For some, The Candy Man is a fun ditty from the 1971 movie “Willie Wonka and The Chocolate Factory.” The phrase, however, has its origins in a much more sinister past. As stated in the May 1976 article of the Oxford Journal, the etymological origins of the term “candyman” are rooted in a historic coalminers’ strike of 1863 England. The mining companies of that day hired itinerant confectionary salesmen to help evict striking miners from company-supplied housing. The phrase candyman soon became a derogatory term representing someone who appears to be harmless and kind, but has unperceived malintent.
The 60’s revolution brought new meaning to the phrase. The modern candyman became the conniving drug pusher who offers unaware teens a “good time” through free or low cost drugs. His strategic marketing plan was simple and has survived to this day – get kids hooked now and garner huge profits later.
Sadly, some who offer financial advise have taken a page out of the candyman’s playbook. The promise of sagacious advice that will enhance one’s wealth, access to elite and high-performing investment products, and of course, eye-popping performance statistics ridden with fine print qualifiers, lure the investor in. Quietly, the needle is slipped into the investor’s brokerage account and invisible, hard to detect commissions, management, 12b-1, trading, and front-end and back-end fees drain away hard-earned savings. Wall Street reaps huge rewards while investors slowly and quietly lose.
Discharging the investment adviser candyman is often a scary proposition. But like many MarketRiders members have found, liberation from high priced investment help is good for the spirit as well as the retirement account.
July 31, 2010 | Filed Under
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Bond prices of all categories rallied again this week. One bond ETF I've been tracking closely is the **20+Year T-bond iShares (TLT)** which is shown in Chart 1. I recently wrote that the TLT...
July 31, 2010 | Filed Under
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Leave a Comment ANNAPOLIS, MD--(Marketwire - July 30, 2010) - China Entertainment Group, Inc. (renamed Safe and Secure TV Channel Inc.) (PINKSHEETS: CGRP), today announced that it completed its merger with Safe and Secure TV Channel, LLC (the "LLC"), the premier internet broadband television network devoted exclusively to homeland security and emergency preparedness. The transaction closed on July 22, 2010, with the merger of the LLC into the Company. The Company issued 35,245,642 shares of restricted common stock to the LLC's three members in connection with the merger, representing just over 50% of the Company's common stock after giving effect to post-merger transaction adjustments, including share cancellations by a principal stockholder. The shares were issued pursuant to the registration exemption provided Rule 506 of Regulation D.
ANNAPOLIS, MD--(Marketwire - July 30, 2010) - China Entertainment Group, Inc. (renamed Safe and Secure TV Channel Inc.) (PINKSHEETS: CGRP), today announced that it completed its merger with Safe and Secure TV Channel, LLC (the "LLC"), the premier internet broadband television network devoted exclusively to homeland security and emergency preparedness. The transaction closed on July 22, 2010, with the merger of the LLC into the Company. The Company issued 35,245,642 shares of restricted common stock to the LLC's three members in connection with the merger, representing just over 50% of the Company's common stock after giving effect to post-merger transaction adjustments, including share cancellations by a principal stockholder. The shares were issued pursuant to the registration exemption provided Rule 506 of Regulation D.
TORONTO and TAMPA, FL--(Marketwire - July 30, 2010) - Cott Corporation (NYSE: COT) (TSX: BCB) announced today that on July 30, 2010, the U.S. Department of Justice and Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (the "HSR Act") for Cott's proposed acquisition of Cliffstar Corporation ("Cliffstar"). As previously announced, Cott has entered into an Asset Purchase Agreement with Cliffstar to acquire substantially all of the assets and liabilities of Cliffstar and its affiliated companies. The purchase price is $500 million in cash, payable at closing, subject to adjustments for working capital, indebtedness and certain expenses. Cliffstar is entitled to additional contingent earnout consideration of up to a maximum of $55 million, the first $15 million of
Mammoth Energy Group to Acquire 49% of Chilean Lithium Concessions at Salar de Maricunga
State Street Corporation (
STT) reported its second-quarter 2010 results on July 20. Operating earnings for the reported quarter were in line with the Zacks Consensus Estimate. However, investors were clearly not buoyant with these results. As a result, the share price plummeted following the earnings release.
The overall response has been negative with respect to estimate revisions over the last 7 days as analysts covering the stock had sufficient time to absorb and consider the near-term fundamental downsides.
Let’s now cover the results of the recent earnings announcement, subsequent analyst estimate revisions and the Zacks ratings for both the short term and the long term outlook for the stock.
Earnings Report Review
Achievement of the estimates should be a positive for the stock price and this inspires optimism for a stable future. But the stock price did not follow this thumb rule. A quick look at the financials reveals that State Street experienced an increase in revenues and assets under management during the reported quarter. State Street’s recent acquisitions – Intesa in mid-May and the Mourant in early April – contributed to the results. However, there were several negatives including higher expenses that kept earnings under pressure.
