Daily Archives: November 14, 2007

Boeing (BA) Takes More Flak On 787 Launch

Boeing (BA) missed it projections on the date of the first flight of its new 787 Dreamliner. The company blew hitting that milestone, by its own estimate, but six months. The plane is still not in the air.

The misfire cost Boeing a great deal of its credibility with Wall St.

And, that cycle is about to repeat itself as the aircraft company has made promises about the production rate of the new plane that it almost certainly cannot keep.

Boeing say that it will make 100 of the 787 Dreamliners in the next two years. "Reaching the planned monthly production rates to achieve 109 deliveries by the end of 2009 is still a near-Herculean task, in our view," said Bear Stearns according to MarketWatch. That is a pleasant way of saying it will never happen.

In the meantime, rival Airbus is picked up orders for its A350 and A380 jets. Airbus was left for dead last year when it missed production targets on almost every product it designed.

MarketWatch adds "Despite the delayed launch (of the 787), Boeing only shaved three planes off its planned rate of 112 by the end of 2009, an assembly rate deemed dicey by some analysts, such as those at J.P. Morgan Chase and BernsteinResearch"

Boeing’s shares have fallen from almost $99 to under $93 so far this month. If the company hints that analysts are right about the 787 production schedule, Boeing could be back at its 52-week low of $84.60 in no time.

Douglas A. McIntyre

Posted on: November 14, 2007 – 8:00 pm in Aerospace,

Oracle (ORCL) Predicts Growth Rate Over 20%

All investors want to hear that the stocks they own are going to do well. Oracle (ORCL) sent a strong signal that Wall St. can count on big things.

"Twenty percent? That’s for pikers. We’ve been growing 26 percent,"  Safra Catz, Orcacle’s CFO, said at a meeting of Wall Street analysts on the sidelines of OracleWorld, the company’s annual user conference in San Francisco. Reuters writes that the company is using 20% as a base case and assuming that it can do ever better.

Oracle management also indicated that its rapid pace of acquisitions was not likely to slow.

Douglas A. McIntyre

Posted on: November 14, 2007 – 7:23 pm in Software,

Sina Earnings Gift: Not Lead Paint, But It’s Socks (SINA)

Shares of Sina Corp. (NASDAQ:SINA) posted EPS at $0.28 on net income of $17.2 million, and earnings before items were $0.32 EPS on a non-GAAP basis.  Its revenues were $64.3 million.  First Call had estimates at $0.28 EPS on $64.5 million revenues. 

Revenue segments were in-line with estimates: Advertising revenue rose 40% to $45.8 million; non-advertising revenue fell 21% to $18.5 million; mobile service revenue fell 24% to $16.6 million (after Chinese government mandates went in place). Gross margins from year ago levels fell from 64% to 62%.

Sina put next quarter revenue guidance at $68 to $70 million. First Call has estimates at $69.56 million.  It also guided advertising revenues to be between $49.0 million and $50.0 million and non-advertising revenues to be between $19.0 million and $20.0 million. 

Chinese web, media, and mobile entertainment stocks are far from cheap.  The truth is that there is nothing majorly wrong with the report, but there was no significant solid report and definitely nothing overly exciting about this report.  Grandma didn’t give me the G.I Joe with the Kung Fu grip for Christmas.  She gave me cheap socks. 

Sina shares closed down 3.85% on their own in normal trading ahead of earnings today, and shares are down 5% to $47.00-ish in after-hours trading.  The 52-week trading range is $27.53 to $59.27.

Jon C. Ogg
November 14, 2007

Posted on: November 14, 2007 – 6:02 pm in China, Earnings, Internet,

Applied Materials Beats Estimates, But No Guidance (AMAT)

Applied Materials (NASDAQ:AMAT) posted earnings and non-GAAP EPS was $0.34 on revenues of $2.37 Billion. First Call had consensus estimates for this quarter at $0.29 EPS on revenues of $2.38 Billion, while next quarter estimates are $0.27 EPS on revenues of $2.31 Billion. 

