Billionaire investor Kirk Kerkorian said he may up his stake in Ford beyond 5.5%, as he follows-through on his intention to purchase additional shares, Bloomberg News reported Friday.
Kerkorian, in a Friday SEC filing, reiterated that his Tracinda Corp. will pay $8.50 per share for 20 million additional shares of Ford (NYSE: F), which will give him a 5.5% stake, Bloomberg News reported. In the filing, Tracinda added that it may "from time to time, propose business strategies and, subsequent to the expiration of the offer, acquire additional shares."
Shares of Ford rose 5 cents to $8.25 in Friday morning trading on the news.
A gold star for Ford
Independent stock analyst C. Leonard Bauer told BloggingStocks Friday Kerkorian's stance is "a definite gold star" for Ford, concerning its turnaround program.
"Kerkorian's decision, because of his investment history and knowledge of the auto sector, will telegraph to other institutional investors that it's time to start moderately adding to your Ford position," Bauer said. "Don't misunderstand, this turnaround story is only about 30% complete, but at this stage you can make a good case for buying a modest share amount." Bauer added that he does not have a rating on Ford nor own the company's shares.
Ford installed former Boeing (NYSE: BA) executive Alan Mulally as part of an effort to re-vamp production and revise its fleet to compete in the global auto marketplace. Ford's legacy cost reduction efforts have gone well; fleet revision progress has been slower, many analysts agree.
Gasoline prices continue to increase along with crude prices, and the latter seem to find a new record every single day. Wasn't it just a few months ago that the media was going crazy about oil reaching the $100 per barrel mark? It hit $122 this week. Now, that's not a year later; that's less than half a year later. It's not surprising then that automakers with an inflexible SUV-selling strategy are getting pummeled, while automakers with a decent offering of gas-efficient vehicles are seeing product mix changes in retail sales.
Ford Motor Co. (NYSE: F), which showed a surprising profit in its most recent quarter, said that it plans to really up the presence of gas-efficient six-speed transmissions by the end of 2009, and wants to have these transmissions in 98% of its North American vehicles by 2012. If Ford follows through with this commitment, it'll be a game-changer for the industry. And, it will force General Motors Corp. (NYSE: GM) to do the same thing. Ford stated that the newer 6-speed automatics will get 4% to 6% better gas mileage than the standard 4-speed and 5-speed automatic transmissions.
GM is not sitting idly by at the same time, though. It debuted a 6-speed automatic transmission in the popular 2008 Chevy Malibu, which it is pitting as a strong competitor to market leaders Honda Motor (NYSE: HMC) Accord and Toyota Motor Corp. (NYSE: TM) Camry. Will the new trend in the consumer vehicle market be smaller 4-cylinder engines with advanced, fuel-efficient 6-speed automatic transmissions? You can count on it until oil prices fall to $50 a barrel. And, that'll be when pigs fly.
News Corp (NYSE: NWS) is scheduled to report earning Wednesday and is estimated to post a profit of 31 cents a share in the fiscal third quarter.
In its attempt to answer consumer demand, Ford Motor Co. (NYSE: F) said Wednesday it plans to greatly increase the use of more fuel-efficient six-speed automatic transmissions. The six-speed automatic transmission, which offers 4-6% better fuel economy, will be in 98% of its North American vehicles by 2012.
Seems that after the recent dealing with Yahoo! Inc. (NASDAQ: YHOO), Microsoft Corp. (NASDAQ: MSFT) Chairman Bill Gates has had enough. He said the company isn't pursuing other deals for now and that Microsoft and Yahoo! should pursue "independent paths." Microsoft still has to show shareholders improvement in Vista and its struggling internet business.
The deal, which freezes wages and reduces vacation pay but avoids changes to base wages, was approved by 78% of the membership.
Ford (NYSE: F)'s shares fell 2 cents to $8.23 on the news during Monday morning trading.
Economist Richard Felson told BloggingStocks Monday the deal, in his interpretation, represents "a qualified win for both sides. The Canadian workers got most of what they wanted, which mainly was an avoidance of the two-tier wage system that Ford is implementing in the United States," Felson said. "But Ford also got the wage freeze and vacation changes critical to bringing Canadian labor costs down."
