Before the bell: Stock futures turn higher after worse-than-expected jobs report
U.S. stock futures were lower early Friday morning, ahead of a February jobs report that is expected to be one of worst months in nearly six decades.Economists expect employers to have slashed a net total of 648,000 jobs last month, the single biggest month of job reductions since October 1949. The unemployment rate is expected to jump to 7.9%, from 7.6% in January, which would mark the highest jobless rate since 1984.
[Update: February non-farm payroll report was worse-than expected with employers slashing 651,000 jobs and unemployment rate shooting up to 8.1%.]
U.S. stocks resumed their slide Thursday, with all three indices reaching multi-year lows. Still, some are looking at today's employment numbers in hopes the bad numbers (better- or worse-than-expected) could spur a rally or capitulation. Either will likely be welcomed by investors, as it may signal a bottom, but neither will likely happen as more losses are likely to come.
Overseas, European markets were mixed Friday, but Asian stock markets resumed their declines. Meanwhile, the dollar fell against the euro and the yen before ahead of the nonfarm payroll data.
Other economic releases today include a government report on January consumer credit due out at 2:00 p.m.
Filed under: Before the bell, International markets, Market matters, Economic data, Recession
More dismal news on the foreclosure front
We all know that things have been less than ideal for homeowners over the past year, and we got a little clearer picture yesterday of just how bad things have become. According to a new report, 12% of all homeowners in the country were at least one month behind on their mortgage payments, or already in foreclosure at the end of 2008.The situation is even worse for subprime, adjust-rate mortgage holders. These loans have been blamed as a major reason why the credit market has reached the point where it is now, and according to this report an amazing 48% of these mortgages have either fallen behind or have entered foreclosure proceedings.
With 12% of homeowners now in trouble with their mortgages, that represents a total of 5.4 million American homeowners. The numbers are now running 20% higher than they were at the end of the third quarter when 10% of the nation's homeowners were in trouble.
While the subprime lending practices were definitely the initial causes for the mortgage situation we are facing, we are now looking at a situation where fixed-rate mortgage holders are also having troubles, clearly indicating that unemployment has become a major factor in the foreclosure mess.
We did get a bit of good news that jobless claims were lower than expected last week, at 639,000, but still higher than usual. While unemployment remains at these levels it is going to be tough for homeowners to keep current on mortgage payments, no matter what sort of mortgages they have on their homes.
Areas of the country that have seen a rise in foreclosures lately are Louisiana, New York, Georgia and Texas. It does not come as a surprise that these states are also witnessing a sharp rise in unemployment.
What is the situation in your area? What trends are you seeing in unemployment as well as foreclosures in your communities?
Filed under: Bad news, Economic data, Housing, Recession, Financial Crisis
European credit market sentiment sinks
There is an index called the Markit iTraxx Crossover Index that measures the cost of protection against junk-rated companies in Europe defaulting on debt-using credit default swaps. It is watched very closely because it indicates sentiment in the credit markets.
The iTraxx Index hit its highest level in its five-year history, implying that a record number of sub-investment grade companies in Europe are getting closer to being unable to meet debt obligations.
Stress was also evident in the short-term money markets, with the spread between sterling overnight market rates and London interbank rates rising to 164 basis points from 127 basis points in January.
The iTraxx Crossover Index rose to 1,123 basis points from 1,120 basis points in December, setting an all-time high for the index. This means the risk premium for a five-year CDS contract written on the index now stands at 1.1 million euros on a notational amount of 10 million euros.But it was in the UK where real concern is growing more than in the US or Europe. There are real worries over the solvency of banks in the UK, which has increased in recent weeks.
There is another iTraxx Europe index that measures mainly investment grade companies in Europe. This index widened by 4.2 basis points to 193 basis points.
Since this is a global crisis, it is important to follow what is going on around the world. Do you follow world markets?
Filed under: International markets, Indices, Financial Crisis
Options Update: Euro Currency Trust and Japanese Yen Trust volatility flat
Euro Currency Trust (NYSE: FXE) closed at 125.60. The FXE reflects the price of the euro plus accrued interest, less the expense of the Trust's operations. FXE over all option implied volatility of 19 is near its 26-week average according to Track Data, suggesting non-directional price movement.
CurrencyShares Japanese Yen Trust (NYSE: FXY) closed at 101.72. The FXY reflects the price of Japanese Yen plus accrued interest. FXY over all option implied volatility of 19 is near its 26-week average according to Track Data, suggesting non-directional price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Filed under: Options
Today's technical outlook: Markets desperately seeking support
The S&P 500 double-bottom finally collapsed Feb. 27, after holding firm for more than four months. But the strong 800 to 820 support zone gave way several weeks before, led by the Dow Industrials, which cracked its support at 7,940 even before that.The breakdown hit a plateau at the Dow 7,390 area, which also marked the market's low on Nov. 21. After several days of indecision, sellers drove stocks to new lows and the Dow headed for lower ground. So where do we go from here?
A trend line drawn from the October 1987 low of Dow 1,950 that connects to 2,334 in October of 1990 extends to 6,526 -- a possible target. And the Fibonacci numbers shown in Tuesday's Daily Market Outlook indicate support at 6,054. My estimate is that the next solid support is within the range of 6,050 to 6,525.
Until then, it would be best to either take a vacation and ignore the market or jump onto your favorite Ultra Exchange-Traded Fund (ETF) and try to make lemonade from lemons. (My current favorite is the Ultra Short Technology ProShares (NYSE: REW), and it's my trade of the day.)
But if you decide on the ETF lemonade, be aware of the oversold nature of the market and the possibility of a brutal rally by panicked short sellers. In all cases, use a stop-loss order that prevents your lemonade from going sour.
Sam Collins is a contributor to OptionsZone.com.
Filed under: Technical Analysis, S and P 500, DJIA
Cramer on BloggingStocks: Sowing the fear, destroying the banks
The purists, the technicians, they are united on this Web site in believing that my quest to return to the old days before the ProShares UltraShort Financials (NYSE: SKF) (Cramer's Take) exchange-traded fund and the like, and the repeal of the uptick rule, live in a world without sin, and a world without manipulation. They ignore the destruction not just of ne'er-do-well Citigroup (NYSE: C) (Cramer's Take) but Bank of America (NYSE: BAC) (Cramer's Take), and Wells Fargo (NYSE: WFC) (Cramer's Take) and just about every other bank you can name.
They worry about silly things, like the rights to short-selling profit, instead of more important things, liking having a working bank system that isn't controlled by the government. They want the government out of their trading lives but in their business lives because, given the destruction of the common stocks of banks, somehow under this administration, the only thing that matters to their solvency, they are going to get a level of government interference they would never believe.
