FactSet Plummets On Q2 View

Shares of investment data provider FactSet Research Systems (FDS), a darling of fund managers who use its research in place of, or alongside, the Bloomberg, are collapsing today, down $8.38, or 11%, at $67.68, after the company this morning reported fiscal Q1 revenue and EPS in line, but forecast current quarter sales below estimates.

Revenue fell 0.2% to $155.2 million, the company said, just a hair below the average $155.9 million estimate, yielding profit per share of 74 cents, in line with estimates. For the current quarter, however, the company forecast sales of $154 million to $158 million, which at the midpoint is below the $158.3 million average estimate. Profit per share is expected to be 73 cents to 75 cents, a penny below estimates at the midpoint.

CEO Phil Hadley said the company’s business was “stabilizing.”

German Concern over ECB Funding Grows

Germany is getting worried–more worried than usual–about the level of debt in the eurozone. The European Central Bank’s Target2 system indicates that money owed to the Bundesbank now totals 489 billion euros ($656 billion). That is an increase of nearly 65% from 2011, and amounts to approximately 20% of Germany’s economic output.

Bloomberg reported Tuesday that Germany is growing more concerned about the imbalance in the system, also known as the Trans-European Automated Real-Time Gross Settlement System. Target2 is the means by which countries settle business transactions in the eurozone.

If, for instance, a Greek importing company wants to place an order with a German company, the ECB’s Target2 system would handle the logistics so that the German company would end up with a credit at the Bundesbank, while the Greek company would owe the Greek central bank on the transaction.

Andrew Bosomworth, a managing director at Pacific Investment Management Co. in Munich, was quoted saying, “The Bundesbank effectively ends up with loans to the other national central banks that are reflected in the Target2 claims on the eurosystem. The eurozone is doing fiscal policy-like stuff through monetary policy, but it’s not going through the same democratic process. It’s not a good thing from a voter’s perspective when you push it to the limit.”

If commercial banks do not want to deal with one another, balances between them fall–well, out of balance. Currently other countries within the system owe the Dutch central bank a balance of 153 billion euros, and Luxembourg 110 billion euros. Germany, however, is owed the most, and it is not happy about it.

John Whittaker, an economist at Lancaster University Management School, who drew attention to the growing imbalances in papers published last year, was quoted saying, “The Germans are very much justified in their concern. The Target2 liabilities are just as risky and just as real as holding the government bonds of Greece and other peripherals.”

SEC Challenges Judge in Citigroup Case

The SEC is fighting back against a judge who rejected the agency’s deal with Citigroup (C) over its marketing of a mortgage security, taking the case to an appeals court.

In a 15-page order last month, Judge Jed Rakoff eviscerated the SEC for its deal with Citigroup, which makes the bank pay $285 million but does not make it admit wrongdoing. Rakoff rejected the deal.

But now the SEC is fighting back, claimingthat the judge made a “legal error” in rejecting the claim.

“We believe the district court committed legal error by announcing a new and unprecedented standard that inadvertently harms investors by depriving them of substantial, certain and immediate benefits. For this reason, today we filed papers seeking review of the decision in the U.S. Court of Appeals for the Second Circuit.

We believe the court was incorrect in requiring an admission of facts ? or a trial ? as a condition of approving a proposed consent judgment, particularly where the agency provided the court with information laying out the reasoned basis for its conclusions. Indeed, in the case against Citigroup, the SEC filed suit after a thorough investigation, the findings of which were described in extensive detail in a 21-page complaint.”

Forex Articles for the Weekend – July 9 – Business Insider

Forex Articles for the Weekend � July 9 Business Insider ForexCrunch is a site all about the foreign exchange market, which consists of tutorials, basics of the forex market, daily and weekly forex analysis, technical analysis, forex software posts, insights about the forex industry and whatever is related … and more »

{forex} – Google News

Parsing Banks' Exposure to Greece

The Guardian has UBS data on the exposure that European banks have to Greek sovereign debt; the grand total, of €93 billion, seems low to me, especially when you back out the €46 billion owned by Greek banks. Add up all the French banks combined and you get to €9.3 billion; Germany’s even lower, at €7.9 billion. All of these sums are entirely manageable and imply that the impact of a Greek default on European bank solvency would be de minimis.

But those aren’t the only numbers out there. Kash has found data (pdf) from the BIS which shows much larger exposures: $65 billion in France, $40 billion in Germany. (And another $40 billion in the US, which I’ll come to in a minute.)

