Daily Archives: December 12, 2006

Cramer Pans the Artes Medical IPO, Says Too Speculative

On tonight’s MAD MONEY, Cramer featured the IPO frenzy with 2 positive and 1 negative.  He already reviewed IPGP and GUID as very positive IPO’s, but he actually panned ARTE and said it is far too speculative to buy.

Artes Medical (ARTE): This is an antiwrinkle company that he really likes and said it was designed to get his blessing.  He said this would have been called a bad company in the old days, but he thinks it is too speculative to merit a buy.  The FDA won’t allow it to be marketed as a permanent solution, and they only have 1 product.  This could be deemed unsafe by doctors and it could be sued.  It needs cash, and Cramer doesn’t like the need for cash and the burn rates.  No earnings, no sales, could be abused by Allergan and others……You get the picture, he doesn’t like it.

I will predict that the company asks to come on his show shortly after coming public, assuming that the Cramer pan didn’t just result in the IPO being pulled.  This IPO-featuring on a pre-pricing basis just doesn’t seem right.

Jon C. Ogg
December 12, 2006

Posted on: December 12, 2006 – 6:53 pm in IPOs

Cramer Calls Up 3 IPO’s for This Week (Story 2)

ON tonight’s MAD MONEY, Cramer featured the IPO frenzy.  He already reviewed IPGP, so he also discussed Guidance Software (GUID).

Everyone is fascinated with IPO’s, but Cramer says he will tell you which to buy and which to sell and prices to get in and out.  He will be the final arbiter on these.

1) review comparable public companies; 2) See if it is a hot issue; 3) are they desperate or are they in fine shape looking for security; 4) are they late to the party and trying to catch the end of a craze; 5) decide when to sell beforehand; 6) use limit orders.

Guidance Software (GUID): Digital investesigations and cyber forensics is the sector.  He embraces it, and thinks the price is right, expected at $12.50 to $14.50 per share and he thinks it is worth buying at $18.00 or under, but he’s a bear at $20.00.  He thinks they’ll have a $1.4 Billion marketplace in 2009 and they are the gold standard in the sector.  They sell to law firms and law enforcement, plus many huge corporations.  They are now approved as evidence approved for submission in the US legal system.  Cramer thinks they are not desperate and they aren’t late.  He likes it up to $18.00.

Jon C. Ogg
December 12, 2006

Posted on: December 12, 2006 – 6:23 pm in Cramer, IPOs

Cramer Calls Up 3 IPO’s for This Week

On tonight’s MAD MONEY, Cramer featured the IPO frenzy.

Everyone is fascinated with IPO’s, but Cramer says he will tell you which to buy and which to sell and prices to get in and out.  He will be the final arbiter on these.

This is the busiest week for IPO’s this year.  IPG (IPGP) and Guidance Software (GUID) he likes, but he really PANNED Artes Medical as too speculative………(EDIT POST 6:40 PM EST)

1) review comparable public companies; 2) See if it is a hot issue; 3) are they desperate or are they in fine shape looking for security; 4) are they late to the party and trying to catch the end of a craze; 5) decide when to sell beforehand; 6) use limit orders.

IPG Photonics: IPGP is in industrial lasers.  It trades at 35-times earnings, but it is hot because it is niche and controls 60% of the fiber lasers and the sector has lamost 40% growth to 2010. He thinks it could end up being a core tech holding for some companies and it could price higher and he would easily pay $20 per share.  If it gaps too much you have to let it slide back down.

Jon C. Ogg
December 12, 2006

Posted on: December 12, 2006 – 6:12 pm in Cramer, IPOs

US Stock Market Wrap (DEC 12, 2006)

DJIA    12,315.58; Down 12.90 (0.10%)
NASDAQ    2,431.60; Down 11.26 (0.46%)
S&P500    1,411.56; Down 1.48 (0.10%)
10YR-Bond  4.491%; Down 0.029
NYSE Volume    2,639,175,000
NASD Volume    1,906,346,000

The FED kept overnight rates steady at 5.25% but the statement seemd a tad more dovish, so the DJIA and other broad index losses were paired toward the end of the day.  If the trading volume felt light out there to you, it was.

