As a Disney (NYSE: DIS) shareholder, the High School Musical juggernaut is important to me. It means money for the company. It means a point of distinction for Disney that adds value to its content and differentiates it from other media businesses such as News Corp. (NYSE: NWS) and Time Warner (NYSE: TWX). It means that tweens have something realistic to relate to that reflects their own days of breaking out in song while walking through school (okay, that was a joke).
But I was disappointed to hear that a reality show extension of the brand is having a tough time in the ratings. According to this blog post at The Hollywood Reporter, the show, called High School Musical: Get in the Picture, had the worst ratings on Monday night. It's some sort of competition show with a prize related to being in some sort of video in the Musical franchise.
I'm not sure of the specifics, but my main concern is that it couldn't offer any competition to CBS (NYSE: CBS) or General Electric's (NYSE: GE) NBC. Remember, Disney's big model is to take its content and spread it around to enhance the value of the company's other platforms. It's all about the synergy. Unfortunately, it didn't work this time. I honestly thought that ABC would have seen huge numbers from the kids on this one. It makes me wonder if Musical might be getting long in the tooth.
Stockholders of publicly traded companies, as well as the general public, have recently become outraged with executive compensation and their hefty bonuses, especially in light of the mounting losses at some companies. It seems that no matter what happens or what they do, executives somehow always win. They win big during their employment, and sometimes even more as they retire. With all that money, you'd think that haggling over some perks in their package would be beneath them . . . but it isn't.
The recent outrageous perk award goes to Continental Airlines (NYSE: CAL) CFO Jeffrey Misner who asked for and was granted a free lifetime parking spot at Jacksonville International Airport. As long as the 54-year-old retiree lives within 200 miles of Jacksonville Airport, and providing Continental has operations at the airport, Misner will have a free parking place. Of course, that's just a perk that goes with a $2,997,000 retirement pay.
At the beginning of the year, many were shocked to hear that Countrywide Financial Corp. -- the poster child of the subprime mortgage meltdown, which has been bought by Bank of America (NYSE: BAC) -- CEO Angelo Mozilo was going to receive a $36.4 million cash severance payments, $400,000 per year for consulting services, and perks including the use of a private airplane. He walked away from most of these after a public outcry. Don't feel bad though, he still left with at least $23.8 million.
It just doesn't cease to amaze me how some people have the nerve to ask for certain perks in addition to their very fine salaries and severance pays. Here are some more examples:
Time Warner (NYSE: TWX) bombed earlier in the summer with a movie called Speed Racer. If you said you didn't see that one, I wouldn't be surprised. However, in the interest of cosmic balance, the media company scored with its new Batman flick, The Dark Knight. And when I say scored, I mean it. The film is estimated to have taken in about $155 million over the past three-day weekend at domestic theaters, according to Boxofficemojo. If this estimate holds, then it represents record business. Spider-Man 3 currently holds the three-day record of $151.1 million.
Mamma Mia!, distributed by General Electric's (NYSE: GE) Universal didn't come close to the Bat. It came in second with around $27 million. Hancock from Sony (NYSE: SNE) was third with $14 million, and it will be crossing the $200 million mark in about a week or so. Time Warner's Journey to the Center of the Earth was fourth, while Universal's Hellboy II: The Golden Army was fifth. That film took a steep 70% drop compared to its debut-weekend performance. I didn't think it would fall that far, but I suppose the Batman juggernaut left it no choice but to step aside. It took in a weak $10 million for the weekend.
Simply put, GSO is a hedge fund that's focused on distressed debt. Of course, with the slowing economy, GSO is in a prime spot to capitalize on some nice opportunities.
For example, when the Weather Channel was up for sale, it was tough to get financing for the deal. So why not GSO?
It worked. In the end, Blackstone and Bain Capital teamed up with General Electric (NYSE: GE) to pull off the acquisition. As for GSO, it provided higher-risk mezzanine debt financing.
Of course there are issues. After all, Blackstone has a conflict. But at the same time, the financial markets are mired in a credit crunch. So, if there are essentially no alternatives, GSO is probably going to provide the best offer.
More importantly, Blackstone realizes that there are some juicy opportunities right now. Thus, by having the GSO advantage, Blackstone certainly is positioned nicely.
So, the past few days have been cool ones for the Dow Jones Industrial Average Index. The market saw a nice uptrend. Click here and set the Dow to the one-month timeframe; that graph says it all. It looks like things may be okay from now on, right? Well, don't bet on it. CNBC.com reminds us about the dreaded bear-market rally. And I completely agree with the thesis: we are most likely headed back down once this market happiness runs its course.
