holding company

WELLS FARGO & CO. $26 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 5.3 billion; Market cap: $137.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.8%; TSINetwork Rating: Average; www.wellsfargo.com) provides a wide variety of financial services through roughly 9,000 branches in the U.S. It also operates in Canada, the Caribbean and Central America. Warren Buffett’s Berkshire Hathaway holding company owns 7% of Wells Fargo’s shares. In the quarter ended September 30, 2011, Wells Fargo earned $4.1 billion, up 21.4% from $3.3 billion a year earlier. Earnings per share rose 20.0%, to $0.72 from $0.60, on more shares outstanding. More clients are repaying their loans on time. As a result, loan-loss provisions fell 47.4%, to $1.8 billion from $3.4 billion. That was the main reason for the earnings increase. Even so, revenue fell 6.0%, to $19.6 billion from $20.9 billion. That’s largely because Wells Fargo is getting less interest income from borrowers due to today’s low interest rates. As well, it has a smaller investment banking business than J.P. Morgan (see below), so it is more reliant on traditional lending....

MANITOBA TELECOM SERVICES INC. $32.72 (Toronto symbol MBT; Shares outstanding: 65.5 million; Market cap: $2.1 billion; TSINetwork Rating: Average; Dividend yield: 5.2%; www.mts.ca) plans to deploy Long Term Evolution (LTE) wireless technology in 2012. LTE networks are up to five times faster than its current high-speed wireless systems. The company did not reveal the cost of these upgrades. However, this technology should help Manitoba Telecom sell more smartphones, including the hugely popular Apple iPhone. That’s good news for the company, because it earns higher fees from these devices than regular cellphones. Manitoba Telecom is a buy....

Low interest rates, high unemployment and new banking regulations continue to weigh on the stock prices of Wells Fargo and J.P. Morgan. However, both companies have brought in tighter lending policies. That lowers their risk and improves their long-term outlooks. WELLS FARGO & CO. $26 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 5.3 billion; Market cap: $137.8 billion; Price-to-sales ratio: 1.7; Dividend yield: 1.8%; TSINetwork Rating: Average; www.wellsfargo.com) provides a wide variety of financial services through roughly 9,000 branches in the U.S. It also operates in Canada, the Caribbean and Central America. Warren Buffett’s Berkshire Hathaway holding company owns 7% of Wells Fargo’s shares. In the quarter ended September 30, 2011, Wells Fargo earned $4.1 billion, up 21.4% from $3.3 billion a year earlier. Earnings per share rose 20.0%, to $0.72 from $0.60, on more shares outstanding. More clients are repaying their loans on time. As a result, loan-loss provisions fell 47.4%, to $1.8 billion from $3.4 billion. That was the main reason for the earnings increase....

DUNDEE CORP. $23 (Toronto symbol DC.A; Aggressive Growth Portfolio, Finance sector; Shares outstanding: 64.8 million; Market cap: $1.5 billion; Price-to-sales ratio: 4.3; No dividends paid; TSINetwork Rating: Average; www.dundeecorp.com) is a holding company with subsidiaries in three main areas: wealth management, real estate and resources. The Goodman family controls 83.3% of the company’s votes through multiple-voting shares. In February 2011, Dundee sold its 48% stake (60% voting interest) in DundeeWealth Inc. to Bank of Nova Scotia (Toronto symbol BNS). DundeeWealth owns the Dynamic family of mutual funds. Dundee Corp. still provides investment-management and brokerage services through 48%-owned Dundee Capital Markets Inc. (Toronto symbol DCM). Dundee Corp. received roughly $1.4 billion of Bank of Nova Scotia common and preferred shares for its DundeeWealth stake. As a result of this sale, Dundee Corp.’s revenue fell 20.2% in the three months ended June 30, 2011, to $123.6 million from $154.9 million a year earlier. Earnings fell 32.5%, to $24.3 million, or $0.27 a share, from $36.0 million, or $0.44 a share....

