Wall Street Breakfast: Must-Know News 17 comments
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- Tribune tanks. The Tribune Company filed for Chapter 11 bankruptcy protection yesterday, covering its eight major daily papers, including the Los Angeles Times and Chicago Tribune, as well as the company's string of local television stations. CEO Sam Zell, who led the $8.2B buyout last year to take the company private, said the company will continue to operate normally while it tries to rework its debt. Zell expects the company to remain intact, though he said he is open to selling assets other than the Tribune's Chicago Cubs baseball franchise. Tribune's bankruptcy filing listed $7.6B of assets and $12.9B of debt. Creditors on the hook for losses include JPMorgan Chase (JPM) and Deutsche Bank (DB).
- Extra-credit money. A new multi-billion dollar government initiative is on the way, as federal regulators prepare a rescue plan for a handful of large credit unions. The plan is expected to be announced this week, and will tap the $41B lending facility that Congress made available to credit-union regulators in September. The goal is to help several big credit unions, none of which deal with the general public, that have been facing heavy paper losses on mortgage-backed securities. Michael Fryzel, chairman of the National Credit Union Administration, the industry's federal regulator, said the initiative isn't a taxpayer-funded bailout, but rather a short-term "mechanism to stabilize the credit-union system" while regulators work on other steps, to be announced early in 2009.
- Not so sunny at Sony. Sony (SNE) announced plans to cut 8,000 jobs, or around 5% of its electronics division’s workforce, "in response to the sudden and rapid changes in the global economic environment." The company will also curb investments, outsource production and move away from unprofitable businesses as part of an effort to save over ¥100B ($1.1B) by March 2010. The world’s second-largest maker of consumer electronics, Sony had previously cut its full year outlook in October on slowing sales and a strong yen. Since then, the severe slump in consumer spending has persisted, even as the holiday shopping season approaches, and the yen is now up 21% against the dollar this year.
- Auto aid advances. Congress and the White House inch closer to a Big Three bailout, and details of the draft legislation are beginning to emerge. The proposed auto aid plan would see the government get stock warrants equal to 20% of the $15B loans (the 7-year loans would have a 5% interest rate for the first five years, and a 9% interest rate for the last two); the President gets to appoint a car czar; no dividends will be paid while the loans are in place; executive compensation will be limited; and automakers may not challenge state laws. (More restrictions.) In a sign of how messy a reorganization could become, the United Auto Workers union will likely seek an equity stake in General Motors (GM) and a seat on its board. In the meantime, General Motors, Ford (F) and Chrysler's Canada divisions have asked the Canadian government for at least C$6B - C$2.4B, C$2B, and C$1.6B respectively.
- Quotables. House Speaker Nancy Pelosi on the auto industry bailout: "It may take more than $15 billion to get to March 31," but "there is not going to be an endless flow of money... Everybody has to take a haircut."
- Yahoo search narrows. Though a decision is still at least several weeks away, Yahoo (YHOO) has narrowed its search for a new CEO and is checking references on a few key candidates. Board members will still be able to propose new names, but sources say the short-list includes Arun Sarin, former chief executive of Vodafone Group (VOD). The Yahoo board has been looking for a seasoned technology executive with experience running a public company from the start, criteria that Sarin meets, and needs to find someone who can tackle the challenge of pulling Yahoo out of a multiyear slump.
- FedEx: The not-so-chipper shipper. FedEx (FDX), widely seen as a bellwether for the general economy, lowered its 2009 earnings due to the economic downturn. The company still sees FQ2 EPS of $1.58 vs. $1.54 consensus, but dropped full-year 2009 EPS to $3.50-4.75 vs $5.15 consensus, and down from earlier forecasts of $4.75-$5.25. "Significantly weaker macroeconomic conditions are expected to offset the benefits from lower fuel prices and the announced departure of DHL from the U.S. domestic package market," the company said.
- Japan pledges to prop up economy. Japan's economy contracted 0.5% in Q3 from the previous quarter, down from the -0.1% the government announced last month. The revised number brings annualized shrinkage to 1.8% for the July-September period vs. an original 0.4%. The worse-than-expected data prompted Japanese officials to pledge further measures to prop up the economy. The government has already committed ¥5T ($54B) to the economy, prompting some critics to question whether stimulus packages alone will be enough to pull Japan out of its deep recession.
- German confidence grows. German investor confidence unexpectedly rose in December for the second month in a row. The ZEW index rose to -45.2 from -53.5 vs. an expected drop to -57. The rise came after the ECB cut interest rates by an unprecedented amount and German lawmakers approved a €32B ($41B) stimulus plan.
Earnings: Tuesday Before Open
Earnings: Monday After Close
- H&R Block (HRB): FQ2 EPS of -$0.40 in-line. Revenue of $351M (-1.5%) vs. $397M. (PR)
- National Semi (NSM): FQ2 EPS of $0.14 misses by $0.07. Revenue of $422M (-15.4%) vs. $427M. Sees FQ3 revenue of $295M vs. $385M due to "significantly lower-than-usual demand levels in the post-holiday season, especially for personal mobile devices." (PR)
Today's Markets
- Asia markets closed mixed. Nikkei +0.8% to 8,396. Hang Seng -1.9% to 14,753. Shanghai -2.5% to 2,038. BSE closed.
- In Europe at midday, London +1.0%. Paris +1.7%. Frankfurt +0.6%.
- U.S. futures: Dow +0.3%. S&P +0.5%. Nasdaq +1.1%. Crude -0.4% to $43.52. Gold +0.1% to $770.10.
Tuesday's Economic Calendar
- 7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 Bank of Canada Announcement
10:00 Pending Home Sales
5:00 PM ABC Consumer Confidence Index - Notable earnings before Tuesday's open: AZO, KR
- Notable earnings after Tuesday's close: ADCT, FNSR, PLL, SAI
Seeking Alpha editor Eli Hoffmann contributed to this post.
