Monthly Archives: March 2008

Has Wal-Mart (WMT) Lied To Us?

Most large corporations amplify the distrust that the common man has for them by making misstatements from time to time. It is Wal-Mart’s (WMT) turn in the gauntlet of public opinion.

The world’s largest retailer seems to be making claims that shoppers who hit its stores will save $2,500 a year. It may have taken a room full of math professors to come to that number, and Wal-Mart thinks it is right.

"The figure represents the company’s calculation of its overall impact on an American household, not the average savings for Wal-Mart shoppers, and this has led an influential watchdog group to recommend that the campaign be fixed or halted," according to The New York Times. So, do families who shop at Wal-Mart save more than families who do not? Unclear.

It is less expensive to shop at Wal-Mart than at Tiffany (TIF) and the selection is better. But, it may not be less expensive than Target (TGT). The calculus may be a little misleading, but that really has not been proved.

Wal-Mart is implying that if everyone came to its stores they would be better off in terms of their household budgets. Most people who work for watch-dog groups can probably afford to shop at CostCo (COST), so how would they know?

Stuff at Wal-Mart is cheap whether people want to shop there or not. Trying to negate or confirm the dollar amount is like chasing your tail. Seekers of the truth should have better things to do.

Douglas A. McIntyre

Posted on: March 31, 2008 – 5:06 am in Retail, , , ,

Apple (AAPL): The No.1 Brand In The Galaxy

A new piece of research shows that Apple (AAPL) has the largest impact of any global brand. Reuters writes that "The poll by online magazine brandchannel.com asked its readers to identify the brands with the greatest impact on their lives, and say how they affected readers’ behaviour and their view of the world."

Microsoft (NASDAQ:MSFT) turned up as the brand most respondents would like to see "revamped". The poll covered 2,000 people in 107 countries.

The data shows how fleeting the force of well-regarded fame can be. In 2000, Apple was a company with a niche PC, the Mac. Much of the company’s rise to respect is due to the iPod, which has sold 140 million units since it was introduced in 2001. The product now comes in zillions of colors and incarnations.

The success of the iPod has allowed Apple to make the audacious move of entering the cellular handset market with the iPhone. It has done this despite competition from much large companies with brands which have been in the market for over a decade, especially Nokia (NOK), Motorola (MOT), and Samsung.

Getting to the top is one thing. Staying there is another. Apple will almost certainly need a new product line to hold its spot. It is in a good position to go into the fruit business.

Douglas A. McIntyre

Posted on: March 31, 2008 – 4:50 am in Research, , , ,

Yahoo! (YHOO) Chases The Women’s Vote

Yahoo! (YHOO) has started another business which Microsoft (MSFT) can shutter when it buys the big web portal.. Yang & Company are starting a site aimed at women ages 25 to 54. According to The Wall Street Journal "it a key demographic underserved by current Yahoo properties."

That may be because it is overserved elsewhere and women have only so much time to spend on the internet each day, save agoraphobics.

Large womens magazines which include properties with loyal following like Vogue, Good Housekeeping, Women’s Day, and Allure have had websites for years. NBC owns large women’s website iVillage. What can Yahoo! offer that is not already in the market?

Nothing.

Douglas A. McIntyre

Posted on: March 31, 2008 – 4:37 am in Internet, ,

As Money Flees Equity Funds “Dry Powder” Moves To Sidelines

A mystery wrapped in an enigma. Money is cashing out of equity funds at an alarming rate. Much of that goes into money markets funds. If the stock market ever goes up again, that liquid capital could come back and fuel a rally. But when? And, in the meantime, does investment capital continue to pull out of stocks?

According to the FT, a study from Emerging Portfolio Fund Research shows that $100 billion was taken out of equity funds in the first quarter. Most of that came out of funds with stock investments in the US and Europe. While the withdrawals may hurt equity fund company earnings, it hurts the stock market much more. As investors yank money to the sidelines, funds have to sell stocks to supply the capital for people to cash out. That, in turn, helps drive markets further down. But, a stock rally might bring that money back.

Every silver lining has a cloud. The falling performance of equity funds will further withdrawals which could easily extend into the second and third quarters. Doom without a prophet.

The optimist’s view of this is based on the perverse notion that, once markets begin to move up, cash from money markets will flood into the market to chase the rising value of stocks. The trouble with this reasoning is that investors have be burned by several sucker rallies over the last year, and they may not be so quick to follow the next caravan. Capital could slip into Treasuries or corporate bonds.

