WSJ gives GM more generous coverage

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General Motors CEO Fritz Henderson and his PR corps have managed to drum up quite a bit of press for his allegedly new, more transparent, consumer-friendly approach to running a car company. The Wall Street Journal reports (subscription required) that "Mr. Henderson is planning various ways to remain the face of GM's turnaround effort, including a consistent string of media interviews and monthly national road shows starting in August, during which he plans to meet with dealers and interact with customers."

Tell Fritz is a new Twitter-like blog format where consumers can interact with the top man at GM. Someone hysterically, it's even equipped with Google Ads for companies like Fritz Hansen Furniture and Fritz the Schnauzer -- Multiple streams of income, here GM comes!

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WSJ gives GM more generous coverage originally appeared on BloggingStocks on Tue, 21 Jul 2009 14:40:00 EST. Please see our terms for use of feeds.

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Tuesday Linkage

Tuesday linkage  — something for everyone:

•  Bernanke Disarms Lawmakers With Garage Meetings, Credit Repairs (Bloomberg) see also Bernanke Heads to Congress Battling Calls to Tame the Fed (WSJ)

Are Manufacturers Also Too Big to Fail? (NYT)

At N.Y. Fed, Blending In Is Part of the Job: Some Fear Wall Street Too Heavily Influences The Financial Enforcer  (Washington Post)

Why Japan Isn’t Rising (Newsweek)

Distressed Assets Market and FDIC Closures (Real Property Alpha)

Morgan Stanley’s Albatross: Real Estate (WSJ)

Bailout Overseer Says Banks Misused TARP Funds (Washington Post)• Is Something Wrong with Certain Kinds of Trading? (Cassandra Does Tokyo)

Patternicity: Finding Meaningful Patterns in Meaningless Noise (Scientific American)

Yahoo to Launch New Homepage (WSJ)

10 Worst Evolutionary Designs (Wired)

Why did I miss — anything linkworthy?


VC first-time infusions hit 15-year low

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Venture capital funds found 612 companies in which to invest $3.67 billion in Q2. Of this, $1.5 billion (41%) was first-time financing, according to a report by PricewaterhouseCoopers and the National Venture Capital Association. This is only slightly ahead of the action in Q1, in which 141 transactions were first-time, and far behind the pace we enjoyed earlier this decade.

The biotech sector was the big winner in a shrinking market, with funding up 54% to $888 million over 85 deals. The software business was flat quarter-over-quarter at 4644 million over 135 transactions. Investments in internet companies fell 15% to $524 million via 124 deals. Clean technology showed considerable growth, up 15% to $274 million, with 42 transactions closed.

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VC first-time infusions hit 15-year low originally appeared on BloggingStocks on Tue, 21 Jul 2009 14:20:00 EST. Please see our terms for use of feeds.

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Revealing the Secret Coup Against Lehman Brothers’ Dick Fuld

In June 2008, a dozen of Lehman Brothers Holdings’ top executives met secretly at a private dinning club on the Upper East Side off Manhattan to plot a palace coup.

lehmanbook_CV_20090721151117.jpg(Courtesy of Crown Business)

The insurgents decided Chief Executive Dick Fuld and President Joe Gregory, two old friends who had run the securities firm for years, could no longer be trusted. They decided to push out Gregory and force Fuld to accept his resignation. “This was done behind my back,” Fuld said when told of Gregory’s fate.

This just one of the juicy tidbits in a new, insider’s account of Lehman’s collapse, titled “Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers.” It was written by Lawrence McDonald, a former vice president in distressed debt and convertible securities trading at Lehman.

McDonald’s book sheds new light on the first draft of Lehman history that often was refracted through the prism of the firm’s old guard, who were trying to put the best face on a disaster. Gregory’s resignation on June 12, 2008, for instance, was described at the time as that of a loyal lieutenant falling on his sword to quiet Lehman’s outside critics. Fuld reportedly refused to accept his resignation.

