Mark Cuban to Sam Zell: Sell me the Chicago Cubs at a discount originally appeared on BloggingStocks on Wed, 07 Jan 2009 09:09:00 EST. Please see our terms for use of feeds.

This post is part of our feature on Money Losers of 2008. See all 20.

When Sam Zell acquired the Tribune Co. in April 2007 for $8.2 billion in cash, pundits speculated about whether the "grave dancer" who had made billions in distressed real estate had bitten off more than he could chew. The overwhelming evidence indicates that is exactly what happened.

Even by the very low standards of the newspaper industry, Tribune was a disaster. Many of its papers were big-city dailies that have been hit especially hard from the move by advertisers online. The Los Angles Times, the flagship paper of the old Times Mirror chain, experienced both the biggest declines in circulation and in newsroom employees, according to a New York Times report from October. During the third quarter, operating expenses in the publishing business rose 6% to $640 million while operating revenue plunged 13% to $654 million. It's no surprise that there have been boatloads of layoffs in the division.

The broadcasting business has also been hurt by soft advertising at the company's 23 television stations. Mark Cuban's efforts to buy the company's Chicago Cubs have reportedly been held up because the the loud-mouth billionaire's problems with the SEC. The fact that many businesses are finding it impossible to get a line of credit does not help either.

Continue reading Money losers of 2008: Sam Zell's year from hell

Money losers of 2008: Sam Zell's year from hell originally appeared on BloggingStocks on Fri, 26 Dec 2008 16:30:00 EST. Please see our terms for use of feeds.

Some big companies have already gone bankrupt. The Tribune Company is the most recent. But, one of the trend's earliest victims was Lehman.

At the economy goes deeper into Hell with each passing month, bankruptcy attorneys will become the richest lawyers in America.

According to MarketWatch, "A sour economy and tight credit market clearly are just the right ingredients to bring about a wave of bankruptcies." There is no shame in it. Airlines have been doing it for decades.

Chapter 11 is actually a nifty way to stiff debt holders and employees. If a company can find an investor who wants to gamble they can get most of a bankrupt firm's assets in court, a debtor-in-possession, a judge can void loans and employment contracts in the name of keeping a troubled firm alive.

All of that may be good for the operations who seek court protection, but the trend would do further damage to the economy. Many of the firms who financed companies that are in trouble are banks. More losses for them will lead to more write-downs. And, that leads to more shareholder dilution and more government aid. On the employment side, cutting big numbers of people increases joblessness. That, in turn, ratchets down consumer spending and pushes up government costs to support those without work.

Otherwise, Chapter 11 is a great idea for companies in peril.

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

Bankruptcy becomes exit of choice originally appeared on BloggingStocks on Tue, 09 Dec 2008 11:11:00 EST. Please see our terms for use of feeds.

Continue reading Stocks in the news: GM, F, BAC, HIG, WMT, AAPL, MOT, MET, IFX ... (update)

Stocks in the news: GM, F, BAC, HIG, WMT, AAPL, MOT, MET, IFX ... (update) originally appeared on BloggingStocks on Mon, 08 Dec 2008 08:20:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• The Wall Street Journal reported that a spokesperson for New Corporation (NYSE: NWS) said the company has dropped out of the bidding for Tribune Co's (NYSE: TXA) Newsday. This leaves Cablevision Systems Corporation (NYSE: CVC) as the apparent winner of the auction.
• According to people familiar with the matter, the Wall Street Journal reported that American International Group Inc's (NYSE: AIG) airplane-leasing unit is considering a split from the company. The people said International Lease Finance Corp have grown "increasingly concerned" the company will be hurt by AIG's financial troubles.
• Royal Dutch Shell Plc (NYSE: RDS.A) and Spain's Repsol YPF SA (NYSE: REP) are pulling out of one of Iran's biggest gas projects, the $10B-plus development of phase 13 of South Pars, the world's largest gas field, the Financial Times reported.

• Bloomberg reported that HSBC Holdings Plc (NYSE: HBC) set aside a smaller-than-forecast $3.2B for bad loans in the U.S. The bank also said its Q1 profit was higher than Q107.

Newspaper wrap-up: HSBC's allowance for bad U.S. loans is lower than expected originally appeared on BloggingStocks on Mon, 12 May 2008 08:00:00 EST. Please see our terms for use of feeds.

Before the bell: Futures rise following Oracle's earnings; ahead of data

Following the new emission laws, General Motors (NYSE: GM) said the law could "hamper muscle cars." Also, the Wall Street Journal reported that GM may sell its medium-duty truck unit to Navistar International.

