Breaking Wall Street Market News & Reports

Bank of America’s shares closed below $5 per share Monday, their lowest level since the worst of the financial crisis in March 2009. Bank of America (BAC) fell more than 5% to as low as $4.92 in late afternoon trading. Saab Automobile AB, the 64-year-old quirky Swedish automaker that turned out thousands of hatchbacks, has come to the end of the road. The automaker filed for bankruptcy Monday and said it expects to liquidate. Eastman Kodak (EK) shares are taking a hit today with a double-whammy of bad news. The Wall Street Journal reports that the company is running into problems in its attempts to sell parts of its patent portfolio and borrow money. The newspaper said the company is trying to do both to avoid a Chapter 11 filing.

Investors fear that the move below $5, a psychological level, could also cause some investors to shed their holdings. Shares closed at $4.99. Stocks trading below $5 historically have a hard time recovering. You run the danger of a dead stock. Below the $5 threshold, many broker-dealers will not allow investors to buy or short a stock on margin. Buying on margin means that an investor can simply put down 50% of the price of a stock initially, and the trading firm advances the rest.

With its sub-$5 stock price and its stock down more than 62% this year, Bank of America could follow Citigroup’s lead and consider a reverse stock split. This move doesn’t change the value of the company. Instead a reverse split lowers the number of shares, but puts them all at a higher value.

In March 2011, with its stock at $4.50, Citigroup announced it would do a reverse stock split. In doing so, it reduced its 29 billion outstanding shares to 2.9 billion, and multiplied its share price by 10. In other words, the market value of the bank did not change.
Still, even with a $24 share price now, Citigroup’s investors have lost 45% since the March announcement. Bank of America’s shares are still relatively far from the stock’s all-time intraday low of $2.53 hit on Feb. 20, 2009. Traders and analysts said much of the selling was due to negative headlines coming out of Europe as well as reports that tougher regulations on banks could come to pass sooner than expected.

SAAB, since March, has struggled to stay alive as it hasn’t been able to raise enough money to build cars. In recent months, Saab sought to sell itself to Chinese investors as a last-ditch move to raise funds to survive. But the deal was blocked by its former parent General Motors Co., which provided key technology to Saab and still holds preferred shares in the automaker. GM refused to go along with the move, citing intellectual property concerns. Saab CEO Victor Muller, owner of Dutch luxury car company Spyker Cars, personally filed the bankruptcy application to a District Court in Vänersborg in southwestern Sweden.

Saab has 188 U.S. dealers and 16 other facilities that provide service only. Saab sold just 356 vehicles in the U.S. in November. Saab North America spokeswoman Michele Tinson said warranties have “been indefinitely suspended for new sales and claims stopped for current” warranties. The company’s North American board is now set to meet Tuesday.

The hedge funds that are in discussions with Kodak have cut the amount of funding they are will to offer the company, and if Kodak does not close deals on its patent sales soon, the amount the hedge funds are offering may not be enough to keep the company going. A U.S. arbiter for trade disputes is delaying a ruling on Eastman Kodak Co.’s high-stakes patent-infringement claim against smartphone makers Apple Inc. and Research in Motion Ltd.

The embattled photography pioneer is trying to negotiate a licensing deal it estimates could be worth up to $1 billion. An administrative judge overseeing the two-year dispute at the U.S. International Trade Commission set a new target date of Sept. 21, 2012. The commission in Washington, D.C., had previously expected to issue a final decision by Dec. 30.

A favorable ruling would be a boon to Kodak. Pummeled by Wall Street over its dwindling cash reserves — and its stumbling attempts to reinvent itself as a profitable player in digital imaging and printing the Rochester, N.Y., company warned last month it could run out of cash in a year if it doesn’t raise new financing or sell assets. Since July, Kodak has been hawking 1,100 digital-imaging patents that many financial analysts think might fetch $2 billion to $3 billion. Kodak shares sank 16 cents, or 19.9 percent, to close at 67 cents Monday. Shares are down 88 percent in 2011.

Kodak’s cash reserves shrank 10 percent to $862 million in the third quarter. In November, it set a year-end cash target of $1.3 billion to $1.4 billion that excludes any intellectual-property licensing deals, down from a previous forecast of $1.6 billion to $1.7 billion.

Here was a post from March 10, 2010 about EK here