Daily Archives: August 3, 2007

Cramer Thinks lululemon athletica Is The Next Under Armour (UA, LULU)

Cramer’s Next Under Armour: Lulelemon Athletica (NASDAQ:LULU).  It came public at $18.00 and went up to $31.00 during a crummy market.  This one does similar things to Under Armour, but they are more into yoga and new age types of clothing.  He thinks their sales will grow huge and operating income will grow exponentially.  It has its own stores and will be opening more stores this year and then even more stores in 2008.  If this matched Under Armour’s growth it would double sales and earnings it can grow considerable.  He does think this is risky and will be closely watched by the street and it is very speculative.  He even thinks you should wait for an entry point next week.  Shares closed down 6% at $31.00 today, but then rose 4% in after-hours after Cramer talked it up. 

Can you imagine a person with a speech impediment trying to say this company’s name?

Jon C. Ogg
August 3, 2007

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

Posted on: August 3, 2007 – 5:28 pm in Apparel, Cramer, , , ,

Cramer Launches “Cramer’s Mortgage Madness Index”

On tonight’s MAD MONEY on CNBC, Jim Cramer said that today and this week proves sometimes you can’t be too bullish.  You need a measure for an ‘all-clear’ signal to see when the market is safe to go back into.  Cramer thinks Bernanke should cut rates, particularly with more spending in Iraq than helping here for those about to lose their homes.  Here are the tickers for his news "CRAMER’S MORTGAGE MADNESS INDEX":

MGIC Investment (MTG), Countrywide (CFC), Bear Stearns (BSC), KB Home (KBH), Centex (CTX), Citigroup (C), Goldman Sachs (GS), Blackstone (BX), MBIA (MBI), Thornburg (TMA), Beazer (BZH), and Washington Mutual (WM).

Cramer said he’s not saying these are buys and aren’t sells, not yet anyway.  This index is just representative of the names that you have to watch because if these are still falling then it means there isn’t a stabilizing market or group.

Jon C. Ogg
August 3, 2007

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

Posted on: August 3, 2007 – 5:23 pm in Cramer, Financial Stocks, , , , , , , , , , , , ,

Berkshire Hathaway Keeps Chugging (BRK-A)

Berkshire Hathaway Inc. (NYSE:BRK-A) has just posted some pretty killer earnings.  It posted $3,118.00 in EPS, but after you back out gains and other items you end up with $2,018.00 per share.  Unfortunately, there are not that many estimates on Berkshire Hathaway.  It looks like $1,444.00 was the estimate, but please check multiple sources before using this as gospel.  Here is the full SEC Filing. 

Warren Buffett is sitting on $39.936 Billion in cash as of the June 30 quarter end.  It holds $24.9 Billion in fixed income securities and $73.6 Billion in equity securities, and total assets are listed as $269 Billion.  Total liabilities are listed as $151.34 Billion.

Buffett said he’d love to do a WHALE OF AN ACQUISITION, so what is he waiting for?  He isn’t hurting for cash.  Here was a list of US stocks we gave in MAY that we felt could fit that bill for a whale of a deal.  Maybe he’s waiting to see if he gets through hurricane season with barely any scrapes from insurance and reinsurance losses.

Jon C. Ogg
August 3, 2007

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

Posted on: August 3, 2007 – 4:16 pm in Buffett, Conglomerates, Earnings, , ,

The 52-Week Low Club: Too Full For New Members?

American Home Mortgage (AHM). It has the word mortgage in it. 63 pennies down from 52-week high of $36.40.

Rait Financial Trust (RAS) Mortgage lender. $6.14 down from $38.25.

Impac Mtg Hldgs (IMH) More mortgages. Down to $1.62 from $9.99.

TETRA Technologies (TTI) Ugly guidance. Down to $18.56 from $30.20.

Radian Group (RDN) In joint venture with MGIC Investment Corp that offers home loans. Liquidity problems in JV. Drops to $22.11 from $67.35.

Bigband Networks (BBND) Recent IPO in business of moving video across internet. Bad quarter. $10 down from $21.63.

Silicon Image (SIMG) Bad quarter and a downgrade. Drops to $5.24 from $14.68.

Network Appliance (NTAP) Storage tech company cuts outlook. Down to $22.63 from $41.56.

