Daily Archives: November 1, 2007

Ford (F) Plans To Cut To The Bone

Ford (F) had another bad month in November with US vehicle sales falling almost 10%. The double-digit monthly drops are now a bad habit.

The company has also indicated that it is not meeting its cost cutting goals. Revenue trouble and high costs are usually a poor mix.

The Wall Street Journal reports that Ford is now about $400 million a year shy of its expense goals. The paper writes "a combination of sick parts suppliers and rising costs for commodities such as steel has hindered those cost-cutting efforts in Ford’s purchasing departments."

Chrysler today announced that it would take about 12,000 more people out of its corporate headcount. The calculus of cutting costs in Detroit is now entering another brutal stage GM (GM) appears to have met most of its cost cutting goals and is happy with its new UAW contract. But, Ford and Chrysler are not holding their own on the sales front. That bleeding may not be staunched for some time.

Ford’s material costs per vehicle are higher than its direct competitors. So are its engineering costs. Of course, selling fewer cars does not help the numbers.

Ford will need another big round of cuts. The UAW is not going to want to hear that, but they have some leverage. Ford’s white collar workers and temporary staff don’t hold any cards.

Douglas A. McIntyre

Posted on: November 1, 2007 – 6:40 pm in Autos, ,

A Sprint (S) Merger With Clearwire (CLWR)

The technology world loves WiMax, the ultra-high-speed wireless broadband technology. Wall St. hates it. The two biggest proponents of the system in the US are Sprint (S) and Clearwire (CLWR). Over the last three months, Sprint’s shares are down well over 15% and Clearwire’s are off 30%.

The big problem with WiMax is that it is expensive to build out a national network that can service as many people as standard cellular technology can. Sprint (S) has said it is committed to spend $5 billion over the next three years to complete its network. Clearwire may need to put up at least that much money to finish its national footprint.

But, now word comes that the board at Sprint is considering either buying Clearwire, or spinning the No.3 US cellular phone company’s WiMax operations out and merging them with Clearwire. CLWR has an impressive list of large investors including Intel (INTC) and Motorola (MOT). These firms stand to lose a great deal if WiMax deployment gets slowed down.

As The Wall Street Journal points out "a publicly traded WiMax spin-off would satisfy Sprint investors who are skeptical of WiMax, but would allow investors who are bullish on the new and relatively untested technology to make a bet on it."

Any combination of Sprint and Clearwire is likely to get financial support from Intel and other large tech companies that are betting that WiMax will become a global standard. A merger of Sprint and Clearwire could save hundreds of millions of dollars in capital spending. The only question is what are the two companies waiting for?

Douglas A. McIntyre

Posted on: November 1, 2007 – 6:23 pm in Mergers and Buy Outs, , , ,

Sun Micro (JAVA) In The Shadows: Selected Stocks Under $10

Share in Sun Microsystems (JAVA) have been drifting. Their performance for the last three months looks like larger proxies for big tech, Hewlett Packard (HPQ), Dell (DELL), and IBM (IBM). All four stocks are up between 5% and 10% for the period. But, so is the Nasdaq for that matter.

Wall St. is waiting for November 5 when Sun puts out earnings, but traders are not showing any conviction about how things might turn out.

The things Sun could do to get shares up, beyond posting good results, it has done. The company is buying back shares. It changed its ticker to the more familiar JAVA from SUNW. It introduced a new flagship line of servers based on its Niagara 2 chips.

The market seems to think that the turnaround at the company has a chance of driving several consecutive quarters of positive earnings, something that has not happened in years. The most recent research call on the company, from Wachovia, was to initiate coverage at "Market Perform". An indifferent opinion that matches the company’s recent results.

Expectations for the next quarter are painfully modest. Revenue is expected to rise a little over 2% to $3.27 billion. EPS is forecast to come in at $.03 compared to a loss of $.01 last year. Cost cutting will make up most of the improvement.

So, what does Sun have to do to get off the schnied? The company could probably miss EPS by a penny. That will not matter as much to investors as some sign that revenue is not going to continue to grow in the low single digits.

