Daily Archives: July 5, 2007

Is $75.00 For Bausch & Lomb the FINAL Offer?

Bausch & Lomb (BOL-NYSE) has received a higher buyout price from Advanced Medical Optics (EYE-NYSE) (or ‘AMO’ hereafter)  in a cash and stock merger where Bausch & Lomb’s shareholders would receive $45.00 in cash and roughly $30.00 in AMO stock, valued based on the average closing price of the AMO common stock for five trading days prior to the date a definitive agreement is signed. 

The new proposal is subject to termination of Bausch & Lomb’s previously announced merger agreement with Warburg Pincus and the execution of a definitive merger agreement with the company. The terms are subject to include that ‘AMO’ will have up to 12 months to close the transaction and that interest would be paid in cash with respect to the purchase price by ‘AMO’ at the rate of 7.2% per annum beginning six months after a definitive merger agreement is executed. BUT, the proposal is not subject to a financing condition and that may be an important kicker since there was a worry that this was too large of a bite for the company.

We had noted on May 16 Bausch & Lomb Selling Itself Away Too Cheap and then again on May 24 we noted that Bausch & Lomb May Get a Higher Bid.

Ultimately, this may not even be the real and final-final offer either.  Warburg Pincus or another group could decide to pony-up the cash, and they might not have to pay the full $75.00 to win.  In a cash and stock deal with some antitrust issues (in lens solutions) and with a very long close date, you could always expect a seller to accept terms from someone else.  So there is always the chance that a higher bid may be hoped for by holders.  Now the main question is at what point there ceases to be any value to a buyer.  Is the Beholder’s eye still even looking to beauty?

Jon C. Ogg
July 5, 2007

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

Posted on: July 5, 2007 – 6:36 pm in Mergers and Buy Outs, ,

Cramer’s New List of CEO’s That Need To Go (AMD, MOT, ALU)

Tonight on CNBC’s MAD MONEY, Cramer said he has a new set of members for the "Wall of Shame."  Cramer said four of his picks have gotten the boot.

3 NEW ADDITIONS:
Hector Ruiz of Advanced Micro (AMD);
Ed Zander of Motorola (MOT);
Patricia Russo of Alcatel-Lucent (ALU)

Changes on the old list: Buckley, of 3M (MMM)…full pardon; Cherkasky of Marsh & McLennan (MMC) now FULL member of Wall of Shame.

Interestingly enough, I had my own list from December in "These Stocks Could Rise Simply on New a CEO Announcement" and 5 out of my 10 picks have announced ‘bye-bye’ but please keep in mind that not all of these CEO’s were noted as "gotta go" leaders. 

I have been reviewing Ruiz of AMD for over a month now and here is the only problem….. There is a management gap and a lack of replacements and this would be a "gotta go just to go with no help in mind" issue, at least as of today.  Zander of Motorola could go too, we’ve had little to no good news to say about him.  Russo of Alcatel is a tough one, particularly as Lucent is now just part of Alcatel.

Jon C. Ogg
July 5, 2007

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

Posted on: July 5, 2007 – 5:53 pm in Cramer, Management Change, , , , ,

Cramer: Don’t let The Bears Shake You Out (July 5, 2007)

On tonight’s MAD MONEY on CNBC, Jim Cramer hosted his first live episode in more than 1 week.  Tonight, Cramer said some of the scare and fright he heard while he was out was too much: the sub-prime blow-up, rates could hit 5.5%, a fed tightening may occur, Bear Stearns may drop, the buyout craze was over, oil prices rising, housing……..

OK you get the picture.  Cramer spent more than a couple minutes being sarcastic, and he said if you got scared out because of the main negatives that maybe you should not be a stock owner.  He thinks you have to own tech (see today’s Cramer post).  He thinks listening to the bears is how you miss all the market moves.  Metals, tech, aerospace, infrastructure…these are all great markets, and you shouldn’t let the press share you out.

Sometimes I agree with Cramer, and sometimes I do not.  But tonight was true, if you looked at all the negativity over the last two weeks and realized the market didn’t melt down then it is hard to think it will after the passe news has mostly or partly passed.

