Filed under: Earnings reports, Forecasts, Press releases, Conventions and conferences, Annual meetings, Ford Motor (F), General Motors (GM), Blockbuster Inc ‘A’ (BBI), Staples Inc (SPLS)

Monday, March 3

• Automakers Ford Motor Company (NYSE: F) and General Motors Corporation (NYSE: GM) to report monthly sales. Ford is hosting a conference call at 1:00pm, GM at 2:00pm.
• Landstar System, Inc. (NASDAQ: LSTR) to hold Q1 mid-quarter update conference call at 2:00pm
• Finisar Corporation (NASDAQ: FNSR) to report Q3 earnings; conference call at 5:00pm.

Tuesday, March 4

• PDUFA date for MGI Pharma’s sNDA for Aloxi for Post-Operative Vomiting. Note that MGI was bought by Eisai Co., Ltd. (OTC: ESALY).
• Staples, Inc. (NASDAQ: SPLS) to report Q4 earnings; conference call at 8:00am.

Continue reading Market highlights for next week

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Filed under: Rumors, Management, Rants and raves, Washington Mutual (WM), Wells Fargo (WFC), Bargain stocks

Many readers have been intrigued by my recent posts (Will Chase (JPM) or Wells Fargo (WFC) buy WaMu (WM)? and Wells chasing Chase for WaMu — Act II) regarding various strategic scenarios that might make sense for either J. P. Morgan Chase & Co. (NYSE: JPM) or Wells Fargo & Company (NYSE: WFC) to acquire Washington Mutual, Inc. (NYSE: WM).

If something is happening along these lines, it is all happening quietly behind closed doors. More than one reader suggested that no deal is possible because the Washington Mutual CEO, Kerry Kilinger, does not want to give up his throne and has too high an opinion of himself and the value of the company.

From my perspective this is a deal that has to get done, and if the CEO stands in the way of shareholder, employee, and customer interests he has to go. Time to bring in the corporate raiders – you listening Carl Icahn; can a deal be done Norman Peltz? Hey Eddie, maybe you could make back the money you lost on Citigroup (NYE: C)! If there were ever a great opportunity this seems like it. The raiders do serve a market purpose.

There are potential buyers waiting in the wings so the raiders could move in friendly like, or do it the hard way, buying in at depressed stock prices, forcing Killinger into submission and doing a quick fip. I think even ‘my pal Warren’ of Berkshire Hathaway (NYSE: BRK.A), a major investor in Wells Fargo, must be doing some heavy duty pondering on the subject.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of WM.

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Filed under: Deals

Wilbur Ross may like to invest in distressed companies, but it looks like some of the teetering bond insurers may be too much even for him. According to Forbes.com, today he put an end to speculations about shoring up a troubled insurer by announcing he would be investing nearly $1 billion in the relatively stable Assured Guaranty(NYSE:AGO), a Bermuda-based reinsurer.

Some on Wall Street had hoped Ross could put his cash muscle behind on of the insurers that struggling, such as AMBAC Financial Group(NYSE:ABK). But Ross is playing it safer in these turbulent financial markets.

According to Marketwatch, Ross insists that the first $250 million is not “rescue capital”. “The idea is to enhance their position for internal growth.” he said. So more deals may be in the future.

The markets like the news as shares of AGO are up today a little over 10%.

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Filed under: General Electric (GE), Time Warner (TWX), Walt Disney (DIS), Viacom (VIA), News Corp’B’ (NWS), Film

General Electric’s (NYSE: GE) Universal Pictures asset received some good news the other day — 75% of the studio’s movie projects for the next few years will be funded, in part, by a financing entity known as Relativity Capital. According to The Hollywood Reporter, the deal calls for Relativity to help cover production costs, but not marketing programs; it could see about $500 million spread out over as many as 45 movies. Also, this is being described as a bona fide partnership — not only will Relativity share in profits generated by ancillary channels, such as home video and television sales, but it will also have the power to co-greenlight a project, and it will be able to review the talent and budget attached to each project.

Financing by hedge funds and private equity is certainly not new in Hollywood; it’s been around for a long time. So has the practice of selling off international rights and partnerships between studio competitors. Remember James Cameron’s Titanic? It took the studio segments of both Viacom (NYSE: VIA) and News Corp. (NYSE: NWS) to shoulder that costly celluloid endeavor. But, although I recognize that filmmaking is extremely risky, and that a flop is very much in the cards whether or not big stars are in a film, I also have to wonder if it might be better for studios to simply lessen their risk by making much cheaper movies and foregoing the distribution of risk. What’s my beef with distribution of risk? Well, I’m not the first to say this, and it’s pretty obvious at any rate: hedge your bet, and you also limit your upside score in terms of a windfall.

Continue reading Should film studios always spread the risk?

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Filed under: Wal-Mart (WMT), Columns

Welcome to the 51st installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes down to a very hot topic these days: Wal-Mart.

In this week’s Wal-Mart Weekly, I’ll be looking at the retailer’s categorization of its food products. Specifically, how Wal-Mart Stores, Inc. (NYSE: WMT) merchandises its organic food products alongside its mainstream food products. There’s an opportunity for Wal-Mart to really seize a new market niche that wants all organic products in one area.

In order to do this, a change in thinking would be required of the world’s largest retailer. Could it possibly think “outside the box” and try to create smaller mini-stores inside its huge Supercenter locations? That’s what this week’s Wal-Mart Weekly will explore. Read on.

