Daily Archives: November 21, 2006

NYSE Short Interest, November 2006

Below are the short positions for stocks traded on the NYSE at mid-November compared to one month earlier.

Largest Short Positions
Rank NOV 15 OCT 13 Change
1 AT&T Inc 134,932,390 134,856,678 75,712
2 Ford Motor Co 101,824,318 100,471,907 1,352,411
3 Lucent Technol 93,061,911 94,645,672 -1,583,761
4 Sprint Nextel 74,778,251 67,980,467 6,797,784
5 Qwest Communications 74,034,168 78,349,233 -4,315,065
6 Time Warner 66,254,788 67,516,192 -1,261,404
7 Gen’l Mtr 60,775,992 63,866,888 -3,090,896
8 Exxon Mobil Corp 52,633,437 48,949,833 3,683,604
9 Interpublic Grp 45,658,923 43,788,340 1,870,583
10 Pfizer Inc 44,733,067 44,113,543 619,524
11 Halliburton Co 44,418,339 46,106,459 -1,688,120
12 Disney (Walt) 42,120,213 47,100,121 -4,979,908
13 Bank of America 36,123,806 38,324,050 -2,200,244
14 Merck & Co 35,852,991 37,369,247 -1,516,256
15 Eastman Kodak Co 35,736,793 34,515,445 1,221,348
16 General Electric 35,616,248 52,211,168 -16,594,920
17 Verizon Communic 35,340,350 44,370,304 -9,029,954
18 Rite Aid Corp 35,326,261 29,755,803 5,570,458
19 Micron Technol 34,744,359 33,607,631 1,136,728
20 Tenet Healthcare 34,743,794 31,567,538 3,176,256
21 Wal-Mart Stores 34,336,701 36,684,738 -2,348,037
22 Chesapeake Engy 33,749,280 32,772,908 976,372
23 Lowe’s Cos 33,466,883 32,971,272 495,611
24 Home Depot 32,790,002 25,494,978 7,295,024
25 Wells Fargo 31,462,801 32,150,249 -687,448
26 Hewlett-Packard 30,151,757 34,576,693 -4,424,936
27 Blockbuster Inc 29,113,229 30,623,877 -1,510,648
28 LSI Logic Corp 29,074,574 29,505,177 -430,603
29 Amer Int’l Group 27,949,808 27,759,693 190,115
30 Reynolds American 27,673,904 29,910,959 -2,237,055
31 News Corp A 27,547,497 26,735,029 812,468
32 Chevron Corp 27,481,944 27,683,179 -201,235
33 Texas Instruments 27,114,257 36,220,732 -9,106,475
34 Boston Scientific 26,899,456 29,820,021 -2,920,565
35 JPMorgan Chase 26,618,325 26,457,840 160,485
36 Kraft Foods A 26,405,241 24,608,559 1,796,682
37 Univision Comm A 26,293,761 27,341,368 -1,047,607
38 Countrywide Fin’l 26,237,895 21,881,936 4,355,959
39 Host Hotels&Resrts 25,882,475 22,280,266 3,602,209
40 CVS Corp 25,649,578 10,716,945 14,932,633
41 Altria Group Inc 25,401,588 26,216,978 -815,390
42 Schlumberger Ltd 25,108,006 24,142,313 965,693
43 iShrDJUSRlEst IYR 24,657,378 27,028,551 -2,371,173
44 Advanced Micro Dev 24,524,597 32,311,716 -7,787,119
45 Tyco Int’l 24,476,933 26,102,602 -1,625,669
46 Xcel Energy 24,051,868 20,305,545 3,746,323
47 FPL Grp 23,996,316 35,375,643 -11,379,327
48 Big Lots Inc 23,638,149 24,352,350 -714,201
49 Allied Waste Ind 23,418,898 28,295,805 -4,876,907
50 Washington Mutual 23,126,769 22,747,432 379,337
51 NY Community Bncp 22,932,035 23,686,034 -753,999
52 US Bancorp 22,848,968 23,449,954 -600,986
53 Commerce Bncp-NJ 22,803,332 24,610,444 -1,807,112
54 Cincinnati Bell 22,599,590 21,959,818 639,772
55 Motorola Inc 22,376,757 38,398,718 -16,021,961
56 Centerpoint Energy 22,138,537 16,564,816 5,573,721
57 Six Flags 22,129,606 22,455,808 -326,202
58 DirecTV Group 21,987,580 27,021,620 -5,034,040
59 Goodyear Tire 21,831,047 23,633,159 -1,802,112
Largest Positive Changes
Rank NOV 15 OCT 13 Change
1 CVS Corp 25,649,578 10,716,945 14,932,633
2 Gap Inc 20,922,780 11,972,112 8,950,668
3 Thermo Fisher Sci 19,850,586 11,547,708 8,302,878
4 Home Depot 32,790,002 25,494,978 7,295,024
5 Sprint Nextel 74,778,251 67,980,467 6,797,784
6 Centerpoint Energy 22,138,537 16,564,816 5,573,721
7 Rite Aid Corp 35,326,261 29,755,803 5,570,458
8 iShrSmlcp600 IJR 8,978,107 4,614,739 4,363,368
9 Countrywide Fin’l 26,237,895 21,881,936 4,355,959
10 Coca-Cola Co 13,335,234 9,141,369 4,193,865
11 Norfolk Southern 7,761,663 3,876,734 3,884,929
12 Xcel Energy 24,051,868 20,305,545 3,746,323
13 Exxon Mobil Corp 52,633,437 48,949,833 3,683,604
14 Host Hotels&Resrts 25,882,475 22,280,266 3,602,209
15 Schering-Plough 15,683,870 12,090,841 3,593,029
16 Diamond Offshore 10,449,135 6,904,436 3,544,699
17 Walgreen Co 17,234,131 13,762,092 3,472,039
18 Nat’l City Corp 18,069,933 14,628,043 3,441,890
19 NYSE Group 19,606,098 16,314,117 3,291,981
20 Laboratory Cp Amer 5,752,384 2,467,124 3,285,260
21 Tenet Healthcare 34,743,794 31,567,538 3,176,256
Largest Negative Changes
Rank NOV 15 OCT 13 Change
1 McDonald’s Corp 15,076,700 60,530,686 -45,453,986
2 General Electric 35,616,248 52,211,168 -16,594,920
3 Motorola Inc 22,376,757 38,398,718 -16,021,961
4 FPL Grp 23,996,316 35,375,643 -11,379,327
5 Regions Fin’l 11,135,550 20,542,706 -9,407,156
6 Texas Instruments 27,114,257 36,220,732 -9,106,475
7 Verizon Communic 35,340,350 44,370,304 -9,029,954
8 iShrMSCIJapan EWJ 5,845,706 14,643,432 -8,797,726
9 Fidelity Natl Finl 3,577,419 11,443,829 -7,866,410
10 Advanced Micro Dev 24,524,597 32,311,716 -7,787,119
11 Gateway Inc 13,160,037 18,256,992 -5,096,955
12 DirecTV Group 21,987,580 27,021,620 -5,034,040
13 Disney (Walt) 42,120,213 47,100,121 -4,979,908
14 Allied Waste Ind 23,418,898 28,295,805 -4,876,907
15 Exelon Corp 6,257,815 11,111,761 -4,853,946
16 Hewlett-Packard 30,151,757 34,576,693 -4,424,936
17 Qwest Communications 74,034,168 78,349,233 -4,315,065
18 Amer Tower A 18,875,823 23,183,564 -4,307,741
19 Wyeth 7,561,095 11,847,427 -4,286,332
20 Hilton Htls 9,938,899 14,075,244 -4,136,345
21 Medtronic Inc 13,299,950 17,405,663 -4,105,713
22 Sara Lee Corp 6,980,562 11,066,466 -4,085,904
23 St Jude Medical 3,943,394 7,818,626 -3,875,232
24 Corning Inc 12,579,089 16,426,416 -3,847,327
25 Cypress Semicond 14,578,937 17,999,829 -3,420,892
26 Avon Products 8,015,427 11,311,711 -3,296,284
27 Gen’l Mtr 60,775,992 63,866,888 -3,090,896
28 CBS Corp B 15,573,405 18,634,678 -3,061,273
29 Quantum Corp 5,074,057 8,129,878 -3,055,821
30 Boston Scientific 26,899,456 29,820,021 -2,920,565

