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Goldman Hints @ Full Break up for Pfizer; $PFE Up by 2%

Tue Mar 27, 2012 3:18pm EST Comments Off on Goldman Hints @ Full Break up for Pfizer; $PFE Up by 2%

“Pfizer Inc. (PFE), the world’s largest drugmaker, gained the most in three months after Goldman Sachs Group Inc. analysts said the company may go beyond the divestiture plans it has already announced.

Pfizer climbed 2.2 percent to $22.64 at 12:22 p.m., after earlier rising to $22.80. Through yesterday’s close, the shares had increased 6.6 percent since July 6, the day before Pfizer Chief Executive Officer Ian Read said the New York-based company was exploring strategic alternatives for its animal health and nutrition businesses.

Read, at a recent meeting with Goldman analysts, indicated he may be willing to further split up the company after selling or spinning off those two units, Jami Rubin, a Goldman analyst, wrote in a note to investors.

“We see these moves as first steps in a potential full- scale breakup,” akin to the split now taking place at Abbott Laboratories (ABT), Rubin wrote.

Abbott, based in Abbott Park, Illinois, said Oct. 19 it plans to divide into two publicly traded companies, with one focused on drug development and the other on products including medical devices, infant formula and generics.

Rubin said a further breakup would be dependent on Pfizer’s success in getting new, brand-name drugs approved by U.S. regulators. “If the pipeline is successful and drives meaningful top-line growth, management will want to separate the businesses so investors can better value the pharma business,” Rubin said in her note. She said that a breakup could happen by 2015…”

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The Birth (and Death) of the Moral Age of Wall Street

Tue Mar 27, 2012 11:24am EST Comments Off on The Birth (and Death) of the Moral Age of Wall Street

by Heidi N. Moore via marketplace.org

Mar 27, 2012

Chris Hondros/Getty Images

Financial professional work in the Goldman Sachs booth on the floor of the New York Stock Exchange near the end of the trading day July 22, 2010 in New York City.

 

It’s well over a week since Greg Smith threw his Molotov cocktail of a resignation at his former employer, Goldman Sachs, and it’s fair to say that he and his claims on the bank are still a cultural sensation.

Goldman is searching its e-mail archives for any mention of the word “muppet” — an English epithet that means “idiot” — allegedly launched by Goldman traders against their clients, acording to Smith. Smith is talking to publishers about a book about his coming-of-age in finance; my vote for the title is Mr. Smith goes to Wall Street. And one hedge-funder turned chicken-farmer sees the Smith scandal as a good time to pursue his own grudge against Goldman for its behavior towards him during the financial crisis.

Smith’s outraged resignation letter hinged on one idea: that the “commercialism” and bald pursuit of money that he saw at Goldman perhaps wasn’t illegal, but it was, to him, immoral.

And that’s why Smith’s screed continues to produce aftershocks. He identified the rift in language and thought that has divided America from its financial system since the crisis began. While capitalism tends to see behavior in terms of “profit” and “loss,” most of the finance industry has been either slow or helpless to engage on the different scale that has obsessed everyone from Occupy Wall Street to the President of the United States: that of “right” and “wrong.”

The New York Times Web site had a fascinating “Room for Debate” feature on this, with perspectives from all sides. It’s an excellent read. And there’s no question that some of the best books on the causes of the financial crisis have a moral undertone to their titles: All the Devils Are Here, by Joe Nocera and Bethany McLean; A Demon of Our Own Design, by Bookstaber; The Devil’s Casino, by Vicky Ward.

Perhaps one of the most touching – nearly, actually, adorable – parts of Smith’s resignation was his conviction that there existed a time in his 12 years at Goldman Sachs when the bank was ruled mostly by honor rather than profit: “Culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients.”(I’ve talked to Goldman employees who have had a hearty chortle at the “humility” part in particularly, but let’s not dwell.)

