Daily Archives: February 5, 2007

Cramer Has a New Tech Exception He Likes

On Cramer’s MAD MONEY on CNBC, Cramer interviewed Avnet’s (AVT-NYSE) CEO Roy Vallee.  Cramer said they had a blow-out quarter and he asked how a distributor does better than the chip companies.  Vallee said it is because of a broadbase of customers and suppliers that are better.  The team helped with it and gross marhin and productivity was ahead of the industry.  Cramer asked about International compared to domestic and the CEO said 51% is AMERICA and 49% outside of "Americas."  Cramer asked if that is why the numbers are better and the CEO said ‘could be’ but revenues come out of Asia in massive volume and they make up space there.  Cramer was very positive on this name with it up close to 52-week highs and this one Can be included in his "protect list" of tech you can buy into Spring. 

If you will recall Cramer gave 5 tech exceptions last month that you can buy are Cisco Systems (CSCO-NASDAQ), Apple (AAPL-NASDAQ),  Microsoft (MSFT-NASDAQ), Hewlett-Packard (HPQ-NYSE) and Google (GOOG-NASDAQ).  Here is what he said back then.

Jon C. Ogg
February 5, 2007

Posted on: February 5, 2007 – 7:03 pm in Cramer, Semiconductor, Technology Companies

24/7 Wall St. Editor On CNBC

Jon Ogg, editor of 24/7 Wall St. was interviewed by CNBC today on

his "10 CEOs Who Must Go" piece.

Click here to watch.

Posted on: February 5, 2007 – 5:39 pm in Uncategorized

Cramer STOP TRADING 2/5/2007 (CVX)

The "Big C" hit the air on CNBC at 2.40 PM eastern.

Cramer is angry, Very. DeutscheBank put a "sell" rating on Chevron (CVX), which is Cramer’s favorite big oil. Cramer is bullish on the commodity and likes dividend. Sells at only 9x earnings. Cramer likes capex going up for drilling. Likes reserves. Trades as part of ETFs for oils.

Cramer still loves Chevron. It has the most room to improve among oils.

Triad (TRI) talked about on Jan 19, and Deutsche Bank liked it. Turned out to be home run. It may not be done going up. Universal Health could go up.

Lehman talked about LOB of Nabor. But it (NBR) is not an LBO. Should not be up now, results are poort.

CEO of Halliburton (HAL) is upset about stock. The stock will have its day.

Douglas A. McIntyre

Posted on: February 5, 2007 – 2:48 pm in Cramer

BAIT SHOP & CEO Updates

The Bait Shop is all about potential takeover candidates.  A call for a change in management speaks for itself, and sometimes leads to a Bait Shop situation.

Is it fair to put Citigroup (C-NYSE) as a BAIT SHOP name? No, not entirely.  Chuck Prince is perhaps more on the way out than other CEO’s, if not then he is truly made of body armor.  They are too big on their own; but if Chuck Prince will finally leave the company could be broken up.  But then will the real Prince be able to own enough of anything substantial as this?  We will be sending out a ‘perceived break-up value’ in the next day or two.

Triad (TRI-NYSE) finally got the buyout bid, and right in the middle of the buyout range we estimated.

Equity Office (EOP)…when will the sage end? Probably soon.  It’s getting to price levels where pride might be part of the "Goodwill" and "other" in the assets half of the balance sheet.

Western Digital (WDC) may be back close to that point where the other half we said could be romoved from the position can be added back in.  Let the few big technology earnings this week get out of the way and we’ll evaluate it then without the event risk.

Bristol-Myers Squibb (BMY) still close to the $28.35 price indicated by options last week; perhaps they were wrong and the price could be hihger but it doesn’t look like much.  We’ll see, but it isn’t trading as though a huge premium is expected from current prices.  It’s up 40% from the 2006 lows.

One of my regulatory contacts says Bank of America (BAC) and Countrywide (CFC) would have issues  ‘potentially’ even on just a partnership; but we’ll see.  Neither side gave the street the feeling it was as real as the media frenzy came in as two Friday’s ago.

