Electronic Arts To Buy Playfish For Up To $400 Million

Electronic Arts (ERTS) this morning said it will acquire Playfish, a creator of social network games. Terms call for ERTS to pay $275 million in cash and about $25 million equity retention agreements; the company will pay out up to another $100 million in cash contingent on certain performance milestones through the end of 2011.

Playfish has over 60 million active players across 10 titles on Facebook, MySpace and other platforms.

ERTS today is up 29 cents, or 1.5%, to $19.29.

News Corp. May Block Google From Searching Newspaper Content

News Corp. (NWS) CEO Rupert Murdoch said the company will eventually remove stories from Google’s (GOOG) search index as a way to encourage people to pay for content online, according to a story in the Guardian, which apparently was based on an interview Murdoch did with Sky News Australia.

News Corp. publishes The Wall Street Journal, The Times of London, the New York Post, the Sun, among other newspapers. (As well as this blog.)

Murdoch said in the interview that the company could eventually remove its sites from Google indexes once it starts charging for additional publications online. The company already charges subscription fees for the WSJ and for Barron’s, but stories for both publications are being indexed by Google.

“I think we will, but that’s when we start charging,” he said. “We have it already with the Wall Street Journal. We have a wall, but it’s not right to the ceiling. You can get, usually, the first paragraph from any story - but if you’re not a paying subscriber to WSJ.com all you get is a paragraph and a subscription form.”

As the Guardian notes, WSJ.com articles found via Google searches are typically provided in full.

“The people who simply just pick up everything and run with it – steal our stories, we say they steal our stories - they just take them,” Murdoch reportedly said. “That’s Google, that’s Microsoft, that’s Ask.com, a whole lot of people … they shouldn’t have had it free all the time, and I think we’ve been asleep.”

Exclusive: Ronnie Lott Waves Goodbye

Former NFL star Ronnie Lott has resigned as an executive with Capital Dynamics, the Swiss alternative asset manager that earlier this year assumed management control of funds-of-funds raised by Lott and others under the HRJ Capital brand.

In a brief email obtained by peHUB, Capital Dynamics thanked Lott for “for his contributions to the company and wish him well in his future endeavors.”

For the uninitiated, HRJ was formed in 1999 by ex-San Francisco 49ers stars Lott and Harris Barton, with Joe Montana joining the following year. It was originally called Champion Ventures, and invested professional athletes’ money in venture capital funds like Accel Partners, Benchmark Capital, Kleiner Perkins Caufield & Byers, Mayfield Fund, MDV, Sequoia Capital, Summit Partners, Redpoint Ventures and Technology Crossover Ventures. Montana left in 2006, by which point the since-rechristened HRJ Capital had broadened both its investor base (institutional investors) and investment strategy (buyouts, real estate, hedge).

It was one of the Valley’s most popular investment shops, but was ultimately felled by a dangerous reliance of “warehouse loans” — or bridge financing that allowed HRJ to invest out of funds-of-funds that weren’t actually raised yet. This worked fine when the fund-raising environment was rolling, but proved disasterous late last year when HRJ invested nearly all of a $250 million-targeted fund that only managed to raise between $110 million and $130 million.

HRJ subsequently defaulted on its loan to Silicon Valley Bank, which included certain management company assets, including revenue streams, as collateral. The immediate result was that many paychecks stopped being printed, and personnel began departing. Sources also say that the collateral included some of Lott and Barton’s personal assets, including at least part of the mortgage on one of Lott’s homes.

Around three months after the default, Capital Dynamics agreed to swoop in and take over management of the HRJ funds-of-funds. It also reached an agreement with Silicon Valley Bank, which included at least a partial repayment of the defaulted loan. It is important to note, however, that Capital Dynamics did not acquire HRJ Capital itself, a shell company that wound down operations save for some pending litigation brought by ex-employees.

The goal for Capital Dynamics was to expand its U.S. fund-of-funds business, which was formed in 2005 via the acquisition of Westport Private Equity. It specifically cited the expected contributions of Lott and Barton, who are both known to have deep relationships within the Silicon Valley investment community.

Capital Dynamics is not currently commenting on Lott’s departure — the firm says personnel matters are private — but conventional wisdom is that Barton was more important than Lott, who had spent the past several years working on a hedge fund platform that is no longer operational. Barton, on the other hand, continues to be out and about, particularly as part of the effort to raise a new fund-of-funds called Champion Ventures VII.

