Shaun Carter dot Com

Microsoft CEO Steve Ballmer wrote a letter to Yahoo Co-Founder Jerry Yang formally withdrawing his offer to acquire the search engine for $33 per share, a 70% premium to it’s price before the offer was announced.

Ballmer cited Yahoo’s unwillingness to accept an offer below $37 per share and attempts to cannibalize their own search engine by partnering with Google.

I think Microsoft is wise to back away from this deal and re-double their efforts against Google on their own. This also plays out well for the Yahoo May 25 Puts and MSFT June 32. Yahoo will surely plummet in early trading Monday morning and I think Microsoft will recover nicely into the mid to upper 30’s over the next several weeks.

Technorati Tags: stocks, options, investing, market, yahoo, microsoft, yhoo, msft, shaun carter, buyout, merger, straddle, strangle

Despite Microsoft’s threats of walking away from their $31 per share offer for Yahoo after last weekend, unconfirmed reports from inside the two companies point to a higher offer to come from Microsoft in the near future.

Microsoft CEO Steve Ballmer announced a few days ago that his company would be willing to pay $32-33 per share for the search engine, but newer reports put that number around $35. It appears that Microsoft is now willing to play nice and seek a cooperative deal rather than a hostile takeover as suggessted by Ballmer.

The Option Strangle trade I have on Yahoo is up about 50% right now, but with the announcement of a firm offer over $31 per share should mean a 300+% gain. On the other hand, an announcement that Microsoft is walking away would also prove very profitable.

Hopefully this deal will be settled over the next few days and I can lock in profits on Monday or Tuesday.

Technorati Tags: stocks, options, investing, market, yahoo, microsoft, yhoo, msft, shaun carter, buyout, merger, straddle, strangle

On Friday morning I decided to enter in some trades that take advantage of the Microsoft/Yahoo deal drama that has been going on for a while. Microsoft set a deadline of Saturday April 26 (yesterday) for Yahoo to accept it’s unsolicited offer of $31 per share. I saw an opportunity to enter into an option strangle on Yahoo with May 25.00 Puts and May 27.50 Calls.

Yahoo is going to move big one way or the other based on how the news pans out Monday morning and whether or not Microsoft or Yahoo have anything to add to the mix. By trading with a straddle or strangle I am able to profit on a big move in either direction, or end up with a big loss on no price movement. While my gut tells me that Yahoo will drop significantly on Monday as Microsoft threatens to walk away from the deal completely, I also wanted some insurance against a surprise increase in the bid to appease Yahoo’s board and facilitate a friendly acquisition.

On this trade, if Yahoo moves down to 20 - I profit at least $500 per Put contract. If Yahoo approves the bid of 31 later in the week - I profit $400 per Call. If the bid is increased, the profits on the Call option increase accordingly.

Because of my feeling that Microsoft will walk away from the deal, I also entered into a June 32 Call contract for Microsoft. I believe that if they walk away, shareholders will cheer and enthusiastically buy the stock up to 35-40, meaning a $300-800 profit per contract.

I am now just awaiting the news and the opening prices for the two stocks on Monday. I expect this to be a very short trade, just long enough to take advantage of the news and get out.

Technorati Tags: stocks, options, investing, market, yahoo, microsoft, yhoo, msft, shaun carter, buyout, merger, straddle, strangle

In my local area, regular unleaded gasoline rose to $3.69 per gallon yesterday. It is strange that the price we pay for gas in west michigan is always higher than the state and national average, despite having a fuel depot and extensive underground pipelines in my town.

While high gasoline prices are a nuisance, I don’t complain about it simply because in the whole scheme of things gasoline is an absolute bargain compared to many other products we use that are taken for granted.

Prices per gallon of commonly used products:

$75 - Extra Virgin Olive Oil

$48 - Pepto Bismol

$40 - Axe Body Wash

$35 - Starbucks coffee drinks

$30 - Spaghetti Sauce

$25 - Ketchup

$22 - Tide Laundry Detergent

$21 - Honey

$10 - Antifreeze

$8 - 20oz Bottled Water/Soda

$7 - Orange Juice

Now, of course people are going to whine and complain that this comparison is not accurate for one reason or another. Firstly, of course the price of gasoline impacts the transportation costs for all of the above products. The amount of each product consumed will also vary depending on a person’s rate of consumption.