Applied’s new orders were $2.21 Billion for the quarter, down 18% from $2.69 billion for the fourth quarter of 2006, and down 3% from $2.28 Billion for the third quarter of fiscal 2007. Gross margin was 45.5%, down from 47.1% for the fourth quarter of fiscal 2006, and down from 47.5% for the third quarter of fiscal 2007. Backlog at the end of the fourth quarter of fiscal 2007 was $3.65 billion, up from $3.43 billion at the end of the third quarter of fiscal 2007.

They did address some of the changes in direction we hoped they would.  CEO Mike Splinter noted, "…..we enhanced our position in flash memory, entered the thin film solar business with strong demand for the SunFab line, and drove our operating performance to increase earnings per share…. HCT acquisition for precision solar wafering and the launch of our PVD product for flat panel display arrays…."

Shares closed up 1.2% today at $18.84 and shares are up marginally in after-hours trading.  Unfortunately, until guidance is out in the conference call, this is an incomplete report.  Next quarter’s estimates from First Call are $0.27 EPS on revenues of $2.31 Billion.  That new orders component being down 3% sequentially doesn’t send a rocking strong message, but the slight increase in backlog may negate that.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the more detailed 24/7 Wall St. subscriber-based Special Situation Investing Newsletter which covers buyouts, reorganizations, spin-offs and more; he does not own securities in the companies he covers.

Posted on: November 14, 2007 – 4:27 pm in Earnings, Semiconductor,

As Fast As Rumors Run Stock, Delta/United Deny Talks (UAUA, DAL)

Delta Air Lines (NYSE:DAL) has canned the notions and the reports on Wall Street and Main Street that it is in merger dicusssions with United Airlines’ parent UAL Corp.  (NASDAQ:UAUA). 

Wall Street has just shown the two that their stocks will rise if they so choose to merge because UAL (UAUA) traded as high as $49+ before closing up 1.5% at $44.17, while Delta traded as high as $21.10 before closing up 4.3% at $19.56.

Assuming you belive the companies about not being in talks (despite their denial), you can blame rumor-mongering or overly aggressive reporting.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the more detailed 24/7 Wall St. subscriber-based Special Situation Investing Newsletter which covers "actual" buyouts, reorganizations, spin-offs and more; he does not own securities in the companies he covers.

Posted on: November 14, 2007 – 4:11 pm in Airlines, ,

The 52-Week Low Club

Six Flags (SIX) Still moving down after announcing drop in net income. Falls to $1.98 from 52-week high of $6.80.

Avery Dennison (AVY) Company announces new financing. Market takes it badly. Down to $51.12 from 52-week high of $71.35.

Blockbuster (BBI) Renting movies at stores is dead, just no buried. Down to $3.74 from 52-week high of $7.30.

Gatehouse (GHS) Newspaper company. Bad earnings. Falls to $8.95 from 52-week high of $22.18.

Daktronics (DAKT) Bad guidance. Bad investment. Drops to $19.76 from 52-week high of $40.05.

MedCath (MDTH) Ugly results for last quarter. Falls to $21.40 from 52-week high of $34.61.

Douglas A. McIntyre

Posted on: November 14, 2007 – 4:01 pm in HI/LOW, , , , , ,

Delta (DAL) May Be Looking At United (UAUA) Merger

According to several media reports, Delta (DAL) may be considering a merger with United Airlines (UAUA).

According to The Wall Street Journal "hedge fund Pardus Capital Management LP, which has stakes in Delta as well as United Airlines, sent a letter to Delta management Tuesday renewing its calls for airline consolidation and specifically advocating a merger of Delta and United."

Both stocks are up on the news.

