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Serious Money: The business of politics and vice versa

Sheldon Liber — 2008-09-03T15:15:00+00:00

Filed under: Rants and raves, Exxon Mobil (XOM), Halliburton (HAL), Schlumberger Limited (SLB), Chevron Corp (CVX), ConocoPhillips (COP), Gilead Sciences (GILD), Politics, Presidential elections, Serious Money, Oil, Suntech Power Hldgs ADS (STP), Intuitive Surgical Inc (ISRG), Precision Drilling TR (PDS)

This charming pic-toon of moderation comes from one of my talented long time friends, Ron Overmyer, who has allowed me to share it with our readers. He does a weekly email blast and this is one of his tamer commentaries, one that might give us pause to consider what it means to be objective.

I thought I would take a moment to shout out to any moderates in the audience and say that I too have worried that some of my colleagues may have sacrificed their reputations for objectivity by writing some posts that could be viewed as borderline paid political announcements. Some readers have quipped that this should be included in the disclosure. However, on the occasion that this is true, it is usually so blatant that I would characterize such disclosure as redundant.

Several of my posts contain political commentary but I think our posts should be about investing, not swaying voter opinion. I especially avoid one-sided rationalizations that appear to have a specific agenda -- although I readily admit that on occasion the dividing line may be very fine indeed.

I still have not made up my mind about the upcoming election because I find some merit in the positions of each candidate. But to me the real question on our site remains: where do you put your money in the case of either candidate's success?

For example, Barack Obama is on record as having an interest in windfall taxes for oil companies and I have an aversion to this (see Obama's $1000 giveaway is a take away!). It seems pretty clear that big oil would be happier with McCain in the White House, so if Barack wins I would think Chevron Corp (NYSE: CVX), ConocoPhillips (NYSE: COP) and Exxon Mobil (NYSE: XOM) might not be favorable investments.

On the other hand, companies like Suntech Power Hldgs. (NYSE: STP), Gilead Sciences (NASDAQ: GILD) and Intuitive Surgical Inc. (NASDAQ: ISRG) may do well because Obama wants to stimulate industries that have heavy R&D components.

Now John McCain, and even more so with Sarah Palin on the ticket, is interested in expanding our oil and gas exploration efforts in North America, so companies in those industries might get a boost, although I'm not sure they need it. Companies like Diamond Offshore (NYSE: DO), Transocean (NYSE: RIG) Precision Drilling TR (NYSE: PDS), and Schlumberger Limited (NYSE: SLB) seem like candidates for continued success.

Oddly, the oil companies may favor McCain but not fair well under his administration if conservation trends continue, or the alternative energy industry expands and the exploration exposes any notable finds.

In any case, I believe either candidate will lead to a "Bush is out" relief rally after the election. This, along with falling oil prices, low interest rates, and stabilizing housing prices and financial stocks, all make me optimistic about 2009. It is 2010 that may be in question depending on what our friends in Congress do. If there is anything that makes me lean a little toward the Republican ticket, it is that I am not enthusiastic about one party rule.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of COP, ISRG & PDS.

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ConocoPhillips (COP) exits gas station business

Douglas McIntyre — 2008-08-27T09:10:00+00:00

Filed under: Industry, Exxon Mobil (XOM), ConocoPhillips (COP)

No one wants to own a gas station; the margins are too small. Consumers will only pay so much for petrol. If the price moves up, people begin to ride bicycles.

ConocoPhillips (NYSE: COP) will sell the last 600 stations it owns, walking away from a business that Exxon Mobil (NYSE: XOM) left just a few months ago. According to The Wall Street Journal, "ConocoPhillips is expected to sell the remainder of its 600 company-owned gasoline stations to closely held PetroSun West LLC for $800 million."

The announcement says a great deal about the perverse economics of the oil business. Due to the recent rise in oil prices, pumping oil out of the ground is an excellent business. The profits on $120 crude are stupendous. But the refining industry is awful. Trying to make margins on the gas and diesel from that high-priced oil is extremely difficult. Demand gets hammered by the consumer's inability to absorb the huge increase in fuel prices.

The question, of course, is why any company would get into the business. That says a great deal about the big oil company strategy of dumping stations. Either the people buying them are fools, or the profits in the sector will come back as gas prices drop. If so, Big Oil will look silly.

Douglas A. McIntyre is an editor at 247wallst.com.

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Before the bell: FNM, FRE, AMLN, BMY, AAPL, AMR ...

Melly Alazraki — 2008-08-27T08:18:00+00:00

Filed under: Before the bell, Analyst reports, Analyst upgrades and downgrades, Deals, Microsoft (MSFT), Apple Inc (AAPL), Hewlett-Packard (HPQ), Pfizer (PFE), Bristol-Myers Squibb (BMY), Federal Natl Mtge (FNM), ConocoPhillips (COP), Mattel, Inc (MAT), AMR Corp (AMR), Lilly (Eli) (LLY), Analyst initiations, Economic data, Oil, Housing

U.S. stock futures were lower this morning on fear Tropical Storm Gustav's path may pose a threat to refinery activity along the Gulf of Mexico coastline and some would have to shut down. Indeed, oil prices rose to above $117 a barrel Wednesday. Also in focus today is the upcoming durable goods order to be reported before the opening bell. Meanwhile, the FDIC is considering borrowing funds from the Treasury, amid an expected wave of bank failures. Nine banks have failed so far this year, and the number of troubled U.S. banks rose 30% to 117 in the second quarter.
[Update: Futures turned positive after durable goods unexpectedly gained.]

Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), which stocks jumped big Tuesday, both had several ratings cut by Standard & Poor's. Still, both stocks seem to continue their climb in premarket with Fannie shares up 7.5% and Freddie's up 10%. At least two analysts, from Citigroup and Goldman said Tuesday the situation isn't as bad as it may seem.

