Reuters: Thain regrets nothing he did at Merrill Lynch and during its merger with Bank of America (NYSE:BAC).
Reuters: Trump put his support to the bondholders of his casino business.
FT: A Chinese court ruled against Microsoft (NASDAQ:MSFT) in an intellectual property case. Read More
There are a number of ways to rank brand values. One of the most important is the level at which a brand contributes to the market value of a public company.
24/7 Wall St. asked Corebrand, the brand research and consulting firm, to look at the top 100 brands based their contribution to market capitalizaton. Using this method, the hardest working brand was Hershey (NYSE:HSY), followed by Coca-Cola (NYSE:KO) and Harley-Davidson (NYSE:HOG)
Corebrand described the process briefly to 24/7 Wall. St.
24/7 Wall St.: Corebard often refers to the brands on this list as the”hardest working brands”. How did you come to that description?
Corebrand: There are a lot of people measuring and examining the “strongest brands” or the “most valuable brands”. Our opinion is that examining one without the other is somewhat meaningless. How “strong” a brand is nice to know but not very relevant unless you understand how that strength benefits business. Similarly, “value” is little more than a measure of corporate size unless you understand the drivers of that value and how to influence it. By examining the strength of the brand and it’s contribution to total market value, we can help companies and their leadership manage that strength and value over time.
24/7 Wall St.: Is there any advantage or disadvantage to having a brand value be a very large percentage of market cap in the present and as an indication of a company’s future performance?
Corebrand: The brand will need to be in balance with the rest of the company’s assets. A company should strive to have it’s brand strong enough to fend off competitors or changing market conditions but not so strong that it becomes overly dependent on the brand as a single driver of value. If a company can achieve and maintain its appropriate maximum strength without becoming over-dependent, it will see greater returns in bull markets and retain greater value in bear markets.
The list: Read More
There were only a few top analyst downgrades and cautious research calls from Wall Street firms this Monday morning.
Cintas (CTAS) Cut to Neutral at Baird.
Leap Wireles (LEAP) Cut to Sell at Auriga.
Sara Lee (SLE) Cut to Sell at Goldman Sachs.
Telecom Italia (TI) Cut to Neutral at UBS.
JON C. OGG
Covering any part of the positives in this market has been literally as rewarding as jumping in the bear cage with the bears at the zoo. We have been refraining from doing as many stocks which are on 52-week lows as the list is just too many companies. But after the close we perused the entire S&P 500 and a few more large companies. We reached down in the barrel and found an extensive list of stocks which are now trading at lows of the entire decade. Fortunately for the seriously depressed, we took out the stocks which are financials, autos, housing, REIT’s, and penny stocks. Below is the full list.
According to Reuters, Europe prepared rate cuts as the economy their worsened.
Reuters reports that the administration cleared the way for the car companies to get access to $25 billion in loans, but Detroit says it needs more.
Reuters reports that Toyota (TM) cut forecasts and worldwide consumer demand weakened.
According to Reutere, Yahoo! (YHOO) profits were down, but the company maintained its full-year forecast.
Reuters reports that Wachovia (WB) posted huge write-offs and losses for the last quarter.
Reuters writes that some members of the FCC have voted on the Sirius (SIRI) merger with XM (XMSR), but no final decision has been made.
No one should be surprised that food companies are passing along tremendous increases in the prices of commodities. Consumers will be paying more for everything from hot dogs to corn flakes. Even the prices of Velveeta and Spam are going up.
According to the FT, "Kraft Foods (KFT), which has said it will push up its prices by 12-13 per cent this year, said some of its cheese categories could rise 25 per cent."
Sara Lee (SLE), Tyson (TSN), Kellogg’s (K), and ConAgra (CAG) are all planning similar increases.
Douglas A. McIntyre
The price of wheat has gone up three-fold in ten months. For something that looks like a weed, that is an impressive run.
Since a large number of business from McDonald’s (NYSE: MCD) to Sara Lee (NYSE: SLE) to Kraft (NYSE: KFT) have a lot of wheat-based products, inflation in the grain is hardly good news.
