01/20/09

Have a great weekend!

Belgium Bud?

Anheuser Busch is up 8% today on news that InBev, a Belgium brewery, is in talks to purchase Busch for a reported $46 billion. A 9 dollar premium for shareholders who were holding the stock before the news was leaked. One report says that InBev would be willing to pay as much as $67 a share for BUD.

A struggling economy paired with rising commodity costs in a mature market has slowed sales growth for BUD recently. Buyouts and consolidations have been popular over the past few years among breweries. SAB and Miller, Molson and Coors, and Carlsberg/Heineken and Newcastle have all made deals in the past few years.

A weak dollar will likely encourage more foreign buyouts of US companies over the next year, but who is next?

Here are some of the best Bud Light commercials ever...

3G iPhone Confirmed

According to Gizmodo the iPhone launch date has been confirmed for June 9th. Here is the news from Gizmodo:

We all suspected it, but now it is confirmed: someone very, very close to the 3G iPhone launch has told me that Apple will announce their new model at the WWDC Keynote on June 9th. The second-generation iPhone will be available worldwide right after the launch, and not at year's end, as previously thought. The new model will also herald new sales policies in some countries.

In Spain, for example, the 3G iPhone will be available for sale at the June 18th grand opening of Telefonica's megastore—an Apple Store-like shop located in the company's historical building in Madrid's Gran Vía— with nationwide availability the next day or after a few hours. The other European countries with iPhone availability will have similar launch schedules.

According to another source involved in the launch, the 3G iPhone will no longer be available at a fixed price point—at least in some countries, and its launch will also bring new sales policies, although these have not been completely specified yet.

The move is a logical step, since the iPhone has clearly solidified its position as the cellphone to beat during the last 12 months, and companies in the cutthroat European cellphone market need to use it as an incentive to capture clients aggressively.

This most probably means the new 3G iPhone will be integrated in the usual marketing systems of carriers, with point-based trade-ups, discounts for carrier switchers and other service-based subvention packages.

Apple store in Boston

New Apple store in Boston looks pretty amazing. I may have to take a pilgrimage. Check out some pictures here..

HP to buy EDS

Hewlett Packard (HP) announced today (leaked out yesterday afternoon) that they have struck a deal to purchase Electronic Data Systems (EDS) for 13.9 billion to strength it's service business. Here are details:

The companies' collective services businesses had combined revenue of more than $38 billion and 210,000 employees in fiscal 2007. The deal will more than double HP's services revenue, which accounted for $16.6 billion of the company's $104 billion in revenue in fiscal 2007.

Palo Alto, Calif.-based HP (NYSE: HPQ) is buying EDS for $25 per share, which EDS stockholders will receive for each share of common stock they hold at the closing of the merger, expected in the second half of this calendar year.

HP (NYSE: HPQ) said it intends to establish a new business group called EDS- an HP company, which will be based at EDS's existing headquarters in Plano, Texas. EDS Chairman, President and CEO Ronald Rittenmeyer will continue to lead EDS's operations following the deal's closing. EDS is a provider of consulting and technology outsourcing services.

So is this a good deal for shareholders? It depends who you are holding. EDS shareholders are probably getting the better deal, since the company has been pretty stagnate in a growing industry. Here is the prior year chart for EDS (it is pretty ugly). If HP has the corporate leadership to turn around the struggling service company than HP shareholders may see some benefit down the road.

Story of the Day

This is almost unbelievable, but hilarious nonetheless. Thanks to Skeeter for the link.. I think it is fitting based on today's earlier post.

A 13 year old from Texas who stole his Dad's credit card and ordered two hookers from an escort agency, has today been convicted of fraud and given a three year community order.

Ralph Hardy, a 13 year old from Newark, Texas confessed to ordering an extra credit card from his father's existing credit card company, and took his friends on a $30,000 spending spree, culminating in playing "Halo" on an Xbox with a couple of hookers in a Texas motel.

The credit card company involved said it was regular practice to send extra credit cards out as long as all security questions are answered.

The escort girls who were released without charge, told the arresting officers something was up when the kids said they would rather play Xbox than get down to business.

Police said they were alerted to the motel by a concerned delivery clerk, whom after delivering supplies of Dr Pepper, Fritos and Oreos had been asked by the kids where they could score some chicks and were willing to pay. They explained they had just made a big score at a "World of Warcraft" tournament and wanted to get some relaxation. On noting the boys age the delivery clerk informed the authorities.

When police arrived at the motel they found $3,000 in cash, numerous electronic gadgets, an Xbox video console with numerous games, and the two local escort girls.

Ralph had reportedly told police that his father wouldn't mind, as it was his birthday last week and he had forgot to get him a present. The father, a lawyer said he had been too busy, but would take him on a surprise trip to Disneyland instead.

Asked why he ordered two escorts, Ralph said he thought it was the thing to do when you win a "World of Warcraft" tournament. They told the suspicious working girls they were people of restricted growth working with a traveling circus, and as State law does not allow those with disabilities to be discriminated against they had no right to refuse them.

The $1,000 a night girls sensing something up played "Halo" on the Xbox with the kids, instead of selling their sexual services.

Ralph's ambition is to one day become a politician.

