Monthly Archives: November 2008

Wal-Mart (WMT): Ambrosia For The Working Man

Wmt

The new Wal-Mart (WMT) super-store in Columbia, Kentucky is longer than the aircraft carrier USS Enterprise which is docked on the West Side of Manhattan. The retail outlet’s ceilings are taller than those below the flight deck, probably forty feet from the floor. Wal-Mart is a ship of war all its own.

The location draws from five counties, bringing in people from as far away as 50 miles. That must hurt retailers in cities and towns from Russell Springs to Burkeville to Campbellsville. The LGA food supermarket in Columbia used to demand immodestly high prices. When the Wal-Mart came to town those prices came down.

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A Century Of Cars: Does Detroit Deserve A Bailout?

Ford1Near the Detroit Metropolitan Airport, visible from several major highways, is a four-story tall replica of a Uniroyal tire. It was built for the 1964 World’s Fair in New York and was moved to its present site after that event closed.

Back then, Akron, Ohio was the “Rubber Capital” of the world with the headquarters of most of the major tire companies including Goodyear and Firestone just a little over 100 miles from Detroit. It was one of the twenty largest cities in the US and Detroit was in the top five. Tire executives could make it up to GM in two hours to grab a three-martini lunch and be home by dinner.

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E-Commerce Spending Flat For “Black Friday” (AMZN)(EBAY)(WMT)(TGT)

AngrybearSome figures picked up in the media from research house ShopperTrak showed retail sales on Black Friday up 3%, which was much better than the most gloomy forecasts. The level of consumer spending may not stay high, but it is an indication that the holiday may not be a complete washout for a retail industry which was already on the ropes.

For the last several years, e-commerce holiday sales have grown faster than in-store revenues. That trend may be coming to an end.

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Microsoft (MSFT) In Talks To Buy Yahoo! (YHOO) Search For $20 Billion?

MsftMicrosoft (MSFT) is well along in talks to control and eventually buy Yahoo!’s (YHOO) search business for $20 billion, according to a report in the Times of London.

AllThingsDigital says no such deal is in the works.

The Times says the boards of both companies have had meetings on the transaction.

If it is a real deal, it would push Yahoo!’s share price back over $20

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Holiday Sales: A Miracle On 34th Street?

Cammonopoly_wideweb__430x3250Santa is for suckers. At least, that is the conventional wisdom

The 2008 holiday season was supposed to be the worst in years, or, perhaps decades. Analysts have forecast retail sales to be down 1% or 2%. Pessimists say those numbers are way off. Even e-commerce, which has grown at double digits for several years, is flat.

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GM (GM): A Debt For Equity Swap No Answer To Larger Problems

GM (GM) would like to get some unsecured debt-holders to swap their crumbling paper for equity in the failing auto marker. It may appear that this would solve a problem, but it creates several more and hardly cures what ails the firm.

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OPEC Fiddles While Venezuela Burns

Saudi Arabia says OPEC needs to drop production until oil moves back above $75 a barrel. As the largest member in the cartel, it would seem that the kingdom would get its way.

No such luck.

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Bill Gates’ Investment Vehicles Continue To Buy AutoNation (AN), Sparking Share Rally

Just days after boosting his stake to 10%, Bill Gates’ investment vehicles, Cascade Investment and Bill & Melinda Gates Foundation Trust, continue to scoop up shares of battered auto retailer AutoNation, Inc. (NYSE: AN).

Gates’ recent buying has sparked a rally in the stock. The stock which started the week at $6.45 are currently trading at $8.53, a gain of 32%.

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Clearwire, Cha-Ching (CLWR, S, CMCSA, TWC, GOOG, CLWRD)

Clearwire_logoClearwire Corporation (NASDAQ:CLWR) will be trading with the "CLWRD" ticker for the first 20 trading days.  While many ticker changes are not good, this one is.  Clearwire and Sprint Nextel Corporation (NYSE: S) have completed their long-pending transaction to combine their next-generation wireless Internet businesses.  The long and short of it is that this is a huge win for Clearwire, but the details are even better for the company.

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Fannie Mae (FNM): Reverse Splits As The Last Refuge For The Weak

FanniemaeReverse spilts are the tools of companies which cannot keep their share prices up through good management and sound operation. Most firms that resort to them want to keep their stocks above $1 to keep NYSE or Nasdaq listing or to trade above $5 to meet the investment standards of certain institutional investors.

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Ford’s (F) Strange Rally

95129cFord (F) made another perverse move up today rising as much as 22% to $2.64.

At this juncture, even if the federal govenment does extend loans to the US car companies the firms will have to go through some form of bankruptcy, The only interests that may be served in that process will be those of labor and suppliers in a hope of minimizing the effects on the econonomy.

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Regional Banks Refusing TARP Funds (BXS, CFR, FCF, HCBK, PRSP, WFD)

Money_stack_pic_2Bailouts, handouts, subsidies, and free money be damned.  In times when most large financial institutions are lining up for their share of TARP funds, there are many regional banks out there which have decided to refuse the government’s bailout TARP funds.  These banks say the are solid, and many of their share prices have held up much better than many of the troubled banks which are taking TARP monies.  Some of these regional banks are BancorpSouth, Inc. (NYSE: BXS), Cullen/Frost Bankers, Inc. (NYSE: CFR), First Commonwealth Financial Corporation (NYSE: FCF), Hudson City Bancorp, Inc. (Nasdaq: HCBK), Prosperity Bancshares, Inc. (Nasdaq: PRSP), and Westfield Financial, Inc. (NASDAQ: WFD).  These are the more actively traded stocks and what gets interesting is the explanation for refusing to accept TARP funds and the ratios of some of these banking institutions.

