Filed under: Analyst reports, Analyst upgrades and downgrades

MOST NOTEWORTHY: UCBH Holdings, National Atlantic Holdings and J Sainsbury were today’s noteworthy downgrades:

• Friedman Billings downgraded UCBH Holdings (NASDAQ: UCBH) to Market Perform from Outperform. The firm said the departure of auditor PWC could not have come at a worse time following the recent CFO replacement and the credit-quality-related adverse change to Q4 earnings in the 10-K.
• Citigroup cut National Atlantic Holdings (NASDAQ: NAHC) to Hold from Buy after the company announced plans to merger with a subsidiary of Palisades Safety and Insurance.
• Goldman removed J Sainsbury (OTC: JSAIY) from the Conviction Buy List on fears that stagflation could impact earnings.

OTHER DOWNGRADES:

• Suntrust cut Goodrich Petroleum (NYSE: GDP) to Neutral from Buy.
• Cubist Pharma (NASDAQ: CBST) was downgraded to Market Weight from Overweight at Thomas Weisel.
• ING lowered Banco Bilbao Vizcaya Argentaria (NYSE: BBV) to Hold from Buy.

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Filed under: Analyst reports, Analyst upgrades and downgrades, Exxon Mobil (XOM), Boeing Co (BA), Cardinal Health (CAH)

MOST NOTEWORTHY: WuXi Pharma, ExxonMobil and LifePoint Hospitals were today’s noteworthy upgrades:

• Jefferies upgraded shares of WuXi Pharma (NYSE: WX) to Buy from Hold as they believe the risk/reward is much improved following the recent weakness. They think the company’s 2008 guidance is achievable.
• Credit Suisse raised ExxonMobil (NYSE: XOM) to Outperform from Neutral as they believe the rise in crude oil means analyst estimates are too low.
• Goldman sees upside to hospital stocks given low valuations and expectations. The firm upgraded LifePoint Hospitals (NASDAQ: LPNT) to Buy from Neutral and named it a top pick along with previous top pick Cardinal Health (NYSE: CAH).

OTHER UPGRADES:

• Goldman added NDS Group (NASDAQ: NNDS) to their Conviction Buy List and upgraded shares to Buy from Neutral.
• Morgan Stanley raised Boeing (NYSE: BA) to Overweight from Equal Weight.
• JP Morgan added Sherwin-Williams (NYSE: SHW) to the Focus List.

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Filed under: Analyst reports, Analyst upgrades and downgrades, Exxon Mobil (XOM), Boeing Co (BA), Cardinal Health (CAH)

MOST NOTEWORTHY: WuXi Pharma, ExxonMobil and LifePoint Hospitals were today’s noteworthy upgrades:

• Jefferies upgraded shares of WuXi Pharma (NYSE: WX) to Buy from Hold as they believe the risk/reward is much improved following the recent weakness. They think the company’s 2008 guidance is achievable.
• Credit Suisse raised ExxonMobil (NYSE: XOM) to Outperform from Neutral as they believe the rise in crude oil means analyst estimates are too low.
• Goldman sees upside to hospital stocks given low valuations and expectations. The firm upgraded LifePoint Hospitals (NASDAQ: LPNT) to Buy from Neutral and named it a top pick along with previous top pick Cardinal Health (NYSE: CAH).

OTHER UPGRADES:

• Goldman added NDS Group (NASDAQ: NNDS) to their Conviction Buy List and upgraded shares to Buy from Neutral.
• Morgan Stanley raised Boeing (NYSE: BA) to Overweight from Equal Weight.
• JP Morgan added Sherwin-Williams (NYSE: SHW) to the Focus List.

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Filed under: Bad news, Consumer experience, Economic data, Recession

U.S. consumer confidence fell to a 16-year low in March 2008, as inflation and recession concerns continued to weigh on consumers, the Reuters/University of Michigan Survey of Consumers announced Friday.

The Reuters/University of Michigan consumer sentiment index fell to 70.5 in March 2008 (preliminary statistic) from 70.8 in February 2008. It’s the lowest reading for the index since February 1992.

Economists surveyed by Bloomberg News had expected the index to decline to 69.5.

The expectations index, which some economists and analysts say is a lead indicator regarding future consumer spending, fell to 61.4 in March 2008 from 62.4 in February 2008.

Also, consumers surveyed said they expect inflation to run at a 4.5% annualized rate in 2008, compared to a 3.6% annualized rate projected in February 2008.

