Daily Archives: December 5, 2006

Cramer on Timberland as a Takeover Target

Before CNBC’s MAD MONEY ended, Cramer evaluated Timberland (TBL) as a potential takeover target for VF Corp (VFC). He noted that TBL is not so big and that VFC could easily handle the acquisition on a financial basis.  He also thought VFC would run TBL’s operation and properties more efficiently than TBL has been able to on a standalone basis.  Cramer then delved into Timberland on a fundamental basis and determined that its fundamentals are pretty good on its own.  He thinks if you are looking for a takeover candidate in the retail/apparel sectore that TBL could be the one.

It should be noted that the WSJ back in mid-November already said the company was exploring a sale and that Goldman Sachs was the hired shoe salesman.  The company also made a "mystery stock move up" about a week before as many stocks began looking like takeout candidates.  Cramer did note some of the "already started" issues, but this was more pondering that VFC maybe "should" do a deal rather than a "VFC is just about to" do a deal.

Jon C. Ogg
December 5, 2006

Posted on: December 5, 2006 – 11:45 pm in Cramer

How Sirius & XM Would Look As a Merged Company

This story was originally posted at 5:00PM EST earlier today.  No data has been changed or altered.

While many are guessing orspeculating on a merger between XM Satellite (XMSR) and Sirius(Satellite Radio (SIRI), very few have shown what a combined companywould look like and what issues would need to be overcome.  No one cansay the deal is a shoe in, but it is more than worth investigating whata combined operation would look like.

The Department of Justice might block a deal FCC may not allow amerger of the two satellite radio companies, but, if one gets intosignificant financial difficulty, that might change.  If they are bothrunning very well and they are still going to grow, then they have toput on a salesman hat to win approval, but if both companies havegrowth issues and a potential survival issue and then all of a suddenneither can run profitably then they would have a better case ofpressing the DOJ & FCC to approve a merger.  There would be someconditions, but if the FCC had to see a near monopoly or had to see yetanother failure of a space venture they just might be inclined to goalong without blocking the deal from the start.

There are some regulatory issues that would be there as noted, andat least Mel Karmazin has already addressed that as a real issue.  Heof course also has expressed interest in acquiring XM.  If this were tohappen soon before a new administration that may or may not be morehawkish on blocking mergers, the issues could potentially be workedout.  After all, there are others that have at least some capabilitiesof offering a competing service in the US and Canada.  Satellite radiois also not going to be deemed as important as terrestrial radio to anFCC or to a DOJ.

XMSR has a $3.85 Billion market cap and SIRI has a $5.4 Billion market cap.

Would both networks be maintained along all of the programming onevery channel, or would the strongest programs be migrated to the mostrobust platform? Most likely a long-haul migration to the strongest andmost stable platform would result with other satellites either set upfor sale or geared toward other uses and product offerings notcurrently in development.  Sprint already has ties to Sirius, andCingular already has ties to XM.  We already know that the musicindustry is looking at trying to force both companies to pay more inroyalties as well.  Sirius has the Stiletto and XM has the XM Xpress orXM2go versions, and both are working on video capabilities. We alsohave what GM has said will be 1.8 million cars with XM factoryinstalled over the course of 2007 and Honda with what will be some650,000 XM installed cars yesterday.  Until we get past the holidayseason we will not get any solid and goal-oriented 2007 projectedsubscriber add-ons from each company, but that is a guess on the timingbased on the companies and based on industry forecasting.

Based on SEC filings, company documents, and Wall St. analysis, thisis what the two companies would look like as one entity at the end of2006:

The subscriber base of the two companies together would be roughly7.8 million from XM. and 6.9 million from Sirius. There is probablyalmost no overlap between the customer bases, so the new company wouldprobably start with about 14.5 million subscribers.  If you look laterin the article you probably won’t get any solid “guestimates” out ofthe subscriber bases for the end of 2007 until after the end of theholidays.

Based on Q3 numbers and Wall St. projections, Sirius should haveabout $200 million in revenue in Q4 (Q3 was $167 million) to add toXM’s $290 million (Q3 was $240 million). So, the revenue base goinginto 2007 would be about $500 million.

Sirius has $323 million in costs in Q3 and XM had $301 million.However, some of those costs could be consolidated from the potentialtotal of $625 million. Customer billing at Sirius runs about $15million a quarter. At XM, the number is $27 million. The combinedcompanies can probably take out $10 million a quarter. Sales,marketing, and customer acquisition at Sirius is almost $130 million.At XM, the number is about $90 million. Total costs for marketing andacquisition could probably be cut $75 million.

