Friday, February 10, 2012

AMR Wants to Layoff 13,000, End Pensions

AMR (AAMRQ), the parent of American Airlines, detailed its plans to emerge from bankruptcy today, saying it wants to lay off 13,000 people and end its defined pension plans. The company is asking all groups within the airline, including management, to cut 20% from costs.

“The plan targets an annual financial improvement of more than $3 billion by 2017, including $2 billion in cost savings and $1 billion in revenue enhancements.”

Instead of pensions, AMR would contribute to 401K’s. Certain operations may also be outsourced.

“These are painful decisions,” Chairman and CEO Tom Horton continued, “but they are essential to American’s future. We will emerge from our restructuring process as a leaner organization with fewer people, but we will also preserve tens of thousands of jobs that would have been lost if we had not embarked on this path and that’s a goal worth fighting for.”

PharMerica dives, Amylin surges after hours

Shares of PharMerica Corp. fell sharply late Friday after a U.S. regulatory agency sought to block an acquisition bid for the pharmacy-management services firm, while Amylin Pharmaceuticals Inc. and Alkermes PLC climbed after the companies received regulatory approval of their diabetes treatment.

PharMerica Corp. PMC ?shares slid 14% at $12.30 after the U.S. Federal Trade Commission filed a complaint aimed at blocking Omnicare Inc.��s OCR ?bid for its rival. Omnicare��s late-traded shares shed 1.4% to $32.60 in scant volume.

The FTC said in a statement that it sees the combination of the two largest U.S. long-term care pharmacies as harmful to competition, and will enable Omnicare to raise the price of drugs for Medicare Part D consumers and others. The FTC also cited concerns by the Centers for Medicare & Medicaid Services, an agency of the Health and Human Services Department, that the deal if completed will likely result in higher reimbursement rates.

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The first post-Steve Jobs Macworld

A report from the 2012 Macworld developer's show in San Francisco. (Photo: Getty Images)

��If Omnicare is allowed to purchase its biggest and only national competitor, it will diminish competition and raise health-care costs �� leaving taxpayers and patients to foot the bill,�� said Richard Feinstein, director of the FTC��s bureau of competition, in a statement.

PharMerica rejected a $456 million bid from Omnicare in August, prompting Omnicare to take its offer d! irectly to PharMerica shareholders. Omnicare earlier Friday extended to Feb. 17 its tender offer to buy all of PharMerica��s shares for $15 each. As of Thursday, about 16% of all PharMerica��s outstanding shares had been tendered, according to Omnicare.

Amylin shares AMLN surged 17% to $14.25 and Alkermes shares ALKS gained 4.7% to $19.99. The biopharmaceutical companies said shortly before the start of the evening session that the U.S. Food and Drug Administration has approved Bydureon to treat Type 2 diabetes.

The newly approved drug is a once-weekly administered version of Amylin��s popular diabetes treatment Byetta. Bydureon will also carry a warning advising that it might cause acute pancreatitis or raise the risk of developing a certain type of thyroid cancer.

Amylin shares through Friday��s trading session had advanced almost 7% this year. Over the 12 months, they��ve fallen 26%. Alkermes shares had gained 10% in 2012, and have risen about 45% over the past year.

During the regular session, most U.S. stocks finished lower following a weaker-than-expected pace of growth in the U.S. economy during the fourth quarter. The economy expanded 2.8%, less than the 3% forecast by analysts surveyed by MarketWatch. Read about Friday's losses among U.S. stocks.

The Dow Jones Industrial Average DJIA ?fell 74 points, or 0.6%, at 12,660.46. The S&P 500 Index SPX fell 0.2% at 1,316.33. But th! e Nasdaq Composite Index COMP ?managed a 0.4% advance to 2,816.55.

Yahoo! Looking to Replace Some Board Members, Says WSJ

The Wall Street Journal’s Gina Chon, Joann Lublin and Anupreeta Das this afternoon report that Yahoo! (YHOO) has retained an executive search firm to find new members for its board of directors, targeting especially long-time directors of the company, citing multiple anonymous sources.

