Monthly Archives: March 2008

Big Price Movers In S&P 500 For Q1 2008 (MSFT)(GOOG)(AAPL)(INTC)(C)(AIG)(VZ)

The largest losers among the big companies in the S&P 500 for the first quarter were:

Microsoft (MSFT) down 21.6%, Google (GOOG) down 36.7%, Apple (AAPL) down 27.8%, Intel (INTC) down 22%, Citigroup (C) down 29.3%, AIG (AIG) down 26.6%, Verizon (VZ) down 17.9%, Schering-Plough (SGP) down 22.1%, Merck (MRK) down 23.4%, Wachovia ((WB) down 31.7%, United Health (UNH) down 40.9%, Merrill Lynch (MER) down 26.3%, Marathon Oil (MRO) down 23.6%, EMC (EMC) down 22.8%, Amazon (AMZN) down 24.7%, Valero (VLO) down 30.1%, Fannie Mae (FNM) down 34.9%, CME Group (CME) down 30.1%, WellPoint (WLP) down 50.7%, Motorola (MOT) down 42.6%, Lehman (LEH) down 42.3%. Spint (S) down 51.1%, Best Buy (BBY) down 23%, Freddie Mac (FRE) down 25.3%, and NYSE Euronext (NYX) down 30.4%.

The largest winners among the big companies in the S&P 500 in the first quarter were:

Wal-Mart (WMT) up 9.7%, Devon Energy (DVN) up 17.3%, Yahoo! (YHOO) up 24.6%, Burlington Northern (BNI) up 10.5%, XTO Energy (XTO) up 18.2%, EOG Resources (EOG) up 33.2%, Calgene (CELG) up 28.6%, Chesapeake Energy (CHK) up 16.1%, CSX (CSX) up 28.6%, and Nucor (NUE) up 16.2%.

Douglas A. McIntyre

Posted on: March 31, 2008 – 5:40 pm in Large Cap Stocks, , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

NYTimes: Huffington Value Compared To 24/7 Wall St. Analysis

In today’s New York Times an article on The Huffington Post says that the company is looking for a valuation of $200 million. That would be $53 per unique visitor based on Nielsen figures of 3.7 million for February.

The paper mentions that if the Huffington internal numbers of 14 million unique visitors is used, the valuation per unique visitor is closer to $15.

The $15 seems much more reasonable, but so does using outside figures like those Nielsen supplies. That would give Huffington a value of $56 million. The 24/7 Wall St. valuation for the company is $70 million. The $15 multiple is more more likely, especially since the audience figures for Huffington are likely to fall sharply after the November election.

Douglas A. McIntyre

Posted on: March 31, 2008 – 5:04 pm in Media

Dell Slashes & Burns, Right In Its Back Yard (DELL, AMAT)

Dell Inc. (NASDAQ: DELL) has announced additional actions in its previous restructuring in its attempt to smooth its operating model, rationalize its operations and improve profitability and cash flow.  In short, costs are coming down and many high-paid Austin workers are going to be out on the street.

Michael Dell has called this a $3 billion annualized savings opportunity over the next three years to drive both productivity and efficiency.  The actions will occur during Fiscal 2009 and beyond and are meant to accelerate growth in five focus areas: global consumer, enterprise, notebooks, small and medium enterprise and emerging countries, while improving profitability and cash returns.

Dell is based in Round Rock, Texas, what is now just thought of as another Austin suburb.  If you can believe it, Dell will close its desktop manufacturing facility in Austin, Texas.   The company also reaffirmed its previously announced plans to reduce global employee headcount by at least 8,800 and related operating expense.  In the last nine months of fiscal 2008, it reduced headcount by 3,200, excluding acquisitions.

Further cost cuts are coming, including design, manufacturing & logistics, materials, and operating expenses and benefits are expected to be realized in the second half of this fiscal year.   Those stock options haven’t been millionaire-makers for quite some time anyway.

It is also reviewing its current financial services ownership structure and is undertaking a strategic assessment of ownership alternatives for that part of the business. That primarily focuses on the U.S. consumer & small/medium business revolving credit financing receivables and operations, but may also include commercial leasing; although it notes that it is possible this will result in no change to the structure it expects to complete in Q3 of the current fiscal year.

