Daily Archives: August 14, 2007

The 52-Week Low Club

Thornburg Mortgage (TMA) Mortgage company faces concerns about margins calls. Analyst downgrades. Shares halted near close. Down to $7.49 from 52-week high of $28.40.

Pulte Homes (PHM) Large home-builder. Nothing more need be said. Down to $17.16 from 52-week high of $35.56.

Gatehouse Media (GHS) Newspaper company. Can’t get a break. Down to $13.44 from 52-week high of $22.25.

Sun-Times Media (SVN) Another newspaper company. Down to $2.70 from 52-week high of $6.94.

Physicians Formula (FACE) Company has quarterly loss. Shares fall to $9.32 from 52-week high of $23.25.

Jamba (JMBA) Juice store chain has poor same-store sales. Falls to $6.49 from 52-week high of $12.25.

Netease (NTES) Chinese game company has slowing growth. Drops to $14.12 from 52-week high of $21.86.

Douglas A. McIntyre

Posted on: August 14, 2007 – 3:21 pm in HI/LOW, , , , , , ,

Medialink (MDLK) Loss Widens, Hires New CTO

From Silicon Alley Insider

Medialink Worldwide (MDLK), a video distribution, production, tracking, and marketing company, reported a second-quarter loss and added to its C-suite this morning. Medialink lost $1.7 million last quarter on $8.3 million of revenue…continued here

Posted on: August 14, 2007 – 12:57 pm in Uncategorized

Will Citadel (CDL) Get Imus?

Late word is the Don Imus has settled things with CBS (CBS). He had a $40 million contract with the company when he was dismissed for unfortunate remarks on his radio show which also aired on MSNBC.

It now appears that Imus will end up at New York station WABC, part of ABC Radio which is owned by Citadel (CDL) Broadcasting, according to a report from The Associated Press. The company has 179 FM and 66 AM stations. The company’s ABC Radio Network, which syndicates programs like Paul Harvey is picked up during some portion of the day by 4,400 stations.

And, that would be the beauty of picking up Imus. While with CBS, his live show ran in the morning on a number of stations outside New York. Citadel could do the same with a large number of its owned and operated stations along with affiliated stations on the network.

CDL could use the help. For the most recent quarter, revenue moved up to $141.2 million from $112.5 million, boosted by the addition of ABC Radio. Excluding ABC, revenue fell 2 percent to $109.9 million. The firm reported profit of $3.8 million, or 3 cents per share.

Imus could help the company change all of that. The shares are off on earnings news today, down 7% to  $4.46. The 52-week high is $11.01.

They should pay the veteran broadcaster in stock.

Douglas A. McIntyre

Posted on: August 14, 2007 – 12:25 pm in Uncategorized, ,

Is Tribune (TRB) LBO Dying?

Shares in The Tribune Company (TRB) are off almost 4% today to $24.57. The price promised for an LBO lead by Sam Zell is $34.

The deal is now likely to die, in which case the public shareholders can hang onto the company, probably with the stock falling further.

Or, Zell can renegotiate in much the same way the the buyers of Home Depot (HD) Supply have. The debt needs to deal of this kind has simply gotten too expensive.

Zell’s best bet may be to walk. Dow Jones (DJ) announced yesterday that ad lineage at The Wall Street Journal  fell almost 21%.

And, Zell can read the papers.

Douglas A. McIntyre

Posted on: August 14, 2007 – 11:01 am in Uncategorized, , ,

Apple (AAPL) Computer Customer Satisfaction Drops

Maybe Apple (AAPL) is just selling too many Macs.

In the University of Michigan US Customer Satisfaction Index, Apple’s score fell 4.8% to 79 (out of 100). Hewlett=Packard (HPQ) moved up 1.3% to 76. And Dell (DELL) fell 5.1% to 74.