McDonald’s account, as told to him by colleagues who attended the dinner, gives new credence to the notion that there was deep dissension in the Lehman ranks and that Fuld, after some resistance, quickly agreed to Gregory’s ouster. Here are excerpts of McDonald’s description of the secret dinner meeting:

“The food was lavish, the claret would have met with the approval of Bobbie Lehman himself and the bill was $7,000….By the time Tom Humphrey (global head of fixed income sales) began to pass around a decanter of rich vintage port, it had become blatantly obvious that drastic action was called for.”

McDonald describes Fuld as “squirming in his chair” as he refused to deliver the bad news to his old friend, Gregory. The author also says Gregory “did not go quietly.” “Fingernail marks etched the top of his desk.”

McDonald’s writing at times is over the top and prone to hyperbole. The second half of the book, which details the firm’s collapse, is much more lively than the first part, which describes Lehman corporate history. It also seems clear that McDonald has his favorites at the firm. For example, he goes easy on Gregory’s successor, Bart McDade, whom others have criticized for not acting aggressively enough to pull the firm back from the brink after he became president in June 2008.

Any insider account is likely to be fraught with bias, but McDonald’s account is useful in revising the next draft of financial meltdown history. At least now we know that future of Lehman, which ultimately ended in one of the largest bankruptcies in history, was being decided over a $7,000 Last Supper.


Venture capital: Back to the future

To cheer themselves up in these dark times, Silicon Valley’s venture capitalists have taken to drawing comparisons with tech’s pre-bubble days. If investment activity has returned to levels seen in the mid-1990s, the argument goes, this at least represents a healthy baseline: it is the “new normal” from which things start to pick up again.

So they should get a kick out of the latest figures from the National Venture Capital Association. Based on the $3.7bn put to work in the second quarter (up a little from the first quarter, but down by more than 50 per cent from a year ago), the total invested this year is projected to reach 1996-1997 levels. Of course, back then the VC industry provided a living for far fewer people. The shake-out has barely started.

SanDisk: Stifel Sees Upside, Auriga Reiterates “Sell”

Strength in the NAND flash memory chip market, and from Apple’s (AAPL) iPhone in particular, should help SanDisk (SNDK) beat expectations when it reports Q2 earnings when it reports tomorrow, according to a note today from Stifel Nicolaus analyst Patrick Ho.

Ho doesn’t formally cover SanDisk: he’s more interested in the implications for some of his coverage companies, including Teradyne (TER) and Verigy (VRGY), both of which he rates “Buy.” Those two companies make chip test equipment.

“We believe the company (and the overall NAND flash market) has seen a pickup in handset demand, as well as continued strength in many Apple-based products (including the iPhone 3G S),” writes Ho. Ho is watching tomorrow’s announcement to see what SanDisk says about chip-equipment capital expenditures.

In a separate note today, Auriga Securities analyst Daniel Berenbaum reiterated his “Sell” rating on SanDisk, writing that the company is too “consumer focused,” and his “checks” indicate that price increases on retail flash memory drives are starting to fade. WIth seasonally normal unit volume expected in flash drives for the second half of this year, Berenbaum thinks SanDisk may only make the middle of its forecast revenue range of $650 million to $725 million, which would be less than the consensus estimate of $708.6 million.

SanDisk shares today are down 50 cents, or 2.7%, at $18.12.

Solar Panel Maker Is Out of This World

Solar panels in space? It sounds more like science fiction than a business, but one early-stage company has raised money from investors to launch solar panels into space, and to then use high-powered radio waves to beam back energy back to Earth.

Manhattan Beach, Calif.-based Solaren raised $600,000 from investors for its business of delivering power from space, according to a recent regulatory filing.

No information about the investors was immediately available. The company had previously raised $1.3 million from friends and family in December 2006, according to regulatory documents.

 

The company says it will deliver power to California’s Pacific Gas & Electric Co. by 2016, according to a statement on the utility’s website. In fact, PG&E has already signed an agreement to purchase 200 megawatts of electric energy from the startup, company CEO Gary Spirnak said in an April interview with the Cleantech Group.

