Daily Archives: April 23, 2007

Target Gets Slaughtered

Target (TGT) is now saying that its same store sales for April will come in below the 2% to 4% forecast. For the second quarter, the retailer expects same store sales to be 3% to 4%, not the 4% to 6% previously forecast.

According to MarketWatch: "ThinkEquity analyst Edward Weller said that implies that April’s results will tumble by 8% to 9%." While it is hard to say where he came up with that number, he probably has one of those Texas Instruments science calculators, we 247 Wall St. has no reason to doubt him.

There is also no reason to believe that the company’s shares will not be punished. The stock closed at $61.43, but fell 2.7% after hours.

And, that is probably just the beginning.

Douglas A. McIntyre

Posted on: April 23, 2007 – 7:53 pm in Retail

Google Lengthens Search Lead As Ask.com Disappears

Google’s (GOOG) share of the US search market rose to almost 54% in March, according to NetRatings. Its year-over-year increase in handling queries rose almost 32%. Yahoo! (YHOO), which has a market share of almost 22% grew at only 16.6% over last March.

Microsoft (MSFT) grew even slower. With a 10% share of US searches, its increase from March 2006 was only 11%.

Near the bottom of the list is IACI’s Ask.com. It has 1.8% of the search market. Its growth rate was only a little over 2%. It is not a business IAC/Interactive (IACI) should be in.

Douglas A. McIntyre

Posted on: April 23, 2007 – 7:41 pm in Internet

AMD’s $1.8 Billion Voodoo Financing Announcement

What’s the best thing to do when you are in the midst of losing a price war THAT YOU STARTED?  Go convince Main Street that you can win what you have been losing if they will loan you more money to throw into the fire….
That is just what Advanced Micro Devices (AMD-NYSE) is doing, and if you believe after reading through this that it is a good financing then we have a bridge to sell you.  The company is raising $1.8 Billion in convertible senior notes, and the convertible (strike) price will be at roughly 3-times the stock price and is planning a price cap on these, WITH YOUR MONEY.  The interest rate, conversion price and other terms of the notes will be determined by negotiations between AMD and the initial purchasers of the notes.  Please read on over the capping and use of proceeds.

AMD expects to enter into capped call transactions which are intended to reduce the potential dilution to AMD’s common stockholders upon any conversion of the notes. The capped call transactions are expected to have a strike price that matches the conversion price of the convertible notes at approximately three times the closing price of its common stock on the date the capped call transactions are executed.

Look at the USE OF PROCEEDS: AMD expects to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions. If the initial purchasers exercise their option to purchase additional notes, AMD expects to use a portion of the net proceeds from the sale of additional notes to enter into additional capped call transactions. AMD expects to use at least $500 million of the remaining net proceeds of the offering to repay a portion of the term loan AMD entered into with Morgan Stanley Senior Funding, Inc. to finance a portion of the purchase price of, and expenses related to, the acquisition of ATI Technologies Inc. AMD expects to use any amounts not applied to the repayment of the term loan for general corporate purposes, including working capital and capital expenditures.

When you read things like this, it is hard to wonder just how the investment bankers that came up with the deal were able to keep a straight face while trying to get the company to do it.  More importantly, you have to wonder if the brokers selling this won’t be hitting the mute button when they call clients so the clients can’t hear them laughing.

The good news is that this is 144A, so it is unregistered and only available for select institutions.  That will keep Joe Q. Public from taking one on the chin as far as being able to buy this offering, but it also means the institutions just got a more ratcheted place in line as a creditor if or when this heads further south.  The stock’s high over the last two years is $40.00+, and shares closed at $14.04 today.  In after-hours trading shares are down almost 3%, and that’s a good indication that this one can’t be trusted.  Maybe the company will get its feet back and maybe it won’t, but this one is a classic example of voodoo financing at its best.

This one also probably makes any truth to rumors that Applied Materials (AMAT-NASDAQ) wanted to buy it further from likely.  When you take on debt to pay some debt and enter financing transactions, that’s just leverage for the sake of leverage.

