With prices close to all-time inflation adjusted record, energy companies, governments, prospectors, and common citizens are investing heavily into facilities that generate crude and crude substitutes. Consumers of fuel oil and petrol products are starting to use their brains and economize; over time, these changes in behavior will shift the balance of power in the favour of the consumer. When this demand curve begins to shift an oil glut will emerge.
Across the country in states like Texas, Ohio, California, and Wyoming rusted well are coming back online and beginning to pump crude. Further the Chinese, is pursuing exploration with African nations Sudan, Chad, and the Congo. So the explotation of reserves will continue. Also, in Alberta, Canada Shell and other big wigs are developing massive strip mines to dig out tar sand. Tar sand can be refined into petroleum for about $30 per barrel.
It was just a few short years ago, when major energy giants were slashing their exploration budgets and cutting jobs; now those positions are en vouge again and its time to dig.
Tuesday, January 29, 2008
Sunday, January 27, 2008
Why oil prices will fall 1 of 3
We have all been watching the prices of oil very closely, and it has continued to climb adn climb. It seems to have finally stabilized, for the time being, around the min-ninety dollars/ barrel range. Much of the price is based in simple economic thoery:supply and demand. However, it was speculation that drove the price into the 90s in the first place. Under our latest outlook, world oil demand is anticipated to rise by 2.1%, or about 1.65 MMB/D next year, a downward revision from last month’s report by some 300 MB/D due to our higher price expectations.
While car and commuter traffic place a huge role in our energy consumption, we ofter forget about the other aspect of energy use: FOOD.
We all have to eat, and the increased fuel cost lead to increased production and distribution cost. So that leads investors to look for new cost-effective ways to extract oil.
A further means of adding oil reserves is through investment in enhanced recovery. In
the context of a simple model, it could be treated in various ways. An extreme assumption is that enhanced recovery investment adds reserves but not capacity. Hence it would simply extend thelife of the reservoir. Here the value of the added barrel of reserves would be the value of a barrel produced in T years, or (P - C)vT, recalling that vT is the relevant discount factor. This would imply, from expression (1), that marginal replacement cost by means of enhanced recovery, mec, would be related to reserves value by: V(TvT/a) = mec.
A more appropriate assumption about the value of a barrel of reserves added through
enhanced recovery would be that it would reduce the rate of decline of production from a reservoir as well as increasing the reserves. This could be incorporated in a more general modelthan the one here that assumes constant output.
While car and commuter traffic place a huge role in our energy consumption, we ofter forget about the other aspect of energy use: FOOD.
We all have to eat, and the increased fuel cost lead to increased production and distribution cost. So that leads investors to look for new cost-effective ways to extract oil. A further means of adding oil reserves is through investment in enhanced recovery. In
the context of a simple model, it could be treated in various ways. An extreme assumption is that enhanced recovery investment adds reserves but not capacity. Hence it would simply extend thelife of the reservoir. Here the value of the added barrel of reserves would be the value of a barrel produced in T years, or (P - C)vT, recalling that vT is the relevant discount factor. This would imply, from expression (1), that marginal replacement cost by means of enhanced recovery, mec, would be related to reserves value by: V(TvT/a) = mec.
A more appropriate assumption about the value of a barrel of reserves added through
enhanced recovery would be that it would reduce the rate of decline of production from a reservoir as well as increasing the reserves. This could be incorporated in a more general modelthan the one here that assumes constant output.
Friday, January 18, 2008
DTC meets OTC
According to the partners, it represents the OTC derivatives industry's only automated solution for calculating, netting and issuing payments between counterparties to bilateral contracts.
Managed by the DTCC's Trade Information Warehouse, the service reduces risks by replacing manually processed bilateral payments with automated netted payments. Previously institutions had to rely on a global network of correspondents and a degree of faith that they had received payments in one currency as they paid in another.
In the first quarterly central settlement cycle for the new service on December 20, the amount of trading obligations requiring financial settlement was reduced by 98 per cent, from USD14.3bn gross to USD288m net.
Gross settlements by the 14 participating OTC derivatives dealers were consolidated from 340,000 to 123 net settlements with the new arrangements. Payments were made in five currencies, the US dollar, euro, Japanese yen, sterling and Swiss francs.
'There are few opportunities of this magnitude in the OTC derivatives market to reduce operational risks while at the same time increase operating efficiencies,' says Diane Schueneman, head of global infrastructure solutions at Merrill Lynch. 'The central settlement service developed by DTCC and CLS represents a tremendous advance for the operations area of this industry.'
