In what appears to be a first for the most recognizable mega-tech company in the world, Microsoft Corp. (MSFT) announced today that for the first time in the company’s history that they will be reducing their workforce by some 5,000 positions. Although the company has made smaller, limited cuts after acquiring other companies, it marks the first time since the company’s inception in 1975 that they have had to make massive personnel changes.
The layoffs, which amounted to 1,400 just today, were directed mainly to the company’s research and development, marketing, corporate affairs, legal, finance, human resources, sales and information technology departments. The remainder of the job cuts will come from billing, support, consulting, operation, data center and manufacturing divisions.
Even with the reduction in their employment status today, Microsoft reiterated that the company would not place a freeze on hiring. In fact, company officials stated that over the next eighteen months, the company would continue to add key personnel to support various areas of operation so that the total number of people laid-off would only amount to between 2,000 and 3,000. To date, Microsoft currently employs more than 96,000 people.
Today’s news was the catalyst for the company pre-announcing their 2nd quarter results, which were not due out until after the close of today’s trading session. In their report, Microsoft revealed an 11% decline in quarterly profits from a year ago as the struggling economy has taken hold of even the most profitable companies.
Quarterly earnings for the tech company amounted to $4.17B, or $0.47 per share, compared to last year’s profits of $4.71B, or $0.50 per share. During the period, revenues managed to advance by 2%, coming in at $16.63B, up from last year’s 2nd quarter revenue total of $16.37B. On average, analysts were looking for Microsoft to post quarterly earnings of $0.49 per share on total sales figures of $17.08B.
Commenting on the results was Chief Executive Steve Ballmer, "We're certainly in the midst of an once-in-a-lifetime set of economic conditions. The perspective I would bring is not one of recession. Rather, the economy is resetting to lower level of business and consumer spending based largely on the reduced leverage in economy."
A key catalyst to the company’s recent downturn can be attributed to not only the lack of consumer spending, but the demand for cheaper netbook computers. Netbooks are smaller, stripped-down laptops that mainly run on Windows XP, which is not as profitable as other operating software sold by Microsoft.
Another key factor was the ultimate perceived failure of Windows Vista, which contributed to an 8% decline in software revenue during their 2nd quarter, posting sales of $3.98B, down from the previous year’s tally of $4.33B. Even with the company cutting some $600M worth in operating expenses, it still could not help with the company’s bottom-line.
With the current amount of job cuts, Microsoft is set to save some $1.5B in operating costs as they head into the second half of the year.
“We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half relative to the previous year,” stated Christopher Liddell, the company’s Chief Financial Officer. With that said, the company declined to release any predictions of revenue or earnings forecasts for the remainder of the year.
By late afternoon, shares of MSFT plummeted more than 11% in trading on the news of a dire earnings release and the report on job cuts. In it, shares gave up $2.15 to trade at $17.23 per share after hitting a new 52-week low of $17.19.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, January 22, 2009
Wednesday, January 21, 2009
GM Passes the Crown of Global Sales Leader - January 21, 2009
In what appeared to be only a matter of time, a report today showed that the Toyota Motor Corp. (TM) has taken over as the world’s top automobile sales company, relinquishing General Motors Corp. (GM) of that dubious honor which they held for the past 77 years.
GM released their totals for the past year in which the company sold 8.355 million cars and trucks, coming up nearly 616,000 units short of Toyota’s total of 8.972 vehicles sold. Having nearly surpassed GM in 2007, Toyota was a little less than 3,000 units short of that title back then.
Downplaying the importance of the newly relinquished title, GM’s executive director of global market and industry analysis Mike DiGiovanni, stated "I don't think being No. 1 in vehicle sales means much at all to the American consumer. I think what matters most to the consumer is strong brands and strong products. And the key thing right now with what the industry is going through now is viability and profitability."
On the global scale, sales for Toyota slipped 4% for the year, which made it possible to overtake GM in sales as the American automaker saw their worldwide sales figures drop 11%. Although Toyota doesn’t have that great of a presence in the European and North American markets, GM does, and sales there declined by 6.5%, with a 21% decrease in sales during the 4th quarter.
Included in GM’s losses for market share, sales within North America fell-off by 21% during the year as consumer shied away from big ticket purchases. In fact, sales outside of the continental U.S. accounted for 64% of GM’s sales, up from the previous year’s tally of 59%, thus proving that the domestic auto industry was in dire straits.
Before GM can think about regaining their crown, the company needs to find a way to stay afloat. If the company doesn’t receive their second installment of the government’s loan money, which was due January 16, the company could run out of money by the end of their 1st quarter.
"If we don't get our second installment of the funding we'll run out of cash, it's that's simple," Chief Operating Officer Fritz Henderson said. "We've been finalizing what we need to do. We anticipate receiving it. But it's critical that we receive it."
By the close of the markets today, shares of GM were trading in the green, adding $0.03, or 0.9%, to close the day at $3.53 per share. Meanwhile, shares of TM were up 2.5%, gaining $1.64 to conclude the session at $67.52 per share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
GM released their totals for the past year in which the company sold 8.355 million cars and trucks, coming up nearly 616,000 units short of Toyota’s total of 8.972 vehicles sold. Having nearly surpassed GM in 2007, Toyota was a little less than 3,000 units short of that title back then.
Downplaying the importance of the newly relinquished title, GM’s executive director of global market and industry analysis Mike DiGiovanni, stated "I don't think being No. 1 in vehicle sales means much at all to the American consumer. I think what matters most to the consumer is strong brands and strong products. And the key thing right now with what the industry is going through now is viability and profitability."
On the global scale, sales for Toyota slipped 4% for the year, which made it possible to overtake GM in sales as the American automaker saw their worldwide sales figures drop 11%. Although Toyota doesn’t have that great of a presence in the European and North American markets, GM does, and sales there declined by 6.5%, with a 21% decrease in sales during the 4th quarter.
Included in GM’s losses for market share, sales within North America fell-off by 21% during the year as consumer shied away from big ticket purchases. In fact, sales outside of the continental U.S. accounted for 64% of GM’s sales, up from the previous year’s tally of 59%, thus proving that the domestic auto industry was in dire straits.
Before GM can think about regaining their crown, the company needs to find a way to stay afloat. If the company doesn’t receive their second installment of the government’s loan money, which was due January 16, the company could run out of money by the end of their 1st quarter.
"If we don't get our second installment of the funding we'll run out of cash, it's that's simple," Chief Operating Officer Fritz Henderson said. "We've been finalizing what we need to do. We anticipate receiving it. But it's critical that we receive it."
By the close of the markets today, shares of GM were trading in the green, adding $0.03, or 0.9%, to close the day at $3.53 per share. Meanwhile, shares of TM were up 2.5%, gaining $1.64 to conclude the session at $67.52 per share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
New Police Cruisers to Hit the Markets - January 21, 2009
Has America’s police patrol gone green? In a statement released by Atlanta-based Carbon Motors Corporation today, the need for more fuel efficient patrol cars has finally come to a head. With the country overly dependant on fossil fuels, the country and the world for that matter, had begun more intense initiatives to reduce their dependency on oil.
After a monumental success in 2008, Carbon Motors toured ten U.S. cities with their prototype of the world’s first purpose-built law enforcement vehicle designed by law enforcement officials. Known as the Carbon E7, the car is set to add tour sites for their upcoming “2009 Pure Justice Tour” of seven cities including Detroit, Atlanta, New York City and Washington D.C.
With more than 2,700 law enforcement professionals giving up their time and expertise, they have all contributed to the design and functionality of the E7, dubbed the “Machine.” With the majority of public service vehicles designed specifically for their purpose, such as firefighters or paramedics, police cruisers are nothing more than slightly modified passenger cars.
From those facts, Carbon Motors took it upon themselves with the help from the boys in blue to design the E7, which in turn will provide the highest level of patrol officer protection with the use of world class technologies and processes.
Some of the outstanding features for the newly designed cruiser include patrol readiness, in which the vehicle will come stocked with badging, graphics and striping upon delivery, which equates to no downtime for aftermarket detailing. Carbon Motors will also collaborate with suppliers of sirens, lights, and prisoner transport seats and cages.
In addition, the car will also provide exceptional protection for the occupants inside the E7, with 75mph rear impact capability, along with optional ballistic protection panels on the outside of the vehicle. Finally, along with better gas mileage, and outstanding performance characteristics, the car is designed for a hard-driving durability lifespan of more than 250,000 miles.
“It is our time. Yesterday our new President of the United States, Barack Obama, stood before citizens from across the country and asked that we stand strong against the terrorists, address the energy crisis, and innovate our way into the creation of thousands of new American jobs. Carbon Motors has answered that calling by developing the most anticipated new product in law enforcement and homeland security history. For the first time ever, our first responders will have a truly purpose-built product offering world class performance, unparalleled safety and a reduction in the total life cycle costs, which in turn will reduce the taxpayer burden,” said William Santana Li, Chairman and Chief Executive Officer, Carbon Motors Corporation.
“Powered by clean diesel technology, the Carbon ‘E7’ will reduce the 1.5 billion gallons of fuel and the 14 million tons of CO2 the nation’s law enforcement fleet consumes and emits every year by 40%. As important, we will also be the high impact catalyst that creates 10,000 new direct and indirect American jobs. All of which collectively sits squarely with the direction of the new Obama administration for the country,” Li went on to add.
So what brought on the need for a purpose-built police cruiser? Well, with gas prices hitting record highs last July, local and state police departments were feeling the pinch of the economic downturn, which lead to fewer hires that lead to current patrolman having to put in extended hours to keep their streets safe.
With many of those departments equipped with gas-guzzlers like Ford’s Crown Victoria and newer models like the Dodge Charger, it became clear that city budgets for the police force needed a cleaner more cost-effective solution.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
After a monumental success in 2008, Carbon Motors toured ten U.S. cities with their prototype of the world’s first purpose-built law enforcement vehicle designed by law enforcement officials. Known as the Carbon E7, the car is set to add tour sites for their upcoming “2009 Pure Justice Tour” of seven cities including Detroit, Atlanta, New York City and Washington D.C.
With more than 2,700 law enforcement professionals giving up their time and expertise, they have all contributed to the design and functionality of the E7, dubbed the “Machine.” With the majority of public service vehicles designed specifically for their purpose, such as firefighters or paramedics, police cruisers are nothing more than slightly modified passenger cars.
From those facts, Carbon Motors took it upon themselves with the help from the boys in blue to design the E7, which in turn will provide the highest level of patrol officer protection with the use of world class technologies and processes.
Some of the outstanding features for the newly designed cruiser include patrol readiness, in which the vehicle will come stocked with badging, graphics and striping upon delivery, which equates to no downtime for aftermarket detailing. Carbon Motors will also collaborate with suppliers of sirens, lights, and prisoner transport seats and cages.
In addition, the car will also provide exceptional protection for the occupants inside the E7, with 75mph rear impact capability, along with optional ballistic protection panels on the outside of the vehicle. Finally, along with better gas mileage, and outstanding performance characteristics, the car is designed for a hard-driving durability lifespan of more than 250,000 miles.
“It is our time. Yesterday our new President of the United States, Barack Obama, stood before citizens from across the country and asked that we stand strong against the terrorists, address the energy crisis, and innovate our way into the creation of thousands of new American jobs. Carbon Motors has answered that calling by developing the most anticipated new product in law enforcement and homeland security history. For the first time ever, our first responders will have a truly purpose-built product offering world class performance, unparalleled safety and a reduction in the total life cycle costs, which in turn will reduce the taxpayer burden,” said William Santana Li, Chairman and Chief Executive Officer, Carbon Motors Corporation.
“Powered by clean diesel technology, the Carbon ‘E7’ will reduce the 1.5 billion gallons of fuel and the 14 million tons of CO2 the nation’s law enforcement fleet consumes and emits every year by 40%. As important, we will also be the high impact catalyst that creates 10,000 new direct and indirect American jobs. All of which collectively sits squarely with the direction of the new Obama administration for the country,” Li went on to add.
So what brought on the need for a purpose-built police cruiser? Well, with gas prices hitting record highs last July, local and state police departments were feeling the pinch of the economic downturn, which lead to fewer hires that lead to current patrolman having to put in extended hours to keep their streets safe.