Jon C. Ogg
April 23, 2007

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

Posted on: April 23, 2007 – 6:17 pm in Secondary Offering, Semiconductor

Cramer’s Discovery (DISCA)

Jim Cramer on tonight’s Mad Money on CNBC said that Discovery Holdings (DISCA-NASDAQ) is a broadcast company that is a winner in the cable arena.  This could be bought, sold, cut up into pieces, and the like.  This one is great on content creation because the shows have an almost endles shelf life.  The ratings have been surging because of the "Planet Earth" series and because of others.  He thinks this is a perfect play for the win in HD programming as well.  It owns 2/3 in Discovery Communications and Pali Research gave a $25 break-up value to it.  DISCA shares closed down 1% at $20.93 in regular trading, but shares rose 2.5% to $21.47 after Cramer made this discovery.  Naturally, that’s trading at a new 52-week high in after-hours.

Jon C. Ogg
April 23, 2007

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

Posted on: April 23, 2007 – 5:52 pm in Cable Companies, Cramer, Entertainment

Cramer’s Private Equity Buyout Pick: Actuant

On tonight’s MAD MONEY on CNBC, Cramer reviewed private equity firms and his feature this week is to predict which ones could be acquired.  So much for Cramer not just speculating about buyout candidates like he used to claim before the buyout craze went into overdrive.

Last month Goldman Sachs issued the "private buyout lists" and he came up with 6 stocks he will discuss this week out of the lists that he thinks could be bought.  Cramer’s first target is Actuant (ATU-NYSE) in the manufacturing of industrial products.  Cramer likes it from the top down and is worth independent of the private equity money.  He said its been paying down debt and buying up smaller niche plays that can deliver value, and at 15-times 2007 earnings it’s cheap.

This one just ran 3% in after-hours after closing down 0.1% at $52.50; its 52-week trading range is $42.31 to $67.60.  If someone wants to buy this, they could do it without help from Cramer because its market cap is only $1.45 Billion. 

He also noted that GlobalSantaFe (GSF) and Transocean (RIG) as positive names in a call-in.

Jon C. Ogg
April 23, 2007

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

Posted on: April 23, 2007 – 5:22 pm in Cramer, Mergers and Buy Outs, Private Equity

Google: The World’s Most Valuable Brand?

Market research firm Millward Brown has come out with a list of the world’s most valuable brands.. According to Reuters, the rankings were based on publicly available financial data along with primary research, including interviews with a million consumers worldwide.

At the top was Google (GOOG). Since its share of the search engine market is in the area of 50% and it makes more money than many small countries, that makes sense.

No. 5 on the list is China Mobile (CHL). The company has over 200 million customers, so that seems fair.

But, No.2 is General Electric (GE). Its stock is basically flat over the last five years, so the ranking is cold comfort for its shareholders. Ditto, No. 9 which is IBM (IBM). Over the last five years, T-bills were a better investment than Big Blue.

Wal-Mart (WMT) was No. 7. Its stock is down over 10% in the last five years. And, Coca-Cola (KO) came in at No. 4. There’s another five year loser in the market.

Oh, and Microsoft (MSFT), last year’s winner, fell to No.3. Its stock is up about 15% over the last five years. All the major indices are up more.

Wall St. should ask that Google have its name taken off the list.

Who makes this stuff up?

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

Posted on: April 23, 2007 – 4:53 pm in Research

GM: For The “Tell Us Something We Don’t Know” File

Bob Lutz, the world’s oldest car designer, who is also vice chaiman of General Motors (GM) today told an automotive conference in Louisville that default rates in the mortgage markets would hurt car sales in April.

He forgot to say that sales of Bentleys and Rolls Royce would not see any impact.

Douglas A. McIntyre

Posted on: April 23, 2007 – 4:17 pm in Autos

Boston Scientific Loses Heart

Boston Scientific (BSX) reported that sales for the first quarter of 2007 were $2.086 billion as compared to $1.620 billion for the first quarter of 2006. EPS came in at $.08.

Analysts surveyed by Thomson Financial estimate earnings per share of 10 cents on revenue of $2.08 billion.

The company’s drug coated stent business is still in the out-house. Worldwide sales of the drug-eluting coronary stent systems for the first quarter of 2007 were $468 million as compared to $633 million for the first quarter of 2006

Guidance was mediocre. BSX estimates net sales for the second quarter of 2007 of between $2.0 billion and $2.1 billion. In addition, EPS on a GAAP basis should be between $0.04 and $0.09 per share.

The shares dropped more than 2% on the news.

