Filed under: Earnings reports, General Electric (GE), Ford Motor (F), Citigroup Inc. (C), Sprint Nextel Corp (S), Fortune Brands (FO), BP p.l.c. ADS (BP), Andersons Inc (ANDE)
Here are some highlights from this past week's earnings coverage from BloggingStocks:
More highlights from this past week: Apollo Group, Family Dollar, Kroger, Deutsche Bank and others
Also, while Jim Cramer ponders what will signal the bottom, many investors will be looking at next week's earnings results for General Electric (NYSE: GE), the world's largest conglomerate, as a sign of the direction of the global market. And BusinessWeek reminds us that cheap stocks -- even with big names such as Ford Motor Co. (NYSE: F), Sprint Nextel Corp. (NYSE: S), and Northwest Airlines (NYSE: NWA) -- are no bargain if they have no earnings.
Upcoming results to watch for include Alcoa (NYSE: AA), Pepsi Bottling Group (NYSE: PBG), Marriott International (NYSE: MAR), and General Electric (NYSE: GE).
Visit AOL Money & Finance for more earnings coverage.
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Filed under: Merrill Lynch (MER)
Since early May, the share price of Merrill Lynch & Co. (NYSE: MER) has plunged, going from $52 to $31.12. Basically, various Wall Street analysts have turned negative on the company as there may be a need to seek more capital to deal with write-downs.
Of course, a strategy to deal with this is to unload some key assets. In fact, according to a piece in the New York Times, it looks like Merrill is trying to sell off its 20% stake in Bloomberg LP.
It was in the early 1980s that Merrill Lynch invested $30 million in Bloomberg. And since then, Bloomberg has become a global powerhouse in financial analytics. Currently, its community comprises about 250,000 subscribers.
As for Merrill Lynch, it looks like its negotiations are in the first stages -- such as with putting out feelers and sending out pitch books.
Yet, it's never easy to sell a minority position. After all, such a stake provides little control. Moreover, it's tough to resell the position. Keep in mind that Michael Bloomberg still owns 72% of the firm.
Plus, he has a right of first refusal on any purchase. This is a powerful tool and is likely to diminish the ultimate valuation of a possible deal. In other words, the logical buyer for the 20% stake is likely to be Michael Bloomberg himself.
Tom Taulli is the author of various books, including The Complete M&A Handbook
and The Edgar Online Guide to Decoding Financial Statements
. He also operates MergerBook.com.
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Filed under: Politics, Oil
One of the most controversial proposals for dropping the price of oil is to allow drilling in protected parklands and in restricted off-shore areas. Since there are deposits of crude and gas in these areas, it is also one of the more sure-fire ways of adding to production.
It now appears that the waters off Florida are among the most promising. According to the AP, "The early activity here stems from a 2006 Congressional compromise that allows drilling on 8.3 million acres more than 125 miles off the Panhandle."
The promise of the Florida coast is both good news and bad, depending which side of the debate one is on. A find of any real significance is likely to be proof of the fact that opening protected lands will yield results.
For the "green" crown, it could mean the the government will be encouraged to drill of near protected beaches. There may even be wells in Yellowstone.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Earnings reports, Bad news
There is something rotten in Denmark, to quote from Hamlet, Act I, as well as in Las Vegas, Louisiana, Mississippi, Colorado, Iowa, and Florida. Gambling havens, once thought recession proof, are in trouble. Customer numbers are down, as are gambling, gift shop, hotel, and restaurant revenues. Casinos in Las Vegas have been hard hit, according to a recent article in the Wall Street Journal, because of billions of dollars of debt to finance overambitious expansion plans. Tropicana Entertainment filed for Chapter 11 in May, defaulting on $2.67 billion in bank and bond debt. But smaller casinos are also feeling the pain.
