Yesterday could have been the end of the NBA season, but the Los Angeles Lakers forced a game six in Boston -- not so much by winning; more by having a "refuse to lose" finish that they could not muster before. I am quite sure David Stern is fine with that outcome. ESPN, and ABC television owned by Walt Disney (NYSE: DIS) must be ecstatic. The NBA officials will earn another paycheck, and the sponsors? They are praying for a game seven for sure!
Yesterday, prior to the game, I posted Sunday Funnies: Lakers/Celtics -- NBA business success, and dedicated much of the word flow to all the clamoring about NBA officiating and reasons why the game had issues. Today is all the about the cash.
While the Super Bowl is the hugest of events, an NBA Finals is a saga with twists and turns, and this one so far has had many. The Lakers face insurmountable odds of winning two games in Boston so they have been as much as counted out already.
Laker star and NBA Most Valuable Player Kobe Bryant has posed the most interesting perspective on the challenge his team faces that I can ever remember. He said, prior to the game, that since he did not go to college he viewed his situation like making the Elite Eight referring to Division I college basketball March Madness. He said, you just have to feel grateful you are there and know that you have to win three games to win the tournament.
Starting with an aggregate of recent airlines news:
Continental Airlines (NYSE: CAL) said it would cut 3,000 of its 45,000 jobs, about 6.5%, and cut capacity 11% in the fourth quarter. The company will eliminate 67 planes and the company's chief executive and president say they will not take a salary for the rest of this year and will decline bonuses.
Delta Airlines (NYSE: DAL) May traffic rose 4.2% from the year-earlier month to 10.51 billion revenue passenger miles. Delta's May capacity increased 1.5% to 12.67 billion available seat miles. Load factor, or the percentage of seats filled with passengers, in May rose to 82.9% from 80.9%.
US Airways Group Inc. (NYSE: LCC) said its May mainline traffic rose 0.6% to 5.39 billion revenue passenger miles from last year. May mainline capacity was flat at about 6.54 billion available seat miles. Mainline load factor in May rose to 82.3% from 81.9% a year ago. It also said Wednesday it is cutting up to 1,100 more jobs, about 3% of its workforce.
If the world comes to an end tomorrow, at least day traders will have found another way to make or lose money. E*Trade (NASDAQ: ETFC) has found another platform for people to buy and sell stocks. They can use their RIM (NASDAQ: RIMM) BlackBerry.
According to the AP, E*Trade "is giving its account holders an application that will let them get real-time stock quotes and trade on their phones." Will wonders never cease?
Since the BlackBerry is getting more and more competition from firms like Apple (NASDAQ: AAPL) and Nokia (NYSE: NOK), it is probably nice that there is one more thing the device can do. But, the news is probably bigger for E*Trade, which has had some hard times and is in competition with larger and more well-funded discount brokers.
Beyond anything else, it is just a sign of the times. The PC was the king of internet use for years. Now little portable devices that use cellular connections can do everything from display a movie to operate as a GPS.
How long will it be before the BlackBerry and other devices will have enough intelligence to trade stocks without their owner's permission?
Douglas A. McIntyre is an editor at 247wallst.com.
Going into 2008, it's been an extreme experience for online brokers. There has been considerable volatility in equities, with the major averages falling an average of 10%. What's more, home prices remain depressed.
So, for a company like optionsXpress (NASDAQ: OXPS), which relies heavily on the retail investor, it's been a challenge. Yet, the company somehow keeps growing.
In Q1, profits increased 12% to $23.8 million, or $0.38 per share. Revenues were up 11% to $60.8 million.
Basically, optionsXpress continues to be effective with customer acquisition, especially with its broad tools and educational resources. It also helps that its competitors – such as E*TRADE Financial Corporation (NASDAQ: ETFC) – are suffering.
TheStreet.com's Jim Cramer says the good stuff out there -- and there's a lot of it -- will keep us going up.
How high can we go? That's pretty much the only question worth asking after you put in a bottom, as we did after the Bear Stearns (NYSE: BSC) (Cramer's Take) collapse.
Nobody's talking about a new bull market. But let me give you some thoughts about what has happened in the past few weeks to make it so that you could become more positive.
First, we went down so much because the systemic risk in the biggest part of the S&P, the financials, was overwhelming. It is why we "overcorrected" because the market feared -- and shorts pressed their bets -- that the following institutions could go under: Bear Stearns, Washington Mutual (WM) (Cramer's Take), Wachovia (WB) (Cramer's Take) -- yes, Wachovia, because of the miserable buy of what turned out to be a really reckless lender, Golden West -- Lehman Brothers (LEH) (Cramer's Take), Merrill Lynch (MER) (Cramer's Take), Citigroup (C) (Cramer's Take), National City (NCC) (Cramer's Take), Capital One (COF) (Cramer's Take) and even Wells Fargo (WFC) (Cramer's Take). Fannie (FNM) (Cramer's Take) and Freddie (FRE) (Cramer's Take), too.
