Daily Archives: June 6, 2007

Cramer’s New ‘Four Horsemen of Technology’

Stock Tickers: MSFT, INTC, DELL, CSCO, GOOG, AAPL, RIMM, AMZN

On tonight’s MAD MONEY on CNBC, Jim Cramer has some names to fall back on after you have two bad tape days like this.  His idea and concept is the NEW 4-Horsemen of Technology: Apple (AAPL), Research-in-Motion (RIMM), Google (GOOG), and surprisingly Amazon.com (AMZN).  These are all the names you’ll want to buy as the end of summer gets here and the techs start running.  Cramer said you aren’t necessarily supposed to buy them all here.

The ‘Four Retiring Horsemen of Tech are Microsoft (MSFT) Intel (INTC), Dell (DELL), and Cisco Systems (CSCO).  These were the leaders of the 1990’s but are still down huge from their highs back in the bubble-days and are no longer leading the tech rally days like they used to.

Cramer said he likes Dell (DELL) still and he still likes Cisco Systems (CSCO).  He thinks Microsoft (MSFT) is sort of a ‘don’t buy" and he thinks Intel (INTC) has lost its way.  It was a bit surprising to see Amazon.com (AMZN) here since Cramer has only been re-endorsing it again after a long long time of bludgeoning it as overvalued.  All of these others are technology plays that Cramer keeps talking about almost day in and day out.  So whatever he says from here on these are calls that maybe he’s got something new and maybe he doesn’t, but you’ve heard some variation of it at some point lately.

Jon C. Ogg
June 6, 2007

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

Posted on: June 6, 2007 – 5:17 pm in Consumer Electronics, Cramer, Internet, Technology Companies, Wireless, , , , , , , ,

Vonage, Actually Making Another Presentation (VG)

Vonage Holdings Corporation (VG-NYSE) has disclosed that the company’s CFO, John Rego, will be speaking in New York City at the Bear Stearns 2007 Technology/Communications/Internet Conference on Monday, June 11, 2007 at 2:15 PM ET.  The company tends to make a press release for almost any event out there, but frankly it is a bit surprising that the company is willing to present any data at all outside of its quarterly earnings conference calls.  This is just after a prior presentation at a Deutsche Bank Media and Telecommunications Conference yesterday (link here), which had no real impact on the stock.

It is embroiled in a court case with Verizon (VZ-NYSE) that has the potential of sinking it, but this is still probably far from over.  It also now has to contribute to an FCC fund that supports service for schools, libraries and rural and low-income households.

The two groups of questions that would be interesting to see how they are answered are as follows:

1) If you plan to stay independent and assuming you lose the Verizon case in most points, how high do you expect to raise rates to survive as a business? 

2) If you are deemed a doomed financial operation but still an attractive operating company for a larger telco operator (like Verizon), then why doesn’t the company perhaps try to see what the value would be to the larger carrier?  Would there be any value for shareholders under that scenario, or would be a near-bankruptcy buy that wipes out shareholders?

The good news is that this does not appear to be in a dire spot for the immediate future, but the bad news is that the unknowns are still piling up and the company has a long difficult road ahead of it.

Jon C. Ogg
June 6, 2007

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

Posted on: June 6, 2007 – 4:44 pm in Internet, Telecom, ,

ARCAF – Arcadis Nv: A Wake-up Call for the NASDAQ

By Saul Sterman

Arcadis announced on May 16, 2007 that it was delisting from the NASDAQ as of June 7th due to low volume and what Arcadis is describing as unnecessary expenses related to being listed on the NASDAQ. Arcadis will maintain public listing on the Euronext.

Read More »

Posted on: June 6, 2007 – 4:35 pm in Uncategorized

Genentech (DNA) Joins The 52-Week Low Club

Genentech (DNA) Big biopharma drops on poort clinical trial results for its drug Avastin. Down to $75.56 from 52-week high of $89.73.

Verasun Energy (VSE) Rise in supply of ethanol could hurt margins. Shares drop to $14.36 from 52-week high of $30.75.