Smith’s blinkered, or maybe just naive, idea was the most skewered by most commentators familiar with Wall Street’s harsh ways, which are by no means less evident at Goldman. The most sarcastic was Michael Kinsley at Bloomberg, who acidly commented, “Apparently, whenGreg Smith arrived at Goldman Sachs Group Inc. almost 12 years ago, the legendary investment firm was something like the Make-A-Wish Foundation — existing only to bring light and peace and happiness to the world…. one imagines Goldman bankers spending their days delivering fresh flowers to elderly shut-ins and providing shelters for abandoned cats.” (As an aside, PETA did actually ask Goldman to establish animal shelters back in 2010.)

It’s hard to say what Wall Street could possibly do to either vindicate or avenge itself against Smith’s charges. E-mail searches for “muppets” or even “Smurfs” are probably not going to work. But a look at history – at the history of Goldman, in particular – shows that there was  another time when Wall Street’s perceived lack of immorality was threatening to spin the industry into chaos, and there was a man who tried to codify what it meant to behave honorably in finance.

The man was John Whitehead, the former CEO of Goldman Sachs, who spearheaded the firm’s business principles back in the 1950s after a years-long government investigation of collusion threatened to destroy investors’ faith in Goldman and other banks. The business principles, which are recited like catechism and which Greg Smith kept at his desk, are here.

What’s more interesting is how and why Whitehead created them – his ideas and his state of mind, the perspective that would cause him to want to impose some kind of moral order on the unchecked pursuit of profit.

The scholar Marcy Murninghan shared with me an unpublished interview she did with Whitehead in the late 90s as part of a book that, unfortunately, never saw the light of day. As Murninghan writes in the chapter on Whitehead, “at the time Whitehead is talking about – the late 1950s and 1960s – a conscious corporate commitment to ethical standards was not common. And on Wall Street, no less!” That’s easy to picture: consider the venal hucksters of Mad Men, and you see the environment Whitehead – a graduate of the Quaker-influenced Haverford – was functioning in.

Here are some excerpts from Murninghan’s wonderful interview with Whitehead, taken from her unpublished manuscript that she generously provided to me. Marcy, thank you for your eye-opening work.

It all has to do with what I would call moral principles and sort of the basic American principles of hard work and doing your best and things of that kind of nature—or the combination of things…..I felt that it was very important that any organization that I worked for – or particularly any organization where I had a leadership responsibility and was known to be the leader – that it be an organization that had high ethical standards, and that it conducted its business in a highly professional, responsible, ethical way.  And so I stressed that at Goldman Sachs in everything we did, and ultimately developed a what we called “Our Business Principles”.  It was a written statement of what we felt Goldman Sachs stood for, and there were fourteen of them.  I won’t burden you with going through them one by one, but we liked to feel that more than just a sort of expression of motherhood, they represented the special features that we liked to feel that Goldman Sachs stood for.[i]  Plus, the clients’ interests always come first, and if we serve our clients well, our success will follow.  That was one of the principles.  That was the kind of thing we talked about.

Whitehead is most interesting when he talks about the firm’s business principles as a way to elevate the firm’s culture as new people were coming in – that Goldman’s way of doing business had been intuited before, but needed to be codified:

And at a period when we were growing quite rapidly and adding new people, I wondered whether these principles – which historically had always been passed on by osmosis and by observation of new employees— “Wow, here’s how they do this at Goldman Sachs.  I’d better live up to that myself!” – I wondered whether with so many new people, and some attrition of old people and replacements, whether we could really successfully keep that culture and those standards, high standards.  And so one Sunday afternoon, I remember quite vividly, I sat down and tried to write them out.

With the next copy of our annual report—we sent the annual report to the home address of our employees, and we attached to the front of it a printed edition of this – “Our Business Principles,” as we called them – with a little note saying, “We’re sending this to your home because we thought your family would also be interested in knowing what your company stands for, and we hope you will, we expect,” we said, “that you will also live by these principles.  This is what Goldman Sachs stands for.”  And that made quite an impact, especially the idea of sending it to the homes.  It sort of brought the family into some appreciation of what their fathers or husbands – mostly male employees at that stage, I’m sorry to say – of what they thought, and exposed them in a different way to this company that was really quite demanding of the father’s life, and absorbed a good deal of his time and energy, and made them maybe a little more appreciative that we were a highly responsible firm that they could be proud of, too.

