Daily Archives: June 7, 2007

Cramer’s Sell Block, Different & Humbling (MNST) (June 7, 2007)

Tonight was Cramer’s big weekly SELL BLOCK feature.  He briefly mnoted some stocks but said those don’t really matter in the big picture.  He said he missed the really big call for the stock market sell-off this week.  He didn’t pay attention to the bond market.  If rates are under control you don’t have to worry, but when rates rise rapidly you have to pay attention.  Bill Gross’ call can move the market even if he doesn’t agree because if the big money managers believe something, then it can become a self-fulfilling prophecy.  As rates rise, the yield competes too much with stocks.  He noted he’s an idiot for not paying attention to this.  Cramer did say that he thinks the market selling is not done yet and you have to get a big gap down before it is done.

The second items in the SELL BLOCK was on Monster Worldwide (MNST).  Monster does NOT belong in the sell block and he still thinks it will be acquired.  He thinks the management team is a sale-team, and "don’t sell it" even though conventional wisdom says that this one is not going to be acquired.

Jon C. Ogg
June 7, 2007

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

Posted on: June 7, 2007 – 6:04 pm in Cramer,

Cramer Stomachs Sticking With NYSE (NYX)

Cramer has said he’s been a big backer of NYSE Euronext (NYX-NYSE) and was up on it early, but it has been a disaster since he named it his #1 Growth stock of the year.  Cramer said he has it in his charitable trust, but now 6 months into the year he said he doesn’t think it is a bad call upon review.  The Euronext merger is helping it and the demutualization history has been rewarding for investors.  He thinks that the stock is becoming a horrible trading stock that drops more than the markets on bad days and doesn’t rally as much as the market. 

Cramer interviewed Duncan Niederauer of the NYSE:  NYSE did big analyst day yesterday and they are the only multi-product global exchange that is scalable.  The street has a hard time valuing it and interpreting it.  On derivatives, the US futures market is a hole in their product mix and they admitted that the only way in is via an acquisition.  The listed trading volume in the U.S. is 85% exchange oriented and as the hybrid trading system has sharpened already.   Cramer asked about the specialist gap and the bizarre trading patterns of the stock, and the company said that it has released soem of the lock-up dates to just get the stock into the market because of the thin float.

What is obvious is that the ‘lock-up unlocking’ is hurting the stock.  That didn’t receive too much press and that would explain some of the mess.  NYSE has a history of allowing for a sloppy ‘lock-up release’ timing.  NYSE shares closed down at $79.95, down more than $32.00 from the $112.00 highs over the last 52-weeks.

Posted on: June 7, 2007 – 5:32 pm in Cramer, Exchange, Exchange News, Financial Stocks,

Cramer’s New Oil & Gas Play (XTO)

Jim Cramer on tonight’s MAD MONEY has an oil stock pick since the energy companies are not reinvesting in exploration and wildcatting.  One oil company that exploits higher oil prices is XTO Energy (XTO-NYSE).  He says he went ahead and bought some for his charitable trust yesterday so he’d own the best wildcatter in the US.

It has ensured growth for years now with the purchase of assets from Dominion Resources, Inc. (D-NYSE).  It held many oil and gas properties that were sold to XTO and to Loew’s (LTR-NYSE).  XTO bought the natural gas reserves for $2.00 per gas unit that can ultimately sell it for $9.00 down the road.  XTO sold off shares to help finance this and shares are now at a discount to the pricing because of the weak market.  Cramer also thinks it has the best management team in the business.

Jon C. Ogg
June 7, 2007

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

Posted on: June 7, 2007 – 5:13 pm in Cramer, Mergers and Buy Outs, Oil & Gas, Secondary Offering, ,

Qualcomm (QCOM) Takes On Water As Chips Are Banned

Qualcomm (QCOM) played with fire one too many times. Whether it was disputes over IP with its largest customer Nokia (NOK) or fights with rival Texas Instruments (TXN).

Today, its ongoing battle with Broadcom (BRCM) took an ugly turn. The U.S. International Trade Commission put a ban on imports of all 3G phones using Qualcomm chips. Broadcom had asked for the ruling. All of the major cell service providers in the US including AT&T (T), Verizon Wireless, and Sprint (S) should feel some impact soon. Qualcomm current model phones being shipped into the country before June 7 will still be allowed to be imported.

The risky behavior at Qualcomm has to be laid at the feet of CEO Paul Jacobs, son of the company’s founder. He has elected to fight every fight and turn away from compromise.

