Submitted By Optiondragon
From Briefing.com
Periodicals Wrap-Up for Tuesday, July 29th
WALL STREET JOURNAL: Starbucks (SBUX) said it will close over two-thirds of its 84 stores in Australia, the most severe of its foreign restructuring plans, the Wall Street Journal reported…The Wall Street Journal also reported that beginning August 1 GMAC LLC (GMA), the biggest volume auto lender in North America, will stop subsidizing car leasing in Canada. If the leasing market continues to worsen, GMAC could stop leasing in the U.S…FINANCIAL TIMES: Teva (TEVA) CEO Shlomo Yanai told the Financial Times that the company will look to form a joint venture in Japan to increase its market share in the small but fast-growing market for generic medicines…TELEGRAPH: After several private equity bidders failed to make an offer that matched the asking price, the Telegraph reported that ExxonMobil (XOM) and Shell (RDS.A) pulled the proposed $3B sale of Infineum. Sources said Apollo Management, KKR, Carlyle and BC Partners all participated in the final stages of the auction, but the lack of readily-available debt financing made it difficult for the firms to come up with a final bid that met expectations…NIKKEI: Sony (SNE) is in talks to acquire the 50% stake that it does not own in Sony BMG Music Entertainment from Bertelsman AG. Sony plans to turn Sony BMG Music Entertainment into a wholly owned subsidiary, according to the Nikkei…
Hedge funds focus on financial sector opportunities-WSJ
Hedge funds are busy raising money form investors as they eye buying opportunities in the struggling financial sector, according to the Wall Street Journal’s “Heard on the Street”. John Paulson, of Paulson & Co., for one, is planning a new fund that will invest in financial firms. If Paulson, a noted bear, is thinking that way, does that mean the bottom is near? “Everyone’s trying to raise a ‘distressed’ or ‘dislocation’ fund,” says Brad Alford of Alpha Capital Management.
Great news for the markets if one of the biggest whales on WallSt wants to reverse his trade that brought him the biggest killing ever made by one man/woman in one year with a $3.7 billion take home, shorting subprime near the top.
You can read more about him at Trader Monthly magazine online.
Deutsche Bank, surviving better than most banks, may become an acquirer-WSJ
It has fewer bad investments than most, its stock is down 35% this year, it may still face more write-downs or have to raise capital, but Deutsche Bank (DB) plans to be an acquirer in the second half of 2008, reports the Wall Street Journal. The bank expects to show a profit in the second quarter when it reports its results on Thursday.
U.K. may guarantee mortgage-backed securities-BBC
The British Treasury may use taxpayer funds to guarantee billions of pounds of the country’s mortgage-backed securities, the BBC’s business editor reports. The Treasury is considering the move after a government regulator predicted that Britain’s mortgage financing would continue to be inadequate through 2010.
Will Apple take a new look at MacBooks?-BusinessWeek
BusinessWeek suggests that investors turn their attention to “future product transition” at Apple (AAPL) rather than focusing on the health of CEO Steve Jobs. BW’s Arik Hesseldahl suggests the company will look to revamp its notebook line and believes new iterations of the MacBook Pro will be a big part of the lineup that will allow gross margins to narrow to 30% in FY09. Hesseldahl believes it is more likely that Apple will put more features on the Macs and iPod rather than cut prices on Macs, particularly because its Q4 coincides with the back-to-school season. An update to the notebook line is likely, Hesseldahl says, because the MacBook Pro is “essential the same notebook” as 2001′s PowerBook Titanium. A new, smaller machine, which may eventually include multitouch screens, could also sell for less than $800.
New Macs expected to have significant architectural changes-AppleInsider
Sources with knowledge of Apple’s (AAPL) plans for the next generation of Macs say–including three redesigned notebooks–it will not use the Montevina chipset which will be a part of Intel’s Centrino 2 mobile platform. It has been suggested that the chipset that will be used in the new Macs may not be based on Intel ttechnology. Exactly what Apple will use is not yet clear.
