Filed under: From the boards, Management, Citigroup Inc. (C), Housing

Former Citigroup (NYSE: C) Chief Executive Chuck Prince isn’t going to feel the pinch of the worst real estate market in a generation that he helped create.

Prince has put his place in Greenwich, Connecticut — a tony New York City suburb that is home to countless hedge funds and celebrities such as Tommy Hilfinger and Regis Philbin — up for sale at the asking price of $6.15 million, according to Bloomberg News. The Tudor-style manor house was sold in 1996 for $2.27 million, according to ZIllow.com. By my calculations, that would be a profit of 170%.

Too bad that most homeowners aren’t as fortunate as Mr. Prince. The National Association of Realtors is due to release its figures for December home sales later this week, and it isn’t going to be pretty. Economists surveyed by Bloomberg News expect sales to have fallen 1% to 4.95 million, the fewest since records began in 1999.

The former Wall Street hot-shot, though, doesn’t need to concern himself with the needs of ordinary folks anymore. He was pushed out the door at Citigroup with a retirement package worth about $60 million. “By retiring rather than being fired, he preserved the right to keep about 743,640 Citigroup shares with a market value of about $26.7 million, compensation consultant Brian Foley based in White Plains, New York, said at the time,” Bloomberg notes.

Prince’s realtor told Bloomberg that the Greenwich house, which includes an entrance hall with barrel-vaulted ceilings, an exercise room with a sauna and shower and a dining room that sits 12, “no longer meets his needs.” Prince also has a place on New York’s Park Avenue.

It must be nice to be able to live your life not having to face the consequences of your actions.

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Filed under: Bad news, Market matters, BHP Billiton Ltd ADR (BHP), Rio Tinto plc ADS (RTP)

Selling in Europe accelerated throughout the day. The fuel behind the drop appeared to be fear of a global slowdown and the impression that the Bush package to stimulate the economy would be too little, too late.

Watching the big markets in Europe left the impression of a simple and blind panic without a specific trigger. Investors simply wanted out, goaded by concerns that stocks have much further to fall. By the last hour of trading, the lemmings were running in force.

The German DAX was hit hardest, plunging 7.2% to 6,790. Shares in global mega-conglomerate Siemens (NYSE: SI) dropped 8.5%.

In the UK, the FTSE sold off 5.5% to 5,578. But there was real carnage among metal and mining companies. Both Rio Tinto (NYSE: RTP) and BHP Billiton (NYSE: BHP) dropped over 10%, killing over $25 billion in market cap. A recession would probably slow demand for commodities, driving the profits out of these companies. BHP has also talked about taking on tens of billions of dollars in debt to buy RTP. Such talk is not popular in times of tight credit.

The large banks in France, lead by BNP Paribas, fell through recent trading lows.

Hardly a single stock was spared.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: SEC filings, Press releases, Scandals

After we pointed out Bloomberg’s failure to mention that an analyst quoted in a piece had been paid by the firm he expressed bullishness on, Bloomberg corrected the piece, adding that “Beacon said in a statement distributed Jan. 10 by PR Newswire that it was compensated $15,000 and 100,000 restricted shares by a third party for enrollment of BioSolar in a research program, without giving more specific information. Earlier today, BloggingStocks.com reported the payment.”

But here’s where it gets confusing. In the January 9th press release, Beacon disclosed that:

“Beacon Equity Research has been compensated a total of fifteen thousand dollars and one hundred thousand restricted rule 144 shares from a non-controlling third party for enrollment of BSRC in this research program.” (emphasis added)

But in a press release dated January 3rd, Beacon disclosed that:

“Beacon Equity Research and its affiliates have been directly compensated a total of fifteen thousand dollars and one hundred thousand restricted rule 144 shs directly from the company for enrollment of BSRC in this research program and other marketing services.” (emphasis added)

Continue reading Who is paying Beacon for the BioSolar ‘research’ anyway?

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Filed under: Earnings reports, Microsoft (MSFT)

Microsoft Corp. (NASDAQ: MSFT) has had a neat recent history. It seems pundits keep wondering when the software giant’s sales will stagnate, and the company continues pumping out one impressive quarter after another. Thursday’s second quarter results for Ole’ Softie should be more of the same.

