Daily Archives: December 8, 2006

Old Media Goes After YouTube?

Stocks:  (GOOG)(NWS)(VIA)(CBS)(GE)

Late word is that News Corp’s Fox, CBS, Viacom, and GE’s NBC Universal are cooking up a plan to start a video website to compete with Google’s YouTube. The site would be used for the old media companies to make money off of internet video viewing of their content. It is also a revenge of sorts because the companies believe that their pirated content running on YouTube helped build that business.

YouTube has made offers to most of the old media companies to compensate them for their video content running on the hugely popular site that Google bought last month for $1.65 billion.

Someone tell the old media guys that the plan won’t work. You read that here first.

YouTube is hardly the product of pirated content from studios and TV. That may be a small part of its success, but videos of guys from China lip syncing the Backstreet Boys and "The Human Can Opener" are what drives big traffic to YouTube. Their are not enough idiots at the old media companies to replicate the kind of mad content that is so popular on YouTube.

There is the further product of how the old media video site would get traffic. YouTube has a zillion viewers who view something like a million videos a day.

Where is old media going to find that kind of traffic?

They aren’t.

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

Posted on: December 8, 2006 – 11:02 pm in Old Media

Sony And Microsoft Sweat: Nintendo’s Wii Rocket

Stocks: (MSFT)(SNE)

Research firm NPD says that Nintendo sold over 476,000 units of its new Wii platform in the US in November. Sony Playstation 3 sold 197,000 in the same period. Both were introduced mid-month. Microsoft Xbox, which was on sale for the entire month, sold 511,000.

The news is probably neutral for Xbox 360, which has not gotten off to a much better start than the original Xbox, but is holding its ground as Sony seems to be slipping.

The figures once again raise the question of when Playstation 3 sales will begin the sharp pick up that will keep the Sony platform in its traditional No. 1 position.

As the race progresses, coming from behind is going to become much more difficult.

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

Posted on: December 8, 2006 – 10:50 pm in Casinos

Ten Most Undervalued Stocks: Sprint

Stocks:  (S)(INTC)(MOT)(MSFT)DELL)

Sprint Nextel is out of favor, Way out. Wall St thinks its third place spot behind Cingular and Verizon Wireless ain’t a good place to be. And intergating the Nextel purchase has cost a couple of senior exect at Sprint their jobs. New subscriber growth has been hard to come by.

Sprint plans to walk a different path than other cell companies in the US when it launches it WiMax network in 2008. The technology platform, supported by Intel, Samsung, and Motorola, will by-pass normal cellular structure for delivering broadband to phones.

After trading over $25 for most of the second half of 2005 and early part of 2006, the stock has dropped to a little of $19 as investors continue their concerns about weak results.

Spint does have some critical things in it favor. There are really only three large cellular providers in the US and they are one of these. As Morningtar points out, the Nextel subscriber base is made up of very profitable business customers.

Spint’s new WiMax network may power PCs as well as phones, and this could be an important new source of income for the company. Sprint has announced a mobile search initiative with Microsoft and a wireless partnership with Dell.

Sprint could use a few more fans, but with partners like Intel, Motorol, Dell, and Microsoft, those fans may not be far behind.

Can you say WiMax?

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

Posted on: December 8, 2006 – 1:53 pm in Telecom

Barclays: No B of A Bid (BAC)(BCS)

The head of Barclays sold shares in the bank to prove that Bank of America had made no bid, nor was it likely to. He could not sell of he had knowledge of a buy-out offer.

According to Reuters: "We believe Bank of America is very interested in acquiring Barclays," Merrill Lynch said in a research note.

Perhaps Merrill banking analysts Edward Najarian, John-Paul Crutchley and Brian Bedell will get a good flogging tonight. Somone should

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

Posted on: December 8, 2006 – 1:28 pm in Banking

Wal-Mart: Do A Good Job And Get Fired (WMT)(IPG)

Julie Roehm, the recently sacked head of advertising at Wal-Mart, may actually have been doing a good job. She did a good job and DaimlerChrysler, which landed her the Wal-Mart job. She then broke the hold that two agencies had had on Wal-Mart for years.