Economic Analysis: The key dimension of the March 2008 Reuters/UMich. survey is the 16-year low for the sentiment index. Rising energy prices, news of continued stress in credit markets, the housing market’s decline, and low/negative job growth are all weighing on consumers, and the survey data reflect the above. The reading also suggests big-ticket retail sales — an important component of U.S. economic activity — may have a tough time recovering in the immediate months ahead, as consumers typically delay/cancel purchases of big-ticket items during periods of low consumer confidence.

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Filed under: Bad news, Consumer experience, Economic data, Recession

U.S. consumer confidence fell to a 16-year low in March 2008, as inflation and recession concerns continued to weigh on consumers, the Reuters/University of Michigan Survey of Consumers announced Friday.

The Reuters/University of Michigan consumer sentiment index fell to 70.5 in March 2008 (preliminary statistic) from 70.8 in February 2008. It’s the lowest reading for the index since February 1992.

Economists surveyed by Bloomberg News had expected the index to decline to 69.5.

The expectations index, which some economists and analysts say is a lead indicator regarding future consumer spending, fell to 61.4 in March 2008 from 62.4 in February 2008.

Also, consumers surveyed said they expect inflation to run at a 4.5% annualized rate in 2008, compared to a 3.6% annualized rate projected in February 2008.

Economic Analysis: The key dimension of the March 2008 Reuters/UMich. survey is the 16-year low for the sentiment index. Rising energy prices, news of continued stress in credit markets, the housing market’s decline, and low/negative job growth are all weighing on consumers, and the survey data reflect the above. The reading also suggests big-ticket retail sales — an important component of U.S. economic activity — may have a tough time recovering in the immediate months ahead, as consumers typically delay/cancel purchases of big-ticket items during periods of low consumer confidence.

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Filed under: Boeing Co (BA), Politics

Boeing Co. (NYSE: BA) filed a formal protest this week against the U.S. Air Force’s decision to award its $35 billion contract for refueling tankers to EADS, the parent of Europe’s Airbus. The value of the contract could grow to $100 billion over the life of the program, and Boeing is not going to let that money slip away easily.

The decision has generated a lot of political heat in the U.S., as politicians decry the loss of American jobs and American profits. The problem is, though, that the United States loses no matter which firm gets the contract.

If Boeing is given the contract, the U.S. gets lower quality planes in smaller numbers. By all accounts, the Boeing tanker, based on the 767, is smaller and older than the EADS tanker, based on the larger and newer Airbus A330. And EADS promised to deliver more of the planes at an earlier date. As BloggingStocks’ Peter Cohan wrote when the decision was made, the choice between the two planes wasn’t close on the merits.

On the other hand, if EADS gets the contract, the U.S. loses tens of thousands of high-paying, high-tech defense jobs. Boeing claims the contract would provide over 40,000 jobs. Although EADS claims that it would assemble its planes in the U.S. and provide roughly 20,000 American jobs, it’s pretty clear that most of the tanker-related jobs would be in Europe, where most Airbus parts are made.

So it’s a lose-lose situation. Either you get jobs, exorbitant corporate profits and inferior planes, or fewer jobs, no (American) profits and superior planes. Usually, our lion-hearted men and women of the U.S. Congress chooses the former course. We’ll see if their preference for the latter will survive the growing political storm.

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Filed under: Boeing Co (BA), Politics

Boeing Co. (NYSE: BA) filed a formal protest this week against the U.S. Air Force’s decision to award its $35 billion contract for refueling tankers to EADS, the parent of Europe’s Airbus. The value of the contract could grow to $100 billion over the life of the program, and Boeing is not going to let that money slip away easily.

The decision has generated a lot of political heat in the U.S., as politicians decry the loss of American jobs and American profits. The problem is, though, that the United States loses no matter which firm gets the contract.

If Boeing is given the contract, the U.S. gets lower quality planes in smaller numbers. By all accounts, the Boeing tanker, based on the 767, is smaller and older than the EADS tanker, based on the larger and newer Airbus A330. And EADS promised to deliver more of the planes at an earlier date. As BloggingStocks’ Peter Cohan wrote when the decision was made, the choice between the two planes wasn’t close on the merits.

On the other hand, if EADS gets the contract, the U.S. loses tens of thousands of high-paying, high-tech defense jobs. Boeing claims the contract would provide over 40,000 jobs. Although EADS claims that it would assemble its planes in the U.S. and provide roughly 20,000 American jobs, it’s pretty clear that most of the tanker-related jobs would be in Europe, where most Airbus parts are made.

