Wal-Mart Stores, Inc. (NYSE: WMT) reported spectacular results this quarter despite disappointing results from its peer group. The world’s largest retailer posted same-store sales number up 2.6% as shoppers tighten their wallets and target the cheaper options. The trend may seem predictable to the average person, but many analysts were caught off-guard with their estimates. Wal-Mart also decided to hike its dividend from $0.88 to $0.95 per year. The move is likely designed to jump-start its multiple that has been trading below peers despite strong growth. So, is this mega-retailer a buy now?

Wal-Mart’s target demographic continues to grow larger as an increasing number of consumers make the switch from quality to value. This should translate into very real growth for the world’s largest retailer as many analysts are now expecting the stock to reach $70 per share if economic and stock market conditions improve within the next 12 to 18 months. Many were previously concerned that weakness in U.S. consumer spending may hurt growth, but it now appears that the company’s “value” image is actually leading to more shoppers purchasing its products.

Unfortunately, the tough environment for retailers may prevent Wal-Mart’s multiples from expanding too much despite strong growth. Decreased consumer spending hurt many players in the industry, including apparel stores like Gap Inc. (NYSE: GPS), Limited Brands, Inc. (NYSE: LTD) and J.C. Penney Co. (NYSE: JCP). Slowdowns in the industry may lead to a lower industry mutliple that so many investors rely on for valuing companies. However, a look at the true measure of valuation, PE to growth (PEG), suggests that Wal-Mart remains undervalued compared to its peers. But in the end, it will take an industry recovery for its multiple to expand and share price to jump.

In the end, this is all good news for Wal-Mart shareholders. Same-store sales have increased during an economic downturn while its profits were also up dramatically. However, it may take some time before the fruits of these improvements are picked on Wall Street thanks to a slowdown in the rest of the economy. If there is a broad recovery in the next year or two, look for Wal-Mart to hit and surpass $70 per share. Combined, these factors make WMT a stock worth watching!

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Motorola, Inc. (NYSE: MOT) warned shareholders today that it has not endorsed activist investor Carl Icahn’s nominees for its board as the troubled company’s annual meeting approaches. However, a growing number of dissident shareholders alongside a plummeting stock price has his odds of a successfully proxy campaign running pretty high. Motorola shares nearly halved since shareholders last rejected Icahn’s bid for board seats to under $10 per share. So, are shareholders ready for change and is Carl Icahn the right man to bring it?

Carl Icahn recently revealed a 6.3% stake in Motorola via a Schedule 13D/A filing, which may indicate that he believes in his odds this time around. The activist investor plans to continue pushing the company towards spinning off its handset division into a standalone company to be led by an outsider. Motorola’s attempt to shop the division have failed and now this appears to be the only option, but many analysts are concerned that a sale now would not obtain full value for its core division. Icahn’s planned spin-off may circumvent this problem by allowing the company to get rid of the division while still retaining a stake that could be held until a successful turnaround takes place.

The problem is that this turnaround could take some time. Motorola’s handset division continues to struggle with declining market share and lower earnings as it loses its dominant edge gained by record sales of the Razor. Now, many service providers are expanding their offerings to include other handset makers like Nokia which could further erode their market leadership. Meanwhile, this slow in growth combined with tight credit has led to no strategic or financial suitors for the division. As a result, investors who were looking for this quick fix are now realizing they may face a long road ahead and began selling off shares.

Carl Icahn now faces increased odds of successfully obtaining valuable board seats that he promises to use to aggressively pursue his agenda. A spin-off of the handset division would likely unlock at least some value in the company’s shares while the excess cash could be used to fund further share repurchases to boost earnings. Meanwhile, any meaningful turnaround in its growth could also expand its multiple and turn this stock into a big with for the activist investor. Whether or not he can pull it off remains to be seen, but this is a situation that is definitely worth watching closely over the next few months!

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Blockbuster Inc. (NYSE: BBI) shares fell sharply today despite announcing strong results proving that it can still compete against online video rental and streaming online video services. The movie rental chain announced in its latest 10-K annual report that its fourth quarter profits grew by 360 percent on the heels of aggressive cost-cutting and the repositioning of some of its subscription offerings. The stock price quickly jumped 3.4 percent in morning trading before investors began to realize that actual revenue increases amounted to just four percent growth year over year. So, can Blockbuster compete or will it eventually face reality?

