Daily Archives: December 20, 2007

Biotech Implosion: Genitope (GTOP)

Genitope Corp. (NASDAQ:GTOP) probably just made sure the workers’ kids won’t be getting much more than coal this year.  Genitope announced that its pivotal Phase 3 clinical trial examining the use of MyVax® personalized immunotherapy in previously untreated follicular B-cell non-Hodgkin’s lymphoma patients did not meet its primary endpoint.

In the primary analysis, there was no statistically significant difference in the progression-free survival (PFS) of patients receiving MyVax® personalized immunotherapy compared to patients receiving the control substance. Importantly, analysis of a pre-specified endpoint in the MyVax® personalized immunotherapy arm showed a highly statistically significant difference in PFS between patients who mounted a positive immune response to the tumor-specific target and those who did not. 

This fell 38% to $2.59 in regular trading as word of the trials came out at the end of the day.  But now shares are down 60% to roughly $1.00 in after-hours trading.  This had a prior 52-week trading range of $3.00 to $4.93. 

The company generates zero revenues and has been burning about $16 million per quarter.  On its last balance sheet it had almost $40 million in cash and securities and held $47.1 million in long-term debt.  What is interesting is that if you look at the quote, they are trying to smooth is over:

  • Dan W. Denney, Jr., Ph.D., Chairman & CEO" “We are excited by these results because the data clearly show that MyVax personalized immunotherapy is a safe and active drug for follicular lymphoma patients. Both arms of the trial appear to show activity. Patients who received MyVax personalized immunotherapy and mounted a positive immune response to the tumor-specific target demonstrated superior clinical outcomes compared to patients who did not mount this specific immune response. While we recognize that the regulatory path would be clearer had the trial met its primary endpoint, we are pleased with the outcome of the trial. We are working closely with the FDA to determine the path forward for MyVax personalized immunotherapy.”  Maybe he should change his name to Dr. Pangloss.

This has been public since 2004 and has been a less promising stock since Summer of 2006. Zombie movies can be fun to watch, but no one likes biotech zombies.  This one isn’t officially at zombie status yet, but it isn’t far.

Jon C. Ogg
December 20, 2007

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Posted on: December 20, 2007 – 4:58 pm in Biotech, ,

Research In Motion Sails Ahead (RIMM)

Research In Motion Ltd. (NASDAQ:RIMM) posted earnings with Net Income of $370.5 million, or $0.65 per share diluted on $1.67 Billion in revenues.  First Call had estimates pegged at $0.62 EPS on revenues of $1.65 Billion.  Its own guidance had been for $0.59 to $0.63 on $1.6 to $1.67 Billion in revenues.

It added 1.65 Million BlackBerry subscribers and over 3.9 million devices were shipped during the quarter to end with approximately 12 million subscriber accounts.

RIMM is guiding next quarter to $0.66-0.70 versus $0.65 estimates, and revenues were guided to $1.80 to $1.87 Billion versus estimates of $1.75 Billion.

Shares are trading north of $8.00 higher to $115.50 in after-hours trading, and that is after a 4.8% gain to $106.99 in normal trading. We had noted that options traders were braced for this to move up to $8.50 or $9.00 in either direction in our preview.

We’ll have to see if this changes in the conference call.

Posted on: December 20, 2007 – 4:14 pm in Earnings, Wireless,

The 52-Week Low Club (C)(MBI)(RAD)

Rite Aid Corporation (RAD) Ugly earnings. No turnaround here. Falls to $2.71 from 52-week high of $6.74.

MBIA (MBI) Concerns about CDOs being insured here. Falls to $18.84 from 52-week high of $76.02.

SLM (SLM) Still falling after comments about tough 2008 and possible dividend cut. Down to $19.84 from 52-week high of $58.

Altus Pharmaceuticals (ALTU) Partnership with Genentech (DNA) broken off. Sells off to $4.80 from 52-week high of $20.50.

Amicus Therapeutics (FOLD) Wall St. views new drug as less than competitive to current offerings. Shares drop to $9.20 from 52-week high of $18.22.

