The Juice: A Little Something Extra for your morning
MainWall Street Archives
Investors are feeling a little better this morning
Wall Street saw a nice rebound yesterday as the sell-off in the bond market cooled and bond prices rose. And when May's retail sales numbers came in much better than expected, Wall Street went on a buying spree. The Dow shot up 187 points to 13,482. The NASDAQ put on 32 points to 2,582. And the S&P 500 climbed 22 to finish at 1,515.
Private equity gets a real fixer-upper
Home Depot's supply unit has been struggling along with the housing market, so today the home improvement retailer has reportedly agreed to sell that division to three private investment groups. The price tag: more than $10 billion. They'll probably do what private equity does best: Swoop in, fix'er up and flip it for a profit by taking it public again.
Time to play 'What's private equity buying now?'
Canada's largest phone company, for one. This weekend, a couple U.S. firms teamed up with the Ontario Teachers' Pension Plan to buy phone company BCE for almost $52 billion. It's the biggest buyout in Canadian history.
And private equity has its eye on Britain's biggest cable operator, Virgin Media. Times of London telecom editor Elizabeth Judge says there's a potential bid brewing worth at least $10 billion.
Hot off the griddle
Pancake chain IHOP announced this morning that it plans to buy Applebee's International, serving up $25.50 per share in cash. The companies say the deal is worth $42.1 billion.
Coca-Cola profits bubbling
The world's largest soft-drink maker has lagged behind rival Pepsi in recent years but Coke's recent acquisitions of juice and tea company Fuze and vitamin-water giant Glaceau seem to be replenishing its place in the market. The company says second-quarter profit rose thanks to emerging markets such as China, Turkey, India, and Brazil.
07/17/07 04:26 AM PT Posted on July 17, 2007 4:26 AM PTAirTran, Midwest merger cookie crumbles
AirTran's $431 million takeover bid for Midwest Airlines — beloved by regular passengers for its Signature Service that includes chocolate chip cookies baked fresh onboard — has expired. No doubt good news for the folks over at Save the Cookie, a campaign that rose to petition the takeover attempt. And Midwest already has other plans cooking. The company said instead it's going to move ahead with an all-cash offer from TPG Capital. The private equity firm formerly known as Texas Pacific Group is offering $16 per share for Midwest.
Wholesome, nutritious and for sale
Kraft Foods is munching on the idea of putting its Post cereals division on the block. The Wall Street Journal reports Kraft could milk as much as $3 billion from a sale. The Post brand has names like Grape Nuts and Shredded Wheat. PepsiCo, owner of breakfast classics Life and Cap'n Crunch, is being tossed out as a potential bidder.
08/16/07 05:12 AM PT Posted on August 16, 2007 5:12 AM PTWhole Foods gets green light
Grocery chain Whole Foods has been waiting in the check-out line for quite a while now to buy rival Wild Oats. Yesterday, a federal judge gave the $565 million deal his blessing, but the Federal Trade Commission plans to appeal. So, Whole Foods might have to keep reading the tabloids for a bit. It's agreed not to close the deal before noon Monday, per the FTC's request.
08/17/07 06:35 AM PT Posted on August 17, 2007 6:35 AM PTCountrywide swings the axe
Looks like the nation's biggest mortgage lender is getting smaller. The Wall Street Journal reports this morning that Countrywide Financial has started laying people off, citing an internal e-mail sent Friday by a senior official at the company. We don't know yet how many people are losing their jobs, but the cuts are reportedly in the Full Spectrum unit which handles loans between prime and subprime.
08/20/07 06:09 AM PT Posted on August 20, 2007 6:09 AM PTSpeaking of hedge fund managers...
Jim Cramer had a heckuva career in hedge funds. Now, he's jumping up and down and screaming on CNBC's "Mad Money," but today's issue of Barron's says viewers could do a lot better than heed Cramer's stock picks. Sure, they're up 12 percent over the past two years, but they haven't beaten the market. The Dow was up 22 percent, and the S&P 500 is 16 percent higher. Still, the article does note that Cramer's advice is generally smart.
08/20/07 06:42 AM PT Posted on August 20, 2007 6:42 AM PTEven the suits are starting to feel it
Wall Street types won't exactly get coal in their stockings this Christmas, but a group that tracks Wall Street bonuses says they'll probably be 5 percent smaller than last year. It's hard to feel too sorry for these folks considering the average bonus last year was $220,000, but some traders will have it a lot worse. The Options Group says one out of every three people who sell mortgage-backed securities could lose their jobs.
08/22/07 04:45 AM PT Posted on August 22, 2007 4:45 AM PTA knight in banking armor
Bank of America is coming to the rescue of struggling mortgage lender Countrywide Financial.
