Daily Archives: December 18, 2006

SIRF: If You Can’t Beat ‘Em, Sue ‘Em

Barron’s beat up on chip maker SIRF this week. The company makes chips for GPS devices, and at one point had 90% of the market. But, one of the company’s big customers, TomTom, is going to use a device from a private company, Global Locate.

The concern over this loss of business has taken the stock from $31 to $26 in three days. So, SIRF took the only sane route. They sued Global Locate for patent infringement.

Awesome. Four patents alledgedly violated. Looking for an injunction and monetary damages in federal court.

Won’t look good if SIRF loses.

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

Posted on: December 18, 2006 – 9:33 pm in Semiconductor

Ebay Pulls The China Plug (TOMO)(EBAY)

Ebay has decided to get out of China, at least in terms of operating its own local language site. Chinese who buy from Ebay sites outside the country will still deal with Ebay.

Chinese portal Tom Online will operate a new auction site that will be a joint venture with Ebay. Tom will own 51%.

The Wall Street Journal said that the move is a defeat for Ebay. That is short sited. Tom has a significant presence in China and knows the local markets. Half a loaf is better than none.

There is a wisdom in Ebay’s decision, and it will probably be evident fairly quickly.

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

Posted on: December 18, 2006 – 9:23 pm in International Markets

Hovnanian Forecasts Homebuilder Woes Aren’t Over

Hovnanian (HOV) ended up having killer numbers, sort of….their numbers got killed.  If this is the bottom for the homebuilders, well you better look at the guidance for 2007 and do some forward multiple projections.  The one caveat here as it is with so many industries is that the Heads of the homebuilders might not be able to see the clear skies beyond the horizon like economists and market predictors looking at radar.  But someone is wrong, and HOV shares fell 5% after this earnings report because of guidance.

HOV reported a loss for the quarter after taking $315 million in inventory impairment charges in the fourth quarter alone (a huge portion of the $336M the whole year).  Backlog is down, units under contract are lower.  The company is forecasting 16,000 to 18,000 net home deliveries in 2007, but that includes 1,000 to 1,500 from joint ventures.  This compares to a number of 17,940 for 2006 after a 2,261 inclusion from joint ventures.

Here is another killer: HOV is forecasting 2007 EPS at $1.50 to $2.00.  You don’t need to worry that the street estimate for 2007 is $2.70 EPS and that the guidance is light.  Homebuilders cant beat even lowered guidance now and we knew that.  But what you need to worry about is that if you take the top of the range and back that into the closing share price of $35.00-ish you end up with a Forward P/E ratio of 17.5.  Homebuilders have traded with a single digit P/E for a long time, and that is because when it is good it is so good that builders are thought of as genius successful businessmen and when it is bad builders are thought of as leper bankrupt losers with bad breath and even worse table manners.

The S&P has a P/E ratio of roughly 15.5 and the DJIA is roughly 15.4, and that is today.  The forward targets are not really set from the street yet, but the street is still looking for earnings growth next year in the single digits.  That means that this homebuilder is trading at a Premium multiple.  If land values do not stabilize that much then the balance sheet projections get pretty weak too.  All of this forward P/E and the like is assuming the company wasn’t lumping in a bunch of odd items, but if they try to say it will be due to one-time write downs then you better be a skeptic.  Ask anyone who went through the 1980’s in Texas and they’ll tell you how those writedowns can keep happening quarter after quarter and year after year.

So now comes the trading game.  Just how bad is the street really prepared for the sector downturn?  Was this fully known and do you keep buying pullbacks in the sector?  The stock closed down at $35.25, and fell to $33.50 in after-hours trading.  The 52-week trading range is $24.79 to $54.59.  We’ll see if the pundits that said the worst is behind in the sector are right or if the industry guys are right.  One of them is way off.

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 8:00 pm in Housing

Cramer Pumps Up GMarket..as the next eBay

Cramer said you need to look at Internet companies not for value but you want them for growth.  Cramer was discussing the next eBay (EBAY) as a stock called G-Market (GMKT).  That is the established e-Bay of its type in South Korea and they are winning on the home turf.  GMKT just popped 10% to $22.60 in after-hours trading.  Yahoo! owns a stake and they are expanding beyond Korea.  The company has no debt and Cramer thinks with Goldman really being a promoter of the company’s 24-times 2007 earnings it is a winner.  It has over 100% growth and he can’t find earnings growth and value like this anywhere else.  It is a new public company and it has a share lock-up on wednesday, although he doesn’t expect insiders to unload.  He said you can buy on Wednesday or Thursday after the lock-up.  The stock is thin volume here and mostly trades in Korea.

