Daily Archives: May 4, 2008

“Iron Man” Tops $100 Million: Marvel Entertainment (MVL) and Viacom (VIA)

Marvel Entertainment (MVL) and Viacom (VIA), parent of Paramount, benefitted as "Iron Man" based on a Marvel comic book character brought in over $100 million.

According to the AP The film also scored overseas with $96.7 million in 57 countries where it began opening Wednesday, putting its worldwide total at $201 million.

The move makes that management at Marvel look brilliant for handling the production of "Iron Man" themselves instead of having it handled by a major studio. Paramount handed distribution.

Douglas A. McIntyre

Posted on: May 4, 2008 – 2:46 pm in Old Media, ,

$200 Oil: Goldman Calls The Ball: Bad News From Nigeria And Russia

Crude has bumped up against $120 several times in the last month. It wants to go higher, and it will. Price was pushed down by the Fed’s action and some improvement in the dollar. Supply data was moderately good. Goldman Sachs are looked at this and has said look for $200 oil. According to Bloomberg, “The possibility of $150-$200 per barrel seems increasingly likely over the next six-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty."

Perhaps it is fair to ask what took them so long.

The geopolitical factors which move oil up are getting worse, perhaps much worse.

In the last several days, there have been more bombings of Royal Dutch Shell facilities in Nigeria, the 8th largest oil producing country. According to Reuters a spokesman for the oil company said "We are mobilising containment booms to stop the spread of oil and have also shut in some production volumes." Nigeria is becoming more and not less unstable.The attacks on Western oil operations are likely to increase.

In Russia, the government has raised the oil export tax by 17%. Bloomberg quotes one source as commenting “The government is addicted to high oil revenues,” said Michael Teagarden, a sales trader at UBS AG in Moscow. “Russia needs to wean itself from this windfall and encourage producers to spend the money developing new fields.”

These pieces of news come on top of word that a ship under contract to the U.S. Defense Department fired warning shots at two boats in the Persian Gulf.

Recent reports from Mexico show that its oil fields are producing less and less crude. Oil exports from the country dropped 12% in the first quarter compared with a year ago. Part of this is because output from the nation’s largest field is beginning to tail off sharply.

Rising oil prices are being created by three factors now. One is the aging of certain large fields. Another is the amount of profit that exporters like Russia and OPEC would like to keep for themselves. The last is flare-ups of instability in countries which are already experiencing great unrest.

None of these is going away.

Douglas A. McIntyre

Posted on: May 4, 2008 – 9:55 am in Oil & Gas

Yahoo! & Microsoft Termination To Unleash The Hounds (YHOO, MSFT, GOOG, TWX, IACI)

It’s official.  At 7:56 PM Saturday night, Steve Ballmer of Microsoft (NASDAQ: MSFT) officially threw in the towel in its bid to acquire Yahoo! Inc. (NASDAQ: YHOO).  Now that the details are out, the differences were just too wide.  Microsoft took its offer up to $33.00.  Yang was holding out for $37.00.

Unless every bit of media and every bit of research was wrong, Yahoo! had no real second bid that would have generated even a "low-$30’s" share price.  In fact, everything we saw in the "new age of liquidity pressures and softer economics" might dictate the shear size of the real dollars involved would dictate that Yahoo! wasn’t even able to even get a "Mid-$20’s valuation" from even a consortium of other media giants.  At $28.60, Yahoo!’s market cap is roughly $40 BILLION.

Over the last 5-year period, Yahoo! shares barely saw $40.00 and anything over $35.00 was long before the Google (NASDAQ: GOOG) AdSense program came on like an avalanche pouring down the mountain. Jerry Yang’s is delusional about the value Internet and web giant, mainly because of that shear size of real dollars at this point.  But now on a standalone basis, Yahoo! is just an overvalued Internet behemoth that used to have a bidder.

Interestingly enough, Yahoo! shares might not really see that "mid to low teens share price" that many shareholders and market pundits have voiced.  Many will believe that Ballmer and Microsoft are going to come back with a lower hostile bid in the coming weeks or months.  But lower prices are almost as certain as a hot Texas summer. 

We recently highlighted IAC/InteractiveCorp. (NASDAQ: IACI) in our Special Situation newsletter, and this merger will have an impact on that call now.  Our Special Situation pick going out early Monday is Time Warner Inc. (NYSE: TWX), as this may change that landscape for web properties now. Keep in mind that not all of these are "Buy and Hold" calls, so merely knowing the name is different from knowing the call.

If you are a director of Yahoo! and if those media reports were true about board members contacting lawyers and insurance companies to find ways to cover themselves in case this bid blows up, then you were smart.  If you didn’t get any extra protection, well, let’s just say that you better have lined that up this weekend.  You will be hearing from lawyers and seeing class action suits.  In fact, it would be a minor miracle if the first class action lawsuit hasn’t been filed by Monday evening "on behalf of Yahoo! shareholders against the board of directors of Yahoo! for grossly neglecting the best interest of shareholders."

Jerry Yang has had the job title of "Chief Yahoo!" for some time. No more.  We’ll be nice and not say "Chief $%^&$#@&."  But if you are a Yahoo! shareholder, you’re probably thinking that Yang’s new title will be "Chief Pariah."  Yahoo! is going to have to make some advances in a serious hurry now tokeep that share price from cratering, but shareholders may want to tryto stop the company from getting aggressive. Otherwise, Yang andfriends may be leveraging the company up too much at a time that thecompany is in a position of weakness.

You can join our open email distribution list to hear about other mergers, special financings, IPO’s, secondary offerings, spin-offs, and more.

Jon C. Ogg
May 4, 2008

Jon Ogg is also a producer and editor of the "10 Stocks Under $10" weekly newsletter; he does not own securities in the companies he covers.

Posted on: May 4, 2008 – 5:11 am in Internet, Mergers and Buy Outs, , , , ,