The unofficial closing bells put the DJIA up more than 33 points to 12,878.43 (0.26%), the NASDAQ rose more than 2 points (0.07%) to 2,904.08, and the S&P 500 rose 0.20% or nearly 3 points to 1,347.05.

There were several analyst upgrades and downgrades today, including Sirius XM Radio Inc. (NASDAQ: SIRI) started as ‘underweight’ at Barclays; IBM Corp. (NYSE: IBM) started as ‘buy’ with a $230 target price at Sterne Agee (our coverage here); AstraZeneca (NYSE: AZN) cut to ‘underperform’ at BofA/ML; Urban Outfitters Inc. (NASDAQ: URBN) cut to ‘sell’ at Brean Murray; and Zoltek Cos. Inc. (NASDAQ: ZOLT) cut to ‘underperform’ at Needham (our coverage here).

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Yum! Brands Inc. (NYSE: YUM) is up 2.67% at $64.88 after posting a new 52-week high of $65.79 earlier today; ArcelorMittal AS (NYSE: MT) is up 3.5% at $22.19; BP plc (NYSE: BP) is down -0.41% at $46.68; Coca-Cola Co. (NYSE: KO) is up 1% at $68.71 (our coverage here); Emerson Electric Co. (NYSE: EMR) is down -2.6% at $51.99; and Louisiana-Pacific Corp. (NYSE: LPX) is down -6.5% at $8.31 (our coverage here).

Our preview of tomorrow’s earnings releases is here.

Other standouts from today include the following stocks:

The McClatchy Co. (NYSE: MNI) is up 21% at $2.71. The newspaper company reported stronger-than-expected earnings today on cost-cutting.

Coinstar Inc. (NASDAQ: CSTR) is up 16.5% at $58.90 after posting a new 52-week high of $60.81 earlier today. The video rental company will join with Verizon Communications Inc. (NYSE: VZ) to offer a streaming video service to compete with Netflix Inc. (NASDAQ: NFLX) and others. More coverage here and here.

Standard Pacific Corp. (NYSE: SPF) is up 15.8% at $4.69 after posting a new 52-week high of $4.85 earlier today. The homebuilder posted good earnings today and reported that orders are up 8% in January.

Nevsun Resources Ltd. (AMEX: NSU) is down more than -30% at $4.43. The junior gold miner issued a preliminary 2012 outlook that included a sharp drop in production and in its reserves estimates.

BioSante Pharmaceuticals Inc. (NASDAQ: BPAX) is down more than -18% at $0.86. The company is the target of a new lawsuit charging it with misrepresentation. We have more coverage of BioSante here.

Stay tuned for Wednesday. San Francisco Federal Reserve president John Williams is giving a speech. We have noted the following events on the schedule (all times Eastern):

• 7:00 a.m. – Mortgage Bankers Association purchase applications report
• 10:30 a.m. – EIA weekly petroleum status report
• 1:00 p.m. – Treasury 10-year note auction

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Paul Ausick

Among the major movers at around noon today are The McClatchy Co. (NYSE: MNI), Coinstar Inc. (NASDAQ: CSTR), Cybex International Inc. (NASDAQ: CYBI), NeurogesX Inc. (NASDAQ: NGSX), and Standard Pacific Corp. (NYSE: SPF).

Shares of McClatchy are up about 25% at $2.79. About 2.4 million shares have been traded so far today, compared with a 3-month daily average of about 1.2 million shares traded. The newspaper company reported stronger-than-expected earnings today. More coverage here.

Coinstar is up nearly 19% at $59.95 after posting a new 52-week high of $60.81 earlier. More than 10 million shares have traded this morning, compared with a 3-month daily average of around 1.1 million. The video rental company will join with Verizon Communications Inc. (NYSE: VZ) to offer a streaming video service to compete with Netflix Inc. (NASDAQ: NFLX) and others. We have more coverage here and here.

Cybex is up nearly 22% at $1.45 after posting a new 52-week high of $1.55 earlier. About 242,000 shares have traded this morning, compared with a 3-month daily average of less than 40,000. The sporting goods firm has settled a product liability suit for $19.5 million.

NeurogesX is down nearly -23% at $0.89. About 1.8 million shares have traded by mid-day, compared with a daily average of about 220,000. The pharmaceuticals firm has received a query from the Food and Drug Administration regarding the efficacy of its pain-relief patch.

