Seeking Alpha's one-page summary of this morning's key market-moving and stock-moving stories. Headlines link to the original article. Use Wall Street Breakfast as your starting point, and make sure to check the original before trading.
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MACRO AND HOUSING
Why Buybacks Aren’t Always Good News [New York Times]
Summary: The S&P 500 is on track to buy back a total of about $435 billion worth of company shares this year, more than the $349 billion repurchased in 2005 and more than triple the $131 billion in 2003. Investors generally cheer buybacks, since they prop up stock prices and paid EPS by reducing the number of shares outstanding. But those virtues can conceal downturns, deprive companies of cash they might need later, and place shareholders at the mercy of management who can reintroduce the shares into the market at any time. When used to cover stock option grants issued to management, buybacks can destroy shareholder value if the purchases are made when the share price is high. Over the past two years, 78 S&P companies have conducted buybacks that resulted in negative cash flow, and 33 of those then used EPS as a measure by which to compensate executives -- begging the question whether the buybacks were intended specifically to boost bonus payouts. A study by the Center for Financial Research Analysis concluded that CEOs at share-repurchasing companies and at companies using EPS as a metric for executive assessment were more likely than others to receive bonuses, and the bonuses at negative-cash-flow companies tended to be higher. The study also noted that eight companies, including Eli Lilly, Hershey and Procter & Gamble, use EPS to gauge both short- and long-term value growth, “a very poor governance practice resulting in the same set of performance achievements being rewarded twice.”
Related links: Commentary: Red Hat Confidently Announces Share Buyback • CBS Announces Stock Buyback to the Chagrin of Its Investors • Amazon's $500 Million Buyback Plan -- Dumb Money • Is Sears' Stock Buyback a Good Idea?
Potentially impacted stocks and ETFs: Eli Lilly (NYSE:LLY), Procter & Gamble (NYSE:PG), Hershey (NYSE:HSY) • ETFs: Standard & Poor's 500 Index Depository Receipts (NYSEARCA:SPY), iShares S & P 500 (NYSEARCA:IVV)
TECHNOLOGY AND INTERNET
Sun Makes Java a Free, Open-Source Platform [Wall Street Journal]
Summary: Sun Microsystems has undertaken to make its Java software available on an open-source basis, in an effort to keep up with the current trend in Java program writing and distribution. The move will make it easier for Java to be distributed along with the Linux operating system as well as other open-source products. Sun's open-sourcing was largely the result of fears software behemoth Microsoft would try to cut Sun out of the Java market by making its products incompatible with market leader Microsoft's. Sun has past experience with open-sourcing, having released its Solaris operating system and other products on an open-source basis.
Related links: Seeking Alpha Commentary: Microsoft Office Guerrilla Warfare • Sun Microsystems' Data Center in a Shipping Container Will Transform Corporate Computing • Sun Open-sources Mobile Java in the Nick of Time • Sun Gaining Share from HP, IBM and Dell, or Healthy Tech Market?
Potentially impacted stocks and ETFs: Sun Microsystems (NASDAQ:SUNW) Microsoft (NASDAQ:MSFT) • Competitors: Hewlett-Packard (NYSE:HPQ), IBM (NYSE:IBM) • ETFs: Internet Architecture HOLDRS (NYSE:IAH)
Summary: Clear Channel is expected to be sold for around $17 billion as leveraged buyout groups compete for ownership of the nation's largest radio broadcaster which controls 1, 150 stations. Sources say that Providence Equity Partners, Blackstone and KKR are bidding against a rival group consisting of Bain Capital, Thomas H. Lee Partners and Texas Pacific Group. The Board put CCU on sale after buyback strategies and asset sales did not raise the stock price; its market value declined 60% since 2000 as firms increasingly purchase advertising on the internet and satellite. "Clear Channel has made the necessary adjustments to succeed long term,'' said Stanford Group analyst, Fred Moran who put a "hold" rating on the company. Sources predict that Blackstone has the winning bid because it approached CCU first, but some speculate that Apollo Management LP, Carlyle Group, Cerberus Capital Management LP and Oak Hill Capital Partners might join the bidding contest.
