Monthly Archives: September 2007

Memo To BigBand (BBND) Board: Fire The CEO

TO: Lloyd Carney, Dean Gilbert , Ken Goldman, Gal Israely, Bruce Sachs, Robert Sachs, Geoff Yang

RE: Amir Bassan-Eskenazi, BigBand CEO

As members of the BigBand (BBND) board of directors, it would seem appropriate that you find a new CEO. None of your investors would have expected, especially after looking at your S-1, that the BigBand business would fall apart in a matter of months.

BigBand’s stock is now down from $21.63 to $6. The company was downgraded by several research firms. The board may have the opportunity to get things back on track, but the time is probably short. The chance of class action suits goes up each day.

Your stock chart is starting to look like Vonage’s (VG).

Douglas A. McIntyre

Posted on: September 28, 2007 – 8:45 am in Management Change, ,

SPAC IPO FILING: Sports Properties Acquisition Corp. (HMR, TAXI)

Sports Properties Acquisition Corp. filed to sell 20 million units at the traditional $10.00 per unit, and the company is granting an overallotment allowance of 3 million more shares.  Sports Properties is taking the proposed ticker "HMR" on the American Stock Exchange and so far lists only Banc of America Securities as the lead underwriter.

The company is a SPAC, a special purpose acquisition company, so it has no existing operations.   This was formed to acquire, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction, joint venture or other similar business combination, one or more domestic or international operating businesses.  It intends to focus efforts on companies that create, produce, deliver, distribute, market content, products and services pertaining to the sports, leisure or entertainment industries.

Here is tha management team:

  • Tony Tavares, President and Chief Executive Officer, is the former CEO and President of SMG, a premier management company engaged in the private management of stadiums, arenas, theaters and convention facilities.
  • Jack Kemp, Chairman, was the Republican Vice Presidential candidate in 1996k former AFL quarterback.
  • Andrew Murstein, Vice Chairman and Secretary, has served as the President and a director of Medallion Financial Corp. (NASDAQ:TAXI), a publicly traded investment company, since its IPO in 1996.
  • Richard Mack, Director, is a senior partner at Apollo Real Estate Advisors.
  • Henry "Hank" Aaron, Director, the unjuiced homerun king of major League baseball.
  • Mario Cuomo, Director, is a former three-term Governor of the State of New York.
  • Randel Vataha, Advisor, is a former Stanford football player and NFL wide receiver.
  • Robert Caporale, Advisor, is a former sports and entertainment law attorney who has represented a number of professional sports leagues and franchises.

A unit consists of 1 common share and 1 warrant with a $7.50 strike price per unit.  Maybe investors will get to own another public sports team since these have essentially all gone private.  Prior public sports teams were the Cleveland Indians and Boston Celtics, and the Green Bay Packers are one of the community owned and quasi-public companies (that you can’t buy a share in easily).

Jon C. Ogg
September 28, 2007

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

Posted on: September 28, 2007 – 8:14 am in Entertainment, IPOs, , , , , ,

AMD Gets A Downgrade

Research firm AmTech has downgraded shares of AMD (AMD) over concerns of late introduction of its new Barcelona chips and poor uptake. The report indicated that Q3 and next year will be rougher than Wall St. thought.

The news comes a day after Intel’s (INTC) chairman claimed that his company was taking market share from AMD. The smaller firm’s shares dropped about 3% as the day wore on.

Douglas A. McIntyre

Posted on: September 28, 2007 – 7:56 am in Uncategorized, ,

Pre-Market Stock News (September 28, 2007)