(ALNY) Alnylam Pharma fell almost 7% to $22.08 after it filed to sell 4.7M shares.

(C) Citigroup fell 1.2% to $52.25 after naming a new COO, but CFO and CEO are staying put.

(CCJ) Cameco traded up 1.5% to $39.46 raised to Top Pick at RBC.

(DELL) Dell fell almost 2% to $26.20 after it lowered flat panel orders by 30% according to reports, although some of this was already known.

(GE) GE rose 1.2% to $35.64 after reaffirming EPS targets but raising its $0.25 dividend to $0.28.

(GLW) Corning fell another 3% to $19.75 on the Dell news, although the company reiterated its guidance and noted some orders tapering off just last week.  Watch the chart as $20+ was deemed a critical support by some technicians.

(HANS) Hansen Natural rose 4.7% to $34.61 after HANS was started as Overweight at JPMorgan and added to its Focus List with a $44 target.

(HPQ) H-P fell 0.5% to $39.83 after reaffirming its guidance out to 2008.

(KCAP) Kohlberg Capital 13.5M share IPO priced at $15.00; shares rose 5% to $15.86.

(MAMA) Mamma.com rose 80% to $4.28 after it launched a new video search engine.

(MTXX) Matrixx Initiatives fell 11% to $16.25 after it lowered guidance.

(NILE) Blue Nile rose 3% to $34.53 after word that it is replacing STAR on S&P Small Cap 600 Index on date TBA.

(POR) Portland General Electric fell 0.4% to $27.13 started as Underweight at JPMorgan.

(TSG) Sabre rose 5% to $31.96 after private equity firms Silver Lake and Texac Pacific stepped in to acquire the company, confirming reports and rumors.

(TXN) Texas Instruments actually rose 1.6% to $29.77 even though the "lowered targets" were worse than the street was braced for.  Texas Instruments raised to Overweight at JPMorgan; defended at Deutsche bank but target lowered to $35; maintained Buy at Jefferies but target cut to $36; maintained Buy at AGEdwards.

Posted on: December 12, 2006 – 4:14 pm in Market Close

Preview of the 2007 “Dogs of the Dow” (Preliminary List)

As we get to the end of each year, investors begin to look at the “DOGS OF THE DOW.”

This is a portfolio the 10 highest yielding stocks out of the 30 Dow Jones Industrial Average stock components.  Some investors even take this a step farther and go for the Dow 5 by only looking at the 5 highest yielding components in the index.  We decided to compile a list of these stocks as it stands today, but please recall this may change before January 1, 2007 as we still have more than two weeks of trading before New Years.

These are listed in order by the highest yielding first.  The 10 Dogs of the Dow have one change on a preliminary basis: AT&T (T) has been added and Coca-Cola (KO) has been dropped, and the order is different and the top 5 area different in those smaller “5 Down Dogs” stocks.  This list includes the market cap of each stock, the current dividend yield, the 52-week trading range, the price change off the low of the year, and we even put the price-to-book ratio for each stock. 

Here is the preliminary list of stocks:

Verizon (VZ) $35.46:  Market Cap $103.53B; Yield 4.60%
52-Week Range: $30.00 to $38.95 (+$5.53);   Price/Book: 2.25 

Altria (MO) $84.68: Market Cap $177.48B;  Yield  4.10%
52-Week Range: $68.36 to $85.55 (+$16.38);  Price/Book: 4.33    

Citigroup (C) $51.96: Market Cap $255.31B; Yield 3.80%
52-Week Range: $44.81 to $52.88 (+$7.18); Price/Book: 2.22

