Are banks using write-downs to game their numbers? originally appeared on BloggingStocks on Thu, 04 Oct 2007 14:38:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• The FDA said no to Pristiq, an experimental Wyeth (NYSE: WYE) drug to treat the symptoms of menopause, reported the Wall Street Journal.
• The $3.1B sale of General Motors Corporation's (NYSE: GM) Allison Transmission to Carlyle Group and Onex has stalled in the debt financing market, thanks to difficulties raising debt from investors, reported the Wall Street Journal's "Heard on the Street" column.
• LVMH Moet Hennessy Louis Vuitton (OTC: LVMUY) is expected to acquire Les Echos from Pearson (NYSE: PSO) for $331.9M, reported the Wall Street Journal.

• Time Warner Inc's (NYSE: TWX) AOL is entering the behavioral-targeting ad market by purchasing Tacoda, which uses "behavioral targeting" techniques to track Web surfers' habits, reported the New York Post.
• Cerberus Capital Management's acquisition of DaimlerChrysler AG's (NYSE: DCX) Chrysler unit could be completed on Monday or Tuesday of next week, reported the Detroit Free Press.

Newspaper wrap-up 7-24-07: Chrysler sale could be completed next week originally appeared on BloggingStocks on Tue, 24 Jul 2007 09:15:00 EST. Please see our terms for use of feeds.

The "Heard on the Street" column in last Tuesday's Wall Street Journal (registration required) talked about a growing trend of companies borrowing large amounts of money to pay dividends. When I started writing for BloggingStocks several months ago, one of the first pieces I wrote was called A rally of declining yields: Should you care? If you read that piece, you will get a good idea how I feel about dividends.

Let's take a logical look at the idea of borrowing money to pay a dividend: A company borrows money at an interest rate which, however low, will likely be substantially higher than what an investor would earn with a savings account (even if it is a high-yield account such as those offered by EmigrantDirect and ING Direct). So, assuming the investor puts the money in a savings account, he is effectively borrowing money at X% to invest it at X-2%. This is not a good deal.

But let's assume that the investor doesn't put it in a savings. Let's say he decides to put it in his favorite stock that he considers to be undervalued. Let's say he puts it in the stock that paid the dividend. If he does that, he will essentially have been charged a hefty tax to plow the money back into the company. This is also not a good deal.

In cases where a company's management believes the stock is undervalued and the company is financially stable, borrowing money to buy back shares can be a good way to increase shareholder value. But, in my opinion, borrowing money to pay a dividend never makes sense.

Borrowing money to pay a dividend: What's wrong with that? originally appeared on BloggingStocks on Sat, 31 Mar 2007 11:10:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• According to the Wall Street Journal (subscription required), citing people familiar with the matter, Community Health Systems Inc (NYSE: CYH) is near a deal to purchase Triad Hospitals (NYSE: TRI), which would break up an existing $4.5B private-equity buyout plan.
• The Wall Street Journal's "Heard on the Street" column reported that rumors are swirling that Infineon Technologies ADS (NYSE: IFX) will be chosen to supply the main chip to drive the upcoming iPhone from Apple Inc (NASDAQ: AAPL).

• The Business Standard reported that Reliance Industries is reportedly in advanced discussions with Nova Chemicals Corporation (NYSE: NCX), the plastics and petrochemicals firm, to form a joint venture.
• According to the U.K. Times, Barclays plc ADS (NYSE: BCS) will announce today its formal interest in buying Netherlands bank ABN Amro Holdings (NYSE: ABN) for a price of up to a little less than EUR60B, or EUR31.3 per share, according to reports.
• Dow Jones & Company (NYSE: DJ) is trying to buy the Financial News for GBP25M, the U.K. Times reported.
• The Sunday Telegraph reported that Coca-Cola Company (NYSE: KO) is planning a 'beauty tea' in conjunction with L'Oreal ADR (OTC: LRLCY), called Lumae.
• According to Google Inc's (NASDAQ: GOOG) official blog, it has acquired Adscape media. Terms were not disclosed.

Newspaper wrap-up 3-19-07: M&A in focus originally appeared on BloggingStocks on Mon, 19 Mar 2007 09:40:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• According to the Wall Street Journal's (subscription required) "Heard on the Street" column, JP Morgan Chase and Company (NYSE: JPM) is working on its growth without acquisitions, by bulking up its Hollywood business and its pension-advisory business.
• The Wall Street Journal reported this morning that China's economic-planning agency said it would allow Intel Corp (NASDAQ: INTC) to build a chip plant in the northeastern city of Dalian.
• The Financial Times (subscription required) reported that Citigroup Inc (NYSE: C) has raised its bid for Nikko Cordial by 25.9% to around $13.4B.

