Daily Archives: September 14, 2007

The Week’s Corporate Gaffes On Wall Street (CEPH, MER, AGE, AMTD, BRLC)

This week’s "Corporate Gaffe of the Week" should actually be shared by several companies.

What may be the blue ribbon winner is Cephalon (NASDAQ:CEPH).  Reports noted that the company sent out a "Dear Doctor Letter" warning that its pain management drug FENTORA for cancer patients has a pretty severe side effect: Death!  How ironic is it that a pain drug causes death, or that a cancer patient would die from a pain aid rather than cancer?  The real problem is if you look at the company website, Cephalon was just touting the positive study results on FENTORA not even a month ago. 

When an analyst at a bulge bracket brokerage firm downgrades a key financial stock, it can actually pull down that same brokerage firm’s stock.  This happened when Merrill Lynch downgraded shares of DJIA component American Express (NYSE:AXP).  Merrill Lynch (NYSE:MER) shares fell over 2% at one point Friday morning in sympathy with American Express, so that took away about $1.7 Billion in market cap from Merrill Lynch stock. The good news is that the brokerage stocks continued their rise and Merrill’s stock recovered.  Butchers can chop off their own fingers if they take too big of cuts at a time.

TD Ameritrade (NASDAQ:AMTD) announced that over 6 million of its client accounts had personal contact information taken in a data hack, and customers have received unwanted email ads that the company disclosed in its SPAM investigation.  This is just a runner up because it could have been far worse.

Syntax-Brillian (NASDAQ:BRLC) is no runner-up, it really screwed up after it delayed its earnings by a day.  It wasn’t the report from the last quarter that hurt it, but the guidance and extraordinary back-items did hurt.  Oh yeah, and the CFO left the company. Ouch.

The worst timed analyst call on Wall Street this week: A.G.Edwards on Cardica (NASDAQ:CRDC).  Shares in Cardica (CRDC) fell of a cliff after an A.G. Edwards analyst downgraded the stock on muted enthusiasm for its new surgical product. The fellow must have felt a bit embarrassed after the stock popped 20% initially on news the company "received a key European approval for its new device for connecting blood vessels during heart bypass surgery." This call wasn’t the analysts fault, but was probably still a problem.  In the financial markets you can be right on your call and accurate in your prediction, but you can still go bankrupt because of other issues.

I have always known that the way the current ethanol mandates in the US were implemented and how they are mandatory was a slick sales job at best, even though I am a supporter of alternative and renewable energy.  But a report surfaced this week that gave the "Climate Change" crowd a jump over the "Global Warming" crowd.  Apparently, those who claim to have lower emissions are, well, exaggerating or just lying.

Who said there is no such thing as a funny side of Wall Street?

Jon C. Ogg
September 14, 2007

Posted on: September 14, 2007 – 3:58 pm in The Week, , , , ,

The 52-Week Low Club

First Acceptance (FAC) Tough quarter for auto insurer. Drops to $4.94 from 52-week high of $11.77.

Bowater Incorporated (BOW) Loses abitration with Weyerhause. Down to 14.60 from 52-week high of $29.96. Business combination with Abitibi approved.

Abitibi-Price (ABY) Shareholders seem unhappy with marriage with Bowater. Down to $1.72 from 52-week high of $3.51.

Harley-Davidson (HOG) Bad numbers continue to dog the hog. Down to $46.35 from 52-week high of $75.87.

ACE*COMM (ACEC) Delisted from Nasdaq. Falls to $.42 from 52-week high of $1.92.

Neurobiological Technologies (NTII) Loss in last quarter. Drops to $.57 from 52-week high of $3.22.

Encysive Pharmaceuticals (ENCY) Biopharma drops to $1.46 from 52-week high of $7.10.

Douglas A. McIntyre

Posted on: September 14, 2007 – 3:29 pm in HI/LOW, , , , , , ,

As Media Touts Nuclear Power, Time To Review Nuclear & Uranium Stocks (CCJ, USU, SGE, FLR, GE, URRE, USEG, URZ, CAU, MOS, CF, NLR)

It seems like the media is touting and flaunting more and more for a return of nuclear energy.  This may or may not happen as the applications are again for "Next Year" and it is with no surprise that it’s becoming the topic of much labor in Mexico pronounced "Man-ya-na" (sorry no N~ without changing languages).    You can also see where spot Uranium prices have come down significantly from the pre-summer ramp and summer highs.  TradeTech’s Uranium site shows its price chart for Uranium and The Ux Consulting Company shows much of the same.  But with $80.00 per barrel of oil and T. Boone Pickens calling for even higher oil prices you never know just how long the "call for nuclear power" will take to resurface from the investment community.  Nuclear power is getting more media coverage again. 