Analyst estimates are for earnings of 46 cents per share on revenue of $15.9 billion for the quarter ended Dec. 31. With Microsoft shares up about 10% since last October, they are poised to go a little higher if the software giant’s results are at or slightly above consensus estimates. The company raised its full-year guidance in October when it reported first-quarter results. There may be a few things at play here: sales of Windows Vista have continued to climb and the money-losing games division may have been helped by better-than-expected holiday sales of the Xbox 360.

Microsoft’s Windows and Office businesses continue to rake in almost all the company’s revenue. Bear Stearns analyst John DiFucci indicated that Microsoft’s efforts in curbing piracy were bearing more fruit in emerging markets as well, as the software maker was “paid in emerging markets” where software piracy has traditionally been rampant.

[Disclosure: The author holds a long position in Microsoft]

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Filed under: International markets, Bargain stocks

If you haven’t already gotten out of the market, it’s too late. Why lock in losses? Too many people panic when they see the type of news we’re seeing today about a worldwide stock market bloodbath. They get caught in the buy high, sell low trap, loose their shirt and stay out of the market until it looks safe. When will it likely look safe to these would-be investors? The next time the market is nearing its highs. Then they’ll get caught in the buy high, sell low trap again. It’s a vicious cycle for many uneducated investors.

For the savvy investors, tomorrow will likely be a buying opportunity. An opportunity to find the many jewels that will be out there. Companies will be beaten down, even though their fundamentals are strong, because they are caught up in the frenzy to get out at all costs. Do your homework today, review your watch lists and find what you think are the best bets and watch them tomorrow. If their stocks tank, buy them. Remember, all of us want to buy low and sell high in order to make money on the stock market.

Have we reached bottom? Probably not, but if you’re waiting to find the bottom you’ll likely miss out on the next big jump in the stock market. Few traders can actually hit bottom exactly at the right moment and when they do I suspect luck plays a big role in their picking right. You can read more about the failure of market timers in this excellent piece by James K. Glassman.

Good luck and good picking. Tomorrow may be a great day to find some good bargains.

Lita Epstein has written more than 20 books including “Trading for Dummies” and “Reading Financial Reports for Dummies.”

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Filed under: Forecasts, Other issues, S and P 500, DJIA

With Wall Street still digesting the latest round of sub-par economic data even as it braces for potentially more, economists and analysts said investors can look forward to one ‘certainty’ in the weeks ahead — market volatility, as the financial community gauges the U.S economy’s probable economic path for 2008.

Market bears will cite the housing sector’s recession, related mortgage and asset-backed defaults, slumping corporate earnings and consumer spending, high energy prices, and uncertain job growth as reasons the Dow and the broader markets are likely to continue to fall in the weeks ahead.

Market bulls will cite solid corporate earnings from companies in international markets, relatively low inflation, a declining trade deficit, the fair or undervalued price of some U.S. equities, and the U.S economy’s ability to adapt as reasons the markets may reverse their slide in early 2008 and head higher.

Continue reading GDP, employment data will set the tone in the weeks ahead

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Filed under: Before the bell, Earnings reports, Forecasts, Apple Inc (AAPL), Stocks to Buy

Apple Inc. (NASDAQ: AAPL) will report its December 2007 quarterly numbers after the close on Tuesday. Consensus estimates call for revenues of $9.3-9.4 billion and earnings per share of $1.55-1.60. Stories circulating on many trading desks suggest that Apple could have topped $10 billion and earnings could range between $1.80 and $1.85. In this environment, will it really matter how much Apple exceeds expectations? It depends.

It depends on the most important statement the company can make: guidance for the first two or three quarters of 2008. In a normal growth-investing environment, if December results did top $10 billion and EPS around $1.80, the stock would be off to the races. But in this cautionary environment, the investor sentiment is only about guidance. What’s the outlook? Does Apple see a slowdown? In the United States? In the rest of the world? What about inventory levels? Component pricing? You get the picture.