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 6:23 pm in Cramer

Cramer Discusses Omniture (OMTR)

Cramer said you can look for growth, but make sure youget the right growth.  Everyoneone wants a hot stock, but very few determine what they really do.  He will do 1 per day this week, and decide if they are too hot to handle.

The first is up 50% since NOV 1…Omniture (OMTR)….Cramer discusses if it is still worth buying.  They do software to collect and analyze data for content sites so they can make decisions based on data.  10 analysts 3 strong buy, 4 buy, 3 holds so it has more room for downgrades than upgrades.  He then noted the lock-ups coming DEC 26, which is 43% of the insiders and they’ll probably sell a lot since they are up a lot.  Cramer said if you want to own this you gotta wait until after lock-up.  P/S is 8.6 and has high multiples, but Cramer said it was a sleepy and ignored IPO from summer and priced under the range.  The second growth favor issue is that they are best of breed in their field.  TheStreet.com rigorously evaluated the company and competitors, and they went with them.

Cramer said this is a buy AFTER DEC 26 after the lock-up.  He thinks if you like F5 (FFIV) or Akamai (AKAM), then you’ll love this one according to Cramer.  BUT Cramer said you’ll be staying past your welcome if you hold it for more than a few months.

OMTR traded up 2.25% to $14.10 after Cramer discussed this.

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 6:11 pm in Cramer

Biogen-Idec & Genentech Trading Down on Rituxan Death Reports

by Jon C. Ogg
December 18, 2006

Biogen Idec Inc. (BIIB) and Genentech, Inc. (DNA) are issuing a DEAR HEALTHCARE PROVIDER letter to physicians and other prescribers, including rheumatologists, neurologists, oncologists, hematologists, dermatologists, nephrologists, oncology nurses and oncology pharmacists, regarding updated safety information for Rituxan®. The letter is currently posted on the Genentech, Inc. website. The letter informs healthcare providers that two cases of progressive multifocal leuklencephalopathy (PML) resulting in death, have been reported in patients receiving Rituxan® for treatment of Systemic Lupus Erythematosus (SLE). Rituxan is not approved for the treatment of SLE.

BIIB is down 4% at $48.20 and DNA is down 1.2% at $79.97 in after-hours trading.

Below is more data out of Biogen-Idec:

PML is a rare, progressive, demyelinating disease of the central nervous system that usually leads to death or severe disability. While rare, PML is a known risk in patients who have immune system suppression either because of their disease or the medications they are taking. PML has been reported in the literature in HIV-positive patients, immunosuppressed cancer patients, transplant patients, and patients with autoimmune disease, including SLE, who were not receiving Rituxan.
The two SLE patients had longstanding SLE with multiple courses of immunosuppressant therapy prior to receiving Rituxan. Rituxan monotherapy was the last treatment administered prior to the diagnosis of PML. PML has also been reported in the literature in patients with SLE receiving prednisone, azathioprine, cyclophosphamide, and other immunosuppressant agents, who were not receiving Rituxan.
Previously, cases of PML have also been reported in patients with hematologic malignancies during or up to one year after completion of Rituxan. The majority of these patients received Rituxan in combination with chemotherapy or as part of a hematopoietic stem cell transplant. A description of cases of PML in patients with hematologic malignancies treated with Rituxan is included in the current US prescribing information.
The Company and Genentech also informed healthcare providers that we are working with FDA to update the Rituxan prescribing information to include the new information.
Rituxan is indicated for the treatment of patients with relapsed or refractory, low-grade or follicular, CD20-positive, B-cell, non-Hodgkin’s lymphoma (NHL), and for the first line treatment of follicular, CD20-positive, B-cell NHL in combination with CVP chemotherapy. Rituxan® is also indicated for the treatment of low-grade, CD20-positive, B-cell NHL in patients with stable disease or who achieve a partial or complete response following first-line treatment with CVP chemotherapy. Rituxan is also indicated for the first-line treatment of diffuse large B-cell, CD20-positive, NHL in combination with CHOP or other anthracycline-based chemotherapy regimens. Rituxan in combination with methotrexate is also indicated to reduce signs and symptoms in adult patients with moderately- to severely- active rheumatoid arthritis who have had an inadequate response to one or more TNF antagonist therapies. The safety and effectiveness of Rituxan for the treatment of SLE has not been established and SLE is not an FDA-approved indication.

