Reuters: Google (NASDAQ:GOOG) and IBM (NYSE:IBM) posted strong results.
Reuters: Bank of America’s (NYSE:BAC) Lewis will skip 2009 pay.
Reuters: Japan Airlines says bankruptcy is an option to solving its problems.
Reuters: Soros says US economy will drag on world growth. Read More
The US business of Readers Digest is going into Chapter 11. The immediate cause is the company’s need to restructure $1.6 billion in debt and to move ownership of the company to its lenders. The story is more complex than that. Two-and-half years ago, private equity firm, Rpplewood, led a buyout of Reader’s Digest for $2.6 billion. The problem at this stage is that Reader’s Digest does not make money. Ripplewood probably projected increasing profits when it closed the deal. Instead, the magazine publishing and direct marketing firm has run into the same trouble that newspaper groups like McClatchy (MNI) have: too much debt against no profit. Read More
Many knew that the huge Russell rebalance stocks was creating huge selling in the names toward the end of last week. Yet on no news today we are seeing solid gains in many of those same stocks. Traders are using the end of week major selling as a discount buying opportunity today. This can be seen explicitly in many of the key low-priced technology stocks and in media names.
Read More
The struggle for large urban newspapers to stay in business has largely been an effort on the part of their managements to increase revenue on the Internet faster than it is lost in their print editions. It has become clear that the race is becoming one that newspapers are unlikely to win. Internet revenue for some online editions is actually dropping. Print advertising is going down as fast as it did in 2008. Several large newspapers including The Rocky Mountain News have folded in the last year. The owners of other papers, particularly The Boston Globe and The San Francisco Chronicle, have threatened to fold these properties unless workers are willing to accept significant cuts in people or compensation.
A few newspaper websites have extremely large numbers of visitors. Online research service Compete.com reported that NYTimes.com had nearly 15 million unique visitors in May. The New York Times Company (NYT) reported that its online revenue fell 8% to $42.2 million in the first quarter, despite the size of the flagship paper’s website and other online properties such as Boston.com, the website affiliated with The Boston Globe. Online revenue was only 12.8% of the company’s sales, hardly adequate to have a significant impact on a firm in severe financial trouble. The Washington Post Company’s newspaper revenue associated with online publishing fell 8% to $23 million in the first quarter of 2009. Washingtonpost.com had 8.7 million unique visitors in May, which makes it a large website, but clearly not big enough. Newspaper publishing revenue at the Post was $160.9 million in Q1, down 22% from the same period a year ago. The company losing revenue that fast cannot afford to have its online revenue shrink and account for only 14% of total sales. Read More
Reuters: Chrysler is already seeing positive effects from bankruptcy.
Reuters: The US is working with GM (GM) on a Chapter 11 filing as the June1 deadline looms.
Reuters: Pimco’s Gross says US is at risk of losing its AAA rating.
Reuters: The US closed BankUnited and sold it to private equity interests.
Reuters: AIG’s (AIG) Liddy stepped down as CEO.
Reuters: The trillion dollar bailout is beginning to shake market confidence in the US economy.
Reuters: New reports show the US has a bumpy road ahead as it moves toward recovery. Read More
Over the last few weeks, the newspaper industry has entered a new period of decline. The parent of the papers in Philadelphia declared bankruptcy as did the Journal Register chain. The Rocky Mountain News closed and the Seattle Post Intelligencer, owned by Hearst, now publishes only online. Hearst has held off closing The San Francisco Chronicle after making massive cuts at the paper. The property still may not be profitable. Advance Publications has announced a mandatory 10-day furlough and a pension freeze at nearly all of its daily papers outside Michigan. In Michigan, the company is closing the Ann Arbor News, the daily in that city, and significantly cutting back frequency of newspapers in Flint, Bay City and Saginaw. At other papers across the country changes have been made to save money. For example, The Washington Post is merging its business section into the first section of the paper. The San Diego Union-Tribune was sold to a private equity group at a price rumored to be only $50 million.
The 24/7 Wall St. analysis was criticized by a number of papers on this list and other analysts who follow the newspaper industry. But, not one of the ten papers would say that it would stay open for the next 18 months. Papers who told us that they were making money would not answer the question of whether their profits were based on GAAP or some bogus measurement like adjusted EBITDA. None of the papers would answer that simple question. Read More
The downturn in newspaper ad revenue has gone from awful to extraordinary. Gannett (GCI) told analysts that sales at its flagship USA Today paper could be down as much as 35%. That would certainly be an indication that the firm’s other dailies are doing poorly and that other newspaper chains including McClatchy (MNI) and Lee (LEE) are not out of the woods. Read More
Over the last few weeks, the newspaper industry has entered a new period of decline. The parent of the papers in Philadelphia declared bankruptcy as did the Journal Register chain. The Rocky Mountain News closed and the Seattle Post Intelligencer, owned by Hearst, will almost certainly close or only publish online. Hearst has said it will also close The San Francisco Chronicle if it cannot make massive cuts at the paper. The most recent rumor is that the company will fire half of the editorial staff. That action still may not be enough to make the property profitable. Read More
Short sellers think financial stocks believe that financial stocks still have further to fall. Based on data as of February 15, short sellers kept a big bet on Citigroup (C). Share short in AIG (AIG) rose 17% to 151 million The short interest in Well Fargo (WFC) was up 11% to 124 million, and shares sold short in Bank of America (BAC) rose 15% to 111 million. Shares sold short in Goldman Sachs (GS) were up 26% to 16 million
Short sellers also made a run at the stocks in large industrial companies. Shares short in GM (GM) rose 9% to 114 million. The short interest in Dow Chemical (DOW) was up 28% to 39 million. Shares short in Corning (GLW) rose rose 33% to 26 million.