Theories are good until practice proves them wrong. Investors are not anxious to return to the stock markets.

Douglas A. McIntyre

Posted on: March 31, 2008 – 4:29 am in Mutual Funds

Media Digest 3/31/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, the Treasury Department will announce a proposed major overhaul of the US financial regulatory system.

Reuters writes that Yahoo! (YHOO) introduced Shine, a site for women.

Reuters writes that the Apple (AAPL) brand is the one which has the most impact on world consumers according to a new survey.

The Wall Street Journal writes that IAC/Interactive (IACI) faces a number of market challenges now that it has won a case giving CEO Barry Diller the right to break-up the company.

The Wall Street Journal writes that Lehman (LEH) lost $350 million in a fraud and will sue Japanese company Marubeni.

The Wall Street Journal writes that a medical panel found that cholesterol drugs sold by Merck (MRK) and Schering-Plough (SGP) were no more effective than older, less expensive drugs.

The Wall Street Journal writes that US stock markets are doing better than most exchanges in other countries.

The Wall Street Journal reports that Google (GOOG) and DoubleClick now dominate the ad serving market.

The New York Times writes that several groups have attacked Wal-Mart’s (WMT) claims about how much it saves consumers.

The New York Times writes that the number of people using food stamps will hit a record this year.

The New York Times reports that Wall St. is nervous that there will be another financial catastrophe involving debt instruments which have not gotten into trouble yet.

The FT writes that investors have pulled almost $100 billion out of equity funds in the first quarter.

Bloomberg writes that Citigroup (C) will separate its credit card unit from its consumer bank.

Douglas A. McIntyre

Posted on: March 31, 2008 – 2:50 am in Press Digest, , , , , , , , ,

Asia Markets 3/31/2008 (LFC)(CHU)

Markets in Asia were down.

The Nikkei fell 2.3% to 12,536. Hitachi was down 5.3% to 591. KDDI was down 4.7% to 609000.

The Hang Seng fell 1.9% to 22,840. China Life (LFC) was down 4.1% to 26.8. China Unicom (CHU) was down 3.7% to 16.3.

The Shanghai Composite sold off 3% to 3,473.

Data from Reuters.

Douglas A. McIntyre

Posted on: March 31, 2008 – 2:22 am in International Markets, ,

How Banks Will Make Huge Money On Fed Borrowing (C)(JPM)(BAC)

Banks are going to the Fed and getting money at 2.5% and putting it onto their balance sheets.

What do the big money centers do with the money? They make investments in high-yield instruments. Or, put it into their proprietary trading operations. A bank that takes in $10 billion could make a $1 billion return on that over the course of a year, perhaps more, by "playing the spread" on the dirt cheap cash from Bernanke & Company.

The game the banks are playing at the expense of tax-payers due to inexpensive money from the Fed is outstanding for investors who hold stock in the firms. It could be one of the best money-making opportunities that companies like Citigroup (NYSE:C), JP Morgan (NYSE:JPM), and Bank of America (NYSE:BAC) have had in years. And, it is an opportunity which exists independent from the issues of their write-downs in mortgage-backed paper and LBO debt which they cannot syndicate.

On the face of it, the action by the banks would seem to be fine. But, in many ways it is not. One place that the money from the Fed is not going is to consumer and small business banking customers who need to re-finance mortgages, make capital expenditures, or add pay-roll to growing operations.

The Fed has a great deal of leverage now. It does not have to hand the money to big money center operations without strings attached. It could insist that some of that capital flow to consumer lending. But, that is not what is going on, which is fabulous news for bank stockholders.

Douglas A. McIntyre

Posted on: March 30, 2008 – 7:08 pm in Banking, , ,

Will Financial Stocks Make New Lows? (C)(JPM)(LEH)(MER)(WM)(WB)(MS)(WFC)

There has been some misplaced optimism that financial stocks bottomed earlier this month based on the notion that much of the bad news about write-offs had come out. Mid-month, the Fed increased the amount of money available to banks to $200 billion. The collateral the agency is willing to take is not of a much higher grade than wall paper.