But it’s worth looking at the raw data here — which is found on pages 102 and 103 of the PDF. The French $65 billion is made up of $57 billion in direct exposure, and $8 billion in potential derivatives exposure. And of that $57 billion, just $2 billion is held by banks: most is held by the public sector and the non-bank private sector. In Germany, too, direct exposure of banks to Greece is a mere $2 billion — and total derivatives exposure is even lower than in France.

The main conclusion I draw from all this is that no one really knows what the effects of a Greek default would be — but that non-Greek banks are unlikely to be the main vector of any contagion. And while Kash is worried about US banks’ derivatives exposure, I’m pretty sanguine on that front, too.

For one thing, $40 billion is not huge in terms of derivatives exposure — especially when we don’t know how much is held by banks and how much by deep-pocketed insurance companies and unleveraged fixed-income investors.

More conceptually, crises occur when banks suddenly find that debt they thought very safe is in fact very risky. That’s what happened during the financial crisis with structured products carrying triple-A credit ratings, and that’s what could happen again with European sovereign debt which carried a zero risk weighting under many bank-capital regimes. It’s emphatically not what’s happening with US investors who are writing credit protection on Greece, in full knowledge that a default is a real possibility.

That credit protection is an expensive hedge for European investors who got exposed to sovereign debt when it seemed much less risky than it does now. For the people selling the protection, it’s a speculative play that there won’t be a formal event of default — and when banks make speculative plays, they can generally cope fine if and when those bets go bad.

None of which is to say that a Greek default would be easily manageable. There’s those Greek banks, for one, which could act as contagion vectors — and of course there’s Spanish and Portugese debt, too, and a whole slew of other highly-correlated assets we can only guess at ex ante. What we do know, though, is that Greece has been a very, very slow trainwreck — even more than Argentina was. And when debt crises come slowly, they’re generally more manageable than when they come fast (think Russia in 1998).

So although no one is going to enjoy a Greek default, I suspect that in and of itself it won’t prove catastrophic. But I could be very, very wrong about that. And that’s a risk no one in Europe really wants to take.

Best Wall St. Stocks Today: CMGI

CMGI Inc. (NASDAQ: CMGI) has announced an acquisition this morning of a company called Open Channel Solutions, Inc., which is a provider of entitlement and e-business management solutions.

This acquisition was all cash and was listed as a total value of $24.5 million for OCS.  CMGI is paying out a net purchase price of $11 million for a minority interest and the repayment of debt that OCS currently holds.

CMGI said that this will be neutral to 2008 earnings and accretive thereafter.  In its integration of OCS into ModusLink, the company provides solutions that manage entitlements for software licenses, maintenance & support subscriptions, hardware features and rights-managed content.

Interestingly enough, this company was spun-off of Modus Media International back in 2001.  After CMGI acquired Modus Media international in 2004, CMGI took a minority interest in the company and it has been held as an @Ventures investment since. 

If you adjust for its reverse stock split, CMGI shares have seen a trading range over the last 52-weeks of $9.66 to $26.00.

Jon C. Ogg
February 20, 2008

The Real Reasons the Rich Are Moving Cash to the Caymans - SmartMoney.com

One thing's for sure. Mitt Romney didn't send his money down to the Cayman Islands to work on its tan.

The former Massachusetts governor has been criticized by some for having some of his vast fortune in the Caribbean offshore banking center. Yes, it was politically clumsy. But it was not uncommon, and -- assuming he has filed all the right disclosures -- it was perfectly legal.

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But if you're not running for president, and don't have to worry about public relations, what are the legitimate reasons for moving money offshore?

I spoke to Jim Duggan, a partner at Chicago law firm Duggan Bertsch, to get the skinny. He's a tax and estate planning attorney who specializes in wealth management issues for the very rich, and he's been practicing in this area for nearly 20 years.

He says a growing number of wealthy people are looking into moving some of their money offshore. "The interest in offshore planning has increased basically by a factor of five in the last ten years," he says. Clients want to talk to him about it all the time.

 

Why the Rich Are Moving Cash to the Caymans

1:23

Brett Arends on The News Hub discusses why the real reason the rich are moving their cash offshore, and it has nothing to do with taxes.

Why?

Contrary to popular opinion, it's not really to save on taxes.

That's because American taxpayers are taxed on their worldwide income -- so if you're making $10,000 (or $10 million) in interest on a bank account in, say, the Caymans or Switzerland, you're getting taxed by Uncle Sam as if you're making it in a bank account here.

It's easy to scoff and assume the rich are hiding their money and cheating. Doubtless some are. But enforcement is tight, and the penalties aren't so much draconian as medieval. They are far more severe than for tax evasion onshore.