Now that Broadcom has had a success, other competitors are likely to press harder.

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

Posted on: June 7, 2007 – 4:48 pm in Uncategorized

Bill Gross & Higher Rates, Actually Good For Many Stock Sectors

A rate call, not just actual rates, is what nailed the markets today.  You can thank PIMCO’s Bill Gross for much of the sell-off today in equities and in longer-term bonds.  If this continues, youcan look at our interest rate sensitive ETF picks.

He has issued a ‘change of heart’ at his recent annual Secular Forum to discuss global rate trends for the coming 3 to 5 years.  He now believes that the old range for the 10-year US Treasury note is now 4.0% to 6.5%, up from last year’s target of 4.0% to 5.5%.

Now before you hurl yourself out the window over a higher rate and higher inflation environment, you need to consider that there are positives and this lends itself toward infrastructure, commodity, and many growth sectors.  If you believe that Gross, now with Greenspan on his advisory team, is right this actually has many positive implications.  What he is talking about is actually good for basic commodity companies, although it is not good for end-users buying finished goods and the companies who have signed hard contracts to produce goods at a price that they will have to purchase higher raw material prices for the commodities needed down the road.

Unfortunately, since Bill Gross is perhaps the most influential bond manager and since he regularly appears in the media many fear that a "Gross Prediction on Rates" can be a self-fulfilling prophecy.

HERE IS THE SUMMARY OF SOME OF THE COMMENTS (shortened):

Over the next three to five years, our secular outlook suggests that global inflation, and certainly U.S. inflation, will accelerate mildly for a number of reasons. We also suggest that global growth continues rather strongly at a 4% to 5% pace, which is typical of what we’re experiencing now.

That combination, I suppose, is not necessarily bond-friendly, especially in light of some of the changes that may take place in terms of financial flows—the recirculation of reserves from foreign central banks, et cetera. As a result, we’ve raised our forecast range for global interest rates, moving the range for 10-year U.S. Treasuries to 4.0-6.5% versus last year’s forecast range of 4.0-5.5%, for instance, which is sort of indicative of how we see the bond markets in general.

In addition, in terms of major conclusions, we think that asset managers and bond managers, to the extent that they can, should try to take advantage of global growth via minor positions in emerging market currencies. We expect the U.S. dollar to be weak going forward, for a number of reasons. And we think that commodity prices in general, based upon this strong global growth environment and the demand from the BRICs1 and the emerging market countries, will produce favorable results for commodities.

Those are our basic conclusions—not necessarily bond friendly but asset friendly in some ways, with the favored assets being emerging market currencies and commodities in terms of some of the more applicable asset categories. We also think that global stocks, especially those outside the United States, will benefit over this period of time.

MUCH CONTINUED AFTER HERE……..

Read More »

Posted on: June 7, 2007 – 3:32 pm in Economy

Cramer’s Bullish Picks (June 7, 2007)

On today’s STOP TRADING segment on CNBC, Jim Cramer didn’t spend too much time talking about the big drops we have seen in the markets in the last 3 days.  He does have picks:

He said that PepsiCo’s (PEP) bought a Ukranian juice maker for $542 million, and that is a good move.  Cramer thinks Coca-Cola (KO) is more attractive now that it came in.

Dicks Sporting Goods (DKS) was one that Cramer went back for as a major grower.

SunTrust (STI) is one that Cramer said may be acquired because its size makes it vulnerable.

Jon C. Ogg
June 7, 2007

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

Posted on: June 7, 2007 – 1:59 pm in Cramer, , , ,

CMGI Profit Taking Is Logical, But The Story Is Still Alive (CMGI, ICGE, SFE)

CMGI Inc. (CMGI-NASDAQ) is down another 5% in trading today, yet it really is acting like it is just follow-on profit taking and more of a buyers-strike than it does anything overly ominous to the long-term focus of the company.

After a 66% run from the quarter before and going into earnings, it actually makes sense that the stock has pulled back.  The sharp drop immediately after the news seemed a bit harsh, but the after-event trading activity has confirmed the action.  It is always hard to sell someone who sees a drop in their shares that"this is good and orderly" because a drop is a drop, but that looks tobe the case.  What may have added fuel to the fire is that this marks the third consecutive day where the Dow Jones Industrial Average has seen triple digit declines.  We all know how strong the market has been right before that.