Here is the full List of 10 CEO’s where the stocks might rise simply on a new CEO or corporate leader; keep in mind that 3 have already gone.

Jon C. Ogg
February 5, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he is a partner in 24/7 Wall St., LLC and he does not hold securities in the companies he covers.  If you wish to subscribe to a free private email newsletter for the Bait Shop, calls for management change, and other special situation equity events then please send an email and label it Subscribe.  We value privacy and do not share our private email list with third parties.  This is not all of our content but some of the content in the email is not posted on our site.  Thank you for visiting 24/7 Wall St.

Posted on: February 5, 2007 – 1:30 pm in Analyst Calls, Bait Shop, Management Change, Mergers and Buy Outs, Shareholder Issues

Google Moves From A Stock Of Hope To A Stock Of Doubt

Google’s (GOOG) stock is having a really rocky time.  On January 31, the stock hit $505. Today, it dropped below $470. A drop of 7% in such a short time is worth a look. The shares can’t seem to find a floor.

Over the weekend, Time Magazine ran a piece about what Yahoo! (YHOO) would have to do to turn itself around. It covered Panama taking share from Google and a lot of other news magazine junk. But, why anyone would use Panama over Google’s product unless it is substantially better is really hard to say.

Google’s earnings weren’t good enough for a lot of investors. There is fear that as the company’s growth inevitably slows and it invests in new products that margins will drop. Fair, and probably true.

And, then there is the news that Viacom wants about 100,000 videos containing its content taken down from Google property YouTube. The YouTube buy will look expensive if the fight with big content holders goes on. But, the other side of that argument is that the YouTube audience is too large to be ignored at an outlet and that content owners will eventually come back with distribution deals.

The real problem for Google is that it has gone from being a stock of hope to a stock of doubt. That has happened to other big stocks over the years. Certainly Microsoft (MSFT) and Yahoo! qualify. In the collective minds of investors Google has more going against it than for it, at least for now. Being the leader in search is giving way to concerns about competition and whether its efforts outside its core competence will ever an pay off.

The floor under that stock may keep falling.

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

Posted on: February 5, 2007 – 10:47 am in Internet

Mutual Fund Derby: Franklin, T. Rowe Price, Janus, Schwab

Barron’s does an annual mutual fund family survey which, of course, uses returns as a key metric.

The survey has to make investors wonder why anyone would put money outside of several well-known fund families. Near the top of this year’s list are Franklin Templeton (BEN), T Rowe Price (TROW), Janus (JNS), Vanguard, and Schwab (SCHW). Several other fund companies including American Funds and Eaton Vance (EV) do very well

Some other household names did badly. These include Putnam, Fidelity, Van Kampen, and Calvert.

The noteworthy thing about the survey is to compare the one year survey with the data going back five years and ten years. High in the five year rankings are Franklin Templeton, T. Rowe Price, American Funds, Janus, and Schwab. Over ten years, the upper level of the rankings includes American Funds, T Rowe Price, Eaton Vance, Vanguard, and Schwab.

Perhaps mutual fund investors are slow to learn, but funds like Calvert stay on the bottom, no matter what the time line. The magic is how they manage to keep their customers.

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

Posted on: February 5, 2007 – 10:03 am in Mutual Funds

Barron’s Break-Up Value, NYTimes $35

Barron’s made the point in their current issue (February 5, 2007) and their November 13, 2006 issue that The New York Times Company (NYT) is worth $35 a share. That may well be. If the company sold off About.com, the New York newspaper, the properties in and around Boston, and other small newspapers, it is not far-fetched that they would be worth more than the $24 that the shares fetch now.

Of course, the company is controlled by the Sulzberger family due to the company’s two classes of shares. Through a trust, they effectively control the board.

Morgan Stanley Investment Management, which owns a large stake in the company, is trying to get the two share classes eliminated. So far, no dice.

All of this is well-known, and old news.

