One Page Annotated WSJ Summary, Friday June 23rd

by: David Jackson
David Jackson
Seeking Alpha's flagship daily business news summary, gives you a rapid overview of the day's key financial news. It is published before 7:00 AM ET every market day and delivered to over 900,000 email subscribers.

Summary of selected articles from this morning's Wall Street Journal with comments on related stocks. Links are to the original WSJ article, which requires a paid subscription. Use this summary as a starting point for research; check the summary against the original before trading:

Google Begins Streaming Free Videos

  • Summary: Google has started offering movies and TV shows for free, supported by ads. The initial offering includes cartoons, Charlie Chaplan movies and wrestling matches supported by ads from Netflix, Burger King and others.
  • Comment on related stocks/ETFs: Positive for Google (NASDAQ:GOOG) -- another ad revenue stream -- but a threat to Apple's (NASDAQ:AAPL) attempt to offer movies and video for sale via iTunes. Positive for content owners such as the movie studios, as it will likely increase the use and profitability of their archives.

In Univision Deal, Frayed Coalitions And New Turmoil

  • Summary: The auction for Univision "descended into turmoil" yesterday when it became apparent that there were few bidders. A group consisting of private-equity firms and Mexican TV firm Grupo Televisia SA was preparing a bid "in excess of" $36 a share, but Univision's board has already rejected an offer of $35.50.
  • Comment on related stocks/ETFs: Univision's stock (Pending:UVN) fell 3.7% yesterday, but this is also incrementally negative for every public company that owns TV assets. They're not as valuable as you hoped...

Getting Man of Steel Off the Ground Tests Mettle of Hollywood

  • Summary: Warner Bros. just completed the making of the movie Superman Returns at a cost of $209 million. The article details the convoluted history of the movie, starting as early as 1993.
  • Comment on related stocks/ETFs: Warner Bros. is owned by Time Warner (NYSE:TWX); the article is actually incrementally positive, because it highlights a potential blockbuster movie while the expense and hassle of its production is already reflected in Time Warner's reported costs.

Buyouts Promise a Big Boon for GM

  • Summary: 28,000 workers, or 25% of GM's unionised work force, have accepted a buy-out offer with a deadline that ends today. A Merrill Lynch analyst estimates that GM could save $2.5 billion by early next year, setting it up to exceed its projected cost savings of $3 billion by 2008. GM hasn't decided when to release the cost of the buyout program to investors.
  • Comment on related stocks/ETFs: Incrementally postive for GM, and also incrementally positive for Ford (NYSE:F) and DaimlerChrysler (DCX) which would also reduce their unionised workforces with buyout offers.

Chrysler Pushes Industry Toward an Incentive War, Threatening Profit Margins

  • Summary: DaimlerChrysler plans to announce an incentive program late next week offering rebates and 0% financing on all but its most popular models. GM and Ford have said that for now they will stick with their current incentive programs. According to, Chrysler's incentives already total $3,668 per vehicle versus $3,209 for Ford, $2,761 for Nissan and $886 for Toyota.
  • Comment on related stocks/ETFs: Another price war is bad for all the stocks: DaimlerChrysler (DCX), Ford (F), GM (NYSE:GM), Nissan (OTCPK:NSANY) and Toyota (NYSE:TM). Sound Money Tips explains why this is a great deal for consumers.

Mittal May Sweeten Arcelor Bid In Friendly Overture

  • Summary: "Mittal is considering increasing its bid [for rival steel maker Arcelor] for a second time, either with more cash, more stock or both..."
  • Comment on related stocks/ETFs: Incrementally negative for Mittal Steel (NYSE:MT).

Leading Indicators Slid Last Month; Jobless Claims Rose in Latest Week

  • Summary: Private research group The Conference Board said that its composite index of leading indicators declined by 0.6% in May, higher than the consensus expectation by economists of a 0.5% decline. The rise in jobless claims last week, however, was better than Wall Street expected.
  • Comment on related stocks/ETFs: Variance is too small to impact the market.

Inco Sees Big Profit Gain Amid Hot Nickel Demand

  • Summary: Nickel mining company Inco raised its EPS projection for the year to $1.70-1.75, above consensus and 60% higher than last year. Inco is trying to acquire Falconbridge, bidding against Swiss mining company Xstrata. Inco's stock rose 1.2%.
  • Comment on related stocks/ETFs: Impact already priced-in to Inco's stock (NYSE:N) after the news was released. But Falconbridge's stock (FAL) was down, odd since Inco's proposed buyout offer is for cash and stock.

Some Apparel Makers Now See China as a Customer

  • Summary: "Earlier this week, Hennes & Mauritz AB, the Swedish owner of the H&M fashion chain, said it will open its first Asian retail outlets in Shanghai and Hong Kong in early 2007. VF Corp., owner of Lee jeans, Kellwood Co., maker of Phat Farm and Baby Phat lines, Inditex SA's Zara and Mango have opened, or are about to open, stores in China. By the end of this year, Jones Apparel Group Inc., will operate 50 stores in China, double the number at the end of 2005." VF Corp is selling Lee jeans in China for double the price it gets in the US.
  • Comment on related stocks/ETFs: Investors like anything China-opportunity related, even if the companies won't make money for years. Incrementally positive for VF Corp (NYSE:VFC), Kellwood (KWD) and Jones Apparel (NYSE:JNY).