Array Biopharma (ARRY) Clinical trial fails. Drops to $7.81 from 52-week high of $14.59

Citigroup (C) Fresh concerns about mortgage risks. Drops to $29.34 from 52-week high of $57.

Douglas A. McIntyre

Douglas A. McIntyre

Posted on: December 20, 2007 – 4:03 pm in HI/LOW, , , , , , ,

Turnarounds That Haven’t Turned Around: Nortel (NT, CSCO, ALU)

Nortel Networks Corp. (NYSE:NT) is one of the old tech/telecom equipment stocks that has never seemed to be able to make a turnaround hold.  The company is far from alone and competition from behemoths is fierce in an environment where wire-line and wireless telecom and communications equipment providers have seemed to merge into larger companies that are smaller in numbers.   

At $15.55, Nortel is at the bottom of its $15.32 to $31.79 52-week trading range and it has hit our own list of 52-week lows recently more times than we’d care to rehash.  But on a reverse-split adjusted basis this reached more than three-times that price in early 2004.  It’s been downhill ever since.  In late-2006 Nortel tried the 1-for-10 reverse stock split to get off the $1 to $3 stock handles and to lower its share count.

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Posted on: December 20, 2007 – 3:32 pm in Telecom, Turnarounds, , ,

Turnarounds That Haven’t Turned Around: JDS Uniphase (JDSU)

There are many companies that have been troubled and involved in turnarounds for quite some time that just never quite seem to get turned around.  Enter JDS Uniphase (NASDAQ: JDSU).  JDS Uniphase is in a true conundrum if you look into the time machine because it isn’t a dirt cheap value stock and it isn’t a high-growth engine. It’s now just an old fiber optics company trying to find its groove.  The good side (or less bad) is that it is far from being alone in old tech wrecks in the fiber optic and communications equipment sector, and it doesn’t really look like the situation is heading far south again.

JDSU still has a $3 Billion market cap, far short of its prior glory days during the tech bubble.  At $13.60 this is at the lower-end of its $12.41 to $17.99 52-week trading band, but on a split-adjusted basis this had climbed back to above $30 in mid-2006.  We aren’t even going to address that old huge $90 Billion or however much it was (biggest in history).

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Posted on: December 20, 2007 – 2:39 pm in Technology Companies, Turnarounds,

Research In Motion Earnings Preview & Tech Fallout (RIMM, AAPL, PALM)

Research In Motion Ltd. (NASDAQ:RIMM) is set to report earnings after today’s close in what is going to be one of the last big tech reports of 2007.  For its November-end Q3, First Call has estimates pegged at $0.62 EPS on revenues of $1.65 Billion.  Its own guidance had been for $0.59 to $0.63 on $1.6 to $1.67 Billion in revenues.  This one is still one of Cramer’s "New Horsemen of Tech" from earlier.

Next quarter (Q4) estimates are $0.65 EPS on revenues of $1.75 Billion (so $2.17 fiscal EPS and $5.86 Billion revenues).  It forecast $2.25 for fiscal FEB-2008 at its last report.  We do not know if R-I-M will step out on a limb for more than a year out but the FEB-2009 Fiscal targets from the street are $3.25 EPS on $8.7 Billion revenues.

Read More »

Posted on: December 20, 2007 – 12:18 pm in Earnings, Wireless, , ,

Confidence In Banking Fix Dissolves As Citigroup (C) Hits New Lows

Citigroup (C) is back to it new lows, trading down to $29.52.

Citi could have been driven down by the losses at Bear Stearns (BSC). It could be that Fitch cut its outlook on Bank of America (BCA) to negative from stable due to weakness in the residential mortgage market, according to MarketWatch.

Wall St. obviously thinks that there is a great deal of negative news that has not come out of the big bank. The mortgage market is likely to get worse. There are auto and credit card CDOs on some bank books.

If the bank’s cash and balance sheet problems get worse, Citi will have to cut its dividend. It also may need to go to the market or sovereign funds for more capital. In other word’s the traditional sources of capital may not be available. Citi may be considered too risky.

