Daily Archives: October 16, 2007

Earnings Preview: JPMorgan Chase (JPM)

DJIA component and financial giant JPMorgan Chase (NYSE:JPM) is set to report earnings Wednesday morning before the open.  We have First Call estimates at $0.90 EPS & $16.6 Billion, but based upon the performance of the bank stocks after the earnings we’d expect a lower whisper number to be in place (maybe that would make it a whimper number).  These estimates may have even come in since this morning.  JPMorgan Chase is supposed to have some of the highest credit standards out there as far as clients and that may help it related to other lenders.  Shares were down over 3% with a n hour to close today and then shares closed down 2.5% at $45.11, and its 52-week trading range is $42.16 to $53.25.

Citigroup (NYSE:C), US Bancorp (NYSE:USB) and Wells Fargo (NYSE:WFC) have all been hit hard after earnings.  At some point the bad news gets priced in.  The problem that 24/7 Wall St. has is that even if the company meets lowered expectations from Wall Street is that there seems to be no good news ahead for lenders even if there some pockets of "Less-Bad" news.  Despite a slight drop in rates, the borrowers in about 50% of the economy aren’t really in any better shape than they were.  Another immediate FOMC rate cut is also not a sure thing at all, and we don’t expect with any certainty that the Fed will step in a second time just because these earnings are lower.

That $80 Billion to $100 Billion superfund set up yesterday (an "SIV") just goes to show how these banks banded together, probably with some government incentive since Department of Treasury was involved, to save their skins.  They didn’t want to call it a bailout fund, so we’ll do it for them.

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 6:35 pm in Banking, Earnings, , , , ,

Cramer’s ‘Improving People’ Picks (ALGN, SNCI)

On tonight’s MAD MONEY on CNBC, Jim Cramer reviewed a couple stocks on what is basically a "bionic you."  Obviously that’s a stretch but these are stocks that are medical or quasi medical products companies that he thinks benefit customers and can benefit investors. 

His first pick was Align Tech (NASDAQ:ALGN), which makes the Invisilign clear teeth straightening device.  This one he discussed with his dentist who noted how it was the best in class.  Shares closed up 1.45% at $27.16 in normal trading, and shares are up 4.9% at $28.50 in after hours trading.  Its 52-week trading range is $12.55 to $29.71 and its market cap is $1.85 Billion.

His second pick was Sonic innovations (NASDAQ:SNCI) thathas a mere $260 million market cap.  Shares closed down 2% at $10.50 in regular trading, but shares rose 7.5% to $10.50 after the Cramer feature.  Cramer likes the digital hearing aids that the company makes.  If these prices hold this will mark 52-week highs above the old $10.29 level.

Many investors clean up on these, but these stocks often trade on different metrics than beating earnings and even than on raised guidance.  Sometimes new competition you never even know about as a threat keeps pressure on these sort of stocks and sometimes far worse than that happens.  Speaking of the "bionic you" or "parts replacements" this sort of reminds me about a joke with a baby elephant and a dinner roll, although that’s a different story.

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 6:16 pm in Cramer, Medical, ,

The Business Day In Global Warming (FPL, TSSP, LDK, JEF, AA, SOPW, WWAT)

Lazard Capital Markets gives a preview for earnings out of key solar companies this week.  First Solar was started with coverage by Pacific Growth Equities with a Neutral rating, and after a 400%+ stock run it is hard to blame the lackluster rating.

FPL Group, Inc. (NYSE:FPL) asked the Public Service Commission to agree on the need for 2 new Nuclear (or Nukular) generating plants.

TrendSetter Solar Products, Inc. (Pink Sheets:TSSP), an alternative energy manufacturing company of state-of-the-art solar hot water systems, solar hot water heating and storage systems, announced today that on Friday, October 12, 2007, California Governor Arnold Schwarzenegger signed a package of legislation furthering his commitment to energy efficiency, conservation and pollution reduction….. That is just a noise press release.

LDK Solar (NYSE:LDK) rose 3% at one point after being awarded a saolar supply pact from Saifun Solar (NASDAQ:SFUN).

Jefferies & Co. (NYSE:JEF) announced it is hoting its 4th Global Clean Technology Conference in London on 18 October.  Companies in attendance will include BP p.l.c., ersol Solar Energy AG, Renewable Energy Corporation ASA, and THEOLIA. The conference keynote speech will be given by Jim Lyons, Chief Engineer of General Electric Company and founder of GE’s wind energy division.