Let’s assume for a moment that we forget about the discussions leading to delays that have been perpetual.  Let’s for get about the political side of nuclear power.  Lets forget about killing land under mountains where we’ll bury the stuff in Nevada.  And let’s forget about the potential environmental catastrophe that can result if something goes horribly wrong.

There are many stock plays in the U.S. alone that will be huge beneficiaries of this if even one nuclear power plant approval goes through.  If there is one, why not the full dozen of them.  Here is the lot of companies:

Shaw Group (NYSE:SGR) is perhaps the most vertical of the engineering and construction firms.  Fluor (NYSE:FLR) is also in there.  And we can’t leave out the monster General Electric (NYSE:GE) for new reactors, nuclear fuel, reactor services and performance services.

Cameco (NYSE:CCJ) out of Canada is THE go-to behemoth in the stock market for Uranium miners and producers.  The much smaller company in the US is USEC (NYSE:USU), although its shares were hit exceptionally hard Friday after testing started.  Some more smaller and much more speculative stocks in the sector are Uranium Resources, Inc. (NASDAQ:URRE), U.S. Energy Corp. (NASDAQ:USEG), Uranerz Energy Corp (AMEX:URZ), and even Canyon Resources Corporation (AMEX:CAU).  Mosaic (NYSE:MOS) and CF Industries (NYSE:CF) are stealth plays in the sector that can enrich uranium from phosphate, but you should know that prices have to be very high and have to be expected to remain very high for quite some time for those to be cost effective.

 

Read More »

Posted on: September 14, 2007 – 12:32 pm in Nuclear, , , , , , , , , , , , , , , , , , ,

Akamai (AKAM) Loses Motion in Limelight (LLNW) Suit, Will Likely Lose Case

From Silicon Alley Insider

Finally, some good news for battered CDN Limelight Networks (LLNW).  Akamai’s (AKAM) suit against Limelight for patent infringement was dealt another blow last week when the judge denied Akamai’s motion for immediate judgment.    continued here….

Posted on: September 14, 2007 – 10:04 am in Uncategorized

News Corp Looks To Ugly Negotiations With Apple

The president of News Corp (NWS) put it this way, according to Reuters: "I assume it will be prickly and dicey and contentious like all negotiations are and like all negotiations should be." Those are the talks between his company and Apple (AAPL) about renewing a deal to put NWS TV shows on iTunes. His comments to the press last week regarding the same subject we more conciliatory.

Like most content providers, NWS would like to set the rates charged for their programming on iTune. TV shows from the last week should be worth more than re-runs from 40 years ago.

But, Apple does not see it that way.

Will be interesting to see if News Corp walks away at some point.

Douglas A. McIntyre

Posted on: September 14, 2007 – 10:01 am in Media, ,

Will Adobe’s Earnings Help Set A New Trading Range? (ADBE)

Adobe Systems Inc. (NASDAQ:ADBE) will report earnings on Monday, September 17.  First Call consensus estimates for Adobe are $0.40 EPS and $789.25 million in revenues.  The company usually offers guidance, and its earnings scheduled for the December 17 report for the quarter ending November (also fiscal year end) are currently expected to be $0.44 EPS and $843 million in revenues.  If Adobe tries to offer any implied guidance for fiscal 2008, estimates are $1.71 EPS (a 13.2% EPS growth rate over 2007 expectations) and $3.4 Billion in revenues (a projected growth rate of 12.5% over 2007 estimates).

If the market has been shifty, Adobe has weathered the storm pretty well.  Shares are shifting back and forth between positive and negative in early trading today, but the $43.30 price is just over 3% down from the 52-week highs of $44.92.  The 52-week low is $36.75.  If you smooth out the last year, Adobe has been a trading range mostly between $38.00 and $44.00.

Analysts still look more positive than negative, and it appears that the average price target is about $48.00.  It may not be fair to use options analysis a weekend ahead of time and with expiration only 1-week away, but if you had to peg the contracts on a static snapshot right now the options traders appear to be bracing only for a move of up to a range of 2% to 2.5% based upon current prices.  Frankly, options are not all that active with about 19,000 contracts in the open interest if you combine the closest in-the-money and out-of-the-money contracts ($42.50 & $45.00) for September expiration.  The closest Put options mostly offset the calls as well. Adobe’s average daily stock volume is over 6.4 million shares.