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Probing HBOS

It's right there -- on page 114 -- in case you missed it.  The full prospectus for Lloyds Banking Group's heroic capital raising, finally confirms the following: FSA supervisory review into historical HBOS disclosures The FSA is conducting a supervisory review into the accuracy and completeness of financial disclosures made by HBOS in connection with its capital raisings in 2008,...

The Long, Slow Pursuit of Cadbury Begins

Where’s the sweetener?

Some analysts had expected Kraft to bump its bid price when the firm made its formal offer for Cadbury today. Instead, Kraft offered 300 pence in cash and 0.2589 new Kraft share per Cadbury share — the same terms as it offered publicly two months ago. But thanks to a slide in Kraft’s shares and the weakening dollar, the bid values Cadbury’s shares at 717 pence down from 745 pence. Not surprisingly, Cadbury wasted little time in rejecting the formal bid.

Kraft had good reason not to increase its offer. Since Sept. 7, no rival bidder emerged for Cadbury; Warren Buffett, Kraft’s largest shareholder, had said the previous Cadbury offer was “pretty full;” and some Cadbury shareholders have said they would accept a more modest increase. Simply put: In formalizing its offer, there was no reason for Kraft to bid against itself.

But Kraft might not be eager to walk away. Its lackluster results last quarter are likely to make Cadbury’s faster-growing business look even more enticing. More so, the offer is just the first step in what is likely to be a protracted process that produces a bit more for Cadbury shareholders.  That seems to be what investors seem to think. Cadbury shares inched ahead to 760 pence each.

Here are some reactions from analysts:

Edward Aaron, RBC Capital Markets: “Overall, we see this as a non-event. Given the lack of competing bidders, we (and others) were not surprised to see Kraft put forward an offer similar to the initial proposal. We would not be surprised to see Kraft raise the bid down the road, but we certainly do not expect the >850p contemplated by some.

Terry Bivens, J.P. Morgan: “We do not expect this bid to force Cadbury’s board to the negotiating table. But this is simply the first concrete step in what we expect to be a protracted process. As a reminder, KFT now has 28 days to post the offer documents. It then has another 46 days to revise the price, taking us to Jan. 22 of next year.”

Clive Black, head of Research at Shore Capital: “Undoubtedly Cadbury will reject the bid but it will give shareholders something to think about. The process will be drawn out and they will come back with a higher offer, although not as high as some are speculating about.”

Matt Arnold, Edward Jones: “There’s a good chance they (Kraft) will have to increase this a little bit. I still think the cash side is likely where they have the opportunity to make it more attractive to Cadbury shareholders.”


Bank of America’s board of directors fights over Lewis’ successor

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The Bank of America (BAC) travesty of corporate governance continues to grow increasingly tragicomic.

A quick recap: Bank of America's board of directors took way too long to kick CEO Ken Lewis to the curb and now it can't pick a successor because of infighting. Meanwhile, the board and the company's executives -- including those who are being considered for the CEO job -- have made such a mess of the whole thing that no one who isn't already part of the company will consider taking the job.

Charlie Gasparino of CNBC reports:

Continue reading Bank of America's board of directors fights over Lewis' successor

Bank of America's board of directors fights over Lewis' successor originally appeared on BloggingStocks on Mon, 09 Nov 2009 12:00:00 EST. Please see our terms for use of feeds.

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Stock Market Returns Lost in Translation

One of the side effects of a weaker dollar is that the returns for foreign investors who invest in US assets are diminished. While the value of the asset may rise in dollar terms, if the dollar is losing value, the investor takes a hit when they convert their funds back into their domestic currency. For example, while the S&P...


JA Solar Jumps; Morgan Stanley Turns Bullish

JA Solar (JASO) shares are getting a boost today from Morgan Stanley analyst Sunil Gupta, who today raised his rating on the stock to Overweight from Equal Weight, setting a price target of $5.30. The stock closed Friday at $3.71.

“JA Solar is a globally competitive low-cost cell producer now trading below replacement cost,” Gupta writes in a research note. “Besides offering strategic value, it also offers trading value,” trading below book value, with a P/E of 12.4x estimates 2010 recurring EPS. He thinks the company will gain market share against higher-cost U.S. and European solar cell manufacturers.

He says shipments may have grown 75% in Q3; he expects 60% shipment growth in 2010.

Gupta lifted his 2010 EPS estimate to 20 cents, from 7 cents; for 2011 he goes to 28 cents, from 20 cents.

JASO today is up 28 cents, or 7.6%, to $3.99.