Standard Pacific shares are up more than 13% at $4.59 after posting a new 52-week high of $4.85 earlier today. More than 9 million shares have already traded this morning, compared with a 3-month daily average of about about 2 million shares. The homebuilder posted good earnings today and reported that orders are up 8% in January.

Paul Ausick

Shares in companies such as the New York Times (NYSE: NYT), Gannett (NYSE: GCI) and McClatchy (NYSE: MNI) moved up sharply early on. But those stocks are down between 10% and 50% for 2011. The balloon of hope that digital revenue and lower costs would rescue the industry has popped. Digital sales have not nearly matched the attrition in print revenue. Some newspaper companies have had difficulties driving digital revenue up compared to numbers from 2010.

The theory behind the aggressive purchase of newspaper stocks actually fails into three areas. The first is that large companies like the New York Times would make share market gains in the revenue from online ads and digital subscriptions — the so-called pay wall. The next is that newspapers could shrink their print subscription bases and retreat to geographic areas in which only subscribers who would pay premiums reside. The third, and most radical, is that some papers could discontinue seven-day-a-week delivery schedules. These papers could keep print subscribers if they only printed and delivered papers three or four days a week. Readers would go online to get news on the other days.

The weakness behind these notions has to do with the way people get news now. There are enough news sites, many of them local, that readers have a number of options when they look for news and entertainment content. The other expectation of publishers is that they could shrink their way to profits. However, print revenue continued to fall more rapidly than costs. Papers have to keep some level of newsroom staff in order to remain viable sources of local news. Presses still have to run. Trucks still have to deliver.

The hope that digital media would save newspapers turned out to be false. If anything, the availability of large amounts of information online undermined the industry as much as anything else.

Douglas A. McIntyre

The unofficial closing bells put the DJIA up more than 45 points to 12,195.61 (0.37%), the NASDAQ fell less than 1 point (-0.01%) to 2,649.21, and the S&P 500 rose 0.20% or more than 2 points to 1,261.02.

There were several analyst upgrades and downgrades today, including Google Inc. (NASDAQ: GOOG) started as ‘buy’ with a $725 target price at Canaccord Genuity. Other ratings actions today include JDS Uniphase Corp. (NASDAQ: JDSU) started as ‘buy’ with a $14.75 target price at Jefferies; Darden Restaurants Inc. (NYSE: DRI) cut to ‘hold’ from ‘buy’ at Argus; Chubb Corp. (NYSE: CB) started as ‘outperform’ at Credit Suisse; and LinkedIn Corp. (NASDAQ: LNKD) started as ‘buy’ with an $85 target price at Canaccord Genuity.

Here are today’s post-earnings news reactions with prices during the last half-hour of trading: SAIC Inc. (NYSE: SAI) is up 6.5% at $12.95; Vera Bradley Inc. (NASDAQ: VRA) is down about -1.5% at $36.62; Vail Resorts Inc. (NYSE: MTN) is up slightly less than -1% at $45.48; Village Super Market Inc. (NASDAQ: VLGEA) is down more than -3.8% at $30.49; and The Men’s Wearhouse, Inc. (NYSE: MW) is up more than 20% at $32.68.

Several other standouts from today are as follows…

The Talbots Inc. (NYSE: TLB) is up about 65% at $2.58. The women’s clothing store has received a takeover offer from private equity firm Sycamore Partners for $3.00/share, a 92% premium to the stock’s closing price yesterday.

The McClatchy Co. (NYSE: MNI) is up more than 52%, at $1.80. The newspaper company said that advertising rates have not fallen as badly in the first two months of the current quarter. For the first nine months of this year ad revenue declined -10%, compared with a decline of -5.6% in October and November.

Martha Stewart Living Omnimedia Inc. (NYSE: MSO) is up more than 32%, to $4.12. Retailer J.C. Penney Co. (NYSE: JCP) acquired a 16.6% stake in the lifestyle and media company today for $3.50/share, or $38.5 million. More coverage here.

First Solar Inc. (NASDAQ: FSLR) is up more than 4.6%, at 48.26. The company sold its 550-megawatt Topaz solar PV plant to a subsidiary of Berkshire Hathaway Inc. (NYSE: BRK-A) for an undisclosed sum. The plant had previously been valued at more than $2 billion. More coverage here.

