Archive for April, 2008
Posted by: in Latest News
Filed under: Deals, Citigroup Inc. (C)
 News that financial services giant Citigroup (NYSE: C) is selling shares of common stock to raise capital is disturbing. According to a report in Bloomberg: “The company announced plans to sell $3 billion of stock to increase capital depleted by writedowns on subprime-related mortgages and bonds.”
To dilute investors even more is just plain “Chutzpah.” Shareholders over the last year or so have already lost more than 50% on their City shares; there has got to be a better way for the company to increase capital. Instead of diluting investors why not try and unlock some value for shareholders? It’s not like the company has no assets. It could spin off the credit cards division, separate domestic and global consumer banking, spin off the capital markets division, and so on. It could generate a lot more than a measly $3 billion, and actually make shareholders happy!
Commenting on the move, as reported by Bloomberg, “Super Analyst” Meredith Whitney, who basically has been correct each step of the way as the banking crisis has worsened, stated, “The fact that the company raised such a small amount of capital at this time confounds us. We believe Citi needs to raise an additional $10-$15 billion or sell several hundreds of billions worth of assets in order to truly shore up its capital position.”
It’s time for Citi to be broken up, so that investors can finally reap some rewards.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer’s fund has no position in any stock mentioned, as of 4/30/08
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Posted by: in Latest News
Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO), Employees
Two pension funds have filed suit against Yahoo! (NASDAQ: YHOO) for not getting to the bargaining table with Microsoft (NASDAQ: MSFT). Fair enough.
A look at the court papers reveals that Microsoft is considering as much as $1.5 billion in employee retention payments to keep key Yahoo! people around. According to Reuters, “The $1.5 billion figure was discussed in a communication between the general counsels of Microsoft and Yahoo.”
The news indicates two things about the Microsoft bid. One is that Redmond thinks highly enough of Yahoo!’s core work-force group that it is prepared to keep it with incentives. Many workers at Yahoo! had assumed that Microsoft would gut the portal to save money.
The other revelation is that Microsoft’s cost of buying Yahoo! is higher than the $44 billion that it has offered. Aside from the execution risk of the deal, adding $1.5 billion to the transaction price is a lot.
Microsoft is not prone to spend that money on Yahoo! staff and raise its bid at the same time.
Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 Letter.
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Posted by: in Latest News
Filed under: Before the bell, Earnings reports, Deals, Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL), General Motors (GM), AT and T (T), Alcatel-LucentADS (ALU), AMR Corp (AMR), Kraft Foods’A’ (KFT)
 Before the bell: Futures lower ahead of Fed, data; flurry of earnings on its way
General Motors Corp. (NYSE: GM) reported a staggering $3.3 billion loss in its first-quarter, due in part to a weak U.S. market, a strike at a major supplier and plummeting sales of sport utility vehicles and pickups. While the loss amounted to $5.74 per share, GM’s adjusted results are a loss of $350 million, or 62 cents per share, handily beating analysts’ expectations of a $1.60 loss per share. Still, compared to last year, when the automaker had earned $62 million, or 11 cents a share, the results are far from stellar especially when considering that GM’s revenue slipped despite being up 20% outside North America. GM shares are up about 3.5% in premarket trading.
Alcatel-Lucent (NYSE: ALU) also reported a loss Wednesday morning, its fifth straight quarterly loss and stated it expected annual revenues to fall while scaling back its market forecast for 2008. Shares of ALU are down nearly 8% in premarket trading.
According to Fortune, AT&T (NYSE: T) is planning to cut the price by as much as $200 on Apple Inc. (NASDAQ: AAPL) iPhone when the new 3G model comes out this summer. Subsidizing the phone by that much will cut the price to $199 to for customers who sign two-year contracts, the Fortune source says.
Kraft Foods Inc. (NYSE: KFT) reported a 13% profit drop in its first quarter. Without one-time items, the company earnined 44 cents per share, beating estimates of 40 cents per share. Kraft now expects 2008 revenue growth of at least 5 percent, up from an earlier estimate of 4 percent growth.
Microsoft Corp. (NASDAQ: MSFT) is mulling it next move in the three-month-old takeover standoff with Yahoo Inc. (NASDAQ: YHOO) as early as Wednesday, according to the WSJ. One option could be a proxy fight to replace Yahoo’s board.
Meanwhile, American Airlines (NYSE: AMR) dealt in the past month with picketing pilots calling for his resignation, FAA inspectors grounding 300 aircraft, the merger of two big competitors, and $110-a-barrel oil that contributed to a $328 million loss for the first quarter. Analysts estimate it is losing $3.3 million a day. More on the airline industry and the current merger mania in that AP piece.
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Posted by: in Business News
Filed under: Business, Internet, Google
 It’s been almost a year since Google acquired RSS service Feedburner or $100 million. But in that year, we’ve seen very little integration of Google services into Feedburner, or vice versa. Sure, it’s now easier to redirect your Blogspot feed to Feedburner, but that’s about it.
Now, according to the official Feedburner blog, the company is getting ready to roll out the thing we’d all kind of been expecting: Google AdSense integration. What that means is you’re probably going to start seeing much more advertising in your RSS reader.
While there are already a few ways to place ads in an RSS feed, a massive number of blogs and web sites use Feedburner to polish and publish their feeds. Being able to place ads in their feeds with just a few clicks of a button almost certainly means that many of those content publishers will be flipping the switch as soon as they have the ability to. Up until now, most web publishers viewed RSS feeds as a loss leader. You give away some of your content, ad-free, in the hopes of gaining loyal readers who will tell their friends about the site. But if you can also get a few of them to click on ads even if they rarely visit your actual web page, why wouldn’t you do it?
