Friday, August 19, 2011
Thursday, August 18, 2011
Wednesday, August 17, 2011
Tuesday, August 16, 2011
Monday, August 15, 2011
Sunday, August 14, 2011
Saturday, August 13, 2011
Friday, August 12, 2011
Apple Earnings; Cisco's Cuts
NEW YORK (TheStreet) -- Apple(AAPL) shares rose 1.3% to $378.80 in pre-market trading on Tuesday, as the company prepares to issue its third quarter earnings after the ball. Analysts are expecting a good quarter from the consumer tech giant, which is expected to post earnings of $5.83 a share, up from $3.51 during the same period last year.
Cisco(CSCO) shares rose 0.4% in pre-market trading on Tuesday after the network equipment maker said it was cutting 11,500 employees, or 16% of its workforce through job cuts, buyouts and outsourcing.
The cuts are part of a $1 billion cost reduction effort to help Cisco realign its business, deal with a drop in tech spending and face market share losses that have battered the company's stock this past year.
IBM(IBM) shares popped 2% in pre-market trading on Tuesday after the software giant posting strong quarterly earnings.
Big Blue brought in revenue of $26.7 billion, compared to $23.7 billion in the same period last year; the numbers were above analysts' estimate of $25.35 billion. Excluding items, IBM earned $3.09 cents a share, up from $2.62 cents a share in the prior year's quarter and up from analysts' forecast of $3.03 a share.
Shares of Baidu(BIDU) jumped 1.4% to $150.25 in pre-market trading on Tuesday after the Chinese search engine reached a deal with major record labels to provide licensed music for users to stream or download for free.
The deal ends years of legal struggles between music labels like Sony(SNE), Universal Music Group and Warner Music Group and Baidu over the use of the search engine's MP3 service which has been accused of promoting piracy.
Online privacy start-up Reputation.com raised $41 million in venture funding, the company said on Monday. The round brings the company's total funding to more than $65 million. Reputation.com helps consumers manage their privacy and reputation online.
--Written by Olivia Oran in New York.
>To follow the writer on Twitter, go to http://twitter.com/Ozoran.
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Thursday, August 11, 2011
No Slowdown at Apple Expected in Fiscal Q3
Story corrected to reflect Apple will report fiscal third-quarter earnings, not second-quarter results.
BOSTON (TheStreet Ratings) -- Apple(AAPL) is scheduled to report fiscal third-quarter earnings after the market close on July 19, and the company's report is expected to show its red-hot growth in sales and earnings continued in the quarter.
Analysts are expecting the computer and personal device maker to report earnings per share of $5.73, up from $3.51 reported a year earlier. Revenue is estimated to increase 58% to $24.8 billion from $15.7 billion based on expectations for improving iPad and iPhone sales.
The following is taken from a first-quarter report published by TheStreet Ratings, an independent-research unit of TheStreet that uses a quantitative model to evaluate stocks.
Apple reported significant earnings per share improvement in the first quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Apple increased its bottom line by earning $15.15 versus $9.07 in the prior year. This year, the market expects an improvement in earnings ($24.92 versus $15.15).
We rate Apple a "buy." This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. Our model maintains a price target of $470 on shares of Apple, indicating the potential for 31% upside from current levels.
The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and impressive record of earnings per share growth. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Computers & Peripherals industry and the overall market, Apple's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
Apple Shakes Off Growth Fears, But What's Next?
BOSTON (TheStreet) -- Apple(AAPL) shares notched yet another all-time high on Monday even as the Dow Jones Industrial Average tumbled nearly 100 points, an impressive comeback for a stock that suffered its worst first-half performance in three years.
Apple, which is due to report quarterly results after the closing bell today, lost some of its shine earlier this year on worries the company could sustain its high growth rate. Apple didn't hold to its schedule of launching a new iPhone iteration in June. Competition from Google(GOOG) and other handset and tablet makers intensified. Perhaps most importantly, Apple CEO Steve Jobs took yet another leave of absence for health reasons. 
By June 20, Apple shares hit a low of $310.50, 3.7% below the stock's closing price at the end of 2010. Through the first six months of the year, Apple shares had their worst first-half performance since 2008, when the worst recession since the Great Depression bruised equities. Since that trough, Apple's stock has roared back, breaking through $374 to a new record high. Apple added $8 billion to its market cap during Monday's session alone.
"The 'Steve Jobs' factor was what hurt the stock in the first six months of the year," says Bryan Keane, co-portfolio manager of the Alpine Global Consumer Growth Fund(AWCGX). "But there's also a lot of talk now about what's next. At this point, it's not completely clear in terms of a product perspective. Investors are in limbo in terms of future growth rates for Apple going forward."
Keane, who helped launch the Alpine Global Consumer Growth Fund earlier this year and is a holder of Apple, says it's unclear what the next major product offering will be from Apple. The iPad 2 launched in March to much fanfare and the next iteration of the wildly popular iPhone is expected to debut in September. While Mac computer sales have been robust, Keane questions what Apple could have up its sleeve next.
"The iCloud was anticipated and it's up in the air if it will have the same impact the iPhone and iPad had," Keane says, referring to the cloud computing service Apple unveiled last month. "They're secretive about what their new products are, so it's difficult to determine the future growth rate." Apple boasted a sales growth rate of 52% in fiscal 2010, with net income jumping 70%.
Wednesday, August 10, 2011
Asia Today: Pork's Surge; China Property Limits
![[smbullriding]](/PF-AA765smbullC20110705163627.jpg)
Rocking with the Stones, rescuing hostages, riding bulls: Getting your ya-yas out, boomer-style.
Sorry, I could not read the content fromt this page.11 Stocks to Watch: Bank of America, Goldman
NEW YORK (TheStreet) -- Bank of America (BAC) reported a second-quarter loss of 90 cents a share, in line with analysts' expectations. During the same time last year, Bank of America reported profit of 27 cents a share.
Shares were down 0.8% to $9.64 in premarket trading Tuesday.
Goldman Sachs(GS) posted second-quarter profit $1.85 a share, below the consensus target of $2.27 a share but above last year's earnings of 78 cents a share.
Shares of the financial services firm were tumbling 3% to $125.50.
Tech bellwether IBM(IBM) earned $3.09 a share in the second quarter, up from $2.62 cents a share in the prior year's quarter, beating analysts' forecasts of $3.03 a share.
IBM shares were gaining 1.7% to $178.30.
Bank of New York Mellon(BK) reported second-quarter earnings of 59 cents a share, beatings analysts' estimates of 56 cents a share. The company reported earnings of 54 cents a share in the year-ago period.
Shares were advancing 1.1% to $24.90.
iPad maker Apple(AAPL) is expected to post third-quarter profit of $5.85 a share Tuesday after the markets close. The company reported $3.51 a share last year.
Shares were adding 1.1% to $377.94.
UnitedHealth(UNH) said Tuesday it earned $1.16 a share in the second quarter versus the average analyst estimate of 94 cents a share. UnitedHealth earned 99 cents a share a year earlier.
Revenue in the quarter rose to $25.23 billion vs. the consensus estimate of $25.24 billion and $23.26 billion a year earlier.
The managed care company raised its outlook for 2011.
Shares were down 0.9% to $51.50.
Wells Fargo(WFC) reported second-quarter profit of 70 cents a share Tuesday morning vs. the consensus estimate of 68 cents a share and last year's profit of 55 cents a share.
Shares were up 0.8% to $27.10.
Soda giant Coca-Cola(KO) reported second-quarter earnings of $1.17 versus the average analyst estimate of $1.16. Earnings per share were $1.06 a year ago.
Shares were rising 0.5% to $67.48.
Networking giant Cisco(CSCO) said it will cut 11,500 people, or 16% of its work force, through job cuts, buyouts and a manufacturing outsourcing deal with Foxconn.
Shares were up 0.5% at $15.51.
Consumer products giant Johnson & Johnson(JNJ) reported second-quarter profit of $1.28 a share Tuesday. The average analyst estimate was $1.24 a share. The company reported earnings of $1.21 a year ago.
J&J maintains its full-year earnings guidance at $4.90 to $5 a share.
Shares were up 0.2% to $67.20.
Internet company Yahoo!(YHOO) is expected to report second-quarter profit of 18 cents a share after the markets close Tuesday. During the same time last year, the company reported profit of 15 cents a share.
-- Written by Andrea Tse in New York.
>To contact the writer of this article, click here: Andrea Tse.
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Tuesday, August 9, 2011
Housing Starts, IBM, Coke Boost Stocks
NEW YORK (TheStreet) -- Solid earnings from IBM(IBM) and Coca-Cola(KO), and progress on U.S. debt talks sent stocks soaring Tuesday.
The Dow Jones Industrial Average accelerated by more than 100 points after President Obama signaled his support for a deal that would cut the deficit by $3.7 trillion. The ambitious plan has been gaining support from Democrats and Republicans, and includes changes to Medicare and in the tax code but not Social Security. The Dow was up 211 points, or 1.7%, at 12,597.
The S&P 500 also drifted up on the news, last gaining 22 points, or 1.7%, at 1327. The Nasdaq was ahead by 62 points, or 2.2%, at 2827.
"This is the first sign that [lawmakers] are coming to an agreement on the debt ceiling," said Jim Paulsen, chief investment strategist at Wells Capital Management. "There was a big discount in the market for fear and a potential Armageddon... if it turns out better, there's room to move up."
