Saturday, January 21, 2012

Credit Crisis Update: U.S. Stocks Skid as Bailout Bogs Down, President to Address the Nation

NEW YORK (CNNMoney) -- Greece and its private sector creditors remain mired in deep negotiations over a deal to reduce the nation's crushing debt load.

Institute of International Finance director Charles Dallara, who represents the private sector investors and banks that hold Greek debt, said "it's not entirely clear" how close the parties are to a deal.

"I wouldn't say I'm confident, but I'm hopeful we'll reach agreement," Dallara told CNN International's Richard Quest in a phone interview from Athens.

The talks ended Wednesday without an agreement. They will resume Thursday and Dallara said final terms could be reached in the days ahead.

The IIF has been in discussions with the Greek government over an agreement to voluntarily write down the value of Greek government bonds by 50%.

The private sector holds over €200 billion worth of Greece's total debt load -- estimated at €350 billion.

Dallara said the group intends to follow through on the 50% writedown, which was announced following a summit of European Union leaders in December.

That would result in significant losses for the private sector. But it would also help reduce Greece's debt load to 120% of economic output by 2020.

In addition, Dallara said 15% of the remaining amount that Greece owes the private sector would be paid in cash. Another 35% would be restructured, or replaced with loans that have longer maturities and lower interest rates.

The talks broke down last week amid demands for even larger write downs, and Greek Prime Minister Lucas Papademos' call for a private sector participation rate of 100%.

Dallara told CNN he's confident the group can "mobilize a high participation." But that doesn't mean 100%, he added.

The deal is a key condition for Greece to receive additional bailout funds from the European Union and International Monetary Fund. Without additional financial support, Greece may not be able to make a €14 bill! ion paym ent it owes on bonds coming due March 20.

Dallara stressed that both sides are interested in finding "common ground."

World Bank warns on risk of global recession

He said the creditors recognize that a portion of Greece's debt needs to be written off in order to avoid a "disorderly" default, which could have severe repercussions for the global economy. But he acknowledged that some investors may be worried that other euro area governments could extract similar concessions.

All governments have an interest in resolving Greece's debt problems "in a cooperative manner" so that investors will be confident that issues this extreme can be resolved "in a mutually satisfactory way," said Dallara.

-- CNN's Jim Boulden contributed to this report from London.  

Lehman Forced to Revise Bankruptcy Exit Plan

After some creditors rejected Lehman Brothers' Chapter 11 proposals, the company revised its plan to exit bankruptcy, filing a new plan in New York, Bloomberg reported Wednesday.

The plan didn't list a voting deadline for creditors or propose a date for the confirmation hearing, Bloomberg reports. Lehman will start soliciting votes for the plan after the summer, and final court approval may be near the end of the year.

Lehman plans to raise $61 billion by selling assets and reducing allowable claims to $322 billion, Bloomberg reports. The average Lehman creditor would receive 18.6 cents on the dollar, and senior bondholders would receive 21.4 cents. Creditors with general unsecured claims would receive a 19.8% return, according to Bloomberg.

Derivatives creditors, which include Goldman Sachs, Morgan Stanley, Credit Suisse, Deutsche Bank and Bank of America, would get 22.3 cents, Bloomberg reports. As of the third quarter of 2010, Lehman had settled over 45% of derivatives transactions made by the Lehman Brother Special Financing unit. When Lehman filed for bankruptcy it was involved in 1.2 million derivatives transactions.

Hedge fund Paulson & Co. and other creditors with large claims against Lehman Brothers argued that Lehman's original plan "created conflict among creditors of Lehman's units," and offered their own plan in December, Bloomberg reports. In that plan, bondholders received 24.5 cents, and derivatives creditors received 25.7 cents. The group, which includes the California Public Employees’ Retirement System, PIMCO and Canyon Partners LLC, a Los Angeles-based $19 billion hedge fund, hold $80 billion in claims against Lehman, Bloomberg writes.

Lehman's revised plan incorporates elements of the Paulson plan and offers bondholders more money than the original plan, which proposed giving creditors 17 cents. If the Paulson group opposes the revised plan, their payout will be reduced to the original amount, Bloomberg reports.

“We think this is the fairest way to deal with all the legal issues,” Lehman President John Suckow told Bloomberg by phone Wednesday. “We’re hoping to get people to rally around this plan in coming weeks and months.”

At the end of 2010, Lehman held $24 billion in cash and $37 billion in real estate, private equity and other assets, Bloomberg writes.

(AEHR,TIII, ASTX, CLNO, SHOR) Stock to Watch by

Aehr Test Systems (Nasdaq:AEHR), a worldwide supplier of semiconductor test and burn-in equipment, announced financial results for the first quarter of fiscal 2012 ended August 31, 2011.

Net sales were $4.1 million in the first quarter of fiscal 2012, compared with $2.2 million in the first quarter of fiscal 2011. Aehr Test reported net income of $124,000, or $0.01 per diluted share, in the first quarter of fiscal 2012, compared to a net loss of $1.5 million, or $0.17 per diluted share, in the first quarter of fiscal 2011. The Company’s net income for first quarter fiscal 2012 included a gain of $990,000 from the sale of its investment in ESA Electronics PTE Ltd.

Commenting on the results of the first quarter, Rhea Posedel, chairman and chief executive officer of Aehr Test Systems, said, “We are pleased to have started fiscal 2012 off with a profitable first quarter. Our revenues for the quarter grew 90% year-over-year and were up 10% sequentially. A major contributor to this growth was the shipment of a number of FOX(TM)-1 WaferPak contactors for full wafer, one touchdown sort testing of flash memory wafers. We also had an increase in ABTS(TM) revenues in the quarter, reflecting the inroads we are making in adding new customers. At the same time, we gained a new customer in China for our ABTS product and booked follow-on ABTS system orders from existing customers.

“Looking ahead, we are seeing a higher level of interest in our broad base of products,” continued Posedel. “We remain focused on penetrating key production accounts with our ABTS and FOX products to grow our business.”

Headquartered in Fremont, California, Aehr Test Systems is a worldwide provider of systems for burning-in and testing DRAMs, flash and other memory and logic integrated circuits and has an installed base of more than 2,500 systems worldwide. Aehr Test has developed! and int roduced several innovative products, including the ABTS, FOX and MAX systems and the DiePak(R) carrier. The ABTS system is Aehr Test’s newest system for packaged part test during burn-in for both low-power and high-power logic as well as all common types of memory devices. The FOX system is a full wafer contact test and burn-in system. The MAX system can effectively burn-in and functionally test complex devices, such as digital signal processors, microprocessors, microcontrollers and systems-on-a-chip. The DiePak carrier is a reusable, temporary package that enables IC manufacturers to perform cost-effective final test and burn-in of bare die.

For more information, please visit the Company’s website at

Tii Network Technologies, Inc (Nasdaq:TIII) a leader in designing, manufacturing and marketing network products for the communications industry, announced the appointment of Stacey L. Moran as Vice President - Finance, Chief Financial Officer, Secretary and Treasurer.

Tii Network Technologies, Inc., together with its subsidiaries, designs, manufactures, and sells products for use in the networks to service providers in the communications industry in the United States.

Astex Pharmaceuticals, Inc. (Nasdaq:ASTX) announced that preclinical data demonstrating that AT13387, a novel non-ansamycin Heat Shock Protein 90 (HSP90) inhibitor, is active in in vitro gastrointestinal stromal tumor (GIST) models (Abstract #9407) was presented at the 2011 ECCO (European Cancer Organization) European Multidisciplinary Cancer Congress in Stockholm, Sweden.

Astex Pharmaceuticals, Inc., a pharmaceutical company, engages in the discovery, development, and commercialization of novel therapeutics with a focus on oncology and hematology.

Cleantech Transit, Inc. (CLNO)

Cleantech Transit Inc. was founded to capitalize on technology advances and manufacturing opportunities in the gro! wing cle an energy public transportation sector. The Company has expanded its focus to invest directly in specific green projects. Recognizing the many economic and operational advances of converting wood waste into renewable sources of energy, Cleantech has selected to invest in Phoenix Energy ( This project could benefit the Company’s manufacturing clients worldwide.

Cleantech Transit, Inc. (CLNO) is pleased to announce it has met its funding requirement to secure the Company’s ability to earn in 25% of the 500KW Merced Project.

The Company is in the final stages of closing its initial interest in the Merced Project and is currently working on completing the necessary documentation and expects closing the transaction soon. As previously announced Cleantech has the option to earn up to 40% of the Merced Project and the Company plans to continue to work towards increasing its interest in the Merced Project as they move ahead.

Biomass is made from plants and is essentially a form of solar energy. Plants absorb energy from the sun as they grow through the process of photosynthesis. Plants use the sun’s energy to break carbon dioxide and water molecules apart into their basic elements, hydrogen, carbon and oxygen. The hydrogen and carbon are used to build the molecules that the plants are made of. Most of the oxygen is released back into the atmosphere.

For more information about Cleantech Transit, Inc. visit its website

ShoreTel, Inc. (Nasdaq:SHOR) the leading provider of brilliantly simple IP phone systems with fully integrated unified communications (UC), welcomes Sunnyvale Mayor Melinda Hamilton, as she visits ShoreTel headquarters in recognition of the company’s success.

Shoretel, Inc., together with its subsidiaries, engages in the development and sale of Internet protocol (IP) communications systems for enterprises in the United States and internationally.

Alamos Gold PT Trimmed At CIBC Reflecting Higher Costs

CIBC World Markets Inc. cut its price target on Alamos Gold Inc. (TSX:AGI.TO) to $23.00 from $24.00, reflecting higher costs for 2013 estimates.

Barry Cooper, an analyst at CIBC, cut his 2012 EPS estimates for thecompany to US$1.33 from US$1.47 and 2013 estimates to US$1.72 fromUS1.77.

Production in the fourth quarter was essentially in line with ourexpectations of 43,000 ounces, Cooper said. The 46,500 ounces producedincluded 3,000 ounces of non-commercial production from the Escondidazone.

Cooper wrote that the start up of the mill associated with Escondidaore will be a major milestone for the operation. The boost will comefrom both grades and costs and partially offset total cash costs thatare expected to be approaching $600/oz for the heap leach operationalone, he said.

