Daily Archives: August 6, 2007

Adobe Acrobat’s Unintended Use: Spam & Stock Promotion (ADBE, CHSH)

Today I got confirmation that ADOBE ACROBAT, the free .pdf file from Adobe Systems Inc. (NASDAQ:ADBE), is starting to be used much wider for spam emails as a way around email filters.  I have read recently how some lower quality advertising "agencies" (term used very liberally) are starting to use Acrobat .PDF files again as a method for sending out spam emails since these are read only (sans-links).  Low and behold today had an extra 10% new junk mail, all using the tactic.  This is very annoying that spammers are starting to use this as a tool to proliferate junk emails all over again.  Adobe just recently got into the soup over their printing relationships by a FedEx Kinkos endorsement that the company was doing.  That may have been their fault, but this guile and trickery by outsiders is not Adobe’s fault.  But that doesn’t mean it won’t be a problem. 

The company must be considering more methods about shutting these digital rights down, but it isn’t always exactly a piece of cake nailing a cyber-scammer.  It is even more annoying that they are using a trusted tool such as Acrobat, and further even more MORE annoying that they are using it for penny stock promotion.  If Adobe doesn’t want Acrobat attachments to be associated on the same seedy level with all of the spam "Tribal Chief so and so" who is "entrusted with a bank account in (YOUR) name with no surviving family members" then they better get on this.

11 Emails were sent to me today (AUG. 6) with the same M.O……..here are the first four:

PDF file titled "readme" …(open email)….(result)…. China Shoe Holdings (CHSH)
PDF file titled "check" …(open email)….(result)…. China Shoe Holdings Inc. (CHSH)
PDF file titled "warning" …(open email)….(result)…. China Shoe Holdings Inc. (CHSH)
PDF file titled "publication" …(open email)….(result)…. China Shoe Holdings Inc. (CHSH)

If China Shoe Holdings is even a real company, they picked a sleazy promoter.  If they did not hire the promoter then they have a weird stock where someone is out spamming because they are long and wrong and buried in the stock.  Either way, they fit the same M.O. as about 1,000+ other companies fitting the ’sleazy stock promoter’ profile. 

It is sad to see a person or group of people use such a trusted tool for such a waste of time like this.  China Shoe Holdings may have started out clean and fair, but yours truly now believes they are a scam.  We have decided to try to bring to light when penny stock scam promotions make sleazy promotion tools such as these.  Something like 98% of these have a very short shelf life of a couple days if that and are rarely heard from ever again, so if you ever venture into these ‘penny stock promoter stocks’ please by all means don’t do it with money you care about.

This isn’t new per se, but it hasn’t been seen as much lately.  Adobe has policies and regulations against this practice, and hopefully it can fix this.  The company tries to be one of the greenest and environmentally friendly companies out there.  The real truth is that it may be quite difficult or even impossible without invading privacy standards.  These action are definitely not Adobe’s fault, not even remotely.  But if this proliferates too much (again) it will end up being their problem.  That is something that a relatively expensive software firm can’t afford for their stock, even if the stock is less than 10% above 52-week lows.

Jon C. Ogg
August 6, 2007

Jon Ogg doesn’t hold securities in any of the companies he covers, but he’s not giving his email address out for this article for any spammers.

Posted on: August 6, 2007 – 9:54 pm in Internet, Software, , , , ,

PFizer’s (PFE) Promising New HIV Drug

Pfizer (PFE) has FDA approval for a new drug that "blocks the CCR5 co-receptor that serves as a main doorway for the HIV virus into immune cells."  It will be marketed as Selzentry and is the first of a new generation of drugs that will bring new pharma R&D to the fight against AIDs.

According to industry analysts, the drug could have annual sales of $500 million within three to four years.

A January research study described the new treatment "a potent new class of antiyirals for the treatment of HIV infection"

Given the PR beating the drug companies take, it is good to see some positive news.

Pfizer could use it. The company is trying to rebuild in the face of generic competition. In an interview with The Associated Press a company executive was upbeat about progress:  "I think so far we’re on track to deliver on the goal of tripling the number of compounds in the Phase III pipeline by 2009," said John LaMattina, president of Pfizer’s global research and development.

