Filed under: Business, World wide web

You’re all intelligent people, so we probably don’t have to tell you that your boss (or at least that guy in the IT department who always gives you the stink eye) not only can, but probably does keep track of your web browsing habits. While you might think that means you should just avoid job hunting sites and web pages you wouldn’t want your mother to see you looking at, a recent New York court case upholds your boss’s right to fire you for just spending too much time dawdling on sites that have nothing to do with your job.

In this case, an employee of the New York City school district was fired in 2006 for spending too much time checking out travel web sites like Lonely Planet, China Advisor, and Escape Artists. Apparently the guy was warned, and a few days later his boss had taken a look at some 300 web sites he had visited anyway.

The specifics might not apply wherever you are. But the message is pretty clear: find a way to anonymize your web surfing. Or umm, refrain from mixing business and pleasure.

[via Gothamist]

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Filed under: Deals, Management, Rants and raves, JPMorgan Chase (JPM), Serious Money, Headline news, Bear Stearns Cos (BSC)

For me, I just find it unfathomable that management would either bet the farm on some very high risk investments, or equally bad bet the farm on investments they didn’t fully understand. This is such an extreme case of mismanagement that investors the world over can not believe it was possible. As a matter of fact it seems so impossible that it is probably what kept many of us faithfully invested. Many of us take investment risks, some more than others, but to bet the whole farm? To bet your future existence? This is financial insanity.

Is this just a case of greed causing blindness? If so why was it so contagious among some firms and not others?

It seems to me that the reported $2 per share buy price that JP Morgan Chase (NYSE: JPM) is paying for Bear Stearns (NYSE: BSC) would not have been enough to purchase the brand name last year, never mind the whole company. What we are witnessing is the strong (until JPM reports some surprise) taking advantage of the weak. It also exemplifies how bad the market is, that no other buyer has stepped in at these fire sale prices.

I also do not understand why management was so slow to act over the course of the last year as the picture became more clear as to how bad things were getting in the credit markets. Perhaps they were in denial. Do we give them the benefit of the doubt as to why they kept telling the market they did not have a liquidity problem until last Friday morning when we all woke up to hear they did? Did they actually believe all the trash they were telling us?

It looks like the strong will become even stronger after the market shake-out —or even more appropriately, the market shake-down. We should not forget that the assets that Chase is buying are impaired now, but likely will be worth some number of billions of dollars more as the credit and liquidity problems work themselves out over the next few years.

Although this might make JP Morgan Chase look like a good purchase right now, since the stock is down and there is so much possible potential, we all have thought this about other institutions, including Bear Stearns, only to watch things fall apart as we’re taken by surprise, as new disclosures of mismanagement and untimely decisions are made public.

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture and planning firm. He writes Chasing Value and Serious Money columns. Disclosure: I’m a shareholder in BSC.

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Filed under: Deals, Good news, Press releases, Industry, Competitive strategy

An International Paper (NYSE: IP) press release announced today that the company is intending to buy the Containerboard, Packaging and Recycling (CBPR) businesses of Weyerhaeuser (NYSE:WY)for $6 billion in cash. The deal is expected to close in Q3 2008, subject to regulatory approval and financing.

Due to the realization of tax benefits based upon International Papers purchase of Weyerhaeuser assets rather than stock, IP shall realize tax benefits in the amount of approximately $1.4 billion, making the actual purchase price closer to $4.6 billion.

International Paper Chairman and Chief Executive Officer John Faraci is quoted in the press release as stating: “This deal represents a compelling opportunity for International Paper and our share owners at a very attractive valuation… integrating Weyerhaeuser’s CBPR business into our North American packaging platform fits very well with our strategy to improve our earnings, cash flow and returns by strengthening existing businesses. We expect the combined packaging business will generate stronger cash flow and higher EBITDA margins than either standalone business.”

Although International Paper sees considerable upside potential in this acquisition, as of this writing, shares of International Paper have lost almost 8.5 percent on the day. This might signal a good near term opportunity to buy into company shares when considering that the company indicates this deal holds income increase potential of as much as $400 million annually. The company sees this acquisition improving profitability over a three year period of assimilation, with approximately 40% of that improvement to be realized within the first 12 months of closing the deal.

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Filed under: Deals, JPMorgan Chase (JPM), Bear Stearns Cos (BSC)

Shares of Bear Stearns (NYSE: BSC) are currently trading at around $3.75, a premium of more than 85% to the recently announced deal for the firm to be acquired by JPMorgan Chase (NYSE: JPM) for $2 per share.

