Wall Street Walloped [TheStreet.com]
Summary: In its worst single-day loss since July 13, the Dow Jones Industrial Average dropped 158.38 points (1.29%) to 12,121.79. Twenty-seven of 30 components fell, including 2.7% declines in Boeing, GM, and Wal-Mart. Precious metals eked out a small gain, while tech stocks were hit hard, losing between 2 and 2.5%. Rebounding oil prices and a big decline in the dollar were blamed for the fall. Many analysts aren't fazed by the sudden drop, saying the market was due for a pullback. Jim Bianco, president of Bianco Research in Chicago, still figures the market is headed higher through year-end, but said stocks were probably due for a short-term drop, considering the S&P 500 hasn't had a decline of 2% from a high since mid-July (it's presently down 1.7% since Wednesday). "This is the longest period without a 2% correction in 20 years -- it just shows you how strong the market has been that we have to think in these terms now."
Related links: Media coverage: WSJ. Commentary: David Fry's Daily Market Outlook • The Disappearing Dollar • Today's Action Indicates Holiday Rally May Have Come (and Gone) Early
Potentially impacted stocks and ETFs: S&P 500 Index (SPY) • NASDAQ 100 Trust Shares ETF (QQQQ) • iShares Russell 2000 Index ETF (IWM) • iShares Lehman 1-3 Year Treasury Bond ETF (SHY) • iShares Lehman 7-10 Yr Treasury Bond ETF (IEF) • iShares Lehman 20+ Year Treasury Bond ETF (TLT)
Icahn Group Raises Stake in Battle for Reckson [New York Times/Bloomberg]
Summary: According to an SEC filing, a group headed by Carl Icahn and Harry Macklowe accumulated 8% of Reckson stock in mid-November. Icahn and his affiliates recently offered $4.26 billion cash to take over entirely the New York REIT, exceeding a $3.8 billion cash/stock offer by SL Green previously accepted by Reckson. While Icahn and Macklowe are submitting a formal financing proposal, Reckson has postponed until Dec. 8 its shareholder vote on the SL Green offer. Should Reckson decide not to sell itself to SL Green, it is entitled to a $99.8 million breakup fee plus expenses.
Related links: Reckson SEC filings • Media coverage: Wall St. Journal , Bloomberg . Commentary: Reckson Realty: The Real Story . More articles on Real Estate and REITS
Potentially impacted stocks: Reckson Associates (RA), SL Green (SLG)
TECHNOLOGY AND INTERNET
YouTube's Web Videos to Go Mobile [Wall Street Journal]
Summary: Verizon Wireless has signed a deal with Google's YouTube website in which the wireless carrier will offer select YouTube content to 57 million Verizon customers. This exclusive deal will give Verizon a competitive edge against Cingular, Sprint-Nextel and T-Mobile USA. However, it is assumed that YouTube will eventually cut deals with the other companies as well. The web content will be offered on Verizon's "V Cast" media service, which costs $15 a month, or $3 for daily access. It is unclear as to whether the licensing agreements that YouTube has with the major media companies applies to mobile web content as well. No agreement has been reached on the issue of showing YouTube content on Verizon's new national FiOS TV service.
Related links: Media coverage: CNNMoney.com, DailyTech, San Francisco Chronicle. Commentary: Verizon: 2007 A 'Tipping Point' For Earnings Growth? • Size Matters: Verizon Wireless vs. T-Mobile USA • Verizon and Sprint: The Prince and The Pauper. Conference call transcripts: Verizon Q3 2006.