In many enterprises, the cost of commodities can be passed on to consumers. In a recession, that becomes somewhat more difficult. Who is willing to buy a $15 Big Mac or $20 box of cake mix? All the money that might go toward those items is already being spent on $4 a gallon gas.
Since the price of wheat is not going to drop, at least not any time soon, it is worth reconsidering investments in fast food chains like Starbucks (NASDAQ: SBUX) and Burger King (NYSE: BKS). Supermarkets may see some margin hit as well.
Even prison stocks like Corrections Corp (NYSE: CXW) may be bothered. The cost of bread and water has just gone up.
Douglas A. McIntyre
Verizon (VZ) bottomed at $33.30 after downgrades due to cellular service price wars.
HCC Insurance (HCC) Weak quarterly results. Trades down to $24.25 from 52-week high of $24.45.
AT&T (T) drops to $32.95 from 52-week high of $42.97 due to cell service pricing competition.
Blackstone (BX) sells off as LBO business goes to hell. Falls to $15.70 from 52-week high of $38.
Sara Lee (SLE) Bread prices up, but nobody doesn’t like Sara Lee. Moves down to $12.97 from 52-week high of $18.15.
Sharper Image (SHRP) Goes Chapter 11. Drops to $.29 from 52-week high of $14.16.
Nutrisystem (NTRI) Bad earnings keep moving the shares down. Falls to $16.32 from 52-week high of $74.09.
3Com (COMS) Deal to take company private loses altitude. Falls to $2.84 from 52-week high of $5.11.
Level 3 (LVLT) Too much debt. Too little earnings. Slides to $2.12 from 52-week high of $6.77.
Douglas A. McIntyre
Wall St. was taken by surprise when AT&T’s (T) chief said that the company was seeing soft home phone and internet business. So far, wireless spending seems OK. Since big company CEOs are trained from birth to be careful what they say in public, it is likely that the big phone operator is sending a message about its earnings.CEO Randall Stephenson told reporters “We’re really experiencing softness on the consumer side of the house from the economy."
The conventional wisdom is that phone companies are close to recession-proof like tobacco companies and consumer goods firms. People will cut back on travel, cars, most shopping, and discretionary items like PCs and household goods. But, who lowers their use of the phone? And, a DSL connection comes with a price tag of under $20 a month.
It looks like the economic slowdown is moving to spending for goods and services below $50 a month. At least the AT&T news would indicate that. If so, it brings a bunch of industries into play that have been left out of the game.
The next level of things that consumers could cut back on would be fast food, inexpensive consumer goods, gas, and food items. That potentially puts pressure on firms like Kraft (KFT), Procter & Gamble (PG), Sara Lee (SLE), Exxon (XOM), and McDonald’s (MCD). It puts another 5% or 10% of the companies in the S&P 100 at some risk for having earnings hurt in a downturn.
The phone companies was supposed to be recession-proof. That is until it wasn’t.
Douglas A. McIntyre
(AMAT) Applied Materials trading down 3% after yesterday’s earnings.
(CSC) CSC said it is part of a large government pact that will result in close to $900 million to CSC.
(DE) Deere $2.37 EPS vs $1.99 est.; sees 2007 inline with estimates.
(ERJ) Embraer SA $0.36 EPS vs $0.45 est.; unsure if comparable because of ADR.
(ETFC) E*TRADE said July averagge trades grew 20.8% sequentially, but said total retail assets decresed 1.9% and margin debt rose 5.5%; has been increasing share buyback activities.
(GNW) Genworth is meeting with investors to discuss its investment portfolio, including subprime and alt-A mortgage loans.
(HW) Headwaters CFo is leaving to becoming CFo of a private company.
(IAG) IAMGOLD $0.04 EPS vs $0.07 est.
(M) MAcy’s $0.29 EPS vs $0.26 est.
(SIRI) SIRIUS Satellite Radio Introduces the Stiletto 2.
(SLE) Sara Lee $0.17 EPS vs $0.13 est.; 2008 earnings guidance may be light.
(TSEM) Tower Semi -0.28 EPS vs -$0.31 est.
(WBSN) Websense names new CFO.
(ZOLT) Zoltek priced a 4M share secondary at $38.76.
Jon C. Ogg
August 15, 2007
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