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December 17, 2013

Cinema chain AMC offers IPO shares at a discount

Filed under: business, economics — Tags: , , , — ManInBlack @ 7:24 pm

LOS ANGELES • AMC Entertainment Holdings, the cinema chain owned by China’s third-richest man, is selling shares at a discount in its initial public offering as it grapples with slower growth and more debt than its rivals.

The company is seeking to raise as much as $368.4 million in the sale Tuesday, offering 18.4 million shares for $18 to $20 each. At the midpoint, AMC would have an enterprise value of about 7.2 times MKM Partners LLC’s forecast for 2014 earnings before interest, taxes, depreciation and amortization. That compares with more than 7.9 times 2014 Ebitda for Regal Entertainment Group and Cinemark Holdings Inc., data compiled by Bloomberg show.

AMC’s concentration in large cities means high rents are keeping profit margins below those of both rivals, according to Wunderlich Securities Inc. While recent upgrades may draw more urban viewers, AMC is projected to lag behind both Regal and Cinemark in revenue growth. AMC, which was taken private in 2004, also carries more than $2 billion of debt, a turnoff to potential investors, said Sam Hamadeh, founder of the New York- based research firm PrivCo Media LLC.

“AMC has lots of debt and the company’s growth has slowed as well,” Hamadeh said by telephone. “AMC’s IPO is unlikely to be well received.”

China’s Dalian Wanda Group purchased Leawood, Kan.-based AMC from a group including private-equity funds Apollo Global Management LLC and Bain Capital for $2.6 billion, including debt, in 2012. The deal made Wanda’s Chairman Wang Jianlin the largest theater owner in the world. Wang has has a net worth of $12 billion, according to the Bloomberg Billionaires Index.

Wanda will own about 80 percent of the company’s stock after the IPO, the prospectus shows.

AMC is the second-largest U.S. theater chain, according to the Washington-based National Association of Theatre Owners. It has 343 locations and 4,950 screens, mostly in cities including New York and Los Angeles. The company has spent $182 million over the last few years making improvements to its cinemas, including reclining chairs, drink fountains with 120 variations and seat-side service for food and cocktails.

While the company trailed rivals in freshening up its theaters, the cushy chairs may increase revenue in larger markets, according to Chad Beynon, an analyst with Macquarie Group Ltd. in New York.

Still, growth in revenue at AMC will be slower than at Regal and Cinemark, rising about 8 percent in the two years through 2014, according to estimates by Greenwich, Connecticut- based MKM easy payday loans. Over the same period, revenue growth at Cinemark will be 18 percent, while that at Regal Entertainment will be about 14 percent, analyst forecasts compiled by Bloomberg show.

One of AMC’s main challenges has been high-cost rents for its theaters in urban markets, according Matthew Harrigan, an analyst with Wunderlich Securities in Denver.

“When you have the cost associated with those theaters, you’re not going to get the margins of other operators like Cinemark,” Harrigan said.

AMC’s Ebitda margin is expected to be about 17 percent next year, compared with about 23 percent at Cinemark and 20 percent at Regal Entertainment, data compiled by Bloomberg show.

The IPO brings AMC back to the public markets for the first time in nine years. The company was acquired by a CCMP Capital Advisors LLC-led group in 2004, and then merged with Loews Cineplex Entertainment Corp., owned by another private equity consortium, before Wanda bought it last year.

AMC had $2.07 billion in net debt at the end of 2012, or about 5.4 times last year’s Ebitda, compared with 3.4 at Regal and 2.2 at Cinemark, data compiled by Bloomberg show.

Proceeds from the offering will be used reduce borrowings, according to the prospectus. Citigroup Inc. and Bank of America Corp. are managing the offering. The shares will be listed on the New York Stock Exchange under the symbol AMC.

AMC may benefit from its relationship with Wanda, China’s largest theater owner, in negotiation deals with movie studios, since theaters and studios split ticket revenue. One reason that industry leader Regal Cinemas has enjoyed high margins is the advantage its size gives it in negotiating, Macquarie’s Beynon said. U.S. studios are very interested in getting space in Chinese theaters.

Regal, based in Knoxville, Tenn., has surged 40 percent this year, while Plano, Texas-based Cinemark has gained 25 percent.

Given the industry’s limited growth potential, investors will not be as excited about AMC’s IPO as other recent offerings including SeaWorld Entertainment Inc. and Hilton Hotels Corp., said Beynon.

“Interest is medium compared to other IPOs,” he said.