Douglas A. McIntyre

Posted on: August 14, 2007 – 10:13 am in Uncategorized, , ,

Applied Materials: What To Expect From Earnings (AMAT, KLAC, NVLS, LRCX, ASML)

AppliedMaterials (NASDAQ:AMAT) reports earnings today after the close and First Call estimates are still $0.32 EPS and$2.53 Billion in revenues.  Next quarter is also its fiscal year-endand analysts expect it to post $0.30 EPS on revenues of $2.46 Billion for the quarter.

Analysts are mixed on the stock, but average targets from analystsare between $24.00 and $25.00. The chart had been quite hard to notnotice last week when the market was in turmoil, but shares have given up a little more ground.  Last week we noted how the stock hadn’t gotten thedown market memo, because it has been in an up-trend and its shares were down only about 3% from recent highs of $23.00.  Shares are lower and closer to $21.50 now.  That recent$23.00 high is within 10% of a 5-year high.  On a static basis, option trader expectations late morning appear to bracing for a move only $0.40 to $0.55 depending on which contract you use.  Keep in mind that with a Friday options expiration the time value will erode rapidly.

Interestingly enough, one of the things that has been helpingApplied out is its new and upcoming solar operations.  After a coupleof recent solar and silicon related purchases and with the extracapacity that Applied has in its capacity arsenal, this solar operationis becoming a business that has the potential of becoming a dominantplayer in the coming years.  It is even feasible that this could becomeits own entity to unlock shareholder value down the road, although thatis far too soon to predict or target.

Bets have been that despite a weak cap-ex market that it willchange or at least not deteriorate.  Themain US chip equipment and cap-ex names to watch for secondary movementare KLA-Tencor (NASDAQ:KLAC), Novellus (NASDAQ:NVLS), LAM Research(NASDAQ:LRCX), and ASML Holdings NV (NASDAQ:ASML) in Europe.

Jon C. Ogg
August 14, 2007

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

               

Posted on: August 14, 2007 – 9:59 am in Earnings, Semiconductor, , , , , ,

VMWare, Open For Trading (EMC, VMW)

VMWare’s (NYSE:VMW) Long awaited partial spin-off and IPO from EMC (NYSE:EMC) has finally made it out to market.  Indications out of the chute were originally $38.00 to $41.00 after a $29.00 pricing.  But indications went higher and this one took roughly 30 minutes to open from specialist indications.  The 33 million share float might as well be considered 37.95 million, because it is a shoe-in that the underwriters will take that 4.95 million share overallotment.

Indications later reached closer $50.00 for the opening price at 9:55 AM, and then the indications were showing a $52.00X$53.00 indication.  It looks like a $51.25 level was the open price, but that only lasts for a second.  Shares have now traded over 7 million shares.

The underwriters could have easily hit our targeted $30.00+ pricing, but decided to leave some juice in it witha $29.00 pricing.

Jon C. Ogg
August 14, 2007

Posted on: August 14, 2007 – 9:00 am in IPOs, , , ,

VMware & EMC Trade Indications (EMC, VMW)

It’s happening.  EMC (EMC) traded up 2.5% after the open and are now only up 1.3% since the indications of VMware have started. $19.84 was the recent and multi-year high, so that may be a critical level to watch if EMC gets up close to that number.

VMware (NYSE: VMW) shares were indicating at $38 to $41 right after the open.  We’ll know where this opens shortly.  After almost 10 minutes, it looks like indications are now closer to the $40 to $41 mark. Stay tuned.

Posted on: August 14, 2007 – 8:37 am in Uncategorized, ,

Linux Founder Paranoid About Microsoft (MSFT)

Everywhere he looks Linux founder Linus Torvalds see Microsoft (MSFT). Redmond attacks him while he is sleeping. According to ZDNet, MSFT "is falling short with its technology and, because it cannot win against open source on price, it is trying to encourage inertia in the IT industry, the creator of the Linux operating system said."

Call it founder’s paranoia, but Torvalds believes that Microsoft’s claim that open source software violates 235 of its patents is simply a smoke screen to keep enterprises from using his stuff.