Northwest Air (NWA) Just out of Chapter 11. Not a nice reception as oil prices hurt airline shares. Down to $23.85 just a few days from emerging. The high since then is $26.50.

Spatialight (HDTV) Bad news about largest customer and delisting keep dogging it. Down to $.07 from $3.10.

Transmeta (TMTA) Chip maker has unhealthy loss in latest quarter. Drops to $.28 from 52-week high of $1.75.

Mannkind (MNKD) Drug development firm had rought quarter. Down to $10.18 from 52-week high of $21.74.

Douglas A. McIntyre

Posted on: June 6, 2007 – 3:18 pm in Uncategorized

Ford (F) Gets A Break

The new JD Power survey of initial car quality gave Ford (F) some good news. It won five of the nineteen segments, edging out Toyota (TM).

According to The Associated Press: "Ford Motor Co. earned segment awards for the Ford Mustang, Lincoln Mark LT, Lincoln MKZ, Mercury Milan and Mazda MX-5 Miata."

No major car company needed the affirmation more than Ford. Its sales have continued to fall in its home market almost every month, and its now lags Toyota in US sales volume. The company’s share price is down over 50% during the last five years, compared to an increase of almost 50% in the S&P.

Douglas A. McIntyre

Posted on: June 6, 2007 – 2:13 pm in Uncategorized

Dendreon’s $75 Million Borrowing, Almost For Free (DNDN)

Dendreon (DNDN-NASDAQ) announced this morning that it did price its $75 million in convertible senior subordinated notes due 2014 via a Rule 144A private placement.  The interest rate is merely 4.75%, and here is the conversion ratio: notes are convertible into DNDN common stock at an initial conversion rate of 97.2644 shares per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $10.28, subject to adjustment. The initial conversion price represents a premium of approximately 17.5% relative to the closing stock price of $8.75 on June 5, 2007. 

The company also may get $25 million more, subject to an overallotment if the underwriters deem the offering cheap.  Shares are down 2.8% at $8.50, but this looks more like a lack of interest or like a drop with a weak stock market more than it does the terms of the borrowing.

Could you imagine walking into your banker and the loan is based on assets that may not have a future value, and that purpose of the loan was to complete studies and pay salaries if your cash gets tight?  And to top it off, that the gatekeeper to your customer base (the FDA in their case) has just issued a huge public delay with a note to potential buyers that they might not ever be allowed to buy the products you want to sell?  That’s what happened here.

The company was already risking it all anyway, and this is pretty cheap money for the company under the current circumstances.  The officers are probably hoping that extra $25 million in the overallotment gets exercised.

Jon C. Ogg
June 6, 2007

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

Posted on: June 6, 2007 – 2:11 pm in Biotech,

Cramer Outlines Long-Term Growth in Aerospace

On today’s Wall Street Confidential video on TheStreet.com, Jim Cramer says that aerospace stocks are great buying opportunities on down market days like today and yesterday.  Aerospace is tied into a long-term cycle, not really part of the stock market.  Honeywell (HON) is even better than Boeing (BA). BEA Areospace (BEAV) is great on the interiors for planes.  Other great aerospace plays he gave were Brush Engineered Materials (BW), Allegheny Tech (ATI), Precision Cast Parts (PCP), and AAR Corp. (AIR).  He also gave some defense names, but the main point was on the long-term growth trends. 

For some conjecture, let’s hope that idf things ever slow down too much that waves of order cancellations don’t come into play like they have in past down-cycles.  If that happens, Cramer will probably remember that these aren’t permanent growth engines.  To prove a point, BEAV traded well under $5.00 at the lows during the last down-cycle in the sector.

Jon C. Ogg
June 6, 2007

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

Posted on: June 6, 2007 – 1:37 pm in Aerospace, Cramer, , , , , , ,

Turkish Incursions Into Iraq Hurt US-Listed Turkish Shares (TKF, TKC)

Some military and political moves affect entire global markets and some moves are limited to certain regions.  If you just look at headlines and saw "Turkish Tropps Launch Offensive Into Iraq" you would worry that major Middle East tension and conflict was heating back up.  If you know the history of Kurdish Iraq, the Kurdish area of Turkey, and the efforts for Kurds to break away from Turkey then this is just another messy day at the geopolitical office meeting the financiers.