If you want to see what it showed in its ADOBE INVESTOR DAY presentation in June, you can access it here on their website.

Jon C. Ogg
September 14, 2007

Jon C. Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. Special Situation Investing Newsletter and does not own securities in the companies he covers.

Posted on: September 14, 2007 – 9:48 am in Earnings, Software, , , ,

IPO FILING: EXCO Partners LP, An MLP Spin-Off of EXCO Resources (XCO,XP)

EXCO Partners, LP has filed to come public via an IPO with 75 million units in a proposed offering of $1.725 Billion.  This is a limited partnership recently formed by EXCO Resources, Inc. (NYSE: XCO) to acquire, exploit and develop oil and natural gas properties that will trade under the "XP" stock ticker on the NYSE.  Assuming that this is not a figure for filing purposes only, then the pricing indicated on this is $23.00 per unit.  The underwriters listed for the offering are Goldman Sachs, Citigroup, UBS, JPMorgan, Merrill Lynch, Morgan Stanley, and Wachovia.

In connection with this offering, EXCO will contribute proved developed producing oil and natural gas wellbores to this LP in its East Texas/North Louisiana, Mid-Continent and Permian operating areas. EXCO will also contribute all of its properties, including its undeveloped properties, in its Appalachian operating area.  As of June 30, 2007, total estimated proved reserves were 895.8 Bcfe, of which 92% were natural gas and 82% were classified as proved developed.  Its properties consisted of working interests in 8,869 producing wells, which it owned a 79% average working interest. EXCO is the operator of 8,036 of its total wells, which represented 94% of total estimated proved reserves as of June 30, 2007. Based on average net daily production for the month of June 2007 of 167.9 Mmcfe/d, total estimated proved reserves had a reserve-to-production ratio of 14.6 years. In addition, based on oil and natural gas prices as of June 30, 2007, it had an inventory of 4,900 drilling locations in Appalachia, of which 1,787 were proved, representing 159.5 Bcfe, or 18%, of total estimated proved reserves. EXCO Partners’ total estimated proved reserves represented approximately 49.8% of EXCO’s total estimated proved reserves as of June 30, 2007.

This lists its primary business objective to maintain its asset base over the long term in a manner that will allow quarterly cash distributions to unitholders at the initial quarterly distribution rate of $0.35 per common unit.  It then wants to grow its asset base to enable increases of this quarterly distribution rate.  Based on a $23.00 per unit pricing, assuming that is accurate, and based upon a $1.40 annual dividend rate ($0.35 per quarter) this will have a proposed dividend yield of 6.08%. 

Shares of EXCO Resources, Inc. (NYSE:XCO) are trading down 1% to $16.07 after the open today, although this is about 1% higher than the opening lows.  Shares of XCO have a $1.7 Billion market cap, and the 52-week trading range for the stock is $12.44 to $19.70.  XCO has been paying no dividend of its own.

Jon C. Ogg
September 14, 2007

Jon C. Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. Special Situation Investing Newsletter and does not own securities in the companies he covers.

Posted on: September 14, 2007 – 9:11 am in IPOs, Oil & Gas, , , ,

IPO FILING: Pogo Jet (POGO)

Pogo Jet, Inc. has filed to come public via an IPO of up to $103.5 million under the propposed ticker of "POGO" on NASDAQ.  It lists only W.R.Hambrecht & Co. as the underwriter, so this is under the OpenIPO platform.

For starters, Pogo is a start-up airline, but it has an industry name behind it.  It intends to be a leading provider of private on-demand jet charter service, initially in the Northeast, Mid-Atlantic, Ohio Valley and Carolinas. The target service area includes major metro markets of New York City, Philadelphia, Washington, DC, Boston, Cleveland, Cincinnati, Pittsburgh, Detroit, Toronto, Montreal and Charlotte, as well as the regions surrounding these markets. Its executive team is led by Robert Crandall, who served as the CEO & Chairman of American Airlines parent AMR from 1985 to 1998.  Julian Robertson is also one of the key backers of Pogo.