Potentially impacted stocks and ETFs: Verizon (VZ), Vodafone (VOD), AT&T (T), Comcast (CMCSA), BellSouth (BLS), Qwest Communications (Q), Sprint Nextel (S) • ETFs: PowerShares Dynamic Lg. Cap Value (PWV), First Tr Morningstar Div Leader (FDL)
Job-Search Site Monster Forges Deals With Newspaper Publishers [Wall Street Journal]
Summary: Following Yahoo's announcement last week that its HotJobs site will partner with over 150 newspapers on classified job ads, Monster Worldwide Inc. has announced it too will partner with four more newspaper publishers; earlier this year Monster struck similar deals in Philadelphia and in Akron, and said Monday that the Philadelphia deal has increased page views on the philly.com careers page by 25%. Its media alliances now include 43 daily newspapers and eight television properties. Monster will build and maintain job-search Web sites for its newspaper partners and integrate the listings with its global-recruitment database. The partnerships: Freedom Communications Inc., whose flagship newspaper is the Orange County Register; North Jersey Media Group Inc., publisher of the Record of Bergen County; the Times Leader in Wilkes-Barre, Pa.; and the Black Press Ltd., which publishes Honolulu Star-Bulletin. Monster shares were down $1.29 (2.9%) to $43.34 in afternoon trading.
Related links: Media coverage: Reuters. Commentary: A Monster Worldwide Problem? • Newspapers To Partner Broadly With Yahoo. Conference call transcripts: Q3 2006
Potentially impacted stocks and ETFs: Monster Worldwide Inc. (MNST), Yahoo! Inc. (YHOO)
Summary: Palm Inc. cut its Q2 profit and revenue forecasts yesterday due to delays in shipping its new Treo 750 smartphones. Palm blamed the delays on a U.S. carrier who was late in securing the Treo 750's compatibility with its network, but would not name the carrier. Palm spokeswoman Marlene Somsak: "There are many, many steps and myriad attributes about the certification process. The phones have to be super well-tuned to the network." Palm said the 750 launch in Europe is doing "quite well." Palm's 750 runs on Microsoft's OS and uses a Samsung chip; its Treo 680 runs on Palm's OS and uses Intel chips. Palm now expects Q2 income of 10-11 cents/share, down from an earlier forecast of 15-18 cents; fiscal Q2 ends on Friday. Shares closed down 3.4% at $15.37, and continued to drop after hours trading as low as $13.90.
Related links: Media coverage: WSJ, TheStreet.com. Commentary: Palm's Warning, Delay May Increase Its Takeover Likelihood • Palm Warns - Stock Down 4% After Hours • Palm: A Gift for Value Investors • Palm's Cash Hoard Adds To Its Appeal • Palm Beats Estimates, Won't Reaffirm Yearly Guidance. Conference call transcripts: F1Q07 (Qtr End 9/1/06)
Potentially impacted stocks and ETFs: Palm Inc. (PALM), Microsoft Corp. (MSFT), Intel Corp. (INTC), Apple Computer Inc. (AAPL), Nokia Corp. (NOK), Motorola Inc. (MOT) • ETFs: iShares Dow Jones U.S. Telecom Sector Index ETF (IYZ), Vanguard Telecom Services ETF (VOX), PowerShares Dynamic Telecom & Wireless ETF (PTE), PowerShares Dynamic Hardware & Consumer Electronics (PHW), PowerShares Telecom ETF (PRFQ)
NeuStar Acquires Followap for $139M [Business Week/AP]
Summary: NeuStar, which provides clearinghouse services to communications companies, reported its $139 million acquisition of U.K.-based Followap, a provider of instant messaging products for European and Asian markets. NeuStar predicts Followap will generate $25 million in revenue in 2007 and twice that amount in 2008. "Strong demand is emerging worldwide for Instant Messaging, and leading mobile network operators in Europe already depend on Followap's products to deliver IM," said Jeff Ganek, NeuStar's chairman and CEO. NeuStar shares fell 23 cents to $31.79.
Related links: Press Release: PR Newswire • NeuStar Financial statements. Commentary: NeuStar Bounces Back Despite Reducing Margins
Potentially impacted stocks and ETFs: NeuStar (NSR) • Competitors: Boston Communications Group Inc. (BCGI)
Summary: Wal-Mart plans to break into the Mexican consumer banking market in the second half of 2007. Banco Wal-Mart de Mexico Adelante SA will offer savings accounts, debit cards, and credit lines to low-income individual and small-business customers at its 558 stores. There is currently a consumer lending boom in Mexico due to current low interest rates. At the end of September, Mexican banks had 338.4 billion pesos ($30.65 billion) in performing loans, a 44% increase over last year. However, most of these loans have been offered to middle and upper income clients; low income clients, Wal-Mart's targeted customers, are usually turned down. Analysts are positive about Wal-Mart's banking move, although the company does not expect to see any banking profits until 2011. The company has faced opposition in its attempts to establish banking operations in the U.S.
