New York Times Might Cancel TimesSelect -- Report
The New York Times is considering ending TimesSelect, its subscription-only online access service, according to a report in the New York Post. The service places several op-ed columnists, including Maureen Dowd, Frank Rich, Paul Krugman, Nicholas Kristof and Thomas L. Friedman, behind a pay-only barrier. The unsourced Post report indicates there is strong opposition to the service inside the Times, despite the advocacy of CEO Arthur "Pinch" Sulzberger Jr. and President Janet Robinson. "While TimesSelect is very popular and we have certainly met and exceeded our goals since it began in 2005," said Times spokeswoman Catherine Mathis, "we continue to evaluate the best approach to our business." The Post quotes an "insider" as saying, "There are many who think they would be better just sending it globally and selling advertising against it rather than operating a toll booth." In related news, Times Public Editor Clark Hoyt criticized the paper in its Sunday edition for insufficiently covering its own struggles as the industry confronts unprecedented challenges. He notes the Times has extensively covered Rupert Murdoch's takeover offer for Dow Jones, but "[t]here has been a comparative silence in the paper about its own owners, their challenges and their strategy."
Sources: New York Post, MarketWatch, Reuters, New York Times
Commentary: News Busters • BloggingStocks • Newspapers Confront The Digital Media Revolution
Stocks/ETFs to watch: The New York Times Company (NYT). Competitors: Dow Jones & Co. Inc. (DJ), Gannett Co., Inc. (GCI), Washington Post Co. (WPO), The McClatchy Company (MNI)
Earnings call transcripts: NYT Q1 2007
Shari Redstone May Leave Viacom After Feud With Father
Media magnate Sumner Redstone and his daughter Shari are negotiating a deal that would end her involvement in the family company and thus her roles as chairman of Viacom and CBS. According to the Wall Street Journal, the biggest stumbling block in negotiations is for Ms. Redstone to relinquish her holdings in the family company, National Amusements, whose holdings include Viacom, CBS and a theater chain. A statement quoted by the Journal indicated that Ms. Redstone didn't want to sell her 20% holding in the company, but would do so if her father if her father "wishes to settle matters that way," after reports the two had had a falling out, apparently because she's looking to succeed her 84-year-old father upon his death. She noted that the company had been publicly valued at $8b, and said she would consider a resolution that "fairly reflects" her stake. Mr. Redstone said in a letter posted on the Forbes Web site, that "if Shari desires to be bought out I will consider this as long as the price is acceptable." National Amusements received the $8B valuation from Shari's brother Brent Redstone during a recently settled lawsuit filed against his father in which Sumner ultimately bought out his son's one-sixth interest for about $240M, a much lower price than his valuation implied.
Sources: Forbes: Redstone Letter, Wall Street Journal, Washington Post
Commentary: Gabelli Multimedia's Larry Haverty Picks Five 'Elephant in the Room Stocks' • Why Viacom's Sumner Redstone Is Not A Hypocrite • Viacom Rules, Google Drools? Not So Fast
Stocks/ETFs to watch: Viacom Inc. (VIA), CBS Corp. (CBS)
Earnings call transcript: Viacom Q1 2007
Brad Greenspan Takes Case to Dow Jones Shareholders
MySpace cofounder Brad Greenspan has issued an open letter to Dow Jones shareholders outlining a proposal that would avert a $5 billion takeover by News Corp. approved last week by the company's board. The Bancrofts, Dow Jones's controlling family, are meeting Monday to consider the News Corp. offer. Greenspan's proposal includes a $400-600 million loan to be used to buy out shareholders who wish to sell at $60 per share. For all the shares bought with those funds, Greenspan's group would receive the rights to all "value created in the stock above $60 a share." The proposal further suggests the company take on debt to buy back up to half its shares at $60 and finance the company's digital operations. Greenspan's group would receive two seats on the Dow Jones board. The proposal also recommends creating a Dow Jones/WSJ Financial News channel to compete with CNBC and the Fox Business Channel, which will be launched soon by News Corp. Greenspan goes on to suggest converting the Journal's subscription website into a mostly free, video-based site. "It's an oddball proposal," said Outsell Inc. media analyst Ken Doctor. "It's very late in the game."
