Daily Archives: October 11, 2007

Cramer Sends Chipotle South of the Border (CMG)

On tonight’s Thursday SELL BLOCK feature on CNBC’s MAD MONEY, Jim Cramer said the time has come to sell Chipotle (NYSE:CMG) after he’s been behind it for what feels like forever.  Cramer said he loves the food and loves the company, but he can’t like the stock amymore up at $129.00.  He thinks this trading at too high of a multiple and the first hint of a hiccup will generate a big correction.  Even if it runs another $20.00, he’d rather be out.  He acknowledged that the growth rate could go up and that it could outperform, but he’d be out and he has his limits.  "Sell and if it goes lower you can revisit……" but it’s too high.  Shares fell 2% at $126.37 after-hours.

Jon C. Ogg
October 11, 2007

Posted on: October 11, 2007 – 5:50 pm in Cramer, Food, , ,

Why GE’s (GE) Earnings Don’t Matter

GE (GE) reported earnings in line with expectations and it is unlikely that the stock will move up or down much more than a couple of percent. Market watchers are fond of reminding Wall St. that GE trades about where it did in January 2002. Jack Welch is gone. And GE will never be a dynamic company again. And, so it goes.

There is a simple reason that GE’s  stock does not move much with earnings and probably won’t any time soon. It is the same problem that Microsoft (MSFT) has now. GE has a couple of large divisions that represent the lion’s share of the company’s earnings power. The other three or four segments usually cancel each other out. One has a good quarter and a couple of other are weak. They take turns.  Here was our full comprehensive earnings preview for GE’s quarter.

In the first half of the year, GE’s top line grew 10%. Earnings from continuing operations rose 12%. In the third quarter, reveneu was up 12% and earnings from ongoing operations were up 7%

GE’s big infrastructure unit had a 20% improvement in revenue in the first six months. It is one-third of the company’s entire revenue. GE’s commercial finance business grew 15%. It is one-sixth of the company’s revenue. Another sixth is the industrial segment, which was flat. The movements in the health-care and entertainment operations were close to being rounding errors.

In terms of segment profits, the same issues apply. Infrastructure profits rose 26% in the first half. Commercial finance was up 19%. The industrial numbers were up very slightly. The units together were more than two-thirds of segment profit. The infrastructure piece was 37% of segment profit all on its own.It did not matter much if the entertainment segment did well or not.

In the third quarter, none of that changed much. Infrastucture reveue was up 19% to $14.5 billion. But segment profit rose only 12% to $2.6 billion. Commercial finance reveue was up 17% to $7 billion. But segment profit there rose only 12% to less than $1.5 billion. Industrial income was flat at $6.2 billion. Segment income rose 6%

There is an argument to be made that the entertainment unit, NBC Universal, drags down profits come. That is true. But, if it is gone, it might move revenue growth from 12% a year to 13%.

GE has a pattern now. It grows faster than the global economy, every quarter, quarter in and quarter out. It does not grow as fast as Google. The stock reflects all of that, and its should.

GE has broken out of its slump some. Over the last year, it is up about 15%, the same as the S&P 500. It has become, because of its size and diversity, a mirror of the large cap market in general. Absent some massive write-off in financial services, things will stay that way. Even that eventuality is priced in.

And, there is nothing wrong with that.

Douglas A. McIntyre

Posted on: October 11, 2007 – 5:35 pm in Conglomerates, ,

Cramer Hosts Pepsi’s Indra Nooyi (PEP)

Pepsico’s (NYSE:PEP) Indra Nooyi came on a telephone interview with Jim Cramer tonight on CNBC’s MAD MONEY.  Cramer said he was originally excited seeing the $0.99 EPS vs $0.96 estimate, but then he was disappointed when he saw the stock fall almost 2.5% on the report.  He thinks the food inflation is hurting it and he was disappointed with some of the unit growth.

Cramer then interviewed Ms. Nooyi said Pepsi is committed to 10% EPS growth.  She made her case about the bullish side of the equation, but Cramer said he wants to wait to wait now for an under $70.00 stock price before pulling the trigger. 

