Friday, July 21, 2006

Notablecalls - Paperstand

The Wall Street Journals "Heard on the Street" column discusses Wal-Mart (WMT), saying that the co's bid to remake itself weighs on sales. Other factors are $3-a-gallon gasoline and high utility bills. The world's largest retailer by sales is attempting a sweeping makeover aimed at paring its inventory and labor costs while enticing affluent customers, some of whom now buy groceries in its stores, to spend more in other areas. As part of that effort, Wal-Mart will remodel nearly half its US stores over the next year. Pulling this off will be no small feat for a retailer with more than $300bn in annual sales. Even CEO Lee Scott has acknowledged that missteps may occur. The result of so much upheaval in many of Wal-Mart's 3,900 US stores is additional pressure on the retailer's already-tepid sales gains, some analysts and investors say. That, coupled with Merrill Lynch's July 13 downgrade of the stock to Neutral from Buy, has pushed the stock down about 9% so far this month. The price could fall further in coming months if sales actually decline, as some anticipate, and put pressure on earnings. "While external economic factors such as rising gas prices and higher interest rates are certainly acting as a head wind, the impact on same-store sales from Wal-Mart's remodeling efforts and other remerchandising initiatives cannot be dismissed as negligible," says Charles Grom, of JP Morgan.

According to the Barron's Online, ValueAct has been aggressively buying shares of Valeant Pharma (VRX) since April, plunking down $92.8m to purchase nearly 10.08m shares.

According to the NY Post, The New York Board of Trade is in early talks about a possible merger with the IntercontinentalExchange. Investment bankers working for the Nybot and ICE have held discussions recently about a possible combination, which could take several forms including ICE purchasing the downtown exchange for as much as $900m.

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