Daily Archives: January 3, 2007

Eastman Kodak Settled With Sony; CEO Perez Might Get Saved

Stock Tickers: EK, SNE, HD, WMT

There was a news release today noting that Eastman Kodak (EK) and Sony (SNE) settled digital patent cases and are going to share access to digital camera patents.  Maybe this will save the CEO Antonio Perez IF and only IF he can continue getting these digital photo issues behind the company and takes some bold steps. 

I awarded him one of the 10 CEO’s that need to go at the end of 2006.  Don’t take this the wrong way, he certainly hasn’t done what Nardelli did to Home Depot (HD) nor what Lee Scott continued at Wal-Mart (WMT).  He may be the nicest guy in the world.  This settlement doesn’t change the position or call, not close and not yet anyway.  This is equivalent to rewarding a 4th grade student for not skipping school.  If the kid stays in school and starts making good marks then they are deserving of reward.  Until several steps are taken, Perez is still on probation.

What needs to happen now is a more full-court press from Eastman Kodak.  If he is nice guy he needs to go take an ANGER INSTALLMENT class for his News Years Resolution.  The company blew the entire digital film opportunity as far as Wall Street is concerned.  They have been in a constant widdling away of their business and employees for what has felt like a career. Now they need to go roll-up these little puny niche online photo operations, or they need to try to put them out of business.  They’ll have to spend close to $1 Billion to knock a bunch of smaller players out, but if they choose the buying binge then it’s a Billion soon or several billion perpetually.  If they do not do this then they need to put more of a full court press on the other digital film companies with a lot more advertising and they need to find a way to attack the security and credibility of other services.

Before they go buy these smaller lines they need to go get more digital new world media pros and they need to wrap that steady restructuring program up rapidly.  They need to almost overcut on that layoff plan too and just get this all over with.  If Eastman Kodak has to go out and hire again the street would probably look at it with a positive.  There is really no reason for this company to continue operating at losses, and the forward valuations for Fiscal DEC 2007 are not showing any "Value" for value investors yet.  The balance sheet is not in a dire situation, but they could shore this up to if you use my strict balance sheet break-ups.

When I made the alert on DEC 14 about Perez needing to go the EK shares were at $26.32, and EK shares closed today at $25.91.  The shares have a 52-week range of $2618.93 to $30.91.  This is just the beginning of a blueprint for Mr. Perez to not go into the books as "yet another Eastman Kodak CEO who let the digital divide get away."

Jon C. Ogg
January 3, 2007

Posted on: January 3, 2007 – 9:00 pm in Management Change

MarketWatch Sees Google Ad Drop

MarketWatch has interviewed some Google (GOOG) advertisers with fairly large budgets and found that a number of them feel that ad prices on the big search engine are getting so high that they have to cut back. The group interviewed by MarketWatch spent between $4 million and $10 million on search ads last year.

The process employed by MarketWatch is hardly scientific, but, if the financial website has uncovered a trend among Google ad customers, the lofty price of the stock could be in trouble as its Q4 06 and Q1 07 numbers hit the market.

At $468, Google may seem low to the price targets of some banks, which see the stock moving over $600.

But, if Google’s advertisers are cutting back due to higher costs, the 52-week low of $331.55 is not that far away.

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

Posted on: January 3, 2007 – 7:22 pm in Internet

Cramer Interviews Six Flags’ CEO

As Cramer finished MAD MONEY on CNBC, he interviewed Six Flags’ (SIX) CEO Mark Shapiro (comments are summary).  The CEO said this is the year they’ll turn it around.  He said they are getting the families back.  Shapiro said that the company will reach a decision to sell up to NINE parks in the next week or so.  These parks can’t be turned around immediately and they are close to having them turned around.  The CEO said this is the year they’ll execute.

Cramer said not only does he think it’s done going down, but he thinks it’s going higher.

Cramer was also positive at the end on Blockbuster (BBI), but said that won’t be his top speculative stock because he’s alreay been out on it and it’s already turning around as the shares are up.

