Sources say Apple's (AAPL) iTunes online music store is considering teaming up with big music distributors to offer customers "all you can eat" iPods for a premium tacked on to the device purchase. The model would rival Nokia's (NOK) "comes with music" deal with Universal, but Apple is reportedly offering music companies just $20 per device, vs. Nokia's $80.
Apple is also considering a monthly/yearly iTunes subscription model. Market research has shown customers would pay up to $100, or $7-8/month, for unlimited access.
Wednesday, March 19, 2008
Yahoo Plays Hard to Get...
Yahoo (YHOO) challenged Microsoft (MSFT) by reaffirming its 2008 financial guidance, and projecting strong revenue and cash-flow growth for 2009 and 2010 -- based on which shares could be worth north of $40/share vs. Microsoft's $31 cash and stock offer which is now worth about $29.50. Citigroup's Mark Mahaney said the 2009-10 numbers would not be easy to hit, but thinks the deal will ultimately close at more than $31/share.
Meanwhile Chinese internet company Alibaba, 39% owned by Yahoo, said it is in advanced talks to finance a buyback of Yahoo's stake should Microsoft's bid prevail.
Meanwhile Chinese internet company Alibaba, 39% owned by Yahoo, said it is in advanced talks to finance a buyback of Yahoo's stake should Microsoft's bid prevail.
VISA Starts Trading Today....
Visa Inc. The San Francisco-based credit card giant late Tuesday priced its initial public offering of 406 million shares at $44 each, raising $17.86 billion. The pricing came in above the expected range of $37 to $42 a share.
The company's shares will begin trading today on the New York Stock Exchange under the ticker symbol "V."
The company's shares will begin trading today on the New York Stock Exchange under the ticker symbol "V."
Adobe Posts Strong Earnings...
Adobe Systems Inc. (ADBE). The San Jose, Calif-based design and publishing software maker late Tuesday said first-quarter net income rose to $219.37 million, or $0.38 a share, from $143.85 million, or $0.24 a share, a year ago. For the quarter to Feb. 29, revenue rose to $851.96 million from $620.29 million.
For the second quarter, Adobe said it is targeting revenue of $855-$885 million. For 2008, it reaffirmed target revenue growth of about 13% and EPS of $1.45-$1.51.
Adobe stock is up 1.90 to $33.60 in premarket trading.
For the second quarter, Adobe said it is targeting revenue of $855-$885 million. For 2008, it reaffirmed target revenue growth of about 13% and EPS of $1.45-$1.51.
Adobe stock is up 1.90 to $33.60 in premarket trading.
Earnings Due Today....
COMPANIES REPORTING EARNINGS
• Charming Shoppes Inc. (CHRS). Expected to report Q4 loss of $0.19 a share, according to the analysts polled by Thomson Financial. This is against a profit of $0.19 a share earned same quarter last year.
• Cintas Corp. (CTAS) Expected to report Q3 earnings of $0.54 a share.
• Discover Financial Services (DFS). Expected to report Q1 profit of $0.40 per share.
• Guess? Inc. (GES). Expected to report a Q4 profit of $0.57 per share.
• Herman Miller Inc. (MLHR). Expected to report Q3 earnings of $0.59 a share.
• Morgan Stanley (MS). Expected to report a Q1 profit of $1.03 per share.
• Nike Inc. (NKE). Expected to report Q3 profit of $0.81 per share, up 17.66% from the same quarter last year when the company earned $0.69.
• Ross Stores Inc. (ROST). Expected to report Q4 profit of $0.70 per share.
• Charming Shoppes Inc. (CHRS). Expected to report Q4 loss of $0.19 a share, according to the analysts polled by Thomson Financial. This is against a profit of $0.19 a share earned same quarter last year.
• Cintas Corp. (CTAS) Expected to report Q3 earnings of $0.54 a share.
• Discover Financial Services (DFS). Expected to report Q1 profit of $0.40 per share.
• Guess? Inc. (GES). Expected to report a Q4 profit of $0.57 per share.