I hear all of the arguments: The longs can have it both ways, so why not the shorts. The rule is outmoded by penny trading. The new studies show it doesn't matter. The SKF is a fitting way to be able to be sure that you can get quick negative trading done on the banks.
Are these really the imperatives?
Of course, I hear the other argument: They are all in trouble so they should go down. They are all in the same boat. Does anyone really believe that? Does anyone really believe that every single bank is run by idiots with worthless common stock?
I am adamant that the shorts/purists are simply not cognizant of the history of why we put in these rules. They were put in not to make it so trading was less efficient and now it can be more efficient. They weren't put in because they wanted to make it so the longs could make money and the shorts couldn't.
They were put in because it was too easy for the shorts to destroy the common stocks and, therefore, the companies in finance. It was too easy to stop capital from flowing into the markets and destroy their functions. The government held hearings and recognized that the shorts had sown fear and that it was not in the national interest to sow fear, collude to bring down stocks and wreck the capital markets. I am sorry, but that's why they put them in.
Has anything really changed in terms of what the goal was? Has anything changed in human nature? And as far as the slippery slope arguments about penny trading, oh please. The first week in law school you learn the irrelevance of that argument. It is not proof of anything. There are simply competing agendas: the rights and privileges of the short-sellers versus the interests of the government to have an orderly capital markets system that is functional and allows capital to be raised. You tell me which is more important for the nation.
It is also no excuse that "throughout the world' the same thing is happening to bank stocks. Remember my argument: I am not saying that all the banks should be preserved and I am not saying that there aren't banks that shouldn't be seized. I am saying that it is irrational and empirically obvious that not all banks are insolvent but they trade as such because it is so easy to sew the panic and fear that the legislators in the 1930s saw happening. You could argue they weren't sophisticated but that would be wrong, too.
Joe Kennedy was the first Securities and Exchange Commission chairman. He favored the rules because he was one of the big short-selling winners and he knew how effective short selling was in undoing the stock market and the banks. In short, he wasn't a rube as so many of the short sellers/purists imply when I take up this cause.
The government also knew that excessive margin creates an untenable amount of volatility, so it gave the Federal Reserve the power to regulate it. The ProBear ultra funds and their ilk are simply ways to take advantage of the lack of an uptick rule and exploit a hole in the margin rules. The impact is the same as the 1930s. (See Eric Oberg's excellent, well-reasoned pieces on this Web site if you disagree.)
Penny trading? OK. Simply say that the next short has to be done 10 cents up. Not possible because of the "way stocks now trade?" Then bring back the old way. I don't care. The simple fact is that we are in an emergency and I think we should retreat to what worked so well for so long and forget about the academic studies done during the greatest bull market of all time. They are irrelevant.
Let me leave you with a realistic thought about this subject. In 1990, Morgan Stanley's options desk showed me a way to get around the uptick rule. I could buy puts and common stock simultaneously and then bang down the common stock so quickly as to scare the buyers and create a vacuum down where I would then sell the put.
It was one greatest ways to make money on the short side I had ever seen. I could go in and buy thousands of puts -- position limit -- and a like amount of common and just, guns blazing, blow weaker stocks apart. I remember destroying Woolworth and Dayton Hudson, laying them to waste. Others got into the game too. It was totally legal.
Then one day they told me to cool it. The regulators didn't like it, too easy, too destructive to the capital markets, too unfair. I argued mightily that the longs could do it, that my rights were violated, my livelihood. I said that my targets were weaker firms that should be going out of business anyway. I said that the people in government who wanted to stop me were playing unfairly and "propping up" stocks. I took it to the highest levels and went to politicians on it. I was adamant about my rights!
And the whole time I knew the truth. It was just such easy pickins. The buyers figured why would some seller be that aggressive if something wasn't wrong. The buyers lived in fear that "the whale," as I was known at the time, would wipe out their stocks so they sold right along with me. I minted money. Married puts were as right and as fair as fair could be. Except that they weren't at all and when a bunch of us would come flying in at the same time we could really take stocks down fast, much faster than they could go up. Remember, this was before you could put a credit default swap on to win both ways.
So sure, I get it, protect the rights of the shorts. They need protection like the longs. Blah blah, blah. You are reading the first guy who went to bat for these rights. But never forget that I knew why I wanted them.
Because it was just a brilliant way to destroy stocks for profit.
Sorry.
I know the truth.
One last thought as we wipe out the banking system because common equity and not Tier 1 capital is the shorts' best friend. Just wait, in a few more points the SKF -- the most powerful weapon known to destroy bank stock capital I have ever seen -- won't matter.
There won't be any common stocks left to drive down.
Then, I guess, like President Bush on that aircraft carrier, we can proclaim "Mission Accomplished."
Random musings: I see the senators are finally getting around to asking who is getting the American International Group (NYSE: AIG) (Cramer's Take) money. I told them a year go: European banks, because the deals were orchestrated by Joe Cassano in London. The senators remain so clueless.
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Wells Fargo.
Filed under: Market matters, Citigroup Inc. (C), Bank of America (BAC), Amer Intl Group (AIG), Wells Fargo (WFC), Cramer on BloggingStocks, Financial Crisis
Wells Fargo cuts dividend to save money
This morning, Wells Fargo (NYSE: WFC) announced what it terms a "very difficult decision." Wells Fargo decided to cut its quarterly dividend to 5 cents per share from 34 cents per share, saving $5 billion in the process. WFC also believes that the move will help the company reimburse the government for its recent investment in the firm. WFC's CEO John Stumpf stated in a press release, "The actions we're taking every day ... are the right thing to do in any event for our shareholders, customers, and team members ... these actions will help us repay the government's investment at the earliest practical date."
According to MarketWatch, WFC also stated that its integration of Wachovia is on track to achieve $5 billion in merger-related expense savings. The bank believes that total merger integration costs will come in lower than originally believed.
As with almost every other financial stock, shares of WFC are struggling. The stock is trapped below resistance in the $10 region and faces overhead resistance from its 10- and 20-unit short- and intermediate-term moving averages. With the entire market searching for a bottom and with negative news coming out on a seemingly daily basis, I wouldn't bank on WFC rallying through this resistance any time soon.
Filed under: Wells Fargo (WFC)
T. Boone Pickens still bullish on oil: Sees $200-300 oil in 10 years
Well, billionaire oilman T. Boone Pickens was "bullish on oil, before being an oil bull was cool." And, despite the bursting of the leverage-influenced oil bubble, during which oil plunged from $147 to below $40 in less than a year, Boone-Pickens is still bullish on oil, long-term.