Taking a closure maneuver of this size and magnitude is often met with public criticism.  Making those drastic cuts in your home town is a total slash and burn operation.  This almost sounds a lot like practicing live fire plane drops of Daisy Cutters, in your own back yard.

Austin housing probably just got cheaper.  Applied Materials (NASDAQ: AMAT) probably gets its pick of the working litter now. 

Jon C. Ogg
March 31, 2008

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

Posted on: March 31, 2008 – 4:25 pm in Labor & Unions, PC Companies, Turnarounds, ,

Lehman Intends $3 Billion Capital Raise in Preferred Sales (LEH)

Lehman Brothers Holdings Inc. (NYSE: LEH) has just announced that it has "responded to investor interest" with the intent to offer to offer 3,000,000 shares of Non-Cumulative Perpetual Convertible Preferred Stock with a $1,000 per share offer.  That’s $3 Billion.

It also expects to grant an overallotment option to purchase up to 450,000 additional shares of the Preferred Stock to the extent the underwriter sells more than 3,000,000 shares of the Preferred Stock in the offering. 

The proceeds from this offering are designated as being used to bolster its capital and increase financial flexibility.  The non-cumulative dividend rate, conversion rate and other terms have not yet been determined.

The Non-Cumulative Perpetual Convertible Preferred Stock, Series P, carries a par value of $1.00 per share and a liquidation preference of $1,000 per share.  Lehman Brothers Inc. itself will act as the sole book-running manager, and this offering will be made under Lehman Brothers Holdings’ existing shelf registration statement filed with the SEC.

Lehman closed down 0.6% at $37.64, and shares are down 6% at $35.19 in after-hours trading.  Its 52-week trading range is $20.25 to $82.05.

Jon C. Ogg
March 31, 2008

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

Posted on: March 31, 2008 – 3:48 pm in Brokerage Firms, Financial Stocks, Secondary Offering,

Cell Genesys Scores Takeda Deal (CEGE)

Cell Genesys, Inc. (NASDAQ: CEGE) has announced a global alliance with Takeda Pharmaceutical Company Limited in Japan.  The companies will develop and commercialize Cell Genesys’ GVAX immunotherapy for prostate cancer, which is the company’s lead product candidate.  It is also currently in Phase 3 clinical development studies.

For exclusive worldwide commercial rights to for prostate cancer, Takeda is paying Cell Genesys $50 million upfront with additional milestone payments totaling up to $270 million.  The additional payments relate to regulatory approval and commercialization for prostate cancer in the U.s., E.U., and in Japan.

Takeda will pay tiered double-digit royalties based on net sales in the United States and it will pay flat double-digit royalties based on net sales in all other regions.  Takeda will also pay from here on out for all external development costs associated with the ongoing Phase 3 studies of GVAX immunotherapy for prostate cancer.  Takeda will also pay for all additional development costs and all of the commercialization costs.  Cell Genesys will maintain manufacturing and supplies of the product and will retain rights to co-promote GVAX immunotherapy for prostate cancer in the United States.

GVAX immunotherapy for prostate cancer is currently in two Phase 3 clinical trials, VITAL-1 and VITAL-2, in advanced prostate cancer patients. It is also under FDA FAST TRACK designation and both trials have completed Special Protocol Assessment agreements.

The company currently estimates that there will be sufficient events to trigger the final analysis for VITAL-1 in the second half of 2009. Patients are continuing to enroll in the VITAL-2 trial at nearly 100 clinical sites in North America and Europe. Cell Genesys has targeted the completion of enrollment for VITAL-2 with approximately 600 patients in the first half of 2009.  It then expects there will be sufficient events to trigger the pre-planned interim analysis in the same time frame.

The options may say it all.  The JANUARY-2010 $2.50 CALLS last traded at $1.30, which is greater than a 50% premium for a slightly out of the money call.  In fact, buying a JANUARY-2010 $2.50 straddle would cost more than owning the stock.  No wonder the open interest isn’t all that high.

