Daily Archives: November 20, 2008

Still No Solutions For Mortgage Foreclosures

For_sale_signFannie Mae (FNM) and Freddie Mac (FRE) announced that they will suspend foreclosures of occupied homes until early 2009. That appears to be an excellent way to stop the increase in evictions and bring some stability to housing prices. The two agencies own or have some level of control over roughly 50% of US mortgages.

The problem with the Fannie and Freddie initiative is that there is no end game. It delays but does not solve the market’s great problem which is that too many homeowners cannot pay mortgages either due to mortgage interest rates resetting at extemely high levels or that their ability to pay has been compromised because of a job loss.

Read More »

Posted on: November 20, 2008 – 8:14 pm in Housing, , ,

Internet Revenue At New York Times (NYT) Needs To Be Going Up 100%, But It’s Not

Newspaper_2

Online revenue at The New York Times Company (NYT) would have to be doubling to make up for the drop in overall revenue, based on the figures the company supplied for October. Unfortunately, online sales increased less than 5% for the month.

With a number of newspaper companies close to insolvency, no one thought that The New York Times would post strong advertising figures for October. But, the firm’s online business should be the one bright spot. Without stellar performance in that department, NYT troubles only grow,putting its dividend and ability to pay debt service at risk.

For last month advertising revenues for the entire company decreased 16.2% and circulation revenue increased 3.9%. 

Read More »

Posted on: November 20, 2008 – 4:40 pm in Old Media,

Dell EPS Driven By Cost Cuts (DELL)

Dell_logoDell Inc. (NASDAQ: DELL) today posted earnings which may contain some surprises for bulls and bears alike.  The PC maker posted $0.37 EPS and $15.16 billion in revenues versus $0.31 and $16.22 billion estimates. 

This report has shares up in after-hours trading.

Read More »

Posted on: November 20, 2008 – 4:12 pm in Earnings, PC Companies, Technology Companies,

The 52-Week Low Club (GOOG)(AAPL)(BAC)(F)(GM)(C)(CLWR)(PLD)(JNY)(STP)

Sad_clownVerifone (PAY) JP Morgan cut rating. Drops to $2.38 from 52-week high of $48.61.

Suntech (STP) Forecast below Wall St. estimates. Down to $5.60 from 52-week high of $90.

Jones Apparel (JNY) Part of retail sector sell-off. Sells off to $2.34 from 52-week high of $22.12.

Prologis (PLD) CEO is out and so are lots of employees. Falls to $2.25 from 52-week high of $71.79.

Clearwire (CLWR) Bad reaction to partnership with Sprint (S). Down to $3.77 from 52-week high of $18.26.

Citigroup (C) Investors still concerned about bank’s viability. Plunges to $4.39 from 52-week high of $35.29.

GE (GE) may be looking to raise money overseas. Later report denies it Down to $12.58 from 52-week high of $38.67.

GM (GM) Concerns about Chapter 11. Drops to $1.70 from 52-week high of $29.95.

Ford (F). Ditto. Drops to $1.01 from 52-week high of $8.79.

Bank of America (BAC) Market expects more losses and perhaps need for more capital. Sells down to $11 from 52-week high of $47.

Apple (AAPL) Could be its first rough holiday season in five years. Falls off to $80 from 52-week high of $202.96.

Google (GOOG) Down to $259.04 from 52-week high of $724.80 on word that search ads are not recession-proof.

Douglas A. McIntyre 

Posted on: November 20, 2008 – 4:01 pm in HI/LOW, , , , , , , , , , ,

DJIA Boot: Will GM, Alcoa, Citi Get Cut From Index? (GM, C, AA, F, AIG)

Bull_and_bear_imageThis is not going to be a pleasant topic, but by now we are all probably more than used to unpleasant economic topics.  The Dow Jones Industrial Average may follow its trend of booting some ‘former’ key components.  The DJIA is unlike other index since it is a price-weighted index, so it tends to follow actual stock prices rather than market cap-weighted index levels like the S&P.  So, we have three components that are now technically at risk.  These are listed by price lowest to highest.

Read More »

Posted on: November 20, 2008 – 3:48 pm in Index, , , , ,

Paulson: Current Financial Crisis A Once Or Twice A Century Event

TreasuryTreasury Secretary Henry Paulson called the financial crisis now plaguing the world economy a "once or twice" in a 100 years event, even as he warned Thursday against imposing too-strict regulations to prevent a repeat calamity, according to an AP story.

