Daily Archives: November 18, 2008

GM (GM) Taking Sirius (SIRI) Down To Zero

Siri

Correction: Based on the financial contribution of GM subscribers to the Sirius P&L, the satellite radio company would not have an immediate loss of earnings if it were not selling product through the large auto maker.Our recent comments on the SIRI stock and financials were recently here and here.  24/7 regrets the error. Shares of Sirius are down 6% as of this post trading at $.1522.

Fears that GM (GM) could go into Chapter 11 are driving Sirius XM (SIRI) shares toward zero. The stock hit $.20 today and closed off by 13%.

Sirius relies on car manufacturers for the majority of its new subscriptions. The odds are remarkably high that if GM does not make it, neither will Sirius.

Douglas A. McIntyre

Posted on: November 18, 2008 – 5:32 pm in Consumer Electronics, ,

Level 3 Scores Credit Downgrades (LVLT)

Level_3_logo_3 Level 3 Communications Inc. (NASDAQ: LVLT) has just seen another negative development, this time from Standard & Poor’s Ratings Services.  S&P lowered its corporate credit rating Level 3 to ‘CC’ from ‘B-’ and it lowered the issue-level ratings on Level 3’s 6% convertible subordinated notes due 2009, the 6% convertible subordinated notes due 2010, and the 2.875% convertible senior notes due 2010 to ‘C’ from ‘CCC’.   Unfortunately, it only gets worse from there.

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Posted on: November 18, 2008 – 5:27 pm in Analyst Calls, Bonds, Internet,

Henry Paulson to Supply-Side Economics: Drop Dead

By John Tamny , RealClearMarkets

In his 1984 book, The Supply-Side Revolution, Paul Craig Roberts wrote of England’s gasping late ’70s economy. Despite the country’s dire economic outlook, London’s streets were full of Rolls-Royces.

Many would consider the above to have been a sign of economic prosperity, but thanks to the country’s at-the-time 98 percent tax on investment income, the plentiful existence of those luxury autos was a sign of economic decline. With taxes high on investment success, those with capital had no reason to offer it up to the next generation of entrepreneurs.

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Posted on: November 18, 2008 – 5:23 pm in Uncategorized

Will Fannie Mae & Freddie Mac Go OTC-BB? (FNM, FRE)

Burningmoney_2There are many bad things that can go wrong at public companies.  Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have both seen their share of EVERYTHING go wrong. 

And the good news for the bad news bears is that there is always more bad news. 

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Posted on: November 18, 2008 – 5:19 pm in Financial Stocks, Housing, OTC, Shareholder Issues, ,

The 52-Week Low Club (SIRI)(GM)(C)(CIT)(SKS)(XTLB)

Sad_clownSirius (SIRI) traded down to $.20 on concern that a bankruptcy at GM (GM) could ruin its already troubled business. The 52-week high is $2.94.

Citigroup (C) Still concerns that bank can hold off a government rescue due to consumer debt balance sheet issues. Drops to $7.89 from 52-week high of $35.29.

CIT Group (CIT) Analyst said CIT’s ability to become a commercial bank is critical to its future. What it it does not work out? Drops to $2.43 from 52-week high of $30.75.

Saks (SKS) Bad earnings, concern about debt. Down to $2.71 from 52-week high of $22.19.

Xtl Biopharmaceuticals (XTLB) Important drug fails trial and analyst downgrade. The daily double. Falls to $.11 from 52-week high of $4.96.

Douglas A. McIntyre

Posted on: November 18, 2008 – 4:42 pm in HI/LOW, , , , , ,

GE Taking $2 Billion Costs Out Of GE Capital (GE)

Ge_logo_2General Electric Co. (NYSE: GE) looks like it is taking its previous reorganization a step further.  In July, it announced it was bringing together its financial services businesses under a common umbrella.  The goal was to enhance GE’s abilities to grow globally, better allocate capital, and reduce costs.  GE is now announcing a new GE Capital organization structure which will take place on January 1.