From financials to toys: A federal jury awarded Mattel Inc. (NYSE: MAT) $100 million in damages on Tuesday in a federal copyright lawsuit against MGA Entertainment Inc., the maker of the saucy Bratz dolls.

Moving to pharmaceuticals, Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) and Eli Lilly & Co. (NYSE: LLY) shares are down 10% and 1% respectively in premarket trading after four more patients taking their Byetta diabetes medication have died. Baird downgraded Amylin from Buy to Neutral and cut its price target from $37 to $27. Soleil downgraded AMLN from Hold to Sell.

Meanwhile, Bristol-Myers Squibb Co. (NYSE: BMY) and Pfizer Inc. (NYSE: PFE) said that early results from a Phase III study show the companies' blood-clot-drug candidate apixaban did not meet its primary goals.

In Apple Inc. (NASDAQ: AAPL) news, The Guardian reports that "A TV ad for Apple's iPhone has been banned by the UK's advertising watchdog for misleading consumers after it over-hyped the internet capabilities of the smart phone." Since the iPhone does not support Flash or Java, claims that "all the parts of the internet are on the iPhone" are deemed misleading.
And if you missed it Tuesday, iPhone 3Gs now outnumber first generation iPhones.

A recent comScore data release show Microsoft (NASDAQ: MSFT) was the top display advertiser in June 2008, which was due in large part to its promotional campaign for Windows Live Search and other such promotions.

ConocoPhillips (NYSE: COP) plans to sell the rest of its company-owned gasoline stations to closely held PetroSun West LLC for $800 million, The Wall Street Journal reported. As profit margins have thinned of late, oil companies have been exiting the retail gasoline business and focusing on exploring for crude oil.

Analyst calls:

Citi downgraded AMR Corp (NYSE: AMR) from Hold to Sell. Price target increased from $6.70 to $9. Shares are down 4.5% in premarket.
Lehman Brothers initiated coverage of Hewlett-Packard (NYSE: HPQ) with Overweight.

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Obama's $1000 giveaway is a take away!

Sheldon Liber — 2008-08-08T15:41:00+00:00

Filed under: Rants and raves, Apple Inc (AAPL), General Electric (GE), Exxon Mobil (XOM), Johnson and Johnson (JNJ), Chevron Corp (CVX), ConocoPhillips (COP), Politics, Presidential elections, Oil, Headline news

If Barack Obama is receiving advice from "my pal Warren" then he must not be listening. There is no way that Warren Buffett, the national debt hawk, would support Obama's stupid idea of giving another $1,000 back to every family in America. It is reported that he would pay for this by creating a windfall profit tax on oil companies.

This give-away program is an attempt to buy votes plain and simple. It would add to the national debt, discourage oil companies from investing and worse it would handicap American companies more than others and mortgage more of our children's futures.

The last thing the people of the United States need is more deficit spending. If we did tax oil companies, which I am against, I would only support using the funds for expanding education, research and development in science and engineering with the goal of maintaining our waning leadership in technology.

We need to do things that increase our productivity. Increasing our dependency on government handouts is a colossal mistake.

The so-called windfall profits of the oil companies is another thing I question. The profits are large because the demand is high and the gross receipts are high. It is simply a big number, not necessarily a high margin. When the profits were absent during periods of lower oil prices, nobody said anything.

Here are some net profit margin facts.

Three oil companies:

Exxon Mobile (NYSE: XOM) 11.32%
ConocoPhillips (NYSE: COP) 6.93%
Chevron Corp (NYSE: CVX) 9.16%

Three popular large non-oil companies in three different industries:

Apple Inc. (NASDAQ: AAPL) 14.56%
Johnson and Johnson (NYSE: JNJ) 17.31%
General Electric (NYSE: GE) 13.09%

I would much prefer to hear anything about balancing budgets, or even just slowing down spending, not more government taxing and spending. In the end Obama's give-away would be a take-away!

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of COP, GE, & JNJ.

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3 blue chips to watch, the one stock to buy now & car stereos disappearing - Today in Money 7/29

Allan Halprin — 2008-07-29T09:45:00+00:00

Filed under: Cisco Systems (CSCO), Wal-Mart (WMT), Starbucks (SBUX), General Motors (GM), XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), Exxon Mobil (XOM), Sony Corp ADR (SNE), Money and Finance Today, Merrill Lynch (MER), ConocoPhillips (COP), NIKE, Inc'B' (NKE), Alcatel-LucentADS (ALU), Amgen Inc (AMGN), Burlington Northern Santa Fe (BNI)

In the News:

· Merrill Lynch to Sell Bad Assets and Issue New Stock to Raise $8.5 Billion

· U.S. Drivers Drive 9.6 Billion Fewer Miles in May; 3rd Largest Drop in 66 Years

· U.S. Deficit Zooms to Half-Trillion as Bush Leaves Office

· Sony Profit Plunges 50%

· GM Cuts 1,760 More Jobs

· British Airways & Iberia Mull Merger

· Alcatel-Lucent CEO Patricia Russo to Step Down

· Linens 'n Things to Close 30 Fewer Stores Than Announced in May

· Amgen Earnings Surprise to Upside; Stock Rises

· XM & Sirius Merge, Forming Sirius XM Radio

· Starbucks to Close Most of Its Australia Stores By This Weekend

· Retailer Mervyn's to File for Bankruptcy Soon Unless Gets Last-Minute Cash Infusion

3 Blue Chip Stocks to Watch
After nearly a decade, these growth stocks are finally showing some signs of life. They include Wal-Mart, ConocoPhillips and Burlington Northern.
Blue chips: A growth spurt - CNNmoney

