Filed under: Deals, Products and services, Private equity

According to the Wall Street Journal [subscription required] Marlborough, MA-based 3Com Corp. (NASDAQ: COMS) is going private with the help of Bain Capital and Huawei Technologies for more than $2 billion — or $5.50 a share. 3Com is up 34% to $4.94 in pre-market.

3Com has been hobbled for most of this decade but it has a storied history. Its founder invented Ethernet — a way for computers to share information. It bought a company that made a very popular modem during the era when people dialed up the Internet on a telephone line. And with this acquisition came a technology which became the Palm Pilot — a Personal Digital Assistant (PDA) which was an indispensable appendage for dot-commers in the 1990s.

Unfortunately, 3Com’s financial position was weak — it lost $89 million on $1.27 billion in sales in the year ending June 2007 but it generated $58 million in cash. It couldn’t maintain its technology lead and it was surpassed by competitors in all its markets.

Continue reading 3Com (COMS) gone private

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Filed under: Google (GOOG), Ford Motor (F), Citigroup Inc. (C), Money and Finance Today

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Filed under: Indices, Market matters, Money and Finance Today, S and P 500

Many investors are feeling good about the fact that the S&P 500 index has had five straight winning quarters (assuming, of course, that share prices don’t fall more than 1.86% by today’s close).

Yet if history is any guide, odds are that the next three months won’t finish up the same way.

Over the past 25 years, winning streaks lasting more than four quarters have been somewhat rare. With the exception of the breathtaking 14-period run that began in the first quarter of 1995, there have only been two other occasions where prices rose for a fifth straight quarter.

The first was the streak that began in the final quarter of 1988, which was followed by a 3.81% decline in the first quarter of 1990. The second such streak began in the second quarter of 2003, after which prices fell by 2.30%.

Unless investors believe that we are entering another new stock market bubble, data from the past two-and-a-half decades suggests now is not the time to be feeling overly exuberant.

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.

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Filed under: Coca-Cola (KO), Market matters, Colgate-Palmolive (CL), Goldman Sachs Group (GS), Procter and Gamble (PG), Bear Stearns Cos (BSC), Stocks to Buy, Cramer on BloggingStocks

TheStreet.com’s Jim Cramer explains why lousy results from a U.K.-based firm bode well for American companies this reporting season.

Tate & Lyle’s loss is our gain. That’s the only way to think about the big decline in that U.K.-based sugar producer’s stock this morning on news that the currency translation from dollars to pounds will kill it.

The declining dollar is going to make some of these earnings in the next few weeks jump off the chart. They will be so much higher than people think they will be for the big exporters, particularly those to Europe (we don’t have much to go to Japan) that you are going to be blown away.

The big litmus test this earnings reporting period will be the exposure to these foreign currencies. We fret every day about the dollar, but it is a little ridiculous at this point — meaning the currency is way too low.

Nevertheless, a Procter & Gamble (NYSE: PG) (Cramer’s Take) will kill the numbers, so will a Coca-Cola (NYSE: KO) (Cramer’s Take). I know these are at 52-week highs, but we are now going to have to start looking at stocks that haven’t gone up that much this year. Take PG; it’s only up 9%. That gives it some room. Same with Colgate (NYSE: CL) (Cramer’s Take). Those still worth betting on; they can still run.

Oh, and don’t forget, for the purposes of next quarter, Goldman Sachs (NYSE: GS) (Cramer’s Take) will have more than 50% in earnings overseas. The firm is not going to report for while, but that’s still another reason to own it — and another reason to expect that a foreign company will take a stake in Bear Stearns (NYSE: BSC) (Cramer’s Take) before long despite the Buffett denial. If a stake is taken, I doubt it will be domestic.

RELATED LINKS:

• Jim Cramer’s Portfolios of the Week
• Cramer: Ignore Wal-Mart’s Drug Press, Buy CVS

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer was long Goldman Sachs.

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Filed under: Hilary On Stocks, Stocks to Buy

This is the third in a series of trend-spotting tips from Hilary Kramer’s newly-released book, Ahead of the Curve.

