Daily Archives: March 22, 2007

S&P Plays Down the NBC & News Corp Online Video Venture

Standard&Poor’s Equity Research came out with a cautious note late in the day about today’s new web video pact, and it is worth a consideration. Even if the information may be more opinion-driven out of S&P and may or may not be more accurate down the road, they are at least absent from most of the inherent conflict of interest that exits on Wall Street.

S&P reiterated its HOLD (3 star) rating on Google (GOOG).  The research noted that a number of media and Internet companies plan to create a premium online video website, in our view seeking to compete with Google’s YouTube. News Corp. (NWS) and General Electric’s (GE) NBC Universal unit will offer TV and movie content, and distribution will be by Time arner’s (TWX) AOL, Microsoft’s (MSFT) MSN, News Corp’s (NWS) MySpace and Yahoo! (YHOO) that will cover something to the tune of 96% of monthly unique U.S. Internet users. While S&P thinks this planned venture has prominent constituents and has considerable assets and advertisers, S&P is skeptical about its prospects because multiple backers with potentially divergent agendas and priorities.  In short, the "partners" are all fierce competitors on everything else.

S&P did maintain its BUY rating (4 Stars) on News Corp (NWS).  S&P noted that after Viacom’s (VIA) $1 Billion suit against Google’s YouTube, that it would not be surprised if more mainstream content providers align with the potential rival site.  S&P still thinks it is early to say whether the venture could challenge entrenched sites, even with the strength of distribution partners like AOL, MSN, MySpace, Yahoo!, and its five top advertisers.

I actually have "some" conflicted feelings of my own here on this issue.  YouTube is still more "user generated content" as far as how the street perceives it.  Google wants that to change, but it won’t come easy.  The NBC-News Corp venture today is a huge one, but it really looks more like studio production content is they key focus.  If the "user generated" model can be monetized then it may become much more of a focus.  I have my own thoughts about some of the web advertising versus the normal television advertising, but in a web-only environment that concern or thought may not even be worth the electricity. 

Either way, it sure looks like the battle has more room to heat up.

Jon C. Ogg
March 22, 2007

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

Posted on: March 22, 2007 – 6:30 pm in Analyst Calls, Internet, Research

Cramer’s SELL BLOCK (MAR 22, 2007)

On CNBC’s MAD MONEY tonight, Cramer featured his SELL BLOCK where he gives his sell or hold calls.

Cramer said on Blockbuster (BBI) that Icahn screwed up getting rid of Antioco and Icahn isn’t the one that ran the stock up 100%.  He is more comfortable taking profits now.

Cramer said to take "some" profits on GSI Commerce (GSIC) after the big run and after the Goldman Sachs upgrade ran the stock. That was his stealthy ecommerce play in December.

On Motorola (MOT), he said he has disliked it over and over lately.  He thinks it will be bad for Nokia (NOK) as well, and he thinks it is time to sell NOK as well.  If MOT slashes prices a lot, it can really hurt all the cell phone makers.

Jon C. Ogg
March 22, 2007

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

Posted on: March 22, 2007 – 5:52 pm in Cramer

Everlast Raising Cash to Shore Up Balance Sheet

Everlast (EVST-NASDAQ), the boxing and fitness company (and cult stock), has filed to sell up to $33 million worth of stock for both the company and for holders via Piper Jaffray (before the overallotment).  It will pay back $21 million of its $25 million four-year senior term facility, repay $2.3 million on a mortgage for its Missouri manufacturing facility, repay $7 million under a factoring agreement, and use the rest for working capital.

Its current market cap is roughly $83 million, so this is dilutive if you just take it at face value.  If you delve farther into the company balance sheet you will see that this actually shores up the balance sheet and brings the debt down basically to normal current operating liabilities with what will be close to no long-term debt.  If it can manage to grow its cash a bit and add a little more onto its cash positions then this will be fairly hard not to look at as a win-win scenario.

Usually shares sell off whenever there is a large offering like this that hits the tape, but this may give newer investors that have been waiting for a reason to own it a chance to get in.  That won’t be any comfort if there is a big drop after the filing tonight, but this may end up getting some buzz back into the stock after it raised 2007 guidance last month. 