October 31, 2013

Fed’s prolonged stimulus doesn’t stimulate stock buying

Filed under: economics, management — Tags: , , , — ManInBlack @ 6:16 pm

Stocks, which are hovering near all-time highs, fell after the Fed announced no major changes to its stimulus program, commonly known on Wall Street as quantitative easing or QE. Investors expect the program to last at least until the end of this year.

The Dow Jones industrial average, the S&P 500 and the Nasdaq closed with modest losses after starting the day with small gains.

Both the Dow and S&P 500 closed at record highs Tuesday, and both hit new intra-day highs on Wednesday.

The rally has been a global one. European markets climbed to their highest levels in five years Wednesday, and Asian markets ended with sizable gains.

Signs of a market that’s too hot to handle? Investors have become increasingly concerned that the market might be overheated. CNNMoney’s Fear & Greed Index, which measures market volatility and six other gauges of investor sentiment, has been in Greed territory for the past week.

There has been a remarkable shift in the market’s mood this month. The index was showing signs of Extreme Fear earlier in October as investors worried about the government shutdown and a potential debt default by the United States.

PIMCO’s Bill Gross. who runs the largest bond mutual fund, is one of a number of big fund managers who think that stocks have gotten ahead of themselves. Gross wrote on Twitter late Tuesday that “all risk asset prices artificially high.”

Allianz Global Investor’s U.S. investment strategist Kristina Hooper says that the market is once again focusing on when the Fed will pull back on its bond purchases.

“We’re back to an environment where bad economic news is good,” said Hooper. “Bad news suggests we will be on Fedicare for longer.”

Weak hiring: Investors got another weak data point on Wednesday. Private sector employers added just 130,000 jobs in October — their lowest level of job growth since April, according to a report by payroll processor ADP.

Big bucks for Detroit’s Big 3

Earnings season continues in full swing: , Fortune 500) soared as it reported narrower losses in Europe and improving profit margins in North America totally free credit score. Chrysler reported double-digit gains in profit and sales for the quarter. The automaker is not publicly traded, but has announced plans for an initial public offering.

Shares of , Fortune 500), which reported earnings after the market closed that blew away forecasts, surged 15% in extended trading. StockTwits user Jcola44 is a bull who was expecting a good quarter. “$FB Will prove tonight it is the mobile leader,” he wrote before the earnings were released.

But other social media stocks stumbled on Wednesday. ) spooked investors with lackluster guidance. Shares of the social media company fell 9%.

) shares closed down 3% after the review site reported a wider-than-expected quarterly loss and announced plans to sell more stock.

Both stocks have been on a tear this year with LinkedIn’s stock doubling. Yelp shares are up more than 240%.

Many investors on StockTwits thought the dip in Yelp and LinkedIn offered a buying opportunity. “$YELP can’t be kept down. Bad miss + secondary means nothing,” wrote TopstepTrader.

Harmonicreasoning agreed, “If $YELP is still red, go sell something and buy some.”

HookEM thinks it’s time to buy more LinkedIn: “$LNKD 2 qtrs in a row they beat top/bottom line but down due to poor guidance. if this is a repeat of last qtr, this red dip will get bought.”

) shares rallied after China’s largest search engine posted strong earnings and sales, and said earnings in the current quarter would easily top forecasts.

, Fortune 500) reported a quarterly profit and shares rose almost 4% on the news. Cable giant , Fortune 500) reported declines in quarterly sales and profit, but earnings topped expectations. Comcast’s stock was modestly lower.

Shares of ) jumped about 8% after the video game maker’s quarterly earnings beat expectations. But shares of rival gaming company Take-Two Interactive, which is most well-known for its Grand Theft Auto franchise, fell even though the company reported sales and profits that easily topped forecasts.


October 23, 2013

South African Debt Balloons as Gordhan Pledges Spending Curbs - Bloomberg

Filed under: Uncategorized, economics — Tags: , , , — ManInBlack @ 3:36 pm

South African Finance Minister Pravin Gordhan will struggle to keep government debt under control even as he pledges to stick to spending targets.

Gross debt will balloon to 48 percent of gross domestic product in the year through March 2017 from an estimated 43 percent last year, the National Treasury said in its mid-term budget report released in Cape Town today. That

October 4, 2013

Twitter unseals IPO papers, hopes to raise $1 billion

Filed under: economics, small business — Tags: , , , — ManInBlack @ 4:08 am

Twitter has unsealed the documents for its planned initial public offering of stock and says it hopes to raise up to $1 billion in one of the year’s most eagerly awaited stock market debuts.

The documents , which didn’t provide the IPO share price, revealed for the first time how much money the social networking company makes. Founded in 2006, Twitter has never turned a profit and has an uninterrupted history of losses totaling $419 million since its inception. But its revenue is growing.