But the bottom line here, is that when compared among commonly used products that we use without even thinking about price, gasoline is very inexpensive. Especially when you consider how gasoline is manufactured and the extensive and expensive processes to get it to market versus something like bottled water or olive oil.

There will also be those that complain of the record profits being reported by the world’s largest oil companies. Well, why aren’t you an investor in these companies? The fact is that the majority of the shareholders of our country’s oil companies are working class Americans who invest in mutual funds! One particular fund I have recommended is Fidelity Select Energy, which is packing on double digit gains recently amid the big increases in the price of oil. The other thing to remember about oil company profits is that as a percentage of sales, their profit margins are very slim… almost always less than 8%, whereas the profit margins of other large companies could be 10-20% and they operate without the fear of a potential “windfall profits tax.”

With the growing demand for oil from developing nations such as china, russia and india, the price of oil will only continue to rise. There is no increase in supply on the near term horizon and oil is most definitely a finite resource. So the “pain at the pump” is only just beginning. I believe we’ll see $4/gallon gasoline in May or shortly thereafter here in West Michigan.

I drive a small, fuel efficient vehicle and try to limit unnecessary driving. With the weather warming, I plan to begin biking the few miles to work to save on gas and improve my health at the same time.

Technorati Tags: gasoline, oil, crude, pepto bismol, soda, water, olive oil, prices, india, russia, china, shaun carter, exxon mobil

Google surprised analysts today by reporting a 30% increase in net profit for the first quarter of 2008. The news boosted Google stock 17% in after hours trading to 525 per share.

Google was beaten down lately because of reports about decreased click through rates and the effect it would have on earnings. But, what many failed to realize is that in the short term earnings may fall - but in the long term the economics will even out and earnings per click will increase to compensate for better targeted traffic.

I have noticed the effect of the decreased click area of Adsense ads on my websites, but my overall earnings have increased with time. If anything will perk Google stock back up, it’s the realization the the slumping economy is not affecting earnings and the decreased click area is helping Google attract more advertisers at a more attractive CPC.

I have been accumulating at levels below 500 per share and doubt that Google will see anything in that range again as long as earnings continue to climb. Any potential advertising agreement with Yahoo should also significantly impact earnings to the upside. I expect an announcement of a formalized agreement from Yahoo within 30-60 days.

I will continue adding to my position on any weakness around the 500 per share price range.

Technorati Tags: google, shaun carter, yahoo, adsense, adwords, investing, stocks, search, technology

I find it ironic, but not surprising, that American Airlines is attempting to “pass the buck” to the FAA for its recent spat of mass flight cancellations because of wire bundles in the wheel wells of their MD-80 aircraft. By acting as if the FAA is the one causing the inconvenience on air passengers rather than citing their own incompetence and laziness in getting required maintenance work done on their aircraft.

It’s true, American Airlines along with all other carriers, were notified by the FAA in September 2006(!) that they had 18 months to check over specific sections of wiring on all MD-80’s in service. So, why is the FAA safety official responsible for enforcing these audits being grilled in congress for these safety inspection orders being enforced after the grace period expired?

I think congress needs to keep their eye one the ball and begin issuing massive fines against the airlines that failed to perform ANY of the ordered electrical wiring work in the 18 month’s they were given to complete it. Had the airline completed the work evenly over the 18 months there would have been very few, if any, flight cancellations as a result. But now that American Air is canceling hundreds and thousands of flights at a time, the damage will be far-reaching and economically devastating.

So stop blaming the FAA, and put the blame where it belongs… on American Airlines and a few other airlines that failed to take the initiative to ensure the safety of their passengers by following FAA mandated safety audit instructions.

Technorati Tags: american airlines, faa, delta, northwest, united, shaun carter, flight cancellation, airplane, airline, md-80, plane, congress

The month of March 2008 is the best yet for my proxy network. My network is comprised of Unblock Youtube and Rasta Proxy.

Unblock Youtube continues to dominate for some great Google keywords and brought in nearly 30,000 visits to the main page and hundreds of thousands of proxy pageviews. I decided to remove the Adversal popunders because there was no way for me to set a frequency cap on them and they were annoying users. That fact is supported by the very steep increase in the number of pages surfed on the proxy as users were more likely to stick around longer when not bombarded by popunders.

