Daily Archives: August 15, 2007

Broadcom (BRCOM) Injunction Could Cost Qualcomm (QCOM) $2.4 Billion

As 24/7 Wall St. reported this morning, Broadcom’s (BRCM) efforts to get an injunction against Qualcomm (QCOM) marketing chips with BRCM intellectual property could have effect of shutting down parts of QCOM’s business.

Many on Wall St. may have believed that our viewpoint was extreme. But, late today, in federal court, Qualcomm founder Irwin Jacobs said the action had "the potential for significant harm" to his company, according to Reuters. Documents filed with the court indicated that the cost of the proposed injunction could be $2.4 billion in lost revenue for QCOM over the next five years.

Qualcomm had a bit less than $2.5 billion in net income last year.

As 24/7 mentioned, the stock, now trading at $35.90, fairly near its 52-week low of $34.10, could drop to under $30.

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

Posted on: August 15, 2007 – 6:14 pm in Wireless, ,

Cramer’s Immune Growth Pick In A Crummy Market (GRMN, UA, CROX, NVT, TRMB, SIRF)

On tonight’s MAD MONEY on CNBC, Jim Cramer wanted to look at what actually works in a major credit crunch.  His situation that worked back in 1990 in food, drug, and soft goods work now, but he’s been covering that already.  The other area he likes: HIGH GROWTH.

Garmin (NASDAQ:GRMN) is a phenomenal high-growth story equal to the trends seen in Under Armour (NYSE:UA) and Crocs (NASDAQ:CROX).  Here’s what he likes about it:  It is the leader in global positioning that is trading under its growth rate.  He really liked the beat they gave with earnings last quarter and the raised guidance.  Shares are down 14% because of the market sell-off and it is still above where it was when it reported.  If shares get much weaker he thinks it’s a gift.  He thinks that it is a cheap growth stock that if he uses the highest estimate from Merrill Lynch that this can hit $116.00.

Cramer even brought on Garmin’s CFO for a telephone interview.  The CFO, Kevin Rauckman, said the company was even surprised with the margins.  The pricing pressures they anticipated haven’t yet surfaced.  As far as manufacturing capacity, they bought a third factory in Taiwan so it can keep doing its own manufacturing and is now in great supply-side shape the rest of the year.  Navigation is still strong and they haven’t seen a pinch from the weaking consumer yet. 

Cramer: Will you have enough product for Christmas?   Rauckman, CFO: "Absolutely….."

If you like the navigation sector, here is what we gave for the sector wrap-up when these companies all reported earnings within the same 24-hour period and here was the preview for the group.  NAVTEQ (NYSE:NVT) and Trimble Navigation (NASDAQ:TRMB) are the two other leaders out of the GPS sector, and SiRF Tech (NASDAQ:SIRF) is the one that makes many of the chipsets and software systems for mobile communications GPS systems.

Jon C. Ogg
August 15, 2007

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

Posted on: August 15, 2007 – 5:36 pm in Cramer, , , , , ,

Getty Images Stock Hits Multi-Year Lows (GYI)

We have covered Getty Images (NYSE:GYI) about how they are a business at risk, how they are going to lose market share, how their margins are going to compress almost routinely into the future, and how they are going to be under direct attack from hundreds or more lean start-ups and early-stage stock photo and media companies.  Today, shares hit a multi-year low.  We still are reviewing whether or not this is going to become a value stock or a value trap.

Getty, and Bill Gates’ Corbis, has perhaps the easiest business to attack with a wiki-model business out of anyone out there.  I have estimated that their model could be attacked by anyone employing a wiki-model in a Web 2.0 world for $20,000.00 with operating capital to last 6-months.  An industry contact Augustine Fou, CEO of PictureSandbox.com says this can be done far less: "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."