U.S. equities still point to a higher open
Stocks continue to look higher after yesterday’s big sell-off. The big news of course is the Merrill Lynch (MER) announcement to shore its balance sheet, and that has had a positive affect. The price of crude oil is trading lower and is now is down to about $123 a barrel. The week’s economic numbers start to kick in with a consumer confidence reading for the July, expected at 10:00am ET. Analysts are predicting a reading of 50.1.
Fording Canadian Coal Trust-FDG to sell assets to Teck Cominco-TCK
Fording Canadian Coal Trust announced that it has entered into an agreement to sell all of its assets to Teck Cominco Limited by way of a plan of arrangement, pursuant to which Fording unitholders will receive $93.76 per unit payable in a combination of $82.00 cash and 0.245 of a Teck Cominco Class B subordinate voting share per Fording unit. “We are pleased to be able to present Fording unitholders with this opportunity to realize enhanced value from their investment,” said Michael Grandin, the Chair of the Independent Committee of the Fording Trustees. It is expected that the Fording unitholder meeting to consider the Transaction will occur in late September 2008 and that the Transaction will be completed in late October 2008. The $82.00 per unit cash payment, which includes a final distribution of $3.00 per unit, and Teck Cominco Shares equate to $14.1 billion. This represents a value of $91.66 per unit or $93.76 per unit, based on the closing trading price of the Teck Cominco Shares of $40.41 and an exchange rate of $0.978/C$1.00 in each case on July 28, 2008.
My crystal ball called this one awhile back…..easy merger to see.
Mechel Steel-MTL unlikely to suffer same fate as Yukos-Reuters
Russia’s Deputy Prime Minister Shuvalov said Mechel is unlikely to suffer the same fate as Yukos.
US Steel-X reports Q2 EPS $5.65 vs. consensus of $3.91
Reports Q2 revenue $6.74B vs. consensus of $5.9B. Commenting on U. S. Steel’s outlook for the third quarter, the company said said, “We expect another excellent quarter with continued earnings improvement as price increases implemented during the second quarter and early in the third quarter are expected to improve average realized prices for each of our reportable segments.”
US Steel-X volatility Elevated; Q2 income of $954M doubles year-over-year
X is recently trading at $155 in pre-open trading, above its close of $145.33. X reported Q2 EPS of $5.65 verses consensus of $3.91. X August & September option implied volatility of 71 is above its 26-week average of 54 according to Track Data, suggesting larger price movement.
First Solar-FSLR: See potential Q2 and 2009 upside@COWN
Cowen said FSLR’s Q2 EPS could be 70c on $250M in revenues vs. the Street’s 58c/217M estimate. The firm said Malaysia 1 was making modules in April and is expected to reach full production in Q3. The analyst said if it reached 50% utilization, shipments could reach 102MW vs their 87MW estimate. The firm adds that FSLR could beat 2009 Street EPS by 25%. Shares are Outperform rated.
Sohu.com-SOHU: IPO of online business may not be best option for stock@PALI
Pali believes SOHU’s decision to IPO its online business may not be the best option for the company’s stock as investors may begin to focus on the health of each division’s operation instead of concentrating on the company as a whole. However, they maintain a Buy rating and $95 target.
National Oilwell Varco-NOV reports Q2 EPS $1.20 vs. consensus of $1.13
Reports Q2 revenue $3.32B vs. consensus of $3.20B.
Amgen-AMGN: Would continue to buy into strength@OPCO
Oppenheimer believes Amgen’s decision to raise its guidance indicates that the company does not expect problems when the FDA issues revised ESA oncology labeling. The firm also expects the company to launch denosumab next year, and they maintained their Outperform rating.
Compass Minerals-CMP: Recommend buying on weakness from Q2 miss@DBAB
Deutsche Bank notes weaker than expected Salt results more than offset a modest beat in sulfate of potash (SOP) in Q2. The firm sees substantial upside in SOP earnings and reiterates a Buy rating. Target lowered to $90 from $95.
