U.S. stock futures were higher Wednesday morning, indicating markets could start on a positive note after two days of declines. Good results from Hewlett-Packard helped lift sentiment, overshadowing financial sector concerns, despite new worries over Fannie and Freddie. Oil remained steady ahead of inventory report later today.
Hewlett-Packard (NYSE: HPQ) shares are rising over 3% in premarket trading after the computer maker reported a 14% rise in fiscal third-quarter earnings and issues current-quarter earnings guidance that exceeded analyst estimates. Tech shares could get a boost from H-P.
Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) remain in focus due to concerns that a government bailout of the two firms is inevitable and would mean wiping out investors. Freddie Mac on Tuesday was forced to pay its steepest borrowing premium in 10 years, which is raising fresh concerns about its ability to withstand the housing and credit crisis without government help.
eBay Inc. (NASDAQ: EBAY) is cutting fixed-price seller listing fees. eBay will now charge 35 cents to list any number of the same types of fixed-price items. This is a dramatic change from charging fees based on item price.
One of the few hopes the U.S. car companies have had is that they have been perceived as closing the quality gap with Japanese models. Recent JP Power data shows Detroit running in a dead heat with imports in the consumer satisfaction race.
That bubble has been at least partially burst due to new information from the University of Michigan's American Customer Satisfaction Index. According to the AP, "U.S. car buyers are growing less satisfied with their purchases from domestic automakers while their Asian and European competitors continue to improve."
In the new survey, BMW and Lexus tied for the top spot followed by Honda (NYSE: HMC) and Toyota (NYSE: TM). Several brands from GM (NYSE: GM) and Ford (NYSE: F) dropped down the rankings.
At the risk of stating the obvious, Detroit is in such deep trouble that a perceived drop in the quality of its cars can only make its recovery more difficult. There are several ways around that, but none of them are very palatable.
GM yesterday introduced buyer incentives across most of its brands. That means its margins on those vehicles will be lower. It may pick up some market share, but any victory there will be costly. The U.S. car companies are cutting their marketing budgets, so they cannot "advertise" their way out of the problem.
Effectively giving cars away can certainly help hurdle the quality barrier, but losing a lot more money could sink a large U.S. auto company.
Douglas A. McIntyre is an editor at 247wallst.com.
Daimler AG (NYSE: DAI) closed at $59.55 Monday. DAI overall option implied volatility of 35 is near its 26-week average of 33 according to Track Data, suggesting non-directional price movement.
Ford (NYSE: F) closed at $4.89 Monday. F overall option implied volatility of 78 is above its 26-week average of 69 according to Track Data, suggesting larger price movement.
General Motors (NYSE: GM) closed at $10.36 Monday. GM September call option implied volatility is at 87, puts are at 103; above its 26-week average of 72, suggesting larger price fluctuations.
Honda (NYSE: HMC) closed at $33.42 Monday. HMC over all option implied volatility of 33 is near its 26-week average, suggesting non-directional risk.
Toyota Motor (NYSE: TM) closed at $90.75 Monday. TM overall option implied volatility of 29 is near its 26-week average, suggesting non-directional price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
There's an upside and a downside regarding major auto companies and the quest to develop vehicles with increased fuel-efficiency.
The upside: Auto makers are positioning themselves to carve out niches in fuel-efficient technology and design, The Wall Street Journalreported Monday (subscription required).
The downside: Auto makers appear to be exhibiting a 'herd mentality' on the current propulsion technology -- hybrid engine cars with both a modest electric power source and a mainstay internal combustion engine. An electric hybrid focus
Following up on its successful electric-gasoline Prius hybrid, Toyota (NYSE: TM) announced it will make hybrid engine systems available on all models by 2020, The Journal reported. Meanwhile, Honda said it would import new hybrid technology to the U.S. to compete with Toyota and Ford (NYSE: F) plans to double its hybrid lineup next year, and Chevrolet's (NYSE: GM) Volt hybrid that will go on sale in 2010.
Economist David H. Wang said investors and consumers should not be overly optimistic or pessimistic regarding the sector's concentration on electric-fuel hybrids.
