Filed under: Other issues, Good news, Consumer experience, Personal finance, Politics, Recession

Typically, seeing an envelope with the letters “IRS” on it in your mailbox could be a cause for concern, but over the next week some 130 million homes in America will be receiving letters in the mail bringing good news from the Internal Revenue Service.

As you are probably already aware, in its attempt to keep the economy afloat, the US government passed a $168 billion economic stimulus plan, and as a result millions of households across the nation are going to be receiving a little extra cash this year from the US government.

Just to make sure that everyone knows what they can expect, the IRS is mailing over 100 million letters next week to make certain that everyone who may be eligible files their 2007 taxes so that they don’t miss the chance to claim their stimulus payments.

Continue reading An IRS letter worth waiting for

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Filed under: Earnings reports, Technical Analysis, Stocks to Buy

Koppers Holdings (NYSE: KOP) provides carbon compounds and commercial wood treatment products to the aluminum, railroad, specialty chemical, utility, rubber and steel industries. Its Carbon Materials and Chemicals unit manufactures carbon pitch, phthalic anhydride, creosote, carbon black, furnace coke, refined tars and specialty chemicals. The Railroad and Utility Products segment treats wood for vineyard and construction uses and supplies treated crossties and utility poles. Koppers serves markets in North America, Australia, the United Kingdom and Scandinavia.

The firm pleased investors last week, when it reported Q4 EPS of 44 cents and revenues of $326.8 million. Analysts had been expecting 38 cents and $310.9 million. Management also guided FY08 revenues to about $1.39-$1.43 billion ($1.41B consensus) and approved a $75 million share repurchase program.

Continue reading Koppers Holdings (KOP): Shares forming bullish ‘pennant’

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Filed under: Exxon Mobil (XOM), Middle East, Oil

MoneyNews reports a surprising reality. Inflation — particularly high fuel prices — is stirring violence in the Middle East. It turns out that just like in the U.S., there’s a minority of royal family members — here we call them Exxon Mobil Corp. (NYSE: XOM) executives — who benefit from $103 a barrel oil and a majority of regular people who actually have to pay the higher prices. This creates political problems for the ruling class.

This is different than in the U.S. Here people grumble at the gas pumps and grocery stores and pay the higher prices. In the Middle East, by contrast, strikes, demonstrations and riots are becoming commonplace as inflation causes prices for basic foods and other necessities to skyrocket from Morocco to the Persian Gulf. In Jordan, the cost of some fuels spiked 76% overnight after the government removed almost all fuel subsidies. Rising fuel immediately doubled prices of food staples like eggs, potatoes and cucumbers.

How would you react if instead of paying $3.30 for a gallon of gas this week, you had to pay $5.80 next week? Such price increases sparked violence in the Middle East. Protests over the cost of bread culminated in violence in Yemen, where 12 protesters were killed; a confrontation between Lebanese Army soldiers and Shiite protesters triggered by rising bread prices killed seven more. 34 Moroccans are in prison for taking part in riots over food prices and even tightly controlled Jordan has seen nonviolent demonstrations and strikes.

Continue reading 76% overnight consumer price increases stir violence in the Middle East

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Filed under: Earnings reports, Technical Analysis, Stocks to Buy

Advanced Medical Optics (NYSE: EYE) manufactures and sells a variety of medical devices used to correct vision problems. Its cataract/implant products include artificial lenses used to replace human lenses, plus instruments and systems employed during the implantation surgery. Its laser systems are used in a variety of FDA-approved vision correction procedures. Its eye care product line features contact lens care solutions.

The company pleased investors earlier in the month, when it reported a Q1 loss of three cents per share and revenues of $304.6 million. Analysts had been looking for a loss of six cents and $287.4 million. Management also guided FY08 EPS to $1.25-$1.45 ($1.37 consensus) and FY08 revenues to $1.22-$1.24 billion ($1.22B consensus).

Continue reading Advanced Medical Optics (EYE): Shares cycle in bullish ‘pennant’

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Filed under: Options, Akamai Technologies (AKAM)

Akamai Technologies (NASDAQ: AKAM) is recently up 89cents to $34.29 on unconfirmed takeover chatter. AKAM offers services for accelerating content and business processes online. AKAM March 35 calls have traded 191 times on transaction volume of 6,671 contracts. AKAM March 40 calls have traded 84 times on transaction volume of 3,233 contracts. AKAM March option implied volatility of 48 is below its 26-week average of 54 according to Track Data, suggesting decreasing price fluctuations.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Filed under: Bad news, Economic data

Personal income rose in January 2008, but inflation also rose in January 2008, canceling-out the purchasing power of most of the personal income gains.

Nominal consumer spending increased 0.4% in January 2008 as did personal income, the U.S. Commerce Department announced Friday, in a statement. Each was above what economists surveyed by Bloomberg News have estimated — a 0.2% increase for each.

However, inflation also rose in January 2008, canceling-out the purchasing power of most of the personal income gains.