General Electric Co., New York symbol GE, plans to buy back all of the preferred shares it sold to Berkshire Hathaway Inc. (New York symbol BRK.B), the holding company controlled by billionaire investor Warren Buffett. GE sold these shares to Berkshire during the 2008-2009 financial crisis. The cash from the sale helped stabilize GE’s finance division. The company will pay $3.3 billion to buy back these shares. That’s nearly equal to the $3.5 billion, or $0.33 a share, that GE earned in the three months ended June 30, 2011. However, this purchase will save the company $300 million a year in dividend payments....

MCGRAW-HILL COMPANIES INC., $45.29, New York symbol MHP, rose 17% this week after it announced that it will split into two separate, publicly traded companies.

One of these new firms, McGraw-Hill Markets, will sell a variety of financial-information products. This business will include Standard & Poor’s, which provides credit ratings on bonds, and McGraw-Hill’s J.D. Power market-research firm. McGraw-Hill Markets will have annual revenue of $4 billion. International sales will account for 40% of that total.

The other company, McGraw-Hill Education, will publish textbooks for schools and colleges. This business will have $2.4 billion of annual revenue.

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RESEARCH IN MOTION LTD., $23.50, Toronto symbol RIM, reported lower than-expected revenue and earnings, mainly because demand for the company’s older BlackBerry smartphones has slowed as it launches newer models. That caused the stock to fall 20% on Friday.

In RIM’s second quarter, which ended August 27, 2011, revenue fell 9.8%, to $4.2 billion from $4.6 billion a year earlier (all amounts except share price in U.S. dollars). That fell short of the consensus revenue estimate of $4.5 billion.

Earnings fell 58.7%, to $329 million, or $0.63 a share, from $797 million, or $1.46 a share. The company is cutting roughly 10% of its workforce as it streamlines its operations. If you exclude severance payments and related costs, RIM would have earned $419 million, or $0.80 a share, in the latest quarter. On this basis, the latest earnings missed the consensus estimate of $0.89 a share.

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MOSAID TECHNOLOGIES INC. $38.90 (Toronto symbol MSD; TSINetwork Rating: Extra Risk) (613-599-9539; www.mosaid.com; Shares outstanding: 12.1 million; Market cap: $466.2 million; Dividend yield: 2.6%) has rejected the $38-a-share, all-cash takeover offer from Wi-LAN Inc. (symbol WIN on Toronto) as too low. Mosaid mainly licenses patented computer chip and telecommunications technology, including patents for technology used in smartphones and laptops. The company has formed a special committee of its board of directors to look at ways to maximize shareholder value. It has also retained Barclays Capital Canada and GMP Securities as financial advisors, and Davies Ward Phillips & Vineberg LLP as legal advisors to the special committee. Mosaid is now trading at $38.90 a share, or 2.4% above Wi-LAN’s bid. This indicates that investors are anticipating that Mosaid will be able to attract a higher offer from Wi-LAN or another bidder....

MOSAID TECHNOLOGIES, $39.22, symbol MSD on Toronto, is now the subject of a takeover bid from Wi-LAN Inc. (symbol WIN on Toronto). The offer is for $38 a share in cash for all of Mosaid’s shares. Mosaid mainly licenses patented computer chip and telecommunications technology, including patents for technology used in smartphones and laptops. Mosaid is now trading at $39.22 a share, or 3.2% above Wi-LAN’s bid. This indicates that investors are anticipating a higher or rival offer....

When investors see a day like Thursday, with a drop of more than 500 points in the Dow Jones Industrials, they can’t help but wonder if we face a replay of the 2007-2009 market plunge. However, though today’s situation could turn out badly, that’s not inevitable. It’s much different from a few years ago. The 2007-2009 drop was mostly about the collapse of the housing boom and everything that went with it. Today there is no boom that could deflate and bring down the economy. Today’s problem grows out of government attempts at ‘fixing’ the economy in recent years. These fixes, which were mostly unsuccessful, bloated government spending and created huge debts. Today’s main market worry is how the U.S. federal government will attempt to fix its budget deficit and bring its debt down to a manageable level. To top things off, the Obama administration has also brought in big changes in health care, union and environmental rules and so on. Some of these changes face court challenges and political opposition. But some are sure to survive and go into effect. Others are sure to follow....