By John Tamny, RealClearMarkets
Ned Ludd founded an eponymous movement in 19th century England meant to ban the mechanized looms that made the work of skilled textile artisans superfluous. According to the Luddites, the advances in textile technology operated by lower-skilled workers would put the skilled out of work, with some kind of "race to the bottom" the logical next step.
Cisco Systems Inc. (NASDAQ: CSCO) is doing something which we thought might not occur. In the full proxy materials for the annual shareholder meeting, the company has re-nominated Yahoo! Inc. (NASDAQ: YHOO) CEO Jerry Yang to its board of directors. We first pondered whether Cisco Systems would want to keep Yang on its board over the summer because of the failed Microsoft (NASDAQ: MSFT) merger mostly being pinned on him. Yang surely knows much about the Internet and you know his contacts are wide and deep. It isn’t anything personal, but being pegged as the destroyer of that much shareholder value can impact your standing at other public companies. This re-nomination may not be a surprise to some, but we thought there would be a real chance that Yang would be asked to not stand for re-election.
It will be interesting to see what the independent proxy advisory firms recommend as this meeting gets closer. Half of our list of CEO’s who need to go in 2008 have gone.
Jon C. Ogg
September 25, 2008
Research In Motion Ltd. (NASDAQ: RIMM) posted disappointing results. The Blackberry maker reported earnings of $0.86 on $2.58 billion in revenue. First Call had estimates of $0.87 for earnings and $2.6 billion for revenue. Its guidance didn’t get much better for those hoping the light earnings would be a one-time event.
Pilgrim’s Pride (PPC) Company says it has liquidity issues. Sometimes that means Chapter 11. The stock drops to $3.26 from 52-week high of $35.98.
Teradata Corp (TDC) is facing competition from Oracle (ORCL). It drops to $19.50 from 52-week high of $30.08.
Air Products and Chemicals (APD) lowers forecasts and is downgraded by Citi. Shares fall to $70.17 from 52-week high of $106.06.
Spansion (SPSN) gets a broker downgrade. It sells down to $1.65 from 52-week high of $8.68.
Douglas A. McIntyre
It appears that the IPO market has lost another IPO. Fluidigm Corp. was set to come public. We had it on the docket last week, then this week. Now it appears to be postponed indefinitely, which a contact at the Morgan Stanley syndicate desk just confirmed. Here was our coverage at the time of the original filing.
Jon C. Ogg
September 25, 2008
Congress is nearly done pulling together terms for a $700 billion bailout of the nation’s banks. It will keep a hand on the purse strings. At first, Treasury will get $250 billion. After that money will be put toward auctions of toxic paper held by the banks at the rate of $100 billion to $150 billion at a time.
It is likely that the pay packages of CEOs at companies which take advantage of the facility will be very modest. The Treasury will also probably get warrants for future ownership in the institutions that they aid.
Every one of these provisions could change before the document makes it to The White House.
If you were against airline mergers, you might be preaching to the deaf now. Northwest Airlines Corporation (NYSE: NWA) has voted in favor its merger with Delta Air Lines (NYSE: DAL). Delta has also now approved the merger. As part of the terms, Delta will issue 1.25 shares per NWA share. This merger actually brings up many issues in the sector and inside the companies.
There had been hopes that Hank Greenberg was going to come with his own plan to save American International Group (NYSE: AIG). That was removed yesterday after the company agreed to the government plan. But now it looks even less and less likely. The ex-Chairman has filed a 13D with the SEC to sell shares in the open market. We don’t know if this means anything about margin calls, but this massive drop in AIG has apparently caused liquidity issues. As of July 15, Greenberg’s Starr International held more than 227 million shares. See below:
This morning Plains Exploration (NYSE:PXP) announced the sale of its oil and gas properties in the Permian and Piceance Basins for $1.25 billion to Occidental Petroleum (NYSE:OXY). This sale highlights two of the main difficulties facing mid- and small-cap energy firms.
Anyone hoping for backdated economic data relief today may have to turn to their local weatherman for good news. There were dismal reports on new home sales, weekly jobless claims, and in durable goods. When does a real recession show up in the official numbers?
There have been more press releases out of the Oracle OpenWorld conference in San Francisco this week than you can count. But one from Oracle Corp. (NASDAQ: ORCL) is perhaps the most interesting. It isn’t virtualization, it is isn’t on operating systems, it isn’t on collaboration, and it isn’t on acquisitions. Oracle has partnered with Hewlett-Packard (NYSE: HPQ) for its debut into the hardware sector.
