Daily Archives: January 16, 2007

Cramer on Hudson City Bancorp

Hudson City Bancorp (HCBK-NASDAQ) had its CEO interviewed by Cramer on CNBC’s MAD MONEY.

Cramer wanted to know why the valuations are higher and why it keeps going up.  The company is a traditional thrift, so they retain mortgages and don’t sell the mortgages and loans.  They only do prime mortgages, so not high risk.  They haven’t had a net charge-off in 7 years. 

The CEO says they have excess capital and they were a mutual holding company until 1995.  Cramer said you get bank exposure here as the one that keeps going up with no poor credit risk profiles.  HCBK closed down 0.15% at $14.13, close to the $14.25 high over the last 52-weeks; It was trading at a new 52-week high of $14.38 in after-hours trading if that holds.

Here are some stats: HCBK is worth close to $8 Billion in market cap, trades with a P/E ratio of over 25, trades at a "stated" 1.6 times book value, and has profit margins of over 40% if those numbers are accurate.

Jon C. Ogg
January 16, 2007

Posted on: January 16, 2007 – 7:03 pm in Banking, Cramer, Financial Stocks

Cramer’s Outsourcing Tie

Cramer talked about 2 savage American IT consulting and 2 outsourcing companies in India.  Cramer is saying this is a match against the two groups to see who is better.  They are all fighting for a larger piece of the pie.

Accenture (ACN) and EDS (EDS) are the American plays here.  Wipro (WIT) and Infosys (INFY) are the Indian plays.  Cramer thinks that the overall prospects for the Indian companies are better and they have more business to win since they only have 2% global market share.  But Cramer thinks that Accenture (ACN) and Infosys (INFY) are the two winners here, and Cramer thinks you should buy both of them.  INFY is the better growth company, but since INFY is just starting to look profitable he thinks that ACN is better if you have to have the earnings.  Cramer thinks both companies are best of breed and can be winners for shareholders.

Jon C. Ogg
January 16, 2007

Posted on: January 16, 2007 – 6:48 pm in Cramer

Cramer Prefers Infosys Over Wipro

Cramer talked about 2 savage American IT consulting and 2 outsourcing companies in India.  Cramer is saying this is a match against the two groups to see who is better.  They are all fighting for a larger piece of the pie.

Accenture (ACN) and EDS (EDS) are the American plays here.  Wipro (WIT) and Infosys (INFY) are the Indian plays.

Infosys (INFY) and Wipro (WIT) are taking business from the Americans.  Cramer thinks the better of the two Indian stocks is Infosys (INFY).  Cramer thinks their results are setting up to be better than expected and they may break-even in the coming quarter.  It just hit a $58.25 high last week.  Its attrition rates of employees leaving was 12%, but that is the lowest of all the major Indian companies. 

Cramer thinks the Indian companies are looking better, but the and he isn’t going to go over the true winners as far as what to invest in later.  That is called "trying to maintain ratings" on TV.

Jon C. Ogg

Posted on: January 16, 2007 – 6:26 pm in Cramer

Why Break Up Citigroup When You Can Just Change the Name?

By Chad Brand of Peridot Capitalist

 

Citi

Investors hoping Citigroup (C) CEO Chuck Prince would break up the company into smaller parts in order to significantly boost shareholder value will have to wait a little while, at least. After calling such break up talk ridiculous and stupid, Prince reportedly has decided to revamp the Citigroup’s brand by, hold your breath, shortening the company’s name to Citi and having each division’s arc on the logo be a different color. Such a move is an attempt to "unify the identity of Citigroup’s businesses" according to the Associated Press.

Isn’t unifying the company’s identity the exact opposite of breaking the company up? Will the move do anything for the company’s lagging stock price (shares have risen a total of about 5% over the last 5 years)? Highly unlikely.

Without a break up, Citi sports a 6 to 7 percent earnings growth rate and a 12 P/E multiple. Such a ratio seems about right for that type of growth. By breaking up into smaller pieces, it would be much more obvious to investors that some of Citi’s businesses are growing much faster than the entire firm as a whole. In that case, higher multiples would clearly be afforded to some divisions.