What is not is whether Morgan Stanley and other large shareholders would attempt to take the issue to federal court, making the argument that the dual-share class depresses the value of the company, and, therefore, violates the fiduciary responsibilities of both the Sulzbergers and the current board. It would be a carefully followed case since other companies like Dow Jones (DJ) have similar dual share arrangements.

The NYT might argue that investors like Morgan Stanley bought the stock with their eyes wide open, aware of the dual share deal. But, the management, the family, and the board still might be found to have liability in holding the value of the company down, artificially. Perhaps a court would find that this is indeed a problem, if other shareholders suffer.   

Morgan Stanley has the money to go to court, but do they have the guts.

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

Posted on: February 5, 2007 – 9:39 am in Mergers and Buy Outs

24/7 Wall St. 2007 Break-Up Values: Met Life $79 (Current Price: $63)

By Ryan Barnes. Edited By Douglas A. McIntyre

Metlife is the largest life insurance company operating in the United States, and also conducts business in home & auto insurance, reinsurance, group insurance, and various retirement & annuity products in the U.S. and abroad.  MetLife is still in the process of integrating its $12b purchase of the Travelers Insurance Company from Citigroup in 2005, which brought the company’s total asset base to over $500b and gave them access to a broad distribution channel for its products.

$500 billion is a lot of assets to manage by any account and MetLife, like all the big float managers, have seen their investment income hurt by near all-time low credit spreads in the fixed income market, which is where they hold the majority of their float, along with a few real estate properties and limited partnership holdings.  They recently committed to sell two of their biggest real estate properties for $5.4 b, which will soon hit the books and presumably reach the bottom line quickly in the form of cash or stock buybacks.  They also hold a majority stake in the Reinsurance Group of America (RGA) that is worth nearly $2b that can be added to our assessment. 

At this point it’s too difficult to tell how much profit MET will be able to generate of their asset base, especially considering the $100b in assets still being integrated from Travelers.  Everything the company is doing has been geared towards establishing a well-greased distribution network of sales agents and partnerships with wirehouse firms to sell their retirement products, with annuities being their real leadership product.  We’ll have to give them a year or two to show how well they can execute – so far the “get massive” strategy hasn’t worked well for Citigroup in terms of shareholder value, but the demographics of the U.S. put MetLife in a real spot when you consider the aging population, under-funded pensions, and their international exposure.  They’ve already gobbled up over 50% market shares in many Asian countries as well as in South America. 

The one laggard group in the company is the Home & Auto insurance segment, with projected flat top-line growth but solid operating margins.  It could be divested for 13-14x operating earnings and sell for about $4.2b.  With this segment removed, the rest of the company is projected to grow revenues beyond 10% per year, which should help the multiple rise from the current 1x level to about 1.3, in line with peers such as AIG and Prudential, bringing the total breakup value to just shy of $79/share.

Ryan Barnes

Ryan Barnes has over 10 years’ experience in portfolio management and investment research, covering equities, fixed income, and derivative products. Ryan spent the past 5 years working as an institutional trader & manager for high-net worth investors, working with Merrill Lynch, Charles Schwab, Morgan Stanley, and many others.  Ryan is currently working as a writer and financial modeling consultant on hedging and capital appreciation strategies, and does not own securities in the companies being covered.

Methodology

Posted on: February 5, 2007 – 9:22 am in Mergers and Buy Outs

24/7 Wall St. 2007 Break-Up Values: Corning $35 (Current Price $21)

By Ryan Barnes. Edited By Douglas A. McIntyre

Corning, Inc. (GLW)

Corning is the world’s largest producer of specialty glass products, the most popular use of which is in the guts of the LCD monitors and televisions that are just now hitting the vertical part of the growth curve, growing in excess of 30% per year.  Yes, prices are falling, but Corning has a nice moat in the fact that they make the product better and cheaper than anyone else, and by any measure.  The competition (all foreign companies) have caught up in some of the lower-margin areas of LCD glass production, but Corning still runs the show in overall market share (60%) and is able to spend a lot more on R&D than the others, so their odds of at least maintaining the top spot for a long time are pretty solid.  Corning also has to fight against the inevitable price declines seen in any consumer technology these days, but so far they’ve been able to keep margins steady in the face of this through impressive cost reductions.  GLW kept margins flat last year in the face of a 10% price drop, and they’re becoming very keen on inventory management, a lesson well-learned after the fiasco the company faced during the 2000-2002 years when fiber optic cable was laid all over (and under) the world only to find that nobody was ready for it. 