Perhaps the most fascinating chunk of Murninghan’s interview with Whitehead was this part, where he talked about how Goldman indoctrinated the Business Principles into its employees. He and the firm’s leaders made a point of firing employees that violated the Business Principles – a practice that, according to former Goldman Sachs partner Jacki Zehner – is exceedingly rare now if the employee brings in big profits.

Then we wanted to be sure that people didn’t just read it as an expression of high principles, but that they really applied it to their job.  And so we asked each department head to have a meeting of his department every six months, and to talk with people in his department about what this meant for them in their job—what did Principle No. 1, what does that mean to us in the work that we do every day?  And somebody would raise some question, maybe, about, “Oh, you’re talking about the customers’ interest always come first, that the customer wants to sell some bonds, and we could buy them at 106_  or 106¼, and the customer really wouldn’t know the difference—which do we do?”  And they would discuss very specific examples of how it affected their job and their department.

We asked the department head that minutes be taken without names, and to submit the minutes to their management, so that was the way we made sure that these meetings were actually held.  And it turned out to be quite successful.  The people enjoyed them and were interested in them and really participated actively.  I think it helped the people understand that these principles and codes of conduct were not just something to put in the annual report, but were something that they really were expected to live by. 

I remember in the next year or two, we had several problems with individual people that were clearly violations of these principles.  Instead of just firing the people because they had done something dishonest or something – I forget the exact circumstances – we tied their departure to violations of the code of conduct instead of to some regulation, and that made a big impression.  They saw that the code was broken and that there was a penalty for it—that this wasn’t just something that would be nice if you did this.  It was something that really had teeth in it.  So that was effective.

Whitehead, now 90, spent 34 years at Goldman before retiring in 1984 to pursue a career in diplomacy. (To Murninghan, Whitehead called his work in Eastern European human rights “God’s work,” marking a rather painful counterpoint with Lloyd Blankfein’s misfire of a joke about banking being God’s work.”)

Whitehead’s parting thoughts on the Business Principles and his efforts to strengthen the moral sense of Goldman are particularly fascinating – mostly because he jokes that he’s offended by the suggestion that he wasn’t also a big moneymaker.

I can’t really say the extent of how this code of conduct still survives and exists.  I don’t really know, but people tell me – people who are still at Goldman Sachs tell me – that this code of conduct, which they attribute to my era of management, was the most important thing that I left behind me during my ten years of being chairman of Goldman Sachs.  It was actually instituted before I was chairman, but [they tell me] that that was the most important thing that I did.  And I guess I’m sort of proud of it, although I must say, I thought that some of the money-making things that I’ve left were at least as important, and [he chuckles] I’m slightly offended by that…

We’ll chalk that last part up to the fact that you can never take banking out of the boy. Whitehead’s thoughts, in all seriousness, raise some questions about Wall Street’s current direction and whether any firm can provide now a moral education to employees such as he tried to provide back in the late 1950s. Probably what a lot of investors want to see at the moment is that Wall Street is at least trying, and while the industry tends to scoff at all this criticism from the outside, there’s very little evidence for that kind of effort now.

About the author

Heidi N. Moore is the New York bureau chief and Wall Street correspondent for Marketplace, where she reports and writes about the culture of banks, companies, financing and markets. Follow Heidi on Twitter @moorehn

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Gapping Up and Down This Morning

Tue Mar 27, 2012 8:47am EST Comments Off on Gapping Up and Down This Morning

Gapping up

OPXT +61.9%, BZH +5.5%, KBH +2.7%, PHM +1.9%,  ISTA +7.9%, RBS +2.8%, ING +1.2%, BCS +0.7%, UBS +0.6%,

ISTA +8.6%, RBS +2.8%, LEN +2.7%, RIO +0.9%, BCS +0.7%, WAG +3.3%, ARNA +2.0%, VALE +1.5%, ATVI +1%,

DANG +2.9%,

Gapping down

MAPP -28.2%, NBIX -8.6%, MMR -5.3%, APOL -4%, HTS -2.9%, TOT -2.7%, DG -1.4%, BP -1.3%,

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U.S. Equity Preview: OPXT, NBIX, MAPP, LEN, LNDC, HTS, BWLD, & APOL

Tue Mar 27, 2012 8:40am EST Comments Off on U.S. Equity Preview: OPXT, NBIX, MAPP, LEN, LNDC, HTS, BWLD, & APOL

Source

Apollo Group Inc. (APOL) fell 6.3 percent to $40.50. The biggest U.S. for-profit college company was cut to neutral from outperform at Credit Suisse Group AG.