B of A just made a $2 billion investment in Countrywide, buying non-voting shares that can be converted to common stock. If those shares are converted, B of A would hold more than 15 percent of Countrywide's stock. In other words, Bank of America is now Countrywide's largest shareholder.
Buyout bargain for private equity
For the last couple years, private equity has paid full price for every company it's bought, and banks have been an endless source of credit to leverage those deals. Not anymore. Over the weekend, Home Depot dropped the price of its contractor supply business by almost $2 billion, so the three private equity firms buying it will pay $8.5 billion instead of $10.3 billion — a move that could mark the beginning of a bargain buyout era.
08/27/07 06:00 AM PT Posted on August 27, 2007 6:00 AM PTYup, it's a buyer's market
We haven't seen home prices drop this much in at least two decades. Standard & Poors said this morning that home prices fell 3.2 percent in the second quarter compared to last year. That's the biggest decline since S&P started tracking the numbers in 1987. Wall Street isn't taking it well.
08/28/07 07:48 AM PT Posted on August 28, 2007 7:48 AM PTBad job news. Very bad.
We keep hearing that the subprime lending mess probably won't bring down the broader economy, but this morning's jobs report suggests otherwise. For the first time in four years, employers fired more people than they hired in August. The net result was a loss of 4,000 jobs. This caught economists completely off guard — they'd predicted that companies had added 110,000 jobs last month — and Wall Street is reeling in early trading.
09/07/07 07:14 AM PT Posted on September 7, 2007 7:14 AM PTOn second thought, that's a little much...
The group that had agreed to buy Sallie Mae for $25 billion is looking for a lower price. The New York Times reports today a couple of private equity firms, along with J-P Morgan Chase and Bank of America met this week to talk about the best way to put the pressure on Sallie Mae. It's the latest big buyout deal in jeopardy. The consortium is also thinking about scrapping its bid for the student loan giant altogether. The Times says the acquirers may be willing to pay the 900-million dollar breakup fee to walk away from the deal.
09/20/07 06:18 AM PT Posted on September 20, 2007 6:18 AM PTSomething's brewing in the beer industry
Nothing like a little beer in the morning -- or, news of a big beer merger. Brewski makers SABMiller and Molson Coors announced today they're bringing their U.S. operations together. The new company will be called "MillerCoors" with a projected revenue of nearly $7 billion, competing with beer leader Anheuser-Busch.
10/09/07 07:55 AM PT Posted on October 9, 2007 7:55 AM PTMore problems for Countrywide
As if mortgage-lender Countrywide Financial didn't have enough trouble. The subprime crisis lopped half the value of Countrywide stock this year. And now the SEC is informally investigating stock sales by the company's CEO. Angelo Mozilo gained $132 million in pre-arranged sales months before Countrywide shares plummeted.
10/18/07 04:52 AM PT Posted on October 18, 2007 4:52 AM PTGoogle is expensive
Google reported earnings yesterday. The company made a billion dollars in the third quarter, a 46 percent increase over the same period last year beating analysts' already high expectations. Google stock is up 39 percent so far in 2007. A single Google stock will cost you $639 these days.
10/19/07 02:37 AM PT Posted on October 19, 2007 2:37 AM PTBP's down, but not that down
The skyrocketing price of oil isn't helping gasoline prices. BP reported its third quarter profit slumped 29 percent -- its poorest performance in almost three years. The gasoline company has faced temporary shutdowns and high maintenance costs at its refineries. Don't cry for BP yet -- it still made off with $4.4 billion in the third quarter.
10/24/07 05:33 AM PT Posted on October 24, 2007 5:33 AM PTMurdoch brings an aria to the boardroom
A 27-year old opera singer named Natalie will be the Bancroft representative serving on Rupert Murdoch's News Corp board. The Bancrofts controlled Dow Jones before agreeing to sell the company to Murdoch for $5 billion. The Wall Street Journal reports there was so much bickering among the Bancroft family when it came to nominating its own candidate to the News Corp board, Murdoch ended up having the final say. The Journal reports Bancroft acknowledges she's a neophyte to the worlds of journalism and commerce. She still needs to be approved by the other, all-male News Corp directors.
11/07/07 06:40 AM PT Posted on November 7, 2007 6:40 AM PTGoogle attempting to go wireless
Today could be the day Google makes its plans clear about wanting a piece of the wireless pie.
The Wall Street Journal reports Google will announce today it'll apply to bid for wireless spectrum in next month's FCC auction. The FCC has a December 3 deadline for speaking up about wanting to bid. No comment from Google, but the company has previously said it would probably go for a chunk of the airwaves that can be used for mobile phone services and internet.
