Daily Archives: June 1, 2007

Google (GOOG) Boosts Ad Operation By Buying FeedBurner

Google (GOOG) has bought RSS feed giant FeedBurner. The company serves 400,000 publishers by feeding their content to desktops and wireless devices. Feedburner works extensively with blog sites.

Google may be able to add the new company to its line of advertising offerings which include its Google Ad Sense program and will shortly include banner ad serving operation DoubleClick.

According to PC World: "The deal will beef up Google’s own AdSense publisher network, particularly among blogs, where FeedBurner is stronger than Google, said Susan Wojcicki, vice president of product management at Google, during a press conference. Likewise, Google advertisers will benefit from an expanded ad inventory and ad distribution platform"

It is another acquisition that puts Google far ahead of Microsoft (MSFT) and Yahoo! (YHOO) in the online ad space. Google now sits at the crossroads of banner ads, search-based text ads, and advertising on RSS feeds.

It’s good to be king.

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

Posted on: June 1, 2007 – 7:24 pm in Uncategorized

Avaya (AV): About To Be Sold

It appears that Avaya (AV), the enterprise telecom equipment maker, is about to be sold to Nortel (NT) or private equity firm Silver Lake. The stock trades at about $16 and it looks like  the sale price may be $20, according to Light Reading.

If both Silver Lake and Nortel are making similar offers, the Nortel bid makes more sense. NT is already in closely related industries selling equipment to telecom giants like Verizon and BT. Avaya is a piece of the old Bell Labs and then Lucent.

According to The Wall Street Journal: "Avaya’s equipment is at the heart of corporate telecommunications systems, helping direct voice and data traffic at many of the nation’s largest corporations."

As a standalone, Avaya probably could not cut much in the way of costs, even as a private company. But in a combination of two public companies, it would be hard to imagine that Nortel could not take out some of AV’s nearly $5 billion in annual expenses. In the last quarter, Avaya’s operating income was $81 million. A consolidation with Nortel could increase that by 50% by taking out public company and general & administrative costs.

Nortel’s shareholders would have to approve. It would give the company competitive advantages against Motorola and Alcatel-Lucent.

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

Posted on: June 1, 2007 – 7:13 pm in Uncategorized

Labopharm (DDSS): The 52-Week Low Club

Labopharm (DDSS) Drug being delayed by FDA review. Stock down by more than half to 52-week low of $2.83 from 52-week high of $9.07.

Point Therapeutics (POTP) After putting drug trial on hold, cuts 60% of workforce. Drops to $.10 from 52-week high of $3.01.

Spatialight (HDTV) Maker of liquid crystal microdisplays used in high-definition keeps falling after poor quarterly results. Down to $.10 from 52-week high of $3.10.

Headwaters (HW) Provides products to energy and construction industries. Debate over coal-to-fuel programs, including companies that HW supplies hurt stock price. Down to $19.10 from 52-week high of $27.81.

Douglas A. McIntyre

Posted on: June 1, 2007 – 6:56 pm in Uncategorized

Einstein Noah Coming Back As a Stock Next Week?

Stock Tickers: NWRG, BAGL, PNRA

New World Restaurant Group, Inc. (NWRG-PINKSHEET) is back to the old Einstein Noah Restaurant Group, Inc. name and will trade under the ticker "BAGL" on NASDAQ after this awaited securities sale next week.  As a reminder, all of these security sales are subject to change.  The company has had an active filing and as of today looks like the sale date is for a late-week offering assuming no changes are made.

Einstein as of now is selling 5 million shares at an estimated $19.00 to $21.00 range in what should amount a roughly $100 million stock offering.  This will get it back into NASDAQ compliance and off the deathly Pink Sheets where most investors fear to tread.  Shares closed today at $19.25, if you count a total of 1,870 shares as a real trade.

This is not a simple deal, so be sure to read what we are noting on this and be sure to read through the prospectus link on your own if you are interested in this offering.  Anyone with an "investor’s memory" may recall that the company never went under as far as an operation, but it was definitely an investor flame-out the first time around. We look for special situation investments such as back-door plays into IPO’s or recapitalizations, and this is truly a unique offering in that this one is a bit of both. 

The company also will have what should be some instant brokerage firm coverage after the offering as well because the joint book-runners are Morgan Stanley and Cowen & Co, and the co-manager is Piper Jaffray.  Based on the diluted share percentages and a mid-point price range, this one should have an implied market cap of roughly $313 million. 

