Reuters reported yesterday that privately held EMI Group plans to join Vivendi’s Universal Music Group and offer songs in Nokia (NYSE: NOK) mobile devices as part of the new “Comes with Music” program. The report comes out of Nokia’s home country, Finland, but since Universal’s commitment bridges international divisions, it is likely the EMI connection will as well.
The “Comes with Music” program was first announced in December 2007, with Universal fully on board to offer unlimited access to millions of Digital Rights Management-free tracks for a year, and any tracks on the phones at the end of the year becoming the consumers’. Clearly, the program has a major upside in that the end of a subscription does not mean music tracks are going to disappear, something that always seems to be at the fore of subscription-based music plans. The tracks will also be available on those consumers’ computers.
As nice as the plan is, the labels will not lose too much from allowing a subscription plan like that to take off. Nokia and label executives are banking on the size of catalogs to combat fears that it will hurt the music industry financially. In the press release for “Comes with Music”, Nokia’s Executive Vice President for Multimedia stated, “even if you listened to music 24 hours a day, seven days a week, you would still only scratch the surface of the music that we’re making available.”
With two major labels on board, the “Comes with Music” program is sure to be on the right track to succeed when it is launched later this year. The only worry that likely remains is whether any other digital store will initiate a better or similar plan to increase sales.
This post is one of several on business heirs apparent. Let us know in the comments whether you think Charlene de Carvalho-Heineken’s heir should take up the reigns of Heineken, and be sure to check out the other heir apparent posts.
It was Charlene de Carvalho-Heineken’s father, Alfred “Freddie” Heineken, who built the family business from a small Dutch brewer into Europe’s largest brewing empire. A well-known bon vivant, he was friendly with the Dutch royal family, and his sense of humor didn’t abandon him even after a three-week kidnapping ordeal in 1983: he claimed that his kidnappers tortured him by making him drink Carlsburg.
On Freddie’s death in 2003, his heir apparent and only child, Charlene, became the wealthiest woman in the Netherlands, now worth more than $7 billion. She lives a more low-key life in London with her five children and stock broker, and former Olympic skier, husband. She continues to hold the controlling stake in Heineken, though she hasn’t been as involved in the company day-to-day as her father was. She told a family biographer that she intends to keep the business together until her heir apparent, her eldest son, is old enough to take on the mantle.
Heineken hasn’t been running on cruise control, however. It just announced a plan to build a brewery in South Africa and has continued its expansion into central and eastern Europe by acquiring Romanian Brewer Bere Mures. But the biggest news recently is Heineken’s joint venture with Carlsberg to buy up and break apart British brewer Scottish & Newcastle, a deal which was just approved by EU regulators. Under the terms of the deal, Heineken will take control of S&N’s British, Belgian, and Indian operations, while Carlsburg gets those in Russia, Greece, and China.
Unless something unexpected happens, when Charlene de Carvalho-Heineken passes the reins to her son, he’ll be taking over a brewing company bigger than Anheuser-Busch Cos. (NYSE: BUD). In the meantime, the Heineken company retains a sense of humor, at least as far as its advertising goes:
Alsobe sure to check out the other heir apparent posts.
TheStreet.com’s Jim Cramer states we’ll finally get real pricing of the hard-to-mark paper.
After months of saying, “Why don’t they bring in some pros, do a Resolution Trust and get on with things?” I can’t believe that it is actually happening. With the anointing of BlackRock (NYSE: BLK) (Cramer’s Take) — nice short squeeze in that one, buddy — to parse out or invest in the worst toxicity that’s Bear’s (NYSE: BSC) (Cramer’s Take) portfolio, the Fed/Treasury — and I reiterate that the Treasury is driving this — is signaling the beginning of the end of the “hard to mark/hard to trade” component of this nasty bear market in fixed income.
Even as recently as two weeks ago I could not believe this stuff couldn’t trade and remained 20 bid and 80 asked, meaning that the gulf between buyers and sellers was just too ridiculous.
Now, with BlackRock, empowered by the government, to dump stuff or parse it out, we are going to get real prices because “something has to happen.” Some trades have to occur. All that had happened before this was that Bear inventoried all this bad stuff, having unwound it from funds of its own or taken junk from clients, and we had no idea how to value it.
This moment might also be when we find out how bad things really are. I have to believe that even with the high defaults we have, some of the paper that wasn’t fraudulent, which is saying something, has some worth if you have the staying power to own it and aren’t worried about where you are marked.
That’s BlackRock’s position now that it has been anointed.
Remember the sequence. Hedge funds borrow money to purchase bonds, the riskier the better because no one defaults on homes and homes don’t lose their value, and then they subtract the cost of borrowing from the coupons they get from the bonds and they book a consistent profit.