Jon C. Ogg
July 5, 2007

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

Posted on: July 5, 2007 – 5:15 pm in Cramer

ETF Winners & Losers (July 5, 2007)

DJIA                            13,565.84; -11.46  (0.08%)
S&P500                      1,525.40; +0.53 (0.03%)
NASDAQ                     2,656.65; +11.70 (0.44%)
10YR-Bond                5.144%; +0.094%
NYSE Volume            2,622,953,000
Nasdaq Volume        1,708,784,000

iShares FTSE NAREIT Retail (RTL)                                 2.46%
Market Vectors Russia (RSX)                                            2.06%
iShares FTSE NAREIT Real Estate 50 (FTY)                  1.95%
Market Vectors Steel (SLX)                                                  1.91%
DJ Wilshire REIT ETF (RWR)                                             1.90%
Ultra Russell2000 Value ProShares (UVT)                     1.77%
iShares MSCI Taiwan Index    (EWT)                                 1.71%
iShares Cohen & Steers Realty Majors (ICF)                  1.70%
PowerShares DB Base Metals (DBB)                               1.66%
PowerShares Dyn Leisure & Entertainment    (PEJ)      1.66%
NYSE Arca Tech 100 ETF (NXT)                                         1.62%
SPDR S&P Emerging Europe (GUR)                                1.59%

ETF LOSERS
HealthShares Cardiology    (HRD)                                     (2.07%)
SPDR Russell/Nomura Small Cap Japan (JSC)            (1.54%)
United States Natural Gas (UNG)                                      (1.51%)
PowerShares WilderHill Clean Energy (PBW)                (1.40%)
SPDR Russell/Nomura PRIME Japan (JPP)                   (1.36%)
B2B Internet HOLDRs (BHH)                                              (1.26%)
WisdomTree International Utilities (DBU)                        (1.20%)
iShares Lehman 20+ Year Treas Bond (TLT)                 (1.12%)   
iShares MSCI Italy Index (EWI)                                            (1.06%)
SPDR S&P Emerging Middle East & Africa (GAF)           (1.06%)
PowerShares Gldn Dragon Halter USX China (PGJ)     (1.04%)

Mixed US markets, China down, real estate up on hotel mergers, rates up again…..looks pretty logical today.

Jon C. Ogg
July 5, 2007

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

Posted on: July 5, 2007 – 4:47 pm in ETF, HI/LOW

Microsoft (MSFT) Falls On XBox Sword

Someone at Microsoft (MSFT) probably lost his job today. Or, perhaps it was a few people.

The company will take a charge of about $1.1 billion for additional warranty costs on its popular video game platform, the XBox.

For that amount of money, the world’s largest software company ought to just send every customer a new one.

Douglas A. McIntyre

Posted on: July 5, 2007 – 3:48 pm in Uncategorized,

Trying to Find a Bottom: Melco PBL Ent. (MPEL)

If there was a stock with a hot story and lousy performance, it is Melco PBL Entertainment Ltd (MPEL-NASDAQ).  As the only pure-play into casino operations in Macau, and after Las Vegas Sands (LVS-NYSE) and Wynn Resorts (WYNN-NASDAQ) saw such a rise it is hard to imagine how the company has been such a bust.

This IPO priced last December at $19.00 and tried to stay above $20.00 after a premium open for close a month.  Unfortunately that was about the last good thing.  This did recover off of the $15.00 mark but then gave those gains back and a lot more.  Just recently shares hit a low of $11.29.  Today shares are up 8% to just over $13.20.  It appears that Citigroup maintained a Hold rating but said the stock was oversold this morning, although analyst Anil Daswani lowered estimates and lowered his $18.10 target down to $14.00.

Here is the problem: last month the company delayed its formal Macau opening from calendar Q4 2008 to March of 2009; it also said it had secured $2.75 Billion in fincaing to spend roughly $1.85 Billion on its City of Dreams project.  This has been interesting to watch because of its ‘pure-play status’ to the hot Macau casino market.  Unfortunately this one has a $5+ Billion market cap and is still probably closer to two-years before seeing any real cash come in the doors. 

It is also hard to trust some of these Asian pure-play growth stocks when there is nothing but outflows expected for much more than a year.  Sure, China should still be growing quite well in 2009.  When you go out too far investors getting in now are taking on more and more risks before being able to see returns.  Maybe a bottom has been found and maybe it hasn’t.  It’s just too difficult to get overly excited about an operating company that still has this far out on the calendar to wait to reap any actual rewards.

Jon C. Ogg
July 5, 2007

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

Posted on: July 5, 2007 – 3:06 pm in Casinos, , ,

The 52-Week Low Club

Beazer Homes (BZH) No surprise here. Down to $22.50 from 52-week high of $48.60.

KB Home (KBH) Down to $37.44 from 52-week high of $56.08.

Journal Register (JRC) Another victim of newspaper woes. Drops to $4.22 from 52-week high of $8.60.

Verso Technologies (VRSO) Provider of network solutions gets delisting notice. Drops to $.62 from 52-week high of $1.52.

