Put away the champagne folks - the conforming loan limit increase seems to be in jeopardy.

According to Inman News:

But an increase in the conforming loan limit faces opposition in the Senate, where Sen. Richard Shelby, R-Ala., is sticking with the position previously held by the Bush administration: that any increase in the conforming loan limit should be tied to strengthening oversight of Fannie and Freddie (”the GSEs,” or government-sponsored entities).

A spokesman for Shelby, the ranking Republican on the Senate Banking Committee, said he “believes that consideration of raising the conforming loan limit should be done carefully within the context of broader and meaningful GSE reform.”

In Shelby’s judgment, “doing so in the absence of such a process enables thinly capitalized entities with recent accounting problems to provide a high-risk benefit to the wealthiest Americans without any real consideration of the need to do so or of the risks it presents to the taxpayer,” a spokesman for the senator, Jonathan Graffeo, told Inman News in an e-mail.

I’ll go out on a limb and say that any stimulus package without some shot in the arm to the GSE’s is going to fall terribly flat.  After all, how many mortgage payments can you make with an extra $300?

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Filed under: Management, Google (GOOG), Yahoo! (YHOO)

Yahoo! Inc. (NASDAQ: YHOO) has lost another high-ranking executive — and this one is a doozy. Richard Frankel, the man in charge of behavioral targeting and marketing, has become Chief Operating Officer of SocialMedia Networks.

SocialMedia is currently the largest company supplying targeted advertising services in social media applications. As those who have followed the explosive growth of MySpace and Facebook can attest to, advertising in social applications — web applications — is turning into hot territory. Will it last, or is social media destined to become the web fad of the decade? There is endless debate on that one in my head, regardless of the media headlines that scream “Web 2.0” is the wave of the future.

Frankel leaves Yahoo! as the company has continued languishing in the ultra-successful presence of Google Inc. (NASDAQ: GOOG), while remaining very profitable. The problem is, it’s not nearly as profitable as it should be — according to critics — in the face of being one of the top web properties on the face of the planet.

Yahoo!’s revolving door in the last 14 months has done little to change the company, according to reports. While Google is the ultimate risk-taker (and can afford to be), Yahoo!’s risk aversion continues to make the company operate in a status quo at a time when the competition is not. Frankel’s departure is yet another hit to whatever strategy Yahoo! has in store for 2008.

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Filed under: New York Times’A’ (NYT)

Earlier today I wrote about Firebrand Partners and Harbinger Capital Partners’ bid to get four directors onto the board of directors at the New York Times Co. (NYSE: NYT) . The other nine directors are controlled by the Sulzberger family through a dual-class voting structure and, in his letter to the company’s top two executives, Firebreand CIO Scott Galloway wrote that:

I want to assure you that we are not pursuing a change in the dual class shareholder structure. The New York Times is a great institution controlled by the Sulzberger family and we have no illusion about, or desire to change, that fact. Our efforts are focused on how we can work with management and the Board for the benefit of all stakeholders.

Amazingly, the stock is trading up about 9% on the news. But here’s the problem: no matter how good Galloway’s idea that the company should invest more in digital media assets, his suggestion that the company do something about it is no more than walking up to the owner of a privately-held restaurant and telling him he should serve better steaks. Maybe he’ll listen, maybe he won’t: But with the ownership structure that’s currently in place, the New York Times board and management has no particular reason to listen to an outside shareholder.

Firebrand has no leverage — The fact that they own almost 5% of the company’s stock means nothing. If their proxy contest is successful, they’ll end up with 4 of 13 seats on a board controlled by a family that has refused to allow other shareholders to have any meaningful say in the company.

I have no idea whether the company is headed up or down, short-term or long-term. But there is no real reason for the stock to be up nearly 10% today.

