Daily Archives: May 23, 2007

Cramer’s 3rd Batch of DJIA Component Price Targets

Stock Tickers: MMM, GM, HPQ, HON, HD, INTC, AMD, SHLD

Cramer came out tonight with his next batch of targets on more individual DJIA targets, and he was much less robust with the middle-alphabet DJIA components.  He still thinks there is a 1,000 point upside in the DJIA from here, but he was only bullish on Hewlett-Packard (HPQ) and Honeywell (HON) tonight.

3M (MMM-NYSE) is one that Cramer is one that Cramer noted quietly as biding time.

General Motors (GM) is one that could have been at $40.00 but that has passed and it is merely marking time now.

Hewlett-Packard (HPQ-NYSE) is one about to take off with buybacks and dividends to go higher and he underestimated its price target and it could maybe reach $50.00.

Home Depot (HD) could have done better if the Fed helped but now Cramer thinks he got it wrong. He thinks it can go up but he’d rather you own Sears (SHLD); He’d Sell Home Depot (HD) for Sears (SHLD).

Honeywell (HON) is one that Cramer underestimated with a $52.00 target but it’s now $56.00 and he thinks it could trade up to $63.00.  But at that level it is attwice its growth rate.

Intel (INTC) is one tha can only have a big move if AMD (AMD) folds up its tent.  When tech recovers he thinks that Intel could go up maybe another 10% to $25.00 and that isn’t enough upside to get excited about.

Cramer’s second batch of DJIA components was a little more bullish than tonight, but the first list of DJIA component targets from Monday would have made you think Cramer was going "all in" with only DJIA components because he was so positive.

Jon C. Ogg
May 23, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the com0panies he covers.

Posted on: May 23, 2007 – 5:24 pm in Cramer, , , , , , , ,

Google (GOOG) To Pay $100 Million For Feedburner

Google (GOOG) will buy Feedburner, the huge RSS feed management firm, for $100 million, according to TechCrunch.

According to Hitwise the site has grown its US traffic by 204% over the past year.

Douglas A. McIntyre

Posted on: May 23, 2007 – 5:11 pm in Uncategorized

The 52-Week Low Club

Alaska Air (ALK) Warns on profits and gets a downgrade. Mush. Drops to $27.35. Down from 52-week high of $45.85.

Vion Pharmaceuticals (VION) Late-stage trial of its blood cancer drug has problems. Stock gets pounded. Down to $.85. From 52-week high of $2.30.

Northfield Labs (NFLD) Company’s red blood cell substitute PolyHeme failed to meet the primary goals of mortality and safety in a Phase III study. Shares drop to $1.86. Down from 52-week high of $17.94.

Netbank (NTBK) One analyst says company is worth nothing. It is getting close to that. Down to $.27 from 52-week high of $6.90.

Northwestern (NWEC) Energy company shares drop after the Montana Public Service Commission said it will block the sale of the company. Down to $32.97 from 52-week high of $36.66.

Douglas A. McIntyre

Posted on: May 23, 2007 – 4:42 pm in Uncategorized

Business 2.0 Nutty Fastest Growing Tech Co. List

Someone who edits business mags has to change the way they define parameters for their "fastest growing" and "best managed" lists.

The new Business 2.0 Fastest Growing Tech Companies list is based on "four financial criteria: growth in revenue, profit, and operating cash flow during the past three years, and the 12-month stock return as of Dec. 31, 2006". It sound fine, and the No.1 company, Akamai (AKAM), makes sense.

It’s their list and their criteria but making the cut are Yahoo! (YHOO), Micron (MU), and Advanced Micro Devices (AMD).

C’mon. It’s surprising Sandisk (SNDK) did not make the list.

