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SKY News 8-30-07

If it seems like more schools are starting earlier this year, they are. According to Market Data Retrieval, a research firm for companies that do business with schools, 75% of schools started before September 1, compared with 51% in 1988. (USA Today)

Next Wednesday in San Francisco, Apple will unveil its new iPod. The new iPod may be an inch shorter and able to store more digital media. If rumors are true, the company is also working on an iCar project. (WSJ)

Dyno Nobel, which bought Ensign Bickford in Simsbury in May 2003, may be taken over by Incitec Pivot, an Australian fertilizer company. Incitec Pivot has bought a 13% stake in Dyno Nobel which is one of two players in the world market for explosives. The average purchase price per share is $2.35, making the value of Dyno Nobel worth $1.9 billion. (FT)

Hewlett Packard introduced a new ad campaign called, “What do you have to say?” The company hopes to encourage customers to print more, not just to use HP printers and supplies. On its Web site, HP has some fun art projects: Everything from custom-designed stationery to paper dolls designed by Gwen Stefani. (FT)

Coke and Pepsi are working on ways to address the growing pile of plastic bottles in municipal dumps. As bottled water sales volume rises (up 11% in the first half of 2007), the anticipated growth in trash is prompting Federal incentives, especially deposits, for recycling. The existing 5 cent deposit on cans and soda bottles have had mixed results in the 11 U.S. states that have deposit laws (There are only four states that have, or are considering, deposit laws to include bottled water). According to the National Association for PET Container Resources, just 23% of recyclable PET bottles and jars were actually recycled in 2005 down from 40% a decade earlier. Coke, Pepsi and Nestle would rather reduce the amount of new plastic in their bottles than have deposit laws instituted. Coke announced plans to build a plant that will be able to recycle as many as two billion 20-ounce bottles a year in order to increase recycled material in its bottles from 5 to 10%. (WSJ)

The Wall Street Journal had a great article today comparing Gmail, the new Yahoo Mail, and Microsoft’s Hotmail. Basically it comes down to this:

Sources: Wall Street Journal (WSJ), New York Times (NYT), Financial Times (FT), Christian Science Monitor (CSM), and

SKY News 8-28-07

Whole Foods will complete their acquisition of Wild Oats today.  The deal went through only after an appeals court judge threw out a decision by Federal antitrust regulators that the deal couldn’t proceed. (WSJ)

The supply of unsold homes rose by 5% to a 16 year high in July in the U.S.  The rate of purchases fell to the lowest level in 5 years. (FT)

U.S. Credit card defaults have risen to 4.58% of payments.  This is up 30% from a year earlier.  The rate is still well below the charge off rate of 6.29% seen in 2004.  (FT)

The Financial Times reported that up to $1.3 trillion could flow out of China into global bond and equity markets.  Last week, Beijing eased rules so Chinese investors could buy shares directly on the

Sources: FT – Financial Times; WSJ – Wall Street Journal

SKY News 8-27-07

SKY News 8-27-07

Venture capital funding for security companies is up by a third in 2007 as investors seek to profit from increased spending by governments for anti-terrorism and emergency response services. Venture Business Research reported that growth in homeland security investments by VCs was outpacing clean energy spending in 2007. Reasons cited were 1) that VC returns in clean energy had peaked and 2) government spending in security was driving markets. (Financial Times)

Some investors are speculating that large banks should begin to find favor as competitors, like mortgage companies and loan securitizers, fall into disfavor or go out of business. The cause is investor unwillingness to take risks on some asset backed securities. Banks with large, liquid balance sheets are in a position to gain market share which could benefit their share prices in the long term. (Financial Times)

Altria’s board of directors meets on Wednesday. It is speculated that they will discuss, and perhaps approve, a spin-off of the international tobacco business. Altria recently announced that they would be moving production of cigarettes used for export out of the U.S. to their international manufacturing facilities. Foreign markets are more attractive to MO because of their faster growth, a better legal environment, and opportunities to grow market share off of a very small base. (Wall Street Journal and Financial Times)

Tobacco sales have been an important export market for the U.S. and have helped to balance the U.S. trade deficit. The move to offshore production may get political attention as the negative effect on the trade deficit becomes apparent.