And there are plenty of tax shelters available here in the U.S. anyway -- such as trusts in low tax states, buying life insurance, and variable annuities.

So what are the real reasons the rich are casing the Caymans with their cash?

There are two, says Duggan: Litigation risk, and political risk.

Yes: Political risk. Or, as he puts in a nice legal euphemism, "jurisdictional diversification."

Litigation risk is the old reason. You could get hit by a crazy lawsuit here in the U.S. The wealthy are an easy mark, and anything onshore is vulnerable. But the U.S. courts don't have jurisdiction overseas and if you plan things right you have at least some chance of protecting money held offshore, Duggan says. "It keeps you away from our court system and the caprices of our courts," he says.

The new reason, though, is political risk: "Diversification from our government, policies, and banking systems," says Duggan. The last few years have shaken faith in our system. Duggan says growing numbers of his clients are worried about the financial system, confiscation -- the whole shebang. "They're concerned about our government, and where our society is headed. There's a lot of socialistic tendencies, capital controls, the redistribution of wealth."

Once again it's easy to scoff. Financially, the very wealthy have probably never had it so good in this country. Corporate profits and financial assets are booming. Tax rates on dividends and long-term capital gains are very, very low. But Duggan says the wealthy feel under attack, and government rhetoric is making them nervous.

But there's a logical problem here. Imagine a future government did decide to confiscate assets. They'd go after the money you held in Switzerland just as much as the money you held in New York, and the penalties for tax evasion would be as medieval as they are now.

The only way to save your money would presumably be to renounce your citizenship and move into exile. Even then the IRS might come after you. Do you want to spend the rest of your life living next to Roman Polanski in France?

Once again, all this makes you see the appeal of holding some gold within a portfolio.

Personally, I don't see any reason to think this administration is going to go after the so-called one percent. Too many of its members are either members of that elite group already -- or have high hopes of joining after they retire.

2-Star Stocks Poised to Plunge: Aeroflex?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, microelectronic products manufacturer Aeroflex Holding (NYSE: ARX  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Aeroflex's business and see what CAPS investors are saying about the stock right now.

Aeroflex facts

Headquarters (founded)	Plainview, N.Y. (1937)
Market Cap	$824.1 million
Industry	Electronic components
Trailing-12-Month Revenue	$728.4 million
Management	CEO Leonard Borow (since 2007) CFO John Adamovich, Jr. (since 2007)
Return on Equity (average, past 3 years)	(19.1%)
Cash/Debt	$57.5 million / $723.6 million
Competitors	Agilent Technologies (NYSE: A  ) Avago Technologies (Nasdaq: AVGO  ) Honeywell International (NYSE: HON  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 14% of the 28 members who have rated Aeroflex believe the stock will underperform the S&P 500 going forward. These bears include MajorBob04 and Jeffrey2012.

Earlier this week, MajorBob04 wrote that Aeroflex "will suffer as the economy slows down and government spending is cut back." Our CAPS member concludes: "Earnings were not good in the last quarter, and I wouldn't expect them to rebound in the near future."

Aeroflex even sports a rather worrisome debt-to-equity of 195%. That's much higher than that of competitors such as Agilent (51%), Avago (0.3%), and Honeywell (69%).

CAPS member Jeffrey2012 elaborates on the bear case:

The continued debate about ongoing fiscal contraction in the US means one thing: military spending is going to be hit. There is no way with military spending that has grown to about 50% of discretionary spending wont take a significant cut. Because of that, [Aeroflex] will also face growth reductions going forward. ...

Also, with the way the defense department procures from private contractors like [Aeroflex] means they will most certainly take a hit going forward with delayed contracts because there will be a new re prioritizing of spending for strategic reasons.

No good can be seen going forward even though it seems attractively priced. A current value trap that will suck in more investors for the forseeable future.

What do you think about Aeroflex, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Want to see how well (or not so well) the stocks in this series are performing? Follow the new TrackPoisedTo CAPS account.

Focus Media's Shares Dropped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: American Depositary Receipts of Chinese digital media and advertising company Focus Media (Nasdaq: FMCN  ) fell as much as 10.3% on fairly heavy morning volume.

So what: Dirt-digging analyst firm Muddy Waters is gearing up for a CNBC interview later today, and the network has been reminding viewers of this event throughout the morning. The firm is a very vocal critic of Focus Media, alleging financial fraud and all kinds of overstated numbers, so reminding investors of this analyst-to-management conflict is doing damage to share prices.