Energy Conversion Devices: FY Q1 Misses; Suspends Guidance

Energy Conversion Devices (ENER) this morning posted revenue for its fiscal first quarter ended September 30 of $42.9 million, down from $95.8 million a year ago and $51.4 million in the June quarter, and well below the Street at $56.4 million. The company lost 34 cents a share in the quarter before special items, which was 3 cents worse than the Street consensus.

The thin-film solar products company noted in a statement that new construction and re-roofing projects “continued to be slow, negatively impacting sales” through building materials channels.

On a conference call with the Street, the company said that its full-year revenue guidance “is no longer applicable,” noting that its project business is “uneven with large discreet orders where the shipments and timing of revenue recognition are difficult to precisely forecast.”

The company did say that on a megawatt basis, production in Q2 would be flat with Q1, and ASPs in the December quarter are likely to be down in the high single digit to low double-digit range.

ENER today is down 46 cents, or 4%, to $11.03.

Senate Bill Would Break-Up TBTF Banks

“If an institution is too big to fail, it is too big to exist. We should break them up so they are no longer in a position to bring down the entire economy.”

-Senator Bernie Sanders, (I, Vt)

“It’s the natural action of capital to grow and exceed. Now we’re going to contain it.”
-Representative Paul Kanjorski

>

Everyone this weekend was so busy watching the Health care bill, that they might have overlooked the most important financial reform legislation since the Commodities Future Modernization Act: A bill is gaining ground in Congress that would “break-up” big banks.

Independent U.S. senator Bernie Sanders has introduced the Volcker Plan. It gives the government the power to identify and break up financial firms that are “too big to fail.”

“In the aftermath of the worst financial crisis in decades, nations are trying to determine what to do about banks and financial firms that are so large that their failure could threaten the stability of the global financial system.

The goal is to prevent another debacle like last year’s when Lehman Brothers collapsed, triggering a credit crisis and huge taxpayer bailouts of AIG (AIG.N), Citigroup (C.N), Bank of America (BAC.N) and others . . .

Another approach, which Sanders and others back, would be to prevent the firms from getting so big in the first place. Sanders’ legislation would give Treasury Secretary Timothy Geithner 90 days to list commercial banks, investment banks, hedge funds and insurers that he deems too big to fail.

The bill defines that as “any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance.” It would give a new government systemic risk council break-up power, with clearance from the president.

Larger banks are expected lobby aggressively against it — but mid-sized and smaller financial institutions might be supportive. The bailouts have created an oligopoly, which makes it challenging for the smaller banks to market themselves.

The regional banks — the ones that are not TBTF — could find a more level playing field in which they could better compete in the market place, if this bill becomes law. Currently, they are at an enormous disadvantage versus the government subsidized giants . . .

>

Sources:
A BILL To address the concept of ‘‘Too Big To Fail’’ with respect to certain financial entities.
http://sanders.senate.gov/files/AYO09C99.pdf

TOO BIG TO FAIL – TOO BIG TO EXIST
November 6, 2009
http://sanders.senate.gov/newsroom/news/?id=b8b8fce1-60b9-4a4b-9bd8-a774761b2182

Big bank “break-up” idea gains ground in Congress
Kevin Drawbaugh
Reuters, Nov 6, 2009
http://www.reuters.com/article/BROKER/idUSN0618960720091106

111THCONGRESS
1STSESSION

To address the concept of ‘‘Too Big To Fail’’ with respect to certain financial entities.

IN THE SENATE OF THE UNITED STATES
Mr. SANDERS introduced the following bill; which was read twice and referred to the Committee on A BILL

To address the concept of ‘‘Too Big To Fail’’ with respect to certain financial entities.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Too Big to Fail, Too Big to Exist Act’’.

SEC. 2. REPORT TO CONGRESS ON INSTITUTIONS THAT ARE TOO BIG TO FAIL.
Notwithstanding any other provision of law, not later than 90 days after the date of enactment of this Act, the Secretary of the Treasury shall submit to Congress a list of all commercial banks, investment banks, hedge funds, and insurance companies that the Secretary believes are too big to fail (in this Act referred to as the ‘‘Too Big
to Fail List’’).

SEC. 3. BREAKING-UP TOO BIG TO FAIL INSTITUTIONS.
Notwithstanding any other provision of law, beginning 1 year after the date of enactment of this Act, the Secretary of the Treasury shall break up entities included on the Too Big To Fail List, so that their failure would no longer cause a catastrophic effect on the United States
or global economy without a taxpayer bailout.