OCTOBER 15, 2007

Yesterday, Alcoa (NYSE:AA) announced that products from two of its Building and Construction Systems businesses – Kawneer Company and Alcoa Architectural Products – are used extensively by a team from Georgia Institute of Technology in the 2007 Solar Decathlon now taking place in Washington, D.C.

Solar Power, Inc. (“SPI”) (OTCBB:SOPW) has completed work on one of the region’s largest photovoltaic (“PV”) solar electric systems. The 400 kilowatt (“kW”) system will provide a majority of the electricity required to power the 43,195 sq. ft. Placer County juvenile detention facility which can accommodate 27,375 bed-nights annually.

WorldWater & Solar Technologies Corp. (OTC BB: WWAT), developer and marketer of proprietary high-power solar systems, and ENTECH, Inc. of Keller, Texas, a high tech supplier of solar technology to NASA for space operations, announced that they have signed an extension of their Letter of Intent (LOI) to merge from October 15, 2007 to November 30, 2007 pending final signatures of the Merger Agreement.

If you wish to set an RSS feed to our daily "The Business Day in Global Warming" and other news we cover from time to time in alternativeenergy, you can set it the following URL:
http://www.247wallst.com/alternative_energy/index.html

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

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 5:08 pm in Alternative Energy, , , , , , , , , , ,

Microsoft (MSFT) To Battle Cisco (CSCO) For Business Communications Dollars

Microsoft (MSFT) said it expects its unified communications product — the company’s effort to link e-mail, instant messaging and phone systems over Internet networks — to become one of the fastest-growing segments of its $16 billion business division. The company made the prediction at an event to introduce its Office Communications Server 2007, which allows users to e-mail, instant message, video conference or make Web-based phone calls from within the company’s Office applications, according to Reuters.

Cisco (CSCO), which controls much of the global router market and recently bought video conferencing company Webex, would like to own the same bit of real estate.

The truth of the matter is that both companies are likely to pick up significant business in the enterprise VoIP, video conference, and instant messaging areas. And, over time, the big losers will be the large telecommunications companies who provide complex and expensive voice systems for big companies.

The business-to-business units of Verizon (VZ) and AT&T (T) are going to face tough going in the next two or three years.

Douglas A. McIntyre

Posted on: October 16, 2007 – 4:52 pm in Software, , , ,

Pepsi Scores Tiger Woods For Gatorade (PEP)

PepsiCo’s (NYSE:PEP) Gatorade unit has signed a collaboration with golf megastar Tiger Woods to develop Tiger-inspired sports performance beverages for athletes at all levels. 

Tiger said in the release, “Gatorade has been part of my game plan for years, whether I’m training or competing, so this is an ideal match…. That’s why I wanted to partner with them. I’m eager to launch my first signature product in a few months and look forward to developing additional sports performance beverages with Gatorade in the coming years.”

The first product, Gatorade Tiger, is a Gatorade Thirst Quencher subline that will be launched in March 2008.  Financial terms of the licensing deal were not disclosed, but even if Tiger doesn’t need the cash you can bet your assets he got a major payday on this.

Gatorade Tiger will be available in three new and refreshing flavors inspired and selected by Woods (cherry blend, citrus blend & grape) and will be packaged in a new 500 ML bottle and a 32 oz. bottle. Gatorade Tiger will be the same scientifically proven formula of Gatorade Thirst Quencher.

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 4:07 pm in Food, , , ,

The 52-Week Low Club

Dominos Pizza (DPZ) Quarterly profits drop along with shares. Down to $14.22 from 52-week high of $35.67.

Standard Pacific (SPF) Home builder on a day with more bad news about housing sales. Off to $4.18 from 52-week high of $30.52.

Metropcs Communications (PCS) Still dogged by weak wireless subscriber growth. Falls to $22.28 from 52-week high of $40.87.

McClatchy (MNI) Weak results at newspaper chain. Falls to $18.50 from 52-week high of $44.95.

Rite Aid (RAD) Poor same-store sales still taking toll. Down to $4.13 from 52-week high of $6,74.

