Daily Archives: March 19, 2007

XM-Sirius at the Senate Today: Witnesses For & Against

Today may be another important juncture in the XM (XMSR) & Sirius (SIRI) merger because this follow-on meeting could further set the tone of how regulators treat the proposed merger between the companies.  The Senate Committee on the JudiciarySubcommittee on Antitrust, Competition Policy and Consumer Rights has ascheduled hearing on “The XM-Sirius Merger: Monopoly or Competitionfrom New Technologies” TODAY at 2:15 p.m. in Room226 of the Senate Dirksen Office Building with Chairman Kohlpresiding. 

We have our own opinions on this and we havenoted in the past that the deal seems more likely to be approved withsome severe conditions attached, and we have also noted that thecompanies both appear to need the deal to be completed for them to both haveready access to more liquidity and to the capital markets.  That is ouropinion ahead of time, but we obviously cannot say what the realoutcome will be and won’t try to guess what the formal votes are or howlong it will take to secure the votes.

Today’s hearing before the Senate Committee on the Judiciary Subcommittee onAntitrust, Competition Policy and Consumer Rights on “The XM-SiriusMerger: Monopoly or Competition from New Technologies.”   Here is who is acting as witness and the "Known" opinions of how each will testify:

Mel Karmazin, Chief Executive Officer, Sirius Satellite Radio
New York, NY (Mel K. is obviously FOR the merger)

Mary Quass, President and CEO, NRG Media, LLC
CedarRapids, IA (she represents theNAB which is "very strongly opposed to the merger."  NRG Media consists of 84 radio stations throughout 7 statesin the Midwest and the Waitt Radio Network, based out of Omaha,Nebraska; ranked as 7th largest radio network in US)

David Balto, Attorney at Law, Law Office of David Balto
Washington,DC (antitrust lawyer who was policy director of the Federal TradeCommission during the Clinton administration; formal opinion or stancenot known/confirmed because of what has been mixed commentary reporting)

Gigi B. Sohn, President, Public Knowledge
Washington, DC (advocacy group that previously told the HOUSE COMMITTEE the merger should be approved subject to Three Conditions:new company makes available pricing choices such as a la carte ortiered programming; new company makes 5% of its capacity available tonon-commercial educational and informational programming over which ithas no editorial control; new company agrees not to raise prices forthree years after the merger is approved)

We will follow-up with more details when they are known,but they might not be known until after the meeting tomorrow.  With themarket up yesterday, SIRI closed up 1.5% at $3.29 and XMSR closed up 2.1% at $13.44.

Jon C. Ogg
March 19, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 19, 2007 – 11:45 pm in Bait Shop, Management Change, Mergers and Buy Outs, Satellite, Wireless

TXU Competitor Line-Up: Before & After (2)

Stock Tickers: TXU, DUK, FPL, ETR, FE, AEP, EIX, AES, PPL, CEG, PGN, XEL, DTE, NRG.

We ran a list of other power generation competitors to TXU (TXU) and this new list has been expanded to show more data (from FEB 23).   We did not differentiate between coal-fired power plants and nuclear-powered plants because of the fact that TXU has both and these are easy to split as is expected in the KKR-led deal.  Even outside of TXU, the power generation sector is doing much better than the market since the TXU announced merger.  So investors are either being defensive in this market OR they are still thinking more merger deals are coming.

Besides the Blackstone, Texas Pacific, Carlyle, KKR, & others, Warren Buffett and Berkshire Hathaway are still deemed as potential bidders among many other firms for other power generation assets.  The KKR-Texas Pacific deal valued the shares at $69.25, but the close Friday was $62.75; shares sit today before the close up 2.8% at $64.56.  Shares closed on Friday, FEB 23 at $59.63 (adjusted for dividend); so shares are up over 7% since then (the S&P is actually Down 3.5% in the same timeframe).  If the KKR & Texas Pacific Capital were bounced out of the deal, it is feasible they would look elsewhere.  Warren Buffett may still be thinking about where he can invest into the sector too.  We gave the following 13 comparables back then, and here is how the list compared:

Stock (Close on FEB 23); Price Now (adjusted for dividends); market capitalization; P/E

