It has been widely anticipated that the EU would bring new antitrust charges against Intel (NASDAQ: INTC). The FTC and other US authorities are chasing the largest chip company in the world for similar reasons. South Korea has already fined Intel for anti-competitive behavior.
The theory behind the charges is that Intel induced PC companies and their retailers to use its chips and not those from rival AMD (NYSE: AMD). According to The Wall Street Journal, "The European Union launched new antitrust charges against Intel Corp., saying the chip giant paid rebates to a major retailer to encourage it not to carry computers using chips from smaller rival Advanced Micro Devices Inc ."
If the charges are true, it shows the extent to which a company of real size, like Intel, can be its own worst enemy. Microsoft (NASDAQ: MSFT) ran into similar problems a decade ago for being too aggressive killing off competition in the browser and media player markets.
The irony of Intel's legal bind is that it almost certainly did not need to pressure or give incentives to keep AMD in a distant second place. It had the balance sheet to keep margin pressure on AMD and the engineering prowess to offer better chips.
Arrogance and carelessness often go with being in first place. This time it appears that it has caught up to Intel.
Douglas A. McIntyre is an editor at 247wallst.com.
Advanced Micro Devices (NYSE: AMD) stock is down 6.6% in premarket trading after the company posted its seventh consecutive quarterly loss of $1.19 billion, or $1.96 per share, missing Wall Street estimates. The operating loss would have been 60 cents a share, heftier than the loss of 52 cents a share from analysts polled by Reuters Estimates. Following the report, AMD also announced that CEO Hector Ruiz would be replaced by COO Dirk Meyer. Ruiz will stay on as executive chairman.
The Wall Street Journal reports that Freddie Mac (NYSE: FRE) is considering raising capital by selling as much as $10 billion in new shares to investors. FRE stock is down again this morning after the recent wild swings in share price. This morning FRE shares are trading over 5.7% lower in premarket action.
Mattel Inc. (NYSE: MAT) shares rose nearly 4% in after-hours trading following second-quarter financial results. The toy maker's profit fell by nearly half, but results still beat Wall Street expectations. Global Barbie sales dropped off 6%.
Hector Ruiz, the CEO who almost ruined AMD (NYSE: AMD), is gone, moved up to the chairman's role. and replaced by the company's COO Dirk Meyer. According toThe New York Times, "Mr. Meyer, president and chief operating officer, is widely respected and admired by other A.M.D. technical employees and also has the confidence of Wall Street analysts." AMD lost another $1.2 billion in the latest quarter making the move almost essential to the firm's survival.
During the time Ruiz has been CEO, AMD has fallen behind Intel (NASDAQ: INTC) in the power and efficiency of its chips. While Intel made it to market with dual and quad-core processors, the AMD "Barcelona", meant to be their dog in the fight, was delayed.
Ruiz's colossal mistake was buying graphics chip company ATI and pushing his company's debt up to $5 billion. AMD now struggles to make its debt service.
Shareholders have been calling for Ruiz to step down for over a year. The AMD share price was above $40 just over two years ago. Now, it often trades below $7.
Ruiz will be remembered as a poor strategist who pulled his company into a precarious position. He is best gone. And, wont be missed.
Douglas A. McIntyre is an editor at 247wallst.com.
Nokia Corp. (NYSE: NOK) shares are up over 7.4% in premarket trading after the world's largest maker of handsets said second-quarter profit fell 61% to $1.75 billion, or 46 cents per share, while sales rose 4% to $20.87 billion. Excluding items, Nokia's profit rose 8% to $2.18 billion. Nokia beat estimates of earnings of 56 cents per share on $20.05 billion in revenue, according to Thomson Financial. The mobile phone maker slightly raised its forecast for the mobile phone industry, saying volume would grow 10% or more in 2008.
Continental Airlines (NYSE: CAL) are up again this morning after climbing 38% Wednesday with the rest of the airline stocks. Continental swung to a second-quarter loss, hurt by record high fuel prices and weakening economic conditions. Still the losses of $3 million, or 3 cents per share, or excluding one-time items totaled $25 million, or 25 cents per share, beat expectations of a loss of 49 cents per share.
Yum Brands (NYSE: YUM) shares are down 4.3% in premarket trading after it reported a second-quarter profit of $224 million, or 45 cents a share. Revenue rose to $2.65 billion from $2.37 billion a year ago. While this beat estimates, and while the company raised its earnings growth forecast for the full year to 12% from 11%, investors were concerned about rising food costs which hurt profit margins in the second quarter.
It seems that Apple Inc. (NASDAQ: AAPL)'s new 3G iPhone was sold out in Germany after less than a week. Deutsche Telekom AG's T-Mobile division sold 15,000 iPhones and it's not clear when Apple will be able to deliver more iPhones for the German market, Financial Times Deutschland reported.