Sirius has general and administrative plus engineering costs of $56million a quarter. XM has $30 million in costs on these items. Thetotal number based on lay-offs and consolidation could probably bedripped to $65 million, a savings of about $30 million.

Before programming costs, overall expense could probably be drivendown by $115 million, which would leave the combined entity with anominal loss. But, programming costs are the largest expense at bothcompanies. Sirius spent $80 million in the last quarter and XM spentalmost $40 million. Sirius has 133 channels. XM has 170. Many of heprogramming contracts are long-term and extend out several years.Because of overlaps on current station deals, a combined company coulddrive down programming costs even after the added programming expensesin 2007.  Any savings in this area in the combined company would makethe entity profitable or at least close to profitable on a GAAP basis.It should be noted that depreciation and amortization at Sirius isabout $28 million. At XM it is running about $43 million a quarter.

The balance sheets represent a huge problem. Sirius has almost $1.1billion in long-term debt. At XM that number is over $1.3 billion.Sirius has cash and securities of $350 million. XM has $285 million.So, combined debt would be $2.4 billion against about $600 million incash. Payables and accrued expenses of the combined company would beover $500 million. To have a significant value to shareholders, thecombined business would have to pay down at least $200 million in debtper year. None of the debt is due until 2009, but the majority is dueby 2013. The combined company would be able to partially use cash onhand and could go to the capital markets with a new debt issue with thesole purpose of refinancing that amount due in 2009 (and withconvertible debt if they were smart and/or able).

If revenue growth can continue at 10% quarter over previous quarter and expense growth can be held to 5%.

Sirius’ CFO speaks tomorrow at 11:00AM at the UBS Global Media Conference  and CEO Mel Karmazin speaks at 12:30 PM at the Credit Suisse Media and Telecom Week Conference.   XM Satellite’s Chairman Gary Parsons speaks tomorrow at the UBS Global Media & Communications Conference at 2:30PM EST and then again at the Credit Suisse Media and Telecom Week Conference on Thursday at 9:40AM EST

If we are going to hear anything out of XM Satellite on its guidancefor the quarter it should theoretically be within the next 40 hours orso because XM’s is presenting Wednesday and Thursday.   Once again,this is more of a viewpoint of what a combined company would resemblerather than a forecast of a Sirius-XM tie-up.

-Douglas A. McIntyre & Jon C. Ogg
December 5, 2006

Douglas McIntyre can be reached at douglasamcintyre@247wallst.com and Jon Ogg can be reached at jonogg@247wallst.com.  Neither own securities in the companies they cover.

Posted on: December 5, 2006 – 10:37 pm in Mergers and Buy Outs, Rumors, Satellite

Cramer’s Conservative Side of “The Stent Trade”

On tonight’s MAD MONEY show on CNBC, Cramer also reviewed using your own risks and emotions to make money after his BSX recommendation.  This all depends on if you are ok with low returns, high returns, or anything in between.  So on the second feature Cramer reviewed the more conservative company in the stent trade as JNJ.

He said on the safer side of the trade, J&J (JNJ) shouldn’t get hit too hard if the FDA unexpectedly comes out against them; but it will go up a little if the FDA backs stents.  Cramer said JNJ is a buy either way, and you’ll get to buy more if the stock drops too much if the FDA unexpectedly goes against stent makers.

Jon C. Ogg
December 5, 2006

Since this was a Part II, below is what he just said on BSX before he commented on JNJ:

Cramer Has a Stent Trade

On tonight’s MAD MONEY show on CNBC, Cramer reviewed what the state of the stent market will be.

There is a meeting Thursday at the FDA where the FDA is going to make a recommendation or decision on stents and the approval of them.  Cramer thinks that stents will stay and the FDA may either ask for more data or just make token comments.

Both Boston Scientific (BSX) & J&J (JNJ) have been down on the possibility that an FDA decision "could" go against them.  Cramer said that BSX is the riskier of the two because it has more business leveraged, and JNJ has diversified mush of its operations.  Cramer prefers BSX for a trade, but warned again that this has risks. BSX traded up almost 4% today to $16.56, but traded up another 0.9% to $16.70 after Cramer discussed this.