It would simply be too easy for investors to have seen the bottom. No way, not with all the problems going on in terms of inflation and financial disasters. Oh yeah, oil has retreated, that's true, but I don't think the energy monster is in permanent hibernation. Not by a long shot. The problem with the past few days is that it plays with investors' emotions. It's played with mine, certainly. I haven't bought a stock in a while, and I really want to buy something. Maybe add to my General Electric (NYSE: GE) trade, my Coca-Cola (NYSE: KO) holding. I love the dip in Microsoft (NASDAQ: MSFT) and really want to get serious about grabbing shares in Mr. Softy. My 401(k) has a lot of money waiting to be put to work. I want to transfer some of those monies into one or two of the quality mutual-fund offerings at my disposal. I can't stand having money tied up in stable-value instruments.
I just can't make a move yet. I feel that lower prices will be upon us sooner rather than later. Already, many are talking about buying opportunities for oil futures, and I fear those who hold such opinion will turn out to be correct. When oil rises again, stocks will most likely fall, and this summer fun will be just another memory of a day at the beach. I'm not saying there aren't buys out there. Again, Microsoft is looking attractive. Value investing, however, isn't. It's not the style of the day. And when value investing isn't the style of the day, your only hope is to become a deep-value investor and pray that patience is eventually rewarded.
There will be five superheroes competing for the attention of weekend moviegoers come Friday. There's Marvel Entertainment Inc. (NYSE: MVL)'s duo Iron Man and The Incredible Hulk, Sony Corporation (NYSE: SNE)'s Hancock, General Electric Corporation (NYSE: GE)'s Hellboy (distributed by GE's Universal), and Time Warner, Inc (NYSE: TWX)'s Dark Knight. So, who's going to be the ultimate crime fighter?
I'll tell you which one prevails: Time Warner and its new Batman film, The Dark Knight, has the weekend all locked up. This is set in stone. The Hulk and Iron Man are pretty much done, Hellboy isn't a powerful enough brand name,and Hancock didn't deliver the big numbers I thought it was capable of during its debut weekend (since then, however, the movie has held up well, I have to admit). But you can bet that Dark Knight hits $100 million this weekend. Can you feel the buzz surrounding this blockbuster in the wings? I can. Several reviews I've read were full of cinematic worship for this new entry in the franchise, with special praise reserved for the late Heath Ledger and his portrayal of the fiendish nightmare known as The Joker. There's a decent marketing campaign behind the project, including promotion of the availability of IMAX (NASDAQ: IMAX) screenings. If there ever seemed a movie fit for Imax, this is it. Yeah, Dark Knight can't lose, it can only win big.
Of course, what about Time Warner's stock? It could certainly use a superhero right now, as it has been hovering in recent times not above Gotham City (although that would probably be treacherous enough) but above 52-week-low City. I can't say that a big opening weekend definitely won't move the stock a little just due to the excitement factor, but I wouldn't buy the company ahead of the film (I also wouldn't gamble with IMAX either). Time Warner simply is too large to be affected significantly by one movie. If you consider Time Warner at all, it would be for fundamentals and valuation (I think the company is cheap here, although with this market, I'd rather get it cheaper). Enjoy the movie first, think about the stock later...
Disclosure: I own GE and Marvel; positions can change at any time.
Microsoft (NASDAQ: MSFT), a competitor of IBM (NYSE: IBM) and Google (NASDAQ: GOOG), will report its earnings for the fourth quarter on Thursday. According to Trey Thoelcke's earnings summary, the software giant will be expected to produce sales of about $15 billion on earnings per share of 47 cents. These numbers would represent double-digit growth rates for each metric.
According to this estimates page at AOL Finance, Microsoft has cultivated a reputation for being reliable when it comes to delivering on Wall Street expectations. It certainly has the assets to keep this trend going. The company's operating-system monopoly, as well as its incredible success with the Office suite of products, guarantees a steady stream of cash flow and bottom-line predictability. Other investments, such as the Xbox 360 and the company's various Internet properties, aren't as guaranteed. In fact, Microsoft has engaged a very strange battle (strange to me and others, at least) to buy Yahoo! (NASDAQ: YHOO) to bolster its future prospects on the 'net.
So, here's what investors should be looking for. I will be very interested in what management has to say about its thoughts regarding Yahoo! and its utility for Microsoft. Is it an absolute necessity? I doubt it, and I really do hope that shareholders will finally get some closure on this subject. The best thing would be for Microsoft to announce that it is done with the portal. And in terms of the Xbox 360, I would be interested in hearing any new marketing strategies being readied for the holiday season and if the current recessionary environment will have any effect on sales. Microsoft recently reduced the price for one Xbox 360 model as a way of increasing that system's value proposition in relation to the Sony (NYSE: SNE) PlayStation 3 and the Nintendo (OTC: NTDOY) Wii. The company also has entered partnerships with General Electric's (NYSE: GE) NBC Universal and Netflix (NASDAQ: NFLX), according to Variety, to make its Xbox Live asset even more attractive to users looking for cool content such as movies and TV shows.
