CF Industries profit widely beats; shares jump

CF Industries profit widely beats; shares jump

Stock Market Predictions

NEW YORK (Global Markets) - Fertilizer producer CF Industries Holdings Inc's (CF.N) quarterly profit soundly beat Wall Street's expectations as higher nitrogen prices offset a dip in sales due to a wet spring.

Shares rose 5.8 percent in after-hours trading on Thursday, partly erasing a steep drop in regular trading with the broader markets.

CF makes nitrogen and phosphate fertilizers, both crucial material for farmers.

CF is bullish on the 2011 U.S. corn crop, saying that despite the wet spring it expects more than 90 million acres of the grain to be harvested and farmers to still be extremely profitable.

"We're in for a pretty good return here," CF Industries Chief Executive Steve Wilson told Global Markets. "We're going to have a good corn crop this year."

The company quadrupled its quarterly dividend to 40 cents per share, said it would spend $1 billion to $1.5 billion in the next four years on capital projects, and authorized a stock repurchase plan of up to $1.5 billion.

Most of the capital spending will go to improve existing plants, Wilson said.

CF has benefited from sliding prices for natural gas, one of the main building blocks for nitrogen. It also is partly immune to the global economic crisis given the essential nature of its products.

"The demand-driver for us is the need to feed the world," Wilson said. "We are very confident with our outlook."

EARNINGS BEAT

For the second quarter, the company posted net income of $487.4 million, or $6.75 per share, compared with $105.1 million, or $1.54 per share, in the year-ago quarter.

Excluding a drop in the market value of natural gas trading positions, CF earned $6.87 per share.

By that measure, analysts expected earnings of $5.94 per share, according to Thomson Global Markets I/B/E/S estimates.

Revenue rose 38 percent to $1.8 billion. Analysts expected $1.77 billion.

CF controls about two-thirds of the ammonia supply in the U.S. corn belt. Urea and other nitrogen-based fertilizers come from ammonia.

While CF's ammonia sales dipped about 18 percent to 981,000 tons during the quarter, its average selling price jumped 57 percent. Ammonia is CF's largest product group.

CF's buyout of rival Terra Industries last year made CF the world's second-largest producer of nitrogen, after Norway's Yara (YAR.OL), by increasing its number of fertilizer plants to seven from two.

Shares of CF rose 5.8 percent to $149.26 in after-hours trading. The stock had plunged nearly 9 percent in regular trading as major stock market indexes dropped more than 4 percent on broader economic woes.

(Reporting by Ernest Scheyder; Editing by Gary Hill)

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JPMorgan, BofA sued over mortgage debt losses

JPMorgan, BofA sued over mortgage debt losses

Stock Market Predictions

(Global Markets) - JPMorgan Chase & Co and Bank of America Corp were hit with new lawsuits by investors claiming losses on $4.5 billion of soured mortgage debt, adding to litigation targeting the two largest U.S. banks.

The plaintiff Sealink Funding Ltd said it lost money after buying nearly $2.4 billion of residential mortgage-backed securities (RMBS) from JPMorgan and $1.6 billion from Bank of America from 2005 to 2007, relying on offering materials that were misleading about the quality of the underlying loans.

According to court papers, Sealink is an Irish entity that oversees risky RMBS that contributed to the near collapse of Germany's Landesbank Sachsen AG.

Another plaintiff, Germany's Landesbank Baden-Wurttemberg, raised similar claims in a separate lawsuit against JPMorgan over $500 million of RMBS that it said it bought.

The lawsuits accuse the banks of packaging large amounts of high-risk mortgages by such issuers as Countrywide Financial now owned by Bank of America, and Bear Stearns and Washington Mutual, now owned by JPMorgan, in pursuit of higher profit.

"This misconduct has resulted in astounding rates of default on the loans underlying the defendants' RMBS and massive downgrades of the (investors') certificates, the vast majority of which are now considered 'junk,'" the lawsuits said.

The investors are seeking compensatory and punitive damages in the lawsuits, all filed Thursday in the New York State Supreme Court in Manhattan.

Bank of America spokesman Lawrence Grayson said the bank will defend against its lawsuit by Sealink, which "appears to be another sophisticated investor looking for someone to blame" for losses caused by a downturn in the economy.

JPMorgan spokeswoman Jennifer Zuccarelli declined to comment. Bernstein Litowitz Bernstein & Grossmann, which represents Sealink and Landesbank Baden-Wurttemberg, did not respond to a request for comment.

In a separate lawsuit filed on Thursday in the same court, Britain's Barclays Plc was sued by Germany's HSH Nordbank AG, which said it lost $40 million after being misled into buying risky RMBS.

Barclays spokeswoman Kristin Friel declined to comment.

Banks face many lawsuits by mortgage securities investors seeking to hold them responsible for losses on debt that once seemed safe but turned toxic once the housing and credit crises began more than four years ago.

Bank of America is seeking court approval of an $8.5 billion global settlement covering investors in mortgage pools with $174 billion of unpaid Countrywide principal balances.

That bank and JPMorgan are also among lenders negotiating with regulators including all 50 state attorneys general on a multibillion-dollar accord addressing foreclosure abuses.

The cases are all in the New York State Supreme Court, New York County. They are HSH Nordbank AG et al v. Barclays Bank Plc et al, No. 652678/2011; Sealink Funding Ltd v. Countrywide Financial Corp et al, No. 652679/2011; Landesbank Baden-Wurrtemberg et al v. Bear Stearns & Co et al, No. 652680/2011; and Sealink Funding Ltd v. Bear Stearns & Co et al, No. 652681/2011.

(Reporting by Jonathan Stempel in New York, editing by Gerald E. McCormick, Matthew Lewis, Gary Hill)

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Cablevision down 15 percent as executive quits

Cablevision down 15 percent as executive quits

Stock Market Predictions

(Global Markets) - Shares of Cablevision Systems Corp (CVC.N) fell more than 15 percent in early trading on Friday as investors sold off on uncertainty surrounding the sudden departure of the New York cable operator's well-regarded chief operating officer.

Cablevision announced the sudden resignation of Tom Rutledge, a nine-year veteran of the company, late on Thursday, leading to speculation that he would be joining a larger rival such as Charter Communications Inc (CHTR.O). It also raised the possibility that the Dolan-family-controlled Cablevision would be vulnerable as an acquisition target for Time Warner Cable (TWC.N) or Comcast Corp (CMCSA.O).

Analysts at Miller Tabak and ISI Group downgraded Cablevision on the news and others on Wall Street described the news as a major loss for Cablevision.

Although Rutledge renewed a five-year employment contract two years ago that would have taken him through to 2014, Bryan Kraft of Evercore Partners noted that a one-time special cash and stock award totaling $18.5 million he received at the signing of his employment contract became fully vested this month. Kraft said this might be an indication that Rutledge has been planning to resign for some time.

Rutledge's departure was especially of concern to investors because his long-time No. 2 John Bickham stepped down as president of Cablevision's cable operations last month.

Shares fell $2.10 to $11.80 in early trading on the New York Stock Exchange.

(Reporting By Yinka Adegoke; Editing by Gerald E. McCormick, Dave Zimmerman)

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Brightcove glitters on debut; competition worries

Brightcove glitters on debut; competition worries

Stock Market Predictions

(Global Markets) - Online video publisher Brightcove Inc's (BCOV.O) shares got off to a flying start on their debut, rising as much as 43 percent, continuing the tech sector's strong run in the IPO market.

The company's shares closed at $14.30 on the Nasdaq, 30 percent above the IPO price, valuing the company at $377.2 million. More than 4.3 million Brightcove shares changed hands on the first day.

Investors have lapped up shares of most companies across sectors that debuted earlier this month such as EPAM Systems (EPAM.N), Roundy's Parent (RNDY.N), Caesars Entertainment (CZR.O) and FX Alliance (FX.N).

Started in 2004, Cambridge, Massachusetts-based Brightcove provides cloud-based solutions to clients to help them publish and distribute videos and other digital media.

"Companies that are cloud related are like last year's social media stocks. They (Brightcove) have attractive customer pricing and it is hard for a customer to change because they are committed to the technology," said IPO Desktop analyst Francis Gaskins.

Despite the glitzy start, some analysts remain cautious on the company's long-term prospects.

"Investors are overlooking the fundamentals and even the competitive threats. (They) just buy because the last IPO did well and the market is hot," Josef Schuster, founder of IPOX Schuster, a fund that specializes in investing in newly public companies, said.

Brightcove has incurred a loss each year since it began operating.

It posted a consolidated net loss of $17.3 million for the fiscal year ended December 31, 2011, and expects to continue to incur operating losses on an annual basis through at least the end of 2012, according to a regulatory filing.

Brightcove, which named only Google's (GOOG.O) YouTube as its rival in the filing, also competes with Ooyala, IAC's (IACI.O) Vimeo and Comcast's (CMCSA.O) thePlatform for a share in the fast-growing video cloud sector.

At its opening price on Friday morning, the company is valued at about $382.8 million.

Brightcove's principal stockholders include Accel Partners that holds about 11 percent stake in social media behemoth Facebook Inc, which filed with U.S. regulators to go public earlier this month.

Brightcove's venture capital backers Accel and General Catalyst Partners will each hold 21.4 percent of the company after the offering.

Palo Alto, California-based Accel's affiliates have a stake in daily deals company Groupon Inc (GRPN.O) and have also backed Rovio, the Finnish developer of the Angry Birds smartphone game.

Brightcove's Chief Executive Jeremy Allaire, who co-founded the company, worked as Chief Technology Officer of Macromedia after its merger with Allere Corp. Macromedia was bought by Adobe Systems Inc (ADBE.O) in 2005.