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This article has 17 comments:
Bring their foreign country manufactoring and outsourcing back to the USA.
Auto makers get their lifeline from Republicans to Democratic administrations. Pure politics folks..........nothing more! Bush agrees so there is NO CH 11 on his watch..........His history has enough negatives?
Cash burn will change little in the current drafts, unless the Jobs Bank is dismantled NOW, 2010 UAW agreement implemented NOW, Debt-to-Equity swap NOW, Unfunded liabilities swapped to 50% equity NOW, Plant closures W/O Job Buyouts AGREED NOW, Dealerships closed en masse W/O PENALTIES NOW, White collar salary REDUCTION 25% NOW, SG&A CUT 20% NOW, etc, etc................
Get my drift????? I guess the Congress & Bush Administration believe that if they could PULL-THE-TARP over taxpayers, an Auto Bailout Bridge "TO NOWHERE" will be a slam dunk!!!!!!!!!!
IMHO
On Dec 09 08:34 AM eddie64 wrote:
> $15 BILLION HANDOFF:
> Auto makers get their lifeline from Republicans to Democratic administrations.
> Pure politics folks..........nothing more! Bush agrees so there is
> NO CH 11 on his watch..........His history has enough negatives?
>
>
> Cash burn will change little in the current drafts, unless the Jobs
> Bank is dismantled NOW, 2010 UAW agreement implemented NOW, Debt-to-Equity
> swap NOW, Unfunded liabilities swapped to 50% equity NOW, Plant closures
> W/O Job Buyouts AGREED NOW, Dealerships closed en masse W/O PENALTIES
> NOW, White collar salary REDUCTION 25% NOW, SG&A CUT 20% NOW,
> etc, etc................
>
> Get my drift????? I guess the Congress & Bush Administration
> believe that if they could PULL-THE-TARP over taxpayers, an Auto
> Bailout Bridge "TO NOWHERE" will be a slam dunk!!!!!!!!!!
>
> IMHO
On Dec 09 08:14 AM lefty37 wrote:
> Another requrement for Auto Aid, should be.
>
> Bring their foreign country manufactoring and outsourcing back to
> the USA.
On Dec 09 08:14 AM lefty37 wrote:
> Another requrement for Auto Aid, should be.
>
> Bring their foreign country manufactoring and outsourcing back to
> the USA.
There should be NO bailout money for Chrysler!!!!
Cerberus is a vulture fund that had every intention of stripping Chrysler of every penny and then bringing it back to the market and walking off with their fat billions and beating their chests while laughing there heads off at how they took the suckers money.
WELL, to bad boys, it did not work out so well for you this time, you where not as smart as you thought you where. EAT YOUR LOSSES, NO GOVERNMENT (TAXPAYER) MONEY FOR YOU!!
No money to slosh around in your fund to cover up all of your other mistakes and keep your sorry butts solvent and your pay checks fat.
Sell out or fold, your done, and I for one am going to write Dodd's office to make sure he hears it loud and clear, as we should all do.
Taxpayer dollars should not be being used to support PRIVATE VULTURE FUNDS business mistakes.
ggillin - 12-09-2008
On Dec 09 11:03 AM ggillin wrote:
> There should be NO bailout money for Chrysler!!!!
>
> There should be NO bailout money for Chrysler!!!!
>
> Cerberus is a vulture fund that had every intention of stripping
> Chrysler of every penny and then bringing it back to the market and
> walking off with their fat billions and beating their chests while
> laughing there heads off at how they took the suckers money.
> WELL, to bad boys, it did not work out so well for you this time,
> you where not as smart as you thought you where. EAT YOUR LOSSES,
> NO GOVERNMENT (TAXPAYER) MONEY FOR YOU!!
> No money to slosh around in your fund to cover up all of your other
> mistakes and keep your sorry butts solvent and your pay checks fat.
>
> Sell out or fold, your done, and I for one am going to write Dodd's
> office to make sure he hears it loud and clear, as we should all
> do.
>
> Taxpayer dollars should not be being used to support PRIVATE VULTURE
> FUNDS business mistakes.
> ggillin - 12-09-2008
Pelosi just gave 15 B away. More give aways in March. The Democratic controlled congress should just say NO.
Obama will save us with the same old change.. lol lol
NEW STOCK MARKET TERMS
CEO --Chief Embezzlement Officer.
CFO-- Corporate Fraud Officer.
BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.
VALUE INVESTING -- The art of buying low and selling lower.
P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.
BROKER -- What my broker has made me.
STANDARD & POOR -- Your life in a nutshell.
STOCK ANALYST -- Idiot who just downgraded your stock.
STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER -- A guy whose phone has been disconnected.
MARKET CORRECTION -- The day after you buy stocks.
CASH FLOW-- The movement your money makes as it disappears down the toilet.
YAHOO -- What you yell after selling it to some poor sucker for $240 per share.
WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share.
INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.
PROFIT -- An archaic word no longer in use
If you are going to tout your web site it should at least work and the "tool shed" should appear where it is easy to click it. The tools I wanted to nominate started with Pelosi, Reed and the rest of the congress, except Ron Paul and MAYBE Brian Bilbray. Then the talking heads on CNBC (Except Santelli, Gasperino and Jane Wells).
Finally the American Taxpayer because we have beeen used by the Democrats and the Republicans all of our lives. Politics is a sham and nothing more than theater for the masses, much like the Circus Maximus in Rome. It doesnt matter which corrupt party is in power, they divert our money to their pockets.
Postscript: When and at what price will the government confiscate gold for "the good of the country"?
Oh, BTw heres a link to the site that doesnt work: digg.com/users/wallstr...