Randolph Cowen, co-chief administrative officer, Goldman Sachs, adds: 'Central settlement provides the credit derivatives market with infrastructure that assures certainty of payment and processing scalability to address the explosion of credit derivatives transaction volume and the inherent operational risk of the previous highly manual processes.
'The central settlement process, which leverages DTCC's Trade Information Warehouse, has produced full straight-through processing, allowing us to go all the way from confirmation to payment calculation to settlement with virtually no manual intervention.'
With the new service, bilateral netting and settlement is completed and reports generated for counterparties early in the morning on settlement day. The function has been designed to enable payments associated with transactions confirmed through Deriv/SERV and residing in the warehouse's global contract repository to be netted by value date, currency and counterparty.
Payments eligible for settlement include initial payments and one-time fees, coupon payments and payments associated with post-trade events. In 2007 Deriv/SERV processed more than 5.8 million OTC derivatives transactions.
The warehouse generates bilaterally netted payment instructions and sends them to CLS for settlement. CLS automatically notifies its settlement members, who effect settlement through CLS on a multilateral, netted basis. Over time, the number of currencies in which payments can be made will be expanded from the initial five.
'The settlement service breaks new ground in OTC derivatives operations,' says Michael Bodson, the executive managing director responsible for business management, strategy and marketing for all DTCC businesses.
'Counterparties used to manage payment reconciliations and funds transfers for thousands of payments on a bilateral basis using manual processes. Now, once trades are fed into the Trade Information Warehouse, these steps are handled automatically and, for the first time, counterparties obtain a full audit trail. The results in terms of cost savings, risk mitigation and efficiency gains are tremendous.'
During the initial launch, which followed an extensive testing period, the participating dealers settled with each other in defined clusters. During 2008 additional dealers will go live on the service, and participants will begin settling among each other outside of their defined clusters. Also during 2008 the warehouse's settlement capabilities will be expanded in preparation for bringing buy-side firms on board.
'By combining CLS's multi-currency liquidity management capability with DTCC's automated processing platform for OTC derivatives, the new central settlement service demonstrates how industry utilities working together can provide enhanced value to the market,' says Rob Close, president and chief executive of CLS Bank International.
'The synergies between our organisations and the efforts of our member banks have enabled us to deliver this important new service in record time and at low cost.' DTCC and CLS launched their partnership to build the central settlement solution in December 2006.
CLS Bank International, which is owned by 70 of the world's largest global financial institutions, settles more than 400,000 instructions equivalent to approximately USD4trn each day and provides global settlement services in 15 currencies.
The DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and OTC derivatives, and is a leading processor of mutual fund and insurance transactions.
Managed by the DTCC's Trade Information Warehouse, the service reduces risks by replacing manually processed bilateral payments with automated netted payments. Previously institutions had to rely on a global network of correspondents and a degree of faith that they had received payments in one currency as they paid in another.
In the first quarterly central settlement cycle for the new service on December 20, the amount of trading obligations requiring financial settlement was reduced by 98 per cent, from USD14.3bn gross to USD288m net.
Gross settlements by the 14 participating OTC derivatives dealers were consolidated from 340,000 to 123 net settlements with the new arrangements. Payments were made in five currencies, the US dollar, euro, Japanese yen, sterling and Swiss francs.
'There are few opportunities of this magnitude in the OTC derivatives market to reduce operational risks while at the same time increase operating efficiencies,' says Diane Schueneman, head of global infrastructure solutions at Merrill Lynch. 'The central settlement service developed by DTCC and CLS represents a tremendous advance for the operations area of this industry.'
Randolph Cowen, co-chief administrative officer, Goldman Sachs, adds: 'Central settlement provides the credit derivatives market with infrastructure that assures certainty of payment and processing scalability to address the explosion of credit derivatives transaction volume and the inherent operational risk of the previous highly manual processes.
'The central settlement process, which leverages DTCC's Trade Information Warehouse, has produced full straight-through processing, allowing us to go all the way from confirmation to payment calculation to settlement with virtually no manual intervention.'
With the new service, bilateral netting and settlement is completed and reports generated for counterparties early in the morning on settlement day. The function has been designed to enable payments associated with transactions confirmed through Deriv/SERV and residing in the warehouse's global contract repository to be netted by value date, currency and counterparty.
Payments eligible for settlement include initial payments and one-time fees, coupon payments and payments associated with post-trade events. In 2007 Deriv/SERV processed more than 5.8 million OTC derivatives transactions.
