Daily Archives: September 6, 2007

‘If, Then’…. Amgen Could Recover Much More (AMGN, BIIB)

Amgen (NASDAQ:AMGN) has seen a slight recovery of late, mostly on reports that the U.S. Senate is asking Centers for Medicaid and Medicare Services to reconsider the drastically cut reimbursement rates.  Shares just last week and the week before were trading just under $50.00, and shares are up almost 4% since last Friday’s close.  It remains unclear how or when CMS will respond, but if there is even a decent chance that this gets reconsidered then investors need to go back and review the past drop and recovery of Biogen-Idec (NASDAQ:BIIB). 

We have laid out the case this was essentially moving from biotech to Big Pharma in comparison, but with more baggage.  The fear from March is still that it can’t get the gorilla off its neck.  There is a real shot that this fear may lighten up considerably.

If you compare this to what happened to Biogen-Idec (NASDAQ:BIIB) in early 2005 after it panicked and withdrew Tysabri as an MS treatment, the Amgen death march has been a much longer and slower version.  But the "Crash Scenario Analysis" looks like it could end up being a quite similar long and slow recovery.  The difference is that once there appeared to be a road to recovery Biogen shares recovered 35% in 5 months.  The amount it recovered in total from what it lost was basically half of the losses.  After that the biotech shares languished before just recently recovering much of the losses from back then. I was in the camp after the Biogen stock implosion that Tysabri was coming back with quite strong warnings and under somewhat more limited use, and that is what ended up happening.  Amgen also has severe label warnings now as well.  The Amgen coincidental analogous factors are just too similar ‘in scope and severity’ to ignore.

Amgen over the last two years has seen shares fall from $80.00 down to under $50.00, although the real scenario comparison should only equate to a $74.00-ish price down to recent levels.  Amgen has recently announced layoffs, essentially put its entire pipeline and partner programs up for review to see where it can focus.  In short, costs are being slashed and you cannot rely upon forward numbers a year or more out.  There is still a wild-card in the lawsuit with Roche that could easily throw a wrench in this machine.  The company should still consider a truly transformational merger (more so than the Ilypsa purchase) so it is not reliant so much on anemia related treatments and so that its patents and reimbursements are not at risk regardless of what Congress does after next year. 

There are a few IF’s here:

  • IF the Senate is real about going soft on the reimbursement criticism;
  • IF the reimbursement rates are not going to be cut as much;
  • IF biotech in general won’t be given the political hatchet ‘as bad as fears’ indicate.

Those are the IF’s.  You know forward guidance and earnings estimates have to be considered irrelevant already.  But this is looking like it may be the case.  Even on the IF’s alone this stock should be headed higher.  It will have a long long ways to go before you see those old highs again.  But based on how Biogen acted, Amgen could its shares rise between now and the end of March 2008 to as high as an estimated range of $61.50 to $65.00 if the trajectory and momentum heads back in it in the same manner.  This would not occur overnight and it will take a while for all these "IF’s" to pan out into a winner.

These are of course "IF, THEN…." scenarios and nothing else.  But it is amazing how over and over history has a way of repeating itself.

Jon C. Ogg
September 6, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER and he does not own securities in the companies he covers.

Posted on: September 6, 2007 – 4:59 pm in Biotech, Regulation, ,

National Semiconductor, Good But Maybe Not Enough (NSM, SMH)

National Semiconductor (NYSE:NSM) posted $0.30 EPS on revenues of $471.5 million versus analyst targets of $0.25 EPS on revenues of $467.4 million (on items).  The company is guiding sales up 4% to 7% or an implied range of $490.36 to $504.5 Million, which compares to analyst estimates of just under $496 million. 

National Semi said its sales growth in the first quarter was on increased demand for new analog products, primarily in the wireless handset and portable device markets. Bookings rose by 6% sequentially and gross margin increased to 63.0% and it trimmed inventories by about $10 million.  Gross margin is expected to improve while operating expenses are also projected to increase.

As part of the cumulative $2.4 Billion share repurchase program, the company executed $1.5 billion of the approved buy back through a leveraged accelerated share repurchase program, financed through a combination of unsecured bonds and bank facilities. National Semi’s weighted average shares was 283.9 million shares, down from 327.5 million shares in the preceding quarter. As of the end of the first quarter of fiscal 2008, National had approximately $880 million still available under approved programs for future stock repurchases.

