Market Watch reports that Morgan Stanley is laying off 600 employees in its mortgage-related divisions as it consolidates mortgage operations in light of recent market changes.  Morgan Stanley owns and operates Saxon Capital which is one of the few remaining subprime lenders in the market place.  The move includes 500 state-side jobs and corroborates the recent implode-o-meter subscriber email detailing branch closings at East Coast Saxon offices.

From the article:

Morgan Stanley unveiled plans Tuesday to scale back its residential mortgage business, including cutting 600 jobs, as the investment bank responds to recent turmoil in the real-estate and home-loan markets.

…

“The industry has experienced a fundamental paradigm shift that will require banks to rethink product offerings and capital structures, and to provide greater transparency to investors in securities backed by pools of mortgages,” said Bruce Witherell, managing director and global co-head of the residential mortgage business at Morgan Stanley.

I have to say that from a corporate perspective limiting exposure to subprime loans in this market is a key strategic win.  As a front-liner I can tell you that subprime is looking, well, more subprime everyday.  The people looking for financing continue to be less credit worthy, more stretched financially, and in general terrible credit risks for banks.  Saxon, Citi and other remaining subprime lenders who have made fewer changes to their subprime product mix compared to  mortgage banks are going to continue to be susceptible to poor portfolio performance.   Every day that these guys stay open is another day that poor quality loans are moving through the system.

Saxon has been a last resort type bank where files that have been declined at multiple other institutions are sent to Saxon for a last-ditch shot at being approved.  That is never a good distinction for a mortgage bank to have; especially in a deteriorating market place.

Share This

Share This

The Carnival of Real Estate is a weekly celebration of the best writing in the real estate “blogosphere”. And this week the contest was held over at one of our favorite blogs, The Orange County Register’s Mortgage Insider blog. Out of 30 entries this week yours truly was one of the 3 winning entries with my post A Bail Out is Still a Bail Out by Any Other Name.

Thanks to Matt at the OC Register for recognizing Blown Mortgage and the work we do here. Here are the other two winners as well:

Spicing Up the Neighborhood
What really gets Web hits on Zillow.com? A house that’s a brothel, writes Diane Tuman on the Zillow Blog. I chose her post to start with a lighter note, and because it’s a titillating read. Also, Tuman gets right to the point, something essential in blogging:

The New Rochelle police routinely monitor Internet sites and saw an ad on Craigslist for “Grand Opening Special! Hot models, soft sensual touch…New Rochelle has Westchester’s first and only member’s only club for men and women…We offer role play, fetishes, light body rubs, body rejuvenation and dominatrix.”

When the police showed up, they busted a couple who are allegedly mortgage brokers. They were into house flipping (among other things, evidently) and were underwater with a few houses, including this one.

6 Reasons Why Downtown isn’t Over Built
Real estate blogs have become best known for one thing: the debate over a housing bubble. Although there is no disputing a slump in housing sales, the debate rages on over how long and deep the correction will go. As a journalist myself, I decided to highlight a contrarian view on how journalists are allegedly portraying the housing market – the charge is we overstate it to sell newspapers.

I found a somewhat local example among the submissions to the Carnival of Real Estate. Sales agent Denny Oh argues that despite press coverage downtown San Diego is not overbuilt with condos. Here’s three of his examples (let the debate roll on):

1) July of 2007 had 492 active resale listings Downtown – July of 2006 had 613. That’s almost a 20% reduction in active listings.

2) In early 2006, there were about 100 condos for sale at The Grande at Santa Fe – today there are only 38 for sale(out of 440).

* Of the homes currently for sale the average size is 1,521 square feet and the average asking price is $1,134,886 – $731/square foot.

3) The average waterfront condo in Downtown San Diego is priced around $750/square foot, but is closer to $1,000/square foot in other West Coast cities like Seattle, Vancouver and San Francisco.

A humble thanks to all of the readers of Blown Mortgage who help support the growth of this blog and amazing community of participants. The winning post was actually an email commentary to our list subscribers; if you want to receive in-depth Blown Mortgage commentary simply click here subscribe to our email list.  Remember, if you receive blog posts via email you may not be on our email distribution list (because technology is not so agreeable always).

