Bloggystyle, Google $700?. Oil, Toxic iPhone?, Tax Cuts Work
– Adam has a nice section on Bartiromo and Citigroup..
– An interesting take on the worth and possible destruction of Google.
– An interesting piece on the cost of oil for oil companies.
– The iPhone appears to have violated California laws for toxicity.
– Stephen Moore make the convincing case for cutting taxes to spur economic growth.
This one was easy to see coming. Oh yeah, the excuses management is giving you? Ignore them.
Six Flags (SIX), which operates 21 amusement parks, reported a third-quarter net profit of $84.2 million, or 61 cents per share, compared with $159.3 million, or $1.08 per share, a year ago. The year-ago period included a one-time gain of $36.8 million from discontinued operations. With the prior year gain subtracted, EPS in 2006 was 85 cents and 2007 EPS declined 28% on a comparable basis. Net loss for the first nine months of 2007 was $142.7 million, or $1.51 per share, compared to a net loss of $132.4 million, or $1.41 per common share last year.
Revenue fell 2% to $465.2 million. Management blamed this on bad weather in July cutting attendance at its Texas and Georgia parks, and bad publicity from an accident at its park in Kentucky. Attendance for the nine months ended September 30, 2007 was 22.1 million, flat with last year.
The total of Texas, Kentucky and Georgia parks equal 7, or 1/3 of total locations.
“I’m proud of the advances we continue to make at Six Flags despite a temporary setback within the third quarter due to inclement July weather and extensive negative publicity stemming from the accident at our Kentucky park,” said Mark Shapiro, Six Flags President and CEO. “With revenue per guest and consumer satisfaction scores at all-time highs and a powerful park-wide capital expansion plan on deck, we are well positioned to deliver on the promise of this company’s turnaround in 2008.” Right, as long as it does not rain?
Shapiro then contradicted himself to a point in the conference call when he said “Secondly, with regard to attendance, yes, the East Coast which is where we usually have the most risks because we have so many parks really on the East Coast, we are great in East Coast. We had great weather and the parks did well with it.” Now, if the weather was great there, why did Georgia and Texas matter so much?
Here is the thing. You can’t blame the weather because it will always rain. The overall weather picture was not that bad this summer and as bad a they claim July was, June and August were just a good and the simple fact is they just did not “get it done” when the weather was good. We have not had a hurricane in two years now and Six Flags still cannot turn a profit. What they did not tell you was that the weather in September for almost the entire nation was the best in several years.
So, if from June to October you only have 1 bad month for 1/3 of your locations and it causes the whole house of cards to fall, things just are not working. What happens when we finally get an active hurricane season? It will happen sooner or later and they normally hit the east coast where Six Flags has it “greatest risk”. If they cannot turn a profit in near perfect conditions almost all summer and into fall for the vast majority of its parks, what happens when these conditions turn imperfect. Answer? More, larger losses.
Disney (DIS) just reported a 5% guest increase at its Domestic parks over 2006.
They did triumph the fact that they got more from each customer. How? Per capita guest spending increased $0.04 during the quarter to $37.13 as guests spent 3% more in-park, primarily on food and beverages, parking, and games. Yea… we know. I detailed this robbery in October.
I’ll check in on the call on provide any updates of note…….
Note to executives at Blockbuster (BBI): PEOPLE DO NOT WANT TO GO TO THE VIDEO STORE ANYMORE!!
Hasn’t the butt whipping they have received from NetFlix (NFLX) the past few years convinced them of that yet?
Blockbuster said on Thursday it was testing pricing for its rental formats and will experiment with store layouts to add downloading stations, books or beverages in a bid to shore up its customer base. CEO Jim Keyes said “Are we raising prices? No, as of today, what I don’t want to do is raise them three or four times.” The ideas mentioned for its new retail format include an interactive area in stores for children, a destination for downloading entertainment to portable media devices or a kiosk for Sony Corp’s (SNE) PlayStation 3 game console.
Then something was said that was incredible. Keys noted the retail success of Apple Inc (AAPL), which has a far smaller store base and sells its iPod digital media players, iPhone mobile phones and personal computers. “I get excited about what we could do with what is some of the most choice real estate,” Keyes said. Yeah, how about selling it and reinvest that money into the online operations!! The fact that Keyes even mentions his company and Apple in the same sentence illustrate a certain lack of grasp on reality.
Keyes said the company is still considering ways to build up a digital distribution channel for films. Proposals include merging its Blockbuster.com Internet site for ordering films by mail with its Movielink download service, and partnering with telecom and cable companies. This ought to be the sole focus of the company right now. This is the future, not a revamped “old way”. Any money being plowed back into the stores is just wasted. Stop trying to reinvent the wooden wheel and and admit the rubber ones are the one folks want.