Shares were halted for the news, but after re-opening shares are down over 2% at just under $26.00.  Shares closed up $0.08 at $26.58 in normal trading and the 52-week range is $21.65 to $29.69.  Unless there are some major surpises in the conference call that "non-directional chart" is likely to continue.

The Semiconductor HOLDRs (AMEX:SMH) are down 0.8% now that National Semi has resumed trading.

Jon C. Ogg
September 6, 2007

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

Posted on: September 6, 2007 – 3:43 pm in Earnings, Semiconductor, ,

VeriFone’s Strong Numbers (PAY)

VeriFone Holdings (NYSE:PAY) has just posted $0.42 EPS and $231.9 Million in Revenues versus First Call estimates of $0.40 and $226.8 million.  If you look below you’ll see they are also raising guidance.  Analysts are still positive on this stock with an average price target of $44.00 to $45.00, so we’ll have to see if this is positive enough to keep them happy in the morning.

Net revenues from VeriFone’s International business increased 106% while net revenues from VeriFone’s North America business increased 22%. The significant increase in net revenues was driven largely by the acquisition of Lipman Electronic Engineering Ltd., which closed November 1, 2006.  Non-GAAP gross margins rose to a record 48.2%; GAAP gross margins fell to 44.0% from 45.0% primarily as a result of increased amortization of purchased technology assets.

Most importantly, the company is jacking up guidance.  Douglas G. Bergeron, Chairman and Chief Executive Officer: "We are increasing our internal expectations for the fourth quarter and now expect to repeat these record third quarter results. Our guidance for the fourth quarter, therefore, is for net revenue of $231 – $233 million and net income, as adjusted, per share of $0.41 – $0.42. As a result, we are also increasing our full year fiscal year 2007 expectations for net income, as adjusted per share to $1.59 to $1.60 per share. As well, given the out-performance in profitability that we have consistently enjoyed since the closing of the Lipman acquisition last November, we are now taking this opportunity to update our long term financial model. We are reaffirming our revenue growth rate projection in the 10% – 15% range and we are increasing our margin expectations as reflected in the table below."

                                          Long Term Model
                                        Prior                    New
Gross Margin         42% – 47%          45% – 50%
EBITDA Margin      18% – 24%          25% – 30%
Net Margin              12% – 17%          15% – 20%

Shares closed down $0.01 at $36.99 in normal trading and shares are up over 1% at $37.40 in after-hours trading after the raised guidance.  The 52-week trading range is $26.25 to $42.72.  A lot seems like it may depend on these portable handheld devices for credit card transactions that have been used in Europe for over 10 years.

Jon C. Ogg
September 6, 2007

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

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

The 52-Week Low Club

The Ryland Group (RYL) In home building and mortgage businesses. Enough said. Down to $26.61 from 52-week high of $60.13.

Dillard Department Stores (DDS) Same store sales down last month. Drops to $21.06 from 52-week high of $40.56.

Nortel Networks (NT) Enterprise network supply business does not seem very good. Ask Alcatel-Lucent (ALU). NT down to $17.02 from 52-week high of $31.79.

Sourceforge (LNUX) Still falling after bad financials. Down to $2.28 from 52-week high of $5.55.

Finisar (FNSR) Poor quarterly numbers kill em. Drops to $2.81 from 52-week high of $4.25.

Douglas A. McIntyre

Posted on: September 6, 2007 – 3:08 pm in HI/LOW, , , , ,

Apple: Jobs Retreats

Even Steve Job makes mistakes. Dropping the price of the iPhone by $200 made so many current customers angry that AAPL is offering rebates to anyone who bought the handset before the cut.

For Apple, it is not a lot of money. Perhaps two million iPhones have been sold already.

It does, however, indicate the problems that Apple may have with several tiers of pricing on its phone and the iPod.

The price cut itself. Still a big mistake. If Apple does sell 10 million iPhone before the end of 2008, $200 per unit is a lot to give up, unless it can improve sales by five or six million units over that time frame.

