Sauer-Danfoss (SHS) Loses money. Suspends dividend. Drops to $3.03 from 52-week high of $37.93.
Chartered Semiconductor (CHRT) No major news. Down to $.65 from 52-week high of $7.05.
Energy Conversion Devices (ENER) Solar energy company pulls its forecasts. Sells off to $12.85 from 52-week high of $83.33
Douglas A. McIntyre
According to Reuters, Obama is working on a program to help some homeowners pay their mortgages.
Reuters reports that Wall St’s appetite to slim down perks will begin to face tests.
Reuters reports that a reports shows that troubled US banks more require more capital than is widely believed. Read More
From time to time, the editors at 24/7 Wall St. will look at which companies may file for Chapter 11 bankruptcy protection over the next year. The analysis involves looking at SEC filings with a focus on balance sheet, cash flow, and risk factors. Also taken into account are stock price, earnings forecasts, and the ability of a company to raise cash.
In the current credit environment, many firms which would not have been on the list at the middle of last year would have to be considered now. We are covering what we feel are the odds that the companies may need protection from creditors.
At the beginning of the decade a number of internet and next-generation technology companies raised money through venture capitalists and IPOs. Many of these companies had little, if any, revenue. Most had relatively high expense structures.
As these firms quickly ate through the cash on their balance sheets and continued to have poor sales prospects, the term "burn rate" was coined. If was defined as the amount of cash a company had on its balance sheet divided by the firm’s monthly expenses less any revenue. An operation with $12 million in cash less short-term debt and a $1 million a month "burn rate" was expected to be out of business in a year.
At this point, GM (GM) and Chrysler would make any burn rate risk lists as would a number of retailers who had awful holiday seasons and are facing repayment of debt or revolving credit facilities. That is why Pier 1 (PIR) is trading at $.40 and shares of Dillard’s (DDS) are off 80% over the last year.
According to Reuters, housing and consumer confidence both suffered record drops.
Reuters reports that GMAC eased lending rules after the government provided it with $6 billion.
Reuters reports that the Madoff probe now extends to offshore funds.
Dow Chemical (DOW) Deal with Kuwait is dead. Falls to $14.93 from 52-week high of $43.43.
Martha Stewart Living (MSO) No special news. Media stocks just keep falling. Drops to $2.55 from 52-week high of $9.99.
Charter Communications (CHTR) Citigroup analyst is concerned about chance of bankruptcy. Plunges to $.085 from 52-week high of $1.68.
Douglas A. McIntyre
Charter Communications (CHTR) was downgraded to "sell" at Citigroup.
Honeywell (HON) was downgraded to "hold" at Argus.
American Eagle (AEO) was startes as "buy" by Pali.
A lot of fairly well-known public companies either disappeared or went bankrupt this year. Circuit City is on the list. Based on the most recent news GM may get added soon.
24/7 Wall St. looked at some of the largest and most well-known companies, reviewed their SEC filings if they are public, analyst reports, and media observations about their businesses and picked ten that probably won’t be around at the end of next year. That does not mean that their brands will disappear, but these companies will have been dissolved as the world knows them now or working though the court system in the hopes of getting Chapter 11 protection and a chance at survival.
The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) is making it easier for the army of relatively new penny stocks to maintain their listings on NASDAQ. The exchange filed with the SEC to extend its suspension of the rules requiring a minimum $1.00 bid price and its minimum market value of publicly held shares. This was initially set to expire in January, but the terms will now be extended until Monday, April 20, 2009. With as many stocks that have violated that $1.00 mark in recent weeks and months, this is hardly a surprise and it would even go against the exchange’s own interests to boot this many stocks off the exchange.
We ran a screen for NASDAQ stocks with active trading volume, share prices under $1.00, and those which have traded over $1.00 in the last 52-weeks. Some of the most usual suspects here are as follows:
One of the few Charter Communications Inc.(CHTR) bulls is turning as the company looks headed for bankruptcy. Analysts at Pali Research downgraded the stock today from Buy to Neutral, citing the massive debt load.
The firm said, while growth has remained at the top end of the cable industry, the weight of its $21 bn of debt (9.1x leverage) is becoming too much for the company to bear.
According to Reuters, there may be another bubble in commodities prices.
Reuters reports that the recession is hurting Japan’s economic sentiment and China’s industrial output.
Reuters writes that Bush said the auto bailout is not ready.
Reuters reports that total loss in home value in 2008 is more than $2 trillion.
If you have been following the land of low-priced stocks that are active in trading volume for long, you will find many groups of traders who have been betting on the success or death of Charter Communications, Inc. (NASDAQ: CHTR). Today came the announcement that it has asked Lazard to initiate discussions with bondholders regarding alternatives to improve its balance sheet.
Thornburg Mortgage (TMA) was just suspended from trading on the NYSE. Its price has been below $1 for too long. It trades at $.24. Extraordinary, because it 52-week high is $140.50.