Today Getty’s stock didn’t just hit a 52-week low.  At $30.10 it has now given up all the stock gains back to early 2003.  In early 2003 this went from a stock in the high-$20’s and low-$30’s rapidly up to $40+, then $50+ by December 2003, and it reached the $70’s, $80’s, and even the $90’s before the end of 2005.  There is less and less war coverage now and the coverage that requires photos can be had for far less.  But the main area of attack is the non-copyright (royalty-free) event photos in what is becoming more and more royalty-free.  A high resolution picture of a bear eating a salmon just isn’t worth what it was even in 2005.  As media conglomerates merge it creates fewer clients, and any new media start-up out there knows it can get stock photos and digital audio or video media for free or very close to free.

Getty won’t implode, or at least we are fairly sure it has a place in the future.  We sent out our Special Situation Investing Newsletter in early May when Getty Images stock was just above $50.00 with a $36.00 to $38.00 target price by early 2008.  We even gave the options strategy for it as the maximized way to limit risk.  Early in August we sent out an alert after it hit our downward target.  It has continued its slide, even worse than we thought it would.  At some point we feel that this could become an incredible value stock as long as it can stay profitable, but we aren’t about to go out with any call like that this soon.

We are constantly looking at special situation investing opportunities out there for our newsletter subscribers.  We won’t be putting Getty on any reverse list for any private equity or management buyouts in the immediate future, but we’ll be issuing for more and more special situation opportunities that have the same criteria.  Some special situations are buyouts, some are break-ups, some are pending de-mergers wrecking an industry, and others are special situations for other reasons.

Jon C. Ogg
August 15, 2007

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

Posted on: August 15, 2007 – 5:12 pm in Internet, , , ,

Sirius (SIRI) Beams Up New Devices, Tries Solving iPod Envy

From Silicon Alley Insider

Just returned from Sirius’ (SIRI) gadget showcase at their Midtown headquarters. The most interesting device they showed off is the new Stiletto 2, an Apple (AAPL) iPod-sized gadget that can tune in to live Sirius content…continued here

Posted on: August 15, 2007 – 4:26 pm in Uncategorized, ,

Taking Charter (CHTR) Private

Billionaire Paul Allen disclosed that he was looking that the possibility of taking Charter Communications (CHTR) private or "a recapitalization or restructuring designed to reduce Charter’s leverage", according to The Wall Street Journal.

Dream on. Charter has $19.6 billion in debt, which is not ideal in any environment. In the current market it is deadly. Even with all of Allen’s money, it is hard to see how he could buy-out current public shareholders and support the debt.

Charter’s stock jumped up briefly on the news, but still traded as low as $2.45, close to it 52-week low. Charter would have to appoint independent directors to review any deal, as happened at Cablevision (CVC) when the founding Dolan family offered to buy-out its public shareholders. Charter traded near $5 in mid-July, so it may be hard to convince directors to take much less than that.

At $4.50 a share, the cost of buying in all of the public float would be close to $2 billion. The company simply could not support that amount plus the current debt load.

Allen could also try to sell the company’s assets to another firm, perhaps Comcast (CMCSA). But, with the debt that would have to be assumed, the price would be at least $25 billion. The company’s operating income run rate is about $750 million. So a sticker that high is not going to attract a buyer.

Charter is going to have to dig itself out the old fashion way. Costs and capex are going to have to stay low which is hard when it needs to compete with large telecom companies coming to market with fiber-to-the-home broadband and TV services.

Charter is a company with no good options.

Douglas A. McIntyre

Posted on: August 15, 2007 – 4:15 pm in Cable Companies, , ,

Amgen Moves From Biotech to Big Pharma, With More Baggage

Amgen Inc. (NASDAQ:AMGN) did what Wall Street thought it would in its after-the-bell conference call.  The biotech giant announced layoffs to the tune 12% to 14% of its workforce, which translates to about 2,200 to 2,600 positions.  Medical, drug, and biotechs used to be the one area immune from the economy and immune from job cuts.  No longer.  The company claims this will save $1.0 to $1.3 Billion pre-tax in 2008, but it will have charges of $600 to $700 million this year and next and that includes $289 million for asset impairment and related costs reported in the second quarter. 

