• That Was Fast
    Posted by on February 21st, 2007 at 7:18 am

    When the Altria Group announced in the fall that it was planning to spin off its Kraft Foods division, Wall Street cheered.

    New York Times, February 21

    Kraft Chief Outlines Turnaround Strategy

    New York Times, February 21

  • Medtronic Earns 61 Cents a Share
    Posted by on February 20th, 2007 at 4:09 pm

    Medtronic (MDT) just reported earnings of 61 cents a share, three cents more than exectations. Here are MDT’s results for the past few quarters:
    Quarter………..EPS………….Sales
    Jul-01…………$0.28………..$1,455.70
    Oct-01………..$0.29………..$1,571.00
    Jan-02………..$0.30………..$1,592.00
    Apr-02………..$0.34………..$1,792.00
    Jul-02…………$0.32………..$1,713.90
    Oct-02………..$0.34………..$1,891.00
    Jan-03………..$0.35………..$1,912.50
    Apr-03………..$0.40………..$2,148.00
    Jul-03…………$0.37………..$2,064.20
    Oct-03………..$0.39………..$2,163.80
    Jan-04………..$0.40………..$2,193.80
    Apr-04………..$0.48………..$2,665.40
    Jul-04…………$0.43………..$2,346.10
    Oct-04………..$0.44………..$2,399.80
    Jan-05………..$0.46………..$2,530.70
    Apr-05………..$0.53………..$2,778.00
    Jul-05…………$0.50………..$2,690.40
    Oct-05………..$0.54………..$2,765.40
    Jan-06………..$0.55………..$2,769.50
    Apr-06………..$0.62………..$3,066.70
    Jul-06…………$0.55………..$2,897.00
    Oct-06………..$0.59………..$3,075.00
    Jan-07………..$0.61………..$3,048.00

  • Wal-Mart: $1 Billion a Day
    Posted by on February 20th, 2007 at 11:21 am

    In 1955, General Motors (GM) became the first American company to make over $1 billion in a single year. Today Wal-Mart (WMT) reported its fourth-quarter earnings. The earnings aren’t that interesting (95 cents a share), but check out the sales number–$98.09 billion! That’s an average of $1.06 billion a day.
    For the record, ExxonMobil (XOM) already hit the $100 billion quarterly revenue mark in 2005, but that was due to soaring oil prices.

  • 10 Things You Might Not Know About the Sirius-XM Merger
    Posted by on February 20th, 2007 at 11:05 am

    From the Wired Blog:

    1. It’s being touted as a “merger of equals,” but in fact, Sirius is buying XM for nearly $4.6 billion in stock. (Source:Bloomberg)
    2. Sirius and XM’s receivers are incompatible: it won’t be elementary to combine the two services, and to get both, you’ll probably have to buy a new receiver. The companies have promised to merge channel lineups, however, letting customers pick and choose on an “a la carte” basis.
    3. Sirius offered one-time payments for a lifetime subscription, but tied it to a receiver. These users could be offered deals to add XM or upgrade their receiver, or could be told that one-time payment forever applies only to Sirius-branded content on the original box. What deal will the merged giant offer?
    4. The merger effectively creates a local monopoly in digital radio (excepting that provided through cable television services.) Under scrutiny from the Justice Department and FCC, Sirius and XM may claim to be competing not with each other, but with iTunes and other music download services. If they do, might it have consequences for XM’s claim that they aren’t a download service, in regard to an RIAA lawsuit? However it pans out, the phrase “regulatory hurdles” could haunt the deal for months.
    5. Channels will die. There’s a lot of duplicated content across the two networks. It’ll be interesting to see how closely culling is tied to earcount and ego.
    6. Though XM has more subscribers (XM has claimed 7.6 million to Sirius’s claimed 6 million) and had more than double Sirius’ revenue in 2005, Sirius recently boasted about its economic performance and climbing subscriber base. Both companies have been losing money hand-over-fist for years, however: Shares for both declined about 50 percent last year. Sirius is worth $5.2 billion, while XM was recently valued at $3.75 billion. (Compare the buyout price!)
    7. Sirius was originally called Dog Radio, and was founded in 1990. XM was originally called American Mobile Satellite Corp, and was founded in 1988.
    8. The elliptical orbit of Sirius’s satellites causes trouble for customers who receive their Musak-like business music service through stationary antennas. Sirius is launching a geostationary satellite just for them.
    9. Sirius’ and XM’s press release contained a boilerplate legal disclaimer about “Forward Looking Statements,” listing the words “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “will,” “should,” “may,” as ones that predicate statements the reader should take with a pinch of salt.
    10. Worldstar serves satellite radio to Europe, Africa and the rest of the world. With about a hundredth of the merged giant’s revenues, it doesn’t compete in its home market, instead licensing a few select channels to XM.