The feed from the fed
Here's the latest prediction on how much the Fed will cut interest rates: 100 basis points before June to help the housing market. That comes from the crystal ball of Citigroup's chief economist Lewis Alexander. Alexander made the comments today during a talk for clients in Singapore.
He worked at the Federal Reserve before joining Citigroup. Alexander also says the drop in the dollar's value shouldn't cause too many inflation worries.
How to help a credit crisis: Try a merger
The head of JP Morgan says he sees lots of new relationships in his crystal ball. Jamie Dimon told a German newspaper today he expects the credit crisis to unleash a wave of bank mergers in the U.S. and Germany. Dimon also mentioned it wouldn't bother him if the SIV super fund didn't happen. That's the plan for three U.S. banks, including JP Morgan, to help rescue structured investment vehicles.
12/07/07 07:30 AM PT Posted on December 7, 2007 7:30 AM PTEven Bear loses sometimes
Bear Stearns is expected to announce its first quarterly loss ever tomorrow. The 84-year old company, like many others, has taken big hits from the credit crunch. And now it looks like the firm's top brass will feel the pinch. The Wall Street Journal reports CEO James Cayne and other executives are expected to say no to their bonuses this year. It's a big change for Bear. Over the years, it's used a hefty compensation approach to recruit employees labeled P-S-Ds: that stands for poor, smart, desire to be rich.
12/19/07 04:03 AM PT Posted on December 19, 2007 4:03 AM PTBig profits mean big bonuses
This year we've seen a good number of Wall Street CEOs' resignations. But there is one chief executive that not only did not lose his job, but is getting a holiday little present. Little as in $68 million. That would be the size of the bonus that Lloyd Blankfein, CEO of Goldman Sachs, is pocketing. He did keep his company on track and drove it to deliver a record profit this year, as competing Wall Street firms were reporting multibillion-dollars write-downs in the middle of the subprime meltdown.
Blackstone couldn't pay, so it's gotta pay
PHH, a New Jersey-based mortgage and leasing company, wants Blackstone Group to cough up a $50 million break fee. Blackstone was in a deal to buy PHH with General Electric for nearly $2 billion, but Blackstone couldn't get financing to hold up its end of the deal. The Times of London reports this morning its not clear whether Blackstone would agree to pay PHH the fee.
01/02/08 05:44 AM PT Posted on January 2, 2008 5:44 AM PTBidding storm looms over Weather Channel
There's a lot of forecasting going on right now about the Weather Channel.
Reports say some big media companies may be willing to pay more than $5 billion for it. The Channel's parent company, Landmark Communications, is expected to announce today it plans to sell everything it owns, including nine daily newspapers. The Weather Channel is a hot commodity because it's one of the last privately owned cable channels. And since the ever-changing weather is mostly immune from Tivo and other DVRs, advertisers love it. The channel's website, weather.com, will probably heat up bidding too. In November, it had more users than Facebook and CNN.
Fox Business hunts for ratings
When the Fox Business Channel made its debut, a reporter appeared on the screen standing outside the headquarters of CNBC. The correspondent declared it was "hunting season."
But in the hunt for ratings, CNBC is well ahead of the game. Early numbers from Nielsen Media Research show on any given weekday Fox Business has just over 6,000 viewers. CNBC, its main competitor, has 283,000. That measurement was taken from mid-October to mid-December, the first two months Fox Business was on the air. The New York Times points out the new channel is so far available in about 30 million homes. CNBC can be seen in 90 million homes.
How many CEOs heading for the door?
A lot of executives have left their jobs because of problems tied to the credit crunch. Bear Stearns CEO James Cayne is the latest to cave to shareholder pressure. But in 2007, there were actually fewer CEOs heading for the door than the previous year. Consulting firm Challenger, Gray, and Christmas says 1,356 chief execs left their positions in '07. That's a drop of more than 8 percent from '06. But for the third straight year, the number of departures a month averaged more than a hundred.
01/08/08 04:55 AM PT Posted on January 8, 2008 4:55 AM PTWanted: More money
That's what Citigroup and Merrill Lynch are looking for, and they're looking far and wide to get it.
The Wall Street Journal reports this morning the two firms are in talks to get additional capital from overseas. Citi could get an infusion of up to $10 billion from mostly foreign governments. It's already taken more than $7 billion from the Abu Dhabi Investment Authority. Merrill Lynch is looking for about $4 billion from a Middle Eastern government fund. At the end of the year Merrill already got a $4 billion dollar injection from Singapore. No comment from either company.