Related links: Additional coverage: Reuters. Commentary: In Clear Channel Buyout Talks, Billboards Loom Large • Google Rumors: Radio M&A, Free Checkout • Clear Channel Shows Mixed Q3 Results Ahead of Possible Sale. Earnings conference call: Clear Channel Q32006
Potentially impacted stocks and ETFs: Clear Channel (NYSE:CCU), PowerShares Dynamic Media (NYSEARCA:PBS) • Competitors: Cox Radio (CXR), Citadel Broadcasting Corp. (CDL), Cumulus Media Inc. (NASDAQ:CMLS)
Summary: Less than a week ago, News Corp announced MySpace was available in Japan via a joint-venture with Softbank. Now, industry sources are saying Rupert Murdoch, his wife Deng and MySpace's co-founders are in talks with two of the leading blogging sites in China: Bokee and BlogCN. News Corp was not available for comment, but said last Wednesday a China launch is possible this fiscal year if it found the right JV partner. Interestingly however, one source told Reuters he thinks News Corp "wants to do its own thing" and was in talks with the Chinese blog companies to "exchange ideas about how to operate in China." Both Bokee and BlogCN have attracted venture capital totaling millions of dollars. China has the second largest number of Internet users at 120 million, with approximately half that number being bloggers, but the blogging services market is already crowded, intensely competitive, and faces government monitoring.
Related links: Commentary: IRG Chinese Tech Stocks Weekly Update (scroll down/search "MySpace" and "China Mobile" -- News Corp and China Mobile announced an alliance over the weekend to a launch a wireless music service in China) • The Web 2.0 Bubble: A Hypothetical Short-Sellers List • News Corp. Reports Mostly Strong Quarter • MySpace Goes to Japan • China's New Obsession with Blogs and How Companies Can Benefit • MySpace Growth Tailing Off As Site Population Reaches Critical Mass • ComScore Traffic Data for Sept.: YouTube Continues To Explode • YouTube vs. MySpace Growth: No Contest • News Corp: Pay Attention to the MySpace Factor • Encouraging Stupidity: Analysts Up in Arms Over 'Outrageous' MySpace Valuation. Earnings conference call transcript: News Corp F1Q07.
Potentially impacted stocks and ETFs: News Corp (NASDAQ:NWS) • Competitors: Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO) already have blogging services in China. Google also owns YouTube, which competes with MySpace for net traffic, but at the same time Google provides search and advertising services to News Corp's MySpace and other Fox websites.
Motorola's Good Deal [Chicago Tribune]
Summary: Last Friday, Motorola announced a deal to purchase Good Technology, a mobile phone software developer primarily for enterprises. Details on the value of the deal were not disclosed, but it's expected to close in early '07. Nokia paid $430m for Good Tech rival Intellisync, which has similar market share (9% vs. 8%) in wireless email, earlier this year. Research in Motion has a 59% market share. A Forrester Research analyst said it is a "good deal" added that a "big short-term opportunity" exists in corporate email. It is said Motorola is weak in the corporate sector. Good is seen helping sales of Motorola's "Q" phone. Good also makes software for Palm's Treo smartphones. Separately, Motorola will sign a deal later today with a Chinese distributor for $1.6 billion to supply 12 million mobile phones in '07.
Related links: Motorola: Good Tech acquisition press release. Additional coverage: WSJ and MarketWatch (re. China supplier deal). Commentary: Merrill: Motorola's Good Acquisition Shouldn't Harm RIMM • Motorola Units, ASPs, Margins Under Pressure? • Nokia: Positive Outlook for China's 'Maturing and Emerging' Mobile Phone Market • Vodafone's OS Strategy: Impact To Handset Makers • Motorola Gains Market Share But Misses Q3 Sales Target • Merrill Lynch Ups Handset Sales Forecasts Believing 2006 Could Be Peak Year for Global Sales • Cellphone Market Report: RAZR Mania Peaked, Sony Ericsson Growing Fastest. Earnings conference call transcripts: Motorola Q3 2006, LM Ericsson Q3 2006, Nokia Q3 2006 , Palm F1Q07 and Research In Motion F2Q07.
