Daily Archives: September 17, 2007

New York Times Online Exits Paid Content

The New York Times (NYT) killed its online paid content section–Times Select. The service has 227,000 subscribers and brought in about $10 million a year, at a company that has well over $3 billion in annual revenue.

NYT says that it is close to bringing in 10% of its total revenue from online operations. With the pace at which print revenue is dropping, the internet sales at the company must move up very quickly. The problems with ad revenue caused Merrill Lynch to drop NYT to a "sell" today.

With the end of Times Select, that company is betting that it will increase pageviews to it website as content that was available to a limited number of people can now be seen by anyone who visits NYTimes.com. Probably a good idea

Douglas A. McIntyre

Posted on: September 17, 2007 – 6:50 pm in Internet,

The Business Day In Global Warming (GE, BLDP, UTX, PX, FWLT, PBOF, OPTT, YGE, FPL, GWSO)

If you haven’t heard of the 4th Annual Energy Tech Conference, from October 3 to 4, 2007, in San Jose, California, it might be worth looking at.  There will be clean-tech, green tech, VC’s and even traditional power companies there.

Apparently, some new company is out in the alternative energy and green tech sector if you trust the name, although you are on your own because they are on the OTC PINK SHEETS.  Global Warming Solutions (PINKSHEETS:GWSO) issued a corporate update.

Florida Power & Light Co. (NYSE:FPL) today asked the Florida Public Service Commission (PSC) for permission to expand power production capacity at its currently operating Turkey Point and St. Lucie nuclear power plants.

Yingli Green Energy Holding Company Limited (NYSE:YGE) entered into a new mid to long term agreement with Wacker Chemie AG of Germany.  Wacker will supply Yingli Green Energy with polysilicon from 2009 to 2011. The total amount of polysilicon supplied will allow Yingli Green Energy to produce over 80MW of PV modules over the life of the agreement.

Ocean Power Technologies, Inc. (NASDAQ:OPTT) announced its results for the first quarter of its fiscal year ending April 30, 2008. Revenues were $556,000 compared with $305,000 in the three months ended July 31, 2006; net loss of $2.4 million in the first quarter of fiscal 2008 compared with a net loss of $1.7 million in the first quarter of fiscal 2007. Stock fell 3.2% to $13.27, still with a $135 million market cap.

PennFuture: Wind Energy Vital to Pennsylvania’s Economy, Environment and Public Health…. This is music to General Electric’s (NYSE:GE) ears as they are the top wind power turbine maker in North America. 

Northeast Advanced Vehicle Consortium signs contracts on Six New Fuel Cell Bus Projects with Federal Transit Administration:  State-of-the-Art Fuel Cell Buses to be deployed In Connecticut, Massachusetts and New York.  UTC Power, GE Research, New York Power Authority, Nuvera, Massport, CT Transit,  Ballard Power Systems, New Flyer, and others to be involved.  STOCK TICKERS: UTX, GE, BLDP.

Praxair, Inc. (NYSE: PX) and Foster Wheeler North America Corp., a US subsidiary of Foster Wheeler Ltd. (Nasdaq: FWLT) have signed a multi-year agreement that calls for the joint pursuit of certain demonstration projects that will incorporate clean coal technologies and integrated oxy-coal combustion systems into coal-fired electric generating plants to facilitate capture and sequestration of carbon dioxide (CO2).

Pure Biofuels Corp. (OTCBB:PBOF), a leader in the South American biofuel industry, today announced the closing of a $30 million round of private financing consisting of a $10 million convertible note and a $20 million secured credit facility.

Goldman Sachs today issued its new Super Spike price band for oil saying we are in Phase 2 of the cycle.  This now lays out the possibilities for up to $135 per barrel and up to $4.50 per gallon at the pump. Remember, this isn’t a prediction these go there, it’s just a range for super-spikes in prices based upon today’s conditions.  They did give new actual targets though, and the call is for higher prices to remain.

Jon C. Ogg
September 17, 2007

As a reminder, whether you prefer the term "Global Warming" or "Climate Change" is not the issue as far as 24/7 Wall St. covers it.  Green business has become big business, and this affects many public companies today.

