New iPod Competition: Fans of Slacker can now take music on the go

Filed under: Products and services, Launches, Competitive strategy, Apple Inc (AAPL), Sirius Satellite Radio (SIRI), Tech for the rest of us, Technology

Slacker is my favorite of the Internet-radio services I've tried. The ability to customize is vast, the programming is top-notch (I favor 90s Alternative and the oxymoronic Indies Hits), and the interruptions are few and far between, even for the free service. Slacker is the primary unit of the privately traded Slacker, Inc., which was officially launched earlier this year.

Throwing its hat into the ring of portable music players -- competing with the likes of Apple, Inc. (NASAQ: AAPL)'s iPod and the Sirius Satellite Radio Inc (NASDAQ: SIRI)'s Stiletto -- Slacker is introducing a portable device, perfect for listeners who aren't tied to their computers. Instead of broadcasting via a WiFi connection, the Slacker device is simply loaded with new tunes (from the user's favorite artists and channels) every time it is synched with the user's PC.

An article in USA Today this week notes that "You have little control over what Slacker selects, beyond identifying what artists you like... but [Slacker CEO Dennis] Mudd says consumers don't care."

Continue reading New iPod Competition: Fans of Slacker can now take music on the go

Is fear of a Hillary Clinton presidency behind United/Delta merger talks?

Filed under: Cintas Corp (CTAS), UAL Corp (UAUA), Delta Air Lines (DAL)

The Associated Press reports that UAL Corporation (NYSE: UAUA)'s United Airlines and Delta Air Lines (NYSE: DAL) are in discussions about a merger. The firms would take United's Chicago headquarters and its name. One possible scenario involves Delta CEO Richard Anderson being the chief of the combined airline.

Why merge? Pardus Capital Management LP, a hedge fund, owns 7 million Delta shares and 5.6 million shares of United. Pardus pushed Delta to merge with UAL. It argued that it was "imperative" that the company merge with another airline in view of soaring fuel prices and what it described as the increased risks of going it alone. Pardus believes that "consolidation is needed to de-risk the industry, and time is of the essence as now is the right regulatory environment."

If Pardus is right, it seems to me that it must be forecasting that Hillary Clinton will be the next president. That's because Pardus believes that the regulatory environment for airline consolidation will deteriorate under the next president -- and I wouldn't be surprised if it thought mergers would be viewed more favorably under a Republican than a Democrat.

Continue reading Is fear of a Hillary Clinton presidency behind United/Delta merger talks?

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Barclays (BCS) takes turn at big write-down

Filed under: Earnings reports, Forecasts, Economic data, Barclays plc ADS (BCS)

Almost every other big bank doing business in the U.S. has taken a big subprime write-down, so why should Barclays (NYSE: BCS) be any different? It's not.

The big British bank announced that it would take a $2.7 billion charge for the four months ending in October. As Reuters writes, "In a surprise trading update on Thursday, Barclays Capital announced a write-down of 500 million pounds for the July-September quarter and a further 800 million pound write-down for October. The write-down was less than many estimates of Barclays' exposure to problems."

As perverse as it may seem, Barclays stock will probably do well because the number was not larger. There had been rumors that the charge could be as large as $10 billion.

The message from big banks and Wall Street firms that is now emerging is that they are, for the most part, OK. The worst of the subprime problems may well have passed and it is time for investors to consider that shares of these institutions may have bottomed.

But, there are other ghosts still hiding in the basement. Consumer credit may have been damaged by the housing mess and LBO loans still sit on the balance sheets of several large financial institutions.

The fun is not over yet.

Douglas A. McIntyre is an editor at 247wallst.com.

i2 Technologies (ITWO) shares advancing through a positive trading channel

Filed under: Earnings reports, Analyst upgrades and downgrades, General Electric (GE), 3M Corporation (MMM), Technical Analysis, Honeywell Intl (HON), Stocks to Buy

One of the top priorities of any manufacturer is efficient management of the variable demands made on its supply chain. There is an outfit in Dallas that has been helping some of the biggest firms in the world streamline the process for nearly twenty years.

i2 Technologies (NASDAQ: ITWO) provides supply chain management software that helps manufacturers boost operating efficiency, work with customers and suppliers, and administer electronic marketplaces. The firm also offers consulting, maintenance and training services. Clients include such manufacturing leaders as 3M (NYSE: MMM), General Electric (NYSE: GE) and Honeywell International (NYSE: HON).

The company pleased investors earlier in the month, when it reported Q3 EPS of 24 cents and revenues of $66.5 million. Analysts had been expecting 12 cents and $63.7 million. In discussing the results, the CEO cited continued momentum in the services business and significant customer wins for the firm's retail and logistics solutions. Management also guided FY07 EPS to 82-92 cents (80 cent consensus) and FY07 revenues to $263.5-266.5 million ($261.87M consensus). JMP Securities subsequently reiterated its "market outperform" rating on the shares and boosted its price target to $22.

Continue reading i2 Technologies (ITWO) shares advancing through a positive trading channel

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Starbucks (SBUX): Mr. Coffee takes a beating

Filed under: Earnings reports, Forecasts, Starbucks (SBUX)

Starbucks (NASDAQ: SBUX) Drive ThruMost of the business media have a story today about market concerns that Starbucks (NASDAQ: SBUX) will report slowing same-store sales when it puts out earnings today. The piece in The Wall Street Journal says, "When Starbucks reports earnings today, investors will be closely watching to see if growth in the average number of transactions per store, which essentially measures customer traffic, declines for the first time since Starbucks began disclosing the number three years ago."

All of that is well and good, but the anticipated decline is already cooked into the stock price. That means Starbucks has a chance at a rally. Everyone already knows that the coffee chain will do badly, which means that, if everyone is wrong, the shares may take a big bounce.

Shares in Starbucks dropped below $23 earlier this month and now trade just above $24. The stock was at $40 last November. Starbucks could move below $23 again if earnings miss expectations, but probably not by much. If the company beats, there should be a good rebound.