Source: NYSE and Wall Street Journal

Douglas A. McIntyre

Posted on: November 21, 2006 – 11:16 pm in Uncategorized

With Cyberonics’ CEO Skip Cummins Gone Over Options, Cramer Says It’s a Buy

by Jon C. Ogg
November 21, 2006

Cramer then discussed options backdating on CNBC’s MAD MONEY.  He said when a CEO gets fired over this he thinks that is when you buy the stock.

Now that has happened to Cyberonics (CYBX) after Skip Cummins resigned over stock options.  The company makes this vagus nerve stimulator for severely depressed people.  Skip Cummins is a CEO that made himself hated and was a weight on the company, particularly after he has acted out brashly against Congressional oversight and toward the FDA.  Cramer said Cummins turned away takeover offers, but now it may be doable since only the caretakers are in charge.

Outside of Cramer touting the stock today, it has been trading up on its own.  After Carl Icahn bought in the stock ran up.  Yesterday after the close the CEO & CFO left over the options inquiry.  Today the stock rose 1.9% to $24.63 in normal trading, but shares rose an additional 5.5% to $26.00 in after-hours activity.

Posted on: November 21, 2006 – 6:21 pm in Uncategorized

Cramer Prefers Hasbro (HAS) Over Mattel

Cramer was reviewing toy companies today.

Cramer said Mattel (MAT) and Hasbro (HAS) have historically outperformed the market during the first half of the year. 

Cramer said toys have become hot again, but you can’t own both stocks.  The one that Cramer says is better is HASBRO (HAS) and forget about Mattel (MAT).

Mattel is more off its 52-week highs, looks cheaper, options investigation is behind.  Mattel is even suing over the Bratz Dolls being like barbie, and it also owns American Girl.  He thinks the Polly Pockets recall won’t matter because it is from kids eating them.

Hasbro has real toys in the pipe.  they have the marvel deal for the new Spiderman movie.  The Transformers movie will drive toy sales for this.  He did mnmote that the Star Wars toys income has been sliding, but Cramer thinks that Transformers may offset this.  Cramer said he disliked the Hasbro games business but it has been turning around.

Cramer said the quality of products matters more than stock valuations or stock performance.

Posted on: November 21, 2006 – 6:10 pm in Cramer

The New SGI, One Month Later

by Jon C. Ogg
November 21, 2006

If you have been around the markets and technology for a while, you probably remember SGI (SGIC-NASDAQ).  This company has been around the block.  It used to be THE graphics and gaming platform, but the rest of the world caught up and various mismanagement steps took the company down the endless road to bankruptcy and beyond.

About 1 month ago SGI re-emerged from bankruptcy, its bond holders and creditors got new stock, the old shareholders were wiped oout, it left the OTC Pink Sheets, and it got a new ticker of "SGIC" on NASDAQ.

Its balance sheet still has a lot of room for improvements.  The total assets are listed as $518.1 million with liabilities at $332.2 million, but $175.4 million of the assets are deemed goodwill, intangibles, and "other." 

