Stocks & Economy

Another one bites the dust! Frontier Airlines has now filed for bankruptcy after a credit card processor indicated that they would begin withholding receipts from the airline's ticket sales. Stockholders are now quite nervous, and are considering pulling out to avoid further losses.

According to a statement, Frontier said that they would continue to operate without disruption during the bankruptcy proceedings, offering their full schedule of flights, honoring reservations, and paying both its employees and suppliers.

Denver-based Frontier said that they were forced to file for bankruptcy protection "following an unexpected attempt by its principal credit card processor to substantially increase a 'holdback' of customer receipts, which threatened to severely impact Frontier's liquidity." The company filed for Chapter 11 bankruptcy in a New York court on Friday.

A merger between the two names in satellite radio became much more likely today as the Department of Justice said they have closed their investigation that a merger would create a monopoly.

The DOJ's Antitrust Divisionr eleased this statement that read:

"After a careful and thorough review of the proposed transaction, the Division concluded that the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers. The Division reached this conclusion because the evidence did not show that the merger would enable the parties to profitably increase prices to satellite radio customers for several reasons, including: a lack of competition between the parties in important segments even without the merger; the competitive alternative services available to consumers; technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers.

News last week of JP Morgans offer to buyout Bear Stearns at just $2 per share shook up the financial industry, and left many investors angry and upset. The $2/share bid was more than a 90% discount on their closing price of $30 two Fridays ago, and a very small fraction of their 52-week high of $159.36/share. According to people involved in the negotiations, JPMorgan Chase was in talks Sunday night for a deal that would quintuple its offer for Bear Stearns in an effort to pacify Bear Stearns shareholders.

The offer is intended to win over stockholders that who last week vowed to right the original deal, which was struck just a week ago and gained approval from the Federal Reserve and Treasury Department.

Reportedly, under the terms of the deal currently being discussed, JPMorgan has offered to pay $10/share for Bear Stearns, up from their original $2/share offer. The Fed, however, must still approve any new deal, and was already balking at the new offer price Sunday evening.

Mega book seller Borders is being hit hard by the sluggish economy. The company announced that it has put itself for sale and there is a good chance that rival Barnes and Noble could be a suitor.

The news of the proposed deal battered an already beaten stock. Shares of the stock have lost over their half of their value since January and fell $2.03 to fall to an all time low of $3.97 in yesterdays trading.

The news is also troubling for the city of Ann Arbor, Michigan, where the headquarters are located.

Patrick Anderson, an East Lansing economist, told the Detroit Free Press:

"I am very hopeful that Borders will stay here. The main problem Borders has is the financial markets and the slowing economy, not anything we have done in Michigan."

Shares of Cleveland-based National City Corp. (NCC) opened the day at $11.63, but plunged down nearly 43% to $7.50 at the closing bell. Hitting their 52-week low today, shares of NCC began dropping on renewed fears over the banking sector following JP Morgan's (JPM) decision to save investment bank Bear Stearns (BSC) from collapse, with a $2/per share buyout.

On this news, NCC stock was down more than 80% today from its 52 week high of $38.32 in April.

News of JP Morgan's decision to bail out Bear Stearns put an increased amount of pressure on the market, and caused elevated fears over the financial security of other banks.

JP Morgan's offer to buy Bear Stearns at $2 per share was more than a 90% discount on their closing price last Friday at $30/share, and an even smaller fraction of their 52-week high of $159.36/share.

The general consensus on Wall Street is that other financial institutions in weakened states and in need of capital may also be subjected to buyouts at drastically reduced prices.

National City, one of the US's 10 largest banks, has not been immune to the country's credit crisis and collapse of the subprime mortgage market. Today's drop is bad news for the city of Cleveland, which has already been hard-hit by the subprime mess.

The boycott of the world's most popular auction website - eBay.com - which began last week has been extended for at least another week, if not longer. Both sellers and buyers alike are boycotting the site in response to changes in eBay's feedback system and listing fees. While the boycott has been downplayed by both eBay officials and others who cite numerous failed strikes in the past, this strike is already beginning to have a major impact on the company and may force them to reconsider the changes.

