Daily Archives: July 6, 2007

Cramer’s Speculating Where? Venezuela? (HNR, TX)

Cramer has two speculative plays down in Venezuela to make money off of.  He thinks the nationalizations have already happened and the bad news is baked in.  If you are a ’safety and stability’ stock investor you might want to stop reading here.  This strategy will result in one of two things: Rags to Riches OR the Boulevard of Broken Dreams.

Harvest Natural Resources (NYSE:HNR) focuses on 3 small fields in Venezuela.  The deal they made isn’t as bad as it looks, they have a deal through 2026 and now got smaller rights to 3 more fields.  He thinks there is even a shot that they could get the concessions that Exxon Mobil (XOM) and ConocoPhilips (COP) walked away from.  Two-thirds of these reserves are not proved.  He can’t justify more than a $15.00 price to pay, but he doesn’t think that it will be expensive until $15.75.

Cramer thinks the one steel stock in Venezuela that is safe is Ternium (NYSE:TX) because it is an Argentinian compay rather than a U.S. company.  Chavez likes Argentina, even if he hates us.  Ternium is in talks to get a deal to keep it from getting nationalized.  This one also operates elsewhere in Latin America.

Well, one thing is probably a lock: these are indicated higher after Cramer’s comments……. BUT, there are so many places you can invest that you don’t have to take this sort of risk.  If I was going to follow either of these, I would MUCH rather be investing in an Argentinian company in Venezuela rather than a fellow company from my own Gringolandia doing business in Venezuela.  BUT (again a but), putting your money down there is like giving a huge loan with no collateral and without a legal contract.  The exception is that you could get hosed in Venezuela even with the collateral and the legal contract.  Remember the Golden Rule: He Who Has The Gold Rules!  Right now Chavez is the one that has the gold.

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 6:06 pm in Cramer, ,

Cramer Keeps Riding Growth, Particularly R-I-M (RIMM)

Stock Tickers: RIMM, AMZN, NVDA, GLW, GOOG, LVLT, CROX, UA, CIEN

On tonight’s MAD MONEY on CNBC, Cramer said you don’t need to worry about next week: You need a roadmap for six months.  Growth is back, and growth stocks are the ones that will keep running. Research-in-Motion (RIMM) blew out estimates, ran $30, and then ran another $15….AND STILL HAS LEGS.  Cramer said tech is just now starting to hit its seasonal sweet spot.  You have to pay up for growth stocks, and "the next R-I-M is…..R-I-M."  American Tech stuck a $300 target on R-I-M.

He’s sticking with his 4 Horsemen of Tech, and though he said once that he thought Apple would sell off he said he IS behind it and said it is going to $150.00.  Others he is noting right now: NVIDIA (NVDA), Corning (GLW), Amazon.com (AMZN), Level 3 Communications (LVLT), Ciena (CIEN), Oracle (ORCL), Under Armour (UA), and Crocs (CROX).

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 5:20 pm in Cramer, , , , , , , , ,

Top 10 Stock Issues Review of This Week (July 6, 2007)

Stock Tickers: CME, BOT, DFS, RIMM, AAPL, AA, RTP, AL, AMD, MOT, ALU, MPEL, GM, TM, BIDU, INTC, DELL, MSFT

If the CME (CME) and CBOT (BOT) doesn’t get approved next week, then what will it take?

What price do investors like the Discover Card (DFS) owner at?

The whole darn world in the palm of your hand: Is a cheaper iPhone already on the way? Research-in-Motion (RIMM), finally headed to China…..

Alcoa (AA), Rio Tinto (RTP), Alcan (AL)…..who is buying whom?

Cramer makes a new list of 3 CEO’s to go (AMD, MOT, ALU).

Did Melco PBL Ent. (MPEL) really find a bottom?

Detroit is shivering…..When GM (GM) loses to Toyota (TM) on trucks, what’s in its future?  Maybe they should head to China like Chrysler.

Baidu.com (BIDU) is entering a time warp back to 1999/2000 Web 1.0 valuations.  Calling a stock too high just because of valuations can be painful sometimes, but when these parachutes catch fire there is no reserve chute.