Corning has four operating segments: the aforementioned Display Technologies (LCD), Telecommunications (fiber optic), Environmental Technologies, and Life Sciences.  The latter two are currently break-even businesses, but both have strong growth potential, especially in the environmental group where new regulations are requiring that diesel engine-based trucks be outfitted with a new filter that only Corning provides.  This group will be profitable very soon, but for now we’re giving them no value in our calculations, as the segments will have to prove themselves before being salable or “spinnable” to the public.

Corning also has two equity ventures that are 50/50 splits with Samsung and Dow, both of which produce display glass.  Giving both ventures the same multiple as the stock market is giving GLW in total (of which the display group provides all the current earnings), they are worth nearly $10b combined. 

The one drag on Corning’s stock – and the best explanation for the low current valuation outside of LCD cyclicality – is the 25m shares that are essentially in escrow as an asbestos settlement from 2003.  The shares will be given away in 2009 and whatever market value they have at that point will be a current liability to the company.  For the sake of extreme conservatism, we’re going to shoot for the moon and value the GLW shares at $2b, which amounts to $80/share in three years.  That should take care of the most pessimistic investors’ qualms, and clearing that trash out of the way, the total breakup value for Corning comes to an impressive $35/share – with any profitability in the environmental and life sciences groups being a great kicker to boot. 

Ryan Barnes

Ryan Barnes has over 10 years’ experience in portfolio management and investment research, covering equities, fixed income, and derivative products. Ryan spent the past 5 years working as an institutional trader & manager for high-net worth investors, working with Merrill Lynch, Charles Schwab, Morgan Stanley, and many others.  Ryan is currently working as a writer and financial modeling consultant on hedging and capital appreciation strategies, and does not own securities in the companies being covered.

Methodology

Posted on: February 5, 2007 – 8:38 am in Mergers and Buy Outs

24/7 Wall St. 2007 Break-Up Values: Wash Mutual $59 (Current Price: $45.50)

By Ryan Barnes. Edited By Douglas A. McIntyre

Washington Mutual (WM)

WaMu is the largest savings & loan operator in the U.S., with nearly $350b in assets, gained chiefly through retail banking and mortgage businesses.  The company also has designated segments for credit card services and commercial lending operations. 

WaMu is overexposed to the downturn in housing, with a large sub-prime business as well as geographic exposure in many overheated markets in the Western portion of the U.S.  Bad loan provisions more than doubled versus the previous quarter, and if things continue to get worse in retail housing, the losses will magnify quickly.  The Home Loans group alone went from a billion-dollar profit in 2005 to a small loss in 2006.  The Credit Card group is growing fast in terms of customers but they’re not quality customers; bad loan provisions here have eroded all profit growth as well.

The 5% dividend yield is a nice buffer for investors, but there aren’t any real signs of shareholder value or multiple expansion on the horizon.  Retail banking is the most stable business, and Commercial Lending is a more stable source of cash flow than the Home Loans segment. 

The problem is the Home Loans group, and it’s a big one.  The Efficiency Ratio, which is a great industry measure of how much it costs for the next dollar of revenue (where lower is better), is 53% for retail banking, 29% for card services, and 33% for commercial lending.  And home loans?  A whopping 95%, up from 59% the year before.  End of story.  The Home Loans segment needs to be dumped for the sake of the shareholders.  It doesn’t a large percentage of fee income, and WaMu can still retain the servicing rights to the mortgage portfolio (a good source of residual cash flow) if they divest the loans themselves, which is what really needs to happen.  They won’t get a great price for it, but by using a moving average of earnings at the group over the past three years, we can arrive at a price of about $9b for the group.