Just another bad quarter.

Douglas A. McIntyre

Posted on: April 23, 2007 – 4:08 pm in Medical

Texas Instruments Drives Guidance

Texas Instruments just reported earnings: $0.35 EPS & REvenues were $3.19 Billion.  Estimates were previously given as $3.07 to $3.22 Billion in revenues on earnings per share of $0.29 to $0.33 non-GAAP EPS.  Analyst estimates were $0.31 EPS & $3.1 Billion in revenues.

Revenue guidance was put at $3.32 to $3.6 Billion versus estimates of $3.35 Billion.  The company is also saying that revenue growth is expected to resume in Q2.  Its gross margin remained above 50 percent and operating margin remained above 20 percent. 

Rich Templeton, TI president and CEO: "We believe the inventory correction that began in the second half of last year largely ended in the first quarter.  Orders are beginning to rebound, and we expect sequential growth to resume in the second quarter." 

As higher-end phones have been somewhat weak, it was hard to be overly excited when the street was already looking for another drop.  Wall Street is taking this as a win, despite the revenue shortfall, because they tone out of the company is not a solemn one and the revenue guidance was more important than what was in the rearview mirror.  Shares of TXN closed down 0.28% in normal trading at $32.41, but shares have popped 6% to $34.50 in after-hours reaction.

Jon C. Ogg
April 23, 2007

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

Posted on: April 23, 2007 – 3:40 pm in Earnings, Semiconductor

The 52-Week Low Club

Capital Bancorp (CBC) Capitol Bancorp Ltd., a community bank holding company, on Friday said its first-quarter profit fell 37 percent as a sagging economy in Michigan and elsewhere necessitated a more than 60 percent increase in its provision for loan losses, and interest expense grew. Enough said. Stock down to $29.05 from 52-week high of $47.49.

Sirius Satellite Radio (SIRI) Blood in the streets over concerns about XM (XMSR) merger and earnings. Down to $2.78 from 52-week high of $5.12.

All American Semi (SEMI) Nice ticker symbol. Reuters says that the company which distributes semiconductors and electronic components, said its lenders have agreed to extend the forbearance on its debt until April 24. Also facing delisting. Down to $.53 from 52-week high of $5.40.

Mesa Air (MESA) Airline stocks took a hit from Goldman today, and oil prices moved up. Shares down to $7.06 from 52-week high of $10.62.

Independent Bank (IBCP) Another Michigan bank hit by bad economy. Shares down to $16.12 from 52-week high of $27.02.

Douglas A. McIntyre

Read More »

Posted on: April 23, 2007 – 3:28 pm in HI/LOW

Juniper Almost Hits Top-Line Estimates

Juniper Networks, Inc. (JNPR-NASDAQ) just reported earnings: Q1-07 Net Revenue of $626.9M, up 11% from Q1′06; GAAP Diluted EPS $0.11; Non-GAAP Diluted EPS $0.19; expectations from te street were $620.8 million and $0.19 non-GAAP EPS. So revenues were a hair light adn non-GAAP EPS were in line.

Net cash flows from operations for the first quarter of 2007 were $152.6 million.  It noted a Virgin Media rollout and a deployment with Nokia Siemens, but did not give formal guidance in its release.  Shares are down 1% in after-hours at $20.85, but shares closed up 2.8% to $21.11 in regular trading.

Until guidance is given, this one is a coin toss.

Jon C. Ogg
April 23, 2007

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

Posted on: April 23, 2007 – 3:21 pm in Earnings

Amgen: Lackluster Results

Amgen (AMGN) got a bit of good news last week, but just a bit. The company’s Aranesp anemia drug for small cell lung cancer patients undergoing chemotherapy did not cause more deaths in patients in a recent trial when compared with a group taking a placebo. There had been concerns to the contrary.

The stock closed at $60 the day before the disclosure. It jumped above $64 three trading days ago, and stock tried to rally into earnings but ended up nearly flat at $62.19. The good drug news could not prop the shares up.

Over the last year, the company has underperformed its rival Genentech (DNA) which is up less that 5% while Amgen is down about 7%.

Wall St. expected Amgen to post earnings of $1.08 a share, according to a poll of analysts conducted by Thomson Financial, vs. 91 cents a share in the first quarter of 2006. Revenue was expected to rise to $3.73 billion from $3.22 billion in the same period last year. 