Duke Energy (DUK) $19.91; $19.69 (-$0.22); $24.6B mkt Cap; 12.4 P/E.
FPL Group (FPL) $59.23; $59.80 (+$0.57); $24.6B mkt cap; 18.4 P/E.
Entergy (ETR) $100.95; $100.65 (-$0.30) $19.8B mkt cap; 18.6 P/E.
Firstenergy (FE) $63.51; $63.53 (+$0.02); $20.1B mkt cap; 16.6 P/E.
Amer Elec Pwr (AEP) $45.75; $46.40 (+$0.65); $18.2B mkt cap; 18.2 P/E.
Edison Int’l (EIX) $46.97; $48.97 (+$2.00); $15.8B mkt cap; 13.5 P/E.
AES Corp (AES) $22.28; $21.01 (-$1.27); $13.6B mkt cap; P/E n/r.
PPL Corp. (PPL) $37.26; $38.55 (+1.29); $14.5B mkt cap; 16.8 P/E.
Constellation (CEG) $75.66; $83.75 (+$8.09); $15.1B mkt cap; 16.2 P/E.
Progress Energy (PGN) $50.09; $49.90 (-$0.19); $12.7B mkt cap; 21.6 P/E.
Xcel Energy (XEL) $24.18; $23.69 (-$0.49); $9.6B mkt cap; 17,3 P/E.
DTE Energy (DTE) $47.20; $46.82 (-$0.38); $8.2B mkt cap; 19 P/E.
NRG Energy (NRG) $63.52; $70.67 (+$7.15); $8.5B mkt cap; 17.1 P/E.

So as you can tell many of these are up and the ones that are down are not trading down anywhere close to the 3.5% drop in the S&P (except AES).  A merger speculator would say the sector is still in play here because of the price action compared to the markets.  Also we listed the P/E ratios here, but keep in mind that many of these are different and aren’t apples to apples. 

Jon C. Ogg
March 19, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 19, 2007 – 8:01 pm in Utilities

Market Candlestick Readings

This Candlestick Charting is an excerpt from our affiliated partners at the Candlestick Forum.

Where it is the market going? Remember whenthe market was in a steady uptrend a few weeks ago, the projectionswere the market could head dramatically higher, everything was rosey.After the big downdraft three weeks ago, the prognosis changeddramatically. The talking-heads on the financial news stations weregiven us many reasons why the market will head down big-time. Thesubprime lending market could crunch the market! The Chinese economycould be slowing down! The feds could raise rates, lower rates, leaverates unchanged, anything out there could send this market into adownward spiral. In 24 hours, investor’s sentiment changed. The worldeconomy did not change, only investor sentiment. That is whatcandlestick signals measure.

If you put four guest speakers on a financial news talk program, youwill get four different passionate dissertations on which direction themarket is going. Candlestick signals incorporate one very simpleinvestment premise. The Japanese Rice traders profess to "let themarket tell us where the market is going." Everybody can come up withreasons why the market should go up or why the market should go down.However, the candlestick signals reveal immediately what investors are’actually’ doing.

To ignore what the signals are revealing is to ignore theobservations that have produced highly profitable trading profits forover the past 300 to 400 years. Each signal reveals investor sentiment.This past week, the Dow had another hard selling day. The next dayrevealed a Hammer signal. Without the knowledge of what the Hammersignal reveals, an investor would have much less insight into what themarket was doing. A Hammer signal represents the hammering out of thebottom of the market. In the case of the Dow, the signal formed at thesame level that the markets bottomed out previously. This now becomesvaluable information. Despite what all the projections were, such as wewere seeing the beginning of a 10% retracement in the markets, thecandlesticks were providing a different message. The Bulls werestepping back in. Not just an up day, but a candlestick reversal day.

DOW JONES INDUSTRIAL AVERAGE

NASDAQ

The analysis of the market direction and severe reversal signals inindividual stocks provide an extremely high probability of being at theright place at the right time. The quick visual interpretation ofcandlesticks allows an investor to participate in strong profit moves.The combination of candlestick signals with other simple technicalanalytical pattern evaluation provides relatively simple entry and exitstrategies.