The short interest in Starbucks dropped at the end of October, down by 3.5 million shares to 22.7 million since the last measurement on October 15. Short sellers are not always right, but they are not feeling great about a further big drop in the stock.

Everyone is right that Starbucks is in trouble, which means that everyone could be wrong.

Douglas A. McIntyre is an editor at 247wallst.com.

OPEC: Increasing oil output won't help prices

Filed under: International markets, Forecasts, Bad news, Economic data, Oil

One of the most novel arguments against raising oil production is that it won't help decrease prices. That may seem counter-intuitive, but it is what the ministers of OPEC want consuming nations to believe.

Algeria's Energy and Mines Minister Chakib Khelil told Reuters, "We have all the factors that impact the price, so if we increase, we are going to have the same phenomenon that happened before, which means, it may not even impact on the price." He may have missed the "supply and demand" lecture in his college economics course.

OPEC has several reasons for not improving supply, but the idea that it will not affect prices is absurd. Just the announcement of improved output from the cartel could cause a stampede of selling in oil futures.

What OPEC does want are guarantees from the big consuming nations, especially China and the U.S., that they will not invest too much in nuclear power and biofuels. The producing nations want to know that there will be oil demand two and three decades out. They are making plenty of money now, but will that continue in 2030?
The attitude being taken by OPEC is that it will not increase output in December. That could cause prices to rise again. But a promise of dialing back alternative energy development that might cut oil demand would almost certainly get more shipments of crude moving.

Douglas A. McIntyre is an editor at 247wallst.com.

Flash: Kraft (KFT) unloads Post to Ralcorp (RAH)

Filed under: Kraft Foods'A' (KFT)

Kraft Foods Inc. (NYSE: KFT) announced a definitive agreement to merge its Post cereals business into Ralcorp Holdings (NYSE: RAH). The transaction is tax-efficient and worth approximately $2.6 billion to Kraft and its shareholders. For purposes of comparison, to have achieved an equivalent amount in a taxable transaction, Kraft would have needed to receive approximately $4.0 billion in cash for the business.

The Post cereals business had net revenues of about $1.1 billion in 2006, and includes such popular cereals as Honey Bunches of Oats, Pebbles, Shredded Wheat, Selects, Grape Nuts and Honeycomb. The brands in this transaction are distributed primarily in North America.

Douglas A. McIntyre is an editor at 247wallst.com.

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Before the bell: Futures lower ahead of CPI, after AMAT

Filed under: Before the bell, International markets, Earnings reports, Bad news, General Electric (GE), Market matters, Applied Materials (AMAT), Economic data, Barclays plc ADS (BCS)

Stocks futures were lower this morning, indicating stocks could continue yesterday's bearish mood ahead of CPI report today as well as several other key indicators. Meanwhile, investors remain concerned about the credit markets, with General Electric, Barclays and possible UBS the most recent companies to announce losses. A slowdown in the tech sector has also been a concern lately after several companies warned with Applied Materials adding its own warning just yesterday. Rising oil prices, which has caused the late selling in Wednesday's session, is another concern.

Yesterday, U.S. stocks ended lower as rising crude-oil prices had the bears taking profit in the technology sector. The Dow industrials fell 76 points, or 0.57%, the S&P 500 lost 10 points, or 0.71%, and the Nasdaq Composite dropped 29 points, or 1.1%.

The economic calendar is full today:
  • At 8:30 a.m., October CPI and core CPI will be released with expectations standing at 0.3% and 0.2% increases respectively, same as the month before.
  • At the same time, weekly initial jobless claims will be reported as well as November NY Empire State Index, which is expected to decline.
  • At noon, November Philadelphia Fed index is due and is also expected to show a decline.

Continue reading Before the bell: Futures lower ahead of CPI, after AMAT

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Two Israeli WiMAX plays in wake of Sprint announcement

Filed under: Sprint Nextel Corp (S), Technology, Israel

Investors learned last week that Sprint Nextel Corporation (NYSE: S) and Clearwire Corporation (NASDAQ: CLWR) were ending their agreement to create a nationwide, high-speed WiMAX network, citing the complexity it would have added to their businesses. Sprint said in a separate statement that it would review its WiMAX business plan and outlook in light of the announcement and plans to make further comments on the topic early next year.

BloggingStock's Aaron Katsman seemed to blame some of this fallout on Sprint's own internal issues, but deferred positing a true forecast on the future of WiMAX. Whether or not WiMAX overhauls telecommunications as we know it, there are two smallish firms already benefiting from the limited roll-out of WiMAX in emerging markets -- both happen to be Israel-based.

Alvarion Ltd. (NASDAQ: ALVR)'s strength comes in winning projects in emerging markets. Markets that the big-boys aren't ready to play in. The company finished the 3rd quarter with 200 commercial deployments, up from about 170 at the end of their second quarter. Sprint's decision not to move forward with their large WiMAX project doesn't seem to have affected Alvarion's ability to win new deals, though the stock has been pounded after a recent earnings report. Cisco recently purchased a WiMAX firm called Navini, and I wouldn't seem surprised to see another large player buy Alvarion.

Continue reading Two Israeli WiMAX plays in wake of Sprint announcement

Before the bell: BSC, MER, SBUX, IBM, KFT ...

Filed under: Before the bell, Analyst reports, Analyst upgrades and downgrades, Deals, Google (GOOG), Microsoft (MSFT), Starbucks (SBUX), International Business Machines (IBM), Citigroup Inc. (C), Penney (J.C.) (JCP), Merrill Lynch (MER), Kohl's Corp (KSS), Intuit Inc (INTU), Kraft Foods'A' (KFT), Bear Stearns Cos (BSC)

Before the bell: Futures lower ahead of CPI, after AMAT

Standard & Poor's lowered the credit rating on Bear Stearns (NYSE: BSC) to A from A+, saying the outlook is negative.

