Daily Archives: February 15, 2007

Cramer’s SELL BLOCK (BPT, FRO)

On CNBC’s MAD MONEY tonight, Cramer went over his SELL BLOCK.  This is where he says to take profits or losses.  Here it is:  New Century Financial (NEW): Cramer was negative on it ahead of earnings.  Dividends don’t lie, but this one was a lie.  Cramer has two more dividends that could be signaling a lie too because they are so high they give a warning flag.

Prudhoe Bay (BPT) and Frontline (FRO) are BOTH going into the SELL BLOCK because their dividends are too ridiculously high. BPT is down 18% and the stock and the dividend have to drop.  FRO and its 28% yield are misleading because they have to sell off assets to maintain that payment instead of using funds from operations. 

Jon C. Ogg
February 15, 2007

Posted on: February 15, 2007 – 6:25 pm in Cramer, Oil & Gas

Cramer’s IPO Playbook for ClearWire (CLWR)

Cramer on MAD MONEY has a telecom pick tonight he says is even better than Level 3 (LVLT).  There is a money-maker, and that is Craig McCaw.  He is the head of ClearWire (CLWR-NASDAQ) that is about to come public.  If you can’t get in on the IPO you can play it in the secondary market.

I have covered this IPO on several occasions.  Here is the article with the terms being set this week.

On January 30, The IPO filing was revised to show the subscriber rates.

Doug has an article showing how much coverage is on this.

Cramer likes the Intel (INTC) and Motorola (MOT) backing it.  At $23 to $25 range given, Cramer said he’d pay $28.00 to $35.00 after the IPO, but only for a portion of it.  He would wait for a dip and then buy more.

Jon C. Ogg
February 15, 2007

Posted on: February 15, 2007 – 6:13 pm in Cramer, Technology Companies, Telecom, Wireless

Microsoft (MSFT) CEO: Vista Projections Too Aggressive?

Microsoft’s CEO Steve Ballmer is quoted as saying that analyst projections for Vista revenue are too aggressive according to Reuters. It was however, difficult to say which analysts and which analysis he was talking about.

Ballmer also indicated that he thought expenses would be along the lines of most expectations and that the company was willing to invest in getting online customers.

Douglas A. McIntyre

Posted on: February 15, 2007 – 6:06 pm in Software

How Smart Is LookSmart?

LookSmart (LOOK-NASDAQ) posted earnings: -$0.04 GAAP EPS and -$0.01 non-GAAP EPS and revenues at $15.0 million; estimates were -$0.08 & $15.475 million, but there are less than a handful that cover it.

David Hills, CEO:  "Looking forward, 2007 will be a year of prudent investment, particularly in the critical areas of sales and marketing. Now that we have improved our product offering, we will focus on increasing our penetration in the marketplace. We believe we are establishing ourselves as a viable competitor in the online advertising industry, and are encouraged that our customers feel the same way. A key indicator of this is Ask.com’s renewal of its AdCenter agreement with us through 2009. We are pleased to continue with them as a customer. We are making strategic investments for long-term growth and profitability, and ultimately for increased value to our stockholders."

The most important part of this was signing IAC’ Ask.com as the anchor client, although it is at far lower rates.  They are forecasting a sequential 12% drop in revenues, which would be $13.2 million for the coming quarter (well under estimates). For 2007 Revenue is expected to increase 20% to 25% from the year ended 2006, which would lead to $61 million or more on the lower-end of projections (even at the high-end this is under estimates).

This is a catch 22 in a big way.  This has warnings because it signed IAC’s Ask.com at significantly lower rates.  Ask.com most likely had them in a barrel so keeping them is still probably a win. After all, where would the company be if they LOST them?  The stock closed at $5.38 and the 52-week range is $2.21 to $5.75.  So there are obviously many hopes they’ll get back to some sort of profitability soon, but they are probably going to have to rely on the cult stock followers from here rather than the turnaround investors.  Shares are down about 1.5% after-hours.

Jon C. Ogg
February 15, 2007

Posted on: February 15, 2007 – 4:28 pm in Earnings, Internet

January NetRatings For Major Finance Sites

Yahoo! Finance kept its huge lead in pageviews.

