Filed under: Analyst reports, Management, Google (GOOG), Employees, Gap Inc (GPS), Options, Entrepreneurs

Google Inc. (NASDAQ: GOOG) recently trading up $15.29 to $609.20.

GOOG is expected to report earnings per share (EPS) on October 18th. GOOG October at the money 580 straddle is priced at $32.10. GOOG October option implied volatility of 38 is above its 26-week average of 27 according to Track Data, suggesting larger risk.

The Gap Inc. (NYSE: GPS) CEO Glenn Murphy hosted a meeting with analysts on October 5th.

Smith Barney says “Mr. Murphy is focused on making the company gets an adequate return on its investments. This includes a focus on the expense of the business. We suspect there will be continued focus on moderating the cost structure and assessing various cost components, including marketing. We think the real estate portfolio is under review.” GPS over all option implied volatility of 31 is near its 26-week average according to Track Data, suggesting flat price risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Filed under: Rumors, Consumer experience, Google (GOOG)

Google (NASDAQ: GOOG) is amassing a huge staple of power over information and advertising these days. The company’s acquisition of YouTube last year and the pending DoubleClick purchase are set to begin creating a massive information use overlord to much of the global internet audience. With that, you have to ask yourself one question: Do you feel lucky?

I’ll pass over the Google-esque and Dirty Harry pun jokes there and say that Google wants every customer to feel lucky using its services. Instead of trying to dominate the internet portal landscape, it’s settling for providing advertising for any online venue possible in order to take a small cut of all those billions of transactions. That’s a tad more profitable than trying to offer every possible feature under the sun (like Yahoo! in the last six years) while not knowing what will stick to the wall and what will fall down. Better to just offer ads everywhere possible and stick to that.

But, there’s more to the Google phenomenon-in-progress than advertising domination. Google’s YouTube was featured this year as a platform to let ordinary citizens interact with presidential hopefuls set for next year’s election (just over a year from now). Ordinary netizens could whip out that cellphone camera or digital videocam and send a question to a presidential candidate. Would that have been possible without YouTube? Perhaps, perhaps not. But, when Google’s services start to allow communication of that magnitude, there’s something rumbling going on in the world. The larger question is, can Google continue to “do no evil” while becoming omnipresent everywhere in our lives?

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Filed under: Products and services, Google (GOOG), Berkshire Hathaway (BRK.A), S and P 500, DJIA

Google Inc. (NASDAQ: GOOG) hit $600, the latest of a long series of hurdles that skeptics including yours truly didn’t think was possible. It’s only a matter of time before they move even higher.

The company continues to chug along even in volatile markets. The stock is up about 30% year to date, eclipsing rival Yahoo! Inc. (NASDAQ: YHOO), which gained 9% during the same period, and Microsoft Corp. (NASDAQ: MSFT), which is little changed.

Interestingly, the stock didn’t stay at $600 for too long, hitting a psychological barrier. Last I checked, the shares traded at $596.65. I think investors will soon get over their unease and push the stock even higher.

The question is how high? What’s the next hurdle for Google? Is it $700? $800? $1000? Henry Blodget recently upset the Internet establishment by arguing that Google could reach $2,000 over the next few decades. Why stop there?

Will Google’s stock ever top Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A) which now trades at the princely sum of $120,800? I am not sure if this will ever happen but the possibility is certainly intriguing. The company reports earnings October 18.

No doubt the faithful are waiting on pins and needles until then.

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Here is an interesting video of Senator Chris Dodd (D - Connecticut) outlining his proposed legislative changes to improve the plight of homeowners who are currently falling victim to the declining housing market. (h/t Housing Doom)

Two thoughts here:

1. Dodd doesn’t address homeowner responsibility in the current fiasco.  Apparently consumer responsibility is not a part of the market mess; and people who made bad decisions shouldn’t have to face the music.  Standard.
2. Dodd says it’s the brokers who are the ones who caused the disaster that is now the housing market.  He claims that brokers, who position themselves as financial advisers, duped homeowners in to bad loans by jacking up the interest rates.  No comment on lenders, apparently lenders didn’t have anything to do with this mess either.

First of all his rambling thoughts and conjectures show a lack of understanding of the mortgage market; but we can forgive him for that, because most politicians are speaking out of their *ss on this issue too.  But the main problem is that he blames mortgage brokers for things that, while mortgage brokers are certainly guilty of, so are the banks and lenders!

Banks and lender originators were busy jacking up rates along with the rest of the brokers.  Yield spread premium isn’t just a broker thing; its a loan thing.  I hope Senator Dodd “hears” that the problems are systemic.  It’s not just brokers, or banks or Wall Street - it’s everyone.