RealNetworks (RNWK) Multimedia software and online music company. Down to $6.41 from $12.08.

Douglas A. McIntyre

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Posted on: August 3, 2007 – 3:58 pm in Uncategorized, , , , , , , , ,

Defensive Stock ‘Havens’ For A Crummy Market (PEP, KO, MRK, NVO, PG, CAG, BUD, HRL, CL, MO, CG MCD, KFT, NVO, WTR)

It’s yet another crummy day in the markets with roughly a 280 DJIA point drop before the closing bell went off.  Bear Stearns added the most fuel at the end of the day, unemployment was not a big enough help, and American Home Mortgage (AHM) shut most operations.  There are many bulls still out there after the malaise ends, and the questions still seem to be around WHEN rather than IF.  As always, there are many unleveraged companies that make basic products that are deemed the defensive stocks.  We try to simplify the list of names down to the true economically immune names, although there in reality is no such thing as an immune stock.  Sell programs kicked in at the end of the day, and these probably got hit too. 

If you are looking for buys in a crummy market you want to usually look at the stocks that produce you goods you have to consume.  If you eat it, drink it, or smoke it, it’s a defensive stock.  We won’t stop using toiletries either.  There are many other defensive stocks, but here is a group of stocks from our classic list and we’ve removed the "leveraged names" and those which would do well only in a moderate economic drop.  Here goes:

Coca-Cola (NYSE:KO) and Pepsi (NYSE:PEP)….does anyone ever stop drinking sodas or water, or stop eating chips?

Anheuser Busch (NYSE:BUD)….if you drink alchohol, you only drink more when things are bad.

Hormel (NYSE:HRL)….canned meats, deemed on the cheap.  Spam is a delicacy somewhere, or at least that is people keep saying.

Kraft (NYSE:KFT)…. maybe it’s too tied to activists, Buffett, Phillip Morris, or whatever, but it’s monster play in the sector.

McDonalds (NYSE:MCD)….best fast food play off the mid to lower income, and they won’t always eat at home regardless.

ConAgra (NYSE:CAG)….food giant that is fairly valued.

Altria (NYSE:MO) & Loews Carolina Group (NYSE:CG)….who says smoking is all bad?  Smoking kills, but people insist on buying.

Merck (NYSE:MRK)….drug king did well on last earnings.

Proctor & Gamble (NYSE:PG) and Colgate-Polmolive (NYSE:CL)….they get into your pocketbook regardless of the market unless you stop shaving, washing hands, and brushing your teeth.

Here are two runner-ups:

Novo Nordisk (NYSE:NVO)…. This is a bit challenging since it’s an ADR based in Denmark, but they are virtually a pureplay on insulin and diabetics need it regardless of a market crash.

Aqua America (NYSE:WTR)….largest independent water and waste water play, although high P/E ratio.

As a final reminder, there is no such thing as a "HAVEN" if there is a total market crash.  If the market falls 5% in a day or two, these are probably going to get hit hard too.  But people will own stocks and many firms HAVE TO own stocks.  The defensive names are where they tend to flock to first.

Jon C. Ogg
August 3, 2007

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

Posted on: August 3, 2007 – 3:18 pm in HI/LOW, Large Cap Stocks, , , , , , , , , , , , , , ,

Gateway, New Lows A Day After Earnings (GTW)

What is a bit sad is that if you look at the start of the Gateway’s (NYSE:GTW) earnings release from yesterday it seemed like the company was actually doing at least something right, but the sales are an ongoing issue.  It posted an operating profit of $5.9 million and net income of $1.9 million, or $0.01 EPS.  Revenues were down again at $841 million.  It even listed gross margins of 7.6% company-wide.  Analysts expectations were $0.00 EPS on $953 million revenues.

It almost sounds like the company’s cost containment is helping it despite the fact that it is a far smaller company.  Gateway said it sold 1,088,400 PC units in the second quarter, down 13 percent sequentially and down 7 percent year-over-year.  Working capital at the end of the quarter was $314 million, which was unchanged from the end of the first quarter.  Accounts payable was lower as it had delays previously (to what it called more normal levels) to $610 million; accounts receivable was up about 3% to $314 million.  Other current assets dropped to $111 million from $203 million at the end of the first quarter, in part due to what it noted as improved collection of vendor credit programs.  The net result is that cash and marketable securities decreased to $255 million from $317 million at the end of the first quarter.

