Daily Archives: February 7, 2007

Cramer Interviewed Celgene’s CEO

Cramer interviewed the CEO (Robert Hugin) of Celgene (CELG-NASDAQ), one name he has been very positive on before.  Cramer said many on the street think they are a one-trick pony with Revlimid, but the best is yet to come.  The track record and opportunity is much larger for it.  Europe is soon to open for it and they have 75 other trials they are starting for that brand alone.  The CEO said this may make a huge difference in many cancer indications.  They also have 6 other drug discovery programs ongoing now, including stem cells.  Cramer said betting against is this is going to make the short sellers wrong. 

If you have been watching this show long enough or just reading our take on this, then you’ll know he has been very positive on CELG many times.  That’s why this one was not even up 1% after Cramer interviewed its CEO.  CELG also has a $19 Billion market cap now and you’ll have to determine if you think the multiples are astronomical even for a high growth biotech on your own.

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 6:52 pm in Biotech, Cramer

Cramer Pans Crocs Long-Term But Likes It Short-Term

On tonight’s MAD MONEY on CNBC, Cramer was on a back-to-school tour at University of Virginia with a couple of stock picks.  He thinks the two most exciting stocks in this market are Under Armour (UA-NYSE) and Crocs (CROX-NASDAQ).   CROX more than doubled since his first call and he has been saying take ‘some’ of it off the table and keep some.

On his second feature on the show tonight, he wanted to discuss how to tell a fad from a hot name.  He already said Under Armour has what it takes to be the next Nike.  What about Crocs?  CROX more than doubled since his first call and he has been saying take ‘some’ of it off the table and keep some.  The brand of Crocs is very strong and sold through 6,000 retailers.  The brand is good but it is not an Under Armour.  He thinks the brand is good for shoes and sandals but their apparel wouldn’t work if they tried it.  In the end it is just a shoe company to Cramer and is a niche.  He thinks at some point it will hit a wall and never recover.  He thinks it could be a Deckers (DECK) that makes Uggs, but that is just an $800 million company and Crocs is worth more than $2 Billion.  Cramer thinks that 2007 will actually be a good year for Crocs and you can make money buying it over the next quarter; but long-term he doesn’t like it as much.  36% of the float is short.

Shares of CROX fell 3% on the long-term pan, but since he said it can still be used to make money the stock is only down 0.5% at $57.25.

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 6:26 pm in Consumer Goods, Cramer, Retail

Cramer Thinks Under Armour May Be the Next Nike

On tonight’s MAD MONEY on CNBC, Cramer was on a back-to-school tour at University of Virginia with a couple of stock picks.  He thinks the two most exciting stocks in this market are Under Armour (UA-NYSE) and Crocs (CROX-NASDAQ).  UA has already started to bounce a bit, some takeover rumors, after its big drop last week after earnings.  CROX more than doubled since his first call and he has been saying take ‘some’ of it off the table and keep some.

Cramer said he thinks one of these could be the next Nike (NKE).  Both are expensive and at the point that they either have to be the next NKE or they have to be one-tick ponies that crash.   UA trades at 47-times forward earnings and they have branched out into cleats and other areas that competes against Nike.  He doesn’t know how global it can be but it has already started to and the brand is catching.  He thinks it deserves to because of its brand.  The revenue guidance is up 30% to 35% for 2007 and Cramer thinks the owners won’t sell to puma or another yet.  Cramer thinks this one is the next Nike, or at least the Next Reebok that got acquired.  UA traded up 1.5% to $48.68 after Cramer discussed this one.

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 6:15 pm in Consumer Goods, Cramer, Retail

What to Think on Riverbed Technology

Riverbed posted $0.03 EPS non-GAAP (loss on GAAP) and revenues were $33.8 million.  This was the first profitable non-GAAP quarter and it added 300 customers, so it appears to have come public at the right time.  The problem is that it simultaneously announced a secondary offering of 5 million shares of common stock, and 2.65 million are coming from selling holders.  Shares are now down 9% to $32.00 in after-hours trading.

