Posted Oct 11th 2007 11:44AM by Jon Ogg
Filed under: Sprint Nextel Corp (S), Initial public offerings
Virgin Mobile USA, Inc. (NYSE:
VM) launched its IPO right after the open today. Billionaire Richard Branson's pay-as-you-go cellular telecom services that uses the
Sprint Nextel (NYSE:
S) network has raised $412.5 million based on 27,500,000 shares at $15.00 per share, which is
actually at the lower end of the $15.00 to $17.00 range. Was the reception poor, or was it conservative?
The lead underwriter and book runner was Lehman Brothers, and joint book-runners were Merrill Lynch and Bear Stearns. The over-allotment option for underwriters is listed as 4,125,000 shares. Not much has changed
since the original coverage of the IPO at the filing date.
As of June 30, 2007, Virgin claimed 4.83 million customers. Revenues and net loss for the year ended December 31, 2006 were approximately $1.1 Billion and -$36.7 million; Revenues and net income for the six months ended June 30, 2007 were approximately $666.9 million and $26.5 million, respectively. As of June 30, 2007 and December 31, 2006, members' accumulated deficit was approximately $(614.4) million and $(643.9) million, respectively.
It seems as though the interest faded here, and part of it may be the entire venture status combined with a cellular market that is deemed as just about fully matured in the lower-end pricing plans. Shares did trade under the $15.00 pricing for a bit after the open, but are up to $15.40 at the 30-minute mark.
Jon C. Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter and he does not own securities in the companies he covers.Posted Oct 5th 2007 2:17PM by Jon Ogg
Filed under: General Electric (GE), Time Warner (TWX), Ford Motor (F), General Motors (GM), Advanced Micro Dev (AMD), Best Buy (BBY), NYSE Euronext (NYX), Countrywide Financial (CFC), Qwest Communications Intl (Q)
The short interest for the NYSE is out for the second half of September. The
NYSE Euronext (NYSE:
NYX) actually showed a small increase in the total shares short on the NYSE: the September 28 settlement short interest was 11,878,834,897, above the 11,841,051,529 reading of September 14, 2007. This represents 3.1% of the total shares outstanding.
The raw truth is that this is actually a very small gain of only just over 37,000,000 shares. But it follows what was a large drop from mid-August to mid September as mid-August was in the midst of the market malaise with 12,466,511,521 shares listed as being short. Just at the end of last month I had noted that
short selling Internet stocks showed mixed results. There had previously been a large
drop in major banking stock short interest, but we also showed how
housing and retail stocks had been under short selling pressure.
You can see the
full list of the September 28 settlement date short stocks at the site, but here are the top 10 (with short interest):
- iShares Russel 2000 Index (NYSE: IWM) 258,152,676
- Ford Motor (NYSE: F) 177,621,324
- Qwest Communications (NYSE: Q) 84,338,020
- Advanced Micro Devices (NYSE: AMD) 76,350,102
- Countrywide Financial (NYSE: CFC) 76,100,928
- General Electric (NYSE: GE) 65,851,636
- Time Warner Inc. (NYSE: TWX) 64,874,719
- Best Buy (NYSE: BBY) 62,259,216
- Tenet Healthcare (NYSE: THC) 57,387,316
- General Motors (NYSE: GM) 56,515,532
Posted Oct 5th 2007 12:13PM by Jon Ogg
Filed under: International markets, Deals, Citigroup Inc. (C), Goldman Sachs Group (GS), Top Picks 2007, Japan
Goldman Sachs (NYSE:
GS) is heading toward Japan in a partnered bid with Aetos Capital LLC to
buy Japanese property company Simplex Investment Advisors in a 65% premium share bid, for the equivalent of about $1.1 billion to $1.35 billion, depending on your price calculations in current and closing prices of yen on the Japanese stock prices versus closing prices. The bid is for at least 80% of Simplex, and it appears that Nikko Cordial, part of
Citigroup Inc. (NYSE:
C) in Japan, is
selling its 42.5% stake to the venture.