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Filed under: Earnings reports, U.S. Steel (X), Dow Chemical (DOW)

The earnings season crunch continues, and among companies scheduled to report earnings tomorrow are Eli Lilly and Co. (NYSE: LLY), Dow Chemical Co. (NYSE: DOW), and US Steel Corp. (NYSE: X) here is a quick peek at each of them.

Eli Lilly hasn’t missed quarterly earnings expectations in the past three years. When it reported third-quarter 2007 results back in October, its earnings per share of 90 cents beat the consensus estimate of analysts polled by Thomson Financial by seven cents, as well as the actual 80 cents per share in the same period of the previous year. For the current quarter, analysts expect earnings of 89 cents per share, or $3.54 per share for the full year. That’s up from $3.18 in 2006.

But Eli Lilly’s 8.3% earnings per share growth forecast for the next year is less than the industry average. The analysts’ consensus recommendation has been to hold Eli Lilly for the past six months. Shares have fallen recently to about two bucks above the 52-week low of $49.09 back in November.

For drug company news that could influence the earnings results, see BloggingStocks’ Eli Lilly coverage.

Continue reading Earnings previews: Eli Lilly, Dow Chemical, US Steel

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Filed under: International markets, Rumors, China, Middle East, Economic data, Commodities, Oil, Recession

As we discussed earlier this month, U.S. President George Bush embarked on a Middle Eastern tour to urge OPEC countries to raise production at their meeting this week, but signs are starting to indicate that the next move the oil cartel makes will actually be to reduce its production output.

With oil prices recently breaking through the $100 barrier, Bush pleaded his case that unless OPEC decides to lift production that high oil prices will create slowdowns in all consuming countries this year. The administration is praying for a cut at this week’s meeting, but according to the Wall Street Journal(subscription required). the oil cartel is more likely to cut production this spring if demand start to diminish.

It is a tough situation in which the cartel finds itself. With recession fears starting to spread regarding the U.S. economy, OPEC has to worry that a slowing American economy will crimp global demand. On the other hand, if they do not boost output then the impact could even worsen a potential recession and reduce demand even more.

Continue reading Will OPEC actually opt to cut its production quotas?

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Filed under: International markets, Newsletters, Japan, Stocks to Buy

“Will the ‘Land of the Rising Sun’ ever rise again?” asks Mike Burnick in Global Market Investor. “From a valuation perspective, Japan is a real bargain; in fact, half its stocks trade below book value.” Here is his review.

“First, let’s cover the bad news; Japan’s economy is slowing right now, just like the U.S. and Europe. Consumer spending is slumping worse than in the U.S. In other worlds, the domestic economy looks dismal. But at the same time, Japan’s exports are booming, businesses are flush with cash, and industrial production is running strong.

“The reason is that Japan is an economy in transition, for years they counted on exports to the U.S. and Europe, but today China is becoming its most important trading partner. Exports to China jumped nearly 14% in November, as overall exports expanded 10%. That’s why a slowdown in the U.S. and Europe may not hurt Japan as much as some people think.

“What was already one of the world’s cheapest markets just went into deep-discount territory last year. In fact, half the stocks listed in Tokyo now trade below book value. In other words, the share price is less than the stock’s per share net worth - that’s unheard of in developed markets.

Continue reading Japan: ‘High yields; bargain prices’

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Filed under: Deals, Next big thing

Only eight months old, the Rubicon Project has already raised roughly $21 million. In fact, today the company announced its latest infusion: $15 million. The investors include: Mayfield Fund, IDG Ventures Asia, Stanford University, University of California Berkeley, Matt Coffin (founder and former CEO of LowerMyBills.com) and Clearstone Venture Partners.

Essentially, the Rubicon Project helps companies manage the complexities of online advertising networks. The system is getting lots of traction, with more than 3,000 websites signing up.

“We are seeing huge demand,” said Frank Addante, CEO and Founder, in an interview with me on Friday. “Customers also want a way to benefit from advertising networks in global markets.”