The possible turn-over of the board follows the appointment by the company earlier this week of a new CEO, Scott Thompson, formerly with eBay (EBAY).

Yahoo! shares ended the day down 12 cents, or 0.8%, at $15.52, and they were down another 3 cents in late trading at $15.49.

Thursday, February 9, 2012

Cheniere Energy: A Look Back at 2011

The past year for Cheniere Energy (AMEX: LNG  ) has been a little like an endless roller coaster. The stock is actually up since the year began, but if you've owned the stock the entire time you have to be suffering from motion sickness.

The stock has popped repeatedly on rumors and news of liquefied natural gas deals. But it has also plunged repeatedly as investors worry about mounting debt. Whether the stock was going up or down, there was really only one thing investors had their eyes on.

Two words...Sabine Pass
The entire year for Cheniere Energy has meant swinging from jubilation to despair over the future of Sabine Pass. The facility, originally built to import liquefied natural gas, or LNG, has been seeking approval to add an export facility and looking to find partners to trade with. The mere mention of a country interested in importing LNG from Cheniere would send shares skyrocketing.

This year ends with much more certainty than 2010 did for Cheniere's future and the future of Sabine Pass. The company has approval to expand into exports at Sabine Pass and has signed export deals that could secure its future. The deals really kicked off with an agreement with BG Gulf Coast LNG, a subsidiary of BG Group, for approximately 3.5 million tonnes per year in a 20-year deal. Gas Natural Fenosa and GAIL India followed with similar agreements.

There's only one problem with the grand plans Cheniere has in store: paying for it.

Cheniere has completed two public share offerings in the last six months for corporate purposes and is still seeking financing to complete the $4.5 billion to $5.0 billion project. Cheniere Energy Partners (NYSE: CQP  ) will own the project, but financing it is another problem entirely.

The consolidated balance sheet of Cheniere Energy shows $2.5 b! illion i n long-term debt and much, much more will be needed to pay for the expansion. With the company reporting losses every quarter, the company is going to have to partner with someone to pay for it, diluting the ownership of Sabine Pass.

If all goes well, construction will begin some time in 2012 with operations beginning in 2015 at the very earliest. That's more than we knew to start the year, but it still leaves plenty of questions for 2012.

As natural gas production expands in the U.S. at firms such as Chesapeake Energy (NYSE: CHK  ) , ExxonMobil (NYSE: XOM  ) , and Range Resources (NYSE: RRC  ) , the LNG business is in prime position to take advantage of the growth and become a major export. For Cheniere Energy, the only question is how it's going to pay for Sabine Pass and another LNG export facility being discussed in Corpus Christi, Texas.

Interested in reading more about Cheniere Energy? Click here to add it to My Watchlist to find all of our Foolish analysis on this stock.

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Tuesday, February 7, 2012

Ron Paul: Las Vegas Here I Come!

Ron Paul's campaign has gone dark in Florida.

Voters found the Texas Congressman absent from the Sunshine State on Friday as he had turned his attention away from the large and expensive primary, but a brief ride through Las Vegas, Nev. would reveal that Paul has ramped up his campaign there.

Nevada's Republican caucuses are on Feb. 4, which could be a grueling four-day turnaround from Florida for Gingrich and Romney. Rick Santorum has decided move on from Florida.

Ron Paul began to run ads more than a week ago in Nevada as "part of our delegate strategy to secure the Republican nomination," Jesse Benton, Paul campaign chairman, said in a Jan. 20 press statement. Benton said Nevada presents "opportunities for a strong top-three showing in their upcoming caucuses."

Nevada's race presents an advantageous race for Paul, whose loyal and eager supporters have the right attitude for its laborious caucus process.