Sees $75 oil in 2009
Pickens sees $75 oil by the end of 2009, Reuters reported, and $200-300 oil in 10 years. Oil Friday morning rose 89 cents to $44.50 per barrel. Oil hit a record high of $147.27 per barrel in July 2008.
"If you don't think we'll see $200 to $300 oil in 10 years, you are kidding yourself," Pickens told marketwatch.com Friday. "You think OPEC is a free market? We have no control over what is going on."
Pickens also reiterated that the nation needs to free itself from imported oil via renewable energy and alternate fuel sources, which he is involved with in business ventures, and via increased energy efficiency and conservation. The United States currently imports almost 70% of its oil, up from about 25% in 1970.
Oil/Economic Analysis: Many economists would view Pickens' prediction of $75 oil by the end of 2009 as a good thing: That high a price would imply decent demand, which would suggest economic growth is occurring, at least globally, if not in the United States. Given current employment, commerce, and GDP trends, that would be decidedly good news.
Further, Pickens is on-the-mark regarding energy policy in the United States: The U.S. must move full-speed-ahead to rid itself of imported oil, then oil entirely, by conservation, increased efficiency, and alternate fuels. Foreign oil represents an enormous transfer of U.S. wealth, $200-600 billion annually, to foreign governments/economies, it complicates (at minimum) U.S. foreign policy, and oil is a fossil fuel that must be phased out, due to global warming. The Obama administration is off to a good start regarding an energy policy: Congress and the president need to implement a practical, innovative policy as soon as possible to put the nation on the energy independence track.
Do you think T. Boone Pickens' prediction regarding oil's price is wrong? What will the price of oil be in 10 years, in your opinion? Let us know what you think.
Filed under: Forecasts, Commodities, Oil
Powershares Agriculture (DBA): A bull market in grains
"I remain a devoted long-term soft commodities bull; the grains and other soft agricultural commodities remain one of the most long-term compelling investment trends of our lifetime," says Eric Roseman.
In The Commodity Trend Alert, the advisor looks at the PowerShares DB Agriculture Fund (NYSE: DBA), noting "The grains and other soft agricultural commodities remain one of the most long-term compelling investment trends of our lifetime. I'm convinced that we remain in a long-term bull market for agricultural commodities.
"This historical trend began in 2006 and remains extremely powerful as population growth exceeds arable food supply combined with unpredictable weather patterns attacking supplies and causing droughts.
"Leading up to last July when inflation peaked for this cycle, food inflation was at its most acute since the 1970s, especially in the emerging markets. Food riots ran wild in many developing countries as the price of grains and other foodstuffs went through the roof coupled by record low harvests in 2007.
"From their highs in 2008, wheat prices have crashed 56%; soybeans are down 42%; corn is off 53%; oats are off 58%; sugar prices are down 16% and Brazilian coffee is down 39%.
"The results are even more compelling if we factor inflation-adjusted prices since 1980 for these commodities. Many of these things are still 50-75% below their inflation-adjusted highs.
"Droughts, one of the most consistent weather phenomena attacking crop yields this decade remains a long-term nemesis.
"In Northern China, a massive drought is getting worse and has scorched the most arable land in fifty years. In Australia, the country has been marred by an unrelenting drought for almost five years. The worst drought in almost fifty years has turned Argentina's once-fertile soil to dust.
"The current drought in California is the worst since 1977 and southwest Texas is seeing the worst drought since 1917-18. An incredible 88% of Texas is experiencing abnormally dry conditions.
"In addition to the above, supplies affected by drought, consider the impact on farms as credit becomes much harder to secure even for successful farms.
"It's a nightmare, especially as grain prices remain well below their highs from last summer. The obvious question after reading all of this is, 'why aren't grain prices trading much higher?'
"My answer is two-fold. First, if not for the credit crisis and the near unraveling of the financial system last fall, grain and other foodstuffs would be trading much higher. This entire deflation episode has attacked all assets, including food and food-consumption trends.
"Also, the big speculators in these markets have been knocked-out by margin calls on de-leveraging. No doubt a part of the bull market we saw last year was driven by frantic money chasing trends to the Moon. When commodities finally broke in July, the party ended. Hedge funds bailed.
"As the global financial system gradually heals, commodities will recover. The first group to rally is the precious metals since November and increasingly, the grains and other agricultural commodities will follow along with energy and the base metals.
"I think it's very important for every investor to buy the PowerShares DB Agriculture Fund. This ETF is almost equally weighted in wheat, corn, soybean and sugar futures.
"It's the purest way to speculate in these important commodities without the associated risk of futures or options trading. DBA stands 44% off its all-time high."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
Filed under: International markets, Newsletters, ETF Investing, Commodities, Agriculture, Stocks to Buy, Green Stocks, Recession
Analyst upgrades, downgrades and initiations: TASR, M, FDO, NVDA, DGX ...
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Analyst upgrades:- Merriman upgraded Taser (NASDAQ: TASR) to Buy from Neutral as it believes current valuation levels do not reflect the company's market opportunities and that the law enforcement funding in President Obama's stimulus plan will boost sales in Q4 and FY10.
- Goldman upgraded Macy's (NYSE: M) to Buy from Neutral and added shares to its Conviction Buy List based on reduced balance sheet concerns and improved risk/reward. The firm also raised their target to $8.25 from $8.
- JP Morgan upgraded Family Dollar (NYSE: FDO) to Neutral from Underweight and raised its target to $29 from $19 following the better-than-expected Q2 report. The analyst continues to prefer Dollar Tree (NASDAQ: DLTR) and Wal-Mart (NYSE: WMT).
- Goldman removed Universal Am (NYSE: UAM) from the Conviction Sell List.
- McDermott (NYSE: MDR) was upgraded to Buy from Hold at Jefferies.
- Canadian Natural (NYSE: CNQ) was upgraded to Sector Outperformer from Sector Performer at CIBC.
- JP Morgan downgraded Gerdau (NYSE: GGB) to Neutral from Overweight to reflect risks in the steel and weak international operations.
- Baird downgraded Obagi Medical (NASDAQ: OMPI) to Neutral from Outperform and lowered their target to $5 from $10 citing the pressure on revenues from the weak environment.
- JMP Securities downgraded Insulet (NASDAQ: PODD) to Market Perform from Outperform following the company's more conservative revenue guidance, as the firm now believes financing risk will continue to weigh on the shares and they do not expect the stock to appreciate significantly this year.
- Quest Diagnostics (NYSE: DGX) was added to Goldman's Conviction Sell List. Genzyme (NASDAQ: GENZ) was also added to Goldman's Conviction Sell List and downgraded to Sell from Buy.
