Category: Articles

The DeBeers Diamond Group is in the middle of settling a class action lawsuit. That means if you purchased diamond jewelry between January 1994 and March 2006, you could be in for some free cash.

The lawsuit claims that DeBeers monopolized the supply of diamonds, and fixed and controlled the price of diamonds. To settle the suit, DeBeers is paying consumers back $136 million.

If you spent more than $160 on a piece of diamond jewelry between January 1 1994 and March 31 2006, you should file a claim. If you spent less than $160, the refund you could receive from DeBeers would be less than $10.

See Story at WSYR.com

To file a claim, click here:

To file a claim online, click here:

Disclosure: Wife likes diamonds….

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It seems the Japanese are courting any US financial institution in need of funds.

While their timing is more than a bit off given recent investments in Citigroup (C) and Merrill Lynch (MER) by Eastern Investors, the news does bode well for the thesis that more and more investors are seeing value in the sector.

Mitsubishi UFJ (MTU), Mitsui Sumitomo Financial Group (SMFJY) and Mizuho Financial (MFG) have pooled together $10 billion have declared they are “open to negotiation” with any struggling Wall Street bank in need of a cash infusion.

This is in a way even more encouraging news that the recent rush of investment primarily by Middle Eastern investors. The reason is the historic extreme financial conservatism of the Japanese banking sector.

Merrill Lynch did secure a $6.6 billion cash injection from a consortium that included Mizuho, together with the Kuwait Investment Authority and the Korean Investment Corporation. How conservative has the Japanese sector been? The deal represents the first time since 1989 that a Japanese financial house has taken a substantial stake American or European bank.

Disclosure: Long Citi, None in others

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Blogger in court, Foodies, Bloggers and companies, Financials

– This is fascinating and bears watching.

– Now a site for folks who love food. Think of it as “Facebook” for food.

– Here is the problem. If companies responded to bloggers when they are contacted by them, a lot of this would be eliminated. Since they do not generally, they deal with us in the blogsphere….

– Another yes vote for the financial sector..

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OK kids, I finally have a position in Apple (AAPL)

I sold 4 July 2008 $280 calls (APVGW) for $258 each this morning.

Simply put, as long as the stock price of Apple is below $280, 70% higher than it is now on July 19th , I pocket the money. Should it go above, I will be out the difference between $280 and wherever it sits.

Why?

* With the rollouts of the iTouch and the iPhone, in the last twelve months shares of Apple are up 74%. There is nothing on the horizon product wise that will provide the boost the company received last year. There was no “one more thing” moment at MacWorld.
* The US economy is clearly slowing down. Citigroup’s (C) and JPMorgan’s (JPM) results the past two days illustrate a clear deterioration of consumer credit cards. That will lead to a contraction in consumer purchases.
* The latest results for Europe, the iPhone’s recent launch area. Its economy is slowing also. Sales there have been moderate at best.
* Google’s (GOOG) phone. The only folks probably more loyal to a products than Apple’s are Google’s
* Research in Motion’s (RIMM) competing product. Until this point, Apple has had a product of one (touch screen), not anymore.
* Intel (INTC): Surprised with a disappointing quarter. May be a tech slowdown in the works.

Now none of this means Apple will not post fantastic results on Jan. 22. It does mean that there are significant headwinds that did not exist last year and up until this point in 2008. Trading at over 40 times earnings after the recent 15% fall in the stock price, 2008 will prove to be much tougher than 2007.

Now, Apple fanatics out there. I did not say Apple will lose money or see earnings decline so lets just pull out the paddles and zap ourselves into a calmer state. One would be hard pressed to think the stock will match the last 12 months performance in the next 6 though given the macro environment.

Disclosure: I guess this makes me short Apple at $280, Long Citi, None in others

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I save the rehash of Citigroup’s (C) quarter. We expected it to be awful, and Citi delivered.

The dividend cut to $.32 a quarter for a still fat 4.5% yield. $18 billion in write-downs, a $9.8 billion loss ans $14 billion in change in preferred stock sold to investors. That finishes my Q4 review.

So, where do investors go from here? Is there light at the end of the tunnel? YUP

The terms of the convertible preferred issuance are $12.5 billion, a 7% dividend, a 20% conversion premium and are non-callable for seven years. The firm will also sell $2 billion in common stock to all shareholders. Time to be announced.International Businesses:

Citi is booming here. International consumer cards net income more than doubled,up 68%. International growth drove an 85% increase in net income at the Private Bank and a 7% increase at Smith Barney.

