More Charges, “Adult” kids, No need for reform?, Cheap Ethanol play
– How about they stand on their own feet when they say “I am an adult”
– Good, he cannot go away for long enough
– Why do we keep letting these clowns be in charge of our retirement?
– Ethanol companies are so cheap now, these guys have to be right
How profitable could the JV in “The Kingdom” be for Dow?
The Saudi Aramco – Dow Chemical (DOW) joint venture at Ras Tanura will have a plastics processing zone, and area of petrochemical processing the Saudi’s covet diversification to, hence the recent purchase of GE Plastics (GE). Saudi Arabia is one of the most sought after destinations for petrochemical investments because it offers the lowest priced ethane in the world.
According to Dev Corp International, which is involved in developing plastics projects in the Kingdom, land is not a problem and companies have a choice of setting up facilities either on the east or the west coast and options include Jubail, Yanbu and the Plastic Valley in King Abdullah Economic City near Rabigh.
How much is the savings doing business in Saudi Arabia?
Land is available for lease at $0.27/square metre/year, .
Power costs are as low as $0.03/KWh.
Funding should also not be a problem as soft loans are available from the Saudi Industrial Development Fund to cover up to 48% of the project cost. As the upcoming “white paper” from Dow will illustrate, the JV strategy enables the projects to be self-funded.
One chief concern that has been voiced was the availability of skilled labor for the facilities but the Saudi government is reported to have set up institutes to train operators. They have a goal of producing 300 skilled operators every year.
There is a worldwide rush to get into Saudi Arabia now and Dow is the first to get it’s foot in the door in petrochemical processing and it is doing so on an unprecedented scale. What this will do is take the raw material costs which now stand at over 50% of Dow total cost structure and lower that dramatically, throwing more cash to the bottom line.
Based on recent history, that cash will be well taken care of for us shareholders.
Usually when you keep getting hints of something, there ends up being a certain level of truth to them. That what is going on with Arhcer Daniel’s Midland (ADM).
Earlier this summer ADM made waves when in Brazil they announced they were “actively” seeking investment in the country’s ethanol industry. Already producing bio-diesel there, a deal for ethanol would cement ADM’s place as the worlds largest producer of the fuel.
A month ago ADM underwent a management reorganization that more aligned its structure in the mold of an oil company much like CEO Patricia Woertz’s previous employer Chevron (CVX). How does the oil industry grow? Mergers and acquisitions.
Now we have Cosan (CZZ) Brazil’s major ethanol producer saying “will start taking its first international steps, with possible investments in ethanol plants in the Caribbean, Mexico or even in the United States in the coming years”. Why does this little tidbit matter, ADM is a minority shareholder in Cosan. Cosan’s financial vice president, Paulo Diniz, said “it’s impossible to be a global player in Brazil. You have to be present in the world’s largest ethanol market, the United States,”. He continued, “there’s no company which is really a global renewable energy player, and at present, Cosan’s condition to move into this position is unique,”.
Cosan’s seemingly “unlimited” capital raising capacity opens the possibility for acquisitions of “big companies,” Diniz said. He added that the company could raise in the coming years up to $15 billion through subsequent stock offerings. “With our current structure we can even dream of big steps (large company acquisitions),”.
HMMM.
We have the largest US player wanting to get into Brazil’s market and the largest Brazilian player wanting in the US market and there is already a equity relationship between the two. What is to stop a merger of equals creating an ethanol powerhouse on a global scale?
Uh, Nothing???
