BloggingStocks

Toyota whups GM in the first half of 2008

Michael Rainey — 2008-07-23T15:20:00+00:00

Filed under: Industry, Competitive strategy, General Motors (GM), Toyota Motor Corp. (TM)

The folks in Detroit may be pleased to see Toyota Motor Corp. (NYSE: TM) cutting its sales forecasts, but the pleasure is sure to be short lived. Despite its more modest outlook, Toyota leads General Motors (NYSE: GM) in global vehicle sales -- and its lead is only getting bigger.

According to a report on Reuters, GM sold 4.54 million vehicles worldwide in the first two quarters of 2008. This represents a 3% drop from the same period last year. Although sales in Europe, Latin America and Asia actually rose, the General couldn't overcome a whopping 15% decline in North America.

Toyota, on the other hand, saw a 2.2% increase in global sales, to 4.8 million units. This gives Toyota a lead in the range of a quarter million vehicles or more. And with its global sales growing, the lead is likely to widen, especially as Toyota switches over to producing more efficient cars in North America and fewer of the wasteful trucks that Americans loved so much until just a few weeks ago.

As Autoblog points out, the sales crown is important to both companies, although neither will admit it publicly. GM was the global sales king for 77 years, and the loss of that title will certainly hurt. Last year, the sales race ended essentially in a tie. But with these results, it looks like Toyota will be the champ in 2008 and, in all likelihood, beyond.

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GM hooks up with utilities to push electric car

Douglas McIntyre — 2008-07-22T10:10:00+00:00

Filed under: Launches, Consumer experience, Competitive strategy, General Motors (GM), Consolidated Edison (ED), Duke Energy (DUK)

General Motors (NYSE: GM) has finally come up with something to save its bacon. It will team with a number of utilities including Con Edison (NYSE: ED) and Duke Power (NYSE: DUK) to create a broad market for electric cars.

According to The Wall Street Journal, "Auto makers need the cooperation of utilities since they control the new technology's primary fuel -- electricity -- and must make sure that the vehicles' recharging processes mesh with the electricity grid and don't inadvertently undermine grid reliability." In other words, no one wants the cars to cause brown outs. GM also plans to negotiate special rates to make its electric cars cheaper to recharge.

The announcement is one of GM's first intelligent moves in a long time. It has allowed its reliance on pickup trucks and SUVs to drive down its sales and cut its market share in the US. Foreign rivals that kept lines of smaller cars now have products with broad appeal to consumers. This is particularly true of their hybrids.

GM's concern remains whether being late to the market will make it too late. Its potential customers want fuel-efficient cars now, when the price of gas is high. GM will lose billions of dollars while it tries to catch up.

The competition will not be sitting still.

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

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Newspaper wrap-up: Fed, Office of the Comptroller scrutinize Fannie, Freddie books

Laurie Pasternack — 2008-07-22T08:28:00+00:00

Filed under: Newspapers, Magazines, Amazon.com (AMZN), General Motors (GM), Federal Natl Mtge (FNM), Consolidated Edison (ED), Duke Energy (DUK), Blackstone Group L.P (BX)

MAJOR PAPERS:

The books of Fannie Mae -- Federal National Mortgage Association (NYSE: FNM) -- and Freddie Mac -- Federal Home Loan Mortgage Corporation (NYSE: FRE) -- are being examined by the Federal Reserve and the Office of the Comptroller of the Currency to review their financial condition, according to the Wall Street Journal.
The Wall Street Journal also reported that the Chevy Volt, an electric car from General Motors Corporation (NYSE: GM), is slated to roll out in two years and it received a major boost from 36 utilities that operate in 40 states who agreed to work together to make the plug-in vehicle possible. Among the utilities are American Electric Power Company Inc (NYSE: AEP), Consolidated Edison Inc (NYSE: ED), Duke Energy Corporation (NYSE: DUK), and Edison International (NYSE: EIX).
Struggling mortgage lender Paragon is reportedly in talks with The Blackstone Group LP (NYSE: BX) about a potential takeover by Blackstone, the Financial Times reported.

OTHER PAPERS:

The New York Times reported that TiVo Inc (NASDAQ: TIVO) will today introduce a "product purchase" feature in partnership with Amazon.com Inc (NASDAQ: AMZN). Under TiVo's plan, the television remote control will be turned into a tool for buying products that are advertised and promoted on talk shows and commercials.

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Before the bell: AAPL, AXP, SNDK, TXN, DD, WB, CAT, XMSR, HAL ...

Melly Alazraki — 2008-07-22T08:04:00+00:00

Filed under: Before the bell, Earnings reports, Yahoo! (YHOO), Apple Inc (AAPL), Ford Motor (F), General Motors (GM), XM Satellite Radio (XMSR), Market matters, Caterpillar (CAT), American Express (AXP), H and R Block (HRB), Federal Natl Mtge (FNM), duPont(E.I.)deNemours (DD), United Parcel'B' (UPS), Wachovia Corp (WB), Washington Mutual (WM), Merck and Co (MRK), Texas Instruments (TXN), SanDisk Corp (SNDK)

Stocks futures are lower Tuesday morning, indicating U.S. stock markets will start on a down note following weak outlooks and disappointing financial results from several companies including Apple and American Express. With oil steady and no economic data out today, Wall Street will focus on earnings.

Apple Inc. (NASDAQ: AAPL) reported after the close Monday a record quarter that beat analyst estimates, posting a 31% surge in earnings. Mac and iPod sales satisfied investors, while iPhone sales were somewhat on the lighter side. What concerned investors most was the very weak guidance Apple gave, which was weak even by Apple's standards of lowballing. Other issues included margin squeeze and Jobs health. Apple shares were 10% lower in Frankfurt and premarket trading.