Sources: Brad Greenspan's letter to DJ shareholders, Wall Street Journal, Reuters, MarketWatch, Forbes, New York Times
Commentary: Dow Jones' Bancrofts: Time to Get Off The Pot • Dow Jones/News Corp. Merger Unlikely to Succeed • Dow Jones Board Approves Murdoch Bid; Bancrofts to Decide • Burkle and Greenspan Present Alternatives to Murdoch Bid for Dow Jones
Stocks/ETFs to watch: Dow Jones & Company Inc. (DJ), News Corp. (NWS). Competitors: Reuters Group PLC [ADR] (RTRSY). ETFs: PowerShares Dynamic Media Portfolio ETF (PBS)
Earnings call transcripts: Dow Jones Q2 2007, News Corporation F3Q07
MACRO AND HOUSING
Cerberus Buys United Rentals for $4B
The Wall Street Journal reports Cerberus Capital Management is near a $4 billion buy out deal for United Rentals Inc., the world's largest equipment rental company based on fleet size, according to people briefed on the matter late Sunday. Cerberus will reportedly pay $34.50/share, representing a 6.6% premium over United's Friday close of $32.37. The take out price is 25% higher than where United's shares traded when it announced it was pursuing a sale in April. The Journal comments that "barring last-minute snags, the acquisition will come as a confidence-booster for the LBO business," since there have been difficulties financing deals of late due to rising risk premiums. Cerberus will finance more than half the United deal using high-yield debt and asset backed securities, according to sources. United has 30 days to solicit superior bids, which could include rival bidders Platinum Equity of Beverly Hills and a consortium of Blackstone Group, Oak Hill Capital and Ripplewood Holdings. Update: United Rentals Inc. said on Monday it has accepted a $4 billion bid from Cerberus Capital Management LP.
Sources: Wall Street Journal, Reuters
Commentary: Borrowing Costs Rising in Chrysler, Other Buyout Deals • PowerShares Private Equity ETF As A Tell On PE's Top
Stocks/ETFs to watch: United Rentals Inc. (URI). Competitors: Hertz Global Holdings, Inc. (HTZ)
Several States Helping Subprime Borrowers -- WSJ
In a bid to contain surging home foreclosures, several states are establishing funds to help homeowners struggling with subprime mortgage loan repayments refinance to more affordable loans, according to the Wall Street Journal. The states include Maryland, Massachusetts, New Jersey, New York, Ohio and Pennsylvania, and they are expected to invest a collective $500 million in the funds. The Massachusetts Housing Finance Agency plans to join forces with Fannie Mae to prevent foreclosures on about 1,000 homes. The Agency will sell bonds to finance $60 million and Fannie Mae will provide $190 million. The New York Mortgage Agency is planning to initiate a $100 million program designed to assist 500 families. The Journal reports that over a million American homeowners are forecast to enter foreclosure this year, representing approximately 2.3% of the country's 44 million home loans. According to Freddie Mac, about 60% of those homeowners are carrying subprime mortgages. There is some concern that taxpayers could end up paying the costs of refinanced loans that are themselves unpaid. "This only works if you're helping people who pay back what they borrow," said Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University.
Sources: Wall Street Journal, Reuters
Commentary: The American Dream Is Overbought & Overbuilt • Brief Foreclosure History & Mortgage Delinquency Maps • Are The Ratings Agencies Really Taking a 'Tough Stance' on Subprime Mortgage Debt?
Stocks/ETFs to watch: Fannie Mae (FNM), Countrywide Financial Corp. (CFC), Accredited Home Lenders Holding Co. (LEND), Novastar Financial Inc. (NFI), Fremont General Corp. (FMT). ETFs: Vanguard REIT ETF (VNQ)
iPhone Hack Allows Attackers 'Complete Control'
Computer security testing company, Independent Security Evaluators [ISE], says it has found a flaw in the iPhone which gives a hacker full control over the device. By redirecting a user's browser page to a web page containing malicious code, through a standard WiFi connection, ISE was able to gain full operational control over the iPhone in question and, downloading private text messages and even recording conversations occurring in the room. According to ISE's principal security analyst, former NSA employee Charles A. Miller, “Once you did manage to find a hole, you were in complete control... We can get any file we want." There is as of yet no evidence the hack has been exploited in a working iPhone. Apple responded to ISE's report: "Apple takes security very seriously and has a great track record of addressing potential vulnerabilities before they can affect users. We’re looking into the report submitted by I.S.E. and always welcome feedback on how to improve our security." (See video of hack)
Sources: New York Times, Security Evaluators.com
Commentary: iPhone: A Look Inside • Apple Stock Will Hit $205 On iPhone Strength - Piper • Does Apple's iPhone Live Up to Its Hype?