The market for video rentals is a quickly changing one that many are struggling to grapple. DVD rentals themselves continue to grow as Americans spent some $7.5 billion in 2006, but growth flattened in 2007 thanks to the rise of online downloads and video-on-demand services offered by cable providers. Meanwhile, Netflix (NDAQ: NFLX) has proven to a more near-term threat that has also taken a large part of the company’s market share over the year. Combined, these revelations caused Blockbuster shares to halve last year to around $3 per share where it has remained until now.

Blockbuster does have a secret weapon, however, in the form of its subsidiary Movielink. The online movie download service was formed in 2002 by a group of major movie studios including MGM Studios, Paramount Pictures, Sony Pictures, Universal Studios, and Warner Bros who spent a reported $100 million building the service that has yet to hit the mainstream. Blockbuster purchased the chain for $6.6 million in cash and it positioned the company to leverage its existing infrastructure to promote a new service that is well connected in the sue-happy movie industry. The service provides the company with the infrastructure for digital downloads and provides it with the digital rights to more than 6,000 films.

Blockbuster has also taken action to improve its current operations. Recently, the company introduced its five-point distribution system that allows customers to rent movies in stores, by mail, via online downloads, in DVD kiosks, and through flash memory cards. Meanwhile, the company also managed to substantially cut its costs, which has directly helped increase its profits and bottom line. Combined, this has many analysts predicting that the company will likely perform well in FY2007 and guide fairly bullishly for 2008. As a result, this is definitely a stock that is worth watching at these cheap levels!

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The saga of Bain Capital LLC and China's Huawei Technologies attempt to purchase 3Com Corporation (NASDAQ: COMS) continues as the company postponed a shareholder meeting for the second time.

On February 20th, 3Com, Bain, and Huawei withdrew their application for approval of the deal by CFIUS. The Committee on Foreign Investment in the United States, an arm of the Treasury Department, had expressed national-security concerns about China's participation in the $2.2 billion deal through Huawei.

Specifically, 3Com provides some network security solutions to the U.S. Defense Department, and Huawei's strong ties to China's Communist government raised serious concerns. Many thought the withdrawal of approval meant the deal was as good as dead, but on February 29th it was announced that all three parties planned on reapplying for approval - supposedly with similar financial terms. The major change would be some measure to block Huawei's access to sensitive technologies that stymied the deal originally.

As a result of this announcement, 3Com postponed its shareholder meeting and rescheduled it for March 7, giving it more time to negotiate with Bain and Huawei; however, since no agreement has been reached, the meeting has been delayed another two weeks to March 21.

The real question becomes - with 3Com seemingly intent on a deal, is 3Com stock a bargain? The originally proposed $2.2 billion deal was worth more than $5 per share, and even a renegotiated deal, if it were to get regulatory approval, would almost certainly be no more than 15% lower than the first offer as 3Com's Defense Department contracts are not huge revenue or profit centers. With 3Com currently trading at $3.19 a share, there is more than $1 of upside potential if a deal that withstands regulatory scrutiny is reached - and that definitely makes 3Com a risky but potentially profitable opportunity right now.

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Spanish Broadcasting System, Inc. (NDAQ: SBSA) directors are starting to feel the heat after a large shareholder criticized the company’s stock performance and governance while promising to take action if things do not improve, according to a Schedule 13D filing with the SEC. Discovery Group, which owns a 9.8 percent stake, sent a letter to the board expressing grave concerns regarding the severe and steady erosion of shareholder value that has occurred since the company went public eight years ago. Management has also been unresponsible to these concerns and countless opportunities to reverse these trends. However, the activist hedge fund believes there is still hope as shares trade substantially lower than their intrinsic value. So, is this a good time to get in SBSA on the coattails of an activist hedge fund?

Spanish Broadcasting IPO’d in 1999 at $20 per share, but the stock now trades at just $1.60. Discovery Group attributes this dramatic decline to (1) weak operating performance as measured by essentially no growth in operating income, (2) significant sums of money spent on acquisitions that provided no incremental value to the company, and (3) the utter loss of management’s credibility with the investment community. In the end, the value of the company was about $1.5 billion when it IPO’d while today the market cap stands at just $500 million with $375 million in debt. Operating income also failed to increase, standing at $32 million when the company IPO’d compared to $38 million in 2007. And finally, the company spent $934 million on acquisitions while the company’s value dropped $1 billion.