Buffalo Wild Wings Inc. (BWLD) decreased 2.4 percent to $92.11. The operator of about 800 namesake restaurants was cut to hold from buy at Deutsche Bank AG, which said the stock is less likely to beat expectations after its valuation rose.

Hatteras Financial Corp. (HTS) declined 2.6 percent to $27.32. The real estate investment trust that invests in mortgage securities issued or guaranteed by U.S. government sponsored entities will sell 15 million shares in a public offering.

Landec Corp. (LNDC) : The maker of packaged food products reported third-quarter earnings were 18 cents a share, surpassing the average analyst estimate by 5 cents.

Lennar Corp. (LEN) increased 3.9 percent to $27.44. The third-largest U.S. homebuilder by revenue reported first-quarter earnings excluding some items of 8 cents a share, beating the average analyst estimate of 5 cents.

Map Pharmaceuticals Inc. (MAPP) plunged 22 percent to $13.45. The biopharmaceutical company failed to win U.S. regulatory approval to sell its inhalable version of a 60-year- old migraine drug after regulators questioned the manufacturing process.

Neurocrine Biosciences Inc. (NBIX) : The San Diego-based drugmaker said results from a phase II trial of NBI-98854 in tardive dyskinesia patients didn’t meet the primary endpoint when data was included from a site where efficacy assessment protocol wasn’t followed. With that site removed, the results shows a “significant” reduction in symptoms, the company said.

Opnext Inc. (OPXT) surged 54 percent to $1.74. The maker of optical components for communications networks will be purchased by Oclaro Inc. (OCLR) in an all-stock deal. Holders of Fremont, California-based Opnext will get 0.42 shares of Oclaro stock, or about $1.96, for every Opnext share they own.

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Starbucks Serves Up a Bug Frapuccino

Tue Mar 27, 2012 7:50am EST Comments Off on Starbucks Serves Up a Bug Frapuccino

Source

“Luzmila Ruiz holds a spool of dyed yarn, made from the cochineal insect, which is crushed in her hand as well as a ball made up of thousands of crushed insects, in this Nov. 2006 file photo.

You can get your Starbucks Strawberry Frappuccino venti, grande or tall. You just can’t get it without insects, to which it owes its pink and rosy color.

In what the company, in a statement, says was a move intended to reduce its use of artificial ingredients, Starbucks has started using cochineal extract to supply its Frappuccinos’ strawberry hue. Cochineal extract is derived from grinding up insects, the dried bodies of cochineal bugs, found primarily in Mexico and South America. Cochineal dye has been used as a coloring agent since the 15th century.

Before you get all cold-and-bothered about your insect-Frappuccino, be advised: Cochineal is considered safe by the FDA, and is widely used for coloration in jams, preserves, meat, marinades, alcoholic drinks, bakery products, cookies, cheddar cheese and many other food products.

It has been found by the World Health Organization, however, to cause asthma in some people, and in some others an allergic reaction.

Starbucks’ statement, issued partly in response to vegans’ asking if the use of this ingredient makes Strawberry Frappuccino vegan or not, reads in full:

“At Starbucks, we strive to carry products that meet a variety of dietary lifestyles and needs. We also have the goal to minimize artificial ingredients in our products. While the strawberry base isn’t a vegan product, it helps us move away from artificial dyes.

“Many Starbucks ingredients can be combined to create a beverage free from animal-derived products; however, we are unable to guarantee this due to the potential cross-contamination with other animal-derived products in our retail locations.”

A vegetarian website, ThisDishIsVegetarian.com, brands the strawberry insecto-Frapp non-vegan.”

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Australian Watchdog Accuses Apple of Misleading Customers

Tue Mar 27, 2012 7:34am EST Comments Off on Australian Watchdog Accuses Apple of Misleading Customers

Source

“Apple Inc. (AAPL) misled customers in Australia with claims the new iPad connects to 4G networks, when that’s not the case, the competition regulator said.