Share This

Share This

Filed under: Television, Google (GOOG), Interviews, Next big thing, Viacom (VIA), Media World, Videos

While television still rakes in billions, executives are getting nervous. What should be done about upstarts like Google (NASDAQ: GOOG)’s YouTube?

Well, in the case of CBS, the company is trying some experimentation. Its latest venture is called “EyeLab,” according to a piece in the Wall Street Journal (subscription required)

CBS thinks that small videos and montages are the best approach for the Web. So, with EyeLab, CBS will create new content as well as splice in existing clips to develop cool videos. What’s more, the video clips can also be effective vehicles to promote television shows, such as CSI and NUMB3RS.

To get some perspective on things, I talked to Chase Norlin, who operates Pixsy, which is an online video platform. According to him:

“This represents a step in the right direction but ultimately two more powerful forces will likely push CBS to tighten their strategy: 1) Getting short video content online doesn’t equal audience. Consumers want access to everything in one place, which points to the success of YouTube; 2) The emerging trend of semipro and pro content created specifically for the web is going to be bigger than people realize. Efforts like Deca.TV, Vuguru, and others have the potential to grow rapidly if they can create breakout hits at low cost.”

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Permalink | Email this | Linking Blogs | Comments

Share This

Filed under: Major movement, Forecasts, Internet, Rants and raves, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL), eBay (EBAY), Berkshire Hathaway (BRK.A), Next big thing, Nokia Corp. (NOK), News Corp’B’ (NWS), Serious Money, Headline news, Garmin Ltd (GRMN)

Today Google Inc. (NASDAQ: GOOG) is the top Internet search and advertising property there is — No Question! Yesterday it was something else. Why do investors believe that everything now ends with Google? Have we already reached the end of the internet revolution. Maybe we just think Google has locked up the next stages as well.

Yahoo Inc. (NASDAQ: YHOO) started with two graduate students from Standford University and was all the rage. Google started with two graduate students from Stanford University and now it is all the rage. Do we think Stanford is running out of bright graduate students all of a sudden? I would call them and make an inquiry but surely they would not take me seriously.

Has Google perfected Internet advertising? I don’t think so, do you? Will Yahoo, Microsoft Inc. (NASDAQ: MSFT), eBay (NASDAQ: EBAY), News Corp (NYSE: NWS) and all the international players concede an inch of ground more than temporarily?

I am not saying that Google won’t eventually conquer the Internet world, (because I do not know) but this feat is by no means as certain as the market currently seems to believe: driving the price of GOOG up $95 per share as I write this story, on no news, in about eight weeks.

Yesterday Nokia Corp (NYSE: NOK) announced a deal that may have serious repercussions for two other very high flyers, Garmin LTD (NASDAQ: GRMN) and Apple Inc. (NASDAQ: AAPL), as reported here by my colleague Peter Cohan. There will be competition even if it has not risen to the top yet and we do not have clear visibility how it will come about.

Last year I railed against all the ridiculous Google share price predictions and made my own valuation, which turned out to be less than 10% off. Now I think it has gotten out of hand again.

Google may have a great company, service, products, market share, management and many of the other characteristics that strong companies and stocks display, but I am not sure it has a very wide moat. Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) has been buying Burlington Northern Inc. (NYSE: BNI) and that has the strongest of moats. Google has no comparison by any stretch of the imagination. Google has greater growth opportunity for sure…and it also has the possibility to come crashing down when you least expect it!

To find potential opportunities and verify my track record read Chasing Value or Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He is on the advisory board of internet start-up CircleBuilder.com.

Permalink | Email this | Linking Blogs | Comments

Share This

Filed under: SEC filings, Management, Insiders, Google (GOOG)

When the CEO of one of the most-watched companies on the planet accelerates his stock sales, people pay attention.

This is what is happening with Google, Inc. (NASDAQ: GOOG) CEO Eric Schmidt, who has sold $1.4 billion worth of stock in under three years with the search king. According to the San Jose Mercury News, “Between Wednesday and Friday, Schmidt filed a series of Form 4s disclosing that he sold 105,739 shares at prices ranging from $563.40 to $571.50 per share to collect $59,968,220.”