With many of those departments equipped with gas-guzzlers like Ford’s Crown Victoria and newer models like the Dodge Charger, it became clear that city budgets for the police force needed a cleaner more cost-effective solution.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Tuesday, January 20, 2009
Peanut Butter Scare Kills Six - Janaury 20, 2009
Its ok to still have your PB&Js, just stay clear from institutional and food company products that contain peanut butter. In what has become a huge concern with peanut butter, an outbreak of salmonella has been reported in which six people have died and another 470 have become ill in more than 43 states.
Finally being able to pinpoint the root of it all, the Food and Drug Administration (FDA) has traced the cause back to a Georgia plant owned and operated by Peanut Corporation of America.
Within the statement from the FDA, consumers have been advised to stay clear of all products containing peanut butter, which include cookies, cakes, ice cream and other foods until the government agency can deem those foods safe once again. The FDA has a list of product recalls listed on their site.
Salmonella is a bacteria related to the contraction of typhoid fever, paratyphoid fever, and the foodborne illness salmonellosis.
In response to the outbreak, Peanut Corp. issued a recall of all peanut butter and peanut paste manufactured since July 1 of 2008. These products were shipped and delivered throughout 24 states to food service industries, institutions, and private label food companies.
"We deeply regret that this product recall has expanded, and our first priority is to protect the health of our customers," said Stewart Parnell, president of Peanut Corp.
On Monday, major supermarket retailers, such as Kroger (KR), Safeway (SWY) and Meijer, which operates more than 181 stores in the Midwest, all began removing products from their shelves in anticipation of safeguarding their customers from contracting the illness.
In the case that a consumer has a listed item recalled by the FDA, one should take immediate action and dispose of that product post-haste.
More recalls are likely ahead in the coming days and weeks, as the time it takes to thoroughly examine these products takes time. However, some other big names companies have not been affected by the salmonella outbreak. Included are Mars, Hershey (HSY), the Girl Scouts and ConAgra Foods (CAG), which had a recall of peanut butter itself back in 2007.
Other companies such as Russell Stover Candies and J.M. Smuckers (SJM) released a company statement today affirming to their customers that their products contain no ingredients from the Peanut Corporation of America, and that they products are safe to consume.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Finally being able to pinpoint the root of it all, the Food and Drug Administration (FDA) has traced the cause back to a Georgia plant owned and operated by Peanut Corporation of America.
Within the statement from the FDA, consumers have been advised to stay clear of all products containing peanut butter, which include cookies, cakes, ice cream and other foods until the government agency can deem those foods safe once again. The FDA has a list of product recalls listed on their site.
Salmonella is a bacteria related to the contraction of typhoid fever, paratyphoid fever, and the foodborne illness salmonellosis.
In response to the outbreak, Peanut Corp. issued a recall of all peanut butter and peanut paste manufactured since July 1 of 2008. These products were shipped and delivered throughout 24 states to food service industries, institutions, and private label food companies.
"We deeply regret that this product recall has expanded, and our first priority is to protect the health of our customers," said Stewart Parnell, president of Peanut Corp.
On Monday, major supermarket retailers, such as Kroger (KR), Safeway (SWY) and Meijer, which operates more than 181 stores in the Midwest, all began removing products from their shelves in anticipation of safeguarding their customers from contracting the illness.
In the case that a consumer has a listed item recalled by the FDA, one should take immediate action and dispose of that product post-haste.
More recalls are likely ahead in the coming days and weeks, as the time it takes to thoroughly examine these products takes time. However, some other big names companies have not been affected by the salmonella outbreak. Included are Mars, Hershey (HSY), the Girl Scouts and ConAgra Foods (CAG), which had a recall of peanut butter itself back in 2007.
Other companies such as Russell Stover Candies and J.M. Smuckers (SJM) released a company statement today affirming to their customers that their products contain no ingredients from the Peanut Corporation of America, and that they products are safe to consume.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Tuesday Trading Tutorial - January 20, 2009
Following the previous week’s article pertaining to the analysis of the markets as a whole. This week’s write-up with delve into more specific aspects of researching and potentially trading a stock, once more in-depth profiling of a company is achieved.
Known as fundamental analysis, this is a method of valuating a security or stock, which consists of the examination of a company's financial standing along with their overall operations. This practice would include the analysis of sales, earnings, growth potential, assets, debt, management, products, and competition.
Fundamental analysis takes into consideration only those variables that are directly related to the company itself, rather than the overall state of the market. Its main purpose is to determine a company’s fair value along with the quantitative forecast of a company’s potential for future price movements.
To obtain these figures, one researching a stock would most often look at a company’s balance sheet, income statement, and statement of cash flow, along with quarterly earnings reports and annual reports.
Comprehending the general dynamics of fundamental analysis and its importance to options trading is paramount, along with being a collective experience. Implementing the data and information once researched into a trade takes time and effort in order to keep up with a company’s performance on a daily, weekly and yearly basis.
It has been said that in order for an investor to succeed at trading, one should take at least one hour per day per stock to do their homework and analyze a company. This is solely beneficial when it comes to placing a trade that has limited risk, but performs adequately to insure the investor of a potential profit. It is always potential in that nothing in this environment is ever guaranteed and without risk.
Many factors go into researching a company before placing your hard-earned money into a trade. There are variables such as an influx in a company’s sales due to a new product release, or a change in leadership that influence a company’s stock to trade sporadically. In addition, there could be instances of a natural disaster, which could trigger a selling action of shares, along with ongoing litigation for a company that may influence its trading habits. An investor needs to take all of these circumstances into account when looking for a company to invest or trade-in.
As one becomes more and more inclined to analyze the given information pertaining to potential trades, it becomes necessary to be able to distinguish between pertinent data and just noise. Some of this knowledge will be obtained through trial and error, while most of it may come to you as instinct. As one progresses as a seasoned trader, you will be able to more effectively gauge the importance of incoming news and data to evaluate a company’s performance or future earnings potential.
Some of the important aspects of a company’s business model to examine in regards to performance and future earnings are the company’s Earnings per Share (EPS), Earnings Growth, Price-to-Earnings (P/E) ratio and Price-to-Sales (P/S) ratio.
Leading off, a company’s EPS is most effectively used to gauge a firm’s overall financial strength. It is here that a company’s past and future earnings are calculated by a company’s net earnings by the total number of shares outstanding. The resulting number is thus compared to the previous number corresponding to the same quarter from the previous year. If the number is larger than the previous year, than most likely the company’s stock is on the rise, or soon to be. However, if that number is below the previous posting, than the company’s financial status could be in jeopardy, which could in turn, send investors elsewhere.
The key to analyzing a company’s EPS shares for future earnings, is to look for companies that have higher projected EPS expectations that the previous years’. When looking at a company’s EPS, you can conclude whether the company has been profitable over the past year, remained unchanged or fallen in productivity.
As for earnings growth, here, much like EPS, an investor looks here to analyze a company’s growth over the past quarter in order to access a company’s profitability. In relation to the previously stated EPS and earnings growth, one of the most analyzed portions of a company’s performance comes from their P/E ratio.
The Price-to-Earnings ratio compares the company’s stock price to the company’s earnings per share. It is used to describe the current state of a stock’s price and is not used to forecast any future price movements of that stock. The main function of a P/E ratio is to tell an investor how many times a stock is trading above earnings. To calculate the current P/E ratio, divide the current stock price by yearly earnings per share.
A general rule of thumb states that a faster growing company will have well-above industry average P/E ratios that may lead to higher earnings in the future. However, this rule is just a generalization, not an absolute. Putting all your faith and capital, for that matter, into a company that has high P/E ratios could lead to massive losses as any input from the outside world could lead to a stock’s demise.
The final aspect of analyzing a stock is the Price-to-Sales ratio, which is solely used to gauge when a stock is overvalued or undervalued. In order to calculate this ratio, simply divide the price of the stock by the company’s sales per share. One other factor not mentioned above was the company Quick Ratio, which also shows a company’s weakness or strength. It is calculated by dividing a company’s current assets by their current liabilities. If it is a positive number that company shows strength, and if it is over 1, then that would show that for every Dollar spent, that company is bringing in more than a Dollar in earnings.
With all said and done, fundamental analysis is just a small step involved in the overall scheme of options trading and investing. Keep in mind that there is no one particular piece of data that will show you exactly what is going on within that particular company.
As a less-seasoned investor, you should always start off with two or three stocks that you have substantial knowledge about in various industries in order to gauge exactly how those sectors trade over time. A key to stock analysis is to not be too bogged down with so many financial figures that may cloud your judgment as to the performance of a stock.
From there, the keys to improving your analytical skill will solely rely on your patience, your determination and your collective experience over time. Happy trading and the best of luck to you in your future endeavors.
Check back periodically as we will continue to look further into options trading and what makes up an investors character in their choices of particular stocks.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Known as fundamental analysis, this is a method of valuating a security or stock, which consists of the examination of a company's financial standing along with their overall operations. This practice would include the analysis of sales, earnings, growth potential, assets, debt, management, products, and competition.
Fundamental analysis takes into consideration only those variables that are directly related to the company itself, rather than the overall state of the market. Its main purpose is to determine a company’s fair value along with the quantitative forecast of a company’s potential for future price movements.
To obtain these figures, one researching a stock would most often look at a company’s balance sheet, income statement, and statement of cash flow, along with quarterly earnings reports and annual reports.
Comprehending the general dynamics of fundamental analysis and its importance to options trading is paramount, along with being a collective experience. Implementing the data and information once researched into a trade takes time and effort in order to keep up with a company’s performance on a daily, weekly and yearly basis.
It has been said that in order for an investor to succeed at trading, one should take at least one hour per day per stock to do their homework and analyze a company. This is solely beneficial when it comes to placing a trade that has limited risk, but performs adequately to insure the investor of a potential profit. It is always potential in that nothing in this environment is ever guaranteed and without risk.
Many factors go into researching a company before placing your hard-earned money into a trade. There are variables such as an influx in a company’s sales due to a new product release, or a change in leadership that influence a company’s stock to trade sporadically. In addition, there could be instances of a natural disaster, which could trigger a selling action of shares, along with ongoing litigation for a company that may influence its trading habits. An investor needs to take all of these circumstances into account when looking for a company to invest or trade-in.
As one becomes more and more inclined to analyze the given information pertaining to potential trades, it becomes necessary to be able to distinguish between pertinent data and just noise. Some of this knowledge will be obtained through trial and error, while most of it may come to you as instinct. As one progresses as a seasoned trader, you will be able to more effectively gauge the importance of incoming news and data to evaluate a company’s performance or future earnings potential.
Some of the important aspects of a company’s business model to examine in regards to performance and future earnings are the company’s Earnings per Share (EPS), Earnings Growth, Price-to-Earnings (P/E) ratio and Price-to-Sales (P/S) ratio.
Leading off, a company’s EPS is most effectively used to gauge a firm’s overall financial strength. It is here that a company’s past and future earnings are calculated by a company’s net earnings by the total number of shares outstanding. The resulting number is thus compared to the previous number corresponding to the same quarter from the previous year. If the number is larger than the previous year, than most likely the company’s stock is on the rise, or soon to be. However, if that number is below the previous posting, than the company’s financial status could be in jeopardy, which could in turn, send investors elsewhere.
The key to analyzing a company’s EPS shares for future earnings, is to look for companies that have higher projected EPS expectations that the previous years’. When looking at a company’s EPS, you can conclude whether the company has been profitable over the past year, remained unchanged or fallen in productivity.
As for earnings growth, here, much like EPS, an investor looks here to analyze a company’s growth over the past quarter in order to access a company’s profitability. In relation to the previously stated EPS and earnings growth, one of the most analyzed portions of a company’s performance comes from their P/E ratio.
The Price-to-Earnings ratio compares the company’s stock price to the company’s earnings per share. It is used to describe the current state of a stock’s price and is not used to forecast any future price movements of that stock. The main function of a P/E ratio is to tell an investor how many times a stock is trading above earnings. To calculate the current P/E ratio, divide the current stock price by yearly earnings per share.
