Daily Archives: January 11, 2007

Zebra Tech’s Great RFID Acquisition

Everyone knows Zebra Technologies (ZBRA) as the bar code king.  Some know of their efforts to get further into radio frequency identification or RFID, but tonight they are making a smart acquisition.  ZBRA is buying WhereNet Corp, and RFID asset tracker, for $126 million in cash.

The deal is subject to the private shareholders of WhereNet.  Here is the description: provides integrated wireless Real Time Locating Systems (RTLS) to companies primarily in the industrial manufacturing, transportation and logistics, and aerospace and defense sectors with more than 150 installations currently in operation helping companies locate and track high-value assets with wireless tags, fixed-position antennas and Web-enabled software.

Zebra management expects WhereNet to generate sales of approximately $50 million in 2007, up from $36 million in 2006. The acquisition is expected to be minimally dilutive to Zebra’s net income in 2007 and be accretive thereafter. Zebra will operate WhereNet as a separate business unit led by the CEO of WhereNet.  The company is actually deemed as one of the better RFID emerging companies out there and is on industry insider watch lists.

This is actually a smart component purchase by Zebra that will take some of the pressure off the company as far as its actual position in RFID compared to other companies that could have continued biting into barcoding operations.  It is not their only operation in RFID at all, but this probably isn’t their last purchase in the field.  RFID was estimated to be a $550 million sector in 2006, but is expected to grow to $6.8 Billion in 2016.

ZBRA closed up 0.2% on the day at $34.44, and the 52-week trading range is $29.23 to $47.97. Back in 2004 this stock reached as high as $60.00.  ZBRA has a market cap of $2.43 Billion and sales estimated for 2006 are roughly $745 million, plus its balance sheet is in great shape.   This used to be a huge growth stock that rose 15-fold from the early 1990’s to 2004, but newer technologies have taken out some of the steady and rapid growth of barcoding.  Zebra might be able to get its old stock mojo back if continues with deals like this.

Jon C. Ogg
January 11, 2007

Posted on: January 11, 2007 – 8:30 pm in Mergers and Buy Outs

Cramer’s Sell Block (JAN 11, 2007)

Cramer made several updated notes on positions he has previously been bullish on in his "Sell Block" segment on CNBC’s MAD MONEY.

Cramer said he is throwing Intercontinental Exchange (ICE) under the bus and into the Sell Block.  The terms of the NYBOT merger are too rich compared to the original deal and you’d be a pig notto take some money off the table.  He thinks seatholders are going to unload shares and he doesn’t want to own this until after the seatholders sell shares.  He still likes NYSE (NYX), which was his #1 growth stock of the year.

Cramer said on Innerworkings (INWK) made a mistake by calling it a buy and he should have said sell it.  So he’d rather cut and run instead of putting in more effort toward it.  Here is what he said on December 19.

Cramer said Crystallex (KRY) should now be sold because he doesn’t think Hugo Chavez in Venezuela will allow it to make what it deserves.

J.Crew (JCG) is actually one that you can buy into the secondary, and he thinks it’s going up as a Buy.  Here is what he said for his positive comments on December 14.

Jon C. Ogg

Posted on: January 11, 2007 – 6:55 pm in Cramer

Cramer’s Case for Blockbuster

Cramer also thinks that Blockbuster (BBI) is still a buy even though it is up 39% since his November recommendation.  The drop off at the stores feature is allowing the stock to compete against Netflix (NFLX) because they now have 2.2 million subscribers to the online service instead of the lofty 2 million they estimated.  The company is looking to double their online access members again.  The company used to be a laughing stock, butthey are winning.  They recently sold off Rhino Games to GameStop, and he thinks this stock is going up and that estimates are too low.  Cramer even thinks that 2007 will be the year of Blockbuster.  He even got to interview John Antioco, its Chairman & CEO.  Antioco said that dumping late fees and fixing stores all helped.  Antioco feels his goals are attainable, and he thinks the value of the game store could be higher in the UK than what Cramer thinks.  He has also been targeting customer satisfaction, and is happy that it is going up.  Cramer thinks it is going much higher.