Potentially impacted stocks and ETFs: Motorola (MOT) • Competitors: Ericsson (NASDAQ:ERIC), Nokia (NYSE:NOK), Palm (PALM), Research in Motion (RIMM) • ETFs: Broadband HOLDRs (NYSE:BDH), iShares Goldman Sachs Networking (NYSEARCA:IGN), iShares Goldman Sachs Semiconductor (IGW), PowerShares Dynamic Telecom & Wireless (PTE), Wireless HOLDRs (NYSEARCA:WMH)
ENERGY AND MATERIALS
HEARD ON THE STREET: Sector Stocks Might Have Peaked [Wall Street Journal]
Summary: Since commodity and energy prices peaked a few months ago, traders have turned their attention to speculative energy stocks with great success. WSJ looks at four up-and-comings: (1) Delta Petroleum Corp., a Denver-based driller, is up 80% over the past five months, boosting its market cap to $1.4b. (2) Goodrich Petroleum Corp., an exploration company, is also up 80% in five months. (3) Parallel Petroleum Corp, a driller, has climbed 20% in a month. (4) Uranium maker Cameco Corp., a $12b company, is up 35% over the past year. Natural gas drillers have done particularly well, rising together with NG prices since late in the summer. But some pundits see these 'investments' as "high-octane" bets on energy prices that could easily backfire if gas prices come back down. (1) Delta, for instance, lost more money ($0.13/share) this Q3 than last, meaning its rise is pure speculation on two NG wells in eastern Washington in which it has an interest. The wells are covered by a thick layer of volcanic rock, making traditional drilling tricky. (2) Goodrich is up on hopes of a new technology that enables it to drill horizontally. But horizontal drilling is expensive, and only feasible when high-enough prices warrant the extra expense. (3) Parallel players are betting on its wells in the promising Barnett Shale in Texas' Fort Worth Basin. NG exploration there, though, is in the early stage. (4) Some see Cameco as a way to bet on the continued growth of nuclear power in developing nations like China and India. Strong demand, and a lack of new production, have fuelled uranium prices in recent years. A safer play is to add some larger outfits, like ConocoPhillips, into the mix, to offset the volatility of the smaller companies.
Related links: Merrill on Integrated Energy Stocks: Stay Bullish • Horizontal Drilling by Goodrich and Devon Bode Well for Pickens’ EXCO Resources • Cameco's Selloff Is a Buying Opportunity • Preparing to Ride the Uranium Bull • Some are more leveraged to Oil than others • Cramer's Take on CCJ
Potentially impacted stocks and ETFs: Delta Petroleum Corp. (DPTR), Goodrich Petroleum Corp. (GDP), Parallel Petroleum Corp. (PLLL), Cameco Corp. (NYSE:CCJ), ConocoPhillips (NYSE:COP)
Chevron Australia discovery captures attention [MarketWatch.com]
Summary: Chevron announced on Friday its new Western Australian natural gas discovery adjacent to the $8.4 billion Gorgon project. The company says the Clio field has 623 feet of net gas sands. However, Chevron has yet to say how many cubic feet of natural gas they can extract from the well for the targeted Asian and North American markets. Initial reports reveal that the Clio well contains less CO2 than other wells in the area, which adds a significant greenhouse benefit. The well was found in an exploration permit area which is divided between Chevron and Royal Dutch/Shell in a 67/33 split. Analysts are pleased with the discovery but express concern about the company's ability to secure permits for the Gorgon project and sign on customers.
Related links: Additional coverage: Bloomberg, Reuters. Commentary: Falling Oil Prices: Producers Are Playing a Game of Chicken • Natural Gas is Running Out of Steam. Earnings conference call transcripts: Chevron Q3 2006.
Potentially impacted stocks and ETFs: Chevron (NYSE:CVX) • Competitors: BP (NYSE:BP), Royal Dutch/Shell (RDSA), ExxonMobil (NYSE:XOM), Total S.A (NYSE:TOT) • ETFs: iShares Russell 1000 Value Index (NYSEARCA:IWD), WisdomTree High-Yielding Equity (NYSEARCA:DHS), WisdomTree LargeCap Dividend (NYSEARCA:DLN), WisdomTree Total Dividend (NYSEARCA:DTD), iShares Russell 3000 Value Index (IWW)
Summary: Global miner BHP Billiton Limited announced today it has acquired an oil and gas development in the Gulf of Mexico from Anadarko Petroleum Corp. for $1.35b in a joint venture with U.S. Hess Corp. and Spanish Repsol YPF SA. Discovered in 2005 and known as Genghis Khan, the development already houses two wells, and could take on another five; it's estimated to have output capacity of anywhere from 65 to 170m barrels of crude oil, first expected in 2007. BHP owns 44% of the joint venture; Hess and Repsol YPF each hold 28%. Separately, BHP shares were down 3.9% in Australia this morning on a 5.5% in copper prices. Nickel was down 3% and zinc dropped 4.8%. BHP is the world's biggest miner by market cap and output.