Meanwhile, the PCE Deflator, which the U.S. Federal Reserve follows closely as a gauge of inflation, increased 0.4%. During the past 12 months, prices have risen 3.7%, roughly twice the pace of the 1.8% 12-month inflation rate as of August 2007.

Core inflation — which excludes food and energy prices — increased 0.3% in January 2008 and is running at a 2.2% rate during the past 12 months. That 2.2% rate is above the U.S. Federal Reserve’s 1.5-2% target zone for PCE Deflator core inflation, commonly referred to as the Fed’s “comfort zone.”

Continue reading U.S. personal income rises, but inflation eats away most of the gain

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Filed under: Industry, Consumer experience, Competitive strategy, Microsoft (MSFT), Sony Corp ADR (SNE)

Imagine if the Sony (NYSE:SNE) PS3 actually came out of the shadow of the Nintendo Wii and Microsoft (NASDAQ:MSFT) Xbox 360. During 2007, PS3 ran in third place in sales in most regions and most months. The machine was viewed as too expensive and did not have enough new games to run on it.

There is a case to be made that some of this could change. Production scale is moving up on the machine. That means lower component costs and another chance to cut prices. According to Reuters, “2008 will be a turning year for the PS3,” said iSuppli analyst Pamela Tufegdzic. “Sony is offering a better forthcoming software pipeline with blockbuster titles like ‘Gran Turismo 5,’ which will boost PS3 sales this year.”

Not so fast. Nintendo and Microsoft are not going to stand by and let their sales be stolen. Nintendo has already introduced a radical new platform called Nintendo Fit. It allows users to stand on a balance board and be physically involved in games that include things such as downhill skiing. Microsoft has its own arsenal lead by Halo 3.

Sony’s PS3 may be in for slightly better times, but it is far behind in a race that it may never win.

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

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Filed under: Kohl’s Corp (KSS), Options

Kohl’s (NYSE: KSS) closed at $45.24 Thursday.

Goldman Sachs says: “expect shares to trade flat to modestly higher following an in-line quarter and setting of an achievable F08 earnings bar.”

KSS April option implied volatility of 46 is above its 26-week average of 40 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO)

Yahoo, Inc. (NASDAQ: YHOO) sure does seem to have a big head on its shoulders these days. After Microsoft Corp. (NASDAQ: MSFT) stated its intention to by Yahoo! almost a month ago, the shots started flying. At first, Yahoo! seemed to be considering the bid. Google, Inc. (NASDAQ: GOOG) started crying foul, claiming that this combination would limit internet innovation.

Yahoo! then rebuffed the offer from Microsoft, stating that the $44 billion offer was too low. For a company that’s ran a decent business in the last few years — but has been sideswiped by Google in every possible way — what did Yahoo! expect? A $75 billion buyout package? Rumor has it that current CEO and co-founder Jerry Yang loathed the idea of being part of Microsoft. Personal distaste, though, should never get in the way of what’s best for Yahoo!’s shareholders, right?

Yahoo! has looked a some partnerships in February that would keep it from Microsoft’s clutches, but is now stating that the software maker’s attempt to buy it is distracting its own workforce. Bull. Yahoo!’s workforce apparently is already highly distracted if it can’t seem to find a business model that would sustain innovation and profitable growth. Yahoo! says the bid is making it harder to hire and retain “key employees and hire new talent.”

Are you serious, Yahoo!? The company may be thinking too highly of itself, and if so, it needs to put its ego on the shelf and find a way to partner with somebody — anybody — to help it compete against Google. There is no way it can do this itself, as it’s been shown for years now. Until then, distractions from the Microsoft bid are the order of the day. Get used to it, Yahoo! — and don’t give a lame excuse of “distracting the company” while it happens. Shareholders know better.

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Filed under: Amer Intl Group (AIG)

Bloomberg News reports on a new study by UBS AG (NYSE: UBS) which estimates that the toll of the subprime mortgage debacle will exceed $600 billion — this suggests that the $163 billion worth of write-downs taken so far are only about 37% of the way there.

I am not exactly sure how this study got to $600 billion. It suggests that banks, brokers and insurers have disclosed $163 billion of write downs and credit losses, and that they stand to lose $350 billion, according to estimates from UBS’s global banking team. If this $350 billion represents the losses yet to be taken, then the total is $510 billion — $90 billion short.

Nevertheless, subprime’s toll is severe. Two new victims emerged yesterday. American International Group Inc. (NYSE: AIG) reported the biggest quarterly loss in its 89-year history yesterday with help from an $11.1 billion write down on derivatives linked in part to subprime mortgages. Also, a $1.8 billion hedge fund run by Peloton Partners LLP, managing asset-backed debt, announced it was liquidating because of tighter lending restrictions on Wall Street.

UBS put it nicely: “All the investment schemes that have been built on the basis of a strong and resilient economic backdrop have to be unwound / scaled down.”

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns AIG stock and has no financial interest in the other companies mentioned.

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