Back in the mid 1970s, Paul Allen cofounded Microsoft (NASDAQ: MSFT). Since then, he has bought many nice toys (such as luxury yachts and sports teams), as well as made investments in a variety of companies. Unfortunately, his investment record has been spotty (perhaps he should have focused on the toys instead?)

Now, it looks like Allen will take the biggest loss of his investment career; that is, in Charter Communications (NASDAQ: CHTR). In all, he has committed $7 billion to the firm.

As each month passes, more and more companies get into the kind of trouble that pushes them toward Chapter 11 or insolvency. Some of the companies that hit that point several months ago include Sirius XM (NASDAQ: SIRI) and Charter Communications (NASDAQ: CHTR).

In the next several months two or three large companies could be added to the list.

Advanced Micros Devices (NYSE: AMD) posted a narrow loss last quarter compared with the same quarter a year ago, but a third of its revenue disappeared. If PC and server sales get worse, its sales could shrink faster than the company can cut costs. The firm's gross margins are dropping fast and AMD has long term debt of over $4.7 billion.

Citigroup (NYSE: C) still faces the prospects that it could be nationalized if it posts more huge losses in the first quarter. Last week, its market cap dropped to $17 billion. A massive capital investment from the Treasury could wipe that equity out.

General Motors (NYSE: GM) may seem like an obvious choice, but its shares could go to zero faster than investors think. If the UAW or creditors walk away from restructuring talks, GM's attempt to cut its costs to get more government assistance based on a plan to be submitted on March 31 would be ruined.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Analyst upgrades:

• Standard Pacific(NYSE:SPF) was upgraded to Buy from Neutral at UBS on valuation. The firm lowered its target to $3 from $3.25.

Analyst downgrades:

• UBS downgraded FPL Group (NYSE:FPL) to Neutral from Buy on valuation and raised its target to $50 from $48.
  
• Citigroup downgraded Charter Comm (NASDAQ:CHTR) to Sell from Buy to reflect Charter's increasing probability of financial distress. The firm lowered its target to 5c from $1.
  
• B. Riley downgraded UCBH Holdings (NASDAQ:UCBH) to Neutral from Buy on valuation.
• Dow Chemical NYSE:DOW) was cut to Equal Weight from Overweight at Barclays.
  
• Honeywell (NYSE:HON) was lowered to Hold from Buy at Argus.
  
• Brean Murray downgraded California Water Service (NYSE:CWT) to Hold from Buy.

Analyst initiations:

• Standpoint Research believes Jacobs Engineering's (NYSE:JEC) relationship-based business model differentiates it from peers. The firm initiated shares with a Buy rating and has a 3-5 year price target of $70-$80.
• Pali thinks American Eagle's (NYSE:AEO) spring product line is improved and that shares already price in weak 2009 results. Shares were assumed with a Buy rating and $13 target.
  
• B. Riley started Watsco (NYSE:WSO) with a Neutral rating and $40 target and believes shares are close to fair valuation.

Charter Communications (NASDAQ:CHTR) is one of the largest cable companies in the US. It is controlled by billionaire Paul Allen. Like a lot of cable firms, it took on buckets of debt as its improved its infrastructure and bought out other companies in the industry.

Charter's problem is that its debt is now so huge that it can barely operate. According to Barron's, Charter has hired Lazard to help it work out a restructuring of its balance sheet. The firm has over $21 billion in long-term debt and not enough cash flow to handle debt service.

But, Charter bringing in Lazard is not the real story. It is what managements that went for maximum debt for maximum expansion are doing to their common shareholders, especially in an economic environment where credit is impossible to come by.

Charter's shares now trade at $.13, down from a 52-week high of $1.68. Less than two years ago, the stock was close to $5. And, there is only one way Charter is going to solve its problem. It will have to hand the company over to its creditors and leave common shareholders with nothing.

Investors in Sirius (NASDAQ:SIRI), Level 3 (NASDAQ:LVLT), and several other large companies that went nuts on debt are about to go through the same process. With refinancing out of the question, selling shares in those companies is the only way to go, even if all an investor gets is pennies.

It is better than getting nothing.

Douglas A. McIntyre is an editor at 247wallst.com.

The focus of last week's preview was on oil and energy companies, and we saw that big oil had a good week, reporting better-than-expected results and record profits driven by high prices in the third quarter. Energy-related companies are well represented again this week and expectations in general remain high.