Ms. Roehm chose Draft FCB, a unit of ad group Interpublic, to handle Wal-Mart’s business. The agency is well regarded, and, whether past agency work was reponsible in come part for Wal-Mart’s poor US sales is hard to tell. But, someone had to take the fall.

Ms. Roehm’s sins seem to have been a potential relationship with another employee and taking dinners and cars from ad agencies involved in the review. Wal-Mart policy does not allow employees to take a pack of gum from suppliers.

But, that may be part of Wal-Mart’s problem. Rules obviously must be in place so that people are not given condos in Florida in exchange for business. But, to reverse a very important decision and delay the process of getting a new marketing campaign may be a mstake. Perhaps Ms. Roehm had to go, but is Draft?

Baby. Bathwater.

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

Posted on: December 8, 2006 – 12:25 pm in Retail

The Hamburger Economy: McDonald’s Sales Up, Again (MCD)(WMT)

McDonald’s cannot be stopped with an elephant gun. The huge food chain announced November same store sales rose 6.2%. Premium coffee and promotional games seemed to be big contributors. US sales were up 5.1%. In Europe the figure was 8.4%.

McDonald’s shares now trade near $44, a multiyear high.

Whether chicken sandwichs and coffee sales are an adequate explanation is really not clear. When the largest company in a field grows faster then competition, a large number of things must be going right. McDonald’s is still the premier brand, and, unlike Wal-Mart, it does not appear to have too many stores. Its basic offerings are not much different that Burger King.

Whatever it is, it works. Some bright analyst at a brokerage might make a name for himself by crafting a better explanation for the success.

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

Posted on: December 8, 2006 – 12:13 pm in Food

Bank of America And Barclays: Bad News

Stocks:  (BAC)(C)(BCS)

Bank of America got a lot of press for passing Citigroup as the world’s largest bank based on market cap. Now, it wants to make the same mistakes that Citi has made: build a presence overseas and expand outside core franchises. While the market is calling to break Citi apart, B of A may be looking at buying British banking giant Barclays.

Barclays has a market value of $90 billion and Bank of America is over $200 million. Merrill Lynch believes that even if B of A pays over $100 billion, the purchae could add to earnings next year. Maybe.

Getting into investment and corporate banking is a dicey proposition, especially outside the US. If the market in private equity does not hold or if M&A activity slows or its the world’s stock markets meet the laws of gravity, $100 million could be a lot to pay.

Take a lesson from Citi. Stick to what you do well. Don’t get too big and complex.

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

Posted on: December 8, 2006 – 12:00 pm in Banking

Jobs Growth Still Looks Like its Weakening

By William Trent, CFA of Stock Market Beat

The jobs report is out, and receiving a fairly warm welcome. Economy adds 132,000 jobs – Yahoo! News:

The U.S. economy added a stronger-than-forecast 132,000 jobs in November, the government reported on Friday, though the unemployment rate edged up slightly from October.

The thing is, 132,000 is still well within the margin of error. The charts below give a good idea of the overall trend.

employment.jpg

employmentsanonsa.jpg

Still looks like a slowdown to us.

The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: FedEx (FDX) put options; 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: Ceradyne (CRDN) put options; Lion’s Gate (LGF) call options; Dell (DELL) put options; Plantronics (PLT) put options

http://stockmarketbeat.com/blog1/

Posted on: December 8, 2006 – 11:51 am in Economy

DivX Holders Can Breathe As the Google Pact Was Renewed

DivX (DIVX) shareholders can take a breather if they were worrying about the state of the Google (GOOG) search and bundling pact.  When DIVX came public and while it was being touted by Cramer and by analysts and traders alike, no one was bothering tomention that the pact with GOOG was up for renewal, renegotiation, or outright end at the end of this year.