The new SGIC stock opened at $20.00 on October 23, 2006 and it hasn’t seen that price since.  It does not necessarily mean the bottom is falling out, as it is quite frequent for the old creditors to begin a mass migration of selling shares to recoup losses and to get out of what has been an eye sore on the books.  Yesterday shares put in a new low for a close of $18.25 and close yet lower today at $17.62.

It is obvious that either investors haven’t gotten the message, or the message they got wasn’t that good.  The stock volume has also been sparce, so there is still a long ways to go before the company gets back into favor. 

Posted on: November 21, 2006 – 6:07 pm in Uncategorized

Dell Escapes the Death Penalty

The company posted revenues of $14.4 Billion, sort of in-line with $14.45 Billion estimates. But $0.30 EPS is the headline instead of the $0.24 estimate.  The street had been worried that the recent delay signaled that Dell was going to hell in a handbasket. But now sharers are up over 9% at $27.10 in after-hours trading and that is after closing up 0.7% at $24.82 on the day.  It has traded as low as $18.95 and as high as $33.22 over the last 52-weeks.

It feels like the street has signaled a bottom has already been put in as far as the stock, so now we have to see if the company can get its act together.  That doesn’t mean the shares can’t come back off, but the shares are up over $8.00 as of after-hours from the 52-week lows.

It was supposed to come out the same day as Hewlett Packard (HPQ) last week, but the SEC investigation on revenue recognition went formal and they decided to delay earnings.  They aren’t even giving us the courtesy of a conference call.  It is saying that the ongoing SEC investigation it will not file the Q2 filing nor will it be able to file this quarter’s 10-Q on time.

Here is the deal that investors going into the stock tomorrow or later have to swallow: Dell is being ambushed with problems;  There have been exploding laptops and battery recalls, SEC inquiry, H-P regaining the number one position, Apple’s onslaught, crmmy customer service and support from Indian call-centers, Vista delays, a switch to a dual processor supplier now available (i.e. Intel/AMD); Rollins needs to go; it is going to now be two quarters late with SEC filings.

Jon C. Ogg
November 21, 2006

Posted on: November 21, 2006 – 4:25 pm in Earnings

US Stock Market Wrap (Nov. 21, 2006)

DJIA    12,321.11; Up 4.57 (0.04%)
NASDAQ    2,454.84; Up 2.12 (0.09%)
S&P500    1,402.81; Up 2.31 (0.16%)
10YR-Bond    4.5780%; Down 0.017%
NYSE Volume    2,530,518,000
NASD Volume    1,644,503,000

The White House even lowered its forecasts on the economy due to the housing slump.  It forecast GDP will run 3.1% for the year, but will also be lower in 2007 and 2008 based on a slower housing market.

The talk of the day was Google (GOOG) as it finally crossed over the $500.00 mark and closed up at $509.65.  Jim Cramer on CNBC’s STOP TRADING segment said that it has to go over $500 before it can go to $600.00, and he even gave GOOG an unofficial target price that he said he wouldn’t sign his name to of $750.00 per share.

Apple (AAPL) also hit another high closing up 2.5% at $88.60 as the market believes its iPhone is now imminent.

AerCap Holdings (AER) closed at $23.02 after its 26.1M share IPO priced at $23.00.

Spirit Aerosystems (SPR) rose to $29.00 after its 52M share IPO priced at $26.00.

Infosys Technologies (INFY) closed down 3.3% at $53.44 after its 30 million share secondary priced at $53.50 per share.

Lazard (LAZ) fell 4% to $43.96after it snuck in a share sale from insiders for 12 Million shares of common stock.

Boeing (BA) rose another 2% to $91.04 after it won a $5.5 Billion order for 25 jets from Korean Air, giving a further jab to Airbus.  If you have ever been a passenger on an Airbus plane you won’t be shocked, besides that the Airbus 380 that seats a million people is quite ugly and reminscient of a retarded one-eyed dolphin.

Deere (DE) rose 6.5% to $95.27 after it beat earnings with $1.20 EPS vs $0.95e, despite soem guidance questions.

GameStop (GME) rose 3.6% to $53.00 after it met earnings estimates and gave guidance that was potentially light.  Upbeat and positive management on the conference call signalled that Wii and PS3 shortages were something they couldn’t control, but Xbox 360 sales were running well above normal.

Nordstrom (JWN) rose over 4% to $49.62 after it post earnings at $0.52 EPS vs $0.51e.

The NYSE (NYX) rose 9% to $104.60 as the company has telegraphed a formal structure with Euronext.

NASDAQ (NDAQ) rose another 1.6% to $38.32 after it looks more probable that it will its fight to acquire the London Stock Exchange.

Medtronic (MDT) rose 9% to $53.55 after beating earnings with $0.59 EPS vs $0.56e; raised to Buy at ThinkEquity, raised to Overweight at JPMorgan.

Northwest Airlines (NWACQ) rose 20% to $2.66 after Continental (CAL) said it would be open to mergers as Northwest is deemed as a veto threat if they are not taken care of first because of codeshares and because of cross ownership and licensings.  Continental (CAL) rose 4% to $44.38 on the news.

Pacific Ethanol (PEIX) traded up 5.7% to $18.50 after posting $0.07 EPS vs -$0.02e.

Tech Data (TECD) rose 4% to $41.67 after posting $0.33 EPS vs $0.25e and after it raised revenue guidance.

Trident (TRID) rose 5.7% to $22.01 after its CEO stepped down after improper options dating.

Wildan Group (WLDN) closed at $10.56 after its 2.9M share IPO priced at $10.00.

Time Warner (TWX) rose to another new 4-year high closing up 0.5% at $20.68.

Dow Chemical (DOW) fell 2.3% to $40.08 after the DJIA component was cut to Sell at Merrill Lynch.

Select Hotel names did very well today after Jefferies started at least 3 of these witha Buy rating: Starwood (HOT) rose 4% to $65.61; Hilton (HLT) 3.5% to $32.87.