"Caucuses are a much clearer sign of enthusiasm, and [Paul's] supporters clearly have the enthusiasm factor and the loyalty factor," says Robert Uithoven, a Nevada Republican political consultant. "They show up, they influence the discussion at these caucus events, and he tends to do much better in caucuses than he does in primaries."

Paul ran as the late front-runner in the Iowa caucuses until Rick Santorum stole his momentum in the final days of campaigning there. Santorum won an historic decision in Iowa while Paul slid to third.

Beyond that fact that Nevada is a caucus state, the Paul campaign feels confident there because the candidate can pick off crucial proportional delegates.

Since Paul finished second on the New Hampshire primary, his campaign has sent some 23 press statements about Nevada endorsements, events and community support. By comparison, Mitt Romney, who is the current front-runner in the state, has sent about four Nevada-themed emails.

This doesn't mean Paul is winning the ground in Nevada. Romney released this week a monster television ad campaign in the! state t hat attacks Newt Gingrich on the housing crisis -- Nevada has one of the worst foreclosure rates (1 in every 177 housing units) in the country -- and he hit radio airwaves two weeks ago.

Romney also has the most serious organization in Nevada as heavyweight political figures Lt. Gov. Brian Krolicki and Rep. Joe Heck (R., Nev.) have co-chaired his campaign there.

Paul's organization doesn't seem as flashy -- state chair Carl Bunce finished third in 2008 for a Nevada Congressional seat -- but the state has a formidable Libertarian population.

"This is the only state in the nation that when you go to vote for state-wide or federal office you can vote 'none of the above,'" says Jim Denton, a Nevada Republican political strategist. "And none of the above traditionally gets three or four percent of the vote for a national election here. ... Nevada has a very libertarian bent to it."

Paul finished second in the 2008 Nevada caucuses with 6,087, or 14% of the vote as he surpassed eventual Republican nominee John McCain by slightly more than 400 votes. The obstacle Paul faces though is Romney, who won a 2008 landslide in the state with 22,659, or 51% of the vote.

While Romney and Gingrich scramble to gather the most votes for Florida's winner-take-all primary, Paul will be canvasing Nevada in hopes to pick off a few more delegates. Second place seems like a realistic bet, but what about first place?

"I don't think he has a chance to win, but he will certainly have an influence on the outcome just given the amount of support he has here," Uithoven says.

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Tech Stocks: 2012¡äs Top Consumer Tech Gadgets

It's too early to tell what will be the blockbuster tech product of 2012, but a few theories prevail.

According to CNBC's Chris Morris, ultrabooks are primed to be the must-have tech toy of 2012. They are super slim and super fast computers aimed at rivaling Apple's MacBook Air. The system is led by Intel.

But the interesting thing is that utlrabooks and game platforms aren't necessarily "new." Yes, 2012 models have fancy new improvements on the older models, but the simple existence of an older model implies that the market is already saturated with one version or another of the gadget.

And now that every tech object does everything, can there ever really be a "next best thing," or will it always be enhancements of the old?

"The move to a more multifunctional mobile world is consolidating electronics -- and that erects more hurdles for technologies hoping to open up new spaces," writes Morris.

A few exceptions
"Apple's Siri and Microsoft's Kinect peripheral for the Xbox 360 are opening up new avenues to search for content and control devices, and could be installed in more electronics."

This relatively new and extremely popular technology has yet to be integrated in the most common tech products like computers and televisions, but it's likely it will be.

"What needs to happen is these products need to find a niche or differentiate themselves," says Arnold, director of industry analysis for consumer tech at NPD. "It's hard to put out a product that's kind of like the Apple ecosystem, but lacks the apps and costs the same amount."

Business section: Investing ideas
Curious which tech stocks will outperform in 2012?

For ideas, we screened a universe of technology stocks with a positive yearly performance greater than 20%. We further screened for companies that have received net positive investments from institutional investors, like hedge funds, in the current q! uarter.< /p>

These tech stocks did well in 2011, and "big money" thinks 2012 will start kick off much the same way -- do you agree with this optimism? (Click here to access free, interactive tools to analyze these ideas.)

