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GM Dave and CC! As Pfizer (PFE) buys Wyeth (WYE) will consolidation spread?
Posted Jan 26th 2009 4:00AM by Douglas McIntyre
Filed under: Deals, Pfizer (PFE), Earnings transcripts
Pfizer (NYSE:PFE) has agreed to buy Wyeth (NYSE:WYE) for $68 billion. According to The New York Times, "The deal would not only create a pharmaceutical behemoth but would be a rarity in the current financial tumult: a big acquisition that is not a desperate merger of two banks orchestrated by the government."
A good point and one which may indicate that there is an unexpected wave of M&A coming.
Recent reports from analysts and the media say that the recession will cause huge drops in revenue in industries beyond retailing., Hotels are facing unprecedented leaves of vacancies. Many car parts suppliers are up against cash problems. Airlines are again being challenged by falling revenue as traffic dries up.
The Pfizer deal with Wyeth is more about cost cutting than it is about increasing revenue. Each company has it its own line of drugs. Putting the two companies together do not appear to do anything to improve sales, at least in the early stages. But, the firms believe that they can fire tens of thousand of people as they face having some of their drugs lose patent protection which actually could drive revenue down at the new company.
Many other industries are facing similar troubles and are facing them now. If firms in these sectors cannot sharply reduce costs, they won't be around in a year.
M&A is back, but it is back for reasons that show how ugly the economy is getting.
Morning Forum. Could be a tough week on earnings due out. Good luck all!
On watch : OCBM. ACTC. BEEI (oil play).
Morning Traders! European Stocks Climb, Led by Barclays, ING; U.S. Futures Rise
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By Adam Haigh
Jan. 26 (Bloomberg) -- European stocks gained as Barclays Plc and ING Groep NV reassured investors that they are taking steps to stem credit-related losses. Japanese shares fell, while U.S. index futures advanced.
Barclays rallied 53 percent after saying its investment bank and the Lehman Brothers Holdings North American assets acquired last year are driving profit, and “record revenue” will cover writedowns. ING Groep NV climbed 21 percent on plans to slash costs by 1 billion euros ($1.3 billion) in 2009. Royal Philips Electronics NV rose 6 percent after maintaining its dividend. Wolseley Plc sank 28 percent on lower earnings.
The Dow Jones Stoxx 600 Index added 1 percent to 184.32 at 10:34 a.m. in London. In Japan, the Nikkei 225 Stock Average Index fell 0.8 percent as Komatsu Ltd. tumbled. Futures on the Standard & Poor’s 500 Index expiring in March rose 0.5 percent.
“Visibility has been the big problem,” for banks, said Jane Coffey, head of equities at Royal London Asset Management Ltd., which manages about $10.5 billion. For banks like Barclays to “emphasize that their position is strong is good for sentiment in the market,” she told Bloomberg Television.
Barclays rallied 53 percent to 78.4 pence. The U.K. bank that last year turned down funding from the government said it won’t need to raise money after writing down 8 billion pounds ($11 billion). The bank exceeds regulators’ capital requirement by 17 billion pounds, the lender said.
ING added 21 percent to 6.394 euros after the biggest Dutch financial-services company said it will cut 7,000 jobs as it seeks to reduce operating expenses. The lender said it will replace Chief Executive Officer Michel Tilmant after reporting its second consecutive quarterly loss.
Earnings Outlook
Banks were among the biggest decliners in the Stoxx 600 last week amid concern they need to raise further capital. Earnings at financial companies in the measure are expected to rise 48 percent in 2009 following a 61 percent slump last year, according to estimates compiled by Bloomberg.
Philips, Europe’s largest maker of consumer electronics, rose 6 percent to 13.36 euros after saying it will pay a dividend of 70 cents a share, unchanged from last year.
Wolseley tumbled 28 percent to 205.5 pence after the world’s biggest distributor of plumbing gear said pretax profit fell 66 percent in the first five months of its financial year, while net debt rose 22 percent.
