Daily Archives: November 7, 2007

“Made In China ” Gets A Lot Worse, Cheap Gets Expensive

"More than four million Chinese-made toys sold in the U.S. as Aqua Dots are being recalled after reports that children became seriously ill after swallowing beads containing a chemical that causes a reaction in the body that mimics a date-rape drug’s effect," according to a report in The Wall Street Journal.

The toy’s manufacturer, Moose Enterprise, of Melbourne, Australia, yesterday said the problem had been traced to a Chinese factory.

Most major retailers like Wal-Mart (WMT) and toy companies like Mattel (MAT) obviously hoped that these problems were behind them Bad press only takes consumers back to other incidents when "China made" toys had problems. Large US manufactures and retaiilers cannot do without Chinese goods. The margins on the stuff are just too good.

But, cheap gets expensive. The entire American toy chain is now facing a holiday with little children waiting for toys they may never get. Their parents are too worried about their safety.

Douglas A. McIntyre

Posted on: November 7, 2007 – 7:54 pm in Retail, ,

Netease.com, Not All Chinese Web Stocks Created Equal (NTES)

Just when you think that all Chinese Internet and communications stocks only go up, you get to see Netease.com, Inc. (NASDAQ:NTES) fall by more than 10% after an earnings report.  Third quarter profits fell to an equivalent of $0.27 EPS on revenues of $76.2 million.  First Call had analyst estimates at $0.29 EPS on $72 million in revenues.

Shares closed down 2.6% after-hours at $22.28, but shares are down over 10% at $20.00 in late after-hours.  The 52-week trading range is $13.45 to $24.00.

You can still get a peak into 24/7 Wall St.’s "Small Cap Internet Watch List" of potential Internet buyout candidates, and we even named the likely acquirers.  Of course the right circumstances would have to surface, but that is always the case.  You can also joing the public distribution list that previews certain special situation data ahead of the web site formal posts.

NetEase.com operates interactive online and wireless communities in China through online games, wireless value added services, and web portals.

Jon C. Ogg
November 7, 2007

Posted on: November 7, 2007 – 6:54 pm in China, Earnings, Internet,

Cisco Systems Analyst Q&A Session With Chambers (CSCO)

Q&A SESSION for Cisco Systems (NASDAQ:CSCO) (once again contextual rather than verbatim):

GOLDMAN SACHS (Brant Thompson?)… Expand on US verticals markets?

  • CHAMBERS: "Was solid, but did see some softness, and dramatic decreases year over year from major financial services and retail."

RBC Capital Markets…is it becoming more cumbersome because of law of large numbers?

  • CHAMBERS: "Depends on how customers purchase but we think is easier now… doing extremely well in commercial market place where job growth is occurring.  Routing & Switching is lumpy but we’ve seen very solid growth.  We’ll be more right than conventional wisdom.  In terms of ability to move into markets…. actually as an architectural play and web 2.0 migration very comfortable with 12-17% projections."

Read More »

Posted on: November 7, 2007 – 6:13 pm in Analyst Calls, Earnings, Technology Companies,

Morgan Stanley (MS) Says Write-Offs Are Huge

Morgan Stanley sees $6 billion in potential losses from subprime. The company said it held $12.3 billion in Q3 U.S. subprime exposure, according to MarketWatch.

Douglas A. McIntyre

Posted on: November 7, 2007 – 6:04 pm in Financial Stocks,

The 52-Week Low Club (C)(MS)(MER)(WM)

Washington Mutual (WM) Mortgage company in bad environment. Down to $19.72 from 52-week high of $46.38.

Capital One Financial (COF) Big financial loss. Down to $50.05 from 52-week high of $83.84.

Fannie Mae (FNM) Mortgages and NY State investigation. Drops to $48.74 from 52-week high of $70.57.

Veraz Networks (VRAZ) Big quarterly loss and downgrade. Falls to $3.65 from 52-week high of $8.33.

Nastech Pharmaceutical (NSTK) Joint venture with Procter & Gamble (PG) falls apart. Down to $8.50 from 52-week high of $19.98.

Starbucks (SBUX) Coffee does not like recessions. Drops to $24.10 from 52-week high of $40.01.

Morgan Stanley (MS) Worries about write-offs. Down to $50.08 from 52-week of $90.95.

Merrill Lynch (MER) No CEO. Drops to $53.64 from 52-week high of $98.68.