A general rule of thumb states that a faster growing company will have well-above industry average P/E ratios that may lead to higher earnings in the future. However, this rule is just a generalization, not an absolute. Putting all your faith and capital, for that matter, into a company that has high P/E ratios could lead to massive losses as any input from the outside world could lead to a stock’s demise.
The final aspect of analyzing a stock is the Price-to-Sales ratio, which is solely used to gauge when a stock is overvalued or undervalued. In order to calculate this ratio, simply divide the price of the stock by the company’s sales per share. One other factor not mentioned above was the company Quick Ratio, which also shows a company’s weakness or strength. It is calculated by dividing a company’s current assets by their current liabilities. If it is a positive number that company shows strength, and if it is over 1, then that would show that for every Dollar spent, that company is bringing in more than a Dollar in earnings.
With all said and done, fundamental analysis is just a small step involved in the overall scheme of options trading and investing. Keep in mind that there is no one particular piece of data that will show you exactly what is going on within that particular company.
As a less-seasoned investor, you should always start off with two or three stocks that you have substantial knowledge about in various industries in order to gauge exactly how those sectors trade over time. A key to stock analysis is to not be too bogged down with so many financial figures that may cloud your judgment as to the performance of a stock.
From there, the keys to improving your analytical skill will solely rely on your patience, your determination and your collective experience over time. Happy trading and the best of luck to you in your future endeavors.
Check back periodically as we will continue to look further into options trading and what makes up an investors character in their choices of particular stocks.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Monday, January 19, 2009
Royal Bank of Scotland Could Post Country's Largest Loss Ever - January 19, 2009
With the markets closed in observance of the Martin Luther King holiday, much of the financial news came from across the pond today. In a statement released in the UK, the country’s Prime Minister, Gordon Brown, confirmed earlier today that the Finance Department is offering to insure banks against any pending defaulted loans.
For the country’s commitment to their banks, the Treasury would insist that the banks make themselves more accessible to British businesses and homeowners for loans as the British economy continues to feel the pinch of the global recession.
Back in October, England’s Treasury Dept. infused more than 37 million pounds ($55B) to help sustain operations in Britain’s banks. However, those funds have done little to offset the enormous impact of the world’s financial collapse.
“Good businesses must have access to credit, jobs should not be lost needlessly," Brown announced earlier this morning. "It is because of this that we are taking the action to expand lending."
As part of the proposed plan, Brown suggests that the mortgage industry should be offered some 50 million pounds ($74B) in funds to create a pool of capital in order to have the BOE, Bank of England, back loans for potential homeowners.
England’s financial woes have taken many of their cues from their troubles counterparts here in America. Following recent quarterly disasters from banking giants Citigroup Inc. (C), and Bank of America Corp. (BAC), both of which reported multi-billion dollar losses in their past earnings release, had to hit up the government for cash in exchange for corporate stock in order to curtail further mega-losses.
Today’s announcement from the British government comes the same day that the country’s largest bank, and corporation for that matter, the Royal Bank of Scotland (RBS) reported that the company is in the midst of taking more than 28 billion pounds ($41.3B) in write-downs for the year.
In relation to the proposed infusion of capital by the BOE, the bank announced that due to the massive losses accrued by RBS, they would exchange some 5 billion pounds ($7.4B) worth of preferred shares to common stock. The recent action would increase the government’s position within the company from 58% to nearly 70%.
The British government, in conjunction with the UK Financial Investments (UKFI), is supporting RBS in order to help stabilize the financial system along with providing protection for those patrons who continue to place their savings, their deposits and their trust into RBS.
Looking into the future, the UKFI will maintain proper management of the government’s position within the company, and develop an exit strategy from RBS, as the British government is not a permanent investor in the bank.
The majority of RBS’ losses stemmed from their unprofitable acquisition of Dutch bank ABN Amro last year before the financial downturn reared its ugly head. Last year, partnered with Banco Santander, RBS purchased the bank for 70.6 billion Euros ($92.6B).
Due to the lack-luster purchase, the losses that RBS is incurring has forced the company to take a goodwill impairment charge between 15 billion ($22B) and 20 billion pounds ($29.2B) on their balance sheet. RBS is also looking to take an 8 billion pound ($11.7B) loss on credit-related assets in regards to subprime loans.
"I think that everyone around the world has been caught out by the scale of the market disruption and the recession, and the damage that does to big banks. We are the latest one to be showing that," The head of RBS, Stephen Hester, told the BBC that there were lessons to be learned for the bank. "But what is clear is that although the losses that RBS is feeling are felt by many banks around the world, we did make the situation worse for ourselves by expanding at the wrong time."
By midday in trading on the London Stock Exchange, shares of RBS were down more than 65%. Coming off their highs of 603 pence ($9) per share in 2007, the stock has plummeted more than 98% to trade at 12 pence ($0.18) today.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
For the country’s commitment to their banks, the Treasury would insist that the banks make themselves more accessible to British businesses and homeowners for loans as the British economy continues to feel the pinch of the global recession.
Back in October, England’s Treasury Dept. infused more than 37 million pounds ($55B) to help sustain operations in Britain’s banks. However, those funds have done little to offset the enormous impact of the world’s financial collapse.
“Good businesses must have access to credit, jobs should not be lost needlessly," Brown announced earlier this morning. "It is because of this that we are taking the action to expand lending."
As part of the proposed plan, Brown suggests that the mortgage industry should be offered some 50 million pounds ($74B) in funds to create a pool of capital in order to have the BOE, Bank of England, back loans for potential homeowners.
England’s financial woes have taken many of their cues from their troubles counterparts here in America. Following recent quarterly disasters from banking giants Citigroup Inc. (C), and Bank of America Corp. (BAC), both of which reported multi-billion dollar losses in their past earnings release, had to hit up the government for cash in exchange for corporate stock in order to curtail further mega-losses.
Today’s announcement from the British government comes the same day that the country’s largest bank, and corporation for that matter, the Royal Bank of Scotland (RBS) reported that the company is in the midst of taking more than 28 billion pounds ($41.3B) in write-downs for the year.
In relation to the proposed infusion of capital by the BOE, the bank announced that due to the massive losses accrued by RBS, they would exchange some 5 billion pounds ($7.4B) worth of preferred shares to common stock. The recent action would increase the government’s position within the company from 58% to nearly 70%.
The British government, in conjunction with the UK Financial Investments (UKFI), is supporting RBS in order to help stabilize the financial system along with providing protection for those patrons who continue to place their savings, their deposits and their trust into RBS.
Looking into the future, the UKFI will maintain proper management of the government’s position within the company, and develop an exit strategy from RBS, as the British government is not a permanent investor in the bank.
The majority of RBS’ losses stemmed from their unprofitable acquisition of Dutch bank ABN Amro last year before the financial downturn reared its ugly head. Last year, partnered with Banco Santander, RBS purchased the bank for 70.6 billion Euros ($92.6B).
Due to the lack-luster purchase, the losses that RBS is incurring has forced the company to take a goodwill impairment charge between 15 billion ($22B) and 20 billion pounds ($29.2B) on their balance sheet. RBS is also looking to take an 8 billion pound ($11.7B) loss on credit-related assets in regards to subprime loans.
"I think that everyone around the world has been caught out by the scale of the market disruption and the recession, and the damage that does to big banks. We are the latest one to be showing that," The head of RBS, Stephen Hester, told the BBC that there were lessons to be learned for the bank. "But what is clear is that although the losses that RBS is feeling are felt by many banks around the world, we did make the situation worse for ourselves by expanding at the wrong time."
By midday in trading on the London Stock Exchange, shares of RBS were down more than 65%. Coming off their highs of 603 pence ($9) per share in 2007, the stock has plummeted more than 98% to trade at 12 pence ($0.18) today.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Friday, January 16, 2009
Bank of America in Need of Additional Bailout - January 16, 2009
Have no fear the U.S. government is here. Digging deeper into the $700B rescue fund, the Treasury Department extended additional funds to Bank of America Corp. (BAC) to the tune of $20B. Not only does the bank receive the bailout, but BAC will also get a guarantee of upwards of $100B for potential losses that Merrill Lynch & Co. was carrying on their books when BAC acquired them last year.
The current loan with guarantee nearly $118B in bad loans and other securities back by residential and commercial real estate loans incurred by Merrill Lynch before the company went bankrupt. Before today’s loan extension, BAC had received $25B from the Treasury Department’s TARP fund, the Troubled Asset Relief Program, back in October.
Within the agreement, BAC will consume the first $10B in losses from Merrill Lynch, while the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) will take the next $10B in losses from the merger. Following that, the Treasury will take on 90% of the remaining losses, while BAC will take the 10% left over in losses.
In agreement with the new arrangement, the government will now receive $24B worth of preferred stock from Bank of America that will pay an annual interest rate of 8%.
Although the bank did not officially release a statement on today’s events regarding additional rescue funds, analysts believed that the company would report a loss for the 4th quarter. In fact, the nation’s largest bank, in terms of total assets, did exactly that this morning.
Before the markets started trading, the company affirmed reports that for the 4th quarter, BAC recorded a loss of $2.39B, or $0.48 per share, versus a profit of $215M, or $0.05 per share from a year ago. Current market and financial conditions have weighed heavily on the company’s performance over the last year, especially with worsening credit, bad investments and huge write-downs.
Quarterly revenue, however, increased to $15.98B, up 19% from last year’s tally of $13.45B. During the quarter, the bank set aside some $8.54B for bad loans, more than two-and-a-half times that amount from the previous year of $3.31B. BAC also released full-year totals, which saw net earnings of $2.56B, or $0.55 per share, compared to a profit of $14.8B, or $3.30 per share from 2007.
As for the company that BAC acquired, Merrill Lynch. They posted a quarterly loss of $15.31B, or $9.62 per share, proving to the government the need for additional capital in order to absorb the massive losses incurred by Merrill Lynch’s bad mortgage debts.
In response to the company’s earnings release earlier this morning, CEO Ken Lewis remarked, "Last quarter we said that market turbulence, economic uncertainty, and rising unemployment would take its toll on quarterly earnings, and that has certainly been the result for the fourth quarter." Lewis went on to add that "Congress has passed a financial stabilization plan as well as other programs put in place, starting to stabilize the market and promote liquidity, but at a pace slower than any of us would like."
At the time of posting, shares of Bank of America plummeted more than 11%, giving up $0.97 to trade at $7.35 per share. With today’s trading price, it marks the lowest level reached in more than 17 years. In addition, over the past year, the price for BAC stock has plummeted more than 84%, and since the start of 2009, shares have fallen nearly 50% in value.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
The current loan with guarantee nearly $118B in bad loans and other securities back by residential and commercial real estate loans incurred by Merrill Lynch before the company went bankrupt. Before today’s loan extension, BAC had received $25B from the Treasury Department’s TARP fund, the Troubled Asset Relief Program, back in October.
Within the agreement, BAC will consume the first $10B in losses from Merrill Lynch, while the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) will take the next $10B in losses from the merger. Following that, the Treasury will take on 90% of the remaining losses, while BAC will take the 10% left over in losses.
In agreement with the new arrangement, the government will now receive $24B worth of preferred stock from Bank of America that will pay an annual interest rate of 8%.
Although the bank did not officially release a statement on today’s events regarding additional rescue funds, analysts believed that the company would report a loss for the 4th quarter. In fact, the nation’s largest bank, in terms of total assets, did exactly that this morning.
Before the markets started trading, the company affirmed reports that for the 4th quarter, BAC recorded a loss of $2.39B, or $0.48 per share, versus a profit of $215M, or $0.05 per share from a year ago. Current market and financial conditions have weighed heavily on the company’s performance over the last year, especially with worsening credit, bad investments and huge write-downs.
Quarterly revenue, however, increased to $15.98B, up 19% from last year’s tally of $13.45B. During the quarter, the bank set aside some $8.54B for bad loans, more than two-and-a-half times that amount from the previous year of $3.31B. BAC also released full-year totals, which saw net earnings of $2.56B, or $0.55 per share, compared to a profit of $14.8B, or $3.30 per share from 2007.