The company’s shares closed at $24.11 today, within hailing distance of their 52-week low.

Douglas A. McIntyre

Posted on: August 6, 2007 – 7:07 pm in Uncategorized,

BMC: Even Software is Bigger in Texas (BMC)

BMC Software (NYSE:BMC), one of the few major local software and business service management for large enterprise organizations, is seeing shares jump another 4% in after-hours trading.  The company posted Q1 2008 EPS at$0.28 GAAP and non-GAAP EPS at $0.37 on revenues of $385 million.  First Call estimates were $0.34 non-GAAP EPS and $375.1 million in revenues.

According to the company, this marks the ninth straight quarter where it met or beat guidance.  Its license bookings rose 55%, and total bookings rose 19%.  The company says this is a precursor to strong cash flow in future quarters. 

Q2 2008 GUIDANCE: BMC expects non-GAAP earnings per share in the range of $0.39 to $0.44 per share, assuming an effective tax rate of 30 percent and excluding an estimated $0.09 of special items, and puts revenues at $395 to $410 million.  ESTIMATES: First Call lists $0.41 EPS and $401.2M revenues, so this guidance is in-line to above-target if you use the mid-point of the range.

FISCAL 2008 GUIDANCE: BMC sees fiscal 2008 non-GAAP earnings per share to be in the range of $1.69 to $1.79 per share, assuming an effective tax rate of 30 percent and excluding an estimated $0.33 of special items.  The Company now expects fiscal 2008 revenue growth in the mid-single digits with margin improvements (at 5% growth, this would be an interpolated $1.66 Billion in revenues).  ESTIMATES: First Call has $1.68 EPS and $1.65 Billion, so the earnings are above (including this and next quarter gains) and revenues are in-line depending upon you ‘mid-single digit gains’ guestimate.

As a reminder the company is also in that large share buyback plan just recently announced.  Shares closed up 1.4% today at $27.79, and shares are 4% after the report at almost $29.00.  BMC’s 52-week trading range is $22.73 to $36.92.  Based on the mid-point of 2008 EPS targets from the company and based on a $29.00 static share price, the stock now trades with a forward P/E ratio of 16.6 (before any additional shares retired from buybacks).

Jon C. Ogg
August 6, 2007

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

Posted on: August 6, 2007 – 6:30 pm in Earnings, Software, , ,

Yet Another New Business For Sun (SUNW)

Sun Microsystems (SUNW) says it has created a new microprocessor that works so well that it will be able to sell it to other companies. Instead of doing one programming sequence, the Sun chip can do many. According to The Wall Street Journal: "Where most chips typically handle one to four threads at a time, Sun says its new offering can execute as many as 64 at once."

The new product may not have an easy birth. Upon hearing about the chip, IBM management said a the processor was a "niche" product. Not a very kind approach.

Several other observers say that it will be hard for Sun to get competitors to use its processor.

Sun should get an "A" for effort. It still needs something to get Wall St. interested in the company. After releasing quarterly results with flat revenue compared to the same quarter last year, investors started to turn on the stock. Over the last month, the shares are down 9% and now trade at $4.96, near their 52-week low.

Sun continues to present itself as a confused collection of businesses that issues press releases about its "next big thing" fairly often. But, at this point, no one is listening.

Douglas A. McIntyre

Posted on: August 6, 2007 – 6:19 pm in Uncategorized,

Qualcomm’s (QCOM) Plays Sisyphus

It is a long, steep hill for Qualcomm (QCOM). The ITC decided that some of Qualcomm’s technology infringed on IP from rival Broadcom (BRCM) and said it would block a number of handsets containing the technology from coming into the country.

Qualcomm said it would appeal to the President of the United States. Susan Schwab, the U.S. Trade Representative, acting on Mr. Bush’s behalf, said they would stay out of the matter. The issue will probably now go into the federal court system.

Several of the wireless carriers could be hurt because newer phones will not be available. Verizon Wireless has taken the step of cutting a license deal with Broadcom so that it will not be restricted in selling these handsets.

Qualcomm needs to get the matter settled, and soon. It battle with Broadcom is now spilling over and is damaging the businesses of both the handset companies and service providers.