The current period is supposed to be one in which tech companies have their best shot at rapid earnings improvement in as many as five or six years. If Sun can’t demonstrate that some of that has rubbed off on it, the rest of 2007 is going to be unpleasant for JAVA shareholders.

Douglas A. McIntyre

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Posted on: November 1, 2007 – 5:54 pm in Technology Companies, , , ,

Cramer’s New Oil Call (APA, XOM)

On tonight’s MAD MONEY on CNBC, Jim Cramer said he has no cure for the financials, mortgage insurers, and banks right now.  But Cramer’s call in oils for exploration and production is Apache Corp. (NYSE:APA) as the anti-Enron.  This was one of his $80 to $120 plays, but it is down $4 today to under $100 because of Exxon’s dense earnings and production being down 2%.  Apache is actively growing, while Exxon is not growing operations.  Cramer said he’s now off the ExxonMobil (NYSE:XOM) bandwagon.  Now you have to know which oils are growing and which ones aren’t. Apache had a blowout quarter and best conference call of oils.  Apache will buy properties that it thinks it can do better then the larger players, and it is on Goldman Sachs’ Conviction Buy List.  The Australian opportunity is more than double last year’s total production.  It has earnings visibility and it is one of of the cheapest of the E&P plays out there at 11.9 times earnings.  If it had a comparable multiple to peers it would be at $130 or $147 rather than $99.

Shares closed down over 4% at $99.18 today, but traded back up 1.6% to $100.80 after the Cramer pump in after-hours.  Its 52-week trading range is $63.01 to $104.90.

Exxon was light, as we worried it would be.
Goldman Sachs lowered oil estimates, or at least said take some profits, although there is no change to its Super-Spike band of up to $135/barrel and $4.50/gallon under extreme circumstances.

Jon C. Ogg
November 1, 2007

Posted on: November 1, 2007 – 5:18 pm in Cramer, Oil & Gas, ,

News Corp’s (NWS) MySpace Joins Google (GOOG) Social Network Group

TechCrunch and Silicon Alley Insider have reported that News Corp’s (NWS) MySpace will join the new Google (GOOG) OpenSocial initiative. The Google program pulls together a number of social networks include the search company’s own property Orkut.

As TechCrunch writes Google wants to create an easy way for developers to create an application that works on all social networks.

The additional of MySpace, the largest social network property is a blow to rival Facebook in which Microsoft (MSFT) recently made an investment. Google’s software will allow developers to write applications which will now run on over a dozen of the larger networks, a scale that Facebook can never hope to match. "OpenSocial is going to become the de facto standard (for developers) instantly out of the gates. It is going to have a reach of 200 million users, which is way bigger than anything else out there," Chris DeWolfe, chief executive and co-founder of MySpace told Reuters.

Douglas A. McIntyre

Posted on: November 1, 2007 – 4:08 pm in Internet, , ,

Web 2.0 Industry De-Merger of Getty Starting To Be Factored In (GYI)

Getty Images (NYSE:GYI) is seeing shares trade up in after-hours activity as some fears of imminent implosion from Web 2.0 start-ups eating its dominance may be getting priced in based on its forward guidance.

The company posted earnings at $0.47 EPS before items and $0.43 after on revenues of $209 million.  Analysts were expecting $0.43 EPS on $209.47 million.  The implied guidance for the fourth quarter of 2007 is $0.48 EPS on revenue of approximately $210 million for the fourth quarter of 2007.  It looks like analysts expect $0.53 EPS on $213.1 million revenues.  It is actually going farther out on a limb: For 2008, the company expects revenue of approximately $900 million; analysts are looking for just under $890 million for the quarter, although there are higher estimates out there.

The company has expanded its multi-site and multi-business strategy.  Its commercial music license operation was entered and it has launched its low-resolution web use model.