Profits at companies in the Stoxx 600 will decrease 2.2 percent on average this year following a 17 percent slump in 2008, estimates compiled by Bloomberg show. In the U.S., profits at companies on the S&P 500 will slip 5.4 percent this year after a 14 percent drop last year.
‘Dismal’ Results
The first round of earnings releases were “dismal” and economic data has remained “bleak,” JPMorgan Chase & Co. analysts led by Srini Ramaswamy in New York wrote in a report dated Jan. 23.
Xstrata Plc, Europe’s largest zinc producer, slid 2.5 percent to 663 pence as Citigroup Inc. downgraded the shares to “sell” from “hold,” citing the economic slump and lower commodity prices.
In Japan, Komatsu sank 4.7 percent to 909 yen after cutting its earnings forecast. On Jan. 23, the world’s second-biggest maker of construction equipment lowered its profit estimate for the year ending in March to 110 billion yen ($1.2 billion) from 190 billion yen, citing sudden sales declines in China and other emerging markets. Rival Hitachi Construction Machinery Co. lost 3.9 percent to 861 yen.
“The market is very cautious and companies are the same,” said Christian Gattiker, head of equity research and strategy at Bank Julius Baer & Co. “The current environment is making them very uncertain about the next few months,” he told Bloomberg Television. The bank manages about $307.6 billion.
Morning SSB and Lounge Lizards! A whole slew of corporate earnings expected out this week. Could be a volatile one this week boys and girls!
GM GA! Leading indicators, short-term interest rates, consumer confidence, GDP on this week's schedule
Posted Jan 25th 2009 6:40PM by Trey Thoelcke
Filed under: Earnings reports, Forecasts, Economic data, Federal Reserve
Wall Street is already bracing itself for dismal earnings reports this week. What else is coming done the pike? Here's a look at what's on the economic calendar for the week of January 26, 2009:
Existing home sales (Dec. 2008): Monday, 10:00 AM
Leading Indicators Index (Dec. 2008): Monday, 10:00 AM
Federal Reserve's FOMC meeting on interest rates: Monday, 8:00 PM
Consumer Confidence Index (Jan. 2009): Tuesday, 10:00 AM
Federal Reserve's FOMC decision on short-term interest rates: Wednesday, 2:15 PM
Durable goods orders (Dec. 2008): Thursday, 8:30 AM
Initial jobless claims (w/o Jan. 24): Thursday, 8:30 AM
New housing sales (Dec. 2008): Thursday, 10:00 AM
Employment Cost Index (Q4 2008): Friday, 8:30 AM
Gross domestic product (Q4 2008): Friday, 8:30 AM
Chicago Purchasing Manager Business Barometer (Jan. 2009): Friday, 9:45 AM
University of Michigan Consumer Sentiment Index (Jan. 2009): Friday, 10:00 AM
For expectations from some of this week's earnings releases, see The week in preview: High hopes for McDonald's, Pfizer, Netflix, P&G.
SWEEET ACTC BABY!!!!!
ACTC. 0.17. EEELLLEECCTTRRIC!!!!!
Not bad at all! ACTC on the run at 0.16 now, still waiting on BWNR and UBRG to shake up a bit!
Good now that its Friday! How goes the trading?
Afternoon joanneg!
ACTC. On the break. 0.15 +25%.
ACTC. 0.14.HOD. +16.67%.
ACTC. UBRG. Startin to go!
Morning BWNR! Usual morning rumblings from the Stone today! +9.09%
ACTC. (0.135 +12.50%). UBRG(1.44 +4.35% CRUISED PAST THE 10DAVG).
