Tag Archive | "power"

An Issue of National Securities

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The following post is by Dealbreaker reader and commenter Infinite Guest.

President Obama has nothing to gain by negotiating with Republicans in Congress in order to raise the debt ceiling. The Department of Treasury doesn’t need Congressional approval to issue more debt and it will be a long time before Treasury actually needs to exceed the debt ceiling.

The analyses I’ve read on the topic are nothing if not variable, but they all assume at some level an agreement by all parties on the basic necessity of raising the debt ceiling and the general wisdom of reducing the deficit. The President knows what needs to be done, the Congress knows and so does the electorate. Based on this shared understanding, it follows that those who act in the spirit of compromise will be rewarded and those who act to obstruct
progress will be punished.

Never mind the compelling absence of evidence that any such shared understanding exists; that’s just not how things work.

The President, and this President in particular, is not answerable to Congress. The President is answerable to history, to the voting public, to our allies, to business interests including bond markets and in relatively rare cases to a 2/3 majority in the Senate. When the executive branch and the legislative branch can’t work out their differences the Supreme Court acts as referree. If Congress failed to raise the debt ceiling, history would not be kind to a President who on their advice failed to honor our debts. The bond markets would not be kind, our allies would not be kind and consequentially neither would the voting public. But a President who stood up to a hostile, inexperienced Congress and continued to honor our debts would win support from all sides. There will have been sufficient turmoil and pain following Congressional failure to raise the debt ceiling that everyone on earth will understand who the heroes and villains are.

If Congress failed to raise the debt ceiling, the President could stand up to Congress on Constitutional grounds, in which case he could count on a fairly corporatist Supreme Court to eventually rule in his favor. He could stand up to Congress on National Security grounds, in which case he might even be able to secretly issue fresh debt. He could stand up to Congress on technical grounds for a very long time without provoking a Constitutional crisis or raising the debt ceiling simply by draining the Treasurys out of trust funds and replacing them with other assets. And if he had to break the law, as President, in order to stand up to Congress, then he could break the law on moral grounds, secure in the knowledge that if he is impeached, the Senate doesn’t have enough votes to convict.

What would the electorate think of a President who defies Congress on any or all of those grounds? The Democrats would rally behind him, the Republicans would still oppose him and the independents would admire him for acting independently.

Now alternatively he can compromise to avoid a direct conflict but what’s in it for him? He could give away everything his constituents like and it still wouldn’t be enough to balance the budget. By compromising he snatches defeat from the jaws of victory. Democrats will hate him. Republicans will (rightly) say that they won. Without any drama to overcome through courageous and decisive action, independents will conclude that he’s a weak leader who stands for nothing.

Politics is not about forethought, compromise and the public good. Politics is about personalities and political narratives and the balance of power. This narrative has yet to be written, but in the politics of the debt ceiling, President Obama has all the power and his opponents in Congress have none.



Article courtesy of Dealbreaker

Opening Bell: 05.20.11

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Goldman Braces for Federal Subpoenas (WSJ)
Goldman Sachs executives expect to receive subpoenas soon from U.S. prosecutors seeking more information about the securities firm’s mortgage-related business, according to people familiar with the situation. Officials at the New York company believe the Justice Department will demand certain documents and other information, possibly within days, these people said.

FrontPoint Partners to Close Funds After Redemption Requests (Bloomberg)
FrontPoint Partners LLC will close some of its hedge funds after clients asked to withdraw money amid charges a manager benefited from an illegal stock tip. “We have received capital redemption requests from some of our clients,” Steve Bruce, a spokesman for Greenwich, Connecticut-based FrontPoint said in a statement today. The firm “will be winding down select strategies.” FrontPoint oversaw $7 billion at the start of November before Chip Skowron, a co-portfolio manager of its health-care funds, was tied to claims by prosecutors that the firm got advance notice on drug-trial results. U.S. officials are pursuing a crackdown on insider-trading at hedge funds, with more than 40 people pleading guilty or facing criminal charges or civil lawsuits for benefiting from non-public information.

