Friday, January 30, 2009


Today's image is of a dominant right brainer hard at work.  I understand that some skeptics would question whether this activity is work.  Au contraire,  for in a couple of hours, the young prodigy would awake and say I have an idea.  

The request by life insurance companies to relax the rules relating to the amount of capital that has to be set aside for investment losses and to pay claims was denied yesterday by the National Association of Insurance Commissioners executive committee.  This caused the life insurers to fall yesterday. Yahoo! Finance

Contrary to its previously announced intention, First Industrial will not pay a special dividend to its common shareholders. The company also announced the tax treatment of its common and preferred dividends.  The preferred dividend components always intrigue a nerd like me, with some portion of the preferred dividends classified as capital gains, a part falls under "qualified dividend", some is classified as unrecaptured section 1250 capital gain and a small amount as ordinary dividends.  Yahoo! Finance  I am just making a note to see if the capital gain is long term which will make this a somewhat tax advantage preferred stock dividend.  

Honeywell's earnings surprised me some.  Yahoo! Finance
Earnings per share actually increased from a year ago to $ .97 versus $.91 but revenues did decline to 8.7 billion from 9.3 billion. 

Another company hitting the analysts' consensus earnings estimate was Proctor & Gamble, although sales were a tad light.  Yahoo! Finance
Unfavorable currency exchange rates impacted sales negatively by 5%.  A stronger dollar will have a negative impact on these American multinationals.   MarketWatch

In case anyone was wondering, it does appear that Exxon will survive this downturn   Yahoo! Finance   Yahoo! Finance

Apparently, the Obama administration is moving toward a two prong approach to save the American banking system. First, in the bad bank model, the government would buy the toxic assets that have already been marked down a great deal in value by the banks.  Second, the government would cover other troubled assets by selling  insurance to the banks.

GDP fell only 3.8% in the 4th quarter of 2008, less than expected.  MarketWatchThis is just the first estimate by the government.   The government counts the undesired buildup of inventory as growth.  But, when inventory builds up, manufacturing output will be cut to reduce supply. 

Unemployment in the euro zone climbed to 8%.  Yahoo! Finance

It is not surprising to me that the BAC board has backed Ken Lewis.    Just look at the Board.   

Gannett reported preliminary earnings. Gannett Co., Inc. Reports Preliminary Fourth Quarter
Revenues declined over 8% from a year ago and the company did report earnings of $.69 per share after items.    Before items, the company reported $.85 a share.  Items included severance expenses and facility consolidations.   Analysts had estimated earnings at $.81 on revenues of 1.79 billion.  GCI: Analyst Estimates for GANNETT CO INC - Yahoo! Finance  Revenues came in light at 1.735 billion.  In a purely contrarian move, I have built up a small Gannett position, slightly more than 100 shares and I am reinvesting the dividends, with the dividend yield now exceeding 20% at the current price. LATE DAY TRADES: GCI, CBL, FR, SLG, NYT, NWSA
This has been done knowing that the newspaper industry is clearly in a secular decline which has been exacerbated by the current severe slowdown. I will check the earnings call to see if management intends to keep the dividend.  At first glance, it appears to me that cash flow is sufficient to cover the dividend payout.  

This is a link to the earnings release of one of the small caps that I am monitoring.  Graham Corporation Reports 19.8% Increase in Sales for the Third Quarter of Fiscal 2009: Financial News - Yahoo! Finance

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