Last week, unexpectedly, financial shares took a terrible turn South. Among the really large companies in the group most were off 10%. Lehman (NYSE: LEH), Washington Mutual (NYSE: WM), Merrill Lynch (NYSE: MER), and Wachovia (NYSE: WC) were down much more. As money moved into 10-year Treasuries at a rapid pace, Wall St. was signaling that it wanted out of the sector. Something is still rotten in De mark.

Oppenheimer downgraded earnings estimate for a number of companies in the sector last week. There are still rumors that Lehman is in trouble. The market’s move into Treasuries may have something to do with that. The news that Lehman was bilked out of $250 million is not likely to help the shares.

Citigroup (NYSE: C) is now back below $21. If it drops another $3, it would breach its low. Wachovia is only slightly above its period low. Merrill (NYSE: MER) is close. And, Lehman fell every day last week.

Goldman Sachs estimates that US financial companies will eventually have credit losses of $460 billion. Only $120 billion of that has been written off already. Wall St. is concerned that there will be another Bear Stearns-like (NYSE: BSC) event. If most of the banks and brokerages make lows this upcoming week the majority of traders see something extremely bad coming.

The disaster which began last summer has not reached, to any great extent, the  home equity loan markets, money market pools. or the derivative credit swaps market. It only takes one more explosion to bring on another crisis.

Douglas A. McIntyre

Posted on: March 30, 2008 – 11:39 am in Financial Stocks, , , , , , , , ,

Can Best Buy Earnings Save Its Stock? (BBY, CC)

On Wednesday we’ll get to see earnings out of Best Buy Co. Inc. (NYSE: BBY). The estimates from First Call are $1.65 EPS on $13.18 billion in revenues.  Next quarter estimates are $0.39 EPS on $8.58 billion in revenues. Estimates for fiscal Feb-2009 are $3.35 EPS on $43.08 billion in revenues.  These numbers may change by Wednesday morning.

Best Buy Co.’s 52-week trading range is $38.75 to $53.90. Analysts have an average price target north of $52.00 and shares closed at $40.56 on Friday.  Year-to-date, its shares are down close to 25%. We recently noted a Banc of America downgrade in the stock.

Normally we’d say to watch Circuit City (NYSE: CC) as well, but that company is so far imploded that a great Best Buy number would be interpreted as at Circuit City’s loss and a bad report from Best Buy would just imply things are bad there too.

One note that we’d like to point out is that while the stock is close to a 52-week low, these prices are close to lows not seen since mid-2005.  If $40.00 doesn’t act as a base for this electronics and appliances retail giant, then seeing this test $35.00 is not out of the realm of possibilities.  Much weak consumer spending should be factored in already, but Wall Street has been very bad in recent months of pricing in good news or bad news ahead of time.

Jon C. Ogg
March 30, 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 30, 2008 – 9:17 am in Earnings, Retail, ,

Agriculture Earnings Duel: Mosaic vs. Monsanto (MOS, MON, MOO)

This week we’ll get to see two important earnings reports out of agriculture leaders.   Wednesday we’ll get to see earnings out of Monsanto Co. (NYSE: MON). Two key calls of late are that Goldman Sachs raised its sector expectations for the group with key earnings visibility.  Jim Cramer has also been staying high on agriculture. 

The estimates from First Call on Monsanto Co. (NYSE: MON) are $1.69 EPS on $3.56 billion in revenues.  Next quarter estimates are $1.29 EPS on $3.69 billion in revenues. Estimates for fiscal Aug-2008 are $3.18 EPS on $11.04 billion in revenues.  Monsanto did just recently guide higher because its stock had come off of highs considerably.  Analysts have an average price target of $139.00, and Monsanto’s 52-week trading range is $53.95 to $129.28.  Since the end of 2007, Monsanto shares are up about 3%.  Its market cap is now roughly $62 Billion.

Friday we’ll get to see earnings out of Mosaic Co. (NYSE: MOS). The estimates from First Call are $0.95 EPS on $1.92 billion in revenues.  Next quarter estimates are $1.55 EPS on $2.55 billion in revenues. Estimates for fiscal May-2008 are $3.90 EPS on $9.01 billion in revenues. Estimates for fiscal May-2009 are $7.40 EPS on $12.23 billion in revenues.  Analysts have an average price target north of $122.00 and Mosaic Co.’s 52-week trading range is $25.95 to $119.78.  Since the end of 2007, Mosaic shares are up about 11%.  Its market cap is now almost $47 Billion.

