
Goldman Sachs expects these names with more exposure to be volatile as future write-downs should correlate with total exposure. The firm recommends buying put options and "put spreads" to position yourself for downside in the sector and these specific names. The firm is expecting more negative news in the coming months.
If you want a brief description of a put spread, we put in a link here from Investopedia.
We would note that we also expect more negative headlines for the sector as yet another wave of troubles is coming via resets and defaults in Option-ARM loans. But we’d also like to note that the worst has already been seen in "some" of the stocks. There will likely be some more failures that go into bank failures rather than mere mortgage lender failures.
Jon C. Ogg
February 29, 2008
Assured Guaranty Ltd. (NYSE: AGO) may not be the largest household name for a bond insurer or financial guarantor when you consider the woes of Ambac Financial (NYSE: ABK) and MBIA (NYSE: MBI). But the company just scored a huge win this morning after it has been announced that Wilbur Ross is investing up to $1 Billion in the company.
The initial investment will run some $250 million to be used for purchasing common stock, and then there are performance hurdles and other issues that would allow the company to have another $750 million from Wilbur Ross.
Of course we heard the announcement that another bailout has hit a snag. Just because one buyer buys a foreclosure on your street doesn’t mean there won’t be more housing pain. But it may at least help signal that beginning of the end is closer rather than farther away.
Assured Guaranty shares are trading up 11% at $25.39 in early pre-market trading.
Jon C. Ogg
February 29, 2008
This morning, Business Week in its "INSIDE WALL STREET" section has featured CarMax (NYSE: KMX) positively, mainly noting that Warren Buffett’s Berkshire Hathaway (NYSE: BRK/A) raised his stake by another half recently to 9.6%. The article notes that this one only has a 2% market share and could become a Wal-Mart for cars, let alone it having some 28% earnings growth. This also notes that while the $20.02 level (actually closed at $19.12 yesterday), leaves a 25% upside to Lehman Brothers’ $25.00 target.
We would note that Lehman doesn’t have the highest target out there, but it looks like the average price target is under $22.00. The truth is that CarMax as a business does have a decent business model in that you can sell your car easily and you don’t have all the games on the car lot like you are dealing with gypsy horse traders. But there is a real issue that very few really address here. If you have ever gone out and price shopped CarMax as a buyer or as a seller, you might think twice. The company has significantly higher priced cars than you can find elsewhere and its "guaranteed buy prices" leave a lot to be desired if you need to sell your car.
There is merit that you have an ease of the transaction here, and their cars do come with a quality assurance and some initial guarantees here. It isn’t all bad. But the cost differential is substantial. There are many risks in buying and selling cars, but Business Week looks like it only did some Warren Buffett chasing here and very few have publicly addressed the key business issues at hand here. If you don’t believe it, go to the lot after you have done real price comparisons as a buyer and a seller. As a strapped U.S. consumer is looking for ways to save $1,000.00 per year here and there, this is an issue that needs to be considered.
Jon C. Ogg
February 29, 2008
CNBC is reporting that ratings agencies want Ambac (NYSE: ABK) to raise more capital than it originally planned if it is to keep its credit rating.
The shares are off 7% on the news.
Douglas A. McIntyre
These are not the only analyst calls affecting shares of stock this morning, but these are the initial calls that 247WallSt.com is focusing on:
Jon C. Ogg
February 29, 2008
A big company gets in trouble. The board throws the CEO under a bus and brings back the founder. The stock market figures that the person who built the company is the ideal one to fix it.
Dell (DELL), Starbucks (SBUX), and Yahoo! (YHOO) have all gone with the popular formula for turning companies around. They must figure that if Steve Jobs did such a fine job when he came back to Apple (AAPL) that anyone with a founder pedigree can do likewise.
Unfortunately, Mr. Dell, Mr. Schultz, and Mr. Yang are not batting 1,000. They are probably not even batting .200. Perhaps that is because they caused the problems which bedevil their companies and then stood by as things got worse.
Over a year ago, Schultz sent Starbucks management a memo about what was wrong with the coffee shop chain. It had lost its neighborhood felling. That needed to be fixed. His handpicked CEO didn’t listen. Another year went by, The SBUX shares fell by 50%. Now Schultz is faced with playing from behind as McDonald’s (MCD) and Dunkin Donuts eat his lunch.