One might wonder if it’s a lack of understanding that makes him pick on brokers instead of lenders until you look at his campaign financing.  Then it is clear why he picks solely on brokers; the banks and lenders are busy giving bucket-loads of cash to this guy.

Trust me, I’m all for industry reform; but I am not for picking on the little guy just because they aren’t filling campaign coffers.  Brokers, lenders et al have the same amount of blood on their hands as the next guy in this fiasco.  Let’s take an objective look at the problem, instead of looking for scapegoats - there are plenty of those wherever you choose to look.

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hat tip keith and thanks to our supporters at first baptist:

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You know you are living in bizarre times when Kevin Federline looks like a model parent in comparison to his ex-wife.  So it may come as no surprise to most Californians that some folks are pulling out all the stops in getting their homes sold.  Inventory is increasing on a daily basis.  With this increase we are seeing a drastic jump in short sales and foreclosures.  More and more lending institutions will be announcing layoffs in the upcoming months.  In a few days, we will have the 3^rd quarter NOD results and we can all guess where they will be heading.  Why are people shocked?  All you need to do is attend a few open houses here in Los Angeles County and the warning signs will be flashing bright red.  Desperate times call for desperate measures.  With today’s home, we see what must be the smallest five bedroom home in the entire Los Angeles region.  Today we salute you Pico Rivera with our Real Homes of Genius Award.   

What is 856 square feet, has 5 bedrooms, and cost $300,000?  Give up?  It is a home in Pico Rivera!  Now you may be scratching your beautiful scalp and asking yourself, “how in the world can you get 5 bedrooms out of 856 square feet?”  Aside from this perplexing riddle, this home is listed as a 5 bedroom and 1 bath so there does exist an answer.  The current owners have been kind enough to warn us about the dog as you can tell by the sign nestled on the black picket fence.  The door is open, welcoming anyone and everyone in – that is if the dog hasn’t chased you out of one of the five rooms.  We must realize that life is grand when you can ask for $300,000 for a 856 square foot home in Pico Rivera.  So let us take a look at the sales history of this gorgeous piece of paradise:

Sale History

02/08/2001: $135,500

04/04/2000: $85,000

When we look at history we learn a lot.  First, we learn that yes there was a time in California legend that homes sold for less than six-figures as early as the start of the millennium.  But that time has passed since we are now swimming in the great barrier reef of subprime sludge that has jaded any fundamental economic price of housing.  This home is now selling for $165,000 over the final sale price in 2001.  This wouldn’t be such a big deal aside from the fact that it sold for $135,000 in 2001!  This place went up $27,500 per year for six years straight.  A record as great as John Wooden’s UCLA NCAA championship run.  Forget about maxing out the 401(k), we need to convert every single home into a five bedroom money machine.  Since we are finally starting to examine fundamentals, people actually care about, hold on to your undies, income!  So let us take a look at the family income for people in this area:

 
Average Family Income:  $55,000

So let us assume that a typical family in this area was to purchase this home.  What would their monthly budget look like?

PITI:  $2,208 (5 percent down payment, 30 year fixed)

Net take home pay:  $3,689

So we are starting to make sense now!  At this rate, housing only consumes 57 percent of their monthly budget.  We have seen other Real Homes of Genius that ate up to 90 percent of monthly take home pay.  As icing on the cake, we are told that this place has a really large backyard.  With our trusty free satellite imagery systems, let us take a look at what they are talking about:

Yes, big back yard and five bedrooms.  What more do you want?  

Today we salute you Pico Rivera with our Real Homes of Genius Award.

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Filed under: Internet, Microsoft (MSFT), Yahoo! (YHOO), General Electric (GE), Interviews, Next big thing, Small business

The social web - which allows everybody to participate - got a boost this week. That is, MSNBC.com, a joint venture between Microsoft (NASDAQ: MSFT) and General Electric (NYSE: GE), agreed to buy Newsvine, a news site that allows for voting, comments and so on.

However, as the social web expands, it gets difficult to follow things. While a variety of services track blogs, there’s not much in terms of following comments.

Well, that’s what coComment is focused on. “Think of us as the Digg for comments,” said Kristina Serafim, VP of Marketing at coComment, in a BloggingStocks interview.

And the site is growing. There are more than 550,000 users so far.

“User-generated comments about you or your company are likely to be fragmented across different sites, such as blogs, Yahoo (NASDAQ: YHOO), and so on,” said Serafim. “But with coComment, we essentially put comments into a conversation.”

Yes, the site is free, although coComment has plans for monetization. “There are display ads. Or, if users don’t want them, they pay a fee for an ad-free environment. We also see opportunities for using the site as a large focus group.”

And with the power of social media growing, I can see where companies will want to call on coComment for some help.

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.