• Herman Miller Inc. (MLHR). Expected to report Q3 earnings of $0.59 a share.
• Morgan Stanley (MS). Expected to report a Q1 profit of $1.03 per share.
• Nike Inc. (NKE). Expected to report Q3 profit of $0.81 per share, up 17.66% from the same quarter last year when the company earned $0.69.
• Ross Stores Inc. (ROST). Expected to report Q4 profit of $0.70 per share.
Today's Top Stories....
• Staples plans hostile bid for Dutch rival - report
• Venezuela wants to return to arbitration with ExxonMobil
• NASDAQ OMX to form Europe-wide market for blue chips
• Total buys 30% stake from Chevron in Alaska exploration zone
• Japan's Takeda Pharma in talks to buy out U.S. JV with Abbott - report
• China's Alibaba planning to buy out Yahoo stake - report
• PetroChina FY net up slightly as crude output rises only 1%
• General Mills Q3 net rises to $430 million
• Apple in talks with music cos to offer free iTunes access - report
• JP Morgan cuts Kraft Foods to 'neutral' from 'overweight'
• Bear Stearns to reimburse indemnified employees for legal costs
• Venezuela wants to return to arbitration with ExxonMobil
• NASDAQ OMX to form Europe-wide market for blue chips
• Total buys 30% stake from Chevron in Alaska exploration zone
• Japan's Takeda Pharma in talks to buy out U.S. JV with Abbott - report
• China's Alibaba planning to buy out Yahoo stake - report
• PetroChina FY net up slightly as crude output rises only 1%
• General Mills Q3 net rises to $430 million
• Apple in talks with music cos to offer free iTunes access - report
• JP Morgan cuts Kraft Foods to 'neutral' from 'overweight'
• Bear Stearns to reimburse indemnified employees for legal costs
Tuesday, March 18, 2008
Nice Day for the Market...
U.S. Markets
Dow +420.41 (+3.51%)
Nasdaq +91.25 (+4.19%)
S&P 500 +54.14 (+4.24%)
News That Moved the Market
Markets Sizzles With More Confidence In Financials. Markets began the session with healthy gains after both Goldman Sachs (GS, +16.3%) and Lehman (LEH, +43.3%) reported better than expected quarters and reassured investors that they were well capitalized. Heading into the FOMC announcement, the Dow was up nearly 300 points. The Fed's decision to cut rates by 75 basis points caused a sell-off, as most expected a full-point cut, but the markets quickly recovered and finished the day at new highs.
Fed Details. The Fed cut both the fed funds rate and discount rate by 75 basis points to 2.25% and 2.50%, respectively. Two members voted against the cut, Dallas Fed President Fisher and Philadelphia Fed President Plosser, who preferred easing less. The statement acknowledged the uncertainty surrounding inflation, but said it expects inflation to moderate over time, keeping the door for further cuts if necessary. The Fed also assured that it will act in a timely manner if more price instability creeps up.
Quick Tics:
The Financial Sector increased 8.5% on the day, its largest jump in 8 years...
Adobe (ADBE, +3.4% day; +4.7% A.H.) reported sales jumped 37% and affirmed revenue would increase 13% this year…
Housing starts fell 0.6% last month, which was better than economists expected...
Bear Stearn's (BSC, +22.9%) jumped after more stockholders hinted they would vote against the JP Morgan (JPM, +6.0%) buyout.
Tomorrow Notable Earnings:
General Mills, Inc.(GIS) Before Open
Morgan Stanley (MS) Before Open
Nike (NKE) After Close
Economic Events:
10:30 AM: Crude Inventories
Dow +420.41 (+3.51%)
Nasdaq +91.25 (+4.19%)
S&P 500 +54.14 (+4.24%)
News That Moved the Market
Markets Sizzles With More Confidence In Financials. Markets began the session with healthy gains after both Goldman Sachs (GS, +16.3%) and Lehman (LEH, +43.3%) reported better than expected quarters and reassured investors that they were well capitalized. Heading into the FOMC announcement, the Dow was up nearly 300 points. The Fed's decision to cut rates by 75 basis points caused a sell-off, as most expected a full-point cut, but the markets quickly recovered and finished the day at new highs.