Douglas A. McIntyre

Posted on: September 6, 2007 – 2:39 pm in Consumer Electronics,

Bioheart Sets IPO Terms (BHRT)

Bioheart Inc. has set its IPO terms and it will trade under the NASDAQ ticker "BHRT."  BioHeart has set its IPO terms and plans to offer 3.575 million shares in a price range of $14.00 to $16.00 per share.  The company only lists Merriman Curhan Ford and Dawson James Securities as the underwriters. 

Here is a brief summary of the company:

  • Biotechnology company focused on the discovery, development and, subject to regulatory approval, commercialization of autologous cell therapies for the treatment of chronic and acute heart damage.
  • Lead product candidate is MyoCell designed to populate regions of scar tissue within a patient’s heart with autologous muscle cells for the purpose of improving cardiac function in chronic heart failure patients.
  • The core technology used in MyoCell has been the subject of human clinical trials conducted over the last six years involving 84 enrollees and 70 treated patients.  A completed 40 patient Phase II clinical trial in various countries in Europe, and the MYOHEART Trial, a completed 20 patient Phase I dose escalation trial in the United States.
  • Interim results of the SEISMIC and MYOHEART Trials are disclosed in the prospectus and it is cleared by the U.S. FDA to proceed with a 330 patient multicenter Phase II/III trial of MyoCell in North America, Europe and Israel, or the MARVEL Trial.
  • Intend to seek to have final data available for the MARVEL Trial by the third quarter of 2009.
  • Its pipeline candidates are for the treatment of heart damage, including Bioheart Acute Cell Therapy, and MyoCell II with SDF-1, a therapy utilizing autologous cells genetically modified to express additional growth factors.

Jon C. Ogg
September 6, 2007

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

Posted on: September 6, 2007 – 1:47 pm in Biotech, IPOs, ,

Earnings Preview: National Semiconductor (NSM)

National Semiconductor (NYSE:NSM) reports earnings after the close today.  Analysts are looking for $0.25 EPS on revenues of $467.4 million, according to First Call.  As far as what to expect next quarter, estimates are $0.31 EPS and just under $496 million.  The company has handily beat estimates in each of the last two quarters.

Analysts have an average target of roughly $30.50, and a fresh recent analyst call from RBC Capital Markets was merely given a "Sector Perform" rating.  Its stock chart is also non-directional.  Options were a bit off in using as a bogey, but it appears that traders are expecting less than a 2% move based on a static snapshot from this morning.

As a reminder, National Semiconductor is one that Wall Street often tries to use as a bogey for tech and chip stocks.  But the tie is not truly an accurate one with only a $7 Billion market cap and not even quite $2 Billion expected in Fiscal May-2008 expected revenues.

Jon C. Ogg
September 6, 2007

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

Posted on: September 6, 2007 – 1:09 pm in Earnings, Semiconductor,

52-Week Lows: eTelecare, Recent IPO For Call Center Outsourcing (ETEL)

There was a surpising screen that hit again this morning in looking at 52-week lows: eTelecare Global Solutions, Inc. (NASDAQ:ETEL).  This outsourced call center operator just came public at the end of March, and August was a truly brutal month for the stock after the company lowered its Q3 and 2007 projections.  We had previously noted how eTelecare was a potential hedge for US-based call center employees who were worried about their jobs being sent offshore.

Wall Street is particularly brutal when a fairly recent IPO guides lower because it creates a nearly permanent credibility gap.  It also can hurt the firms that bring it public because it can imply the bankers are overly trusting or may be endorsing overly touted numbers.  The negative catalyst was likely this week’s earlier call out of JMP Securities where it trimmed its $16.00 target down to $13.50.

The prior low was $8.00, and shares traded as low as $7.46 at one point this morning.  Who knows, maybe all these laid off mortgage personnel are going to work at call center operations in the U.S. and replacing the need to offshore this function.  How would that be for irony?

Jon C. Ogg
September 6, 2007

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

Posted on: September 6, 2007 – 12:49 pm in HI/LOW,

Palm’s True Loss: Cisco as a Client (PALM, CSCO, RIMM, AAPL, HPQ)

An interesting thing is going on in PDA-land and Phoneland this week.  Palm Inc. (NASDAQ:PALM) already disclosed that it is canning its Foleo offering.  But another key development that has received little to no coverage is that after two-years Cisco Systems (NASDAQ:CSCO) is dumping the Palm Treo(R) for its sales and support staff.

