Google, Callaway, Home Depot, Countrywide, FGIC, S&P, MBIA
Google this... Google, the #1 Internet search engine,
reported profit +17% and sales +52% that trailed analysts' estimates.
This was Googles 3rd miss in 14 quarters, shares down 18% this year and 24% from the Nov 6th $741 peak.
Backing into the 19th Hole... Callaway Golf For 2007: revenue +11%; profit doubled.
However, Q4 loss widened to $16 vs $10 million, because of fewer new product launches and a drop in sales in the U.S. Q4 revenue -3%; European sales -1%; US sales -11%.
On $3 gasoline & declining home values... Home Despot, the world's #1 home improvement retailer,
cut 10% of the workforce at its Atlanta headquarters, or 500 employees.
Six cents on the dollar isn't enough... BofA bought $1.5 Trillion in Countrywide loans for $6 billion,
assume 33% are written off leaving $1 Trillion, thats six cents on the dollar with $500 billion in writedown pretax benefits.
SRM Global Fund, a private investment firm which controls a 5.2% stake in Countrywide: "The merger agreement does not provide sufficient value.
The board of Countrywide and its advisers should fully explain to shareholders the reasons why
they have agreed to recommend the transaction to shareholders at less than half of the company's book value."
FGIC Strike Two... Yesterday Fitch cut FGIC from AAA, today, the world's 4th largest bond insurer
had its AAA credit rating cut two levels to AA at Standard & Poor's. S&P affirmed #2 Ambac's rating & put #1 MBIA on review.
The Fed Cut, Don't Worry... Yesterday, S&P said it cut or may reduce ratings on $270.1 billion of subprime-mortgage securities
and 572 CDOs valued at $263.9 billion that could extend bank losses and have a "ripple impact" on the broader financial markets.
Reinsurance thats the ticket... After reporting a record Q4 $2.3 billion loss and full-year net loss of $1.9 billion...
MBIA posted $3.4 billion of losses from marking down the value of residential and commercial mortgages as well as CDOs that it guarantees,
MBIA also wrote off its $85.7 million investment in Channel Reinsurance Ltd., which reinsures securities guaranteed by MBIA.
Hello, BIG RED FLAG WAVING... this is a write off of their OWN REINSURER which covers $42 billion of MBIA guarantees. Very reassuring...
Famous Last Words... #1 bond insurer MBIA's CEO Gary Dunton acknowledged they will have significant losses,
but nothing to justify the 80% decline in the share price since last year.
Mr Dunton said a downgrade would impact capital by $100 to $200 million in a worst case scenario.
The company said it will not be forced into bankruptcy and that it is virtually impossible to imagine a situation where MBIA would become insolvent.
In a 2002 report entitled, "Is MBIA Triple-A?" Willaim Ackman argued that the company had insufficient reserves to cover potential losses and was guaranteeing increasingly risky debts.
In 2005, Ackman wrote to Moody's warning that it was risking its own credibility by keeping MBIA at AAA.
On Jan 18th, 2008 Ackman wrote a letter to the SEC detailing how MBIA & Ambac could both wind up writing off losses of $11 billion. (A MUST READ!)
The Nattering One muses... As of Jan 15th, short interest in MBIA was 46 million shares, almost triple that of a year earlier.
YO!! Mr. Spitzer, Mr. Dinallo, is this a math test?
MBIA has $16 billion in claim pay resources...and has insured $678 billion of securities. Hmmm... isn't that extra special!
reported profit +17% and sales +52% that trailed analysts' estimates.
This was Googles 3rd miss in 14 quarters, shares down 18% this year and 24% from the Nov 6th $741 peak.
Backing into the 19th Hole... Callaway Golf For 2007: revenue +11%; profit doubled.
However, Q4 loss widened to $16 vs $10 million, because of fewer new product launches and a drop in sales in the U.S. Q4 revenue -3%; European sales -1%; US sales -11%.
On $3 gasoline & declining home values... Home Despot, the world's #1 home improvement retailer,
cut 10% of the workforce at its Atlanta headquarters, or 500 employees.
Six cents on the dollar isn't enough... BofA bought $1.5 Trillion in Countrywide loans for $6 billion,
assume 33% are written off leaving $1 Trillion, thats six cents on the dollar with $500 billion in writedown pretax benefits.
SRM Global Fund, a private investment firm which controls a 5.2% stake in Countrywide: "The merger agreement does not provide sufficient value.
The board of Countrywide and its advisers should fully explain to shareholders the reasons why
they have agreed to recommend the transaction to shareholders at less than half of the company's book value."
FGIC Strike Two... Yesterday Fitch cut FGIC from AAA, today, the world's 4th largest bond insurer
had its AAA credit rating cut two levels to AA at Standard & Poor's. S&P affirmed #2 Ambac's rating & put #1 MBIA on review.
The Fed Cut, Don't Worry... Yesterday, S&P said it cut or may reduce ratings on $270.1 billion of subprime-mortgage securities
and 572 CDOs valued at $263.9 billion that could extend bank losses and have a "ripple impact" on the broader financial markets.
Reinsurance thats the ticket... After reporting a record Q4 $2.3 billion loss and full-year net loss of $1.9 billion...
MBIA posted $3.4 billion of losses from marking down the value of residential and commercial mortgages as well as CDOs that it guarantees,
MBIA also wrote off its $85.7 million investment in Channel Reinsurance Ltd., which reinsures securities guaranteed by MBIA.
Hello, BIG RED FLAG WAVING... this is a write off of their OWN REINSURER which covers $42 billion of MBIA guarantees. Very reassuring...
Famous Last Words... #1 bond insurer MBIA's CEO Gary Dunton acknowledged they will have significant losses,
but nothing to justify the 80% decline in the share price since last year.
Mr Dunton said a downgrade would impact capital by $100 to $200 million in a worst case scenario.
The company said it will not be forced into bankruptcy and that it is virtually impossible to imagine a situation where MBIA would become insolvent.
In a 2002 report entitled, "Is MBIA Triple-A?" Willaim Ackman argued that the company had insufficient reserves to cover potential losses and was guaranteeing increasingly risky debts.
In 2005, Ackman wrote to Moody's warning that it was risking its own credibility by keeping MBIA at AAA.
On Jan 18th, 2008 Ackman wrote a letter to the SEC detailing how MBIA & Ambac could both wind up writing off losses of $11 billion. (A MUST READ!)
The Nattering One muses... As of Jan 15th, short interest in MBIA was 46 million shares, almost triple that of a year earlier.
YO!! Mr. Spitzer, Mr. Dinallo, is this a math test?
MBIA has $16 billion in claim pay resources...and has insured $678 billion of securities. Hmmm... isn't that extra special!
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