Daily Archives: November 10, 2008

Most Overpaid CEO Of The Day: Howard Schultz Of Starbucks (SBUX)

StarbucksA week or so ago Howard Schultz, the CEO of Starbucks (SBUX), said he thought he was seeing a bottom in his company’s business. It must have been a mirage.

Starbucks reported a quarter that disappointed Wall St. and indicated that the day’s of rapid growth are in the company’s past.

Revenue rose 3% to $2.52 billion from $2.44 billion. Analysts expected sales of $2.58 billion. Same-store sales, or sales at locations open at least a year, dropped 8% in the U.S. as fewer customers came into the stores.

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Posted on: November 10, 2008 – 6:21 pm in Management Change,

As Consumer Spending Worsens, Sears (SHLD) Moves In The Cross Hairs

R218533_855025Consumer sentiment and consumer spending may be bad today, but according to a major new survey, they are going to get much worse over the next three months. Among the largest victims of the slowdown are Sears (SHLD), Bed Bath and Beyond (BBBY) and Macy’s (M).

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Posted on: November 10, 2008 – 5:52 pm in Retail, , , , , ,

Worst Corporate Press Release Of The Day: Comerica

Batmobile512_2For some reason the chief economist at Comerica still worries about how many weeks of pay it takes for the average American to buy a car. That is the same American who cannot afford a car and is not likely to buy one at any time in the foreseeable future.

According to the bank, "The purchase of an average-priced new vehicle took 24.1 weeks of median family income in the third quarter, according to the Auto Affordability Index compiled by Comerica Bank. The latest reading is up 1.0 week from the second quarter."

Someone forgot to tell Dana Johnson, Chief Economist at Comerica Bank, that the US car companies are about to go out of business due to lack of sales.

Douglas A. McIntyre

Posted on: November 10, 2008 – 5:39 pm in Research

SIRIUS XM Gives Confusing Report (SIRI)

Sirius_logoSIRIUS XM Radio Inc. (NASDAQ: SIRI) has just reported its first real earnings report since its full merger completions.  The satellite radio giant posted results which it only included in the conference call rather than in a press release.  About 12 minutes into the conference call we started seeing numbers come across newswires with additional data and some different figures, so you will need to compare results on your own.  That practice is not normal should not at all be accepted as fair or normal in today’s world.

In the conference call, the company said that Pro Forma is without many costs associated with earnings with revenues gaining 16.5% to $613 million, adjusted loss excluding costs was -$9 million.  Be advised that these were taken from the audio conference and appear different than the first headlines we saw from newswires.

Mel Karmazin did note in the conference call that it is very hard to talk positively about anything because of where the stock price is, but he wanted to discuss the positives and discuss how well this is compared to how the economy and where auto sales are.  He is still talking positive EBITDA in 2009 and now sees a smaller EBITA loss for 2008.  In 2009 it will have over $300 million in EBITDA and will not have a net cash outflow for the full year of 2009 (and will continue that beyond).

We did not put much faith in the First Call numbers of -$0.09 EPS and $587.4 million in revenues because analysts have lost coverage, have not made proper updates, and have not counted in all of the numbers from the merger. 

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Posted on: November 10, 2008 – 4:49 pm in Earnings, Media, Satellite,

Starbucks, Cooling Coffee & Cooling Earnings (SBUX)

Starbucks_logo_2Starbucks Corp. (NASDAQ: SBUX) has just reported earnings of $0.01 EPS (after $0.09 restructuring costs) on $2.5 billion in revenues  Thomson Reuters (First Call) had earnings consensus estimates at $0.13 EPS and $2.58 billion in revenues. 

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Posted on: November 10, 2008 – 4:17 pm in Earnings, Food, Retail,

Harvard President Says It’s Time To Tighten Belt

AngrybearEven the nation’s oldest and richest university cannot escape the economic downturn.

In a note to to almost everyone affiliated with the institution, President Drew Gilpin Faust said the the value of the university’s endowment would almost certainly fall and donations will also drop.

She noted that some programs and employees may have to be cut.

Her letter:

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Posted on: November 10, 2008 – 4:02 pm in Economy

The 52-Week Low Club (GM)(C)(GS)(EBAY)(NT)(CC)(NYT)(TSCM)

Sad_clownGM (GM) plunges on concerns about Chapter 11. Falls to $3.02 from 52-week high of $32.80.

Citigroup (C) get caught in fears that big financials will have to raise more money. Sells down to $11.05 from 52-week high of $37.50.

Goldman (GS) gets pushed down on same fears. Dips to $68.51 from 52-week high of $240.05.

