03 – February – 2009 – 24/7 Wall St.

Daily Archives: February 3, 2009

False Hopes For Internet Profits (IACI)(GOOG)(TWX)(NYT)(DIS)

Barry Diller, who has been in the media industry as long as almost any man alive, said the online display advertising at his company, IACI (IACI), might be down as much as 50% this month. Disney (DIS) reported that its interactive business lost money in the final quarter of last year. The head of advertising sales at Time Warner’s (TWX) AOL internet unit was replaced, probably a reasonable sign that revenue is under-performing there.

At The New York Times (NYT) where income from NYT.com has to do well because the newspaper is losing sales so fast, online revenue fell at a faster pace than print revenue did in December.

Posted on: February 3, 2009 – 8:36 pm in Internet, DIS, GOOG, IACI, NYT, TWX

Game Plan: Cisco Earnings (CSCO, JNPR, NT)

Cisco Systems Inc. (NASDAQ: CSCO) is set to report earnings on Wednesday after the close. What is interesting is that the news is expected to be dismal and the guidance is expected to be worse, yet many traders have been trying to use the current low prices to accumulate shares.

Posted on: February 3, 2009 – 7:15 pm in Earnings, Technology Companies, CSCO, JNPR, NT

Bill Gates Keeps Adding To Republic Services Stake (RSG, WMI)

Republic Services Inc. (NYSE: RSG) keeps seeing its largest shareholder buy stock. This is none other than Bill Gates. A fresh filing shows that Gates purchased 600,000 more shares at a price average of $26.12 for a total of $15.69+ million with a January 30 transaction date. This is a drop in the bucket for one of the world’s richest men, but there are implications here.

Posted on: February 3, 2009 – 5:43 pm in Infrastructure, Insider Activity, RSG, WMI

Lincoln Educational Selling Shares Into Strength (LINC)

Lincoln Educational Services Corporation (NASDAQ: LINC) was one of the stocks on our list of those hitting 52-week highs today as the entire education sector was strong. Now it looks like the company is taking advantage of the situation with an equity offering. Most of the proceeds will also be going to shareholders rather than to the company.

Posted on: February 3, 2009 – 5:08 pm in Secondary Offering, LINC

The 52-Week Low Club (MI)(STI)(MGM)(AIG)(COF)(PRGO)

Marshall & Ilsley (MI) Dragged down by big drop in financial sector. Hits a low of $3.47 off a 52-week high of $29.97.

SunTrust Banks (STI) Credit concerns cause big sell-off in regional banks. Drops to $8.84 from 52-week high of $67.25.

MGM Mirage (MGM) Moody’ cuts rating. Sells down to $6.555 from 52-week high of $75.08.

American International Group (AIG) Will federal government have to dump more money in? Sells off to $1 from 52-week high of $55.96.

Capital One (COF) CEO to forgo pay, but that is the only good news. Credit write-offs just off stage. Drops to $14.82 from 52-week high of $63.50.

Perrigo (PRGO) Poor quarterly results and forecast. Down to $22.11 from 52-week high of $43.08.

Douglas A. McIntyre

Posted on: February 3, 2009 – 5:04 pm in HI/LOW, AIG, COF, MGM, MI, PRGO, STI

Yum! Earnings: Part Yum, Part Yuck (YUM)

Yum! Brands Inc. (NYSE: YUM) posted earnings of $0.46 EPS on revenue of $3.38 billion. Analysts had expected results of $0.45 EPS on $3.38 billion in revenue, according to Thomson Reuters (First Call). Yum! earnings were not as clean as they have been, but the guidance is far from a disaster.

Posted on: February 3, 2009 – 4:44 pm in Earnings, Food, Retail, YUM

Disney (DIS): The Mouse That Cried

The harsh economic environment dinged Disney (DIS) earnings. Revenue for the last quarter fell 8% to $9.6 billion.Net income fell 32% to $845 million.

The company’s movie studio operation was hurt much more than other divisions. Revenue dropped 26% to $1.9 billion. Operating income was off 64%.

At Disney’s TV network business, ABC did poorly as ad rates fell. The operating income in broadcasting was down 60%.

The market was upset about the results, sending Disney’s stock down almost 10% to $18.65.

Douglas A. McIntyre

Posted on: February 3, 2009 – 4:30 pm in Entertainment, DIS

EA Earnings: Video Games For Broken Fingers (ERTS)

Electronic Arts Inc. (NASDAQ: ERTS) posted a net loss on a GAAP basis and announced plans to cut staff and close factories. It reported $0.56 EPS in non-GAAP earnings and non-GAAP revenue of $1.74 billion. Thomson Reuters (First Call) had estimates for the video game giant at $0.91 non-GAAP EPS on $1.92 billion in revenue. Where this gets interesting is what lies ahead.

Posted on: February 3, 2009 – 4:13 pm in Earnings, Earnings Warning, Video Games, ERTS

Winner’s Circle: Stocks On 52-Week Highs (CECO, COCO, DLTR, ESI, LINC, MYGN, NNDS, SXCI, NJR)

There are actually some stocks which are hitting 52-week highs despite the fact that January was the worst annual start on record and despite the fact that the markets are barely off of fresh lows. Most of these are around education as the unemployed are going back to school, but there are other winners. Here are today’s stocks which put in new 52-week highs:

STOCK (TICKER)                TODAY PRIOR
Career Education (CECO)       $23.51 $22.79
Corinthian Colleges (COCO)    $21.73 $19.50
Dollar Tree (DLTR)                $44.32 $44.10
ITT Educational Services (ESI) $133.49 $131.49
Lincoln Educational (LINC)       $17.29 $16.76
Myriad Genetics (MYGN)       $85.00 $75.43
NDS Group plc (NNDS)          $62.49 $62.49
SXC Health Solutions (SXCI)    $20.12 $20.08
New Jersey Resources (NJR)    $41.83 $41.82

Jon C. Ogg
February 3, 2009

Posted on: February 3, 2009 – 3:41 pm in HI/LOW, Trading Alert, CECO, COCO, DLTR, ESI, LINC, MYGN, NJR, NNDS, SXCI

GM (GM) January Sales: Odds Of Chapter 11 Go Way Up

Turning around GM (GM) and getting additional money from the federal government to support the company after the end of March depends on two things.