"Grades are expected to be down 23% at the Mulatos pit year-over-yearand follow a previous decline of 18% in 2011. This should be a lowpoint relative to the reserve grade, although higher gold prices will beaffecting reserve figures for AGI as well as others as low gradesbecome economical," Cooper said.

"Throughput for Mulatos may prove difficult to achieve given the17,500 TPD avg that has been forecast. About 500 TPD will come from milltailings, but to avg 17,000 TPD for the main crusher facility may beaggressive," Cooper wrote. "We think that there could be a cushion inthe grade estimate that could help."

The stock is currently trading 0.12% lower at $17.31. The shares havebeen trading in the 52-week range between $13.26 and $20.15.


Friday, January 20, 2012

China Wants Its Money Back

Late word is that the China Development Bank may pass on putting $2 billion into Citigroup (C) as was planned. According to The Wall Street Journal the Chinese government may be blocking the deal.

As China puts more and more money into US government debt and invests in troubled financial institutions it would be well to remember that one of its earlier deals, an investment in BlackStone (BX), turned out to be about as bad as an investment could get. Shares in the firm have gone from $38 to $20.

China wants it money back. Maybe then it will put in some more.

Douglas A. McIntyre

Tesoro Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tesoro (NYSE: TSO  ) are plunging today, down by as much as 10%, after the company updated its fourth-quarter guidance.

So what: The company expects to report a net loss between $0.55 and $0.80 per share, compared to the $0.65 profit analysts are looking for. Tesoro cited an extremely weak margin environment in California and the collapse of the West Texas Intermediate (WTI) to Brent crude oil spread.

Now what: The Tesoro Index for the California area was a negative $0.05 per barrel, down over $6 compared to the sequential and year-over-year prices. The WTI to Brent spread fell from $26 per barrel in September to just $8 per barrel in December. The decline reduces benchmark margins at Tesoro's refineries and the margin on long-haul foreign crude oil barrels indexed to WTI. When you're in the oil business, volatility is simply the name of the game.

A broad band of support at S&P 500 1,124 to 1,225 will likely slow the decline

A fall in the euro sent equity and commodity markets into a downward spiral yesterday. Sentiment against the euro strengthened following Germany��s stand that its government is against raising the lending limit for a euro zone bailout.

In response, Italy��s 10-year bond yield rose 7%-plus, and Spain and France saw their bond yields jump as well. The U.S. dollar rose, of course, and the rise was accentuated by a series of better-than-expected economic reports.

Commodities fell sharply in response to the stronger dollar. The CRB Index fell 3.4%, and gold settled at $1,587.70 an ounce, down 4.6%, and silver lost 7.6%.

The Dow Jones Industrial Average closed at 11,823, off 1.1%, the S&P 500 ended at 1,212, down 1.13%, and the Nasdaq closed at 2,539, down 1.55%. The NYSE traded 928 million shares, and the Nasdaq crossed 512 million. Decliners were ahead of advancers on the Big Board by 3-to-1 and on the Nasdaq by 2-to-1.

Yesterday, every major index violated its near-term support as the dollar rocketed to new highs.

The breakdown of the S&P 500 is significant because it confirmed the failure of the index to break higher at its bearish resistance line (June/July, October and November highs); it turned down from its 200-day moving average — a confirmation that the long-term bear market is intact; and it crushed the near-term support provided by the conjunction of the 20-day and 50-day moving averages.

The question is: How low will it go?

The answer may surprise you: Not very far, at least initially. There is a broad band of support at 1,124 to 1,225 that will more than likely slow the decline, and the uptrend line of a major trading triangle rests at 1,175.

Additionally, the Fibonacci numbers off of the November low to the December are: 50% = 1,212 (yesterday��s close), 61.8% = 1,200.

Finally, we are approaching the holiday period when trading traditionally slows and volume falls until we enter the New Year.

! Yesterda y��s higher close in the PowerShares DB US Dollar Index Bullish Fund (NYSE:UUP) confirmed the bull market in the U.S. dollar, and that conclusion is backed by the MACD buy signal. But volume on the breakout is not as high as the average volume of the October sell-off.

Conclusion: The most followed indices have broken from major support levels, indicating that the bear market is intact and that prices should head modestly lower.

But European politicians are no less nimble than our own. When our credit markets were in jeopardy (not that they still aren��t), the Feds sprang TARP, then QE1 and QE2 while dropping interest rates to near zero. And each move was immediately greeted with a rebound in stocks.

The Europeans have followed the same pattern and will, in desperation, scramble to turn an outgoing tide with each attempt triggering a rally in equities. Thus, shorts should expect violent rebounds. Take profits when you can. (Check out my colleague John Jagerson who turned a 67% profit overnight last week.) And protect positions with stop-loss orders.

The trend is down, but expect more volatility and less predictability.

Thursday, January 19, 2012

As Fidelity Re-Opens Magellan Fund, Investors Review Top Holdings (FMAGX, NOK, GLW, GOOG, SLB, CNQ, SPLS, T, AGN, MON)

It’s official.  Fidelity’s Magellan Fund (FMAGX) is being re-opened for new investors.  This fund at one point in 1997 became so large that the fund closed itself to new funds and outside investment commitments.  As of the last seen date Fidelity’s Magellan Fund had some $43.3+ Billion in assets under management.

  • Fidelity says that as the investor base is now 10 years older, they have had adequate redemptions and portfolio manager Harry Lang says: "We believe that the time is right to make Magellan available to a new generation of investors………… We believe that generating new sales to offset future redemptions will help stabilize the fund’s cash flows and assist Harry in most effectively directing investment strategies for the benefit of fund shareholders. It’s effectively the inverse of the reason why we limited new purchases of the fund 10 years ago. At that time, we were seeing strengthening cash inflows, and we expected that trend to continue."
  • More importantly, Harry Lang also noted, "I’ve been fortunate to find great stocks here in the U.S. and abroad to include in the portfolio. If we’re able to achieve a better balance of cash flows in the fund going forward, I’ll regularly have the cash on hand to capitalize on attractive investment opportunities as I find them."

Fidelity noted that some 85% of the funds assets are deemed for retirement (IRA, 401K etc.), and therefore the fund would seem to take more of a longer-term view.  The top 10 Holdings are unfortunately as of September 30, 2007, so we’ll have another two weeks or so before we know what the real holdings are:  The TOP 10 as of then are as follows:

  • Nokia (NOK, Corning (GLW), Google (GOOG), Schlumberger (SLB), Canadian Natural Resources (CNQ), Staples (SPLS), AT&T (T), Allergan (AGN), Monsanto (MON), Renewable Energy Corp. AS (overseas).  This list was posted! on Dece mber 30, 2007, so it might be more updated than some of the aggregator financial news and data web sites that take time to update.

If you want to see the full holdings the list on their site is here.  With more than $43 Billion in assets this could create quite a lot of buying in stock names where Fidelity wants to put capital to work.  We would surmize that the fund might not add as much to some of its key holdings if it can put capital to work in some of the names it owns less of that might like to own more of. 

Also be advised that the full holdings list is 45 days old and we know for certain that many of the positions and many of the weightings have already changed from November 30, 2007.  We’d actually start screening out some of the smaller holdings off of that master list to see which are attractive in growth and/or value that will still do well in a slowing economy or even a recession.  If you were opening a decade-long closed fund, you might be tempted to disperse more of the new inflows into other names that might be under-owned or under-weighted in the fund.

Jon C. Ogg
January 14, 2008

Chapter 7 Or 13 on Personal Bankruptcy

Bankruptcy laws in the United States are made to ensure the interests of the borrower are safeguarded, and are formed by the federal government and addressed accordingly by various US Bankruptcy Courts, and it is believed that each year as many as one million Americans go bankrupt and are found filing for bankruptcy. Most of these individuals that file for bankruptcy do so under different personal bankruptcy laws that include chapter thirteen and also chapter 7, and in a few instances, they can even qualify for chapter twelve, especially if they are anglers or farmers and business is owned by the family.

Filing Under Chapter Seven

You can file personal bankruptcy and at the same time do so under chapter seven in which case it is necessary for you to provide a list of all your assets to the court and also have to assign a trustee who will liquidate items in order to pay off creditors. Furthermore, filing personal bankruptcy is allowed once in seven years and the cost of filing personal bankruptcy is approximately three hundred dollars which goes towards filing fee.

If you plan on filing personal bankruptcy under chapter thirteen, it will help in reducing your debt though unlike chapter seven, does not cancel out your debt. And, chapter thirteen personal bankruptcies also means having to set out a plan for repayment with creditors and courts and assigning trustee who will make monthly payments after paying them the money. The trustee will receive payments from you and apportion them to various creditors, and an advantage to using chapter thirteen for filing personal bankruptcy is that unlike in chapter seven, under this chapter you may hold on to everything that would have been lost under chapter seven.

However, both these types of personal bankruptcy allows the debtor to rid him or herself of debts, though remember when filing chapter thirteen bankruptcy, you need to have debt that is not more than two hundred fifty thousand dollars and that such debt is uns! ecured, while debts that are secured should not exceed seven hundred and fifty thousand dollars.

The bottom line is that before filing for personal bankruptcy, makes sure to know what the ramifications of different chapters are and in most instances it may be better to file for chapter thirteen instead of chapter seven as the latter shows that you are a person that does not pay your debts.

Marathon Petroleum Corp (NYSE: MPC) May Soon Be the World¡¯s Richest Refiner

There's an oil price trend that's giving some oil refining companies a huge competitive edge.

Specifically I'm referring to Marathon Petroleum Corp. (NYSE: MPC).

You see, production from North Dakota's Bakken oil shale formation - the largest known reserve of light sweet crude in North America - is soaring. It went from a mere 3,000 barrels a day in 2005 to 225,000 in 2010, and could hit 350,000 barrels a day by 2035, according to the Energy Information Administration.

Currently, there aren't many ways to ship oil out of the basin, and supply in the region is outpacing refining capacity. That's helped keep the price of West Texas Intermediate (WTI) crude lower than the price of Brent crude in London, with the spread now around $17.

Since U.S. East Coast refineries usually source Brent-priced crude oil, their input costs have skyrocketed. This is one of the reasons major integrated oil companies have shed their refining capacities.

But Midwest refineries have been able to save money by running WTI-priced oil, getting crude at significantly cheaper prices than globally sourced locations.