This one is highly watched and discussed because Jim Cramer touted this name before as the upscale high-performance wide area network player.  Back on December 21 he said you should sell some if you originally bought since it was up so much, but he did also say it is a Keeper and not done.  He was positive on this one before then too.

This stock was under $20.00 after its September IPO and ran to $35 before the end of December.  While it si close to recent highs that is above the $35 peak, it has spent most of the time since the end of December in a channel of $30.00 to $35.00.  Its market cap as of the close today was $2.33 Billion.

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 5:05 pm in Cramer, Earnings, Technology Companies, Telecom

EMC Announced VMWare IPO Spin-Off News

EMC Corporation (EMC-NYSE) announced its intent to sell approximately 10% of VMware via an IPO of newly issued VMware stock. EMC will retain ownership of the remaining shares of VMware, and has no intention of divesting this ownership interest. VMware, according to EMC, is the global leader in software for industry-standard virtualized desktops and servers and is currently a wholly-owned subsidiary of EMC.  Here is CEO Joe Tucci’s comment: "VMware is one of the fastest-growing businesses in the history of the software industry. We expect the IPO to unlock more of VMware’s value for EMC shareholders while also strengthening its ability to retain and attract the software industry’s top talent."

This does potentially unlock extra value for EMC holders, but keep in mind the size of this.  VMware had sales in 2006, growing revenues 83% during the year to $709 million. It finished the fourth quarter of 2006 with year-over-year revenue growth of 101%, delivering accelerating year-over-year growth for the fifth consecutive quarter.  The IPO is not expected to have a material impact on EMC’s 2007 business outlook.  EMC gave guidance for 2007 revenue to be at least $12.7 billion with its last earnings, and that was inclusive of the RSA Security and VMWare units.

EMC closed down $0.02 at $13.60 and had a market cap at the close of $28.9 Billion; the yearly high is $14.75.  Now it is up over 8% on the news at a $14.80, so it would have an implied $31 Billion market cap.  This is good news no doubt, but now we have to see if an 8+% instant gain is merited on this alone.

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 4:36 pm in IPOs, Semiconductor, Software, Technology Companies

Disney, The Magic Kingdom Indeed

Disney (DIS) reported strong earnings for Q4. Excluding non-operating items, EPS rose 43% to $.50. Revenue rose 10% to $9.7 billion.

Operating income at the company’s studio unit went from $128 million a year ago to $604 million. Disney’s cable networks also did well.

The stock rose over 2.5% to $36.37 after hours.

Douglas A. McIntyre

Posted on: February 7, 2007 – 4:15 pm in Media

Akamai Dips Initially, But No Guidance Yet

Akamai Technologies (AKAM-NASDAQ): $0.27 EPS & Revenues $125.7 million versus estimates of $0.26 & $121+ million.  GAAP EPS were only $0.12. 

Akamai’s Q4 include 18 days of activity from Nine Systems Corporation following the closing of Akamai’s acquisition of Nine Systems on December 13, which contributed approximately $800,000 of revenue during Q4 2006.  Akamai added 78 net new customers under long-term services contracts during the fourth quarter, plus 125 recurring revenue customers from the Nine Systems acquisition, bringing Akamai’s total year-end number of customers under long-term services contracts to 2,347.  Sales through resellers and sales outside the United States accounted for 20 percent and 22 percent, respectively, of revenue for full-year 2006.

This is all we have as far as a quote for the guidance from Paul Sagan, CEO: "With these fourth quarter results, we reached a run rate of more than half a billion dollars on the top line, a milestone on the way to our billion dollar goal, while we continued to expand profitability."

Next quarter street estimates are $0.27 & $128.9 million, although the company did not give guidance before the conference call.  This stock got a bit of a Super Bowl bump from all the online watching of many Super Bowl ads and this was already close to its year highs of $58.45.  Shares ran over 3% to $56.95 in regular trading and are now down about 4% after-hours to just under $55.00. 