The One Stock to Buy Now
We asked eight up-and-coming and top mutual fund managers what one stock they would buy now. Some of their recommendations are household names. Others might surprise you. They include Nike, Cisco, ExxonMobil, Noble Corp., Canon, Valeant Pharmaceuticals, Nalco Holding Co and Cognizant.
The One Stock They Would Buy - Kiplinger

Roadblocks Ahead for Low-Cost Cars
Indian billionaire Ratan N. Tata, chairman of Tata Motors, has captured the imagination of auto executives and consumers with his ambitious plan to launch the world's most inexpensive car. The Tata Nano, unveiled early this year and set to go on sale in October, will have a sticker price of about $2,500. With soaring oil prices and steel prices rising over 40% since Tata announced the Nano in January, it has becoming more difficult for Tata to meet its price target. Can low-cost cars hit the market?
Roadblocks Ahead for Low-Cost Cars - BusinessWeek The Nano: Tata's Costly Promise

Are Car Stereos the Next Thing to Disappear in America?
The iPod generation is taking some of the thump-thump out of car audio sales. This year, spending on aftermarket car stereo systems is expected to slip 28%. The category includes everything from CD changers and speakers to satellite radio.
Car stereo sales hit a distressing low note - USATODAY.com

Cold Case: The Death of Ice Cream Magnate Tom Carval
Tom Carvel's ice cream empire churned up a big estate and a bitter fight over his money. Now a lawsuit asks, was he murdered?
Death of Ice Cream Magnate Carvel - Portfolio.com

'Switch Kits' Make It Easier Than Ever To Change Banks
Today, we are bound to our banks like never before, thanks to direct deposit and automatic bill pay, sweep accounts and CDs, credit and debit cards, and expanded brokerage and insurance products, not to mention online banking. But if you want to change banks it has just gotten much easier thanks to switch kits. With this new tool, even those with multiple ties to their old banks can pack up and head for better (or safer) deals.
'Switch kits' help depositors jump ship -Bankrate.com

World's Most Expensive Cups of Coffee
Lenin must be rolling over in his grave. Just 17 years after the collapse of the Soviet Union, the one-time capital of communism is now home to the world's most expensive cup of coffee. The average cup of joe in Moscow is $10.19. Other cities with a pricey cup of joe include Paris at $6.77, Athens at $6.62 and Beijing at $6.28.
World's Most Expensive Cups Of Coffee - Forbes.com

Youngest Female Billionaires
This elite club includes the world's richest author, Barack Obama's finance chief, former factory workers and two 20-something heiresses.
The World's Youngest Women Billionaires - Forbes.com

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Before the bell: COST, YHOO, WM, BA, PEP, PFE, GOOG ...

Melly Alazraki — 2008-07-23T08:05:00+00:00

Filed under: Before the bell, Earnings reports, Analyst reports, Analyst upgrades and downgrades, Deals, Google (GOOG), Yahoo! (YHOO), Pfizer (PFE), PepsiCo (PEP), Amazon.com (AMZN), McDonald's (MCD), AT and T (T), Anheuser-Busch Cos (BUD), Boeing Co (BA), ConocoPhillips (COP), Costco Wholesale (COST), Washington Mutual (WM)

Stock futures were higher this morning, indicating stocks could have a positive start to the session as oil prices continued to decline, sinking below $127 a barrel. Weekly inventories numbers reported later today could have an impact on oil prices. Then there is continued optimism in the financial sector, which caused the rally Tuesday. Also, a bill aimed at helping the housing market will reach the House floor. But once again earnings will likely have investors' attention with Costco already giving a profit warning.

Costco Wholesale Corp. (NASDAQ: COST) shares are plunging over 8% in premarket trading after the wholesale retailer warned its August-ending quarter's profit would miss analyst estimates. This is most surprising as Costco had been one of the retailer that seemed to have benefited from consumers trying to save and buy lower-cost items. But Costco blamed the lower profit on rising energy costs, saying it will earn less than $1 per share.

Washington Mutual Inc. (NYSE: WM) late Tuesday reported second-quarter results, posting a loss of $3.3 billion, was worse than analysts had anticipated. Excluding one-time items, WaMu lost $3.34 per share, much wider than the expected loss of $1.05 per share. Piper Jaffray downgraded WM shares from Neutral to Sell and Friedman Billings halved its target price on the shares from $8 to $4. Shares are off nearly 3% in premarket trading.

Yahoo Inc. (NASDAQ: YHOO) also reported profits and sales that came up short of estimates. Second-quarter profit fell 18% to $131 million, or 9 cents per share. Analysts had projected earnings of 11 cents per share in the most recent quarter, according to Thomson Financial. Revenue grew 6% to $1.8 billion, or $1.35 billion after subtracting commissions, also below estimates. Yahoo! shares, however, are up about 3% in premarket trading since investors were relieved the performance wasn't as bad as many had feared after Google (NASDAQ: GOOG) reported last week and disappointed investors. Also, Yahoo didn't dramatically lower its revenue outlook for the remainder of the year.

Boeing Co NYSE: BA) has just announced results, saying quarterly profit fell due to a charge. The plane maker reported Q2 EPS of $1.16, with $0.22 charge, versus the consensus of $1.23. Revenues came in at $17 billion, versus the consensus of $17.24 billion. Boeing also reaffirmed 2008, 2009 forecast.

PepsiCo (NYSE: PEP) reported higher quarterly profit on Wednesday, as net income rose to $1.7 billion, or $1.05 per share. Excluding items, earnigns per share were $1.03. Net revenue rose 14% to $10.95 billion. The company benefited from strong international demand and the weak U.S. dollar. The company raised its revenue outlook.