By the way, Cramer left off two important companies here.  SurModics (SRDX) provides the stent polymer coating for J&J and Angiotech (ANPI) makes the stent polymer coating for Boston Scientific.  Those would both be very leveraged, with more downside if FDA pans the stent markets.

Jon C. Ogg
December 5, 2006

Posted on: December 5, 2006 – 6:26 pm in Cramer

Cramer Has a Stent Trade

On tonight’s MAD MONEY show on CNBC, Cramer reviewed what the state of the stent market will be.

There is a meeting Thursday at the FDA where the FDA is going to make a recommendation or decision on stents and the approval of them.  Cramer thinks that stents will stay and the FDA may either ask for more data or just make token comments.

Both Boston Scientific (BSX) & J&J (JNJ) have been down on the possibility that an FDA decision "could" go against them.  Cramer said that BSX is the riskier of the two because it has more business leveraged, and JNJ has diversified mush of its operations.  Cramer prefers BSX for a trade, but warned again that this has risks.BSX traded up almost 4% today to $16.56, but traded up another 0.9% to$16.70 after Cramer discussed this.

By the way, Cramer left off two important companies here.  SurModics (SRDX) provides the stent polymer coating for J&J and Angiotech (ANPI) makes the stent polymer coating for Boston Scientific.  Those would both be very leveraged, with more downside if FDA pans the stent markets.

Jon C. Ogg
December 5, 2006

Posted on: December 5, 2006 – 6:11 pm in Cramer, Drug companies, FDA

How Sirius & XM Would Look As a Merged Company

While many are guessing or speculating on a merger between XM Satellite (XMSR) and Sirius (Satellite Radio (SIRI), very few have shown what a combined company would look like and what issues would need to be overcome.  No one can say the deal is a shoe in, but it is more than worth investigating what a combined operation would look like.

The Department of Justice might block a deal FCC may not allow a merger of the two satellite radio companies, but, if one gets into significant financial difficulty, that might change.  If they are both running very well and they are still going to grow, then they have to put on a salesman hat to win approval, but if both companies have growth issues and a potential survival issue and then all of a sudden neither can run profitably then they would have a better case of pressing the DOJ & FCC to approve a merger.  There would be some conditions, but if the FCC had to see a near monopoly or had to see yet another failure of a space venture they just might be inclined to go along without blocking the deal from the start.

There are some regulatory issues that would be there as noted, and at least Mel Karmazin has already addressed that as a real issue.  He of course also has expressed interest in acquiring XM.  If this were to happen soon before a new administration that may or may not be more hawkish on blocking mergers, the issues could potentially be worked out.  After all, there are others that have at least some capabilities of offering a competing service in the US and Canada.  Satellite radio is also not going to be deemed as important as terrestrial radio to an FCC or to a DOJ.

XMSR has a $3.85 Billion market cap and SIRI has a $5.4 Billion market cap.

Would both networks be maintained along all of the programming on every channel, or would the strongest programs be migrated to the most robust platform? Most likely a long-haul migration to the strongest and most stable platform would result with other satellites either set up for sale or geared toward other uses and product offerings not currently in development.  Sprint already has ties to Sirius, and Cingular already has ties to XM.  We already know that the music industry is looking at trying to force both companies to pay more in royalties as well.  Sirius has the Stiletto and XM has the XM Xpress or XM2go versions, and both are working on video capabilities. We also have what GM has said will be 1.8 million cars with XM factory installed over the course of 2007 and Honda with what will be some 650,000 XM installed cars yesterday.  Until we get past the holiday season we will not get any solid and goal-oriented 2007 projected subscriber add-ons from each company, but that is a guess on the timing based on the companies and based on industry forecasting.

Based on SEC filings, company documents, and Wall St. analysis, this is what the two companies would look like as one entity at the end of 2006:

The subscriber base of the two companies together would be roughly 7.8 million from XM. and 6.9 million from Sirius. There is probably almost no overlap between the customer bases, so the new company would probably start with about 14.5 million subscribers.  If you look later in the article you probably won’t get any solid “guestimates” out of the subscriber bases for the end of 2007 until after the end of the holidays.

Based on Q3 numbers and Wall St. projections, Sirius should have about $200 million in revenue in Q4 (Q3 was $167 million) to add to XM’s $290 million (Q3 was $240 million). So, the revenue base going into 2007 would be about $500 million.