There are reports of Turkish armed forces strikes across the Iraqi borders and itdepends all upon which sources you read.  Some say YES and some say NO.  Yahoo! notes that troops have entered and are chasing guerillas that use staging bases there.

The armed fighting between Kurdish separatists and Turkish forces is more than 20 years old, and it is a mult-generations’-old issue.  The Kurds want their own nation and Turkey isn’t exactly too fond of giving back land it will lose rights and control over.  You can understand both sides of the argument.

There are very few live direct plays for US investors to play the Turkish stock market here in the US, but there are two:  The Turkish Investment Fund (TKF-NYSE) and Turkcell Iletisim Hizmetleri AS (TKC-NYSE).

TKF is trading down 4.1% at $17.25 today.  TKC is trading down 2.2% at $16.06 today.

You might be able to blame this on the two days of weak trading in the US markets, and you might be able to blame the perceived geopolitical risks.  The Turkish markets measured by the ISE National 100 Index and the ISE National 30 were down 1.27% and 1.35% respectively.  Energy traders are of course watching this because of the headline risks, but if the history would indicate that this is a retalitory strike.  If you can start a sentence with "just" it is probably "just" another messy day at the geopolitical office in a meeting with the financiers.

Jon C. Ogg
June 6, 2007

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

Posted on: June 6, 2007 – 12:21 pm in ADR, ,

AMD (AMD) At The Rally’s End

AMD (AMD) was a fairly exciting stock for a few weeks. After bottoming just below $13 on May 8, the stock ran up and traded above $15 for a few days. At one point the stock was up about 20% over a period of a week. The company brought in new financing and agreed to fire a few hundred people. There were rumors that some AMD’s less strategic business segments might be sold off.

But, Intel (INTC) introduced a new chip line last week, and word walked around Wall St. that some of AMD’s new customers wins came due to deep discounting. The impression returned that the war of attrition between the two processor companies was going to continue.

To really kill the AMD rally, Stifel Nicolaus came out with a research note saying that AMD vendors were told the new Barcelona chip would be late to market. An analyst at Citi said fundamentally the same thing. AMD’s shares were routed like Napoleon at Waterloo. The shares have fallen 2.6% today, and are back at $13.61.

Oh, well.

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

Posted on: June 6, 2007 – 12:18 pm in Uncategorized

Newspaper Carnage Continues, But…. (NWS, DJ, TRB, MNI, GHS, JRN, NYT, GCI, SSP, BLC, LEE )

There has been a solid recovery in newspaper and media plays in recent weeks, for some obvious merger reasons.  But the continuously deteriorating fundamentals in the sector lend a credence that the sector is just getting a reprieve that is masking the obvious trend.

Despite the mini-rally seen of late in newspaper stocks, Goldman Sachs remains unchanged and suggests selling into strength in the newspaper sector.  The purchase of Tribune (TRB) at 10-times EBITDA by Sam Zell and the major premium buyout offer from News Corp. (NWS) to Dow Jones (DJ) are fueling the speculative fire for more deals in the sector. Goldman thinks the ad revenues in Q2 will be down in the 5% range for newspapers, which is the second worse performance since the recession impacted Q1 2002.

What is interesting is that Goldman notes that there ‘undoubtedly will be further consolidation’ in the sector, but expresses a ‘remain underweight’ stance because of downward revenue trends, operating margin pressure, and downward earnings revision bias.  It also notes that valuations are not enticing for a declining fundamental basis.

So how far off of lows are these companies? 