1. Silicon Motion Technology (Nasdaq: SIMO  ) : Operates as a fabless semiconductor company. Market cap of $694.38M. Net institutional shares purchased over the current quarter at 1.6M, which is 5.88% of the company's 27.22M share float. Over the past year the stock value has increased by 371.64%.

2. FARO Technologies (Nasdaq: FARO  ) : Designs, develops, manufactures, markets, and supports portable, software driven, 3-D measurement systems used in a range of manufacturing, industrial, building construction, and forensic applications. Market cap of $913.32M. Net institutional shares purchased over the current quarter at 496.5K, which is 3.08% of the company's 16.10M share float. Over the past year the stock value has increased by 81.61%.

3. Rightnow Technologies: Provides cloud-based customer experience software products and services. Market cap of $1.41B. Net institutional shares purchased over the current quarter at 1.4M, which is 5.03% of the company's 27.86M share float. Over the past year the stock value has increased by 57.73%.

4. Globecomm Systems: Provides satellite-based communications infrastructure solutions and services. Market cap of $321.64M. Net institutional shares purchased over the current quarter at 622.0K, which is 3.04% of the company's 20.48M share float. Over the past year the stock value has increased by 48.11%.

5. InfoSpace (Nasdaq: INSP  ) : Develops search tools and technologies that assist consumers with finding content and information on the Internet. Market cap of $479.86M. Net institutional shares purchased over the current quarter at ! 1.7M, wh ich is 5.29% of the company's 32.13M share float. Over the past year the stock value has increased by 48.05%.

6. Cognex (Nasdaq: CGNX  ) : Provides machine vision products that capture and analyze visual information to automate tasks, primarily in manufacturing processes. Market cap of $1.73B. Net institutional shares purchased over the current quarter at 2.2M, which is 5.85% of the company's 37.63M share float. Over the past year the stock value has increased by 43.78%.

7. The Ultimate Software Group: Designs, markets, implements, and supports unified human capital management (HCM) software-as-service (SaaS) solutions to businesses, providing a single source for comprehensive human resources, payroll, and talent management technology. Market cap of $1.79B. Net institutional shares purchased over the current quarter at 2.4M, which is 9.49% of the company's 25.29M share float. Over the past year the stock value has increased by 39.99%.

8. Cepheid (Nasdaq: CPHD  ) : Develops, manufactures, and markets integrated systems for testing in the clinical market, as well as for application in legacy biothreat, industrial, and partner markets. Market cap of $2.16B. Net institutional shares purchased over the current quarter at 3.4M, which is 5.42% of the company's 62.68M share float. Over the past year the stock value has increased by 39.21%.

9. Sourcefire: Provides intelligent Cybersecurity solutions for information technology (IT); environments of commercial enterprises, such as health care, financial services, manufacturing, energy, education, retail, and telecommunications; and federal, state, and international government organizations worldwide. Market cap of $923.39M. Net institutional shares purchased over the current quarter at 3.3M, which is 11.99% of the company's 27.52M share float. Over the past year the stock value has increased by 33.! 22%.

10. OPNET Technologies: Provides software products and related services for managing applications and networks in the United States and internationally. Market cap of $786.27M. Net institutional shares purchased over the current quarter at 896.3K, which is 6.03% of the company's 14.87M share float. Over the past year the stock value has increased by 32.61%.

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.

Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Data sourced from Finviz.

