Filed under: Major movement, Earnings reports, Forecasts, Bad news, Products and services, Competitive strategy, Sara Lee Corp (SLE), Commodities

Shares of consumer goods giant Sara Lee (NYSE: SLE) have been taking a beating today after the company failed to meet analyst estimates for its fiscal third quarter.

At first glance, it looked like a fantastic quarter for the company, as profit rose by a remarkable 82%, but things start to look less than rosy once we take a closer look. Analysts had been expecting to see the company show earnings during the quarter of 24 cents a share, and were disappointed to see the company come in below this, with only 22 cents a share.

This is the second quarter in a row in which the company posted weaker than expected earnings, and is quickly erasing the progress that the stock has been making since the beginning of March.

Continue reading Sara Lee (SLE) gets hit by volatile commodity prices

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Here’s a sponsored review by Blown Mortgage about the Mortgage Loan Calculator Web site and Free mortgage widget.  Blown Mortgage provides sponsored reviews to companies who wish to promote their services to our readers.  You can learn more about a sponsored review from Blown Mortgage here.

What do you get when you cross Web 2.0 with a mortgage calculator?  Check out the Mortgage Loan Calculator web site and see for yourself.  Whether you’re a consumer or an industry vet the Mortgage Loan Calculator provides a great, free calculator for those of you looking to determine your monthly mortgage payment and pay-off schedule for your mortgage or other loan.  

The site has two calculators, a mortgage calculator and a simple loan calculator.  The mortgage calculator is robust and includes all of the factors you need to determine your actual amortization and pay-off schedule.  Once you’ve plugged in all the variables the program provides a slick-looking graph of the results with the resultant mortgage payments in an easy-to-read grid format below.

The Mortgage Calculator Widget Gives Your Blog Instant Functionality

The mortgage and loan calculator is available in a streamlined widget which can be placed right on your blog or web site by simply copying a few lines of code and pasting it in to your side bar or wherever you want to place the widget.  This is a great value-add for any loan officer or real estate agent looking to provide good-looking, functional, valuable content to readers.

I’ve installed the mortgage calculator widget here on the sidebar of Blown Mortgage to show you how it works.  When the user tries the calculator from your blog or site the results are displayed in a slick ‘modal window’ that keeps the users on your site and doesn’t require a pop-up window or any other distraction.  That’s what I call slick integration.

See how the graph and pay-off information simply overlays the blog so the users don’t have to leave to get the data.  I love the graph design too.

Totally Professional

The execution of this calculator is superb from the smooth sidebar integration, modal window results and AJAX-based graphs that are incredibly visually appealing.  I recommend anyone who is looking for a mortgage calculator to offer to their readers to add this Mortgage Loan Calculator.  It’s a great little application that delivers a lot of value in a user-friendly and well-executed way.  Even though this is a sponsored review I’m ecstatic I found it.  It will have a permanent home on Blown Mortgage and I recommend that you find a spot for it too.

Source [blownmortgage]

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There seems to be a false sense of security that somehow, the credit (debt) crisis is now slowly floating away into space. The market rally is indicative of this false sense of security. All bad news is ignored while slim glimmers of good news are enough to spark a rally. We are […]
Related Posts:
■The Housing Wave of the Future: Two Main Mortgage Tsunamis.
■Did you Feel That? Housing Just Hit the Third Rail.
■What really goes on with Black-matter SIVs. A Micro-case study. My Experience with Prosper and how it is Similar to the Current Mortgage Debacle.
■The Rent vs. Buying Dilemma: Mortgages the Southern California Way. 3 Factors to look at: Increase Rental Prices, Housing Price Declines, and Tighter Credit Markets.
■Second Quarter Housing All-Stars Recap: Subprime closes shop, Prime Loans Gone Wild, and the Future of Housing.

There seems to be a false sense of security that somehow, the credit (debt) crisis is now slowly floating away into space. The market rally is indicative of this false sense of security. All bad news is ignored while slim glimmers of good news are enough to spark a rally. We are starting to look like the first quarter of 2007 when the idea that sub-prime was going to be contained in a tightly sealed silo and the market rallied all the way through August, only to be slashed to its current level. I’m not sure what data the bulls are looking at but it really doesn’t point to a recovery for sometime. In fact, many states are now revising their budgets for the fiscal year and things are a lot worse than they once appeared. California is now looking at a $20 billion budget deficit revised from the earlier $14.5 billion deficit only a few months ago.
These are things that I hope most of you are already aware of. Yet the focus has been taken away from the actual data in these toxic mortgages. Have things reached their apex of crap? Unfortunately they have not and let us go through a few reasons for this.

