Archive for May, 2008
Posted by: in Latest News
Filed under: Deals, Good news, JPMorgan Chase (JPM), Options, Technical Analysis, Bear Stearns Cos (BSC)
 JPMorgan Chase (NYSE: JPM) shares are trading higher on news that shareholders of Bear Stearns Cos. (NYSE: BSC) have approved JPM’s $2.2 billion buyout of the investment bank. JPM will purchase BSC for about $10 a share. The deal is expected to become official tomorrow. If you think that the stock 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 JPM.
After hitting a one-year high of $52.31 last Might, the stock hit a one-year low of $36.01 in March. JPM opened this morning at $42.69. So far today the stock has hit a low of $42.29 and a high of $44.06. As of 12:15, JPM is trading at $43.79, up 0.93 (2.2%). The chart for JPM looks bullish and deteriorating, while S&P gives the stock its highest 5 Stars (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $37.50 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’ll make a 11.1% return in just seven weeks as long as JPM is above $37.50 at July expiration. JPMorgan would have to fall by more than 14% before we would begin to lose money. Learn more about this type of trade here.
JPM hasn’t been below $7.50 at all in the past year except for a short time in March and has shown support around $42 recently. This trade could be risky if the financial sector suffers some more in the coming months, but even if that happens, that position could be protected by support the stock might find just above $40, where it bottomed out twice in the past two months.
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 might include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in JPM or BSC.
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Posted by: in Latest News
Filed under: Deals, Industry, Consumer experience, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Sony Corp ADR (SNE)
Anyone who didn’t think a Microsoft (NASDAQ:MSFT) buyout of Yahoo! (NASDAQ:YHOO) has become less likely should have stopped by the All Things Digital conference. According to Reuters, “Yahoo Inc Chief Executive Jerry Yang stated on Wednesday a potential deal with Microsoft has tremendous power, but the software giant appears no longer interested in a full merger.”
The leaves Yahoo! management, its board, and takeover artist Carl Icahn in a tough spot. Many analysts believe that without a deal, the Yahoo! shares could drop back near $20, where they traded before the offer from Redmond. Yahoo! currently changes hands at $27.
The news is a sign that Microsoft thinks it can do nearly anything on its own, including challenging Google (NASDAQ:GOOG) in the search business. Gates, Ballmer & Co. have the money to get the engineering hands on board to push superior search tech, but user loyalty to Google may be so great that even a much better product from Microsoft won’t break its rival’s hold on the market.
Microsoft has had success exceeding the market’s expectations before. No one believed that the company’s Xbox could challenge the Sony (NYSE:SNE) PlayStation franchise.
But, search engines are not game consoles and the rules in one game don’t necessarily apply in another.
Douglas A. McIntyre is an editor at 247wallst.com and 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), Dell (DELL), Pfizer (PFE), JPMorgan Chase (JPM), US Airways Group (LCC), UAL Corp (UAUA), Bear Stearns Cos (BSC)
 Before the bell: Futures mixed ahead of GDP; after COST, SHLD reporting
Bear Stearns (NYSE: BSC) shareholders are due to approve the buyout by JPMorgan Chase (NYSE: JPM) this day, marking what many feel as an end of an era as the 85-year-old company collapsed due to the subprime mortgage crisis.
The chief executives of UAL Corp. (NASDAQ: UAUA) United Airlines and US Airways (NYSE: LCC) are set to meet this day to discuss a possible deal despite concerns that threaten the deal, according to two people briefed on the discussions, the AP reported. Stocks of both airlines are up over 2% in premarket trading.
In other deal news, Yahoo (NASDAQ: YHOO) CEO Jerry Yang said that Yahoo isn’t a company under siege and that he is still waiting for a clearer proposal from Microsoft Corp. (NASDAQ: MSFT) about a possible partnership between the two firms. He said stated that Yahoo “did not walk away from the proposal - Microsoft did. We were willing to do the deal on the right terms.”
