No matter how bad the markets were in February, they were worse for some stocks than for others.
Shares in Microsoft (NASDAQ: MSFT) dropped 16% during the second month of the year, which shows how costly the company’s bid for Yahoo! (NASDAQ: YHOO) has been. Now that no other reasonable offer has materialized for the portal company, Redmond should withdraw its offer, let Yahoo! fall to $18 and then re-bid the deal at $22. That would certainly allow MSFT stockholders to recoup most of their losses.
Sprint Nextel (NYSE:S) has been a particularly gruesome piece of work, falling over 30% over the course of th last month. Earnings were bad and the company is still struggling to keep subscribers. The lowering of rate plans for cell customers at AT&T (NYSE: T) and Verizon Wireless puts even more pressure on Sprint. If the company does not put itself up for sale or get a large investor to put capital into the company’s WiMax initiative, the stock will go lower. There are rumors that Intel (NASDAQ: INTC) will invest $2 billion into a joint venture between Sprint and Clearwire (NASDAQ: CLWR) to help build-out a national WiMax network. The rumors had better be true.
AIG (NYSE:AIG) dropped about 17% in February because of a series of unexpected losses tied to investments in complex instruments which lost much of their value as the credit markets imploded. It is nearly impossible to see management doing anything to get shareholder confidence back. AIG gets to join other deservedly battered companies like Citigroup (NYSE: C) in purgatory.
GM (NYSE: GM) fell 15% over the course of February. The odds that there will be any good news for the company this quarter are unusually poor. The domestic car market shrinks by the month as does the chance for GM to make money in North America.
AT&T (NYSE: T) and Verizon (NYSE: VZ) are the surprising cripples of the last month. The stocks had been doing extraordinarily well. Their cellular businesses were growing and kicking off piles of cash. Their new fiber TV initiatives appeared to be giving cable companies fits. The most perverse thing about the companies, which were both down about 7% in February, is that they cut each others throats by getting into a cell service price war.
Douglas A. McIntyre