Daily Archives: October 16, 2008

GM (GM) Deal To Takeover Chrysler Makes Progress, Creating Opportunity For Disaster

Gm20jpeg20image_2The merger talks between GM (GM) and Chrysler appear to be heating up. GM would like to have an agreement by the end of this month.

Putting the two companies together would be a disaster.

The UAW would almost certainly fight the deal to the death to save jobs. This could mean a protracted strike would could cut production for months. It would not be unlike what Boeing’s (BA) machinists are doing to that company, effectively shutting it down.

Both Chrysler and GM have already cut staff to the bone. There may be some more people who could go in finance, administration, and product development. That represents a modest savings given the risk of integrating all of the operations and production facilities of the two companies. The severance costs could also be remarkably high.

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Posted on: October 16, 2008 – 5:49 pm in Mergers and Buy Outs, ,

AMD (AMD): More Of The Same, Which Is Not Good

AmdAMD (AMD) had another dreadful quarter. It is a wonder that the NYSE even lets the company keep its membership card. The firm reported third quarter 2008 revenue from continuing operations of $1.776 billion, up 14% compared to last year.

AMD’s graphics product revenue did do well, moving up 55% sequentially from the second quarter.

Gross margins across the company were 51% compared with 52% in Q2 and 41% in Q3 last year.

AMD had operating income of $131 million compared to a loss of $181 in the same quarter last year.

Guidance was poor. AMD said revenue for Q4 will be flat with Q3.

Douglas A. McIntyre

Posted on: October 16, 2008 – 3:31 pm in Earnings,

Gilead Boosted Partly By Currencies (GILD)

Gilead_logoGilead Sciences Inc. (NASDAQ: GILD) has just issued its third quarter earnings at $0.52 net EPS and $0.55 non-GAAP EPS and $1.37 billion in revenue.  First Call had estimates at $0.49 non-GAAP EPS and $1.32 billion in revenue.  But more important than earnings were some key metrics which might be accounting for some issues.

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Posted on: October 16, 2008 – 3:23 pm in Biotech, Earnings,

IBM (IBM) Makes Numbers

IbmIBM (IBM) had already told the market that it had done remarkably well in Q3. The company confirmed that today.

IBM announced third-quarter 2008 earnings of $2.05 per share from continuing operations compared with diluted earnings of $1.68 per share in the third quarter of 2007, an increase of 22 percent. Third-quarter income from continuing operations was $2.8 billion compared with $2.4 billion in the third quarter of 2007, an increase of 20 percent. Revenue rose 5 percent to $25.3 billion.

The company’s software unit was out in front with revenue up 11.8% to more than $5.2 billion.

Douglas A. McIntyre

Posted on: October 16, 2008 – 3:19 pm in Earnings,

Google (GOOG): Low Expectations, Great Achievement

GoogAnalysts have been revising down their expectations for Google’s (GOOG) third quarter for weeks. The search company did not have much to measure up to. A slowing economy moved consensus estimates to EPS of $4.76 for the period just finished on revenue of $4.06 billion. For the year, the expected numbers are $19.36 on $16.05 billion.

Google traded down much of the day along with the market but rallied at the end.

Google’s third quarter revenue was $5.54 billion compared to $4.23 billion last year. Traffic acquisition costs were $1.5 billion so the company hit revenue estimates.

EPS for the third quarter of 2008 was $4.24.

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Posted on: October 16, 2008 – 3:14 pm in Earnings,

Coal and Steel Play Follow the Leader (IIIN, RS, ACI, BTU, MEE, NUE)

Two small-cap steel companies reported earnings before the market opened today. Insteel Industries (NASDAQ:IIIN) beat analysts’ estimates of $0.60 EPS on $101 million in revenue, posting EPS of $0.89 on revenues of $106 million. Reliance Steel (NYSE:RS) posted EPS of $2.07 on revenue of $2.57 billion, easily outpacing estimates of $1.95 EPS and revenue of $2.37 billion. Insteel is up more than 3% and Reliance is up more than 11% in early trading today.

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Posted on: October 16, 2008 – 2:48 pm in Commodities, Earnings, Metals, , , , , ,

Microsoft (MSFT) Tortures Yahoo! (YHOO)

MsftMicrosoft (MSFT) CEO Steve Ballmer is torturing Yahoo!’s (YHOO) board for not taking his $33 buy-out offer. Recently, Yahoo! was below $12.