Receding fears of a U.S. debt default triggered a gold selloff. August futures were dropping $13.40 to $1,589 an ounce, well off from Monday's record high above $1,600. August crude oil contract gained $1.76 to trade at $97.69 a barrel.
The tech sector gave stocks a lift early in the session, with IBM(IBM) shares up 4.3% at the top of the Dow. The company reported strong sales growthacross its hardware, software and services businesses late Monday, and also lifted its full-year profit outlook to adjusted earnings of at least $13.25 a share, up from its prior guidance for earnings of $13.15 a share.
Microsoft(MSFT) and Intel(INTC) were also among the top Dow gainers.
Apple(AAPL) is expected to report third-quarter earnings of $5.85 a share after the closing bell. Shares were trading 0.7% higher at $376.57. Coca-Cola(KO) was up popping by 3.7% to $69.62 after the company beat expectations by 1 cent, with adjusted earnings of $1.17 a share and said global volume grew 6% in the second quarter.
On the weaker end of the Dow were Bank of America(BAC) and Johnson & Johnson(JNJ), which reported earnings on Tuesday, alongside 3M(MMM), AT&T(T) and Verizon(VZ).
Bank of America met analysts' estimates with a loss of 90 cents a share. The loss was largely a result of the bank's recent agreement to settle claims with investors who lost money on Countrywide-issued mortgage-backed securities before the downfall of the housing market. Excluding mortgages, BofA had net income of $3.7 billion, or 33 cents a share. The stock was down 1.2% at $9.60.
Although Johnson & Johnson beat consensus estimates by 4 cents with an adjusted second-quarter profit of $1.28 a share, the company reported a 19.4% decline in quarterly profit as a result of higher litigation and recall costs. The stock was declining 0.7% to $66.61.
Monday, August 8, 2011
Bank of America Takes Another Mortgage Hit
NEW YORK (TheStreet) -- The bad news for Bank of America(BAC) is that mortgages cost the bank $20 billion in the second quarter.
The worse news is that management continues to struggle over the ultimate cost of its mortgage operations.
The mortgage-related costs were announced June 29, including a proposed $8.5 billion settlement with 22 institutions that bought mortgage backed securities (MBS) from Bank of America backed by mortgages that were fraudulent or otherwise didn't meet the underwriting criteria promised to the investors who bought the MBS. 
Bank of America CEO Brian Moynihan
With the agreement and other mortgage-related actions taken in the second quarter of 2011, the company believes it has recorded reserves in its financial statements for a substantial portion of its representations and warranties exposure as measured by original principal balance.
Bank of America recorded a loss of 90 cents for the second quarter, equal to Thomson Reuters consensus analyst estimates.
Even following an $8.5 billion settlement with a group of 22 institutions over mortgage backed securities and $12 billion in other mortgage-related charges, there appears to be a fair amount of uncertainty among investors and analysts about the extent of the bank's ongoing exposure.
What appears certain is that the bank is well behind rivals including Citigroup(C), Wells Fargo(WFC)and JPMorgan Chase(JPM) when it comes to reserving against higher capital requirements for globally systemically important financial institutions under international regulatory guidelines known as Basel III.
Still, Bank of America has said it expects to generate enough capital out of earnings to be able to meet the requirements, which, although they don't go into effect for several years, have in recent weeks been a keen area of focus for investors and analysts.
Bank of America CFO Bruce Thompson told analysts in a June 29 conference call the bank has set aside "the lion's share of what we can," for disputes with "monoline" bond insurers, such as Assured Guarantee Ltd.(AGO) and MBIA(MBI) as well as "private label" investors in its mortgage backed securities (MBS)--those other than government sponsored entities (GSEs) Fannie Mae (FNMA.OB)and Freddie Mac(FMCC.OB).
Bank of America also said the "range of possible loss" for non-GSE MBS claims is $5 billion.
While Bank of America has announced settlements with the GSEs, they are limited in scope. Also to be determined is the much-anticipated deal with a host of federal and state regulators over mortgage servicing. Some estimates have predicted a settlement of mortgage could cost Bank of America and other servicers as much as $25 billion, though many banking industry watchers, such as Sandler O'Neill analyst Jeff Harte, have said in the past that banks would be very unlikely to agree to such a large number.
Sunday, August 7, 2011
How Apple Products Will Sell
CUPERTINO, Calif. (TheStreet) -- As Apple(AAPL) reports fiscal third-quarter results Tuesday afternoon, will investors see some of the magic that hit Google(GOOG) in its second-quarter report last week?
"All in all, I would expect a good quarter, not a Google-type of quarter, but a good quarter," said Michael Yoshikami, CEO and founder YCMNET Advisors, which holds a small position in Apple. "I am expecting good numbers -- I think that they will surprise to the upside with iPad numbers."
Analysts predict that Apple will enjoy a summer of major iPad and iPhone sales, despite the lack of a new iPhone announcement at its Worldwide Developers' Conference (WWDC) last month. An upgraded version of the device is expected to make its debut in September.
YCMNET's Yoshikami is not getting too carried away with all the iPhone chatter. "I won't be surprised to see the iPhone numbers be fair, but not great," he told TheStreet. "That would be because Verizon(VZ) has had a very successful rollout of their LG LTE devices," said Yoshikami, referring to the slew of Google Android phones hitting the market this summer.
The Apple investor expects to see Mac adoption rates continue to rise, as well as hear more details about its recent patent win against HTC.
"I will be listening for what they are going to do about Apple in terms of litigation, and also their TV product launch," he said, referring to rumors that the company is planning to enter the high-definition TV market, possibly later this year.
Apple, of course, is notoriously tight-lipped about future product launches, and analysts seem to think that the firm is likely to focus attention on the roll-out of its new iCloud service, which was unveiled at WWDC last month.
Overall, analysts surveyed by Thomson Reuters are looking for Apple to report third-quarter revenue of $24.92 billion and earnings of $5.80 a share.
--Written by James Rogers in New York.
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Apple vs. Google: A 5-Round Scorecard
NEW YORK (TheStreet) -- Summer has been good for Apple(AAPL) shares, but it's been even better for Google's(GOOG).
The fierce mobile tech rivals have enjoyed a resurgent popularity among investors over the past month, with Apple up 14% and Google -- thanks to a strong second-quarter performance -- up 24%.
Investors will watch to see if Apple can top Google's results when it releases its fiscal third-quarter report after the bell Tuesday. (TheStreet will live-blog Apple's earnings day, starting at 3:45 ET.) 
But beyond the financial metrics, Apple and Google continue to duke it out on the innovation front. Apple and Google are undeniably the sector leaders, but they also represent a large swath of the tech market being shaped by sweeping trends in technology.
Developing areas like social networking, mobile, devices, cloud services and retail expansion are just some of the forces fueling investor enthusiasm.
Here is an updated look at how well some analysts and industry experts say Apple and Google measure up in five of the key categories. The half-dozen analysts TheStreet spoke with were asked to rank the companies' performance on a 1-5 scale.
Social Web
Three months ago, this category had both Google and Apple tied in a dead heat for Social Networking Failure. But in just the past two weeks, Google's new Facebook imitation Google+ has managed to catch on with 10 million-plus users. 
For its part, Apple has Ping, a community-building attempt that allows users to share their music recommendations and comments with others in iTunes. The uptake has been disappointing. And FaceTime, a video conferencing service linking Apple devices only, has had limited success.
Social is a much bigger threat to Google's search ad-driven business and therefore a much larger priority for the `Net giant. Google+ is a promising medium for Google to plant ads that are targeted to people aligned around common interests. It's still early, but Google+ could help Google forestall Facebook's advertising challenge.
"Apple just hasn't gotten into this area yet and relies mostly on third-party products," said Gartner analyst Ken Dulaney. "Google participates, but its early days and they have had some failures already."
Score: Apple 2, Google 4
Saturday, August 6, 2011
Extreme couponing: Stockpiling toothpaste, meat
Michelle and Darren Gutwein with kids Alex and Zoey, and the $750 worth of groceries they bought for $122.
(Money Magazine) -- Malinda Hodges, a 41-year-old business technology consultant for Bank of America, is one of many coupon enthusiasts who never dreamed she would find herself stockpiling men's deodorant under the bathroom sink. But in 2008, when her husband, Dwayne, was laid off from his job in the mortgage industry, she began using coupons to help support their three children, now ages 3 to 12, and her mom, who lives with them in Fort Mills, S.C. Dwayne eventually found work, but Malinda never gave up her bargain-hunting ways.
Now couponing seems like a common sense way to live. She buys six Sunday newspapers for the inserts each week, then matches the coupons with weekly sales at nearby retailers, some of which double or even triple the coupon value.
It can be a lot of work -- she estimates she spends five hours a week couponing -- but Hodges has cut her $300 weekly grocery bill in half. "I plan meals around what's on sale and always try to save more than I spend," she says, adding that she never pays for toothpaste since there's always a deal to be found.
"We don't stockpile like the people on the TV show -- we don't have that much space," though she does admit to stashing away that deodorant, plus 23 tubes of toothpaste.