Some may argue that this undermines the value of the prostate cancertreatment’s value on a fully-rolled-out basis if it reaches fullapproval and is a success because this has blockbuster potential.  Others will argue that this gets itsliquidity back in line with its long-term debt.  Shares of Cell Genesys closed down under 1% at $2.35 today, and the 52-week trading range is $1.78 to $7.30.  Its market cap is a mere $185 million. 

Jon C. Ogg
March 31, 2008

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

Posted on: March 31, 2008 – 3:39 pm in Biotech,

The 52-Week Low Club (SGP)(MRK)(MO)

Schering-Plough (SGP) Bad news on key cholesterol drug marketed with Merck. Shares fall to $14 from 52-week high of $33.81.

Merck (MRK) Pulled down for the same reason. Sells off to $36.82 from 52-week high of $61.62.

Altria Group (MO) Stock down because of spin-out of international unit. Falls to $21.95 from 52-week high of $87.81.

Ampex Corp (AMPX) Files Chapter 11. Drops to $.38 from 52-week high of $20.83.

Secure Computing (SCUR) Brokerage firm downgrade. Moves off to $6.27 from 52-week high of $10.54.

Citrix (CTXS) Companies like this and VMWare (VMW) suffering from concerns about growth of vitualiztion software busiess.

Douglas A. McIntyre

Posted on: March 31, 2008 – 2:59 pm in HI/LOW, , , , , , ,

Wall St. Votes Against Big Apple (AAPL) iPhone Prediction

A Wall St. research firm suggested that Apple (NYSE: AAPL) would sell 45 million iPhones in 2009 which would bring in $11.7 billion, according to Silicon Alley Insider. Investors don’t think so. Apple’s shares are flat today, under $144. That is well down from their 52-week high of nearly $203.

Some of the reasons given for the prediction by Piper Jaffray’s Gene Munster are the upcoming introduction of a 3G version of the iPhone and expansion into new foreign markets.

There are slightly more than one billion handsets sold worldwide. Nokia (NYSE: NOK) has 40% of the market. Samsung and Motorola (NYSE: MOT) each have about 12% and Sony Ericsson has roughly 10%.As large markets like the US and Europe hit saturation levels, overall growth of the market is slowing.

The single biggest hurdle to Apple hitting its number is the extent to which the competition is putting handhelds which compete with the iPhone into the market. LG has recently launched its LH2300 Touch Web device. Nokia has introduced its new S90 smartphone and news reports say it is designing handsets with the goal of picking up market share in the high end of the US where is has not done well.

Research In Motion (RIMM) is also moving into the "iPhone" segment. Computer World recently called the RIM 9000 a "cheap knock-off" of the iPhone. RIM will sell some of these, but the figure may be modest.

Unlike the digital media player market which the iPod entered in 2001, the handset market is much more mature and has many more well-funded global companies anxious to defend their forts.

The iPhone may do well, but Wall St. is not convinced it will be the kind of financial contributor to the company that the iPod has been

Douglas A. McIntyre

Posted on: March 31, 2008 – 2:45 pm in Consumer Electronics, , , ,

SPAC IPO FILING: Fintech Acquisition Corp. (TBBK)

Fintech Acquisition Corp., a SPAC, or special purpose acquisition company, has filed to come public via an IPO. The filing shows a target of $100 million. Each $10 unit will consist of unit of one unit of common stock and a warrant with a $7.50 strike price. The sole underwriter is UBS Investment Bank. The company has applied to trade on The American Stock Exchange.

Fintech was organized by TBBK Acquisitions, a wholly-owned subsidiary of The Bancorp, Inc. (NASDAQ: TBBK), a financial holding company. As an indirect subsidiary of a financial holding company, Fintech is limited to financial activities. Their target will consist of established financial technology business companies that provide data processing, storage and transmission services, databases and payment and payment processing services in support of businesses in the financial services industry and are in need of redirection.

Fintech will utilize the experience of Chairman and CEO, Betsy Cohen and President, Frank Mastrangelo. Betsy Cohen has 37 years of experience and current acts as CEO of Bancorp.