Posted on: December 18, 2006 – 5:34 pm in Biotech

Oracle Trades Down Slightly in Earnings Reaction (1)

Oracle (ORCL) met $0.22 EPS expectations, although as noted they have beat in each of the last 3 quarters and some were hoping for more.  Revenues were $4.16 Billion instead of the $4.15 Billion estimate.  Here is the break down (in new orders):

-software revenues were up 23% to $3.2B;
-database and middleware revenues up 9%;
-applications revenues up 28%;
-services revenues were up 41%.

Oracle President and CFO, Safra Catz: "We are now halfway through our five year plan targeting EPS growth at 20% per year. For the first two-and-a-half years we are comfortably ahead of that target."

He also noted that they are taking share from SAP in applications, from BEA in middleware, and from IBM in database.  Its reference to BEA Suystems (BEAS) and the fact that they expect to take more from them and pass them later in the year doesn’t really telegraph a buyout is in the company’s mind.  Ellison himself has pledged to only do buyouts that would actually  assist the company meet its 20% bottomline growth.

We’ll have to see what the guidance is for the company before giving this a thumbs up or thumbs down.  Shares are down 1.15% at $17.70 in after-hours trading, although shares were initially down about 2% after the report.

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 4:32 pm in Earnings

US Stock Market Closing Notes (DEC 18, 2006)

(ABBI) Abraxis Rose 4.9% to $29.24 after it showed 60% gain in ABRAXANE in tumor response compared to Taxotere.

(AHO) Royal Ahold fell 1.5% to $10.59 despite reports that it’s is in talks with private equity over potentially selling is US food service unit.

(AMSC) American Superconductor fell 9% to $9.83 after it lowered guidance.

(BMET) Biomet Shares fell 1% to $41.59 after its $44.00 private equity buyout was finally announced.

(SNN) Smith & Nephew rose a sharp 7% to $50.58 after it broke off dilutive acquisition talks with Biomet and after Merrill Lynch raised its rating to a Buy.

(BPA) BioSante rose a sharp 24% to $3.14 after it received FDA approval on Bio-E-Gel (Elestrin) for hot flashes.

(CMX) Caremark gets $26 Billion merger from Express Scripts, threatening the CVS deal; CMX rose 10.5% to $55.58.

(CVS) CVS fell 1.7% to $30.01 after the competing deal for Caremark and after it puts added pressure on the company to perform.

(H) Realogy rose  19% to $30.40 after the company received a $30.00 per share cash offer in a buyout from Apollo Management in a $9 Billion deal after debt assumptions.

(HET) Harrah’s rose 3% to $82.18 on reports that the board was accepting a $90 private equity buyout; the dela could take 1-year to clse, but maybe that’s being pessimistic.

(IMAX) IMAX traded down 8.9% to $3.71 after the company decided to rule out a potential takeover, after down 60% that was obvious.

(WTW) Weight Watchers gained 9% to $51.45 after announcing a self tender to lower its share count.

(NTRI) Nurti-system fell another 3.6% to $62.25 on worries of WTW competition.

(LLL) L3 fell almost 6% to $79.00 after losing language training pact to DynCorp according to WSJ.

(MRD) MacDermid gets $35 buyout offer from a CEO-led group; shares rose 3.7% to $34.01.

(OVEN) Turbo Chef shares rose a sharp 7% to $15.99 after Barron’s reported that shares could rise 40% in 2007.

(SGR) Shaw Group rose 8.5% to $33.20 as its consortium with Westinghouse was selected for new construction of nuclear plants in China.

(SWHC) Smith & Wesson rose 0.9% to $10.36 after it announced it is paying $102M to acquire Thompson/Center Arms and raised 2007 & 2008 guidance as result of additional company.

(UBET) YouBet.com fell 5% to $3.30 after it filed to sell 6+ million shares.

(BMC) BMC Software fell 0.1% to $32.35 after it was raised to Overweight at Lehman.

