Monday, February 05, 2007
Doug Kass: XMSR-SIRI Merger Is Imminent
Ten Things That Could Move StocksBy
Doug Kass Street Insight Contributor 2/5/2007 1:37 PM
Every few weeks, I recap 10 tidbits I've picked up from trading desks and other industry sources. These items have not been confirmed, but either have affected, or could affect, the stocks mentioned. The first such column, in early January, proved prescient on several fronts. Here are this week's top 10.
1. Apple's (AAPL) Steve Jobs' problems regarding option grants run much deeper than is generally assumed. I am hearing that Jobs has personally hired a high-powered law firm in his own defense, and that the odds increasingly favor action by the SEC and the U.S. attorney's office.
As well, a recent regulatory filing by Apple filled with audacious statements ("The company intends to continue full cooperation ... the resolution of these matters will be time-consuming, expensive and will distract management from the conduct of the Company's business") has incensed the two aforementioned government bodies as well as certain members of Congress. I am also hearing that Google (GOOG) CEO Eric Schmidt has already begun low-level discussions with several Apple board members regarding his role as a possible temporary replacement to Steve Jobs should the options-backdating issues intensify at legal levels.
2. Earlier this month, I heard (correctly) that the low-end cellular-phone market "has been jammed with inventory as demand erodes ... guidance will be lowered by the leading manufacturers as margins erode and average selling prices continue to fall."
Since then Motorola (MOT) , Nokia (NOK) and Ericsson (ERIC) have disappointed and guided down profit forecasts. Now I am hearing that the high-end market has weakened abruptly over the last three weeks, and more estimate revisions are in the offing.
3. In January, I also had heard that Dell (DELL) would guide lower. Indeed, Dell missed, and Michael Dell has seized back operating control of the company from Kevin Rollins. I am now hearing that Dell -- in conjunction with Microsoft (MSFT) -- is working on a SideShow-enabled MP3 player that will sport media capabilities along with wireless connectivity and will offer almost unlimited types of data that the SideShow platform is capable of displaying.
4. I also am hearing that Microsoft is planning the introduction of a Zunephone by Christmas 2007. Designed to compete with the iPhone's midyear entry, the effort is being managed by J. Allard (one of the chief architects of the Xbox), who recently replaced Bryan Lee as the head of Zune's operations.
5. I continue to hear the subprime carnage is accelerating. Several of these firms are believed to be close to shutting their doors.
6. Deals I hear that are imminent include the combination of Sirius Satellite (SIRI) and XM Satellite Radio (XMSR) ; Unilever (UN) and Richardson-Vicks; IBM (IBM) and SAP (SAP) ; and private-equity takeovers of the following:
Nabors Industries (NBR) Novellus Systems (NVLS) Novelis (NVL) Bristol-Myers Squibb (BMY) Control Data Business Objects (BOBJ) Nvidia (NVDA) Triad Hospitals (TRI) Gaylord Entertainment (GET) Qwest Communications (Q) ...read more:
here2/05/2007 03:34:00 PM
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