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Posted on: June 1, 2007 – 3:59 pm in Food, IPOs, Restatements, Retail, Secondary Offering, Shareholder Issues, , ,

Cramer’s Making Tech Picks (EMC, DELL, NOK, SHLD)

On today’s STOP TRADING segment on CNBC, Jim Cramer focused on Dell inc. (DELL) again.  He is very positive on the company and he thinks Michael Dell is the real deal.  Last night he said this is just the beginning for Dell.   Cramer said in cell phones the only buy is Nokia (NOK).  EMC (EMC) is the best storage play since the company has decided to break itself up, and he said EMC is going to $20.00.

Cramer is also sticking with Sears Holdings (SHLD), although this is obviously not tech.  He said that while there was no buyback of shares in the quarter but the company did repurchase shares in may after the quarter ended.  He is staying a believer, and still thinks that Eddie Lampert is the next Warren Buffett.

Jon C. Ogg
June 1, 2007

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

Posted on: June 1, 2007 – 1:58 pm in Buffett, Cramer, PC Companies, Retail, Technology Companies, Wireless, , , ,

Toyota (TM) and GM (GM): May Car Sales And The Price Of Incentives

The headlines were about unit sales. The critical issue was incentives.

GM’s (GM) May vehicles sales in the US rose almost 10% to over 371,000. The company showed increases in cars and light truck. Although it was unexpected with fuel costs high, pick-up sales did well.

Toyota’s (TM) sales were up 14% to 269,000, with one of the drivers being hybrid.

Ford (F) sales fell 7% to to 259,000. Sales of passenger cars fell. Pick-up sales were flat. The silver lining was sales of crossovers such as the Ford Edge and Lincoln MKX rose 67% from a year ago

Chrysler sales rose a modest 4%.

Increased customer incentives may have provided some of the boost. Incentives for Toyotas moved to $1,140 from $886 last May, according to Edmunds. Incentives on Chryslers moved to $4,050 from $3,668. GM’s incentives were up to $2,963 from $2.761. Only Ford dropped incentives from $3,209 to $3,040.

So, Ford dropped incentives and its sales fell. The opposite happened for the other car companies. And, Toyota is increasing incentives. Perhaps the sales number are not just based on raw demand.

Douglas A. McIntyre

Posted on: June 1, 2007 – 1:47 pm in Uncategorized

CKX, Inc.: Taking American Idol, Elvis, Ali Mostly Private (CKXE)

It is very frequent that ‘going private’ transactions are bad for shareholders, or at least not rewarding enough.  That does not appear to be the case today in CKX, Inc. (CKXE-NASDAQ) as Robert Sillerman is taking the company private.  There is a $13.75 cash and unit distribution to shareholders.  That is why shares are trading at $14.37, almost 5% over the cash buyout component.

What shareholders will receive along with the $13.75 per share check is shares in FX Luxury Realty, LLC, an affiliate of Robert F.X. Sillerman that has significant real estate interests in Las Vegas and has entered into licenses to use certain intellectual property rights of CKX associated with Elvis Presley and Muhammad Ali in the development of real estate and attraction based projects.

The distribution of shares in FX Luxury Realty allows CKX stockholders to receive a share on a 1:1 basis for the exploitation of CKX’s Elvis Presley and Muhammad Ali assets through FX Luxury Realty’s real estate projects.  These are expected to include Elvis Presley- and Muhammad Ali-themed attractions as well as FX Luxury Realty’s other real estate ventures.  Also on June 1, 2007, CKX acquired 50 percent of FX Luxury Realty LLC for cash consideration of $100 million. The distribution by CKX to its stockholders of half of CKX’s interests in FX Luxury Realty is a condition to the closing of the merger transaction.  Please read through that press release because the other interest is a partial transaction and this involves Riviera Holdings Corp. (RIV-AMEX) going private as well.

The merger agreement contains a 45-day "go-shop" provision pursuant to which CKX, acting through a special committee of independent directors and its financial advisor, will solicit competing proposals. During the "go shop" period no termination fee would be payable to 19X. The merger agreement does not contain a financing contingency. Mr. Sillerman, Mr. Fuller and members of senior management have agreed to vote their shares in favor of certain competing offers that the special committee deems more favorable, from a financial point of view.

CKX owns the rights to the name, image and likeness of Elvis Presley, the operations of Graceland, the rights to the name, image and likeness of Muhammad Ali and proprietary rights to the IDOLS television brand, including the American Idol series in the United States and local adaptations of the IDOLS television show format which, collectively, air in over 100 countries around the world.

