Monthly Archives: May 2007

Cramer’s ‘Sell Block’ (CHTR, AAPL, DELL, SHLD)

Tonight Cramer came on CNBC’s MAD MONEY with his SELL BLOCK tonight.  He had two 40% gainers, and these are both two very widely traded stocks.

Charter Communications (CHTR) he thinks it is timke to make most or all off the table. It is more expensive now than others and it’s time for a victory dance.

Apple (AAPL) is one that you can keep some as a core position, but now it is becoming a stock that needs to be a trading stock.  That means he thinks you can take some profits, but you can buy more on dips and sell on gains.  The ship date is June 21 for iPhone and he thinks you should sell some a few days ahead of the ship date because the bar has been set too high.  After ittakes a hit you can buy some more.

Others that he noted were DELL & SEARS…….

Cramer is saying "Don’t Sell Dell (DELL) as this is just the beginning."  Take a look at my pairs trade idea on this from the day that Michael Dell came back.  Sears Holdings (SHLD) had a horrible quarter and he’s not happy with it.  When you wonder if you should ponder new store management and asset sales the answer is ‘yes.’  But…Cramer said you need to give Eddie Lampert some faith and believe in him, so you should not sell the SHLD stock.

Jon C.Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 5:54 pm in Cramer, , , ,

Cramer’s Russell 2000 Index Rebalance Stock Picks

Cramer wanted to talk about the trade of the year that hasn’t happened: The Russell Rebalance.  After the picks below is his additional commentary.  The rough range expected this year for stocks to be added is a market cap of $233 million on the low-end to $3 Billion on the high-end, has to be on a major exchange, has to be a $1.00 stock, no LLC and no trusts, no ADR.  He is predicting 3 of his favorite stocks that he thinks will join the Russell 2000 Index and go up ahead of it:

1) Coleman Cable (CCIX-NASDAQ) that makes electrical wiring and cable that doubled via an acquisition that only has one analyst and could become a target itself.

2) FC Stone (FCSX-NASDAQ), a commodities risk management company that came public in March that only has 2 analysts.

3) Great Lakes Dredge & Dock (GLDD-NASDAQ), a demolition and dredging services company that is protected by the Jones Act that prevents foreign competitors from taking its business with 40% market share.

The Russell 2000 has much money indexed to them and they have to berebalanced because of buyouts or because many fallout during the year.The Russell people are waiting for June 22, 2007.  The ones that haveto get dumped, and the ones that need to be added get bought up.  Theadditions and deletions are based on prices for TODAY’s close.  Thereare many that will be added and many that will be booted.  TonightCramer is working on the Russell 2000 for more smaller cap stocks.Cramer said that once these companies get added, they tend to getcovered more by analysts.  The average gains of the ones that went inwas 44% for the half that went up and a 26% average loss for the onesthat went down after being added.  At least Cramer told you not to buythem in after-hours today.

Jon C.Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 5:31 pm in Cramer, Index, , ,

Dell Sails Past Estimates, Cuts 10% Headcount

Dell Inc. (DELL-NASDAQ) posted much better than the pessimistic expectations with preliminary $0.34 EPS and $14.6 Billion in revenues versus expectations of $0.26 EPS and $13.95 Billion per First Call estimates.  Shares are now up almost 5% at $28.30 in after-hours.

In the quarter, gross and operating income margins were positively affected by a favorable decline in component costs. In addition, a focus on more richly configured customer solutions and a better mix of products and services yielded significantly higher average selling prices and a better balance of profitability and revenue growth. In the quarter, the company incurred approximately $46 million, or $0.02 per share, in costs associated with the ongoing investigations into certain accounting and financial reporting matters.

The stock closed at $24.22 the day (January 31, 2007) the announcement came that Michael was retaking the lead and shares closed at $26.91 on the day.  On that same January 31, Hewlett-Packard shares closed at $43.19 and those shares are at $45.71 as of today’s close.