DIVX announced this morning that it has extended its multi-year agreement with Google to bundle the Google Toolbar with downloads of DivX video software products and will bundle the Mozilla Firefox browser.  We have no details of the deal and we have no idea if DIVX had to give away their first born, but this removes that hurdle. 

Now the only thing DIVX shareholders have to worry about is if the management is strong enough to keep executing internally and externally like they have so far.  On last look DIVX shares were up more than 4% pre-market at $28.75.  Its trading range since coming public has been $18.00 to $31.89.

Jon C. Ogg
December 8, 2006

Posted on: December 8, 2006 – 9:00 am in Internet

All 3 IPO’s Price Well: Heelys, Aegean, Allegiant

Aegean Marine Petroleum (ANW) saw its 12.5 million share IPO price at $14.00, which was at the top of the $12 to $14 range. Bear Stearns was the lead underwriter; co-managers listed as Johson Rice, Simmons, and Dahlman Rose.  Aegean is a Greek-based company that provides fuel and lubricants to ships at port.

Allegiant Travel (ALGT) saw its 5 million share IPO price at $18.00, above the $15 to $17 range from Merrill Lynch, Bear Stearns, and Raymond James.  Allegiant is the Las Vegas-based low cost airliner that services smaller cities.

Heelys (HLYS) priced a 6.43 million share IPO at $21.00, up from 6.25 million shares and above the $16 to $18 range.  Bear Stearns and Wachovia were the lead underwriters; co-managers were listed as J.P.Morgan and CIBC.  Heelys makes the wheeled shoes, although this has been well telegraphed and talked up by Cramer and others.

So all IPO’s were either hiked or priced at the high-end of the range today.

Jon C. Ogg
December 8, 2006

Posted on: December 8, 2006 – 8:26 am in Uncategorized

Pre-Market Stock News (DEC 8, 2006)

(ACOR) Acorda will conduct adfditional Phase III studies on its MS treatment for the FDA.
(ALGT) Allegiant Travel 5M share IPo priced at $18.00, above the $15-17 range.
(ANW) Aegean Marine 12.5M share IPO priced at $14.00, at the top of the range.
(APPB) Applebees raised its dividend.
(ARNA) Arena 11.5M share secondary was hiked from 8M shares to 11.5M and priced at $13.21.
(ATO) Atmos Energy 5.5M share secondary priced at $31.50.
(BCS) Barclays reported as potential takeover target of Bank of America.
(CAE) Cascade $0.95 EPS vs $0.89e.
(CENT) Central Garden & Pet traded down 10% after earnings were under plan on net basis.
(CHK) Chesapeake 30M share secondary today.
(CSCO) Cisco Systems said it is eyeing 12 potential acquisitions, but they are still digesting the SFA buyout.
(DLB) Dolby up 3% after Cramer called them the "Microsoft of digital media" and after saying the stock is going up.
(DTE) DTE lowered guidance and raised dividend.
(EBAY) eBaY traded up1% after cramer changed his position to positive.
(ENCY) Encysive Pharma received FDA approval to resume TBC3711 clinical studies.
(ESL) Esterline $0.71 EPS vs $0.67e.
(FBN) Furniture Brands trims guidance, but there may be a charge.
(GCI) Gannett positive in Business Week.
(HLYS) Heels 6.4M share IPO priced at $21.00, above the $16.00 to $18.00 range.
(HPQ) HP paid out $14.5M to California AG to settle civil cases on pre-texting.
(ICON) Iconics Brand 12M share secondary priced at $18.75.
(IDT)IDT $522.3M revenues versus $539M(e).
(IPAR) Inter Parfums positive in Business Week.
(IRM) Iron Mountain declared a 3-2 stock split.
(MFE) McAfee noted as takeover candidate in Business Week.
(MHGC) Morgan Hotel announced $50M allocated for a share buyback plan.
(MSFT) Microsoft’s Vista is reportedly allowing old Viruses to run freely so far.
(MWA) Mueller Water spin-off ratio was set at 1.65+shares per WLT share.
(NSM) National Semiconductor traded down 1% after earnings because of weak guidance.
(PAY) Verifone $0.32 EPS vs $0.29e.
(PNRA) Panera noted as a sell by Cramer.
(PRU) Prudential filed to sell $2B in convertible notes.
(SFC) Spirit Finance has an 8+M share secondary.
(TASR) Taser announced another lawsuit dismissal.
(WGOV) Woodward Governor in new diesel after treatment pact with Tenneco.
(WITS) Witness Systems CEO resigned over options inaccuracies.
(XLNX) Xilinx traded down almost 5% after taking down guidance at mid-quarter update.