After the bell Thursday, personal maker Dell (NASDAQ: DELL) is due to report results, with analysts forecasting a narrow decline in earnings.
TiVo (NASDAQ: TIVO) shares aren’t moving much despite the digital video recorder reporting Wednesday after the close that its net income more than quadrupled in the first quarter to $3.6 million, or 4 cents per share, beating estimate of a loss of 1 cent per share. TiVo stated it expects to return to a loss in the current quarter.
Pfizer Inc. (NYSE: PFE) is trying to do some damage control following a warning from the FDA about its quit-smoking drug Chantix and its side effects which were linked to suicides, seizures, and traffic accidents. The drugmaker said it will run newspaper ads and send letters to doctors to alleviate concerns about the drug.
And yet another agreement for the iPhone. Apple Inc. (NASDAQ: AAPL) will offer its iPhone handset in Hong Kong and Macau this year to subscribers of Hutchison Telecommunications International Ltd.
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Posted by: in Business News
Filed under: Business, World wide web, Web services
While Borders might be one of the most recognizable bricks and mortar book sellers in the US, the company has been almost invisible online. For the last seven years, Borders has basically relied on Amazon for its online presence. But now Borders is relaunching its website with a heavy focus on recommendations and recreating the experience of browsing in a book store
While you can certainly use the site to search for books, the most prominent features of the new site are recommendations for books, music, and movies. There are “staff picks,” new fiction and non-fiction, and customized suggestions based on your tastes in media.
One area where Borders has the advantage over Amazon is that the company does have bricks and mortar stores throughout the country. That means you can place an order on the web and have it shipped for free to your neighborhood store where you can pick it up. If you don’t have a safe, secure spot for receiving deliveries at your home, this could be an attractive feature.
[via AP]
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Posted by: in Business News
Filed under: Business, World wide web, Web services
While Borders might be one of the most recognizable bricks and mortar book sellers in the US, the company has been nearly invisible on the internet. For the last seven years, Borders has basically relied on Amazon for its on the internet presence. But now Borders is relaunching its website with a heavy focus on recommendations and recreating the experience of browsing in a book store
While you can certainly use the site to search for books, the most prominent features of the new site are recommendations for books, music, and movies. There are “staff picks,” new fiction and non-fiction, and customized suggestions based on your tastes in media.
One area where Borders has the advantage over Amazon is that the company does have bricks and mortar stores throughout the country. That means you can place an order on the web and have it shipped for free to your neighborhood store where you can pick it up. If you don’t have a safe, secure spot for receiving deliveries at your home, this could be an attractive feature.
[via AP]
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Posted by: in Business News
Filed under: Business, Design, World wide web, Productivity, Adobe, Google, Yahoo!, web 2.0
 Let’s pretend you read this column and agree that it’s time to embark on a Web site overhaul for your small business. You understand a little about Web 2.0-ness, want some interactivity, are considering using new online tools and have created a real job for the webmaster to do site updates. What’s on your Web Overhaul Due Diligence To-Do List? What steps should you take to ensure that your site gets architected, designed, programmed, launched, and updated correctly?
HOMEWORK - let’s begin browsing sites and making favorites/bookmarks out of the ones that catch your eye. Note that you like the drop-down menu in one and the fading background in another. Make a “how did they do this?” list of snazzy features to ask your designer about implementing. In fact, build a spreadsheet and make column headings such as: URL, feature, forms, Flash, menus and more so you can keep your design notes and questions in a handy electronic document to share with all the design firms you interview, and we want you to talk to more than one.
Continue reading Seven Web Redesign Planning Tools
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Posted by: in Latest News
Filed under: Forecasts, Deals, XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI)
Wall Street might believe that whether there’s a deal to merge with XM Satellite (NASDAQ: XMSR) or not, Sirius (NASDAQ: SIRI) shares have fallen as far as they are going to. How much more bad news can the company take? Recently, Goldman Sachs stated a combined company would need to raise as much as $1 billion for operating costs. Each of the companies already has long-term debt of well over $1 billion.