Company (Ticker)        Price Today    52-Week Range
Gannett (GCI)                   $58.75         $51.65-$63.50
McClatchy (MNI)               $27.90         $27.42-$45.29
EW Scripps (SSP)            $46.00        $40.86-$53.39
New York Times (NYT)    $25.85        $21.54-$26.90
Belo Corp. (BLC)              $22.30         $14.93-$22.94
Lee Entrprs. (LEE)            $24.92        $22.98-$25.13
Journal Comms. (JRN)    $13.80        $10.05-$14.00

If you read media publications in the sector, the trend has been that major metro publications are the ones that have been experiencing the rapid drop-off.  The rural and small city papers is where the mergers have been and where the strength has been.  It isn’t so much that these areas are just full of non-webby bumpkins because that isn’t the case.  It’s just that the farther and farther you get away from major population centers the live and daily information becomes decentralized and it easier to keep it focused in a newpaper and ‘weeklies’ type of local publication.  That lends credibility to GateHouse Media Inc. (GHS-NYSE), still a fairly recent IPO.

With some of the trends continuing and an economy that is slowing, it is hard to fall back in love with the sector.  But there has been so much damage and the ‘undoubted consolidation’ just makes it harder and harder to consider putting new funds to work in the companies that have not recovered.  Sure, there will be more carnage in the sector and there will probably be some extra erosion in the stocks of the ones that have less value. 

A year from now it is likely we’ll still be discussing the carnage in newpaper and print media trends.  But we might be discussing the trends of companies that have either merged or been taken private, or at least fewer public companies.  With an election in 2008, its still a toss-up if newspapers will stabilize or if the new-media will steal away so much that even a larger market may not help.  If you have read our work frequently you will probably recallreferences to "Less Bad Is Good," and this may be a trend to watch for (or maybe just hope for) inthe sector.  Perhaps digital paper will take newspapers to a new realm.

The verdict is still out, for now.

Jon C. Ogg
June 6, 2007

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

Posted on: June 6, 2007 – 11:09 am in Media, , , , , , , , , , ,

Reasoning Behind Borders Group ‘Cut to Sell’ at Goldman Sachs (BGP)

When a bulge bracket firm issues a ‘Sell’ rating on a stock, you always have to consider the reasoning.  ‘Sell’ recommendations can cause many more backlashes historically than other downgrade and ratings changes, particularly since the description leaves such little leeway in the interpretation.

Goldman Sachs downgraded Borders Group (BGP-NYSE) this morning from a ‘Neutral’ to a "sell’ rating. and BGP shares are down more than 6% as a result.  Technically an analyst downgrade based on indirect news is technically not a game-changer, but there are instances where this is not the case.

The reasoning behind the downgrade actually has some ties to the Federal Trade Commission trying to block the proposed merger between Whole Foods (WFMI-NASDAQ) and Wild Oats (OATS).  Goldman notes that the market has been expecting a more permissive merger environment, even though the proposed XM Satellite Radio (XMSR-NASDAQ) and SIRIUS Satellite Radio (SIRI-NASDAQ) is under fire by the FCC.

Goldman believes that the prior share price of Borders (BGP) was pricing in the possibility of a transaction, and the new merger climate might be less permissive to such a deal.  It also states that shares are overvalued on a purely fundamental basis and trimmed its 12-month target by $1.00 to $19.00.  Shares are down more than 6% to $20.35 so far, and the 52-week trading range is $16.20 to $24.19.  Its key competitor, Barnes & Noble (BKS-NYSE), is trading down 0.8% at$41.85 on the day. 

It will be interesting to see if Goldman takes the air out of other ‘potential merger candidates’ in the coming days and weeks.  These are actually small businesses in the grand scheme of things:  Borders Group has a $1.2 Billion market cap, and Barnes & Noble has a $2.7 Billion market cap.