Related links: Media coverage: Asian Stocks Drop Led by BHP on Metals [Bloomberg]. Commentary: Metal Miners Rattled by Fears of a Global Economic Slowdown • A Few Miner Adjustments: BHP Billiton & Phelps Dodge • Is it Too Late to Buy Base Metal Miners Rio Tinto and BHP Billiton? • Cramer's Take on BHP. Earnings conference call transcripts: Hess Q3 2006
Potentially impacted stocks and ETFs: BHP Billiton Limited (NYSE:BHP), Hess Corp. (NYSE:HES), Repsol YPF SA (REP), Anadarko Petroleum Corp. (NYSE:APC) • ETFs: United States Oil Fund ETF (NYSEARCA:USO), Oil Service HOLDRs ETF (NYSEARCA:OIH). BLDRS Asia 50 ADR Index (NASDAQ:ADRA) has a 6% BHP holding. PowerShares Dyn Energy Exploration (NYSEARCA:PXE) and Vanguard Mid-Cap ETF (NYSEARCA:VO) have HES as a top-10 holding. Europe 2001 HOLDRs (NASDAQ:EKH) has a 5% REP holding.
Toyota Races to Rev Up Production For a Boom in Emerging Markets [Wall Street Journal]
Summary: The Wall Street Journal reviewed a confidential Toyota document that details how the firm aims to achieve 15% global auto market share by 2010, up from 11% in 2005. Toyota recently surpassed Ford as the world's 2nd largest auto maker by sales and is closing in quickly on GM. Toyota's "global master plan" predicts the global auto sales market will expand 12% by 2010, to 73 million units, driven primarily by the BRIC nations of Brazil, Russia, India and China. Industry research firms and Toyota rivals alike, see the potential of the BRIC markets. One of the biggest risks however, is competing on price, as local competitors will likely be most aggressive in trying to serve the low-end market with autos priced between $5,000-$7,000. So far among global players, Renault's Logan starting at $7,300 is the benchmark. Also, Toyota cited rising gasoline prices as a risk it is most concerned with. If prices were to reach $80 a barrel in 2010, Toyota predicts its sales would decline by about 8% that year to 9.52m units. Nonetheless, Toyota plans to boost annual capacity by 450,000 units a year to help meet its 2010 goal.
Related links: No Tough Times For Toyota • Toyota Beats with Record Earnings, Raises Guidance and Dividend • India's Auto Industry Attracting More Investment • Bill Ford Jr. On the Importance of China's Auto Market • Toyota Speeds Ahead of Competition in China • GM, Ford Eye India's Middle Class • Toyota Aims for 1 Million Mark, 10% Share in China by 2010
Potentially impacted stocks and ETFs: Toyota (NYSE:TM) • Competitors: Honda (NYSE:HMC), Nissan (OTCPK:NSANY), General Motors (NYSE:GM), Ford (NYSE:F), DaimlerChrysler (DCX) • ETFs: BLDRS Asia 50 ADR Index (ADRA), BLDRS Developed Markets 100 ADR Index (NASDAQ:ADRD), iShares NYSE Composite Index (NYSEARCA:NYC)
Why Short Sellers Want to Crash the Tupperware Party [New York Times]
Summary: Multilevel marketing companies such as Tupperware, Avon, Nuskin, Herbalife and Pre-Paid Legal are facing possible legislation that would force them to tell prospective salespeople about sales-force failure rates and current litigation. The law would also require a one-week waiting period before new salespeople can begin working. Although the legislation is expected to take at least 2 years to gain approval, MLM companies are already getting nervous and short sellers are getting excited. The latter have been actively encouraging Congress to pass the law, in hopes of sinking the companies' stock prices and reaping significant profits. Avon currently has 11.3 million shorted shares, up 44% since April, while Tupperware has 3.9 million, up 77% since the spring. Analysts predict a significant drop in sales-force recruitment should the legislation pass.
