Wachovia to Acquire Golden West Bank for $26 Billion (NYT)
With one large acquisition, Wachovia becomes the fourth-largest bank, gets a presence in California, and becomes more heavily involved in mortgage lending. Apparently, the executives took a break from their eponymous PGA tournament, the Wachovia Championship in North Carolina, to approve the deal this weekend. Though Golden West is probably one of the stronger, more-solid players in the mortgage industry, it might be seen as a vote of confidence for an area which has a lot of doubters.
Will SanDisk Sour Apple's Tune? (BusinessWeek)
In recent years, trying to scale the iPod fortress has meant certain doom for all comers. The original players in the mp3 game have all withered, while electronics giants like Sony and Samsung have barely made a dent, despite repeated efforts. Now BusinessWeek asks whether Sandisk, of all companies, may be up for the test. The flash memory company makes its own cheap flash players -- though unlike Apple's lowest end products, they have screens, radios, play video etc. The question, however, is not whether they can match the iPod on paper, but whether they can crack the iPod/iTunes monopoly. Their players will work with subscription services from Real and Napster, which are growing in popularity, but the iPod will be a tough nut to crack. Still, if they manage to pull it off, it will be an amazing feat for the staid memory company and one that nobody saw coming.
How Not to Invest (Jeff Matthews)
Anytime stocks rise, you can be sure of one of one thing, the media will ascribe some silly reason to the rise: "Stocks rose yesterday on merger news" or "Stocks rose as bush as GM expressed confidence it would resolve its healthcare issues". While it would be tempting to argue that the buyers are idiots, the reality is not nearly so sexy. Most of the time, it's just some Journal lackey looking for a hook to write an article on the day's trading. So they call around and get some analyst to give them a reason. So, Jeff Matthews rightly takes the market to task for buying because of Buffett, i.e. in anticipation of Buffett's purchase. But, more likely, it's just a journalist doing what journalists do, looking for cause and effect when none is there.
Under Warren Buffett's Big Top (BusinessWeek)
If investors really are buying stocks in anticipation of a Berkshire buyout, they may want to look abroad. At this weekend's Buffetstock, the Oracle stated that the company is likely to look overseas for future acquisitions. He also hinted that there's a remote chance the company would complete a $15 billion acquisition with an unnamed, the key word being remote. That being said, perhaps we'll see a rally today among all companies worth $14.5 with good management, high ROE, strong brands and a wide moat.
Possible Deal Would Make Major Player in Lab Tools (NYT)
We really haven't had a bona fide Merger Monday, so it's nice to wake up news that the market will cheer (as it's prone to do). Fischer Scientific and Thermo Electron are merging, and will create a lab tools powerhouse. Oddly, Thermo will be the acquirer, though boasting only half the revenue of their rival.
Argentina's Redrado Says Markets Showing `Appetite' for Bonds (Bloomberg)
Depending on your perspective, investors are growing increasingly optimistic or decreasingly prudent when it comes to investing in emerging market debt. Last year, buyers started bidding up Ecuador's foreign debts, which has historically been a sign that things are nearing a top -- now they're nibbling at Argentinean 10-year notes, confident that the country's recent troubles are officially a thing of the past. Still, it's relatively small change -- the country just sold $500 million at auction, a drop in the bucket compared to the $95 billion they defaulted on in 2001.
Apple Beats Beatles In Court (CNN Money)
A London judge has made the treasonous ruling that Apple did not infringe on the trademark of the Beatles' Apple Records label when the company launched its iTunes music store. In 1991, Apple (computer) promised that they wouldn't use the Apple brand name to promote any music offerings. At the time, the iPod probably wasn't even on the drawing board, so they had no reason to think this would be a problem. During this case, they convinced the judge that iTunes (despite it's name) was not really about music, but was a data transmission service, which apparently was allowed under the agreement.
China Ends One-Year Ban on Company Share Sales (Bloomberg)
You thought Sarb-Ox was rough? Ha. Did you know that last year, China simply banned companies from selling any new shares to the market? Nobody (here at least) seemed to notice, and it makes one wonder about some of our economic assumptions. If we did that here, the general consensus would certainly predict calamity. There the economy still grew over 10%. Now, companies can sell shares to the public again, but with high hurdle to clear. It needs to satisfy 34 criteria, including three straight years of profitability. No money-bleeding RFID IPOs for the Chinese.
Venezuela Imposing New Oil Extraction Tax (AP)
The oil-lords of Latin America have the stage. There's no doubt; this is their time to shine. Venezuela and to a lesser extent Bolivia hold the cards, while the evil multinationals, thirsty for oil to replace their depleting stocks, must play along. This weekend, The Times discussed this shifting balance of power, and explained that it is consistent with historical cycles. Sure, it looks like the oil companies are riding high -- and they are -- but now they have to play by the host country's rules, whereas in leaner times, countries are begging them to invest there.