Douglas A. McIntyre

Posted on: May 23, 2007 – 3:17 pm in Uncategorized

IPO Filing:The Vitamin Shoppe or VS Holdings

Vitamin Shoppe, Inc. has filed to come public via an IPO under the "VSI" ticker on NYSE.  The amount filed for declarartion purposes was up to $150 million in securities, although that is for filing purposes only and may be far different at the time of the IPO.  Bear Stearns, Lehman Bros., and Banc of America are the book-runners with co-managers listed as Piper Jaffray, Wachovia, and Cowen & Co.

The Vitamin Shoppe is a store based, online, and catalog-based sales organization that sells….you guessed it: vitamins and nutritional supplements.  As of April 30, it operated 317 stores in 31 states.  Since the start of 2003 it has opened 191 stores, so it has been growing aggressively via new stores. 

Net sales grew from $331.2 million in fiscal 2003 to $486.0 million in fiscal 2006.  It claims 15-years of consecutive comparable store sales growth.  Its retail sales segment in 2006 accounted for $407.5 milllion of the $486 million in total sales and it generated income from operations of $29.5 million in fiscal 2006.

The company will have to be able to prove its growth, but in looking at the footprint it is more than obvious that it should easily have much room to grow.  To prove a point, GNC (General Nutrition Centers, has more than 4,800 ‘locations’ inside the US with 1,000 of those being franchises and another 1,200 store-within-a-store concepts.  That is still a far larger market that Vitamin Shoppe can pursue.

Jon C. Ogg
May 23, 2007

Posted on: May 23, 2007 – 2:54 pm in IPOs, Retail,

Sirius (SIRI): Key Player Rejects Merger Idea

Democratic Sen. Herb Kohl chairman of the U.S. Senate’s antitrust subcommittee suggested that regulators nix the merger of Sirius (SIRI) and XM (XMSR). His comments were aimed at the Justice Department and FCC.

According to The Wall Street Journal, Kohl wrote "The combined firm would have the ability to raise prices to consumers, who will have no choice but to accept the price increase," he said. "Such a result would be unacceptable under antitrust law and as a matter of communications policy."

While there is still some distance to go before the merger is approved or rejected. SIRI and XMSR are running out of time. Based on the most recent quarterly results for each company, it is hard to see that either is viable long-term without raising additional case. XM has also had to deal with suspending the hosts of its morning program over leud comments and outages on one of its satellites.

Vegas odds are now 3 to 1 against approval

Douglas A. McIntyre

Posted on: May 23, 2007 – 2:44 pm in Uncategorized

Microsoft (MSFT) Turns Its Back On Yahoo! (YHOO)

Microsoft (MSFT) has everything it needs to be a king in the online advertising business. And, it does not need Yahoo! (YHOO). Its own internet properties and its purchase of aQuantive (AQNT) are enough.

So says Microsoft Chief Advertising Strategist Yusuf Mehdi, and Wall St. should hope he has approval from the MSFT headquarters to make the comment.

The whole thing rings a bit hollow. Numbers from Hitwise show that Microsoft’s US search share dropped from 12.6% in April 06 to 8.5% last month. Google’s (GOOG) share of market rose sharply to 65.3%.

While search is not everything when it comes to building a successful online advertising business, it is something. Or, perhaps a lot of something. Microsoft may hope its new aQuantive’s ad serving platform and MSN and Microsoft Live can dig that company’s online business out of its hole.

But, it’s unlikely.

Douglas A. McIntyre

Posted on: May 23, 2007 – 12:08 pm in Uncategorized

Boeing (BA): No New News, Competition From China

The CEO of Boeing (BA) was good enough to tell his shareholders, the press, and the rest of the world that the company might have a new competitor beyond Airbus. The company will probably be based on China.

But, since the Chinese government mentioned this possibility over a month ago, the news has run everywhere.

The reasoning behind the Boeing statement is that China has learned how to build supply chains for the auto industry there. But, the Chinese have said that such a venture is probably fifteen years away.

Between now and then, China could go through a depression. The central government could be overthrown. Global warming could make air travel impossible.

