Howard Stern, the reason why many people subscribe to Sirius Satellite Radio Inc. (NASDAQ: SIRI), has upset country legend Dolly Parton.
The singer is madder than a rattlesnake trying to bite a fencepost at the self-styled King of All Media for splicing together audio segments that made it appear that she was saying nasty things about celebrities including Kenny Rogers, Linda Rondstadt, Burt Reynolds and Johnny Carson, according to the Associated Press.
In a statement posted on her Web site, the singer/songwriter said she had never been so "shocked, hurt and humiliated in my life...Please accept my apology for them and certainly know I had nothing to do with this. If there was ever going to be a lawsuit, it's going to be over this."
I am sure that any lawyer Parton contacts -- or an law student for that matter -- will tell the writer of "I will always love you" that she doesn't have a snowball's chance of prevailing against Stern. The First Amendment gives performers the right to say vile things about celebrities in what is obviously a parody. Remember Jerry Falwell's fight against Hustler magazine which he lost in the Supreme Court? The same concept applies here.
MOST NOTEWORTHY: IberiaBank, Dynamic Materials and Barr Pharmaceuticals were today's noteworthy upgrades:
Keefe Bruyette upgraded shares of IberiaBank (NASDAQ: IBKC) to Market Perform from Underperform after the company announced that Pulaski has assumed the insured deposits of ANB Financial of Bentonville, Arkansas.
KeyBanc upgraded Dynamic Materials (NASDAQ: BOOM) to Buy from Hold citing stability in base business, valuation, and the added benefit associated with a European competitor being acquired.
Cowen raised Barr Pharma (NYSE: BRL) to Outperform from Neutral citing the recent pullback.
OTHER UPGRADES:
Goldman added McGraw-Hill (NASDAQ: MHP) to its Conviction Buy List.
RBC Capital raised RadioShack (NYSE: RSH) to Sector Perform from Underperform.
Sirius Satellite (NASDAQ: SIRI) was upgraded at Merrill Lynch to Neutral from Sell.
Staples (NASDAQ: SPLS) stepped up its hostile campaign to acquire Dutch office supplies group Corporate Express (NYSE: CXP), lifting its offer to 8 euros ($12.43) a share, up from 7.25 euros previously and taking its bid directly to shareholders. CXP shares were 6% higher.
In its attempt to shore up its balance sheet, American International Group Inc. (NYSE: AIG) priced an offering of 171.1 million common shares at $38, valuing the deal at $6.5 billion. On Monday AIG also said it priced an offering of 72 million equity units at $75 each, a deal value of $5.4 billion.
LDK Solar Co. Ltd. (NYSE: LDK) shares are down over 6% in premarket trading after the Chinese solar energy company reported first-quarter results late Monday. While earnings topped forecasts and the company raised its revenue outlook for the year, raw material costs caused it to cut its gross margin forecast.
Sirius Satellite Radio Inc. (NASDAQ: SIRI) also reported results after closing bell Monday. While the results are important, they don't have the weight they would had the Street not expected Sirius to complete the purchase of larger rival XM Satellite Radio Holdings Inc. (NASDAQ: XMSR). Both companies reported more losses, although Sirius narrowed its loss, while at XM, the loss increased. This may be the reason why StreetInsider says that Merrill Lynch upgraded Sirius from Sell to Neutral. Interestingly, though, XM shares climbed Monday following its results, while SIRI shares are down in premarket trading following its.
Merrill Lynch upgraded Sirius (NASDAQ: SIRI) to "neutral" from "sell" according toBriefing.com. The news service also reports that Citigroup downgraded EDS (NYSE: EDS) from "outperform" from "market perform".
Goldman Sachs downgraded ITV to "sell" from "neutral," according toMarketWatch.
"We share the reasonable frustration that many of our investors feel regarding the time it has taken," said the loquacious CEO during yesterday's earnings conference call (via SeekingAlpha). "We also share the outrage that some have expressed to me regarding press reports of opportunistic parties trying to take advantage of the process and extract value for themselves that properly belongs to SIRIUS subscribers and shareholders."
Karmazin has a point. The FCC review of the satellite radio merger has moved at a glacial pace because of the opposition of the terrestrial radio industry which figures that any medium that employs Howard Stern needs to be stopped at all costs. As yesterday's earnings report indicates, the industry is not big enough to support two companies.
Sirius reported a first-quarter net loss of $104.1 million, or 7 cents a share, narrower than $144.7 million, or 10 cents a share, a year earlier. Revenue rose 33% to $270.4 million. The results, which matched Wall Street expectations, were helped by a drop in SAC per gross subscriber addition to $91 in the first quarter from $101 a year earlier. The company ended the quarter with 8.64 million subscribers, up 31% from a year earlier. Average revenue per subscriber was little changed at$10.42,
XM Satellite Radio (NASDAQ: XMSR) shares are up after the company reported that its subscriber base grew 9.33 million subscribers in March, up from 7.9 million a year earlier. This comes despite the company reporting a first-quarter loss of $129.3 million, or 42 cents per share, this morning, worse than analysts' predictions of a 39 cents per-share loss. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on XMSR.