Juniper Networks (JNPR) rose 4.5% to $21.42, back to its highest levels since its woes started in Januray, after its rating was raised to Overweight at JPMorgan.

Jon C. Ogg
November 21, 2006

Posted on: November 21, 2006 – 4:09 pm in Market Close

Cramer unofficially takes Google’s target to $750

On today’s STOP TRADING segment on CNBC, Jim Cramer discussed Google (GOOG) as going to $600.00 and it has to pass $500.00 to get there.  The numbers keep going up and the metrics keep rising.  He said if he used the $850.00 target he’d like to use he’d be investigated.  With al the forward multiples it is just difficult to not see it under $600.00.  He isn’t wearing the tag, but he thinks it could ultimately go to $750.00.

He also noted Goldman Sachs (GS).  He said with a Wells Fargo multiple it would be at $225.00.  He doesn’t know why it has the lowest multiple of thr goup when it is the best.  It is too cheap according to him.

Deere (DE) is one that Cramer said is killing the shorts, and is going higher to Par ($100).  He said they did everything right besides the forward numbers.

"This is the best market I have ever seen" is what Cramer noted.

Jon C. Ogg
November 21, 2006

Posted on: November 21, 2006 – 2:48 pm in Cramer

Let The Games Being: UAW To Open Talks With GM

While the soap opera around the UAW’s negotiations with bankrupt parts maker Delphi play out, investors should not forget that the big union starts talking with GM in about six months.While this rites are always important, GM’s ability to get its cost base down in North America will be on the line. The company has targetted annual reductions of $9 billion. GM may get there, but demands from the UAW about work force size and benefits could still cause problems. And, a strike could cut the flow of new cars within a matter of days.

Pension benefits are one of the few perks that the UAW can still offer its members, but they are extemely expensive for the car companies. The UAW leaderhship cannot afford to go gentle on the matter, not if they want to keep their jobs. Due to a number of these legacy issues, it is estimated that while labor costs at US plants owned by Japanese companies at $35 an hour compared to $80 an hour for the Big Three.

GM may be considering whether a strike could work to the company’s benefit. That tactic would only work if the labor interruption is short. But, with over three months of vehicles in inventory, there is unlikely to be a better time to show the union that GM cannot afford to have the kind of labor agreements it has had in the past.

UAW leaders have to ask for the moon. But, it won’t be a cloudless night.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: November 21, 2006 – 2:30 pm in Uncategorized

Wal-Mart Now Targeting Food Prices To Keep Up Sales

by Jon C. Ogg
November 21, 2006

Wal-Mart (WMT) is keeping its promise of cost cutting on select items.  Today it has announced that now it will trim many select food price items.  This is in the shadow of recent price cuts on select consumer products, home electronics, plasma HDTV’s, toys, and the like.

Below is a partial list of price cuts on the hundreds of food items effective through the holiday season:

– Pilgrims Pride®/Tyson(TM)/ Perdue® Fresh Fryer Boneless Skinless Chicken Breast*, 26.4 oz. pack (was $5.35/now $4.74 – was $3.34 per lb./now $2.87 per lb.)
– Louis Rich® Chicken Breast Strips, 6 oz. (was $2.87-3.27/now $2.50)
– Smithfield(TM) St. Louis Ribs with Barbecue Sauce**, 39 oz. pkg. (was $11.45/now $9.98 – was $4.70 per lb/ now $4.09 per lb)
– Select Hillshire Farm Lit’l Smokies® Assortment, 14-16 oz. (was $3.28 to 3.38/now 2 for $5.00)
– Stove Top® Stuffing, 6 oz. (was $1.44-1.74/now $0.88)
– Ocean Spray® Cranberry Sauce, 16 oz. can (was $1.14-1.36/now $0.88)
– Betty Crocker® Potato Assortment, 7.2 oz. (was $1.23-1.43/now $.98)
– Daisy® Sour Cream, 16 oz. (was $1.74/now $1.50)
– General Mills Chex® Cereal, 15.6-16 oz. (were $2.78 each/now 3 boxes for $7.00)
– Planters® Deluxe Mixed Nuts or Whole Cashews, 21-oz. can (was $6.94/now $5.97)
– Keebler® Town House® Toppers Cracker Assortment, 13.5 oz. (was $2.50/now $2.00)
– 7 UP®, 2 liter bottle (was $1.08/now $0.77)
– Hershey’s® Giant Chocolate Bar Assortment (was $1.64/now $1.25)

Food is generally considered alow margin sector already, and if you don’t believe it is true then be sure to ask a grocer that is not Whole Foods or one of the other higher-end stores.  Wal-Mart is showing more and more evidence that it is willing to sacrifice that bottom line and margin rates to keep its same-store-sales from being flat.  This is still going to set a difficult bar for 2007 if this continues.

Besides the obvious answer being EVERYTHING, it makes you wonder what they’ll cut next.

WMT shares are basically flat today.  WMT is trading up $0.05 at $47.77; its 52-week trading range is $42.31 to $52.15.

Posted on: November 21, 2006 – 1:35 pm in Uncategorized

Ford’s Car Giveaway (F)

Ford is moving to "rational pricing" for its cars and trucks in the US. The is auto company speak for lowering car prices to reflect what incentives and low financing do to pricing anyway.

It reminds some industry observers of Saturn’s no negotiation fair pricing. Consumers seem to like the idea. They just won’t buy Saturn’s cars.

The action by Ford means that the prices of some of its cars and trucks will actually drop but that incentive packages should be used much less often, if at all. A fair price should eliminate the reasons for additional discounts.

Right.

With Ford’s inventory at 105 days excluding fleet sales, moving cars is not a problem that is going to be solved by rolling discounts into the base price. For cannot sell cars with the discounts in place.Ford is offering incentives fast and furious to try to get cars off the dealer lots by the end of the year.