With the Bakken formation ramping up production in coming years to meet growing demand, the region's refineries will continue to enjoy low input costs. It also means refineries that have access to Bakken oil will have a steady supply that's cheaper than their competitors.

This is why Marathon Petroleum Corp., the largest Midwest refiner, is a "Buy." (**)

Marathon Petroleum Corp.

Ohio-based Marathon Petroleum Corp. was formed July 1, 2011 when Marathon Oil Corp. (NYSE: MRO) spun off its highly profitable refinery and gas station business. It's the fifth largest petroleum refiner in the United States, with its six refineries offering a combined capacity of 1,142,000 barrels of oil per day.

G! ary R. H eminger, Marathon's new chief executive officer, said his company has built a strong enough refining position in the Midwest to ward off competition. He doesn't expect new pipelines and rail yard capacity bringing oil from the Bakken to the Gulf Coast to soften his competitive edge. The oil still needs a high-volume consumer and his refineries are the most obvious choice.

"If you look at Midwest refineries, we already have plenty of pipeline capacity into our plants," Heminger said at the Reuters Global Energy and Climate Summit. "It really comes back to (West Texas Intermediate) and lighter-type crudes that are in and around Cushing [Oklahoma, where WTI is priced]. They're looking for a home."

Marathon also will profit from its operations beyond the Midwest.

It's negotiating with pipeline companies to use its Texas refinery to process more crude from the new Eagle Ford Shale. The new Eagle Ford is unconventional shale oil that's extremely light, and can be mixed with another cheap blend - a heavy, sour crude - to make a more expensive finished product.

Marathon's Detroit refinery is undergoing a $2.2 billion overhaul that'll let it process heavy Canadian crude, which currently is priced even cheaper than WTI.

Marathon also has a profitable retail footprint. It operates 5,100 Marathon-branded gas stations in 18 states and 1,350 Speedway-branded convenience stores in seven states. It has more than 9,600 miles of pipelines into and out of its facilities.

The new refining company has a market cap of $13.3 billion with an enterprise value of $14.6 billion once net cash and debt is taken into consideration. The company reported $66.8 billion in revenue over the last trailing 12 months.

Third quarter earnings released Nov. 1 showed a 309% increase in net income from 2010's third quarter to $1.13 billion. Earnings per diluted share rose to $3.16 from $0.77 last year. Marathon also announced Oct. 26 a 25% div! idend in crease, for a yield of 2.6%.

The company has historical price/earnings (P/E) ratio of 7.2 over the last 12 months with an estimated forward P/E ratio of 5.6.

Its stock has soared more than 17% in the past month, closing yesterday (Wednesday) at $37.02.

Action to Take: Buy Marathon Petroleum Corp. (NYSE: MPC) (**).

It's time to buy Marathon Petroleum Corp. as it positions itself to profit from low input costs and high refining capacity.

I would buy half of our position now at market price, with an eye toward selling naked puts contracts for the other half of the position. This would give you a chance to be exposed to the upside move while increasing the overall cash yield on your first-half position.

(**) Special Note of Disclosure: Jack Barnes has no interest in Marathon Petroleum Corporation. (NYSE: MPC).

Let the outrage begin

Apple (NASDAQ:AAPL) fan boys and digerati alike were all asking (possibly to Siri), “What��s up with Apple CEO Tim Cook��s ridiculous compensation package?”

The compensation package, released Monday, showed a grand total of $378 million for the new leader of the second-most valuable company in the world behind Exxon Mobile (NYSE:XOM) –? Apple has a whopping $100 billion in revenue and a $400 billion market capitalization.

Grand indeed.

How did this number come to be? $900,000 is his actual salary (don��t faint yet) and $377 million is being awarded to him in stocks.

And we wonder why the Occupy Movement is pulling their hair out.

Just look at this fun little statistic. CEO pay in 2010 was an astounding 343 times that of their blue collar counterparts — compared to 42 times that of blue collar workers in 1980). If you consider Steve Jobs famously took home $1 a year, Cook��s total compensation is 378 million times what Jobs made.

Now, I wouldn��t have considered Steve Jobs to be a blue collar worker, but with Cook at the helm anything’s possible.

Yes, Steve Jobs had a $1 salary, in part, because he was a large shareholder in Apple stock. He held on to an option grant after returning to the company in the late 1990s, which grew exponentially thanks to Apple’s successful turnaround — by 2011 it was worth several billion dollars. But can you blame him for having large amount of stock in a company he co-founded?

Another item to take into account is the stock grant awarded to Tim Cook wasn��t to reward him for a year��s work, it��s most likely to give him the incentive to succeed over the course of many years with the company. Some may argue $378 million spread over 10 to 15 years makes the compensation package look more in line with what other exorbitant amounts fat cat CEOs make in America. But, this doesn��t necessarily make it right.

The! last ti me I checked, the economy was still in the crapper and, despite the unemployment rate dropping to 8.5% and consumer spending and borrowing picking up, I��m still inclined to think that in order to improve the economy, the underlings, peons, blue collar or whatever-you-want-to-call-them workers should be getting their fair share, or should be seeing a lot more fellow employees popping up over the next few years.

Forget Obama, with the kind of money these CEOs are making, they sure as hell can afford to hire a Joe Everyday or two, or three, or thousand.

- Andrew Lander, @andrewlander

Tuesday, January 17, 2012

Woz loves Android, but iPhone is still good for most

( -- My primary phone is the iPhone. I love the beauty of it. But I wish it did all the things my Android does, I really do.

Speaking to Dan Lyons in an article comparing the iPhone to Android devices, Apple co-founder, Steve Wozniak points out the relative limitations of Apple’s iPhone. Woz makes the case made by many smartphone power-users, suggesting the iPhone is still a great device for most people, but with a little effort and understanding, more can be done to an Android phone. Greater customization and user control have always been key selling points for Android devices; both the high-end smartphones and even the low-cost units.

More from
  • A database to help the military share its airwaves
  • 955 Dreams tackles music discovery with Band of the Day
  • 10 ways to deal with cybersecurity in a smart grid world

Another interesting tidbit from Lyons’ article: unlike me, Woz prefers the Motorola Droid Razr over the Samsung Galaxy Nexus. Really, Woz? Are you running a custom ROM or are you suggesting that Android 4.0 isn’t as good as its predecessor? Oh well; that’s the beauty of Android: To each his or her own!

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

  • A Global Mobile Handset Platform Forecast, 2! 011 &nda sh; 2015
  • 2012: Data, spectrum and the race to LTE
  • Connected world: the consumer technology revolution

EXOU Exousia Continues Supplier Relationship with China United Engineering Corporation( News Report!)

EXOU, Exousia Advanced Materials Inc, EXOU.OB

DrStockPick News Report!

Dr Stock Pick HOT News & Alerts!

Exousia Continues Supplier Relationship with China United Engineering Corporation


Thursday August 13, 2009

DrStockPick News Report!

Exousia Continues Supplier Relationship with China United Engineering Corporation

Fifth Order Represents CUC’s Continued Confidence in Exousia as a Supplier

SUGAR LAND, Texas /CRWENEWSwire/ Exousia Advanced Materials, Inc. (OTC Bulletin Board: EXOU), a company that manufactures advanced industrial coatings for worldwide infrastructure applications and engineered composites for eco-friendly wood substitutes, proudly announces its fifth order from China United Engineering Corporation (CUC) for industrial coatings. Exousia Chairman & CEO, J. Wayne Rodrigue, explained, “The significance of this order is that it represents the ongoing cycle of business that Exousia is striving to achieve. Every day, we gain momentum as our order flow increases at our now established plant in China.”

CUC is a large-scale engineering, design, and construction enterprise headquartered in Hangzhou, China. CUC engages in numerous project categories including general contracting, infrastructure and industrial projects. “We look forward to expanding our relationship with CUC and to Exousia’s future growth throughout China,” conclud! ed Mr. R odrigue.

About China United Engineering Corporation

China United Engineering Corporation (CUC) is a large-scale scientific and technological enterprise headquartered in Hangzhou in China’s central region. CUC engages in numerous project categories including general contracting, infrastructure and industrial projects. More information on CUC can be found at

About Exousia Advanced Materials, Inc.

Exousia manufactures advanced resins, engineered particles, high-performance coatings and structural products. Exousia products enhance strength, durability, cost effectiveness and performance for a wide range of manufacturing, commercial and construction applications. The Company serves both domestic and international markets. Additional information on Exousia can be found at


Statements released by Exousia Advanced Materials, Inc. that are not purely historical are forward-looking within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the company’s expectations, hopes, intentions, and strategies for the future. Investors are cautioned that forward-looking statements involve risk and uncertainties that may affect the company’s business prospects and performance. The company’s actual results could differ materially from those in such forward-looking statements. Risk factors include but are not limited to general economic, competitive, governmental and technological factors as discussed in the company’s filings with the SEC on Forms 10-K, 10-Q and 8-K. The company does not undertake any responsibility to update the forward-looking statements contained in this release.

Source: Exousia Advanced Materials, Inc.

Keep a close eye on EXOU today, do your homework, and like always BE READY for the ACTION!

Is FLIR's Stock Expensive by the Numbers?

Numbers can lie -- but they're the best first step in determining whether a stock is a buy. In this series, we use some carefully chosen metrics to size up a stock's true value based on the following clues:

  • The current price multiples.
  • The consistency of past earnings and cash flow.
  • How much growth we can expect.

Let's see what those numbers can tell us about how expensive or cheap FLIR Systems (Nasdaq: FLIR  ) might be.

We'll look at the numbers against some competitors and industry mates: L-3 Communications Holdings (NYSE: LLL  ) , Lockheed Martin (NYSE: LMT  ) , and Honeywell International (NYSE: HON  ) .

The current price multiples
First, we'll look at most investors' favorite metric: the P/E ratio. It divides the company's share price by its earnings per share -- the lower, the better.

Then, we'll take things up a notch with a more advanced metric: enterprise value to unlevered free cash flow. This divides the company's enterprise value (basically, its market cap plus its debt, minus its cash) by its unlevered free cash flow (its free cash flow, adding back the interest payments on its debt). Like the P/E, the lower this number is, the better.

Analysts argue about which is more important -- earnings or cash flow. Who cares? A good buy ideally has low multiples on both.

