A month ago, I suggested that Countrywide Financial Corp. (NYSE:CFC) could be this year's version of Enron. One reason: Enron's Ken Lay and Countrywide's CEO Angelo Mozilo both publicly boosted their companies' prospects as they dumped their shares.

Today's New York Times [registration required] seconds that motion by reporting that North Carolina's Treasurer, Richard Moore, has asked the SEC to investigate Mozilo's $132 million in stock profits -- which he took as Countrywide traded above $40 -- it's now trading at $18.80 -- right before the subprime mess heated up starting in October 2006.

Moore's letter expressed his anger: "As an investor and a Countrywide shareholder, I was shocked to learn that C.E.O. Angelo Mozilo apparently manipulated his trading plans to cash in, just as the subprime crisis was heating up and Countrywide's fortunes were cooling off." How is this like Enron's Ken Lay? As I posted before, Ken Lay sold about $100 million worth of shares even as he was telling Enron employees what a great investment its shares were.

Will the SEC investigate? Will Mitt Romney keep Mozilo's campaign contribution? Stay tuned for the next episode.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Countrywide securities.

More Countrywide Financial news

Douglas McIntyre: Countrywide (CFC) CEO stock sales questioned
Zac Bissonette: Countrywide (CFC) has a new PR campaign, but what about real change?
Eric Buscemi: Countrywide (CFC) showing some class and good business sense
Peter Cohan: Is Countrywide (CFC) too big to fail?
Douglas McIntyre: Could subprime problems hurt search engines?
Peter Cohan: Is Bank of America's (BAC) purchase of Countrywide Financial (CFC) a good bet?
Joseph Lazzaro: The (still) foggy subprime mortgage sector
Peter Cohan: What the mortgage meltdown means to you
Michael Fowlkes: Countrywide Financial (CFC) adds to subprime panic
Peter Cohan: Could Countrywide Financial (CFC) be put down?

Wal-Mart Stores (NYSE: WMT) is giving its long-suffering shareholders something to cheer about. That's because, according to TheStreet.com, Wal-Mart is raising its earnings estimates about 10%.

Wal-Mart now expects to make 68 or 69 cents a share for the quarter, up from its previous forecast of 62 to 65 cents a share -- citing gains in its expense control, which expanded profit margins. On the other hand, its sales are not exactly booming -- it said same-store sales rose 1.4% from a year ago in September, with sales in established Wal-Mart stores inching up 0.8% and those at Sam's Clubs store jumping 4.4%.

I think it would be great if Wal-Mart could keep tightening its expenses and then spinoff its core business -- retaining only the faster-growing Sam's Clubs stores. In the meantime, this boost in earnings growth is just what the doctor ordered for this beleaguered stock.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

The Associated Press reports that The Boeing Company (NYSE: BA) has announced that it's delaying the shipment of its 787 Dreamliner from May 2008 to November 2008. The culprit? Unspecified manufacturing problems.

Boeing CEO Jim McNerney was disappointed with new schedule and said, "Notwithstanding the challenges that we are experiencing in bringing forward this game-changing product, we remain confident in the design of the 787, and in the fundamental innovation and technologies that underpin it."

It will be interesting to see how Boeing will be able to meet the new deadline without "materially affect[ing] its earnings or guidance for next year." Meanwhile, with its stock down 3%, the market appears skeptical of this claim.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Boeing.

The Associated Press reports that Chrysler's 45,000 workers represented by the UAW are on strike. But they are facing Bob Nardelli, a CEO with a track record of replacing many thousands of full-time store workers with legions of part-timers, as part of a relentless cost-cutting program at The Home Depot Inc. (NYSE: HD). So there is a real question about how effective the union will be in getting concessions from Chrysler.

What are the issues?

• Whether the UAW will grant the same health care cost concessions to Chrysler as it did to GM and Ford in 2005;
• How much Chrysler would pay into a company-funded, UAW-run trust that would take on its $18 billion worth of retiree health care costs such as the one GM is creating;
• Whether the UAW can get job security pledges at U.S. factories; and
• Whether Chrysler will get the UAW to allow it to outsource parts transportation now done by higher-wage union members.