Cisco sales and support staff have other needs that the Treo just can’t handle, and contacts have openly complained about call drops, poor bandwidth for data, and a lack of needed functionality for where Cisco is going.  These devices are being changed out as this is being written, but it is likely that Palm knew about being dropped when it gave its last guidance since this would not have been an overnight development. 

Getting the one-two heave-ho from the networking behemoth is bad enough, but with the highest visibility possible in Cisco this could spill over to Cisco clients as well. PDA-phones are often conversational pieces, and having the world’s number one networker bash a PDA-phone in favor of a new replacement is not a good thing.  You could easily see other companies take the attitude "If it’s good enough for Cisco, then it should be good enough for me." in fact, a contact has noted at least one specific instance at a global law firm.

Upon first learning of this as a possibility, the first thought was that perhaps Research-in-Motion (NASDAQ:RIMM) was going to be leaping for joy to secure the Cisco account since there are already some crossovers. The numbers disclosed by R-I-M and Palm after the last earnings showed a clear R-I-M advantage that was only widening.  But the BlackBerry and BlackBerry Pearl(R) phones are apparently not in the replacement choices.  The reason for this is unknown, but contacts have not disclosed any rifts developing.  These are the phones that contacts have said are the new choices, although it is possible these could have also changed over the last couple of weeks:

  • Motorola’s Q phone
  • Samsung’s BlackJack phone
  • Nokia’s E61 dual-mode phone

This isn’t just a Palm bashing article, and there is at least some balance that can be offered. Shares are actually up this week at two-week highs.  Personally, I use a Palm Treo as well.  My first one was riddled with problems, but the replacement has been more than adequate for now.  The bandwidth and download speeds for web pages is not as good as at least the BlackBerry phones as I have run the two side by side for comparison.  But it isn’t so bad that I have decided to make the change.  Not yet, at any rate.  My organization is also not an enterprise class operation with thousands of employees and millions of emails.

Hewlett-Packard (NYSE:HPQ) has also just announced that it is entering the business class phone space.  Apple (NASDAQ:AAPL) has also just slashed the price for its base-model iPhone.  Palm’s shares are actually up since announcing it was dumping the Foleo, or now the Faux-leo.  For a while this one looked cheap on its relative multiples, but with all the problems it is getting harder and harder to endorse this one as trend changes often take a matter of quarters or longer to change.  Palm has been the topic of takeover rumors even before and after the recent private equity group investment (which may also be in trouble since recent leverage is again frowned upon and harder to sell to financiers) and recapitalization.

If the company has any unknown or decent deal lurking in the wings, it may want to consider it before any further real PDA-phone wars start.

Jon C. Ogg
September 6, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER and he does not own securities in the companies he covers.

Posted on: September 6, 2007 – 12:27 pm in Wireless, , , , ,

Baker Hughes’ Likely Uses For Its $2 Billion Securities Offering (BHI, GE, RIG, GSF)

Last night Baker Hughes Inc. (NYSE:BHI) filed to sell up to $2 Billion in a mixed securities shelf, and this has surprisingly received very little coverage.  If you have been tracking this sector at all, you would wonder why on earth the company needs up to $2 Billion more.  None of the analysts that follow Baker Hughes are looking for losses any time this year or next with close to 20% earnings growth expected and it can internally service its debt without having to tap the markets, so they don’t have to raise cash.  The last time it filed to raise cash like this was in 1999 with a $1 Billion filing.

The company could be raising cash for a myriad of reasons, but raising some good old spending money would seem to be the most logical.  The markets have also closed the window or have at least made it less desired to borrow money just to buyback stock, but this is always possible as well.  Look at the "Use of Proceeds": acquisitions; working capital; capital expenditures; repayment of debt; and repurchases and redemptions of securities (identical to 1999 filing).

Baker Hughes is one of the leaders in the oilfield services industry as a supplier of products and technology services and systems to the oil and natural gas industry worldwide.  In a quite brief summary this includes products and services for drilling, formation evaluation, completion and production of oil and natural gas wells.  Baker Hughes’ shares are trading up over four-fold from the end of 1999-2000 and still up more than 100% from the start of 2005 when the sector and oil prices began a meteoric rise.