Top Financial News and Information Sites for January 2007
Brand or Channel Unique Audience (000) Web Page Views (000) TimePerPerson(hh:mm:ss)
Yahoo! Finance                        13,753                      684,593 0:29:04
MSN Money                        12,919                      307,142 0:22:05
AOL Money & Finance                        11,383                      244,101 0:18:49
CNNMoney                         8,416                      167,753 0:13:32
Dow Jones Online                         8,314                      152,453 0:18:27
Forbes.com                         6,898                      104,353 0:05:32
Reuters                         5,877                        57,315 0:08:06
BusinessWeek Online                         3,951                        29,327 0:04:29
Motley Fool                         3,702                        37,305 0:11:38
FreeCreditReport.com                         3,298                        17,924 0:06:36
American City Business Journals Network                         3,019                        16,278 0:04:00
TheStreet.com                         3,002                        25,858 0:07:29
About.com Business & Finance                         2,926                        14,488 0:03:49
Bankrate.com                         2,728                        39,666 0:10:42
Bloomberg.com                         2,430                        14,988 0:05:59
USATODAY.com Money                         2,324                        15,284 0:09:06
Smartmoney                         2,138                        23,301 0:10:09
Morningstar                         1,692                        43,502 0:18:38
Hoover’s Online                         1,589                        16,828 0:03:03
Google Finance                         1,585                        14,836 0:06:27
kiplinger.com                         1,117                         5,466 0:03:27
Stockgroup                            764                         3,420 0:03:08
AutoCheck                            699                         1,736 0:03:36
Creditcards.com^                            608                         3,041 0:07:31

Source: NetRatings

Posted on: February 15, 2007 – 3:37 pm in Media

Cramer on Good CEO’s

On today’s STOP TRADING segment on CNBC, Jim Cramer said BUY on all of these: Safeway (SWY), Deere (DE), Qwest (Q), Norfolk Southern (NSC), Caterpillar (CAT), UnionPacific (UNP), and Aetna (AET) is good. 

Eli Lilly (LLY) and Schering Plough (SGP) are avoids.

This was on the CEO council stocks today that have been interviewed by Erin Burnett on CNBC.

Jon C. Ogg
February 15, 2007

Posted on: February 15, 2007 – 2:55 pm in Cramer

Baidu From The Stock Masters

From The Stock Masters

Baidu.com (BIDU) starting the day off with three downgrades from UBS, Citigroup, and Brean Murray. If you haven’t heard Baidu.com is the equivalent of Google.com in China, as explained the majority of analysts "in the know". Whatever, again with the China, China, China talk. What’s scary about playing this stock is Wall Street’s Lenny & Squiggyincredible expectations for growth. Yesterday BIDU posted a 5-fold jump in quarterly profits, beating estimates, on rapid growth of customers, but forecast first-quarter sales that fell short of expectations – BIDU only expects $34 to $35M (and I use the term "only" biting my hand like Lenny & Squiggy). UBS analyst George Chu cut his rating on BIDU to "Reduce" from "Neutral" with a price target of $99. He raised the possibility of BIDU losing market share, as Google Inc. gains in the region, although he noted that currently Google seems to be growing at Yahoo expense. Shares of BIDU are down 11% today to around $102 a share. It could be worse, you could a member of Lenny and the Squigtones (this picture is a must see), oh where are they now?

http://www.thestockmasters.com/

Posted on: February 15, 2007 – 2:39 pm in Internet

NBC Universal’s Online Problem (GE)

Based on the Comscore January traffic numbers that followed unique visitors to web properties, NBC Universal has a long way to go to catch most of its competition. No one would think that the GE division would have anywhere close to the online presence of TimeWarner/AOL (TWX) which had 117.2 million unique visitors in January. Most investors would assume that Fox Interactive (NWS) would be well ahead because the numbers include MySpace. The Fox figure for January was 74.8 million unique visitors.

But a number of other media company sites are ahead of NBC which had 15 million unique visitors in January. ESPN had 16.2 million unique visitors. The EW Scripps websites had 17.6 million, and that is not a very big operation. Gannett (GCI) had 18.7 million. CBS (CBS) had 22.6 million, Disney (DIS) 25 million, and Viacom (VIA) 37.3 million.

With a movie studio and a TV network, the low NBCUniversal web numbers are a bit hard to understand. But, maybe that is why the unit has a new CEO.

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

Posted on: February 15, 2007 – 1:30 pm in Internet

The Global ETF Landscape

From Ticker Sense

With US markets making all-time highs, we take a look at how other countries and regions of the World are faring.  Most are currently overbought, with Mexico and Malaysia trading at theoretical highs.  India, on the other hand, is currently slightly oversold.  These overbought/oversold charts are released daily along with large lists of US stocks and ETFs to our Mini Institutional subscribers.

