Daily Archives: December 16, 2008

The 52-Week Low Club (SAY)(KFN)(ZIXI)

Sad_clown_2Satyam Computer (SAY) Plans to buy another company send stock diving. Drops to $5.05 from 52-week high of $29.84.

KKR Financial (KFN) Plans to replace CEO on top of poor performance. Drops to $.60 from 52-week high of $16.78.

Zix (ZIXI) No news, just a bad day. Falls to $1.11 from 52-week high of $5.30.

Douglas A. McIntyre

GE Changes Guidance Policy; Reaffirms Targets (GE)

Ge_logoGeneral Electric Co. (NYSE: GE) has reconfirmed its December 2 earnings outlook of $0.50 to $0.52 EPS excluding charges and $0.36 to $0.42 including charges); it still sees full-year 2008 earnings of $1.78 to $1.84 EPS from $185 billion in revenue.

But here is where this gets interesting.  GE is eliminating its policy of issuing quarterly guidance and will now provide a framework for annual operating earnings.  It will also continue to run the Consumer & Industrial segment as part of its portfolio.

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FOMC Enters Realm of 0% Interest Rates

Money_stack_pic_3The FOMC voted, and the Fed Funds Rate has now been given a TARGET RANGE of 0% to 0.25%.

The Discount Rate was cut 0.75% and is now at 0.50%.

Some of the statements are as follows:

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ConocoPhillips, Peabody Energy Will Convert Coal-to-Gas (COP, BTU)

Turning coal into natural gas is not brand-new technology, but it is rarely done because natural gas is, or has been, relatively cheap. Not as cheap as coal, but cleaner to burn for electricity generation.

ConocoPhillips Corporation (NYSE:COP) and Peabody Energy Corporation (NYSE:BTU) plan to build a "mine-mouth" coal gasification plant in Muhlenberg County, Kentucky. The companies have filed for an air permit, which is the latest in a number of steps that need to be completed before construction begins.

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Cimarex Buys Back Senior Notes, With More Debt (XEC)

Cimarex Energy Company is one of those mid-cap energy stocks that is well-liked by institutional investors. Nearly 90% of the company’s stock is held by institutional investors. In good times, that’s good. In bad times, those investors might need the cash themselves. That appears to be what’s happened today.

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Worst News Of The Recession: Goldman Sachs (GS) Pay Drops 45%

Sad_clownIn another sign that the recession is deepening, the average employee at Goldman Sachs (GS) will make only $363,654 a drop of 45% from last year. In other words, that would still pay the salaries of ten school teachers. Goldman personnel made that money even though the firm lost $60 billion in market cap.

According to Bloomberg, "Expenses for compensation and benefits fell 46 percent to $10.9 billion from a record $20.2 billion in 2007, the New York- based company said in a statement today. That provides an average $363,654 for each of the firm’s 30,067 employees, down from $661,490 for each of the 30,522 people employed last year."

It’s hard to be poor

Douglas A. McIntyre

Satyam’s Diversification, A Bridge To Nowhere (SAY)

Burning_money_pic_3Satyam Computer Services Ltd. (NYSE: SAY) is seeing its stock crushed this morning after the company’s board of directors approved acquisitions of infrastructure development companies Maytas Infra Ltd. and Maytas Properties Ltd.  What is interesting is that this acquisition of the two Maytas was being sold as a view to remove the risk from its core business of software and IT-outsourcing services.  The purchase price is roughly $1.6 billion, and technically these are majority stakes being taken.

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OPEC Cut To Be ‘Around 2M Barrels’

Oil_well_imageIf you have been wondering if OPEC was going to cut production due to prices, the answer is a resounding "YES."  It has been about as telegraphed as the sun coming up from the east tomorrow.  But we now have an idea about what lies ahead.

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Biodiesel Refinery Goes on the Block (NSC, BRK-A)

Burning_money_pic_2Bad news doesn’t surprise anyone any more, especially in the bio-refining business. Shareholder value in ethanol companies has all but evaporated. Now, we get news of a biodiesel plant going on the auction block.

A company called Mid-Atlantic Biodiesel Company, LLC, is being forced to auction its five million gallon/year refinery, which went into operation in 2006. The plant only produced B100 (100% biodiesel), and only did so for about six months. Then the cost of feedstock caught up with Mid-Atlantic, and the company closed its doors. Now, according to the auctioneer’s web site, the plant will go under the gavel on January 22, 2009, in a "lender ordered collateral sale."

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Will The Recession Stop Global Warming?

95129c_2The recession has touched almost everything in the world from employment, to prices, to GDP growth to housing. Even China is seeing its economy slow. In the US, this downturn may be the worst in eight decades.

One thing that hard times do is cut energy consumption. OPEC may have to reduce production by two million barrels a day, about 5% of the cartel’s shipments.Car sales are off as are airline trips. That pushes fuel prices down. Use of home heating oil is also likely to drop. As factories shut down or move to shorter hours, energy use will slump across most of the industrial sector.