Flood of Fees Flows Into Bank Coffers (WSJ)
Fees from IPOs already total $1 billion this year, double the level of last year, and are on pace to hit $2.5 billion, said Richard Peterson, an analyst at Standard & Poor’s Corp. Except for 2006, it would be the biggest year for IPOs in the U.S. since the tech boom ended in 2000.

At I.M.F., Men on Prowl and Women on Guard (NYT)
The laws of the United States do not apply inside its walls, and until earlier this month the I.M.F.’s own rules contained an unusual provision that some experts and former officials say has encouraged managers to pursue the women who work for them: “Intimate personal relationships between supervisors and subordinates do not, in themselves, constitute harassment.” “It’s sort of like ‘Pirates of the Caribbean’; the rules are more like guidelines,” said Carmen M. Reinhart, a prominent female economist who served as the I.M.F.’s deputy director for research from 2001 to 2003. “That sets the stage, I think, for more risk-taking.”

Long-Ago Affair Might Damage Turkish Candidate’s Chances to Lead I.M.F. (NYT)
But, [Kemal] Dervis, it turns out, has a secret that could disqualify him from being considered for the job. Years ago, while a senior executive at the World Bank, he had an affair with a female subordinate who now works at the I.M.F., according to a person with direct knowledge of the affair.

Fed Sells Out Latest AIG Bond Offering (WSJ)
The Federal Reserve Bank of New York on Thursday sold all 29 subprime mortgage bonds on offer in its latest sale from a portfolio of securities acquired from American International Group. The securities, held in a legal entity called Maiden Lane II, sold for what the Fed had estimated their fair current value to be, $878.6 million. The debt was part of a clutch of so-called toxic bonds the central bank acquired when it rescued the failing insurer in 2008.

Contrarian Investor Shuns Hot Idea for Bigger Picture (DealBook)
Mr. Thiel is shunning the most popular Internet start-ups because they are not “taking civilization to the next level.” Instead, he’s placing bets in health care, biotechnology and artificial intelligence companies — areas most of his peers have shied away from…According to Mr. Thiel, not enough energy is spent tackling big, challenging problems, like space exploration. Instead, many people are chasing incremental progress and short-term gains.

Citigroup Adds Wolfe to Lead Venture Capital in Tech, Media (Bloomberg)
Wolfe is taking a newly created position at the New York- based bank after working at Union Square Advisors LLC, where he managed venture capital and private equity sponsor coverage, according to a memo to Citigroup employees obtained by Bloomberg News. Citigroup added Union Square co-founder Ethan Topper in April to head global technology banking.

Bank of Japan Refrains From Adding Stimulus (Bloomberg)
The Bank of Japan’s policy board unanimously voted to maintain monetary policy even after a report yesterday showed the country slipped into a recession following a record earthquake. Governor Masaaki Shirakawa and his eight colleagues decided to maintain a 30-trillion yen ($370 billion) credit program and a 10-trillion yen asset-purchase fund that represent the bank’s main policy tools.

Bundesbank Says German Economy to Weaken (Bloomberg)
“Growth is likely to ease somewhat in the foreseeable future,” the Frankfurt-based Bundesbank said in its monthly bulletin published today. The economy’s 1.5 percent growth rate in the first quarter from the previous three months “considerably overstates the underlying economic momentum. Output growth was clearly lifted during the reporting period by backloading and catching-up effects.”

Senate Democrats won’t release their spending plan (WaPo)
Senate Democrats decided Thursday not to release their spending plan to counter the budget blueprint approved last month by House Republicans, saying they will wait to see whether talks at the White House produce a compromise plan for reining in the national debt.

Tepco chief quits after $15 billion loss on nuclear crisis (Reuters)
Tokyo Electric Power Co reported a net loss of $15 billion on Friday to account for the disaster at its Fukushima nuclear power plant, marking Japan’s biggest non-financial loss, and it warned its future was uncertain.