Back when this stock was at $50-ish in May, 24/7 Wall St. sent subscribers our own playbook on how to profit off of what was a nearly certain de-merger equivalent force that was going to cause more than just trouble for Getty.  Our target was achieved, but this kept falling much farther than we expected in the relative time frame.  That was when we took the wait and see attitude, and from an objective standpoint it seems like some of the forces against the company are being priced in. 

Read More »

Posted on: November 1, 2007 – 4:00 pm in Earnings, Internet, Media,

EA Delivers, Outside of Deferred Numbers (ERTS)

Electronic Arts (NASDAQ:ERTS) posted non-GAAP EPS of $0.27 on revenues of $640 million; Analysts were looking for $0.20 EPS on $896 million revenues but there is a revenue deferral and recognition issue for the discrepancy there.  The changes resulted in a $296 million sequential net increase in deferred net revenue as of September 30, 2007, which will be recognized in future periods.  For fiscal March 2008, EA see $0.85 to $1.15 EPS (down $0.05 fromPandemic/BioWare buyout) and see revenues excluding deferrals at $3.8to $4.0 Billion; estimates are $1.15 EPS and $3.77 Billion in revenues.

Pretty impressive title sales are as follows:

  • Madden NFL 08 sold 4.5 million copies and was EA’s best performing title in the quarter.
  • FIFA 08 sold 2.9 million copies internationally – with sell through at retail up double digits year-over-year.
  • MySims, a new owned intellectual property, sold over one million copies on the Nintendo DS™ and Wii.

It also went back over some reorganization charges. The Company expects to incur total pre-tax charges of between $90 million and $110 million, the majority of which will be incurred in fiscal 2008. The Company estimates these actions will result in annual pre-tax cost savings of approximately $25 million to $30 million.

EA is seeing shares up 0.8% in after-hours trading at $59.23, but shares closed down almost 4% at $58.74 in normal trading.  The 52-week trading range is $46.27 to $61.62.

Jon C. Ogg
November 1, 2007

Posted on: November 1, 2007 – 3:29 pm in Earnings, Video Games,

CBS (CBS): A Modest Improvement, Radio Weak

CBS (CBS) revenues of $3.3 billion for the third quarter of 2007 decreased 3% from $3.4 billion for the same quarter last year, reflecting lower television license fees, the impact of radio and television station divestitures and the absence of UPN, which ceased broadcasting in September 2006.

Net earnings from continuing operations for the third quarter of 2007 increased 5% to $340.2 million from $323.6 million for the same prior-year period. Diluted earnings per share from continuing operations of $.48 increased 14% from $.42 per diluted share for the same prior-year period due primarily to lower shares outstanding in 2007

CBS said when comparing full year 2007 to 2006 on a reported basis, revenues will be down 2% to 3% as we have disposed of certain lower-margin, slower-growth assets, including 39 radio stations, 9 television stations, UPN, and the non- renewal of several of our urban outdoor transit contracts. Operating income in 2007 will be comparable to 2006 due to the above factors and higher expense for stock-based compensation.

If radio results had not been so bad, it would have been a decent quarter. Revenue in the unit fell 12% $446 million. Operating income was off 20% to $162 million.

Douglas A. McIntyre

Posted on: November 1, 2007 – 3:25 pm in Media,

ValueClick’s In-Line Numbers Surprisingly Well Tolerated (VCLK)

ValueClick Inc. (NASDAQ:VCLK) posted revenues of $156.9 million and EPS of $0.17, versus prior forecasts of $156 to $157 million and $0.16 to $0.17 EPS.

Third quarter 2007 revenue was negatively impacted primarily by continued weakness in the lead generation portion of the Company’s Media business segment, partially offset by better than expected results in the Comparison Shopping segment.

The guidance for next quarter is $172 to $177 million and adjusted EPS $0.17 to $0.18.  Consensus estimates are $0.20 EPS and $177.75 million.  Fourth quarter 2007 guidance for diluted net income per common share includes a reduction of $0.03 per diluted common share for stock-based compensation expense and assumes a 42.5% net effective income tax rate.

