and the latest stock market news,
For Friday Morning, May 18
• Facebook to debut with record $104B market cap. Facebook (FB) is due to debut on Nasdaq today with a market cap of $104B, the highest ever for a firm at the time of its IPO. Facebook priced its offering at $38 a share, the top end of an increased range, and will raise up to $18.4B for itself and its investors. A thousand paper millionaire employees will also be created.
• H-P may slash 30,000 jobs in major overhaul. Hewlett-Packard (HPQ) intends to cut 25,000-30,000 jobs, reports say, or up to 10% of its workforce. H-P's aim is to spend the savings on making the salesforce more efficient and on creating new products, the NYT says. The company is expected to unveil the final plans on Wednesday with its FQ2 earnings report.
• Salesforce tops the Street and forecasts more to come. Salesforce.com's (CRM) shares were +7.1% premarket after its FQ1 earnings beat analyst forecasts and the company gave guidance that was in line or above estimates. FQ1 EPS came in at $0.37 as revenue jumped 38% to $695.5M. On a positive earnings call, Salesforce said its FQ2 pipeline is "unlike anything seen before in size (or) scope."
⇒ Follow The Ice Man, Dollar Man, The Sage, and others on 
How to Profit from IPOs
by the Dragon Trader.com
Making money on IPOs is easy ... if you have a clue and are lucky. The first requirement, Having A Clue, I can comment on; the second, being Lucky, only YOU can know if you are or are not — and I can even comment more on that. If you think you are NOT lucky, then you need to do some serious soul searching and become aware of what life has already given you: see through the crap. And if you don't believe in luck — but that you make your own luck — then get to work!
If I knew the absolute secret to betting on a winner every time, I would either be in jail for fraud of some sort or be "too rich to jail." But I don't know the absolute secret. With IPOs, guessing a winner is even more difficult than guessing about regular stocks. There are, though, several factors that you can consider and a few that you cannot.
Here are a couple factors that you cannot use:
You can't use price charts, and you can't use trends (not until the IPO starts trending after it lists). So technical traders are out of luck in that area.
Here are a few factors that you can use:
These will help give you some clues. Look at: the sector; the product's/service's worth and quality; the quality and reputation of the company, and of course; the price. You can also assess the economic climate. To amalgamate these factors into something useful, you must think clearly and see through the PR (Prescriptively Rubbish). PR is not news; it is "domesticated" propaganda designed to sell you something. Maybe they're selling stocks, a dishwasher, a financial service, or even a belief of some kind — maybe religious, philosophical, political, economic. (Beliefs are the most opaque "products" they sell.) If you can think of something, someone is trying (or would like) to sell it. And if they're "good at sales," they'll have a story that makes their product sound irresistible.
In addition, PR conveniently leaves out useful information, like evidence that the directors are taking very good care of themselves, as in aggressive accounting policies, related party transactions, or very generous salaries and bonuses paid to management. Or that the company is straving for money and struggling to get funding. So, for clues look at:
1. The Sector. Is the company in a 'hot' sector? Hot sectors can cool fast, so the risk is great. Some sectors favor faddish stocks. They might preform well for the moment — thanks to a generous dousing of PR — but the price can drop quickly when the herd suddenly wakes ups and realizes what they really bought.
2. Worth. Look at the quality of goods and services. Is there real worth? Take a look at Groupon (GRPN). Then look at Google (GOOG). Keep an eye on FACEBOOK today for the fireworks. Basically, think long term — 5 years +. This tip can also help lessen the "hot" sector risk.
3. Quality of the Company. Is the company popular? Does it have a good image and reputation? All things being equal, managers can make or break a company. Are they open? Secretive? Criminal? Ethical? Recpetive? Do they have solid management experience?
The best IPO stocks have a solid financial history as a private company that spans many years. These companies receive plenty of financial press (and PR). And while they are the best prospects, few IPOs fit this profile.
4. Price. Always important, always a guess to get it right. IPOs usually are offered at full retail, which is generally not a problem. However, keep the obvious in mind: If a person buys the stock and it is overpriced, he is more likely to lose; instead, he should wait a bit and then buy. If a person buys a stock and it is underpriced, he is more likely to win; and he should keep a close eye on the stock's trending for the first few weeks.
5. Climate. Remember that the success of an IPO also depends a lot on the market sentiments at the time it is listed. Rule of thumb: for short-term gains, buy when the market is bullish.
Check the BSE IPO index for the sentiment weather report. New IPOs like to be offered when the market is booming and have a better chance to succeed when buyers are making large capital gains. (Note to self... When many IPOs are being offer, a large correction could be on the horizon.)
So, are you feeling lucky? As an individual investor, you can't compete with institutional buyers. They will get the lion's portion of shares — you are lucky if you can get more than a few shares. IPO share allocation may not be fair. However, if you find who is doing the underwriting — who is controlling the Share allotment — and you deal with them, you may have a better shot at it. In any case, most of your buying will have to wait until the stock hits the market.
back to top⇒ See the complete list of all 12 STM Commentators.
Check their styles, analysis, and stock picks.
