Daily Archives: July 10, 2007

Cramer: Energizer Heading to $120, Thanks to iPhone

On tonight’s MAD MONEY on CNBC, Jim Cramer’s pick is Energizer Holdings (NYSE:ENR) that is close to $100.00 and headed to $120.00.  One of the things that he found is that Energizer lithium batteries are said to add 46 hours of play-time between charges.  The cost is only $29.99 and this extends the play-time before those iPod batteries die out.  Cramer also likes the specialty battery business right now with Energizer sales growing double-digit.  The float has gobe from over 80 million shares to under 60 million shares because of its buyback.

His pick ahead of this today was ConocoPhillips (NYSE:COP), and yesterday his names were Boeing (NYSE:BA) and Caterpillar (NYSE:CAT).

Jon C. Ogg
July 10, 2007

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

Posted on: July 10, 2007 – 5:24 pm in Cramer,

Cramer: ConocoPhillips (COP) Heading to $100.00

On tonight’s MAD MONEY on CNBC, Jim Cramer said today’s blemish is not a reason to not own some stocks out there.  He is featuring the ‘obvious money trades’ that are leaders and that buck any downtrends.  His list of $80.00 to $100.00 stocks are the ones heading to Par ($100) that tend to go to $120.00.

One such name is ConocoPhillips (NYSE:COP).  This is on the might of the mutli-billion dollar buyback that is a "buy-high and sell-higher" trade.  It has gone through $80.00 and could go through $100.00.  The real story is the oil industry and it being great.  It is only at 9.7 times forward earnings and Cramer thinks it is undervalued after it announced it will buyback 10% of its stock.

Yesterday his names were Boeing (NYSE:BA) and Caterpillar (NYSE:CAT).

Jon C. Ogg
July 10, 2007

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

Posted on: July 10, 2007 – 5:09 pm in Uncategorized,

3M’s Great New Discovery: The Internet (MMM)

3M (NYSE:MMM) is just today announcing the launch of its own eStore.  If you look through the press release it has all the reminders of 1999 when companies merely issued a press release saying "We Have An Internet Strategy" and seeing the share rise 10%.  The difference is that 3M is a major conglomerate that should have figured this out by now.  Almost every manufacturer has figured out that "Selling Direct Online" is not noticeable for a while to distributors and has become an acceptable cost of business.  The only funny thing is that they are still going likely to send you to a downstream store or center to buy the products and keep it more informational.

It is almost funny when you look at the press release. The company claims it is responding to customers’ expressed wishes for easy access to the company’s broad range of industrial products, 3M has created the 3M eStore. At the new site, customers in the 48 contiguous United States (guess Alaska and Hawaii still have to call around for Post-It notes) can purchase from a large and growing selection of 3M products with a simple credit card transaction.

By opening the 3M eStore, its products are in more locations where our customers can purchase them.   3M will connect customers directly to authorized distributors to set up an ongoing relationship so customers can find and purchase 3M products the way they want.

The website is www.3MeStore.com and it’s sort of amazing that this hasn’t been up for, oh, anout 7 or 8 years by now.

Jon C. Ogg
July 10, 2007

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

Posted on: July 10, 2007 – 4:56 pm in Conglomerates, Internet,

Tercica (TRCA): More Small Cap BioTech Madness

Tercica (TRCA) is a small biotech which had an operating loss of $86 million last year on revenue of a little over $1 million. The year’s numbers have not been much better.

The company’s shares are up almost 25% after hours to $6.60 which would give the company a market cap over $270 million.

Why? Tercica signed a deal with Genentech (DNA) for the larger company to pay "up to" $53 million "to combine its Increlex with Genentech’s Nutropin, a growth hormone, to form a once-daily injectable treatment for children who don’t grow normally," according to CNN Money.

Phase 2 testing will not begin until next year, so the drug may or may not be approved by 2010.

A lot can happen in three years.

Douglas A. McIntyre

Posted on: July 10, 2007 – 4:49 pm in Uncategorized, ,

The 52-Week Low Club: Home Builders By The Ton

Already regular members, today’s list includes Meritage (MTH), KB Home (KBH), Pulte (PHM), Lennar (LEN), and  Beazer (BZH).

Circuit City (CC) Electronics retail continues to disappoint. Down to $14.60 from $29.31 as 52-week high.

Office Depot (ODP) Company blames slow economy for poor sales.

Depomed Inc (DEPO) Biomed company runs into poor clinical trials, drops 60%. Shares down to $1.83 from 52-week high of $5.24.

Physicians Formula (FACE) Cuts Q2 and full-year outlook. Down to $11.32 from 52-week high of $23.25.