Sirius has $323 million in costs in Q3 and XM had $301 million. However, some of those costs could be consolidated from the potential total of $625 million. Customer billing at Sirius runs about $15 million a quarter. At XM, the number is $27 million. The combined companies can probably take out $10 million a quarter. Sales, marketing, and customer acquisition at Sirius is almost $130 million. At XM, the number is about $90 million. Total costs for marketing and acquisition could probably be cut $75 million.

Sirius has general and administrative plus engineering costs of $56 million a quarter. XM has $30 million in costs on these items. The total number based on lay-offs and consolidation could probably be dripped to $65 million, a savings of about $30 million.

Before programming costs, overall expense could probably be driven down by $115 million, which would leave the combined entity with a nominal loss. But, programming costs are the largest expense at both companies. Sirius spent $80 million in the last quarter and XM spent almost $40 million. Sirius has 133 channels. XM has 170. Many of he programming contracts are long-term and extend out several years.  Because of overlaps on current station deals, a combined company could drive down programming costs even after the added programming expenses in 2007.  Any savings in this area in the combined company would make the entity profitable or at least close to profitable on a GAAP basis.  It should be noted that depreciation and amortization at Sirius is about $28 million. At XM it is running about $43 million a quarter.

The balance sheets represent a huge problem. Sirius has almost $1.1 billion in long-term debt. At XM that number is over $1.3 billion. Sirius has cash and securities of $350 million. XM has $285 million. So, combined debt would be $2.4 billion against about $600 million in cash. Payables and accrued expenses of the combined company would be over $500 million. To have a significant value to shareholders, the combined business would have to pay down at least $200 million in debt per year. None of the debt is due until 2009, but the majority is due by 2013. The combined company would be able to partially use cash on hand and could go to the capital markets with a new debt issue with the sole purpose of refinancing that amount due in 2009 (and with convertible debt if they were smart and/or able).

If revenue growth can continue at 10% quarter over previous quarter and expense growth can be held to 5%.

Sirius’ CFO speaks tomorrow at 11:00AM at the UBS Global Media Conference  and CEO Mel Karmazin speaks at 12:30 PM at the Credit Suisse Media and Telecom Week Conference.   XM Satellite’s Chairman Gary Parsons speaks tomorrow at the UBS Global Media & Communications Conference at 2:30PM EST and then again at the Credit Suisse Media and Telecom Week Conference on Thursday at 9:40AM EST

If we are going to hear anything out of XM Satellite on its guidance for the quarter it should theoretically be within the next 40 hours or so because XM’s is presenting Wednesday and Thursday.   Once again, this is more of a viewpoint of what a combined company would resemble rather than a forecast of a Sirius-XM tie-up.

-Douglas A. McIntyre & Jon C. Ogg
December 5, 2006

Douglas McIntyre can be reached at douglasamcintyre@247wallst.com and Jon Ogg can be reached at jonogg@247wallst.com.  Neither own securities in the companies they cover.

Posted on: December 5, 2006 – 6:02 pm in Mergers and Buy Outs, Rumors, Satellite

WorldSpace Founders File to Sell Shares

WorldSpace (WRSP) has filed to sell 3.008 million shares on behalf of shareholders, but these are essentially founder-shares.  The shares are subject to options issued by the predecessor corporation, so none of the proceeds will go to the company.  After looking the filing these are all insiders or former parties that were tied to the founding company.

This will take the number of shares outstanding from 38.9+ million to just under 42 million shares.  WorldSpace came public vian an IPO under 18 months ago and has seen its shares trade from over $20.00 all the way down to as low as $2.00, but shares now sit at $4.92 as of today’s close.  The company never did raise enough cash when it came public and with its losses its liquidity and net balance sheet deficit are going to become an issue down the road.

Customers can access WORLDSPACE content, plus BBC, CNN, Virgin Radio UK, NDTV and RFI. WORLDSPACE’s satellites cover two-thirds of the earth’s population with six beams. Each beam is capable of delivering up to 80 channels of high quality digital audio and multimedia programming directly to WORLDSPACE Satellite Radios anytime and virtually anywhere in its coverage areas in India, China, Africa, the Middle East, and western Europe.

Jon C. Ogg
December 5, 2006

Posted on: December 5, 2006 – 4:51 pm in Satellite

US Stock Market Wrap (DEC 5, 2006)

DJIA    12,331.60; Up 47.75 (0.39%)
NASDQ    2,452.38; Up 3.99 (0.16%)
S&P500    1,414.76; Up 5.64 (0.40%)
10YR-Bond    4.442%     Up 0.009
NYSE Volume    2,717,668,000
NASD Volume    1,963,499,000

Apple (AAPL) rose only 0.15% to $91.27 after it was reiterated as Outperform at Piper Jaffray and reiterated as Buy at UBS.