On tonight’s MAD MONEY on CNBC, Cramer first reviewed Sony (SNE-NYSE/ADR) as a value and break-up play.  The company could trade at $61 to $72 instead of $45 today if the broke themselves up, and it could run a lot just on the hint of a turn.  Here are his full comments.

Cramer also noted again that Google (GOOG) is cheap, and he thinks it will go to $513 by next Wednesday.

Jon C. Ogg
January 11, 2007

Posted on: January 11, 2007 – 6:26 pm in Uncategorized

Cramer Evaluates Sony

On tohight’s MAD MONEY on CNBC, Cramer reviewed Sony (SNE-NYSE/ADR) as a favorite foreign value and break-up play.  The company could trade at $61 to $72 instead of $45 today if the broke themselves up, and it could run a lot just on the hint of a turn.  He added the value of each of the divisions to come up with that value.  Sony was called a revenue machine for revenues but it is not loved by the street, but Cramer said this is a great value.  It is a good value play in consumer electronics and you might even hear about a spin-off or break-up as soon as next quarter.  Cramer thinks it isn’t a complete screw upand there is a lot inside worth much more than the $45 price today.

Jon C. Ogg
January 11, 2007

Posted on: January 11, 2007 – 6:14 pm in Cramer

JDA Software Issues Guidance After Manugistics Purchase

JDA Software (JDAS) issued a release discussing the last mileston of its Manugistics acquisition (a former Bait Shop member), but it also issued guidance.  The revenues for Q4 2006 were approxim,ately $89 million ($17.7 million in software) and it gave EBITDA guidance of $14 million.  Unfortunately the street estimate for the quarter is just under $94 million.

CEO Hamish Brewer made the following comments as far as the continued expectations: "The sales growth in the Americas and EMEA has already underscored the revenue opportunities created by the combination of JDA and Manugistics. Although we experienced a number of earnings setbacks in the quarter, many of which were related to the integration of Manugistics, I do not anticipate ongoing recurrence of these detrimental impacts."

JDAS shares are down just over 3.5% at $14.20 in after-hours trading, but shares closed up 1.2% at $14.74 in regular trading.  It only traded almost 300,000 shares on the day.  The 52-week trading range is $12.46 to $17.17, so if they can make the "one quarter" issue stick then they might not get punished too bad.

Jon C. Ogg
January 11, 2007

Posted on: January 11, 2007 – 4:15 pm in Earnings

Cramer on Stop Trading (JAN 11, 2007)

On today’s STOP TRADING segment on CNBC, Jim Cramer has been looking for numbers to go up on the weak dollar, but the very recent strength will keep that from happening.  Cramer thought that would happen for Altria (MO), Caterpillar (CAT), and Pfizer (PFE), so now he isn’t looking for bump ups in forward numbers.

Amdocs (DOX) was noted with a little concern by Cramer, although he still wants to give them the benefit of the doubt (stock down over 9%).

Jon C. Ogg
January 11, 2007

Posted on: January 11, 2007 – 2:50 pm in Cramer

Pacificnet Scores a Sony Pact

Pacificnet, Inc. (PACT) has announced that Sony’s (SNE) Hong Kong operations retained the company to provide e-commerce solutions for Sony Style.  Unfortunately, financial terms are not disclosed.  PACT shares are responding well with a 9% pop to $7.00 on 725,000 shares.

The platform includes the following internet applications: mass multi-user online customer log-in registration, administration, MySony membership management, billing, sales and order reports, warehouse inventory management and backend ERP interface with SAP systems, firewall and load-balancing systems, Web+ application servers, credit-card security management, and a shopping cart and payment system which enables customers to purchase products from Sony Style online, and make payment online using a credit card.

Pacificnet (PACT) is one of the Chinese online and offline operators that many companies either use or at least go to for technical assistance in China, Hong Kong, and elsewhere in S.E. Asia.  With a tiny $82 million market cap, a partial cult stock status, an HQ in China, and a name like Sony you never know how much volume will end up trading.  It usually trades under 400,000 shares per day.