Posted on: September 17, 2007 – 6:04 pm in Alternative Energy, , , , , , , , , , , , , , , ,

Cramer Thinks Grant Prideco Is Overlooked (GRP)

Cramer on Tonight’s MAD MONEY said he is endoring oil services, but not just because of Goldman Sachs’ upgrade of its base prices today.  If you already own these you might not want to chase with additional funds, but Cramer has one that has been missed and overlooked if you don’t have any energy stocks.

The one overlooked is Grant Prideco (NYSE:GRP).  He thinks it has lagged significantly and has 22 manufacturing facilities in the US, Canada, Mexico, and elsewhere.  This makes the drill bits that oil companies keep burning through, and the pricing power is significant.  The company has been doing very well, but the stock hasn’t.  The CEO is notorious for over-promising and over-delivering.

This might not be totally unknown and overlooked after you take a look at the others in the sector: $6.8 Billion market cap; up over 60% from year lows and down about 11% from its 52-week highs.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 5:25 pm in Cramer, Oil & Gas, ,

Cramer’s Israeli Satellite TV Play (RRST)

On tonight’s MAD MONEY on CNBC, Jim Cramer discussed a company that he thinks would be immune from the dependence of the FOMC and Bernanke.  The company is Israel-based and it is doing satellite uplinks for many Arabic and Middle-Eastern television stations.  RRSat Global Communications (NASDAQ:RRST) only has a $300 million market cap, and he said don’t buy it yet.  Wait a week and only use a limit order.  He thinks this can grow in the satellite TV market and may reach a $1 Billion market ultimately.

Someone didn’t take his advice on after-hours buying because shares went up 5% to $19.50 after closing down 1.7% at $18.65 in normal trading on thin volume.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 5:10 pm in Cramer, , ,

E*Trade, Missing The Obvious (ETFC, AMTD, SCH)

E*TRADE FINANCIAL Corp. (NASDAQ:ETFC) announced it is exiting or restructuring non-core businesses that "lack a direct and strategic connection with its retail customers."   It’s also getting an earnings whack: is revising its 2007 outlook for the full year 2007 GAAP net income of between $450 million and $500 million, and earnings per share of between $1.05 and $1.15 per share.  This is down from its previous range of $1.53 to $1.67.

The Company is increasing the provision for loan losses due to charge-offs expected as a result of the disturbance in the credit markets.  Despite all the factors, the Company confirms that its balance sheet funding sources remain sound and the Company remains well capitalized based on regulatory standards. 

Given the significant deterioration in the mortgage market in August and particularly the pace of change in the performance of home equity loans in August, the Company expects charge-offs of $95 million dollars and total provision expense of $245 million in the second half of 2007. The majority of this provision is expected to be recorded in the third quarter. With this additional reserve, allowance for loan losses as a percentage of non-performing loans is expected to increase to 75 percent based on assumptions for the second half of the year, up from 45 percent on June 30, 2007. Within home equity loans, where the Company and the marketplace have seen the most significant stress, the coverage will be approximately 100 percent, up from 51 percent as of June 30, 2007.  Embedded in the Company’s modified guidance is an assumed securities impairment of up to $100 million in the second half of 2007. The Company will exit its wholesale mortgage operations and will streamline its direct mortgage lending business to focus on its retail franchise, and it sees $32 million in charges as a result in the fourth quarter.

Things were different a month ago when E*TRADE (NASDAQ:ETFC) stated that it has seen no material changes to date with respect to the availability, pricing or margin on its wholesale funding sources, including repurchase agreements.  But the truth is that one of the rumors out there was over significant mortgage losses, and the company only partly addressed that at the time.  This could even make one think they were just pulling words out of the air because of how critical the environment was at the time.  Wink, Wink!  Management maintained that it didn’t believe that the current market capitalization accurately reflects the financial strength and performance of the business.