Stock futures continue to point to a lower open. It has been confirmed that the British economy has slipped into a recession with a report that GDP was a negative -1.5% in the fourth quarter. The report is the largest contraction for Britain since 1980 and is indicative of what is going on worldwide. GE (GE) reported that earnings fell 46% for the quarter, and as a bellwether for the U.S. economy, said 2009 will be a challenging year. There is little economic data scheduled to be released today with the one major report expected to be EIA Natural Gas Storage at 10:30 am ET. flyonthewall.com
ACTC set to start at 0.12. Broke that dime!
GM $oldier! What's happening?
GM v!
Morning Lil' Pink!
CAAS? Will radar it. Thanks my friend.
Dead Man Walking Friday Plays : TNRI. UBRG. ACTC.
GM JARHEAD! What's the word today?
Plays for Friday : TNRI.UBRG.ACTC. EOM.
GM CC! Glaxo’s Witty Shuns Mega-Merger ‘Trap’ in Buyout Hunt (Update1)
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By Trista Kelley
Jan. 23 (Bloomberg) -- Andrew Witty, GlaxoSmithKline Plc’s new chief executive officer, is hunting for his next deal, and it won’t be a mega-merger.
The 44-year-old CEO, known for being calm and direct, says his strategy is clear. Adding more vaccines, drugs and consumer products will help wean Glaxo off its reliance on one or two bestsellers, he said. A large merger or acquisition would threaten to disrupt the company’s own revamped drug research and development operations, Witty said.
“While people are saying now’s the moment to do some M&A, I think that’s a little bit of a trap,” Witty said in a Jan. 8 interview in New York. “You could very quickly distract an organization like GSK which is now settling into quite a good groove in terms of R&D productivity. I’m not into that.”
Witty joined London-based Glaxo in 1985. He describes himself as more impatient and demanding than his predecessor, Jean-Pierre Garnier, who chose him over David Stout, then chief of pharmaceutical operations, and North American division head Chris Viehbacher for the top job in 2007.
“J.P. had a reputation for being a tough guy,” Witty said. “I’m probably more demanding. I’m more impatient for seeing the company achieve and I expect the company to be able to achieve more.”
Still, he says his strategy is long term, a lesson that he learned while tracking lions with a friend in Africa.
“One day the guy said to me, ‘You know, Andrew, you’re going to have to lift your head up here and stop looking at the paw prints,’” Witty said. “Sooner or later, you follow those paw prints, you put your head in the lion’s mouth. You have to look up and see where the lion is.
Where the Lion Is
“Sometimes in business, people get so fixated on the short run, they don’t look up and see where the lion is, where the real big issues are in the marketplace,” Witty said. “That’s what I want to talk to the market about” when Glaxo reports fourth- quarter earnings on Feb. 5.
Investors have given the U.K. drugmaker’s youngest-ever CEO a green light, sending the shares up 11 percent since he took over on May 21. Samuel Isaly, a managing partner at Orbimed Advisers LLC who oversees about $1.34 billion including Glaxo shares, said he agrees with Witty’s emphasis on emerging economies and niche markets to fix a broken business model for pharmaceutical companies.
“Witty is trying to be as visionary as he can,” Isaly said in a telephone interview. “The old model is not working and will not work.”
Last year, the stock was the second-best performer in the 18-member Bloomberg Europe Pharmaceutical Index after U.K. rival AstraZeneca Plc, gaining 0.4 percent. The stock gained 13.5 pence, or 1.1 percent, to 1,254.5 pence as of 9:37 a.m. in London trading.
Marathon Runner
In addition to Africa, Witty worked in the U.S. and Asia and ran the European drug division before becoming CEO. The married father of two stays trim by running, and completed his first marathon in London last year.
He spends about half of his time in the U.S., managing the business while seeking a replacement for Viehbacher, who is now CEO of French drugmaker Sanofi-Aventis SA. Witty keeps an apartment in Philadelphia, where Glaxo has one of its U.S. offices. When there, he eats his lunch in the company’s cafeteria so employees can approach him with their concerns.