Ebay (EBAY) shows the internet and e-commerce are not escaping the recession. Runs off to $13.38 from 52-week high of $35.12.

Nortel (NT) announced big losses and big job cuts. Moves down to $.90 from 52-week high of $19.42.

Circuit City (CC) goes bankrupt and falls to $.11 from 52-week high of $8.24.

The New York Times (NYT) takes big write-offs from falling value of assets. Drops to $8.62 from 52-week high of $21.14

TheStreet.com (TSCM) still dropping for a poor quarter. Sells off to $3.35 from 52-week high of $16.74. May be time to go private.

Douglas A. McIntyre 

Posted on: November 10, 2008 – 3:56 pm in HI/LOW, , , , , , , ,

Southwest Looks Far Out To Mexico (LUV, CAL, XJT, AMR)

Southwest_logo_2Southwest Airlines Co. (NYSE: LUV) has announced its first efforts to go cross-border to our closest neighbor to the south. The discount airline carrier intends to build a codeshare partnership with Mexican carrier Volaris.  Be advised that this does mean that Soutwest’s orange planes will be seen over the skies of Mexicio and this codeshare agreement won’t take effectimmediately.  But if Volaris is able to expand between now and when this starts, it could eventually give Southwest a shot at capturing some of the business that has historically gone to competitors like Continental Airlines, Inc. (NYSE: CAL), ExpressJet Holdings Inc.(NYSE: XJT), and AMR Corp. (NYSE: AMR).

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Posted on: November 10, 2008 – 3:26 pm in Airlines, , , ,

Starbucks Braces For Earnings (SBUX)

Starbucks_logoStarbucks Corp. (NASDAQ: SBUX) is set to report earnings right after the close of trading today.  Unfortunately, it isn’t expected to look that pretty.  To make matters worse, the report has a look-back to the end of September, and October was the first month where Joe Consumer went from slowing discretionary spending and regular mini-luxury spending habits down to a slowdown in spending that is off the cliff.

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Posted on: November 10, 2008 – 2:38 pm in Earnings, Food, Retail,

When Does Sirius (SIRI) Follow Circuit City (CC) And GM (GM) To The Bottom?

SiriCircuit City (CC) and GM (GM) have effectively proved a point about the current economy and credit markets. Without substantial positive cash flow and operating earnings, raising money is nearly impossible. Corporations which already have a large amount of debt on their balance sheets are particularly unlikely to find financing.

Earlier today Circuit City filed Chapter 11 and GM’s share price target was dropped to zero by Deutsche Bank. The nation’s largest car company will either run low on money early next year or be forced to raise money in a fashion that will wipe out common shareholders.

The news from the consumer electronics and car companies pushed CC shares as low as $.11 against a 52-week high of $8.24 and GM’s down to $3.02 against its 52-week high of $32.80.

The question is which well-known US company will be next into the credit gauntlet. The answer is that it will probably be Sirius XM (SIRI).

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Posted on: November 10, 2008 – 11:55 am in Media, , ,

Pacific Ethanol Follows the Fold (PEIX, VSE, AVR)

Pacific_ethanol_logoPacific Ethanol (NASDAQ:PEIX) reported third quarter numbers this morning and any resemblance to VeraSun and Aventine (NYSE:AVR) is purely familial. Pacific had revenue of $184 million, compared with analysts’ estimates of $219 million, and an EPS loss of $0.98, compared with estimates of $0.16. It’s hard to imagine how it could have been worse.

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Posted on: November 10, 2008 – 10:41 am in Alternative Energy, Earnings, Oil & Gas, , ,

24/7 Wall St. Day Trading Alerts (STEM)(DRYS)(ACAS)(FDRY)(BRCD)(CYCL)(T)

Good news out of the sector is driving StemCells (STEM) up almost 20%. Details here.

DryShips (DRYS) is spiking up on news of the China stimulus package.

American Capital (ACAS) suspended its dividend sending its shares down sharply.

Foundry Networks (FDRY) is up on news of a revised buyout agreement from Brocade (BRCD).

Centennial Communications (CYCL) is staging a furious rally on a buyout by AT&T (T)

Douglas A. McIntyre

Posted on: November 10, 2008 – 10:15 am in Uncategorized, , , , , , ,

UPS & FedEx Losing DHL As Competition Via Layoffs (UPS, FDX)

Fedex_logoUps_logoDHL has announced that it was cutting 9,500 jobs as it discontinues air and ground operations within the United States.  DHL Express says that it will continue to operate between the United States and other nations, but it is killing the "domestic-only" air and ground services within the United States by January 30.  Despite an obvious slowdown, United Parcel Services, Inc. (NYSE: UPS) and FedEx Corporation (NYSE: FDX) are probably happy as clams over this announcement.