American Express (NYSE: AXP), said late Monday its second-quarter results fell 38% due to the weakening economy. The company, which missed projections, caters to the more affluent who have good credit, and yet even this company felt the pains from the slowing economy. AmEx earned 56 cents per share compared to estimates of 83 cents per share. The company's stock tumbled AXP shares are down over 12% in premarket trading.

Also reporting Monday after the close were Merck & Co., Inc. (NYSE: MRK), Texas Instruments (NYSE: TXN) and SanDisk (NASDAQ: SNDK). MRK shares are down over 6.6% in premarket trading as the company said it would stop give guidance of results. TXN shares are also declining over 10.5% in premarket trading after it gave a disappointing forecast. SNDK shares are plunging over 16% in premarket trading after it swung to a Q2 loss, missing analyst estimates.

This morning we'll have another wave of earnings, and already started were DuPont and Wachovia.

DuPont Co. (NYSE: DD) said Tuesday agriculture sales and emerging markets helped fuel a rise in second-quarter profit to $1.08 billion, or $1.18 per share. Net sales rose to $8.83 billion. This beat expectations of $1.07 per share on revenue of $8.47 billion. While DuPont raised its 2008 outlook slightly, it expects earnings in the second half of this year to decline from a year earlier. DD shares are actually nearly 2% higher in premarket trading.

Meanwhile, Wachovia Corp (NYSE: WB) shares are down over 12% in premarket trading after the bank posted an $8.86 billion second-quarter loss and slashed its dividend for a second time this year. Wachovia's results missed analyst estimates.

Also, Caterpillar Inc (NYSE: CAT) said on Tuesday quarterly earnings rose 34% due to strong growth in emerging economies that offset weakness in North America, Western Europe and Japan. Sales rose 20%. The company handily topped Street estimates.

XM Satellite Radio Holdings Inc. (NASDAQ: XMSR) said its second-quarter loss narrowed. Earnings per share came in at 38 cents, better than the loss of 42 cents a share forecast by analysts polled by FactSet Research. Revenue climbed 15% as the satellite radio company posted a 17% increase in subscribers.

Halliburton Co. (NYSE: HAL) said net income dropped 67% after the sale of the company's stake in engineering unit KBR inflated 2007 earnings, ex-items, profit rose to 68 cents from 63 cents, matching the average of 22 analyst estimates compiled by Bloomberg.

Reporting after the close are after the close, Yahoo (NASDAQ: YHOO), United Parcel Service (NYSE: UPS) and Washington Mutual (NYSE: WM).

In non-earnings news:

Bush Prods Congress, as Financers Are Inspected - Treasury Secretary Henry M. Paulson Jr. said examiners are inspecting the books of Fannie Mae and Freddie Mac.
GM, utilities team up on electric cars - Partnership aims to tackle issues that will crop up when electric vehicles are rolled out.
H&R Block names McDonald's executive CEO
Ford to Make Broader Bet on Small Cars - After two decades focused on trucks, the company is about to drastically shift focus to building smaller cars.

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Sunday Funnies: Phil Gramm loses his balance

Sheldon Liber — 2008-07-20T18:30:00+00:00

Filed under: Rants and raves, Ford Motor (F), General Motors (GM), Sunday Funnies

Giving some thought to what in the world Mr. Gramm was thinking about (or not), it seems to me that his angst last week about Americans being a bunch of whiners was quite self referential. He obviously has lost his sense of balance and is spending too much time with the country club crowd to realize that some folks are feeling true pain.

Unless he is getting free gas or his limousine driver is not speaking with him then how could he have missed the fact that everyone in our country has seen a rapid and significant rise in prices. Ask anyone driving a truck for a living, just as a sampling. I would not consider their plight frivolous.

For some reason he has also missed the fact that all three of our major automobile manufacturers Ford Motor (NYSE: F), General Motors (NYSE: GM), and Chrysler (now privately held) are teetering on bankruptcy.

I have been fortunate enough to have traveled to the four corners of the United States, Alaska and Hawaii and I would actually say we tend to be overly optimistic at times in the US. By comparison many of the 25 countries I have had the chance to visit can be some what negative. I would place us somewhere in the middle.

I need not list in any detail the destruction of our lending institutions, credit markets, housing, construction, and all else that ails us because it is all so well documented that for this not to be worthy of our complaints is just plain silly.

From another perspective, even if we were a big bunch of complainers, I think it is important to express our displeasure with our national and local leadership, both elected and private. A public discourse is healthy and anything else, well, now that would be un-American.

Those that seek to squash dissent and view people with negative opinions as just a collection of ingrates are usually those that are more comfortable with authoritarian rule.

Giving some credit to former Senator Gramm for his service to the country, in light of the above thoughts, his whining remarks are unworthy of someone that sees himself as a quasi libertarian. Alas, the complaints about his attitude came so fast and furious that Senator John McCain the presumed Republican nominee for president felt obliged to immediately dump Gramm from his team of advisers. It was Gramm that made one complaint too many.

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 do not own shares of any of the companies mentioned here.

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Chinese auto giants see little value in GM or Ford

Brian White — 2008-07-18T12:25:00+00:00

Filed under: Ford Motor (F), General Motors (GM)

2008 will be the year that both General Motors Corp. (NYSE: GM) and Ford Motor Co. (NYSE: F) went down in recent history as the complete sandbags those companies have really become. Both are losing money hand over fist (save for Ford's most recent profit surprise), and are struggling with trying to provide vehicles customers actually want to buy -- as distinct from vehicles they were projecting to produce.