Discovery Group met with Spanish Broadcasting officials several times during the past two years to discuss the decline in shareholder value and the challenges the company faces to restore a fair valuation given its small size, weak governance, disappointing operating results, unrestrained M&A spending, lack of credibility with institutional investors, and general proclivity towards running the company as if it were privately held. The activist hedge fund also met with several industry players who insist that the company’s premier properties, market leadership position, attractive geographic markets and promising media genre would make it a desirable and valuable target in the ongoing industry consolidation. However, it is generally understood in the industry that the company will not consider any transaction that requires him to relinquish any degree of control and questions its ability to cooperate with any partnership with strategic suitors or private investors.

Just how bad is it? Well, here’s a synopsis of one scenario presented by the Discovery Group in their letter:

We now know this claim to be justified because we have direct knowledge of an important public media company (“XYZ”) that is interested in a potential transaction that could yield a substantial premium to the current SBSA stock price, yet Mr. Alarcon refuses to engage in an evaluation of this opportunity. During a meeting with Mr. Alarcon in December 2007 members of our firm presented the rationale for a combination with XYZ, to which SBSA would bring great strategic value and substantial, immediate cost synergies. Mr. Alarcon concurred with the analysis and suggested that we get the reaction of XYZ’s management to the idea. Our team met in January 2008 with XYZ’s Chairman/Chief Executive Officer and its Chief Financial Officer. We communicated to Mr. Alarcon that the XYZ officials were very enthused about the possible combination and wish to engage in a further dialogue directly with Mr. Alarcon. Mr. Alarcon is also in possession of detailed materials prepared by Discovery that outline a proposed structure for this transaction which yields a premium in excess of 100% to SBSA shareholders. Suddenly and without explanation, Mr. Alarcon refuses to discuss this opportunity. While Mr. Alarcon’s change in posture is consistent with his industry reputation, it is surprising nonetheless. Mr. Alarcon’s resistance in this case cannot be attributed to valuation because the proposed structure gives him the option to either remain invested or liquidate his shares. Rather, it appears that Mr. Alarcon fears a loss of control. That fear is interfering with Mr. Alarcon’s ability to act in the interest of all shareholders.

The Discover Group is now increasing its pressure on Spanish Broadcasting to unlock value by threatening to replace board members if it does not immediately retain an investment bank to investigate three specific alternatives:

1. A Going-Private Transaction. “If Mr. Alarcon insists on retaining all voting control and all management authority, it seems rather obvious that there is no purpose to SBSA remaining public. Given the current stock price and the vast availability of private equity capital, we believe that a transaction can be structured that provides an acceptable premium to shareholders. Any qualified investment banking firm can introduce Mr. Alarcon to numerous private equity firms, many with media expertise. We have spoken to several of these potential financial partners that would be interested so long as Mr. Alarcon is willing to provide them with adequate financial oversight and controls. As testament to the feasibility of this option, Univision was taken private in April 2007 by a consortium of industry-leading private equity firms; Madison Dearborn Partners, Providence Equity Partners, Texas Pacific Group, Thomas H. Lee Partners, and Sabon Capital Group. Currently, Clear Channel Communications is close to completing a similar deal with Bain Capital Partners and Thomas H. Lee Partners. Cumulus Media is working on an announced going-private transaction with Merrill Lynch Global Private Equity.”
2. A Sale to a Strategic Party. “Industry consolidation is now seen as part of the solution to the long-term secular decline in radio advertising. By combining platforms, companies seek to gain competitive advantage and reduce costs. SBSA has a unique franchise in Hispanic radio that is a highly-desirable addition to any broad media platform. The asset values of SBSA licenses and stations far exceed the current share price. While the current management team has not been able to harvest the value of SBSA’s assets and industry position, a strategic suitor would reward shareholders immediately for the opportunity to maximize the potential of this business. As we have explained, we have direct knowledge of parties interested in a strategic combination with SBSA.”
3. Remain Public But Adopt Modern Corporate Governance Standards. “It is highly unlikely that a comprehensive evaluation of all alternatives would result in a decision to remain public, if measured in terms of the best interests of public shareholders. Regardless, while the Company is public, the Directors must find the courage to invoke the governance changes needed to reassure the capital markets that they takes their stewardship responsibilities seriously. The Board must dismantle the antiquated A/B common equity class structure, which only serves to entrench Mr. Alarcon and embolden his self-serving agenda. Importantly, the jointly held positions of Chairman and Chief Executive Officer must be split in order to bring more accountability to bear on the management team. Mr. Alarcon’s track record running SBSA since it became public makes abundantly clear the need for a change in operating management. Lastly, the Board must undertake a director search to add truly independent directors that will serve the interests of public shareholders.”