Movie Gallery (MOVI) Best excuse for falling shares. Went bankrupt. Down to $.19 from 52-week high of $5.29.

Ericsson (ERIC) Wall St devastated by bad earnings. Shares fall down to $30.59 from 52-week high of $43.41.

Fifth Third Bancorp (FITB) Mortgage and consumer credit worries. Falls to $31.05 from 52-high of $43.42.

Douglas A. McIntyre

Posted on: October 16, 2007 – 3:59 pm in HI/LOW, , , , , , , ,

Seagate Earnings Carrying On (STX, WDC)

Seagate Technology (NYSE:STX) reported disc drive unit shipments of 47 million, revenue of $3.3 billion, diluted net income per share of $0.64 for the quarter ended September 28, 2007. Its non-GAAP EPS was $0.69. Included in both GAAP and non-GAAP results are restructuring charges of approximately $5 million or approximately $0.01 per share.  First Call had estimates at $0.64 for non-GAAP EPS & $3.22 Billion in revenues.  For the December quarter, Seagate sees non-GAAP EPS at $0.71 to $0.75 ($0.69 estimate) and sees revenue of $3.4 to $3.5 billion (estimate is $3.4 Billion).

Seagate maintained its quarterly dividend of $0.10 per share and it took delivery of approximately 10.3 million common shares related to its share repurchase plan at an average price of $24.27. The company has authorization to purchase approximately $725 million of additional shares under the current stock repurchase program.

Seagate didn’t see much trading activity initially, but shares are indicated up over 1.5% at $26.85 after closing down 1.6% at $26.45 today.  Shares have traded in a $20.10 to $28.51 over the last year.  We’ll have to see if these charges throw any wrench in the trading machines out there, but this looked fine on the surface.  Our own BAIT SHOP stock, a Special Situation Investing Newsletter pick for subscribers, is competitor Western Digital (NYSE:WDC) and it hasn’t seen any trades in after-hours trading.

"Our strong performance in the quarter reflects favorable industry conditions as well as the competitive strength of Seagate’s unique platform and commitment to innovation," said Bill Watkins, Seagate chief executive officer. "The first fiscal quarter has historically been a strong one for Seagate, and this year, we benefited from unit demand greater than expected. We believe we are well positioned to continue driving year-over-year revenue growth, and these record quarterly results demonstrate the effectiveness of Seagate’s business model."

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 3:45 pm in Earnings, Technology Companies, ,

Yahoo!’s (YHOO) Home Run Quarter

The market bet against Yahoo! (YHOO) today, taking the shares down over 4% to $26.69. It was a bad gamble.

Yahoo! (YHOO) revenues were $1,768 million for the third quarter of 2007, a 12 percent increase compared to $1,580 million for the same period of 2006. Revenues excluding traffic acquisition costs ("TAC") were $1,283 million for the third quarter of 2007, a 14 percent increase compared to $1,121 million for the same period of 2006. Wall St expected Yahoo!  $1.24 Billion in revenues (ex-TAC).

Operating income for the third quarter of 2007 was $150 million, a 26 percent decrease compared to $202 million for the same period of 2006.

Net income for the third quarter of 2007 was $151 million or $0.11 per diluted share compared to $159 million or $0.11 per diluted share for the same period of 2006. Analysts were looking for a $0.08 EPS figure.

For the final quarter of the year, Wall St. is hoping for $0.12 EPS on $1.37 Billion revenues (ex TAC). Yahoo! is forecasting $1,35 billion to $1.45 billion, so it should outperform expectations.

The market obviously loved the numbers, sending Yahoo! shares up 8% after hours.

Douglas A. McIntyre

Posted on: October 16, 2007 – 3:42 pm in Earnings,

Intel Margins & Guidance Cause Cheers (INTC)

Intel (NASDAQ:INTC) has reported earnings of $0.31 EPS and $10.1 Billion in revenues, versus First Call estimates $0.30 EPS and $9.62 Billion in revenues. It said microprocessor units set a record and the average selling price was flat; chipset and flash units set records, but motherboard sales were lower.  Gross margins came in at 52.4% and the company is offering 57% +/- 1% for the coming quarter.

It is putting next quarter revenues in a $10.5 to $11.1 Billion range compared to estimates for next quarter of $0.37 EPS & revenues $10.4 Billion.  This guidance for revenue and margins has shares up about 2.5% in after-hours trading.  Intel shipped more than 2 million quad core processors during the quarter.