Amgen is also adjusting its targets: earnings per share guidance for 2007 has been changed from $4.28 to a range of $4.13 to $4.23, excluding restructuring charges, due to lower Aranesp revenues.  The new guidance is before restructuring charges.  Shares have been sliding and it just can’t the gorilla off its neck.   

It is also slowing its capital expenditures by $1.9 Billion in the 2007-2008 period and closing certain prodiuction operations.  Lastly, here is the wildcard: It says it is making choices about the highest priorities in research and development and operations that build the framework for future growth.  In other words, it is trying to focus on which drug development programs it wants to keep and which it wants to not renew or walk away from entirely.

Amgen needs to make more acquisitions, but it needs to make acquisitions in new territories that the company can ramp into. Iliypsa was a start, but that needs to go to different areas.  We have noted before how Amgen is being treated just like another Big Pharma drug stock in trouble, and Wall Street seems to agree.

Once again, this is what happens when your entire product line has a shot of becoming a Congressional target.  The good news is that it can buy back more stock in that new expanded program.  Most recently, Amgen had over $5 Billion in net cash and short-term equivalents.  This is becoming the antithesis of Fantasy Island, because right now Amgen turned its employees into a bunch of Tattoo’s all yelling "The Pain! The Pain!"……

Jon C. Ogg
August 15, 2007

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

Posted on: August 15, 2007 – 4:07 pm in Biotech, , , ,

The VIX Crosses Above 30….An Omen, Or Closer To An Extreme

DJIA                     12,861.47; -167.45 (-1.29%)
S&P500               1,406.70; -19.84 (-1.39%)
NASDAQ             2,458.83; -40.29 (-1.61%)
10YR- Bond        4.706%; -0.026%
NYSE Volume    3,365,515,000
NASD Volume    2,267,149,000

The CBOE VOLATILITY INDEX, or the beloved "VIX," has crossed back above the 30 threshold now. This is the near-term high for that index.  The DJIA didn’t just close under 13,000, it closed under 12,900.  It would be easy to put on a bargain hunter’s hat and try to say this is a great buying opportunity, but trying to fight the tape is something that has be done by those with unlimited resources or by those that don’t need to worry about short-term fluctautions.

As far as the year is concerned, the DJIA is still up but barely.  The DJIA closed at the of DEC-2006 at 12,621.69 and we closed at 12,861.47 today.

Today’s weak market close puts us at a recent high on the VIX that hasn’t been seen March 2003 when the VIX got as high as 33.61 after seeing highs north of 34 in the months before that.  In July and August of 2002 the VIX traded up in the 40’s, the same as after September 11.

As we get to extreme readings in a call and orderly day, why is it that it is easy to get the feeling that we are going to have to get a major shakeout day before the selling climax feels closer?  A 400-point drop is historically just a run of the mill bad down day on a percentage basis, so we’d be considering something far worse if this feeling is true.  Hopefully it won’t come to that.

Here were some winning DJIA components just last week when the market was as bad as today.  We also discussed defensive stocks for a crummy market, and those are the sort of stocks investors usually flock to when they want to go for a safety net but still be exposed to the stock market.

Jon C. Ogg
August 15, 2007

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

Posted on: August 15, 2007 – 3:33 pm in Economy, ,

Countrywide (CFC) Merrill Rating: Credit Where Credit Is Due

Merrill put a "sell" on Countrywide Financial (CFC) which looked late in the game. For shareholders who got into the stock earlier in the year, the rating could have come much earlier. For those who bought yesterday and sold this morning, it was not.

CFC dropped 13% today on over 117 million shares and was down another 2.3% after hours.

As MarketWatch wrote: The ratings change came as a stark contrast to Merrill analyst Kenneth Bruce’s earlier comments. In an Aug. 10 note, the analyst said that news reports "appear to sensationalize" the company’s liquidity problems. 

But, this AM, Bruce said sell, and at the end of the day the shares were way down.