Continue reading The Wal-Mart Weekly: An idea for organic growth

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Filed under: International markets, Rumors, Products and services, Consumer experience, Middle East, Economic data, Oil, Recession

With the recent surge in oil prices, many of you out there may be hoping to see OPEC come in and cool the market with a production increase, but that is far from likely to occur. In fact, OPEC now finds itself in a pretty unusual position (wsj.com subscription required), with the likely outcome being that the group will decide to do nothing at all.

So what exactly is OPEC looking at? The most obvious factor that the group must contend with is all time highs in oil, and a current cost per barrel of $102.50. For so long we kept wondering if / when we would be seeing $100 oil, and that time has come, and now it seems like oil has formed a pretty solid base of support above the psychological $100 barrier. This would typically lead you to believe that OPEC would come in and lift production in order to cool off prices.

But, on the other hand, OPEC also has to contend with a weakening dollar, fears over a possible recession, and rising inventories in America. All three of these, by themselves alone, would be enough to put pressure on OPEC to actually look at tightening its supplies. The group definitely doesn’t want to see a recession spread across America and put a serious crimp in the nation’s appetite for oil.

Continue reading What is OPEC to do?

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Filed under: Bad news, Economic data, Federal Reserve

With wholesale inflation running at a 12% annual rate, prices are raging out of control. But Fed Chair Ben Bernanke is wagering that the risk of economic contraction is greater than the damage from inflation. He might be thinking that it took 15 years to get us out of the Great Depression but only two years in the early 1980s of 19% Fed Funds rate to break inflationary expectations after a decade of the stagflationary 1970s.

In 2005, the Wall Street Journal reported that Ben Bernanke was a Great Depression “buff.” This makes me think that he is trying to avoid making the mistakes that the Fed made in the 1930s. In so doing, he is spurring runaway inflation. For example, the price of gasoline is expected to rise to $4.00 a gallon this summer with help from $103-a-barrel oil. Back in January 2001, oil was at $24 a barrel — it’s increased at a nice 23% compound annual growth rate in the last seven years. Since oil is traded in dollars, Bernanke’s interest rate cuts are spurring a weaker dollar, hence higher oil prices.

The Great Depression started in 1929 with a stock market crash. And it really didn’t end until World War II — which spurred enormous government spending to build a war arsenal. Bernanke believes that a major reason that the Great Depression lasted so long was that the Fed tightened credit, which cut off liquidity when it was needed most.

Continue reading Is Bernanke right to ignore inflation?

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Filed under: Management, Law, Internet, Competitive strategy, eBay (EBAY), Technology

In what may end up being a net positive for eBay, albeit possibly an expensive one, a settlement has been reached in the litigation over patent infringement between eBay Inc. (NASDAQ: EBAY) and MercExchange. Financial figures of the settlement have not been disclosed, but a report from Computerworld indicates that eBay shall purchase the three patents which were the subject of the litigation, as well as a number of other related technologies and developments.

Mike Jacobson, eBay senior vice president and general counsel, was quoted by Computerworld as stating: “In addition to resolving the litigation, this settlement gives us access to additional intellectual property that will help improve and further secure our marketplaces.” MercExchange founder and CEO Thomas Woolston, is quoted in the same report as stating: “It seemed like the right time to put it behind us.”

In May of 2003, a jury in the case found eBay guilty of patent infringement and an injunction was sought and granted. However, in reviewing the US Court of Appeals decision, the Supreme Court unanimously derailed the long standing practice of issuing immediate injunctions in cases of intellectual property infringement, insisting that in the future, such injunctions must meet the requirements of a four-factor test.

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Filed under: Other issues, Good news, Abbott Laboratories (ABT), Housing, Federal Reserve

The U.S. Federal Reserve will conduct two auctions of 28-day credit through its Term Auction Facility in March, the Fed announced Friday, in a statement.

The Fed said it will offer $30 billion in an auction on March 10, 2008 and $30 billion in an auction two weeks later, on March 24, 2008.

The Fed also reiterated its support for the term auction facility policy. The Fed said: “The Federal Reserve intends to conduct biweekly TAF auctions for as long as necessary to address elevated pressures in short-term funding markets. Decisions regarding auctions in April will be announced by Friday, March 28.”

Continue reading Fed to offer $60 billion via term auction facility in March; reiterates TAF policy support

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Filed under: Bad news, MasterCard Inc’A’ (MA), Options, Technical Analysis, Economic data

Mastercard Incorporated (NYSE: MA) stock is declining this morning after the Commerce Department reported that consumer spending grew a scant 0.4 percent in January. While that reading beat economists’ predictions, inflation-adjusted consumer spending, which is used to compute overall economic growth, was flat for the month. Inflation-adjusted consumer spending has not been this bad since late-summer of 2005, when Hurricane Katrina disrupted the market. This could be a bad sign for credit-card companies like MA. 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 MA.

After hitting a one-year low of $99.28 in March, the stock hit a one-year high of $227.18 in December. This morning, MA opened at $192.65. So far today the stock has hit a low of $189.87 and a high of $193.60. As of 11:30, MA is trading at $192.08, down $2.62 (-1.3%). The chart for MA looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $230 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in two months as long as MA is below $230 at April expiration. MasterCard would have to rise by more than 20% before we would start to lose money.

MA hasn’t been above $230 at all in the past year and has shown resistance around $200 recently. This trade could be risky if the economy rebounds quickly, but even if that happens, this position could be protected by resistance MA might find just above $220, where it topped out twice in the past few months.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in MA.

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