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  • Vringo-Google Trial Update - What Happened At Court Today

    I received the following update from a secondary source ("source") who is attending the trial today. Thought readers might find this useful.

    Court Update 1:45 pm lunch break
    I spoke to my source from the Courthouse personally 5 minutes ago.
    Both sides have completed closing arguments.
    My source plans to return to hear the Verdict.

    2:45 pm Court to read the charges to the Jury

    3:45 pm case goes to the JURY

    Source reports from Court Vringo (NASDAQ:VRNG) did a better job in closing arguments. Google (NASDAQ:GOOG) came across to source as arrogant telling Jury members what they should or should not include in deciding the case.

    Source said he felt the JURY was "NOT" as attentive during GOOG closing.

    VRNG had the last 10 minutes and again did a good job of summarizing the case very clearly. They said LYCOS [ per KEN LANG ] tried to get their search business going but ran into financial troubles early on. That does not warrant they should be cheated by Google (or words to that effect).

    In court earlier

    Vringo had graphs / charts showing the jury on average $27 million is owed to VRINGO per EACH Quarter GOOGLE has infringed [ they showed specific Rev numbers for each quarter].

    Today's VRNG Motion on Laches has not yet be ruled [ not sure when it will or if it will ] .

    Disclaimer: The present author does not attest to the truth of any of these statements made by a secondary source.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: GOOG, VRNG, long-ideas
    Nov 01 8:54 PM | Link | Comment!
  • Citigroup - The Future Ahead After Vikram Pandit

    In a move that surprised most analysts, Citigroup (NYSE:C) announced that the bank's CEO Mr. Vikram Pandit has resigned with immediate effect. The surprise announcement "raises tremendous questions" according to Michael Jones, CIO, Riverfront Investment Group. He went on to add that "It will be a headwind for the financial sector specifically if this proves that there's another major financial hiccup at a money-center bank."

    There was surprise over Pandit's resignation as the news of his resignation came only a day after the Wall Street gave a thumbs-up to Citi when its third quarter profits beat street expectations. What Adam Sarhan, the chief executive of Sarhan Capital in New York, found even more "shocking" and a question that needs to be answered is "why they didn't announce it with the earnings."

    Vikram Pandit has been Citigroup's chief executive since December 2007. His success story is one of a legion stories of immigrant executives who have been leading large American institutions. His departure, however, raises many questions, answers to which are not forthcoming yet.

    Vikram Pandit - A Quick Profile

    • India born, age 55
    • BS/MS in electrical engineering from Columbia School of Engineering and Applied Science, 1976-77
    • MBA, PhD (Finance) Columbia Business School, 1986; thesis entitled "Asset prices in a heterogeneous consumer economy," a research that examines the properties of asset prices in a multi-consumer, dynamic economy under uncertainty.
    • Joined Morgan Stanley (NYSE:MS) as an associate in 1983, worked with the company for the next two decades in various capacities, including Chief Operating Officer of Institutional Securities, a Division of Morgan Stanley and President of Institutional Securities. In September, 2000, he became Co-President of Institutional Securities, a subsidiary of Morgan Stanley.
    • Founded Old Lane, a hedge fund, with John Havens, 2006.
    • Old Lane purchased by Citigroup for $800 million; Pandit joins Citigroup management.
    • Worked as chairman and CEO of Citi Alternative Investments and subsequently of Citi's Institutional Clients Group. On December 11, 2007, became the Citigroup's new CEO replacing interim CEO Sir Winfried Bischoff.

    Career at Citigroup:

    In November 2007, Chuck Prince had resigned due to the unexpectedly bad third-quarter results, primarily due to losses related to collateralized debt obligation and mortgage-backed securities, what eventually came to be known as the subprime crisis. Mr. Pandit had the support of the then interim chairman of Citigroup, Robert Rubin, the effective successor to Chuck Prince. In the years that followed, here is how the company looked like:


    Citi accepted $45 billion in Troubled Asset Relief Program (TARP) funds in 2009, as a consequence to which Mr. Pandit testified in front of the U.S. House Financial Services Committee that he will take a salary of only $1 and no bonus until Citigroup returns to profitability. This was in response to the intense criticism from lawmakers regarding bonus payments and corporate expenses especially when they were getting billions from the government for reviving the economy - something that President Obama called "shameful" and the "height of irresponsibility."

    His resignation on Tuesday is a sudden ending of his "turbulent chapter at Citigroup".

    Citigroup After Pandit's Resignation

    According to a news report, Mr. Pandit may leave with a rich exit package. According to the most recent annual proxy filing by Citigroup, he is not eligible for a pre-negotiated severance pay, commonly known as a golden parachute.

    However, Mr. Pandit's sudden resignation has led to speculations about the future of USA's third largest bank and financial services giant. Speculations apart, it seems evident that Citigroup is "going to be a lot smaller." Analysts are predicting that the odds are in favor of "more cost cutting, more shrinking and more focus on boring, traditional banking, like making loans."

    During his tenure as CEO, Vikram Pandit cut businesses and jobs (from 375,000 to 262,000). From the largest bank in the U.S., Citibank (Citigroup is its parent company), with assets of $1.9 trillion, is now the third largest, lagging behind JPMorgan Chase (NYSE:JPM) ($2.3 trillion) and Bank of America (NYSE:BAC) ($2.1 trillion). Besides, Michael Corbat, the new CEO named by Citigroup, is not well known and analysts do not have any idea as to the direction in which he will take the company.

    However, as of now, it all seems stable as the stock market has not reacted negatively to the news of the resignation and the stock is up by 2.20% at last check.

    The Future Ahead For Citigroup

    As the chart above shows, Citigroup has a long way to go before it can attain a height where it was before 2007.