Like many serious couponers, Hodges loves scoring deals in large quantities so that she can give the extras to family, friends, and fellow church members. Never mind that buying 18 containers of deodorant at a deep discount might have cost more than paying full retail price for one. "It's a way to be a blessing to other people," says Hodges.
Couponing is a popular example of what economists call "price discrimination." Like airline discounts that require a Saturday night stay, coupons are a way of collecting more from the people willing to pay more and less from people who will jump through hoops for a bargain.
If you don't mind devoting hours to clipping and learning coupon policies, you get a discount; if you consider that a hassle, you pay full price. In times of economic uncertainty, more people are willing to play the cat-and-mouse game.
"People who coupon have a definition of themselves as not being suckers," says Ariely. "They think, 'I'm more clever because I'm outsmarting the system.'"
The Internet has made couponing simpler than ever by automatically matching coupons with store sales -- once a laborious job -- and allowing consumers to find coupons easily. That, of course, has prompted manufacturers and stores to create more elaborate rules to keep the process difficult. Otherwise, they might as well just drop the prices for everybody.
The ideal consumer, from the brand's point of view, is a bumbling couponer who tries a new breakfast cereal with a 50-cent-off deal, then becomes hooked and pays the full price forever after.
There are no rigorous cost-benefit studies about coupon behavior, but an admittedly unscientific exercise by Coupons.com concludes that devoting 40 minutes a week can save you $1,400 a year on groceries, and nearly $6,000 if you factor in store sales.
You don't have to become an obsessive-compulsive couponer -- hauling binders through the store or driving miles out of your way for a free case of soda -- to save. Mary Henderson, a 31-year-old marketing specialist for Accenture who lives in Lombard, Ill., says she spends only about two hours a week couponing but saves $100 to $150, allowing her and her husband, Greg, to maintain their ambitious retirement and college savings regimen while she cuts back her work hours to spend more time with their 1-year-old, Evelyn. "We're still planning to retire at 55," she says.
It can be a challenge, however, for even serious couponers to find all the food they truly want to eat. Discounts for processed food like ramen noodles and crackers are easy to come by, but not so easy to find for fresh produce. Meat and dairy products can be tricky too, though dedicated couponers usually have extra freezers in the basement to stock up when those items go on sale. And you can forget about brand loyalty.
Catherine Boyle, 48, a Christian speaker and author in Richmond, is a devoted couponer when she shops for her husband, Barney, 50, a bank vice president, and their two children, ages 14 and 11. The kids have accepted having to give up their favorite JIF or Peter Pan peanut butter in favor of Skippy, which is often on sale."But I'd be drawn and quartered if I brought home generic peanut butter," Boyle says. "You can only go so far."
The most popular coupon items are groceries and personal-care products, but once this addictive habit sets in, couponers find it nearly impossible to pay full price for anything. They search Google for discount codes, learn of sales through Twitter and Facebook, and sign up for restaurant mailing lists. Social-networking coupon sites even offer free vacations if you persuade others to buy the same package (though unless you split the discount with your pals, it could be awkward when they realize your trip was free).
New convert Michelle Gutwein, a 30-year-old IT professional in the Twin Cities area, found it difficult to resist the undertow once she started. When she first watched "Extreme Couponing," she thought couponers were crazy hoarders. "Flash-forward about six months, and now I'm one of them!" she says.
Gutwein has stockpiled goods in every available nook and cranny in the house she shares with her husband, Darren, and two children, 3 and 5. She buys meat in bulk and chops it up into one-pound bags to use later. The work has paid off. She estimates she saves $700 a month and is launching a blog to share tips.
But she began to think she had a problem when she found herself spending eight hours one day searching online and reading blogs. "I thought I had to go to every single store to stockpile goods," she says. "I was running myself ragged because I thought you had to do it the way they do on TV."
This is a common phenomenon in coupondom. Blogger Melanie Feehan calls rabid newbies "baby vampires" who clear the shelves of sale items, annoy other customers waiting in line, and drive store managers crazy. Fortunately, Gutwein says, she finally got hold of herself. "I realized with a busy family, you don't need to go to seven stores a week," she says. "Just pick and choose what you need."
E-mail The Help Desk your household budget questions.
At best, enthusiastic couponers are highly organized, efficient, smart, and mathematically-inclined Type A personalities. At worst, some appear to suffer from impulse-control problems such as obsessive-compulsive disorder, according to Bonny Forrest, a clinical neuropsychologist in San Diego who trained at Yale's highly regarded OCD unit -- though she hastens to add that couponers usually can't be considered hoarders. The clinical definition of hoarding requires clutter, and couponers tend to be excessively neat.
"It seems to be an addiction, like compulsive shopping," says Forrest. "Like the women who buy all those clothes they don't need because of the high it gives them, that feeling of self-esteem." The questions to ask yourself are: How much time does it take, does it interfere with your relationships, and does it stem from a fear of losing your job? "If so," says Forrest, "a more rational approach would be to spend more time at your job."
Matt Sharp, executive producer of Extreme Couponing, sees couponing not as a pathology but as an emerging subculture with its own rituals and mores. "It's a way of life," he says. "Yes, it's about saving money, but not in the regular way of being on a budget, giving up your Starbucks, and neglecting yourself," he says. "For couponers saving is fun, almost a sport."
For Lauren Liggett, a 22-year old college student who discovered the coupon-clipping, couponing has given her a productive and exciting way to spend her time, deepened her social connections, and let her help others who are less fortunate. "Before I started couponing, I wasted my time on the computer or watching TV," she says. "Now I'm spending time with friends, getting them into it, and going to stores together to see if we can find some good deals."
Like computer nerds who were scorned until the world realized how valuable their skills made them, serious couponers are starting to get more respect. When Liggett started couponing in January, her aunt told her she was crazy. But a few weeks ago she called from Connecticut. "You know that couponing thing you do?" her aunt said, a bit sheepishly. "Is there any way you can teach me?" 
News Hub: Stocks Tumble on Europe Debt Worries
Rocking with the Stones, rescuing hostages, riding bulls: Getting your ya-yas out, boomer-style.
Sorry, I could not read the content fromt this page.Friday, August 5, 2011
News Hub: Stocks Fall on Debt Concerns
Rocking with the Stones, rescuing hostages, riding bulls: Getting your ya-yas out, boomer-style.
Sorry, I could not read the content fromt this page.Thursday, August 4, 2011
News Hub: Stocks End Higher on Strong Earnings
Rocking with the Stones, rescuing hostages, riding bulls: Getting your ya-yas out, boomer-style.
Sorry, I could not read the content fromt this page.DJIA Targets 200-Point Day
NEW YORK—U.S. stocks traded near session highs, lifted by International Business Machines (IBM)' strong earnings and President Barack Obama's praise for $3.7 trillion deficit-reduction plan.
About an hour before the closer, the Dow Jones Industrial Average was up 208 points, or 1.7%, to 12593. The blue-chip index rose as much as 214 points in afternoon trading on Mr. Obama's comments.
IBM surged 5.2%, touching a fresh intraday record, and has accounted for about 66 points of the Dow's gains.
5:23 Goldman Sachs shares hit their lowest level in a year, and Bank of America swings to a loss, Deal Journal's Shira Ovide reports. (Photo: Getty Images.)The president said the proposal, which would modify entitlement programs like Social Security and rework the tax code, represents a "very significant step" forward in deficit talks.
"There's no question that the political game of chicken over the deficit is weighing on investor minds," said Ted Weisberg, president of Seaport Securities. "Obama must've given the impression that this will one way or the other get resolved."
Investors were already in a positive mood thanks to encouraging earnings and a hint of housing optimism.
IBM shares surged a day after reporting second-quarter results that exceeded forecasts. The technology company posted strength in its hardware, software and services businesses, prompting a boost to its full-year earnings outlook. That lifted tech stocks and pushed the tech-heavy Nasdaq Composite up 58 points, or 2.1%, to 2823. The Standard & Poor's 500-stock index was up 21 points, or 1.6%, to 1327.
Technology was the best performing sector in the S&P 500, up 2.6% on the day. While tech stocks have been the biggest gainers so far this month, they have lagged the broader market over 2011. Japan's earthquake and tsunami in March have caused supply hitches, which prompted worries about global economic growth and dragged down tech stocks down more than other sectors in recent months.
The S&P 500's tech sector is up 5.2% this year, well behind energy's 14% rise and health care's 12% gain.
Despite renewed optimism prompted by IBM's strong results and how the rest of the tech sector may perform during earnings season, traders cautioned into getting overly bullish about the sector's prospects.
"One day doesn't make a bull market," Seaport's Mr. Weisberg said.
The broad market rally comes after stocks fell on Monday to the lowest close this month. For the moment, earnings and housing data are acting as a welcome distraction to concerns over European governments' finances and U.S. debt-ceiling negotiations that have roiled markets for weeks.
"Earnings have trumped everything else," said David Klaskin, chief investment officer at Oak Ridge Investments in Chicago. "There's no major negative news offsetting the fact that earnings were pretty good, which is why we're rallying."
Apple (AAPL) shares edged up 0.7% after hitting a new intraday record earlier in the day. The technology giant is expected to report earnings for its June quarter after the closing bell.
On the economic front, U.S. home construction rose in June to the highest level in five months, according to the Commerce Department. Still, construction remains well below what economists consider as healthy levels.