GM CEO Rick Wagoner said recently that a GM bankruptcy won't be coming, although the automaker then announced it would be laying off even more workers as it digs and scratches its way to some type of profitability. A question then came up in the market again: would a foreign auto company be willing to take a stake in either American icon? How about those up-and-coming Chinese automakers who are cranking out fuel-efficient cars by the boatload and could be seen as very eager to enter the U.S. market?

Not so fast -- according to The New York Times, Chinese automakers are not interested. Not interested in equity stakes or even buying asset pieces from either American automaker. GM's recent sale notice for its struggling Hummer division and Ford's recent sale of Volvo didn't even register on the radars of Chinese auto companies, according to the report.

It's hard to see any company buying Hummer (except a military contractor) with global fuel prices where they are, but Volvo would be a neat catch for a company wanting to expand beyond a single global region. Ford doesn't have a buyer yet, but a deal could be announced any day now. Still, Chinese automakers may be smarter than to partner with or buy into two currently dead weights in the vehicle business. There are plenty of other global auto partners besides GM and Ford.

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Harley-Davidson rallies on Q2 earnings, but I'm not taking the ride

Steven Mallas — 2008-07-17T15:05:00+00:00

Filed under: Earnings reports, Ford Motor (F), General Motors (GM), Harley-Davidson (HOG)

I've never used a motorcycle before in my life and don't know much about the vehicles, but I recognize that Harley-Davidson, Inc. (NYSE: HOG) is an American icon whose product represents an aspirational brand. Even so, the company and its stock finds itself on hard times. The company's latest earnings report is reflective of the current economic malaise.

The first paragraph of the Q2 release tells me almost all I need to know. Revenues declined almost 3% to $1.57 billion. Net profit on a dollar basis dropped sharply by 23%, coming in at $222.8 million. Diluted earnings per share decreased by nearly 17% to $0.95. These numbers are not good. Also, in terms of cash flow, cash was used to fund operations for the first six months of the fiscal year as opposed to being generated. Yet another negative.

As I write this, Harley-Davidson's stock is up well over 7%. Am I impressed? Not enough to buy. Undoubtedly some of this rise can be attributed to the retreat in oil futures. But do I believe the economy will now be nice to Harley-Davidson? Not yet. The company, like General Motors Corporation (NYSE: GM) and Ford Motor Company (NYSE: F), will still have a rough time selling things that require fuel to run. According to this article, Harley-Davidson did better than expected, but that's little comfort to me. You can make an argument that the stock is cheap, but at the very least, anyone interested in buying it (again, I'm not) better wait till the euphoric rally of the day has faded.

Disclosure: I don't own any company mentioned; positions can change at any time.

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America's cheapest cars

Eliza Popescu — 2008-07-17T14:12:00+00:00

Filed under: Forecasts, Consumer experience, Competitive strategy, General Motors (GM), Toyota Motor Corp. (TM), Economic data

We have heard a lot of news over the past 12 months about soaring fuel prices and the effect it is having on the major automakers. With record-high oil prices, and gasoline running about $4.10 a gallon, drivers are spending more and more money to fill up their tanks. One of the natural options for people has been to move towards less expensive, small, and simple cars.

General Motors Corp. (NYSE: GM) noticed that fuel-efficient vehicles will be more appealing to consumers, and announced last week plans to reduce production at its truck division (a bit late to join the party, but at least it's something for the struggling auto maker). Toyota Motor Corp. (NYSE: TM) is also slashing truck production during three months at its U.S. plants.

While It is true that most less expensive cars don't offer the same luxury when compared to sedans or SUVs, they come with a lot of options that can satisfy every individual need. Among the cheapest cars available, the article points out Honda's Fit ranked No. 11 at $13,950, a small car whose standard version comes with an adjustable steering column and four-speaker audio system, and is equipped with multiple airbags in the front, rear and side. Other vehicles that follow the same logic are the Chevrolet Aveo, ranked No. 2 at $11,460; the Toyota Yaris, third at $11,550, and the Kia Spectra, fifth at $12,895.

However, if you are taking into account only the lowest price when choosing a car, then the cheapest new car available in America is the Korean-made Kia Rio, which starts at $10,890. For this low price, you must be aware though that you won't get air conditioner, audio system, power window or power door locks. Another car that made its debut last year in the U.S. is the Smart Fortwo whose base model Pure is priced at $11,590; it comes with a manual transmission, and offers power locks and electronic stability control as standard.

Safety is another issue that the consumer must take into account. It is difficult to buy a cheap car that offers the safety we may be looking for. For additional safety features people may find themselves reaching into their pockets. Compared with cars from the past, though, today's small cars are safer, the Insurance Institute for Highway Safety stated. Thus the Toyota Yaris, Smart Fortwo Pure, Honda Fit and Nissan Versa all got the IIHS "good" rating in front- and side-impact crash tests, while the Versa and the Mitsubishi Lancer were able to earn "good" in rear-impact testing. Analysts expects further safety improvements but for every positive change there will be a cost to pay.

For Americans, times are definitely changing. It can easily be argued that the days of "cheap" gasoline that the American consumer has enjoyed for so long will never be back. If this proves to be true, then you are going to continue to see more and more drivers moving into the smaller cars, and if the auto makers want to stay in business they need to recognize that sooner than later, or else they will definitely pay the price.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

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GM has to sell cars in order to improve performance? Duh!

Zac Bissonnette — 2008-07-17T09:47:00+00:00

Filed under: General Motors (GM), Marketing and advertising

The prestigious 2008 No Kidding! Award For Obviousness in Financial Journalism goes to the Associated Press for this headline: GM's recovery depends on winning over car buyers.

Ya don't say? And here I was thinking it depended on the Yen carry trade.