Forbes gave all the positive summary of its own, and you can go through our notes over conference call.  Now that company is continuing to press its ModusLink image and brand, things are slowly getting better even after two large customer losses over the last two quarters.  The hidden call option is the @Ventures IV investment fund dedicated to clean energy and renewable energy.  The company has made some interesting investments in the sector and these may have significantly higher values down the road if alternative energy continues to gather steam like it has.  Here was our full preview discussing what was expected ahead of earnings.

In the last two days, Internet Capital Group (ICGE) is down mostly today by 3.7% and Safeguard Scientifics (SFE) is down almost 6%.

Jon C. Ogg
June 7, 2007

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

Posted on: June 7, 2007 – 1:40 pm in Alternative Energy, Internet, , ,

Wal-Mart Public Criticism & Activism Still Sharp (WMT)

We have noted that certain activist organizations may never be able to be appeased.  That is life.  Wal-Mart Watch is out with their criticisms against Wal-Mart (WMT-NYSE) today noting how many shortcomings the company made and how many issues remain unaddressed after the annual shareholder meeting.

The company does have an image issue.  The company doesn’t want to address many or most of the issues.  They are out of touch with even much of its customer base.  The list can go on and on.  The truth is that what was observed last week and this week before the major selling started  this week is that the company doesn’t have to fix everything perfectly.  It just has to do "less bad" for shareholders to get rewarded.  As the company addresses some (and if they will at least note and address some other) issues, many of the fixes will fall into place.  That is why shares rose sharply on Friday, and again on Monday after the round of investment firm upgrades that we expected actually came out.

We issued a 10 STEP PROGRAM for Wal-Mart to help its shareholders, and some of the issues are the same as the public image and activism issues.  They might not have been aggressive as we would have liked, but it is still a start.  Since we are approaching this from the stock side, the "less bad is good" stance holds true.

Frankly, Lee Scott and the entire company has a long way to go.  But they are seeming to at least try to do ‘less bad" than before.  If you are a shareholder, your outlook for the company is probably a tad better than it was last week.  If you are a professional critic and activist, well you know you still have plenty of meat to have job secutrity for quite some time.  Lee Scott may have saved his neck, but even if he did not he at least bought more time.

The verdict is still out on which company is going to do better for investors from here between target (TGT) and Wal-Mart (WMT).   Costco (COST) is still winning in the retail sales as you saw by today’s same-store-sale beat, and it still has a lot of room for growth.

On the second page you can read the Wal-Mart Watch criticisms over the shortcomings from last week……..

Jon C. Ogg
June 7, 2007

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

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Posted on: June 7, 2007 – 1:08 pm in Management Change, Retail, Shareholder Issues, , ,

Almost 52-Week Lows: Some Key Ethanol Stocks

Stock Tickers: PEIX, VSE, XNL, ADM, CLNE, ANDE, USBE, AVR

With oil prices remaining high, with politicians noting ethanol ahead of the Iowa caucus, and with OPEC threatening no new development and exploration if we keep pushing toward more and more biofuels, it was pretty amazing to see some of the ethanol stocks within spitting distance of their 52-week lows:

Pacific Ethanol, Inc. (PEIX) $12.90, 52-week low $12.50 (OCT 2006)
Verasun Energy Corp. (VSE) $14.91, 52-week low $14.36 (yesterday)
Xethanol (XNL) $1.35, 52-week low $1.24 (MAY 2007)

Andersons Inc. (ANDE) is not in the boat, with shares at $39.28 and its 52-week low is $31.05.  US BioEnergy (USBE) is trading at $12.07, above its $10.78 lows over the last 52-weeks.  Aventine Renewable Energy (AVR) is up on the day close to 2% at $17.16, up from its $14.60 low over the last 52-weeks.

Archer Daniels Midland (ADM) is no longer doing its major alternative energy swings and its shares sit down 1.1% at $33.71, with its 52-week lows at $30.20 (JAN 2007).  The recent IPO Clean Energy Fuels (CLNE) from T. Boone Pickens might be an ultimate indicator of demand for these shares right now (although, that isn’t ethanol).

If OPEC is out raising cain against biofuels, it has to make any sensible person wonder how much of a shortage there really is.  It is true thatthere is actually not a net shortage, but capacity is supposedly maxxed and storm season and summer is always a serious concern to energy prices.  But this first sabre rattling out of OPEC essentially against biofuels has to be yet another indicator that biofuels are starting to actually be noticed in downstream shipments by the OPEC nations.