Pfizer Inc. (NYSE: PFE) shares are up more than 3% in premarket after the pharmaceutical said second-quarter profits more than doubled. The company earned $2.78 billion, or 41 cents per share. Excluding special items, Pfizer earned 55 cents per share, beating estimates by a penny. Revenue rose 9% to $12.13 billion, of which 7% was due to the dollar. U.S. sales fell 2%.

Another busy day for earnings includes results from McDonald's (NYSE: MCD), AT&T (NYSE: T) and ConocoPhilips (NYSE: COP), Amazon.com Inc. (NASDAQ: AMZN) and Anheuser-Busch Cos (NYSE: BUD) among many others.

In non-earnings news, TechCrunch reports that Google Inc. (NASDAQ: GOOG) is in final negotiations to acquire Digg for "Around $200 Million."

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Cramer on BloggingStocks: Oil, Gas Stocks in a Tug of War

Jim Cramer — 2008-07-01T09:48:00+00:00

Filed under: Exxon Mobil (XOM), Columns, Chesapeake Energy (CHK), ConocoPhillips (COP), IndyMac Bancorp (IMB), Cramer on BloggingStocks

TheStreet.com's Jim Cramer says both oil futures and equity futures can move these hot issues.

Will the futures pull down the oil and gas stocks today? No, I don't mean the oil futures, I mean the equity futur

Last week when oil exploded, we caught two days of trading that dropped the stocks hard. We caught a bit of a bid in the nat gases like Chesapeake (NYSE:CHK) and Devon (NYSE:DVN) but at the end of the day, but the stocks were truly overwhelmed by the simple fact that they are in the indices.

This pattern has really held down the integrateds: last week Conoco (NYSE:COP) should have exploded, but it couldn't because it is such a big part of the S&P. Chevron (NYSE:CVX) and Exxon (NYSE: XOM) are no different.

The natural gas stocks are not as big a factor, but they can be rocked down without a problem.

I am not saying to avoid looking at the oil futures. They can control the stocks. I am saying that the equity futures tide can take down anything, even when the oil futures spike hard.

Watch 'em both. Ideally, the best time to buy is when oil is strong but the S&P futures are stronger to the downside. Witness Devon. That stock traded 7 points lower on Thursday because of the S&P futures even as the company's prospects at plus-$13 nat gas are huge and the numbers are therefore way too low around the Street because it has so much available supply.

That's when to strike best.

Random musings: Peter Eavis and Herb Greenberg have made a cottage industry out of writing about the mezzanine lenders, Allied Capital (NYSE: ALD) and American Capital (NASDAQ:ACAS). So far these two companies have managed to avoid the fate of Indymac (NYSE: IMB). Today's "Heard on the Street," this one by Eavis -- now that Herb has left the day-to-day -- develops the same themes as usual: dividend too large, can they pay it? I figure the companies sell something saleable, up the dividends and issue more shares just to stay one step ahead of the posse. Boy, the people who run those companies must be sick of these two. They probably rejoiced when Herb went out of the Internet and TV columnist business to work at Greenberg Meritz.

At the time of publication, Cramer was long Devon.

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Goldman Sachs analyst bets on ConocoPhillips (COP)

Steven Halpern — 2008-06-26T14:34:00+00:00

Filed under: International markets, Newsletters, ConocoPhillips (COP), Commodities, Oil, Stocks to Buy

Leading advisor Jack Adamo, editor of Insiders Plus, reports that a Goldman Sachs analyst has chosen one of the stocks on his newsletter's buy list -- ConocoPhillips (NYSE: COP) -- as his top pick in the energy sector.

"There was an extremely interesting piece recently in Barron's by the oil analyst at Goldman Sachs who predicted $100 oil back in late 2004. We'd been buying energy stocks for almost a year at that point, but, although I expected oil prices to rise, I had no idea they'd go this high.

"In any case, the analyst, whose name is Arjun Murti, said he expects oil to reach $150 to $200 sometime within the next 24 months. The low end of that range is only a Middle East incident away, but the high end still seems like a reach, especially given weakening economic conditions.

"Murti thinks that the higher prices will eventually rein in demand, and that oil will then sink to somewhere around $75, or even lower. Given the strong growth in consumption in developing nations, I doubt the world can wean itself from petroleum quickly enough to get oil to stay below $75 for long. Nonetheless, the guy has a track record, and his view merits attention.

"I don't think we need to change our investment approach any time soon, but, as always, I'll be on the lookout for signs of deteriorating fundamentals in the sector.

"Most interesting was that Murti's top pick for the entire sector, including every type of oil producer, driller, pipeline, etc., was our own Conoco-Phillips (NYSE: COP). He said it was cheapest, based on its assets, and that the huge gas fields it got from its purchase of Burlington Resources a few years ago, would start hitting the bottom line, now that natural gas prices have firmed.

"By the way, I was gratified to read that the joint venture between Conoco and Tyson Foods is already producing 300 to 500 barrels a day of diesel fuel from animal fats. It's a drop in the bucket in terms of our energy needs, but it's a start."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

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Some oil stocks for your portofolio from Kiplinger

Eliza Popescu — 2008-06-16T15:45:00+00:00

Filed under: Forecasts, Newsletters, ConocoPhillips (COP), Economic data, Oil, Stocks to Buy

With the economy facing soaring crude oil prices for the past year, consumers and drivers have seen a major impact on their savings. It could seem as though the good old times are over. Gasoline at $4 a gallon is not something we can ignore, and if we take into account that Americans consume nearly 40% of the world's gasoline, you can see where the problems begin. So the surge in oil prices came with an imminent effect on consumers, who had to cut back on their spending.