Pantry Inc (PTRY) Convenience store cuts outlook due to high gas prices. Drops to $39.55 from 52-week high of $60.35.

Douglas A. McIntyre

Posted on: July 10, 2007 – 3:26 pm in Uncategorized, , , , , , , , , ,

Dell (DELL): No Turnaround For Now

Michael Dell told a group at a company product launch that Dell (DELL) still has a long way to go before its solves its sales and market share problems.

The stock had gotten ahead of itself when the company turned in a "not so bad" quarter. But, with its shares up 15% this year there is still no hard evidence that the company’s move into selling at retail has helped its overall results. Dell is introducing more attractive packaging, perhaps inspired by the Apple (AAPL) Mac. But, rivals including HP (HPQ), Acer, and Lenovo are unlikely to give Dell a break.

Dell is also dogged by the lack of a surge in PC sales driven by Microsoft (MSFT) Vista. While the demand for the new OS seems to be good, that is all it is.

Dell’s major buyers continue to be enterprises. If the economy stays relatively soft, there is no reason to think that they will suddenly open their wallets wider.

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

Posted on: July 10, 2007 – 2:59 pm in Uncategorized, , , ,

Earnings Preview: Infosys Technologies (INFY) (July 2007)

Expectations for Infosys Technologies Ltd. (NASDAQ:INFY): $0.40 EPS and $909 Million Revenues; next quarter $0.44 EPS and $982 Million Revenues.

If you outsource IT or if you utilize overseas programmers in a very large company, chances are that if you aren’t using Infosys Technologies you have at least run across or received a bid proposal from them.  Its annual 2005 revenues (March-end) were only $1.59 Billion, and now the company is within striking distance of $1 Billion in revenues per quarter.

Options traders appear braced for close to a $2.00 move in either direction, although shares are down 1.6% today and that number might be off compared to closer-to-strike trading yesterday.  Unfortunately, even with the stock down close to 2% today, the shares are in the higher-end of a recent trading band.  The average price target for the research firms with buy/outperform ratings is close to $63.00, almost $10.00 north of today’s level.

Infosys’ 52-week trading range is $37.15 to $61.25 and shares are now basically flat compared to 90-days ago.

Jon C. Ogg
July 10, 2007

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

Posted on: July 10, 2007 – 12:13 pm in Earnings,

Yahoo! (YHOO) Picks Up Ground In Games And Photos

Yahoo! (YHOO) is showing some real strength in a couple of critical vertical markets where the portal and most of its competitors have a presence.

In the online photo storage and sharing segment, Yahoo! has put its own photo section together with its second photo property, Flickr. The result is that Yahoo! is now the second largest photo destination on the web with 6.2% of the market, according to HitWise. Photobucket still leads in share with an astonishing 43.5%, It’s a start.

Yahoo! now dominates the online game category. Based on numbers from comScore, as of May there were 217 million unique visitors to game websites. Yahoo! has 53 million unique visitors, followed by MSN with 40 million.

Now, if only the company can figure out how to make money on all of that traffic.

Douglas A. McIntyre

Posted on: July 10, 2007 – 11:37 am in Uncategorized,

Another 52-Week Low: Circuit City (CC); Any Value Yet?

How fast the world can change in retail, particularly when you are a troubled technology retailer.  Circuit City (NYSE:CC) is hitting yet another 52-week low this morning.  The company stock is down with the weakness after warnings out of Lexmark, Home Depot, and Sears. 

With shares down over 3% at $14.65 today, Ciricuit City is officially trading down 50% from the 52-week high of $29.31.  Unfortunately the company is at a different point in its cycle than when this had a private equity offer that it rejected.  Back when that occurred the company was recovering on its own and had at least some things going for it.  Now it has let their more savvy and expensive sales techs go in favor of the lower-wage workers that know less than the semi-educated customer.  The stores are also far from the hip and bustling Best Buy stores it competes against, and earnings guestimates are as diverse as the United Nations.

After the big drops of late we have looked at this numerous times trying to see if the old private equity buyout offer of $17.00 from Highfields Capital in February 2005 was relevant.  Anything is possible, but the value of Circuit City today looks far different than it did then.  Anything is possible, but a buyer in 2007 would be much more of a turnaround buyer rather than a value buyer.

Jon C. Ogg
July 10, 2007

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

Posted on: July 10, 2007 – 11:12 am in Consumer Electronics, Retail, ,

Apple (AAPL) Will Not Introduce A Cheaper iPhone: A New Rumor

The market of Apple (AAPL) watchers grows larger by the day and looks for the smallest hint of new news from the inventor of the Mac and the iPod.