With the home loan portfolio off the books, WaMu should trend towards and industry-level multiple of 14x current earnings, as the rest of the business is strong and well-managed, with the retail channel still the driver of growth, and the commercial lending division is an up-and-comer that provides some diversity to the cash flows.  5% yield still intact, the breakup value for WaMu comes to $59/share.

Ryan Barnes

Ryan Barnes has over 10 years’ experience in portfolio management and investment research, covering equities, fixed income, and derivative products. Ryan spent the past 5 years working as an institutional trader & manager for high-net worth investors, working with Merrill Lynch, Charles Schwab, Morgan Stanley, and many others.  Ryan is currently working as a writer and financial modeling consultant on hedging and capital appreciation strategies, and does not own securities in the companies being covered.

Methodology

Posted on: February 5, 2007 – 8:34 am in Mergers and Buy Outs

Chrysler And Mercedes To Merger, Finally

The Detroit Free Press says that Chrysler will cut 10,000 jobs and rely on its stable-mate in DaimlerChrysler, Mercedes, to pick up most of the work on product design. The companies may also share important parts that will be common to vehicles for each model line.

The plan could actually work. The company has kept Mercedes and Chrysler separate for the most part, and its has cost billion of dollars to do so. The ongoing lack of cooperation has undercut the reasons for most mergers, and made the purchase of Chrysler something of a lemon in the M&A world.

Daimler’s shares holders have been pushing for a sales of the company. Nissan and Renault would have been candidates. But, the problems at Chrysler have not hurt the parent’s stock. It trades near its 52-week high at $63, up from the one-year low of $45.98.

If the new plan to cut costs and share platforms is attractive to Wall St., DCX shares 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: February 5, 2007 – 8:23 am in Autos

Pre-Market Stock Notes (FEB 5, 2007)

(ALVR) Alvarion announces that the leading Taiwanese telecom service provider Chunghwa Telecom has selected its WiMAX solution
(APC) Anadarko will record a $100 million charge on taxes in Algeria.
(BA) Boeing gets a 27 plane order from UPS.
(BKC) Burger King holders filed to sell 20 million shares.
(DCX) Daimler Chrysler reportedly cutting 10,000 factory jobs.
(ELOS) Syneron Medical (ELOS) announces the initiation of a multi-center clinical study with Obagi Medical Products (OMPI).
(ENZ) Enzo Biochem raises $15 million in registered direct offering.
(GNBT) Generex Biotech announced that volunteers selected for human clinical trial of its synthetic avian influenza vaccine.
(HC) Hanover Compressor raised guidance.
(HEP) Holly Energy $0.56 EPS vs $0.50e.
(HERO) Hercules Offshore $1.09 EPS vs $1.00e.
(HUM) Humana $0.92 EPS vs $0.88; stock higher on overall 2007 looking better than Q1.
(IFIN) Investors Finacial Services is being acquired by State Street for roughly $65.00 in stock; IFIN trading up 35%.
(KNTA) Kintera has a shareholder calling for the ouster of the CEO.
(MLS) Mills Corp gets a $24.00 confirmed offer from Simon Property (SPG) and Fallon.
(REGN) Regeneron licensed its VelocImmune technology to AstraZeneca for discovering human monoclonal antibodies.
(SCLN) Sciclone will proceed to Phase II dosing range for a variety of diseases fro SCV-07.
(SHLD) Sears Holdings is appealing a ruling of $73+ million for dissenting creditors that went against on Friday.
(SNCR) Synchronoss Tech gets order management pact from Time Warner Cable.
(TIN) Temple-Inland $0.73 EPS vs $0.73e.
(TRI) Triad entered merger agreement with CCMP Capital Advisors and GS Partners for what looks to be $50.25 per share in cash; versus $43.27 close and versus $45.67 year-high; stock up 15%.
(WMT) Wal-Mart now gave a 2.2% same store sales forecast instead of 1.2%; stock up 1% in pre-market trading.