Intel shares did close down 1% on the day but ahead of the numbers shares were within about 3% of 52-week highs, and are up almost 40% from the 52-week lows.  Intel’s conference call is at 5:30 PM EST today.  At $26.20 in after-hours trading this is only about 1% under those recent $26.58 highs.  Shares of smaller rival AMD are up marginally and the Semiconductor HOLDRs (AMEX:SMH) are indicated up about 0.5% at $36.35 in after-hours trading.

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 3:28 pm in Earnings, Semiconductor, , ,

IBM Earnings Lack Significant Upside (IBM)

IBM (NYSE:IBM) has posted earnings at $1.68 EPS on $24.1 Billion in revenues, versus First Call estimates of $1.67 EPS & $24.07 Billion in revenues; Big Blue usually holds off on formal guidance and gives some data in its conference calls, but estimates next quarter are $2.60 EPS & $27.7 Billion in revenues. 

Shares closed up 1.3% today, less than 2% under multi-year highs, but shares are down about 1% after the report.

The one number we hone in on for the future is Big Blue’s backlog, and that came in flat to last quarter at $116 Billion and up $7 Billion year over year.  If that sounds familiar the backlog last quarter was up $7 Billion from Q2 2006 at $116 Billion.  It is not expected that IBM will have made major share buybacks in the compared to Q2.  The company’s total gross profit margin was 41.3 percent in the 2007 third quarter compared with 42.0 percent in the 2006 period and its tax rate fell to 28.0% from 30.0% last year. The cash balance was $13.8 billion at the end of the third quarter.

"Our outstanding services results this quarter enabled us to stay on track toward our objective of accelerated earnings per share growth through 2010, while we work through a transition in our hardware business," said Samuel J. Palmisano, IBM chairman, president and chief executive officer. "Our year-to-date performance underscores the strength of major elements of our long-term roadmap, including revenue growth, margin expansion, and continued success in emerging market countries and in the integration of our acquisitions."

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 3:16 pm in Earnings, Technology Companies,

Microsoft Earnings: Goldman Sachs Must Know Something (MSFT)

Goldman Sachs has one of the more premiere research shops for the bulge bracket firms on Wall Street and investors look to its "Conviction Buy List" with regularity.  It might not seem odd that Goldman Sachs added Microsoft (NASDAQ:MSFT) to its Americas Conviction Buy List on a regular day.  But when it is about a week before earnings and the day Intel and others are reporting it makes it very difficult not to wonder if the analyst didn’t get some insight that might not be available elsewhere.

Goldman Sachs’ note from analyst Sarah Friar says that it expects upside to Microsoft’s first quarter results based upon the numbers out of Halo 3, the aQuantive buyout, currency benefits, and new product cycles like Office 2007 and Windows Server 2008 driving what Goldman estimates at 12%+ growth into fiscal 2009.  Goldman Sachs also noted that the current valuation remains at a significant discount to the software group and in-line with S&P peers, while sentiment is "almost overwhelmingly negative."  The summary concludes that this will take the stock higher on a better quarter.

Another wild card here is that these notes are no longer from Rick Sherlund, the former Goldman Sachs analyst that was considered the honcho of all analysts that covered Microsoft.  Microsoft was removed from the Conviction Buy List back on April 10, 2007 and shares closed at $28.21 that day.  Shares are up 1.2% today at $30.42.  Estimates were already raised last week and Goldman Sachs has a $37 target for the stock.  It isn’t our take that the analyst got anything secret, but maybe some solid research came in ahead of these other tech earnings. There is either some performance chasing going on, or there is some strong insight here from investigative research.

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 1:05 pm in Analyst Calls, Software, , , , , , , ,

Boston Scientific (BSX) Tries To Fire Everyone

Will the last one to leave the building please turn out the lights?

Boston Scientific (BSX) will apparently ax up to 3,400 people. It appears that CEO James Tobin and his co-founders Peter Michael Nicholas, Jr. and John Abele will not be among them. But, they should be.

BSX is a wreck. After buying medical device-maker Guidant for $24 billion, BSX took on a load of debt that it is having trouble paying back  According to The Associated Press "Boston Scientific’s credit standing among the three major ratings agencies has recently fallen into junk bond territory, creating pressure to release cost-cutting specifics."