As Ford’s US market share sits at about 17%, down from 25% ten years ago, and projected by the company to move as low as 14%, the core problem is not pricing. It is product. Ford is even offering rebates on its crossover Freestyle, which is supposed to be part of the model line that will get the company out of the mud.

Eliminating incentives is not going to solve Ford’s problems. What for them to return in 2007. You can make book on it.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about. 

Posted on: November 21, 2006 – 12:49 pm in Large Cap Stocks

Pirate Capital Wants Brinks (BCO) Sale, Seat on Board

From 13D Tracker

In an amended 13D filing on Brinks Co. (NYSE: BCO), 8.5% holder Pirate Capital disclosed a letter to the board of directors of the Issuer, among other things, encouraging the board to (i) take immediate steps to unlock long-term shareholder value by retaining an investment bank to explore the sale of the Company and initiate a large Dutch tender offer for the Shares, and (ii) immediately appoint Thomas R. Hudson Jr. to the board. The firm also recommended a substantial second Dutch tender offer for its stock.

The firm said its past request urging the company to an retain an investment bank to explore the sale of the Company has not been met and instead, based on management’s posturing on the most recent investor call, BCO appears to be pursuing an acquisition.

In its letter the firm said, "Despite BCO’s two premier security businesses, the Company has yet to be awarded a deserving multiple. While we applaud the Board’s successful strategic initiatives, we believe that BCO remains an undervalued and underleveraged company. We have urged BCO to engage an investment bank to explore the sale of the Company, and we further call on the Company to immediately pursue a substantial second Dutch tender offer for its stock. If the Board agrees thatBCO shares are undervalued then it is an opportune time to initiate a Dutch tender. If the shares continue to trade at an unwarranted discount, we believe substantial value will be realized through competitive bidding and the sale process. We are confident that our proposals will unlock significant shareholder value as evidenced by the success of the sale of BAX Global and the first Dutch tender offer. Unfortunately, we have seen no progress towards the fulfillment of these shareholder initiatives."

The firm also said, "We have had meaningful conversations with investment bankers and are highly confident that a number of financial and strategic buyers would be interested in acquiring the Company at a considerable premium to the current stock price."

A Copy of the Letter:

Dear Members of the Board:

Pirate Capital LLC, as the investment advisor to Jolly Roger Fund LP, JollyRoger Offshore Fund LTD and Jolly Roger Activist Portfolio Company LTD, is the beneficial owner of approximately 4.1 million shares of the common stock of TheBrink’s Company ("BCO" or the "Company"). As a long-term investor and as one of the largest shareholders, we have urged BCO to maximize shareholder value by retaining an investment bank to explore the sale of the Company. This request has not been met and instead, based on management’s posturing on the most recent investor call, BCO appears to be pursuing an acquisition. We are concerned that shareholder propositions are falling upon deaf ears.

Despite BCO’s two premier security businesses, the Company has yet to be awarded a deserving multiple. While we applaud the Board’s successful strategic initiatives, we believe that BCO remains an undervalued and underleveraged company. We have urged BCO to engage an investment bank to explore the sale ofthe Company, and we further call on the Company to immediately pursue asubstantial second Dutch tender offer for its stock. If the Board agrees that BCO shares are undervalued then it is an opportune time to initiate a Dutch tender. If the shares continue to trade at an unwarranted discount, we believe substantial value will be realized through competitive bidding and the sale process. We are confident that our proposals will unlock significant shareholdervalue as evidenced by the success of the sale of BAX Global and the first Dutch tender offer. Unfortunately, we have seen no progress towards the fulfillment ofthese shareholder initiatives.

As one of the largest shareholders, we believe it is in the best interest of all investors to have a significant shareholder presence on the Board in order to ensure that shareholder objectives are properly deliberated. Accordingly, Pirate Capital hereby requests that I be appointed to the Board immediately. We note that the current Board and executive officers as a group beneficially owns only approximately 2.1% of the BCO shares. Pirate Capital beneficially owns approximately 8.5% of the BCO shares, or over four times as much as the combined amount owned by the Board and executive officers. We believe that a Board seat designated to Pirate Capital will substantially enhance the quality of the Boardby providing considerable shareholder interest at the Board level.

If the Company neglects to grant me a Board seat, I intend to run for election at the upcoming annual meeting. Pirate Capital also intends to submit a formal shareholder proposal, requesting that BCO retain an investment bank to explore strategic alternatives, including the sale of the Company and a large Dutch tender offer for the Company’s stock. We have had meaningful conversations with investment bankers and are highly confident that a number of financial and strategic buyers would be interested in acquiring the Company at a considerable premium to the current stock price. We look forward to working with the Board to unlock significant shareholder value.

Sincerely,
Thomas R. Hudson Jr.
Manager

http://www.13dtracker.blogspot.com/

Posted on: November 21, 2006 – 11:54 am in Uncategorized

GameStop’s (GME) Sharp Reverse; Management Soothes Any Concerns; Stock Hits New Highs

by Jon C. Ogg
November 21, 2006

GameStop (GME) managed to rectify themselves in the conference call today.  The numbers looked light on revenues in the press release, but the company was able to address this adequately in the conference call.  Management was very enthusiastic here and the shares managed to continue rising during the call on what appears to be a lack of any aplogy for its quarter and a very positive and upbeat message from the management.  At 9:00 AM this looked like a potential problem, but the earnings calculations and guidance metrics in the press release were only part of the story.

They also said part of the guidance that was up for interpretation was impacted because of severe supply limitations on the new PS3’s and Wii’s that came out last week.  The company is also saying that Xbox 360 hardware, games, and peripherals are running very strong that it said should even come through in the NPD data in a couple weeks.