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

Posted on: June 6, 2007 – 9:51 am in Analyst Calls, Consumer Goods, Mergers and Buy Outs, Regulation, Retail, , , , , ,

Prudential Turns Itself Into A Widget Firm (PRU)

In a somewhat surprising move, Prudential Financial, Inc. (PRU-NYSE) has decided to jettison its institutional equity research, sales, amnd trading business known as Prudential Equity Group. This will affect equity research operations including its offices and trading operations in New York City and Washington, D.C., San Francisco, Kansas City, Chicago, Philadelphia, Cleveland, Atlanta and Boston, and outside the United States in London, Zurich, Paris and Tokyo. Effective immediately, Prudential Equity Group is dropping coverage of the sectors and companies it covers.

So if Prudential is now out of the institutional research and trading game, this leaves retail asset gathering operations. At March 31, 2007 it claimed $630 million in assets under management.  Prudential’s business includes life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services.

Interestingly enough, Cramer said that despite the fact that Prudential had top quality research he likes the move.  In fact, he said he’d sell AMERITRADE (AMTD) and Buy Prudential (PRU).

The problem with this is that it leaves the asset gatherers esentially offering NOTHING unique.  The sales staff is left to sell widgets.  To top it off, there has been a huge shift into ETF’s over the last 12 to 24 months.  It is still unclear if the ETF trend has been taking Joe Q. Public out of individual stocks or if it has taken him out of mutual funds, but there is a real question that exists today: why on God’s green earth would anyone still buy a 5-letter ticker mutual fund anymore if they have any knowledge of the market?  If you are a fairly sophisticated investor and have your main account at Prudential, this is the first question you should be asking.  They have no underwriting and investment banking department any longer, now canned the research and trading, so what is there?  Maybe they need to acquire more of an online discount trading firm to join that crowd.

Some may consider this a good move because of cost cuts, but now Prudential is just another "me too" brokerage house with basically nothing proprietary.   The good news is that other bulge bracket firms such as Goldman Sachs (GS), Morgan Stanley (MS), Bear Stearns (BSC), Lehman  Brothers (LEH), Merrill Lynch (MER), and others have one less competitor out there.

Jon C. Ogg
June 6, 2007

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

Posted on: June 6, 2007 – 8:17 am in Brokerage Firms, Financial Stocks, , , , , ,

Hope For Higher DRAM Chip Prices Ahead

The article is titled "DRAM contract prices slips 5% in 1HJun, hopes for a price rebound may occur in July；Taiwan’s miCARD to offer more choice" and overshadows an industry whose MO just seems hampered almost monthly with falling prices.  It seems as though it is getting to the point that some of outsiders are starting to wonder if the commodities and chemicals used to make chips somehow cost more than the chips themselves, even though it more of a joke than a fact.

Spot price went up last week on lack of new DRAM chip supply, while contract prices tumbled another 5%. It is projected that after the 2007 Taipei Computex draws to a close, prices will have a chance in experiencing a rebound. Elpida’s CSO has suggested his bullish view to 2H07 and he anticipate supply may tighten in 2H07.

Spot prices for 512Mb 64Mx8 DDR2 rose 13.7% to US$1.74 and original chip prices rose more than 7% during the last week of May.  This appears to be noted as an inventory price change rather a demand-driven price change.  Some special deals were signed at lower prices ahead to take care of excess inventory at DRAM makers.  The group notes that commodity DDR2 chips are expected to decline 15-20% because of Korean chip-makers output in July.  NAND Flash spot prices looked stable to higher for the reporting periods.

You can read the article and see the tables to view the actual pricing metrics for the period.

Jon C. Ogg
June 6, 2007

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

Posted on: June 6, 2007 – 7:49 am in Semiconductor

Pre-Market Stock News (June 6, 2007)