Jon C. Ogg
June 7, 2007 

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

Posted on: June 7, 2007 – 10:03 am in Alternative Energy, HI/LOW, , , , , , , ,

ETF Plays on Rates (TLT, ITB, IEF); 10-Year Rates At 10-Month Highs

ETF Tickers: TLT, ITB, IEF

Some stock traders claim to be spooked by the thought of higher rates.  The two consecutive negative days were partially on this, but today was the mark to watch.  The 10-Year US Treasury Note just crossed back over 5.00% for the first time since August 2006.  The yield is currently at $5.04% to 5.05%, up 0.08% from last night.

An ETF that tracks the intermediate to longer-term maturities is the iShares Lehman 20+ Year Treasury Bond (TLT), and this is down 0.8% at $84.67.  Its stated ETF price moves inversely with the direction or change of interest rates, so as rates rise its price falls and vice versa. The slightly shorter time period ETF with a lower duration is the iShares Lehman 7-10 Year Treasury (IEF), and it is trading down 0.5% at$80.61 this morning.

If anyone is still hoping for a rate cut from Bernanke & Co., the markets are beating an entirely different drum.  The 10-year note is also the key for mortgage rates, and outside of the negative news still coming out of housing stocks would help explain the 5% drop in the homebuilder stocks.  The ETF that tracks homebuilders is the iShares Dow Jones US Home Construction (ITB), and its shares are down again today by more than 1.5% at$35.32 and are now down about 5% from the close on Monday.  In fact, average mortgage rates have climbed 0.14% this week.

Rates are dragging on stocks this morning, but not as much as earlier this week.  After 45 minutes of trading, here’s where we stand today:
DJIA            13,439.42; -26.25 (-0.2%)
S&P500      1,512.52; -4.86 (-0.3%)
NASDAQ    2,580.09; -7.09 (-0.27%)

Jon C. Ogg
June 7, 2007

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

Posted on: June 7, 2007 – 9:26 am in ETF, Economy, , ,

Starbucks (SBUX): Another 52-Week Low

Paul McCartney could not save Starbucks (SBUX). His deal to distribute his music in the big coffee chain did it little good. It hit another 52-week low today at $28

But, perhaps the two things are related. Starbucks has gotten fairly far from its roots. Of course, the company believes it is helped by selling breakfast sandwichs, donuts, music, coffee makers, mugs, and newspapers. And, perhaps they are right. But, it makes Wall St. nervous. Lost focus.

More than competition from McDonald’s (MCD) or any other coffee/fast food operator, it’s focus that Starbucks seems to be missing.

That, and a better share price.

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

Posted on: June 7, 2007 – 8:56 am in Uncategorized

Not All May Retail Stores Were Weak (COST, KSS, JWN, JOSB, SKS, ZUMZ, PSUN, SHRP)

Despite an earnings warnings out of Bed Bath & Beyond (BBBY) earlier this week and despite some perceived softness at Wal-Mart (WMT), there were actually some retail winners that posted strong same-store-sales gains above expectations for the month of May.  Here is a sample of some that beat the mark:

Costco (COST)         +7.0% vs. +5.6% est.
Jos. A. Banks (JOSB)     +13.5% vs. +4% est.
JW Nordstrom (JWN)     +6.3% vs. +2.6% est.
Kohl’s (KSS)         +10.5% vs. +6.3% est.
Pacific Sunwear (PSUN)  +6.4% vs. +1.9% est.
Saks (SKS)         +37.9% vs. +14% est.
Zumiez (ZUMZ)         +11.2% vs. +7.3% est.

Sharper Image (SHRP) did not do well on the surface with same-store-sales coming in at -8%, but when you take into consideration the steady double-digit declines and that the First Call estimate was looking for -13.8% then this isn’t quite so bad.  As we have noted on many occasions, sometimes Wall Street will reward disparaged companies that merely do ‘LESS BAD’ than they have in prior periods.  Shares are down more than 1% on very thin volume and somehow shares have managed to come back up close to 52-week highs, so we won’t be looking for a major run today.

Jon C. Ogg
June 7, 2007

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

Posted on: June 7, 2007 – 8:43 am in Retail, , , , , , , ,

Biomet Capitulates In Merger Fight, Accepts $46.00 Private Equity Buyout

Biomet, Inc. (BMET-NASDAQ) has recived and accepted a higher buyout price for shareholders.  The company announced that it has unanimously recommended to shareholders an increased offer from a private equity consortium to acquire Biomet for $46.00 per share in cash.  This $11.4 Billion deal is a sweetened offer from the private equity consortium including affiliates of the Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. and TPG.  This will commence on June 14, 2007.