SEC. 4. DEFINITION.
For purposes of this Act, the term ‘‘Too Big to Fail’’ means any entity that has grown so large that its failure would have a catastrophic effect on the stability of either
the financial system or the United States economy without substantial Government assistance.


Inflation expectations continue to rise

On the heels of the status quo G20 meeting over the weekend that has hit the US$ today and buoyed commodities, the implied inflation rate in the 5 year TIPS is rising 8 bps from Friday to 1.86% (vs 1.72% one week ago), matching the highest level since Sept 1st ‘08 and expectations 10 years out have risen to 2.23% (vs 2.04% one week ago), up 7 bps from Friday and at the highest since Aug 21st ‘08.


Nike’s new marketing campaign may be a bit insensitive

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I promised myself that I wasn't going to give Nike (NKE) the publicity that it wants with its new rivalry uniforms. You see, the company has decided that 10 colleges will wear specially designed uniforms for their big rivalry games this year, assigning the slogan "Prepare for Combat" to the program.

For example, The Ohio State University will wear "retro-inspired" uniforms when it takes the field against that team from up north (Michigan). I was worried when I heard that Nike was designing this uniform; Ohio State doesn't do alternate uniforms -- they never have. Honestly, it isn't all that bad; the jersey leaves a little to be desired, but perhaps that is just me.

Continue reading Nike's new marketing campaign may be a bit insensitive

Nike's new marketing campaign may be a bit insensitive originally appeared on BloggingStocks on Mon, 09 Nov 2009 11:30:00 EST. Please see our terms for use of feeds.

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Blowing emerging bubbles

Risk appetite is back, and with it, the search for yield in emerging markets. According to the WSJ, US investors have pumped roughly $26bn into emerging-markets funds this year, $15bn of which was invested via exchange-traded funds. All well and good. But as the search for yield intensifies, so do fears that a global bubble is forming afresh....

Two More New High Notables

Along with the Dow hitting new bull market highs today, two other notable securities have done the same. As shown below, Google (GOOG) broke to new highs this morning and is now trading above $560. One of the more popular China ETFs (FXI) also broke above its October highs and is now trading at $45.55. Both of these names are...


NBC Universal Worth $30B, Comcast and GE Agree

NBC Universal is worth about $30 billion, Comcast (CMCSA) and General Electric (GE) agree, according to the Wall Street Journal, citing “people familiar with the matter.” That meeting of the minds on the valuation of NBCU brings a deal for Comcast to buy NBCU a little closer to reality. The WSJ says a deal could come as soon as the end of this week.

The piece note, though, that Vivendi, which owns 20% of NBCU - GE owns the rest. The Journal says it is unclear whether Vivendi supports the deal Comcast and GE are sketching out.

Under terms now being considered, Comcast would contribute cash and merge its own cable networks with NBCU in return for an initial 51% stake GE would own 49%, and Vivendi would sell its stake. Comcast would buy GE’s stake over a seven-year period, using a formula tied to the performance of both NBCU and similar businesses.

In today’s trading:

  • CMCSA is up 28 cents, or 1.9%, to $14.87.
  • GE is up 50 cents, or 3.2%, to $15.82.

Analyst upgrades, downgrades and initiations: ANF, AZN, BX, GPS, PH, RAIL, VRSN …

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Analyst upgrades:

  • Keefe Bruyette upgraded Blackstone Group (BX) to outperform from market perform following the company's Q3 results and maintains an $18.50 price target on shares.
  • Baird upgraded Astec (ASTE) to outperform from neutral citing relative valuation and upside from new multi-year U.S. highway funding legislation. The firm raised its target to $33 from $27.
  • Goldman upgraded Abercrombie & Fitch (ANF) to conviction buy from neutral citing "significant" long-term growth drivers that include international growth. The firm raised its target to $45 from $36.
  • Ariad Pharmaceuticals (ARIA) was upgraded to overweight from neutral at JPMorgan.
  • Energizer (ENR) was upgraded to overweight from equal weight at Morgan Stanley.
  • AstraZeneca (AZN) was upgraded to buy from hold at RBS.

Continue reading Analyst upgrades, downgrades and initiations: ANF, AZN, BX, GPS, PH, RAIL, VRSN ...

Analyst upgrades, downgrades and initiations: ANF, AZN, BX, GPS, PH, RAIL, VRSN ... originally appeared on BloggingStocks on Mon, 09 Nov 2009 11:10:00 EST. Please see our terms for use of feeds.

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