PC’s aint dead! Here’s the evidence: Intel (INTC) hits another 52-week high, and a high close on Friday.  Dell (DELL) even hit a new 52-week high Friday, although the shares didn’t hold it.  Microsoft (MSFT) Vista sales are about to be smoking hot, or so some think; if they weren’t, the Xbox 360 $1 Billion PLUS charge would have hurt the stock more than the whole $0.02 it lost the day after that announcement.

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 4:49 pm in The Week, , , , , , , , , , , , , , , , , ,

ETF Winners & Losers (July 6, 2007)

DJIA                                13,611.68; +45.84 (+0.34%)
S&P500                         1,530.44; +5.04 (+0.33%)
NASDAQ                        2,666.51; +9.86 (+0.37%)
10YR-Bond                    5.195%     Up 0.051
NYSE Volume               2,341,464,000
NASDAQ Volume          1,572,602,000
VIX                                    14.77 (-0.71)

Market Vectors Gold Miners                                 GDX     3.13%
iShares Dow Jones US Home Construction    ITB       2.92%
SPDR S&P Homebuilders                                    XHB     2.90%
iShares MSCI Hong Kong Index                          EWH    2.51%
iShares MSCI South Korea Index                        EWY     2.29%
PowerShares Lux Nanotech                                PXN      2.24%
iShares FTSE/Xinhua China 25 Index                FXI        2.13%
First Trust ISE Chindia                                          FNI        2.13%
iPath MSCI India Index ETN                                  INP       1.99%
iShares MSCI Emerging Markets Index             EEM      1.73%
iShares MSCI South Africa Index                         EZA       1.67%
Retail HOLDRs                                                       RTH      1.64%
PowerShares WilderHill Clean Energy              PBW      1.61%

United States Natural Gas                                    UNG    (2.10%)
WisdomTree Japan High-Yielding Equity          DNL     (1.33%)
iShares FTSE NAREIT Retail                               RTL      (1.26%)
iShares MSCI Japan Index                                   EWJ      (0.54%)
Claymore S&P Global Water                               CGW     (0.50%)
Utilities Select Sector SPDR                                XLU       (0.50%)
iShares Lehman 20+ Year Treas Bond            TLT        (0.49%)
iShares Dow Jones US Utilities                         IDU        (0.48%)

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 3:17 pm in ETF, HI/LOW

Cramer At Home on the Rail Depot (UNP, HD)

On today’s STOP TRADING segment on CNBC, Jim Cramer has a trade for the weekend: Union Pacific (UNP) is great because it is up after lowering guidance and shows how bullish the market is for secular growth stories like this.  Cramer thinks railroads are in an oligopoly and is still going higher.  He thinks they have pricing power where the truckers do not.

On Home Depot (HD), today was the first day that they have been a real buyer of the stock and this was the first day they have been a buyer.  He thinks they can follow the stock up and the new management will want to keep buying per their buyback plan.

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 1:49 pm in Cramer, ,

UAW Comments On A Ford (F) Bankruptcy

The UAW officer who heads negotiations with The Ford Motor Company (F) told other members of the union that the automaker could not weather a strike. He added that if the company’s sales continue to fall, Ford could have to enter Chapter 11 within “a couple of years”, according to Bloomberg.

Ford’s share of the US market has continued to fall as it former flagships including the F-series pick-up and Explorer have lost sales.

The UAW’s problem will be that, if it gives concessions to Ford (F), it may have trouble holding back agreeing to the same accommodations with GM (GM) and Chrysler. All three companies are troubled, and arguing that one is substantially worse off that the others should fall on deaf ears.

It is more likely that this fall’s negotiations will be the end of the UAW, as its members have known it, than the end of Ford.

Douglas A. McIntyre

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

Will Investors Discover the Discover Card? (DFS, MS, AXP, MA)

Discover Financial Services (DFS-NYSE) has been trading for one trading week now, albeit it is technically a 3 and a half day week.   Now that the distribution of these shares is complete from Morgan Stanley (MS-NYSE), there are approximately 477 million shares of Discover stock outstanding and Discover’s capital base is approximately $5.5 Billion.

Shares have seen a ho-hum reaction, and unfortunately are trading down another 1.6% at $25.53 today.  These spin-offs often come under profit taking and a ’sell the event’ trading pattern, and that has happened here.  Shares opened close to $28.50 on Monday and have closed lower each day. 