In the end, this is great news for shareholders and may be a situation worth watching for other investors as the Discovery Group continues to put on the pressure. It will be interesting to see how the company responds in the coming months…

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Dillard's, Inc. (NYSE: DDS) may soon be facing a board and management shake-up after a several large activist investors took their campaign for change a step further yesterday. Barington Capital and the Clinton Group revealed in a Schedule 13D/A filing with the SEC that they are now on the verge of launching a proxy battle to install their own candidates to the company's board of directors. The two activist hedge funds requested a list of shareholders and other documents that typically point to a proxy contest. Unfortunately, the company's poison pill gives the Dillard's family majority control (8 of 12 board seats), but many believe that the two funds will seek to put a minority slate of directors on the board to increase pressure. So, does this represent a catalyst that could make Dillard's a buy here?

Barington Capital originally contacted the company at the end of January, insisting that the vast vlaue potential of the company was not being realied. In their opinion, if the company were more effectively managed it would be worth substantially more than its current stock price. Furthrmore, the company's sizable asset base provides the company with a number of untapped options to create additional value for stockholders. More specifically, the activist hedge fund sees the following opportunities for improvement (in their own words):

1. Dillard's $7.5 billion revenue base offers significant margin leverage capable of producing sizable cash flow gains from any future operating improvements. The Company’s geographic concentration, especially in high-growth areas of the Southeast and Southwest United States, offers unique regional opportunities for its 331-store portfolio. Furthermore, the Dillard’s brand name is well-regarded in the department store sector and the Company has received above average scores in the area of customer loyalty according to a recently released survey by Brand Keys.Clearly, Dillard’s has the scale and brand recognition to be a successful retailer.

2. As Dillard’s trailing twelve month operating free cash flow margin is 2.4% versus 7.7% for its department store peer group, we believe that stockholders can realize enormous upside if margins can be improved to the levels achieved by the Company’s peers. We see a number of opportunities to immediately reduce the Company’s cost base, including by improving sourcing, rationalizing SG&A expenses and lowering capital expenditures. We also believe that there are a host of initiatives in inventory management and merchandising that can drive customer traffic and enhance margins. Among other things, we believe that Dillard’s needs to tighten its current assortment of offerings and vendors and consider a more regular promotional cadence, as its stores, in our opinion, are over-inventoried. In addition, we believe that Dillard’s needs to embark upon an aggressive re-merchandising effort that features new vendors (including exclusive offerings) and updated private label and in-house collections to differentiate its value proposition for customers. Furthermore, it is our belief that the Company needs to enhance its brand marketing by adding more image and lifestyle campaigns that communicate a revitalized message to the marketplace. We are convinced that each of these initiatives would add excitement and newness to the Dillard’s shopping experience and attract customers to its stores.

3. Dillard’s owns approximately 75% of its store portfolio, comprised of approximately 42 million square feet of retail real estate. Currently, the Company’s shares trade at only 0.5x its tangible book value of approximately $32.50 per share. This represents a significant discount to the Company’s peer group, which trades at an average tangible book value multiple of approximately 2.0x. We also believe that Dillard’s tangible book value is understated, since the current market value of the Company’s owned real estate far exceeds its depreciated book value. In fact, in a November 26, 2007 research report, Deutsche Bank estimated Dillard’s net asset value before taxes to be $59 per share. Deutsche Bank also notes that “actions taken to unlock the Company’s real estate value would be positive for the shares, as the NAV [net asset value] for Dillard’s [is] greater than the value based solely on operating fundamentals.” It is our belief that there are a number of measures that the Company can take to enhance the value of its real estate portfolio, including converting certain properties to higher and better use, closing underperforming stores and engaging in sale/leaseback transactions.

These are all classic activist arguments that really do have merit and should be considered by the board. Unfortunately, Barington was shunned by Dillard's and is now being forced to take more dramatic actions in order to unlock value. In the meantime, their investment (and that of other investors) is quickly deteriorating as the company repored slower same store sales, subpar operating performance, and a falling stock price. Many analysts estimate that Barington Capital and the Clinton Group could have around 12% support from institutions, which bodes well for their odds in getting at least one board seat. Combined, these factors make DDS a stock worth watching!