Morgan Stanley provided the Board of Directors with its opinion that the revised merger agreement is fair from a financial point of view to holders of Biomet common stock.  Completion of the tender offer is subject to the condition that at least 75% of the Biomet common shares have been tendered in the offer, which is the same percentage approval requirement as with the previous merger structure. 

As a result, Biomet announced that it has cancelled the special meeting of shareholders previously scheduled for Friday, June 8 to consider and vote on the original merger agreement AND has agreed not to pay its annual dividend.  Sharesare trading up 3% at $25.60 in pre-market activity, which is a new 52-week and 24-month high.  It is also at the high-end of an old trading range from back in 2004, so this new improved merger price will essentially make just about all shareholders whole.

Jon C. Ogg
June 7, 2007

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

Posted on: June 7, 2007 – 8:40 am in Bait Shop, Medical, Mergers and Buy Outs, Private Equity,

Ocean Power Tech (OPTT) First Contract Award Since IPO

After what was deemed a botched IPO, Ocean Power Tech. (OPTT-NASDAQ) has issued its first contract award press release since coming public.  The company has been awarded a US $1.7 million contract from the US Navy to provide its PowerBuoy technology to a program for ocean data gathering designed to utilize sophisticated data gathering and communications systems.

This advanced technology program has prospective applications which include vessel tracking for homeland security, and utilizes wide-area unattended sensor networks. Under this contract, the Navy will ocean test OPT’s autonomous PowerBuoy as the power source for the DWADS program. OPT will support the Navy’s ocean test procedures in the areas of mooring design, at-sea operations and deployment. OPT’s performance under this contract will commence in June 2007, and is expected to continue over an eighteen-month period.

As far as how this compares, the company only produced revenues of $1.513 Million for the 9-months ended January 21, 2007. This might not be enough to mend a broken IPO, but this is a start and is actually different than the normal course issue of its main goals in producing power from the energy of ocean waves. 

Jon C. Ogg
June 7, 2007

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

Posted on: June 7, 2007 – 7:36 am in Alternative Energy,

Pre-Market Stock News (June 7, 2007)

(A) Agilent reiterated guidance after completing Stratagene buyout.
(ADCT) ADC Telecom trading up 3% after posting $0.35 EPS vs $0.24 estimates.
(ANN) Ann Taylor May s-s-s -4.6% versus -3.1% estimate.
(ATVI) Activision will take $66.7 million non-cash and pre-tax charge for options back-dating.
(BEBE) Bebe Stroes May s-s-s -3% versus -2.8% estimate.
(BHI) Baker Hughes rig count rose 23 to 1,007 versus April and up from 920 in May 2006.
(BMET) Biomet’s private equity buyout raised to $46.00.
(CALL) CallWave announced the ‘industry’s first’ Visual Voicemail gadget for Google Personalized Homepage.
(CHINA) CDC Corp. appointed two new directors.
(COST) CostCo s-s-s were +7% in May, above 5.5% estimates.
(DJ) Dow Jones may have some interest from owner of Philadelphia Inquirer.
(DSCO) Discovery Laboratories initiated a Phase II clinical trial evaluating the use of Surfaxin in children up to two years of age suffering from Acute Respiratory Failure.
(ESLT) Elbit Systems awarded $110 million order by Thales UK to provide ISTAR capability for UK armed forces.
(FINL) Finish Line guided Q1 earnings below estimates and now sees a loss.
(HGSI) Human Genome Sciences shows positive final results Of Phase 2b trial of Albuferon
(IDEV) Indevus Pharmaceuticals reports positive data from Phase III NEBIDO trial for development for the treatment of male hypogonadism.
(INFN) Infinera Corp. IPO priced 14M shares at $13.00, above the 410.00 to $12.00 range.
(IMMC) Immunicon has released highlights from podium presentations made at ASCO meeting.
(JOSB) Jos. A. Banks may s-s-s +13.5% versus +4% estimate.
(JCP) JC Penney May s-s-s -2% vs +0.3% estimates.
(JWN) JW Nordstrom’s May s-s-s +6.3% versus +2.6% estimate.
(LTD) Limited Brands May s-s-s _2% vs -1% estimate.
(MSFT) Microsoft has entered a cross license pact with LG Electronics for further development of current and future product lines.
(OPTT) Ocean Power Tech awarded a $1.7 million Navy order for its PowerBuoys.
(SFD) Smithfield Foods $0.34 EPS vs $0.34e; named new CFO.
(SHRP) Sharper Image May s-s-s -8% vs -13% estimate.
(UTIW) UTI Worldwide $0.18 EPS vs $0.16e.
(WMT) Wal-Mart s-s-s +1.1% vs 1.2% estimate; sales were +1.3% after fuel.
(YANB) Yardville National gets $35.00 buyout from PNC.