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Posted on: November 18, 2008 – 3:28 pm in Conglomerates,

Housing Stinks, But… “Please No Bailout There Too”

Burning_house_picThe National Association of Home Builders index for November is yet another record low. This drop was into single-digit territory with the index falling to 9, under the low of 14 put from last month.  The 50 level is the dividing line with above 50 as good and under 50 as bad.  But it gets worse…

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Posted on: November 18, 2008 – 1:32 pm in Economy, Housing

Online Spending Gains Slow To Crawl (AMZN)

Broken_merger_torn_moneyThe latest data from comSCORE is showing some very troubling trends.  In the past, online retails sales have grown while on-site retail sales have seen their ups and downs.  It was the growth of the internet which outweighed any developments in the economy.  The good news is that growth was seen in October online sales at a time when overall sales shrank.  The bad news is that the growth slowed to 1%.  This data coincides with a significant drop in shares of Amazon.com Inc. (NASDAQ: AMZN).

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Posted on: November 18, 2008 – 1:02 pm in Economy, Internet, Retail,

Evidence of Corporate Debt Issues Stabilizing (T, DUK, PCG, MO, TWC, BA)

Money_stack_picWe have been tracking the developments in corporate bond spreads and the lack of liquidity for new capital.  Over the last ten days or so we have witnessed several corporate bond offerings of size by household companies which most investors would deem as "survivors" if history is any use.  We tracked issuance releases by AT&T Inc. (NYSE: T), Duke Energy (NYSE: DUK), Pacific Gas & Electric (NYSE: PCG), Altria (NYSE: MO), and Time Warner Cable (NYSE: TWC).

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Posted on: November 18, 2008 – 11:51 am in Bonds, Economy, Secondary Offering, , , , , ,

China Now Largest Holder Of US Treasuries

China_2The next time Congress wants to raise a $700 billion bailout fund or put together a new package to help a firm like AIG (AIG), Washington is going to have to call Beijing.

As the budget deficit grows each year and is likely to expand at a more rapid rate during a recession as receipts fall and the need for a social safety net rises, the Treasury is going to have to get deeper and deeper into the money printing business.

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Posted on: November 18, 2008 – 11:45 am in China

Big WWF Match Between FDIC And Fed At Congress Hearings

Uncle_samHank Paulson and FDIC chief Sheila Bair got into a fight over how the $700 billion bailout package should be used. Congress had a ring side seat.

A little color from MarketWatch:

"The root cause of the current economic crisis [is] the failure to deal effectively with unaffordable loans and unnecessary foreclosures," Bair said to lawmakers at a House Financial Services Committee TARP oversight hearing.

She noted that the rescue package approved by Congress "specifically provides" Paulson with the power to use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.
Instead, Paulson said he is sticking with his plan to use the first half of the allocated government capital, $350 billion, to buy significant minority stakes in large, mid-sized and small financial institutions. This approach is starkly different from Paulson’s initial strategy in September to use the capital to buy illiquid mortgage backed securities.
Douglas A. McIntyre
Posted on: November 18, 2008 – 10:58 am in Housing

Ethanol News From All Over (PEIX, AVR, JAVA)

Pacific_ethanol_logoThe news on the ethanol front this morning is, shall we say, mixed. First, Pacific Ethanol (NASDAQ:PEIX) announced yesterday that it would increase its non-cash impairment charge for the suspended construction of its plant in California’s Imperial Valley. The company took a third-quarter charge of $26.6 million, but will issue updated financials upping the charge by $14.3 million less estimated future undiscounted cash flows. The effect, according to the company, will be an increase in future non-cash gains "to the extent the company is discharged from its construction-related liabilities." Shares are up nearly 2%, to $0.7127, on the news.

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Posted on: November 18, 2008 – 10:41 am in Alternative Energy, Oil & Gas, , ,

New Biotech Zombie: XTL Biopharma (XTLB)

BurningmoneyXTL Biopharmaceuticals Ltd. (NASDAQ: XTLB) is an Israeli biotech player that most traders have not heard of.  By the looks of the trading today, it doesn’t look like shareholders will get to hear about it for too much longer either.  The company stumbled on a Phase II test, and that may be all she wrote.

