05 – May – 2009 – 24/7 Wall St.

Daily Archives: May 5, 2009

Cramer Calls Brocade His #2 Speculative Tech Stock (BRCD, IBM, TKLC)

Jim Cramer came back on CNBC’s MAD MONEY with a “Part 2″ of his basket of 5 speculative technology stocks for investors. The second pick named Tuesday was Brocade Communications Systems, Inc. (NASDAQ: BRCD), what he called a $5.00 “tech has-been.”
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Posted on: May 5, 2009 – 6:18 pm in Cramer, Technology Companies, Trading Alert, Value Investing, BRCD, IBM, TKLC

Pepsi’s Dividend Hike Signals Twist in Bottling Mergers (PEP, PBG, PAS)

Pepsico, Inc. (NYSE: PEP) has just come out and announced it was going to hike its dividend by some 6%. The $1.70 annualized dividend will now be $1.80 on an annual basis that is paid out quarterly. Normally, these announcements are a blip on the radar, but this could actually signal that it has the capital to pay more for that proposed Pepsi Bottling Group Inc. (NYSE: PBG) acquisition. It may even have an ultimate impact on PepsiAmericas Inc. (NYSE: PAS).
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Posted on: May 5, 2009 – 6:05 pm in Dividend, Food, Mergers and Buy Outs, Water, PAS, PBG, PEP

Dow Shoring Up Capital (DOW)

The Dow Chemical Company (NYSE: DOW) has commenced a public offering of common stock to shore up its balance sheet after closing its recent huge merger (acquisition) with Rohm & Haas. It will raise approximately $1.625 billion in the sale. Roughly $1 billion of the proceeds will be through shares offered by the company itself and roughly $625 million will be through shares offered by accounts and funds managed by Paulson & Co. and trusts created by members of the Haas Family. This might not be the only offering to raise capital.
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Posted on: May 5, 2009 – 3:42 pm in Bonds, Mergers and Buy Outs, Secondary Offering, DOW

Speculative Swine Flu Stocks Make Last Stand (NVAX, GNBT, BCRX, PURE, VICL, VIVO, AVII)

It looks like everyone has figured out that swine flu was more of a media pandemic rather than a disease or viral pandemic. Had this been November as flu season was starting, that might have been a bigger deal. We have seen substantial pullbacks after the massive gains seen in the speculative swine flu stocks. Novavax, Inc. (NASDAQ: NVAX), Generex Biotechnology Corp. (NASDAQ: GNBT), BioCryst Pharmaceuticals Inc. (NASDAQ: BCRX), Pure Bioscience (NASDAQ: PURE), Vical Inc (NASDAQ: VICL), Meridian Bioscience Inc. (NASDAQ: VIVO), and AVI BioPharma Inc. (NASDAQ: AVII) have all begun their overbought roll-over.
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Posted on: May 5, 2009 – 3:12 pm in Biotech, Trading Alert, GNBT, NVAX, VICL, BCRX, AVII, PURE, VIVO

Is Crocs Becoming The New Bull Market Proxy? (CROX)

It is true that the most speculative or most battered stocks often rise the most during the initial turnaround and recovery, and to call the latest rally since the March lows a mere recovery would be an understatement of the year. But while the S&P has recovered 35% from lows and the NASDAQ has recovered by almost 40% from lows, shares of Crocs Inc. (NASDAQ: CROX) have exploded from their lows. With shares up 14% today at $3.71, CROCs has risen well over 200% from the March lows and is up over 100% in less than one-month.
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Posted on: May 5, 2009 – 11:09 am in Apparel, HI/LOW, Technical Analysis, Trading Alert, CROX

Bernanke: Things Will Get Better, Or They Won’t

Ben Bernanke told Congress that the recession may be over by the end of the year, at least as it is measured by GDP. Unemployment will be troubling for a longer period, perhaps well into next year.