Rasta Proxy is struggling and is only generating a few cents daily. The reason being poor adsense targeting/payouts on that page due to a bad domain name. I decided to monetize Rasta Proxy using only adbrite and have been unsuccessful in generating any meaningful traffic to the site. The top 3 Google ranking for Unblock Youtube is what creates nearly all of the revenue for that site and finding a domain with similar SE rank will not be an easy task, or a cheap one.

I have also been using the two proxies to promote my credit card comparison site as well as this blog and have gotten a decent number of clickthroughs from their respective text links. Afterall, it is free advertising.

Perhaps April 2008 will be the month that profit from my proxies tops $100.

Adsense - $38.68

Adbrite - $49.75

Adversal - Discontinued

Net Audio Ads - not fully functioning yet, but could generate another $25-50 per month.

Total Revenue- $88.43

Expenses - Less than $20

March 2008 Profit = $68.43

Technorati Tags: proxy, proxy network, making money, shaun carter, unblock, youtube, myspace, facebook, bebo, rasta, network, internet, adsense, google, adversal, adbrite, net audio ads

Shares of Bear Stearns (BSC) took a dive today amid news of a $2 per share buyout offer from JP Morgan and a government bailout. I’m truly upset that the federal government has had to resort to bailing out institutions who made horrible investing decisions and lost billions of dollars. It just really burns me that the American people as a whole are being punished for the stupid investments and lending practices of some of the largest banking institutions in the country which are run by some of the most educated financial minds in the world. Considering this is a field I wish to enter someday I’m appalled at the lack of foresight these professionals possess when immediate profits are stake.

Bear Stears is just the beginning. I’m sure we will see more bank implosions in the coming months and subsequent government bailouts designed to “protect” the American public from further losses and home equity bleeding.

For now I am focusing on companies with strong balance sheets, stable profits during any economic condition and a good dividend. Some of those companies include:

Altria

Burlington Northern Santa Fe

Google

Diageo

Reynolds American

Technorati Tags: investing, economy, bear sterns, jp morgan, shaun carter, dow jones, nasdaq, retirement, google, altria, diageo, reynolds american, burlington northern, federal reserve

In, what I consider to be the best Apprentice episode yet, Omarosa gets fired by Donald Trump for the second time. I really wish they had dumped her off the show much sooner than they did, but she manages to pull in viewers because of the drama that inevitably surrounds her being.

What strikes me as shocking is that she would stoop so low as to accuse Piers Morgan of “being in the closet” in an attempt to avoid being fired. What her thinking was on that front is beyond me. Trump wasn’t happy with the things coming out of Omarosa’s mouth and felt that Piers should be allowed back into the boardroom to defend himself against Omarosa’s seemingly baseless attacks. His defense was hilarious… Piers walks in, plants a kiss on Trace Adkins cheek and declares him a “Beautiful Cowboy” and then leaves the room. Omarosa says she thought he was going to hit her and Trace looked pretty pissed off, but all three Trumps (Donald, Don Jr. and Ivanka) thought it was hilarious and immediately picked up the Brokeback Mountain joke that Piers was playing on Omarosa.

I just wish Trump had added the word “again” after saying to Omarosa, “You’re Fired.”

Technorati Tags: apprentice, donald trump, ivanka trump, piers morgan, omarosa, trace adkins, shaun carter, brokeback mountain, nbc, reality, steve baldwin, tito ortiz, gene simmons

Warren Buffett, the world renowned CEO of Berkshire Hathaway, has once again earned the title of World’s Richest Person. Buffett beat out Bill Gates after having been the wealthiest person on the Forbes list for the past 13 years.

It seems inevitable though that Warren Buffett’s newfound glory will be short lived as Mexican business tycoon Carlos Slim is generating wealth at an extraordinary pace - doubling his net worth in only two short years. His stranglehold on the Mexican telecom industry is very lucrative, success that in the US would most likely result in landmark anti-trust investigations of a scale larger than Microsoft’s troubles with the European Union.

Technorati Tags: warren buffett, bill gates, carlos slim, microsoft, mexico telecom, united states, antitrust, forbes, ceo, berkshire hathaway, world’s richest person, european union