The Australian Competition & Consumer Commission said in a statement today it will seek court orders in Melbourne tomorrow that will include injunctions, monetary penalties and refunds to customers. Fiona Martin, an Apple spokeswoman in Sydney, didn’t immediately respond to an e-mailed request for comment.

“The ACCC alleges that Apple’s recent promotion of the new ‘iPad with WiFi + 4G’ is misleading,” the regulator said in a statement today. “It represents to Australian consumers that the product ‘iPad with WiFi + 4G’ can, with a SIM card, connect to a 4G mobile data network inAustralia, when this is not the case.”

The new iPad, advertised as 4G compatible, uses the 700 megahertz and 2,100 megahertz frequencies for 4G services. Telstra Corp. operates Australia’s only working 4G network, which uses the 1,800 megahertz frequency.”

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U.S. Equity Preview: WFT, VVUS, VRSK, LGF, IGT, DE, CPA, C, AWI, ALXN, & APO

Mon Mar 26, 2012 8:36am EST Comments Off on U.S. Equity Preview: WFT, VVUS, VRSK, LGF, IGT, DE, CPA, C, AWI, ALXN, & APO

Source

Alexion Pharmaceuticals Inc. (ALXN) : The biotechnology company may stall unless it can expand beyond dependence on its Soliris treatment for rare blood disorders, Barron’s reports in its March 26 edition. The Cheshire, Connecticut-based company’s shares are up 31 percent this year, compared with 77 percent last year and 65 percent in 2010.

Apollo Global Management (APO) (APO US): The private-equity firm may need to increase its offering price for Great Wolf Resorts, Barron’s “Trader” column said, without citing anyone. New York-based Apollo offered $5-a-share on March 13 for Great Wolf, which closed in March 23 trading at $5.59-a-share.

Armstrong World Industries Inc. (AWI) increased 3 percent to $58.50. The Lancaster, Pennsylvania-based maker of floors, ceilings and cabinets said it plans to pay a special cash dividend of $8.55 a share.

Citigroup Inc. (C) gained 0.4 percent to $37.30. The third-largest U.S. bank by assets expects an impairment charge of $700 million as the lender reduces an investment in Istanbul- basedAkbank TAS. (AKBNK) The sum is about $1.1 billion before taxes, the New York-based lender said in a regulatory filing.

Copa Holdings SA (CPA) : The Panama City-based carrier is among Latin American airlines that may gain as the region becomes an increasingly popular destination for business and tourist travel, Barron’s reported. The company has code-share, marketing ties to United Continental Airlines (UAL) and passenger traffic is up 22 percent in 2012 through February.

Deere & Co. (DE) rose 1.4 percent to $81.97. The Moline, Illinois-based farm-equipment maker may rise to $100 in 12 months as the company takes advantage of opportunities in South America and Central Europe, Barron’s reported. The company has had seven straight quarters of record earnings and plans to build seven plants around the world, according to Barron’s.

International Game Technology (IGT) : The world’s biggest maker of slot machines may be poised to gain 20 percent as more U.S. states move to add casino resorts, Barron’s reported. The Reno, Nevada-based company plans a $100 million stock repurchase this fiscal year.

Lions Gate Entertainment Corp. (LGF) rose 7.9 percent to $15.68. The film and television studio behind TV’s “Mad Men” and the Tyler Perry movies pulled in about $155 million in opening weekend ticket sales for its “Hunger Games” film.

Verisk Analytics Inc. (VRSK) : The Jersey City, New Jersey-based information-services company will buy MediConnect Global Inc., a provider of systems and services for medical- record analysis, for $348.6 million.

Vivus Inc. (VVUS) rose 3.2 percent to $22. The biopharmaceutical company said that a marketing authorization application had been accepted by the European Medicines Agency for the review of avanafil, its investigational drug for the treatment of erectile dysfunction.

Weatherford International Ltd. (WFT) : The Geneva-based oilfield-services and equipment provider named John Briscoe, who joined the company in August, as chief financial officer.