The Twitter prospectus also discloses that co-founder and Chairman Jack Dorsey holds 23.4 million shares, or 4.9 percent of the company before the IPO. It also notes that Dorsey, a native of the St. Louis area, sold some shares in a 2011 tender offer.

Twitter disclosed three weeks ago that it filed confidential papers to start the IPO process. The company was taking advantage of federal legislation passed last year that allows companies with less than $1 billion in revenue in its previous fiscal year to avoid submitting public IPO documents.

On Thursday, Twitter Inc. unsealed the papers with the Securities and Exchange Commission, giving potential investors and its users a look inside its business. Twitter was required to unseal its documents at least three weeks before it starts holding events around the country to woo potential investors. At this rate, the company will likely price its IPO by Thanksgiving.

According to the IPO filings, Twitter generated $317 million in revenue in 2012 and had more than 218 million active users in the second quarter, up 44 percent from a year earlier. That compares with nearly 1.2 billion for Facebook and 240 million for LinkedIn.

Three-quarters of Twitter users accessed the service from a mobile device in the second quarter, and 65 percent of its advertising revenue was generated from mobile in the same period. That’s more than the 71 percent and the 41 percent, respectively, for Facebook in the same period.

Twitter also said that it lost $69.3 million in the first six months of 2013, compared with a loss of $49.1 million in the same period last year. Revenue more than doubled to $254 million from $122 million cash advance america. The revenue figures are largely in line with what analysts have been expecting. Research firm eMarketer had projected ad revenue for all of 2013 at $583 million.

Gartner analyst Brian Blau said the company’s expenditures “seemed to be a little bit higher than what I had imagined,” but he said it wasn’t “totally out of whack” for a growing company that’s investing a lot in its business. Twitter says it expects capital expenditures of $225 million to $275 million this year.

During the first six months of 2013, Twitter got nearly all of its revenue — 87 percent — from advertising. Advertisers pay Twitter to insert their tweets, accounts or topics into users’ feeds. Burger King, for example, recently promoted its new lower-calorie fries, called “statisfries,” on Twitter.

Twitter’s IPO has been long expected. The San Francisco-based company has been ramping up its advertising products and working to boost ad revenue in preparation. But it is still tiny compared with Facebook, which saw its hotly anticipated IPO implode last year amid worries about its ability to grow mobile ad revenue. Facebook has since made a comeback, having proven that it is able to generate money from mobile advertisements. Its stock price has been hovering around $50, up from its $38 IPO price.

Twitter’s moneymaking potential has minted the company with an estimated market value of $10 billion, based on the appraisals of venture capitalists and other early investors. The IPO could value it higher or lower. PrivCo analyst Sam Hamadeh expects Twitter to aim for a market value of about $15 billion when it prices its IPO.

A big part of Twitter’s appeal is in its simplicity. Users send short messages — either public or private — that consist of up to 140 characters. Anyone can “follow” anyone else, but the relationship doesn’t have to be reciprocal, which makes the service especially attractive for celebrities and companies that use Twitter to communicate directly with customers.


October 2, 2013

Debt Ceiling Wall of Worry Is Another Reason for U.S. Investing - Bloomberg

Filed under: economics, management — Tags: , , , — ManInBlack @ 1:24 pm

The U.S. congressional standoff that shut down the government for the first time in 17 years is a buying opportunity for stock investors, if history is any guide.

The Standard & Poor

September 4, 2013

Fracking Boom Seen Raising Household Incomes by $1,200 - Bloomberg

Filed under: economics, uk — Tags: , , , — ManInBlack @ 11:44 pm

Surging oil and natural gas production brought on by hydraulic fracturing is lifting the U.S. economy by lowering energy costs for consumers and manufacturers, according an industry-funded report.

In 2012, the energy boom supported 2.1 million jobs, added almost $75 billion in federal and state revenues, contributed $283 billion to the gross domestic product and lifted household income by more than $1,200, according to the report released today from IHS CERA. The competitive advantage for U.S. manufacturers from lower fuel prices will raise industrial production by 3.5 percent by the end of the decade, said the report from CERA, which provides business advice for energy companies.

August 29, 2013

Oil briefly surges past $112 in hectic trading

Filed under: economics, term — Tags: , , , — ManInBlack @ 11:24 am

The price of oil briefly surged past $112 a barrel Wednesday before giving up most of its gains while the U.S. seemed to edge closer to intervening in Syria’s civil war.

The U.N.’s special envoy to Syria, Lakhdar Brahimi, said Wednesday in Geneva that there was evidence that some kind of chemical “substance” had been used in an attack that may have killed more than 1,000 people near Damascus.

