Saturday, July 18, 2009

CIT Domino's, Vultures and Team Obama Justification

CIT Group (CIT) is done. Now watch the domino’s fall over. Strange as it seems the Obama administration by letting the market place deal with CIT failure will justify the previous support for larger institutions by saying look at the pain the CIT group is causing. Imagine what it would have been like if we had let the really big guy’s go down. Vultures at the ready pickings might be rather good.

Friday, July 17, 2009

Google Needs More Slice & Dice

Google (GOOG) reports 3% increase in revenues when the rest of the world seems to be shrinking. This sounds very good. Most other media platforms for advertising report which sectors provide them with the best returns. You know are the car guy’s advertising, is it drugs or consumer electronics. That sort of thing. Google does not seem to want to share that kind of information. Pay no attention to that man behind the curtain.

Google you are getting to the point where so more slicing and dicing on your numbers are sorely needed. It’s all just too much of a black box at the present time.

Thursday, July 16, 2009

Calpers Sues Rating Agencies -- Rumble In The Alley After The Dance Ends Badly

Calpers sues Rating Agencies. Rumble in the back alley after the dance. Moody’s (MCO), Fitch (FIM) and McGraw Hill (MHP) which owns S&P are about to feel the wrath of one of the largest financial institutions in the world. Calpers has a long and legitimate interest in corporate governance.

Calpers possesses the resources and moral turpitude to press the lawsuit aggressively. Despite supposed regulatory change, the Obama administration does not seem to have the rating agencies on their radars. Calpers does. Calpers is said to have billion dollar losses. Calpers is suing for damages which are still unspecified.

How will the lawsuit modify the way rating agencies operate. While Calpers and others may extract financial penalties they will almost certainly want changes to the way rating agencies operate. The rating agencies frequently have entire product lines of associated analytical tools. What integrity will these products really have when a rating is found to be so inadequate that it causes economic pain? The rating model will be at risk. The entire analytical offering will be at risk.

Wednesday, July 15, 2009

Intel $1.5 Billion Eurpean Speeding Ticket

Intel (INTC) announced along with encouraging earnings that they have paid a fine to the European commission of approximately $1.5 billion. The mega-buck fine is a slap on the wrist sanctioned because they were supposedly dumping through a rebate program. While it looks bad to pay huge fines, considering what it costs to acquire markets or companies with proprietary advantages, $1.5 billion is acceptable if your end game is dominance. The question becomes did the board understand the game and its outcome or did they just fluke this one.

Gannett Will It Get The Recovery?

Gannett Co (GCI) gamely reported improved earnings on drastically lower revenues. The improvement is because the impairment pain occurred last year. Gannett tells us that they are positioning for the future when the economy rebounds. Here is the problem. If the consumer starts to believe in the new frugality and curtails consumption the value of media and Gannett will drop. So waiting for the good old days is risky. What are they doing to become relevant in a new consumer mindset?

Tuesday, July 14, 2009

JNJ Question of Adequate Earnings Release

Johnson & Johnson (JNJ) announced results which included drastically reducing revenues in almost every category and almost every region. EPS substantially the same. The press release gave lip service to macro global numbers. But quite frankly JNJ gave no qualitative commentary in the press release. I imagine they are saving the good stuff for their conference call. This creates a two tier disclosure system. Conference call material needs to be dissected. Conference call transcripts do not come out immediately. Not everyone can listen to a live conference call. This is not a level playing field.

Goldman Sachs -- Golden Egg

Goldman Sachs (GS) hit a home run. TARP funding be damned. They beat expectations by a country mile. The producers seem to be fixed income and currencies. The M&A fees are down dramatically. It is very hard to argue with the genius that is Goldman, yet at the same time you have to acknowledge the almost artistic flair that their genius brings to the table.

How many of us can understand a genius, or predict the artistic output that genius can create. Enterprises run by genius’s do achieve great success. Goldman is in danger of creating its own separate genre. Just like movie studio’s should produce blockbusters but once in a while it lays an egg. Today the egg was golden. Tomorrow .....??

Monday, July 13, 2009

CIT Come On Who Is Really Surprised!

CIT Financial (CIT) hit the headlines today as investors were surprised that CIT is looking for good quality life-boats. CIT executives are surprised that the market is surprised. This probably signals that the credit crisis may be rolling through the smaller players who will need to be swept up off the market. The message to investors is “If it ain’t vanilla do not lick it”

Bank of America and Regulators ---- Dig 2 Graves

Bank of America (BAC) continues to find controversy. Regulators now claim that Bank of America owes up to $4 billion in fees for a guarantee against losses at Merrill Lynch. The bank says the deal was never signed and certainly never used. Regulators say yeah but you guy’s benefited because everyone thought it was in effect.

So what we know with certainty is that there was great panic in the executive suite. The regulator and the bank were frantic and did not get their signals straight. The Lewis vs. Bernanke misunderstanding continues at a fundamental level.

The $4 billion is huge. Financial statements are all over the place but the $4 Billion is approximately double last years bottom line. Is this a back door bitch slap as regulators/Bernanke seek to embarrass Bank of America.

Maybe we need a sit down at a small Italian restaurant and just work this out. Or just dig two graves. The financial system needs to get this nonsense over with.

Sunday, July 12, 2009

The New General Motors is Venture Capital.

The New General Motors arose phoenix like from the ashes of its former self and started to beat the marketing and corporate communications drum. It wants to sell cars. It needs to sell cars. Can it come out with decent cars in the very near future. The shareholders have been wiped out. Governments and a union VEBA have the overwhelming majority of the shares. The old GM (GMGMQ) continues to trade on pink sheets despite warnings from everyone that the shares may soon be worthless.

An IPO is already being spoken of the new General Motors, green logo and all, will need enormous amounts of capital. Right now we do not know what the board looks like. We do not have a good handle on what the new financials look like. We have no reason to believe that the fall new car season will be kind to General Motors. Now that we have stripped away the legacy problems here are the drivers of shareholders value.

1. Majority shareholders who do not think like shareholders
2. Suspicions of juicing results to make the entity look extremely attractive
3. Other competitors have no intention of letting the new General Motors thrive
4. New compelling car models. Will Camaro really do it?

The New General Motors is Venture Capital.