UPGRADES
Hexcel HXL Wedbush Morgan Hold » Buy
Mattson MTSN Am Tech/JSA Research Sell » Neutral
ADTRAN ADTN Brean Murray Sell » Hold
Polycom PLCM Kaufman Bros Hold » Buy
Aaron Rents RNT Morgan Keegan Mkt Perform » Outperform
Gol Intelligent Airlines GOL JP Morgan Underweight » Neutral
Sonic Solutions SNIC JP Morgan Neutral » Overweight
1-800-FLOWERS FLWS CIBC Wrld Mkts Sector Perform » Sector Outperform
Westwood One WON Deutsche Securities Hold » Buy
Briggs & Stratton BGG Robert W. Baird Underperform » Neutral
DOWNGRADES
Sonus Pharm SNUS Punk, Ziegel & Co Buy » Mkt Perform
C-COR.net CCBL Ferris Baker Watts Buy » Neutral
Panacos Pharma PANC Caris & Company Above Average » Average
American Commercial Lines ACLI Cantor Fitzgerald Buy » Hold
Corn Products CPO BB&T Capital Mkts Buy » Hold
Arris ARRS Friedman Billings Outperform » Mkt Perform
Kellogg K Bear Stearns Outperform » Peer Perform
Dean Foods DF Bear Stearns Outperform » Peer Perform
Marsh McLennan MMC JP Morgan Overweight » Neutral
C-COR.net CCBL Friedman Billings Outperform » Mkt Perform
Michael Baker BKR Oppenheimer Buy » Neutral
Cadbury Schweppes CSG Bear Stearns Peer Perform » Underperform
Wednesday’s Picks
Jeff Macke liked eBay (EBAY). Open $39.07
Guy Adami recommended USEC Corp (USU). Open $10.36
Karen Finerman preferred Comverse Technology (CMVT.PK). Open $20.41
Pete Najarian said buy Digital River (DRIV). Open $44.73
TUESDAY’S PICKS
Jeff Macke expects a pull back and recommends Short Dow30 ProShares (DOG). Open $58.03 Close $57.25 Loss $.78
Guy Adami said buy Pfizer (PFE). Open $24.42 Close $24.24 Loss $.18
Karen Finerman preferred NYMEX (NMX).Open $125.10 Close $125.70 Gain $.60
Pete Najarian liked ValueClick (VCLK). Open $22.00 Close $24.85 Gain $2.85
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks)
Guy Adami= 25-18 Gain $40.86
Eric Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Jeff Macke= 30-23 Gain $9.18
Pete Najarian= 19-16 Gain $27.74
Tim Seymore= 3-2 Loss $.49
Karen Finerman= 11-5 Gain $4.71
Stacey Briere-Gilbert= 2-0 Gain $1.61
WERN Werner Enterprises Inc 17.09
WCC Wesco Intl Inc 39.64
UFPI Universal Forest Products 31.79
TUES Tuesday Morning Corp 9.36
TMS Thomson 14.76
SPLS Staples Inc 21.57
SPF Standard Pacific Corp 6.30
SHLD Sears Hldgs Corp 125.12
RAIL Freightcar Amer Inc 38.34
PTRY Pantry Inc 28.70
PEIX Pacific Ethanol Inc 8.71
MSSR Mccormick & Schmicks … 19.30
MNI McClatchy Newspapers, Inc 19.94
LAMR Lamar Advertising Com … 48.13
KND Kindred Healthcare Inc 17.77
DHI D.R. Horton, Inc 13.37
DF Dean Foods Co New 25.03
ISCA International Speedwa … 45.69
IMN Imation Corp 24.06
IIIN Insteel Industries, Inc 15.27
HZO Marinemax Inc 15.02
HVTA Haverty Furniture Inc 9.85
HTLD Heartland Express Inc 14.21
CC Circuit City Stores, … 7.93
CAO Csk Auto Corp 10.90
CALC California Coastal Cm … 12.68
CAKE The Cheesecake Factor … 22.96
BSET Bassett Furniture Ind … 10.94
BOW Bowater Incorporated 14.34
AVR Aventine Renewable Energy 10.28
AN AutoNation Inc 17.39
Leaders, Sub-Prime, UN Scandal?, The MoveOn 25
– The top ten companies for producing leaders
– Remember those “rip off” sub-prime mortgages that are just terrible? If done right, they are actually the best for you
– Another thanks for the mention I just became aware of.-
– Hillary Clinton sides with Moveon.org over the US Military, only 1 of 25 Senators (all Democrats) to do so.
Did you ever read something that just did not jive with what you were witnessing?
Yesterday, Lowe’s (LOW), the second-largest home improvement chain after Home Depot (HD), said it now expected profit for the year ending in February to be at the low end or below a forecast of $1.97 to $2.01 a share it gave in August. Currently, analysts expect a profit of $1.99 a share equal to last year. The result of that warning was a 3% haircut for shares after hours yesterday and continued weakness this morning with share opening down 5%. A bit of an overreaction to a company essentially reaffirming estimates albeit at the low end?
They cited “drier” than normal conditions in much of the country that were keeping people from purchasing lawn and garden accessories. Makes sense. Except, I live in the Northeast and we have had probably 3 rainy days since July 4th and are currently under “drought” watering conditions. Yet, despite this, the local Lowe’s I was at this weekend was just a busy as usual. Now obviously you cannot extrapolate the entire chain from one location but that location in experiencing the very conditions they gave for the potential shortfall. Odd. This warning is also odd in that earlier this year Lowe’s told us they were seeing “improving” conditions in many areas. Just does not add up.
They also backed expectations of average growth of 12 percent to 15 percent in profit per share each year from 2008 through 2010, while total sales rise 8 percent to 11 percent a year during that time.