Early in the week, analysts surveyed by Thomson Financial anticipate that the big earnings gainers will include EOG Resources Inc. (NYSE: EOG), Anadarko Petroleum Corp. (NYSE: APC), and Cimarex Energy Co. (NYSE: XEC), which are expected to post profits of $2.24 per share (up 64.7% from a year ago), $1.48 per share (up 52.7%) and $2.26 per share (up 61.1%) respectively. All three of them have offered positive surprises in recent quarters, and analysts on average recommend buying EOG and Anadarko. Other expected big earnings gainers early in the week include Forest Oil Corp. (NYSE: FST), Pioneer Natural Resources Co. (NYSE: PXD), Comstock Resources Inc. (NYSE: CRK), and MasterCard Inc. (NYSE: MA). The earnings of phosphates producer Innophos Holdings Inc. (NASDAQ: IPHS) are expected to have risen 92.3% to $3.37 per share. Innophos beat estimates in the previous quarter by a whopping 210%, and analysts have been impressed with Innophos's lack of debt and pricing gains despite the slowing economy, so, on average, they recommend buying IPHS.

Also early in the week, analysts expect Goodyear Tire & Rubber Co. (NYSE: GT), Kaiser Aluminum Corp. (NASDAQ: KALU), and Oshkosh Corp. (NYSE: OSK) to report that their profits fell 52.9% to $0.33 per share, 45.1% to $0.67 per share, and 41.2% to $0.67 per share, respectively. These companies have tended to beat estimates in recent quarters, and the consensus recommendations of analysts are to buy them. However, PMI Group Inc. (NYSE: PMI), one of the largest private mortgage insurance providers in the U.S., is expected to take another hit as the housing slump drags on. The California-based company is expected to have widened its net loss from $1.04 per share a year ago to $2.43 per share in the most recent quarter. Its shares are down 84.5% from a year ago, and have been trading recently near their 52-week low.

Charter Communications (NASDAQ: CHTR) raised another $1 billion in junk bonds. That may not help. The cable company is a potential candidate for a Chapter 11 filing.

According to The Wall Street Journal, "Rating company Standard & Poor's affirmed its single-B-minus credit rating on Charter, but revised the loss-making company's outlook to negative from stable due to increased concerns about its liquidity."

It is amazing that a company in such bad shape could raise money at all. The firm is controlled by billionaire Paul Allen. It has $19 billion in debt already. In the December quarter, the company had only $85 million in operating profit on $1.553 billion. Debt service in the quarter was $464 million.

Charter has to spend the money to upgrade its network the same way that other cable companies are. Competition from telecom fiber offering and satellite TV are making the cable industry's life harder. Charter does not have access to the kind of capital it may need because its financials are stretched so thin.

The company's stock has fallen from a 52-week high of $4.93 to $0.93. If Charter sees any fall-off in operating income, the stock could go to zero.

Douglas A. McIntyre is an editor at 247wallst.com.

Short sellers trading stocks listed on Nasdaq made big bets against cable and financial shares, according to data from January 15. The numbers compare to short interest in the same companies on December 15, 2007.

The short interest in cable company Charter Communications (NASDAQ: CHTR) moved up 4 million to 99.3 million. Charter's stock has fallen close to $1. It carries $19 billion in debt and there is a growing concern that operating profits will not cover interest. Controlling shareholder Paul Allen may have to put more debt into the company.

Short interest in Comcast (NASDAQ: CMCSA) rose almost 600,000 shares to 45.1 million. After hitting a record high last year, shares of the nation's largest cable company have fallen one-third on concerns that large telephone companies will take its TV and broadband subscribers with their new fiber-to-the-home products.

Short interest in E*Trade (NASDAQ: ETFC) moved up 9.9 million shares to 91.2 million. The market is obviously willing to bet that there are more problems with the company's balance sheet. Short interest in healthier rival TD Ameritrade (NASDAQ: AMTD) fell 5.1 million to 8.6 million shares. The market is not shorting the discount brokerage industry, just the weakest company in the group.

Douglas A. McIntyre is an editor at 247wallst.com.

Cable stocks have fallen sharply and most trade near 52-week lows, but that is not keeping short sellers from continuing to believe that they could go lower. The short interest in Comcast (NASDAQ: CMCSA) and Charter (NASDAQ: CHTR) went up on December 14 compared to November 30 according to data from Nasdaq.