Keyes also said that the change would not be “an overnight success”. Translation? More dismal performance for shareholders.
I think this is in part why shares are down 11% Thursday and are almost cheaper than a rental.
UPGRADES
Hearst-Argyle TV HTV Barrington Research Underperform » Mkt Perform
j2 Global JCOM BMO Capital Markets Underperform » Market Perform
PACCAR PCAR UBS Sell » Neutral
Clear Channel CCU Stanford Research Hold » Buy
Powerwave PWAV Lehman Brothers Equal-weight » Overweight
Broadcom BRCM AmTech Research Sell » Neutral
Corn Products CPO BMO Capital Markets Market Perform » Outperform
Furniture Brands FBN Stifel Nicolaus Sell » Hold
Hansen Natural HANS Stifel Nicolaus Hold » Buy
Sprint Nextel S Stifel Nicolaus Sell » Hold
Hutchinson HTCH Caris & Company Average » Above Average
Limited LTD Caris & Company Below Average » Average
Avocent AVCT Morgan Keegan Mkt Perform » Outperform
Estee Lauder EL Bear Stearns Peer Perform » Outperform
Shuffle Master SHFL Morgan Joseph Sell » Hold
CAE CGT CIBC Wrld Mkts Sector Perform » Sector Outperform
Perini PCR Morgan Joseph Hold » Buy
Kenexa KNXA Cantor Fitzgerald Hold » Buy
Canadian Pacific CP CIBC Wrld Mkts Sector Perform » Sector Outperform
Sappi Limited SPP Citigroup Sell » Hold
Powerwave PWAV Piper Jaffray Market Perform » Outperform
eBay EBAY Piper Jaffray Market Perform » Outperform
Applied Materials AMAT Citigroup Hold » Buy
Applied Materials AMAT JP Morgan Neutral » Overweight
National Atlantic Holdings NAHC Citigroup Hold » Buy
Sonus Networks SONS Merriman Curhan Ford Sell » Neutral
DOWNGRADES
World Fuel Svcs INT Wedbush Morgan Buy » Hold
Wachovia WB Friedman Billings Mkt Perform » Underperform
JC Penney JCP Bear Stearns Outperform » Peer Perform
Nordstrom JWN Bear Stearns Outperform » Peer Perform
Isilon Systems ISLN Friedman Billings Outperform » Mkt Perform
Biovail BVF Broadpoint Capital Buy » Neutral
Finisar FNSR Jefferies & Co Buy » Hold
Allscripts MDRX Jefferies & Co Buy » Hold
Cephalon CEPH JMP Securities Strong Buy » Mkt Outperform
Home Diagnostics HDIX Deutsche Securities Buy » Hold
Supertel Hospitality, Inc SPPR JMP Securities Mkt Outperform » Mkt Perform
Comtech COGO Piper Jaffray Outperform » Market Perform
Mannkind MNKD JP Morgan Overweight » Neutral
Allscripts MDRX JP Morgan Overweight » Neutral
Entergy ETR Credit Suisse Outperform » Neutral
Edison EIX Credit Suisse Outperform » Neutral
NRG Energy NRG Credit Suisse Outperform » Neutral
Tellabs TLAB Lehman Brothers Overweight » Equal-weight
Pioneer Natural PXD Citigroup Buy » Hold
Sierra Pacific SRP Citigroup Buy » Hold
RPM Inc RPM Banc of America Sec Buy » Neutral
Turkcell TKC UBS Buy » Neutral
Financial Federal FIF Friedman Billings Mkt Perform » Underperform
Limelight Networks LLNW Friedman Billings Outperform » Mkt Perform
Supertel Hospitality, Inc SPPR Robert W. Baird Outperform » Neutral
Monday’s Picks
Guy Adami recommends BorgWarner (BWA).Open $98.32
Pete Najarian prefers Energy Conversion Devices (ENER) Open $ 31.11 as well as AGCO Corp. (AG) Open $63.35 .
