Filed under: Deals, Good news, Motorola (MOT), Options, Technical Analysis

Motorola Inc. (NYSE: MOT) shares soared at the open today, but are now trading only slightly higher after the company announced it plans to split itself into two publicly traded companies.

Under the plan, MOT’s handset business will become its own entity separate from the company’s home and networks business. The move comes after months of pressure from billionaire investor Carl Icahn, who thinks separating the handset business from other operations could help the company strengthen its mobile phone brand and bottom line. Pending regulatory approval, the company will be split in 2009. If you think that the company won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on MOT.

After hitting a one-year high of $19.68 in October, the stock hit a one-year low of $8.98 last week. MOT opened this morning at $10.30. So far this day the stock has hit a low of $9.82 and a high of $10.35. As of 10:00, MOT is trading at $9.81, up just $0.05 (0.5%), indicating that investors aren’t going crazy about this announcement. The chart for MOT looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would think about a July bull-put credit spread below the $8 range. A bull-put credit spread is an options position that combines the buy and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 12.5% return in just 4 months as long as MOT is above $8 at July expiration. Motorola would have to fall by more than 18% before we would begin to lose money.

MOT hasn’t been below $8.90 at all in the past year and has shown support around $9.30 recently. This trade could be risky if the company’s earnings (due out in late April) disappoint, but even if that happens, this position could be protected by the support the stock might find around $9, where it bottomed out over the past month.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in MOT.

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Filed under: Before the bell, Earnings reports, Analyst reports, Deals, Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX), Ford Motor (F), Motorola (MOT), Exxon Mobil (XOM), Sprint Nextel Corp (S), Comcast Cl’A’ (CMCSA), PetroChina Co Ltd ADR (PTR), Time Warner Cable (TWC), Tata Mtrs Ltd (TTM)

Before the bell: Futures decline on renewed credit concerns

With reports all over the place yesterday that Ford Motor Co. (NYSE: F) was close to a deal with Tata Motors Ltd. (NYSE: TTM), it is no surprise the deal was announced this morning with Ford selling British automakers Jaguar and Land Rover to India’s Tata for roughly $2 billion.

Comcast Corp. (NASDAQ: CMCSA) and Time Warner Cable Inc. (NYSE: TWC) are discussing a plan to fund a new wireless Internet venture that would be run by Sprint Nextel Corp. (NYSE: S) and Clearwire Corp. (NASDAQ: CLWR) and create a nationwide network using WiMax technology. This would provide faster wireless Web connection speeds for laptops and cell phones than the current networks, according to The Wall Street Journal.

Deutsche Bank (NYSE: DB) stated Wednesday that turmoil in global markets may endanger its annual profit forecast for $13.1 billion. DB stock has declined in Frankfurt trading.

Citigroup’s Mark Mahaney believes Microsoft Corp. (NASDAQ: MSFT) might increase its bid for Yahoo! Inc. (NASDAQ: YHOO) from $31 to $34 a share. The analyst believes Microsoft won’t shy away from the deal, and while there are no other bidders, Yahoo! is pursuing other strategic substitute like getting content from Time Warner (NYSE: TWX). This could entice Microsoft to up the bid. Not only that, the analyst states, but looking at other deals, a higher multiple could be argued, putting the price in the mid $30s. YHOO stock is not really reacting to this analyst note at the moment.

Exxon Mobil Corp. (NYSE: XOM) is once again the world’s biggest company by market value, overtaking PetroChina Co. (NYSE: PTR) as the latter’s shares have slumped 58% since its listing in Shanghai, reducing its market capitalization to $453.1 billion. Exxon Mobil was valued at $455.8 billion on Tuesday after rising 13% in the past year on record energy prices. Rising drilling costs squeezed profits at PTR despite $100 a barrel oil prices. To compare, PetroChina’s refineries lost $54 million a week last year while Exxon Mobil’s refining business had profit of $184 million a week in 2007. Also, PetroChina’s costs for drilling wells and building pipelines jumped 30% in 2007, compared with a 3.1% drop in such expenses at Exxon Mobil.

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Filed under: Before the bell, Earnings reports, Analyst reports, Deals, Private equity, Market matters, Citigroup Inc. (C), Clear Channel Commun (CCU), Oracle Corp (ORCL), Economic data, Oil, Housing

U.S. stock futures were lower early Wednesday morning. Just as investors started to feel the credit crisis may have seen its worse days, came yesterday’s bombshell that banks are unwilling to finance the $19 billion sale of radio broadcaster Clear Channel to private equity firms. This, of course renewed credit concerns and as investors await some economic data this morning, all indications points to U.S. markets starting on a weak note.

Yesterday, U.S. stocks completed mixed as readings on housing and consumer confidence came in weak. An upgrade of Yahoo! and several companies forecasting improved earnings caused the mixed trading day. The Dow industrials lost 16 points, or 0.13%, while the Nasdaq Composite rose 14 points, or 0.61%, and the S&P 500 added 3 points, or 0.23%.

Economic data today includes a reading at 8:30 a.m. EDT on durable goods orders for February, which is expected to have increased somewhat, after dropping the month before.
At 10:00 a.m. EDT, February new home sales is due out. It is expected the data will show yet another weakness, but to remind readers, existing home sales released earlier this week, showed the first improvement in a while.
Then, at 10:30 a.m. EDT, weekly crude inventory will be reported. Oil futures increased ahead of the report. Despite expectation supplies will show an increase, it seems investors once again purchased oil futures in wake of the dollar weakening again and economic worries predict lower demand for oil.

Overseas, Asia stock markets were blended. In Europe, despite business sentiment in Germany and France remaining resilient, stocks are seeing modest losses.

Much to report on the corporate front:
Clear Channel Communications (NYSE: CCU) stock is declining over 18% in premarket trading after closing down 5.5% Tuesday. Reports advocate that the proposed $19 billion buyout deal for the broadcaster by private equity groups Thomas H. Lee and Bain Capital Partners LLC is virtually dead mainly due to financing issues with the banks. It’s quite possible banks are unwilling to take the same risks this day, especially for a company whose business is weakening.

Oracle Corp. (NASDAQ: ORCL) is reporting earnings after the close today.Analysts on average anticipate Oracle to post earnings of 30 cents a share for its third quarter and $5.4 billion in revenue, according to FactSet Research. This is up from last year’s 25 cents a share and $4.41 billion in revenue.

Citigroup Inc. (NYSE: C) had its first-quarter loss estimate quadrupled to $1.15 a share (from an earlier estimate of 28 cents) by Oppenheimer & Co. analyst Meredith Whitney on expectations for further asset writedowns on leveraged loans and collateralized debt obligations of $13.1 billion. Whitney also cut her full-year estimate to a loss of 15 cents a share from a profit of 75 cents. Citi shares are down 2% in premarket trading.

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