Stock futures were mixed early Friday morning with the Nasdaq futures higher, given a boost by a new deal being discussed between Microsoft and Yahoo! Blue chip stock futures were lower after a new forecast the economy will weaken further and unemployment will rise.
U.S. stocks ended Friday little changed after consumer confidence data disappointed Wall Street again and high oil prices dampened the mood. For the week, though all the major indexes posted gains. The Dow industrials rose 1.9% for the week despite being down 0.05% Friday, the S&P 500 rose 2.7% for the week, helped by a 0.13% rise Friday, and the Nasdaq Composite climbed 3.4%, including a 0.19% decline Friday.
At 10:00 a.m. EDT, April leading indicators, a lagging broad, general, indicator of economic activity, is expected to show minimal increase. However, a survey was released Monday by the National Association for Business Economics giving their collective outlook on the U.S. economy. While, according to the survey economists believe the worst of the housing slump and the credit crunch might come to an end this year, a majority of economists now believe the economy is in a recession or on the brink of a recession and therefore they forecast further weakening of the economy and unemployment to continue to rise.
Once again this morning investors’ attention will turn to Microsoft Corp. (NASDAQ: MSFT) and Yahoo! Inc. (NASDAQ: YHOO) as the former is once again trying to team up with the latter to challenge Internet search and advertising leader Google Inc. (NASDAQ: GOOG). While the companies haven’t disclosed any specifics, it appears that at this point the renewed talks do not include another attempt to take over Yahoo. YHOO shares are up marginally in premarket trading.
Still in deal news, the Wall Street Journalreported that after failing to get the support of a majority of the company’s shareholders for a deal and after the previous deadline has expired Friday, Electronic Arts (NASDAQ: ERTS) is apt to again extend the deadline for its hostile tender offer to acquire Take-Two Interactive Software (NASDAQ: TTWO).
Lowe’s Companies Inc. (NYSE: LOW) shares are down over 3% in premarket trading after the home improvement retailer stated its profit fell 17.9% and sales fell 8.4% as it faces a challenging sales environment amid a national housing slump. Lowe’s 41 cents earnings per share is actually about the 40 cents estimated by analysts.
A new capital raise may have set a record, or at least close to it. Tygris Commercial Finance Group, Inc. has launched a new commercial finance company for middle markets transactions, and it says in the launch release that its funding is over $1.75 billion in equity commitments. Tygris says this is the largest initial capital raise ever in the U.S. commercial finance sector. Tygris will initially have offices in Chicago, Stamford, CT and Parsippany, NJ.
Tygris was founded by Aquiline Capital Partners LLC (”Aquiline”), a New York based private equity firm specializing in financial services, with New Mountain Capital, L.L.C. and TPG Capital joining as lead investors.
The company also claims to have established significant relationships with financial institutions including Deutsche Bank, Credit Suisse, SunTrust Robinson Humphrey, Barclays, Wachovia and Wells Fargo Foothill. With the backers and management team here on this, this seems like it is easily within the realm of contacts.
The Company initially will concentrate on developing leading franchise positions in three commercial finance businesses: middle market corporate finance, middle market equipment leasing and asset finance, and small ticket leasing.
Below is the management team, and unless I am missing something it looks like an impressive list of executives:
Frederick E. “Rick” Wolfert, former Vice Chairman of Commercial Finance of the CIT Group and President of Heller Financial Inc., is the Company’s CEO.
Steven F. Kluger, EVP, Capital Markets and Corporate Strategy; former President/CEO of GE Capital Markets.
Stuart A. Armstrong, President of Corporate Finance; former President/CEO of Black Diamond Commercial Finance, former Senior Managing Director and Head of Corporate Lending’s vertical industry financing groups at GE Commercial Finance.
Laird M. Boulden, President of Asset Finance (Chicago); former President/CEO of RBS Asset Finance, and President/co-founder of the Commercial Equipment Finance Group for Heller Financial Inc.
Tim J. Eichenlaub, EVP, Chief Risk Officer; former Senior Managing Director and Group Head for CIT’s Sponsor Finance business.
T. Doug Hollowell, EVP, General Counsel and Head of Depository Strategy; former Executive Director at Morgan Stanley Corporate Treasury, and General Counsel at Merrill Lynch Capital.
In what looks to be a pretty desperate attempt to revive its failing business, Borders Group Inc. (NYSE: BGP) has officially cut its ties with Amazon.com (NASDAQ: AMZN) and launched its own e-commerce website. Under the previous arrangement, shoppers at Borders.com had their orders fulfilled by Amazon, with Borders taking a small commission.