This quarter also included part of the old Microsoft settlement payments of $8.6 million, and we’ve noted before how this is not going to last indefinitely.  In the past we noted Gateway as one of the companies that management probably can’t fix.  There have not been any credible rumors of late and this one just feels stuck.  We were wondering at the end of last quarter if this one was even relevant in today’s world. 

Gateway shares are trading down $0.08 at $1.25, under the $1.31 low over the last year (from yesterday) and basically at half of the 52-week $2.44 high.  This is the day after the previous low after it closed down $0.12 after earnings.  After looking back at split adjusted trading, it looks like this may be at or very close to an all-time low for the ailing PC-maker.

Jon C. Ogg
August 3, 2007

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

Posted on: August 3, 2007 – 12:49 pm in Earnings, HI/LOW, PC Companies, ,

Looking Beyond Dendreon’s Upcoming Earnings Release (DNDN)

Dendreon Corp. (NASDAQ:DNDN) will release earnings next Tuesday, August 7, after the close.  The volatility in shares has dried up considerably as shares have only traded above $8.00 or below $7.00 for part of three trading days in July.  The company’s only expected revenues here will be from interest and the loss expected looks like it is -$0.30 on an EPS basis.  That number may change before the report.

There can always be some activist group activity here, or at least that is what incoming emails received have stated.  Some sent in to us listed "the first of many" and "Many more to come."  We’ll see if that creates some movement or not. Options are still fairly active in the open interest with over 154,000 contracts in the August $7.50 Calls and over 129,000 contracts in the $7.50 puts.  That huge open interest drops off a cliff in the near-months after this as no new FDA data is really expected.  An at-the-money straddle right now only looks like it costs $0.70, lower than in any recent month.   

All of these following issues are already known and already in the news, but on top of earnings the company is going to address the following:

  • The Company received confirmation that the U.S. Food and Drug Administration will accept either a positive interim or final analysis of survival from its ongoing IMPACT study to amend the Biologics License Application for Provenge® (sipuleucel-T), its investigational active cellular immunotherapy for metastatic, androgen-independent prostate cancer.
  • The Company continues to have strong patient enrollment in its Phase 3 IMPACT study, which is on track for completion of enrollment this year.
  • The Company completed a financing that resulted in gross proceeds of approximately $85 million from a convertible senior subordinated notes offering.
  • Presented data from an analysis of Phase 3 Studies (D9901 and D9902A) that showed a prolonged survival benefit for patients who were initially treated with PROVENGE who then went on to receive docetaxel chemotherapy after disease progression.

Obviously if there is any new development out of the FDA or if the company decides it wants a partner that will be key to watch over anything else.  We previously noted how shares may face a news vacuum through much of summer and that looks like it has been the case as trading volume has dropped and volatility in the stock has disappeared.  What we will be looking at the closest is the company’s current and projected cash burn rates since it secured the recent financing package and announced its reduced cost structure. 

This one has been eerily quiet of late as far as any real news out of the company.  We’ll follow up if there are any substantial changes ahead of the release. 

Jon C. Ogg
August 3, 2007

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

Posted on: August 3, 2007 – 11:44 am in Biotech, Earnings, FDA, , , ,

Washington Post (WPO) Internet Growth Too Slow

The Washington Post Company (WPO) put out its quarterly numbers today. Wall St. loved the figures and pusked the stock up over 6% to to $841.

Net income fell to $69 million from $79 million in the quarter a year ago. Revenue for the second quarter of 2007 was $1,046.8 million, up 8% from $969.0 million in the second quarter of 2006

The driver at the topline was the Kaplan education businesses which improved revenue by 23% to $503 million. Revenue at the company’s newspapers fell 7% to $228 million. Magazine revenue dropped 13% to $73 million. Cable revenue rose 9% to $154 million.

In an article run in Fortune last week, the magazine made the point that The Washington Post is banking on the internet to "save serious journalism." The company’s CEO, Donald Graham, made his point: "If Internet advertising revenues don’t continue to grow fast," he says, "I think the future of the newspaper business will be very challenging. The Web site simply has to come through."