You can visit the Candlestick Forum here to access the full website and all they have to offer for the overall Candlestick charting for individual stocks and for the broader index readings.

Posted on: March 19, 2007 – 5:38 pm in Charts

StreetInsider.com After-Hours Movers 03/19

Systemax Inc. (NYSE: SYX) 17% LOWER; reports Q4 EPS of $0.22 compared to $0.09 for the same period last year. Net sales increased 11% to $648 million compared to $583 million in the fourth quarter of 2005. Announces Special $1.00 Per Share Dividend.

Rambus Inc. (Nasdaq: RMBS) 5% HIGHER; said the Federal Trade Commission (FTC) has stayed portions of its remedy order In the Matter of Rambus Inc. The stay is effective upon Rambus’ filing of a timely petition for review in a court of appeals. Rambus plans to appeal both the FTC’s liability and remedy orders in their entirety.

Ballard Power Systems (Nasdaq: BLDP) 3.8% HIGHER; announced that it has been awarded a research and development contract from the US Department of Defense (DoD) for a materials handling equipment application cost reduction and demonstration program. The contract is valued at up to US $5.88 million.

SIGA Technologies Inc. (Nasdaq: SIGA) 3% HIGHER; continues today’s 14% move higher after announcing that a toddler who inadvertently contracted eczema vaccinatum has been treated with ST-246, SIGA’s lead smallpox drug candidate, pursuant to an Emergency Investigational New Drug Application (IND) granted by the FDA, and is now improving.

Accredited Home Lenders Holding Co. (Nasdaq: LEND) 3% LOWER; gives back some recent gains. Stock down 17.9% intra-day.

ViroPharma Inc. (Nasdaq: VPHM) 3% LOWER; intends to offer $200 million aggregate principal amount of Convertible Senior Notes due March 2017.

http://www.streetinsider.com/

Posted on: March 19, 2007 – 4:47 pm in Market Close

More Wall St. Questions On Vista

According to Barron’s, research firm ThinkEquity does not think that Microsoft (MSFT) Vista sales are going very well. The firm put it this way: “We believe Vista is a disaster.” ThinkEquity thingks the suction from this will also take down AMD (AMD) and Dell (DELL) in the vortex.

Perhaps Wall St. is missing the message. Microsoft was up about 2% today. It has actually been moving up for several days now and is about to reclaim the $28 level. Steve Ballmer, Microsoft’s CEO, has said that he thinks investor expectations for Vista have been aggressive and that helped step MSFT’s price down last month.

So far, however, there is no significant concern that the sky is falling over at Microsoft.

AMD is unlikely to do well even if Vista sales are OK. The stock is at its 52-week low and it is not on concern about unit sales. No, Wall St. hates the fact that AMD had to give up a huge number of margin points to stay in a market share war with Intel (INTC). AMD now trades at 1.4x sales compared to Intel at 3.1x. AMD is a dog, but, unless it has to raise money to stay in business, the stock is unlikely to go much lower. The definition of "cheap" in the dictionary has the AMD logo next to it.

Dell (DELL) is another stock that does not offer investors very much, but it would appear that the company could come up with more good news than bad. Michael Dell has already said that it will take several quarters to move the company back into any kind of working order. Falling chip prices could help margins. And, if the company cuts costs through lay-offs, it is likely that the stock might get a little bounce.

Much of the tech landscape is a disaster now. It is not likely to become more so.

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

Posted on: March 19, 2007 – 4:22 pm in Software

TXU Competitor Line-Up: Before & After

Stock Tickers: TXU, DUK, FPL, ETR, FE, AEP, EIX, AES, PPL, CEG, PGN, XEL, DTE, NRG.

On the Friday of February 23 that CNBC’s David Faber broke the TXU (TXU-NYSE) merger in the largest private equity to date, we simultaneously gave a big list of competitors with high market caps in the power generation business.  We did not really differentiate between coal-fired power plants and nuclear-powered plants because of the fact that TXU has both.  Those may be split up and the KKR-Texas Pacific deal was going to alter the future of coal powered plants and encourage more investing in renewables, so really the potential buyout spectrum could be among any of these.  What is most interesting is that besides TXU, the sector is doing much better than the market during the time the drop came in the came in the overall markets.  So investors are either being defensive OR they are still thinking more deals are coming. Cramer noted more deals were likely at the time.

