Washington Mutual (NYSE:WM) shares fell again today after the company announced new measures aimed at curbing subprime and credit losses while preserving liquidity. The measures include widespread job cuts, a dividend cut, and more preferred shares to raise capital. Many are now questioning whether the company will be able to pull itself out of the mess with Banc of America Securities cutting its rating to "sell" with a $13 target.

WaMu announced that it would be cutting 3,000 jobs to cut its costs and issue $2.9 billion in convertible preferred stock to boost its capital. Meanwhile, shareholders will only be receiving 15 cents instead of 56 cents per share in dividends as the company works to set aside an additional $1.6 billion to cover loan losses in the fourth quarter. And with no end to the subprime and credit mess in sight, there is no saying whether or not there will be additional writedowns.

Many analysts have suggested that WaMu could lose as much as $2.54 per share in the fourth quarter of this year and $1.01 per share in 2008. Meanwhile, options in the company continue to trade at record volatility as shares come close to hitting their eleven-year lows. The company is hoping that the lack of liquidity in the credit markets will resolve itself soon as there is limited funding to go around to the various banks looking to raise loss provisions.

So, when will this problem end? Well, subprime and credit market concerns are only growing after many are concerned that coordinated efforts by central banks in North America and Europe to relieve the gridlock in the credit markets will fail. This lack of confidence stemmed from record borrowing costs in euros, signaling that the plan by the Federal Reserve and European central banks to inject funds into the financial system wasn't lowering borrowing costs and boosting lending. This is a problem...

Related Companies
Crazy Woman Creek Bancorp Inc. (CRZY)
Home Federal Bancorp Inc. (HOME)
Washington Federal Inc. (WFSL)

Yum Brands (NYSE:YUM) announced that it would be following McDonald's lead by instituting a broad turnaround effort aimed at improving its margins and sending more money to its bottom line. Shareholders are hoping that the new measures can help keep up the company's historical growth rate, which has returned an impressive 30 percent since 2006. But will the strategy work?

Chief executive David Novak told a group of investors and analysts Wednesday that the restaurant chain would introduce new products, including beverages and breakfast meals, expand its value menus and offer healthier options at all three of its major US brands - KFC, Taco Bell and Pizza Hut. The initiative mirrors that of McDonald's, which experienced great success introducing healthier options, better food and more beverage choices.

Yum Brands also wants to increase its franchise locations by reducing its ownership of restaurants to below 10 percent by 2010. That would represent a substantial drop from the approximately 20 percent that it owns today. The company, like many others, has found that franchise locations have higher margins that owned operations. Combined, the company believes that all of these efforts could generate EPS growth of at least 10 percent in 2008.

"We know this works," said Novak during a meeting with a group of investors. "We're going to build a business we're proud of. We can do a lot better. Frankly, we're mad as hell that we haven't done better."

Related Companies
McDonalds Corporation (MCD)
Domino's Pizza, Inc. (DPZ)
Rubio's Restaurants Inc. (RUBO)

The Blackstone Group (NYSE:BX) announced this morning that it has closed the Blackstone Credit Liquidity Partners to new investments after securing more than $1.3 billion in capital. The vulture fund was created to capitalize on the recent dislocations in the credit markets by investing in a broad range of debt and debt-related securities. The move comes amid the mortgage and credit crisis that has crippled the economy of the past few months.

Blackstone said it was considering the purchase of various distressed securities, including bank debt, publicly traded debt securities, bridge financings, securities issued by CDOs and other debt instruments on a global basis. Blackstone has announced plans to do this before and they aren't the only ones - Chimera Investment (NYSE:CIM) also announced its vulture REIT last month, which aims to take advantage of the same opportunities.

Many hedge funds and private equity firms that are well capitalized can take advantage of the situation because they don't have to worry about illiquidity in the short-term. Many of the securities they are purchasing for pennies on the dollar are worth close to face value; however, the firms holding them are losing value so quickly that they cannot afford to own them. As a result, there is a fire sale and many opportunities.

Related Companies
MF Global Ltd (MF)
Nasdaq Stock Market (NDAQ)
IntercontinentalExchange (ICE)