Douglas A. McIntyre

Posted on: August 15, 2007 – 3:20 pm in Analyst Calls,

Wal-Mart Flirts With 52-Week Lows; Will Lee Scott Consider His Future? (WMT)

Retail behemoth Wal-Mart (NYSE:WMT) has graced us today with a dubious 52-week low.  If this gets under and closes under $43.48, then Wal-Mart stock will be riding a true 52-week low. On a dividend adjusted basis the 52-week low close looks to be $43.13.  Whether this closes there or doesn’t, you get the idea and have to think Wal-Mart investors are feeling duped again.  This is just a day after the company disclosed the discourse from retail buyers would adversely impact forward earnings.  We have to go back a year ago to reach that old $43.48 low (August 23, 2006 to be exact), and on that same day the DJIA was trading at 11,297.90 (versus 12,940-ish right now).

The subprime, Alt.A, and those with lower credit tend to make up more of Wal-Mart’s customers, and it is no secret that the lower half of the economy is in trouble.  Even the top-half of the economy is not immune now and the question for it is if things will get much worse for them or if it will only be ‘not quite as good.’  The former would be an economic catastrophe and the latter sets the stage for a continued goldilocks economy that Larry Kudlow would be proud of. 

Just a short couple months ago, we actually thought the mighty Wal-Mart was starting to show that it wanted to start treating its shareholders better than its employees.  We laid out a ten point plan for the company to follow and it happens to coincide with some of what the company said it would do.  The economy is to blame for this last major slide, but this is going to make us rethink Lee Scott’s role again if the company doesn’t figure out some of the company tricks that can be used to stabilize a stock.  We recently lightened up on Mr. Scott needing to immediately leave after he got up and started doing more shareholder friendly initiatives, although we still think the stock would react favorably with a friendlier face man to ruin the show.  Now this question of should he stay or should he go is likely just coming back up on those who gave him a pass.  The call for him to go in December 2006 also coincided with the time that the stock started to come up a bit, so there is merit here for more activism. 

All of the Wal-Mart and Scott initiatives have failed to materialize into a any solid reward for investors.  We recently noted that he needed to get shares back into the $50.00 levels and that seems more than a stretch right now that the market has changed its tune even more.  It has shown it will take on some leverage, has hiked its dividend, and has officially  raised its share buyback plan.  You cannot blame a soft economy on a CEO and you cannot pin a stock market malaise on a CEO.  But if you are a shareholder and have a CEO in charge of your money, you want someone there who can at least help performance when times get good or stabilize.  If not, we may have to go back to our initial thought that the company might need to break itself up.

This is beginning to look again like a stock that will underperform in a good market and so far wants to sell off more than the broad market.  That may change through time, because at some point this stock will become a defensive stock compared to other high-flying retail chains that investors seek.  But right now, things aren’t looking too good for Mr. Scott.  We’ll be addressing his position and an impact if he would get out of the way, but if Lee Scott thinks things are going to get worse on a broader economic base from here then he’d be smart to just call it a day on his own volition.  Hypothetically speaking, if Lee Scott would buy Wal-Mart stock and then announce his retirement he’d probably make more than the company would be willing to pay him to stay.

Jon C. Ogg
August 15, 2007

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

Posted on: August 15, 2007 – 2:59 pm in Management Change, Retail, , ,

Salesforce.Com Set For Earnings (CRM)

After today’s close, we’ll get the awaited earnings relase from Salesforce.com (NYSE:CRM).  First Call pegs estimates at $0.01 EPS and $173.6 million in revenues.  Next quarter estimates are $0.02 EPS and $188.3 million in revenues. 

The forward valuations on this stock are still in the stratosphere, so they will have to keep performing everyone’s favorite tune and they’ll have to keep banging those drums.  The fiscal 2008 end in Jan-2008 shows estimates at $0.08 EPS and $730 million in revenues, and fiscal Jan-2009 estimates are $0.27 EPS and $1 Billion in revenues.  Here is what this does for forward valuations:

Fiscal Jan-2008: forward P/E ratio of 500-ish and forward sales multiple of 6.98.  Fiscal Jan-2009: forward P/E ratio of 164 and forward sales multiple of 5.1.