Pfizer (PFE) $25.16:   Market Cap $181.41B; Yield  3.80%
52-Week Range: $20.27 to $28.60 (+$4.88);  Price/Book: 2.61   

AT&T (T) $35.48:  Market Cap $136.35B; Yield  3.80%
52-week range: $24.24 to $35.33 (+$11.23);  Price/Book: 2.45      

Merck (MRK) $43.54:  Market Cap $94.53B;  Yield 3.50%      
52-Week Range: $27.99 to $46.37 (+$15.63);  Price/Book:  4.96   

General Motors (GM) $29.70: Market Cap $16.80B;  Yield  3.40%   
52-Week Range: $18.33 to $36.56 (+$11.40);   Price/Book:  1.52      

DuPont (DD) $46.83: Market Cap $43.07B;  Yield 3.20%   
52-Week Range: $38.52 to $48.87 (+$8.31);  Price/Book: 4.41   

General Electric (GE) $35.60: Market Cap $367.5B;  Yield  3.14%       
52-Week Range: $32.06 to $36.48 (+$3.12)   Price/Book: 3.26   

J.P.Morgan (JPM) $47.60:    Market Cap $165.12B;  Yield  2.90%   
52-Week Range: $37.88 to $48.57 (+$9.73);   Price/Book: 1.45    

It may be worth noting that J&J (JNJ), Home Depot (HD), McDonalds (MCD), and 3M (MMM) all have roughly a 2.3% yield; and Coca-Cola (KO) has a 2.5% yield.  So if any of the lower-yielding preliminary Dogs have a substantially rally or if any of these "almost Dogs" see their share prices fall sharply then you could see a change to these names.  Also, this list does include the change to GE based on their dividend hike today.

Jon C. Ogg
December 12, 2006

Also, it may be worth noting that that this data was taken from sources deemed reliable but no assurances can be made as to the accuracy of any claims or figures.  Please verify all data on your own before making any investment decisions.  The author of this report does not own securities of the companies mentioned.

Posted on: December 12, 2006 – 3:50 pm in Uncategorized

GE Slows Down

The markets probably did not want to hear that GE would grow more slowly in 2007 than in 2006. But, that is exactly what they heard. GE reiterated that it would have EPS growth in 2006 of 15% to 16% for a range of $1.97 to $1.99 per share. But, in 2007 EPS growth will only be  0% to 13%.

GE’s stock has been flat this year, so the market already has some doubts about the compay’s prospcects. The stock staged a little pity rally on the news, moving up 1.5% to $35.75. Maybe investors were happy that it was not worse. Or, maybe it was because GE raised its dividend.

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

Posted on: December 12, 2006 – 3:32 pm in Economy

Consumed Consumers: Does Best Buy Signal an End to the Consumption Boom?

By Willaim Trent, CFA of Stock Market Beat

Stocks: (BBY)

Given the pile of carcasses left behind by other pundits who have attempted to call an end to the consumer’s willingness to keep spending, we have been reluctant to make such forecasts in the past. However, as the evidence mounts we increasingly believe that this holiday season will amount to something of a last hurrah – for now, anyway.

The latest news is Best Buy’s profitless prosperity. This shows that the consumer is still pulling out the pocketbook – but only when there is a good deal. With home theater equipment now being offered at low sale prices and with no-interest until 2010 credit offers, it is little wonder profits are getting tight. (Although the consumers should consider that with LCD prices falling 35% per year zero percent interest is still usurous in real terms!)

Granted, this is all still anecdotal. But the anecdotes are piling up.

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 12, 2006 – 3:16 pm in Retail

Texas Instruments, Foundries Begin to See What We’ve Been Talking About

By Willlaim Trent, CFA of Stock Market Beat

It seems like less than two weeks ago that Texas Instruments said there wasn’t a serious problem with excess inventory. Now, they say they are cutting back capacity in a big way. From the earnings update conference call:

We reduced production loadings at both our internal factories and at our foundry suppliers. Having a significant part of TI’s production sourced at third party foundries is providing a significant buffer to our profit margins as revenue declines and we adjust production.