Takin' Off the Ritz -- a Tad

  • Summary: The Ritz-Carlton hotel chain, owned by Marriott International, is scaling back the formality of its service in an attempt to better compete with Four Seasons. "[Ritz-Carlton] officials acknowledge that it needs to reposition itself vis-à-vis archrival Four Seasons Hotel Co., which seems to be edging out the Ritz in the hipster zeitgeist of late, even though formal surveys still place Ritz-Carlton at or near the top of the sector."
  • Comment on related stocks/ETFs: Incrementally negative for Marriott (NYSE:MAR), positive for Four Seasons Hotels (FS). Note that Jim Cramer likes the hotel stocks, but prefers Hilton (NYSE:HLT) to Four Seasons. Hotel stocks are particularly at risk from an Avian Flu outbreak, however, and therefore figure in a long-short Avian Flu portfolio. Full disclosure: author is short HLT at time of writing.

Oracle Net Rises 27% on Strong Sales

  • Summary: Oracle's FQ4 earnings matched the company's projections last week: revenue up 25%, EPS up 27%.
  • Comment on related stocks/ETFs: The strong results announced last week were already priced-in, and the market was expecting a little more, so Oracle's stock (NASDAQ:ORCL) fell 1.4% in late trading. See the full transcript of Oracle's conference call last night.

Qualcomm Says Intel Is Stalling Wireless Method

  • Summary: Qualcomm accused Intel of delaying work in a standards body deliberating over an alternative to WiMax. Work in the IEEE standards body has been frozen due to Intel's allegations that Qualcomm packed the vote with paid consultants.
  • Comment on related stocks/ETFs: Negative press for Qualcomm (NASDAQ:QCOM), and a reminder that its market position in next-generation wireless broadband may be weaker than its current position in CDMA. Neutral for Intel (NASDAQ:INTC); no revenue impact.

France Acts to Ease ITunes-iPod Law, But Apple Is Wary

  • Summary: "French lawmakers voted to water down a draft copyright law that could force Apple Computer Inc. to make its iPod music player and iTunes online store compatible with rivals' offerings. But the changes didn't appear to go far enough to satisfy Apple, which hinted that it might withdraw from selling songs online in France rather than comply."
  • Comment on related stocks/ETFs: Incrementally positive for Apple (AAPL); the company's situation in France is certainly better than it was a few months ago.

Glitch Locks Ameritrade Users Out of Their Trading Accounts

  • Summary: "Ameritrade wanted to change the way the clients logged on to the Web site, to make it "more secure," but in so doing ran into "some technical problems," she said. These problems locked an unspecified number of clients out of their accounts. Ms. Hillyer said Ameritrade has put in place "some fixes," but that it isn't yet "a complete solution.""
  • Comment on related stocks/ETFs: Incrementally negative for Ameritrade (NASDAQ:AMTD), positive for competitors Schwab (NYSE:SCHW) and E*Trade (NYSE:ET), though the impact will likely be small unless the problems persist. Ameritrade's latest conference call transcript is here.

Novell CEO, Finance Chief Are Replaced Amid Overhaul

  • Summary: Novell sacked its CEO and CFO because of the company's poor performance.
  • Comment on related stocks/ETFs: Novell's stock (NASDAQ:NOVL) was up on the news, as any change was perceived as good. But the disarray inside Novell may further help open-source software competitor Red Hat (RHAT). The transcript of Red Hat's most recent conference call is here.

HEARD ON THE STREET: Time Warner's Malaise Persists

  • Summary: Since Carl Icahn gave up his proxy fight for Time Warner, its stock is down about 20% in contrast to its peers which have risen over the same period. AOL is struggling, the print businesses are facing decling revenue, and its cable businesss are potentially threatened by the Internet.
  • Comment on related stocks/ETFs: Value manager Bill Nygren, who owns 25.6 million Time Warner shares (TWX) for his Oakmark funds, is quoted at the end of the article: "Expectations for AOL have been quite low and if they can accomplish any resumption of growth, people will be positively surprised."


  • Summary: Eight IPOs are lined up for next week, including catalog retailer J Crew and ethanol producer Aventine Renewable Energy. If they go badly, future IPOs will be harder and private equity firms will be less willing to buy out public companies.
  • Comment on related stocks/ETFs: Analysis of the Aventine Renewable Energy (AVR) filing here; more IPO coverage here.

FUND TRACK: TIPS Funds Grow as Inflation Hedge, But With Their Allure Comes Caveats

  • Summary: Treasury Inflation-Protected Securities -- or TIPS -- funds have seen healthy inflows, with assets totalling about $34 billion, up $4 billion since early 2002. The iShares Lehman U.S. TIPS Bond Fund ETF is now one of the largest fixed-income ETFs with assets of $3.8 billion. Downsides to these funds: they turn out poorly if inflation is low, and they're not tax efficient even if inflation is high.
  • Comment on related stocks/ETFs: The tax point is crucial here: the principle is adjusted up for inflation, but the adjustment is taxable as income. That means that these funds don't really protect you against inflation unless you hold them in a non-taxable account. The iShares Lehman U.S. TIPS Bond Fund ETF (NYSEARCA:TIP) is in the Core ETF Portfolio of the Radical Guide to Investing.

SMALL STOCKS: Concorde, Green Mountain Rally; Phoenix Technologies, Orchid Slide

  • Summary: Reactions to earnings guidance or results: Phoenix Technologies (PTEC) down 31%, Gene Logic (GLGC) down 36%, Nice Systems (NASDAQ:NICE) up 13%, Orchid Cellmark (NASDAQ:ORCH) down 32%.

Other notable articles on Seeking Alpha: Latest conference call transcripts from Oracle, Family Dollar Stores, and Rite Aid. Jim Cramer's Mad Money stock picks. Despite price declines, money flows into gold and silver ETFs. Latest IPO filing, from Sucampo Inc. More new ETFs from Claymore and StateStreet.

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