As it turned out, total revenue increased 15 percent during the first quarter of 2007 to $3,687 million versus $3,217 million in the first quarter of 2006. The company reported reported adjusted earnings per share, excluding stock option expense and certain other expenses, of $1.08 for the first quarter of 2007, an increase of 19 percent compared to $0.91 during the first quarter of 2006.

It was "kiss your sister" earnings news, and the stock moved was flat after hours at 4.10 PM

Douglas A. McIntyre

Posted on: April 23, 2007 – 3:10 pm in Earnings

24/7 Wall St. Starbucks Evaluation Tour – San Diego II

Peter Lynch encourages investors to look at what they use and what they know for investing, and Starbucks (SBUX-NASDAQ) has become one of the largest household names out there. 24/7 Wall St. is reviewing numerous locations between the rush hours of 7:30 AM and 8:30 AM local time in numerous cities throughout the country, putting the Peter Lynch methods to test and to see if the company’s growth plans will be as successful as the company hopes.

Location:  3675 Murphy Canyon Rd, San Diego

We’re back on the West Coast today, and this morning’s location is right smack-dab next to an Einstein Brothers bagel & coffee shop.  Fortunately for both stores, the area is a lay-up, as they are both located on a feed-in street where many big-box retailers are located (including a Fry’s Electronics and a Wal-Mart).  When I arrived at 8:05, both locations were basically “overflowing”.

There were six people ahead of me in line, so my wait time of 2 minutes, 55 seconds was not too bad.  The staff here must have had military training, because they were about as efficient as possible, creating a friendly buzz that had the pleasant side effect of making people move a bit faster in line.  The location itself is pretty small, seating only 12-14 people inside, with 3 tables outside for co-mingling with Einstein patrons.  Customers were evenly split between commuters hoping for a quick exit, and the daily lollygagger crowd on their way to/from shopping. 

Merchandise was sparse but well-stocked, mainly focused on beans and mugs; the idea must have been to preserve seating space in this cramped location.  The bathroom was adequate, but not perfect.  Ambiance was better than at our last San Diego spot, with some local media publications dotting the outside entrance and peaceful outside seating. 

Overall Ratings (1 to 3, 3 being best): Wait Time – 2, Cleanliness – 2, Bathrooms – 2, Space – 1, Personnel – 3, Inventory – 2, Ambience – 2

There is also a McDonald’s a stone’s throw from here, and once they get their full coffee push going, there might be some tightness in this area – right now, however, this location is a throughput machine. 

We’ve recently kicked the tires down in Texas, and on the East Coast, and look to increase our sample size in the coming weeks.

Ryan Barnes

April 23, 2007

Posted on: April 23, 2007 – 2:26 pm in Retail

Cramer’s Bank & Biotech Picks

On today’s STOP Trading segment on CNBC, Jim Cramer said he questions the call that retail is tied to weaker General Motors (GM) sales comments that hurt the market today.  He wants to see weak retail numbers out of retail that he hasn’t seen before tying GM to that.

On Barclays (BCS), Cramer said the takeaway could ptentially be a higher price.  Cramer noted Sun Trust (STI), Fifth Third (FITB), and Comerica (CMA) all potential deals.  He also noted that Bank of America (BAC) is addicted to buying other banks for sale.

On MedImmune, Cramer thinks that the overpayment by AstraZeneca means a potential higher valuation for Cephalon (CEPH) and Celgene (CELG).

Cramer also rushed in a "I Like Coal too," and Arch Coal (ACI) was his name.

Jon C. Ogg
April 23, 2007

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

Posted on: April 23, 2007 – 1:48 pm in Cramer

StreetInsider.com Unusual 11 Mid-Day Movers 04/23/2007

Alanco Technologies (NASDAQ: ALAN) 38.8% HIGHER; Expects sales revenues for the third quarter ended March 31, 2007, to exceed $4.4 million, an increase of over 300% versus comparable revenues of $988,000 in the prior year period. Sales revenue for the first nine months of fiscal year ending June 30, 2007 is expected to be approximately $15 million, an increase in excess of $11 million compared to $3.8 million in comparable revenue for the prior year nine months.