Posted on: December 8, 2006 – 8:04 am in Pre-Market Activity

Select Analyst Calls (DEC 8, 2006)

AACC started as Underperform at KBW.
AG started as Neutral at B of A.
AMED raised to Outperform at Wachovia.
AQNT reitr Buy at Jefferies.
ARNA started as Buy at MerrillLynch.
BBY started as Outperform at Cowen.
BOBJ started as Buy at Jefferies.
CBE started as Buy at Merrill Lynch.
CBST cut to Mkt Perform at Piper Jaffray.
CC started as Outperform at Cowen.
CFC cut to Hold at Stifel Nicolaus.
CLS cut to Underweight at JPMorgan.
CNW cut to Underweight at BB&T.
DE started as Neutral at B of A.
ERIC raised to Buy at B of A.
GOOG reitr Buy at Jefferies.
MMM cut to Neutral at Prudential.
NRG started as Outperform at Wachovia.
PALM started as Neutral at UBS.
PCG cut to Neutral at JPMorgan.
RF started as Neutral at Goldman Sachs.
RSH started as Neutral at Cowen.
SHOO cut to Underperform at First Albany.
SII started as Buy at Merrill Lynch.
TECD cut to Underweight at JPMorgan.
TS started as Buy at Jefferies.
XLNX cut to Neutral at JPMorgan.
YRCW cut to Hold at BB&T.
YUM cut to Neutral at Wachovia.

Posted on: December 8, 2006 – 7:51 am in Analyst Calls

Xbox Sales Fail To Impress (MSFT)(SNE)

The Xbox is supposed to be part of Microsoft’s plan to diversify beyond Windows. Other initiative like its Zune multimedia player are off to a slow start. The company’s online initiatives are behind Yahoo! and Google.

But, market research firm NPD indicates the Xbox 360 sales may not be doing to well. Xbox  360sales in the first 13 months that the product has been in stores are 6% higher than the regular old Xbox. That product was introduced in November 2001.

Six percent is not much. With Playstation 3 somewhat slow in getting to market, Microsoft should have expected more.

At least the Nintendo Wii is selling well.

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

Posted on: December 8, 2006 – 6:20 am in Casinos

WiMax Nation: Intel Gears Up

Stocks:  (INTC)(MOT)(QCOM)(S)

There has been a growing body of evidence that Intel is planning to base much of its future growth on WiMax. It investment in Clearwire, a WiMax service firm, its alliance to build out WiMax in other countries with partner Samsung and Motorola, and visits of its management abroad to promote WiMax in places like India are road signs.

Now, Intel management is saying that WiMax will support a generation of ultra-small PCs with screens in the 3 to 5 inch range. The source for broadband connectivity for the machines will be WiMax.

Intel plays down its competition with Qualcomm which could put WiMax against the CDMA technology. But, Intel seems to be hiding its desire to replace Qualcomm as the de facto industry provider of next generation wireless broadband. And, Sprint’s nationwide WiMax network should help Intel’s plans

And, Intel believes that it will have the chip horepower to make small PC-like devices the mobile choice of the future. As Fortune magazine points out: "The coming super-mini, portable, in-your-pocket PC, in the Intel view, will just be the way that such enormously powerful chips get put to use."

With PC sales slowing and cellphone sales predicted to rise less than 10% in 2007, Intel may have found a magic bullet.