Ford, the U.S. auto giant facing perhaps its toughest combination of sector competition and economic headwinds in the company's history, is expected to announce it will build a new, seven-passenger luxury crossover, The Wall Street Journal reported Friday (subscription required).
The new three-row Lincoln MKT crossover is expected to go into production next year, and mirror a 'bustle back concept' displayed at the Detroit Auto Show this year, The Journal reported. Its primary competitors would be the Acura MDX, Audi Q7, and Mercedes R class.
Ford Motor Company (NYSE: F) shares were virtually unchanged on the news, up 2 cents to $5.12 in Friday afternoon trading.
Crossovers are larger cars designed to look and function like SUVs, only with better gas mileage.
Analyst takes wait-and-see approach on crossover
Stock Analyst C. Leonard Bauer said he's reserving judgment on the Lincoln MKT, pending performance, fuel economy, and safety test reviews.
Ford (NYSE: F) will stick to its plan to become less of a truck company and more of a car company, even if oil prices stay relatively low. According toReuters, "A decline in gas prices would support consumer confidence, but customers still face job risks, potential financing difficulties with tight credit markets and other factors and it would not change Ford's planning assumptions."
Ford hurt itself with its last "all or nothing" gamble, and it could hurt itself with this one. Going to extremes has done little for Ford over the last decade.
The demand for small cars is not likely to change. It is hard to imagine gas prices going below $3 in the next year. Crude seems to have set a floor above $110 a barrel, which is still very high compared to 18 months ago.
But Ford has the brand image of being first in bringing the consumer high-quality pickups and SUVs. Its F-150 truck has been the top selling vehicle in the U.S. for a number of years.
Ford has to be careful it does not let the pendulum swing too far away from its current core business. In a couple of years, the market may change again. Use of alternative energy could help inch gas prices down by 2010. Ford can't afford to be caught flat-footed again.
More bad news for Ford Motor Co. (NYSE: F). After announcing a mammoth $8.6 billion loss just three weeks ago, the company is laying off 300 workers in the Detroit area. The workers at the Romeo Engine Plant are being let go due to a steep drop in demand for vehicles which use a V8 engine that goes into a majority of Ford's trucks and SUVs. As gas prices have climbed, large truck and SUV sales have plummeted.
The layoffs start Monday, according to a Ford spokesperson. The 300 being let go are a good chunk of the 1,075 people employed at the Romeo plant. Perhaps Michael Moore should show up and film another movie.
After Ford saw an 18% drop in truck and SUV sales during the first seven months of 2008, its Way Forward plan needs to be pushed into high gear. Ford needs to make the product mix as flexible as possible to meet the changing demand arising from changing tastes and gas prices fluctuations.
This situation reminds me of Clayton Christensen'sInnovator's Dilemma a bit. Instead of innovating in the supply chain and manufacturing flexibility arenas, automakers that aren't adept at near-instantaneous changes in consumer buying habits are finding out just how painful the status quo can really be.
This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Ford below in the comments.
I didn't grow up in one of those families that placed a high premium on American-made goods. If the Japanese can make it better, we'll buy it from them! was the general consensus. And those foreign autos served the Harrows well. My parents bought their 1984 Toyota Tercel when it was new, and that unattractive but reliable compact was part of the family through the beginning of my college career -- even surviving my first, hilarious attempts to operate a manual transmission. So, it wasn't until I moved in with my friend Debbie, as an adult, that I learned the details behind a particularly unflattering nickname for the Ford Motor Co. (NYSE: F).
There are those who would joke that the letters in "FORD" stand for "Fix Or Repair Daily." I know from experience that if you make that particular wisecrack within Debbie's earshot, she probably won't crack a smile. Instead, you can almost see her wheels churning, as though she's trying to calculate the thousands she's already poured into her Ford Focus -- or maybe she's just trying to predict which part will break down next.
During the time we shared a mailbox, it was a not-out-of-the-ordinary occurrence for Debbie to receive recall notices bearing the familiar Ford logo. These repair-o-grams arrived with such frequency that the exact number now escapes my memory; when I questioned her via text message, she replied, "I have had six. Stupid car."