But, Torvald misses the point. It is unlikely that huge corporations and government spend their time worrying about Microsoft suing them. It would not risk alienating its customer base.

Redhat (RHT), the largest company in the business of marking Linux to enterprises, has a market cap of only $4.2 billion. In the last quarter, it had revenue of $118 million and operating income of less than $15 million. Its numbers are a bell weather for Linux adoption. And, the modest size of its revenue speaks volumes.

Douglas A. McIntyre

Posted on: August 14, 2007 – 7:53 am in Uncategorized, ,

Is Citigroup (C) Out Of Pocket $3 Billion?

Analysts at Sanford C. Bernstein & Co believe that Citigroup (C) may lose $3 billion in the third quarter. The big bank "may lose between $1.2 billion and $1.5 billion on loans to buyout firms and between $500 million and $1 billion on subprime mortgages in the three months ending Sept. 30," according to Bloomberg.

So much for the big Chuck Prince comeback.

Douglas A. McIntyre

Posted on: August 14, 2007 – 7:31 am in Uncategorized,

Do Fat Children Prefer McDonald’s (MCD)?

A little study done by some doctors and scientists and published in Archives of Pediatrics and Adolescent Medicine shows that most children prefer food wrapped in paper with the McDonald’s (MCD) logo.

According to The New York Times "almost 77 percent, for example, thought that McDonald’s french fries served in a McDonald’s bag tasted better, compared with 13 percent who liked the fries in a plain white bag."

But some of the academicians involved were troubled by the results. “The best response the fast-food industry could make to this information,” Dr. Thomas N. Robinson, the head researcher said, “is to alter their menus to include a majority of healthful foods instead of encouraging consumption of high-fat, high-calorie foods.” McDonald’s responded that it already sells items like salads.

But, researchers appear to believe that the world’s largest fast-food company just wants to make kids fat.

Douglas A. McIntyre

Posted on: August 14, 2007 – 7:15 am in Uncategorized,

Nokia (NOK): Recalls Hit The Cellphone Industry

Perhaps Sony (SNE) should not feel so bad about all of those faulty PC batteries that it made.

This AM Nokia (NOK) announced that as many as 46 million handsets had Matsushita Electric Industrial that could overheat. The company offered to replace them for free.

The magnitude of the problem is fairly staggering. Motorola (MOT) did not sell 46 million phones for the entire second quarter.

Douglas A. McIntyre

Posted on: August 14, 2007 – 6:15 am in Uncategorized, , ,

Home Depet (HD): Things Get Nasty

The Home Depot (HD) today reported fiscal 2007 second quarter consolidated net earnings of $1.6 billion, or $0.81 per diluted share, compared with $1.9 billion, or $0.90 per diluted share, in the same period in fiscal 2006.Earnings from continuing operations in the fiscal 2007 second quarter were $1.5 billion, or $0.77 per diluted share, compared to fiscal 2006 second quarter earnings from continuing operations of $1.7 billion, or $0.82 per diluted share. The Company is now reflecting the results of HD Supply as a discontinued operation.

Sales for the second quarter totaled $22.2 billion, a 1.8 percent decrease from the second quarter of fiscal 2006, reflecting negative comparable store sales of 5.2 percent, offset in part by sales from new stores.

HD reiterated in its earnings outlook that it expects its earnings per share from continuing operations to decline by 12-15 percent for fiscal 2007. Consolidated earnings per share are expected to decline by 15-18 percent for fiscal 2007.

Douglas A. McIntyre

Posted on: August 14, 2007 – 6:07 am in Retail,

Wal-Mart (WMT) Net Rises, Cuts Guidance

Wal-Mart (WMT) reported that net sales for the second quarter of fiscal year 2008 were $91.99 billion, an increase of 8.8 percent over the second quarter of fiscal year 2007. Income from continuing operations for the quarter was $3.11 billion, an increase of 4.1 percent from $2.98 billion in the second quarter of fiscal year 2007.