Ricks Cabaret (RICK)

Ricks Cabaret (RICK), an operator of 15 adult nightclubs, has apparently not been effected by the current economic slowdown. I guess we know where guys are spending their stimulus checks. I have been folowing this stock for a while, but never pulled the trigger. It has released very strong 2008 and 2009 outlook and looks poised to move higher. I will continue to watch for know, but I will be looking to add some shares on a dip.

Here is an excerpt from yahoo:

"For its 2008 fiscal year the company said it expects to have sales of approximately $61 to $62 million, with after tax net income of about $10.5 to $11 million, on which it anticipates earning between $1.25 and $1.30 per fully diluted share. If spread over all of calendar 2008 revenues should equal about $68-$70 million, with net income of about $13 to $14 million and projected earnings of approximately $1.55 to $1.60 per fully diluted share.

The company’s outlook for fiscal 2009 anticipates revenues of exceeding $100 million, with earnings per share in the $2.30 to $2.50 range per fully diluted share."

ETF

I spent some time this weekend looking into ETF's to hedge my long positions. My portfolio is currently about 90% long and 10% cash. In retrospect when the market hit 14,000 a while back I should have begun searching for something to hedge my long positions. The bear market short ETF's have been doing great this year (SSG is up nearly 35% YTD).

I always thought of ETF's were a great way to invest in foreign stocks without having to due extensive research, but domestic ETF's always seemed like an expensive mutual fund that you could trade like a stock. If you are not very familiar with ETF's Yahoo! has nailed it.

A short fund ETF is a great way to get some short exposure without the risk of actually shorting a particular stock. I like the idea of hedging my long positions with some short exposure, but I don't like the risk of a short squeeze. Here are a few of the top performing short ETF's and here is a blog that covers ETF's.

SSG, REW, QID, RXD, and SKK

Classic Clip from Boiler Room

What's in your wallet? - Credit Cards

America is addicted to debt, so why not make a few bucks off this addiction. Here are three credit cards stocks that I am following. Which one do you like the best?

Master Card (MA)

Closing Price - $293.41
P/E Ratio - 29.95
F P/E - 26.46
EPS - 9.80
Yield - .20

Visa (V)

Closing Price - 87.30
Visa went public in March so no historical data is available

American Express (AXP)

Closing Price - 48.85
P/E Ratio - 14.64
F P/E - 17.67
EPS - 3.34
Yield - 1.47

50 Best Stocks for 2008 - UPDATE

Only 11 of the 50 best stocks for 2008 are in the black! Click here for the original list. The 11 winners are CAJ, CHK, DKS, DNA, JPM, MTH, NKE, RIG, RIMM, TGT, & TOT. Overall the portfolio is down about 9.92%. I will continue to follow this all year, and hopefully we will go positive soon. I put in some limit orders today to peel back my AAPL position, but none have hit so far. As soon as I free up some cash I will be evaluating this list again looking for some winners.

Lunch with Greenspan

Do you have an extra $16,000? You could have lunch with Alan Greenspan & Andrea Mitchell at the Four Seasons in Washington DC. Check it out here.... The current bid is 16k

$360,000,000,000 Personal Check

My man Charles Fuller tried to cash a personal check for 360 billion dollars last week at a Chase bank in Dallas. This dude is awesome! What do you think the teller thought when she saw all the zeros on the check. Needless to say he was arrested and charged with theft, unlawful carrying of a weapon, and possession of a green leafy substance. Hat tip to Skeeter for the story...

Real or Fake?

Surfing With A Great White Shark - Watch more free videos

New Trades, Kentucky Derby Update

I plan on pulling some AAPL off the table tomorrow, if it continues to head north. I am way to heavily invested in one stock so I am going to be looking to spread the action. I have made huge gains in AAPL, so it may be time to peal down my position. Still love the company and where it is headed, but it is never smart to be to heavy in one stock. I will sleep on it.....

My wife cleaned up at the Kentucky Derby this weekend. She put all of her money on Big Brown to win! I may have her pick some stocks for me.

Twitter

Just set up a twitter account. I am new to the twitter experience but I have heard good things. The concept is fresh and the interaction with the blog world is awesome. I will give it a shot. If you are interested check it out here or look on the right side of this page for my link.

Microsoft Pulls Yahoo Offer

Microsoft withdrew its bid to purchase Yahoo for 42.3 Billion on Saturday. Bad news for Yahoo shareholders, who are going to take a hit on Monday. Microsoft will not pursue a hostile takeover of Yahoo. This was a smart move for Microsoft who was offering way to much for the struggling Yahoo. Microsoft should wait for a year and if Yahoo continues to struggle make a lower offer or a hostile takeover. Here is Steve Ballmer's letter to Jerry Yang.


May 3, 2008


Mr. Jerry Yang
CEO and Chief Yahoo
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089


Dear Jerry:

After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!.

I first want to convey my personal thanks to you, your management team, and Yahoo!'s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.

I am disappointed that Yahoo! has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions.

In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.

Also, after giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.

We regard with particular concern your apparent planning to respond to a "hostile" bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

-- First, it would fundamentally undermine Yahoo!'s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.

-- Given this, it would impair Yahoo's ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.

-- In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.

-- This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.

-- It could foreclose any chance of a combination with any other search provider that is not already relying on Google's search services.

Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft's proposal to acquire Yahoo!.

We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.

I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.

But clearly a deal is not to be.

Thank you again for the time we have spent together discussing this.

Sincerely yours,
/s/ Steven A. Ballmer