Stocks/ETFs to watch: Apple Inc. (AAPL).Competitors: Palm Inc. (PALM), Research In Motion Ltd. (RIMM), Microsoft Corp. (MSFT). ETFs: Internet Architecture HOLDRs (IAH), PowerShares QQQ (QQQQ), Technology Select Sector SPDR (XLK), iShares DJ U.S. Telecom Sector Index ETF (IYZ)
Earnings call transcripts: Apple F2Q07 (Qtr End 3/31/07) Earnings Call Transcript
Related: iPhone Online • Independent Security Evaluators
Microsoft to Embrace Online Office Slowly; Enhances Search Privacy
Microsoft does not appear to be in a hurry to expand its Office productivity applications' features on the web. Instead, Jeff Raikes, the company's head of business and servers, says there will be new features within the next year or so. "I remember the days when people said: 'retail will die because of online commerce'. Well, actually, retail is pretty healthy in the last few years," said Mr. Raikes in an interview with the Financial Times. An analyst at Directions on Microsoft, says it will be three years or more until a full version of Office is available online. Microsoft's first step is believed to be allowing Office users to share files on the Internet, a function Google already offers. Separately, Microsoft announced enhanced privacy protection for search customers on Monday, saying it will make search query data anonymous after 18 months and let users opt-out of receiving behaviorally-targeted ads. Microsoft and IAC's Ask.com announced a joint effort to bring search industry stakeholders together to further enhance privacy protection. Ask.com now offers Ask Eraser, a service allowing for completely anonymous searches; Yahoo! has a new policy to "anonymize" search data after 13 months; Google's policy is 18 months.
Sources: Press release I, II, FT.com, New York Times, Wall Street Journal
Commentary: Microsoft CFO Notes Strength In Unearned Revenue; Weak Xbox Sales • Google Still Outpacing Its Internet Rivals • Google Dominates as Users Move to Search for Navigation -- Hitwise
Stocks/ETFs to watch: Microsoft Corp. (MSFT), Google, Inc. (GOOG), Yahoo! Inc. (YHOO), IAC/InterActiveCorp (IACI). ETFs: iShares Goldman Sachs Software Index Fund (IGV), Software HOLDRS Trust ETF (SWH), PowerShares Dynamic Software (PSJ), PowerShares QQQ (QQQQ)
Earnings call transcripts: Microsoft F4Q07, Google Q2 2007, Yahoo! Q2 2007, IAC/InterActiveCorp Q1 2007
TRANSPORT AND AEROSPACE
Siemens Gets Two €12B Bids for VDO Auto Electronics Unit -- Report
Siemens has received two bids, each worth more than €12b, for its automotive electronics unit VDO, the Handelsblatt paper reported. Citing financial sources, the paper said Monday that TRW, which is majority owned by The Blackstone Group, and Germany's Continental AG have each made offers for the €10B business. Siemens' board is expected to discuss the future of VDO at a meeting on Wednesday. In the past, Siemens has said it would like to list the company publicly, but that it also would consider acquisition proposals. All three companies declined to comment. Media reports stated that Blackstone and TRW have promised not to close any German factories to sweeten their offer for the business.
Sources: Reuters, Thomson Financial
Commentary: Tough Times for Auto Parts Makers Should Continue • Getting Bullish On Germany
Stocks/ETFs to watch: Siemens AG (SI), TRW Automotive Holdings Corp. (TRW), Blackstone Group LP (BX), Continental SG (OTCPK:CTTAY). Competitors: Lear Corp. (LEA), BorgWarner (BWA), ArvinMeritor (ARM), Johnson Controls (JCI). ETFs: iShares MSCI Germany Index Fund (EWG)
Hedge Funds Build Stake in UBS, Sparking Split-up Speculation -- London Times
Harris Associates, one of America's leading activist funds, has built a $1 billion, 1% stake in embattled Swiss investment bank UBS the Sunday Times reported. Harris, a Chicago-based fund manager run by David Herro that controls $73 billion, built up the stake over the past three months, according to the unsourced report. Lansdowne Partners, one of the UK's biggest hedge funds, has also compiled a significant holding in UBS, the Times said. Calls for the bank to split its wealth management and investment banking divisions to unlock value, have increased in wake of the successful drive of London hedge fund TCI to break up the Dutch bank ABN Amro. But one analyst downplayed the idea of a UBS breakup: "Although it's easy to say UBS is another ABN, that's not the case. There are far more compelling reasons for UBS to remain whole than there were with ABN. The stock is attracting hedge funds simply because it has been oversold following the problems." Earlier this month, UBS ousted Peter Wuffli as chief executive. UBS declined to comment on the report.