Chrysler's owner, private equity firm Cerberus, is eager to turn Chrysler profitable and sell it quickly at a huge profit. With Nardelli sporting a reputation as a cost cutter, the UAW could find itself on the short end of this negotiation. And if Nardelli's leadership of quality at Home Depot are any indication -- Home Depot slipped to last among major U.S. retailers in the University of Michigan's annual American Consumer Satisfaction Index -- Chrysler's product quality and revenues could suffer along with its workers.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Home Depot.

The Washington Post reports that News Corp's (NYSE: NWS) Fox News was among the news agencies that downloaded an al-Qaeda video that was leaked by the U.S. government, and in so doing unveiled a security hole in al-Qaeda's network that permanently damages a valuable source of information about its plans.

According to the article, many news agencies downloaded transcripts of the video, but Fox News cited the source, effectively closing that avenue of information for good.

A little background is in order here. Search for International Terrorist Entities (SITE) was established in 2002 to track and expose terrorist groups. According to the Post piece, SITE obtained a new Osama bin Laden video ahead of its official release last month, and around 10 a.m. on September 7, it notified the Bush administration, giving two senior U.S. officials access on the condition that they not reveal what they had until al-Qaeda had officially released the broadcast. But by mid-afternoon that day, the video and a transcript of its audio track had been leaked from within the Bush administration to media outlets. Fox News had the transcripts up and sourced to SITE by 3 p.m.

Bloomberg News reports that Gary Forsee, Sprint Nextel's (NYSE: S) CEO has been shown the door after he failed to gain market share from Verizon Communications (NYSE: VZ) and AT&T Inc. (NYSE: T). Forsee will leave immediately, and CFO Paul Saleh will run the company Sprint, the third-largest U.S. wireless carrier, finds a permanent replacement.

Forsee lost customers following Sprint's $36 billion purchase of Nextel. Ultimately, the deal was flawed as a strategic response to competition from Verizon and Sprint and Foresee was distracted in a failed effort to integrate the two companies from adapting to rapidly changing competitive pressures.

Forsee is rightly paying the price for lousy results he oversaw. Sprint lost about 337,000 contract subscribers in the third quarter. And it anticipates results below forecast -- it had predicted $11 billion to $11.5 billion in operating income and $41 billion to $42 billion in sales. Meanwhile Nextel customers complained about poor reception and dropped calls, and Sprint still has to combine two billing systems, a process that may confuse subscribers who receive new bills.

Let's hope Sprint shareholders can get a new leader who can fix these problems fast!

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Though August's market volatility is now a distant memory for some investors, it could be a spur to seek out assistance from financial planners. How can financial planners advise clients to deal with volatility, both from a psychological and portfolio standpoint? What does volatility actually indicate about underlying economic fundamentals (apart from fear and uncertainty)?

In my view, financial planners need to be honest about what they know and what they don't know. And they should advise their clients to prepare themselves for volatility through a combination of balancing their life – the psychological part -- and portfolio contingency planning – the portfolio perspective.

From a psychological perspective, I don't know if financial planners have a role – beyond recommending psychologists who specialize in helping people deal with psychological pressures related to money. But one thing financial planners can do is to be honest about the limitations of their knowledge:

The New York Times [registration required] makes a compelling case that it's time for Citigroup's (NYSE: C) directors to can its long-suffering and persistently incompetent CEO. Here are the six reasons why it's time for Prince to go:

• Citigroup stock is stuck. At $48 the stock is roughly where it was when Prince took over in 2003.
• Citigroup has had five significant blow ups since Prince took over. On Monday, Citigroup warned that it planned to take a $5.9 billion write-down in the third quarter -- causing a 60% profit plunge. This was the fifth time since becoming CEO that Prince had to disclose a major problem to his board.
• Citigroup's corporate strategy is not working. The idea behind predecessor Sanford Weill's acquisition strategy was to create an organization which would be able to earn consistently high profits because when one business unit was doing poorly, another one would take up the slack. But the latest earnings miss shows otherwise -- problems in the mortgage market hurt Citigroup's consumer and fixed income units. And with the deal financing business at a standstill -- yet another pillar of Citigroup's corporate strategy is evaporating.

