Daily Archives: August 9, 2007

Countrywide Punished Over Quarterly SEC Filing Disclosures (CFC)

Countrywide Financial Corp. (NYSE:CFC) has filed its 10-Q quarterly report with the SEC, and the stock has gotten hammered in after-hours trading with a drop of more than 10%.  Investors should understand that many of these comments may have been included in prior filings and may have already been telegraphed by the company.  But right now in our credit crunch and liquidity squeeze Wall Street is just shooting first.  It isn’t even that they will ask questions later, because right now it’s just a status of shooting and walking away. 

Many of the pre-packaged quarterly disclosure statements and possible scenarios outlined herein sound ghastly as well, but these are frequently covered as risk factors in every filing.  After a huge down day like today, it’s no wonder that after-hours trading is being so hard on Countrywide.  After this reaction to a quarterly filing, you can bet that Countrywide’s CEO Angelo Mozilo will be on CNBC and elsewhere in media outlets Friday trying to bring about at least some calm and to state that many of these disclosures are routine (or at least somewhat) in the sector.

The company has also said that it believes the changes may hurt near-term but will ultimately help it in the long-run.  (If this was truly believed on the surface, then the shares wouldn’t be down over 10% in after-hours.)

Page 94 OFF BALANCE SHEET TRANSACTIONS
….
We do not believe that any of our off-balance sheet arrangements have had, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Our material contractual obligations were summarized and included in our 2006 Annual Report. There have been no material changes outside the ordinary course of our business in the contractual obligations as summarized in our 2006 Annual Report during the six months ended June 30, 2007.

Here are some of the comments on the next page out of the end of the SEC filing that are hitting the stock:

Read More »

Posted on: August 9, 2007 – 6:58 pm in Banking, Financial Stocks, , ,

Cramer’s Chip/Semiconductor Plays (SNDK, INTC, AMD)

Jim Cramer came on CNBC on tonight’s MAD MONEY and he said that he still likes technology and his pick tonight was Intel (NASDAQ:INTC) for it in the tech sweet spot with growth, earnings, and killing its competitor Advanced Micro Devices (NYSE:AMD).  Intel shares fell 3% with the broad market today to $23.92 and shares are up 0.2% after the Cramer tout here.  Oddly enough, Jim Cramer didn’t once mention any of his "New Four Horsemen of Tech" in this.  He also gave a favorable interview to the head of SanDisk (NASDAQ:SNDK) this evening on CNBC.  He thinks flash memory is gaining over disk drives down the road and is still in a growth cycle.
Jon C. Ogg
August 9, 2007

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

Posted on: August 9, 2007 – 5:54 pm in Cramer, Semiconductor, , , ,

Bears In Them Thar Gold Hills (GLD, ABX, NEM, AUY, AU, RGLD)

What is the one sector that is viewed as a safe haven in scary times?  Outside of water it’s gold, and gold is easier to invest in than water as far as the stock market is concerned.  But when you get a worry that we might be heading into a ‘deflationary environment’ gold isn’t viewed as a safety net.  On last look, the shiny metal itself was down to $661.00 and was almost $672.00 when I woke up this morning. The DJIA fell almost 400 points to 13,270.68.  Check this out:

The StreetTracks Gold Trust (NYSE:GLD), the ETF that tracks gold prices on a 1:10 ratio of the price of an ounce of the shiny metal, fell 1.95% to $65.46. 

Barrick Gold Corp. (NYSE:ABX) fell almost 1% to $33.77, still with a $29.2 Billion market cap.  Goldcorp Inc. (NYSE:GG) fell 3% to $24.92 and AngloGold Ashanti (NYSE:AU) fell 2.6% to $37.45.  Yamana Gold (NYSE:AUY) fell 3% to $10.92, and it’s one of Jim Cramer’s favorites.  Newmont Mining Corp. (NYSE:NEM) is back to mostly being unhedged and it fell 2.15% to $41.42. 

Royal Gold Inc. (NASDAQ:RGLD) was one of the few bright spots with a 0.4% gain to $31.52, mainly because of a press release of an amended merger pact with Battle Mountain Gold.