The Finish Line (FINL) Retailer has loss. Down to $8.45 from $14.97.

Douglas A. McIntyre

Posted on: July 5, 2007 – 2:55 pm in Uncategorized, , , , ,

NASDAQ & AMEX ETF’s: Who Will Win The ETF Wars?

This week there has been more talk of the ongoing attempts of NASDAQ (NDAQ-NASDAQ) trying to win more of the ETF markets by making new listings cheaper.  On Monday, the exchange announced it was introducing The NASDAQ ETF Market.  NASDAQ claims to now hold 54.1% of the total ETF market share including NASD/NASDAQ TRF market share of 17.8%.

Frankly, the American Stock Exchange has gotten a bit of a re-boost as its listing fees have been traditionally more affordable and rapid.  It has a massive listing of over 200 ETF’s that may actually be closer to 300 ETF’s now with the newest listings and the planned upcoming ETF’s.  The AMEX is still a pending IPO and we have unfortunately not really seen anything new or solid on the timing, terms, or anything with any meat to it to report on.

In a static world, the NASDAQ-100 ETF (QQQQ-NASDAQ) is one of the most liquid ETF’s on any given day and we have seen some more of the NASDAQ index-tracking ETFs switch over to the NASDAQ or just list there.  But it would seem like those companies which already list new ETF’s will be inclined to keep the listings at AMEX to keep things simple.  Maybe I am being old-school in thinking the 3-tickers is more appropriate for ETF’s and stocks that trade on AMEX or NYSE and 4-letter tickers are better to kept pure, rather than 3-letter tickers for NASDAQ listings and more new ETF’s trading with 4-letter tickers. What would seem obvious is that the new flood of ETF’s is creating or will very soon create an oversupply, so the newer listings will have more choices rather than existing ETF’s switching exchanges.

This one is still probably years away from being completely over, but so far AMEX has been winning in the newer ETF’s being listed.

Jon C. Ogg
July 5, 2007

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

Posted on: July 5, 2007 – 1:10 pm in ETF, ,

Facebook Takes Off

Facebook’s May numbers show that the social network site has grown 89% in one year in terms of unique visitors. Page views have more than doubled during that period, according to comScore.

The rapid growth of the web operation makes it a true competitor to News Corp (NWS) MySpace and an increasingly attractive acquisition candidate for one of the large web portals that needs to add to mass audience and has little presence in social networking. Yahoo! (YHOO) and Microsoft’s (MSFT) MSN are the two most logical buyers.

While MySpace was sold for $565 million, it is likely that the price inflation that goes with properties that might involve an auction process among large web companies could put Facebook’s value at over $2 billion.

Douglas A McIntyre

Posted on: July 5, 2007 – 12:53 pm in Uncategorized, , , , ,

Cramer’s Back; Sticking with Apple, R-I-M, And More

Today on TheStreet.com video (link here), Jim Cramer was interviewed after being out on vacation and he is sticking with Apple (AAPL-NASDAQ) and Research-in-Motion (RIMM-NASDAQ).  This is a bit different than the prior Apple stregy that was more of a sell the news for a trade.  He is also positive on Google (GOOG-NASDAQ); and he is still positive on Level 3 (LVLT-NASDAQ) as one of the best plays out there in tech because we’ll be out of bandwidth in a year.  He thinks that you can put half of your positions on in tech, mainly incase there are any downward pressures after July earnings.  Lastly, Cramer still thinks the market is cheap and much of the tech stocks are still very cheap compared to growth rates. 

This is all a sort of follow-on to the New 4 Horsemen of Tech that he had previously noted.

Jon C. Ogg
July 5, 2007

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

Posted on: July 5, 2007 – 12:01 pm in Cramer, Technology Companies, , , ,

Will Sirius (SIRI) Miss?

Research outfit Janco believes that Sirius (SIRI) will come in slightly below Wall St’s target of adding 466,000 new subscribers for the quarter. If so, the company’s stock, already under extreme pressure, could go lower.

Sirius stock is trading below $3 was at close to $8 in late 2005.

A slight miss probably has little to do with the merger with XM (XMSR), but it would almost certainly pull down the value of the combined operation.

Douglas A. McIntyre

Posted on: July 5, 2007 – 9:11 am in Uncategorized

China Mobile (CHL): I’ll Have A Beer With That Cellphone

In a move that could change the way that cellular provides market handsets in countries all over the globe, China Unicom (CHU) is giving away 12 bottles of beer to new subscribers. Its larger rival, China Mobile (CHL), the world’s largest cellular company, upped the ante by offering twice as many beers.