Altria recently won an important class action appeal in Madison, Wisconsin for the firm’s liability for false advertising safety claims regarding light cigarettes. An appeals court ruled that the case could not proceed. With that ruling behind them, the board may approve the spin-off. (Financial Times)

Roche Holdings announced that Avastin was approved for lung cancer by E.U. regulators on Friday. Roche’s partner on Avastin is U.S.-based Genentech, of which Roche is the majority shareholder. Genentech recently resubmitted Avastin to the FDA for permission to treat breast cancer. Avastin is the number 3 selling drug for Roche and generates $2.46 billion in sales. It is a novel therapy that cuts off blood circulation to tumors, effectively killing them.

Dubai World agreed to take a $5 billion stake in MGM or 9.5 percent of the company. The cash infusion strengthens MGM’s balance sheet at a time when their major competitor in Las Vegas, Harrahs, is struggling with the downturn in the fixed income markets and tightening credit. Harrahs was acquired by a private equity group earlier in the year. MGM owns almost half of the rentable beds in Las Vegas. At a time when other casinos may find their growth constrained, MGM’s financial strength should give them capital to accelerate growth. Kirk Kerkorian controls MGM through his Tracinda investment vehicle. (Financial Times)

SKY News 8-24-07

Japan’s Central Bank Governor, Toshihiko Fukui, issued statements indicating the bank was determined to gradually close the gap between Japan’s interest rates and the rest of the world’s. Although the bank didn’t raise rates yesterday as some had expected, his comments indicate the bank is likely to raise rates at their September 18th and 19th meeting. Japan’s short-term interest rate target is currently .50%. (WSJ)

The Congressional Budget Office reported yesterday that the budget for this fiscal year is expected to be $158 billion, or 1.2% of GDP.

Gap Stores net income increased by 19% due to cost cutting. The new CEO, Glenn Murphy, who previously had been chairman and CEO of Shopper’s Dairy Mart, has embarked on a cost cutting campaign to improve the retailer’s financial position while they work towards improving their merchandising. The board recently authorized the repurchase of $1.5 billion in stock. The company was sitting on $2.6 billion of cash and marketable securities as of fiscal year-end 2007. (WSJ) The company currently has an enterprise value of $12.8 billion and generates annual sales of roughly $15.9 billion (2/2007, source Bloomberg).The company currently trades for .80 times sales and trades at 6.65 EBITDA to enterprise value.

Bank of America injected $2 billion into Countrywide Financial in return for a 7.25% preferred stock convertible into Countrywide common stock at $18. If and when converted, the stock would represent a 16-17% ownership interest in Countrywide or 111 million common shares. The capital infusion reassured Countrywide investors, and the stock traded up to $22.02 on the news.

The bank’s vote of confidence was viewed by investors an important indication of the long-term viability of Countrywide’s mortgage business. Bank of America has first right of refusal should Countrywide go up for sale.

SKY News 8-23-07

News of the Day

August 23, 2007

Great news for hikers: The White Mountain Guide is now online at wmgonline.org. The site allows you to plan hikes, gives weather conditions and availability of water, and also includes an interactive map for a $15 annual fee or $12 for club members.

Facebook is planning to improve its profits by focusing on advertising. (The company currently gets most of its $30 million profit through an ad deal with Microsoft). The system being planned allows advertisers to intersperse ads with items on the Web site’s news feed which runs a list of the user’s friends’ activities. Currently, Facebook runs banners or boxed ads on the borders of the user’s page. This technique has been relatively unsuccessful as users of Facebook and other online networking space, such as MySpace, tend not to click through to display ads, unlike other users of Web sites such as Yahoo Finance. The planned approach to advertising will be unlike the Google approach which uses Internet searches by people actively looking for something to guess what the next need may be. Instead, Facebook will use information that the Facebook user has input, such as region, age, and gender to anticipate what the user might want before he has searched for anything.

Facebook was founded in 2004 by a Harvard student named Mark Zuckerberg. Unlike YouTube and MySpace, Facebook is independent. There is talk that they may take the company public at a valuation approaching $10 billion.

Dunkin Donuts is going national!

People are using personalized stationary again. Crane & Co. sales have risen more than 20% in the past year. For less expensive personalized notes, try www.americanstationery.com for 50 printed cards and printed envelopes for $96.