Besides the Blackstone, Texas Pacific, Carlyle, KKR, and others, Warren Buffett and Berkshire Hathaway are still deemed as potential bidders among many other firms for other power generation assets.  The KKR-Texas Pacific deal valued the shares at $69.25, but the close Friday was $62.75; shares sit today before the close up 2.8% at $64.56.  Shares closed on Friday, FEB 23 at $59.63 (adjusted for dividend); so shares are up over 7% since then (the S&P is actually Down 3.5% in the same timeframe).  If the KKR & Texas Pacific Capital were bounced out of the deal, it is feasible they would look elsewhere.  Warren Buffett may still be thinking about where he can invest into the sector too.  This number is lower now because of corporate spin-off activities and the like, but we already gave a $29.00 perceived break-up value on Duke back on February 9, 2007.  We gave the following 13 comparables back then, and here is how the list compared:

Stock (Close on FEB 23); Price Now (adjusted for dividends)

Duke Energy (DUK) $19.91; $19.69 (-$0.22).
FPL Group (FPL) $59.23; $59.80 (+$0.57).
Entergy (ETR) $100.95; $100.65 (-$0.30).
Firstenergy (FE) $63.51; $63.53 (+$0.02).
American Electric Power (AEP) $45.75; $46.40 (+$0.65).
Edison Int’l (EIX) $46.97; $48.97 (+$2.00).
AES Corp (AES) $22.28; $21.01 (-$1.27).
PPL Corp. (PPL) $37.26; $38.55 (+1.29).
Constellation (CEG) $75.66; $83.75 (+$8.09).
Progress Energy (PGN) $50.09; $49.90 (-$0.19).
Xcel Energy (XEL) $24.18; $23.69 (-$0.49).
DTE Energy (DTE) $47.20; $46.82 (-$0.38).
NRG Energy (NRG) $63.52; $70.67 (+$7.15).

So as you can tell many of these are up and the ones that are down are not trading down anywhere close to the 3.5% drop in the S&P (except AES).  A merger speculator would say the sector is still in play here because of the price action compared to the markets.

Jon C. Ogg
March 19, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 19, 2007 – 3:40 pm in Bait Shop, Mergers and Buy Outs, Utilities

PureDepth’s technology could profoundly change the $85 billion U.S. gambling industry

From The Stock Masters

PureDepth, Inc. (PDEP.OB) has inked a deal with International Game Technology to provide a "realistic digital video display" to add a new level of control Brad's Slotsto vanilla slot machines. Now casinos can change the typical cherries and numbers to Brad Pitt and Angelina Jolie’s kids, for instance, if they know Brad and Angelina are staying at their casino and want to score some suck-up points. Furthermore those same casinos can now control the cost, payout, and nearly every other aspect of the game making it one profitable and anticipated revenue cash cow.

PureDepth slot screens were created using real depth between two or more LCD panels providing "viewing innovation" that enables users to simultaneously view two separate fields of data on one monitor. By overlaying two or more separate image planes within a single monitor, PureDepth adds realistic 3D effects that are pleasant to the eye and they have 46 approved patents and more on the way to protect their valuable investment.

However, before you get all excited and start buying up shares of PureDepth because they only cost $1.77 a share, they are an OTC BB stock. The technology and payday of this company are why we are writing about PureDepth, that and anything we can do to dig at Brad and Angelina’s child Part IIacquisition spree. I mean how many kids can you adopt in a 90 days? Seriously? Isn’t their a limit on how many people you can buy? Nope celebs rule the world. But expect PureDepth to get more media attention and should you decide to invest in them, consider they will be operating in the red for a long time to come. If you are bored today, read PureDepth’s last quarterly report, it’s not pretty and the word "Risk" appears 15 times (which is as many times as Brad and Angelina mention their kids in a typical interview). If PureDepth can become profitable, then it may be time to think about buying shares, but if you like gambling and playing the slots, by all means, let it ride. Read more about PureDepth…