Douglas A. McIntyre

Posted on: November 14, 2007 – 3:08 pm in Airlines, ,

NYSE’s Thain Will Become CEO Of Merrill (MER, C, GS, NYX)

The New York Post has reported that NYSE (NYSE:NYX) CEO John Thain will be made the new head of Merrill Lynch (NYSE:MER). The announcement is expeted after the close.   This also follows reports from CNBC today.

Thain has also been a hopeful replacement for Citigroup (NYSE:C) as well, although it is no secret as why Thain would choose Merrill Lynch of Citigroup.  Anyone taking over the helm at Citigroup will be forced to announce thousands of layoffs across most divisions of the company, and they will be forced to evaluate the entire structure of a financial supermarket business model that Wall Street really hates.  Would you like to step in and announce thousands of layoffs across the board AND that you are taking a hatchet to the entire company?

At Merrill Lynch, Thain can merely migrate some of his hat tricks from the old Goldman Sachs (NYSE:GS) model, and migrate the inner workings of the NYSE.  Who cares if you have to be the one to kill a bunch of bond and derivative guys anyway.  They already know they are dead.

 

Douglas A. McIntyre

Posted on: November 14, 2007 – 12:49 pm in Brokerage Firms, Management Change, , , ,

Lazard Defends Solar, On Pullbacks (ENER, ESLR, FSLR, SPWR, STP)

Lazard Capital Markets has issued a defense of the solar power companies today.  Analyst Sanjay Shrestha noted that these stocks can be bought on dips.  It is no secret of late that calling these volatile is an understatement.

Shrestha’s report states: "The past few months have seen unprecedented volatility in the solar sector, driven by macro energy dynamics, outstanding earnings performance and outlook from select companies, a number of industry events that saw record investor attendance, and significant capital inflow into the sector….. the sector has changed from a cottage industry into a mainstream industry with a fully evolved value chain on a global basis. The sector has enjoyed an increase in market capitalization from $9 billion to about $45 billion in less than 18 months….."

He also adds, "We believe it is important to take a longer-term view despite somewhat loud near-term noise, and to buy high-quality names on any meaningful dips…. a supply/demand imbalance will likely materialize by 2009, raising the importance of accelerating growth in the US market…"

This notes specifically that SunPower (NASDAQ:SPWR), First Solar (NASDAQ:FSLR), and SunTech power (NYSE:STP) are opportunities where investors are encouraged to take positions in on any weakness.  It notes that Energy Conversion Devices (NASDAQ:ENER) and Evergreen Solar (NASDAQ:ESLR) are turnaround stories with attractive risk/reward.  Evergreen Solar’s target was lifted from $12 to $15 to reflect 25X based on 2009 estimates by Lazard in this note.  Here is the Lazard matrix today:

Ticker  Rated      $PRICE     TARGET
ENER   BUY        $29.22          $40
ESLR    BUY        $12.92          $15
FSLR    BUY         $188.07       $225
SPWR   BUY        $108.42       $185
STP       BUY        $59.70          $75

Here is yesterday’s "The Business Day in Global Warming" where 24/7 Wall St. covers the alternative energy news announcements and developments that affect public companies whether they are green or dirty.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the more detailed 24/7 Wall St. subscriber-based Special Situation Investing Newsletter which covers buyouts, reorganizations, spin-offs and more; he does not own securities in the companies he covers.

Posted on: November 14, 2007 – 12:42 pm in Alternative Energy, Analyst Calls, , , , ,

Gatehouse (GHS) Could Fall Much Further

Newspaper chain Gatehouse (GHS) has been down as much as 15% today on poor earnings and a downgrade from "buy" to "neutral" at Goldman Sachs (GS).

And, this may just be the beginning. Gatehouse trades at a premium to most other newspaper stocks, and the reasons for that are going away. The company reported revenue "as adjusted" of $172 million, and operating income of $12.5 million. The company had a net loss of $8.8 million. The "as adjusted" numbers are used because the company has made a number of acquisitions.

