Bank Of America

Today's capital raising move looks good on the surface. Bank of America sold 5.62 billion Construction Bank shares at 3.92 Hong Kong dollars -- that amounted to $2.83 billion in proceeds and a profit of about $1.13 billion on the stake sale, based on Construction Bank's initial offering price. (Bank of America now holds 16.6% of the Chinese bank.) But Bank of America sold that stake at a 12% discount to the stock's Tuesday close -- and that makes me nervous.

Why? Because it ought to be able to sell at the market price by breaking that sale into small lots and executing it over a relatively long period of time. Its decision to sell at such a huge discount hints at desperation. It is difficult to know what kind of financial shape Bank of America is in because it has not released financial statements following its merger with Merrill Lynch. At the end of September it had $11 of assets per $1 of equity, but when it bought Merrill it probably added a significant amount of debt and the potential for big asset write-downs.

I'd guess that Bank of America could use much more capital -- but just how much more it needs and where it will get that money is hard to know.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Does Bank of America have enough capital? originally appeared on BloggingStocks on Wed, 07 Jan 2009 11:41:00 EST. Please see our terms for use of feeds.

Last week I blogged on Britain banning Rockstar's Manhunt 2, owned by Take-Two Interactive (NASDAQ: TTWO) for the game's "unremitting bleakness and callousness of tone." I said that banning games stifles creative freedom and has the ability to destroy an industry -- from game makers to retailers, and, most importantly, consumers.

Well that's exactly what has happened folks.

Following bans in Britain and Ireland, as well as an "Adults Only" rating in the United States, GamesIndustry.biz has told us that Take-Two temporarily shelved Manhunt 2.

Manhunt 2 was scheduled for release on July 10 on the Sony Corp. (NYSE: SNE) PlayStation 2, PSP, and Nintendo's (OTC: NTDOY) Wii consoles. However, both Sony and Nintendo carry an Adults Only policy, which leaves little room for compromise. Even if the game were to ship with the AO rating, many retailers -- including Wal-Mart Stores (NYSE: WMT) -- will not put Manhunt 2 on the shelves.

Take-Two could still appeal the rating of a more toned-down version that fits the "Mature" rating for players 17 and older. However, the AP's Matt Slagle reports that the decision to suspend distribution of Manhunt 2 could actually boost demand, according to industry analysts. Colin Sebastian, an analyst at Lazard Capital Markets, tells Slagle that he doesn't believe the game will hurt Take-Two's bottom line in the long term, and he considers the recent controversy over the game to be great exposure. "It's free publicity," Sebastian said. "Consumer backlash is a risk, but at the end of the day if it's rated 'M' the retailers will take it."

Investor's didn't seem phased on the news. Shares of Take-Two Interactive were up for the week and closed +1.02% on Friday, to $20.82.

Manhunt 2 shelved by Take-Two's Rockstar Games originally appeared on BloggingStocks on Sun, 24 Jun 2007 16:10:00 EST. Please see our terms for use of feeds.