Gee. Back in June the foundries said not to worry about inventory either. Whatever will they do with all the excess equipment they have been ordering?

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 12, 2006 – 3:14 pm in Semiconductor

HP: $100 Billion Or Bust (HPQ)(MSFT)

Hewlett-Packard is saying the its reveues will top $100 billion in fiscal 2008. Their financial year ends in October. It does sound a bit like the predictions Dell used to make. Those did not work out.

Revenue in the fiscal ending this past October was just below $92 billion.

Based on Hewlett-Packard’s growth rate over the last few years, it is entirely possible that they hit their forecast. Revenue in the 2004 fiscal was $79.9 billion. In 2005, the number was $86.7 billion.

The estimates obviously assume that the server and PC markets will continue to grow at their current pace. HP is likely to keep its share in the PC, printer and server markets, but the driver of the growth may end up being Vista and Microsoft Office.

If HP hits its number, they should send MSFT a thank you note.

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

Posted on: December 12, 2006 – 3:11 pm in Hardware

A Meak Cramer on STOP TRADING

On today’s STOP TRADING segment CNBC, Jim Cramer noted the Fed, but he really hit options again as weighing on the market.  He said Nucor (NUE) and Best Buy (BBY) are weighing on the market.  While he noted some individual stocks, he didn’t say anything really big or bad on any names.

NUE -8% at $59.20; BBY -4.8% at $51.33.

He is trying to avoid the negative chatter right now to not miss a big move.  There is a private equity "put" (meaning they will buy anything weak) and a weak dollar making our companies attractive.  Focus on earnings, but he won’t get tricked into believing BBY is permanent.  The main reason he would be happy is because spending is still happening, and we want things to be a little weaker.

Oh well, earlier he said "PHARMA ISN’T WORKING" so we’ll see what he has to say this evening.

Jon C. Ogg
December 12, 2006

Posted on: December 12, 2006 – 2:56 pm in Cramer

Cramer: Illogical Issues Winning Over Fundamentals

Is this a change from Cramer on his stance on Big Pharma?  He is saying Pharma isn’t working this morning in TheStreet.com video today.

He said options are driving trading instead of fundamentals, and that is why Goldman (GS) is hugging $200.00; and he noted Texas Instruments (TXN) going up is a little illogical based on how bad the news was last night.

He thinks the drillers are winning from legislation and developments (Washington Post article) regardless of oil prices next year: he likes (CLB) Core Labs NV and (HAL) Halliburton, although he has been riding these ponies for some time.

PHARMA is not working, even biotech in general, except for Celgene (CELG) and Genentech (DNA) as two names he was ok on.   He thinks the day is a wash and this is not a fundamental day, otherwise Texas Instruments would be down. 

My take on TXN is the same as his and other "non-bulge bracket firms" that evaluated the news.  It might not be fair to say that the street is conflicted in TXN, but the warning was worse than the worse whisper and the guidance for Q1 being even lower signals the real industry trends.  We still also have several big chip giants that haven’t yet come clean with any guidance, and that is still a potential headline risk.  It is truly illogical about the TXN rise today, although so far it has been marginal.  There is another interesting article worth noting, and while I do not really agree with the real extreme timeframe I definitely agree with the basis and the probability that you will see lower prices in TXN from here.

Jon C. Ogg
December 12, 2006

Posted on: December 12, 2006 – 12:25 pm in Biotech, Cramer, Financial Stocks, Semiconductor

Solarfun: Another Chinese Solar Power Files For An IPO

Solarfun Power Holdings has filed to come public via an IPO under the ticker SOLF.  Solarfun is yet another manufacturer of solar cells and modules out of China.  The Chinese company plans to offer 12 million ADS’s at a range of $11.50 to $13.50, giving the company a proposed market cap of $600 million at the middle of the range.  Each ADS will represent 5 ordinary shares.  Goldman Sachs is the lead underwriter and CIBC World markets is the co-manager on the IPO. The company commenced commercial sales of its main lines in 2005 and 2006, and has more factory capacity coming on line in 2007 and beyond.