CKXE had a prior 52-week trading range of $8.77 to $14.48, and shares briefly traded over $15.00 today.  It should be known that this briefly traded above $25.00 back in 2005 when it came out that the company had purchased the Elvis rights.  This purchase doesn’t look like a hounddog deal on the surface.

Jon C. Ogg
June 1, 2007

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

Posted on: June 1, 2007 – 12:32 pm in Entertainment, Mergers and Buy Outs, ,

Wal-Mart Proves ‘Less Bad’ Is Really Good (WMT)

Wal-Mart (WMT-NYSE) finally remembered that they are a public company today because they have held their annual shareholder meeting.  This proves that the company is truly owned by the investors for at least one-day of any year.  If you thought you would only hear negative comments from us on the company, that is not true.  Today’s news in the company isn’t quite as good as the company could have done.  But the reality is that it only has to do ‘less bad’ to end up being good.

Despite all of my slamming Lee Scott and calls for him to go and despite criticisms of how the company has been under-performing, I actually said on CNBC in an interview that Wal-Mart may actually begin to recapture some of its lost mojo that Target (TGT-NYSE) and that the company will likely be a better long-term investment than Target.  Does Lee Scott absolutely and positively have to go?  The simple answer is NO.  But he’s got serious issues ahead of him and frankly there are probably very few men or women who would want to step into his shoes.  The good news is that so far everything being telegraphed looks  ‘less bad’ today and this will ultimately be good  for shareholders.

There is a ton of data out of the company and you can literally spend your whole day on this if you choose.

Here are the guts of the actual plan.

The company is taking its $3.3 Billion share buyback plan up to a new amount of $15 Billion.  The company has already boosted its dividend, although that was snubbed initially earlier this year.  They are slowing down their supercenter growth, albeit not by enough of a slowdown by my account; but it is still a start.  As I have noted before: the company doesn’t actually have to get it exactly right to reward shareholders, they just have to get it ‘less wrong.’  The result will be between 190 and 200 new U.S. supercenters during this fiscal year and approximately 170 supercenters each year for the next three fiscal years.  The company has also said it will review its growth strategy annually, although that is a promise that doesn’t mean much.

For fiscal year 2008, the 190 to 200 range includes approximately 70 relocations and 40 expansions of discount stores into supercenters. In October 2006, the Company had announced that its fiscal year 2008 growth plans included between 265 and 270 supercenters in the United States. Approximately 80 of the supercenters originally scheduled to open in January 2008 now will open in early fiscal year 2009.  I have been under the belief that the growth and expansion plans needed to be cut in half or even by two-thirds for it to focus on its core operations and fix what it already has, but as already noted this is still good because it is ‘less wrong.  It also notes that its consolidated square footage growth rate will be approximately 6% for fiscal years 2008 and 2009; Wal-Mart U.S. square footage growth rate is expected to range from 4% to 5% during these same fiscal years. This figure is key and one that analysts will probably applaud.

It is also in the second year of a three-year plan under Eduardo Castro-Wright to improve customer relevancy in operations and merchandise.  That plan should perhaps be scrubbed and rekindled with a newer plan, but once again, it is still ‘less bad.’ 

Capital expenditure (Cap-ex) cuts have finally come into play.  Wal-Mart is recognizing that they are no longer a growth company inside the U.S. and this is a start. This Cap-ex cut is now going from a planned $17 Billion down to $15.5 Billion, and the extra $1.5 Billion will go to fund the buyback.  The company could cut this by much more and they should consider it, although once again it is ‘less bad’ and that is good for shareholders.  The new strategy does not affect the capital investment plans for the Company’s Sam’s Club or International operations.  This is actually good (not even ‘less bad’) because the company has major opportunities there outside of the U.S.  I previously noted that their recent purchase in China was a home run and looked like a great purchase.

continued….

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Posted on: June 1, 2007 – 12:04 pm in Annual Report, Apparel, Consumer Electronics, Corporate Governance, Management Change, Press Digest, Shareholder Issues, Stock Buybacks, , , , , , ,

Dendreon Kicked By Banc of America

Banc of America has noted that yesterday’s ‘positive data’ is actually not new and that the interim data will not be available until the second half of 2008.  Mitchell Gold, MD/PhD/CEO of Dendreon, detailed the FDA’s decision to accept either a positive interim or final analysis of the IMPACT study.  He also updated the company’s financial guidance at the BofA Healthcare Conference.