Liberty Media Bids for Barnes & Noble (WSJ)
John Malone’s Liberty Media Corp. made an offer Thursday to acquire Barnes & Noble Inc. for $1.02 billion, a dramatic turn for the nation’s largest bookstore chain—which put itself up for sale last summer but struggled to find a buyer as the outlook for traditional booksellers soured. The proposed deal represents a 20% premium over Barnes & Noble’s share price in 4 p.m. New York Stock Exchange trading Thursday.

Ex-Teammate: I saw Lance Armstrong use EPO (CBS 60 Minutes)
A former teammate of perhaps the world’s greatest cyclist, Lance Armstrong, says he used banned performance-enhancing substances with Armstrong to cheat in pro races, including the Tour de France, the sport’s ultimate event…[Tyler] Hamilton says Armstrong used EPO, a drug that boosted endurance by increasing the amount of red blood cells in his body, to win the 1999 Tour de France, the race he won an astonishing seven times. “I saw [EPO] in his refrigerator…I saw him inject it more than one time like we all did, like I did many, many times.”

Harold Camping: The Man Behind ‘Judgment Day,’ May 21, 2011 (HuffPo)
He made a similar prediction in the 1990s but later said he didn’t look close enough at the Book of Jeremiah. This time around, he’s absolutely certain.



Article courtesy of Dealbreaker

Solar: More Positive Nuke Newsflow

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There’s nothing to show it in early trading of First Solar (FSLR) or other solar energy technology providers, but yesterday brought some further positive headlines for alternative energy versus nukes.

Japan’s prime minister said the country would abandon plans to build more nuclear reactors, as Martin Fackler of The New York Times reports.

The company that owns the stricken Fukushima Daiichi nuclear power plant, Tokyo Electric Power, is expected to book losses of more than $12.4 billion as a result of March’s earthquake and Tsunami in Japan, according to Japan’s Nikkei news service.

Tokyo Electric may receive government bailout funds to help cover costs, which could result in the Japanese government getting “closely involved in the management of Tokyo Electric Power,” according to a write-up this morning by Dow Jones’s Mitsuru Obe.

Germany’s Green Party is demanding all 17 nuclear power plants be shut down by 2017, though the party is apparently working with other officials on a possible “nuclear consensus,” according to a Dow Jones Newswires report this morning.

Another DJ report, by Ryan Tracy, last night reported a nuclear plant in Browns Ferry, Alabama, which was recently shut down, was cited by the Nuclear Regulatory Commission for “an equipment failure of high significance,” involving “key safety systems.”

First Solar shares this morning are unchanged at $128.51.

Update: I spoke too soon. First Solar shares are actually down 92 cents, or 0.7%, at $127.59 in early trading.

Article courtesy of Tech Trader Daily

Solar Brightens: Italy Decree Lifts Most Shares

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Solar energy technology stocks are largely on the mend today after several days of slack performance, following word that Italy signed the long-awaited decree for its revision of subsidies for solar projects, which should provide some closure for vendors and their customers in the country.

Reuters’s Svetlana Kovalyova and Stephen Jewkes today report that the decree, which must be published in Italy’s “Official Gazette,” prescribes gradual subsidy reductions until 2013, and subsidies from that time on that will be based on targets for meeting a level of installed capacity.

Kovalyova and Jewkes write that the subsidies will be “capped” at €6 billion to €7 billion a year from now through 2016, when an installed capacity of 23 gigawatts is expected, with an expectation of “grid parity” for solar in 2017.

More on the decree is here, at Italy Global Nation, and here’s the Google Translation.

Aaron Chew with Hapoalim Securities today notes that the decree excludes any change to rooftop solar projects that are below one megawatt, extends a deadline for ground projects to be registered with the government from May 31st to August 31st, and closes a loophole that would have saved ground installations.

“While the revision is incrementally positive relative to the April 19th draft, it nevertheless suggests Italy will be more of a drag than a boost to global solar demand going forward,” writes Chew. Chew thinks there may be “further downside through May earnings season” given that there is 2.5 gigawatts of solar inventory, by his estimation, and a “vacuum of demand in the second half of the year, and further declines in 2012.”