Jon C. Ogg
August 9, 2007

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

Posted on: August 9, 2007 – 5:05 pm in Metals, , , , , , ,

How Are Defensive Stocks Doing? (KO, MRK, PG, CAG, BUD, HRL, MO, CG MCD, KFT, GM)

Last Friday, we wrote about defensive stock havens for a crummy stock market.  We also warned that in true market selling extremes there is no such thing as a true haven, and stocks that do "less bad" are still down.  But interestingly enough, some of these names are holding up rather well.  These or related stocks are where investors start to look when things aren’t falling off a cliff.  Here is how the market fared today, followed by the performance of defensive stocks:

DJIA                13,270.68 (-387.18; -2.83%)
S&P500         1,453.09 (-44.40; -2.96%)
NASDAQ        2,556.49 (-56.49; -2.16%)
10YR-Bond   4.79% (-0.07%)

THE ONES THAT WORKED, OR NOT SO BAD ANYWAY

Coca-Cola Co. (NUSE:KO) closed down only 1 penny at $55.85, just under recent highs of $55.88. That’s not too bad.  Does anyone ever stop drinking sodas or water?  Pepsi (NYSE:PEP) isn’t faring as well with a 2% drop to $68.50, but that is still close to its $70.17 recent highs.  McDonalds (NYSE:MCD) fell only 0.7% in regular trading to $49.93, down from recent highs of $53.22.  This is still better than the market as a whole, but this is still up close to 50% from year lows.  ConAgra (NYSE:CAG) fell 1.8% to $25.91, down from recent highs of $28.35.  The food giant is fairly valued, and this was positive some today.  Procter & Gamble (NYSE:PG) spent most of the day up and closed down only 0.3% at $64.97 and still close to recent highs of $66.30.  Not bad.  Afterall, they get into your pocketbook regardless of the market unless you stop shaving, washing hands, and brushing your teeth.

DEFENSIVE STOCKS NOT WORKING

Merck (NYSE:MRK) fell only 1.7% in a crummy day and never really got to be profitable.  Maybe a ‘less bad day’ is a good to some, but barely.  Altria (NYSE:MO) fell 2.7% to $67.67 and Carolina Group (NYSE:CG) also fell 3.5% to $72.33..  Maybe the market tank isn’t making everyone go smoke afterall.  Hormel (NYSE:HRL) fell 2.6% to $31.76 today, but this is now down from recent highs of $39.88.  Maybe SPAM is not that well regarded afterall. Kraft (NYSE:KFT) fell 4% to $31.45, aldo down a lot from the $37.20 recent highs.  Peltz and Buffett aren’t able to offer any stability?  Anheuser Busch (NYSE:BUD) fell almost 5% today to $48.50, down a lot from the 455.19 recent highs.  Booze, particularly cheap beer is supposed to do well.

General Motors (NYSE:GM) was the only one of DJIA components that closed UP…up a whole 3 cents to $34.85, but still.  Go figure.

Jon C. Ogg
August 9, 2007

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

Posted on: August 9, 2007 – 4:39 pm in Defensive Stocks, , , , , , , , , , , , ,

NVIDIA Running Strong, But No Guidance Until Conference Call (NVDA)

NVIDIA (NASDAQ:NVDA) posted earnings of $0.51 EPS and $935.3 million in revenues.  First Call estimates were $0.43 EPS and $859.9 million revenues.  Non-GAAP gross margin improved to a record 45.6 percent, an increase of 290 basis points from a year ago.  The company did not issue guidance, but will likely give guidance in its conference call.  Next quarter estimates are $0.49 EPS & $939 million revenues and fiscal JAN-2008 estimates are $1.86 EPS & $3.64 Billion revenues.

Jen-Hsun Huang, president and CEO of NVIDIA: "NVIDIA delivered an outstanding quarter, with record revenue, record gross margin, and record net income. These results reflect the growing importance of the GPU as well as great execution across the company.  Our ongoing strategy to extend the reach of the GPU is paying off. There is a fast-growing universe of applications that rely on the processing capability of the GPU, from 3D design and styling tools, video and photo editing software, 3D maps, and video games, to the user interfaces of the Mac and Vista. The GPU can surely enhance the computing experience for everyone, from artists, engineers, and scientists, to gamers and everyday PC users."

