In an SEC filing yesterday Carl Icahn and affiliates disclosed they added over 2.3 million shares of Motorola (MOT) on 3/6 and 3/7 at $9.75 and $9.99 a share.
This brings to total ownership to 6.44%.
Disclosure (“none” means no position):None
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Upgrades
Motorola (MOT)- AmTech Research Sell » Neutral
Telecom Italia (TI)- Bear Stearns Underperform » Peer Perform
EnCana (ECA)- Bernstein Underperform » Mkt Perform
Apache (APA)- Bernstein Mkt Perform » Outperform
XTO Energy (XTO)- Bernstein Mkt Perform » Outperform
Waters (WAT)- JP Morgan Neutral » Overweight
Clear Channel Outdoor (CCO)- Jefferies & Co Hold » Buy
Watson Wyatt (WW)- UBS Neutral » Buy
Talisman Energy (TLM)- Citigroup Hold » Buy
Comp. Cervecerias (CU)- Citigroup Sell » Hold
Downgrades
SiRF Technology (SIRF)- Collins Stewart Buy » Hold
Jabil Circuit (JBL)- Longbow Buy » Neutral
Clear Channel (CCU)- SMH Capital Buy » Sell
Jabil Circuit (JBL)- Credit Suisse Outperform » Neutral
Elan (ELN)- Canaccord Adams Hold » Sell
Brookfield Asset Mngmt (BAM)- BMO Capital Markets Outperform » Market Perform
Cooper Tire (CTB)- KeyBanc Capital Mkts Aggressive Buy » Hold
PF Chang’s (PFCB)- Friedman Billings Mkt Perform » Underperform
Hudson City Banc (HCBK)- Friedman Billings Outperform » Mkt Perform
Astoria Fincl (AF)- Friedman Billings Mkt Perform » Underperform
Aircastle (AYR)- JP Morgan Overweight » Neutral
Genesis Lease (GLS)- JP Morgan Overweight » Neutral
Jabil Circuit (JBL)- JP Morgan Overweight » Underweight
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Thursday’s Picks
Tim Seymour likes Cosan Limited (CZZ) $12.34 as the largest ethanol producer in Latin America.
Karen Finerman prefers Kaiser Aluminum (KALU) $69.71
Pete Najarian recommends buying puts on the Oil Services HLDRS (OIH) $176.44
Jeff Macke says he likes Home Depot (HD) $28.16 out of spite, because it didn’t advance in the Fast Money Madness tournament.
Wednesday’s Results
Jeff Macke likes Intel (INTC) $22.27 Close $21.86 LOSS
Tim Seymour prefers Tesoro (TSO) $29.88 Close $30.73 GAIN
Karen Finerman recommends the Altria (MO) $73.33 stub. Close $73 LOSS
Pete Najarian thinks Oracle (ORCL) $21.08 is a buy ahead of earnings. Close $20.94 LOSS
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 21-15
Tim Seymore= 14-6
Guy Adami= 20-21
Pete Najarian= 21-18
Karen Finerman= 16-21-1
Joe Terrenova= 1-1
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
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HiPhone, iPod, iPhone, Gphone
– The reason Apple (AAPL) has no deal in China
– The reason iPod sales are slowing
– More evidence Apple’s total control issues may be hurting it
– And finally, this..
Who can forget Ralph Witworth’s ill timed foray into Home Depot (HD) and the carnage that ensued for shareholders. At least Sprint (S) seems to have learned from that history and gave his demands their due course, the garbage can.
In February I begged Sprint’s new CEO Dan Hesse to ignore Withworth’s call to abandon the WiMax effort and spin off the long distance unit.
New out today from the Journal says Comcast (CMCSA) and Time Warner Cable (TWC) are considering providing funding for a new wireless company that would be operated by both Sprint and Clearwire (CLWR).
The new venture would create a nationwide wireless network using Sprint’s WiMax technology. The goal is to provide high-speed Web access and high-quality mobile video to laptops, cellphones and other mobile devices. Sprint and Clearwire have been working for months on WiMax have looked to raise at least $3 billion for a joint venture.
Comcast, Time Warner Cable and Bright House Networks are rumored to be contributing $1.7 billion to the new company.