The company is lucky the reaction wasn’t worse, because it is trading up under 1% in after-hours trading.  There must at least be some relief that Microsoft-aQuantive and Google-DoubleClick (if that one is allowed) is not going to destroy the company.  Shares closed down 7.7% at $25.08 in regular trading, and the 52-week trading range is $18.06 to $36.70.

Jon C. Ogg
November 1, 2007

Posted on: November 1, 2007 – 3:17 pm in Earnings, Internet,

The 52-Week Low Club

Assured Guaranty (AGO) Small bond insurance company. Wall St. hates bonds. Drops to $17.79 from 52-week high of $31.99.

AMBAC (ABK) Big bond insurance company in world where bonds are bad. Down to $26.96. The 52-week high was $96.10.

Valeant Pharmaceuticals (VRX) Quarterly loss. Falls to $11.61 from 52-week high $19.15.

MBIA (MBI) Bond insurance company. Dead in the water. Down to $36.92 from $76.02 high for last year.

Citigroup (C) Down to $38.13 on possible dividend cut. From 52-week high of $57.00.

Smith Micro (SMSI) Rough quarter. Down to $10.65 from 52-week high of $21.20

Douglas A. McIntyre

Posted on: November 1, 2007 – 3:10 pm in HI/LOW, , , , , ,

Other In-Trouble Mergers After Affiliated Computer (ACS, TRB, CMLS, GCO, PPH, FINL, BX, COMS)

Yesterday morning 24/7 Wall St. covered how the buyout for Affiliated Computer Services (NYSE:ACS) was for all practical purposes looking like toast, and we wanted to see which other pending deals were at risk.  A much more detailed review went to our free email newsletter subscribers yesterday morning, and all of these spreads have widened out today.  The news from last night confirmed this buyout was dead and today the Chairman received notice that the independent directors would leave their posts as per his demands.

But there are many other mergers out there that have misleading merger-arb spreads that are indicative of potential trouble as far as a closing at all or at least a risk of the stated merger price being sent to a reduced buyout price. Almost all of these mergers are different than the ones from September that we deemed at risk.

Tribune (NYSE:TRB) $34 buyout from Sam Zell and employees….
Shares reached almost $30.50 yesterday and today’s $29.90 is representative of a 13.7% merger-arb spread for a merger that shareholders have already approved.  24/7 Wall St. has given our own prediction for a buyout price that Sam Zell would likely offer if financing gets tight in this LBO-OPM (leverage buyout, other peoples money) offer.  We are looking at updating this in our New Media/Old Media subscriber letter next week.

PHH Corp. (NYSE:PHH) $31.50 buyout……
With a near-50% merger-arb spread consider this one toast or revised far lower or maybe only even by one of the buyout partners.  The Blackstone (NYSE:BX) buyout is supposedly to be revisited momentarily, although JPMorgan and Lehman that were financing a portion of the deal have (as of last look) maintained a $750 million shortfall on the debt portion here.  General Electric (NYSE:GE) was Blackstone’s buyout partner and the deal as originally intended was going to send the fleet services group (corporate car and truck fleets) to GE and the mortgage business to Blackstone. 

Genesco (NYSE:GCO) $54.50 buyout……
The $1.5 billion footwear acquisition that had been agreed to in June was scheduled to close last month, but would-be acquirer Finish Line (NASDAQ:FINL) and investment bank UBS stalled on the deal because of concerns over Genesco’s financial performance after the $54.50 buyout deal was announced.  At $45.40 there is a 20% merger-arb spread.  24/7 Wall St.’s belief is that Finish Line is in no position to do the deal whether it "states uncomfort and concerns" or not.

3Com (NASDAQ:COMS) $5.30 buyout…..
3Com’s buyout is not at risk over shareholder revolts nor over financing.  This one is at risk over China’s Huawei holding a stake after the Bain Capital buyout over "national security concerns" because many US and partner government agencies still relying on 3Com’s communication equipment. Senators are reviewing the deal and saber rattling here.  Boy, those must be some old systems.  24/7 Wall St. is reviewing this one now for the Special Situation Investing Newsletter since at $4.86 this has only a 9% merger arb-spread for an at-risk deal on a company that management can’t fix on its own.