TD Ameritrade Holding Corporation (NASDAQ: AMTD) reported earnings for its second fiscal quarter yesterday, and they were pretty decent for the most part -- some might have thought that investors were completely shunning the market because of all the volatility going on, but TD Ameritrade's results show that a broker can still make money in such a challenging climate.
Even so, overall revenues declined 3% to $623 million. While transaction-based revenues also declined, it should be noted that average client trades per day did increase 23% to 312,000. That's an important measure when talking about brokers such as TD Ameritrade, or competitors such as E TRADE Financial Corporation (NASDAQ: ETFC) and The Charles Schwab Corporation (NASDAQ: SCHW). Earnings per share really shined, rising 35% to $0.31 per diluted share.
TD Ameritrade is sticking to its earnings guidance of a "midpoint forecast of $1.32." Of course, I'd like to see raised guidance, but a reaffirmation is certainly better than a reduction in guidance. Besides, I have to go back to the challenging climate concern -- if TD is happy to keep the forecast right now, then this is definitely positive. Investors would probably do well to at least investigate the brokers. When the economy snaps back, they should rally higher from these levels. TD Ameritrade, while not right up against a 52-week high, actually isn't that far from it, interestingly enough.
Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.
As Portfolio.com so eloquently stated, President Bush has "Lyndon Johnson's war and now Herbert Hoover's bank runs. Other than that, it's going well."
With the high-profile collapse of The Bear Stearns Companies Inc. (NYSE: BSC) and questions surrounding the liquidity of other banks, some, like Jim Cramer, are urging people to relax and not rush to withdraw money from bank and brokerage accounts. This is reasonable: deposits that aren't unusually large are fully insured and there's really no reason to worry.
In today's Wall Street Journal, James B. Stewart writes (subscription required) that "before anyone panics and starts another run on a big bank, let me say unequivocally that client assets in the big brokerage firms are safe from the danger of any Bear Stearns-type collapse."
Stewart's right. But here's the thing: if your account with E Trade Financial Corporation (NASDAQ: ETFC) or another scandal-plagued financial services firm is giving you sleepless nights, switch! There's just no reason not to -- the different banks are all reasonably competitive and moving money around is pretty easy.
I know: if everyone does that, it will cause a run on the bank. But not everyone will, and if moving money will ease your nerves, go for it.
Jarrett Lilien, E-Trade Financial Corporation's (NASDAQ: ETFC) president and COO, who lost out on the CEO job last month to Donald Layton, is going to resign from the online brokerage firm, the Wall Street Journal reported; Layton doesn't plan to fill the position.
Chinese Internet search firm Baidu.com Inc (NASDAQ: BIDU) is poised for aggressive growth but must also confront a number of obstacles, according to the Wall Street Journal's "Heard in Asia," including a number of lawsuits regarding its music services and a vacancy in the CFO position.
Alibaba Group, a Chinese Internet company , is in advanced talks with investors to finance its acquisition of Yahoo! Inc's (NASDAQ: YHOO) stake to expand its management independence, the Wall Street Journal reported.
OTHER PAPERS:
According to inside sources, the New York Post reported that billionaire Joseph Lewis and former Bear Stearns Companies Inc (NYSE: BSC) CEO Jimmy Cayne are looking for a white knight that could surpass JPMorgan Chase & Co's (NYSE: JPM) takeover offer for Bear Lewis and Cayne have reportedly reached out to several private equity firms and overseas banks, including Barclays Plc (NYSE: BCS) and Credit Suisse Group (NYSE: CS).
WEB SITES:
Medical supplies boss Michael Mastromarino, accused of stealing the body parts of around 1,000 corpses, has pleaded guilty to several charges in a deal with prosecutors. The BBC News reported that the Biomedical Tissue Services company shipped bones, skin and tendons to tissue-processing companies such as LifeCell Corporation (NASDAQ: LIFC) and Tutogen Medical Inc (AMEX: TTG), which are in turn facing hundreds of civil lawsuits.
E*Trade (NASDAQ: ETFC) is naming its chairman, former JPMorgan (NYSE: JPM) vice-chairman Donald Layton, to be the company's new CEO.
The stock was trading up more than 5% on the news earlier, probably because of speculation of a possible sale. The Wall Street Journalreported [subscription required] that "E*Trade and Citadel have discussed the possibility of trying to find a buyer for the home-equity portfolio, which would lift a tremendous burden off E*Trade and could pave the way for a sale of the entire company, according to people familiar with the matter."
But Mr. Layton told the Journal that selling the home-equity portfolio is not an option right now.
I think investors should, as always, be extremely cautious about buying shares in the company on takeover speculation. E*Trade's woes -- and declining share price -- are hardly an unknown entity given its status as a poster child of subprime stupidity. The fact that Ameritrade (NASDAQ: AMTD) and other well-capitalized competitors, which had expressed interest in acquiring E*Trade before its precipitous decline in value aren't stepping up with an offer, tells me all I need to know: there's really no reason to think a deal is coming any time soon.