Bernanke pointed to stabailization of housing, which is hardly a given, and an end to the liquidation of inventories. But, inventories will only begin to rise again if there is consumer and business spending to support it. Read More »

Posted on: May 5, 2009 – 10:51 am in Economy

Rebel Yelp

The replacement for newspapers isn’t Craigslist; it’s local social media.

By Paul Smalera of The Big Money

Much has been made of Craigslist rising up to destroy newspapers’ classified-listings business, but less has been said about newspapers’ own sins in falling behind the needs of their commercial advertisers. For decades, publishers had the luxury of actively disparaging, say, the bra ads that made 10-part Pulitzer Prize reportage possible. But the rise of the Internet, despite taking decades, caught them unprepared. New York University professor and longtime Internet sociologist Clay Shirky recently explained, “When Wal-Mart and the local Maytag dealer … were all able to use [the Internet] to get out of their old relationship with the publisher, they did. They’d never really signed up to fund the Baghdad bureau anyway.”

Less Power from the Generators (DUK, CEG)

Duke Energy Corp. (NYSE:DUK) reported first quarter 2009 diluted EPS of $0.27, down from $0.37 in the year-ago period. Adjusted diluted EPS came in at $0.28, compared with $0.35 a year ago. Analysts had been expecting $0.32 adjusted EPS, and revenue of $3.39 billion for the quarter. First quarter revenue came in at $3.312 billion. Read More »

Posted on: May 5, 2009 – 8:45 am in Earnings, CEG, DUK

ADM Misses on Big Charges (ADM)

Agricultural giant Archer Daniels Midland Company (NYSE:ADM) reporated earnings of a paltry $8 million (EPS of $0.01) on sales of $14.8 billion for its 2009 third quarter which ended on March 31st. Analysts had been expecting EPS of $0.49 on revenues of $16.94 billion.

The earnings hit came from a $132 million non-cash after-tax charge on currency losses sustained by an equity investor in ADM and a $97 million income tax charge related to an ADM investment. Okay, so before the unusual items earnings would have been $232 million. That’s still 36% lower than earnings for the same period last year. And revenue fell 21% year-over-year. Read More »

Posted on: May 5, 2009 – 8:19 am in Agriculture, Earnings, ADM

New ETN to Track MLPs (JPM, ALJ, KMP, EPD, PAA)

JPMorgan Chase & Co. (NYSE:JPM) has created a new exchange traded note based on “the portfolio of midstream energy [MLPs] underlying the Alerian MLP Index.” The new structured investment is called the JPMorgan Alerian MLP Index ETN (NYSE:AMJ).

The three largest components of the Alerian MLP Index include Kinder Morgan Energy Partners LP (NYSE:KMP) at 12.75%, Enterprise Products Partners LP (NYSE:EPD) at 10.79%, and Plains All American Pipeline LP (NYSE:PAA) at 6.67%.

The shares opened on May 4th at $21.8046 and closed at $21.85.

Paul Ausick

Posted on: May 5, 2009 – 8:12 am in Old Media, AMJ, EDP, JPM, KPM, PAA

The Myths About a Return to the Gold Standard

By John Tamny of RealClearMarkets

“…it is not necessary that paper money should be payable in specie to secure its value; it is only necessary that its quantity should be regulated according to the value of the metal which is declared to be the standard. If the standard were gold of a given weight and fineness, paper might be increased with every fall in the value of the gold, or, which is the same thing in its effects, with every rise in the price of goods.” David Ricardo, Principles of Political Economy and Taxation

The financial crisis of the past year has predictably generated all manner of suggestions about how to fix the problems before us. And while most solutions have missed the point along the lines of treating a cancer patient with a pacemaker, there’s a small but growing call for a return to the monetary stability wrought by a gold standard.

Is Apple (AAPL) Trying To Buy Twitter?

Rumor of the day.

Gawker is reporting that Apple (AAPL) is in advanced negotiations to buy social texting company Twitter for $700 million and would like to close by early June.

Since Apple rarely makes acquisitions and never makes large ones, the rumor seems unlikely to be true.