(BBND) BigBand Networks traded down almost 30% on earnings and revenue warning.
(CBS) CBS has created CBS EyeLab, a site of short clips from its shows to attract web views who only want to spend a few minutes watching video.
(COMS) 3COM reportedly being sold to Bain Capital and Huawei; stock halted up 32%.
(CRA) Celera received $2M milestone payment from Merck.
(DELL) Dell will sell computers in Wal-Mart stores in Brazil and Mexico.
(DIS) Disney reportedly closed its cellular service.
(DUF) Duff & Phelps priced its IPO at $16.00.
(FCSX) FC Stone trades ex-split today.
(FMCN) Focus Media raised 2007 targets.
(GOOG) Google’s free ad-based phine getting more media coverage; facing harder battle ovver DoubleClick acquisition.
(NOV) National Oilwell Varco trades ex-split Monday.
(PCL) Plum Creek noted positively on ethanol help on "Inside Wall Street" in Business Week.
(SEH) Spartech announced a 2M share buyback plan.
(SIRI) Sirius trading down over 1% on concerns over FCC comments.
(SPWR) SunPower partnering with Macy’s to install solar power in stores in California.
(TWTC) Time Warner Telecom noted positively on "Inside Wall Street" in Business Week.
(UEIC) Universal Electronics noted positively by analysts on "Inside Wall Street" in Business Week.
(WCC) Wesco announced a $400M buyback plan.

Jon C. Ogg
September 28, 2007

Posted on: September 28, 2007 – 7:39 am in Pre-Market Activity

3Com’s Rescue Plan….A Sale (COMS)

3Com (NASDAQ:COMS) may be a long-standing disaster story on its own, but shares are up 30% pre-market.  The Wall Street Journal has reported that 3Com is about to be acquired by private equity firm Bain Capital and Cinese equipment maker Huawei for more than $2 Billion.  This will reach more than $5.00 per share if the reports are accurate, representing more than a 50% premium. 

Shares of COMS were halted at 8:06 AM EST up 32% at $4.88 in pre-market activity and had traded 1.44 million shares.  This is one of those stocks that we had featured as one that management couldn’t fix.  Maybe private equity and the Chinese can.

Jon C. Ogg
September 28, 2007

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

Posted on: September 28, 2007 – 7:31 am in Mergers and Buy Outs, Rumors, Technology Companies, , , ,

Will Ford (F) Kill UAW Deal?

The Detroit News is reporting that Ford (F) does not want the same deal that the UAW offered GM (GM). It wants a much better one. That might PO the union. As a matter of fact, it probably will.

The union could go along with a better deal with Ford, but GM might resent that. According to DetNews "executives at Ford Motor Co.already worry that it (GM’s deal) may not cut costs deep enough for them."

"Of course, GM would scream bloody murder," said Sean McAlinden, chief economist for the Center for Automotive Research.

The labor deal with the car companies is not done yet, Not by a long shot.

Douglas A. McIntyre

Posted on: September 28, 2007 – 7:08 am in Autos, ,

Pre-Market Analyst Calls (September 28, 2007)

BIDZ started as Buy at Roth Capital.
BBND cut to Mkt Perform at Morgan Keegan.
CMG cut to Hold at Citigroup.
CNO raised to Outperform at FBR.
CRAI raised to Outperform at William Blair.
CFR raised to Outperform at KBW.
CNB cut to Underperform at KBW.
CPF cut to Underperform at KBW.
CSFL cut to Underperform at KBW.
FHN cut to Underperform at KBW.
FTEK started as Outperform at JMP Securities.
GBE started as Outperform at JMP Securities.
HAR raised to Outperform at Bear Stearns.
IPGP started as Outperform at Bear Stearns.
LNUX started as Buy at Merriman Curhan Ford.
LUM raised to Hold at Deutsche Bank.
MMM started as Buy at UBS.
MWE started as Outperform at Morgan Keegan.
NWA started as Neutral at UBS.
RSTI started as Outperform at Bear Stearns.
SE cut to Hold at Jefferies.
SNV raised to Outperform at KBW.
THO raised to Sector Perform at RBC.
WCC started as Outperrform at CIBC.
WYN started as Buy at Deutsche Bank.

Jon C. Ogg
September 28, 2007

Posted on: September 28, 2007 – 7:00 am in Analyst Calls

Microsoft (MSFT) To Keep XP Shipping: Bad News For Vista?

Microsoft (MSFT) says it will continue to ship is old-world OS, XP, for another six months. It is the product which was to be replaced by Vista.

Does that mean that Vista is in trouble because customers still want the older OS?

Maybe. But, if the life of the XP product is extended again, there is reason to worry.

Douglas A. McIntyre

Posted on: September 28, 2007 – 6:59 am in Software,

Bone Head Research Call Of The Day: Morgan Keegan On BigBand (BBND)

The folks at investment house Morgan Keegan were good enough to downgrade broadband infrastructure company BigBand (BBND), a recent IPO.