This does some very important things:
1- Begins “tying up loose ends” at Sprint for any potential buyer. With all the uncertainty surrounding the effort, potential buyers have been staying at arms length. With this cleared up, a price for the company can be more easily attained.
2- Sprint Network: Sprint already has a far superior network to rival AT&T (T), its problems have been customer service related. As mobile web-browsing becomes more prevalent, the best network has the clear advantage. As this is rolled-out, that will be Sprint.
Rather than listening to Whitworth, Hesse ignored his calls to either abandon, sell or otherwise dispose of the WiMax effort and instead seems to be on the cusp of making it the future of the company.
Good for him…
Disclosure (“none” means no position):None
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Watch “Black Swan” author Nassim Nicolas Talub. This guy makes you think about how the “improbable” regularly happens.
Here he describes the book title:
Interesting video I cam across.
Mary Buffett talks about the types of businesses Berkshire’s (BRK.A) Warren Buffett likes..
Disclosure (“none” means no position):none
It looks like Carl Icahn will get what he want with Motorola (MOT)
Motorola announced this morning it has “commenced a process to create two independent, publicly-traded companies. Today’s decision follows the Company’s January 31, 2008 announced evaluation of the structural and strategic realignment of its businesses and represents affirmative steps to position its Mobile Devices and Broadband & Mobility Solutions businesses for success, while creating value for all Motorola shareholders.
“Our decision to separate our Mobile Devices and Broadband & Mobility Solutions businesses follows a review process undertaken by our management team and Board of Directors, together with independent advisors,” said Greg Brown, Motorola’s president and chief executive officer. “Creating two industry-leading companies will provide improved flexibility, more tailored capital structures, and increased management focus – as well as more targeted investment opportunities for our shareholders.”
Based on current plans, the creation of the two stand-alone businesses is expected to take the form of a tax-free distribution to Motorola’s shareholders, subject to further financial, tax and legal analysis, resulting in shareholders holding shares of two independent and publicly-traded companies.”
It took him a while but the man (Icahn) rarely loses…
Disclosure (“none” means no position):none
On March 11th Goldman Sachs (GS) made an announcement that may give light into the future of Circuit City (CC).
An analyst note removed price targets for CC’s stock saying Goldman is “acting as a financial adviser in connection with a strategic transaction that is fundamental to the reasonable analysis” of Circuit City’s stock price.
Hmm
But, Circuit City spokesman Bill Cimino said yesterday the “strategic transaction” referenced is an ongoing effort to sell the company’s InterTan unit, a Canadian electronics retailer purchased from RadioShack (RSK) in 2004.
He continued..”Last year, [the process] was put on hold for the holidays, then it started back up.” Goldman’s withdrawal of its stock rating “is really in connection with that.”
Well, if that is true, why didn’t Goldman withdraw its price targets from CC’s stock then? Shouldn’t they have done so? Why wait 6 months? It does not make sense.
The timing of investor Mark Wattles’ recent agitation and the Goldman change must leave one to think this has nothing to do with the Canadian unit. We can assume this if for no other reason than CC says it is so.
We can assume that something is in the works……
Disclosure (“none” means no position):None
Finally got around to reading the Borders (BGP) earnings call and the take away for me at least was very positive…
A couple of things struck me.
1- Guidance:
Despite a 2% comps sales increase number last year, guidance for the current year was in the words of CEO George Jones “very conservative”, “given the current environment”.
2- Cost cutting:
DVD “shrinkage” (read:theft) was at $20 million last year. The company has both made changes to security measures and will be reducing the number of titles sold and the expectations are for this number to fall dramatically.
Inventory ended the year at $1.3 billion and change, essentially flat over the previous year. Now, the company is moving towards a “face out” strategy on books that will reduce the number of titles sold at the store level. The results will be a dramatic fall in carried inventory at the store level. This savings drops immediately to the bottom line. The locations that have the “face out” shelving, carry 20% fewer titles yet are seeing double digits sales growth. hmmm.
The dividend was stopped (for now) and that will save $25 million and change.