The company has had impressive growth from 2004 to 2006.  Its shares are up almost 100% from its 52-week lows and up more than 4-fold from its lows about 18 montsh ago.  It closed today up 1.9% at $20.37 and its 52-week range is $11.05 to $21.82.  As a reminder, microcaps often act much different compared to other stocks on secondary offerings and this has seen no real after-hours activity.  This only traded 15,795 shares today.

Jon C. Ogg
March 22, 2007

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

Posted on: March 22, 2007 – 5:29 pm in Secondary Offering

Cramer’s Risky Water Stock

Cramer on tonight’s MAD MONEY on CNBC said he got stumped on a question about water holdings when he was at UT in Texas.  He has a stock now called Pico Holdings (PICO-NASDAQ) that could be a winner.  He said he will not endorse it though because it is very small and very thin.  They hold water rights in Arizona.

This one actually holds other investments as well that has rallied 300% in the last few years.  Its water resource and storage unit is the main one that resells water and they are not a regulated water utility; it finished a 35-mile water pipeline last year; it holds real estate and insurance as well.  It priced a secondary at $37.50 earlier in the month and he thinks it can go higher, but because it is so small Cramer says it is very risky and it is only followed by 1 analyst.  Cramer thinks it could be a sleeping giant or it could stay dormant for years and years, so he reminds about the risk.

PICO traded up 3% to almost $45.00 after closing up 2% at $43.61.

Jon C. Ogg
March 22, 2007

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

Posted on: March 22, 2007 – 5:23 pm in Cramer, Water

Cramer on Telecom

Cramer on tonight’s MAD MONEY on CNBC was discussing the upcoming huge federal government telecom contract worth $20 Billion out of the federal government.  Some place this worth up to $50 Billion total over a 10-year period.

AT&T (T) and Verizon (VZ) would both do well, but the companies are so large that they would hardly tick a couple percent.  As far as Sprint (S), Cramer thinks this would help more.  Unfortunately he doesn’t think it is a huge mover and it still has a cloud.

On Qwest (Q), Cramer thinks this one has been under a cloud because of the Nacchio trial.  But Qwest is the one that would gain the most and it could have a gigantic move if they win a large part of it.  Cramer thinsk the comapny has turned around on its own and may even beat numbers without the government contract.

Standard & Poor’s issued its own report on this yesterday.  The contract is under the name "Networx" and S&P says that it believes Qwest will likely win a smaller piece of the pie compared to AT&T and Verizon’s share of the contract.  S&P thinks that Verizon and AT&T are the most promising contenders.

Jon C. Ogg
March 22, 2007

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

Posted on: March 22, 2007 – 5:13 pm in Cramer, Telecom

3Com Wins Approval for its Huawei J-V Acquisition (and reports earnings)

3Com (COMS-NASDAQ) announced the receipt of final approval from the People’s Republic of China for 3Com to acquire Huawei Technologies’ 49 percent stake in H3C for $882 million. 3Com, which won the right to acquire the remaining stake in H3C through a bidding process that ended on November 28, 2006, anticipates the deal will officially close on or about March 29, 2007. 3Com intends to use approximately $470 million of cash from its balance sheet and approximately $430 million from a senior secured bank loan at its H3C segment.

3Com ended the quarter with $956M in cash and equivalents. The net increase of $88M from the balance at the end of the previous quarter was driven by positive cash from operations.  So teh good news is that the company is NOT going to Zero Out its cash balance, which gives investors extra hope.  It is also lightly growing its TippingPoint security revenues up 10% sequentially to $25 million.

Revenues hit $323 million; GAAP loss was -$0.01 EPS (-$9M) and non-GAAP was actually positive income for the second quarter at $10M. Revenue estimates were $329 million.

There is still some mixed news and this one is still going to be a battleground.  The Bad: The revenues were a tad light on the surface.  The Good: revenues weren’t so light that the doomsday crowd can point to an imminent death and the company can probably account for some of its other revenue wind downs as part of it.  The other good news is that the company is showing that it won’t really zero out their cash, and that was actually a concern that the bears could point to.