Until home price DEPRECIATION sets in. My belief is that now that BlackRock is in we’ll start to get that kind of markings that make sense — a California-weighted bond, for example, might be worth 30 cents on the dollar, Florida-weighted paper 20 cents. If California and Florida are both in the piece of paper, maybe you just put it away and see what happens. Whatever, anything is superior than the limbo that we’ve been in where no one who purchases the bonds wants to mark them down because then they immediately have to put up more capital, particularly because the ideal way — the most honest way, that is — is to mark paper on the bid side.
So, with BlackRock sorting things out, we’ll be able to price and move a lot of stuff that hasn’t been priced. I think we will discover that things aren’t as bad as we thought for some pieces of paper, while others are indeed worthless.
It isn’t knowing that’s been killing the back end of the process. The front end, the home price depreciation end, is going to take care of itself when the last resets occur and the fire sales of existing properties occur now for those who can’t afford to keep them.
Oh, and if I hear, “This is highly unusual,” or, “There’s a moral hazard here,” from one more person, I’ll simply banish them to universities to write papers on the topics. Deals like the JPMorgan (NYSE: JPM) (Cramer’s Take) and BSC and BLK deal are the nature of how we get out of this, and we could not do it without Treasury’s help — the government HAD been relying on the market, and the market simply ceased to work anymore.
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 had no positions in the stocks mentioned.
To the surprise of no one, the newly private Tribune Co. is probably going to sell Newsday. The once-venerable New York paper, like all metro dailies, has fallen on hard times and Tribune’s new CEO and owner Sam Zell has got a mountain of debt to pay down.
According toThe Wall Street Journal . Long Island-based Cablevision Systems Corp. (NYSE: CVC) and New York’s Daily News as potential buyers. Rupert Murdoch probably would love to purchase Newsday and combine it with News Corp’s (NYSE: NWS) New York Post, but I am not sure whether the antitrust regulators would allow it. He’s trying to merge everything but the editorial staffs of the Post — never a hugely profitable enterprise — with Newsday to save money in a joint operating agreement, the Journal says.
After spending $5 billion for Dow Jones, Murdoch needs to pick all of the low-hanging fruit he has the ability to. I anticipate this deal to happen. Maybe it will lead to others for papers that buyers are eager to unload. Perhaps, Murdoch might purchase other Tribune papers from Zell such as The Baltimore Sun or Los Angeles Times. As the Australian tycoon showed in chasing Dow Jones, influence matters as much to him as profits. Gaining more large papers furthers that goal at the expense of shareholders.
Suntech Power (NYSE: STP) has announced that it will make a strategic investment in Nitol Solar. STP will acquire newly issued ordinary shares in Nitol Solar, an independent polysilicon producer, comprising a minority interest in Nitol Solar for a total consideration of up to $100 million.
This is of course subject to the satisfaction of certain conditions. The companies have some history as STP entered into a multi-year first phase supply agreement with Nitol Solar in August 2007 for the supply of committed monthly volumes of polysilicon to STP from 2009 to 2015.
If you look at the reports from companies like LDK Solar Co., Ltd. (NYSE: LDK) from just this morning with being fully booked in wafer orders, and with major players taking options to buy supply from producers like Hoku Scientific Inc. (NASDAQ: HOKU) that doesn’t even have its main factory on line yet, you can tell that the solar companies are doing everything they can to secure more capacity.
Other deals will be coming down the pipe, and its just surprising that some of these players haven’t tried using their stocks as currency to acquire each other.
Target Corp. (NYSE: TGT) stock is trading lower after competitor JC Penney (NYSE: JCP) cut its first-quarter profit estimate to 50 cents per share from 75 cents per share, citing waning consumer demand and lower-than-expected sales. The announcement has sent the retail sector down, piquing worries that inflation and a slowing economy will adversely affect the retail sector. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on TGT.
After hitting a one-year high of $70.75 in July, the stock hit a one-year low of $47.01 in January. This morning, TGT opened at $50.05. So far today the stock has hit a low of $49.50 and a high of $50.52. As of 12:30, TGT is trading at $50.23, down 75 cents (-1.5%). The chart for TGT looks bullish but deteriorating, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.
For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $55 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 13.6% return in 3 weeks as long as TGT is below $55 at April expiration. Target would have to rise by more than 9% before we would start to lose money. Learn more about this type of trade here.
TGT hasn’t been above $55 for more than a few days at a time since November and has shown resistance around $53 recently. This trade could be risky if the US economy turns around quickly, but even if that happens, this position could be protected by resistance TGT might find right around $55, where the stock has topped out over the past month.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in TGT or JCP.