Brahimi also said that any military strike against Syria needed to gain approval from the 15-member U.N. Security Council.

U.S. Defense Secretary Chuck Hagel said Tuesday that American forces were ready to act on any order by President Barack Obama to strike Syria in response to the alleged use of chemical weapons in the conflict.

By early afternoon in Europe, benchmark oil for October delivery was up 97 cents to $109.98 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, oil rose as high as $112.24.

On Tuesday, the Nymex contract jumped $3.09 to close at $109.01 a barrel. Still, the price remains far below its record close of $145.29 a barrel, reached on July 3, 2008.

The price of oil is has surged more than 15 percent in the last three months on concerns over the civil war in Syria and unrest in Egypt. Neither country is a major oil exporter, but traders worry that the violence could spread to more important oil-exporting countries or disrupt major oil transport routes.

“Syria’s political-economic-military links to Iran, Hezbollah and Russia underline the threat of unintended chain-reaction resulting in wider regional instability. Threat of supply disruption is not insignificant,” said Vishnu Varathan of Mizuho Bank Ltd. in Singapore in a market commentary.

Other analysts, however, said the developments in Syria were being used as an incentive to reconsider the status of the global oil markets — with other factors accounting for rising prices.

A report from JBC Energy in Vienna said there was a “clear risk of an overreaction in the current situation,” especially as Syria was only producing around 70,000 barrels of oil a day. Instead, it pointed to Libya’s export cuts of at least 1 million barrels a day due to production outages and labor conflicts at shipping ports as a more probable price driver.

When Libya’s oil production stopped completely during the revolution in 2011, oil rose by $20 a barrel over the span of two weeks.

While reports of ample global supplies were recently the norm, JBC Energy said current developments — such as low spare capacity in Saudi Arabia, stockpiles falling in the U.S., disappointing supply developments around the world and signs of an improving global economy — pointed to tighter markets.

“In sum, there are surely risks to the upside of oil prices, but they have not much to do with Syria, which has only been a catalyst for reassessing markets,” JBC said.

Brent crude, the benchmark for international crudes, was up $1.20 to $115.56 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

— Heating oil added 2.79 cents to $3.1935 per gallon.

— Natural gas lost 1.4 cents to $3.52 per 1,000 cubic feet.

— Wholesale gasoline rose 3.73 cents to $2.95 per gallon.


August 21, 2013

Industry Minister James Moore denies ‘courting’ Verizon

Filed under: economics, online — Tags: , , , — ManInBlack @ 9:08 am

Officials with Industry Canada and U.S. wireless giant Verizon met in New York in late May but the session was at the U.S. operator’s request and was not part of an attempt to entice Verizon north, Industry Minister James Moore said Tuesday.

“It’s not true, we have not,” he said when asked about an assertion by Rogers Communications that Industry Canada has gone to extraordinary lengths to court Verizon Wireless as part of its goal to promote strong cellphone competition across Canada.

“There was only one meeting,” he told the Star in an interview Tuesday. “Verizon contacted us to ask (for) basic information about the auction and telecom policy,” he said.

“Courting is usually when you cross the dance floor.”

He added that Verizon did not seek favours or inducements and that he had not personally met with anyone from the company.

Moore said while Verizon is the focus of established wireless providers Rogers, Telus and Bell, it is not the linchpin of the government’s strategy to encourage a fourth competitor in each region of the country. “Our policy will succeed whether Verizon comes or not,” he said.

Speculation about a possible entry of Verizon surfaced in June in a report that said the company had made a $700 million offer for Canadian wireless upstart Wind Mobile and was in talks with fellow new entrant Mobilicity. Verizon has said only that is has considered expansion into Canada among many options, while another report last week said the company has shelved, at least temporarily, any plan to set up shop here.

Moore said he believes Verizon is basing its decisions on a business case, adding that Canada is challenging due to its size, consumer expectations, existing brand loyalties and protections — and requirements for heavy capital outlays to build rural networks.

“It’s not an easy market place for somebody to just walk in,” he said.

The minister is meeting with consumer groups and journalists across the country in response to an advertising and public relations blitz by the established telecom providers, who say the government’s wireless rules are skewed toward new entrants at the expense of incumbents.

The so-called big three, along with unions representing some of their workers, say Verizon operations in Canada might lead to higher prices, slower wireless speeds, less rural coverage and could even compromise the security of consumers business cards.

The Communications, Energy and Paperworkers Union of Canada, for example, wants a review of “national security concerns,” relating to a Verizon move here, saying Verizon has worked closely with the U.S. National Security Agency to collect personal data on millions of its U.S. customers. Verizon has declined comment.