On Monday, the USDA gives the Clarence Beeks crops report showing total numbers of acreage expected to be planted, and this may create many last minute revisions to each earnings report for anything tied to agriculture suppliers from seed to machinery to transportation.  As these companies are key contributors to the cop growers, these agriculture firms should already have at least a rough estimate of what is likely.  Lastly, investors may want to watch the Market Vectors Global Agribusiness ETF (AMEX: MOO) as the key ETF in the sector.  Of the total estimated percentage of the ETF’s assets, Monsanto comprises 8.4% of assets and Mosaic comprises 8.5% of the assets.

Jon C. Ogg
March 30, 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 30, 2008 – 8:29 am in Agriculture, Earnings, , ,

Research In Motion, This Week’s Earnings Spotlight (RIMM, AAPL, PALM)

On Wednesday afternoon we’ll get to see earnings out of Research In Motion Ltd. (NASDAQ: RIMM). The estimates from First Call are $0.70 EPS on $1.85 billion in revenues.  Next quarter estimates are $0.74 EPS on $1.99 billion in revenues. Estimates for fiscal Feb-2009 are $3.46 EPS on $9.18 billion in revenues.  All of these estimates may be slightly different by the time that earnings actually get here, and they may very well be different with slight revisions on Monday.  We’ follow up with more chart and options analysis as Wednesday afternoon approaches.

Despite woes of many other cellular phone companies, R-I-M raised its guidance very late in February.  It said it sees roughly 14 million subscribers for the quarter end.  It also put revenue expectations in the $1.80 to $1.87 Billion and its sees $0.66 to $0.70 per share diluted; First Call had estimates at the time as $1.85 Billion revenues and $0.69 EPS. 

When it raised its subscriber targets shares were at $104.55 after the pop from the news.  Shares closed Friday at $115.34.  R-I-M sits well above key longer-term moving averages as its 200-day moving average was $94.34 on Friday and the 50-day moving average was $98.81 as of Friday.  Those levels should ratchet slightly higher by Wednesday.  Analysts have an average price target north of $136.00.

Despite Palm Inc. (NASDAQ: PALM) not imploding after its earnings a week ago, it is becoming farther and farther behind as a competitor as far as Wall Street is concerned.  The thought had been that Apple Inc. (NASDAQ: AAPL) was going to release its 3G version of the iPhone later in the year.  Now some data points to May.  If this does come out in May, it will be a challenge now that Apple has opened its apps development to outside teams.  But if that doesn’t come out until Q3 or later then R-I-M will have another dominant two quarters of being the smart phone leader on the enterprise level.  As far as whether or not Apple’s 3G iPhone will ever truly challenge the enterprise space, that opinion varies wildly.

Jon C. Ogg
March 30, 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 30, 2008 – 8:01 am in Earnings, Wireless, , ,

Apple (AAPL): 3G iPhone A Month Out

One of the things that has kept some consumers from buying an Apple (NASDAQ: AAPL) iPhone is that it only runs on AT&T’s (NYSE: T) 2.5G network. That makes the device’s connection to the internet slow.

Now, the research arm of a major firm, Bank of America, says that the Apple iPhone 3G product will be out in a few weeks. According to AppleInsider "financial analyst Scott Craig points to channel investigations which show an iPhone capable of faster, third-generation cellular Internet access produced in small numbers in May."

The product would not only bring in consumers who want a handset with a faster connection. It could help Apple crack the business market. Most RIM (NASDAQ: RIMM) Blackberry products already have 3G capacity. Apple is targeting the Blackberry as it tries to take a piece of the enterprise market.

A 3G version of the iPhone could boost sales significantly and help Apple’s numbers in the June quarter and beyond. It would be the largest single change in the handset since its release.

Douglas A. McIntyre

Posted on: March 30, 2008 – 6:42 am in Consumer Goods, , ,

UBS (UBS) To Mark-Down Value Of Auction-Rate Securities

In a move that will bloody a number of its customers, UBS (UBS) will mark down the value of auction-rate securities held by its customers. According to The Wall Street Journal the bank "began on Friday to lower the values of so-called auction-rate securities held by its clients, a move that will be a jolt to customers who had been told they were investing in a "cash alternative."