Hopefully, the Boeing speculation will not send its stock down.

Douglas A. McIntyre

Posted on: May 23, 2007 – 11:33 am in Uncategorized

The worst could finally be over for Micron Technology (MU)

Since the beginning of September 2006 Micron Technology (NYSE:MU) shares have fallen 34%. Just last fall Micron was trading in the $18’s and today shares are in the $11 range. You would think a company with a market cap of $8.61 billion would fare better, but with a P/E of 40, 756 million shares outstanding, and the flash memory sector in jeopardy the share price is justified. To make things even worse on May 17th they announced they would offering $1.1 billion in unsecured convertible senior notes due June 1, 2014.

American Technology Research analyst Doug Freedman maintains his “Neutral” rating on Micron’s stock mainly due to a lower price estimate of $14, as losses are expected to increase in Q3. Freedman had this to say last week:
“We are lowering our estimates to reflect our expectation that the deal will cost Micron approximately $11 million per quarter (4 percent interest rate), which is reflective of recent convertible financings and the short maturity (2014) of the convertible. Micron also entered into a capped call transaction at prices 50 percent to 100 percent above the current market price. Capped calls help companies avoid the dilutive effects of convertibles. We believe the proceeds will help Micron continue to fund capital spending on IMFT, as well as on upgrade equipment. We do not expect any major acquisitions in the near-term, and believe the financing firms up the balance sheet during this prolonged pricing contraction more than anything else.”

So despite the negative Nancy vibe around Micron, the "Wall Street Professional", not to be confused with the ("Penny Stock Professional", Peter Leeds – super music by the way) is calling for $14 in the next year. According to Micron officials, the notes will be convertible by the holders based on an initial conversion rate of 70.2679 shares of common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of about $14.23 per share. The notes are to be used for "general corporate purposes, including working capital and capital expenditures", so besides buying chips with that, they’ll be buying pizza for the employees and throwing a few keggers every Wednesday until 2009 (we made this up so relax Micron HR Team).
Micron Keg Wednesday's
Micron still made the Fortune 500 list last year but at number 438, moving one slot from 439 in 2005. Still, they are a solid company despite what everyone else thinks they pulled in $408 million in net income last year on revenue of $5.27 billion. But Wall Street has just finished a extra large glass of "hater-aid" on Micron, so we aren’t seeing the shares move. It doesn’t help that SanDisk (SNDK) just got downgraded yesterday due to oversupply of flash memory that could pressure the stock in the second half of the year. Everyone knows, these companies like Micron, SanDisk, and Intel (INTC) all need to take a chill-pill on cranking out flash memory chips, there’s enough to go around people. So don’t you think they know that by now? These guys all know what’s going on and they aren’t about to let Wall Street keep their stock price stock down forever. They’ll start doing what they should do, making investors happy, cut production a bit, maybe trim some fat, the usual corporate fix-it moves and get MU shares back in the green.

Aren’t buying it? Don’t think it will happen? Do you still hate Micron?

Well, this article shouldn’t change your mind anyway, but it should get you thinking that "do you really think the management of these billion dollar companies are that dumb?" Sure some of the board members aren’t the brightest of stars, but these guys want to make money, and they won’t let the powers that be keep their share price down for months on end. When they cash out their mandatory 40,000 shares in September, they don’t want the stock price at $11, more like $13 a share.

SnoopStill think it won’t happen?

I’m willing to bet these corporate guys get their money, just like Snoop Dogg, everyone one of them probably bumps Jin and Juice on the way home from the office. They make sure the windows are up but when the chorus kicks in they all rap while bobbing their heads back and forth: "Laid back, with my mind on my money, and my money on my mind." Micron shares are going up in smoke, and that’s that.

Article written by: Frank Lara Jr.