NVIDIA’s short interest in July was listed as 22.855 million shares.  Shares closed up over 1% at $46.13 on a day when the broader market would have dictated a higher chance for a loss.  Shares are initially up 3% atr $47.50 in after-hours trading and initially traded up a bit more than that.  $47.93 is the company’s 52-week and all-time high.

Until we have guidance from a conference call or see the reaction, this is an incomplete report.

Jon C. Ogg
August 9, 2007

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

Posted on: August 9, 2007 – 3:41 pm in Earnings, Semiconductor,

Ford (F): The Next Shoe Drops

Ford (F) is off almost 5.5% today, victim of the double whammy.

With private equity frightened of its own shadow and the $10 billion Home Deport (HD) Supply deal in trouble, it is unlikely that Ford can unload Jaguar and Rover. Jaq has lost money in the past, so any deal of the two units would probably require substantial leverage. No one is going to have an interest in that.

Over on the other side of the debt crisis, signals are the mortgage defaults are rising. Consumers who can’t sell their homes are not going to buy cars. People who have lost their homes probably aren’t in the market for a pick-up.

Yesterday, Ford had a bit of a run when its new CEO said that the company still believed that 2009 could be profitable. Today’s market could make that comment look irrational.

Douglas A. McIntyre

Posted on: August 9, 2007 – 1:58 pm in Mergers and Buy Outs, ,

IPO Filing: Peplin (PLIN)

Today was an interesting IPO filing for a company called Peplin, Inc., a subsidiary of Peplin Limited in Australia.  There will be somewhat of a dual listing and if you want to look up some historical data on the parent company it has been public in Australia for some time.  It trades under the "PEP" ticker in Australia.

The company has filed to raise $75 million via equity sales and will list on NASDAQ under the ticker "PLIN."  The underwriting group is fairly impressive with underwriters being listed as Merrill Lynch, Cowen & Co., Thomas Weisel, Leerink Swann, and Wilson HTM.

Peplin is still a development stage company, but it is one you will want to watch if you believe that actinic keratosis (‘AK’)and ultimately skin cancer are going to be secular growth opportunities for the companies that can treat them.  The company may have other indicated uses as well, but AK is the first and foremost focus.  The company has completed Phase IIb trials with three different dosages, and the company believes its lead candidate is safe and well tolerated, as well has having a statistically significant and clinically meaningful lesion clearance by all measures evaluated and at all doses studied.

Here is the rest of the story and a more clear explanation of the full company from the prospectus filing or you can visit the company’s website at www.peplin.com.

Jon C. Ogg
August 9, 2007

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

Posted on: August 9, 2007 – 1:56 pm in Biotech, IPOs, , ,

Ramifications Of A Higher VMware IPO Price (EMC, VMW)

The upcoming and heavily anticipated partial-IPO of EMC Corp.’s (NYSE:EMC) VMware (NYSE:VMW) just saw the stakes of poker go up.  The company has hiked the IPO pricing range for next week from the original $23.00 to $25.00 to a new and higher range of $27.00 to $29.00 for some 33 million shares (plus the 4.95 million overallotment option).  After the partial-IPO, EMC will still own close to 87% of the stock and will have roughly 98% of the votes because of the dual class of shares.  Underwriters in the amended prospectus are Citigroup, JPMorgan, Lehman Brothers, Credit Suisse, Merrill Lynch, and Deutsche Bank. 

If you look at some of the competing interests in a competitor called VirtualIron, it’s probably safe to assume that this higher IPO price will also spawn another public company competitor in virtualization software sooner rather than later. This also adjusted the terms for the employee conversions per the SEC Filing, after we were wondering why some employees had not responded or were holding out to the previous option and restricted stock tender.  The new VWAP price range for employees in the filing shows a $26.00 to $30.00 range for some added leeway.