Posted on: February 5, 2007 – 8:20 am in Pre-Market Activity

Pre-Market Analyst Calls (FEB 5, 2007)

by Jon C. Ogg

ARM raised to Neutral at UBS.
AXL raised to Buy at Deutsche Bank.
BEZ started as Outperform at Baird.
BKS raised to Overweight at Prudential.
BP raised to Buy at Goldman Sachs.
CROX raised to Outperform at Baird.
CVX cut to Sell at Deutsche Bank.
DECK raised to Outperform at Baird.
DELL raised to Outperform at Credit Suisse.
D raised to Hold at Deutsche Securities.
EPEX started as Neutral at JPMorgan.
ERTS cut to Neutral at JPMorgan.
GCI raised to Outperform at Credit Suisse.
INWK raised to Buy at Jefferies.
KND raised to Buy at Stifel Niclolaus.
LXK cut to Reduce at UBS.
MDRX cut to Mkt Weight at Thomas Weisel.
MNI cut to Mkt Perform at Wachovia.
MU cut to Hold at Jefferies.
SUNH raised to Buy at Stifel Nicolaus.
SWN started as Buy at UBS.
YRCW cut to Underperform at Baird; cut to Neutral at Credit Suisse.

Posted on: February 5, 2007 – 8:03 am in Analyst Calls, Pre-Market Activity

BAIT SHOP UPDATE: Triad Hospitals Acquired in Our Target Range

Triad Hospitals, Inc. (TRI-NYSE) has finally announced that it has entered into a definitive merger for an equity buyout offer at $50.25 per share in cash with affiliates of CCMP Capital Advisors and GS Capital Partners valued at approximately $6.4 billion, including approximately $1.7 billion of debt.  Its Board of Directors has approved the agreement and recommends that Triad stockholders approve the merger. All disinterested members of the Board voted in favor of the agreement, with the two inside directors abstaining.

This is a deal that we covered on January 23 (At What Price is a Triad LBO Doable)as one that makes sense and we had a $46.00 to $54.00 range that could still make sense, and even gave a likely range of $45.00 and $50.00 as the starting ranges.  We also updated it shortly after on an impatient basis by updating it with No Word Yet.  Did these guys read our range or did we have the range pegged?  Probably neither, but it came right in line with what made sense on paper.  You could still see some chasing up here in hopes for a higher bid, but if you bought in hopes of the buyout then it may make sense to at least take some of the profits here.  Since the deal isn’t subject to terms from the buyers and is chump change there is going to be a lower-risk of the buyers walking away.

The deal does have the normal caveats, although this sounds close as could be to being approved: The transaction is subject to certain closing conditions, including the approval of Triad’s stockholders, regulatory approvals and the satisfaction of other customary closing conditions. There is no financing condition to consummate the transaction. The transaction is expected to close promptly following the satisfaction of all closing conditions.  Triad can seek offers from third parties during the next 40 days and would be obligated to pay a $20 million break-up fee to CCMP Capital and GSCP and reimburse up to $20 million of their out-of-pocket expenses.  A $20 Million break-up fee sounds pretty low, so it possible that others might have an interest; but it may be too soon to call for a higher bid on what looks like an entrenched deal.

Jon C. Ogg
February 5, 2007

Jon Ogg is a partner in 24/7 Wall St., LLC and can be reached at jonogg@247wallst.com by email; if you wish to subscribe to our email newsletter regarding BAIT SHOP buyout candidates, IPO’s and other special situation investments please send an email and title it SUBSCRIBE.  This is offered at no charge for the time being.  We value privacy and do not share our email lists with any outside parties

Posted on: February 5, 2007 – 7:37 am in Analyst Calls, Bait Shop, Mergers and Buy Outs, Press Digest

Satellite Radio Begins To Wither (SIRI)(XMSR)

The news that UBS thinks XM Radio (XMSR) will end 2007 with only 9.1 million subscribers must be depressing for owners of the stock and its rival Sirius (SIRI). That would put it growth rate at less than 20%

An addition of only 1.5 million net new subscribers in 2007 would mark a significant slowing in satellite growth rate for the industry leader. Even if Sirius adds two million subscribers, that would put its total at only 8 million.