But in a way, that headline is a wonderfully succinct illustration of why the odds of a successful turnaround at General Motors (NYSE: GM) are basically zero. The company has a crippling debt load and a cost structure that isn't even close to being competitive with the infinitely leaner Asian automakers which, by the way, make cars that are more relevant.

GM brass are sounding an optimistic note on their upcoming car introductions, and maybe they will improve. But the company has a difficult task: slash costs while restoring the company's brand positions. Either of those would be difficult, and both at the same time is probably impossible. The company is at a competitive disadvantage that is simply massive, and its decline has gained additional momentum from the decline of its brand equity. If GM didn't already exist, people would laugh at the idea: "Let's have a huge debt load and a really high cost structure and sell cars that are almost as good as our foreign competitors."

When I think about it like that, it's hard to find a reason to even consider investing in the company's stock.

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Before the bell: NOK, CAL, YUM, AAPL, GM, F, UTX, AMD, SBUX, WFC

Melly Alazraki — 2008-07-17T08:18:00+00:00

Filed under: Earnings reports, Analyst reports, Analyst upgrades and downgrades, Apple Inc (AAPL), Starbucks (SBUX), Ford Motor (F), General Motors (GM), Nokia Corp. (NOK), Advanced Micro Dev (AMD), Yum Brands (YUM), United Technologies (UTX), Wells Fargo (WFC)

Before the bell: Futures higher ahead of housing data and a wave of earnings; JPM, KO already reported

Nokia Corp. (NYSE: NOK) shares are up over 7.4% in premarket trading after the world's largest maker of handsets said second-quarter profit fell 61% to $1.75 billion, or 46 cents per share, while sales rose 4% to $20.87 billion. Excluding items, Nokia's profit rose 8% to $2.18 billion. Nokia beat estimates of earnings of 56 cents per share on $20.05 billion in revenue, according to Thomson Financial. The mobile phone maker slightly raised its forecast for the mobile phone industry, saying volume would grow 10% or more in 2008.

Continental Airlines (NYSE: CAL) are up again this morning after climbing 38% Wednesday with the rest of the airline stocks. Continental swung to a second-quarter loss, hurt by record high fuel prices and weakening economic conditions. Still the losses of $3 million, or 3 cents per share, or excluding one-time items totaled $25 million, or 25 cents per share, beat expectations of a loss of 49 cents per share.

Yum Brands (NYSE: YUM) shares are down 4.3% in premarket trading after it reported a second-quarter profit of $224 million, or 45 cents a share. Revenue rose to $2.65 billion from $2.37 billion a year ago. While this beat estimates, and while the company raised its earnings growth forecast for the full year to 12% from 11%, investors were concerned about rising food costs which hurt profit margins in the second quarter.

It seems that Apple Inc. (NASDAQ: AAPL)'s new 3G iPhone was sold out in Germany after less than a week. Deutsche Telekom AG's T-Mobile division sold 15,000 iPhones and it's not clear when Apple will be able to deliver more iPhones for the German market, Financial Times Deutschland reported.

The city of New York is trying to replace its entire fleet of yellow cabs with hybrid vehicles and Nissan North America, General Motors (NYSE: GM) and the Ford Motor Co. (NYSE: F) promised Wednesday to deliver 300 cars a month each.

United Technologies (NYSE: UTX) reported an 11% gain in profit in the second quarter to $1.28 billion, or $1.32 per share and increased its full-year guidance on revenue and per-share earnings. Earnings beat estimates by 2 cents. Shares are up 2.2%

Also reporting today is Advanced Micro Devices (NYSE: AMD), which is projected to report second-quarter earnings of 53 cents a share, according to analysts surveyed by FactSet Research.

Notable analyst calls:

Piper Jaffray downgraded Starbucks (NASDAQ: SBUX) from Buy to Neutral.
UBS downgraded Wells Fargo (NYSE: WFC) from Buy to Neutral.

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Closing Bell: A wild trading day

Jon Ogg — 2008-07-15T16:12:00+00:00

Filed under: General Motors (GM), Sprint Nextel Corp (S), Federal Natl Mtge (FNM), Genentech Inc (DNA)

Today was nothing short of a wild trading day and despite the levels seen at the close it is still a toss up over whether the bulls or bears won today. Merrill Lynch has said that the commodities cycle may have peaked in the first half of this year. It noted that the S&P/GSCI commodity index was up roughly 41% during the first half of 2008, which is the largest gain since the index inception. This may have only been one factor, but oil fell as much as $9.00 per barrel in the biggest one-day dollar drop since 1991. We did even briefly see the VIX hit that magic 30.0 reading. Below are the unofficial closing bell levels:

DJIA 10,961.72 (-93.47)
S&P500 1214.96 (-13.34)
NASDAQ 2215.71 (+2.84)
10YR T-Note 3.844% (-0.036%)
52-WEEK LOWS
TOP ANALYST UPGRADES
TOP ANALYST DOWNGRADES

Genentech, Inc. (NYSE: DNA) rose today despite a weak earnings report and despite it saying it was going to act like an old industrial company with a share buyback plan. Shares were up over 5% at $79.37 in todays final minutes.

General Motors Corporation (NYSE: GM) was up 5% at $9.87 at the end of the day despite being weak on the open. We saw yet another restructuring of its financial situation so the company would have a better operating structure from a liquidity standpoint.

Are you getting sick of reading about Fannie Mae (NYSE: FNM)? We are just about to send a letter to foreclose on Fannie Mae just so we won't have to analyze it or report on it any more. Shares were down 24% at $7.38 on more than 180 million share in today's final half hour of trading. The SEC is instigating rules that would make naked short selling illegal, although that is already supposed to be the case.