Now what: Focus Media shares have now dropped 41% over the last month amid the assault led by Muddy Waters. A number of private lawsuits have been launched as well, underscoring investor worries even further. Focus Media is not the first Chinese company in Muddy Waters' sights, and several others have failed to disprove the firm's harsh allegations. But the firm doesn't bat a pristine 1.00 either. Add Focus Media to your Foolish watchlist and stay tuned as this drama unfolds.

Don't Get Too Worked Up Over Vicor's Earnings

It takes money to make money. Most investors know that, but with business media so focused on the "how much," very few investors bother to ask, "How fast?"

When judging a company's prospects, how quickly it turns cash outflows into cash inflows can be just as important as how much profit it's booking in the accounting fantasy world we call "earnings." This is one of the first metrics I check when I'm hunting for the market's best stocks. Today, we'll see how it applies to Vicor (Nasdaq: VICR  ) .

Let's break this down
In this series, we measure how swiftly a company turns cash into goods or services and back into cash. We'll use a quick, relatively foolproof tool known as the cash conversion cycle, or CCC for short.

Why does the CCC matter? The less time it takes a firm to convert outgoing cash into incoming cash, the more powerful and flexible its profit engine is. The less money tied up in inventory and accounts receivable, the more available to grow the company, pay investors, or both.

To calculate the cash conversion cycle, add days inventory outstanding to days sales outstanding, then subtract days payable outstanding. Like golf, the lower your score here, the better. The CCC figure for Vicor for the trailing 12 months is 103.4.

For younger, fast-growth companies, the CCC can give you valuable insight into the sustainability of that growth. A company that's taking longer to make cash may need to tap financing to keep its momentum. For older, mature companies, the CCC can tell you how well the company is managed. Firms that begin to lose control of the CCC may be losing their clout with their suppliers (who might be demanding stricter payment terms) and customers (who might be demanding more generous terms). This can sometimes be an important signal of future distress -- one most investors are likely to miss.

In this series, I'm most interested in comparing a company's CCC to its prior performance. Here's where I believe all investors need to become trend-watchers. Sure, there may be legitimate reasons for an increase in the CCC, but all things being equal, I want to see this number stay steady or move downward over time.

Source: S&P Capital IQ. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Because of the seasonality in some businesses, the CCC for the TTM period may not be strictly comparable to the fiscal-year periods shown in the chart. Even the steadiest-looking businesses on an annual basis will experience some quarterly fluctuations in the CCC. To get an understanding of the usual ebb and flow at Vicor, consult the quarterly-period chart below.

Source: S&P Capital IQ. Dollar amounts in millions. FQ = fiscal quarter.

On a 12-month basis, the trend at Vicor looks less than great. At 103.4 days, it is 2.2 days worse than the five-year average of 101.2 days. The biggest contributor to that degradation was DIO, which worsened 6.1 days when compared to the five-year average.

Considering the numbers on a quarterly basis, the CCC trend at Vicor looks OK. At 122.9 days, it is 22.1 days worse than the average of the past eight quarters. Investors will want to keep an eye on this for the future to make sure it doesn't stray too far in the wrong direction. With both 12-month and quarterly CCC running worse than average, Vicor gets low marks in this cash-conversion checkup.

Though the CCC can take a little work to calculate, it's definitely worth watching every quarter. You'll be better informed about potential problems, and you'll improve your odds of finding the underappreciated home run stocks that provide the market's best returns.

• Add Vicor to My Watchlist.

What Zynga's Friday Flop Means for Manic Monday

With prices always falling, Zynga (NASDAQ: ZNGA) is like the Wal-Mart (NYSE: WMT) of social gaming.

Well, not exactly. When Wal-Mart announces a price drop, it usually involves consumer goods. When Zynga announces a price drop, it will -- from this day forward -- most likely refer to its stock.

I am laughing right now. Seriously laughing. Falling-out-of-my-chair laughing. Patting-myself-on-the-back laughing. And it's all because Zynga, that little nubbin of a social gaming company that pulled every dirty trick in the book to gain revenue, is officially in the toilet.

The stock debuted on Friday at a price of $10 and closed at $9.50.

$9.50!

This was the company that many said would be the next big thing in gaming. This was the company that was supposed to prove that traditional console game machines were dead and that social games were the future. Not even iOS gaming could stand up to Zynga, some said.