If you think the U.S. property weakness has been bad, the situation in Japan has been worse. Japan experienced its own bubble back in the 1980s, and only in recent years have things seemed to get better. Goldman Sachs has already been active in buying commercial and recreational properties in Japan over the last decade, but this would mark a larger leap into a property market that may hold relative values.
Goldman Sachs was Jim Cramer's
#2 Value Pick for 2007, and he recently said he thinks
its stock could go to $300.00 per share next year. If you look at how
Goldman Sachs recently crushed earnings by betting against mortgages, you'll know why.
Goldman Sachs has raised over $4 billion this year for property acquisitions, so you can assume more land grabs are coming. Bloomberg has a pretty detailed piece that
gives more background on the ongoing landgrabs in Japan. If you want to look up more data on Simplex Investment Advisors, it trades under the numeric stock ticker "8942" on the Tokyo Stock Exchange.
Jon Ogg produces the Special Situation Investing Newsletter and he does not own securities in the companies he covers.
Posted Oct 2nd 2007 1:45PM by Jon Ogg
Filed under: Apple Inc (AAPL), Cisco Systems (CSCO), Hewlett-Packard (HPQ), Research in Motion (RIMM), Palm Inc (PALM), iPhone
Research-in-Motion (NASDAQ:
RIMM) has been a beast of a tech stock. But shares have run up so much and the valuations have risen so much that the stock NEEDS a breather. Shares are down roughly 3% at $95.50 today, after reaching over $100+ highs last week. Currently, RIM has a market cap north of $50 billion, its trailing P/E ratio is over 70, and it trades at roughly 42 times Feb-2008 fiscal earnings.
Just yesterday RIM received a downgrade from RBC Capital Markets' Mike Abramsky saying the current valuations and recent monster performance will make it hard for the stock to continue rising from here. His downgrade was from TOP PICK down to Outperform, which still isn't exactly a death sentence. Shares were down over 1% yesterday early on, but managed to close up $0.11 at $98.66 in such a strong market.
On Friday I noted how Research in Motion was one of the ten or so
major "Windows Dressing" beneficiaries where fund managers and investment advisors want to show the stock in their holdings at the end of a quarter. These performed unbelievably well and RIM along with them, showing a 50% quarterly gain, to the point you'd never know we were all worried in August.
Continue reading Research In Motion (RIMM): Wrath of values
Posted Oct 1st 2007 11:08AM by Jon Ogg
Filed under: Time Warner (TWX), Mutual funds, Time Warner Cable (TWC)
It's no secret that
Time Warner Inc. (NYSE:
TWX) and
Time Warner Cable (NYSE:
TWC) stocks had a rough third quarter in 2007. This weak performance might have been a negative catalyst at the end of the quarter as fund managers and investment advisors moved to get those shares off their books.
This could continue in October since this marks the end of many mutual fund annual report periods. (If you want to see how fund managers and investment advisors look at stocks at the end of the quarter, I compiled
a list of Window Dressing Beneficiaries for Q3 on Friday and the performance was nothing short of amazing in key tech names.)
Time Warner Inc. closed at $18.36 on Friday to end the quarter, down from the adjusted $20.97 close on June 29 and down from the $21.51 highs in early July. This means shares were down 12.44% on an adjusted basis for the quarter.
Time Warner Cable ended the quarter at $32.80, down from the June 29 close of $39.17 and down from highs north of $42.00 in mid-July. This means shares were down 16.26% on an adjusted basis for the quarter.
Continue reading Did Time Warner (TWX, TWC) shares get whacked by month-end window dressing (and could the pain persist)?
Posted Sep 27th 2007 11:00AM by Jon Ogg
Filed under: Analyst upgrades and downgrades, Time Warner (TWX), Time Warner Cable (TWC)
Time Warner Inc. (NYSE:
TWX) is seeing its shares being
reiterated with an Overweight rating at Thomas Weisel, and the brokerage firm has a $24.00 price target on the stock.
One of the winning issues was the success of the latest Harry Potter film
Harry Potter and the Order of the Phoenix that could help the media giant beat earnings estimates. The note also lists positive home video sales as a catalyst that could lift earnings.
Thomas Weisel's analyst Gordon Hodge also notes the likelihood that over the next 18 months the media conglomerate may spin off its cable, AOL, or even publishing units.