Qualcomm has issued a strong forecast for the balance of the year. So, it does not expect this trouble to hurt it short term.

But, Wall St is already beginning to turn its back on the company. Despite the company’s excellent earnings, QCOM shares are down 6% over the last month and BRCM shares are up 8%. If Qualcomm persists, that spread could get much bigger.

Douglas A. McIntyre

Posted on: August 6, 2007 – 6:07 pm in Uncategorized, ,

SINA Doesn’t Make The Grade (SINA, SOHU, BIDU)

SINA Corporation (Nasdaq:SINA): Non-GAAP net income was $16.1 million or $0.27 diluted non-GAAP and $0.25 GAAP EPS; net revenues increased 11% year over year to $59.8 million, within the upper range of the Company’s guidance of between $58.0 million and $60.0 million.  Estimates were $0.24 non-GAAP EPS & $59.6 million in revenues.  Non-advertising revenues for the second quarter of 2007 totaled $18.6 million, a 23% decrease from the same period in 2006 and a 5% decrease from the previous quarter.  Gross margin for the second quarter of 2007 was 62%, compared to 63% in the same period last year and 59% in the last quarter.

SINA’s guestimates are total revenues for the third quarter of 2007 to be between $63.0 million and $65.0 million, with advertising revenues to be between $45.0 million and $46.0 million and non-advertising revenues to be between $18.0 million and $19.0 million. Stock-based compensation for the third quarter of 2007 is expected to be approximately $1.7 million, which excludes any new shares that may be granted.  Unfortunately consensus estimates are $64.75 million and that isn’t going to cut it for a high-beta and high-growth Chinese web company.

The soft revenues and soft guidance has shares down over 5% in after-hours trading to $39.50.  SINA’s 52-week trading range is $21.70 to $47.05.  This has shares of Sohu.com (NASDAQ:SOHU) down almost 1% and Baidu.com (NASDAQ:BIDU) down 0.3% in after-hours trading.

Jon C. Ogg
August 6, 2007

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

Posted on: August 6, 2007 – 4:19 pm in Earnings, Internet, , , , ,

Local.com Posts Gains & Calls For More (LOCM)

Local.com (NASDAQ:LOCM) posted revenues of $5.1 million, up 51% year over year and over 4% sequentially.  The loss was $3.15 million or -$0.34 dilued and basic EPS.  Consensus estimates were -$0.35 and $5.07 million, although again we caution how thin the coverage is in the microcap web stock.

The company expects third quarter 2007 revenue of between $5.5 million and $5.7 million, the mid-range of which is a 10% increase over the second quarter 2007. We expect the mid-range of local search revenue to be approximately $4.8 million, an increase of 19% over the second quarter 2007. The company expects net loss for the third quarter 2007 to be between $9.2 million and $9.3 million, or $0.70 to $0.71 per share, which includes non-cash expenses of $7.4 million or $0.56 per share. The loss per share forecast assumes 13.1 million weighted average shares outstanding and guidance is based on 13.1 million weighted average shares outstanding.

It listed only $8.7 million in cash and marketable securities at the end of the quarter, but that has been bumped up recently with a $12 million net proceeds financing pact completed just last week.  Shares ar up about 2% in after-hours trading at $5.79, although it looks like shares had jumped almost 5% a few minutes ago.

Jon C. Ogg
August 6, 2007

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

Posted on: August 6, 2007 – 4:02 pm in Earnings, Internet, ,

Tech Tuesday: All About Cisco Systems & The Fed (CSCO)

Tomorrow is going to be an interesting day after a massive rally Monday.  The market is going to be looking to the FOMC for soem stability on the economic outlook and hope that Bernanke & Co. say they are carefully monitoring the slide from subprime into the rest of the economy. 

Tech stocks will potentially have to wait for the market close before hearing Cisco Systems results for the quarter and fiscal year.  Shares of Cisco barely made it into positive territory closing up $0.04 at $29.50 Monday.  If you want a full earnings preview from Friday, you can see it here.  Here are the basics if you just want the basics: $0.35 EPS and $9.29 Billion revenues.  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.

Even after the drop Friday, shares are up almost 10% over the last quarter.  That $30.00 barrier is still an issue and has been difficult for the stock to hold.  Analysts on average have an average target of $32.00 to $33.00, and we gave a scenario earlier in the year for a $34.00 target mid-year that has yet to be seen.