Citicorp (C) No CEO and worries about more big write-offs. Falls to $33.38 from 52-week high of $57.

Bear Stearns (BSC) Wall St. wants CEO to leave. Worries about mortage-backed assets. Falls to $96.11 from 52-week high of $172.61.

Douglas A. McIntyre

Posted on: November 7, 2007 – 5:36 pm in HI/LOW, , , , , , , , ,

AIG (AIG): Tough Quarter

American International Group. (AIG) today reported that its net income for the third quarter of 2007 was $3.09 billion or $1.19 per diluted share, compared to $4.22 billion or $1.61 per diluted share in the third quarter of 2006. Wall St. expected EPS of $1.62 and revenue of $22.9 billion.

Commenting on the third quarter’s results, AIG President and Chief Executive Officer Martin J. Sullivan said, “In a volatile market environment that challenged many financial institutions, AIG reported adjusted net income of $3.49 billion in the third quarter of 2007 and increased book value per share to $40.81, once again confirming the benefits of our diversified portfolio of global businesses. While U.S. residential mortgage and credit market conditions adversely affected our results, our active and strong risk management processes helped contain the exposure. Our balance sheet remains strong with the financial resources to weather continued uncertainty as well as to take advantage of attractive market opportunities as they emerge."

After falling 6.7% in the regular session to $57.90, shares were off 2% after hours.

Douglas A. McIntyre

Posted on: November 7, 2007 – 5:07 pm in Earnings,

John Chambers Conference Call Commentary (CSCO)

The following commentary is what we took out of context rather than verbatim.  The following comments were all given by Cisco Systems’ (NASDAQ:CSCO) Chairman & CEO John Chambers, and we tried to focus on the commentary on a "looking forward" basis rather than a "looking back" basis:

  • "Two key takeaways were unique balance from technology and business architecture, with an average growth rate in mid-double digit gains or better."
  • "The wave just beginning is Phase II of the internet, Web 2.0 and collaboration and Cisco wants to expand its position." 
  • "Services were strong across all categories."
  • "Now has 10 product families with order run rates over $1 Billion."
  • "Believe we are getting larger portion of customers’ ‘total spend’ compared to competitors.
  • "Service revenues is now 16% of total, and it grew by 24% year over year to a $6 Billion run rate and gross margions around 65%."
  • "Europe was very strong with 20% y/o/y growth, Asia-pacific was solid in high-teens and U.S. 13%."
  • "Video continues to drive and is a potential killer app…"
  • "Consumer video and broadband buildouts are driving…unified communications… all will require upgrades to existing Cisco networks and it is now increasing that growth target from 200-300% up to a higher to 400% estimate"
  • "Growth opportunity should be well above industry."
  • "One area very important… the next frontier will be around collaboration and Web 2.0…will drive next wave of productivity around the globe"
  • "Decisions are made on long-term not just next quarter or even two-years."
  • "We continue to believe with caveats that long term growth 12-17% guidance year over year…. Cisco will always be affected by spending patterns etc…. GUIDANCE for fiscal 2008 is middle of long-term rate and the 13-16% was right in middle of range.  Revenue guidance for Q2 2008 revenue growth of 16% year over year."
  • "We will execute similar stratgey for the next decade that we did in early 1990’s…."

After 24/7 WALL ST. overlaid interpreted that guidance range, we calculate a $9.789 Billion in revenues.  FirstCall shows estimates for the quarter at $9.81 Billion.

UPDATE: (5:03 PM) The CFO said forecasting gross margin is difficult but it will remain at approximately 65.5%.  For calculating earnings per share, it sees 50 million more shares next quarter.  GAAP EPS will be $0.04-0.06 lower than non-GAAP EPS dure to acquisitions and impairments.

UPDATE (5:07 PM) Chambers added "We too see some of the same problems evident in US market, but believes Cisco is in a unique position.  The US enterprise is experiencing some softness, and it sees lumpy growth from U.S. enterprises….."  "We believe that in Web 2.0, WE ARE IN THE FIRST INNING OF A NINE INNING GAME….."

Wall Street must have flopped and gone to a negative bias based upon that Cowen & Co. neutral initiation today, because it hit multi-year highs just yesterday.  Sometimes Wall Street flips and flops that fast, particularly on a crummy market day like today.  This is still surprising that the flop was so rapid and that the crowd was demanding more than anyone believed. 