So far, this is not helping EMC’s stock today, as shares are down more than 2% with a crummy market.  With all of the hype in recent weeks, this price hike should have also been mostly expected.  We’ll still be sending out a playbook to subscribers of our Special Situation Investing Newsletter for EMC and VMware in the hours ahead of the IPO next week.  The stock market getting killed isn’t a help and the timing of this couldn’t have been much worse from EMC but there is also some of a ’sell the news’ going on.

If you keep reading about Virualization in PC and computer land then you’ll know why the demand is there and why the price got bumped up.  This could now end up with a perceived value of closer to $10 Billion on a fully diluted basis, although keep in mind that this is a very small amount being sold and as of today EMC is not planning on spinning shares off to EMC holders and has not given any plans that it wants to sell more.  Except for the fact that cheaper DRAM and multi-core processors taking virtualization farther and farther into mainstream, nothing else has changed other than the total market opportunity becoming much larger than originally estimated.

Jon C. Ogg
August 9, 2007

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

Posted on: August 9, 2007 – 1:29 pm in IPOs, Software, Technology Companies, , , , ,

Weighing AMD’s Replacement Financing Pact (AMD, INTC, NVDA)

After looking at a new financing pact at Advanced Micro Devices Inc. (NYSE:AMD) the first reaction here was "these bankers really are using voodoo financing like we said back in April," but even if that is the case today’s note pricing actually looks like much less like voodoo for the buyer and seller on the surface.  It’s never easy to defend a bad situation, but when you see companies that are in trouble doing "less bad than before" the market usually reacts favorably.  Shares are down today with a weak market while NVIDIA (NASDAQ:NVDA) shares are up ahead of earnings, but this really doesn’t look that bad considering how we perceive the AMD situation right now.

Let’s compare today’s pricing to the prior voodoo financing:

  • The company priced $1.5 Billion worth of 5.75% convertible notes, and it did it a time where the credit markets are demanding far more than just a few months ago.  The notes will be convertible into shares of common stock based on an initial conversion rate of 49.6771 shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $20.13 per share.  This initial conversion price represents a premium of approximately 50% relative to yesterday’s close of $13.42 per share. Holders of the notes may require AMD to repurchase the notes for cash equal to 100% of the principal amount to be repurchased plus accrued and unpaid interest upon the occurrence of certain designated events (in other words there is still a death put, so to speak).  AMD intends to use the net proceeds of the offering, together with available cash, to repay in full the outstanding balance of the term loan AMD entered into with Morgan Stanley Senior Funding, Inc. in October 2006.
  • The prior deal, which went from $1.8 Billion up to $2.2 Billion carried a 6% coupon on the convertible note and didn’t mature until 2015.  But the prior conversion price was $42.12 subject to capped call provisions.  The most surprising part of that offering was that it seemed like the investment bankers would have had to do whatever the could to keep from laughing when they sold the deal to AMD and to the buyer of the notes.

This new financing looks like it has gotten the rest of that old term loan of $2.5 Billion from Morgan Stanley Senior Funding (for the ATI acquisition) paid off, out of the way, and out of the creditor order.  The new financing is also a 144A private placement, so it is unknown who bought it and it is still not going into the hands of the public.  This isn’t without any debt covenants and doesn’t have a get out jail free card attached, but it cleans up that old financing and the terms seem better when you compare the financial markets of today to the financial markets in April.

AMD’s shares actually rose into the last voodoo deal we talked about in April, but then had a couple of rough weeks before recovering again.  The last few weeks have been hard on the stock with shares trading briefly over $16.00 toward the end of July and shares around $13.00 today.  Predicting the pattern from here has too many variables and would be guesswork.  This will save in interest expense depending on the timing and interpretation of exit terms.  That is very subjective and very much on the surface, so don’t etch it into stone.  This deal also looks more fair to the actual note buyers with better convertible price terms. 

