Filed under: Bad news, Management, Rants and raves, Competitive strategy, Scandals, Citigroup Inc. (C), Business of sports, Sunday Funnies, Headline news

Any experienced investor could give a dissertation on the utmost importance of good senior management toward the success of any enterprise. This seems to be lost on the Boards of Directors of both Citigroup Inc. (NYSE: C) and the New York Knickerbockers NBA franchise.

Last week the Knicks suffered another embarrassing moment during the reign of Isaiah Thomas as General Manager and Coach of the team. A jury awarded a plaintiff $11,600,000 in a sexual harassment case against Thomas and the Knicks. Thomas has squirmed around in the executive suite for a long time, and after numerous bad trades and draft picks, he let a great coach go only to decide to pace the hardwood himself. After all the wheeling and dealing, it is long overdue for a change at the top of the Knicks organization. My comment comes at the end of a long list of people that have been saying the same thing for years — but now the feeling is almost unanimous throughout the sports world.

Continue reading Sunday Funnies: The Knicks & Citigroup (C) need a major overhaul

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Filed under: Rants and raves, Presidential elections, Sunday Funnies, Headline news

Congratulations to former Vice President (and woulda-coulda-shoulda president) Al Gore on receiving half of the Nobel Peace Prize this week for his strident work in the area of global warming. The news added fuel to the fire that Gore might insert his name on the long list of presidential candidates, even this late in the game.

If he enters the race, he would do so challenging democratic front runner Hillary Clinton for the nomination, after serving as vice president under her partner and currently greatest supporter President Bill Clinton. Can you hear the backroom politics going into full swing at this very moment? No doubt there are phone lines on fire in Washington, New York, and California as I type.

Hillary wants to be president so bad she can taste it. If not for her ambition, Mr. Clinton might have been lodging with some foreign legion in a remote part of the world many years ago. Gore does muddy things up a bit for a lot of hopeful folks. If he ran it would add a lot of excitement to what is getting to be a more and more boring presidential campaign. Meanwhile after winning the “Prize,” Gore passes Obama for Democratic nomination. Another twist if Gore runs (50/50 odds) is that polls still show him as a long shot to receive the nomination over Clinton. Perhaps Barrack Obama and Gore joining forces (a Gore/Obama ticket) might make some advances if they announced early — but this would burn some bridges neither wants to burn.

Continue reading Sunday Funnies: Al Gore would make a great vice president

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Filed under: Earnings reports, Pfizer (PFE), Altria Group (MO)

The earnings season crunch is upon us once again, and among those companies reporting next week are Altria Group Inc. (NYSE: MO) and Pfizer Inc. (NYSE: PFE).

In its second quarter report in July, Atria reported earnings per share of $1.15, beating Wall Street’s expectations by a couple of pennies. However, Altria has had five-year earnings per share growth of only 1.9 percent, well below the tobacco industry average and the S&P 500. For the third quarter, analysts surveyed by Thomson Financial expect Intel to report EPS of $1.14, about the same as last quarter, and less than the $1.39 actual EPS from the same period last year.

Yet, the handful of analysts surveyed by Thomson Financial recommend buying Altria: two rate it a strong buy, six a buy, and four a hold. Altria’s share price is up from a 52-week low of $63.13 in July, but well off of its 52-week high of $90.50 in January. It closed Friday at $70.06.

For more on Supreme Court decisions, cigarette taxes, and other news that might affect Altria’s quarterly report, check out BloggingStocks’ Altria coverage.

Continue reading Earnings previews: Altria (MO) and Pfizer (PFE)

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Filed under: Apple Inc (AAPL)

Heard of Snocap? There’s a good chance you haven’t. And that’s a big problem. In fact, according to a report in C/NET, Snocap has laid off about 60% of its workforce.

The company — which got its start in 2002 — was the brainstorm of twenty-something Shawn Fanning. His prior gig was Napster, which had a big disruptive impact on the music business.