In October, Zynga's Erik Bethke, a general manager of Mafia Wars 2, spoke fondly of the company's hit franchise. �Our goal with Mafia Wars 2 was to build on the Mafia Wars franchise in a way that feels familiar to our loyal players, yet provides a brand new world of criminal mischief to explore,� Bethke said in a company release. �The game makes fighting a visceral, social experience and wraps it in a story and art style that we think our players will love. Believe us when we say that Mafia Wars 2 is unlike anything Zynga has released before. We can't wait to let our players in on the social mayhem.�

These days, Zynga execs, managers and developers haven't been nearly as talkative. And on Friday, investors weren't amused by the company's performance. Maybe they were turned off by the accounting adjustments, which made Zynga look profitable even though the company isn't making a dime. Maybe it was the simple fact that the social gaming business model � where you can play for free but must pay to acquire select items � is broken. Or maybe investors finally realized that social gaming (as we currently know it) is just a fad.

Or maybe investors were not that excited for Zynga in the first place. Maybe it was all the crazy media � which loves to jump on any bandwagon it can find � that made Zynga seem so darn popular. Let's not forget that it was the media that overemphasized the success of Guitar Hero and Rock Band, which made their respective companies � Activision (NASDAQ: ATVI) and Electronic Arts (NASDAQ: ERTS) � billions of dollars but can no longer survive at retail. Music games, like social games and so many other genres and gaming subsets, proved to be nothing more than a fad that people eventually abandoned.

Zynga is a particularly amusing case, however, because I have been predicting its demise for quite some time. Whereas most video game-related fads provide a degree of enjoyment, Zynga's social games are little more than a time-waster that appeals to the same psychology as gambling.

Before the market close on Friday, Zynga dropped as low as $9 a share. In pre-market trading this morning, the company was down a few pennies, indicating that it could close at another loss. As of 9:48 a.m. EST, Zynga was down 3.83%.

One can only imagine how Mark Turmell � the legendary creator of NBA Jam, NFL Blitz, and SmashTV � feels right now. Turmell left Electronic Arts (which revived both NBA Jam and NFL Blitz after Midway, the games' original publisher, closed) last summer to pursue a gig with Zynga. My assumption � well, my hope � was that Turmell had left with the intent of creating a new, arcade-style sports game that would revolutionize the world of social gaming and transform Zynga into a real video game company.

Instead, we are left with a dying corporation (can we even call it a �video game� company? Is that anywhere near accurate?) that will one day be known as the producer of that farming game people used to waste their lives playing.

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ACTION ITEMS:

Bullish:

Zynga's demise isn't as bad for the IPO market as people think, but it could:

• Ensure that proven game publishers like Activision, Electronic Arts � and even duds like THQ (NASDAQ: THQI) � get more investor support than unproven newcomers.

• Push investors toward iOS developers like Glu Mobile (NASDAQ: GLUU) instead of social game developers.

• Keep smaller development studios from considering an IPO in the coming year.

Bearish:

If Zynga perseveres, however, it might:

• Inspire investors to take a more serious look at all game companies, including those that cater to a Zynga-style (casual) market, such as Majesco (NASDAQ: COOL).

• Force investors to trade more carefully. Traders who subscribe to Benzinga Pro will be instantly alerted to any earnings updates, stock price adjustments or any other changes that occur within these game companies.

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Molycorp Announces Major Rare Earth Supply Agreement with Hitachi Metals

(Note: This news was disclosed during Molycorp�s 2Q 2011 earnings call on Thursday, Aug. 11, 2011)

GREENWOOD VILLAGE, Colo.–(CRWENewswire)– Molycorp, Inc. (NYSE:MCP), the Western hemisphere’s only producer of rare earth oxides (REO) and the largest REO producer outside of China, announced that it has reached an agreement with Hitachi Metals to supply the company with rare earth magnetic materials, including Didymium (a mix of neodymium and praseodymium) metal and alloy, as well as Lanthanum Oxide.

The three-year deal, which extends and expands upon an existing supply relationship between the companies, significantly increases the amount of rare earth materials that Molycorp will provide Hitachi Metals. The volume begins at a level comparable to the companies� current agreement and grows substantially when Molycorp reaches its Phase 1 production level in 2012 at its flagship rare earth production facility at Mountain Pass, California.

“We are very pleased to be moving forward with this significant supply agreement to produce high-quality rare earth products for Hitachi Metals,” said Mark A. Smith, President and CEO of Molycorp. “Hitachi Metals has a long standing reputation as a global leader in the development and manufacture of advanced technology products that require rare earth materials, and we look forward to playing a very prominent role in their production supply chain.�

Building upon its �mine to magnets� vertical integration strategy, Molycorp�s newly announced supply relationship with Hitachi Metals demonstrates the progress the company has made in developing its downstream manufacturing capabilities over the past year. The oxide and metal production at the Molycorp Silmet facility in Estonia and the alloy production at the Molycorp Metals and Alloys facility in Tolleson, Arizona, will enable the company to produce the upgraded magnetic materials necessary to meet a significant portion of Hitachi Metals� global requirements when Molycorp reaches its full, Phase 1 production levels at Mountain Pass.