Does this sound familiar or what? I wrote about
both scenarios numerous times, mentioning the possible stake sale in cable, and how AOL can become its own tracking stock as well.
Last week Time Warner was
started with a Neutral rating at Credit Suisse. There is obviously a lot of value that can be unlocked, and it seems analyst are slowly getting around the "unlocking value" story.
Posted Sep 26th 2007 3:40PM by Jon Ogg
Filed under: Internet, Time Warner (TWX), Next big thing, Personal finance, Technology
AOL founder Steve Case may have left
Time Warner Inc. (NYSE:
TWX) and AOL, but he isn't out of the web space entirely. His latest venture,
Revolution Money, promises to lower transaction fees on the Web. And he has an interesting new partner in the venture: his old friend, AOL.
Revolution Money, still in its pilot stage, will let users transfer money to individuals and merchants for free through its Revolution MoneyExchange service. AOL will be a launch partner, and will allow users and customers to make payments and fund transfers through its AOL instant messaging service, AIM, for free. It will also offer RevolutionCard, a credit card with an interchange fee of 0.5%, which is below the average of 1.9% for other cards.
The truth is that you and I will win from this venture because this will help drive fees down. The bad news is that as transaction fees move closer and closer to zero, so do the profit margins. Whether the margins are enough to keep these operations viable is an open question.
Posted Sep 26th 2007 2:44PM by Jon Ogg
Filed under: Time Warner (TWX), Comcast Cl'A' (CMCSA), Verizon Communications (VZ), Time Warner Cable (TWC)
Tuesday marked an interesting day for Time Warner -- actually both Time Warners. Shares of both Time Warner Inc. (NYSE: TWX) and Time Warner Cable (NYSE: TWC) hit 52-week lows during the day. TWX dipped as low as $17.77 and TWC to $30.77.
It seems as if almost every internet company is rumored to be in merger talks. But lately, Time Warner's AOL unit is left out. If AOL has to rely solely on the cash of the parent to do deals and make cash buyouts, then it is at a strategic disadvantage compared to other web leaders. The company is kicking major (you know what) on the advertising front, but it needs a cashless currency to do deals. In short, it needs a tracking stock.
Time Warner Cable (NYSE: TWC) is not in considerably better shape. Cable shares are under fire, or so analysts and pundits claim, from broadband over phone lines via Verizon Communication''s(NYSE: VZ) FiOS and AT&T Inc.'s (NYSE: T) uVerse offerings. Even Comcast Corp. (NASDAQ: CMCSA) hit a new low recently.
Time Warner Cable needs a much larger free float for its shares for it to be in the same league as other public cable companies. Time Warner Inc. can make a similar effort for a tracking stock for AOL that gives it the currency it needs to do deals. Those might not be the only solutions, but they would be a good start for two stocks that don't want to be hitting 52-week lows.
The good news is that neither of these stocks closed on 52-week lows and already today both are higher. TWX is up a mere two cents to $18.13 at 2 PM. But TWC is up 69 cents to $32.82 (2.15%).
Posted Sep 26th 2007 9:15AM by Jon Ogg
Filed under: Scandals, McGraw-Hill Companies (MHP), Politics
Today should be an interesting day for the "independent" ratings agencies.
McGraw Hill's (NYSE:
MHP) Standard & Poor's and
Moody's Corp. (NYSE:
MCO) will be
speaking on Capitol Hilll today and tomorrow [subscription required].
Critics have become more vocal that the late summer downgrades on mortgage and derivative securities came too late. It goes without saying that the analysis the bond rating agencies were issuing seemed as if none had questioned the numbers given to them without finding the real exposure. The results were so good that S&P
canned its ratings agency head. Moody's
also made changes, but this was too little too late. If you have been keeping up with this, you'd know shares of both were hit and recently reached new 52-week lows.
Bond rating agencies have been in the soup before over their coverage of great companies like Enron and WorldCom. The difference is, this time they were not just duped by management being hellbent on fraud; this time they just didn't do their job.