The warehouse generates bilaterally netted payment instructions and sends them to CLS for settlement. CLS automatically notifies its settlement members, who effect settlement through CLS on a multilateral, netted basis. Over time, the number of currencies in which payments can be made will be expanded from the initial five.
'The settlement service breaks new ground in OTC derivatives operations,' says Michael Bodson, the executive managing director responsible for business management, strategy and marketing for all DTCC businesses.
'Counterparties used to manage payment reconciliations and funds transfers for thousands of payments on a bilateral basis using manual processes. Now, once trades are fed into the Trade Information Warehouse, these steps are handled automatically and, for the first time, counterparties obtain a full audit trail. The results in terms of cost savings, risk mitigation and efficiency gains are tremendous.'
During the initial launch, which followed an extensive testing period, the participating dealers settled with each other in defined clusters. During 2008 additional dealers will go live on the service, and participants will begin settling among each other outside of their defined clusters. Also during 2008 the warehouse's settlement capabilities will be expanded in preparation for bringing buy-side firms on board.
'By combining CLS's multi-currency liquidity management capability with DTCC's automated processing platform for OTC derivatives, the new central settlement service demonstrates how industry utilities working together can provide enhanced value to the market,' says Rob Close, president and chief executive of CLS Bank International.
'The synergies between our organisations and the efforts of our member banks have enabled us to deliver this important new service in record time and at low cost.' DTCC and CLS launched their partnership to build the central settlement solution in December 2006.
CLS Bank International, which is owned by 70 of the world's largest global financial institutions, settles more than 400,000 instructions equivalent to approximately USD4trn each day and provides global settlement services in 15 currencies.
The DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and OTC derivatives, and is a leading processor of mutual fund and insurance transactions.
Hedge Fund analyst?
What does a hedge fund get for $20,000,000 a year? Alan Greenspan.Yes its true, Alan Greenspan, the former chairman of the US Federal Reserve, is to become an adviser to Paulson & Co, the $28bn New York-based hedge fund company that achieved spectacular investment returns at the height of the credit squeeze last year.
Mr Greenspan will join the advisory board of the credit specialist investment house. Paulson will be the only hedge fund that Mr Greenspan will work with under the terms of the agreement.
Mr Greenspan will join the advisory board of the credit specialist investment house. Paulson will be the only hedge fund that Mr Greenspan will work with under the terms of the agreement.
Thursday, January 17, 2008
Is Swiss secrecy over?
YES. At least for US clients, the end is year. UBS one of the biggest casualties of the US subprime crisis, faces an additional blow to its profitability after a decision to wind down its traditional Switzerland-based private banking business for rich US clients.
The move by the world’s biggest wealth manager follows a reassessment of the risks and rewards from an activity that has drawn increasing attention from US regulators, especially the IRS. Governemnts have been putting pressure because of the fear that they are loosing revenue.
Profitability for the US business is not disclosed. However, private banking is one of UBS’s most lucrative activities and the bank enjoys among the highest margins of top international wealth managers. In 2006, private banking accounted for SFr5.8bn ($5.3bn) of the group’s total pre-tax profit of SFr14.4bn.
UBS’s decision, announced internally in late November but only confirmed publicly on Wednesday, follows the earlier termination of business with Iran. The moves are unconnected but reflect rising reputational concerns at a group that employs about a quarter of its staff in the US.
About 60 private bankers in Zurich, Geneva and Lugano are affected. A few might transfer to UBS Swiss Financial Advisers, a Zurich subsidiary created specially to meet US regulatory requirements, but not enjoying Swiss banking secrecy on securities transactions.
“We are talking to lots of people. It is clear there has been a rather exceptional situation over the past three to four months,” said an executive at Impact Partners, a Geneva executive search company dealing with some of the UBS staff affected.
Employees declined to comment, for fear of breaching internal guidelines or Swiss bank secrecy law. But former staff have described falling morale and conflicts between ambitious internal growth targets and ever-tighter compliance rules.
“This strategic alignment brings our services closer to the clients, streamlines operations and enhances our ability to ensure compliance with applicable laws and regulations,” said UBS.
However, where UBS will not be, some small Aisle will step in a provide clients numbered accounts. The service will fall back into the shadows, where it began and continue -- just this time it will stay behind closed doors.
The move by the world’s biggest wealth manager follows a reassessment of the risks and rewards from an activity that has drawn increasing attention from US regulators, especially the IRS. Governemnts have been putting pressure because of the fear that they are loosing revenue.