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

Posted on: December 8, 2006 – 6:12 am in Technology Companies

Chevron Gains An Edge (COP)(CVX)

Chevron will increase capex 20% next year to almost $20 billion. Exploration of new fields in the Gulf of Mexico are expected to fuel much of this. Conoco, on the other hand, is cuttin capex by 25% to $13,5 billion.

Wall St should probably like the move by Chevron more, even though it is putting out a larger sum.

Chevron’s production has been flat for several years, between 2001 and 2005. Oil reserves in the Gulf and elsewhere could remedy that.

Conoco has recently completed development of Russian oil fields Lower capex will allow it to cut costs and raise dividends.

But, longer term, companies with larger development opportunities should do better than those seeking to get cash to shareholders now.

Chevron’s stock has outperformed Conoco’s over the last year. Chevron is up close to 30% while Conoco is up only 10%. Look for that to continue long range if the Gulf works for Chevron.

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

Posted on: December 8, 2006 – 5:50 am in Oil & Gas

UAW Will Retreat As GM Rolls

Stocks:  (F)(GM)(DCX)(TM)

It’s all big talk at GM and maybe it should be. The largest auto maker says that 40% of US sales will come from new models. It plans to add European cars to its Saturn car line. The company is building higher quality vehicles that retain the resale value better.

The market has two concerns as GM gets more healthy. Steel prices are rising and it is a critical component of car costs. And, GM begins negotiation with the UAW soon over the next contract between the worker’s union and the car company. Some analysts are pessimistic that an improving GM can get concessions. Credit Suisse has gone so far as to say: that it does not expect meaningful concessions from the union.

The UAW may want to have its own way, but union management is not stupid. Chrysler has a huge glut of cars and is offering rebates of up to $7,000. Ford’s market share is down to 14% and even with the $23 billion it is raising, further drops in share could cause the company to flounder. GM is doing much better, but is still losing share to Toyota.

Toyota is not going to replace the jobs bleeding out of the Big Three. It would be reasonable for the union to want to keep much of what it has in jobs and benefits. But, no compromise. The UAW is less likely to bit the hand that feeds it with the recovery of the entire US car industry on the line. The Japanese are still gaining share, and, if US car companies cannot run their operations at a profit and us some of that to produce new models, the union will have done very little for its workers long term.

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

Posted on: December 8, 2006 – 5:29 am in Autos

Europe Market Report 12/8/2006 ST Micro Down, Barclays Up

Stocks:  (BCS)(BT)(BP)(GSK)(RTRSY)(UL)(VOD)(BAY)(CT)(CB)(SI)(DCX)(ALA)(AXA)(FTE)(V)

Markets in Europe were lower at 5.15 AM New York time.

The FTSE was down .3% to 6,114. Barclays was up .9% to 713.5. BP was up .2% to 579. BT was flat at 290. GlaxoSmithKline was down .4% to 1335. Prudential was flat at 680. Reuters was up .3% to to 456.5. Unilever was down .8% to 1357. Vodafone was down .4% to 136.76.

The DAXX was down .3% to 6,302. Bayer was flat at 39.4. DaimlerChrysler was down .9% to 43.95. DeutscheBank was down .5% to 98.55. Deutsche Telekom was down .3% to 13.38. Siemens was up .1% to 73.

The CAC 40 was down ..5% to 5,352. Alacatel was flat at 10.12. AXA was down .1% to 29.06. France Telecom was down .2% to 19.57. ST Micro was down 1% to 13.61. Vivendi was up .3% to 29.31.

Data from Reuters.

Douglas A. McIntyre

Posted on: December 8, 2006 – 5:16 am in International Markets

Media Digest 12/8/2006 Reuters, NYTimes, WSJ, FT

Stocks;  (HPQ)(COP)(GM)(F)(WMT)(MO)

According to Reuters, Hewlett Packard paid $14.5 million to settle civil charges by the State of California over its boardroom spying incident.

Reuters writes that the capex spending of Chevron and Conoco deal with costs in vastly different ways based on the progress of the two companies toward developing oil and gas reserves.