http://www.thestockmasters.com/index.asp

Posted on: March 19, 2007 – 3:36 pm in Research

Comments From The Stock Masters 3/19/2007

RealNetworks, Inc. worth looking at
With the market doing so well today, let’s take a look at a company that isn’t RNWKdoing so hot. RealNetworks, Inc. (RNWK) has taken a beating in the last 3 months falling 28% in share price. Shares are trading around $7.77, which is 20 cents from their 52-week low. The Masters are further inclined to mention RNWK after they were Upgraded last week by Goldman Sachs and the response was a quick rally followed by shares falling right back down. Goldman Sachs analyst Anthony Noto upgraded RealNetworks to "Neutral" from "Sell". He does not see a significant downside to the stock following its weakness over the past few months. Noto went on to say:
"Our fundamental view that the company operates in a competitive environment and could see decelerating growth in many of its product lines remains unchanged."
Noto believes these concerns are already priced into the stock with it trading at such low prices. He then said:
"We also believe that the company could be increasingly interested in buying back shares at current levels, which would provide near-term support."
RNWK brought home $395M in revenue last year and $145M in net income – thus they are profitable America. Besides their consumer products and services such as Rhapsody, RealPlayer, and Real Music Store RNWK has its Helix Initiative and the Helix Servers going for them. RealNetworks is more than just their RealPlayer and could be worth a look while it is trading at its current levels.

Stock Tips With crap sales of the PS3, Sony (SNE) could be the perfect short candidate. So in over six years, the WORST month the PS2 had in America is 87,000 more units than the PS3 unit sales in February. The PS3 sales were barely 60% of the worst PS2 monthly sales. Sony is in trouble (read more) .

http://www.thestockmasters.com/index.asp

Posted on: March 19, 2007 – 3:34 pm in Technology Companies

Don’t Expect DRAM Prices to Rebound in the Second Half

By William Trent, CFA of Stock Market Beat

DRAM prices head for the toilet

Those clever folk at Gartner say the price of 512-Mbit DDR2-based chips has tumbled by 44 per cent this year, already.And average DRAM spot prices were down to $3.67, last week, a 39 per cent since the beginning of 2007, according to the market watchers.

Firms have been pumping out DRAM chips expecting the market to chew them up to run Vista on. The over-supply has sent prices tumbling. Vendors reckon demand will kick in later this year to help prop up prices.

Or, more likely, vendors hope demand will kick in later this year. Furthermore, with all the new supply being added it is unlikely to be absorbed even if demand does pick up. We don’t thing prices will rebound in 2007, although the stocks may bottom this year ahead of the bottom in industry fundamentals.

http://www.stockmarketbeat.com/

Posted on: March 19, 2007 – 3:33 pm in Technology Companies

Use Sites Like Yahoo! Finance With Caution

From Chad Brand of Peridot Capitalist

Investors need to be careful when they do stock research on portal sites like Yahoo! Finance. If you enter a symbol in these sites you will quickly get a summary of where the stock trades. Not only do current prices show up, but also other metrics like market cap, earnings per share, P/E ratio, dividend yield, etc.

Keep in mind that oftentimes these numbers are wrong. They can include one-time items like EPS charges and gains, as well as special dividends. Also, the numbers aren’t always adjusted in a timely fashion to account for stock splits. The reason I wanted to point this out is because of an email I received summarizing the contents of this week’s Barron’s Magazine. It said the following:

ST Microelectronics, one of the top five global semiconductor companies, has been beset by troubles including flat sales, a struggle to cut costs, removing itself from the low-margin memory chip business, and competition from strong rivals like Texas Instruments and Qualcomm. Yet its 23x P/E multiple is double that of TI — and Technology Trader Bill Alpert "doesn’t get it."

If you follow semiconductor stocks you might know that Texas Instruments does not trade at 11.5 times earnings. If it did it would be a screaming buy. I’m surprised that a writer for Barron’s would make a mistake like this, but as soon as I saw it, I knew exactly where Mr. Alpert got that number; Yahoo! Finance.