Home-builder stocks are getting a boost following the housing data. Lennar (LEN) rose 6.3%, D.R. Horton (DHI) jumped 5.9% and Toll Brothers (TOL) gained 3.8%.
Elswhere, Wells Fargo (wfc)'s second-quarter earnings rose 29% amid falling loan losses and strong demand for business loans. Shares climbed 4.3%.
Dow component Coca-Cola (KO)'s second-quarter earnings rose 18%, boosted by Coke's recent bottler acquisition and strong volume growth overseas. The stock rose 3.3%.
Bank of America (BAC) posted its third loss in four quarters, as mortgage-related issues continued to overshadow any improvements in other operations. Shares dropped 1.3%. The stock is down about 12% this month and closed Monday in single-digit territory for the first time since May 2009.
Goldman Sachs Group (GS) shed 1.3%. Its second-quarter profit of $1.05 billion was significantly lower than expectations, as difficult markets led the Wall Street bank to reduce risk taking to the lowest levels in five years.
Harley-Davidson (HOG)'s earnings more than doubled in the second quarter as retail sales of its new motorcycles rose in the U.S. for the first time since the fourth quarter of 2006. Shares rose 9.9%.
Write to Steven Russolillo at steven.russolillo@dowjones.com
Wednesday, August 3, 2011
Markets Hub: Stocks Tumble on Europe Jitters
Rocking with the Stones, rescuing hostages, riding bulls: Getting your ya-yas out, boomer-style.
Sorry, I could not read the content fromt this page.Tuesday, August 2, 2011
Casino magnate Steve Wynn trashes Obama
Steve Wynn had some harsh words for the Obama administration.
NEW YORK (CNNMoney) -- Billionaire CEO Steve Wynn used his company's earnings call to trash President Obama and his economic policies Monday -- calling the administration a "wet blanket" on the business community.
"I'm saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime," Wynn said in response to a question about Las Vegas real estate.
Wynn then expanded on that idea in a 400-word soliloquy, before fielding a follow-up question on a planned real estate project in Macau.
"The guy [Obama] keeps making speeches about redistribution, and maybe we ought to do something to businesses that don't invest or hold too much money," Wynn said. "We haven't heard that kind of talk except from pure socialists."
Wynn described himself as a Democratic businessman, and supporter of Harry Reid, before adding that, "I support Democrats and Republicans."
Wynn's company, the resort and casino operator Wynn Resorts (WYNN), actually did quite well in the second quarter, earning $122 million or 97 cents per share.
But Wynn said he could be doing even more if not Obama. His company alone could add 10,000 jobs in Las Vegas, but he is "afraid to do anything in the current political environment in the United States."
"The business community in this country is frightened to death of the weird political philosophy of the president of the United States," Wynn said.
Some business leaders have cited an uncertain regulatory atmosphere as a reason for the slow pace of hiring. But there are plenty of examples of individual companies -- like Google -- that are hiring at a breakneck pace.
And while hiring is slow, mergers and acquisitions are heating up, and investors are being rewarded with stock buybacks and dividend hikes.
Wynn did not focus exclusively on the administration, although his harshest criticisms were reserved for the president. He also blasted the debate over the debt ceiling.
"Everybody is so political, so focused on holding their job for the next year that the discussion in Washington is nauseating," Wynn said.
The Obama administration has not always been on the friendliest of terms with the business community, but the relationship has thawed this year.
The president acknowledged the tensions in February, telling members of Washington's most powerful business lobby that "we've had some pretty strong disagreements."
The White House has made concrete efforts to mend the relationship, including the hiring of chief of staff Bill Daley, who came over from JPMorgan.
But things won't improve, Wynn said, until Obama is out of the White House.
"Until he's gone, everybody's going to be sitting on their thumbs," Wynn said.
News Hub: Bernanke Takes Wind Out of Stocks
Rocking with the Stones, rescuing hostages, riding bulls: Getting your ya-yas out, boomer-style.
Sorry, I could not read the content fromt this page.Monday, August 1, 2011
News Hub: Bernanke Says Fed Ready to Act if Needed
Rocking with the Stones, rescuing hostages, riding bulls: Getting your ya-yas out, boomer-style.
Sorry, I could not read the content fromt this page.News Hub: Fed Minutes Fail to Stop Stock Slide
Rocking with the Stones, rescuing hostages, riding bulls: Getting your ya-yas out, boomer-style.
Sorry, I could not read the content fromt this page.Sunday, July 31, 2011
Earth to Rupert: Just sell the newspapers!
James Murdoch and father Rupert Murdoch appear before Parliament to answer questions about the News of the World tabloid hacking scandal. It did not go well.
NEW YORK (CNNMoney) -- Watching Rupert Murdoch testify in front of the British Parliament Tuesday, two things became immediately obvious.
This is only going to make the phone hacking scandal worse. And it's time for Rupert to cut bait with his first love and give up on News Corp.'s profit-challenged newspaper business.
The elder Murdoch, who is chairman and CEO of News Corp (NWSA, Fortune 500)., looked uncomfortable throughout his appearance -- even before someone tried to hit him with a foam plate.
Rupert repeatedly professed to having little dealings with his U.K. tabloids and often gave monosyllabic (yes/no) answers to tough questions from British lawmakers.
Meanwhile, his son James, who is the CEO of the News International unit that oversaw the now defunct News of the World tabloid at the heart of the voicemail hacking, actually came across reasonably well. He was more contrite and had more detailed responses to direct questions.
Still, it remains to be seen whether James' performance is enough to convince shareholders that perhaps he is really more Brian Roberts of Comcast (CMCSA, Fortune 500) than James Dolan of Cablevision (CVC, Fortune 500) and could be a capable News Corp. CEO.
I personally think that barring a knight in white armor return of Peter Chernin, Rupert's long-time top general who was almost universally adored by Wall Street, News Corp. probably needs to eventually elevate current chief operating officer Chase Carey to the CEO slot.
In fact, it seems that investors may be betting on that outcome Tuesday. Despite the fact that Rupert bumbled his way through his Parliament testimony, shares of News Corp. rose about 6% Tuesday following a 4% drop Monday.
Carey, like Chernin -- who left News Corp. in 2009 and now runs his own media company -- is not a newspaper guy. He used to be the CEO of DirecTV (DTV, Fortune 500). He also benefits from the fact that his surname isn't Murdoch, which is proving to be as toxic as any subprime mortgage on Bank of America's balance sheet.
And as anyone who knows how to read a corporate income statement knows, the real growth in News Corp. lies in its broadcast, cable TV and movie assets, not the stodgy world of newspapers (or book publisher HarperCollins for that matter.)
Which brings me back to my second point. It's time for News Corp., with or without Murdoch at the helm, to abandon much of the News in its Corp.
Sure, selling the newspapers won't mean that the hacking scandal is over. This will continue to be a huge story across the pond. There's even calls for blood in the U.S., with members of Congress urging an investigation into whether News of the World also hacked into voicemails of 9/11 victims and their families.
But getting rid of the papers may allow News Corp. to move on and begin the process of putting this sordid mess behind it. It would also probably be a smart financial decision. If nothing else, it would allow the company to focus more directly on assets that actually have more value.
Yes, it would be an embarrassing about face to get rid of all his dead tree operations so soon after purchasing The Wall Street Journal publisher Dow Jones in 2007 for more than $5 billion.
You can tell that Rupert still loves the business. He even conceded in Tuesday's hearing that he spends a lot more of his time with the WSJ than his U.K. papers.
But News Corp. has already written down the value of Dow Jones by $2.8 billion in 2009, a stunning admission that Rupert paid way too much for the company.
And if you look at Murdoch's overall history at News Corp. (which I did extensively in my book Inside Rupert's Brain) you'd quickly realize that he often buys and sells assets more quickly than people flipped houses back in 2006.
The Village Voice. TV Guide. The Los Angeles Dodgers. MySpace. All assets that News Corp. bought and dumped.
As long as News Corp. is a Hollywood media company (with news limited to its Fox cable networks) then it may actually be more appreciated by investors. It would be more like fellow media giants CBS (CBS, Fortune 500), Viacom (VIAB, Fortune 500), Disney (DIS, Fortune 500) and CNNMoney owner Time Warner (TWX, Fortune 500).
The so-called Rupert discount has been a widely discussed phenomenon on Wall Street for years. News Corp. trades for less than 12 times earnings estimates for its next fiscal year. That's lower than the P/E ratios for CBS, Viacom and Disney.
But with the newspapers, even something that still is as widely respected as The Wall Street Journal, News Corp. is a 21st century misfit still paying too much attention to 19th century media.
And the supposed influence that comes from owning papers no longer is enough to outweigh the financial negatives. The papers are now both a slow-growth albatross and a public relations/political quagmire.
Wall Street knows that. Chase Carey likely knows it. And Rupert, in his heart of hearts, probably knows it as well.
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
Saturday, July 30, 2011
News Hub: Stocks End Higher on Bernanke Comments
Rocking with the Stones, rescuing hostages, riding bulls: Getting your ya-yas out, boomer-style.
Sorry, I could not read the content fromt this page.Friday, July 29, 2011
An ex-Googler's inside view on Google+ vs. Facebook
Dhanji R. Prasanna is a Sydney-based software engineer. He recently left Google after a nearly three-year stint working on projects like Google Wave. A version of this post first appeared on his blog, http://rethrick.com/, where you can read more about him.