FLIR has a P/E ratio of 18.5 and an EV/FCF ratio of 29.9 over the trailing 12 months. If we stretch and compare current valuations to the five-year averages for earnings and free cash flow, FLIR has a P/E ratio of 19.9 and a five-year EV/FCF ratio of 23.3.

A positive one-year ratio under 10 for both metrics is ideal (at least in my opinion). For a five-year metric, under 20 is ideal.

FLIR ! has a mi xed performance in hitting the ideal targets, but let's see how it compares against some competitors and industry mates.?


1-Year P/E

1-Year EV/FCF

5-Year P/E

5-Year EV/FCF

FLIR Systems 18.5 29.9 19.9 23.3
L-3 Communications Holdings 7.1 7.4 7.7 7.7
Lockheed Martin 8.8 11.3 8.9 9.4
Honeywell International 15.7 25.0 18.3 14.5

Source: S&P Capital IQ.

Numerically, we've seen how FLIR's valuation rates on both an absolute and relative basis. Next, let's examine...

The consistency of past earnings and cash flow
An ideal company will be consistently strong in its earnings and cash flow generation.

In the past five years, FLIR's net income margin has ranged from 13.7% to 20.6%. In that same time frame, unlevered free cash flow margin has ranged from 8.2% to 22.2%.

How do those figures compare with those of the company's peers? See for yourself:


Source: S&P Capital IQ; margin ranges are combined.

Additionally, over the last five years, FLIR has tallied up five years of positive earnings and five years of positive free cash flow.

Next, let's figure out...

How much growth we can expect
Analysts tend to comically overstate their five-year growth estimates. If you accept them at face value, you will overpay for stocks. But while you should definitely take the analysts' prognostications with a grain of salt, they can still provide a useful starting point when compared to similar numbers from a company's closest rivals.

Let's start by seeing what this company's done over the past five years. In that time period, FLIR has put up past EPS growth rates of 16.5%. Meanwhile, Wall Street's analysts expect future growth rates of 14.8%.

Here's how FLIR compares to its peers for trailing five-year growth:


Source: S&P Capital IQ; EPS growth shown.

And here's how it measures up with regard to the growth analysts expect over the next five years:


Source: S&P Capital IQ; estimates for EPS growth.

The bottom line
The pile of numbers we've plowed through has shown us the price multiples shares of FLIR?are trading at, the volatility of its operational performance, and what kind of growth profile it has -- both on an absolute and a relative basis.

The more consistent a company's performance has been and the more growth we can expect, the more we should be willing to pay. We've gone well beyond looking at an 18.5 P/E ratio, and we see that its price multiples are elevated for companies linked to the defense industry. Its multiples are higher than each of its comps.

However, looking at margins and growth over the last five years, FLIR also beats L-3, Lockheed, and Honeywell. On an absolute basis, its margins are quite impressive.

Although FLIR's price multiples ! are expe nsive, its operational numbers could justify them. Our CAPS community rates FLIR four stars out of five despite the uncertainty of defense budgets. But these initial numbers are just a start. If you find FLIR's numbers or story compelling, don't stop. Continue your due diligence process until you're confident one way or the other. As a start, add it to My Watchlist to find all of our Foolish analysis.

I wrote about a stock that's flying under the radar in our brand new free report: "The Stocks Only the Smartest Investors Are Buying." I invite you to take a free copy to find out the name of the company I believe Warren Buffett would be interested in if he could still invest in small companies.

Searing Heat for Sears Stock (SHLD)

I recently wrote that consumer behavior was changing dramatically in the face of rising oil prices.  Demand is down and interest in smaller, more fuel efficient vehicles is growing. The great thing about capitalism is that if we fail to change our ways, markets will do it for us. What is just beginning to happen with oil and consumer behavior is happening on the corporate level dealing with a slowing economy.

That is to say, competition for a share of the consumer dollar is fiercer than at any other time in recent history. Corporations that adapt to the new field of play will survive.  Those that don’t won’t.

Let’s take a look at stock pick Walmart (WMT).  For most of the new millennium, WMT was getting taken to the cleaners by sleek rival Target (TGT).

Seen mostly as a bargain bin basement with little knack for style, WMT had trouble prying extra dollars away from the consumer.  TGT had little trouble increasing dollars spent at its stores as they focused on luxury brands and style at low prices.

That worked great in an expanding economy, but what happens when that growth disappears? (For more on Target’s recent share decline you’ll want to read, “Why are Target Shares Off Target?”)

We are seeing the results before our very eyes.  All of a sudden that bargain basement doesn’t look so bad with oil prices hitting $135 per barrel!

In fact, the ChangeWave Alliance has been showing tremendous strength for both Wal-Mart and Cosco since late February. For more details, check out Paul Carton’s recent article, “World Takeover By Wal-Mart and Costco (COST).”  

Behavior is changing, and that change is benefiting WMT as they remain focused on pushing lower pr! ices to its consumers.

Target is not faring as well. Those little extra spending sprees by its customers are no longer the norm and as a result TGT results have been less than stellar. TGT will have to find a new formula that will work given the current and expected conditions moving forward.

With the game still being played, it will be interesting to see how things pan out for both companies.

One company that is not faring so well in the current environment is… Sears Holding (SHLD).  The star child of private equity guru, Eddie Lampert, SHLD has not fared well with the collapse in economic activity. Highly leveraged to the homebuilding cycle, sales of its large consumer items like dishwashers, refrigerators and laundry machines dropped hard as new home sales fell.

As a result of the slowing sales, shares of SHLD have lost more than $100 per share in just the last year alone.  What had been a former high flyer enjoying the benefits of monetizing real estate holdings is now simply a retail stock playing in a very difficult field under very difficult circumstances.

Does Eddie Lampert have it in him to change behavior in a way that generates positive results for shareholders? I’m not so sure. While Mr. Lampert has the skills as a financier, does he have what it takes to adapt to intense competition?

I would be worried if I were a SHLD shareholder. Just today, the company announced that it had lost $56 million in the first quarter coming fall short of Wall Street estimates.  Sales dropped 6% as the company blamed higher fuel and food costs for its woes.

The blame game is a natural reaction, but I think SHLD needs to look hard in the mirror.  There are retailers that are adapting well to the current environment and even those that may have had trouble in the early stages adjusting strat! egy in a way that is already showing results.

That is not happening at Sears.

Where we go from here is anyone’s guess.  I can give Lampert a free pass in the short term, but there needs to be a plan for going forward.

The bottom line: will the company better manage inventories improving its mix of products to enhance sales even in this difficult market?  If they do, SHLD will bounce back big. If not, it will be more pain for shareholders.

One market that is still growing and growing fast is China. And more importantly, competition is not nearly as fierce as it is in the United States. Check out Robert Hsu’s China Strategy letter for the companies that can be expected to prosper in that environment.

Jamie Dlugosch
Executive Editor, InvestorPlace

Join China Strategy risk-free today, and Robert Hsu bring you the latest news and developments from China. He’ll tell you how to profit from this extraordinary global opportunity and which companies and industries to avoid. Be among the first to know which companies to buy and when by joining China Strategytoday. Don’t miss out!

Monday, January 16, 2012

SEC to appeal rejected Citigroup settlement

NEW YORK (CNNMoney) -- The Securities and Exchange Commission is appealing a federal judge's decision last month to toss out a proposed $285 million mortgage securities fraud settlement between the agency and Citigroup.

Federal judge Jed Rakoff ruled on Nov. 28 that the deal between the SEC and Citi was "neither fair, nor reasonable, nor adequate, nor in the public interest" and ordered the case to proceed to trial in July 2012.

He said that the settlement announced in October, under which Citigroup (C, Fortune 500) neither admitted nor denied the SEC's allegations, deprived the public "of ever knowing the truth in a matter of obvious public importance."

The SEC argued in a statement Thursday that the ruling "inadvertently harms investors by depriving them of substantial, certain and immediate benefits."

"We believe the court was incorrect in requiring an admission of facts -- or a trial -- as a condition of approving a proposed consent judgment," said the agency. It argued Rakoff's ruling would set a new standard for settlements that would be difficult to reach and that it is at odds with established practice.

Big bank SEC settlements: Toothless face-savers?

"Courts have routinely approved settlements in which a defendant does not admit or even expressly denies liability, exactly because of the benefits that settlements provide," said the agency.

The SEC said the $285 million proposed settlement, "while less than investor losses, represents most of the total monetary recovery that the SEC itself could have sought at trial. An SEC settlement does not limit the ability of injured investors to pursue claims for additional relief."

Rakoff said in his ruling that given the damage done to financial markets by the alleged actions by Citigroup, a greater level of transparency is needed.

JPMorgan pays $153 million to settle mortgage case

"[I]n any case like this that touches on t! he trans parency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth," Rakoff, a U.S. district judge in Manhattan, wrote in his decision.

The SEC's pattern of allowing big banks to reach settlements without admitting or denying wrongdoing, Rakoff added, has been "hallowed by history, but not by reason."

Citigroup did not have an immediate reaction to the SEC's appeal. At the time of Rakoff's ruling, a spokeswoman for the banking giant said it respectfully disagreed with the decision.

"In the event the case is tried, we would present substantial factual and legal defenses to the charges," she added.

The SEC alleged that in 2007, Citi created and sold a mortgage-related collaterialized debt obligation, or CDO, called Class V Funding III.

According to the SEC complaint, one CDO trader characterized the asset group in internal communications as "a collection of dogshit" and "possibly the best short EVER!"

Can Wall Street thrive again?

In marketing materials, however, the assets were described as "attractive investments rigorously selected by an independent investment adviser," Rakoff's decision said.

After marketing the CDO, Citi then took a short position -- or bet against -- the security as the housing market deteriorated, bringing in a net profit of $160 million for the bank. Meanwhile, investors lost more than $700 million.

The SEC has settled a string of similar complaints in recent months, including agreements with Goldman Sachs (GS, Fortune 500) and JPMorgan Chase (JPM, Fortune 500).

Rakoff, though, has been a thorn in the agency's side in recent years, rejecting a proposed $33 million settlement in 2009 between the SEC and Bank of America (BAC, Fortune 500) over allegations that BofA lied about bonuses for Merrill Lynch & Co. employees following the firms' merger.