Is this part of his normally scheduled portfolio divesting strategy, or is Schmidt cashing out before Google shares come crashing down? Although Schmidt, like many execs, sells shares on a scheduled filed with the SEC, we can’t judge the guy for Google shares being near the $600 level at this point, right? Although Google shares may come crashing down to reasonable levels at some point, they do stand at over $582 today, within shouting distance of the ill-famed $600 price point. Is Google really worth that much? That question has been bandied about many times recently over the last year, and here we are.

When Schmidt signed on to lead the rag-tag Google team with founders Larry Page and Sergey Brin, he probably had no idea what would transpire. However, the behemoth now controls access to so much information it would boggle the average mind. In a world of instant gratification, Google serves up a tasty dish of information billions of times per day around the world, satisfying the needs of business, government and consumers alike.

For that kind of exponential growth in such a short time, perhaps Schmidt’s leadership is worth the billion-plus in stock he’s sold since 2005. Is he worth it? You decide.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Filed under: Newspapers, Magazines, Google (GOOG), Microsoft (MSFT), General Motors (GM), AT and T (T), AMR Corp (AMR)

MAJOR PAPERS:

• Under pressure to improve results, AMR Corporation (NYSE: AMR), the parent of American Airlines, will prepay $545M in aircraft debt in the fourth quarter, cutting its annual interest expense by $25M, reported the Wall Street Journal.
• AT&T (NYSE: T) and India’s Mahindra Telecommunications Private LTD have jointly applied for a unified access service license in India to provide wireless service, according to the Wall Street Journal.

OTHER PAPERS:

• The New York Times reported that the tentative contract between General Motors Corporation (NYSE: GM) and the United Auto Workers union would allow GM to close two plants, and possibly shut down several other facilities, according to a copy of the agreement posted on the Internet.

WEBSITES:

• According to the BetaNews Web site, Microsoft Corporation (NASDAQ: MSFT) will reportedly hold an event today to launch the second generation of its Zune music players.
• Google Inc’s (NASDAQ: GOOG) AdSense system that now reportedly allows people in Malaysia to make payments through Western Union Company (NYSE: WU) could become a “quasi bank,” according to Bear Stearns analyst Robert Peck, reported CNet.com.

Permalink | Email this | Linking Blogs | Comments

Share This

Filed under: Before the bell, International markets, Earnings reports, Deals, Products and services, Google (GOOG), Yahoo! (YHOO), Ford Motor (F), General Motors (GM), Market matters, Palm Inc (PALM), Economic data, Housing

U.S. stock futures are indicating this morning that the markets may continue yesterday’s rally and start the session higher. After the Dow Jones Industrial Average closed at a record high yesterday, this morning investors will focus on housing and car and truck sales.

Yesterday, the start of the fourth quarter, U.S. stocks rallied with the Dow reaching record highs, on hopes of future rate cuts. Huge write downs announced by banks also helped sentiment as many were hoping these mean the credit crisis is coming under control and being dealt with. The Dow industrials gained nearly 192 points to close at a new record 14,0857, having hit an intraday high of 14,115. This 1.38% climb was matched by the Nasdaq Composite and the S&P 500 with 1.46% and 1.33% respective advances of their own.

Only August pending U.S. home sales will be released today at 10:00 a.m. and sales are expected to show a further decline.
Car makers will report September car and truck sales with Honda the only manufacturer expected to show year-over-year gains, according to MarketWatch, but the overall industry is starting to stabilize after car makers experienced a tough summer in the showrooms due to the sluggish economic climate. According to the average estimates of seven analysts in a Bloomberg survey, however, Ford Motor Co. (NYSE: F) and Chrysler are expected to post 15% and 5.9% declines in September U.S. sales and GM (NYSE: GM) a 3% increase.

Overseas, Asian markets rose to record highs with Hong Kong’s Hang Seng Index closing above 28,000 points for the first time, Australia, Singapore, and Indonesia also reaching records. European stocks continued their advance today for the second day in a row, boosted by gains from the banking sector and solid results from British supermarket giant Tesco.

