You can find Debbie Downers in the stock market as well. Today’s example is Mattel (NYSE: MAT). After it reported lower earnings and an 11% drop in sales, it dragged Hasbro (NYSE: HAS) down with it.

The reasoning behind most of these moves is that the pressures hurting one company in a sector should be impacting the competition as well.

But that isn’t always the case.

We can find numerous examples of companies in the same industry with the same pressures that deal with those challenges differently. Southwest Airlines (NYSE: LUV) was able to put up considerable numbers over the past year as it’s competition suffered greatly. It did this by hedging its oil costs correctly.

Maybe Hasbro hasn’t done the exact same thing as Mattel – and will report similar earnings figures? But who’s to say they did. As smart investors, we cannot assume that is the case. As of this writing, Mattel is down 16% and Hasbro is down 9%.

Lets think about that, a 9% percent drop on no information about their business model. It’s the kind of emotional movement that value investors love.

Source: Mattel’s (NYSE: MAT) New Doll: Debbie Downer

• German manufacturing and engineering titan MAN AG said it will acquire Volkswagen Truck and Bus from Volkswagen AG (OTC: VLKAY). The 250-year-old MAN AG is Europe’s third-largest truckmaker, and this purchase marks its first major South American investment, Bloomberg reported.

• Siemens AG (ADR:SI) will pay more than $1.3 billion to settle corporate corruption charges that it paid bribes to win major contracts in the United States and Germany. The scandal resulted in the resignations of former CEO Klaus Kleinfeld and ex-CEO and former supervisory board Chairman Heinrich von Pierer, Reuters reported.

• Mattel Inc. (MAT) will pay to settle a probe that its Chinese-made dolls and accessories shipped to the United States were made with lead paint. The toys never made it to the shelves, but the world’s largest toymaker will pay $12 million to the 39 states in the suit, Bloomberg reported.

• Irish banks will be on the receiving end of a $13.5 billion (10 billion euro) investment from the Ireland government, MarketWatch reported. The recapitalization plan may take the form of preference or ordinary shares, the government said in a statement. And the list of banks that will receive the cash has not been determined.

• The National Association of Home Builders/Wells Fargo housing market index remained at nine in December for the second month in a row, indicative of the pessimistic outlook permeating the market.  Index readings higher than 50 indicate positive sentiment about the market. It has slumped below 50 since May 2006 and has been below 20 since April.

• The Boeing Co. (BA) yesterday (Monday) increased its quarterly dividend by 5%, or 2 cents, to 42 cents. The aerospace and defense dividend is payable March 6, 2009 to shareholders of record as of Feb. 6, 2009.

• Homes in the United States will lose more $2 trillion dollars in value by the end of the year, and nearly 11.7 million American households currently owe more on their mortgage than their homes are worth, Reuters reported yesterday (Monday). “In general, homeowners in most areas we cover are struggling with foreclosures pouring into the market, large amounts of negative equity and dropping home values,” Dr. Stan Humphries, vice president of data and analytics for Zillow Real Estate Market Reports, said in a statement.

Source: Global Investing Roundups Tuesday, December 16th, 2008

• October sales dropped for big-name retailers Macy’s Inc. (M), Target Corp. (TGT) and Gap Inc. (GPS) a result of continuing job losses and widespread credit drought that took the spirit out of consumer spending. Same-store sales climbed 2.4% at Wal-Mart Stores Inc. (WMT), as tight-budget shoppers searched for cheaper prices, Bloomberg reported.

• A day after forecasting a 5% to 10% annual revenue drop, Cisco Systems Inc. (CSCO) said it will invest $100 million sales to small businesses, Reuters reported. Despite a weaker global economy, Cisco said it sees a window to expand sales of routers, switches and other equipment.

• Blackstone Group LP (BX) posted its biggest quarterly loss, shedding $502.5 million in the third quarter, or 44 cents a share, Bloomberg reported. Blackstone is the world’s largest private-equity firm who went public 18 months ago, right before the credit crisis depleted the value of its holdings and made acquiring financing more difficult.