Companies keep cutting dividends. Some are pressed for cash because of operating losses. Others are being constrained by higher debt service. Banks need to preserve capital.
The problem is becoming big enough that it could actually be a blow to consumer confidence and consumer spending.
According to MINOnline, advertising pages in major monthly magazines are down 20% for issues from the first two months of this year. One of the most popular weeklies, The Economist, suffered ad pages losses of almost 30% through the end of last week.
Newspaper advertising revenue at a number of the largest chains fell by 20% last year, and early evidence indicates that ad sales at dailies at companies such as Gannett (GCI) and McClatchy (MNI) continue to fall at a rate at least that sharp this year.
Now there is evidence that online display advertising at major websites is not doing much better. The theory has been that "new media" would outperform print because it is a more efficient and targeted way to reach selected audiences. When a recession is deep enough, that may not matter.
The New York Times will probably not be writing a piece on the fact that Carlos Slim has occasionally been accused of creating his great wealth in part because he has been "close" to Mexican presidents and other high officials.
In the US, he would be a perfect target for investigative reporters curious about the ongoing relationships between the very rich and the very powerful politicians who make and enforce the laws.
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.
No one working in the media industry will ever have seen a year as bad as 2009 will be. The sharp slide in advertising began in 2008, and, based on the worsening economy, there is no reason to think that advertising will improve. Most Wall St. analysts have predicted a harsh year for the ad business. If the downturn deepens and unemployment rises above 10% most predictions about media, no matter how negative, will have been unexpectedly optimistic.
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.
K-V Pharmaceutical (KVA) Suspends shipments of tablet-form drugs and expects earnings hit. Stock falls to $2.50 from 52-week high of $29.02.
American Greetings (AM) Says it lost money. Drops to $6.20 from 52-week high of $22.17.
McClatchy (MNI) Newspaper shares keep plunging. Someone may know something the general public has missed. Off to $.65 from 52-week high of $13.31.
Berry Petroleum (BRY) No news. Bad oil prices. Sells down to $6.15 from 52-week high of $62.15.
Smurfit-Stone Container (SSCC) Deutsche Bank downgrades shares. Drops to $.23 from 52-week high of $10.90.
Douglas A. McIntyre
McClatchy (MNI) Another big newspaper company headed toward liquidation. Drops to $.83 from 52-week high of $13.31.
Markwest Energy (MWE) Downgraded by Morgan Keegan. Drops to $7.36 from 52-week high of $38.50.
ArthroCare (ARTC) May have to restate several years of financials. Sells off to $4.35 from 52-week high of $53.76.
TranSwitch (TXCC) No news, but big sell-off toward the close. Dips to $.22 from 52-week high of $1.15.
Douglas A. McIntyre
McClatchy Newspapers (MNI) Drops to $.98 as shareholder panic. The 52-week high is $13.31.
Stone Energy (SGY) Cuts production view for quarter. Drops to $8.47 from 52-week high of $73.96.
Nortel Networks (NT) falls to $.24 on concerns about bankruptcy against 52-week high of $16.07.
Take-Two Interactive (TTWO) Remarkably poor earnings and awful forecast. Sells down to $8.65 from 52-week high of $27.95.
Douglas A. McIntyre
What appears to be a wave of panic-driven selling is taking shares in newspaper chain McClatchy (MNI) down 26% to a new multi-year low of $1.10. The stock has a 52-week high of $13.31.
On Monday, McClatchy announced that November advertising revenue dropped 19.4% which means that the company is facing having an operating deficit for Q4.
McClatchy has $2.4 billion in debt and it is not clear how it can possibly repay that.
Douglas A. McIntyre
According to Reuters, the House will vote on the auto bailout as early as this week.
Reuters writes that Rio Tinto (RTP) will cut 14,000 jobs.
Reuters reports that AIG (AIG) owes other firms $10 billion for soured trades.
Reuters reports that a panel appointed by Congress will be critical on how the Paulson bailout money has been used.
| Today’s top tickerspy Indexes | |
| Platinum and Pall... | +2.8% |
| Pollution Control... | +2.6% |
| Department Store ... | +2.5% |
| Cement Stocks | +2.4% |
| Wind Energy Stock... | +2.4% |
 | |
| |
RSS Updates
Email Updates