At a talk on September 20th at New York's 92nd Street Y, Lazard Ltd. (NYSE: LAZ) CEO Bruce Wasserstein took a swipe at Time Warner Inc. (NYSE: TWX), BloggingStocks' parent, for its moribund stock price. At the same time, Wasserstein patted himself on the back for taking all his chips off the table when the stock levitated above $18 following the publication of a Lazard report on Time Warner.

Lazard, which was hired by corporate raider Carl Icahn in February 2006, authored a 343 page report that argued for a breakup of Time Warner and a big stock buyback. Beyond its $5 million fee, Lazard's reward from Icahn was a bonus based on how far above $18 Time Warner stock went. Lazard's report estimated that Time Warner's breakup value ranged between $23.30 and $26.57. Following the report, Time Warner stock rose -- peaking at $22.73 on January 12, 2007 -- before declining to its current $18.99 -- about 50 cents a share above its price in February 2006.

While he claimed to like Time Warner management -- he called CEO Dick Parsons "a lovely, well-liked guy" and president Jeff Bewkes, "a highly regarded management kind of guy" -- Wasserstein blamed Time Warner's moribund stock price on their decision not to follow the recommendations in his report. Wasserstein thought Time Warner took one of his ideas -- a $20 billion stock buyback (Time Warner bought back $12 billion) -- but ignored his other suggestions -- to do more spin-offs and to run AOL more effectively.

This holiday season parents will need to choose between buying American and getting the toys their kids want. According to USA Today, That's because 80% of all toys sold in the USA are made in China. Some internal toy-industry estimates show only about 10% are actually made here.

Not only are few toys made in the U.S. but the ones that are don't appeal to the typical American child. That's because 10% of toys that are U.S.-made are wooden, old-fashioned "nostalgia" toys, such as blocks or puzzles, that may not hold the interest of kids older than toddlers. As noted in my post last month, there's Slinky, the twisty-wire-walking toy from the 1950s, and some plastic toys like K'Nex construction sets.

And here's the bad news about U.S. toys -- while they're safer than those made in China, they have some problems of their own. For example, U.S.-made toys were the subject of four of the 40 toy recalls the Consumer Products Safety Commission (CPSC) announced in the 2006 fiscal year, or 10%. Chinese-made toys were the subject of 28, or 70%. The other recalls were divided among toys made elsewhere in Asia and Europe.

If you have advice for parents seeking safe American toys that their children will actually want to own, please comment below.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

The Wall Street Journal [subscription required] reports that employment rebounded in September -- Nonfarm payrolls rose 110,000 in September and August was revised to an 89,000 rise from a previous estimate of a 4,000 decline. By the Street's twisted logic, this should be bad news for the stock market. How so? Good news on the job front means that the Fed does not need to cut interest rates more to rescue the economy.

Yet just the opposite is happening -- the market is celebrating. According to The Associated Press, Dow Jones industrial average futures for December surged 94, or 0.66%, to 14,133. Standard & Poor's 500 futures gained 11.70, or 0.75%, to 1,563.90. Nasdaq 100 index futures jumped 17.00, or 0.80%, to 2,140.00. The market may have been expecting worse figures and thus placed bets on declining stocks -- a bet it must now reverse by buying to cover short trades.

So is the market moving because of economic prospects or hopes for further rate cuts? The nice thing about Ben Bernanke's Buyout Bailout (BBBB) -- the Fed's 50 basis point interest rate cut on September 19th -- is that there was no specifically measurable reason given for the cut. Absent a compelling justification for the BBBB, an additional 50 basis point cut by year-end can be done regardless of the economic news.

This morning's report that U.S. jobless claims rebounded suggests that the economy may be slowing down. But Merrill Lynch & Co.'s (NYSE: MER) decision to clean house in its fixed income division tells us one source of future job losses.