Jon C. Ogg
January 3, 2007

Posted on: January 3, 2007 – 7:05 pm in Cramer

Cramer’s #1 Value Pick for 2007

Stock Tickers: ATI, HAL, GS, MO

The #1 VALUE PICK BY CRAMER FOR 2007 is Altria (MO).  He thinks after this gets freed up from the Kraft (KFT) issue and the Philip Morris International that it will be off to the races.  He said the tobacco sales are staying strong and the international arm make this very cheap for investors.  He hates their products, but he said someone is going to make money and it might as well be you.  He loves the dividend and the dividend will exceed treasuries if the stock drops much.  You have heard him before be positive for a long-long time on the name.

Cramer’s #2 VALUE PICK FOR 2007 is Goldman Sachs (GS), and you can see the expanded report here.

Cramer picked Halliburton (HAL) as the #3 VALUE PICK FOR 2007, and you can see the expanded report on this here.

Cramer predicts the DJIA, well over 10% gains for 2007.

Jon C. Ogg
January 3, 2007

Posted on: January 3, 2007 – 6:55 pm in Cramer

Cramer’s #2 Value Pick for 2007

Stock Tickers: ATI, HAL, GS

Last year Allegheny Tech (ATI) was his stock pick of the year, which more than doubled and was the best of all S&P 500 performers.  His 3 low-risk value stocks are going to be in descending order and he is reviewing the value stocks tonight.  He already picked Halliburton (HAL) as the #3 VALUE PICK FOR 2007.

Cramer’s #2 VALUE PICK FOR 2007 is Goldman Sachs (GS), another stock he’s been sticking with for a long time.  He said it could have been #1 but he has been pushing it for a long time.  The $200 price is immaterial when you value their earnings growth.  He thinks it is too cheap by all metrics.  As for the rest, you know the drill.

Jon C. Ogg
January 3, 2007

Posted on: January 3, 2007 – 6:21 pm in Cramer

Cramer’s #3 Value Pick for 2007

Stock Tickers: HAL, ATI

Last year Allegheny Tech (ATI) was his stock pick of the year.  It morethan doubled and was the best of all S&P 500 performers.  ATI wentfrom $36.00 to $90.00.  His 2007 stock of the year is not just one single stock, as investorsshould diversify.  He has 3 picks: low-risk value, higher-risk growth,and speculative stocks.  No one can pour more than one-fifth of theirmoney into speculative stocks.

His 3 low-risk value stocks are going to be in descending order and heis reviewing the value stocks tonight.  That means you know he’ll bemaking the others Thursday and Friday.

The #3 value pick is Halliburton (HAL).  He has been all over this for weeks and months, so this may not be a huge surprise.  He likes that KBR spin-off, he likes buybacks, he likes valuation discounts.  You know the drill.

Jon C. Ogg
January 3, 2007

Posted on: January 3, 2007 – 6:14 pm in Cramer

Cramer’s Predicts DJIA 14,582 At End of 2007

Cramer says 14,582 is the level that the DJIA will close at the end of 2007.  He said he was only off by 7 points on his 2006 predictions.  That is roughly a 17% gain for 2007 on the DJIA based on the 12,474 close today.

Posted on: January 3, 2007 – 6:11 pm in Cramer

Uranium Deals Continue: Uranerz Energy Thinks More Uranium Be in Thar Hills

We have been monitoring uranium production and acquisitions since our piece last month pointing to higher expected uranium prices for 2007 and beyond.  After today’s close there was another Uranium acquisition from a Canadian company in Wyoming.  This won’t have any impact for Uranium in general, but Uranerz (URZ) has a mere $147 million market cap.  It also is a low priced-stock that sees occasional pops in the volume to levels that interest some traders.

Uranerz Energy Corporation (URZ-AMEX) made several small acquisitions for potential Uranium producing properties in the Powder River Basin area.  Uranerz signed a binding Letter of Intent to acquire three separate uranium projects in N.E. Wyoming named West Flank, North Rolling Pin and C-line. The locations of these three properties are nearby mining claims already owned by Uranerz Energy. The surface area covered by these acquisitions is on land already covered by Uranerz Energy’s surface use agreement with the rancher, so this means that they are buying rights on dirt they have already been working.  There is only reason I can think of that someone would do that, and that is that they feel there is more Uranium there in thar hills.

The company said these were originally staked in the late 1960s and exploration was performed on them during the late 1970s and early 1980s by Cleveland-Cliffs Inc. Uranerz Energy has much of this data which it believes significant value is present on these properties and Uranerz said that uranium mineralization is present in at least four different stratagraphic zones on the West Flank property.  Geologic study will be initiated immediately on these properties and confirmation drilling may commence during the late 2007 drilling season.