Here was what the company released with its statement a month ago:
    * The Company’s $15.7 billion first lien mortgage portfolio is supported by high FICO scores, low Loan-to-Value ratios (LTV) and private mortgage insurance
    * All first lien mortgage loans with an 80% or higher LTV are protected by private mortgage insurance
    * $9.2 billion, or 74%, of its home equity portfolio is to borrowers with FICO scores of 700 and higher
    * $12.6 billion, or 99%, of mortgage-backed securities are rated AAA
    * 97% of its Asset-backed Securities portfolio is rated investment grade
    * Consistent and growing base of retail customer cash
    * $10 billion in excess wholesale borrowing capacity from the Federal Home Loan Bank

There may actually be a silver lining if you can act like Dr. Pangloss for a moment, although it’s hard to imagine being optimistic and fully trusting of management right now.  If Joe Moglia at TD Ameritrade (NASDAQ:AMTD), or even Charles Schwab (NYSE:SCH), is interested in pursuing a deal it probably just got a lot cheaper to do.  The other silver lining is that company press release also stated, "Given the expectations for limited balance sheet growth going forward, the capital needs of the overall business will be reduced – creating opportunities in higher return investments such as accelerated share and debt repurchase activity or other initiatives to strengthen the business."

Shares closed down 1.25% at $14.21 in normal trading, but shares are getting a 10% haircut in after-hours with shares at $12.75.  The 52-week lows of $9.92, but if this new level holds on Tuesday it will mark the lowest closing levels (again, assuming this weakness holds) since mid-2005.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 4:27 pm in Brokerage Firms, Earnings Warning, , , , , ,

Lehman Set To Lead Broker Earnings Ahead of the FOMC (LEH, BSC, MS, GS)

We compiled a summary of the key brokers reporting this week, and here you can see a full detailed preview that we offered on Friday for the whole sector with more detailed data:

Lehman Brothers (NYSE:LEH) reports on Tuesday (9/18) and estimates are $1.47 EPS & Revenues of $4.3 Billion.  Estimates were a dime higher two weeks ago and were $1.81 EPS 60 to 90 days ago.

Morgan Stanley (NYSE:MS) reports on Wednesday.  Morgan Stanley is expected to post $1.53 EPS & $8.3 Billion in revenues.  Estimates were $1.60 two weeks ago and were over $1.82 90-days ago.

On Thursday (9/20) we get the dual reports from Bear Stearns (NYSE:BSC) and from Goldman Sachs (NYSE:GS).  Bear Stearns (NYSE:BSC) is expected to post $1.78 EPS on $1.65 Billion in revenues.  Just two weeks ago, estimates were over $2.00, and were $3.00+ over 60 to 90 days ago.  Goldman Sachs (NYSE:GS) is expected to post $4.35 EPS & $9.55 Billion in revenues.  Goldman Sachs has seen the least amount of estimate changes of the bulge bracket firms.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 3:48 pm in Brokerage Firms, Earnings

The 52-Week Low Club

Enterra Energy (ENT) Canadian oil and gas investment company suspends monthly distribution payments to unitholders for at least six months to repay debt. Falls to $1.85 from 52-week high of $10.30.

PHH (PHH) Mortgage and vehicle fleet company was going to be bought by Blackstone (BX) and GE (GE). But, market environment seems to have killed that. Drops to $22.51 from 52-week high of $31.52.

Marsh & McLennan (MMC) Big insurance brokerage company fires head of largest unit. Down to $24.60 from 52-week high of $33.90.

Alcatel-Lucent (ALU) Telecom equipment company get downgrade after revising forecast down. Falls to $8.53 from 52-week high of $15.43.

Moody’s (MCO) Ratings agency under more pressure for bad ratings. Drops to $42.42 from 52-week high of $76.09.

Central Garden & Pet (CENT) Bad weather conditions and volatile grain prices. Down to $9.26 from 52-week high of $55.11.

Douglas A. McIntyre

Posted on: September 17, 2007 – 3:30 pm in HI/LOW, , , , , , , ,

Adobe Cruises Past Estimates: Are New Stock Highs Coming?

Adobe Systems Inc. (NASDAQ:ADBE) shares are indicated higher in after-hours trading after the company posted earnings.  Adobe posted record revenue of 41% over 2006 at $851.7 million, compared to $602.2 million reported for the third quarter of fiscal 2006 and $745.6 million reported in the second quarter of fiscal 2007.  Adobe’s third quarter revenue target range was $760 to $800 million, and estimates were almost $790 million.

