Under The Radar News - Thursday

by: SA Eli Hoffmann

Bear bottom? "A major bear market bottom seems to be developing, with a test of the January low likely to occur in the weeks ahead," Brown Brothers Harriman technical analyst Andrew Burkly says. "In addition to revisiting or slightly penetrating the prior low, I am also looking for a significant wave of negative investor sentiment as the second bottom occurs, thereby completing the technical parameters usually found at major cyclical lows," after which "heavy accumulation" usually begins.

Ambac just getting started. "Based on our estimate that Ambac will eventually absorb $11B of losses from insured CDOs and MBS related exposures, $1.5B of new capital at first blush does not seem like enough to fix the capital adequacy problem," JPMorgan says. "It is likely that another round of capital may be required this year to avoid downgrade." Securing its AAA rating "is a first step, but winning back customers that will have been using more stable competitors for a long period may prove to be a difficult, if not impossible, task."

'Government-sponsored' ain't good enough. Mortgage-backed debt obligations issued by Fannie Mae (FNM) and Freddie Mac (FRE) is plunging relative to Treasurys. Yields on notes paying 5.5% interest jumped by 10 BP to 2.23% above benchmark Treasurys, the most in more than two decades. The spread has widened for a fifth day, and is up 1.51% from the beginning of 2008. FNM and FRE are down 5.6% and 4.6% in early trading.

Ballmer goes ballistic. Sources say Microsoft (NASDAQ:MSFT) CEO Steven Ballmer is fuming over Yahoo's move yesterday to pre-empt a proxy fight by pushing off its shareholder meeting. Microsoft may alter its offer to $31/share cash-only, and is reportedly trying to convince 3% stakeholder Softbank to come out in favor of its offer. Ballmer is also miffed that Yahoo apparently talked with AOL (NYSE:TWX) but still refuses to sit down with MSFT.

So much for iPhone Flash. Apple's (NASDAQ:AAPL) Steve Jobs says Adobe's (NASDAQ:ADBE) Flash Lite Player is too slow to be useful on the iPhone. There are, however, rumors Jobs' tirade is a form of playing 'hard-to-get' in response to Adobe's pressuring Apple to use its PDF renderer. Sources say iPhone can run Flash Lite with its 'eyes' closed.

Bill Miller bets on Countrywide, Yahoo. Famed Legg Mason (NYSE:LM) investor Bill Miller -- who outperformed the S&P 500 for 15 years before trailing by 10% in 2006 and 12% in 2007 -- is placing high-stakes bets on takeover targets Countrywide (CFC) and Yahoo! (YHOO). He likes CFC whether or not the BofA (NYSE:BAC) buyout goes through, and thinks Microsoft (MSFT) needs to boost its offer to snag a much-needed Yahoo.

Citi: How low can it go? Shares of Citigroup (NYSE:C) are trading below book value, leaving its market cap at 66% that of Bank of America (BAC) and 87% of JPMorgan & Chase (NYSE:JPM). Then again, does anyone know what Citi's book value is?

Inside Google. Jonathan Moreland of InsiderInsights.com recommends selling Google (NASDAQ:GOOG) in the face of continued insider selling, declining share price and concerns that an economic slowdown will hurt Google's advertising revenue. When "momentum finally starts breaking down, see what the insiders do," Moreland says. "And if they continue to sell, that's when you act on the signal... The near-religious fervor behind the stock is likely to wane a bit in the near future, and I thank insiders very much for showing their extreme lack of confidence."

Game console prices may be dropping as soon as March 14.

India IT firms feeling pinch. Two large Wall Street banks (possibly Citigroup (C) and Merrill Lynch (MER)) recently cancelled IT outsourcing contracts, highlighting the extent India's IT industry is exposed to a U.S. slowdown. Average sales growth at firms such as Wipro (NYSE:WIT) and Infosys Technologies (NASDAQ:INFY) is about 21%, down sharply from more than 50% a year ago.

Ethanol makers' bad luck. While oil continues to post all-time record highs, so does corn. Soaring oil prices should boost demand for ethanol, but high corn prices are more than offsetting any benefits from the oil rally. Meanwhile, President Bush complained yesterday that ethanol demand was "beginning to affect the price of food. And so we got to do something about it."

Chevron trots out new refining effort. Chevron (NYSE:CVX) unveiled a new refining technology that converts ultra-heavy oil into clean-burning fuel. Called Vacuum Resid Slurry Hydrocracking, Chevron says the technology could significantly increase yields of gasoline, diesel and jet fuel from heavy and ultra-heavy oils.

Decoupling may become reality. Unless global commodity prices collapse, developing countries will likely weather a U.S. downturn better than ever before. Strong exports to emerging economies like China and growing domestic consumption, along with current-account surpluses, all mean developing economies are far less U.S. dependent than in previous U.S. recessions.

$200 Blu-rays a long way off. "I don't think $200 is going to happen this year. Next year $200 could happen. We'll be at a $300 rate this year. $299 will happen this year." -- Sony CEO Stan Glasgow. He also says Sony is not feeling any impact from a U.S. slowdown, and that the company is "working very hard" on an answer to Apple TV.

What CAN'T you do without? According to a recent survey, American's would be most loathe to give up their cell phone (51%). Next comes internet (45%), TV (43%) and their landline (40%). My how times have changed. 2002's numbers: Landline (63%), TV (47%), internet (38%) and cell phone (38%).

Sprint spinoff? Sources say Sprint Nextel (NYSE:S) has hired Morgan Stanley (NYSE:MS) in an effort to spin-off Nextel, with an announcement expected over the next 2-4 weeks.

Internet TV ads do better. NBC (NYSE:GE) says new research shows online audiences watch more full-length episodes of its programs, and remember the commercials better. NBC says there was higher brand recall for web-specific ad content now than in previous quarters, and that users found ads less intrusive than those on TV. Meanwhile, comScore data shows ABC's (NYSE:DIS) website serves up the most videos, while CBS (NYSE:CBS) is doing the best job of keeping viewers online: ABC: 47.3 million videos, 28 million minutes. CBS: 33.8 million videos, 104 million minutes. NBC: 25.3 million videos, 62 million minutes. Fox: (TWX) 1.4 million videos, 2 million minutes.