As a reminder, the guidance will likely create the ‘real move’ in the stock and they didn’t offer guidance in the release.  Cisco did the same thing yesterday, so who knows how to call this ‘looking forward’ on the immediate reaction.

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 4:12 pm in Earnings, Internet, Technology Companies, Telecom

Coming Into Earnings, Wall St. See Level 3 Overvalued

Janco today upgraded Level 3 (LVLT) to "market perform" from "sell" and indicated it did not what to be short the stock going into earnings, according to Briefing.com. The firm put a price target on LVLT of $5.

Funny coincidence. Goldman Sachs repeated its rating of "neutral" on Monday and also set a price target of $5.

The ratings have extra drama because the stock is up, trading at $6.69 a day before quarterly results are released. If both brokers are right, the shares is going to have a pretty rapid 25% drop.

As a reminder, Level 3 was Cramer’s TOP Speculative Pick for 2007 back in January.  So whatever happens, you know he’ll be out covering it in depth.

 

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

Posted on: February 7, 2007 – 3:12 pm in Earnings

Cramer’s Less Followed Picks on the Road

On today’s STOP TRADING segment on CNBC, Jim Cramer was on the road on a back-to-school special at UVA and he was dismissing the "drop" today as almost nothing.  On RPM (RPM) Cramer said it is going to $30.00 and he likes it (he interviewed the CEO recently too).

On Middleby (MIDD) Cramer thinks it is very consistent and it delivers.  Intevac (IVAC) is another one Cramer likes.

On IAC/Interactive (IACI) Cramer said the quarter wasn’t bad like the street thought.  The buy side is right the sell side is wrong and he thinks IACI is going to mid-$40’s.  We noted last month that Barry Diller was one of the top entrenched CEO’s.

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 2:56 pm in Cramer

Google Say Internet No Good For TV

Managers from Google (GOOG) are trying to make the case that the internet is not made for distribution of full-length video. And, a number of large cable companies appear to agree.

The argument being put forward is that the internet does not scale well enough to handle the traffic load being built by services like YouTube and Joost, the service for peer-to-peer TV being started by Skype’s founders.

Google’s statements about the problem don’t appear to be specific enough to yield much information about how much more load the internet can take. But, to illustrate the point, Reuters reports that one hour of video contains about the same amount of data as one year’s worth of e-mail.

It is also unclear whether Google’s warnings will impact the TV-over-IP services being launched by Verizon (VZ) and AT&T (T) in the hope that they can keep pace with cable companies in terms of product offerings.

Bringing the internet to its knees. Interesting picture.

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

Posted on: February 7, 2007 – 2:52 pm in Internet

Applied Digital Set for VeriChip IPO Spin-Off

Stock Tickers: ADSX, CHIP, DOC

Applied Digital (ADSX-NASDAQ) is getting ready for the launch of its VeriChip (CHIP-NASDAQ) IPO tomorrow.   If there have ben any delays to this one it hasn’t made the rounds yet.  We have covered this one several times, but the terms will be 4.3 million shares between $6.50 and $8.50 per share from underwriters Merriman Curhan Ford, C.E. Unterberg Towbin, and Kaufman Bros. 

This is a cult stock situation and for those that have forgotten VeriChip is essentially wearable and implantable RFID for humans (and animals).  It also has corporate applications but the main cult status is from the implantable RFID chip for humans.  The terms were set back on January 22, and this is set to price for tomorrow.  There is a much deeper backgrounder on this one if you are interested.

As a reminder, Digital Angel (DOC-AMEX) is also considered a backdoor play on this IPO.  This situation has been in the works as long as modern memory can recall.  If you want to do a search on how far back this goes, do a web search on "Destron Fearing."