Profitability for the US business is not disclosed. However, private banking is one of UBS’s most lucrative activities and the bank enjoys among the highest margins of top international wealth managers. In 2006, private banking accounted for SFr5.8bn ($5.3bn) of the group’s total pre-tax profit of SFr14.4bn.
UBS’s decision, announced internally in late November but only confirmed publicly on Wednesday, follows the earlier termination of business with Iran. The moves are unconnected but reflect rising reputational concerns at a group that employs about a quarter of its staff in the US.
About 60 private bankers in Zurich, Geneva and Lugano are affected. A few might transfer to UBS Swiss Financial Advisers, a Zurich subsidiary created specially to meet US regulatory requirements, but not enjoying Swiss banking secrecy on securities transactions.
“We are talking to lots of people. It is clear there has been a rather exceptional situation over the past three to four months,” said an executive at Impact Partners, a Geneva executive search company dealing with some of the UBS staff affected.
Employees declined to comment, for fear of breaching internal guidelines or Swiss bank secrecy law. But former staff have described falling morale and conflicts between ambitious internal growth targets and ever-tighter compliance rules.
“This strategic alignment brings our services closer to the clients, streamlines operations and enhances our ability to ensure compliance with applicable laws and regulations,” said UBS.
However, where UBS will not be, some small Aisle will step in a provide clients numbered accounts. The service will fall back into the shadows, where it began and continue -- just this time it will stay behind closed doors.
Big Bad Broker
NEW YORK (Reuters) - Merrill Lynch & Co Inc (MER.N) on Thursday said it took a $14.1 billion writedown and adjustments in the fourth quarter as bad subprime mortgage bets forced the brokerage to sell pieces of the company to foreign investors to raise capital.
Analysts expected Merrill's write-down to land anywhere from $10 billion to $15 billion. For the year, Merrill's subprime mortgage-related losses totaled nearly $23 billion.
Merrill reported a fourth-quarter net loss of $9.8 billion, or $12.01 a share, the largest in the company's history. The world's largest brokerage turned a profit of $2.3 billion, or $2.41 a share, in the year-ago period.
The results eclipse the $2.3 billion loss in the third quarter when Merrill recorded an $8.4 billion write-down.
In a statement, Chief Executive John Thain called the results "clearly unacceptable." But in the past month, Merrill has fortified its balance sheet with nearly $13 billion in capital infusions from U.S. and Asian investors.
(Reporting by Tim McLaughlin, editing by Mark Porter)
Analysts expected Merrill's write-down to land anywhere from $10 billion to $15 billion. For the year, Merrill's subprime mortgage-related losses totaled nearly $23 billion.
Merrill reported a fourth-quarter net loss of $9.8 billion, or $12.01 a share, the largest in the company's history. The world's largest brokerage turned a profit of $2.3 billion, or $2.41 a share, in the year-ago period.
The results eclipse the $2.3 billion loss in the third quarter when Merrill recorded an $8.4 billion write-down.
In a statement, Chief Executive John Thain called the results "clearly unacceptable." But in the past month, Merrill has fortified its balance sheet with nearly $13 billion in capital infusions from U.S. and Asian investors.
(Reporting by Tim McLaughlin, editing by Mark Porter)
Tuesday, January 15, 2008
Citi cut dividend
Citi has just committed the cardinal sin for blue chip stocks, it cut is dividend. I was completely shocked by this move, I have predicted that they would cut job over dividens, but I was wrong.
Citigroup Inc. lost almost $10 billion in last year's final three months, the largest quarterly deficit in the bank's 196-year history, and slashed its dividend as it recorded a mammoth write-down for bad bets on the mortgage industry.
The nation's largest bank wrote down the value of its portfolio by $18.1 billion. It also boosted loan-loss reserves by $4.1 billion, signaling further problems in its consumer businesses as deflated home prices, high energy and food costs, and rising unemployment weigh on people's ability to make their loan payments.
To bolster its capital, the bank also said Tuesday it has lined up $12.5 billion in new investments from sovereign wealth funds and existing shareholders.
That includes $6.88 billion from the Government of Singapore Investment Corp. for a 4 percent stake. Other investors were Capital Research Global Investors, Capital World Investors, the Kuwait Investment Authority, the New Jersey Division of Investment, shareholder Prince Alwaleed bin Talal of Saudi Arabia and former chief executive Sanford Weill and his family foundation.