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Posted on: November 18, 2008 – 9:53 am in Biotech,

And Like That, Budweiser Goes European (BUD)

Anheuser_b_logoAnheuser-Busch Companies Inc. (NYSE: BUD) is no more.  Any doubts over whether  this merger was going to properly close are now history.  InBev has now completed its acquisition of Anheuser-Busch. This merger will create the global leader in beer and one of the world’s top five consumer products companies.  All shareholders of Anheuser-Busch common stock receive $70.00 per share in cash as part of this $52 billion merger.

The surviving post-merger company will be called Anheuser-Busch InBev.  All regulatory approvals have been secured and all shareholders have approved this deal.  Consider this one history.

Jon C. Ogg
November 18, 2008

Posted on: November 18, 2008 – 9:24 am in Food, Mergers and Buy Outs,

Transocean’s Move to Switzerland Pays Off for Note Holders (RIG)

Transocean_logoThe world’s largest offshore drilling contractor, Transocean (NYSE:RIG) is moving its incorporation location from the Cayman Islands to Switzerland. Pending final approvals, the move will be effective on December 18th.

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Posted on: November 18, 2008 – 9:01 am in Bonds, Oil & Gas,

Cliffs, Alpha Scrap Merger Plans (CLF, ANR)

Two weeks ago, Cliffs Natural Resources (NYSE:CLF) pushed out its shareholder vote on a merger with Alpha Natural Resources (NYSE:ANR) to mid-December. Alpha promptly filed suit, seeking to force Cliffs to stick to its agreed upon date of November 19th.

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Posted on: November 18, 2008 – 8:58 am in Mergers and Buy Outs, ,

Corning Lowers Lowered Lows (GLW)

Corning_logoCorning Inc. (NYSE: GLW) is making a presentation this morning at a UBS conference, and it is adding more negative sentiment on top of what was already there.  CFO James Flaws said the company is withdrawing its previously given guidance for this fourth quarter.

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Posted on: November 18, 2008 – 8:55 am in Earnings Warning, Technology Companies,

Hewlett-Packard Tries To Save Tech Stocks (HPQ, DELL, IBM, INTC, MSFT)

Hp_logoHewlett-Packard Company (NYSE: HPQ) is trying to save technology stocks this morning all on its own.  Or that is how it seems with its guidance.  The company issued preliminary guidance for its fourth quarter-end in October with revenues of roughly $33.6 billion and $1.03 non-GAAP EPS.  Thomson Reuters (First Call) had estimates at $33.09 billion in revenues and $1.00 EPS.  The company is also giving its long-term goals for the next year and this is helping tech stocks.

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Posted on: November 18, 2008 – 8:29 am in Earnings, PC Companies, Technology Companies, , , , ,

Early Bird Analyst Upgrades (BJS, CHS, FSLR, GNCMA, MDTH, PCS)

These are some of the top early bird upgrades or positive calls from analysts on Wall Street which we have seen early this Tuesday morning:

  • BJ Services (BJS) Raised to Outperform at Wachovia.
  • Chico’s FAS (CHS) Raised to Neutral at UBS.
  • First Solar (FSLR) Started as Overweight at JPMorgan.
  • General Communications (GNCMA) Raised to Outperform at RBC.
  • Medcath (MDTH) Raised to Hold at Citigroup.
  • MetroPCS (PCS) Raised to Outperform at RBC.

Jon C. Ogg
November 18, 2008

Posted on: November 18, 2008 – 7:33 am in Analyst Calls, , , , , ,

Early Bird Analyst Downgrades (ASTI, KO, DT, ESLR, K, PEP, TSL)

Down_arrow_red_2These are some of the top early bird downgrades or negative calls we have seen from analysts on Wall Street this Tuesday morning:

  • Ascent Solar (ASTI) Cut to Underweight at JPMorgan.
  • Coca-Cola (KO) Cut to Neutral at UBS.
  • Deutsche Telekom (DT) Cut to Hold at Deutsche Bank.
  • Evergreen Solar (ESLR) Cut to Underweight at JPMorgan.
  • Kellogg (K) Cut to Neutral at UBS.
  • PepsiCo (PEP) Cut to Neutral at UBS.
  • Trina Solar (TSL) Cut to Hold at Deutsche Bank.

Jon C. Ogg
November 18, 2008

Posted on: November 18, 2008 – 7:29 am in Analyst Calls, , , , , , ,