- NetLogic (NASDAQ: NETL) was downgraded to Neutral from Buy at Piper Jaffray.
- BT Group (NYSE: BT) was cut to Underweight from Equal Weight at Morgan Stanley.
- Citigroup initiated Norfolk Southern (NYSE: NSC) with a Buy rating and $42 target. The firm believes management's record of earning above-average returns on capital will serve investors well during the current economic downturn.
- Auriga started Nvidia (NASDAQ: NVDA) with a Hold rating and $8 target. The firm sees risk to first half of 2009 consensus estimates due to continued weakness in the core graphics business.
- Morgan Keegan said Quality Systems (NASDAQ: QSII) is feeling the impact from the weak economy and its impact on physician practices and demand for software. Shares were assumed with a Market Perform rating.
- International Game Tech (NYSE: IGT) and MGM Mirage (NYSE: MGM) were initiated at Janney Montgomery with Neutral ratings.
- Ralcorp (NYSE: RAH) was started with a Neutral rating at SunTrust.
- Forest Labs (NYSE: FRX) was initiated with a Neutral rating and $23 target at Baird.
Filed under: Analyst reports, Analyst upgrades and downgrades, Wal-Mart (WMT), Family Dollar Stores (FDO), Analyst initiations
With unemployment at 8.1%, here's where the jobs are
This morning the stock market rose a bit even though the jobs numbers were worse than expected (this makes sense if you buy the idea that there is no logical explanation for daily market movements). Investors expected the unemployment rate to top 7.9% with 648,000 jobs lost in February and the actual numbers were worse -- 8.1% and 651,000, respectively.
But do you really care about government statistics? The simple fact is that if you're now unemployed you're scrambling to find a job and it's probably very tough. And if you have a job, you're worried you won't have it for much longer. I meet with several undergraduate and MBA students each week who are looking for help to find jobs. And the simple reality is that there are no easy answers. But I have three ideas.
Before offering these suggestions, it is worth emphasizing that if you do not have the skills or the interest in these kinds of jobs then these companies will be of no use to you. Also, with the hunger for jobs high, the competition for these positions will be fierce. And if you are trying to "transition" from another industry and you face competition from people within that industry, you will need to do a great job of convincing a potential employer that your previous experience in another industry is valuable.
Without further ado, here are three suggestions:
- Go Green. Within the next two years the $787 billion stimulus spending is expected to create or save 3.5 million jobs -- 79,000 in Massachusetts where I live. $83 billion of that is targeted for green jobs. One company creating those jobs is Conservation Services Group (CSG), an energy-efficiency company, which has hired 50 employees in its main office. Because of the stimulus bill as well as several new contracts, it plans to add 200 more jobs in 2009. CSG currently employs about 400 and does business in 22 states.
- Follow the money. Another suggestion is to look where venture money has been invested most recently. Companies that have received venture cash probably have solid business models -- otherwise they would not have gotten the extremely scarce venture cash. And those firms are likely to use some of that cash to hire people. This MoneyTree Survey gives you an idea of where that money has been invested most recently. It's not easy though -- you have to do some digging to get the names of the companies.
- Go where the growth is. Finally, you can go where the growth is. I have been writing a series of Growth Matters posts on BloggingStocks that currently covers about 30 growing companies -- most recently, Evernote and MocoSpace. You could read each of these posts and if you're interested in the company, you could contact its CEO. I have no idea whether these companies are hiring, but if they're growing chances are they need people to manage that growth.
When the going gets tough, the tough get going. And things are really tough.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
Filed under: Economic data, Recession, Financial Crisis
Pension fund adviser wants BofA CEO out
CtW Investment Group, which provides advice to seven union pension funds, has sent a strongly worded letter to Bank of America's (NYSE: BAC) lead independent director urging him to take the necessary steps to remove CEO Ken Lewis from office."Recent events have fatally undermined investor confidence in
Ken Lewis has overseen two absolutely moronic, company-destroying acquisitions: Countrywide Financial and Merrill Lynch, both in the span of about a year. If that isn't enough for him to lose his job, then it's hard to know what would be. The fact that he still has a job is proof that the entire Bank of America board of directors should be put out on the street.
Filed under: Management, Bank of America (BAC)
Growth Matters: Veoh finds you the Web's best video
With all the gloom in the global economy, I got to wondering whether there is anything else going on in the world of business. I'm looking for growth because I think that's what will ultimately bring the economy out of the doldrums. Not surprisingly, that growth is coming from technology companies. In Growth Matters, I look at consumer technology companies that point the way to growth trends -- and in the process introduce services and products you may want to explore.
If you want to make sense of all the video on the Internet so you can view just the good stuff, then Veoh Networks may be worth a visit. I interviewed Veoh Networks' CEO, Steve Mitgang, who told me an interesting tale about Veoh's history: "The founder of Veoh [Dmitry Shapiro] was an expert in security for Peer-to-Peer (P2P) networks. Video was active around enterprises as employees were watching more videos on YouTube."
As Mitgang pointed out, "People needed a way to find, organize, discover, and watch videos. Dmitry was interested in building a site to share longer-form videos to provide entertainment and to share experiences. There was increasing amounts of P2P traffic into the enterprise. He used his expertise in P2P security to build a site that would help people to organize, discover, and play back video in the Web."
Why this focus? As Mitgang explained, "Some companies think their role is to serve as a platform for TV on the Internet. However, if a friend sends you a video and you want to watch it, such platforms are not useful. That is why we decided to focus our platform on helping people to organize, find, discover, and watch videos."
Veoh makes money by selling advertising to companies that want to reach its "engaged" viewers. As Mitgang explained, "Veoh Networks has the highest engagement level of any Internet video site in part because we have longer videos. We get 100 million users per month and 250 million streams per month." And Veoh has grown fast. As Mitgang pointed out, "In 2007, we had between two million and three million unique visitors, and by 2009 we had 28 million unique visitors."
Are you going to try Veoh? Have you used it already? What do you think?
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
Filed under: Products and services, Marketing and advertising, Videos, Technology
Just call it U.S. Government AIG
In the film version of Tennessee Williams' 'Cat On A Hot Tin Roof' (1958), Maggie 'The Cat' (Elizabeth Taylor), knows her husband Brick (Paul Newman) is hiding something, but she can't figure out what it is.
Later, we learn that Brick is hiding the truth about his father, millionaire Big Daddy (Burl Ives), and he slowly gathers the courage to end the mendacity that has permeated their lives.