As of December 31, 2011, the company had 3,872 customers in more than 50 countries. They include BBC Worldwide, The New York Times Co, The Financial Times, Bank of America, General Motors and Sears.

(Reporting by Sharanya Hrishikesh and Ashutosh Pandey in Bangalore; Editing by Sriraj Kalluvila, Sreejiraj Eluvangal)

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Discounts weigh on Ann Taylor parent's margins; shares fall

Discounts weigh on Ann Taylor parent's margins; shares fall

Stock Market Predictions

BANGALORE (Global Markets) - Ann Inc (ANN.N), the parent of Ann Taylor and LOFT stores, saw first-quarter margins slip as it discounted more to get sales in an unseasonably cold spring and a highly competitive space, raising concerns about the company's turnaround this year.

Shares of the women's clothing retailer fell 6 percent to a near two-month low of $28.47 in Friday morning trade on the New York Stock Exchange.

Chains like Ann and Chico's FAS Inc (CHS.N), which cater to women over 35, have benefited from increased traffic as they overhaul merchandise, but an extremely competitive environment has forced them to discount and keep prices low.

A rapid rise in prices of raw materials have further pressured margins, forcing many retailers to forecast weak quarters ahead.

On Wednesday, Chico's beat quarterly profit estimates, but its sales fell short of estimates.

Ann, which sells office wear through its Ann Taylor chains and more casual clothes at LOFT, saw the margins slip to 57.3 percent from 59 percent last year.

However, sales rose 10 percent to $523.6 million, beating estimates. Comparable sales increased 7.8 percent.

Ann, which dropped "Taylor" from its corporate name in March, has been investing in e-commerce and outlet stores as it grows its presence beyond traditional retail.

Ecommerce sales on a comparable basis rose 43.1 percent at Ann Taylor and 32.8 percent at LOFT. Traditional stores at Ann Taylor saw a 13.7 percent rise, while LOFT comparable sales at brick-and-mortar stores dropped 1 percent.

The growth of higher margin ecommerce businesses and stabilization of sales at Loft should drive sales and margin gains in 2011, UBS analyst Roxanne Meyer said in a note.

Sales at Loft, being called out as a brand that was beginning to fundamentally improve at the store level, could have contributed to the share movement as well, added Wall Street Strategies analyst Brian Sozzi.

The company expects second-quarter profit to be "slightly higher" than current analyst estimates, on strong sales.

For the first quarter, the company earned 51 cents a share, while analysts, on average, expected 48 cents a share, according to Thomson Global Markets I/B/E/S. [ID:nWNAB0453]

Ann shares were down 3 percent at $29.43 On the New York Stock Exchange on Friday. (Reporting by Nivedita Bhattacharjee; Editing by Maju Samuel)

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Moody's may downgrade UBS and Morgan Stanley

Moody's may downgrade UBS and Morgan Stanley

Stock Market Predictions

(Global Markets) - Moody's warned on Thursday it may cut the credit ratings of 17 global and 114 European financial institutions in another sign the impact of the euro zone government debt crisis is spreading throughout the global financial system.

It was reviewing the long-term ratings and standalone credit assessments of a range of banks, Moody's added. Markets were unaffected by the Moody's announcement.

"Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions," the ratings agency said in a statement.

It said among 17 banks and securities firms with global capital markets operations, it might cut the long-term credit rating of UBS, Credit Suisse and Morgan Stanley by as much as three notches following the review. It said the guidance was indicative.

Among the banks that might be downgraded by two notches are Barclays, BNP Paribas, Credit Agricole, Deutsche Bank, HSBC Holdings, and Goldman Sachs.

Bank of America and Nomura were included in those that might be downgraded by one notch.

The U.S. rating agency said in a separate statement its action on 114 financial institutions from 16 European nations reflected the impact of the debt crisis and deteriorating creditworthiness of its governments.

It cited more fragile funding conditions, increased regulatory burdens and a tougher economic environment for its review of banks and securities firms with global reach.

Moody's salvo follows rounds of downgrades in European sovereign ratings as the euro zone's struggle to keep its weakest link Greece afloat has been driving up borrowing costs and straining finances of other nations.

Last Monday, Moody's cut the ratings of six European nations including Italy, Spain and Portugal and warned it could strip France, Britain and Austria of their top-level AAA grade.

Standard & Poor's cut France's and Austria's top ratings and downgraded seven other euro zone nations last month. It also cut the euro zone's bailout fund by one notch.

Moody's on Thursday also downgraded the insurance financial strength ratings (IFSR) by one or two notches of several insurance companies, which it said related to their investment and operating exposures to Spain and Italy.

These included Unipol Assicurazioni SpA, Mapfre Global Risks, Assicurazioni Generali SpA and Allianz SpA. It affirmed the IFSR of Allianz SE, AXA SA, Aviva Plc and their subsidiaries, but cut the outlook on the rating to negative from stable.

VICIOUS CIRCLE

Asian shares and the euro were weaker on Thursday on concerns about another delay in cementing a bailout for Greece. Traders said markets didn't not show any specific reaction to the Moody's announcement.

In its review of European financial institutions, Moody's said that once completed, the ratings would "fully reflect the currently foreseen adverse credit drivers."

European banks' bond holdings of struggling euro zone nations Greece, Portugal, Ireland, Spain and Italy have trapped Europe in a vicious circle.

The falling value of the debt puts pressure on banks, which in turn weighs on lending and economic activity, making it tougher to sustain the growth that governments badly need to shore up their finances.

The biggest single group among the 114 institutions under review were headquartered in Italy, followed by Spain, with more than 20 each. Nine were headquartered in Britain, 10 in France and seven in Germany.

Moody's said nine of the 17 banks with global reach are included in the list of 114 financial institutions in Europe.

European Union leaders have been trying to put a financial "firewall" around the nations most afflicted by the euro zone debt crisis.

But jittery market sentiment suffered a fresh setback on Wednesday when several EU sources told Global Markets that the euro zone was considering a delay in parts of a second bailout plan for Greece.

Moody's said that for 99 European financial institutions, the standalone credit assessments have been placed on review for downgrade. For 109 institutions, the long-term debt and deposit ratings have been placed on review for downgrade.

For 66 institutions, the short-term ratings have been placed on review for downgrade.

(Additional reporting by Wayne Cole in Sydney: Writing by Tomasz Janowski and Neil Fullick; Editing by Ramya Venugopal)

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Hartford Financial sees lower Q3 credit loss

Hartford Financial sees lower Q3 credit loss

Stock Market Predictions

Hartford Financial Services Group Inc (HIG.N) sees lower credit losses in the third quarter and said it has no direct exposure to sovereign European debt.

The Hartford, which is one of the oldest companies in America, said it expects a third-quarter credit loss of about $61 million, primarily on structured securities, and a net unrealized gain of $2.6 billion as of Sept 30.

Shares of the Hartford, Connecticut-based insurer were trading nearly flat at $17.76 in the morning session Friday on the New York Stock Exchange.

(Reporting by Aditi Sharma in Bangalore; Editing by Anil D'Silva)

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UniCredit 3-day share plunge reaches 37 percent

UniCredit 3-day share plunge reaches 37 percent

Stock Market Predictions

MILAN (Global Markets) - Shares of UniCredit (CRDI.MI), Italy's biggest bank by assets, sank for a third day as investors punished the stock after the lender priced a 7.5 billion-euro ($9.5 billion) rights issue at a deep discount.

The shares closed down 11.1 percent at 3.98 euros on Friday, the last trading day before the new share offer takes effect on Monday, extending losses over the past three days to 37 percent.

Since it priced the rights issue on Wednesday, UniCredit's market capitalization has fallen from 12.2 billion euros to 7.68 billion, a shade above the total amount of the new share offer.

UniCredit's rights issue is a litmus test of investor appetite for banking stocks at a time when many European lenders are under pressure to shore up their capital buffers to withstand a spreading debt crisis.

To meet the new requirements, UniCredit must plug an 8 billion-euro capital shortfall -- the biggest shortfall for a single bank after Spain's Santander (SAN.MC).

The Milan-based lender, the first big European bank to launch a share offer since the tougher capital requirements were introduced, priced its two-for-one rights issue at 1.943 euros per share.

That represents a 43 percent discount to the theoretical ex-rights price, a much higher discount than that offered by peers in recent rights issues.

The shares are trading at their lowest since UniCredit was created in 1998 through the merger of several Italian lenders.

"Everyone's selling part of their shares now to buy back through the rights at 1.943 euros," a Milan trader said.

Prime Minister Mario Monti defended Italy's banking system, which he said was among the most stable in Europe and said the turbulence encountered by UniCredit was the result of temporary problems linked to its capital increase.

"The Italian banking system is among the most solid," he told France 24 in an interview on Friday, noting that Italian banks had little exposure to the complex financial instruments that have undermined banks in some other countries.

"I think the difficulties of UniCredit were above all linked to the capital raising exercise, which in this market situation, encountered some temporary difficulties, but the Italian banking system is fundamentally solid," he said.

The three-day drop highlights the struggle European lenders face to raise funds and may deter them from tapping the market as the debt crisis continues.

"After the collapse in the UniCredit share price, many banks will now be looking at other ways to raise capital," said Neil Dwane, chief investment officer in Europe for RCM, a unit of Allianz Global Investors.

The Italian stock exchange said after the close that UniCredit's share price, adjusted for the rights issue, will begin trading on January 9 at 2.622 euros.

The new share offer ends on January 27 and is guaranteed by a pool of 27 lenders, meaning they will take up any portion of the offer that might go unsubscribed.