• The International Energy Agency said that import prices for crude oil will “likely” average $100 a barrel from 2008 to 2015, MarketWatch reported. The opposite happened Thursday, as December crude futures fell $3.51 to $61.77 a barrel. The official IEA 2008 Energy Outlook will be released on Nov. 12.

• Mattel Inc. (MAT) said yesterday (Thursday) it is cutting about 1,000 jobs worldwide. The maker of Barbie and Fisher Price products said the positions equate to 3% of its global work force and will reduce its professional and management staff by 8%. Mattel last month reported fiscal third-quarter profit rose less than 1% to $238.1 million.

• DirecTV Group Inc. (DTV), the nation’s largest satellite TV operator, yesterday (Thursday) announced third-quarter earnings rose 14%. The company reported net income of $363 million, or 33 cents per share, up from $319 million, or 27 cents per share, a year ago. Revenue rose 15% to $4.98 billion. Revenue in Latin America jumped 49% to $658 million.

• Fidelity Investments said yesterday (Thursday) it is cutting nearly 1,300 jobs this month, with more layoffs coming early next year. The layoff notices, set to go out later this month, amount to about 2.9% of Fidelity’s total work force of 44,400. A second round of cuts is planned for the first three months of 2009.

• The number of U.S. workers filing new claims for jobless benefits fell by 4,000 last week to 481,000, the Labor Department reported yesterday (Thursday). The department revised up its estimate for jobless claims the week prior to 485,000. The four-week moving average of claims, a less volatile measure, was unchanged at 477,000 last week.

Source: Global Investing Roundups Friday, November 7th, 2008

This from Money Morning:

Although bank-to-bank loan rates fell for the sixth-straight day yesterday (Monday) – decreasing fears that the corporate-lending market was going to seize up – a new reality has emerged: As the song says, “only the strong will survive.”

Strong companies will navigate the uncertainties of the markets in the months and years go come; weaker players will falter, fall into bankruptcy, and get gobbled up by larger, more-healthy companies.

“This is unequivocally, absolutely, positively” the new reality, says R. Shah Gilani, a retired hedge-fund manager and Money Morning contributing editor who has emerged as a top expert on the global credit crisis. “And the unspoken reason is that even after the credit crisis has been alleviated, it will not be over.”

If the credit markets continue to improve as they have been over the past week or so, then the more-creditworthy companies should discover that loans are easier to get, and carry a lower interest rate, to boot. As Money Morning has been reporting, the London Interbank Offered Rate (LIBOR) – a benchmark rate for short-term loans – has been dropping. Yesterday, LIBOR for three-month dollar loans fell for the sixth straight day, declining 0.36 percentage points to reach 4.06%.

The recent decline in LIBOR — which establishes lending costs for individuals and for businesses — reflects a growing trust in the financial sector after governments around the world have guaranteed billions of dollars worth in bank debt and have also unveiled plans under which they will buy stakes in weak and foundering banks.

“The general economy was weakening, and that weakening has taken a turn for the worse,” Robert DiClemente, an economist at Citigroup Inc. (NYSE:C), told The Associated Press. “And any company that was already facing more-challenging business conditions, when they’re confronted by tighter credit, it gives them one less degree of flexibility.”

LIBOR Lessons

The LIBOR decrease has helped ease some investor demand for U.S. Treasury bills – considered the ultimate in safe investments. The yield on the three-month T-bill surpassed 1.0% for the first time in nearly two weeks, rising to 1.12% yesterday from 0.82% late Friday.

The U.S. Treasury Department auctioned $25 billion in three-month bills at a discount grate of 1.25%, up from 0.50% last week, and another $26 billion in six-month bills at a discount rate of 1.80%, up from 1.10% last week, The AP reported. Those higher rates for short-term government debt suggest “continued healing in the credit markets,” Tony Crescenzi, an analyst with Miller Tabak & Co. LLC., wrote in a research note to clients yesterday.

As investment funds slowly take money out of safe assets, they are turning to assets that carry a bit more risk – presumably for a better return.

Indeed, Miller Tabak’s Crescenzi noted that yesterday’s mortgage-backed securities market signaled “increased risk taking.”