The company’s critical stent business is being hammered by on-going reports that drug-coated stents can cause clots and heart attacks. Cardiologists are shying away from using them and have turned to drug-based treatments instead.

BSX shares were at $27 in December 2005. They are off over 4% today to $14.41.

The company still needs to convince Wall St. that it can pay back all of that money. It could bring in capital by selling shares of Guidant in the public market.

Douglas A. McIntyre

Posted on: October 16, 2007 – 1:03 pm in Medical,

No Wonder Toyota (TM) Is Near 52-Week Low?

24/7 Wall St. wrote earlier that Toyota (TM) is trading near its 52-week low. Given the relative success of the big car company compared to rivals like GM (GM), the stock price level seems odd.

But, quality is critical to Toyota’s ability to sell cars and take market share from its competition. The news out today is that TM may be losing its crown.

According to CNN Money" "The Toyota brand has lost its top position for iron-clad reliability, according to an influential Consumer Reports survey released Tuesday. The survey dropped Toyota from first to fifth place – behind Honda, Acura, Scion and Subaru – in average vehicle reliability. The rankings are based on average predicted reliability for all models sold under a given brand."

At least the other winners are Japanese.

Only one American car, GM’s (GM) Buick, made it into the top ten. Ford (F) also showed improvement across most of its models. Unfortunately, the number of Buicks and Fords being sold is shrinking. Ford’s domestic sales dropped over 20% last month.

Douglas A. McIntyre

Posted on: October 16, 2007 – 12:36 pm in Uncategorized, , ,

McClatchy (MNI) Sees Brighter Future, Debt Pay-Down, Stock Says Otherwise

McClatchy (MNI) has just ended its investor conference call for the third quarter results. In the discussion of paying down debt, there was talk of selling land in Miami and a tax refund on the sale of one of its papers. The company also forecast its debt level through the end of 2008.

According to the share price, the market was buying none of it. The stock fell almost 2% to $18.50, a new 52-week low. The company’s 52-week high was $44.95. The stock has fallen almost 55% over the last year, while shares in Gannett (GCI) are off 22% for that period, and the New York Times (NYT) is down 18%.

The company said that "debt at the end of the third quarter was $2.58 billion, down approximately $98 million in the quarter and down $697.4 million since the end of 2006. We expect debt to be approximately $2.5 billion at the end of 2007, and we expect our debt balance at the end of 2008 to be approximately $2.0 billion." So, debt repayment will be modest in Q4.

Asset sales and tax refunds can only go so far.

When talking about future guidance, MNI commented "Accordingly, we expect the advertising revenue decline in the fourth quarter to be similar to that in the second and third quarters. We do not know when this downturn will end, and do not have visibility beyond the fourth quarter." So, the company sees debt dropping but without having a clear picture of how next year will go.

The third quarter was tough. Revenue fell from $595 million in the quarter a year ago to $540 million this year. Net income fell from $52 million to just over $23 million. Under the circumstances, there are clearly still concerns about debt service.

And, the company cannot make the case that it should have a share price performance that mirrors most of its peers.

Douglas A. McIntyre

Posted on: October 16, 2007 – 12:03 pm in Media, , ,

New York Times (NYT) Launches Blog, Share Hit New Low

The New York Times (NYT) is launching a new blog called "The Board" which will run on NYTimes.com.

According to the company the blog will be written by members of The New York Times editorial board, providing commentary and background on each day’s editorials Vivian Schiller, senior vice president and general manager, NYTimes.com said, "The influx of new readers to our Op-Ed columnists since the end of TimesSelect serves as a springboard to vastly expand the opinion content available on NYTimes.com. The Board is just the latest of what will be a wide selection of offerings, strengthening our unique position as a purveyor of the most influential voices on the Web."

All of this happened as NYT shares fell almost 3% to $18.77, a new 52-week low.

A vote of confidence.

Douglas A. McIntyre

Posted on: October 16, 2007 – 11:22 am in Uncategorized,

24/7 Wall St.’s Take on Scripps & Media Break-Ups (SSP, BLC, TRB, JRC)

EW Scripps Co. (NYSE:SSP) is following the media trend of separating its operations into more pure play media sectors.  The good news here is that the valuable interactive unit will no longer have to be tied to newspapers.  The bad news is that the stations have to go with the paper unit, but arguably that might be construed well by some.  Scripps will split operations and become "Scripps Networks Interactive" and "The E.W. Scripps Company."