  • News this Morning
    Posted by on February 20th, 2007 at 10:09 am

    Good morning. I hope everyone had a great three-day weekend. This is an important week for us. Two of our Buy List stocks will report earnings. First, Medtronic (MDT) reports after the close today. Wall Street is looking for 58 cents a share. Also, Donaldson (DCI) reports on Thursday. The Street is looking for 37 cents a share. I don’t expect any surprises here.
    The best news is that Harley-Davidson (HOG) has reached a tentative deal with its union. Hallelujah! The stock is up early this morning.
    Another big event will come tomorrow morning when the Consumer Price Index for January comes out. I’m expecting more good news on the inflation front.
    Finally, a word on JetBlue (JBLU). The stock is getting slammed this morning, and deservedly so. What I don’t get about JBLU is that in the five years since its IPO, the stock has split 3-for-2, three times. Yet the stock hasn’t gone anywhere. Splits are for high prices! On its first day of trading, JBLU soared from $27 to $45. Three 3-for-2 splits works out to one 3.375-to-1, so $45 is equal to $13.33 today. The shares are around $12.67 this morning.

  • XM and Sirius to Merge
    Posted by on February 19th, 2007 at 2:13 pm

    The New York Post reports:

    Satellite radio operators Sirius and XM are expected to announce their long-awaited merger today, according to a source familiar with the deal.
    The two sides were locked in negotiations over the weekend trying to hammer out a final agreement with an eye toward going public with the merger today in Washington, D.C., where XM is based, this source said.
    Talks were still going on at press time and the deal could fall apart at any time. With antitrust issues of paramount importance, this source said lawyers for both companies were working overtime to fine-tune the language of the agreement and frame the discussion around the deal itself and not regulatory concerns.
    The transaction is expected to be structured as a merger of equals, but given Sirius’ higher enterprise value, shareholders in the Mel Karmazin-led firm will likely come away with a larger percentage of a combined company.
    According to the source, XM Chairman Gary Parsons will retain that title in the combined entity, with Karmazin likely taking the CEO role. It is unclear what role, if any, XM CEO Hugh Panero will play.
    Combining Sirius and XM would result in a single satellite radio operator with more than 12 million total subscribers. A deal would also marry Sirius content, such as Howard Stern, Frank Sinatra and Nascar with XM’s Oprah Winfrey, Bob Dylan and Major League Baseball.
    More important, analysts widely predict that a deal would also save the two companies nearly $7 billion annually.
    Karmazin and Parsons have been dropping hints since last summer about a possible tie-up, believing that competition from terrestrial radio, online radio and mobile music devices such as iPods have not only expanded the marketplace but also lowered the regulatory hurdles to a deal.
    In a note on Friday, Bear Stearns analyst Robert Peck speculated that Sirius and XM needed to move quickly before their window of opportunity closed.
    Gaining regulatory approval “could take up to 15 months; hence, we think any proposed deal needs to be announced by the end of March to close by mid-2008,” Peck wrote.
    On Friday, XM shares hit their lowest point since early November while Sirius shares were approaching 52-week lows. Shares in both companies did trade on heavy volume and ended the session higher, with Sirius gaining 10 cents to close at $3.70 and XM jumping a dollar to $13.98.

    The appeal of these two stocks simply esacapes me. Neither one has made a dime in profit. And from the looks of things, it’ll be a long time before they do.

  • Happy 275th
    Posted by on February 19th, 2007 at 8:32 am

    Labor to keep alive in your breast that little spark of celestial fire, called conscience. – George Washington
    washington-delaware-l.jpg

  • The English-Speaking Century
    Posted by on February 17th, 2007 at 10:05 pm

    Winston Churchill spent twenty years on his four-volume A History of the English-Speaking Peoples, which ended with the death of Queen Victoria. Now Andrew Roberts carries on the great man’s work in “A History of the English-Speaking Peoples Since 1900.”
    Keith Windschuttle writes:

    The connection between Protestant individualism and personal responsibility, Roberts argues, also created a favorable environment for the free enterprise that provided the economic base for British and then American economic dominance. Their form of capitalism, free enterprise, free trade, and laissez-faire economics, consistently produced more prosperity than any other model.
    The key to this was a Dutch invention, the limited-liability joint-stock company, which in the mid-nineteenth century was perfected by British legislation. As a result, civilizations that had once outstripped the West yet failed to develop private sector companies—notably China and the Islamic world—fell farther and farther behind. Anglo-American capitalism, when allied to the right to own secure property and the rule of law, unleashed the energy and ingenuity of mankind. It formed the basis of the English-speaking peoples’ present global hegemony.

  • We’ll Be Together Again
    Posted by on February 17th, 2007 at 2:39 pm

    “Let’s face it. We tenor saxophonists would all play like him, if we could.” — John Coltrane on Stan Getz

  • A Triple High
    Posted by on February 16th, 2007 at 2:21 pm

    Due to my Capitol Hill Odyssey, I neglected to mention Wednesday’s triple high.
    For the first time in nine years, the Dow Industrials, Utilities and Transports all closed at all-time record highs. This is only the fourth time this has happened in the last 20 years.
    The Dow Jones Industrials (^DJI) closed Wednesday at 12741.86. The Dow Jones Utility Average (^DJU) closed at 477.07. And the Dow Jones Transportation Average (^DJT) closed at 5117.27.