Sure enough, when you enter STM and TXN into the site, it shows trailing P/E’s for the two stocks as 23 and 11, respectively. However, if you dig deeper you will learn that the TXN number is way too low, likely due to one-time items that Yahoo! (or more accurately the supplier of its data) did not remove. The actual trailing P/E ratio for TXN is 18.5. No wonder Barron’s "doesn’t get" why TXN trades at half the multiple of STM, it really doesn’t.

Don’t make the same mistake Barron’s did. Always double check numbers on finance portal sites if they look a bit strange. Chances are they were miscalculated.

Full Disclosure: No positions in the companies mentioned

http://www.peridotcapitalist.com/

Posted on: March 19, 2007 – 3:30 pm in Internet

Rambus Tells the FCC Thank You!

Rambus Inc. (RMBS-NASDAQ) is up 6.5% at $21.15 after-hours after closing down 1.2% at $19.83 in normal trading.  It announced that the Federal Trade Commission has stayed portions of its remedy order effective upon Rambus’ filing of a timely petition for review in a court of appeals.  Rambus noted that it plans to appeal both the FTC’s liability and remedy orders in their entirety. 

Rambus also noted that the FTC clarified that its remedy is intended to be "forward-looking," and therefore Rambus is not restricted from collecting royalties for the use of its technologies in the past, nor is it required to refund royalties already paid.  The Commission has ordered that Rambus be permitted to collect royalty payments for use of its patented technologies during the period of the stay in excess of the FTC-imposed maximum royalty rates on SDRAM and DDR SDRAM products, provided funds above its maximum allowed rates be placed into an escrow account, and be distributed in accordance with the decision of the court of appeals.

On February 2, 2007, the Commission issued its remedy order setting the maximum royalty rate that Rambus can collect on sales made of certain JEDEC-compliant parts after the Order becomes effective, as follows: 0.25% for SDRAM products; 0.5% for DDR SDRAM products; 0.5% for SDRAM memory controllers or other non-memory chip components; and 1.0% for DDR SDRAM memory controllers or other non-memory chip components. The Commission determined that its remedy would not apply to DDR2 SDRAM or other post-DDR JEDEC standards.

Jon C. Ogg
March 19, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 19, 2007 – 3:29 pm in Semiconductor

The 52-Week Low Club

When the market is up big, membership in the club drops off.

ProQuest (PQE) Education publisher gets delisting notice. Down to $8.61 today. The 52-week high is $22.80.

Group 1 Automotive (GPI) Auto retailer recently bought new operations in Europe. Down to $40.94. The 52-week high was $63.97.

Atherogenics (AGIX) Biotech had unsuccessful Phase III trials on new drug. Dropped like a stone to $2.90. With a 52-week high of $20.03, the company is on suicide watch.

Worldgate (WGAT) Personal video phone company still troubled by poor earnings. Down to $.65 from 52-week high of $2.16.

Century Casinos (CNTY) Brean Murray downgrades stock. Slips to $7.94 from 52-week high of $12.11.

NetBank (NTBK) Non-conforming loan problems. Down to $2.30. The 52-week high was $7.60.

Douglas A. McIntyre

Posted on: March 19, 2007 – 3:14 pm in HI/LOW

Blank-Check IPO Filing: Adabra 2 Acquisition Corp.

Aldabra 2 Acquisition Corp. has made its SEC Filing for a proposed IPO.  It is seeking to raise up to $200 million in stocks and warrants in a unit sale for its IPO.  It lists 20 million units, so it is going for the typical $10.00 pricing. 
The company lists Lazard Capital Markets as the lead underwriter and lists Pali Capital in the prospectus as well.  Aldabra 2 was just formed on February 1, 2007 and management has already been involved in blank check operations.  If you want to find out more about Aldabra 1, this is now a fairly large holder (still a minoirity holder) of Great Lakes Dredge & Dock (GLDD-NASDAQ).  That will give you an idea of how the company operated its first Blank Check company.

The full SEC filing can be accessed here if you want to peruse the filing.