If you think that this wipes out the rest of the solar players, guess again.  Go visit Alibaba.com and type in "Solar Panels" or "Solar Cells" and you’ll see that there is almost an endless supply of these companies in China, India, US, Canada, and the EU.  This will continue to cloud the "alternative energy" sector.  It will also make it harder and harder for the established companies to make their products stand out.  So many of the technologies that are used for these are so old that many of the core patents are essentially voided out, so you can have an endless list of companies in the field.  Trine Solar in China just filed last week, and you can imagine all the smaller venture companies that are seeking an IPO as their instant multi-millionaire strategy will be wondering if they should follow suit. 

If you back out the currency, here is a US-dollar equivalent in operations: $21 million revenues and $1.8 Million in net income for 2005; first nine months in 2006 were $48.9 million in revenues and $9.2 million in net income.

It is actually surprising that Citigroup isn’t listed in the underwriting.  Citigroup’s venture arms invested with other investment groups a sum of US$53 million in June and August of 2006.  There is actually a chance that the deal may price before the end of the year since it is international, so keep this name on an underwriting watch list for next week if you monitor IPO and secondary offerings.

Jon C. Ogg
December 12, 2006

Posted on: December 12, 2006 – 12:02 pm in IPOs

Merck Wants Out Of Pfizer’s Shadow

Stocks:  (MRK)(PFE)

Merck, along with most Big Pharma, wants to get as far away from the blast of Pfizer’s failed cholesterol drug launch as possible.

To that end, MRK announced that it will seek approval for three important drugs for cholesterol, insomnia, and HIV. The company said it would have four more drugs in late stage trials by mid-2007.

Merck has already said that earnings will be flat this year and up only slightly next year. It has also indicated that it will have to cut billions in expenses to bolster profitability. There is the spectre of Vioxx litigation.

The market does not seem to be impressed. Merck’s stock is flat at $44. Since Pfizer’s shares fell almost 10% on the bad news about its cholesterol blockbuster, Merck has managed to keep its shares fairly flat.

But, Wall St. is skeptical now. Pfizer made sure of that. It wants to see drugs out of trials and revenue from them replacing sales lost to generics. And, that may not happen.

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

Posted on: December 12, 2006 – 11:08 am in Pharmaceuticals

Fed Day, Analyzing a Soft Landing

Today at 2:15 PM EST (plus or minus a few minutes) we’ll get the FOMC decision on interest rates, but investors are not expecting any rate change and that is with reason.

We already had the 17 consecutive rate hikes, and there was not one single hike different than the 0.25% auto-pilot hike.  You can probably expect the Fed to say they have noticed the weakening economy with expansion expected to be at a moderate pace.  They will also likely say that inflationary pressures still pose a risk, but they have to say that.

Even if inflation stays at current levels or ticks up a tad, the Fed cannot risk fighting an extra 0.5% in higher prices to the point the break the growth engine.  Right now everyone seems focused on the minute details in the numbers coming out, but all in all the Fed did its job.  Manufacturing has slowed, the housing bubble popped and broke some of the weakest links, weak auto sales are still present, a tight job market has stabilized, mixed retail results in the middle and lower-end store levels have set in, the dollar has weakened, and even government forecasts for 2007 GDP are lower but still positive. 

Everyone wanted to know what a soft landing looks like, and this is it.

HERE is the last FOMC statement at the October 25, 2006 meeting.  Most are not expecting the overall statement to change that much except maybe even more notes about a weaker housing market.  The next meeting is a two day meeting from January 30 to January 31, and by then the Fed will have gotten a chance to look over some DJIA component earnings and their forecasts for 2007.