The result would be increased shareholder value, not to mention better growth prospects given that it is much easier to grow a bunch of separately run, individualized, smaller firms than it is an enormous one. Just giving each business their own colored arc really doesn’t accomplish that feat quite as well.

Full Disclosure: No position

http://www.peridotcapitalist.com/

Posted on: January 16, 2007 – 6:20 pm in Financial Stocks

Cramer Likes Accenture Over EDS

Cramer talked about 2 savage American IT consulting and 2 outsourcing companies in India.  Cramer is saying this is a match against the two groups to see who is better.  They are all fighting for a larger piece of the pie.

Accenture (ACN) and EDS (EDS) are the American plays here.  Wipro (WIT) and Infosys (INFY) are the Indian plays.

Accenture (ACN) has people in all parts of the industry.  Cramer says that Accenture is a better buy than EDS with its 30,000 people.  Its earnings were up 32%, and it has over 12% consulting growth.  Accenture (ACN) was up 1.3% at $37.58, close to the $38.00 high over the last 52-weeks.  EDS owns 30% of an outsourcing company in india, but it shouldn’t be bought for that.  Cramer also said don’t worry about looking at metrics other than earnings and earnings growth, because the assets are their employees who all leave the front door at night.

Jon C. Ogg
January 16, 2007

Posted on: January 16, 2007 – 6:17 pm in Cramer

Rackable Systems Gets Racked

What happens when a high-multiple and high-beta stock that has been a high-flyer misses or pre-announces light earnings and revenues?  They get crushed.  Note Rackable Systems (RACK).

Rackable came clean and is projecting a loss of $683,000 to a profit of $194,000, or a loss of 2 cents per share to a profit of a penny per share.  Rackable Systems expects quarterly revenue to range from $105.5 million to $106.8 million.  Excluding certain expenses, the company expects $4.8 million to $5.3 million in net income, or earnings of $0.17 to $0.18.

Analysts were looking for a higher profit of $0.27 on $106.1 million in revenue.  The company said its earnings and gross margins were hurt by higher-than-anticipated DDR (double data rate) memory pricing, lower-than-expected sales of RapidScale products and more aggressive pricing on some of its contracts due to increased competition.

RACK shares are down 32% at $21.92 in after-hours, and that is after a 2.5% rise to $32.42.  Ouch!

Jon C. Ogg

Posted on: January 16, 2007 – 6:05 pm in Earnings

Detroit Sees $4 To $5 Per Gallon Gas

Don’t tell the car industry about oil dropping from $78 a barrel to $52. They aren’t buying it long-term.

A survey of 100 power-train experts, including CEOs, by University of Michigan Transportation Research Institute (UMTRI) found a consensus that gas is going way, way up. To $4 by 2010 and $5 by 2020.

The stock market currently appears to be betting that oil prices will drop, or, at least stay stable. Large oil company stocks have continued to drop for several weeks marking down shares of Exxon (XOM), Chevron (CVX), Conoco (COP), and BP (BP).

Fuel prices at over $4 a gallon would clearly mean that Detroit firms like GM (GM) and Ford (F) will need to step up their migration from large SUV and pick-up heavy product lines to more fuel efficient cars like those offered by Toyota (TM) and Honda (HMC)

At $5 a gallon, that would put oil at $100 a barrel or so? Looks about right.

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

Posted on: January 16, 2007 – 5:57 pm in Autos

Intel Delivers, Sort Of

Intel (INTC) reported earnings at $0.26 EPS and $9.7 Billion in revenues.  It was expected to post $0.25 EPS & $9.45 Billion, although whisper numbers had this a tad higher than estimates since the company didn’t offer any guidance or warning other than what it telegraphed with its last quarter. 

