Daily Archives: December 20, 2006

On Re-imagination

From AAO Weblog

Just to clarify a point or two on yesterday’s post about the possible “re-imagination” of UnitedHealth’s (UNH) earnings history between 1994 and 2005…

What happens here could set a precedent for the way the remedies from the other investigations are handled. So, let’s hope that the Office of the Chief Accountant thinks this one through before signing off. There’s an important question to be addressed here, specifically, what’s the right way to handle new accounting treatments that can be handled retrospectively? Are investors better served by “re-imagining” history as if the new accounting treatment is handled all the way back to the beginning of time (like in the fictional environments of James Bond and Batman)? Or are such treatments misleading?

(Of course, little is known to date about the cash effects stemming from tax consequences. They’re far from unimportant – but we’re concerned with how operating performance has been portrayed and will be portrayed.)

When UnitedHealth chose to adopt the modified retrospective method of reporting stock compensation under Statement 123R on 1/1/2006, it was taking the accounting high road. Because of the awkward history of the stock compensation standard (optional adoption, with pro forma footnote info required for all), the FASB allowed firms to retrospectively adopt the recognition of stock compensation expense for all periods presented in the financial statements. That was NOT contemplated to be a twelve year stretch; I think that the typical three-year presentation is what the Board had in mind.

That interpretation is not likely to be construed by many firms other than UnitedHealth. It might interpret the retrospective provisions that way only because it chose the modified retrospective adoption method in the first place, which was a rarity among firms. If a firms elected to adopt Statement 123R under the modified prospective method (in other words, burdening future earnings with the nonvested fair value of option grants plus future grant fair values), they have no basis for trying to go all the way back to the beginning of their option problems in presenting a revised history. They never had an entry point for revising the past in the first place.

When a firm like UnitedHealth contemplated its policy of stock option compensation in the 1990’s, it consciously chose to adopt APB Opinion No. 25 – and misapplied it. When revising the history, it should show the effect of that conscious decision, correctly applied. To wipe out the history of that decision and its consequences with a favorable accounting treatment (the 123R results cost less than the correct application of Opinion 25.) When they chose to adopt Statement 123R on a modified retrospective basis, they knew that they were getting a three year retrospective treatment – another conscious decision. So, a fair resolution would show APB 25 treatment, correctly executed, up until 2002, with the retrospective application of Statement 123R in 2003 – the beginning of the retrospective period for Statement 123R application under their decision to present history in that fashion, before they learned there was an upside to having taken the high road over a decade earlier.

http://www.accountingobserver.com/blog/

Posted on: December 20, 2006 – 11:42 pm in Accounting

Wednesday’s Top Biotech and Medical Stocks

From BioHealth Investor

Biotechnology

VERNALIS PLC ADR [VNLS] +10.67%
KOSAN BIOSCIENCES [KOSN] +10.66%
OPEXA THERAPEUTICS [OPXA] +10.03%
EMERGENT BIOSOLUTION [EBS] +10.03%
I G I INC [IG] +9.76%

Diagnostic Substances

REMOTEMDX INC [RMDX.OB] +9.32%
EPICEPT CORPORATION [EPCT] +5.52%
ADEZA BIOMEDICAL COR [ADZA] +3.94%
LEXICON GENETICS I [LEXG] +2.54%
THRESHOLD PHARMACEUT [THLD] +2.32%

Drug Delivery

COLUMBIA LABS INC [CBRX] +12.65%
SKYEPHARMA PLC [SKYE] +7.80%
PETMED EXPRESS INC [PETS] +2.06%
MATRIXX INITIATVS [MTXX] +2.01%
QUIGLEY CORP THE [QGLY] +0.84%

Drug Manufacturers

SIGA TECH INC [SIGA] +82.15%
TAPESTRY PHARMA INC [TPPH] +12.66%
UNIGENE LABS INC [UGNE.OB] +8.59%
POZEN INC [POZN] +8.10%
BRADLEY PHARMACTCL [BDY] +5.63%

Medical Appliances & Equipment

THERMAGE, INC. [THRM] +18.09%
ESCALON MED CP [ESMC] +8.24%
EDAP TMS SA ADR [EDAP] +7.73%
SYNERON MEDICAL LTD. [ELOS] +6.86%
QMED INC [QMED] +5.84%