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Community Banks Refusing TARP Funds (AUBN, HARL, UBCP, AMNB, KRNY)

Money_stack_picIn a time of trouble, crisis, and inability to raise capital, there are many banks out there which have decided to refuse the government’s bailout TARP funds.  These banks appear to be more solid than many of the troubled banks, and interestingly enough their stocks have by and large held up better.  We compiled a list of smaller community banks which have refused to participate in TARP funds.  Some of these banks are Auburn National Bancorporation, Inc. (NASDAQ: AUBN), Harleysville Savings Financial Corp. (NASDAQ:HARL), United Bancorp, Inc. (Nasdaq: UBCP), American National Bankshares Inc. (Nasdaq: AMNB), and Kearny Financial Corp. (NASDAQ:KRNY).  Below are the ratios and explanations for each.

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Are Gold Miners Getting Well? (ABX, GG, NEM, AU)

Gold_picIn the past month, gold mining stocks have hit new 52-week lows. On October 27th, Barrick Gold Corporation (NYSE:ABX) bottomed out at $17.27, Goldcorp (NYSE:GG) hit $13.84 on the same day, and Newmont Mining (NYSE:NEM) fell to $21.17. AngloGold Ashanti (NYSE:AU) waited a month to touch a low of $13.37 on November 20th.

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Media Digest 11/28/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

Accoring to Reuters, Japan’s industrial output fell sharply in October.

Reuters reports that stores are courting careful customers this Black Friday.

Reuters report that Panasonic shares fell to a five year low based on its revised forecast.

Reuters reports that hits it profits goals will be a major task.

Reuters reports that ArcelorMittal will cut 9,000 jobs.

The Wall Street Journal reports that the Paulson bailout has been hurt by lack of staff.

The Wall Street Journal reports that OPEC is looking at a fresh round of cuts.

The Wall Street Journal reports that the turnaround at Dell (DELL) is in trouble dur to changes in the global "gadget" business.

The Wall Street Journal reports that cities and states are felling the credit sqeeze.

The Wall Street Journal reports that luxury car sales are in deep decline.

The Wall Street Journal reports that markets in Europe opened flat

The Wall Street Journal reports that a shipping slowdown has hit Nordic banks.

The Wall Street Journal reports that the U.S. Pension Benefit Guaranty said the use of pension funds by the Big Three to pay for restructuring threatens to drain the funds

The New York Times says RBS (RBS) says the the government will take a 58% stake.

The FT reports that GM is looking at selling European assets for 200 million euros.

The FT reports that OPEC is looking for members who cheat on quotas.

The FT reports that the downturn in the Chinese economy accelerated over the past month and could lead to high unemployment and social unrest.

Bloomberg says that Treasuries are heading for their best month since 1981.

Douglas A. McIntyre

Saks (SKS): A Poison Pill For A Dying Company

R218533_855025_2Saks (SKS), which was up until recently one of the world’s premier brands for high-end shoppers, has voted itself a "poison pill". The purpose of this may be to block Mexican billionaire Carlos Slim from taking the company over.

According to The Wall Street Journal, "Just days after Mexican billionaire Carlos Slim Helu raised his stake in Saks Inc. to nearly 18%, the beleaguered luxury retailer has adopted a shareholder rights plan intended to thwart a potential takeover."

The board at Saks should let him have the company.

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Media Digest 11/27/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

NewspaperAccording to Reuters, markets in Asia and Europe ross about 2%

Reuters reports that the downturn in the Chinese economy deepened.

Reuters reports that BHP Billiton (BHP) was gloomy about its prospects and defended it bid for Rio Tinto (RTP)

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The Black Friday Ten: Retailers Who May Not See 2009 (BONT)(DDS)(TLB)(PIR)(CPWM)(WSM)(CHS)(SKS)(EBHI)(RAD)

Angrybear_3A year ago, not many people would have thought Circuit City would be in bankruptcy now. Linens ‘n Things, Mervyn’s, Whitehall Jewelers and Steve & Barry’s have either shut down or are closing huge numbers of locations since they moved into Chapter 11.

The most astonishing fact about the retail industry now is that the environment has gotten much worse than it was when each of these businesses began to fail. Sales at stores across the country will be down this holiday season. Some analysts believe that the numbers will be as bad as for any fourth quarter in thirty-five years.

Adding to the problem of slow consumer spending brought on by the recession is an unprecedented liquidity crisis. Retailers who need access to capital for inventory, rent, and personnel costs are finding that it is nearly impossible to get access to funds without a pristine balance sheet and a history of substantial positive cash flow.

These troubles point to a number of other retail chains going out of business between now and early next year. Sales on Black Friday, the day after Thanksgiving, which is considered the bellwether of holiday sales, will determine the fate of several companies which are now viewed as the weakest operators in the industry.

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Petroleum Development Corporation Files To Raise Cash (PETD)

Money_stack_pic_5Petroleum Development Corporation (NASDAQ: PETD) has just filed a mixed shelf registration with the SEC to allow it to sell securities to raise capital.  The securities listed are any combination of debt securities, common stock, preferred stock, depositary shares, warrants, purchase contracts, and units. 

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Youbet.com Files To Raise Cash (UBET)

Money_stack_pic_4YouBet.com Inc. (NASDAQ: UBET) has just filed a mixed shelf registration with the SEC to allow it to sell securities to raise capital.  The securities listed are any combination of common stock, preferred stock, stock purchase contracts, stock purchase units, warrants or rights.

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