The $12.5 billion in fresh equity adds to the $7.5 billion that Citi got in November from the Abu Dhabi Investment Authority in exchange for a 4.9 percent stake in the company. Citigroup's shares, which were trading around $55 a year ago, fell 70 cents to $28.36 in premarket trading on Tuesday.
The financial services company made no mention in its earnings report about job cuts beyond the 17,000 announced in the spring, a disappointment to some investors who were looking for a big downsizing. That means Chief Executive Vikram Pandit, who replaced Charles Prince in December, hasn't yet decided whether any of the global bank's core operations need to be cut or sold.
Pandit, calling the fourth-quarter results "clearly unacceptable," said in a statement Tuesday that "in an uncertain environment, these actions put us on our 'front foot,' focused on capturing opportunities that earn attractive returns for our shareholders."
The loss for the quarter totaled $9.83 billion, or $1.99 per share, compared with earnings of $5.13 billion, or $1.03 per share, during the same quarter a year earlier. Citigroup's revenue fell to $7.22 billion, down 70 percent from $23.83 billion in the final quarter of 2006.
Citigroup said the 41 percent cut in its quarterly dividend to 32 cents a share from 54 cents — along with the Asian investments and a stock offering of about $2 billion — will help boost its Tier 1 capital ratio, a measure of its financial strength.
Financial companies have been the highest dividend-paying sector in the stock market, but many — including Washington Mutual Inc., National City Corp. and the government-sponsored lenders Freddie Mac and Fannie Mae — have pared those payouts in recent months.
Citigroup's decision to cut its dividend and seek new cash from outside investors was widely anticipated on Wall Street after months of scrutiny over the bank's deteriorating operations. The biggest was Citigroup's bad bets on mortgage-backed bond instruments called collateralized debt obligations. It also was forced to bring $49 billion in hemorrhaging funds known as structured investment vehicles onto its books.
Over the past several weeks, Asian funds have been buying up the battered stocks of struggling U.S. banks. Early Tuesday, Merrill Lynch said it will receive a total of $6.6 billion from the Korean Investment Corp., Kuwait Investment Authority and Japan's Mizuho Corporate Bank — in addition to the $4.4 billion it has already gotten from Singapore's state-run Temasek Holdings.
In my opinion if you are in the stock market for 2-5 (or more) years, now is a good time to buy, but this is not a stock that you should consider if you are looking to mkae a quick buck.
Citigroup Inc. lost almost $10 billion in last year's final three months, the largest quarterly deficit in the bank's 196-year history, and slashed its dividend as it recorded a mammoth write-down for bad bets on the mortgage industry.
The nation's largest bank wrote down the value of its portfolio by $18.1 billion. It also boosted loan-loss reserves by $4.1 billion, signaling further problems in its consumer businesses as deflated home prices, high energy and food costs, and rising unemployment weigh on people's ability to make their loan payments.
To bolster its capital, the bank also said Tuesday it has lined up $12.5 billion in new investments from sovereign wealth funds and existing shareholders.
That includes $6.88 billion from the Government of Singapore Investment Corp. for a 4 percent stake. Other investors were Capital Research Global Investors, Capital World Investors, the Kuwait Investment Authority, the New Jersey Division of Investment, shareholder Prince Alwaleed bin Talal of Saudi Arabia and former chief executive Sanford Weill and his family foundation.
The $12.5 billion in fresh equity adds to the $7.5 billion that Citi got in November from the Abu Dhabi Investment Authority in exchange for a 4.9 percent stake in the company. Citigroup's shares, which were trading around $55 a year ago, fell 70 cents to $28.36 in premarket trading on Tuesday.
The financial services company made no mention in its earnings report about job cuts beyond the 17,000 announced in the spring, a disappointment to some investors who were looking for a big downsizing. That means Chief Executive Vikram Pandit, who replaced Charles Prince in December, hasn't yet decided whether any of the global bank's core operations need to be cut or sold.
Pandit, calling the fourth-quarter results "clearly unacceptable," said in a statement Tuesday that "in an uncertain environment, these actions put us on our 'front foot,' focused on capturing opportunities that earn attractive returns for our shareholders."
The loss for the quarter totaled $9.83 billion, or $1.99 per share, compared with earnings of $5.13 billion, or $1.03 per share, during the same quarter a year earlier. Citigroup's revenue fell to $7.22 billion, down 70 percent from $23.83 billion in the final quarter of 2006.
Citigroup said the 41 percent cut in its quarterly dividend to 32 cents a share from 54 cents — along with the Asian investments and a stock offering of about $2 billion — will help boost its Tier 1 capital ratio, a measure of its financial strength.