The raw number was $0.30 for EPS outside of options, but there is a gain from the sale of certain assets of the company’s communications and application processor business to Marvell Technology Group partially offset by impairments, including an impairment for the related decision to place the company’s Fab 23 facility in Colorado Springs, Colo., up for sale. The gain and impairments resulted in a net increase to EPS of approximately 2.5 cents. Fourth-quarter restructuring charges related to the company’s structure and efficiency program were in line with the company’s expectations and decreased EPS by approximately 1.5 cents.

Fourth-quarter gross margin was 49.6 percent and the company used $150 million for share repurchases.  The company ended 2006 with a workforce of 94,100 people, slightly below the target of 95,000 people. The company is on track to generate spending and manufacturing cost savings of approximately $2 billion in 2007 exclusive of restructuring costs.

Intel is marginally raising guidance for the coming quarter if you use the mid-point of the range, but there is no guidance on revenues or earnings yet for the fiscal year:
    * Revenue: Expected to be between $8.7 billion and $9.3 billion.
    * Gross margin: 49 percent, plus or minus a couple of points.
    * Spending (R&D plus MG&A): Between $2.6 billion and $2.7 billion. In addition, the company expects a first-quarter restructuring charge of approximately $50 million.

2007 Outlook
    * Gross margin: 50 percent, plus or minus a few points.
    * R&D: Approximately $5.4 billion.
    * MG&A: Approximately $5.3 billion.
    * Capital spending: $5.5 billion plus or minus $200 million (45nm process technology spending included)

INTC shares were down most of the day, but managed to close in positive territory up 0.7% at $22.30.  At the close of trading it looks like options traders were braced for a move of $0.45 to $0.50 in either direction.

INTC initially popped more than 2% on the news, but as often happens the stock whips around in after-hours while everyone tries to digest their numbers and while everyone tries to determine if it is a real exceeding or not.  Shares are now looking down 0.9% from the $22.30 close, but you’ll have to see how it reacts during their conference call and to the analyst calls in the morning before saying they truly pleased or failed to please.

Jon C. Ogg
January 16, 2007

Posted on: January 16, 2007 – 4:24 pm in Earnings, Semiconductor, Technology Companies

Cramer Hit On a Couple of Bait Shop Names

I briefly noted that on CNBC’s STOP TRADING segment that Cramer said Bank of America (BAC) may be telegraphing that they are going to buy someone.  He said the equivalent of, "Please Don’t Do It! Your stock finally looks good."  He noted that BAC could be looking at Comerica (CMA) and National City (NCC).  These are not "completely undoable" but the current regulations could be a real issue.

Bank of America can go make purchases all day long in the domestic financial services arena, as long as we are talking about non-depository institutions.  The company is up very close to its nationally imposed 10% CAP, where the federal reserve does not allow any single bank to hold more than 10% of banking deposits on a nationwide basis.  Could you imagine the run on the banking system that could occur if a bank that held more 10% of the total deposits was ever in financial trouble?  It is also important to know that they can grow organically to more than that 10% threshold, but that takes them out of the depository acquisition game.  The 10% cap applies to US deposits only, so they are free to do whatever they want internationally.

At one point last year, BAC was estimated to be around the 9.8% of total deposits in the US.  The 10% limit does not include deposits at credit unions and Bank of America has made the argument that those should be counted in the 10% limit when it comes to total deposits in the nation.  If any legislation happens or if they get any hard lobbying through, then that could change the argument.  They were instrumental in breaking down many of the old limiting interstate banking laws, so it isn’t fair to assume that laws and rules can’t be changed when Billion of dollars are at stake and when corporate America really takes its gloves off. The Wall Street Journal’s article discussing that Bank of America is trying to get the ceiling raised has sparked other reports and speculation that they are trying to do a larger deal, but I have discussed this on several occasions with a contact at the Fed (dating back to the J.P.Morgan (JPM) purchase of Bank One) and he said he thought Bank of America has been trying to get that 10% threshold raised for some time.

There are other areas such as custodial services, advisory services, investment banking, clearing, insurance, lending, merchant banking, and many more that they could go out and do deals in.  Neither bank, Comerica (CMA) nor National City (NCC), has had much price movement since Cramer noted this, so the street is probably guessing that these aren’t in-play. 