The move could be a huge lift for beer company stocks like Anheuser-Busch (BUD). With a billion handsets sold worldwide, the benefits to brewers are almost beyond imagination.

As the "free beer" movement grows beyond China, it may be that more expensive beverages will have to be part of the inducement for premium cellphones. An iPhone might come with a free bottle of Dom Perrion.

The action in China does raise the question of what cellular providers may have to do in markets as they become more mature. Beer may not be the ticket in every market, but it will probably work in most.

Douglas A. McIntyre

Posted on: July 5, 2007 – 7:59 am in Uncategorized

Dendreon Options Trading: Hope or Hearsay?

Dendreon (DNDN-NASDAQ) is trading up almost another 2% pre-market after Tuesday options activity had shares up $0.47 to close at $7.70 per share.  The shares actually hit as high as $8.30 on Tuesday, which would be the highest levels since July 11.  Tuesday’s close of $7.70 was the highest close since July 12.

Traders are said to be expecting some positive report on Provenge, although it should be noted that recent research brokerage reports have noted that Dendreon may now want to or need to seek a larger partner to help see Provenge through.  To date the company has taken the go-it-alone stance.  Here is the JULY Call Option trading activity from Tuesday:   

Strike        Volume  Open Interest
$5.00        11,152    7,348
$7.50        27,974    65,990
$10.00      34,559    68,613

There is an interesting piece on Biohealth Investor noting that Provenge’s blockage from the FDA may have been flawed in that the focus was on lack of tumor shrinkage rather than based on an increase in survival.  Here is the crux of the note:

As expected, shares of Dendreon jumped more than 6% on Tuesday on the study findings, and deservingly so….
Imaginecalling a clinical study a failure because the tumor size did notsignificantly decrease, yet the average survival rate of patientsincreased!… Is it not the survival of patients the real aim of medical treatment?… Provenge deserves a second hard look by the FDA, and Dendreon stock still has a lot of room to the upside; deservingly so.

The truth is that this remains a battleground stock.  You can find a number of critics and you can find a group of backers with nearly the same fervor, although a group of cancer patients and activists wanting and demanding FDA approval will probably be able to make more noise than critics. Until this stock has real news from inside or outside that directly pertains to Provenge and until the stock closes closer to intraday highs on ‘trading activity,’ we’d be more inclined to treat any vague or complex trading as reaction to hearsay rather than a story with real meat to it.

Jon C. Ogg
July 5, 2007

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

Posted on: July 5, 2007 – 7:55 am in Biotech,

Pre-Market Stock News (July 5, 2007)

(APOL) Apollo Group received notice from the SEC that its investigation has been completed and they do not intend to recommend any enforcement action.
(BOT) CBOT is sticking with recommendation of a CME merger over and ICE merger.
(CMPP) Champ’s Entertainment being acquired for $5.60 per share by F&H Acquisition.
(COGN) Cognos amends share buyback plan to be increased to total $400 million.
(DELL) Dell will soon start selling laptop and desktop PC’s in Asian retail chains and stores.
(HLT) Hilton Hotels is being acquired by Blackstone for $20 Billion, or $47.50 per share.
(HOT) Starwood Hotels trading up pre-market on hopes of a bid.
(HUN) Huntsman trading up pre-market on confirmed buyout interest from Apollo.
(JNY) Jones Apparel received $900M unsolicited rival bid for Barney’s.
(KO) Coca-Cola is approaching groups about buying Snapple from Cadbury-Schwepp’s.
(MSFT) Microsoft announced Xbox 360 Elite launch in Japan on October 11.
(PFCB) PF Chang’s Q2 revenues were $267.4M vs $270.5M estimate.
(PNRA) Panera’s Q2 sales were $253M vs $250.75M estimate.
(RIMM) R-I-M gets approval to sell Blackberry in China.
(RPRX) Repros Therapeutics’ peer reviewed journal article indicates Proellex exhibits potential for a new approach to breast cancer treatments.
(SNDA) Shanda Interactive acquired Aurora Tech, which operates two MMORPG’s in China.
(SU) Suncor Energy is targeting average oil sands production of 255,000 to 265,000 BPD in 2007.
(VOD) Vodafone trading down 1% on reports that Apple’s iPhone carrier will sign with O2, a unit of Spani’s Telefonica (TEF), as its exclusive wireless carrier.