Earnings season rolls on with results from J.C. Penney (NYSE: JCP) - $1.01 per share expected, Kohl's Corp. (NYSE: KSS) - 60 cents per shares expected, Intuit (NASDAQ: INTU) - 12 cents per share, Starbucks (NASDAQ: SBUX) - 21 cents per share expected.

Merrill Lynch (NYSE: MER) confirmed yesterday the appointment of NYSE Euronext Chief Executive John Thain as its new CEO. MER shares are up nearly 1% in premarket trading after analysts wrote favorably of the appointment. Credit Suisse analyst Susan Roth Katzke upgraded Merrill to Outperform from Neutral. Sandler O'Neill & Partners LP analyst Jeff Harte also said Thain is "the right man for the job."
Citigroup Inc. (NYSE: C) still looking for its next leader.

Continue reading Before the bell: BSC, MER, SBUX, IBM, KFT ...

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Big pre-market movers

Filed under: Penney (J.C.) (JCP), NovaStar Financial (NFI)

JC Penney (NYSE: JCP) is trading off almost 4% after cutting its holiday sales outlook.

InfoSpace (NASDAQ: INSP) is up 7% after announcing a special dividend.

Telestone Technologies (NASDAQ: TSTC) is trading up 26% on strong earnings.

Advanced Life Sciences (NASDAQ: ADLS) is up on news of a successful trial of one of its drugs.

Sina (NASDAQ: SINA) is down 10% on weak earnings.

NovaStar Financial (NYSE: NFI) is down 39% on poor earnings and the possibility that its shares could be de-listed.

Stocks trading in the pre-market may open at different prices in the regular session.

Douglas A. McIntyre is an editor at 247wallst.com

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UBS may write down more than $7 billion

Filed under: Major movement, Citigroup Inc. (C), Merrill Lynch (MER), Housing

In the latest string of write-downs caused by the mortgage mess, the Wall Street Journal reports that UBS (NYSE: UBS) may take a $7.11 billion write-down in the fourth quarter and that analysts expect that Citigroup (NYSE: C) has not yet finished announcing its write-downs. The big problem all the banks and brokerage houses are facing is that no one really knows how to value these CDOs because not all CDOs are the same. The underlying assets may or may not be at risk of default.

Merrill Lynch (NYSE: MER) took a more conservative view and wrote down its losses on these assets more significantly than Citigroup because it put lower values on some of its CDOs. Analysts expect that Citigroup, UBS and others may have to follow Merrill Lynch's lead by the end of the year as the underlying values of the mortgage securities they are holding comes to light.

In reality, no one can be sure of the value a CDO until they can actually sell it. There are no set rules on how to value these instruments. Until the mortgage mess started most of these holdings were considered safe investments and rated AAA. Obviously, the ratings agencies need to get their act together and come up with a standard. But the only thing any of us can know for certain is that the values will continue to drop until the mortgage crisis eases and we see a slow down in foreclosures.

Lita Epstein has written more than 20 books including the "Reading Financial Reports for Dummies."

Newspaper wrap-up: UBS, Citigroup facing write downs from subprime mess

Filed under: Newspapers, Magazines, Apple Inc (AAPL), General Electric (GE), Citigroup Inc. (C), JPMorgan Chase (JPM), iPhone

MAJOR PAPERS:
  • Royal Dutch Shell Plc's (NYSE: RDS.A) 16.67% stake in the Cossack Pioneer field of Australia's North West Shelf may be up for sale, according to the Wall Street Journal. The sale price is expected to be about $450M and may attract the likes of Cnooc Ltd (NYSE: CEO).
  • According to the Wall Street Journal's "Heard on the Street," subprime woes continue, and UBS AG (NYSE: UBS) may face a $7B-plus write-down in the fourth quarter and Citigroup Incorporated (NYSE: C) could face between $8B and $11B of write downs in the fourth quarter.
  • According to Barron's Online's "Weekday Trader" column, a General Electric Company (NYSE: GE) Asset Management bond fund, worth $5B, is suffering losses in its asset-backed mortgages and asset-backed securities, and is giving its investors the opportunity to redeem their holdings at 96c on the dollar.
OTHER PAPERS:
WEB SITES:
  • According to executives familiar with the situation and reported by Apple Insider, the launch of the Apple Inc (NASDAQ: AAPL) iPhone in China is likely to be delayed due to a number of issues including revenue sharing and SIM card incompatibility.
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Tuition-free colleges, mutual fund hall of shame & are money-market funds safe? - Today in Money 11/15

Filed under: Starbucks (SBUX), Ford Motor (F), Money and Finance Today, Merrill Lynch (MER), UAL Corp (UAUA), Kraft Foods'A' (KFT), Delta Air Lines (DAL)

In the News:

Pssst! Want to Send Your Kids to College for Free?
Most parents would love to send their kids to college for free but probably don't believe it's possible. It is-if you know where to look.
Pssst! Wanna Go to College for Free?
In Pictures: Tuition-Free Colleges


Mutual Fund Hall of Shame

Kiplinger inducts eight new losers for their rotten stock picking, misguided ideas and shameless greed.
The Hall of Shame - Kiplinger.com


Billionaire Wives Club Gets New Member

When Google co-founder Larry Page, whose stake in the Internet search leader is worth about $20 billion, marries Lucy Southworth Dec. 8, one of the world's most exclusive clubs will have a new member.
Billionaire Wives Club Gets New Member - Forbes.com
In Pictures: Wives of Billionaires


Is Your Money-Market Fund Safe?

Mounting concerns about these 'safe' investments are rising daily. Millions of U.S. investors with cash in these mainstream vehicles are asking that question as some leading banks, investment managers and mutual-fund companies take steps to shield money funds from potential losses on troubled debt in their portfolios.
Are Money Funds As Safe As Advertised? - Marketwatch

Continue reading Tuition-free colleges, mutual fund hall of shame & are money-market funds safe? - Today in Money 11/15

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Cramer on BloggingStocks: Seven oil stocks to buy now

Filed under: Ford Motor (F), Exxon Mobil (XOM), Chevron Corp (CVX), ConocoPhillips (COP), Oil, Cramer on BloggingStocks

Jim Cramer on BloggingStocksTheStreet.com's Jim Cramer says you have to be bullish on the commodity when we're using more of it than ever, it's running out and $100 a barrel doesn't even sound crazy anymore.