If AMD can focus more on some of the current offerings now and do more outsourcing to focus on design and R&D, then we might think a bit better of the company.  It would also be able to unload some of its factory land, assuming there is a buyer in the current liquidity crunch.  That entire scenario is still an IF and we do not really expect that in the near-term based on certain recent factory investments committed.    AMD is still at a crossroads right now where it still needs to decide on its core processors whether it wants to fight the biggest bad boy on the block named Intel (NASDAQ:INTC) or if it wants to accept a less dominant position that has more assured survival. 

Until we’ve gotten to weigh today’s environment more and see what some of the covenants and provisions in later filings are for sure, we aren’t going to give this a true thumbs up or thumbs down verdict.

Jon C. Ogg
August 9, 2007

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

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Posted on: August 9, 2007 – 12:14 pm in Secondary Offering, Semiconductor, , ,

Home Depot (HD): Bring Back Bob Nardelli

This is what Bloomberg said about Robert Nardelli in a piece written the day he joined Chrysler as CEO: "At Home Depot (HD), Nardelli doubled sales and the number of store operations while expanding into Mexico and China. The world’s largest home-improvement retailer delivered more than 20 percent earnings-per-share growth for four consecutive years and more than quintupled its dividend to 90 cents a share."  Shareholders though he was paid too much and almost everyone thought he was an arrogant SOB.

From early 2003 to early 2006, Nardelli took the shares from $21 to $43. Then, the bottom began to fall out of housing, and HD dropped to $33 August 06. When he left at the beginning of this year, the stock was back at $40. Not so bad, really,

So far this year, the stock is off almost 10%.

Today, HD announced that its HD Supply sale to private equity was having difficulty due to the credit markets. The big home improvement operation also said it would have to drop the price at which it would buy in shares in its "Dutch auction". That did the shares no good.

Chrysler is only only paying Nardelli $1 a year. Maybe he would come back to Home Depot, if they would pay him enough.

Douglas A. McIntyre

Posted on: August 9, 2007 – 10:20 am in Uncategorized,

Earnings Preview: NVIDIA (NVDA)

After the market closes today, we will get earnings out of NVIDIA Corp. (NASDAQ:NVDA).  First Call estimates are $0.43 EPS and $859.9 million in revenues.  Next quarter estimates are $0.49 EPS & $939 million revenues and fiscal JAN-2008 estimates are $1.86 EPS & $3.64 Billion revenues.

The company did previously guide for flat to slightly higher revenues for the July-end quarter, and for whatever it’s worth this last quarter is the company’s seasonal low-point year in and year out.  Based on this being the throw away quarter, investors will likely be looking ahead rather than in the rear view mirror.

The internals on NVIDIA are strong, with the stock up over 3% this morning ahead of earnings and on a day where the broad market is weak.  Shares today have gotten within $1.00 of the 52-week highs, which is also all-time highs.  Analysts average price targets are actually right around the current stock price as shares have outperformed and achieved many price targets.  There are still some buy/outperform targets north of $50.00.  Options are a bit hard to read today with the market in flux and with the stock up this much, but on a static snapshot basis at 10:30 it looks like options traders would be valuing today’s expected move of up to $3.00 in either direction.

Perhaps the most interesting comparison will be the company’s comparisons to AMD’s ATI unit, particularly since NVIDIA has enjoyed such a strong lead of late.  NVIDIA’s short interest in July was listed as 22.855 million shares and that was up from 20.787 million in June.  We’ll also get to see an update as to how many shares it is really repurchasing in its $1 Billion+ buyback plan, as the need to offset employee option dilution may be less with shares gaining so much.

Jon C. Ogg
August 9, 2007

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

Posted on: August 9, 2007 – 10:18 am in Earnings, Semiconductor, Technology Companies, Video Games, ,

Dell’s (DELL) Little China Problem

It seems that some Chinese consumers want to beat up Dell (DELL) and take its lunch money.

Some of the people who bought the big US company’s PCs have started a group called "10000 Consumers Suing Dell", according to ChinaTechNews.

The aggrieved parties say that Dell was late delivering computers. As far as anyone can tell, there are not 10,000 people involved. Chinese hyperbole.

Dell has had customer service complaints in the US. It lead the company to recruit a new head of customer service. Dell’s domestic user base did not like being routed to call centers from India and back to the US.