Non-GAAP diluted earnings per share for the third quarter of fiscal 2007 were $0.45. This compares with non-GAAP diluted earnings per share of $0.29 reported in the third quarter of fiscal 2006, and non-GAAP diluted earnings per share of $0.37 reported in the second quarter of fiscal 2007. Adobe’s third quarter non-GAAP earnings per share target range was $0.39 to $0.41, and estimates were $0.40 EPS.  Adobe’s non-GAAP operating income was $340.9 million in the third quarter of fiscal 2007, compared to $207.2 million in the third quarter of fiscal 2006 and $282.1 million in the second quarter of fiscal 2007.

Non-GAAP net income was $269.4 million for the third quarter of fiscal 2007, compared to $171.5 million in the third quarter of fiscal 2006, and $223.2 million in the second quarter of fiscal 2007.  As a percent of revenue, non-GAAP operating income in the third quarter of fiscal 2007 was 40%.

Bruce Chizen, chief executive officer of Adobe: "Our record results were driven by outstanding Creative Suite 3 adoption and continued Acrobat momentum.  As we near the end of fiscal 2007, we remain well positioned for continued double digit revenue growth."

Fourth Quarter GUIDANCE:  For the fourth quarter of fiscal 2007, Adobe announced it is targeting revenue of $860 million to $890 million with GAAP operating margin of approximately 30% to 31%. On a non-GAAP basis, the Company is targeting an operating margin of approximately 41%. GAAP earnings per share target range of approximately $0.35 to $0.37 and non-GAAP it is targeting earnings per share of approximately $0.46 to $0.48.  STREET ESTIMATES ARE $0.44 on revenues of $843 million, so the company still appears to be firing perfectly on all cylinders.

Shares closed down 0.8% in normal trade at $43.06, but shares are up almost 4% at $44.70 in after-hours activity.  The prior 52-week high is $44.92, so these after-hours levels will be critical for technicians tomorrow.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 3:25 pm in Earnings, Software, , , ,

Yahoo!: Bring Back Terry Semel

Since Terry Semel left the CEO seat at Yahoo! (YHOO) the stock is down over 10% and recently that number was closer to 20%.

Yahoo! announced today that it has paid $350 million to buy Zembra, an open source e-mail and calendar company. Now it can compete with Google (GOOG) Apps and Microsoft (MSFT) Office. Like going after an elephant with a water pistol.

Yahoo! has also announced that it will start a social network called Mash. There are only about 1,000 companies in that business, lead by MySpace and Facebook.

Yahoo! also just bought a news-aggregation Web site called BuzzTracker. And, the company is selling display ads for UK-based social network Bebo. Display advertising is not growing very fast anymore, especially compared to the kind of search-based ads they do so well over at Google (GOOG).

If there does not seem to be a pattern here, it is because there is not one. Yahoo! is throwing sh-t at the wall and hopes that some of it will stick. Any other explanation is beyond what the human mind can comprehend.

Douglas A. McIntyre

Posted on: September 17, 2007 – 3:08 pm in Management Change, , ,

Ahead of BEA Systems Investor Presentation, Carl Icahn May Be Wasting His Time (BEAS)

Carl Icahn is a powerful investor when he wants to be.  As far as BEA Systems (NASDAQ:BEAS) he increased his stake in a filing on Friday to more than 33 million shares to what amounts to an 8.5% stake in the company.  His take on BEA Systems is that consolidation has hurt growth and that the company would do better as a unit of a larger parent. 

BEA Systems used to be one of the perpetual takeover rumor stocks out there.  But the problem is that this company cannot be bossed around.  The company is still delinquent in some of the required filings, and it is deemed to be a company that Alfred Chuang (the Founder, Chairman, CEO, and President) can enact anti-takeover provisions.  That may have changed, but that is still the belief of many tech investors.

We previously asked if BEA Systems was any closer to a buyout offer.  BEA has been a perpetual stock where the company has said it wants to remain independent, and the belief is that this can ONLY be done on a friendly basis.

Shares closed up almost 4% at $13.25 on Friday and are up marginally at the end of today.  It seems that many others also that Carl Icahn may only be marginally successful in this particular instance.  BEA Systems’ head of investor relations is set to speak at a Bank of America conference Tuesday. September 18, at 4 PM Pacific Time, so this may be one to watch later today if this gets addressed.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 2:58 pm in Software, , , ,

CEOs: Economy OK, Hiring Tough

The latest survey of the members of Business Roundtable, big company CEOs, show that, on average, they still expect good GDP growth this year–about 2.4%.