As for the company that BAC acquired, Merrill Lynch. They posted a quarterly loss of $15.31B, or $9.62 per share, proving to the government the need for additional capital in order to absorb the massive losses incurred by Merrill Lynch’s bad mortgage debts.
In response to the company’s earnings release earlier this morning, CEO Ken Lewis remarked, "Last quarter we said that market turbulence, economic uncertainty, and rising unemployment would take its toll on quarterly earnings, and that has certainly been the result for the fourth quarter." Lewis went on to add that "Congress has passed a financial stabilization plan as well as other programs put in place, starting to stabilize the market and promote liquidity, but at a pace slower than any of us would like."
At the time of posting, shares of Bank of America plummeted more than 11%, giving up $0.97 to trade at $7.35 per share. With today’s trading price, it marks the lowest level reached in more than 17 years. In addition, over the past year, the price for BAC stock has plummeted more than 84%, and since the start of 2009, shares have fallen nearly 50% in value.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, January 15, 2009
What Should Obama's Top Priority Be When First Taking Office? - January 15, 2009
Ask not what you can do for your country, ask what your country can do for you. Although that sounds a little backwards from Kennedy’s inaugural speech back in 1961, it seems more relevant today as the country’s dismal status is in need of the government more than the people itself.
With less than a week away from the inauguration of President-elect Barack Obama, the House Democrats made their voice heard today in that they are pushing for an $825B stimulus package that calls for tax cuts and federal spending cuts in an effort to revive the lagging economy.
With their top emphasis on health care, education, energy and highway construction, the Democrats are looking for the cost of federal spending to total only $550B and tax cuts of $275B over the next two years.
In addition, the report calls for $90B in aid to all U.S. states in order for them to fight the increasing costs for providing health care for the poor. It also calls for an additional $39B worth in subsidies to those people who are out of work and cannot afford health care, being the sole bread winner who is out of work.
The package would also be able to infuse billions of dollars to state and local governments for the improvement of roads and bridges along with the modernizing of current infrastructure works.
“It’s about modernizing our roads, bridges, et cetera, education for the 21st century, tax cuts that make work pay and create jobs and initiatives to lower healthcare costs and help workers who are hurt in this economy, and protect our vital services,” House Speaker Nancy Pelosi said in an earlier interview.
“Next week the bills will be marked up in committee, Appropriations, Ways and Means, and Energy and Commerce,” Pelosi went on to say. “The following week we will vote on the floor, send it to the Senate. They will act upon it, go to conference, and then come to agreement; go back to both floors and send it to the president of the United States, all by the President’s Day recess.”
In a survey of more than 1,000 Americans by the International Communications Research (ICR), the study showed that heading into the new administration, those surveyed revealed that the top priority of the Obama administration should focus primarily on the economy and the proposed stimulus package. Nearly 60% gave that answer as the first major goal for the incoming president.
Heading out the rest of the list of priorities is Obama’s attention to healthcare reform, which came in at 10%, followed by the war in Iraq at 9% and the overall safety of the nation as a whole, which came in at 9% as well. The remainder of the list was the use and impact of ‘green” energy programs, which came in at 6%, and an “other” category which came in at 7%.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
With less than a week away from the inauguration of President-elect Barack Obama, the House Democrats made their voice heard today in that they are pushing for an $825B stimulus package that calls for tax cuts and federal spending cuts in an effort to revive the lagging economy.
With their top emphasis on health care, education, energy and highway construction, the Democrats are looking for the cost of federal spending to total only $550B and tax cuts of $275B over the next two years.
In addition, the report calls for $90B in aid to all U.S. states in order for them to fight the increasing costs for providing health care for the poor. It also calls for an additional $39B worth in subsidies to those people who are out of work and cannot afford health care, being the sole bread winner who is out of work.
The package would also be able to infuse billions of dollars to state and local governments for the improvement of roads and bridges along with the modernizing of current infrastructure works.
“It’s about modernizing our roads, bridges, et cetera, education for the 21st century, tax cuts that make work pay and create jobs and initiatives to lower healthcare costs and help workers who are hurt in this economy, and protect our vital services,” House Speaker Nancy Pelosi said in an earlier interview.
“Next week the bills will be marked up in committee, Appropriations, Ways and Means, and Energy and Commerce,” Pelosi went on to say. “The following week we will vote on the floor, send it to the Senate. They will act upon it, go to conference, and then come to agreement; go back to both floors and send it to the president of the United States, all by the President’s Day recess.”
In a survey of more than 1,000 Americans by the International Communications Research (ICR), the study showed that heading into the new administration, those surveyed revealed that the top priority of the Obama administration should focus primarily on the economy and the proposed stimulus package. Nearly 60% gave that answer as the first major goal for the incoming president.
Heading out the rest of the list of priorities is Obama’s attention to healthcare reform, which came in at 10%, followed by the war in Iraq at 9% and the overall safety of the nation as a whole, which came in at 9% as well. The remainder of the list was the use and impact of ‘green” energy programs, which came in at 6%, and an “other” category which came in at 7%.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Wednesday, January 14, 2009
Citigroup's One-Stop Shopping is No Longer - January 14, 2009
The express checkout lane is now closed. In what was known as the “financial supermarket,” Citigroup Inc. (C) confirmed earlier today that the bank was dissolving its 10-year experiment in which customers could get one-stop financial services from the bank, including anything from consumer loans to investment banking.
On the heels of the bank’s announcement yesterday to sell a major stake, 51%, of their Smith Barney brokerage operations to Morgan Stanley (MS), Citi has accelerated its plan to sell off their businesses that they had planned on relinquishing in the coming years.
The introduction of the “supermarket’ was supposed to be an innovative venture for the bank, as the average customer could have a full gamut of financial services provided to them. Dating back to 1998, the merging of, then insurance giant, Travelers Group and Citicorp, which at that time was the nation’s largest bank, fell on the shoulders of Citicorp’s CEO Sanford Weill.
The biggest question, which appears to be answered today, was whether Citigroup could provide better services as a whole, than other specialized businesses. It appears that one company cannot provide such a diverse scope of services efficiently and successfully.
Since the creation of the financial “supermarket,” shares of Citigroup have fallen more than 75%. Today’s trading session brought much of the same trend for the company’s stock. By the end of the day, shares of C were down more than 23%, losing $1.37 to trade at $4.53 per share.
"I think within 12 months, Citigroup no longer exists," stated William Smith at Smith Asset Management, who currently is in possession of Citigroup shares. "The problem with Citi is the model, the execution, the management," Smith went on to add. "How do you go a decade without integrating?"
Looking into the company’s upcoming 4th quarter, Citigroup is expected to post a loss of $10B from operations, despite the recent efforts from the government in which the bank received a total of $45B in relief funds from the TARP, the Troubled Asset Relief Program.
The only positive that Citigroup has to hang its hat on comes from the possible venture with Morgan Stanley. If the deal for Smith Barney goes through, Citi will receive much needed capital in a time when raising funds has appeared most difficult for struggling companies.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
On the heels of the bank’s announcement yesterday to sell a major stake, 51%, of their Smith Barney brokerage operations to Morgan Stanley (MS), Citi has accelerated its plan to sell off their businesses that they had planned on relinquishing in the coming years.
The introduction of the “supermarket’ was supposed to be an innovative venture for the bank, as the average customer could have a full gamut of financial services provided to them. Dating back to 1998, the merging of, then insurance giant, Travelers Group and Citicorp, which at that time was the nation’s largest bank, fell on the shoulders of Citicorp’s CEO Sanford Weill.
The biggest question, which appears to be answered today, was whether Citigroup could provide better services as a whole, than other specialized businesses. It appears that one company cannot provide such a diverse scope of services efficiently and successfully.
Since the creation of the financial “supermarket,” shares of Citigroup have fallen more than 75%. Today’s trading session brought much of the same trend for the company’s stock. By the end of the day, shares of C were down more than 23%, losing $1.37 to trade at $4.53 per share.
"I think within 12 months, Citigroup no longer exists," stated William Smith at Smith Asset Management, who currently is in possession of Citigroup shares. "The problem with Citi is the model, the execution, the management," Smith went on to add. "How do you go a decade without integrating?"
Looking into the company’s upcoming 4th quarter, Citigroup is expected to post a loss of $10B from operations, despite the recent efforts from the government in which the bank received a total of $45B in relief funds from the TARP, the Troubled Asset Relief Program.
The only positive that Citigroup has to hang its hat on comes from the possible venture with Morgan Stanley. If the deal for Smith Barney goes through, Citi will receive much needed capital in a time when raising funds has appeared most difficult for struggling companies.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Nortel Networks Files for Chapter 11 Protection - January 14, 2009
Has North America’s largest maker of telecom equipment seen the beginning of the end? In a report out of Toronto today, Nortel Networks Corp. (NT), announced this morning that the company has filed for bankruptcy protection in the U.S. as continuing economic pitfalls has hampered the company’s bottom-line for some time now.
In a filing of Chapter 11 protection in a Delaware district court, Nortel, and a number of their affiliates, made their claims the day before the company was set to make a $107M interest payment on the debt they owe.
Today’s filing could be attributed to the company’s debt of nearly $4B to bondholders that are represented by the Bank of New York Mellon. Never really recouping from the dot.com collapse in the earlier part of the decade, Nortel was once Canada’s largest company.
"Based on this filing, the board of directors must believe that not only is the fourth quarter bad, but that the first quarter is going to be just as bad or worse," stated Duncan Stewart, an analyst at DSAM Consulting in Toronto. "Although they have cash in the short term, even the medium-term outlook is not enough to make the company viable as a going concern," Stewart added.
During the last quarterly report, the company reported a loss of $3.4B as revenues plunged more than 14% during their 3rd quarter. In order to offset some of those losses, Nortel reduced their workforce by 2,100 jobs in North America, along with an additional 1,000 positions throughout other countries.
“Nortel must be put on a sound financial footing once and for all,” Mike Zafirovski, Nortel’s chief executive, said in a statement. “These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be.”
Nortel, which does business in 150 countries with more than 30,000 employees, draws its history back to 1882, when it was known as the mechanical department of Bell Telephone Canada. In the years and decades to follow, it was later known as Northern Electric and Northern Telecom before changing its name in 1999 to Nortel Networks Corporation.
In a sad twist of fate, Nortel was recently named the official network supplier of the Vancouver 2010 Olympics, along with being named in a partnership for the London 2012 Olympic to provide network communication equipment.
In more disappointing news, the New York Stock Exchange (NYSE) sent Nortel a letter of notification last month that the company’s stock (NT) was on the brink of being delisted from their exchange. The reason came from the stock’s price not meeting the minimum price of $1.00 per share for 30 consecutive days.
With the company filing for Chapter 11 this morning, shares of NT plummeted more than 77% in pre-market trading before trading was halted on the stock. As it currently stands, shares of NT is valued at $0.07 per share, a far cry from its 52-week high of $13.71 set a year ago, and an even further cry from its all-time high of $890 per share set back in July of 2000, right before the explosion of the tech bubble.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
In a filing of Chapter 11 protection in a Delaware district court, Nortel, and a number of their affiliates, made their claims the day before the company was set to make a $107M interest payment on the debt they owe.
Today’s filing could be attributed to the company’s debt of nearly $4B to bondholders that are represented by the Bank of New York Mellon. Never really recouping from the dot.com collapse in the earlier part of the decade, Nortel was once Canada’s largest company.
"Based on this filing, the board of directors must believe that not only is the fourth quarter bad, but that the first quarter is going to be just as bad or worse," stated Duncan Stewart, an analyst at DSAM Consulting in Toronto. "Although they have cash in the short term, even the medium-term outlook is not enough to make the company viable as a going concern," Stewart added.
During the last quarterly report, the company reported a loss of $3.4B as revenues plunged more than 14% during their 3rd quarter. In order to offset some of those losses, Nortel reduced their workforce by 2,100 jobs in North America, along with an additional 1,000 positions throughout other countries.
“Nortel must be put on a sound financial footing once and for all,” Mike Zafirovski, Nortel’s chief executive, said in a statement. “These actions are imperative so that Nortel can build on its core strengths and become the highly focused and financially sound leader in the communications industry that its people, technology and customer relationships show it ought to be.”