Jon C. Ogg
February 7, 2007

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Posted on: February 7, 2007 – 2:17 pm in IPOs, Semiconductor, Technology Companies

Does The iPod Have A Patent Problem? (AAPL)

Website Gizmodo is reporting that the Apple iPod’s ability to "automatically rotate from portrait to landscape mode depending on how you hold it" is a function that was patented by Sony Ericsson (SNE)(ERIC) in August 2006.

The iPod has certainly taken the thunder from Sony. The Walkman and Watchman successes are now long ago memories. And, the Sony Ericsson handset, which tend to be high-end and more expensive that most from Motorola (MOT) and Nokia (NOK) has to view the new iPhone as big competition.

Nice to have a patent on something the competition markets.

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

Posted on: February 7, 2007 – 12:32 pm in Consumer Electronics

Jim Cramer Panning ETF’s

Cramer did not have any direct stock picks here today, although you should read oe watch his take on ETF’s.  Jim Cramer was discussing ETF’s on a pre-recorded Wall Street Confidential on TheStreet.com.  As a reminder he is out on the road at UVA. 

He thinks ETF’s are part of the ‘corrupt’ process in creating product on Wall Street.  This is Wall Street making new baskets and derivatives to drive commissions and Cramer asks who would admit it.  He says it is like saying you want to be in 5 different types rather than being in one theme: MSFT-for software; MRVL -for semi’s; HPQ-for PC’s; CA-for enterprise; MRK….Cramer also says there isn’tt a lot of honesty in the brokerage system.  Cramer also said that there is a misconception that he is pro-trading and he says he isn’t because it is hard to keep up with the constant manipulations on a daily basis.

Once again this is a pre-recorded segment, and more can be found there.  I really don’t agree with the ETF panning today, for whatever that is worth.  I am of the camp that ETF’s are perhaps some of the first things that have actually made sense on Wall Street in a long time as far as a full line of products for Main Street, and while he pans the diversification that is very arguable.  Many fund managers have been taking stances against ETF’s, but keep in mind that ETF’s offer investors a diversified way of playing sectors and segments.  Does that sound a bit like them panning competition?  It does to me.

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 12:23 pm in Cramer, ETF

Apple’s Secret Announcement: Wide Screen Video iPod?

LoopRumors is convinced that Apple has a very big announcement in the offing. Word is that it could be a wide screen/touch screen video iPod or an announcement with the Beatles.

The International Business Times says that the new iPod could also have GPS and WiFi capacity.

That would be nice.

Apple’s (AAPL) stock has not recovered from poor guidance and concerns about the company’s option backdating issues. The stock is at $85.50, down from over $97 in mid-January.

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

Posted on: February 7, 2007 – 12:19 pm in Consumer Electronics

3SBio IPO: Chinese Biotech Success

3SBio Inc. (SSRX-NASDAQ) opened at a premium to its pricing out of the chute today.  The company priced 7.7 million ADR shares at $16.00, and the first print was $17.50.  The original range was $12.00 to $14.00 set last month, so this one may be greeted with some less optimism from IPO traders looking for undervalued and unknown stocks.

SSRX is a Chinese biotechnology company focused on researching, developing, manufacturing and marketing biopharmaceutical products primarily in China; main focal areas are anemia and platelet count.   Underwriters were UBS as the sole book-runner and CIBC World markets and Pacific Growth Equities listed as co-managers.  This $275 million implied market cap at the original terms is now closer to $370 million after the premium open.  More can be found on the company as its website. 

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 11:16 am in Biotech, IPOs, International Markets

Equity Office Won by Blackstone; The Saga Finally Ends

If you have been following the bidding process for Equity Office Properties Trust (EOP-NYSE), you will be glad to know that it is FINALLY over.  Vornado (VNO-NYSE) has decided to withdraw its offer based on the latest hike from Blackstone.  Yesterday Blackstone raised the bid price to $55.50 per share, up roughly 15% from the original November bid of $48.50.