Moody's wields the machete to Spanish banks. As expected, Moody's yesterday cut its ratings on 17 Spanish banks by one-to-three notches. The song remains the same: "Adverse operating conditions ... Reduced creditworthiness of the Spanish sovereign ... Rapid asset-quality deterioration." Santander (STD) and BBVA (BBVA) were cut but remain the most creditworthy of the nation's lenders.
EU drawing up contingency plan for Greece leaving euro. The European Commission and the ECB are working on "emergency scenarios" in case Greece leaves the euro, Trade Commissioner Karel De Gucht tells Belgium's De Standaard (via Reuters) newspaper in what appears to be the first official acknowledgement of such plans. Greece may still stay in the euro, though, as a new poll shows the pro-austerity parties being able to form a government.
JPM's CIO holds $100B of risky bonds. JPMorgan's (JPM) Chief Investment Office has built up over $100B of positions in complex, risky bonds and structured products, the FT reports, with the CIO's "non-vanilla" portfolio now over $150B. The WSJ, meanwhile, reveals that the CIO's risk manager, who was appointed in February, had little relevant experience at the time and is the brother-in-law of another JPM executive.
Smartphone demand helps Applied Materials. Applied Materials' (AMAT) FQ2 net profit slumped 41% to $289M as revenue declined 11.3% to $2.54B, although the company beat consensus for sales and EPS. While demand for manufacturing tools from memory-chip manufacturers remains soft, Applied is benefiting from the surge in sales of smartphones, as foundries that produce the necessary components increase their orders for the equipment needed to make the chips.
HSBC could dump U.K. ops. HSBC (HBC) CEO Stuart Gulliver has told analysts that the bank could sell its U.K. retail banking business if new regulations prove too demanding, the Times newspaper reports (via MarketWatch). Selling the operations, which have 16M customers, would give HSBC one less reason to keep its head office in Britain, as the U.K.'s bank levy already makes relocating attractive.
Berkshire wanted to acquire ResCap. Warren Buffett tried to buy ResCap from Ally Financial before the home-lending unit was put into bankruptcy, Bloomberg reports, as Berkshire Hathaway (BRK.A) had unsecured debt in the unit. Under the deal, Berkshire would have taken on potential liabilities such as increasing litigation costs while paying almost nothing upfront for ResCap's assets.
Groupon pre-earnings share jump probed. Finra is investigating trading in Groupon (GRPN) after the firm's share price spiked hours before a positive earnings announcement on Monday, the WSJ reports. Groupon's shares climbed 18.5% on four times the average volume during regular trading, and then continued to rise post-market after the earnings were released.
Kinder Morgan to join S&P 500. Kinder Morgan (KMI) will replace El Paso (EP) in the S&P 500 index after the close of trading on Thursday next week. Kinder Morgan is acquiring EP in a deal that is expected to be completed near that date.
Major U.S. companies hold $588B overseas. Big U.S. multinationals are stashing at least 60% of their cash offshore — around $588B — with some keeping nearly all of their money in foreign accounts, a JPMorgan study shows. Apple (AAPL) has the most at $74B, or 67% of its holdings; as a percentage of total cash, Microsoft (MSFT), Cisco (CSCO) and H-P (HPQ) hold 89% or more of their capital abroad.
Property sector seen hitting Chinese growth. China's Q2 GDP could slow to 7.5% because of property sector curbs and dampened external demand, according to the State Information Center, a Chinese government think-tank. That would be in line with China's official target of 7.5% for the year, but would raise concerns about the sustainability of China's job creation.
Today's Markets:
In Asia, Japan -3%. Hong Kong -1.3%. China -1.4%. India +0.5%.
In Europe, at midday, London -0.8%. Paris +0.6%. Frankfurt -0.1%.
Futures at 7:00: Dow +0.4%. S&P +0.5%. Nasdaq +0.5%. Crude +0.05% to $92.61. Gold +0.95% to $1589.80.
Today's economic calendar:
No events scheduled.
Today's Earnings:
Notable earnings before today's open: ANN, DCI, FL
back to topBULLS of the Day
Bulls of the Day has moved to the STM front page.
• activity
Assaulting Austerity
Mark Fiore — News, in a Nutshell presents ... "Assaulting Austerity" or "Why events an ocean away matter to you."
• health
Nearly 1 in 2 Americans are Now Victims of This Heartless Marketing Ploy
As most of you know, the conventional medical system tends to equate "health" with the absence of symptoms of disease. The entire industry is built around treating symptoms with expensive patented drugs, many of which are profoundly toxic and dangerous.
• humor
The Avengers 2 — "revenge of the god"
"Avengers, it's happening again!"
• other news
DRONES: From "Military Use" to "Civilian Use." Towards the Remote UAV Policing of Civil Society?
Just a few days after a senior US counter-terrorism expert warned that US drone strikes were turning Yemen into the "Arabian equivalent of Waziristan," US drone strikes yesterday aped the tactic of 'follow up' strikes used by the US in Pakistan.
• views & opinions
We Have Reached Peak Government
As the foundations that supported an expansive centralized State crumble, the entire centralized State is revealed as unsustainable: we have reached Peak Government.
END