Daily Archives: August 7, 2008

Can Wachovia (WB) Weather An Auction-Rate Buy-Back?

WbNow that Citigroup (C) and Merrill Lynch (MER) have announced that they will buy back auction-rate securities sold to their private clients, the question arises about how financial companies with weaker balance sheets will handle this. Merrill will purchase as much as $12 billion of the paper and Citi is taking in over $7 billion.

One of the hard-up banks which has a significant auction-rate exposure is Wachovia (WB). About two weeks ago, securities regulators from several U.S. states, investigating Wachovia Securities’ auction rate securities sales practices, went to the company’s St. Louis headquarters and requested its documents and records.

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Posted on: August 7, 2008 – 5:11 pm in Banking, , ,

Merrill Lynch (MER) Caves In On Auction Rates

MerrillMerrill Lynch (MER), pole-axed by the Citigroup (C) decision to buy back all of the auction-rate securities it has sold to individual investors, buckled and said it will purchase up to $12 billion of the paper on the same basis.

MER said that effective January 15, 2009, and through January 15, 2010, it will offer to buy at par auction rate securities sold by it to its retail clients.

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Posted on: August 7, 2008 – 4:47 pm in Brokerage Firms, ,

Edgar Online Loses Largest Shareholder (EDGR)

Edgar_logoAll companies gain or lose their largest holders at some point, and today the arrow stopped on EDGAR Online Inc. (NASDAQ: EDGR).  Edgar Online lost its largest shareholder yesterday according to an SEC filing made today.  The OHIO STRS (state teachers retirement) fund sold out of all 2.9844 million shares of common stock. 

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Posted on: August 7, 2008 – 3:14 pm in Insider Activity, Internet,

Sprint (S) Rises Aloft On Wild Rumors

95129cSprint (S) has traded about ten times its normal volume with over 261 million shares changing hands. The market is ablaze with rumors that the cellular carrier will cancel its plan to raise $3 billion in the open market and take the money from Korean company SK Telecom instead. SK has been trying to get in the front door at Sprint for over a year.

There is no reason to believe that shareholders will get diluted any less if the money comes in as a convertible sold to the public or as a direct investment from SK.

It is a nice way from people to get sucked in at a relatively high price only to see the stock drop later.

Douglas A. McIntyre

Posted on: August 7, 2008 – 2:43 pm in Telecom,

The 52-Week Low Club 8/7/2008 (NWS)(ANF)(CIEN)

Sad_clownGeo Group (GEO) Drops full-year outlook. Down to $18.47 from 52-week high of $32.93.

Teekay (TK) Market unhappy with quarterly results. Falls to $33.13 from 52-week high of $62.61.

Abercrombie & Fitch (ANF) Bad same-store sales. Sells off to $49.29 from 52-week high of $85.77.

News Corp (NWS) Fear that advertising sales will keep falling. Down to $13.93 from $24.95.

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Posted on: August 7, 2008 – 2:34 pm in HI/LOW, , , , ,

Buffett & Berkshire Hathaway Earnings Watch (BRK.A, BRK.B, KFT, BUD)

Buffett_imageAfter the close of trading on Friday, we’ll get to see earnings out of Wall Street’s favorite idol as Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) reports earnings.   

The first thing we ant to advise readers about is that there are very few estimates on Wall Street out of analysts, so the actual numbers are generally thought of as a hint or a nod rather than a formal bar.  Guidance is also not formally given so traders have to listen to the inferences made for internal projections.

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Posted on: August 7, 2008 – 1:52 pm in Buffett, Conglomerates, Earnings, , , ,

Rhino Resources IPO Terms Slashed (RNO)

Rhino Resources, Inc. (NYSE: RNO) is supposed to price its IPO this evening for Friday trading, or at least that is what we had on our IPO calendar at the start of the week.  The IPO is still on schedule, but the company just made an amended filing showing that the original $16 to $18 range has been taken down to a range of $11 to $12.00 per share. 

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Posted on: August 7, 2008 – 12:34 pm in Commodities, IPOs,

Lenovo: PCs Still Selling In China (DELL)(HPQ)

ChinaNo wonder Dell (DELL) and Hewlett-Packard (HPQ) wish they had higher market shares in China. While sales are slowing in the US, big China-based PC firm Lenovo says its revenue and earnings are moving up fine, despite a slowdown in America.

The company reported profit for the three months ending June 30 was $110 million, or $1.25 per share.. Sales rose 10 percent to $4.2 billion.

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Posted on: August 7, 2008 – 12:26 pm in China, ,

Citigroup (C) Goes A Long Way Toward Becoming “Worst Managed Company”

DataIn an announcement that shows how remarkable flawed the marketing and risk management at Citigroup (C) have been, the bank agreed to buy-back $7.5 billion in auction rate securities. It will also pay fines totaling $100 million for improperly selling the paper as "cash equivalents."

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Posted on: August 7, 2008 – 11:21 am in Banking,

Good News Gets Scarce in the Energy Business (WNR, WMB, SRE)

Oil_gas_pipeline_picThere’s no good news coming from Western Refining (NYSE:WNR) today. The company reported second quarter earnings of $8.2 million (EPS of $0.12) versus $155 million and EPS of $2.29 for the same period a year ago. The culprit, of course, is lower refining margins. Analysts expected EPS of $0.28, so Western achieved a clear miss.

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Posted on: August 7, 2008 – 9:46 am in Oil & Gas, , ,

Blackstone Going Green (BX)

Blackstone_logo_2This morning there was interesting note out of The Blackstone Group (NYSE: BX), although some efforts have already been made down this road.  The company has formed a new business group to focus on investments in the cleantech energy sector and will also provide advice on renewable energy strategies across its existing diverse asset base.