Globaletf_2

Oboskey_32

http://www.tickersense.typepad.com/

Posted on: February 15, 2007 – 12:26 pm in ETF

Cramer’s Corn Plays as OPEC-Busters

On today’s Wall Street Confidential on TheStreet.com, Cramer talked about the demand for corn as the new OPEC or OPEC breaker for traders.  Cramer wants companies where there isn’t a visibility issue.  AGCO (AG), Monsanto (MON), Landec (LNDC), Deere (DE), and Archer Daniels (ADM) are the names he thinks that are in this camp.  This gives visibility to 2009 to 2010 and the industry wasn’t prepared for all the demand that there is and there will be.  Cramer said again that VeraSun (VSE-NYSE) and the ethanol stocks are NOT the way to play this.  Cramer said Baker Hughes (BHI) is taking down the service and drillers; Transocean (RIG) is a winner in the sector and BHI isn’t, plus RIG isn’t levered to the Gulf of Mexico.

Jon C. Ogg
February 15, 2007

Posted on: February 15, 2007 – 12:12 pm in Alternative Energy, Cramer, Oil & Gas

What Is Chrysler Worth? $6 Billion To $7 Billion

Wall St. analysts are speculating that Daimler (DCX) will probably figure out a way to sell part of Chrysler to the public or find a buyer, perhaps a car company in the US or China.

Based on DaimlerChrysler’s recently released earnings for 2006, the Chrysler Group had revenue of $61 billion and a loss of $1.44 billion.

It is impossible to value Chrysler without determining what would happen to the company’s assets. Which would go with the new company and which would stay with Daimler? More important, what would become of the obligations? The pension. The health care benefits. These are all the expenses that the market thinks would hamper the company going forward just as they have GM (GM) and Ford (F).

But, what if the new entity were set up so that its US balance sheet and legal obligations mirrored those of GM and Ford? In other words, Chrysler would keep the burdens of operating in the US just as it would have it Daimler had never bought the company at all.

Conveniently, both GM and Ford trade at 10% of their trailing twelve month sales. That gives GM a market cap of $21 billion and Ford a market cap of $26 billion.

On that basis, Chrysler would be worth a little over $6 billion. The company was valued at $37 billion when Daimler picked it up in 1998. That means that the company is worth 16% of what the German company paid. That may not be far off.

Ford shares traded for over $37 in 1998. The 200 day moving average on Ford’s share price is about $7.62. So, the share are worth about 20% of what they were in 1998. On that basis, Chrysler would be worth just under $7.5 billion.

A point in favor of the DCX shareholders who want Chrysler dumped. Daimler’s market cap is .36x its total revenue. If Chrysler is worth .1x, DCX shares should rise nicely without the American unit.

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

Posted on: February 15, 2007 – 11:35 am in Autos

Opnext IPO Well Received

Opnext (OPXT-NASDAQ) has come public today, and shares are up roughly $2.00 from its $15.00 pricing.  This was already at the higher end of the $13.00 to $15.00 range.  After searching around for pre-market buzz over the last couple of days, this was one that could have opened higher.  Some traders were even looking for it to open as high as $18.00.  It is not to say it WILL head higher, but there was plenty of demand for it and volume reached 3 million shares in what seemed like only a few minutes.  Last Friday Cramer even put it in his speculative basket of telecom supplier stocks.  Now the company is out on the exchange all on its own, so it’s up to the buyers and sellers.  We’ll follow up on this issue next week to see all of the post-IPO dust settle before making any longer-term projections or looking for any floors and ceilings on the deal. 

As a reminder, Goldman Sachs was the lead underwriter and Hitachi (HIT-NYSE/ADR) is the major shareholder.

Jon C. Ogg
February 15, 2007

Posted on: February 15, 2007 – 11:20 am in Cramer, IPOs, Technology Companies, Telecom

IPO Filing: NovaBay Pharmaceuticals

NovaBay Pharmaceuticals has filed to come public via an IPO, although this one is being put on the American Stock Exchange instead of NASDAQ or NYSE.  It will also trade in Canada on the Toronto Stock Exchange, and its ticker will be NBY.  Terms have not been set in the offering, but it lists up to $23 million as the amount to be raised for filing purposes.  Dundee Securities is the sole underwriter.

