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SMF Blogs > Fundamental Analysis > September 2008

RIMM Research In Motion upgraded to Mkt Outperform at JMP Securities; tgt $80

RIMM Research In Motion upgraded to Mkt Outperform at JMP Securities; tgt $80J

MP Securities upgrades RIMM to Mkt Outperform from Mkt Perform and sets target price at $80 saying the recent sharp sell off in Research in Motion presents investors with an opportunity to purchase a high quality company at a reduced price.

The firm believes the recent sell off in Research in Motion is overdone and patient investors should make a healthy return over the next 12 months.

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Posted: 9/30/2008 9:01:30 AM by Global Administrator | with 0 comments

Yahoo!: California representatives defend GOOG/YHOO ad agreement

WSJ reports some members of the California delegation of the U.S. House of Representatives have warned regulators not to block a controversial advertising agreement between Google (GOOG) and Yahoo, which has been drawing fierce criticism from advertisers and publishers for months.

In a letter sent to the U.S. Department of Justice Friday, the California representatives wrote of their concern that any effort by the Justice Department to block the deal "could detrimentally affect the online advertising market and electronic commerce."

"If the DOJ blocks this agreement we fear that the threat of additional scrutiny may chill future agreements," read the letter, which characterized such advertising partnerships as "standard among Internet companies." The letter was signed by 11 of the 53 California members of the U.S. House of Representatives.

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Posted: 9/30/2008 9:01:16 AM by Global Administrator | with 0 comments

MTU Mitsubishi Financial loses $506 million in one day on Morgan Stanley

Bloomberg.com reports Mitsubishi UFJ Financial Group Inc. took a $506 mln paper loss on its $9 bln investment in Morgan Stanley (MS) yesterday after the rejection of the U.S. financial rescue plan sent banking stocks tumbling.

As part of the deal, the Tokyo-based lender agreed to buy $3 bln of Morgan Stanley's common stock for $25.25 a share. The second-largest U.S. securities firm plummeted 15% in New York Stock Exchange composite trading to close at $20.99. The loss underscores the risks involved for Asian companies seeking bargains in the wreckage on Wall Street.

Morgan Stanley, Citigroup (C) and Merrill Lynch (MER) have tapped the region's banks and sovereign wealth funds for money in the past year as falling U.S. home prices triggered the worst financial crisis since the Great Depression.

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Posted: 9/30/2008 9:01:00 AM by Global Administrator | with 0 comments

RRI Reliant Energy revises its 2008 outlook downward to reflect the financial impact of Hurricane Ike and lower commodity prices in its wholesale business (9.73 -2.48)

RRI Reliant Energy revises its 2008 outlook downward to reflect the financial impact of Hurricane Ike and lower commodity prices in its wholesale business (9.73 -2.48)

Co announces it is revising its 2008 outlook downward to reflect the financial impact of Hurricane Ike and lower commodity prices in its wholesale business. In addition, the company and Merrill Lynch have agreed to take steps to end their credit-enhanced retail structure, given the current operating environment and Reliant's decision to develop a new retail strategy aimed at lowering collateral requirements and providing more consistent earnings.

Co has obtained commitments for $1 bln in new capital to support its business to facilitate the transition. "Our retail results in 2008 have been disappointing, due in part to the recent impact of Hurricane Ike. We have also faced unprecedented turmoil in the financial markets... We have arranged for $1 billion of additional capital.

Combined with current liquidity of $1.2 bln, we will have adequate liquidity to facilitate the termination of the credit-enhanced retail structure." Co has lowered its retail contribution margin outlook for 2008 by $300 mln to $350 mln as a result of the effects of Hurricane Ike, including reduced sales volumes, the sale of excess supply during this time, updates to retail pricing assumptions and increased storm-related operating costs.

In response to its intention to terminate the credit-enhanced retail structure and current operating environment, Reliant is developing a new retail strategy aimed at lowering collateral requirements and providing more consistent earnings. Commodity prices have fallen significantly since the company provided its most recent outlook.

In addition, third quarter results were impacted by mild weather and reduced off-peak prices. Co estimates that its outlook for 2008 open wholesale contribution margin will be ~$480 mln lower than its previous outlook. These outlook updates exclude any financial impact arising from termination of the credit-enhanced structure.

Posted: 9/29/2008 4:05:37 PM by Global Administrator | with 0 comments

WB Wachovia: Detail of Citigroup acquisition of WB banking operations

The FDIC announces that Citigroup Inc. will acquire the banking operations of Wachovia Corporation; Charlotte, North Carolina, in a transaction facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury in consultation with the President.

All depositors are fully protected and there is expected to be no cost to the Deposit Insurance Fund. Wachovia did not fail; rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC. "For Wachovia customers, today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits." said FDIC Chairman Sheila C. Bair.

"There will be no interruption in services and bank customers should expect business as usual." Citigroup Inc. will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia Corp. Wachovia Corporation will continue to own AG Edwards and Evergreen.

The FDIC has entered into a loss sharing arrangement on a pre-identified pool of loans. Under the agreement, Citigroup Inc. will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk.

In consultation with the President, the Secretary of the Treasury on the recommendation of the Federal Reserve and FDIC determined that open bank assistance was necessary to avoid serious adverse effects on economic conditions and financial stability. "On the whole, the commercial banking system in the United States remains well capitalized.

This morning's decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury," Bair said. "This action was necessary to maintain confidence in the banking industry given current financial market conditions."

Posted: 9/29/2008 8:47:47 AM by Global Administrator | with 0 comments

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