Jon C. Ogg
January 11, 2007

Posted on: January 11, 2007 – 2:43 pm in Uncategorized

Cramer Pans Oil; Pro Apple & Sears

On TheStreet.com "Wall Street Confidential" video this morning, Jim Cramer said that oil was somehow kept artificially high at the year-end.  The stock market bulls have a big advantage right now except for oils.

Cramer notes that analysts have to downgrade oil names.  Cramer was again positive on Sears (SHLD) and that it would go to $200 faster than he thought and that Lampert is building the next Berkshire Hathaway.

Cramer was again very positive on Apple (AAPL) and noted it would be foolish to buy Nokia (NOK) or Motorola (MOT).  Cramer thinks many will switch from Verizon and others to go to Cingular for wireless.  He was positive here on AT&T (T) as the Cingular owner and said RIMM had its day, and he said PALM is nothing as far as a stock now.

If you want to see a much more calm and collective Cramer, the Wall Street Confidential videos on thestreet.com website are where you go.

Posted on: January 11, 2007 – 11:41 am in Cramer

Intel Signals All Is Well

Intel (INTC) has been quite silent since last earnings, and after the round of semiconductor and chip warnings in December Wall Street is interpreting that the company isn’t going to have any major issues with the quarter.  Street estimates on a preliminary basis before last minute changes are $0.25 EPS and $9.45 Billion revenues; based on recent bullish calls you could expect a whisper earnings number of $0.26 & around $9.55-$9.6 Billion. INTC reports January 16 after the close.

Over the last 3 months the stock has actually been mostly flat and in a range of just above $20 on the low-end in December and up as high as almost $22.50 in November.  In recent days Banc of America has reiterated a Buy rating with a $28 target and just this morning Deutsche Bank did the same reiteration of a Buy rating, although Bank of America’s ongoing research was the most compelling that it will be in the higher-end of the range.  Sanford Bernstein and Credit Suisse were cautious last week, so don’t think it is only one-sided.  Options traders as of this mornings 1.5% gain are only factoring in a move of essentially 1.5% to 2% in either direction ahead of earnings, but that may be different by earnings day.

Outside of the move from Dual-Core into Quad-Core and then other speculation suggesting we’ll have 8-core and 16-core processors by the end of the year, the talk of its flash unit spin-out and new wireless cards and WiMax initiatives is really overshadowed by the launch of Windows Vista.  The AMD threat is now known and very quantifiable.  So now it really seems to boil down to one single point: If you believe that the Windows Vista launch is going to be monumental and a strong upgrade catalyst, then Intel should do quite well.  If not, then lower share prices are a given.  I am optimistic ahead of the launch and therefore have great expectations for the coming quarter, but that’s my opinion; some are thinking sell-throughs are not strong enough yet to merit being positive.  My answer to that is that this could miss by a quarter or even two, but in a year from now if you or your business aren’t running on a quad-core processor and you might as well be turning in the plasma for an old CRT black & white TV with wood panels.

You can assume that forward Q1 2007 and Fiscal 2007 estimates will see some real changes either way after the report, but here are some rough forward expectations from the street: $0.23/$8.9 Billion for Q1 and Fiscal 2007 $1.14 & $37.8 Billion.

Companies are supposed to be in a quiet-period by this time, so if the company warns this late in the game or if they come out with substantially lower revenues next week then they would be at risk of having credibility issues because of their size.

Jon C. Ogg
January 11, 2006

Posted on: January 11, 2007 – 11:14 am in Earnings, Semiconductor, Technology Companies

Sirius And XM Rise A Flash In The Pan

After a nice run up yesterday on an upgrade from Citigroup, XM and SIRI just can’t keep the momentum. The Citi research report said that more cars would be satellite radio receivers in 2007 and 2008 giving XM the opportunity to drive up its subscriber base. Citi also said that it liked the chances that the two companies would merge.

On the upgrade, XM moved from $15.35 to $16.70. But, today it is back down to $15.97. Sirius moved from $3.75 to $4.17. Today is changes hands at $3.88.

It may be that, in stark contrast to the new iPhone, Sirius and XM are companies that cannot attract consumers with hot new products. The lack of enthusiasm for the shares is palpable.