(C) Citigroup rose 2.5% to $55.44 after it was raised to Buy at Merrill Lynch.

(ELK) ElkCorp rose 8% to $38.81 on a Carlyle buyout.

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 4:12 pm in Market Close

Will Comcast Finally Do Blockbuster In?

Stocks:  (BBY)(CMCSA)

Comcast is testing a program that allows consumers to see a movie on cable VOD that same day it is available in DVD form at stores. The time period between the release of DVD and their cable release is now a month of more.

According to The New York Times, Blockbuster’s reaction was: “we believe that they will be very cautious in introducing any new less profitable service that could be cannibalistic to the rental and retail channel.”  Well, that may be true today, but it may not be true for long.

No one believes that Blockbuster can make it through the mine field of telecom TV, cable VOD, and competition from firms like NetFlix. It shows in the stock which traded near $30 in 2002 is now trading at just above $5.

With cable getting more aggressive by the day, it could go much lower.

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

Posted on: December 18, 2006 – 3:18 pm in Cable Companies

Cramer’s Retail Picks Today

On today’s STOP TRADING segment on CNBC Cramer went back over Under Armour (UARM) as it becomes (UA) on NYSE.

The company already said that it didn’t go into football cleats to go into the cleat business.  That is to go into the shoe business.  The shorts are wrong according to Cramer, and he thinks the "UA" stock is only kept down by its trailing multiples.  Cramer thinks the CEO is humble but is also the next Mickey Drexler and he loves it.

Coldwater Creek (CWTR) has been oversold according to Cramer and he thinks it fits the regional to national story that is pressured by the short sellers.  He thinsk the shorts have won, but now need to get out of the way.

Cramer again said Halliburton (HAL) is very undervalued to peers and undervalued to Schlumberger (SLB).  He likes HAL, but he’d buy it after gas inventories on Thursday.

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 2:46 pm in Cramer

CEO’s Who Need to Leave: Amazon.com’s Jeff Bezos, BUT Only a Title Change

Amazon.com (AMZN) would do better if Bezos dropped only one of his two titles: CEO & President.  He can stay one and can stay as Chairman.  Think about it.

Shareholder groups are becoming more activist and this trend will continue in 2007.  Private Equity and LBO Groups can only acquire so many companies, and there are only so many candidates that can run behemoths.  The best way to see change is right at the top in many cases and there is a slew of US public companies that would do far better if they could replace current management.  These aren’t in any ranked order, so the first isn’t the worst and the last isn’t the best of the worst.  The problem in stating this is that it is very easy to come in and criticize, yet finding replacements for companies this size is not exactly an easy feat.  Private Equity as a sector has taken all the talented guys, and they haven’t stopped with the age limits that many public companies live by.  There just aren’t too many Lou Gerstner and Jack Welch carbon copies out there.

Amazon.com (AMZN) stock would likely rise just by announcing a partial change of figureheads.  Here is the best thing: All Jeff Bezos has to do is simply split his CEO and President role.  He can stay Chairman of the Board.  He is the founder and has a Wall Street background, but now the company needs some help.  The company knows the earnings and analyst game because he taught them and only hired executives that understand Wall Street.  Their investor and media relations departments monitor research calls, monitor stock commentary, and should understand this.  Maybe no one wants to point this out, so why not us…. 

There are too many reports and too much gossip that Bezos wants to launch spaceships from West Texas more than he wants to run Amazon.com.  The company truly transformed e-commerce and transformed online shopping in a few sectors.  If you had to think of how large the warehouses would be to store all the vendor products they sell you would be looking at a large chunk of Manhattan.  Amazon warehouses some of its books, CD’s and DVD’s, but in a sense it is now just a master clearing house and order taker for just about everything else.  A new CEO or President could get the shipping centers fixed, could identify the markets it should stop clearing orders for, and could identify new avenues. 

This might give the company its "mojo" back if it had some new blood.  The company has a great board of directors.  I like Bezos as a CEO personality, and I like Amazon.com.  But after looking at these "CEO’s who could go," Bezos should drop the CEO position and just remain as the Chairman and President (or drop the President title and let someone have the new CEO title).  This would actually help the company.  Bezos has done what many thought he couldn’t: He turned Amazon.com into a consistently profitable business quarter after quarter on a GAAP and on a cash flow basis.  Now he could use some help to take it from here.  Bezos doesn’t have to leave, he just has to bring in some serious help in what the street thinks is the helm.  He won’t even have to give up control in order to implement this.

