Daily Archives: October 13, 2008

As Recession Spreads, Small Businesses Start To Cut Jobs

UnemplyThe credit crisis has been so severe that even the largest companies  in the US have had trouble getting access to the capital markets. Firms as large as GM (GM), Goodyear, and Gannett (GCI) have used credit lines to access capital which they could not get in the commercial paper market.

Small businesses are not so fortunate. Many were never large enough to use commercial paper and most do not have a line of credit.

As the recession takes hold and drives down demand for goods and services, most firms with under 100 employees face both lack of access to credit and falling sales. 

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Posted on: October 13, 2008 – 7:10 pm in Economy, , ,

FDIC To Insure New Senior Bank Debt: Inviting The Sovereign Funds To Dinner (MER)(C)

EarthMany of the world’s largest sovereign funds believe that they were taken to the cleaners earlier this year when they dumped billions of dollars into large US financial companies like Citigroup (C) and Merrill Lynch (MER). They got to watch the value of their investments drop 50% or more as the credit crisis got worse.

After all of that, it was fair to assume that countries from China to Singapore to Abu Dhabi would not be sending analysts to the America to kick the tires of banks with plans to put good money after bad.

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Posted on: October 13, 2008 – 6:50 pm in Banking, ,

Government To Buy Pieces Of Nine Large Banks?

Uncle_samThe US Treasury is apparently ready to buy significant stakes in nine of the largest financial firms in America. The trouble with the report is that no one knows for certain which companies are part of the package, or at least no one is saying.

According to The Wall Street Journal, "The U.S. government is set to buy preferred equity stakes in nine top financial institutions as part of its new comprehensive plan to tackle the credit crisis."

It is also a mystery when the investments will be made or how much money is involved. Treasury Secretary Henry Paulson will probably not even tell the banks’ board of directors how he plans to proceed until he has the shares in hand.

Beyond that, the program is crystal clear.

Douglas A. McIntyre

Posted on: October 13, 2008 – 6:29 pm in Banking

Burlington Northern: Warren Buffett Synthetic Stake Addition (BNI, BRK-A)

Buffett_imageThere was an interesting Form 4 filed today with the SEC.  Warren Buffett’s Berkshire Hathaway (NYSE: BRK-A) has artificially added to his holdings of Burlington Northern Santa Fe Corp. (NYSE: BNI).  On October 8, Berkshire’s National Indemnity Co. unit sold put options in the rail giant in a bet that shares wouldn’t fall further or that he’d be willing to add to his position.

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Posted on: October 13, 2008 – 3:51 pm in Buffett, Transports, ,

The 52-Week Low Club (AFFX)(PIR)(AXL)

Sad_clownAmerican Axle (AXL) S&P downgrade due to big customer GM (GM) cutting production. Drops to $2.61 from 52-week high of $28.11.

Pier 1 (PIR) Analyst dowgrade due to weak same-store sales. Down to $1.58 from 52-week high of $8.25.

Affymetrix (AFFX) Misses Q3 sales forecasts. Sells off to $3.88 from 52-week high of $28.12.

Douglas A. McIntyre

Posted on: October 13, 2008 – 2:43 pm in HI/LOW, ,

Why So Many Mergers Are Failing (WMI, RSG, AW, VSH, IRF, DBD, UTX, SNDK)

Broken_merger_torn_moneyBack in normal economic times and back when private equity was king, Mondays were often referred to as "Merger Monday" because mergers would be announced at the start of the week.  If you monitor mergers and possible buyout targets in the manner we do at 247 Wall St., then today might feel like it should be named De-Merger Monday.  There are three very large mergers which have been scrapped today and this brings up issues in another pending giant technology merger.

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Posted on: October 13, 2008 – 1:05 pm in Mergers and Buy Outs, , , , , , , ,

Wells Fargo Looking More and More Like The Old Citigroup Model (WFC, WB, C)

Wells_fargo_logoWells Fargo & Co. (NYSE: WFC) is the latest of the banking giants to look like the old Citigroup Inc. (NYSE: C) business model.  This became the case with the acquisition of Wachovia Corp. (NYSE: WB) out from under Citi’s, but today Wells Fargo is making another acquisition.  The company’s  Wells Fargo Insurance Services announced that it has acquired New Jersey-based EMAR Group, one of the nation’s largest independently owned commercial insurance agencies with offices in New Jersyey, New York, and Florida.

