2008 July 31 | money news blog

Archive for July 31st, 2008

31 07 2008

American Express: Don’t leave home without … Concur

Posted by: in Latest News

Filed under: Earnings reports, Deals, American Express (AXP)

Back in 2001, Concur Technologies, Inc., (NASDAQ: CNQR) hit a low of 31 cents per share. At that time, investors had lost all confidence in the Internet. What’s more, Agree was in an un-sexy space; that is, a provider of software to help companies with travel expenses.

But the company’s CEO, Steve Singh, was still a believer and thought the market opportunity was large.

Well, as of now, things are starting to pay off. In fact, this week, Concur announced that it received a $251 million strategic investment from American Express (NYSE: AXP) at $39.25 per share. There’s also a warrant to buy an additional 1.28 million share (see more of today’s earnings news).

No doubt, this is a large validator - and should be a major boost for Concur’s business. Essentially, the celebrations have concurred to an exclusive marketing arrangement. Agree will promote American Express’ Corporate Cards. Next, American Express will promote Concur’s Expense offering to its massive customer footprint.

So does this mean that Concur wants to ultimately sell out? Perhaps so. But, according to Singh, he thinks Agree can reach 40,000 to 50,000 customers. And, in light of its recurring subscription model, the operating leverage and profitability could be substantial.

What’s more, Concur reported its fiscal Q3 results yesterday. Revenues spiked 65% to $54.9 million and profits came to $4.5 million or $0.09 per share. And, going forward, Concur expects to generate profits of 32 cents per share with revenues of $214 million.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements. He also operates MergerBook.com.

Permalink | Email this | Linking Blogs | Comments

Share This

No Comments »

31 07 2008

Google plans venture arm — conflict of interest?

Posted by: in Latest News

Filed under: Deals, Competitive strategy, Google (GOOG), Intel (INTC)

Back in the day when internet companies ruled the rolls of the Nasdaq, a number of on the web and tech companies had venture capital arms. Intel (NASDAQ: INTC) has kept its to this day. The tech collapse of 2000 and 2001 eliminated most of those funds.

Now Google (NASDAQ: GOOG) has decided to revive the tradition of large tech companies spreading money around. According to The Wall Street Journal, “The group will be lead by David Drummond, Google’s senior vice president of corporate development and chief legal officer.”

The move is a bad idea because it could alienate current and future Google partners. There is still an abundance of venture capital, so it is not as if the search company is filling a hole in the market.

The trouble is that Google could put money into a wireless broadband company only to find down the road it wants to form a partnership with one of that company’s competitors. Should a firm risk doing business with Google when the giant internet company owns a piece of its nemesis?

Google may like the idea of supporting startups that are aligned with its goals. But it is slicing off the option of doing business with companies that don’t have Google backing but do have services Google wants.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Share This

No Comments »

31 07 2008

Is the worst over for Motorola (MOT)?

Posted by: in Latest News

Filed under: Major movement, Earnings reports, Deals, Good news, Motorola (MOT)

Motorola Inc. (NYSE: MOT) shares are high flying this morning, opening over 8% higher at $8.43. Motorola reported second quarter financial results, posting an unexpected modest profit, beating sales estimate and saying the planned spinoff is on track (see more of today’s earnings news).

By the numbers, the largest U.S. mobile-phone maker net income was $4 million, or break-even on a per-share basis, an improvement over last year’s quarter loss of $28 million, or 1 cent a share as the company cut jobs. Excluding costs from job cuts, earnings came at 2 cents a share, surprising analysts who had expected a loss of 3 cents per share! Revenue fell 7.4% to $8.08 billion, but beat estimates.

Even the handset division with its widening losses as phone sales slumped 21% actually sold more phones than was expected and sequentially even showed sales growth. The $346 million loss in this division was offset by profit at the two-way radio and set-top box businesses. These units performed well with sales growth and operating profits. A positive operating cash flow and reduced cost structure were other good elements in the report.

The question now is whether we’re indeed seeing the beginning of a stabilization in the stock that has lost over 70% of its value since October 2006, when the deterioration began, and 52% year-to-date. The company’s third-quarter and full-year forecast would seem to suggest so, but while Motorola managed to keep its No. 3 position in the global mobile-phone maker, it is still in danger of losing that rank to LG Electronics Inc. whose handset sales have been soaring, not declining.

What investors are interested in going forward is the spinoff — the separation of Motorola into two independent, publicly traded companies: the losing phone unit and the profitable set-top boxes, radios and networking gear. The split will happen in the third quarter of 2009, according to the CFO, but no word yet as to which of the new companies will get to keep the Motorola brand, or what the management at either company will be.