This was one we previously noted where management might not be able to fix the company.  Unfortunately it is still an unknown, and will probably be that way for a while longer.  If they announce a new partner or get a big infusion after the H3C deal closes then they have that much more to go on. 

COMS closed Down 2% to $3.79 today, and shares are at $3.82 atfer-hours.  This report and approval is not the sort of news that will run a stock very much on the surface, but there is enough here that the optimists could make a case to run the shares up.  Unfortunately, we already said the verdict is going to be out for a while.

Jon C. Ogg
March 22, 2007

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

Posted on: March 22, 2007 – 3:50 pm in Earnings, Technology Companies

Nike Just Did It

Nike (NKE) posted $3.9 Billion revenues (up 9%, but 3% was from currency adjustments) and posted EPS of $1.37 (up 10% from last year); estimates were $3.93 Billion and $1.33 EPS.  Gross margins were 44.2% during the third quarter compared to 43.6% year ago.

Mark Parker, Nike, Inc. president and chief executive officer (consolidated): "We had a strong third quarter. Our mix of compelling product and premium consumer experiences drove a meaningful acceleration of futures orders.  We continue to grow because we’re innovative, disciplined, and connected to our consumers."

Worldwide futures orders for athletic footwear and apparel, scheduled for delivery from March 2007 through July 2007, totaling $6.0 billion, 9 percent higher than such orders reported for the same period last year (currency adjustments helped that by 1%). 

We’ll have to see about the guidance, but shares have traded up 2% to more than $110.50 after closing down 0.25% at $108.60 on the day.  The 52-week range is $75.52 to $110.10.  So if the after-hours holds, this will be a new high on the name.

Jon C. Ogg
March 22, 2007

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

Posted on: March 22, 2007 – 3:31 pm in Earnings

Budweiser the King of Beers, maybe its the King of Stocks?

From The Stock Masters

Anheuser-Busch Companies, Inc. (NYSE:BUD) has been getting plenty of good attention lately including upgrades and being added to Warren Buffett’s portfolio just before the start of the year. You know if the Godfather of investing is picking up BUD, it’s got to be worth looking at. Cramer has hounded BUD for years and with the stock trading near its 52-week high it would appear they could do no wrong.

Just after Warren picked up his shares BUD, Anheuser-Busch received two upgrades in January and two this month. It’s even on the China bandwagon with BUD to double the number of ChiHomer loves BUDnese cities where it sells its products, all the way up to 100 municipalities over the next five years. Beer is cool. A.G. Edwards upgraded BUD and said "Budweiser is showing gains in volume growth and marketing while buying back stock." I bet Homer Simpson would upgrade BUD shares if he were a Wall Street analyst. If only Homer could drink a Bud, he’d never touch Duff again. Even Homer can understand the benefit of buying a solid brand name like Budweiser. No matter how bad times get in America, people will always drink beer. In 2006 BUD sold 102 million barrels of beer in the U.S. and 22.7 million internationally. They report solid revenue every year and brought in $15.7B in 2006 and $15B in 2005.. They make the best commercials every Superbowl and more importantly, they can afford to buy the ad time during the whole game. So with shares trading near the 52-week high, why would you care about buying? During times of crisis and market despair, Beer is King, and who’s the King of Beers? You get the point. Hmmm, Beer.

If you are concerned the stock market is going to keep getting worse or a recession is on hand, BUD is your stock. Take it from Homer:
Homer and BUDBeer… Now there’s a temporary solution.
You can even use Homer’s beer advice for help with those awkward father-son talks:
Bart, a woman is like beer. They look good, they smell good, and you’d step over your own mother just to get one!