There's no shortage of punditry around the future and fate of Google+, a massive social networking effort from Google. Much of it centers around competition with Facebook, and whether or not it will succeed in unseating the latter as the dominant social networking site.
I have a somewhat unique perspective on the matter, since I worked under the Google+ project umbrella for a good 6-8 months after Wave was canceled and know many of the engineers and product designers involved in this drama.
The argument is generally phrased along the lines of 'is Google+ a Facebook killer?'
This is a somewhat contrived and sensational narrative, so let me try and explain what I think the argument is really about. But before you hear my take, let me give you some background.
I don't find Google+ all that innovative. It hits all the notes that a Facebook clone merits, and adds a few points of distinctiveness that are genuinely compelling -- but I don't find it all that interesting, personally. To my mind, Twitter was a far greater innovation that continues unchallenged. But before you judge me as harsh: Broad product innovation is not exactly what they were going for, I believe.
A few years ago, before Google's CEO cared a whit about social networking or identity, a Google User Experience researcher named Paul Adams created a slide deck called the Real Life Social Network.
In a very long and well-illustrated talk, he makes the point that there is an impedance mismatch between what you share on Facebook and your interactions in real life. When you share a photo of yourself doing something crazy at a party, you don't intend for your aunt and uncle, workmates or casual acquaintances to see it. But Facebook does not do a good job of making this separation. This, in essence, is what the slide deck says, and Adams' point is made with great detail and insight.
So when Google (GOOG, Fortune 500) began its social effort in earnest, the powers-that-be seized upon Paul's research and came up with the Circles product. This was to be the core differentiator between Google+ (then codenamed Emerald Sea) and Facebook.
As part of induction into Emerald Sea, my team got the 30-minute pitch from the Circles team. I listened politely, all the while rolling my eyes in secret at their seemingly implausible naivete. By then I was also growing increasingly frustrated at Google's sluggish engineering culture. I asked the obvious question: "While I agree that Circles is a very compelling feature, this slide deck is public. Surely someone at Facebook has seen it, and it won't take them long to copy it?"
I was met with a sheepish, if honest look of resignation. They knew the danger of this, but were betting that Facebook wouldn't be able to change something so core to their product, at least not by the time Emerald Sea got to market.
I laughed, disbelieving. Facebook has a hacker culture. They're only a handful of engineers, and they develop with quick, adaptable tools like PHP -- especially when compared with the slow moving mammoths we were using at Google. By that time, 200+ engineers over three months had produced little more than ugly, bug-ridden demos, and everyone was fretting about the sure-to-fail aggressive timeline.
Sure enough, I watched as TechCrunch published leak after leak of Facebook going into lockdown for a secret project. On my side of the fence, engineers were increasingly frustrated. Some leaving Emerald Sea for other projects -- and some were even leaving for Facebook. I had the impression that Paul Adams was not being heard (if you're not an engineer at Google, you often aren't). Many were visibly unhappy that his slide deck, the basis for an upcoming book, had been published for all to see. I even heard a rumor that Google was attempting to stop or delay the book's publication.
One fine day Paul Adams quit and went to Facebook. I was convinced that this was the final nail in the coffin. Engineers outside Emerald Sea -- a cynical bunch at the best of times -- were making snide comments and writing off the project as a dismal failure before it even launched.
Then it happened. Facebook finally released the product they'd been working on so secretly, their answer to Paul's thesis. The team lead at Facebook even publicly tweeted a snarky jab at Google. Their product was called Facebook Groups.
I was dumbstruck. Was I reading this correctly? I quickly logged on and played with it, to see for myself. My former colleagues had started a Google Wave alumni group, and I looked in there to see if I had misunderstood. But no -- it seemed that Facebook had completely missed the point.
There was no change to the social graph, there was no real impetus to encourage people to map their real-life social circles on to the virtual graph, and the feature itself was a under a tab sitting somewhere off to the side.
Then I remembered something the Circles team lead had said: "[We know] the danger of this, but we're counting on the fact that Facebook wouldn't be able to change something so core to their product."
I had originally assumed that he meant Facebook would lack the agility to make the necessary technical changes. I was wrong -- the real point was that they would not be willing to change direction so fundamentally. Given such a large, captivated audience, you could hardly blame them.
And now, Circles have launched as a central feature of Google+, with a generally positive reaction from the tech press and users alike. Wow.
Now, I'm not saying that Circles is the one killer feature to bring down Facebook -- not at all.
What I am saying is that these two products are not playing on an even field. Like Microsoft (MSFT, Fortune 500) and its online Office, it is incredibly difficult for Facebook to make fundamental changes to their product suite to answer competitive threats.
That's why I feel that Google+ has a genuine shot at unseating Facebook.
Of course, there are many other factors to consider. For example, the Google+ sharing console is only ever a click away in any Google property via the toolbar. This is bound to keep users deeply engaged. At the same time, it will probably attract antitrust scrutiny.
On the other hand, Facebook already has strong networks effects in its favor. Stealing away even a quarter of its 750 million users will be an arduous, multi-year campaign, and Mark Zuckerberg has time and again shown that he has the uncanny ability to make good decisions under pressure. So maybe Facebook will decide at some point that it needs to pivot fundamentally and make the necessary changes.
Both companies will compete fervently for partnerships with major Web properties to feature the "Like" or "+1" buttons. And the mobile ecosystem (with Apple (AAPL, Fortune 500) now getting in bed with Twitter) will have a large impact. There are so many variables at play that many of the things I've highlighted may make no difference at all in the outcome.
With those caveats in place, however, here's my prediction: Google+ won't usurp the throne from Facebook. It will instead grow into a strong, competitive player and much-needed alternative, much as Google's Chrome has with Microsoft's Internet Explorer. That would leave Facebook as the largest player, but one without a dominant share of the social networking market.
I predict that when this game is done playing, there will be no more thrones.
Harley-Davidson stock zooms 10% on bike sales
Click chart to view Harley-Davidson's stock.
NEW YORK (CNNMoney) -- Harley-Davidson pulled a wheelie on Wall Street today. Shares of the motorcycle giant shot up more than 10% Tuesday after it reported that U.S. bike sales rose on an annual basis for the first time in nearly five years.
Dealers sold more than 53,000 new motorcycles in the U.S. during the second quarter, up 7.5% from a year ago and the first year-over-year quarterly rise since the fourth quarter of 2006. Global sales climbed almost 6% during the period.
The strong sales helped the Milwaukee-based company boost its second-quarter profit nearly 40% from a year earlier to $190.6 million, or 81 cents per share, as overall revenues rose 18% to $1.34 billion.
The results blew past Wall Street's expectations. Analysts surveyed by Thomson Reuters were looking for the company to earn 71 cents per share for the quarter, on revenue of $1.26 billion.
Harley-Davidson (HOG, Fortune 500) also lifted its guidance for the year. The company expects to ship up to 235,000 new motorcycles to distributors worldwide this year, up 12% from 2010. At the end of the first quarter, Harley's most optimistic forecast called for an 8% rise in shipments for the year.
Thursday, July 28, 2011
Putting Fees Into Context
Rocking with the Stones, rescuing hostages, riding bulls: Getting your ya-yas out, boomer-style.
Sorry, I could not read the content fromt this page.Stocks poised to rebound on strong housing
Click chart to track futures.
NEW YORK?(CNNMoney) -- U.S. stocks were set to rebound Tuesday, as investors react to strong reports on the housing market and digest the latest batch of corporate earnings.
Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were higher ahead of the opening bell. Futures measure current index values against perceived future performance.
Stocks began the week sharply lower, selling off nearly 1% on Monday, as worries about Europe's debt crisis and uncertainty over the U.S. debt ceiling continued to hang over the market. Meanwhile, gold prices surged.
The failure of eight banks to pass Europe's latest round of bank stress tests, coupled with the ongoing struggle to find a solution for Greece's debt crisis, have done little to restore investor confidence overseas.
And lawmakers at home have made little progress on a deal to raise the debt ceiling. There are now only two weeks before the Aug. 2 deadline to raise the country's legal borrowing limit.
Philip Isherwood, equities strategist at Evolution Securities, said there are just enough bright spots in corporate results to distract investors -- however briefly -- from the European sovereign debt crisis and political brinkmanship in the United States.
"Some of the results have been coming out well," Isherwood said. "It's just a question of how long you can carry on thinking about that."
Economy: Before the opening bell, the Commerce Department reporting stronger-than-expected numbers of June housing starts and building permits, giving the markets an extra boost.
The government reported an annual rate of 629,000 housing starts and 624,000 housing permits for June.
Economists polled by Briefing.com had forecast that housing starts would rise to an annual rate of 570,000 units in June, while permits were expected to remain unchanged at 609,000 units.
Companies: Quarterly reports from the banking sector will take center stage Tuesday morning.
Before the opening bell, Bank of America (BAC, Fortune 500) reported a net loss of $8.8 billion, or 90 cents per diluted share, in line with analyst expectations.
The bank was not expected to report a profit after agreeing to pay an $8.5 billion settlement to investors burned by fraudulent mortgage securities.
Goldman Sachs (GS, Fortune 500) posted second-quarter earnings of $1.1 billion profit, or $1.85 a share -- missing analysts' forecasts. The investment firm reported net revenue of $7.28 billion.