Reuters writes that GM will get 40% of its 2007 sales from new models that are less expensive to develop. The company also said it expects sales gains.

The FT writes that Chinese company Wanxiang Group, China’s top auto parts supplier, is in talks about buying some of Ford’s component businesses.

The Wall Street Journal  reports Wal-Mart dismissed its new ad agency Draft FCB just a few months after signing it.

The Wall Street Jounral also reports that Coke has named its international chief to become president and COO.

The Wall Street Jounal reports that deals are imminent in the tobacco industry will the potential that more than one group will bid for Britain’s Gallaher.

The New York Times reports that GM wil add European models to its Saturn line.

Douglas A. McIntyre

Posted on: December 8, 2006 – 5:00 am in Uncategorized

Asia Markets 12/8/2006 Japan Tobacco Up, NEC, China Netcom Down

Stocks:  CAJ)(FUJ)(HIT)(HMC)(NIPNY)(NTT)(SNE)(TM)(CHL)(CN)(PCW)(HBC)

Asia markets were off.

The Nikkei fell .3% to 16,418. Bridgestone was down 1.7% to 2580.Canon was up 1.4% to 6430. Daiwas Securities was down 1.3% to 1317. Fuji Film was up .7% to 4750. Hitachi was up 1.2% to 698. Honda was up .2% to 4070. Japan Tobacco was up 4% to 550000 NEC was down 1.6% to 556. NTT was down .3% to 582000. Sharp was down 1.5% to 1979. Softbank was down 1.4% to 2440. Sony was up .2% to 4620. Toshiba was down .7% to 744. Toyota was up .1% to 7040. Yahoo Japan was dwon 1.2% to 46800

The Hang Seng was down .6% to 18,740. Cathay Pacific was down .2% to 18.66. China Mobile was down 1.8% to 61.8. China Netcom was down 2.5% to 16.7. HSBC was down 1.% to 140.9 PCCW was down .2% to 4.81.

The KOSPI was down 1.4% to 1,380.

The Straits Times was down 1.3% to 2,865.

The Shanghai Composite was down 2.9% to 2,094.

Data from Reuters

Douglas A. McIntyre

Posted on: December 8, 2006 – 4:42 am in International Markets

Tech Outlook & US Dollar Misconceptions

By Yaser Anwar, CSC of Equity Investment Ideas

Technology View
  • Given the substantial increase in tech valuations over the last several months, the question is how long the rally will last?
  • I believe strong year end spending will continue (think: Apple, Cisco) boosting the valuation run through December and into early January as most fund managers who are lagging (this year especially) in their returns will be "window dressing" their portfolios.
  • When we move into Jan. I expect we will witness a slowdown as institutions take a little profits. So look to see a correction, which will be healthy, as we move into the seasonally slow first Q.
  • I believe tech spending trends are increasingly moving toward the back half of the year, and that the slight drop off in demand from the 4th Q into the first is getting more pronounced.
  • Lately everybody just loves Akamai Tech. & F5 Networks, which has lead them to trade at high multiples of revenue and earnings. But then again they are well positioned and have high growth rates, benefiting of this online video and new media boom.
Dollar Misconceptions
  • Investors seem to think that growth abroad and a weaker dollar will benefit U.S. corporate earnings, as overseas sales translate into more dollars alongside faster growth in Europe and Asia.
  • In my view business fundamentals are more important than dollar woes. For example- When investing in Big Pharma we need to understand that pricing pressure on branded prescription drugs (read: WMT’s wager and CVS/WAG), loss of patent protection, and the failure of new products (read: Pfizer’s recent woes) count far more than international sales exposure.
  • Still don’t believe me? In the 90s despite the semiconductor companies strong sales exposure outside the US a strong dollar did not keep the chip stocks from soaring. When all is said and done- its about industry trends- understand them and you will benefit handsomely.

http://www.equityinvestmentideas.blogspot.com/

Posted on: December 8, 2006 – 4:22 am in Technical Analysis