AQuantive (AQNT) rose 3.5% to $25.15 after the stock raised to Buy at Oppenheimer afterrecent weakness.

Auto Zone (AZO) rose 4% to $119.29 after the company posted EPS at $1.73 vs $1.68e.

Central Garden & Pet (CENT) rose 2.6% to $52.88 as it was named as an addition to the S&P Small Cap 600 Index.

Exlservice (EXLS) fell 5% to $20.86 after it was started as Underweight at Lehman.

Blue Nile (NILE) rose 3% to $34.92 after the online jeweler was raised to Outperform at RBC.

Food Technology (VIFL) rose an unbelievable 40% to $3.01, although shares had been up 100% after reports of listeria and after e.coli news because they make food irradiation machines.

Henry Schein (HSIC) closed down 6% to $50.44 after the company cut its EPS targets after yesterdays close.

Jamba Juice (JMBA) fell 3.4% to $10.86 after saying it received batches of strawberries that went to stores that have tested positive for Lysteria.

Penn Virginia GP Holdings LP (PVG) closed at $18.00 as an immediated busted IPO after its 6.3 million share IPO priced at $18.50.

Sirius Satellite Radio (SIRI) fell 7.7% to $3.85 after the company did come clean and lower guidance for subscriber growth down to 5.9 to 6.1 million.

Starbucks (SBUX) rose 3% to $36.84 after the coffee game-changer was raised to Buy at UBS.

Sycamore Networks (SCMR) rose 6% to $3.93 after posting above-expected revenues.

Syntax-Brillian (BRLC) rose 8% to $9.30 after raising guidance.

Toll Brothers (TOL) rose 3% to $32.87 after the company posted a 44% drop in earnings, but signalling the sector has perhaps seen "most of the worst" in the housing sector.

Under Amrour (UARM) rose another 6% to $49.57 after Jim Cramer featured it as a "Buy to the Ninth Power" on last night’s MAD MONEY.

Yum! Brands (YUM) rose 2.5% to $63.26 despite being responsible for numerous e.coli cases around New York & New Jersey from Taco Bell locations in the area.

Jon C. Ogg

Posted on: December 5, 2006 – 4:08 pm in Market Close

Cramer touts Oil

On todays STOP TRADING! segment on CNBC, Jim Cramer noted the oil stocks as going higher because they have been buying back stock so much. ExxonMobil (XOM) can clearly go over $80.00, compared to $79.98 today.  He doesn’t think XOM is the best one in thre group, but that is the one to buy. ConocoPhillips (COP) could run another $2.00 if they announce a new share buyback plan, maybe as soon as tomorrow.  Chevron (CVX) was also noted positively. 

On Syntax-Brillian (BRLC) on the hi definition boom; BUT…Cramer said he would play by buying Corning (GLW).

Jon C. Ogg

Posted on: December 5, 2006 – 2:47 pm in Cramer

Target To Double Sales? Nope

Stocks:  (TGT)(WMT)

Research firms are wonderful. They can grab headlines with all sorts of predictions.Consulting firm Retail Forward says that Target will double its revenue between now and 2010. That would put it at $95 billion. That would mean that Target would have to operate over 2,000 stores. Target has 1,500 now. The firm also predicts that Wal-Mart revenue will rise from the $312 billion it did in its last fiscal to $500 billion. Nifty trick given Wal-Mart’s same-store sales. Perhaps they can make it up overseas. Retail Forward does admit that companies like JC Penney make be in the market taking share.

It could be that Retail Forward has a better crystal ball. But, Target’s revenue from 2001 to 2006 went from just under $37 billion to almost $53 billion. That doesn’t seem like doubling. And, the base was much smaller.

From 2001 to 2006, Wal-Mart revenue grew 63%. It would have to grow over 60% again to hit the Retail Forward 2010 forecast.

That’s just silly.

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

Posted on: December 5, 2006 – 2:28 pm in Retail

The Hamburger Economy: McDonald’s Seven Year High

Stocks:  (MCD)(SBUX)(F)(TOL)

McDonald’s stock hit a seven year high of $43. JP Morgan credits the company with turning around its operations in Europe and having strong-same store sales in the US. For a company with over $20 million in annual sales, the growth rate is impressive.