Related links: Commentary: The Long Case for Pre-Paid Legal Services • Avon Misdirects Ad Spending • Brutal Honesty At Nu Skin Enterprises • Earnings conference call transcripts: Avon Q3 2006,
Potentially impacted stocks and ETFs: Tupperware (NYSE:TUP), NuSkin Enterprises (NYSE:NUS), Pre-Paid Legal (NYSE:PPD), Avon Products (NYSE:AVP), Herbalife Ltd (NYSE:HLF) • ETFs: iShares Dow Jones U.S. Consumer Goods Index (NYSEARCA:IYK), Consumer Discretionary Select Sector SPDR (NYSEARCA:XLY).
Summary: According to a poll conducted by America's Research Group, an unexpectedly high 89% of 1,000 respondents plan to shop at Wal-Mart this holiday season, apparently vindicating the company's aggressive price-cutting campaign. Same-store sales are thus expected to be up about 3.1%, flat with last year. The next survey will take place on "Black Friday," the first day after Thanksgiving and the traditional start to the holiday shopping season. Almost 95% of respondents said they would buy an expensive item on Black Friday if it were advertised as an "early-bird special" -- twice as many people as last year. This result suggests that consumers are watching advertising very closely, which should lead to a rehabilitation of the word "Christmas": as Wal-Mart learned last year, many shoppers want to be greeted with "Merry Christmas" rather than the more ecumenical "Happy Holidays" in ads and at stores. Meanwhile, the Gap, Motorola, Apple and other companies are seeing strong demand for their "Red" T-shirts, cellphones, iPods and so on, proceeds of which go to The Global Fund to Fight AIDS in Africa. The initiative has yet to do much for the companies' bottom lines, but that could change if production runs are sufficiently increased on the red items. Strong buzz about the campaign plus increased supply of red merchandise could drive holiday sales.
Related links: Commentary: Wal-Mart and Other Retailers Suffer Weak Sales in Run-Up to Holidays • Wal-Mart: October Same Store Sales Rose (Only) 0.5%, Lowest Since Dec. 2000
Potentially impacted stocks and ETFs: Wal-Mart Stores, Inc. (NYSE:WMT), Motorola, Inc. (MOT), The Gap, Inc. (NYSE:GPS), Apple Computer, Inc. (NASDAQ:AAPL) • ETFs: Market 2000 HOLDRs (NYSEARCA:MKH), iShares Russell 1000 Growth Index (NYSEARCA:IWF), iShares Russell 3000 Growth Index (IWZ), PowerShares FTSE RAFI US 1000 (NYSEARCA:PRF)
AEROSPACE AND DEFENSE
How Boeing's Defense Unit Is Bouncing Back [Wall Street Journal]
Summary: Boeing has had problems with its reputation in the defense industry in recent years. Boeing was forced to pay out nearly $500 million to Australia and Turkey because of problems developing surveillance planes; the company was also stripped of a large portion of a classified spy-satellite program and saw its rocket-launch business suffer because of ethical lapses. Earlier this year, the company paid out more than $600 million to settle U.S. criminal and civil investigations of its space and military businesses. However, the company surprised many military and Wall street experts by snatching two prestigious new defense contracts: to lead fence construction for Homeland Security's Mexican-U.S. border fence and from the Air Force's $15 billion helicopter program. Defense contracts represent more than 50% of Boeing's annual revenue.