Shares are now down over 8% in after-hours to $30.10.

Jon C. Ogg
November 7, 2007

Posted on: November 7, 2007 – 4:59 pm in Earnings, Technology Companies,

First Solar Rides Cosmic Rays (FSLR)

First Solar (NASDAQ:FSLR) is trading so well after-earnings that it might be thought of as "First Stellar."  The solar company posted net income of $46.0 million, or $0.58 EPS after a $0.09 tax benefit.  FirstCall had estimates at $0.19 EPS and revenues at $120 million. 

The company said that it successfully completed the ramp of a German production facility well ahead of schedule.  That afforded highly leveraged growth during the quarter and gave customers additional production volumes in a "continued robust demand environment."

Unfortunately no guidance was offered.  Without guidance we will hold off any formal ruling, although with an outperformance of this sort it is hard to imagine the numbers were all caught up by analysts.

Shares closed down 1% at $167.12 today, but shares are up 14% at $190.00 in after-hours trading.

Jon C. Ogg
November 7, 2007

Posted on: November 7, 2007 – 4:36 pm in Alternative Energy, Earnings,

Advertising And “Simpsons” Help News Corp (NWS)

News Corp (NWS) reported first quarter consolidated operating income of $1.05 billion, up 23% as compared to the $851 million reported a year ago, primarily as a result of double-digit percentage increases at the Filmed Entertainment and Cable Network. First quarter net income of $732 million ($0.23 per share), decreased versus net income of $843 million ($0.27 per share on a diluted combined basis) reported in the first quarter a year ago.

Revenue rose to $7.1 billion from $5.9 billion a year ago.

At the company’s studios higher first quarter film results were largely driven by the theatrical success of The Simpsons Movie, which has grossed over $524 million in worldwide box office, and Live Free or Die Hard, which has surpassed $375 million in worldwide box office.

Cable Network Programming reported first quarter operating income of $289 million, an increase of $40 million over the first quarter a year ago. The 16% growth reflects increased contributions from Fox News Channel

The Newspapers segment reported first quarter operating income of $93 million, down $31 million from the $124 million reported in the same period a year ago

Shares are up 1.7% after hours

Douglas A. McIntyre

Posted on: November 7, 2007 – 4:15 pm in Earnings,

Cisco Beats Again, On a Confusing Report (CSCO)

John Chambers & Co., A.K.A. Cisco Sytems (NASDAQ:CSCO), has just posted earnings.  The networking and data communications giant posted revenues of $9.6 Billion, and non-Gaap earnings of $2.5 Billion.  Non-GAAP EPS came in at $0.40, after a $0.03 tax benefit.  First Call had estimates at $0.36 EPS and $9.54 Billion in revenues.

Cash flows were $3.1 Billion, cash and equivalents were $24.7 Billion; it repurchased 96 million shares at a $31.28 average price; DSO’s were 33 days, down from 38 days the quarter before; non-GAAP inventort turns were 10.0 days, compared to 10.1 days the prior quarter.

John Chambers said, "We believe the migration to the second phase of the Internet and the proliferation of networked Web 2.0 technologies will help drive dramatic gains in productivity and innovation across all industries. If this market transition continues to unfold as we expect, it has the potential to power Cisco’s and the industry’s growth for many years to come."

Cisco Systems closed down 3.9% at $32.75 on more than 116 million shares at the unofficial close at 4:00 PM, but shares are down 3% more at $31.80 in after-hours trading. 

We predicted shares would fall under $32 or rise to above $35 based upon earnings, but until we hear the full John Chambers unprepared comments from the conference call we are considering this an unresolved issue.

Jon C. Ogg
November 7, 2007

Posted on: November 7, 2007 – 4:15 pm in Earnings,

Cisco Likely Headed Over $35 Or Back Under $32 (CSCO)

Tonight is the Cisco Systems (NASDAQ:CSCO) much awaited earnings conference call, and this will likely set the tone for tech stocks.  Estimates from First Call are still $0.36 EPS on $9.54 Billion in revenues.

24/7 Wall St. does not believe that John Chambers will have to come out and raise his recently-raised guidance to keep Wall Street happy.  The last call was so positive that 24/7 Wall St. feels Chambers just has to come out and maintain his vigilance exhibited in the August call and not show any major margin worries.  But if he doesn’t then the ‘against’ crowd will have all the ammo they need.  When you have a stock at an inflection point like this, it’s quite rare that it stays flat and that is why we expect a large stock price swing one way or another after today.