($1 = 0.7865 euros)

(Additional reporting by Stephen Jewkes and Michel Rose; Editing by David Hulmes and Steve Orlofsky)

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Muddy Waters' Block says OSC move a "major positive"

Muddy Waters' Block says OSC move a "major positive"

Stock Market Predictions

NEW YORK (Global Markets) - Carson Block, director of research at Muddy Waters Research, said on Friday that the Ontario Securities Commission's moves against Sino-Forest (TRE.TO) were "a major positive."

The OSC ordered all trading in Sino-Forest securities to cease and ordered several executives to resign, though it rescinded that order.

"It seems the OSC has some information investors do not that it believes is material to investment decisions," Block said. "I'm impressed with the progress the OSC has made so far."

Muddy Waters on June 2 issued a sharply negative report on Sino-Forest, accusing it of exaggerating the size of its forestry assets and sparking a massive decline in the shares.

"We're encouraged that it looks like the wheels of justice are turning," Block said, adding that while his firm faced criticism for its report, "at the end of the day, people who lost money in this are hurting a lot more from (Sino-Forest) than we are."

Shares of Sino-Forest slid 5.7 percent on Friday before being halted. They have plunged almost 74 percent since the close prior to the Muddy Waters report on June 2.

(Reporting by Ryan Vlastelica)

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Top Vulcan shareholder backs Martin Marietta deal

Top Vulcan shareholder backs Martin Marietta deal

Stock Market Predictions

(Global Markets) - Southeastern Asset Management, an investment management firm that holds nearly 10 percent of Vulcan Materials Co's (VMC.N) shares, said the construction materials company should strike a deal with rival Martin Marietta Materials (MLM.N).

Southeastern, which is also a top Martin Marietta shareholder, said in a letter filed with U.S. regulators on Friday that it strongly recommended the two companies resume talks.

Martin Marietta launched a hostile, nearly $5 billion bid to buy larger rival Vulcan in December, with the hope of building the world's largest producer of sand, gravel and other construction materials. Vulcan has rejected the offer.

"We understand that a higher offer from Martin Marietta will be necessary to complete a deal, and as Vulcan shareholders we support seeking a higher offer," Southeastern senior analyst Lowry Howell and general counsel Andrew McCaroll said in the letter.

Southeastern said that if Vulcan refuses to negotiate over the bid, it would vote for the slate of directors that Martin Marietta has nominated to Vulcan's board.

Vulcan shares rose 3.1 percent to $42.93 on the New York Stock Exchange on Friday afternoon.

(Reporting By Michael Erman; Editing by Steve Orlofsky)

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Alcoa stock down after announcing metal output cut

Alcoa stock down after announcing metal output cut

Stock Market Predictions

(Global Markets) - Alcoa Inc (AA.N) stock dropped over 2 percent on Friday, a day after the largest U.S. aluminum producer said it will cut global smelting capacity by 12 percent in the face of slumping metal prices.

In early trading on the New York Stock Exchange, Alcoa shares were down 2.4 percent at $9.14.

On Thursday, the company said it was closing down its Tennessee smelter and two potlines at a smelter in Rockdale, Texas, as part of a plan to cut 531,000 tonnes in annual output.

Analyst Tony Rizzuto, of Dahlman Rose & Co said although the action might be seen negatively in the short-term, he believes it is good for Alcoa and the industry.

"The move is in line with the company's efforts to improve its position on the primary aluminum cost curve," he said.

"These actions, while likely to be viewed by some observers as negative, are a positive for Alcoa and the industry as it could lead to a more balanced supply/demand environment and provide some stability to aluminum pricing."

Alcoa, battling higher raw material costs and slumping metal prices, is expected by many Wall Street analysts to post a fourth-quarter loss next Monday.

(Reporting By Steve James; Editing by Gerald E. McCormick)

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Why stock market predictions are so often misses the

Why stock market predictions are so often misses the?
What was the oracle in ancient times , which is now the expert. To find out what happens to the economy or the stock exchanges, we rely on the knowledge of modern prophets : On Financial Market researchers , analysts and fund managers – even on those who earn their money by watching the markets.

Success makes arrogant
But how accurate are the stock market predictions of the experts? Three researchers from Germany and wanted to know Canada and compared with the old estimates of future actual values.

Cause of their study are insights from psychology : " Most people are often over- confident and to the precision of their knowledge , "write Richard Deaves ( McMaster University, Ontario ), Erik Lueders and Michael Schröder (both: ZEW Mannheim) in their study, the forthcoming in the Journal of Economic Behavior & Organization "appears. But the same goes for professional financial prophet? This question has been no research team investigated.

For its test of reality , the three scientists used the forecasts on the future development of the German stock index ( DAX ), which are requested in the same questionnaire. The expert estimates of future economic development proved to be asked for the study as too crude – the ZEW only be a basic assessment of the development: Is it up , down, or is all the same?

The DAX forecasts on the other hand much more concrete : So the experts have to specify a precise margin, are the likely the stock after half a year in their opinion is .

Hardly a respondent is the test oracle
The interesting thing : The width of the margin to select the respondents themselves . An interval of 1000 Dax – points is just as possible as one of ten. Who was more uncertain , then, how many points are in the index six months later, would , could simply indicate a greater margin – and thus in the end maybe even be right .

Nevertheless, a respondent could barely pass the test oracle : The vast majority of Dax true value was at most only seven out of ten estimates the assumed interval. 40 percent met even only a maximum of every second time the mark.

In a second study the researchers were able to demonstrate to the financial experts a typical human trait : to make success self-confidence , caution against failures . they were correct with their predictions in the previous time, then reduced the respondents the margin at the next attempt at about five percent.

they were wrong, they increased the interval by a similar amount – probably to the danger of a renewed insult reduced. The crucial question, the researchers went about was: experts with long experience better? "If they are able to learn from their successes and failures , they would have the time to make really accurate forecasts " , the researchers suspect .

But curiously, their analysis showed just the opposite : three additional years of professional experience, the forecasts deteriorate measured by an average of over one percent , noted the authors. Perhaps the motivation is to deliver good performance, with experienced veterans simply are not as big as the presumption of Deaves , Luders , and Schroder.

Experience therefore not protected against errors , but makes it more likely. Conversely, this means that true professionals do not have to be old.

For additional you can also read - Can You Dominate Your Retirement?

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Brokerages cut earning estimates on BofA

Brokerages cut earning estimates on BofA

Stock Market Predictions

(Global Markets) - JMP Securities said Bank of America Corp has the capital levels to absorb $100 billion in mortgage losses without technically needing to raise capital, but practical considerations could force the issue at half that loss amount.

Though the largest U.S. bank by assets currently has a pro-forma $37 billion capital cushion under the Basel III framework, mounting mortgage losses could transcend earnings and cut into the capital buffer, leading the bank issue stock and dilute shareholders, JMP Securities analysts David Trone said.

"As we saw in 2008 and 2009, financial firms will often be forced to raise capital well before the technical benchmarks are breached," Trone wrote in a note.

"We suspect the company would raise (capital) even at $50 billion, or half the projected loss levels in our 'reverse engineer/stress test' analysis."

JMP said the newly issued warrants to Berkshire Hathaway Inc imply a modest share dilution, cutting its 2011 operating EPS estimate by a cent to $0.95 and 2012 operating EPS by 7 cents to $1.42.

It maintained its "market perform" rating on the stock.

In August, Warren Buffet said he will invest $5 billion in the bank.

Separately, Guggenheim Partners also cut its earnings estimates and lowered its price target by a dollar to $10 on the bank's stock to reflect the market's current lack of appetite for risk and the overhang which is directly related to the bank's acquisition of CountryWide.

The brokerage lowered its 2011 estimated EPS by 3 cents to a loss of 17 cents and estimated 2012 EPS by 4 cents to $1.33, while maintaining its "buy" rating on the stock.

Shares of Bank of America were trading down 2 percent at $7.07 in early trade on Friday on the New York Stock Exchange. The stock has lost nearly 50 percent of its value since January.

(Reporting by Tanya Agrawal in Bangalore; Editing by Joyjeet Das)

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Analysis: Gol bond rally seen limited as Delta deal falls short

Analysis: Gol bond rally seen limited as Delta deal falls short

Stock Market Predictions

SAO PAULO (Global Markets) - Gol Linhas Aereas' (GOLL4.SA) (GOL.N) sale of a minority stake to Delta Air Lines Inc (DAL.N), is sparking gains in Gol's bonds, but some investors say the rally will be short-lived.

While Delta's investment of $100 million for a 3 percent stake will earn it a seat on Gol's board, it will not bolster the Brazilian airline's finances as much as bondholders hoped.

The benefits of codesharing and shared efficiencies between the airlines also pale in comparison to the takeover of rival TAM (TAMM4.SA)(TAM.N) by Chile's LAN Airlines LAN.SNLAN.N, which promises $400 million a year in cost savings.

Yields on Gol's dollar-denominated notes due in 2020 have tightened more than 70 basis points since Wednesday, when the alliance was announced, to 10.40 percent early on Friday. Yields move inversely to prices and decline as market risk perceptions of the bond improves.

But hopes that Gol's yields will converge to levels similar to those of TAM's comparable bonds will likely fade, as the rush of enthusiasm following the Delta deal wanes, according to fund manager Leonardo Kestelman of Dinosaur Securities in Sao Paulo.

"From a credit perspective, the TAM-LAN deal was more decisive," said Kestelman, who manages about $800 million in bonds. "The yield convergence process will be temporary since Gol and Delta didn't go as far as TAM did with LAN."

The deal does not significantly shift Gol's debt profile, he said. Delta's investment is a drop in the bucket compared to Gol's net debt of 2.6 billion reais ($1.4 billion), or about 8 times its operating earnings over the past 12 months.