Tim Seymour says Powershares Water Resources ETF (PHO) .Open $20.91
Karen Finerman likes Kaiser Aluminum (KALU). Open $67.96
Friday’s Results
Tim Seymour recommended Alcoa (AA).Open $37.66 Close $37.09 LOSS
For the second day in a row Guy Adami said Short Dow30 ProShares(DOG) was a buy. Open $59.95 Close $60.77 GAIN
Karen Finerman liked Watts Water Technologies (WTS).Open $27.80 Close $28.32 GAIN
Pete Najarian preferred Boston Scientific (BSX). Open $12.49 Close $12.66 GAIN
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks
Guy Adami= 44-25 = 65%
John Najarian= 13-4 = 76%
Jeff Macke= 47-33 = 58%
Pete Najarian= 32-30 = 52%
Tim Seymore= 5-4 = 55%
Karen Finerman= 27-16 = 62%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%
Here are the top stories for the week from Value Investing News
Nuclear spinoff anyone? Take a look at ETR
Mark Sellers gives a frank talk on how hard it is to be a great investor and what traits are needed to do so. He also includes a good overview of what creates an economic moat.
The Special Situations Real Money Portfolio managed by Fat Pitch Financials is a real Coverdell Educational Savings Account turned mini-hedge fund for his son. Performance to date has been 25.4% annualized rate of return and year to day the account is up 36.3%. The month of October brought a slight decline in the account and opportunities in special situations and tender offers were scarce.
Three beaten-up stocks trading at or below 1x book value – a structured finance insurer, a building supplier, and a homebuilder.
Delta’s 3rd Quarter results…Ouch!
Most of the literature discussing Stock Advisor recommendation Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) chairman Warren Buffett focuses on the later stages of his career. By then, he was already wealthy and making billion-dollar bets on companies like Wells Fargo.
Barry Diller’s company IAC/InterActiveCorp announced that it’s splitting up into 5 separate entities. These situations usually yield undervalued securities and we should take a moment to study what the new companies will be so that we may watch the situation unfold and invest carefully.
Commentary based on Warren Buffett’s 1999 prediction.
Click on FULL STORY to read about the three approaches to value investing.
WMG Warner Music Group Corp 7.75
TWX Time Warner Inc 17.29
TTI TETRA Technologies Inc 16.08
TTEC TeleTech Holdings Inc 20.25
TOPT Top Tankers Inc 4.39
TLAB Tellabs, Inc 7.57
TDA Telephone & Data Sys Inc 21.93
TCMI Triple Crown Media Inc 4.49
TAYC Taylor Cap Group Inc 22.19
SIX Six Flags Inc 2.17
SBUX Starbucks Corp 22.90
SBSA Spanish Broadcasting … 2.24
RPM RPM International Inc 18.72
ROX Castle Brands Inc 2.20
PEIX Pacific Ethanol Inc 7.00
PDS Precision Drilling Tr 17.11
MDRX Allscripts Healthcare … 18.47
MAXE Max & Ermas Restauran … 2.89
LYV Live Nation Inc 15.99
LEAP Leap Wireless Intl Inc 38.82
JBLU Jetblue Awys Corp 6.88
JBL Jabil Circuit Inc 19.35
IX Orix Corp 84.62
ISLN Isilon Sys Inc 4.78
HME Home Properties, Inc 44.11
HLYS Heelys Inc 6.16
FRE Freddie Mac 40.49
FNSR Finisar 2.02
DITC Ditech Networks Inc 3.20
DFC Delta Financial Corp 2.27
CDL Citadel Broadcasting Corp 3.02
CBT Cabot Corporation 32.18
ALU Alcatel-Lucent 8.24
AKH Air France Klm 33.12
Bill Miller, Better than Google and Apple?, US Dollar, Bloggers vs Congress
– Another “buy” for financials
– This is a very interesting take on what could be next years tech stars.
– Want to invest in currencies? Here is an easy way.
– Americans now trust bloggers more than they do Congress
–
Andy Serwer and Barney Gimbel at Fortune got an interview with Citigroup’s (C) largest individual shareholder Prince Alwaleed who holds 3.6% of the $150 billion dollar company.
Some excerpts:
Why he withdrew his support for CEO Chuck Prince:
“You cannot come to the public and say that this normalization is expected in the fourth quarter and then three weeks later, not three months later, you come and say there is an $11 billion writeoff. This is unacceptable. That’s when the events changed completely. My backing was withdrawn dramatically. You should never commit to something that you can’t deliver. Never.”
Is he supporting Sandy Weill for CEO?
“No, no, Sandy is not seeking to be president. What Sandy likes to do is to be involved in the process of selecting a new boss. Sandy told me, “I have no aspirations whatsoever to be CEO or chairman.”
However, he would like to be involved in the process of selecting the boss for Citi because Citi can’t afford to have another loss. The situation right now is unacceptable for a bank like Citi with $2.5 trillion in assets and $120 billion of equity, and is in more than 100 countries. It’s a pity for Citibank to be in this position. It’s not right. We can’t afford to have another blunder like that. “
Who should the next CEO be?