Related links: Media coverage: MSN Money, Forbes , Reuters. Commentary: Wal-Mart Goes On Investor Probation • Wal-Mart's Organic Food Initiative: A Case of Hippie Capitalism Gone Awry? • Retail Weakness: So Much for the 'Cheaper Gas Effect'. Conference call transcripts: Wal-Mart F3Q07 (Qtr End 10/31/06) .
Potentially impacted stocks and ETFs: Wal-Mart (WMT), Target (TGT), Federated Department Stores (FD), J.C. Penney (JCP), Saks Incorporated (SKS), Kohl's Corporation (KSS), Nordstrom, Inc. (JWN), Sears Holdings Corporation (SHLD), The TJX Companies, Inc. (TJX) • ETFs: Retail HOLDRS ETF (RTH)
Summary: The U.S. Supreme court upheld a previous Illinois court decision and declined to award $10 billion to light cigarette smokers who sued the Altria Group for misleading them about the relative safety of the product. The Illinois decision had declared that consumers could not invoke a state consumer protection law against products already authorized by the Federal Trade Commission. This decision has protected R.J. Reynolds Tobacco and other cigarette makers from similar lawsuits. Analysts predict that this outcome will aid the company in other lights lawsuits currently pending in addition to smoothing the way for the Kraft spinoff announced earlier in the month. Altria shares rose 1 cent to $83.76 on Monday morning. The company will seek to recoup $6 billion it had placed in an escrow during the appeal
Related links: Media coverage: MarketWatch , CNN , Houston Chronicle. Commentary: Altria Stock Jumps on Judge's Ruling Against Smokers • Kraft Divestiture News Eases Investor Concerns • The Tobacco Empire Strikes Back • Light Cigarette Suit Could Exact a Heavy Price on Tobacco Companies . Conference call transcripts: Altria Group Q3 2006 .
Potentially impacted stocks and ETFs: Altria (MO) Competitors: Kraft Foods (KFT), Reynolds American (RAI), Carolina Group (CG), Loews Corporation (LTR) • ETFs: WISDOMTREE H-Y EQ TR (DHS), MORNINGSTAR DV (FDL), ISHARES DOW SEL DIV (DVY).
Swift Transportation Rejects $2.2 Billion Takeover Offer [New York Times]
Summary:Swift Transportation rejected a $2.2 billion buyout offer from ousted CEO and founder Jerry C. Moyes, although the trucking company says it may consider other bids. Swift indicated the amount was "indadequate" and did not fully reflect the company's value. Moyes, who was dismissed from his position last year because of an options-backdating scandal, indicated in a letter that he may increase his offer. Moyes, who founded the company in 1966 and holds 38% of its shares, offered a premium of 20.6 percent over Friday's closing price of $24.05. Swift's shares rose 3% or 75 cents to $28.36.
Related links: The Street.com. Commentary: Ousted Swift Transportation CEO Moyes Tries To Buy Company • Landstar's Success is Due to Their Business Model • Trucker C.H. Robinson's Strategy of Not Owning Its Trucks Pays Off
Potentially impacted stocks and ETFs: Swift Transportation Co. Inc. (SWFT) • Competitors: JB Hunt Transport Services Inc. (JBHT), Landstar System Inc. (LSTR) and Werner Enterprises Inc. (WERN)
Toyota, Honda Report Increases In Japan Output [Wall Street Journal]
Summary: Demand for fuel-efficient autos is helping Toyota and Honda overcome challenges in their home market. Exports grew 20% and 46% in October for Toyota and Honda respectively, as overseas demand -- particularly in North America -- outpaced overseas production, which was up for the two by 8.1% and 12%. Domestic sales fell for both by 5.6% and 6.2%, respectively. Nissan's domestic sales grew 1.6% due to strong sales of a newly released mini-car. Its exports were off 1.7%, while overseas production increased 9.5%. These are all largely improved numbers for Nissan. The production and export growth at Toyota and Honda extends multi-month strings of increases.