TAM's net debt is about 5 times its operating profit. The yield on its dollar note due in 2020 is now 7.87 percent, representing a 2.54 percentage-point difference to Gol's yields. The difference was 3 percentage points on Monday, according to Thomson Global Markets data.

Bond investor Mark Christensen of DoubleLine Capital LP said Gol's cash position is stronger than TAM's, and its short-term debt exposure is lower, but investors would feel safer if Gol came entirely under the protection of a bigger player like Delta.

Gol's short-term debt represents only 9 percent of total liabilities, compared with 21 percent for TAM. Gol is rated B-plus by Standard & Poor's, one level above TAM's B rating.

"We're going to have a stronger balance sheet and capital structure," after the Delta deal, Gol's Chief Financial Officer Leonardo Pereira told analysts on a conference call.

TOUGH OUTLOOK

Gol could see gains in its bonds limited by challenges confronting the industry, as fuel costs have risen and a glut of new capacity has come onto the Brazilian market this year.

Air traffic growth is also slowing sharply in Brazil because of congested airports and consumers' cooling appetites in the face of higher ticket prices.

Citigroup analyst Stephen Trent said Gol is particularly hemmed in by available flight times at the busiest airports and has struggled to fill seats, flying emptier planes in October than its rivals.

Gol also suffers more from spikes in dollar-linked fuel prices than TAM, because it has more revenue denominated in Brazilian reais.

"Given the tough outlook for the sector, the chances of positive news flow that could trigger the tightening of Gol bonds seem to be limited in the short term, and both bonds are tending to trade sideways," Ciro Matuo, a credit market analyst with Itau BBA in Sao Paulo, wrote in a note to clients.

With Delta booking more passengers on its flights, Gol is hoping to boost its load factor, a gauge of seat occupancy, where it has lagged behind rivals even as the airline cut fares. Cost savings through the alliance could also improve measures of Gol's operating costs, which are running above TAM's.

The deal's biggest winner may be Delta, which gains much better access Latin America's leading air travel market and its attractive yields, a metric of ticket pricing.

Gol agreed to appoint a Delta representative to its board as long as the U.S. company retains a minimum 50 percent of the acquired shares. Delta agreed not to sell the stake within the next 12 months or to add to it without Gol's consent.

Headwinds in Brazil's air travel industry have driven a wave of consolidation, including Gol's deal to buy smaller rival WebJet and TAM's talks to buy a 31 percent share of TRIP, leaving fewer local partners for foreign carriers.

In announcing the alliance with Delta, Gol executives acknowledged that a codesharing agreement with American Airlines will end in September next year.

Delta's investment in Gol came just days after American Airlines' parent, AMR Corp (AMR.N), filed for bankruptcy, citing the carrier's uncompetitive cost structure.

Delta carried 15 percent of the passenger traffic between Brazil and the United States last year, trailing TAM and American, which both carried over 30 percent of passengers.

($1=1.81 reais)

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Bombardier stock hit again by regional jet outlook

Bombardier stock hit again by regional jet outlook

Stock Market Predictions

VANCOUVER (Global Markets) - Shares of Bombardier Inc (BBDb.TO) fell for a second day on Thursday after the world's No. 3 commercial planemaker raised cash flow concerns and spooked investors with a dismal sales outlook for its regional jets.

Several brokerages cut their price targets for Bombardier stock and at least one analyst downgraded it even though the company's second-quarter earnings and revenue, released on Wednesday, beat market expectations.

Bombardier shares closed 21 Canadian cents, or 4.4 percent, lower at C$4.56 on the Toronto Stock Exchange on Thursday in heavy trading after losing 6.8 percent on Wednesday.

Montreal-based Bombardier said on Wednesday it may have to curb production of its CRJ fleet of regional commercial aircraft if orders do not pick up, and its results showed a much higher-than-expected cash burn .

Bombardier's aerospace outlook has become more muted on growing concerns over global slowdown, said Raymond James analyst Steve Hansen, who downgraded the stock to "market perform" from "outperform".

"If the company does not win these CRJ (sales) campaigns, we believe it will reduce production rates, which in turn may impact its 2013 EBIT target of 10 percent," said analyst Walter Spracklin of RBC Capital Markets.

Spracklin, who cut his price target on the stock by a C$1 to C$6, said he does not expect any big orders for Bombardier's new larger-sized jet, the C-Series, any time soon.

"With most of the large U.S. carriers already announcing or postponing their fleet renewal plans into 2012, we believe the probability of a 'mega' order (which we would consider 100-plus firm orders as such) in the coming months as low," he said.

Just as Bombardier is trying to ramp up its regional jet sales in emerging markets, several new products are coming online, including Russia's Superjet, Japan's MRJ, and China's ARJ regional jet, making Bombardier's penetration of these markets more difficult, Spracklin said.

J.P. Morgan Securities, Credit Suisse, Desjardins Securities and Stonecap Securities cut their price targets on the stock as well.

JP Morgan's Joseph Nadol, however, said: "The key earnings driver is a business jet recovery and we see Bombardier as the best play on this end market in our group." Nadol kept his "overweight" rating on the stock.

(Reporting by Bhaswati Mukhopadhyay in Bangalore and Nicole Mordant in Vancouver; Editing by Peter Galloway)

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Yingli Green posts loss, cuts shipment view

Yingli Green posts loss, cuts shipment view

Stock Market Predictions

(Global Markets) - China-based Yingli Green Energy Holding Co posted a quarterly loss, hurt by a steep slide in solar panel prices, and cut its full-year photovoltaic module shipment outlook.

Like other solar makers, Yingli has been hit hard this year as a glut of panels has knocked prices lower, squeezing profit margins and pushing its shares down 64 percent so far since 2010.

On Tuesday, Suntech Power Holdings, JA Solar and other Chinese companies reported disappointing earnings and said the market would remain weak into the first half of 2012.

At the request of some U.S. solar companies, the Obama Administration is investigating whether Chinese manufacturers, including Yingli, have engaged in "dumping" their solar panels at below-market prices.

Yingli has strongly denied the dumping charge, and China's industry fired back this week, saying it might seek an investigation into possible dumping of polysilicon by U.S. companies.

Yingli Green's net loss for the third quarter was $28.3 million, or 18 cents per American Depositary Share ADS, compared with a year-earlier profit of $68.2 million, or 44 cents per ADS.

Revenues rose 36 percent to about $667.7 million.

Yingli's gross margin shrank to 10.8 percent from 22.1 percent in the second quarter and 33.3 percent a year earlier.

For 2011, Yingli cut its module shipment forecast to a range of 1,580 to 1,630 megawatts from its previous estimate of 1,700 to 1,750 MW. The revised figure represents growth of about 50 percent from 2010 shipment levels.

Shares of Yingli Green rose 1 cent to $3.55 in premarket trading on Wednesday.

(Reporting by Arup Roychoudhury in Bangalore and Matt Daily in New York; Editing by Supriya Kurane and Lisa Von Ahn)

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Yingli profit beats Wall Street, sees sector bounce

Yingli profit beats Wall Street, sees sector bounce

Stock Market Predictions

NEW YORK (Global Markets) - Rosy earnings from Chinese solar panel maker Yingli Green Energy on Friday stood in stark contrast to the dismal reports from its rivals, and the company said market signs pointed to a rebound in the second half of the year.

The solar industry has been battered in 2011 by steep declines in the prices for the modules that turn sunlight into electricity, shrinking profit margins and pushing some of the largest players into the red.

The MAC Solar companies index has slumped more than 31 percent so far this year, more than three times the drop in the S&P 500.

Yingli, however, managed to beat Wall Street forecasts with its second-quarter earnings issued on Friday as it shipments jumped nearly 37 percent from the first quarter, and it stuck with its forecast that it would sell more than 1,700 megawatts of solar panels this year.

That helped lift Yingli's share price more than 3 percent, gaining back a bit of the selloff that has wiped off more than 40 percent of its value this year.

"The stock has probably found a pretty nice bottom right here," said Mark Bachman, analyst with Avian Securities LLC.

"They were the first company so far this earnings period to come out and say things are looking better. We anticipate a year-end gold rush."

Global demand for solar panels sank in the first half as governments in the top two markets, Germany and Italy, pared their subsidies that make the technology competitive with fossil fuels such as coal and natural gas.

Those subsidy cuts came even as the major producers ramped up their production, causing a glut in panel supplies that swelled inventories across the industry, driving prices lower.

That price pressure drove Evergreen Solar, once an industry darling, into bankruptcy earlier this week after it struggled to keep pace with its Chinese rivals.

To be sure, those Chinese companies have suffered as well. JA Solar Holdings Co Ltd said its solar module sales prices fell 20 percent in from the first quarter, pushing it to a net loss in the second quarter.

China Sunergy Co reported a worse-than-expected loss on Friday, and chopped its 2011 shipment forecast.

On Monday, all eyes will turn to Suntech Power Holdings, the world's biggest solar company by production capacity, Its shares slumped more than 5 percent on Friday to challenge their lifetime lows.

LDK Solar, which makes the silicon wafers that are used to build solar panels, cut its revenue and margin forecasts after the market close on Thursday, and said it would write down the value of its inventories.

"The wafer market could face a prolonged downturn due to industry oversupply," said Wells Fargo analyst Sam Dubinsky, who cuts his 2011 profit forecast for LDK by about two-thirds.

Still, those low wafer prices help most of the module makers, since the wafers typically make up more than half their costs.

BETTING ON BRIGHTER SUMMER

Yingli, which said its net income nearly doubled to $58.1 million, or 36 cents per American Depositary Share (ADS) from a year ago, topped Wall Street forecasts and said it has seen strong interest from customers since June.