So it’s a lose-lose situation. Either you get jobs, exorbitant corporate profits and inferior planes, or fewer jobs, no (American) profits and superior planes. Usually, our lion-hearted men and women of the U.S. Congress chooses the former course. We’ll see if their preference for the latter will survive the growing political storm.

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Filed under: JPMorgan Chase (JPM), Bear Stearns Cos (BSC)

This morning, I took a look at Bear Stearns’ (NYSE: BSC) 10-K filing, focusing on the Risk Factors. Usually, such stuff is boilerplate and not worth thinking about. Yet, reading the list, it seems that Bear is triggering many of them. Essentially, it’s a classic case where there’s a run on the bank.

OK, so take a look at this risk factor from the 10-K:

“Liquidity risk could impair our ability to fund operations and jeopardize our financial condition. Liquidity, i.e., ready access to funds, is essential to our businesses. An inability to raise money in the long-term or short-term debt markets, or to engage in repurchase agreements or securities lending, could have a substantial negative effect on our liquidity… For example, lenders could develop a negative perception of our long-term or short-term financial prospects if we incurred large trading losses, if the level of our business activity decreased due to a market downturn or if regulatory authorities took significant action against us.”

With Bear, we are certainly getting a hard dose of “negative perception.” Despite its billions of dollars, the firm has had a tremendous break-down with its clients and counterparties. According to Bear’s CEO, Alan Schwartz, the liquidity position “deteriorated” in a matter of about 24 hours (yes, it’s something you never want someone like him to say). As a result, the firm has received secured loan facilities from JPMorgan Chase & Co. (NYSE: JPM) and even the Federal Reserve Bank of New York.

This action is vital. After all, a collapse of a massive financial institution is poison for all the other players (if history is any indication). What’s more, firms like Bear have extremely complicated operations and structure highly leveraged transactions and derivatives. In other words, the “house of cards” seems like the right analogy. More importantly, what other firms are stretched like Bear?

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: JPMorgan Chase (JPM), Bear Stearns Cos (BSC)

This morning, I took a look at Bear Stearns’ (NYSE: BSC) 10-K filing, focusing on the Risk Factors. Usually, such stuff is boilerplate and not worth thinking about. Yet, reading the list, it seems that Bear is triggering many of them. Essentially, it’s a classic case where there’s a run on the bank.

OK, so take a look at this risk factor from the 10-K:

“Liquidity risk could impair our ability to fund operations and jeopardize our financial condition. Liquidity, i.e., ready access to funds, is essential to our businesses. An inability to raise money in the long-term or short-term debt markets, or to engage in repurchase agreements or securities lending, could have a substantial negative effect on our liquidity… For example, lenders could develop a negative perception of our long-term or short-term financial prospects if we incurred large trading losses, if the level of our business activity decreased due to a market downturn or if regulatory authorities took significant action against us.”

With Bear, we are certainly getting a hard dose of “negative perception.” Despite its billions of dollars, the firm has had a tremendous break-down with its clients and counterparties. According to Bear’s CEO, Alan Schwartz, the liquidity position “deteriorated” in a matter of about 24 hours (yes, it’s something you never want someone like him to say). As a result, the firm has received secured loan facilities from JPMorgan Chase & Co. (NYSE: JPM) and even the Federal Reserve Bank of New York.

This action is vital. After all, a collapse of a massive financial institution is poison for all the other players (if history is any indication). What’s more, firms like Bear have extremely complicated operations and structure highly leveraged transactions and derivatives. In other words, the “house of cards” seems like the right analogy. More importantly, what other firms are stretched like Bear?

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: Deals, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), News Corp’B’ (NWS)

It looks like we have now entered the when, not if, stage of Microsoft Corp. (NASDAQ: MSFT) acquiring Yahoo Inc. (NASDAQ: YHOO) and we will soon be saying good-bye to the Yahoo we know for something else.

You will find this splattered across the web today: Microsoft presents its vision of a combined company to Yahoo executives in what appears to be the first meeting since Microsoft made its unsolicited offer for Yahoo, reports The Wall Street Journal [subscription required].

On January 31, 2008, a buyout offer of $44.6 billion was made by the software giant to combine forces with Yahoo!, against the supposedly next evil empire, Google Inc. (NASDAQ: GOOG).

Google has stolen Yahoo’s thunder, and try as it might, Yahoo has not been able to get it back. Its stock has stagnated. Even as GOOG shareholders have watched their stock plummet some 40% this year, Google is still the current web star when it comes to search and advertising revenue. Microsoft hopes to steal this mantle by combining MSN with Yahoo.

Continue reading Bye bye Yahoo!, it was nice knowing you

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