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Posted on: October 13, 2008 – 11:52 am in Banking, Mergers and Buy Outs, , ,

AmTech’s Top Fundamental Technology Stocks (CNQR, MELI, MFE, MPWR, QCOM, RIMM, VRSN)

Amtech_logo_2American Technology Research has issued a research report going into earnings season called "Our Best Dozen Fundamental Picks."  AmTech believes investors already expect a disaster but that the current business climate isn’t as bad as some argue.  While the firm believes that many companies will guide expectations lower or will be very cautious, some will continue to outperform their peers. We have broken out the technology companies in an individual piece today and some very brief commentary from AmTech is outlined below.

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Posted on: October 13, 2008 – 10:11 am in Analyst Calls, Internet, Technology Companies, , , , , , ,

Microsoft (MSFT): The Redmond Nation Turns Toward Sanity

MsftAt the coroner’s inquest about the dead deal for Microsoft (MSFT) to buy Yahoo! (YHOO) it became clear the Redmond got the best of it. For reasons which investors are not likely to fathom, MSFT is up almost 10% today, well above the market’s own push from its remarkable sell-off.

As the markets have thrown themselves into a pit, Microsoft has been off less than 15% while Yahoo! has swooned 30%.

But, Microsoft’s relatively strong performance has little to do with Yahoo!, while Yahoo!’s weak performance has everything to do with Microsoft. The portal company needed the deal to get an unreasonable price for its shares. In the fog of battle it was nearly forgotten that Microsoft is in the software business. Its internet operations are a sort of sore appendix which may have to be taken out.

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Posted on: October 13, 2008 – 9:53 am in Software, , , ,

AmTech’s Favorite Defense & Infrastructure Fundamental Picks (FLR, LMT)

Amtech_logo_3There is an interesting report from research team over at American Technology Research called "Our Best Dozen Fundamental Picks" as earnings season is upon us.   The research firm noted that investors already expect a disaster in the earnings reports and the current business climate isn’t as bad as what investors are expecting.  While the firm believes that many companies will guide expectations lower or will be very cautious, this is their list of companies it expects to outperform peers.  We have included some very brief commentary from AmTech in its calls, and the two of their picks from large cap traditional companies are Fluor Corporation (NYSE: FLR) and Lockheed Martin Corporation (NYSE: LMT).

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Posted on: October 13, 2008 – 9:52 am in Analyst Calls, Defense, Infrastructure, ,

AmTech Issues Best Fundamental Alternative Energy Picks (ENER, FSLR, FSYS)

Amtech_logoThe research team over at American Technology Research has issued a report called "Our Best Dozen Fundamental Picks" going into earnings season.  The research firm notes that investors are already prepared for a disaster in the earnings reports, but it seems that the current business climate isn’t as bad as what investors are expecting.  While the firm believes that many companies will guide expectations lower or will be very cautious, this is their list of companies it expects to outperform peers.  As you will see below with some brief analyst commentary from the firm, they have highlighted Energy Conversion Devices, Inc. (NASDAQ: ENER),  First Solar, Inc. (NASDAQ: FSLR), and Fuel Systems Solutions, Inc. (NASDAQ: FSYS).

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Posted on: October 13, 2008 – 9:43 am in Alternative Energy, Analyst Calls, , ,

Earnings Confessions Starting (AFFX, BEAV, COHR, CONN, NTY, ORBK)

BurningmoneyAs we are entering earnings season, we are also starting to get "confession season" where companies begin issuing updates ahead of their formal earnings.  Some of these will make some obvious sense, and others are almost counter-intuitive. Here is a look at some recent annooucements.

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Posted on: October 13, 2008 – 8:06 am in Earnings Warning, , , , , ,

Mitsubishi UFJ Closes Morgan Stanley (MS) Deal

Jap_2According to The Wall Street Journal, "Mitsubishi UFJ Financial Group closed a $9 billion investment in Morgan Stanley that gives MUFG a 21% interest. Under revised terms, MUFG has acquired $7.8 billion of convertible preferred stock with a 10% dividend and a conversion price of $25.25 a share, and $1.2 billion of non-convertible preferred stock with a 10% dividend. Previously, MUFG was getting a mix of preferred and common shares."

Morgan Stanley shares are up almost 40% in pre-market trading.

Douglas A. McIntyre

Posted on: October 13, 2008 – 7:38 am in Mergers and Buy Outs,

Yahoo! (YHOO) Deal For AOL (TWX) Done?

Yahoo_logoThe long-rumored Time Warner (TWX) deal to merge AOL into Yahoo! (YHOO) is nearly done, according to Time Warner insiders.

The deal should be difficult to do, but TWX CEO Jeff Bewkes may feel humiliated if he can’t land a transaction. Yahoo! trades at a multi-year low, at $12, making its market cap $17 billion. It can hardly pay a great deal for AOL with it own value so sharply cut over the last several weeks.