Maybe Howard Stern will start broadcastin on the iPhone.

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

Posted on: January 11, 2007 – 10:41 am in Satellite

24/7 Wall St. 2007 Price Targets: Chervron, $75

Over the next week 24/7 Wall St. will set mid-year price targets (June, 30, 2007) for the sixty most widely traded stocks. These targets will be based on past price performance, industry activity, forward projections of financial performance, outside analyst opinions, and research conducted for doing past articles on these firms. The price targets assume flat markets over the next six months. In other words, if the Nasdaq moved up 25% between now and mid-year, the target share price targets would probably be too low. If the market moved down by 20%, they would probably be too high.

Chevron. (CVX) Chevron has already said that lower oil prices will hurt its Q4 06 results. The stock has moved from a 52-week high of $76.20 to under $70 to reflect the market’s concern. But, Chevron has additional production coming online from Africa and Kazakhstan, so, if oil moves back toward the mid-$60 range again, the company should continue to do very well. The company also has a large operating base in Asia where oil demand is rising faster than anywhere in the world.

The open question about Chevron is the same as it is for all Big Oil companies. Our forecast on Chevron is based on oil prices rising back to above $60. A warm winter in the US will not offset the huge demand in countries like China. Lower oil should also fuel demand for gas in the US as the lower pump price gets Americans back on the road. A terrorist act or quick deep freeze across the northern US could quickly move per barrel prices back up.

As Barron’s pointed out not long ago, Conoco and Chevron has the lowest P/Es of any of the 50 largest companies in the world based on market cap. Two analysts quoted in the story put their target price on the stock at over $90. While that may be wishful thinking, increasing oil prices should lift Chevron.

Reasons the the stock might rise above target: Any events that push oil prices up, especially for an extended period.

Reasons that the stock might fall below forecast: Sustained oil prices below $55 a barrel.

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

Posted on: January 11, 2007 – 10:03 am in Oil & Gas

Companies That Should Pay CEOs $1 A Year

Certain large cap companies have performed poorly enough that it would not be unreasonable to ask their top manager to take $1 a year in salary and give them a chance to make money on performance-based bonuses and restricted stock grants.

Yahoo! (YHOO)  Stock down from $43 to $28 in last year. No one believes it can get back into the race as the "go to" website.

Apollo Group  (APOL) Company was viewed at the winner in the online education business. Management blew that up and took stock from $82 to $41.

Advanced Micro Devices (AMD) Management had convinced Wall St. that the company had Intel on the run in the server and PC markets. Then investors found out the market share was paid for by plunging operating margins. A $40 stock less than a year ago, now goes for about $20.

Sandisk (SNDK) The leader in flash memory cards, management decided to build expensive fabrication facilities at a cost of as much as $5 billion per. Stock was almost $80 a year ago, goes for $46 now.

Sirius (SIRI) In December 2005, the stock was almost $8. With subscriber growth, Howard Stern, and forecasts of positive cash flow, all the company can manage now is just over $4.

Ebay (EBAY) Stock was at $59 at the end of 2004. Company has not been able to get markets to buy into overseas growth story and Skype purchase looks insane. Stock is $30 now.

St. Jude. (STJ) Traded at almost $55 a year ago and $38 now. Bet much of the company’s growth on implantable cardioverter defibrillator and stands in third place in the market behind Medtronic and Boston Scientific.

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

Posted on: January 11, 2007 – 9:22 am in Compensation

Six Flags Delivers on Promise to Sell Parks

Six Flags (SIX) is selling 7 properties as part of its restructuring and streamlining plans: selling three of its water parks and four of its theme parks to PARC 7F-Operations Corporation of Jacksonville, FL for approximately $312 million; the breakdown is $275 million in cash and a note receivable for $37 million. The scrapped parks are:

Six Flags Darien Lake in Buffalo, NY;
Six Flags Elitch Gardens in Denver, CO;
Frontier City and the White Water Bay Water Park in Oklahoma City, OK;
SplashTown in Houston, TX;
Waterworld USA in Concord, CA; 
Wild Waves and Enchanted Village in Seattle, WA.