Medical Instruments & Supplies

CARDIOTECH INTL [CTE] +12.50%
CRYOCOR, INC. [CRYO] +9.35%
INOVIO BIOMED CORP [INO] +5.96%
BIOMIMETIC THERAPEUT [BMTI] +5.43%
DTLL INC [DTLI.OB] +4.55%

Medical Laboratories & Research

BIO-IMAGING TECH [BITI] +3.74%
MEDASORB TECHNOLOGS [MSBT.OB] +3.39%
PREMD INC [PME] +2.86%
AETERNA ZENTARIS [AEZS] +2.80%
NEOGENOMICS INC [NGNM.OB] +2.74%

http://www.biohealthinvestor.com/

Posted on: December 20, 2006 – 11:39 pm in Biotech

Sony Gets Another Break, Digital Camera Sales Rise (SNE)

NPD market research says that digital camera sales will surpass expectations for 2006. Sales though November rose 24% compared to last year. Given that total units sales for this year should be double 2003, many industry observers thought that growth would begin to fall off.

Sony, which has struggles across many lines of business, gets little break because of the news. This and its affirmation that it will hit Playstation3 sales targets are an indication that the company maybe making a slow turn in the right direction. Kodak, Canon, and Nikon also benefit from the continued strength in digital camera sales.

Analysts say that sales growth could drop down to single digits in 2007, but they thought 2006 would be slow and were wrong.

Sony’s stock has gone from $37.50 in early October to its current level of $43. A little more good news and it could go higher.

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

Posted on: December 20, 2006 – 11:36 pm in Consumer Electronics

Juniper Gets Jilted (JNPR)(ALU)(MOT)(NT)(RBAK)

The gang down on Wall St. thinks Juniper got left at the altar when Ericsson bought rival Redback. Juniper and Redback noth sell edge routing equipment for the internet. CIBC was so upset that they downgraded Juniper’s stock.

Of course, Redback’s market cap is about $2 billion, and Juniper’s is over $10 billion. Even in this day and age, that is a fairly big difference.

There was another good reason to pass up Juniper and that came out today. Juniper is going to take a $900 million charge for backdated options.

All is not lost. Motorola may still be interested in Juniper. Even though Alcatel and Lucent have merged, they might want to take on a third partner. Nortel could use some help as well.

The question for Juniper shareholders is whether they will get an 18% premium like the Redback shareholders got.

Redback’s stock has outperformed Juniper’s for almost the entire year. That maybe one sign.

The other key issue is whether Juniper can get the options issue behind it quickly, file past financials, and show the its is continuing to grow and improve operatin income. If not, the premium in any takeover may be very small indeed.

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

Posted on: December 20, 2006 – 11:24 pm in Hardware

The FCC Is Not Doing Telecoms Any Favors (VZ)

Step right in and have your head knocked off. The FCC approved a plan to shorten the time it will take for telephone companies to get licenses to offer subscription based TV. Local authorities will only have a few months to approve applications for TV service.

The FCC feels that by letting telephone companies into a business dominated by cable it will keep consumer rates down. That may be true short term.

The fact is that there is still a big question mark whether consumers want to use the telephone pipe to the home for broadband and TV as well as voice service. Consumers don’t like the current phone broadband, DSL, because it is usually slower than cable. Now they will have to convince potential subscribers that the new fiber intrastructure is better than cable.

What makes the process more difficult for the phone company is that the cable guy has been delivering the TV signal for many, many years and the broadband pipe for the last five or so. And, now they offer VoIP which is usually cheaper that the phone company phone service.

Now, the telephone company can offer all of these services. Maybe the consumer doesn’t what telecoms to do them any favors.

Verizon has about 100,000 subsribers to its new fibet TV operation. It will need to multiply that number by the dozens to pay off the $18 million it is investing in the platform. The cable folks already have their platform. And, they also have the customers already, by the way.