Initial jobless claims rose by 16,000 to 317,000 in the week ending September 29, marking their highest level since September 8. Many of those job losses were undoubtedly related to the housing slowdown. Certainly an estimated $4 billion loss in housing finance -- in the form of too many subprime mortgages -- led to Merrill's canning of its global head of fixed income, Osman Semerci, his deputy, Dale Lattanzio, co-head of fixed income for the Americas and their former boss, Dow Kim, the former co-head of institutional securities.

Does Merrill's decision -- coupled with some 3,400 jobs cut already -- mark the beginning of a multi-year Wall Street slump? As DealBreaker posts, BreakingViews [subscription required] pointed out that more Wall Street heads could roll. 20% of New York City's financial workforce got the boot in the two years after the 2001 downturn. A 20% decline over the next few years would litter Wall Street with the blood of "40,000 Big Apple financiers."

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Merrill Lynch securities.

Bloomberg News reports that on August 17th, in the midst of the August credit crunch, Fed Chairman Ben Bernanke sought the advice of Citigroup (NYSE: C) Chairman and Former Treasury Secretary Robert Rubin, mortgage backed securities inventor Lewis Ranieri and hedge fund honcho Ray Dalio of $32.1 billion Bridgewater Associates. Kenneth H. Thomas, a Wharton lecturer, obtained the information on Bernanke's calls and contacts under the Freedom of Information Act.

Although there are no details of what Bernanke discussed with these investment luminaries, I applaud him for making the effort. One of the things that helped Alan Greenspan to make decisions was the network of business and finance leaders which he had created when he headed his own consulting firm prior to his move to Washington. Such real world contacts are particularly important for Bernanke to develop given his academic background.

It would be very helpful for investors to know how Bernanke makes his decisions. But this little glimpse into his schedule reveals an obvious point -- it would be very difficult to believe that anyone Bernanke spoke with would not have obtained very valuable information from which they could profit. And we'll never know whether Rubin, Ranieri, or Dalio did just that.

The rest of us can always eat cake.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Henry Blodget, who was banned from the securities industry due to his dishonest analyst work, predicts in AlleyInsider that Google Inc. (NASDAQ: GOOG) will hit $2,000 -- his biggest ever boost boast.

Blodget's fame soared in December 1998 when he predicted that Amazon.com (NASDAQ: AMZN) would hit $400 when it traded at $243 -- a 65% boost. After his call, which proved accurate, Amazon soared to peak at $630 in April 1999. It now trades at $552 on a comparable basis (six times the currently quoted price since Amazon split 3:1 in January 1999 and 2:1 in August 1999). Blodget was later hired by Merrill Lynch (NYSE: MER) where e-mails which trashed the companies he was publicly boosting landed him a life ban from the securities industry.

What is Blodget's logic for Google's $750 billion market cap (at $2,000 a share, which is 242% above its current $585)? "Assuming a 25x free cash flow multiple (generous), it would take free cash flow of $30 billion. That is one heck of a lot of free cash flow, especially considering that Google's free cash flow next year will be about $4 billion."

Is this achievable? Who knows. But one thing's for sure, I am one sucker who took the bait to write about Blodget's call. So while the SEC has banned Blodget from providing investment advice, he remains as media savvy as ever.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

The New York Times [registration required] reports that J.C. Flowers, the private equity firm that announced it was pulling out of its deal to buy SLM Corp. (NYSE: SLM), has changed its mind. Flowers is now offering $50 a share in cash, 10% 16.7% below its original $60 a share offer for the student lender.

But J.C. Flowers has offered a kicker: warrants to buy SLM shares, which it claims could eventually be worth as much as $10 a share if SLM meets or exceeds its earnings projections. Warrants, which give their owners the right to buy shares at a specific price, are sometimes used in bankruptcy cases as a way to repay creditors. The idea is that if the company fares better than expected, warrant holders can share in the profits by exercising the options. But a few hours ago SLM announced it rejected the offer.

According to its statement, J.C. Flowers wanted out because of a law signed by the president which limited government reimbursement of student loans. But SLM countered with a statement reaffirming its rights under the merger contract. So what does the cash and warrants deal mean? It could be seen as a clever way to tie SLM's sale price to its business prospects. Or it may be an attempt to buy SLM on the cheap while claiming to stand by its previous bid