WSF Headline Roundup - 5/7/08 - Legg Mason losses; Deutsche Bank CEO says fin'l crisis nearing end; UBS exits muni biz; Lazard losses; Wachovia takes a hit; No surprises at Cisco; Sprint / Clearwire combining high speed network; Steel pennies?

• Legg Mason Writes Down Private Capital as Assets Fall
• Ackermann Says Financial Crisis at `Beginning of End'
• UBS Leaving Municipal Bond Business After a Decade
• Fannie Mae Offers $2 Billion of Convertibles at 9.25%
• Lazard Profit Falls 71%, Missing Analysts' Estimates
• Wachovia hit by policies revaluation
• Analyst warns of oil at $200 a barrel
• Cisco Profit Falls 5.4%; Forecast Meets Estimates
• Sprint to Combine High-Speed Network With Clearwire
• Advanced Micro Shares Surge on Breakup Speculation
• Surging Copper Prices Have Some In Congress Calling for Steel Pennies

Legg Mason Writes Down Private Capital as Assets Fall - Bloomberg

Legg Mason Inc. wrote down the value of Private Capital Management LP by $151 million after poor returns and investor outflows cut assets in half since 2004 at the money- management unit run by Bruce Sherman.

The write-off contributed to Legg Mason's fiscal fourth- quarter loss of $255 million, the Baltimore-based company said yesterday. It was the first quarterly deficit in 25 years as a public company, and Legg Mason fell 10 percent, the most in 19 months, in New York trading.

Legg Mason acquired Sherman's firm in 2001, agreeing to pay as much as $1.38 billion to add $8 billion in assets managed for wealthy investors. Assets overseen by the Naples, Florida-based division rose almost fourfold to $31 billion by 2004, before falling in the past three years on bets on newspaper companies and Bear Stearns Cos. Private Capital managed $15.7 billion at the end of 2007, according to Morningstar Inc.

``They've been continuously beaten up for some time,'' Andrew Richards, an analyst with Chicago-based Morningstar, said in an interview....

Ackermann Says Financial Crisis at `Beginning of End' - Bloomberg 

Deutsche Bank AG Chief Executive Officer Josef Ackermann said the financial crisis stemming from the collapse of the U.S. subprime market may be nearing an end.
 
  ``We are at the beginning of the end and not the end of the beginning,'' Ackermann said this evening in Frankfurt at an event organized by the American Chamber of Commerce in Germany. ``There are signs of stabilization and if no further shocks arise, we could get through the worst.''
 
  Deutsche Bank, Germany's biggest bank, last week reported its first quarterly loss in five years after writing down the value of loans for leveraged buyouts and asset-backed securities by 2.7 billion euros ($4.2 billion). Banks and securities firms have reported credit losses and writedowns of more than $318 billion linked to the U.S. subprime meltdown.
 
  Ackermann's optimism on financial markets follows similar comments from Citigroup Inc. CEO Vikram Pandit, who said on April 22 ``we are closer to the end'' of the credit-market contraction, and Jamie Dimon, his counterpart at JPMorgan Chase & Co., who said that the credit-market freeze is more than half over.....

UBS Leaving Municipal Bond Business After a Decade - Bloomberg

UBS AG will exit the U.S. municipal bond market, abandoning a business it sought to dominate for almost a decade.

UBS said it will sell or close its New York-based municipal securities department, which employs about 300 people, as it overhauls its investment banking operations amid $17.3 billion first-quarter losses. Jerker Johansson, chief executive officer of the investment banking unit, said the firm is choosing to focus on businesses that can meet ``return on capital targets'' and have ``future growth potential.''

The exit ``is symbolic because it marks a retreat from its days of aggressive expansion in the U.S.,'' said Simon Adamson, a credit analyst at bond research firm CreditSights Inc. in London, who has an ``underperform'' rating on the Zurich-based company's debt. ``We're starting to see the longer-term damage to its franchise from the losses in the past six months.''.....

Fannie Mae Offers $2 Billion of Convertibles at 9.25% - Bloomberg

Fannie Mae, after cutting its dividend and reporting a wider-than-expected loss, is marketing $2 billion of convertible preferred stock at a coupon of 8.75 percent to 9.25 percent, according to a person familiar with the offering.

The non-cumulative shares may pay a conversion premium of 18 percent to 22 percent, said the person, who declined to be identified because terms aren't set. The securities must be converted into common shares within three years. Washington-based Fannie Mae, the largest U.S. mortgage-finance company, said it plans to raise a total of $6 billion, including from sales of non-convertible preferred stock and common shares.

Fannie Mae, which owns or guarantees one of every five U.S. home loans, needs new capital to weather credit and derivative losses that rose fivefold to $8.9 billion last quarter. The government-chartered firm's regulator today said it will loosen capital restrictions once Fannie Mae raises the $6 billion.....

Lazard Profit Falls 71%, Missing Analysts' Estimates - Bloomberg

Lazard Ltd., the investment bank led by Bruce Wasserstein, said profit dropped 71 percent, falling short of analysts' estimates because of losses at its Paris arm and lower-than-expected revenue from advising on takeovers.

First-quarter net income fell to $16 million, or 14 cents a share, from $55 million, or 47 cents, a year earlier, the New York-based firm said today in a statement. That missed the 52- cent average estimate from 6 analysts surveyed by Bloomberg.