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

Posted on: December 20, 2006 – 11:07 pm in Telecom

2007 Predictions & Ideas: Your Chance To Make A Direct Difference

Do you want to get a shot at making your own 2007 forecats,predictions, and a even get a shot at making your own suggestions orsharing ideas?  The shot is yours if you want it.  If Time is going tomake YOU the man of the year, then we’ll double down on that and giveyou a direct chance to make an impact right here.

Do you have projections, predictions, ideas, or suggestions that youwould like to share?  If so please send in a different email titled "MY 2007 " to jonogg@247wallst.com.  Once again we do not share any email address lists with outside parties.

Make your predictions, make a rant, pick a trend, or pick a stock….whatever you’d like:

DJIA, S&P 500, NASDAQ 12/31/2007?

S&P Earnings growth in 2007?

Gold & Oil Prices in 2007?

What sectors win in 2007?

Major Market shifts or calls?

Which overseas or international stock market will be the best for 2007?

Will private equity quiet down?

Takeover targets for 2007?

Which High-Flyers will keep soaring, and which will crash & burn?

Which market pundit do you like the best and who would you like to see covered more?

Which of our TOP 10 CEO’s THAT NEED TO GO would you like to see leave their post first?

What is your single best idea for 2007?

FED POLICY in 2007…when do they cut? or will they have to raise?

This is your shot to fire away……No holds barred……No string attached……

Google $600 or $300?

Windows Vista a game changer or a Gates/Ballmer belly flop?

Best Small Cap for 2007?

Part II
We are bolstering up our email database as we have been for the lastfour weeks.  If you would like to subscribe to our email lists for FREEBAIT SHOP UPDATES and for other SPECIAL SITUATIONS that we do not poston the site, please send in an email to us.  Send that email to jonogg@247wallst.comand title it SUBSCRIBE.  Just include a name and whatever data youwant.  We do not share our subscriber and free email list with anyoutside parties.

We’ll be running this a few times between now and the end of theyear for comments, suggestions, predictions, and ideas.  We are herefor our readers and we are giving you a chance to influence somedirection or aspects if you want to voice anything.  And no, we aren’tclosing down for the holidays like many other sites and blogs.

Happy Holidays from 24/7 Wall St.

Jon C. Ogg & Douglas A. McIntyre

Posted on: December 20, 2006 – 11:00 pm in Analyst Calls, Bait Shop, Consumer Goods, Cramer, Dividend, ETF, Earnings, Economy, Hardware, IPOs, Internet, Management Change, Mergers and Buy Outs, Oil & Gas, PC Companies, Press Digest, Research, Rumors, Semiconductor, Short Interest, Technical Analysis, WiMAX

At Least Someone Is Making Money Selling Cars

Stocks:  (KMX)(GM)(F)(DCX)

CarMax had a profit in its latest quarter. A big one. The company even moved up its forecast for the next fiscal year.

CarMax made a profit of $45 million up from $23 million in the same quarter last year. Revenue rose 24% to $1.77 billion. Gross profit on the used cars sold by CarMax is well above the gross profit on new cars: $1,898 versus $1,108.

The company said that internet traffic, luxury car demand, and a return of SUV buyers as gas prices dropped helped increase sales. CarMax stock hit a record high of $52.77.

But, that’s all yesterday’s news.

What does it mean?

CarMax is the largest retailer of used cars in the US. Oddly enough, the small new vehicle business that CarMax has dropped 3% to $110 million while the used car revenue rose 27% to $1.378 billion.

Another clue is that Detroit says that the average price that it is getting per vehicle is dropping. Incentives for some Chrysler models are over $4,000 a car and GM and Ford are not doing much better.

Consumers do not want to pay retail or anywhere near it for a car. Perhaps it is concern about the economy. Perhaps it is concern about the value of their homes. Perhaps research and internet intiatives like Consumer Reports and JP Powers have convinced buyers that the right used car is virtually as good as most new one.

CarMax results are not good for Detroit. When people buy used, new cars pile up.