After hitting a one-year high of $16.44 in December, the stock hit a one-year low of $9.62 in January. XMSR opened this morning at $11.90. So far today the stock has hit a low of $11.70 and a high of $12.41. As of 12:30, XMSR is trading at $12.40, up $0.60 (5.1%). The chart for XMSR looks bearish and improving slightly, while S&P gives the stock a bearish 2 Stars (out of 5) Sell rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $10 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just ten weeks as long as XMSR is above $10 at July expiration. XM would have to fall by more than 18% before we would start to lose money.
XMSR hasn't been below $10 by more than a few cents in the past year and has shown support around $11.60 recently. This trade could be risky if something about the XM-Sirius (NASDAQ: SIRI) deal goes wrong, but even if that happens, that position could be protected by support the stock might find just above $10, where it has bounced quite a few times over the past year.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in XMSR or SIRI.
Stock futures were higher early Monday morning as the dollar strengthened and oil prices retreated. Investors may be coming into the market looking for bargains as a result of the recent selloff, meanwhile digesting news of a profit warning from FedEx, upbeat outlook from HSBC and Cableivision may be close to buying Newsday.
On Friday, stocks tanked after oil kept setting new highs, passing the $126 per barrel level. Losses from American International Group -- a Dow component -- also contributed to the bearish sentiment as many had hoped financials were on their way to a recovery. The Dow industrials lost 120 points, or 0.94%, the Nasdaq Composite declined 5 points, or 0.23%, and the S&P 500 declined 9 points, or 0.67%.
Without much economic news, investors will focus on the dollar and oil prices. After breaking the $126 per barrel level Friday and settling at $125.96, oil prices retreated Monday in Asia as the dollar strengthened against the euro and yen. Of course, the retreat is relative and oil has been trading around $125.34 recently. And for the first time since December 2005, futures traders are turning bullish on the dollar, according to Bloomberg. According to two measures of currency trading, it seems traders expect further dollar appreciation, and not only that, that the rally will hold.
The earnings party of last week was full of fun and frolic. For the most part, if you followed my list of recommendations, you would have had your very own "Fiesta de Finance." (See Week in Preview – May 5)
The earnings season is still in full swing and should provide a great deal of action for the companies that will be reporting. But these companies will have to fight through a few new economic barriers. With oil pushing past historic levels and questions beginning to surface concerning the ability of the investor to continue to support a market that has so many headwinds, the mood is likely to shift moving forward. It is time for discipline, short and simple. Now, more than ever investors need a plan. I cover this strategy in my book, The Disciplined Investor.
In the last installment of The Week in Preview, I was looking for party opportunities in honor of Cinco de Mayo. This week, Misery is the theme. That is the only word that comes to mind with oil at a level that you would have never expected, a massive and unrelenting credit and housing crisis and a banking system that is defunct.
Monday - May 12
We start the week with a report from IndyMac Bancorp (NYSE: IMB). This bank is smack in the middle of the housing problem. It is primarily a lending company that facilitates loans for single-family homes. It's also involved in the origination and trading of mortgages. How does that sound to you as an investment? Shares have slid from $23 in October 2007 to an unbelievable level of $3.50 recently. Ouch... If you are a shareholder still holding on with hope and a prayer for something...anything, keep on dreaming. The good news is that the stock is sporting a yield of 29%. But, if you think that yield is going to be maintained, I have a bridge for sale. Estimates are for a loss of $1.92 per share for the quarter.
Analysts surveyed by Thomson Financial expect Sirius Satellite Radio (NASDAQ: SIRI) and XM Satellite Radio Holdings (NASDAQ: XMSR) to report narrower losses for the first quarter. Both companies are scheduled to report Monday morning.
Sirius is expected to report a loss of 7 cents per share, compared to the same period in 2007 when it lost 10 cents per share, and the previous quarter when it lost 11 cents per share. The company has provided positive surprises in the past few quarters.
New York-based Sirius boasts 8.3 million subscribers and is the radio home of Howard Stern and Martha Stewart. In 2007 the company agreed to acquire rival XM Satellite Radio. In the past year, Sirius's revenues were $922 million. Its EPS growth forecast for the year is 19.47%, which is much better than its industry average. The consensus recommendation of analysts remains to buy Sirius.
The stock has fallen 3.87% in the past year and closed Friday at $2.73.
