Daily Archives: May 21, 2009

Cramer Outlines The Obama Target List (COF, ACI, MEE, X, SO)

Obama ImageCramer ImageTonight on CNBC’s MAD MONEY, Jim Cramer came out with several sectors that he thinks that President Obama will be trying to change, and noted Nancy Pelosi is in the fold as well.  He thinks they will be targets for change and these businesses can be hurt by government action more than by any competition.  He thinks credit cards, anything carbon, and healthcare are all at-risk sectors that could be hurt by Obama’s actions.

Capital One Financial (NYSE: COF) is the one he is worried about even though the stock was one of his favorites.  He thinks that the big issuers are at risk here and now thinks Capital One is a SELL.  Anything carbon-related is at risk.  Arch Coal Inc. (NYSE: ACI) and Massey Energy Co. (NYSE: MEE) are at risk, but Cramer thinks China can keep their businesses from rotting.  This hurts the steel producers as well and he would sell US Steel (NYSEL: X) on this notion that they are tied to it.  He would also sell Southern Company (NYSE: SO) because it has 71% of its energy from fossil fuels.

In healthcare, he knows pharma and anything that makes a profit in that sector is a target.  He thinks this can drive down anything tied to healthcare as investors have to move to the sidelines to figure it out.

JON C. OGG
May 21, 2009

Posted on: May 21, 2009 – 5:17 pm in Cramer, Metals, Pharmaceuticals, Politics, Utilities, , , , ,

Only One Man Can Replace Liddy At AIG (AIG)

AIG LogoAmerican International Group, Inc. (NYSE: AIG) has announced that Chairman and CEO Ed Liddy will be stepping down.  He is actually waiting for the board of directors to conclude a search for a replacement.  No one will be sorry to see Liddy leave, but it is important to understand that none of the old problems of AIG were as a result of Liddy’s actions.  He was essentially a government appointee and it is a wonder as to why on earth he was even willing to take the CEO and Chairman role in the first place.  Liddy’s biggest controversy was the scandal over bonuses paid to employees following the government bailout, but he claimed this was under the government’s approval.  As far as Liddy’s actions in the company before and after that, it was generally with the government endorsement even if negative publicity was given simultaneously.
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Posted on: May 21, 2009 – 3:27 pm in Financial Stocks, Insider Activity, Management Change,

Gap’s Old Navy Carnage May Be Finally Abating (GPS)

Gap LogoGap Inc. (NYSE: GPS) may be seeing some cheer despite another round of lower earnings and revenues.  The clothing and apparel retailer posted earnings of $0.31 EPS, or $215 million.  This is down from $0.34 EPS a year ago and is slightly above the $0.30 estimates from Thomson Reuters.  Revenues were $3.127 billion, down from $3.38 billion a year ago while estimates were $3.14 billion.  Amazingly, at least some of the downward trends are abating.
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Posted on: May 21, 2009 – 3:12 pm in Apparel, Earnings, Retail,

Did Bill Gross Short Sell Stocks & Bonds Via U.S. “AAA” Rating Comments?

Burning Money PicThe S&P Credit rating change of “negative” from “Stable” for  The United Kingdom may not matter to most Americans, but the implications are there for the United States.  England losing its “AAA” rating would be a catastrophe for the United States.  We share much more than the same language, as the world thinks of England as having perhaps the highest sovereign rating behind the U.S.  And today we had PIMCO’s esteemed Bill Gross hinting at the notion of a debt rating downgrade in the U.S. down the road.

It is easy to add panic to the fire when you get an actual downgrade as we saw today from S&P on the U.K.  Technically, that is just a bias downgrade, but that is still enough.  The notion that someone with the clout of Bill Gross bringing this risk to light is troubling for investors who have been preparing for the next wave of the economy and credit to be better rather than worse.  But technically, this is not a new notion at all.  Stocks have remained very weak and long-dated 10-Year and 30-Year Treasuries have seen yields rise 15 basis points to 3.36% and 15 basis points to 4.31%, respectively.
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Posted on: May 21, 2009 – 2:07 pm in Analyst Calls, Bonds, Economy, International Markets, Mutual Funds

For Some Stimulus Contractors, a Blemished Past

by Michael Grabell and David Epstein, ProPublica

One company paid nearly $1 million for destroying seagrass in the Florida Keys marine sanctuary. Another settled a discrimination case after federal investigators found it refused to hire black employees. A third firm was rebuked by the Army for poorly screening interrogators it hired – interrogators who later abused prisoners at Abu Ghraib.

Despite those problems, the three companies have won millions of dollars in contracts under the economic stimulus package.

In the three months since President Obama signed the $787 billion stimulus bill, the federal government has awarded more than 800 contracts to repair military buildings, thin forests and clean up Cold War nuclear plants. Much of the initial $3.8 billion in awards has gone to large companies with long records of working with the government.

