Filed under: Competitive strategy, Google (GOOG)

When Wikipedia was conceived, few would have thought it would end up in the regular top-10 of internet sites — but it has. The largest encyclopedia in the world has a viewership that any entity on the web would kill for. Its strength remains in the ability of anyone to create and edit encyclopedia entries, giving the power to the people (literally).

What was next, then, for Jimmy Wales, one of Wikipedia’s founders? Why, a search engine, of course. Although Google has a tight grip on that market already, the new Wikia.com believes it can contend for the internet search championship belt at some point in time. It’s off to a very rocky start (and sorely disappointing to many), but does Wikia.com have a chance to compete against Google where internet stalwarts Yahoo, Inc. (NASDAQ: YHOO) and Microsoft Corp. (NASDAQ: MSFT) have so far failed? if so, why?

According to Wales, Wikia.com will succeed because it will be more trustworthy than any other internet search provider. His reason is the same one that has made Wikipedia so popular: anyone will be able to control the results returned from a Wikia.com search. No automated Google algorithms or automated software bots that can be rigged to giving certain search results.

Is Wales correct? Will customers see the value in being able to vote down results that are fluff or not very relevant better than Google’s artificially intelligent software? If customers do see this value — and enough of them start using Wikia.com — Google could potentially see its largest threat yet in the internet search arena. But it will be years down the road from now before consumers flock to anything other than Google.

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Filed under: Products and services, Launches, General Motors (GM)

General Motors Corp. (NYSE: GM) joined the slew of companies this week at the Consumer Electronics Show (CES) in Las Vegas which touted their technological advances and gave insight into what was ahead. CEO Rick Wagoner even took the opportunity to introduce a Cadillac concept vehicle during his keynote speech that uses fuel-cell and battery technology for propulsion. Translated: no fossil fuels needed.

The Cadillac concept is powered by the promising fuel-cell technology along with lithium batteries. Additionally, it will be built on the same platform as GM’s previously-announced and uber-anticipated Volt 100% electric vehicle scheduled to roll off assembly lines sometime before or in 2010. Wagoner even drove a Volt onto the stage where he gave his keynote. If that’s not grandstanding for the future of the auto industry, I’m not sure what is.

The Cadillac Provoq will have all the style and luxury of the Cadillac brand if it makes its way from concept to reality, to which Wagoner said “it is fitting that our premium brand would be propelled by our most advanced technology.” The details pit this as not a bad auto performer all things considered: 300 mile range before re-fueling, 0 to 60 in under nine seconds and a 100 mph top speed. It’s good to see GM really promoting a green vehicle agenda instead of $2,500 DVD navigation systems linked to Bluetooth smartphones that dress you and cook your breakfast while you drive. Well, something like that anyway.

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Filed under: Major movement, Bad news, Apple Inc (AAPL), Amazon.com (AMZN), Options, Technical Analysis

Amazon.com Inc. (NASDAQ: AMZN) shares are declining after news of a new iTunes rental plan by Apple (NASDAQ: AAPL) threatens to take market-share away from the online-retail giant. According to a report on Bloomberg, AAPL will let iTunes users rent movies as well as buy them. AAPL plans in the near future to add Warner Bros. and Fox as suppliers. This could be a bad sign for AMZN, as AAPL could easily take advantage of its online-distribution system to take market share away. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AMZN.

After hitting a one-year low of $36.30 last January, the stock hit a one-year high of $101.09 in October. This morning, AMZN opened at $87.56. So far today the stock has hit a low of $82.05 and a high of $87.80. As of 12:30, AMZN is trading at $83.73, down $4.13 (-4.7%). The chart for AMZN looks bullish but deteriorating, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

Continue reading Amazon.com (AMZN) lower on Apple’s online movie plans

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Filed under: Other issues, Politics

There’s an old political adage that goes, “Regarding the nomination process, Republicans fall in line, Democrats fall in love.” Tuesday’s New Hampshire primary provided ample evidence of the above, for each party.
Sen. Barack Obama’s (D-IL) strong showing instantaneously catapults him to formidable contender status in the Democratic race. His performance also suggests — and we won’t know this empirically until survey research has been analyzed — that he has expanded the electorate. Obama increased voter turnout particularly, and unexpectedly, among voters ages 18-21. This age group has had the lowest turnout rate of any age group in primaries and presidential elections since 1952 when political scientists began keeping statistics.

