Thursday, August 30, 2007

Paperstand (CHU, SKM)

According to the WSJ's "Heard on the Street" column, the recent drama over financing for the sale of Home Depot's (HD) supply unit was in some ways just a warm-up. An even bigger battle between banks and their clients at private-equity firms looms with the impending sale of First Data (FDC) to Kohlberg Kravis Roberts. Banks have committed to lending billions of dollars to buyout firms that are in the midst of buying numerous co's. As investors shun buying these loans from the banks, these Wall St. giants run the risk of being saddled with these loans on their books, hurting their profitability. So far, KKR has shown a willingness to give some ground, although not on issues that would fundamentally change the outlook for banks and their shares. But the banks are hoping KKR's willingness to compromise will grow over time.

Barron's Online out saying that there are telecom values to be found even among those stocks that have already done well within telecommunications, especially those tied to the unrelenting growth of wireless communications. They include wireless frontrunners such as China Unicom (CHU), the number-two operator in the race to unwire the mainland, and SK Telecom (SKM), the dominant wireless operator in S-Korea. The ADR's of both co's have outperformed the last 12 mo's, with Unicom ADRs more than doubling and SK ADRs up 26%. But there's still much value to be found in both. The growth in cellular makes sense, given that emerging mkts, and especially Asia, have substantially underdeveloped wireless mkts that could see blockbuster growth for years to come, much higher than the US cellular services mkt, where about 80% of the eligible population already has a wireless account. Indeed, in a note last Fri, Lehman analyst Paul Wuh wrote, "China Unicom will continue to benefit from strong subs growth given China's relatively low wireless penetration [of 38%] and the trend of fixed-to-wireless substitution."

"Inside Scoop" section reports that last week, Intuit (INTU) announced the departure of its president and CEO. This week, the co disclosed the outgoing exec had sold $4.2m worth of stock. Stephen Bennett sold 154K shares on Mon. The divested stake represented 74% of Bennett's direct holdings. Bennett's stock sale stands in contrast to his stated optimism for Intuit. "If he thinks everything is fine with the co, it is definitely an odd way to show it by selling so much of his holdings," says Jonathan Moreland, of

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