Daily Archives: April 16, 2007

Microsoft Directory Assistance: The Best Things In Life Are Free

Microsoft (MSFT) has never been much on giving things away. But, its new voice recognition acquisition, TellMe, is going to begin offering voice recognition directory assistance. For free. That’s right.

The theory over at the FT is that 411 will not longer be a service that is charged for by call. Over time, it will be advertising supported. And, those ads will run on your home phone, your cell phone, and your shoe phone. For the time being: "Angus Davis, one of Tellme’s founders, said his company would operate its service without advertising while it tried to perfect the user experience."

No one should be surprised that Google (GOOG) began offering free 411 service within the last couple of weeks. The media has been impressed with the results.

Google offers most of its services for free. It is so successful in the search text-based advertising business that it can test a number of other products and apparently feels no pressure to make money on these, for now.

Microsoft, on the other hand, charges for everything from its OS to its MP3 player. But, it has not done terribly well for its shareholders. While Google’s stock is up over 150% in the last two years, Microsoft’s has only risen about 18%, less than the S&P.

If the world’s largest software company would give away more of its products , perhaps its shares would perform as well as Google’s.

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

Posted on: April 16, 2007 – 8:06 pm in Telecom

Nokia: The WiMax Craze Takes Off

For a long time investors and consumers could only dream about WiMax, a broadband signal that can stretch for miles. Clearwire (CLWR), a recent IPO, is beginning to offer the service. Intel (INTC) has started to create chips that receive the signals. Sprint (S) is building out a WiMax network across the US for its next generation of broadband phone service.

Now, there is finally a handset that will take a WiMax signal. Nokia (NOK) will have it on sale in less than a year.

CNN Money made this observation about the value of the technology: "WiMAX will make wireless broadband much cheaper to deliver – up to 10 times cheaper than current third-generation cellular telephony networks."

Too good to be true? Wall St. will know in a few months.

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

Posted on: April 16, 2007 – 7:49 pm in Wireless

Did Vonage Find a Savior?

Vonage Holdings (VG-NYSE) may have found something to save itself from impending suits: a sale.  But before you believe it, you better read the article from LightReading.com:

"Our sources confirm Sprint and Vonage have been in talks about the patent issue, and one source says Vonage is considering selling itself to Sprint."

Now keep in mind that this is also noted inside the article as "Skeptical" by unnamed analysts.  Because of the fact that Vonage has been the pig of the year, has been Dr. Pangloss facing the Spanish Inquisition, and because the company is facing a mountain that it might not have enough rope to climb, we are not going to comment on this.  If Vonage was a baseball card, its stock ticker would have been PR-FR.

Shares are up 13% at roughly $3.70 after hours as speculators are out making their bets on this.  Once again, you’ll have to decide how likely this one is on your own because of how toxic the stock has been and because there has been far more money made betting against it and by being skeptical.  Also remember that many would likely hold out for higher prices because they are buried as Long & Wrong.

Jon C. Ogg
April 16, 2007

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

Posted on: April 16, 2007 – 5:39 pm in Telecom

GE: Cash On The Table For Digital Start-Ups

Why build when you can buy? GE (GE) is opening doors for a $250 million fund to put money into digital media start-ups.

GE management told Reuters: "It basically is a way for us to invest in smart companies where we see a strategic value and companies that have a high- growth potential, particularly in the digital media space."

These corporate VC operations often don’t work well. Intel (INTC) has had one for years, but as the company’s direction changed, so did the focus of funding. Then, there is the issue of control. A company that GE invests in could end up in a partnership with a GE competitor. Being Switzerland is very hard for a large company.

Douglas A. McIntyre

Posted on: April 16, 2007 – 5:39 pm in Media

Cramer Clean Power Company Plays (APR 16, 2007)

Cramer on tonight’s MAD MONEY said he’s pulling a complete-180 because of a recent ruling out of the Massachusetts Supreme Court on alternative energy investing on the EPA.  Two weeks ago Cramer said that unless you are in a couple solar names you wouldn’t know that the ruling came out or what it is.  MASS ruled against the EPA for not regulating auto emissions enough.  Before this time, states didn’t have the right to sue before because the EPS is is a joke.  Cramer said that now it is too costly to pollute and think you can get away with it, and now the White House no longer can destroy the environment purely for profits.  Because of this Cramer now supports investing in companies for clean energy now.  You can make monet top to bottom in the entire alternative energy section.

So Cramer said he is unveiling an entire series to "Green" this week." He said he was already positive on First Solar (FSLR) $17.00 ago, but he has new picks now.  Cramer has a list of new stocks for this alternative nergy sector: The two companies Foster Wheeler (FWLT-NASDAQ) and Shaw Group (SGR) are both good companies that help power companies clean up their power plants.

