Posted on Thursday, May 8th, 2008 | In Current Market News, Stocks to Watch
Contributed by: Trader Mark (http://fundmyfund.blogspot.com) -
First, AIG - the huge insurer just blew a massive tire, announcing a $8 billion writeoff - and another capital raise, which again dilutes current shareholders and means earnings PER share is going to be punished for years to come. But really it's all good - whats $8 billion among friends - and it's all priced in (oops, not so much, down 8% after hours, but maybe by tomorrow morning after CNBC announces it's a good thing it will be up). What I want you to do now is close your eyes and imagine Uncle Ben B as a short order cook. He is now ringing that bell over his head and shouting over to the other minion cooks - "got a fresh order, let's get up some more billions of US pesos pronto, print 'er up!" More paper currency coming folks! Faaaaantastic.
- (AIG) reported after Thursday's closing bell that it lost $7.81 billion in its first quarter due to heavy writedowns on credit-default swaps and mortgage-related investments.
- The insurance giant became the latest in a long string of major U.S. financial institutions to shore up its financial position by raising about $12.5 billion fresh capital through a common stock offering and an equity-linked offering.
- AIG said it lost $3.09 a share, compared with earnings of $1.58 a share, or $4.13 billion, during the year-ago period. The results disappointed Wall Street, where analysts, on average, had expected a loss of 76 cents a share (oh analysts... well I guess AIG is not looking quite so "cheap" on 2008 and 2009 estimates as it did 3 hours ago; well time to upgrade consumer discretionary!)
- AIG already took an $11.5 billion writedown in the value of its derivatives portfolio last year shortly after it assured investors that it had "little to no exposure" to asset-backed commercial paper, structured investment vehicles or collateralized debt obligations tied to residential mortgage-backed securities. (I hate when that happens... we were off by just a tad on what we told the market.... no worries. It's not like the CEO is flying blind or anything p.s. did we give this CEO a bonus for the hard work they have been doing in these difficult times? Sure hope so; they deserve it.)
- Online travel company Priceline.com Inc. said Thursday it swung to a first-quarter profit, as gross travel bookings and international revenue surged.
- Adjusted net income, which excludes one-time gains and charges, rose to $37.3 million, or 76 cents per share, from $17.4 million, or 43 cents per share, in the year-ago period. Total revenue rose 34 percent to $403.2 million from $301.4 million in the 2007 quarter.
- The results beat Wall Street predictions. Analysts polled by Thomson Financial expected a profit of 60 cents per share on $377.2 million in revenue.
- Gross travel bookings, which refers to the total dollar value including taxes and fees of all travel services purchased by consumers, rose 76 percent to $1.76 billion. International revenue more than doubled to $104.2 million. (international still a tiny part of business so a lot of potential growth opportunity there)
- Priceline.com said it expects to post a 2008 pro forma profit of $5.25 to $5.65 per share, while analysts polled by Thomson Financial expect a profit of $5.11 per share.
- Priceline.com added that it expects to generate about $7.5 billion to $7.9 billion in gross travel bookings for the year.
About Trader Mark (http://fundmyfund.blogspot.com)
Mark is a self taught private investor, fascinated by the market since an early age, discovering mutual funds as a teenager in the 80s, and then moving to equities by the mid 90s. His equity focus is identifying secular growth trends, and the companies most likely to benefit from these macro trends. Stocks are identified through fundamental analysis, although basic technical analysis is used in determining entry and exit points.
With a degree in Economics from the University of Michigan, a broader understanding of the economy as a whole, along with interpreting investor psychology is also a major interest for Mark. His career background has focused on financial analysis in corporate America.