Nortel, which does business in 150 countries with more than 30,000 employees, draws its history back to 1882, when it was known as the mechanical department of Bell Telephone Canada. In the years and decades to follow, it was later known as Northern Electric and Northern Telecom before changing its name in 1999 to Nortel Networks Corporation.
In a sad twist of fate, Nortel was recently named the official network supplier of the Vancouver 2010 Olympics, along with being named in a partnership for the London 2012 Olympic to provide network communication equipment.
In more disappointing news, the New York Stock Exchange (NYSE) sent Nortel a letter of notification last month that the company’s stock (NT) was on the brink of being delisted from their exchange. The reason came from the stock’s price not meeting the minimum price of $1.00 per share for 30 consecutive days.
With the company filing for Chapter 11 this morning, shares of NT plummeted more than 77% in pre-market trading before trading was halted on the stock. As it currently stands, shares of NT is valued at $0.07 per share, a far cry from its 52-week high of $13.71 set a year ago, and an even further cry from its all-time high of $890 per share set back in July of 2000, right before the explosion of the tech bubble.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Monday, January 12, 2009
Is Citigroup Looking to Sell Smith Barney? - January 12, 2009
Is Morgan Stanley trying to become the largest retail brokerage in the world? If today’s talks continue as a possible deal with Citigroup is discussed, then that possibility could become reality.
If the talks, about combining Citigroup Inc. (C) and Morgan Stanley’s (MS) brokerage operations, continue to deepen then the merger could trigger more consolidations within the troubled banking industry.
Over the past several months, Morgan Stanley has had to revamp their business models as the economy has taken its toll on the company’s finances. In that time, MS has become a bank holding company, along with Goldman Sachs Inc. (GS), while other big named companies such as Merrill Lynch & Co., which was sold to Bank of America Corp. (BAC), and Lehman Brothers Holdings Inc. filed for bankruptcy.
As for the terms of the deal, in it MS is looking to pay Citigroup between $2B and $3B in cash for a 51% stake in the company’s Smith Barney brokerage operations. Once the deal is complete, MS would have the option to purchase the remaining percentage of Smith Barney over the next three years. If the deal goes through, Citigroup is looking to gain upwards of $10B in pre-tax gains, once Smith Barney is revalued.
"If Morgan and Citi get together, they would be able to put together a retail brokerage unit that is larger than Merrill's thundering herd, which could position them well in the marketplace," said Chris Probyn, chief economist at State Street Global Advisors. "This may be a way of staying competitive."
Citigroup, which over the past several months, has been pummeled by the ongoing demise of the housing and credit crisis, just recently received $45B worth of funds granted by the government as part of their $700B financial rescue plan.
Over the past year, Citigroup has amassed losses of more than $20B and is expected to post an additional loss for their upcoming 4th quarter. In that quarter, analysts are anticipating that the struggling bank post a loss of nearly $10B. That total was calculated by analysts foreseeing a loss for Citigroup of $1.14 per share, multiplied by their total outstanding shares, comes to $6.21B. The remaining $4B is said to derive from Citigroup’s potential gain from the sale of their German retail banking operations, which were sold late last year.
Clearly you can see why Citigroup is looking for the sale to go through as the bank is in dire need of cash in order to maintain operations. However, the deal would be prosperous for Morgan Stanley as well. MS is looking to build their retail deposit base by increasing their number of salesman as improving deposits has become a top priority once MS became a bank holding company.
By the close of trading, shares of Citigroup had fallen 17%, or $1.15, to trade at $5.60 per share, while shares of Morgan Stanley were down as well, slipping 1.4%, or $0.27, to trade at $18.79 per share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
If the talks, about combining Citigroup Inc. (C) and Morgan Stanley’s (MS) brokerage operations, continue to deepen then the merger could trigger more consolidations within the troubled banking industry.
Over the past several months, Morgan Stanley has had to revamp their business models as the economy has taken its toll on the company’s finances. In that time, MS has become a bank holding company, along with Goldman Sachs Inc. (GS), while other big named companies such as Merrill Lynch & Co., which was sold to Bank of America Corp. (BAC), and Lehman Brothers Holdings Inc. filed for bankruptcy.
As for the terms of the deal, in it MS is looking to pay Citigroup between $2B and $3B in cash for a 51% stake in the company’s Smith Barney brokerage operations. Once the deal is complete, MS would have the option to purchase the remaining percentage of Smith Barney over the next three years. If the deal goes through, Citigroup is looking to gain upwards of $10B in pre-tax gains, once Smith Barney is revalued.
"If Morgan and Citi get together, they would be able to put together a retail brokerage unit that is larger than Merrill's thundering herd, which could position them well in the marketplace," said Chris Probyn, chief economist at State Street Global Advisors. "This may be a way of staying competitive."
Citigroup, which over the past several months, has been pummeled by the ongoing demise of the housing and credit crisis, just recently received $45B worth of funds granted by the government as part of their $700B financial rescue plan.
Over the past year, Citigroup has amassed losses of more than $20B and is expected to post an additional loss for their upcoming 4th quarter. In that quarter, analysts are anticipating that the struggling bank post a loss of nearly $10B. That total was calculated by analysts foreseeing a loss for Citigroup of $1.14 per share, multiplied by their total outstanding shares, comes to $6.21B. The remaining $4B is said to derive from Citigroup’s potential gain from the sale of their German retail banking operations, which were sold late last year.
Clearly you can see why Citigroup is looking for the sale to go through as the bank is in dire need of cash in order to maintain operations. However, the deal would be prosperous for Morgan Stanley as well. MS is looking to build their retail deposit base by increasing their number of salesman as improving deposits has become a top priority once MS became a bank holding company.
By the close of trading, shares of Citigroup had fallen 17%, or $1.15, to trade at $5.60 per share, while shares of Morgan Stanley were down as well, slipping 1.4%, or $0.27, to trade at $18.79 per share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Please Cover One Eye and Read the Top Four Lines - January 12, 2009
E FP TOZ LPED PECFD….do you know what these represent? These are the starting letters from the basic eye chart exam. This is significant today in that Abbott Laboratories (ABT) confirmed a report early this morning that the company has made plans to acquire Advanced Medical Optics Inc. (EYE) for $1.36B.
Abbott, which is a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health. The company’s products consist of a broad range of healthcare implementations, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies.
On the other side of the coin, Advanced Medical Optics is a leader in the development, manufacturing and marketing of medical devices for the eye and contact lens care products. Focusing on the development of a broad suite of innovative technologies and devices to address a wide range of eye disorders, their products include the ophthalmic surgical line of foldable intraocular lenses, phacoemulsification systems, viscoelastics and related products used in cataract surgery and microkeratomes used in LASIK procedures for refractive error correction.
As part of the deal, Abbott offered Advanced Medical Optics $22 per share, nearly 150% over last Friday’s closing price of $8.85 per share. Including the debt that Abbott will accumulate from Advanced Medical, the deal is valued at over $2.8B.
"With Advanced Medical Optics, Abbott is enhancing and strengthening its diverse mix of medical device businesses and gaining a leadership position in another large and growing segment," Abbott Chairman and CEO Miles D. White said in a company statement. "Additionally, Abbott's significant global presence will help drive growth opportunities for this business, especially in international markets, where favorable demographics are driving demand for advanced eye care procedures and products."
Advanced Medical is most recently recognizable from their 2007 recall of their contact lens solution, Complete MoisturePlus, which was linked to potentially blinding eye infections. Another news-making event that put EYE in the spotlight was the $4.23B hostile bid of Bausch & Lomb made that same year. However, Advanced Medical retracted their bid as there were too many hoops to jump through that were unrealistic to the company at that time.
As part of the deal, Abbott officials predict that the acquisition will generate a long-term sustainable growth rate of more than $1B in annual sales once Advanced Medical is incorporated into Abbott’s business model.
In addition, Abbott, before the company’s announcement of the deal early this morning, had provided 2009 earnings forecasts that have the company posting net income of $3.65 to $3.70 per share, which equates to a growth rate of more than 10% over last year’s yearly per share earnings.
With Abbott yet to announce yearly results for 2008, ABT reaffirmed their outlook of producing earnings between $3.31 and $3.33 per share. Although the company does not expect the deal to have any impact on 2009 earnings, look for an impact of the acquisition to take hold in 2010, along with transaction-related costs as well.
In morning trading, shares of ABT were down less than 1%, trading at $50.80 per share, while shares of EYE skyrocketed from the opening bell, surging more than 144% to trade at $21.62 per share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Abbott, which is a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health. The company’s products consist of a broad range of healthcare implementations, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies.
On the other side of the coin, Advanced Medical Optics is a leader in the development, manufacturing and marketing of medical devices for the eye and contact lens care products. Focusing on the development of a broad suite of innovative technologies and devices to address a wide range of eye disorders, their products include the ophthalmic surgical line of foldable intraocular lenses, phacoemulsification systems, viscoelastics and related products used in cataract surgery and microkeratomes used in LASIK procedures for refractive error correction.
As part of the deal, Abbott offered Advanced Medical Optics $22 per share, nearly 150% over last Friday’s closing price of $8.85 per share. Including the debt that Abbott will accumulate from Advanced Medical, the deal is valued at over $2.8B.
"With Advanced Medical Optics, Abbott is enhancing and strengthening its diverse mix of medical device businesses and gaining a leadership position in another large and growing segment," Abbott Chairman and CEO Miles D. White said in a company statement. "Additionally, Abbott's significant global presence will help drive growth opportunities for this business, especially in international markets, where favorable demographics are driving demand for advanced eye care procedures and products."
Advanced Medical is most recently recognizable from their 2007 recall of their contact lens solution, Complete MoisturePlus, which was linked to potentially blinding eye infections. Another news-making event that put EYE in the spotlight was the $4.23B hostile bid of Bausch & Lomb made that same year. However, Advanced Medical retracted their bid as there were too many hoops to jump through that were unrealistic to the company at that time.
As part of the deal, Abbott officials predict that the acquisition will generate a long-term sustainable growth rate of more than $1B in annual sales once Advanced Medical is incorporated into Abbott’s business model.
In addition, Abbott, before the company’s announcement of the deal early this morning, had provided 2009 earnings forecasts that have the company posting net income of $3.65 to $3.70 per share, which equates to a growth rate of more than 10% over last year’s yearly per share earnings.
With Abbott yet to announce yearly results for 2008, ABT reaffirmed their outlook of producing earnings between $3.31 and $3.33 per share. Although the company does not expect the deal to have any impact on 2009 earnings, look for an impact of the acquisition to take hold in 2010, along with transaction-related costs as well.
In morning trading, shares of ABT were down less than 1%, trading at $50.80 per share, while shares of EYE skyrocketed from the opening bell, surging more than 144% to trade at $21.62 per share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Friday, January 09, 2009
How Venomous is This COBRA? - January 9, 2009
If you were to lose your job today, would you be able to pay for your, or your family’s health insurance? Many would answer no to that, and with today’s release of the new unemployment rate, 7.2%, that number is increasing exponentially on a monthly basis.
In a report revealed today by Families USA, newly laid-off Americans will have to spend upwards of 30% of their unemployment benefits to help pay for their health insurance, and that’s just for an individual. If that person were trying to pay for a family coverage from their benefit package, then he or she would have to spend nearly 80% of their check in order to maintain healthcare coverage.
When a worker is laid-off, they may be eligible to maintain their coverage using a plan called COBRA, the Consolidated Omnibus Budget Reconciliation Act. COBRA gives those workers the right to continue their healthcare plan for a limited time as long as they pay for the premiums and an additional 2% administration fee.
Although this plan seems to be a great benefit at first glance, the program has astronomical costs and with limited cash provided to those recently laid-off, this plan is in need of serious reworking.
"On average, nationally, the monthly benefit for unemployment insurance is $1,278. The average COBRA monthly premiums for family coverage are $1,069," Ron Pollack, executive director of Families USA, stated earlier today.
Pollack went on to add, "Unemployed workers need either premium subsidies to help them afford COBRA benefits or temporary health safety-net coverage through Medicaid. The right to COBRA health coverage is a tragic ruse for millions of families whose breadwinner was laid off."