At some point the nation will, likewise, end the mendacity about American International Group (NYSE: AIG) and announce the full, probable cost of the orderly stabilization of AIG. For economic conservatives, market absolutists, most Republicans, and others who oppose government intervention, the above would be bad news, but at this juncture, it appears to be unavoidable.
Fed Chairman Ben Bernanke has already provided not-so-subtle hints regarding the system risk posed by AIG. In Capitol Hill testimony this week, Bernanke repeatedly used phrases like "unavoidable," "we had no other choice," "there were no other options," and "Senator, we did what we had to do," in reference to the Fed's decisions to intervene and bolster AIG.
Comment: The above is Fedspeak, or the Fed's way of emphasizing the large degree of systemic risk represented by a potential AIG failure.
AIG operated a number of business over the years but most recently, during the housing bubble, AIG sold credit protection called credit default swaps - - really a form of credit default insurance -- on mortgage-backed securities / bonds and on other collateralized debt obligations. Its counterparties span the globe. And there was just one problem with AIG's operation: it had nowhere near the capital sufficient to pay for major claims for credit default swaps.
In short, AIG was a certainly reckless and probably illegal insurance operation.
For those investors who find it hard to understand AIG's business and exposure, here's an analogy: say you sold fire insurance for 10 neighbors' houses. You collected premiums, but never held enough capital to rebuild even 2 of the houses, let alone 10, should a major fire occur. Then, a major fire occurred and 7 of the houses burned down. You can't pay, and they are left without homes, because they were counting on your insurance to rebuild their homes. That's essentially what AIG did.
$163 billion: Just the first step
On Monday, the Fed and the U.S. Treasury announced the third version of the government's bailout of AIG, CNNMoney.com reported, providing the firm an additional $30 billion in capital, bringing total U.S. taxpayer exposure to AIG to $163 billion. AIG reported a $61.7 billion loss in Q4 2008.
And, astonishingly, that will undoubtedly represent just the first step with regard to government resources to support AIG.
Due to AIG's myriad of credit default swap products, derivatives, and other financial products, and its deep connections to the global financial system, AIG will probably need at $200 billion more in assistance, and may need as much as $300-500 billion, so says economist David H. Wang. Wang added that he's "100% in support of the Fed's decision to intervene and stabilize AIG."
Monetary Policy / Economic Analysis: To be sure, no one wants to further increase the national debt and / or the Fed's balance sheet, but if economist given what we know about AIG's relationships, the U.S. has no other choice. The impact of an AIG failure on already-constrained U.S. and global financial systems would far exceed the costs of an AIG bailout. And one can only imagine the further slowdown in the economy, should credit be constrained more.
A some point the Fed, if it hasn't already, should dialogue with the European Central Bank, Bank of England, Bank of Japan, and other major central banks regarding potential help in AIG's stabilization, given the counterparties that exist in these countries, particularly if the bill for AIG exceeds $500 billion.
A $500 billion intervention for one company? Who would have imagined this 10 years ago? Nevertheless, it is stabilize AIG, we must.
Financial Editor Joseph Lazzaro is based in New York.
Filed under: Forecasts, Amer Intl Group (AIG), Federal Reserve, Financial Crisis
$70 million fine paid by specialists for 'trading ahead to their customers'
When you get a parking ticket you pay the fine and no one gets hurt. But on Wall Street the rules are different. If you get caught you also pay a fine, but you also cause losses to others in the process. Generally this is how it works. You, the customer, call in an order to your specialist. The phones are answered by "runners" who are just off the trading floor. They give it to the specialist who is the one who executes the order.The specialist holds all the orders for a particular security and knows how many orders there are and at what prices they must be executed.
But a "crooked" specialist is a thief. For example, he knows that a customer wants to buy a security at $10.00. Instead of immediately buying the security for the customer, he buys it for himself first. By doing this he usually can pick up an extra point or two for himself. It should be noted that most specialists can trade for their own account.This is what the specialists for Goldman Sachs(NYSE: GS) Executing and Clearing and SLK-Hull Derivatives (also owned by Goldman) did. Other parties in the settlement included Automated Trading Desk Specialists now owned by Citigroup Inc. (NYSE: C), ETraded Capital Markets, and Susquehanna Investment Services. Altogether these firms paid $70 million to settle claims against them.
Let;s hope that this small ($70 million is chump change on Wall Street) payment slows down the practice of "trading ahead of your customers."
What are your feelings on this practice?
Filed under: Market matters, Personal finance
JockStocks: A look at Nike's potential ahead of earnings
Let me make a quick editorial comment here about Nike (NYSE: NKE). This discussion isn't about the company's business practices (i.e. how and where the shoes are made) nor is it a discussion about the aesthetics of their latest creations (which I could go on and on about - FYI: my tastes are "old school"). I am conducting an examination of NKE's stock and business model (i.e. marketing and stores) -- don't shoot the messenger.The performance sport behemoth from the great Northwest has struggled mightily of late, but that hasn't stopped its spending. NKE continues to churn out new shoe after new shoe in many different colorways (color schemes) and for many different players (PEs or Player Editions). Just last night, NKE debuted its latest CP3 IIs (that is the shoe that New Orleans Hornet Chris Paul wears) . These babies will drop on March 14 and will go for a cool $118. There aren't many people that would put that kind of cash into a pair of shoes, right? Think again my friend, people are willing to pay status and disregard looks. Want proof? Here, check these out, ugly, right? How about this colorway - yeeeikes!
What if you were told that you could have these shoes for a mere $250 - $300 (rumored)? You would think I was nuts, right? Now, what if I told you that these shoes are the rage of the Internet message boards? I'm sure you would wonder why. For you answer, let's take a look at one final picture of the NKE Air Yeezy, yes, that is Kanye West wearing them, instantly lending them popularity.
I have long contended that it isn't just NKE's product that gets people to drop a great deal of cash, but it is the people that NKE signs. I remember being given a pair of original red, black, and white Air Jordans when I made my seventh-grade basketball team (they looked awesome sitting on the bench), after coveting those shoes thanks to one Michael Jeffery Jordan. Then I remember the rage of the Olympic edition shoes when the original Dream Team was playing in the Olympics - you could get red, white, and blue editions of the company's benchmark PEs (Jordans, Pippins, Barkleys, et al). These were going for $150 a pop in 1992!
Bottom line: people will pay for the name - and if it isn't the NKE name it is the player's (or singer's) name.
What about the stock? As stated earlier, it is struggling - but who isn't? One indicator I like to use is Bollinger Bands, which can tell you if a stock is oversold or overbought. In NKE's case, it is way oversold, as it has trended along the lower Bollinger Band in each of the last three months. With the stock lingering around the round-number $40 level, it could realize a bit of a support, or even a springboard.