Article posted on May 23rd, 2007

Disclaimer: None of the Stock Master staff owns shares, puts, calls, or any short or long interest in MU at the time this article was published. However we all have CD’s of ‘Doggie Style’ in the back of our cars.

http://thestockmasters.com/index.asp

Posted on: May 23, 2007 – 10:38 am in Uncategorized

Level 3’s (LVLT) High Jump

Shares in Level 3 (LVLT) are up almost 15% over the last three days. Telecom equipment stocks including Nortel (NT) and Alcatel-Lucent (ALU) are doing well based on the assumption that network build-outs will help their order books. There have been some positive comments in the press as well.

But, the Level 3 revenue dynamic is really different than the telecom equipment one, so it begs the question of whether the stock should be rising. Level 3 is a bandwidth demand play, which does not strictly go arm-in-arm with telecom equipment orders.

Morningstar recently pointed out that Level 3 "has not proved that it can generate enough profits to support its hefty debt load" Fair enough. And most of the debt restructuring the company could accomplish is now behind it. The research firm has a "fair value estimate" on the shares of $4. The stock currently trades above $6.

Level 3 is in a simple foot race. Demand for bandwidth is clearly increasing as the amount of data and video going across the internet increases. But, bandwidth capacity may still be more than enough to accommodate this need. If so, the "commodity price" of bandwidth will keep falling. At least for the time being.

With its stock up over 200% in the last two years, LVLT needs to show it is winning its race.

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

Posted on: May 23, 2007 – 10:24 am in Uncategorized

Lenovo Gets Better, Will Dell (DELL)?

Lenovo, the fourth largest PC maker in the world, surprised most investors by posting a $60 million net against a loss of $116 million in the quarter a year ago. The company said worldwide shipments grew 17% in the Q, well ahead of the growth rate for the industry.

Lenovo has the largest market share of PCs in it home market of China. Due to the rapid growth there, a number of other PC companies, particularly Dell (DELL) are entering the country with low-price PCs.

Hewlett-Packard (HPQ) have both posted solid results for PC sales and unit growth, which may be a signal that Dell will benefit from a rebounding marketplace.

Douglas A. McIntyre

Posted on: May 23, 2007 – 9:33 am in Uncategorized

iPhone: Apple (AAPL) Makes The Wrong Moves

After my first post on the iPhone last week in which I opined that the AT&T (T) lockup was a mistake for Apple (AAPL) and that the real winner in all this was AT&T. The #1 response from readers I received (other than I was a moron)was that this "was a short term arrangement that all carriers do, within 6 months the iPhone will be available to all carriers." Hold the phone (pun intended), it would appear that the iPhone will only be available to the 47 million AT&T subscribers for the next 5 years!

USA Today reports the supposed half-decade deal also precludes Apple from developing a CDMA handset in that time. It would also appear that the arrogance and dismissive attitude Apple took with carriers during negotiations may come back to bite them. Word is that the #2 carrier in the US, Verizon will introduce it’s own version and is claiming it will be an iPhone-killer. According to Denny Strigl, Verizon CEO, "We do have a very good response in the mill. You’ll see that from us in the late summer."

Rather than have a market all too itself for some time buy playing nice with all carriers, the attitude Apple took has caused a rush to introduce like versions to co-inside with it’s launch. Now not only will the iPhone not be available to the other 140 million plus US cell phone users, but those folks will be able to get their own version from other carriers this summer. Anyone want to bet it will be available for far less than the $500 -$600 the iPhone will be?

Now, any Verizon offering will not have the iPod application that the iPhone will have but if my many critics are to be believed, that was not going to be a major selling point anyway so the elimination of it will really be an insignificant factor to those purchasing these phones from Verizon. What will matter? Price. If consumers are able to avoid cancellation fees, can get a similar phone at a cheaper price and already have an iPod, there is zero incentive to rush out and get the iPhone.

This also means that the 10 million units Apple plans to have sold by the end of 2008 will be done to 47 million AT&T subscribers meaning 1 in 5 will have one? Doubt it.