NovaBay has developed a class of antimicrobial compounds (Aganocide compounds) that may form a platform to create products that address the treatment and prevention of bacterial infections in hospital and non-hospital settings.  They also have a collaboration and licensing agreement with an affiliate of Alcon, Inc. (ACL-NYSE) to develop products incorporating Aganocide compounds for use in the eye, ear and sinus, as well as in contact lens solutions.  Its major push and key development efforts are focused on Aganocide compounds NVC-422 to treat patients with infections of the eye, ear and sinus, to create an improved environment for the healing of wounds and to prevent infections that result from surgical or other hospital procedures, or that can be caused by the use of products which can introduce an infection into the body.

For all practical purposes this is a pre-revenue stage company.

Jon C. Ogg
February 15, 2007

Posted on: February 15, 2007 – 10:11 am in Biotech, IPOs

JetBlue and the Runway Debacle; Upgraded at Goldman

From Ticker Sense

Many of you have probably read about the disastrous time passengers had on many JetBlue flights coming in and out of the Northeast in the past couple of days.  After twiddling his thumbs on the runway for hours on end waiting to take off, one young lad interviewed by CNBC this morning called the scene "chaos." 

We have no comprehension of what must be going through the mind, if anything, of the person or persons in charge of making the decision to keep passengers on the tarmac for up to 10 hours, but it is ten times worse if you have already landed at your destination and then have to wait 8 hours to deplane.

That is just what happened to flight 1048 from Nashville yesterday:

On Flight 1048 from Nashville, passenger Yossi Gleiberman, 41, of Brooklyn, reported landing on time at 10:10 a.m.

"Now it’s after 6 p.m. and we’re still here," Gleiberman told the Daily News via cell phone from the plane. "They’re feeding us, but there’s 50 of us who want to get home."

Gleiberman said the bathrooms were overflowing and he could no longer stomach the blue chips given him and other passengers.

"I’ve eaten six bags of chips," he said. "I need an antacid."

Yes, Mr. Gleiberman, we would need our antacid too.

Nonetheless, Goldman Sachs upgraded JetBlue (JBLU) this morning from Neutral to Buy.  Below are their historical calls on the stock.

Jblugs

http://www.tickersense.typepad.com/

Posted on: February 15, 2007 – 10:06 am in Airlines

EFX: Equifax Gives TALX Shareholders the Illusion of Choice

By William Trent, CFA of Stock Market Beat

Stock Market Beat Mid Cap Watch List and Large Cap Watch List member Equifax (EFX) – whose business is likely well known in our credit-driven society – has agreed to buy Talx Corp. (TALX), which offers HR and payroll-related outsourced services including employment verification, unemployment cost and tax management, and associated paperless solutions.
According to Yahoo! Finance:

The companies expect the deal to be completed late in the second quarter or early third quarter, subject to regulatory approvals, approval by Talx shareholders and customary closing conditions.
Under the terms of the agreement, Talx shareholders can elect to receive, for each Talx share, either 0.861 shares of Equifax stock, $35.50 in cash, or a combination of stock and cash of equivalent value, subject to pro-ration, so that the total consideration consists of 75 percent Equifax stock and 25 percent cash. The stock portion of the purchase price will be tax-free to selling shareholders, according to the companies. All told, Equifax said it will issue about 22 million shares of Equifax stock and pay about $300 million in cash.

While TALX shareholders appear to have the choice whether to accept cash or stock, Equifax has secured an important limit with its pro-ration clause, which prevents its own stock from being stuck in purgatory while the deal waits for approval. Consider the following scenarios:

  1. Equifax shares decline: If for whatever reason Equifax shares were to decline before the deal was completed, TALX shareholders would clearly prefer the cash. Without pro-ration Equifax would be asked to fork over the entire $1.4 billion in cash (an amount they don’t have.) They would have to either issue a load of debt or sell shares more cheaply (thus giving up more than the 22 million planned) in order to pay the TALX shareholders. With the pro-ration, if all the TALX shareholders ask for cash they will all get a 75/25 stock/cash mix.
  2. Equifax shares rise: On the other hand, if Equifax shares go up a bunch then TALX shareholders would all ask for the shares – and the value of the acquisition would be much more than the $1.4 billion it is now. Although clearly less of a concern for both parties (the 22 million shares will be equally dilutive regardless of their value) Equifax limits the total size of the deal by keeping a $300 million cash component that doesn’t rise with the stock price.