In fact, President-elect Obama has recently stated that he plans on initiating a program from his economic stimulus package that would extend unemployment benefits along with subsidizing healthcare programs for those that have lost their jobs. Obama plans on using some $80B as part of his plan.
Throughout the country, some 160 million people receive their healthcare plans through their current employers. In addition, more than 46 million people go day-to-day without any means of healthcare coverage what so ever. The remainders of those that receive health benefits, but don’t pay for it, are employed by the government.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
In a report revealed today by Families USA, newly laid-off Americans will have to spend upwards of 30% of their unemployment benefits to help pay for their health insurance, and that’s just for an individual. If that person were trying to pay for a family coverage from their benefit package, then he or she would have to spend nearly 80% of their check in order to maintain healthcare coverage.
When a worker is laid-off, they may be eligible to maintain their coverage using a plan called COBRA, the Consolidated Omnibus Budget Reconciliation Act. COBRA gives those workers the right to continue their healthcare plan for a limited time as long as they pay for the premiums and an additional 2% administration fee.
Although this plan seems to be a great benefit at first glance, the program has astronomical costs and with limited cash provided to those recently laid-off, this plan is in need of serious reworking.
"On average, nationally, the monthly benefit for unemployment insurance is $1,278. The average COBRA monthly premiums for family coverage are $1,069," Ron Pollack, executive director of Families USA, stated earlier today.
Pollack went on to add, "Unemployed workers need either premium subsidies to help them afford COBRA benefits or temporary health safety-net coverage through Medicaid. The right to COBRA health coverage is a tragic ruse for millions of families whose breadwinner was laid off."
In fact, President-elect Obama has recently stated that he plans on initiating a program from his economic stimulus package that would extend unemployment benefits along with subsidizing healthcare programs for those that have lost their jobs. Obama plans on using some $80B as part of his plan.
Throughout the country, some 160 million people receive their healthcare plans through their current employers. In addition, more than 46 million people go day-to-day without any means of healthcare coverage what so ever. The remainders of those that receive health benefits, but don’t pay for it, are employed by the government.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Did Circuit City Find a Rescuer? - January 9, 2009
Has Circuit City found a savior? In a statement released early Friday morning, the company confirmed reports that the there may be a possible sales of the company as “two interested parties” have made it known that they may be interested in what used to be the nation’s No. 2 electronics retailer.
The possible investors have made it clear the possible purchase will be a going concern. A going concern is an accounting term that relates to a buyer acquiring a business without the intention or threat of liquidating any assets from the company to be acquired.
With two potential buyers, Circuit City intends on holding an auction for the sale of the company. If the sale goes threw, it could mean that the company could emerge from bankruptcy with its entire business unharmed.
"If that doesn't happen and these deals fall through, then it is very likely that it could go out of business," said Joseph Steinfeld, bankruptcy expert and managing partner with ASK Financial. "It's the same exact situation that confronted Linens N Things and the company was forced to liquidate."
Circuit City first filed for bankruptcy back in November as sales dwindled during the economic crunch that took its toll on numerous retailers and businesses as a whole. During the company’s 3rd quarter, leading up to the Chapter 11 filing, sales had plummeted more than 13%, which is a deadly sign ahead of the holiday shopping season. On top of that, the company’s stock price had lost more than 90% of its value since the beginning of 2008.
"While the company is optimistic that a transaction can be successfully finalized, no assurance can be given that this will occur," the company announced in a statement released earlier this morning.
By the end of August 2008, the company had more than $3.4B in total assets, and $2.32B worth of liabilities. Operating more than 565 stores throughout the U.S. and an additional 765 stores in Canada, Circuit City had closed nearly 20% of their stores to help offset the oncoming pressures of going out of business. Over the past two years, the company had posted losses in seven of the last eight quarters heading into their bankruptcy filing.
Other mistakes were made by the company as well. The first blunder the company made, after posting such a successful decade in the ‘80s, was in real estate. At the start of the ‘90s, with money flowing in, the company went on to make less-lucrative real estate deals in which the company acquired enormous building in less-desirable areas that, in retrospect, actually pushed customers away.
In the interim, Circuit City’s biggest rival, Best Buy Co. Inc. (BBY) played their cards more conservatively. Looking for better real estate deals, better locations, and better business practices, which proved to be their saving grace as the markets turned dramatically by the turn of the millennium.
After learning of Circuit City’s recent developments, Best Buy offered their own news, revising their 2009 profit forecasts. With the company reducing their workforce and consumers tightening their budgets, Best Buy stated that the company now anticipates earnings between $2.50 and $2.70 per share, narrowing its range from $2.30 to $2.90 per share.
With companies such as Best Buy, Costco (COST) and Wal-Mart (WMT) increasing their market presence in offering low-cost electronics, any investor coming in and looking to buy Circuit City better have substantial funds in order to repel significant losses in the upcoming years.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
The possible investors have made it clear the possible purchase will be a going concern. A going concern is an accounting term that relates to a buyer acquiring a business without the intention or threat of liquidating any assets from the company to be acquired.
With two potential buyers, Circuit City intends on holding an auction for the sale of the company. If the sale goes threw, it could mean that the company could emerge from bankruptcy with its entire business unharmed.
"If that doesn't happen and these deals fall through, then it is very likely that it could go out of business," said Joseph Steinfeld, bankruptcy expert and managing partner with ASK Financial. "It's the same exact situation that confronted Linens N Things and the company was forced to liquidate."
Circuit City first filed for bankruptcy back in November as sales dwindled during the economic crunch that took its toll on numerous retailers and businesses as a whole. During the company’s 3rd quarter, leading up to the Chapter 11 filing, sales had plummeted more than 13%, which is a deadly sign ahead of the holiday shopping season. On top of that, the company’s stock price had lost more than 90% of its value since the beginning of 2008.
"While the company is optimistic that a transaction can be successfully finalized, no assurance can be given that this will occur," the company announced in a statement released earlier this morning.
By the end of August 2008, the company had more than $3.4B in total assets, and $2.32B worth of liabilities. Operating more than 565 stores throughout the U.S. and an additional 765 stores in Canada, Circuit City had closed nearly 20% of their stores to help offset the oncoming pressures of going out of business. Over the past two years, the company had posted losses in seven of the last eight quarters heading into their bankruptcy filing.
Other mistakes were made by the company as well. The first blunder the company made, after posting such a successful decade in the ‘80s, was in real estate. At the start of the ‘90s, with money flowing in, the company went on to make less-lucrative real estate deals in which the company acquired enormous building in less-desirable areas that, in retrospect, actually pushed customers away.
In the interim, Circuit City’s biggest rival, Best Buy Co. Inc. (BBY) played their cards more conservatively. Looking for better real estate deals, better locations, and better business practices, which proved to be their saving grace as the markets turned dramatically by the turn of the millennium.
After learning of Circuit City’s recent developments, Best Buy offered their own news, revising their 2009 profit forecasts. With the company reducing their workforce and consumers tightening their budgets, Best Buy stated that the company now anticipates earnings between $2.50 and $2.70 per share, narrowing its range from $2.30 to $2.90 per share.
With companies such as Best Buy, Costco (COST) and Wal-Mart (WMT) increasing their market presence in offering low-cost electronics, any investor coming in and looking to buy Circuit City better have substantial funds in order to repel significant losses in the upcoming years.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, January 08, 2009
Leading Online Options Trader Acquired - January 8, 2009
Which is more challenging, thinking or swimming? For TD Ameritrade Holding Corp. (AMTD), that was not even a contest, as the leader in online equity trading confirmed this morning that the company was purchasing thinkorswim Group Inc. (SWIM) for $605M.
The deal, which will be funded by both cash and stock, is a strategic move by AMTD to gain a better market position within the options trading arena. The agreement consists of AMTD paying $225M in cash, along with issuing 28M shares to current thinkorswim shareholders. That comes out to $3.34 in cash and 0.398 AMTD shares for each outstanding SWIM share.
Upon yesterday’s closing price, TD Ameritrade valued the deal at $8.71 per share for SWIM, a 54% premium over Wednesday’s price of $5.65 per share. With today’s news, shares of SWIM surged more than 45% during the session, trading at $8.23, while shares of AMTD slipped less than 2%, at $13.23 per share.
The acquisition of thinkorswim at such a bargain price, elates TD Ameritrade as the company was in search of company that would be able to provide them with a solid standing with the options world, as the importance of options trading has surged in recent years.
"Options are currently the most profitable part of the online brokerage world, and dedicated firms like OptionsXpress (OXPS) and Thinkorswim have been doing well even through the markets' declines," said Robert Ellis, analyst for Celent LLC. "Options clients trade more, therefore adding more revenue to the brokerage firm."
In the company’s research before making the acquisition, AMTD found that thinkorswim was an industry leader within the options market, posting the highest number of daily retail option trades. To date, SWIM has nearly 87,000 funded brokerage accounts on their books, with each account placing approximately 176 trades per day, or 450 times per year. SWIM also has more than $3B worth in client assets.
Ameritrade CEO Fred Tomczyk went on to say "They have a much more advanced options trading platform, with things such as multi-legging that our active traders have been asking for. We think we're now the best front-end trading platform in the country."
Options are a basic form of derivatives, which allows an investor to buy a form of “insurance” on a stock if they currently own those shares. Options also allow investors a second form of income if they are well versed in this type of trading style.
As for the company that Ameritrade is acquiring, through the first three quarters of 2008, thinkorswim managed to post net income of nearly $50M, ten times that from the previous year. Although the company’s shares price dropped more than 68%, the company’s core business is stronger than ever.
The deal, which is subject to approval by thinkorswim shareholders and by federal antitrust regulators, is scheduled to complete within the next six months.
Ameritrade believes that the purchase of SWIM will boost the company’s fiscal 2010 earnings by between 3% and 7%, while hopefully bringing up those to 10% to 15% once the two companies are fully integrated.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
The deal, which will be funded by both cash and stock, is a strategic move by AMTD to gain a better market position within the options trading arena. The agreement consists of AMTD paying $225M in cash, along with issuing 28M shares to current thinkorswim shareholders. That comes out to $3.34 in cash and 0.398 AMTD shares for each outstanding SWIM share.
Upon yesterday’s closing price, TD Ameritrade valued the deal at $8.71 per share for SWIM, a 54% premium over Wednesday’s price of $5.65 per share. With today’s news, shares of SWIM surged more than 45% during the session, trading at $8.23, while shares of AMTD slipped less than 2%, at $13.23 per share.
The acquisition of thinkorswim at such a bargain price, elates TD Ameritrade as the company was in search of company that would be able to provide them with a solid standing with the options world, as the importance of options trading has surged in recent years.
"Options are currently the most profitable part of the online brokerage world, and dedicated firms like OptionsXpress (OXPS) and Thinkorswim have been doing well even through the markets' declines," said Robert Ellis, analyst for Celent LLC. "Options clients trade more, therefore adding more revenue to the brokerage firm."
In the company’s research before making the acquisition, AMTD found that thinkorswim was an industry leader within the options market, posting the highest number of daily retail option trades. To date, SWIM has nearly 87,000 funded brokerage accounts on their books, with each account placing approximately 176 trades per day, or 450 times per year. SWIM also has more than $3B worth in client assets.
Ameritrade CEO Fred Tomczyk went on to say "They have a much more advanced options trading platform, with things such as multi-legging that our active traders have been asking for. We think we're now the best front-end trading platform in the country."
Options are a basic form of derivatives, which allows an investor to buy a form of “insurance” on a stock if they currently own those shares. Options also allow investors a second form of income if they are well versed in this type of trading style.
As for the company that Ameritrade is acquiring, through the first three quarters of 2008, thinkorswim managed to post net income of nearly $50M, ten times that from the previous year. Although the company’s shares price dropped more than 68%, the company’s core business is stronger than ever.
The deal, which is subject to approval by thinkorswim shareholders and by federal antitrust regulators, is scheduled to complete within the next six months.