Frankly she sounded either a little defensive or maybe a little too surprised, particularly since she started out saying the equivalent of "I have no idea why the stock acted the way it did."  That’s life in the markets.  Sometimes good isn’t enough after a big run, although shares are only up about 16% from the lows over the last year.  Maybe that’s huge for a food and beverage company.

Jon C. Ogg
October 11, 2007

Posted on: October 11, 2007 – 5:22 pm in Cramer, Food, , , ,

Allegheny Warning Melts Metal (ATI, X, TIE)

Allegheny Technologies Incorporated (NYSE:ATI) said today that it expects full-year 2007 earnings per share to be in the range of $7.00 to $7.25 per diluted share in anticipation of lower second half 2007 earnings than previously expected. ATI expects third quarter 2007 earnings to be in the range of $1.85 to $1.88 per diluted share and further impacts in the fourth quarter.  As far as how this compares to estimates: Annual estimates are $7.95; Q3 is $1.96; and Q4 is $2.05.

Here are the two biggies, neither of which are overly comforting for serious metals bulls: Softness in demand for standard stainless sheet is continuing because of higher inventories at certain mills and depots and volatile raw material costs. In addition, a significant reduction in raw material surcharges and indexes is expected from the rapid decline in the cost of nickel, nickel-bearing scrap, and titanium scrap.

Allegheny says it sees continuing growth in demand for our high-value products from the global aerospace and defense, chemical process industry, oil and gas, and electrical energy markets. Shipments under long-term agreements in these markets should continue to grow over the next several years. There is at least one refreshing part: "We do not anticipate a significant impact from the recently announced delay in the Boeing 787 Dreamliner schedule."  Allegheny also says the softness in demand for standard stainless sheet appears to be bottoming out and inventory levels at distributors are low by historic measures. Demand for these products should begin to improve in early 2008 once the high inventories at stainless mills and depots are reduced.

Shares of Allegheny closed down 4% at $106.65 in regular trading today, but shares are down another 9% at $97.00 in after hours trading.  As ATI is roughly an $11 Billion market cap, this is spelling trouble elsewhere: United States Steel Corp. (NYSE:X) fell 1.3% today but shares are down 3% at $103.50 in after-hours; Titanium Metals Corp. (NYSE:TIE) fell 1.3% today but are down another 3.3% at $31.98 in after-hours.

Jon C. Ogg
October 11, 2007

Posted on: October 11, 2007 – 4:56 pm in Earnings Warning, Metals, , ,

ZipRealty needs to face REALITY

By Frank Lara, Correspondent to 24/7 Wall St.

ZIPRZipRealty, Inc. (NASDAQ::ZIPR) finished the day at $5.74 a share, a fry cry from its 52-week high of $8.49. Today (10/11) they cut their revenue outlook for the rest of the year and plan to eliminate jobs to reduce operating expenses but you just have to ask – will that really help?

It’s no secret America, we are experiencing a nationwide real estate slowdown that is impacting homebuilders, lenders, would-be home buyers, and ZipRealty is experiencing the pain first hand. Foreclosure filings across the U.S. nearly doubled last month compared with September 2006 to a total of 223,538 foreclosure filings, up from 112,210 in the same month a year ago, according to Irvine-based RealtyTrac Inc. People are struggling to make mortgage payments so would you really expect people to be flocking to ZipRealty’s website to do commerce based Real Estate deals? Of course not.

ZIPR

ZIPR now expects revenue of $97.5 million to $102.5 million, compared with its earlier forecast of $105 to $110 million. Considering that analysts on average were expecting revenue at a gracious $111 million, the Street responded by dropping the stock by 12% today. It doesn’t matter that ZipRealty plans to cut jobs at its corporate headquarters and field offices if America isn’t buying and selling homes, how can they possibly improve the stock price?