How long does anyone think it will be before RIMM’s (RIMM)Blackberry has a version out there that will be available through all carriers?

When entering a new business, it is not really a good idea to strut in and tell folks who have been doing it for many years how much better you are than them and why you are going to dictate what theycan or cannot do. All reports out there indicate this is what Jobs did and in the process seems to have focused the efforts of the other carriers into competing against him rather than working with him. Bottom line, he needs their networks for his product, he seems to have forgotten or chose not too recognize it.

I said before that the iPhone, as things are currently configured will be nothing more than a niche product and that it will be Apple’s first stumble after a string of hits in recent years, if the USA today article is correct, the AT&T deal all but assures it.

Todd Sullivan

5/23/2007

No position in any company mentioned above

Posted on: May 23, 2007 – 8:45 am in Uncategorized

Target, Still Targeting Wal-Mart

Target (TGT) is trading up 4% pre-market after posting higher earnings. It showed $0.75 EPS, up from $0.63 the prior year and above the $0.71 estimates; revenues were $14.04 billion, up from $12.86 billion last year and a hair under the $14.17 billion estimate.  The company said same-store-sales for the quarter came in at +4.3% for the quarter.  What is interesting is that the company did not show formal guidance for the next quarter or the year in same-store-sales nor in earnings.

What is interesting is what Bob Ulrich, Target’s Chairman & CEO, said: "Our overall performance reinforces our confidence in our ability to continue to generate profitable market share growth for the full year 2007 and many years to come."

"Market share growth" for "many years to come" doesn’t exactly sound like they are going to try standing in place, nore does it sound like they are going to back off of their onslaught against Wal-Mart (WMT-NYSE) and others.  Target stock is up 4% at $60.50 in pre-market trading, still short of the $64.74 52-week highs.  There is no sizeable trading pre-market in Wal-Mart.  We’ll follow up with guidance if there are any real changes that develop out of the conference call.

Jon C. Ogg
May 23, 2007

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

Posted on: May 23, 2007 – 8:24 am in Earnings, Retail, ,

Alcatel-Lucent (ALU) Could Be Good For Motorola (MOT)

Alcatel-Lucent (ALU), the telecom equipment merger disaster, had a bit of good news. It told investors that its cost cutting efforts were on track and that it bookings are improving.

Shares in the new company have been down this year on concerns that Q1 results showed the company struggling. But, the new information has sent the shares up almost 4%.

Either ALU is taking business from rivals including Motorola (MOT) and Nortel (NT) or the telecom equipment business is improving. With new build-outs for next generation broadband networks and 3G, the latter is likely to be true. If so, it may be a decent year for all three companies. And, it could take some focus off Motorola’s handset problems.

Douglas A. McIntyre

Posted on: May 23, 2007 – 8:16 am in Uncategorized

Cypress Biosciences & Forest Labs Get a Newer Boost, An Understatement (CYPB, FRX)

Cypress Biosciences (CYPB-NASDAQ) is literally a ‘double" in pre-market trading.  Forest Labs (FRX-NYSE) and the company released top-line Phase III results that show statistically significant therapeutic effects of milnacipran as a treatment of fibromyalgia syndrome. 

Milnacipran is the first of a new class of agents known as norepinephrine serotonin reuptake inhibitors, or NSRIs, which exerts its effect by preferentially inhibiting the reuptake of norepinephrine over serotonin, two neurotransmitters known to play an essential role in regulating pain and mood. It has been approved for the treatment of depression in over 32 countries and has been used safely by more than 5 million patients during more than seven years of commercial availability outside the U.S. Milnacipran is being developed for fibromyalgia in the United States market jointly by Forest and its licensor, Cypress Biosciences, Inc.