Check out the site here. It offers some great incentives to switch over from Amazon — like free shipping on orders over $25! Oh wait. Amazon and Barnes & Noble (NYSE: BKS) already offer the exact same deal. Never mind.
Borders invested a lot of money in developing a site with no particular competitive advantages. Most Amazon customers are pretty happy with the service they get, and I just don’t see any reason for anyone to switch. The duplication of effort probably makes Borders less attractive to potential strategic buyers like Barnes & Noble, which might have preferred that the company pay down debt instead of building another website.
A piece in the USA Today reports that top retail chains have improved their supply chain management to get the hot new fashions in stores more swiftly before.
Sounds great, right? Maybe not. According to the article. “With the tighter economy squeezing retailers industrywide, several companies have hit on a successful formula for propping up earnings: They’re speeding up the time it takes to get the latest fashions into their stores.”
Obviously increased efficiency is great and there’s nothing not to enjoy about improved ordering, fewer markdowns, etc. But it could be creating a false sense of optimism if it’s allowing for the frontloading of sales. $30 million in sales in the first quarter and then $10 million in the second is the same as $20 million in each quarter: but if you don’t know about the differences in inventory situations, you could have a false sense of optimism at the end of the first quarter.
Time will tell whether superior supply chain management is messing with the distribution of sales throughout the year.
I wrote a few weeks ago about Chrysler’s new sales gimmick: buy a new Chrysler and pay no more than $2.99 a gallon for gas for three years.
Well it seems that the sales promotion is working, at least in the short run. Chrysler is reporting that sales in May are up 15% compared to April. Vice Chairman Bill Jim Press has announced that the offer will be extended until after the July 4 holiday.
But the real question is whether this is enough to turn Chrysler around. I was skeptical when I first heard about the plan, and I remain so. The cheap gas promotion is no doubt increasing foot traffic at Chrysler dealers and even moving some sheet metal, but the overall picture for Chrysler remains pretty bleak. Chrysler sales are down 18% for the year, and sales in May 2008 will be weaker than in May 2007 even with the promotion. So the cheap gas offer is probably just filling a few holes in a sinking ship.
Current projections call for fewer car sales in 2008 than in 2007, with the American car market shrinking by something like one million cars, down to 15 million. Given the poor mileage of most Chrysler products, I suspect that even with the $2.99 gas sales promotion, a disproportionate number of those unsold vehicles will be Chryslers. Even guaranteed cheap gas can’t disguise the fact that Chrysler isn’t selling the well-designed, fuel efficient cars that Americans are increasingly demanding.
Perhaps the most well regarded bond manager in the country, Bill Gross of Pimco, is making a huge gamble on mortgage debt. The Pimco Total Return Fund, which invests $130 billion, has tripled its exposure to mortgage debt instruments.
According to the FT, Gross is counting on the US government to partially bail out the housing industry. He told the paper that “his decision to raise exposure to mortgage debt in recent months was based on the US government’s implicit guarantee of Freddie Mac and Fannie Mae, the government-sponsored mortgage agencies.”
Of course, counting on the government to do anything is a bit risky, but Gross is probably making a good bet that the US won’t let the housing situation slide much more than it has already. The danger to the entire economy is too great.
Gross could be right, and, if he’s, Pimco investors stand to make massive returns on the fund.
Douglas A. McIntyre is an editor at 247wallst.com.
Yesterday was a tough day in the markets, with the Dow falling 199 points. But if you follow some of the legends of finance - such as Carl Icahn, T. Boone Pickens and The Blackstone Group’s (NYSE: BX) Steven Schwarzman - you will notice that they are getting aggressive.
Keep in mind that these guys have been through multiple market cycles. And if history is any worthy benchmark, it’s during times of instability where the massive money is made.
Pickens is focusing on the energy industry. He sees major demand/supply imbalances and is buying various stocks. He’s also interested in natural gas and alternative fuels.
As for Icahn, he’s doing what he does best - shareholder activism. He senses when companies are vulnerable and seems to relish an attack on corporate managements and boards. Of course, he’s gearing up for a fight with Yahoo! (NASDAQ: YHOO). Interestingly enough, he persuaded Pickens to buy 10 million shares.
And with Schwarzman, he’s buying up the bank debt of companies that went private. Because Blackstone sees many deals, it has an extensive database of opportunities.