Now with management being strong and unapologetic, you just get the feeling that they were being very conservative in guidance for legal ramifications.  This 14% to 18% growth in same store sales forecasts is also what is helping.

As far as combining A shares and B shares, but that has not yet been determined.  To see a stock that has been quite strong over the last quarter to the tune of a 40% rise drop down before the open, open weak under the $50.00 mark, and then come back to over $54.50 is something of a feat. 

This now takes it to a new year high after trading over the old $54.48 highs.  Now that is something you don’t see every day.

Posted on: November 21, 2006 – 11:54 am in Earnings

Will the Bull Market in Exchanges Ever End?

By Chad Brand of Peridot Capitalist

Over the last few years we have witnessed an undeniably sensational run in the stocks of various stock, bond, and derivative exchanges. Private and owned by seat holders for generations, the latest bull market in the equity market, which has lasted four years, has allowed the New York Stock Exchange (NYX), the NASDAQ (NDAQ), the Chicago Merc (CME), the Chicago Board of Trade (BOT), and the New York Mercantile Exchange (NMX), to all go public and see their stocks soar.

I must say that I have avoided playing this sector. The stocks IPO’d to extreme fanfare, and with such jubilation came steep valuations that fell outside of my investment discipline. I have warned investors to be cautious with these stocks, many of which sport P/E ratios of 40, 50, even 60 times forward earnings. The Chicago Mercantile Exchange, which recently agreed to merge with the CBOT in an $8 billion deal, has risen more than 1,000% since it’s opening trade and now trades at nearly 20 times revenues.

Some readers might chalk up my negative comments as merely trying to rain on the parades of people who have actually made good money in these names. However, in all honestly, I merely want to let people know that these stocks, while they are all the rage right now, trade at levels that will be hard to justify if things start to go bad.

Is it reasonable to think the tide will shift in the other direction at some point? I think so, but the timing in impossible to know. Let’s focus on what factors have driven the bull market in these stocks. The last four years have brought the exchanges increased demand, and subsequently, increased volume. In response, they have been able to introduce new products and raise their fees on existing ones. More business, along with pricing power, leads to surging profits. Hence, the stocks have outperformed dramatically.

But, will the music stop? Eventually I think it has to. Why? Because bull markets end. Exchanges are very cyclical, though many investors don’t relaize this because they were private entities during the last bear market. What happens when the bear rears his ugly head? Prices drop, volume evaporates, demand is reduced, price increases aren’t possible, and all of the sudden, revenue and profits will decline. For companies already trading at 40 to 60 times earnings, with 20 percent plus growth rates projected, such a scenario would likely hurt investors in the exchanges immensely.

Do I know when the bull market will end? Of course not, nobody does. All I can tell you is that we have had a great run over the last four years, with the S&P 500 averaging mid double digit returns annually. If you feel comfortable owning these stocks and riding the momentum, that’s completely your call. I just want people to understand what the risks are. That way, when the next bear market hits, they understand it will be time to take whatever profits are left off of the table and move on to something else. Until that happens, I will continue to sit on the sidelines, in awe.

www.peridotcapitalist.com/

Posted on: November 21, 2006 – 11:52 am in Uncategorized

Verizon: Fiber is Fine, But Watch the Balance Sheet

By William Trent, CFA of Stock Market Beat

A while back our friend Doug McIntyre said Verizon’s (VZ) fiber to the home strategy was unpopular with investors and hurting the company’s price/sales ratio. We pointed out that the price/sales differential was easily explained by the fact that Verizon and AT&T (T) use different accounting methods when reporting the results of their wireless divisions. Still, the nay-sayers continue to pour vitriol on Verizon’s strategy, the latest bears being the folks at Computerworld:

Verizon is alone among the major telcos in building an extremely expensive fiber to the home (FTTH) network rather than less-expensive fiber to the node (FTTN). This extra cost could end up killing the company.In Verizon’s FTTH network (also called fiber to the premises, or FTTP), fiber is laid all the way to people’s home. With FTTN, by way of contrast, fiber goes to a neighborhood node, and existing copper lines carry the signal to the home. FTTN is far less expensive than FTTH.

Verizon argues that it’s worth the cost, because it will be able to deliver higher-quality services, and get increased revenue because of that. But that doesn’t appear to be the case. Other telcos say that they can deliver the same services, but at far lower cost.

Verizon is in essence betting the company on FTTH, because it’s enormously expensive to deploy it, far more expensive than FTTH. The Mercury News, back in September, noted that AT&T’s FTT project will cost about $5.1 billion to wire up 19 million homes. The newspaper added, “That’s less than a quarter of the capital commitment Verizon is making to completely rewire markets serving 18 million homes.”

As any first-year business student can tell you, industry forces shape the competitive environment for any company. In order to compete effectively, a company generally must either have the lowest cost structure or be able to differentiate itself. Video content has to be purchased, and costs essentially the same for either telco or cable providers. So unless there is some other way to achieve a lower cost structure differentiation is the way to go. While one may argue whether Verizon will actually achieve a differentiated position (note to naysayers: look what they have been able to do in wireless) to say they shouldn’t pursue the strategy is another thing. To say they shouldn’t pursue the strategy simply because their competitors aren’t borders on absurdity, as no differentiation is possible when imitating competitors.

And there are signs that the differentiation is indeed working – or at least that the strategy is gaining momentum. Verizon has announced price increases for its video services, beginning in January.
So stop picking on Verizon for its FTTH strategy. If you must criticize the company, there is lower-hanging fruit in its former directory business, which took with it $9 billion in debt (and possibly an unknown amount of retiree benefit obligations as well). Why is this significant?
Because new accounting rules are in place that require Verizon to recognize its full liability for expected retiree benefits beginning this year. Previously companies were able to keep a large part of these liabilities off-balance sheet. As of December 31, 2005 Verizon had unfunded liabilities totaling $20 billion due to its retiree health plans (unfunded liability of $23.5 billion) and pension plans (which are $3.5 billion over-funded). Of that amount, only $2.5 billion of net liabilities were being recognized on the balance sheet.