Lazard had writedowns and losses of $28.5 million in its Paris bank's portfolio. Shares of the firm have declined 13 percent this year on concern a slowing pace of mergers and acquisitions may erode Lazard's biggest revenue source. Takeovers fell to $29 billion in the quarter, compared with $59 billion a year earlier, data compiled by Bloomberg show.

``The writedowns were a bit of a surprise,'' said David Killian, a portfolio manager at Stoneridge Investment Partners in Malvern, Pennsylvania, which manages about $700 million, including Lazard shares. ``The M&A environment is obviously feeling a great deal of pressure right now.''....

Wachovia hit by policies revaluation - Financial Times

Wachovia, the fourth-largest US bank by assets, on Tuesday nearly doubled the size of its first-quarter loss to $708m after adding $315m in writedowns on the value of life assurance policies it takes out on its own employees.

The fresh writedown came after the bank, hit by mortgage losses and rising credit costs, last month reported a $393m first-quarter loss and revealed plans to raise $7bn in new capital.

Last month, Wachovia also agreed to pay up to $144m to settle claims that it failed to stop abusive telemarketing practices.

Wachovia shares were little changed in midday trade at $30.07 after the bank said it could record gains in the value of its insurance portfolio in future quarters....

Analyst warns of oil at $200 a barrel - Financial Times

Crude oil prices could surge to $200 a barrel in the next two years, according to the Goldman Sachs analyst who three years ago correctly predicted a price “super-spike” above $100 a barrel.

The warning by Arjun Murti came as oil prices hit a fresh high above $122 a barrel, boosted by supply disruptions in Nigeria, lower output in Russia and continued robust demand in China ahead of the Olympics.

Mr Murti said the energy crisis could be coming to a head as a lack of adequate supply growth was becoming apparent.

He said: “The possibility of $150-$200 per barrel seems increasingly likely over the next six to 24 months.”....

Cisco Profit Falls 5.4%; Forecast Meets Estimates - Bloomberg

Cisco Systems Inc., the world's largest maker of networking equipment, reported a 5.4 percent drop in profit because of acquisition expenses and predicted sales that met analysts' estimates as U.S. customers slowed spending.

Third-quarter net income declined to $1.77 billion, or 29 cents a share, from $1.87 billion, or 30 cents, a year earlier, Cisco said today in a statement. Revenue rose 10 percent to $9.79 billion in the period ended April 26.

Customers in the U.S. and Europe continue to be cautious, Chief Executive Officer John Chambers said on a conference call. Cisco has lost 20 percent of its market value since Nov. 7, when Chambers said orders from some big U.S. companies were slowing. Fourth-quarter sales will rise 9 percent to 10 percent, Chambers said, in line with the 9.1 percent predicted by analysts.

``He has the reputation for low-balling forecasts and being a conservative manager,'' Scott Neuendorf, an analyst with Hester Capital in Austin, Texas, said in an interview with Bloomberg Television. The firm owns 640,000 shares of Cisco. ``The fact that he's reiterating guidance is probably a bit of a relief.''.....

Sprint to Combine High-Speed Network With Clearwire - Bloomberg

Sprint Nextel Corp. is combining its planned high-speed wireless network with Clearwire Corp., creating a venture with funding from technology and cable companies.

Intel Corp., Comcast Corp., Time Warner Cable Inc., Google Inc. and Bright House Networks will invest $3.2 billion in the new company, Sprint Nextel and Clearwire said in a Business Wire statement. The network uses a technology called WiMax.

The agreement lets Sprint scale back spending after an exodus of mobile-phone customers hurt profit last year. It also builds support for WiMax, which can blanket whole cities with network coverage. The technology may help Sprint compete with larger rivals AT&T Inc. and Verizon Wireless by providing faster Internet access.

``This could remove a potential distraction'' for Sprint, Michael Nelson, an analyst at Stanford Group Co. in New York, said before the announcement. ``They need to increase their focus on fixing their core business.''....

Advanced Micro Shares Surge on Breakup Speculation - Bloomberg

Advanced Micro Devices Inc., the second-largest maker of personal-computer processors, surged the most in more than three months in New York trading on speculation that it's close to announcing plans to split up the company.

Advanced Micro rose 59 cents, or 9 percent, to $7.12 at 4 p.m. in New York Stock Exchange composite trading, leaving them down 5.1 percent this year.

Investors are betting that the company will soon announce details of a plan to separate its manufacturing business from its chip design and development operations, according to CRT Capital Group analyst Ashok Kumar in San Francisco. Chief Executive Officer Hector Ruiz first said he was exploring ways to cut Advanced Micro's costs and return it to profitability in a strategy he dubbed ``asset smart'' about a year ago.

``The street has been waiting with bated breath,'' Kumar said. He advises buying the stock in anticipation of a breakup. ``In its current state, the business model isn't viable.''...

Surging Copper Prices Have Some In Congress Calling for Steel Pennies - AP via NY Sun 

Surging prices for copper, zinc, and nickel have some in Congress trying to bring back the steel-made pennies of World War II, and maybe using steel for nickels, as well.
 
  Copper and nickel prices have tripled since 2003 and the price of zinc has quadrupled, said Rep. Luis Gutierrez, an Illinois Democrat, whose subcommittee oversees the U.S. Mint.
 
  Keeping the coin content means “contributing to our national debt by almost as much as the coin is worth,” Mr. Gutierrez said.
 
  A penny, which consists of 97.5% zinc and 2.5% copper, cost 1.26 cents to make as of yesterday. And a nickel — 75% copper and the rest nickel — cost 7.7 cents, based on current commodity prices, according to the Mint.....