The new earnings report gives WPO a low grade in that arena. According to the company’s earnings release: Revenue generated by the Company’s online publishing activities, primarily washingtonpost.com, increased 11% to $28.2 million for the second quarter of 2007, from $25.3 million for the second quarter of 2006.

Not only is that a very small number relative to the size of the newspaper operation, but the revenue growth rate is very low. The growth rate at The New York Times Company (NYT) was over 20% in the last quarter.

WPO shares may be up, but someone forgot to read the fine print.

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

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Posted on: August 3, 2007 – 11:33 am in Uncategorized, ,

IPO Filing: Synacor.. A Web 2.0 Portal Platform (SYNC)

A company called Synacor, Inc. filed to come public via an IPO last night under the proposed ticker of "SYNC" on NASDAQ.  For filing purposes, the company listed a sale of up to $86.25 million for registration purposes.  The lead underwriters are listed as Deutsche Bank and Bear Stearns; and co-managers are listed as Thomas Weisel Partners, Canaccord Adams, and Montgomery & Co.

Synacor is an interesting company, at least if you are into any aspect of how broadband affects online content creation and maintenance.  Its platform is used to create customized Internet portals and includes integration infrastructure, subscriber personalization capabilities, a content management and delivery system and a customer-branded video player and toolbar.  It also aggregates free and paid digital content and value-added services, including video from third parties.  Its customers are primarily high-speed ISP’s and broadband providers: Charter Communications, Inc., EarthLink, Inc., Embarq Corporation, Time Warner Cable Inc., United Online, Inc. and Virgin Media Limited.  The company estimates some 21 million broadband users, 5 million narrowband Internet subscribers, and roughly 33 million household television subscribers in the U.S. and the U.K.

Sales were only 2.38 million in 2004.  By 2006 it generated over $26 million in revenues and a net loss of $2.25 million.  Sales grew to $8.677 million in Q1 2007 (up from $5.86 million in Q1 2006) and the losses were carried as ($297,000) on the books. 

This company will be quite interesting to watch, because as it adds more and key customers it means that the competition for eyeballs and interactive services will be increasing. 

Jon C. Ogg
August 3, 2007

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

Posted on: August 3, 2007 – 10:34 am in IPOs, Internet, , , , , ,

What To Expect From Cisco Systems Fiscal 2007 Earnings Next Week (CSCO)

Next week, on August 7, Cisco Systems (NASDAQ:CSCO) will post earnings for its quarter and fiscal year, and this will be the highlight of tech stocks for the week.  Estimates from First Call are $0.35 EPS and $9.29 Billion revenues, but keep in mind that these may change slightly since there are three more trading days.  Next quarter estimates are $0.36 EPS and $9.38 Billion in revenues.  If we get any fiscal July-2008 targets from the company, estimates are currently $1.55 EPS and $39.7 Billion in revenues.  If the company only gives guidance in percentages for fiscal 2008 you would get a static 2008 to 2007 implied 16.5% gain in EPS and a 14% gain in revenues.

Cisco’s shares have held up quite well when you consider the recent market malaise. Shares closed Thursday at $30.13, less than 1% from the highs of its $17.10 to $30.39 trading range over the last 52-weeks.  The most important level for the stock would seem to the $30.00 barrier.  This is above that level reached in January to February 2004 and the company is now far larger and executing far better.  It also has the accumulated businesses of Scientific-Atlanta, Webex, and others under its umbrella.  In fiscal 2004 the networking giant posted $22.04 Billion in revenues and it is expected to have roughly $34.75 Billion for this fiscal year (and estimated at $39.7 Billion for 2008).  The company has also been retiring stock.  So unless there are some more serious cracks forming across communications as a whole, it would seem that the company has a significantly higher base.  We’ll see if the market believes the same.

The average price target is now around $32.00 to $33.00 from analysts.  Back in January, we ran some forward valuations and the scenario that could give Cisco shares a $34.00 price mid-year.  It hasn’t hit that based on the trading range, so now the rest is up to the company.  The company just recently announced its increased share buyback plan, which we thought was a bit odd with shares at a multi-year high and it only being two-weeks ahead of earnings.  Perhaps John Chambers and crew want to try to create a much higher floor for the stock.  We’ll know Tuesday.