We cover issues regarding SPAC’s and other IPO’s, back door plays into IPO’s, restructurings, spin-offs and more on our open email distribution list.

Rachel Lopez
March 31, 2008

Posted on: March 31, 2008 – 11:59 am in IPOs,

Cell Therapeutics, Ready To Tap Financing (CTIC)

Cell Therapeutics (NASDAQ: CTIC) has filed an open mixed securities shelf registration for up to $150 million.  This will allow it to sell debt securities, common stock, preferred stock, and warrants. 

Last Tuesday, the company announced progress in beginning Phase III testing for its non-Hodgkin’s lymphoma treatment. Friday, the company filed its annual report.

Shares have showed no reaction to the filing, with a 0% change, sitting at $0.66.  The 52-week range is $0.47 to $7.56 and its current market cap is only $62.5 million.

Rachel Lopez
March 31, 2008

Posted on: March 31, 2008 – 11:51 am in Biotech, Secondary Offering,

Trivial Pursuit, Now All Hasbro’s (HAS)

Hasbro, Inc. (NYSE:HAS) has finally purchased all of the intellectual property rights related to the Trivial Pursuit brand from Horn Abbot Ltd. and from Horn Abbot International Ltd.  Hasbro paid out an aggregate purchase price of some $80 million to the Horn Abbot companies for the intellectual property rights. 

This isn’t going to change much about the game itself, but now Hasbro will get to keep everything from the gross sales of the Trivial Pursuit games.  Hasbro has developed and marketed Trivial Pursuit under a license agreement from the Horn Abbot companies since 1983.  If you trust the Wikipedia numbers, 88 million copies had sold in 17 languages as of 2004.

You should try playing Trivial Pursuit in Spanish against Spaniards who won’t let you translate anything besides the Spanish you know… and then winning.

This won’t change much about the game itself, although now Hasbro can take it any direction it wants with more offshoots than it already has and can keep all of the pie pieces.

Jon C. Ogg
March 31, 2008

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

Posted on: March 31, 2008 – 11:33 am in Entertainment,

Biotech Busine$$ Daily (BNT, TEVA, BPAX, NCST, RPRX, VRTX)

Bentley Pharmaceuticals Inc. (NYSE: BNT) will be purchased by Teva Pharmaceutical Industries (NASDAQ: TEVA) for $360 million. Bentley shareholders will receive $15 per share and an undisclosed amount of shares in CPEX Pharmaceuticals, a drug-delivery Bentley spin-off. Bentley sells about 130 products in Spain and the transaction will allow Teva to meet its strategic Spain target. Bentley is up 15% to $15.70 on a 52-week range of $8.06 to $15.89. Teva is up marginally, almost 2% to $46.81 on the announcement. Their 52-week range is $35.90 to $50.00.

BioSante Pharmaceuticals, Inc. (NASDAQ: BPAX) announced Friday they are to begin Phase III late stage studies for their “Viagra for Women” treatment, LibiGel, which attempts to remedy a loss of libido in women. Shares are not stimulated, down by $0.55, a 12% drop, to $4.13. The 52-week range is $2.05 to $8.00.

Nucryst Pharmaceuticals Corporation (NASDAQ: NCST) up over by over $0.60, a whopping 60% jump, to $1.64 in mid-day trading on new news. Friday, the stock dropped $0.50 to a new 52-week low. This volatile infection and inflammation biotech company has a 52-week range of $1.01 to $1.85.

Repros Therapeutics (NASDAQ: RPRX) reported some interim safety results from its ongoing One-Year open label study of its Proellex(R) for the indicated treatment of uterine fibroids.  Its shares are up 2.4% today.  We just covered this one in our weekly "10 Stocks Under $10" subscriber newsletter this morning ahead of the news.  It’s still under that $10.00 threshold, for now.