The problem with Discover is that they are not at all an American Express (AXP-NYSE) and are not even comparable to Mastercard (MA-NYSE).  It isn’t that all the Discover credit card holders are sub-prime, but the stigma on the street is that it is a lower brand of credit card (no offense) and that the credit quality of card holders is lower.  Shares of Mastercard opened on Monday at $165.50 and have traded down to $161.00 or so today.  American Express shares opened Monday at $61.31 (adjusted for $0.15 dividend) and are at $61.40 today.

So it isn’t really as though Discover has had a great peer group to debut trading in, but its performance has been pretty poor so far.  This one will ultimately find its own place, it’s just a question of at what price.

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 11:45 am in Financial Stocks, , , ,

Tyco’s Parts One Week Later (TYC, TEL, COV, GE, MMM)

As you will see, so far the markets have greeted the post-Tyco with a bit of a thud.  This is one we were a bit cautious on the valuations as being fully valued and perhaps even having a phantom premium just because of the break-up itself.  Here you’ll see the pieces:

The remaining Tyco International Ltd. (TYC-NYSE) after a 1:4 reversesplit is down marginally at $53.00.  It opened at $52.92 Monday andhave managed to close up north of $53.00 per share each day since.Unfortunately each close has been slightly lower than the day before.

Tyco Electronics (TEL-NYSE) is trading at $39.30, barely above the opening price on Monday at $39.20.  Shares have briefly traded over $40.00 since the spin-off, but based on the trading activity it looks like the specialist was more than happy to give shares away there.

Covidien Ltd. (COV-NYSE) is up an entire penny today at $42.21 and have traded down from roughly a $43.00 open (conflicting opening prices).  It looks like the specialist was more than eager to give away shares at $43.00.

In all fairness, shares of other conglomerates haven’t exactly been lighting up the road: General Electric (GE-NYSE) has seen shares stuck in a $38.00 to $38.79 range for the last week, and 3M (MMM-NYSE) has seen only an $87.13 to $88.40 range in the same time.

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 10:19 am in Conglomerates, , , , ,

Local.com’s (LOCM) Stock Falls: A Victory Of Reason Over Hope

Shares in Local.com (LOCM) are finally headed down after several days of furious rallying. The stock went from under $4 on June 28 to over $13 yesterday. It is off 11% today.

Local came out with two pieces of news. The company received approval for two patents. The first was for "the process of indexing and retrieving web-related information by geographical location", to use the company’s language. The second covers "the method of responding to enhanced directory assistance inquiries using various protocols including voice-enabled and SMS systems. The patent also covers an associated referral advertising model, which is designed to monetize those local searches."

The company was good enough to mention in each release that companies "using our intellectual property to enter into licensing agreements with Local.com."  Seems like a bit of a threat.

Of course, as companies involved in IP patent suits have found, counting chickens before they are hatched often doesn’t work. The recent legal battle between Limelight (LLNW) and Akamai (AKAM) should school Wall St. on that matter.

The other piece of news was that Hearst Communications has bought 22.4% of the company. Why that would matter to anyone is a puzzle.

Local.com is on its way back to where it should trade.

Douglas A. McIntyre

Posted on: July 6, 2007 – 9:41 am in Uncategorized, , ,

Another Missed Chance For Sony (SNE) PS3

After almost every analyst that follows the gaming industry said Sony (SNE) would cut prices on it PS3 game platform, the company’s president said "no dice." Reuters reports that there may just be too much cost built into the unit with its Blu-ray optical disk and other gadgets.

Sony management may have forgotten to check the sales figures. Last month the PS3 was outsold by Nintendo’s Wii by a factor of 6 to 1. Numbers in other large countries tell the story. Sony may hope that a number of new games coming to market for its platform will stimulate demand for the product, but its high cost continues to keep customers away.

And, that is not going to stop.

Douglas A. McIntyre

Posted on: July 6, 2007 – 9:00 am in Uncategorized, , , ,

Applied Micro (AMCC): Cuts Forecast And Stock Rises

Investors get vexed when the market acts against their instincts.

Applied Micro (AMCC) cuts it forecast for the next quarter. The company had expected revenue of close to $60 million, but knocked that down to $50 million. The stock rose over 10% at the open.