But some contractors have paid hefty fines for breaking environmental, safety or other regulations, an examination of the first round of stimulus contracts shows. Read More »

Posted on: May 21, 2009 – 10:04 am in Politics

OpenTable Strength Clears Way For More IPO’s (OPEN)

Money Stack ImageOpenTable, Inc. (NASDAQ: OPEN) has just opened around $25.00 on its initial public offering.  The online restaurant reservations system priced its 3 million share IPO at $20.00 per share, which was already well above its indicated price range of $12.00 to $14.00 and then was bumped to $16.00 to $18.00 per share.
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Posted on: May 21, 2009 – 9:58 am in Entertainment, IPOs, Internet,

LDK Disclosing More Write-downs and Provisions (LDK)

Solar Panel PicLDK Solar Co.Ltd. (NYSE: LDK) has announced plans to file its 2008 report with the SEC tomorrow.  As many have become used to with LDK, there is some negative news as well.  The company said that during the preparation of the 2008 annual report, management determined that a further write-down to inventories and additional recovery provisions were needed.
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Posted on: May 21, 2009 – 9:28 am in Accounting, Alternative Energy, Annual Report, China, Green Biz, Restatements,

Tessera Tech Gets on the Map (TSRA, QCOM, MOT, AMD)

Money Stack ImageTessera Technologies, Inc. (NASDAQ: TSRA) is not one of the most common names in the land of chip stocks, but that may be about to change as it won a patent fight against some key chip companies.  Late Wednesday, the company announced that the International Trade Commission issued a final determination against certain wireless manufacturers finding Tessera’s asserted patents are valid and infringed.

The commission also issued a cease-and-desist order against Motorola (NYSE: MOT), Qualcomm (NASDAQ: QCOM), Freescale, and Spansion.  This cease and desist from the ITC directed these companies to stop selling infringing articles out of their US inventories.  Tessera also noted that ATI Technologies of Advanced Micro Devices (NYSE: AMD) was also one of the respondents.  It looks like Qualcomm has already shifted chip supplies to another licensed party.  Workarounds in these cases are not unusual, and they can sometimes do nothing to alter or change verdicts.

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Posted on: May 21, 2009 – 8:59 am in Law, Regulation, Semiconductor, Technology Companies, Trading Alert, , , ,

NetApp Averts Possible Takeover For Now By Acquiring Data Domain (NTAP, DDUP)

Money Stack ImageNetApp, Inc. (NASDAQ: NTAP) has long been considered a potential takeover target by many traders and investors.  Yet this morning the company announced that it was a making a play of its own.  It is paying approximately $1.5 billion net of cash to acquire rival Data Domain Inc. (NASDAQ: DDUP) for the data backup and recovery operations.
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Posted on: May 21, 2009 – 8:05 am in Mergers and Buy Outs, Software, Technology Companies, ,

Changes May Come to Rio Tinto’s Chinalco Deal (RTP, BHP)

Money Stack ImageThe deal between China’s government-owned aluminum company, Chinalco, and Rio Tinto plc (NYSE: RTP), in which Rio gets $19.5 billion and Chinalco gets a larger stake in Rio may be changing. There are several reports this morning that Rio is encouraging Chinalco to scale back its offer to smooth the Australian regulatory approval process. Chinalco, which already owns about 9% of Rio, originally offered to buy $7.2 billion in Rio’s convertible bonds, and to purchase an additional 9% stake in Rio for $12.3 billion.
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Posted on: May 21, 2009 – 7:46 am in ADR, China, Commodities, Mergers and Buy Outs, Metals, ,

Jobs Data Continues Bataan March Toward 10% Unemployment

Jobless Line PicThe Labor Department has released some mixed data on weekly jobless claims.  The figures show a level of 631,000.  This sounds better on the surface as Bloomberg had estimates pegged at 645,000, which would have been a drop of another 8,000 from last week’s unaltered 637,000.  But the prior week’s reading was revised to 643,000.
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Posted on: May 21, 2009 – 7:37 am in Economy, Labor & Unions

Suntech Power Raising Cash After Earnings (STP)

Solar Panel PicSuntech Power Holdings Co. Ltd. (NYSE: STP) is seeing shares take a hit this morning after the solar player filed to raise capital afterissuing earnings.  The company’s profit slid to $1.8 million, or only $0.01 EPS.  That is down from $46 million and $0.27 year-over-year.  The good news is that Thomson Reuters was looking for a consensus estimates of almost -$0.06 EPS.  Revenue was down more than 25% to $315.7 million compared to analyst expectations of about $350 million.
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Posted on: May 21, 2009 – 7:28 am in ADR, Alternative Energy, China, Earnings, Green Biz, Secondary Offering,