WMT said estimates earnings per share from continuing operations for the third quarter of fiscal 2008 to come in between $0.62 and $0.65. In addition, the Company is updating its full year guidance for earnings per share from continuing operations for the full year of fiscal 2008, which it estimates to be between $3.05 and $3.13. The firm’s initial forecast for earnings per share from continuing operations for fiscal year 2008 was between $3.15 and $3.23 per share.

Douglas A. McIntyre

Posted on: August 14, 2007 – 5:53 am in Uncategorized,

Europe Markets 8/14/2007

Markets in Europe were mixed at 6.45 AM New York time.

The FTSE was up .2% to 6,232. BT (BT) rose 1.1% to 311.5. Vodafone (VOD) moved up 1.4% to 160.5.

The DAXX fell .1% to 7,470. Deutsche Bank (DB) fell 1.7% to 95.47. MAN AG was up 2.7% to 101.63.

The CAC 40 fell .5% to 5,541. France Telecom (FTE) rose 1.7% to 20.89. Societe Generale fell 1.3% to 123.1.

Data from Reuters

Douglas A. McIntyre

Posted on: August 14, 2007 – 5:49 am in International Markets, , , ,

United Online (UNTD) Looks For Redemption

United Online (UNTD) is in a crummy business. It sells dial-up internet service to about five million online customers. It is the business that AOL exited last year. Broadband has made it obsolete. The company’s revenues are only about $130 million a quarter.

United has a market cap of $900 million, so it trades at less than 2x sales. Its stock has gone nowhere since 2003.

But, all of that may be about to change. United also owns Classmates.com, a large social network set up to put together people who were in school at the same time. UNTD filed an S-1 yesterday to IPO Classmates and raise $125 million.

In the quarter ending March 31, Classmates had revenue of $42.4 million and lost $250,000. The business is growing. Revenue in 2005 was $84.8 million. Last year, that number rose to $139 million.

Based on the numbers that get thrown around for the value of Facebook. Classmates could be a high-priced property. It could well be on its way to revenue of over $200 million this year.

If so, Classmates is worth well over $1 billion, more than United’s entire market cap.

Douglas A. McIntyre

Posted on: August 14, 2007 – 5:30 am in Uncategorized,

Starbucks (SBUX) Fires Back At Dunkin’ Donuts

Earlier in the week, Dunkin’ Donuts made a big deal about its new plan to team up with Procter & Gamble (PG) to sell its coffee at retail outlets like Wal-Mart (WMT) and Kroger (KR). Dunkin’ has 5,400 stores and would like to eat as much of Starbucks’ (SBUX) as it can.

The management at Starbucks must have been upset. Yesterday, their shares moved way down at the open and stayed down all day.

Not to be outdone, Starbuck’s immediately announced that it "sees ample room for growth in selling Starbucks-branded products such as coffee beans, ice cream and chocolate in supermarkets and convenience stores ," according to Reuters. Packaged coffees account for about two-thirds of Starbucks consumer products group’s revenue, which reported a 24 percent increase in net revenue to $87.1 million in the quarter ended July 1. The segment accounts for nearly 20 percent of Starbucks’ total operating profit.

Starbucks packaged coffee is more expensive than other brands, and the company believes that consumers will pay for higher quality stuff.

Maybe. By, maybe the announcement is a sign that Starbucks is worried. Its stock is still near a 52-week low, even though its last quarterly report show 20% revenue growth. But, same-store sales were only up about 4% so marketing products through retail outfits like grocery stores may become a bigger part of its business.

But, of course, it will have to compete with the likes of Dunkin’ Donuts.

Maybe McDonald’s (MCD) would be willing to sell the Starbucks prepacked stuff.

Douglas A. McIntyre

Posted on: August 14, 2007 – 5:16 am in Uncategorized, , , ,

Mattel (MAT): More Dangerous Toys

Mattel (MAT) appears to be ready to recall more toys made in China, based on reports from Dow Jones and Reuters. The company is taking a $30 million charge for about one million toys it recalled last month.

