2008 September | money news blog

Continue reading Yahoo! board gives AOL talks a green light

30 09 2008

Yahoo! board gives AOL speaks a green light

Posted by: in Latest News

Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX)

Yahoo! Inc.’s (NASDAQ: YHOO) new board gave management the go-ahead to negotiate with Time Warner (NYSE:TWX) to buy AOL or create a broad partnership with it.

The FT reports that, “According to one person familiar with the company’s thinking, the Yahoo board approved a new round of discussions with AOL, though active deal negotiations are not underway at this stage.” Some analysts believe that Microsoft Corp. (NASDAQ: MSFT) would never allow AOL to fall into Yahoo!’s hands and would outbid the portal company to keep it from gaining any edge in the battle to be much larger than Redmond’s MSN operation.

Yahoo! is such a distant second in the internet search business that it might as well try to build its display advertising base. Most audience measurement firms put AOL’s monthly one-of-a-kind audience at well over 100 million visitors. That would increase Yahoo!’ audience by about 80%.

Yahoo!’s board might be dodging two practical considerations. One is that AOL’s advertising revenue isn’t growing quickly and any buyout might actually hurt Yahoo!’s own growth rate. The other is that putting the two companies together could take a year or two. Each has so many properties and so many brands that meshing them and the people who run them could be a mammoth mess.

Continue reading Cramer on BloggingStocks: Buffett knows the score on Goldman

29 09 2008

Cramer on BloggingStocks: Buffett knows the score on Goldman

Posted by: in Latest News

Filed under: Deals, Market matters, Goldman Sachs Group (GS), Wells Fargo (WFC), Cramer on BloggingStocks

TheStreet.com’s Jim Cramer says he at least recognizes value when he sees it.

Warren Buffett isn’t an idiot. He has kept his powder dry through all of this madness and suddenly, within one week, he has opened his coffers and picked up not one, but two multi-billion-dollar steals, Constellation Energy (NYSE: CEG) (Cramer’s Take) and Goldman Sachs (NYSE: GS) (Cramer’s Take).

These investments are the first sign that someone, some grown-up, is coming in from the sidelines, not because he has been talked into something that he doesn’t want to do or comprehend — which has been the case in all of the other bank financings — but because he sees a delicious rate of return that’ll be hard to take away now that he has put his balance sheet to work, one of the last with any firepower to make a difference.

First, Constellation. Here’s a perfectly good utility that, because of its business model, needs capital to work. It made several miscues that brought it to its knees — a business that is a regular, good generator of income gone bad because of financing. I have no idea how low it would have gone, but as long as it was intact, it was worth a lot more than it was selling for to someone who has financing, and that’s what Buffett has in spades. He stole the company.

29 09 2008

Datapresser is d(ata)epressing

Posted by: in Business News

Filed under: Business, Internet, Text, Blogging, Web services, Commercial

As if most of the content on the web isn’t crappy enough, now you can use a web service called Datapresser to automatically generate content for your blogs. I have the ability to only imagine then sort of repetitive nonsense that would come out of a program intended to generate text.

Billed as a very special content creation and network management system, really all I see is one huge blog spam engine. While that might be a bit harsh, let’s look at what’s going on here. Datapresser takes some minimal amount of input, like a few links or a Flickr feed, and automatically generates text around it. From what I have the ability to see, it then ensures to cross link to your other properties to try to drive up the page rank of linked pages.

When one of the big selling features is “Datapresser can create content that can fool a human reader”, it’s not hard to guess that the point isn’t so much about fooling human readers as it is about fooling Google. And when the lowest-priced plan includes 500 generated blog posts per day, can this be intended for anything but blog spam?

This product is probably legal, and it probably works. But that certainly doesn’t mean that I’ve to care about it, or think it is moral. I’m certain that the use of Datapresser to generate web content lowers the overall value of the internet for everyone else, by filling it with mindless, thoughtless crap. What do you think?

[via thenextweb.org]

Continue reading Will GE win the Spielberg race?

29 09 2008

Will GE win the Spielberg race?

Posted by: in Latest News

Filed under: Deals, General Electric (GE), Walt Disney (DIS), Viacom (VIA), News Corp’B’ (NWS), Film

Since General Electric (NYSE: GE) is reeling from the financial crisis that’s currently gripping Wall Street, there’s no doubt that a little Hollywood magic might be in order, something to take its corporate mind off reality for at least a little while.

Well, according to The Hollywood Reporter, that might happen. Steven Spielberg needs to move his DreamWorks company over to a new studio, and it looks like NBC Universal is at the front of the pack in the race to secure his business.

The pairing of Spielberg and Universal would be logically sound. He certainly had a better time over at that lot than he did at Viacom’s (NYSE: VIA) Paramount. There’s, however, one other studio that is in the running. The article seems to imply that Disney (NYSE: DIS) has a shot with Spielberg as well, although the way I read it, the Mouse is a distant second in the contest. Disney wouldn’t be a good fit. As much as CEO Bob Iger would love to hold meetings with the most famous director in Hollywood (and the world, for that matter), a DreamWorks distribution deal just doesn’t make sense since the company is really into getting a lot of bang for its capital buck.

28 09 2008

McAfee revs up its dealmaking; purchases Secure Computing

Posted by: in Latest News

Filed under: Deals

McAfee (NYSE: MFE) is the No. 2 player in the security software market. But the company’s CEO, Dave DeWalt, definitely wants to be No. 1. In fact, he’s been putting together a string of acquisitions to pump things up.

The latest deal came this week: McAfee purchased Secure Computing Corp. (NASDAQ: SCUR) for $465 million. On news of the deal, the company’s shares spiked 23% to $5.58.