• CNet.com has learned that Microsoft Corporation (NASDAQ: MSFT) is close to acquiring privately held Tellme Networks, which a deal expected to be completed later this week.
• The U.K. Times reported that Warner Music Group Corp (NYSE: WMG) is struggling to justify raising its bid for rival EMI Group (OTC: EMIPY), because it does not believe it can risk an improved offer without having access to EMI's books.
• According to the Independent, Diageo plc ADS (NYSE: DEO) is expected to bid for Absolut vodka owners Vin & Sprit despite worries about competition.

Newspaper wrap-up 3-13-07: Microsoft to acquire Tellme Networks originally appeared on BloggingStocks on Tue, 13 Mar 2007 09:42:00 EST. Please see our terms for use of feeds.

• According to the Wall Street Journal, citing sources close to the situation, Las Vegas casino company Station Casinos Inc (NYSE: STN) has entered into a definitive agreement with Fertitta Colony Partners to be acquired by the company for about $5.5B and taken private.
• The Wall Street Journal's "Heard on the Street" column reported that many investors are getting cautious on REITs, saying "If Sam Zell is selling, I should too." The article advises to be cautious, and not to flood the REIT market, but not to be too worried by these signs.

• In more Sam Zell related news, the Chicago real estate billionaire who just sold his office development company for $39B wants to buy the Tribune Company (NYSE: TRB), according to the New York Times.
• Also according to the New York Times, Citigroup Inc (NYSE: C) is expected to name Gary Crittenden as its new CFO, replacing Sallie Krawcheck.
• According to Bloomberg, Dow Chemical Co. (NYSE: DOW) is expected to receive an LBO offer of up to $54B, or $60 per share, from a private equity consortium.
• According to the Sunday U.K. Times, EQT is close to acquiring Hilton Hotels Corporation (NYSE: HLT) Scandic Hotels for around $1B.
• The Associated Press, citing an Iranian State-run radio, is reporting that President Mahmoud Ahmadinejad said Iran will move forward with its nuclear program despite international demands to halt the uranium enrichment.

Newspaper wrap-up 2-26-07: Sam Zell interested in Tribune originally appeared on BloggingStocks on Mon, 26 Feb 2007 09:52:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that Microsoft Corp (NASDAQ: MSFT) has been ordered to pay $1.52B to Alcatel-Lucent (NYSE: ALU) for infringing patents on a fundamental technology for digital music.
• According to the Wall Street Journal's "Heard on the Street" column, shares of India's two largest private sector banking companies, Icici Bank Ltd. (NYSE: IBN) and HDFC Bank (NYSE: HDB), have tripled over the past three years. However, some investors are getting cautious on the stocks as India's central bank has taken tougher steps to rein in lending growth and stanch inflation.
• Barron's Online's (subscription required) "Weekday Trader" suggested investing in companies with modest dividend yields, but a strong cash position and business model, such as outsourcing player Paychex, Inc. (NASDAQ: PAYX), fast-food giant McDonald's Corp. (NYSE: MCD) and insurer Prudential Financial, Inc. (NYSE: PRU).

• According to German website Heise Online, Apple Inc (NASDAQ: AAPL) will exhibit at CeBIT, the European version of the CES expo, from March 15 through the 21. Apple will be exhibiting the iPhone, said the site. However, according to German website Computerwoche, Apple has denied that it is participating in CeBIT. (Both links in German)
  
• Business Week's "Inside Wall Street" column mentioned UnitedHealth (NYSE: UNH), Epix (NASDAQ: EPIX) and LJ International (NASDAQ: JADE) positively.
  
• Warren Buffet has stirred up interest in UnitedHealth by reportedly buying one million shares in the company.
• Small biotech Epix, which recently signed a deal with GlaxoSmithKline (NYSE: GSK), could double within a year, believe some experts.
• LJ International, which has already risen from slightly over $4 to over $11 since December, may still have room to rise, according to Albert Lee of Maxim Group, who has a $12 price target on the stock.
• Investor's Business Daily's "New America" column highlighted Spartan Stores (NASDAQ: SPTN), the 10th largest grocery distributor in the U.S., which has seen earnings growth in double and triple digits for nine of the past ten quarters.

Newspaper wrap-up 2-23-07: Apple at CeBIT? originally appeared on BloggingStocks on Fri, 23 Feb 2007 09:45:00 EST. Please see our terms for use of feeds.