Citing strong demand, Coca-Cola (KO, Fortune 500) reported earnings per share of $1.20 on revenue of $12.7 billion, beating analyst expectations. Shares of the soft-drink maker were up more than 1% in premarket trading.
Investors will also hear from Dow component Johnson & Johnson (JNJ, Fortune 500) before the market open.
Apple (AAPL, Fortune 500) is scheduled to report its earnings after the closing bell. The iPod, iPad and Mac computer maker is forecast to have earned $5.85 a share. Also out after the close on Tuesday are results from Yahoo! (YHOO, Fortune 500).
Cisco (CSCO, Fortune 500) announced plans late Monday to lay off 9% of its work force, and to transfer another 7% of its staff to another company in a sale of one of its businesses. Shares of Cisco rose about 1% in premarket trading.
IBM said Monday its profit for the quarter rose 8% from last year to $3.7 billion. Excluding one-time charges, earnings per share were $3.09. The positive news had IBM (IBM, Fortune 500) shares up almost 2% in premarket trading.
World markets: European stocks were higher in morning trading. Britain's FTSE 100 edged higher 0.5%, the DAX in Germany advanced 1.5% and France's CAC 40 added 1.3%.
Asian markets ended mixed. The Shanghai Composite was off 0.7% and Japan's Nikkei lost 0.9%, while the Hang Seng in Hong Kong ticked up 0.5%.
Currencies and commodities: The dollar weakened against the euro, the Japanese yen and British pound.
Gold futures for August delivery hit an intraday record of $1,610.70 an ounce, before retreating to $1,605.60 -- a gain of $3.20 an ounce.
Oil for August delivery gained 80 cents to $96.73 a barrel.
Bonds: The price on the benchmark 10-year U.S. Treasury dropped, pushing the yield up to 2.96% from 2.91% late Monday.
Wednesday, July 27, 2011
Saab story: Will it survive?
FORTUNE -- The Saab soap opera has taken more twists and turns than the fate of the heroine in a Stieg Larsson trilogy. Experienced executives have resigned, potential investors have gotten cold feet and backed out, suppliers have withheld parts, and employees have withheld their labor. The question is whether we are at the end of volume three, when Lisbeth Salander declares victory in her war of revenge -- or still buried back in volume one?
Following some 11th-hour financing maneuvers to free up parts to make cars and workers to assemble them, Saab has announced it would restart production at its plant of its 9-3 and 9-5 models in Trollhättan on August 9. The plant has been dark for two months because suppliers and workers weren't getting paid.
The final piece of the financial puzzle came when the Swedish government approved the sale and leaseback of a majority stake in the plant for $32 million dollars.
Sale and leaseback is a common-enough tactic for cash-strapped companies. A little more unusual is Saab's deal with its one of its Chinese partners, Pang Da, to buy another 1,930 cars worth $63 million and pay in advance. Delivery of the vehicles won't start until the third quarter.
"Our visit to Trollhättan has further strengthened our belief that we made the right decision in entering a partnership with Spyker and Saab Automobile," Pang Qinghua said in a statement. "This additional order is the result of my firm conviction that Saab has the right product program for the Chinese market and our large distribution network will be an important asset in unlocking the potential of the brand."
While production was stopped on Saab's two mainstream models in its ancestral Swedish home, it continued on a third model, the 9-4X, made at a plant in Mexico. That's because the 9-4X is built in a General Motors plant alongside the Cadillac SRX. Production started in May, and the first one was sold last weekend to a customer in Cleveland.
Whether Saab can emerge from its financial and operational chaos and become a functioning auto company again remains an open question. Buying a new car in Saab's price neighborhood is like investing in the company that made it. Saab's brush with liquidation has likely scared off the more cautious among its potential owners.
Longer term, there remains the very pressing issue of how a company as small as Saab can survive with an uneven product line, high-cost manufacturing base, a second- (or third-) tier brand, and scant technical resources.
Even if everything goes smoothly for the rest of the year Saab is on track to sell around 50,000 cars this year. By comparison, Ford (F, Fortune 500) makes that many F-series pickups every four weeks.
What the future holds for Saab depends largely on the energy of one man, Victor Muller, 51, a Dutch businessman who is long on charm and persuasiveness and short of capital. A lawyer by training, Muller had an opportunistic career in salvage and fashion before forming the boutique automaker, Spyker, in 2000 to make high-end exotic cars.
Spyker has apparently never turned an annual profit. As one industry observer put it, "Spyker's only real accomplishment is its continued existence." That didn't stop Muller from rounding up $74 million (and $320 million in Spyker preferred shares) to buy Saab from bankrupt GM.
The shorthand description of Muller parallels other strong-willed personalities who want to play in their own automotive sandbox. The early years of the auto industry are replete with such figures. Just going back to the 1940s, they include car salesman Preston Tucker, engineer John Z. DeLorean, and entrepreneur Malcolm Bricklin.
Their common denominator was an excess of ego and a lack of liquid assets. To make up for the shortfall, it is good to have wealthy backers.
Saab has two new models to launch this year, both designed and engineered by GM (GM, Fortune 500). The aforementioned 9-4X crossover is a variant of the SRX, while the 9-5 sedan shares its underpinnings with the Buick Regal. Although both bear Saab design cues like a clamshell hood and blackout instrument lights, they also share the GM disease of being several hundred pounds overweight. Coming in 2012 is another GM offspring, the 9-3, based on a modified version of the platform used by the Pontiac G6 and 2004 Malibu.
Farther out in the future, Saab will be partnering up with Youngman, a Chinese car manufacturer, to build three completely new vehicles that previously had not been part of the Saab portfolio. They are known as the 9-2, 9-6, and 9-7.
From Trollhättan to Detroit and now to China, it has been a long and winding road for Saab. It will be interesting to see if the Swedish automaker can maintain its identity after all these life-changing experiences and if Muller can write a happy ending to the Saab saga.
Tuesday, July 26, 2011
Investing when 'paralyzed with fear'
NEW YORK (Money) -- I've been investing my retirement accounts in a combination of stock and bond index funds, REITs and a few other investments for 10 years. But after going through the crash and watching the hard-earned equity in my home vanish, I've been investing more conservatively, putting much more in cash than I usually do.
I want to get back to my original investment mix, but I'm paralyzed with fear. I've still got 15 to 20 years before I retire, so I know this cash is really an albatross around my neck. But I don't know what to do. How do I overcome this fear? -- Cindy, California
If it's any consolation, you're not the only one with the jitters. Given the sturm und drang about raising the debt ceiling, worries about anemic job growth and questions about the strength of the European banking system, most investors are on edge.
And it's not as if this anxiety has been building just the past couple of weeks. Many of these issues have been simmering for months, which no doubt is why Morningstar figures show that investors yanked a net $18 billion out of U.S. stock funds in June, the largest outflow since the height of the credit crisis back in October 2008.
But while feeling skittish is understandable, you don't want to let your short-term emotional reactions dictate your long-term investing strategy. Granted, the issues I've mentioned above are serious.
But you're talking about retirement money. This isn't dough you're investing for the next two weeks or two months or even two years. It's money you're investing for two decades, and actually longer since you're not going to cash out the day you retire.
So you want to set an investing strategy that will work for the long-term. Otherwise, you run the risk of becoming one of those people who flee to cash or other perceived safe havens when everyone is focusing on the catastrophe du jour -- and then do the opposite, shifting their money from and into stocks when everyone's euphoric about the economy and the markets.
"In-N-Out" may be a great name for a burger chain. But it's not a good recipe for building a nest egg for retirement. All of which is to say that you need to get back to what you were doing before: investing a diversified portfolio appropriate for your age and risk tolerance and -- aside from occasional rebalancing -- sticking with it.
In light of your recent experience, it wouldn't hurt for you to re-consider just what your long-term investment strategy should be. You don't want to wimp out and limit your growth potential.
On the other hand, maybe the reason you fled to cash was that your original stocks-bonds ratio was actually a little too racy for you. So I suggest you go to Morningstar's Asset Allocator tool and adjust the sliders to see how different combos of stocks and bonds might perform over the next 10 to 20 years.
Once you've got a mix you think you'll feel comfortable with in both up and down markets, plug that portfolio, along with the value of your investments and the amount you're saving annually, into T. Rowe Price's Retirement Income Calculator.
This will give you a sense of whether you're on track to a secure retirement based on what you're saving and how you're investing.
Once you know where you want your retirement investment portfolio to be, the next question is how do you get there?
I say you should move to your target stocks-bonds mix as quickly as possible. I know that puts me at odds with people who would recommend you take a dollar-cost-averaging approach and move in gradually. But as I've noted before, that strategy doesn't really make sense financially.
After all, if your retirement accounts are currently invested, say, 30% in stocks and 70% in bonds and you know they should be the other way around, why would you want to delay getting to the right tradeoff of risk vs. return?
In effect, you would be undermining the very strategy you've just concluded is best for you. (Okay, in the case of assets in taxable accounts there may be tax-related reasons not to shift all your assets at once, but you would still want to get to the right mix sooner rather than later.)
But I recognize that some people just can't do that, whether due to fear or other reasons. And for people in that position -- and it appears you're one of them -- making the move a bit at a time is better than not doing it at all.