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AMERICA’S 10 LARGEST WEBSITES

Sun Mar 25, 2012 12:35pm EST Comments Off on AMERICA’S 10 LARGEST WEBSITES

Eric Risberg / AP

Mallory Whitt works at her desk at the offices of the Wikipedia Foundation in San Francisco. The nonprofit is one of the largest websites.

By Douglas A. McIntyre, 24/7 Wall St.

via MSNBC.com

The 10 most-visited websites in America may share a few characteristics, but interestingly enough, none are in the same business, with the exception of two portals. Each has a different business model as well. An analysis of these largest sites shows that no single model has helped one type of Internet property or another to dominate the web in terms of traffic. The collection of media that is the Internet shows how essential web diversity has become to Americans’ lives.

This list of the most visited sites includes the world’s largest search engine, web portal, video site, software company, social network, encyclopedia, and e-commerce site. One of the sites on this list, Wikipedia, is a nonprofit that runs on a budget of a few million dollars a year. Another, Google, has revenue that will be well above $50 billion. Revenue is not essential to size online, but size can be essential to revenue.

Internet giants have been in particular focus recently, mostly for three reasons. The first is that large sites collect millions and millions of pieces of information about their visitors. Governments, both inside the U.S. and, especially, in Europe have become concerned with how this information is gathered, to whom it is given, what is done with it, and for what financial consideration. Naturally, sites with the largest number of visitors are at the center of this because their inventories of user data are so vast.

Another reason large Internet properties are of interest lately is the upcoming initial public offering of Facebook. The online social networking site has close to one billion members, many of whom spend hundreds of hours each month on the site. The company’s value is set at about $100 billion ahead of the public offering, which is extraordinary because Facebook’s revenue was less than $4 billion in 2011. There is a great disparity among the value of the most visited websites, causing a debate about why users of an e-commerce site are worth any more or less than users of a search engine or a social network.

Finally, sites with tens of millions of visitors are in focus also because of the mass movement of Internet users from PC to smartphones. Smartphones have browsers that operate nearly identically to those on PCs. Strong processors and high-speed wireless connections allow smartphone users to visit the same sites and use them in the same way as they do on computers. The owners of all sites are in a frenzy to see if they can hold onto their user base in the smartphone environment. What happens to the very largest sites will at least be instructional.

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With each year, the Internet becomes increasingly crowded with websites of various sizes, features and functions. The most-visited sites have been among the largest ones for several years. That tells a great deal about the real interests of Americans, probably as much as any other set of markers.

24/7 Wall St. used data from Quantcast to rank the sites. The rank is based on the number of people in the United States who visit each site in a month. The data are updated daily. Revenue figures are based on SEC filings for the public companies and for those in the process of going public. For others, the information is based on data from third party analysts. Revenue data or estimates are for full year 2011.

10. Microsoft.com

  • Monthly audience: 61,981,128
  • Year founded: 1975
  • Revenue size: $69.9 billion

Microsoft’s (NASDAQ: MSFT) website traffic does not include visits to content sites it controls such as the MSN portal, MSNBC news site or the Bing search engine. The visitors counted are for the online corporate destination of the world’s largest software company. Microsoft’s site primary purposes are to sell, download and support its most widely used software products — Windows and its business suite of tools. Microsoft.com is also the destination for public company information, including financial data and the company’s significant patent and intellectual property legal activity.

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9. WordPress.com

  • Monthly audience: 63,933,088
  • Year founded: 2003
  • Revenue size: $10 million

WordPress has two large online destination sites. One is WordPress.org, a place where millions of bloggers download basic open source software they can use to create and maintain their own websites. The WordPress.org traffic is not included in WordPress.com’s traffic figure. WordPress.com is the destination for a broad spectrum of users — from small bloggers to large companies — that use the site to post information and design their blogs. WordPress.com is operated by Automattic, which sells custom design, custom domains and upgrades to the basic WordPress open source software. While the WordPress for-profit business has products used by a large number of different media and large companies, Automattic does not charge high enough fees to make the “upgrade” business a large one.