Yang was part of the board and management team when Yahoo! decided to go the portal route and not the search engine route five years ago. Terry Semel, a former movie company executive, was an odd choice for CEO of an internet company. Yang was one of those who approved the new chief. Semel followed the crowd, the same one that MSN and AOL were following. Google (GOOG) went down a different path and crushed them all. Now Yang is back. He has done nothing to change Semel’s core decisions. Because of Microsoft’s takeover bid, he is about to be very rich and out of a job,
Dell may be the most striking example of a man who backed his hand selected CEO. Mr.Dell made the direct sales model in the PC world a huge success. Buy machines on the internet and through call centers. Forget stores. PC buyers don’t go to Wal-Mart (WMT). His boy, Kevin Rollins, stayed with the program, even when it stopped working. Dell kept saying what a great man Rollins was, until he bounced the man and took that CEO’s chair himself.
Based on its earnings, it is clear that Dell has not brought any real innovation to his company. He move to retail sales has come very late in the game. Most electronics stores have been doing business with his competitors for years. That has given HP (HPQ), Lenovo, Acer, and Apple (AAPL) a conduit for sales which Dell simply does not have.
Not everyone can be Steve Jobs.
Douglas A. McIntyre
It is surprising that it took so long. A private equity firm is finally suing a bank that walked on a big transaction. It is only the beginning.
Wachovia (WB) skipped out on its obligation to fund the Providence Equity buy-out of Clear Channel’s (CCU) TV stations. The banks reasoning was perverse. The deal terms had changed so it had the right to exit. But, the change in terms made the transaction better for the bank.
Legal eagles at the money center banks have decided that it is wiser to pay a break-up fee than to take more LBO debt onto their balance sheets. They cannot syndicate this debt to other institutions because of fear that too much leverage on the companies’ balance sheets could cause defaults in a recession.
The argument has the benefit of being true, but it does no take the banks away from their obligations.
On the scales of their reasoning the banks clearly think that the litigation costs outweigh the costs of more write-offs and having to raise more capital. It is the kind of theory that is true until it is not.
Banks now may face an onslaught of suits over broken deals. They will lose some of them and find that the price of breaking their word may be more than they imagined.
Douglas A. McIntyre
Oil moved over $103. The excuse this time was that "Ecuador’s state-run oil company, Petroecuador, suspended operations at a key export pipeline after a landslide damaged infrastructure," according to MarketWatch.
That has nothing to do with what is actually happening. OPEC has learned to game the system of rising oil prices by largely staying on the sidelines. It has mentioned it could drop production slightly in March but some of its ministers have said flow will stay steady.
The new psychology of oil prices is based on flooding the brain with enough unrelated pieces of information that it sets off a panic.
Much of the new information about existing oil fields points to the fact that some of the older ones, which are also the largest in many cases, have hit their peak pumping levels. That crude may not be easily replaced.
On the other side of the equation the rising price of oil is not meeting the normal economics of supply and demand. India, China, and other developing countries need more oil each year for infrastructure improvements and a growing number of cars and trucks on their highways. US consumption does not seem to be dropping. Gas at $3 has become part of the cost of living.
Unrest in Venezuela and Nigeria are enough to psyche the market about a very large, long-term interruption which could drive a sharp drop in supply.
With all of this as a backdrop, OPEC can point to enough reasons in the market to say that it is blameless. It is a convenient lie supported by facts which are not related to what the cartel can do on its own to help alleviate the problem.
But, with hundreds of billions of dollars hitting OPEC bank accounts each year, denying the obvious becomes part of the game.
Douglas A. McIntyre
Sony’s (NYSE: SNE) PS3 may have a better year in 2008 than it did in 2007. That would not be hard. The game console was beaten like a red-headed mule by the Nintendo Wii and Microsoft (NASDAQ: MSFT) Xbox 360.
Sony’s hope for improvement rests on the fact that production quantities will allow it to bring down component costs and retail prices. There are also several "hot’ new games coming that will run on the PS3. Reuters writes "2008 will be a turning year for the PS3," said iSuppli analyst Pamela Tufegdzic. "Sony is offering a better forthcoming software pipeline with blockbuster titles like "Gran Turismo 5", which will boost PS3 sales this year."
The optimism seems misplaced. Microsoft still has the most popular game in the market with its "Halo 3" game. Nintendo has introduced the new Wii Fit and expects to sell over one million units of the new product in the US this year.
The leads that Microsoft and Nintendo have are formidable and may even be insurmountable. Sony should learn to rely on its TV business and movie studio operations. Its two rivals will do everything they can to keep the PS3 out of the game.
Douglas A. McIntyre
| Today’s top tickerspy Indexes | |
| Education Stocks | 0.0% |
| Marketing and Adv... | 0.0% |
| Drug Delivery Sto... | 0.0% |
| Hotel REITs | 0.0% |
| Grocery Store Sto... | 0.0% |
 | |
| |
RSS Updates
Email Updates