But ... congress doesn't even know what it is looking for here, other than getting some air time and making it look like it wants to investigate. The ratings agencies definitely botched it here, but it's likely that nothing of major consequence will happen to them for it.
Posted Sep 20th 2007 1:14PM by Jon Ogg
Filed under: Time Warner (TWX), Comcast Cl'A' (CMCSA), Time Warner Cable (TWC)
It appears that
Time Warner Inc. (NYSE:
TWX) may actually be
considering a sell-back of a small stake in
Time Warner Cable (NYSE:
TWC) according to an Associated Press report from last night.
This morning Reuters added some information. The board of directors of Time Warner Cable appointed a special committee to look into any
proposal that Time Warner might make on its 12.43% stake. This stake was valued at roughly $2.9 billion back in 2005. If this occurs, it will be financed from the Cable company's revolving credit facility or by accessing debt. Time Warner would apparently still hold an 84% stake in the cable operator if the filing information is accurate.
But there is another thought here. It may be a bit Panglossian, but still worth a visit. Time Warner Inc. probably has a second wave of a restructuring in the not too distant future, or
so I have speculated (actually, I believe it inevitable and as logical as Ireland being green). Shares of Time Warner Cable are down to $32.79, down from $43.25. The cable company should not take on the debt. The average daily trading volume is barely 1.2 million shares (about $40 million worth of stock trading per day). Its rival
Comcast Corp. (NASDAQ:
CMCSA) trades close to 20 million shares per day (over $400 million worth of stock).
The company could allow these to make the necessary conversions and it could be added to the free float on the exchange. While it is dilutive to existing shareholders, it would at least get that low float higher. Its $29.6 billion in market cap is far lower if you consider the free float in the stock.
Posted Sep 20th 2007 11:23AM by Jon Ogg
Filed under: Products and services, Time Warner (TWX), Marketing and advertising, Walt Disney (DIS)
Disney-ABC Television Group, a division of
Walt Disney Co. (NYSE:
DIS), and AOL, a unit of
Time Warner Inc. (NYSE:
TWX) have announced the availability
of full-length episodes of popular primetime shows on AOL Video. The shows will be available via a co-branded version of ABC.com's broadband player and starting next week will feature ABC's new fall lineup of programming.
Additionally, the two companies will team to offer select short-form programming from ABC through an embedded short-form player, which will debut on AOL later this year and will include both original and derivative content from ABC. Here is part of the programming that will be offered the day after their broadcast premieres:
Continue reading AOL Video gets to offer Disney-ABC (DIS) primetime lineup
Posted Sep 19th 2007 8:29PM by Jon Ogg
Filed under: Launches, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX)
Time Warner Inc.'s (NYSE:
TWX) AOL unit recently announced the availability of a beta version of
BlueString, a free site that enables users to easily upload, store, manage, create and share many kinds of digital media. It will centralize and act as a backup for photos, videos and music stored externally for users.
BlueString provides the ability to manually (or even automatically) upload personal media and to create rich multimedia shows that can be shared with family and friends. An innovative feature called "String it" makes it easy to collaborate, allowing several people to add media assets to one show.
BlueString offers up to 5 GB of free online storage and, beginning this fall, any user with an active email address from any provider can easily register to use this product for free. An upgrade to preserve online media with the ability to upgrade to 50 GB is available at $99 per year. Users can also invite private groups of friends and family to view their personal media collection or even embed their media on a Website or blog. This concept was created by AOL and is to be powered by the Xdrive operations.
It sounds like the real winner will be Joe Q. Public. Once free storage is offered by one content provider it tends to happen rapidly elsewhere. In fact, this is somewhat an evolution of the obvious -- but a cool obvious. This entire push will probably go outside of AOL, beyond what is already available.
Google (NASDAQ:
GOOG) has YouTube,
Yahoo! (NASDAQ:
YHOO) has its Briefcase and
Microsoft (NASDAQ:
MSFT) has Live. Now the competition will likely boil down to which company one-ups the others.
This online media storage and quasi-available-to-public feature is also going to continue the fight against
Getty Images (NYSE:
GYI) for smaller end-user media buyers.