Jon C. Ogg
July 5, 2007

Posted on: July 5, 2007 – 7:07 am in Pre-Market Activity

Ford (F) To Get Bag Of Coal For Jaguar And Range Rover

Late word from the Londay Daily Telegraph is that Ford (F) is seeking about $6 billion for its Jaguar and Range Rover units. But, buyers who have looked at the financial statements for the units believe that a rational offer would be in the $2 billion range.

If this is true, Ford will have wasted a great deal of time on a sale that is unlikely to happen. It is hard to imagine that the US car maker would take so little for the premium cars units.

But, they might want to hire famous car company cost-cutter Carlos Ghosn to come in an slash employees and costs. Never know. That might work. And, with poor results at Nissan mounting, he may be looking for a job.

Douglas A. McIntyre

Posted on: July 5, 2007 – 7:06 am in Uncategorized, , , ,

Radio Shack (RSH): An Unlikely Victim Of The Apple (AAPL) iPhone

The research firm Soleil says that its spies have seen a drop-off in wireless product sales and contract renewals at Radio Shack (RSH) stores, probably due to the availability of the Apple (AAPL) iPhone.

If so, it could be a rude awakening for investors who have watched the stock more than double this year on some evidence of a turnaround. The ratings service Fitch saw all of this in its crystal ball when it downgraded Radio Shakes debt to "BB" from "BB+." According to the AP:  "The downgrades reflect weakness in many of RadioShack’s business segments, especially its wireless products and services segment, according to Fitch."

Which is short for saying a stock that has doubled may be expensive.

Douglas A. McIntyre

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

Earlybird Analyst Calls (JULY 5, 2007)

ARRS cut to Neutral at UBS.
CSUN started as Hold at Jefferies.
GBX cut to Peer Perform at Bear Stearns.
GLRE started as Equal Weight at Lehman.
GM cut to Peer Perform at Bear Stearns.
HLCS started as Neutral at JP Morgan; started as Neutral at UBS.
IIJI raised to Overweight at Lehman.
OPTN cut to Neutral at Sun Trust Robinson Humphrey.
TKC raised to Overweight at JP Morgan.
TRP raised to outperform at BMO Capital.

Jon C. Ogg
July 5, 2007

Posted on: July 5, 2007 – 6:32 am in Analyst Calls

Problems In China May Be Worse Than They Appear

The Shanghai Composite is down over 15% in the last five weeks. And, The Wall Street Journal writes that: "Nearly one-fifth of the sold-in-China products that were studied failed to meet the country’s quality standards."

There have recently been complaints in the US of tainted pet food, toothpaste, and sea food. Taken together with China’s own assessment of its quality control and it is not hard to see the demand for Chinese products falling, at least for the time being.

But, the larger problem is China may be that the lack of quality control on pollution standards is pre-maturely killing hundreds of thousand of people each year. The FT obtained a report from the World Bank "found about 750,000 people die prematurely in China each year, mainly from air pollution in large cities." The report went on to say that the problem might lead to "social unrest".

Taken separately, the issues with product quality, falling stock markets, and acute health problems may not represent substantial cracks in the country’s economic future. But, taken as a whole, they may well spell the onset of a troubled period.

Douglas A. McIntyre

Posted on: July 5, 2007 – 5:39 am in Uncategorized

Will Dell (DELL) Go Retail In Asia?

The head of Dell’s (DELL) Asian operation told the AP the sales of PCs and servers in the region "excluding China, Japan and South Korea to grow almost 20 percent in 2007 compared with the previous year."

The forecast is fairly silly and useless given the countries that are excluded in the figure.

But, the same executive also hinted that Dell may supplement its direct-to-customer internet and telephone sales with some retail outlet channel. The company has already begun to do this in the US.

The move of the new tactic from the US to Asia might signal one of two things. The first is that sales in larger Asian countries are lagging and retail may be viewed as a way to improve things. The other is that early results from the US have convinced Dell that moving away from its strictly direct model is something that the company should do worldwide.

Too tough to call.

Douglas A. McIntyre

Posted on: July 5, 2007 – 5:27 am in Uncategorized

Europe Markets 7/5/2007

Markets in Europe were mostly off at 6.15 AM New York time.

The FTSE was flat at 6,674. Vodafone (VOD) was down .8% to 164.8.

The DAXX fell .4% to 8,047. Deutsche Telekom (DT) was down .7% to 13.66. Siemens (SI) was down .5% to 109.55.

The CAC 40 was off .2% to 6,087. Alcatel-Lucent (ALU) was down 1.2% to 10.54. Sanofi-Aventis (SNY) was up 1.5% to 62.07.

Data from Reuters.

Douglas A. McIntyre

Posted on: July 5, 2007 – 5:16 am in Uncategorized, , , , ,