Sources: Sunday Times, Reuters
Commentary: UBS Ousts CEO Wuffli; Replaces Him with Rohner • UBS's Schizophrenic Sale of Julius Baer • UBS Accused of 'Running Hedge Fund Hotel' After Offering Half-Priced Snacks
Stocks/ETFs to watch: UBS AG (UBS). Competitors: ABN Amro Holding N.V. (ABN), Deutsche Bank AG (DB), Credit Suisse Group (CS), Citigroup Inc. (C), HSBC Holdings plc ADR (HBC). ETFs: iShares MSCI Switzerland (EWL)
Barclays Might Sue Bear Over Hedge Fund Losses -- WSJ
Barclays is considering several options, including arbitration, a negotiated settlement, or litigation to recover $400 million it invested in a now-worthless Bear Stearns hedge fund. Barclays had put the funds into the Bear Stearns Asset Management High-Grade Structured Credit Strategies Enhanced Leverage Fund, which bet heavily on the subprime mortgage market. Bear Stearns notified investors last week that that fund's value is now zero. The British bank had lent the fund $200 million and later offered another $250 million, an offer that was not extended. The $400 million it now wants to recover was a separate investment. "I would be astounded if there weren't lawsuits, given the magnitude and speed of the collapse," said securities lawyer Scott A. Meyers. "The fundamental issue will be what caused the collapse, a general market event, something specific to the way these funds were managed, or some combination of the two." In related news, Fed Chair Ben Bernanke told a Congressional hearing that losses connected to the subprime market will not derail the economy. "There's a chance investors have been overreacting," said Moody's chief economist John Lonsky. "...it is going to take more than a subprime meltdown to trigger a recession and send your broad equity markets 10-20% lower."
Sources: Wall Street Journal, Dow Jones, MarketWatch, Business Week, Bloomberg
Commentary: Bear Stearns Hedge Funds Nearly Worthless • Credit Suisse/Tremont Index Implodes On Bear Stearns Hedge Fund Meltdown • Bear Stearns' Slide Appears to Be Slowing
Stocks/ETFs to watch: Bear Stearns Companies Inc. (BSC), Barclays plc [ADR] (BCS). ETFs: iShares Dow Jones US Broker-Dealers (IAI), KBW Capital Markets ETF (KCE)
Barclays Raises Bid for ABN Amro
Barclays has raised its offer for Dutch banking giant ABN Amro to €67.5 billion ($93 billion) from €65 billion and included a cash element following comments by ABN CEO Rijkman Groenink that ABN's shareholders require a richer bid. The new bid consists of €42.7 billion in stock and €24.8 billion in cash. The revised offer remains shy of the €71 billion ($98.2 billion) hostile bid submitted by a Royal Bank of Scotland-led consortium. Mr. Groenink said over the weekend that though he believes a Barclays combination is better for ABN "in terms of content," the amount is not sufficient to satisfy a significant proportion of ABN's shareholders. "There is a large group of hedge funds and speculators," he told Dutch newspaper NRC Handelsblad, that have "but one interest and that's in the highest offer, in cash, and today, please. Estimates are that they own 30-40% of the bank." ABN is asking the RBS consortium for specifics on its plans to break up the bank in case its offer is accepted. ABN's European Staff Council said it has received assurances from the consortium concerning the "social consequences" of the takeover that exceeded its expectations. On August 6, shareholders of consortium member Fortis will vote on the consortium's bid and on Fortis's plans to help finance it.