The first is that GM has to get its costs of doing business under control. That will be difficult because the UAW, creditors, and suppliers will all have to make significant concessions. Each group is going to put up some resistance.

The second part of GM’s restructuring depends on something over which is has only the most modest control–sales.

Posted on: February 3, 2009 – 2:26 pm in Autos, GM

Yum! Earnings on Deck: Next McDonald’s, or Troubled Growth? (YUM, MCD)

Yum! Brands Inc. (NYSE: YUM) is set to report earnings after the close of trading today. Analysts surveyed by Thomson Reuters expect earnings of $0.45 EPS on $3.38 billion in revenue. We have noted before how Yum! may have an ultimate aim of surpassing McDonald’s Corp. (NYSE: MCD) as the largest fast food chain globally.

Posted on: February 3, 2009 – 1:15 pm in Earnings, Food, Retail, MCD, YUM

Video Game Sector Braces For Electronic Arts Earnings (ERTS, TTWO, ATVI, THQI, GME)

Electronic Arts Inc. (NASDAQ: ERTS) is set to report earnings after the close of trading today. The (former) largest US-based video game company is expected to post $0.91 non-GAAP EPS on $1.92 billion in revenue.

Posted on: February 3, 2009 – 12:40 pm in Earnings, Video Games, ATVI, ERTS, GME, THQI, TTWO

Ford (F): January Sales Off 42%, Will Need Bailout

The Ford (F) media relations department writes the most misleading press releases of any large company in the US. Ford’s January sales were down 42%. The entire first section of the document on January sales covered how the firm’s F-150 trucks and Fusion models picked up market share.

The PR should have said "Ford Will Need Bailout Cash."

Posted on: February 3, 2009 – 12:34 pm in Autos, F, GM

Rohm And Haas (ROH) Fairly Accuses Dow Chemical (DOW) Of Bad Faith

Rohm and Haas (ROH) has now made it public that Dow Chemical (DOW) has a binding obligation to buy it, and that questions of whether the environment for chemical companies has gotten worse has nothing to do with consummating the transaction.

The Rohm argument is sound

Dow Chemical’s board, which is facing reasonable questions about its integrity, got a letter from Rohm yesterday.

Posted on: February 3, 2009 – 12:17 pm in Mergers and Buy Outs, DOW, ROH

XTO Cuts 2009 Capital Spending and Resets Hedges (XTO)

XTO Energy Inc. (NYSE:XTO) has cut its 2009 capital spending budget from $3.8 billion to $3.2 billion. Development and exploration expenses are now expected at $2.75 billion and pipeline construction is set at $450 million.

Posted on: February 3, 2009 – 12:09 pm in Oil & Gas, XTO

Warren Buffett Invests In Harley-Davidson, With 15% Rate (HOG, BRK-A)

Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) was one of the investors in Harley-Davidson Inc’s (NYSE: HOG) offering of $600 million of senior unsecured notes. The company is raising funds for the lending activities of Harley-Davidson Financial Services.

Posted on: February 3, 2009 – 10:46 am in Autos, Bonds, Buffett, Entertainment, Luxury, Secondary Offering, BRK-A, HOG

Marathon Takes Loss on Oil Sands Charge (MRO)

Marathon Oil Corporation (NYSE:MRO) this morning reported a net loss of -$41 million (EPS of -$0.06) on revenue of $14.8 billion for the fourth quarter of 2008. Adjusted income, which excludes certain items including a $1.4 billion non-cash impairment charge, totaled $1.03 billion (EPS of $1.44). Analysts had expected EPS of $0.90 and revenue of $13.32 billion.

Posted on: February 3, 2009 – 10:40 am in Earnings, Oil & Gas, MRO

Pending Home Sales No Cause For Celebration, Not Yet

The December pending home sales data is a bit dated, but there was a surprise gain by +6.3% for the month. The reading for the index was 87.7. What is more interesting than the gain in the index number is the geographic breakdown and the type of sales.

Posted on: February 3, 2009 – 10:12 am in Economy, Housing

Warren Buffett Keeps Riding the Reading Railroad (BRK-A, BNI)

A new SEC filing shows that Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) has acquired even more shares of Burlington Northern Santa Fe Corp. (NYSE: BNI). As the company’s shares have slid and slid, you have to wonder how much the Oracle of Omaha will keep buying.

Posted on: February 3, 2009 – 9:33 am in Buffett, Conglomerates, Transports, BNI, BRK-A, BRK-B

Citi Initiates Coverage on MGM Mirage (MGM) with a Sell, Next Shoe to Drop – Defaults at CityCenter

Citi initiates coverage on MGM Mirage (NYSE: MGM) with a Sell with a price target $2.50, citing the default rates at CityCenter.

Citi analyst says, "20-30% default rate at CityCenter? — Completion of this mega-project could not come at a worse time for MGM. To date, 55% of condo units have been sold, with only 20% deposits being received

Today’s top tickerspy Indexes
Domestic Telecom ...	+2.6%
Stem Cell Stocks	+2.3%
Pain Management S...	+2.1%
Ethanol and Biofu...	+1.9%
Savings and Loan ...	+1.8%

24/7 Wall St.