The action could drop the value of some of the paper by as much as 20%. Other banks are likely to follow UBS’s example

The auction-rate securities has held by individual investors, institutions, and some corporations who list them on their balance sheets as "cash equivalents". At the end of the first quarter,the public companies in this pool may have to take large write-offs for their holdings which will hit P&Ls.

There is a strong case to be made that the banks and brokerages which marketed auction-rate paper did so by saying that they were nearly as safe as cash. The auction-rate market traded well from 1985 until late last year. At that point troubled financial companies were not willing to keep the market liquid by buying excess securities from one auction and selling them in the next. This role as "specialists" kept the market operating smoothly.

There will almost certainly be a rash of lawsuits now from institutions and corporations. They will argue that the financial companies who "made the market" in auction-rate paper had an obligation to keep it trading if the securities were offered to investors as being as liquid as Treasuries.

If the auction-rate market continues to deteriorate, the lawsuits can go on as investors lose more with each passing quarter.

Douglas A. McIntyre

Posted on: March 29, 2008 – 6:22 am in Banking,

Barry Diller Gets Wish To Hammer IACI (IACI) Shareholders

Barry Diller and John Malone went after one another in court over whether Diller could get shareholders in IAC/Interactive (IACI) to approve breaking the company into five piece. Each would be traded as a public company. Malone’s Liberty Media (LCAPA) said that the voting rights it had given Diller for its shares did not extend to the level which would allow them to be voted for dismantling the company.

The entire matter was pushed into the Delaware courts, and Diller won. According to MarketWatch "Vice Chancellor Stephen Lamb ruled Friday that "Liberty has failed to demonstrate that Diller has breached or threatened to breach any contractual duty he owes to Liberty," according to Lamb’s 78-page opinion."

For shareholders, it is a Pyrrhic victory. IACI shares trade near a 52-week low at $20.49. The were above $40 in February of 2007. Revenue growth at the company’s big HSN operation has been very modest. Operating income at the unit fell last year. The firm’s Lending Tree operation has been badly damaged by the current downturn in housing. IACI’s media operations, which include Ask.com, are too small to compete with operations like AOL and MSN.

Diller may have won in court, but it did nothing for his shareholders.

Douglas A. McIntyre

Posted on: March 29, 2008 – 6:06 am in Media, ,

Northwest (NWA) To Push Deal, Cause Pilot Strike

Northwest (NWA) could not get pilots in line for a merger with Delta (DAL), so it is going to try to move forward without them. It can get ready for a pilot’s strike that could cost hundreds of millions of dollars in revenue.

Northwest and Delta have been talking merger for several months. The pilots at the airlines have not been able to agree on seniority of a combined pool of fly-boys and this has held up the deal. Northwest wants none of that. According to The Wall Street Journal, NWA’s "jumpstarted deal wouldn’t include terms of a combined pilot labor agreement and the salary enhancements previously foreseen."

A married-up company can watch a pilot’s strike take it down the drain.

The benefits of merging airlines is hardly clear anyway. Fuel costs will stay high, so there is little benefit there. Combining customer service means putting together computer reservations systems, Glitches in this process almost always anger customers and probably drive them to other carriers. Cutting employees like mechanics who are parts of unions causes the remaining workers to push for higher compensation.

Competing airlines usually try to use the mess created to pick up unhappy passengers.

Man the picket lines. The merger is probably going through.

Douglas A. McIntyre

Posted on: March 29, 2008 – 5:51 am in Airlines, ,

Fraud Hits Lehman (LEH)

Lehman Brothers has been the victim of fraud to the tune of $250 million. According to The Wall Street Journal "swindlers used forged documents from one of Japan’s biggest trading companies."

The money taken was for loans to a Japanese medical company secured by certificates from Marubeni, a large Japanese trading company.

Douglas A. McIntyre

Posted on: March 29, 2008 – 5:06 am in Brokerage Firms,

Cramer Speculates on Dialysis Drug (AMAG, XCR)

On tonight’s MAD MONEY on CNBC, Jim Cramer said he had a speculative biotech stock.  His pick in the sector is AMAG Pharmaceuticals, Inc. (AMAG) because of its soon to be approved  ferumoxytol, a newer and better intravenous iron treatment for kidney disease patients on dialysis.    Cramer thinks there are many reasons to like this one:

  • ferumoxytol should be approved later in the year;
  • he thinks a secondary has put pressure on it, although that gives it more cash to stabilize the stock;
  • has its own strong sales force;
  • was given an untimely and unwarranted analyst downgrade;
  • will perform better than existing drugs on the market;
  • a competing biotech drug received negative FDA comments on safety, yet that isn’t AMAG’s issue; and he thinks this can expand the market from $400 million annually to much higher.