It is not fair to use options pricing as an estimate several days ahead of the event with erosion of time value, but as of today it appears that options traders are prepared for the stock to move up to 3% in either direction.  That number is likely to change by the time earnings actually get released, and we’ll make an update on that next week.  As a reminder, this was also one of Jim Cramer’s TOP PICKS FOR 2007.

Here is a May 8 preview we gave if you want to see any comparisons to then.  Shares ended the last quarter under $27.00, so the stock is up about 11% since then.

Jon C. Ogg
August 3, 2007

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

Posted on: August 3, 2007 – 8:53 am in Earnings, Technology Companies, Telecom, Wireless, , , , , , ,

Yahoo (YHOO): Video, Video, Everywhere

From SIlicon Alley Insider

Yahoo (YHOO) will go hog wild with integrated video in order to try to close the massive gap with YouTube.  Good for Yahoo, we guess…continued here

Posted on: August 3, 2007 – 8:30 am in Uncategorized,

Viacom (VIA): Details on Digital Business and TV Upfront

From Silicon Alley Insider

Key points from Viacom’s (VIA) earnings call:  TV up slightly.  Digital growing quickly, but still small as percent of business.  No update on YouTube litigation…continued here

Posted on: August 3, 2007 – 8:27 am in Uncategorized,

Weyehaeuser Beats Lower Earnings, But Value Unlocking Plan Remains Elusive (WY)

Weyerhaeuser (NYSE:WY) has posted earnings that were mixed on the surface, but after you back out one-time charges the company posted $0.48 EPS on revenues of $4.3 Billion.  First Call estimates were $0.39 EPS and $4.24 Billion in revenues. Unfortunately these earnings numbers are convoluted with various EPS charges of $0.14, $0.12, $0.12, $0.02; and a net gain to EPS of $0.07.

The company gave some color on each area of operations, and this was mixed.  Higher seasonal costs and lower sales of non-strategic timberlands adversely affected earnings; Lumber, plywood and oriented strand board prices increased slightly, but market conditions remained difficult; Cellulose Fiber prices continued to increase; Containerboard Packaging and Recycling saw a normal seasonal upswing in packaging shipments occurred and average price realizations for packaging increased due to product mix, but fiber costs remain high; Real Estate and Related Assets: market conditions remain challenging and margins continue to decline, hard to imagine that would be any different right now.

Unfortunately, any solid restructuring plan or unlocking value method is not specific and is still quite vague.  Steven R. Rogel, chairman, president & CEO: "In response to continued challenging market conditions, we managed production and costs throughout the second quarter.  Our focus remains on the strategic initiatives we’ve been implementing to create more value for shareholders. In the coming quarter, we will look for ways to further reduce costs and improve performance as we face challenges produced by the continuing sluggish housing market. Meeting these challenges will require tough decisions and the focus of every employee."

Shares are up 1% after results look ahead of expectations.  But without any formal shareholder value unlocking plan, there seems no compelling argument that new shareholders needs to rush in immediately.  It would seem the recent credit crunch and slowdown in housing and development are keeping a solid break-up, recapitalization, or reclassification at bay.  The comapny has so much timberland that it should still consider applying to become the 51st state. 

Jon C. Ogg
August 3, 2007

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

Posted on: August 3, 2007 – 7:54 am in Conglomerates, Earnings, , , , ,

Procter & Gamble Trumps Earnings With Huge Stock Buyback (PG)

Procter & Gamble (NYSE:PG) did post earnings at $0.67 EPS versus $0.66 estimates from First Call. It also put next quarter targets for $0.88 to $0.90 versus $0.91 estimates and said that fiscal June-2008 earnings per share would grow at a double-digit rate on sales growth and improved margins.  It is going to face near-term margin pressure due to higher commodity prices for an upcoming conversion to a compacted formula for detergents.

But here is the kicker.  The household products giant is going to buy back up to $30 Billion in stock in only a 3-year period.  According to the company, this will be $8 to $10 Billion per year.  This could represent 5% of the outstanding shares if the entire amount is used.  Its whole buyback plan for fiscal 2007 was $5.7 Billion.