“Frankly speaking, I don’t have anybody in mind. I trust Mr. Rubin. I trust Mr. Bischoff. I trust Mr. Parsons. The selection process has to be very careful and they should take their time finding the right guy. My recommendation and advice for them is they don’t hire anyone unless this guy has expertise in banking. I told them, next time no lawyer, please.”
Is he selling?
“I will sell nothing. We are selling nothing. I want to make it clear that I fully support the leadership of Citigroup and think it is a very strong company with a good future.
You remember something very important, that the average [price at which] I bought Citibank was $2.75 per share adjusted for stock splits. That’s my average. But still Citibank does not deserve to be where it is right now. It is a pity what is happening, but I hope that a big lesson is learned in the board of directors and the management of Citibank. “
Is a deal in the works?
“It is not time for that right now, for sure. I am against it now. Not at this price, for sure. It would not be fair for the shareholders of Citibank at all. I mean even after the stock went down, Citibank is still worth $160 billion. It’s still a force to be reckoned with. I mean, how many companies in the world can withstand a writeoff of $6 billion and another writeoff of $8 to $11 billion three weeks later, and still stand on its own feet? Not many”
Read the whole interview here:
“Customers are still spending for the holidays. Halloween was very good for us, so I suspect that Christmas is going to be great,” said Raul Vazquez, Walmart.com’s (WMT) CEO recently.
While overall U.S. online holiday sales are expected to rise about 20% this year, Walmart.com’s sales should jump between 40% to 60%. It would appear that the “Black Friday” Wal-Mart held the Friday after Halloween was success and that momentum is carrying over.
Vasquez said that unlike past years the retailer will post special deals on its Web site Thanksgiving day. The selected items, many of which will only be available online, can be purchased through the Web site that same day.
They are also planning special online deals for what it is calling “cyber-week”, the Monday through Friday after Thanksgiving. It will offer special deals on twice as many items as a year ago, and it will post new items on its site daily during those five days, he said.
They also have completed the roll-out of its “Site to Store” program that now accounts for 1/3 of all online transactions. It allows customers to order products on the Web site and have them shipped to a local Wal-Mart store for free. Vasquez said of the program, “It has exceeded our expectations, we expect it to rise.”
Wal-Mart is the place people turn to when times get tough and the consensus now is that they just may. That being said Wal-Mart is out front with its online site and the integration of it to the stores on such a massive scale. Sears Holdings (SHLD) has a similar program through its site but it does not compare to the Wal-Mart site in terms of ease of use and breadth of offerings. One drawback is that the Kmart and Sears sites and the merchandise is not consolidated, causing the user to have ti use both sites to find an item, not convenient.
Target, (TGT) based on what I can tell does not have a site-to-store program and that hurts them as it makes their site that much less convenient that the others.
Wal-Mart reinvented the retailing experience and now they seem to be reinventing the retailing internet one as well.
Oh yea…. If Lee Scott did not buy back at least $2 billion in stock the last quarter, time to go…
Jeez, McDonald’s (MCD) just cannot be slowed down.
McDonald’s Chief Executive Officer Jim Skinner said, “We are leveraging our menu variety and value with convenient restaurant locations and innovative marketing to deliver a restaurant experience that resonates with customers. The combined strength of these strategic initiatives continues to drive our business forward.” How good was it?
Thursday that same-store sales grew 6.9% in October, with gains across all of its regions. Systemwide sales for McDonald’s restaurants worldwide increased 14.2% for the month (8.2% in constant currencies).
In the U.S., same-store sales for the month increased 5.4%. Europe, the company’s second-largest market, reported a 6.4% rise for the month, led by France, the U.K. and Russia. Asia/Pacific, the Middle East and Africa climbed 9.4%, led by Australia, Japan and China.
Why? In a word, value. The chains value menu, which appeals to consumers pressed by higher costs for gasoline and other items is seeing sales surge. This is the reason I have been saying since January that Starbucks (SBUX) is out of luck if they think they are going to offset dairy and coffee cost increases with yet another price increase on customers. Starbucks reports on 11/15. It will be interesting to compare their commentary.
If people feel their wallet pinched, the first thing that will go is the $5 latte’.