ZIPR is a ticker that shows up too frequently in the biggest loser category on a weekly basis. They could trim the company to 10 employees, it’s still not going to cure America’s housing crisis. ZipRealty said it expects to lower operating expense by about $4 million annually, I say that’s not enough. Tighter lending standards, ridiculous prices and a standoff between home buyers and sellers are expected to drive home prices and sales even lower in 2008. The problem our nation is facing is not just limited to California, Texas, Detroit or any other horror story real estate market you read about, it’s everywhere. The impacts of Subprime mortgages is going to continue to impact the entire real estate and homebuilding sector, it’s not going away. Foreclosure signs are all over the Country and I’m wondering how a company like ZipRealty can realistically survive in the coming months without watching its shares reach a new 52-week low every month? It’s just not rational?

Fancy web 2.0 or whatever they are calling it these day businesses cashing in on the real estate game have been handed a pink slip by the U.S. economy. ZipRealty, got their pink slip a few months back, so how long on the job do you really think they have left?

Posted on: October 11, 2007 – 3:55 pm in Housing

Electronic Arts Wants Its Own Halo; Buys BioWare & Pandemic (ERTS, MSFT)

Electronic Arts Inc. (NASDAQ:ERTS) has announced what is roughly an $800 million diluted (before any long-term debt absorption) agreement with Elevation Partners to acquire VG Holding Corp., the owner of both BioWare Corp. and Pandemic Studios. This acquisition is meant to give EA a stronger competitive position in key genres in interactive entertainment: action, adventure and role-playing games.

The two studios have been recognized for creating some of the highest-quality games in the industry.  BioWare Corp. and Pandemic Studios have ten franchises under development, including six wholly owned games. BioWare Corp. is currently developing the highly anticipated Mass Effect, which will be published by Microsoft in November (NOV. 20), and is in the early development stages of a massively multiplayer online game (think EverQuest or WOW, but not those per se).  Pandemic Studios and BioWare Corp. employ roughly 800 people across four studios located in Edmonton, Canada; Los Angeles; Austin; and Brisbane, Australia.

EA will pay up to $620 million in cash to the stockholders of VG Holding Corp. and will issue up to an additional $155 million in equity to certain employees of VG Holding Corp., which will be subject to time-based or performance-based vesting criteria. EA will also assume outstanding VG Holding Corp. stock options. In addition, EA has agreed to lend VG Holding Corp. up to $35 million through the closing of the acquisition.  The transaction is supposed to close in January 2008 and will be dilutive to EA’s 2008 EPS by $0.30 to $0.40 on a GAAP basis and by $0.05 EPS on a non-GAAP basis. 

Microsoft’s (NASDAQ:MSFT) Halo 3 is well over $300 million by now in sales for the first two weeks and the path for Bungie Studios to become its own independent company is going to potentially shake up the industry.  Sure sounds to me like they want their own version of Halo or WOW to me……..

We have been reviewing this upcoming "launch" of Bungie into its own company.  There are still more questions than there are answers.   But this will create a unique special situation investing scenario that will be made available first to subscribers of our Special Situation Investing Newsletter.   Shares of Electronic Arts closed down 2% at $58.69 today, but shares are down another 2.5% at $57.25 in after-hours trading.

Jon C. Ogg
October 11, 2007

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

Posted on: October 11, 2007 – 3:52 pm in Mergers and Buy Outs, Video Games, , , , , , , ,

Limelight (LLNW) Raises Q3 Guidance, Stock Up 8%

Limelight (LLNW), which has issued lackluster guidance for Q3 improved that forecast, and shares rallied over 8% after hours to $12.62.

The company announced that it expects 2007 third-quarter GAAP revenue to be in the range of $28.6 million to $29.1 million and non-GAAP revenue to be in the range of $27.5 million to $28.0 million, compared to earlier expectations of GAAP and non-GAAP revenue in the range of $27.0 million to $28.0 million and $25.5 million and $26.5 million, respectively, as provided on August 9, 2007.

Good news for all.

Douglas A. McIntyre

Posted on: October 11, 2007 – 3:43 pm in Uncategorized,

The 52-Week Low Club

Ruby Tuesday (RT) Low profits, analysts downgrades. Falls to $15.87 from 52-week high of $30.80.

United Microelectronics (UMC) Wall St. worried about contract chip makers. Off to $4.03.

Maidenform Brands (MFB) Bra business must be light. Drops to $14.62 from 52-week high of $24.49.