Dell would like to gain market share from Lenovo and Acer in China. Perhaps one of them is among the 10,000.

Douglas A. McIntyre

Posted on: August 9, 2007 – 9:21 am in Uncategorized,

Limelight’s (LLNW) Shares Shattered

Limelight Networks (LLNW), the content delivery network and Akamai (AKAM) competitor which recently went public is off over 37% in today’s trading. The company traded as high as $24.33 after its IPO and now sits at $8.85.

It must have been the earnings. For the second quarter, Limelight Networks reported revenue of $21.2 million up 43%. Off the small base and in the hot content hosting and delivery industry, Wall St wanted a much bigger jump. LLNW reported a second quarter loss per diluted share of $0.23. The company’s operating loss grew from $4 million to almost $11 million.

Investors also seemed disappointed with guidance which is for revenue to be in the range of $27 to $28 million in the next quarter and in the range of $101 to $103 million for the year. That would be more than poor for a business that did $21 million in the most recent quarter.

The numbers may well show that the anticipated growth of content hosting and streaming is slowing and that the YouTube era did not last very long.

Douglas A. McIntyre

Posted on: August 9, 2007 – 8:44 am in Uncategorized,

Jupitermedia: Earnings Miss & Stock Photo Issues (JUPM, GYI)

Jupitermedia Corp. (NASDAQ:JUPM) shares gapped down significantly with what looks to be new 52-week lows, although it appears the shares are back above that low.  Shares closed at $6.79 yesterday ahead of earnings and shares hit $5.25 right after the open. The company posted $0.02 EPS diluted after including option charges of $0.01 and revenues were $34.7 million.  Estimates were $0.04 EPS and $36+ million in revenues.  Revenues from Online Images increased from $26.8 million to $27.4 million, while revenues from Online Media decreased from $8.2 million to $7.3 million.

Frankly, it is at least refreshing to see a company be honest about the current trends in stock photos.  If they are honest enough, well that is another topic but this at least addresses the compression of the value here and the trends that are coming into play upfront instead of the company trying to explain how it didn’t get it 6-months from now.  This should actually create more and more future writedowns to the value of goodwill and intangibles, and that won’t be good for Jupitermedia with the state of its balance sheet now. 

Getty Images (NYSE:GYI) was the one we felt had the most to lose, partly because they were the largest pure-play in stock photos and partly because the company hasn’t been as forthcoming about the future of these businesses even after it has made recent acquisitions to try to stave off some of the onslaught.  The wiki-model is too powerful here for this sort of business.  It will probably continue to make money and it will have a solid place in many copyright enforced venues, but much of its business will face severe margin compression.  This is an overly simplified explanation for a highly complex issue, but it is what it is.

Here are Alan Meckler’s quotes regarding the trends in the stock photo sector: "Despite a challenging period for the stock photo industry, our Jupiterimages division had some bright spots in the second quarter and for the first six months of 2007. Our Rights Managed category experienced over 30% growth for the first six months of this year compared to the same period of 2006. In addition, our JupiterimagesUnlimited high level royalty-free subscription offering grew over 200% for the first six months of 2007 compared to the same period last year. On a sequential quarterly basis, operating income for our Jupiterimages division increased from $8.6 million for the three months ended March 31, 2007 to $9.2 million for the three months ended June 30, 2007. Due to the evolution taking place in the stock photo industry, we are currently focusing our direct sales team to further emphasize our strengths: sales of Rights Managed images and JupiterimagesUnlimited. We have also initiated a rigorous review of our operating expenses that we expect will result in annual expense reductions of $2.0-$3.0 million on a prospective basis starting in the third quarter of 2007. Additionally, we have also identified opportunities to streamline various capital projects and content production that we expect will result in a reduction of over $3.0 million in annual cash expenditures. Combined, this restructuring is expected to improve our annual after-tax cash flows by approximately $4.0 million and possibly more."

