Daily Archives: January 17, 2008

Cramer on Oversold & Value In Tech (WIND)

On tonight’s MAD MONEY on CNBC, Jim Cramer is sticking with picking technology stocks that are either oversold or are great value.  His down and out tech stock is Wind River Systems (NASDAQ: WIND).  In light of BEA Systems buyout he thinks it could get acquired.  It makes embedded systems for autos, routers, jets, and more, and the complex new systems will drive demand ahead.  It has joined the Google Android Alliance for open handsets.  An analyst noted several significant deals in the pipeline and its balance sheet is strong.  SAP, Oracle, Cisco, IBM, Motorola could all be buyers of this company.  Cramer thinks maybe Carl Icahn would want to look at it, but he likes it even if it doesn’t get acquired.

This week Cramer has made several value calls on oversold technology companies that will still do well in the current environment.   On Monday, Cramer picked EMC Corp (EMC) for its intrinsic value of sub-$5.00 and this is one where we noted that great value manager Whitney Tilson was discussing with "THE EMC STUB" with the explanation for the trade; on Tuesday, Cramer picked Riverbed Tech (RVBD) for network optimization and he’s been on this stock before; and last night Cramer talked up ADC Telecom (ADCT) with a $1 down $7 up call that he’s liked for some time.

Wind River shares closed down 2.6% at $8.15 today, but this rose 5.5% to $8.60 in after-hours. 

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 6:30 pm in Cramer, Technology Companies, Value Investing,

Cramer Kicks The Casino Stocks (LVS, WYNN, MGM)

On tonight’s MAD MONEY on CNBC, Jim Cramer wanted go over a sell sector, the casinos. Cramer thinks that the casinos have to be sold.  They have a property crisis and the earnings are going to be squeezed.  He just noted the huge $750 million default for a property loan on the Vegas strip, plus it is already overbuilt and they are still building.  Even Macau is growing lower than expected.  Three of the casino stocks that Cramer said to sell are:

  • Las Vegas Sands (NYSE: LVS); down 5.1% today, down 1.9% to $73.00 after-hours.
  • Wynn Resorts (NASDAQ: WYNN); down 5.6% today, down 1.6% more to $95.32 after-hours.
  • MGM Mirage (NYSE: MGM); down 3.9% today, down 1% more to $67.11 after-hours.

He also discussed a huge down day with Congress kissing Ben Bernanke’s you know what despite Bernanke & Co. being part of this massive problem.  With the endless rumors all day of insurance defaults and the horrible financial results, Cramer noted zero accountability with the Fed.  Cramer would like to fire Ben Bernanke.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 6:12 pm in Casinos, Cramer, , ,

NYSE Buys AMEX, Becomes ETF King (NYX)

The NYSE Euronext (NYSE: NYX) is finally acquiring the American Stock Exchange.  NYSE is paying roughly $260 million entirely in NYSE stock to acquire its tiny rival exchange.  Amex members (full seat owners) will be entitled to receive additional shares of NYSE Euronext common stock based on the net proceeds from the expected sale of Amex’s lower Manhattan headquarters.

There are several things that will happen as a key here: 

  • The NYSE will now be the true leader in Exchange Traded Funds (ETF’s) trading, which will bring over massive amounts of more trading on the exchange.  Amex has some 381 ETF’s (compared to 240 NYSE ARCA ETF’s). Now we know who the ETF KING IS.
  • This will also bring over numerous closed-end funds and structured product listings to NYSE; Amex had 545 listings. 
  • The NYSE will also sell the American Stock Exchange building and will consolidate the operations. 

The NYSE will now be a leader in stock options trading.  The combined entity will see an annualized cost synergies of over $100 million within two years from closing when you include technology, data center and staff integration, consolidation of professional and contract services and vendors.

We had been waiting and waiting for AMEX to come public, but that won’t be happening now.  The rumors on this were circling last week and these terms are within the range that had been discussed.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 4:54 pm in ETF, Exchange News, Mergers and Buy Outs, , , ,

No Major Restructuring Yet From AMD But Results Could Have Been Worse (AMD)

Advanced Micro Devices (NYSE: AMD) posted a huge loss at -$3.06 EPS after a $2.89 charge.  AMD’s operating GAAP loss was $1.678 Billion, but the company said its non-GAAP loss was -$9 million.  The company is claiming gross margins of 44%, up from 41% last quarter. Revenues were $1.77 Billion versus $1.79 Billion estimates.