Monday, February 6, 2012

Introducing the 24/7 Wall St. Wire

FTSE FTSE 100 IndexView Report04:37 AM6,312.50+30.30+0.48%
.GDAXI DAXX IndexView Report04:37 AM6,864.00+12.72+0.19%
.FCHI CAC 40 IndexView Report04:37 AM5,677.39+15.14+0.27%!
.SSMI SMI-IndexView Report04:22 AM9,236.23+18.36+0.20%

Data from Reuters

Douglas A. McIntyre

Sunday, February 5, 2012

Introducing the 24/7 Wall St. Wire

Most of the recent news about Google (GOOG) has been bad. Online advertising posted a slow fourth quarter. That unexpectedly included both display ads and search marketing which has made Google one of the fastest growing large companies in America.? Several Wall St. analysts have commented that Google's search revenue’s rate of increase flattened out in January and February. Since the consensus among experts who cover the company is that revenue will rise 11% in the first quarter, a flat quarter would be devastating.

One of the things that Wall St. hates about Google is that it does one thing better than any other company in the world, but that is all it does. Google Chrome browser, Google Earth, Google Maps, and YouTube have really made much money. Some of the features have not produced any revenue at all. If its search operation falters, Google's run as the hottest tech company in the world could be over.

At this point, Google is a $22 billion company. If the search business drops to a growth rate of 10% a year, it will take three years for Google's sales to get to $30 billion. From the time Microsoft (MSFT) hit $22 billion in sales in 2000, it took the company less than three years to get to the $30 billion plateau. Then from 2002 to 2008, Microsoft's sales doubled. The software business not only grew. Until recently, it grew quickly.

The assumption about Google's prospects is that the search company is the next Microsoft. Twenty years ago, Microsoft had the hot hand. Sales of Windows and the company's business and server software were stunning. The margins on some of Microsoft's software franchises were over 70%. Then the hyper-growth stopped as the company's market penetration of PCs and servers reached a saturation point. Microsoft's stock never saw the level it hit in 2000 again. Without lucrative stock options, employees who wanted to make it rich moved to start-ups. The people who had been at the company thirty years were already rich. Many! of them retired.

About seven years after Microsoft's stock hit an all-time high, Google traded at $747, its peak. It now changes hands at $348, and if the company's sales can only grow at 10% or 15%, the stock is not going back above $700, ever.
The myth about companies like Microsoft and Google is that what they do is so important to business and consumers and so pervasive that the growth curve never flattens out. It does flatten at every company. No exceptions.
The press coverage of Google this week included a few pathetic announcements. Disney (DIS) will put some of its premium content on Google's YouTube. That should be good for $10 million in revenue a year. Google is starting a $100 million venture capital arm which will make it the 1,000th largest venture operation in the world. In other words, it will not be managing enough venture money to matter. Then word came out that Hewlett-Packard (HPQ) might use Google's operating system in some of its netbooks instead of Microsoft Windows. The important word in that report is "might." The news that Google is adding thousands of employees a quarter and that the founders have bought a 747 or an aircraft carrier probably hit a high point two years ago.

Saying that Google is doing poorly is not the same as saying that Microsoft is doing well. What matters to Microsoft is that Google becomes less of a threat each day as it fails in its diversification attempts. Google's cash flow does not continue to give it an almost limitless capital arsenal. Google has to consider cutting people in areas which will never be profitable. The entire ethos at Google is in the process of changing. Microsoft may be in third place in the search business, but it is in first place in software, which is still the larger industry.

Investors still ask Microsoft why it is in the video game business. There is not any reasonable answer. It is an awful business with poor margins. It has nothing to do with selling Windows. There may have been some idea that being in th! e hardwa re business would help the software business, but, if so, that idea didn't work out a long time ago.

With the perceived playing field that Microsoft and Google operate on a bit more level now, they can race after the one market that could be substantial for either one or both of them, which is providing software and search on mobile devices. The smartphone, which is really a PC for the pocket, is part of the one-billion-units-per-year-in-sales handset industry. Providing the operating software and other key components for wireless devices is almost certainly the next big thing for tech companies from Google to Yahoo (YHOO) to Microsoft to Adobe (ADBE). Trying to milk more money out of the PC gets harder and harder. For the largest companies in the industry, it has become a zero sum game.

For Google and Microsoft, the best days are over, unless one can dominate the handset world the way it did the universe of computers.

Douglas A. McIntyre