Dendreon has already discussed the S.P.A. of the IMPACT study during the earnings conference call for the first quarter of 2007. The exact death event number for interim analysis and the p-value hurdle were again not disclosed, but management hinted that the interim analysis may be triggered when death events exceed at least 164, approximately the combined death events of the 9901 and the 9902A studies.

Dendreon maintains that it believes the study can show a statistically meaningful interim analysis, although this should be expected and there was not really any detail.  A further potential flag is thatthe company has said the interim goals will be hard to reach.

To sink a further axe into the stock, Banc of America has reiterated its Sell Rating and warns that this could go to $4.00 over the coming year and warns that it faces financial issues on the financing of its current trials.   Perhaps the CEO could call the coordinator for that Banc of America conference and say "Thanks for having us, and thanks for slamming us."

You can imagine what the provengenow.org will be saying about this.  Also, I have been sent several ‘factual’ emails pointing to how there are significant and blatant conflicts of interest with doctors on FDA panels that have been instrumental in the current blockage of Provenge. That is still an outstanding issue, and the actual resolution or end game is still a long ways off.

Jon C. Ogg
June 1, 2007

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

Posted on: June 1, 2007 – 9:05 am in Analyst Calls, Biotech, FDA, Pharmaceuticals, Research,

Labopharm (DDSS) What Goes Up, Must Come Down

Labopharm (DDSS) supplies yet another demonstration of investing in small biotechs. Information given to the FDA on painkiller tramadol was viewed as insufficient. As The Associated Press said: "The FDA stated that the company has not demonstrated the drug is effective because the statistical methods used to analyze data from the clinical trials didn’t address missing data related to patients who had dropped out of the studies."

And, that brought on hammer time. The stock has dropped 52% to $2.90 on volume of almost 1.5 million shares. On a typical day trading only amounts to about 121,000.

The stock’s 52-week high was $9.07.

Last year the company had $13 million in revenue and an operating loss of $20 million.

A real winner.

Douglas A. McIntyre

Posted on: June 1, 2007 – 8:38 am in Uncategorized

Sirius and XM, Lowering Expectations of a Deal (SIRI, XMSR)

Stifel Nicolaus has issued a broker research note calling the expectations for a successful and approved merger between Sirius Satellite Radio (SIRI) and XM Satellite Radio (XMSR) as now being less than 50%.  This also notes that Wall Street now sees only a 10-20% chance of success.

Interestingly enough, the research note says that both companies are attractive on a stand-alone basis and that these companies can become highly profitable in the nex 5 years.  Stifel Nicolaus is also maintaining a Buy rating on both stocks. 

This sort of echoes what was noted by TheStreet.Com yesterday.

Either way, this is far from over.  It seems now that this merger is coming too late.  The companies might not be in financial dispair and facing an impending doom, but Congress and the FCC’s delay and now-likely blockage becuase of a fake monopoly is going to have the opposite impact of what they are trying to accomplish.  Both satellite radio companies are going to have to jack up prices next year, or at least for newer subscribers.  If the merger is allowed Congress and the FCC can get a price lock for 3-years.  Big mergers are rarely good for consumers, but this blockage in the end will actually hurt Joe Q. Public.

Jon C. Ogg
June 1, 2007

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

Posted on: June 1, 2007 – 8:25 am in Analyst Calls, Media, Regulation, Satellite, ,

Pre-Market Stock News (June 1, 2007)

(AAPL) Apple noted as a “sell some of the position by Cramer on his Sell Block” on CNBC’s Mad Money last night.
(BKC) Burger King announced a 4100M share buyback plan.
(BOT) CBOT reported that May 2007 was a record trading volume month.
(CHTR) Charter Communications noted as a “take your profits” on Cramer’s Sell Block on Mad Money last night.
(DELL) Dell traded up 4.7% after beating earnings.
(DJ) Dow Jones has Bancroft’s agreeing to meet with Rupert Murdoch.
(DNDN) Dendreon’s data announced yesterday was not new according to B of A, but expects that interim data to be submitted to the FDA will be available by the second half of 2008.
(ENMD) EntreMed announces its Aurora Kinase inhibitor induces tumor regression in preclinical models.
(FTEK) Fuel Tech announced a new order in the Pacific Northwest.
(GEO) Geo Group trades ex-split today to reflect a 2 for 1 stock split.
(IFLO) I-Flow in strategic alliance with GE Healthcare.
(NRG) NRG Energy trades ex-split today to reflect a 2 for 1 stock split.
(SGR) Shaw Group CFO taking a medical leave of absence.
(SRCL) Stericycle trades ex-split today to reflect a 2 for 1 stock split.
(USU) USEC signed a 5-year nuclear power supply pact of enriched uranium with the Tennessee Valley Authority.
(WMT) Wal-Mart has annual shareholder meeting today.

