The NY Times reports that the Jones Apparel (JNY), plans to abandon its months-long auction after failing to find a buyer willing to meet its price. The move, which could be announced as early as today, would be the first time that a major retail co had been forced to cancel a prominent auction at a time of intense interest in the sector by private equity firms, which have spent billions to buy retail co's.
The WSJ reports that Berkshire Hathaway (BRKA) bought shares of Sanofi-Aventis (SNY) and appeared to have sold shares in Lexmark Intl (LXK). In a securities filing listing its top stock holdings, Berkshire reported owning 488K ADRs of Sanofi-Aventis as of June 30. Berkshire didn't report owning the stock in a filing covering the three months ended March 31. Also absent from the Berkshire's latest list of stocks were Gap (GPS) and Johnson & Johnson (JNJ). Berkshire's March 31 filing reported 10m Gap shares and 2m J&J shares.
The WSJ's "Heard on the Street" column questions Motorola (MOT) margins, that may be Razr-thin. Motorola wowed its annual gathering of Wall St. and industry analysts last month in Chicago: New gadgets, with names like Krzr and Rizr, quickly helped persuade some investors that the co could expand on the success of its sleek Razr. The co has posted impressive global mkt-share gains, rising to 22% from 18% over the past year, making it No. 2 after Nokia, which has a 33% global share. Motorola is trading at about 15x estd earnings for '07. This is a slightly richer per-share multiple than Nokia, which trades at about 13x forward earnings. While the stock may see more lift in the coming months as new phones get rolled out, not everyone is happy. Some long-term investors are concerned that the excitement over the Razr's offspring is overdone. They note that the co's flagship phone has done little to boost margins. To wit: Motorola's handset business had a 9.9% operating margin, before the Razr's appearance in late '04, when the overall co was losing money. Five quarters and 50m Razrs later, the margin is just 11.2%, compared with Nokia's operating margin of about 16%. "They have the marketing and promotion right, but with limited margin expansion, you have to value [based on] expectations," said Patricia Wilson, of Widows Investment Partnership, which manages $189m of assets as part of the Lloyds TSB Group. Ms. Wilson thinks that the intense competition to provide feature-packed phones at ever lower prices, especially in emerging mkts, will continue to eat into profits across the handset industry. She advised the fund to sell its holdings in Motorola in the Q1, when it reached her price tgt of $24, and the partnership turned a profit.
Barron's Online reports that Fortress Investment Group and a slew of insiders are seeing their investments in newly public Aircastle Limited (AYR) take flight. Altogether, Fortress and a slew of execs and directors doled out $12.95m to acquire 561K shares, primarily during last Tuesday's IPO. Ben Silverman, director of research at InsiderScore.com, says, "The IPO has performed nicely in spite of the recent terror threat involving airlines. In one sense it shows the strength of the business model here."