Subscription growth at Sirius is slowing and it still does not make an operating profit. The market has been concerned that HD radio, new consumer electronics devices, and mult-media phones all mean new competition for the satellite radio operator.
But the short interest in Sirius dropped 18 million shares to 170.4 million, the second largest drop for any company on Nasdaq during the Might 15 period.
Trading just above $2.50, SIRI shares may have found a permanent bottom. Its market cap is under $4 billion, a fraction of what it was two years ago. Is there anything left to move it down a lot more? Probably not.
Douglas A. McIntyre is an editor at 247wallst.com and 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, Employees, Market matters, US Airways Group (LCC), AMR Corp (AMR), UAL Corp (UAUA), Economic data, JetBlue Airways (JBLU), Oil
Stock futures were higher early Wednesday morning as oil and other commodities declined, providing some relief.
U.S. stocks ended higher Tuesday, especially the tech heavy Nasdaq composite which rose 36 points, or a solid 1.5%. The Dow industrials and the broader measure S&P 500, rose 68 points, or 0.55%, and 9 points, or 0.68% respectively. A dramatic retreat in crude of more than $3 a barrel helped boost sentiment.
On the economic docket today is April durable goods order, which economists are anticipating to show a further decline. The report is due to release at 8:30 a.m. EDT.
Weekly crude inventories, usually released Wednesdays, will be postponed due to the shortened week. Meanwhile, though, oil prices continued to decline, dropping below $127 a barrel Wednesday in Asia, extending the previous session’s decline. It seems that the higher prices cut demand, which in turn, pressured prices back.
On the corporate side of things, Borders (NYSE: BGP) stated its losses narrowed in the first quarter to $31.7 million, or 53 cents per share, although its same-store sales fell. The results were below estimates of a loss of 47 cents per share. The relaunch of the bookseller’s retail Web site Tuesday didn’t impress Wall Street much either and shares dropped 7%. There was continued pressure on the shares in after-hours trading.
Shares of airlines might also be in the spotlight Wednesday, after JetBlue Airways Corp. (NASDAQ: JBLU) stated it will delay buying 21 new Airbus jetliners 4-5 years from because of rising fuel costs. JBLU shares were down some 4.7% in after-hours trading.
Meanwhile, AMR Corp. (NYSE: AMR)’s American Airlines, also faced with soaring fuel prices, stated it has rejected its pilot union’s contract proposals because the cost is too high. The union now wants to know if speaks are at an impasse. The airline also detailed the first round of cuts. AMR shares, however, are 2% higher in premarket trading.
Similarly, merger speaks between UAL Corp. (NYSE: UAUA)’s United Airlines and US Airways (NYSE: LCC) appear to have slowed and perhaps even fallen apart, according to the New York Times. Shares of both are higher.
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Posted by: in Latest News
Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO)
Short sellers must be betting that there won’t be any deal between Microsoft (NASDAQ: MSFT) and Yahoo! (NASDAQ: YHOO). That would leave Carl Icahn holding a lot of stock without a profit.
Short sellers reduced their position in Microsoft by 25 million shares as of May 15 compared with April 30. That brought the total short interest in the world’s largest software company down to 73.4 million.
Over at Yahoo!, short interest rose 9.3 million to 47.3 million. That was the largest increase for any company traded on Nasdaq during the May 15 period.
Short sellers might be admitting what Yahoo! shareholders can’t bring themselves to believe, at least not yet. With no bid from Microsoft likely, Yahoo! has no other buyers. The company can do tiny to keep its share price from drifting back to the $20 range, especially if its Q2 numbers are weak.
Icahn can win his board seats in a proxy fight against the portal company. He’ll not be able to do anything with his influence if he gets it. He can’t sell what no one wants.
Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 newsletter.
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