The bank dropped its rating from "outperform" to "market perform". The change was certainly very late, and its is surprising that the company was not posted as an outright sell.

BigBand’s take on its Q3 performance was that it now expects to report revenue in the range of $35 to $39 million, which is below the company’s previous guidance of $54 to $58 million. Nice work. The company also said that it will lose money. The stock fell almost 30% after hours and will probably trade around $6 or $7 today. That would be a 52-week low by a wide margin. The company traded as high as $21.63 right after it went public.

The Morgan Keegan clients may not take much comfort in the ratings change.

Douglas A. McIntyre

Posted on: September 28, 2007 – 6:07 am in Analyst Calls,

M&A Falls 43% In Q3

There was some hope that as mortgage problems and hedge fund headaches took down shares and earnings of investment banks like Lehman (LEH) and Morgan Stanley (MS) that global M&A fees would take up some of the slack. In its earnings announcement, Goldman Sachs (GS) said it liked its M&A pipeline going forward.

But, Goldman may be alone. A study by Dealogic picked up by the FT, shows M&A activity off 43% in the third quarter when compared with the immediately previous period. Most bankers believe that, if there is no recession, business could pick back up again.

The bankers should not hold their breath. Not only is the economy softening, but the private equity transactions that helped built M&A practices over the last two years have gone away. And, company-to-company mergers are unlikely to pick up the slack.

It’s an M&A recession, and it may well be a long one.

Douglas A. McIntyre

Posted on: September 28, 2007 – 5:57 am in Mergers and Buy Outs, , ,

CBS Goes YouTube

The management at CBS (CBS) have finally caught on that most people do not want to watch feature length video content on PCs. The screens are small and sound systems weak. Old people like their TVs better. Young people don’t watch TV

What YouTube has proven is that clips which are a few minutes long are endlessly fascinating, especially to teens and twenty-somthings. This dawned on CBS when a video of short edited clips of its "CSI" show got over one million views at YouTube. The network had not made the video. Some pirating young kid did.

No matter whose fault it was, CBS decided to start CBS EyeLab, "a digital-production studio that will create and distribute short clips cut together from the network’s most popular shows," according to The Wall Street Journal.

If this works well, what does it mean for the other networks? There is Hulu and NBC’s direct download of entire shows. ABC is doing the same thing. Several movie studios have download deals going with the likes of Amazon (AMZN).

If the short clip plan works at CBS, it will be a sign that, once again, simple and inexpensive solutions often trump ones that are expensive and overdone. It’s the law of the jungle.

Douglas A. McIntyre

Posted on: September 28, 2007 – 5:48 am in Media, ,

$90 Oil By Christmas

Many Americans will be asking for a gallon of gas in their stockings this year. Oil hit $83 a barrel yesterday. Storms in the Gulf again.

And, storms in the Middle East, Nigeria, and Venezuela. Tight supply out of OPEC. And, China sucking up oil like a vacuum.

Oil bears want Wall St. to believe that prices are rising because hedge funds are putting money into oil futures and because the dollar is weak  But, oil is rising because the world is beginning to run out of the black gold. There is no reason for the Saudis or the oil companies to increase supply even if they could. It is not good for business.

The government of Dubai is going around picking up everything from a big piece of the Nasdaq (NDAQ) to commercial real estate.

With the price of oil likely to move to $90 as the winter sets in for the Northern Hemisphere, Dubai may end up owning a lot more assets in the free world.

Douglas A. McIntyre

Posted on: September 28, 2007 – 5:34 am in Oil & Gas,

Coke (KO) and Pepsi (PEP): Soft Drinks In A Soft Economy

Coca-Cola (KO) and Pepsi (PEP) keep making new highs. Yesterday, Coke hit $57.33, a few pennies from its 52-week peak. At $72.62, the same is true of Pepsi (PEP). So far this year, both companies have out-performed the market by wide margins.

Conventional wisdom is that the companies are now diversified. They have a large portion of their business overseas. But, the have real headwinds. Commodities prices are rising. Soft drinks are not the medical community’s No.1 suggestion for a healthy diet.