U.S. automakers, late to recognize the sales implications of spiraling gas prices, have started to adjust their business models, in at least one modest respect: some luxury cars are now being designed to run on regular unleaded gasoline, USA Today reported Thursday.
Regular unleaded gasoline, with an 87 octane, typically costs 20-40 cents less than premium gasoline, with a 91 octane.
Ford (NYSE: F) and General Motors (NYSE: GM) are encouraging dealers to promote their no-premium-gas luxury cars' potential, as a selling point for consumers with budgets pinched by $4 per gallon gasoline, USA Today reported Thursday. Ford rose 5 cents to $4.99, while GM fell 15 cents to $10.10 in mid-day Thursday trading.
Auto mechanic Eddie Renn, based in Larchmont, N.Y., said the fact that automakers are manufacturing more cars designed to run on regular gasoline "is an improvement," but he questions why the automakers are using a lower gasoline cost as a selling point for luxury cars. Renn added that his auto repair business is not affiliated with any auto manufacturer.
Does gas price matter for luxury car owners?
"If you're driving a luxury car and you're concerned about a 20 or 30 cent difference a gallon, maybe you shouldn't be driving a luxury car." Renn said. "The luxury car owners who come in here [to his gas station] aren't concerned about the price of gas, I can tell you that."
Renn said most new cars, excluding sports cars and other vehicles, are designed to run on regular gasoline. A higher percentage of older cars -- particularly those built before 2000, require a higher octane, either mid-grade gasoline (also called 'plus') with an 89 octane, or the aforementioned premium gasoline, with a 91 octane.
Top Colleges for Getting Rich These colleges produce top earners. Graduates of Dartmouth College finished on top of the list with a median compensation of $134,000, edging out alumni of Princeton University who finished second with a median comp of $131,000. For public colleges the University of California, Berkley tops the list at $112,000 followed by University of Virginia and University of California, Los Angeles. Top Colleges For Getting Rich - Forbes.com Also: Top Public Colleges for Getting Rich
When you sell something as a "limited edition," you better mean it. But it turns out that a recent limited edition of the Ford (NYSE: F) Mustang was not that limited after all. And now a group of angry Mustang buyers are taking legal action against the troubled automaker.
Ford claimed that only 100 of the 2007 Roush Stage 3 BlackJack Mustangs would be made in 2007, and fans snatched them up as they went on sale. The car, which cost $59,000, was continued in 2008 and another 100 were made by Ford and Roush Performance Products. That fact didn't sit well with those who had purchased the 2007 model. (I remember the Chevy Camaro and Ford Mustang fanatics of the 70s and 80s -- and fans of both can be quite intense and still dote on their treasured vehicles to this day.)
in the end, though, "limited" doesn't really mean anything -- the number can refer to 10 or 1,000. The lawsuit states that the value of each of the 2007 Mustangs was harmed by the additional 100 cars made in 2008. But is this what true fans are really worried about? I doubt it -- it's hard to think of these vehicles as long-term investments. Their attraction comes more from being something unique. Perhaps it's a bit of both. The lawsuit, though, is claiming more than $12 million in damages. Doing the math, 100 vehicles times $59,000 equals just over $5.9 million. Multiply that by two and you get something close to $12 million. Apparently, the entire value of all 200 Mustangs from 2007 and 2008 are at issue here.
Could it really be just about money? Or is it more a matter of bruised egos? Either way, it could be expensive for Ford, which can't afford to lose another penny.
One 'Lettter' Stocks Offer Opportunity Several companies with single-letter ticker symbols currently offer potential for value investors, says George Putnam. The editor of The Turnaround Letter stock publication highlights a number of single-letter stocks that have been "beaten down pretty badly and now look particularly appealing." They include Agilent ('A'), Citigroup ('C'), Ford Motor ('F'), Kellogg ('K'), Macy's ('M'), NetSuite ('N'), Qwest ('Q'), Spring Nextel ('S') and AT&T ('T'). 'Singular' values: A, C, F, K, M, N, Q, S, T - BloggingStocks
August Trading Strategies August is traditionally one of the worst months for the market. Against an already volatile backdrop, Experts show you 12 ways to navigate the dog days of summer. http://www.marketwatch.com/newscommentary/tradingstrategies
Chrysler is having trouble refinancing a big piece of its debt. According to Reuters, "Chrysler LLC's finance arm said on Sunday it had renewed its credit facilities, but had reduced the amount to $24 billion from $30 billion due to tough credit markets and changes in its retail strategy."