I asked Frank about the concerns of a slowdown in online advertising (especially in light of the cloudy economy in the U.S.). His take? Well, he is not seeing a slowdown. “I experienced the downturn in 2001,” said Addante. “That was mostly the result of dot-coms running out of money. As of now, things are different because it’s traditional companies that are buying online advertising.”

Interestingly enough, the genesis of the Rubicon Project’s funding came from Frank’s trip to Hawaii - which he wrote about it in his blog.

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: Management

Shares of Kellwood (NYSE: KWD) are up more than 15% today after the company’s board of directors decided that it would let the people who own the company decide [subscription required] whether they want to sell it. What a novel idea!

According to a press release put out by the company, Kellwood “intends to remove all impediments to the $21.00 per share cash tender offer made by an affiliate of Sun Capital Securities Group so that it can be consummated on February 12, 2008 if a majority of the shares are tendered. Sun Capital’s $21.00 per share cash tender offer, under its terms, is not subject to financing or due diligence.”

Kellwood has also hired Banc of America and Morgan Stanley to search for buyers who might able to top Sun Capital’s offer. If they find a buyer that can make a better offer, they said they will reserve the right not to rescind the debt tender offer, a poison pill designed to make it more difficult for a third party to gain control of the company without the consent of the board of directors.

It’s good to see that Kellwood is doing the right thing — the fate of the company should rest in the hands of the shareholders, not the management and directors who have a history of failing to generate shareholder value.

Kellwood is an apparel company with brands including Baby Phat, Phat Farm, Vince, and Hollywould.

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Filed under: Bad news, Products and services, Industry

The Associated Press last week reported that the record industry is fighting a major losing battle against illegal downloading, which outpaces legal downloading alternatives 20-to-1, causing losses in the billions of dollars. Meanwhile, revenue from digital music sales has not made any inroads toward recovering money lost by the dying CD, rising just 40% to $2.9 billion during 2007 after doubling in 2005 and tripling in 2006. The International Federation of the Phonographic Industry also told the AP, “CD sales fell 11 percent between 2005 and 2006 and were likely to drop further in 2007,” and digital revenue “is also showing signs of slowing.”

The IFPI also said that “digital downloads have grown in five years to account for 15 % of the world’s music sales, with more than 500 legally licensed music sites selling around 6 million tracks of music.” The industry’s fight against piracy has received massive support in France, where the government of President Nicholas Sarkozy has proposed to have Internet service providers there “automatically disconnect customers involved in piracy.” Japan leads digital downloads, both illegal and legal, with sales and piracy mostly working through consumers’ phones.

Although this devastating report indicates that the record industry is still in a dire situation, the developments in legal downloading throughout the last few months in 2007 and the first month of 2008 seem to set a more optimistic tone. Whether the disabling of anti-piracy technology from all music labels will allow growth this year, is obviously yet to be seen, but the benefits of the music available now would seem to outpace the availability of media available illegally. The problem of paying for products still remains for those consumers, but the quality of new MP3 tracks is finally at an acceptable level for those that look for the difference.

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Filed under: Middle East, Commodities, Oil

OPEC is said to be evaluating a potential production cut this spring, but is likely to keep its output quota the same when in meets Friday in Vienna, The Wall Street Journal (subscription required) reported.

OPEC, which produces about 40% of the world’s oil, is said to be concerned that the U.S. economic slowdown could hurt oil demand growth. Oil traded 77 cents lower to $89.94 per barrel in Monday afternoon trading. Heating oil fell about 2 cents to $2.50 per gallon, unleaded gasoline declined 1 cent to $2.30 per gallon. Natural gas fell about 1 cent to $7.99 per million BTUs.

OPEC expects global oil demand of 87.4 million barrels per day in Q1 2008 and 85.5 million in Q2 2008. Meanwhile, the International Energy Agency expects slightly higher demand during the two periods, 88.2 million in Q1 2008 and 86.7 million in Q2 2008.

Continue reading Say it ain’t so: OPEC may cut oil production this spring

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