As a reminder, the company is in that new $5 Billion share buyback plan we thought was a bit odd only two weeks ahead of earnings and this is still one of Jim Cramer’s TOP 2007 PICKS.  If Cisco upsets the market it may have additional fallout in the sector, particularly as the street thinks that they are the key leader winning more and more business in the sector.

Jon C. Ogg
August 6, 2007

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

Posted on: August 6, 2007 – 3:49 pm in Earnings, Technology Companies, , , , ,

Wynn Resorts, Earnings Wynner! (WYNN, LVS, MPEL)

Wynn Resorts, Ltd. (NASDAQ:WYNN) posted earnings of $0.82 GAAP EPS on revenues of $687.5 million  First Call had estimates at $0.53 EPS and almost $604 million revenues.  Year over year results are hard to count comparably because Wynn Macau wasn’t open this last quarter in 2006.  Adjusted earnings were $0.92 EPS.

They are showing they aren’t just about the spread in gambling too.  Check these numbers out: Gross non-casino revenues for the quarter were $211.2 million, a 7.5% increase from the second quarter of 2006. Hotel revenues were up 7.6% to $74.4 million during the quarter, versus $69.2 million in the second quarter of 2006. Wynn Las Vegas achieved an Average Daily Rate (ADR) of $311 for the quarter, compared to $293 in the second quarter of 2006. The property’s occupancy was 97.0%, compared to 95.7% during the prior year period, generating revenue per available room (REVPAR) of $301 in the 2007 period (7.4% higher than in 2006).  Food and beverage revenues increased 5.7% to $82.1 million in the quarter, compared to $77.7 million in the second quarter of 2006. Retail revenues were $22.9 million in the quarter, compared to $19.3 million in the second quarter of 2006, an increase of 18.7%. Entertainment revenues were approximately $18.7 million, compared to $17.1 million in the second quarter of 2006 as Avenue Q closed in May 2006.

Wynn is also outlining its Encore property adjacent to the Wynn Las Vegas, abd it is going to be a big one: 20 acres on the Las Vegas Strip adjacent to Wynn Las Vegas, 2,034 all-suite hotel tower fully integrated with Wynn Las Vegas, 72,000 square foot casino, additional convention and meeting space, more restaurants, a nightclub, swimming pools, a spa and salon and retail outlets. Encore is expected to open in early 2009 and the project budget is currently estimated at approximately $2.2 billion all inclusive.  Its Macau operations are still growing as well since it decided to roll that operation out more gradually and will include another 20,000 square feet of gaming space.

After a recent convertible debt redemption, $224.1 million debt converted to equity and deferred financing was reduced by $5.2 million.  Wynn isn’t usually big on giving exact guidance since so much is unknown until the very end of a quarter, but shareholders don’t seem to care.  Shares are up some 9% at $117.00+ in after-hours trading, and that is after a 6.2% gain in regular trading.  If this holds, that will mark a new high over the prior $114.60 high.

Elsewhere, shares of Melco PBL Entertainment (NASDAQ:MPEL) is seeing shares up over 3% after-hours to $13.10 and Las Vegas Sands (NYSE:LVS) shares are up almost 3% after-hours.

Jon C. Ogg
August 6, 2007

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

Posted on: August 6, 2007 – 3:27 pm in Casinos, Earnings, , , , , , ,

Clearwire (CLWR): Not The Quarter Hoped For

Clearwire (CLWR) opened way down today trading as low as $26.47. But, late in the day, the shares made a sharp turn north and closed up almost 3% at $29.52. Just after hours, Clearwire jumped another 2%.

Someone on Wall St. thought the recent WiMax IPO was going to report a good quarter.

On a consolidated basis, Clearwire’s second-quarter service revenue more than doubled to $35.5 million from $15.4 million in the same quarter of 2006. The First Call consensus was  $33.26 million

The company had a net loss of $118 million. or $.72 a share. Wall St. was hoping for a $.60 loss.