Portfolio managers and hedge funds I speak with love the name going forward, no question, and Apple has distinguished itself with cutting edge products and incredible margins. As one manager put it to me, “I loved the stock at $195, I still love it here at $161. What’s changed? Nothing, just investor sentiment.” He is right. Growth stories that are executing on their key fundamentals are not getting the “current credit” for these feats. The investing community has turned to defensive investing and is not hesitating to take profits where they exist.

Continue reading Will Apple’s numbers matter?

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Filed under: Earnings reports, Ford Motor (F)

When Ford Motor Co. (NYSE: F) reports its fourth quarter earnings this Thursday, the U.S. automaker is widely expected to post yet another huge loss. Although Ford may have been called a leading manufacturing expert in the past, the slow pace of its turnaround will continue hurting it for at least all of 2008. CEO Alan Mulally’s Way Forward plan is making progress, but people are buying less cars due to a slowing economy — and Ford has just as much competition now as it ever had.

Ford investors are well aware of this as shares in the automaker are already sitting at 16-year lows. This week’s earnings results won’t change it for the better, as analysts expect a loss of $0.20 per share on sales of $38.3 billion. It’s not just Ford that will suffer soon. Analyst David Silver said, “November and December were just horrible months for auto sales in the U.S.” Encouraging words? Well, maybe not.

Although Asia and Central America sales may be a sweet spot for Ford this Thursday, its domestic sales may continue the slide they saw in the Q3 period, when Ford lost a billion greenbacks in the U.S. market. It was 2007 and Ford still considered trucks and SUVs to be the heart of its product lineup. Trouble is, consumers are running away screaming from those product lines due to shabby fuel economy figures. A bright spot continues to be the Ford Edge, an SUV crossover (or, CUV) that is selling very well for Ford. It has car-like handling, SUV-like storage and car-like gas mileage. Go figure — customers are swallowing them up. It still can’t rescue Ford from many more quarters of lackluster performance.

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Filed under: International markets, Industry, Consumer experience, China, Economic data, Politics, Housing

We have heard and read a lot over the past year regarding the weakening U.S. real estate market, but what about the red hot Chinese market? Some evidence is starting to show that the Chinese real estate market is also starting to soften a bit.

For the past several years, the Chinese government has started to try to curb the rapidly surging housing market, which kick-started around the start of 2001. Now the first signs of a housing slowdown are starting to show themselves, as property brokers are scaling back their operations, or in some cases closing their doors altogether.

Just how much of a slowdown are we looking at? Consider this… in the first week of 2008, home sales in Beijing fell 20 percent compared to the week before. OK, I know what you are thinking… that’s just one week, we shouldn’t take too much from just one week’s data. Well, that would be correct, so we can’t just immediately assume the worst, but the writing is definitely starting to appear on the wall.

Continue reading Chinese real estate market may be starting to fade

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Filed under: Magazines, Internet, Martha Stewart Living Omnimedia (MSO)

With its stock sitting in a toilet that would make the housekeeping goddess cringe, Martha Stewart Living Omnimedia (NYSE: MSO) is looking for something to boost its operations.

Fortune reports it has learned that the company “has held recent talks with two prominent tastemakers, the fashion designer Cynthia Rowley and Jonathan Adler, known for his home décor, with the aim of building multifaceted brands around these personalities that span television, publishing and the internet.”

The talks have reportedly broken off, but CEO Susan Lyne has said that she is on the prowl for acquisitions. Acquisitions have a bad habit of failing to generate value for the acquirer, and Fortune notes that “The pressure to do a deal will intensify this year, as MSO prepares to take a hit on several fronts.” And therein lies the problem.

The company has historically been unable to generate a profit, and that’s not going to get any better in the near future. An acquisition driven by what amounts to desperation is unlikely to change that. And signing a big star will cost a lot money, and the value of that star’s brand will tend to aggregate to them, not MSO — that’s the nature of licensing deals.

Bottom line: If you want to buy shares of MSO, it should be because you’re bullish on the future of the company as it is now, not because you’re hoping that a management team that has failed to generate value can make a killer acquisition that will restore the company to its once high-flying status.

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