Obama’s appeal among independents was also high, and — also troubling for the campaign of Sen. Hillary Clinton (D-NY) — his appeal among Democratic Party-affiliated voters was much stronger than expected. Furthermore, African-American voters — although not a major factor in New Hampshire — now appear to be shifting decidedly in his direction nationally, a big change from the previously overwhelming support they gave to Clinton as late as this summer. As a result of the latter, look for the Clinton camp to face a markedly tougher fight in the South Carolina primary, which is the next hurdle, along with Nevada, before Tsunami Tuesday (formerly called Super Tuesday), on February 5.

Continue reading Obama’s New Hampshire strength highlights Clinton’s vulnerablity

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Filed under: Forecasts, Other issues, Bad news, Goldman Sachs Group (GS), Housing, Federal Reserve

On Wall Street, there are forecasts…and then there are forecasts that investors/readers ignore only at their peril.

Put investment banking giant Goldman Sachs decidedly in the later category.

On Wednesday, Goldman Sachs (NYSE: GS) said the U.S economy is probably slipping into a recession, and also predicted that the U.S. Federal Reserve will cut its benchmark interest rate, the Fed funds rate, substantially, to 2.5% from 4.25% by third quarter, Bloomberg News reported.

Goldman, which projects an anemic 0.8% growth rate for the U.S. economy for all of 2008, also said it expects the Fed to lower its key interest rate to 3% by the middle of 2008, Bloomberg News reported.

To counteract the effects of the housing’s sector’s correction and other drags on the U.S. economy, including high energy prices, the Fed has cut benchmark interest rates three times since September.. The Fed Funds rate, the rate banks charge each other, now stands at 4.25%, and the discount rate, the rate the Fed charges banks for short-term loans, is at 4.50%. The Fed also set up a special term auction facility to help banks maintain short-term liquidity.

Continue reading Goldman recession forecast can’t be ignored

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Filed under: Bad news, Consumer experience, Target Corp. (TGT), Bed Bath and Beyond (BBBY), Economic data

December is a critical month for retailers - the holiday season is the busiest shopping time, and a large chunk of bottom-line profits is booked in the final month of the calendar year. In 2006, December sales accounted for about 15% of all sales for the retailing sector. But December 2007, as many were predicting, may be one of the worst Decembers this decade.

Tomorrow, same-store sales for this critical month will hit the Street and the International Council of Shopping Centers (ICSC) is expecting an overall gain of 1% among stores open at least a year. This is below the ICSC’s earlier estimate of 1.5% and compares to a year-ago jump of 3.3%. If this estimate is on the nose, it will be the sector’s worst December since 2002.

There are many reasons that the holiday-shopping season was a slow one: rising food and fuel costs, the credit market breakdown, continued housing woes. And because of all these reasons, many retailers were forced to offer sale prices and additional incentives to lure cautious customers into the stores. These discounts obviously pressured the bottom line.

Continue reading Retailers steeling themselves for weak December sales numbers

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Filed under: Good news, Technical Analysis, Stocks to Buy

Auxilium Pharmaceuticals (NASDAQ: AUXL) is a specialty biopharmaceutical company with a focus on developing products for urologists, endocrinologists, orthopedists and select primary care physicians. The firm markets Testim, a topical testosterone gel for the treatment of hypogonadism. It also has projects in clinical development for the treatment of Dupuytren’s contracture, Peyronie’s disease, Frozen Shoulder syndrome and overactive bladder.