3-Selective Promotions:
The Borders Rewards program now sports a membership of 25 million people. The importance of this is huge. It allows Borders to track purchases from its members and then tailor promotions to maximize the value of them. Retailers have been using these programs for years but Borders is only now getting involved. The tie in with the upcoming website launch will allow email-to-purchase marketing previously not available on this scale to the company.
4-Borders.com
The heavy costs involved with rolling out the site are done. Estimates of them were not given but looking sat the site one ought to assume they were substantial. It is important to note that in the previous year, Borders reaped no benefits from that investment. This year they will both reap the benefits and see a decrease in costs. CEO Jones said that he expects CapEX to fall from $200 million to “around” $140 million
5- Sale of assets
The minimum that will be raised in the $125 million offered by Ackman. Now, the company only has a market cap of just under $400 million at the current share price. They could conceivably by back 25% of the shares and have cash left over for operations or debt repurchases.
So where does this leave us? A cursory look shows $80 to $100 million in cost cuts available without any real effort or impediment to operations. The inventory reductions should be over an additional $100 million as the stores (not the company) begin stocking fewer titles.
Border lost $157 million last year and it looks as though it could easily cut its way to break-even or better this year now that much of heavy lifting in investment has be done. This assumes the above conservative guidance. Should that guidance prove to be conservative, results could improve even more.
Disclosure (“none” means no position):Long BGP
Upgrades
Radyne (RADN)- Feltl & Co. Hold » Buy
XM Satellite (XMSR)- Utendahl Equal-weight » Over-weight
Force Protection (FRPT)- Collins Stewart Sell » Hold
L-1 Identity Solutions (ID)- Needham & Co Hold » Buy
N Amer Palladium (PAL)- HSBC Securities Underweight » Neutral
Avant Immun (AVAN)- Needham & Co Hold » Buy
XM Satellite (XMSR)- Stifel Nicolaus Hold » Buy
Canadian Solar (CSIQ)- Lazard Capital Hold » Buy
Boardwalk Pipeline (BWP)- Morgan Keegan Mkt Perform » Outperform
Orleans Homebuilders (OHB)- JMP Securities Mkt Perform » Mkt Outperform
Pulte Homes (PHM)- JMP Securities Mkt Perform » Mkt Outperform
Meritage (MTH)- JMP Securities Mkt Perform » Mkt Outperform
DR Horton (DHI)- JMP Securities Mkt Outperform » Strong Buy
Packeteer (PKTR)- Brean Murray Sell » Hold
CIGNA (CI)- Credit Suisse Neutral » Outperform
Wimm-Bill-Dann Foods (WBD)- Citigroup Hold » Buy
THQ Inc (THQI)- Citigroup Hold » Buy
Yahoo! (YHOO)- Citigroup Hold » Buy
Downgrades
SiRF Technology (SIRF)- Piper Jaffray Neutral » Sell
Agree Realty (ADC)- Janney Mntgmy Scott Buy » Sell
Omega Health (OHI)- Ferris Baker Watts Buy » Neutral
XM Satellite (XMSR)- Janco Partners Buy » Accumulate
Williams-Sonoma (WSM)- FTN Midwest Buy » Neutral
Volcom (VLCM)- Wedbush Morgan Buy » Hold
Stillwater Mining (SWC)- HSBC Securities Neutral » Underweight
Heartland Payment Systems (HPY)- Sun Trust Rbsn Humphrey Buy » Neutral
Starwood Hotels (HOT)- Stifel Nicolaus Buy » Hold
FPIC Insurance (FPIC)- Stifel Nicolaus Buy » Hold
Extra Space Storage (EXR)- Banc of America Sec Buy » Neutral
Prosperity Bancshares (PRSP)- BMO Capital Markets Outperform » Market Perform
Public Storage (PSA)- Banc of America Sec Buy » Neutral
Accentia Biopharmaceuticals (ABPI)- Jefferies & Co Buy » Underperform
Capital One (COF)- Friedman Billings Mkt Perform » Underperform
UnitedHealth (UNH)- Credit Suisse Outperform » Neutral
C.H. Robinson (CHRW)- UBS Buy » Neutral
Amtrust Financial (AFSI)- Keefe Bruyette Outperform » Mkt Perform
Pzena (PZN)- Keefe Bruyette Mkt Perform » Underperform
Royal Philips Electronics (PHG)- JP Morgan Overweight » Neutral
Credit Suisse (CS)- UBS Buy » Neutral
Liberty Media Capital (LCAPA)- Lehman Brothers Overweight » Equal-weight
Gap Inc (GPS)- Citigroup Buy » Hold
Bear Stearns (BSC)- Sandler O’Neill Hold » Sell
Accentia Biopharmaceuticals (ABPI)- Rodman & Renshaw Mkt Outperform » Mkt Perform
Zumiez (ZUMZ)- Oppenheimer Outperform » Perform
Tiffany & Co (TIF)- Oppenheimer Outperform » Perform
Wednesday’s Picks
Jeff Macke likes Intel (INTC) $22.27
Tim Seymour prefers Tesoro (TSO) $29.88
Karen Finerman recommends the Altria (MO) $73.33 stub.