Vornado had a $56.00 ‘implied’ bid, but this was cash and stock and came with some conditions outside of the plain-jane cash bid with all approvals and permissions not a condition.  Vornado should be breathing a sigh of relief at this point, and with shares up 3% at $130.85 that is evident.  They would have had to have paid out a $720 million break-up and termination fee to Blackstone to win the deal.

This deal was also getting to the point that on paper it stopped making much sense to outsiders.  It is unknown how much of this transaction ended up being based on pride rather than actual value, and it even makes one wonder that certain deals may be done because of the size of the deal rather than based on the real value.  Private equity is changing, now we’ll need history to determine if it is for better or worse.  Blackstone is very well entrenched and has deep pockets and incredibly talented teams inside of it, so this isn’t a pure second-guessing of the transaction.  As an outsider myself I will be the first to admit that insiders and deep-pocket bidders can see the real value that outsiders do not have access or insight into.  These firms each must have known how they could spin certain properties off and unlock some core values that would not have been available to others.

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 9:57 am in Mergers and Buy Outs

Keane Goes Private

Keane (KEA-NYSE) is being acquired by private Caritor, Inc., a privately held and VC-backed provider of IT services, in an all-cash purchase price of approximately $854 million.  Keane’s common stockholders will receive $14.30 per share in cash (19% premium, but well under the $16.50 yearly high).  The resulting private company is anticipated to have annual revenues over $1 billion and more than 14,000 professionals.

Keane’s Board of Directors voted that this transaction is in the best interest of Keane’s shareholders.  Members of the Keane family and affiliated entities (representing approximately 20 percent of the current shares outstanding) have committed to vote their Keane shares owned by them in favor of the merger.  The transaction is expected to be completed in Q2 2007, subject to receipt of Keane stockholder approval and customary regulatory approval; the deal is being financed thru CVCI and debt financing provided by Citigroup, UBS and Bank of America.

Citigroup and UBS acted as financial advisors to CVCI and Caritor in connection with the transaction. Morgan Stanley & Co. Incorporated acted as financial advisor to the Board of Directors of Keane.

Jon C. Ogg
February 7, 2007

Posted on: February 7, 2007 – 9:10 am in Business Services, Mergers and Buy Outs, Shareholder Issues, Software, Technology Companies

Pre-Market Stock Notes (FEB 7, 2007)

(ACOR) Acorda Therapeutics receives additional $5 million from Paul Capital Healthcare to fund the expansion of its Zanaflex.
(ACTG) Acacia has entered patent license and settlement with Lexmark International.
(ALVR) Alvarion $0.03 EPS vs $0.02e.
(APOL) Apollo Group $0.66 EPS vs $0.62e.
(ARXT) Adams Respiratory CFO David Becker has resigned to work for a private medical diagnostics company.
(ASBC) Associated Bancorp announced a 2 million share accelerated buyback plan.
(ASTM) Aastrom Bio -$0.04 EPS vs -$0.04e.
(BHP) BHP Billiton announced a $10 Billion share repurchase plan; stock up 4%.
(BIVN) Bioenvision files with European Medicines Agency for label extension of Evoltra.
(BOBJ) Business Objects stock up 1% after beating estimates.
(BRKR) Bruker Bio 10.4M share secondary priced at $7.10 per share.
(CI) Cigna indicated up almost 3% after beating earnings.
(CLAY) Clayton Homes $0.24 EPS vs $0.20e.
(CSCO) Cisco Systems traded up 4% after beating earnings and guiding revenues up.
(DF) Dean Foods $0.61 EPS vs $0.61e.
(DTLK) Datalink $0.19 EPS vs $0.14e.
(DVN) Devon Energy $1.38 EPS vs $1.36e.
(ECTX) ECTel gets security pact from Portugal Telecom.
(GAIA) Gaiam 2.5M shares were repurchased from holder.
(GNA) Gerdau Ameristeel $0.23 EPS vs $0.29e.
(ICE) IntercontinentalExchange $0.81 EPS vs $0.74e.
(IFX) Infineon chip selected for entry level Nokia phone.
(IMAX) IMAX signed a 2 theatre pact in China.
(LAZ) Lazard $0.78 EPS vs $0.63e.
(MKTX) Marketaccess $0.06 EPS vs $0.05e.
(NWS) News Cotrp $0.26 EPS vs $0.25e.
(OSIS) OSI Systems -$1.23 EPS vs -$1.35e.
(PCNTF) Pacific Internet’s Thai subsidiary is collaborating with Cisco for IP-based business solutions.
(RL) Ralph Lauren $1.03 EPS vs $0.93e.
(SNWL) SonicWALL $0.09 EPS vs $0.07e.
(VOD) Vodafone in exclusive mobile pact with MySpace in the UK.
(TASR) Taser said a study confirmed the safety of its taser products.
(TEC) Teton Energy said its estimated nat gas reserves gained by over 70%.
(TIVO) TiVo in pact with Amazon for “Amazon Unbox on TiVo”  to rent and own movies and TV shows from CBS, Fox, Lionsgate, Paramount, Universal Studios and Warner Bros.
(TZOO) Travelzoo traded down 10% after missing earnings expectations, but now looks almost flat.
(VOCL) VocalTec Communications announces the partnership with Energo Complect, a Russian systems integrator.
(VPHM) ViroPharma receives orphan drug designation for Maribavir for Cytomegalovirus Viremia and disease indication.