Ballmer commented that the transaction would still "make sense economically" for both companies shareholders. He noted, however, that Yahoo! would probably still want the extraordinarily high price he offered months ago. He knows that a new offer would be more likely to be in the range of $18 to $22, if it were to make any sense. Yahoo! has been losing market share in the search engine business and is expected to report poor earnings.

Ballmer may also be messing with the deal conversations between Time Warner (TWX) and Yahoo! about whether they would merge AOL into the portal company.

Yahoo!’s shares are up 9% on the news

Douglas A. McIntyre

Posted on: October 16, 2008 – 11:05 am in Mergers and Buy Outs, , ,

Real Goods Solar In The Shade (RSOL, GAIA)

Real Goods Solar (NASDAQ:RSOL) came public in May at $10.00 per share (at the bottom of the $10 to $12 range) yet its trading high is only $9.25 this year.  It has been dropping ever since. It closed yesterday at $4.37, only a dollar above its all-time low. But lack of support for its share price hasn’t stopped Real Goods from acquiring more assets.

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Posted on: October 16, 2008 – 9:47 am in Alternative Energy, Apparel, Entertainment, ,

Financial Stocks: No One Believes Paulson (UBS)(MER)(C)(BAC)(MS)(WFC)(JPM)

AngrybearHenry Paulson seems like a very large and old Eagle Scout. He would never mislead, at least not on purpose.

He gave the impression as he announced that Treasury would dump $250 billion into nine financial companies that it would stop the hemorrhaging of deposits from the banking system by putting a lot of money into the industry’s pockets. His actions, he thought, made it keenly clear that capital was not an issue. Banks would have plenty on hand, even if they experienced substantial losses due to mortgage derivatives and a mind-boggling slowdown in the economy.

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Posted on: October 16, 2008 – 9:37 am in Banking, , , , , , ,

The Plot Thickens at SemGroup, L.P. (SGLP, BX)

Not every piece of SemGroup, L.P. was included in the company’s Chapter 11 filing back in July.  The company’s publicly traded midstream subsidiary, SemGroup Energy Partners LP (NASDAQ:SGLP), was spared, as was SemGroup’s SemLogistics Milford Haven subsidiary in England.

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Posted on: October 16, 2008 – 9:30 am in Oil & Gas, ,

Kinder Morgan Hiking Payout, Yet Misses Targets (KMP, KMR)

After the market closed yesterday, Kinder Morgan Energy Partners (NYSE:KMP) reported EPS of $0.48 on revenue of $3.23 billion for the third quarter. This is a gain of more than 50% in earnings but analysts had estimated EPS of $0.59 on revenue of $3.41 billion. A clear miss. What is interesting is that the dividend is heading north.

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Posted on: October 16, 2008 – 8:37 am in Dividend, Earnings, Oil & Gas, ,

Day Trader Alert: Aladdin Knowledge Systems (ALDN)

Aladdin Knowledge Systems Ltd. (NASDAQ: ALDN) is seeing shares surge in pre-market trading, albeit on rather thin volume.  The data security company posted much narrower losses than expected with a report of -$0.02 EPS on $31.7 million in revenues, while First Call estimates were -$0.21 EPS on $29.9 million in revenues.  The company now sees fiscal 2008 earnings at $0.04 to $0.10 EPS rather than the estimates for the company to break even.  We have only seen about 6,800 shares trade pre-market but the last print was at $11.00 after a $9.43 close yesterday.  This is setting the stage for a bounce as the 52-week low is $8.29 and the 52-week high is $26.94.  Average daily volume is about 120,000 shares.  The stock does have options, although they are thinly traded.

Jon C. Ogg
October 16, 2008

Posted on: October 16, 2008 – 8:26 am in Earnings, Software,

Nokia (NOK): Trouble For Motorola (MOT)

MotBy some estimates the handset business that Motorola (MOT) plans to spin-out to shareholders next year has no value at all. If the parent company puts some cash in the handset firm’s bank account as it goes out the door that capital may be all it has to justify a positive market cap.

Concerns about Motorola’s weakest unit got more acute today. Its largest rival, Nokia (NOK), turned in some tough figures for the third quarter. The world’s largest handset company had a 30% drop in earnings on a 5% drop in revenue.

For the period, Nokia sold 118 million units, down from 122 million in Q2. Since the Finnish company has 38% of the global market, its latest numbers are telling.

