AG Edwards Refining & Marketing Brief & IBM Contract

By Douglas A. McIntyre Published Dec 14, 4:17AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

By Yaser Anwar, CSC of Equity Investment Ideas

Here’s an excerpt from AG Edward’s R&M briefing a friend sent me (thanks Ray!). Check back later (midnight) for my analysis of Exxon Mobil.

US refining margins declined in all regions, except the West Coast. The composite margin fell for the second straight week, and averaged $8.84 versus $10.23 the prior week. For 4Q06, margins are averaging $9.08 below $12.26 in 3Q06 and $10.20 a year ago. In contrast, marketing margins trended higher in all regions.
Singapore margins are at their lowest level in over four years at $0.04 versus $2.07 a week ago; averaging $2.17 in 4Q06 compared to $4.72 in 3Q06 and $5.78 a year ago. Meanwhile, European refining margins remained depressed at ($1.60) versus ($1.23) the prior week, and are currently averaging $0.28 in 4Q06 versus $1.56 in 3Q06 and $2.78 a year ago.
Ethanol prices were higher at $2.32, up from $2.22 last week and are averaging $2.07 for 4Q06 compared to $2.67 last quarter and $2.18 in 4Q05. The gasoline spread increased to $0.62, above the historic average of about $0.40, and the blender’s tax credit of $0.51.
Implications: Refining margins have declined the past two weeks as domestic utilization rates have rebounded from longer-than-anticipated seasonal maintenance. Given our expectation for crude throughputs to remain near current levels, margins should stabilize and potentially trend higher pending near-term winter weather patterns.

IBM wins $4B contract with the German military

This morning the German parliament approved its defense budget with 7B Euros or $9B allocated for IT HW and services (IBM and Siemens). The Street views this as a significant positive for IBM who will capture ~$4B of the deal (40% of contract).
The Street is currently modeling ~$13B in services bookings for the December Q with deals announced to date ~$6B (excluding the German military deal).
IBM usually reports around 20-30% of its deals over the course of a Q. This mega deal will likely materialize in either the Q4 or Q1 reported bookings figure.

http://www.equityinvestmentideas.blogspot.com/

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.