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Yahoo Inc. (NASDAQ: YHOO), in an attempt to continue to thwart Microsoft Corporation (NASDAQ:MSFT), announced it is extending the deadline for nominating directors to its board. Nominations were due March 14, but now Yahoo will accept them until 10 days following the announcement of the date of its annual meeting - a meeting which itself does not have a date set yet.

The nomination process is key because Microsoft will almost certainly try to nominate its own directors to Yahoo's board. Directors that would be friendly to the proposed takeover. Yahoo CEO Jerry Yang spoke on this point in his ongoing e-mail conversation with employees, the full text of which follows:

"Subject: update

yahoos

we want to update you on some news we announced this morning. yahoo!'s board has decided to extend the deadline for nominating directors to our board from march 14th to 10 days following our announcement of a date for our annual stockholders meeting. we have not yet announced the date of this year's meeting.

why did we do this?

in light of the current circumstances, this change removes an imminent deadline. microsoft, of course, could still choose to name directors, but our objective here is to enable our board to continue to explore all of its strategic alternatives for maximizing value for stockholders without the distraction of a proxy contest. it will also make it easier for you to continue to focus intently on delivering on our business strategies and creating value.

since we last updated you, our board and management team are aligned in ongoing efforts to explore a number of alternatives to create stockholder value. we believe we are making progress clarifying the many options available to us. and, of course, throughout this process, management and the board are both speaking with--and listening carefully to--our stockholders. this ongoing dialogue has provided us with helpful feedback.

let's all be clear about one thing: we have a great company, a company with a truly unique set of assets -- including our global brand, large worldwide audience, significant recent investments in advertising platforms, future growth prospects and the excellent momentum we have created behind our core business strategy. so it should come as no surprise that this situation is receiving such a high level of attention -- from national media to blogs.

we ask you to continue to put aside all the rumor and speculation you may be hearing. none of us should allow external reports to shift our focus away from doing what we do best -- transforming the experiences of our users, advertisers, publishers and developers, all while enhancing our leadership position in the online marketplace.

we want to thank all of you again for your continued hard work and dedication to yahoo!. we'll continue to update you as new information becomes available.

jerry and roy"

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Barnes & Noble Inc. (NYSE: BKS) shares fell sharply after the company warned that recessionary pressures will make 2008 a difficult year for the bookseller, as it now expects earnings to be well below analyst expectations. The bookseller also noted that the business environment remains very competitive despite record-setting sales of Harry Potter and improved sales of The Secret in late 2007 and 2008. Currently, Barnes & Noble trades below enterprise value at just over 12x earnings and many investors - including well-known activists - insist that it is cheap these days. So, is this bookseller a turnaround play or flop?

Famed activist Bill Ackman has been one of Barnes & Nobles most faithful supporters and still holds over $125 million worth of stock in the troubled company, according to his latest Schedule 13F filing. Many investors are predicting that he will eventually push the company to utilize its spare cash to pursue share buybacks in order to boost its earnings per share and encourage a higher share price to maintain its current multiples. However, he may run into problems if the company cannot sustain its growth as this is a key factor to encouraging and increasing multiples. Considering he is already sitting on a large loss, many are hoping he will take action to also turn around the business itself rather than focusing purely on unlocking value.

Some insiders have also shown faith in Barnes & Noble by purchasing large amounts of shares on the open market, according to recent Form 4 filings with the SEC. Chairman of the Board, Leonard Riggio, purchased 300,000 shares earlier this month at prices ranging from $32.29 to $33.86 in cash on the open market. These actions by such high ranking members suggest confidence in the company's management to turn the situation around and improve growth prospects, which would increase the company's trading multiple, especially if Ackman took action. Meanwhile, the company has already instituted a dividend and share buyback program aimed at encouraging investors to properly value the company.

Just what actions is the Barnes & Noble taking to orchestrate a turnaround? In its most recent 8-K, the bookseller said it was focusing its efforts on managing its expenses and working capital with a realistic view of market conditions, as well as continuing to refine its marketing strategies and grow the member program to maximize top line growth profitability. Unfortunately, these actions will take awhile to come to fruition as it now expects full-year earnings to come in between $1.70 and $1.90 per share for 2008 - flat with 2007 on an operating basis. However, the company believes that its strong balance sheet and free cash flow will give it flexibility to compete effectively in 2008 as well as continue to unlock value.