The company did show some growth in its WiMax subscriber base. Clearwire reported approximately 41,000 net subscriber additions for the quarter ended June 30, 2007. The increase brings the total subscriber base to 299,000, a 130 percent increase over the subscriber base at the end of the second quarter of 2006, and a 16 percent sequential quarter increase.

It was not the quarter investors were looking for

Douglas A. McIntyre

Posted on: August 6, 2007 – 3:16 pm in Uncategorized,

Yahoo! Briefly Hit 52-Week Lows (YHOO, GOOG)

Yahoo! (NASDAQ-YHOO) almost joined the ranks of the 52-week low club today.  It actually did hit new 52-week lows, although it looks like Yahoo! stock isn’t going to actually close down at 52-week lows.  It may just have the bottom fishers in there to thank, and a 190 point rise in the DJIA probably didn’t hurt it today.  Its shares are still in negative territory with less than 30 minutes to the close.

It seems that despite Panama and despite new management that shareholders just aren’t going to give the company a pass for a few quarters.  Jerry Yang stepped back in and the company hasn’t had a good run at all since then.  The prior 52-week low was $22.65 intraday and shares reached as low as $22.44 earlier today before recovering. 

Google (NASDAQ:GOOG) trades at a discount on forward numbers compared to Yahoo!.  Yahoo! is also only cheap if you consider that its shares traded north of $40.00 about 18-months ago.  So the stock appears to be on sale when the underlying business isn’t.  Yang has his work cut out for him even more now Chief Yahoo! and it’s a wonder that no one has said "Could we please get Semel back?".

Jon C. Ogg
August 6, 2007

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

Posted on: August 6, 2007 – 2:42 pm in HI/LOW, Internet, , , , , ,

Lazard Defends Fuel-Tech (FTEK)

Lazard Capital Markets has made a post-earnings call on Fuel-Tech, Inc. (NASDAQ:FTEK).  The brokerage firm has reiterated its Buy rating and $33.00 in an intraday research call.  Its reason: they expected this news. 

Lazard’s analyst for the alternative and clean energy sector, Sanjay Shrestha, also noted that the results reflect inherent lumpiness in bookings related to air pollution control (APC) projects and the timing of revenue and expenses in the company’s FUELCHEM segment.  He also noted "2Q results don’t alter our view of the company’s long-term growth prospects. In our July 30th earnings preview, we noted the potential for lower reported numbers and outlook for 2H07, reflecting the lumpy nature of bookings with utilities and percentage-of-completion accounting." The firm did lower its fiscal 2007 earnings revenue targets to $0.28 (from $0.42) and $80 million (from $92 million), respectively.

In the report, it is also noted that Fuel-Tech is well positioned to gain meaningfully in major international markets, particularly in China.  They expect the company to end 2007 with significant backlog that will set the stage for excellent growth in 2008/2009.  Lazard’s note also states "Our price target of $33 reflects a 25x multiple on our 2010E EPS of $1.60 discounted back one year at 20%. We believe the pullback in the shares represents an attractive entry point and risk/reward."  Maybe they are right.  We noted some problems this is starting to show in the model.  But shares were down over 10% and are now down less than 3%.  Despite the  high current P/E ratios, it looks like more traders are using this pullback as an opportunity to buy the stock on sale.

Jon C. Ogg
August 6, 2007

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

Posted on: August 6, 2007 – 2:27 pm in Alternative Energy, Analyst Calls, , , ,

Why Take-Two (TTWO) Is Not Recovering

Take-Two (TTWO) is off almost 5% today to $13.45 and it has traded within a penny of its 52-week low. That low was set when the company was operating in the shadow of incompetent management and an SEC investigation. The shares should not be there again now that a new management team is in place.

But, with the delay of the company’s premier product, "Grand Theft Auto", the stock has run down from over $21 on July 17

Bear Stearns upgraded the stock from "underperform" to "peer perform" this morning, which must be a bit humiliating.

The market’s concern about Take-Two is whether it has enough cash to get to the launch of its big game.

In its most recent 10-Q, the company reported a loss from operations of $51 million. The company’s cash on the balance sheet was just over $108 million. Receivables were $70 million and payables, accrued expenses, and other current liabilities were $210 million.

All of that taken together does not leave much of a buffer for a company with a $50 million operating loss.

