Wednesday, September 23, 2009

Wednesday Morning

AlphaNinja - Stock futures are up slightly ahead of the open, as we await details of the Fed meeting.

NYTimes suggests that a year in, HP's purchase of EDS is on track to be a success.
Plenty of employees have complained about H.P.’s tactics, but the company says it has persevered through the turmoil to keep most of E.D.S.’s customers. Last quarter, H.P.’s operating profit margin on services hit 13.8 percent, the highest in a decade. And the combined company’s services division is H.P.’s biggest business in terms of revenue — a remarkable metamorphosis for what has long been viewed as a slow-growth PC and printer maker

Insight on what got the ball rolling for the Dell-Perot Systems deal.
“I went down to Austin to meet him on Saturday for breakfast a couple of years ago, thinking we were going to do some business together, and Michael broached it,” said Perot Jr., chairman of the Plano, Texas-based company. “We really liked each other, but I said no. Dell is in the manufacturing business, we’re in services. They’re as different as football and basketball.”

While they may help avert bankruptcy, recent expensive financings will be plenty difficult for companies in the future.

The song remains the same - much like in the S&L scandal 20 years ago, brokered deposits creep up wherever bank failures happen.
The over-reliance on such deposits was evident to state and federal regulators for years. Brokered deposits rose almost fivefold to $121 million in 2005, or 19 percent of New Frontier’s total, from $26 million, or 6 percent, at the end of 2004. By March 31, 2008, they accounted for 41 percent. By comparison, brokered deposits made up 8.4 percent of the deposits at similarly sized banks nationwide in March 2008, according to FDIC reports.

WSJ dismissing the notion (and backing it up factually) that bank pay should be regulated.
Bankers who owned large equity stakes in their banks—and therefore had a strong incentive not to see them fail—also did not outperform their peers in the crisis. And as Jeff Friedman of Critical Review notes, banks on the whole bought AAA- and AA-rated securities almost exclusively for their own portfolios. Thus they sacrificed the higher yields of the lower-rated tranches for the perceived safety of a AAA seal of approval—hardly the behavior of people seeking short-term gain, whatever the long-term consequences

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