The stock is up 48% over the past fifteen weeks, sparked by such issues as better than expected Q3 results, upside guidance and subsequent affirmation of FY07 revenues, and positive clinic trial developments. The news has the stock cycling through a positive trading channel. The price is consolidating at the base of that channel, where oversold CCI, MACD and Stochastic technical parameters suggest the potential for a rise back toward the top. Correspondence of the stock’s 30-day moving average to the base of the channel backs the rebound notion.

Continue reading Auxilium Pharmaceuticals: Shares advance through a positive trading channel

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Filed under: General Motors (GM)

Although facing a slowdown in U.S. vehicle sales this year, General Motors Corp. (NYSE: GM) appears to have enough money to keep operating during the first half of 2008 without reaching into deep credit to finance itself. In fact, it has eliminated a $4.1 billion credit line because it has enough money to stay afloat through June of this year.

GM never borrowed money under the credit line it canceled. Even so, eliminating $4 billion in credit does not mean everything will be rosy for the automaker in 2008. GM Chief Rick Wagoner said this week that the largest automaker in the world does not expect to generate more money than it uses in 2008. That means that the company will probably not see a profit this year, though there is the possibility of a few small quarterly profits if sales outpace predictions.

GM has about $30 billion in cash, so the automaker is not hurting for money to fund itself even as it tries to increase its growth presence in markets outside the U.S. and make more fuel-efficient vehicles that customers will snap up (or so it hopes). Mark Altherr from Credit Suisse said that “GM put this in place in the summer as additional liquidity, if needed, in the event of a longer-term work stoppage during the UAW negotiations.” This is most likely true — and now that those UAW negotiations are complete, access to outside capital funding through credit can safely go away.

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Filed under: Forecasts, Bad news, Countrywide Financial (CFC), Housing

Bloomberg News reports that a measure of the risk that corporations won’t make their bond payments is at record high levels. In 2006, it became clear that subprime mortgages might be in trouble and that their problems would hurt investors in mortgage backed securities (MBSs). Now there could be trouble in the $3.7 trillion corporate bond market.

How so? The CDX, or Markit CDX North America Investment Grade Series 9 Index, a benchmark gauge of default risk tied to the bonds of 125 companies including Countrywide Financial Corporation (NYSE: CFC), climbed 3.75 basis points to 100 basis points as of 8:15 a.m. this morning in New York. The index is at the widest since the CDX indexes started trading in 2004.

Despite denying bankruptcy rumors, bond buyers are not convinced that Countrywide will be able to stave off bankruptcy. Credit-default swaps on Countrywide moved deeper into distressed levels. Sellers of credit-default swaps were demanding 30% upfront and 5% a year for contracts protecting Countrywide bondholders from default for five years. That’s up from 28% upfront and 5% a year at the close of trading yesterday.

Continue reading Will the $3.7 trillion corporate bond market follow subprime’s decline?

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Filed under: Earnings reports, Analyst reports, Forecasts, Good news, Consumer experience, duPont(E.I.)deNemours (DD), Economic data

Shares of chemical maker EI DuPont de Nemours & Co. (NYSE: DD) are trading higher this morning after the company lifted both its 2007 and 2008 earnings outlook, citing strength in its agriculture and nutrition business and higher raw material prices.

The company said it expects to show a rise of 11% or more for its 2007 profit, based on better-than-predicted fourth-quarter numbers. According to Charles O. Holliday Jr. , the company’s Chief Executive Officer, DuPont’s quarterly sales came in above analysts’ expectations, lifted by “science-driven innovations and market differentiation.”

The third-biggest U.S. chemical maker now anticipates 2007 earnings per share of $3.20, excluding special items. That’s at the upper end of its earlier forecast for earnings per share in a range of $3.15 and $3.20. DuPont’s predictions for 2007 exclude $0.09 per share of charges and a net benefit of $.02 per share. Analysts, on average, forecast a profit of $3.19 per share.

Continue reading DuPont (DD) lifts earnings outlook

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