Thee 52-week trading range is $26.92 to $50.43, so even at the current $44.50 it still has a lot of air if they can’t overly please investors.  Analysts still have an average target over $50.00 and there havent seemed to be any stellar or major impact analyst calls for some time.  For the most part this has traded in a $40.00 to $50.00 trading band in 2007 and more recently it has spent most of the summer trading between $40.00 and $45.00.  Options expire this Friday and it looks like options traders on a static snapshot based on today only are not expecting much more than a $2.00 move in either direction.  Its hard to know what the real short interest now after a huge market swing, but its short interest grew from 8.4 million in June to more than 9.5 million shares in July.  As short sellers have recently been able to win again in general, this may become an even larger post-earnings trading wildcard than before.

Jon C. Ogg
August 15, 2007

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

Posted on: August 15, 2007 – 1:30 pm in Earnings, Software, , , ,

Maybe Warren Buffett Is The Buyer of Last Resort in Financials (BRK-A, WFC, BAC, USB)

Yesterday evening’s FED FILINGS shows some interesting increases in holdings in Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A).  He boosted holdings in his financial stocks, and it is helping the stocks today.  Keep in mind that this has a June 30 cut-off date, so Berkshire Hathaway will have actually been feeling some pain in these names.  Here are the increased holdings in financials and how it is helping the shares today after his filing:

Bank of America (BAC), up 1.7% today at $48.68. June 29 close: $48.89

Wells Fargo & Co. (WFC), up 1.2% at $34.07. June 29 close: $34.86.

U.S. Bancorp (USB), up 1.7% at $30.05. June 29 close: $32.95.

Interestingly enough, these have all held their ground better than the overall market since that cut-off date.  Maybe the Oracle of Omaha knows more than the market afterall.  Berkshire Hathaway (BRK-A) shares are at 111,100 today and closed at 109,475 on June 29.  Maybe the Oracle himself is a better investment than his underlying picks.

We made a list of the potential "whale of an acquisition" targets that fit certain ‘Berkshire" criteria after Warrnen Buffett made his statement.  So far, he’s been dark and quiet and has yet to do any such deal.  He’s probably also watching Dean hoping it heads more west and out range of much of the reinsurance-exposure areas where a hurricane would hit his pocketbook.

Jon C. Ogg
August 15, 2007

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

Posted on: August 15, 2007 – 12:33 pm in Banking, Buffett, Financial Stocks, , , , , ,

Countrywide Financial (CFC) Shrugs Off Merrill “Sell”

The market ignored Merrill’s "sell" call on Countrywide (CFC) today. Merrill had rated the mortgage company as a "buy" since 2005. The stock was off only 1.4% at 11.15 AM New York time.

The change in rating came far too late to help investors who have watched the stock move from $42 to just over $24 so far this year.

A call to late appears to be worse than no call at all.

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

Posted on: August 15, 2007 – 10:20 am in Uncategorized,

NASDAQ (NDAQ) Launches Private-Stock Market

From Silicon Alley Insider

One of New York’s two biggest e-commerce businesses, NASDAQ, aimed a volley of enthusiastic press releases at its own moribund stock this morning (NDAQ) saying that it will launch an exchange for 144A offerings…continued here.

Posted on: August 15, 2007 – 9:41 am in Uncategorized,

IPO Filing: Value Financial Services, A Pawn Operation (VFSI)

Value Financial Services, Inc., a pawn shop operator, has filed to come public via an IPO under the NASDAQ ticker "VFSI."  The pawn operator lists JMP Securities and Ferris Baker Watts as the underwriters.

Everyone knows what a pawn shop is, and this pawn operator was founded in 1994 and now has 62 stores.  It actually still has quite a bit of room for growth because it only operates with 56 stores in Florida, 4 stores in Tennessee, and 2 stores in Georgia.  It said the average pawn/loan in 2006 was small at $149.00.  In 2004, 2005 and 2006, approximately 78.0%, 78.8% and 77.8%, respectively, of the pawn loans made by the company were redeemed in full or were renewed or extended through the payment of accrued pawn service charges.  These loan rates run from 12.5% to 25% monthly under regulatory guidelines.