Beer is the answer to all of man’s problems and it may be the cure if your stocks have taken a beating in recent weeks. But don’t listen to us, Christopher R. Growe from A.G. Edwards said BUD is poised for growth and it’s stock price is "cheap". Growe boosted his rating on the maker of Budweiser and Michelob to "Buy," from "Hold," pointing to a turnaround in fundamentals in the last nine months. He noted a recent run up in the stock price after rumors surfaced about a possible buyout, but discounted that possibility. Now that those rumors have subsided (like the head on a beer after it’s poured), Growe said: "the exuberance has clearly dissipated and the stock is back down to what we consider ‘cheap’ levels given the improved growth profile we foresee here." Let’s also keep in mind Christopher R. Growe worked at Anheuser-Busch for three years, so he may be playing for the home team, but still, perhaps that makes his analysis even more credible. Growe also said: "We look at improved volume growth trends as one of the alluring features here," he wrote, citing the recent acquisition of Rolling Rock and deals regarding imports and distribution of other beverages. "A very solid year of activity in A Toast by Homer our opinion and one that should help support improved volume growth alongside improved core brand performance following increased marketing investments and more ‘feet-on-the-street’." He also pointed to international growth, particularly in China, as a catalyst for Anheuser. Ah, another reason to toast when drinking beer, "To China and to Alcohol!"

Shares of BUD may be trading close to it’s 52-week high at around $50 per share, but like a good beer, its worth paying for the good stuff. Last month, Anheuser-Busch reported profit rose 31% in the fourth quarter on renewed growth in domestic beer sales. In the past few months, BUD reached import alliances with InBev, Grolsch, Kirin, Tiger and the Czechvar brand. It also bought the Rolling Rock brands and introduced its own internally developed specialty brands. This Bud Light ad says it all…
Bud Light - What more do you need?
What more can I say after that, I’m thirsty for a Bud.

Article written by: Frank Lara Jr.
Article posted on: March 22nd, 2007

http://thestockmasters.com/index.asp

Posted on: March 22, 2007 – 3:29 pm in Consumer Goods

Commentary From The Stock Masters 3/22/2007

Micron Technology (MU) shares have fallen over 33% in the last six months. Shares of Micron are in the $11 range and flirt with a new 52-week low on a daily basis. It’s no surprise though considering the flash memory sector is hurting, just look at SanDisk (SNDK). Micron is to Boise, ID like Boeing (BA) is to Seattle, WA.
Micron got an Upgrade on March 12th by Citigroup Investment with the expectation that DRAM prices will stop falling soon. They decreased the stock’s 52-week price target to $15.50 per share from $17.50 per share. Micron has been around since 1978 and they manufacture & market DRAM, Flash memory, CMOS image sensors, other semiconductor components, and memory modules. Think they can pull out of their slump? Might be worth thinking about.

Stock Tips Look at the Rack go! Rackable Systems (RACK) shares are up 9% today. There is a rumor that Sun Microsystems (SUNW) is looking to buy them but that is unconfirmed and could be just as much hype as yesterday’s CNBC Exclusive interview with the unnamed Palm Shareholder (Mr. Secret Club Guy).
By the way, have you checked out Palm today (PALM)? Shares are down almost 9% but don’t worry, I’m sure that buyer is coming any minute, just tune into CNBC. Back to Rackable…
They did make news today and hired a new Executive Vice-President, Carl Boisvert who has more than 20 years of leadership within the server market. This is great news for Rackable considering their stock price has dropped 40% in the last three months. Their stock is still trading miles away from its 52-week high of $56. Shares of RACK are trading at just under $18 today. Rackable is a promising company with a great product. They are a trendsetter with their open architecture server designs and low cost server solutions. Just to let you know their clients include Amazon.com (AMZN), Yahoo! (YHOO), Electronic Arts (ERTS), and many more. Rackable is here to stay.

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

Read More »

Posted on: March 22, 2007 – 3:27 pm in Research

The 52-Week Low Club, Motorola Joins

Motorola (MOT) Bad forecast. Down to $17.45 from 52-week high of $26.30.

Warner Music Group (WMG) News that CD sales are in free fall. Stock drops to $16.34 against 52-week high of $31.00.

US Auto Parts (PRTS) Still dropping due to weak Q1 forecast. Off to $6.26 from 52-week high of $12.61.

CV Therapeutics (CVTX) Can’t recover from the poor FDA reports on its coronary treatmen. Down to $8.79 from 52-week high of $23.47.

Spectrum Brands (SP) Still falling after announcing restructuring of debt facility. Down to $5.51 from 52-week high of $22.14.

