(SWY)- Safeway Inc
(SUPG)- SuperGen Inc
(SHAU)- Shanghai Century Acqu …
(OPNT)- Opnet Technologies Inc
(NVTL)- Novatel Wireless Inc
(NURO)- Neurometrix Inc
(NTRI)- Nutri Sys Inc New
(MDZ)- Mds Inc
(MDAS)- Medassets Inc
(EXEL)- Exelixis Inc
(ESI)- ITT Educational Servi …
(EMAG)- Emageon Inc
(ARNA)- Arena Pharmaceuticals Inc
(AMLN)- Amylin Pharmaceutical …
(ALXA)- Alexza Pharmaceutical …
(AIIU)- Aldabra 2 Acquisition …
Blockbuster (BBI) has spent the better part of the past year “talking” about an online video strategy. Meanwhile Netflix (NFLX), has just gone out and done it.
Rumors are that Netflix will announces this week a collaboration with Microsoft (MSFT) to distribute videos through its Xbox. For the moment we will ignore the possible blow to Apple (APPL) this will be.
Blockbuster, still clinging to the video store business model will soon disappear with this news. The ONLY prayer they will have would be to go to Apple hat in hand and beg to be rescued. Perhaps Apple would want the stores Blockbuster currently has, at least they could make money off of them. Most likely Apple would tell them to politely “go away”.
The bottom line for Blockbuster is that they held fast to an outdated business model for too long while the competition not only innovated, but took its model to the next level.
What to do if you are a Blockbuster shareholder?
1- Sell and lick your wounds
2- Pray
Blockbuster’s plight could be reversed in a few easy steps. But, considering I have been saying the same thing since last spring and management is still determined to follow the current downward path, let’s not bet on it. What to do?
1- CLOSE THE STORES: A few strategically placed locations could be spared but the overwhelming vast majority of them need to be shuttered. They are a drain on resources.
2- Call Sony (SNE): If Microsoft is going to distribute Netflix’s offerings, perhaps sony could do the same for Blockbuster.
3- Call Steve Jobs: Blockbustre rentals through itunes?
4- CLOSE THE STORES (just in case we missed it the first time)
Now, unfortunately, all of these moves will only serve to stop the inevitable irrelevance of the business. If Blockbuster ever plans to actually compete with NetFlix, innovation is what they need.
Wouldn’t it be nice to walk up to one of a thousand kiosks, insert a memory card and download a movie for rental on it that I could then plug into my computer or TV to watch? Surely these locations would be stunningly cheaper than a store? If my local supermarket can give me a card to track my purchases and send me related coupons, surely Blockbuster could produce cards to track and bill purchases, just swipe the card and download the movie, easy. Perhaps place the information on the stick?
One step and done?
The point is that by sticking to an 1980’s business model the company now stands on the precipice of extinction. Here is hoping for those who still own shares that they recognize this soon..
Disclosure (“none” means no position): None
Sub-Prime, Cullen buys, Cramer, Apple (AAPL) price cuts
– Yes, many of them are not in foreclosure..
– James Cullen takes the plunge on American Eagle
– Has anyone else noticed the chorus against Jim Cramer has been growing louder?
– Apple is cutting prices on iPods. When will there finally be a $299 iPhone like i predicted in May, 2007?
Some notables from the Wal-Mart (WMT) earnings call
Domestic:
** US capex is projected to be down between approximately $1.4 billion and $2 billion for fiscal 2009 when compared to 2008.
** In fiscal 2008, returned more than $11 billion to shareholders in the form of share repurchase and dividends (5.5% of market cap).
** The company generated $5.4 billion in free cash flow in fiscal 2008 and that compares to $4.3 billion in fiscal 2007, a 25% increase year over year.
** Additional square footage dedicated to entertainment selling space this past year. Entertainment area is clearly becoming the destination for of customers.
** Adding known brands to apparel offerings. These include Garanimals already available in baby and kids. Ocean Pacific or OP coming in the spring across all of apparel and LEI the denim brand for back to school in juniors and girls.
International:
** Strongest underlying sales performance in the quarter came from China, Brazil and Argentina. ASDA in United Kingdom continued with very positive sales results in the fourth quarter.
** Wal-Mart Canada delivered its strongest quarterly sales increase in the year during the fourth quarter.
** $500 million projected increase in International capex in fiscal 2009 when compared to 2008.
Not much new released and to be honest not much was really expected. There were very positive comments about apparel and it has been a long time since I heard that on a call. Even moderate success in this area would be fantastic.