Since he took the helm in May of Europe’s biggest pharmaceutical maker, Witty created a mergers-and-acquisitions team that he says is now “very active.” Last month Witty paid $36.5 million for Bristol-Myers Squibb Co.’s Pakistan unit after purchasing the New York-based drugmaker’s Egyptian business in October for $210 million.
“You’ll see for sure more activity like that,” Witty said.
Consumer Products
As former director of pharmacy and distribution in the U.K., Witty sees the value of the drugmaker’s global consumer-products channel, which he says is second in size only to Johnson & Johnson’s. That’s led to such purchases as Biotene, a dry-mouth treatment that will be introduced in 50 markets. Biotene is available in a “handful” of countries now, he said.
“We did the same with Breathe Right nasal strips,” he said. “They were in five markets when we bought them, 18 months later they were in 50 markets. There’s no rocket science to that, it’s just an execution-driven strategy.” The consumer business is “really a machine we want to feed.”
He’s also prowling for another purchase like Reliant Pharmaceuticals Inc., the U.S. company Glaxo bought for $1.65 billion in 2007 to gain the heart medicine Lovaza.
“If we see targets like that, we’ll go after that,” he said. “You have to wait for the targets to come along sometimes.”
Bankers are pushing bigger deals, he said.
No No-Brainers
“Every bank in the world comes in with their book of what deal is like a no-brainer for a new CEO to do,” Witty said. “I’m not quite so convinced that there are such great, no- brainer mega-transactions to get done.”
That might change if a competitor pursues a large acquisition, he said. Pfizer Inc., the world’s largest drugmaker, is in talks to acquire Wyeth in a deal that may be valued more than $60 billion, the Wall Street Journal reported today, citing people familiar with the talks.
“If one big company makes a move, I can absolutely imagine that triggering off a series of moves,” Witty said on Jan. 8. “The industry has historically habitually demonstrated its inability to sit on its hands when someone moves. The question is whether somebody big is going to finally pull the trigger.”
UCB Agreement
A deal that size would distract Witty from his efforts to make the company’s research more productive. Glaxo today announced an agreement to buy a range of UCB SA’s marketed products in areas of Africa, the Middle East, Asia Pacific and Latin America for 515 million euros ($661.7 million) in cash.
In July, Witty began requiring drug-discovery divisions to compete for funding. He brought in an investment board that included venture capitalists and biotechnology executives to review researchers’ proposed projects. The board applies three- year business plans to the scientific process, mimicking the do- or-die environment in small, cash-strapped biotechnology companies. Previously, a research unit’s funding wasn’t dependent on meeting deadlines and goals.
Selling Science
“That was a transformational experience,” Zhi Hong, senior vice president of Glaxo’s discovery unit for infectious diseases, one of its largest research divisions. “A lot of scientists aren’t used to the selling part of the business. It used to be the failure of the company was not an option. Now it’s failure in a small unit is not an option.”
Witty, an economics graduate of Nottingham University, has also made researchers think carefully about how they spend money, Hong said.
“Forty kilograms of a drug would be made before phase one even started,” Hong said. “When the drug failed, whole drums of white powders had to be thrown away. Now there are more questions” about costs.
Witty said the investment board “gave us objectivity” about research projects and played a role in his decision to study eye treatments. He says he’s moving quickly to help offset patent expirations on products that generated more than $3 billion in peak annual sales.
“I’m not a subscriber to the blockbuster drug ethos,” Witty said. “I no longer believe it’s the way you should focus your organization.”
GM E EXPRE$$! Stocks in Europe, Asia, U.S. Futures Fall; Samsung, Pfizer Drop
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By Adam Haigh
Jan. 23 (Bloomberg) -- Stocks declined around the world, driving Europe’s Dow Jones Stoxx 600 Index to the lowest level in more than five years, as concern deepened the global economic slump will erode earnings.