This IPO filing claims that pawn shops have grown from 6,900 registered in 1988 to 11,000 in 2007, so with 62 stores this has exponential growth possibilities.  Value Financial Services posted $87.8 million in revenues and $11.7 million in EBITDA for 2006 and in the three months ended March 31, 2007, it generated total revenues of $24.2 million and EBITDA $3.0 million. At March 31, 2007, Value had a total of 91,304 pawn loans outstanding, with a total balance of $13.5 million and an average balance of $218,293 per store.

Jon C. Ogg
August 15, 2007

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

Posted on: August 15, 2007 – 9:25 am in IPOs, , , ,

Yahoo! (YHOO) Finance Missing NYSE Quotes

Yahoo!’s (YHOO) live NYSE stock quotes are down this AM. Any Yahoo! paid subscriber to quotes cannot access any stocks traded on the big NY exchange.

A check with other online live quote services indicates that they are up and running.

In the big battle for eyeballs among the large financial websites, it is a good way to alienate Yahoo!’s best customers at a section of the portal that must be among their most profitable.

10:42 AM EST UPDATE: Yahoo!’s customer care department has responded to us this is a technical issue from servers and not from any policy changes.  If it can fix this in short order the online financial information portal will get through fine.  But if Yahoo! Finance can’t get it together for extended periods of time, well any independent supplier of financial data and information can tell you how loyal customers are when they cannot access anything special.

Douglas A. McIntyre

Posted on: August 15, 2007 – 8:48 am in Uncategorized,

Merrill Lynch’s Very Late Countrywide (CFC) Call

Merrill Lynch downgraded Countrywide Financial (CFC) to a "sell" today. It has had a "buy" on the stock since April 2005, according to Bloomberg. And, investors always thought analysts earned money to be ahead of the news.

Countrywide has lost 42% of its value this year as the crisis in sub-prime mortgages has spread to mortgages to homeowners with modest credit. The Merrill analyst who covers the stock wrote “We cannot understate the importance of liquidity.”

Thank you for that, and for warning shareholders after the company’s shares have already collapsed.

Douglas A. McIntyre

Posted on: August 15, 2007 – 8:17 am in Analyst Calls,

A Google (GOOG) Takeover Of Adobe (ADBE)?

GigaOm has suggested that Google (GOOG) may look at buying online tools company Adobe (ADBE). While the big search company would get the large Acrobat and Photoshop, the key to a buy-out would be the access to the Adobe video creation tools. As GigaOm writes "this is the next frontier for Internet advertising revenues, and without a strong presence, it could get away from them (Google)."

Adobe’s Flash player, which runs video, is probably the most widely distributed multimedia player in the world with over 700 million downloads.

Beyond an deal being a good strategic move, an acquisition makes financial sense. Adobes’s shares trade at about $40, which is where they were in April 2006. Adobe has a $24 billion market cap, about eight times annual sales. Google trades at about 12x.

Adobe has about $2.3 billion in cash. In the quarter ending June 1, revenue was $746 million, up from $635 million in the same quarter a year ago. Operating income was $180 million up from $148 million. The 24% operating margin makes the company an attractive target.

According to the Adobe proxy, 20% of the company’s shares are in the hands of three institutions: PRIMECAP, Prudential Financial, and Wellington. Getting their agreements would make a deal relatively likely.

Adobe’s stock seem stuck. That would seem to make it a target.

Douglas A. McIntyre

Posted on: August 15, 2007 – 8:01 am in Uncategorized, ,

E*Trade DARTs Rise As Customer Internals Weaken (ETFC)

E*Trade Financial Corp. (NASDAQ:ETFC) released the industry metric that Wall Street looks at to see how its overall trading revenues are going.  Its DARTs (daily average revenue trades) rose a whopping 20.8% in July over the June reading, which is a fairly substantial number.  It also opened 100,787 gross new retail accounts to end with 4,658,228 retail accounts.