As far as the stocks are concerned, SunPower (SPWRA) shares are up 1% today, Trina Solar (TSL) is up 1%, First Solar (FSLR) is up 1.3%, Jinko Solar (JKS) is up 1.4%, Yingli Green Energy (YGE) is up 1.4%, JA Solar is up a fraction of a percent, LDK (LDK) is down 1%, and Suntech Power (STP) is down a fraction of a percent.

Article courtesy of Tech Trader Daily

Write-Offs: 05.04.11

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$$$ Lawmakers told $2 trillion debt cap raise needed: sources (Reuters)

$$$ Obama will not release bin Laden photos, White House says (WaPo)

$$$ Value Investing Congress Summary: Marks, Romick, Tilson, Leonard & More (MarketFolly)

$$$ UBS Financial Services Inc. lost a jury verdict of almost $10.6 million in a case brought by a former sales assistant who said she was sexually harassed by a supervisor…[who] “repeatedly made inappropriate comments about Ingraham’s breast size,” called her into his office “to view sexually offensive e-mails on his computer,” and repeatedly talked about the size of his genitals,” she said. He also asked her about her sexual fantasies, she said in the lawsuit. (Bloomberg)

$$$ More Power Over Wall Street, but Little Chance to Discuss It (ProPublica)

$$$ Dems To Force Vote On Oil Subsidies (HuffPo)

$$$ Madoff trustee Irving Picard wants to start repaying victims (NYP)

$$$ PIMCO rolls out floating-rate fund ahead of rates (Reuters)

$$$ Carlos Slim Actively Selling Silver Futures (CNBC)

$$$ Bank Stocks Shunned by Money Managers Over Derivatives (Bloomberg)

$$$ LinkedIn Chooses NYSE Over Nasdaq, Following Renren and Pandora (Bloomberg)

$$$ NASA Gravity Probe Confirms Two Einstein Theories (Space)



Article courtesy of Dealbreaker

Analysts: Mets Will Win The 2011 World Series If Steve Cohen Is Approved For A Minority Stake

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As you may have heard, the New York Mets are going through a bit of a rough patch, on account of being screwed financially on their investment with Madoff Securities. They need money and they plan to get it by selling a minority stake in the team. Last month, Steve Cohen put in a bid and while other financiers might buy pro sports teams to fulfill some sort of childhood dream, SC is doing so because he believes the ball club is on the brink of greatness.

Commissioner Bud Selig does not believe the Mets are as in bad shape as the Los Angeles Dodgers, and apparently the investment groups interested in purchasing a minority share agree with him. The Mets are currently struggling on the field and at the box office, but owner Fred Wilpon’s potential partners believe the club will be able to turn things around quickly, according to financial industry sources. The investment groups believe general manager Sandy Alderson will build a competitive team within two or three years; an improved club means increased attendance, television ratings and revenue. “It’s a New York sports franchise, so if you put a decent product on the field, you will see things improve,” one source said.

And the 2-3 year projection doesn’t even take into account Steve’s rumored suggestions for improvement. If those are implemented, sources say this thing could get turned around in 2-3 months. Reps for the hedge fund will be messengering a series of training tapes to Queens, shot by SC during his own stint playing ball with the Fairfield County winter league. Start with “Bring the Power” and work your way through. As a newly winning organization must be great from top to bottom, SAC employees are advised to start perfecting their peanut vending yell now, because you will be taking over these positions.

Investors interested in buying minority share in the Mets think club can turn things around quickly [NYDN]



Article courtesy of Dealbreaker

Opening Bell: 05.03.11

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Goldman Chief To Stay In Job At Least Two More Years (NYP)
Lloyd Blankfein, approaching his fifth anniversary running Goldman amid some Wall Street speculation that recent regulatory tussles have left him burned out and looking to step down, is likely to stay put at the helm of Goldman Sachs for at least two years, sources tell The Post.