We recently covered a speculative portable dialysis device maker (in prototype and development stage) on our "10 Stocks Under $10" called Xcorporeal, Inc. (AMEX: XCR) which has risen in the last two weeks since being included.  We have also reviewed some of the lower-tier dialysis names for this as well.

We would note that this AMAG traded at $56.00 after an upgrade just in early February and shares closed under $40.00 Friday.

Jon C. Ogg
March 28, 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 28, 2008 – 5:51 pm in Biotech, Cramer, ,

Investools Files Shelf Registration (SWIM)

Investools Inc. (NASDAQ: SWIM) has filed to sell up to 3,083,178 shares of common stock in an open shelf registration.  None of the shares are going to the company as this was filed on behalf of the selling shareholders that were the owners of thinkorswim.  This will allow the thinkorswim owners to sell any, all, or none of the shares if they so choose.

At today’s prices, this would represent north of $33 million.  Investools market cap is $730 million.  At $11.06 and a $9.29 to $18.23 trading range, this offering is just a small drop in the bucket.

We frequently cover such issues around private offerings, management buyouts, private equity and more in our open email distribution list where we preview certain issues that will be in our twice-monthly Special Situation newsletter for our our subscribers.

Jon C. Ogg
March 28, 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 28, 2008 – 4:31 pm in Financial Stocks, Secondary Offering,

The 52-Week Low Club (MPG)(MTG)(WLP)(APOL)(WOOF)

Maguire (MPG) Possible sale of the company fails. Shares sell down to $12.42 from 52-week high of $38.08.

MGIC (MTG) Company closes common stock offering, dilution. Stock off to $9.60 from 52-week high of $67.05.

Wellpoint (WLP) Dowgrade from Lehman. Sells down to $43.02 from 52-week high of $90.

Apollo Group (APOL) Misses quarterly numbers. Down to $39.41 from 52-week high of $81.68.

VCA Antech (WOOF) No real news. Just drifting down. Hits low of $26.55 from 52-week high of $46.23.

Douglas A. McIntyre

Posted on: March 28, 2008 – 3:01 pm in HI/LOW, , , , ,

Corel Holder Wants To Take It Private (CREL, CAPA)

Corel Corp. (NASDAQ:CREL) has announced today it has received an unsolicited proposal from Corel Holdings, L.P., which is controlled by an affiliate of Vector Capital Corporation, the holder of 69% of Corel’s outstanding common shares.

The Vector affiliate has proposed to make an offer to acquire all of Corel’s outstanding shares that it currently does not hold at a price of $11.00 cash per share in US Dollars.  We would note that before the stock was halted, shares were trading at $10.80 and the stock has a 52-week trading range of $6.94 to $14.37.  Vector has stipulated that the offer would be conditional upon satisfactory confirmatory due diligence and Corel’s existing credit facility remaining in place following the consummation of any transaction, among other things.

Corel’s Board of Directors has formed a Special Committee of independent members of the Board consisting of Ian Giffen, Steven Cohen and Daniel Ciporin.  The group will assist in evaluating and responding to the proposal and other related strategic considerations.  Corel said it will not provide further comments at this time but will provide updates as further information becomes available. There is also the pre-packaged statement that there can be no assurance that a transaction will be completed or, if completed, of its terms, price or timing.

We frequently cover such issues around private offerings, management buyouts, private equity and more in our open email distribution list where we preview certain issues that will be in our twice-monthly Special Situation newsletter for our our subscribers.

Corel is a leading developer of graphics productivity and digital media software whose offerings include WordPerfect, CorelDraw, Painter, and more.  We’d also note that Vector Capital recently had attempted to acquire Captaris, Inc. (NASDAQ: CAPA).  That was one we covered as having not gone through today. 

If you look above at the buyout offer versus where this one has traded, it doesn’t look like this deal is an assured slam dunk that will be approved.  That answer won’t be known until the firm makes a response.

Jon C. Ogg
March 28, 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 28, 2008 – 2:19 pm in Mergers and Buy Outs, Private Equity, Software, ,