Posted Sep 19th 2007 6:05PM by Jon Ogg
Filed under: Google (GOOG), International Business Machines (IBM), Oracle Corp (ORCL)
On last night's
MAD MONEY on CNBC, Jim Cramer came out and said he thinks Carl Icahn's activist investor attempt to make
BEA Systems, Inc. (NASDAQ:
BEAS) get acquired may actually work. He said that Carl Icahn even went after stock options, which means he is avoiding some of his votes because he's that confident. Cramer thinks that if this does get acquired it will fetch $15.50 to $18.50 (or a 17% to 40% upside), and he thinks the downside is less. Ultimately, Cramer noted that
Oracle Corp. (NASDAQ:
ORCL) or
IBM (NYSE:
IBM) would be natural buyers.
For whatever this is worth, anyone buying BEA Systems on hopes of a buyout even with Carl Icahn's large stake needs to know that this company has been in the "Speculators Bin" for as long as I can remember it being around (literally). This is one that also is believed to have many
"Anti-Takeover" provisions in place if management wants to fend off a buyout. That may or may not be the case, but the founder, chairman, CEO, and chief BEA-zer, Alfred Chuang, has said over and over how the company will remain independent. It doesn't mean he can't be dealt with at all, and doesn't mean he can't be won over, but he will have to want to go along with it or he'll be telling Icahn and Cramer to go look elsewhere. I have had this as a BAIT SHOP Value Stock before (now called the
Special Situation Investing Newsletter for subscribers), although I have removed it twice and never added it back this year because it seemed
too difficult to acquire.
Cramer also said today was a game changer, and he said you can buy almost anything. Here are some of his major lists that he has given with stocks he refers to often:
Jon C. Ogg produces the 24/7 Wall St., LLC Special Situation Investing Newsletter; he does not own securities in the companies he covers.Posted Sep 18th 2007 4:15PM by Jon Ogg
Filed under: Time Warner (TWX)
Time Warner Inc. (NYSE:
TWX) has some good news still cranking out of its AOL unit.
comScore has just released its new Internet "Top 50" lists today, and in August, Advertising.com remained atop the Ad Focus Ranking. comScore said that Advertising.com is reaching 89% of the more than 181 million Americans online.
If you just run some simple math, this would generate a total audience reach of roughly 161 million Americans. Obviously an audience reach is not the same ranking for search or time spent per visit on a website, but the number is more than substantial.
If AOL is or is not going to end up
being its own unit or a tracking stock, this advertising.com is a major help. If you will recall, the
parent just rolled out the Platform A that integrates all the online ad properties and builds upon the Advertising.com business. That should help extend the reach even more, although you have to wonder if any changes may cause a skipped beat here and there. Obviously AOL wants to increase the depth of this reach now. Even a slight incremental increase in "per user" metrics can have a major impact with numbers this large.
Jon C. Ogg is a partner in 24/7 Wall St.; he does not own securities in the companies he covers. Posted Sep 18th 2007 1:54PM by Jon Ogg
Filed under: Comcast Cl'A' (CMCSA), Time Warner Cable (TWC)
Time Warner Cable Inc.'s (NYSE:
TWC) CEO
Glenn Britt told the Goldman Sachs Communacopia Conference today that the cable TV operator is seeing a small increase in bad debt from subscribers in subprime housing areas. This was noted as a "little uptick" from customers who could not pay their bill in markets populated with subprime home loans.
The funny thing is that is this is historically a counter-trend. When times get tough, people may cut down on going out to eat or spending in other areas, but cable has traditionally been a good recession-proof business because families stay home more. Obviously, with the Triple Play scoring larger wins, this makes for higher subscriber prices and that might explain part of it.
The company signaled that it would not be increasing discounts for triple play in subprime ridden areas in an effort to retain subscribers. Britt also noted the cable company is interested in making strategic acquisitions where it can, although not on an overly aggressive basis.
Comcast Corp. (NASDAQ:
CMCSA) will have its COO presenting at the same conference at 2:50 PM EST today, so it will be interesting to see if they have the same reports. It's hard to imaging they would be immune.
Supposedly one of the economic issues that Ben Bernanke investigates is what is going on with cable bills.
Jon C. Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.
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