When all is said and done, if 25% of TALX shareholders happen to ask for cash and the rest for shares, they will all get exactly what they want. But if what they want drifts very far from that magic balance, the choice really belongs to Equifax.

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; 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: Starbucks (SBUX) call options; Landstar (LSTR) put options; Plantronics (PLT) put options

http://stockmarketbeat.com/blog1/

Posted on: February 15, 2007 – 10:04 am in Uncategorized

A Goofy Upgrade For Qualcomm (QCOM)

Qualcomm’s shares are up almost 7% to $40.65. The shares have been doing so poorly over the last year that it could be a dead cat bounce, but it’s not.

The Associated Press say that Oppenheimer upgraded the stock from "neutral" to "buy". The primary reason for the change of heart is "Cingular Wireless’s decision to use MediaFlo, a wireless network developed by Qualcomm, to bring broadcast television to its cell phones"

Nice, but will anyone use it? Recent studies indicate that only 10% to 15% of cell phone customers will want to use their phones for video programming. And, the screens are a bit small for the purpose.

Does MediaFlow have a future as a big money maker for Qualcomm? It’s only a guess either way.

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

Posted on: February 15, 2007 – 9:53 am in Wireless

Hershey’s Restructuring Squeeze

Hershey (HSY-NYSE) has announced a three-year restructuring plan which includes 1,500 job cuts, and it is cutting production lines.  It will outsource some low value-added items and build a production plant in Mexico.

It expects pre-tax charges and non-recurring project implementation costs of $525 to $575 million over the next three years.  $300 million of the charges will be recognized in 2007 and the rest in 2008.  Hershey estimates that its gross margin will improve and should have an annual savings of roughly $170 to $190 million by 2010.

How many candy makers will ask where the water comes from in making the candy?  HSY shares are up 2% at $52.40 on the news.

Jon C. Ogg
February 15, 2007

Posted on: February 15, 2007 – 9:47 am in Uncategorized

Microsoft Search Engine: If Wishes Were Horse, All The Beggars Would Ride

Word from TheStreet.com is that Microsoft’s (MSFT) new Vista-based search function may be in a position to take share from Google (GOOG). The reasoning: "Microsoft will tie in contextual Web search across its host of popular applications such as Word, Excel and PowerPoint."

It might work, but it might not. Depending on who is asking and who is answering, Google has something in the range of 50% of all search traffic. Yahoo! (YHOO) has about half that, and Microsoft has about 7%. AOL (TWX) and Ask.com (IACI) are in the lower range as well.

The argument that Microsoft will do better in search gets less credible every year. Microsoft was going to use MSN to drive search share. Then it was going to build a better search platform. Then it was going to spend hundreds of millions of dollars to become the search platform for sites like MySpace. Of course, Google got that instead.

Microsoft might take share from Google, but it also might take as much or more from Yahoo! which seems to have the weaker search brand of the two larges destinations. Google has been able to beat them up and take their lunch money. Why shouldn’t Microsoft do the same?

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

Posted on: February 15, 2007 – 9:40 am in Uncategorized

Can Vonage (VG) Confound The Skeptics?

Vonage (VG) reported fourth quarter revenue that rose 91% to $181 million. The company’s net loss fell slightly to $65 million. Not great, but better than a satellite radio company.

For the full year 2006, revenue hit $607 million. For 2007, the company believes that revenue will be $850 to $900 million.

The markets don’t think Vonage can make it. The stock has fallen from $17.65 to $5.84.

Wall St. assume that the "triple play" from cable (and soon telecom) which offers voice, TV, and broadband will be make selling VoIP alone a tough proposition.

If Vonage keeps growing at the current rate, it may prove the conventional wisdom is wrong.

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

Posted on: February 15, 2007 – 9:17 am in Internet

Toyota Marchs Into Europe

Toyota’s (TM) sales in Europe rose 20% in January pushing its total unit sales for the month ahead of DaimlerChrysler (DCX). TM units topped 82,000 for the first month of the year.

It would now appear that Europe is becoming a more important battlefield for the large Japanese car company as it attempts to do to the locals what it has done to GM (GM) and Ford (F) in the US. It also puts more pressure on both US and European car companies to do better in countries like China, where GM in particular is doing well.

It just isn’t safe for the Western car companies anywhere anymore.

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

Posted on: February 15, 2007 – 9:04 am in Autos