The Daily Racing Form’s take on Microsoft’s (MSFT) fourth quarter is that there was nothing good about it. The company missed earnings and will have to fire almost 10,000 people.
Redmond forecast that its sales for the last period would be $17.3 billion to $17.8 billion. No one believes that will happen, so the questions are what parts of the company will be accountable for poor results and how may employees will pay for it with their jobs.
The number of large American companies which have effectively dodged the falling safe of the recession can be counted on most people’s fingers and toes.
Wal-Mart (WMT) has done remarkably well, but its latest financial forecast was considered a bit short of expectations. McDonald’s (MCD) still does well, and as people have less money for food, things could get even better for the fast food operation.
Some of the oil firms are prospering. Exxon Mobil (XOM) will be a tremendous cash machine as long as crude is above $10. It may not make the kind of profit it did last year, but its dividend is safe, which is something which many other public corporations envy.
The raging debate about the largest American banks is whether their stock market values should be zero. Economist Nouriel Roubini, the most highly paid pessimist in the world, recently said that US banks are "insolvent" and credit crisis write-downs will total $3.6 trillion. That is a great deal more than has been taken as losses by financial firms to date.
Americans can also look at the choices made by the UK to salvage its credit system. Large banks there are being effectively bought out by the government as the UK attempts to put a firewall around huge losses from toxic assets.The Royal Bank of Scotland (RBS) is already 70% owned by the government and management’s kilts have been repossessed.
TD Ameritrade Holding Corp. (NASDAQ: AMTD) has been caught up in much of the same malaise affecting other financial and brokerage firm stocks. The company posted a drop of more than 20% to its earnings this morning and gave lackluster guidance. But what is interesting is that late today Moody’s Investors Service raised its debt ratings on the company to investment grade.
A Houston-based company called Stallion Oilfield Services, Inc. has withdrawn its plans for an initial public offering. While the company did not formally call its reason as being "market conditions," it does not take a genius to realize that a drop in commodity prices with a tougher business environment are the likely culprits. The company noted in an SEC filing that it believes the withdrawal to be consistent with the public interest and the protection of investors.
Jon C. Ogg
January 20, 2009
International Business Machines (NYSE: IBM) has posted some mixed earnings with earnings at $3.28 EPS and revenue at $27.01 billion. Thomson Reuters (First Call) had estimates of $3.03 EPS and $28.05 billion in revenue. The guidance is much more important.
The carnage among financial stocks is so complete, that they are listed here witht thier lows:
Bank of America (BAC): $5.17, Citigroup (C): $2.80, Wells Fargo (WFC): $14.02, JP Morgan (JPM): $17.70, State Street (STT): $14.43. For an order of magnitude, BAC is now off almost 90% from its 52-week high.
Apple (AAPL) Down to $78.30 from a 52-week high of $192.24.
Dendreon (DNDN) Down to $3,42 from 52-week high of $10.
Douglas A. McIntyre
The so-called fiduciary banks were never supposed to be immune from the woes of the financial sector. They were supposed to be more-resistant than most depository and lending institutions. Ask anyone holding State Street Corp. (NYSE: STT) or The Bank of New York Mellon Corp. (NYSE: BK) how that theory is working out.
Constellation Energy Group Inc. (NYSE:CEG) continues to shed assets. This time it’s the company’s London-based international commodities trading operations, which Constellation will sell to a division of Goldman Sachs Group Inc. (NYSE:GS). The company did not disclose the terms of the sale.
The Canadian government is reported to have offered financial support to the Mackenzie Valley gas pipeline project. Imperial Oil, a wholly-owned subsidiary of Exxon Mobil Corporation (NYSE:XOM), leads the project, which includes ConocoPhillips Corporation, Royal Dutch Shell plc (NYSE:RDS.A-B), and TransCanada Corporation (NYSE:TRP) through TransCanada’s investment in the Aboriginal Pipeline Group.
When China’s CNOOC Ltd. (NYSE:CEO) lost out to Chevron Corporation (NYSE:CVX) in a bid for Unocal, it found other places to invest. Like Nigeria and Indonesia. Those investments are expected to start paying off this year, as CNOOC targets net production at 225-231 million barrels of oil equivalent. Estimated net production for 2008 is 194-196 million barrels.
Bank of America Corporation (NYSE: BAC) has put itself right in harm’s way if you have been watching its share price over the last week (and longer). Ken Lewis is either going to be a hero or a zero for the acquisitions of Countrywide and then Merrill Lynch. The shareholder suits that are going to be coming down the pike may now end up making Lewis a zero. The sad thing is that Lewis was one of the few who made the predictions long before the blow-up that in the future we would realize we did some pretty stupid things on lending.
OPEC must know something the rest of the world does not know. Its chief believes that crude prices will recover to $75 sometime this year.
Either OPEC expects to cut its supply by another 3 million barrels a day or it expects the global recession to end driving up the demand for crude.
If you are not familiar with the name Kingdom Holding Co., you may know its owner by the name of Prince Alwaleed bin Talal. He has been a very visible investor in many companies including Citigroup, Inc. (NYSE: C). There are reports that his holding company has lost roughly $8.26 billion in the last quarter.
Nothing like a holiday weekend to soften the blow of bad news. Add in another day for a presidential inauguration, and it’s hard to see how ConocoPhillips Corporation (NYSE:COP) could have planned better to release its sorry interim update last Friday. The biggest bombshell in the report was Conoco’s expectation that itwould cut 4% of its workforce (about 1,300 jobs) and take a $100million hit to its fourth quarter 2008 results to pay for the firings.The company also plans to reduce its contract workforce.
Today, RBC Capital upgraded Research in Motion (NASDAQ: RIMM) from Sector Perform to Outperform from Sector and raised its price target form $45 to $75. The firm said it expects performance to exceed lowered expectations.
In its upgrade, RBC cited improving margin visibility and recovering execution. The firm also sees a multiple recovery following a 69% decline in the stock since June of 2008, which compares to a drop of 28% for peers and a 38% drop in the NASDAQ.
Goldman Sachs upgraded Motorola (NYSE: MOT) from Neutral to Buy and added the stock to its Conviction Buy List with a $7 price target, citing valuation.
Goldman said the stock price implies a negative $5 billion value for the handset business which the firm said is overly negative, according to MarketWatch.
Cerberus Capital Management was one of the top private equity firms any MBA graduate would have wanted as their career destination. But this week may mark another stark reminder that private equity is in decline The Financial Times reported that Cerberus is set to cut about 10% of its workforce.
US bank stocks are off sharply this morning on bad news from the UK, particularly that it has taken a 70% interest in huge financial firm RBS (RBS).
Banks may have another reason to sell off. Famous economist Nouriel Roubini says that “I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers. If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis," according to Bloomberg.
Douglas A. McIntyre
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