Cumulus Media (NASDAQ:CMLS) $11.75 management-led buyout…..
The $1.3 Billion MBO agreement announced on July 23, 2007 has been a quiet one.  When announced this was almost a 40% premium.  At $10.12 today, there is still a 16% merger-arb spread.  The Board of Directors approved the deal and recommended that shareholders vote for it, but the financing from Merrill Lynch Global Private Equity and Merrill Lynch Capital Corporation "could" be up for interpretation.  Jim Cramer actually called this a takeover candidate before the MBO was announced.  Cumulus is also a name 24/7 Wall St. has under review for its New Media Old Media subscriber newsletter.

Jon C. Ogg
November 1, 2007

Jon Ogg produces the subscriber-based Special Situation Investing Newsletter where we cover buyout candidates, restructurings, spin-offs, and more.  We recently issued our "Small Cap Internet Watch List" PART 1 of 2 that showed a list of smaller web related properties we think could be acquired under the right circumstances, and we even listed which predator companies could or would acquire them under the right circumstances.

Posted on: November 1, 2007 – 2:44 pm in Mergers and Buy Outs, Private Equity, , , , , , , , ,

GM (GM) November Sales Tick Up

GM (GM) had another pretty good month in November. Sales of its cars and light trucks moved up 3.4% to just over 307,000.

GM’s stock was off 4.2% to $37.54.

Douglas A. McIntyre

Posted on: November 1, 2007 – 12:59 pm in Autos,

Bad News For Ford (F), No News For Toyota (TM)

Ford (F) had another bad month for sales in its domestic vehicle operations. US units fell almost 10% to just over 195,000 total cars and light trucks. Wall St. thought the numbers would be around 13%, but doing better is this case is hardly doing well. The company now has posted several months of double digit sales drops and has to be in real trouble.

The only bright spot for Ford was a new line of vehicles. According to MarketWatch "combined sales of Ford, Lincoln and Mercury crossover vehicles surged 145% to 36,852."

Over at Toyota (TM) sales rose a little over 4% to almost 198,000 cars and light trucks.

Douglas A. McIntyre

Posted on: November 1, 2007 – 12:53 pm in Autos, ,

The Washington Post (WPO) Online Train Wreck

Donald Graham, CEO of The Washington Post Company (WPO) made this comment to Fortune last summer: "If Internet advertising revenues don’t continue to grow fast," he says, "I think the future of the newspaper business will be very challenging. The Web site simply has to come through."

Any shareholders in the company who hoped that the plan was a good one are very disappoint today. The WPO third quarter numbers were not very good. The online figures were abysmal.

WPO reported net income of $72.5 million ($7.60 per share) for its third quarter ended September 30, 2007, compared to net income of $73.3 million ($7.60 per share) for the third quarter of last year. Revenue for the third quarter of 2007 was $1,022.5 million, up 8% from $946.9 million in 2006. The increase is due mostly to significant revenue growth at the education and cable television divisions.

Newspaper publishing division revenue totaled $210.2 million for the third quarter of 2007, a decrease of 7% from $225.6 million in the third quarter of 2006.

Revenue generated by the WPO online publishing activities, primarily washingtonpost.com, increased 11% to $27.2 million for the third quarter of 2007, from $24.5 million for the third quarter of 2006. The lack of growth here is astonishing, as is the relatively small amount of revenue. Contrast the figures to The New York Times (NYT) were in the third quarter, the company’s Internet revenues increased 26.5 percent to $79.7 million from $63.0 million in the third quarter of 2006. Internet businesses include digital archives, NYTimes.com, Boston.com, About.com and other Company Web sites.

The Post is falling well behind the curve in terms of turning the power of its print brands into online success. And, given the head start that companies like NYT and Dow Jones (DJ) already have, the game may be nearly over. Online consumers will only get their news from so many places.