RESTRUCTURING & TRANSFORMATION INFO:
    * Restructured the senior leadership team to enhance accountability, bring clarity to the company’s transformation strategy and move decision-making closer to the customer.
    * Improved customer satisfaction ratings through increased investment in technical support resources like Dell Support Center and DellConnect. These investments helped the company achieve a 66 percent decrease in the number of times customers are transferred before their issue or question is resolved.
    * Strengthened the foundation for renewed growth in established and emerging regions through innovative products tailored to specific customer needs such as the EC280 system introduced for China, and new manufacturing and development facilities in high-growth regions like Brazil.
    * Globalized the services business around a strategy of embedding supportability and serviceability into hardware, simplifying and standardizing service options and delivery, and enhancing remote monitoring and resolution capability to minimize IT infrastructure costs for customers.
    * Initiated a comprehensive review of costs across all processes and organizations from product development and procurement through service and support delivery with the goal to simplify structure, eliminate redundancies and better align operating expenses with the current business environment and strategic growth opportunities. As a part of this overall effort, Dell will reduce headcount by approximately 10 percent over the next 12 months. The reductions will vary across geographic regions, customer segments, and functions, and will reflect business considerations as well as local legal requirements.

Due to the delay in filing the annual report on Form 10-K for fiscal 2007, the company has decided to reschedule its annual meeting for stockholders, which was originally scheduled for July 20. Details for the meeting will be announced publicly as soon as they are available and will be distributed to stockholders in the notice of meeting included in the proxy materials.

Jon C. Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 3:13 pm in Earnings Warning, Management Change, PC Companies, Technology Companies, ,

Cramer: Hail Retail Investors, Plus Ralph Lauren To $120

On today’s STOP TRADING segment on CNBC, Jim Cramer came out discussing if the individual investor is in the market.  If retails buys tech like Ciena (CIEN-NASDAQ) and Apple (AAPL-NASDAQ) then they are buying needles in the haystck, but machinery, mining , minerals, aerospace are all their own haystacks.  You can see what he said the other night for individual stock picks here with his four sectors and then the other two sectors where he believed we are in wild bull markets that outlines his picks in each of these sectors.

Ralph Lauren (RL-NYSE) is firing on all cylinders and it is starting to take up more and more retail space and taking gross margin power away from retailers.  Cramer said RL’s stock is heading for $120.00.

Jon C. Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 1:55 pm in Cramer, , ,

Final Review of Dell Ahead of Earnings (May 31, 2007) (DELL, HPQ, GTW)

Dell Inc. (DELL-NASDAQ) is actually back from the depths as far as the stock has been doing since Michael Dell returned to oust Kevin Rollins.  Wall Street is expecting $0.26 EPS and $13.95 Billion per First Call estimates for after the close today.  The real turnaround and focal shifts are still "pending" as far as the real guts and real details.  In fact, the company may actually need to keep some of its critics, analysts, and journalists guessing so that Hewlett-Packard (HPQ-NYSE), Acer, Apple (AAPL-NASDAQ), Gateway (GTW-NYSE) and Lenovo.

The stock closed at $24.22 the day (January 31, 2007) the announcement came that Michael was retaking the lead and shares are now up at $26.55.  On that same day, Hewlett-Packard shares closed at $43.19 and those shares are at $45.65 now.

The SEC probe still pending on options issues and financial reporting delays are still there.  This is not a quick fix.  Michael took the squeeze and extreme-JIT (just in time) manufacturing and competitors were able to adapt the model in perhaps a better manner of late.  Shipments are down at Dell, while H-P has increase its shipments.

Wal-Mart is the first of what will probably be many on-site and outlet retailer sales arrangements for the company.  That will drive up costs for furnishing that many extra PC’s on-site at retailers, but it may ultimately help itregain some market share.  It also recently moved to include Linux-based PC offerings and it is no longer solely "Intel-inside."

The company will not be taking questions from investors or from Wall Street after earnings, so you’ll basically get the press release and a bunch of analyst comments tomorrow.  As long as the company can stay profitable without major downside disappointments and doesn’t lose ridiculous market share in projections, then calling for a quick fix out of Michael Dell will be unwarranted.

This is not going to be a one-day fix, and anyone holders thinking this is just a quick fix and flip is probably being unrealistic.

Jon C. Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 1:29 pm in Earnings, PC Companies, Technology Companies, , , , , ,

Google (GOOG): YouTube Begins To Crack Content Companies

Google’s (GOOG) YouTube was able to get a deal with music publisher EMI to allow its music videos to be played and shared on the big user-generated video site.

According to the company in a statement to Reuters: "With this deal, all four of the world’s major music companies are now official YouTube partners," Chad Hurley, chief executive and co-founder of YouTube.