Jon C. Ogg
June 1, 2007

Posted on: June 1, 2007 – 7:44 am in Pre-Market Activity

Pre-Market Analyst Calls (June 1, 2007)

ALV cut to Neutral at Prudential.
BYD raised to Outperform at Wachovia.
CELL started as Outperform at Piper Jaffray.
CPLA started as Outperform at BMO.
CPK cut to Neutral at Baird.
DRH cut to Neutral at Baird.
EMMS cut to Underperform Bear Stearns.
GEO started as Buy at B of A.
GLUU started as Buy at Deutsche Bank.
HRS cut to Neutral at Oppenheimer.
INTC started as Outperform at BMO.
LEA raised to Neutral at UBS.
MPS cut to Peer Perform at Bear Stearns.
NDAQ cut to Equal Weight at Lehman.
NHY raised to Buy at UBS.
NSTC started as Overweight at JPMorgan.
OVTI raised to Buy at UBS.
RHB started as Mkt Perform at Morgan Keegan.
SIRO started as Outperform at Baird.
SPWR started as Buy at First Albany.
SUMT started as Outperform at RBC.
TTG started as Hold at Roth.
VSTA raised to Outperform at Cowen.
WFMI started as Underperform at CIBC.
WFR started as Buy at First Albany.

Jon C. Ogg
June 1, 2007

Posted on: June 1, 2007 – 7:21 am in Analyst Calls

RealNetworks (RNWK), CBS (CBS): Financial Blog Comments

Business 2.0 writes that the new RealPlayer (RNWK) will make it easier for consumers to share big media video files, out-doing YouTube.

TechCrunch writes that EMI music videos will begin to run on YouTube.

Gigaom writes that CBS’s (CBS) purchase of Last.fm may be a hedge for its radio business.

Herb Greenberg comments on Omnivision’s (OVTI) earnings being leaked early.

Douglas A. McIntyre

Posted on: June 1, 2007 – 5:37 am in Uncategorized

Europe Markets 6/1/2007

Markets in Europe were higher at 6.15 AM New York time.

The FTSE rose .3% to 6,641. BP (BP) fell .4% to 562.5. GlaxoSmithKline (GSK) dropped .9% to 1298. Vodafone (VOD) was up 1.5% to 160.3.

The DAXX was up .8% to 7,944. Deutsche Telekom (DT) was up 2% to 14.05. SAP (SAP) was up 3.4% to 36.78.

The CAC 40 was up .5% to 6,137. France Telecom (FTE) was up 1.4% to 23.09. EDF was up 2.7% to 70.78.

Data from Reuters

Douglas A. McIntyre

Posted on: June 1, 2007 – 5:20 am in Uncategorized

Dow Jones (DJ): Other Bidders

In its announcement that it would meet with Rupert Murdoch to discuss his $5 billion bid for Dow Jones (DJ), the founding Bancroft family said it would look at other bids.

Bluff? Perhaps.

But, if Dow Jones has any sense, it has begun to aggressively shop the company to a buyer more to its liking.

The New York Times (NYSE:NYT) would be a good partner, but it is weaker than Dow Jones because its print properties are in more trouble. Its market cap is also lower than the DJ figure.

Pearson (PSO), which has a market cap of almost three times DJ, would seem to be an ideal choice. It owns the Financial Times and The Economist. There are certainly economies between the FT and WSJ. It would also allow Pearson to get further into electronic news delivery.

A dark horse may be Time Warner (TWX). Its has substantial financial content assets, led by CNN Money and Fortune. CNN’s online presence might allow DJ to offer a 24-hour financial news channel to compete with CNBC. And, CNN’s online operations could incorporate MarketWatch and WSJ Online. Time Warner is large enough and it roots remain in the news business.

McGraw-Hill (MHP) should not be left off the list. It has a market cap of $24 billion and owns BusinessWeek and S&P. It could offer its magazine and the WSJ as a print and online package to advertisers and subscribers. S&P would be an ideal stable mate for the Dow Jones newswire and terminal system.

Talking to Rupert Murdoch may just be a way to buy time.

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

Posted on: June 1, 2007 – 5:07 am in Uncategorized

Dell’s (DELL) Stock: 52-Week High Justified?

