Icahn: A Man of Letters; IBM Looks to Weather Some Storms; Twitter Has Yet to Impress

Icahn. Therefore I am…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Carl Icahn took time out of his busy schedule of haranguing Congress and ousting CEO’s to write yet another letter, this time on his website, to insurance company AIG. Icahn now owns a sizable chink of the company, though exactly how much remains a mystery. He only tells us that it is very “large.” I, for one, believe him, just cause it’d be kind of weird to make something like that up. Besides, he usually goes big. In his advice letter to AIG, the activist investor writes, “There is no more need for procrastination.” He wants AIG split up into three separate divisions because he’s not digging the company’s “Systemically Important Financial Institution” status, or SIFI if you’re feeling funky.  If you find that term a bit too clunky, then, by all means, refer to it by its other more user-friendly term, “Too Big To Fail,” as in the 2008 fiscal crisis and the HBO movie of the same name (that starred Bill Pullman  as JP Morgan Chase’s Jamie Dimon and Ed Asner as Warren Buffet). Icahn believes that when a company gets SIFI status it’s bad. It’s like a tax. A tax of a bunch of regulators breathing down your fiscal back with heavy breaths of federal oversight. Companies that don’t get saddled with that status are more valuable to shareholders, in Mr. Icahn’s not-so-humble opinion. Icahn wants to divide AIG into a property and casualty coverage division, a life insurance division, and a mortgage backing division. Then he wants to throw in some cuts and have AIG buy back some stock. After that, he feels AIG will start trading closer to its book value at about $100 a share. Right now the stock is trading at just under $64 and trades for less than 80% of its book value (which, by the way measures assets minus liabilities). As for AIG CEO Peter Hancock, well, Icahn will probably find a way to kick him out of AIG if he doesn’t take his advice.

Super duper…

Image courtesy of  Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Today’s big shopper is IBM, who is getting set to acquire The Weather Co.’s digital assets. In case you were wondering (because I know you were), those digital assets are its websites and apps. The channel, however, stays put, as it doesn’t really fit into IBM’s master plan. That master plan involves IBM beefing up its Watson Internet of Things Unit, its artificial intelligence unit that puts the super in supercomputer. The data supplied by the deal will give Watson the ability to create accurate forecasts – is that an oxymoron? – and will be able to provide commercial clients, from airlines to insurance companies, and beyond, very precise information. While the exact terms of the purchase have yet to be disclosed, the deal is rumored to be valued at around $2 billion. Naturally, shares of IBM took a little ride on the uptown train because of the super news.

These are the not quite the Moments…

Image courtesy of bplanet/FreeDigitalPhotos.net

Image courtesy of bplanet/FreeDigitalPhotos.net

Twitter is down 13% for the year and another 11% just today, and yet the micro-blogging site still beat the street. The social media company pulled down $569 million in revenue adding ten cents per share. Analysts predicted that Twitter would score closer to $560 million and add only a nickel per share. In terms of last year at this time, Twitter was up 58%. But here’s where things start to go south. The company revised its fourth quarter profit outlook between $695 million and $710 million. That seems like a whole lot of cash except that analysts were expecting numbers closer to $740 million. Then we turn to growth. There wasn’t that much of it.  Twitter only managed to add about 4 million new active monthly users. A very unimpressive 11% increase over the same time last year. Analysts, however, are still optimistic that launches, including the much-hyped Moments, and its increasing ad revenues will help turn the company’s fiscal tide.

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