According to The New York Times, 68% believe that their company’s sales will increase in the next six months, but only 33% expect to increase hiring in the US.

But, if the companies aren’t hiring, who will contribute to all of those sales increases?

Douglas A. McIntyre

Posted on: September 17, 2007 – 2:46 pm in Research

Apple iPhone Price Will Be Handicap In Europe

In the wireless markets in Europe, they give the phones away. Even the super-nice ones like the Nokia (NOK) N 95. And, the really souped up handsets work on 3G networks.

Analysts watching for the launch of the Apple (AAPL) iPhone in Europe next week believe that the release of the product could be fairly good news for almost everyone in the market. The iPhone’s high end features should get consumers to look at competing devices that most carriers give away as part of callling plans.

According to Reuters: " Analysts said Apple is likely to benefit from its strong brand and dedicated followers when starting European sales, but a limited offering and signing deals with just one telecom operator per country would put a lid on its sales hopes." The carriers without the iPhone will be helped by the market being stimulated by such a popular multimedia handset.

The iPhone–a rising ship lifts all tides?

Douglas A. McIntyre

Posted on: September 17, 2007 – 1:27 pm in Wireless, ,

Shareholders Riding To Hell On A Harley (HOG)

Two Fridays ago, shares of Harley-Davidson, Inc. (NYSE:HOG) fell some $5.00 to under $50.00 for the first time since Summer of 2006.  From last Summer shares did rise more than 40% before the end of 2006, but it is obvious that weaker housing, credit woes, weak autos, a tired consumer, deteriorating credit scores, and a myriad of other conditions aren’t helping the company at all.  Even supercharged foreign purchasing from a weak dollar isn’t helping the company offset weak US-sales.

Today, shares are at yet another 52-week low at $46.30, under the $46.35 lows from last Friday.  Since Hog’s shares have fallen so much two Fridays ago, it has only seen one single day where shares closed up for the trading session.  That cannot continue forever.  But the stock was in trouble long before this last dive.  Shares started around $70.00 at the start of 2007 and slid steadily into the warning. 

Before today, this has seen 30 million shares trade hands since two fateful Fridays ago.  A lot of this can be attributed to institutions selling, but a lot of the selling is from Joe Q. Public.  Unless institutions are deciding that they want to try bottom fishing into a hoped-for rate cut from the FOMC, it seems as though there could be more block selling in the stock.  We do not have the September short interest yet, but the short interest in Agust actually shrank to 14.9+ million shares from the 16.5+ million shares in July. 

Stocks that hit 52-week lows do eventually recover.  But many of the traditional financial institutions don’t try to catch a falling knife.  Harley-Davidson as a brand has one of the most loyal customer bases out there that has crossed well into the upper-income brackets, and with almost a $12 Billion market cap has roughly 30% of its share float owned by retail investors.  When this turns back up it will turn fast.  Very fast.  The question boils down to from what share price that will be the case.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 10:37 am in HI/LOW, , , ,

Another Downgrade For The New York Times

Shares of The New York Times Company (NYT) are off as much as 2.5% today to a 52-week low on another analyst downgrade. Merrill Lynch cut the shares to "sell" from "neutral." The firm also put a "sell" rating on McClatchy (MNI) and Lee Enterprises (LEE), two other newspaper stocks.

The research call is late, very late. It has been evident for almost two years that falling print advertising was destorying the financial future of newspapers. Most have onlne editions, but they often produce little more than a few percent of overall revenue at major chains

The question now is where the newspaper industry will turn. It could being to cut circulation in a bid to save paper and distribution costs. It takes the risk that the readers will not move to the online version of the paper to get their news.

The other option is to begin to sharply cut the salaries of newspaper employees. Most papers have unions, but the reality of the crisis is not lost on them. Lower salaries would save some jobs. For now.

Douglas A. McIntyre

Posted on: September 17, 2007 – 10:25 am in Analyst Calls, , ,

InfoSpace Sells Online Directory, But Is Still A Dog

InfoSpace (INSP) is selling its online directory business to  Idearc Inc (IAR) for $225 million. INSP shares are up 28% on the news to $17, but still well below their 52-week high of almost $28.