The Fed is not done providing funding to the nation’s big bank. Not by a long shot. The liquidity infusion that looked so promising a day ago appear to be no blessing at all as money center banks drop further

New management did not have a honeymoon.

Douglas A. McIntyre

Posted on: December 20, 2007 – 11:13 am in Banking, , ,

Footnoted.org Poll

A poll on the "Stupidest FootNote of 2007" from our friends at Footnoted.org

Douglas A. McIntyre

Posted on: December 20, 2007 – 10:03 am in Uncategorized

NetSuite Remind You Of Anyone?… Almost & Not Quite (N, VMW, ORCL, EMC)

NetSuite (NYSE: N) is one we covered with a strengthening bid ahead of its IPO, but it priced at $26.00.  That is twice the initial price forecast.  Shares traded slightly lower at the open and then went back above the $26.00 pricing.  That 100% mark-up to the original price indications might be to blame for some of the trading uncertainty.  Traders are searching for a comparison here. 

This has much of the look and feel of EMC Corp. (NYSE: EMC) partial spin-off of VMware (NYSE: VMW).  In fact, traders are already drawing the parallel.  NetSuite is application software on-demand allowing companies to subscribing to services to use software on any device with an Internet connection instead of paying up to install programs on their own computers and maintain them.  Larry Ellison of Oracle backed NetSuite and he holds over half of the company. 

But the comparisons stop there for now.  NetSuite has a history of losses and the "virtualization" word is the term for the second half of 2007 and all of 2008.   Despite a sickly low public float in the number of shares, VMware has grown rapidly in a shorter period and is already profitable.

This is probably the last hot IPO of 2007, so enjoy this one while it’s here.  You can join our open email distribution list to hear about other hot upcoming IPO’s and back door plays, break-ups, spin-offs, and more previews for special situations.

Jon C. Ogg
December 20, 2007

Posted on: December 20, 2007 – 9:51 am in IPOs, Software, , , ,

Slaughter Stocks: LDK Solar (LDK), MBIA (MBI), And Rite Aid (RAD)

It’s a big day for big caps to get eviscerated.

Rite Aid (RAD) is off 20% after reporting a bad quarter/

MBIA (MBI) is down 18% on a negative outlook from S&P.

LDK Solar (LDK) is off 18% on good earnings which were not good enough.

Douglas A. McIntyre

Posted on: December 20, 2007 – 9:38 am in Uncategorized, , ,

When Brokers Defy Logic (BSC, MS, GS, MER)

Whether or not the markets comply going into year-end is a completely different issue.  But these brokerage stocks look like they are trying to find a bottom as they throw out all that they can.  Will there be more bad headlines? You bet there will.  But these firms are not at all signaling that they will implode from all the CDO, mortgage, and debt risks.  That is what Wall Street is focusing on for the time being.

This morning Bear Stearns (NYSE:BSC) posted an incredibly wide loss and its first quarterly loss.  Its $854 million loss for the quarter after a $1.9 Billion write-down translates to -$6.90 EPS.  The truth is that it doesn’t really matter what the numbers were.  The company is sending the message that it will survive this CDO and mortgage implosion mess. It’s also not paying a bonus at the top and CEO Jimmy Cayne is one we think taht will probably ‘retire’ in 2008.  Initially the stock dropped on the news, but BSC shares are actually trading up about 1.5% at $92.00 in pre-market trading.

Yesterday, Morgan Stanley (NYSE: MS) also posted a loss and took $9.4 Billion in charges.  it also took a $5 Billion investment from China and CEO John Mack took no bonus.  Its shares rose roughly 4% yesterday and are up almost 1% pre-market today at $50.49.

On Tuesday, Goldman Sachs (NYSE:GS) came out and beat earnings expectations yet its stock fell over $7.00 Tuesday after reports of a "horrible November" were noted on its earnings conference call.  Those "horrible November" comments were being passed around Wall Street on instant messenger comments on Monday afternoon, so that was really just a confirmation.  Goldman Sachs has gone unscathed so far because of its hedging and bets against mortgage and CDO’s earlier this year.  This one is by far the Best In Show out of the brokers.  Shares are up marginally pre-market after a light recovery yesterday.