"We saw the sign of demand recovery triggered by the drop of module price," Chief Executive and Chairman Liansheng Miao said in a statement.

Its revenue of $680.6 million easily topped the $616 million that analysts had expected.

The turmoil from the first six months of the year may give way to a rebound in the second half, companies have said. Italian buyers have returned now that uncertainty about the subsidies has abated, and sales to new markets, such as the United States, China and other Asian countries are growing steadily.

And Germany, which bought only 1,000 MW of modules through May versus 1,700 in the same period of 2010, is expected to return heavily to the market now that panel prices have sunk.

"We have already signed several contracts for products for delivery from August through to the fourth quarter of the German end market," JA Solar Chief Executive Peng Fang told analysts on Thursday.

Yingli's American Depositary Receipts in New York rose 3 percent to $5.80, while LDK tumbled more than 17 percent to $5.43. The MAC Global Solar energy index fell 3.4 percent.

(Reporting by Matt Daily, Nichola Groom in Los Angeles, Krishn N Das and Vaishnavi Bala in Bangalore, editing by Dave Zimmerman)

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Aon Q2 beats on Hewitt buy, says soft pricing to continue

Aon Q2 beats on Hewitt buy, says soft pricing to continue

Stock Market Predictions

BANGALORE (Global Markets) - Aon Corp (AON.N) posted an estimate-topping quarterly profit as its acquisition of Hewitt Associates paid off, but the world's largest insurance broker said it still expects soft insurance pricing to continue.

High unemployment and stiff competition made it hard for insurers to raise premiums, hurting insurance brokers like Aon, Marsh & McLennan (MMC.N) and Willis Group (WSH.N) that depend on commissions for much of their revenue.

As insurers have faced high levels of losses over the last year, analysts expect them to increase premiums, benefiting insurance brokers like Aon. But the company is not optimistic.

"Despite industry loss expense in the first half, we believe excess capacity globally will continue to drive soft pricing, albeit at a more modest rate of decline," Aon Chief Executive Greg Case said on a conference call.

Aon's views on soft insurance come in sharp contrast to what has been said by virtually every major insurer to report results so far this season.

Sandler O'Neill analyst Paul Newsome said the disconnect between the brokers and insurance companies relates to the difference between renewal pricing and new insurance pricing.

The fall in the operating margin for Aon's brokerage unit also disappointed investors, but analysts expect the margin to expand in the future.

"We should see stronger margins in the back half of the year as organic growth continues," Stifel analyst Meyer Shields told Global Markets.

For the second quarter, the adjusted operating margin from the brokerage operations fell to 19.6 percent from 21 percent a year ago.

Second-quarter net income attributable to common shareholders rose to $258 million, or 75 cents a share, from $153 million, or 54 cents a share, in the year-ago period.

Excluding items, earnings from continuing operations were 83 cents a share.

Analysts, on average, expected the company to earn 82 cents a share, according to Thomson Global Markets I/B/E/S.

Total revenue rose 48 percent to $2.8 billion. HR solutions revenue more than tripled to $1.09 billion.

Aon Corp last year spent $4.9 billion to buy Hewitt Associates Inc in an aggressive bid to leapfrog arch rival Marsh and McLennan and create the world's largest human resource services company.

Shares of the Chicago-based company were down 3 percent at $47.98 in morning trade on Friday on the New York Stock Exchange.

(Reporting by Jochelle Mendonca in Bangalore; Additional reporting by Ben Berkowitz in New York; Editing by Joyjeet Das and Gopakumar Warrier)

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Affymetrix shares fall on weak Q2 revenue view

Affymetrix shares fall on weak Q2 revenue view

Stock Market Predictions

(Global Markets) - Shares of Affymetrix Inc (AFFX.O) fell about 20 percent on Thursday, a day after the genetic analysis products maker reported preliminary second-quarter revenue below market expectations.

"Affymetrix described its academic business (nearly 70 percent of revenue) as weak across all geographies, particularly in North America. Some of this business is pushed into third-quarter, as we believe it restricted its salesforce's ability to offer end-of-quarter discounts to meet quota," Leerink Swann analysts said in a note to clients.

On Wednesday, the company said it expects revenue between $64-65 million. Analysts, on average, were expecting $74 million in revenue, according to Thomson Global Markets I/B/E/S.

"Our consumable revenue was down by about 10 percent from last year," said Chief Commercial Officer Andrew Last.

The company expects product revenue of about $58-$59 million. Consumable sales was projected at about $55 million.

Leerink Swann analysts said they were expecting consumable sales of $63 million for the second quarter.

Shares of the company were trading down 19 percent at $6.48 after hitting a low of $6.42 on Thursday on Nasdaq. (Reporting by Kavyanjali Kaushik in Bangalore; Editing by Sriraj Kalluvila)

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Diamond Foods may breach debt covenants: analysts

Diamond Foods may breach debt covenants: analysts

Stock Market Predictions

(Global Markets) - Diamond Foods Inc (DMND.O) is likely to breach its debt covenants and cancel its biggest-ever deal, analysts said, as its stock tumbled 37 percent a day after the company removed its two top executives and said it would restate results for the last two years.

"Diamond's (earnings) restatements will cause debt covenant default and ultimately raise interest expense," Janney Capital Markets analyst Mitchell Pinheiro said in a note, adding that Diamond's proposed purchase of Pringles potato chips from Procter & Gamble Co (PG.N) was "finished."

The company will most likely have to renegotiate the terms of its debt and pay a higher interest rate, KeyBanc Capital Markets analyst Akshay Jagdale said.

The restatement of results would change the ratio of debt to earnings -- one of the terms of Diamond's debt agreements.

Diamond -- which had debt of $531.7 million and just $3.1 million of cash as of July 31, 2011 -- did not have an immediate comment.

On Wednesday, Diamond, maker of Pop Secret popcorn and Kettle chips, said its audit committee found the company had improperly accounted for payments to walnut growers. It said it would restate results for fiscal years 2010 and 2011.

Diamond removed Chief Executive Michael Mendes and named a director, Rick Wolford, as acting CEO. It also replaced Chief Finance Officer Steven Neil with Michael Murphy of consulting firm Alix Partners.

SunTrust Robinson Humphrey's William Chappell, who previously backed the company's accounting practices, cut his rating on the stock to "neutral" from "buy," admitting that he had been wrong.

"This is the worst-case scenario, not only creating uncertainty around the financial statements and removing a senior management team that directed the solid growth of the past few years, but also likely rendering dead the pending Pringles deal," Chappell said in a note.

The company's stock was down 37 percent at $23.31 Thursday afternoon. Earlier in the session the shares fell to $21.44, their lowest in almost three years. More than 26 million shares were traded -- nearly 13 times the stock's 10-day moving average.

Using figures from Data Explorers, about 80 percent of Diamond shares that are available to be borrowed are already on loan, indicating a high number of short sellers.

LOW ENOUGH?

Some observers said Diamond's stock is a good buy at its current range of $22 to $24, because the company still has strong brands.

"They still have good businesses -- Pop Secret, Kettle and (Emerald) nuts," a Diamond investor who declined to be named told Global Markets. "When cooler heads prevail, the stock should trade back up somewhere in the 30s, probably after a couple of quarters."

KeyBanc's Jagdale said Diamond's various businesses were together worth about $44 a share. Janney's Pinheiro said number is $31 a share.

Pinheiro said Diamond should earn about $1.70 a share in fiscal 2012. The company previously forecast adjusted earnings of $3.05 to $3.15 a share.

However, RBC Capital Markets analyst Edward Aaron suspended his earnings estimates and said it was difficult to stick a value on Diamond, with the company going through so many changes and multiple lawsuits and investigations still in progress.

PRINGLES DEAL

After the company said it would restate results, P&G started going through the merger documents to make sure it can cancel the sale of Pringles without triggering a breakup fee, a source familiar with the matter said.

P&G has been approached about a possible Pringles deal, but it has not held substantial talks, the source said.

"P&G wants to structure the deal as a reverse Morris Trust so it can minimize taxes for shareholders, and it also has to find a good fit for the brand. It is going to be a challenge for them to find a buyer (for Pringles) given these conditions," Morningstar analyst Lauren Desanto told Global Markets.

A reverse Morris Trust deal saves on capital gains taxes that a parent company otherwise would have to pay in a straight sale of a unit or asset.

P&G declined to comment.

(Reporting by Mihir Dalal in Bangalore; additional reporting by Jessica Hall in Philadelphia, Jessica Wohl in Chicago and David Gaffen in New York; Editing by Don Sebastian, Viraj Nair, John Wallace and Steve Orlofsky)

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Nintendo president puzzled by investor reaction to Wii U

Nintendo president puzzled by investor reaction to Wii U

Stock Market Predictions

LOS ANGELES (Global Markets) - Nintendo President Satoru Iwata said he was surprised at the tumble in the company's share price following the unveiling of a successor to its smash hit Wii games console, adding that the new gadget had to be played to be understood.

Shares in Nintendo fell almost 10 percent in the two days following the company's splashy presentation of the Wii U, which features a tablet-style controller and high-definition graphics, and goes on sale next year.

"Honestly speaking, the reaction to (Tuesday's) presentation and what I heard from people I met and the mood of the convention did not chime at all with what happened in the stock market," Iwata said in an interview at the E3 games show in Los Angeles on Wednesday. "It's very strange."

But he added that the reaction reminded him of the mixed reaction to the original Wii in 2006 and that it showed that those who had not experienced the new gadget did not fully understand its potential.

"In the end, it is easy to get the mistaken impression that this is just a game console with a tablet," he said. "People who came to the presentation and tried it out have understood very well that it opens up a lot of new possibilities. But people who have not tried it will find it hard to believe that this controller will change things."