Jaguar Mining Inc. (NYSE: JAG) is down -9.6%, at $6.55. The junior gold miner said yesterday that its founding CEO had resigned.

Great Basin Gold Ltd. (AMEX: GBG) is up about 17.8%, at $1.19. Another junior gold miner, Great Basin has finalized a $150 million term credit facility for 5 years at a rate 4% above LIBOR.

Stay tuned for Thursday. Here are some noteworthy events on the schedule (all times Eastern):

• 8:30 a.m. – New US unemployment claims report
• 10:00 a.m. – Wholesale trade report
• 10:30 a.m. – EIA weekly natural gas status report
• 4:30 p.m. – Federal Reserve balance sheet
• 4:30 p.m. – Money supply report

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Paul Ausick

The NASDAQ stocks which fit this bill are as follows: Cadence Pharmaceuticals, Inc. (NASDAQ: CADX); Diamond Foods, Inc. (NASDAQ: DMND); Tesla Motors, Inc. (NASDAQ: TSLA); Odyssey Marine Exploration, Inc. (NASDAQ: OMEX); Pacer International, Inc. (NASDAQ: PACR); MannKind Corporation (NASDAQ: MNKD); Wave Systems Corporation (NASDAQ: WAVX); Energy Conversion Devices, Inc. (NASDAQ: ENER); NutriSystem Inc. (NASDAQ: NTRI); and Zix Corporation (NASDAQ: ZIXI). 

The NYSE stocks which fit this bill, except for one, are as follows: Mindray Medical International (NYSE: MR); Sealy Corporation (NYSE: ZZ); Rogers Communication, Inc. (NYSE: RCI); The McClatchy Company (NYSE: MNI); HHGregg, Inc. (NYSE: HGG); American Greetings Corporation (NYSE: AM); Bridgepoint Education, Inc. (NYSE: BPI); and Life Time Fitness (NYSE: LTM). 

We only looked at companies with an average volume of more than 250,000 shares and have added some loose color on these if applicable.

It’s the middle of the year, and by now, most large public companies have reported financial results for the second quarter of 2011. Some of the figures have been terrible — in many cases worse than expected. In the case of a few large companies, the horror of this year is an extension of several years of declines. The CEOs at many of these most troubled companies have been in place for a long time and investors have to question how they keep their jobs. Eventually, performance has to count, even in sectors in which the overall environment is poor.

Read more….

Newspaper and magazine stocks are up 22.9% in the past month. The best performing stocks in the index are Journal Communications Inc., (NYSE: JRN) up 56.5%, The McClatchy Company, (NYSE: MNI) up 50%, and Lee Enterprises Inc. (NYSE: LEE) up 49.7%.

Real estate development stocks are up 20% in the past month. The best performing stocks in the index are Bluegreen Corp., (NYSE: BXG) up 74.6%, Thomas Properties Group Inc., (NASDAQ: TPGI) up 49.5%, and IRSA Investments and Representations Inc., (IRS) up 22.1%

24/7 Wall St.

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.

Reuters:   A Congressional committee approved rules for over-the-counter derivatives.

Reuters:   Wasserstein’s death will result in a $186 million payment for restricted stock.

Reuters:   Goldman Sachs (NYSE:GS) will devote a smaller part of revenue to compensation to help quiet critics.

Reuters:   The Fed’s Fisher said rates would stay low and inflation is not a risk.

WSJ:   Wal-Mart (NYSE:WMT) will push Amazon’s (NASDAQ:AMZN) book initiative by offering $10 online deals.

WSJ:   The US is resisting a merger between Live Nation (NYSE:LYV) and TicketMaster (NASDAQ:TKTM)

WSJ:   The loss widened at Sony Ericsson (NYSE:SNE) (NASDAQ:ERIC)

WSJ:   Construction may rebound in 2010.

WSJ:   The Consumer Product Safety Commission will ask China to pay for some of the repairs to home using drywall made in the country.

WSJ:   AMD (NYSE:AMD) posted a small-than-expected loss and Nokia (NYSE:NOK) results were hit by write-offs.

WSJ:   China will probably not support sanctions on Iran.