After hitting a one-year high of $16.19 last July, the stock hit a one-year low of $4.53 yesterday. AMD opened this morning at $4.90. So far today the stock has hit a low of $4.68 and a high of $4.95. As of 1:55, AMD is trading at $4.93, up 21 cents (4.4%). The chart for AMD looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a January covered call at the $5 level. A covered call is an options position that combines the purchase of stock with the sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 30% return in just 6 months if AMD is above $5 at January expiration. AMD would have to fall by more than 21% before we would start to lose money.
AMD hasn't been below $3.90, which would be the break-even point, at all in the past year and has shown support around $4.50 recently. This trade could be risky if today's encouraging Intel results are a result of them taking even more market share from AMD, but even if that happens, this position could be protected by the 30% downside protection on this trade.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in AMD. He does control bullish hedged positions in INTC.
Proving the rule that large mergers rarely work out as planned, computer chip giant Advanced Micro Devices (NYSE: AMD) will write down $880 million of the purchase cost of graphic chip giant ATI, the company AMD bought over a year ago. Add that to the fact that AMD's product delays have cost it market share, and you can be sure that competitor Intel Corp. (NASDAQ: INTC) has been singing a happy tune lately.
AMD is expected to take $32 million in restructuring costs due to employee severance costs resulting from last September's job cuts, and record a loss of $0.52 per share on revenue of $1.45 billion come tomorrow's earnings release. This would be in line with analyst expectations, but at the same time, may not please investors much. AMD management is also expected to give conservative guidance for the current quarter due to soft seasonality and the overall U.S. economic environment, since so many of its products are consumed here.
AMD really needs to get out a price competitive, cutting-edge processing chip for the laptop PC that can compete with Intel's Core 2 Duo product and the Centrino wireless offering. Laptops are the hottest PC category and AMD is letting Intel have all the fun. Its current dual-core chip lineup just can't compete and requires too much energy to operate. I hope analysts nail down AMD's exact road map and time lines for these products, which it needs if it expects to be competitive at all during the remainder of 2008. Right now, it's not even close.
Intel (NASDAQ: INTC) delivered extremely good earnings, surpassing what most analysts thought the big chip company would deliver. Global notebook sales were the key source of the company's success.
With 80% of the world's PC and server chip sales, Intel has little to compete with but itself. That may prove to be its undoing. Late word is that Intel is about to be hit by major antitrust charges in Europe. According toThe Wall Street Journal, "European regulators are preparing to file new antitrust charges against Intel."
The case against Intel -- the same as the ones being brought in the U.S. and South Korea -- is that the company took a number of actions to shut out sales of chips and computers with chips from smaller competitor AMD (NYSE: AMD).
Intel has begun to take on the role that Microsoft (NASDAQ: MSFT) has a decade ago. It has become so big that authorities are questioning how it got to its place of dominance. In essence, regulators are saying Intel cheated.
While Intel may suffer fines and other sanctions, the cases against the company may be the only chance AMD has of surviving. With over $5 billion in debt, operating losses, and falling gross margins, reparations from Intel's antitrust cases are probably its only life preserver.
People familiar with the issue said that European regulators are gearing up to file new antitrust charges against Intel Corporation (NASDAQ: INTC). The charges, the Wall Street Journal reported, would allege Intel gave major European retailers an incentive not to sell computers that use Advanced Micro Devices Inc (NYSE: AMD) chips.
OTHER PAPERS:
The New York Times reported that News Corporation's (NYSE: NWS) New York Post and The Daily News, owned by Mortimer Zuckerman, are exploring a print pact and have been in talks to find ways to combine some business functions of the papers, according to people briefed on the matter.
Three people familiar with the matter said that the SEC subpoenaed Wall Street investment banks including The Goldman Sachs Group Inc (NYSE: GS), Deutsche Bank AG (NYSE: DB) and Merrill Lynch & Co Inc (NYSE: MER) in its hunt and crack down on suspected manipulation of Bear Stearns and Lehman Brothers Holdings Inc (NYSE: LEH) shares. Bloomberg reported that two of the people said the SEC, which yesterday curtailed short selling in financial stocks, is looking for e-mails and trading records and is also examining whether securities firms have "adequate controls" to deal properly with misconduct.
TheStreet.com's Jim Cramer says our problems are so widespread, he sees lots more IndyMacs before we're out.
You don't need me to tell you it's awful out there. You don't need me to tell you that there's no quick fix for any of these things. But what might help you understand why it feels so bad this time is that I have never, in my career, seen so many companies go off track at the same time. This is one unbelievable moment, and it is made more horrible by the day as companies' stocks just get pummeled, causing people to then question the very viability of the companies involved.
First, obviously, are Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take). We don't know what will happen, but we do know that their futures are much darker than their pasts. Their best hope: a Democrat becomes president and shows the usual love to both. But as investments, they are pretty much perma-losers going forward. The losses are that heavy. Yes, it is true that two years from now they will be better, but will the government let them limp through to that? View them as calls on a Democratic win.