The interest rates on the money Chrysler is bringing in will also go up.
The funding round by the No.3 U.S. car company is only the beginning of a difficult process that will go on over the next few quarters. Ford (NYSE: F) and General Motors (NYSE: GM) will each have to raise money too. By some estimates, each of the larger companies will need as much as $10 billion to cover operating losses through 2010.
GM says it has $21 billion in cash and short-term investments, but its cash losses are over $1 billion a month. Even with new cuts, if cars sales keep falling, GM will need to put more money into its treasury. In the current climate and with GM's junk rating, the capital will come at a dear price.
Money carrying higher interest rates falls into the category of troubles car companies do not need. The sales falloff combined with higher debt service could cause acute financial problems two years from now. At that point, banks may not want to put more money into the industry.
Stock futures were lower Monday morning ahead of a wave of economic data, a tropical storm and, most important, the Federal Reserve meeting and decision Tuesday.
Before the opening bell, the economic calendar includes personal income and spending data for June, as well as the core PCE deflator, an inflation gauge the Federal Reserve eyes closely. Factory orders for June are also due after the open. Oil prices were steady near $125 a barrel Monday as the market kept on eye on both tropical storm Edouard that could turn into a hurricane and hit oil facilities in the Gulf of Mexico, and on further developments in Iran. But most of trading today will likely be affected by expectations the Fed will not change interest rates Tuesday, and issue a neutral statement with the focus changing to the weak economy.
Bank troubles aren't over. HSBC Holdings PLC (NYSE: HBC) reported a significant profit drop as costs for bad U.S. mortgage loans mounted. "HSBC Chairman Stephen Green said the first half of 2008 saw one of the most difficult financial markets for decades." As long as the housing market slump continues, and before the bottom can be seen, no doubt the financial sector will continue to suffer. And given that only about 40% on the $1 trillion expected writedowns were taken, the challenges for financials are far from over. For now, HBC shares are dropping about 3% in premarket trading.
"One group of stocks that has always intrigued us are those whose symbols have one letter," notes George Putnam. The editor of The Turnaround Letter explains, "Odd as this idea may at first seem, it actually makes some sense for a deep value investor. These are often old-line companies with well-known brand names. In some cases the single letter symbols were awarded many decades ago."
After reviewing the 19 stocks with single letter symbols (7 are currently unused), Putnam offers six that he says, have been "beaten down pretty badly and now look particularly appealing."'
"Agilent Technologies (NYSE: A), which makes electronic and bio-analytic measuring devices, was spun out of Hewlett-Packard in 1999. Revenues surged in 2000 as did the stock price, reaching a lofty 162.
"But the company subsequently suffered along with its customers in the communications and technology sectors. However, the financials are sound, including strong cash flow that is supporting a $2 billion share buyback, and management has been restructuring and realigning operations for long-term growth.
U.S. stock futures were higher Wednesday morning, indicating markets could start on a positive note after two days of declines. Good results from Hewlett-Packard helped lift sentiment, overshadowing financial sector concerns, despite new worries over Fannie and Freddie. Oil remained steady ahead of inventory report later today.
Daimler AG
More bad news for 
This post is one in a series on prominent company nicknames. 
U.S. automakers, late to recognize the sales implications of spiraling gas prices, have started to adjust their business models, in at least one modest respect: some luxury cars are now being designed to run on regular unleaded gasoline, 
When you sell something as a "limited edition," you better mean it. But it turns out that a recent limited edition of the 
Stock futures were lower Monday morning ahead of a wave of economic data, a tropical storm and, most important, the Federal Reserve meeting and decision Tuesday. 
Slow approach to raising bank capital loses the race against write-offs
Cramer on BloggingStocks: The SEC's waffling will be deadly
How Fannie and Freddie will fail
