Filed under: Earnings reports, Deals, Ford Motor (F), General Motors (GM)

Ford Motor Co. (NYSE: F) Chief Executive Alan Mullaly has a friend in cantankerous billionaire Kirk Kerkorian.

Kerkorian, who was Chrysler’s largest shareholder before the company was acquired by Daimler, is snapping up shares in the automaker, which recently posted an unexpected $100 million first quarter profit. Kerkorian’s Tracinda Corp. owns a 4.7% position in Ford and plans to offer to purchase as much as 20 million shares at a 13% premium to Friday’s close, according to The Wall Street Journal (subscription required).

“Tracinda has been following Ford closely since the company released its fourth quarter 2007 results which indicated that Ford’s management was starting to achieve highly meaningful traction in its turnaround efforts,” the company stated in a statement. “Last week this was reinforced by Ford’s first quarter 2008 results, achieved despite the difficult U.S. economic environment. Tracinda believes that Ford management under the leadership of Chief Executive Officer Alan Mulally will continue to show significant improvements in its results going forward.”

At least that’s how Kerkorian feels now.

In 2000, Kerkorian opposed the merger of Daimler and Chrysler, which at the time was heralded a triumph of trans Atlantic deal-making. Last year, he made a $4.5 billion bid to purchase Chrysler from DaimlerChrysler that was rejected. Kerkorian also tried to take over General Motors Co. (NYSE: GM) in 2005.

For now, Ford management is putting a positive spin on Kerkorian’s move, saying it welcomes “confidence in Ford and the progress we are making on our transformation plan.” The company’s shares also are soaring in pre-market trading.

Privately, they must be wondering what the 90-year-old is up to. It’s difficult to believe that he’s going to remain on the sidelines and count his money.

Share This

Share This

Filed under: Deals, Ford Motor (F), Options

Ford (NYSE: F) is recently trading at $8.23 in pre-open trading, above its close of $7.50.

Tracinda Corporation announced it intends to make a cash tender offer for up to 20 million shares of common stock of F at a price of $8.50. Tracinda currently owns 100 million shares of F, representing approximately 4.7% of the outstanding shares.

F Might option implied volatility of 61 is above its 26-week average of 54 according to Track Data, suggesting more massive price movement.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Share This

Share This

Filed under: Deals, Industry, Berkshire Hathaway (BRK.A), Wrigley, (Wm) Jr (WWY)

Why it makes sense to merge two big candy companies is a mystery. Nonetheless, Berkshire Hathaway (NYSE: BRK.A) and privately held Mars plan to spend $22 billion to purchase gum company Wrigley (NYSE: WWY).

According to The Wall Street Journal, “Terms of the deal weren’t immediately clear, but Wrigley has a stock market value of about $17.3 billion and it appeared that the buyers were prepared to offer a rich premium.”

Wrigley does well outside the US while Mars does well in the domestic market.

What exactly Buffett and Mars get is unclear. The buyout would be at a price near the company’s two-year high. The gum company’s profits and revenue have been steadily rising, but it is not a spectacular growth business.

There would not appear to be a lot of redundant costs between the two firms. One makes mostly chocolate and the other, gum. It is questionable that they can benefit from one aother’s distribution networks. Both brands are widely available in the US and overseas.

Warren Buffett usually does well with his investments. How this one will work out is difficult to divine.

Douglas A. McIntyre is an editor at 247wallst.com and writes Ten Stocks Under $10.

Share This

Share This

Filed under: Before the bell, Earnings reports, Deals, Launches, Consumer experience, Competitive strategy, Google (GOOG), Apple Inc (AAPL), Ford Motor (F), IAC/InterActiveCorp (IACI), Verizon Communications (VZ), Harley-Davidson (HOG)

Before the bell: Futures higher following deal news; investors await Fed move

Kirk Kerkorian’s Tracinda Corp. is planning to offer $8.50 per share for up to 20 million shares of Ford Motor Co. (NYSE: F), a 13.3% premium over Friday’s close. Tracinda now owns 100 million Ford shares, or 4.7% of the outstanding stock, which would increase to 5.6% when the offer is finished. Ford shares climbed over 6.5% in premarket trading. The deal, announced recently, is helping stock futures’ upward movement.