The company does have access to capital, but it is the kind no company should want to take. It is a line of credit secured by receivables and the terms are onerous.

So, Take-Two is in a race against time. It cannot afford to lose much more money, but in revised guidance it says its revenue will fall far short of expectations and its losses will rise.

But, the stock won’t.

Douglas A. McIntyre

Posted on: August 6, 2007 – 2:04 pm in Uncategorized,

Cramer Thinks Thornburg Mortgage Will Be Fine (TMA)

On today’s STOP TRADING segment on CNBC, Jim Cramer said that Thornburg Mortgage Inc. (NYSE:TMA) is one of the companies in mortgage land that is bad short that will hurt the traders betting against it.  Cramer thinks that many of these mortgage companies are really at risk, but Thornburg isn’t one of them.  Despite that many of their loans are stated income, the company has shown over and over how they pick through some of the riskier loans.  After all, Cramer just created his "Mortgage Market Madness Index" on Friday, and this was one of the components.  Earlier today he noted again that some homebuilders could be at risk as well.

Jon C. Ogg
August 6, 2007

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

Posted on: August 6, 2007 – 1:56 pm in Cramer, Financial Stocks, , , ,

EMI Results Awful: Digital Up, But Not Enough.

From Silicon Alley Insider

It’s big music’s recurring refrain: CD sales are plummeting. But one day digital sales will make up for that.

That day cannot come soon enough. EMI Music Group reports that revenue dropped 5% in the last quarter, even though digital sales increased by double digits …continued here

Posted on: August 6, 2007 – 1:38 pm in Uncategorized

Getty Images: Value Stock or Value Trap? (GYI)

Getty Images Inc. (NYSE:GYI) is a stock that is in a conundrum.  It looks like a great value stock with a very low P/E multiple now, but it also has all of the set-ups and industry developments that could make it a serious value trap.  Back in early May 2007 when shares were north of $50.00 we issued in our Special Situation Investing Newsletter a projected target of $36.00 to $38.00 for Getty Images’ stock.  On August 2 we got the entire expected price drop four to six months sooner than expected, and then some.  Shares have continued their fall since and we are reviewing this one again, but there are many other fish to fry and we likely won’t have any major changes of heart in getty for a while.  Attached at the end of this article you can read each of the reports that went out to newsletter subscribers in Adobe Acrobat (R) format.

Last week Getty Images posted an earnings and revenues increase, but the company’s lowered guidance (which we expected) is taking a serious toll.  Revenues rose 6% to $218 million and earnings came in at $0.56 on a diluted basis. First Call estimates were $218.8 million revenues and $0.58 EPS.  Getty also announced a restructuring and related reduction in workforce of about 100 employees.  Unfortunately it also trimmed guidance for Q3 and Fiscal 2007.  Cash balances were $288.6 million at June 30, 2007. During the quarter, the company spent a total of $248 million for acquired businesses, of which $120 million was financed through the company’s senior credit facility and the remaining $128 million paid from existing cash balances.  The cash is very important here, at least it will be more important ahead.

We aren’t entirely negative on Getty Images, because even if it faces rough waters it still has a shot of maintaining high profitability if it focuses on what will be its core markets and can fend off fledgling competitors for a while longer.  Getty will likely have a strong place in a few lines of copyright protected material for live events.  With a 15 forward P/E ratio the company doesn’t expensive at all, but they are going to have to fight harder and harder to compete in the same pricing model.  At some point, it wouldn’t even be uncharacteristic for the co-founders Mark Getty and Jonathan Klein to try to mount an MBO.  They didn’t exactly come from nowhere and could probably get financing even in a liquidity crunched world.

The argument that it is really just a value trap for investors is equally or even more overwhelming.  Vast portions of the company’s business will fall prey to mass collaboration, and anyone with about $20,000 can build a similar wiki-model stock photo and copyright video and audio business.  It isn’t that Getty will start losing money, it is that margins could face a perpetual squeeze here.  Once these online digital photo hubs begin to  take a C2C or C2B (yeah, remember those terms?) (now p2p) approach a step further, then there is more trouble for Getty.  The value of digital, audio, and video images is unfortunately not what it was once even 12 or 24 months ago (see article on Jupiter Media deal falling apart).  Not in a world where your business has the easiest model to mass collaborate or Wiki at any rate.  Getty Images is now and will continue to be the true wiki-model victim.  Even though it has made some good acquisitions it cannot acquire everyone.