Douglas A. McIntyre

Posted on: May 5, 2009 – 6:41 am in Mergers and Buy Outs, AAPL

Top 10 Analyst Upgrades & Downgrades (APC, ATML, CBY, CEO, EXR, N, OXY, OZM, PSA, WFC)

These are ten of the top pre-market analyst calls we have seen early this Tuesday morning with more than two hours until the market opens:
Anadarko Petroleum (APC) Cut to Equal Weight at Barclays.
Atmel (ATML) Raised to Outperform at FBR.
Cadbury Schweppes (CBY) Raised to Neutral at JPMorgan.
CNOOC Ltd (CEO) Cut to Neutral at JPMorgan.
Extra Space Storage (EXR) Cut to Underweight at KeyBanc.
Netsuite (N) Cut to Sell at Piper Jaffray.
Occidental Petroleum (OXY) Raised to Outperform at Barclays.
Och-Ziff Capital (OZM) Raised to Outperform at KBW.
Public Storage (PSA) Cut to Underweight at KeyBanc.
Wells Fargo (WFC) Started as Outperform at Oppenheimer.

JON C. OGG

Posted on: May 5, 2009 – 6:27 am in Analyst Calls, APC, ATML, CBY, CEO, EXR, N, OXY, OZM, PSA, WFC

GM (GM) Sales In China Up 50%, A Way For The Company To Raise Money

GM’s (GM) most valuable asset may be its operation in China. Sales at the division rose 50% in April to 151,084. The No. 1 US car company sold 173,007 light vehicles in the US last month.

China may pass the US as the world’s largest auto market this year. According to the AP, “Vehicle sales in China so far this year have outpaced those in the U.S.” Read More »

Posted on: May 5, 2009 – 5:09 am in Autos, China, GM

Is UBS (UBS) Loss A Caution For American Banks?

UBS (UBS) lost $1.7 billion in the first quarter. Some of the reasons for the poor earnings report could apply to American banks and their results in future quarters. UBS management mentioned that its short-term prospects were still not good.

The Swiss bank said that its ability to trade derivatives is still being impeded by a lack of any market for these volatile securities. UBS also warned that it still faces substantial credit write-downs. Read More »

Posted on: May 5, 2009 – 4:51 am in Banking, Earnings

Rumors The Ten Of 19 Banks Failed “Stress Tests” (WFC)(BAC)(C)

Several news organizations are reporting that ten of the 19 banks subjected to “stress tests” will be asked to raise more capital. Since the firms are still debating with the government, the number could change. It is not clear whether the problem can be solved, at last at some of the banks, by converting preferred shares to common, which would cause significant dilution for existing shareholders.

Among the largest banks on the list of those that will need new capital are Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC). Read More »

Posted on: May 5, 2009 – 4:35 am in Banking, BAC, C, FITB, RF, STI, WFC

Google (GOOG) And Apple (AAPL) Up Against Bogus Antitrust Probe

The FTC believes that there may be an antitrust problem because two members of the Google (GOOG) board sit on the Apple (AAPL) board. One of those is Google CEO Eric Schmidt.

The situation is almost certainly not a real problem. Read More »

Posted on: May 5, 2009 – 4:22 am in Consumer Electronics, Internet, AAPL, GOOG

Despite Signs To The Contrary, Real Estate Will Get Worse

Warren Buffett said that the real estate business his company Berkshire Hathaway owns is seeing a small improvement in housing demand. The National Association of Realtors seemed to confirm his observations when it announced that the index for pending home sales went up in March. This data helped send the stock market higher as it stays true to form by rising on the most modest news.

Except for low home prices and very low mortgage rates, all of the elements for a recover in housing are missing. Those two things should be enough, but balanced against them are shrinking access to credit, an inability of Americans to get higher wages, and crippling unemployment. Read More »

Posted on: May 5, 2009 – 4:11 am in Economy, Housing

Despair And The Vision Of The New Economy

A number of prominent American economists believe that the American economy has permanently lost its resilience and vitality. They believe that, for the first time in memory, America cannot rebuild itself after a severe economic cataclysm and that the business base of the country is not creative enough or elastic enough to come back to where it was just two years ago.