�The strategic acquisitions we have made this year and the technology innovations we are building into our Mountain Pass facility position us to produce some of the world’s most advanced magnetic materials,� Smith said. �We are proud that our rapidly growing manufacturing supply chain will be able to meet the exacting specifications of a renowned global technology company like Hitachi Metals.�

Separately, Molycorp and Hitachi Metals announced that they are suspending discussions for now on their December 2010 letter of intent to create a joint venture in the U.S. to manufacture neodymium-iron-boron (NdFeB) alloy and permanent magnets made from the alloy. The companies were unable to reach agreement on certain key matters affecting the value of the joint venture to each party.

�We remain fully committed to producing rare earth permanent magnets and to capturing the highest value of our rare earth materials throughout the supply chain,� said Smith. �In fact, we have been in advanced discussions with other companies regarding magnet joint venture opportunities for some time, and we look forward to sharing more details on these developments in the near future.�

About Molycorp

Colorado-based Molycorp, Inc. is the only rare earth oxide (REO) producer in the Western Hemisphere and the largest REO producer outside of China. The company currently is expected to produce a total of between 4,541 to 5,813 metric tons of commercial rare earth materials in 2011 from its three facilities. In addition to its flagship rare earth mine and processing facility at Mountain Pass, California, Molycorp also owns a controlling interest in the Estonia-based Molycorp Silmet AS. One of the largest rare earth and rare metal producers in Europe, Molycorp Silmet AS has an annual production capacity of approximately 3,000 metric tons of rare earth products and 700 metric tons of rare metal products. Molycorp also owns Molycorp Metals and Alloys in Tolleson, Arizona. Formerly known as Santoku America, Inc., the facility is one of the leading producers of high-purity rare earth alloys and metals outside of China, and manufactures neodymium-iron-boron (NdFeB) alloy and samarium cobalt (SmCo) alloy, as well as other specialty alloys and products. Following the execution of Molycorp’s “mine-to-magnets” strategy and the expected 2012 completion of Phase 1 of its modernization and expansion efforts at its Mountain Pass, California processing facility, Molycorp expects to produce at a rate of approximately 19,050 metric tons of REO equivalent per year from Mountain Pass. The Company expects to achieve an annual production capacity at Mountain Pass by the end of 2013 of approximately 40,000 metric tons of REO equivalent after the completion of Phase 2. Molycorp intends to provide to the market a range of rare earth products, including high-purity oxides, metals, alloys, and permanent magnets. The company currently sells products to customers in Europe, North and South America, Asia, Russia, and other previous Soviet Union countries.

Safe Harbor Statement Regarding Forward-Looking Statements

This release contains forward-looking statements that represent Molycorp�s beliefs, projections and predictions about future events or Molycorp�s future performance. Forward-looking statements can be identified by terminology such as �may,� �will,� �would,� �could,� �should,� �expect,� �intend,� �plan,� �anticipate,� �believe,� �estimate,� �predict,� �potential,� �continue� or the negative of these terms or other similar expressions or phrases. These forward-looking statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause Molycorp�s actual results, performance or achievements or industry results to differ materially from any future results, performance or achievement described in or implied by such statements.

Factors that may cause actual results to differ materially from expected results described in forward-looking statements include, but are not limited to: Molycorp�s ability to secure sufficient capital to implement its business plans; Molycorp�s ability to complete its Phase 1 modernization and expansion efforts and Phase 2 expansion efforts and reach full planned production rates for REOs and other planned downstream products; the final costs of the Phase 1 modernization and expansion plan and Phase 2 expansion, which may differ from estimated costs; uncertainties associated with Molycorp�s reserve estimates and non-reserve deposit information; uncertainties regarding global supply and demand for rare earths materials; Molycorp�s ability to successfully integrate recently acquired businesses; Molycorp�s ability to reach definitive agreements for a joint venture to manufacture neodymium-iron-boron permanent rare earth magnets and its supply and financing arrangement with Sumitomo; Molycorp�s ability to maintain appropriate relations with unions and employees; Molycorp�s ability to successfully implement its �mine-to-magnets� strategy; environmental laws, regulations and permits affecting Molycorp�s business, directly and indirectly, including, among others, those relating to mine reclamation and restoration, climate change, emissions to the air and water and human exposure to hazardous substances used, released or disposed of by Molycorp; and uncertainties associated with unanticipated geological conditions related to mining.