That settlement ! was late r revised upward to $150 million, which Rakoff reluctantly approved, calling it "half-baked justice at its best."

Shares of Citi (C, Fortune 500) closed down 0.5% in trading Thursday. 

Favorite Large Bank Picks For Jan-2012

Yesterday, major regional banks (fourteen in number) sported gains of almost 1.16 percent, collectively. Among these banks, Bank of America's share price gained the least ($0.18), while? M&T Bank Corp's share price gained the most ($3.8).

Share price gains were surprising given that the Federal Reserve proposed steps to strengthen regulation and supervision of large bank holding companies with consolidated assets equal to or greater than $50 billion or those designated to be systemically important. The proposals include risk-based capital and leverage requirements implemented in two phases that would include subjection to the Fed's capital plan rule that requires firms to develop annual capital plans, conduct stress tests, and maintain adequate capital ratios, as well as a proposal issued by the Fed to implement a risk-based capital surcharge based on the framework and methodology developed by the
Basel Committee on Banking Supervision. Firms would also be subjected to annual stress tests. Credit exposure of a covered financial firm would be limited to a single counterparty as a percentage of the firm's regulatory capital. The Fed noted that it is proposing that firms would need to comply with many of the enhanced standards a year after they are finalized. Requirements related to stress tests would take effect shortly after the rule is finalized.

Compliance with Fed's proposals would not only increase regulatory costs but would also limit strategic options for these banks. So Fed's announcement should have had a negative impact. Yesterday that didn't happen but would surely happen as the market digests the import of Fed's proposals. This should lead to adjustments, positive on some and negative on some other, in the share prices of these fourteen banks. Though I am not giving the workings of the detailed share price impacts, nevertheless I will pick my favorite stocks among these fourteen.

Fifth Third Bancorp? (NASDAQ:FITB)

Fifth Third! 's capit al position is already well in excess of established standards, likely standards, and most peers. Holding company cash is currently sufficient for more than 2 years of obligations. Minimal holding company or bank debt maturities until 2013, so need for new capital at above peer average cost of marginal capital is minimal. Fifth Third has completely exited all crisis-era government support programs and it is one of the few large banks that
have no TLGP-guaranteed debt to refinance in 2012. In addition, it has no direct European sovereign exposure; total exposure to European peripheral borrowers is less than $0.2 billion and gross exposure to European banks less than $0.3 billion.

I expect FITB share to test $15.5 and establish $15 in January 2012.

State Street Corporation? (NYSE:STT)

STT has two powerful platforms for growth namely State Street Global Services ($21.5 trillion in assets under custody and administration), and State Street Global Advisors (1.9 trillion in assets under management). Nearly 78 of its top 100 clients use both asset servicing and asset management and they account for about 35% of total management fee revenue (YTD 2011).

As of end September 2011, STT's tier 1 common ratio was 16 percent,which is significantly higher than 12.5 percent for The Bank of New York Mellon Corporation? (NYSE:BK), and 11.8 percent for Northern Trust Corporation? (NASDAQ:NTRS). Moreover, even under Basel III, STT's tier 1 common ratio was 11.7 percent, which is significantly higher than 6.5 percent for The Bank of New York Mellon Corporation (NYSE:BK), and 11.8 percent for Northern Trust Corporation (NASDAQ:NTRS).

I expect STT share to test $50 and establish $49 in January 2012.

Other stocks that I think could benefit include SunTrust Banks, Inc.(NYSE:STI), U.S. Bancorp (NYSE:USB), and JPMorgan Chase & Co. (NYSE:JPM).{$end}

Buy, Sell or Hold: The Clorox Co. (NYSE:CLX) Is Cleaning Up

The Clorox Co. (NYSE:CLX) on Thursday reported net earnings of $171 million on sales of $1.52 billion for the fourth quarter of fiscal year 2010 ended June 30, compared to net earnings of $170 million on net sales of $1.5 billion the year prior.

This continued the company's trend of improvement. But more importantly, the bulk of Clorox's profit and margin growth came from its international unit, and the firm projected an expansion in earnings per share of at least 10% to 14% for next fiscal year.

Boring is beautiful when you're dealing with consumer staples, since share prices improve with incremental increases in sales and margins. In Clorox's case, this has meant taking advantage of low rates and dependable cashflow to finance expansion plans. But the good news is that the high financial leverage results in an exorbitant return on equity. 

Clorox's strong cashflow affords the company very comfortable debt coverage ratios. Its level of debt to earnings before income tax, depreciation and amortization (EBITDA) has declined in the last three years from 3.3-times to 2.2-times, improving its creditworthiness.  Clorox's interest coverage ratio (EBITDA to interest expense) also has improved strongly, to 8.96-times from 6.27-times.  This trend has warranted an improvement in the firm's credit rating outlook, which in the investment grade is BBB+ to stable. 

There is no question that this is a sound strategy with interest rates so low.  A few years from now, as interest rates normalize and the cost of debt goes up, this strategy will be more costly.  But, by that time, the company's effort to improve its earnings/debt ratio will have put it in a better position to face higher borrowing costs.

Of course, there's more to Clorox's recent success than shrewd borrowing.

In the past two years the company has set out to recover the slight profit ! margin e rosion brought on by the economic disaster.  And in that time, Clorox has recovered much its lost market share through disciplined cost cutting, better pricing power and lower commodity prices.  You see, in this business, little differences add up. That means careful marketing, advertising, distribution and cost controls, as well as an optimal financing structure are of paramount importance.  And that's precisely where Clorox has excelled.

For example, Clorox is already number two in U.S. market share, behind The Procter & Gamble Co. (NYSE: PG).  In fact, Clorox is ranked in the top two in almost every one of its key brands.  And those brands represent 88% of the company's total portfolio. 

While double-digit earnings growth is achievable via growth in both its core U.S. operations and in its international units, do not expect miracles.  The likely range for outperformance or underperformance is relatively small at first sight.  Yet, the relatively low weight of international sales within the company and a proven capacity for successful and profitable innovation make its objectives achievable.  There is some room for upside surprises with both new products and developments in fast-growing emerging economies.

Clorox concentrates some 71% of its international presence in home cleaning and bleach and laundry products in Latin America.  And the fact that Asia today represents only 5% of sales is actually a plus, since it leaves lots of room for improvement in the long term. So, we have a superbly managed marketing company, with plenty of room to grow internationally. 

This success is the result of a carefully managed process that prioritizes margin and market share expansion, allocating resources based on economic profit.  We expect continued margin improvement through the continuation of relentless cost savings initiatives, information technology investment, and innovation.  In addition, market s! hare imp rovement will come from the launching of carefully targeted products - the emphasis being in value and superior customer perception.

Health and wellness are key themes that will drive future growth.  Clorox has very sophisticated market segmentation, product positioning and overall marketing strategy in these sectors.  It is bound to deliver results, based on their proven track record.

Earnings momentum is at its back due to a mix of carefully tested marketing and financial initiatives.  The stock is valued at 13-times earnings at a nice discount to the Standard & Poor's 500 Index. Its Price/Earnings/Growth (PEG) ratio is high at 1.43, though not disqualifying. 

We can overpay a little for growth that we are pretty certain lies ahead. And Clorox offers an attractive 3.4% dividend yield.  That dividend is easily sustainable at a dividend payout ratio of only 47%. In fact, it was just raised by 10% in May.

Technically, the stock is almost "boringly" bullish.  Its 200-day moving average shows a very steady upward slope. At just over $64 a share Clorox is sitting right near its 50-day moving average and in the middle of the Bollinger bands, in an oversold condition.  This bodes very well for an entry point.

However, the stock also is approaching the 2007 all-time high, so it should start showing some short-term resistance. So what is the investment proposition? 

With this type of stability and high dividend yield, Clorox should be a core holding in any portfolio that is not purely speculative.  Rather than sitting in ten-year U.S. Treasury bonds, we can sit on Clorox stock, get paid much more and have the upside of a first-class equity that can actually adjust prices up if inflation becomes a problem. 

If we see some resistance here, we could run a short-term covered-call strategy: Buy the stock and sell some out of the money calls on it.  The one-month calls we sell lower our entry poi! nt in th e stock by the amount of premium we collect and would probably expire worthless.  The traditional risk-minimization strategy is to dollar-cost average into the stock over the next couple of months.

Recommendation: Dollar-cost average into The Clorox Co. (NYSE:CLX) on a weekly basis over the next two months (**).

(**) - Special Note of Disclosure: Horacio Marquez holds no interest in The Clorox Co.

[Editor's Note: Horacio Marquez knows how to make a market call. It was Marquez who told investors that lithium was going to be big - a year before other "experts" made the same call. Now Marquez has isolated the major profit opportunities being created by the possible broadband breakdown - a situation that the news media is only just now starting to understand. To find out all about those top profit opportunities, check out this new report.]

Polo Ralph Lauren Corporation (RL) Closes 2.73% Higher

Shares of Polo Ralph Lauren Corporation (NYSE: RL) jumped more than 3% in today's trading. The stock reached a high of $89.26 in trading, and closed 2.73% higher at $88.12. Volume was up from daily average of 1.01 million to 5.58 million.

Earlier today, Polo Ralph Lauren reported its fourth quarter and fiscal 2010 results. The company reported fourth-quarter net income of $114 million, or $1.13 per share, up from $45 million, or $0.44 per share reported in the fourth quarter of previous year. For fiscal 2010, the company reported net income of $480 million, or $4.73 per share, up from $406 million, or $4.01 per share reported in fiscal 2009. Revenue increased 9% to $1.3 billion in the fourth quarter. For the full fiscal year, revenue fell 1% to $5 billion. The decline has been mainly due to lower global wholesale shipment volumes. In the fourth quarter the company opened three directly operated freestanding stores, while it closed two directly operated freestanding stores. It also took over 16 freestanding stores and 75 concession shop locations in Asia.

Commenting on the results, Ralph Lauren, the company's chairman and CEO, said that in fiscal 2010, the company saw tremendous growth????????? and progress. Lauren said that the successful takeover Asian operations, development of accessories products and opening of several luxury stores were the highlights of fiscal 2010. With more than $1.2 billion in cash and investments on its balance sheet, the company is planning to accelerate investments in growth initiatives during fiscal 2011.