FMS is chronic and debilitating with widespread pain and stiffness throughout the body, accompanied by severe fatigue, insomnia and mood symptoms.  FMS is estimated to affect over six million people in the United States alone.  Despite the high prevalence and severity of this syndrome, there are no treatments specifically approved for FMS in the United States or elsewhere and the addressable patient population is not yet well established.

Since this is a new indication, this one could go far beyond what Cypress and Forest were originally targeting.  The population base and widespread number of potential patients make this even morelucrative if the results turn out to be as they initially look.

Cypress-CYPB is trading up 110% at $17.75 to highs not seen since 2001 (market cap may be close to $600M now after the jump) and Forest-FRX is even trading up 9% at $56.70 in pre-market trading (FRX has a $16.5 Billion market cap before the pop).

Jon C. Ogg
May 23, 2007

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

Posted on: May 23, 2007 – 8:14 am in Biotech, ,

Northfield Labs Heads Permanently South

Northfield Labs (NFLD-NASDAQ) just faced what may the knockout blow for the company.  The company has been working for years now on studies for PolyHeme, its blood substitution product.  This product has been touted in the past as the Holy Grail for on the scene treatment of blood loss in trauma and injury cases, yet the hopes never matched up with the results.

The company’s stock is trading down 40% pre-market after releasing that its Phase III studies failed to meet endpoints and failed to show any statistically significance.  A prior result before this latest release even showed some progress that was interpreted as worse than the observation group.  It just looks like the fake blood product from this company is not going to come to fruition.

As of its last balance sheet reading it carried $47 million cash and equivalents and had less than $5 million in total liabilities.  Its implied market cap after this huge 40% beheading today will put it close to $66 million in market cap.  This has been a huge cash burn and before the negative results started coming out in Phase III and Phase III’s this traded higher than $17.00 over the last 52-weeks.  We noted that the implosion here back in December was the equivalent of ‘bleeding to death on fake blood.’

A small bio-medical developer named Biopure Corporation (BPUR-NASDAQ)  is trading up 8% in the Northfield Labs’ product failure.  Biopure is working on a blood oxygenation treatment supplement mainly used in anemia but could have some of the same applications.

Jon C. Ogg
May 23, 2007

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

Posted on: May 23, 2007 – 7:49 am in Biotech, ,

Pre-Market Stock News (May 23, 2007)

(AA) Alcoa trading up 2% on hopes that the Alcan rebuff will put into play.
(AL) Alcan denied the Alcoa takeover attempt as “insufficient” and shares up over 3% on hopes for a higher bid.
(AEZS) AEterna Zentaris showed some positive data via a partner presentation at AUA conference.
(BOOM) Dynamic Materials received an $8.3M order for explosion wielded plates.
(CEI) Crescent being acquired by Morgan Stanley.
(DJ) Dow Jones’ Bancroft family is now getting together to discuss the News Corp. offer.
(DDS) Dillard’s $0.53 EPS vs $0.72e, unsure if comparable.
(EVST) Everlast will launch new global brand and product strategy to build on its status.
(HPQ) Hewlett-Packard wins NASA contract valued at potentially more than $5 Billion.
(KBH) KB Home enetered into sale of French home unit, had already been partially disclosed.
(MDT) Medtronic trading up 4% after beating earnings.
(MER) Merrill Lynch is reportedly set for a restructuring.
(MMR) McMoran Exploration noted favorably as a leveraged energy wildcatter.
(NFLD) Northfield Labs said Phase III PolyHeme was not statistically significant.
(NVT) Navteq received a mapping contract from BMW.
(OMCL) Omnicell priced a 3.9M share secondary at $21.50 per share.
(SRR) Stride Rite gets a $20.50 buyout offer from Payless Shoes.
(TLB) Talbots $0.10 EPS vs $0.09e.
(VICL) Vical’s patented Vaxfectin delivered by needle-free injection yielded significantly higher antibody responses than an unformulated DNA vaccine delivered by needle and syringe.
(WTSLA) wet Seal $0.07 EPS vs $0.06e.