Isle of Capri Casinos Inc. (NASDAQ: ISLE) recently reported 4Q and FY2008 results. Snake eyes. Investors know they are not in for good news when the CEO spends the first few paragraphs of an earnings release discussing what a "transformational period" the last year has been. That's corporate-speak for "money losing," beginning with a $78.7 million write down in the value of some of the company's international assets and ending with a $51.3 million loss from continuing operations in 4Q 2008. All told, Isle of Capri Casinos lost $96.9 million from continuing operations in FY2008.The company cited increased competition in riverboat gambling in Biloxi, a smoking ban in casinos in Colorado, and a flood in Natchez as reasons for the lackluster performance. The company admits it needs to renovate 1,200 of its hotel rooms in order to attract customers back to the slots and tables.
The stock is currently trading at $4.23, near its 52-week low of $3.97.
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Filed under: Comfort Zone Investing
Ted Allrich is the founder of The Online Investor and author of the just released 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.
There will come a point when the stock market stops going down. Hard to believe as we muck through the mire of the mortgage mess, oil spikes, and housing hardships. But it will happen. At some point the last mortgage will be written off, oil will at least stabilize, and houses will sell again. Having said that, don't expect any sharp rebound when the recovery starts. In fact, don't expect the recovery to begin any time soon.
That's because the mess we're in doesn't have a quick fix. Changing the tax laws doesn't make a mortgage payment. The federal government didn't make the mortgages, and it can't fix the bad ones. It can help, but not much. Tax laws can help promote new purchases, but the mortgage crisis is huge, much larger than anyone could have imagined a year ago. There were more subprime loans made than initially estimated. But remember that it's not only subprime loans that are contributing. There are also regular loans that are defaulting as unemployment increases.
Continue reading Comfort Zone Investing: Keep your recovery expectations real
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Filed under: Time Warner (TWX), Walt Disney (DIS), Viacom (VIA), News Corp'B' (NWS)
Have you checked News Corp.'s (NYSE: NWS) stock price lately? It's pretty close to the 52-week low. Last Thursday, before the Fourth of July holiday began, News Corp.'s shares closed at $14.76. The 52-week low is $14.58, and the 52-week high is $24.95. As can be seen, it's had quite a fall. And what about competitor Viacom (NYSE: VIA)? The company's stock closed on Thursday with a price of $29.70. That was, in fact, the 52-week low. The 52-week high for Viacom is $44.95. Again, a pretty big dive.
Is it time to enter these two names? From a valuation perspective, considering their growth prospects, the stock prices do make one pause for consideration. They seem cheaper than colleagues Disney (NYSE: DIS) and Time Warner (NYSE: TWX) from certain angles, although the latter two media businesses do have higher dividend yields. But with the big decline in the stock prices, traders certainly have to be looking at them as perhaps candidates for a bounce-back in the second half of the year, especially if the oil situation improves.
I think that's the big problem here. With oil and financials acting in negative ways for the economy, the entire market is one huge growling bear in a bad mood. And that has made me very reticent about initiating a trading position in either News Corp. or Viacom, though I really, really am interested in doing so. I think value trades like this might very well simply be tests of patience at this point. I sense that both these stocks will be higher by the end of the year, but so what? These stocks will probably merely move along with the rest of the major averages, and that movement could be in the downward direction. And News Corp. has been having issues with MySpace.
Continue reading Are News Corp. and Viacom cheap?
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Filed under: Earnings reports, Bad news
Anybody who does much in the way of graphics or design knows Corel Corp. (NASDAQ: CREL) and its products -- Corel DRAW and Corel Paint Shop. No question they are good products. But that does not mask the fact that 2Q 2008 numbers do paint paint a pretty picture. Interim CEO Kris Hagerman states that "Corel performed well in the second quarter." Given that revenues were up less than 3% and GAAP net income, another word for earnings, dropped 60% to $930,000, what would qualify in Hagerman's book as a bad quarter? It isn't necessarily how much a company makes that is most important, it is how much of that amount it gets to keep.
EBITDA is heading south and Hagerman admits the company needs to pursue "opportunities in faster growing markets." The company issued 3Q 2008 guidance of GAAP earnings per share of zero to $0.06, in line with 2Q results. Time for senior management to paint a prettier picture.
