Opening Bell: 01.23.09

Posted by William Richards, Jan 23, 2009, 7:46am

Picture 616.pngSchapiro Approved as New SEC Chairman (Reuters)
Apparently the New SEC doesn't take shit from anyone, and maybe carries nightsticks. At her confirmation hearing yesterday, Mary Schapiro vowed-- and she actually said this-- to 'take the 'handcuffs off' the SEC's enforcement division and go full force against anyone who violates investors' trust."

Citi Directors To Leave (FT)
"Citigroup is to revamp its board with the departure of long-standing members Kenneth Derr and Franklin Thomas following criticism of its ability to supervise the troubled company's executives and strategy, people close to the situation have said."

What We Have Here Is A Three Pronged Approach (WSJ)
Apparently what we're looking at is the following:

1) Stemming Foreclosures.

2) Revamping Existing Efforts.

3) Purchasing of Assets.

Pulling the assets off the books is going to help, but it's not going to help as fast as the government thinks it will; there would be at least a two quarter bleed before the banks would consider loosening restrictions in re: liquidity.

That being said, we haven't seen anything concrete on the "Stemming Foreclosures" side yet, and I don't have a clue what the "Revamping" prong even means.

Google Beats Expectations (Reuters)
"Excluding one-time charges, profit was $5.10 a share, beating the average analyst forecast of $4.95 according to Reuters Estimates.

Revenue rose 18 percent to $5.7 billion -- a shadow of the 50 percent growth levels that Google used to enjoy, but considered by analysts to be a robust performance given the weak economy and corporate cutbacks in advertising spending."

Bankers And Regulators Call It What It Is (Bloomberg)
The idea that just because you avoid the word nationalization it isn't in play is annoying; the bottom line here is that the government has in fact nationalized some of the banks. Look at it like this: arrest in many states is defined as the inability to leave. Now, the police won't directly place you under arrest in most cases until they're done questioning you about whatever heinous thing you did/peed on. But, should you be snarky and insist on departure, they will (usually) cuff your ass.

No one in the government is calling what's going on nationalization until the banks decide that they can act autonomously again. Or, as Jon Bruss puts it: "When the Treasury tells a bank to pay a penny a share vs. its old dividend, you know who's calling the shots."

Pfizer In Talks To Buy Wyeth (WSJ)
The combination of the two companies would provide for a pharmaceutical powerhouse, one would hope they will use their newfound power for the ultimate good: the panacea for STDs.

"Pfizer, the world's largest drug maker by revenue, would likely use a combination of cash and stock for the acquisition. Details on price haven't been worked out, but Wyeth has a market capitalization of about $52 billion and premiums in the sector have averaged just over 20%. That would put the value of the deal at well over $60 billion."

Times To Sell Its Building (NYT)
The Grey Lady has been facing hard times lately; with ad revenue down and the emergence of online media it's become a more cost-competitive marketplace. Add to that the debt coming due and about $400MM in revolving credit lines expiring in May and you have a liquidity crunch - and a perilous situation at best. To counter, the Times has borrowed about $250MM from outside investors, and it's looking to sell its historic building on 8th in a lease/buyback.

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