The Associated Press quoted the company: "The shortfall in the first quarter revenues is the result of continued weakness in the telecom market space, weaker than anticipated processor sales due to delayed new product ramps and continued inventory corrections," said Kambiz Hooshmand, president and chief executive officer.

Applied Micro also expects some weakness in the quarter beyond next.

It is planning to cut costs.

Nice way to cause a rally.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com.

Posted on: July 6, 2007 – 8:39 am in Uncategorized,

CME-CBOT 99.999% Done! (CME, BOT, ICE)

The Chicago Board of Trade (BOT-NYSE) and the Chicago Mercantile Echange (CME-NYSE) are THAT much closer to closing their merger.  Unless the IntercontinentalExchange Inc. (ICE-NYSE) is able to pull an unexpected Hail Mary pass, this CBOT-CME combo is going to occur.   This is one of the top 10 issues for next week as the vote is on Monday, July 9, 2007.

A further reason to believe this deal is done is that the CME has sweetened its offer for the CBOT, and CBOT holders will now own 36% of the combined exchange rather than the prior 35% stake.  Unfortunately the ICE bid came in too late, because much of the integration had already been started.  These exchanges also recently received regulatory clearance for the merger.

The other issue is that traders on the floor (who own seats and shares of the exchanges) were much more supportive of the CME-CBOT tie up than they were the ICE offer.  More than money was at stake as operating history and location were/are a factor.  ICE had challenged the ‘better deal’ issue, but the largest holder CBOT shareholder Caledonia Investments is now recommending approval and ‘encourages all other shareholders to vote in favor of the CME-CBOT merger’.   Anyhow, unless a final Hail Mary pass is made this one is going in the history books.

CBOT (BOT) shares are indicated up almost 3% at $212.00, up at a new high and up 100% from the 52-week lows.  CME shares are indicated down less than 1% at $553.25.  Interestingly enough, IntercontinentalExchange Inc. (ICE) shares are indicated up 2% at almost $155.00. The ICE offer obviously came too late, but CBOT holders have to be thankful it came.

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 8:20 am in Uncategorized, , ,

Less Expensive Apple (AAPL) iPhone?

Unwired View is reporting that Apple (AAPL) has applied for patents that might allow the company to sell a cheaper version of the iPhone that can only be used to handle calls and play music.

While it is interesting speculation, it is almost certainly untrue.

It would be difficult to imagine Apple undercutting sales of a device that has a price of $599 and a gross margin of 55%. Jobs & Co. are not that slow witted.

Douglas A. McIntyre

Posted on: July 6, 2007 – 7:59 am in Uncategorized, , ,

IPO Filing: Gulfstream International Group

This morning there was a bit of excitement, followed by a let-down, when looking through SEC Filings. Gulfstream International Group, Inc. has filed to come public via an IPO and will trade under the American Stock Exchange ticker "GIA".  It has listed Taglich Brothers as the sole underwriter, and has only listed 1.15 million shares at a maximum indicated price of $13.00 per unit ($11.00 to $13.00 range).

Before you get too excited thinking that this is "Gulfstream Jet," unfortunately it is not.  That is owned by General Dynamics (GD-NYSE), and that is NOT THIS Gulfstream.  Pitty, because that would have been a great spin-off or at least generated a lot of coverage.  This Gulfstream operates two subsidiaries: Gulfstream International Airlines, Inc. and Gulfstream Training Academy, Inc.

Gulfstream is a Fort Lauderdale, Florida-based commercial airline operating more than 200 flights per day with eleven destinations in Florida, ten destinations in the Bahamas, charter flights within its destination zone, and offers some charter flights to Cuba.  Its fleet consists of 27 Beechcraft 19-seat, turbo-prop aircraft and eight Embraer 30-seat, turbo-prop aircraft.  It has a principal code share and alliance agreement with Continental Airlines and is also party to code share agreements with United Airlines, Northwest Airlines and Copa Airlines of Panama.

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 7:44 am in Airlines, IPOs, ,

Is Murdoch’s Deal With Dow Jones (DJ) Done?

The Business in the UK is reporting that News Corp’s (NWS) deal to buy Dow Jones (DJ) is now complete.