Six Flags Magic Mountain and Hurricane Harbor in Valencia, CA were excluded from the sale, and the reason the company said it is exclusing these is becaus ethe land value was deemed high and the street was looking for soem California properties to potentially be sold; and those were up for review with several others.

As far as backing these numbers out of forward and past numbers, the company estimated that these parks generated approximately $30 million of Park EBITDA(1) and 3.6 million of attendance in 2006. Mark Shapiro was on CNBC last week in a Jim Cramer interview and he noted that several park property sales would be decided on, and it looks like he has remained true to that.

SIX shares are up 3% at $5.60, although shares were initially indicated at $5.75 in pre-market activity.  The 52-week trading range is $4.53 to $11.93.

Jon C. Ogg
January 11, 2007

Posted on: January 11, 2007 – 8:54 am in Uncategorized

Pre-Market Stock Notes (JAN 11, 2007)

(AAPL) Apple fell 0.6% after Cisco sued it over iPhone trademark name.
(ARRS) Arris mixed news this morning: company guidance $0.23-0.26 EPS vs $0.27 estimates; but reports now say its above high-end of prior range; stock looks up 4% now after indicating lower.
(BMY) Bristol Myers in diabetes collaboration with AstraZeneca.
(CCBL) C-Cor raised guidance.
(DNA) Genentech trading up 1.5% after beating earnings.
(EBAY) eBay confirmed it is paying $310M for StubHub.
(EOP) Equity Office apparently has a higher bid now from Cerberus.
(EPMD) EPMedsystems gets distribution pact from Philips.
(GNVC) Genvec received FDA clearance for TNFerade in ultrasound for pancreatic cancer.
(GOOG) Google noted as going to $600’s by Cramer.
(HOS) Hornbeck Offshore lowered guidance.
(INFY) Infosys $0.38 EPS vs $0.37e; sees next quarter $0.40 EPS vs $0.39e.
(MEH) Midwest Air gets higher bid from Airtran.
(PETM) Petsmart positive as turnaround by Cramer on MAD MONEY.
(RMBS) Rambus up 2% after patent license pact from Spansion.
(SAPE) Sapient $0.07 EPS vs $0.04e.
(SIRI) Sirius down 1% after Karmazin was offering some general guidelines for 2007.
(SKS) Saks positive as turnaround by Cramer on MAD MONEY.
(SSTI) Silicon Storage COO resigned.
(STAA) Star Surgical slightly raised guidance.
(THQI) THQ Interactive up 3% on raised guidance.
(TUES) Tuesday Morning actually sees Q4 slightly betterthan expected after guidance had been lowered.
(WAG) Walgreens Chairman stepping down after buyback yesterday.
(WST) West pharma sees EPS at lower end of range.

Jon C. Ogg
January 11, 2007

Posted on: January 11, 2007 – 8:16 am in Pre-Market Activity

Pre-Market Analyst Calls (JAN 11, 2007)

ABN raised to Buy at Merill Lynch.
AFN started as Buy at Oppenheimer.
AG started as Underweight at Morgan Stanley.
AGN started as Overweight at Prudential.
ALU started as Neutral at RWBaird.
AKAM reitr Buy at Jefferies.
ARHMY cut to Neutral at UBS.
AU raised to Overweight at Prudential.
BMS raised to Buy at B of A.
CAI cut to Mkt Perform at Wachovia.
CAT started as Underweight at Morgan Stanley.
CMA started as Neutral at Credit Suisse.
COO raised to Neutral at UBS.
DE started as Overweight at Morgan Stanley.
GE cautiously maintained Buy at B of A.
GOOG reitr Buy and raised estimates at Goldman Sachs.
GOOG reitr Buy at B of A.
GSK cut to Equal Weight at Lehman.
HBC cut to Sell at Merrill lynch.
HCR started as Buy at Merrill Lynch.
HITT raised to Overweight at Lehman.
HOS cut to Sell at Goldman Sachs.
LVLT started as Outperform and $7.50 target at Credit Suisse.
METraised to Buy at UBS.
NOA started as Outperform at CIBC.
PRAI cut to Underweight at Lehman.
SNY cut to Equal Weight at Lehman.
SYKE raised to Outperform at RWBaird.
TDW started as sell at Goldman Sachs.
TEX started as Equal Weight at Morgan Stanley.
TWGP raiised to Outperform at KBW.
USPI cut to Hold at Deutsche Bank.
VOD raised to Overweight at Lehman.
WAG reitr Buy at Goldman Sachs.
YHOO reitr Buy at B of A.