Amazon.com is up 35% from lows over the summer.  This suggestion doesn’t mean Bezos is bad or that he needs to disappear.  He could just use a more active face next to him for implementations from here.  AMZN is still down roughly 20% from its 52-week highs.  If this is being taken as an ultimate slap to a founding CEO who has been Time’s man of the year, then you didn’t read the advisory article here. 

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 2:40 pm in Management Change

Skype Founders Attack TV World

The world of video is already crowded with movie downloads to PCs and iPods, fiber-to-the-home TV on the way, video on demand from cable, and new services from companies like Amazon coming along almost weekly.

The founders of Skype want in on the action, and have invested some of their Skype cash (EBAY) in a peer-to-peer, near high definition global TV platform. According to the management at the new company the system will be able to handle tens of millions of users because it will rely on PCs around the world with downloaded content to serve the system. Central servers will not be required.

Digital rights management will also not be necessary, at least not in the classic sense. Since each piece of content will be streamed and the "bits and bytes" will never reside on the PC hard drive. Clever, if it works.

The company hopes to get studios and TV networks to use the service as a new conduit to bring in money. Programming will be underwritten by advertising.

It is easy to bet against the new service, just as it was easy to bet against Skype in it early stages. But, Skype’s 125 million users came from a model that significantly disrupted the traditional telephone industry.

Maybe fiber-to-the-home isn’t such a great idea.

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

Posted on: December 18, 2006 – 2:19 pm in Internet

Someone Finally Slaps Home Depot (HD)

A proxy fight at Home Depot? Could be. Rational Investors wants an independent committee of the household retailer’s board to do a strategic review and look at management performance.

After buy-out rumors and complaints about executive compensation and performance, it is about time that a large investment group attack Home Depot at the board level.

DeutscheBank says that it views the move by Rational as proof that Home Depot is undervalued.

The comany has screwed up a number of things including option grants that lead to restatements from 1981 to 2000. Investors have to wonder what the board, especially its compensation committee, was up to.

HD trades at just over $40, up slightly on the day. The stock was at $50 a little over four years ago. Since then, the stock is down over 20% while the S&P is up over 20%.

Perhaps some other insitutions will pile on and shareholders will get some results.

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

Posted on: December 18, 2006 – 2:07 pm in Retail

Why Is Oracle Off More Than Other Tech Stocks Ahead of Earnings

Out of the ‘Horsemen’ stocks, Oracle (ORCL) is the only on that has actually pulled back more than 10% from its recent post-earnings highs.  ORCL is up 2.3% today to $18.09, but shares closed at $17.68 Friday and were down to $17.50 in early December.  From the November intra-day high of $19.75 and high close of $19.66, the stock was down 10%.  So while it has been hitting on all cylinders and finally proved to the world that its endless acquisitions let the company win, the stock has been acting as though it was capped. 

That may be because the recent highs were post-bubble and 5-year highs, but this is still the only one of the big volume Horsemen stocks that has seen a 10% pullback.

Here is the list of other pullbacks off of recent highs, but understand that trying to use all-time highs or highs back before 2001 may show different readings:

Google (GOOG) pulled back 8% or so, stock recently at all-time highs.  Cisco (CSCO) hardly off highs at all, close to multi-year highs.  Microsoft (MSFT) hardly off highs at all, close to multi-year highs and not including dividend adjustments.  Intel (INTC) INTC is only off 6% from recent highs, and that is even with all the chip stocks in the sector warning.  Apple (AAPL) since hitting $93 it has only pulled back about as much as 8% from its recent highs.  Yahoo! (YHOO) has pulled back 10% at the extreme point but it much higher.  Yahoo! is in the midst of a turnaround that has yet to turn so comparing this may not even be fair to include it in the same piece.  Even if you go to the direct competitor SAP (SAP-AND/NYSE) the stock is only about 4% off of current quarter highs, although it is down roughly 10% from its 52-week highs from before the summer.

