Investing Category
AIG may actually be able to repay the government afterall?
Jennifer McClelland | RSS | Tue, Nov 10 2009 | 0 Comments
According to Moody’s Investors Service, AIG may actually be able to pay back its loans from the government. The company posted its second straight quarterly profit last week thanks to a recovery in the value of investments.
Moody’s said that as long as the operations of AIG and other markets continue to get better and stabilize, then they will likely be able to repay the government with heavy government support in its restructuring plan.
With the government now likely to recoup its investment, it has incentive to continue supporting AIG and its various creditors, Moody’s said. The agency affirmed AIG’s long-term rating of A3, the seventh-highest investment grade, with a negative outlook.
Credit spreads on AIG’s 8.25 percent notes due in 2018 tightened by 15 basis points on Tuesday to 751 basis points over U.S. Treasuries, according to MarketAxess.
Over the past year, AIG has taken more than $180 billion in financial aid from the government. Eighty percent is currently owned by taxpayers in the United States. While AIG is looking for someone to buy major assets, it is having a very difficult time finding anyone to buy from them.
I am actually surprised to see any company saying that AIG will be able to pay back the better part of $200 billion to anyone…especially from a company that went nearly bankrupt.
I don’t see why anyone would spend their time investing in a company like this. I sometimes wonder if the government knew what they were getting themselves into with AIG if they would have lent the money to them without and major consequences (remember executive retreats and those outrageous bonuses?).
Source
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Tags: aig, negative outlook, government support
Advanta has filed for bankruptcy
Jennifer McClelland | RSS | Mon, Nov 09 2009 | 1 Comment
Advanta Corp is a company that offers small businesses credit cards in the United States. Yesterday the lender filed for bankruptcy protection. The company, in its filing with the U.S. Bankruptcy Court for the Deleware District, listed assets of $363 million and debts totaling $331 million.
The company came into hardships after many of its small business clients simply could no longer afford to pay the balance or the minimum payment on credit cards lent by the company because they had also come under economic hardships. According to the company, it is trying to collect $2.7 billion from the accounts of 360,000 customers. The accounts are closed to new charges, but the outstanding balance is killing the company.
It had decided to shut down its credit card lending business five months ago to try to keep something like this, or worse, a takeover of its bank by the FDIC, from happening. however, it appears as though the bank will likely be taken over by the FDIC shortly because its level of capital is below regulatory requirements.
The company said that it has almost $100 million in cash and cash equivalents available, but would not be capable of meeting all of the debt obligations that will become due. There are around $138 million of senior retail investment notes still outstanding. The company’s largest unsecured debt holder is the Bank of New York Melton; it is investing in $230 million in debt for the lender.
Due to the announcement, of course, the stock for the publicly traded company fell 70%. It fell from 25 cents to 8 cents after hitting its all time low of just seven and a half cents.
Not included in the bankruptcy filing is Advanta Bank Corp. Also, customers who are making payments to their credit cards need to continue making payments on time because this has no effect on those accounts.
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Tags: advanta bank corp, advanta corp, cash and cash equivalents
“Flash Trading” could be no more, thankfully.
Jennifer McClelland | RSS | Thu, Nov 05 2009 | 0 Comments
Flash orders give some traders an edge in the purchase or sale of their stocks. The advantage is only a split second advantage, but it is enough to get the attention of the SEC.
For the next 60 days, the change will be up for public comment and could be adopted by the SEC after that time.
Flash orders are one of those things that sometimes occurs in the trading world. They really have started to become quite a hot issue on Wall Street though due to people asking questions about fairness on the Street.
From MSNBC:
A flash order refers to certain members of exchanges — often big companies — buying and selling reports about continuing stock deals milliseconds prior to that information being made public. A number of big banks and financial companies, using high-speed PC programs, can get a speedy, sneak peep at how additional investors are trading, giving them a brief peek into the direction of the market.
The other rule on the table includes more transparency from credit rating companies. For its role in the subprime mortgage mess, the industry that performs credit ratings has been shamed. The practices of these companies (which includes Standard & Poor’s, Moody’s Investors Service, as well as Fitch Ratings) will be able to be seen by the public and will also be subject to restraints.