Royal Bank of Canada (NYSE: RY) is expected to launch the first covered bond from the country next week, the Financial Times reported. The bank is targeting a benchmark-sized issue worth $1.4B-$4.2B.
The Financial Times also reported that Indian conglomerate Tata has concluded an agreement with Virgin Mobile USA Inc (NYSE: VM) to launch a cellular phone brand in India. The brand, called Virgin Mobile in India, would target young Indians under a franchise agreement with Tata Teleservices.
WEB SITES:
Bloomberg reported that former JP Morgan Chase & Co (NYSE: JPM) Vice Chairman Donald Layton is expected to be named E*Trade Financial Corporation's (NASDAQ: ETFC) new CEO. In an interview, Layton said he may consider a sale of the troubled online brokerage if it "made sense" for shareholders.
Stock futures were lower this morning, indicating Wall Street could start March with a down day as investors' concerns about the economy continued. Adding to the sentiment is the U.S. dollar, which now stands at its worst level against a basket of currencies since 1973. Also, some manufacturing data will be in focus today.
On Friday, U.S. stocks plunged on economic concerns, the credit crisis and consequently the health of the financial sector following American International Group (NYSE: AIG)'s reported large loss. The Dow industrials lost 315 points Friday, or 2.51%, the S&P 500 dropped 37 points, or 2.71%, and the Nasdaq Composite declined 60 points, or 2.58%.
At 10:00 a.m. EST this morning, after the market opens, the Institute of Supply Management will release the ISM index for February, giving investors an idea of manufacturing activity throughout the nation. Economists expect the index to drop to 49, below 50, indicating contraction.
At the same time, the Commerce Department will report on January construction spending, which is also expected to show a decline.
E*Trade (NASDAQ:ETFC) did something odd. It made a former vice chairman of JP Morgan (NYSE:JPM) its new CEO. It would be hard to imagine that he has much experience in the discount brokerage industry. Donald Layton has been non-executive chairman of the company since Citadel Investment Group put $1.75 billion into the brokerage firm last November.
According toThe Wall Street Journal "Citadel has nearly a 20% stake, and tapping Mr. Layton is a sign Citadel is getting antsy for results." The brokerage firm still have $12 billion of home loans on its books. It is hard to assign them a value while real estate prices are still dropping and default rates are rising.
Citadel may want to sell the discount brokerage firm but that would cause potential problems with other E*Trade investors. What would be left over is a company with a large pool of mortgages which are still falling in value. Getting a return on the discount brokerage operation might be a good idea on paper but separating it from the balance of the company is no "slam dunk". Shareholders don't want to be left holding that mortgage bag.
Douglas A. McIntyre is an editor at 247wallst.com.
While nearly all of the top investment banks took a big hit from problems in the housing and lending industries, a handful of prescient analysts have seen their careers bolstered [subscription required] by the carnage. Goldman Sachs analyst William Tanona and Oppenheimer's Meredith Whitney have gained some notoriety for their bearish calls on Merrill Lynch (NYSE: MER) and Citigroup (NYSE: C), respectively.
Most interesting to me is the case with Citigroup's Prashant Bhatia who predicted E*Trade's (NASDAQ: ETFC) subprime woes could cause banking customers to withdraw deposits. E*Trade's acting CEO Jarrett Lilien fired back, calling Bhatia's comments reckless.
Bhatia told the Wall Street Journal that "You can go back over time and look at what we have written and what has taken place and be the judge of it ... I don't listen to what management says."
It's a rare analyst who doesn't listen to what management says, but I think there's a lot to it. Executives are nearly always optimistic, at least publicly, about their companies' futures, and investors looking for red flags will find little in the way of help from them. When was the last time you tuned into a conference call to hear the CEO say "We're messing up badly, and we expect to continue to mess up badly in the future. If I can get a decent severance package, I'll be on the next plane back to the Hamptons?"
Letting the numbers do the talking -- specifically those contained in SEC filings -- and first hand research (talking to customers) and reading trade journals/websites that aren't viewed by most investors is a more likely path to success than listening to the wisdom of ever-bullish executives.
Yesterday could have been the end of the NBA season, but the Los Angeles Lakers forced a game six in Boston -- not so much by winning; more by having a "refuse to lose" finish that they could not muster before. I am quite sure David Stern is fine with that outcome. ESPN, and ABC television owned by Walt Disney (NYSE: DIS) must be ecstatic. The NBA officials will earn another paycheck, and the sponsors? They are praying for a game seven for sure!
Going into 2008, it's been an extreme experience for online brokers. There has been considerable volatility in equities, with the major averages falling an average of 10%. What's more, home prices remain depressed.
TheStreet.com's Jim Cramer says the good stuff out there -- and there's a lot of it -- will keep us going up.
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Stock futures were lower this morning, indicating Wall Street could start March with a down day as investors' concerns about the economy continued. Adding to the sentiment is the U.S. dollar, which now stands at its worst level against a basket of currencies since 1973. Also, some manufacturing data will be in focus today.
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