In the year following the launch of the first Wii in November 2006, shares in Nintendo tripled but have since given up all those gains. The stock was down 0.6 percent at 16,080 yen on Friday.

Nintendo is emphasizing its plans for the Wii U to bring together the casual gamers who bought the Wii and the more dedicated "core" gamers who tend to prefer rival Sony's Playstation or Microsoft's Xbox.

"At the moment, there is a barrier between the Wii, which is seen as for casual users and the other companies' consoles, which are seen as for core gamers. We are questioning whether that barrier needs to be there," said Iwata.

To that end, Nintendo worked hard on winning over the third-party game developers favored by serious gamers, who failed to back the Wii.

At E3 this week, both Electronic Arts Inc, known for its sports titles, and Activision Blizzard, the owners of the Call of duty shooter franchise, voiced strong support for the Wii U.

(Reporting by Liana Baker and Isabel Reynolds; Editing by Lincoln Feast)

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Storm clouds gather for RIM after profit warning

Storm clouds gather for RIM after profit warning

Stock Market Predictions

TORONTO (Global Markets) - Storm clouds over Research In Motion have darkened with a dismal profit warning, and the company's shares fell sharply on Friday after the company's third jolt of bad news in a month.

The BlackBerry maker, out of favor even with its fans, will need flawless execution on a promised next generation of gadgets to convince increasingly skeptical investors that it can run with mobile leaders Apple and Google.

Ontario-based RIM on Thursday slashed its sales and earnings forecasts, an unexpected blow that followed an anemic forecast in late March and last week's troubled launch of an as-yet underwhelming competitor to the red-hot Apple iPad.

"The updated guidance has substantiated a lingering concern about a growing portfolio gap in a hyper-competitive market," CCS Insight analyst Geoff Blaber said.

RIM tried to excite customers last year with an improved browser and upgraded operating system on its touchscreen and slideout keyboard BlackBerry Torch. But the response was tepid.

It promises another major upgrade and a slew of more powerful touchscreen devices at its annual BlackBerry World trade show in Florida next week.

RIM's products compete with those from Apple and with devices using Google's Android platform. Customers, are tired of waiting for RIM's innovations to kick in, are voting with their dollars for the rival phones.

RIM shares fell some 14 percent by early afternoon on Friday, in line with a late-trade fall on Thursday -- an eerily similar drop to that after its March results. The shares are around $49, their lowest level since October.

"We've heard for too long about RIM's great product roadmap. Consumers are not listening nor waiting," National Bank analysts said in a note. "RIM does not even seem to have dual cameras on its upcoming BlackBerry product line-up. The last time we checked, video is the future."

Thursday's after-market warning focused on weak sales of RIM's aging smartphones in the United States and Latin America, and the company lowered an already tepid outlook for the current quarter.

All hope seems to rest on what the Canadian company pulls out of its labs and onto center stage at BlackBerry World, starting Monday, where the company will unveil a new generation of touchscreen BlackBerrys.

LOSS OF FAITH

RIM had hoped to turn its fortunes around with the launch of its long-awaited PlayBook tablet -- a sleek tablet computer that runs on a fresh QNX platform that RIM says will transform its business.

But the PlayBook won dismal reviews and complaints it was rushed out before it was ready, despite a six-month launch pad.

"Mis-execution has undermined sentiment recovery," wrote Mike Abramsky, a longtime optimist on RIM. Abramsky kicked RIM out of his list of preferred stocks and slashed his target price to $55 from $90.

"PlayBook is a promising tablet contender, but RIM bears some responsibility for its less-than-favorable debut, confusion over its positioning and criticisms it was not fully ready for market," he wrote.

Customers and developers are eager to know when the PlayBook will run Android and BlackBerry smartphone applications, while investors want to know how many PlayBooks sold in the first week and when better phones will ship.

Jefferies analyst Peter Misek said RIM was scrambling to fix glitches in the PlayBook and integrate QNX, likely leading to delays for new handsets and flagging interest from carriers. He dropped his rating by two notches to "underperform" and cut his price target to $35 from $80.

RIM has tried to shift attention to what comes next -- a suite of phones running an upgraded (but not yet QNX-based) operating system with beefed-up hardware.

"We're cutting over to a whole new platform, a whole new set of products, a whole new set of architecture. And it's very, very powerful and very, very exciting," RIM's co-chief executive Jim Balsillie told a conference call on Thursday.

"Stay tuned, the products are truly fantastic both in terms of their style and their performance. The issue is, I would have liked to have them sooner."

The sliding stock price shows that the market is yet to be convinced.

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Massachusetts subpoenas Bank of America documents

Massachusetts subpoenas Bank of America documents

Stock Market Predictions

(Global Markets) - Massachusetts securities regulators said on Friday that they were subpoenaing Bank of America Corp for documents to determine whether the lender had knowingly overvalued assets in some investment products.

Local investors lost about $150 million in investment vehicles structured by the company's affiliate Banc of America Securities LLC, said William Galvin, the state's top securities regulator.

Now his office is asking the Charlotte, North Carolina-based bank to supply documents for its activities involving collateralized loan obligations.

The CLOs include LCM VII Ltd and Bryn Mawr CLO II Ltd, which were structured by the bank and sold to investors in 2007.

Bank of America spokesman Bill Halldin said the bank doesn't comment on regulatory inquiries, except to say that it cooperates fully with them.

Galvin, who has been especially aggressive in looking into how big banks hurt small investors during the housing crisis and financial crisis, said he wanted to find out whether the issuer "was knowingly overvaluing assets in the portfolio to get them off their books and onto investors."

The news comes one day after Bank of America and other large lenders agreed to a $25 billion settlement over alleged foreclosure abuses.

The company's shares were down 1.3 percent at $8.07 in afternoon New York Stock Exchange trading.

(Reporting By Svea Herbst-Bayliss and Rick Rothaker; Editing by Lisa Von Ahn and Gerald E. McCormick)

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Google's Schmidt may sell about 2.4 million shares

Google's Schmidt may sell about 2.4 million shares

Stock Market Predictions

(Global Markets) - Google Inc (GOOG.O) chairman Eric Schmidt could sell as many as 2.4 million shares of the company's class A common stock as part of a predetermined stock trading plan.

In a filing with the U.S. regulators, the Mountain View, California-based company said Schmidt adopted the Rule 10b5-1 plan last November and could begin selling shares this month.

Schmidt, who stepped down as Google's chief executive last April after a decade of "adult supervision," could bring down his voting power on the company's stock to about 7.3 percent if he sells all the shares under the plan.

As of December 31, he held 9.1 million shares of Google's Class A and Class B common stock - wielding about 9.7 percent voting power.

If Schmidt sells his shares under the plan, his overall stake would fall to 6.7 million class A and B shares - based on Google's outstanding shares as on December 31 - or about 2.1 percent of outstanding capital stock.

Schmidt, who led Google starting in 2001 to bring more management experience to a then-fledgling company, became executive chairman of the Internet giant's board after stepping down.

Google shares closed at $604.64 on Friday on the Nasdaq.

(Reporting by Himank Sharma in Bangalore; Editing by Unnikrishnan Nair)

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Jefferies eyes big deals in ambitious growth drive

Jefferies eyes big deals in ambitious growth drive

Stock Market Predictions

NEW YORK (Global Markets) - Jefferies Group Inc (JEF.N), a midsized brokerage with an equities trading lineage, is making an ambitious bet on investment banking when many of its larger rivals are cutting back.

The bank is hiring aggressively and has ordered its bankers to focus on bigger, more profitable deals to move up the Wall Street pecking order.

Founded almost 50 years ago as a firm that facilitated trading of large blocks of stock by institutional investors off traditional exchanges, Jefferies employs some 3,200 people -- 40 percent more than just four years ago.

While Jefferies is boosting staff levels, the bank is also telling its bankers to focus on bigger deals and clients.

The change has accelerated since Jefferies hired healthcare banker Benjamin Lorello from UBS AG (UBSN.VX) in 2009 and named him head of investment banking and capital markets businesses.

Under Lorello, Jefferies has imposed a minimum fee requirement of $2 million for a banker to be allowed to advise a company on a merger deal, sources familiar with the matter said. That's nearly double the minimum previously in place, and the new rule is more strictly imposed now, one source said.

Its bankers can ask for exceptions, such as when there is an expectation of more business from the client or the deal would help build relationships, the sources said.

"It is more of a message that we are moving upmarket, and we want all of our bankers to focus on moving upmarket and focus on larger transactions," one source said.

Jefferies declined to comment.

MOVING UP -- AT A PRICE

In another sign of this change, the firm in recent months disbanded the Putnam Lovell team that focused on asset management deals that tend to be smaller, the sources said.

It has been hiring from larger rivals instead. They include Michael Tedesco, a former Citigroup Inc (C.N) banker who became global head of technology M&A and U.S. head of M&A, and Frank Cicero, who came from Barclays Capital (BARC.L) to become global head of financial institutions investment banking.

The hiring has come at a cost. In its second fiscal quarter, Jefferies paid 59 percent of its revenue as compensation, well above the industry standard of about 50 percent and higher than its own pre-financial crisis level of about 54 percent.

By comparison, Goldman Sachs, which pays some of the best salaries on Wall Street, spent 44 percent of its revenue on pay and benefits during the first quarter.

Jefferies says new hires will bring in more deals and its pay ratio will fall as revenues rise. Analysts wonder though whether it can grow fast enough to recoup the investment.

"When you make one of these bets on growth, you better hope the growth continues," said Brad Hintz, a former Lehman Brothers CFO who is now an analyst at Sanford Bernstein.