Sources: Reuters I, II, III, IV, Wall Street Journal, Forbes, MoneyCentral
Commentary: ABN Amro to Meet with Barclays and RBS Consortium -- FT • Barclays to Sweeten Offer for ABN Amro -- FT • RBS Consortium Ups Cash Ante for ABN Amro
Stocks/ETFs to watch: ABN Amro Holding N.V. (ABN), Barclays PLC (BCS), Royal Bank of Scotland Group plc [ADR] (RBSPY.PK), Fortis NV [ADR] (FORSY). Competitors: HSBC Holdings plc ADR (HBC), Deutsche Bank AG (DB), UBS AG (UBS). ETFs: iShares MSCI Netherlands Index (EWN), streetTRACKS KBW Bank (KBE), HOLDRS Regional Bank (RKH)
Roche/Trimeris Report Positive Interim Fuzeon Results
Swiss drug giant Roche Holdings AG and its U.S. partner Trimeris Inc., reported positive interim results from an HIV study conducted with Fuzeon, an HIV treatment the companies have co-developed. The results, presented at the Fourth International AIDS Society Conference on HIV Pathogenesis, Treatment and Prevention in Sydney, show that when Fuzeon is combined with with Darunavir and a third anti-HIV drug, 64% of treatment-experienced patients achieved undetectable HIV at 24 weeks. The study involved 63 patients in the US and Australia. "Undetectable" HIV is defined as less than 50 copies per ml of blood. Fuzeon is the first fusion inhibitor available for the treatment of HIV.
Sources: Press Release, Dow Jones Newswires, AFX News, MarketWatch
Commentary: Roche Recalls Contaminated Drug • Ventana Rejects Roche's Hostile Takeover Bid Sending Shares To An All-Time High • Expecting Trimeris To Fall Following HIV Drug Development
Stocks/ETFs to watch: Roche Holdings AG (RHBBY.PK), Trimeris Inc. (TRMS). ETFs: Pharmaceutical HOLDRs (PPH), iShares Dow Jones US Pharmaceuticals (IHE)
Related: Fuzeon.com • Wikipedia: Fusion Inhibitor
TO THE POINT
- Barron's says hedge fund managers and buyout gurus John Neff and Mario Gabelli like Kaman Corp. (KAMN), United States Cellular Corp. (USM) and Sensient Technologies Corp. (SXT) as future buyout candidates. Neff also likes Citigroup Inc. (C), and is keeping some of his shares in Lyondell Chemical Company (LYO) in case its sale falls through or a rival bid emerges. (Full summary)
- Online DVD rental giant Netflix (NFLX) is lowering the price of its two most popular subscription plans (3 DVDs/1 DVD at a time with no limit on frequency) by $1 to match rival Blockbuster's (BBI) pricing. These cuts will have a far bigger impact on NFLX's bottom line than similar $1 price cuts in June due to their immense popularity. Management will quantify bottom-line effect in its earnings conference call (check for transcript later today) Monday afternoon. (Source)
- Shares of wind-turbine component maker Kaydon Corp. (KDN), up 28% since February on excitement over a new CEO and industry strength, are still reasonable, Barron's says. They could go as high as $66 in the next year, and considerably higher after that. (Full summary)
- Government subsidies to wireless carriers providing service to rural areas have ballooned from $131M in 2003 to an estimated $1.1B in 2007, prompting calls to abolish what one government insider calls a bizarre program. Biggest beneficiaries, in order, are Alltel Corp. (AT) (soon to be taken private), AT&T Inc. (T) and United States Cellular Corp. (USM). (Source)
- Mattel Inc.'s (MAT) newest Barbie boasts an MP3 player and special pages on her website that are unlocked by plugging her feet into a docking station. (Source)
- Gabelli Multimedia's Larry Haverty made 50% last year by finding 'elephant in the room stocks' -- companies that offer blowout value yet are largely ignored. Barron's says he now likes: Las Vegas Sands Corp. (LVS), Best Buy Co. Inc. (BBY), Bed Bath & Beyond Inc. (BBBY), Kohl's Corp. (KSS) and Viacom Inc. (VIA). (Full summary)
- Oil prices fell on Monday, extending Friday's decline, after OPEC said it was concerned about the impact of high oil prices on the global economy. (Source)
- EchoStar Communications Corp. (DISH) is suing a distributor of set-top boxes it says are designed to circumvent its antipiracy system and allows non-subscribers to watch its content. Previous lawsuits have targeted customers rather than 'facilitators.' An industry group says EchoStar's network is more prone to piracy than that of rival DirecTV Group Inc. (DTV). (Source)
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