Financial companies have been the highest dividend-paying sector in the stock market, but many — including Washington Mutual Inc., National City Corp. and the government-sponsored lenders Freddie Mac and Fannie Mae — have pared those payouts in recent months.
Citigroup's decision to cut its dividend and seek new cash from outside investors was widely anticipated on Wall Street after months of scrutiny over the bank's deteriorating operations. The biggest was Citigroup's bad bets on mortgage-backed bond instruments called collateralized debt obligations. It also was forced to bring $49 billion in hemorrhaging funds known as structured investment vehicles onto its books.
Over the past several weeks, Asian funds have been buying up the battered stocks of struggling U.S. banks. Early Tuesday, Merrill Lynch said it will receive a total of $6.6 billion from the Korean Investment Corp., Kuwait Investment Authority and Japan's Mizuho Corporate Bank — in addition to the $4.4 billion it has already gotten from Singapore's state-run Temasek Holdings.
In my opinion if you are in the stock market for 2-5 (or more) years, now is a good time to buy, but this is not a stock that you should consider if you are looking to mkae a quick buck.
Tuesday, January 8, 2008
Microsoft is Back on the Block it built
Microsoft is busy doing what Microsoft does best, invent stuff. While Google has been the big tech company over the past few years, and its stock prices continues to climb, it looks like Microsoft is ready to jump back in the driver's seat.
What's driving the new M; basically hardware. While Microsoft made its name, literally, in the software business it has been spurred on of late by hardware sales. First the Xbox 360 has out sold the Play Station 3 by millions of units; the new partnership with Ford and the Microsoft SYNC technology appears to be paying dividends; plus product placement like The Devil Wears Prada never hurts. We cant forget Zune, while Zune is not iPod and has not sold 100+ million units it is taking podcasting to a while new level: the Zune Community is a WiFi connected musical community where like-listeners can listen to whatever they wish.
Oh yeah, and by the way Microsoft wants to get into the search engine business. This seems like a blantant knock on Google's door. OSLO, Norway (AP) -- Microsoft Corp. agreed to buy search engine company Fast Search & Transfer ASA for $1.2 billion Tuesday, adding software products that help companies trawl for information on the Internet.
The offer of $2.97 per share, or 19 kroner, was 42 percent premium to the Norwegian company's recent average share price, and caused the stock to soar by nearly the same amount in early trading on the Oslo stock exchange. Fast's board unanimously recommended that shareholders accept the offer, a news release said.
Fast, founded in 1997 in Oslo, specializes in tailored Web searches that allow major companies, from freight to telecommunications, to store and manage information.
"Enterprise search is becoming an indispensable tool to businesses of all sizes, helping people find, use and share critical business information quickly," Jeff Raikes, president of the Microsoft Business Division, said in a joint news release. "Until now organizations have been forced to choose between powerful, high-end search technologies or more mainstream, infrastructure solutions. The combination of Microsoft and FAST gives customers a new choice: a single vendor with solutions that span the full range of customer needs."
Conditions of the offer include acceptance by at least 90 percent of Fast's shareholders under the terms of a formal offer to be made next week, the statement from the two companies said. The two largest institutional shareholders, Norway's Orkla ASA and Hermes Focus Asset Management Europe have already accepted the offer, and the companies aim to complete the sale during the second quarter.
Fast's chief executive, John Lervik, said becoming part of Microsoft "gives Fast an exciting way to spread our cutting-edge search technologies and innovations to more and more organizations across the world."
My target for Microsoft is $42 in the next 24 weeks.
What's driving the new M; basically hardware. While Microsoft made its name, literally, in the software business it has been spurred on of late by hardware sales. First the Xbox 360 has out sold the Play Station 3 by millions of units; the new partnership with Ford and the Microsoft SYNC technology appears to be paying dividends; plus product placement like The Devil Wears Prada never hurts. We cant forget Zune, while Zune is not iPod and has not sold 100+ million units it is taking podcasting to a while new level: the Zune Community is a WiFi connected musical community where like-listeners can listen to whatever they wish.
Oh yeah, and by the way Microsoft wants to get into the search engine business. This seems like a blantant knock on Google's door. OSLO, Norway (AP) -- Microsoft Corp. agreed to buy search engine company Fast Search & Transfer ASA for $1.2 billion Tuesday, adding software products that help companies trawl for information on the Internet.