Merrill Lynch has already taken over $10 Billion in write-downs and Credit Suisse put their worst case scenario as an additional $12 to $15 Billion in write-downs.  With John Thayne as the new CEO there, you can expect him to throw out the bathwater, the baby, mommy, and all the cousins.  None of this happened on his watch there and he has a real incentive to clean house so Merrill Lynch can focus on the future.  Shares of Merrill lynch are up almost 1% pre-market.

When you see stocks trading up on bad news as most of the data is finally being filtered out, it tells you something.

Jon C. Ogg
December 20, 2007

Posted on: December 20, 2007 – 9:33 am in Brokerage Firms, , , ,

McClatchy (MNI) Falls Apart

November was another horrible month for newspaper chain McClatchy (MNI). The company said that both consolidated advertising and total revenues in November 2007 decreased 9.2%.

Real estate classified revenue was down 31% for the month and employment classified by almost 25%.

Revenue in the company’s California papers fell 16%.

Only ad revenue is going nowhere. It dropped 4%.

McClatchy shares are off 70% this year, and that is likely to get worse.

Douglas A. McIntyre

Posted on: December 20, 2007 – 9:24 am in Old Media,

Qualcomm (QCOM) Raises Guidance

No matter how big its legal problems are with Nokia (NOK) or Broadcom (BRCM), Qualcomm (QCOM) keeps chugging along.

Qualcomm said that based on the current business outlook, it now anticipates first fiscal quarter pro forma revenues to be at the high end of the prior guidance of approximately $2.3 to $2.4 billion compared to $2.02 billion in the year ago quarter. The firm anticipates first fiscal quarter pro forma diluted earnings per share to be approximately $0.52 to $0.53 compared to $0.43 in the year ago quarter. This estimate is based on the shipment of approximately 78 million Mobile Station Modem chips during the quarter as compared to our prior estimate of 74 to 78 million units. QCOM previously anticipated first fiscal quarter Qualcomm pro forma diluted earnings per share of approximately $0.50 to $0.52.

Impressive.

Douglas A. McIntyre

Posted on: December 20, 2007 – 9:18 am in Uncategorized, , ,

Local.com Meets Barry Diller (LOCM, IACI)

Local.com (NASDAQ:LOCM) is seeing its shares surge some 15% pre-market after it signed a new pact today.  It has entered a strategic partnership with Barry Diller’s IAC/Interactive (NASDAQ:IACI).

Local.com says it will benefit from additional advertiser revenue and content on its site by displaying Citysearch business profile data including over one million editorial and user reviews, as well as ratings, business coupons and photos.  Citysearch will get to increase its advertiser reach on Local.com and its distribution network of over 400 regional media sites, which serve over 10 million visitors each month.

We recently highlighted Local.com (NASDAQ:LOCM) in our "10 Stocks Under $10" as one that would turn on the press release machines, and that was before it moved more than 40% in a single day.  IAC/Interactive (NASDAQ:IACI) is also under review for our Special Situation Investing Newsletter.  Here is our HOLIDAY DISCOUNT PAGE.

As usually expected, financial terms of the agreement were not disclosed.  Local.com (NASDAQ:LOCM) shares are up roughly 15% pre-market at $5.80. Its 52-week trading range is $3.05 to $13.74.

Jon C. Ogg
December 20, 2007

Posted on: December 20, 2007 – 9:01 am in Internet, , ,

Rite Aid Can’t Get It Right (RAD, CVS, WAG)

Rite Aid Corp. (NYSE: RAD) is indicated to open lower after the company posted another net loss for the quarter.  It also lowered guidance for a second time.  We just noted this one as a turnaround stock that has yet to turn around, and this proves that even more true.

Its $93 million net loss came in at -$0.12 EPS, while First Call was looking for only -$0.07 EPS targets. revenues came in at $6.52 Billion, also under the $6.6 Billion estimate.  To top it off, Rite Aid said a slow cold and flu season was having an impact.