Both of these names are on a "WATCH LIST" for the BAIT SHOP because of their valuations being within the valuation guidelines that would make them potentially attractive to a buyer, but at the size of the companies you could just as easily see them out trying to buy smaller banks on their own.  For that reason, these two have never been added as full members to the BAIT SHOP.

If you would like further updates to our free private email list regarding BAIT SHOP candidates and other special situation investing please send an email to jonogg@247wallst.com and title the email SUBSCRIBE.  We value privacy and do not share our email lists with any third parties. 

Jon C. Ogg
January 16, 2007

Posted on: January 16, 2007 – 3:34 pm in Bait Shop, Banking, Cramer, Financial Stocks, Mergers and Buy Outs

Cramer Talks Real Estate Buys and Banks

On today’s STOP TRADING segment on CNBC, Jim Cramer was outsaying Ken Heebner was right on real estate. He talked about SL Green (SLG) and CB Richard Ellis (CBG) after KenHeebner was talking them up. Cramer alsosaid Wells Fargo (WFC) was a great call because they are expanding in sub-primemortgages and doing well where others can’t. Cramer also said that Commerce Bancorp (CBH) is down on the targetedinvestigation, but this is the best run bank there (even though he said youhave to believe all is great for it to go up rapidly now). Indymac (NDE) was also noted as ugly toCramer, and Cramer said that if the CEO is saying his segment stinks then heisn’t going to try to out-guess the CEO. Cramer told Bank of America (BAC) point blank to stay out of theacquisitions game from here on because the stock is finally looking ok. 

As a reminder from earlier he did telegraph that he wasgoing to discuss Yum! Brands (YUM) on tonight’s MAD MONEY segment after

6:00 PM

on CNBC.

Jon C. Ogg

January 16, 2007

Posted on: January 16, 2007 – 2:50 pm in Cramer

Break-Up Value: Motorola, $26.70

Wall St. may have lost track of the fact that Motorola (MOT) is really three large business under one roof. Of the $42 million in revenue that the company is likely to have in 2006, about $28 billion will come from the handset business. The company’s telecom network infrastructure business is another $11 billion. Its set-top box division, which competes with Cisco’s (CSCO) Scientific Atlanta group, is the third operating business and should bring in about $3 billion.

The handset business has had an operating margin of about 12%. Based on the company’s recent bad news about price pressure in this part of the company, that figure could clearly drop. The infrastructure business has a margin of about 14%. The set-top box business has a 3% margin.

Motorola has debt that roughly equals cash, so there is very little discount needed from its $43.7 billion market cap ($18 a share).

Nokia, the largest handset company in the world, trades at about 1.5x revenue. Motorola is at about 1x. Nokia is putting its network business together with Siemens, so that is probably priced into its stock. At 1.5x Motorola’s revenue, the handset business would have a value of $42 billion, close the current market value for the whole company.

The infrastructure business has a few large competitors. Alcatel-Lucent (ALU) and Nortel (NT) each have a fair deal of debt for their market caps. Each company trades for about 1x sales.

The other companies that are dominant in the segment are the Nokia/Siemens (NOK)(SI) upcoming joint venture and Ericsson  (ERIC) which is buying Redback (RBAK). Ericsson trades for 2.6x sales. An analyst could argue that Cisco (CSCO) and Juniper (JNPR) are also in closely related businesses and each trades for over 5x sales.

Leaving the companies with the high premium multiples out of the valuation, Motorola’s infrastructure business has comparables in Nortel, Alcatel-Lucent, and Ericsson that range from 1.1x sales in value to 2.6x. At a 1.8x multiple, Motorola infrastructure business would be worth $19.8 billion.

Leaving the set-top box business at Motorola’s own 1x valuation would give that segment a $3 billion valuation. That would bring the valuation of the entire company to $64.8 billion or $26.70 per share, about 50% higher than the stock is now.