So what you have to ask is this: Is all the good news priced in and is the street bracing for bad news, OR did the street just sell it off more than the others for other reasons that aren’t paired adequately to reality?  The company has exceeded estimates in the last 3 quarters, so maybe traders are thinking the company can only outperform for so many quarters.  Maybe the street is bracing for the company to use its stock for another big acquisition.

Options have more than 1 month of time value, so trying to use these for an estimated expectation is going to seem wider than in most cases.  It appears as though option traders are braced to absorb a move of $0.80 to $1.10 in either direction.  That 4% to 5.5% expected move is because of the time value and a low VIX is not really reflected in this number today.  ORCL shares are up roughly 50% from its January lows.

Oracle is expected to post earnings of $0.22 for the November quarter on revenues of $4.15 Billion. It is also expected to post $0.22 EPS next quarter on revenues of $4.18+ Billion.  We’ll have to see if the selling was just because of the multi-year highs or if the selling was signaling another slowdown risk for the company.  Even if these shares fall off significantly after earnings today, thestock seems like a higher trading range has been established than wehave seen in the last 5-years before the earnings report in September.

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 1:52 pm in Earnings, Software

Cramer Makes 2 Big Buyout Predictions

Jim Cramer made 2 significant company buyout calls on CNBC just a few minutes ago: He noted that Alcoa (AA) will not be public this time next year, as he thinks it will go private.  He doesn’t thinK that Honeywell (HON) will be public this time next year either, as there is little reason for them to be their own company any longer.

Cramer really keyed in on CHINA GOING NUCLEAR POWER this weekend, although a lot of this has been known by those following the Uranium trades.  He noted that Cameco (CCJ) will go higher even though they don’t know what they are doing.  Cramer noted this was good for McDermott (MDR) and Foster Wheeler (FWHL).

The real beneficiary from this si the one he didn’t note: Shaw Group (SGR) up 15% after winning the construction for these plants in China with a Westinghouse consortium.

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 10:06 am in Cramer, Mergers and Buy Outs

Monday Morning M&A Roundup (DEC 18, 2006)

There is a reason the term MERGER MONDAY was coined, and this Monday is certainly living up to its name.  It is likely that the year-end could be blamed for this as many firms will all but effectively shut down M&A departments later this week until after the first of January.  Some of these deals make sense, but it is getting obvious that private equity firms are starting to chase performance by simply committing large amounts of capital now that we have entered the realm of teh mega-mergers and barriers to such deals being removed by the capital markets.  Right now many of the larger private equity firms are really looking at a premium to committing capital in large deals rather more small deals that offer better values.  This doesn’t even include some of the smaller deals and unit transcations.

(AHO) Royal Ahold is in talks with private equity over potentially selling is US food service unit; reports put this as much as $4B to $5B.

(BMET) Biomet has agreed to be acquired for some $10.9 Billion in cash, a $44 offer from buyers include Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts and the Texas Pacific Group, along with one of Biomet’s founders, Dane A. Miller.  BMET was up 1%, now down 1.2%; BAIT SHOP traders should consider taking profits if they don’t want to just sit in waiting for money market returns or hoping for a higher buyout offer.  This is 10% higher than what I estimated they would have to pay had they made this offer 6 weeks ago.

(BUCY) Bucyrus pays $731M to acquire DBT GmbH in Germany.

(CMX) Caremark gets $26 Billion merger from Express Scripts for $58.80, threatening the CVS deal.  CMX shares are up 9% to $55.00.  CVS trading up almost 1% as it would receive a break-up fee.

(ELK) ElkCorp is being acquired by the Carlyle Group for $38.00 per share, the company makes building materials but is mostly known to the public for its roofing operations.

(H) Realogy gets $30.00 per share cash offer in a buyout from Apollo Management in a $9 Billion deal after debt assumptions.  Realogy is the old Cendant unit spun-off.

(HET) Harrah’s board met over weekend to discuss the potential buyout from groups.

(ICOS) Icos gets $32.00 offer revised to $34.00 from Lilly, ICOS shares up 1.5% at $33.85.

(LORL) Loral is paying $2.8 Billion to acquire BCE’s Telesat Canada, so forget about that IPO now. This is leveraged as LORL has a current market cap of $672M.  This was BCE’s largest hope as they were trying to monetize the unit and have had to file and withdraw for an IPO of it before.