Tribune Co. (NYSE: TRB) is bracing for the "Sam Zell era" as he is set to take the ailing newspaper and TV company private with the expected closing of his $8.2 billion buyout as soon as Thursday.

According to Think Secret, Apple Inc. (NASDAQ: AAPL) and Think Secret have settled their lawsuit in a confidential, "amicable" settlement. While no sources were revealed, Think Secret will no longer be published. Bloggers lament ThinkSecret: TUAW and Engadget -- if this is true, I wonder if Apple made the right move.

Research In Motion (NASDAQ: RIMM) is expected to post earnings of 62 cents a share in the third quarter. Cruise operator Carnival Corp. (NYSE: CCL) is also scheduled to report earnings today.

Continue reading Before the bell: GM, TRB, RIMM, AAPL, ETN, BA ...

Before the bell: GM, TRB, RIMM, AAPL, ETN, BA ... originally appeared on BloggingStocks on Thu, 20 Dec 2007 08:16:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• The Wall Street Journal reported that in a list released last night by the FCC, Google Inc (NASDAQ: GOOG), Cablevision Systems Corporation (NYSE: CVC) and other "nontraditional" players are set to compete against more traditional wireless companies like Qualcomm Incorporated (NASDAQ: QCOM) and MetroPCS Communications Inc (NYSE: PCS) in the federal government's spectrum auction next month.

• Banks that include Merrill Lynch & Co Inc (NYSE: MER) and The Bear Stearns Companies Inc (NYSE: BSC) are reportedly in talks to help bail out struggling bond insurer ACA Capital Holdings, which lost $1B in the most recent quarter, according to two people briefed on the situation and reported by the New York Times; ACA Capital has guaranteed $26B in mortgage securities.
• Executives at Tribune Company (NYSE: TRB) were faced with last-minute questioning from bankers that were reluctant to fund the final portion of the $8.2B deal to take the company private, according to sources close to the company, the Chicago Tribune reported.

• Barron's Online's "Inside Scoop" reported that analysts are not convinced that the deal with Citadel is enough to save E*Trade Financial Corporation (NASDAQ: ETFC), as it does not eliminate E*Trade's $12.4B second-lien mortgage exposure, and the company could potentially face further customer attrition, which many think will continue to pressure the shares.

Newspaper wrap-up: Google, Cablevision to bid for FCC spectrum originally appeared on BloggingStocks on Wed, 19 Dec 2007 08:15:00 EST. Please see our terms for use of feeds.

Tribune (TRB) higher on expected FCC changes originally appeared on BloggingStocks on Tue, 18 Dec 2007 12:33:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• The Wall Street Journal's "Deal Journal" reported that Sam Zell's planned buyout of Tribune Company (NYSE: TRB) is contingent on the receipt of a solvency opinion, and that this is the first time they have ever seen a deal dependant on this.
• The WSJ's "Heard on the Street" reported that Countrywide Financial Corporation (NYSE: CFC) may not be out of the woods yet. Despite executives promising a return to profitability, there is still a risk the company may eventually seek bankruptcy protection or "resort to huge sales" of new stock.
• U.S. private equity group JC Flowers "is understood" to have walked away from the auction for troubled bank Northern Rock, the Financial Times reported.
• Rupert Murdoch is shaking up the management of News Corp (NYSE: NWS.A), the Financial Times reported, giving his son, James Murdoch, control over the company's European and Asian operations, and appointing two trusted executives to lead Dow Jones & Company Inc (NYSE: DJ) and the Wall Street Journal.

• Barron's Online's "Weekly Trader" said AutoNation Inc (NYSE: AN) looks attractive now, despite hovering near a multi-year low. The company has also been on a slow but steady quest to diversify away from unpopular domestic brands by snapping up luxury and import dealerships.

Newspaper wrap-up: Tribune buyout contingent on solvency opinion originally appeared on BloggingStocks on Fri, 07 Dec 2007 08:05:00 EST. Please see our terms for use of feeds.

Tribune (NYSE: TRB) is recently up $32.08.

CNBC's David Faber says the TRB deal could close very soon. TRB has expected its $34 per share sale to Sam Zell, private equity, debt holders and employees to be closed by year-end. The FCC granted temporary waivers to complete the deal. TRB announced this morning it intends to use cash on hand to reduce total amount of bridge loan to $1.6 billion from $2.1 billion. TRB January option implied volatility of 33 is below a level of 79 from Dec 6th and below its 26-week average of 38 according to Track Data, suggesting the close of the $34 deal is near.

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

Option update: Tribune (TRB) volatility collapses; Zell's buyout could close soon originally appeared on BloggingStocks on Thu, 06 Dec 2007 12:12:00 EST. Please see our terms for use of feeds.

