As if there weren't sufficient causes already to refer to CIT Group (NYSE: CIT) as "beleaguered," the list just got longer. This morning, the financial services firm delayed filing its second-quarter report with the Securities and Exchange Commission (SEC), citing the ongoing restructuring of its debt as a mitigating factor.

Specifically, CIT told the regulatory agency that it could not meet Monday's 10-Q deadline "without unreasonable effort and expense," since executives have been spending most of their time lately attending to restructuring needs. The company is expecting a second-quarter loss in excess of $1.5 billion, thanks in large part to a loss totaling $2.1 billion from its discontinued home-lending operations.

Continue reading CIT Group plummets on going concern doubts, Chapter 11 threat

CIT Group plummets on going concern doubts, Chapter 11 threat originally appeared on BloggingStocks on Tue, 11 Aug 2009 09:50:00 EST. Please see our terms for use of feeds.

Monsanto Co. (NYSE: MON) pleasantly surprised the Street with a stronger-than-expected third-quarter profit. This morning, the company reported quarterly net income of $694 million, or $1.25 per share, besting analysts' expectations for a profit of $1.18 per share. Net sales arrived at $3.2 billion, down 11% from the year-ago period.

Additionally, Monsanto said it will create a separate division for its herbicides business, in order to "better align spending and working capital needs." The firm will also undergo a restructuring that will result in 900 lost jobs, or less than 4% of its global workforce. The change will translate to a fourth-quarter charge of roughly $350 million, or 41 cents to 47 cents per share.

Continue reading Monsanto tops 3Q profit estimates, warns on Roundup earnings

Monsanto tops 3Q profit estimates, warns on Roundup earnings originally appeared on BloggingStocks on Wed, 24 Jun 2009 12:40:00 EST. Please see our terms for use of feeds.

In a clock-stopping move, the United Auto Workers and GM have come to an agreement on a health care deal. The key provision of the deal is that GM would contribute shares instead of cash to a health-care trust known as a Voluntary Employees Beneficiary Association (Veba).

In so doing, the UAW would own 39% of GM. The mix of ownership would then be 50% to the government, 39% to the UAW and 10% to the bondholders, with the remaining 1% for current shareholders. The agreement still must be ratified by GM workers.

Continue reading GM and United Auto Workers to clinch deal on health care

GM and United Auto Workers to clinch deal on health care originally appeared on BloggingStocks on Fri, 22 May 2009 13:00:00 EST. Please see our terms for use of feeds.

A report today in The Wall Street Journal [subscription required] indicates that the restructuring of American International Group, Inc. (NYSE: AIG) could be a multi-year process.

The paper cites an internal email sent to AIG employees on April 23, which describes an initiative known as "Project Destiny." The dreamily named plan involves a 45-day review of the insurance issue's various units, which is then meant to generate a longer-term road map for the future.

While the internal memo explains Project Destiny as an "effort to redefine the future of most of the major businesses within AIG," Chief Restructuring Officer Paula Reynolds described the initiative in terms indicating that all AIG needs to regain its joie de vivre is a torrid island affair with a younger man. "Simply put, we are going to get our groove back," she enthused.

Continue reading American International Group's restructuring could take years

American International Group's restructuring could take years originally appeared on BloggingStocks on Mon, 11 May 2009 10:30:00 EST. Please see our terms for use of feeds.

Alfred P. Sloan, the legendary CEO of General Motors Corp. (NYSE: GM) from 1934 to 1956, envisioned GM as a company that would offer a car for every income level, thus keeping customers in the GM fold as they climbed the ladder of American success from their entry level jobs to their peak earnings years. Starting out, a customer would buy a Chevrolet and then keep buying bigger intermediate cars -- e.g., Pontiacs, Oldsmobiles and Buicks -- before reaching the summit -- Cadillac.

The new GM won't sell you those intermediate cars -- it will get you at the bottom (Chevrolet) and the top (Cadillac) and offer you nothing in between. Through something called a Section 363 bankruptcy, GM will sell its most valuable assets -- Chevy and Cadillac -- to a new government-funded company. The rest of GM -- Buick, Pontiac, Hummer, etc. -- will be left in the old GM. The proceeds from selling the good assets will help pay claims like GM's $27 billion in unsecured debt and its $20 billion in union pension liabilities.

Continue reading New GM will include Cadillac and Chevy and chuck the rest

New GM will include Cadillac and Chevy and chuck the rest originally appeared on BloggingStocks on Wed, 01 Apr 2009 10:10:00 EST. Please see our terms for use of feeds.