First, we’ll be looking at a sampling of 1% of first lien mortgages from the Fed that was put out in March of 2008:

The first thing I want to draw your attention to is the mean of these loans in various mortgage products. Overall, what we are seeing is distress on loan balances that seem below the median price of a home in the United States. The balances are not that high but remember that these are only for first lien mortgages and as we all know, many took out second mortgages and piggy-backed on these so they could go with little or no money down. It looks like the average size of a sub-prime loan ranges from $140,000 to $200,000. Out of the 1% sampling, we can get a quick glimpse and see that the bulk of these mortgages are ARMs; in this sample group over 70% of the sub-prime mortgage balance is in ARMs. So how are these mortgages performing?

Out of this small pool, already 47% of the ARMs are not current! 13% are foreclosed and 8% are real estate owned. Guess where that 16% 60+ is heading? You may be running the math above and see that it only adds up to 90%. You can assume that we are looking at 90+ lates or other forms of distress for that remaining 10%. Either way, the performance here is absolutely abysmal and that 16% is likely heading to further future distress in the market. That is baked in. But the next shoe to drop is the Alt-A loans.  You know, the cream filling between an ultra-prime and sub-prime taco? Let us quickly look at that profile:

This is where things get even more disturbing. From this sample profile you’ll notice that the mean is much higher than the sub-prime pool. In fact, we have a range of $220,000 to $350,000 with the bulk of the loans being in the ARM profile and being close to $349,000. And by the way, many of these are in high priced areas like California. The first line above is observations which is the actual individual mortgages measured in this 1% sampling. Take a look at the first row and the second. Now you understand why the next shoe to drop is actually more distressing than the sub-prime profile.  In fact, the size is comparable to the sub-prime portfolio. The nearly double in size is much more suspect and now that we know that ratings of AAA aren’t worth what they try to imply, we know many of these loans are going to go into some form of distress down the line. Look at the current status:

Already 19% of this portfolio is delinquent! And assuming many of these loans are in high priced areas like California, we have only entered the first stage of the debacle. In fact, the median year over year price was still positive as late as the 4^th quarter of 2007! So you can certainly expect this number to balloon. Just take a look at the notice of default chart below:

What you’ll notice is how quickly these notice of defaults are turning into foreclosures. If this is any guide to the future, these loans are going to get hammered into the ground. And of course, California is living in another dimension assuming that we are at a bottom. Now take a look at the California “non-prime” aka banana republic mortgage profile:

Okay, so the share of loans that are non-prime and ARMs is 73.8%. 58.9% are current. 43.2% of these are resetting in the next 12 months. And things are bottoming out because?

And by the way, anyone that bought in California in the last three years is most likely already underwater so any of these additional bailouts will not help since these folks are in negative equity positions.  Severe negative equity. And you notice how the above is first liens? A high percentage have junior liens and they have no desire to let the property go since it will very likely wipe their loan out completely. That is why you are seeing such a delay in short sales getting done. The loss mitigation department with the first lien in most cases wants to work with you but the junior note holders have no rush to cancel out their debt. That is why cram downs are so important to improving the market. This way, judges can force and approve these deals without other parties delaying simply because they are delusional they’ll get some money back. They won’t. The industry is shooting itself in the foot here. Many of the bailout proposals on the table at a minimum require some equity which rules out the vast majority of California loans. And that is assuming most people are willing to stay in an asset that is depreciating with no potential of equity for a very long time.  Most are deciding to practice the new modern dance of moonwalking away from their mortgages.

I am extremely disappointed with our leadership and this isn’t just me:

“WASHINGTON DC (CNN) — A new poll suggests that President Bush is the most unpopular president in modern American history.”