In the second quarter, INSP revenue dropped sharply to $70 million from $95 million. And, the company posted an operating loss of $33 million.

While the online business which is being sold had segment income of $16 million on revenue of $40 million, the mobile business, which INSP is keeping had a segment loss of $ 4 million on revenue of $31 million.

In other words, the better business is being sold.

Douglas A. McIntyre

Posted on: September 17, 2007 – 8:51 am in Mergers and Buy Outs, ,

InfoSpace Finally Sells, At Least Partly (INSP, IAR, GOOG)

InfoSpace (NASDAQ:INSP) has been one of the perpetual old "internet value stocks" that circulated as a takeover stock because of the relative market cap to asset value, but the value was somewhat skewed because the company is no longer profitable and isn’t expected to be for the near future.  Google (NASDAQ:GOOG) never made the company completely irrelevant, but the search functions that were available for free on Google bit into much of InfoSpace’s core operations that it led the pack in before 2002 or 2003 and that it was able to charge large premiums for.

This morning, InfoSpace (INSP) announced it is selling its Switchboard.com and other online directory assets to Idearc, Inc. (NYSE:IAR).  Idearc is paying $225 million from cash and short-term borrowings.  Shares of InfoSpace are up about 24% pre-market at $16.50, still in the lower-end of the $12.56 to $27.76 range over the last year.

unfortunately, InfoSpace hasn’t been profitable and analysts have been looking for losses in both 2007 and 2008.  It is also expected to see declining revenues.  As of June 30, the company had $197.79 million in cash and short term investments and total liabilities of $72.29 million; net tangible assets were listed as $350.89 million.  Its market cap before this was listed as $439.5 million, so an an interpolated basis it would have a new market cap of $550 million.

This is part of the Board of Directors’ ongoing review of our company and the opportunities available to enhance value for shareholders.  Upon completion of the transaction, InfoSpace expects to return the net proceeds from the sale to shareholders as a special cash distribution.  At closing, InfoSpace’s cash position is expected to be in excess of $400 million.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 8:29 am in Dividend, Internet, Mergers and Buy Outs, , , , , , ,

Goldman Sachs Major Oil Changes (APA, FST, KWK, KGS, EP, XOM, FTO, HES, MUR, OXY, CVX)

Goldman Sachs this morning made some significant "Super-Spike" era calls where it said oil could reach $135 per barrel and noted up to $4.50 per gallon of gasoline at the pump for you and me, although its actual base targets are not at that level.  It has hiked integrated oil earnings estimates and maintaining "Attractive Ratings" on the sector to include exploration and production.  2008 and 2009 estimates have been raised for oil services and deepwater drillers, and made the following price base price assumptions for oil per barrel and natural gas ($/MMBtu):

  • 2008 $80.00/$8.50
  • 2009 $90.00/$10.00
  • 2010 $80.00/$8.50
  • 2011 $75.00/$7.50

Oil Services estimates raised 6% in 2008 and 16% 2009.  Estimates unchanged for offshore drillers due to high contract coverage in deepwater markets and increasing uncontracted supply in the shallow water market.  Increased price targets by 7% on average for oil service stocks and by 5% on average for deepwater levered drillers.

Even after Apache Corp. (NYSE:APA) was raised to Buy last week, Goldman Sachs is adding it to the CONVICTION BUY LIST, replaces Forest Oil Corp. (NYSE:FST) on the list.

Quicksilver Resources (NYSE:KWK) continued as Buy/Attractive as performed well since announcing asset sales last week.

QuickSilver Gas Services L.P. (KGS) started as Buy with a $27 target over 12 months.

Other estimates increased (partial list): El Paso (EP), Exxon Mobil (XOM), Frontier Oil (FTO), Hess (HES), Marathon Oil (MRO), Murphy Oil (MUR), Newfield Exploration (NFX), Occidental Petroleum (OXY), Petro-Canada (PCZ), Suncor Energy (SU), Sunoco (SUN), Canadian Natural Resources (CNQ), Chevron (CVX), Apache (APA).