8. Wikipedia.org

  • Year founded: 2001
  • Monthly audience: 77,354,504
  • Revenue: $20 million

Wikipedia is operated by the nonprofit Wikimedia Foundation. The work of the foundation is to support a collection of open source encyclopedias. This already includes dozens of encyclopedias written in the world’s most common languages. The number of articles created for the sites is huge. The English version alone has 3.9 million articles. The German language edition has 1.4 million articles. The tiny budget of the foundation is being used to drive global traffic to the level of one billion readers and the number of articles to 50 million. All of the capital for these projects is donated to the nonprofit foundation. Wikipedia is most famous for making information on a universe of subjects available for free to anyone with access to the Internet. But with such a large amount of content and small staff to monitor its quality, Wikipedia is also infamous for being inconsistent with mixed quality in different subjects.

7. MSN

  • Monthly audience: 78,095,128
  • Year founded: 1995
  • Revenue: $2.5 billion

MSN.com is one of the three largest Internet content portals, along with Yahoo! and Aol (NYSE: AOL). Its business is supported by display advertising and search revenue. The portal model is based on providing millions of visitors access to a large range of content. This includes a number of areas that used to be exclusively the role of national magazines, newspapers, radio and television. News posted by the portals is among their most visited content, and so is content about sports, entertainment and self-help. The portals have expanded into areas that can get some local advertising revenue, particularly automobiles and real estate. Premium news and entertainment content have recently become a large part of the offerings of these sites as well.

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6. Twitter

  • Monthly audience: 90,790,080
  • Year founded: 2006
  • Revenue: $140 million

Twitter is described alternatively as a “microblog” and as a “social network.” Users, which by many estimates exceed 300 million, can post messages of up to 140 characters at a time. This is microblogging to the extent that the “tweets” are available for large numbers of people to read. It is a social network to the extent that it allows users to exchange details about their lives, plans and interests. The problem Twitter faces is that it has not been able to turn what some industry experts believe is 200 million tweets a day into a viable business. Advertisers have shown a reluctance to put marketing messages into these tweets because they are so short and because Twitter users have often rejected using a service that has become partially commercialized. Some of the Twitter users with the largest followings, mostly celebrities connected to millions of fans, use these followings as a way to promote causes, products or even their own careers. So far, this has proved a more successful way to exploit the service than traditional advertising.

5. Yahoo!

  • Monthly audience: 94,840,280
  • Year founded: 1995
  • Revenue: $5 billion

Yahoo! (NASDAQ: YHOO) has been at the center of a number of controversies over the past several years. It rejected a rich bid by Microsoft in 2008, had three CEOs in four years, and executed a large series of layoffs. Recently, a substantial portion of its board of directors resigned. Yet, the remarkable size of the website’s traffic has not changed, and the parent company continues to be profitable, despite a lack of revenue growth. Some of the sites on this list would welcome Yahoo!’s profits. The Internet portal makes money from a combination of display and search advertising. Yahoo! runs far behind Google in terms of search engine traffic, and it holds only 14 percent of the U.S. market for search activity, according to Comscore. But it still manages to capitalize on that small share.

4. Amazon.com

  • Monthly audience: 99,374,352
  • Year founded: 1994
  • Revenue: $48 billion

Amazon.com (NASDAQ: AMZN) is the primary website for the world’s largest e-commerce company. It is an online superstore with an immensely diverse virtual inventory. It sells nearly anything brick-and-mortar retailers such as Walmart (NYSE: WMT), Best Buy (NYSE: BBY), Barnes & Noble (NYSE: BKS), Home Depot (NYSE: HD) and Kroger (NYSE: KR) sell. And that is to list just a few. Amazon has used the traffic and customer base it has established over the years to enter a number of new, lucrative and even revolutionary businesses. This includes electronic books, which barely existed five years ago. It includes the e-reader business, which Amazon pioneered with the 2007 introduction of the Kindle. And it includes the online video-on-demand business. Amazon has recently been transformed from a company that competes with other retailers to one that also competes with the likes of Netflix (NASDAQ: NFLX) in the content delivery business and with Apple (NASDAQ: AAPL) in the consumer electronics sector.