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

Posted on: December 20, 2006 – 10:56 pm in Autos

Cramer Revists DivX, But Not the Way You Would Guess

Cramer also wanted to review another "do you know what you own" on MAD MONEY tonight.  A hot stock that has been on fire is DivX (DIVX).  He was positive on it on at $18+ and now it is up about 50% from there.  As far as what they do and if they are worth owning:

It makes video compression software that it licenses to DVD player companies that stream and download.  He noted the Google relationship as well as the company having great opportunities in Eastern Europe and in India because those other expensive video formats are too expensive to license.  As far as if you should sell or hang on from here……

Cramer said there are 4 buys and 1 hold from the street.  This stock is a lower-tier that might not get covered everywhere and the IPO-Lock-up doesn’t come untilmarch.  Cramer thinks that may keep a lid on it until then and it could sell shares.  Their actual market is hard to guage the real size of it because it is a niche within a huge market and it comeptes with Real Networks and Microsoft.  It trades at 17-times sales, so everything that was known back then is still known now and he wouldn’t keep hanging around in the stock.  Cramer says to take profits here and he would like it a lot cheaper than it is now.  DIVX closed up 2% at $27.69, and while it ticked up after Cramer was saying good things it is now down in after-hours after he said to avoid it.

Jon C. Ogg
December 20, 2006

Posted on: December 20, 2006 – 6:24 pm in Cramer

Cramer Wants to Go Back Into An Old Stock

Cramer on tonight’s MAD MONEY was discussing a stock that was taken off the table after it ran huge.   Cramer thinks that Syneron Medical (ELOS) really has the laser we’re all looking for.  He said he swaped out of it before in favor of Palomar (PMTI), but since it fell from $40 to under $25 it is cheap.  There is a catalyst coming next month that could reverse the stock drop after two bad earnings misses from higher expenses.  ELOS rolls out a dental laser next month that isn’t just cosmetic.  This one does the same thing as drilling teeth and there are 200,000 dentists versus 18,000 dermatologists.

ELOS was up a mysterious 6.8% today to $25.70 on 4-times normal volume.  Did one of Cramer’s cronies doll out a stock tip into people’s Christmas stockings or in place of Hanukkah dradles today?  This stock is up another 4.4% in after-Cramer hours.

Cramer said rumors were out there today that the company would be acquired by Allergan (AGN), so that is his explanation for the run today.  He thinks the buyer could be anyone since the company has only a $700M market cap.  He thinks the worst is over.  He nailed it once and said to take profits, but now he wants you back into ELOS.

Jon C. Ogg
December 20, 2006

Posted on: December 20, 2006 – 6:10 pm in Cramer

Make Your Predictions & Ideas Known

Do you want to get a shot at making your own 2007 forecats, predictions, and a even get a shot at making your own suggestions or sharing ideas?  The shot is yours if you want it.  If Time is going to make YOU the man of the year, then we’ll double down on that and give you a direct chance to make an impact right here.

Do you have projections, predictions, ideas, or suggestions that you would like to share?  If so please send in a different email titled " MY 2007 " to jonogg@247wallst.com.  Once again we do not share any email address lists with outside parties.

Make your predictions, make a rant, pick a trend, or pick a stock….whatever you’d like:

DJIA, S&P 500, NASDAQ 12/31/2007?

S&P Earnings growth in 2007?

Gold & Oil Prices in 2007?

What sectors win in 2007?

Major Market shifts or calls?

Which overseas or international stock market will be the best for 2007?

Will private equity quiet down?

Takeover targets for 2007?

Which High-Flyers will keep soaring, and which will crash & burn?

Which market pundit do you like the best and who would you like to see covered more?

Which of our TOP 10 CEO’s THAT NEED TO GO would you like to see leave their post first?

What is your single best idea for 2007?

FED POLICY in 2007…when do they cut? or will they have to raise?

This is your shot to fire away……No holds barred……No string attached……

Google $600 or $300?

Windows Vista a game changer or a Gates/Ballmer belly flop?

Best Small Cap for 2007?

Part II
We are bolstering up our email database as we have been for the lastfour weeks.  If you would like to subscribe to our email lists for FREEBAIT SHOP UPDATES and for other SPECIAL SITUATIONS that we do not poston the site, please send in an email to us.  Send that email to jonogg@247wallst.comand title it SUBSCRIBE.  Just include a name and whatever data youwant.  We do not share our subscriber and free email list with anyoutside parties.