Douglas A. McIntyre

Posted on: March 22, 2007 – 3:21 pm in HI/LOW

Dendreon’s Stock Activity

Dendreon (DNDN-NASDAQ) started making a mystery move at the end of the day, but you have to look at its calendar to see why it moved.  It appears that the company has an FDA ADVISORY COMMITTEE review next week and it is seeking approval for a cancer vaccine Provenge for the treatment of prostate cancer.  Does someone know something?  Most likely not, but that won’t keep traders from speculating with cash.

The $320 million market cap makes this one a microcap, and these are the most volatile going into "FDA" events.  It closed up roughly 6% at $3.95 today, and its 52-week trading range is $3.57 to $5.77.  Over the last 5 years the shares have been as high as $15.00 and as low as $2.00.  This is nearly a "biotech zombie" because they have no products on market and do virtually no revenues.  It has been public since 2000.

If DNDN gets its vaccine approved this could be a major win for the company, and if not then you will have to use the net cash after liabilities and back out another 6 to 12 months of cash burn to try to figure out a floor.  That would be over $60 million in net liquidity plus another $40 million to $50 million in longer-term assets as of 12/31/06.  It has been burning roughly $100 million in R&D and general expenses, so you’d have to try to predict what the company would do with its R&D expenses if this was snubbed to determine the value.  So this is make or break for the company.  You can find as many believers as you can doubters, so we won’t even make a guess on trying to predict the FDA outcome on such an unknown event.  The issue on evaluating the cash and liquidity is that it has a large shelf filing of $146 million pending, which can be another wildcard.

DNDN is a battleground stock with about 16.8 million of its 71 million share float listed in the short interest as of February.  It also has some major open interest in the options for MAY CALLS: 16,984 for the MAY $2.50; 46,735 contracts for the MAY $5.00; 30,100 for teh MAY $7.50; and 32,716 for the MAY $12.50.  The PUT OPTIONS are large too with 33,119 contracts open in the MAY $2.50 PUTS and 16,028 in the MAY $5.00 PUTS; another 10 contracts between the MAY $7.50 and $10.00 PUTS are there.  So this still leaves more than 70,000 contracts open for the stock on a net-net basis for MAY alone.  There are another 50,000 contracts open in AUG.

Jon C. Ogg
March 22, 2007

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

Posted on: March 22, 2007 – 3:21 pm in Biotech, FDA

Cramer Positive on Metals

On today’s STOP TRADING segment on CNBC, Cramer noted General Mills (GIS-NYSE): he said the CEO is good and money in the bank.  Cramer said the cost of corn in the ethanol joke is driving up food production prices.  This is acting as a tax on the poor according to Cramer.

Cramer also noted the ongoing bull market in hardening metals.  As far as the Raytheon downgrade today, he thinks that the call really just means it is the worst of the best and he thinks the sector is still better than many others.  Yamana (AUY) was downgraded today too, but Cramer thinks it’s the best gold name out there.

Jon C. Ogg
March 22, 2007

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

Posted on: March 22, 2007 – 1:48 pm in Cramer

Net Neutrality Gets A Police Force

The FCC wants to make sure that broadband wireless, cable, and telecom companies treat all internet users the same. Two of the agency commissioners said "they thought the FCC should act now to take action on the issue of net neutrality, rather than simply conduct an inquiry into the matter", according to The Wall Street Journal.

This won’t make the issue go away. Cable and telecom companies continue to have an argument that websites and consumers who use more bandwidth should pay for the privilege. YouTube (GOOG) stands as the best example of a large website that hogs broadband pipes. Video takes up more than its fair share of broadband infrastructure, particularly compared to applications like e-mail.

The FCC wants to protect consumers, which may be fair enough. The larger issue is whether the broadband service giants like Comcast (CMCSA) and Verizon (VZ) can convince Congress and the FCC that large web companies should pay for part of the services from which they profit, and profit at the expense of the of cable and telecom folks. Of course, then there is the issue of whether the websites try to pass it on to consumers. Some one has to foot the bill.

That fight is not done yet.