Inphonic  (INPC) Looking at "strategic options" and CEO stepped down. Falls to $.40 from 52-week high of $14.49.

Curagen Corp (CRGN) Drug trial fails and is abandoned. So are the shares. Down to $.90 from 52-week high of $4.99.

Sharper Image (SHRP) Retail sales were dying slowly, but now dying quickly. Drops to $3.17 from 52-week high of $14.16.

Douglas A. McIntyre

Posted on: October 11, 2007 – 3:10 pm in HI/LOW, , , , , ,

Baidu & Overinflated Bubble Pricing Lessons (BIDU, RIMM, GOOG, AMZN)

Baidu.com (NASDAQ:BIDU) is showing how vulnerable overinflated shares are when even a hint of bad news or "Less Good" news comes out.  A report out of JPMorgan deemed somewhat cautious is the culprit.  Now Baidu’s shares are DOWN OVER $50.00 FROM INTRADAY HIGHS.  These bubble stocks can rally and rally beyond what the valuations or fundamentals will merit.  If you were a trader in 1998 to 2000 you know that.  But when the air comes out it is one massive rush.  The NASDAQ was over 2,820 earlier, but now it is at 2,775 and the air is out at least for part of the day.

The Chinese stocks have made the endless runs like this before, only to give back huge percentages of losses.  VMWare (NYSE:VMW) is not Chinese, but it was making the same sort of gains.  VMware shares are now down over 5% and are down almost $14.00 from intraday highs.  Google (NASDAQ:GOOG) is also down $20.00 from its intraday highs.  Research-in-Motion (NASDAQ:RIMM) is now down some 8% on the day and down over $10.00 from intraday highs.  Amazon.com (NASDAQ:AMZN) shares are down 6% on the day. The list goes on and on.

The truth is that these stocks can swing back too.  But the lessons of the bubble every few years or so seem to get forgotten before the reminder of what can happen shows itself.  Sometimes the selling pressure is just profit taking, and sometimes it’s just selling because everyone else is selling.

Jon C. Ogg
October 11, 2007

Posted on: October 11, 2007 – 2:34 pm in ADR, HI/LOW, Internet, , , ,

TheStreet.com Hits Seven-Year High (TSCM)

TheStreet.com (TSCM) hit a seven-year high today at $13.72. It is hard to point to one factor driving the stock. Jim Cramer is as popular as ever, Wall St. probably is looking for a strong third quarter.

But, the reason for the move up in the shares could simply be an acknowledgment that online content has become very valuable. The premium that News Corp (NWS) paid for Dow Jones (DJ) is some indication of that. NBC recently bought cable company Oxygen.

There is increasing speculation about the value of private online content sites. CBS has recently acquired video financial site WallStrip.com. NBC bought news aggregation site Newsvine.

The cycle for TheStreet has been a long one. Like many other internet businesses, it was punished in 2000. The beating lasted a long time, but TSCM had company. Shares in CNET collapsed and really did not come back until 2004.

With a forward P/E of 20, TSCM is not expensive, even at its new high.

Douglas A. McIntyre. McIntyre was a member of the board at TSCM until 2005.

Posted on: October 11, 2007 – 1:43 pm in Media, , , , , ,

Sharper Image…Maybe Time To Close The Stores (SHRP)

If you follow retail stocks, it is no secret that Sharper Image (NASDAQ:SHRP) has not done that well.  In fact, this is becoming a case study on disaster management.  The company reported same-store-sales of -21%, and September’s total revenues fell to $19.6 million from $31.9 million in September 2006. 

Air purification sales were only 13% of sales this last month, versus 30% in September 2006.  There were also $3.5 million in infomercial sales counted in the September 2006 numbers (discontinued this in OCT 2006).  Without prior year infomercial sales, the total Company sales decrease in September was 31 percent. Total store sales were down 22% to $13.6 million compared to $17.5 million in the prior September.

Read More »

Posted on: October 11, 2007 – 1:32 pm in Retail, ,

Newspaper Stocks Lanquish Ahead Of September Numbers

Major newspaper groups will report their September revenues within the next several days. The market does not seem to be anticipating much in terms of good news.