We’ll see. One would think the news would have been passed to the editors of The Wall Street Journal first.

Douglas A. McIntyre

Posted on: July 6, 2007 – 7:33 am in Uncategorized, ,

AMD (AMD) Dumps Money Into Transmeta (TMTA)

In a move that is difficult to fathom, AMD (AMD) has put $7.5 million into preferred stock at Transmeta (TMTA). The stock is up 50% on the news to over $1.

But, in early June, Transmeta traded for $.28. AMD could probably have bought the entire company for $45 million. In the March quarter, Transmeta lost $19.2 million on $2.1 million in revenue.

According to AMD management: "Transmeta was a key ally in helping to bring our highly-successful AMD64 technology to market and has supported the widespread industry adoption of both AMD64 and AMD’s HyperTransport technology. Our investment will support Transmeta’s technology development work and AMD’s efforts to leverage Transmeta’s innovative energy-efficient technologies to the benefit of AMD’s customers."

Yes, that $2 million in sales did quite a bit for industry adoption of AMD’s technology.

Douglas A. McIntyre

Posted on: July 6, 2007 – 7:25 am in Uncategorized, ,

Goldman Sachs Lowers Microsoft Estimates on Xbox Issues (MSFT)

In a new research note this morning, Goldman Sachs has reacted to the negative news on the recall and warranty charges on Microsoft’s (MSFT-NASDAQ) Xbox 360.  This is after the company announced it would have a $1.05 to $1.15 Billion charge and if you do the math on the costs this could come out to half of the units that have already been sold.  Supposedly this is not a design issue and is not affecting the currently built machines.  Goldman Sachs has lowered FY2007 EPS to $1.41 from $1.49 and lowered FY2008 EPS from $1.70 to $1.69,although it has maintained the 2009 estimates.  Microsoft was maintained as Buy at Goldman.

In a separate note, D.A. Davidson maintained a neutral rating on Microsoft, and trimmed FY2007 EPS to $1.49 from $1.50.

Based on the differences of the timings, it looks like the differences from firm to firm are going to be in the timing of the charges.

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 7:20 am in Analyst Calls, Software, Video Games,

Pre-Market Analyst Calls (July 6, 2007)

BP raised to Buy at Deutsche Bank.
BRG raised target at Deutsche Bank.
CACH started as Neutral at JP Morgan.
DCEL cut to Hold at Jefferies.
HLT downgraded at Jefferies, Citigroup, and at Susquehanna.
MSFT cut estimates at D.A. Davidson.
OSG raised to Overweight at JP Morgan.
PPDI reiterated outperform at Baird.
RJF raised to Outperform at Wachovia.
RDS.A raised to Buy at Deutsche Bank.
UDRL raised to Peer Perform at Bear Stearns.

Jon C. Ogg
July 6, 2007

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

Posted on: July 6, 2007 – 6:50 am in Analyst Calls, , , , , , , , , , ,

Nestle Raises A Warning Flag

The head of Nestle told the FT that long-term food prices were going up, perhaps sharply. He indicated that demand in China and India were one component this trend, and the need for corn in biofuels was the other.

Someone ought to tell Nelson Peltz about this. He has just put a bunch of money up to buy 3% of Kraft (KFT). Kellogg (K) and General Mills (GIS) should feel the pinch as well.

It should have occurred to the good companies that their investors long ago that the same supply pressure that are hitting oil and metals are coming to the food business as well. It may not be as easy to get consumers to pay a "China premium" on food as it has been on gasoline. They can always turn to Spam and Velveeta.

General Mills trades near its 52-week high. So does Kellogg (K).

That may not last.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com.

Posted on: July 6, 2007 – 5:42 am in Uncategorized, , ,

Europe Markets 7/6/2007

Markets in Europe were up at 6.30 AM New York time.

The FTSE rose .6% to 6,674. Barclays (BCS) rose 1.2% to 718.5.

The DAXX was up .3% to 8,011. SAP (SAP) was up .4% to 37.26.

The CAC 40 moved up 6,091. France Telecom (FTE) rose .3% to 20.41.

Data from Reuters

Douglas A. McIntyre

Posted on: July 6, 2007 – 5:29 am in Uncategorized, , ,