In other words, the legends of finance are confident in the long-term. They are making some large bets — based on lots of experience and due diligence — and not listening to the short-term noise. All in all, these are some valuable lessons for investors.
Goldman Sachs cut its view of U.S. department stores to Neutral from Attractive. Specifically, the broker downgraded J.C. Penney (NYSE: JCP) and Nordstrom Inc. (NYSE: JWN) to Neutral from Buy after its commodity team upped 2008 oil price forecasts to $149 a barrel. Still, Goldman upgraded TJX Cos. (NYSE: TJX) to Buy from Neutral and removed Kohl’s Corp. (NYSE: KSS) from its conviction-buy list in favor of Wal-Mart Stores Inc. (NYSE: WMT).
By now I’m getting confused with all the deals Apple Inc. (NASDAQ: AAPL) is signing with wireless operators to sell the iPhone in different countries around the world. I believe the past two weeks we heard of at least two deals, including one with a S.Korean company. Today, French wireless operator Orange stated it has signed a deal to sell its iPhone in the Middle East, Africa and several European countries. Orange will be the exclusive iPhone provider in Belgium and Romania. It seems that by now Apple’s got the world covered.
General Motors Corp. (NYSE: GM) is apparently considering launching its Chevrolet brand in South Korea. In its attempt to stay ahead of fast growing Toyota (NYSE: TM), GM will try to capture a more massive share of S.Korea’s growing market for imported vehicles.
As Yahoo! (NASDAQ: YHOO) is trying to keep Icahn off its board back, it keeps speaking about a search advertising partnership with Google Inc (NASDAQ: GOOG), according to a Reuters source.
And Microsoft (NASDAQ: MSFT) also keeps to other business these times. The software giant joined The One Laptop Per Child project as the green-and-white “XO” personal now can run Windows in addition to their homegrown Linux-based interface. This could further the cause of the organization.
Stock futures fell early Tuesday morning, ahead of an inflation reading at the wholesale level. It is rising prices, as well as the worse housing slump in over a century that caused Home Depot’s profit to decline 66% when it reported this morning. Other retailers are scheduled to report earnings this day, and the concern is many will show they face similar problems.
U.S. stocks ended mixed on Monday despite rising quite steadily until 1:30 p.m. EDT. While leading economic indicators alleviated some concerns over the economy, record crude oil prices, once again, dampened the mood on the Street and the Dow industrials rose 41 points, or 0.32%, the S&P 500 added a point, or 0.09%, but the Nasdaq Composite dropped 12 points, or 0.50%.
Producer price index, a gauge of inflation at the wholesale level, is due out in about an hour, at 8:30 a.m. EDT. The data is expected to show a 0.4% rise in April. Excluding food and energy, core-PPI is expected to show a rise of 0.2% in April.
In focus at the moment are Home Depot (NYSE: HD) earnings. The home improvement retailer reported a 66% drop in first-quarter profit Tuesday due to a massive one-time charge and continued weakness in the housing market. Excluding the charge, though, the results — 41 cents a share — beat expectations of 37 cents a share. Home Depot also stated revenue in the quarter fell 3.4% and same-store sales fell 6.5% in the first quarter.
Staples Inc. (NASDAQ: SPLS) posted a slim 1.5% increase in its first-quarter profit, for the first time in two quarters. The results matched analysts expectations. Sales rose 6%, beating estimates, and the company reaffirmed its profit and sales forecast for the full year. On Monday afternoon Staples brought its $2.5 billion hostile takeover bid for Corporate Express NV directly to the Dutch office products firm’s shareholders.
Among other retailers also due to report before the bell Tuesday is Target (NYSE: TGT).
Stock futures were mixed early Friday morning with the Nasdaq futures higher, given a boost by a new deal being discussed between Microsoft and Yahoo! Blue chip stock futures were lower after a new forecast the economy will weaken further and unemployment will rise.
In what looks to be a pretty desperate attempt to revive its failing business, 
A 
I wrote a few weeks ago about Chrysler’s 
Yesterday was a tough day in the markets, with the Dow falling 199 points. But if you follow some of the legends of finance - such as Carl Icahn, T. Boone Pickens and 
and 
. He also operates 
Stock futures fell early Tuesday morning, ahead of an inflation reading at the wholesale level. It is rising prices, as well as the worse housing slump in over a century that caused Home Depot’s profit to decline 66% when it reported this morning. Other retailers are scheduled to report earnings this day, and the concern is many will show they face similar problems.
Entries (RSS)