SocGen's rogue trader dealing with large pool
French bank Societe Generale said Friday that the rogue trader who cost the bank $7.14 billion had been trading with a far bigger pool -- tens of billions of dollars. A bank official confirmed that the size of the trader's positions had reached "several tens of billions of euros," a staggering sum for a bank whose market capitalization is $52.6 billion. The official spoke on condition of anonymity in line with bank policy.
01/25/08 06:57 AM PT Posted on January 25, 2008 6:57 AM PTXM-Sirius deal approved
The Justice Department approved the merger of two major satellite radio companies. The department concluded that the deal is unlikely to hurt competition or consumers. Sirius Satellite Radio wants to buy XM Satellite Radio for around $5 billion. The deal still needs approval from the Federal Communications Commission. When the FCC first provided satellite radio operating licenses more than a decade ago, it said it would stand in the way of mergers between two competing companies.
03/25/08 06:40 AM PT Posted on March 25, 2008 6:40 AM PTThe deal is no longer so Clear
There was a time, not so long ago, when we heard of a multibillion-dollar deal every other day. These days, we hear more about buyouts falling apart. The latest deal to be in jeopardy is the sale of Clear Channel, the nation's number one owner of radio stations.
This time, it's not the buyers that are pulling the plug, it's the banks lending the money to the two private equity firms. Citigroup, Morgan Stanley, Deutsche Bank and Credit Suisse want to renegotiate the terms of the financing -- as in they want to set stricter terms (You see, it happens to the rich people, too). Clear Channel shares fell 5 point 6 percent before the markets closed and 21 percent in after-hours trading.
When the chairman sells all his company stock . . .
Bear Stearns Chairman James Cayne made a sale this week. He unloaded all of his Bear stock for just over $61 million. Last year, the 5.6 million shares would have been worth about $1 billion. That's when Bear's share price peaked at more than $170. JP Morgan agreed earlier this week to increase its original $2 a share bid for Bear Stearns to around $10 per share. Cayne's sell-off probably means bank shareholders won't get a higher price for their stock.
03/28/08 06:25 AM PT Posted by Melissa Kaplan on March 28, 2008 6:25 AM PTAn Absolut tug-of-war
French company Pernod Ricard beat out the favorite in a heated auction to buy the maker of Sweden's Absolut vodka. Fortune Brands, the maker of Jim Beam, had been the frontrunner. Pernod Ricard is the world's second-largest wine and spirits company. They'll pay nearly $9 billion for Absolut. The sale of the vodka icon is the center of Sweden's largest-ever push to privatize state assets.
03/31/08 02:59 AM PT Posted by Melissa Kaplan on March 31, 2008 2:59 AM PTDeal near to help struggling WaMu
The private equity firm TPG and other investors are nearing a deal to invest $5 billion in Washington Mutual, according to a report in the Wall Street Journal.
The Journal says an agreement has not been finalized.
Washington Mutual, the country's biggest savings and loan, has lost billions in the
national mortgage crisis. Investors have lost more than 74 per cent of their investment in the past year.
Skybus to file for bankruptcy
Another airline bites the dust.
Skybus -- home to the $10 flight -- is expected to file for bankruptcy protection Monday. Just three days ago, the airline suspended flights -- leaving thousands of ticketholders stranded. The carrier said a slow economy and rising fuel costs were behind its demise.
Skybus is the third U.S. carrier grounded by bankruptcy in a week.
04/07/08 11:01 AM PT Posted by Lori Stassi on April 7, 2008 11:01 AM PTIf you're a hedge fund manager, it's been a good year
While the country seems to be heading into tough economic times, guess who is not touched by them? Hedge fund managers, of course.
Alpha magazine came out with its annual survey of hedge fund managers' yearly gains. One manager, John Paulson, made $3.7 billion last year. George Soros made almost $3 billion. The top 25 on the list earned an average $892 million, up from $532 million in 2006.
And of course, their secrets include getting ahead of the news in the markets. John Paulson, for example, predicted the decline in value of those flaky mortgage-backed securities back in 2005.
What recession?
Miller beer says annual results top expectations
Here's a business that might be benefiting from a slowing economy -- Miller beer.
The SABMiller company says (today) its annual results would be at the upper end of expectations. Lager sales have helped. Lager volumes in North America are up 3 percent and 15 percent in Asia and Africa. The cost of producing beer has increased as grain has become more expensive. But Miller says it has increased prices. It also said currency shifts have helped stave off a loss. Analysts say the beer industry should remain strong in the U.S. during the slowdown.
04/16/08 09:37 AM PT Posted by Lori Stassi on April 16, 2008 9:37 AM PT