That is a great increase in trading for a firm, but it comes at a time when the internals appear to be weakening.  Its total retail assets decreased 1.9% sequentially to $208.8 Billion. This can fluctuate because of the market and it is no secret that the second half of July was painful after the stock market hit new highs earlier in the month.  This is not out of the norm.

But its margin debt balances are increasing.  End of period margin debt rose 5.5% sequentially to $7.9 Billion, with average debt margin balances showing a 5% gain to $7.6 Billion.  When you consider that the company did many mortgages in the past few years, this margin debt increase needs to be watched.  That isn’t a total killer for margin increases, but a couple more months of that would not be a welcoming sign to its retail customer base.

The company is trying to stave of weakness.  E*Trade’s president & COO, Jarrett Lilien said the franchise remains strong and doesn’t believe the current market cap reflects performance.  So he noted the company has been increase share buybacks over the last two weeks.

So far, shares of E*Trade are up 0.5% at $15.08 in pre-market activity.

Jon C. Ogg
August 15, 2007

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

Posted on: August 15, 2007 – 8:01 am in Brokerage Firms, ,

Broadcom (BRCM) Works To Shut Qualcomm (QCOM) Down

Broadcom (BRCM) is arguing in federal court that Qualcomm (QCOM) should be prohibited from selling a number of its chips because they infringe on BRCM patents. According to Reuters:  "Broadcom was seeking an injunction in federal court on Tuesday to bar Qualcomm from supplying its customers with chips that a Santa Ana jury found in May had infringed three technology patents owned by Broadcom."

If Broadcom wins the case, it will have the affect of taking a number of Qualcomm products off the market, doing what could be nearly irreparable damage to the company. Qualcomm has asked the court to license Broadcom tech while the case continues.

One of Qualcomm’s arguments for the arrangement is flawed. The company claims that large wireless service operators like Sprint (S) would be prevented from marketing certain handsets with the QCOM tech. Verizon Wireless, which has set up a direct licensing agreement with Broadcom would, therefore, have an unfair advantage. The theory lacks substance because nothing prevents Spint or AT&T (T) from setting up their own license agreements with Broadcom.

As one attorney told the Associated Press regarding a potential ban on Qualcomm offering infringing products: "It essentially makes it extremely difficult for Qualcomm to work with customers to make new (chip) designs."

Broadcom is doing nothing short of trying to get the courts to lock Qualcomm out of certain of its largest markets.

Qualcomm traded at $52 in May 2005. It is not down to $37.75. If things get worse, the shares could see $30.

Douglas A. McIntyre

Posted on: August 15, 2007 – 7:40 am in Uncategorized, , , , ,

Pre-Market Stock News (August 15, 2007)

(AMAT) Applied Materials trading down 3% after yesterday’s earnings.
(CSC) CSC said it is part of a large government pact that will result in close to $900 million to CSC.
(DE) Deere $2.37 EPS vs $1.99 est.; sees 2007 inline with estimates.
(ERJ) Embraer SA $0.36 EPS vs $0.45 est.; unsure if comparable because of ADR.
(ETFC) E*TRADE said July averagge trades grew 20.8% sequentially, but said total retail assets decresed 1.9% and margin debt rose 5.5%; has been increasing share buyback activities.
(GNW) Genworth is meeting with investors to discuss its investment portfolio, including subprime and alt-A mortgage loans.
(HW) Headwaters CFo is leaving to becoming CFo of a private company.
(IAG) IAMGOLD $0.04 EPS vs $0.07 est.
(M) MAcy’s $0.29 EPS vs $0.26 est.
(SIRI) SIRIUS Satellite Radio Introduces the Stiletto 2.
(SLE) Sara Lee $0.17 EPS vs $0.13 est.; 2008 earnings guidance may be light.
(TSEM) Tower Semi -0.28 EPS vs -$0.31 est.
(WBSN) Websense names new CFO.
(ZOLT) Zoltek priced a 4M share secondary at $38.76.

Jon C. Ogg
August 15, 2007

Posted on: August 15, 2007 – 7:32 am in Pre-Market Activity, , , , , , , , , , , , , ,