Morgan Aligned With Commodities Bulls As Goldman Says Sell (Bloomberg)
The surge in everything from oil to corn to gold has yet to crimp demand, inventories are still tight, and getting out now would be “premature,” Hussein Allidina, the head of commodity research at Morgan Stanley in New York, said on April 29. Prices may no longer reflect supply and demand, and they are likely to drop in the next three to six months before rebounding, Goldman said in reports April 11 and April 15.

U.S. Business Has High Tax Rates but Pays Less (NYT)
Topping out at 35 percent, America’s official corporate income tax rate trails that of only Japan, at 39.5 percent, which has said it plans to lower its rate. It is nearly triple Ireland’s and 10 percentage points higher than in Denmark, Austria or China. To help companies here stay competitive, many executives say, Congress should lower it. But by taking advantage of myriad breaks and loopholes that other countries generally do not offer, United States corporations pay only slightly more on average than their counterparts in other industrial countries. And some American corporations use aggressive strategies to pay less — often far less — than their competitors abroad and at home. A Government Accountability Office study released in 2008 found that 55 percent of United States companies paid no federal income taxes during at least one year in a seven-year period it studied.

Buffett Lets The Facts Bury Sokol (Dealbook)
Sorkin: A close friend of Mr. Buffett’s explained his thinking this way. “Warren knew that the second that press release hit the wires, Sokol’s professional career was over. Done. Forever. Sokol was finished. He didn’t need to brag about being ‘ruthless.’ ”

Frank Bill Would Cut Regional Fed Presidents From Rate Votes (Bloomberg)
U.S. Representative Barney Frank, the senior Democrat on the House Financial Services Committee, is pushing to remove the power regional Federal Reserve Bank presidents have to weigh in on interest-rate decisions.

India Raises Interest Rates to Battle Inflation (NYT)
In a bid to rein in persistently high inflation, India’s central bank raised interest rates Tuesday more than analysts had expected and signaled that it would be willing to raise borrowing costs even further. The action, which caused the country’s stock market to close 2.4 percent lower, will make it harder for India to achieve the 9 percent growth target set by the government for the current financial year, which ends in March 2012.

Man Group launches $1.5bn Japan fund (Telegraph)
The computer-driven Nomura Global Trend fund was the first onshore Japanese fund to be launched by Man’s AHL unit and will invest in a mixture of assets via three currency baskets, one of which includes the Chinese Yuan.

Greece To Name And Shame Tax Evaders (CNBC)
For those not paying their taxes in full the warning is stark; the Greek government plans to make an example of someone by the “identification and exemplary punishment of large-scale tax evasion.”

Banks Said to Be Quizzed by European Union Over Libor Rates (Bloomberg)
European antitrust regulators, who last week opened probes into 16 banks over credit derivatives, are also examining whether lenders manipulated the daily London interbank offered rate, according to two people familiar with the investigation…“This case will be difficult to prove — and the construction of Libor is such that it is difficult to manipulate as extreme pricing is smoothed out of the calculation,” said Simon Maughan, co-head of European equities at MF Global Ltd. in London.

Nasdaq, NYSE Arca Cancel Trades in Over 50 Stocks (CNBC)
More than 50 companies including pharmaceutical giants Pfizer and Merck & Co. were hit with a flurry of bad trades on Monday that later had to be canceled. Most of the trades that were canceled involved companies in the healthcare industry. Many trades occurred at prices far from their closing price. NYSE Arca and Nasdaq decided to cancel all trades 30 percent away from the prior consolidated price, the exchanges said. The trades were made in a purchase of an entire portfolio of shares that were sold together, like in a basket, according to a source familiar with the matter.

North Korea behind cyber attack on S.Korea bank-prosecutors (Reuters)
North Korean computer hackers were responsible for bringing down the network of a South Korean bank last month, prosecutors in Seoul said on Tuesday, in the latest of a string of cyber attacks thought to have originated from the secretive state.