On a GAAP basis, the company had revenue of $163.4 million up from $97.6 million in the same quarter last year. Excluding depreciation and other items, expenses were $131.2 million, up from $78.1 million. Interest expense was $22.3 million, and that is the company’s big problem. If revenue continues to fall, the Gatehouse long-term debt of almost $1.2 billion looks like a very big number.

Gatehouse still trades at about one times revenue. Gannett (GCI) is at 1.2x, but smaller and financially weaker McClatchy (MNI) is .6x. Journal Register (JRC), which is also loaded with debt, trades at .2x.

What is the rational price for the Gatehouse stock? Based on industry comparables, probably less than $6. That is well below the $10.26 it trades for today.

Douglas A. McIntyre

Posted on: November 14, 2007 – 12:38 pm in Media, , , , ,

If United Rentals Buyout Is Dead, Even More Will Follow (URI, BRE)

Shares of United Rentals, Inc. (NYSE:URI) are being crushed with a 25% hit today.  The company announced early this morning an "Extension of Expiration Date for Current Tender Offers and Consent Solicitations" for its debt offerings. Unfortunately, there are reports out of Reuters noting the Cerberus Capital Management is considering the withdrawal of its private equity buyout for the equipment rental company. 

Cerberus is supposedly worried about the company’s economic outlook, and investment banks funding the deal are struggling with selling the associated debt offering. But the report also says that Cerberus is working with the board to come to terms on repricing the deal or reworking the debt offering  For those who watch M&A and for those who follow private equity, that is not exactly mother’s milk.

Cerberus would be obligated to pay a break-up fee if it backs out of the deal.  Frankly, these leveraged "OPM" private equity buyouts are rolling further and further down the market cap food chain.  It seems the billionaires aren’t quite as powerful nor quite as omniscient as they’d have you believe.  When a private equity firm goes out and makes a buyout offer that locks a company’s hands like this, these target companies need to be more aggressive about noting that a "slight change in the economic climate" isn’t a material change in the business.  They should also start forcing the private equity buyers to only be able to announce a "definitive merger agreement approved by both boards of directors" when the private equity firms actually have the financing in hand rather than as "tentative."

Obviously the credit markets have changed.  But even in summer when these deals were becoming more and more crowded, the writing was on the wall.  If private equity firms can’t sell a deal in the low mid-cap range, maybe their salespeople need to be evaluated.

The company posted earnings on October 31: operations diluted earnings per share of $0.97, an increase of 23% compared with $0.79 for the third quarter 2006. Income from continuing operations for the third quarter 2007 increased 26% to $111 million, compared with $88 million for the third quarter 2006. Its EBITDA was even a record for the quarter.  With its earnings, United Rentals included the following statement:

  • Completion of the transaction is subject to customary closing conditions, but is not subject to a financing condition. The acquiring Cerberus affiliate has obtained debt and equity financing commitments for the transactions contemplated by the merger agreement, the aggregate proceeds of which will be sufficient to pay the aggregate merger consideration, related fees and expenses and any required refinancings or repayments of existing company indebtedness.

United Rentals stock is down over 25% today alone at $25.10, and the 52-week trading range is $23.60 to $35.56.  This isn’t the first time the chances of this merger falling apart has come into play.  The agreed price at the time was $34.50.  This traded over $35.00 all on its own back in 2006 before private equity firms went on a drunken buying binge, so accepting too much lower of a buyout might not be a great fiduciary job by management.  Even if the deal is off entirely this much lower price today would be the entire value of the company back to before the deal even came up, barring any huge hidden issues in the company.

24/7 Wall St. sends its own list out to its open email distribution list showing a list of other mergers and acquisitions where the merger-arb spread shows which other deals are indicated to be at-risk.

If this acquisition falls apart, it also impacts BRE Properties Inc.(NYSE:BRE) because it is supposed to replace United Rentals on theS&P Mid Cap 400 Index on a date T.B.A.  There have been some $200 Billion worth of deal implosions, and it seems there are still more to come…. Here is our summary of others we calculated at-risk recently.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the more detailed 24/7 Wall St. subscriber-based Special Situation Investing Newsletter which covers buyouts, reorganizations, spin-offs and more; he does not own securities in the companies he covers.