Douglas A. McIntyre

Posted on: November 1, 2007 – 12:46 pm in Media, , ,

Defensive Stocks Show No Panic Rotation (PEP, KO, BUD, TAP, KFT, CAG, CPB, HRL, MCD, MO, VGR, RAI, PG, CL, MRK, JNJ, NVO)

With the markets down so much today on the financial stock fallout after the Citi downgrade/concern and with oil stocks listing lower after the Exxon miss, we wanted to show a brief comparison of DEFENSIVE STOCKS versus the market today.  If the market does start to get shaky, many of these defensive stock names are where traders will look to hide their equity money.  That may be even more-so the case now that the fiscal year-end window dressing trade for mutual funds has played out.

If you look below the top defensive stocks, which are all trading lower today, are by and large not down as much as the broad market but they aren’t showing any massive defensive interest either.  Of the 30 DJIA components, only 3 are positive today and they are all technology related. 

DJIA            13,727.52 (-202.49/-1.45%)
S&P500      1,527.59  (-21.79/-1.41%)
NASDAQ    2,829.27  (-29.85/-1.04%)

PEP    $73.19    (-0.53/-0.72%)   
KO      $61.63    (-0.13/-0.21%)   
BUD   $50.95    (-0.33/-0.64%)   
TAP    $55.83    (-1.40/-2.45%)   
KFT    $32.98    (-0.43/-1.29%)   
CAG    $23.50    (-0.23/-0.97%)   
CPB    $36.51    (-0.47/-1.27%)   
HRL    $36.21    (-0.27/-0.74%)   
MCD   $59.29    (-0.46/-0.77%)   
MO      $72.63    (-0.30/-0.41%)   
VGR    $21.62    (-0.26/-1.19%)
RAI      $63.49    (-0.94/-1.46%)   
PG       $69.44    (-0.08/-0.12%)   
CL       $75.03    (-1.24/-1.63%)   
MRK    $57.93    (-0.33/-0.57%)   
JNJ      $64.91    (-0.26/-0.40%)   
NVO    $122.55   (-2.14/-1.72%)

So today may be a bad day and decliners may be greatly higher than advancers, but there is not any major fear going on even if the VIX is back over 21.0 right now. Of course that can change, but that isn’t the case so far.

Jon C. Ogg
November 1, 2007

Posted on: November 1, 2007 – 12:30 pm in Defensive Stocks, , , , , , , , , , , , , , , , ,

Why Wall St. Hates Ambac (ABK)

Ambac (ABK), the bond insurance company is down 19% today to a 52-week low of $30.10. The high for the period is $96.10.

Competing firm MBIA (MBI) is already signalling big trouble. According to Businessweek, "MBIA, the world’s largest bond insurer, with nearly $3 billion in revenues, is at the center of the growing mess. In late October the Armonk (N.Y.) firm announced a $36.6 million loss for the third quarter. MBIA blamed markdowns on CDOs and similar securities, which forced it to cut the value of policies it wrote on those products"

And, The Wall Street Journal points out that "independent bond research analyst Kathleen Shanley of GimmeCredit downgraded both MBIA and Ambac Thursday as "the continuing turmoil in credit markets and the major impairments taken against CDO positions."

These shares may look cheap, but the CDO mess may be far from over. Like the shares of Citigroup (C), the two bond insurance companies probably have not found a bottom.

They may not even be close.

Douglas A. McIntyre

Posted on: November 1, 2007 – 12:17 pm in Financial Stocks, , ,

A Fully Compliant Dell (DELL)

Dell (NASDAQ:DELL) issued a release today with the news that it has received a letter from the Board of Directors of The NASDAQ Stock Market LLC confirming that the company has regained compliance with all NASDAQ listing requirements by reason of its recent filing of past due periodic reports.

This is really just a follow-up to this week’s news that Dell had gotten its filings up to date.  Between you and us, Dell was never really at risk of being delisted despite the saber rattling and the implications of not being compliant.  About the worst it ever faced was having a "E" or a "D" on the end of it, and even then that wasn’t really a long term risk.