P&G has a market cap of $199 billion, and shares are within about 5% of its highs.  Shares are not that volatile though, as its 52-week trading range is only $58.13 to $66.30.  It is kicking out ample cash flows to fund the buyback with $13.4 Billion in cash flow from operations during fiscal 2007.  Its current assets were $24 Billion, total assets including current were $138 Billion, and total liabilities were $71.25 Billion. 

Jon C. Ogg
August 3, 2007

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

Posted on: August 3, 2007 – 7:33 am in Consumer Goods, Earnings, Stock Buybacks, ,

Nortel (NT) And Alcatel-Lucent (ALU): Bad News For Telecom Infrastructure

Nortel (NT) turned in bad numbers. According to The Wall Street Journal "the company said the quarterly net loss was $37 million, or seven cents a share, compared with net income of $342 million, or 79 cents a share, in the second quarter of 2006." And, revenue dropped.

The news for Alcatel-Lucent (ALU), a Nortel competitor, was just as bad. The company’s stock is down almost 20% in the last month.

Telecom companies were supposed to be spending a lot of money on high-speed infrastructure and cell networks. But, that did not show up in Nokia’s (NOK) earnings either. It joint venture with Siemens (SI). According to MarketWatch, NOK said "the JV business underperformed in the quarter and that pricing on some contracts was extremely aggressive."

All of this could spill over to Motorola’s enterprise telecom equipment business as well. With the company’s handset problems, the firm does not need trouble in another big division.

But, the telecom enterprise equipment business is not going well. Either the customer base is delaying capital spending, or price ware are heating up.

None of that is going to get better anytime soon.

Douglas A. McIntyre

Posted on: August 3, 2007 – 7:17 am in Uncategorized, , , ,

Pre-Market Stock News (August 3, 2007)

(ACA) ACA Capital said subprime mortgage exposure does not threaten stability of its unit ratings.
(AHM) American Home Mortgage is closing most operations and laying off most of its 7,400 workers Fridaydown to about 750 workers.
(BBND) BigBand Networks traded down close to 20% after lowering estimates after earnings.
(BUCY) Bucyrus $0.80 EPS vs $0.76 est.
(CME) CME traded higher after Cramer said it was a cheap growth stock and one to play the volatility.
(FTEK) Fuel-Tech won pollution control orders for almost $3.7 million.
(GRMN) Garmin is buying a distributor in Italy.
(HERO) Hercules Offshore $0.74 EPS vs $0.70 est.
(ISLE) Isle of Capri $0.17 EPS vs $0.04 est; unsure if comparable.
(NTAP) lowered guidance; shares trading down close to 20%.
(PCS) MetroPCS $0.17 EPS vs $0.14 est.
(PG) P&G $0.67 EPS vs $0.66 est.
(QTWW) Quantun Fuel Systems said a subsidiary entered into agreement with Ford for producing the Ford F-150 special edition truck.
(THI) Tim Horton $0.36 EPS vs $0.36 est.
(TM) Toyota Motors posted record profits and strong hybrid sales; shares indicated up 1%.
(TOPT) Top Tankers $0.15 EPS bvs $0.04 est.
(TTWO) Take-Two lowered guidance after delaying ist Grand Theft Auto 4 video game.

Jon C. Ogg
August 3, 2007

Posted on: August 3, 2007 – 7:11 am in Pre-Market Activity, , , , , , , , , , , , , , , , ,

Big Band (BBND), Akamai (AKAM), And Level 3 (LVLT): Bad Times For Multimedia

Big Band Networks (BBND) had a bad quarter. The provider of infrastructure for moving video around the internet lost 20% of its value after hours down to $11. It announced a modest $54.5 million in revenue and earnings $.07 a share. An IPO this year, Big Band is now off from a high of $21.63.

LimeLight (LLNW), a content delivery network that competes with industry leader Akamai (AKAM), is off from $24.33 just after its IPO to $16.54. Akamai’s stock is down 35% this year. It earnings disappointed investors.

In a related part of the internet infrastructure, Level 3 (LVLT) came up with flat revenue and lackluster earnings for the last quarter. Its shares went from $6.42 to $4.93 after its announcement. It has recovered a bit since then.

But, there is a trend here. The companies that provide the pipes and pipe parts to get video around the internet should be doing very well during the "YouTube" generation. They are not.