The idea that Verizon would sell or spin out its directory business has been bandied about for years but never done. Does anyone else think it more than coincidental that it finally happens, partially cleaning up the balance sheet in the very same quarter that Verizon will have its off-balance sheet liabilities recognized?

The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion’s Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Lion’s Gate (LGF) call options; Dell (DELL) put options; Plantronics (PLT) put options.

http://stockmarketbeat.com/blog1/

Posted on: November 21, 2006 – 11:50 am in Uncategorized

Did GameStop Miss the Mark?

by Jon C. Ogg

GameStop (GME) posted same-store-sales gains of 8.8% for the third quarter.  Total sales were $1.0116 Billion and earnings per share were $0.22 before merger related expenses.  Consensus estimates were $0.22 EPS and $1.03 Billion.

The company press release says this is at the high-end of guidance, although that is actually a hair under on the revenue side.  Considering that the stock had gone up so much and considering the easy comparable same-store-sales this is a disappointment at first glance.  Video game software sales grew 14% and hardware sales were up 69%.

Its guidance for Q4 2006 are for 14% to 18% same-store-sales gains on diluted earnings of $1.53 to $1.59 EPS, but the street estimate is $1.60 for the coming quarter.  Its fiscal 2006 EPS projections are $1.98 to $2.04, although that is before a $0.17 option charge for the year (but only 1 quarter left on charges).  Consensus is $2.01 for fiscal 2006.

GameStop shares are down 3.3% at $49.50 in pre-market activity.  With the launch of the Wii, the launch of PS3, and even the new add-on features for World of Warcraft sales mostly coming in this current quarter it makes you wonder what happened that they didn’t think their numbers would make consensus.  The company has a conference call at 11:00 AM EST and we will listen in on this call to gleam extra data before we issue any damning words on the quarter.   

Because this looks like a beat and then like a miss (or vice versa) you could see some big stock swings up and down and every which way until the street decides on the real verdict here.  Shares had gone up 40% from its summer lows to last week’s highs, so the street is likely not going to be tolerant of anything questionable here.

November 21, 2006

Posted on: November 21, 2006 – 9:03 am in Earnings

Pre-Market Stock News (Nov. 21, 2006)

(AER) AerCap Holdings 26.1M share IPO priced at $23.00.
(AMLN/LLY) Amylin & Lilly won approval for Byetta for diabetes in Europe.
(AIQ) Alliance Imaging has an 8M share secondary.
(AFN) Alesco has a 26M share secondary.
(BA) Boeing won a $5.5 Billion order for 25 jets from Korean Air.
(BCSI) Blue Coat Systems $40.2M revenues versus $38M(e).
(BWS) Brown Shoe Company $0.97 EPS vs $0.85e.
(DE) Deere $1.20 EPS vs $0.95e.
(DELL) Dell will be issuing revenues after the close today.
(DRYS) Dry Ships $0.50 EPS vs $0.53e.
(DY) Dycom $0.24 EPS vs $0.25e.
(FMCN) Focus Media $0.55 EPS vs $0.50e.
(GCO) Genesco $0.62 EPS vs $0.59e.
(GHCI) Genesis Healthcare $0.62 EPS vs $0.61e.
(INFY) Infosys 30 million share secondary priced at $53.50 per share.
(JBX) Jack in the Box $0.60 EPS vs $0.66e.
JLG) JLG Industries $0.37 EPS vs $0.33e.
(JWN) Nordstrom $0.52 EPS vs $0.51e.
(LAZ) Lazard selling 12M shares of common stock.
(LOJN) Lojack entered non-compete with CEO that left last week.
(LUV) Southwest said it would buy assets that a USAir/Delta merger would need to sell.
(MDT) Medtronic $0.59 EPS vs $0.56e.
(MFB) Maidenform has a 4M share secondary.
(MTCT) MTC Tech won $8+ million coast guard contract.
(NTLI) NTL up 2.5% after making offer that (was spurned) to acquire ITV for $8.9 Billion.
(ORCH) Orchid Cellmark selling 4.8M shares.
(PEIX) Pacific Ethanol trading up 12% after posting $0.07 EPS vs -$0.02e.
(PERY) Perry Ellis $0.80 EPS vs $0.72e.
(RGEN) Repligen gets orphan drug designation for RG1068.
(RS) Reliance Steel was noted as the next likely takeover play according to Cramer on MAD MONEY.
(SPR) Spirit Aerosystems 52M share IPO priced at $26.00.
(TECD) Tech Data $0.33 EPS vs $0.25e; raised revenue guidance.
(THS) Treehouse Foods is noted as an LBO fund that masquerades as a food company and it is a buy at the year high according to Cramer on MAD MONEY.
(TRID) Trident CEO stepped down after improper options dating.
(UNFI) United Natural Foods $0.29 EPS vs $0.29e; will generate new business from Whole Foods exclusive deals.
(WGII) Washington Group will build large cement plant 50 miles outside of St. Louis.
(WLDN) Wildan Group 2.9M share IPO priced at $10.00.
(XTXI) Crosstex announced 3-1 stock split.