Further, while both GM and Chrysler, which are set to begin talks with the CAW, may initially view the Ford deal less-favorably, Felson said he expects both to negotiate similar deals with the CAW.
"The downside is GM and Chrysler accepting a deal that's slightly more generous than they'd want to offer," Felson said. "But the upside is avoiding a major production shut-down during a critical transition period for the automakers, as they adjust their fleets to compete better with more-efficient foreign vehicles."
Avoid These Ugly, Risky Stocks For the moment, the market seems to have settled. Does that mean the worst is over? It's unclear. You should still be cautious. The key to investing during a crisis is making sure that the stocks you're buying truly are isolated from the blow-up. Avoid These Ugly, Risky Stocks - Motley Fool
10 Auto Brands in Trouble -- Which Auto Brands Should Go? Should Ford Motor dump Mercury and Volvo? What will happen with GMC, Hummer, Jaguar and Linconl?There are too many brands and not enough buyers. Many auto-industry insiders agree weak ones should go, but it's not that easy. Which Auto Brands Should Go? - BusinessWeek In Pictures: 10 Auto Brands in Trouble
Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) reported a 64% drop in quarterly profit late Friday. At the company's annual meeting this past weekend, the legendary investor said that while a Berkshire unit has bought portfolios of subprime mortgages (and has frozen resets that were due to send interest rates on those loans higher) he warned investors that housing-market weakness isn't over yet and predicted more losses for banks. At the same time, Buffett said Sunday he will consider investing in the insurance business of U.K. banking giant Royal Bank of Scotland (NYSE: RBS) and is close to buying a medium-sized company in the country.
Hovnanian Enterprises Inc. (NYSE: HOV) estimated on Monday it would take $225 million to $275 million of land-related charges for the that fiscal second-quarter and said that home deliveries dropped 21% to 2,494 homes in the period. The company also turned cash-flow positive faster than it expected and tripled its full-year estimate of cash flow.
After being rejected by Continental Airlines Inc. (NYSE: CAL) last month, United Airlines parent UAL Corp. (NYSE: UAUA) is intensifying merger talks with US Airways Group Inc. (NYSE: LCC), according to The Wall Street Journal. A deal is said could emerge in as soon as 10 days. In light of rising fuel costs, the more than $1.5 billion in potential cost savings and revenue enhancements the companies see from joining forces is no doubt appealing more and more.
This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
When it comes to comparing the pick-up trucks of Ford Motor Co. (NYSE: F) and Chevrolet by General Motors Corp. (NYSE: GM), I can honestly say that I've owned both brands. I bought one F-150 off the showroom floor. I also bought one that was very well used. Both my Chevy Silverados were low-mileage, used models. I leased one of them from my dad and the other one I bought from my brother. I have also had opportunities to drive multiple specimens of each brand that were owned by friends or associates. I like both brands as far as their trucks go. Their cars are a story for another day.
To me, Chevy trucks always seem a bit more solid, with interior appointments a little more lush and inviting. Ford trucks seem to focus more on utility and usability within a bit roomier interior. The Chevy trucks always exhibit deep power, easily delivered upon demand. Fords trucks always seem a bit more spunky with their aggressiveness always close under foot. Chevy trucks appeal to the gentleman in me but they've always done any job I asked of them. Ford trucks appeal to the workman in me and they sometimes seem immortal.
Today, in a headline ripped from the 1970s, the front page of The New York Timesannounced: "As Gas Costs Soar, Buyers Flock to Small Cars." In the immortal words of Yogi Berra, it's deja vu all over again.
A lot of people moan and wail about the tough times in Detroit, but it's not as if the American automakers didn't have plenty of time to prepare for the current market. They were warned, over and over again, that they needed to develop better small cars and more efficient vehicles. But they did nothing. Instead, they focused on wasteful but high-margin SUVs. Well, now the time has come to pay the piper.
The Times reports that in April, 20% of new vehicle sales were compacts or subcompacts. That's the first time this has happened in the American market. In another first, more cars with four cylinder engines were sold than cars with six cylinders. Clearly, as gas approaches $4 a gallon, Americans are looking for more efficient cars.