But Snocap wanted to be different; that is, it wanted to develop a platform to allow file-sharing sites to sell music in accordance with the law. Basically, the company handles such complexities as licensing and e-commerce distribution.

In theory, it’s a cool idea. But, in the real world, there hasn’t been much interest. This is the case even though Snocap has a distribution deal with MySpace.

Essentially, I think the big problem is Apple Inc.’s (NASDAQ: APPL) iTunes. Simply put, it sucks up most of the attention in the online music space.

And now, according to a post in Valleywag, it looks like Snocap is prepping for a sale. But in light of the mixed performance so far, I wouldn’t expect a premium deal.

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: Products and services, Consumer experience

Some people are disinterested in chocolate, while others of us would drive through a hurricane to feed our Godiva jones. According to the UK Telegraph, a new study in the Journal of Proteome Research suggests that the culprits may live in our stomach.

According to the findings of scientists at the Nestle Research Centre and others, the type of bacteria busy aiding in digestion in the guts of chocolate lovers may be different than those of people who don’t crave the brown bliss. Since 90% of the cells making up a human being are actually bacteria and other symbiotic partners along for the ride, how could we expect to be able to fight off the urgings of such a throng?

While the findings are only suggestive of a link, I wonder if any chocolate company executives are already fantasizing about the effects on sales of adding the sweet-craving bacteria to their products.

I can’t decide if this is good or bad news for the Hershey Co. (NYSE: HSY) and other chocolatiers. If you could eliminate your desire for chocolate, would you?

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Filed under: Management, Insiders

Shares of Children’s Place (NASDAQ: PLCE) were up more than 5% on Friday after the children’s clothier and Disney Store owner announced that it was putting itself up for sale. The shares closed at $23.92, well off the 52-week high of $71.81. The company has been mired in scandal and recently CEO Ezra Dabah recently resigned after an investigation found that he had failed to comply with company rules regarding insider trading and reporting. Dabah remains on the board and own 18% of the company.

Here’s where it gets interesting. According to The Wall Street Journal, “Mr. Dabah has told acquaintances that he wants to start his own private-equity firm and may be interested in buying Children’s Place and the Disney Store chain it operates. Mr. Dabah had been CEO of Children’s Place since 1991.”

Children’s Place hasn’t filed a 10-Q in more than a year, has several shareholder class-action lawsuits pending against it, and its auditor, Deloitte & Touche, reported that it would not stand for re-election because it can’t rely on information provided by Mr. Dabah and the company.

In other words, a big part of the blame for the company’s troubles — and resulting stock price — could probably be placed on the shoulders of Mr. Dabah. With the stock so far off its highs, he may stand to benefit from his poor management if he ends up acquiring all or part of the company.

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Filed under: Ford Motor (F), General Motors (GM)

General Motors (NYSE: GM) and Chrysler have settled work stoppages through Voluntary Employment Benefit Associations (VEBAs) which assume the future liabilities of retiree health benefits. Will Ford Motor Co. (NYSE: F) follow — making a trend?

I think the VEBA is a great solution for a company that needs to get a huge long-term health care liability off of its books so it can lower its costs and compete globally. The VEBA also helps workers and retirees who are worried that the company on the hook for those liabilities could file for bankruptcy.

The bet that the workers and retirees take is that settling those liabilities now through a VEBA has a higher expected value - the odds that the liabilities will be satisfied times the magnitude of the payment made to satisfy those liabilities - than the expected value of continuing with the current contract terms. From the union’s standpoint, there is also the bet that it can do a better job of managing the money that the company sets aside for those liabilities than the company can do itself.

Continue reading Will VEBAs at General Motors (GM), Chrysler, and Ford (F) make a trend?

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Filed under: Earnings reports, Intel (INTC), Johnson and Johnson (JNJ)

The earnings season crunch is upon us once more, and among those reporting next week are Intel Corp. (NASDAQ: INTC) and Johnson & Johnson (NYSE: JNJ).