The total purchase price for the acquisition of the three projects will be $3,120,000 payable after a 35-day due diligence period. Uranerz Energy may elect, at its sole discretion, to cancel the Letter of Intent and not close on the transaction if the Company is not satisfied with the results of the due diligence, although these usually are closed.  We’ll see if this actually closes or not, but it looks like this company still believes Uranium prices are going to remain elevated.

URZ closed up 5% at $4.30 on 326,000 shares today.

Jon C. Ogg
January 3, 2007

Posted on: January 3, 2007 – 4:41 pm in Nuclear

US Stock Market Wrap (JAN 3, 2006)

Stock Tickers: GM, HD, AMGN, CYTK, XOM, SMH, OIH, SIRI, SONS, AMZN, T, TWX

DJIA    12,474.52; Up 11.37 (0.09%)
NASDAQ    2,423.16; Up 7.87 (0.33%)
S&P500    1,416.60; Down 1.70 (0.12%)
10YR-Bond    4.664%;    Down 0.046
NYSE Volume    3,334,104,000
NASD Volume    2,423,423,000

Today started as out as a huge uupday with triple-digit gains, but we ended up well into red territory before late day buying put the market in positive territory. The ISM reading posted 51.4 for manufacturing in December, up from 49.5 in November.  The FOMC minutes also still showed inflationary concerns are present. Take a look at NYSE trading volume and see that it is OVER 3 Billion Shares.

General Motors (GM) fell 4% to $29.45 after weak sales for December and after Banc of America cut an already weak neutral trating to a SELL.
The big story of the day was Home Depot (HD) and CEO nardelli agreeing to call it splitsville, with a $210 million exit package.  HD shares rose 2.4% to $41.10.

Cytokinetics (CYTO) rose 11% to $8.34 on an Amgen heart failure drug pact.

Exxon (XOM) fell over 3% to $74.11 and Oil Service HOLDRs (OIH) fell 4.5% to $133.35 after oil fell 4.5% to under $59.00 today.

The Semiconductor HOLDRs (SMH) fell 0.2% to $33.57 after Goldman Sachs downgraded many key chip names.

Sirius (SIRI) rose 5.6% to $3.74 after closing 2006 with more than 6.02 million subscribers and claiming positive cash flows.

Sonus Networks (SONS) rose 7.4% to $7.08 after claiming record orders for Q4.

Amazon.com (AMZN) fell 1.9%as Citigroup issued a SELL rating on the stock.

AT&T (T) fell over 2% to $34.95 after the first full trading session since approval of its BellSouth merger.

Time Warner (TWX) rose 1% to $22.03 after selling its Farmer lifestyle magazine, closing the swap with Comcast for cable assets, after agreeing to carry the new Fox Business Network and after a strong movie weekend.

Jon C. Ogg
January 3, 2007

Posted on: January 3, 2007 – 4:16 pm in Market Close

Cramer’s 3 for the Money

Cramer is back from vacation and already said Hallelujah! over Nardelli leaving Home Depot (HD) today and use the cash to buy Lowe’s (LOW).

Cramer noted 10% of the S&P is energy pulling the market down with oil down $2…..he also noted the downgrades hurting today.  Cramer said Goldman’s thesis on downgrading tech and others is just getting ahead of the exit crowd, but Cramer challenges that call.  He likes Seagate (STX) as a huge beneficiary of Vista and Cramer said he’d even buy Dell (DELL) because Vista will be so big.

Ralph Lauren (RL), Fortune (FO), and Johnson Controls (JCI) are the three-for-the-money picks Cramer is offering.

Jon C. Ogg
January 3, 2007

Posted on: January 3, 2007 – 2:48 pm in Cramer

Game. Set. Match To Toyota (F)(DCX)(GM)(TM)(HMC)

The large car companies can stop putting out monthly figures and just make photo copies of the reports from the previous month. The US car sales fall and Toyota picks up more share.

December auto sales show that Toyota had a 12.3% rise in units to 228,322. Honda’s sales were essentially flat at 131,778.

By contrast, Ford’s sales fell 12.8% to 233,621. Truck sales fell 14% at Ford to 163,003. The flagship F-series pick-up sales were off over 21% to 70,580.

GM may have had the most disappointing month of all. Vehicles sales fell 13% to 334,501. Truck sales fell 21%.