One thing is becoming clear. XM and Sirius are not growth stocks any longer.

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

Posted on: February 5, 2007 – 5:29 am in Consumer Electronics

Europe Markets 2/5/2007 BT Up, Bayer, Vivendi Down

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

Europe markets were narrowly mixed at 5.15 AM New York time.

The FTSE was off .1% to 6,316. Barclays was down .7% to 751. BP was up 1.2% to 541.5  BT was up 2.9% to 318. GlaxoSmithKline was down 1.1% to 1404. Prudential was up .2% to 707. Reuters was down .8% to 439.25. Unilver was flat at 1413. Vodafone was up .3% to 148.5.

The DAXX was down .2% to 6,874. Bayer was down 1.1% to 44.89 Daimler was down .3% to 46.36. DeutscheBank was down .4% to 107.09. Deutsche Telekom was up .5% to 13.55. SAP was down .1% to 35.54. Siemens was down .7% to 83.72.

The CAC 40 was was down a fraction to 5,676. Alcatel-Lucent was up .7% to 9.84. AXA was down 1% to 32.88. France Telecom was up .7% to 21.24. ST Micro was up .4% to 14.24. Vivendi was down 1.2% to 3.36.

Data from Reuters

Douglas A. McIntyre

Posted on: February 5, 2007 – 5:19 am in International Markets

Media Digest 2/5/2007 Reuters, WSJ, NYTime, Barron’s, FT

According to Reuters, Vornado Realty Trust (VNO) increased its bid for Equity Office Properties (EOP) to $23.2 billion in an attempt to win the company from Blackstone.

Reuters writes that The London Stock Exchange has reiterated its opposition to a bid from Nasdaq (NDAQ).

The Wall Street Journal writes that GE (GE) is set to name Jeff Zucker as the CEO of its NBC Universal division.

The Wall Street Journal reports that Triad Hospitals (TRI) is expected to announce it has been sold to private equity interests for $4.4 billion.

The WSJ writes that GM (GM) may have "over corrected" in cutting car discounts in January, driving unit sales down.

The WSJ reports that Michael Dell (DELL) has sent a memo to employess saying that the company will not offer 2006 bonuses.

The New York Times writes that Yahoo! (YHOO) is placing its hopes on closing the gap in search engine ad with Google (GOOG) on its new Panama technology.

The New York TImes writes that much of cell phone use in China is driven by online games and instant messaging. The big winner so far is Chinese company Tencent.

FT reports that a US court will take up the question of "scheme liability" which could put banks, lawyers and business partners on the hook when a public company goes under because of fraud.

Barron’s writes that growth of video on demand from companies like Comcast (CMCSA) could hurt profits and revenue at firms like NetFlix (NFLX), Blockbuster (BBI) and Movie Gallery (MOVI).

Douglas A. McIntyre

Posted on: February 5, 2007 – 5:06 am in Press Digest

Asia Markets 2/5/2007 Nissan Down 8%

Stocks:  (CAJ)(FUJ)(HIT)(HMC)(NIPNY)(NTT)(DCM)(SNE)(TM)(CHU)(CHU)(CN)(PCW)(HBC)

Most markets in Asia were down.

The Nikkei fell 1.2% to 17,345. Bridgestone fell 2.1% to 2510. Canon fell 2.4% to 6150. Fuji Film fell 1.8% to 4880. Hitachi fell 3.1% to 787. Honda fell 3.6% to 4530. NEC fell .7% to 592. Nissan fell 8.3% to 1383. NTT fell 2.4% to 610000. Docomo rose 1% to 193000. Sharp fell 1.2% to 2115. Softbank fell .2% to 2890. Sony fell .9% to 5700. Toshiba fell 2.1% to 737. Toyota fell 1.6% to 7820. Yahoo Japan fell 1.4% to 42700.