Finally, NKE is set to report earnings on March 18 - we could see the shares bounce from better-than-expected earnings. Estimates call for NKE to report 81 cents per share for the quarter, 11 cents less than a year ago. The firm's earnings have actually come in either at or slightly above the consensus estimate of dating back to the fourth quarter of 2007. Should this trend continue, we could see the shares run higher.
Filed under: NIKE, Inc'B' (NKE)
Ann Taylor's awful earnings miss means stock is a sell
Ann Taylor (NYSE: ANN) is not the darling of Wall Street today. As I write this, the retailer's shares have lost 30% of their value. Trading volume is heavy. The company missed Wall Street's estimates by a pretty wide margin. The call, was for an adjusted loss of $0.55 per share in the fourth quarter. According to the press release, Ann Taylor lost $1.03 per share on an adjusted basis. Last year at this time, there was a profit of $0.19 per share. What a difference a year makes. By the way, if you include all the GAAP stuff in the current Q4, Ann Taylor lost an amount equal to the mark of the beast. I don't even want to write the evil number out, but it begins with a 6 if you want a hint.
You can thank the ravaging recession for the change in fortune. Sales were horrible. Net revenues plunged over 19%. And same-store sales? If you're a shareholder, get ready, because they're bad: comps declined over 24% during the quarter. And here's your big problem, as if decimated comps weren't enough: gross margin went from 48.7% in last year's Q4 to 35.7% in this year's Q4.
Simply put, Ann Taylor needs to move its inventory, so it needs to entice traffic to buy via aggressive promotions. Indeed, the consumer is reticent about paying any perceived premium these days, so retailers who aren't in a strong position in terms of very desirable merchandise are getting hit hard (hey, even if you've got the best of the fashion trends, people still don't want to pay!).
Maybe Ann Taylor will bounce back at some point, but really, should any sane individual investor be fooling around with this company? Absolutely not. The stock is not only at a 52-week low as I write this, but it's priced at below $4 per share. Retail is just so awful right now. Look at Liz Claiborne (NYSE: LIZ). That stock is below $2 per share. Target (NYSE: TGT) is at a 52-week low, Urban Outfitters (NASDAQ: URBN) is close to one. I wrote about the latter the other day. Wal-Mart (NYSE: WMT) seems to be doing okay since it raised its dividend this week, but even that move doesn't necessarily make me want to put money down to buy it in this marketplace.
So, when it comes to Ann Taylor, you're going to want to make like a Star Wars galaxy and stay far, far away from it...
Disclosure: I don't own any company mentioned; positions can change at any time.
Filed under: Earnings reports, Urban Outfitters (URBN)
What will move the Dow? A look inside the average
"What can get this market going again?" asks Chuck Carlson. In The DRIP Investor he says, "It's helpful to understand what stocks within the Dow need to do well for the index to do well."
"Not surprisingly, IBM (NYSE: IBM), the highest-priced stock in the Dow, carries the greatest weighting at more than 9% of the index. Obviously, with such a heavy weighting in the index, IBM will need to be a decent performer for the Dow to do well going forward.
"And when you total up the exposure of IBM with the other tech stocks in the Dow - Microsoft (NASDAQ: MSFT), Intel (NASDAQ: INTC), and Hewlett-Packard (NYSE: HPQ) - the total tech weighting in the Dow is 16%. Thus, tech stocks matter to the Dow, so it is diffcult to see the Dow sustaining a move upward without a nice rebound in the tech sector.
"Another important sector to the Dow is energy. Indeed, after IBM, the Dow stocks carrying the greatest weight in the index are oil giants Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX).
"Together, the two account for nearly 15% of the Dow. Obviously, a firming in oil prices and oil stocks would provide a nice boost to the Industrials.
"Interestingly, financials - the one sector receiving the most attention these days - have minimal influence in the Dow.
"When you tally up financial-related stocks in the Industrial Average - American Express (NYSE: AXP), Bank of America (NYSE: BAC), Citigroup (NYSE: C), General Electric (NYSE: GE), and J.P. Morgan Chase (NYSE: JPM) - the total weighting of these five stocks accounts for less than 6% of the Dow.
"Said differently, IBM's performance has a greater impact on the Dow than the performance of these five financial-related stocks combined.
"The minuscule exposure to financials has been a plus for the Dow's performance relative to market-cap weighted indexes. Indeed, the Dow has outperformed the S&P 500 Index over the last year, partly as a result of its modest exposure to the financials.
"Of course, that weighting in financials does present a double-edged sword of sorts for the Industrials. If you are an index investor and want to play a market rebound by owning either the S&P 500 Index or the Dow Industrials, understand that the Dow will probably lag if financials lead the next upward move.
"Conversely, if you think financials will remain in the doldrums this year, the Dow is a much better 'market' index to own.
"The last point worth mentioning is that while a lot of fuss has been made about whether to bail out the auto industry, the fate of the industry is irrelevant to the Dow. Yes, GM (NYSE: GM) is a Dow component (for now, at least).
"But its weighting in the index is only 0.2%. The bottom line is that GM could quadruple or go to zero, and that gain or loss would have virtually no impact on the Dow average."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
Filed under: General Motors (GM), Exxon Mobil (XOM), Newsletters, Citigroup Inc. (C), American Express (AXP), Bank of America (BAC), Chevron Corp (CVX), DJIA, Stocks to Buy
Who freakin' cares what GM thinks?
General Motors (NYSE: GM) reiterated today that it doesn't want to file for bankruptcy."GM has not changed its position on bankruptcy," the company said in a statement. "Restructuring the business out of court remains the best solution for GM and its constituents."
"The company firmly believes an in-court restructuring would carry with it tremendous costs and risks, the most significant being a dramatic deterioration of revenue due to lost sales."
"Dramatic deterioration in revenue"? You mean like sales falling 53%? If people were buying GM cars, then the "Don't file for bankruptcy because we'll lose customers" argument might make sense. But even then, it really doesn't because independent research has shown that a GM bankruptcy actually wouldn't make customers any less likely to buy the company's cars.
What General Motors management should do is shut up and try to cut costs and restructure the company. But to make statements complaining about the possibles conditions for receiving the government cheese that you're asking for is completely obnoxious.
Why General Motors CEO Richard Wagoner still has a job is completely beyond me but since he does, he should do us all a favor and issue this memo to his PR corps: "Shut up."