What to think? Lowe’s is giving us the worst case scenario. What is most likely to happen is a meet or more likely beat of these lowered expectations. Between the two chains (HD & LOW) Lowe’s is by far the better run and better situated to capitalize on any improvement. Having spent the last three years stealing market share from home depot every quarter, Lowe’s will see result catapult when things settle.
This may be a tremendous time to buy shres…
Why would you give away one of the most popular items available today? Maybe it is the only way to get people into your stores?
From Oct. 2 to Nov. 7, Starbucks (SBUX) more than 10,000 U.S. stores will hand out about 1.5 million “Song of the Day” cards each day. The cards can be redeemed at Apple’s (APPL) online iTunes Store.
Thirty-seven artists with featured songs include Paul McCartney and Joni Mitchell – the first two to sign on with Starbucks’ Hear Music label – along with Joss Stone, Dave Matthews, John Mayer, Annie Lennox and Band of Horses.
Starbucks and Apple recently announced they will allow users of Apple’s iPhone and new iPod Touch to directly download songs playing in a Starbucks to their iPods. A Starbucks icon will light up on the iPhone or Touch whenever a user is within range of a Starbucks shop’s Wi-Fi signal. Great, but, why give it away?
Why is this bad news? If you are the #1 coffee chain and are going into business with a company that has a product essentially in a category of one, why give it away? The very first thing that comes to my mind is that Starbucks has seen further deterioration of already anemic store traffic. There ought to be a natural curiosity of the new service that would cause an increase in traffic as people come in to check it out without cutting 99 cents of what they make on a cup of coffee. Unless, unless, traffic has fallen so much recently that Starbucks is in fear of an earnings miss and is pulling out all the stops to generate whatever revenue it can for the quarter.
Starbucks is already on record saying “meeting the high end of earnings expectations will be challenging” and this action illustrates that it just might be more challenging than they are even admitting.
Both Apple and Starbucks rarely give anything away, for Starbucks to do it now smells a little like desperation.
With all the talk about lately, Gap (GPS) made a hire that may eventually transform the listless retailer.
The designer Todd Oldham, whose products revitalized retailers like Target and La-Z-Boy was hired to hopefully do the same for Old Navy. He has agreed to oversee clothing design and eventually create a line of merchandise for the chain sold under his name, which currently appears on items from flower arrangements at FTD to a fashion show on MTV.
Old Navy it seems has finally realized it target market and said that Mr. Oldham would focus on shoppers in their 20s, after years of the chain “trying to be all things to all people,” said Dawn Robertson, the president of Old Navy.
How important is this for Old Navy? Consider Old Navy whose had sales of nearly $7 billion last year, is bigger than both Gap and Banana Republic. Ms. Robertson said Mr. Oldham’s clothing for Old Navy would be “modern and relevant,” adding that “it will be an important part of our turnaround.”
This is big for Gap. In an environment in which we may be seeing a slowdown, people will need a reason to go to Old Navy. Mr. Oldham, with his name recognition, will give the much coveted young shopped that very reason and given his past successes, thee is no reason to expect anything but that here. Should we rush out and buy Gap shares now? Not yet. CEO Glen Murphy has not really given us his “vision” of where he wants to take the company so for that reason, I would hold off. Gap still has too much cash on hand, too many stores, and needs to buy back more shares. Until we know what will happen there, anything is guesswork. But, and this is a big but, if this is indicative of what he plans to do on the retail front, it is a very promising development.