We’ll be running this a few times between now and the end of the year for comments, suggestions, predictions, and ideas.  We are here for our readers and we are giving you a chance to influence some direction or aspects if you want to voice anything.  And no, we aren’t closing down for the holidays like many other sites and blogs.

Happy Holidays from 24/7 Wall St.

Jon C. Ogg & Douglas A. McIntyre

Posted on: December 20, 2006 – 3:44 pm in Analyst Calls, Bait Shop, Business Services, Cramer, Dividend, ETF, FDA, Hardware, IPOs, Internet, Management Change, Media, Mergers and Buy Outs, Oil & Gas, Old Media, PC Companies, Press Digest, Research, Rumors, Shareholder Issues, Software, Technical Analysis, WiMAX

CRAMER’S TOP OIL PICKS FOR 2007

Cramer is one that rarely holds back, and today he went pretty far out on a limb.

On today’s STOP TRADING segment on CNBC, Cramer has top 3 oil picks for 2007 that CNBC believes you haven’t thought of yet:

1) Devon (DVN)…will be bought in Europe if stock stays low.

2) Ultra Petroleum (UPL)

3) Core Labs (CLB)

He also said subprime Accredited Home Lending (LEND) is ok and they were hurt because other brokerage firms came in the game and crushed margins, because they understand risk.  He thinks we’re nowhere near the red-line on Credit yet and he isn’t seeing a spike in credit losses.

Jon C. Ogg
December 20, 2006

Posted on: December 20, 2006 – 2:46 pm in Cramer, Oil & Gas

Cramer’s Focus Names For The Week

Cramer thinks that Best Buy and Circuit City are proving that the Consumer is spending like crazy when you cut prices.  He had a fairly long video on the web this morning.

Cramer slammed Circuit City (CC) because it is unbelievable how much they are losing in TV’s because of their open return policy. (As I noted myself yesterday there is probably a preceived floor out there because of Private Equity bid in the past that was rejected.  Please don’t takle that as a "The bottom is in" because the stock has to shake some more people out.  A new buyer could come in and refuse to the TV plan and cut that off at the source after pointing out how the consumer is taking advantage of it.  The margin issues arent going away either, but the company needs to get their act together.  It is is till pretty ludicrous that the entire street research teamn as a whole wasn’t able to factor this in because they are a de-minimus reverse proxy for what is going on at Best Buy…If Best Buy has a cold, Circuit City has lupus). Cramer is still psotive on Bext Buy (BBY) stock evene after the recent woes.

Cramer also noted that even a horrible PPI and no good earnings moves didn’t stop the market from staying up.  To him this is end of year buying and sellers are finished.  The buybacks have taken much stock out of market when fund managers have to show they aren’t underexposed to the stock market.  In Oils Cramer was still positive on Exxon (XOM).  Tech is one that you should not miss and he said he’d buy Apple (AAPL) at $86 here and he’d buy Oracle (ORCL) in here.  Cramer even said he’d wait for a pullback on FedEx (FDX) here and then buy it.

Cramer said the following earnings estimates are too low: Altria (MO), Colgate-Polmolive (CL), and P&G (PG).  Cramer has 3 themes he is still positive on:Toyota (TM), NYSE (NYX), and Goldman Sachs (GS).  He is still canning the two upgrades on Ford (F) as far as common stock, but you could play it via the CONVERTIBLE deal from last week.  Cramer is also staying positive on bank of America (BAC).  Cramer also positive on the VCI deal where Valassis is acquiring ADVO.  Those are the names he said would be his Focus names between now and Friday.

Jon C. Ogg
December 20, 2006

Posted on: December 20, 2006 – 2:29 pm in Cramer

Minimum Wage Hike Talk Helps Dollar Stores

Before reading this "economic-political" piece, understand that this is not trying to take a side on a policy here.  I don’t have to take a side in this, I just have to get it right.

In a speech this morning it was a little surprising to hear President Bush say in a public speech that he supports a $2.10 hike to the minimum wage over 2 years.  There was of course a hedge to the statement in that it was with a caveat "in a way it won’t hurt businesses."  So that means you have to determine if this statement is going to come to light or not.  Personally, I predict this just locked in a minimum wage hike BEFORE the 2008 elections in some staggered manor. 