Top Analyst Upgrades (CSIQ, EXPE, FCX, JNPR, K, LNC, OWW, TLEO, THS)

These are some of the top analyst upgrades and positive research calls which we have seen from Wall Street early this Thursday morning:

Canadian Solar (CSIQ) Raised to Outperform at Oppenheimer.
Expedia (EXPE) Started as Buy at Soleil.
Freeport-McMoRan (FCX) Raised to Overweight at JPMorgan.
Juniper Networks (JNPR) Raised to Overweight at Barclays.
Kellogg (K) Started as Outperform at RBC.
Lincoln National (LNC) Raised to Buy at UBS.
Orbitz Worldwide (OWW) Started as Buy at Soleil.
Taleo (TLEO) Started as Buy at Jefferies.
Treehouse Foods (THS) Started as Outperform at William Blair.

JON C. OGG

Posted on: May 21, 2009 – 6:42 am in Analyst Calls, , , , , , , , ,

The Trend Toward US Businesses Offering $1 Products Accelerates

bankIt has begun to dawn on more and more large companies that high-priced goods are costing them sales during the recession. Maybe the only way for them to hold onto customers is to offer some products at remarkably low prices, prices as low as $1.

The benefit of $1 items is that it keeps consumers coming back to brands which they have bought for decades but may no longer be able to afford. It also keep sales coming, even if those sales are very modest. Read More »

Posted on: May 21, 2009 – 5:29 am in Consumer Goods, , , , ,

The China Miracle May Be About To Stall

bearThe recovery of the Chinese economy always sounded too good to be true. Granted, the central government put $585 billion into helping bolster GDP. But, exports and manufacturing cannot do better without a recovery in Japan and in the West.

Credit Suisse analysts are seeing weakening of economic numbers out of China. According to Reuters, ” economic activity appeared to have softened in the second half of April and that the trend was more pronounced in May, with weakness in the materials sector and power consumption spreading to retail sales.”

Douglas A. McIntyre

Posted on: May 21, 2009 – 5:18 am in China, Economy

Sony (SNE): A Plan To Cut But Not Build

WinterSony’s (SNE) plan to turn itself around is all about cutting costs and has nothing to do with building new products or restructuring the firm’s content operations.

Sony’s management laid out a program to cut its component suppliers by about half to 1,200. This action should save more than $5 billion in the current fiscal year. Read More »

Posted on: May 21, 2009 – 5:08 am in Consumer Electronics, Entertainment, ,

Bank Of America (BAC): An Audacious Plan To Pay Back The Government

bankBank of America (BAC) is hinting strongly that it plans to pay back the US government the $45 billion that it owes by the end of this year. Bank stress tests showed that B of A needs to raise $34 billion. Somehow the financial firm believes that it can turn around and quickly pay off an extraordinary obligation. Read More »

Posted on: May 21, 2009 – 4:51 am in Banking, Economy, Housing,

UK Debt Trouble Moves Soveign Borrowing Problem Closer To US

bearNo one in the US worried much when S&P downgraded the sovereign debt of The Ukraine or the Republic of Kazakhstan. Now, the trouble has moved much closer to home as the credit agency lowered its credit rating outlook for the UK from “stable” to “negative.” The agency is concerned about the increase in government debt and decrease in GDP. The action may make it more difficult for the British government to raise money or, alternatively, it may force the country to pay higher interest rates. Read More »

Posted on: May 21, 2009 – 4:32 am in Economy

The Joy Of Reading The Minutes Of The Federal Open Market Committee

bearThe FOMC minutes are like most other documents produced inside the government’s bureaucracy. The bulk of the information has been gathered long before the report reaches the public. In the case of the Fed’s minutes some of the data, particularly information on GDP, unemployment, and production, are several months old. The Fed feels the need to add them for the sake of context.

Halfway into the minutes for the April 29 to April 30 meeting are the projections of the Federal Reserve Governors and Federal Reserve Bank presidents. These figures are more than three weeks old, and they paint a remarkably pessimistic portrait of where there economy will be over the next several quarters. Most of the rhetoric that comes before them in the document covers small hints that the Fed has observed in the economy that would lead the reader to believe that a recovery is imminent. The forecasts say otherwise. Read More »

Posted on: May 21, 2009 – 4:07 am in Economy, Housing, Regulation

Who Runs The Government’s Portfolio? (C)(GM)(AIG)

bankThe federal government will end up owning bits and pieces of businesses including banks, car companies and insurance firms as it puts money into industries weakened by the recession. The Achilles Heel of this investing strategy is that there is no central authority watching the “portfolio” and no publicly articulated statement about when the holdings will be valuable enough to sell. Essentially, the taxpayer has nothing to tell him about the planned returns on his investments. Read More »

Posted on: May 21, 2009 – 3:58 am in Accounting, Autos, Banking, Politics, , ,