Jon C. Ogg
June 7, 2007

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

Posted on: June 7, 2007 – 7:20 am in Pre-Market Activity, , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Wal-Mart (WMT): More Slow Sales

In the last four weeks, sales at Wal-Mart stores rose only 1.3% compared to 3.5% for the same four week period last year. For the period, US net sales rose about 6% and international was up by over 14%. Worldwide net revenue rose just under 8% to $28.3 billion.

Douglas A. McIntyre

Posted on: June 7, 2007 – 6:54 am in Uncategorized

Pre-Market Analyst Calls (June 7, 2007)

ASML raised to Outperform at Bernstein.
CENT cut to Neutral at B of A.
COBZ raised to Outperform at KBW.
DCP raised to Outperform at CIBC.
DGX raised to Buy at UBS.
ECL raised to Buy at Jefferies.
FNM raised to Outperform at FBR.
GD raised to Overweight at Lehman.
HC raised to Overweight at JPMorgan.
IFX raised to Mkt Perform at Bernstein.
IO started as Buy at Jefferies.
KBR started as Outperform at Credit Suisse.
MHS raised to Buy at UBS.
MKC raised to Outperform at Bear Stearns.
OPTM started as Sector Perform at CIBC.
OREX started as Overweight at JPMorgan.
PDLI cut to Mkt Perform at Wachovia.
PG cut to Equal Weight at Lehman.
RDWR raised to Outperform at CIBC.
VOLV cut to Underweight at JPMorgan.
VRUS started as Outperform at JMP Securities.

Jon C. Ogg
June 7, 2007

Posted on: June 7, 2007 – 6:41 am in Analyst Calls, , , , , , , , , , , , , , , , , , , , ,

Sony (SNE) Job Cuts: No Good News For Playstation 3

Sony’s (SNE) game console arm is cutting jobs in the US after letting a bunch of folks go in Europe.

As a rule, large companies do not let go of people when business is good. The PS3 has not been selling as well as the Xbox 360 or Ninendo Wii. but Wall St. has hoped that as more game became available for the new Sony platform, sales would rise. Investors have also expected a price cut for the PS3 which is more expensive than its two rivals.

Firings are often a lagging indicator of how well a business has done. But, they can be a leading indicator of how a firm sees its upcoming performance. If Sony sees the future of the PS3 as dicey, cutting costs may simply be a way to staunch the bleeding.

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

Posted on: June 7, 2007 – 6:34 am in Uncategorized

Europe Markets 6/7/2007

Markets in Europe are mixed at 6.35 AM New York time.

The FTSE is up a fraction to 6,525. BHP Billiton was up 1.7% to 1285. GlaxoSmithKline (GSK) is up 1.5% to 1291. Vodafone (VOD) is up 1.9% to 158.

The DAXX was off .2% to 7,712. DaimlerChrysler (DCX) was up 1% to 65.41.

The CAC 40 was down .4% to 5,952. France Telecom (FTE) is down 6.5% to 21.17.

Data from Reuters

Douglas A. McIntyre

Posted on: June 7, 2007 – 5:41 am in Uncategorized

Apple (AAPL) Does Not Make Much On TV, But Intel (INTC) Does

Barron’s reports that the costs of the components in the AppleTV product are so high that the consumer electronics company does not make much. The product sells for $299. The cost of components is $237 according to iSuppy. So, best case, Apple (AAPL) makes 20%. But "that number does not include additional costs like cables, packaging and marketing."

Intel (INTC) gets about $68 for its part of the box, which is mostly the cost of its processor. So, the chip company does better than Apple does.

Why Apple launched the TV product is anyone’s question. It competes with set-top boxes, Tivos, DVRs, and Amazon’s Ubox, and that is just a partial list.

Apple already has its hands full, one would think, with getting its iPhone to market. The fate of the company’s shareholders depends on the new handset much more than it does the TV hardware.

The AppleTV. Why did the company bother?

Douglas A. McIntyre

Posted on: June 7, 2007 – 5:26 am in Uncategorized