It probably won’t really be a $2.10 hike, but this just locked in something significant.  Maybe I am being naive in believing politicians on either side of the aisle, but the prediction stands.  The republicans need to appeal to a broader base and the way to reach right down to the little guy is by offering them a pay raise, and the democrats have been gunning for this for a while.  I won’t go into the macroeconomic implications of a $2.10 hike to the minimum wage (even though it will likely be a lower amount).  The hike probably won’t be implied to the sub-20 hours per week and teenage part-time workers, but the line in the sand just became visible.

OK, enough on the political front because our readers come here for stocks.  I already noted in the past right after the election that the minimum wage was going to rise.  The writing is on the wall.  Who is the single largest beneficiary of a hike in the minimum wage?  The absolute purest beneficiary for stock traders from a hike in the minimum wage is the DOLLAR STORES.  This will actually give a more prolonged dividend (if that analogy is fair) to lower income earners than a $300 tax refund ever thought about.  Think about it, even if it ends up being a $1.00 hike:  $1, 30 hours, $30/week, $120/month, $1,440/year, 15% tax plus another 5% miscellaneous that somehow works out to 20% tax: $1,152.00 per year.  Yes this helps other businesses and yes this is inflationary, but the dollar stores are the winners.  Wal-Mart will of course too as will others, but the pure-play would be the Dollar Stores.

These have run with the market and run with the implied private equity interest in the cash flow story, but this just locked in the future of their business.  At a minimum this will act as a stabilization factor to a slowing lower-income consumer.  Dollar Store stocks are up more than the market in general today:

Dollar General (DG) $15.94 (+$0.33, +2.1%)
$4.97B market cap

Family Dollar (FDO) $29.59 (+$0.70, +2.4%)
$4.5B market cap

Dollar Tree (DLTR) $30.05 (+$0.20, +0.7%)
$3.1B market cap

99C Only Stores (NDN) $12.21 (+$0.23, +1.92%)
$849M market cap

This can’t be taken to presume that all of these will win, because many have had "issues" in the operational side of their businesses.  Dollar General (DG) and Dollar Tree (DLTR) are the two that come up the most frequently as buyout targets.  Buyout fever has really gotten out of hand, but many of these companies offer fairly predictable cash flows and they could all be improved a bit.

That’s my read on the group, and they offer a more pure play on the minimum wage than some of the other underperforming discount and lower-end retailers.

Jon C. Ogg
December 20, 2006

Posted on: December 20, 2006 – 11:37 am in Economy, Retail

Sirius And XM; Remarkably Poor Performance

SIRI and XMSR have had very tough years as losses continue and subscriber growth rates slow. But, it is hard to imagine just how much investors have lost since the beginning of the year. The stocks have not tracked each other exactly, but, as 2006 closes, both are down a little over 40%.

Chart

Source: AOL Finance
Posted on: December 20, 2006 – 11:36 am in Satellite

FDX Gapping Down on Earnings

From Ticker Sense

FDX is trading down nearly $5 in pre-market trading after reporting earnings this morning.  Below is a list of FDX earnings reports along with its one-day price change since October 2002.  When the stock has gapped down on earnings (as it is doing this morning), it tends to trade lower from the open to the close as well.  When the stock gaps up on earnings (as it is not doing this morning but for future reference), the stock tends to continue its rally during regular trading hours.

Fdxearnings_2

http://tickersense.typepad.com/

Posted on: December 20, 2006 – 11:31 am in Business Services

SEMI Equipment Takes A Breather – Don’t Hold Your Breath Waiting For it to End

By William Trent, CFA of Stock Market Beat

Semiconductor Equipment and Materials International (SEMI) has released its latest semiconductor equipment bookings and billings data.

“North American semiconductor equipment bookings and billings have moderated in recent months, following a strong first half of 2006 and expected cyclic patterns,” said Stanley T. Myers, president and CEO of SEMI. “Though having slowed recently, bookings remain at levels well above those of the last slowdown in 2005.”