Jon C. Ogg
March 19, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 19, 2007 – 2:07 pm in IPOs

Cramer’s Picks on the Road

On today’s STOP TRADING on CNBC segment Cramer was on the road in Austin, TX.  Cramer said the world is refusing to come to an end and that is why we are rallying.  Things werent as bad as people thought and most DJIA components will go higher. 

General Maritime (GMR) is the only shipping company in the sector that has its shareholders in mind.

Newcastle Investments (NCT) is one buying loans and Cramer thinks Wells Fargo (WFC) is the one to look at that can clean up in these loans.

As far as metals he noted last Friday and on Freeport-McMoRan Copper & Gold (FCX) having an $80 target, Cramer was positive on the call and he thinks the call was actually conservative. He would own FCX and buy it hand over first.

Jon C. Ogg
March 19, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 19, 2007 – 1:47 pm in Cramer

Triad (TRI): How Much Higher of a Bid Is There?

Is this the LAST buyout offer for Triad (TRI)?  Based on all of the old data, this is now toward the higher end of the band we gave on numerous occasions.  Everyone knows that if Firm A sees Value at $50.00 and Firm B sees value at $52.00 (both theoretical) then firm A or someone else may actually still see value at even higher prices.  We noted the buyout could come higher in early February, but the question was still by how much.

We originally noted that this made sense at $46.00 to $54.00 and shares are now at $52.00.  We also noted that a buyout could come at a higher price, but the chance of a much higher premium wasn’t really considered.  The options activity is not showing a classic signal of a higher bid, but we are usually the first to admit that anything is possible.  The Community Health deal (CYH) values the company at $54.00, although that may be a tad less because of the 4% drop in CYH shares even though this is a cash deal. 

We don’t want to play the guessing game here, but it is hard to not notice that the MAY $55 CALLS in Triad are only priced at $0.15.  A $55.00 offer would only be just under 2% higher than the new cvash bid of $54 so it sure looks like the options traders are not bracing for a significantly higher bid.  Father time will probably be both the judge and the jury here.

Jon C. Ogg
March 19, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 19, 2007 – 1:35 pm in Bait Shop, Medical, Mergers and Buy Outs, Shareholder Issues

Sirius-XM Brace for More Hearings Tuesday (XMSR, SIRI)

The Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights has a scheduled hearing on “The XM-Sirius Merger: Monopoly or Competition from New Technologies” for Tuesday, March 20, 2007 at 2:15 p.m. in Room 226 of the Senate Dirksen Office Building.  Chairman Kohl will preside. 

Obviously, these hearings can greatly affect the perception on both XM Satellite Radio (XMSR) and Sirius Satellite Radio (SIRI); and this is after some committee meetings in the House of Representatives.  Before you read further, please understand that there is still one "stances and positions" we are still awaiting and this is somewhat incomplete as a result.  We have our own opinions on this and we have noted in the past that the deal seems more likely to be approved with some severe conditions attached, and we have also noted that the companies both need the deal to be completed for them to both have ready access to more liquidity and to the capital markets.  That is our opinion ahead of time, but we obviously cannot say what the real outcome will be and won’t try to guess what the formal votes are or how long it will take to secure the votes.

Hearing before the Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights on “The XM-Sirius Merger: Monopoly or Competition from New Technologies.”  Those acting as witnesses are the following:

Mel Karmazin, Chief Executive Officer, Sirius Satellite Radio
New York, NY (Mel K. is obviously FOR the merger)

Mary Quass, President and CEO, NRG Media, LLC
Cedar Rapids, IA (NRG Media consists of 84 radio stations throughout 7 states in the Midwest and the Waitt Radio Network, based out of Omaha, Nebraska; ranked as 7th largest radio network in US; she represents the NAB which is "very strongly opposed to the merger.")