The large content companies that have not been able to cut deals with YouTube, especially Viacom (VIA) are beginning to look mighty silly. Viacom has sued YouTube for $1 billion, alleging damages because its content has been posted by YouTube users.

Viacom has cut a deal with video streaming site Joost to use it as a deliver network for the content from its film studios and networks. But, several technical websites have raised questions about whether Joost actually works properly.

YouTube still has the largest video audience online, and by a wide margin. The large studios and networks will probably catch on the way the music companies have.

But, why wait?

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

Posted on: May 31, 2007 – 11:46 am in Uncategorized

Critical Therapeutics (CRTX): What Goes Up…

Critical Therapeutics (CRTX) is having a hell of a run today. The stock is up 31% to $3.50 on almost 11.8 million shares. At one point, the share hit $4.10.

The reason? The Food and Drug Administration approved its chronic asthma drug. Cowen & Co."predicted the franchise will bring the company $125 million in revenue in 2011." The product is marketed with Merck KGaA.

The stock increase brings the CRTX market cap to $150 million.

In the last quarter, the company had revenue of $3.5 million and an operating loss of $5.2 million. The company has about $45 million in cash.

Is the stock worth the much higher price. Perhaps. But, the company is small and investors might like to see it bought at this price. Takes away what appear to be a huge risk.

Douglas A. McIntyre

Posted on: May 31, 2007 – 11:19 am in Uncategorized

Can ‘Who’s Your Daddy, Inc.’ Be The Next Hot Beverage Play? (WYDY)

Stock Tickers: WYDY, HANS, JSDA, KO, KR

The higher-end bottled sport and energy beverages sector is an interesting one, needless to say.  After seeing companies like Hansen Natural (HANS-NASDAQ) and Jones Soda (JSDA-NASDAQ) make exponential stock returns it is without any surprise that investors and business people alike peruse the sector to see if there are any stones left unturned.  After Coca-Cola (KO-NYSE) paid more than $4 Billion for Glaceau’s Vitamin Water, there are obviously traders looking for more and more of these potential home runs.  That is why there is such a wide gap between the winners and the losers in thr group.

After running some SEC filing screens yesterday, an interesting stock surfaced over an investment group having a 13% stake in the company.: Who’s Your Daddy, Inc. (WYDY-NASDAQ/OTC).  Who’s Your Daddy is an ‘functional’ energy drink maker that most have never heard of, let alone tried the product (including yours truly).  When you look at the website, www.kingofenergy.com, you can see what they are all about.  It looks like they are targeting the young men and the sports crowd and from how it seems will end up targeting the flashy, young, bling crowd; but it also aims for the ’supplement’ and some sugar-free alternatives.  Both the Chairman and the President are in their mid-20’s.

The company recently hired Tony Seery the former "Trade Development Manager" of Hansen Beverages
(HANS-NASDAQ) to develop more relationships with distributors in Southern California and beyond.
Mr. Seery also worked for Coors and Crest (said to be a Red Bull distributor). Who’s Your Daddy also promotes itself actively via press releases, or at least it appears that they publicly announce each contract and pact signed.  In recent weeks and months it has signed the
following:

-Expanded retail distribution into 130 retail Smith’s Food & Drug Stores (Kroger-KR) in Utah, Montana, Nevada, New Mexico, Wyoming, Idaho and Arizona (this morning).
-Beach Volleyball sponsorship in San Diego.
-Sale and distribution through Bashas’ and Food City Supermarkets in Arizona.
-Distribution with Seven-Up in Wisconsin.
-Recent $3.25M financing to pay off all of its short and long-term debt to NIR Group, plus additional working capital.
-Distribution pact in El Paso, Texas.
-Distribution in New Mexico.

You have to keep in mind that all of these deals are going to be very small pacts in the grand scheme of things compared to other sport and energy drink makers, and the company will end up doing far better if it takes the regional approach first because shipping costs can eat all the profits up (there’s a reason for multiple bottling locations around the US for large players). 

It sounds like the company has some additional limited financing now, and the question is going to
boil down to just how much more capital it will need.  The trick with almost every one of these micro-cap OTC-BB stocks is that they often have high blips in stock trading followed by long periods of next to nothing in share volume.  There is also a lot of hype (many press releases and promotion) around these micro-caps with more promise than history.  These are often in hot sectors (energy drinks have been). 