The New York Times (NYT) is trading at $20.10, less than a dollar from its 52-week low.

McClatchy (MNI) trades at $19.70 against a 52-week low of $19.28.

Journal Register (JRC) is changing hands at $2.73 with a 52-week low of $2.33.

Gannett (GCI) trades at $45.26 against a 52-week low of $43.63.

As September numbers and Q3 earnings come out, watch for new lows.

Douglas A. McIntyre

Posted on: October 11, 2007 – 12:47 pm in Media, , , ,

Would Reuters (RTRSY) Or Yahoo! (YHOO) Buy SeekingAlpha?

SeekingAlpha, the big financial commentary and blog site, syndicates its content at a number of other large web properties with Yahoo! (YHOO) Finance and Reuters.com (RTRSY) probably being the largest. There has been recent speculation about the value of technology and news websites like Huffington Post and TechCrunch. The main criticisms of these valuations is that they are too high based on the traffic and revenue that the sites are likely to be creating. Would a large financial "blog" face the same issues?

The value analysis that simply looks at revenue does not address the issue of larger media companies picking up assets that they believe are strategic. Earlier today, CBS (CBS) bought Dotspotter for a rumored $10 million. The site is a fairly small celebrity property.

SeekingAlpha would have a significant value if it were owned by a large financial media company. It produces over a hundred pieces a day, a mix between its own commentary and blogs from other websites. A number of large financial sites like WSJ.com, NYTimes.com, and MarketWatch.com already run blogs from their own writers. It appears to be considered a hot business.

Based on data from Compete, Alexa, and Quantcast, 24/7 Wall St. estimates that SA has 2,750,000 page views a month. Financial sites tend to get high CPMs due to their demographics, so we have assigned a $10 CPM to the advertisers on the site.

SA runs an average of four display ads on each page, which would bring in about $110,000 a month. The site also has six discount brokers in its "Trading Center". At a $2 CPM, these would bring in another $33,000. Classified and Adsense may be worth another $5,000, bringing monthly revenue to almost $150,000. This does not include any money they bring in from the use of their e-mail lists.

Having a hundred or more stories a day has a special value to sites like Reuters and Yahoo! Finance, especially if they have to pay for most of their current content. Reuters has high editorial costs due to its large number of full-time reporters. The SeekingAlpha stories could drive a high number of page views on a very large financial site.

On a simple 10x revenue model, SA would be worth a little less than $18 million. But, because of the value of the content, and its relative size compared to other financial commentary sites, SA is probably worth twice that amount, of $36 million. TheStreet.com (TSCM) currently has a market cap of $400 million. AOL owns another large financial blogging site called BloggingStocks which is uses to supply content and links to AOL Finance. It probably considers the strategic value of that site to be fairly big.

About a year ago, VC firm Benchmark Capital put money into SeekingAlpha. At some point they will want a return. SA already has relationships with Reuters and Yahoo!.

Deal?

Douglas A. McIntyre

Posted on: October 11, 2007 – 12:08 pm in Mergers and Buy Outs, , , , , ,

General Electric (GE): Comprehensive Review Ahead of Earnings

The world’s conglomerate leader, General Electric (NYSE:GE), is set to report earnings on Friday morning early ahead of the opening bell.  Just recently, the company reaffirmed its guidance for the quarter and for the full year when it was discussing "a pretty good economy."

First Call estimates are now $0.50 EPS and $42.4 Billion in revenues, but this look like it is adjusted downward to account for the plastics unit and for exiting Japanese personal loan operations and for items rather than a mass exodus on earnings.  Prior to the changes, the range given was $0.54 to $0.56 EPS on total revenues of approximately $42 Billion, with net earnings of $5.5 to $5.7 Billion.  The truth is that in modern history the company is never really that far off and the one-time items are going make this harder to look at for the quarter.  It previously offered $2.18 to $2.23 for Fiscal 2007, and we are going to be focused on the guidance more than on the past.  We backed out the charges for restructuring and divested operations, but the number here appears to be one-penny lower now after backing out items with the new Fiscal 2007 estimate at $2.20 and revenues of roughly $171.4 Billion.

