16 – September – 2008

Daily Archives: September 16, 2008

AIG’s (AIG) Last Hours, Paulson The Anarchist

No one could quite get to the crash victim, and now it seems certain AIG (AIG) will not make it out of the wreck.

After staging a rally during the day, AIG’s shares closed down 21% at $3.75. After hours the stock fell another 49% to $1.95.

AIG’s fate hinged on the chance that the government would put a single dime into a rescue effort. Hank Greenburg, AIG’s former CEO and an 83-year-old gentleman who was pushed out the door, said he might make an offer. It was never more than a rant, a little bit of revenge to point out that he was right. If the company had kept him on, none of this would have happened. Old School irony.

Posted on: September 16, 2008 – 5:52 pm in Financial Stocks, AIG, FNM, FRE, GS, Leh

SanDisk’s New Name: SamDisk or Sanshung (SNDK)

SanDisk Corporation (NASDAQ: SNDK) has received a $26 buyout offer from Samsung, and shares are soaring after the close. We would like to note that this deal may be a hostile one, and one with conditions that management might not like. We had previously noted how an offer of this sort might not be accepted.

Samsung has sent a letter to SanDisk stating that four months of meetings and discussions over a possible business combination went nowhere. It said it was deeply disappointed about SanDisk’s unrealistic expectations over a standalone market value and an appropriate merger price. Samsung reiterated that it will pay cash to acquire the company in a merger that is not subject to financing conditions.

Posted on: September 16, 2008 – 4:53 pm in Mergers and Buy Outs, Semiconductor, SNDK

A Surprise From Morgan Stanley (MS)

By all accounts, Morgan Stanley (MS) was supposed to have a mediocre quarter. Wall St. was concerned it could be worse than that. Enough of the large financial companies had been damaged by write-offs for the period.

Following the example of Goldman Sachs (GS), Morgan posted a profit, and its numbers were close to the ones it posted last year. For many traders, that was a miracle.

Posted on: September 16, 2008 – 3:42 pm in Earnings, GS, MS

Adobe Hits The Mark (ADBE)

Adobe Systems Inc. (NASDAQ: ADBE) reported better-than-expected results. The software and media player giant earned $0.50 per share on revenue of $887.3 million. First Call had estimates of $0.46 for earnings and $876.7 million for revenue. For next quarter, Adobe guided non-GAAP EPS of $0.51 to $0.53 on revenue of $925 million to $955 million. First Call had estimates of earnings of $0.51 on sales of $939.4 million.

Posted on: September 16, 2008 – 3:24 pm in Earnings, Software, ADBE

The 52-Week Low Club 9/16/2008 (AIG)(WM)(MER)(CEG)(GHS)

Constellation Energy Group (CEG) falls on fears of link to the Lehman bankruptcy. The company says no. The shares plunges to $13 from 52-week high of $107.97.

Gatehouse (GHS) shows why it’s a bad time to be a newspaper company. It slips to $.40 from 52-week high of $13.50.

Washington Mutual (WM) sells down and then recovers. It hits $1.50, down from 52-week low of $39.25.

Merrill Lynch (MER) also starts down and springs up. The stock sells off to $16.25 from 52-week high of $78.66.

AIG (AIG) is another stock which drops and recovers. Shares are down to $1.25 from 52-week high of $70.13.

Douglas A. McIntyre

Posted on: September 16, 2008 – 2:57 pm in HI/LOW, AIG, CEG, GHS, MER, WM

Ken Heebner Bailed Out of Commodities (SLB, PBR, CGMFX)