24/7 Wall St.: The most profitable stores in America

3. Facebook

  • Monthly audience: 149,488,208
  • Year founded: 2004
  • Revenue: $3.7 billion

Facebook, the world’s largest social network with nearly one billion members, plans to raise enough money through an IPO this year to value the company at nearly $100 billion. The site is not even 10 years old. The meteoric rise of the business is largely due to how it altered people’s use the Internet. Before Facebook, Internet use was mostly passive. Visitors went to a portal to get information, to a search engine to get research results, and to video sites to watch content. Facebook helped the Internet evolve into a two-way interpersonal medium on which people voluntarily offer a great deal of their personal information to interact with friends, family and business associates. In the process, Facebook has been at the core of one of the most revolutionary changes in human interaction. Despite this, Facebook has not been able to find a way to make a great deal of money from its huge membership, particularly when compared to Google and Amazon.

2. YouTube

  • Monthly audience: 159,975,920
  • Year founded: 2005
  • Revenue: $1.6 billion

YouTube is the largest video site in the world. To give an idea of its dominance of the U.S. market, 18.6 billion videos were viewed at this division of Google in January against the a total of 40 billion nationwide for all websites. The average number of minutes per viewer for Google’s video content, almost all of it on YouTube, was 448 minutes in January, compared to 57 minutes on Yahoo! and 22 minutes on Facebook. YouTube’s sales are only 5 percent of Google’s total revenue, an extremely small amount given its size. To a great extent, this is because most of the content posted at the site continues to be low-quality, user-created videos, and these videos do not create an environment attractive to major marketers. YouTube has found other ways to pursue revenue. Premium content owners have started to use YouTube to build audiences, and they often pay YouTube for traffic. YouTube also has set up a paid video rental business and joint ventures with several studios. Despite all of this, its revenue was only $1.6 billion in 2011, as based on several estimates. YouTube is the only site on this list that could not have existed before the advent of the broadband technology that allows the transfer of large amounts of data online.

1. Google

  • Monthly audience: 185,167,472
  • Year founded: 1998
  • Revenue: $37.5 billion

Google (NASDAQ: GOOG) is the largest search engine in the U.S. Its dominance goes beyond that. It is also the largest search engine by market share throughout most of Europe. The only large markets where it has stiff competition happen to be emerging markets with huge populations such as China, India and Russia. Google has two substantial challenges now that will determine whether its business can continue to expand at the extraordinary rate of the past decade. First, there is a great deal of competition to become the primary search engine on new tablet PCs like the Apple iPad and smartphones like the iPhone. As more Americans turn to these portable devices to use the Internet, it is not certain that Google will be able to hold the dominant position it currently has against Microsoft and Yahoo! The second challenge Google faces is expanding its other offerings beyond search. It is unclear whether it can use its Google.com site as a means to help it successfully market these products, including applications that compete with Microsoft’s Windows products or e-commerce products like Google Wallet. Google has yet to demonstrate that it is more than a single legged company — at least so far as sales are concerned.

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U.S. Equity Preview: WTSLA, SCS, NKE, MU, COV. CPWM, & ACN

Fri Mar 23, 2012 8:39am EST Comments Off on U.S. Equity Preview: WTSLA, SCS, NKE, MU, COV. CPWM, & ACN

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Accenture Plc (ACN) : The world’s second-largest technology-consulting company raised its full-year earnings forecast to at least $3.82 a share, beating analysts’ average projection of $3.80.

Cost Plus Inc. (CPWM) : The seller of international- themed food and casual furnishings forecast first-quarter revenue of at least $210 million, exceeding the average analyst estimate of $205.8 million.

Covidien Plc (COV) : The maker of surgical products and drugs agreed to buy closely held Newport Medical Instruments Inc., which makes ventilators, for $108 million. The Dublin- based company said it sees no material effect on sales and earnings in 2012.

Micron Technology Inc. (MU) : The largest U.S. maker of computer memory reported a third consecutive loss after sluggish demand for personal computers dragged down chip prices.

Nike Inc. (NKE) : The world’s largest sporting-goods company reported third-quarter profit that topped analysts’ estimates as sales gained in North America.

Steelcase Inc. (SCS) : The maker of office furniture forecast first-quarter earnings of no more than 12 cents a share, falling short of the average analyst estimate of 16 cents.

Wet Seal Inc. (WTSLA) : The apparel chain for teenage girls forecast first-quarter earnings of no more than 4 cents a share, missing the average analyst estimate by 2 cents.

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