DaimlerChrysler sales fell by a much smaller margin, down 1% to 218,530. Mercedes sales were off but an improvement at Chrysler helped the German car company come close to breakeven compared to December of last year.

At the US car companies, which may have to make further cuts in costs and employees, the beatings will continue until morale improves.

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

Posted on: January 3, 2007 – 2:01 pm in Autos

Will Google’s WiFi Plans Be Spoiled By Sprint

Google (GOOG)  has been in negotiations for months to blanket San Francisco with WiFi. Its partner, Earthlink (ELNK), would supply most of the infrastructure. The "free" service would be supported by advertising that would appear on the user’s computer when the WiFi link is on.

According to media sources, the deal may be announced by the city in the next day or two. Google may use the project as a platform for tracking users across a large geography and serving them advertising using the Adense platform. Over time, the deal could bring Google a new line of geography based advertising products.

The project is a great idea, but it is bound to bump up against the huge WiMax deployment being engineered by Sprint (S) for its 4G wireless phone service. The technology should work with PCs as well. Sprint says that its technology will be available to 100 million people in the US within two years. The great concentration of those potential customers will be in cities.

Sprint is not going it alone. It has the support of WiMax advocates Intel (INTC), Motorola (MOT), and Samsung. Several other companies like Nokia (NOK) and Ericsson (ERIC) has been mentioned at technology partners as well.

WiMax technology is not particularly good for the WiFi revolution. Spreading WiFi over a large geography is expensive. It requires thousands of "hot spots". WiMax works over a much wider footprint.

Google may find itself in the midst of one of its most public technology deployments, one in its own backyard, confronted by a project supported by two or three of the largest hardware companies in the world.

Nice battle.

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

Posted on: January 3, 2007 – 1:37 pm in Wireless

Chinese Internet Shares Look Like US 2004

Stocks:  (YHOO)(EBAY)(AMZN)(BIDU)(SOHU)(TOMO)

From mid-2002 to early 2004, old-line US internet stocks posted huge gains.

Yahoo! went from under $10 to $35. Amazon went from under $10 to $57. Ebay rose from $15 to nearly $50. Most of those increases have been cut roughly in half.

Now, it’s China’s turn. On the strength of the growing number of internet users and a recently upgrade of Chinese internet stocks by CIBC World Markets the web stocks in the world’s most populated country are off to the races. Today, Baidu is up 10%. Sohu.com and Tom Online are up about 5%.  To quote MarketWatch: "CIBC World Markets analsyt Paul Keung predicted spending on search advertising in China will rise to 20% of a typical Chinese company’s marketing budget in a year."

Up and up, but maybe too much. In the last year Baidu’s stock has gone from $44 to its current $122, just below its 52-week low. Sohu’s run from $18.20 to $25.17 is less impressive, but still a good showing. Tom Online has gone from a 52-week low of $8.83 to $16.19. That is still below its one year high of $28.89, but it’s a double nonetheless.

According to MarketWatch stats, Baidu has a P/E of 395, so, at some point soon, these stocks get to be pricey.

Very.

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

Posted on: January 3, 2007 – 12:05 pm in Internet

US ETF Overbought / Oversold

From Ticker Sense

We’ll start the 2007 posts off with our US ETF Overbought/Oversold charts.  Below we highlight the sector or index ETFs that are currently above or below their normal trading ranges.  As shown, fixed income ETFs are currently oversold along with biotechs, transports and internet stocks.  The S&P 500 and Dow 30 are both overbought at the moment along with quite a few sectors.

Usobos10307

Oboskey_26

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Posted on: January 3, 2007 – 11:06 am in Research

Apple Gets Sued Over Options

Some of Apple’s shareholders have had enough. They sued the big hardware company in federal court according to the Los Angeles Times. The plantiffs accuse Apple of a longtime practice of manipulating option grants including on the day before AAPL announced its alliance with Microsoft in 1997.

Perhaps the shareholders can do what the board would not. Options granted a day before good news does seem a bit of a coincidence.

Or, is it?

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

Posted on: January 3, 2007 – 11:03 am in Hardware

Cramer’s Way to play Nardelli

Cramer said it is a good thing that Nardelli is gone from Home Depot (HD).  He says Hallelujah.  I couldn’t agree more personally. 

