Skip to main content

Opening Bell: 5.22.07

Lowe's profit slump weighs on retailers (MarketWatch)
Like its archrival Home Depot, Lowe's reported punk earnings in the latest quarter. Both companies are pretty sensitive to the housing economy, so given everything else, it's no surprise that they're slumping. Also like Home Depot, the company made sure to spread the blame around so that things didn't look too bad It noted that comparisons were tough -- not because of bad weather this quarter, though it was -- but because of bad weather in the past (Hurricane Katrina), and the subsequent rebuilding efforts. But really, it's all about the housing market, regardless of what they say.
CBS Does Indeed Scoop Up Wallstrip (NewTeeVee)
As was rumored early last week, CBS has in fact purchased Wallstrip. And it sounds like the initial reported price tag of about $5 million was more or less correct. Apparently, according to Howard Lindzon, there were actually multiple bidders, but CBS was selected because it will offer the best opportunity for the show's employees, including, most notably, Lindsay Campbell. That's probably a wise move for her, since with A.J. not doing so well, she probably won't be reprised very much as his college English prof. That and the Sopranos is ending soon.
China Appeals to US to Preserve Ties (AP)
A delegation of Chinese trade reps is here, hoping to convince the US that despite the trade deficit and all that, it should not impose any kind of trade barriers on the country. There's been a lot of talk about resurgent protectionism lately, but it's hard to see it actually happening, at least at the moment. Granted, the whole poisonous food thing didn't help. And the fact that neither the Congress nor the President are really into free trade, like Clinton was, makes things even worse. But it would probably be too much effort to substantially throw up any kind of meaningful limits on trade.
Phone Company Deal Irks Would-Be Bidders (NYT)
Some questions are being raised about the bidding process in the Alltel buyout, well, actually, there doesn't appear to have been much of a bidding process. Other PE firms are complaining that they thought they had longer to submit a bid, and they're angry that there's no "go shop" provision included in this one. It's a little early to see how shareholders will react, though you can imagine they'll be upset if it seems that they left money on the table.
China Investigates Contaminated Toothpaste (NYT)
Contaminated pig feed is one thing. It's bad, but people won't freak out about it too much, because it only effects on the second degree -- there's a pig between humans and the food, thank god. Contaminated toothpaste seems a bit more serious. The Chinese government, which already has its hands full, does not need to be examining toothpaste right now, but unfortunately it has to. So far, there's only evidence that it was exported to the Dominican Republic, where authorities say they've found chemicals that are used in antifreeze. The FDA says there's no evidence of that here (yet), but that it's taking a hard look.

Brent oil near 9-month high on Nigeria, U.S. gasoline (Reuters)
It's Brent oil, so take that for what it's worth, but the dirty (dirty) stuff is at a nin-month high, hitting $70 barrel. The cause? US driving season and fighting in Nigeria, which doesn't seem to have ever gone away, but becomes more of an issue when oil prices are high.
Will Weakness In Dollar Bust Some Couples? (WSJ)
The US Dollar's persistent weakness is causing some countries to question the wisdom of trying their currency to the Dollar. At one point in history it was a way to shortcut your way to currency stability and strength. Now it's a recipe for inflation. And while their neighbors see major currency appreciation, they're stuck. If their citizenry ever wants to travel to Europe, they're screwed. This weekend, Kuwait said it would decouple its currency from the Dollar, which is some thanks for the way we save them 16 years ago.
High Court Raises Bar On Antitrust Lawsuits (WSJ)
If you file an antistrust suit, it's not enough to just show that companies may have behaved in some way that would be consistent with an oligopoly. You actually have to prove that the companies conspired. That's the upshot of a Supreme Court ruling on a lawsuit filed against various telecoms alleging that they intentionally didn't compete with each other in certain areas so as to avoid competitive pressure. The Supreme Court ruled in the telco's favor, citing a lack of any evidence whatsoever of an actual conspiracy.
European Phone Stocks Rise; GlaxoSmithKline, Novartis Drop (Bloomberg)
In German trading, shares of Deutsche Telekom rose on speculation that the company may spin off its US-based T-Mobile operation, which is coming on pretty strong in this market. For awhile the company was a laggard, as it's the only major carrier not to have a high-speed mobile data offering. But the company recently went out and got itself a nice fat slice of spectrum, so such a service won't be far behind. Combine that with the company's still popular Sidekick, and you've got the making of an American success story.
Tracinda to explore options for MGM Mirage stake (Reuters)
Tracinda, which owns a large stake of MGM Mirage, says it's considering a range of strategic alternatives, including purchasing some rival Vegas properties, like the Bellagio. It's good to see Kirk Kerkorian paying more attention to his Vegas assets, since we're sort of under the impression that it's the only market that he knows very well. Seriously, Vegas is where he's successful, and when he tries to venture elsewhere, it's not clear that he's really sharp enough to make a successful go of it.