If you're going to take the gradual approach, though, I recommend that you at least set a schedule. You could move a pre-set percentage of your portfolio or a certain dollar amount from cash (or whatever asset class you're overweight) to stocks (or wherever else you're light) so you get to your target mix over the course of six months to a year.
This way, you'll at least be going about it systematically rather just winging it, and you'll be less apt to succumb to another case of the jitters and back out.
What you don't want to do, though, is dither or obsess about his move. Nor do you want to play the game so popular these days of trying to figure out what will hold up (Gold? German bonds? The Chinese yuan?) should the debt negotiations falter and the U.S. technically default.
That's a guessing game -- and not one worth engaging in when you're investing money you won't need for more than two decades down the road.
Besides, the whole point of owning a diversified mix of investments is that you can't consistently pick short-term winners and losers. If that were possible, you wouldn't need to diversify in the first place.
So figure out what your mix should be for the long-term and get to that blend as soon as you can. And then try to stay calm so you don't get spooked again by the next big crisis, whatever it may be.
Your credit score: Not always what you're told it is
WASHINGTON (CNNMoney) -- The credit score you get from an agency might be quite different from the credit score your lender gets, according to a new study released Tuesday by the Consumer Financial Protection Bureau.
The study found that credit reporting agencies use different models and choose different financial data to crunch into different credit scores for consumers than they do for banks, retailers, landlords and other creditors.
"Given this complexity, it is unlikely that a consumer will often be able to know the exact score that a particular lender will use to evaluate them," the report stated.
Although the Consumer Financial Protection Bureau is two days from officially launching, the bureau had to conduct a number of studies required by the Dodd-Frank Act, including one that compared the differences in credit scores bought and paid for by consumers and creditors.
Creditors use credit scores to decide whether to approve or reject consumers for mortgages, credit cards, auto insurance even and apartment rentals.
Given the boom in the business of charging for a peek at credit scores, lawmakers wanted the bureau to study whether credit scores can vary. A quarter of the revenue that credit rating agencies now make comes from the sale of credit reports and scores to consumers, according to the report.
The study didn't look into whether the credit rating agencies were purposefully giving creditors better or worse credit scores than those provided to consumers.
But the study concludes that consumers and creditors can get different pictures of credit-worthiness, leaving consumers in the dark about the true quality of their credit.
"When a consumer purchases a score from a (credit rating agency) it is likely that the credit score that the consumer receives will not be the same score as that purchased and used by a lender to whom the consumer applies for a loan," the report said.
Requests for comment from the credit reporting agencies were not immediately returned.
The problems are in the different models used, and in the different information provided to get a credit score, according to the report.
The most common scores are FICO scores (Fair Isaac Corporation), which comprise of 90% of the market of scores sold to creditors. But there are different types of formulas available to create different types of FICO scores, the study states.
In addition to FICO scores, each of the credit rating agencies sells their own credit scores to consumers, based on their own secret black-box formula, resulting in a score for "educational purposes," which can differ from the scores sold to creditors.
Also, different scores can be generated when a creditor calls a credit rating agency and reports incomplete information for a consumer, according to the bureau.
Consumers have the right to get one free credit report every year from each of the top three consumer reporting agencies -- Equifax, Experian, and TransUnion. But the agencies didn't have to furnish the actual credit score for free.
Starting Thursday, part of the new Dodd-Frank law will allow consumers to get their credit score for free if they've been denied a loan or given unfavorable loan terms. Lenders who don't use credit scores to make decisions won't be required to disclose a score to consumers.
Monday, July 25, 2011
IMF: Debt threatens to engulf Europe
The IMF, run by Christine Lagarde, urges European leaders to quickly and decisively address the debt crisis.
NEW YORK (CNNMoney) -- The debt crisis engulfing Europe poses a significant risk to the global economy and the European Union must take decisive action to stop the spread of contagion, the International Monetary Fund said Tuesday.
In a review of euro zone financial policies, the IMF said the economic recovery is "solid" in most EU nations.
But the fund warned that unresolved fiscal problems in Greece, Ireland and Portugal could "spill over" into other nations and threaten the global economy.
"There was shared concern that the sovereign tensions could spill over into the core economies via the financial system with large adverse regional and global implications," the report states.
The report comes ahead of a key meeting in Brussels on Thursday. European leaders are set to hammer out the terms of a second bailout for Greece and discuss the intensifying debt crisis as it threatens to spread to Italy and Spain.
"The crisis in the periphery is not fully addressed yet," said Luc Everaert, a division chief in the IMF's European Department. "And the directors think this should be done very urgently."
European leaders "should not delay clarifying" the various proposals being discussed to address the crisis, said Everaert. The role that private sector investors will play, he said, "is a large uncertainty that has to be resolved."
Indeed, a key sticking point in the negotiations over Greece is whether banks would be forced to take losses as part of further bailouts of the debt-saddled nation.
In addition, the European Financial Stability Fund, the sovereign rescue program set up last year, should be expanded and modified so that it can be used as a more effective "backstop" for sovereign debt and banking problems, the IMF said.
The fund -- administered by the EU, ECB and IMF -- has the authority to issue up to 440 billion euros worth of bonds backed by EU members. It uses the proceeds to fund low-cost loans to troubled euro zone nations.
To date, the bailout fund has disbursed 9.5 billion euros to Ireland and Portugal. Greece received billions more before the fund was set up.
The fund is being scaled up to 500 billion euros, which should be "sufficient to address contagion," said Everaert. But authorities should be willing to increase the size if conditions in the euro zone deteriorate, he added.
To strengthen the financial system, the IMF called for "immediate measures" to ensure that European banks are sufficiently capitalized.
The European Banking Authority said last week that eight banks will need 2.5 billion euros ($3.5 billion) to survive a serious downturn, and that 16 other lenders passed but should raise more money.
The debt crisis in Europe, which has been playing out for more than a year, has raised concern that the currency block is in danger of breaking up.
To address large structural problems, Everaert said the euro zone needs "binding rules" to ensure fiscal discipline across the 27-member group. He said the euro zone also needs to establish "backstops" for banks and governments to protect against future crisis.
But he sounded optimistic about the ability of European leaders to take needed steps to preserve the union.
"If we can contain the crisis to the periphery," he said. "Then we shouldn't have to worry about the others."
Sunday, July 24, 2011
News Corp. stock rebounds
Click chart to track News Corp. shares.
NEW YORK (CNNMoney) -- News Corp. shares rebounded Tuesday even as the media empire's CEO faced questions from Parliament on the company's phone hacking scandal.
Investors shook off images of Rupert Murdoch and his son James fielding questions, and the company's stock price ticked up more than 5%, increasing 84 cents to $15.81.
While the stock was not being punished Tuesday, News Corp. (NWSA, Fortune 500) is not out of the woods: Shares have lost almost 13% since the long-simmering scandal was re-ignited on July 5.
In early July, the stock was sitting near 52-week highs at $18.13, but a media firestorm erupted after allegations of widespread hacking surfaced.
It is alleged that News of the World reporters had hacked into the cell phone accounts of celebrities, a 13-year-old murder victim and the families of dead British soldiers.
News Corp. subsequently shelved plans to buy the remainder of satellite TV company British Sky Broadcasting, and announced it would devote $5 billion in cash to buyback shares.
The company's share price has since stabilized, and the stock is up 2.3% over the past five trading sessions.
One reason the fall of News Corp.'s stock has been arrested is that the publishing arm of the company is responsible for a relatively small part of the firm's business.
In the third quarter, publishing accounted for operating income of $36 million, while cable network programming brought in $735 million and the film entertainment division made $248 million.
And the crisis appears to be contained to the U.K.
American authorities have announced some preliminary investigations, but there are no indications that the tactics of News of the World reporters were practiced by any of Murdoch's American publications.
While News Corp. has lost billions in market capitalization since the scandal broke, the company's stock is still up more than 8% on the year.
Minnesota shutdown nearer to an end
State agencies could reopen soon once the Minnesota government shutdown ends.
NEW YORK (CNNMoney) -- It's almost over.
Minnesota lawmakers will take up the state budget Tuesday afternoon, the latest step in ending the nation's longest government shutdown in recent years.
Lawmakers will vote on 12 bills that were drawn up in accordance with the budget deal that Governor Mark Dayton and Republican legislative leaders reached last Thursday.
The special session to approve the budget is scheduled to end Thursday morning, but the vote should take place before then. If the bills are approved, they will be sent to the governor for his signature, at which point the shutdown should conclude.
"Minnesota will be officially lights on," Dayton said.
The shutdown, which began July 1, brought many functions of state government to a halt. The state parks and rest stops are closed. Restaurants are unable to renew their liquor licenses. And some social service agencies are not receiving their state funds. Roughly 22,000 state workers remain unemployed.
But state services and agencies that were deemed essential by a state judge remain open during the shutdown. The state troopers continue to patrol, and state universities are open. The state is funding custodial care for residents in prisons, treatment centers and nursing homes. And it continues to pay for health care for patients covered by state plans, such as Medicaid.
The budget impasse finally came to an end last Thursday when the governor agreed to plug the remaining $1.4 billion budget gap by delaying state aid to schools and issuing bonds against future tobacco settlement payments.
In turn, he demanded Republican lawmakers set aside various policy issues and drop their demand to cut 15% of the staff in all state agencies.