Posted on: November 14, 2007 – 11:53 am in Mergers and Buy Outs, Private Equity, ,

Earnings Preview: Applied Materials (AMAT)

Applied Materials (NASDAQ:AMAT) reports earnings after close and today’s report marks the company’s fiscal-2007 year-end.  First Call puts consensus estimates for this quarter at $0.29 EPS on revenues of $2.38 Billion, while next quarter estimates are $0.27 EPS on revenues of $2.31 Billion.

At $19.04 with the stock up 2% today, this only has a P/E of 15.2.  But the problem is that earnings growth is essentially Nil.  The fiscal 2007 EPS target of $1.25 is not really different than the $1.23 EPS target for 2008, and the revenue expected for fiscal 2007 at $9.75 Billion is only about 1% from the $9.86 Billion for fiscal 2008.

So there exists a tech stock conundrum.  The stock is now back closer to the middle portion of its $17.35 to $23.00 trading range over the last year.  The good news is that the stock recently bounced off of an $18.00-ish support level.  Options traders are pricing in only a move of $0.50.  Wall Street analysts still have an average price target of $23.50 to $24.00 depending on how you calculate.

The valuations are low, but that’s because there’s no growth. It really looks like Applied Materials is going to need to communicate that it is growing its expansion into solar beyond its recent acquisitions.  They even made noise in Investors Business Daily over the solar operations.  Unfortunately that is a mere blip at the company right now.  Applied has smart executives running it, so hopefully they recognize that going out to buy growth operations may be more exciting than buying back and retiring Applied’s own shares.  Selling chip equipment to chip manufacturers has become an industry that is very far from being exciting, even for the leader in the field.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the more detailed 24/7 Wall St. subscriber-based Special Situation Investing Newsletter; he does not own securities in the companies he covers.

Posted on: November 14, 2007 – 10:46 am in Earnings, Semiconductor,

Fed Increasing Public Forecasting; To Confuse Further

The FOMC under Bernanke is now saying that it wants to increase its communication to the public and will increase its public forecasting from twice per year to four-times per year.  This pertains to public reports that are made by Federal Reserve Board members and Reserve Bank presidents and released to the public.  It will also begin a 3-year inflationary forecasting rather than a two-year.  It will also begin forecasting headline CPI rather than just the Core-PPI which excludes food, energy, medical, and everything else that most of us use every day.  Here is the full list of changes:

  • overall personal consumption expenditures (PCE) inflation,
  • as well as for real gross domestic product (GDP) growth,
  • the unemployment rate,
  • and core PCE inflation.
  • Projections of Nominal GDP Growth will be discontinued.

The full link to this is here at the Federal Reserve site.

Traders may actually like a more open Federal Reserve, but 24/7 Wall St. wonders how this will be any more accurate when you consider how the Fed has been behind the 8-ball over and over.  This is good on the surface, but the old maxim of  "be careful what you wish for" comes to mind when it boils down to forecasting out of academic economists.  Unfortunately, the Fed’s crystal ball is usually no better than that of the bond market.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the more detailed 24/7 Wall St. subscriber-based Special Situation Investing Newsletter; he does not own securities in the companies he covers.

Posted on: November 14, 2007 – 9:56 am in Economy,

Och-Ziff, Hedge Fund IPO Debuts Today (OZM)

Och-Ziff Capital Management Group LLC (NYSE:OZM) is set to see its IPO trade Wednesday.  The giant hedge fund operator priced 36,000,000 Class-A shares at $32.00 per share, for proceeds of about $1.15 billion.  The expected price range had been $30.00 to $33.00. The hedge fund company granted the underwriters the option to buy up to an additional 5.4 million Class A shares to cover any overallotments.