The truth is that any company with the profile listed here (or same data and different industry) like this could fit the bill of an OTC flame-out where investors feel they should have known better.  That doesn’t mean this is the case in this stock, but making some risk disclosure is critical before you even think of trading such a micro-cap bulletin board company.  As always with Micro-Cap OTC stocks, you’ll need to do your own research and your own decisions on these.  I don’t even like to comment on such things as market cap, shares in the float, financial data, and real highs and lows on a historic basis because some of the data is either old and inaccurate or it is just carry-on data.

Jon C. Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 10:47 am in Food, Water, , , , ,

Big List of Private Equity Targets in Financial Services

There is a recent boutique research report from earlier in the week showing a list of potential private equity targets from a specialty brokerage firm that I was very positive on from even before its IPO: Keefe Bruyette & Woods (KBW).  The truth is that this company is probably only behind Goldman Sachs (GS) as far as its knowledge of what is going on in the North American financial services sector, and the argument is that KBW is considered the number one firm as far as independent coverage of the financial services sector.  It is too bad the company did not get this out at the end of last year to include many other names that have been gobbled up, but it really feels as though every firm is ‘cramming for finals’ in the M&A world with the private equity superstars.

Read More »

Posted on: May 31, 2007 – 9:32 am in Bait Shop, Banking, Financial Stocks, Mergers and Buy Outs, Private Equity, Research, , , , , , , , , , , , , , , , , ,

Dendreon Catches a Break From The FDA

Dendreon (DNDN-NASDAQ) is benefitting from something that become thought of as a low probability event: an FDA that buckled at least a little to peer pressure.   It has received confirmation that the FDA will accept either "a positive interim or final analysis of survival" from its ongoing IMPACT study to amend the Biologics License Application for PROVENGE as a late-stage prostate cancer treatment. This information was obtained in a recent follow up meeting with the FDA to discuss the additional clinical data required to support the licensure of PROVENGE requested by the FDA in the Complete Response Letter the Company received on May 8, 2007.

Mitchell H. Gold, President/CEO: "We anticipate completing enrollment in the IMPACT study this year and anticipate interim survival results in 2008. We are committed to making PROVENGE available as rapidly as possible to help the many men with late-stage prostate cancer who currently have few appealing treatment options."  So the translation here is that this won’t yield an immediate approval, but it could move up the date of an approval considerably.  The Company anticipates net cash for operating and capital expenditures for 2007 of approximately $95 million and expects spending levels to decrease substantially in 2008 to approximately $55 million because it has already incurred many of the third-party costs necessary to prepare for the commercialization of PROVENGE. These costs include items such as third party clinical trial costs, inventory purchases, capital expenditures related to New Jersey manufacturing and other outside infrastructure costs.

Shares are up more than 50% on this news to over $10.00, and this is much sooner than would have been expected by most.  It should also give the company some added oomph going into the ASCO meeting this weekend.  This one is still a long way from over, but this is at least a break for the company and should keep it from facing as soon of a cash crunch.

Jon C. Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 8:40 am in Biotech, FDA,

Sears…A Glass Half-Empty or Half-Full?

Sears Holdings Corp. (SHLD-NASDAQ) is trading down over 2% in pre-market activity after its earnings this morning.  The company posted $1.40 EPS before items, up from $1.14 last year; but overall Net Income after items was $1.10 per share.  Revenues were down 2.5% to $11.7 billion in fiscal 2007, as compared to $12.0 billion for the first quarter of fiscal 2006.  Estimates were $1.22 EPS and $11.55 billion in revenues for the quarter.

Comparable store sales were down 3.9%, with Sears being -3.4% and Kmart showing -4.4%.  It beleives that these declines reflect both increased competition and the impact of external factors such as rising energy costs, a slower housing market and poor weather conditions during the latter part of the first quarter of fiscal 2007.  The company’s cash and cash equivalents came in at $3.4 billion at May 5, 2007 as compared to $3.2 billion at April 29, 2006 and $4.0 billion at February 3, 2007. It did not spend any cash repurchasing shares this quarter, although it still has $604 million that can be used to acquire shares.