Samsung Electronics Co. slid 4.1 percent after the largest maker of memory chips reported its first quarterly loss. Infineon Technologies AG, Europe’s second-biggest semiconductor maker, sank 6.3 percent as its Qimonda unit filed for insolvency. Pfizer Inc. retreated 1.4 percent in Germany after the Wall Street Journal said the largest drugmaker is in talks to buy Wyeth.
The MSCI World Index dropped 1.3 percent to 819.58 as of 10:37 a.m. in London. Disappointing earnings from Nokia Oyj to Microsoft Corp. and speculation banks may need to raise more capital to shore up their balance sheets has sent the measure to its third straight weekly decline.
“Doom and gloom is everywhere,” said Andy Brough, a London-based fund manager at Schroder Investment Management, which has about $12.7 billion under management. “It’s far harder for companies to come out saying they have actually noticed something improving,” he told Bloomberg Television.
The U.K. economy shrank more than economists forecast during the fourth quarter in the biggest contraction since 1980. Gross domestic product fell 1.5 percent from the previous quarter.
Europe’s Stoxx 600 lost 1.9 percent to 179.3. A close at this level would be the lowest since April 2003. The MSCI Asia Pacific Index retreated 2.6 percent as Sony Corp. tumbled.
The yen approached its strongest level since 1995 versus the dollar and was set for its best weekly gain in three months against the pound as concern the global slowdown will worsen spurred demand for Japan’s currency.
Europe, U.S.
Futures on the Standard & Poor’s 500 Index expiring in March declined 2.4 percent after Advanced Micro Devices Inc. reported its ninth consecutive loss.
U.S. companies are reducing dividends at the fastest rate in half a century, squeezing investors who depend on the payouts more than ever to boost returns. In Europe, dividends may fall 10 percent in 2008 and 3 percent this year, UBS AG equity strategists led by Nick Nelson wrote in note today.
The worst financial crisis since the Great Depression is forcing companies to hoard cash after earnings before one-time costs dropped 38 percent last year, the most since 2001, according to data compiled by Bloomberg.
Samsung dropped 4.1 percent to 442,000 won after reporting a fourth-quarter net loss of 22.2 billion won ($16 million). Excluding a tax credit, the company had an operating loss that was more than double the deficit projected by analysts in a Bloomberg survey.
Sony, AMD
Sony, the world’s second-biggest consumer electronics maker, plunged 7 percent to 1,802 yen after forecasting its first annual loss in 14 years.
AMD dropped 4 percent to $1.94 in German trading. The second-largest maker of personal-computer processors had a fourth-quarter net loss of $1.42 billion, or $2.34 a share, after plummeting PC demand forced customers to slash orders.
Analysts have slashed their profit projections as credit losses and writedowns topped $1 trillion and the U.S., Japan and Europe entered the first simultaneous recessions since World War II. Earnings at companies in the Stoxx 600 will fall 1.4 percent on average this year following a 17 percent slump in 2008, estimates compiled by Bloomberg show. For the S&P 500, company profits will drop 2.3 percent this year, the data show.
Infineon retreated 6.3 percent to 67 cents. The company’s Qimonda unit filed to open insolvency proceedings this morning after failing to secure sufficient financing following a slide in memory-chip prices this year. Infineon said it will increase its provisions in the first quarter.
Pfizer, Wyeth
Pfizer declined 1.4 percent to $16.97 in early New York trading. The drugmaker is in talks with Wyeth over a deal that may be valued as much as $60 billion, according to the Wall Street Journal. Wyeth surged 13 percent to $43.99 in Germany.
Ray Kerins, a spokesman for Pfizer, said by telephone that the company doesn’t comment on what he referred to as “market speculation.” Doug Petkus, a spokesman for Wyeth, didn’t immediately respond to an e-mail and voicemail left on his office phone after normal business hours.
Ubisoft Entertainment SA tumbled 23 percent to 9.984 euros as Europe’s largest maker of video games revised its full-year sales forecast.