What do you think? Are you a web publisher looking forward to Google AdSense/Feedburner integration? Or are you a loyal blog reader preparing to unsubscribe to any feeds that start displaying ads?
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Filed under: Deals , Circuit City Stores (CC) For a company so in the dumps, there seems to be a whole lot of attention focused on Circuit City Stores, Inc. (NYSE: CC ) these days.
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Posted by: in Business News
Filed under: Business, World wide web, Web services, web 2.0
In case you hadn’t noticed, there’s been a bit of a revolt among eBay power sellers. Basically, eBay increased some fees, which led some buyers to hold a boycott. But the truth of the matter is eBay is a giant, and if you make a decent portion of your income buying and selling goods on eBay, there aren’t a ton of good alternatives. Wigix wants to change that, and the site is willing to waive fees on all items sold for less than $25 to do it. For pricier items, WIgix has significantly lower transaction fees than you’ll find on eBay.
Wigix isn’t exactly an auction like eBay. Rather, it’s an “exchange,” which lets buyers and sellers connect with one another. Sellers don’t have to fill out product descriptions manually. Instead they choose from a database of products which already have product descriptions. This database also makes the search process simple for buyers. When you begin to enter a term in the search box, Wigix will provide a list of items to chose from before you even hit enter. When you find the item you’re looking for, you can see how many buyers and sellers there are, and you can set a price at which you’re wiling to buy an item. As soon as the item is available for that price, Wigix will hook you up with a seller.
You can conduct similar transactions with eBay’s Half.com, which lets you “pre-order” an item which will automatically be bought as soon as someone offers one for sale at your desired price. But Half.com only includes books, movies, music, and video games, while Wigix users can sell pretty much anything.
[via Mashable]
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Posted by: in Business News
Filed under: Business, World wide web, Web services, Social Software, web 2.0
 Yelp lets customers write reviews of restaurants, shops, and all sorts of other businesses in communities throughout the country. And that’s the sort of service that makes the site both incredibly useful and incredibly dangerous for business owners.
Now Yelp is giving business owners tools that let them keep a closer eye on the reviews their establishment is receiving. If you sign up for a Business Owner Account, you can track how many people view your business page, update your business profile, and send messages to people who have reviewed your business. In order to get a business owner account, you’ll obviously need to verify that you actually run the business in question.
Of course, there’s no guaranty that you’ll be able to prevent people from writing that your food tastes stale or that your bathrooms are smelly unless you actual improve your food and clean your bathrooms. You know, unless those folks on the internet are lying. But that never happens.
[via TechCrunch]
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Posted by: in Latest News
Filed under: Deals, Marketing and advertising
When IHOP (NYSE: IHP) concurred acquire Applebee’s nine months ago, Applebee’s shareholders were none too pleased. Highly respected investor Sardar Biglari vocally opposed the deal, Applebee’s director Burton Sack made plans to sue, and shares of IHOP rose more than Applebee’s on the announcement — a very rare occurrence.
But now things have changed as the restaurant industry has continued to weaken and shares of IHOP have lost a good chunk of their value. Applebee’s competitors like Ruby Tuesday’s (NYSE: RT) have plunged, and the deal is looking less well timed.
The company released its first quarter results this week and the Applebee’s turnaround appears to be doing as well as could be expected given the environment — the company saw the first quarter of positive same-store sales growth in two years. However, plans to sell and lease back some of the real estate that came with the deal has been “challenged by weakening credit market conditions.” The plan to franchise more of the company-owned stores has made some progress.
In an interview with USA This day, IHOP chairman and CEO Julia A. Stewart explained her plan to revitalize Applebee’s. The paper stated that she wanted “better food, superior ads, superior atmosphere and conversion to a near-100% franchise business model from the current about 75%. She wants Applebee’s again to be the friendly, neighborhood bar and grill it was.”
Stewart might have overpaid for Applebee’s, but that happens with nearly each acquisition. In addition, the ill-timed buy pulled IHOP out of the acquisition game right before a lot of other restaurant companies got cheaper. If Stewart can’t make hay out of Applebee’s, she’ll have a lot of explaining to do.
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Posted by: in Latest News
Filed under: Deals, Launches, Viacom (VIA), Blockbuster Inc ‘A’ (BBI), Circuit City Stores (CC)
 Blockbuster (NYSE: BBI) must want to own a piece of everything. First, it made a bid for Circuit City (NYSE: CC) and now it is trying to get a piece of the new pay TV channel being launched by Viacom (NYSE: VIA).
Viacom states it will start a TV network with movies and other video content with contributions from MGM and Lions Gate (NYSE: LGF). The channel will compete with HBO and Showtime.
According to The Wall Street Journal, “As part of a deal being discussed, Blockbuster would get digital rights to the new channel’s programming in return for an investment in the partnership.”
How that makes sense is a mystery. The Viacom channel can sell DVDs though a number of outlets. Streaming content over the web does not require help from Blockbuster. How does a company with rental stores and a DVD-by-Internet operation help a pay Television channel which will be distributed by satellite and cable?
Blockbuster has problems of its own. For starters, it just needs to stay in business. Its stock trades at $2.98, near a 52-week low, and down from more than $20 less than five years ago. Putting capital into new ventures or nutty M&A transactions is a waste of shareholder money.
Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 Letter.
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