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Posted on: November 10, 2008 – 10:03 am in Labor & Unions, Transports, ,

Uranium Resources, Imploding Nuke (URRE)

Before the market opened this morning, Uranium Resources Inc. (NASDAQ:URRE) announced revenue of $4 million for the third quarter and a net loss of $14 million (-$0.25 EPS) due to lower sales and lower prices. The company’s share price has fallen 92% from its 52-week high of $14.07. This morning’s report won’t help that a bit.

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Posted on: November 10, 2008 – 8:58 am in Commodities, Earnings, Nuclear,

NRG Denies Exelon Ambitions (NRG, EXC)

Nrg_logoAbout three weeks ago, NRG Energy Inc. (NYSE: NRG) received a buyout offer from Exelon Corporation (NYSE: EXC). The deal would have exchanged one share of NRG stock for 0.485 shares of Exelon. On Sunday, NRG told Exelon that the offer was "not in the best interests of NRG shareholders as it manifestly undervalues NRG both on an absolute basis and relative to your own share value."

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Posted on: November 10, 2008 – 8:47 am in Mergers and Buy Outs, Utilities, ,

Analyst Call: GM Goes To Zero (GM, F)

Gm_logoBurningmoneyGeneral Motors Corporation (NYSE: GM) has been an ugly stock, in an ugly sector, in an ugly economy.  Bailout or no bailout, things are looking haggard and questionable at the auto giant.  This morning Deutsche Bank issued a new SELL rating on the stock.  If you think that is bad, look at its price target: ZERO!!!

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Posted on: November 10, 2008 – 8:30 am in Analyst Calls, Autos, ,

Top Pre-Market Analyst Upgrades & Downgrades (CIM, CCE, KMB, KSS, WFC, AMAT, FTI, SSYS)

It is looking pretty light so far from analyst coverage this Monday morning.  Here are some of the top individual stock calls we have seen this morning from Wall Street analysts:

  • Chimera Investment (NYSE: CIM) Raised to Outperform at KBW.
  • Coca-Cola Enterprises (NYSE: CCE) Raised to Overweight at JPMorgan.
  • Kimberly-Clark (NYSE: KMB) Started as Buy at Citigroup.
  • Kohl’s (NYSE: KSS) Raised to Market Weight at Thomas Weisel.
  • Wells Fargo (NYSE: WFC) Raised to Outperform at Credit Suisse.
  • Applied Materials (NASDAQ: AMAT) Cut to Perform at Oppenheimer.
  • FMC Technologies (NYSE: FTI) Cut to Underweight at JPMorgan.
  • Stratasys (NASDAQ: SSYS) Cut to Market Perform at William Blair.

Here was a sector downgrade this morning from Deutsche Bank on the solar stocks.

Jon C. Ogg
November 10, 2008

Posted on: November 10, 2008 – 8:18 am in Analyst Calls, , , , , , , ,

Astonishingly Good Numbers At McDonald’s (MCD)

RonaldmcdonaldMcDonald’s (MCD) and Wal-Mart (WMT) may be the only retailers in the country who are doing extraordinarily well. The reason may be simple. What they sell is cheap and, in the case of MCD, if the food does not kill customers, it will keep them filed up straight through the recession.

In October, global comparable sales rose 8.2%.

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Posted on: November 10, 2008 – 8:09 am in Food, ,

Deutsche Bank Punting Solar Stocks (CSIQ, ENER, FSLR, SPWRA, STP)

Solar_panel_picThere is a sector downgrade from Deutsche Bank today in the solar sector.  Due to the rally from China’s stimulus package, the pre-market rally in stocks and oil prices, and the hopes that the Obama administration will juice the sector, most of these stocks are actually indicated higher in early pre-market trading: 

  • Canadian Solar (NASDAQ: CSIQ) Cut to Hold from Buy.
  • Energy Conversion Devices (NASDAQ: ENER) Cut to Hold from Buy.
  • First Solar (NASDAQ: FSLR) Cut to Hold from Buy.
  • Sunpower (NASDAQ: SPWRA) Cut to Hold from Buy.
  • Suntech Power (NYSE: STP) Cut to Sell from Hold.

So far this round of downgrades is falling on deaf ears.
Jon C. Ogg
November 10, 2008

Posted on: November 10, 2008 – 7:58 am in Alternative Energy, Analyst Calls, , , , ,

Circuit City (CC) Files For Chapter 11

What more is there to say?

Douglas A. McIntyre

Posted on: November 10, 2008 – 7:53 am in Uncategorized,