While car sales down and durable goods orders dropping at a rate not seen in six years, hamburgers and coffee are flying off the shelves. Ford may trade at $8, down from almost $15 two years ago, but McDonald’s has gone from $31 to its current high over that period. And, Starbucks has moved from $29 to $37. That means that the increase in the price of McDonald’s stock has even outpaced the coffee guys.

The inexpensive stuff is selling. Housing firms like Toll Brothers may be experiencing sharp drops in their stock prices because they can’t sell new homes, but at least can eat cheap.

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

Posted on: December 5, 2006 – 1:53 pm in Economy

Short Sellers Lament

Normally public company’s complain about short sellers trying to take their stocks down, spread rumors, and doing naked shorting (where the shares are never borrowed at all). Operations like Overstock seem to complain about short selling almost once a day.

Now, short selling firms are whining in open court. Two short selling firms have sued 13 investment banks like Morgan Stanley and  Goldman Sachs for fixing prices on the fees for the borrowed shares. In particular, the complaint says that the short sellers were overcharged for "hard to borrow" shares. That would be an antitrust claim.

But, what if the shares are hard to borrow. Not all companies have huge floats or trade 10 million shares a day. Should the fees be fixed without any elasticity when the degree of difficulty may vary from stock to stock?

An odd claim from firms that bet that stock prices will drop. But, with the markets up, they may not have anything else to do.

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

Posted on: December 5, 2006 – 1:39 pm in Short Interest

Lufthansa Buries Airbus (BA)

The Germans are not even buying from themselves. At least not airplanes. Airbus, Airbus, a subsidiary of Franco-German EADS, has been flogging its 380 super-jumbo as the next big thing. But, Lufthansa is having none of it. The airline has ordered 20 of the new stretch 747s, worth $5 billion, and took options on another twenty.

The Airbus 380 has been plagued by techical issues and missed deadlines, and EADS is struggling to get financing and may have to go to its goverment shareholders for cash. The big Lufthansa order is not the kind of news that the company needed.

Boeing, on the other hand, must be doing a victory dance in the end zone. It stock is up over $1 to almost $91. And, as Airbus gets thumped, that could continue.

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

Posted on: December 5, 2006 – 1:03 pm in Transports

Ten Most Undervalued Stocks: EBay

Stocks: (EBAY)(GOOG)

It is no secret that this is a good holiday season for online shopping. E-commerce sales are up about 24% through the first month of the period. And, EBay has been up a little bit on the news. Progress at EBay is beginning to earn its some accolades from Wall St. But, the stock, trading at $32, is still well off its 52-week high of $47.86.  In December 2004, the stock was at $59. Even some new believers in the investment community, a haircut of nearly 50% is a lot.

The purchase of Skype is still a mystery, but EBay’s other businesses are doing well, very well. PayPal was a big part of last quarter’s earnings. According to Morningstar, even with 120 million accounts, the market for PayPal is 10x that size. Companies like Dell and Barnes & Noble alread use it and the threat from Google CheckOut has not materialized.

It is easy to forget that no other auction site has anywhere close to EBay’s membership. The fear that raising prices would drive traffic away appears to have been baseless. And, the company continues its expansion overseas.

According to Yahoo!Finance, the price target for EBay’s shares is as high as $45 among the 19 analysts listed by Thomson/First Call as covering the company. And, that would not even take it back to its 12-month high.

Happy holidays, EBay

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

Posted on: December 5, 2006 – 12:25 pm in Internet

XM: A Silver Lining (XMSR)(SIRI)

XM and GM today announced that GM plans to build more than 1.8 million cars with factory installed XM receivers.

On a day when Sirius is down 6% to $3.91 and almost touched its 52-week low and XM is down 3% to $14.16, both on news that SIRI will miss year-end subscriber targets, a little good news is welcome.

What XM did not say, and what Wall St. would like to know, is whether the GM installation will have any effect on XMSR subscription growth for next year.

But, they aren’t talking.

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

Posted on: December 5, 2006 – 11:58 am in Satellite

Cramer Back to Endorsing Share Buybacks

I didn’t think he would go back to this, but Cramer is actually back in favor of discussing "Share Buyback Plans" from companies as being a catalyst.

You can watch his daily videos, and here is the link for this one titles BUYBACK SURPRISE on TheStreet.com.