Jon C. Ogg
September 14, 2007

Posted on: September 14, 2007 – 8:21 am in Airlines, IPOs, , , , , , , ,

IPO FILING: Varolii

Varolii Corp. has filed to come public via an IPO and said it plans to sell up to $86.25 million in stock under the stock ticker of "VRLI" on NASDAQ, although this dollar amount is nominal and just for filing purposes.  Lehman Brothers and JP Morgan Securities are listed as the joint book-runners; and co-managers are William Blair, JMP Securities and RBC Capital Markets.

This is a Seattle-based software company which allows businesses to communicate with customers and groups over multiple channels including voice, text messages, email, and online notifications.  It even uses pagers and fax, if anyone still uses these for major alerts anymore.  Varolii’s on-demand hosted platform handles more than 3.5 million notifications during each business day.  Here are some of the features notifications:

  • flight cancellation notices,
  • medicine/medical notifications,
  • customer notifications,
  • scheduling of service calls,
  • credit card fraud detection alerts, 
  • and the beloved bill payment reminders.

For the six months ended June 30, the company posted revenue of roughly $31.6 million, up about 40% from the $23.2 million in the same 2006 period; and the company showed that it had slightly narrowed losses to $3.2 million, from $3.3 million.  Some of the company’s key customers include Alaska Air, Dell, Delta, Deutsche Bank, Time Warner Cable, UPS.

Jon C. Ogg
September 14, 2007

Posted on: September 14, 2007 – 8:10 am in IPOs, Software, , ,

Another Strong Month For Video Game Sales (NTDOY, MSFT, ERTS, TTWO)

NPD has its data out for the month of August showing another massive month in video game sales.  Game titles and hardware showed roughly a 46% combined gain over August 2006.

The Nintendo (NASDAQ/PK:NTDOY) Wii still took the lead with over 400,000 consoles selling.  The negative part of this is that this represents a 5% sequential decline from July.  And the other downside is that Wii-nies won’t be playing Halo 3 in less than two weeks like every Xbox 360 owner will be.

The Xbox 360 from Microsoft (NASDAQ:MSFT) sold over 276,000 consoles in August after announcing price cuts.  The Xbox 360 crowd is obviously looking forward to this Halo 3 record breaking launch, because even early last month it came out that Halo 3 had pre-sold over 1 million copies of its blockbuster game.

Take-Two Interactive (NASDAQ:TTWO) also won out with its BioShock game title selling 491,000 units.  Shares of TTWO are indicated higher pre-market.  Electronic Arts (NASDAQ:ERTS) Madden NFL 2008 sold 897,000 units.

While the comparables for year over year from 2007 compared to 2006 are strong, you know this is going to set a huge benchmark for 2008 that will be tough to show this same sort of growth.

Jon C. Ogg
September 14, 2007

Posted on: September 14, 2007 – 7:36 am in Video Games, , , , , , , , , , ,

Alexa Looks At Major Financial Websites

After looking at the Nielsen and comScore ratings of the audiences of major financial websites, 24/7 Wall St. turned to Alexa. Alexa shows a website’s three month average reach against all other websites in the world. It then ranks the sites accordingly. The data also shows the website’s traffic ranking trend.

The figures for financial sections of sites like Yahoo! (YHOO) and AOL cannot be shown because they are rolled into the parent website’s numbers.

Like the other measuring services, Alexa show Forbes.com with a substantial lead followed by Reuters, WSJ.com and MarketWatch. The last two sites are owned by Dow Jones (DJ).

Further down the list are sites including the Motley Fool, the FT, and McGraw-Hill’s (MHP) BusinessWeek.com

Website                            Alexa Ranking     Trend

Forbes                              484                     Up 58 places

Reuters                            529                      Down 16

WSJ                                1,096                    Down 87

MarketWatch                   1,109                    Down 172

Bloomberg                       1,246                    Up 102

BusinessWeek                1,352                     Down 99

TheStreet                        1,745                     Up 131

Fool                                1,842                     Down 18

FT                                   2,755                     Up 25

Economist                       3,668                      Down 48

CNBC                              6,615                      Up 1,095

Data from Alexa

Douglas A. McIntyre

Posted on: September 14, 2007 – 7:26 am in Media, , ,

Pre-Market Analyst Calls (September 14, 2007)

