The Zacks Analyst Blog Highlights: Capital One Financial, ING Groep NV, General Electric, CIT Group and The Walt Disney Company

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Jun 08, 2011, 09:30 ET

CHICAGO, June 8, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Capital One Financial Corp. (NYSE: COF), ING Groep NV (NYSE: ING), General Electric Co. (NYSE: GE), CIT Group Inc. (NYSE: CIT) and The Walt Disney Company (NYSE: DIS).

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Here are highlights from Tuesday's Analyst Blog:

Capital One Bids for ING Direct

Bloomberg reported that Capital One Financial Corp. (NYSE: COF) has tendered an offer to buy ING Direct USA, the online banking unit of Amsterdam-based ING Groep NV (NYSE: ING).

Apart from Capital One, General Electric Co. (NYSE: GE) has also submitted its bid to acquire ING Direct.

While Capital One has tendered a stock-cum-cash offer, General Electric has made an all-cash bid. The deal would raise nearly $9 billion from the sale of the unit; and ING is expected to reach an agreement on the deal by the end of this month.

Earlier in April, both Capital One and General Electric, along with SJB National Bank, Ally Financial Inc. and CIT Group Inc. (NYSE: CIT), had shown interest in buying ING Direct. However, now it looks that the remaining three companies have either put the talks on hold or have ended the talks.

If Capital One is able to clinch the deal, the company will be able to control the country's largest online bank. Also, with $81.6 billion in deposits, ING Direct will greatly benefit the company.

Additionally, according to the figures available with the Federal Deposit Insurance Corp., Capital One would also get $40.5 billion of mortgage loans and $19.9 billion of mortgage-based securities (MBS) as part of the deal. Further, it would also make the company one of the largest stakeholders in ING.

Furthermore, it would not be difficult for Capital One to get the required regulatory approvals as a result of its bank status. However, it is to be seen whether ING and the regulators support a stock-and-cash deal.

As a part of the European Union's (EU) approval of ING's restructuring plan, ING needs to sell off ING Direct by 2013 in order to receive €10 billion ($14 billion) as bail out money.

ING Direct mainly focuses on providing retail banking products, such as savings, payment services, mortgages, consumer lending and investment products, at a very low cost. These banking services complement Capital One's financial products and services quite well.

Hence, if Capital One wins ING Direct USA, this would surely enhance its revenue base in the near-to-medium term.

Currently, Capital One retains a Zacks #1 Rank, which translates into a short-term 'Strong Buy' rating. However, considering the fundamentals, we maintain a long-term "Neutral" recommendation on the stock.

Disney to Lay Off, Blamed DVD Sales

According to Bloomberg, The Walt Disney Company (NYSE: DIS) is planning to slash jobs of around 5% of its employees or more than 200 people at its film division in June, as the company is looking to reduce costs at its Studio Entertainment segment.

The move was inevitable and is likely to be followed by other studios as the sales of DVD have been plunging due to the shift in consumer demand. An increasing number of customers now prefer to use the on-demand TV services and other digital mediums at home for watching movies.

Moreover, the Studio Entertainment division of Disney is struggling badly due to the sluggish performance of the worldwide home entertainment and worldwide theatrical distribution coupled with higher film cost write-downs. Revenues at this segment came in at $1,340 million in the second quarter of 2011, reflecting a sharp decline of 13% versus the year-ago quarter. Operating income also plunged 65% to $77 million in this segment.

Further, Disney realigned its distribution and is focusing on increasing its production from Marvel and Steven Spielberg's DreamWorks Studios.

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