One of the latest ideas being kicked around by Congress and the White House is naming an "auto czar" to oversee how the taxpayer's money is spent on the bailout of The Big Three.

According to The Wall Street Journal (subscription required), "Negotiations over a government rescue of the Big Three automakers slowed Saturday as Congress and the White House debated over the role of an 'auto czar' who would oversee a restructuring of the industry."

Which restructuring is that? The one where GM (NYSE: GM) and Chrysler go through a prepackaged bankruptcy to cut union costs and debt? Or, the one where the Detroit firms get $34 million to retool their factories and negotiate with labor and creditors? Or, the one where GM and Chrysler merge?

The issues that are the most pressing for the American automotive industry are not how to supervise a restructuring. They are what form a restructuring will take, how much money will be needed, and what will happen if, in six months, the first bailout is financially inadequate.

At this point the auto czar really has nothing to be in charge of.

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

The absurd notion of an 'auto czar' originally appeared on BloggingStocks on Sun, 07 Dec 2008 07:14:00 EST. Please see our terms for use of feeds.

General Motors Corp. (NYSE: GM) should get government help with financing in Chapter 11 once it restructures in a pre-packaged bankruptcy. A restructuring would jettison GM's management team, cut labor costs, close unprofitable dealerships, and toss overboard GM's money-losing product lines. Taxpayers should not pay the salaries of people who can't operate a profitable business.

Here are six steps of a proposed restructuring that could save $16 billion a year:

• Allow GM to merge with Chrysler -- but only if Cerberus, which owns Chrysler, sees its equity wiped out -- to save $7 billion in annual costs;
• Dump unprofitable brands -- Cadillac, Chevy and Buick (it is popular in China) would be the surviving GM brands. All the others -- Saturn, Pontiac, GMC and Saab -- would be sold to interested buyers or shut down. This would save $5 billion a year;
• Close related dealerships -- this would cut $4 billion annually;

Continue reading Six steps to restructure GM

Six steps to restructure GM originally appeared on BloggingStocks on Tue, 18 Nov 2008 10:25:00 EST. Please see our terms for use of feeds.

Shares of Swiss pharmaceutical maker Novartis AG (NYSE: NVS) are lower in early morning trading after the company announced its fourth-quarter net profit fell by 45%, hurt by a restructuring charge and higher generic competition.

Novartis said net profit attributable to shareholders slipped to $904 million from $1.65 billion in the fourth quarter. Net profit from continuing operations also plunged 42% to $931 million from $1.6 billion in the same period of last year. The results were below analysts' average estimate of a profit of $1.33 billion. Included in the company's figures was a $444 million charge related to Novartis's cost-savings program pressured earnings.

However, Novartis results weren't really a surprise, as analysts had anticipated the fourth quarter would be weak for the drugmaker after the company announced in December that it would cut 2,500 jobs worldwide. Its decision came on worries over ongoing challenges from generics producers. Novartis declared that the job cuts brought the $444 million fourth-quarter charge, but it expects to save $1.6 billion in costs each year until 2010.

Continue reading Novartis (NVS) fourth-quarter profit plunges

Novartis (NVS) fourth-quarter profit plunges originally appeared on BloggingStocks on Thu, 17 Jan 2008 11:40:00 EST. Please see our terms for use of feeds.

Continue reading Avon (AVP) plans to slash 2,400 jobs

Avon (AVP) plans to slash 2,400 jobs originally appeared on BloggingStocks on Tue, 08 Jan 2008 12:38:00 EST. Please see our terms for use of feeds.

Dell (DELL) announces more job cuts originally appeared on BloggingStocks on Thu, 11 Oct 2007 14:08:00 EST. Please see our terms for use of feeds.

Yahoo! (NASDAQ: YHOO) implied volatility elevated at 40. YHOO is recently down 37 cents to $22.95. YHOO overall option implied volatility of 40 is above its 26-week average of 35 according to Track Data, suggesting larger risk.

Microsoft (NASDAQ: MSFT) implied volatility elevated at 40. MSFT is recently down 19 cents to $27.91. MSFT overall option implied volatility of 40 is above its 26-week average of 23 according to Track Data, suggesting larger risk.

Amgen (NASDAQ: AMGN) implied volatility elevated at 34 after restructuring. AMGN is recently down $1.57 to $49.02. Goldman Sachs says: "Sales and costs in line. Maintain estimate and intrinsic value of $45." AMGN September option implied volatility of 34 is above its 26-week average of 26 according to Track Data, indicating larger risks.