We gave Cisco a $34 target at the start of the year for mid-year, and shares just hit that level yesterday. A weak dollar is likely to play into the equation at least somewhat today, and if not we’d expect the company to at least address that.   Is it possible to predict a stock price ahead of an event?  No way.  We aren’t even trying to.  But what is funny is that when we plug in our options trader expectations and a discounting mechanism for a synthetic straddle trade we derive a $34.95 to $35.05 upside price and roughly a $32.25 to $32.40 downside price.  Once again, these are just math based upon history and interpretation of events. 

There is a note today from Barron’s showing that the stock pressure is from Cowen & Co. initiating coverage with a Neutral rating because of growing competition and slowing demand. Just last month, Wachovia started Cisco with an "Outperform" rating back in mid-October. Of course today’s analyst call is more front and center since it is right ahead of earnings. But what is certain is that someone is right and someone is wrong.

Cisco was named as the #3 Cramer Growth Stock early in the year.
Here was yesterday’s full earnings preview with options activity active.
Cisco was one of the windows dressing stocks.
It just announced its $16 Billion China expansion.

Of course there is no way to know ahead of time for sure, but the major move in after-hours in Cisco will likely come from Chambers first comments that are not part of the prepared commentary in the press release.  Cisco has already come close to its normal trading volume, and we’d expect this to lead the volume in after-hours and tomorrow.  It traded 193 million shares the day after last earnings.  The short interest as of mid-October was 43.89 million shares, but that is barely one day’s trading volume.

Jon C. Ogg
November 7, 2007

Posted on: November 7, 2007 – 12:31 pm in Analyst Calls, Earnings, Technology Companies,

Lazard Defending Fuel-Tech (FTEK)

Fuel-Tech (NASDAQ:FTEK) is being defended by Lazard Capital after the net earnings miss yesterday.  Analyst Sanjay Shrestha, Managing Director & Senior Analyst, Alternative Energy & Industrials, maintained a BUY rating and a $33 price target on Fuel-Tech today.  This was also one of the "Jim Cramer Alternative Energy Picks Reviewed" stocks from last night.  Lazard maintains that the $33 target reflects a 25-multiple of 2010 EPS estimates of $1.60 discounted back one year by 20%.

Fuel Tech reported 3Q revenues and EPS of $15.2 million and $0.04, below our and consensus estimates of $19.5 million and $0.07, reflecting lumpiness with timing of bookings, typical for the company’s end market.  Consolidated revenues were down 24% Y/Y, with air pollution control (APC) revenues down 39% Y/Y due mainly to major awards materializing later in the quarter than previously anticipated.  As a result, management lowered 2007 revenue and EPS expectations to $76-$79 million and $0.25-$0.28 from $80-$85 million and $0.30-$0.35.

Shestha notes that there was a record booking and backlog: booking sat $24.7 million; backlog $28 million up from $9 million at end of last quarter. "We continue to believe the outlook is robust for the company’s APC and FUELCHEM work, as utilities attempt to comply with increasingly stringent air pollution regulations and focus on improving overall plant efficiency. Despite the lower than expected 3Q, we expect the company to exit 2007 with a solid backlog base, setting the stage for excellent growth into 2008/2009 and beyond…. We are lowering our 2007 revenue and EPS estimates to $71.5 million/$0.25 from $80 million/$0.28, but we leave our out-year estimates unchanged as the company’s growth prospects and outlook remain intact."

24/7 Wall St. has an enhanced viewpoint of this stock.  The reason you saw buying yesterday  after a disappointing result was because Fuel-Tech has one hell of a business model.  Everyone hates coal except for coal mine operators, but that doesn’t matter one bit.  Even in the U.S. with all the alternatives out there, coal-fired power plants are something we are stuck with for probably decades, and we won’t even address Asia.  Only so many nuclear power plants can be built if the permitting is allowed, only so many workers can be hired at any time for this, and only so many plants can be decommissioned in a certain time.

Assuming there are no regulatory loosening factors at work, it is the opinion of 24/7 Wall St. that ‘cleaner coal’ is a fact the world will have to deal with "like it or not."  That doesn’t assure a higher price for a triple-digit P/E alternative energy beneficiary.  But it certainly explains why there are buyers for this stock every single time it weakens.