Related links: Press releases: Toyota, Honda and Nissan. Commentary: My Breakfast With Honda Motor Co. • Toyota: Lithium Battery Hybrid In The Works • Toyota Sees Gold in BRIC Auto Markets • Earnings: Toyota, Honda and Nissan.
Potentially impacted stocks and ETFs: Japan Big-3: Toyota (TM), Honda (HMC), Nissan (OTCPK:NSANY), U.S. Big-3: Daimler Chrysler (DCX), Ford (F), General Motors (GM) • ETFs: iShares MSCI Japan Index (EWJ), iShares S&P/TOPIX 150 Index (ITF), BLDRS Asia 50 ADR Index (ADRA)
Summary: For the first time ever, Ford is borrowing money under the cover of collateral. Already $154 billion in the hole, Ford is putting up its most profitable units - production plants, Volvo and Ford Motor Credit - to secure an additional $18 billion in funding. The additional funding will be used to lay off 40,000 North American workers and close plants - all part of Ford's plan to be profitable by 2009. the company has lost nearly $7 billion to date this year and has not turned a profit in eight of its last nine quarters.
Related links: Media coverage: WSJ • Reuters. Commentary: Ford Relying On Volvo Increasing Sales To Lift It Out of the Red • Highlights From Ford's Sales Conference Call: Inventories Not As Bad As They Seem? • Auto Nation: Detroit Needs To Get Real • Ford Expects to Slash 1H07 Production By 12%. Conference call transcripts: Ford Q3 2006.
Potentially impacted stocks and ETFs: Ford Motor Co. (F) • Competitors: General Motors (GM), DaimlerChrysler (DCX), Toyota (TM), Honda (HMC), Nissan (OTCPK:NSANY).
Summary: Interactive Brokers Group Inc filed a Form S-1 with the SEC for an IPO on Nasdaq that could reach $500 million, with most of the proceeds going to its current owners. Interactive Brokers is a global market maker and broker that provides specialized trading services for more than 60 electronic exchanges and trading venues. Post-IPO it will become a holding company with a 5% equity stake in IBG LLC (the current holding company for its businesses). It will use an OpenIPO process with share price and allocation determined by auction, underwritten by WR Hambrecht & Co. and E*Trade Securities. The WSJ reports IBG is the 16th largest securities firm in the U.S. based on consolidated capital. It will trade under proposed ticker: IBKR.
Related links: Press Release. Interactive Brokers' S-1 Filing. Media coverage: WSJ. Commentary: Nomura's Agreement to Buy Instinet from Silver Lake a Win-Win.
Potentially impacted stocks and ETFs: Competitor: Investment Technology Group (ITG) • ETF: streetTRACKS KBW Capital Markets (KCE)
Nasdaq's Risky Bid [TheStreet.com]
Summary: Both Moody's and S&P have placed Nasdaq Stock Market Inc. on a "credit watch" after the company decided to finance its takeover bid for the London Stock Exchange almost entirely with loans. The latest company to willingly saddle itself with debt in pursuit of a large acquisition, many on Wall Street feel the deal means Nasdaq is taking on too much leverage for an acquisition rife with "integration risk,'' given London's continuing opposition to a merger.
Related links: Media coverage: WSJ. Commentary: LSE Rejects Nasdaq Bid • Nasdaq's LSE Bid's Fate Likely in the Hands of 'Market Sentiment' • The Long Case for NDAQ • CRAMER'S TAKE ON NDAQ.
Potentially impacted stocks and ETFs: Nasdaq Stock Market Inc. (NDAQ) • Competitors: NYSE Group (NYX).