Cisco Systems (NASDAQ: CSCO) implied volatility elevated at 34. CSCO is recently up 9 cents to $30.01. CSCO will be holding an analyst meeting on September 5 in San Jose. Jeffreies has a Buy rating on CSCO. CSCO September option implied volatility of 34 is above its 26-week average of 28 according to Track Data, suggesting slightly larger risk.

Volatility Index S&P 500 Options-VIX up 2.68 to 33.35.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Option update: NASDAQ blue chips -- YHOO, MSFT, AMGN, CSCO originally appeared on BloggingStocks on Thu, 16 Aug 2007 13:50:00 EST. Please see our terms for use of feeds.

Johnson & Johnson

Johnson & Johnson trimming workforce originally appeared on BloggingStocks on Tue, 31 Jul 2007 11:20:00 EST. Please see our terms for use of feeds.

The Dow Jones is up over 11% for the year so far and the euphoria on Wall Street has certainly hit Main Street. The one sector that has not participated in this rally is major U.S., large-cap banks. The stock performance of the major six banks has been as low as down 10% to flat -- in other words lousy. The six major banks are Citigroup (NYSE: C), Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), Wachovia (NYSE: WB) and Washington Mutual (NYSE: WM) and JP Morgan Chase (NYSE: JPM). So is time to start nibbling away at these stocks?

The central issue is the state of the subprime mortgage market. All of these banks are major mortgage players in the United States, from coast to coast. As the earnings season was approaching with first quarter results, many thought the answers would be evident and that the issue would be a memory. All six reported very good, solid first quarter results, and reserve requirements were raised for the year to absorb defaulted mortgages. Washington Mutual explained that they were aggressively working with the subprime customers to refinance their loans before the problems got worse. Wells Fargo, Bank of America, and Wachovia followed suit.

The earnings were strong for the first quarter and guidance for the calender year 2007 stayed the same, no lowering of forward expectations. Dividends are absolutely solid in terms of earnings/dividend coverage, and the yields are mouth-watering. The yields on the big six range from 3.2% to 5.2%.

The stocks have been flat to down as the mortgage issue is not yet totally resolved. The housing market is still a troubling aspect of the economy, with no real relief in sight until at least 2008. That factor has kept these stocks depressed. But remember, you want to buy when no one else is.

Continue reading The big six U.S. banks: Is it time to buy?

The big six U.S. banks: Is it time to buy? originally appeared on BloggingStocks on Sat, 14 Jul 2007 09:40:00 EST. Please see our terms for use of feeds.

Nokia lifted by restructuring plan originally appeared on BloggingStocks on Wed, 20 Jun 2007 12:46:00 EST. Please see our terms for use of feeds.

Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. Short Stories discusses what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I describe possible short trades and I seek your comments and questions for story ideas. I don't offer any investment advice and I don't trade on any of the posts I write.

I first suggested selling short Bally Total Fitness, Inc. (Pink Sheets: BFTH) last November at $2.59. Why? Bally owed $512 million this year, was spending $7 million more cash than it was taking in, and I doubted that banks would lend it enough money to stay afloat. Back then my biggest concern for the short position was that hedge fund billionaire Stevie Cohen had placed a big bullish bet on Bally -- his SAC Capital Advisors owned 6.9% of the company. I figured he must know something that I didn't.

But on Thursday, Cohen's bet went bust as Bally filed for bankruptcy. According to its filing, "Under the prepackaged restructuring plan, there will be a reduction in the principal outstanding on Bally's existing senior subordinated notes by $150 million by exchanging all existing senior subordinated notes for a new class of notes, common equity and the right to participate in a $77.5 million rights offering."

SAC's wipe out provides a useful insight for investors -- even the most talented players make mistakes. It's just that they make more good calls than bad ones. Meanwhile, those who followed my suggestion to short Bally could cover their position on Monday at $0.31 a share, pocketing a 736% return -- not bad for eight month's work.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Bally.

Short Stories: Bally goes belly up, yielding 736% return for shorts originally appeared on BloggingStocks on Sat, 02 Jun 2007 09:30:00 EST. Please see our terms for use of feeds.

A good time to buy HealthSouth originally appeared on BloggingStocks on Tue, 08 May 2007 16:30:00 EST. Please see our terms for use of feeds.