While the stock market experienced a significant appreciation in the second quarter, the growth in assets under management of the company was relatively low.
Earnings Estimate Revisions – Overview
Following the earnings release, estimates have moved slightly down. The estimate revision trends and the magnitude of such revisions justify a slight weakness in the stock. We will now go through the details of the earnings estimate revision to substantiate why an investor would not be very interested in this stock in the near term.
Agreement of Estimate Revisions
One of the total 17 analysts covering the stock has lowered estimates for the third quarter and full year 2010, while no upward revision was witnessed over the last 7 days. The majority of the analysts have not revised their estimates following the earnings release.
Magnitude of Estimate Revisions
Estimates for the third quarter of 2010 remained unchanged at 83 cents since the earnings announcement. However, estimates for 2010 deteriorated only by a penny from the operating earnings per share of 86 cents to 85 cents since then. The magnitude of the downward estimate revisions indicates why adding State Street to an investor’s portfolio at this point is best avoided.
Earnings Surprises
However, the stock has been steady over the last four quarters with respect to earnings surprises. The average remained positive at 4.1%. This implies that State Street has surpassed the Zacks Consensus Estimate by the same magnitude over that period.
Our Take
Given the ongoing turmoil in the mortgage market, we are significantly concerned about the sizable amount of mortgage-backed and asset-backed securities exposure in State Street’s investment portfolio, though it is diversified with respect to asset classes. We expect impairment charges on these exposures to negatively impact the company’s financials in the near future.
However, we believe that prudent cost control and strong regulatory capital ratios along with well-off core servicing and investment management franchises will help offset the volatility caused by the global economic turmoil, thereby providing buoyancy to growth in the longer term. Also, the recent acquisitions are expected to reinforce State Street’s core asset servicing business.
The estimate revision trends and the magnitude of revising the estimates portray no clear directional downward pressure on the stock over the near term.
State Street shares currently maintain a Zacks #3 Rank, which translates into a short-term ‘Hold’ recommendation.
Also, considering the company’s business model and fundamentals, we have a long-term “Neutral” recommendation on the stock.
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at http://www.zacks.com/education/
July 30, 2010 | Filed Under
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The Canadian arm of
General Motors (
MTLQQ) has decided to shut down its last remaining transmission plant in Windsor, Ontario. The closure of the plant will cease the production of transmissions for the Pontiac G5 and Chevy Cobalt, leaving nearly 500 workers unemployed.
General Motors (or GM), one of the world’s largest automakers operating in around 157 countries, has been hit hard by the economic slowdown. To this is added the growing competition from the Chinese automakers and from
Toyota Motors (
TM) in Japan.
GM reeled under huge losses last year before declaring bankruptcy. Consequently, each of its subsidiaries including GM Canada has felt the backlash. GM Canada received investments worth $10.1 billion from the federal and Ontario governments, but these failed to improve its condition.
In order to rally round, GM Canada took to cost reduction through job cuts and closing of plants. Since May 2008, the subsidiary has eliminated as many as 1,400 jobs in the country. In addition, it closed down two factories – General Motors Diesel and Oshawa Truck Assembly in Ontario.
The cost minimizing programs have apparently paid off in face of challenging economic and industry conditions. GM recorded revenues of $31.44 billion in first quarter 2010, a rise of 40% from the last year. GM North America saw an over 55% increase in revenues to $19.2 billion in the quarter compared with its year-ago level. Earnings per share for the company stood at $1.66.
The increase in GM's revenue as a whole is the consequence of a15.6% improvement in vehicle sales in the domestic market in the same quarter as compared with that of 2009. GM Canada saw a 5% reduction in vehicle sales, though it managed to grab a 15% market share in the North American region. GM North America as a whole performed well, with 12.5% increase in vehicle sales in this quarter over the same period last year.
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July 30, 2010 | Filed Under
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International Business Machines Corp. (IBM) has announced to acquire Storwize, a privately held company, for an undisclosed sum. The acquisition, expected to close in the third quarter of 2010, is expected to boost IBM’s storage capacity.
Marlborough, Massachusetts based Storwize is a provider of data compression technology, which helps clients to reduce physical storage requirements by up to 80%.
Storwize has more than 100 customers such as Mobileye, Polycom Israel, Shopzilla Inc. and Sumitomo Mitsui Construction, among others. The company serves in a diversified range of markets, which include energy, manufacturing, finance, insurance, telecommunications and cloud services.