Jon C. Ogg
May 23, 2007

Posted on: May 23, 2007 – 7:11 am in Pre-Market Activity

Earlybird Analyst Calls (May 23, 2007)

ADI cut to Neutral at JPMorgan, cut to Neutral at Credit Suisse.
AEP raised to Overweight at Lehman.
ARRY started as Overweight at JPMorgan.
AZO cut to Hold at Citigroup.
BBEP cut to Hold at Deutsche Bank.
BFLY started as Neutral at Merriman Curhan Ford.
BGH raised to Buy at Deutsche Bank.
CLMT raised to Buy at Deutsche Bank.
COMV started as Outperform at RBC.
COP raised to Outperform at Sanford Bernstein.
CVX cut to Mkt Perform atr Sanford Bernstein.
CYPB raised to Outperform at CIBC.
DOW cut to Neutral at Credit Suisse.
FIS cut to Neutral at Sun Trust Robinson Humphrey.
FRX raised to Strong Buy at First Albany.
ISIL cut to Neutral at Credit Suisse.
LEAP started as Outperform at Baird.
LLTC cut to Neutral at Credit Suisse.
MET cut to Neutral at UBS.
MDT raised to Outperform at Piper Jaffray.
MHP started as overweight at Lehman.
NFS cut to Neutral at UBS.
NILE cut to Equal Weight at Lehman.
NS cut to Hold at Deutsche Bank.
PCS started as Outperform at Baird.
PNW cut to Underweight at Lehman.
PNX cut to Neutral at UBS.
RDS.B raised to Outperform at Sanford Bernstein.
RGA cut to Neutral at UBS.
XEL cut to Underweight at Lehman.

Jon C. Ogg
May 23, 2007

Posted on: May 23, 2007 – 6:26 am in Analyst Calls

Alcan (AL): The Big Risk Of Saying “No”

Alcan (AL) turned down a buy-out offer from rival aluminum company Alcoa (AA). Rumors are that the Canadian company is now in talks with Australian metal giant BHP Billiton (BHP), and that another company, Rio Tinto (RTP) may be in the wings. But, only Alcoa has put a deal on the table.

Alcan’s board rejected the Alcoa offer using this language: "It does not adequately reflect the value of Alcan’s extremely attractive assets, strategic capabilities and growth prospects,"

That is all well and good, but Alcan’s stock had only performed as well as the S&P over the last year, until the Alcoa offer came along. Taken from the shareholder’s point of view, the deal was a bonanza. Alcan’s stock went from below $60 to almost $82.

There is no saying how long Alcan’s stock would have taken to get to $80 on its own.It may never get there. Looking back over five years, the company had done no better than the S&P, so it is not as if the shares have been a world beater. Until the company got itself into play.

Obviously, the Alcan board does not think that "a bird in the hand is worth two in the bush". But, they have a terrible problem on their hands if no new bid comes from BHP or another company. The stock will drop back to $60 and it will be hard to argue that anyone holding shares in Alcan won.

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

Posted on: May 23, 2007 – 5:19 am in Uncategorized

Europe Markets 5/23/2007

Markets in Europe were up at 5.35 AM New York time.

The FTSE rose .4% to 6,630. Barclays (BCS) was up 1% to 724, GlaxoSmithKline (GSK) was down 1.5% to 1350. Rio Tinto (RTP) was up .5% to 3565.

The DAXX was up .6% to 7,703. DaimlerChrysler (DCX) was up 2.9% to 67.3. Deutsche Telekom (DT) was up 2.5% to 13.3. SAP (SAP) was up 1.7% to 35.55.

The CAC 40 was up .5% to 6,619. Alcatel-Lucent (ALU) was up 2.8% to 10.41. France Telecom (FTE) was up 1.8% to 22.61

Data from Reuters

Douglas A. McIntyre

Posted on: May 23, 2007 – 4:41 am in Uncategorized