Dell (DELL) is going to grow faster than the other global PC companies. Why? Because Michael Dell says so. That means HP (HPQ), the big Chinese PC companies, and perhaps Apple (AAPL) better take care.
The assumption does not show in Dell’s stock. It trades at $16.70, down from at 52-week high of $30.77. Year-to-date the shares are down 43%. HP is only off 7%.
Many traders and short sellers have loved targeting solar power and other alternative energy stocks. Interestingly, bets against these companies have not risen dramatically even though many of them are under pressure from falling energy and commodities prices. As you will see below, there was only one company with a significant rise in short interest.
As you will see below, there were many key changes to short sales in oil stocks. Some of these would have been expected to have gone up because oil was so weak. But there were many surprising gains as well. Here are the mid-September short sale numbers:
COMPANY (TICKER) Sep 15 Aug 29 Change
Baker Hughes Inc. (BHI) 6,133,690 6,061,556 1.19%
Chevron Corporation (CVX) 22,795,662 20,202,281 12.84%
Exxon Mobil Corporation (XOM) 31,416,108 29,473,462 6.59%
Hess Corporation (HES) 4,447,432 4,382,553 1.48%
Marathon Oil Corporation (MRO) 7,261,748 5,969,911 21.64%
Schlumberger N.V. (SLB) 14,953,601 13,375,004 11.80%
COMPANY (TICKER) Sep 15 Aug 29 Change
Halliburton Company (HAL) 30,099,107 38,571,133 -21.96%
National Oilwell Varco (NOV) 7,514,971 7,778,930 -3.39%
Transocean Inc (RIG) 13,948,428 14,367,494 -2.92%
Valero Energy Corp. (VLO) 14,846,937 15,028,560 -1.21%
Jon C. Ogg
September 25, 2008
Below are some of the top analyst calls we are seeing from Wall Street firms this Thursday morning:
Jon C. Ogg
September 25, 2008
GE (GE) was one of the alleged last safe harbors in corporate America. The company said the credit issues facing the economy would not damage GE Financial. The conglomerate indicated that it could make its way through the downturn.
No one lied, but a lot of people at GE must have miscalculated.
GM (GM) is celebrating its 100th anniversary this year. Cake and candles. It has even introduced its new Volt electric car, which it says is the future of the company.
In the midst of the party, it appears that GM and its US peers will get their $25 billion in loan guarantees from Congress. That buys them time to retool their plants to make more fuel-efficient cars. That may not matter since the Japanese already dominate that niche and car sales around the world are falling.
Hedge funds are concerned that the market as they know it may collapse. The Wall St. casino is closing. Risk can be taxed by total annihilation. The fun has gone out of becoming fabulous rich on the back of other people’s money.
So, hedge funds are pulling in their horns and preparing to hibernate until the storm has passed them by.
The Treasury is making the case that the financial industry needs $700 billion to take toxic assets off bank balance sheets. This should free up liquidity and ease credit problems. Treasury Secretary Henry Paulson is even willing to pay prices close to the future value of where the bonds will trade when they mature. If he is wrong, taxpayers may be a bit poorer for his miscalculation.
While all of the fisticuffs go on in Congress as the parties fight over how legislation can solve the problem, Goldman Sachs (GS) raised $10 billion in a fairly short time. Morgan Stanley (MS) got $8.4 billion from Mitsubishi UFJ. The Japanese firm will probably end up with 20% of Morgan. While the capital was raised to improve the balance sheets of the investment firms which are changing into banks, it might have been applied, at least in part, to covering losses from derivatives.
No one has checked the water on Wall St. for traces of LSD and other hallucinogens. First, financial firms bet huge sums of their money on arcane mortgage-related paper and lost hundreds of billions of dollars. Now, equity analysts are predicting tremendous increases for corporate earnings in 2009.
That is the same 2009 which will almost certainly be crushed by the current credit problems and slowing consumer and business spending.
| Today’s top tickerspy Indexes | |
| Coffee Stocks | +16.3% |
| Hotel Stocks | +9.0% |
| 2009 IPOs | +8.2% |
| Education Stocks | +4.7% |
| Coal Stocks | +4.4% |
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