David Balto, Attorney at Law, Law Office of David Balto
Washington, DC (antitrust lawyer who was policy director of the Federal Trade Commission during the Clinton administration; formal opinion or stance not known/confirmed)

Gigi B. Sohn, President, Public Knowledge
Washington, DC (advocacy group that previously told the HOUSE COMMITTEE the merger should be approved subject to Three Conditions: new company makes available pricing choices such as a la carte or tiered programming; new company makes 5% of its capacity available to non-commercial educational and informational programming over which it has no editorial control; new company agrees not to raise prices for three years after the merger is approved)

If there are any updated positions or more public opinion made available before the hearing, we will make an update to this article.  This will be another big day for the XM-Sirius merger investors either way and it could further set the tone of how Wall Street is going to treat the companies: 1) as a combined entity or 2) as struggling competitors.  We will follow-up with more details when they are known, but they might not be known until after the meeting tomorrow.  With the market up today, XMSR is up 1.7% at $13.39 and SIRI is up 1.3% at $3.28.

Jon C. Ogg
March 19, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 19, 2007 – 12:39 pm in Bait Shop, Consumer Electronics, Internet, Media, Mergers and Buy Outs, Old Media, Regulation, Satellite, Technology Companies

PNCL: More Growth Plans for Pinnacle

By William Trent, CFA of Stock Market Beat

Small Cap Watch List member Pinnacle Airlines (PNCL) announced the following in an 8k Filing:

Bombardier Aerospace announced today that Pinnacle Airlines Corp. of Memphis, Tenn. has signed a contract to acquire 15 Bombardier Q400 74-seat turboprop airliners. The transaction also includes conditional orders for another 10 Q400 aircraft and options on an additional 20.The value of the 15 firm ordered aircraft, based on the list price of the Q400 aircraft, is approximately $381 million US. The value could rise to $1.2 billion US if all conditional orders and options are exercised.

Pinnacle typically operates under a fairly safe business model under which it leases most of its capacity to major carriers for whom it provides regional connections. Still, there are some residual risks and capacity additions always bring further risk of excess supply. But even though risks remain, the business model is one of the safest in the airline industry.

http://www.stockmarketbeat.com/

Posted on: March 19, 2007 – 12:34 pm in Research

In Like a Bear, Out Like a Bull?

From Ticker Sense

While we have all heard the phrase how March comes in like a lamb and out like a lion, we wondered if the phrase had any application to the stock market. Namely, if March comes in like a bear, does it go out like a bull, or vice versa? In terms of the current market, since the S&P 500 was down in the first half of March (came in like a bear), will it go up in the second half (out like a bull)?

In the chart below, we plotted the performance of the S&P 500 in the first half of March (3/1-3/16) versus its performance in the second half (3/16 – 3/31). If the above saying had any relevance we would expect to see most of the dots in the upper left and lower right quadrants. As results show, there is some relevance to the saying in terms of the market’s performance. However, we would caution that in the 67 years we looked at, the direction of returns in the first half of March differed from the returns of the second half in 57% of the periods we looked at. So while the results do support gains in the second half of the month, the argument is not overly compelling.

March_bull_bear

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

Posted on: March 19, 2007 – 12:33 pm in Research

Consecutive Up Days

From Ticker Sense

Novell, Inc. (NOVL) is currently the only stock in the S&P 500 that has been up at least 5 days in a row.  In the last four years, NOVL has been up 5 days in a row 11 times and has gone up the 6th day just twice.  The average price change for NOVL on day six following 5 consecutive up days is -2.06%.

Updays

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

Posted on: March 19, 2007 – 12:32 pm in Research

Same Reports, Two Different Takes

From Ticker Sense

New Inflation Fears Cap a Rocky Week” – New York Times 3/18/07

“Upbeat Outlook for US Inflation” – Financial Times 3/17/07

When investors get caught up in the tick by tick minutiae of the market, one suggestion often given is to take a step back and look at the data from an outsider’s viewpoint.  With that in mind, we found that the pair of headlines regarding February’s CPI report were interesting.

One headline, from The New York Times, interpreted the report as showing signs that inflation was starting to pick up again.  The article stated that Friday’s CPI report, "alarmed many investors in advance of this week’s Federal Reserve meeting on interest rates."

The other headline came from across the Atlantic in The Financial Times.  It took the opposite view and interpreted the report as positive for the inflation outlook. It went on to say, "The Federal Reserve is likely to welcome the cooling of underlying price pressures…"

Which article is right?  Only time will tell, but for now we’ll go with the outsiders view.

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

Posted on: March 19, 2007 – 12:30 pm in Economy