merger

THOMSON REUTERS CORP. $33 (Toronto symbol TRI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 824.3 million; Market cap: $27.2 billion; SI Rating: Above average) divides its operations into two divisions: Markets (60% of revenue), which provides financial information products to banks and other financial institutions; and Professional (40%), which sells specialized information to professionals in the legal, accounting, scientific and healthcare fields. The company took its present form on April 17, 2008 when The Thomson Corp. (old symbol TOC) acquired UK-based information provider Reuters Group plc.

Electronic focus a plus

The company sells 90% of its products electronically. That cuts its printing and postage costs. Selling information products electronically also makes it easier to expand to new markets such as Latin America and Asia. The Americas region provides 60% of Thomson Reuters’ revenue, followed by Europe (30%) and Asia (10%)....

MOLSON COORS CANADA INC. (Toronto symbols TPX.A $50 and TPX.B $50; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 183.6 million; Market cap: $9.2 billion; SI Rating: Average) recently merged its brewing operations in the United States into a new joint venture with the parent company of Miller Brewing. Molson Coors has a 50% voting stake in this new company, called MillerCoors, although just a 42% economic interest. MillerCoors aims to cut its annual costs by $500 million (all amounts except share prices and market cap in U.S. dollars). Molson Coors is also making good progress with its own plan to cut annual expenses by $250 million. Thanks partly to these savings, Molson Coors earned $175.8 million in the third quarter of 2008, up 1.5% from $173.2 million a year earlier. Earnings per share were unchanged at $0.95. These figures exclude unusual items....

Andrew Peller and Molson Coors have both moved down lately, but by less than the drop in the overall market. That’s because demand for wine and beer tends to remain steady, regardless of the direction of the overall economy. Cost controls are also helping them expand earnings. ANDREW PELLER LTD. $7.50 (Toronto symbol ADW.A; Income Portfolio, Consumer sector: Shares outstanding: 14.9 million; Market cap: $111.8 million; SI Rating: Above average) continues to benefit from strong demand for premium wines, as well as from new products and acquisitions. In its second fiscal quarter ended September 30, 2008, sales rose 13.3%, to $69.4 million from $61.2 million a year earlier. Earnings fell 7.8%, to $2.4 million or $0.17 a share from $2.7 million or $0.18 a share. However, the latest earnings included roughly $1.2 million in unusual pre-tax losses on interest rate and foreign exchange hedging contracts....

TECK COMINCO LTD. $6.35, Toronto symbol TCK.B, fell 50% this week largely due to concerns over its ability to carry a $5.8 billion U.S. short-term loan it used to finance its recent $15.0 billion U.S. takeover of Fording Canadian Coal Trust. That loan itself is now equal to roughly 2.3 times Teck’s market cap. Falling prices for zinc, copper and gold could hurt Teck’s ability to quickly repay the new debt. The company may have to cut or eliminate its $1.00 dividend, which now yields a high 15.7%. It may also have to issue new shares at depressed prices. Teck feels it can pay down a big part of this loan in 2009. It will receive a $1 billion (Canadian) tax refund on the Fording transaction. It also plans to raise cash by selling some of its operations. This could include its gold mining businesses. As well, Teck will delay capital spending on several new projects....

As I’ve said several times in the past few weeks, you can only spot a market bottom (a reversal in a falling trend in stock prices) in hindsight. Then too, a market can hit bottom, put on a healthy bounce, then go back down to the bottom once again before going on to a lasting rise. But I do feel that a lot of the risk of further decline is now out of the market. My view is that stocks are likely to move substantially higher in the next 6 months to a year, if not sooner. VERIZON COMMUNICATIONS INC. $30.05, New York symbol VZ, owns 55% of Verizon Wireless, a joint venture with UK-based Vodafone. Verizon Wireless has now received most of the regulatory approvals it needs for its acquisition of privately held Alltel Corp., which provides wireless services to 13 million customers in mainly rural areas of 34 U.S. states. Regulators imposed several conditions on the takeover, including exiting certain markets. However, these conditions should not significantly diminish the future profitability of the combined operations, which will be the largest wireless provider in the United States with over 80 million customers. Verizon Wireless aims to complete the takeover in the next few weeks....