Chase Scuttles Test Of $5 ATM Fees (Tribune)
JPMorgan Chase says it has finished testing $4 and $5 ATM fees for noncustomers in two states, and it is going back to the $3 fees it previously charged.

Bin Laden kill may reopen CIA interrogation debate (Reuters)
One of the key sources for initial information about an al Qaeda “courier” who led U.S. authorities to bin Laden’s Pakistani hide-out was Khalid Sheikh Mohammed, the al Qaeda operative said to have masterminded the September 11, 2001 attacks, a former U.S. national security official said. KSM, as he was known to U.S. officials, was subjected to “waterboarding” 183 times, the U.S. government has acknowledged.

Hustler Club Charges $2 For Ice And $2 For No Ice (Eater)
“Thought you would enjoy this image of our receipt from Hustler Club. $2 for putting our drink on the rocks, and also $2 for taking it neat without rocks.”

Overheard (WSJ)
The death of Osama bin Laden just made President George W. Bush’s appearance as keynote at next week’s SALT hedge-fund gathering in Sin City a much hotter ticket.



Article courtesy of Dealbreaker

Atheros envisions an “internet of things” connected by home power lines

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One of these days, there will be an “internet of things,” or once-dumb appliances and gadgets smartened up with chips and internet connectivity. Wireless chip maker Atheros Communications believes that day is not so far away.

Today, the San Jose maker of wireless chips is announcing an initiative that will make it easy for internet-aware home appliances to transfer data over electrical wires in the home to a user’s web-connected devices and to the smart grid. This initiative is one of the enabling steps to putting smart appliances on the grid without spending money to wire them with traditional Ethernet-based wiring.

“There will be 100 internet-connected devices per home one day,” said Adam Lapede, senior director of internet of things technology at Atheros, in an interview.

It’s kind of a pipe dream, but it’s a big one that is shared by a lot of companies that want to make everyday appliances smarter, more useful in providing data feedback, and more energy efficient. Atheros has chosen to connect the smart appliances using the HomePlug Green Phy, or a version of the HomePlug AV standard for transferring internet data over home electrical wires.

Atheros, which is in the process of being acquired by Qualcomm, designed the technology so that smart appliances can transfer or receive internet data without consuming a lot of power or taking much of the available internet bandwidth of the home wires, Lapede said. Once connected, these devices will be readable, recognizable, locatable, and addressable. It means they will be able to provide information such as how much energy they are consuming and when is the best time to use them to preserve energy.

“We need to figure out how to reduce the demand during peak usage and improve our efficiency,” Lapede said.

Lapede said the cost of putting internet connectivity is getting smaller and smaller. Atheros, which makes Wi-Fi chips and other related technology, hopes to drive the costs of the connectivity chips even lower by making them in huge quantities and standardizing them across the industry

With the HomePlug Green Phy technology, Atheros is asking software developers to begin developing applications that will use its chip hardware in the future for the internet of things vision. As envisioned, the technology will be integrated into stand-alone gateway devices or into the appliances themselves. It will allow the transfer of data from device to device at a rate of 10 megabits a second or more. That will happen seamlessly, without the need to translate the data from one format to another.

Lapede said that applications will have to use built-in encryption and other security methods to ensure that a neighbor won’t be able to hack another one across the smart grid. Lapede said that the power line technology has rivals, but he believes it is the best way to reach all of the appliances in the home. And while HomePlug AV has a number of rivals, he says chips based on the standard have shipped in the tens of millions of units worldwide. So it makes sense to adapt HomePlug for the internet of things.

Once the applications have been defined and requirements set, Atheros will design chips based on the standard and ship them to customers in the coming years.

“We expect to see traction in 2012,” Lapede said.

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Article courtesy of VentureBeat » deals

Intel: License ARM, Buy OMAP, Says Nomura

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Nomura Research’s chip analyst Romit Shah this morning offers an “open letter” to Intel (INTC) CEO Paul Otellini in which he suggests the company license ARM Holdings’s (ARMH) microprocessor instruction set, possibly buy Texas Instrument’s (TXN) “OMAP” chip line for mobile devices, and consider a $20 billion buyback authorization.