With this one being a turnaround retailer with a hedge fund and hard asset kicker that is usually misunderstood by Wall Street, it is hard to know which way the buyers and seller swill spin Eddie Lampert & Co.  It’s a bit like the teacher saying it doesn’t matter if they earth is round or flat, because he can teach it either way.  You can also bet that Jim Cramer will be out positive, at least that’s been the case almost forever.

Jon C. Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 7:55 am in Earnings, Retail,

EMC Gets A Minor Roadblock At Its Multi-year Highs (EMC, VMW, MSFT)

EMC (EMC) shares are trading lower by 1% pre-market after Bear Stearns downgraded its Outperform rating to a ‘Peer Perform’ rating based on valuation and performance.  Shares are up some 80% from the lows of the year, almost unheard of for a tech giant of its size in a market where everything but tech seems to be the new focus.  Not only is the performance strong, but yesterday’s $17.00 close marked what was a high in more than the last 5-years.

Much of the recent performance is because of the upcoming spin-off IPO of its VMware (VMW) this summer.  This one was noted as a potential Microsoft chaser back in February and its IPO filing in April was eagerly greeted by Wall Street.  Just yesterday, R.W.Baird raised its previous $17.00 target up to $20.00.

CNNMoney.com is running something out of Fortune about the VMWare IPO.As soon as this summer, a Silicon Valley company called VMware will offer shares to the public for the first time in what could be the biggest and buzziest IPO in the hotbed of technology since Google went public in 2004.  Upon reading this, it really felt as though this should have been dated early-May or late-April because the filing was in late-April.

Downgrades on ‘Valuation’ and profit taking is quite normal after a large run to multi-year highs and is something that probably is easy to absorb by a market with a strong appetite for the name.

Jon C. Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 7:30 am in IPOs, Software, Technology Companies, , ,

Pre-Market Stock News (May 31, 2007)

(AGE) A.G.Edwards gets an $89.50 buyout from Wachovia (WB) in cash and stock.
(AGIX) AtheroGenics announces business plan to focus on advancing AGI-1067 in diabetes.
(ASML) ASML will return 960 million Euros to shareholders in combination with an 8 for 9 split.
(BLI) Big Lots $0.26 EPS vs $0.20e.
(BRCD) Brocade is paying a $7 million SEC fine to settle its options backdating issue.
(CIEN) Ciena $0.26 EPS vs $0.25e; sees revenues up 3% in Q3 and sees 2007 revenue growth up to 36% from prior range of 27% to 30%.
(CLF) Cleveland Cliffs noted as takeover candidate by Jim Cramer on Mad Money.
(CONN) Conn’s $0.54 EPS vs $0.48e.
(COST) CostCo $0.56 EPS vs $0.56e; R$14.66B vs $14.68B(e).
(CRTX) Critical Therapeutics says FDA approves it’s ANDA for a twice-daily Zyflo CR extended-release tablets for asthma.
(FMX) FEMSA trades ex-split today to reflect its 3 for 1 stock split.
(HRAY) Hurray CFO/Co-Founder Jesse Liu will resign from his management role in the company at Hurray Holding.
(JTX) Jackson Hewitt $2.04 EPS vs. $1.93 estimate.
(LAYN) Layne Christensen $0.52 EPS vs $0.37e; unsure if comparable.
(MEDX) Medarex announced collaborative research pact with Mitsubishi Pharma.
(MGRM) Monogram announced it will release data on its biomarkers for breast cancer at ASCO.
(MOT) Motorola announced 4,000 layoffs in what is turning into an 11-yearrestructuring plan.
(MYL) Mylan Labs announced tentative FDA approval for its ANDA of paroxetine hydrochloride extended-release tablets.
(NOVL) Novell traded up 3% after beating earnings expectations.
(NRG) NRG Energy trades ex-split Tomorrow (Friday) and will reflect its 2 for 1 split then.
(VSEA) Varian Semi trades ex-split to reflect its 3 for 2 stock split today.
(WLP) (WLP) WellPoint CFO is resigning due to code of conduct violations
(WYE) Wyeth received FDA approval for its mTOR inhibitor for advanced kidney cancer.