BHP Billiton Ltd., the world’s biggest mining company, lost 3.1 percent to 1,126 pence. Anglo American Plc retreated 2.9 percent to 1,232 pence. Nomura Holdings Inc. cut its recommendation for both companies to “neutral” from “buy.”
Atlas Copco AB slid 4.8 percent to 54.5 kronor after the largest maker of air compressors had its recommendation lowered to “equal-weight” from “overweight” by Morgan Stanley, saying “we want to sell stocks whose earnings have seen the greatest surge from the commodity boom, where pricing is deteriorating and there is limited benefit from decreasing operating costs.”
Morning Forum. TNRI crazy ride yesterday. URBG and ACTC making some noise. Radar.
Morning Forum. TNRI crazy ride yesterday. URBG and ACTC making some noise. Radar.
Looking for some Friday love on URBG TNRI and ACTC!
GM Traders! Pfizer (PFE) pushes for Wyeth (WYE) merger
Posted Jan 23rd 2009 4:19AM by Douglas McIntyre
Filed under: Deals, Pfizer (PFE), Employees, Recession
Pfizer (NYSE:PFE) is pushing to buy rival Wyeth (NYSE:WYE) for $60 billion. Since this is not a particularly good time to complete M&A work, it is hard to understand why the big drug company would be considering the deal.
According to The Wall Street Journal, "A combination of these two U.S. pharmaceutical giants would redraw the boundaries of the global drug industry, which has suffered from flagging product development and high fixed costs."
Investors don't have to go far to see the motivation. The combination would allow the new entity to cut hundreds of millions if not billions of dollars in redundant costs. No matter how much risk there is in integrating the two companies, the ability to cut expenses is too big a motivation.
Welcome to the next stage of the recession and rising unemployment. Up until now most large layoffs have come from individual companies with falling sales and operating incomes. Cuts give them modest cost savings, perhaps enough to get through the recession without losing money.
But, industry consolidation is often the next shoe to drop in a failing economy. It has already happened in financial services. But, that sector is in shambles. Both Pfizer and Wyeth have been consistent money-makers. They would be benefiting from tens of thousands of job cuts in a marriage.
The economy is really bad when corporations which has been doing OK take large risk to dump staff.
Capone Watch today :URBG ACTC TNRI. Things stirring up!
Morning SSB and Lounge Lizards! TNRI unleashed yesterday over 50 million moved! What the hell?
GM GA! Options run out for print media
Posted Jan 23rd 2009 3:57AM by Douglas McIntyre
Filed under: Industry, New York Times'A' (NYT)
Through the third week in January, advertising pages at BusinessWeek are down 31%. At Entertainment Weekly, they are off 36%. Through their February issues, GQ and Gourmet's ad pages are off over 30%.
Today, the news came out that The New York Times Company (NYSE:NYT) is close to selling part of its building. It has already taken money from Carlos Slim, some of which comes with a 14% interest rate. The Times is now nearly out of options. It won't sell The Boston Globe which some experts believe is losing $1 million a week. That leave the option of raising money by dumping assets out of the question.
The third largest newspaper chain in the US, McClatchy (NYSE:MNI) which has insisted it would be OK, now trades below $1.
Most of this has been written about before, but the numbers from print media which have come in during the last three days show that an industry which was in decline is in such a rapid decline that scores of newspapers and magazines will close over the next two or three months. Even a year ago, this was unimaginable.
The print media is something which most business people cannot imagine. It is an industry in trouble which cannot be fixed. Intelligence and hard work has no effect. The end of many of the world's greatest print brands are is in sight.
The bleeding was supposed to be slow enough so that there were be time to work on solutions.That opportunity is now well in the past.
loving this yo-yo!
4's looking to run the board.
Hold on. It ain't over yet! :)
Still got crazy gains today D!
One sec bro, I'll try to get that L2 to ya. Image shack is a night mare! lol.
Already got the E Express classic radared Z!