by Jon C. Ogg

Posted on: February 7, 2007 – 8:19 am in Pre-Market Activity

Nokia’s TV Dream

Spies inside Nokia tell Reuters that the largest handset manufacturer in the world is coming out with a cellphone TV. And, it will be affordable to boot.

The mole is quoted as telling Reuters: "Immediately when the phone prices reach the 200-300 euro price point, mobile television goes mass market."  Wow.

There may be a reason that other handset companies like Motorola (MOT), Samsung, and Sony-Ericsson (SNE)(ERIC) are not rushing to market with mini-TVs. There is still a lack of evidence that consumers want to watch content on a screen about the size of a postage stamp.

Research firm Parks Associates recently produced a study which said that mobile TV will only have 7% penetration in the US by 2010, and 10% penetration in Europe. Another firm, Strategy Analytics reports that only 5% of cell phone customers will be frequent users of a TV function.

Maybe mobile TV is not going mass.

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

Posted on: February 7, 2007 – 8:14 am in Wireless

Pre-Market Analyst Calls (FEB 7, 2007)

ALVR raised to Buy at Oppenheimer.
AT cut to Neutral at B of A.
BHE cut to Peer Perform at Bear Stearns.
BOBJ raised to Outperform at Baird and raised to Buy at Soleil.
BRCM raised to Overweight at Morgan Stanley; stock up 3%.
CRDN raised to Mkt Perform at FBR.
CSCO raised to Outperform at Baird.
CTV started as Buy at Jefferies.
ELNK raised to Neutral at Goldman Sachs.
ENSI raised to Buy at AGEdwards.
EQR cut to Hold at Citigroup.
FRX cut to Sell at Citigroup.
GSAT cut to Hold at Jefferies.
ILMN raised to Buy at Deutsche Bank.
IVGN started as Buy at B of A.
JOE cut to Underperform at Wachovia.
MAR raised to Buy at AGEdwards.
MFLX raised to Outperform at Baird.
MIL started as Buy at B of A.
PPDI started as Buy at B of A.
PPS cut to Sell at B of A.
SOHU cut to Neutral at UBS.
TSCO raised to Outperform at Baird.
TYC cut to Hold at Deutsche bank.
TZOO raised to Strong Buy at First Albany and raised to Hold at Stifel Nicolaus.
VTIV started as Buy at B of A.

by Jon C. Ogg

Posted on: February 7, 2007 – 8:07 am in Analyst Calls