Shah reiterates a Neutral rating on Intel shares and a $22 price target. Intel shares this morning are down 23 cents, or 1%, at $19.52.

Despite healthy earnings growth, Shah observes, Intel’s shares trade at an all-time low valuation, at a 30% discount to the S&P.

Referring to the “mea culpa” letter by Cisco Systems (CSCO) John Chambers two weeks ago, Shah thinks Otellini faces a similar moment of truth. “Although Intel’s operational execution has been strong, we believe aspects of the company’s strategy in mobile computing (handsets and tablets) have not been,” writes Shah. “Mobile, in our opinion, represents the biggest opportunity for Intel to restore growth and valuation.”

The total “mobile computing market” of smartphones and tablets — apparently, excluding laptops, notebooks — will be 1.5 times the size of the PC market next year, Shah estimates.

Intel’s x86 instruction set won’t catch up with ARM’s chip designs — and, by implication, the implementations of ARM’s instruction set by Nvidia (NVDA), et al. — no matter how good Intel is at fab’ing chips:

We believe dual-core ARM- based SoCs today are 30-40% more power efficient on average than Intel’s current Atom offering. While Intel should bridge the power gap by further integration (SoC approach vs. a multi-chip offering) and die-shrinks using advanced processes, we believe ARM is likely to stay ahead on performance per watt.

Intel could also consider buying Nvidia, but at a price tag of $7.5 billion based just on enterprise value, probably a bit too much to swallow, not to mention regulatory issues over Nvidia’s graphics chip dominance.

So, TI’s “core wireless business” — basically, the OMAP chip line — might be had for just $3 billion.

OMAP generated roughly $600mn in revenue in 2010. In addition, TI has a solid list of customers that include Nokia, Motorola, Samsung and RIM. The company also has a full wireless connectivity portfolio that would be complementary. Based on a multiple of 2.5x, we believe TI’s core wireless business is worth $3bn.

At a minimum, Shah writes, Intel should repair its relationship with Microsoft (MSFT), whose Windows Phone 7 operating system will be running Nokia (NOK) phones in future, in one form or another. Qualcomm (QCOM) is currently the clear leader to supply chips for Win Phone 7, and Shah thinks Intel needs to get back together with Microsoft. A rapprochement would have the added benefit, Shah believes, of setting up Intel better for the expected release of a version of Windows that will support ARM-based chips as well as x86 for the PC market.

Last, Shah recommends Intel buy back shares big time:

We believe a large share repurchase makes sense for several reasons: (1) Intel is generating less than 1% on its existing cash balance, (2) debt is cheap, (3) the company has posted 20 consecutive years of positive free cash flow, and (4) this would be materially accretive to EPS. A $20bn share repurchase consisting of $10bn in cash and $10bn in debt would boost our 2011 EPS estimate by $0.35, or 18%, to $2.30. The company’s balance sheet would weaken from $12bn in net cash to $8bn in net debt. That said, we estimate that Intel will generate north of $5bn in free cash flow in 2011 and 2012 after-dividend payments of $4-5bn and capital expenditures of $9bn.

Article courtesy of Tech Trader Daily

Opening Bell: 4.18.11

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Citi Profit Falls 32 Percent (Reuters, Citi)
Citigroup’s first-quarter profit fell 32 percent as the bank lost less money on bad loans but struggled to grow its business. The bank said this morning it earned $3.0 billion, or 10 cents per share. That compared with $4.4 billion, or 15 cents per share, a year earlier.

Geithner Says GOP Prepared To Lift Debt Limit (WSJ)
In interviews aired on the Sunday talk shows, Mr. Geithner said House Speaker John Boehner and other senior Republicans told President Barack Obama in discussions last week that they were aware of the risk of a credit default and were open to lifting the limit even in the absence of a comprehensive deal to slash the country’s debt load.