Trina Solar Limited (NYSE: TSL) shares were down more than 2% at $29.69 in today's final minutes after it filed an open shelf registration to sell securities this morning.

Sprint Nextel Corporation (NYSE: S) saw a rather large surge in volume after CNBC's David Faber reported that SK Telecom is in talks to potentially acquire the ailing telecom.

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Who is going to want the assets GM is trying to sell?

Jonathan Berr — 2008-07-15T11:03:00+00:00

Filed under: Major movement, Management, General Motors (GM)

General Motors Corp. (NYSE: GM) shares fell in early trading as Wall Street viewed the company's announcement that it plans to raise as much as $15 billion through the end of next year by suspending its dividend, cutting its salaried workforce and selling assets with skepticism.

For one thing, who is going to want to buy the assets GE is trying to sell? For instance, sales of Hummer were down about 60% in June. What private equity player will take a chance on buying a brand synonymous with gas guzzling as gas sells for more than $4 a gallon at the pump? Who is going to want other lackluster GM brands like Saturn? Any new owners of the business will face the same problems as GM.

Also, let's not forget the rising prices of commodities used to make cars, such as steel. Hyundai Motor Co. announced today that it was raising prices on its cars because of increased costs for raw materials, according to Reuters. Soaring oil prices also is making the costs of plastics needed for car parts rise.

The next year or two for GM will be ugly. Bankruptcy still is not out of the question, though GM continues to argue to investors that is not going to happen.

"GM is highly confident that the initiatives announced today, in conjunction with the current cash position and its $4-5 billion of committed U.S. credit lines, will provide the company with ample liquidity to meet its operational needs through 2009," the company said today in a press release.

The automaker is taking steps to right itself that it should have taken during the 1980s or 1990s. Suspending the dividend was long overdue. It will improve liquidity by about $800 million through 2010. But the turnaround plan is filled with many "ifs" and "woulds."

Chief Executive Rick Wagoner said today that the actions were "difficult decisions, but necessary to respond to the current auto market conditions. Even under conservative planning scenarios, GM is well-positioned to withstand the U.S. market downturn and emerge a stronger company."

Investors, though, are not so optimistic.

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Option Update: General Motors volatility up as GM steps up restructuring

Paul Foster — 2008-07-15T09:09:00+00:00

Filed under: General Motors (GM), Options

General Motors (NYSE: GM) is recently trading at $9.53 in pre-open trading, above its close of $9.38.

GM will suspend its dividend, decrease capital spending, lower salaried cash costs by 20% and bolster liquidity by $15 billion through 2009.

GM July 10 straddle is priced at $1.20. GM August option implied volatility of 119 is above its 26-week average of 65 according to Track Data, suggesting larger price fluctuations.

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

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Cramer on BloggingStocks: The breadth of the danger is staggering

Jim Cramer — 2008-07-15T08:56:00+00:00

Filed under: Bad news, Industry, Ford Motor (F), General Motors (GM), Market matters, Citigroup Inc. (C), Advanced Micro Dev (AMD), Regions Financial (RF), AutoNation Inc (AN), Bank of America (BAC), BB and T (BBT), Merrill Lynch (MER), Sears Holdings (SHLD), Federal Natl Mtge (FNM), Comerica Inc (CMA), D.R.Horton (DHI), Amer Intl Group (AIG), Lennar Corp'A' (LEN), Southwest Airlines (LUV), Wachovia Corp (WB), Washington Mutual (WM), IndyMac Bancorp (IMB), Lehman Br Holdings (LEH), Cramer on BloggingStocks, MBIA Inc (MBI)

TheStreet.com's Jim Cramer says our problems are so widespread, he sees lots more IndyMacs before we're out.

You don't need me to tell you it's awful out there. You don't need me to tell you that there's no quick fix for any of these things. But what might help you understand why it feels so bad this time is that I have never, in my career, seen so many companies go off track at the same time. This is one unbelievable moment, and it is made more horrible by the day as companies' stocks just get pummeled, causing people to then question the very viability of the companies involved.

First, obviously, are Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take). We don't know what will happen, but we do know that their futures are much darker than their pasts. Their best hope: a Democrat becomes president and shows the usual love to both. But as investments, they are pretty much perma-losers going forward. The losses are that heavy. Yes, it is true that two years from now they will be better, but will the government let them limp through to that? View them as calls on a Democratic win.

We all know that Citigroup (NYSE: C) (Cramer's Take), Wachovia (NYSE: WB) (Cramer's Take), Washington Mutual (NYSE: WM) (Cramer's Take) and National City (NYSE: NCC) (Cramer's Take) are in trouble. Bank of America (NYSE: BAC) (Cramer's Take) says it isn't in trouble, but obviously the market doesn't believe management because the stock failed to rally when it said its dividend was safe. Any short-selling hedge fund could hire 30 actors and have them line up at a Washington Mutual or two and get a bank run going. Then we would have to hear about a "hasty" Treasury department plan to bail out WM. Hasty? How can these guys not see it coming?

No revelation that Lehman (NYSE: LEH) (Cramer's Take) or Merrill's (NYSE: MER) (Cramer's Take) in the soup, although I do marvel that at no price do they seem interesting to anyone -- value guys, takeover guys, or acquirers in general. But how about Comerica (NYSE: CMA) (Cramer's Take), Regions Financial (NYSE: RF) (Cramer's Take), Sovereign (NYSE: SOV) (Cramer's Take), Huntington Bancshares (NASDAQ: HBAN) (Cramer's Take), Suntrust (NYSE: STI) (Cramer's Take), Fifth Third (NASDAQ: FITB) (Cramer's Take), First Horizon (NYSE: FHN) (Cramer's Take), Marshall & Ilsley (NYSE: MI) (Cramer's Take), Zions (NASDAQ: ZION) (Cramer's Take), Key (NYSE: KEY) (Cramer's Take), Colonial (NYSE: CNB) (Cramer's Take) and BB&T (NYSE: BBT) (Cramer's Take)? Their charts are indicating there is much more devastation ahead. Every one of them is small enough to fail, and no one would give a darn. If the FDIC follows the trail blazed by IndyMac (NYSE: IMB) (Cramer's Take) it would be great because IndyMac Federal isn't foreclosing anymore. Get rid of the foreclosures, get rid of some of the overhang. But is that the plan, or do they have no place to put the foreclosed loans?