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Posted on: August 7, 2008 – 9:36 am in Alternative Energy, Private Equity,

Senomyx Files To Raise Cash (SNMX)

Senomyx Inc. (NASDAQ: SNMX) has just filed for a possible secondary offering or capital raise of up to $50 million.  It has filed an open shelf that will allow the company to sell common stock, preferred stock, debt securities, and/or warrants in any manner or combination.

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Posted on: August 7, 2008 – 8:53 am in Secondary Offering,

Vonage Creeps Up (VG)

Vonage_logoNew management over at Vonage Holdings Corp. (NYSE: VG) is going to have its hands full.  The independent VoIP telephony leader did post a narrower loss on expense management.  Its $7 million loss came to -$0.04 EPS (GAAP)as revenues gained 11% to $228 million.  Its adjusted operating income did come in at $12 million versus last year’s -$18 million defecit.

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Posted on: August 7, 2008 – 8:35 am in Earnings, Internet, Telecom,

Jobless Claims Hit New Highs: More Babysitter Positions Needed

Labor_department_logo_2The Labor Department just posted a pretty ugly jobs number.  Normally we do not pay quite as much attention to the weekly numbers, but they are getting worse and worse.  This last week’s report showed 455,000 weekly jobless claims.  This was up 7,000 from the 448,000 the week before, which was actually left unchanged.

What is more important than even the number is the perspective.  This appears to be the highest number since early in 2002.  Yep, that’s right after the 9/11 crisis and right as things were getting really bad. 

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Posted on: August 7, 2008 – 7:45 am in Economy

Illumina Gets Secondary Behind It (ILMN)

Illumina Inc. (NASDAQ: ILMN) has priced its proposed secondary offering of 3.5 million shares at $87.50 per share.  This will result in net proceeds of roughly $297.9 million. The sole manager of the offering is Goldman Sachs.

While that is a $1.75 discount from yesterday’s close, it is down from recent highs of $95.75 and around the lows of two-days ago.  Some secondary pricings look bad for holders, but this one doesn’t look too bad with shares down $1.00 from yesterday’s close.

Jon C. Ogg
August 7, 2008

Posted on: August 7, 2008 – 7:17 am in Biotech, Secondary Offering,

Wal-Mart (WMT): The “Recession Proof” Theory Leaves The Building

WalmartThe big theory after Wal-Mart (WMT) announced its June same-store sales was that the company was recession-proof. People were going from higher-priced retailers to Wal-Mart to save money because the economy was forcing them to do so.

Wal-Mart was to be the one large American company that stepped out of the way as the recession rolled on.

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Posted on: August 7, 2008 – 6:46 am in Earnings, , ,

Sirius (SIRI): A Miss Is As Good As A Mile

Sirius_satellite_radio_1Sirius (SIRI) second quarter earnings demonstrated once again that, even after a merger with XM the new entity is not a viable business. The company’s gross subscriber additions were 1,029,287, barely above the 1,002,145 in the same quarter last year.

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Posted on: August 7, 2008 – 6:19 am in SEC,

Top Pre-Market Analyst Upgrades (BPFH, CAAS, CTXS, HAYN, MMC, NDAQ, RL, RMD)

These are not all of the analyst upgrades or positive calls we are seeing, but these are the stand out calls early this Thursday morning:

  • Boston Private Financial (BPFH) Raised to Overweight at JPMorgan.
  • China Automotive Systems (CAAS) Started as Buy at Merriman Curhan Ford.
  • Citris (CTXS) Started as Outperform at Bernstein.
  • Haynes International (HAYN) Raised to Overweight at JPMorgan.
  • Marsh & McLennan (MMC) Raised to Market Perform at FBR.
  • NASDAQ OMX (NDAQ) Raised to Outperform at FBR.
  • Polo Ralph Lauren (RL) Raised to Outperform at Morgan Keegan.
  • Resmed (RMD) Raised to Hold at Citigroup.

Jon C. Ogg
August 7, 2008

Posted on: August 7, 2008 – 6:09 am in Analyst Calls, , , , , , , ,

Top Pre-Market Analyst Downgrades (AIG, ANEN, AVP, KMX, CTRN, EW, FMX, LAMR, TRMK, VMW)

These are not all of the downgrades or negative calls we are seeing, but these are the stand out calls early this Thursday morning:

  • AIG (AIG) Cut to Market Perform at FBR.
  • Anaren (ANEN) Cut to Neutral at Piper Jaffray.
  • Avon Products (AVP) Cut to Neutral at Credit Suisse.
  • CarMax (KMX) Cut to Market Perform at Raymond James.
  • Citi Trends (CTRN) Cut to Neutral at Piper Jaffray.
  • Edwards Lifesciences (EW) Cut to Underweight at JPMorgan.
  • Femsa (FMX) Cut to Equal-weight at Morgan Stanley.
  • Lamar Advertising (LAMR) Started as Sell at Citigroup.
  • Trustmark (TRMK) Cut to Underweight at JPMorgan.
  • VMware (VMW) Started as Underperform at Bernstein.

Jon C. Ogg
August 7, 2008

Posted on: August 7, 2008 – 6:07 am in Analyst Calls, , , , , , , , , ,

The Mortgage Crater Gets Deeper, Storm Flags Up For Banks

Forsale2The IMF and NYU economist Nouriel Roubini can say "I told you so." Both put estimates for mortgage write-downs at over $1 trillion. Banks executives are hoping the number is half of that. The lower number is wrong. As Sam Spade said, it is "the stuff that dreams are made of."

Mortgage defaults are in the process of rising rather than falling.

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Posted on: August 7, 2008 – 5:13 am in Housing