Monday, March 15, 2010

Monday Morning

US futures are down slightly ahead of the market's open, in anticipation of tomorrow's Fed meeting. February industrial production numbers came in just slightly ahead of expectations.

Pepsico (PEP) announced this morning that it will boost its dividend by 7%, from $1.80 t0 1.90 per share. They also said they will repurchase $15 billion in stock through 2013, an extension of a buyback program ending in 2010.

A tale of two loan applications illustrates the challenges small businesses face in securing growth capital.

Paul Kedrosky points out Apple's "Market Capitalization bigger than" numbers:

  • 4x the global smartphone market
  • 5x the global music market
  • 100x the global smartphone app market
  • Enough to buy HP, Dell and Hitachi, with mad money left over for Xerox or Seagate

Phillips-Van Heusen (PVH) released a statement saying they have purchased Tommy Hilfiger for about $3.0billion from private equity owners Apax Partners. The deal looks like it will boost earnings immediately. The deal values Tommy Hilfiger at about 7x EBITDA and 1.33x sales. Those numbers aren't far off from PVH's own valuation. Phillips-Van Heusen CEO Emanuel Chirico had this to say:
“Tommy Hilfiger fits all of our acquisition criteria: a strong brand, superior management, highly profitable, immediately accretive to earnings, and focused on international growth. We also believe that our cultures are highly compatible. All of this makes us confident that this compelling combination will generate strong revenue growth, high operating margins and substantial free cash flow, which should enable us to reduce debt very quickly while continuing to grow the companies’ respective brands and businesses.”

Moody's discusses the AAA ratings of sovereign debt issuers, concluding that some are safer than others.

For now though, Moody's said the triple A
governments don't face an immediate threat to their top ratings as the servicing
of the debt remains manageable -- the top credit rating reduces the interest
payments countries have to pay on their debt when going to the bond markets to
raise capital. However, debt affordability is "most stretched" in Britain
and the U.S., Moody's said.
Good news on the oil front. Despite public statements, actual OPEC drilling activity may have gotten ahead of itself lately. In January and February, OPEC pumped 1.9million more barrels of oil than was expected.
While oil prices recovered from a four-year low at the end of 2008 as OPEC announced a record supply cut, excess production means the doubling in oil prices since then may have run its course, according to the Centre for Global Energy Studies and Commerzbank AG. The premium charged for crude deliveries in 2015 has plunged 51 percent in three months, indicating investors are less concerned of future shortages.
It is becoming increasingly likely that Google will shut down its operations in China, according to the WSJ:
A person familiar with situation said on Saturday that Google is likely to take action within weeks. Separately, Chinese authorities on Friday told local news Web sites that Google's Chinese site is likely to close and that, if it does, the news sites will be required to use only official accounts of the situation, rather than publish stories from anywhere else.
Safety regulators have been unable to recreate the unintended acceleration in a Toyota Prius that has sparked so much media attention.
Copyright 2010 AlphaNinja

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