A few things come to mind. First, as recently as last week, CEO Alan Schwartz was essentially telling the market that there wasn’t no darn iceberg, that if there was, he would have steered the ship clear of it, and that if they’d hit an iceberg, everything would have been fine: “Bear Stearns’ balance sheet, liquidity and capital remain strong,” he stated in a statement.

How could things have deteriorated so swiftly that a takeover offer at less than 5% of the market price at the time of that statement was compelling? It seems likely that Bear Stearns’s financial statement are totally unreliable at this point, leading me to this conclusion: Nobody knows nothing, and buying Bear Stearns here is mindless speculation based on nothing . And speculation that someone else will come along and pay 85% more than the Fed-backed bailout that the company’s board has already set up, is all that is — speculation — and I wouldn’t bet on it.

That’s not a game I’d want to be playing — there’s just not enough information here for intelligent investing. I’d stay the hell away from Bear Stearns.

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Filed under: Deals, Consumer experience, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)

Google (NASDAQ: GOOG) is hardly prone to benefit from a Microsoft (NASDAQ: MSFT) buyout of Yahoo! (NASDAQ: YHOO). Having a more massive competitor with a more massive piece of the search market hardly does it any good. The “merger” of the two companies also creates that largest display ad company in the world.

But, display advertising is not a fast-growing business. Google’s search operation is, and it will continue to have , more than 60% of the market in the US.

Perhaps because its share price is down so much, Google has begun kicking about the proposed marriage. According to Reuters, Google CEO Eric Schmidt stated, “We would hope that anything they did would be consistent with the openness of the World wide web, but I doubt it would be.” The search company is probably trying to hint that Microsoft would “use” the new company to promote its software agenda to the detriment of consumers who simply want to use the internet for information and entertainment.

It may be a reasonable argument to get regulators to look hard at the potential deal, but Microsoft isn’t that stupid. It is very prone to understand that pushing its products to users and hurting access to the normal experience of getting everything from sports scores to news about Madonna won’t fly.

Google can hardly talk. It pushes its Google Apps software, its e-mail and mapping products to people who come to the site to use its search features. None of the huge internet sites is “pure”. They do have to make money.

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

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Filed under: Deals, Bad news, Citigroup Inc. (C), JPMorgan Chase (JPM), Sprint Nextel Corp (S), Merrill Lynch (MER), Technical Analysis, Bear Stearns Cos (BSC), Stocks to Purchase, Stocks to Sell, Recession

Lots of massive important news out lately, but I’m not doing anything differently. Nor will I ever. Because I’ve matured enough over the past decade to sit, wait and strike only when I see all the variables aligned. And that time still is not upon us. By buying The Bear Stearns Companies Inc. (NYSE: BSC), JPMorgan Chase & Co. (NYSE: JPM) may or might not be getting a great deal, but I’m not smart, well-informed or interested enough to really care because there are still too many conflicting variables. I only care for ideal trading opportunities, of which there are none (for my style of trading).

Since January, I’ve been calling for a 10%+ market drop and warning about a potential disaster not because I’m psychic, but thanks to archaic industry regulations limiting transparency, for industry outsiders, there’s really no way how deeply troubled these financial firms are. Judging by Bear’s buyout price of $2, even well-informed industry insiders are scared to pay too much to take on such risk.

So, just as when I featured them last week, perfectly downtrending stocks like Sprint Nextel Corporation (NYSE: S), Citigroup Inc. (NYSE: C) and Merrill Lynch & Co. Inc. (NYSE: MER) will probably continue downtrending, only more steeply this week around.

And, the perfectly uptrending stocks like Quicksilver Resources Inc (NYSE: KWK), streetTRACKS Gold Trust (NYSE: GLD) and United Says Oil Fund (AMEX: USO) will similarly continue uptrending, if more steeply.

No, this is not magic or voo doo, it’s just basic trend following. Maybe that’s why trend following hedge funds and traders are all raking it in right now. Maybe that’s why you need to take up chart reading, to which I have devoted my entire mind, body and soul.

I leave you with one radical thought: trust no one and no company and focus on your investments’ charts.

Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund

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Filed under: Before the bell, Deals, Bad news, JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Lehman Br Holdings (LEH), Bear Stearns Cos (BSC)

I’ve friends who work at Bear Stearns (NYSE: BSC) and one of them in a very senior capacity. Believe me, they’re not laughing and this is actually quite a sad moment for them and their colleagues. Bear Stearns had an 85-year history having come through the Great Depression and several recessions. Bear was a proud trading house and took great pride in its trading prowess. Sure, the naysayers will argue that Bear bit off more than it could chew and that Bear was a greedy Wall Street firm. But there’s more to the story and it should be told.