The stock is within 1% of multi-year highs, but the stock has more or less been trading in a $41 to $42 trading range for most of the last three weeks.  Analysts have an average target of $44.00 to $45.00, depending on which targeting sources you use.  With the favor going back into mega-cap stocks and with the shares within $2.00 to $3.00 of the targets, it is actually fathomable to see targets raised if the company offers some formal 2008 targets.  If that happens a new target range is likely to ratchet up to a $46.00 to $48.00, but understand that is purely for conjecture at this point.  We won’t have an exact number until today’s close, but as of mid-morning today it appears as though options traders are only factoring in up to a 1% to 2% price change in either direction.

To make matters more complicated on a longer-term basis, the Financial Times yesterday broke news that GE’s NBC unit "MAY" be up for review for a spin-off.  This is noted as being a post-Olympics decision for 2008, and we have noted that an entire spin-off might be better in pieces.  This is not a full break-up of the company like we said would be a bad idea on CNBC.  We’ll also look to see if the Boeing Dreamliner delay yesterday has any impact on its jet engine business and service contracts like it did on other suppliers.  There are other key issues to watch:

If you’d like to see a preview we did ahead of last earnings you can see it here.

Jon C. Ogg
October 11, 2007

Posted on: October 11, 2007 – 10:47 am in Conglomerates, Earnings, ,

Inphonic (INPC) Gets Destroyed

Shares of Inphonic (INPC) are off 75% and trading as low as $.44 against a 52-week high of $14.49.

The wireless products company announced its board has selected Lazard Middle Market to conduct, in conjunction with management, a full review of the company’s financing and strategic alternatives to increase cash liquidity and to maximize shareholder value. These alternatives could include a re-financing of existing credit arrangements, merger, sale, strategic alliance or other transaction.

The company recently replaced its CEO. The INPC audit committee also disclosed that it had found misapplication of GAAP; improperly recognized revenue and improperly deferred expenses; inadequate controls; and insufficient processes, procedures and expertise in its review of the firm’s financial operations.

Douglas A. McIntyre

Posted on: October 11, 2007 – 10:31 am in Wireless,

GM (GM) Breaks $40

For the first time since late 2004, shares of GM (GM) broke above $40 rising as much as 5% in early trading. The wrapping up of the UAW contract probably gave the stock a final push.

But, there is something more that the market likes. For the first time in years, GM has held up its sales numbers for two months in a row. Unit volume increased in August and September. At the same time, sales for Toyota (TM) have faltered a bit and Ford (F) sales have cratered.

Perhaps the General is back

Douglas A. McIntyre

Posted on: October 11, 2007 – 9:36 am in Autos,

IPO FILING: Critical Homecare Solutions Holdings, Inc.

Critical Homecare Solutions Holdings, Inc. has filed to come public via an IPO.  For filing purposes it has said it will sell up to $125 million in common stock under the ticker "CHCS" on NASDAQ.  The initial filing shows UBS Investment Bank as the lead underwriter and co-managers are listed as Jefferies & Co. and Piper Jaffray. 

The company operates in two segments: home infusion therapy and home nursing.  It is a provider of comprehensive home infusion therapy services to patients suffering from acute or chronic conditions and it claims to deliver over 400,000 infusion pharmaceuticals and equipment each year to patients in the home through our 33 infusion locations in 14 states.  It also provides over 350,000 nursing and therapy visits and 500,000 private duty nursing hours each year to patients in the home through our 32 home nursing locations in three states.

Its filing also notes that it currently provide customized local clinical care to over 19,000 patients through its branch network and have relationships with approximately 450 payors, including insurers, managed care organizations and government payors. In the year ended 2006 and the six months ended June 30, 2007, we generated pro forma net revenue of $176.1 million and $92.8 million, respectively.