• material cost savings of up to $1.5 billion by 2009
• eliminating production shifts
• reducing total production capacity by 400,000 vehicles on an annual basis
• idling its Newark, Delaware, assembly plant which employs about 2,000

13,000 jobs later and DCX reaches new five-year highs originally appeared on BloggingStocks on Wed, 14 Feb 2007 11:43:00 EST. Please see our terms for use of feeds.

Back in June, a new investment bank got its start: Perella Weinberg Partners. The firm raised about $1.1 billion and hired some high-profile veterans of Wall Street.

Well, this week, the firm purchased Kramer Capital Partners. The firm specializes in so-called "transformational corporate transactions."

What does this mean? This is when a company has lots of troubles and needs a workout.

Kramer has engagements on such restructurings as Delta's (OTC:DALRQ) bankruptcy, Tower Automotive (OTC:TWRA), and Monsanto's (NYSE:MON) restructuring of Solutia.

Basically, the "smart money" is thinking that the current mega trend of leverage buyouts is going to result in major problems - which, of course, will need the help of Wall Street advisors.

Another firm is also positioning itself for the trend: Goldman Sachs (NYSE:GS).

For example, according to a recent report from Bloomberg, Goldman Sachs provided $685 million for Wilbur Ross's deals. Yes, Ross is a specialist in bankruptcies.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

The world after leveraged buyouts originally appeared on BloggingStocks on Tue, 14 Nov 2006 12:15:00 EST. Please see our terms for use of feeds.

One of the issues that Time Warner Inc. (NYSE:TWX) faces as it tries to improve margins is the bias against cutting editorial costs at well-known media properties. The Grahams face the same issue at The Washington Post Company (NYSE:WPO) and the Sulzbergers are up against the same wall at The New York Times Company (NYSE:NYT). Fortunately for the Washington Post, most of its revenues now come from its online education businesses, like Kaplan. Lucky for them.

For decades big, widely distributed editorial operations have been viewed as something of a public trust. Even some of the network news operations fell into this category until Bill Paley died. Then Larry Tisch came in and cut with a vengeance. Entire editorial bureaus were closed.

From the time that Henry Luce and his partners started Time Magazine in 1923 until Life Magazine was closed in 1972, Time, Inc. did not shutter any of its major publications. If Luce had not died in 1967, Life may have survived.

At companies where editorial standards are a bit more "flexible," cutting is no big deal. Dean Singleton has made a career of buying large city dailies and cutting their costs, including newsrooms, to the bone. He has purchased newspapers in markets as large as Dallas, Denver, and Oakland. If the papers do not make money, he closes them.

Time Magazine, Newsweek, The New York Times, and The Washington Post are institutions with lives that are measured as much in reputation as they are in economic success. And it is probably less popular with the press when their brethren are let go than it is with, say, auto workers. And there is nothing amiss with looking out for your own.

It is almost inevitable that Parsons & Co. are looking at the number of bureaus that Time has, and the number of senior editors, as well as the number of writers at People and Sports Illustrated. Why? Because these magazines, perhaps with the exception of the gossip found in People, are no longer the primary source of news. They may have been twenty years ago, or even ten. But that rationale has lost its teeth.

While it is hard to say that anything is inevitable, the clash of the dropping margins at Time, Inc. and the large editorial staffs at the magazine is coming. And if shareholder pressure keeps up, it may come soon.

Time Inc's cost cutting taboo originally appeared on BloggingStocks on Thu, 07 Sep 2006 14:39:00 EST. Please see our terms for use of feeds.

Over the past few years, RadioShack's (RSH) stock has seen a steady decline. Then again, the company looks like it is still stuck in the 1970s. Why go to RadioShack when you can get much more selection at places like Best Buy or Circuit City or even Wal-Mart?

True, the company has tried to do some innovative things, such as cutting a VOIP deal with Skype (which is a division of eBay). But, the fact remains that the value proposition for customers is amorphous.

The company has also had a lot of drama in the boardroom. That is, the company's former CEO resigned because of errors on his resume. Also, he did not appear for court on a DWI (driving while intoxicated) charge.

So, within the past few months, RadioShack has finally realized the world has changed and it has, as a result, initiated a restructuring. It means closing stores and firing people.

Yesterday, RadioShack sent a cold email to roughly 400 employees. The gist: "The work force reduction notification is currently in progress. Unfortunately your position is one that has been eliminated."

Continue reading RadioShack: You're fired! (via email)

RadioShack: You're fired! (via email) originally appeared on BloggingStocks on Thu, 31 Aug 2006 11:23:00 EST. Please see our terms for use of feeds.