Ken Heebner of the CGM Focus Fund (CGMFX) has made a game-changing move in his portfolio. In a CNBC interview with Erin Burnett, Heenber was asked about his positions in two key stocks in the oil sector Schlumberger (NYSE: SLB) and Petroleo Brasileiro (NYSE: PBR), or Petrobras. Heebner said that because of the slowing in emerging growth markets such as China and India, HE HAS CUT COMMODITY STOCKS DOWN TO UNDER 10% OF THE PORTFOLIO. He said Schlumerger is gone and he’s hanging on to Petrobras, but is watching oil prices. This is a major change. If you go back to his last filing, it showed how Heebner had stuck with commodities. That was hurting him. Based upon how the markets have been performing he hasn’t seen a reprieve from the selling pressure in whatever his new holdings were. With the market drop yesterday, the CGM Focus Fund was down 5.5% at $42.82. Heebner’s performance until recently has been incredible. But the CGM Focus Fund has lost nearly one-third of its value since the end of June.

Jon C. Ogg
September 16, 2008

Posted on: September 16, 2008 – 1:58 pm in Agriculture, Commodities, Interview, Metals, Oil & Gas, CGMFX, PBR, SLB

FOMC Asleep At The Wheel

Well, the awaited FOMC announcement has finally come out and is a disappointment initially. The FOMC voted unanimously to leave interest rates unchanged at 2.00%. The Discount Rate was also unchanged at 2.25%. On the surface this was a disappointment based upon the financial meltdown we are seeing. The FOMC isn’t the one responsible for bailing out a bunch of greedy people who operated at 20-times leverage (or more) and this current problem is actually beyond what it can do smoothly without being accused of being a band called The Bailout Boys. But the criticism will still come for Ben Bernanke and friends at the Fed. Below are some of the summary comments and more detailed commentary and analysis.

Posted on: September 16, 2008 – 1:21 pm in Economy

INDEX ALERT: Which Stock Will Replace AIG on the DJIA? (AIG, MO, HON, GOOG, AAPL, CSCO, PEP, BRK-A, CL, MDT, ABT)

There is one critical aspect to the stock market that pertains to American International Group (NYSE: AIG) which has been given less coverage because of the media’s focus on the turmoil in the stock markets. AIG is one of the 30 components of the Dow Jones industrial average, the most widely known stock market index. AIG is on the verge of imploding, and even if it survives it will be a shadow of its former self. So this brings up a key question: Which company will replace AIG in the DJIA? This seems like it will likely take place soon. As you will see below, we have made many possible selections here.

Posted on: September 16, 2008 – 12:38 pm in ETF, Index, AAPL, ABT, AIG, BRK-A, CL, CSCO, GOOG, HON, MDT, MO, PEP

Court Keeps Sprint From Hosing iPCS For Now (IPCS, S, CLWR)

iPCS, Inc. (NASDAQ: IPCS) has announced that a circuit court judge in Cook County, Illinois, has denied a motion from Sprint Nextel (NYSE: S) to dismiss or stay the company’s lawsuit against Sprint over a joint venture with Clearwire Corporation (NASDAQ: CLWR).

Posted on: September 16, 2008 – 10:31 am in Law, Telecom, WiMAX, Wireless, CLWR, IPCS, S

The Phillips Curve Is Dead, Except At The Fed

By John Tamny, RealClearMarkets

The Phillips Curve is the theory that inflation is the result of total demand outstripping total supply at the national level. In a recent speech, Fed vice chairman Donald Kohn said, "A model in the Phillips curve tradition remains at the core of how most academic researchers and policymakers, including this one, think about fluctuations in inflation." And with government measures of inflation presently higher than what is thought allowable by our central bank, he added that "bringing overall inflation immediately back to the low rate consistent with price stability could be associated with a much higher rate of unemployment for a short time."

The Market Mounts The Consumer’s Back And Stages A Rally

The market staged an improbable rally. After selling off over 500 points yesterday and opening down over 100 points today, the Dow is about even.

Wall St. may see a small ember left from the fire of consumer spending that raced through the economy for half a decade. Even with housing down and credit tight, a few things have flipped in the direction of the average citizen. Most important, the costs of food and fuel have dropped. If the Fed cuts rates, they may even be able to get a loan.