Jon C. Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 6:53 am in Pre-Market Activity

Earlybird Analyst Calls (May 31, 2007)

ANDE cut to Neutral at B of A.
AVR cut to Sell at B of A.
CMI raised to Outperform at Wachovia.
DBRN raised to Buy at Merriman Curhan Ford.
HTZ started as Buy at B of A.
NI raised to Neutral at Credit Suisse.
NMX started as Outperform at CIBC.
NOVC cut to Peer Perform at Bear Stearns.
NVTL started as Outperform at JMP Securities.
OPSW raised to Buy at Deutsche Bank.
PEIX cut to Sell at B of A.
RGRP started as Buy at Cantor Fitzgerald.
RHT raised to Outperform at Baird.
SWIR started as Outperform at JMP Securities.
VSE cut to Sell at B of A.
YHOO raised to Overweight at JPMorgan.

Jon C. Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 6:07 am in Analyst Calls

Wachovia (WB) Buys A.G. Edwards (AGE)

In a move that will create the No.2 broker in the US, bank giant Wachovia (WB) will buy A.G.Edwards (AGE) for $6.8 billion, a 16% premium over where the stock has traded recently.

The new operation will have about 15,000 brokers. The companies believe that they can create annual savings of about $400 million. Which means that someone may lose his job

Douglas A. McInyre

Posted on: May 31, 2007 – 6:05 am in Uncategorized

The Incredible Shrinking Tivo (TIVO)

Tivo (TIVO) ended the quarter with fewer subscribers than it had a year ago–4.34 million compared with 4.42 million.

The company gave a number of reasons why this was a good thing. DirecTV (DTV) is deploying its own digital video recorders instead of using the Tivo product. But, revenue growth was slow, only about 6%, so the explanation does not seem to make things feel better. Tivo did $60.4 million in the quarter and had net of less than $1 million.

Tivo management forecast that revenue in the next quarter would actually move down to about $58 million and that the company would lose money. The firm is trying to replace its DirecTV business with partnerships wedding it to Earthlink and Comcast (CMCSA). But, no big deployments are in the offing.

No matter what happens to the company, Tivo will be remembered as an innovator. It was the first widely availabe service that let people watch TV shows at a time other than when they were broadcast.

But, Wall St. cannot help but get the felling that a $250 million breakeven business with questionable growth prospects has much of a future.

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

Posted on: May 31, 2007 – 5:58 am in Uncategorized

Europe Markets 5/31/2007

Markets in Europe were up modestly at 6.40 AM New York time.

The FTSE rose .5% to 6,632. BEA Systems was up 2.5% to 447.25. GlaxoSmithKline (GSK) was down .7% to 1319. Vodafone (VOD) was down 1% to 158.4.

The DAXX was up 1.2% to 7,858. DeutscheBank (DB) was up .8% to 113.34. Siemens (SI) was down .4% to 97.06.

The CAC 40 was up .5% to 6,074. Alcatel-Lucent (ALU) was up 2.4% to 10.41. AXA (AXA) was up 1.3% to 32.33.

Data from Reuters.

Douglas A. McIntyre

Posted on: May 31, 2007 – 5:44 am in Uncategorized

Glaxo: Why Does The News Come So Late?

GlaxoSmithKline (GSK) has come out with a ton of information that say its diabetes drug  Avandia is safe for the heart.

Big companies seem to be masters of releasing key information late, especially when they are attacked.

The drug was savaged in a recent article in The New England Journal of Medicine. The piece said that avandia could increase the risk of heart attack. And, apparently, use of the drug has dropped sharply in the US after the study came out. Volunteers have even been dropping out of the GSK study, probably due to concerns about the potential dangerous side-effects.

It is a wonder that the Glaxo information was not made available to doctors and patients before the negative press came out. Perhaps someone left the positive study in a drawer..

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

Posted on: May 31, 2007 – 5:22 am in Uncategorized

CMGI Earnings Preview For June 5, 2007 (CMGI, ICGE, SFE)

CMGI, Inc. (CMGI-NASDAQ) has an important few days ahead itself.  The company is reporting earnings next week (Tuesday June 5, 2007, after the close) and every single investor who has purchased shares any point since January 2005 prior to Wednesday’s close actually appears to be in the money.  If we go back to the bubble years there are painful memories and broken dreams, but since we started giving this one more focused attention back on February 22, 2005 shares up 66%.  Short sellers increased their bets against all of the incubators in May 2007 against CMGI, Internet Capital Group (ICGE-NASDAQ) and Safeguard Scientifics (SFE-NYSE).

