Under The Radar News - Wednesday

ITunes (AAPL) film rentals. Expanding its reach in consumer entertainment, Apple will let iTunes users rent movies as well as buy them, and add Fox and Warner Bros. as suppliers.

Wal-Mart (WMT) comps to hit Target (TGT). For the first time since 2003, Wal-Mart's same-store sales growth is set to overtake that of arch-rival Target.

Goldman Sachs (GS) says U.S. economy slipping into recession. It expects the Fed to respond by slashing interest rates to 2.5% by the end of the year. On CNBC, Goldman's chief economist said unemployment has risen more than 1/3% on a 3-month average basis, which has 10/10 historical correlation with recession. He thinks the Fed will cut rates by 0.5% in January.

Berkshire Hathaway (BRK.A) tiptoes into bond insurance. On Tuesday, Buffet's new bond insurance company, Berkshire Hathaway Assurance Corp., sold its first insurance on a $10M bond. Separately, BRK.A also took in $2B in a private placement.

Most PCs ship sans Vista (MSFT). While Bill Gates recently boasted about the more-than 100M copies of Vista Microsoft sold in 2007, he failed to note that while Windows XP captured 67% of the new PC market in 2002, Windows Vista is only shipping on 39% of all new PCs.

Iraq in talks with Total SA (TOT), Royal Dutch Shell (RDS.A). The Iraqi government is in talks with Total and Shell to develop its huge Akkas gas field. Akkas can produce up to 50 million cubic feet of gas per day, or 450 million if developed. Iraq may also consider a partnership with an oil services company like Halliburton (HAL) or Schlumberger (SLB).

Harrah's (HET) debt sale delayed. Harrah's banks, including Bank of America (BAC) and Deutsche Bank (DB), were going to begin marketing $9B of loans for Harrah's $17B LBO this week. The sale has now been put on ice until next week; no reason for the delay was given.

Bear Stearns (BSC) to stay independent. New CEO Alan Schwartz said he won't wait for a takeover bid to determine Bear's future. "Being acquired is not a strategy," Schwartz said, vowing to return the firm to strong profitability.

New Blackberry (RIMM) to mimic iPhone (AAPL). A Vodafone (VOD) document leaked on the web shows a photo of a yet-to-be released BlackBerry that retains the BlackBerry's traditional look (full-sized keyboard and smaller screen) but adopts the iPhone's sleek black and steel motif. The new smartphone will be "BlackBerry's new flagship device targeted at senior execs," when it goes on sale in May.

Paramount (VIA.B) sticks with HD DVD. Viacom's Paramount Pictures denied a report that the studio will follow Time Warner's (TWX) desertion of Toshiba's (TOSBF.PK) HD DVD technology.

Sony (SNE) goes DRM-free. Sony BMG will begin to sell DRM-free music downloads in North America. Its new MP3 service will be called Platinum MusicPass.

Amgen's (AMGN) itchy fingers? Two former salespeople accuse AMGN of aggressive and "possibly improper" marketing practices for its psoriasis treatment, Enbrel, including requiring salespeople to access medical information of patients in doctors' offices.

Goldman Sachs (GS) to back China fund. Goldman plans to invest $300M in a new private-equity fund created by its China partner, Fang Fenglei, as a number of new Chinese deal-maker firms hope to compete with incumbents Carlyle Group and TPG.

Arbitrage spreads speak of skepticism on takeovers. Spreads on yet-unclosed LBO deals are growing. Blackstone's (BX) delayed $6B takeover of Alliance Data Systems (ADS) now carries a 10% spread. How Clear Channel's (CCU) buyout by a private-equity group goes could say a lot about what 2008 holds in store for LBOs.

Hewlett-Packard (HPQ) to get new China partner. HP's current partner, 30% stakeholder China Electronic, says it will sell its stake in the JV for about $133M, preferably to another Chinese firm.

Siemens (SI) drops on profit fears. Shares fell as much as 6.7% in Germany amid speculation the firm would reduce its earnings outlook. A spokesman denied the rumors. Analyst James Stettler notes the company's Nov. forecast of a 2007 earnings gain fails to include all potential charges relating to a bribery investigation, and says there could be some downside to the outlook.

Comments

[dsilisk:]

I've been trying to figure out why Siemens is down all morning. No one but you gave early coverage. Thanks so much for your astute coverage of this foreign blue chip.

2008 Jan 09 10:04 AM

[Long-Short Guy:]

Yes, this is really useful.

2008 Jan 09 11:33 AM

[SA Editor E...:]

Glad to hear you found it useful!

2008 Jan 09 12:33 PM

[Brian in Mo...:]

Hi, Great News that nobody else is talking about much.

Can you try and shed some light on something I find to be under the radar?
Many Tech companies in the USA are going out of there way to say what percentage of sales are Intenational. Intel I remember as 75%, now I belief it, but, don't those customers like Lenova in China supply back to the markets in the USA ?

Doesn't this whole concept of the World saving the USA leave out the part about everybody is using US dollars from US consumers or should I say US credit accounts?

Cheers, Brian in Montreal and I don't feel any safer up here.

2008 Jan 09 07:49 PM

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