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

Posted on: March 22, 2007 – 1:30 pm in Internet

Oracle Zaps SAP

Oracle (ORCL-NASDAQ) has filed a multi-headed lawsuit against SAP (SAP-NYSE/ADR), its oldest independent pure-play competitor.  It accuses SAP of stealing potentially thousands of copyrighted software items and other confidential trade secrets and materials, so go ahead and throw in corporate espionage as well.

On March 22, 2007, Oracle filed a lawsuit in U.S. Federal District Court in the Northern District of California against SAP. Among the claims made against SAP are violations of the Federal Computer Fraud and Abuse Act and California Computer Data Access and Fraud Act, Unfair Competition, Intentional and Negligent Interference with Prospective Economic Advantage and Civil Conspiracy.

Here is the full PDF link to the formal complaint out of Oracle.

More likely than not, you can expect either a countersuit or counterclaims or at least formal complaints to be filed in short order by SAP representatives.  At least that is what usually happens.  With all of the companies that Oracle has acquired it is probably not even possible to guess how many trade secrets have walked out the door in recent years.

SAP is now down almost 1% on the day at $45.95 (year low is $43.30) and ORCL is still up 1.5% at $18.45 (year high is $19.75).

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

Jon C. Ogg
March 22, 2007

Posted on: March 22, 2007 – 1:24 pm in Law, Software

Motorola Earnings Warning Highlights Failure to Find Next Hit After RAZR

From Chad Brand at Peridot Capitalist

Shares of Motorola (MOT) are getting smacked in pre-market trading after the mobile phone giant shocked Wall Street yesterday by forecasting a first quarter loss. After having failed to find another hit after the wildly popular RAZR phone, rumors are swirling that Motorola may buy handheld maker Palm (PALM) to boost its product offering. As you can see from the chart below, shares of MOT are nearing multi-year lows.

Mot

Is it worth it to bargain hunt in this stock? After all, shareholder activist Carl Icahn recently purchased a stake in the company and his calls for increasing shareholder payouts in the form of dividends and buybacks will likely only get louder with yesterday’s announcement.

Motorola has always had a ton of cash on its balance sheet and that is still the case. After netting out $4.4 billion in debt as of December 31st, the company has $12.3 in cash. That equates to a stunning $5 per share (Motorola is indicated to trade at $17 and change at the open this morning). With trailing earnings of $1.19 in 2006, MOT shares are pretty cheap.

That said, given how hard the cell phone business is, perhaps Motorola deserves a below-market multiple during tough times. After all, exciting new products aren’t right around the corner, and if they go ahead with an acquisition of Palm, it’s hard to think Wall Street will be drooling over the move.

Although shares of Motorola are down significantly, I probably wouldn’t want to step in yet. As you can see from the chart, the stock got down to the $14-$15 area the last time the company hit hard times. If we got back down to those types of levels, I would be more inclined to bargain hunt in the name.

Full Disclosure: No positions in the companies mentioned at the time of writing

http://www.peridotcapitalist.com/

Posted on: March 22, 2007 – 12:36 pm in Wireless

INTU: We’ve Got Intuit-ion

By William Trent, CFA of Stock Market Beat

We recently said that “As we have pointed out before, Intuit’s (INTU) stock price is highly seasonal.  It goes up in anticipation of tax season, but “sells on the news” while tax season is actually here. The confusion around…     earnings and all the buying and selling is simply part of the overall process – Intuit getting cheaper during tax season, possibly presenting an opportunity to buy shares with your refund in April.”
The latest news is yet another example. Intuit 2006 TurboTax Sales Up 1 Percent:

Personal finance and business software maker Intuit Inc. said Wednesday sales of its TurboTax software for the 2006 tax period have increased 1 percent from the same period last year.

The period includes sales of TurboTax software since the launch of the 2006 version, released in late November, through March 17, 2007.The company also said it continues to expect TurboTax unit sales growth of 3 percent to 5 percent for the full season, and backed a February forecast for full-year earnings of $1.10 per share to $1.14 per share, or $1.33 to $1.37 per share on an adjusted basis, on $2.63 billion to $2.68 billion in revenue.

Analysts expect average earnings of $1.37 per share on $2.66 billion in revenue, according to a Thomson Financial survey. Analysts typically exclude charges in their estimates.