Verizon Communications Inc. (NYSE: VZ) reported a 9.8% rise in its first-quarter earnings as its wireless division attracted more customers than other carriers. Excluding items, earnings were 61 cents per shares, inline with estimates. Revenue rose 5.5% to $23.8 billion, also inline with estimates. VZ shares are up 1.9% in premarket trading.

According to The New York Post, Barry Diller and Liberty Media (NASDAQ: LINTA) Chairman John Malone are continuing to talk about “a deal that would trade one or more of IAC Interactive (NASDAQ: IACI)’s assets for Liberty’s ownership stake in IAC.” Diller is also “expected to meet with his board this week to restart the process of breaking up his company into five separate pieces.”

Visa Inc. (NYSE: V) shares are up almost 2% in premarket trading as the world’s largest credit-card processor is expected to post quarterly results late in the day and report strong profits for the second quarter.

Harley-Davidson, Inc. (NYSE: HOG) raised the quarterly dividend 10% to 33 cents a share, payable June 20 to holders of record June 5.

The New York Times reports that Google Inc. (NASDAQ: GOOG) researchers “have a software technology intended to do for digital images on the Web what the company’s original PageRank software did for searches of Web pages.” VisualRank is an algorithm that blends “image-recognition software methods with techniques for weighting and ranking images that look most similar.”

And the latest on the 3G iPhone Apple Inc. (NASDAQ: AAPL) is expected to launch soon comes from a company, Foxconn Electronics (Hon Hai Precision Industry), which has reportedly landed orders for the assembly of the much talked about iPhone. Shipments, it is said, are to start in June this year, for three million units, but total shipment is expected to be 24-25 million units throughout its life-cycle. Foxconn is currently the sole manufacturer of first-generation iPhones.

Share This

Share This

Filed under: Before the bell, Earnings reports, Deals, Microsoft (MSFT), Yahoo! (YHOO), Berkshire Hathaway (BRK.A), Market matters, Wrigley, (Wm) Jr (WWY), Verizon Communications (VZ), Contl Airlines’B’ (CAL), UAL Corp (UAUA), Tyson Foods’A’ (TSN), Economic data, Federal Reserve

Stock futures got a boost this morning from a possible $22 billion deal as Buffett’s Berkshire and Mars think about buying Wrigley. Also in on investors’ mind is this week’s Federal Reserve meeting and rate decision as well as oil nearing $120 a barrel again.

U.S. stocks completed mixed on Friday, with the Dow industrials rising 42 points, or 0.33%, and the S&P 500 up 9 points, or 0.65%. The Nasdaq composite, however, found itself in the red following a cautious outlook from Microsoft the day before, and finished the day down almost 6 points, or 0.25%.

Without much economic news this day, investors will focus on the Federal Reserve Open Market Committee two-day meeting starting Tuesday. On Wednesday, Fed chairman Bernanke will announce the policy decided and most economist expect a quarter point rate cut, but also for the Fed to stop the cuts after that as inflationary pressures have been rising.

Also, attention will be on oil prices, which once again hit an all-time high of $119.93 a barrel Monday. A refinery strike closed a pipeline system that delivers a third of Britain’s North Sea oil to refineries in the U.K. as well as supply outages in Nigeria have caused oil to climb again despite the strengthening dollar.

Another big new item this morning, and one that helped boost sentiment is that of Mars and Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) nearing a deal to purchase chewing gum giant Wm. Wrigley Jr. (NYSE: WWY) for more than $22 billion, according to The Wall Street Journal and The New York Times. Wrigley, which has a market capitalization value of roughly $13.6 billion, is seeing its shares climbing over 23% in premarket trading.