But since we are already in this unpleasant situation, Kiplinger offers some solutions to help investors fight against high oil prices. Kiplinger underlines in this article that one smart move would be to minimize the cost of driving by making some good energy-related investments.

Gerry Jordan, manager of Jordan Opportunity, recommends investors invest in oil companies such as Schlumberger Ltd. (NYSE: SLB) and Weatherford International (NYSE: WFT), citing strong international business. In addition, Jordan believes that higher crude prices will increase drilling demand. On the other hand, Jordan also loves power companies like Calpine Corp. (NYSE: CPN) and Reliant Energy Inc. (NYSE: RRI) as he anticipates huge power outages across the globe during this year.

On the other side, Steve Romick, one of the best value managers in the business, prefers energy companies. He picks out stocks such as ConocoPhillips (NYSE: COP) and Ensco International Inc. (NYSE: ESV) for which he expects significant earnings in the future even amid difficult market conditions.

For the moment though, it's clear that oil supply-demand is a major problem that will persist for many years ahead. "Maturing basins in the OECD, limited access elsewhere, constrained capacity, higher costs and rising resource nationalism challenge consumers and producers alike, "BP chief executive Tony Hayward stated.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

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Five scary stories for Friday the 13th

Melly Alazraki — 2008-06-13T16:35:00+00:00

Filed under: Yahoo! (YHOO), Wal-Mart (WMT), Ford Motor (F), General Motors (GM), Exxon Mobil (XOM), Altria Group (MO), Anheuser-Busch Cos (BUD), Boeing Co (BA), ConocoPhillips (COP), Amer Intl Group (AIG), BP p.l.c. ADS (BP), US Airways Group (LCC), Lehman Br Holdings (LEH)

Gather around the campfire and let me tell you such scary stories Jason's mask would fail to impress you after that.

Of course, the theme that runs in the background of these scary stories is the state of the economy in the U.S., from the housing slump, inflation and soft labor markets to weak dollar, excessive government spending and increasing national debt load and trade gap.

1. Exxon Mobil and Oil

So scariest of all stories is oil. With prices reaching new records nearly daily, gas prices have also zoomed higher, crossing the $4 a gallon mark. Why, then, is Exxon Mobil (NYSE: XOM) exiting the retail gas business. To be sure, BP (NYSE: BP) and ConocoPhillips (NYSE: COP) have either indicated taking such measures or have taken them already. Apparently, gas prices haven't been rising fast enough to keep pace, causing margins to narrow and for cents-earned-per-gallon to be dismal.

One would then think it's a good move by Exxon and the other oil giants to get out of the retail gas business, but I have questions. First, it's alarming that companies with revenues in the hundreds of billions of dollar look for ways to make even more money (even if YTD XOM is down 6.4%). Second, and most important, what could it mean for the consumer? As Doug McIntyre suggested, would the price of gas at the pump increase even more after the sale to private owners than when it was sold under Exxon? Scary indeed.

2. Cars and Ford

Related to oil is, of course, cars. Car makers particularly have been the perfect example of the effects of high oil prices on industry, consumer choices and the labor market. Detroit has suffered from a slowdown long before it was felt throughout the U.S. with one of the worst housing market and workers being laid off by General Motors (NYSE: GM), Chrysler, and Ford Motor Co. (NYSE: F). Why then would Kirk Kerkorian choose to increase his stake in Ford and at such a premium too? Is it any wonder the tender is oversubscribed? What does he know that we don't? If the Big Three's state of affairs isn't scary, I don't know what is.

3. Airlines and U.S. Airways

And from one form of transportation to another. If Ford and GM look in a bad shape, the airlines look even worse, some probably closer to bankruptcy than anyone would like admit. The culprit? Oil. The result? Layoffs, price increases and ridiculous practices. At least the car companies have some restructuring plans already in place. The airlines? Other than reduce the weight on their current airplanes, all they can do is wait for Boeing's (NYSE: BA) new Dreamliner, which is supposedly more fuel efficient. Deliveries of the new jet will not occur before the third quarter of 2009.

It is no wonder U.S. Airways (NYSE: LCC), which may confuse some with today's stock jumping 10%, is actually down nearly 80% YTD. U.S. Airways announced Friday it will cut 1,700 jobs and charge passengers $15 to check their first bag, but that's not all. Other than reducing flights, it will also charge fliers $2 for soft drinks and water, $7 for alcoholic beverages and $25-50 for redeeming frequent flier miles. There are other measures the airline will take that would hurt consumers. I'm not even sure how much these measures could help some of the airlines, but I am sure sad times are ahead for some.

4. Retail and Wal-Mart

With the consumer accounting for nearly 70% of economic activity, retail sales have been closely watched. In May, sales figures surprised economists as the rebate checks worked better than expected. One major beneficiary was the world's biggest retailer, Wal-Mart Stores Inc. (NYSE: WMT). Now, have you seen the chart lately? Have you compared it to the S&P 500? Here, let me show you:

What's so scary about this chart you may ask? While not exactly a negative correlation to the broader stock market index, some parts of the chart come pretty amazingly close.
And why is it scary? Few reasons: One is that Wal-Mart has by now proven it is doing well in bad times. Given the stock has been climbing, up over 24% YTD, what does it mean for the market, the economy -- set for more declines? For the past three years Wal-Mart has traded in a $44-$50 range, today it came very close to breaking $60. Could it mean the economy would get even worse? And finally, if you're a Wal-Mart shareholder, what do you wish for? I'll leave others to answer that.