The slowdown in orders and billings is illustrated in the following chart.

bookingsvbillings.jpg

What is particularly interesting is that billings have slowed ahead of bookings. The normal relationship is for bookings to lead billings – you can’t install equipment you haven’t ordered. The faster deceleration of billings growth shows how quickly orders are being pushed back or canceled.

According to a recent MarketWatch article:

Spending on chip-equipment, or machines used to make computer chips in consumer electronics, will slowdown in 2007 but there won’t be a “collapse in demand,” according to Gartner Inc., a technology research firm. 

“Looking ahead to 2007, we believe the capital equipment industry will take a breather as manufacturers slow their rate of expansion to allow demand to catch up,” Gartner said in a statement Wednesday.

There is one little problem with Gartner’s forecast, however. Best Buy (BBY) and Circuit City (CCS) have shown that end demand is even cooler than many industry watchers believe. With a slowdown in consumer spending on electronics looking increasingly likely for 2007, the orders will likely be pushed back further still. In other words, don’t hold your breath waiting for the industry’s “breather” to end.

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

http://stockmarketbeat.com/blog1/

Posted on: December 20, 2006 – 11:29 am in Semiconductor

ETF Alert: HOLDRS Still Have All 5 Worst Performance

A couple of weeks ago we noted some performers in ETF’s that were really lagging and noted that the FIVE WORST performing ETF’s were all specialty sector funds from the HOLDR’s family of Merrill Lynch.  HOLDRS are HOLding Company Depositary ReceiptS.  Now in fairness, the second best year to date performer was also a HOLDR, although it is a low priced low volume ETF called the Internet Infrastructure HOLDRs (IIH) with a 45% year to date return.  There was also the Telecom HOLDRs (TTH) that rose more than 27% year to date.  So maybe these aren’t all entirely bad, but when you see one fund family that is a "stock selected and predesignated" group of holdings in an ETF you have to scratch your head and wonder what is going on.

Below are the performance metrics for these ETF’s:

Internet HOLDRs    (HHH)    YTD: (17.88%)
3MO: 10.03%;  1YR: (19.95%);  3-year: 4.97%

B2B Internet HOLDRs (BHH) YTD: (10.63%)
3MO: 12.38%;  1YR: (13.03%);  3-year: (8.16%)

Broadband HOLDRs (BDH) YTD: (9.92%)
3MO: (0.12%);  1YR: (12.75%);  3-year: 8.00%

Biotech HOLDRs (BBH) YTD: (6.61%)
3MO: 4.42%; 1YR: (8.32%);  3-year: 13.68%

Semiconductor HOLDRs (SMH) YTD: (5.70%)   
3MO: 1.35%;  1YR: (7.60%);  3-year: (7.46%)

Jon C. Ogg
December 20, 2006

Posted on: December 20, 2006 – 9:10 am in ETF

Pre-Market Stock Notes (DEC 20, 2006)

(ABTL) Autobytel.com settles with Dealix & will receive $20 million in settlement.
(ADBE) Adobe positive by Cramer on MAD MONEY.
(AIR) AAR $0.33 EPS vs $0.32e; wins Southwest Air pact.
(ALOY) Alloy pays $10.50 per share to retire shares from large inside on BOD.
(ALTU) Altus Pharma enters into strategic collaboration with Genentech; will get $15M investment.
(AMT) Amer Tower resuming is $390+M remaining share buyback plan.
(ARTE) Artes Medical IPO priced at $6.00 for 4.6M shares.
(DELL) Dell’s CFO is leaving; replaced by old AMR CFO Carty.
(DRI) Darden $0.41 EPS vs $0.40e.
(FDO) Family Dollar preliminary EPS posted as $0.36 vs $0.36e.
(FDX) FedEx telegraphs earnings in-line, but that is before pilot costs from cointract; guidance looks light for the following quarter; stock indicated down $3 to $5 pre-market.
(FPL) FPL pays almost $1B to buy Point Beach Nuke Power.
(HYDL) Hydril slight boost to current guidance.
(INWK) InnerWorkings positive by Cramer on MAD MONEY.
(JBX) Jack in the Box tender results were 2.3+ million shares at average of $61.00.
(KMX) CarMax $0.42 EPS vs $0.26e; unsure if comparable.
(KOSN) Kosan Biosciences licenses motilin agonist program to Pfizer.
(LNT) Alliant Energyraised 2007 guidance; reaffirmed 2008 guidance; hikes dividend.
(MXIM) Maxim Integrated CEO is retiring for health reasons.
(NBIX) Neurocrine initiates phase II trial with CRF1 Antagonist with GSK.
(NFLD) Northfield Labs traded lower by 50% after poor results on blood substitute product.
(PALM) Palm fell another 2% after disappointing outlook again after beating lowered estimates.
(PAY) Verifone positive by Cramer on MAD MONEY.
(PKE) ParK Electrochemical $0.47 EPS vs $0.47e.
(QLTI) QLT signs research collaboration with Wilmer Eye of Johns Hopkins.
(RBAK) Redback in takeover deal with Ericsson at $25.00 per share.
(SOLF) SolarFun Power 12M share IPO priced at $12.50 from Goldman Sachs.
(ZGEN) Zymogenetics started Phase II rheumatoid arthritis with Serono.