Cramer says you should Sell HD here up $2 and go buy Lowe’s (LOW). He thinks any LBO rumors aren’t true.  The market reaction is correct but the news is in the stock.  Cramer has long said he prefers LOW stock over HD, so this may not be a huge shock.

Jon C. Ogg
January 3, 2006

Posted on: January 3, 2007 – 11:02 am in Cramer, Housing, Management Change, Mergers and Buy Outs

Alcatel-Lucent’s Quiet Rise (ALU)(NOK)(SI)(ERIC)(MOT)

When Alcatel and Lucent announced that they would merge, there seemed to be nothing but skeptics on Wall St. So, odd that the stock has gone from $11.75 on October 9 to $15.19 to open trading in the new year, an increase of 29%.

ALU did close its deal to buy Nortel’s radio access business for $320 million. But that was expected.

Citigroup actually put out research notes saying it preferred Ericsson’s shares to ALU and Nokia. That call seemed to drive ALU shares even higher. Moody’s downgraded the ALU bonds on execution risk from the merger.

There are rumors that ALU is being considered as a partner for the Sprint WiMax deployment in the US. But, that would hardly drive the shares up 29%.

In many ways, there are more reasons for the stock to be down. Save one. And, that is the most important. Alcatel-Lucent, through its merger, is now one of the few large suppliers of a broad array of equipment for the world’s largest telecoms. Competition has moved out of the market as two companies that could bid against each other have joined forces.

Ericsson is still a formidable player in the game. So is Motorola. The Nokia joint venture with Siemens could be, but bribery charges at Siemens have delayed that.

The rise in ALU shares is an admission by the markets that, in a market where scale matters and customers are large and complex, size matters. And, smaller companies will be pushed out of 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: January 3, 2007 – 10:40 am in Telecom

Why XM Is Up On Sirius News? (SIRI)(XMSR)

Strange as it may seem, shares of XM Radio are up 6% on news that rival Sirius increased it year end subscription figure to 6.1 million from 3.3 million last year. Sirius stock is up by the same percentage.

But, XM released no news.

What gives? There are rumors of a merger. Perhaps XM would benefit more from a business combination, but that is not clear.

Another possibility is that the market thinks that if Sirius did well and had positive cash-flow in its Q4, then XM may also be cash-flow positive.

But, the most likely reason is the XM, with it larger sub base and revenue is further along the development curve to permanent profits. Sirius may have added a lot of its subscribers because of Howard Stern. They may not be able to repear that this year. Being cash flow positive in the busiest sales quarter of the year is nice. But, it is far from full-year results that show either company being past consuming cash for operations.

Both stocks are still near 52-week lows, so Wall St. is still appropriately concerned about 2007.

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

Posted on: January 3, 2007 – 10:22 am in Satellite

B of A’s Rating Change On GM: A Little Late (GM)

Bank of America dropped GM’s shares from a "hold" to a "sell". They moved their price target from $30 to $25. The stock trades at about $30 now. B of A gave the reason that the firm had "concerns over a sharp decline in product volume resulting from lower market share" according to MarketWatch.

Now GM has been losing share for some time. And, it has cut production capacity for next year, which some observers think is prudent cost cutting and others think is a capitulation to lower market share in the future.

But, all of the is old news. GM’s stock sold just below $36 on November 26. Did B of A have to wait until early January to figure out what its reservations would be. Or, was it better for investors to watch the stock slide over 15%?

Nice call.

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

Posted on: January 3, 2007 – 10:10 am in Research

Sirius Up 6% on 6.02 Million Subscribers and Free Cash Flow

Sirius Satellite Radio (SIRI) said that it finished 2006 with 82% more subscribers than in the previous year, in-line with the company’s recently lowered projection.  It grew from 3.3 million subscribers in 2005-end to 6.024 million subscribers at the end of 2006.  SIRI shares are up over 5%at $3.76 pre-market.

This is within the company’s Dec. 4 forecast of 5.9 million to 6.1 million subscribers. Sirius also noted that it expects to report its first quarter of positive free cash flow in the quarter, a milestone.

The New York Times recapped on Monday the advantages of a merger for the two companies, and we commented on this a ways back too.  This potential merger talk is getting long in the tooth.

Jon C.Ogg
December 3, 2006

Posted on: January 3, 2007 – 9:02 am in Media, Mergers and Buy Outs, Satellite