Regional home loan banks will be allowed to boost holdings of mortgage-backed securities by more than $100 billion, federal regulators announced Monday, (pdf) in still another effort to both increase liquidity to and stabilize the mortgage market.
The decision by the Federal Housing Finance Board enables banks in the Federal Home Loan Bank system to increase their holdings of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) securities. The FHFB said it will let banks use their existing capital to increase their holdings of agency mortgage-backed securities for two years. The purchases are restricted to securities guaranteed by Fannie Mae and Freddie Mac.
The move comes one week after the regulator for Fannie Mae and Freddie Mac eased capital requirements for the two home mortgage purchasers, enabling them to add another $200 billion into the mortgage market.
Further, while the overall combined capital infusion amount, about $350 billion, represents a fraction of the $4.5 trillion in mortgage backed securities backed by Fannie Mae and Freddie Mac, economists generally agree the money represents a non-insignificant piece of the housing recovery puzzle. Housing Sector Analysis: Another positive data point for the U.S. housing sector, which brings the total positive data points this Monday to two, a record of late for the beleaguered sector. The additional capital amount is small, in market terms, but every additional capital amount, or investor, helps, to use a clich
Sony (NYSE: SNE) is still in the game, and it wants competitors Microsoft (NASDAQ: MSFT) and Nintendo (OTC BB: NTDOY) to know about it. The latest move by the company might not be breathtaking or anything like that, but it nevertheless shows a console maker that believes its product is worth something to living rooms across America (and the world, for that matter).
According to the following article from The Wall Street Journal(subscription required), Sony is injecting some new bells and whistles into the PlayStation 3 unit. Via a system update called Blu-ray Disc Profile 2.0, Sony users will be able to do neat things like transfer images and song playlists to the company’s handheld PSP system, invoke a resume-play feature for Blu-ray films even once the disc has been taken out of the system, and download streamed content. Yep, these are neat things, all right — but will they make people suddenly state to themselves, “Oh man, I’ve to get a PlayStation 3 over a Nintendo Wii or a Microsoft Xbox 360 for sure now!!!”
Well, it’s hard to say that someone would state that exactly, but Sony is doing the correct thing here by adding functionality. And there are some who will indeed care about this stuff, and like it. So it’s important to have two minds about this as shareholders — it isn’t mindblowing news, but it shows that Sony is out there promoting. Anything helps. Plus, I like how Sony is yet again highlighting the Blu-ray capability — that is a huge distinction between its unit and the Xbox 360/Wii platforms. Blu-ray, as we all know by now, is the winner of the new format war, and Sony should gloat about that fact at each conceivable juncture.
So, again, I’m not saying this particular update will by itself turn the tide or anything — price cuts would be more effective — but I think it will help the brand equity of the PlayStation 3. As for me, I’m not running out to buy Sony — I’m still happy playing the video-game revolution via my Activision (Nasdaq: ATVI) shares.
Disclosure: I own shares of Activision; positions can change at any time.
Motorola (NYSE: MOT) is getting kicked while it is down. Not that the company has done a good job of keeping its cellphone sales going. It does not have a single “hot” product. Its global market share is around 13%, depending on who is measuring. Analysts are cutting the number of handsets that they think the US company sold in the first quarter.
The one place Motorola does have good market share is the US. With 35% of the market, it is the leader. Nokia (NYSE: NOK) as only 10% against its global share of 40%. Nokia plans to change that. According toThe Wall Street Journal : “Nokia is making mostly behind-the-scenes changes. It is cooperating with the large carriers such as AT&T (NYSE: T) that control how most phones are sold to customers in the U.S. and has started designing phones specifically for North America.”
While the news could be good for Nokia, if it is successful, it would not have a huge impact on its financials. The company already sells over 400 million handsets and does particularly well in fast-growing markets in China.
Any share Motorola loses in the US would be devastating. The company lost about $1 billion in its handset division on $19 billion in revenue last year. Those numbers are likely to be worse for 2008.
When Motorola announced its was breaking the company in two, its share price barely moved. It may be occurring to Wall Street that the company is not worth more than the sum of its parts, especially with its largest division doing so poorly and under pressure from competition.
Douglas A. McIntyre is an editor at 247wallst.com.
This post is one of several on business 
To the surprise of no one, the newly private Tribune Co. is probably going to sell Newsday. The once-venerable New York paper, like all metro dailies, has fallen on hard times and Tribune’s new CEO and owner Sam Zell has got a mountain of debt to pay down. 
Sony
Motorola
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