It looks like the company is going more interactive with product video demos, as well as other promotional efforts:  Dell launched its first online interactive year-in-review, which can be found at www.dell.com/fy07yearinreview. The new year-in-review site features videos and Flash microsites that describe the company’s products, services, milestones and impact around the world.

Dell will still benefit from a strong PC cycle, as will H-P.  The only thing for new money now is that the "easy money" has been made, and now we just have to estimate how much Dell’s share buyback plan being reinitiated can carry it on top of the turnaround plan.

Jon C. Ogg
November 1, 2007

Posted on: November 1, 2007 – 12:04 pm in PC Companies, Regulation, Restatements, SEC, Stock Buybacks,

Video Game Earnings Trifecta: EA, THQ, Midway (ERTS, THQI, MWY)

After today’s close, we’ll see earnings out of three video game publishers.  Electronic Arts (NASDAQ:ERTS), THQ Inc. (NASDAQ:THQI), and Midway Games (NYSE:MWY) all report today.  The key to remember here is that calendar Q3 is not generally as dead as calendar Q2 for video game makers, but that calendar Q4 guidance is perhaps the most important out there.

Electronic Arts (ERTS) is still the kahuna of the video game group.  Analysts are looking for $0.20 EPS on $896 million revenues, and next quarter $0.94 EPS on $1.61 Billion in revenues.  Fiscal March-2008 estimates are $1.15 EPS and $3.77 Billion in revenues.  EA sort of lucked out after the delay of the new Grand Theft Auto game earlier this year, particularly since its near simultaneous launch of Halo 3 would have sucked up much of the available gaming spending money and gaming time.  One key issue will be what the company telegraphs out of the coming BioWare acquisition.  With the acquisition and the new launched of Hellgate:London, The Simpsons, Command & Conquer, and The Orange Box, EA is getting farther and farther away from its old quasi-dependence upon Madden Football and The Sims franchise.

THQ Inc. (THQI) is expected to post -$0.02 EPS and $229.4 million in revenues, but next quarter estimates are $0.70 EPS and $491.1 million in revenues.  Fiscal March-2008 estimates are $0.85 EPS and $1.07 Billion revenues.  The company’s recent guidance already muted expectations.

Midway Games (MWY) is the runt of the group, although it’s always interesting to see how the Sumner Redstone game empire is chugging along through what has been perpetual losses in the past and ahead.  Analysts are looking for -$0.33 EPS on revenues of $39.2 million.  Shares are down 2% at $3.04 today, and the 52-week trading range is $2.96 to $9.18.  Its market cap is only $277 million.

Activision (ATVI) is set to report next week.

Jon C. Ogg
November 1, 2007

Posted on: November 1, 2007 – 9:43 am in Earnings, Video Games, , ,

United Therapeutics (UTHR) Up 31% On Big Profits

United Therapeutics (UTHR) is up 31% to a new 52-week high at $89.

The company had a home run quarter. Total revenues for the third quarter of 2007 were $59.0 million, up 46% from $40.4 million for the third quarter of 2006. Net income for the third quarter of 2007 was $14.8 million, or $0.70 per basic share, up 74% from $8.5 million, or $0.37 per basic share, in the third quarter of 2006.

Cardiovascular product revenue rose almost 90%. This segment is over half of the company’s revenue.

Douglas A. McIntyre

Posted on: November 1, 2007 – 8:53 am in Earnings,

Smith Micro (SMSI) Shares Fall 28% On Rough Earnings

Smith Micro (SMSI) reported an 81 percent fall in quarterly profit, hurt by mounting operating expenses. Revenue of the wireless communication software products developer rose 38 percent to $20.4 million from a year ago.

Shares are off 28% to $10.94.

SMSI reported third-quarter net income of $472,000, or 2 cents a share, compared with $2.5 million, or 9 cents a share, a year ago, according to Reuters.

Analysts had expected the company to earn 21 cents a share, excluding special items, on revenue of $20.3 million, but it did not work out that way.

Douglas A. McIntyre

Posted on: November 1, 2007 – 8:43 am in Uncategorized,