Sales since November are up 1%, but the company expects sales for the full season – ending in less than a month – to be up 3-5%? We know people procrastinate on their taxes, but didn’t they procrastinate last year as well? By sticking to the previous guidance, Intuit is saying people are significantly more likely to procrastinate this year than they were last year.

And even with the implausible guidance, consensus estimates were at the high end of management’s range. No wonder the shares are down after hours. For those procrastinators out there, however, it’s time to file your taxes. If you’re getting a refund it should arrive just as the stock is bottoming.

http://www.stockmarketbeat.com/

Posted on: March 22, 2007 – 12:32 pm in Software

CTR: Cato Earnings Outlook Difficult

By William Trent, CFA of Stock Market Beat

Small Cap Watch List and Mid Cap Watch List member Cato Corporation (CTR) reported earnings of $0.40 for the fourth quarter and $1.62 for the full year on $862.8 million in sales. While the EPS results compare favorably to consensus estimates of $0.36 for the quarter and $1.57 for the year, management notes that the company benefitted from several one-time items – not the least of which being an extra week of sales:

Similar to other retailers that use the National Retail Federation 4-5-4 calendar, the Company’s fiscal year 2006 included 53 weeks as compared to 52 weeks in 2005. During the year the Company received an insurance settlement related to hurricanes in the southeast in 2005 and a settlement related to excess credit card service fees the Company paid over a number of years. The after-tax effect of these items was an additional $3.0 million in net income or $.10 per diluted share.

Seen in context, then, the results look like a “miss,” particularly when the consensus revenue estimate of $870 million for the year is factored in. Guidance falls short of the $1.68 currently expected by analysts:

Due to the one-time items noted above and a return to a 52-week year, the Company expects 2007 to be a more challenging year for earnings growth. The Company estimates that 2007 net income will be in a range of $51.5 million to $53.3 million, a flat to 3.5% increase over 2006, or $1.60 to $1.66 per diluted share. This estimate reflects a 1% to 3% comparable store sales increase over 2006.

The company expects to open 90 new stores this year and close 15 existing ones. The latter number appears oddly specific given that “at this time, no stores have been identified for closure.” We say if they can’t figure out which stores are doing so poorly they need to be closed it’s no wonder the company is missing earnings.

http://www.stockmarketbeat.com/

Posted on: March 22, 2007 – 12:29 pm in Earnings

S&P 10-Day Advance/Decline Line

Although the S&P 500 has yet to take out the old highs, the 10-day Advance/Decline line for the Index has moved into overbought territory by our measures.

Spx322_2   

Financials, Capital Goods, Health Care and Utilities are also registering as overbought based on their 10-day A/D lines.

Adline322

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

Posted on: March 22, 2007 – 12:27 pm in Research

Largest $ Movers of Note – StreetInsider.com – 03/22/2007

UPWARD MOVERS:
Adams Respiratory Therapeutics (Nasdaq: ARXT) +$5.20; Entered into a settlement agreement with Mutual Pharmaceutical Co. and United Research Laboratories, Inc., both wholly owned subsidiaries of Pharmaceutical Holdings

Chattem (Nasdaq: CHTT) +$4.60; Reports Q1 earnings of $0.71 per share, above the consensus of $0.61. Revenues came in at $100.8 million versus the consensus of $101 million. Sees FY07 EPS of $2.71-$2.96 versus prior guidance of of $2.66-$2.91 and the consensus of $2.76.

IHS (NYSE: IHS) +$4.14; Reports Q1 adj-EPS of $0.38, 3 cents better than estimates.(0.35) Revenues were $152.6 million vs. $147.96 million consensus. IHS revises guidance upwards to revenue growth in the range of 11 to 13 percent and adjusted EBITDA growth in the range of 18 to 22 percent for the full year ending November 30, 2007.

Marathon Oil Corp. (NYSE: MRO) +$3.66; Stock seeing interest on higher than normal volume. No specific news releases attributed to today’s move.

Orient-Express Hotels Ltd. (NYSE: OEH) +$3.07; Stock up on rumors the company may be the target of a takeover with a buyout price of $3 billion.

