Archive for January 12th, 2008
Filed under: Earnings reports, Forecasts, Wells Fargo (WFC)
For more earnings forecasts, see Peter Cohan’s Earnings expectations for 10 banks tell a mixed story.
Thomson Financial expects Wells Fargo & Co. (NYSE: WFC) to lose $0.19 when it announces its fourth-quarter results on January 16th. That’s bad compared to the same period in 2006, when it earned $0.64.
Wells Fargo is a San Francisco-based bank which operates in three business segments: Community Banking, Wholesale Banking and Wells Fargo Financial. In the last year, its revenues were $34.2 billion and its net income totaled $9 billion. Its stock has lost 21.3% of its value in the last year, and it now trades at a P/E of 10.6.
It has a mixed record when it comes to beating estimates. In the second quarter of 2007, it met the estimate exactly, and in the third quarter it missed by 1.5%. My hunch is that it will miss expectations.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Wells Fargo securities.
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Filed under: Deals, ConocoPhillips (COP)
 Shares of were trading near record highs when ConocoPhillips (NYSE: COP) started off the new year by announcing that it expected fourth quarter production results to exceed those of the third quarter. But it was good news/bad news for the company this past week.
The good news: The Wall Steet Journal reported that Conoco was now the front-runner to participate in a multiyear, $10 billion project to develop the Shah natural-gas field in Abu Dhabi, beating out such rivals as Occidental Petroleum (NYSE: OXY) and Royal Dutch Shell (NYSE: RDS.A). Abu Dhabi National Oil Co. had been expected to name a partner for the project last year, and oil companies have become frustrated by the delays. Abu Dhabi is trying to meet rising demand for natural gas, which has surged with the building of gas-fired power stations and desalination plants.
The bad news: The company’s donation of $5 million to a local cancer center apparently did not impress Alaska state officials sufficiently to allow Conoco to go forward with its nonconforming proposal for a natural gas pipeline project in that state’s North Slope. Conoco’s proposal had requested that state taxes be fixed on the project for decades, which prompted Governor Sarah Palin to send Conoco a rejection letter. The rejection left TransCanada Corp. (NYSE: TRP) as the sole finalist for the project.
Conoco shares have fallen 5.96% since the beginning of the year, and closed Friday at $83.04.
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Filed under: Industry, UAL Corp (UAUA), Delta Air Lines (DAL)
After airline stocks took a nearly unprecedented beating during the last few weeks on concerns about higher fuel costs and a falling economy, they rallied this week. Some of its may be that the selling was a bit overdone. But, the biggest cause was news that Delta (NYSE: DAL) is considering a merger with Northwest (NYSE: NWA) or United (NASDAQ: UAUA).
According to Reuters, “most of the largest U.S. airlines are likely to post fourth-quarter losses, possibly signaling the end of an industry recovery that began in 2006 and further building a case for mergers.”
Mergers in the airline industry are often used to keep one or the other carrier out of Chapter 11. The courts have been the refuge of the flying business for decades. If a carrier can’t pay its bills, it goes into bankruptcy. When things get better, it comes out again. Creditors and unions usually get the short end.
The assumption that putting two big airlines together will save money is undoubtedly true. But, compared to overall costs, those savings are probably very, very modest. Running Northwest costs about $12 billion a year. So much of that goes into fleet costs, fuel, and labor that there is not much to cut. Employees can be pushed out over time, but the unions are sensitive about it.
Continue reading Airline mergers are no solution
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Filed under: Earnings reports, Forecasts, JPMorgan Chase (JPM)
For more earnings forecasts, see Peter Cohan’s Earnings expectations for 10 banks tell a mixed story.
Thomson Financial expects JPMorgan Chase (NYSE: JPM) to earn $0.94 when it announces its fourth-quarter earnings on January 16th. That’s 3% above the same period in 2006, when it earned $0.91.
JPMorgan Chase is a New York-based bank whose subsidiaries are JPMorgan Chase Bank, National Association, a national banking association with branches in 17 states, and Chase Bank USA, National Association, a national bank that issues credit cards. In the last year, its revenues were $69.4 billion and its net income totaled $16.3 billion. Its stock has lost 15.7% of its value in the last year, and it now trades at a P/E of 9.
JPMorgan regularly beats estimates. In the second quarter of 2007, it beat by 11.1% and in the third quarter it beat by 4.3%. My hunch is that it will beat expectations.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in JP Morgan Chase securities.
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Filed under: Earnings reports, Alcoa Inc (AA), American Express (AXP), Tiffany and Co (TIF), Family Dollar Stores (FDO), KB HOME (KBH), duPont(E.I.)deNemours (DD)
Here are a few highlights of this past week’s earnings coverage from BloggingStocks:
Continue reading Earnings highlights: Alcoa, KB Home, Capital One, Family Dollar, and others
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Filed under: Marketing and advertising, Small business
 As a business owner, you are certainly an expert. You keep up with industry trends, you understand the benefits of your products and services, and you have creative ideas.