No one is going take this report well in its entirety, and the stock is seeing the punishment for it.  But it is at least a step in the right direction.  This industry is rapidly changing and changing faster than a mere writeup here can address in a few hundred words.  Jupitermedia’s prior 52-week trading range is $5.45 to $10.48.  At least it owns the Internet.com domain name and is entering new operations with venues such as MediaBistro.com.  Things are bad, but they could have been much worse.

Jon C. Ogg
August 9, 2007

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

Posted on: August 9, 2007 – 8:36 am in Earnings, Internet, Media, , , , , , ,

Home Depot Supply Unit Sale Being Restructured & Share Tender Modified Lower (HD)

Home Depot (NYSE:HD) broke the news this morning that it is in discussions with private equity firms Bain Capital, Caylyle, and with Clayton Dubilier & Rice over restructuring its previously agreed to sale of HD SUPPLY.  This says the discussions could result in material change to the prior terms and financing of the sale of HD SUPPLY.  That includes a reduction in the $10.325 Billion sale price. Obviously these firms are going to have to contribute more of their own capital and the amount of leverage available is ratcheting down drastically.

The company is also modifiying its Dutch tender offer announced on July 10.  The $39 to $44 price is being lowered to a $37 to $42 price range and is extending the date to August 31, 2007.  The only good news is thatthe tender offer is not subject to the HD SUPPLY sale.  Shareholders who tendered between $39 and $42 will not need to take action if already done, but shareholders which tendered in the $42.25 to $44 will not be valid  and those will need to be re-tendered at new prices.

Here are the supplemental details in SEC Filings and you will want to verify any specific terms in there other than these summary terms.  As of August 8, the number of shares tendered were 3,052,214.
http://ir.homedepot.com/edgar.cfm

Shares of Home Depot are now down almost 5% pre-market around $36.00 on a day already hosed by the BNP Paribas hedge fund lock-ups and inability to value.  This is now back to within 10% of the stock’s 52-week lows of $33.07 again.

Jon C. Ogg
August 9, 2007

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

Posted on: August 9, 2007 – 7:55 am in Financial Stocks, Housing, Private Equity, Stock Buybacks, , , , ,

Pre-Market Stock News (August 9, 2007)

(AEO) American Eagle Outfitters s-s-s were -6% vs +4% est.
(AIG) AIG $1.64 EPS vs $1.61 est.; says comfortable with US mortgage market.
(ATPG) ATP Oil & Gas $0.39 EPS vs $0.05 est.; unsure if comparable.
(BBY) Best Buy reaffirmed fiscal guidance ahead of analyst meeting.
(BCRX) Biocryst -$0.24 EPS vs -$0.33 est.
(BIG) Big Lots s-s-s +5.2% vs $3.5% est.
(CHS) Chico’s FAS s-s-s -6.7% vs. -5% est.; sees revenues under plan.
(CLMS) Calamos Asset Mgmt. assets under management were $43.4 Billion; down from $43.8 B last month and down from $44.2 B last year.
(COST) Costco s-s-s +7% vs 5.5% est.
(CPB) Campbell Soup exploring alternatives for its Godiva Chocolate unit.
(CYPB) Cypress Bio $0.06 EPS vs $0.10 est.
(EAT) Brinker $0.57 EPS vs $0.49 est.
(ENN) Equity Inns $0.50 EPS vs $0.44 est.
(ENS) Enersys $0.30 EPS vs $0.26 est.
(ESPD) eSpeed $0.01 EPS vs $0.00 est.
(EXPE) Expedia did receive its full 25 million shares in a lowered share count dutch tender at $29.00 per share.
(GILT) Gilat Satellite $0.14 EPS vs $0.12 est.
(GLBC) Global Crossing $547 million revenues vs. $545M est; sees revenues in-line with 2007 targets.
(GPS) Gap Inc. s-s-s -7% vs -4.9% est.
(HOC) Holly Corp. $2.84 EPS vs $2.43 est.
(JCP) JCPenney s-s-s +10.8% vs +9.9% est.
(M) Macy’s s-s-s -1.4% vs -2% est.
(MIC) MacQuarie Infrastructure posted losses after items but was supposed to have gains; shares down 2%.
(NAT) Nordic American Tanker $0.78 EPS vs $0.67 est.
(PSUN) Pacific Sunwear s-s-s -4.6% vs +3% est.
(RMIX) US Concrete$0.18 EPS vs. $0.18 est.; guided in-line for Q3 and fiscal 2007.
(SPPI) Spectrum Pharma investigational new drug application accepted by FDA over its carcinoma treatment candidate.
(STP) Suntech Power $0.25 EPS vs $0.23 est.
(SUG) Southern Union $0.39 EPS vs $0.31 est.
(TLB) Talbots preliminary results were under plan and sees $0.00 EPS vs $0.02 est.
(URBN) Urban Outfitters $0.19 EPS vs $0.19 est.
(URRE) Urnaium Resources $0.02 EPS and $8 million revenues; no estimates.
(VFC) VF Corp noted positive by Cramer on MAD MONEY.
(VG) Vonage -$0.12 before charges and -$0.22 net EPS vs -$0.34 est.; subscribers added only 57,000 to 2.45 million.
(VIAC) Viacell -$0.09 EPS vs -$0.13 est.
(VTR) Ventas $0.70 EPS vs $0.66 est.
(WMT) Wal-Mart s-s-s +1.9% vs +1.5% est.
(WON) Westwood One $0.08 EPPS vs $0.07 est.
(WTSLA) Wet Seal s-s-s -1.7% vs. -5% est.
(ZLC) Zales $488M revenues vs. $481M est.