The Hang Seng dropped .5% to 20,456. Cathay Pacific fell .5% to 20.45. China Mobile fell .3% to 73.5. Chin Netcom fell 1.7% to 20.1. China Unicom fell 2.4% to 10.3. HSBC fell .6% to 142.9. PCCW fell .2% to 4.71.

The KOSPI rose .3% to 1,418.

The Straits Times rose .1% to 3,222,

The Shanghai Composite fell 2.2% to 2,613.

Data from Reuters

Douglas A. McIntyre

Posted on: February 5, 2007 – 4:40 am in International Markets

Can Dell’s Founder Bring the PC Giant Back from the Dead?

By Chad Brand of The Peridot Capiltalist

The news that founder Michael Dell is coming back to lead his company again is quite interesting. Normally, a CEO change alone wouldn’t totally alter an investment thesis for a stock such as Dell (DELL), but in a commodity business like tech hardware sometimes a new face can really rally the troops.

We all know what Mark Hurd has done for Hewlett Packard (HPQ) and it’s interesting that HP has really been the thorn in Dell’s side during the Kevin Rollins era. Bringing back Michael Dell to lead the company might not seem like a big deal, but he is the company. He started it out of his dorm room before dropping out of college and his name is on these computers. Dell isn’t getting his corner office back for the money or anything like that. HP has been kicking their butts lately, after they did the same thing to HP in the 1990’s, and Mr. Dell has likely had just about enough.

Could this move signal the top of HP’s comeback? That would be a bold statement to make, but I think it could. Check out this two-year chart of DELL vs HPQ:

Dellhpq_1

I doubt Michael Dell would come back if he didn’t have a plan to regain the market share his company has lost to HP. Any success in doing so would likely alter the trend that the above chart shows, which has really gotten embarrassing for the former PC leader.

Does this mean DELL shares are a buy? Well, the stock isn’t that cheap, and even if the company can take back some market share, it will be tough to get margins back to where they were in 2005 and also gain ground on Hewlett Packard. Dell stock has likely put in a bottom, but I wouldn’t expect a turnaround overnight.

If you have been fortunate enough to own HPQ lately, however, I would consider taking some profits. While Dell might not regain its former glory quickly, it could certainly halt Hewlett’s momentum at the very least.

Full Disclosure: No positions in DELL or HPQ

http://www.peridotcapitalist.com/

Posted on: February 5, 2007 – 4:22 am in PC Companies

Some Hot Cajun Stocks

From The Average Joe Investor

In honor of my first trip to New Orleans, I thought I’d post up a few stocks from the area.

Entergy (NYSE: ETR) – Electric utility company based in New Orleans. Up about 40% over the last year and is now trading at a somewhat aggressive 21x LTM EPS. If you believe forward estimates though, which have EPS growing 20% year over year, forward P/E is a more palatable 17x. Pays a 2.3% dividend.

Freeport-McMoRan Copper (NYSE: FCX) – Based in New Orleans and making big news lately with the proposed merger with Phelps Dodge (NYSE: PD). The stock has been down on commodity price concerns, but it’ll be pretty well positioned in the industry after the Phelps merger and it’s been throwing off a bunch of cash lately. They pay a 2.2% dividend.

Superior Energy Services (NYSE: SPN) – Superior is based in Harvey, LA and provides oilfield services. Despite the concerns over the oil & gas industry the stock has outpaced the S&P over the last year. If you can buy the long term EPS growth estimates of 36%, then the stock’s 17x trailing EPS multiple is downright cheap.

Gulf Island Fabrication (Nasdaq: GIFI) – A smaller guy ($500m market cap) based in Houma, LA, Gulf Island manufactures and refurbishes drilling platforms for offshore oil production. The stock is up 40% year over year, with most of those gains coming in the second half of 2006. The company is getting ready to report Q4 and full year numbers, and if they hit expectations, they’ll be reporting EPS up almost 80% over 2005.

There are eight other companies in the New Orleans area with market caps over $250m, but the above should give a good kick-off to what New Orleans has to offer investors.

-AvgJoe

http://theaveragejoeinvestor.blogspot.com/

Posted on: February 5, 2007 – 4:19 am in Research