As previously noted, Och-Ziff is selling another $1.15 Billion in shares to Dubai International Capital LLC, a subsidiary of Dubai Holding LLC, and they will own a 9.9% stake in Och-Ziff after the offering.

Och-Ziff plans to use proceeds from the IPO and from Dubai International to buy interests in the company from its existing owners, which includes members of senior management. Och-Ziff’s existing partners will reinvest all their proceeds into the company’s funds.

Och-Ziff’s underwriting group is massive.  Goldman Sachs and Lehman Bros. are tagged as the lead underwriters, and other key underwriters are Merrill Lynch, Morgan Stanley, Citigroup, Deutsche Bank, and J.P.Morgan.  Co-managers with smaller allocations are listed as Credit Suisse, Keefe Bruyette & Woods, Bear Stearns, Macquarie, Nomura, BOC International, Ramirez & co., and Utendahl Capital Partners.  While some of the key European investment banks are not listed in here, it looks like the hedge fund operator is giving an allocation to every investment banker in its rolodex.

More detailed information on this and other IPO’s is previewed on our open email distribution list, and there we often cover spin-offs, break-ups, reorganizations, and more.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the more detailed 24/7 Wall St. subscriber-based Special Situation Investing Newsletter; he does not own securities in the companies he covers.

Posted on: November 14, 2007 – 9:29 am in Financial Stocks, IPOs, ,

Pre-Market Stock News (November 14, 2007)

Below is some of the top news pre-market:

  • Applied Materials (AMAT) reports earnings after close; estimates are $0.29 EPS & R$2.38B.
  • BEA Systems (BEAS) said it expects to submit SEC filings tomorrow to regain compliance.
  • Canadian Solar (CSIQ) trading up over 25% after beating earnings and raising guidance.
  • CDC Corp. (CHINA) announced that its CDC Software expects record revenues this quarter.
  • E*Trade (ETFC) trading up another 3% pre-market.
  • GigaMedia (GIGM) $0.17 EPS vs $0.14 est.
  • HSBC Holdings plc (HBC) taking a $3.4 Billion charge on bad loans in U.S.
  • Meridian BioScience (VIVO) $0.16 EPS vs $0.15 est.
  • MetroPCS (PCS) $0.15 EPS vs $0.13 est.
  • Northstar Neuroscience (NSTR) now expects to unblind EVEREST data and announce primary endpoint results in Jan-2008 and submit PMA early in Q2-2008; for stroke motor recovery and its planned PMA submission; after FDA communications.
  • Pepsico (PEP) reaffirmed guidance of $3.39 EPS for 2007 and cash flows of $7 Billion.
  • Qualcomm (QCOM) hosts its analyst day, Dutch court dismissed one of Nokia’s patent claims against Qualcomm; announced acquisition of Firethorn for mobile banking.
  • Rigel Pharms (RIGL) said that Merck-Serono exercised an option to R763/AS703569 and Aurora Kinase inhibitors in Japan.
  • Rockwell Collins (COL) increased its buyback plan by $300 million.
  • Taser (TASR) reported 3 large orders that will ship this quarter.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.

Posted on: November 14, 2007 – 8:19 am in Pre-Market Activity, , , , , , , , , , , , ,

Top 10 Pre-Market Analyst Calls (ANDE, ADSK, CCL, RCL, KO, PEP, HAS, MAT, OVTI, ORCL, TGT)

There are many other impacting analyst calls today, but these are the top calls that 24/7 Wall St. is focusing on:

  • The Andersons (ANDE) raised to Buy at Banc of America.
  • Autodesk (ADSK) raised to Buy at Jefferies.
  • Carnival Cruises (CCL) and Royal Caribbean (RCL) both started as Outperform at Wachovia.
  • Coca-Cola (KO) and Pepsico (PEP) both started as Outperform at Credit Suisse.
  • Hasbro (HAS) and Mattel (MAT) both started as Outperform at Wachovia.
  • OmniVision (OVTI) and Oracle (ORCL) both raised to Outperform at CIBC.
  • Target (TGT) cut to Neutral from Buy at Merrill Lynch.

