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TWM Today: Wall Street

May 31, 2011 1:08 PM ETGS, AAPL, NFLX
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.
Goldman Dodges a Libyan Bullet ~ Inside of Goldman Sachs (GS) there is one unexpected reaction to the news Tuesday morning about the firm’s dealings with Libya: relief.

Goldman invested $1.5 billion for the Libyan sovereign wealth fund in 2008, according to a report in The Wall Street Journal.  It lost 98% of the money.

In an effort to placate outraged Libyan officials, Goldman executives attempted to sell preferred shares of the firm to Libya.

And this is where the feeling of relief comes in. "The last thing we need right now would be headlines reading ‘Vampire Squid Profits Funding Libyan Dictator,’” one senior Goldman investment banker told NetNet. (We agreed not to identify him, because bankers are not really supposed to talk to reporters, except under very limited and controlled circumstances.)

The United States has been bombing Libya for months—and Gadaffi is back on the list of official villains.

But back when Goldman offered Libya a preferred equity stake in the firm, Libya had spent years on the list of foreign governments with which it was acceptable for US companies to do business. After years as a pariah nation, Libya was being brought back into the fold of the respectable international community.

Goldman has been stung again and again with bad publicity, much of it stemming from how the firm maneuvered itself through the mortgage meltdown and financial crisis. Goldman has been accused by the SEC of defrauding customers—a lawsuit it settled for $500 million. It is reportedly expecting federal subpoenas in connection with its mortgage-related business.

“Finally, we dodged a bullet,” another person at Goldman said in reaction to the Libya news. (CNBC)

Home Prices in 20 US Cities Fall to 8 Year Low ~  Home prices dropped in March to the lowest level since 2003, showing housing remains mired in a slump almost 2 years into the economic recovery.

The S&P/Case-Shiller index of property values in 20 cities fell 3.6% from March 2010, the biggest year-over-year decline since November 2009, the group said today in New York. At 138.16, the gauge was the weakest since March 2003.

A backlog of foreclosures poised to reach the market means prices may stay depressed, dissuading builders from taking on new-home construction projects. Unemployment at 9% and stricter lending conditions are signs that any recovery in housing may take years.

“With the foreclosure pipeline still full to bursting, it’s hard to see this downward pressure on prices abating,” said Paul Dales, a senior U.S. economist at Capital Economics Ltd. in Toronto. “I wouldn’t be surprised to see prices continue to fall this year and maybe into next year.”

Economists surveyed by Bloomberg had forecast a 3.4% decline from a year earlier, according to the median forecast of 27 economists surveyed. Estimates ranged from declines of 4.9% to 2.8%. (Bloomberg)

Madoff Victim Seeks Divorce Do-Over ~ After 33 years of marriage, Steven Simkin and Laura Blank divorced in 2006. They agreed to split their considerable wealth equally. She got the apartment on the Upper East Side; he got the house in Scarsdale, N.Y.

More than 2 years later, Ms. Blank received a voicemail message that stunned her: Mr. Simkin wanted to revise their settlement. She refused, and he sued.

While divorce agreements are generally ironclad and rarely rescinded, this challenge has now reached New York’s highest court. Deeply divided appellate justices requested what is considered an unusual review of settled law involving contracts.

What made Mr. Simkin’s call for a do-over even remotely possible has its roots in Bernard L. Madoff’s ponzi scheme.

When the couple split their assets evenly, the largest chunk of money was invested with Madoff. Mr. Simkin kept much of his funds in the Madoff account, which was held in his name. Ms. Blank, who said she had no interest in investing with Madoff, received her settlement proceeds in cash.

Shortly after Madoff admitted wrongdoing in December 2008, Mr. Simkin, a lawyer at one of the country’s most powerful law firms, Paul, Weiss, Rifkind, Wharton & Garrison, filed court papers to drastically alter the terms of his divorce settlement. Ms. Blank, he argued in the lawsuit, should be required to turn over millions of dollars that she had received in their settlement to make up for the substantial losses he had sustained in the fraud. (NYTimes)

Steve Jobs to Kick off Apple Meet, Launch iCloud ~ Apple Inc (AAPL) Chief Executive Steve Jobs, who spent months on medical leave, will open an annual developers' conference next week showcasing the iPad maker's latest computer software and a new cloud computing service.

Apple's shares rose almost 2% after it said on Tuesday that Jobs and a team of executives will kick off the June 6 conference with a keynote speech, without making clear exactly what role Jobs would play or if he is returning from medical leave.

An appearance by Jobs, a survivor of a rare form of pancreatic cancer, would mark one of the few occasions he has appeared in public on the company's behalf since he went on his third medical leave -- for an undisclosed condition -- in January.

"It's a good sign he's healthy enough to be there and participate," Pacific Crest Securities analyst Andy Hargreaves said, but he added that "it's not a huge surprise" because of the executive's appearances at other events.

Apple said it plans to unveil software upgrades at the conference including Lion, the eighth major release of its Mac OS X computer operating system, and iOS 5, the next version of its mobile operating system used in products including iPhone and the iPad.

The company said it will unveil a new cloud-based service called iCloud, which will offer remote computing power and data over the Internet. (Reuters)

Netflix Ramps Up Online Video With Hit TV Shows ~ It's official: Netflix's (NFLX) glory days as a DVD-rental-by-mail provider are over.

After rising for 14 years since its founding, DVD mail shipments will drop this year, CEO Reed Hastings told shareholders recently.

"Our focus is really on streaming at this point," he said in a recent question-and-answer session following the release of Netflix's first-quarter earnings.

And how. To feed video streams to its soaring number of subscribers — over 23 million at last count vs. 14 million a year ago — it's been spending like mad to add content.

It recently won exclusive syndication rights for reruns of the hit TV series "Mad Men" and agreements to stream reruns of other top-rated shows such as "Glee" and "Sons of Anarchy."

It also cut a deal with CBS to stream shows such as "Medium."

And it plans to license, in exclusive rights, the premier of a new TV series planned for late 2012, "House of Cards," based on a popular BBC series. (Investors.com)



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