Dell’s (DELL) shares moved up as much as 6% after hours. The would put them at $28.50. That is about where the stock traded in November 2005.

Dell has made remarkable improvements since Michael Dell reclaimed the CEO job. The price the company gets per computer is up. Component costs are down. And, the company’s server line continues to grow and has the largest market share in the US.

But, revenue is still flat at around $14.6 billion. And, one quarter does not a recovery make.

In 2005, Dell had revenue of $49.2 billion, up from $41.4 billion in 2004. Operating income was $4.3 billion compared to the 2004 figure of $3.5 billion.

Granted, Dell was entering a difficult period, but it was still about to report a banner year.

The figures raise a critical question. Is a stock more valuable as it is beginning a rough patch or when it appears that it might regain its footing? It is too early in Dell’s revival to say whether using retail outlets like Wal-Mart (WMT) and cutting 10% of its staff will do the trick. Hewlett-Packard (HPQ), Acer, Lenovo, and Apple (AAPL) still want Dell’s customers.

And, there is still very little evidence that Dell can start to get its revenue going again. Firing almost 9,000 people is a trick that only works once.

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

Posted on: June 1, 2007 – 4:49 am in Uncategorized

Media Digest 6/1/2007 Reuters, WSJ, NYTimes, FT, Barron’s

According to Reuters, the family that controls Dow Jones (DJ) has agreed to talkd with News Corp (NWS) about a possible takeover.

Reuters writes that Dell’s (DELL) earnings were stronger than expected and the the company will cut 10% of its workforce.

The Wall Street Journal reports that the head of Coca-Cola (KO) is trying to jump-start sales by "retooling" some of the company’s bottlers.

The WSJ writes that Mercury Interactive paid $28 million to settle SEC options back-dating problems.

The WSJ reports that Google (GOOG) plans to build software applications for cell phones and also to offer a platform for products from other software developers. The company is essentially building its own operating system for handsets.

The WSJ reports that Hovnanian (HOV) posted a loss as its sales fell  The company blamed the housing slump.

The New York Times writes that GE (GE) is developing projects in India so that its sales can keep pace with the country’s growth.

The FT writes that the Intercontinental Exchange signalled that it might make a hostile bid for the CBOT.

Barron’s writes that Credit Suisse thinks that prospects at Alcatel-Lucent (ALU) are improving.

Douglas A. McIntyre

Posted on: June 1, 2007 – 3:32 am in Uncategorized

Asia Markets 6/1/2007 Shanghai Down

Markets in Asia were mostly higher.

The Nikkei rose .5% to 17,957. Hitachi (HIT) fell .7% to 888. Honda (HMC) rose .7% to 4310. Japan Airlines dropped 1.7% to 238. NTT (NTT) fell 1.7% to 563000. Sony (SNE) fell 1% to 6840. Toyota (TM) rose 2.2% to 7460.

The Hang Seng rose .5% to 20,736. Cathay Pacific fell 2.4% to 20.3. China Petroleum (SNP) fell 1.6% to  8.58.

The Shanghai Composite fell 2.7% to 4,001.

Data from Reuters

Douglas A. McIntyre

Posted on: June 1, 2007 – 2:58 am in Uncategorized

Motorola’s (MOT) European Headwind

Ed Zander and the management at Motorola (MOT) did not get much of a bounce in their stock when they fired 4,000 people. The stock closed down .5% today at $18.19. It is not the kind of buying frenzy that greeted Dell (DELL) when it disclosed that it would cut 10% of its staff.

Dell is making progress. The price per computer went up in the last quarter. Component costs went down. Server sales were very strong.

Motorola said that its European business has been its single biggest problem. Because consumers in Europe use more multimedia functions, they tend to buy more expensive phones. Reuters quotes Zander as saying: "It’s not the unit number as much as the revenue figure you get … There’s an eco-system of applications in Europe that doesn’t even exist here." The company needs to sell more high-end phones there.

Europe may be an issue, but the company seems to be saying that it is fighting a one-front war. And, that is not true. Motorola’s marketshare worldwide is now 18% and perhaps lower. The company has no clearly articulated plan for reaching customers in emerging markets, especially India and China. Handsets for these markets have very little margin unless they are built at extremely low cost. Motorola seems to leave this matter out of its conversationa about a "come back".

If Motorola is going to become sucessful once again, it share is going to have to move back toward 25%. Europe ain’t going to get that done alone.

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

Posted on: June 1, 2007 – 1:15 am in Uncategorized