Saturday, July 23, 2011
Housing shows glimmer of progress
NEW YORK (CNNMoney) -- New home construction ticked higher in June, the government said Tuesday, as two key measures topped expectations.
Housing starts, the number of new homes being built, rose 14.6% in June to an annual rate of 629,000 units, up from a revised 549,000 in May, the Commerce Department said.
That's the highest level since January, when 636,000 housing starts were reported. Economists had expected an annual rate 570,000 units, according to consensus estimates from Briefing.com.
The report also said there were 624,000 building permits issued in June, 2.5% above the revised May rate of 609,000. Building permits were forecast to have remained steady at an annual rate of 609,000 units.
While construction has shown some resilience recently, the market for new homes has been stifled by a glut of foreclosed properties.
In addition, the overall housing market has been hindered by high levels of unemployment, despite a modest pick up in hiring this year. Homebuilders have also had trouble financing projects, as credit remains tight.
Best investment deals - 4 expert picks
NEW YORK (Money Magazine) -- Scour equities markets today, and you won't find many obvious deals. Yes, stocks have fallen 5% since the spring, roiled by concerns over Greek debt and a potential slowdown in global growth.
But the S&P 500 still isn't cheap: By one conservative measure, the market's trading at 38% above its average based on long-term profitability. So you have to dig deep to find investments at attractive prices that don't incur undue risk.
A bright spot for bargain hunters: real estate. Many vacation-home markets are down 50% or more from their peaks, making now a compelling time to acquire a second address.
Go where there's still value. One place to look: beaten-down megacap stocks. "Some big companies are making more money than they were three years ago but have the same valuations they did then," says Robert McIver, co- portfolio manager of the Jensen Fund. Or buy a fund with a proven record of finding value over the long run.
Best tech deals -- plus 4 expert picks
Check out an alternative fund. Want downside protection? Wealthy investors and institutions opt for pricey hedge funds, which try to smooth out returns by selling some stocks short.
Be warned -- it's not an easy strategy: The manager has to pick winners and losers. Wasatch Long/Short (FMLSX) has a solid long-term track record, says Morningstar analyst Nadia Papagiannis, and a fee of just 1.34%.
Buy a closed-end bond fund. Such funds typically pay higher yields (and are riskier) than traditional fixed-income options because they (a) invest with borrowed money and (b) sell a limited number of shares.
When those shares are trading for a lot less than the value of the underlying bonds -- say, owing to talk of interest rates rising -- it's time to buy.
The group as a whole isn't cheap now, but there are a few good deals, says closed-fund specialist Cecilia Gondor of Thomas J. Herzfeld Advisors. Fort Dearborn Income Securities (FDI), for example, currently yields 5% and trades at a discount of 8.2%, compared with a one-year average discount of 7.4%, and doesn't rely on borrowed funds. Look for more closed-end deals at cefconnect.com.
Go ETF. Exchange-traded funds have always been cheap. Lately firms such as Fidelity and Schwab have cut commissions on many widely traded ETFs, making them an even better value.
Vanguard Total Stock Market ETF (VTI) , for example, charges just 0.07% yearly, vs. 0.17% for Vanguard's index-fund equivalent, with no trading fees.
Send The Help Desk questions about your portfolio.
To get the basket of stocks at the best price, set up an order with your brokerage to buy when the market dips 3% or more, says Edina, Minn., financial adviser Ross Levin.
Check out second homes. When housing heads south, the second-home market suffers most.
The median price of a vacation home has plunged from $204,100 to $150,000 since 2005, according to the National Association of Realtors. Homes that appeal to renters hold their value better, so buy in an area popular with vacationers in all seasons, advises Tom Kelly, co-author of "How a Second Home Can Be Your Best Investment."
36% OF VACATION-HOME BUYERS PAID ALL CASH LAST YEAR
What you don't know. To beat the other bidders on well-priced vacation properties these days, buyers need to flaunt their greenbacks. Aim to put down at least 30% to 40% to win, says Tahoe-Truckee broker Matt Hanson.
EXPERT PICKS
From Ryan Leggio, fund analyst at Morningstar.
10-YEAR ANNUALIZED RETURN 10%, EXP. RATIO* 1.0%, Fairholme (FAIRX):
Returns: 5-yr: 5.9%; 10-yr: 10%
Top five holdings: AIG, Bank of America, Berkshire Hathaway, Morgan Stanley, Sears
"Fairholme [a MONEY 70 fund] has had a losing streak recently due to manager Bruce Berkowitz's big bet on financials, which he believes are very undervalued. But all great managers look stupid sometimes. Unpopular bets can pay off handsomely."
10-YEAR ANNUALIZED RETURN 8.4%, EXP. RATIO 1.08%, Oakmark International (OAKIX):
Returns: 5-yr: 5.5%; 10-yr: 8.4%
Top five holdings: Daiwa Securities, Credit Suisse, Rohm, Toyota, Canon
"Manager David Herro was Morningstar's International Stock Fund Manager of the Decade in 2010. Despite losses from the Japanese tsunami, Herro argues that the market has oversold; he has 25% of OAKIX's holdings in Japan."
10-YEAR ANNUALIZED RETURN 11.9%, EXP. RATIO 0.85%, Yacktman (YACKX):
Returns: 5-yr: 10.6%; 10-yr: 11.9%
Top five holdings: News Corp., PepsiCo, Procter & Gamble, Microsoft, Coca-Cola
"Yacktman looks for stocks that are priced at a discount to their expected earnings. It's a simple process but one of the best. The fund's track record says it all: Over the past 15 years it has beaten 99% of funds with similar investment strategies."
10-YEAR ANNUALIZED RETURN 6.2%, EXP. RATIO 1.13%, Mutual Quest (TEQIX):
Returns: 5-yr: 4.7%; 10-yr: 6.2%
Top five holdings: Telefonica, GDF Suez, Royal Dutch Shell, British American Tobacco, Time Warner Cable
"This global value fund looks for firms facing short-term challenges and whose shares are therefore selling at deep discounts. The strategy has paid off: Over the last 10 years Mutual Quest has beaten 74% of its peers."
Friday, July 22, 2011
Gang of six rolls out debt proposal
President Obama discusses a proposal to cut $3.7 billion from the national debt amid tough negotiations to raise the federal debt limit.
(CNN) -- President Obama gave a boost Tuesday to a bipartisan Senate plan to slash the nation's debt by about $3.7 trillion over the next ten years.
"The framework that [the senators] put forward is broadly consistent with what we've been working on here in the White House and with the presentations that I've made to the leadership when they've come over here," he said.
The plan by the so-called Gang of Six got a largely positive reception when presented earlier to about 50 senators in a closed meeting in the Capitol.
However, with some final details still left to sort out on the long-sought compromise, it was not clear if the proposal would have enough support -- or time -- to play a role in separate congressional negotiations to increase the debt ceiling by Aug. 2.
"We've gone from a Gang of Six to a Mob of Fifty," said an upbeat Sen. Joe Manchin, D-West Virginia, as he left the meeting.
But Manchin stopped short of supporting the proposal, saying only that it had "great promise."
Sen. Kent Conrad, D-North Dakota, who is the Budget Committee chair and a member of the Gang of Six, praised the proposal.
"We've come up with a plan and it's comprehensive and it's balanced and it changes fundamentally the trajectory of our debt," he said.
Sen. Tom Coburn, R-Oklahoma, who was an original member of the gang but dropped out because he wanted deeper cuts to entitlement programs, said Tuesday he had rejoined the gang.
"The plan has moved significantly and it's where we need to be and it's a start," Coburn told reporters. "It doesn't solve our problems. It creates a way forward where we can solve our problems."
Conrad said Coburn agreed to rejoin after the group added $116 billion in savings to entitlement health care programs.
The complex plan -- hammered out over months of steady negotiations -- envisions deep spending cuts to discretionary spending and entitlement programs to make up about three-quarters of the savings. The remaining quarter would come from increased revenues achieved through tax reform.
"What you'll see is significant amount of revenue generated out of the tax reforms and reductions in the (marginal) rates," Coburn said.
Sen. Joe Lieberman, I-Connecticut, said senators are anxious to make a serious dent in the country's $14.3 trillion debt and many are worried an emerging debt ceiling compromise senate leaders are working on would not do enough.
"I think what happened this morning is that the Gang of Six began to turn into a bipartisan majority of senators who want to solve a national problem instead of play partisan politics. It got very emotional in there," Lieberman said. "This is the moment because everybody sees the process drifting towards a kick-the-can down the road response, which is embarrassing."
However, Sen. Rob Portman, R-Ohio, a budget director under President George W. Bush, cautioned that it might be too late for the gang's work to be included in the debt ceiling process.
"This process is moving pretty quickly and obviously the House and White House have to be brought into it. It's a challenge," he said.
Conrad said they hoped to hear back in 24 hours whether senators think there is enough Senate support to move forward with the plan. It would take 60 votes to get through the senate.
The original goal of the gang was to implement the recommendation of President Obama's fiscal commission, which called for $4 trillion in savings over ten years. In addition to Conrad and Coburn, its members include Democratic Senators Dick Durbin of Illinois and Mark Warner of Virginia and Republicans Saxby Chambliss of Georgia and Mike Crapo of Idaho.