According to data released by USAToday on Monday, the number of auctions on eBay have fallen 13% to just 13 million listings, down from 18 million. But there's another effect of the boycott that hasn't yet been quantified - the PayPal effect.

eBay purchased the online payment processing company in October 2002, arguably the most popular payment method for eBay auctions. So in addition to earning revenue from auctions, eBay also earns money by taking a cut of transactions processed through PayPal. With a reduction in auctions and items sold, it can be assumed that the company will also feel the effects through a reduced number of transactions at PayPal.

The original protest thread posted on eBay's discussion board is now over 209 pages long, and is growing rapidly. Scores of eBay sellers have "signed" the pledge agreeing to honor the strike, and have subsequently stopped listing new auctions, shut down their eBay stores, and have altogether ceased their activities on the site. Some have even put up virtual "closed for business" signs in their eBay stores and eBay profiles, alerting potential buyers that they will not be selling during the strike.

So where are all the sellers going? Many have relocated their listings to a site called OnlineAuction.com, which also happens to be accessible by typing in ola.com.

Offering a simple $8.00 per month flat-rate fee to list auctions, and no individual listing fees or final value assessments, OLA is a much more appealing option in light of the policy and fee changes at eBay. OLA is no small potatoes either - as of Monday, their total number of online auctions was hovering near 12 million. With eBay at 13 million and falling, the gap is closing quickly. Many eBay sellers have taken up residence here, and have begun directing buyers to their new auctions at OLA.

As far as payment processing goes, the strike also includes a boycott of PayPal. The next biggest payment processing system, which is simple to use and takes far less in fees, is Google Checkout. Users can store their payment details easily in a Google Profile, for quick and easy payments. Sellers can easily accept payments, which are directly deposited into your bank account by Google, unlike PayPal where it is held in limbo until you cash out.

Visa Inc., who made its initial IPO filing with the Securities & Exchange Commission in June 2007, said on Monday that it expects to raise nearly $19 billion through an initial public offering. That figure could easily make it the largest IPO in American history.

According to an SEC filing, Visa will ofer 406.6 million shares at between $37 to $42 per share. An option will be available for underwriters to purchase an extra 40.6 million shares to cover any excess demand.

The largest IPO to date was that of AT&T Wireless in 2000, which raised $10.6 billion. Visa's proposed IPO at $18.76 billion, with up to 447.2 million Class A shares would thus become the largest IPO in U.S. history, almost as big as AT&T's 2000 IPO and Kraft Foods' 2001 IPO of $8.7 billion combined.

Current Media, the youth-oriented cable network which was founded by former Vice President Al Gore and entrepreneur Joel Hyatt, filed documents on Monday with the U.S. Securities and Exchange Commission for a $100 million initial public offering of Stock. The San Francisco-based independent network did not reveal how much stock they would offer, nor did they reveal the price or timing of the IPO.

More specifics of the IPO, which is being underwritten by JP Morgan; Pacific Crest Securities; and Lehman Bros, should be revealed in later filings with the SEC.

Current Media was founded by Gore and Hyatt following their purchase of Newsworld International from Vivendi Universal Entertainment in 2004. The network launched in 2005 to 19 million households, and currently reaches 51 U.S. households, Canada, the United Kingdom, and Ireland.

Current Media also operates a website (current.com), and has carriage deals with Dish Network, Comcast, Time Warner Cable, AT&T, and DirecTV Group.

In 2007 Current reported revenue of $63.8 million, up from $37.9 million in 2006. A loss of $9.9 million was also reported in 2007.

Warren Buffet's company Berkshire Hathaway Inc. announced their intentions to purchase a 60% share of Marmon Holdings Inc. at a price tag of $4.5 billion. The deal is expected to close sometime during the first quarter of 2008.

Marmon Holdings is a manufacturing and services group. The company has more than 125 units with products ranging from electrical wires and cables to railroad tank cards. The company was initially acquired in 1953 by Jay and Robert Pritzer when it was just a small manufacturing company based out of Ohio.

Berkshire Hathaway will acquire the remaining 40% share of Marmon Holdings over the next five to six years. The price will be based on the group's future performance.

Last year, Marmon Holdings reported an overall revenue of $7 billion, with an operating income more than tripled between 2002 and 2007, and operating margins increasing from 4.9% to 12.4% in that same period.