WELLS FARGO & CO. $31 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 3.3 billion; Market cap: $102.3 billion; WSSF Rating: Average) provides a wide variety of financial services to nearly eight million customers through roughly 6,000 branches and offices in 23 states. Internationally, it operates in Canada, the Caribbean and Central America. Warren Buffett’s Berkshire Hathaway holding company owns 9% of Wells Fargo’s shares. The company has now agreed to acquire WACHOVIA CORP. $5.71 (New York symbol WB, Conservative Growth Portfolio, Finance sector; Shares outstanding: 2.2 billion; Market cap: $12.6 billion; WSSF Rating: Extra risk). Wachovia stockholders will receive 0.1991 of a Wells Fargo common share for each Wachovia share they hold. The merger will make Wells Fargo one of the largest banks in the United States, with over 10,000 branches in 39 states and $713 billion in U.S. deposits ($787 billion in total deposits). It also gives Wells Fargo its first operations in the Atlantic Seaboard and southeastern U.S....

Wells Fargo has avoided most of the big writedowns that have led to the recent bankruptcies of several major banks and brokerage firms. That’s largely to due to its stricter lending standards, which limited its exposure to subprime mortgages. The company’s focus on retail banking also provides it with a sound capital base, plus steady fee income from services such as credit and debit cards and Internet banking. Wells Fargo now aims to acquire struggling Wachovia. It’s a complex transaction, but the deal could lead to big gains for Wells Fargo as it sheds Wachovia’s bad loans and integrates its large retail banking network. WELLS FARGO & CO. $31 (New York symbol WFC; Conservative Growth Portfolio, Finance sector; Shares outstanding: 3.3 billion; Market cap: $102.3 billion; WSSF Rating: Average) provides a wide variety of financial services to nearly eight million customers through roughly 6,000 branches and offices in 23 states. Internationally, it operates in Canada, the Caribbean and Central America. Warren Buffett’s Berkshire Hathaway holding company owns 9% of Wells Fargo’s shares....

VERIZON COMMUNICATIONS INC. $31 (New York symbol VZ; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 2.9 billion; Market cap: $89.9 billion; WSSF Rating: Average) provides telephone services to over 140 million customers in 28 states. Through 55%-owned Verizon Wireless, a joint venture with UK-based Vodafone, it also has 59 million wireless subscribers in 50 states. Verizon’s wireless operations supply about half of its revenues, but 75% of its profits. These figures should rise now that Verizon Wireless has agreed to buy privately held Alltel Corp., which provides wireless services to 13 million customers in mainly rural areas of 34 states. The purchase will make Verizon Wireless the largest wireless provider in the United States, with over 80 million customers. Verizon Wireless will pay $5.9 billion in cash and assume Alltel’s debt of $22.2 billion, for a total price of $28.1 billion. Verizon’s share works out to $15.5 billion. Verizon feels the merger will generate annual cost savings of $1 billion in the second year after closing....

Traditional telephone companies like the three below continue to lose customers to cable companies, Internet-based phone services and other tech stocks. However, they are offsetting their telephone-business losses by entering the world of tech stocks. They’ve been offering faster-growing services, like wireless and high-speed Internet access. Essentially, they are fighting competition from tech stocks by becoming more like tech stocks themselves. Future revenues from these new services will also help them keep paying above-average dividends. VERIZON COMMUNICATIONS INC. $31 (New York symbol VZ; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 2.9 billion; Market cap: $89.9 billion; WSSF Rating: Average) provides telephone services to over 140 million customers in 28 states. Through 55%-owned Verizon Wireless, a joint venture with UK-based Vodafone, it also has 59 million wireless subscribers in 50 states....

Despite a stream of nerve-rattling financial news, starting with the failure of the first Congressional bailout package, the Dow Industrials and the S&P 500 managed to hold above Monday’s lows this week until just before Friday’s close. It’s a mistake to read too much into this, of course. But it is encouraging to see both indexes move sideways in this depressing news environment. Market turnarounds often occur in times of high volatility and bad news. Our advice is to resist any urge you may feel to sell good-quality stocks, just because you fear they may go lower. WACHOVIA CORP. $6.21, New York symbol WB, has agreed to merge with WELLS FARGO & CO. $34.56, New York symbol WFC. Wachovia stockholders will receive 0.1991 of a Wells Fargo common share for each Wachovia share they hold. The deal requires stockholder and regulatory approvals....