Bloomberg recently reported “Fallout from the recession implies a `markedly higher’ natural rate of unemployment, says Edmund Phelps, a professor at Columbia University in New York and winner of the 2006 Nobel Prize in economics. “It was 5.5 percent; maybe it will be 6.5 percent, maybe 7 percent.” Phelps has a number of equally qualified experts who agree with him. Read More »

Posted on: May 5, 2009 – 4:04 am in Economy, AAPL, CSCO, GOOG, INTC, MSFT

Media Digest 5/5/2009 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, changes at Yahoo! (YHOO) are getting mixed reviews from employees.

Reuters reports that ten banks could could have to raise new money after stress tests.

Reuters reports that two top Fed officials think the recession will end this year.

Reuters writes that Chrysler’s bankruptcy has brought many of its dealers to the brink of closing.

Reuters reports that AIG (AIG) will post a loss for the last quarter but will not need more government money.

Reuters reports that UBS (UBS) had a first quarter loss and remains cautious.

Reuters writes that “So many U.S. banks are failing that three government bank watchdogs want the law changed to force a review only when a bank failure costs the federal insurance fund $300 million or more.”

Reuters reports that US retailers may have gained some strength in April.

Reuters reports that the FTC will look at ties between the Apple (AAPL) and Google (GOOG) boards.

Reuters reports that Bank of America (BAC) said it does not need to raise new funds.

Reuters reports that Chinese exporters are having to try to sell their goods within their country.

The Wall Street Journal reports that stress tests will force several banks to raise money including Citigroup (C), Wells Fargo (WFC), and Bank of America (BAC).

The Wall Street Journal reports that “A government program to unfreeze the credit markets got a boost as companies rushed to issue nearly $10 billion of bonds and as credit markets rode the same wave of optimism that sent stocks soaring.”

The Wall Street Journal writes that fewer banks are tightening lending standards compared to a few months ago.

The Wall Street Journal reports that Alcatel-Lucent (ALU) lost money.

The Wall Street Journal reports that Chrysler expects a profit in 2012.

The Wall Street Journal reports that the new Amazon (AMZN) Kindle will be aimed at the education market.

The Wall Street Journal reports that business is upset about plans to tax overseas profits.

The Wall Street Journal reports that more consumers are making coffee at home.

The Wall Street Journal reports that the rally has sent stocks into the black for 2009.

The Wall Street Journal reports that Sprint’s (S) loss widened as it lost more customers.

The Wall Street Journal reports that banks are facing hits on real estate loans.

The Wall Street Journal writes that CEO pay fell as bonuses dropped.

The Wall Street Journal reports that a lack of cost information has slowed the overhaul of healthcare.

The Wall Street Journal reports that a bounce in manufacturing in Asia needs help from US demand.

The Wall Street Journal reports that one bottler has rejected a buyout from Pepsi (PEP).

The Wall Street Journal reports that Roger Penske may be a buyer of the Saturn unit of GM (GM).

The Wall Street Journal reports that a Fiat plan to buy Opel may mean big job cuts.

The Wall Street Journal reports that MGM (MGM) earnings fell 10%.

The Wall Street Journal reports that the RIM (RIMM) Blackberry Curve outsold the Apple (AAPL) iPhone last quarter.

The Wall Street Journal reports that The New York Times (NYT) is near a deal to keep The Boston Globe open.

The Wall Street Journal reports that the pace at which advertising is falling quickened to 9.2%.

The New York Times reports that growth in India is slowing due to lack of investment.

The New York Times reports that Germany may help Fiat with a bid for Opel.

The New York Times reports that the EU is forecasting a deepening recession.

The FT writes that the wealth management arm of UBS may suffer 10,000 job cuts.

Bloomberg reports that Chrysler non-TARP lenders are opposing the sale of its assets.