Capital Research & Management was warned about revenue expense cuts at Facebook before its IPO (WSJ)

China’s CIC may make a $2 billion investment in Alibaba (Reuters)

The Times-Picayune newspaper in New Orleans may make substantial job cuts (NYT)

Douglas A. McIntyre

Facebook advised its bankers to drop their revenue forecasts ahead of its IPO and while its roadshow was ongoing (Reuters)

The owner of Getty Images may stage an IPO (FT)

Douglas A. McIntyre

RailAmerica, Inc. (NYSE: RA) recently announced the redemption of $74 million in its remaining 9.25% notes due in 2017.  That is not enough to move the needle on a stock by much that is worth over $1 billion in market value.  What can move a stock this much is takeover chatter.  The Jacksonville Business Journal is quoting Trains Magazine noting that Fortress Investment Group LLC is looking to sell its majority stake in RailAmerica.

Warren Buffett was listed as on potential acquirer and RailAmerica has 45 individual railroad lines with approximately 7,500 miles of track throughout 28 states in America and another three Canadian provinces.

RailAmerica shares are up almost 6% at $22.81 against a 52-week trading range of $11.06 to $23.90.  Its market value is listed as $1.15 billion according to Yahoo! Finance.

Until news gets more concrete, we would only treat reports of this sort as a market rumor.

JON C. OGG

Morgan Stanley analysts cut their outlook for Facebook ahead of its IPO (Reuters)

Blackrock and associates bought 20% of Formula One Group ahead of its Singapore IPO (WSJ)

Douglas A. McIntyre

But a CEO wedding announcement on the following day? The answer that new shareholders should be concerned with is simple: “You knew you had a founding CEO who was able to do whatever he wants, even though he is now playing with your money. Now you know he WILL do whatever he wants whenever he wants.”

Magically announcing a wedding at what was supposed to be a graduation party is one thing. But within a day of an IPO of this magnitude? Shareholders now have every reason to be concerned. Oh, and by the way, if you do not like it your only way to make a statement is to sell your shares. You have no vote in the company at all because Zuckerberg has well over 50% of the share votes either under ownership or under control.

It is hard to imagine that Zuck would go take a three-week honeymoon, but he could do that at some point and the poor Facebook shareholders would just have to sit there and take it. Again, your only vote as a shareholder is to sell your shares. Even then, do you think a guy now worth $20 billion or so really cares?

We warned you that there were 18 big risks in chasing Facebook ahead of the IPO, and all of these risks are still present. We never thought that there were two more: 19) CEO decides to distract himself with his own marriage status as just a small deal, and 20) CEO could go take a long vacation/honeymoon immediately.

Who knows what Zuckerberg’s living situation will be now and who knows if he and his now-wife will decide to go take a great vacation and honeymoon. I would if I was in his shoes, at some point, but not the weekend after an IPO. Shareholders should care what this means, but they better remember over and over that they were warned about the corporate governance here as a controlled entity (over and over, and over).

As of 6:50 PM EST on Sunday night there have been “853,293 people like this” on Zuckerberg’s Facebook status page. If any of those people are shareholders liking this, well let’s just say that they have a conflict of interest over “liking” their own money.

Barron’s wrote about the new downside risks about Facebook shares falling if underwriters choose not to support the IPO like they did on Friday at the $38.00 share price. That was without considering the CEO would sneak out and get married the same weekend.

JON C. OGG

Faber notes that while the number of job cuts are not yet known, sources indicate that the turnaround of the company is going to include thousands of layoffs.

The question that has to be asked here is one of relevance.  H-P is a DJIA component and it is worth under $44 billion in market capitalization since the stock is down more than half from the peak in early 2011.  This company employed a whopping 349,600 employees as of October 31, 2011 per its annual report.

What is so sad here is that the market is completely discounting H-P.  Literally, this stock trades at less than 6-times its expected earnings.  The company was going to jettison its PC business, but the turnaround plan under Meg Whitman determination was that it would just cost too much to break the PC unit out of H-P.

The market either just does not believe that H-P can live up to its earnings through time or it has just reset what the company’s valuation really is.  Under 6-times earnings is not expensive by any count as long as those earnings can be maintained.  Rival (at least in PC sales) Dell Inc. (NASDAQ: DELL) now trades at only about 7.5-times its forward earnings.

H-P is already loaded up with enough debt of over $25 billion even if it does have a $19 billion cash and liquidity arsenal.  Earnings are next week and the layoffs are expected to be announced sometime around that report.  The current targets for the April-end quarter are $0.91 EPS and $29.9 billion in sales according to Thomson Reuters.

H-P is up three-cents at $22.06 and the 52-week trading range is $21.50 to $37.70.

Apparently the slogan on a tee-shirt is true, “The beatings will continue until morale improves.”

JON C. OGG

The Administration may press for harsher rules on banks due to the JP Morgan debacle (WSJ)

JP Morgan’s loss on a trade on $2 billion will rise as much as 50%

Douglas A. McIntyre

Sony and Panasonic may built OLED TVs (Reuters)

Apple will upgrade its iCloud service (WSJ)

Apple will launch new MacBooks, thinner than earlier ones, with Intel chips

Douglas A. McIntyre

All of the trading people at JP Morgan in London will be fired.

Douglas A. McIntyre

Facebook’s IPO is already over subscribed (Reuters)

Facebook’s Instagram deal could delayed by FTC concerns (FT)

Douglas A. McIntyre