The offer of $2.97 per share, or 19 kroner, was 42 percent premium to the Norwegian company's recent average share price, and caused the stock to soar by nearly the same amount in early trading on the Oslo stock exchange. Fast's board unanimously recommended that shareholders accept the offer, a news release said.
Fast, founded in 1997 in Oslo, specializes in tailored Web searches that allow major companies, from freight to telecommunications, to store and manage information.
"Enterprise search is becoming an indispensable tool to businesses of all sizes, helping people find, use and share critical business information quickly," Jeff Raikes, president of the Microsoft Business Division, said in a joint news release. "Until now organizations have been forced to choose between powerful, high-end search technologies or more mainstream, infrastructure solutions. The combination of Microsoft and FAST gives customers a new choice: a single vendor with solutions that span the full range of customer needs."
Conditions of the offer include acceptance by at least 90 percent of Fast's shareholders under the terms of a formal offer to be made next week, the statement from the two companies said. The two largest institutional shareholders, Norway's Orkla ASA and Hermes Focus Asset Management Europe have already accepted the offer, and the companies aim to complete the sale during the second quarter.
Fast's chief executive, John Lervik, said becoming part of Microsoft "gives Fast an exciting way to spread our cutting-edge search technologies and innovations to more and more organizations across the world."
My target for Microsoft is $42 in the next 24 weeks.
Friday, January 4, 2008
Recession
Or should we say stagflation? Commodities prices s soaring, the dollar is very unstable, and the jobs numbers say 3.5 million new people are out of work.
NEW YORK - U.S. stocks headed toward a modestly higher open Friday ahead of the Labor Department's December employment report, which Wall Street hopes will point to consumer spending continuing at a healthy pace.
It is time to call a spade a spade, but lets see what happens.
NEW YORK - U.S. stocks headed toward a modestly higher open Friday ahead of the Labor Department's December employment report, which Wall Street hopes will point to consumer spending continuing at a healthy pace.
It is time to call a spade a spade, but lets see what happens.
Tuesday, January 1, 2008
Wall Street Wraps Up 2007 in a Somber Mood
NEW YORK (AP) -- Wall Street ended a painful year with another steep loss Monday as investors glumly anticipated that 2008 would bring more of the uncertainty and turbulence of 2007.
The Dow Jones industrials fell 101 points, the latest in a string of triple-digit moves that became commonplace in the just-ended year amid a continuum of bad news about housing, faltering mortgages and shrinking credit. Thanks to a big first-half advance, they managed to finish 2007 with a respectable increase of 6.43 percent -- not as large as the 16.29 percent jump in 2006, but a better performance than the modest loss in 2005.
The Dow's annual gain came even after it posted its worst fourth-quarter drop in 20 years, amid billion-dollar losses at the world's biggest financial firms and falling spending by consumers whose budgets have been crimped by record-high oil prices and declining home prices.
"Considering all that's going on, the market really acted pretty well," said Todd Leone, managing director of equity trading at Cowen & Co.
It's tough to say what the primary market driver of 2008 will be, but the stock market faces a slew of threats: more adjustable-rate mortgage resets, a still-tight credit market and the possibility of accelerating inflation. But Leone said the fourth-quarter earnings season in January should shed some light on how U.S. companies are surviving the recent slowdown and credit crunch.
There was more downbeat news on housing Monday. The National Association of Realtors said November existing home sales rose 0.4 percent to an annual rate of 5 million -- the first rise in nine months. However, sales are 20 percent below where they were a year ago, and the median existing home price has dropped 3.3 percent over the past 12 months.
Falling home prices have made it hard for struggling homeowners to refinance their mortgages, and the slump in construction activity has hurt homebuilders and other housing-related industries.
Still, there were some slivers of optimism Monday. The U.K.'s Observer newspaper reported Sunday that Merrill Lynch & Co. was in talks over the weekend to line up capital from investors in China and the Middle East in exchange for portions of the Wall Street firm.
Merrill, like many other financial houses, has seen its portfolio lose billions of dollar in value due to misplaced bets on mortgages. And as Citigroup Inc., UBS AG, Morgan Stanley and Bear Stearns Cos. have done, it has turned to investors in Asia for much-needed capital -- Merrill has already gotten $4.4 billion this month from a Singapore fund, which bought a 9.9 percent stake in the U.S. brokerage.
The Dow fell 101.05, or 0.76 percent, to 13,264.82. The blue-chip index remains below its Oct. 9 record high of 14,164.53, at which point it was up more than 13 percent year-to-date.