Shares closed Friday at $10.75. The stock is up about 4% year to date.
See also: What's going on with the Corel buyout?
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Filed under: Private equity, Clear Channel Commun (CCU), Canada, SLM Corp (SLM)
This week, we've seen two major buyout deals come undone: the $6.1 transaction for Penn National Gaming Inc. (NASDAQ: PENN) and TPG's play for Bradford & Bingley. In fact, according to FactSet Research, about 20% of leveraged buyouts (LBOs) since mid-2007 have been terminated.
Despite all this, some deals are getting done. Perhaps the most notable is the BCE (NYSE: BCE) LBO. BCE has reached an agreement with its private equity sponsors and banks to close its $51 billion LBO. This will represent the biggest buyout in history.
Now, there are some wrinkles. The closing date will be extended to December and there will not be any dividend payments for the rest of the year. The break-up fee was also upped from $1 billion to $1.2 billion.
Yet, the fact is that the price tag will remain unchanged (at $42 per share). No doubt, this is a big feat, especially in light of the credit crunch.
Apparently, there was much discussion about renegotiating the price. Then again, the prospects of massive litigation were daunting, as we have seen in a variety of other deals such as with Clear Channel, SLM (NYSE: SLM) and Huntsman Corp. (NYSE: HUN).
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.
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Filed under: Private equity
While there were challenges, it looked like Texas Pacific Group would snag a 23% equity stake in Bradford & Bingley PLC, a UK mortgage company. True, the deal was highly dilutive, but at the same time, B&B has been suffering from the credit crunch.
Now, TPG has walked away and instead, a syndicate of investors has rounded up $793 million to bolster B&B. Apparently, the company will need to raise even more capital.
Why? Basically, Moody's Investors Service downgraded the debt of B&B because of rising mortgage delinquencies and continued balance sheet problems. As a result, the economics of the deal changed significantly. In fact, TPG had negotiated an "out" clause for such a scenario.
Actually, the deal implosion points to the fact that the credit crunch is global. It even appears that things may be getting worse, especially in Europe, where there may be a need for many more capital infusions for the financial services sector.
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.
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Filed under: Walt Disney (DIS), Sony Corp ADR (SNE), Film, Marvel Entertainment (MVL)
It's the Fourth of July weekend, and movie studios want to capture as much money for their films as possible, even if they've already been in the theaters for several weeks. No matter what, though, Sony (NYSE: SNE)'s Hancock, starring the always excellent Will Smith, is set to be the financial superhero of the weekend. Already, as of this writing, the film has taken in about $24 million through Wednesday, according to Boxofficemojo. The movie had some showings on Tuesday before its official debut in the middle of the week. It was number one on Wednesday, followed by Disney (NYSE: DIS)'s Wall-E. The robot flick so far has a total tally of around $86 million.
Poor Marvel (NYSE: MVL) and its The Incredible Hulk project. Will anybody be interested in seeing the big green guy now that Hancock is in the marketplace? Indeed, Hulk took in less than a million bucks on Wednesday, and it ranked number seven for that day. Looks like the Hulk fever is winding down at the multiplex, and it looks like Marvel's stock has had its run for the time being. The stock closed on Thursday at $31.20, well away from the 52-week high of $37.41. I still hold Marvel shares, and although there are no big catalysts on the immediate horizon, I have a long-term outlook on the company. Still, the trader in me wishes that I had lightened up on the position back at the $37 level to book some gains.
Hancock should do well north of $100 million once the Fourth of July holiday period has passed. The marketing, in my opinion, is very compelling, and from what I know about the story, it's a smart idea that provides a nice balance to the frivolous plots of Iron Man and Hulk (I'm using the term "frivolous" here with affection). Sony's scored a hit, maybe even a new franchise (I haven't seen the film, so I can't say if a sequel is feasible or not within the confines of the concept), but it won't do much to move the company's stock. Those looking to play the Hollywood game might want to wait for Marvel to pull back further from current levels.
Disclosure: I own Disney and Marvel; positions can change at any time.
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