Scottish Re to get $600 million investment [MarketWatch.com]
Summary: Struggling life reinsurance company Scottish Re stock sunk about 12% to $5.85 Monday following the announcement that MassMutual Capital and Cerberus Capital will each invest $300 million to gain preferred shares that constitute about 68% of the company at about $4 a share. The highly dilutive deal was defended by Scottish Re CEO Paul Goldean: 'Without this investment and ancillary financing commitments, the company may not have been able to continue operations in its current form.' While the deal is sure to bring shareholder complaints, Standard & Poor's immediately raised its credit rating on the firm. The stock has lost about 75% of its value over the past twelve months.
Related links: Press release on the investment • Media coverage: Wall St. Journal , Reuters. Commentary: Scottish Re Gets Belated Downgrade From Bear Stearns
Potentially impacted stocks: Scottish Re (SCT)
HEARD ON THE STREET: How China's 3G Telecom Initiative Could Work Against Western Firms [Wall Street Journal]
Summary: The delayed but much anticipated rollout of 3G networks in China may not be as lucrative as initially thought for Western telecom-equipment co's and particularly not for American vendors. Beijing is expected to issue 3G licenses next year, but in the meantime, Chinese players such as Huawei Tech and ZTE have become more competitive and are seen as benefiting from the creation of a Chinese standard for 3G, TD-SCDMA, that would differ from those used in Europe and the U.S. Chinese carriers are actually against a national standard because it will limit their pool of equipment suppliers and since the TD-SCDMA is commercially unproven. At any rate, U.S. equipment manufacturers have already lost revenue from the 3G delay. And although there's urgency in China to have 3G ready for the 2008 Olympics, European vendors such as Siemens, Nokia and Alcatel are seen as being better positioned due to their JVs with Chinese partners.
Related links: Commentary: Booming Chinese Wireless Market Leaves Room for Two Players -- Barron's • Chinese Tech Stock Weekly Report • China's Optical Threat to U.S. Networking Companies • Nokia: Positive Outlook for China's 'Maturing and Emerging' Mobile Phone Market. Conference call transcripts: Motorola Q3'06, Lucent F4Q'06, Nortel Q3'06, Nokia Q3'06, Alcatel Q3'06.
Potentially impacted stocks and ETFs: Motorola (MOT), Lucent (LU), Nortel (NT), Ericsson (ERIC), Siemens (SI), Nokia (NOK), Alcatel (ALA), 3Com (COMS) • Chinese Wireless Stocks: China Mobile (CHL), China Unicom(CHU), China Techfaith Wireless Comm. (CNTF) • ETFs: Broadband HOLDRs (BDH), iShares Goldman Sachs Networking (IGN), Wireless HOLDRs (WMH)
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U.S. Markets: The Disappearing Dollar
Long Idea: Deutche Bank: Sears Holdings Is a Buy
Short Idea: Yum!: Sell Calls Against Stock to Pad Yield
Internet: Amazon's Spending Spree
Telecom: Qualcomm's Empire Is Under Siege
Hardware: Five Stocks For The Microsoft Vista Cycle
Software: Midway Games: Overvalued and Lags Competitors
Consumer Electronics: Gamestop COO Discusses New Console and Gaming Software Sales
Media: Weakening Retail Sales For Satellite Radio Operators?
Healthcare: Eye On American Shared Hospital Services
Retail: Wal-Mart Goes On Investor Probation
Transport: Pep Boys Now Pursued By Two Hedge Funds
Gold: An Analysis on Freeport-McMoRan's Bid for Phelps Dodge
Energy: 9 Reasons To Invest In Suntech Power
Financial: Bank of America: Impressive Numbers Prove We Were Wrong -- Barron's
Asia: Will the U.S.-China Trade/Currency Deal Adjust?
ETFs: The Zweig Total Return Fund: Grab the Bull By Its Horns
Small-Caps: Targeted Genetics Jumps 52%
IPO Analysis: Why The IPO Slowdown May Be A Good Thing
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Jim Cramer: Latest stock picks
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