The new set of products appears to be for toy cars among other things.

Perhap Barbie and the GI Joe with the Kung Fu Grip were dangerous, but they never seem to have been recalled when Mattel got into those businesses. Now the company is in real trouble.

Mattel took a long time to recover from the fiasco of having Jill Barad as is CEO. She left in 2000. Early that year, the stock trade below $10. The rebuilding process got the shares to almost $30 this June.

Recalls may not be expensive from the point of view of initial write-offs, but they can destroy consumer confidence. Mattel’s shares dropped below $23 last week.

If the recalls cause consumers to move away from buying the company’s toys and Mattel warns on earnings for the third calendar quarter, the stock could drop a long, long way.

Perhaps it is a plot to destroy the American toy industry.

Douglas A. McIntyre

Posted on: August 14, 2007 – 5:05 am in Uncategorized,

AOL Finance Catching Up To Yahoo! (YHOO): MSN Money Buried

Based an analysis of highly detailed ComScore data cover the last five quarters, AOL Finance has virtually caught Yahoo! (YHOO) Finance as MSN Money (MSFT) has lost significant ground.

Among unique visitors, Yahoo! Finance still has a small lead over AOL. In July, the Yahoo! property had 12.4 million unique visitors to AOL’s 11.7 million. In the previous month both web destinations has about 10.7 million uniques. In July, MSN Money’s unique visitor pool was 10.2 million.

But, when pageviews are the measuring factor, Yahoo! Finance has lost tremendous market share. In May, June, and July of 2006, Yahoo! averaged about 475 million pageviews a month. AOL Finance averaged about 225 million and MSN Money 180 million. For June and July 2007, Yahoo! Finance pageviews have been just below 300 million and AOL Finance has been at about 250 million. MSN Money’s figure has dropped to 130 million. It may be that visits to Yahoo! Finance’s widely used message boards is dropping.

A look at total visits paints a similar picture. Yahoo! Finance averaged 65 million over the last two months (June and July) while AOL Finance was at about the same level. MSN Money lagged again with about 40 million unique visits.

At smaller financial websites Reuters has been losing pageviews over the last five quarters averaging almost 50 million pageviews in May and June of last year, dropping to about 15 million in the most recent two months. Dow Jones (DJ) has moved from an average of about 90 million to 55 million when comparing the same two periods. BusinessWeek online has also suffered audience erosion.

Douglas A. McIntyre

Posted on: August 14, 2007 – 4:49 am in Uncategorized, , ,

Yahoo! (YHOO): No Profit In Customer Satisfaction

The new University of Michigan American Consumer Satisfaction Index shows that people like using Yahoo! (YHOO) better than they do Google (GOOG), at least in the US. According to Reuters, satisfaction with Yahoo! rose 3.9% to 79 (out of 100) and Google fell 3.7% to 78.

People apparently like Yahoo! for its e-mail, social network (does it have one), and large number of websites devoted to individual topics.

Among other internet properties the Ask.com (IACI) search engine rose markedly in customer satisfaction ratings, up 5.6 percent to 75 points. And, Reuters writes Time Warner’s (TWX) "AOL, which has moved its focus from Internet access services to become an ad-supported source of e-mail and entertainment, slipped more than 9 percent to a score of 67 points." That rating is about the same as the one that the IRS got in the same survey.

The problem it these surveys is that they make good headlines, but appear to have nothing to do with whether any of these companies can make money. People, it would appear, go to Google for search. Search is inherently a more profitable business, at least in the way the internet works now.

Functions like message boards and e-mail are far less desirable to marketers. They are less targeted and do poorly in terms of getting online advertisers results.

Love Yahoo!, but don’t buy the stock.

Douglas A. McIntyre

Posted on: August 14, 2007 – 4:29 am in Internet, , , ,