Pete Najarian thinks Oracle (ORCL) $21.08 is a buy ahead of earnings.
Tuesday’s Results
Jeff Macke is buying Valero (VLO) $50.08 Close $48.10 LOSS
Tim Seymour likes the U.S. Natural Gas ETF (UNG) $45.56 Close $45.99 GAIN
Karen Finerman recommends Philip Morris International (PM-WI). Agreed
Jon Najarian is sticking with JPMorgan Chase (JPM) $46.55 and CEO Jamie Dimon. Close $46.06 LOSS
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 21-14
Tim Seymore= 13-6
Guy Adami= 20-21
Pete Najarian= 21-17
Karen Finerman= 16-20-1
Joe Terrenova= 1-1
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Ever see the cop shows where the crazy guy sits there with a gun to his head and shouts “take one step closer and I’ll shoot”? We now know what Circuit City (CC) CEO Phil “The Shill” Schoonover watched as a kid.
Back in February when Mark Wattles disclosed a 5% stake in the company, rumors abounded he may make a play for it. Schoonver responded by expanding the company’s credit line by $800 million to $1.3 billion with an option to add another $300 million at their convenience. It does not seem like much until you consider prior to this they had $49.7 million outstanding against the current credit facility and have total sales of a paltry $2.9 billion. Quite an increase for no apparent reason.
Clearly Schoonover was trying to protect his job by making the company unattractive as a potential investment. It should be noted here that the now almost 80% drop in the stock price had done that for scores of current investors.
Wattles then called for the a new Board of Directors and nominated his own slate.
Schoonover responded by chopping off his own feet and fired Steven Pappas the Company’s “Small Store President,” and Peter Weedfald the Chief Marketing Officer. An important note here is the $6 million bonuses approved in December to retain 10 Vice Presidents and $3 million more to retain Executive Vice presidents, including the now unemployed Pappas and Weedfald. At the time Schoonover defended the bonuses saying it was important to retain “instrumental executives”. OK
Now word is that Schoonover is seeking to pacify irate investors with a $0.04 dividend. Is he thinking that makes up for the $16 collapse in the stock price?
Now the company is being removed from the S&P 500 and index funds are dumping the stock by the truck load. Schoonover’s moves have backfired as activist funds D.E. Shaw, Royal Capital Management & HBK Investments LP, have scooped up over 15% of the shares.
I cannot wait to see Schoonover’s next move… maybe random rolling store closings until Wattles “goes away”?
Disclosure (“none” means no position):None (Thank God)
CNBC ran a piece today that may give more clarity into Leucadia’s (LUK) recent AmeriCredit (ACF) investment.
The key take-away is that the financing companies are seeing more revenues due to the increased length of financing terms BUT, so far there have been no real increase in defaults. I still stand by my thesis that people will walk away from a home before an auto…..must get to work.
Translation: Higher profits.
Disclosure (“none” means no position): None
Tipping, LTCM again, Starbucks’ “social networking site”, Hillary.
– This was fascinating
– Remember John Meriweather? Left Solomon in the 80’s amid bond trading scandal, then founded LTCM which imploded, almost taking 6 banks with it and now…. back at his old tricks.
– Finally got it….it is just an idea factory.
– Oops….Bet she never though this stuff would see the light of day
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