It is not fair when some companies have the ability to trade before the general public is allowed to do so. When there are ultra high speed computers and company information and reports available, then of course they will have an small advantage. I do not believe that the flash ordering has been exactly beneficial to a lot of companies on Wall Street because if you look at how many companies have performed over the past few months and especially when you look at the last year, you can tell that they are not exactly doing great. Many of the banks and financial institutions have only remained open only by the grace of our taxpayer dollars.
I am glad that they will no longer be helped out by any of the money that I pay the government. I know that the general public of the United States is ready to go after the boards of many of these companies because of all the bonuses that they seem to be raking in every couple of months; and I have to agree with the general public on this one.
These rules can be seen at the MSNBC article I’ve linked below. I would like to see what the SEC does with the public comments over the next two months. In 60 days, we will see how the market is doing and I am sure that will have some impact on the SEC’s decision as to what it is going to do with the new rules.
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Tags: restraints, transparency, credit rating
Citigroup: Sell Palm, RIM and buy Motorola
Jennifer McClelland | RSS | Tue, Nov 03 2009 | 0 Comments
An analyst at Citigroup is calling for the company to buy into Motorola as well as sell stocks in Palm and RIM (the makers of Blackberry devices).
Jim Suva says that the release of Motorola’s Droid on the Verizon network will end up spelling trouble for the other makers, even with Palm coming out with the Pixie in about two weeks. Even Research in Motion has a new device coming out, the Storm 2, but it just isn’t drumming up the kind of noise that the Droid is.
Something else no one should forget is that Motorola is releasing several Android handsets in the next few months. It is all pretty impressive when you think that people were talking about Motorola’s handset division going out of business.
The Citigroup analyst said yesterday that Motorola is a “buy” instead of a “hold” and that the Droid handset is “compelling.”
I am not sure what else he is looking at, but right now there are more HTC handsets on the market running Android than Motorola handsets.
After the analyst made his announcement, RIM and Palm both closed down for the day and Motorola closed up. Obviously this kind of analyst announcement has a large effect on the stocks for both of these companies.
I think Palm may be able to come back from losing, but the problem is (at least in my opinion from a consumer point of view) that the WebOS operating system was not ready for prime time when it was released and it has taken some time to get it ready.
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Tags: spelling trouble, point of view, prime time
Sprint lost nearly half a billion dollars in the third quarter
Jennifer McClelland | RSS | Thu, Oct 29 2009 | 0 Comments
Sprint can’t keep itself from hemorrhaging money as well as customers. The nation’s third largest retailer announced their third quarter earnings and they obviously weren’t too great.
As subscribers dropped the carrier, it found itself losing $478 million, 17 cents per share. This is a greater loss than the company saw in the third quarter last year of $326 million, or 11 cents per share.
The loss the company had was greater than what analysts were expecting. The majority were expecting an average loss of 15 cents per share.
The net operating revenue for the company was also down to $8.04 billion. This represents a 9 percent drop from the $8.82 billion it was making last year during the same quarter.
So, where did the money go? I would guess it followed the 545,000 wireless customers it lost during the last quarter alone. The company actually lost 801,000 post paid Sprint subscribers, but 801,000 signed up for its Boost Mobile prepaid service.
When the dust settled, Sprint was left with 48.3 million subscribers. There is a pretty large gap between Sprint and its next biggest competitor; AT&T Wireless (which currently has over 80 million subscribers. However, it is still ahead of the smaller T-Mobile cellular provider with just over 32.8 million customers.
It’s not all bad news for the company, however. In its earning statement for the third quarter, Sprint also talked about how it has had improvement in customer care satisfaction for the past 7 consecutive quarters as well as opening its 4G network to 17 different markets, and it has launched (and will be launching) 16 new touchscreen, full keyboard smart phones.
In my honest opinion, Sprint has bent over backwards to keep a lot of their subscribers happy. I don’t know what they’re doing to lose so many subscribers, but I would imagine it has something to do with the company’s phone lineup. I can’t imagine it being the actual network because (at least in my opinion) the service is great anywhere I go. I even had reception in a basement on the college campus near me while my friend with an iPhone did not.
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Tags: million subscribers, satisfaction, wireless customers