Can you trust the International Energy Agency to be right about how oil demand will be blunted by high prices and how consumption will decline?

First, let's deal with demand. I haven't seen any slowing in demand in any of the indicators I use, in part because gasoline hasn't kept pace with the commodity. Cars, certainly, haven't made any strides in using less gasoline, and news right now out of Ford (NYSE: F) (Cramer's Take) is that there's really been no progress whatsoever.

How about heating demand? I have seen no switch whatsoever to another fuel because of the rise. Not one bit, or you would see a nat gas rally.

How about power plant demand? I am willing to think that some power plant manufacturers will debate switching, but building a new coal plant is something no one feels comfortable with without new standards. Nothing's happened along these lines, though.

Continue reading Cramer on BloggingStocks: Seven oil stocks to buy now

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October CPI up 0.3%, in line with consensus

Filed under: Economic data, Headline news, Federal Reserve

October consumer prices rose 0.3% the, lead by higher fuel costs, the U.S. Labor Department announced Thursday. CPI came in in-line with the consensus estimate.

Meanwhile, core CPI, which excludes food and energy costs, rose 0.2%, also in-line with the consensus estimate.

For the first 10 months of 2007, prices have risen at a 3.6% rate, compared with a 2.4% rise the first 10 months of 2006. Core prices were up 2.3% for the same period, compared with 2.8% int the same period in 2006.

Energy prices are a major factor in CPI's rise, the Labor Department indicated, rising 1.4% in October and more than 50% for the year. Food prices rose 0.3%.

Economic Analysis: The October CPI stat shows an inflation rate above the U.S. Federal Reserve's inflation "comfort zone" and makes it harder for the Fed to implement a monetary easing policy aimed at stimulating the U.S. economy. Fed Chairman Ben Bernanke has said that high commodity prices and a weak dollar will boost inflation for the immediate period, but should moderate in the quarters ahead. Still, despite Thursday's inflation statistic, most market participants believe the Fed will maintain its current easing policy and will lower benchmark interest rates by a quarter point at next month's meeting.
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Hexcel Corp (HXL): The whole is greater than the sum of its parts

Filed under: Boeing Co (BA), Hilary On Stocks, Stocks to Buy, Technology

Composite materials -- putting two building materials together to make them stronger than they would be on their own -- have been around for as long as mankind has been building structures. But we've come a long way since we first figured out that straw and mud together can make a brick, and modern composite materials, like carbon fiber, are becoming increasingly important in a number of technology markets, especially the aeronautics field.

Lightweight and super-strong, Goldman Sachs estimates at the next generation of aircraft could be made up of as much as three-fourths composite material, and this is why I think there are some great opportunities to be found in Hexcel Corporation (NYSE: HXL), a California-based company that has been making technologically advanced composite materials since the 1940s.

Hexcel's strongest sales have always been to the aeronautics industry. The company's longstanding relationship with Boeing (NYSE: BA), among other aircraft builders, has kept profits high over the past year, with operating earnings up 26% in the last quarter.

Continue reading Hexcel Corp (HXL): The whole is greater than the sum of its parts

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Investors need to know why Merrill really chose Thain over Fink

Filed under: Merrill Lynch (MER)

If you're an investor in Merrill Lynch & Co. (NYSE: MER), it really matters why your board has chosen John Thain over Laurence Fink. The reported reason for not picking Fink has changed since yesterday.

Yesterday, I posted about a CNBC report that Fink was the initial candidate. When he asked the board for a thorough reporting on Merrill's subprime problems, however, he was shunted aside. Today's New York Times suggests that Fink was not offered the job because he was too cocky, talking freely about the pros of leading Merrill compared with the cons of leaving BlackRock. The article suggests that Fink had told the press he was a shoe-in for the job, which angered the board.

I guess it's possible that Fink did not get the job for both reasons, but the notion that Fink embarrassed the board by going public with the offer certainly does not seem like a good justification for passing Fink over if he was the best one for the job. While this is not a good reason, it would concern me even more if Fink did not get the job because the board did not want to know how much of a subprime problem Merrill had before Fink decided whether to take the CEO job.

Continue reading Investors need to know why Merrill really chose Thain over Fink

Option update: ETFC and TTWO implied volatility suggests price movement

Filed under: Options

E*Trade (NASDAQ: ETFC) closed at $5.54.

  • ETFC announced on November 9 it expected to take significant write-downs in Q4 on its asset backed securities.
  • ETFC recently announced The Securities and Exchange Commission is conducting an informal inquiry of ETFC loan and securities portfolios.
  • ETFC December 5, 6 and December 7 call and put option implied volatility of 155 is above its 26-week average of 57, according to Track Data, suggesting option traders are initiating the purchase of options as a hedge to potential price fluctuations.

Take-Two Interactive (NASDAQ: TTWO) closed at $15.31.

  • Activist shareholders have been involved in TTWO, an interactive entertainment software game developer, over the last year.
  • Carl Icahn reported a 462,037 share position as of September 30.
  • TTWO over all option implied volatility of 82 is above its 26-week average of 54 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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GE bond fund to offer 96 cents on the dollar signaling more money market woes

Filed under: General Electric (GE)

MarketWatch reports that General Electric Co.'s (NYSE: GE) General Electric Asset Management (GEAM) Trust Enhanced Cash Fund will offer investors the option to redeem holdings at 96 cents on the dollar. I wonder whether this will look like a relatively good deal when we look back on the problems that money market funds are likely to experience due to their exposure to asset-backed securities (ABSs).

The GEAM fund sustained losses due to mortgage-backed securities (MBS) investments and has already let institutional investors exit the fund. No word on the terms these investors received, but if they had other business dealings with GE, I would be very surprised if they got out below 96 cents on the dollar. Meanwhile, GE plans to withdraw $250 million of its own money from the fund.

