Skip to main content

Opening Bell: 12.20.06

Sponsored by
Stock market closes, share prices rebound after government reverses track (Bangkok Post)
Apparently, even the coup can respond to price signals. After imposing strict capital controls on foreign investment and the Thai baht, the Bangkok stock market plunged terribly. Ok, that didn't work, capital controls rescinded. This prompted a big spike in the market, as well as gains across emerging market (apparently investors in these other countries were optimistic that should they ever be subjected to a coup, then the new leaders will promptly rescind price controls after they're imposed). You have to hand it to them for their, throw-it-against-the-wall-and-see-what-sticks economic policy. There's something very, oh, Bernanke about it.
Ericsson Offers $2.1B for Redback (Light Reading)
A bubble-era mega-darling buys out a bubble-era darling. Ericsson announced that it will buyout networking equipment player Redback networks, in a deal that will pay Redback shareholders $25/share. The move will enhance Ericsson's product suite, enabling them to sell full IP-based communication systems. This specific tie-up had actually been speculated on earlier this year.
To-Do List: Wrap Gifts. Have Baby.
David Leonhardt at the Times goes all Freakonomics on us, and ponders whether there is any connection between tax breaks for new parents and the timing of birthdays. Basically, there's been a spike in Birthdays, in recent years, in the week between Christmas and New Years, leading some to conclude that mothers have C-sections, so that the baby can be had to make them eligible for end-of-year tax savings. It's a good deal. The little brat saves you money, before costing you anything. And some academic research supports this notion. We've always held a very similar theory, actually, though we have yet to see it backed up anywhere (Steve Levitt, are you reading?). We suspect that the death tax contributes to longevity. Taxes on anything reduce the frequency of that which is being taxed. Why should death be an exemption? And if you're a parent thinking of doing this, remember to take a second and ask whether your kid will like having a birthday so close to Christmas. You're going to have to get them two sets of gifts, you know, so there won't be any cost savings there.
Hefty Discounting Of Flat-Panel TVs Pinches Retailers (WSJ)
The plummeting price of HDTVs is turning into a bloodbath for retailers. We can speak from firsthand experience on this one, having just joined the HD revolution in the last 10 days. For one thing, price are down enormously since just this summer, like 35% or more in many cases. Not just that, many sets are down since last week, like on the order of %10, no joke. It's taking a major toll on the likes of Best Buy and Circuit City, which reported earnings for its last quarter that sent the stock tumbling after hours. If you want to find one stock, that's emblematic of the whole problem, check out the purest play on the panels themselves, Corning, which now hovers near a 52-week low, after a multi-year rally.

EU Says Airlines Must Trade Emissions Starting 2011 (Bloomberg)
People, and particularly Europeans, are fascinated with emissions trading. Fact is, the idea's really gone nowhere, despite the fact that for awhile, banks were anticipating a major market in carbon emissions, per demands of the Kyoto Protocol (also loved by Europeans, also going nowhere). In fact, some trades actually happened. They were basically practice trades, which is a little silly, sort of like playing practice poker without real money. Doesn't really work. Now the EU will demand that airlines trade emissions, as a way to eliminate greenhouse gases. The real reason for the fascination with these schemes, is that it appears to be market-based, and in a sense it is. But in creating a false market, it doesn't really satisfy what it is that makes market-based measures a good idea.
Dell Names Carty As Finance Chief Amid U.S. Probes (WSJ)
We still don't know what the ongoing scandal and investigation at Dell is all about. They've been pretty tight-lipped on the whole thing, though it might have something to do with buybacks. Whatever the issue is, it's serious enough for the company's finance chief to be shown the door. CFO James Schneider will resign, while former CEO of AMR, Donald Carty, will immediately take over. That being said, whatever Schneider did can't be that bad. He already has a job lined up a Texas bank once he leaves Dell.
Babcock to Raise $1 Billion for Infrastructure Fund (Dealbook)
Australia's #2 i-bank Babcock & brown announced that it will raise $1 billion for a new infrastructure fund, that will invest in things like European water utilities and airports. Hmm, why does this sound familiar. Maybe because it's been the m.o. of Australia's #1 bank, Macquarie, which has been doing this for the last few years. That company's already been going around, snapping up airports and railroads and ports, so it's not clear what's going to be left over for Babcock.
Selling Yourself Short . . . (The Conglomerate)
We've always sort of wondered how we'd react, if we saw an insider at a company we followed actually short their own shares. It'd be hard to take that as anything but an unbridled negative. Apparently the new COO of Coca-Cola did just that, back when he worked for a regional Coke bottler in Australia. And conveniently, that short sale came just before a major profit warning, which he described as a bad coincidence. Coming back from that kind of thing is quite a turnaround. In fact, we'd like to see an academic study that says disgraced executives who come back to lead companies actually perform better, since they've managed to overcome tremendous personal adversity.