A fitting way to end the final year in office.  Can’t get lower approval than that and just look at the state of our country today. Am I blaming this entire mess on one person? Of course not! The current Congress is just as bad on both sides. But when you are commander and chief (aka CEO of the U.S.) the buck stops with you. If this were a publicly traded company he’d been fired a long time ago. No one has a crystal ball but even a toddler can understand that giving people mortgages that they cannot pay is a recipe for disaster. The invention of perpetual housing appreciation was a myth.  The “ownership society” was an Orwellian ploy to screw the vast majority of Americans. When they marketed ARMs with the blessing of Greenspan it was for prudent investing and to free up additional resources. Of course the absolute inverse happened. And why not? No one bothered to enforce any of the regulations on the books. This government was preoccupied with destroying the future of our country and putting us into an incredible amount of debt. Anyone that thinks are country is in good financial shape is out of their minds and probably still thinks these mortgage products were good ideas. Thankfully, 70 percent of the country disagrees with how things are being handled at the top. When you build your entire fortune and fortress on a volcano, don’t be angry when it explodes.

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Related Posts:
■The Housing Wave of the Future: Two Main Mortgage Tsunamis.
■Did you Feel That? Housing Just Hit the Third Rail.
■What really goes on with Black-matter SIVs. A Micro-case study. My Experience with Prosper and how it is Similar to the Current Mortgage Debacle.
■The Rent vs. Buying Dilemma: Mortgages the Southern California Way. 3 Factors to look at: Increase Rental Prices, Housing Price Declines, and Tighter Credit Markets.
■Second Quarter Housing All-Stars Recap: Subprime closes shop, Prime Loans Gone Wild, and the Future of Housing.

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Filed under: Competitive strategy, Google (GOOG), Microsoft (MSFT), Battle of the Brands

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

Microsoft Corp. (NASDAQ: MSFT) has been around more than 30 years now and continues to make money hand over first every quarter. Its growth has slowed to levels representative of a mature company, but the power the computer software maker has over the flow of the world’s information is very formidable. Then you have Google Inc. (NASDAQ: GOOG), a company just a decade old but with power that rivals Microsoft in many ways. In a sense, Microsoft provides the river, and Google provides the current.

That’s probably not what Microsoft executives had in mind, but that’s reality. The two companies are uniquely different cultures: Microsoft is a standard, dyed-in-the-wool, buttoned-down corporation and Google operates in an organized chaos type of way, much like a start-up software company. The difference is that Google’s revenue and growth is slowly reaching where Microsoft’s is, and it’s only taken a fraction of the time.

Now that Google is starting to deploy online-based software “products” (webware, if you will) that compete head-on with Microsoft’s products, is a showdown between these two brands imminent? News flash — it’s already here, a fact Microsoft may nor may not realize. Now, dethroning the world’s largest software maker may seem impossible to many of us, and it very well may be impossible. But that may not be Google’s goal; it may want Microsoft to just become irrelevant, which would be a self-imposed death sentence in a way.

By 2015 or so, we’ll have a very clear picture of the competitive landscape between these two, but if today is any indication, Microsoft’s largest challenge in its history is well under way.

Vote in our poll for Microsoft or Google as your preferred brand, and let us know in the comments why you love it.

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Filed under: Major movement, International markets, Earnings reports, Forecasts, Anadarko Petroleum (APC), Chasing Value, Oil, Stocks to Buy, Best Stocks for 2008

After yesterday’s closing bell Anadarko Petroleum (NYSE: APC) reported strong earnings. Excluding nonrecurring items, Anadarko’s earnings totaled $1.44 per share for the quarter. On average, analysts were expecting just $1.22 per share. When compared with last year, Anadarko’s quarterly profit per share surged more than 40%.

Shares ended Monday at up $1.04 to $68.14, and rose over 10% today to $75.04 as oils prices continue to surge. It was only last week I posted Chasing Value: Anadarko (APC) up 75% — hits new 52-week high but I guess it will move higher still.

The other good news is that it has more than halved its debt since acquiring Kerr-McGee IN 2006.

Continue reading Anadarko Petroleum up on earnings & outlook

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Bank of America announced that it plans to work-out approximately $40 billion of loans in trouble at Countrywide as part of it’s acquisition of the failed mortgage lender. BofA estimates that the $40 billion will result in a little over a quarter-million homeowners keeping their homes instead of losing them to foreclosure.

From the Pacific Business News on the new BofA initiative:

In addition, BofA says it will continue its policy of allowing tenants living in properties facing foreclosure to remain on site for 60 days after the completion of foreclosure proceedings. They will receive $2,000 to defray moving expenses if they leave voluntarily within 30 days of the completion of foreclosure proceedings.

BofA (NYSE: BAC) says it plans to spend $1.5 trillion over the next 10 years in community-development efforts that focus on affordable housing, economic development and consumer and small-business lending. BofA is the second-largest bank in the Sacramento region, based on deposits, according to the Federal Deposit Insurance Corp.