And the market for commercial paper — the unsecured debt that companies sell for short-term financing — continued to improve. Commercial paper rates were generally down 0.20 to 0.40 percentage points for key issuers tapping the market Monday, including American Express Co. (NYSE:AXP), General Electric Co. (NYSE:GE), HSBC Finance (ADR: HBC), AT&T Corp. (NYSE:T) and The Coca-Cola (NYSE:KO), Kevin Giddis, managing director of fixed income at Morgan Keegan & Co. Inc., told The AP.

Just a few weeks ago, even stronger companies like AT&T were having trouble selling paper for longer than overnight. Now, investors are starting to step in and buy paper with 30-day and 60-day maturities, Morgan Keegan’s Giddis said. On Oct. 27, the Federal Reserve is scheduled to start buying commercial paper from issuers that can’t find buyers in the market. 

Against this still-slightly-uncertain credit-market backdrop, companies are going out of their way to broadcast their financial strength – and ability to be financially flexible – to the capital markets.

For instance, engineering-and-construction giant The Shaw Group Inc. (NYSE:SGR) said it was able to amend its credit facility so it can use up to $200 million as collateral for letters of credit. Trucking company Werner Enterprises Inc. (NASDAQ:WERN) emphasized that it is a “debt-free company.” And U.S. toymakers Mattel Inc. (NYSE:MAT) and Hasbro Inc. (NYSE:HAS) both underscored they have little debt on their books and have plenty of cash available.

Even so, both Werner and Mattel conceded that they may feel the credit-crisis pinch – albeit indirectly – because so many of their suppliers and customers have not been able to obtain financing of their own.

Source: Although Bank-to-Bank Loan Rates Fall for the Sixth Straight Day, Only the Strong Will Survive

“Road trip!” Remember those epic words?

When I was seven or 8 years old, my dad and I took a cross-country trip in a beaten-up old VW bug. He had bought it for the princely sum of one dollar, from a friend who had simply gotten tired of fixing the thing. (It needed about $900 worth of repairs.)

I’ll never forget that little bug. It was light blue with rust accents from all the dings and dents. The shifter was a crystal doorknob taken from someone’s house. And the entire back seat had been torn out, making room for a sleeping bag area where dad and I could sleep.

The trip took us from San Jose to Detroit… then down to Atlanta… then a westward swing through El Paso, Texas, and back home again to Cali.

On some of the wide-open stretches where no one was around for miles — just us and the 18-wheelers out in the great American landscape — Dad would sometimes let me drive. I would sit in his lap and steer while he worked the pedals. For an 8-year-old, that was pretty much the coolest thing in the world.

Like rock and roll, the road trip will never die. But it’s certainly taking a beating these days. Based on current trends, this will be the first year Americans drive less since 1980.

The road used to be a symbol of freedom. There are countless books and songs written about it, some more well-known than others. But thanks to the cost of a gallon of gas these days, that symbol of freedom has morphed into a symbol of oppression. The highway has become a driveway: “You want to drive how far? Do you realize how much gas money that would take? Maybe we should just fly…”

My Other Car Is a Hot Wheels

Detroit’s “Big Three” — Ford, GM and Chrysler — are really feeling it, too. With the three-ring circus unfolding on Wall Street, many haven’t noticed how bad things have gotten for motor city.

There are plenty of stats to illustrate just how hard up the big automakers are right now. But here is one of my favorites…

The market cap of General Motors (as of this writing) is $6.4 billion. The market cap of Mattel Inc. — the company that makes “Hot Wheels” — is $7.3 billion. (The tickers are GM and MAT respectively.)

So basically, it’s more profitable these days to make those little toy cars we all used to scoot around the kitchen floor as kids than it is to be the No. 1 or No. 2 volume automaker in the world.

If ever there were a lesson that “bigger ain’t necessarily better,” this would be it. General Motors’ total revenue in 2007 was more than 30 times that of Mattel Inc’s… roughly $181 billion, in comparison to just under $6 billion.

The trouble is, GM booked a whopping loss of nearly $39 billion in 2007… whereas Mattel showed a profit.

Trouble in the Heartland

And here’s an ironic thing: It used to be that U.S. car market was a huge profit center for Detroit’s Big Three. The rest of the world was more of an afterthought.