Related links: Seeking Alpha commentary: Boeing Group Wins Border Contract from Department of Homeland Security • Boeing One-Ups Airbus Yet Again With FedEx Contract • Airbus' Loss in Market Share is Boeing's Gain • Boeing: Get Ready to Fly • Boeing's Earnings Crash As R&D Expenses Soar. Earnings conference call transcripts: Boeing Q3 2006 Earnings Call Transcript • Boeing Q2 2006 Earnings Conference Call Transcript (NYSE:BA)
Potentially impacted stocks and ETFs: Boeing (BA) • Competitors: Lockheed Martin Corp. (NYSE:LMT), Northrop Grumman Corp. (NYSE:NOC), United Technologies Corp. (NYSE:UTX) • ETFs: iShares Dow Jones US Aerospace & Defense (NYSEARCA:ITA), PowerShares Aerospace & Defense (NYSEARCA:PPA)
KBR Spinoff Raises Reward and Risk Issue [Houston Chronicle]
Summary: Next week, shares of Halliburton's engineering and construction unit KBR Inc. will begin trading on the NYSE. KBR is the U.S. military's top contractor in Iraq. Last quarter, work in Iraq generated half of KBR's $2.4 billion in revenue and $45 million of its $98 million in operating income. KBR was accused of overcharging the U.S. government for its services, a dispute it had resolved but that might reemerge now that the Democrats have taken Congress. Many believe KBR received preferential treatment in both the original bid and the charges dispute because Vice President Dick Cheney used to be Halliburton's CEO. Aside from the closer scrutiny the company is likely to receive from the newly constituted House Government Reform Committee, its business may shrivel substantially now that a new defense secretary is in place and the Democrats have new influence on the progress of the war. Still, the Street is viewing KBR as a competitively priced issue at $15-17, and the company's position as the leading global contractor for liquefied-natural-gas plants should keep it comfortably generating revenues. Whatever direction KBR's stock takes, the spin-off is seen as good news for Halliburton, which can now distance itself from KBR's controversial military contracting work and focus on its own oil-field-services business.
Related links: Additional coverage: Wall Street Journal • Forbes • Commentary: Halliburton's Problems Are Spreading Like Kudzu • Halliburton Company: Windfall of War • Earnings conference call transcript: Halliburton Q3 2006
Potentially impacted stocks and ETFs: Halliburton Company (NYSE:HAL) • Competitors: Schlumberger Ltd. (NYSE:SLB), Technip (TKP) • ETFs: Oil Services HOLDRs (OIH), iShares Dow Jones US Oil Equipment Index (NYSEARCA:IEZ), PowerShares Dynamic Oil & Gas Services (NYSEARCA:PXJ), Vanguard Energy ETF (NYSEARCA:VDE)
Summary: IBM will join forces with Citigroup in a $3 billion bid for China's Guangdong Development Bank, according to anonymous sources. For the past year, Citigroup and France's Societe Generale have been in a fierce competition for the troubled Chinese lender. IBM, along with China Life Insurance Co., would have a 25% stake if Citigroup gains ownership of GDB. Citigroup is bidding for 20% of the company, the maxiumum portion that can be sold to a foreign buyer under Chinese law. IBM's executives did not comment on the report and it is unclear which division will be involved in the bidding war.
Related links: Commentary: Developments in China's Banking Sector • Citigroup Seen Winning Bid for $3B Stake in Chinese Bank
Potentially impacted stocks and ETFs: International Business Machines (IBM) and Citigroup (NYSE:C)
ACTIONABLE BARRON'S CALLS
- Barron's interviews Richard Arvedlund, founder of Cypress Capital Management. Stocks he likes: Newmont Mining Corp. (NYSE:NEM) and Barrick Gold Corp. (NYSE:ABX) for a 3-5% exposure in precious metals. St. Paul Travelers Companies Inc. (STA) and Delphi Financial Group Inc. (NYSE:DFG) from the "dramatically underfollowed" insurance sector. Verizon Communications Inc. (NYSE:VZ) and Windstream Corp. (NASDAQ:WIN) who operate in areas not covered by wireless. Supervalu Inc. (NYSE:SVU) -- he knows and likes management. JetBlue Airways Corp. (NASDAQ:JBLU) -- they stand to profit from falling oil prices and rates. Dow Chemical Company (NYSE:DOW) -- unloved company.
- "Anatomy of a Miscalculation" looks at post-election stock market repercussions: Cisco Systems Inc. (NASDAQ:CSCO), Microsoft Corp. (MSFT), Amgen Inc. (NASDAQ:AMGN) can weather any storm. Ditch pharmaceuticals such as Merck & Co. Inc. (NYSE:MRK), Pfizer Inc. (NYSE:PFE), Johnson & Johnson (NYSE:JNJ). Lenders Fannie Mae (FNM) and Freddie Mac (FRE) could get regulatory relief.