The slide in cable shares began around mid-year, when comments from Comcast indicated that the new TV-over-fiber products from telecom companies like Verizon (NYSE: VZ) were starting to take cable customers. Up until recently, cable was able to market voice, TV,and broadband as one package into the home. The telephone companies could not match that. But fiber installations have changed the picture, and competition is fierce.

Cable companies are starting to see slowing growth in their subscriber bases. That could push them to drop rates, and it is forcing them into capital expenditures to improve the speed of their own networks. Both moves put pressure on earnings.

TheStreet.com's Jim Cramer says this major player's lowered guidance shows why its whole sector is uninvestible.

Is it EchoStar (NASDAQ: DISH) (Cramer's Take)? Or is it foreclosures? Is it DirecTV (NYSE: DTV) (Cramer's Take) or is it bills that are too high? Is it Verizon (NYSE: VZ) (Cramer's Take) or is it house poor fears?

We will debate the Comcast (NASDAQ: CMCSA) (Cramer's Take) blowup -- it just cut its forecasts for 2007 sales, new subscribers and cash -- for a long time. Trying to figure out how a monopoly utility that we used to regard as a utility that could no more be shut off than Con Ed, has become a totally discretionary competitive item that needs to be sold and can't be pulled.

The implications either way show you the limits of this former wonder industry. For all of the years I have been in the business, investing in cable stocks worked. The companies always grew with consistent cash flow and that was enough. They were utilities that always talked about how dividends weren't tax-advantaged and instead focused on the broad expansion and cash flow growth.

Charter Communications (NASDAQ: CHTR) is the weakest of the big cable companies. It has $19 billion in debt and most operating earnings to cover the interest. While its larger rivals may be able to weather a tough time as the telephone companies begin to take customers with their new "triple play" products, Charter may not make it.

Yesterday, Comcast (NASDAQ: CMCSA), the largest cable company, came out with earnings that showed its growth in digital cable subscribers was not moving up at the rate that it had in earlier reporting periods. With its VoIP offering it was able to steal telecom customers by offering VoIP, broadband, and TV bundled together. But, the telephone companies are putting in fiber systems that are allowing them to match those offerings.

Charter's shares fell from $2.50 to under $2 yesterday on the poor earnings out of Comcast.

Charter's stock price is now down from a 52-week high of almost $5. With its market cap well under $1 billion and a debt load that could crush that company, it is a real question whether the company can stay out of bankruptcy court. It does not have the capital to match the marketing dollars from the large telephone companies and certainly lacks the capital to upgrade its infrastructure to stay in the game.

Douglas A. McIntyre is an editor at 247wallst.com.

Visit AOL Money & Finance for more earnings coverage

MOST NOTEWORTHY: SuperValu, SunPower, LKQ and Charter Comm were today's noteworthy initiations:

• Banc of America started shares of SuperValu Inc (NYSE: SVU) with a Sell rating and $34 target as they believe the company will struggle to modernize its store base and reset its pricing to more competitive levels over the next 12 months.
  
• William Blair initiated SunPower (NASDAQ: SPWR) shares with an Outperform rating, citing the company's large market opportunity and strong technology/market positioning.
  
• LKQ (NASDAQ: LKQX) was started at Deutsche Bank with a Hold rating and $35 target. The firm believes the company's growth projections are priced into shares.
  
• JP Morgan initiated Charter Communications (NASDAQ: CHTR) with an Overweight rating, as they expect the company to be able to refinance its maturing debt over the next five years and generate attractive returns.

OTHER INITIATIONS:

• B. Riley started Wsfs Financial Corporation (NASDAQ: WSFS) with a Buy rating and $69 target.
  
• Bear initiated Commercial Vehicle Group (NASDAQ: CVGI) with a Peer Perform rating and Tenneco Inc (NYSE: TEN) with an Underperform rating.
  
• Cowen started Micrus Endovascular Corporation (NASDAQ: MEND) with an Outperform rating.

In a filing with the SEC, billionaire Paul Allen has mentioned that he may want to take cable firm Charter Communications (NASDAQ: CHTR) private.

It is hard to see how he could manage that. The company has over $19 billion in debt and a market cap of over $1 billion. In the trailing four quarters, the company has only had about $550 million in operating income.