Cramer thinks FWLT can now go to $105.00 because their energy burners are flexible and allow many uses of their burners; he also thinks that they may have enough capital to get back to NYSE listing and then they could start buying back stock.

He likes SGR for helping to build  nuclear power plants, mainly because that is the pure-play against global warming.  He likes its recent contract win from Westinghouse and he thinks it is just the beginning. They are the #2 nuclear design firm.

Jon C. Ogg
April 16, 2007

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

Posted on: April 16, 2007 – 5:25 pm in Alternative Energy, Cramer

Is Sony Playstation Gaining Steam?

How is the Sony (SNE) Playstation 3 doing? It depends on who you ask.

Research firm Chart Track shows that PS3 sales dropped the three weeks in a row after the game console went on sale in the UK.  The press in that country has even suggested that Sony needs to cut price to pick up customers.

Over at Sony, the CEO says that the Playstation 3 launch in Europe is a clear success. The record-breaking success of the PlayStation 3 in Europe has rescued the games console from “the perception wars” that hit sales in Japan, says Sir Howard Stringer, he told the FT.

Maybe sales in Switzerland were good enough to make up for the short-fall in the UK.

Douglas A. McIntyre

Posted on: April 16, 2007 – 4:49 pm in Consumer Electronics

The 52-Week Low Club

Sirius (SIRI) The company and its shareholders have every reason to be upset. The shares drop to $3.02 with no news to push them down when the market is up big. The 52-week high is $5.33.

Clearwire (CLWR) WiMax is supposed to be hot. Clearwire is the big IPO in the territory. Down to $18.12. The 52-week high is $27.95. Investors are concerned about when those customers will start signing up by the ton.

Radcom (RDCM) Builds test and quality management equipment for data communications networks. Sounds too complicated. Company has loss in last quarter. Down to $1.60 from 52-week high of $3.30.

Healthtronics. (HTRN) Medical equipment maker Company is going through restructuring and change in strategic direction. Down to $4.91 from 52-week high of $8.60.

Douglas A. McIntyre

Posted on: April 16, 2007 – 4:22 pm in HI/LOW

eBay Earnings Preview

eBay (EBAY) reports earnings on Wednesday after the close, andwhile whisper numbers are on the rise, but the most important informationwe’ll get will be below the headline numbers.  Shares in eBayare up over 15% in the past three months, compared to a flat NASDAQcomposite. 

Current consensus for the firstquarter is $0.30 to $0.31 per share, up 25% year-over-year.  Revenueestimates are $1.69B to $1.75B, which would amount to about 23% growthfrom 2006 levels.  None of the two dozen analysts that cover thestock are making any real changes to the bets laid down at the end of2006, either for the quarter or the full year.  EBay is usuallypretty good at managing earnings, having met or exceeded estimates forthe past 5 quarters.

The big story for eBay thesedays is whether expenses can fall back in line with revenue; operatingincome actually fell slightly in 2006; while EBay grew the top lineat 31%, operating expenses rose over 43%.  Some analysts have suggestedthat since the introduction of Yahoo’s Panama, ad rates have beenfalling on a per-click basis, which could help Ebay in the expense department. PayPal should put in anothergreat quarter, as they continue to add thousands of new merchants. So far Google Checkout isn’t mounting much of a threat, but it willbe interesting to see if management comments on (jabs) the competitorduring the conference call. 

In the January call, eBay announceda $2 billion share repurchase program to be implemented over the next24 months.  Considering the strong run the stock has had of late,some important color will be provided Wednesday as to how many shareswere bought in the first quarter.

Average selling prices areexpected to continue their uptrend (estimates are for double-digit growthyear-over-year), and overall listings have been up 8% to 10% so far thisyear, based on spot checks.  The all-important revenue per listingmetric is expected to be in the range of $1.80 to $1.90, with some numbersas high as $1.95.

Of course lots of folks willbe looking over the Skype data, hoping to see sequential growth continuingin the 20% plus range, and growing monthly revenue per user.  Skype’s$4 billion price tag notwithstanding, the revenue of recent acquisitionStubHub.com will also be of note; the current estimates are for $107 to $120 million in revenue during 2007.  In the last conferencecall Meg Whitman said that integration with the ticket vendor was inthe early stages, so we’ll probably need to wait until July beforegetting a feel for the long-term earnings impact of the buy.  Any update on rising cult favoriteCraigslist.org (in which eBay has a 25% stake) would be much appreciated,but don’t expect to hear much about monetization of the site on Wednesday.