Secure Computing itself is an amalgam of a variety of acquisitions. For the most part, the company’s products help deal with e-mail intrusions and network security. However, Secure Computing has had difficulties integrating its deals. As a result, the company has missed expectations on several earnings releases, which put lots of pressure on the stock price.

For some more insight on McAfee’s latest deal I turned to Paul Roberts, Senior Analyst of Enterprise Security at The 451 Group, who said:

“Consolidation has been a long time coming in the enterprise security market. Despite persistent rumors that it might be acquired by a much bigger player, McAfee shows all intentions of staying independent and being one of the survivors, rather than road kill, as the enterprise security market consolidates. In the last twelve months, the company has made bold bets on data encryption and anti data leakage. This deal re-introduces McAfee as a player in the network security space after it was forced to downsize a few years back. We’re interested to see how the company knits together the disparate technologies it has acquired.”

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’s also the founder of BizEquity, a valuation website

28 09 2008

Gap pays $150 million for Athleta

Posted by: in Latest News

Filed under: Deals, Gap Inc (GPS)

Gap Stores Inc. (NYSE: GPS) has agreed to acquire women’s activewear clothier Athleta for $150 million in cash. In a press release announcing the deal, Gap stated that “Founded 10 years ago, Athleta has evolved into a premier lifestyle brand, offering high quality apparel that’s stylish and functional for a variety of sports, including yoga, running, skiing, snowboarding and surfing. Customers can buy Athleta product on the internet or through the company’s catalog.”

Gap plans to sell Athleta’s products on the web through its recently introduced e-commerce platform that allows shoppers to combine orders from Gap, Old Navy, Banana Republic and Piperlime. A 2005 AllBusiness article pegged Athleta’s annual sales at $28 million, and while that number is believed to have grown rapidly since then, Gap is likely paying a much higher price/sales multiple than the market currently affords its own stock.

What’s interesting about this deal is that Gap has, historically, made very few acquisitions. Gap’s last apparel acquisition was Banana Republic — way back in 1983.

Investors should probably take some comfort in the fact that The Gap is not a serial acquirer with frequent writedowns. A once per quarter century acquisition is prone to be well thought out but it may also be indicative of continued weakness in the company’s current brands.

28 09 2008

Bill to save banks probably done

Posted by: in Latest News

Filed under: Deals, Politics, Financial Crisis

The bill to bailout the banking system though the process of the Treasury buying toxic mortgage assets from banks appears to be all but finished.

According to The Wall Street Journal, a deal to bailout U.S. financial markets has been concurred on and all that remains to be done is to commit the legislation to paper.

The most significant addition to the original bill appears to be “the legislation will expand the range of firms that can sell troubled assets to the government to include pension plans, local governments and community banks serving low- and middle-income families.”

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

27 09 2008

Banks try to save the newspaper business

Posted by: in Latest News

Filed under: Forecasts, Deals, Industry, Newspapers

Within the past years, several public newspaper companies have been pushed to the cliff of insolvency. They have taken on too much debt and the downturn in advertising has put them in a position where they cannot cover interest payments.

Journal Register was knocked off The New York Stock Exchange and is in the process of liquidation. The value of its properties has dropped so low that its common shareholders will get nothing and creditors will not recover the amount of their loans. Gatehouse Media (NYSE: GHS) has traded under $1 for weeks and also face delisting. Odds are that its properties will have to be auctioned off.

Banks may be employing a new tactic in the hope of getting their money out of the newspaper industry. Extend loans, let the companies cut expenses to the bone, and pray that advertising will get superior. If it does, they might get their money back. McClatchy (NYSE: MNI), the nation’s third largest chain, was the next company in the industry to head toward liquidation. Based on a new lifeline from its creditors, it may dodge that for a while. According to The Wall Street Journal (subscription required), “The publisher of the Sacramento Bee and Miami Herald said Friday its banks concurred to loosen restrictions on the company’s level of debt compared to cash flow, and its ratio of interest payments to cash flow.”

The banks are making a large mistake. McClatchy’s has many of its properties in California and Florida were the economies could be troubled for years. By letting McClatchy stay in business, the banks are risking that the value of the company’s papers will drop even more. If McClatchy is sold off in pieces now, creditors might get most of their money back.

The holders of McClatchy’s debt may have saved the company, for a few months at least. They have also put themselves in a position to lose most of their money.

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

26 09 2008

Borders faces an ultimatum: Deal or dilute

Posted by: in Latest News

Filed under: Deals

With Borders’ (NYSE: BGP) efforts at a sale of the entire company so far producing no results, the company is coming up on an important deadline. Under a deal struck with hedge fund manager William Ackman, if the company doesn’t sell itself by October 1, Ackman’s fund will receive options to purchase 5.15 million shares of the company’s stock at $7 per share. Given that that represents a good chunk of the company’s 60.5 million shares outstanding, any deal at a substantial premium would become a lot more costly after October 1.

The Wall Street Journal reports (subscription required) that since “shares of Borders are trading close to the exercise price of the warrants, Mr. Ackman is apt to wait to redeem them until the shares are well above their current level. If Borders misses the deadline to complete a deal and issues the warrants, Mr. Ackman stands to benefit even more from a sale and may start to exert pressure on Borders to secure a transaction quickly.”

I’m not so sure about that. I think the problem is that no one wants to buy Borders — Barnes & Noble (NYSE: BKS) reportedly lost interest after taking a look at the books — and the higher cost to a potential buyer that will come with the options allow will make a sale much less likely, however badly Ackman wants it.

Ackman already has a 35.6% stake in Borders, and shareholders are lucky to have someone as smart as him on their side, pushing the board of directors to maximize value. But it might be too late.