Still in deal news, Microsoft (NASDAQ: MSFT) and Yahoo! (NASDAQ: YHOO). The deadline the software giant gave the internet portal passed on Saturday. As there was no announcement from either side, this leaves Microsoft with two choices, walk away from the deal or engage in a huge hostile takeover battle.

And one more item in deal news concerns Continental Airlines Inc. (NYSE: CAL), which said late Sunday it would not be part of any merger in the near future. Many who have speculated the airline could join forces with United Airlines (NASDAQ: UAUA) were surprised. Shares of CAL are down over 5% in premarket trading.

And it’s earnings season with Verizon (NYSE: VZ) and Tyson Foods (NYSE: TSN) reporting today.

Share This

Share This

Filed under: Deals, Consumer experience, Competitive strategy, Contl Airlines’B’ (CAL), Oil, Delta Air Lines (DAL)

While Northwest (NYSE:NWA) and Delta (NYSE:DAL) have decided to merge, Continental (NYSE:CAL) will take the road in the other direction by electing to stay independent.

According to The Wall Street Journal “Continental’s statement comes as the industry faces soaring fuel prices.” The trouble is that whether airlines merge or not, crude oil prices continue to rise.

Continental has probably made a wise decision. There is no guarantee that the marriage of NWA and DAL will help either company. Mergers mean lay-offs and that often means strikes. If there are labor walk-outs the new carrier could face weeks of being unable to fly and unable to collect revenue. Merged reservation systems can also take months to integrate.

Continental will be on its own, but if fuel continues it sharp ascent, it won’t matter.

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

Share This

Share This

Filed under: Deals, Blockbuster Inc ‘A’ (BBI), Circuit City Stores (CC)

It’s simple to understand why Blockbuster’s (NYSE: BBI) out-of-nowhere bid for Circuit City (NYSE: CC) has been greeted with such skepticism: it’s one of the most patently moronic business stories in current months. And given the subprime mess, that’s saying a lot.

The New York Times quotes a number of analysts, all of whom expressed substantial skepticism about the Circuit City deal. Most just don’t see the point. Some worry that such a huge deal will distract Blockbuster management from the task of restructuring its struggling core business.

Lehman Brothers analyst Douglas Anmuth has a creative take on it, pointing out that Netflix (NASDAQ: NFLX) could be the ultimate beneficiary of the deal: “The extensive use of both financial and management resources by Blockbuster throughout this process could be positive for Netflix as Netflix continues to focus on growing its subscriber base.”

I’m not so sure about that, but I would look at it this way: how confident can Blockbuster be about its future as a stand-alone company if it’s trying to pour its resources into such a bizarre acquisition?

Carl Icahn has said he is willing to step in as the financier of last resort if no one else will finance the deal, which seems like a good bet. Given the status of the credit markets, I can’t see any bank rushing in to finance this universally maligned deal.

But questions remain about Icahn’s offer. What are the terms? The publicly available details are vague.

Whether the deal will get done is anyone’s guess. I’ll leave Circuit City to the arbitrageurs, but I’d stay away from Blockbuster. This drunken-sailor grabbing the arm of another drunken sailor bid looks desperate — and may indicate that Blockbuster’s management is far less confident about its future with or without Circuit City than it’s been letting on.