Watch electronics. The local store here just did a remodel and the electronics area is real nice. Based on the stores reputation for pricing, it is becoming a “first on the list” to shop for those items. One has to wonder if recent results at Best Buy (BBY) and Circuit City (CC) may be reflecting that success.
It is too early to tell for sure, but it does bear watching as the upbeat comments at Wal-Mart do contradict those from the other two.
I get a feeling that something rather exciting is in store for the annual meeting this year. It just seems a bit to calm out there now… A nice fat dividend increase would be nice. I asked for 28 cents a share Monday, can we do better? Do not forget the stock repurchase plan was for $15 billion, 1/2 half of that is gone and free cash flow is at record levels. Can we add another $15 billion to it?
Disclosure (“none” means no position):Long Wal-Mart
Bernanke & Co. released the minutes from the last two meeting and for one surprise conference call we did not know about.
Some very interesting notes (in order of placement in the minutes):
After the scheduled January meeting the Fed observed: “The subsequent release of the minutes of the meeting elicited little market reaction. However, investors did mark down the expected path of policy in response to speeches by Federal Reserve officials; the speeches were interpreted as suggesting that signs of broader economic weakness and additional financial strains would likely require an easier stance of policy.”
“The Committee’s decision to reduce the target federal funds rate 75 basis points on January 22 surprised market participants and led investors to mark down further
the path of policy over the next few months.”
“In their discussion of the economic situation and outlook, and in the projections that they had submitted for this meeting, participants noted that information received since the December meeting had been decidedly downbeat on balance. In particular, the drop in housing activity had intensified, factory output had weakened, news on business investment had been soft, and conditions in labor markets appeared to have deteriorated. In addition, consumer confidence had remained
low and business confidence appeared to have worsened. Although the functioning of money markets had improved notably, strains remained evident in a number
of other financial markets, and credit conditions had become generally more restrictive.”
“Against this backdrop, participants expected economic growth to remain weak in the first half of this year before picking up in the second half, aided in part by a more accommodative stance of monetary policy and by likely fiscal stimulus. Further ahead, participants judged that economic growth would continue to pick up gradually in 2009 and 2010. Nonetheless, with housing activity and house prices still declining and with financial conditions for businesses and households tightening further, significant uncertainties surrounded this outlook and the risks to economic growth in the near term appeared to be weighted to the downside. Indeed, several participants noted that the risks of a downturn in the economy were significant.”
“To be sure, some positive financial developments were evident. Banks appeared to be making some progress in strengthening their balance sheets, with several financial institutions able to raise significant amounts of capital to offset the large losses they had suffered in recent quarters.”
“Participants agreed that the inflation data that were received since the December meeting had been disappointing. But many believed that the slow growth in
economic activity anticipated for the first half of this year and the associated slack in resource utilization would contribute to an easing of price pressures.”
“Members were also mindful of the need for policy to promote price stability, and some noted that, when prospects for growth had improved, a reversal of a portion of the recent easing actions, possibly even a rapid reversal, might be appropriate.”
What is interesting is the concern with the markets reaction to the decisions. My guess would be that with household wealth diminished by dramatic housing value declines in key markets, whereas the Fed might not be so inclined to pay attention to the stock markets reaction it does seem like they want to avoid further deterioration in wealth by a declining stock market.
With housing expected to be depressed until 2009, it would seem the Fed will be very accommodative to the market until then. That being said, we can expect further rate cuts going into the spring and summer and depending what happens with inflation, possibly the fall.