Posted on: December 20, 2006 – 8:30 am in Pre-Market Activity

WiMax Goes Mainstream (MOT)(INTC)(QCOM)(S)(CLWR)(WAVE)

Two WiMax companies are planning to go publc: Clearwire and NextWave. The technology is hot now. Sprint is adopting it for next generation cell infrastructure. The technology is in trials in a number of countries and Seoul is already blanketed by the new tech.

WiMax has the early promise of efficiently competing with high speed broadband including cable and DSL.

Clearwire has already raised $900 million primarily from Intel and Motorola both of which have significant technology they will market as part of WiMax infrastructure. The Clearwire IPO would plan to raise $400 million.

Research firm Gartner expects there to be over 21 million WiMax connections in North America by 2011.

NextWave’s CEO was a former board member of Qualcomm. WiMax phone services, like Sprint, are viewed as a threat to Qualcomm in the 3G phone industry.

If WiMax works as well as some expect it will, cable and telecom companies may have a headache.

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

Posted on: December 20, 2006 – 8:16 am in IPOs

Select Analyst Calls (DEC 20, 2006)

by Jon C. Ogg

ACA started as Outperform at Credit Suisse; started as Overweight at JPMorgan.
ALAB started as Overweight at JPMorgan.
ALY started as Buy at AGEdwards.
ASML started as Overweight at Thomas Weisel.
BCE raised to Buy at Merrill Lynch.
BKUNA started as Overweight at JPMorgan.
COH started as Buy at Citigroup.
CMX cut to Equal Weight at Morgan Stanley.
CPLA started as Buy at B of A.
DNA removed from Conviction Buy List (Americas) at Goldman Sachs.
ERJ cut to Underperform at Bear Stearns.
F raised to Hold at KeyBanc/McDonald.
FACE started as Outperform at Piper Jaffray (yesterday).
FTWR started as Buy at Jefferies.
GE added to Recommend List at Prudential.
GFIG started as Buy at Deutsche Bank.
GILD started as Buy/$78 target at Goldman Sachs.
HANS started as Buy at Stifel Nicolaus.
ITG started as Buy at Deutsche Bank.
KSS cut to Neutral at RWBaird.
JNPR cut to Sector PErform at CIBC (based on RBAK buyout).
LAUR started as Hold at Citigroup.
MBLX started as Buy at Jefferies.
MDR started as Outperform at Wachovia.
MEDI added to Conviction Buy List (Americas) at Goldman Sachs.
NHWK raised to Overweight at Morgan Stanley.
NITE started as Buy at Deutsche Bank.
PAA cut to Hold at Deutsche Bank.
PANC cut to Peer Perform at Bear Stearns.
PLMD started as Buy at BB&T.
SBH cut to Underweight at Prudential.
STO cut to Hold at Citigroup.
SYMC added to Conviction Buy List (Americas) at Goldman Sachs.
TU raised to Buy at Merrill Lynch.
VCI cut to Neutral at RWBaird.

Posted on: December 20, 2006 – 8:11 am in Analyst Calls