Cramer said he thought no buyback would do what he is seeing now, as the supply of stock is being taken off of the market.  Cramer noted that there are 29 buyback programs out of the 30 DJIA component stocks.  He notes 3 oil buybacks: Exxon (XOM), Chevron (CVX), & ConocoPhillips (COP) because they have taken out enough supply of stock off the market.  He thinks these are the easiest stocks to buy into year-end:  Cramer thinks XOM will blow through $80 now, COP could tack on 10-points, and CVX is at the end of its $5B buyback and it will go up $2 when they announce a new buyback plan.   

Cramer is also positive on techs & financials still and he thinks the tech trade isn’t done, and they’ll rally through the end of the year.  The mortgage weakness isn’t going to kill financials, and with Citigroup (C) under $50 and Bank of America (BAC) down on the CFO leaving he’d buy into them before the fed starts cutting rates.

I have my own opinions on share buybacks.  They are good in teh sense that they eliminate a lot of the loose float out there in the stock market, but they also chew up a corporate balance sheet.  If the underlying company is really going to be strong and stable in the next two to three years then buybacks are fine, but if a company is in a capital intensive business then companies need to be careful about buybacks.  It also can be viewed as a notion that the company isn’t going to use its own cash and resources to go make acquisitions that could add more growth, but I will warn you that many investors will say that is blasphemy.

Anyhow, I thought this was an interesting twist since Cramer has poo-poo’d buybacks of late or at least been acting like he doesn’t care.  For the last few weeks he has been more favorable and more receptive to dividend paying strategies.  To me a dividend is a true return of capital to shareholders, where share buybacks tend to signal a semi-floor in a stock.  The most important thing to remember is that not all buybacks are created equal and that when a company issues a press release that they are "Authorizing a $2 Billion share buyback plan" that the company has that "at their discretion" but they are not bound to spend $2 Billion (or $200 million for that matter) on genuinely repurchasing shares.

Jon C. Ogg
December 5, 2006

Posted on: December 5, 2006 – 11:28 am in Cramer

Cramer Backs Away from Sirius

Cramer keys in on Sirius Satellite Radio (SIRI) in "Merger Watch for Sirius" at TheStreet.com.

Jim Cramer noted that this warning out of Sirius is at a bad time, because it is more than 10 trading days before Christmas.  The logic there would seemingly be that it means the sales are going behind schedule far enough that that the last 10 days before Christmas won’t be able to come close to picking up the slack.  I think last year the company had a massive rush in the last 10 days of unit sales ahead of the holiday.

This also signals that he sees SIRI and XMSR as a merger that needs to happen again.  He even notes that SIRI is "done for" without a merger.

After reading his story on thestreet.com this morning, you can also probably blow out any dim candle light on hopes that Thestreet.com (TSCM) would sign any deal in the immediate future with a Sirius.  I thought that last week’s jettison out of terrestrial radio to focus on an ad-based "TheStreet.com only" model was potentially leaving some room for a Sirius deal if you use Cramer as an indicator on himself and his company. The verbage is too hard in his article now and there is no inkling of an out here that would show they really want a relationship at all.  It was a good thought, but that chance is probably gone for a long time if not gone for good.

SIRI is down at $3.87 right after the open, down more than 7%.  The 52-week trading range for SIRI is $3.60 to $7.98.  Shares are back to more than 50% off yearly highs.

Jon C. Ogg
December 5, 2006

Posted on: December 5, 2006 – 10:14 am in Cramer, Press Digest, Satellite

Drumbeat Gets Louder At Nintendo

Stocks:  (MSFT)(SNE)

Nintendo says it will do better than Wall St. expects. And, Wall St. expects a great deal.

The company said that profit for the March fiscal will rise 60% to $1.26 billion. Revenue should be up 45%.

The reason. Sales of the Wii are not cutting into sales of Nintendo’s older game system, the DS. And, investors have been worried about that. As a matter of fact, DS sales are growing at the same time that Wii sales are off to the races. Over 600,000 units of the Wii were sold in the US the first eight days it was on the market.

It is unlikely that Nintento’s success is not taking some share from one of the other game consoles. Microsoft says the Xbox is doing fine.

That leaves Sony. It would be nice if they would come out and say how Playstation 3 and Playstation portable are doing for the holidays.

Ho. Ho. Ho.