Upgrades
RC2 (RCRC)- Wedbush Morgan Hold » Buy
Signature Bank (SBNY)- FTN Midwest Neutral » Buy
Premiere Glbl Svcs (PGI)- Stanford Research Hold » Buy
Holly (HOC)- BMO Capital Markets Market Perform » Outperform
Meritage (MTH)- UBS Neutral » Buy
Lukoil (LUKOY)- Citigroup Hold » Buy
Trico Marine Services (TRMA)- Lehman Brothers Equal-weight » Overweight
Downgrades
Wal-Mart (WMT )- BMO Capital Markets Outperform » Market Perform
Thermage (THRM)- Leerink Swann Outperform » Mkt Perform
TradeStation (TRAD)- Fox Pitt Outperform » In Line
Verizon (VZ)- Credit Suisse Outperform » Neutral
Veraz Networks (VRAZ)- Credit Suisse Outperform » Neutral
Horsehead Holding (ZINC)- BMO Capital Markets Outperform » Market Perform
Hibbett Sporting (HIBB)- Stifel Nicolaus Hold » Sell
IDM Pharma (IDMI)- Rodman & Renshaw Mkt Perform » Mkt Underperform
Alon USA Energy (ALJ)- BMO Capital Markets Market Perform » Underperform
KeyCorp (KEY )- RBC Capital Mkts Sector Perform » Underperform
Veraz Networks (VRAZ)- Cantor Fitzgerald Buy » Hold
Nutrisystem (NTRI)- Broadpoint Capital Buy » Neutral
Comcast (CMCSA)- Credit Suisse Outperform » Neutral
Coca-Cola FEMSA (KOF)- Citigroup Buy » Hold
Limelight Networks (LLNW)- Oppenheimer Outperform » Perform
Watsco (WSO)- Oppenheimer Outperform » Perform
AT&T (T)- Credit Suisse Outperform » Neutral
AT&T (T)- Robert W. Baird Outperform » Neutral
PPG Industries (PPG)- Citigroup Buy » Hold
Gol Intelligent Airlines (GOL)- Avondale Partners Mkt Perform » Mkt Underperform
Disclosure (“none” means no position):
Thurday’s Picks
Jeff Macke likes Hasbro (HAS) $27.39
Guy Adami prefers GameStop (GME) $45.74
Karen Finerman recommends Microsoft (MSFT) $28.22
Tim Seymour suggests investors short emerging markets via the iShares MSCI Emerging Markets Indx (EEM) $141.33
Wednesday’s Results
Jeff Macke likes Microsoft (MSFT) $28.17 Close $28.21 GAIN
Guy Adami says XTO Energy (XTO) $57.72 is a buy. Close $58.60 GAIN
Karen Finerman prefers Kaiser (KALU) $71.97 Close $74.82 GAIN
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 12-8
Tim Seymore= 2-4
Guy Adami= 11-12
Pete Najarian= 12-8
Karen Finerman= 12-9-1
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Disclosure (“none” means no position):
In a new SEC filing, Carl Icahn disclosed option activity in Temple Inland (TIN)
From the filing:
“On February 15, 2008, the Reporting Persons: (i) sold call options, with an
exercise price of $19.9234 per share and an expiration date of February 20,
2008, with respect to 4,510,556 Shares in the aggregate, and received aggregate
consideration of $4,510.56; and (ii) purchased call options, with an exercise
price of $12.65 per share and an expiration date of October 17, 2008, with
respect to 4,510,556 Shares in the aggregate, and paid aggregate consideration
of $21,542,415.46 (including commissions). “
Icahn now “may be deemed to beneficially own, in the aggregate, 10,366,491 Shares (including Shares underlying call options), representing approximately 9.77% of the Issuer’s outstanding Shares (based upon the 106,071,167 Shares stated to be outstanding as of September 29, 2007 by the Issuer in the Issuer’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 7, 2007. “
Also,
“The Reporting Persons have entered into a number of derivative agreements,
commonly known as Total Return Swaps, with counterparties, which agreements
provide that the profit to the Reporting Persons shall be based upon the
increase in value of the Shares and the loss to the Reporting Persons shall be
based upon the decrease in the value of the Shares, during the period from
inception of the applicable agreement to its termination. The agreements provide
that they settle in cash. In addition to the Shares which they beneficially own
as shown in Item 5 above, the Reporting Persons currently have long economic
exposure to an aggregate of 5,866,778 Shares through such agreements.”
This would bring Icahn’s total economic exposure in Temple shares to 15.2%
Disclosure (“none” means no position): None
Pershing Square’s Bill Ackman presented his plan for the bond insurers MBIA (MBI) and Ambac (ABK) today.
First, here it is:
Unlike the Buffett that would essentially leave the SFV (structured financial vehicle) portion of the company’s to shrivel away, Ackman’s plan calls the bluff of the company’s.
Rather than have the proceeds from the Municipal portfolio flow to the holding company, Ackman is saying “let them support the losses at the SFV portfolio”. Assuming the losses in SFV are as small as management says they are, this ought to work.
Now, the plan falls apart if the losses are as massive as Ackman claims they will be. In this case, the Muni proceeds will not cover the losses and the house of cards come tumbling down. This is what Ackman is banking on.
Either way he wins because if the Muni portfolio is providing liquidity to the SFV side, there are no dividends to flow up to the holding company’s. Without the dividends, there is no income or revenue for the insurers. Would you buy shares in a holding company with no revenues?
Me either….