Now things have been flipped around. It’s the international market that looks good, and the home market that’s dragging the numbers down.

The Big Three are making decent money in regions like Asia, Africa, South America and the Middle East. At home they are drowning in red ink, thanks to sky-high labor costs, tightened belts, and a nasty drop-off in truck and SUV sales. Gas-guzzling SUVs and oversized trucks were huge cash cows before the gas crisis hit. For many years, the American love affair with “big iron” helped Detroit fend off the onslaught of smaller foreign models. Not anymore.

And how about the overseas automakers? How are they doing? I checked in with Sara Nunnally, our globe-trotting foreign markets analyst, to find out.

Sara’s view was surprisingly upbeat. “You’d be surprised to see how well foreign automakers are performing,” she said.

“Take Honda for example… When you combine high commodity prices and a strong Japanese currency, you might expect tough times for a big exporter like Honda. But Honda actually just increased its quarterly net profits by 8%! Its yearly profit forecast remains strong, too.

“And Toyota, while forecasting a drop in profit for this year, is still expected to top GM’s sales for the year, and for the first two quarters is living up to that expectation, selling 300,000 more vehicles than GM so far.”

We already saw that bigger isn’t always better with the GM / Mattel comparison. The ultimate bottom line is profit, not gross revenues or market share. But the fact that Toyota is now so close to confirming the No. 1 crown, and turning a fair profit while doing so, speaks volumes.

The Future Is Elsewhere

So what is the answer to the Big Three’s problems? We already know those problems are set to get worse… much worse.

The 2007 numbers for GM, Ford and Chrysler were ugly as sin — and that was all before gas skyrocketed to $4 a gallon, consumers started cutting up their credit cards, and banks started pulling in their horns on leasing and finance programs for pricey vehicles.

If there were no political element, the solution would be painful but clear… the Big Three should say goodbye to American markets. Let North American operations die, or otherwise naturally shrink back to a viable size.

(I’m reminded here of a tree I came across hiking through the Australian desert. This tree managed to survive countless droughts by letting its limbs die off from the top down, keeping precious water reserves in the trunk and roots. When the rains came back, the tree would resume growth in its upper limbs again.)

However, both U.S. production and sales are possible, the sources said.

U.S. government fuel efficiency mandates are also playing a role. By 2020, automakers are required to reduce fuel use by 40%.

GM at least knows drivers around the world are excited about the Beat compared to two other prototypes it unveiled. Votes of an online poll on GM’s Web site overwhelmingly preferred the Beat, which received 1.8 million votes worldwide.

“The people have spoken. The vote count tripled all previous GM online consumer surveys, telling us the Beat resonated with customers all around the world,” said Ed Peper, Chevrolet general manager. “Chevrolet was overwhelmed by the positive reaction to each of the ‘triplets,’ but the Beat was the clear winner.”

Though not a hybrid, the Beat can get as much as 40 miles a gallon. GM – whose autoline is heavy on trucks, SUVs, and the Hummer – hopes that number will sing to U.S. drivers, who are hampered by record gasoline costs.

“This is a very big change for GM,” John Wolkonowicz, an analyst at Global Insight Inc. in Lexington, Mass., told Bloomberg. “They have no choice. There’s never been as rapid a shift in consumer demand in the history of the auto industry.”

Demand isn’t just shifting away from gas-guzzlers, but U.S. carmakers in general.

For the past 76 years, GM has been the world’s biggest automaker. But Toyota Motor Corp. (ADR: TM) almost stole that title, selling only about 3,000 cars (9.366 million total) less than GM’s 9.369 million.

Though the Beat would be a pioneer in the U.S. market, it’s up against an army of established subcompacts overseas. On top of that, Tata Motor Ltd.’s (ADR: TTM) forthcoming $2,500 Nano is generating huge buzz.

The trend is playing out tragically for GM, as Chairman and Chief Executive Rick Wagoner announced in June that the company will close four truck and SUV plants. The maneuver will cut its North American truck capacity by 700,000 vehicles and is expected to save the company $1 billion.

