Amit Kumar

Sun Micro: Put Spreads to Play Merger Arb?

Talks between International Business Machines Corp. and Sun Microsystems Inc. were on the verge of unraveling Sunday, threatening to undermine a potential $7 billion acquisition that would place one of Silicon Valley's iconic companies under the Big Blue umbrella - WSJ Report.

Sun Micro: Put Spreads to Play Merger Arb?

IBM lowered its intended takeover price for Sun Microsystems to between $9 and $10 a share, according to people familiar with the matter. Sun agreed to accept the lower price in return for stronger commitments from IBM that it will complete the deal despite facing intense regulatory scrutiny. The companies previously discussed a price in the range of $10 to $11 a share. The two sides continue to negotiate, and it remains unclear when they will reach a deal. - WSJ Report

Sun Micro: Put Spreads to Play Merger Arb?

right. 35c. the spread is almost gone (down to 13c) with the rally in Sun stocks today.

Sun Micro: Put Spreads to Play Merger Arb?

Yes. April puts. Thanks

Geithner Regulates: After the Carrot, A Stick for Banks

Regulators having been bouncing the idea of system regulator for TBTF entities since LTCM collapse. Today, Jim Chanos said on bloomberg that hedge funds and non-banking financial institutions have been bracing for such a regulation since the current credit crisis began. Most large hedge funds and private equity firms over $2b are already registered with SEC. The question is not as much about capability as about political will and execution. For multinational institutions, winding down an entity global could pose serious cross-border political hurdles.

Shades of Recourse Lending

Great points about banking practices in the last thirty years which saw the origin and boom of asset securitization market and helped banks maintain off-balance sheet larger than actual balance sheets. FDIC's insurance on bank liabilities did create moral hazards, encouraging bankers to take on massive risks.

The more imminent question is whether this plan really helps tax payers benefit from the "big upside and limited downside" alongside investors. If the taxpayer were to put back the assets to FDIC just like the investor, does she really limit her downside? Can the private investors value these toxic assets better than US treasury and make a better judgment in selecting assets? The plan would raise the bid side like Paul Krugman, Jeff Chinos and others think, but will banks be the sellers?

Solar Stocks Come Back to Earth

Market is concerned that YGE paid too much for CyberPower and may face problems with financing the expansion of poly facilities especially as YGE has not disclosed the Capex requirements.
In the longer run, securing the Silicon supply is positive for YGE, but the falling silicon prices, and YGE's reliance on bank facilities to finance the capex poses a big headwind. Solar companies that rely on the their cash flow for any capex and have good cash reserves have a lower down side risk at this point, I would say.

Solar Stocks Come Back to Earth

sorry for the typo, I meant companies with installed capacity and scale, long-term contracts such as FSLR and good conversion efficiencies, such as and SunTech,

CD Te efficiencies for FSLR are much lower than Si based panels, and I mentioned in my article "I believe that silicon based companies will benefit more in the next 12-18 months from the price decline and margins for non-Si based companies, such as FSLR, will get squeezed from resulting lower ASPs"

On Dec 10 09:01 AM jcordes wrote:

> Lower polysilicon prices are counterintuitive for FSLR. Obviously
> this makes the panel makers more price competitive. You state;
> good conversion efficiencies, such as First Solar (FSLR). FSLR's
> conversion efficiency is among the worst in the market place. FSLR's
> only advantage is priceing to polysilicon, which is being eroded
> by the drop in poly prices.
>
> Your article is full of erroneous comments and conclusions.

Bullish on Solar Energy, Bearish on Solar Stocks

Great point. In any growth industry, margins continue to get squeezed until no player can make an "economic" profit (except monopolies), hence 25-40% margins are not sustainable in the long term.
Silicon producers are beginning to bring capacity online now after watching steady surge in demand for over four years in the solar industry. If that does not happen, STP will suffer as well, from their 10-K : "we cannot assure you that we will be able to obtain supplies from them [long-term suppliers] or any other suppliers in sufficient quantities or at acceptable prices"
FSLR, on the other hand, has long term supply (2-3 yrs) contracts for CDTe but CDTe has one of the lowest conversion efficiencies.

Bullish on Solar Energy, Bearish on Solar Stocks

An economist article, Bright Prospects, dated March 8th, 2007 published conversion efficiencies stats for the CDTe, CIGs, Sil etc. putting crystalline silicon on the top with 25+%.

www.economist.com/sear...

STP FSLR financials and efficiencies are quoted from their 10K 2006 and later quarterly statements. The data is obtained from the most recent filings.

Yes, there are a couple of typos.