Fed Details. The Fed cut both the fed funds rate and discount rate by 75 basis points to 2.25% and 2.50%, respectively. Two members voted against the cut, Dallas Fed President Fisher and Philadelphia Fed President Plosser, who preferred easing less. The statement acknowledged the uncertainty surrounding inflation, but said it expects inflation to moderate over time, keeping the door for further cuts if necessary. The Fed also assured that it will act in a timely manner if more price instability creeps up.
Quick Tics:
The Financial Sector increased 8.5% on the day, its largest jump in 8 years...
Adobe (ADBE, +3.4% day; +4.7% A.H.) reported sales jumped 37% and affirmed revenue would increase 13% this year…
Housing starts fell 0.6% last month, which was better than economists expected...
Bear Stearn's (BSC, +22.9%) jumped after more stockholders hinted they would vote against the JP Morgan (JPM, +6.0%) buyout.
Tomorrow Notable Earnings:
General Mills, Inc.(GIS) Before Open
Morgan Stanley (MS) Before Open
Nike (NKE) After Close
Economic Events:
10:30 AM: Crude Inventories
Fed Cuts Rates Another 75 Basis Points...
Federal Reserve slashes its key interest rate to 2.25% and signals more reductions are likely, unloading heavy artillery in its effort to keep the credit crunch from triggering a prolonged recession.
Rates are back to June 2004 levels.
Rates are back to June 2004 levels.
Kirby Corp Lifts Guidance...
Kirby Corp. (KEX) expects first-quarter net income to exceed 66 cents a share, above its previous forecast range of 57 cents to 62 cents. The Houston tank barge and towing vessel operator said the guidance reflects strong demand for both marine transportation and diesel engine service operations.
On average, analysts polled by Thomson Financial expect per-share earnings of 60 cents.
On average, analysts polled by Thomson Financial expect per-share earnings of 60 cents.
Lehman Jumps on Earnings Report...
Lehman Brothers (LEH) - brokerage's net slides 57% to $489 million, or 81¢ a share, as results are hurt by net mark-to-market adjustments of $1.8 billion. Revenue falls by 31% to $3.51 billion.
But shares gain 15% pre-market as results top estimates.
But shares gain 15% pre-market as results top estimates.
Goldman Beats Street....
Financial-services firm Goldman Sachs (GS) reports net earnings of $1.51 billion, or $3.23 a share. Net revenue drops to $8.34 billion from $12.73 billion. CEO says market conditions "are clearly very difficult," as firm takes net losses on residential mortgages and securities of $1 billion, while credit products included a loss of roughly $1 billion.
Wall Street expected EPS of $2.58.
Wall Street expected EPS of $2.58.
Rite Aid Warns....
Shares of Rite Aid (RAD) fell 6.3% after the drugstore operator warned it would lose more than a previous forecast of $0.27-0.31 during the fiscal year ended March 1. Rite Aid said it cannot estimate its exact loss, but noted that weaker earnings are forcing it to reduce by up to $1B ($1.38/share) a deferred tax credit it no longer thinks it will be able to take advantage of.
Earnings Due Today....
COMPANIES REPORTING EARNINGS
• AAR Corp. (AIR). Expected to report Q3 profit of $0.46 per share, according to analysts polled by Thomson Financial.
• Adobe Systems Inc. (ADBE). Expected to report Q1 profit of $0.45 per share.
• Darden Restaurants Inc. (DRI). Expected to report Q3 earnings of $0.82 per share.
• Goldman Sachs Group Inc. (GS). Expected to report Q1 profit of $2.58 per share.
• Healthways Inc. (HWAY). Expected to report Q2 profit of $0.33 per share, which is a 10.33% increase from the same quarter last year when the company earned $0.30.