Palm Inc. (NASDAQ: PALM) shares fell nearly 5% in after-hours trading yesterday after the company reported a a small loss in its fiscal first quarter and forecast lower-than-expected results for the current quarter. As Palm continues to struggle, rivals Apple and RIM’s performance has been phenomenal. In the quarter Palm sold 689,000 Treos, up 21% from the year-ago period. It lost $841,000, or a penny per share, in the first quarter on revenue that rose to $360.8 million, 1% above the year-ago period. Excluding charges, Palm would have earned $9.7 million, or 9 cents per share, beating analysts expectations. But Palm also issued a weak outlook.

TD Bank Financial Group (NYSE: TD) said it will acquire Commerce Bancorp Inc. (NYSE: CBH) in a stock-and-cash deal valued at $8.5 billion.

Yahoo Inc. (NYSE: YHOO), in yet another attempt to gain back some market share from rival Google Inc. (NASDAQ: GOOG) in internet search, has retooled its online search engine to make it more helpful and engaging.

Permalink | Email this | Linking Blogs | Comments

Share This

Filed under: Launches, Industry, Consumer experience, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)

Yahoo! (NASDAQ: YHOO) is releasing a major upgrade to its search engine technology. The company calls the new version an improvement, but only time can tell whether that is accurate. According to the FT the product promises “more relevant answers to queries and integrates audio, video and photos into its results pages.” Microsoft (NASDAQ: MSFT) and Ask.com have also released similar upgrades to their search products.

Yahoo! almost certainly spent a huge sum of money and precious engineering resources to bring the new product to market, but the company is in the unenviable position of launching a new version of its technology that is not likely to get it any additional marketshare. In other words, the company is running hard to stay in place.

It may be notable that the Yahoo! search improvement comes after those from Microsoft and Ask.com. It is a sign that being first to market in the most profitable part of the internet business is no longer prized because of Google’s (NASDAQ: GOOG) huge lead.

For beaten down Yahoo!, a better mouse trap is not terribly valuable if there are no mice to catch.

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

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Filed under: Forecasts, Bad news, Consumer experience, Competitive strategy, Dean Foods (DF), Agriculture

The news just continues to be “decidedly less than stellar,” (to put it diplomatically), regarding Dean Foods Co.’s (NYSE: DF) business execution.

Dean Foods cut its full-year EPS estimate to about $1.25 versus the Reuters consensus estimate of $1.47 — citing a consumer pull-back prompted by rising dairy prices at the retail level.

If was the second time this year that Dean Foods had cut full-year earnings estimates. In a statement, CFO Jack Callahan said the company expects an oversupply of organic milk to continue to affect results for the balance of this year and into at least the first half of 2008. In addition, overall sales have softened as consumers adjusted their consumption habits to cope with record-high food prices, Callahan said.

Continue reading Dean Foods (DF) cuts earnings guidance, again

Read | Permalink | Email this | Comments

Share This

Filed under: Major movement, Forecasts, Internet, Rants and raves, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL), eBay (EBAY), Berkshire Hathaway (BRK.A), Next big thing, Nokia Corp. (NOK), News Corp’B’ (NWS), Serious Money, Headline news, Garmin Ltd (GRMN)

Today Google Inc. (NASDAQ: GOOG) is the top Internet search and advertising property there is — No Question! Yesterday it was something else. Why do investors believe that everything now ends with Google? Have we already reached the end of the internet revolution. Maybe we just think Google has locked up the next stages as well.

Yahoo Inc. (NASDAQ: YHOO) started with two graduate students from Standford University and was all the rage. Google started with two graduate students from Stanford University and now it is all the rage. Do we think Stanford is running out of bright graduate students all of a sudden? I would call them and make an inquiry but surely they would not take me seriously.

Has Google perfected Internet advertising? I don’t think so, do you? Will Yahoo, Microsoft Inc. (NASDAQ: MSFT), eBay (NASDAQ: EBAY), News Corp (NYSE: NWS) and all the international players concede an inch of ground more than temporarily?

I am not saying that Google won’t eventually conquer the Internet world, (because I do not know) but this feat is by no means as certain as the market currently seems to believe: driving the price of GOOG up $95 per share as I write this story, on no news, in about eight weeks.

Continue reading Serious Money: Google (GOOG) has no moat — beware of false prophets

Permalink | Email this | Comments

Share This