(AAUK) Anglo American’s CEO will become a non-executive member of the board of directors at BP (BP).
(ACAD) Acadia Pharmaceuticals traded up over 10% after Jim Cramer touted the stock as a speculative play for trading the upcoming data on its schizophrenia and Parkinson’s treatment.
(ACOR) Acorda Therapeutics Starts Second Phase 3 Trial of Fampridine-SR in MS
(AMTD) TD AMERITRADE was notified that JANA and S.A.C. funds have secured an interest of roughly 8.6% stake to pressure the companies to enter a merger.
(AZN) AstraZeneca CFO leaves to join Goldman Sachs.
(CROX) Crocs is launching a fashionable line of high heel and flats for women to appeal to fashion conscious women.
(CSC) Computer Sciences Corp. may look to acquire iSoft Group plc in the UK.
(ETFC) E*Trade trading up 3% on AMERITRADE news.
(FCS) Fairchild Semiconductor reaffirmed Q2 growth targets.
(GSK) GlaxoSmithkline defends Avandia saying it does not increase heart risks.
(KFY) Korn Ferry $0.37 adjusted EPS versus $0.34 estimates.
(MAIR) MAIR Holdings -$0.06 EPS vs -$0.05e.
(PNRA) Panera trading down $7.00 on an earnings warning of $0.38-0.40 vs $0.47-0.51e.
(PLUG) Plug Power named new CFO.
(PRU) Prudential lays off 420 in a research phase out, will cease covering all equities immediately.
(RUS) Russ Berrie rejected an $18.00 buyout as an undervalued deal.
(SCHW) Charles Schwab traded up 1% after the AMERITRADE news.
(SIRI) Sirius Satellite Radio announced a $250 million term-loan from Morgan Stanley.
(STAR) Starent priced a 10.5 million share IPO at$12.00, above the $9.00 to $11.00 range.
(WFMI) Whole Foods is facing a deal blockage by the FTC over a ‘natural foods market disruption’ according to FTC.

Jon C. Ogg
June 6, 2007

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

Posted on: June 6, 2007 – 7:13 am in Pre-Market Activity, , , , , , , , , , , , , , , , , , , ,

Starent Networks Premium IPO Pricing (STAR)

Starent Networks Corp. (STAR-NASDAQ) priced its awaited 10.5 million share IPO at $12.00 per share, above the original $9.00 to $11.00 range.  Underwriters are isted as Goldman Sachs, Lehman Brothers, Thomas Weisel, and J.P.Morgan.  9 million shares are being sold by the company, and 1.5 million shares are being sold by the company.  So the company will receive $108 million before fees. 

Starent is a provider of hardware and software enabling mobile-service operators to delivery multimedia services to subscribers.  It works with video downloads or streaming, Internet access, voice-over-IP, e-mail, mobile TV, video and photo sharing, gaming, and others.  On its site it lists Cantv, SK Telecom, US Cellular, Verizon, Virgin Mobile, Vivo, Zapp, China Unicom, and KDDI as its key customers.

The company had revenues of $94 million and net income was almost $4 million in 2006.  More information can be found at its website at starentnetworks.com.

Jon C. Ogg
June 6, 2007

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

Posted on: June 6, 2007 – 6:59 am in IPOs, Software, Technology Companies, Wireless,

Earlybird Analyst Calls (June 6, 2007)

AGN started as Buy at Jefferies.
AW started as Outperform at Credit Suisse.
BAY started as Overweight at JPMorgan.
CACH cut to Neutral at Merriman Curhan Ford.
CIEN started as Outperform at Piper Jaffray.
CPNO started as Outperform at Morgan Keegan.
EPD started as Outperform at Morgan Keegan.
EPE started as market perform at Morgan Keegan.
ETE started as Outperform at Morgan Keegan.
ETP started as Outperform at Morgan Keegan.
GILD cut to Neutral at Credit Suisse.
IMA started as Buy at Stifel Nicolaus.
JCI raised to Outperform at Credit Suisse.
KMP started as Outperform at Morgan Keegan.
KSE raised to Neutral at Credit Suisse.
LOOP started as Buy at Sun Trust Robinson Humphrey.
MNT started as Buy at Jefferies.
NTEC started as Outperform at Rodman & Renshaw.
ORBC started as Outperform at CIBC.
RSG started as Outperform at Credit Suisse.
SINT cut to Hold at Stifel Nicolaus.
TEVA raised to Outperform at Credit Suisse.
VLTR cut to Sector Perform at CIBC.
VRUS started as Buy at B of A.
WMI started as Outperform at Credit Suisse.