WSJ:   AIG (NYSE:AIG) will post a loss on the sale of its Taiwan unit.

WSJ:   Profits at Schwab (NASDAQ:SCHW) fell.

WSJ:   Profit margin that measures interest income on a bank’s assets was bad at Citigroup (NYSE:C).

WSJ:   Gap (NYSE:GPS) will open a store in China.

NYT:   Airlines are increasing fares for holiday travel.

NYT:   Some analysts do not see the improvement in earnings at IBM and Google as a sign of a tech turnaround.

NYT:   Federal jobs programs are missing many states that need them most.

NYT:   Ad revenue at McClatchy (NYSE:MNI) declined.

FT:   The Treasury stopped short of saying China manipulates its currency

Bloomberg:   LBOs are making a comeback cutting financing costs for Blackstone (NYSE:BX).

Douglas A. McIntyre

The Digest was launched in 1922, about the same year as Time, Inc. and within the same decade as Life and BusinessWeek. Reader’s Digest once had a circulation of 18 million. It recently announced it would cut its present circulation from 8 million to 5.5 million in February 2010. It will also reduce the number of issues it will publish each year from 12 to 10. These moves are a routine part of the effort of many older magazines to save themselves. Newsweek recently cut its circulation to 1.5 million. Only three years ago, it was over 3 million. US News recently decreased its publishing frequency to monthly from its weekly level two years ago.

Reader’s Digest lost a modest amount of money before restructuring fees in the March quarter. The figures would have been worse, but the company removed a large piece of its expenses. Revenue for the period fell 17% to $479 million.
There is nothing particularly new or novel about the Reader’s Digest filing. Private equity firms take risks like this all of the time. They buy businesses based on projections that end up being off by large magnitudes. The equity part of the investments get wiped out and debtors end up owning a company worth a small fraction of the buy-out price.

The portion of the Reader’s Digest story that is unique is that, for many years, it was the largest magazine in the world and appeared in local language editions all over the world. That should have made it a good candidate for moving a great deal of its business online and taking advantage of its presence in dozens of countries and dozens of languages. The company’s business was not confined to the US or to the English language. This might have offered the Digest an advantage, but the age of the magazine’s readers undermined this option.

Time, Reader Digest, Newsweek, and US News, all magazines that are decades old now tend to have readers over 50, and, in some cases over 60 years old. They also tend to be middle class. They are not nearly as active in their presence online as the generations of people who spend time on Facebook or Twitter. These print media have been left behind. The most recent measure of the Reader’s Digest’s online audience by research firm Compete shows the magazine with only 1.6 million unique visitors in July. Even if the figure is too low by half, the audience is not nearly large enough to bring in the ad revenue to offset the falling print sales at the magazine. The Digest is dying slowly by dropping its circulation to 5.5 million and consequently decreasing what it can charge advertisers. The company has no choice, since too few people are interested in the magazine any more. The firm would need to race to cut costs to keep pace with falling revenue, and that is not possible any longer.

The sad part about the Digest is that it served a large audience well and long. That may be why magazine publishers facing the shrinking subscribers that they have left cannot bring themselves to believe that many of the publications will die and die very soon. The Digest won’t make it much longer because its audience is too old. The content that it digests or runs is too easily available elsewhere on the internet—“the dos and don’ts of corporate culture”, “six healthy fish recipes”, and “8 medical myths”. The Digest was always quaint. It never had much of an edge. That was comforting to millions of people. It is not comforting enough for them to pay for the Digest in great numbers. Due to their age, they are also dying off.

The Digest is a precious part of the media founded in the first half of the 20th century that will not make it through the first decade of this one.

Douglas A. McIntyre

Shares of Blockbuster Inc. (NYSE: BBI) are up 11% at $0.69. Even The McClatchy Company (NYSE: MNI) is up almost 11% at $0.51.

Two other huge “stock boots” which saw major selling on Friday and being bought back up today are the two worst GSE’s of our lives:  Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) are up 16% at $0.61 and up 17% at $0.60 respectively.

While the Russell indexes changes are much more powerful than many other index changes, the truth is that the addition or deletion does not change any of the business fundamentals.  So traders are buying was was unloaded on a wholesale basis at the end of last week.

What was on sale all week is being considered a bargain today.

Jon C. Ogg
June 29, 2009