• Lehman Brothers Holdings Inc. (LEH). Expected to report Q1 profit of $0.72 per share.
• AAR Corp. (AIR). Expected to report Q3 profit of $0.46 per share, according to analysts polled by Thomson Financial.
• Adobe Systems Inc. (ADBE). Expected to report Q1 profit of $0.45 per share.
• Darden Restaurants Inc. (DRI). Expected to report Q3 earnings of $0.82 per share.
• Goldman Sachs Group Inc. (GS). Expected to report Q1 profit of $2.58 per share.
• Healthways Inc. (HWAY). Expected to report Q2 profit of $0.33 per share, which is a 10.33% increase from the same quarter last year when the company earned $0.30.
• Lehman Brothers Holdings Inc. (LEH). Expected to report Q1 profit of $0.72 per share.
Today's Top Stories....
• New York Fed called on banks to support Lehman Bros. - report
• NYSE Euronext announces $1 billion share buyback; hikes annual dividend
• Goldman Sachs raised to 'outperform' at Wachovia on strong capital position
• Bear Stearns shareholder Joe Lewis seeks to block JP Morgan takeover - report
• BlackRock explores solutions for fund shareholders hit by auction-rate failures
• AstraZeneca could pay £14.25/shr for Shire and still create value - UBS
• Vodafone to axe 450 head office jobs • Deutsche Bank sued by auction-rate securities investors
• NYSE Euronext announces $1 billion share buyback; hikes annual dividend
• Goldman Sachs raised to 'outperform' at Wachovia on strong capital position
• Bear Stearns shareholder Joe Lewis seeks to block JP Morgan takeover - report
• BlackRock explores solutions for fund shareholders hit by auction-rate failures
• AstraZeneca could pay £14.25/shr for Shire and still create value - UBS
• Vodafone to axe 450 head office jobs • Deutsche Bank sued by auction-rate securities investors
Monday's Trading Summary...
U.S. Markets
Dow +21.16 (+0.18%)
Nasdaq -35.48 (-1.60%)
S&P 500 -11.54 (-0.90%)
News That Moved the Market
Don't Panic. When the opening bell rang, many expected today to be a bloodbath. Bear Stearns's (BSC, -84.0%) liquidity crisis and sale to JP Morgan (JPM, +10.3%) for about $240 million shocked most investors and left many wondering what bank was next. To stem the fears, the Fed reacted with assertiveness, lowering its discount rate by a quarter of a point to 3.25% and offering lending to a greater number of companies, including investment banks. Though foreign markets lost ground overnight, the Fed's actions were enough to reduce nervousness and actually convince some that the Fed will back this market and not let it nosedive. Trading turned around midday and a late rally allowed the markets to end basically flat. Tomorrow's Fed announcement will be important, with the market now expecting a full-point cut.
Lehman May Be Next. Lehman Brothers (LEH, -19.1%) stock dropped as speculation increased that it may be the next to fold. The move came after CEO Richard Fuld said the Fed's "move improves the liquidity picture and, from my perspective, takes the liquidity issue for the entire industry off the table." The idea that the company's CEO would have to say something like that, especially after Bear's CEO's gave a similar statement last week, scared investors and drove them to sell their Lehman positions. Tomorrow, Lehman reports its latest earnings.
Quick Tics:
Commodities had a weak session, with the 4.6% decline in the CRB Index…
To this point, Bear Stearns's book value was reported to be $84 per share at the end of the fourth quarter.
