One Page Annotated WSJ Summary, June 12th

by: David Jackson
David Jackson
Seeking Alpha's flagship daily business news summary, gives you a rapid overview of the day's key financial news. It is published before 7:00 AM ET every market day and delivered to over 900,000 email subscribers.

Summary of selected articles from this morning's Wall Street Journal with comments on related stocks. Links are to the original WSJ article, which requires a paid subscription. Use this summary as a starting point for research; check the summary against the original before trading:

Big Companies Put Record Sums Into Buybacks

  • Summary: Companies in the S&P 500 spent over $100 billion buying back their own stock in Q1, up over 22% year over year. Buybacks have a dual message: companies view their stock as undervalued, but also can't find better investment opportunities. S&P 500 companies have 7.4% of their market value in cash on their balance sheets, the highest level in two decades.
  • Comment on related stocks/ETFs: "Exxon Mobil Corp. (NYSE:XOM), Microsoft Corp. (NASDAQ:MSFT) and Time Warner Inc. (NYSE:TWX) were the biggest buyers of their own shares during the first quarter, spending $14.37 billion combined". Other companies that recently announced large buy-back programs: Cisco (NASDAQ:CSCO) and Tribune (TRB). Negative comment on Broadcom (BRCM) in the article: it spent $94 million on stock repurchases in Q1, but its diluted share count was up 12% year over year due to options issuance. Broadcom is one of Jim Cramer's Dead Generals.

Latest Israeli-Palestinian Violence Threatens Leaders' Initiatives

  • Summary: A recent increase in violence between Israel and Palestinians in Gaza threatens Mr Abbas' plans to hold a referendum on a Palestinian state and Mr Olmert's plan to unilaterally remove Israelis from the West Bank. "If both the referendum and pullout plan fail... the situation could revert to the heavy fighting of recent years and perhaps worse."
  • Comment on related stocks/ETFs: There's no ETF that tracks the Israeli stock market, but there is a closed-end fund: the First Israel Fund (NYSEMKT:ISL).

Local Stations Struggle to Adapt As Web Grabs Viewers, Revenue

  • Summary: As advertisers move spending from TV to the Internet, the profits of local TV stations and the companies that own them are taking a hit. Auto manufacturers account for about a third of ad spending, and DaimlerChrysler cut its local TV ad budget by 13% in 2005 and Ford by 15%. Local TV stations are also being hit by competition from cable and satellite and a paucity of new hit shows. "A recent Pew Research Center study showed that 71% of adults 18 to 29 now get most of their news online, while 46% say they regularly watch local TV news."
  • Comment on related stocks/ETFs: The article focuses on the woes of one local TV channel, WOOD-TV, owned by Lin TV (TVL). Other stocks identified as victims of the decline of local TV are Viacom (NASDAQ:VIAB), News Corp. (NASDAQ:NWS), General Electric (NYSE:GE), Tribune Co. (TRB) and Gannett Co. (NYSE:GCI). Hearst-Argyle Television Inc. (HTV) is mentioned more postively.

Texas Instruments Shrinks Its Chips

  • Summary: TI says a new chip-making process using immersion lithography has yielded memory cells for storing data that are about 30% smaller than those projected by Intel. "Intel expects to deliver some 45-nanometer products by the end of 2007; TI projects initial production by mid-2008... Intel, at the same technical conference, is disclosing progress on another big change to chip manufacturing that may follow 45-nanometer technology... that could bring chips such benefits as a 45% increase in calculating speed, or a 35% reduction in power consumption at a constant speed."
  • Comment on related stocks/ETFs: Depspite the positive comments about Intel at the end of the article, TI's announcment will likely contribute to the negative sentiment on Intel's stock (NASDAQ:INTC). It's not over yet... Meanwhile, Ben Thomas makes the long case for Texas Instruments (NYSE:TXN) this morning.

Airbus A380 Faces Operating Limits

  • Summary: Aviation regulators are concerned about the safety hazards of the A380, Airbus' superjumbo airliner. They are considering unprecedented operating restrictions intended to protect nearby aircraft from the A380's turbulence.
  • Comment on related stocks/ETFs: Bad for Airbus, good for Boeing (NYSE:BA). Boeing's most recent conference call is interesting reading.

Noted Microsoft Blogger Scoble To Join a Podcasting Start-Up

  • Summary: Robert Scoble, Microsoft's best know corporate blogger, has quit. He's joing tech start up PodTech.Network Inc.
  • Comment on related stocks/ETFs: While this story has generated reams of anti-Microsoft articles on blogs, it will have no impact on the stock. Why? Because the bloggers hated Microsoft anyway, and most Microsoft (MSFT) investors haven't heard of Robert Scoble.