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Posted on: October 16, 2008 – 8:12 am in Wireless, ,

The Bankrupting of Henry Paulson

By John Tamny  RealClearMarkets

‘while nationalization has enabled some industries to postpone job losses for a time, the resulting overmanning has usually proved unsustainable and the eventual job losses consequentially greater.’ · Nigel Lawson, The View From No. 11

Nigel Lawson served as Margaret Thatcher’s chancellor of the exchequer, and as the Thatcher and Reagan eras in England and the U.S. were most notable for governments removing themselves from the doings of private enterprise, it’s passing strange that politicians in the U.S. and around the world would take their hysterics to such astonishing levels. It’s as though the capitalistic economic revival of the last twenty-five years didn’t happen, and that the denationalization of industry was irrelevant to our subsequent good fortune.

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Posted on: October 16, 2008 – 7:44 am in Uncategorized

Top Pre-Market Upgrades & Downgrades (APC, ATPG, BCS, CRZO, DNDN, EBAY, FPL, STM)

These are some of the top analyst upgrades and downgrades we are seeing from Wall Street analysts this Thursday morning:

  • Anadarko Petroleum (APC) Raised to Buy at Jefferies.
  • ATP Oil & Gas (ATPG) Cut to Hold at Jefferies.
  • Barclays PLC (BCS) Raised to Hold from Sell at Citigroup.
  • Carrizo Oil & Gas (CRZO) raised to Buy at Jefferies.
  • Dendreon Corp. (DNDN) started as SELL at Merriman Curhan Ford.
  • eBay (EBAY) Cut to Neutral at piper Jaffray and cut to Neutral at JPMorgan.
  • FPL Group (FPL) Cut to Hold at Citigroup.
  • STMicroelectronics (STM) Cut to Underperform from Neutral at Credit Suisse.

Jon C. Ogg
October 16, 2008

Posted on: October 16, 2008 – 6:42 am in Analyst Calls, , , , , , , ,

Citigroup (C) Earnings: Still Sweating

DataCitigroup (C) is still struggling. The bank reported a net loss for Q3 2008 third of $2.8 billion, or $.60 per. Total assets declined by $50 billion since second quarter 2008 and by $308 billion since third quarter 2007.

Revenue dropped 23% to $16.7 billion. In the Institutional Clients Group, Securities and Banking revenues were negative $81 million, due to substantial write-downs and losses related to the credit markets.

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Posted on: October 16, 2008 – 6:21 am in Earnings,

Merrill Lynch’s (MER) Bad Medicine

MerrillA lot of people on Wall St. were worried about the future of Merrill Lynch (MER) and were glad when Bank of America (BAC) bought it. Now, Bank of America may be unhappy.

Merrill lost $5.2 billion in the third quarter. The brokerage firm said that it had a loss from continuing operations for the third quarter of 2008 of $5.1 billion, or $5.56 per diluted share, compared with a net loss from continuing operations of $2.4 billion, or $2.99 per diluted share, for the third quarter of 2007.

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Posted on: October 16, 2008 – 5:50 am in Brokerage Firms, ,

Nokia (NOK): The Cellphone Business Used To Be Great

IphoneNokia (NOK) is a great company for two reasons. It has been run so well that it has nearly 40% of the global cellphone business even though it is headquartered in an obscure European country. But, it is also a perfect proxy for how well the cellular business is doing worldwide. For over a decade people from China to Italy have been buying handsets in increasing numbers. In the US some estimates say that there are more cellphones than there are people.

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Posted on: October 16, 2008 – 5:42 am in Wireless, , , , , , , ,

The Problem With Cuomo Taking Back AIG (AIG) Bonuses

R218533_855025The notion that corporate executives are paid too much money is very old. Everyone protests the habit and says the system should make compensation more reasonable. But, big company CEOs still make tens of millions of dollars. One excuse is that they are worth it. They create a lot of shareholder value. Another argument is that they have contracts that require  they be paid well and that, if they are not, they will leave and join the competition.

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Posted on: October 16, 2008 – 5:22 am in Management Change,

Patricide At GMAC (GM)

Gm20jpeg20imageGMAC was set up decades ago so that GM car customers could get inexpensive loans to buy their new vehicles. It made so much sense that most other auto firms set up similar operations.

When GM needed cash two years back, it seemed only logical that it sold a majority interest in GMAC to hedge fund Cerberus which has been humiliated by its foray into the car business including the purchase of 80% of failing American auto company Chrysler.

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Posted on: October 16, 2008 – 5:03 am in Autos