The most recent frenzy is centered around a report from an analyst at JP Morgan based on a patent filed at the U.S. Patent and Trademark Office. There may be and might be signs in that patent that Apple (AAPL) will launch a cheap version of its iPhone to hit younger consumers.

According to MarketWatch the research note from JP Morgan says: "We believe it’s a strong sign that Apple could potentially convert every iPod Nano into a Nano phone," The speculation goes further and give some actual numbers: "If Apple’s approach is successful, Chang predicted the company could potentially ship 30 million to 40 million units of the Nano phone in fiscal 2008."

After digging through Steve Jobs’s garbage, 24/7 can say the rumor is not true, There will be no cheaper iPhone launched.

You heard it here first.

Douglas A. McIntyre.

Posted on: July 10, 2007 – 9:14 am in Uncategorized, ,

First Solar: Dueling Analyst Calls (FSLR)

This morning shares of First Solar, Inc. (NASDAQ:FSLR) are trading lower after dueling analyst calls. 

AmTech/JSA Research has removed its sell rating and raised the stock to a ‘Neutral.’  It had a sell rating on the stock since the end of March.  The raised rating of a ’sell to neutral’ is not going to create much interest.  The valuations looked high back then too, but that must have been a painful research call as shares doubled since that "Sell" rating was placed on the stock.

But this morning there is a downgrade: Lazard Capital Markets has trimmed its rating on the stock from a "Buy to Hold" based on valuations.  Interestingly enough, the note says that the firms Q2 estimates could be wildly conservative and Lazard is raising estimates for 2009 EPS to $2.75 from $2.50.  It believes the stock should trade at a significant premium due to leadership, low cost, outstanding sales visibility, capacity ramping up, and technological enhancements.

Shares are down more than 4% in early trading to just under $114.00.  Its 52-week trading range is $23.50 to $119.85.

Jon C. Ogg
July 10, 2007

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

Posted on: July 10, 2007 – 9:13 am in Alternative Energy, Analyst Calls,

Depomed (DEPO): Another Small Cap BioTech Implodes

Depomed (DEPO) is down over 60% today to $1.85, a new 52-week low. The stock has been as high as $5.83 during the period.

It is yet another small cap biotech that was a "one trick pony". But, in this case, the pony died.

According to the AP the company said "results of a late-stage clinical trial of its Gabapentin GR extended release tablet for nerve pain didn’t show significant effectiveness versus placebo."

There was not much to say for the company before the announcement. Last year, it lost almost $42 million on revenue of less than $10 million.

But, before its collapse DEPO had a market cap of $200 million.

Go figure.

Douglas A. McIntyre

Posted on: July 10, 2007 – 9:05 am in Uncategorized,

The Internet Helps Wal-Mart (WMT)

Wal-Mart (WMT) started a clever program in 3,300 of its stores recently. Customers could order merchandise online and pick the items up at their closest store. Saves on shipping.

The largest retail chain says that the program is a success. According to Reuters its has "seen strong results from its service." It sounds good, but does not say much.

But, the company did provide some details. The program has saved customers $5 million in shipping costs. And, about a third of all walmart.com purchases now use the "Site to Store" service.

The most important part of the announcement is that customers are buying additional merchandise when they come into stores to pick-up items that they have ordered online. That could actually be a fairly big piece of good news for Wal-Mart’s embattled US store operations.

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

Posted on: July 10, 2007 – 8:20 am in Uncategorized,

EMC & VMWare: SEC Filings & Developments Confirming Hot IPO Status (EMC, VMW, INTC)

EMC (EMC) is getting closer and closer getting the VMWare (VMW) spin-off and IPO out the door to Wall Street.  Some interesting developments have happened: Intel (INTC) has taken a $218.5 million stake in the company for approximately 2.5% of the company post-IPO.  VMware indicated Monday that it expects to raise more than $740 million from its IPO after expenses, based upon 33 million Class A shares for between $23 and $25 per share.

Yesterday the company made an SEC filing showing an exchange program for VMWare employees to exchange their employee stock options. In another filing, the internal memo was included and here are some of the guts of it:  As Diane Greene recently announced, VMware and EMC are launching the stock option and restricted stock Exchange Program for eligible VMware employees, effective today, Monday, July 9th, 2007.  The EMC-VMware Exchange Program is a one-time offer for eligible employees to voluntarily exchange EMC Options and Restricted Stock for VMware Options and Restricted Stock respectively. If you are eligible and decide to participate in the Exchange Program, you must make your election(s) before the offer expires at 11:00 a.m. Pacific Time on August 6th, 2007 (unless the offer is extended). 