The FDA approved Johnson &Johnson’s antipsychotic drug Risperdal for schizophrenic children ages 13-17 and bipolar children from 10 to 17 years old.

Illinois Tool Works (ITW) announced plans to repurchase up to $3 billion of the company’s common stock over an open-ended period of time. The plan represents about 55 million shares based on the August 20, 2007 stock price. This is in addition to the 35 million share repurchase plan announced in August of 2006.

Praxair has signed an agreement to sell its majority interest in Maxima Air Separation Center Ltd., based in Ramat Gan, Israel, to Discount Investment Corporation Ltd. (DIC), one of Israel’s largest holding companies. Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 2006 sales of $8.3 billion. The company produces, sells and distributes atmospheric, process and specialty gases, and high-performance surface coatings.

SKY News 8-22-07

August 21, 2007 – News of the Day

NPR reported today on nuclear plants in France. Apparently, nuclear energy requires cold water to cool its reactors. Recently, France which relies heavily on nuclear power, closed some plants because the rivers cooling the plants have gotten too warm. A nuclear reactor requires water to be less than 85 degrees. So, if you have a particularly hot summer, when you really need the air conditioning, there may be no electricity if you rely on nuclear energy alone.

Also along the line of energy, Spectra and Keyspan, the two energy companies trying to build a 40-mile gas transmission pipeline form Branford across the Sound to Long Island, had a major setback last week. U.S. District Court Judge Stefan R. Underhill in Bridgeport reversed a decision made in 2004 by then-U.S. Commerce Secretary Donald Evans that allowed the project to proceed. The companies can appeal the ruling and also are awaiting a ruling from the U. S. 2nd Court of Appeals on a water quality permit. Clams and oysters are at risk. Communities of Juniper Point and the Thimble Islands argued that the benefit to Connecticut was not sufficient to outweigh the risk to the Sound.

There was a correction printed in the Courant today which explains the confusion surrounding the Cherry Brook Farm negotiations. It seems there are two Cherry Brook Farms in Canton; one owned by the Humphrey family, and another that sold its development rights to the Town in 2004. Unfortunately, the Courant used a picture of the wrong farm with the story about the negotiations of the Town of Canton and the Humphrey family for development rights to a farm. The land (65 acres) is valued at $1.5 million. The Town was looking at purchasing the development rights for $600,000, but the Humphrey family found the Town’s restrictions too limiting for active farming. They expect to sell the property to a developer.

This is interesting. At a time when online advertising is expected to increase by 28.5%, AOL, Microsoft and Yahoo! are experiencing quite a slowdown in advertising growth. In fact, Richard D. Parsons, CEO of Time Warner which owns 95% of AOL, said, “he no longer expects AOL’s ad growth to match or exceed the overall growth rate of online advertising.” (AOL’s ad growth was 16% last quarter, while Yahoo’s rose 8% last quarter). So where are the advertisements going? Like always, our kids know the answer. The ads are on MySpace and Facebook, as well as on blogs and news collectors. But the traditional Internet portals (Yahoo!, Microsoft and Google) are fighting back by remaking themselves as companies that help sell or broker ads across the fragmented Internet market. Advertising.com, purchased by AOL in 2004, is now AOL’s fastest-growing unit.

Carl Malamud, an information activist has been busy. He is making major federal and state court decisions available to the general population through his Internet site, public.resources.org. His first 1,000 pages from court cases from the 1880s came from a used Thomson microfiche, begging the issue of copyright laws. His contention is, “that the control of publishing court rulings subverts the original intent of the framers of the Constitution by making the nation’s laws difficult to obtain by those outside the legal profession.” How does that sit with Thomson and LexisNexis, who control the nearly $5 billion legal publishing market? Not well, but they are planning to go to court.

Hewlett Packard, in an effort to increase sales of its ink and other printing supplies, has introduced a way for a traveler to use his cell phone to print off, store or share documents from any location. (http://cloudprint.hpl.hp.com/).

The Quote of the Day goes to Warren Buffet, who said of the market, “I can spend money faster the Imelda Marcos when things are right.” There is talk that Berkshire Hathaway could buy parts of Countrywide Financial with some of its $50 billion in cash.
Sources: Wall Street Journal, Hartford Courant, NPR, and New York Times