Disclosure (none means no position): None
(ZOLT)- Zoltek Companies Inc
(XRIT)- X-Rite Incorporated
(VZ)- Verizon Communications
(VRTU)- Virtusa Corp
(VRAZ)- Veraz Networks Inc
(VM)- Virgin Mobile Usa Inc
(USM)- United States Cellula …
(TDS)- Telephone And Data Sy …
(TCMI)- Triple Crown Media Inc
(SSN)- Samson Oil & Gas Ltd
(NURO)- Neurometrix Inc
(NTRI)- Nutri Sys Inc New
(DEKU)- Dekania Corp
(COMS)- 3Com Corporation
(CLX)- The Clorox Company
(CLCT)- Collectors Universe Inc
It appears that Sprint’s (S) CEO Dan Hesse is not playing games in his quest to curb to exodus of subscribers.
Rumors are that after both Verizon (VZ) and AT&T (T) adopted a $99 “unlimited plan” Tuesday, it was reported Sprint may just throw down the gauntlet and go with a $60 plan.
Hesse has been aggressive since taking them helm to cuts costs and redundancies like having two headquarters. He also had made tremendous strides in the customer service arena.
Now, wouldn’t a calling plan that cuts the competition by 40% be the prefect way to attract new customers? It would sure go a long way to ensure those of us currently there resist the urge to switch when are plans come up….
This is a move straight out of the Nextel playbook. I was a Nextel subscriber from way back and was always extremely happy with the service and value I got from them. They would call me with new plans that based on my usage, would save me money and the new plans did just that. That all stopped after the merger and hopefully, this plan comes into play and my phone rings soon…..
Disclosure (“none” means no position): None
At the end of January in a conference call Sherwin Williams (SHW) CEO Chris Connor said he would recommend increasing the dividend 11% to 35 cent a share. At that level Sherwin will yield 2.6% at today’s prices.
Today the Board of Directors approved that request enacting the company’s 29 consecutive annual dividend increase.
Disclosure (“none” means no position):Long SHW
After watching its stock price fall continually from its post internet bubble high of $43 set in Jan. 2006 and seeing Google (GOOG) surpass it in virtually every online metric, Yahoo’s (YHOO) senior management has decided to make sure if Microsoft (MSFT) does buy them, they are richly rewarded. Too bad for shareholders that actions like this just might cost them money..
A new “employee retention and severance” program for SENIOR EXECUTIVES looks like this:
* Up to two years of full pay and benefits following departure,
* $3,000-$15,000 of “outplacement services” (help finding a new job),
* Accelerated stock and option vesting, and
* The ability to leave the company–and trigger the severance payments–for any “good reason”
Now what is important is that this plan goes into effect “in the event of a change of control” of the company. What this all amounts to is a near $1 billion increase in the cost of any acquisition of Yahoo. Now, while in this case the cost may be born by Microsoft, it will probably come at the expense of a reduce offer price, lower bonuses to retain current non-senior executives and, for these shareholders who may elect to take shares for the transaction, a prolonged “synergy” period as the excess costs are absorbed.
Essentially Yang realized that the offer from Microsoft was a great one and that he would have a hard time getting shareholders to say “no”. He also recognized that Microsoft was the only bidder despite his attempts to interest Google and News Corp. (NWS) and that a higher offer was not going to be forthcoming. Without a higher per share offer coming, this loathsome action was the next best choice to wring a few more buck for him and his cronies out of the deal. Slimy…
All this so Yang & Co. can cash out at a higher price than the rest of the “little folks” (this would include his employees and shareholders)? With a mindset like this, any wonder the stock has been a dud this decade?
The worst case scenario would be for Microsoft to tell them to take a hike and let the socks price, current at $28 ($3 below the offer price) plummet back down to the $20 level it was at prior to Microsoft’s bid. Once there, it can comfortable resume its downward march to $10. All this due to greed….
I thought we were trying to get passed management enriching themselves at the expense of employees and shareholders?
Disclosure (“none” means no position): None
Jeter, Riot’s, Schoonover, Clemens
– Red Sox fans did not need this to tell you the answer
– Another take on the Circuit City (CC) CEO.
– Adam finds this gem about sportscasters questioning if Clemens has lost his best fastball…… IN 1995!!
In an SEC filing on Wednesday, Horizon Asset Management disclosed it owned 22,642,832 shares of Leucadia (LUK). The holdings amount to 10% of the outstanding shares.
Horizon, “focuses on a security selection approach which emphasizes the purchase of equities selling at discounts to their intrinsic value and debt instruments selling below our assessment of their inherent worth. It is noteworthy to point out that today there is a value investor bias so permeating the professional investor population that it is by far the dominant investment school of thought. Thus one needs to be all the more contrarian in a value focused world. We believe this new environment requires an additional research focus on unique, ‘future potential’ situations which classically would be called growth stocks. A more thorough analysis becomes particularly important in the assessment of “
Disclosure (“none” means no position):None