First Solar-FSLR: Expect upside to June quarter consensus estimates@SBSH
Citigroup thinks there could be potential upside to their estimates of 69c/$234M, which are already above the consensus estimates of 58c/$217M. The firm maintains a Buy rating and $450 target into the quarter.
Energy Conversion-ENER initiated with an Outperform, target $80@FBCO
Merrill Lynch-MER: Expect sale of mortgage assets to be a catalyst@SBSH
Citigroup believes the CDO sale will be a catalyst to refocus on the earnings power of the Merrill franchise as the overhang has been removed. To reflect equity dilution and writedowns, Citigroup lowered MER’s 2008 estimate to ($8.29) from ($7.00), 2009 estimate to $3.00 from $4.40 and target to $45 from $65.
Wow my brother told me that MER sold the CDOs at $0.22 on the dollar!!! Thain is trying to clean up shop and taking a cleaver to MER’s balance sheet! I think he should have kept the Bloomberg stake, that makes money forever and is a great asset that makes money consistantly. CDO’s need to go!
MER: ‘Applaud’ capital raise and sale of CDOs@OPCO
Oppenheimer applauds MER’s capital raise and CDO sale but admits the move significantly dilutes existing shareholders. Oppenheimer believes MER shares are getting closer to fairly valued levels, but remain expensive at a premium to book value. The firm maintains an Undeperform rating.
GrafTech-GTI reports Q2 EPS 51c vs. consensus of 47c
Reports Q2 revenue $320M vs. consensus $295.86M.
Alpha Natural-ANR reports Q2 EPS 62c vs. consensus of 53c
Reports Q2 revenue $732.2M vs. consensus of $571.44M.
Under Armour-UA reports Q2 EPS 3c vs. consensus of 1c
Reports Q2 revenue $156.7M vs. consensus of $156.34M.
UA expects Q3, Q4 revenue to be “relatively similiar”
The company expects Q4 earnings will be the highest of the year.
Kaydon-KDN reports Q2 EPS 64c vs. consensus of 63c
Reports Q2 revenue $139.9M vs. consensus of $132.87M.
V initiated with a Buy, target $94@KEYB
KeyBanc said Visa’s strengths are its recurring revenue model, significant pricing power, no consumer credit risk, operating leverage, expense flexibility, and considerable free cash flow, among other reasons.
Alexion Pharma-ALXN reports Q2 EPS 20c vs. consensus of (14c)
Reports Q2 revenue $59.6M vs. consensus of $53.98M.
Alexion Pharma-ALXN sees profit in Q3, Q4 and FY08
ALXN announces 2-for-1 stock split
C: Estimate Q3 CDO writedowns of $8B following Merrill move@DBAB
Deutsche Bank notes that Merrill Lynch (MER) sold CDOs for 22c on the dollar while the current marks at Citi are 53c. The firm estimates writedowns at Citi of about $8B on its CDOs in Q3 but thinks the company can absorb much of these charges and credit costs. Shares remain Hold rated.
Patriot Coal-PCX reports Q2 EPS 22c vs. consensus of 53c
Reports Q2 revenue $339.7M vs. consensus of $324.37M. The Company reported revenues of $339.7 million, EBITDA of $41.1 million, net income of $11.8 million and earnings per share of $0.22 for the 2008 second quarter, after adjustment for the recently announced 2-for-1 stock split.
AKAM: Expect strong results with higher than expected gross margins@AMTR
Am Tech believes the company will provide in-line guidance, and the firm maintained their Buy rating, as they are optimistic about the company’s market position, technology differentiation, and execution.
First Solar-FSLR: Expect strong Q2 results, maintain Buy@AMTR
Am Tech notes that several of the company’s end markets have shown strength, and the firm believes the quick progression of the company’s new Malaysian facility bodes well for its 2H08 results. The firm does not feel strongly about trading the stock into its earnings, but the company remains one of their top solar picks over the long-term.