No, the stocks are doing well for the same reason that McDonald’s (MCD) is. People can always afford a can of Coke. Even when making the mortgage payments is tough.

As the economy contracts, Coke and Pepsi are signature businesses for the kind of operation that will not get hurt. What they sell is inexpensive, and almost everyone likes it.

Douglas A. McIntyre

Posted on: September 28, 2007 – 5:25 am in Food, , ,

Why A Global Market Collapse Will Begin In China

Most experts believe that, when a sharp drop in the global stock markets comes, and it will one day, the fall will begin in the US. It could be triggered by a slowing economy, falling corporate earnings, or trouble in the housing industry.

But, the S&P is up less than 15% this year, and there are not many stocks making 52-week highs. The market may be OK, but it appears to have at least a modest amount of risk built in.

Looking across the Pacific to China, the story is completely different. The Shanghai Composite made another new high overnight. It has more than doubled since the beginning of January.

Perhaps more impressive is the number of Chinese stocks hitting 52-week highs, even when they trade on US exchanges. Yesterday, China BAK Battery (CBAK) rose 20% in Nasdaq trading to make a new high. China Fire & Security (CFSG) made a new high on Nasdaq as well. So did China Fin Online (JRJC).

On the NYSE, nine of the 25 new highs reached yesterday where Chinese companies. These include huge operations China Telecom (CHA), China Unicom (CHU), China Mobile (CHL), PetroChina (PTR), China Petroleum (SNP), and China Life (LFC). These are not small, speculative stocks. Some of the shares in these large companies have almost tripled from their lows.

What is impressive is that the move up is not in one sector. It is spread across telecom, energy, finance, and industrial stocks.

China’s GDP is growing at 10% or so. A significant run-up in markets there is too be expected. But, there is plentiful evidence that the share price of many companies is out-stripping near-term potential.

A fall in global markets begins in China.

Douglas A. McIntyre

Posted on: September 28, 2007 – 5:16 am in China, , , , , , , , ,

Why is Yahoo! (YHOO) So Successful In Japan?

Unlike Yahoo! (YHOO) in the US, Yahoo! Japan shares are in the middle of their 52-week trading range. And, the Yahoo! sites lead all others in terms of total unique visitors, According to comScore, Yahoo! Japan had 41.1 million unique visitors during August. Google (GOOG) was second with 30.9 million.

In most large countries in Europe, Google leads Yahoo!. And in China, both are behind sites like Baidu (BIDU), but Google still does better than its rival.

Why is Yahoo! different in Japan? Perhaps the most important thing is that the company has several large shareholders including Softbank, a large multimedia company with interests in broadband, telecom, and wireless operations.

Yahoo! might like to buy-out Softbank, but having a relationship with a major infrastructure company in the country give the portal access to distribution, like wireless, that it might not have so easily in the US and Europe.

There have been many rumors about Yahoo! being sold. But, the company might be much smarter to look for a large distribution network company like Comcast (CMCSA) or AT&T (T) to be a holder.

It seems to work well in Japan.

Douglas A. McIntyre

Posted on: September 28, 2007 – 4:58 am in Internet, , , , ,

Media Digest 9/28/2007 Reuters, WSJ, NYTimes, FT, Barrons

According to Reuters, Goldman Sachs (GS) offered $1.5 billion for reinsurance broker Benfield

Reuters writes that Alan Greenspan thinks the chance of a US recession is still below 50/50.

Reuters reports that the head of Freddie Mac says the chance of a US recession is close to 40% to 45%.

The Wall Street Journal writes that Google (GOOG) is facing a battle in the US Senate over is purchase of DoubeClick.

The Wall Street Journal reports that AT&T (T) is planning to buy companies overseas and offer telecom services worldwide.

WSJ writes that CBS (CBS) has created CBS EyeLab, a site of short clips from its shows to attract web views who only want to spend a few minutes watching video.

WSJ said comments by the head of the FCC cast some doubt on the Sirius (SIRI) merger with XM.

WSJ writes that Dell (DELL) will sell computers in Wal-Mart stores in Brazil and Mexico.

The New York Times writes that Disnye (DIS) has shut down its cellphone service.