Tribune (NYSE: TRB) is recently down 55 cents to $29.95. TRB expects its $34-per-share sale to Sam Zell, private equity, debt holders and employees to be closed by end of 2007. The FCC granted temporary waivers to complete the deal on Dec. 30. TRB call option volume of 2,688 contracts compares to put volume of 15,775 contracts. TRB December option implied volatility of 80 is above its 26-week average of 36 according to Track Data, suggesting larger price risks.

LDK Solar (NYSE: LDK) is a manufacturer of multicrystalline solar wafers. Dow Jones reported LDK will tap $700 million in long-term debt and credit lines, as well as about $100 million in customer prepayments. LDK auditing report on the investigation of allegations of inaccurate inventory is expected in early December. LDK has said the company has correctly reported its inventories. LDK is expected to report Q3 EPS in mid-December. LDK December option implied volatility is at 165 and March is at 133; above its 21-week average of 98, according to Track Data, suggesting larger risk.

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

Option update 12-4-07: Tribune put volume spikes as buyout nears close originally appeared on BloggingStocks on Tue, 04 Dec 2007 16:10:00 EST. Please see our terms for use of feeds.

Continue reading Cramer on BloggingStocks: Three tests for financial stocks

Cramer on BloggingStocks: Three tests for financial stocks originally appeared on BloggingStocks on Wed, 14 Nov 2007 09:17:00 EST. Please see our terms for use of feeds.

Most mergers are driven by the notion, sometimes wildly mistaken, that the combination will bring both a competitive advantage. Some pairs of companies, however, seem so intuitively right for one another, no bottom-line considerations should be allowed to interfere with their matrimony. Like a foul ball and a plate glass window, these two were meant for one another.

Continue reading Mergers I'd like to see -- Cubbies (TRB) and Emergency Med (EMS)

Mergers I'd like to see -- Cubbies (TRB) and Emergency Med (EMS) originally appeared on BloggingStocks on Sun, 28 Oct 2007 16:00:00 EST. Please see our terms for use of feeds.

• Baird upgraded shares of Apollo Group (NASDAQ: APOL) to Outperform from Neutral based on positive enrollment and revenue trends, margin improvement, and a strategic international announcement.
  
• CIBC upped its rating on Zoran Corporation (NASDAQ: ZRAN) to Sector Outperformer from Sector Performer following strong Q3 results and guidance.
  
• Jefferies upgraded shares of AmSurg Corp (NASDAQ: AMSG) to Buy from Hold as they believe the new CEO is preparing to drive earnings growth through acquisitions.
  
• ThinkEquity continues to expect Apple (NASDAQ: AAPL) to outpace the industry in growth. The firm upgraded shares to Buy from Accumulate.
  
• Barrington upgraded shares of Tribune Company (NYSE: TRB) to Market Perform from Underperform on valuation, as they believe the current price significantly discounts the risks of the going private transaction getting done.

• Citigroup upgraded Jarden Corporation (NYSE: JAH) and Teradyne (NYSE: TER) to Buy from Hold.
  
• Lehman upgraded SunPower Corporation (NASDAQ: SPWR) to Overweight from Equal Weight.
  
• HSBC upgraded ArcelorMittal (NYSE: MT) to Overweight from Underweight.
  
• WestLB raised Roche Holding (OTC: RHHBY) to Add from Hold.

Analyst upgrades: APOL, ZRAN, AMSG, AAPL and TRB originally appeared on BloggingStocks on Tue, 23 Oct 2007 11:20:00 EST. Please see our terms for use of feeds.

Continue reading Tribune may sell Cubs, Wrigley Field separately

Tribune may sell Cubs, Wrigley Field separately originally appeared on BloggingStocks on Mon, 17 Sep 2007 16:00:00 EST. Please see our terms for use of feeds.

It is getting very hard to believe that Sam Zell can close his deal to buy-out the public shareholders at The Tribune Company (NYSE: TRB). Shareholders approved the $34 a share deal on Tuesday, but the stock stands at $28.98.

This morning, the Tribune announced that revenue for July fell another 5.9% to $467 million. Advertising revenue tumbled 10.3% to $247 and classified advertising revenues decreased 18.2%. At least sales at the company's TV and radio operations were flat.

According to The Motley Fool "On Monday, in part because of the expected continuing slide in a number of the company's properties, Standard & Poor's took the company's debt to a B + rating from BBB-, casting it smack-dab into the world of "junk." And as if that weren't enough, S&P has indicated that it'll further knock the rating down to B after the deal is completed." The company's debt burden will be $8.2 billion.