Vertex Pharmaceuticals Inc. (VRTX) and their hepatitis C competitor, Schering-Plough, released clinical data on their respective drugs today. Schering-Plough’s drug, boceprevir, did not stack up to Vertex’s previously presented similar clinical data, hinting that Schering-Plough may not be as big as a competitor in the market as previously expected. Paired with positive results on Vertex’s drug, the stock is up almost 20% to $22.34 in mid-day trading. The 52-week range is $19.99 to $22.61.

Rachel Lopez
March 31, 2008

Posted on: March 31, 2008 – 11:23 am in Biotech, , , , , ,

Monsanto Acquires European Seed Company (MON)

Monsanto Company (NYSE: MON) has just announced that it has signed a definitive agreement to acquire De Ruiter Seeds Group B.V., in The Netherlands.  This is a Dutch-holding company that owns and operates De Ruiter Seeds.  The total transaction value was placed at 546 million Euros, or more than $800 million depending on currency exchange rates after backing out the net debt.

Monsanto has been an acquirer of many smaller seed companies in the U.S. and internationally.  The company expects this to build upon vegetable seed business as well as to enhance its growth in the protected-culture segment, which is listed as the fastest-growing space within the vegetable seeds industry.  This acquisition of De Ruiter is expected to help transform Monsanto’s vegetable seed platform into a $1 billion revenue business by 2012.

As a reminder, Monsanto reports earnings this week.  We just did an earnings preview for it and another ag-player.

Monsanto shares are down some 2.5% today at $111.36.

Jon C. Ogg
March 31, 2008

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

Posted on: March 31, 2008 – 10:32 am in Agriculture, Mergers and Buy Outs,

AMD (AMD) Takes On More Water

AMD (NYSE: AMD) is trading off today and is not much above its 52-week low. The reason may be a note out of JP Morgan picked up at Barron’s. The analysis sees AMD missing its guidance and revises down the bank’s estimates for EPS.

No one should be surprised. The company has not been talking up its quarter. AMD still issues fairly worthless press releases almost every day, but CEO Hector de J. Ruiz has not been very visible.

If AMD misses the first quarter and guidance is poor, the stock could slide to under $4. At that point, the company might even get itself sold to Nvidia (NASDAQ: NVDA) or another company that would like a toe-hold in the x86 market.

Douglas A. McIntyre

Posted on: March 31, 2008 – 10:27 am in Semiconductor, ,

Exxon Mobil’s Thai Unit, Up For IPO (XOM)

Reuters ran a pretty interesting article regarding Exxon Mobil Corp. (NYSE: XOM) today that really hasn’t gotten much coverage.  Apparently, its Esso (Thailand), its unit of Exxon Mobil in Thailand, plans to raise up to $454 million (14.3 billion Thai Baht) in an initial public offering in April.  Esso (Thailand) is 87.5% owned by Exxon Mobil and the final IPO price and share count will be set on what is April 24 as of today.  It also looks like about 9.6% of the total shares sold will be sold bythe Thai Finance Ministry, which will dilute its percentage ownership.The use of proceeds will be used mostly to repay debt.

After seeing this we dug around for some additional data and wanted to see how this compares to the entire company and what the ramifications could be.  This listing was apparently required under an agreement made in the 1990’s which allowed the oil company to build a refinery in Thailand.  We frequently cover spin-offs, divestitures, break-ups, IPO’s and more in our own open email distribution list.

The operations of Esso (Thailand) is a complex refinery with a capacity of 177,000 barrels per day, and its 2007 results were a net profit of 7.05 billion Thai Baht on sales of almost 200 billion Thai Baht.  Phatra Securities was listed as the financial adviser and lead underwriter for local market share placement and trading in Thailand, and Morgan Stanley was not as the lead underwriter for foreign markets.

If you’ve ever been to Thailand in recent years, you’ll know that the streets are packed full of cars, scooters, and Tuk-Tuk’s.  What is perhaps more interesting is that despite this was under an agreement from old, this could at least get it in the minds of Exxon Mobil Corp. shareholders that the oil giant is willing to look at divesting some units.  We’d urge against falling for that thought too much because the company would probably never want to bust its empire up on its own.  But this will at least be what some investors ponder.