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 8:05 am in Analyst Calls, Oil & Gas, , , , , , , , , , ,

Goldman Sachs Major Oil Changes (Up To $135 Per Barrel Super-Spike)

This morning Goldman Sachs has made some major changes to its integrated oil and refining universe to reflect new commodity price assumptions, as well as changes in many cost structures ahead.  The overall rating is still listed as "Attractive" for both integrated oil and for refining. 

Goldman Sachs is calling it as now being in Phase 2 of a multi-year "Super-Spike" era.  It says the lower ends of the $50 to $105 per barrel oil and $8 to $15 per barrel USGC refining margin range has not caused demand to fall.  Its base case forecasts now reflect the upper portion of that band with $80 per barrel oil in 2008 and $90 per barrel in 2009.  It also sees refining margins at $14 per barrel in 2008 and $16 per barrel in 2009. 

Goldman Sachs has raised the high-end of its super-spike price range now and lists $135 per barrel of oil as the high-end, $25 per barrel in refining margin, and even lists $4.50 per gallon as the high-end of a super-spike price on gasoline at the pump.  It does clarify that prices may not need to go this high to lower demand, but says that this similarly is not a ceiling.

Goldman Sachs also named a slew of companies we will include in an updated story.  Over the weekend, we noted a scenario that could justify even higher prices than this, and just last week T. Boone Pickens called for higher oil prices without any definitive targets being noted.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 7:24 am in Analyst Calls, Oil & Gas, , , , ,

Pre-Market Stock News (September 17, 2007)

(ALVR) Alvarion won a WiMAX contract from Digicel Group in the Cayman Islands.
(CTSH) Cognizant Tech announced a 2 for 1 stock split and authorized up to $100 million for share buybacks.
(CX) CEMEX raised revenue projections and said it may divest more assets in US and Europe.
(EDO) EDO Corp. is being acquired by ITT Corp. for 41.19 Billion
(HEPH) Hollis-Eden Pharmaceuticals announced the filing of IND for phase I/II clinical trials with HE3286 in inflammation diseases.
(IART) Integra LifeSciences announced that it received 510(k) clearance from the FDA to market the DuraGen XS Dural Regeneration Matrix in the US.
(IFF) International Flavors announced a $450 million accelerated share buyback as part of its existing $750 million plan.
(LEAP) Leap Wireless rejected the MetroPCS offer.
(MSFT) Microsoft’s $613 million fine in Europe upheld after losing its appeal.
(NFX)  Newfield Exploration is selling North Sea business for $486 million.
(NOK) Nokia is acquiring Enpocket.
(OMPI) Obagi Medical filed to sell up to $100 million in securities.
(PAET) PAETEC Holding to acquire privately held McLeodUSA for $557 million in stock.
(SAI) SAIC won a contract option exercise by NASA from 2004 valued at an additional $205.9 million.
(SNIC) Sonic Solutions announced a multi-year licensing agreement with RealNetworks (RNWK) for Sonic AuthorScript, the company’s media formatting and CD/DVD burning engine.
(TPC) SunCom Wireless Holdings Inc. being acquired by Deutsche Telecom’s T-Mobile.
(ULBI) Ultralife Batteries won a $24 million contract from Raytheon (RTN) for SATCOM-On-The-Move systems.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 7:11 am in Pre-Market Activity, , , , , , , , ,

Pre-Market Analyst Calls (September 17, 2007)

ALU cut to Neutral at UBS.
AON raised to outperform at Morgan Stanley.
AMD raised to Neutral at JPMorgan.
BEBE raised to Outperform at Wachovia.
BKCC started as Outperform at Wachovia.
BRCD raised to Buy at Citigroup.
BTI cut to Underweight at Lehman.
CSX raised to Buy at UBS.
DAI started as Outperform at Bear Stearns.
EJ started as Outperform at CIBC.
F raised to Outperform at Bear Stearns.
HIRE started as Outperform at CIBC; started as Neutral at Baird, and started as Mkt Perform at Piper Jaffray.
KGS started as Buy at Goldman Sachs.
MASI started as Outperform at Piper Jaffray; started as Buy at Deutsche Bank; started as Neutral at Cowen & Co.
MCC cut hold at Citigroup.
SUNH raised to Buy at UBS.
TIN raised to Buy at UBS.

Jon C. Ogg
September 17, 2007

Posted on: September 17, 2007 – 7:02 am in Analyst Calls