Greenspan Says US Should Let Bush-Era Tax Cuts Expire (Bloomberg)
We should “allow the Bush tax cuts to expire,” Greenspan said on NBC’s “Meet the Press” today, calling the economic crisis “imminent and dire.” We should “put the rates back to where they were during the Clinton administration,” he said.

Hedge Funds Bounce Back (WSJ)
Total hedge-fund assets are approaching $2 trillion and are soon expected to surpass their peak in early 2008, according to industry analysts. Even start-ups and smaller funds, which were shunned by many investors in the wake of the crisis, are benefiting.

Emerging Nations Reject Capital Plan (WSJ)
The IMF’s plan would have encouraged nations to treat capital controls as a last resort, after they had first tried use other tools, such as policies on interest rates, currency values and government budgets. But ministers of developing economies resisted vehemently, viewing the proposal as an effort by advanced economies to hamstring their policies. Brazil, Turkey, South Korea and several other developing countries have adopted capital controls over the past year to limit surging inflows. “We oppose any guidelines, frameworks or ‘codes of conduct’ that attempt to constrain, directly or indirectly, policy responses of countries facing surges in volatile capital inflows,” Brazil’s finance minister, Guido Mantega, told the IMF’s steering-committee meeting.

Robot Does Hazardous Duty At Nuclear Plant (WSJ)
The plant’s operator, Tokyo Electric Power Co., said Sunday that the PackBot, a small robot that scoots around on tank-like treads, would monitor radiation and oxygen levels to find out whether conditions were safe enough to allow human workers to go in to try to bring the nuclear crisis at the plant under control.

FDIC Eyes Tougher Rules For Big Banks (FT)
Sheila Bair warned that regulators now had the authority to demand that US banks break themselves into smaller parts — and it “could and should be used.”

Is Sitting Lethal? (NYT)
Over a lifetime, the unhealthful effects of sitting add up. Alpa Patel, an epidemiologist at the American Cancer Society, tracked the health of 123,000 Americans between 1992 and 2006. The men in the study who spent six hours or more per day of their leisure time sitting had an overall death rate that was about 20 percent higher than the men who sat for three hours or less. The death rate for women who sat for more than six hours a day was about 40 percent higher. Patel estimates that on average, people who sit too much shave a few years off of their lives…Sitting, it would seem, is an independent pathology. Being sedentary for nine hours a day at the office is bad for your health whether you go home and watch television afterward or hit the gym. It is bad whether you are morbidly obese or marathon-runner thin. “Excessive sitting,” Dr. Levine says, “is a lethal activity.”

Ferrari Should Be Valued at $7.3 Billion in IPO, Marchionne Says (Bloomberg)
Fiat SpA Chief Executive Officer Sergio Marchionne said he’s told bankers pushing him to pursue an initial public offering of Ferrari that the division may be worth more than 5 billion euros ($7.3 billion).

Greece Denies Restructuring Plan As Traders Raise Bet Default (Bloomberg)
“Restructuring is not an issue we’re discussing,” Greek Finance Minister George Papaconstantinou said in an April 16 interview in Washington. “The pain and the cost” of doing so would be greater than repaying lenders, he told reporters the same day.

Greek Default Would Mean Pain All-Around (WSJ)
Economists at the Brussels think tank Bruegel calculate that roughly 20% of Greece’s debt at the end of 2010 was held by domestic banks. They are in difficult straits, and forcing losses on them may simply require the country’s rescuers to come up with more money to help.

Rep. Jesse Jackson Jr. Blames iPad For American Unemployment (HP)
On Friday, Congressman Jesse Jackson Jr. addressed the United States’s current unemployment crisis and claimed the iPad was “probably responsible for eliminating thousands of American jobs.” Jackson, himself an iPad owner, expanded on his statement by pointing to the recent bankruptcy of Borders Books. “Why do you need to go to Borders anymore? Why do you need to go to Barnes and Noble? Just buy an iPad and download your book, download your newspaper, download your magazine,” the Congressman said.



Article courtesy of Dealbreaker