For more information regarding these and other risks and uncertainties that Molycorp may face, see the section entitled �Risk Factors� of the Company�s Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC. Any forward-looking statement contained in this press release or the Annual Report on Form 10-K reflects Molycorp�s current views with respect to future events and Molycorp assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as otherwise required by applicable law.

Contact:

Molycorp Inc.
Brian Blackman, +1 303-843-806
Senior Manager, Investor Relations
Brian.Blackman@Molycorp.com
or
ICR, LLC
Investor Relations:
Gary T. Dvorchak, CFA, +1 310-954-1123
Senior Vice President
Gary.Dvorchak@icrinc.com

Source: Molycorp, Inc.

THIS IS NOT A RECOMMENDATION TO BUY OR SELL ANY SECURITY!

Its granted appeal of the giant copyright case adds new pressure

Viacom (NYSE:VIA.B) Chairman Sumner Redstone, who coined the phrase �content is king,� is a happy man today because a federal appeals court has reinstated the company�s landmark $1 billion copyright infringement suit against Google‘s (NASDAQ:GOOG) YouTube business.

Viacom, parent company of Comedy Central, MTV and Paramount Pictures, filed suit in 2007 claiming that YouTube users had illegally downloaded more than 62,000 clips of popular Viacom programs such as The Daily Show with Jon Stewart and The Colbert Report. YouTube had sought a dismal of the case, arguing that it had removed the infringing content as it was notified, per the requirements of the Digital Millennium Copyright Act (DCMA).

A federal judge in 2010 ruled in Google�s favor, but that ruling that was unexpectedly reversed Thursday by the U.S. Court of Appeals in Manhattan. As Bloomberg News noted, the appellate decision vindicates Viacom, stating that �a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website.�

Not surprisingly, the ruling delighted Viacom. �We are pleased with the decision by the U.S. Court of Appeals,� the New York-based company said in a statement. �The Court delivered a definitive, common sense message � intentionally ignoring theft is not protected by the law.�

The case is being closely watched by media companies, some which have complained for years that YouTube does a poor job of policing piracy on its website. Indeed, even with the publicity surrounding the case, finding Viacom content on YouTube isn�t hard. Google couldn’t immediately be reached for comment.

�That�s the right result,� said Andrew Berger, an intellectual property attorney with Tannenbaum Helpern Syracuse & Hirschtritt in New York, in an interview. He added that there was plenty of evidence of �red flag knowledge if not actual knowledge� of infringement by YouTube. �This case should not have been dismissed on summary judgment.�

On its website, Viacom argued that YouTube �welcomed� infringement to build traffic on its site, which the DCMA�s Safe Harbor provision was never designed to protect. The case has broad ramifications beyond questions over video clips, the media company says.

�Our economic future will be largely built on innovation, information and the growth of trade in intellectual property — the incentive to innovate is extinguished if investment in content is not protected under U.S. law,� according to Viacom.

Whether other companies will wage similar battles with YouTube is unclear. In the years since Viacom filed its lawsuit, the video channel has tried to convince Hollywood that it’s a friend. Ironically, YouTube recently announced a deal with Paramount to let YouTube users stream the studio�s films. YouTube has similar arrangements with every Hollywood studio except 20th Century Fox (NASDAQ:NWS).

�When you take on Google, you take the tiger by the tail,� Berger said. �I don�t know whether others will emerge and try the same.�

Given the complexities of copyright and trademark law, predicting the outcome of the YouTube-Viacom battle is difficult. These types of cases are often settled out of court, but given this one’s duration and the stakes involved, any resolution might cost Google big bucks. Unfortunately for shareholders, who have seen Google shares barely move this year, Berger thinks the legal battle may linger for another two years or so.

–Jonathan Berr does not own shares of the companies listed here. Follow him on Twitter@jdberr.

Mastech: Forgotten Spin-off?

I recently dusted off my spinoff database to see if I can find anything interesting. One name which caught my eye was Mastech Holdings (MHH).

The stock was spun off from iGate Corp (IGTE) back in September of 2008. It began trading at around $10 and then a few weeks later, fell off a cliff to ~ $1 for no apparent reason. Since then has crawled its way back to $4.45.

At its current price, it is trading at an EV/EBTIDA of 3x whereas comparable companies are trading in a range of 9x-18x (average multiple 13x).