Filed under: General Motors (GM)
Closing Bell: Traders fear D.C. more than massive unemployment (GME, DNA, GM, SIRI, WFC, WFMI)
Filed under: After the bell, General Motors (GM), Sirius Satellite Radio (SIRI), Whole Foods Market (WFMI), Genentech Inc (DNA), Economic data, Wells Fargo (WFC), S and P 500, DJIA, NASDAQ
Today was one of those strange Friday sessions where you just never felt stable. Interestingly enough, the 8.1% unemployment rate ended up moving the market up briefly, but only briefly. Most of the day was spent in red numbers with a rally that brought the markets back to a flat close.
The focus is still on what is coming out of Washington D.C. and just how long and how deep this recession is going to be.
Here are today's unofficial closing bell levels:
Dow 6,626.94 +32.50 (+0.49%)
S&P 500 683.39 +0.84 (+0.12%)
Nasdaq 1,293.85 -5.74 (-0.44%)
Top Analyst Calls
Chasing Value: The safest bank in the U.S. -- Wells Fargo
Filed under: International markets, Good news, Management, Citigroup Inc. (C), JPMorgan Chase (JPM), Bank of New York (BK), Wells Fargo (WFC), Chasing Value, U.S. Bancorp (USB)
It is being reported today in the Business Journal that the safest bank in the United States is Wells Fargo & Company (NYSE: WFC).According to Global Finance, which will publish its analysis, "World's 50 Safest Banks" in its April issue, international banks dominate the rankings, which show the effects of the sub-prime mortgage meltdown and credit crisis brought on by large Wall Street players. San Francisco-based Wells Fargo is the top-rated U.S. bank at No. 21. European banks now dominate the rankings, with only four U.S. banks among the listing.
Continue reading Chasing Value: The safest bank in the U.S. -- Wells Fargo
GameStop CEO trashes Amazon's video game plans
Filed under: Competitive strategy, Amazon.com (AMZN)
Earlier this week, Amazon.com, Inc. (NASDAQ: AMZN) announced a plan to allow its customers to trade in used video games for Amazon credit.
Now GameStop (NYSE: GME) CEO Dan DeMatteo is telling Edge that this plan won't work: "I give the probability of this working at zero."
Continue reading GameStop CEO trashes Amazon's video game plans
Were the mathematicians of Wall Street a blessing or a curse?
Filed under: Financial Crisis
Everyone is trying to figure out the roots of the current financial crisis. You can trace it back to one man, Mr. Li, and a formula that was very misused by Wall Street. Let me start by telling you a story that took place some 30 years ago. I was sitting in my statistics class and the professor walked in and said, "Today we are going to learn about correlations." He explained that correlation is very simple. It is a single number that describes the degree of relationship between two variables, and that there was a formula in our book we could use. "But right now," he said " it's more important that you learn the concept that a correlation is a single number that describes the degree of relationship between two variables," he repeated, as professors often do. "Your answer will therefore always range between -1 and +1."
Continue reading Were the mathematicians of Wall Street a blessing or a curse?
Madoff scam not as big as widely reported
Filed under: Scandals
Bernard Madoff has become one of the most infamous non-violent people in the history of the world for operating the largest Ponzi scheme ever, widely quoted at something like $50 billion.
But some experts say that the number is exaggerated, and suggest that the actual figure could be less than $20 billion. Stephen Harbeck, president of the Securities Investor Protection Corp. told the Associated Press that the $50 billion figure includes fictitious returns reported to investors.
Doomsday Scenario: Rotten Apple, hedge fund lies, bad case of natural gas
Filed under: Analyst upgrades and downgrades, Bad news, Apple Inc (AAPL), Short stories, Scandals, Smartphones, Technology
Apple, Inc. (NASDAQ: AAPL) is a company with $31 per share in cash on hand that just can't get a break. Analysts have begun downgrading the stock on fears that sales of Macs and iPhones will slow. As Apple hadn't been beaten down enough, shares dove today. Sentiment on Apple is rapidly deteriorating.Meanwhile, Hedge Fund Research, a company that tracks hedge fund returns, released its February stats for how the hedgies performed. According to HFR, the hedgies beat the market soundly, losing only 0.5% in the month.
Continue reading Doomsday Scenario: Rotten Apple, hedge fund lies, bad case of natural gas
Wal-Mart blows past February same-store sales expectations
Filed under: Good news, Wal-Mart (WMT)
Wal-Mart Stores Inc. (NYSE: WMT) blew past February same-store sales expectations. In fact, it didn't just blow by them -- it doubled them. With other retailers reeling from the recession, Wal-Mart continues expanding its retail sales footprint by taking sales from money-weary consumer wallets in addition to stealing market share from the competition.
Continue reading Wal-Mart blows past February same-store sales expectations
Apple for the long play
Filed under: Apple Inc (AAPL), Bargain stocks, Stocks to Buy, Technology, Best Stocks for 2009
The recession may have a hold on stocks, but that does not mean profits have to suffer. As chaotic as things have been, a few wise moves with your portfolio could translate to victory instead of defeat.For starters, investors had every opportunity to miss much of the downside in the market by selling stocks in late September. At that time, I explained why it was okay to sell. My message was meant for those die hard buy-and-hold types that needed some encouragement to liquidate shares.
Will gold, guns, and safes protect you from Dow 1,400?
Filed under: Consumer experience, Politics, Financial Crisis
Sales of safes are booming in New York and probably around the United States. (SentrySafe is a large safe manufacturer that probably has an opportunity for an IPO if it's profitable -- its stock would represent another great "fear play.") The price of gold hit $927 an ounce this week. And stock in Smith & Wesson (NASDAQ: SWHC) is up 79% since inauguration day (despite losing $76 million in its fourth quarter).
It's beginning to feel a bit like the period after 9/11 when people went out and bought gas masks, duct tape, and the antibiotic Cipro.
Continue reading Will gold, guns, and safes protect you from Dow 1,400?
Earnings highlights: Berkshire Hathaway, Blackstone, Costco, Toll Bros. and more
Filed under: Earnings reports
Here are some highlights from this past week's earnings coverage from BloggingStocks:
- Adobe Systems Inc. (NASDAQ: ADBE) was upgraded following its Q1 release and guidance.
- America's Car-Mart Inc. (NASDAQ: CRMT) posted higher earnings in Q3 and same-store sales growth.
- AT&T Inc. (NYSE: T) was upgraded by an analysts who felt that consensus estimates are beatable.
- Berkshire Hathaway Inc. (NYSE BRK.A) suffered a big profit decline, its fifth straight quarterly decline.
- Blackstone Group (NYSE: BX) posted horrible Q4 results as the values of its portfolio shrank.