Cognex Corporation (NASDAQ: CGNX) provides machine vision computer systems that automate a range of manufacturing processes. Essentially, the systems link to video cameras and serve as eyes where human vision is insufficient. The firm's Modular Vision Systems automate the manufacture of discrete items (e.g: semiconductor chips) by locating, identifying, inspecting and measuring them during the manufacturing process. Its Surface Inspection Systems monitor the surfaces of materials processed in a continuous fashion (e.g: paper, metal, plastic) for imperfections. Cognex has offices throughout North America, Japan, Europe, Asia and Latin America. Boston Scientific (NYSE: BSX), Ford Motor (NYSE: F) and Sony (NYSE: SNE) are customers.
Cognex pleased investors earlier in the week, when it reported Q1 EPS of 20 cents and revenues of $60.5 million. Analysts had been looking for 17 cents and $59.9 million. Management also guided Q2 EPS to 20-24 cents (20 cent consensus) and Q2 revenues to $65-$68 million ($63.14 million consensus). The firm expects gross margin to remain in the low-70% range.
The market hasn't seemed to have fully made up its mind yet regarding Wednesday's Federal Reserve announcement about its policy. While stocks shot up immediately after the announcement, markets finished the Wednesday in the red. Still, this morning stocks futures edged higher as investors not only continued to digest the news, but awaited several more economic reports. The Bank of England saying the worst of the credit crisis may be over, definitely helps boost sentiment this morning.
Indeed, stocks ended Wednesday's session lower despite the Dow topping 13,000 briefly after the Fed's statement. It seemed also investors were divided, some preferring the Fed to signal clearly a pause in rate cuts so the dollar would gain strength and halt the rise in commodity prices and hence inflationary pressures. Meanwhile others were more concerned about the economy and perhaps preferred either a more positive language regarding the economy or indications of further measure. Regardless, the Dow Jones Industrial Average fell 11.81 points, or 0.09%, and the S&P 500 index shed 5.35 points, or 0.38%. The Nasdaq dropped 13 points, or 0.55%.
On the economic calendar for Thursday are the March figures for personal income and spending, which includes a key inflation measure. The ISM index for manufacturing activity also is on tap as well as construction spending. The weekly jobless claims is due before the opening bell, but April jobs report is due tomorrow, and that will likely affect markets the most.
When General Motors Corp. (NYSE: GM) reports quarterly earnings tomorrow, the Detroit automaker is expected to post a steep loss in profit due to sales of SUVs and large trucks dropping off a cliff. Gas prices have increased sharply and have caught GM off-guard as its margin-heavy SUV segment has been hit hard. The automaker has not shifted its product mix fast enough to compensate.
Curiously though, investor Kirk Kerkorian planted more seeds in the auto industry yesterday by increasing his stake in rival Ford Motor Co. (NYSE: F), upping his ownership of the company to 5.7% after Ford reported a surprising $100 million profit late last week. Kerkorian invested in GM a few years ago, but dumped his shares after GM rebuffed efforts to become a partner with France's Renault SA. Why would Kerkorian re-enter the auto market after years of turbulence and the highest gas prices in a generation, even with Ford's recent profit?
Kerkorian may like what he sees in Ford CEO Alan Mulally. Mulally has said that Ford is re-sizing its capacity output to fit market conditions in terms of demand. This includes production capacity as well as product mix, which is the flexible golden ticket any automaker needs in a world of constantly changing variables. GM just hasn't gotten there, and it's hard to see if it will. GM lost $39 billion, although that amount was mostly due to tax changes not bad decision making. Will Kerkorian have success with Ford as his renewed interest in the auto sector picks back up? Ford will need it, as one quarter doesn't make a turnaround.
Stocks futures were lower early Tuesday morning ahead of the Federal Reserve Open Committee two-day meeting set to start today. On Wednesday, Fed chairman Bernanke will announce the policy decided, and while most investors expect a quarter point rate cut, they also expect the Fed to announce a pause in the cuts following some inflationary pressures.