Storwize’s patented Random Access Compression Engine (RACE) compresses primary data as compared with other prevalent storage compression technologies, which only compress secondary or backup data. Primary data, extensively used in daily business operations, may comprise multiple types of files from virtualization images to databases.
By compressing primary data, Storwize allows its clients to store more than five times of data using the same amount of storage, as the technology shrinks data files and databases take up less space. Storwize data compression does not affect business and other applications and takes only four hours to install.
Storwize’s data compression technology enables its clients not only to reduce their storage cost, but also improves the overall efficiency in fetching data for analytics and other applications. Decision making improves as analytics applications can scan through a huge amount of historical data without any additional storage need and at a faster pace.
Enterprise’s demand for larger storage space is increasing daily and is expected to grow at a compound annual growth rate (CAGR) of over 43.0% from 2008 to 2013, according to the research firm IDC.
We believe this acquisition will help IBM to serve its expanding analytics customer base. IBM already uses technologies such as ProtecTIER deduplication that can be used along with compression technology to improve storage efficiency.
IBM also utilizes XIV high-end disk storage architecture that supports faster analysis of data by making it available in a considerably short span of time. The company pointed out that its Scale-out Network Attached Storage (SONAS) supports multiple petabytes of storage in a single file system.
The Storwize application will work with popular network attached storage (NAS) systems, including IBM N series and SONAS, as well as non-IBM NAS systems from EMC Corporation (EMC), Hewlett-Packard (HPQ), NetApp Inc. (NTAP) and others.
IBM continues to proceed with its strategy of accretive acquisitions that can be easily integrated into its current business. IBM plans to spend approximately $20.0 billion in acquisitions over the next 5 years.
Since 2000, IBM has acquired approximately 108 companies for a total of about $22.0 billion, all of which have been profitable. Since 2005, IBM has invested $10.0 billion, or $8.5 billion net, in 14 strategic acquisitions to build its business analytics capabilities.
We believe IBM will continue to acquire companies with a higher intellectual property, particularly in the software arena going forward.
Although IBM benefits from a strong liquidity position, operational efficiency, substantial free cash flow and earnings momentum, the company faces stiff competition from Hewlett-Packard, Accenture plc (ACN), Oracle Corporation (ORCL), VMware Inc. (VMW), Google Inc. (GOOG) and Microsoft Corporation (MSFT) in most of its markets. We maintain a Neutral rating on a long-term basis (6–12 months).
IBM has a Zacks #2 Rank, which implies a Buy rating on a short-term basis (1–3 months).
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July 30, 2010 | Filed Under
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American Electric Power Company Inc. (
AEP) reported strong second quarter fiscal 2010 results. In the reported quarter, the company eclipsed the Zacks Consensus Estimate of 69 cents by 5 cents with EPS of 74 cents. The company's results also climbed from the year-ago quarterly EPS of 68 cents.
On a reported basis, including one-time items, earnings came in at 28 cents in the reported quarter, down significantly from 67 cents in the year-ago quarter. Reported earnings were largely affected by the charges incurred for the cost reduction and restructuring program implemented in May 2010, as well as the disallowance by the Virginia State Corporation Commission of the recovery of $54 million related to the Mountaineer Plant carbon capture and storage project ($34 million net of tax).
Operational Performance
Quarterly revenue at American Electric Power rose 6% to $3.4 billion from $3.2 billion last year. However, this came in below the Zacks Consensus Estimate of $3.5 billion. American Electric Power's ongoing earnings also grew 11% year over year to $355 million in the quarter.
Retail electricity sales volumes of 41.1 billion kWh in the quarter rose 5% compared to 39.2 billion kWh sold in the prior-year quarter. This was mainly due to strong sales across all contributing sections. Electric sales volumes for residential, commercial and industrial sections grew 2.2%, 3.2% and 9.4%, respectively, accompanied by a 1.6% rise in miscellaneous electric sales.
Wholesale electricity sales volumes, however, declined 2.1% year over year to 7.0 billion kWh.
Segmental Performance
Ongoing earnings from Utility Operations increased $22 million to $348 million in the reported quarter. The improvement was driven by a favorable impact of rate changes and constructive weather throughout its utility service territory, offset by reduced marketing and trading activity.
Ongoing earnings from AEP's River Operations were poor compared to the year-ago period. However, ongoing earnings from the Generation and Marketing segment increased $3 million in the quarter to $7 million. This was due to improved wind farm earnings.
All Others, which includes the parent company and other investments of the company, was at break-even compared to a loss of $10 million last year. The improved position was due to higher investment income.
Outlook
American Electric Power reaffirmed its ongoing earnings guidance range for fiscal 2010 in the range of $2.80 to $3.20. The Zacks Consensus Estimate for fiscal 2010 is presently $3.03 per share.
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July 30, 2010 | Filed Under
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