In the end, Barnes & Noble is a company with a strong balance sheet and a dedication to unlocking value. However, it has been struggling recently with its growth prospects, which has led to a lower valuation and share price. It will be interesting to see whether management can take action to turn this company around. Clearly, both major insiders as well as activists are confident which should lead many amateur investors to the same conclusion. Combined, these factors make BKS a stock worth watching closely over the next year or two!

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Apple Inc. (NDAQ: AAPL) announced after-hours yesterday that the company has no plans for a share buyback or dividend despite strong rumors that the iPod-maker would return some of its more than $18 billion in cash and short-term investments to shareholders. Instead, the company announced that it was taking a very conservative stance when investing its cash. This has caused some speculation that Apple may be facing a cash crunch or gearing up for a larger investment in the near future. So, is Apple stock a buy at these levels anyway or is their refusal to unlock value a sign of bad news to come?

Apple announced that it expects its current estimates and guidance to be on track, despite speculation that its iPhone sales may be in trouble. The company also announced that it is working with Nike to make the iPod compatible with gym equipment. The two companies are partnering with gym equipment manufacturers and health clubs to allow members to plug their iPod Nanos into cardio equipment to track workouts, set goals and upload information to a Nike website. Many are hoping that this new partnership will help spur sales of its slowing iPod to make up for an expected decline in iPhone sales.

Meanwhile, Apple stock continues to trade at a reasonable multiple of 27x and a cheap 19x forward earnings. These numbers put the stock's PEG ratio at around 1.09, which indicates that it is fairly priced given its current growth, while the forward earnings are a clear indication that there is some concern about FY2008 results. Some analysts find it hard to believe that the company will be able to retain its current growth given the weakness in the U.S. economy combined with the many potential problems facing the iPhone - a key factor in Apple's future.

All in all, it is hard to argue with a 29% ROE and strong growth now, but there are many concerns about the company's future. Many analysts believe there could be trouble for their iPhone ahead; however, it looks like the majority of this risk is already priced into the stock. In the end, this is a stock that is definitely worth watching through 2008 given its cheap valuation now and strong potential growth prospects if it surpasses expectations!

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E*Trade Financial Corporation (NDAQ: ETFC) shares dropped more than 12 percent today after newly appointed chief executive Donald Layton announced that there are no plans to sell or break up the troubled online brokerage in an 8-K filing with the SEC. The troubled firm likely experienced some difficulty attracting a buyer with some $12 billion in troubled home equity loans on its books that may still present a going concern risk. Meanwhile, the firm is also facing lower revenues and higher expenses stemming from a mass exodus of its brokerage clients amid concerns about liquidity. So, is E*Trade a potential turnaround play or a hopeless cause?

E*Trade began its fall from glory when it announced massive write-downs related to its exposure to subprime mortgages that currently stand at around $12 billion. Private equity firm Citadel infused the troubled brokerage last year with $1.7 billion in debt to keep it alive, but many are still concerned that the firm could be insolvent in another quarter or two if write-offs continue at their current clip. Meanwhile, E*Trade continues to struggle with keeping its brokerage clients onboard, which is putting pressure on both its earnings and liquidity.

Despite these problems, many shareholders are finding hope in E*Trade’s new chief executive Donald Layton. Mr. Layton retired from JPMorgan in 2004 after 29 years where he supervised investment-banking and retail operatations at the bank. Since joining E*Trade, he has won praise for the way he tackled the mortgage mess and helped put the company on firmer financial ground. He also helped enact last month’s appointment of Robert Druskin to the brokerage firm’s board, which may end up paying some dividends in the future.

The price drop seen today is evidence that many shareholders were looking or a quick-fix in the form of a sale. There was speculation that E*Trade would break up its bank and brokerage business and sell them off, but Mr. Layton quickly rejected the notion saying that the ideas are “not practical and do not work”. Instead, he remains focused on being good, long-term fiduciaries focusing on shareholder value. He did caution, however, that the road would be a long one that would likely see lower earnings and liqudity pressures before spectacular results.

In the end, E*Trade is still facing some substantial issues, but it now has a great new chief executive and is hoping to turn things around. The road is likely to be long and dangerous, but investors willing to stick it out may see substantial gains. However, it may be prudent to wait until we figure out just how bad the $12 billion home equity portfolio losses will be before initiating an investment. Combined, these factors make ETFC a stock worth watching over the next year!

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