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

Posted on: December 5, 2006 – 9:53 am in Hardware

Penn Virginia, Round 3, Sophistcated IPO

PENN VIRGINIA GP HOLDINGS LP (PVG-NYSE) priced its 6.3 million share IPO at $18.50 per share.  This is toward the lower-part of its price range estimated.  This is a complicated special purpose entity as the "company" is a partnership formed to own the general partner interest, all of the incentive distribution rights and approximately 41.1% of the limited partner interests in Penn Virginia Resource Partners, L.P. (PVR-NYSE).  This offering represents an approximate 16.4% limited partner interest in Penn Virginia GP Holdings.

Here is the use of the $107.1 million in proceeds: (i) approximately $102.5 million to purchase 416,444 PVR common units and 3,610,383 PVR Class B Units from PVR; (ii) approximately $2.1 million to make a capital contribution to PVR to maintain PVG’s 2% general partner interest; and (iii) the remainder of the proceeds for general partnership purposes. PVR is expected to use the $104.6 million of proceeds from the sale of units and general partner capital contribution to repay borrowings outstanding under its credit facility.

Lehman Brothers and UBS were the lead underwriters; and co-managers are listed as A.G.Edwards, RBC Capital, Wachovia, J.P.Morgan, BMO Capital, and Stifel Nicolaus.

To make matters even more complicated this "PVR" is a master limited partnership formed by Penn Virginia Corporation (PVA-NYSE). The Partnership manages coal properties and related assets and operates a midstream natural gas gathering and processing business.

At the end of November the company lowered its IPO price range of $19 to $21 down to a new $18 to $20 range, but raised the share count from 6 million to 6.3 million shares.

Jon C. Ogg
December 5, 2006

Posted on: December 5, 2006 – 9:45 am in IPOs

Broadcast International Secondary Offering (BCST-OTC)

Investors are always on the lookout for little tiny unknown companies either raising cash or with news.  There is a video compression company that is actually surprising it has received no realcoverage, but for no other fact than it has so many similarities to a formerly-public company.

Broadcast International, Inc. trades under the "BCST" stock ticker on NASDAQ-OTC.  This is in no way related to the old broadcast.com that shares the same ticker, as that was Mark Cuban’s company he took public and later sold to Yahoo! (YHOO) where he became an insta-Billionaire.  The company is also in the same related field if you think of video as the old audio, but the similarities end there.  This "BCST" is selling some $8.06 million in new stock and warrants in a new SEC filing, and about $6.66 million of the proceeds will be going to the company for working capital and general corporate purposes.

Broadcast International owns ‘proprietary video compression technology’ it calls “CodecSys” where content is converted into a digital data stream for transmission over satellite, cable, Internet or wireless networks; and video content may be transmitted over decreased bandwidth while maintaining media quality.  In short, the company’s goal is to allow organizations to transmit video quality streams with cost savings on bandwidth usage.

This is a Salt Lake City, Utah-based penny stock, and if you want to look up data you can find it under the www.brin.com website.  As of September 30, 2006, we had 34,586,609 shares of our common stock issued and outstanding, and there were approximately 1,300 shareholders of record.  For the 9-months ended September 30, 2006 the company shows sales of $10.97 million and a net loss from operations of $5.7 million and a net-net loss of $6.9 million.  The company also appears to have raised cash on 3 occasions this year before this offering.

Under no circumstances should this article be viewed as any endorsement.  This is just identifying the company as raising cash in the market via an SEC Filing.  I have seen the old "penny stock out of Utah raising cash time after time."  While the particulars of this company here are unknown, you better look long and hard into companies like these before venturing forth.

Jon C. Ogg
December 5, 2006

Posted on: December 5, 2006 – 9:27 am in Uncategorized

GM Europe’s Tow Truck (GM)

GM Europe is going to make money this year, and, so they say, more money next. Its earnings for the first three quarters of 2006 are $196 million. Sales in Russia are likely to rise.

The company said that lower costs and higher revenue yield for each car will improve results in 2007.

What is missing from this picture? GM North America, which has gotten into the bad habit of losing money. What’s up? Europe has as many competing car companies as North America, perhaps more. All of the Japanese sell cars there. Odd.

GM does not talk about the lessons it has learned in Europe as a template for North America. GM Europe lost money the first three quarters of last year, and has turned that red ink black.

Some one please connect the dots. Before it gets too late.

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

Posted on: December 5, 2006 – 9:20 am in Autos