So why not provide some of your wisdom to your customers - through an email newsletter?
Actually, with web services like Vertical Response and Constant Contact, it’s fairly easy to set one up. But before getting started, let’s take a look at some things that will help your efforts:
Content Is King: Yes, it’s a cliché. Then again, it seems that newsletter writers spend lots of time on the design of the email, not the content. Don’t fall into this trap. Instead, try to come up with content that your readers can’t wait to read. Some ideas:
- Tips
- Recent experiences
- Innovative uses of your product
- Profiles of customer successes
- Industry statistics
- How-to pieces
Oh, and make sure you spell-check your email and have someone provide some editing.
Continue reading Entrepreneur’s Journal: Creating a killer newsletter
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Filed under: Deals, China, Middle East, Citigroup Inc. (C)
Citigroup (NYSE: C) is about to raise $14 billion, but the press is a bit unclear about who is putting in the money.
The Wall Street Journal reports that Prince Alwaleed bin Talal, currently one of Citi’s largest investors, will put in capital along with the China Development Bank. The CDB piece is probably $2 billion.
According to the FT.com “Under the proposal being discussed, the bulk of the money — roughly $9bn — would be most likely to come from China, people familiar with the negotiations say. The Kuwait Investment Authority would contribute about $1bn, while $2bn to $4bn would be raised through a public placement of shares.”
Leaving aside the fact that two big newspapers have different accounts of the same news, Citigroup may be faced with a challenge from Congress over whether it is OK for such a large U.S. financial institution to have big blocks of its stock owned by foreign entities. Citi’s role in lending, underwriting, and trading might be considered “strategic” by the U.S. government.
To investors, that matter of who owns what is hardly important. The big bank’s market cap is down to $142 billion. Another $10 billion is significant dilution. In theory, it could push the Citi shares from $29 to $25 of below. The shares have a 52-week high of $55.55.
If the federal government is against having investors from overseas, the Fed should lend Citi $10 billion on its own.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Earnings reports, Forecasts
For more earnings forecasts, see Peter Cohan’s Earnings expectations for 10 banks tell a mixed story.
Thomson Financial expects U.S. Bancorp (NYSE: USB) to earn $0.59 when it announces its fourth-quarter earnings on January 15th. That’s 11% below the same period in 2006, when it earned $0.66.
U.S. Bancorp is a Minneapolis, MN-based bank operating in four lines of business: Wholesale Banking, Payment Services, Wealth Management and Consumer Banking. In the last year its revenues were $13 billion and its net income totaled $4.5 billion. Its stock has lost 15.8% of its value in the last year and it trades at a P/E of 11.7.
It has a mixed track record of delivering actual earnings vs expected ones. In the second quarter of 2007, it fell 3% below expectations and in the third quarter it beat by 1.5%. My hunch is that it will miss by a little.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in U.S. Bancorp securities.
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Filed under: Citigroup Inc. (C), Merrill Lynch (MER)
Wall Street banks such as Citigroup Inc. (NYSE: C) and Merrill Lynch (NYSE: MER) are sending their CEOs to the Middle East and Asia to restore their capital depleted by write-downs of mortgage-backed securities (MBS) and collateralized debt obligations (CDO). To raise $10 billion, for example, Bloomberg News reports that Citigroup is going back to the well of Saudi Prince Alwaleed bin Talal.
Reuters reports that hedge funds have $2 trillion — with almost $22 billion flowing into them in November 2007 alone. With so much money in hedge funds, much of which is in the U.S., I wonder why these Wall Street banks need to go overseas for capital.
Here are three guesses:
- Wall Street knows it can’t pull the wool over the eyes of hedge fund managers. Would hedge funds demand to know how big the write-downs of CDOs and MBSs would be before agreeing to invest? Might hedge funds demand management changes before investing? Could hedge funds seek interest payments and option terms that the banks would find too onerous?
Continue reading Why won’t hedge funds bet their $2 trillion to boost Wall Street capital?
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Filed under: Competitive strategy, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM), Economic data
 The Ford (NYSE: F) F-150 has been one of the best selling vehicles in U.S. history. It is one of the most profitable products that the company produces.
A new version of the F-150 is one the way. According to Reuters, “the automaker, which has said its turnaround efforts hinge on exciting new products, is counting on the new trucks to help stem its protracted decline in U.S. sales.”
Even if the truck has very little competition, it would not be likely to sell well. Pickups consume a great deal of gasoline. High fuel prices make the F-150 unattractive from that standpoint. And, Americans will probably defer new car buying due to tight credit and a bad economy.
In addition, Toyota (NYSE: TM) has entered the full-sized pickup market with the Tundra, and Chrysler has been in the business for year. GM (NYSE: GM) has a large line of light trucks. Each of these companies want the profits that come from selling a lot of pickup trucks.
If the F-150 is critical to Ford’s fortunes, the company has a problem.
Douglas A. McIntyre is an editor at 247wallst.com.
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