Ameritrade believes that the purchase of SWIM will boost the company’s fiscal 2010 earnings by between 3% and 7%, while hopefully bringing up those to 10% to 15% once the two companies are fully integrated.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Wednesday, January 07, 2009
The EuroZone Continues to Expand - January 7, 2009
By how many more will the Eurozone expand? Well you can add another name to the group of countries that are now supported by the value of the Euro.
To bring in the New Year, the newest member to adopt the European Union’s Euro, Slovakia became the 16th country to use the currency as their own monetary paper. in a country of some 5.4 million people, that brings the total amount of users of the currency to more than 330 million people, with an estimated GDP of more than $5.6 trillion, or in this case 4 trillion Euros.
“We are waving goodbye to the Slovak currency, to which we have become strongly emotionally attached,” said Prime Minister Robert Fico, who withdrew 100 euros ($140) from an ATM bank machine in the Parliament building. “At the time of the current global crisis” the Euro “is a psychological tool for Slovaks to boost their self-confidence.”
The recent decision comes as an economically strategic move by the country as numerous countries in that region have seen their currencies severely devalued amidst the global financial crisis. Slovakia joined the European Union in 2004.
For example, neighboring Hungary, once seen as a beacon of economic prosperity during the post-communist era in Eastern Europe, was forced last month to take out a lone from the International Monetary Fund to sidestep economic destruction.
Since the disbanding in 1993 of Czechoslovakia into two member states, the Czech Republic and Slovakia, the country has been able to enjoy steady economic growth throughout the country as exports, which consist of machinery, transport equipment, and manufactured goods, have continued to show strong advances.
In fact, Slovakia showed a record expansion in Gross Domestic Product (GDP) of 14.3% in their 4th quarter of 2007. Furthermore, during the country’s 3rd quarter of last year, GDP increased at an annualized rate of 7%. However, the OECD, the Organization for Economic Cooperation and Development, released their finding that showed that Slovakia’s projected growth rate for all of 2008 would come in around 4%. Although down over pervious years, it still shows a positive sign that the country can still continue to grow in an economic downturn, such as the one that we are all currently in.
With the country adopting the new currency and being able to maintain a positive growth pattern, other EU members are now looking to Slovakia as a possible investment area. Volkswagen AG, Europe’s largest automaker, has chosen to infuse capital into their factory their instead of shutting it down, and now has plans on restructuring the plant to produce a new car model in the coming months.
The greatest concerns for Slovakia were the transition from one currency to another. To date, there appears to be no major hassles encountered in the change over. Retailers are dealing quite well, due in large part to the declined traffic in stores as fewer people are shopping after the holiday season.
On new year’s day, more than 96% of the country’s ATMs has already began dispensing the new currency, while banks had begun to stockpile the currency in order to handle the rush of customers coming in to exchange the old paper for the new.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
To bring in the New Year, the newest member to adopt the European Union’s Euro, Slovakia became the 16th country to use the currency as their own monetary paper. in a country of some 5.4 million people, that brings the total amount of users of the currency to more than 330 million people, with an estimated GDP of more than $5.6 trillion, or in this case 4 trillion Euros.
“We are waving goodbye to the Slovak currency, to which we have become strongly emotionally attached,” said Prime Minister Robert Fico, who withdrew 100 euros ($140) from an ATM bank machine in the Parliament building. “At the time of the current global crisis” the Euro “is a psychological tool for Slovaks to boost their self-confidence.”
The recent decision comes as an economically strategic move by the country as numerous countries in that region have seen their currencies severely devalued amidst the global financial crisis. Slovakia joined the European Union in 2004.
For example, neighboring Hungary, once seen as a beacon of economic prosperity during the post-communist era in Eastern Europe, was forced last month to take out a lone from the International Monetary Fund to sidestep economic destruction.
Since the disbanding in 1993 of Czechoslovakia into two member states, the Czech Republic and Slovakia, the country has been able to enjoy steady economic growth throughout the country as exports, which consist of machinery, transport equipment, and manufactured goods, have continued to show strong advances.
In fact, Slovakia showed a record expansion in Gross Domestic Product (GDP) of 14.3% in their 4th quarter of 2007. Furthermore, during the country’s 3rd quarter of last year, GDP increased at an annualized rate of 7%. However, the OECD, the Organization for Economic Cooperation and Development, released their finding that showed that Slovakia’s projected growth rate for all of 2008 would come in around 4%. Although down over pervious years, it still shows a positive sign that the country can still continue to grow in an economic downturn, such as the one that we are all currently in.
With the country adopting the new currency and being able to maintain a positive growth pattern, other EU members are now looking to Slovakia as a possible investment area. Volkswagen AG, Europe’s largest automaker, has chosen to infuse capital into their factory their instead of shutting it down, and now has plans on restructuring the plant to produce a new car model in the coming months.
The greatest concerns for Slovakia were the transition from one currency to another. To date, there appears to be no major hassles encountered in the change over. Retailers are dealing quite well, due in large part to the declined traffic in stores as fewer people are shopping after the holiday season.
On new year’s day, more than 96% of the country’s ATMs has already began dispensing the new currency, while banks had begun to stockpile the currency in order to handle the rush of customers coming in to exchange the old paper for the new.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
In the World of Mac, Does Freddie and Fannie Still Rule? - January 7, 2008
The Mac attack… no not Freddie (FRE) or Fannie (FNM), but Penny. In a statement released earlier today, the Private National Mortgage Acceptance Company, LLC (PennyMac) announced that they were purchasing nearly $560M worth of residential mortgages from the Federal Deposit Insurance Corp. (FDIC).
The mortgages, first held by the First National Bank of Nevada, were seized by the FDIC last year, as the bank could not fund the mortgages they were holding. On July 25, 2008, First National Bank of Nevada was closed by the Office of the Comptroller of the Currency and the FDIC was named receiver.
The purchase by PennyMac signifies the first such transaction by the FDIC in a structured sale of non-construction residential mortgage loans to a private entity.
Formed in early 2008, PennyMac was the brainchild of BlackRock Inc. (BLK), HighFields Capital, and a consortium of mortgage industry leaders in order to concentrate on the dissonance within the U.S. mortgage industry. The company currently has more than $2B in capital that they are willing to invest into a struggling mortgage sector.
The key member leading the team is Stanford L. Kurland, CEO and Chairman of PennyMac. With his leadership, along with others, PennyMac is focused on acquiring and expediting residential mortgage assets on behalf of the company’s private investors.
PennyMac’s primary operation is the recognition of key investment opportunities that include modeling, valuation, along with capital market activity research. Also included is transaction management, strategic portfolio management, due diligence and the company’s innovative loan restructuring programs.
"We are excited about investing in and managing mortgages in this unique transaction where we share in the economics with the FDIC," said Kurland. "We believe that PennyMac's approach of strategically managing troubled loans combined with our best-in-class mortgage servicing will create significant value for homeowners as well as our investors."
Mr. Kurland went on to add, "PennyMac's objective is to maximize value by working with borrowers to maintain ownership of their homes and reduce foreclosures."
For more information on the stock and options markets check out the wealth of information at BetterTrades.
The mortgages, first held by the First National Bank of Nevada, were seized by the FDIC last year, as the bank could not fund the mortgages they were holding. On July 25, 2008, First National Bank of Nevada was closed by the Office of the Comptroller of the Currency and the FDIC was named receiver.
The purchase by PennyMac signifies the first such transaction by the FDIC in a structured sale of non-construction residential mortgage loans to a private entity.
Formed in early 2008, PennyMac was the brainchild of BlackRock Inc. (BLK), HighFields Capital, and a consortium of mortgage industry leaders in order to concentrate on the dissonance within the U.S. mortgage industry. The company currently has more than $2B in capital that they are willing to invest into a struggling mortgage sector.
The key member leading the team is Stanford L. Kurland, CEO and Chairman of PennyMac. With his leadership, along with others, PennyMac is focused on acquiring and expediting residential mortgage assets on behalf of the company’s private investors.
PennyMac’s primary operation is the recognition of key investment opportunities that include modeling, valuation, along with capital market activity research. Also included is transaction management, strategic portfolio management, due diligence and the company’s innovative loan restructuring programs.
"We are excited about investing in and managing mortgages in this unique transaction where we share in the economics with the FDIC," said Kurland. "We believe that PennyMac's approach of strategically managing troubled loans combined with our best-in-class mortgage servicing will create significant value for homeowners as well as our investors."
Mr. Kurland went on to add, "PennyMac's objective is to maximize value by working with borrowers to maintain ownership of their homes and reduce foreclosures."
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Tuesday, January 06, 2009
Tuesday Trading Tutorial - January 6, 2009
When we last left off, we had discussed the intricate details pertaining to credit spreads. Today’s article will delve into a broader scope of trading, analyzing the markets as one entity.
One of the most challenging aspects of becoming a successful trader relies on the individual to be able to recognize and distinguish certain trends and signals within the markets.
With more than 10,000 publicly traded stocks, there are more than 2,300 stocks out there, which offer available options. It can be extremely daunting for an investor to take into account the overall extent of the markets as a whole.
One of the most important aspects a trader needs to take into account when analyzing the markets is that the sentiment of other investors is driven mainly on fear and greed. It becomes invaluable for you, as an investor, to take into consideration the psychology of other investors when coming up with your own trading strategy.
Another key ingredient to improving your skills and knowledge towards investing is that you need to know that you are competing against professional traders, and that it is paramount to hone your skills and choose the proper analytical tools to strengthen your strategies.
The most popular analytical tool that is free to everyone comes from the Internet. Both novice and advanced investors have free reign to research and access any information pertaining to a company’s financial statement, stock performance, charts and other analysts’ opinions on any company.
Some of the most popular sites to visit for the aforementioned information can be Yahoo! Finance, Google Finance and Reuters. Additional sites are also available that provide a more in-depth approach to market analysis, they include Bloomberg, Reuters and CNNMoney.
Once you have put into place the tools needed to improve your trading skills, it is now time to look at the markets to determine the general movement within the markets. On average, three out of every four stocks move in the same direction as does the overall market.
While analyzing the markets as one, there are many contributing factors to take into account when predicting the market’s next move. These factors would include monetary policies, interest rates, industry leaders and economic reports.
In the first part, monetary policies, it is vital for an investor to keep up with current happenings within the Federal Reserve. The Fed, among many other roles, is in charge of curtailing inflation, which in turn affects the overall direction of the markets. If the Fed was to slow down inflation, short-term interest rates would increase, and vice-versa. However, it usually takes the markets upwards of six months to react to the Fed’s moves, which leaves the markets to trade on their own accord.
As stated above, directly linked to the Fed are interest rates. The discount rate, the fees charged to banks for borrowing money, is extremely vital because it is directly linked to the cash flow and money supply of the country. Thus, there is an unique relationship between interest rates, bond prices and the stock market, and can be used to anticipate the markets direction.
Being able to follow industry leaders is also a good tool to use when analyzing the marketplace. With the help from the listed financial Internet sites above, investors can compare and contrast various groups and companies within a specific segment. With more than 200 industrial groups, many analysts believe that nearly half of a stock’s trading price is attributed to its specified group within that industry.
The final aspect surrounding the analysis of the broader markets comes from differentiating between the noise and the pertinent information inside the many economic reports released by the government, or related parties. Some of the most influential reports that may lead the markets in certain directions are the Unemployment Reports, Gross Domestic Product (GDP), Consumer Price Index (CPI), Producer Price Index (PPI) and Retail Sales.
Regardless of what path you take to learn and use the tools needed to become a successful trader, being knowledgeable and perceptive about the macro environment will help you succeed in the micro arena, when it comes to investing.
Check back soon as the next article will cover aspects of a basic approach to researching and analyzing the fundamentals of a stock and its encompassing attributes.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
One of the most challenging aspects of becoming a successful trader relies on the individual to be able to recognize and distinguish certain trends and signals within the markets.
With more than 10,000 publicly traded stocks, there are more than 2,300 stocks out there, which offer available options. It can be extremely daunting for an investor to take into account the overall extent of the markets as a whole.
One of the most important aspects a trader needs to take into account when analyzing the markets is that the sentiment of other investors is driven mainly on fear and greed. It becomes invaluable for you, as an investor, to take into consideration the psychology of other investors when coming up with your own trading strategy.