(NHY-ADR) Norsk Hydro is being acquired for oil and gas drilling operation by Statoil in Norway, which now looks like will be the largest offshore driller in the world.  This could make other EU and US drillers and servicers look to get back into the M&A game.

(SRA) Serono’s acquisition by Merck KGaA was approved by the European Commission.

(SWHC) Smith & Wesson is paying $102M to acquire Thompson/Center Arms and raised 2007 & 2008 guidance as result of additional company.  SWHC up almost 1% at$10.35 pre-market.  Smith & Wesson had already telegraphed this in recent filings that it was raising cash for buyouts.

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 9:14 am in Mergers and Buy Outs

Select Analyst Calls (DEC 18, 2006)

APPB raised to Buy at UBS.
ATO started as Overweight at JPMorgan.
AYE raised to Outperform at Credit Suisse.
BBBY started as Outperform at Cowen.
BHI raised to Buy at Goldman Sachs.
C raised to Buy at Merrill Lynch.
COO cut to Underweight at Prudential.
CSE started as Outperform at KBW.
ECA cut to Sell at Goldman Sachs.
FST raised to Outperform at Credit Suisse.
GFIG started as Mkt Perform at KBW.
IBM started as Neutral at Prudential.
ICON started as Buy at Merrill Lynch; started as Outperform at Piper Jaffray.
JCP raised to Buy at AGEdwards.
JNJ added to B of A’s Fresh Money Focus List.
KELYA cut to Sell at Merrill Lynch.
LLL cut to Neutral at Credit Suisse.
LRW cut to Sell at Merrill Lynch.
MUR cut to Underperform at Credit Suisse.
NRP raised to Outperform at Wachovia.
PNM started as Sell at Citigroup.
POWI cut to Sell at Citigroup.
PSPT started as Outperform at Credit Suisse.
RHI cut to Neutral at Merrill Lynch.
RMIX raised to Buy at Citigroup.
SLB cut to Neutral at Goldman Sachs.
SNN raised to Buy at Merrill Lynch.
SOV cut to Underperform at RBC.
TIF started as Outperform at Cowen.
URBN started as Neutral at Cowen.
VRX started as Buy at citigroup.
WNR cut to Sell at B of A.
ZZ cut to Neutral at JPMorgan.

Cowen started selected retail stocks as Outperform: A&F-ANF, Ann Taylor-ANN, Bed Bath & Beyond-BBBY, Chico’s-CHS, Men’s Warehouse-MW, Tiffany’s-TIF, William Sonoma-WSM.  Cowen also nailed Pier 1-PIR and Tuesday Morning-TUES as Underperform ratings.

Goldman Sachs has a coverage trade in the energy patch: Baker Hughes (BHI) raised to BUY; while Schlumberger (SLB) was downgraded to Neutral from Buy and EnCana (ECA) was cut to Sell from Neutral.

Jon C. Ogg
December 18, 2006

Posted on: December 18, 2006 – 8:10 am in Analyst Calls

Pre-Market Stock Notes (DEC 18, 2006)