What he did not say is whether this was the first or second time this has happened this century.

Douglas A. McIntyre

Posted on: November 20, 2008 – 3:32 pm in Economy

Ford Run Over By S&P (F, GM)

Ford_logoStandard & Poor’s has come out with another timely research call today, and while shares are still up about 5% they are off of intra-day highs..  The ratings agency has lowered its ratings on Ford Motor Co. (NYSE: F) and its Ford Motor Credit Co. and related entities.  The corporate credit ratings were cut to ‘CCC+’ from ‘B-’…

Read More »

Posted on: November 20, 2008 – 3:08 pm in Analyst Calls, Autos, ,

Bank Of America (BAC) CEO Blames Government For Credit Crisis

Uncle_samNow that his company has its bailout cash from Henry Paulson, Bank of America (BAC) CEO Kenneth Lewis can say whatever he wants about the government. BAC has probably spent all the money, so the Treasury can’t take it back.

Today, Lewis blamed the current credit crisis on lax regulation by state officials and said all "systemically important" financial institutions need some form of federal oversight, according to Reuters.

To add insult on insul,t he added that the structures of Fannie Mae (FNM) and Freddie Mac (FRE) were set up "to take on extra risk because of the implicit government backing they enjoyed as GSEs."

Douglas A. McIntyre

Posted on: November 20, 2008 – 3:05 pm in Banking, , ,

Oouch! Auto Bailout Deal Dead In A Hour (GM)(F)

95129c_3So much for the Detroit bailout that was supposed to be announced later today.

CNBC is reporting that there is no deal.

The network says: "Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi said a compromise agreement worked out earlier Thursday by four key senators would not be approved. Instead, they said they will hold more hearings in December to consider the auto industry’s pleas."

Douglas A. McIntyre

Posted on: November 20, 2008 – 2:33 pm in Autos, ,

Talk That Car Industry Will Get Bailout (GM)(F)

Batmobile512Word from Washington is that a bailout agreement has been reach among the various factions in Congress.

There will no details on the arrangement until a news conference later this afternoon

According to MarketWatch:  "A small bipartisan group of lawmakers have reached a deal to buoy the struggling U.S. automobile industry, finding common ground after two furious days of lobbying on Capitol Hill by the battered Big Three automakers."

GM (GM) is up 9% to $3.05 on the news. Ford (F) is up 10% to $1.41.

Douglas A. McIntyre

Posted on: November 20, 2008 – 2:20 pm in Autos, ,

Airline Industry 2009 Recovery – MAYBE – (AMR)(UAL)(DAL)(CAL)(SWA)(LCC)(JBLU)

______________________________________________________________
Airline Industry 2009 Recovery – MAYBE -


By Robert Herbst


Only weeks ago due to the unprecedented rise in fuel costs, analysts were  predicting doom for the airline industry.

Today, crude oil is over 60% less than it was just over three months ago and  the price of

Aac1_6 jet fuel is about what it was in early 2007. In anticipation of lower demand, every major airline reduced capacity starting with the current Q4 2008.  (See note at end regarding jet fuel pricing).

Read More »

Posted on: November 20, 2008 – 12:41 pm in Airlines

Citigroup (C) And GM (GM): The Shadow Of Economic Ruin

AngrybearNo one knows what a Great Depression would look like in 2009. It would not necessarily have to match the 25% or so unemployment rate which was the high-water mark of joblessness in the 1930s. The stock markets might not have to correct 90% from their peaks as they did in the 30s.

There are some plausible predictions of how GDP could contract at 5% and perhaps more for several quarters starting now and how unemployment could go well above 10%. The stock prices of Citigroup (C) and GM (GM) and their tremendous sell-offs say a great deal about the market’s greatest concerns.

Read More »

Posted on: November 20, 2008 – 11:33 am in Economy, , ,

Bank Share Collapse Points to the Failure of TARP

By John Tamny  RealClearMarkets

When Treasury Secretary Henry Paulson announced last month that he would use TARP funds to directly buy shares of banking firms, many on the left and right rejoiced. With an alleged run on the banks in progress, federal dollars borrowed from a private sector already short on risk capital would supposedly lead to a revivification of the banking system.