We know that the Gang of Four -- MBIA (NYSE: MBI) (Cramer's Take), MGIC (NYSE: MTG) (Cramer's Take), PMI (NYSE: PMI) (Cramer's Take) and Ambac (NYSE: ABK) (Cramer's Take) -- has been obliterated, a long-running saga of puffing by management and disastrous numbers. These companies are important, even if everyone seems to think that they have gone down without much repercussion other than the 40th story about how private mortgage insurers are now raising rates. Golly gee, who is paying them anything? They don't have enough money to pay the bank back for heaven's sake!

For example, they are very important to AIG (NYSE: AIG) (Cramer's Take), which seems to have found no bottom. None at all. Remember that funny dividend boost at AIG? What was that about?

There are tons of other financial insurers no one's paying attention to that seem to go down pretty constantly. An outfit like XL (NYSE: XL) (Cramer's Take) seems like it is a wasting asset. Or how about Genworth (NYSE: GNW) (Cramer's Take), which is selling well below book value?

Then there is everything auto, not just Ford (NYSE: F) (Cramer's Take) and GM (NYSE: GM) (Cramer's Take) (although do you really need anything else to go wrong there?) -- outfits like Visteon (NYSE: VC) (Cramer's Take) or Autonation (NYSE: AN) (Cramer's Take) or Carmax (NYSE: KMX) (Cramer's Take) aren't going to get through this one unscathed.

Or how about the homebuilders? Does anyone think that Hovnanian (NYSE: HOV) (Cramer's Take), Lennar (NYSE: LEN) (Cramer's Take), Pulte (NYSE: PHM) (Cramer's Take) and Horton (NYSE: DHI) (Cramer's Take) will all make it? I don't. How about that nifty Lennar upgrade by UBS? Sold to you, UBS (NYSE: UBS) (Cramer's Take), along with all of the toxic mortgages you STILL OWN!

I am not even going to include the airlines, they are all hopeless in my opinion, except for maybe Southwest (NYSE: LUV) (Cramer's Take). They are charities.

Other areas have problems -- retail has some busted stocks, and so do restaurants. Chico's (NYSE: CHS) (Cramer's Take)? Charming Shoppes (NASDAQ: CHRS) (Cramer's Take)? How about Macy's (NYSE: M) (Cramer's Take) -- where's that headed? Sears (NASDAQ: SHLD) (Cramer's Take)? OUCH!

You can see some techs folding, but only a handful. Maybe because only AMD (NYSE: AMD) (Cramer's Take) is on the fiscal ropes do people see "relative strength" in tech, whatever that means.

The problem is that the dire stocks, the ones I have listed, are so numerous and so concentrated with so little hope for rescue that it is hard to imagine anything but more downside for these stocks and therefore more downside for the rest of the market, simply because they are so glaring, are owned by so many mutual funds and have so many roles to play in the real economy.

We know that things have gotten out of control because the IndyMac collapse -- widely predicted -- used a huge amount of the surplus the FDIC has, suddenly making the safety net seem like a flimsy piece of Brawny.

The bottom line here -- there is too much going wrong right now, too much to put us anywhere near sound footing. I suspect that every rally will be met with selling until we see a multitude of collapses like IndyMac.

I am not going to search for positives in any of these groups yet, and if they rally off the decision by the Treasury to make more explicit the Fannie and Freddie guarantees, I would scale out of them once again on any short squeeze like the one we had at yesterday's opening.

Someone asked me yesterday, "When do we bottom?" I said it wouldn't be until all the banks that have to fail do so and GM files bankruptcy along with Ford. I said it matter-of-factly, because I meant it and because it is obvious.

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RELATED LINKS:
IndyMac Insurance Tab Could Hit $8B
Fannie, Freddie Plan Staves Off Housing Disaster
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Before the bell: Futures tumble on financials, ahead of data, earnings

Melly Alazraki — 2008-07-15T07:43:00+00:00

Filed under: Before the bell, International markets, Earnings reports, Analyst reports, Analyst upgrades and downgrades, Intel (INTC), General Motors (GM), Employees, Market matters, Johnson and Johnson (JNJ), Anheuser-Busch Cos (BUD), Federal Natl Mtge (FNM), Wachovia Corp (WB), Washington Mutual (WM), Economic data, Federal Reserve

Who is next to fail/fall? That seems to be the only question on investors' minds these days, and this morning is not different as concern about the health of the financial sector grows. With global markets plunging overnight, the dollar falling to yet another record low against the euro and ahead of a day full of economic data releases and earnings, as well as a testimony from Fed chairman Bernanke, U.S. stock futures dropped this morning, indicating the market is poised for a lower open.

On Monday, what seemed like might be a promising day with the government plan to bail out Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) and several large deals including the mega beer deal between Anheuser-Busch (NYSE: BUD) and InBev. But once again financials took front stage and after IndyMac was seized by federal regulators over the weekend Wall Street tumbled. The Dow industrials fell 45 points, or 0.41%, the S&P 500 dropped 11 points, or 0.9%, and the Nasdaq Composite lost 26 points, or 1.17%.