by Jon C. Ogg

Posted on: January 11, 2007 – 8:05 am in Analyst Calls

Goldman Sachs Research; Hike Google; Trim Oil

Goldman Sachs raised estimates on Houston Exploration (THX), Pioneer (PXD), Verasun (VSE); Goldman Decreased estimates on Anadarko (APC), Apache (APA), Aventine (AVR), Berry (BRY), Cabot Oil (COG), Canadian Natural (CNQ), Devon (DVN), El Paso (EP), EOG (EOG), Encana (ECA), Forest (FST), Newfield ((NFX), Noble (NBL), Pogo (PPP), Questar (STR), Quicksilver (KWK), Southwestern (SWN),  Cheaspeake (CHK), Hess (HES), Marathon (MRO), Nexen (NXY), Occidental (OXY), Pacific Ethanol (PEIX), Petro-Canada (PCZ), Chevron (CVX), Ultra Petroleum  (UPL), ConocoPhillips (COP), and Aracruz Celulose (ARA), Suncor (SU), Talisman (TLM), XTO (XTO), Tidewater (TDW).

Goldman Sachs also raised estimates by $0.09 for the current quarter on Google (GOOG); raised estimates on Genentech (DNA) and Tiffany (TIF).

Goldman Cut estimates on Guitar Center (GTRC), Capital One (COF), and Sapient (SAPE).

Eastman Kodak (EK) and Gap (GPS) noted cautiously at Goldman as well.

Walgreens (WAG) reiterated Buy by Goldman Sachs.

Goldman Sachs says Google (GOOG) could have 20% upside to its $595 target and reiterated Buy.

Jon C. Ogg
January 11, 2007.

Posted on: January 11, 2007 – 7:41 am in Analyst Calls

Europe Markets 1/11/2007 Prudential, Alcatel-Lucent Up

Stocks:  (BCS)(BT)(BP)(GSK)(UN)(PUK)(RTRSY)(VOD)(BAY)(DCX)(DB)(DT)(SAP)(SI)(ALU)(AXA)(FTE)(V)

Markets in Europe were up modestly at 6 AM New York time.

The FTSE rose .4% to 6,188. Barclays rose .1% to 755.5. BP rose 1.1% to 535.5. BT dropped .3% to 315.5. GlaxoSmithKline rose .8% to 1370. Prudential rose 1.7% to 723.5. Reuters rose 1.4% to 442.25. Unilever rose .3% to 1391. Vodafone was up .7% to 146.75.

The DAXX was up .8% to 6,618. Bayer rose .4% to 41.04. DaimlerChrysler fell .3% to 46.17. DeutscheBank rose .6% to 101.6. Deutsche Telekom fell .6% to 14.5. SAP rose 1.1% to 41.92. Siemens rose .3% to 76.23.

The CAC 40 rose .8% to 5,546. AlcatelLucent was up 1.8% to 11.71. AXA was up .8% to 31.61. France Telecom was down .4% to 21.78. ST Micro was up .5% to 14.73. Vivendi was down .2% to 30.95.

Data from Reuters.

Douglas A.McIntyre

Posted on: January 11, 2007 – 6:05 am in International Markets

24/7 Wall St 2007 Price Targets: Exxon, $75.

Over the next week 24/7 Wall St. will set mid-year price targets (June, 30, 2007) for the sixty most widely traded stocks. These targets will be based on past price performance, industry activity, forward projections of financial performance, outside analyst opinions, and research conducted for doing past articles on these firms. The price targets assume flat markets over the next six months. In other words, if the Nasdaq moved up 25% between now and mid-year, the target share price targets would probably be too low. If the market moved down by 20%, they would probably be too high.