Bear Stearns was the second-largest packager of mortgage backed securities only surpassed by Lehman Brothers (NYSE: LEH). As we saw these past couple of years, the quality scale on mortgage-backed securities slid down to lousy, risky sub-prime mortgages. But keep in mind that the $400 billion worth of securities that Bear Stearns underwrote and managed weren’t all lousy credit risks. The biggest part, more than $300 billion worth were of the highest quality. Bear Stearns facilitated a market that needed facilitating!

In the old days, only major banks underwrote mortgages and they typically kept and serviced the loans. But as the American population and economy expanded these past 20 years, mortgage companies were formed and needed to “sell the loans off” as they didn’t possess the capital base of state a Bank of America (NYSE: BAC) or a Wells Fargo (NYSE: WFC). Firms like Bear Stearns became adept at packaging these loans and re-selling them to major pension funds and hedge funds globally.

The problem ensued when credit requirements and quality went to lower levels — sub-prime. Borrowers were scrambling to get in on the real estate ladder as homeowners bought the song and dance that home values were poised to run up 25%+ per year. Don’t worry about the mortgage payment — in fact here is a teaser rate to get you going.

Bear Stearns will provide the pundits with a lot of stories as we all start to question what happened? And what happened in just 2 short days. JP Morgan (NYSE: JPM) has picked off for an absolute song 85 years worth of expertise and relationships in many profitable investment banking businesses — except mortgage underwriting and packaging. To think JP Morgan is paying for Bear Stearns what Bear Stearns use to make in one month’s profit.

Georges Yared writes about great growth stocks this day in Game On Investing

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Filed under: Before the bell, Major movement, International markets, Deals, Market matters, JPMorgan Chase (JPM), Economic data, Commodities, Oil, Bear Stearns Cos (BSC), Federal Reserve

Looks like it’s going to be hideous out there this day according to global markets and U.S. stock futures. The Dow Jones Industrial Average futures are down about 200 points (two and half hours before the markets open). A fire sale of Bear Stearns to JP Morgan caused a chain reaction all over with the Federal Reserve taking emergency action and slicing the discount rate by a quarter point.

Already on Friday U.S. markets have reacted to news that Bear Stearns required assistance from JP Morgan Chase and the New York Fed. The Dow industrials fell 194 points, or 1.6%, the S&P 500 lost 27 points, or 2.08%, and the Nasdaq Composite dropped 51 points, 2.26%.

When a deal was finally struck Sunday, the magnitude of the credit crisis and its potential dangers have become more apparent. JPMorgan Chase & Co. (NYSE: JPM) has purchased its once biggest rival on Wall Street, Bear Stearns Cos (NYSE: BSC) “for the shockingly low price of $2 per share, or $236.2 million,” as the AP put it. Bear Stearns shares dropped over 47% on Friday to close at $30 per share. They’re now plummeting over 86% to $4.10 and will likely decline further. With analysts saying that the broker’s headquarter alone was worth over a $1 billion, the losses Bear Stearns might have must be staggering.
And indeed, investors will want to know how much Bear Stearns bet on mortgage-backed investments and what was its financial situation as a result, hoping to get better insight into the credit crisis caused by the subprime meltdown.

The reactions didn’t come fast enough. Despite meeting Tuesday, the Federal Reserve cut the discount rate, the rate that applies only to the short-term loans that financial institutions get directly from the Federal Reserve, by a quarter point to 3.25%. The key rate remains unchanged at 3%, but most anticipate the Fed to lower it by at least half a percentage point when the FOMC meets Tuesday.

But that didn’t alleviate the feelings of concerns about the financial markets and global stocks plunged Monday. In Asia stocks tumbled with Japan’s benchmark 225 index sinking 3.7% to shut at 11,787.51 points, its lowest in more than 2 1/2 years. Hong Kong’s Hang Seng index fell 5.2%. Meanwhile in Europe, the French CAC 40 and London’s FTSE 100 both dropped some 2.4%, while German’s DAX declined 3.2%.

And of course, the “usual suspects” kept the trends set the past while: The dollar continued its free fall, declining to a record low against the euro and to its lowest level in 12 1/2 years against the yen, oil prices jumped to an all-time trading high near $112 a barrel and gold soared above the $1,000 an ounce mark once again.

Also this day there are several economic reports starting at 8:30 a.m. with March New York area manufacturing activity. Then, later, current account data for the fourth quarter is due. Industrial production and utilization for February will also be released this day.

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