If you want to compare this financially, Exxon Mobil has a market cap of some $460 Billion.  This is only about one-tenth of one-percent of the total size of the company’s entire equity value.  Exxon as a whole also generated US$404 Billion in total revenues in 2007.  This is a small drop in the bucket (or barrel).

Jon C. Ogg
March 31, 2008

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

Posted on: March 31, 2008 – 10:16 am in IPOs, International Markets, Oil & Gas, ,

Did Banks Sell Their Auction-Rate Securities To The Fed? (LEH)(UBS)(C)(MER)(MS)

Over the weekend UBS (NYSE: UBS) said that it would be cutting the value of auction-rate securities in it client’s accounts. According to CNN Money "UBS using an internal model to value the securities, will mark them down and inform clients via their online statements. The markdowns will range from a few percentage points to more than 20." Other big banks are likely to follow suit.

UBS held $5.9 billion of  the securities in its own accounts at the end of last year. In all likelihood  there was also billions of dollars of the paper held by Citigroup (NYSE: C), Merrill Lynch (NYSE: MER), Morgan Stanley (NYSE: MS), Lehman (NYSE: LEH), and other large financial firms.

All of those auction-rate securities may be gone from their balance sheets now, in essence passed to the Fed as collateral for cash from the agency. Primary broker dealers borrowed $37 billion from the Fed last Wednesday. Most other days the amounts is probably in the arena. The Fed has also created a $200 billion facility for banks.

Customers holding auction-rate securities which they cannot sell may be vexed at the financial firms which started the market and then closed it down. The brokers and banks did not want to take on the risk of supporting the auctions with there balance sheets. Those firms have a way out through the Fed’s door, exchange auction-rate paper which is below par for cash.

The institutions, corporations, and individuals holding the paper are stuck.

Douglas A. McIntyre

Posted on: March 31, 2008 – 9:59 am in Banking, , , , ,

American Water Works Sets IPO Terms… $1.6 Billion For Starters (AWK)

American Water Works Company, Inc. has finally sets its pricing range in its latest SEC FILING today.  This was the fifth such amendment to the original filing in 2007.  The mostly regulated water utility will still trade under the proposed ticker "AWK" on the NYSE.

The initial pricing terms are putting this in a range of $24 to $26 per share, for 64 million shares.  In our last update, we noted the underwriters were as follows:  Goldman Sachs, Citi, Merrill Lynch all listed as lead underwriters; Credit Suisse, JPMorgan, Morgan Stanley, and UBS; and co-managers listed as Edward Jones, Janney Montgomery Scott, Societe Generale, Wachovia Securities, Boenning & Scattergood, Cabrera Capital Markets, HSBC, Stanford Group Company, and The Williams Capital Group.

We will covering this one routinely via our open email distribution list.  At the mid-point of the range, this IPO would yield gross proceeds of $1.6 Billion.

Jon C. Ogg
March 31, 2008

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

Posted on: March 31, 2008 – 9:33 am in IPOs, Water,

Merck & Schering-Plough Face Cholesterol Firing Squad (MRK, SGP)

Usually drug companies look forward to presenting data on their drugs and medical treatments.  The the American College of Cardiology meeting was this weekend, and the findings and recommendations are worse than bad. 

Shares of Schering-Plough Corp (NYSE: SGP) and Merck & Co (NYSE: MRK) are being hit sharply this morning.  Doctors at this prominent medical meeting recommended that patients try older cholesterol drugs before trying these companies’ newer medicines.

Vytorin and Zetia generate roughly $5 Billion in annual sales and many have questioned the overall results of these for several months.  Doctors are now recommending older statins in high doses, followed by other treatments before putting clients on these drugs.  So these will be garnered to a last line of defense drug group, which will effectively kill the sales if doctors on the local level follow this recommendation.

So far, we have seen Schering-Plough downgraded at both Lehman Brothers and at Goldman Sachs.  Lowering cholesterol doesn’t seem to matter if the arterial plaque still builds up.