5. Other scary tidbits

Is Anheuser-Busch (NYSE: BUD) going the way of the Yahoo! (NASDAQ: YHOO)? Is BUD also trying to thwart a good offer for reasons not related to sound business rationale? Is an overblown ego going to ruin yet another sensible merger?
Have we seen the last of the financial turmoil? Will there be another Bear Stearns? Why do Lehman (NYSE: LEH), AIG (NYSE: AIG) and KeyCorp (NYSE: KEY) -- to name but a few -- insist on scaring us?
Can Altria (NYSE: MO)'s Phillip Morris really develop a smokeless cigarette? And how long before we find out the health implications of that one?

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Companies that vanished: Standard Oil -- one giant becomes three

Peter Cohan — 2008-06-09T12:50:00+00:00

Filed under: Competitive strategy, Exxon Mobil (XOM), Chevron Corp (CVX), ConocoPhillips (COP)

This post is part of a series on some of the most memorable companies that have disappeared.

Standard Oil (1870 - 1911) was the dominant oil company in the world until it was felled by the Sherman Anti-Trust Act of 1890. John D. Rockefeller was a business genius of the first order. He used his control over train routes and refineries to buy up oil wells and block competitors from taking market share.

Thanks to journalist Ida Tarbell, Rockefeller's rough business tactics got plenty of publicity. In 1911, the Supreme Court ruled that Standard Oil had violated the Sherman Anti-Trust Act through its tactics of using low prices to wipe out competitors. The result, as chronicled in one of my favorite books, Ron Chernow's Titan, was a breakup of the company into what is now Chevron (NYSE: CVX), Exxon Mobil (NYSE: XOM), and ConocoPhillips (NYSE: COP).

The lesson: What didn't kill Standard Oil made its offspring stronger.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Let us know in the comments what you miss about Standard Oil. And be sure to check out other Companies That Have Vanished.

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Option Update: ConocoPhillips volatility at 34; shares near record

Paul Foster — 2008-06-09T10:00:00+00:00

Filed under: ConocoPhillips (COP), Options

ConocoPhillips (NYSE: COP) closed at $92.17 Friday, shares near record on $137 oil.

WTI crude oil futures are recently down 1.08% to $137.04 according to Bloomberg.

COP overall option implied volatility of 34 is above its 26-week average of 32 according to Track Data, suggesting slightly larger movement.

Volatility Index S&P 500 Options-VIX at 23.55; 10-day moving average is 19.72

Option Update is provided

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Cramer on BloggingStocks: Oil stocks + dividends = good times

Jim Cramer — 2008-06-03T09:33:00+00:00

Filed under: Exxon Mobil (XOM), Market matters, Chevron Corp (CVX), ConocoPhillips (COP), Oil, Stocks to Buy, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says the companies could deliver money to shareholders without sacrificing growth.

What happens if the oil companies start actually recognizing their good fortune -- their sustainable good fortune -- and start boosting dividends the way that Tidewater (NYSE: TDW) (Cramer's Take) did last week with its 67% hike.

Throughout this great run with oil and gas, it seems that the companies themselves haven't caught up with the good fortune. They haven't spent that much on drilling relative to profits, and they have chosen to buy a lot of stock back, never bad. But what if they start returning the profits to shareholders in the form of dividends?

I think that what could happen is that you wouldn't think that Chevron (NYSE: CVX) (Cramer's Take) and Occidental Petroleum (NYSE: OXY) (Cramer's Take) and Exxon (NYSE: XOM) (Cramer's Take) are such nose-bleeders.

If you go back and look at the presentations of Conoco (NYSE: COP) (Cramer's Take) -- a very pro-shareholder company -- you'll see how the dividend could be boosted hugely without hurting the growth of the company.

I am betting that Tidewater may not be an isolated example. This group could provide a lot of good dividend news this year, another reason that if and when oil comes back to $120 -- where I think it will go before going over its previous highs -- you want to buy the stocks, not sell them.

RELATED LINKS:

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Cramer on BloggingStocks: The ultimate burden of proof: profit

Jim Cramer — 2008-05-28T09:00:00+00:00

Filed under: Google (GOOG), Apple Inc (AAPL), Dell (DELL), Exxon Mobil (XOM), Market matters, Chevron Corp (CVX), ConocoPhillips (COP), Research in Motion (RIMM), BP p.l.c. ADS (BP), salesforce.com inc (CRM), Stocks to Buy, Stocks to Sell, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says observers demand perfection, but the arrows slung at diverse thinking offer lessons in making money.

The level of perfection people demand, the level of performance they say they demand, the insistence on making money in any particular way, these are all part of what it is like to be, well, me.

One of the best calls I have ever had was with Apple (NASDAQ: AAPL) (Cramer's Take). It was a happenstance call, as so many really are but pros won't admit that because well, then why pay them? My daughter wanted a second iPod because she had a pink one and needed a blue one. It was that "fashion statement" wakeup call that told me the numbers for iPods in the analysts' reports were way too low.

I pushed the stock hard everywhere. When I got my own show on CNBC, I endlessly lauded Apple in the $70s, $80s and $90s, and made a major statement when I included it in my Four Horsemen of Tech.

At the end of the year I took it off the list, as I did with all the Horsemen except Research In Motion (NASDAQ: RIMM) (Cramer's Take). The $198 price reeked of greed.

I got back on the stock when it hit the $120s. Again, happenstance. This time the iChat camera in my daughter's room after she insisted I get rid of the Dell (NASDAQ: DELL) (Cramer's Take) and go for the Mac. When word came down that the new iPhone would possibly include iChat, I went out and said, when it was in the $150s, that I didn't care about price, I just cared about the time frame of the launch of the new iPhone and I would sell it into the launch. Some right before, some during and some after, and maybe to leave a quarter on, maybe not. I said last night to sell the last quarter the day after, but it might be worth keeping. I hadn't made up my mind yet.