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Filed under: Earnings reports, Bad news, Market matters, Citigroup Inc. (C), Merrill Lynch (MER), Housing

Merrill Lynch (NYSE: MER) took the record on Friday when it announced that it would take a $5 billion hit to third-quarter earnings because of losses in its mortgage-securities business. Today, JP Morgan Chase & Co. (NYSE: JPM) and Credit Suisse Group (NYSE: CS) cut their ratings of MER. The next three hardest hit by the subprime mortgage mess are UBS (NYSE: UBS) ($3.4 billion), Citigroup (NYSE: C) ($3.3 billion) and Deutsche Bank (NYSE: DB) ($3.1 billion).

This is certainly a race Merrill Lynch did not want to win and it’s been hit hard. MER is dropping fast and is now down $18.21, 19.6% from its high of $92.86 on May 29. At 11:30, MER was selling at $74.65. Why is MER being hit so hard? Well it told investors just three months ago that its “exposure was ‘limited’ and ‘contained,’” according to a report in the Wall Street Journal.

Heads did roll on this miscalculation. Merrill Lynch fired its top credit-market executives, Osman Semerci and Dale Lattanzio on Friday, the Journal reported. The Journal says CEO E. Stanley O’Neal told employees he shared the blame for Merrill’s problems and said, “While market conditions were extremely difficult and the degree of sustained dislocation unprecedented, we are disappointed in our performance in structured finance and mortgages.” And he added, “I missed it.”

Boy did he miss it, as did many others in the financial world. The big question yet to be answered is what will happen to the investors who hold mutual funds or money market funds whose assets include these mortgage securities. I haven’t seen any analysis discussing the impact on investors’ holdings, but I’m sure there’s nothing good to report.

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Filed under: Press releases, Berkshire Hathaway (BRK.A), China, Top Picks 2007, PetroChina Co Ltd ADR (PTR), Serious Money, Oil, Stocks to Buy

For the fifth time since its last shareholder meeting, Berkshire Hathaway (NYSE: BRK.A) has announced that it has sold more shares of Petro-China ADR (NYSE: PTR), trimming back its position from 7.29% to 6.97%.

Berkshire is trading at $121,500 per share as I write this story. The highest price stock on any exchange keeps moving higher as Warren Buffett continues to amaze. Over the last five years he has become a utilities mogul, and this year you can add railroad tycoon to the Oracle of Omaha’s many characterizations.

It is not clear why he is selling shares, since his investment is up six-fold in the last five years. However, Berkshire’s stake in Petro-China was one of the few areas of contention to ever be raised at a shareholder meeting. This year, because of PTR’s business relationship with Somalia, and the human rights violations in the Darfur region, many shareholders questioned this holding. Buffett seemed to imply he did not want to overtly mix business and politics and thought more could be done from the inside than the outside. Given Buffett’s desire to make his moves quietly, it is very possible that he has decided to trim his shares slowly to accommodate concerned shareholders, while not wanting to create negative pressure on the stock price.

Continue reading Serious Money: Berkshire Hathaway (BRK.A) cuts Petro-China (PTR) holdings again

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Filed under: Launches, Television, Competitive strategy, General Electric (GE), News Corp’B’ (NWS), Media World

On October 15, the latest challenge to General Electric (NYSE: GE)’s CNBC network dominance of business programming via cable television, the Fox Business Network, will sign on for the first time. And while CNBC President Mark Hoffman is taking the public stance that it is business as usual, he’s not fooling anyone. As demonstrated by News Corp (NYSE: NWS)’s Fox News Network whomping of CNN, the newcomer can be a market changer. News Corp’s recent acquisition of Dow Jones, including The Wall Street Journal, gives it yet more ammunition for its assault.

At stake is a juicy demographic, viewers well above average in income and in their prime consumption years (25-54), according to Nielsen Media Research. TVWeek estimates CNBC’s current take from advertising at $250 million per year.

Heading the assault on CNBC is Roger Ailes, the guiding force behind Fox News. In an interview with the Journal (subscription) today, Ailes dodged one of the most interesting questions: Can Fox find a way around the WSJ’s current agreement to share content with CNBC, which won’t expire until 2012? Integrating the WSJ content and brand into the new network could allow Fox to quickly leapfrog CNBC.

One message that seems clear from the Ailes interview: he doesn’t intend FBN to bottom feed, but compete for the same demographic as CNBC. At the same time, when I look at some of CNBC’s schlocky prime-time offerings, I have the impression that network has already undergone some Foxification.

FBN will launch with only one-third of CNBC’s viewership, but its leverage should allow it to quickly bully its way into more cable packages. As the internet continues to steal away investors interested in timely business news, the race between the two may be decided on entertainment value, a coin both sides know how to employ. Check out the pretty people already on-board for Fox. Not a Paul Kangas (one of my favorites) among them.

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