Tuesday's Notable Earnings:
Adobe Systems (ADBE) Time Not Supplied
Goldman Sachs (GS) Before Open
Lehman Brothers (LEH) Before Open
Gamestop Corp. (GME) Time Not Supplied
Economic Events:
8:30 AM: Housing Starts
8:30 AM: PPI
10:00 AM: State Street Investor Confidence Index
2:15 PM: FOMC Announcement
Dow +21.16 (+0.18%)
Nasdaq -35.48 (-1.60%)
S&P 500 -11.54 (-0.90%)
News That Moved the Market
Don't Panic. When the opening bell rang, many expected today to be a bloodbath. Bear Stearns's (BSC, -84.0%) liquidity crisis and sale to JP Morgan (JPM, +10.3%) for about $240 million shocked most investors and left many wondering what bank was next. To stem the fears, the Fed reacted with assertiveness, lowering its discount rate by a quarter of a point to 3.25% and offering lending to a greater number of companies, including investment banks. Though foreign markets lost ground overnight, the Fed's actions were enough to reduce nervousness and actually convince some that the Fed will back this market and not let it nosedive. Trading turned around midday and a late rally allowed the markets to end basically flat. Tomorrow's Fed announcement will be important, with the market now expecting a full-point cut.
Lehman May Be Next. Lehman Brothers (LEH, -19.1%) stock dropped as speculation increased that it may be the next to fold. The move came after CEO Richard Fuld said the Fed's "move improves the liquidity picture and, from my perspective, takes the liquidity issue for the entire industry off the table." The idea that the company's CEO would have to say something like that, especially after Bear's CEO's gave a similar statement last week, scared investors and drove them to sell their Lehman positions. Tomorrow, Lehman reports its latest earnings.
Quick Tics:
Commodities had a weak session, with the 4.6% decline in the CRB Index…
To this point, Bear Stearns's book value was reported to be $84 per share at the end of the fourth quarter.
Tuesday's Notable Earnings:
Adobe Systems (ADBE) Time Not Supplied
Goldman Sachs (GS) Before Open
Lehman Brothers (LEH) Before Open
Gamestop Corp. (GME) Time Not Supplied
Economic Events:
8:30 AM: Housing Starts
8:30 AM: PPI
10:00 AM: State Street Investor Confidence Index
2:15 PM: FOMC Announcement
Monday, March 17, 2008
Afternoon Update....
Dow -146
S&P - 29
Nasdaq -51
After gapping lower, the market actually went positive just before noon. Since then we have drifted back lower.
My take: This market is pretty much washed out. Not that we can't go lower, but long term, we have a serious buying opportunity here. The Fed is not going to let the entire US Financial system collapse. However, this is how assets are currently being priced. Bear Stearns was always the type of company that had an air of shadiness about them....and they probably got what they had coming to them.
Tomorrow the Fed meets on interest rates. No doubt they will try to shock the market back to life again. It's too bad they didn't react quicker...if you remember I was pushing for them to act on rates the first week of January...they waited until the third week...and basically created this run on the bank mentality.
If history holds up...and it should...this looks like an inflection point...a place to buy and NOT a place to sell. Hang in there and I think you will be better off a year from now.
Look for bargains.
S&P - 29
Nasdaq -51
After gapping lower, the market actually went positive just before noon. Since then we have drifted back lower.
My take: This market is pretty much washed out. Not that we can't go lower, but long term, we have a serious buying opportunity here. The Fed is not going to let the entire US Financial system collapse. However, this is how assets are currently being priced. Bear Stearns was always the type of company that had an air of shadiness about them....and they probably got what they had coming to them.
Tomorrow the Fed meets on interest rates. No doubt they will try to shock the market back to life again. It's too bad they didn't react quicker...if you remember I was pushing for them to act on rates the first week of January...they waited until the third week...and basically created this run on the bank mentality.
If history holds up...and it should...this looks like an inflection point...a place to buy and NOT a place to sell. Hang in there and I think you will be better off a year from now.
Look for bargains.
Market Gaps Lower....
Dow -152
S&P - 22
Nasdaq -38
Following Bear Stearns collapse the market is lower. The big question is whether there are any other collapses in the wings.
The Fed meets tomorrow...should be an interesting meeting.
S&P - 22
Nasdaq -38
Following Bear Stearns collapse the market is lower. The big question is whether there are any other collapses in the wings.
The Fed meets tomorrow...should be an interesting meeting.
Fed Cuts Discount Rate....