We just recently pondered how large General Electric’s (NYSE:GE) oil and gas operations would become since it is acquiring into the space.  The Transocean Inc. (NYSE:RIG) and GlobalSantaFe Corp. (NYSE:GSF) and other prior large deals spread out in the oil & gas sector are not expected to be the last in the space.  With other mergers selectively taking place in the sector and the company not truly needing the cash, it’s just hard to imagine anything different than Baker Hughes looking for some spending cash.  T. Boone Pickens recently called for $80 oil before he is 80, and there are some who still believe that $100 oil is coming.

The June 30 balance sheet is lean for a company with a $27.5 Billion market cap: a hair under $840 million in cash and short-term securities, but $2.333 Billion in receivables.  The company’s total assets (minus Goodwill, intangible, and ‘other’) is over $7 Billion; with the ‘official’ total assets at $8.99 Billion.  Its total debt is only $3.146 Billion, with under $2 Billion being allocated to long-term debt, deferred long-term debt, and other liabilities.

The company bought Western Atlas in the past and made several smaller deals since then, so it isn’t as though it wouldn’t be out of the norm for it to go shopping for a fairly large company.  It is very possible that the funds will in part just be used to repay some debt maturing in early 2009: per the annual report debt schedule it has notes due in January and February of 2009 that combined equals $534.4 million. 

If this is being done for defensive purposes that is another thing, although it is hard to imagine that a hostile deal would be headed its way.  We don’t want to fuel any speculation by throwing names out as to whom the company would look at.  Besides that there are just too many large and small companies (and units thereof) in too many segments that Baker Hughes could consider buying if it wants to.

Jon C. Ogg
September 6, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER and he does not own securities in the companies he covers.

Posted on: September 6, 2007 – 11:02 am in Mergers and Buy Outs, Oil & Gas, Secondary Offering, , , ,

Bankrate & Move: Cheaper To Partner Than Merge (RATE, MOVE)

Bankrate, Inc. (NASDAQ:RATE) And Move, Inc. (NASDAQ:MOVE) have announced a distribution agreement for Bankrate to be the provider of mortgage and home equity rate data on the Move network of Web sites. Move will also make select content in the form of Bankrate articles and features available to the millions of monthly users on its network.

Just a year ago these companies would have (or maybe could have) likelyjust considered an outright merger.  But with Move being so much moretied specifically to real estate you can’t blame Bankrate for justwanting to partner with them.  In uncertain times for key aspects ofeach company’s operations, for now at least, it is cheaper to partnerthan it is to actually acquire.  This effort costs basically nothing,while merging two companies like this could be more than complicated inan environment where online financial companies have to watch theirbottom line closer than ever.

Bankrates’s market cap is $724 million and Move’s market cap is $441 million. Bankrate shares closed Wednesday at $39.37, and its 52-week trading range is $25.16 to $53.14.  Move shares closed Wednesday at $2.84, and its 52-week trading range is $2.36 to $6.69.

Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER and he does not own securities in the companies he covers.

Posted on: September 6, 2007 – 8:30 am in Financial Stocks, Internet, Mergers and Buy Outs, ,

Retail Sales In August Not On Life Support

Just yesterday and the day before, the tone was looking to be that sub-prime fallout and the recent tightening on credit was helping to squash Joe Q. Consumer in the U.S.  Yesterday, CostCo (COST) shares were hit hard on a big miss in same store sales gains.  J.C.Penney (JCP) just yesterday also gave -4% s-s-s, although that was a tad better than the -5% estimate.

But this morning both Wal-Mart (WMT) and Target (TGT) beat sales same store sales expectations with +3.1% and +6.1% respectively.  Take a look at these other same store sales (s-s-s) numbers from some of the larger chain retailers:

Saks (SKS) s-s-s +18.2% vs. +9.2% estimates.  This is the s-s-s winner, by far.  Shares are up over 4% pre-market and still only about 10% above 52-week stock lows.  At $16.00 pre-market, this is well under the $23.25 yearly high.

Nordstrom (JWN) +6.6% s-s-s vs. +6.3% estimates.

TJX (TJX), the owner of discounter TJMAXX and Marshall’s, posted +4% s-s-s vs. 3.8% estimates.