Read more…

Posted on: November 20, 2008 – 11:11 am in Uncategorized

Market Welcomes Grand Canyon Education, With Sellers (LOPE)

BurningmoneyGrand Canyon Education, Inc. (NASDAQ: LOPE) priced its initial public offering of 10,500,000 shares of its common stock at $12.00 per share.  This pricing was at the lower-end of yesterday’s lowered range.  Trading just began, and it is not pretty.  On this IPO, the problems were not just a horrible stock market.

Read More »

Posted on: November 20, 2008 – 10:50 am in IPOs,

Sun and Wind Turn Into Clouds and Rain (STP, APWR, JASO, FSLR, ENER)

Solar_panel_picThe point that alternative energy companies are being battered in the stock market is no surprise. Yet some of the companies, at least, are performing fairly well and probably deserve better treatment.  Solar PV cell-maker SunTech Power Holdings (NYSE:STP) for example. Yesterday, the company reported third quarter revenue of $594.4 million and earnings per diluted ADS of $0.33 on net income of $55.9 million. Analysts expected earnings of $0.42 and revenue of $572 million. Gross margins were up nearly a full point.  SunTech also revised its full-year guidance down from $205 million-$215 millionto $185 million-$187 million.  While this might be "good enough" growth on the surface, it has devastating implications in alternative energy.

Read More »

Posted on: November 20, 2008 – 10:25 am in Alternative Energy, , , , ,

Analyst Defends Google (GOOG), Says Search Ads Will Hold Up Well

From StreetInsider

With shares of Google (Nasdaq: GOOG) in the tank, bullish Piper Jaffray analyst Gene Munster is pleading his case again to buy the stock.

The main issue driving the downside in Google’s stock has been the view that the slowdown in advertising will have a large negative impact on the company, driving down paid click rates and company revenues. Google was a great stock because of its growth. Not only is growth slowing, but people are now worried about the company just sustaining its past sales and profit.

Gene argues that search is one of the most defensible forms of online advertising in an economic downturn.

Read more…

Posted on: November 20, 2008 – 10:03 am in Uncategorized

What Sub-$50 Oil Means For You

Oil_well_logo_2_2If you wanted help from the oil front, the help you have sought has come and may be a curse.  Forget oil close to $150.00 per barrel and forget whatever T. Boone Pickens tells you about the same old broken record argument over supply and demand.  Crude broke $50.00 temporarily this morning.

NYMEX has Crude (CL) at $50.30 but it looks like there was briefly asub-$50.00 print.  It looks like $49.90 was the low in January 2007.As far as Brent Sea crude, that is down around$48.40 per barrel.  This is starting to feel like an extreme on theother end of the de-leveraging sword after speculators ran oil up somuch.

Read More »

Posted on: November 20, 2008 – 9:33 am in Alternative Energy, Economy, Housing, Oil & Gas

Does Pepsi Guidance Even Matter? (PEP, PBG, KO)

Pepsi_logo_2PepsiCo, Inc. (NYSE: PEP) issued a statement this morning noting that the company would reaffirm its core guidance at the Morgan Stanley Global Consumer and Retail Conference.  Pepsi is reaffirming its previously announced full-year 2008 core EPS guidance, although the full-year 2008 core EPS guidance excludes impacts on commodity mark-to-market, productivity for growth costs, and its share of the Pepsi Bottling Group’s (NYSE: PBG) restructuring initiative and impairment charge already announced this week.

Read More »

Posted on: November 20, 2008 – 9:18 am in Earnings, Food, , ,

Credit Cards: The Next Big Financial Explosion

95129c_2A number of bank analysts believe that the reason industry earnings will not improve next year is a sharp spike up in credit card defaults.

In many cases, financial companies are faced with more than the direct losses of customers who walk away from their obligations. These debts have been put into pools not unlike those which were created for mortgages. Those pools could become toxic quickly if the underlying debt begins to sour at an increasingly rapid pace.

Read More »

Posted on: November 20, 2008 – 9:00 am in Banking

Microsoft Debt Registration (MSFT)

Microsoft_logoMicrosoft Corporation (NASDAQ: MSFT) has just filed a shelf registration statement with the SEC that will allow the company to sell debt instruments from time to time if it chooses.  No terms were given, no size is indicated, and no underwriters are mentioned.

Read More »

Posted on: November 20, 2008 – 8:54 am in Bonds, Secondary Offering, Software,