(ABBI) Abraxis showed 60% gain in ABRAXANE in tumor response compared to Taxotere alone.
(AGO) Assured Guaranty filed to sell 1.5M shares for holder.
(AHO) Royal Ahold is in talks with private equity over potentially selling is US food service unit.
(BMET) Biomet Shares halted; still in talks to be acquired in auction process according to WSJ; deal has been in works for weeks though.
(BPA) BioSante received FDA approval on Bio-E-Gel (Elestrin) for hot flashes.
(BRKR) Bruker Bio filed to sell 10+ million shares of common stock.
(BUCY) Bucyrus pays $731M to acquire DBT GmbH in Germany.
(CMX) Caremark gets $26 Billion merger from Express Scripts, threatening the CVS deal.
(COCO) Corinthian Colleges Chairman is retiring.
(COP) ConocoPhillips noted as cheap compared to peers in barron’s.
(DALRQ) Delta will file restructuring plan to fight off a takeover.
(ENCY) Encysive hypertension pills are now available for sale in Germany.
(EXEL) Exelixis signed new collaborative pact with Bristol-Myers.
(H) Realogy gets $30.00 per share cash offer in a buyout from Apollo Management in a $9 Billion deal after debt assumptions.
(HET) Harrah’s board met over weekend to discuss the potential buyout from groups.
(ICFI) ICF International awarded $10M contract with EPA.
(ICOS) Icos gets $32 offer revised to $34.00 from Lilly.
(IDXX) IDEXX Labs is planning to acquire Osmetech’s critical care division for $44 million.
(IMAX) IMAX is trading down about 10% pre-market after the company decided to rule out a potential takeover, after down 60% that was obvious.
(JOYG) Joy Global $0.71 EPS vs $0.66e.
(LLL) L3 could face business hurdles after losing language training pact to DynCorp according to WSJ.
(LORL) Loral is paying $2.8 Billion to acquire BCE’s Telesat Canada, so forget about that IPO now. This is leveraged as LORL has a current market cap of $672M.
(MRD) MacDermid gets $35 buyout offer from a CEO-led group.
(NHO) Norsk Hydro trading up 25% as Statoil is buying the company’s oil and gas operations, effectively a merger.
(NFX) Newfield Exploration is cheap stock according to Barron’s.
(ORCL) Oracle reports after the close.
(OVEN) Turbo Chef shares could rise 40% according to Barron’s.
(POWI) Power Integrations gets NASDAQ delisting.
(RPRX) Repros Therapeutics says Proellex achieves statistically significant pain reduction in endometriosis trials; named new chief medical officer.
(SCS) Steelcase $0.22 EPS vs $0.19e.
(SGR) Shaw Group consortium with Westinghouse selected for new construction of nuclear plant in China.
(SNE) Sony may attempt to compete with iTunes according to WSJ note.
(SNY) Sanofi-Aventis said the FDA recommended against continued marketing of Ketek for axacerbated chronic bronchitis and sinusitis.
(SRA) Serono’s acquisition by Merck KGaA was approved by the European Commission.
(SWHC) Smith & Wesson is paying $102M to acquire Thomason/Center Arms and raised 2007 & 2008 guidance as result of additional company.
(TTEK) Tetra Tech wins $4M in reversed legal charge, will delay annual report and recognize charge of $200K.
(UBEY)YouBet.com filed to sell 6+ million shares.
(VZ) Verizon in pact with China Netcome and China telecom to construct and maintain the first next-generation optical cable underseas to directly link the US and China.
(WMG) Warner Music pays $73.5M for controlling stake in Roadrunner Music Group BV, a hard rock record label.
(ZVUE) Handheld Media paid $1M+ for YourDailyMedia video library.

Posted on: December 18, 2006 – 7:57 am in Pre-Market Activity

Europe Markets 12/18/2006 BT Down, VW Up

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

Markets in Europe were narrowly mixed at 6.30 AM New York time.

The FTSE was flat at 6,258. Barclays was up .1% to 728.5. BP was up .6% to 583.5. BT was down 1.8% to 309.25. GlaxoSmithKline was up .4% to 1338. Prudential was down .1% to 710. Reuters was down 1.1% to 452. Unilever was up .4% to 1411. Vodafone was down .7% to 145.25.

The DAXX was up .2% to 6,599. Bayer was up .9% to 40.79. Daimler was up .3% to 46.32. DeutscheBank was flat at 101.77 Deutsche Telekom was down .9% to 13.83. Siemens was down .3% to 44.09. Volkswagen was up 1.5% to 84.6.

The CAC 40 was down .1% to 5,536. Alcatel was down .2% to 10.86. AXA was down .2% to 30.71. France Telecom was down .7% to 20.86. ST Micro was down .4% to 14.16. Vivendi was down .5% to 29.18.

Data from Reuters.

Douglas A. McIntyre

Posted on: December 18, 2006 – 6:31 am in International Markets

Poor Holiday Spending Trends Could Hurt E-commerce And Retail Alike

Stocks:  (WMT)(TGT)(FD)

MasterCard Advisors says that holiday spending is growing at about half of last year’s 8% increase. The news is not exactly a bright spot for companies like Wal-Mart, Target, or Federated. They need a sharp untick to drive earnings. Wal-Mart especially needs a jolt.

Online sales growth is also slowing. The rate of increase has been over 20% in years past but Reuters quotes a SpendingPulse executive as saying  "this year they’re in the teens," This would seem to contradict data from ComScore that shows online spending up about 25% for the holidays.

If the Mastercard data is right, a lot of retailers are going to have rough fourth quarters.

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

Posted on: December 18, 2006 – 5:48 am in Retail