Meanwhile, NDP Opposition Industry critic Chris Charlton is calling on the Standing Committee on Industry, Science and Technology to hold Parliamentary hearings on Canada’s wireless rules and its upcoming auction of the airwave spectrum that boosts performance of mobile devices.

It’s a call supported by telecoms, including Bell, and Moore did not rule out the possibility. A spokesperson for the minister said the request is being reviewed by the committee chair David Sweet.

Moore said the twice-delayed auction will proceed as planned in January under rules that set aside two blocks of spectrum for new entrants versus one for incumbents.

The minister acknowledged the structure could lead to incumbents being unable to secure spectrum, which Rogers says could hinder its ability to deliver the highest speed wireless services.

Moore also stood by the government’s decision to effectively block the purchase of Mobilicity by Telus in order to prevent spectrum from a struggling company being passed along to an incumbent with a dominant market share.

Financially distressed Mobilicity has said is in acquisition talks with “multiple parties” and Wind Mobile CEO Anthony Lacavera last week said he was revising efforts to combine Wind and Mobile as a home grown fourth competitor.

Moore said he met with Mobilicity two weeks ago and a further meeting could take place if requested. Mobilicity, which Tuesday said it was partnering with a Vancouver-based reseller, did not immediately respond to a request for comment.


August 16, 2013

MLB set to expand video replay in 2014 pending owners vote in November

Filed under: economics, legal — Tags: , , , — ManInBlack @ 12:32 pm

COOPERSTOWN, N.Y.—Major League Baseball is expanding its video review process next season, giving managers a tool they’ve never had.

Commissioner Bud Selig calls it a historic moment for the game in a press conference in Cooperstown after two days of meetings with representatives of the 30 teams. The proposal is to be voted on by the owners in November.

Managers will be allowed one challenge over the first six innings of games and two after the seventh inning until the end of the game. Calls that are challenged will be reviewed by a crew in MLB headquarters in New York City, which will make the final ruling.

MLB vice-president Joe Torre gave the replay presentation to representatives from all 30 teams on Wednesday and it was discussed Thursday morning.

A 75-per-cent vote by the owners is needed for approval and the players’ association and umpires would have to agree to any changes to the current system.


August 11, 2013

Remembering the Christie Pits riot: DiManno

Filed under: economics, term — Tags: , , , — ManInBlack @ 3:20 pm

Joe Black’s father was a mild-mannered man who owned a small confectioner’s near Christie Pits. Unusual for the time, the store had a telephone.

On the evening of Aug. 16, 1933, the elder Black obligingly let a youth into his store who said he desperately needed to make a call. The fellow was carrying a long steel rod. As Mr. Black hovered nearby, he overhead the teenager trying to summon anti-Semitic reinforcements for the melee that had shockingly broken out across the street.

“My dad took the guy’s arm, pulled it up behind him until you could hear it crack, dislocated the arm completely,’’ recalls the son, now 87 years old, but with vivid recollections of that chaotic night.

“I have memories of everything.”

This was one time that Toronto’s Jewish community would not stand for the abuse, the Jew-baiting, which was quite prevalent in the city in those years just before World War II, when Adolf Hitler had just taken power in an economically flattened Germany and Nazism was ascendant.

This one time, Toronto’s Jews — the teen boys, at least — fought back, with help from Italian lads (the late Johnny Lombardi among them) who’d been equally resented and unwelcome as “foreigners’’ in what was an insular, xenophobic town sometimes called the Belfast of Canada because of its militantly Protestant character and the flamboyant annual Orange Parades.

Working-class youth of Scottish and British stock were just as socially and financially frozen out of the landed gentry privileges personified by the Eaton family — “they ran the city,” snorts call-me-Joe. (At Eaton’s, Jews were hired only for jobs where they wouldn’t deal with the public; a Jewish woman, for example, would not be considered for the elevator-operation position.)

But the white trash had kikes and wops to look down their noses at, as the two largest “ethnic” demographics in the ’30s.

Swastikas and Heil Hitler salutes were not an unfamiliar sight in Toronto. Neither Jews nor Italians were permitted to swim at the city-run Sunnyside pool. They weren’t welcome, either, during that hot summer of ’33, at public beaches in the east and west.

Temperatures and tempers were seething.

It all broke at the end of a softball game at Christie Pits between a Catholic youth team from St. Peter’s Church, and Harbord Playground, composed mostly of Jewish boys but also some Italians.

The rumble erupted when a clot of boys from the self-styled Pit Gang, who’d been sitting on the “camel’s hump’’ — a knoll just south of the baseball diamond — unfurled a large white quilt featuring a black swastika. Young Joe, 7

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