As far as guidance, that is lower. It now expects to lose $161 to $192 million for fiscal 2008, a wider loss than its prior range of $78 to $161 million. It targets fiscal 2008 sales between $24.3 and $24.6 billion, under the September forecast of $24.5 to $25.1 billion.

Last night Jim Cramer noted the difference on execution between CVS Caremark (NYSE:CVS) and Walgreens (NYSE:WAG) with CVS being the clear winner.  Imagine what you’d have to say about the execution here.  This one had been one of Cramer’s Top 9 Picks for 2007, but its turnaround stumbled.  Hell, it’s falling off the cart.

Rite Aid shares are now indicated down almost 10% at $3.70 in crummy pre-market trading.  Its 52-week trading range is $3.44 to $6.74.  That hurts.

Jon C. Ogg
December 20, 2007

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Posted on: December 20, 2007 – 8:20 am in Earnings, , ,

Pre-Market Stock News (December 20, 2007) (ACN, ATVI, ALTU, ARRY, ATHX, BSC, BX, CAKE, ECHO, INTU, FDX, MLHR, IDEV, LDK, LEG, LOCM, NKE, ORCL, PIR, RIMM, RAD, RUTH, SMOD, SCS, DEEP, TRB)

This is not every bit of news on individual stocks but this is the major news affecting many shares in pre-market activity this Thursday morning:

  • Accenture (ACN) stock up 4% after posting $0.60 EPS vs. estimate of $0.56.
  • Activision (ATVI) again guided earnings higher.
  • Altus Pharmaceuticals (ALTU) traded down almost 20% after it reacquired ALTU-238 development and commercialization rights for North America from Genentech, an end to the development pact.
  • Array BioPharma (ARRY) traded down almost 20% after it announced initial results from a Phase II study comparing its monotherapy with temozolomide in the first-line treatment of advanced melanoma showed no apparent difference in efficacy for the primary endpoint.
  • Athersys (ATHX) and Angiotech announce authorization of Phase I stem cell trial for heart attacks.
  • Bear Stearns (BSC) expected to post first loss.
  • Blackstone (BX) plans to sell a $9 Billion CMBS offer backed by Hilton Hotels in Q1 2008.
  • Cheesecake Factory (CAKE) had a 10% stake taken by activist Nelson Peltz.
  • Electronic Clearing house (ECHO) getting acquired by intuit for $17.00 per share.
  • FedEx (FDX) $1.54 EPS vs. $1.50 estimates (had been lowered) but next quarter $1.15-1.30 vs. $1.38 est.; $6.40 to $6.70 for year bvs. $6.47 estimate.
  • Herman Miller (MLHR) $0.72EPS Vs. estimate of $0.59; stock rose about 10%.
  • Indevus Pharma (IDEV) trading down about 5% on a non-approvable letter from the FDA for VALSTAR NDA supplement (submitted May 2007).
  • Intuit (INTU) paying $131 Million for ECHO.
  • LDK Solar (LDK) $0.37 EPS on $157M revenues vs. $0.37/$143.22M est.; Q4 guidance $0.40-$0.41 on $180-$185M revenues vs. $0.41/$167.5M est.; stock indicated down 5%.
  • Leggett & Platt (LEG) stock down about 5% on lower guidance.
  • Local.com (LOCM) announced a strategic partnership with IAC/Interactive’s Citysearch; stock trading up 7% on news.
  • Nike (NKE) traded up 3% after $0.71 EPS on $4.3 Billion revenues vs. estimates $0.66/$4.3B.
  • Oracle (ORCL) traded up 6% after beating earnings and giving slightly higher guidance; sees enterprise spending lasting into 2008.
  • Pier 1 (PIR) -$0.11 EPS vs -$0.24 estimate.
  • Research-in-Motion (RIMM) reports earnings after the close today.
  • Rite Aid (RAD) indicated down about 5% after posting loss.
  • Ruths Chris (RUTH) gave an earnings warning.
  • Smart Modular Tech (SMOD) $0.18 EPS vs. $0.17 estimate.
  • Steelcase (SCS) $0.30 EPS vs. $0.28 estimate.
  • Superior Offshore (DEEP) signed a letter of intent with a strategic partner for ownership of a DP-III deepwater construction and dive support vessel expected to be delivered in late 2008.
  • Tribune (TRB) buyout supposedly set to close today.