General Electric (NYSE: GE) didn't see a huge reaction to its earnings on Friday. I think the stock closed up by only a couple pennies. But at least its NBC Universal asset scored a hit with Hellboy II: The Golden Army. According to Boxofficemojo, it topped this weekend's domestic box office with a gross of more than $35 million. Sony's (NYSE: SNE) Hancock, however, is close. That film was in second place with a haul of $33 million. By the time final figures are out, Hancock could find itself in first place, but I doubt that's going to happen. This really seemed to be Hellboy's weekend. I have to say, though, that Hancock did much better than I thought it would for its second weekend at bat. The film will easily pull in over $200 million, maybe $250 million, before all is said and done.
Time Warner's (NYSE: TWX) Journey to the Center of the Earth 3D was number three with over $20 million. Not a particularly great debut, I don't expect too much action in the coming weeks from this one. Now, Wall-E is an important project for Disney (NYSE: DIS) shareholders since it is another effort from Pixar. Investors are still trying to figure out if the price paid for Pixar will be ultimately worth it. Wall-E is doing pretty well; it came in fourth over the weekend, and its total box-office take so far is about $162 million. Incidentally, Eddie Murphy failed horribly with his film Meet Dave. The movie, from News Corp. (NYSE: NWS), came in seventh with a little over $5 million. I didn't even know it was in the marketplace.
GE and Universal scored again at the multiplex with Wanted, which came in fifth. Its cumulative gross is now more $110 million. See that? GE can leverage quality content to bring in the revenues. If NBC Universal can synergize better with hits like these, then perhaps there won't be such pressure in terms of dumping the asset. For now, though, NBC Universal is a show-me division, and it better keep the hits coming to placate the board.
Disclosure: I own Disney and GE; positions can change at any time.
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.
FedEx (NYSE: FDX) may be in talks to buy its rival European rival TNT, according to a report from the Financial Times. TNT shares have jumped 25% in Europe.
General Electric Co. (NYSE: GE) announced Monday it will supply parts for Gulfstream Aircraft Corp.'s G650 business jet in a deal worth potentially more than $100 million. Separately, GE said it would develop with Safran SA a new line of fuel efficient jet engines to compete with United Technologies Corp. (NYSE: UTX) Pratt & Whitney.
Apple Inc. (NASDAQ: AAPL) may have sold as many as 425,000 of its new 3G iPhones in the first three days after the handset made its debut, in line with projections and despite serious technical and activation problems. Apple and AT&T (NYSE: T) sold a combined 225,000 in the U.S. Gene Munster of Piper Jaffray & Co. predicts Apple will sell 4.08 million this quarter.
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%)
Early in the day, rumors that a government bailout might destroy the value of the common stocks of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) sent the shares down almost 50%. Comments by the government and an offer by the Fed to provide short-term funds to the firms helped, a little. At the close, FNM was off about 22% and FRE was down about 3%.
Want to know how bad it is? Apple Inc. (NASDAQ: AAPL) shares are down on the day the geeks around the world are waiting in line for the new iPhone, which has gotten rave reviews. Amazing. If people are looking for an excuse to buy Apple, this may be it.
As a General Electric Company (NYSE: GE) shareholder, I am not happy with the loss of 32% of my capital under the current CEO. The previous two CEOs -- Reg Jones and Jack Welch -- have changed GE under their reigns. Thanks to the fall of Communism, many countries -- such as China, Russia, India and others -- are investing over $1 trillion in their efforts to bring their people into the 21st century, according to the Courier-Journal. Thanks to its Infrastructure unit -- which provides jet engines, power plants, locomotives and other products -- GE is well positioned to take a big share of that opportunity.
Today's GE earnings report confirms that. The infrastructure unit boosted its revenues 26% to $17.5 billion in the second quarter of 2008 and its segment profit climbed 24% to $3.2 billion. Unfortunately, that outstanding performance was masked by all the other flotsam in GE's portfolio. Now, according to Reuters, GE stock -- which had been up 2% in premarket trading after meeting its 54 cents a share outlook for Q2 earnings from continuing operations -- is down 1.3% due to a forecast of flat to down third-quarter profits at GE's finance units and an uncertain outlook for capital markets.
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TheStreet.com's Jim Cramer says the news on Fannie and Freddie is great, but we still have earnings looming ahead.
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 
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Earnings preview for Ford
Apple shares rise on report Steve Jobs is free of cancer
Toyota whups GM in the first half of 2008