While eBay definitely has somevery promising “side projects” going, how shares react will dependmostly on revenue and margin trends.  Jim Cramer still likes thisstock going into earnings, having previously named it a top internet pick in February. Yahoo (YHOO) releases on Tuesday,and how well they do may add/subtract a little momentum from eBay’srelease, but investors should proceed cautiously after the big run-upheading into the release. 

Ryan Barnes
April 16, 2007

Ryan Barnes can be reachedat ryanbarnes@247wallst.com; he does not own securities in thecompanies he covers.

Posted on: April 16, 2007 – 2:17 pm in Earnings

Cramer Defends Subprime Somewhat

Stock Tickers: FMT, WB, NTRI, NSTK, CMCSA

Cramer earlier today on TheStreet.com’s Wall Street Confidential video said this is an impressive day.  With $4 Trillion in borrowing power from all the private equity and public monies out there, there are only 150 S&P 500 companies that are too big to look at as far as any potential buyout.  This makes a private equity call essentially being in the market.

As far as Fremont General (FMT) this shows that there is actually some value to subprime since that means someone was willing to buy the loans.

On Wachovia (WB), this did well when it was expected to be bad.

As far as trying to "Beat The Street" they discussed NurtiSystems (NTRI) because of the short interest. Cramer said this could create a major pop, although he is not a long-term fan.  He said if there is a big upside and buying then it could run up big.  He doesn’t want to touch it after that though.

Cramer was again positive on Natech (NSTK) and Comcast (CMCSA)

Jon C. Ogg
April 16, 2007

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

Posted on: April 16, 2007 – 1:57 pm in Cramer

Cramer’s Bank & Retail Picks

Stock Tickers: HBC, CFC, WB, FMT, WM, RL, SLM

Cramer today said that the large Saudi investor buying into HSBC (HBC-NYSE/ADR) signals that banks might be attractive now.  This is Maan Al-Sanea, head a huge conglomerate that is not Price Alwaleed Bin Talal.

Cramer said this lends credence that Countrywide (CFC-NYSE), Wachovia (WB-NYSE), and Washington Mutual (WM-NYSE) could all be acquired.  The fact that Fremont General (FMT-NYSE) sold off $2 Billion in subprime lows is showing there is a bid out there.   

Cramer said even SLM Corp, or Sallie Mae, (SLM-NYSE) being bought is showing that these in the group are taking out the short sellers.

On the retail sector, Cramer again pumped up Ralph Lauren (RL-NYSE).  He said that this could to go to $110 to $115 based on the Coach (COH-NYSE) multiple out there.

Jon C. Ogg
April 16, 2007

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

Posted on: April 16, 2007 – 1:49 pm in Cramer

Our CNBC Interview: Lee Scott Needs to Leave Wal-Mart (WMT)

Our own Jon Ogg made another guest appearance today on CNBC.  Today’s discussion was with CNBC’s Bill Griffeth and the other interviewee was Maggie Gilliam of Gilliam & Co. (her website link here).  Today’s interview was on the status of Wal-Mart’s (WMT-NYSE) Lee Scott, and whether he should stay at the helm of the company or if he should go.

http://www.cnbc.com/id/15840232?video=257412729
Jon_ogg_pic_for_cnbc_apr_16_07 She and Jon may be on different sides of the spectrum on the topic in theory, but if you watch the interview you can see the problems in trying to find all the great things about Lee Scott as remaining CEO of the company.  She is an analyst that covers many large retail issues.  In a three to four minute interview, no one can get all of their points across and it is likely true both ways.

After conducting more and more reviews of the stock and the CEO, there is no change in the position that Lee Scott would best serve the company simply by saying he is ready to let new leadership take the company forward.

Once again, you can link to the CNBC video interview online on the CNBC site.  The perspective of this interview was solely from the investment side, and not just from the consumer activist side.  As long as Wal-Mart is the #1 retailer in the US, they are going to have critics.  What is at stake is that THIS CEO is not able to help the company shed the image of some of the problems.  We noted a couple weeks ago that trying to tie Wal-Mart to terrorism sure felt like someone was taking an extreme point of view, and we noted that this was probably above and beyond anything fair.

We’ll see if this happens before the end of the year or not.  After the last pay package paid to Mr. Scott, it sure doesn’t feel like the company is leaning this way.  The stock is "cheap" and for a reason.  Our position is that a new corporate leader could better man the helm, and after 5-years WMT shareholders would probably not fight comment too much.   Wal-Mart was just this morning named #1 on the Fortune 500 list, but that is a size metric that has no real bearing or relation to current shareholders. 

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers; neither he nor the company have been compensated in any manner to portray Wal-Mart in any particular manner.

Posted on: April 16, 2007 – 1:13 pm in Management Change

Amgen: No Lesson Learned From Merck

Amgen (AMGN) made an announcement that many investors already expected. The death rate in cancer patients using its anemia drug Aranesp was higher that those using a placebo.

