12 – January – 2009 – 24/7 Wall St.

Daily Archives: January 12, 2009

Short Sellers Attack America’s Largest Companies (GE)(PFE)(T)(HAL)(XOM)(INTC)(MSFT)(CSCO)(IBM)

For the latest reported period, ending December 31, short sellers did not make any notable moves in or out of tech, financials, or industrial shares. What they did do was take impressively large positions in many of the largest cap companies in the world.

It was as if a part of the market was making a negative bet across the entire economy.

The short interest in GE (GE) went up 46% to 155 million shares. Shares short in Pfizer (PFE) rose 29% to 76 million shares. The short interest in Halliburton (HAL) moved up 33% to 37.4 million shares. Shares short in AT&T (T) were up 20% to 49.8 million shares. Short interest in IBM (IBM) was up 17% to 17.4 million. Shares short in Exxon Mobil (XOM) rose 14% to 49.8 million.

The short interests in Intel (INTC), Microsoft (MSFT), and Cisco (CSCO) also all rose.

Posted on: January 12, 2009 – 7:49 pm in Short Interest, BAC, C, CMCSA, CSCO, F, GE, GM, HAL, IBM, INTC, LVLT, MSFT, PFE, SIRI, T, WFC, XOM, YHOO, YHOO< AMZN

Palm (PALM): Stock Up, Questions Remain (AAPL)(RIMM)(VZ)(T)(S)

The excitement about Palm’s (PALM) new Pre handset has sent the company"s stock up from $3.50 to over $6. But, the shares have not moved in two days, even with several analyst upgrades.

Palm won’t trade higher until it publishes results of Pre sales or shows a financial benefit from the new product when it next releases earnings.

The big question, which may not be answered for a month or two, is whether anyone will actually buy the thing. The odds are poor.

Posted on: January 12, 2009 – 6:37 pm in Wireless, AAPL, PALM, RIMM, S, T, VZ

Bill Gates Keeps Adding To Republic Services Stake (RSG)

Bill Gates is at it again. He’s bought more shares of Republic Services Inc. (NYSE: RSG). In an SEC filing after the close today,Mr. Gates disclosed he spent more than $11.6 million to buy another 460,100 shares.

Posted on: January 12, 2009 – 5:08 pm in Business Services, Insider Activity, RSG

Alcoa Enters the Rust Business (AA)

Alcoa Inc. (NYSE: AA) posted earnings excludling one-time items of -$0.28 EPS on revenue of $5.69 billion. This compares with First Call estimates of -$0.11 EPS on $5.18 billion in revenues. Some of the metrics really outline the woes.

Posted on: January 12, 2009 – 4:26 pm in Earnings, Metals, AA

NASDAQ Sees Drop In Short Selling (NDAQ)

The NASDAQ OMX Group (NASDAQ: NDAQ) is seeing a drop in short selling activity if the trends in December continue. The exchange said that as of December 31, the total short interest in 2,559 NASDAQ Global Market securities totaled 6,757,422,121 shares.

Posted on: January 12, 2009 – 4:13 pm in Short Interest, NDAQ

The 52-WeeK Low Club (ZEP)(LZB)(TNC)(SINA)

Zep (ZEP) Shares downgraded. Drops to $13.17 from 52-week high of $21.80.

La-Z-Boy (LZB) Shares in industry downgraded. $1.82 from 52-week high of $11.76.

Tennant (TNC) Still falling due to accounting concerns. Guidance cut. Shares downgraded. Falls to $13.70 from 52-week high of $43.94.

Sina (SINA) No news. China portal stock plunges to $20.20 from 52-week of $58.50.

Douglas A. McIntyre

Posted on: January 12, 2009 – 4:09 pm in HI/LOW, LZB, SINA, TNC, ZEP

Medtronic Adjusts Long-Term Goals (MDT)

Medical devices was supposed to be recession-proof, or at least was supposed to be recession-resistant. But we have seen over and over how this notion has not been the case. Medtronic Inc. (NYSE: MDT) today highlighted further evidence that medical technology has to adjust to a new, harsher environment.

Posted on: January 12, 2009 – 3:12 pm in Earnings Warning, Medical, MDT

S&P Takes BorgWarner Closer to Junk (BWA)

BorgWarner Inc. (NYSE: BWA) has been a troubled company in a troubled sector. It seems that after completing its debt rating review, Standard & Poor’s has decided it doesn’t like the auto parts business. S&P cut a prior "A-" rating down to "BBB". The good news is that this is still investment grade. The bad news is that the outlook is still negative.

Posted on: January 12, 2009 – 2:57 pm in Analyst Calls, Autos, BWA

A Vicious Market Turns Against Citigroup (C), Again

Usually when there are rumors that management is being changed at a company, its shares go up.

There are stories flying around Wall St. that the Citgroup (C) chairman Win Bischoff will be pushed out in favor of former Time Warner (TWX) CEO Dick Parsons. Parsons did nothing for the huge content company other than warm the seat in the corner office. He has also been on the Citi board long enough to be partially to blame for the bank’s misfortunes.

The market is more worried about Citi’s future than it is excited about change and the bank’s shares are down over 10%, back below $6.

Posted on: January 12, 2009 – 12:28 pm in Banking, AIG, C, MS

Seagate & Storage Sector: More Pain, More Change (STX, WDC, EMC)

You know times are more than tough when an industry’s leader is caught like a roach on its back. That is the position that Seagate Technology (NYSE: STX) finds itself in at the onset of 2009. The implications will not stop with Seagate, as consumer trends challenge the traditional storage business.

