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The Wall Street Greek blog is the sexy & syndicated financial securities markets publication of former Senior Equity Analyst Markos N. Kaminis. Our stock market blog reaches reputable publishers & private networks and is an unbiased, independent Wall Street research resource on the economy, stocks, gold & currency, energy & oil, real estate and more. Wall Street & Greece should be as honest, dependable and passionate as The Greek.


Seeking Alpha

Thursday, February 14, 2008

Murdoch Trumping Hearst


(Stocks in this article: NYSE: NWS, Nasdaq: YHOO, Nasdaq: MSFT, NYSE: GE, Nasdaq: GOOG, NYSE: RHI, NYSE: MAN, NYSE: LM, NYSE: UBS, Nasdaq: BIDU, Nasdaq: CMCSA, NYSE: MS, NYSE: MAR, NYSE: CCU, NYSE: DAI, AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: MOO, AMEX: XLF)

Somewhere in his California castle Rupert Murdoch is exclaiming, "I'm king of the world!" When the story of Microsoft's (Nasdaq: MSFT) tender offer for Yahoo! first broke, we curiously pondered whether Murdoch would have interest. Like most, however, we expected Murdoch's News Corp. (NYSE: NWS) had its hands full digesting Dow Jones & Company.

Murdoch himself quelled early speculation when he announced News Corp. would not pursue the online behemoth. The Greek posited that Yahoo! represents beachfront real estate in Internet paradise, and we could not imagine a world without a bidding war for Jerry Yang's ingenious creation. Pundits declared the Microsoft offer a "no brainer" because of its Murdochian price premium. Well, little did most pundits know, but Greek proposed candidate number one, Google (Nasdaq: GOOG), immediately responded and sought to find a regulatory loophole to keep its rivals from teaming up. Today, candidate #2, News Corp. (NYSE: NWS) has shown up at the door with a creative offer to take a stake in Yahoo!. NWS expects it could realize synergies in combining its properties including MySpace and others with Yahoo!. That only leaves our third candidate, General Electric (NYSE: GE), to trump all with a blowout bid to take the whole of Yahoo! in one fell swoop. At that point, we'll see how serious Microsoft really is.

Of course there remain a slew of mouths watering over the prized, coveted Internet asset that is Yahoo!. Don't believe the player haters and naysayers who tell you Yahoo! is a flailing firm. These are the guys valuing the company based on '08 earnings expectations. These are the blind, and if you follow them, your path is one of the short-sighted. News Corp.'s private equity partner, however, is the seer. We expect this unmentioned, and perhaps yet undetermined, firm gets it (it being the Internet). Now, of course everything has a value, even the mysterious, seemingly infinite treasure trove of the virtual world. But, The Greek expects '08 earnings fall far short of estimating future earnings potential at Yahoo!.

If I was Yang, I would NOT sell Yahoo!. Legg Mason's (NYSE: LM) 9% interest is not going close the deal. Impatient YHOO shareholders would have to pull YHOO from my dead, cold grip before I sold the underperformer. Instead, Jerry Yang, I would forget I was an ultra-rich success story and put in the necessary 16 hour days to unleash the value in Yahoo!. Let's see who shows up at the gate next before we go too far.

Economic Data & Analysis

The Department of Labor offered up the latest serving of the Weekly Initial Jobless Claims Report this morning. New claims measured 348K, down from the 357K reported in the week just prior, but 5K more than the consensus of economists expected, by Bloomberg's measure. All in all, the number is not far enough off expectations or prior results to do damage to sentiment or to enthuse bulls further. The fact is that economists have not been very good at estimating this figure, as it really requires a million strands of antennae tuned into the employment market. Recruiting firms like Robert Half (NYSE: RHI) and Manpower (NYSE: MAN) might have a better handle on this than economists.

The Greek remains uncomfortable with the level of new claims, and maintains concern that the retail/restaurant/consumer sensitive sector should have a ton of weight to unload if fiscal stimulus doesn't arrive in the mail quickly to get consumers shopping again.

Trade Deficit Narrows - Greek Says, That's Bad News

"That's crazy talk Greek!," perhaps you just screamed out loud. Apologize to the dog, while I explain why it's not. Two years ago, a narrowing trade deficit could have offered positive news, but nowadays folks, it's a clear negative in our view. Why you ask?

Europe posted 2.3% Q4 GDP growth today, so we know well dressed Europeans are still buying relatively cheaper U.S. goods. China may be suffering through some bad weather in February, but back in December, their middle class was still interested in American brands, or at least brand names on cheap imitations. So, what's changed then... Americans are not buying anything! We're not buying American goods or imported goods. Put simply, exports increased partly on the negative driver of a weak dollar, but imports decreased mainly on the negative driver of softening overall demand. Thus, the deficit narrowed.

Yesterday, we pointed out the obvious impact of multiple factors on the inventory-to-sales ratio; whenever data is impacted by multiple factors, we have to, as the words of that not so famous early '90s tune say, "we gotta go deeper" folks. If any of you remember that song or more sadly own the album, we suggest staying out of the music talent search business.

Market-Moving News


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USAFlorist.com

posted by The Greek | 10:42 AM

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