Jon C. Ogg
November 14, 2007

Jon Ogg produces the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers.

Posted on: November 14, 2007 – 7:56 am in Analyst Calls, , , , , , , , , , ,

Microsoft’s (MSFT) Software Giveaway

Microsoft (MSFT) is going to offer its new "Communications package, described as collaborative productivity tools, which will provide small businesses with Internet-based corporate-class e-mail, calendar and document sharing for free to customers of Comcast (CMCSA) Business’s high-speed Internet service," according to Reuters.

It is actually an excellent way to skunk Google (GOOG) App software which has similar features and is also aimed at small businesses. And, Comcast has picked up a big marketing point in taking business from telecom firms.

If Microsoft gives away enough software, there won’t be a market for Google to pursue.

Douglas A. McIntyre

Posted on: November 14, 2007 – 7:42 am in Software, , ,

No Apple (AAPL) iPhone For China

Apple’s (AAPL) shares surged 11% yesterday. The Nasdaq was up sharply, which accounts for part of that. But, word that Apple was in talks with huge cellular company China Mobile (CHL) about putting the iPhone into China caused a great deal of the rally.

Not so fast. According to Reuters "the iPhone is unlikely to hit Chinese shelves soon because of technical and fee issues, industry executives said on Wednesday, a day after shares in the U.S. company shot up on hopes of a deal with China Mobile."

The head of China Mobile made a point of saying that the iPhone was unlikely to see his market anytime soon. China’s cellular companies see no need to share subscriber revenue with a handset company, and that is at the core of Apple’s model of its phone.

If Apple is going to push its revenue sharing model as the only way for Chinese cell companies to set up a partnership, the iPhone may not enter that market for years. That is great news for Nokia (NOK), Samsung, RIM (RIMM) and Motorola (MOT), who have smartphones of their own, but don’t require taking a cut of the house’s profits.

Douglas A. McIntyre

Posted on: November 14, 2007 – 6:51 am in China, , , ,

Qualcomm (QCOM) Claws Back

Qualcomm (QCOM) has been left for dead by many investors. Rival Broadcom (BRCM) has won some key intellectual property decisions with the ITC and is also pounding the larger company in the federal court system. Qualcomm’s largest customer, Nokia (NOK) has claims in the courts that the handset chip company charges license fees which are unfairly high and also has violated some of the European company’s patents.

But, US authorities kicked out a case that Nokia had brought against Qualcomm on the licensing dispute between the two companies. Overnight, a court in The Hague "dismissed a patent complaint by the world’s biggest mobile phone maker," according to Reuters.

The court "dismissed the case based on the scope of claims that Nokia had asked, rather than the patent issue itself," Nokia said in a statement. In other words, Nokia will be back in court with a more focused complaint.

But, not every call is going against Qualcomm now, and that is a big change

Douglas A. McIntyre

Posted on: November 14, 2007 – 6:42 am in Wireless, , ,

Europe Markets 11/14/2007

Markets in Europe were shaprly higher at 6.25 AM New York time.

The FTSE rose 1.4% to 6,453. Barclays (BCS) rose 4% to 548. BHP Billiton (BHP) rose 3.5% to 1646. Vodafone (VOD) fell 1.9% to 192.

The DAXX moved up .9% to 7,488. Deutsche Bank (DB) rose 2.8% to 87.28. SAP (SAP) rose 1.1% to 35.23.

The CAC 40 improved 1.5% to 5,621. Alcatel-Lucent (ALU) rose 4.8% to 5.9. AXA (AXA) rose 2.8% to 28.35.

Data from Reuters

Douglas A. McIntyre

Posted on: November 14, 2007 – 6:30 am in International Markets, , , , , , ,