Another tip I make use of in my book is this: It pays to think like a detective! The key is to collect clues wherever they are and use them to come to a conclusion about how to solve the crime — or in this case, to solve the problem of how to make profitable investments.

This tip came into play the other day when I was walking down the street on a garbage day in New York. The bags from an apartment building were piled so high they’d spilled over to block the sidewalk. After navigating this minefield, I got to the subway, on my way out at my stop, I dropped my newspaper in a rubbish bin instead of recycling it — and noticed that the bin was full of other newspapers that should have been recycled.

Continue reading Covanta Holding Corp. (CVA): Follow your nose to the deal

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Filed under: Before the bell, Google (GOOG), Apple Inc (AAPL), Starbucks (SBUX), PepsiCo (PEP), Ford Motor (F), General Motors (GM), XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI)

Before the bell: Futures slip ahead of economic data, after Greenspan warns

The blogosphere is abuzz over Apple Inc.’s (NASDAQ: AAPL) iPhone. The company had said that hacked phones will not work following yesterday’s software update. Guess what? The company didn’t lie and depending on which unlocking program was used, certain modified phones no longer worked after they installed the software update. Many are furious. Is this going to be a PR nightmare? Will Apple fans actually speak out against the company?

According to Detroit News, Ford (NYSE: F) may seek even deeper cost cuts from the United Auto Workers union than those that the union agreed with General Motors (NYSE: GM) as these cuts it may not be enough for Ford, which is in worse financial shape than GM.

A college student, Ahmed Abdellatif Sherif Mohamed, who made a video showing how to detonate explosives using a remote-controlled toy and uploaded it to Google Inc.’s (NASDAQ: GOOG) YouTube is facing a terrorism-related charge. No doubt, debates will ensue on YouTube’s responsibilities and controls of such videos.

Starbucks Corp (NASDAQ: SBUX) and PepsiCo Inc (NYSE: PEP) said yesterday they were expanding their bottled coffee business into countries outside North America, including a first into China. No financial terms were disclosed or what other countries they are targeting, except that they could include those that do not yet have Starbucks stores.

Sirius (NASDAQ: SIRI) and XM (NASDAQ: XMSR) shares are declining in premarket action this morning after FCC Chairman discusses the proposed merger, saying there is a “higher burden” to examine the transaction carefully.

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Filed under: Before the bell, Earnings reports, Management, Alcatel-LucentADS (ALU), Economic data, Federal Reserve

U.S. stock futures were lower this morning ahead of several economic reports today indicating a weaker start for stocks. Comments by former Federal Reserve Alan Greenspan saying that the odds on the first U.S. recession in six years have increased due to the housing slump and its effect on consumer spending, didn’t serve to improve investor sentiment either. Greenspan said the chances of a recession are now “less than 50-50.” Investors will also stay tuned to speeches from Atlanta Federal Reserve President Dennis Lockhard and St. Louis Federal Reserve President William Poole are planned.

Yesterday, U.S. stocks closed higher despite weak data on the housing market. The Dow Industrial Average added 34.8 points points or 0.25%, and the S&P 500 and the Nasdaq Composite each closed 0.39% higher.

A barrage of economic news is scheduled for today:
- At 8:30 a.m. personal income and spending for the month of August is due. Income is seen growing 0.4% compared to 0.5% in July, while spending is expected to rise the same as last month, 0.4%.
- Just after the market opens, Septemeber Chicago purchasing managers’ index is due and is expected to tick down.
- At 10:00, the consumer sentiment index from the University of Michigan for September will be reported as well as August construction spending.

While weak reports lately have been seen as a sign the Fed will further cut rates, at some point the question will be asked if the Fed acted too late and the economy might still be headed toward a recession. A decline in consumer buying power could cause bearish sentiments to flare up again. This will be in focus as we are headed into earnings season next month and some see profit growing at the slowest rate in more than five years for some U.S. companies this quarter. The current forecast for earnings of Standard & Poor’s 500 Index members may rise an average of 3.2% from a year earlier, breaking a 20- quarter streak of gains exceeding 10%.

Overseas, Asian markets finished mixed and European markets are mostly lower.

Freddie Mac (NYSE: FRE) is paying a $50 million fine to settle civil securities fraud charges brought by federal regulators in a four-year accounting lapse.