Jon C. Ogg
November 7, 2007

Posted on: November 7, 2007 – 11:56 am in Alternative Energy, Analyst Calls,

A Conversation With FT.com Chief Ien Cheng

Those who believe that the newspaper industry is going the way of the Dodo and buggy whip
and can’t conceive that enhanced online versions of papers can ever do especially well
ought to pay a visit to the UK’s FT. The brutal calculus of newspapers in most developed
countries is that their audiences are being devoured by the internet. If news becomes
a commodity, that may indeed be true. Wall St. suspects it is, trading stocks like The
New York Times (NYT) and Gannett (GCI) at multi-year lows.

Industry observers might argue that the Financial Times and its FT.com stable mate have the
advantage of serving a rarified market because the paper covers global finance. But, the
competition in that market is keen with Dow Jones (DJ) playing in paper and online, and
firms like Reuters improving their web operations.

One trend that content companies may have failed to notice is that better writing and
better analysis can catch and hold a large audience. In the US the industry needs to
look no further than the high-end blog like TechCruch which has a huge readership and
spends virtually nothing on marketing. It has readers because it has stories that readers
must read.

In a conversation today with Ien Cheng, managing editor and publisher of FT.com, he made it clear
that the paper and the website offer products that readers cannot get elsewhere. The
company will not devalue this content by offering all of its services
to the reader for free. Instead, it is improving those services and making the paper and online
edition even more attractive.

Some significant portion of that plan must be working. Mr. Cheng says that FT.com monthly
unique visitors are up 70% over the last year to 6.3 million. Page views have jumped 50%
to 48 million per month

To keep the readers coming back and to build their ranks, FT.com is launching an enhanced
market data sight. The product will include interactive charts, intraday currency data,and
better portfolio tools among other things. The website is also moving some of its
more well-known columnists to its blogging community. Mr. Cheng’s theory is that readers
would like to see the work of these writers. Publishing their views more often will be a
magnet for repeat visits.

The new program is not without a marketing plan. FT.com already has traffic arrangements
with several of the large portals, and it now offers 30 stories a month per user for free.

Mr. Cheng says that much of the philosophy behind all of this work is that better analysis
and speed to market with news can trump pure size and scale. In the arena of global
business reporting it would be hard to quarrel that the FT is not in the first tier,
but the company does not feel it is at a disadvantage by being smaller than Mr. Murdoch’s
new Dow Jones/News Corp (NWS) financial information empire. Being nimble can best being massive.

When asked why the FT.com should simply not move to a "free content", ad supported model,
Mr. Cheng had a response that might prove educational to others in the content business.
He does not have to. Traffic to FT.com is growing despite the fact that a full online
subscription requires a payment. FT.com believes that it can enjoy the best of both worlds.
Mr. Murdoch may prove him wrong if the WSJ.com becomes an entirely free product.
That still remains to be seen.

FT.com and The Financial Times do have greater resources than many papers, but certainly
no more than The New York Times, Washington Post (WPO), or Gannett. The UK company may have
decided to use its fire power more wisely, and indications are that the approach is a
success.

Mr. Cheng promises more innovation at FT.com next year. He may want to hold the calls
from other newspaper companies who would like to stop by and benchmark his plans.

The FT Group is part of Pearson plc (PSO)

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com.

Posted on: November 7, 2007 – 10:44 am in Uncategorized, , , , , ,

The Market Loses Faith In Yahoo! (YHOO)

The big rally in Yahoo! (YHOO) did not last long. Modest earnings and excitement about its 40% stake in Alibaba took the shares from $26.55 in mid-October to $33.99 at the end of the month. The stock have been as low as $28.37 today, trading off 5%

Some on Wall St. think that fact that Yahoo! ratted out a journalist in China may contribute to the sell-off. It was certainly a moral lapse, but nothing to bring the stock down. CEO Jerry Yang will be flogged in Congress and the media, but he has bigger problems.

It has dawned on traders that, even if Yahoo!’s piece of new IPO Alibaba is worth $8 billion or so, the price of the newly public company cannot defy gravity for long. And, selling a 40% share of the Chinese firm is impossible. What is on paper is not always what goes into the bank.

And, today AOL posted modest advertising revenue growth of 13% over the same quarter last year. It reminded Yahoo! investors that the portal business is cruel and competitive.

