Wednesday, July 29, 2009

Technology stocks lead selloff

Stocks slid Wednesday, with technology leading the way, as investors dumped Yahoo shares after the company announced a partnership with Microsoft.

Wall Street was also vulnerable to a pullback in the wake of a big two-week rally.

The Dow Jones industrial average (INDU) lost 62 points, or 0.7%. The S&P 500 (SPX) index fell 8 points, or 0.8%. The Nasdaq composite (COMP) gave up 15 points, or 0.8%.

U.S. stocks were volatile Tuesday and finished the session mixed as investors weighed a weak reading on consumer sentiment and had trouble finding momentum in the aftermath of the recent rally.

Peter Cardillo, chief market economist for Avalon Partners, said Tuesday's weak Treasury auction "gave the market a bad case of indigestion" that was offset somewhat by bullish traders.

Microsoft-Yahoo: Microsoft (MSFT, Fortune 500) and Yahoo (YHOO, Fortune 500) have reached a long-awaited 10-year search deal, the companies announced. Microsoft will acquire Yahoo's search technologies to integrate into its existing platforms, while Yahoo will become the exclusive sales force for both companies' search business, according to their joint statement.

Yahoo shares slumped almost 8% on the news, while Microsoft shares added 1%.

Oil prices and stocks: The price of oil dropped $1.83 per barrel, to $65.40. Oil stocks declined in tandem, with Dow components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) both sliding 2%.

Economy: The U.S. Census Bureau reported that durable goods orders fell 2.5% in June, which was much worse than expected.

The durable goods orders, which reflect manufacturing activity, were expected to slip 0.6% for the month of June, according to a Briefing.com consensus, compared to an increase of 1.3% in May.

Investors will also look to the Fed's Beige Book of economic conditions, due out at 2 p.m. ET.

Corporate results: Investors have another batch of results to consider.

Time Warner (TWX, Fortune 500), the largest media company in the world and the parent company of CNNMoney.com, reported that its second-quarter profit from continuing operations slipped to 43 cents per share from 47 cents a year earlier.

Sprint Nextel (S, Fortune 500) a wireless communications provider, reported a diluted loss of 13 cents per share in the second quarter, which was slightly larger than the 12 cent loss per share in the year-ago quarter.

World markets: Asian shares dived, with Shanghai stocks losing 5%. European shares ended higher.

Money and oil: The dollar rose against the major international currencies, including the euro, the yen and the British pound.

Friday, July 17, 2009

Microsoft and Yahoo near ad deal-AllThingsDigital

Microsoft Corp and Yahoo Inc are close to a long-discussed search and online advertising deal, which could be announced in the next week, according to the AllThingsDigital blog.

The two companies have talked about cooperating for months, after Microsoft's bid to buy Yahoo was rebuffed last year and Yahoo's attempt to seal a search advertising deal with Google Inc fell apart under regulatory scrutiny.

The latest discussions involve Microsoft paying Yahoo "several billion dollars upfront to take over its search advertising business and guarantee certain payments back to Yahoo," according to AllThingsDigital's Kara Swisher.

Yahoo is likely to take the lead on selling display advertising for the companies, she wrote.

Microsoft Senior Vice President of Online Audience Business Group Yusuf Mehdi, search head Satya Nadella, top digital executive Qi Lu and others flew to Silicon Valley on Thursday to iron out remaining issues, related with technology deployment, the blog said.

If all goes well, a deal could be announced within the next week, Swisher wrote, citing sources at both companies. But she cautioned that an agreement was not certain, since both companies have been in talks before.

Representatives for Microsoft and Yahoo declined comment. Yahoo is scheduled to report quarterly results next Tuesday, and Microsoft on Thursday.

Yahoo Chief Executive Carol Bartz said in May that any deal to spin off or combine its search assets will require a partner with "boatloads of money." She said at the time that Yahoo was talking "a little bit" with Microsoft, but gave no details.

Microsoft withdrew its $47.5 billion offer to buy Yahoo in May 2008 after Yahoo's board said the price was too low. The software giant then offered to buy Yahoo's search advertising assets for $1 billion upfront, and guarantee $2.3 billion in annual revenue for five years.

Google is the dominant player in the search market, with a 65 percent market share in June, according to comScore. Yahoo was second with 19.6 percent, while Microsoft was third with 8.4 percent. While Microsoft's share remains small, its new search engine Bing has won positive early reviews.

Shares of Yahoo rose 3.9 percent to $16.82 in morning Nasdaq trading. Oppenheimer raised its price target on Yahoo shares to $19 from $13.25, with a 'perform' rating, saying the company was likely to benefit from a rebound in large advertiser spending.

Source: Cnn.com

Sunday, July 12, 2009

Who caused the financial crisis — villains or jerks?

Bloggers are buzzing over what one writer has called “Taibbi’s Scream” — that is, Rolling Stone writer Matt Taibbi’s muckraking takedown of Goldman Sachs in the latest issue of that magazine.

Well, “muckraking” isn’t perhaps the best word for it, for Taibbi doesn’t so much rake the muck as fling it. The article starts off, after all, by describing the investment bank as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” In the rest of the article, which is full of such invective, Taibbi argues that Goldman Sachs was at the center of — and a prime beneficiary of — every financial bubble in America from the market crash of 1929, to our millennial Internet madness, through the housing market collapse and the subsequent bailout. Heck, he even blames the firm for a bubble that doesn’t yet exist: what he foresees as the cap-and-trade boom and bust.

Goldman’s devious formula “is relatively simple,” writes Taibbi. “Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again.”

cracked_bank.cr.03Goldman, naturally, has denounced Taibbi’s article as “hysterical,” a “compilation of just about every conspiracy theory ever dreamed up about Goldman Sachs.” Unfortunately, that’s not too far from the truth. It’s not that Taibbi’s article is a collection of lies; it’s, that, like most conspiracy theorists, Taibbi dramatically exaggerates Goldman’s role in all the bubbles, and, perhaps more importantly, exaggerates the firms supposed omniscience. Like most Wall Street firms, Goldman has done plenty of sleazy stuff over the years, but Goldmanites aren’t the diabolical masterminds Taibbi thinks they are, creating and deflating bubbles at will and cackling with glee as they rip off the rest of us.

You can find excerpts of Taibbi’s screed on RollingStone.com, but if you’re really interested you should probably read the whole thing in the magazine. (Look for the Jonas Brothers on the cover.)

If, however, you’re looking for a more sophisticated — and ultimately much more enlightening — look at the financial skullduggery behind our current crisis, you’d do far better to turn to Michael Lewis’s take on the AIG collapse in the latest Vanity Fair. (You can find the whole thing here.)

“Nearly a year after perhaps the most sensational corporate collapse in the history of finance, a collapse that, without the intervention of the government, would have led to the bankruptcy of every major American financial institution, plus a lot of foreign ones, too, A.I.G.’s losses and the trades that led to them still haven’t been properly explained,” Lewis notes. His article is an attempt to explain just what happened. A onetime bond trader who’s been a perceptive writer on the money culture for decades, Lewis talked to those who’d been there at ground zero, at AIG’s Financial Products division.

The story that he tells is a complicated one, impossible to easily summarize; even the villain at the center of it all, former AIG FP head Joe Cassano, turns out to be more of an egotistical jerk than a diabolical mastermind — as trapped as anyone else in the bubble he helped create. Though Taibbi may find it hard to believe, that’s how it usually is.

Source: Cnn.com
 

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