We all know that Citigroup (NYSE: C) (Cramer's Take), Wachovia (NYSE: WB) (Cramer's Take), Washington Mutual (NYSE: WM) (Cramer's Take) and National City (NYSE: NCC) (Cramer's Take) are in trouble. Bank of America (NYSE: BAC) (Cramer's Take) says it isn't in trouble, but obviously the market doesn't believe management because the stock failed to rally when it said its dividend was safe. Any short-selling hedge fund could hire 30 actors and have them line up at a Washington Mutual or two and get a bank run going. Then we would have to hear about a "hasty" Treasury department plan to bail out WM. Hasty? How can these guys not see it coming?
TheStreet.com's Jim Cramer says the news on Fannie and Freddie is great, but we still have earnings looming ahead.
Chance to sell? Every time has been a chance to sell. Every big futures lift. I struggle to think how this time will be different. In 24 hours, the Fannie (NYSE: FNM) (Cramer's Take) and Freddie (NYSE: FRE) (Cramer's Take) fiasco will be behind us. Instead we will be faced with more earnings, and the earnings, while conceivably not horrid -- how bad can Intel's (NASDAQ: INTC) (Cramer's Take) be given the destruction of AMD (NYSE: AMD) (Cramer's Take)? -- won't be great, either. The bulls' best hope is a rally that was put off from Friday after GE's (NYSE: GE) (Cramer's Take) good numbers that showed lots of businesses doing well.
All last week I was picking at stocks, trying to build positions in names I like on the way down.
As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from Alcoa (NYSE: AA) and General Electric (NYSE: GE) kicking things off last week, here's a look at what Wall Street is expecting from many of the companies scheduled to report this coming week.
Analysts surveyed by Thomson Financial are expecting the following companies to report a rise in earnings when compared to the same period of the previous year.
Nucor Corp. (NYSE: NUE): $1.80 EPS (36.6%) on sales of $6.4 billion (+53.0%)
Google Inc. (NASDAQ: GOOG): $4.74 EPS (24.9%) on sales of $3.9 billion (+41.6%)
Nokia Corp. (NYSE: NOK): 56 cents EPS (23.2%) on sales of $19.9 billion (+17.8%)
CSX Corp. (NYSE: CSX): 90 cents EPS (21.1%) on sales of $2.9 billion (+12.8%)
Altera Corp. (NASDAQ: ALTR): 27 cents EPS (18.5%) on sales of $346.7 million (+8.4%)
IBM (NYSE: IBM): $1.82 EPS (+17.6%) on sales of $25.9 billion (+9.0%)
eBay Inc. (NASDAQ: EBAY): 41 cents EPS (17.1%) on sales of $2.2 billion (+18.0%)
It is not very many chips, but it means a great deal, especially from a PR standpoint. Intel (NASDAQ: INTC) has taken the processor franchise at Dreamworks from smaller rival AMD (NYSE: AMD). Dreamworks indicated that the Intel products worked much better, a public slap at the incumbent.
According toThe Wall Street Journal, "DreamWorks Animation said the resulting increase in computing power would substantially shorten the time needed for many computing chores and aid the studio's planned shift next year to 3-D animation." Given how good the press is for Intel, it should be giving the chips to Dreamworks for free. Perhaps that is how it got the contract.
Intel's new eight-core chips are extremely powerful and this should be of real benefit to Dreamworks.
The news is another demonstration of how bad things are at AMD. The company still has over $5 billion in debt and barely breaks even on an operating basis. Its shares are just above $5. In 2006, they were above $40.
AMD can ill afford having its name on the front page matched with another customer loss.
Douglas A. McIntyre is an editor at 247wallst.com.
Today felt like a traditional summer Monday with plenty of market winners and losers and the general sense that it was a wash day. So the Saudis agreed to boost production, but oil still rose to near $137/barrel today in a move that is becoming all too familiar. The markets are getting ready for the two-days before the FOMC announcement on the rate decision, so you can expect the talking heads to come out of the woodwork ahead of this. Here were today's unofficial closing bell levels:
Circuit City Stores, Inc. (NYSE: CC) is down as analysts and others are doubting whether or not the company will allow itself to be acquired. We saw a drop early on And shares were down 20% to $3.42 in the final minutes today.
Investors are taking their money out of hedge funds more now that at any time over the past 10 years, according to the Wall Street Journal. Firms are bracing for the end of June when the next big wave will hit.
First it was a demand for management changes, and now shareholders, including one time director Eli Broad and fund managers Shelby Davis of Davis Selected Advisors and Bill Miller of Legg Mason Inc (NYSE: LM), are again upset with American International Group Inc (NYSE: AIG) and want changes in the boardroom as well, the Wall Street Journal reported.
Spotlight Capital is increasing pressure on Chico's FAS Inc (NYSE: CHS) and said it has been in touch with 25 major shareholders in order to oust CEO Scott Edmonds and unseat board member John Burden, who are accused of having a conflict of interest, the New York Post reported.
WEB SITES:
Advanced Micro Devices Inc (NYSE: AMD) denied reports certain of its new dual-core chip, code-named Kuma, have been canceled, according to CNet. A spokesman for the company said that the launch of Kuma, scheduled for the second half of 2008, remains on track.
Proving the rule that large mergers rarely work out as planned, computer chip giant 
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As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from .gif){kind=logo}
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