All American Semiconductor (Nasdaq: SEMI) 22.5% LOWER; Continues sell-off after Nasdaq announced move to delist company last Thursday.

Applied Micro Circuits (Nasdaq: AMCC) 22% LOWER; Expects to report net revenues of approximately $70 million for the quarter ended March 31, 2007, down approximately 8.5% compared to the quarter ended December 31, 2006. The Company had previously provided guidance for fourth quarter revenues to be down between 2% and 5% sequentially.

Metabolix (NASDAQ: MBLX) 18% HIGHER; MBLX and Archer-Daniels-Midland (NYSE: ADM) announced that they will jointly produce Mirel Natural Plastics. Mirel is a family of high performance natural plastics that are biobased, sustainable and completely biodegradable.

MedImmune (Nasdaq: MEDI) 17.9% HIGHER; AstraZeneca PLC (NYSE: AZN) entered into a definitive agreement to acquire MedImmune in an all-cash transaction. Under the terms of the agreement, which has unanimous MedImmune Board support, AstraZeneca will acquire all of the fully diluted shares of MedImmune common stock at a price of $58 per share, for a total consideration of approximately $15.6 billion.

Administaff (NYSE: ASF) 14.7% LOWER; Sees Q1 EPS of $0.30 vs. consensus of $0.37. The company expects to report average gross profit per work-site employee per month of $216, compared to its initial guidance of $224 to $230. This shortfall is due primarily to higher than expected healthcare costs, offset in part by a better than expected workers’ compensation surplus.

Kensey Nash (Nasdaq: KNSY) 14.6% LOWER; Reports Q3 EPS of $0.19, 2 cents worse than estimates. Revenues were $19 million vs. $19.48 million consensus. Sees Q4 revenues in a range of $18.0-$18.7 million. (Consensus is $21.93 million). Diluted EPS is expected to be in a range of $0.14 to $0.15, which includes equity compensation expense of approximately $0.04 per share. (Consensus is $0.28)

Lee Enterprises (NYSE: LEE) 11.2% LOWER; Reported that same property advertising revenue in March decreased 1.2% compared with a year ago. Same property online advertising revenue increased 64.3%. Year to date, total same property advertising revenue was up 0.2%. National advertising revenue decreased 7.1%. Print-only retail advertising revenue decreased 2.3%, and print-only classified revenue decreased 6.6%.

Novastar Financial (NYSE: NFI) 8.8% HIGHER; Stock continues to rebound after recent positive news following sub-prime debacle. (Stock has rebounded approx. 35% in 10 sessions, however, NFI is down over 67% from Feb. 7th, 2007 closing price)

Pioneer Natural Resources (NYSE: PXD) 7.8% HIGHER; Company has approved a plan to form two new publicly-traded master limited partnerships (MLPs) which will own interests in long-lived, low-decline oil and gas assets. Company also approved a $450 million increase in its existing share repurchase program, which now authorizes the purchase of up to $750 million of its common stock.

Ryerson (NYSE: RYI) 7% HIGHER; Crain’s Chicago Business reports Metals USA, a steel distributor run by Apollo Management has entered a bid to acquire Ryerson. Crain’s cites three sources with knowledge of the auction.

Read More »

Posted on: April 23, 2007 – 1:00 pm in Research

Chicago Fed Index: Still Slowing, Not in Recession Territory

By William Trent, CFA of Stock Market Beat

Read More »

Posted on: April 23, 2007 – 12:59 pm in Economy

INTC: Intel Needs to Turn Down the Heat

By William Trent, CFA of Stock Market Beat

Read More »

Posted on: April 23, 2007 – 12:56 pm in Semiconductor

French Raider Bollore Discloses 6.4% Stake in Harris Interactive (HPOL)

From 13D Tracker

Read More »

Posted on: April 23, 2007 – 12:51 pm in SEC

Apple, Apple, Apple – Can someone write just one more article on AAPL?

From The Stock Masters

Read More »

Posted on: April 23, 2007 – 12:49 pm in Hardware

Bally’s: Comments From TheStockMasters

Remember Bally’s (BFT) and all the fun we’ve had at their expense. We told you two weeks ago why not gamble with Bally’s since they are trading under 70 Cents a share?
Pipe dream or not, shares are up 14% today.

Read More »

Posted on: April 23, 2007 – 12:47 pm in Research