A quick look at the Tribune's latest 10-Q shows operating profit of just under $196 million. Perhaps on an annual run rate that could be $800 million a year. Of course, this would depend on revenue staying steady, and that is not going to happen.

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

Tribune (TRB) numbers get worse as Zell tries to close originally appeared on BloggingStocks on Fri, 24 Aug 2007 10:10:00 EST. Please see our terms for use of feeds.

Over the course of last night, bankers and private equity interests battled over the funding for buying Home Depot's (NYSE: HD) wholesale supply business. JP Morgan (NYSE: JPM), Lehman (NYSE: LEH), and Merrill Lynch (NYSE: MER) have come close to walking away from the buy-out lead by Bain Capital, Carlyle Group and Clayton, Dubilier & Rice. The price for the unit may be cut by as much as $1.2 billion from its original $10.3 billion price.

The banks are concerned about the risky debt and the fact that the business is being hurt by the falling housing market, according to (subscription required) a story in The Wall Street Journal.

The banks have made billions of dollars from lending money to the larger private equity operators. When business was good the door to the vault almost always open. Now that it is clear that some of the buy-out loans will sour, the same lenders want to save their own skins.

Is there a solution to this, or will many of the largest private equity deals fall apart? One obvious answer is that private equity firms may have to put up more than the 10% or so that they normally like to contribute to these transactions. That would let them take on more of the risk and mitigate the problems for the banks. Another answer is that the price for deal like Home Depot and the Tribune (NYSE: TRB) will simply drop to adjust for risk, leaving the sellers holding the bag.

The most likely set of circumstances is that in more of these deals, the buyers will simply walk away. Current owners of these businesses will be left to make them work through cost cuts and supporting them financially until better times come around again.

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

Home Depot's (HD) troubled buyout originally appeared on BloggingStocks on Fri, 24 Aug 2007 07:00:00 EST. Please see our terms for use of feeds.

Continue reading Private equity: Can buyers walk from mega deals?

Private equity: Can buyers walk from mega deals? originally appeared on BloggingStocks on Tue, 21 Aug 2007 16:10:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• According to an internal email, Countrywide Financial Corporation (NYSE: CFC) has begun laying off employees involved in originating loans, reported the Wall Street Journal (subscription required).

• The New York Times reported that the market is having doubts about the deal for the Tribune Company (NYSE: TRB), despite confidence from those involved that the deal will be done.
• Just weeks after acquiring its first pension scheme, Citigroup Incorporated (NYSE: C) is looking for another; Citi is said to be looking at a European scheme that is worth about £200M, reported the U.K. Times.
• While the rugged cowboy has been the face for Altria Group Inc's (NYSE: MO) Philip Morris for many years now, the global brand could be fading, according to the U.K. Times.
• American Express Company (NYSE: AXP) has put its private banking business, which could be worth $400M-$500M, up for sale, according to the U.K. Times.
• The Telegraph reported that a subsidiary of HSBC Holdings (NYSE: HBC), the Hong Kong and Shanghai Banking Corporation, is in talks to buy a 51% controlling stake in Korea Exchange Bank, which would cost in the region of £2.5B.

Newspaper wrap-up: Countrywide (CFC) begins laying off employees originally appeared on BloggingStocks on Mon, 20 Aug 2007 09:15:00 EST. Please see our terms for use of feeds.

Much of the one-day panic about the market was driven by the fear that falling housing prices will hurt consumer confidence. One aspect of that is accurate. As variable rate mortgages reset, people may lose their homes. Unless, of course, the problem become so wide-spread that banks or the Fed decide that mortgage payments need to be underwritten so that homeowners keep their places and the market is not flooded with cheap real estate.

Another reason that investors are worried is the private equity debt is becoming more expensive. Some of the deals for companies like Chrysler or The Tribune Company (NYSE: TRB) could fall apart. The other side of that worry is that banks may pull out of the largest and most risky deals. That could cause lawsuits, but save financial institutions from billion dollar loses. It could also take the prices of some stocks that were in the takeover pool down. But, a stock that KKR wanted to buy at $100 may be attractive to investors at $80.

Shareholders who have stocks that have done as well as the S&P 500 over the last two years are up 20%. And that does not include dividends. Those stocks may be worth less than they were a week ago. But, if they have not been sold, that really isn't important.

The current market may be an ugly business for day traders, but it may give them a break from sitting in their basements in the dark all day.

They just might be scared out into the sunlight.

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

The market: you can't lose what you don't sell originally appeared on BloggingStocks on Fri, 27 Jul 2007 12:39:00 EST. Please see our terms for use of feeds.