The churn is not unusual for Jefferies. The firm hired aggressively, for example, in the downturn after the tech bubble burst at the turn of the century, boosting headcount by 15 percent in 2000 and 18 percent in 2001.

"Better people cost more money," said Richard Lipstein, a recruiter at Boyden Global Executive Search. "You don't always hire people who then generate money immediately. So there are times when the compensation ratios will go up before the revenue starts to kick in."

In the fiscal quarter to the end of May, Jefferies reported a 9 percent rise in net revenue. But higher costs like banker pay drowned those gains and profit fell 3.8 percent.

Jefferies shares are down 21 percent so far this year, lagging the Thomson Global Markets U.S. Investment Banking & Brokerage Services Index .TRXFLDUSPINBK, which is off 17 percent.

MOVING UP THE RANKS

While Jefferies has already come a long way from its roots as a trading house, it still has a long way to go to fulfill

its ambition of playing in the top league.

Jefferies came in at No. 24 in the worldwide rankings of M&A advisers in the first half, up one notch from the same period last year, according to Thomson Global Markets data.

Hiring appears to be paying off in some areas. In U.S. healthcare M&A deals -- a Lorello forte -- Jefferies moved up to No. 12 in the first half, compared with No. 47 in the same period in 2008 and No. 16 in 2007.

In league tables for equity capital markets, Jefferies went up one notch to No. 11, the data shows.

The average size of M&A deals Jefferies advised on increased to $368 million in the first half, compared with $235 million in 2008 and $214 million in 2007, before Lorello took over. Goldman Sachs' (GS.N) average deal size in comparison was $1.8 billion in the first half of this year.

Jefferies' minimum for fees for merger advisory is lower than the $3 million that is typical for the biggest banks. Banker fees are set as a percentage of the deal size. In a $1 billion deal, for instance, fees would typically be 0.75 percent to 1 percent.

The M&A transactions on Jefferies' list are still mostly below $1 billion, but there are some multibillion-dollar deals, such as bankrupt Nortel Networks Corp's (NRTLQ.PK) $4.5 billion sale of patents to a group of tech giants on July 1.

It can take several years for the transformation to take place, Hintz said.

"We don't know whether that wager is going to work out," Hintz said. "But it's certainly a management team that's not being shy about its aspirations."

(Reporting by Paritosh Bansal and Nadia Damouni; additional reporting by Dan Wilchins and Lauren Tara LaCapra. Editing by Knut Engelmann and Robert MacMillan)

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Olympus capitulates to investor pressure, launches M&A probe

Olympus capitulates to investor pressure, launches M&A probe

Stock Market Predictions

TOKYO (Global Markets) - Scandal-hit Japanese firm Olympus Corp (7733.T) on Friday gave in to shareholder pressure over massive fees paid to advisers in a 2008 acquisition, announcing it would set up a third-party panel to examine its past M&A deals.

This marks an end to a dramatic week for the maker of endoscopes and cameras, which unexpectedly fired its British chief executive citing management incompetence, only to have him turn whistleblower. Olympus shares have lost half their value since the shock dismissal on October 14.

Michael Woodford, the ousted CEO who is now in the UK, has sent dossiers to British fraud investigators about the Japanese firm's $687 million payments to two advisory firms over its $2.2 billion acquisition of British medical equipment maker Gyrus, which he says he did not receive explanations about.

Olympus has confirmed the payments, but has up to now not provided any detail on why such a large fee was required. Criticism from investors has been mounting, with even normally pliant Japanese stakeholders -- such as Nippon Life Insurance Co, its biggest shareholder -- calling for prompt action to address concerns.

Woodford has also written to Japan's Securities and Exchange Surveillance Commission (SESC) asking it to look into the matter.

Japanese Financial Services Minister Shozaburo Jimi said on Friday that the financial watchdog would do its duty but declined to comment on individual cases.

"We are preparing to set up a third-party panel, including lawyers and accountants, to look into past acquisitions by the company," Olympus said in a short statement, adding that shareholders had been asking for information.

"It looks like a step in the right direction," said Kiyoshi Noda, chief fund manager at the MU Investments Co. "Investors want full disclosure of what has really happened, because statements from the ex-CEO and the board differ. So if independent investigators take a close look at past deals and compile a report on that, that should be helpful," Noda said.

"But at this stage it is too soon to speculate whether it would lead to any substantial changes to the firm's board or management," he added.

At the heart of the controversy is the advisory fee paid to two companies, New York-based AXES America LLC and Axam Investments in the Cayman Islands. The amount is equal to a third of the acquisition price, compared with an industry standard of 1 percent to 2 percent of a deal's value.

A large portion of the fee was paid in preferred shares, which ballooned in value, ultimately raising fees from an originally agreed $100 million, according to a PricewaterhouseCoopers report commissioned by Woodford.

Financial adviser AXES had demanded payment in preferred shares in part to delay tax payments on the fees, Olympus President Hisashi Mori was quoted as saying in an email exchange, forwarded to Global Markets by Woodford.

A former Wall Street banker of Japanese descent has emerged as a key figure in both of the recipient advisers, according to documents provided by the firm's ex-CEO.

The veteran banker, Hajime 'Jim' Sagawa, owned AXES, which was hired by the endoscope-maker five years ago to provide what later turned out to be stunningly expensive advice, the documents show.

"Sagawa represented AXES in relation to the Gyrus transaction who we understand has resided in the United States from 1980 to the present, including a period stationed in New York for Nomura Securities," the PWC report said.

It said Sagawa, who also worked for Drexel Burnham and PaineWebber before setting up AXES, was AXES president and "held himself out" to be a director of affiliated firm AXAM which ultimately received the bulk of the fee.

Global Markets went to Sagawa's Florida home on Thursday, but the ex-banker was not in. Instead, his wife Ellen said he was traveling and that he had done nothing wrong.

"My husband was on Wall Street for many years and was well-respected," she said, after answering the door of their waterside two-story home in Boca Raton, north of Miami.

"My husband is clean as a whistle, I assure you," she said when asked about Sagawa's connection with the scandal.

Mori told analysts in a teleconference on Monday that Olympus had close dealings with AXAM, described in Gyrus's financial statements as the portfolio manager for AXES, but that he had no contact with AXAM recently.

The PWC report said that AXAM had been struck off the Cayman Islands registry in the last year. Mori told investors he was not aware of this fact.

Woodford, who was dismissed just two weeks after taking over as CEO and six months after becoming president, took his case to British fraud investigators earlier this week since most of the Gyrus deal was paid for through an Olympus subsidiary in the UK.

Woodford said he was fired because he requested an explanation of the payment and demanded that the Chairman Hisashi Kikukawa and Mori resign when he didn't receive a satisfactory answer.

In his interview with Global Markets on Thursday, he called Olympus "a fiefdom, a kingdom," and added that "Kikukawa is the emperor."

Asked to comment on this description of Kikukawa, Olympus spokesman Yoshiaki Yamada said: "Chairman Kikukawa's management of the firm is being conducted appropriately and decently."

(Additional reporting by Reiji Murai and Antoni Slodkowski; Editing by Abi Sekimitsu and Chris Gallagher)

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Jefferies shares fall, analyst cuts price target

Jefferies shares fall, analyst cuts price target

Stock Market Predictions

(Global Markets) - Shares of Jefferies Group Inc (JEF.N) fell on Friday as a Keefe, Bruyette & Woods analyst cut her price target on the stock, saying stricter regulation of its leverage and funding could meaningfully reduce earnings.

Jefferies shares were down 3.8 percent at $11.55 in morning trade on the New York Stock Exchange, after falling as low as $11.12.

KBW analyst Lauren Smith lowered her price target on Jefferies to $17 from $22, after running a scenario to quantify the impact of Jefferies shifting its funding and leverage to a model more like those used by Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N).

Smith said such a move would raise Jeffries' interest costs by $350 million per year and lower its earnings by 50 cents per share -- more than one-third of its estimated earnings for 2012, according to Thomson Global Markets I/B/E/S.

"We believe the continued overhang of increased regulatory oversight and the speculation for the potential negative impact on EPS could limit a recovery in the stock price," said Smith.

On Thursday, Jefferies shares fell as much as 20 percent, and were briefly halted, before closing down 2 percent at $12.01.

Initial worries about the company's exposure to Europe were damped by the bank's disclosure that it has a net short position on troubled sovereign debt. Yet analysts have also been citing concern that the quick downfall of competitor MF Global Holdings Ltd (MFGLQ.PK), which filed for bankruptcy protection on Monday, could lead to stricter regulation of small Wall Street firms like Jefferies.

Holdings of sovereign debt from Belgium, Ireland, Italy, Portugal and Spain and a heavy reliance on overnight loans crippled MF Global's ability to fund itself and retain clients.

After MF Global sought bankruptcy protection, ratings agency Egan Jones downgraded Jefferies, saying the bank is also too highly leveraged with a heavy reliance on short-term debt.

Analysts and company executives have dismissed comparisons to MF Global, arguing that Jefferies does not take on the same kind of proprietary risks nor does it have as much leverage.

Oppenheimer analyst Chris Kotowski issued a report on Jefferies titled "Drawing Some Differences with MF Global." He noted that Jefferies' leverage ratio was 14 to 1 as of September 30, compared with 34 to 1 for MF Global.

Kotowski characterized Jefferies as "a very conservatively run firm" and said the recent sell-off is "overdone."

Yet the potential for a regulatory crackdown on Jefferies cannot be dismissed, analysts said.

"There may be a frenzy of new regulation aimed at unregulated financial companies," Rochdale Securities analyst Richard Bove said in a report on Tuesday. "Jefferies could be impacted by such a development."