  • Its guidance is not precise as it merely discusses a seasonal slowdown: "In the seasonally down first quarter, AMD expects revenue to decrease in line with seasonality."

Investors were hoping for a broader restructuring and a better plan for turning around its operations.  It doesn’t look like Hector Ruiz is letting go of his control yet.  That is a mistake, but we don’t get to run the company there.  The good news is that this could have been much worse, and margins were actually above expectations.  Maybe that’s all that Wall Street needs to hear.

AMD shares were down 3.5% in the normal session to close at $6.34.  In after-hours trading it looks like shares are all over the place.  We saw shares down 2% initially, but then the came back to flat, and now shares are up about almost 2% at $6.47.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 4:30 pm in Earnings, Semiconductor,

Many Major Tech, Media, Telecom Hitting New 52-Week Lows

With about 20 minutes to go into the close and on one ugly day, we have the DJIA down nearly 300 points, the NASDAQ down almost 40 points, and even the S&P 500 down over 35 points.  We have been commenting about the recession for some time now and this is going from the good to the bad to the fugly.  Of course financials, REIT’s, retail, and other classic sectors had more than their fair share of 52-week lows.  But Telecom, Media, and Tech reached these critical 52-week lows and these are looking horrible. 

The markets are hostage to the ratings agencies now.  Here is what happens when you look at "VALUE INVESTING" in technology:

Alliance Data (ADS), Answers (ANSW), ATMI Inc. (ATMI), BigBand Networks (BBND), British Sky ADR’s (BSY), CA inc. (CA), CBS Corp. (CBS), Century Tel (CTL), Cincinatti Bell (CBB)…

Cisco Systems (CSCO) is a new entrant, this was surprising but those teen prices were in 2006.

Cogent (COGT), Cohu Inc. (COHU), Computer Science (CSC), Compuware (CPWR), DireTV (DTV),
Echostar (DISH).. unsure because of reorg…, Emulex (ELX), Epicor Software (EPIC), General Electric (GE), Getty Images (GYI), Gluu Mobile (GLUU), Hungarian Telecom (HTC), Internet Capital Group (ICGE), Interactive Intelligence (ININ), J2 Global (JCOM), ML Internet HOLDRs (HHH), ML Telecom HOLDRs (TTH), PlanetOut (LGBT), Liberty Media (LINTA), Loral Space (LORL), Live Nation (LYV), Sourcefire (FIRE), Flextronics (FLEX), Monster Worldwide (MNST)….

Motorola (MOT), Martha Stewart (MSO), Mattson Tech (MTSN), Network Appliance (NTAP), Orbitz Worldwide (OWW), Plantronics (PLT), Powershares Dynamic Media (PBS), Qwest Communications (Q), RCN Corp. (RCNI), RF Micro Devices (RFMD), Riverbed Tech (RVBD), Savvis (SVVS), Sprint Nextel (S), SiRF Tech (SIRF), Stamps.com (STMP), Time Warner (TWX), Trimble Navigation (TRMB), Veeco Inst. (VECO), Vishay (VSH), Voltera Semiconductor (VLTR), Xinhua Finance Media (XFML) ,

Yahoo! (YHOO) ouch.

This is almost enough to make many people cry.  The VIX is trading at 27.34 and is up 2.96 points but we aren’t even at 30 yet meaning that massive critical oversold and true panic levels haven’t yet been reached.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 3:51 pm in HI/LOW, Media, Technology Companies, Telecom, , , , , , , , , , , , , , , , , , ,

Cable Tries To Beat The Devil

Time Warner Cable (TWC) will begin testing a program where internet subscribers pay based on usage.

According to Reuters "the company believes the billing system will impact only heavy users, who account for around 5 percent of all customers but typically use more than half of the total network bandwidth."

The move could be a gradual shift in the way broadband companies bring in money. Subscribers who do a great deal of data or video downloading eat up a huge portion of total bandwidth used by residential customers putting a load on cable company facilities.

The move raises the issue of whether internet fees could completely change in the US. If the cable companies can pull it off, it might represent a substantial increase in the revenue that the firms can pull out of their markets.

The cable customer is about to have the screws put to him.

Douglas A. McIntyre

Posted on: January 17, 2008 – 1:34 pm in Cable Companies,

AMD’s Critical Earnings Juncture (AMD, INTC)

After today’s close we’ll see earnings out of Advanced Micro Devices (NYSE: AMD).  The estimates have gone from bad to ugly as problems have mounted with the company’s processors.  Analysts are looking for -$0.36 EPS on revenues of roughly $1.79 Billion.  We would caution that estimates have widened out for larger losses even from a few weeks earlier and there are many out there who believe that AMD’s targets for 2008 were too robust at the December analyst meeting.