As the day go on, investors will have more to chew on though as several economic reports are due out today. June Producer Price Index, a measure of inflation at the wholesale level, is due before the market open, at 8:30 a.m. EDT. While economists expect a smaller increase in prices in June, an increase is expected for both PPI and core-PPI, which excludes food and energy prices.
At the same time, June retail sales will be released, and may show a nice increase due to the government checks.
July NY Empire State Index will also be released at that time and it's likely we'll see it decline further.
Then, 10:00 a.m., a reading on business inventories for May is due.

Meanwhile, Federal Reserve Chairman Ben Bernanke is due to give his semi-annual testimony before Congress at 10 a.m. EDT. He will also testify at a hearing about regulatory responses to recent market developments.

Shares of financial companies continue their wild -- mostly downward -- ride. After Washington Mutual (NYSE: WM) over 34% Monday, it's making some signs of a recovery this morning, up over 3.5% in premarket trading. Wachovia (NYSE: WB), however, which was already hit by a downgrade Monday, has been hit again by a downgrade to Underperform courtesy of Oppenheimer. And so, after declining over 14.7% Monday, it's declining nearly 9% in premarket trading this morning.

Investors will also have earnings from heavyweights such as Johnson & Johnson (NYSE: JNJ) and Intel (NASDAQ: INTC) to contemplate today. Analysts seem to expect strong earnings from Intel.

And finally, the troubles for automaker General Motors (NYSE: GM) are far from over. CEO Rick Wagoner is expected to announce several thousand more job cuts as well as further production cuts at a news conference at 9 a.m. EDT.

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Short sellers gamble GM's prospects will get worse

Douglas McIntyre — 2008-07-12T11:40:00+00:00

Filed under: Forecasts, Industry, General Motors (GM), Short stories

The second largest increase in short position among all stocks traded on the NYSE was for General Motors (NYSE: GM). Shares sold short in America's largest car company moved up 27%, or 35 million, to 152.9 million. The change took place between June 13 and June 30.

The increase is amazing given that GM has been trading at a 54-year low of $9.14; short sellers are investing based on that price going lower.

But, the gamble may be a smart one. Several Wall Street analysts believe that GM may have to raise over $10 billion due to the slowdown in U.S. car sales. With a market cap of only $5.6 billion, shareholders would face huge dilution that could easily push the stock toward $5.

GM's says it will not take the route of bankruptcy, but the promise may be empty. By some estimates, the company is losing $1 billion a month in its North American operations. In the current credit environment, GM may find that selling common shares or raising debt will be difficult. Borrowing money with its "junk" debt rating could come at a very, very high price.

GM is still in terrible financial trouble and short sellers are willing to capitalize on that. They are likely to make a bundle.

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

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Comfort Zone Investing: Your alibi in diary form

Ted Allrich — 2008-07-12T10:30:00+00:00

Filed under: General Motors (GM), Federal Natl Mtge (FNM), Comfort Zone Investing

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

Several years from now, maybe even 10 or more, one of your children is going to ask, "Mom and Dad, we're studying the market meltdown of 2008 in school. Why didn't you buy stocks then? We could all be rich now."

In order to avoid a stammering, defensive answer, you might want to keep a diary, one that records your feelings as well as the reality of what we're going through. Because you won't remember the details, you'll only remember the overall fear that reigned over the market, a diary will give you specific examples of why you didn't buy stocks. Here are some possible entries:

July 7: enjoyed the long weekend...market was closed on Friday...it couldn't go down that day...filled the SUV with gas ($120) bought groceries (bread was almost $5 a loaf)....had a barbecue with the neighbors in the back yard....three out of 10 of them were out of work....today Fannie Mae and Freddie Mac lost 20% of their value before rallying back a little....will they go out of business?...who will make mortgages if they do...not the banks, they're keeping credit tight....tried to keep my stress level down by sitting in the hot tub longer than I should have....feel extremely tired....

July 2: Bobby needs braces....I see General Motors (NYSE: GM) is trading below $10 a share....what a bargain, I think...of course, it looks like it's going to go out of business....making cars and trucks and SUV's that are stacking up on lots....don't know why they're so slow in getting out energy efficient cars or electric ones....maybe I should buy a 100 shares but that would be $1000 and if I get laid off, I'll need that money to pay the mortgage....or fill the SUV eight times...better keep liquid for now....at least I didn't buy Ford at $8 like that big tycoon....it's trading around $4.50 now.....feel very tired...

June 20: Carol just got accepted to Brown....congratulations, I think...is that still the most expensive school in the country?.....oil keeps going up, near $145 a barrel...can it get to $200 a barrel?.....why not $300?...maybe I can bike to work but after 10 miles I get pretty smelly.....hope I have more energy tomorrow....

June 15: got our monthly mortgage notice.....payments are going up again....can I refinance now?....last time I talked to the banker, she said they weren't making loans that were more than 60% of value of the home.....we don't qualify for that....and the bank stopped making home equity loans so we can't get one of those.....but I got a nice pen....we'd sell the house but the proceeds won't cover the loan...if we can even get a bid....won't look at the stocks tomorrow

May 24: our portfolio is getting hit hard.....I thought the banks would be a safe place to invest plus they mostly had good dividends....but I guess the mortgage problems are a lot deeper than anyone guesses, even the so-called experts....ha!..a lot they know....even my favorite columnist, The Online Investor, thought banks were a buy a few months ago....he got that totally wrong....what should I do now?....it's too late to sell them, take too many losses....I don't have any money to buy anything else....I'll just sit and wait this one out, hope everything's OK......can they really go lower?