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Moody’s Downgrades Goldman Sachs (GS) Long-Term Senior Debt Ratings to A1

Moody’s Investors Service downgraded the long-term senior debt ratings of Goldman Sachs Group Inc. (NYSE: GS) to A1 from Aa3, excluding FDIC-guaranteed debt. The Aa3 deposit ratings of Goldman Sachs’ banking subsidiaries and all of its Prime-1 short-term ratings were affirmed. The outlook remains negative.

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Fertilizer, Ag, and Potash… Almost Cool Again (AGU, MOS, TRA, IPI, POT, CF)

Money_stack_pic_2There have been several research calls in the potash, agriculture, and fertilizer sector this morning which have pushed stocks higher.  Agrium Inc. (NYSE: AGU), Mosaic Co. (NYSE: MOS), Terra Industries Inc. (NYSE: TRA), Intrepid Potash, Inc. (NYSE: IPI), Potash Corp. of Saskatchewan, Inc. (NYSE: POT), and CF Industries Holdings, Inc. (NYSE: CF) are all trading higher.

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Baidu.com, Goldman, and Conviction Buy (BIDU)

Baidu_logoBaidu.com Inc. (NASDAQ: BIDU) may finally be catching another break after so much trouble.  The Chinese internet search leader has been raised to the Conviction Buy List at Goldman Sachs this morning with a 6-month price target of $145.00.  Its prior rating was a "neutral" rating, but the data may be more interesting than the call itself.

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RadioShack Takes Back Mexican Ops (RSH)

RadioShack Corporation (NYSE: RSH) announced that it closed on a a stock purchase agreement yesterday that its subsidiaries Tandy International Corporation and ITC Services, Inc. entered into with Grupo Gigante, S.A.B. de C.V. in Mexico.

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Consumer Prices: Things Get So Cheap They Are Almost Free

Cammonopoly_wideweb__430x3250Consumer prices dropped so much in November that goods and services are almost free. Energy prices were down 17%, lead by the falling price of gas.

The Consumer Price Index dropped 1.7% after falling 1% the previous month. People who keep track of such things say that this has not happened in two consecutive months since 1947. The five decades between disasters is hardly comforting.

But, is it a disaster?

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Goldman Sachs Sighs, Amputation Trumps Guillotine (GS)

Imagine a wide loss being considered a win.  That is partly the case at Goldman Sachs Group, Inc. (NYSE: GS) This morning.  The former "Golden Slacks" posted a loss of $4.97 EPS for the quarter and its revenue came in negative at -$1.58 billion now that the broker (or bank holding company) took many marks that it had not previously taken.

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Top 10 Pre-Market Analyst Upgrades (BAM, CEPH, CYPB, FCEL, KR, SWY, XNPT)

Money_stack_picThese are some of the top analyst upgrades and positive research calls we have seen from Wall Street this Tuesday morning:

  • Brookfield Asset Management (BAM) Started as Buy at TD.
  • Cephalon (CEPH) Started as Buy at Piper Jaffray.
  • Cypress Bioscience (CYPB) Started as Buy at Piper Jaffray.
  • FuelCell Energy (FCEL) Started as Overweight at Thomas Weisel.
  • Kroger (KR) Raised to Neutral from Underweight at JPMorgan.
  • Safeway (SWY) Raised to Neutral from Underweight at JPMorgan.
  • Xenoport (XNPT) Started as Buy at Piper Jaffray.

Jon C. Ogg
December 16, 2008

Top Pre-Market Analyst Downgrades (ADTN, AZ, CY, F, GPS, GM, IFX, LEN, ERIC, MXIM, PGR, WFMI)

Burning_money_picThese are some of the key analyst downgrades and negative calls we have seen this Tuesday morning:

  • ADTRAN (ADTN) Cut to Neutral at Baird.
  • Allianz (AZ) Started as Underperform at Jefferies.
  • Cypress Semi (CY) Cut to Underweight at JPMorgan.
  • Ford (F) Started as Sell at Societe Generale.
  • Gap Inc. (GPS) Cut to Market Perform at FBR.
  • General Motors (GM) Started as Sell at Societe Generale.
  • Infineon (IFX) Cut to Neutral at UBS.
  • Lennar (LEN) Cut to Neutral at UBS.
  • LM Ericsson (ERIC) Cut to Sell at Deutsche Bank.
  • Maxim Integrated (MXIM) Cut to Underweight at JPMorgan.
  • Progressive (PGR) Cut to Sell at Citigroup.
  • Whole Foods (WFMI) Cut to Underweight at JPMorgan.

Jon C. Ogg
December 16, 2008

The Car Czar: Auto Firms May Go Bankrupt Anyway

Ford1The car czar is a joke, a way to get a few billion dollars to GM (GM) and Chrysler while they move their companies in better shape for Chapter 11 filings.

The two car companies are not likely to get what they want from the UAW, suppliers, and creditors without some kind of fight. Who wants to walk away with the smallest piece of the pie?

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Bank Stocks Get Ready For New Lows (HBC)(C)(BAC)

DataDespite all the capital the Treasury has put into large US banks, their stocks may be about to make new multi-year lows.

While the housing market is still hurting their derivative holdings, consumer credit and corporate lending troubles may just be beginning.

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