On Monday, stocks finished the day little change ahead of the Fed meeting and despite some big deal news involving candy maker Mars and Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) buying chewing gum maker Wrigley (NYSE: WWY) for some $22 billion. Also, Kirk Kerkorian's Tracinda Corp. announced its intention to purchase 20 million of Ford (NYSE: F)'s shares at $8.50 per share. With that, the Dow industrials ended the day down 20 points, or 0.16%, the S&P 500 fell 1 point, or 0.11%, while the Nasdaq rose 1 point, or 0.06%.
Not many economic releases today. Still, already RealtyTrac reported that foreclosures soared 112% in the first quarter, compared to a year earlier. And still in the housing sector that doesn't seem to be able to find a bottom yet, before the bell, the S&P/Case-Shiller home price index is due for release. Also today at 10 a.m. EDT, April consumer confidence index will be reported and economists are expecting the index will slide from the previous month. With higher food and energy prices, along with the troubles in the housing sector and the increasing troubles in the labor market, this is far from surprising.
Deutsche Bank upgrades Wachovia (NYSE:WB) to "buy" from "hold" according toBriefing.com. The news service also reports that Thomas Weisel initiated VMWare (NYSE:VMW) with a "market weight" rating.
Citigroup downgraded CB Richard Ellis Group (NYSE:CBG) to "hold" from "buy" according to the AP. The news service also writes that Moody's raised it outlook on NRG Energy (NYSE:NRG) to "stable" from "negative."
Ford (NYSE:F) was raised to "hold" from "sell "at Citigroup according to24/7 Wall St.
What is going on in Detroit? Ford (NYSE:F) came out with good earnings last week. The stock spiked up. Then a Wall Street analyst said the car company was overvalued and the shares sold off. A day later, Kirk Kerkorian made a tender offer for 20 million shares at a price above the market. Up went Ford's share again.
It may say more about the car industry that GM (NYSE:GM) sharply cut production of SUVs and pick-ups. The Big Three make large profit margins on these vehicles but, with gas price high and discretionary income low, no one is buying them. According toThe Wall Street Journal, "The move will reduce by 88,000 the number of pickup trucks GM had planned to produce this year, and lower by 50,000 the number of SUVs it had planned to build."
As part of the cutback 3,500 people will be laid off.
The Ford action may have been fun to watch but the move by GM indicates that the car industry has many quarters to go before things get better, especially in the US market. GM and Ford could lose money well into 2009. If the market does not improve that is an optimistic guess.
The layoffs say that Ford and GM may now be overpriced. Ford is up near its 52-week high, trading at $8.21. At $21.94, GM is not doing well.
Anyone who thinks that there is a lot of money to be made is these stock is badly mistaken.
Today was a mixed day, which is evident in the tape. Today we had one of the top food deals announced, yet Warren Buffett came out and said we were in a recession. There were also concerns that the housing market will continue to slide along with general credit conditions, and that black stuff in the barrels was up $0.25 at $118.77 on last look.. Here were the unofficial closing levels:
Bebe Stores, Inc. (NASDAQ: BEBE) fell after a downgrade by Roth Capital Partners from a Buy to a Hold rating, citing disappointing sales and conservative guidance. The company reports earnings Thursday. Shares fell by more than 10% to $9.86 on the news.
Gasoline prices continue to increase along with crude prices, and the latter seem to find a new record every single day. Wasn't it just a few months ago that the media was going crazy about oil reaching the $100 per barrel mark? It hit $122 this week. Now, that's not a year later; that's less than half a year later. It's not surprising then that automakers with an inflexible SUV-selling strategy are getting pummeled, while automakers with a decent offering of gas-efficient vehicles are seeing product mix changes in retail sales.
This post is part of our 
Today, in a headline ripped from the 1970s, the front page of The New York Times 
he market hasn't seemed to have fully made up its mind yet regarding Wednesday's Federal Reserve announcement about its policy. While stocks shot up immediately after the announcement, markets finished the Wednesday in the red. Still, this morning stocks futures edged higher as investors not only continued to digest the news, but awaited several more economic reports. The Bank of England saying the 
When 
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