Another key ingredient to improving your skills and knowledge towards investing is that you need to know that you are competing against professional traders, and that it is paramount to hone your skills and choose the proper analytical tools to strengthen your strategies.
The most popular analytical tool that is free to everyone comes from the Internet. Both novice and advanced investors have free reign to research and access any information pertaining to a company’s financial statement, stock performance, charts and other analysts’ opinions on any company.
Some of the most popular sites to visit for the aforementioned information can be Yahoo! Finance, Google Finance and Reuters. Additional sites are also available that provide a more in-depth approach to market analysis, they include Bloomberg, Reuters and CNNMoney.
Once you have put into place the tools needed to improve your trading skills, it is now time to look at the markets to determine the general movement within the markets. On average, three out of every four stocks move in the same direction as does the overall market.
While analyzing the markets as one, there are many contributing factors to take into account when predicting the market’s next move. These factors would include monetary policies, interest rates, industry leaders and economic reports.
In the first part, monetary policies, it is vital for an investor to keep up with current happenings within the Federal Reserve. The Fed, among many other roles, is in charge of curtailing inflation, which in turn affects the overall direction of the markets. If the Fed was to slow down inflation, short-term interest rates would increase, and vice-versa. However, it usually takes the markets upwards of six months to react to the Fed’s moves, which leaves the markets to trade on their own accord.
As stated above, directly linked to the Fed are interest rates. The discount rate, the fees charged to banks for borrowing money, is extremely vital because it is directly linked to the cash flow and money supply of the country. Thus, there is an unique relationship between interest rates, bond prices and the stock market, and can be used to anticipate the markets direction.
Being able to follow industry leaders is also a good tool to use when analyzing the marketplace. With the help from the listed financial Internet sites above, investors can compare and contrast various groups and companies within a specific segment. With more than 200 industrial groups, many analysts believe that nearly half of a stock’s trading price is attributed to its specified group within that industry.
The final aspect surrounding the analysis of the broader markets comes from differentiating between the noise and the pertinent information inside the many economic reports released by the government, or related parties. Some of the most influential reports that may lead the markets in certain directions are the Unemployment Reports, Gross Domestic Product (GDP), Consumer Price Index (CPI), Producer Price Index (PPI) and Retail Sales.
Regardless of what path you take to learn and use the tools needed to become a successful trader, being knowledgeable and perceptive about the macro environment will help you succeed in the micro arena, when it comes to investing.
Check back soon as the next article will cover aspects of a basic approach to researching and analyzing the fundamentals of a stock and its encompassing attributes.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Monday, January 05, 2009
Who's Got the Hottest Electronics This Year? - January 5, 2009
The International Consumer Electronics Show (CES), produced by the Consumer Electronics Association (CEA), is the preeminent trade association promoting growth in the consumer technology industry.
CEA represents more than 2,100 corporate members involved in the design, development, manufacturing, distribution and integration of consumer electronics products. All profits from CES are reinvested into industry services, including technical training and education, industry promotion, engineering standards development, market research and legislative advocacy.
Held each January in Las Vegas, Nevada, the CES is a trade-only show in which its displays are not open to the public. In the past, numerous products have made their debuts here at the CES. Included are the VCR, introduced in 1970, the Camcorder in 1981, the CD player, also in 1981, DVDs in 1996, HDTV in 1998, and Microsoft’s Xbox in 2001.
This year, the International CES will have a trimmed down feel to it, as the recession has weighed heavily on electronic retailers. In fact, it is expected that there will be a 10% decline in attendance this year, or 11,000 less visitors from last year’s total.
The current economic condition has certainly taken its toll on the consumer electronic industry. last month, the CEA revised their previous forecast for sales in the 4th quarter from an increase of 3.5% to a putrid 0.1% growth rate.
Businesses surrounding the convention center have also been affected by the decrease in consumer confidence. Hotels, which are usually booked weeks in advance, are now offering special discounted rates to help fill the empty rooms remaining from the decrease in projected visitors.
With companies such as Sony Corp. (SNE), Cisco Systems Inc. (CSCO) and Panasonic Corp., all presenting this year, there will be substantially fewer exhibition booths this year.
Spanning over 30 product categories from various markets including audio, digital content creation and distribution, digital imaging, embedded technology, gaming and digital entertainment, high-performance audio & home theater, video, home networking, in-vehicle technology and wireless networks, this years CES will still provide have plenty of surprises presented.
Sony, for instance, will be unveiling their newest flat-panel TVs that provide smoother action scenes, better 3-D capabilities, along with internet connections that allows the owner to download movies, screen savers and other features directly to the TV itself.
As for Cisco Systems, the company plans to reveal its latest version of their wireless stereo system, which should most surely outperform the simple version of web radio players that the company’s Linksys division is currently selling.
Running from January 8-11, the CES will be at the forefront promoting the newest and latest electronic technologies for the upcoming year. "This is still the largest technology show we have in the U.S.," said Tim Bajarin of Creative Strategies in Campbell, Calif. "Attendance may be down, but its impact will be just as important as ever."
For more information on the stock and options markets check out the wealth of information at BetterTrades.
CEA represents more than 2,100 corporate members involved in the design, development, manufacturing, distribution and integration of consumer electronics products. All profits from CES are reinvested into industry services, including technical training and education, industry promotion, engineering standards development, market research and legislative advocacy.
Held each January in Las Vegas, Nevada, the CES is a trade-only show in which its displays are not open to the public. In the past, numerous products have made their debuts here at the CES. Included are the VCR, introduced in 1970, the Camcorder in 1981, the CD player, also in 1981, DVDs in 1996, HDTV in 1998, and Microsoft’s Xbox in 2001.
This year, the International CES will have a trimmed down feel to it, as the recession has weighed heavily on electronic retailers. In fact, it is expected that there will be a 10% decline in attendance this year, or 11,000 less visitors from last year’s total.
The current economic condition has certainly taken its toll on the consumer electronic industry. last month, the CEA revised their previous forecast for sales in the 4th quarter from an increase of 3.5% to a putrid 0.1% growth rate.
Businesses surrounding the convention center have also been affected by the decrease in consumer confidence. Hotels, which are usually booked weeks in advance, are now offering special discounted rates to help fill the empty rooms remaining from the decrease in projected visitors.
With companies such as Sony Corp. (SNE), Cisco Systems Inc. (CSCO) and Panasonic Corp., all presenting this year, there will be substantially fewer exhibition booths this year.
Spanning over 30 product categories from various markets including audio, digital content creation and distribution, digital imaging, embedded technology, gaming and digital entertainment, high-performance audio & home theater, video, home networking, in-vehicle technology and wireless networks, this years CES will still provide have plenty of surprises presented.
Sony, for instance, will be unveiling their newest flat-panel TVs that provide smoother action scenes, better 3-D capabilities, along with internet connections that allows the owner to download movies, screen savers and other features directly to the TV itself.
As for Cisco Systems, the company plans to reveal its latest version of their wireless stereo system, which should most surely outperform the simple version of web radio players that the company’s Linksys division is currently selling.
Running from January 8-11, the CES will be at the forefront promoting the newest and latest electronic technologies for the upcoming year. "This is still the largest technology show we have in the U.S.," said Tim Bajarin of Creative Strategies in Campbell, Calif. "Attendance may be down, but its impact will be just as important as ever."
For more information on the stock and options markets check out the wealth of information at BetterTrades.
What is the Current Health of Apple and its Founder? - January 5, 2009
Is Apple Inc. (AAPL) turning sour? In a report released earlier today, the major concerns within the company falls on the health of its founding member, Steve Jobs.
Diagnosed as a hormonal imbalance, doctors confirmed their reviews of the CEO’s tests that the main reason for his unexplained weight loss stems from the imbalance.
“As many of you know, I have been losing weight throughout 2008. The reason has been a mystery to me and my doctors,” Jobs stated. “A few weeks ago, I decided that getting to the root cause of this and reversing it needed to become my No. 1 priority.”
“Fortunately, after further testing, my doctors think they have found the cause, a hormone imbalance that has been ‘robbing’ me of the proteins my body needs to be healthy. Sophisticated blood tests have confirmed this diagnosis,” Jobs went on to add.
Concerns about his health first arose last year, as complications following a surgery in 2004 began to surface.
Another signal of his deteriorating health came last month as Apple announced that Jobs would not make a keynote speech at the Macworld conference held in San Francisco. Macworld, which is run by Apple, is a tech show that features the company’s new and innovated products soon to be released.
At the upcoming conference, Apple has stated that they will not present any new products at the show, but will introduce new applications for updates to their Mac desktops and software programs.
Apple enthusiasts were looking forward to Jobs presenting their newest product, the company’s netbook, a low-cost low-feature laptop computer that could provide substantial sales for the company.
“As software becomes the differentiating technology of this product category, people find that a hundred hardware variations presented to software developers is not very enticing,” Jobs said. “And most companies in this business do not have much experience in a software platform business. We’re extremely comfortable with our product strategy going forward, and we approach it as a software platform company, which is pretty different than most of our competition.”
Within a unique position that Steve Jobs is currently in, there are no other companies that can compare to the overall impact of a founder, or CEO, has on the day-to-day operations of a company. Apple, with mega-sellers such as Mac computers, iPods and iPhones, relies heavily on the perception of their founder to generate positive media relations.
In closing, the company’s board of directors released a statement this morning pertaining to the overall situation of their leader, citing that "Apple is very lucky to have Steve as its leader and CEO, and he deserves our complete and unwavering support during his recuperation. He most certainly has that from Apple and its Board."
By early afternoon, shares of Apple responding positively to the breaking news, adding nearly 4%, or $3.50, to trade at $94.25 per share. Over the course of several months, the company’s stock has taken a beaten amidst the current financial crisis. From the time the stock hits its 52-week high of $193 a share in late spring, shares of AAPL have slipped more than 51% since then.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Diagnosed as a hormonal imbalance, doctors confirmed their reviews of the CEO’s tests that the main reason for his unexplained weight loss stems from the imbalance.
“As many of you know, I have been losing weight throughout 2008. The reason has been a mystery to me and my doctors,” Jobs stated. “A few weeks ago, I decided that getting to the root cause of this and reversing it needed to become my No. 1 priority.”
“Fortunately, after further testing, my doctors think they have found the cause, a hormone imbalance that has been ‘robbing’ me of the proteins my body needs to be healthy. Sophisticated blood tests have confirmed this diagnosis,” Jobs went on to add.
Concerns about his health first arose last year, as complications following a surgery in 2004 began to surface.
Another signal of his deteriorating health came last month as Apple announced that Jobs would not make a keynote speech at the Macworld conference held in San Francisco. Macworld, which is run by Apple, is a tech show that features the company’s new and innovated products soon to be released.
At the upcoming conference, Apple has stated that they will not present any new products at the show, but will introduce new applications for updates to their Mac desktops and software programs.
Apple enthusiasts were looking forward to Jobs presenting their newest product, the company’s netbook, a low-cost low-feature laptop computer that could provide substantial sales for the company.
“As software becomes the differentiating technology of this product category, people find that a hundred hardware variations presented to software developers is not very enticing,” Jobs said. “And most companies in this business do not have much experience in a software platform business. We’re extremely comfortable with our product strategy going forward, and we approach it as a software platform company, which is pretty different than most of our competition.”
Within a unique position that Steve Jobs is currently in, there are no other companies that can compare to the overall impact of a founder, or CEO, has on the day-to-day operations of a company. Apple, with mega-sellers such as Mac computers, iPods and iPhones, relies heavily on the perception of their founder to generate positive media relations.
In closing, the company’s board of directors released a statement this morning pertaining to the overall situation of their leader, citing that "Apple is very lucky to have Steve as its leader and CEO, and he deserves our complete and unwavering support during his recuperation. He most certainly has that from Apple and its Board."
By early afternoon, shares of Apple responding positively to the breaking news, adding nearly 4%, or $3.50, to trade at $94.25 per share. Over the course of several months, the company’s stock has taken a beaten amidst the current financial crisis. From the time the stock hits its 52-week high of $193 a share in late spring, shares of AAPL have slipped more than 51% since then.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
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