In its second quarter report in July, Intel reported earnings per share of 22 cents, beating Wall Street’s expectation by three cents. In fact, Intel has beat analysts’ expectations in the past four quarters, and also has had one-year earnings per share growth of 32 percent, which was better than the S&P 500 and the semiconductor industry average. For the third quarter, analysts surveyed by Thomson Financial expect Intel to report EPS of 30 cents — profit growth of 35 percent and revenue growth of 10 percent — which is in line with Intel’s updated guidance.

Analysts surveyed by Thomson Financial recommend buying INTC: 15 rate it a strong buy, 16 a buy, and only 7 a hold. The share price is trading near its 52-week high of $26.58, up from a 52-week low of $18.75 in March. The share price closed Friday at $25.55.

For more on what’s been going on with Intel, check out BloggingStocks’ Intel coverage.

Continue reading Earnings previews: Intel (INTC) and Johnson & Johnson (JNJ)

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Filed under: Citigroup Inc. (C), JPMorgan Chase (JPM), Goldman Sachs Group (GS)

The New York Times [registration required] reports that Citigroup (NYSE: C) and JPMorgan Chase (NYSE: JPM) are working with the Treasury Department to create a $75 billion fund to bail out Structured Investment Vehicles (SIV) — of which there are thought to be $400 billion worldwide. What are SIVs? Why do they need to be bailed out? Why is the Treasury Department getting involved? Will the bailout plan work? Why should you care?

Before addressing these questions, it’s worth pointing out that Hank Paulson, the current Treasury Secretary and former Goldman Sachs Group (NYSE: GS) CEO, has not had much success as a government servant. His efforts to talk China into loosening its currency have fallen flat. And a high-level government source told me that Paulson’s brusque personal style has not endeared him to other economic policy makers.

When Paulson took the job in May 2006, I speculated that the reason he took it was so he would have the chance to outshine Robert Rubin, another former Goldman executive, whose tenure at Treasury was widely perceived to have been brilliant. I thought then that Paulson thought a financial crisis would occur under his tenure that would enable him to demonstrate his financial crisis management skills. The SIV crisis is a big problem but I doubt he’ll rise to the occasion like Rubin did.

Continue reading Hank Paulson’s got an Enron-like crisis that could swamp Citigroup (C) and JPMorgan (JPM)

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Filed under: Good news, Citigroup Inc. (C), JPMorgan Chase (JPM), Money and Finance Today, Bank of America (BAC)

Finally some possible good news: There may be a solution to the credit crisis caused by shaky subprime mortgages. Citigroup (NYSE: C) is leading the charge to piece together a pool of funds with other big banks that would financially back as much as $100 billion in shaky mortgage securities and other investments, according to the Wall Street Journal. Talks to work out this solution started three weeks ago at the U.S. Treasury Department, which is playing a crucial role in making this happen. Success in putting this fix together may be announced as early as Monday. Two other key players in these talks are Bank of America Corp. (NYSE: BAC) and J.P. Morgan Chase & Co. (NYSE: JPM), which don’t have SIVs but would earn fees in helping to arrange the fix.

Citigroup CEO Chuck Prince is desperately trying to save his skin with this bailout, which is reminiscent of the bailout for Long Term Capital Management in 1998. What exactly is it that is being bailed out? They’re called SIVs (structured investment vehicles). Essentially SIVs are short-term debt used to raise money to buy high-yielding assets, such as securities tied to mortgages or receivables (money due from customers of mid-size businesses).

Citigroup, which is the largest player in SIVs, holds nearly $100 billion in SIVs, and globally there are $400 billion in SIVs as of Aug. 28, according to Moody’s. If the banks that hold them have to write them down, we haven’t seen anything yet. There could be an even broader credit crunch, which would hurt the economy even more than the pain we already feel. In August, banks holding SIVs had difficulty rolling over their short-term debt, which seized up credit markets until the Fed stepped in and encouraged banks to borrow money by reducing the rate at which they could borrow it.

Continue reading Banks to the rescue: A plan to back mortgage secuities and prevent fire sales

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