At the same time it was backstopping J.P. Morgan's buyout of Bear Stearns, the Fed also stepped in to prop up the broader credit crunch. The Fed dropped its discount window rate -- at which intstitutions borrow directly from the Fed -- by 25 BP to 3.25%, and extended the maximum loan term to 90 days from 30. In an unprecedented move, it also opened up the window to securities dealers for at least the next six months.
The move to waive the usual restriction on Fed lending to banks was approved unanimously by the five FOMC governors.
The move to waive the usual restriction on Fed lending to banks was approved unanimously by the five FOMC governors.
Bear Stearns Taken Out by JP Morgan...
Bear Stearns (BSC) shocked Wall Street by selling itself Sunday for just $2/share to J.P. Morgan & Chase (JPM), the bank that stepped up Friday to bail it out in tandem with the New York Federal Reserve. In order to make the deal palatable, the Fed will assume risk on up to $30B of Bear Stearns' riskiest assets, including $20B of mortgage-backed securities. "
Despite recent events, the health of franchise and the prime brokerage and clearing business is in good shape," a JPM executive said Sunday. JPM does, however, assume some of Bear's large positions. It's unlikely other bidders will emerge, due to the degree of uncertainty surrounding Bear's positions.
Despite recent events, the health of franchise and the prime brokerage and clearing business is in good shape," a JPM executive said Sunday. JPM does, however, assume some of Bear's large positions. It's unlikely other bidders will emerge, due to the degree of uncertainty surrounding Bear's positions.
Sunday, March 16, 2008
Free Cash Flow "BUYS"
Barron's interviews free-cash guru Bruce Berkowitz, CEO of Fairholme Capital Management, whose no-load Fairholme Fund boasts returns of 16.27% since its 1999 inception. Berkowitz advocates buying stocks capable of reacting to a variety of economic conditions, with an emphasis on companies with above-average free cash flow.
Stocks he likes:
Conglomerates Berkshire Hathaway (BRK.A) and Leucadia National (LUK) -- "they are always playing defense, because you never know when something bad will happen." Berkshire is still "reasonably priced," and stands to have "one more good growth spurt" as it capitalizes on current economic soft spots.
WellCare Health Plans (WCG) -- shares plunged when its headquarters were raided by federal agents in October. Past history shows that after a fine and some executive firings, firms in similar situations move on. With $5/share ($37) of free cash flow, it's too cheap.
Mohawk Industries (MHK) -- despite a rough residential real-estate market, MHK can earn $7/share of free cash flow. CEO Jeffrey Lorberbaum is growing the business while cutting costs.
St. Joe (JOE) -- an international airport is being built in the middle of its Florida land. Long-term, its holdings of oceans, rivers, lakes and sand make it a "very, very valuable company."
Sears (SHLD) -- despite recent turmoil, CEO Eddie Lampert understands retail. Sears' properties provide a downside cushion; shares are priced for a worst-case outcome.
Stocks he likes:
Conglomerates Berkshire Hathaway (BRK.A) and Leucadia National (LUK) -- "they are always playing defense, because you never know when something bad will happen." Berkshire is still "reasonably priced," and stands to have "one more good growth spurt" as it capitalizes on current economic soft spots.
WellCare Health Plans (WCG) -- shares plunged when its headquarters were raided by federal agents in October. Past history shows that after a fine and some executive firings, firms in similar situations move on. With $5/share ($37) of free cash flow, it's too cheap.
Mohawk Industries (MHK) -- despite a rough residential real-estate market, MHK can earn $7/share of free cash flow. CEO Jeffrey Lorberbaum is growing the business while cutting costs.
St. Joe (JOE) -- an international airport is being built in the middle of its Florida land. Long-term, its holdings of oceans, rivers, lakes and sand make it a "very, very valuable company."
Sears (SHLD) -- despite recent turmoil, CEO Eddie Lampert understands retail. Sears' properties provide a downside cushion; shares are priced for a worst-case outcome.
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