Under The Radar News - Friday

From Harley Davidson's Q1 earnings call: "From my vantage point, it is unclear when the U.S. economy will recover." -- CEO Jim Ziemer

Where are we headed? Companies with healthy international sales seem to be faring far better in Q1 than those dependent on domestic revenue. Some analysts forecast a big rebound in Q3 and Q4 earnings. Others worry whether, as was the case with the housing market, weak consumer confidence will make its mark on the economy slowly but surely.

The state of digital music. 10% of all "acquired" music last year was via paid downloads, up from 7% in 2006. But total paid music fell to just 42% (from 48%) vs. music ripped or burned from friends' libraries. Amazon's (AMZN) five-month-old digital music store is off to a strong start; it has only 1/10 of Apple's (AAPL) iTunes sales, but is already number-two. Amazon users are more likely to buy entire albums than are iTunes customers. Amazon's strategy of selling non-restricted (no DRM) music hasn't made major inroads; most users listen to music on an iPod or their PC, which they can just as easily do with Apple's restricted format.

Ross buying regional banks. Billionaire distressed assets investor Wilbur Ross Jr. is looking for $4B to buy U.S. regional banks, which he says have "more narrowly defined" problems than international giants like Citigroup (C). Thrift banks, whose portfolios tend to be real-estate heavy, are among the most attractive, Ross says. He plans to approach Gulf area SWFs, among others.

Take that. Electronic Arts' (ERTS) hostile pursuit of Take-Two Interactive (TTWO) suffered a setback: TTWO shareholders look ready to approve a contentious compensation package for its managers (ZelnickMedia), while only a fraction of shareholders were expected to tender their shares. EA hoped Take-Two's shareholder vote would decry ZelnickMedia's compensation and jump at its offer. "They're looking pretty foolish right now," a source said. "Despite their lobbying, shareholders clearly support ZelnickMedia and its strategy for Take-Two." EA extended its offer, which was to expire last night, to May 16.

Pilots take flight from union. US Airway (LCC) pilots ousted their union (the Air Line Pilots Assoc.) and replaced it with the insurgent US Airline Pilots Association amid pilot seniority issues, raising further questions about its ability to integrate with America West. The vote was closely watched, because much of pilots' opposition to this week's merger of Delta (DAL) and Northwest (NWA) hinges on a similar dispute.

Why are Citi shares climbing? "Vikram Pandit was always going to shake the trees and get every skeleton out of the cupboard imaginable, which is what he's done. Commentators and analysts love to see blood running down Canary Wharf and Broadway, and that being the case, there are undoubtedly going to be substantial redundancies over the course of the next two years. The fact that remedial action is being taken, investors love that." -- Cantor Index's David Buik

Not everyone loves Citi's earnings. Moody's downgraded Citigroup's (C) outlook to negative after Q1 writedowns of more than $15B were higher than expected.

You've got new jingle mail. Rapidly falling home values mean one in five borrowers will soon owe more on their houses than they're worth, giving them little impetus to meet mortgage deadlines. Moody's says 10.6M homeowners will have zero or negative home equity by the end of June. Walkaways (aka jingle mail) have a hugely negative effect on housing prices, not to mention the losses banks like Wachovia (WB) and Regions Financial (RF) are suffering in their wake.

Wal-Mart Brazil expanding. Wal-Mart (WMT) will invest $722.8M in Brazil this year as it branches out into e-commerce there.

Everyone wants China growth, no one knows how. Time Warner's (TWX) AOL may be planning to enter China, joining Google (GOOG), Yahoo! (YHOO) and Microsoft (MSFT). Considering China's fire-like growth, it sounds like a good move -- except that the firsts three have yet to gain any serious foothold in the region.

New Nvidia card. Nvidia (NVDA) will launch a new GeForce 9600 GSO GPU in May, which will compete with AMD's (AMD) Radeon HD 3830. The GeForce 9600 GSO will target the mid-range graphics card market.

Comments

[Brewer]

Though many of the apple songs have DRM, some do not, and it all works far better than Amazon ever will, even with DRM free songs there.

Most of those using Amazon are iPod users.