Europe, Asia, Latin America, Africa and Middle East consumer divisions all experienced high double digit net income growth. Latin America and Asian Markets & Banking divisions net income grew at mid double digit rates.

Now, admittedly saying “except for those write-downs it would have been a great quarter” is more than a bit like saying “other than the assassination, how was the theater Mrs. Lincoln?”

Much of the planned head count reductions are going to come from asset sales. Both of these things are exactly what need to be done. The dividend did not need to be cut and I think returning it will be a priority down the road.

Part of the problem is that Pandit will not make anyone forget Sandy Weill or Jack Welch. Charisma is not in his DNA. That does not mean he cannot get the job done. Turning Citi is a job unlike any other.

Wall St. wanted blood Tuesday and did not get it. Because of that, the stock is selling off. Personally, with an operation the size of Citi, coming out and saying “this is the finalized plan” a couple months after being on the job would have been irresponsible. It just is not possible to do a detailed job in that time frame. Had he done it that way, he would have been relying heavily on the opinion and advice of others, not a good idea at this point.

Pandit needs to take decisive action and has Q1 to do it. He should not just fire away to make jittery investors happy.

Disclosure: Long Citi

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Interesting thoughts on Countrywide (CFC).

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Wednesday’s Picks

None

Tuesday’s Results:
Jeff Macke says sell Netflix (NFLX) $22.77 Close $22.05 GAIN

Guy Adami recommends buying EMC Corp (EMC) $16.80 Close $16.68 LOSS

Karen Finerman prefers Corning (GLW) $23.25 Close $23.24 LOSS

Pete Najarian likes Bunge (BG) $133.0 Close $127.21 LOSS

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 3-1
Jeff Macke= 4-2
Tim Seymore= 2-1
Guy Adami= 3-4
Pete Najarian= 2-3
Karen Finerman= 2-3

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Karen Finerman= 40-30 = 57%

Disclosure:

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Steve Job’s announced today that Apple’s (AAPL) iPhone has sold 4 million units in the 200 days since it went on sale. Not good enough.

The stated goal from Job’s, who is famous for his low ball objective that he can then blow away was 10 million units by the end of 2008. Currently Apple has averaged 20,000 units a day. The shine comes off this number when you consider about 1,000,000 were sold the first 30 days (estimates vary). That leaves us at 17,600 a day since.

In order for the “goal” to be accomplished, Apple must hit a daily average to 18,100. Questionable. One has to acknowledge the initial US launch euphoria will not be seen elsewhere and holiday season two will not approach #1. When you consider Europe’s launch has been tempid at best and plans for China seem to have fallen through at this point. Canada is rumored to launch any day now but how many users will switch from the hometown Research in Motion for Apple? If the US does indeed head for a recession or dramatic slowing, how many folks will be willing to pay $399 for a phone? The argument is that high end users are buyers of the phone but if results at Tiffany’s (TIF) and Coach (COH) are any indication, these folks are cutting back also.

Now, does this mean the phone has been a “flop”? No. It does mean that a $599 phone will not dominate a category. Jobs seemed to have realized this when he lopped $200 off the price 90 days after the launch as sales stalled.

As the details of the phone trickled out in May last year, 2 months before the phone hit the stores I said the phone would be a flop. I was wrong. I also said “cut the price to $299 and you may have something. A $599 phone will not gain mass acceptance no matter what it does, especially when people can still get it’s functionality from their existing devices. Also, the exclusive deal with AT&T was not a very bright idea”.

I would say right on both those accounts. I think Apple really missed the boat with the exclusive AT&T (T) deal. With Research in Motion (RIMM) coming out with a competing product very soon that will be available on most carriers, I think Apple may have missed its chance to dominate the landscape. As things stand now, RIMM has 36% vs 19% to Apple of the “smart phone” market. Let us not forget Google’s (GOOG) highly anticipated foray into the market later this year.

The sad thing is that it is a self-inflicted move as Jobs’s history of not playing nice with others may have come back to bite the company. He may have got the “best deal” from AT&T at the expense of much bigger things.

Disclosure: None

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