According to Reuters: "The U.S. Food and Drug Administration last month slapped a strong new warning on the label of Aranesp and similar anemia drugs calling on doctors to use the lowest dose that can effectively avoid the need for blood transfusions."

Last week, Merck (MRK) came out with news that its new arthritis drug Arcoxia can cause blood pressure and heart problems. The FDA panel rejected the drug by a vote of 20-to-1.

The amazing thing about the large drug companies is that they seem surprised and disappointed with the results of these trials. In reality, it is a safe bet that they have a very good idea what side-affects these drugs may have long before they come to market.

So, why push them all the way to the FDA?

Good question.

Douglas A. McIntyre

Posted on: April 16, 2007 – 1:04 pm in Uncategorized

Boston Scientific Begging For Good News

It’s always an interesting phenomenon when a large company becomes ultra-sensitive to news, as Boston Scientific (BSX) seems to be doing these days.  BSX shares are up nearly 8% this morning to $16.20 on news from the FDA that the company’s Minnesota facility (acquired from Guidant) is in compliance, lifting the restrictions that came with a review letter in late 2005. 

Besides removing some overhang in the stock, the clearance today allows Boston Scientific to apply for new approvals on defibrillators and pacemakers.  But unfortunately this wasn’t the only warning letter on BSX’s desk; a second (and probably more important) one that covers three U.S. facilities has locked the company out of applying for approval of its next-gen stent, Taxus Liberte. 

Given all the problems at Boston Scientific these days, good news like this – which really amounts to table scraps – is enough to lift the stock substantially.  This could be because the company is at a relative floor, as we postulated in our break-up value analysis of BSX back in February. 

Still within a dollar of its 52-week lows, BSX stock has been stifled by data from a recent stent study, called “COURAGE”, which failed to prove that drug-coated stents could decrease the rates of heart attack and death by more than 20% compared with drug therapies. 

This study and others have contributed to market share losses in excess of 25% for the drug-eluting stents as a group.  Meanwhile, competitor Abbott Laboratories (ABT)’s new Xience stent is poised to take more share from BSX’s leading Taxus product in the U.S. and Europe, as new clinical data stated that Xience outperformed Taxus with fewer complications. 

Adding insult to injury, the Xience product was sold to Abbott by Boston Scientific as a prerequisite to the Guidant acquisition; under an existing agreement BSX will be able to market the Xience product (which will be sold as “Promus”), but it will be a margin killer as 40% of gross profits will be handed over to Abbott. 

Boston Scientific will be reporting earnings next Monday, and we will do an earnings preview later in the week after competitor St. Jude Medical (STJ) reports on Thursday. 

Ryan Barnes

April 16, 2007

Ryan Barnes can be reached at ryanbarnes@247wallst.com; he does not own securities in the companies he covers.

Posted on: April 16, 2007 – 12:18 pm in Medical

Sirius Falls As Market Move Higher

Sirius (SIRI) hit another 52-week low today at $3.06. It continues to drift down on no news. The Dow is up almost 1% to 12,714, and the Nasdaq is up even more on a percentage basis.

Oddly enough, XM (XMSR) is not near its 52-week low. It trades at $12 on a 52-week high/low of $23.56/$9.63.

The markets may view XM as the better off of the two if their planned merger does not go through. The company has more subscribers and higher revenue against a similar cost base. It may be able to generate substantial cash flow before SIRI.

XM continues to sell at 4x sales while Sirius is at 7x. It is a disparity that no longer makes sense.

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

Posted on: April 16, 2007 – 11:25 am in Consumer Electronics

TIF – Tiffany & Co: A Rollercoaster Stock, Enjoy the Ride

By CrossProfit

04/16/2007

The majority (75%) of revenue is generated in the US and Japan.

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Posted on: April 16, 2007 – 11:16 am in Uncategorized

APOL: Apollo’s Students Aren’t Paying the Bills

By William Trent, CFA of Stock Market Beat

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Posted on: April 16, 2007 – 11:13 am in Uncategorized

ERJ: Embraer Seems Back on Track After Production Glitch

By William Trent, CFA of Stock Market Beat

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Posted on: April 16, 2007 – 11:11 am in Uncategorized

S&P 500 At New IntraDay Highs

From Ticker Sense

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Posted on: April 16, 2007 – 11:09 am in Research

First Charter’s SAB 108 Story

From AAO Weblog

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Posted on: April 16, 2007 – 11:07 am in Accounting

Flawed Logic: Jason Trennert Barron’s Interview

From Investment Intelligencer

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Posted on: April 16, 2007 – 11:05 am in Uncategorized