Yahoo! has a three week rally, and now it is over, perhaps for a long time.

Douglas A. McIntyre

Read More »

Posted on: November 7, 2007 – 10:05 am in Internet,

Geron Positive Spinal Cord Injury Data (GERN)

Geron Corp. (NASDAQ:GERN) is trading up in pre-market activity on news that would have been much more eagerly received back in the emergence of stem cell news.  Geron announced that data shows its human embryonic stem cell based therapeutic candidate for spinal cord injury GRNOPC1 survives and exhibits durable and robust human remyelination in spinal cord-injured rats.  The duration was for at least nine months following a single injection.

This data is being presented at the Society for Neurosciences Annual Meeting in San Diego, the data also demonstrate that GRNOPC1 does not amplify neuropathic pain or the reaction to painful stimuli.  Surprisingly, other similar research has shown that other cell types injected in the spinal cord amplify neuropathic pain, and that has been a complication of human spinal cord injury.

GRNOPC1 is an allogeneic population of cells that contain oligodendroglial progenitors ultimately intended for transplant into the lesion site of patients with spinal cord injury to induce tissue repair. Geron’s development plan for GRNOPC1 calls for the filing of an Investigational New Drug Application with the FDA and ultimately an initiation of human clinical trials in 2008.

It doesn’t sound like this is a pure cure for paralyzation or spinal cord injury yet, but this is hopefully one more step to a major medical issue that has been to date untreatable.  Geron shares are up 2.5% at $7.30 in pre-market trading, and the 52-week trading range is $5.67 to $10.00. Back in the early 2000’s, this is the sort of news that would have had a stem cell stock up double-digit percentages.

Jon C. Ogg
November 7, 2007

Posted on: November 7, 2007 – 8:46 am in Biotech,

Ebay (EBAY) May Buy Brit Auction Firm QXL

The TImes of London is reporting that eBay (EBAY), the US online auction giant, is being touted as a bidder for its smaller UK rival QXL Ricardo after the British dotcom survivor confirmed today that it has received a takeover approach.

Douglas A. McIntyre

Posted on: November 7, 2007 – 8:28 am in Mergers and Buy Outs,

Pre-market Stock News (November 7, 2007)

  • Blue Nile (NILE) trading up almost 10% after earnings.
  • CDC Corp.’s (CHINA) China.com subsidiar signed an advertising contract with Giant Interactive Group (GA), one of China’s leading online game developers.
  • Devon Energy (DVN) $1.55 EPS vs $1.40 est.
  • DollarThrifty (DTG) $1.16 EPS vs $1.17 est.; guidance looked soft.
  • Fluor (FLR) $1.02 EPS vs $1.09 est.; backlog up 41%.
  • Ford (F) trading down 2% in conjunction with GM losses; Ford posts earnings Thursday.
  • Foster Wheeler (FWLT) approved a 2-1 stock split.
  • General Motors (GM) traded down 8% after posting huge charges and wider losses.
  • Geron (GERN) says data show its cell-based therapeutic for spinal cord injury survives and exhibits remyelination for at least nine months following injection; shares up 2%.
  • Health Care (HCN) To Replace Ceridian (CEN) in S&P MidCap 400 Index.
  • Inspire Pharma (ISPH) -$0.32 EPs vs -$0.37 est.
  • Melco PBL Ent. (MPEL) says Macau City of Dreams remains on budget and on-time.
  • MEMC Electonic (WFR) noted by Cramer as his favorite stock in alternative energy related stocks.
  • Microsoft (MSFT) fired its Chief Information Officer after violating company policies.
  • NASDAQ (NDAQ) confirmed a $652 million buyout of Philadelphia exchange for some $652 million purchase price in a deal that will close in early 2008.
  • NuStar Energy (NS) $0.81 EPS vs $0.77 est.
  • Time Warner Cable (TWC) $0.25 EPS vs $0.27 est.
  • Time Warner inc. (TWX) $0.24 EPS vs $0.24 est.; reaffirmed 2007 target, although it may be $0.01 under consensus EPS.