UPGRADES
First Solar FSLR Merriman Curhan Ford Sell » Neutral
Cooper Tire CTB KeyBanc Capital Mkts Buy » Aggressive Buy
Maguire Properties MPG Stifel Nicolaus Sell » Buy
Enterprise GP Holdings EPE Wachovia Mkt Perform » Outperform
Tyson Foods TSN Wachovia Underperform » Mkt Perform
WebMD Health WBMD Needham & Co Hold » Buy
Greenfield Online SRVY Needham & Co Buy » Strong Buy
China Grentech GRRF Susquehanna Financial Neutral » Positive
Nortel NT Credit Suisse Underperform » Neutral
Middlesex Water MSEX Boenning & Scattergood Market Perform » Market Outperform
Sun Healthcare SUNH Bear Stearns Peer Perform » Outperform
NetLogic NETL CIBC Wrld Mkts Sector Perform » Sector Outperform
Foster Wheeler FWLT Citigroup Hold » Buy
Ashland ASH Credit Suisse Underperform » Neutral
Stantec SXC Brean Murray Hold » Buy
HLTH Corp HLTH Friedman Billings Mkt Perform » Outperform
First Solar FSLR CIBC Wrld Mkts Sector Perform » Sector Outperform
Ship Finance Intl SFL Citigroup Sell » Buy
Town Sports Intl CLUB Banc of America Sec Sell » Neutral
Eaton ETN Bernstein Mkt Perform » Outperform
Total S.A. TOT JP Morgan Neutral » Overweight
FirstMerit Corp FMER Lehman Brothers Underweight » Equal-weight
Coeur d’Alene Mines CDE JP Morgan Neutral » Overweight
Somaxon Pharma SOMX JP Morgan Underweight » Neutral
PG&E PCG Jefferies & Co Hold » Buy
DOWNGRADES
Nastech Pharm NSTK BMO Capital Markets Outperform » Market Perform
Goldman Sachs GS Wachovia Outperform » Mkt Perform
Sotheby’s BID Banc of America Sec Buy » Neutral
Kinross Gold KGC CIBC Wrld Mkts Sector Outperform » Sector Perform
Kenexa KNXA CIBC Wrld Mkts Sector Outperform » Sector Perform
Kenexa KNXA Brean Murray Buy » Hold
Quebecor World IQW CIBC Wrld Mkts Sector Outperform » Sector Perform
Quebecor World IQW UBS Buy » Neutral
McCormick & Schmick’s MSSR Morgan Joseph Buy » Hold
Bankrate RATE RBC Capital Mkts Outperform » Sector Perform
Baidu.com BIDU RBC Capital Mkts Outperform » Sector Perform
Sotheby’s BID JMP Securities Mkt Outperform » Mkt Perform
Hologic HOLX RBC Capital Mkts Outperform » Sector Perform
InnerWorkings INWK Jefferies & Co Buy » Hold
Kinross Gold KGC Credit Suisse Outperform » Neutral
ING Groep ING Bear Stearns Outperform » Peer Perform
Global Cash Access GCA JP Morgan Overweight » Neutral
Maidenform Brands MFB Brean Murray Buy » Hold
Kenexa KNXA Susquehanna Financial Neutral » Negative
Primus Guaranty PRS Lehman Brothers Overweight » Underweight
AMR Corp AMR UBS Neutral » Sell
Air Tran Holdings AAI UBS Buy » Neutral
Nice Systems NICE Banc of America Sec Buy » Neutral
Bankrate RATE CIBC Wrld Mkts Sector Perform » Sector Underperform
Brown-Forman BF.A JP Morgan Overweight » Neutral
Gol Intelligent Airlines GOL Deutsche Securities Buy » Hold
Friday’s Picks
Tim Seymour recommended Alcoa (AA).Open $37.66
For the second day in a row Guy Adami said Short Dow30 ProShares(DOG) was a buy. Open $59.95
Karen Finerman liked Watts Water Technologies (WTS).Open $27.80
Pete Najarian preferred Boston Scientific (BSX). Open $12.49
Thursday’s Results
Tim Seymour liked Gold Fields (GFI). Open $18.10 Close $18.93 GAIN
Guy Adami recommended shorting the Dow with Short Dow30 ProShares (DOG). Open $59.46 Close $59.95 GAIN
Karen Finerman liked her financials trade; long Goldman (GS) Open $214.18 Close $209.01 LOSS and short Lehman (LEH). Open $55.96 Close $56.11 LOSS
Pete Najarian liked Evergreen Solar (ESLR). Open $13.65 Close $15.99 GAIN
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks
Guy Adami= 43-25 = 64%
John Najarian= 13-4 = 76%
Jeff Macke= 47-33 = 58%
Pete Najarian= 31-30 = 51%
Tim Seymore= 5-3 = 62%
Karen Finerman= 26-16 = 61%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%