Posted on: August 9, 2007 – 7:15 am in Pre-Market Activity

Gap (GPS) Same-Store Sales Continue Collapse

Gap (GPS) same-store sales fell 7% in July. Wall St. expected a 4.9% drop.

It must be that US shoppers are upset that the company hired a Canadian to be CEO.

Gap North America sales dropped 6% and Old Navy was down 9%. Old Navy needs to be closed.

Gap also said that for the second quarter of fiscal year 2007, the company expects diluted earnings per share on a GAAP basis to be $0.17 to $0.18.

Wall St. must be used to awful news from the company. Shares are up over 4% in the pre-market on retail buying by Canadian investors.

Douglas A. McIntyre

Posted on: August 9, 2007 – 7:12 am in Uncategorized,

Wal-Mart (WMT) Same-Store Sales Inch Up

Perhaps it is all of these Dell PCs that it is selling. Or, the new program that allows buyers to order products and walmart.com and pick them up in stores.

Wal-Mart (WMT) same-store sales rose 1.9% in July. The company said electronics continued to show solid comparable store sales gains over last year, with strength in TVs, computers, digital cameras and video games. And the big retailer added apparel and home overall continued to be soft and are expected to remain so through the third quarter.

Wal-Mart still needst close some stores in the US

Douglas A. McIntyre

Posted on: August 9, 2007 – 7:05 am in Uncategorized,

VC Firm Goes Insane: Dumping $100 Million into NBCU-News YouTube Killer

From Silicon Alley Insider

…at a $1 billion valuation.  Not done deal yet, but Providence Equity Partners is apparently ready to sign. 

Continued here.

Posted on: August 9, 2007 – 6:57 am in Uncategorized

Some Sunlight For Vonage (VG)

Vonage (VG), know in some quarters as the worst IPO in history, had a decent earnings announcement.

Revenue for the second quarter 2007 grew to a record $206 million, a 43% increase from $144 million in the second quarter 2006  For the second quarter of 2007, the Company’s net loss narrowed to $34 million, or $0.22 per share, from a net loss of $74 million reported in the second quarter 2006  The company had $344 million in cash at the end of the Q.

The company’s CEO said that Vonage had found a way to deal with patent problems that deal to a major lawsuit by Verizon (VZ) "At the same time, we have substantially completed the deployment of workarounds for the two name translation patents and have completed the development of the wireless patent workaround. This is a significant step toward moving ahead with our business in the wake of the Verizon litigation. We look forward to the Court’s ultimate decision and remain confident in the strength of our appeal."

The success of the workaround remains to be seen, at least from the point of view of the legal system.

Douglas A. McIntyre

Read More »

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