Why go over this litany? Because yesterday I was accosted by some fellow who was in disbelief that I recommended selling the stock. He wanted to know why I didn't just say buy and hold, because here it is back where I told people to sell it last December -- if they had done nothing, they would have done well.

I had just finished my show, and frankly I wasn't in the mood to debate it. But the guy was insistent that I hadn't done the right thing.

I told him, OK, on at $70, off at $190; on at $120, back to $185. How in heck could you be better than that?

He insisted that all I did was trade it. That trading was really unnecessary. I went through the arithmetic. With my suggestions you picked up 120, (190 minus 70 basis) and then an additional 65, so you got 185 points. With his method, he only got 115.

He suggested my method was riskier. I said that the riskiest thing to do was to ride $190 back to $120 and give up more than half your gain. He said it didn't turn out that way. Buy and hold "kept you in."

Finally, I said, forget Apple. If you can make 185, isn't that better than 115?

He said, "They are both good."

I gave up.

This can be an impossible business.

Most stocks, the vast majority, have stunk for several years now. Stocks have stunk as an investment unless you nailed the sector, and the sectors have been agriculture, infrastructure, minerals, defense and oil and gas, and Apple, Google (NASDAQ: GOOG) (Cramer's Take), RIMM and Salesforce.com (NYSE: CRM) (Cramer's Take).

Some scattered takeovers. Otherwise, that's it.

And even when you nail it, as I did with Apple, it isn't enough.

This weekend a guy came up to me at a restaurant in Allenhurst, N.J. I was minding my own business, trying to eat. The guy told me that he had all oils, that he had made millions of dollars, that he had Chevron (NYSE: CVX) (Cramer's Take), Exxon (NYSE: XOM) (Cramer's Take), Conoco (NYSE: COP) (Cramer's Take), BP (NYSE: BP) (Cramer's Take). I think he may have been implying that I helped him, but I am not sure.

Anyway, I told him that he should sell some, that those gains could not be sustainable. I told him that I had sold my BP.

He told me I didn't know what I was talking about. That these were up stocks.

Here's my conclusion. I know what I am talking about. This is a really horrid, crummy market, where the gains are all hardscrabble and can be ephemeral. Taking them is the only sure thing. You don't have to take all of them but you have to take some of them.

Oh, and here's another take. In the end, nobody cares what anybody else says when they are winning. The Apple guy and the oil guy are winning. They are geniuses. The rest of us are idiots.

Just like we were in March 2000. Maybe we were even more stupid because we liked them in February 2000 (much-reviled mind change when the Nasdaq moved up several thousand points in a couple of months.)

Last conclusion: I like being stupid and an idiot. It is why I have made a lot of money.

RELATED LINKS:
Cramer's 'Mad Money' Recap: Wade In with Kaydon
Top Ten Most Searched Stocks on TheStreet.com

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long ConocoPhillips.

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Option Update; ConocoPhillips volatility flat; shares near record

Paul Foster — 2008-05-22T10:35:00+00:00

Filed under: ConocoPhillips (COP), Options

ConocoPhillips (NYSE: COP) is recently trading up 85 cents to $93.17.

WTI crude oil futures are recently up 0.18% to $133.41 according to Bloomberg.

COP overall option implied volatility of 31 is near its 26-week average according to Track Data, suggesting non-directional movement.

Volatility Index S&P 500 Options-VIX up 27c to 18.26.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Before the bell: Futures higher as oil bursts through $135

Melly Alazraki — 2008-05-22T07:49:00+00:00

Filed under: Before the bell, Exxon Mobil (XOM), Market matters, Chevron Corp (CVX), ConocoPhillips (COP), Amer Intl Group (AIG), BP p.l.c. ADS (BP), Economic data, Oil

Stock futures were a little higher early Thursday morning as stocks seemed poised for a rebound after plunging the last two straight sessions and as oil crossed $135 per barrel.

On Wednesday, U.S. stocks dropped sharply, again, as oil continued to rally, breaking new highs throughout the day and as the FOMC minutes indicated the Federal Reserve expects higher inflation and slower economic growth. The Dow industrials finished the day down 227 points, or 1.77%, the same as the Nasdaq Composite which lost 43 points, and the S&P 500 declined 22 points, or 1.61%.

Not much economic news today except for weekly jobless claims, but no doubt investors will continue to focus on the surging price of oil, now blamed also on Wall Street as traders are scrambling to cover bets. Oil prices rose above $135 to $135.09 a barrel for the first time Thursday, as supply concerns continued increased with reports that the International Energy Agency would cut its supply predictions. Even with assumption that global demand possibly weakening, the weakening U.S dollar drove crude futures up. Still, some blame the oil's rally due to traders covering wrong-way bets that prices would decline and buying crude, according to data from the New York Mercantile Exchange.

Executives of the five big oil companies, Exxon Mobil Corp (NYSE: XOM), Chevron Corp (NYSE: CVX), ConocoPhillips (NYSE: COP) and the U.S. subsidiaries of BP Plc (NYSE: BP) and Royal Dutch Shell (NYSE: RDS) will appear before congress for the second day as gas prices hit yet another high. No doubt, with crude above $135 a barrel, their excuse of market forces rather than profiteering will sound that much better.

Also in the headlines this morning is the power sector with NRG Energy (NYSE: NRG) offering Wednesday to buy rival Calpine (NYSE: CPN) for about $11.3 billion in stock.

American International Group (NYSE: AIG) can sigh in relief as Standard & Poor's, which ended its review of the company's debt due to its plan to raise capital is no longer considering downgrading it.

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Before the bell: INTC, LEH, COP, GM, GS, BRK.a ...