Scripps Networks Interactive will have an estimated $1.4 Billion in annual revenues with some 2,100 employees and will consist of:

  • National lifestyle media brands and associated enterprises that operate collectively as Scripps Networks, including television’s HGTV, Food Network, DIY Network, the Fine Living Television Network and Great American Country and their category-leading Internet businesses.
  • The new company also would include online comparison shopping services Shopzilla and uSwitch and their associated Web sites.

The E. W. Scripps Company will have combined annual revenues of $1.1 Billion and some 7,100 employees and will include:

  • Daily and community newspapers in 17 U.S. markets;
  • 10 broadcast television stations clustered among the nation’s largest 50 markets, including six ABC affiliates, three NBC affiliates and one independent station;
  • The character licensing and feature syndication businesses operated by United Media;
  • Scripps Media Center in Washington D.C., which includes the Scripps Howard News Service.

If you have seen 24/7 Wall St. for very long, or if you have read all the reports out there on what is happening with newspapers, you’ll know that the media sector is looking for ways to get away from newspaper revenues.  Unfortunately, old fashioned newspaper readers are dropping off at a faster clip than smokers.  The next wave of cuts the industry will feel is when newspapers get cut more from many hotel chains that leave them at the front door of each occupied room.

If you enjoy reading about break-ups and other special situations we produce our own "Special Situation Investing Newsletter" for subscribers.  We will be reviewing this for subscribers as the break-up gets closer.  Unfortunately, the company believes this tax-free spin-off will not be completed until the end of the second quarter of 2008.  There is a lot of calendar between now and then, and many more months of bad news out of newspaper companies.  One thing may help papers in 2008: the presidential election.  Depending upon how the valuations are laid out, it is even conceivable that the interactive content unit might have predators looking at it right out of the gate.

The market is reacting with enthusiasm to the Scripps plan.  Shares are up almost 8% at $45.50, back in the middle of its $37.89 to $53.39 trading range over the last 52-weeks.

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 11:16 am in Media, Mergers and Buy Outs, , , , ,

Is Google (GOOG) About To Ship G-Phone?

A UBS analyst has confirmed that Taiwanese handset manufacturer HTC will ship about 50,000 cell phones running on a mobile operating system made by the Mountain View, Calif.-based search giant by the end of this year, according to CNN Money.

“These initial phones are not going to be for sale,” Benjamin Schachter, one of the analysts who worked on the report, said in a phone call earlier today. “These are going to be available for developers only to understand how the software works.”

There has been so much rumor about the project that there is no way to tell what is true.

More important, a G-Phone is entering a wildly competitive, one where the Google (GOOG) brand may mean very little.

Douglas A. McIntyre

Posted on: October 16, 2007 – 11:14 am in Wireless,

Solar Sector Earnings Preview (FSLR, SPWR, STP, CSIQ, ENER, ESLR)

If you follow solar stocks, you’ve probably seen Lazard Capital Markets covering the sector routinely.  Sanjay Shrestha, Managing Director and Senior Analyst of Alternative Energy & Industrials at Lazard Capital Markets, has given a general preview for the solar industry.  He expects generally positive results except for a few.

Mr. Shrestha notes in his report, "We look for First Solar (NASDAQ:FSLR) and SunPower (NASDAQ:SPWR) to handily beat expectations. We believe Suntech Power (NYSE:STP) will deliver better top-line results with a potential impact on gross margins. Energy Conversion Devices (NASDAQ:ENER) should be viewed as a turnaround story. The key for Evergreen Solar (NASDAQ:ESLR) remains capacity ramp and additional manufacturing processes improvement following the rollout of Quad. While Canadian Solar (NASDAQ:CSIQ) appear to be taking necessary steps, we continue to evaluate its long-term competitive positioning."