But where will this growth come from? The U.S. market is only just recovering. Consumer spending, the backbone of the U.S. economy, is seeing a rebound. But, it is still way below the pre-crisis levels. Europe is even worse. With all the troubles that the continent has been growing through, it looks like a recovery is a long way off. This leaves the company with just the Asian markets. In fiscal 2010, the company took contro! l of the Asian operations and this gives a signal that it is ready to focus more on these markets. This is a step in the right direction.

The stock has seen a lot of price fluctuations in the past year. It has a 52-week range of $48.07-$95.59. The stock has a beta of 1.60. Currently, the stock is trading above its 50-day and 200-day moving averages.

About is committed to producing the highest-quality insight and analysis of small cap stocks, emerging technology stocks,hot penny stocks and helping investors make informed decisions. Our focus is primarily on the underserved OTC stocks market, or "penny stock" market, which has traditionally been shunned by Wall Street. We have particular expertise with renewable energy stocks, biotech stocks, oil stocks, green energy stocks and internet stocks. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.

Duke Energy Corporation posted a Year Record Price - NYSE:DUK

Duke Energy Corporation (NYSE:DUK) achieved its new price of $20.89 where it was opened at $20.95 up 0.37 points or +1.81% by closing at $20.86. DUK transacted shares during the day were over 10.20 million shares however it has an average volume of 14.63 million shares.

DUK has a market capitalization $47.80 billion and an enterprise value at $45.53 billion. Trailing twelve months price to sales ratio of the stock was 1.91 while price to book ratio in most recent quarter was 1.20. In profitability ratios, net profit margin in past twelve months appeared at 12.89% whereas operating profit margin for the same period at 20.61%.

The company made a return on asset of 3.11% in past twelve months and return on equity of 8.21% for similar period. In the period of trailing 12 months it generated revenue amounted to $14.31 billion gaining $10.76 revenue per share. Its year over year, quarterly growth of revenue was 0.50% holding -29.60% quarterly earnings growth.

According to preceding quarter balance sheet results, the company had $2.18 billion cash in hand making cash per share at 1.64. The total of $20.11 billion debt was there putting a total debt to equity ratio 87.83. Moreover its current ratio according to same quarter results was 1.23 and book value per share was 17.11.

Looking at the trading information, the stock price history displayed that its S&P500 52 Week Change illustrated 1.19% where the stock current price exhibited up beat from its 50 day moving average price $20.46 and remained above from its 200 Day Moving Average price $19.30.

DUK holds 1.33 billion outstanding shares with 1.33 billion floating shares where insider possessed 0.25% and institutions kept 47.70%.

Looking for a Fixer-Upper? Try Home Center Stocks

This is not the best of times to be in retail in general, or home-related retail in particular, but it may be the moment for investors to look at hardware store stocks.

Let's look at the hardware big boxes, where there is plenty of room for improvement in the market. Just in mid-November, Home Depot CEO Frank Blake was telling analysts: "Inventories remain high, pricing is under pressure and credit is still difficult."

That pretty much sums it all up for hardware stores. All the plastic, copper, and lumber you need for pipes, wiring, and two-by-fours is having commodity price pressures. And that means margin pressure. At the same time, the hardware chains are having to invest in improving store facilities after taking costs out to balance their books earlier in the recession.

Neither Home Depot (NYSE: HD  ) nor Lowe's (NYSE: LOW  ) is baking a housing recovery into its 2012 estimates, so if housing were to surprise even slightly on the upside, the effect on their stocks could be noticeable.

Housing: still in the doghouse
The biggest snag for home center chains has been simply that the housing slump has lasted longer than expected, leaving them no room for error. At first, they cut costs and moved focus from selling to construction pros to pushing moderately priced stuff such as paint and flooring to DIY homeowners fixing the homes they couldn't sell.

But by the end of 2011, they had made real structural changes, closing stores and investing in technology to make store operations more efficient. That meant higher capital expense at a time when inventory costs were also under pressure.

In Lowe's case, it added a fair amount of expenses as part of its latest restructuring, which included overhauling inventory and closing stores. The latest move was buying online retailer ATG at the end of the year. Like many retailers, Lowe's needed a ha! ndle on e-commerce and decided to buy instead of build.

However, there is good news as well. COO Robert Hull indicated Lowe's is expected to crank out about $2.1 billion in free cash flow during the next fiscal year. Lowe's managers also said they've laid out a five-year plan to get them to 2015 with no expectation of a "frothy housing market."

Lowe's is where Home Depot was a couple of years ago, trying to fix stores and boost sales, and its stock has been driven down by those issues, which gives it a bit more upside potential. Fool Austin Smith likes Lowe's over Home Depot as a better shareholder value for buying back far more of its shares.

And Home Depot has burned through quite a bit of upside potential already. It was one of the best performers in the Dow in 2011, as The Fool pointed out recently. It hit its 52-week high recently, and as fellow Fool Dan Caplinger mentioned, it's expensive and investing in it requires faith in the housing recovery, so the short-term upside is slim.

But Home Depot has been paying dividends regularly and accelerated its share repurchase plan last year. If you're a value investor, there are worse places to be in retail than a sector leader who pays regular dividends.

It's up to you whether you want to back the favorite or the scrappy upstart. But keep in mind, the U.S. is not Japan -- retail is not facing a lost decade. Housing and consumer spending will pick up, because Americans are shoppers and homeowners by nature. Saturday morning at the hardware store is not a ritual in danger of extinction.

So if you are hoping for a real retail recovery, invest in Home Depot, Lowe's, or even Orchard Supply Hardware -- these days, it beats putting your money on stocks of clothing chains or bookstores -- but keep a long horizon.

If you're interested in the Dow's top stocks on your quest for great dividend-paying stocks, The Motley Fool has compiled a special free report outlining our 11 favorite dependable dividend-paying stocks.! It's ca lled "Secure Your Future With 11 Rock-Solid Dividend Stocks." You can access your free copy today! Just click here to discover the winners we've picked.

Sunday, January 15, 2012

Oracle Flies Past Targets & Taking Share (ORCL, SAP, IBM)

Oracle Corp. (NASDAQ: ORCL) just posted earnings.  Its GAAP EPS was $0.25 but non-GAAP was $0.31 EPS on revenues of $5.3 Billion.  First Call had estimates at $0.27 non-GAAP EPS on revenues of $5.04 Billion.  Look at these metrics individually:

  • software license revenues up 35%, the strongest growth of any quarter in ten years,
  • software license sales up 38%
  • applications new license sales grew 63% compared to SAP’s new license sales growth rate of 15%


  • Charles Phillips, president, said, "We like our growth strategy of expanding beyond ERP into high-end industry specific vertical software in contrast to SAP’s strategy of moving down market to sell ERP systems to small companies."
  • CEO Larry Ellison said, "Our database and middleware new license sales grew 28% in Q2. We continue to take market share from IBM in both product categories."

While the earnings guidance is not yet out, this last quarter was a phenomenal report and it is really hard to call anything bad so far.  When it offers guidance, First call has next quarter’s estimates at $0.29 EPS and $5.19 Billion in revenues and it has fiscal May 2008 shows estimates at $1.22 EPS on almost $21.5 Billion.

Oracle’s stock closed down 2.3% at $20.76 today, and shares are at $21.70 in after-hours trading.  The 52-week trading range is $15.97 to $23.00.

Jon C. Ogg
December 19, 2007

Jon Ogg can be reached at; he produces the SPECIAL SITUATION newsletter and he does not own securities in the companies he covers.

5 Undervalued Recession-Proof Stocks

Markets were crushed Thursday on signs of slowing growth in China and Germany and a gloomy economic outlook from the Federal Reserve, reported CNBC. In response, investors fled to the safety of the U.S. dollar and government bonds.

The U.S dollar climbed 1.36%, which pushed down U.S crude oil prices by more than 5%. Gold dropped nearly $50/ounce and European stocks fell 4% to a two-year low, "dragging an index of global equities to a one-year trough." This was all before 11 a.m.

Market volatility isn't going anywhere, and more cloudy days may still be ahead for the global economy.

So how can you prepare yourself for more market losses?

For ideas, we went back into time, and identified a list of stocks that outperformed the market during each of the last three big market downturns over the last decade (Oct. 1, 2007 to March 2, 2009, April 19, 2010 to June 28, 2010, and July 18, 2011 to the present).

In addition, all of these stocks appear to be undervalued, when comparing levered free cash flow to enterprise value.

Considering the track record of these companies during downturns, are they being underestimated by the market?

List sorted by each stock's average alpha relative to the S&P 500 during the three downturns over the last decade. (Click here to access free, interactive tools to analyze these ideas.)

1. Arch Capital Group (Nasdaq: ACGL  ) : Provides insurance and reinsurance products worldwide. Between Oct. 1, 2007 and March 2, 2009: Price changed from $25.16 to $17.52, a price return of -30.37% (alpha of 24.33%). Between April 19, 2010 to June 28, 2010: Price changed from $25.29 to $25.47, a price return of 0.71% (alpha of 10.98%). Between July 18, 2011 and Sept. 18, 2011: Price changed from $32.32 to $33.65, a price return of 4.12% (alpha of 10.97%). [Average Alpha: 15.43%] Levered free cash flow at $527.50M vs. enterprise value at $4.15B (implies an LFCF/EV ratio at 12.71%).

2. Mea dowbrook Insurance Group (NYSE: MIG  ) : Operates as a specialty commercial insurance underwriter and insurance administration services company in the United States. Between Oct. 1, 2007 and March2, 2009: Price changed from $8.72 to $5.58, a price return of -36.01% (alpha of 18.69%). Between April 19, 2010 to June 28, 2010: Price changed from $7.97 to $8.77, a price return of 10.04% (alpha of 20.3%). Between July 18, 2011 and Sept. 18, 2011: Price changed from $9.49 to $9.51, a price return of 0.21% (alpha of 7.06%). [Average Alpha: 15.35%] Levered free cash flow at $53.57M vs. enterprise value at $527.85M (implies an LFCF/EV ratio at 10.15%).