Jon C. Ogg
November 7, 2007

Posted on: November 7, 2007 – 8:23 am in Pre-Market Activity

Pre-Market Analyst Calls (November 7, 2007)

  • Allstate (ALL) raised to Buy from Hold at Citigroup.
  • Archer-Daniels Midland (ADM) raised to Neutral at Credit Suisse.
  • Assured Guaranty (AGO) raised to Neutral at JPMorgan.
  • Camden Property (CPT) raised to Outperform at Credit Suisse.
  • Canadian Solar (CSIQ) started as Neutral at B of A.
  • Charlotte Russe (CHIC) cut to Mkt Perform at FBR.
  • China Sunergy (CSUN) started as Sell at B of A.
  • Credence Systems (CMOS) cut to Sell at Citigroup.
  • Indymac Nacorp (IMB) cut to Underperform at FBR.
  • Interpublic (IPG) cut to Neutral at B of A.
  • JA Solar (JASO) started as Buy at B of A.
  • Lululemon (LULU) raised to Neutral from Sell at UBS.
  • Mediacom Communications (MCCC) raised to Buy at Citigroup.
  • Northrup Grumman (NOC) raised to Buy at UBS.
  • Omnicom (OMC) cut to Sell at B of A.
  • Performance Food (PFGC) raised to Outperform at Wachovia; but cut to Underweight at JPMorgan.
  • PetroChina (PTR) cut to Underperform at Credit Suisse.
  • SolarFun (SFUN) started as Neutral at B of A.
  • Sun Micro (JAVA) raised to Mkt Perform at Sanford Bernstein.
  • Sysco Foods (SYY) raised to Overweight at JPMorgan.
  • Tongjitang Chinese Medicine (TCM) cut to Underperform at CIBC.
  • Trina Solar (TSL) started as Buy at B of A.
  • UBS AG (UBS) raised to Overweight at JPMorgan.
  • UnitedHealth (UNH) raised to Buy at UBS.
  • Yingli Green Energy (YGE) started as Neutral at B of A.

Jon C. Ogg
November 7, 2007

Posted on: November 7, 2007 – 8:04 am in Analyst Calls

Is GM’s (GM) Big Turnaround in The Dumpster

General Motors Corp. (NYSE:GM) is trading down sharply after disclosing huge charges last night.  The auto giant posted $43.1 Billion in quarterly revenues  GM does note that ongoing challenges in the U.S. mortgage market is impacting GM income from GMAC.  The company is recording a $39 billion allowance on deferred tax assets, although the company is also claiming that its liquidity position improved to $30 billion.

Unfortunately GM’s core operations were still at a loss. Excluding special items, GM had a 2007 third-quarter adjusted net loss of $1.6 billion, or $2.80 per diluted share, compared to net income of $497 million, or $.88 per diluted share, in the year-ago quarter.

In North American, the car company had an adjusted net loss from continuing operations of $247 million. So, it still have a long way to go to fix the broken core of the company–its home market.

No matter how well GM does in China and South America, a talking point for almost all GM execs, the labor cost cuts that the company has just won in its UAW negotiations are now faced with multiple threats.

The first of these is $100 oil. This could translate into $3.50 gas prices, which would certainly hurt US car sales, especially of profitable SUV and pick-up models.

And, the housing crisis makes the consumer feel more broke each day.

The truth is, the consumer is broke in many cases, and that would kill GM’s hopes here for a long, long time.

Douglas A. McIntyre

Posted on: November 7, 2007 – 7:34 am in Uncategorized,

GM’s Earnings…Driving on Flat Tires (GM)

General Motors Corp. (NYSE:GM) is trading down sharply after disclosing huge charges last night.  The auto giant posted $43.1 Billion in quarterly revenues  GM does note that ongoing challenges in the U.S. mortgage market is impacting GM income from GMAC.  The company is recording a $39 billion allowance on deferred tax assets, although the company is also claiming that its liquidity position improved to $30 billion.

GM also noted that its global sales were a record.  Unfortunately its core operations were still at a loss. Excluding special items, GM had a 2007 third-quarter adjusted net loss of $1.6 billion, or $2.80 per diluted share, compared to net income of $497 million, or $.88 per diluted share, in the year-ago quarter.  If you trust the estimates, it appears that First Call was -$0.11 EPS & $40.28 Billion in revenues.

Shares are down 8% pre-market at $33.25, and the 52-week range is $28.49 to $43.20.  Unfortunately, this and the weak dollar are adding to early indications of a significantly lower DJIA this morning. 

Jon C. Ogg
November 7, 2007

Posted on: November 7, 2007 – 7:19 am in Autos, Earnings,