The past is the past, and the future is up to the company.  The new and improved ‘operating company’ of CMGI is really a supply chain management outfit called ModusLink, plus it still has its @Ventures incubator arm.  @Ventures’ incubator investments are split between Internet and digital company stakes and alternative energy stakes, and lately it has been focusing on and funding more on the alternative energy sector.  Enough on that.

With the stock up 66% and with this one being up 66% since last earnings and with this re-developing one of the largest cult followings out there, how does one predict an earnings outcome on such a transformed company that is grossly under-followed by analysts?

Since its last earnings report, CMGI has either made or been the beneficiary of almost all good developments: it was given a ‘Buy’ rating by boutique WR Hambrecht (with a $2.50 target, where the stock is now, and out of a $2.47 to $2.97 range suggestion), was given a ‘Buy’ rating from TheStreet.com internal ratings, institutions actually bought shares, it named a new CFO, it has invested more into clean/alternative energy including ‘Earthanol,’ it acquired full ownership of its Japan-based joint venture, brought in a solid CFO from IDC, was named as one of the CNBC Challenge most widely picked stocks almost daily, named a new leader for its alternative and clean power investing, and named a new head of sales and marketing out of Lenovo.

What we know is that when it issued it last earnings CMGI came clean and disclosed that they were losing Hewlett-Packard (HPQ-NYSE) as a client that represented in the vicinity of $100 million annual revenue and $3 million in operating income.  This quarter will still have much of the H-P business in it, but we only really know what the company is targeting for year-end: up to $1.10 Billion in revenues, 12% to 14% gross margin, 7% SG&A, and 5% to 7% operating margins.  While the market was busy tanking after the first mini-tank in Shanghai, this one pulled back briefly after earnings and came roaring back when almost everything else was falling. 

So this quarter is really going to be a mixed bag and very difficult to hang your hat on any one metric.  The WR Hambrecht analyst, assuming nothing has changed, has a $0.02 EPS target on revenues of $259.5 million.  Investors should be strongly cautious on depending upon one or even a couple of targets as this can lead to what may be good hits and bad misses on the surface when in fact the company itself may be taking the exact opposite stance on the same bit of news.  The full-year guidance and "progress with our new team" communique is most likely where the cult following of investors will take its cue from.

It would be easy to predict that with a 66% gain since its last report that ‘profit taking’ would be the most likely excuse.  But it would also be foolish to make such a prediction in a cult stock with such a core small-cap trader following like CMGI.  Whatever the prediction is, it would be difficult to believe that shares just stay static after the earnings on Tuesday.  Based on this coming earnings in a corny analogy, some may think the @Ventures incubator took on one of two new sectors: rockets or parachutes.

If it looks like CMGI went into the rocket business if it beats earnings, then you can probably expect that much more attention will also finally be directed toward the other two key incubators Internet Capital Group (ICGE-NASDAQ) and Safeguard Scientifics (SFE-NYSE).  Neither company has been rekindled in the same manner or to the same degree as CMGI, and you could easily see either company go on a rapid mission that would make them look like a blank-check that found a target plus still retain an incubator group.  We’ll know after next Tuesday.

Jon C. Ogg
May 31, 2007

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

Posted on: May 31, 2007 – 5:06 am in Alternative Energy, Earnings, Internet, Software, Technology Companies, , , ,

Ebay’s (EBAY) Ad Auction Program Still In Limbo

Limbo has sort of been abandoned by the Catholic church which started the whole concept as a place between heaven and hell. But, Ebay (EBAY) has brought it back with its TV advertising auction program. Originally intended as a way for big advertisers to get the best rates, it was rejected by the large networks. And, no wonder, it would have cut out their sales forces as the mechanism for marketing ad time.

Ebay did announced a network partner, the also-ran women’s programming cable firm Oxygen. The operation is so obscure that the venture almost certainly indicates that the last days of the Ebay project are upon us.

The first marketing beta testers of the program include Home Depot, Microsoft, and Hewlett-Packard. But, the initial commitment of ad dollars may be as low as $5 million. That might buy an ad in "The Daily Planet", the newspaper where Clark Kent once worked.

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

Posted on: May 31, 2007 – 4:00 am in Uncategorized