As I posted yesterday, GEAM is far from the only money market fund in trouble due to investing in MBSs. One thing's clear -- those who get out first will be better off than the small fry that wait until the end to try to redeem their money from these uninsured funds.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns GE stock.

Ohio court gives victory to homeowners facing foreclosure

Filed under: Good news, Market matters, Personal finance, Housing

A white knight has come to the rescue of homeowners about to lose their homes to foreclosure. A federal district court in Ohio dismissed 14 foreclosure cases brought by Deutsche Bank (NYSE: DB) on behalf of mortgage investors because they couldn't produce proof that they owned the properties they were trying to seize, the New York Times reports today. These complicated mortgage securities, totaling $6.5 trillion of securitized mortgage debt as of the end of 2006, make it easy for investors to trade the securities, but harder for them to prove actual ownership in the courts.

Until this ruling, the courts have been letting them get away with it. They've also gotten away with the lax legal standards of proof because most people facing foreclosure don't have the money to fight lenders in court. Judge Christopher Boyko asked Deutsche Bank on Oct. 10 to file copies of loan assignments showing that the lender was indeed the owner of the note and mortgage on each property when the foreclosure was filed. But the bank couldn't do that. It could only show that there was an intent to convey the rights in the mortgages rather than proof of ownership. That's because to make things easier for the banks to buy and sell these securities the actual mortgage notes are not shipped around the world.

Continue reading Ohio court gives victory to homeowners facing foreclosure

Wal-Mart ordered to pay $36.4 million in fees in off the clock case

Filed under: Law, Wal-Mart (WMT), Employees, Scandals

Wal-Mart (NYSE: WMT) has been ordered to pay $36.4 million in fees and legal expenses to attorneys representing Pennsylvania employees who worked off the clock at the world's largest retailer. The suit involved 187,000 workers, and the total value of the judgment is now up to $187.6 million.

My favorite part: According to The Wall Street Journal, "A Philadelphia jury last year rejected Wal-Mart's claim that some people chose to work through breaks or that a few minutes of extra work was insignificant."

Can't imagine why they rejected that one. If true, though, it would have made a great recruiting slogan for the company: "Wal-Mart: The job that's so much fun you'll want to skip your break and work off the clock!"

Fighting the suit in the courts has just prolonged the bad publicity for the company.

Earnings preview: Starbucks (SBUX)

Filed under: After the bell, Earnings reports, Starbucks (SBUX), Technical Analysis

Tonight after the close, the coffee king of Seattle will unleash its fourth-quarter earnings report upon an anxious public. The consensus opinion on Wall Street is that Starbucks (NASDAQ: SBUX) will have banked 21 cents per share, a 23.5% increase from year-ago results of 17 cents. Analysts have been fairly skilled at projecting SBUX earnings of late; according to Briefing.com, SBUX has matched the Street's expectations in each of the past five reporting periods. A negative or positive earnings surprise tonight would be just that -- quite the surprise, indeed.

At its last earnings report in early August, the company warned that matching its earlier estimate for fiscal 2007 per-share earnings of 89 cents would be "very challenging." A quarterly showing of 21 cents would put full-year results at 87 cents, a 19% increase from the previous year.

Continue reading Earnings preview: Starbucks (SBUX)

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Nike sells Starter brand to Iconix for $60 million

Filed under: Deals, NIKE, Inc'B' (NKE)

Nike (NYSE: NKE) has agreed to sell its Starter brand to Iconix (NASDAQ: ICON) for $60 million.

Starter is best known for its jackets bearing the logos of professional sports teams that were wildly popular during the early 1990s. As evidenced by the low price Nike is receiving for the brand, Starter has been in decline for years.

But the deal is consistent with the Iconix strategy of acquiring brands off the scrapheap and seeking to resuscitate them through licensing deals and clever marketing. Iconix does none of its own manufacturing, leaving it free to focus on maximizing brand value and selling licenses.

Iconix has been tremendously successful (take a look at the stock chart) with this approach, and owns brands including Rocawear, Danskin, London Fogg, Mudd, Joe Boxer, and Candie's.

Interestingly, Iconix founder and CEO Neil Cole is the less-known brother of Kenneth Cole, the founder and embattled CEO of Kenneth Cole (NYSE: KCP). Neil labored in anonymity for decades while his brother became a household name, but Iconix's market value has eclipsed that of Kenneth Cole. Still, numerous parties have called for a new CEO at that company.

Analyst upgrades: ANFGY, MER, VCLK, TMX and NTAP

Filed under: Analyst upgrades and downgrades, Merrill Lynch (MER), Amgen Inc (AMGN), ValueClick Inc (VCLK)

MOST NOTEWORTHY: Antofagasta plc, Merrill Lynch, Valueclick, Telmex and Network Appliance were today's noteworthy upgrades:
  • UBS upgraded shares of Antofagasta (OTC: ANFGY) to Neutral from Sell as they see a strong possibility of delays to copper supply due to an earthquake on Nov. 14 in northern Chile.
  • Credit Suisse is positive on the appointment of John Thain as Merrill Lynch (NYSE: MER)'s CEO and his ability to get the company back on track strategically. The firm upgraded shares of Merrill to Outperform from Neutral.
  • Valueclick (NASDAQ: VCLK) was upgraded to Buy from Hold at Citigroup on valuation, as they believe the recent sell-off provides a great entry point.
  • Citigroup also raised its rating on Telmex (NYSE: TMX) to Buy from Hold after the company announced the spin-off of its international businesses.
  • Bear Stearns upgraded Network Appliance (NASDAQ: NTAP) to Peer Perform from Underperform following its Q2 report and increased outlook.
OTHER UPGRADES:
  • RBC Capital upgraded Sciele Pharma (NASDAQ: SCRX) to Sector Perform from Underperform.
  • Lehman upgraded Amgen (NASDAQ: AMGN) to Overweight from Equal Weight.
  • W.W. Grainger (NYSE: GWW) was upgraded to Outperform from Market Perform at Morgan Keegan.
  • Merrill Lynch upgraded Weyerhaeuser (NYSE: WY) to Buy from Neutral.
ANFGY;MER;VCLK;TMX;NTAP;SCRX;AMGN;GWW;WY
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Analyst initiations: GPRO, MNST, LH and DGX