KBW's Smith said Jefferies shares will trade in line with larger and more tightly regulated Wall Street rivals for the near term. Her new $17 price target for Jefferies represents 122 percent of tangible book value. Morgan Stanley trades at 54 percent of its September 30 tangible book value, while Goldman trades at 89 percent of tangible book value.

(Reporting by Lauren Tara LaCapra in New York; Editing by Matthew Lewis and Steve Orlofsky)

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China's XCMG delays $1.2 bln Hong Kong IPO: IFR

China's XCMG delays $1.2 bln Hong Kong IPO: IFR

Stock Market Predictions

HONG KONG (Global Markets) - China's XCMG Construction Machinery Co Ltd (000425.SZ) has postponed its planned $1.2 billion Hong Kong stock offering, IFR reported on Saturday, citing four sources with direct knowledge of the matter.

XCMG's decision came only a few days after bigger rival Sany Heavy Industry Co Ltd (600031.SS) pulled its $3.3 billion Hong Kong share offer due to market turmoil.

IFR did not indicate a reason for the delay. Bookbuilding of the offering was originally scheduled to start on September 26, the report said.

The original size of the IPO was $1.5 billion. XCMG recently added six more banks to the underwriting team, taking the total number of banks on the deal to 12, according to IFR.

ABC International, BOC International, BoCom International, Essence Securities, Goldman Sachs Group Inc (GS.N) and ICBC International will join BNP Paribas SA (BNPP.PA), China International Credit Corp, Credit Suisse Group AG (CSGN.VX), HSBC Holdings Plc (0005.HK)(HSBA.L), Macquarie Group Ltd (MQG.AX) and Morgan Stanley (MS.N) to arrange the float.

On Thursday, Sany Heavy delayed a planned up to $3.3 billion Hong Kong offering. Xiao Nan Guo Restaurants Holdings also decided to call off its $95 million Hong Kong IPO because of market volatility.

(Reporting by Fiona Lau; Writing by Leonora Walet; Editing by Sugita Katyal)

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Good times roll for auto suppliers

Good times roll for auto suppliers

Stock Market Predictions

DETROIT (Global Markets) - Major auto suppliers blew past profit expectations on Friday, suggesting the recovery in the global auto market remains strong despite rising oil prices and the disaster in Japan.

Goodyear Tire & Rubber Co (GT.N), powertrain maker American Axle and Manufacturing Holding Inc (AXL.N) and Lear Corp (LEA.N), which makes seating and electrical power management systems, posted first-quarter earnings that easily exceeded Wall Street estimates on improving global demand.

"What we're seeing from these results is the volumes are significantly higher and therefore the recovery in the auto industry is gaining momentum," said Tim Ghriskey, chief investment officer with Solaris Asset Management.

"Clearly, the sales are doing well and the consumer is replacing older vehicles," added Ghriskey, who has owned auto stocks in the past and still follows the sector closely.

Shares of Goodyear, American Axle and Lear were up 10.9 percent, 3.3 percent and 2.5 percent, respectively, in morning trading.

Lear cited a 5 percent increase in global auto production in the first quarter compared with a year earlier. Demand grew around the world, offsetting a 32 percent production decline in Japan due to the earthquake and tsunami last month.

Friday's earnings reports continued a strong week for the sector, underlined by Ford Motor Co's (F.N) better-than-expected profit.

Other suppliers whose results topped expectations this week included BorgWarner Inc (BWA.N), Federal-Mogul Corp (FDML.O) and Dana Holding Corp (DAN.N).

Dealer groups -- AutoNation Inc (AN.N), Penske Automotive Group Inc (PAG.N), Asbury Automotive Group Inc (ABG.N) and Group 1 Automotive Inc (GPI.N) -- also posted strong profits, although many warned the Japanese crisis would crimp vehicle inventories on their lots.

"Obviously, it's all about volume," Morningstar analyst David Whiston said. "With a lower fixed cost and a better top line, it's not a surprise to see earnings doing so well."

While he still expects some choppiness due to the Japanese crisis, he said the industry's recovery remains in place.

David Silver, analyst with Wall Street Strategies, cautioned against exuberant expectations, however.

"I wouldn't call it a party right now. It's more of a get-together," he said. "The profitability of the North American automakers is much improved from 2007 and 2008, but the Japan disaster is an overhang."

Silver expects more of drag on automaker and supplier earnings later this year.

That squared with comments from General Motors Co (GM.N) Chief Executive Dan Akerson, who said on Thursday that the Japanese crisis was a "second-quarter event.

Akerson, like Ford CEO Alan Mulally, said the disaster in Japan was not likely to have a great impact on earnings.

Silver also said the European market will be weak for the year, while Ghriskey voiced concern about rising raw material costs.

(Additional reporting by Bernie Woodall; editing by John Wallace)

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Sino-Forest clobbered by short-seller's report

Sino-Forest clobbered by short-seller's report

Stock Market Predictions

TORONTO/NEW YORK (Global Markets) - A damning short-seller's report accusing Sino-Forest Corp (TRE.TO) of theft and fraud put the skids under the Canadian-listed company on Friday, even as it denied there was a problem.

Sino-Forest, which operates forest plantations in China, told investors to exercise "extreme caution" in assessing the report, issued by research firm Muddy Waters.

"Muddy Waters has a short position in the company's shares and therefore stands to realize significant gains from a share price decline that it precipitated," Sino-Forest said in a statement on Friday. Its shares fell 24 percent on Thursday.

Stock in Sino-Forest, whose top shareholder at the end of April was billionaire hedge-fund manager John Paulson, fell a further 65 percent on Friday, hitting a new low of C$4.81 before closing at C$5.23.

A record 42 million shares changed hands, making the company Toronto's most active stock by far.

CHARGES OF FRAUD, THEFT AND PONZI SCHEME

In a detailed, 37-page report, Muddy Waters said its researchers found that Sino-Forest had exaggerated its assets and falsified its investments.

"Like Madoff, (Sino-Forest) is one of the rare frauds that is committed by an established institution," it said, referring to convicted fraudster Bernie Madoff. Its "capital raising is a multibillion dollar Ponzi scheme, and accompanied by substantial theft."

Muddy Waters holds short positions on companies it reports on, and makes money when shares fall. It first won attention with a scathing report on Orient Paper Inc (ONP.A) in 2010.

Sino-Forest, which says it employed 3,900 people and managed 790,000 hectares of plantation trees in China at the end of last year, has reported steady earnings growth since its stock was first listed in Toronto in 1995.

But it has also had its share of controversy. It restated earnings in 2004, the same year that it proposed an executive compensation plan that investors saw as overly generous.

The company actively buys and sells forests, according to a report from Poyry's. The industry consultant said the company had a "dynamic" forestry estate.

"Unlike most forest owners and managers, Sino-Forest actively trades in forests. Each year the company both sells and buys forests, and accordingly the composition of the forest estate changes much more than for a business that is simply managing and harvesting a more static resource," Poyry's wrote in its 2010 annual report on the company's assets.

Thomson Global Markets Starmine shows 10 analysts follow the company, with four listing Sino-Forest as "strong buy," five as "buy" and one as "hold."

Dundee Capital Markets analyst Richard Kelertas put Sino-Forest "under review" pending more information, but said he did not believe the Muddy Water charges.

"To the best of our knowledge we believe that the allegations cited in the short-seller's 'research report' are false and without merit," he said, noting his conclusions were based on several years of conversations with management.

BMO Capital Markets cut its rating on Sino-Forest to "market perform" from "outperform" on Friday, and put its price target on the shares under review, "pending a better understanding of the company's timber holding."

PROBING THE ALLEGATIONS

Sino-Forest said its board had appointed a committee of three of its independent directors to investigate the allegations and complained the Muddy Waters report had a substantial impact on its reputation and securities prices.

"Sino-Forest wish to state clearly that there is no material change in its business or inaccuracy contained in its corporate reports and filings that needs to be brought to the attention of the market," the company said.

Paulson owned 14.13 percent of the shares as of the end of April 29, according to Thomson Global Markets data. An investor familiar with the situation said Paulson & Co had informed investors that Paulson is looking at the situation closely.

Sino-Forest shares represent about 2 percent of his Advantage Strategy and are not owned in any other Paulson strategies. A Paulson spokesman declined to comment.

The Ontario Securities Commission declined to comment on the allegations about Sino-Forest, which has an office in Mississauga, Ontario, outside Toronto.

BOND SELLOFF

The Muddy Waters report also prompted a sell-off in Sino-Forest bonds and dragged down the China high-yield offshore sector.

Thomson Global Markets data shows Sino-Forest has some $2.3 billion in debt financing outstanding, with credit ratings in the low grade, speculative range or junk status.

Its longest dated issue, maturing in October 2017, is currently yielding almost 17 percent, Thomson Global Markets data shows.

Credit default swaps, which protect fixed income investors against default or restructuring, are trading with an immediate upfront cost to investors of $493,000 plus an additional $500,000 annually for the five-year life of the contract, according to data provider MarkIt.

Muddy Waters has also published damning notes on RINO International Corp (RINO.PK) and China MediaExpress Holdings (CCME.PK), both of which have been delisted from the Nasdaq.

Following the report, RINO said its auditors had found accounting flaws. The chief financial officer at China MediaExpress later resigned, along with its auditors.

But some companies are fighting back.

Drew Bernstein, the chairman of Orient Paper's audit committee, said the Muddy Waters report on Orient was filled with untrue allegations. He said Orient Paper was perhaps the most vetted Chinese company following the report.

Its shares still trade on NYSE Amex.

(Additional reporting by Jennifer Ablan, Daniel Bases and Julie Gordon; writing by Janet Guttsman; editing by Frank McGurty)

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