Jon C. Ogg
December 20, 2007

Posted on: December 20, 2007 – 8:02 am in Pre-Market Activity, , , , , , , , , , , , , , , , , , , , , , , , , ,

Top 10 Pre-Market Analyst Calls (BWLD, CMI, TEX, HTZ, LDK, MA, MPWR, MNST, SNCR, ULTI, WYNN)

These are not the only impact analyst calls, but these are the top research calls that 247WallSt.com is focusing on pre-market this Thursday:

  • Buffalo Wild Wings (BWLD) started as Underweight at J.P.Morgan.
  • Cummins (CMI) & Terex (TEX) both started as Buy at Banc of America.
  • Hertz (HTZ) started as Buy at UBS.
  • LDK Solar (LDK) downgraded to Sell from Neutral at Piper Jaffray.
  • MasterCard (MA) raised to Outperform at Bear Stearns.
  • Monolithic Power (MPWR) started as Buy at Piper Jaffray.
  • Moster Worldwide (MNST) started as Outperform at Bear Stearns.
  • Synchronoss Technologies (SNCR) raised to Buy from Neutral at Goldman Sachs.
  • Ultimate Software (ULTI) started as Buy at Banc of America.
  • Wynn Resorts (WYNN) raised to Neutral from Sell at UBS; Susquehanna started as ‘Positive’.

Jon C. Ogg
December 20, 2007

Posted on: December 20, 2007 – 7:52 am in Analyst Calls, , , , , , , , , , ,

Goldman Sachs Remains Cautous on Ethanol (AVR, PEIX, VSE)

Goldman Sachs lowered its estimates in the ethanol alternative energy patch this morning. This estimate cut is after the Energy Bill has higher CAFE standards that actually makes no change to its bullish call over 3 to 5 years for crude oil and refining.  Goldman Sachs said it retains its cautious views in ethanol with a moderated outlook.  The new bill reduces some near-term downside risks for ethanol crush spreads and ethanol equities but also moderates intermediate upside.  Goldman Sachs now sees an $0.80/gallon crush spread for 2008 to 2011 on higher corn.

Goldman Sachs noted with Pacific Ethanol (PEIX) and VeraSun Energy (VSE) trading above its upwardly revised 12-month targets it maintains a sell rating on both.  Aventine Renewable (AVR) remains neutral.

Aventine (AVR) fiscal estimates trimmed to $0.46 EPS from $0.50; estimates raised for following fiscal year..
Pacific Ethanol (PEIX) estimates trimmed to -$0.22 EPS from -$0.19; estimates raised for following fiscal year.
VeraSun (VSE) estimates trimmed to $0.02 EPS from $0.12; estimates raised for following fiscal year.

Jon C. Ogg
December 20, 2007

Posted on: December 20, 2007 – 7:33 am in Alternative Energy, Analyst Calls, , ,

Research in Motion: iPhone-Killer BlackBerries in Early 2008

From Silicon Alley Insider

Research in Motion (RIMM), which reports earnings today after the close, is hurrying to release the touch-screen iPhone-killer BlackBerries we noted last month. The Globe and Mail provides new details and reports that RIM could release two new units…. continued here

Posted on: December 20, 2007 – 7:28 am in Wireless

Europe Markets 12/20/2007

Markets in Europe were up modestly at 7.10 AM

The FTSE rose .6% to 6,322. GlaxoSmithKline (GSK) was up 1% to 1288. Northern Rock was down 2.2% to 88.7. Vodafone (VOD) was up 1.5% to 184.5.

The DAXX was up .4% to 7,865. Merck KGaa was up 1.2%to 88.89.

The CAC 40 rose .6% to 5,528. Cap Gemini rose 2.6% to 40.21. Total rose 1.7% to 55.47.

Data from Reuters

Douglas A. McIntyre

Posted on: December 20, 2007 – 7:16 am in International Markets, ,