Jon C. Ogg
June 6, 2007

Posted on: June 6, 2007 – 6:30 am in Analyst Calls, , , , , , , , , , , , , , , , , , , , , , , , ,

Dell (DELL) To Chase IBM (IBM) And HP (HPQ), Buy EDS?

Dell (DELL) has services revenue envy. Selling PCs and servers may be a good business, but offering IT services to big companies may be much better. Michael Dell looks at the large operations that IBM (IBM) and HP (HPQ) have developed in services and wonders why he can’t get some of the same. Computer companies use their enterprise relationships built through selling hardware to create operations to offer consulting on technology integration.

Dell brings in 10% of its $60 billion from its services businesses. Michael Dell told the FT that increasing the company’s revenues in this sector is a “huge opportunity”.and is already growing faster than hardware sales.

The question is how does Dell become a factor in the IT services business? It is already an industry that is crowded with companies which include other hardware vendors and big consulting operation like EDS (EDS) and Accenture (ACN).

One option is to buy and not build. Dell’s stock is at a 52-week high and the company now has a market cap of over $60 billion. EDS has a market cap of only $14 billion. Over the trailing four quarters, the company has brought in $21 billion in revenue and has had operating income of $2.8 billion. Dell could easily afford an acquisition, if it would catapult the company into an industry it viewed as critical.

Would Dell make such a large purchase? To keep its momentum going, it may have to.

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

Posted on: June 6, 2007 – 5:51 am in Uncategorized

Europe Markets 6/6/2007

Markets in Europe were sharply lower at 6.20 AM New York time.

The FTSE was off .9% to 6,572. Barclays (BCS) was off 1.6% to 727. British Airways (BAB) was down 2% to 447. GlaxoSmithKline (GSK) was up 1.8% to 1303.

The DAXX fell 1.4% to 7,809. DaimlerChrysler (DCX) was off 2.4% to 65.3. DeutscheBank (DB) was down 2.1% to 109.4. SAP (SAP) was up .8% to 36.65.

The CAC 40 was down .8% to 6,028. Peugeot was off 2.4% to 57.45.

Data from Reuters

Douglas A. McIntyre

Posted on: June 6, 2007 – 5:24 am in Uncategorized

OPEC Sabre Rattling: Biofuel Backlash

OPEC is getting sick of developed countries working on alternative energy. Why, the cartel asks, should it invest more in oil exploration, if it is to eventually be replaced by technologies like windmills and electric cars? The head of OPEC said that efforts to find oil alternatives could risk driving oil prices "through the roof". No reason to be subtle. Use direct threats. “If we are unable to see a security of demand…we may revisit investment in the long-term,” the chief of OPEC stated.

The cartel is planning to spend $130 billion through 2012 to raise oil output.

But, OPEC did offer some hope, especially to the large oil companies. The organization said it would need outside investment to improve its ability to produce oil. State-run oil companies in the OPEC nations may not be able to provide all of the capital to expand production.

OPEC’s plan to add nine million barrels a day to its current 30 million between now and 2020 could be a major lift to international exploration and production companies like Exxon (XOM). In exchange for infrastructure investment, multi-national oil companies could gain access to special rights to refine and sell the products of the exploration that they fund.

Unless, of course, the green interests promoting biofuels have their way. In that case, OPEC may not want outside money. It may just raise the prices on the oil it already produces.

The cartel has decided to use the stick of raising prices and the carrot of allowing large oil companies the chance to make more profit. Who can blame them?

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

Posted on: June 6, 2007 – 4:55 am in Uncategorized

Sony (SNE): the PS3 falls further behind

Based on reports out of Japan, the Sony (SNE) Playstation 3 is being outsold by rival game platform, the Nintendo Wii, by a very large margin.

Research firm Enterbrain reports that Nintendo sold 251,794 units of the Wii in May, compared with 45,321 units of the PS3 sold.

Douglas A. McIntyre

Posted on: June 6, 2007 – 3:45 am in Uncategorized