Jon C. Ogg
December 12, 2006

Posted on: December 12, 2006 – 10:56 am in Economy

Starbuck’s Gets Off Track (SBUX)

Starbuck’s stock is trading at about $36, which is almost exactly where it was six months ago. The stock traded under $10 five years ago, so it really acted like a growth stock until recently.

The primary reason that the share price of a growth stock does not grow is that the market is concerned about the growth.

UBS just upgraded SBUX with a price target of $42. It said the company’s shares were undervalued. The company says it is gaining ground in China. And, even with revenue up 20% in the last quarter to $2 billion, and positive remarks from analysts, Wall St. is worried about the future.

The company has said that most of its growth is ahead of it. Starbucks has about 12,000 stores worldwide and believes that it will eventually have 40,000. But the company also said that margins are flattening, and investors just can’t seem to accept that.

Thre is actually no reason to think Starbucks will head up anytime soon unless it can show that its guidance was too conservative.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does own securities in companies that he writes about.

Posted on: December 12, 2006 – 10:42 am in Retail

Hallucinations About Yahoo!

Stocks:  (YHOO)(GOOG)(NWS)

Bill Miller, one of the world’s greatest money managers, had his worst year in over a decade. His investments in EBay, Amazon, and Yahoo! killed his performance in 2006. But, he justified his Yahoo! holdings by saying the stock could go from its current $26 to $40 next year. Maybe his grief over losing all that money has clouded his judgment.

Miller thinks that Yahoo!’s new search technology for advertisers, the so called Panama Project, will drive earnings and the stock price. He has not made it clear why he thinks anyone would switch from Google, which has almost the entire market and a product that works remarkably well.

It is also worth noting that in the November Comscore numbers on intrenet audience, Fox Interactive, which owns MySpace, passed  Yahoo! to move into first place for total pageviews. Yahoo! shareholders cannot be too happy about that. Google also made big strides forward in th study.

Maybe Yahoo! should sell Panama back to the panamanians.

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

Posted on: December 12, 2006 – 10:07 am in Internet

Best Buy: Wal-Mart Collateral Damage

Stocks:  (BBY)(WMT)(TGT)(COST)

Best Buy reported earnings and Wall St. was disappointed. Revenue came in fine, up over 15% to almost $8.5 billion. But, EPS was $.31 and investors wanted $.35. The shares were knocked down over 6% to $50.60 in early trading.

Now the question is whether another group of retailers will report weak results as they try to keep traffic in the face of price cuts on thousands of items. CostCo and Target are especially at risk, but a number of smaller retailers could be part of the fall-out.

Sales may be good this year, but retailers look to have a weak Christmas for margins and earnings.

Ouch.

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

Posted on: December 12, 2006 – 9:54 am in Retail

Red Hat Completes its Transition to the NYSE….Why?

Stock Tickers: RHT, RHAT, MSFT, ORCL, NOVL

Red Hat, the leader of a standalone Linux O/S and Office Suite for in-store boxed software suites, has completed its transition from a NASDAQ listing to the NYSE as of this morning.  You can jettison the RHAT ticker for the new RHT ticker on NYSE.

The CEO, Matthew Szulik, said (in a CNBC interview from NYSE floor, with all of them wearing corny red gangster hats of course) that its transition was to give an investor brand as a leader on a global basis for open source software boxed packages and he was commenting how bright the company’s future is.  The CEO also said it is still too early to tell if Oracle’s product at half the price was going to hurt them and he noted a research report saying they would see more growth.

A transition from NASDAQ to NYSE is fine for certain companies, but for a company like Red Hat it just doesn’t seem to make much sense. Maybe the company was trying to shake out the shorts in the name, but this just doesn’t telegraph huge growth out of the company.  That may not be far off now that Microsoft (MSFT) has started signing Linux pacts with Novell (NOVL) and has other Linux deals on the table (Red Hat rebuffed the offer); and as competition from Oracle (ORCL) and others.