With 50 new handset launches Motorola is planning for this year, including more smartphones and other hip phones, even this segment could show some resilience given the latest numbers. The other units have done well. Motorola may have well just seen the bottom.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

No Comments »

31 07 2008

Blackstone chasing Informa?

Posted by: in Latest News

Filed under: Deals, Private equity, Blackstone Group L.P (BX)

With bulging coffers, U.S. private equity firms have been aggressively expanding into foreign markets. One of the big players is The Blackstone Group LP (NYSE: BX).

According to a piece in the Financial Times, it looks like Blackstone is taking a look at Informa Plc, a UK publisher.

Actually, it looks like other major private equity firms, such as Providence Equity Partners Ltd. and Carlyle Group, are swarming over the company.

Informa was formed, in 1998, as the result of a merger of the IBC Group plc and LLP Group plc, but if you take a look at the various businesses, the roots go back to 1734 with the first maritime publication.

As of now, Informa has operations in 40 countries and about 10,000 employees. Moreover, the firm organizes more than 10,000 events and conferences a year. There are also 2,500 subscription based information services.
In other words, Informa has a fairly steady business, with strong recurring revenues.

Interestingly enough, last month Providence Equity made a preliminary overture for Informa for about $4.29 billion. But getting debt financing won’t be easy.

Then again, in the case of Blackstone, it might not have to worry about such things since it looks like the firm is teaming up with the cash-flush Dubai World Trade Center sovereign wealth fund.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the internet Guide to Decoding Financial Statements. He also operates MergerBook.com.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

No Comments »

31 07 2008

Cramer on BloggingStocks: Cheap housing markets will sow the seeds of a rebound

Posted by: in Latest News

Filed under: Earnings reports, Deals, Private equity, Market matters, Merrill Lynch (MER), Colgate-Palmolive (CL), Federal Natl Mtge (FNM), Comcast Cl’A’ (CMCSA), Procter and Gamble (PG), Verizon Communications (VZ), Unilever ADR (UL), Housing, Cramer on BloggingStocks, Recession

TheStreet.com’s Jim Cramer says 30%-40% discounts have a way of bringing out the buyers.

Home prices in Stockton, CA are down 40%. In Daytona, FL, houses are priced at 30% discounts with amenities. The Inland Empire of California — you name your price. That’s how the madness ends: with large price cuts, the way it ended in Bradenton, FL.

And believe me, we get more Fannie Mae (NYSE: FNM) (Cramer’s Take) money — forget these darned covered bonds, let’s just solve the problem. You get buyers after a year and a half that buyers went on strike.

Remember, while we can’t live in stocks, we know they trade like houses, and when the first stocks to go down bottom, the others are not far behind.

With the new housing bill, the rate of foreclosures will go down and the bargains will be quite evident for those who want to take them. Either a new administration will remove the fear of the illegal immigrants from buying homes — they were a large part of the hard hit Arizona, Florida and California markets. Or the dramatic decline in inventory at the homebuilding level has given us breathing room.

It is all coming together, just when no one sees it coming. Because you have to look at the hardest-hit regions to know what’s going on.

This morning, the Wall Street Journal noted that more clarity on Merrill’s (NYSE: MER) (Cramer’s Take) arrangement with Lone Star is needed, and speculates whether Lone Star is going to renege on this deal, and whether this isn’t a fair, arm’s-length deal.

I say give me a break. These mortgages, if held with a private company with a servicing arm that is in the subprime business — Accredited Home Lending (Cramer’s Take) — and has assumptions and models for this time — would not have bid if it didn’t want them. I think the loan is fine.

More importantly, if the homes are down 50% and you’re buying mortgages that somehow — we don’t even know — relate to those homes, you can figure you can purchase them for 20 cents on the dollar and flip them for 50 cents on the dollar if you can work out the financing. And Lone Star can.

This deal works because of depressed markets like Stockton and Daytona and the Inland Empire. Not because of the financing.

You have to pay attention to the real markets, not the Wall Street markets if this stuff is going to be successful and I think it will at these prices.

I continue to think that Merrill was a game changer and that things look brighter now each day.

Random musings: Did Unilever (NYSE: UL) (Cramer’s Take) lose share to Colgate (NYSE: CL) (Cramer’s Take) and perhaps Procter & Gamble (NYSE: PG) (Cramer’s Take)?

It would seem so.

I have to admit that the Comcast (NASDAQ: CMCSA) (Cramer’s Take) quarter shows powerful video-on-demand numbers, and you can see with FIOS is the way for Verizon (NYSE: VZ) (Cramer’s Take) to go.