Needless to say, it is probable that VMWare employees will want to lock in the recent EMC-option gains and convert to the ‘newest hottest IPO’ when they can. Based on the S-4 filing it appears as though 9.225 million options are being filed and some 4.35 million shares of restricted common stock will be issued.  Keep in mind that this is still preliminary and these numbers could be very different by the time the spin-off comes.

Here is what the company is saying about itself and how the classes of stock will be broken down:

VMware Stock has been approved for listing on the New York Stock Exchange under the symbol “VMW.” We are currently a wholly owned subsidiary of EMC and following the IPO and this Offer, EMC will continue to be our controlling stockholder. Following the IPO, we will have two classes of authorized common stock: Class A common stock and Class B common stock. EMC will own 32,500,000 shares of Class A common stock and all 300,000,000 shares of Class B common stock, representing approximately 89% of our total outstanding shares of common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting, the election of directors, conversion, certain actions that require the consent of holders of Class B common stock and other protective provisions as set forth in this Prospectus—Offer to Exchange. The holders of Class B common stock shall be entitled to 10 votes per share and the holders of Class A common stock shall be entitled to one vote per share. Therefore, EMC will hold approximately 99% of the combined voting power of our outstanding common stock upon completion of the IPO and this Offer.

There are still some pending issues, but this one seems to be getting much closer to coming to market.  Here was the preliminary data on EMC-VMWare we issued at the end of last month.  As a reminder, EMC shareholders will not be receiving shares in this spin-off.

Jon C. Ogg
July 10, 2007

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

Posted on: July 10, 2007 – 8:05 am in IPOs, Software, Technology Companies, , ,

Pre-Market Stock News (July 10, 2007)

(AA) Alcoa $0.81 EPS vs $0.81e; will likely have to sweeten Alcan bid before getting any approval from Alcan.
(BOT) CBOT holders approve the CME merger offer.
(CACS) Carrier Access lowered guidance.
(CAKE) Cheesecake Factory put revenues at $373.2 million vs $371 million consensus estimate.
(CVTX) CV Therapeutics identified possible anti-diabetic characteristics in Ranexa.
(DELL) Dell has new smaller business initiative being released today.
(ENCY) Encysive announced its CFO is resigning.
(FORM) Form Factor in strategic pact with Elpida for test cost reductions.
(GMST) Gemstar TV-Guide hired UBS to explore strategic alternatives.
(HD) Home Depot issued earnings warning, but stock called flat to marginally higher.
(LXK) Lexmark issued earnings warning.
(SHLD) Sears lowered guidance to %0.98-1.24 EPS (vs. $2.12 est.) because of home appliances and other sales being weaker; increased share buyback plan.
(THRX)  Theravance announced positive results from phase II clinical study that met primary endpoints fot staph and other skin based infections.
(UNCA) Unica lowered guidance.
(WDFC) WD-40 $0.44 EPS vs $0.47e; lowered annual EPS guidance.

Jon C. Ogg
July 10, 2007

Posted on: July 10, 2007 – 7:08 am in Pre-Market Activity, , , , , , , , , , , , , , , ,

Pre-Market Analyst Calls (July 10, 2007)

ACAD started as Outperform at FBR.
ALC started as Outperform at RBC.
ARUN started as Buy at Jefferies.
ATVI started as Buy at First Albany.
AZ raised to Buy at UBS.
CHA cut to Hold at Deutsche Bank.
DRIV raised to Outperform at RBC.
DTV raised to Buy at Citigroup.
EMC started as Mkt Perform at BMO Capital Markets.
F raised to Overweight at JPMorgan.
FOLD started as Overweight at JPMorgan.
FORM cut to Underweight at JPMorgan.
FVE started as Sector Perform at RBC.
GGG cut to Sector Perform at CIBC.
GM raised to Overweight at JPMorgan.
GME started as Buy at First Albany.
GRMN started as Neutral at B of A.
LMIA cut to Mkt Perform at Wachovia.
MU raised to Buy at Jefferies.
PLCM started as Buy at Jefferies.
PNM raised to Hold at Citigroup.
QLGC started as Outperform at BMO Capital Markets.
RACK cut to Sector Perform at RBC.
SMG raised to Overweight at JPMorgan.
UNCA cut to Hold at Jefferies.
VOLV raised to Overweight at HSBC.