Share This

Share This

Career Guide for Job Searches - US News Money and Business

News: Business, Financial and Investing News - MSN Money

News Flash: Money Does Purchase Happiness

FCIC - Home Page

Lawyers Trust in Britney's Money - Yahoo! News

ThePittsburghChannel.com - Money

Money Speaks with Stacy Johnson - News That Pays - Personal Finance

Cash Money Millionaires | Music Artist, Videos, Pics, News …

Business News - Your Money - New York Times

Money - from TBO.com

News, Travel, Weather, Entertainment, Sports, Technology, U.S. …

Anchorage Business - Alaska Oil, Alaska Gas Pipeline, Alaska Gold …

Share This

Share This

Industry Moves: WSJ; Fortune-Money; TargetSpot; US News …

Money & Business - NY Daily News

Business, financial, personal finance news - CNNMoney

Investing: Stock Quotes, Charts & Market News - MSN Money

Money News

First Coast News - Money - Business and Consumer News

Rhode Island business | projo.com | The Providence Journal Rhode …

News, Travel, Weather, Entertainment, Sports, Technology, U.S. …

RIAA anti-P2P campaign a real money pit, according to testimony

News: Business, Financial and Investing News - MSN Money

NOLA.com: From the Times-Picayune

Your Money: Personal finance news from the Chicago Tribune …

Pensions & Investments - The international newspaper of money …

Share This

Share This

Filed under: Deals, Marketing and advertising, Private equity, New York Times’A’ (NYT), News Corp’B’ (NWS)

Fortune and BusinessWeek are piling on the story of Harbinger Capital Partners, a $19 billion hedge fund, seeking to take over the New York Times (NYSE: NYT). Harbinger now owns 19% of its Class A shares. Of course, Harbinger is not the only threat to management of the Times — News Corp.’s (NYSE: NWS) Rupert Murdoch is doing his part as well. Will Steve Rattner, a long-time friend of Times publisher Arthur Sulzberger and Managing Principal of Quadrangle Group, come to the rescue and take the Times private?

In play here are Phillip Falcone, a Harbinger partner who made $1.7 billion last year, and the quaint idea of protecting a media company’s founding family by maintaining two classes of stock: Class A for the public to make insiders liquid and Class B for the insiders. Murdoch and Sulzberger enjoy protection for their family dynasties thanks to that two-tiered structure.

Falcone thinks that the Times is leaving large amounts of money on the table by not “monetizing” all the comments on its stories. What sparked this idea was a January opinion piece by Caroline Kennedy comparing Barack Obama with her dad, President John F. Kennedy. There were only a few comments about the article on the newspaper’s Web site, nytimes.com, but there were hundreds on Huffington Post and Digg.com. BusinessWeek quotes Scott Galloway, founder of hedge fund Firebrand Partners and Falcone friend who said: “We came to the collective conclusion that there was so much upside in terms of billions of pages the paper wasn’t monetizing. He [Falcone] never looked back.”

Falcone recently got two of his allies onto the Times’ board. How did he do it? This January, with the stock trading at $15, Falcone bought a 4.9% of the publicly traded Class A shares for $105 million over several weeks. (The Class B shares are held privately by the extended Sulzberger family, allowing them to retain control of the company.) Falcone and Galloway quickly launched a proxy assault, pushing the Times board to add four of their picks as directors. They only backed down in March when the Times concurred to accept two of the nominees for its 15 person board.

If the Times was doing well financially it might not be so vulnerable. Earlier this month, the Times reported that it lost $335,000 in the first-quarter 2008 in a performance that fell far short of both analysts’ expectations and its $23.9 million profit in the 2007 quarter. Its newspaper and on the internet advertising revenues were down 10.6% and digital advertising growth slowed to 16% from 21.6% a year earlier.

Last year newspaper industry ad revenue fell 8% while the Times’ ad revenue fell 4.7%. So it looks like the industry and the Times are doing worse. And its stock has fallen 15% in the last year. Although since Harbinger bought in, the stock has risen 33% to $20.58.

Nevertheless, the Times is under siege and it could use a savior. Will Rattner ride to Sulzberger’s rescue? Rattner is a former Times reporter and Lazard Ltd. (NYSE: LAZ) executive who now runs the $6 billion Quadrangle Group. Vanity Fair reported that Rattner, who raises money for Hillary Clinton, persuaded Sulzberger to endorse Clinton — overruling the Times editorial board.

I don’t think Falcone will be able to reverse what ails the Times with his plan for digital advertising — there’s just not enough revenue there. But he’s already made a nice profit on his shares. Meanwhile, Rattner appears to be the only source of capital who would protect the Sulzberger family in a going private transaction. But I don’t know if the banks have an appetite now for such a deal.

I don’t know what will happen next but it seems clear to me that the Times needs a change in management if it’s going to remain a viable business.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Share This

Share This