 

Because space solar arrays are not affected by cloud cover and other atmosphere impurities and can be positioned in a high orbit to receive the sun’s light 24 hours a day, the technology is considered eight to 10 times more efficient than terrestrial solar arrays, according to PG&E.

 

Having a large public utility such as PG&E interested in buying energy from Solaren’s technology helps interest investors, Spirnak told the Cleantech Group. He also said that he hopes to raise “billions” of dollars for his business plan.

 

Is Anybody Else Out There?

Solaren isn’t the only company that is working on collecting solar power from space. Japan’s space agency, JAXA, is also looking at how to deploy a similar system, but it is not planning to have anything available for launch before 2030, according to the space agency.

 

Angel investors, presumably the investors that Spirnak is reaching out to, may be more skeptical than he realizes.

 

“As of now, there remain major unsolved technical issues with this type of project,” says Burton Lee, principal and co-founder of the Space Angels Network. Lee says that he has seen two similar startups aim to collect solar power from space. He says that he’s wary of entrepreneurs pushing for this type of commercial space endeavor.

 

“Space advocacy groups need to take care not to let their justifiable enthusiasm for human exploitation of space resources color their professional judgment as to near- and medium-term feasible space businesses and technologies,” he says.

 

If solar power from space sounds like it has a science fiction bent to it, that’s because it does. The concept was proposed in 1941 by science fiction author Isaac Asimov in his short story “Reason,” which tells the tale of two astronauts who are assigned to a space station that supplies energy via microwave beams to the planets.

 

The robots that control the energy beams have highly developed reasoning ability. Using these abilities, the robots decide that space, stars and the planets beyond the station don’t really exist, and that the humans that visit the station are unimportant, short-lived and expendable.

 

Outside of science fiction, however, the Pentagon’s National Security Space Office gave space-based solar power high marks in a 2007 report:

 

“There is enormous potential for energy security, economic development, improved environmental stewardship … and overall national security for those nations who construct and possess a.”

 

The Pentagon says that it is looking at a space-based solar power constellation as one possible method of supplying energy to U.S. troops in bases or on the battlefield. In the meantime, Solaren’s website (www.solarenspace.com) consists of one page with an animated company logo and the motto: “Energy for tomorrow with the technology of today.”

 

The Cleantech Group reported that Spirnak and other Solaren employees have backgrounds from the aerospace business and have been in talks with such companies as Lockheed-Martin and Boeing to build the solar plant and the rockets needed to launch its operations into orbit.

 

Little is known about Spirnak, other than he was a spacecraft project engineer in the U.S. Air Force and previously worked at Boeing. Whether or not Spirnak has experience running a solar power startup may not matter.

 

Venture capitalists have decreased their investment pace in solar startups since the financial crisis late last year. VCs put $150 million into 17 solar-related companies during the second quarter, according to preliminary data from Thomson Reuters. That’s down from the $660 million they invested into 28 companies during the same period a year ago.

This story first appeared in PE Week, a sister publication to peHUB.

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Chasing Value: Chinese buying into Diageo

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It was announced today that China's sovereign wealth fund has acquired 1.1% of the worlds largest alcoholic beverages maker Diageo PLC (NYSE: DEO), a deal valued at $365 million.

  • "The move by China Investment Corp, which manages $200bn of the country's $2,132bn in foreign exchange reserves, makes the fund the UK-based groups' ninth-largest investor."

It was only last week I wrote about Diageo, stating: "the kind of stock you might pick if you only owned one stock in the universe"

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Bob Nardelli Returns To Cerberus

DETROIT (Reuters) - Former Chrysler Chief Executive Bob Nardelli has returned to Cerberus Capital Management as an adviser, the private equity company said on Tuesday.

Nardelli, who left Chrysler in June after the automaker emerged from bankruptcy, will oversee and supervise the management and operation of Cerberus’ investments in different companies.

Chrysler emerged from Chapter 11 bankruptcy protection on June 10 after completing the sale of its best assets to a group led by Fiat (FIA.MI). Cerberus was the former majority owner of Chrysler.