Jon C. Ogg
July 10, 2007

Posted on: July 10, 2007 – 6:41 am in Analyst Calls, , , , , , , , , , , , , , , , , ,

Microsoft (MSFT) And Oracle (ORCL): Software No One Wants

Oracle (ORCL) has launched its new "database management system" software’s latest version. But, a number of customers have indicated that they will not upgrade, maybe for a couple of years. The software has a lot of new security improvements but, at large companies, installing all of the complex components can take several quarters. And, Microsoft’s (MSFT) competing SQL Server can cost much less than the latest Oracle upgrade.

The enterprise software company’s new version "11g" has not even launched and word is that companies either don’t need it right away or don’t want the hassle of upgrading. At least for now.

The whole thing sounds a little bit like Microsoft’s (MSFT) Vista launch. PC users are buying the software, but large enterprises are in no rush to make wholesale upgrades. The older version of Windows is hardly out of date, so why sweat?

The PC industry started to run into the problem of selling more computing power as Intel (INTC) and AMD (AMD) made substantially more powerful chips a year ago. Consumers and businesses wondered if the additional computing power was needed for most tasks. The processors made the PCs more expensive, but did it make them more useful? For some buyers the answer was "probably not."

Now it is the software industry’s turn. Have Oracle and Microsoft built better mouse traps? Probably. But, the IT world may think its mouse problem is already under control.

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

Posted on: July 10, 2007 – 6:02 am in Uncategorized, , , ,

Big Jumps In Amazon (AMZN) And Level 3 (LVLT) Signal Tech Hopes

Amazon (AMZN) rose 4% yesterday on no news. So did Level 3 (LVLT). Odd that both happened on the opening day of earnings season.

Other tech firms like Google (GOOG) are also moving up and trading around their highs, but Amazon and Level 3 represent the dream of endless internet growth better than most other companies.

It is very old news that Amazon’s shares are up 100% this year. But, it is based on a wonderful assumption that may or may not be true. If Amazon builds out enough new services, it can stay ahead of the falling margins of its core e-commerce businesses in the US. With new initiatives including VOD and selling use of its huge tech platform to other enterprises, this may work. As long as the commerce engine of the internet stays strong.

Level 3’s rally is also based on the ideas that video over the internet and internet commerce in general will improving. Its massive bandwidth pipeline infrastructure can only get higher prices if demand demand keeps rising sharply. Video is the driver of that assumption. And, video use may expand forever.

Measuring video trends is not terribly hard. YouTube and digital TV growth are fair proxies. Amazon’s new ventures and Level 3 will do well if the bell weathers stay strong.

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

Posted on: July 10, 2007 – 5:17 am in Uncategorized, , ,

Gemstar (GMST) In Pieces: Dump TV Guide

Gemstar-TV Guide (GMST) says that is may put itself up for sale. As would be expected, shares jumped 17% after hours to $6.27. That would put it well above its 52-week high and up over 100% for the year.

Rupert Murdoch’s News Corp (NWS) owns 41% of the company, so he may be in for a nice pay day.

The question about Gemstar is whether it is a good business. Revenue in Q1 was up from $144 million to $157 million. The company’s technology unit which sells electronic channel guides to set-top box, cable, and satellite companies does very well. In the first quarter, it had EBITDA of $54 million on revenue of $75 million. The company’s ad sales unit also did well, with EBITDA of $9 million on $48 million revenue.

But, the company’s publishing business is awful. In Q1, on revenue of $34 million, the unit lost $6 million.

The best way for the company to make shareholders money is probably to get out of the publishing business. The balance of the firm does just fine.

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

Posted on: July 10, 2007 – 4:53 am in Uncategorized, ,

Charter’s (CHTR) Big Year

Bulls on Charter Communications (CHTR) would argue that the company was almost out of business less than two years ago and that the shares deserve to have had a run. The other side of that case is that the company still has tremendous debt and that there is no guarantee that the company can handle it.

The one fact not in dispute is that the company’s shares are up 275% over the last year. That compares with 35% for Comcast (CMCSA) and almost 80% for Cablevision (CVC) which is being bought-out by its founding family.

Charter has two hurdles, neither of which it may be able to overcome. One is that many of its customers do not like it. In the latest American Customer Satisfaction Survey, Charter came in last among cable and satellite companies. That leads to another issue.

Cable companies may continue to do very well, if they can keep Verizon (VZ) and AT&T (T) and their fiber-to-the-home initiatives out of the consumers living room. Cable has a nature edge. It already has most of the current "triple play" consumers who subscribe to bundled TV, broadband, and voice services. The telcos need to pick-up customers to offset their landline losses. Of all the large cable firms, Charter has the least money to spend on improving its network and keeping customers.

All of that means that Charter’s stock will have a tougher time moving up.

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

Posted on: July 10, 2007 – 4:39 am in Uncategorized, , , , ,