Two things may be happening. The first is the the service providers are in such fierce competition for business in a market that Wall St. views as hot that margins are being compressd by price cuts. The other possibility is that, after two years of extremely rapid expansion, video streaming and consumption is flattening.

Neither set of circumstances is good for these business, and neither is likely to go away.

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

Posted on: August 3, 2007 – 7:03 am in Uncategorized, , , ,

Pre-Market Analyst Calls (August 3, 2007)

APD started as Outperform at CIBC.
CAB raised to Outperform at Wachovia.
CKFR cut to Neutral at Baird.
CDL raised to Neutral at B of A.
CLX cut to Equal Weight at Lehman.
CXR raised to Neutral at B of A.
EGLE raised to Outperform at Wachovia.
EYE raised to Hold at Citigroup.
ETM raised to Neutral at B of A.
EXPE raised to Overweight at JPMorgan.
FISV raised to Outperform at CIBC.
FLML cut to Neutral at Merriman Curhan Ford.
HPY cut to Hold at Citigroup.
INFI raised to Outperform at Baird.
KBR raised to Outperform at Wachovia.
KEYS cut to Neutralat Baird.
LEA raised to Outperform at Baird.
LUX cut to Equal Weight at Lehman.
NTAP raised to Buy at Citigroup; cut to underperform at Bear Stearns.
OKE raised to Buy at Citigroup.
OKS raised to Buy at Citigroup.
PCG raised to Buy at B of A.
PDGI raised to outperform at Baird.
POZN cut to Hold at Lazard and cut to Hold at Jefferies.
PRM raised to Buy at Deutsche Bank.
PVH started as Buy at UBS.
SKX raised to Buy at First Albany.
SNDK started as Neutral at Cowen.
SRE raised to Buy at Jefferies.
TBL raised to Neutral at UBS.
THS raised to Overweight at Lehman.
TLB cut to Sell at Citigroup.
TYC raised to Overweight at JPMorgan.
YRCW raised to Neutral at Baird.

Jon C. Ogg
August 3, 2007

Posted on: August 3, 2007 – 6:43 am in Analyst Calls

Boston Scientific (BSX) Unit IPO Dies On The Table

Boston Scientific (BSX) had planned to take its fast-growing endosurgery group public to raise as much as $1 billion. According to The Associated Press: "The endosurgery unit has recently enjoyed strong growth, and is expected to generate $1.4 billion in revenue this year — nearly one-fifth of the revenue at a company best known for stents and defibrillators, heart devices that are suffering slow sales."

The parent company needed the money. But, now its says that the unit is worth more if its is completely owned by Boston Scientific, a company with $7 billion in debt. As an alternative, the company will cut jobs and sell some assets. BSX shares are off about 55% over the last two years.

The story from the company sounds a bit off. BSX would still have had clear voting control over the unit. And, it could have used the proceeds to improve a flagging balance sheet.

What happened? Well, perhaps in a market where IPOs have become very difficult, BSX’s bankers told the company that it would not get full value for the unit, and management decided to pull the deal. In it place, management can resort to a favorite way out.

Fire a lot of people.

Douglas A. McIntyre

Posted on: August 3, 2007 – 5:07 am in Uncategorized,

Municipal Wi-Fi Loses It Juice

The big city-wide WiFi deployment that was going to make broadband access to the masses a reality was to start in San Francisco. After all, it is the large city at the region that is America’s tech cradle. But, it looks like it is not to be.

The SF infrastructure was going to be built by Google (GOOG) and Earthlink (ELNK). According to MarketWatch: EarthLink is now "doing a detailed review of the business model" associated with municipal wireless, ELNK CEO Huff said. "The Wi-Fi business as currently constituted will not provide an acceptable return."

In other words, there is no money to be made, and Earthlink is not willing to take a big loss.

Municipal Wi-Fi was to be the modern day equivalent of water and sewage service, city-side services. But, in most cases high-speed wireless was to be free.

Fights between city official and tech providers have delayed this just as 3G and 4G networks are being bought to market by the cell carriers and Sprint (S) and Clearwire (CLWR) are rolling out WiMax to most big cities and much of the rest of the country.

With new technology on the way and city-wide Wi-Fi projects bogged down, it is likely that none of them will ever become a reality.

Douglas A. McIntyre

Posted on: August 3, 2007 – 4:58 am in Uncategorized, , , ,