Gap shares are becoming extremely enticing but I just cannot pull the trigger yet with the unanswered questions I have. Just need more answers…
UPGRADES
Jo-Ann Stores JAS KeyBanc Capital Mkts Hold » Buy
Ventana Medical VMSI Caris & Company Average » Above Average
Cousins Prop CUZ Wachovia Mkt Perform » Outperform
Maxygen MAXY Stanford Research Hold » Buy
SL Green Rlty SLG KeyBanc Capital Mkts Hold » Buy
Ariba ARBA Cowen & Co Underperform » Outperform
Motorola MOT RBC Capital Mkts Sector Perform » Outperform
Susser SUSS JP Morgan Neutral » Overweight
EMC Corp EMC Citigroup Hold » Buy
Optium OPTM Jefferies & Co Hold » Buy
DOWNGRADES
Mattson MTSN CIBC Wrld Mkts Sector Perform » Sector Underperform
Cubic CUB BB&T Capital Mkts Hold » Underweight
Dime Community DCOM Stifel Nicolaus Hold » Sell
F5 Networks FFIV Nollenberger Capital Buy » Neutral
Foundry Ntwks FDRY Nollenberger Capital Buy » Neutral
Kyphon KYPH Piper Jaffray Outperform » Market Perform
LDK Solar LDK CIBC Wrld Mkts Sector Outperform » Sector Perform
Sirtris Pharma SIRT JP Morgan Overweight » Neutral
Rockwell Automation ROK JP Morgan Overweight » Neutral
Red Hat RHT Credit Suisse Outperform » Neutral
Reliance Steel RS UBS Buy » Neutral
TUESDAY’S PICKS
Jeff Macke expects a pull back and recommends Short Dow30 ProShares (DOG). open $58.03
Guy Adami said buy Pfizer (PFE). Open $24.42
Karen Finerman preferred NYMEX (NMX).Open $125.10
Pete Najarian liked ValueClick (VCLK). Open $22.00
MONDAY’S RESULTS
Jeff Macke recommended selling General Motors (GM). Open $34.94 Close $34.74 Gain $.20
Karen Finerman liked NYSE Euronext (NYX). Open $76.05 Close $77.81 Gain $1.76
Pete Najarian preferred BJ Services (BJS). Open $27.81 Close $27.67 Loss $.15
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks)
Guy Adami= 25-17 Gain $41.04
Eric Bolling= 10-11 Loss $14.01
John Najarian= 13-3 Gain $15.54
Jeff Macke= 30-22 Gain $9.96
Pete Najarian= 18-16 Gain $24.89
Tim Seymore= 3-2 Loss $.49
Karen Finerman= 10-5 Gain $4.11
Stacey Briere-Gilbert= 2-0 Gain $1.61
WOS Wolseley Plc 16.43
WERN Werner Enterprises Inc 17.30
USBE US Bioenergy Corp 9.01
SEH Spartech Corporation 16.54
RYL The Ryland Group, Inc 22.64
PLCE Childrens Pl Retail S … 24.79
PIR Pier 1 Imports, Inc 5.41
PEIX Pacific Ethanol Inc 9.25
MTH Meritage Homes Corp 15.45
MNI McClatchy Newspapers, Inc 20.30
ISCA International Speedwa … 46.12
CC Circuit City Stores, … 8.11
BGP Borders Group, Inc 13.50
HHS Harte-Hanks Communica … 21.11
HAR Harman International … 79.85
GPRE Green Plains Renewabl … 13.02
I have spent the better part of a year now detailing the missteps of management at Starbucks (SBUX) and predicting their current predicament but, I have to come to their defense on this one.
The National Labor Relations Board has accused Starbucks of illegal anti-union activity at a store in Michigan. This is the second charge it has received in the past month and the company is currently on trial in New York on charges of union-busting efforts involving the International Workers of the World. Business Week recently took a look at Starbuck’s situation and compared them to Wal-Mart (WMT). Not good for a company that has long ridden the “good corporate citizen of the world” train. Here is the thing, they actually earned that title and deserve it. While I have been a bit vehement in my criticism of their business moves (or lack thereof), Starbucks does treat its workers very well.
Should Starbucks be fighting union activity? Hell yes! Can anyone think of anything positive unions have contributed to their workers since the 1940’s other than predictable layoffs, salary cuts and the eventual destruction of the businesses their “workers” are employed by? For proof one need look no further that the US Auto and Airline industries for proof. Both industries, totally unionized and strapped with impossible labor costs are perennially doomed watching one or more of its members battle with bankruptcy. The UAW has seen its ranks decimated and hundreds of thousands of its workers lose their job because they view the employer as the enemy, not a partner. In negotiations they either “win” or “lose”. The problem? when they think they “win”, they actually lose more long term.
So yes, Starbucks and Wal-Mart ought to fight the unions with every once of corporate soul they have. Not just for shareholders, not for management but for the soon to be unemployed workers they will layoff if the unions find their way into their businesses.
What unions today fail to realize is that management has a fiduciary duty to its shareholders. That means keeping labor costs in line. If the unions do “win” and get in to either location, they will get their salary increases to ridiculous levels, there will just be a whole lot less people getting a check each week. How is that good?
Just ask GM (GM). They will lose about $100 million a day when workers walk out today…. GO UNIONS!!!
Lobbyists, UN, Killing gays ok at Columbia, Oil
– Not every time an industry lobbies congress does it work.
– Another UN scandal, who would have thought? Please detect the heavy sarcasm
– You can kill gays for being gay and get invited to Columbia University, ask them to keep quiet about it, and you get banned
– Another take similar to mine on the state of oil short term