The Standard & Poor's 500 index and the technology-dominated Nasdaq composite index also declined Monday, but both posted annual gains for the fifth straight year.
The S&P 500 index fell 10.13, or 0.69 percent, to 1,468.36, to end 2007 with a gain of 3.53 percent. It had reached a record close of 1,565.15 on Oct. 9.
The Nasdaq fell 22.18, or 0.83 percent, to 2,652.28, to finish the year with a 9.81 percent gain. Despite the market's volatility, this was the best performance for the Nasdaq, still well below its tech boom highs, since 2003.
Government bonds rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slid to 4.03 percent from 4.12 percent late Friday, and is down nearly 17 percent for the year.
Declining issues narrowly outnumbered advancers on the New York Stock Exchange, where volume came to a light 1.15 billion shares.
2007 was a remarkable year on Wall Street. The market began the year continuing the rally that propelled the Dow above 12,000 for the first time in October. Then, in late February, came a reminder that stocks were capable of turning tail and plunging -- a skid on China's stock market and an ominous economic outlook from former Federal Reserve Chairman Alan Greenspan sent the Dow down 416 points in one day.
The Dow Jones industrials fell 101 points, the latest in a string of triple-digit moves that became commonplace in the just-ended year amid a continuum of bad news about housing, faltering mortgages and shrinking credit. Thanks to a big first-half advance, they managed to finish 2007 with a respectable increase of 6.43 percent -- not as large as the 16.29 percent jump in 2006, but a better performance than the modest loss in 2005.
The Dow's annual gain came even after it posted its worst fourth-quarter drop in 20 years, amid billion-dollar losses at the world's biggest financial firms and falling spending by consumers whose budgets have been crimped by record-high oil prices and declining home prices.
"Considering all that's going on, the market really acted pretty well," said Todd Leone, managing director of equity trading at Cowen & Co.
It's tough to say what the primary market driver of 2008 will be, but the stock market faces a slew of threats: more adjustable-rate mortgage resets, a still-tight credit market and the possibility of accelerating inflation. But Leone said the fourth-quarter earnings season in January should shed some light on how U.S. companies are surviving the recent slowdown and credit crunch.
There was more downbeat news on housing Monday. The National Association of Realtors said November existing home sales rose 0.4 percent to an annual rate of 5 million -- the first rise in nine months. However, sales are 20 percent below where they were a year ago, and the median existing home price has dropped 3.3 percent over the past 12 months.
Falling home prices have made it hard for struggling homeowners to refinance their mortgages, and the slump in construction activity has hurt homebuilders and other housing-related industries.
Still, there were some slivers of optimism Monday. The U.K.'s Observer newspaper reported Sunday that Merrill Lynch & Co. was in talks over the weekend to line up capital from investors in China and the Middle East in exchange for portions of the Wall Street firm.
Merrill, like many other financial houses, has seen its portfolio lose billions of dollar in value due to misplaced bets on mortgages. And as Citigroup Inc., UBS AG, Morgan Stanley and Bear Stearns Cos. have done, it has turned to investors in Asia for much-needed capital -- Merrill has already gotten $4.4 billion this month from a Singapore fund, which bought a 9.9 percent stake in the U.S. brokerage.
The Dow fell 101.05, or 0.76 percent, to 13,264.82. The blue-chip index remains below its Oct. 9 record high of 14,164.53, at which point it was up more than 13 percent year-to-date.
The Standard & Poor's 500 index and the technology-dominated Nasdaq composite index also declined Monday, but both posted annual gains for the fifth straight year.
The S&P 500 index fell 10.13, or 0.69 percent, to 1,468.36, to end 2007 with a gain of 3.53 percent. It had reached a record close of 1,565.15 on Oct. 9.
The Nasdaq fell 22.18, or 0.83 percent, to 2,652.28, to finish the year with a 9.81 percent gain. Despite the market's volatility, this was the best performance for the Nasdaq, still well below its tech boom highs, since 2003.
Government bonds rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slid to 4.03 percent from 4.12 percent late Friday, and is down nearly 17 percent for the year.
Declining issues narrowly outnumbered advancers on the New York Stock Exchange, where volume came to a light 1.15 billion shares.
2007 was a remarkable year on Wall Street. The market began the year continuing the rally that propelled the Dow above 12,000 for the first time in October. Then, in late February, came a reminder that stocks were capable of turning tail and plunging -- a skid on China's stock market and an ominous economic outlook from former Federal Reserve Chairman Alan Greenspan sent the Dow down 416 points in one day.
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