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

Posted on: January 16, 2007 – 2:40 pm in Mergers and Buy Outs

Previewing Apple: Earnings & Potential Stock Split

After tomorrow’s close we’ll get to see how Apple’s quarter turned out, but more importantly we’ll get a first look at the guidance ahead that includes the previously unincluded numbers for the Apple set-top box for television and the Apple Phone.  We have not heard any forecasts on these devices, and analysts have only started raising longer-term estimates and targets after these were unveiled at MacWorld.

The Banc of America analyst, Keith Bachman, is a 5-star rated analyst with Starmine and he recently reiterated his Buy rating and lifted his $100 target to $110 after the new products were unveiled.  The street is looking for estimates of $0.78, but the Starmine SmartEstimate(R) is for $0.81.  The higher-end of the range is $0.83.  Revenue expectations from Wall Street are roughly $6.43 Billion.  The company only guided $0.70 to $0.73 and $6.0 to $6.2 Billion implied with its last earnings when it gave guidance.

Apple’s chart shows an overbought reading, but that is frequently the case and almost every sell-off in Apple shares has been met with a buying flurry and a surge to newer and higher all-time highs.  On an adjusted basis, Apple is up more than TENFOLD since October 2001 when Windows XP was released and when the economy was choking on the impact from 9/11.  Shares are also up huge from last earnings when its shares went out at $74.29 ahead of earnings.

The real impact from new products is actually two and three quarters away, so there is a lot of calendar between now and the forward guidance.  Any supply hiccups or any real changes in the component markets could speed up or delay the launches, and many research firms will have to try factoring that variable into estimates.  As of one-day out, Options traders appear braced for a move of up to $4.00 in either direction; but that "expectation from options pricing" should compress rapidly after tomorrow’s results come out and as the time value left on the options will erode in the last 48 hours until Friday’s options expiration date.

We’ll likely see the formal restatement from 2004 to 2006 for the accounting charges from options expensing, and you can expect that many media reports will still be focusing on Steve Jobs and the potential options scandal.  Also, with the stock close to $100.00 you can just assume that this is on STOCK SPLIT watch.

Jon C. Ogg
January 16, 2007

Posted on: January 16, 2007 – 2:34 pm in Consumer Electronics, Earnings, Technology Companies

Cramer on Tech & More

On today’s video from TheStreet.com, Cramer said he is sick of the Symantec (SYMC) story as "one that is coming" and he said it is only going to get worse. It reminds him of software companies that never came back from the 1990’s.  He said this is going to get worse and the company is just unable to execute and the online security space is uninvestable with Microsoft dominating the group.  Doug noted the same sort of idea on this today, which you can read here.

On Cisco Systems (CSCO) Cramer disagrees with the downgrades this morning, but the analysts were locking in gains from $18.00 and he respects that; but Comcast’s buildout is helping CSCO directly and Cramer said this 3% drop won’t drop back to $25.00 like everyone who wants to buy it again would hope for.

Intel (INTC) is one trapped by the $22.50 option strike price and he likes H-P instead of Intel because it is a Buyer of processors and chips rather than the one fighting with AMD.  Here is our earnings preview we did last week ahead of Intel earnings.

On TD Ameritrade (AMTD) Cramer said that the notion that retail is notback is wrong; and they are coming back in via E*trade and Amritrade.He thinks it will trade back but you can pull the trigger with it up 6%today.  On Centex (CTX) and KBHome (KBH) the landvalue writedowns are not as bas it sounds, but he doesn’t really likethem right now as a group.  It wasn’t clear how Cramer was going to note Yum! Brands (YUM), but hesaid he was working on that tie to Taco Bell weakness into YUM sharesfor his MAD MONEY show. 

There are many more calls and comments on his video segment if you wish to watch it further.

Here is the rest of the earnings release calendar for this week, as there are many.

Jon C. Ogg
January 16, 2007

Posted on: January 16, 2007 – 12:40 pm in Cramer, Earnings, Technology Companies

Yahoo! Leads All Web Properties, PhotoBucket IPO Dreams

During December, Yahoo!  (YHOO) had 131.4 million unique visitor in the US. The Time Warner (TWX)Network finished second with 121 million unique followed by Microsoft (MSFT) at 116.5 million  and Google (GOOG) at 112.8 million.