These diversified funds have provided superior returns historically and are relatively conservative in their stock-picking and philosophy. Unlike with the specialty funds, you don't necessarily need to be a contrarian buying these. Following are some of those that made the list Morningstar recommends.
Add Sirius Satellite Radio Inc. (NASDAQ: SIRI) to the list of stocks Wall Street thinks are undervalued. You heard that right.
If anyone wants to take the advice of these analysts, I have a bridge in Brooklyn I would like to sell you. Sirius, which reports earnings next week, is expected to lose 7 cents per share, down from 11 cents a year earlier, according to Thomson Financial. Revenue is due to rise more than 33% to $272.3 million. Their average price target is $3.86, higher than the $2.80 where the stock currently trades. The high target is a whopping $8.
I am still not convinced this is a good stock. Even if the XM Satellite Radio Inc. (NASDAQ: XMSR) merger happens, I don't see the company's prospects improving.
First of all, people aren't buying cars of any sort including those that come with satellite radio pre-installed. Moreover, Apple Inc. (NASDAQ: AAPL) has a device called the iPod. Perhaps you have heard of it.
"Now that many new cars offer input jacks to broadcast media player content through car stereo systems, won't that compete with the commercial-free digital music that makes satellite radio so appealing?" asks Rick Aristotle Munarriz of the Motley Fool.
Good point. Keep in mind that I am a satellite radio subscriber. In fact, I am listening to Howard 100 over the Internet right now. I also like my iPod. I find Howard Stern as amusing as most people and enjoy the commercial-free music such as the Grateful Dead Channel. But I am not sure whether I am going to need both devices in the future.
Until its future is cleared up, investors should avoid satellite radio even if they are fans of Howard.
According to The Wall Street Journal, Microsoft Corp. (NASDAQ: MSFT), attempting to avoid a huge hostile takeover bid, indicated it may be willing to raise its bid to as much as $33 per Yahoo Inc. (NASDAQ: YHOO) share. Microsoft's board had failed to reach a final decision on how to proceed with its bid for the Internet search group. Yahoo!, though, may want $35-37 per share. And I thought Ballmer said he would lower the bid ... Don't they know by now these negotiating tactics are well known? In any event, it's starting to look more and more like the deal is closer than ever and the parties are willing, despite each showing off some muscle first.
Starbucks (NASDAQ: SBUX) reported late Wednesday a 28% drop in second-quarter earnings to $108.7 million, matching market expectations. While the drop was expected, it doesn't mean the report showed any positive changes following Schultz coming back to the CEO role. Perhaps it's too early to see them manifested, but Starbucks, once such a darling, isn't showing improvement yet. Stock is up about half a percent in premarket trading.
Adobe Systems Inc., (NASDAQ: ADBE) estimated that fiscal second-quarter earnings and revenue would come in near the high end of its targets and affirmed its earnings outlook for the full year. That is about 45-47 cents, compared to analysts' estimates of 43 cents per share.
Merck & Co. (NYSE: MRK) shares are dropping over 8% in premarket trading after it said its cholesterol pill Cordaptive failed to win approval from the U.S. Food and Drug Administration, less than a week after it was recommended for marketing in the European Union. While Merck intends to submit more data to the FDA, it is unclear it will succeed given even some European doctors said more research is needed on one of the drug's main components safety.
Who said higher oil prices aren't good? If you ask Royal Dutch Shell (NYSE: RDS.A) and BP (NYSE: BP), high oil prices are fantastic as the two oil giants beat forecasts when posting quarterly earnings Tuesday, reporting that net income, excluding unrealized gains from changes in inventory values, rose 12% to a record $7.8 billion and 48% to $6.6 billion respectively. Shell shares are climbing 5.7% in premarket trading and BP's over 4.8% as it seems investors think oil above $100 a barrel is here to stay.
Archer Daniels Midland Co. (NYSE: ADM), the world's largest grain processor, said third-quarter profit rose 42% to $517 million or 80 cents per share, topping analyst estimates of 69 cents per share, as it traded more grains and crushed more soybeans. Sales climbed 64% to $18.7 billion. Seems that being in agriculture lately is a positive and ADM shares are rising 3.75% in premarket trading.
Howard Stern, the reason why many people subscribe to 
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Stock futures were higher early Monday morning as the dollar strengthened and oil prices retreated. Investors may be coming into the market looking for bargains as a result of the recent selloff, meanwhile digesting news of a profit warning from FedEx, upbeat outlook from HSBC and Cableivision may be close to buying Newsday.
The earnings party of last week was full of fun and frolic. For the most part, if you followed my list of recommendations, you would have had your very own "Fiesta de Finance." (
Sirius is expected to report a loss of 7 cents per share, compared to the same period in 2007 when it lost 10 cents per share, and the previous quarter when it lost 11 cents per share. The company has provided 
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