    The chairman of Citigroup, Michael E. O'Neill, is someone who is not willing to cede too much power to CEOs. His career has been marked by rehabilitating banks usually by downsizing them and sticking to their core businesses. He is known for immersing himself in the project he undertakes. However, he admits that he does "not have a one-size-fits-all approach." He will have to think of a new strategy because Citigroup is much larger than the banks he has headed before.

    While it is yet to be seen which approach Mr. O'Neill takes, the moot point is that the focus has to be on Citibank's core expertise. The bank needs to prune out sectors where it is losing money -focus on performers and outperformers and shed flab (underperformers).

    The bank also needs to be more open and forthcoming about its operations and income to its shareholders. Here is a list of what it has to do in the coming months:

    • Focus on international lending businesses that are consistent outperformers.
    • Prune or sell off Citi Holdings assets; this segment has assets worth $171 billion and is a major underperformer.
    • Citigroup's regulatory capital ratios must be improved.
    • Shrink its investment banking division, a regular underachiever since the 2007 crisis. Segment has $903 billion assets.
    • More disclosures to shareholders, especially related to profit from capital in investment banking division.

    In a nutshell, the bank needs to shrink a lot more than it already has. Its main focus needs to be on cost cutting and focus on what Daniel Alpert, managing partner of Westwood Capital, calls the "dull and boring" businesses of lending to companies and consumers.

    Mr. Pandit was instrumental in saving the bank from government ownership. The strong quarterly earnings report is another signal that the bank is on its way to recovery. It is now up to Mr. O'Neill and his CEO Michael Corbat to guide the Citi and return it to its lost glory.

    The duo form a pair of sorts. O'Neill has the reputation of a person who can resort to stringent measures. When he was head of Bank of Hawaii, he shut down 50% of its branches. Michael Corbat's work as Director of Citi Holdings in one of his previous positions gave him experience with this sort of corporate thinning the fat . If the two can work well together, the bank may see better days.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: C
    Oct 25 2:20 AM | Link | Comment!
  • Laggard Stocks In Up Market: SAVE, HNP, LCC

    Markets are trading up today, thanks to the generous stimulus package announced by the Federal Reserve on Thursday. Individual stocks are also doing well with Apple Inc. (NASDAQ:AAPL) touching yet another all-time high.

    Though, in Apple's case, it is because of the new shiny iPhone 5. According to the rumors, the phone is already sold out online. However, not every stock is as lucky as Apple. Even, in this overall up market, there are certain stocks which took a nosedive due to diverse reason. While it is good to notice winners, it is equally important to keep an eye out for losers. Taking account of tumbling shares not only lets you make decision about the stocks that need to be kicked out of your portfolio, but also provide valuable information about attractive entry points. So, let's have a look at the stocks which are going down today:

    Spirit Airlines Inc. (NASDAQ:SAVE): The airlines stock is trading 14.10 percent down at $16.89. Now this is one stock which certainly is not a good candidate for purchase, even at this relatively lower price point. The main reason behind the tumble is the recent traffic data released by the company. Spirit Airlines also gave gloomy revenue forecast, further triggering the decline. The company expects its total revenue per available seat mile for the quarter to fall by 2.5 to 4.5 percent. Though, Spirit Airlines blames Hurricane Isaac for this shortfall, analysts believe that there is overall weakness in the aviation sector. Spirit Airlines has seen its stock oscillating in the range of $10.73 and $24.75 in the past 52 weeks. However, despite being about 30 percent down from its highs, the stock is unlikely to provide you any healthy upside potential in the near future. Spirit Airlines seems be inundated with the bad news lately, as its stock has been downgraded from 'Outperform' to 'Market Perform' by equity research firm Raymond James. Another research firm, Dahlman Rose slashed the stock price target from $27 to $23. So, in case of Spirit Airlines, it is better not to catch the falling knife.

    Huaneng Power International Inc. (NYSE:HNP) While most of the utility company stocks decided to follow the general market trend and are in green territory, Huaneng Power International is down 6.33 percent. The stock is currently at $27.68, off its intraday high of $28.23. While the company recently announced completing its trial run for a new project, it also withheld announcing any dividend for the first half the year. Huaneng Power International also announced receiving approval for its Henan Huaneng Mianchi Cogeneration Power Plant. The company holds 51 percent stake in the project. So, while this new project sounds like a good news for the company and stockholders, I am less than impressed with other parameters of the stock. The company already has low dividend yield of 0.90 percent and high Price Earnings Ratio of 28.29, which makes it an expensive stock. Further, it is also trading close to its 52 weeks high of $29.97. Therefore, I am of the opinion that in absence of any compelling stimulant, the stock is unlikely to go enough high to yield substantial returns.

    US Airways Group Inc. (NYSE:LCC): This stock is yet another casualty of growing soft trend in aviation sector. US Airways Group lost 6.04 percent of its value today and its stock is currently trading at $10.58. Following Southwest's lead, US Airways Group also announced $10 per round trip fare increase for some of its sectors. The price increase is likely to put further pressure on traffic volume and the impact is clearly seen on the stock price today. While all the major airlines stocks are trading down, US Airways Group stock has taken the royal tumble. Unfortunately, the decline in price has come with equally strong volume. The stock has already traded 9.09 million shares, in comparison to its usual volume of 8.48 million shares. On the brighter side, the stock has been rated 'Overweight' by JPMorgan Chase, though its price target was marginally slashed from $17.50 and $17. Imperial Capital also chose to retain its Outperform rating for the stock, but cut the price target from $22 to $19. Despite these recommendations, I would retain my cautious stance about aviation sector in general.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: SAVE, HNP, AAL
    Sep 15 6:04 AM | Link | Comment!
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