ANW started as Buy at Jefferies.
AVY cut to Neutral at RWBaird.
AXP cut to Neutral at Merrill Lynch (indicated down 1% to 2%).
BOBJ cut to Neutral at First Albany.
CHD started as Neutral at UBS.
EGP started as Outperform atRWBaird.
ENER started as Buy at Jefferies.
ESLR started as Hold at Jefferies.
FLR cut to Hold at Citigroup.
FTI started as Buy at Jefferies.
IMCL Cut to Mkt Perform at FBR (shares down 3%).
BBEP raised to Outperform at Wachovia.
CLMS raised to Outperform at CRedit Suisse.
GGC raised to neutral at Credit Suisse.
INTC cut to Neutral at Merrill Lynch (shares down almost 2%).
NKTR started as Neutral at B of A.
PALM raised to Outperform at Morgan Keegan.
RIMM started as Outperform at BMO (maybe transition coverage, shares up 1%).
ROP cut to Mkt Perform at FBR.
TGI raised to Buy at B of A.
TPTX started as Strong Buy at JMP Securities.
UTX raised to Outperform at Bernstein.
VIP cut to Peer Perform at Bear Stearns.
WY raised to Buy at B of A.

Jon C. Ogg
September 14, 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 14, 2007 – 7:11 am in Analyst Calls, , , , , , , ,

Intel & American Express Downgrades Hurting the DJIA (INTC, AXP, MER)

Intel Corp. (NASDAQ:INTC) shares are trading down about 1.7% in very earlybird trading this Friday.  The bulge bracket brokerage firm Merrill Lynch has downgraded the processor giant shares from a "Buy" rating down to the beloved "Neutral."  First and foremost, this downgrade looks like a transition in coverage inside the brokerage firm.  It says it expects Intel to benefit from a healthy PC demand, but notes that at 18-times CY2008 EPS that it is at the high-end of its recent valuation range.

American Express (NYSE:AXP) was also downgraded at Merrill Lynch from a "Buy" rating to a "Neutral."  2008 EPS were cut to $3.85 from $3.96 and even 2009 cut to $4.20 from $4.33.

Ironically, this downgrade that includes American Express is having a share indication impact on Merrill Lynch’s own share price.  There have not been trades yet that crossed the tape pre-market, but indications have the stock around $74.00 to $74.60, versus the $75.14 close yesterday. 

Sometimes butchers do cut their fingers off if they take too wide of a cut.

Jon C. Ogg
September 14, 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 14, 2007 – 6:53 am in Analyst Calls, , , , , , ,

Google’s Powerpoint Killer

According to The Inquirer, Google (GOOG) is about to launch a product to go head-to-head with Microsoft (MSFT) Powerpoint. That will add to Google word processing and spreadsheet offering and bring it a bit closer to suite offered in Microsoft Office.

Bad news for Redmond.

As the UK website points out, Google’s product is cheaper than Office and may well be set up to run on Google’s servers instead of the PC’s own processor and storage.

Douglas A. McIntyre

Posted on: September 14, 2007 – 6:42 am in Software, ,

Mortgage And Bank Stocks: Save Investors, Open The Books

Shares in Northern Rock, a big UK mortgage company are down almost 30% on news that the Bank of England had to provide emergency loans. Shares in CountryWide (CFC) are off 50% in less than two months. Bear Stearns (BSC) is down over 20% in the last quarter.

The big problem facing the markets is not what has happened to these companies in the past. It is a fear of what shoe will drop next. How bad it will be. How sudden and unexpected.

There is a way around all of this. It is risky and would require a lot of work by banks and financial institutions.

All of the public investment banks, money center banks, and mortgage banks should file their loan and investment portfolios with the SEC. As soon as possible. For some institutions, this could be tens of thousand of pages. But, in the computer age, supplying them is at least possible.

Some market experts and economists would argue that, if the figures were grim, it could case a massive drop in the markets and runs on hedge funds and banks. But, bit by bit, that is happening now anyway and every Northern Rock and CFC will make the activity accelerate.

Lance the boil and be done with it. There is no transparency. And, that is leading to a slow death for the markets

Douglas A. McIntyre

Posted on: September 14, 2007 – 6:26 am in Financial Stocks, ,

Europe Markets 9/14/2007

Markets in Europe fell as a mortgage company in the UK has to be rescued by the government

The FTSE fell 1.9% to 6,242. Barclays (BCS) was down 3.2% to 591.5. British Air (BAB) fell 3.4% to 379.5. Norther Rock, the troubled lender, fell 23.5% to 489.

The DAXX was off .9% to 7,470. Commerzbank fell 4.8% to 27.02. DeutscheBank (DB) fell 1.5% to 89.8. Siemens (SI) fell 3.4% to 86.25.