NEGATIVES:

Kohl’s (KSS) s-s-s -0.6% compared to +2.7% estimates.

Dillard’s (DDS) s-s-s were -5%, compared to -2.9% estimates.

Gap Inc. (GPS) s-s-s were -1%, although analysts were looking for -2%.

These are just a snapshot, but regardless of the overall estimates it does not appear that Joe Q. Consumer is dead.  It seems every time that the consumer is ruled dead on arrival that he or she pops up again.  This doesn’t even look like zombie mode either.

The biggest example of the sector winning today is the key ETF used to measure the group with the ML RETAIL HOLDRs (RTH), with shares up over 1% pre-market.

Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER and he does not own securities in the companies he covers.

Posted on: September 6, 2007 – 8:12 am in Retail, , , , , , , , , ,

Same-Store-Sales: Wal-Mart Vs. Target (WMT, TGT, COST)

You have to love a morning where Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) have big news out on the same day.  This morning both retail giants released August Same-Store-Sales.  Surprisingly, both did pretty well and the drop-off that was seen at CostCo (NASDAQ:COST) did not hit either retail giant.

SAME-STORE-SALES GAINS:
Wal-Mart +3.1%, compared to analyst expectations of +1.5%. Sales were +3% including fuel impact.
Target +6.1%, compared to analyst expectations of +5%.

AUGUST TOTAL SALES GAINS:
Wal-Mart +9.3% to $28.22 Billion.
Target +11.6% to $4.707 Billion.

SAME-STORE-SALES FORECAST (SEPT):
Wal-Mart forecast +1% to +3%.
Target forecast +4% to +6%.

PRE-MARKET TRADING REACTION:
Wal-Mart (WMT) shares are trading up about 2% pre-market, after recent year-lows; Target (TGT) shares are up about 1% pre-market.

Jon C. Ogg
September 6, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER and he does not own securities in the companies he covers.

Posted on: September 6, 2007 – 7:43 am in Retail, , ,

Pre-Market Analyst Calls (September 6, 2007)

APLX cut to Neutral at First Albany; cut to Neutral at Sun Trust Robinson Humphrey (company being acquired by Cognos).
AZN started as Neutral at UBS.
BFF started as Buy at Oppenheimer.
COGN raised to Overweight at JPMorgan.
CNXT raised to Outperform at CIBC.
CRM started as Hold at KeyBanc.
DKS started as Buy at UBS.
EDO raised to Outperform at CIBC.
FRX raised to Buy at Jefferies.
GIS raised to Buy at UBS.
GSK started as Neutral at UBS.
HLTH cut to Mkt Perform at FBR.
IACI started as Sector Perform at RBC.
LXK raised to Outperform at Bernstein.
MSFT started as Buy at Deutsche Bank.
NU cut to Neutral at JPMorgan.
NVS started as Buy at UBS.
OWW started as Equal Weight at Lehman.
PNNT started as Buy at UBS.
PTV raised to Buy at Citigroup.
PWRD started as Outperform at CIBC.
RTRSY raised to Overweight at Lehman.
SLG cut to Equal Weight at Lehman.
SNY started as Neutral at UBS.
TIBX cut to Neutral at Merrill Lynch.
TLEO started as Buy at KeyBanc.
TMA raised to Sector Perform at RBC.
WEC raised to Overweight at JPMOrgan.

Jon C. Ogg
September 6, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. SPECIAL SITUATION INVESTING NEWSLETTER and he does not own securities in the companies he covers.

Posted on: September 6, 2007 – 6:59 am in Analyst Calls

HP Wants Part Of Cellphone Business

It is not enough that Apple (AAPL) is getting more aggressive with prices on its iPhone to take market share from the likes of Nokia (NOK) and Motorola (MOT). Now, Hewlett-Packard (HPQ) want a piece of the smartphone market.

It has introduced a new 3G enabled device called the iPAQ 600 Series Business Navigator will compete with high-end offerings from firms like Palm (PALM).

The market is too crowded, so this venture may be one of HP’s few failures. The business market, where the product is aimed, already has RIMM and PALM. Rumors are that Apple will introduce a business version of the iPhone.

HP should spend its efforts elsewhere.