Filed under: Monster Worldwide (MNST), Analyst initiations

MOST NOTEWORTHY: Gen-Probe, Monster Worldwide, LabCorp and Quest Diagnostics were today's noteworthy initiations:
  • Deutsche Bank initiated shares of Gen-Probe (NASDAQ: GPRO) with a Buy rating and $78 target and expects the company's broad product portfolio in Clinical Diagnostics and Blood Screening to drive growth.
  • CIBC initiated Monster Worldwide (NASDAQ: MNST) with a Sector Performer rating, as they believe their macro concerns are more important than the company's intermediate-term prospects and its position within the global recruiting market.
  • William Blair views the valuation of LabCorp (NYSE: LH) as compelling given the company's growth outlook. The firm started shares off with an Outperform rating.
  • William Blair also initiated Quest Diagnostics (NYSE: DGX) with a Market Perform rating, and prefers a wait-and-see approach as the company's diversification strategy unfolds.
OTHER INITIATIONS:
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Och-Ziff: Whiffing on its IPO

Filed under: Goldman Sachs Group (GS), Lehman Br Holdings (LEH), Blackstone Group L.P (BX), Initial public offerings

Just imagine if hedge fund giant Och-Ziff (NYSE: OZM) went public earlier this year. It certainly would have been a stellar performer. Unfortunately, the public offering came Wednesday with the stock falling 4.2% to $30.65.

Ironically, Och-Ziff seems well-positioned for the volatile markets. Since 1994, the CEO of the firm, Daniel Och, has built a global franchise that spans the markets in the US, Asia and Europe. What's more, he has taken a multi-strategy approach, which involves merger arb, convertible arb, equity restructuring, distressed credit investments and so on.

More importantly, Och-Ziff is a big believer in strong risk management. In fact, this was a key for the firm's strong performance in 2001-2002.

As a result, Och-Ziff has picked up a large amount of assets (the current amount is about $30 billion). In fact, the mega sovereign fund, Dubai International Capital, agreed to invest $1.15 billion in the firm.

With the awful performances of the IPOs of Blackstone (NYSE: BX) and Fortress (NYSE: FIG), it was no surprise that Wall Street was lukewarm on Och-Ziff. Taking the long view on things, however, the growth prospects look promising as major investors seek out diversified alternative asset managers.

The lead underwriters on the Och-Ziff deal include Goldman Sachs (NYSE: GS) and Lehman Brothers (NYSE: LEH).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

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Analyst downgrades: SWIR, NVTI, GFSI, IFX and VRSN

Filed under: Analyst upgrades and downgrades, Nokia Corp. (NOK), QUALCOMM Inc (QCOM)

MOST NOTEWORTHY: Sierra Wireless, Navteq, Goldleaf Financial, Infineon and VeriSign were today's noteworthy downgrades:
  • Piper downgraded shares of Sierra Wireless (NASDAQ: SWIR) to Market Perform from Outperform to reflect increasing competition for the company's core businesses and longer term margin concerns. Based on comments from Qualcomm (NASDAQ: QCOM), Piper believes the new Gobi embedded solution is gaining more traction than previously anticipated.
  • The firm also downgraded Navteq (NYSE: NVT) to Market Perform from Outperform as they believe the Nokia (NYSE: NOK) acquisition will close.
  • Credit Suisse lowered its rating on Goldleaf Financial (NASDAQ: GFSI) to Market Perform from Outperform following its weak Q3 report and guidance.
  • ABN Amro downgraded shares of Infineon (NYSE: IFX) to Hold from Buy as they believe the strength of the euro will hurt margins.
  • VeriSign (NASDAQ: VRSN) was downgraded to Hold from Buy at Hambrecht to reflect the uncertainty surrounding the company's numerous divestitures as well as the execution risk.
OTHER DOWNGRADES:
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Buffett wants a tax increase, not an aristocracy

Filed under: Law, Rants and raves, Rich in America, Politics, Headline news

In testimony to congress, Warren Buffett expressed his opinion that the inheritance taxes were meant to recirculate accumulated great wealth and that repealing them would support an undesirable "aristocratic dynasty of wealth."

Republican arguments in favor of repealing the so called "death tax," permanently, mention two concepts they think are unfair. One is that the money has already been taxed and the other is that to satisfy inheritance tax requirements, heirs are forced to break up family businesses or farms and sell assets at what might not be an appropriate time or fair value.

The idea that our earnings are taxed more than one time is pretty weak to me. First of all, we are not taxing the one that earned it (they're dead), we're taxing the heirs who did not earn it. Besides, most money is taxed every time it changes hands. It is taxed when earned, when you buy or sell something, when you win the lottery, gamble or make money on a game show, receive a large gift and more. Using gift taxes as the most similar -- are not the heirs receiving a large gift?

Continue reading Buffett wants a tax increase, not an aristocracy

Bad news all inside JCPenney for 3Q earnings, outlook

Filed under: Before the bell, After the bell, Earnings reports, Bad news, Competitive strategy

JCPenney (NYSE: JCP) said this morning that its net income in the third-quarter dropped 9% to $261 million, or $1.17 per share, the first profit decline in three quarters. Excluding a 14-cent tax credit, earnings totaled $1.03 per share, above analysts' expected $1.01 per share (though well below the retailer's earlier outlook of $1.28 per share). Last month, the company reduced its third-quarter outlook to a range of $1.00 to $1.04 per share (excluding the tax-credit item).