But, the deal could be announced in the next day or two.

Douglas A. McIntyre

Posted on: October 13, 2008 – 6:43 am in Mergers and Buy Outs

Top Pre-Market Analyst Upgrades (ANN, CVC, COF, CELG, GME, PPDI, STJ, STI, THQI, WOOF, WU)

These are some of the many research upgrades we have seen from Wall Street analysts this Monday morning with more than two hours to the open:

  • Ann Taylor (ANN) Raised to Neutral at Goldman Sachs
  • Cablevision (CVC) Raised to Hold at S&P Equity Research
  • Capital One Financial (COF) Raised to Market Perform at KBW
  • Celgene (CELG) Raised to Outperform at Baird
  • GameStop (GME) Raised to Buy at Piper Jaffray
  • Pharmaceutical Product Development (PPDI) Raised to Outperform at Baird
  • St. Jude Medical (STJ) Raised to Overweight at JPMorgan
  • SunTrust Banks (STI) Raised to Market Perform at KBW
  • THQ (THQI) Raised to Buy at Piper Jaffray
  • VCA Antech (WOOF) Raised to Buy at Piper Jaffray
  • Western Union (WU) Raised to Buy at S&P Equity Research

Jon C. Ogg
October 13, 2008

Posted on: October 13, 2008 – 6:18 am in Analyst Calls, , , , , , , , , , ,

Top Pre-Market Analyst Downgrades (ALL, DO, DOW, JCG, LULU, SONC)

Down_arrow_redThese are some of the top pre-market downgrades we are seeing this Monday morning with more than two hours to the open:

  • Allstate (ALL) Cut to Sell from Hold at S&P Equity Research
  • Diamond Offshore (DO) Cut to Underweight from Overweight at JP Morgan
  • Dow Chemical (DOW) Cut to Neutral from Overweight at JP Morgan
  • J. Crew (JCG) Cut to Sell from Neutral at Goldman Sachs
  • lululemon (LULU) Cut to Sell at Goldman Sachs
  • Sonic Corp. (SONC) Cut to Sell from Neutral at Goldman Sachs

Jon C. Ogg
October 13, 2008

Posted on: October 13, 2008 – 6:11 am in Analyst Calls, , , , , ,

Goldman Sachs Hits Oil Sector (BHI, EP, XOM, KMP, MMP, EPB, MRO, MUR, KGS, SLB)

Goldman_sachs_logoOil_well_logo_2_2In a perhaps late research call in the oilpatch, Goldman Sachs has downgraded the exploration & production sector to Neutral from attractive and downgraded the oil services sector to Neutral from Attractive.  Interestingly enough. in all of the downgrades for these sub-sectors there are actually some upgrades in the group.  Below are some of these top calls in the sector from Goldman Sachs:

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Posted on: October 13, 2008 – 6:00 am in Analyst Calls, Oil & Gas, , , , , , , , , ,

Can The Market Rally For A Week? It Needs To (PEP)(JNJ)(INTC)(WFC)(JPM)(MS)

Cammonopoly_wideweb__430x3250A big up day in the market, say 4% or 5%, is not a rally, at least not any more. The DJIA has proved that it can move 1,000 points from bottom to top or top to bottom in one trading session.

If stocks are going to dodge a move toward 7,000 or below, they have to show that they can rally most days this week and end with the Dow, S&P, and Nasdaq higher by 10% before the close on Friday.

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Posted on: October 13, 2008 – 5:07 am in Index, , , , , ,

As UK Bank Rescue Moves Forward Could The US Treasury Own Most Of Citigroup (C)?

DataThe UK government is about to become the de facto largest shareholder in two of the country’s largest banks, HBOS and The Royal Bank of Scotland (RBS). Given the number of times that England has invaded Scotland, it must be especially hard for the RBS management, so the CEO and chairman have decided to resign and move south.

Even though the government will own preferred shares, it will still be putting a huge amount into the firms. In many ways, the banks are no longer "independent". The next question is whether something similar could happen in the US if the worldwide rescue of banks does not take hold immediately.

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Posted on: October 13, 2008 – 4:45 am in Banking, , ,

The Caste System At The Core Of The Credit Crisis

For_sale_signThe great fraud perpetrated by the criminal manipulators at the top of the US financial system was that almost every American could move up a level in the US caste system, an entity whose existence most Americans would not even acknowledge.

The con and its temptation was simple at each level. The poor would become middle class if they bought a house. The middle class would become wealthy, and the wealthy would become maharajahs and sultans. Like many well-crafted schemes, it worked for a while.

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Posted on: October 13, 2008 – 4:05 am in Economy