The surprises on the Comscore Top 50 list are Gorilla Nation Media at 25.4 million unique visitors and Photobucket at 16.7 million. It is an IPO waiting to happen.

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

Posted on: January 16, 2007 – 11:58 am in Internet

Holida E-Commerce Is Great, Except For PCs

Holiday e-commerce spending rose 26% over 2005. Online luxury goods sales went wild.Traffic to the website for luxury retailer Coach (COH) rose 25%. Watch company Fossil had a 56% increase in traffic. In the shipping category, UPS (UPS) web traffic was up 26%.

But, PC website traffic was weak. Computer hardware sites showed a 9% increase in traffic during December. Apple (AAPL) lead the pack, up 17%. But, visits to the Hewlett-Packard (HPQ) website were up only 7% to 14 million visitors. This was ahead of Dell (DELL) which had 13 million.

Obviously, online purchases of PCs are not the only sales channel that they have, but, it is an important one. And, that makes the figures a bad omen.

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

Posted on: January 16, 2007 – 11:42 am in Hardware

Samsung Sales to Slow, Company Does the Right Thing

By William Trent, CFA of Stock Market Beat

Samsung posts strong Q4, drops 2007 capex – 1/12/2007 – Electronic News

Samsung has dropped its capex for the coming year. The company said that it has earmarked $8.6 billion (8.1 trillion Korean won) in capital expenditure for 2007, down from the $10.67 billion it laid out for 2006. Samsung was quick to note that though there is a decline, the capex is actually relatively similar to 2006 levels considering advanced spending at the end of 2006, foreign exchange effects, and the spending of $1.7 billion (1.6 trillion Korean won) at Samsung Austin Semiconductor and S-LCD, its joint venture with Sony, in 2007.Samsung further offered a cautious Q1 outlook. “Samsung Electronics anticipates challenges in key product areas in the quarter, a seasonally weak period,” Chu said.

“Key product areas” for Samsung include cel phones, LCD panels and semiconductors – all of which we have warned are in danger of facing inventory gluts. By cutting back the money they will spend on equipment, Samsung is doing the right thing to ease those gluts.

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: January 16, 2007 – 11:05 am in Consumer Electronics

The Great Cisco Debate

The Associated Press recently went to great lengths to describe all of the reasons that Cisco (CSCO) would do well in the coming quarters. Increased traffic over the internet due to video and VoIP would increase demand for the company’s core products. The AP went so far as to round up some experts to support its position: "Cisco would like to see video delivered to every device everywhere," said Zeus Kerravala, a network infrastructure analyst with Yankee Group. "If you’re looking to something to create the next wave of network upgrades, video is front and center. It drives bandwidth like we’ve never seen before."

The market for routers and switches is growing rapidly. That is beyond argument. And, most of Cisco’s competitors like Redback (RBAK) and Juniper (JNPR) are much smaller companies.

So, where does Bank of America get off dropping Cisco from "buy" to "neutral"? B of A’s argument is that “growth will slow over the next few quarters as the salesperson headcount benefit is appreciated, there is less scope for share gains, and margins are at peak.” Prudential also downgraded Cisco’s shares.

Cisco’s shares moved down about 3% on the analyst actions but still trade near their 52-week high of $28.99.

Someone said that "the trend is your friend". Of course, the need for broadband providers around the world to upgrade their networks to handle more traffic is a significant benefit for Cisco. Analysts can’t always be right.

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

Posted on: January 16, 2007 – 11:01 am in Hardware

False Hope For A Nokia Turnaround

Goldman Sachs this Nokia (NOK) has been bombarded by too much bad news. When Motorola guided downward for the last quarter and said that margins were under pressure from lower cost handset, Nokia’s shares dropped as well . Goldman think the worst is behind the world’s largest cellphone maker. The bank sees Nokia’s earnings bottoming. Handset prices and margins should recover.