Melly Alazraki — 2008-05-19T08:20:00+00:00

Filed under: Before the bell, Analyst reports, Analyst upgrades and downgrades, Deals, Google (GOOG), Apple Inc (AAPL), Intel (INTC), General Motors (GM), Berkshire Hathaway (BRK.A), Employees, Comcast Cl'A' (CMCSA), ConocoPhillips (COP), Goldman Sachs Group (GS), Morgan Stanley (MS), Time Warner Cable (TWC), Lehman Br Holdings (LEH)

Before the bell: Stock futures mixed as Microsoft resumes talks with Yahoo

The New York Times Bits blog says that according to several label executives, Apple Inc. (NASDAQ: AAPL) has approached some of the major music labels to try to expand the variety of ringtones and other musical features for the iPhone. The negotiations are very active right now and a final deal has not been set, but will likely be during the summer, but after June 9. Ringtones are quite a profitable market, and Apple wanting to have ringtones from major label makes total sense. Apple also wants to offer Answer Tones for the iPhone.

Intel Corp (NASDAQ: INTC) said Monday its venture capital arm has invested 50 million ringgit ($16 million) in Malaysia's Green Packet Berhad to help develop the country's first nationwide high-speed WiMAX network. Already earlier this month, Intel Capital along with Google Inc (NASDAQ: GOOG), Comcast Corp (NASDAQ: CMCSA), Time Warner Cable Inc (NYSE: TWC), and Bright House Networks agreed to invest $3.2 billion into a new company to speed up deployment of the next-generation mobile WiMAX network. But that's not all. Intel Capital also expects to close half a dozen deals in India this year, its regional head said on Monday.

Warren Buffett is apparently on the prowl for another acquisition. The Oracle of Omaha has begun his European tour Monday, looking for possible acquisitions for his Berkshire Hathaway Inc. (NYSE: BRK.A).

General Motors Corp. (NYSE: GM) shares are up over 1% after a tentative accord was reached May 16 with the United Auto Workers. American Axle & Manufacturing Holdings Inc. (NYSE: AXL) workers start voting Monday on a proposed contract that also calls for wage cuts and buyouts at five American Axle plants in New York and Michigan. This could end the 83-day strike that has slowed output at GM, the partsmaker's biggest customer.
State-run Saudi Arabian Oil Co., or Saudi Aramco, and ConocoPhillips (NYSE: COP) said Friday they have approved continued funding for the development of a refinery that will process 400,000 barrel-per-day of crude supplied by Saudi Aramco in Saudi Arabia's Red Sea city of Yanbu.

Citigroup slashed its earnings outlook for Goldman Sachs Group Inc (NYSE: GS), Morgan Stanley (NYSE: MS) and Lehman Brothers Holdings Inc (NYSE: LEH), which also Friday announced it is cutting 5%, or 1,400 people, of its staff. Citi said tough operating environment will be the culprit of lower earnings and the analyst expects significant asset sales.

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Newspaper wrap-up: General Dynamics may win MoD contract

Laurie Pasternack — 2008-05-08T08:47:00+00:00

Filed under: Newspapers, Magazines, Exxon Mobil (XOM), Citigroup Inc. (C), ConocoPhillips (COP), BP p.l.c. ADS (BP), Bear Stearns Cos (BSC), General Dynamics Corp (GD)

MAJOR PAPERS:

According to senior industry sources, the Financial Times reported that the Ministry of Defense could ask General Dynamics Corporation (NYSE: GD) to provide the vehicle design for a new generation of armored vehicles for the army. It is unclear whether General Dynamics, in competition with Nexter and Artec, will be awarded the contract or will be named the preferred bidder.
Following the collapse in March of The Bear Stearns Companies Inc (NYSE: BSC), the Financial Times also reported that the SEC will soon require Wall Street banks to publicly disclose more details about liquidity and capital positions. Cox also urged lawmakers to pass legislation that would allow the SEC, or another regulator, the "explicit mandate to supervise" investment banks.

OTHER PAPERS:

According to the New York Times, Citigroup Incorporated (NYSE: C) will move senior investment banker Alberto Verme to Dubai by the end of the month in the hopes of establishing a stronger foothold in the region, a crucial area for global banks.
The New York Times also reported that several large oil companies, including BP Plc (NYSE: BP), ConocoPhillips (NYSE: COP) and Chevron Corporation (NYSE: CVX), agreed to pay nearly $423M in cash in order to settle a lawsuit that alleged water contamination from methyl tertiary butyl ether, a gasoline additive. Under the terms of the deal, the oil giants also agreed to pay 70% of the future cleanup costs for the next 30 years. Exxon Mobil Corporation (NYSE: XOM) and several other companies named in the suit did not agree to the deal.

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Analyst upgrades: WB, COP, ACS, AEP and CNX

Eric Buscemi — 2008-04-29T11:37:00+00:00

Filed under: Analyst reports, Analyst upgrades and downgrades, ConocoPhillips (COP), Wachovia Corp (WB)

MOST NOTEWORTHY: Wachovia, American Electric Power and Consol Energy were today's noteworthy upgrades:

Deutsche Bank upgraded Wachovia (NYSE: WB), citing valuation and recent capital actions.
Bank of America upgraded American Electric Power (NYSE: AEP), citing the new Ohio rate structure which will provide steady growth.
Merrill upgraded Consol Energy (NYSE: CNX) based on higher coal prices.

OTHER UPGRADES:

Goldman upgraded the Integrated Oils sector based on risk/reward relative to oil prices. ConocoPhillips (NYSE: COP) is the firm's favorite pick.
Affiliated Computer Services (NYSE: ACS) was upgraded to Buy from Neutral. Goldman expects Affiliated to do well in the current slower macro backdrop and views shares as relatively insulated to government cutbacks.

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