Energy Firms Turn to Pipelines, In Bet Gas Ports Won't Happen

  • Summary: In a bet that new liquified natural gas [LNG] tanker terminals won't get built on the East Coast, various companies are investing in pipelines. Donald Mason, an Ohio Public Utility Commissioner and chairman of the National Association of Regulatory Utility Commissioners' gas committee is quoted saying the LNG terminals won't be built so the pipelines should go ahead.
  • Comment on related stocks/ETFs: A JV between Royal Dutch Shell (RDSA) and TransCanada (NYSE:TRP) Corp. is tying to build an LNG terminal in the Long Island Sound. Kinder Morgan Energy Partners LP (NYSE:KMP) and Sempra Energy (NYSE:SRE) are jointly building a gas pipeline from the Rockies to Ohio. Kurt Wulff said in January that Kinder was overvalued.

Discover Credit Card Targets Small Firms

  • Summary: Morgan Stanley-owned credit card company Discover is launching a credit card aimed at small business owners that will pay 5% cash back on office supplies, 2% on gasoline and 1% on other purchases, and will allow business owners to write checks oin the account to merchants that don't take credit cards.
  • Comment on related stocks/ETFs: Not significant enough to impact Morgan Stanley's stock (NYSE:MS), but highlights the under-penetrated small business opportunity for the large publicly-traded credit card companies American Express (NYSE:AXP) and Mastercard (NYSE:MA). Mastercard's recent IPO was overshadowed by the Vonage disaster, but actually had far more investment potential.

HEARD IN ASIA: Spruced-Up Mitsubishi UFJ May Be Japan's Top Bank Play

  • Summary: "Some analysts say the decline in MUFG's shares has brought them back to bargain levels." Mitsubishi UFJ is the largest bank in Japan, has the largest loan book to take advantage of higher interest rates, and will likely raise its dividend. Recent government selling of the stock, which contributed to a 25% decline in the stock since April 7th versus a 16% decline in the Topix index, ended Friday.
  • Comment on related stocks/ETFs: US investors can buy Mitsubishi UFJ via its US ADR (NYSE:MTU). Japanese banking competitor Mizuho Financial Group is also soon to list on the NYSE.

FUND TRACK: Investors Flock To Mutual Funds With Lower Fees

  • Summary: The average expenses paid by investors on stock mutual funds fell 0.04 percentage points to 1.13% in 2005, and 90% of all stock-fund assets are now held in funds with below average expenses, says fund trade group Investment Company Institute. This proves that investors are opting for low-cost funds.
  • Comment on related stocks/ETFs: A critique of the article attacks the bias of the mutual fund industry's own trade group and instead suggests that retail investors park their savings in a portfolio of 5 ETFs that would probably cost less than 0.25% per year in expenses. The five are: the iShares S&P 500 ETF (NYSEARCA:IVV), iShares Mid Cap 400 Index ETF (NYSEARCA:IJH), the iShares Russell 2000 Index ETF (NYSEARCA:IWM), the iShares MSCI EAFE Index ETF (NYSEARCA:EFA) and the Vanguard Emerging Markets VIPERs (NYSEARCA:VWO).

AHEAD OF THE TAPE: Shop Till You Drop

  • Summary: Private equity firms are scanning the retail sector for possible acquisitions. Two groups of private equity firms are currently bidding for crafts retailer Michael's Stores (MIK-OLD). Other companies on the block include Jones Apparel Group (NYSE:JNY) and Federated Department Stores' (FD) Lord & Taylor. Some investors believe that Foot Locker (NYSE:FL) and Pier 1 Imports (NYSE:PIR) are also for sale.
  • Comment on related stocks/ETFs: Rick Konrad's discussion of private equity buyouts of retail stocks also named Jo-Ann Stores (NYSE:JAS) and A.C. Moore (NASDAQ:ACMR-OLD) as potential targets. Seeking Alpha published an excerpt from an interview with Ken Shubin Stein, manager of hedge fund Spencer Capital Management, in which he argued that Foot Locker (FL) was a bargain.

HEARD ON THE STREET: Marvel Defection Deals Blow to Shares

  • Summary: Late last month Marvel Entertainment (MVL) announced that the head of its film division, Avi Arad, was leaving to become an indendent movie producer and consultant to Marvel. Arad was pivotal to the company's plan to transition from a licensor of comic book characters to a producer of 10 comic book movies over the next decade, and was responsible for the Spider Man and X-Men series. Arad then sold 3 million shares of Marvel stock, and will still share in undisclosed upside from Marvel movies.
  • Comment on related stocks/ETFs: So Marvel's super hero has flown away. Travis Johnson's analysis of the pipeline and prospects for Marvel's own-produced movies was written before Mr Arad's departure. Will the WSJ article hit the stock today? Probably not, as most of the information was in the market already.

Seeking Alpha updates: See also the One Page Barron's Summary and the excerpt from John Hussman published this morning, and today's earnings calendar including estimates.