If you want a summary of the company, it is the boots on the ground for the homecare business in the long-term care segment of the health and insurance business.  The home health care sector is estimated by Frost & Sullivan to have accounted for between approximately $47 billion and $58 billion of overall health care spending in the United States in 2005 and is projected to grow at a compound annual growth rate of approximately 8% from 2005 to 2010. Home health care services can provide a less expensive alternative to the provision of similar treatments in hospitals, nursing facilities or on an outpatient basis.  The company has just completed three smaller acquisitions, and based upon the fragmented marketplace in the homecare market there are hundreds or more companies that could be rolled up.

Jon C. Ogg
October 11, 2007

Posted on: October 11, 2007 – 9:31 am in IPOs, , ,

More China Stock Craziness (CTEL)(NWD)(FEED)(SNP)(NOEC)

More huge gains in China-based company shares traded on US exchanges.

Perhaps the most extraordinary in huge China Petroleum (SNP) up 11% to an all-time high of $145.68.

Also on the hit list:

City Telecom HK (CTEL) is up 84% on no visible news to over $10 and an all-time high.

New Dragon Asia (NWD) traded on the AMEX, up 39% to $1.88.

LJ International (JADE) May be deliquent in filings but up 41% to $6.80.

Agrifeed (FEED) is up another 30% to $15.60.

GigaMedia (GIGM) Taiwan-based, upgraded by Bear Stearns, trading up 11% to $20, a 52-week high.

New Oriental Energy (NOEC) is up 12% to over $10, a 52-week high.

Origin Agritech (SEED) is rising 12% to over $14.

JA Solar (JASO) up 9% to $47.

Watch for a correction. It’s on the way.

Douglas A. McIntyre

Posted on: October 11, 2007 – 9:24 am in China, , , , , , , , ,

Virgin Mobile IPO Debut (VM, S)

Virgin Mobile USA (NYSE:VM) has raised $412.5 million after it priced its IPO of 27.5 million shares at $15.00 per share.  25.467 million shares are being sold by the company and the small remainder by holders; underwriters have a 4.125 million share over-allotment option.  The lead underwriter and book runner is Lehman Brothers, and joint book-runners were Merrill Lynch and Bear Stearns.  Here was our original coverage of the IPO at the filing date.

We recently noted that the terms were being set at $15.00 to $17.00, so some may deem this as a conservative pricing for billionaire Richard Branson’s wireless telecom venture that uses the Sprint Nextel (NYSE:S) network.  Shares should open for trading shortly after the open and original range estimates were pretty wide at $15.50 to $18.50, assuming those are accurate indications.

As of June 30, 2007, Virgin claimed 4.83 million customers. Revenues and net loss for the year ended December 31, 2006 were approximately $1.1 Billion and -$36.7 million; Revenues and net income for the six months ended June 30, 2007 were approximately $666.9 million and $26.5 million, respectively. As of June 30, 2007 and December 31, 2006, members’ accumulated deficit was approximately $(614.4) million and $(643.9) million, respectively. 

Jon C. Ogg
October 11, 2007

Posted on: October 11, 2007 – 8:32 am in IPOs, Telecom, Wireless, , , ,

Infosys: When Good Earnings Aren’t Enough (INFY)

Infosys Technologies Ltd. (NASDAQ:INFY) is seeing shares trade down 4% pre-market in the US after roughly a 6.9% drop in overseas trading on the Mumbai exchange in India.  The company posted higher EPS and even raised guidance with $0.48 EPS versus $0.46 estimates and sees next quarter $0.51 EPS versus $0.49 estimates.  Revenues also showed a $1 Billion quarter, a first.

There are concerns that currency appreciation may have an impact and the ongoing concern that Infosys won’t see the same growth rates ahead as margins are contracting.  The earnings growth for Fiscal March 2008 was raised from 13% to 15%.  This compares to year over year growth this last quarter of 18%.

Shares are trading down 4.5% at $52.75 in pre-market trading; the 52-week range is $44.00 to $61.25.  To give you an idea of the size of Infosys and Indian IT outsourcing markets, the market cap of Infosys is roughly $31 Billion.  The average analyst target going into earnings was $61.00.  Outsourcing will likely continue growing, but at first glance it appears the rate at which it will grow may be declining.

Jon C. Ogg
October 11, 2007

Posted on: October 11, 2007 – 7:51 am in ADR, Earnings, Technology Companies, , ,