“From the start of our North American turnaround plan in 2005, I’ve said that our goal is not just to return GM to profitability, but to structure GM globally for sustained profitability and growth,” Wagoner said in a statement. “Since the first of this year, however, U.S. economic and market conditions have become significantly more difficult. Higher gasoline prices are changing consumer behavior, and they are significantly affecting the U.S. auto industry sales mix.”

As far as the company’s Hummer brand is concerned, Wagoner said GM is “considering all options from a complete revamp to a partial or complete sale of the brand.”

GM Stock: Bargain or Junk?

Bloomberg cleverly pointed out that GM’s current market value is smaller than that of Mattel, Inc. (MAT), maker of Matchbox cars.

Specifically (and fittingly to such comparison), GM is only one-tenth the size of what it was in 2000.

Worse for investors, GM’s stock price is trading at its lowest price since 1954, Reuters reported.

Year-to-date, GM has been the worst performing stock on the Dow Jones Industrial Average Index, falling nearly 60%.

The damage has actually lifted the value of its 25-cent quarterly dividend, but that’s about the extent of the good news.

Citigroup Inc. (C) analyst Itay Michaeli said last week in an investor’s note that he doesn’t think GM or rival Ford Motor Co.’s (F) stocks are standing on solid enough ground to pivot for a rebound.

“We remain cautious on the shares of Ford and General Motors in spite of recent share price declines,” Michaeli said, Reuters reported.

Source: Sources: GM May Accelerate Subcompact Sales in U.S.

• Merck & Co. Inc. (MRK) reported yesterday (Monday) that it its first-quarter profit rose to $3.3 billion ($1.52 per share), nearly double the $1.7 billion (78 cents per share) earned a year ago. The drug maker cited a $1.4 billion payment from AstraZeneca PLC, a partner drug company.  Excluding that and other one-time items, Whitehouse Station, N.J.-based Merck earned 89 cents per share in the latest quarter the Associated Press reported.

• Arch Coal Inc. (ACI) turned in one of its best quarters ever yesterday (Monday) after earnings nearly tripled in the first quarter to $81.1 million. The company earned just $28.7 million over the same period last year. With demand for coal rising due to Asia’s rapidly expanding economies, Arch estimates that global coal demand will outstrip supply by 25 million to 35 million metric tons, according to Forbes.

• Northwest Bancorp Inc. (NWSB) reported first-quarter earnings of $12.6 million, up from $11.3 million last year, Thomson Financial reported. The bank holding company said its profit in the latest quarter reflects a gain of $409,000 related to Visa Inc.’s (V) initial public offering.

• First quarter profit for Bank of America Corp. (BAC), the second largest bank in the United States, dropped 77%, the third consecutive quarterly profit decline and short of analysts’ expectations.  “The first quarter was much worse than our expectations three months ago,” Chief Executive Officer Kenneth Lewis said on a conference call, Bloomberg reported. “It’s too early to strike up the band and say that happy days are here again.”

• Shares for Ohio-based bank National City Corp. (NCC) plummeted almost 28% yesterday (Monday) after the company slashed its dividend to 1 cent and agreed to sell a $7 billion stake in the company at a 40% discount to a group of investors. The bank’s previous dividend was 21 cents. The bank also reported a first-quarter loss of $171 million, BusinessWeek reported.

• Mattel Inc. (MAT), the largest global toymaker, announced its first loss in three years yesterday (Monday) due to higher production costs in China. Mattel posted a net loss of $46.6 million, or 13 cents per share for the first quarter, missing analyst estimates that had anticipated a 1 cent profit per share. The stock dropped over 8% to close at $20.00.

• Hasbro Inc. (HAS) posted a surprise gain yesterday (Monday) on the strength of movie-related toys such as Transformers action figures. The toy firm beat analyst expectation with a 13% increase in revenue to $704.2 million. Earnings were $37.5 million or 25 cents per share. The stock soared 9% to close at $34.65.

• Shares of MF Global Ltd. (MF) dropped over 10% yesterday (Monday) to close at $12.88 on news that several analysts lowered profit guidance on the exchange-listed futures and options broker. Analysts polled by Thomson Financial, on average, estimate a fourth-quarter loss of 6 cents per share, The Associated Press reported.