—————————
RELATED LINKS:
Home Inventories Fall, but Foreclosures Rise
Cramer: Housing Bill to Move Builders, Banks
—————————

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer was long PG.

Permalink | Email this | Linking Blogs | Comments

Share This

No Comments »

31 07 2008

Before the bell: Undecided ahead of GDP: XOM, FSLR, MOT, MO, GM, GOOG …

Posted by: in Latest News

Filed under: Before the bell, Earnings reports, Deals, Google (GOOG), Apple Inc (AAPL), Starbucks (SBUX), General Motors (GM), Motorola (MOT), Exxon Mobil (XOM), Market matters, Walt Disney (DIS), Aetna Inc (AET), Altria Group (MO), Kellogg Co (K), MasterCard Inc’A’ (MA), Economic data, Unilever ADR (UL)

U.S. stock futures were mixed Thursday morning ahead of the government preliminary report of U.S. second-quarter gross domestic product to be released at 8:30 a.m. EDT. Compare to the first quarter, where GDP grew at an annual rate of 1%, analysts are anticipating an annual growth rate in the second quarter of 2.3% according to Briefing.com. Another wave of earnings will also wash Wall Street over this morning, while it’s still digesting Wednesday’s ones. The market will likely take a clearer direction once GDP is out.

[Update: GDP grew at a 1.9% pace in the second quarter came in well short of the 2.3% forecast. Futures are declining on economy and the XOM miss. Wall Street will likely open significantly lower.]

Reporting/reported this morning:

Exxon Mobil (NYSE: XOM) is expected to report second-quarter earnings before the open. If ConocoPhillips (NYSE: COP) and BP (NYSE: BP) results are any indication, XOM will likely post large profits thanks to oil’s skyrocketing prices and even break the record it has set for largest profit by a U.S. company. Analyst on average expect Exxon Mobil to earn $2.52 a share on revenue of $144 billion, according to a survey by Thomson Financial.
MasterCard Inc. (NYSE: MA) is expected to report earnings of $2.02 per share.
Kellog (NYSE: K) is expected to post earnings of 81 cents per shares.

Motorola (NYSE: MOT) shares are climbing 4.8% in premarket trading after it posted a small profit as revenue and phone sales beat estimates. Motorola reported a second-quarter profit of $4 million and broke even on a per share basis. Revenue fell to $8.1 billion.
Aetna (NYSE: AET) shares are gaining 1% in premarket trading after the health insurer stated its second-quarter profit rose 6.4% on membership growth and a hike in premium rates. The company posted 97 cents earnings per share on revenue of $7.83 billion (a rise of 15%). Analysts polled by Thomson Financial expected profit of 93 cents per share on revenue of about $7.87 billion, on average.
Altria (NYSE: MO) shares are trading 2.7% higher in premarket action after the it stated its second-quarter profit fell 58% as it separated its international cigarette unit. Excluding one-time items, profit rose to 46 cents per share. Revenue has risen 4% to $5.05 billion from $4.86 billion. Thomson Financial states analysts expected a profit of 45 cents per share on revenue of $4.17 billion.
Unilever (NYSE: UN, UL) shares are down nearly 9% in premarket trading after the consumer product company said profit declined by almost a fifth while sales dipped 1%.
Royal Dutch Shell (NYSE: RDS.A) reported profit growth of 33%.
Deutsche Bank AG (NYSE: DB) reported bigger-than-estimated 2.3 billion euros ($3.6 billion) of debt writedowns in the second quarter, saying it remains cautious on the rest of the year.

Reported Wednesday after the close:

Starbucks (NASDAQ: SBUX) shares are climbing 4.3% in premarket trading as it beat estimates.
Visa (NYSE: V) shares are also climbing over 3.2% in premarket trading after it topped Street forecast. Visa seems to be counting on international transactions.
First Solar (NASDAQ: FSLR) are up almost 8% in premarket trading after the solar energy company crushed estimated across the board.
Disney (NYSE: DIS) shares, on the other hand, are down over 2% in premarket trading despite beating estimates. The media conglomerate said it detected slowing growth.

According to the Wall Street Journal General Motors Corp. (NYSE: GM) will cut 5,000 North American white-collar jobs by November 1 as part the plan announced earlier this month to save $10 billion through 2009.

A day after Google Inc. (NASDAQ: GOOG) acquired Omnisio to interact with YouTube, for the Wall Street Journal reported it “is working on plans to start a venture-capital arm, according to several people briefed on the discussions.”

Despite claims of Rogers, sole carrier of Apple (NASDAQ: AAPL) iPhone in Canada it is getting weekly shipments from Apple, sales of the iPhone in Canada are still outpacing supply.

Share This

No Comments »

31 07 2008