Altanes Investments --- Obuchowski, Michael ---Principal
>> pfizer fell as much as 4% after the maker of lipitor estimated little upside to growth revenue and outlined less aggressive cost cuts than some investors hoped. for more on the outlook of pfizer, let’s bring in michael obolkuwski.
>> how significant a disappointment of this coast cutting plan was today?
>> you have to remember one of largest companies in the u.s. and the world withdrew earnings estimates,, of course, the stock crashed, and there was a lot of hope for some more positive estimates that were going to be presented today. unfortunately, they were basic until line or a little bit below―over the lowered estimate of the analyst.
>> were you surprised?
>> i was not really surprised. i think the―what fieser is going through. they are really trying, trying to cut costs ahead of losing revenues. it’s a tough race to win, especially with the potential exploration of the drug for representing about $10 billion in revenues. there was a disappointment that the cuts were not as aggressive as many analysts would hoped.
>> what additional cuts do you think they need to be making right now?
>> basic ail lot of them.
>> when you look at a loss of about $10 million in revenues can and they have six drugs in the pipeline coming out. they were at the peek about $6 million. they have to cut a lot and every where.
>> quantify that for me. why can’t the new drugs―i’m asking a lot of questions here, but some of the new drugs, xubera, the inhaled insulin product, is getting a lot of media attention, and also a smoking cessation aide. couldn’t they be block bluster drugs and surface estimates?
>> even if all six of them that are coming out surpass billion dollars, it’s only $6 billion. for any other company, it’s a tremendous pipeline many for pfizer, it’s just $6 billion. we’re looking for more cuts, they should probably be thinking about buying growth instead of developing it themselves.
>> give us some strategies on that front.
>> really focus on other companies. off the top of my head, gilead would be a great company for pfizer to acquire that has a tremendous franchise.
>> you mentioned fieser is losing some of its patents. how will it protect lipitor and zocor that’s going off the patent.
>> there’s a line of them. lipitor expiration is 2010, is not that far away they have defended the patents of lipitor which was a big sigh of leaf for many investors last year. but the pipeline is understanding. they have a lot of great interesting products further down the pipeline, but are you looking at about 4-5-6 years away. and hank mckinnell was saying lip toir has 15% growth potential. is that legitimate still?
>> it was until the past couple of quarters, where suddenly 24-30% of growth rates, lipitor’s growth rates slowed to single digits, now it’s more expectations of 10-12%.
>> pfizer’s growth went from 20-25% to basically down to greero. in terms of an investment perspective, you said it was a bottom feeder value surfers would like. is there any at all in buying this?
>> when pfizer used to grove at about 25%, every quarter, every year, reliably. it was a great company owned by growth managers. it totally fell out of growth managers radar screen, they are trying to justify that it is about 4% return endive depend, basically it cannot go that much lower. they have been saying that for the past several years and it dropped about 50% since. so it’s possible that there is some―we are probably close to the bottom that the restructuring is going to help. it’s really the first really solid move on hank mckinnell’s -- is doing something about changing the cost structure, but they need to change a lot.
>> consumer product units are talking about spinning off. how much could that help?
>> it could bring about $10 billion, unfortunately, the growth rates and consumer products are higher than pharmaceutical rs, although margins are much lower. it’s bringing $130 million for not much else. >> you do not own shares of pfizer?
>> no.
>> and your rating?
>> we don’t have a rating.
>> thank you for joining us.
>> thank you.
>> well, there’s still much more ahead today. rhythm, passion, speed, a few of the promises made by organizers for the winter games. all eyes are on tourin. where―why is china gearing up profit? that coming up on “money and sports.”
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Listen Market briefing--- Lori (slow)
Chart of the day --- Tom (slow)
you can see the dow joans closing 35 points 10,919. fizz pfizer out with a disappointing forecast earlier. s&p up 3 points, 1266 the close, and the nasdaq gains six points, 2261. investors in the travel and leisure con grom rate, sendent are banking on the plan to break up the com conglomerate.
>> they own howard johnson, sent tree 21, ave vice, and budget renta car, they have never really recovered. orbitz and e-book led it to cut its forecast twice late last year, driving the stock down 16%. michael millman of solae securities is upbeat about the travel business and thinks the four companies, real estate, arental, hospitality and arental could be 50% more than the current share price.
>> we think it’s fixable. online travel we think is a terrific business with great opportunity, we also think that stock is priced so that the three other pieces are worth more than the $16 that the stock is at. we think that you’re getting this travel with huge opportunity for nothing.
>> the stock trades below $17. it’s near a two-year low and newman thinks it could be worth $23 per -- 24 per share. he expects it to meet analyst and sales estimates when it releases fourth quarter results on monday.
>> we don’t see a valentine’s massacre. we think earnings will be uneventful. we think uneventful is good, we think it’s a catalyst, we see the second catalyst march 21, the first day of spring when the company is planning to have investor day, we think give much more detail about the four new companies.
>> the original sendant strategy was did i sers fiction would boost growth growth. and a man who includes $125 million, including $500,000 of cendant shares doesn’t know if this is the way to up lock value. although diversification works for many companies, it’s turned out to be a lousy strategy for cendant shareholders.
>> thank you for that the december trade seff sit was wider than economists were looking for. here way decade of peck speculatives and our “chart of the day,” tom keene.
>> it’s important to have a decade of perspective.
>> have you more than that, we know.
>> true. what we have to do with monthly data is look at the up-down, up-down. there’s always good news in the trade report and bad news in the trade report. we look at the ratios that the. the reports. you can see it here, it’s a real simple chart it goes back nine, 10 years, the red line is restretch or trend of the trade balance, not the current account balance, but the trade balance. and it’s not a pretty picture. we tpwhripped it here. the line going support a worse, a poorer trade deficit. we flipped the math upward, you can see the key word here is the persistcy of a deficit. now we’re at 6% of g.d.p. the optimists say we have certainly done well so far, even if the trade deficit is worsened or with those more cautious or pessimistic say this is a difficult trend, at some point this will be harmful to the u.s. economy. entry that trend is going up, we’ll see a wider deficit more than likely next year?
>> more than likely. i see most economist says say a continuation of a trend, maybe we finally see exports pick up, imports diminish, so we get a leveling of the trade balance as a percent of g.d.p. i see very few people we talk to calling for a truly improved trade balance as a percentage.
>> china cheaper imports, growing economy, how does that factor in?
>> china is a big story here it makes up over a quarter of our trade balance. joshua shapiro at f.m.r. says it’s 20 pest of the trade balance. that’s the focus. what’s interesting is the give and take. i spoke with daniel ikenson of the indicateo institute on the radio today and adamant that it was about chinese imports coming in and you see a firestorm of criticism from congress over the jobs issue and the idea of explosive imports from china. we can’t forget the exports that we’re sending to china. granted a lot of that is boeing aircraft. those civilian aircraft orders going over there. but there is still this growing sense of exports to china, still not outweighing but somewhat balanced with the imports coming in.
>> this might be a rudimentary question, what are they focused on more? imports or exports?
>> great question by lori rothman. what you’ve got there is we focus on imports, imports, imports. the exports matter for a nation like germany, their exports are critical. they are just as critical for us because it’s a blended makeup of products such as technology products, semiconductors, not just about aircraft. so the economists, they focus on both the import math matics and export math matics.
>> two deficits this week, the trade and annual budget deficit. is there a link?
>> there’s not a link. there’s a wide body of literature that says separate those. it makes for great media but has very little to do with good economics.
>> once again, bloomberg’s editor at large tom keene.
>> find out whether or not prin paffle altranes investors disagrees with analysts who say fieser is a buy.