Schering-Plough shares had been hit by almost 30% since the questions had started coming out about the efficacy of the drugs.  That was before the drop today.  Shares of Schering-Plough Corp (NYSE: SGP) are down 22% pre-market at $15.08 and shares of Merck & Co (NYSE: MRK) are down 10% at $39.70 in pre-market trading this Monday. 

Jon C. Ogg
March 31, 2008

Posted on: March 31, 2008 – 7:45 am in Drug companies, ,

Citi Restructures Itself, Well Sort Of (C)

Citigroup Inc. (NYSE: C) is making some organizational changes today.  The troubled financial and banking supermarket has announced a reorganization of Citi’s structure with what it hopes to achieve greater client focus, connectivity, and clear accountability.

Citi has established more of a regional structure to bring decision-making closer to clients, and leaders of the geographic regions will have the authority to make decisions at the local level.  Each geographic region will have a single chief executive officer who reports to CEO Vikram Pandit.

 

Teresa A. “Terri” Dial has also been appointed as CEO of Citi Consumer Banking in North America and named Global Head of Consumer Strategy, reporting directly to Citi Chief Executive Officer Vikram Pandit.  This will help to effect a split of the card unit from its banking operations.

Could a regional break-up come instead of a unit break-up?  Highly unlikely.  Could this lead to a separate card business down the road?  Possibly.

Shares of Citi closed at $20.83 Friday and pre-market indications aren’t giving this any great marks nor any poor ones so far.  Shares are indicted flat, although that may change as we get within two-hours of the market open. 

Jon C. Ogg
March 31, 2008

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

Posted on: March 31, 2008 – 6:31 am in Banking, Financial Stocks, Turnarounds,

Top 10 Pre-Market Analyst Calls (GFIG, GU, HTZ, MBT, NSM, PM, SGP, TOC, TIBX, VOD)

These are not all of the calls we are seeing this morning, but these are the top analyst calls we see affecting shares in pre-market trading this Monday morning:

  • GFI Group (NASDAQ: GFIG) started as Market Perform at KBW.
  • Gushan Environmental Energy (NYSE: GU) downgraded to Neutral from Buy at Piper Jaffray.
  • Hertz Global (NYSE: HTZ) downgraded to Neutral from Buy at UBS.
  • Mobile Telesystems (NYSE: MBT) raised to Outperform at Credit Suisse.
  • National Semiconductor (NYSE: NSM) started as Market-weight at Thomas Weisel.
  • Philip Morris International (NYSE: PM) started as Overweight at Lehman.
  • Schering-Plough (NYSE: SGP) downgraded to Equal-weight from Overweight at Lehman Brothers.
  • Thomson (NYSE: TOC) downgraded to Hold from Buy at Deutsche Bank.
  • TIBCO Software (NASDAQ: TIBX) downgraded to Underperform from Hold at Jefferies.
  • VODAFONE (NYSE: VOD) downgraded to Underweight at Morgan Stanley.

Jon C. Ogg
March 31, 2008

Posted on: March 31, 2008 – 6:18 am in Analyst Calls, , , , , , , , , ,

Aloha Airlines: A Canary In The Coal Mine? (AMR)(NWA)(DAL)

Aloha Airlines went into Chapter 11 last week. That was not enough. Now the carrier says it is ending passenger service after 60 years of operation.

Aloha is small and flies in only one market, but the reasons for its demise still had to do with falling ticket prices forced down by competition and risking fuel prices.

It is no coincidence that carriers like AMR (NYSE:AMR), Delta (NYSE:DAL), and Northwest (NWA) are near their 52-week lows. Someone, somewhere thinks that one or more of these airlines won’t make it, at least in its current incarnation. And, that would probably not be a bad bet.

One of the reasons, perhaps the sole reason, that Northwest (NWA) wants to merge with Delta (DAL) is because of perceived cost savings, Whether those are real or not doesn’t seem to matter. There is a desperation to the push to combine airlines which is a sign that management does not see any other way out of the current toxic environment.

But, mergers may not save anyone. The industry may have to go through a Chapter 11 filing or two. It happens to airlines about once a decade. Why should this time be any different?

Douglas A. McIntyre

Posted on: March 31, 2008 – 5:28 am in Airlines, , ,