Sales fell 1.1% to $4.73 billion, as same-store sales dropped 3.5%. Gross margin was down 1.8 percentage points to 39.7%. During the period, the company slashed prices to reduce inventory. Calendar shifts also had a negative impact, as the 2006 third quarter had an extra week's worth of sales. Bloomberg quoted CEO Myron Ullman as noting, "We were disappointed to see sales weaken dramatically in September and October." Like many retailers that posted lackluster sales results last month, JCPenny cited unseasonably warm weather and rising fuel costs, which have crimped consumers.

Continue reading Bad news all inside JCPenney for 3Q earnings, outlook

Is Google immune to an economic downturn?

Filed under: Other issues, Google (GOOG), Marketing and advertising, Market matters

Google, Inc. (NASDAQ: GOOG) continues to be a high-flying stock, closing yesterday at $641.68. While some think Google will reach $1,000 per share in the near future, some aren't sure. With "growing signs that the U.S. economy may be headed for a downturn," can Google keep up its magnificent pace as a growth stock and a company known for ever-growing quarterly revenues?

Google's business model could actually be helped by an economic downturn. The company is in a position to weather conditions that would make many industries swoon, and that's by design. By being a virtual company, you can imagine the layers of insulation Google has from nastiness in the economy. No physical inventory, no product cycles, no commodities, etc. Must be nice.

But if advertisers lessen their spending during times of financial crises, Google could get hit. Its network completely relies on advertisers and little else at this time. This is where the difference between graphic and text ads show up -- those Google text ads are displayed while customers are actively engaged (at least, partially) in searching for a product or service.

Though Google's graphic ads are threatening the revenue base of television networks and other types of media, advertisers still want to value for their money. If advertisers start to think Google ads are losing their effectiveness,
the stock is not headed to $1,000 anytime soon.

Wall Street 'relieved' by Barclays' $2.7 billion subprime loss

Filed under: Citigroup Inc. (C), Merrill Lynch (MER), Barclays plc ADS (BCS), Bear Stearns Cos (BSC)

It's not every season that Wall Street analysts greet losses or write-downs with smiles, but such is the case in the 'subprime watch' era.

Barclays (NYSE: BCS) Thursday said it wrote-down $2.7 billion of credit-related securities tied to the U.S. subprime mortgage market.

Investors once again appeared to be relieved that a major bank's subprime losses, while not small, weren't catastrophic. Barclays' shares fell just 44 cents to $43.44 in mid-morning trading Thursday. Further, Barclays' shares are up more than 10% for the week, an indication that investors may be regaining an appetite for the United Kingdom's third-largest bank.

Continue reading Wall Street 'relieved' by Barclays' $2.7 billion subprime loss

Tyco is doing just fine without Kozlowski

Filed under: Earnings reports, Deals, Competitive strategy, General Electric (GE)

Dennis Kozlowski is everywhere these days. CNBC featured an interview with the former Tyco International Ltd. (NYSE: TYC) chief executive from jail where he spoke about the difficulty in doing hard time and how he's helping his fellow inmates earn their GEDs. A Wall Street Journal editorial recently argued that Kozlowski was "railroaded" and that "living large isn't a crime."

Funny thing is that his former company seems to be doing just fine unwinding the empire that Kozlowski built. The conglomerate, which is splitting up into three separate companies, today reported better-than-expected third quarter results. Net income was $181 million, or 36 cents per share. Excluding one-time items, profit was $285 million, or 57 cents. Revenue jumped $5.03 billion. The results beat Wall Street consensus estimates of 55-cent profit on revenue of $4.97 billion.

Shares of Tyco are down $1.11, or 2.82%, to $38.20 because Tyco's yearly guidance for profit of $2.50 to $2.65 a share was below the $2.62 analysts had projected.

In a conference call with analysts, Kozlowski's replacement Ed Breen said the company was "cautiously optimistic" about its outlook for 2008, according to Bloomberg News. The company's revenue growth of 5.4%, which beat Tyco's estimates, was particularly impressive.

Shares of Tyco, which are down about 18% over the past year, are trading at near their 52-week low. Do some investors miss Kozlowski? Maybe. But if the world never learned about $6,000 shower curtains and tacky birthday parties, "Deal a Day Dennis" probably would have been forced to split up the company he cobbled together through acquisitions. Conglomerates, including General Electric Co. (NYSE: GE), are no longer the darlings that they once were on Wall Street.

Dell to offer servers using Sun's Solaris software

Filed under: Products and services, Competitive strategy, Microsoft (MSFT), Dell (DELL), Hewlett-Packard (HPQ), Advanced Micro Dev (AMD), Sun Microsystems (JAVA), Technology

Dell, Inc. (NASDAQ: DELL) and Sun Microsystems, Inc. (NASDAQ: JAVA) announced yesterday that the world's second-largest maker of computer systems will begin using Sun Microsystems' Solaris operating system as an offered feature of its new hardware servers. Dell will also custom build new servers around Sun's software.

The CEOs of both companies, Dell's Michael Dell and Sun's Jonathan Schwartz, announced the unique partnership and although this is being seen as a major step forward in Dell's attempt to release the shackles of Microsoft Corp.'s (NASDAQ: MSFT) grip, no specific financial terms were disclosed. Since Dell opened up its consumer and business PCs and server computers to processors from Advanced Micro Devices, Inc. (NYSE: AMD) and the freely-available Linux operating system, this is yet another way the Round Rock, Tx. company is trying to diversify its offerings in the wake of slowing sales and market share losses to competitor Hewlett-Packard Corp. (NYSE: HPQ) in 2007.

Sun CEO Schwartz said that "Dell's offering of Solaris redefines the market opportunity for both companies," and he's right. Dell's hardware and distribution expertise will easily help Sun grow its market share for server computers, many of which power some huge web properties around the globe. Dell's ability to partner with multiple hardware and software platforms in the last 12 months or so really stands as a testament to its desire to reach any and every customer it can (in any segment) with a wide variety of offerings to suit every need. Microsoft shouldn't feel threatened -- yet.