Jim Cramer’s “Mad Money”
After Monday’s 239-point drop in the DJIA, Cramer says there is “no relief in sight”, and again blamed the financial stocks. But Cramer noted some positive things that occurred in the market, mainly the FCC’s approval of the merger between Sirius Satellite (SIRI) and XM Satellite (XMSR), which took an unprecedented 18 months to accomplish. He then pondered why the stocks of both companies were down on the news. Cramer warned that it will still be difficult for the company to make money with three-quarters of its new subscribers coming from the now declining auto market. Cramer called the stock of Sirius nothing more a $2 lottery ticket, saying that the delay in approval of the merger has cost both companies dearly. Cramer said that as long as the company is not turning a profit, the common stock of the combined entity will continue to struggle. He strongly warned against the common stock and instead recommended going after the $550M worth of senior sub-ordinate notes being offered by XM. Cramer told viewers that, Happier days could be here again with the price of gasoline continuing to fall.” He reiterated his price target of $3.50 a gallon for gasoline and said that the stock of United Parcel Service (UPS) is one way to play cheaper gas. He has been bearish on UPS since October 2006, recommending selling the stock at $76.05 a share. Since then, shares have fallen 19%, and Cramer now says the stock is ready for a comeback. When UPS shares rebounded 4.4% after it cut guidance, that signaled to Cramer a bottom. Next, Cramer reiterated that he is in favor of the short sale rule, and advocated for not only for the rule to remain in effect, but for the protection to extend to all stocks. He noted such hard-hit stocks as Washington Mutual (WM), AIG (AIG) and National City (NCC) were left off the initial emergency protection list. MAD MAIL: Harley Davidson (HOG) great management doing everything right, and eventually it’ll be a buy. E*Trade (ETFC) he wants to see another quarter before making a recommendation. AIG (AIG) he only sees value in that name below $20 a share. SUDDEN DEATH: (Bullish) COST; (Bearish) BIDU. LIGHTNING ROUND: (Bullish) PMC; TC; VZ; POT; DCI. (Bearish) TWX; MTL.
Fast Money Position recap: First Moves- Guy likes BDX, Jeff likes long the XLF, Karen likes RIG, Pete likes going long XLF but only under $17.50.
Macke Owns (HAS), (DIS), (WMT), (ATVID), (MSFT); Adami Owns (BTU), (C), (AGU), (GS), (MSFT), (NUE); Finerman Owns (GS); Finerman’s Firm Owns (MSFT), (SUN), (TSO), (VLO); Finerman’s Firm And Finerman Own (C), (C) Leaps; Finerman’s Firm Is Short (BBT), (XLF), (IYR), (IJR), (MDY), (IWM), (SPY); Finerman’s Firm And Finerman Own (C), (C) Leaps; Najarian Owns (CSCO) Calls, (YHOO) Calls, (SKF) Calls, (WLT) Calls; Najarian Owns (TSO) And Is Short (TSO) Calls; Najarian Owns (AAPL) And (AAPL) Puts; Najarian Owns (XLF) Puts
(Important note on how to use this upgrade/downgrade list with analyst comments and news….you must parse out the factual data (Factual data is the most important) from the opinionated data and always take all analyst comments with a grain of salt. Do not follow blindly with their recommendations. Remember that technicals are the most powerful force in short term direction for stock prices due to the law of supply and demand.)
Art Cashin would like a panic bottom and thinks we haven’t got one yet, he also would like to see the market retest 1200 for a solid bottom. Art says that it is difficult to get climatic bottoms during slow summers. Financials have been leading the way and I will be watching it with strong interest as a leading indicator for the market. For my Optiondragon Leading Indicator Basket I have (UUP (following the dollar), inversely to USO (oil prices), XLF, GS (brokers), FNM). So LIB= UUP+USO+XLF+GS(brokers)+FNM. The horsemen are no longer there nor is energy (stocks) besides the price of oil. The market is weak no doubt and it better find some footing soon or we are going down a longer slope without much support.
Pick plays with a high probability of success, have focus and patience, run technicals through support and resistance, plan the trade and trade the plan. Great Luck my friend and dear readers, and HappyTrading!
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