3. Synopsys (Nasdaq: SNPS  ) : Provides technology solutions used to develop electronics and electronic systems worldwide. Between Oct. 1, 2007 and March 2, 2009: Price changed from $27.47 to $17.94, a price return of -34.69% (alpha of 20.01%). Between April 19, 2010 to June 28, 2010: Price changed from $23.03 to $21.96, a price return of -4.65% (alpha of 5.62%). Between July 18, 2011 and Sept. 18, 2011: Price changed from $24.15 to $25.99, a price return of 7.62% (alpha of 14.47%). [Average Alpha: 13.37%] Levered free cash flow at $294.70M vs. enterprise value at $2.56B (implies an LFCF/EV ratio at 11.51%).

4. MKS Instruments (Nasdaq: MKSI  ) : Provides instruments, subsystems, and process control solutions that measure, control, power, monitor, and analyze parameters of manufacturing processes worldwide. Between Oct. 1, 2007 and March 2, 2009: Price changed from $19.35 to $11.75, a price return of -39.28% (alpha of 15.42%). Between April 19, 2010 to June 28, 2010: Price changed from $20.7 to $20.26, a price return of -2.13% (alpha of 8.14%). Between July 18, 2011 and Sept. 18, 2011: Price changed from $24.86 to $24.65, a price return of -0.84% (alpha of 6.01%). [Average Alpha: 9.86%] Levered fr! ee cash flow at $128.07M vs. enterprise value at $707.26M (implies an LFCF/EV ratio at 18.11%).

5. Fresh Del Monte Produce (NYSE: FDP  ) : Produces, transports, sources, markets, and distributes fresh and fresh-cut fruit and vegetables worldwide. Between Oct. 1, 2007 and March 2, 2009: Price changed from $28.97 to $17.88, a price return of -38.28% (alpha of 16.42%). Between April 19, 2010 to June 28, 2010: Price changed from $20.89 to $20.84, a price return of -0.24% (alpha of 10.03%). Between July 18, 2011 and Sept. 18, 2011: Price changed from $26.19 to $23.8, a price return of -9.13% (alpha of -2.28%). [Average Alpha: 8.06%] Levered free cash flow at $167.94M vs. enterprise value at $1.43B (implies an LFCF/EV ratio at 11.74%).

Interactive chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


How to Invest Like Warren Buffett – For Beginners That Want Some Insight

At the core of all Warren Buffett’s investment decisions is a business man like outlook on stock purchasing. In Warren’s mind, he is not buying a stock ticker; rather, he is buying an actual piece of a company.

So he first analyses the product, the business model that surrounds that product and then the underlying economics that underpin that business model. And if he likes what he sees, then he starts fiddling around with the profit numbers and earnings projections.

Warren likes a business that he can understand. But for Warren, this has a deeper business meaning. A business that he can understand is one in which it has a product or service that does not have to change in order to sell. To Warren, a predictable product equals predictable profits. Coke is fine example of this. The cola product has been the same for over 100 years, so it’s not unreasonable to suggest it will be the same for the next 100 years. This gives Warren better insight in how to forecast future earnings.

Next, Warren needs the business model to have a durable competitive advantage. It is the nature of capitalism to want to crush the other guy. So this is Warren’s stress test. He wants to see if a competitor had 8 billion dollars, what could they do with it? Could they make a dent in the company he wants to invest in? So if Pepsi had 8 billion dollars, could they dent Coke world wide? The answer is a resounding no.

Competent Management is critical in forecasting the performance of future cash flows. Warren understands human nature, in that; people are always compelled to do something stupid when a huge pile of cash is on the radar screen. Bank management is a striking example of this. For this reason, he wants management with a history of having integrity and common sense with respect to how business affairs should be governed. This means no 40 to 1 leverage ratio, no crazy loan portfolio, etc.

Price for the world’s greatest investor needs to be sensibl! e. He us es a discounted cash flow model with a discount rate of 10%. If a company has stable predictable growing earnings and these earnings are protected with a durable competitive advantage than he is willing to pay a premium. His acquisition of Burlington Northern Sante Fe is a good example of this. The railroads can’t be out sourced to India.

In my next article I will talk about discounted cash flow models and finance math and do my best to explain it in basic terms for the beginner investor. This article was just meant as a blueprint for sound investing methods, ones that Warren Buffett subscribes to himself.


Ultimate Market Recap: Amazon Wins with Online Customer Service, Oil and Metals Down

Wednesday Morning��s Top Stories

After closing down almost 9 percent, shares of?Computer Sciences Corp.?(NYSE:CSC) continue to attract heavy attention.? The company warned it may write down a $1.5 billion contract with Britain��s National Health Service.

Shares of?Morgan Stanley?(NYSE:MS) are edging .20 percent higher in late trading after a report leaked that the bank plans on cutting 580 jobs in New York City.? Other financial firms such as?Goldman Sachs?(NYSE:GS) and?Citigroup?(NYSE:C) are trading lower on the news.

Don��t Miss:?Windows App Developers are Loving the Money

Although IPOs such as?LinkedIn Corp.?(NYSE:LNKD),?Groupon Inc.?(NASDAQ:GRPN) and?Pandora Media Inc.?(NYSE:P) have dominated headlines this year, other IPOs deserve some attention. Forbes recently released a list of the worst IPOs in 2011. The list contains?FriendFinder Networks?(FFN) with a 94% loss from its IPO.?Imperial Holding?(NYSE:IFT) and?Kips Bay Medical?(NASDAQ:KIPS) followed with losses of 83% and 79%, respectively.??Mission New Energy Limited?(NASDAQ:MNEL),?Sequans Communications S.A.?(NYSE:SQNS),?Renren?(NYSE:RENN) and?Tudou Holdings?(NASDAQ:TUDO) also rounded out the list.

Shares of?The New York Times Co.?(NYSE:NYT) are jumping 1.6% in late trading. The media company announced it reached an agreement to sell its Regional Media Group to Halifax Media Holdings for $143 million in cash.

HOT FEATURE:?China Cracks Down on Gold Exchanges>>

Wednesday Morning Hot Stocks

Numerous Asian electronics companies, including?Sharp Corp.?(SHCAY) and Samsung Electronics Co., have agreed to a$550 million-plus settlement for the alleged price-fixing of! LCD scr eens. Consumers will receive partial refunds from a pool of $501 million and about $37 million will pay governments and other public groups for damages, according to Bloomberg.

Don��t Miss:?Iran Threatens to Block Oil Flow Through Vital Strait of Hormuz in Response to U.S. Sanctions.

Italy?(NYSE:EWI) has sold EUR $9 billion euros ($11.8 billion) of six-month bills, with sharply declining yields as compared to November��s auction levels, according to MarketWatch. The sale saw an average yield of 3.25 percent, a decrease from November��s 6.50 percent.

The Obama administration plans to ask Congress to raise the?nation��s borrowing limit?by $1.2 trillion this week, representing the third and last increase from summer��s negotiated deal. On Tuesday, treasury officials said the increase is necessary because the government will be within $100 billion of its current limit by Friday, according to CNBC.

The latest boost will increase the limit to $16.4 trillion, which officials believe should be enough for the government to continue borrowing until 2012��s end�Cright after the presidential election.

Investing Insights:?China Cracks Down on Gold Exchanges.

The?New York Times Co.?(NYSE:NYT) announced that it has agreed to sell its its Regional Media Group, the owner of 16 regional newspapers and other publications, to the privately-owned Halifax Media Holdings for $143 million in cash ($150 million in post-tax proceeds).

The transaction is expected to close in the first quarter of 2012 and the net proceeds will go to general corporate purposes.

Many believed this was the year of an IPO comeback, but 2011 will end with less IPOs than in 2010. The money raised in the offerings will be approximately six percent less than last year and approximately 40 percent below 2007��s peak, reported the Wall Street Journal.?For the companies with U.S. offerings, around two-thirds of them are trading below their IPO prices.?Li! nkedIn C orp.?(NYSE:LNKD),?Groupon Inc.?(NASDAQ:GRPN) and?Pandora Media Inc.?(NYSE:P) have all fallen short after hitting the public markets.

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Wednesday��s Trending Stocks

After falling 27 percent yesterday,?Sears Holdings Corp.?(NASDAQ:SHLD) continues to fall more than 3% early Wednesday after news of Kmart store closings.?Goldman Sachs?(NYSE:GS) remains bearish on shares, and also cut their price target from $43 to $30.? The bank said, ��The weaker fundamentals reaffirmed our view that SHLD��s weak positioning will only be exacerbated in an uncertain environment.��

Investing Insights:?Will Sears Store Closings Affect Chico FAS Shareholders?

Shares of? are attracting attention Wednesday morning. The company finished dead last in a survey by ForSee measuring customer satisfaction with online shoppers this holiday season.?Gap Inc.?(NYSE:GPS) finished second to last, and?Netflix?(NASDAQ:NFLX) posted the largest year-over-year decline.?Amazon?(NASDAQ:AMZN) was the big winner again, as its score improved from 86/100 last year to 88/100 this year.

Don��t Miss:?Netflix, Gap Rank Low in Customer Satisfaction.

Shares of?The New York Times Co.?(NYSE:NYT) are receiving a boost this morning after a late Tuesday announcement.? The media company announced it reached an agreement to sell its Regional Media Group to Halifax media Holdings for $143 million in cash.

Apple Inc.?(NASDAQ:AAPL) shares are climbing more than .40% higher this morning. After reporting that Apple will release a TV set in Q2 or Q3, Digitimes reports that Apple will finalize hardware standards for its sets by the end of Q2. Apple may also turn to?Taiwan Semiconductor Manufacturing C! o.?(NYSE:TSM) for assistance.

Wendy��s Company?(NYSE:WEN) fell 1.3% early Wednesday. The company expects to open about 100 or more stores over the next 5 years in Japan. Other fast-food restaurants such as?McDonald��s?(NYSE:MCD) and?Yum! Brands, Inc.?(NYSE:YUM) are also trading lower.

Google Inc.?(NASDAQ:GOOG) is climbing .50% after Goldman Sachs raises estimates and its price target to $685 from $660.? Goldman expects Google��s core search business has the potential to post better-than-expected fourth quarter results.