Posted on: November 21, 2006 – 8:31 am in Market Open

Select Analyst Calls (Nov. 21, 2006)

by JON C. OGG

ADBE raised to Outperform at Wachovia.
ADTN cut to Hold at Jefferies.
AIG started as Buy at B of A.
AMZN tgt raised to $45 at Bear Stearns.
APOL cut to Hold at Citigroup.
AQNT reitr Buy at Merrill Lynch.
AZN cut to Underperform at Bernstein.
BCSI raised to Buy at ThinkEquity.
BK cut to Neutral at Credit Suisse.
BLDP started as Underperform at CIBC.
BLK started as Buy at B of A.
BLKB started as Sell at Citigroup.
CHKP raised to Overweight at JPMorgan.
DJ started as Peer Perform at Bear Stearns.
DOW cut to Sell at Merrill Lynch.
GYMB started as Neutral at Merrill Lynch.
HLT started as Buy at Jefferies.
HNSN started as Buy at Think Equity.
HOT started as Buy at Jefferies.
HST cut to Neutral at Merrill Lynch.
IVAC started as Neutral at Goldman Sachs.
JNPR raised to Overweight at JPMorgan.
KOMG started as Neutral at Goldman Sachs.
LRCX cut to Hold at AGEdwards.
LYO cut to Neutral at Merrill Lynch.
MAR started as Buy at Jefferies.
MDT raised to Buy at ThinkEquity, raised to Overweight at JPMorgan..
MNT raised to Hold at Lazard.
MTB cut to Equal Weight at Morgan Stanley.
NCX cut to Sell at Merrill Lynch.
PETS started as Underperform at First Albany.
PD cut to Hold at Citigroup.
STMP started as Neutral at First Albany.
STRA cut to Sell at Citigroup.
SWX cut to Hold at Citigroup.
TALX started as Hold at AGEdwards.
TCB raised to Overweight at Morgan Stanley.
TLS raised to Hold at Citigroup.
TWB started as BUy at Merrill Lynch.
URS added to Merrill Lynch Focus List.
VZ raised to Outperform at Credit Suisse.
WAG cut to Equal Weight at Morgan Stanley.
WEBX started as Hold at Citigroup.

Posted on: November 21, 2006 – 8:19 am in Analyst Calls

Fifteen Most Overvalued Stocks: Sun Micro

Stocks: (SUNW)(HPQ)(DELL)(IBM)

Sun Microsystems has had a resurrection of sorts. But, it still has a long, long way to go.

The company’s stock has popped from $3.64 last November to $5.50, right around its 52-week high. The 51% jump in less than a year is probably not justified.

Sun’s purchase of See Beyond and StorageTek has helped it keep its revenue moving up year-over-year, but the topline improvement was not organic. It was purchased. Over the last four sequential quarter, Sun has shown very little growth with revenue averaging about $3.3 billion. Operating losses have improved as the company fired thousand of employees.

Although several brokerages including Morgan Stanley and Lehman have upgraded Sun, Thomson/First Call shows a mean price target among ten analysts surveyed of $4.32, well below the current price. Morningstar has a "fair estimate value" of $3.50 on Sun.

SUNW has still not reversed the opinion among a numer of skeptics that it will never be able to take enough share from servier giants like IBM, Dell, and Hewlett-Packard to move the needle.

Sun’s new Niagara processor has gotten good reviews, but whether that will translate into a lot of sales remains to be seen.

Morningstar gives some indication of why its price target is so low: Sun’s higher priced workstations are not a good fit in an IT climate where less expensive machines are the trend.

Enough said.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: November 21, 2006 – 6:32 am in Uncategorized

Europe Market Report 11/21/2006 DeutscheBank Up Sharply

Stocks: (BCS)(BP)(BT)(GSK)(PUK)(UL)(RTRSY)(VOD)(BAY)(DCX)(DB)(DT)(SI)(ALA)(AXA)(FTE)(V)

Markets in Europe were modestly higher at 6 AM New York time.

The FTSE was up .3% to 6,224. Barclays was was up .4% to 710. BP was up .9% to 589.5. BT was up .6% to 281.75. GlaxoSmithKline was down .5% to 1363. Prudential was up .9% to 681. Reuters was down .2% to 472. Unilever was up .6% to 1388. Vodafone was up .5% to 138.5.

The DAXX was up .3% to 6,472. Bayer was up .8% to 40.3. DaimlerChrysler was down .3% to 47.13. DeutscheBank was up 2.2% to 101.66. Deutsche Telekom was down .1% to 13.87. Siemens was down .6% to 75.85.

The CAC 40 was up .5% to 5,482. Alcatel was down .7% to 10.58. AXA was up .9% to 30.36. France Telecom was down .3% to 20.14. ST Micro was up .3% to 14.35. Vivendi was up .1% to 29.77.

Data from Reuters.

Douglas A. McIntyre

Posted on: November 21, 2006 – 6:01 am in International Markets

Microsoft’s Plan To Kill Linux

Stocks:  (MSFT)(NOVL)(RHAT)

Microsoft looked like a benign partner when it struck a deal with Novell recently to sell the open source Linux operating system side-by-side with the Suse version of Linux. MSFT agreed not to sue Novell clients over potential patent violations in the company’s software. Microsoft has long indicated that Linux may infringe on some of the intellectual property in Windows. Novell also agreed not to sue Microsoft for potential infringements by Windows

But, in a clever move, Microsoft picked the weakest Linux provider to cut its deal. Redhat, which has a much larger portion of the Linux OS business was left out. And, Microsoft is not ruling out patent infringement by the Redhat version of Linux.

Microsoft has made a devilishly clever move. Because Linux is free and competes with some Windows functions, MSFT has had to worry that customers might move to the software. And, Windows is Microsoft’s cash cow.

By setting up a partnership with Novell and putting hundreds of million of dollars into the deal, it gives the weaker Linux player a chance to compete with Redhat. It also sends a signal that Novell Linux is safe and infringement free, while Redhat may face an IP suit from MSFT over its version of Linux. Corporate customers can decide if they want the "safe" version of Linux, or the Redhat brand. A nice move to make enterprise clients think twice about Redhat.

MSFT. A pat on the back with one hand and a knife in the other.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: November 21, 2006 – 5:47 am in Large Cap Stocks