FT writes that the global M&A market fell 42% in the third quarter.

FT also writes that Intel (INTC) says that a large number of jobs will go overseas if healthcare cost in the US keep rising.

Barron’s writes that Big Band (BBND) cuts its forecasts driving the stock down more than 20%.

Bloomberg reports that oil moved up sharply to $83 a barrel.

CNN Money writes that the EPA found the Japanese cars are still more fuel efficient than those made by US companies.

Douglas A. McIntyre

Posted on: September 28, 2007 – 3:24 am in Press Digest, , , , , , , , , ,

Asia Markets 9/28/2007

Markets in Asia were mixed.

The Nikkei fell .3% to 16,786. Canon (CAJ) rose 2.6% to 6270. NTT (NTT) rose 1.7% to 537000. Toyota (TM) rose 1.3% to 6780.

The Hang Seng rose .6% to 27,224. China Life (LFC) rose 4.1% to 45. China Petrolaum (SNP) rose 3.1% to 9.75.

The Shanghai Composite rose 2.6% to 5,532.

Data from Retuers

Douglas A. McIntyre

Posted on: September 28, 2007 – 2:55 am in Uncategorized, , , , ,

Alcatel-Lucent (ALU) CEO Faces Firing Squad

The board of Alcatel-Lucent (ALU) has told CEO Pat Russo that she needs to come up with an "emergency restructuring plan" for the company, according to the FT. It’s hard to say what took them so long. Shares in the telecommunications equipment company are down over 30% this year. The company seems to cut its earnings estimates every month.

Research firm Dresdner Kleinwort has just calling on Alcatel-Lucent to replace Ms Russo with Mike Quigley, former chief operating officer. It cut its rating on the company to "hold" and suggested that a new restructuring plan should plan for firing 30,000 people, not the 12,500 that management has set as a target.

While the FT says that the board has not told Ms. Russo that here job is on the line, investors should hope that she has already figured that out.

The time for her to leave has already passed.

Douglas A. McIntrye

Posted on: September 27, 2007 – 6:43 pm in Telecom,

Another Reason GM (GM) And Ford (F) Can’t Sell Cars: Fuel Mileage

GM (GM) can cut all of the costs it wants to, and get a world class contract with the UAW. And, Ford (F) can follow suit. But, if they can’t sell cars, over time it will not matter.

In the current world of high fuel costs and a sinking feeling about the economy, most drivers probably look at fuel-efficiency when they buy a car.

The Environmental Protection Agency came out with its new rankings for fuel use. No one should be surprised that Honda (HMC) and Toyota (TM) were at the top of the list. Across its model line Honda’s averaged 22.9 mpg and Toyota 22.8.

Over at GM, the mpg average was 19.4 and at Ford 18.7. The head of Ford did run part of Boeing (BA) where the mpg for the airplanes is low, so it may take him some time to get around to the notion that cars have smaller engines than jets do.

Chrysler did poorly with an average mpg of 18.3.

The Japanese fleets which are about 20% more fuel-efficient than the Americans. That’s too big a spread.

Douglas A. McIntyre

Posted on: September 27, 2007 – 6:16 pm in Autos, , , ,

Earnings Slaughterhouse: BigBand Networks (BBND)

BigBand Networks Inc. (NASDAQ:BBND) has been a long and hard ride into Uglyville.  This company came public as a "Hot IPO" earlier this year and it was a hot potato.  But hot potatoes cool quickly, and they cool really fast when you break them apart and expose them.   The company has severely cut revenues forecasts of an original $54 to $58 million down to a new range of $35 to $39 million.  It’s also going to have a loss.

You can read the company’s excuses if you want, but it doesn’t really matter.  The company has lost all forms of credibility and is going to be turned on by its underwriters for making them look so bad after a premium pricing.  Having great products doesn’t cut it sometimes when you are competing against power-house companies because they offer full end-to-end solutions and can undercut you simply for the sake of doing it.

The analysts at the underwriters started this with positive ratings back in April.  Now they are covering a firm called "The One Man Band."  This looks absolutely shameful.

Jon C. Ogg
September 27, 2007

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

Posted on: September 27, 2007 – 4:26 pm in Earnings Warning, ,