Posted on: January 12, 2009 – 12:06 pm in Consumer Electronics, Labor & Unions, Shareholder Issues, Technology Companies, EMC, STX, WDC

The Retailers That Will Dominate Store Closings (SHLD)(M)(JWN)(TIF)(WMT)(BBY)(GPS)(M)

Several estimates from retail analysts predict the tens of thousands of retail outlets will close this year. Some put the number as high as 70,000 in the first half of 2009. Wall St. is bracing for a large number of bankruptcies in the sector, some of them public companies.

The largest fifteen or twenty retailers will chop locations but not go out of business. They have the sales and balance sheets to make it through the next two or three years, unless the recession turns to a depression. But, they won’t be able to keep the doors of all their operations open.

These are some of the nation’s largest retailers and estimates of what they will have to do to cut their total numbers of outlets as revenues fall.

Posted on: January 12, 2009 – 11:49 am in Retail, ANF, BBY, COH, GPS, JWN, M, SHLD, SIG, TIF, WMT, ZLC

Stuff Gets Out Of Hand At Level 3 (LVLT)

Level 3 (LVLT), the troubled telecom company is trading off nearly 25% today to $1.13 with no news. The firm carries a lot of debt at $6.4 billion and has modest operating income.

It is probably nothing. The stock may even be back to even by the end of the day.

Douglas A. McIntyre

Posted on: January 12, 2009 – 11:35 am in Telecom, LVLT

Closing Down a Coal Mine (PCX, BTU)

Last Friday, Patriot Coal Corporation (NYSE:PCX) announced that it would close its Jupiter mine in March. The company had said in September that it planned to close the West Virginia mine, so the announcement was not unexpected.

Posted on: January 12, 2009 – 11:17 am in Commodities, BTU, PCX

Tale of Two Small-Cap Oil Companies (VQ, DNR, CRED)

Venoco, Incorporated (NYSE:VQ) announced this morning that it will cut its capital spending in 2009 to $150 million. As recently as last November, Venoco had planned to spend $400 million on capex in 2009.

Posted on: January 12, 2009 – 11:13 am in Oil & Gas, CRED, DNR, VQ

100% Buyout Premiums Still Exist (ABT, EYE)

If we told you on Friday that a decent-sized medical merger was coming with a 100% premium, you probably wouldn’t have believed it. We are having a hard time believing it even after the fact. Abbott Laboratories (NYSE: ABT) is buying Advanced Medical Optics Inc. (NYSE: EYE).

Posted on: January 12, 2009 – 10:43 am in Medical, Mergers and Buy Outs, ABT, EYE

Goldman Sachs Thinks Oil Could Fall To $30 On Weak Fundamentals and Inventory Build

Analysts at Goldman Sachs said weak fundamentals will dominate the oil market and high inventories could result in oil prices as low as $30 per barrel this quarter.

Goldman said inventories are likely to rise to a 10-year high in the next two months

Can Rambus Regain Its Shine? (RMBS, MU)

Calling last week a rough spot for Rambus, Inc. (NASDAQ: RMBS) might be the understatement of the year. This was after a federal judge in Delaware ruled that the chip patent shop could not enforce some of its patents against Micron Technology Inc. (NYSE: MU). Rambus is far from dead, but this case could at least in theory go to the core of patent shops which manufacture nothing on their own which and live off of royalty and license payments from manufacturers.

Posted on: January 12, 2009 – 8:59 am in Law, Regulation, Semiconductor, Shareholder Issues, MU, RMBS

When Americans Save, They Are Stimulating

John Tamny RealClearMarkets

Amid the U.S. economy’s continuing struggles, conventional wisdom has suggested that Americans must spend in order to bring the economy out of its slump. Along those lines, a recent newspaper beamed the words, "Hard-Hit Families Finally Start Saving, Aggravating Nation’s Economic Woes." The paradoxical nature of such a headline presumably lost on the paper’s sub-editor.

The problem with today’s presumed economic wisdom is that it has no basis in reality. Simply put, no act of saving, short of an individual putting money under the proverbial mattress, can ever detract from consumption.

Early Bird Analyst Upgrades & Downgrades (A, GNTX, PFE, AA, AGN, HOG, PBH, SSS, STM, TEN)

These are some of the top early bird upgrades and downgrades we have seen from Wall Street analysts this Monday morning:

Agilent (NYSE: A) Raised to Outperform at Baird.
Gentex (NASDAQ: GNTX) Raised to Outperform at Baird.
Pfizer (NYSE: PFE) Raised to Neutral at Goldman Sachs.
Alcoa (NYSE: AA) Cut to Sell at Deutsche Bank.
Allergan (NYSE: AGN) Cut to Hold at Lazard.
Harley-Davidson (NYSE: HOG) Cut to Sell at Goldman Sachs.
Prestige Brands (NYSE: PBH) Cut to Underweight at JPMorgan.
Sovran Self Storage (NYSE: SSS) Cut to Underperform at Oppenheimer.
STMicroelectronics (NYSE: STM) Cut to Sell at UBS.
Tenneco (NYSE: TEN) Cut to Market Perform at Wachovia.

Jon C. Ogg
January 12, 2009

Posted on: January 12, 2009 – 7:31 am in Analyst Calls, A, AA, AGN, GNTX, HOG, PBH, PFE, SSS, STM, TEN

Corporate Bankruptcies: The Next Hurdle For Banks

The list of problems that could hurt bank earnings is already pretty long. The first big problem was mortgage-backed securities. That was followed by consumer credit write-offs. Then came loans for commercial real estate. That gets added to LBO lending defaults.

Over the last week or so another, a very large problem for banks has begun to become more prominent–the bankruptcies of big companies. Citigroup (C) has said it will take a write-off of more than a billion dollars on the Chapter 11 filing from Lyondell. Chemical company Tronox filed for bankruptcy today.

Posted on: January 12, 2009 – 6:48 am in Banking, C, GM

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