Established in 1992, Cerberus and its affiliates have about $24 billion under management.

Nardelli took the helm of Chrysler in August 2007 shortly after Cerberus acquired a 80.1 percent stake from Daimler AG (DAIGn.DE) with a pledge to rescue a falling American icon.

His efforts to turn around the smallest U.S. automaker with sweeping cost cuts were overwhelmed by a brutal industry downturn. Chrysler sales fell 30 percent last year and tumbled 45 percent in the first quarter of 2009.

Prior to his tenure at Chrysler, Nardelli was CEO and chairman of Home Depot (HD.N). (Reporting by Soyoung Kim; editing by Jeffrey Benkoe)

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Agencies

Agency spreads are 2 basis points to 3 basis points tighter across the curve. One traded averred that the Bernanke restatement that financing would be low for that famous “extended period” generated some buying in the under one year sector.

Home Loan announced a 3 year deal which will price tomorrow. It will probably be $ 3billion and spread talk is T+ 36.


Married and Merry in the Recession

Love may be blind, but when it comes to saying “I do” many look at the price-tag.

A new paper confirms what previous economic research found: The cost of marriage affects decisions to marry.

Do cheaper weddings make marriage more inviting? (Getty Images)

To quantify the concept, economists Kasey S. Buckles of the University of Notre Dame, Melanie E. Guldi of Mount Holyoke College, and Joseph Price of Brigham Young University look at states’ blood test requirements for the betrothed.

In the 1980s most states required a blood test in order to obtain a wedding license. The legislation was an effort to contain the spread of sexually transmitted, but by 2006 it had been phased out in all but two states, Mississippi and the District of Columbia, as new vaccines and cheap treatments made the premarital screening obsolete.

On average, the paper shows, when blood test requirements are in place states issue 5.7% fewer marriage licenses. About half the difference is due to couples flocking out of state for the wedlock, and half of it to sweethearts deciding against marriage altogether.

The study also found that blood-test requirements increase the number of out-of-wedlock first-time mothers, especially among the young, African-American and those without a high-school degree, indicating that for low-income segments of the population the financial burden of blood tests may be higher.

But the heaviest “costs” of premarital screening programs, the research seems to suggest, are psychological rather than pecuniary. Some dread the doctor’s office or the sight of blood, while others fear testing positive and “having to reveal that condition to one’s partner,” write the authors. In some cases, “the act of submitting to a blood test and waiting for results induces a waiting period for a marriage license that might deter spur-of-the-moment marriages,” write the economists.

But if time is so precious that the prospect of wasting it can deter some people from the ultimate commitment, having more of it may well bring more people to the altar (or the city hall). It makes one wonder whether recessions, with the slowdown in economic activity and spiking joblessness, may raise the wedding rate by lowering the cost of marriage.

Here’s some preliminary evidence: The sour economy has unleashed a wave of dating as some have thrown themselves in the hunt for that-special-someone “with the same fervor others are showing hunting for jobs,” the Associated Press reported three weeks ago. eHarmony membership is up 20% — how’s that for a silver lining.


State Street (STT) Q2 earnings disappoint

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STT logoState Street (NYSE: STT - option chain) stock is falling today after the company reported a second-quarter loss of $3.3 billion or $7.12 per share, hurt by charges related to the consolidation of the asset-backed commercial paper conduits onto the company's balance sheet and its TARP repayment. Excluding one-time items, STT earned 79 cents per share, missing analysts' estimates of 97 cents per share. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on STT.

This morning, STT opened at $48.81. So far today the stock has hit a low of $45.98 and a high of $48.77. As of 11:45, STT is trading at $46.91, down $1.90 (3.9%). The chart for STT looks bullish and S&P gives STT a positive 4 STARS (out of 5) buy ranking.

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State Street (STT) Q2 earnings disappoint originally appeared on BloggingStocks on Tue, 21 Jul 2009 13:40:00 EST. Please see our terms for use of feeds.

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