It’s a nice theory. But Nokia’s stock may still be expensive.

Over the last two year’s Nokia’s shares are up 30%. Mototola’s (MOT) are up about 3%.

During Nokia’s last quarter earnings announcement, it blamed poor earnings performance on cheap, low-profit phones it sold in India and China. Since those markets continue to be the growth geographies for Nokia and its rivals, and sales in the US and Europe are slowing, it is very hard to see how that trend will change.

Of course, Motorola, Samsung, and Sony-Ericsson still want their market shares to grow. That places a second vector of pressures on handset prices.

No, Nokia is not out of the woods. It is not even close.

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

Posted on: January 16, 2007 – 10:42 am in Wireless

A Backdoor Investment In Cuba: Herzfeld Caribbean Basin Fund Inc.

Herzfeld Caribbean Basin Fund Inc. (CUBA-NASDAQ), a closed-end investment management company perceived as an investor play and trading instrument that would benefit from the ropening up of Cuba, shares are up 17% out of the chute today at $14.71 on 33,900 shares. 
The fund’s investment objective is long-term capital appreciation by investing in issuers that are likely to benefit from economic, political, structural and technological developments in the countries in the Caribbean Basin, which consist of Cuba, Jamaica, Trinidad and Tobago, the Bahamas, the Dominican Republic, Barbados, Aruba, Haiti, the Netherlands Antilles, the Commonwealth of Puerto Rico, Mexico, Honduras, Guatemala, Belize, Costa Rica, Panama, Colombia and Venezuela. The fund is supposed to invest at least 80% of its total assets in a broad range of securities of issuers including U.S.-based companies that engage in substantial trade with, and derive substantial revenue from, operations in the Caribbean Basin Countries.

This one has been mentioned by us before as the trade to make if Cuba is going to re-open OR if Castro dies.
The reason for the gap up in "CUBA" is because of reports that Fidel Castro is in grave condition.  Havana has reportedly denied that its leader is in grave condition, so you’ll have to decide for yourself if Castro is talking to the Grim Reaper or if he is just laying low.

Back on December 29, there were SEC filings showing the chairman and president of Herzfeld Caribbean Basin Fund Inc. with a Form 4 filed with the SEC: Thomas J. Herzfeld reported he sold the shares for $15.58 to $16.08 apiece.

This CUBA fund has a 52-week trading range of $7.00 to $16.84.  We noted this back on August 1, 2006 as a backdoor play into Cuban investing, when Castro was sick.  Americans are by and large prohibited from investing in Cuba, and this is one of the few legal ways for Americans to play the situation.  The CUBA closed-end fund was trading around $7.00 back then and has risen dramatically on the investment community trying to position themselves ahead of any additional adverse health events for Castro.

If you would like to subscribe to our free email reports that are not always posted on the web site for other SPECIAL SITUATIONS, BAIT SHOP REPORTS, Backdoor Investment Plays, IPO’s and more please send in an email to jonogg@247wallst.comand title it SUBSCRIBE.  We value privacy and do not share our email lists with any third parties.

Jon C. Ogg
January 16, 2007

Posted on: January 16, 2007 – 10:28 am in Uncategorized

Symantec’s Bad News, And Then There’s Microsoft

Symantec, the security software company, said that it was lowering its expectation for the quarter ending December 29. The estimate for the current quarter was not so hot either. The news took down Symantec’s stock by 7% to $19.

Symantec (SYMC) and McAfee (MFE), it primary rival, have been complaining for some time that Microsoft Vista would make use of its near-monopoly in operating systems to promote its own security software, PatchGuard. Microsoft (MSFT) recently made tools available to both companies so that they can better integrate their software with Vista.

If Symantec’s earnings are hurting its stock, the latest quarters may just be the beginning. With over $7 billion in security software sold each year, MSFT is not going to let SYMC and MFE keep the lion’s share of the market.

For Symantec, not good. And, it will make McAfee’s earnings more dramatic.

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

Posted on: January 16, 2007 – 10:11 am in Software