You can read the full press release from Bank of America on the initiative here.

Source [blownmortgage]

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Filed under: Deals, Press releases, Industry, Competitive strategy, Boeing Co (BA), Lockheed Martin (LMT)

Focus LLC, investment banking service provider, has announced the acquisition of U.K. based Avialec by Kapco-Valtec, in a move aimed in part at expanding Kapco-Vatec’s marketing base. Avialec, based in Petersfield, England, is a provider of electrical components to the aerospace industry. Building on eight years of growth, Avialec company leadership sought the benefit of increased aerospace industry clout which Kapco-Valtec presents.

Barrie Prescott, CEO of Avialec stated in the Focus LLC press release, “I had decided it was time to put Avialec under the wing of a larger progressive organization with financial firepower to realize the many opportunities before us … FOCUS was the perfect firm to help us realize our goals.”

Kapco-Valtec, a leader in aerospace supply chain management, shall provide market leverage for Avialec to realize it’s expected growth potential, while gaining the benefit of greater exposure to Avialec’s major accounts in the U.K. Likewise, Kapco-Valtec shall provide broader exposure of Avialec to U.S. aerospace accounts.

The Focus LLC investment bankers press release stated: “As is the case with the growing number of international M&A transactions, this deal is a win-win for both companies. We were pleased to be able to complete the transaction in just over four months, said Manan Shah, a FOCUS Partner.”

For further information regarding this acquisition and the services of Focus LLC, please visit the Focus website at www.focusbankers.com.

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Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)

What got Microsoft Corp. (NASDAQ: MSFT) started on its Yahoo! (NASDAQ: YHOO) takeover proposal was a fairly boneheaded idea that it could turn its money-losing online advertising unit — known as the Online Services Business (OSB) which in the last nine months lost $775 million — into a profitable contender to Google Inc. (NASDAQ: GOOG).

Now that Microsoft has withdrawn its offer, it’s still stuck with OSB and it lacks a compelling strategy to make it profitable. But if Microsoft goes back and asks why it got into OSB in the first place it becomes pretty clear that this is not a good business for Microsoft to be in at all. It got into the business for the simple reason that it had Internet envy — that is, it saw other companies get all the hype and profit from online advertising and it wanted its share. While that is a common reason for companies to get into new businesses, that doesn’t make it a profitable one for shareholders.

Here’s how badly Microsoft has done in online advertising. According to PC World, in November 2005 Microsoft ramped up its plan to provide Web-based services through the Windows Live and Office Live brands with the intent of bolstering its online ad revenue. Between August 2005 and December 2006 its share declined from 11% to 8%. By February 2008, its share had fallen even further to 5% of the online advertising market.

It would obviously be great for Microsoft if someone was willing to buy OSB but I don’t know why anyone would want to own its negative cash flows. So that would leave Microsoft with the option of closing down OSB — or at least those parts of it that are losing money.

At this point, the only thing that keeps Microsoft “investing” in OSB is pure ego. It can’t stand the idea that another company — Google — has come along and created a new business that leaves Microsoft out of the limelight. But Microsoft has yet to prove that it can create a process that outperforms Google at giving advertisers better returns on their online advertising investment. So Microsoft has been steadily losing share.

Why it thought a combination with Yahoo would help is hard for me to grasp. If I owned Microsoft shares, I’d feel that there was no way that I would ever get a return on OSB and therefore it’s time to close it.

What do you think?

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

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

When it comes to big merger news, investors let the media get away with making sleazy deals with sources in exchange for access. The case of the aborted Microsoft Corp. (NASDAQ: MSFT) — Yahoo Inc. (NASDAQ: YHOO) deal is no different.

Investors would be nauseated by the amount of butts that get kissed behind the scenes during these drawn-out sagas. Reporters suck up to companies, public relations people and investment bankers and vice versa. I saw some of this first hand when I worked for Bloomberg and would write about deals from time to time.

Since the number of people who actually know anything about an acquisition is fairly small, members of the media contort themselves into rhetorical knots to protect the identities of the people who are spilling the beans. That’s why these types of stories are filled with phrases that no one would ever utter in daily conversation such as a “person familiar with the situation” or a “person familiar with (insert executive’s or company’s name) thinking”or my personal favorite “a person close to the company.”

Continue reading Media World: Use of anonymous sources on Microsoft-Yahoo! deal got out of hand

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