May 3: Can't find any good news anywhere: war in Iraq goes on without end, oil is above $130 a barrel, mortgage market is in total disarray, stocks are down every day, the Fed says it may raise interest rates to fight possible inflation when the whole economy feels like its in a recession, houses aren't selling (neighbor Bill has his on the market, for almost a year now, dropped the price 3 times and still hasn't sold), homebuilders laid off most of their workers, auto sales are down, especially trucks and SUV's (duh), seems like every aspect of the economy except for energy and exporters (the weak dollar is helping somebody) is doing poorly....will it ever end?....

You get the idea. Make it personal. Make it real. Make it about now. Then when your kids or even your spouse question your investing intellect, you'll have some ammunition to draw on, to show them how it really was and why you decided that food and getting to your job were more important than a 100 shares of anything.

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GM's Wagoner: No bankruptcy coming, no brands being killed

Brian White — 2008-07-11T11:46:00+00:00

Filed under: Bad news, Management, General Motors (GM)

General Motors Corp. (NYSE: GM) CEO Rick Wagoner told the media this week that there would be no bankruptcy for the beleaguered automaker. While GM and rivals wind down SUV production and see what they can do with the glut of big, gas-hogging trucks in inventory, Wagoner assured the world that GM would not be shutting down any of its brands as a result of its current financial difficulty.

And then came the standard, boring corporate speak from Wagoner when he said that the company's focus is on evolving its various brands to make them more profitable and meet consumer needs.

Well, duh. Isn't that the SOP for every automaker during every quarter? GM has not marketed itself well to the gas-conscious crowd nor was it in a position to change its product mix swiftly as consumer attitudes towards gas efficiency changed almost overnight.

With GM shares trading for under $10 now -- the lowest price in about 50 years -- the company can't spin more rhetoric. It's put up or shut down time. That is, unless gas prices go down and the economy improves. I won't take that bet with anyone for the foreseeable future. Will you?

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How growth destroyed brand value at Starbucks, warehouse club shopping tips & 6 ways to downsize in retirement

Allan Halprin — 2008-07-11T09:02:00+00:00

Filed under: Apple Inc (AAPL), General Electric (GE), Time Warner (TWX), Starbucks (SBUX), General Motors (GM), Toyota Motor Corp. (TM), Citigroup Inc. (C), Money and Finance Today, Anheuser-Busch Cos (BUD), Federal Natl Mtge (FNM), Starwood Hotels Worldwide (HOT), JetBlue Airways (JBLU)

In the News:

· GE Profits Fall as Earnings Meet Estimates

· Oil Surges for Second Straight Day

· Fannie & Freddie Shares in Freefall, Stocks Worth Nothing?

· Apple's 3G iPhone Goes on Sale Today

· Citi Sells German Business for $7.7 Billion

· GM CEO Says Company Won't Seek Bankruptcy

· Toyota to Build Prius in U.S.

· A Happy Ending for Time Warner?

· Deal for Anheuser-Busch Said to Be Near

· Pioneer of Performance Funds Dies

· Salsa Ingredients Suspects in Salmonella Probe

How Growth Destroyed Brand Value at Starbucks
Founder and CEO Howard Schultz had a great concept, and it worked for a while. But too many new stores and diverse products changed the experience.
Starbucks: How Growth Destroyed Brand Value - BusinessWeek

How to Make the Most of Your Trip to a Warehouse Club (and Spend the Least)
Here are five ways to whip inflation when you shop at Costco or one of the other warehouse clubs. You won't save much money if you get sidetracked by the bling and the flat-screen TVs. Here is how to really shop at one of these clubs.
Five Ways to Whip Inflation When You Shop at a Warehouse Club - Kiplinger.com

6 Ways to Downsize for Retirement
In a nation obsessed with everything "biggie-sized," the thought of downsizing holds as much appeal as a root canal. At best, downsizing is sometimes undesirable; at worst, it suggests failure. But it can be a smart move. Consider these tips to trim the fat from your budget and boost your bottom line.
Ways to downsize during retirement - Bankrate.com

The JetBlue of Hotels
Starwood Hotels & Resorts asked architect David Rockwell to help it develop some fresh ideas, and Aloft Hotels, debuting this summer, is the result. Starwood plans to open 72 Alofts by the end of 2009 and ultimately 500 worldwide.
The JetBlue of Hotels | Fast Company

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Newspaper wrap-up: U.S. considering government takeover of Fannie Mae, Freddie Mac

Laurie Pasternack — 2008-07-11T08:00:00+00:00

Filed under: Newspapers, Magazines, Google (GOOG), Yahoo! (YHOO), General Motors (GM), Anheuser-Busch Cos (BUD), Federal Natl Mtge (FNM)

MAJOR PAPERS:

Rick Wagoner, the CEO of General Motors Corporation (NYSE: GM), hit out against allegations that the auto maker may soon file for bankruptcy and said he believes the company's financial position will "remain robust" for the rest of the year. Wagoner also said, the Wall Street Journal reported, that the company has no plans to sell or reduce more of its brands.
An independent Yahoo! Inc (NASDAQ: YHOO) would be better for the world, Google Inc (NASDAQ: GOOG) CEO Eric Schmidt said and the Financial Times reported. Yahoo! will be able to create more competition in the search market and other advertising markets if it stays independent, Schmidt contended.

OTHER PAPERS:

According to people briefed on the plan, the New York Times reported that senior Bush administration officials are weighing a plan to have the government take over either Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, or Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac -- or both -- and place them in a conservatorship if their problems continue or worsen.
The New York Times also reported that people briefed on the matter said Anheuser-Busch Companies Inc (NYSE: BUD) is in active talks to sell itself to InBev in a friendly deal, despite previous hostility to the idea. One person said InBev indicated it may be willing to pay more than the $65 per share originally offered.

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