Posted on: September 16, 2008 – 9:50 am in Most Actives, F, KR, SBUX, SCHW, UAUA

Wells Fargo (WFC) Up 8%: Bad News Is Good

Wells Fargo’s (WFC) shares are up 8% on strong volume. The bank stock should be trading down along with Citigroup (C) and Wachovia (WB).

Due to the perverse reasoning of traders, Well Fargo is fine. Its bad news is better than the bad news from its peers.

RBC Capital Markets cut its earnings estimate for WFC. The research firm lowered its third-quarter earnings forecast to $.40 from $.53, while the full-year outlook dropped to $2.07 a share from $2.20.

Posted on: September 16, 2008 – 9:03 am in Banking, C, WB, WFC

Lehman Rains On Solar Stocks Too (LEH, ESLR, JASO)

The bankruptcy of Lehman Brothers (NYSE:LEH) and the ongoing counterparty risk scenario isn’t just applicable to financial stocks. This is going to hit a couple of solar stocks pretty hard today. Evergreen Solar (NASDAQ:ESLR) looks to be taking the bigger hit, but JA Solar (NASDAQ:JASO) will also feel the pain.

Posted on: September 16, 2008 – 8:25 am in Alternative Energy, Brokerage Firms, ESLR, JASO, Leh

Monsanto Tries Raising Guidance (MON)

Monsanto Company (NYSE: MON) raised fiscal 2008 earnings estimates. The crop and agriculture player now sees earnings of $3.58 to $3.60 per share. It also gave reported guidance of $3.49 to $3.51. Its prior guidance was $3.37 on an ongoing basis and $3.63 on a reported basis. First Call has estimates pegged at $3.45.

Posted on: September 16, 2008 – 8:17 am in Agriculture, Earnings, MON

Kroger (KR): People Love Being Cheap

Wal-Mart (WMT) is not the only retailer benefiting from the consumer’s need to be cheap. Kroger (KR), which sells groceries to the middle class, reported robust earnings.

The chain said it had revenue of $18.1 billion for the second quarter ended August 16, an increase of 11.9% over the same period last year. Same-store sales increased 9.7%.

Posted on: September 16, 2008 – 8:01 am in Food, KR, WMT

Ingram Micro, Skydiving Without A Parachute (IM, TECD)

Ingram Micro (NYSE: IM) is trading down about 7% pre-market after the company warned about its results ahead. The technology product distribution company noted that soft economies globally are going to keep it from meeting its quarterly financial targets.

Posted on: September 16, 2008 – 7:56 am in Earnings, Technology Companies, IM, TECD

UBS Gets Its Turn In The Barrel (UBS)

UBS AG is back in the barrel this morning. Investors have more concerns about write-downs, adding pressure to the stock today. It looks like shares were even halted. They opened down 10% in overseas trading. That went from bad to worse. Shares are now down 14% at $14.55 for its ADR’s in the U.S. The sad thing is that this also marks a new 52-week low. The 52-week trading range is $16.47 to $58.02. Actually, that should read "was" as the stock price this morning was last seen around $14.60 on active volume.

Jon C. Ogg
September 16, 2008

Posted on: September 16, 2008 – 7:38 am in Banking, Brokerage Firms, Financial Stocks, UBS

Goldman Sachs (GS) Holds The Thin Line

Strong earnings out of Goldman Sachs (GS) would probably reverse the market’s perception that all is lost and prove the best companies on Wall St. can handle the pressure of the credit crisis.

Goldman delivered. It shares fell slightly, but its numbers were comparatively strong.

Posted on: September 16, 2008 – 7:30 am in Earnings Warning, GS

AIG (AIG) Dying

AIG (AIG) shares are off 40% in pre-open, to $2.85.

Posted on: September 16, 2008 – 6:25 am in Financial Stocks, AIG

Dell (DELL) Sails To Dark Waters

Perhaps it is just a bad week for news and it is not going to get better.

Dell (DELL) said it is seeing further softening in global end-user demand in the current quarter.