Regardless, as long as it isn't a buggy whip business, melting ice cube or a Toronto-listed company, any business trading at 3x EV/EBITDA on depressed earnings warrants inspection.

Mastech is an IT staffing firm. It has a market cap of $16 mm, has $7 mm in cash and zero debt. Last year, it generated $0.69 per share in free cash flow. Here is some historical financial data:

• Year: EPS/FCF per share
• 2005:$1.60/NA
• 2006:$1.92/$2.31
• 2007:$1.51/$1.51
• 2008:$0.71/$1.09
• 2009:$0.38/$0.69

The background on the business is that back during the 1990s tech bubble, there was a huge shortage of qualified IT specialists in the US (yes, it's true...it did happen). Mastech's parent company, iGate, is a provider of outsourced IT services to corporate America. The company developed a small in-house staffing business (call it a by-product) and spun it off to shareholders as a publicly traded company, Mastech Holdings.

You might have guessed it yourself, but let me just say that unemployment at 10% is not a good environment for revenue generation for Mastech and its ilk.

However, if you believe that the employment picture will get better, then you might find this an interesting way to play the cycle because it is relatively inexpensive, is still generating free cash flow and has no debt.

Some additional facts about Mastech which I found appealing:

1. Founders/managers of iGate continue to own 56% of MHH shares so they have a vested interest in MHH's success.
2. The spinoff was unsuitable for iGate's stockholders and most of them likely sold it without analyzing it.
3. This is not just true for MHH, most companies share this aspect - - the business has been restructured to deal with the severe downturn we are experiencing and when the cycle picks up, will probably generate excellent earnings.
4. If the upturn takes longer than expected, Mastech has a strong balance sheet and should be able to weather it. The risk of permanent capital loss for equity is small.

The risks:

1. Ownership concentration makes it vulnerable to a "take-under".
2. Staggered Board and poison pill in place.
3. Client concentration - 60% revenues are from top-10 clients.

The company will announce earning on April 28th and I have no idea what the numbers might look like. As far as I know, the stock has no official sell-side coverage.

Disclosure: Author holds a long position in MHH

Troubling Developments for Kodak

It's been a hard few months for Eastman Kodak (NYSE: EK  ) , but this past week was a real doozy. The stock fell on rumors that the company may be talking with Citigroup (NYSE: C  ) about arranging bankruptcy financing, a development that could see Kodak selling its patent portfolio to meet obligations.

Source: Yahoo! finance.

If Kodak's share price continues to slide, there's a distinct possibility that the stock itself could be delisted. But whoever snaps up Kodak's patents could find itself sitting on a goldmine of possibilities. The future may be hazy for Kodak, but photo bugs out there can still find a reason to smile.

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Zions, BondDesk Join to Help Retail Investors Compare Bond Yields

Zions Direct and BondDesk Group on Friday announced their latest collaboration, which lets retail investors see how yields on bonds auctioned by Zions compare to weighted-average yields for similar issues in the broader market.

This latest collaboration of online broker-dealer Zions Direct and fixed-income technology firm BondDesk’s electronic trading platform offers a user-friendly “Market Snapshot” that appears weekly on ZionsDirect.com.

The snapshot allows retail bond investors to see how the yields on bonds auctioned by Zions compare to weighted-average yields computed by BondDesk for similar issues in the broader market. For example, if Zions is auctioning an AA 3-year corporate bond, investors can refer to the snapshot to determine if the Zions-auctioned bond has a higher yield than the market average.

“Zions has essentially blended our analytics with their sales process so investors can compare bonds that Zions is auctioning,” said Chris Shayne (left), a BondDesk chartered financial analyst and director, in an interview on Tuesday. “It’s a quantifiable way to show you’re getting a good value for your investment.”

In May 2010, Zions Direct and Bond Desk joined together to launch a new version of the Bond Store trading platform that retail clients use at www.zionsdirect.com. In October 2010, the two firms announced the ability to place buy/sell orders after-hours.

"These changes are largely the result of customer feedback. The staff at Zions Direct is committed to adding value to users' experience with future improvements to www.bondstore.com," said W. David Hemingway, chairman of Zions Direct, in a news release announcing the Market Snapshot.

The partnership with Zions allows BondDesk to deliver innovative solutions to their customers that neither party could provide alone, said BondDesk CEO Greg Stockett in the news release. "We are constantly evolving our business to meet the needs of the market, and this partnership is a great example of our ability to provide custom tools, data and analysis to our clients,” Stockett said.

Read about Chris Shayne’s launch of a muni transparency report and a corporate transparency report at AdvisorOne.com.