As of last month, Red Hat saw its short interest grow from 15.8 million shares in October up to 20.4 million shares.  This now represents 10.8% of its float.  The stock closed yesterday at $16.22, and shares were at $16.34 on last look.  Time will tell, but this sort of transition is not usually one that active traders of tech stocks usually like to see.

I don’t know why I keep thinking Red Hat sounds so much like Dead Cat, but they came up with their own name.  Hopefully this works for them, because they have some pretty strong head winds in their path.

Jon C. Ogg
December 11, 2006

Posted on: December 12, 2006 – 9:51 am in Exchange, Software

Hewlett Packard & Analysts: Who Is in Charge?

Stock Tickers: HPQ, DELL, SYMC

I am not questioning who is running Hewlett-Packard (HPQ) at all.  That is quite clear, and we all know it is effectively Hurdlett-Packard.

What is not clear is the uncanny reiterations being seen at the Analyst meeting today.  In a webcast, Mark Hurd reiterated 2008 targets of $2.78 to $2.98 and revenues of $100.9 Billion to $102.8 Billion.  If you can guess what consensus is, you are the same as the street: Consensus for 2008 is $2.88 and $102 Billion respectively.  The company also reiterated prior 2007 targets already given, but this was the first real formal number targets for 2008.

It is uncanny how often the "consensus" numbers from Wall Street analysts are essentially acting as a tool that companies use to bogey their guidance.  HPQ has its fiscal end in October, so this is really only a 2-year target.  But you still have to wonder whose crystal ball is right and whose crystal ball is the one dictating guidance.  What you can expect is that this essentially should lock down chances of any huge estimate changes up or down from the street after this analyst meeting.

The company did say it would continue to evaluate cost cutting opportunities.  It is still looking for opportunities as well.  The company also made a small acquisition, and the company was dismissing recent rumors that it could be interested in a large acquisition like Symantec (SYMC) or other large pure-play security or storage companies because the CEO noted you shouldn’t expect huge transactions.  H-P also announced that it was acquiring private Knightsbridge Solutions for undisclosed terms.  Knightsbridge is another information management company in business intelligence and data warehousing & integration.

Shares of Dell (DELL) are down 0.5% at $26.60 this morning, but that is after more reports of the lagging ex-PC sales leader cutting monitor panel orders by as much as 30%.

Shares of HPQ are up 0.2% at $40.10 in pre-market activity.  Symantec (SYMC) has not seen any pre-market trading activity after HPQ effectively dismissed the rumors of a potential deal.

Jon C.Ogg
December 11, 2006

Posted on: December 12, 2006 – 9:14 am in Analyst Calls, Earnings, Pre-Market Activity, Rumors

Goldman Sachs Indicating Lower After Earnings

Goldman Sachs (GS) posted earnings this morning at $6.59 on a diluted basis, but the number before items is a tad higher at $6.77 EPS,  The street was looking for $6.00 to $6.10, but recent strength in the markets and a slew of positive research calls in the sector put the "whisper number" up between $6.50 and $7.00 on EPS.

Brokerage firms are expected to always exceed earnings estimates, so this is actually par for the course. GS shares are trading marginally lower by 1.25% down to $200.00 in pre-market activity.  The 52-week trading band is $124.23 to $206.70, so you can see the company has been doing more than well in 2006.

Just yesterday Cramer noted that the company’s stock was ahead of itself.  GS now has an $86 Billion market cap.  Based on the full 2006 number just reported (at $19.69 EPS), the company has a trailing P/E ratio of $10.15.  The street is expecting roughly $18.00 per share in earnings for 2007 as of last week, so it looks like there will probably be some estimate hikes in the coming days after we see the rest of the brokerage firm EPS reports.

Jon C. Ogg
December 11, 2006

Posted on: December 12, 2006 – 8:42 am in Earnings, Financial Stocks, Pre-Market Activity