Allen will not be able to refinance the debt at better rates in such a tough credit environment. His management at Charter has spent the last two years restructuring the balance sheet to improve debt service. And, they have done a good job, so the payment picture for that pool is not going to get any better.

Selling the company would probably be hard. Even with some savings, no other large cable company will be able to offset the need to come up with $25 billion or more to buy a company with $1.5 billion in revenue.

Unless Allen wants to pay hundreds of millions of dollars each year to make sure that Charter does not default, the company isn't going private.

For broadband providers such as Charter Communications (NASDAQ: CHTR), EarthLink (NASDAQ: ELNK), Time Warner Cable (NYSE: TWC), and Virgin Media, its necessary to have a portal. However, it's not cheap to build this technology -- or keep up with the latest innovations.

Well, it's a big opportunity for Synacor, which has a turnkey portal platform. And now the company plans to go public.

Synacor's system is highly flexible. A customer can allow for subscriber personalization, video, premium services, and so on. There are also extensive relationships with content providers, like CNN, CinemaNow, Fox Sports Interactive Media, MLB Advanced Media, and NASCAR.

The business model includes subscriber-based revenues as well as search monetization, which involves a deal with Google (NASDAQ: GOOG). From 2004 to 2006, revenues increased from $2.3 million to $26 million. Although, there was a loss of $2.2 million last year.

The lead underwriters on the IPO include Deutsche Bank Securities and Bear Stearns (NYSE: BSC). The proposed ticker symbol is SYNC. You can find the prospectus on the SEC website. Also, check out more recent IPO filings.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

The market smarted today with its 280 point drop, but as MarketWatch pointed out, it was only off .7% for the week.

The trouble for a lot of investors is that averages don't mean much if you are in the wrong stock.

Some big name, mega-volume stocks took on water like the RMS Lusitania after it was torpedoed off the Irish coast.

Stocks that provide high-speed internet infrastructure had substantial losses. Charter (NASDAQ: CHTR), the cable firm, has fallen fell from $4.14 to $3.00 this week. Big Band Networks (NASDAQ: BBND) went from $14 to $10. Limelight Networks (NASDAQ: LLNW), another IPO in the industry fell from $17 to $14.50.

Companies in the tech sector that are perceived as already weak took big dives as well. Motorola (NYSE: MOT) was above $17 at the beginning of the week. It dropped to $16.35 today. AMD (NYSE: AMD) went from over $14 to $12.85. Yahoo! (NASDAQ: YHOO) was above $23.60 early in the week. It hit $22.90 today. These stocks are already near their 52-week lows.

In a tough market, those companies viewed as being already in difficult straights often sell-off more than the rest of their industries. It seems that their recoveries appear less certain.

Mortgage companies are not even worth writing about. Some have lost 50% of their value. American Home Mortgage (NYSE:AHM) lost almost all of its. But, the fall-out in financial stocks is far from over.

The market thinks that Bear Stearns (NYSE:BSC) is holding more than its share of weak debt and debt derivatives. If that is true, the stock could be back to its late 2002 low of $54. That means that its value would fall another 50%. Hard to imagine, but entirely possible.

Investors in stocks that are dropping are in a panic now. They have the weekend to read the tea leaves, sweat it out at night, and hope that Asia rallies early Monday.

If the Nikkei and Shanghai Composite signal that the fear has moved around the world.

Well...

Douglas A. McIntyre is a partner at 247wallst.com.

Cable company Charter (NASDAQ: CHTR), controlled by billionaire Paul Allen, has staged a recovery of sorts. After being on the dead pool list for several years due to a huge debt load and large losses, the company appears to be on the mend. Optimistic investors have taken the stock up 250% over the last year, and at one point recently it had risen over 300%.

In the last quarter, Charter's revenue rose 8% to $1.43 billion. The company is riding the same wave of demand for high-speed internet access and VoIP that has fueled earnings at Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC).

But, Charter will announce earnings on August 2, and at least some portion of the market is prepared to bet that earnings not be enough to support the stock's run-up. The increase in shares short in the company was the second largest of all Nasdaq stocks for July, rising 12.6 million shares to 103.7 million.

The bet against Charter is simple. The company has $19.2 billion in debt and tremendous debt service charges every quarter. A drop in operating income could damage the company's ability to stay current, and that could really send shares south.

Douglas A. McIntyre is a partner at 24/7 Wall St.