Continue reading Earnings highlights: Berkshire Hathaway, Blackstone, Costco, Toll Bros. and more
Comfort Zone Investing: Six tranquil havens in a stormy market
Filed under: Coca-Cola (KO), Exxon Mobil (XOM), International Business Machines (IBM), Johnson and Johnson (JNJ), NIKE, Inc'B' (NKE), Oracle Corp (ORCL), Comfort Zone Investing, Recession
Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.
Notice the title does not say "Safe Havens." Nothing is safe in the stock market. There are always risks with every stock. Being big doesn't mean safe. Look at WaMu, Fannie Mae, Countrywide, Freddie Mac. Very big. Very gone. And good financial statements don't always mean safe. Remember MCI. Bernie Ebbers cooked the books until they were overdone. Now he sits and tries to come up with new recipes. Only there aren't many opportunities in jail.
Continue reading Comfort Zone Investing: Six tranquil havens in a stormy market
Yahoo! close to mobile deal with Europe's Vodafone
Filed under: Deals, Products and services, Yahoo! (YHOO)
Yahoo! Inc. (NASDAQ: YHOO) newly-minted CEO Carol Bartz has been on an open-ended tear recently, admitting what is broken at the company and even admitting that she uses a competitor's mapping product instead of the one produced by the company she now leads.
That's all well and good, but real change needs to come forth at Yahoo! for the company to know what it is supposed to be doing. Bartz has 2009 to prove that change is not being talked about, but is happening.
Continue reading Yahoo! close to mobile deal with Europe's Vodafone
Stanford Financial lays off 85% of employees
Filed under: Employees, Scandals
The court-appointed receiver charged with salvaging as much value as possible for Stanford Financial investors has taken draconian steps to cut the firm's costs: 1,000 workers -- equal to about 85% of Stanford's total headcount -- have been fired, effective immediately.
In a statement, the receiver said that "After a review of the circumstances, the receiver concluded that continuing employment for these employees is not in the interest of conserving and preserving the value of the estate because there are insufficient resources to continue to compensate all present employees."
Continue reading Stanford Financial lays off 85% of employees
How much of AIG's $173 billion bailout went to European banks?
Filed under: Bank of America (BAC), Goldman Sachs Group (GS), Morgan Stanley (MS)
Do you feel good about $173 billion of your tax money helping to keep American International Group (NYSE: AIG) from going bust? If you made the decisions that put AIG at death's door you might be. But the odds are pretty good that you had absolutely nothing to do with AIG's failure and received not a penny of compensation during the time when its executives were reporting profits -- and getting millions in compensation that they're not paying back now that it's losing money.
That's one of the reasons why I was arguing on KCRW's To the Point that the U.S. ought to disclose who is getting the taxpayer money that goes to AIG. After all, they just got another $30 billion this week after reporting history's biggest quarterly loss of $61 billion. A professor on the program suggested that we should not disclose the names of the recipients because it would threaten the stability of the financial system. I thought this professor's argument was unpersuasive -- and now we'll get a chance to see who was right.
Continue reading How much of AIG's $173 billion bailout went to European banks?
Earnings highlights: AIG, HP, AutoZone, Big Lots, MBIA, TiVo and more
Filed under: Earnings reports, Hewlett-Packard (HPQ), AutoZone Inc (AZO), Amer Intl Group (AIG), Urban Outfitters (URBN), MBIA Inc (MBI)
Here are some highlights from this past week's earnings coverage from BloggingStocks:
- American International Group Inc. (NYS: AIG) posted a record loss even as it asks for more taxpayer funds.
- AnnTaylor Stores Corp. (NYSE: ANN) shares sank after it missed Q4 expectations by a wide margin.
- AutoZone Inc. (NYSE: AZO) reported strong Q2 results, sending shares upward toward its 52-week high.
- Big Lots Inc. (NYSE: BIG) shares soared after it reported better-than-expected numbers for Q4.
- Chico's FAS Inc. (NYSE: CHS) Q4 loss widened on impairment charges and severance costs.
Continue reading Earnings highlights: AIG, HP, AutoZone, Big Lots, MBIA, TiVo and more
Is Activision Blizzard in a buying mood? Should it be?
Filed under: Electronic Arts (ERTS), Activision Inc (ATVI), Technology
According to speculation in various news outlets and blogs, Activision Blizzard (NASDAQ: ATVI) may end up doing something with its huge cash position. The software publisher, most famous these days for its Guitar Hero property, has around $3 billion in its coffers. The question is, should Activision Blizzard spend its cash on an acquisition as opposed to doing other things with the money, like pay a special dividend or increase its buyback?
Considering that assets are cheap because of the recession, I'd say that a little shopping might not be such a bad idea. Here's an article that discusses the possibility of Activision Blizzard taking over Take-Two (NASDAQ: TTWO) distributor of Grand Theft Auto. Then there's the concept of buying up THQ (NASDAQ: THQI). Perhaps the company could take Mortal Kombat off the corporate hands of Midway Games.
Continue reading Is Activision Blizzard in a buying mood? Should it be?
Growth Matters: Companies that may bring the economy out of the doldrums
Filed under: Products and services, Technology
With all the gloom in the global economy, I got to wondering whether there's anything else going on in the world of business. I'm looking for growth because I think that's what will ultimately bring the economy out of the doldrums. Not surprisingly, that growth is coming from technology companies.
The fastest growing companies these days share a common trait -- they help make the lives of consumers easier and more fun. Whether it's navigating in your car, looking for fun restaurants, playing games on your mobile, arranging meetings with your friends, personalizing the reams of songs and videos aroung the Web, or planning a vacation, the fastest growers are the ones that do these things the best. So, in Growth Matters I look at consumer technology companies that point the way to growth trends.
Continue reading Growth Matters: Companies that may bring the economy out of the doldrums
Bank of England cuts rates and buys bonds
Filed under: International markets
In a startling move, the Bank of England cut interest rates to .5% and announced plans to buy 75 billion pounds of gilts (the British equivalent of the U.S. Treasury bond). Gilt prices rose sharply, especially longer term maturities.
This had the effect of changing the slope of the yield curve (longer term maturities gained ground over shorter term ones). The Bank of England initiated these moves in an effort to bring down medium- and long-term rates.
Blodget calls for Geithner's head
Filed under: Politics, Recession, Financial Crisis
Tim Geithner hasn't been Treasury Secretary for much more than a month, and already Henry Blodget is calling for his head.
Blodget writes that Geithner's ideas and personality have failed to inspire and, most importantly, he has "Refused to revisit or defend his almost certainly inaccurate view that this crisis is merely a temporary price decline caused by a lack of liquidity, rather than a collapse of a debt-driven economy. You can't cure the patient if you're treating the wrong problem."
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