The CAC 40 fell 1% to 5,511. Alcatel-Lucent (ALU) fell 21.5 to 6.48. BNP Paribas fell 3.4% to 72.28. Societe Generale fell 3.7% to 111.8.

Data from Reuters

Douglas A. McIntyre

Posted on: September 14, 2007 – 6:12 am in Uncategorized, , , ,

Verizon Pushes Back On FCC

The FCC decides that in the next auction of wireless spectrum, it would set aside part of the airwaves for open use. Consumers would be able to use whatever devices could connect on those frequencies and download applications as they wished. It would be a partial end to the closed systems where cellphone companies picked up real estate at the auctions and only allows their customers with their phones to use it.

Google (GOOG) and several other companies had pushed the "open airwaves" program and the FCC has agreed that it is a good idea.

Verizon Wireless does not.

The big telecom joint venture between Verizon (VZ) and Vodafone (VOD) is taking its case to the federal appeals court claiming that the FCC is "exceeding its authority in requiring carriers to open their networks to any devices and cellphone applications."

While Verizon may not win the case, it could, according to The Wall Street Journal "give Verizon a leverage point in its private discussions with Google, which has been shopping plans to offer Google-powered phones to various cellphone companies, including Verizon."

But, the case goes well beyond that, and Verizon is, up to a point, right in confronting the FCC. The agency is asking for billions of dollars for the new spectrum. It is then telling the buyers.that they should undermine their own businesses by letting consumers use the airwaves for whatever devices and software they want. Buy the spectrum and then give it away.

If the government wants consumers to have access to the airwaves, to use them as they see fit, fine. Let the FCC open up that spectrum without an auction. Give it to the citizens. They do pay taxes. But, don’t expect companies to pay for the privilege.

Douglas A. McIntyre

Posted on: September 14, 2007 – 5:56 am in Wireless, , ,

Is McDonald’s Walking Out On Wal-Mart?

McDonald’s (MCD) used to be the exclusive fast food supplier in Wal-Mart (WMT) stores. Subway is now taking over a number of those spots. According to The Wall Street Journal, Subway is now in 1,419 Wal-Marts compared with 1,021 McDonald’s.

The Subway people would like the world to believe that Wal-Mart wants the image of selling healthy food, and not hamburgers and French Fries with milkshakes the size of a VW. There may be some truth to that, but there is also some evidence that McDonald’s may not be renewing its leases in Wal-Mart stores and Subway is getting its spots because there is a vacuum

McDonald’s is making a lot of its big money by staying open 24 hours a day and serving breakfast to the world-weary at 5 PM. Drive throughs make up a lot of its business. Wal-Mart locations are ill-suited to these new tactics.

It may be that McDonald’s is just taking its burgers and leaving.

Douglas A. McIntyre

Posted on: September 14, 2007 – 5:39 am in Retail, ,

Dell Delays Second Quarter Report

Dell (DELL) will delay its second quarter 10-Q due to continuing work on restatements of past quarters. It still expected to file the document in November, but hardly needed another headache.

Douglas A. McIntyre

Posted on: September 14, 2007 – 5:22 am in Earnings,

Can Nokia And Motorola Get Upgraded At The Same Time?

Several analysts have upgrades shares in Motorola (MOT). The reasoning is that, with new models coming out, and much of the backlog in inventory for old products like the RAZR drying up, MOT could have a good fourth quarter.

But, Lehman has upgraded Nokia (NOK) and raised its price target to $38. The shares now trade just above $38. The reasoning behind the upgrade, according to Barron’s, is "a raft of new phones in the fourth quarter, the addition of touch-screen capabilities to some phones" will give the company improved sales in the last part of 2007 and well into 2008. Lehman also said that Nokia’s global market share could move to over 40%. Recently it has been closer to 25%.

Someone has to be wrong about all of these handset providers. Samsung recently passed Motorola at the world No.2 supplier of wireless phones. Sony Ericsson has been growing very fast and is adding models that will help it get into China and India. And, the overall market for handsets is not growing quickly now, perhaps less than 10%.

Motorola has done so poorly over the last year and its product release program is so vague, that it is still probably the company that has the worst chance of improving its fortunes over the next year. That will make for a tough ride for its long-suffering shareholders.

Douglas A. McIntyre

Posted on: September 14, 2007 – 5:19 am in Analyst Calls, ,