DOWNWARD MOVERS:
Scholastic Corp (NASDAQ: SCHL) -$4.97; Reports a Q3 loss of $0.18 (including $0.04 gain on the sale of an investment) vs. consensus for a loss of $0.08. Revenues were $497.0 million vs. $498.56 million consensus. Based on lower than expected results in Continuities in the third quarter, and the revised outlook for this business in the fourth quarter, the Company now expects full year earnings in the range of $1.40 to $1.60 per diluted share on revenues of $2.1 to $2.2 billion. (Current FY07 EPS consensus is $1.74 and revenue consensus is $2.19 billion)

Herman Miller (Nasdaq: MLHR) -$4.36; Reports Q3 EPS of $0.50, 2 cents worse than estimates.(0.52) Revenues were $484.8 million vs. $491.41 million consensus. Sees Q4 EPS of $0.47-$0.51, versus the consensus of $0.52. Sees Q4 revenues of $485-$505 million versus the consensus of $491.4 million.

CRA International (Nasdaq: CRAI) -$3.51; Reports Q1 earnings of $0.56 per share, 1 cent worse than estimates. Revenues came in at $83.3 million versus the consensus of $86.2 million.

CLARCOR (NYSE: CLC) -$3.31; Reports Q1 EPS of $0.32, 4 cents worse than estimates.(0.36) Revenues were $209.5 million vs. $222.04 million consensus. Reaffirms FY forecast.

Deere & Co. (NYSE: DE) -$2.77; UBS downgrades Deere from Buy to Neutral.

http://www.streetinsider.com/index.php

Posted on: March 22, 2007 – 12:24 pm in Research

Ramifications of a NBC & News Corp Online Video Pact

This morning, Doug ran an article discussing some of the inherent problems that could come out of the new video services aimed at competing against Google’s (GOOG-NASDAQ) YouTube.  General Electric’s (GE-NYSE) and News Corp (NWS-NYSE) have confirmed a joint venture here.

This is under Jeff Zucker of the NBC Universal unit of GE and Peter Chernin of News Corp.  This will debut in summer, but the announcement is more potent than may have originally been thought.  AOL of Time Warner (TWX-NYSE), MSN of Microsoft (MSFT-NASDAQ), MySpace of NewsCorp (NWS-NYSE) and Yahoo! (YHOO-NASDAQ) will be the new site’s initial distribution partners and the charter advertisers include Cadbury Schweppes, Cisco, Esurance, Intel Corporation and General Motors.

One thing to consider is that a lot of this is ALREADY available, albeit maybe not as robust as the lineup that will be available.  But this will essentially now be made available under a centralized location.   

An odd twist will be that also may bring the new upcoming Fox Business News channel that News Corp is launching right up against NBC’s CNBC unit.  Who knows for sure, because however this is presented today history has dictated time after time that the end product and end offerings will end up looking much different than at the time of the announcements.

The long-haul broadband carriers and downstream storage players have to be licking their chops, let alone some of the equipment makers.  Akamai Tech (AKAM-NASDAQ) already brings the video storage further downstream and closer to end-users for many of the partners in this deal.  Level 3 (LVLT-NASDAQ) already has a long-haul contract with YouTube that was assumed by Google (GOOG-NASDAQ), although the terms and timeframe are unknown since that agreement was made last year and since Google has bought so much of its own capacity out there.  Apple’s (AAPL-NASDAQ)  Apple TV set-top box probably couldn’t have been shipped at a more appropriate time and NVIDIA (NVDA-NASDAQ) is probably hoping it gets to sell many more higher end GeForce graphic cards.   

It is pretty hard not to notice that CBS (CBS-NYSE) and Viacom (VIA-NYSE) are not in the deal, but it’s assumed that because two or more media companies partner up it doesn’t mean they ALL want to partner up with everyone.  This might make Viacom reconsider that suit against Google (GOOG) to head for more of a straight partnership in light of this development.  Viacom told reuters in a statement that it welcomes the venture because of the respect it will give for copyright protection.

Jon C. Ogg
March 22, 2007

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

Posted on: March 22, 2007 – 11:54 am in Consumer Electronics, Internet, Media, Old Media, PC Companies, Semiconductor, Software, Technology Companies, Wireless