Read More »

Posted on: October 16, 2007 – 10:17 am in Alternative Energy, Earnings, , , , , ,

Tech Earnings Trifecta: IBM, Intel, Yahoo! (IBM, INTC, YHOO)

It used to be that banks all grouped their earnings around each other.  We’ve already started seeing some of the big earnings come out, but today we have a major day from technology giants and this could actually set the tone for much of the technology sector.  IBM, Intel, and Yahoo! are all set to report.  Here are the previews:

IBM (NYSE:IBM): $1.67 EPS & $24.07 Billion in revenues; next quarter $2.60 EPS & $27.7 Billion in revenues.  Big Blue is seeing shares actually under 3% of its multi-year highs and analysts have roughly a $125.00 target.  Options may not be indicative as a prediction tool because on calculation showed only a $1.25 expected move and one calculation showed traders appear to be braced for almost a $4.00 move.  The one number we hone in on for the future is Big Blue’s backlog, which it listed last quarter up $7 Billion from Q2 2006 as being $116 Billion.  It is not expected that IBM will have made major share buybacks in the compared to Q2.

Intel (NASDAQ:INTC): $0.19 EPS & revenues $8.52 Billion; next quarter $0.27 EPS & revenues $9.30 Billion.  The processor giant has an average target from analysts north of $29.00 and analysts appear to be braced for shares to move up to 2.5% in either direction.  Intel shares are also within about 3% of 52-week highs, and are up almost 40% from the 52-week lows.  Analysts will likely be focusing on that 51% to 52% gross margin reading to see if the AMD price wars are still biting its heels.

Yahoo! Inc. (NASDAQ:YHOO): $0.08 EPS & $1.24 Billion revenues (ex-TAC).  Remember, the headline revenue number will appear considerably higher because of traffic acquisition costs (TAC). Next quarter guidance $0.12 EPS & $1.37 Billion revenues.  This is Yahoo’s first full quarter under Jerry Yang and this will be the first full quarter we really get to peer inside the new Panama ad platform as to how it is trickling down into the company results.  At $27.00, and even though it is 20% off lows, Yahoo! has spent two-years as dead money while Google has been stealing market share.  Yahoo! has to find more ways to capitalize on its 400+ million registered users.  Analysts have an average buy target of $30.00 to $31.00, although the number of positive analysts has fallen over the last year.

As a reminder, any of these estimates could have changed at the last minute because of revisions or changes in sentiment.

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 9:44 am in Earnings, Technology Companies, , , , ,

Interpreting Amgen Sales From J&J’s PROCRIT (AMGN, JNJ)

Shares of Amgen Inc. (NASDAQ:AMGN) are under bit of pressure this morning, although not from any direct news from the company itself.  Luckily for Amgen, much of the bad news may already be baked into the biotech cake.  Genentech’s slightly soft top-line results aren’t a great development for biotechs in general, but the real issue may revolve around competitor (actually, its sales partner) anemia drug sales out of Johnson & Johnson (NYSE:JNJ).  J&J and Amgen have been feeling sales pressures since their anemia drugs came under fire and have had to carry a black box warning label.

J&J said in its drug unit that growth was impacted by lower sales of anemia drug PROCRIT, primarily due to a decline in the market related to a labeling change made this past March and a decision memorandum issued by the Centers for Medicare & Medicaid Services under its national coverage analysis process.  J&J licenses PROCRIT from Amgen.  If you review the sales of this in J&J’s release, PROCRIT sales in the U.S. were down year over year by 27% to $380 million (from $522 million), although international PROCRIT sales rose 9% to $302 million.  Total PROCRIT sales were down 14.6% to $682 million.

The good news is that this was mostly a known event, at both companies.  Wall Street has systematically trimmed earnings and revenue projections for Amgen throughout 2007.  The key difference in these companies is that Amgen is much more dependent upon on anemia drug sales for about half of its sales, whereas J&J’s 5% exposure to anemia sales is relatively just a line-item on a long-term basis.

We’ll find out Amgen’s earnings on October 24: analysts are looking for total revenues of $3.56 Billion (down from $3.612 Billion in Q3 2006).  We’ll follow up with a more detailed Amgen preview using some of these interpolations for the bigger picture ahead of its earnings release.  Amgen shares are only down 0.2% at $57.55, and the 52-week trading range is $48.30 to $77.00.  In late 2005, Amgen traded over $80.00. 

Jon C. Ogg
October 16, 2007

Posted on: October 16, 2007 – 9:07 am in Biotech, , , , , ,