- In "A Houseful of Democrats? No Problem" Vito J. Racanelli takes the opposite stance, positing the healthcare selloff was overdone. He likes Abbott Laboratories (NYSE:ABT) and Johnson & Johnson (JNJ) to bounce back once people realize there's little the Democrats can actually do to the industry at this juncture.
- "Plugged In" editor Mark Veverka loves the football games DirecTV (DTV) gets him, but thinks their customer service is the pits. Once they lose their NFL monopoly, which he feels is only a matter of time, its faithfuls are going to be running for the gates.
- The New York Times (NYSE:NYT) is in the midst of a challenge to its two-tier share structure that allows its founders to control the board with a minority holding. Regardless of its outcome, Barron's Andrew Bary thinks the suit will put pressure on management to boost Times' low-end 10-15% margins, propelling its profits and share prices higher.
- Both commercial and residential REITs are falling, and may continue to do so for the foreseeable future, considering a steep 19x-22x P/E multiple and paltry 4% yields. Tickers mentioned: Equity Residential (NYSE:EQR), BRE Properties Inc. (NYSE:BRE), Avalonbay Communities Inc. (NYSE:AVB), and Mack-Cali Realty Corp. (NYSE:CLI).
- Wynn Resorts Ltd. (NASDAQ:WYNN) shares are already up 50% on the year at $82.75, mainly on the strength of its claimed 12% market share in Macau. It trades at a rich 37x trailing cash flow, but institutional investors are super-bullish, seeing its current $722m revenues growing to $1.4b by year-end and $2.3b in 2007. Barron's says the stock "could shoot well past $100 a share," some say as high as $140.
- Bill Alpert revisits his CEOCast exposé now that SEC-listed CEO Kenneth Sgro is dead, and his widow is making it obvious that convicted financial felon Michael S. Wachs has been pulling the strings all along, despite his previous denials. Some might call CEOCast a pump-and-dump penny stock shill. Alpert suggests: "If the allegations prove out, then investors may want to do their own due diligence on longtime CEOcast clients like the drug-addiction treatment company Hythiam Inc. (NASDAQ:HYTM) and Internet telephony firm VoiP (VOII)."
- Both Best Buy Co. Inc. (NYSE:BBY) and Wal-Mart Stores Inc. (WMT) have Black Friday blockbuster sales planned. But Barron's Jay Palmer gives BBY the edge because of its savvy sales staff and higher-end (higher-margin) items that may boost sales and profits once they get customers through the door. "With sales on track to rise nicely -- perhaps gaining 15% this fiscal year and 20% next -- the stock could be one of the best buys of all."
Seeking Alpha is not affiliated with Wall Street Journal, New York Times, Bloomberg, Chicago Tribune, Marketwatch.com, Houston Chronicle, Barron's or Reuters.
U.S. Markets: Yield Curve Implies 'Probable Recession'
Long Idea: uWink: Next-Generation Chuck E. Cheese
Short Idea: Look For Continued REIT Weakness -- Barron's
Internet: The Web 2.0 Bubble: A Hypothetical Short-Sellers List
Telecom: Will Comcast Buy Sprint?
Hardware: Dell Losing PC Market Share - And Wall Street Doesn't Care
Software: Pondering The Mystery Of Adobe CFO's Departure
Healthcare: Dental Industry Investing: The Future Looks Bright
Retail: A True Religion Stockholder Licks His Wounds
Consumer Electronics: Merrill: Motorola's Good Acquisition Shouldn't Harm RIMM
Biotech: Genentech's Tanox Buyout And Earnings Potential
Gold: Who Owns The World's Gold - And Who's Buying
Energy: Ethanol Stocks: Six Reasons To Be Cautious
Asia: Chinese Microcap Highway Holdings Doing The Right Things
ETFs: Gold Miners ETF Caputures Upside, Avoids Individual Company Risk
Sound Money Tips: 46 Tips on Personal Finance
Jim Cramer: Latest stock picks
Earnings Conference Call Transcripts: Lionsgate F2Q07 • eLong Q3 2006
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