General Motors (GM) amends Delphi reoranization plan

Filed under: General Motors (GM), Options, Technical Analysis

GM logoGeneral Motors Corporation (NYSE: GM) agreed to a set of amendments to the reorganization plan of its former subsidiary Delphi Corp (OTC: DPHIQ) announced yesterday. Under the revised plan, the total enterprise value of DPHIQ is reduced to $13.4 billion from the $13.9 billion called for under the original plan. With the lower enterprise value, GM's recovery was reduced to $2.6 billion from $2.7 billion. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on GM.

After hitting a one-year high of $43.20 in October, the stock has slid over the past month. This morning, GM opened at $30.95. So far today the stock has hit a low of $30.25 and a high of $31.07. As of 11:35, GM is trading at $30.71, down $0.49 (-1.6%). The chart for GM looks bullish but deteriorating quickly, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

Continue reading General Motors (GM) amends Delphi reoranization plan

Comcast (CMCSA) teams up with Microsoft (MSFT) for small business tools

Filed under: Microsoft (MSFT), Comcast Cl'A' (CMCSA), Options, Technical Analysis

CMCSA logoComcast Corp. (NASDAQ: CMCSA) announced yesterday that it will partner with Microsoft Corp. (NASDAQ: MSFT) to launch a new Internet-based product for small and medium-sized businesses that will provide communications tools normally used for larger organizations. These tools include corporate-class e-mail, calendaring and document sharing. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CMCSA.

After hitting a one-year high of $30.18 in January, the stock hit a one-year low of $18.83 last week. CMCSA opened this morning at $19.68. So far today the stock has hit a low of $19.58 and a high of $20.28. As of 12:05, CMCSA is trading at $19.93, up $0.28 (1.4%). The chart for CMCSA looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

Continue reading Comcast (CMCSA) teams up with Microsoft (MSFT) for small business tools

Option update: Delta Air and AMR volatility elevated on merger talks, oil & economy

Filed under: AMR Corp (AMR), UAL Corp (UAUA), Options, Delta Air Lines (DAL)

Delta Air (NYSE: DAL) is recently up $0.53 to $20.53. On November 14, Pardus Capital Management, an activist hedge fund, sent a letter to DAL recommending DAL merger with UAL Corp (NASDAQ: UAUA). WTI Crude oil is down 0.51% $93.61 according to Bloomberg. DAL December option implied volatility of 74 is above its 24-week average of 50 according to Track Data, suggesting larger price risk.

AMR (NYSE: AMR) is recently up $1.04 to $24.36. AMR the world's largest airline, has been frequently mentioned as a merger partner over the last seven months. AMR December option implied volatility of 62 is above its 26-week average of 52 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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MasterCard (MA) lower on delayed EU ruling

Filed under: Bad news, MasterCard Inc'A' (MA), Options, Technical Analysis, Politics

MA logoMastercard Incorporated (NYSE: MA) stock is lower this morning on news that a European Union ruling on fees levied by MA has been delayed until at least the end of this year. The delay may also put the January launch of the Single Euro Payments Area (SEPA) on hold as well, a plan which would allow consumers to authorize payments and use their debit and credit cards anywhere in the 27 EU member states. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on MA.

MA hit a one-year high of $203.00 last week, after hitting a one-year low of $90.50 in February. This morning, MA opened at $185.00. So far today the stock has hit a low of $182.10 and a high of $188.47. As of 12:15, MA is trading at $184.27, down $2.50 (-1.4%). The chart for MA looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

Continue reading MasterCard (MA) lower on delayed EU ruling

Will Ford's new engines be a day late, dollar short?

Filed under: Consumer experience, Competitive strategy, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM)

Speaking at the Los Angeles Auto Show, Ford (NYSE: F) CEO Alan Mulally said the automaker is committed to improving miles per gallon efficiency and reducing emissions via implementing technological advances.

And the technological advances Ford's looking to incorporate to help stabilize its market share? Direct fuel injection, smaller-cylinder engines with turbo charges, lighter weight materials, hybrids, and diesels, among others. Moreover, Mulally said Ford's goal will be to increase fuel economy without sacrificing engine performance or auto safety. Ford's shares drifted three cents lower to $7.95 in Thursday afternoon trading.

In general, analysts were encouraged by Ford's presentation, despite the company's lack of a time-table for efficiency improvements or announcement of changes to specific vehicle models, other than a promise to apply diesel fuel and technology to improve the mpg of its popular but fuel-guzzling F-150 pickups.

Continue reading Will Ford's new engines be a day late, dollar short?

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Texas Roadhouse (TXRH) shares forming bullish "flag" pattern

Filed under: Earnings reports, Technical Analysis, Stocks to Buy

Texas Roadhouse (NASDAQ: TXRH) operates a full-service, casual dining chain of 278 restaurants in 44 states. Outlets are decorated in a southwestern theme and feature steaks, ribs, chicken, and seafood. The chain is ranked 38th on the Forbes Best 200 Small Companies List and has been ranked first in the Pub/Grill category by readers of Consumer Reports.

The firm pleased investors late last month, when it reported Q3 EPS of 14 cents and revenues of $189.5 million. Analysts had been looking for 13 cents and $189.3 million. Management also offered FY07 EPS guidance of "at least" 53 cents (53 cent consensus) and said that FY08 earnings would grow by about 20%. CIBC subsequently remarked that the firm's solid report and positive outlook stood out in a casual dining landscape littered with earnings and guidance disappointments. TXRH shares popped on the news and have since been consolidating the gain in a bullish "flag" pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the stock with six "strong buys," five "buys" and two "holds." Analysts see a 22% average annual growth rate, through the next five years. The TXRH PEG ratio (1.08), Price to Sales ratio (1.30), Price to Book ratio (2.54), Price to Cash Flow ratio (13.49), Sales Growth rate (27.61%), EPS Growth rate (40.0%) and Return on Assets (8.66%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 68% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $10.51 and $16.05. A stop-loss of $10.40 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

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