If you think the $20,000.00 sounds low, an industry contact of a relatively new competitor estimated only a fraction of that.  Augustine Fou, CEO of PictureSandbox.com, stated, "Anyone with $1,000 can build a web 2.0 service — something as simple as a meta search engine for photos which searches across every available microstock collection. Helping the potential buyer more quickly and easily find and license a photo means that purchase will occur outside walls of traditional stock houses."

So, is Getty Images now great value stock, or is it just a major value trap?  We are looking into this now to see if there is a reason to reverse our negative projection.  This stock didn’t really participate in the last major market rally, and this last drop from guidance has made it fare much worse than the broader markets.  For now, we are looking at many other special situation investing situations and going to just call this one a victory for now. 

Download ssin_getty_may_8_2007.pdf
Download ssin_getty_close_aug_2_2007.pdf

Jon C. Ogg
August 6, 2007

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

Posted on: August 6, 2007 – 1:02 pm in Earnings Warning, , , , ,

Limelight Networks (LLNW): Friedman Billings Looks The Fool

On July 18, Friedman Billings put an "outperform" on Limelight Networks. The shares closed at $16.85 that day. Today, the stock is off over 17% to under $12.

What Friedman did not see was that there is s price war going on in the content delivery network business. It involves that largest company in the business, Akamai (AKAM), and that stock has fallen from $47 to under $33 in two weeks. The third company in the competition is Internap (INAP). Its shares have fallen from over $15 to $14 in the last two weeks.

It seems that the research firm missed that point.

Douglas A. McIntyre

Posted on: August 6, 2007 – 12:58 pm in Uncategorized, , ,

McDonald’s (MCD) Sells Boston Markets

McDonald’s (MCD) has sold Boston Markets. According to MarketWatch, the big hamberger chain paid $174 million for the chain in 2000.

The buyer is Sun Capital:. No price was given.

Douglas A. McIntyre

Posted on: August 6, 2007 – 12:50 pm in Uncategorized,

FCC Spectrum Auction: Meet The Bidders (GOOG)(T)(VZ)

From Silicon Alley Insider

Expect the two biggest wireless companies, AT&T (T) and Verizon Wireless VZ), to give Google (GOOG) (and other potential new entrants like satellite TV firms) their biggest challenge.

According to Stifel’s report, Basking Ridge, N.J.-based Verizon Wireless and T-Mobile have the lowest average spectrum holdings of nationwide carriers… continued here

Posted on: August 6, 2007 – 12:23 pm in Uncategorized, , ,

Earnings Preview: Wynn Resorts Ltd. (WYNN, LVS, MPEL)

Wynn Resorts, Ltd. (NASDAQ:WYNN) reports earnings after the close.  This is by far one of the more volatile casino and resort names after earnings or news.  First Call has estimates at $0.53 EPS and almost $604 million revenues.

On a static basis options traders appear to only be expecting a move of up to 3.5% to 4%.  Analysts have an average price target of about $105.00 per share.  For most of 2007, shares have traded mostly in a $90.00 to $110.00 trading range.  Unfortunately the chart is rangebound and most non-directional, although the waves of highs on rallies has been a series of lower highs.  As of July, Wynn had almost 7.3 million shares in its short interest, or roughly 14% of the float.

Wynn now has a $10.4 Billion market cap and its shares have traded between $65.51 and $114.60 over the last year.  If you have been to the Wynn in Las Vegas, you’ll know that this is the benchmark for high-end casinos that want to draw high-rollers and upscale tourism business.  That is already known.  What this frequently boils down to is the ongoing developments and gradual continued roll-outs of its Wynn operations in Macau.  Las Vegas Sands (NYSE:LVS) is usually the most tied to Wynn as far as a competitor in Las Vegas and in Macau, and Melco PBL Entertainment (NASDAQ:MPEL) is the ‘future Macau competitor.’

Jon C. Ogg
August 6, 2007

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

Posted on: August 6, 2007 – 11:25 am in Casinos, Earnings, , , , , , ,