Archive for October, 2007

  • Third-Quarter Earnings Reports
    , October 16th, 2007 at 11:05 am

    Earnings season gets underway for out stocks this week. On Thursday, Danaher (DHR) and UnitedHealth (UNH) report. Then on Friday, Harley-Davidson (HOG) reports. I think HOG is due for a lift soon.

  • Medtronic Pulls Defibrillation Leads
    , October 15th, 2007 at 10:36 am

    Ugh.

    Medtronic Inc. has suspended distribution of its Sprint Fidelis defibrillation leads after identifying five patient deaths in which a lead fracture may have been a contributing factor.
    Medtronic shares fell nearly 5 percent in premarket trading.
    A defibrillator monitors a patient’s heartbeat; if it senses an abnormal heart rhythm, it delivers an electronic shock to reset the heart to a normal beat. A defibrillation system consists of a device implanted near the shoulder with one or more leads connecting the device to the heart.
    Medtronic said Monday it had discovered a “small chance of fractures in particular locations” on Sprint Fidelis models 6930, 6931, 6948 and 6949. The company is asking doctors to stop implanting the leads and return all unused leads to Medtronic.
    A fractured lead “can cause the defibrillator to deliver unnecessary shocks or not operate at all,” said Daniel Schultz, director of the Food and Drug Administration’s Center for Devices and Radiological Health.
    The company is not recommending that patients with such a lead have it removed, since they “are more likely to experience complications from removal.” Instead, Medtronic said, doctors can reprogram the device to alert the patient that a fracture may have occurred. Possible indicators could include audible alerts or inappropriate shocks.

    The stock is getting crushed today. The shares went as low as $50.20.

  • UNH Below $50
    , October 12th, 2007 at 12:24 pm

    If you’re looking to add new money to the market, consider shares of UnitedHealth (UNH). I really am surprised to see the stock going for less than $50. I’m not sure what the market is expecting. The stock is going for about 12.6 times next year’s earnings estimate. Yet, the company will probably grow its earnings about 17% this year, and 14% next year.

  • Is the Worst Over?
    , October 11th, 2007 at 10:24 am

    Quick question: How much did foreclosures increase last month? 10%? 20%?
    Try an 8% drop.

    But the figures were still double the number reported a year ago. “It’s important to note that September’s total was still the second highest monthly total we’ve seen since we began issuing our report in January of 2005,” James Saccacio, chief executive of RealtyTrac, said in a statement.
    “It’s too early to tell if September’s numbers represent a one-month lull,” he said, “or if they could signify that more buyers and investors are getting back in the market and snatching up discounted foreclosure properties, thereby providing a release valve for distressed homeowners and overwhelmed lenders.”

  • The Market Five Years On
    , October 9th, 2007 at 11:02 am

    Today is the fifth anniversary of the market’s low close. On October 9, 2002, the Dow closed at 7,286.27. The S&P 500 closed at 776.76, which is eerily similar to the Dow’s low from 20 years before.
    Over the last five years, the Wilshire 5000 is up 132.1% (including dividends) which slightly beats gold’s gain of 129.8%. Also, the dollar has lost about 30% of its value against the euro.

  • Monday Night Football at Tradesports
    , October 9th, 2007 at 10:09 am

    Here’s the futures contract for the Cowboys to win last night’s game:
    chart119123370657218755.png
    If you missed the game, I’m not sure how to describe it. Dallas was counted out not once, but a few times and still managed to win. Look at how often the contract was basically worthless.

  • Write-Offs Are a Buy?
    , October 9th, 2007 at 9:24 am

    David Weidner looks at the recent round of broker write-offs:

    The bet is that the bigger the write-down now, the less these institutions will have to write down in the future. This is like a baseball team that celebrates after losing by nine runs, because the odds seem somehow greater that it will lose the next game by a big margin. This logic has Richard Bove, an analyst at Punk Ziegal & Co., flabbergasted.
    “These companies are not going to see their markets jump back immediately,” he wrote in a note to clients. “Their earnings power has been lowered. This is a reason to sell not buy. The theory that if the company writes off $2 billion it should see its stock price up $1 and if it writes off $6 billion the stock should jump $3 is not one I can embrace.”

    Doesn’t make much sense to me either.

  • Option Traders Fear a Crash
    , October 8th, 2007 at 12:14 pm

    In the stock pits, traders are bullish but not so in the options arena:

    Investors are paying the most ever to protect against a drop in the Standard & Poor’s 500 Index, data compiled by Morgan Stanley show. The gap between the price of so-called put options on the benchmark for U.S. equity and the cost to wager on further gains has averaged about 8 percentage points since August. That’s more than the previous high in July 2001, before the index dropped 34 percent and fell to the lowest this decade.

  • Business Deals Gone Bad
    , October 4th, 2007 at 11:11 am

    1004_worst.jpg
    Business Week has an interesting article on bad business deals. This problem is far more common than most people realize. My particular concern is the mega-merger. Time and time again, these deals never seem to work out. They’re always greeted with great fanfare. You see the new CEOs smiling and shaking hands. Everyone is talking about synergy this and new markets that.
    My hunch is that mega-mergers flatter the vanities of the executives who make the deal. Shareholder value, on the other, is probably more do to innovation and execution where executive decisions play a much smaller role.
    So how come the mergers rarely seem to work out? I think the problem is that there are a million steps that can go wrong. You have to merge two different cultures. Your clients need to realize that. There are ego and turf wars. Shareholders must be pleased. Lawyers need to be pleased. Plus, there’s always the issue of anti-trust battles.

    The wreckage of deals gone bad litters the business landscape these days. On Oct. 4, shareholders of German automaker DaimlerChrysler (DAI) are expected to approve renaming the company Daimler, jettisoning the last vestiges of the disastrous 1998 acquisition of Chrysler, for which it paid some $40 billion. While retaining a 19.9% stake in the Michigan company, Daimler’s shareholders will be more than happy to forget the whole episode, which saw litigation over the deal, a dearth of hit models, cultural and operational snags between U.S. and German managers, and heavy financial losses. In May, Daimler agreed to sell the bulk of the company to private equity firm Cerberus Capital Management for a mere $6 billion.
    On Oct. 1, online auction house eBay (EBAY) conceded that it had overpaid in its $2.6 billion acquisition of Internet telephone service Skype Technologies in 2005. EBay took a writedown of $1.4 billion, and Skype founders Niklas Zennström and Janus Friis departed from their former suitor.

    Here’s Business Week‘s list of the Worst Deals of All-Time.

  • The Buy List Today
    , October 3rd, 2007 at 5:00 pm

    I shouldn’t toot my own horn, but the Buy List has been doing pretty well lately. Since September 21, we’re up 2.91% a full two points ahead of the S&P 500. For the year, however, we’re still trailing the S&P 500, 8.55% to 3.74%.
    Today we were up 0.19% while the S&P was down -0.46%. That’s a nice spread for one day. Today’s big winners were Harley-Davidson (HOG) and Fiserv (FISV). Harley’s been a disaster this year, but to be honest, I still like the stock. For the year, HOG is down over 30% but the company recently raised its dividend.
    Respironics (RESP) is still kicking ass and it’s another 52-week high today. FactSet Research Systems (FDS) is also doing well and it nearly made a new high yesterday.