Douglas A. McIntyre

Posted on: September 6, 2007 – 6:38 am in Consumer Electronics, , , , , ,

AMD, Intel Goes For The Kill

AMD (AMD) has all kinds of antitrust suits filled against larger rival Intel (INTC), both in the US and abroad. It appears that the smaller company will have to win in the courts, if it is going to win at all.

AMD is about to release it quad core Barcelona chip, a move that The Wall Street Journal calls the company’s "most important product launch in years."

But INTC does not want to be bested, so it will launch a new version of its Xeon processor which will have two chips that each have the core circuitry of two microprocessors. That would be trumping AMD’s ace.

Both the AMD and Intel product are aimed at the high end server markets where products are sold to enterprises to run large amounts of data.

AMD has not been able to get out from Intel’s shadow. After taking a clear technology lead, AMD picked up significant market share in both PCs and servers. Its stock handily out-performed Intel’s from September two years ago until late last year.

But, Intel got tired of being beaten like a red-headed mule and turned on its R&D rockets. It has take back most of the market share its has lost. It stock has done much better than AMD’s so far this year. INTC is now up about 20% year-to-date and AMD is down about 35%.

It does not look like AMD is going to get back into the game. It may want to lay-off everyone except its lawyers.

Douglas A. McIntyre

Posted on: September 6, 2007 – 5:01 am in Semiconductor, ,

Europe Markets 9/6/2007

Markets in Europe were higher at 5.45 AM New York time.

The FTSE rose .4% to 6,287. Barclays (BCS) fell 1.1% to 613.5. Rio Tinto (RTP) rose 4.1% to 3668.

The DAXX was up .5% to 7,623. SAP (SAP) was up 2.1% to 40.1. Infineon was up 3.7% to 11.96.

The CAC 40 moved up .4% to 5,573. Alcatel-Lucent (ALU) was up 1.2% to 7.85. Total was up 1.2% to 55.4

Data from Reuters

Douglas A. McIntyre

Posted on: September 6, 2007 – 4:49 am in International Markets, , , ,

e-Books, Yet Again — This Time Amazon Gears Up To Fail

From Silicon Alley Insider

Amazon is about to introduce yet another attempt at an e-book, the NYT reports. The Kindle will go on sale this fall for $400 to $500. The NYT summarizes the many failed attempts to introduce e-books, and wonders if this one will finally succeed. It won’t.

That’s because this e-book, like last year’s Sony Reader and every e-book before it, ask consumers to change their behavior and offers little in return. Existing book technology works pretty darn well, and the only advantage the e-book offers is the chance to put multiple books on one device  continued here…

Posted on: September 6, 2007 – 4:39 am in Retail

The Cellular Business’s Next Big Thing

There are only so many people who can own a cellphone. In Europe and the US, that number is no longer growing quickly. America’s three largest cellular carriers, Sprint (S), AT&T (T), and Verizon Wireless have a combined 180 million customers.

So, where do the companies turn for new revenue? The answer appears to be getting more people to make calls from within their homes. The wired phone could become a thing of the past in many residences.

The trouble with home calling is that the signal inside buildings is often weak.

Enter femtocell technology. The new products allow each home to have the equivalent of a large phone tower for the home, according to The Wall Street Journal. New-York-based analyst group ABI Research, some 70 million femtocells will be installed in homes around the world, serving 150 million users by 2012. The price for the devices could get as low as $100.

But, the product is too little, too late. With inexpensive VoIP being delivered by cable companies like Comcast (CMCSA), millions of telecom landline customers have already left to move to the less expensive alternative. By 2012, the number could be in the ten of millions of customers.

Better cellphone reception is not going to help.

Douglas A. McIntyre

Posted on: September 6, 2007 – 4:35 am in Wireless, , , ,

CountryWide Financial: How Many More People Go?

Countrywide (CFC) is going to whack another 900 people. Most of these will come from the mortgage production business. CFC has 60,000 total employees.

CFC keeps saying that its prospects are improving. But, it may not want to say that to the people who are leaving.

CFC shares got as low as $15 in the middle of last month. The briefly recovered to almost $25. But, yesterday, the shares traded as low as $18.75.

So much for the recovery.

Douglas A. McIntyre

Posted on: September 6, 2007 – 4:24 am in Financial Stocks,