Losses and fear of more losses have taken Fannie Mae (FNM) down to $.87. It traded as high as $40.45 a year ago. The situation is not much better at Freddie Mac (FRE). It sits at $.88 off its 52-week high of $37.18. Remember, these companies were the twin pillars of the US mortgage industry.
Everyone knows about the old $1.00 stock limit for a regular NASDAQ listing. This $1.00 listing requirment rule has been under a moratorium until after the first of the year so that NASDAQ would not have to boot off many of its key component or most active share volume stocks. But many companies are already signaling an intent to conduct a reverse stock split or to take other actions to maintain a stock listing. SIRIUS XM Radio Inc. (NASDAQ: SIRI) and Charter Communications Inc. (NASDAQ: CHTR) are both in the soup with NASDAQ requirements. They are also debt-ridden with severely negative values on a tangible asset basis. These and other issues at hand may make initial listing maintenance steps ultimately irrelevant.
A year ago, it would have been hard to find people who would believe that Sirius XM (SIRI) or Charter Communications (CHTR) would trade below $1. Sirius had a 52-week high of $3.92. Its merger, which was to create one satellite radio company, was supposed to push that share price up. But, it has over $1 billion of debt to be refinanced next year. Today it fetches $.37.
Charter is in a pretty good business. As a cable provider it markets digital TV, broadband and VoIP services. The company has more than five million customers. It also has over $20 billion in debt. The stock changes hands at $.38. That compares with a 52-week high of $3.94
Yahoo! (YHOO) Concerns about slowdown in internet advertising. Drops to $13.20 from 52-week high of $34.08. Bet they wish they had taken Microsoft (MSFT) deal.
Sirius (SIRI) Merger a failure.Sells off to $.45 from 52-week high of $3.94.
Xl Cap (XL) Met Life warns, kills shares in industry. Down to $6.22 from 52-week high of $81.63.
Charter (CHTR) Troubled cable company, heavy with debt, gets more troubled. Falls to $.52 from 52-week high of $2.98.
Level 3 (LVLT) Big internet network company has too much debt. Dips to $1.66 from 52-week high of $5.01.
Oracle (ORCL) Concerns about enterprise software sales softening. Down to $16.01 from 52-week high of $23.62.
Cisco (CSCO) Another tech icon hurt by IT spending concerns. Sells down to $17.80 from 52-week high of $32.24.
Ford (F) More concerns about cash position and car sales. Runs down to $2.10 from 52-week high of $9.24.
Dell (DELL) Looks like the holidays may be weak for PC company. Off to $13.23 from 52-week high of $30.77.
Douglas A. McIntyre
Jim Cramer wants people to sell all of their stocks. Even though the market may keep falling, that might not be a practical solution for everyone. There are several things investors can do to at least partially save themselves from a falling market and get in position if stocks move up again.
1. Sell your dogs. No matter how much an investor loves a stock, firms in the second or third tier of their industries are going to get hurt more. They will get hit by both a falling market and a recession. Some good examples are AMD (AMD), which runs a distant second to Intel (INTC). Yahoo! (YHOO), which is well behind Google (GOOG) in search is another company which will find the going especially tough. Palm (PALM) runs behind Apple (AAPL) and RIM (RIMM) in the smart phone industry. In an awful market, being in second place means being in last place.
Updated: 31 October 2008
Not all companies and industries will be hit equally hard by the consumer credit crisis. Operations such as Procter & Gamble (PG), McDonald’s (MCD), and Wal-Mart (WMT) may be safe. They either sell things people can’t do without or offer inexpensive goods and services that consumers can afford during a tough period. McDonald’s reported earnings today and its same-store sales were up in every region.The stock traded up on a day when the overall market was swamped by selling.
If the credit crisis gets substantially worse and only the most stable companies with the highest credit ratings have access to cash, some will not be able to maintain inventory. Other firms will be affected because their target consumers no longer have any discretionary income. The head of AutoNation (AN), the largest car dealer chain in the US, said that even his prime customers cannot get bank loans for new cars in many cases. "The banks are looking for every excuse possible to say no and they are saying no to good customers," Reuters quotes him as saying.
Neither set of companies has a bright future, but the ones who cannot finance their operations and inventories face almost immediate consequences
Charter Communications (CHTR) is still one of the largest cable companies in the US in a period where cable should be doing fairly well, Charter’s common stock is worthless at this point. It may trade at $.77 but that is a cruel joke for anyone holding the shares.
Charter cannot take advantage of the increasing markets in voice-over-IP and video-on-demand because its debt service is so remarkably high. Charter has almost $21 billion in long-term debt and will be lucky to have $750 million in operating income this year. Some of Charter’s bonds may go into default or get very close after the next quarter’s results. At that point, the shares, which should be at zero, will actually trade there.
Douglas A. McIntyre
The national economy has gotten so bad, driven by high commodities prices and a credit crisis which cannot seem to find a bottom, that some of America’s most well-known companies will have to raise capital, diluting current shareholders, sometime by as much as 75%.
The low share prices of these firm’s makes matters significantly worse as they turn to the markets for cash.
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