Exxon Mobil. (XOM) Oil price drops have already caused Exxon to give back some of the gains  it amassed over the last year. The stock got as high as $79 in mid-December and since then has fallen to just above $70. At its high point, the shares were up 30% over the low for  previous twelve months. That increase now stands at 18%.

The bet on Exxon’s stock price is a bet on the price of oil. And, there seem to be more bets at $50 now than $100, although a few months ago no one had their money on the lower price. With Conoco forecasting a margin drop of 25% in Q4, investors in Big Oil are spooked.

While GM’s chief economist is predicting oil prices will see $40 this year, that is not likely. The demand for oil is likely to increase in huge markets like the US and China because they have expanding economies and have made no real moves to cut reliance on fossil fuels. The drop in demand in the US due to warm weather may help prices for a brief time, but put the emphasis on brief.

Oil is also the commodity of fear. Terrorist activity, pipeline breakdowns, tanker accidents, failure to add more nuclear energy production can all run oil prices up. So, the chances that the price of oil averages above $60 a barrel in 2007 is probably fairly good.

Exxon’s size also gives it economies of scale and its business diversity should help it earnings going forware. As Morningstar has pointed out compared to its smaller peers: "downstream refining, petrochemical, and lubricant operations make up a larger chunk of ExxonMobil’s business" The median price target for Exxon’s stock among 16 brokers covered by Thomson/First Call is $80 although the number of analysts the rate the stock a hold is rising.

Exxon’s stock may not be up another 30% in 2007, but it is not going down.

Factors that could move the stock price above target: The price of oil.

Factors that could move the shares below targer: The price of oil.

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

Posted on: January 11, 2007 – 5:35 am in Oil & Gas

As Sony Playstation3 Underperfroms In Japan, Prospects Fade

Sales of the Playstation3 have fallen well short of expectations in the critical Japanese market Research firm Enterbrain says that Sony (SNE) sold a little over 534,000 PS3 units from its November 11 launch to January 7. Sony had hoped to sell one million units in Japan during 2006.

Sales of the Nintendo Wii, which came out December reached 1.14 million units through January 7.

Big problems with the PS3 would spell big problems for Sony. In the September 2006 quarter, game sales were $1.44 billion of Sony’s total $15.71 billion in revenue. But in fiscal 2005, operating income from the game division was nearly 40% of the company’s total, despite its relatively small percentage of total revenue.

Opererating profit at Sony’s studios and consumer electronics business are unlikely to take up the slack, so Sony could be headed for real trouble.

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

Posted on: January 11, 2007 – 5:07 am in Consumer Electronics

Media Digest 1/11/2007 NYTimes, WSJ, Reuters, Barron’s, FT

According to Reuters, management at Nokia (NOK) said that the sales goals for the Apple (AAPL) iPhone are not very ambitious.

Reuters reports that Ebay (EBAY) is buyong online ticket broker StubHun for $310 million.

Reuters reports the Infosys, India’s second largest software exporter, reported a 51% increase in third quater profits, but the stock fell  due to higher expectations.

Reuters writes that profits at biotech firm Genentech (DNA) rose 75% on strength of rising demand for cancer drugs.

The Wall Street Journal writes that Blackstone may fact a rival for its $20 billion bid for real estate firm Equity Office Product (EOP)

WSJ also writes that US Airways (LCC) has raised it hostile bid for Delta to $10.3 billion

WSJ reports that Cisco (CSCO) has sued Apple (AAPL) of the iPhone trademark.

Scripps (SSP) is considering spinning off its newspaper division and keeping its cable programming group.

The New York Times reports that GM’s (GM) future may depend significantly on how its does in China, its second largest market.

The New York Times reports that Sony’s (SNE) PS3 sales in Japan fell far short of expectation.

FT reports that analysts are questioning whether the new Apple iPhone is actually any threat to smartphones from Palm (PALM) and Research In Motion (RIMM).

Barron’s reports that ethanol and solar energy stocks could continue to be hot in 2007, naming SunPower and VeraSun Energy as two of the firms.

Douglas A. McIntyre

Posted on: January 11, 2007 – 4:46 am in Press Digest