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Market Recap

During Wednesday��s market trading action, the DJIA is off over 100 points to 12,172, the S&P 500 Index is trading above 1,250 and the Nasdaq is trading at 2,598. Here are the stocks driving the Wall Street trader chatter today:

EMCORE Corporation?(NASDAQ:EMKR): Shares of EMCORE Corporation are trading?higher?17% today. The company delivered a wider than expected loss in its earnings report yesterday. Shares are popping heavily following yesterday��s selloff. EMCORE Corporation offers a broad portfolio of products for the broadband, fiber optic, satellite and terrestrial solar power markets. The Company��s products include optical components and systems for high-speed data and telecommunications networks, cable television, and fiber-to-the-premises applications, and products for both satellite and terrestrial power generation.

Cavium Inc?(NASDAQ:CAVM): Shares of Cavium Inc are trading?lower?1.9% today. The company reduced its financial guidance due to weak demand from both the enterprise and service provider markets. Cavium Networks, Inc. provides semiconductor processors that enable intelligent networking, communications and security applications. The Company offers a broad! portfol io of software compatible processors and accelerator boards ranging in performance from 10 Mbps to 10 Gbps.

Sears Holdings Corporation?(NASDAQ:SHLD): Shares of Sears Holdings Corporation are trading?slightly lower?today. Following yesterday��s plunge, Goldman Sachs remains bearish on shares, cutting their price target from $43 to $30. Sears Holdings Corporation is a broadline retailer with full-line and specialty retail stores in the United States and Canada. The Company retails home appliances, as well as tools, lawn and garden products, home electronics, and other products. Sears Holdings also provides automotive repair and maintenance.

Arctic Cat Inc.?(NASDAQ:ACAT): Shares of Arctic Cat Inc. are trading?higher?20% today. The company announced a cash buyback of 6.1 mln class B shares from Suzuki Motor, Arctic Cat Inc. designs, engineers, manufactures, and markets snowmobiles and all-terrain vehicles under the Arctic Cat brand name. The Company also sells personal watercraft products under the Tigershark brand name. In addition, Arctic Cat sells related parts, garments, and accessories.

Medicis Pharmaceutical Corporation?(NYSE:MRX): Shares of Medicis Pharmaceutical Corporation are trading?lower?2% today. The company reduced its fourth quarter earnings guidance. Medicis Pharmaceutical Corporation provides pharmaceuticals focusing on the treatment of dermatological, pediatric, and podiatric conditions, as well as aesthetics medicine. The Company has branded prescription products in therapeutic categories such as acne, asthma, eczema, fungal infections, hyperpigmentation, photoaging, psoriasis, and rosacea.

Endeavour International Corporation?(NYSE:END): Shares of Endeavour International Corporation are trading?higher?12% today. Rodman & Renshaw raised its rating to Outperform from Market Perform with a $12.50 target price. The analyst report is! sues 201 2 upside on strong, oil-weighted production growth. Endeavour International Corporation is an international oil and gas exploration and production company that acquires, explores, and develops energy reserves. The Company conducts operations in the North Sea sectors of the United Kingdom and Norway. Endeavor holds license rights to a 3-D seismic dataset of the North Sea.

Noble Energy, Inc.?(NYSE:NBL): Shares of Noble Energy, Inc. are trading?flat?today. Noble Energy, Inc. is an independent energy exploration and production company. The Company explores for and produces crude oil, natural gas, and natural gas liquids. Noble Energy operates primarily in the Rocky Mountains, Mid-continent, and deepwater Gulf of Mexico areas in the US, with key international operations offshore Israel, the North Sea and West Africa.

Whirlpool Corporation?(NYSE:WHR): Shares of Whirlpool Corporation are trading?flat?today. The company��s shares sold off on the negative news out of retailer Sears Holdings�� store closings. Sears is a distributor of Whirlpool��s products at the retail level. Whirlpool Corporation manufactures and markets major home appliances. The Company��s principal products include laundry appliances, refrigeration and room air conditioning equipment, cooking appliances, dishwashers, and mixers and other small household appliances. Whirlpool��s products are sold worldwide

Piedmont Natural Gas Company Inc.?(NYSE:PNY): Shares of Piedmont Natural Gas Company Inc. are trading?off almost 1%?today. Piedmont Natural Gas Company, Inc. is an energy and services company that primarily transports, distributes, and sells natural gas. The Company serves residential, commercial, and industrial customers in North Carolina, South Carolina, and Tennessee. Piedmont also, through subsidiaries, markets natural gas to customers in Georgia, and distributes propane in various states.

Bank of America ! Corporat ion?(NYSE:BAC): Shares of Bank of America Corporation are trading?lower?3% today. Europe��s central bank reported its overnight deposits hit another record, dragging major banking stocks down today on the fearful news. Bank of America Corporation accepts deposits and offers banking, investing, asset management, and other financial and risk-management products and services. The Company has a mortgage lending subsidiary, and an investment banking and securities brokerage subsidiary.

Fracking Woes Could Help China Blow Past Us

It seems like only yesterday that China was characterized by the Great Wall, hordes of bicycles, and nary a thought about starting companies to permit participation in global commerce. Little did we know that it would soon become the major market for the world's commodities, while essentially keeping the U.S. afloat with a stream of loans.

Now its adoption of the controversial hydraulic fracturing process, or fracking, just might allow it to further advance on us. Indeed, that's especially likely if our own fracking activities continue to face a steady flow of challenges.

Fracking involves a process wherein, once a well has been drilled to hydrocarbon-bearing rock (usually shale), the rock is blasted by a mixture of water, sand, and chemicals. Fractures in the rock then allow the trapped gas or liquids to make their exit.

Here comes China
Thus far, China has only taken a few steps with regard to fracking. In its own country, PetroChina (NYSE: PTR  ) has reported some positive results in Sichuan province under the tutelage of Royal Dutch Shell (NYSE: RDS-B  ) . And CNOOC (NYSE: CEO  ) , the country's biggest offshore producer, is involved in U.S. fracking deals with Chesapeake Energy (NYSE: CHK  ) in the Eagle Ford and Niobrara shale plays.

But the country is gearing up to intensify activity on its own field, thereby allowing it to benefit from shale-gas reserves half again larger than our own. To help with the process, CNOOC and China Petrochemical Corp., or Sinopec (NYSE: SHI  ) , are both in line with the likes of Saudi Arabian Oil Co. for a chance to bid for a 30% stake in Texas' sophisticated Frac Tech Holdings, which provides and operates the ! stimulat ion equipment and services that are vital to hydraulic fracturing. ?

The winning bidder will shell out at least $2 billion to join the ranks of current owners. Today, 70% of Frac Tech belongs to a consortium of investment and sovereign-wealth firms from Asia and Abu Dhabi, along with Chesapeake, which is a 30% holder. It's likely that the sale would be facilitated by the issuance of new shares by Frac Tech -- which is also considering joint ventures around the world -- along with sales of a portion of stakes by current holders.

There's no certainty about what sort of regulatory rules will face companies, foreign and state-owned, that ultimately participate in China's fracking expansion. But, with a seeming determination to reduce its choking urban pollution, I'm betting that those rules will lean in the direction of pragmatism and reality, and will generally be intended to enhance the amount of fracking in the country.

Damaged water?
Meanwhile, our own fracking milieu is becoming a bit more shaky. There's long been concern about the chemicals used in fracking fluids and the potential that they could contaminate water tables near the drill sites. But 2011 also has witnessed intensifying concerns that the fracking process is guilty of spawning small earthquakes in the area of "injection wells," where the water is discarded once it's been used.

Concerns about fracking's effect on groundwater have been around for years, but were helped to spread virtually nationwide in 2010 with the release of a documentary film, Gasland, by a Pennsylvania filmmaker. Industry experts maintained that the film was fraught with errors and misinformation, but it nevertheless dealt fracking something of a blow.

More recently, that attention has been focused on Pavillion, Wyo., a town with a population of fewer than 200, whose groundwater the Environmental Protection Agency thinks may have been contaminated, primarily by the wells drilled near it. While the Wyoming wells a! re shall ower, fracking typically takes place at depths exceeding 10,000 feet; most water tables are within 500 feet of the surface.

That, says Mark Miller, CEO of Cuadrilla Resources, is why "it would defy physics" for fracking chemicals to find their way into groundwater. (Earlier this year, Cuadrilla surprisingly made a major natural gas find through fracking operations near Blackpool, England.) Nevertheless, the peripatetic EPA forges on, and, as The Wall Street Journal noted in an editorial, "If the Wyoming study holds up under scrutiny, an industry that employs tens of thousands could be in peril."

Shake it up, baby
Perhaps somewhat more plausible is the contention that pressure imbalances brought about by the discarding of used fracking water into injection wells can result in generally minor earthquakes. As my Foolish colleague Dan Dzombak noted recently, a series of 43 earthquakes that occurred in Oklahoma are thought to have resulted from fracking, a phenomenon that also occurred amid Cuadrilla's efforts in England.

In addition, Arkansas recorded 850 mostly minor events in 2010, up from 38 the prior year. Chesapeake was fracking actively in the state's Fayetteville Shale at the time. The company has since sold its Fayetteville assets to Australia's BHP Billiton (NYSE: BHP  ) .

More than a few industry observers would echo the Journal's concerns about EPA overzealousness potentially leading to a moratorium on fracking in the U.S. As the newspaper also stated in its opinion piece, "The agency is dominated by the anticarbon true believers, and the Obama Administration has waged a campaign to raise the price and limit production of fossil fuels."

Batty excessive environmentalism
But it isn't only fossil fuels that are in environmentalists' scopes these days. Indeed, so-called green fuels attract their attention even before becoming economically viab! le. Amon g the concerns du jour is that bats are being killed by wind turbines, albeit without contact occurring. It seems that the bats' lungs essentially explode from the rapid pressure drop that occurs as air flows over the turbine blades.

Don't get me wrong: I'm not keen on damage to the planet. In fact, I consider myself to be an environmentalist and am most offended by real environmental destruction, such as is brought about by the equivalent of one Deepwater Horizon spill occurring through leakage in Russia every couple of months. But I am also concerned about those who would chase windmills and potentially curtail the operations of domestic natural gas producers, precisely as our Chinese friends are getting cranking.

From an investment perspective, all this is but one reason why my attention to oil-field-services kingpin Schlumberger (NYSE: SLB  ) continues to increase. Given the company's broad reach, poorly grounded domestic regulations will be at least partially offset by its international activities, including those in China. It's also a reason why the company belongs on all Foolish watchlists.