Alcatel-Lucent (NYSE: ALU) Chief Executive Patricia Russo has been given a month to devise an emergency restructuring plan for the board following the third profit warning earlier this month. ALU shares are up 4.6% in premarket.

Accenture Ltd (NYSE: ACN) reported lower quarterly earnings on higher taxes, but its shares rose as revenue beat analysts’ estimates. Net income fell to $316.8 million, or 50 cents per share, from 497.2 million, or 56 cents per share, a year earlier. Revenue before reimbursements grew 29% to $5.11 billion from $3.97 billion.

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Filed under: Goldman Sachs Group (GS), Morgan Stanley (MS), Lehman Br Holdings (LEH)

When operations like Morgan Stanley (NYSE: MS), Lehman (NYSE: LEH), and Goldman Sachs (NYSE: GS) reported earnings, it was obvious that they had been hurt by being forced to mark down assets in private equity deals. Some had losses in their hedge funds or from the subprime morgage meltdown. But, the hope remained that global M&A markets would help drive earnings going forward.

It looks like that was a pipe dream. According to a survey by Dealogic covered in the Financial Times, M&A activity dropped 42% from Q2 to Q3 of this year. That deal activity may not come back. One Morgan banker told the paper: “If there is no recession, strategic acquirers will be active across sectors and mid-sized private equity deals will get financed,” That’s a big “if”.

Part of the problem is private equity. Those deals fell 68% during the third quarter. And, that business is not likely to recover soon, especially if credit markets remain volatile. These deals are only a modest amount of deal flow. That means that there could also be a drop-off in normal company-to-company M&A.

What the information means to investors in the big financial firms is that there may still be more downside on these stocks, and the downside could be considerable. At $62, Lehman’s shares are significantly down from their 52-week high. But, the low for the period is $49. It has been there once, and it could go back again.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Filed under: Competitive strategy, Intel (INTC), India, International Business Machines (IBM)

A chip company is an odd place to get advice on the US healthcare system. But, the people who build semiconductors are smart.

The US will lose thousands of jobs to low-cost countries unless companies reduce soaring healthcare expenditures urgently, Intel’s (NASDAQ: INTC) chairman Craig Barrett told the Financial Times. As the paper points out, Intel has not had much success selling its solutions to the healthcare industry, so perhaps its comments are just a way to get back at the doctors, insurance companies, and hospitals.

But, the comments may have the power of coming from a company that employees tens of thousand of people both inside and outside the US. Intel must constantly be weighing the total cost of supporting each person, balancing skills, resources, salary, and benefits.

Outsourcing functions overseas has been a big topic of debate of the last ten years. Companies like IBM (NYSE: IBM) send more work off-shore every year to places like India.

Intel may only be a chip company, but its seems to have good advice on healthcare costs.

Douglas A. McIntyre is a parter at 24/7 Wall St.

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Filed under: Deals, Law, Consumer experience, XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), News Corp’B’ (NWS), Dow Jones and Co (DJ)

Michael Copps, a member of the FCC, said that the tests for some upcoming mergers should be set higher. Two deals over which he showed special concern were the Sirius (NASDAQ: SIRI) merger with XM (NASDAQ: XMSR) and the News Corp (NYSE: NWS) purchase of Dow Jones (NYSE: DJ).

Mr Copps’ worries about Dow Jones are simple enough. He is troubled that Mr. Murdoch will have such a large concentration of media in New York

He shows even more interest in the Sirius plan. The Wall Street Journal writes that “as one of five FCC commissioners, Mr. Copps will cast a vote on whether the Sirius-XM merger and Tribune sale should be allowed to proceed.” Copps may want the satellite radio companies to give more guarantees on prices charged to consumers.

XM and Sirius stocks have both moved off lows as it appeared that approval for their merger looks more certain. The stocks are sill severely depressed. Copps comments may help push them down again.

While the satellite radio company merger may face more opposition than was anticipated recently, the firms still have a compelling argument about how competitive the marketplace is. They continue to lose money, and, without some change in their structures, their debt loads could sink the. Perhaps someone will point that out to Copps.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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