There is the possibility that a negative on Intel (NASDAQ: INTC) was caused by AMD.  We just aren’t finding anyone on the research side nor on the technology side that agrees with this.  That is even more true when you consider that the quad-core is more like a tri-core and the clocking speeds are running much slower than both original goals and revised goals.  There are also the issues of delays and damaged relationships as a result of the delays.

The good news is that the graphics side of the business might actually carry the quarter.  That alone won’t make up for the processor shortfalls for an entire year ahead, but at least if your name is Dr. Pangloss you could have at least one bright spot to hang your hat on.   

Yesterday’s surge after a disappointing Intel may have been more short covering than anything else as the latest short interest reading grew to 79,207,000 shares from 75,656,300.  That is more than 14% of the float.  We also believe that many are speculating that today could be Hector Ruiz’s last earnings release as the head of the company.  Ruiz is our own top pick for the next technology CEO to be fired. We are not as convinced as Hector Ruiz is that their current succession plan with Dirk Meyer will fly with Wall Street.  Wall Street might be communicating to Mr. Clegg that entirely new blood with a fresh start is needed.  The good news for Ruiz himself is that a general recession might actually give him the excuse to continue poor performance and take away the timing demands on its new processors.

There is also the shot that ATI’s future status and AMD’s current fab-process may all be up for review, although the company has some hidden benefits in keeping each somewhat as is.  Lastly, we are now a year or so away from the Intel trial and now that 2009 is only a year away this could start to at least get some attention from at least the legal watchers that trade stocks.

Covering the financial metrics on this one is actually fairly easy.  The analysts are negative on it, the chart is ugly.  You just have to wonder if the stock has based out or not, particularly if you consider that the one thing that may save AMD is that AMD has to exit to keep Intel from being an official monopoly.  Options expire tomorrow and because each $1 move represents such a large percentage in stock price the open interest isn’t what we’d normally expect.  So we are not using options as a measurement today.

AMD shares have given back almost half of yesterday’s gains and at $6.37 are actually up nearly 20% from recent lows of $5.31. 

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 12:10 pm in Earnings, Semiconductor, , , ,

Google (GOOG) Strengthens Video Hand

Google’s (GOOG) shares of the video market increased in November. Its share increased by two percentage points to 31.3% or almost 3 billion videos viewed, according to comScore.

The news indicates how difficult it will be for major media companies to get "eyeballs" to their competing sites some of which have their premium content on display.

The Fox Interactive division of News Corp (NWS) had a share of only 4.4% Viacom Digital (VIA) sat at 2.6%. Other media companies had even lower share of videos viewed during the month.

Douglas A. McIntyre

Posted on: January 17, 2008 – 11:59 am in Internet, , ,

Would Warren Buffett Rescue The Bond Insurers? (ABK, MBI, MTG, BRK-A)

Shares of Ambac Financial Group, Inc. (NYSE: ABK) are being crushed even harder today than yesterday by more than 60% to around $5.00.  The problem is that Moody’s has put it under review for a possible downgrade and the company is "assessing the impact" this notice.

  • "In view of the uncertainty generated by Moody’s surprising announcement, Ambac is assessing the impact of this action on the Company’s previously announced capital plan.,,, Management remains confident in Ambac’s insured portfolio and will communicate further on these matters in its previously scheduled conference call on Tuesday, January 22, 2008…" 

The implications of this are more than bad because of all the counter-party transactions that could collapse.  But there could be one shot here, and that could be a man named Warren Buffett who runs a small company called Berkshire Hathaway (NYSE: BRK-A).  Ambac shares have tumbled from $96.10 over the last year and around $5.00 this market cap is merely around $550 million.  The company CEO is gone and the situation maybe nothing short of desperate.  Buffett wouldn’t rule out the possibility of acquiring a bond insurer and he’s already opening up his own bond insurer.

The question is twofold here.  First off, would Buffett bet the farm and take on a potentially ruined company even if it was just a subsidiary?  Secondly, would Buffett be able to get some government guarantees or assurances that he wouldn’t be taking on limitless liability in a unit?  We have said that many financial mergers may start being mandated rather than just preferred.  Yes it is a bit controversial, but this is something that people in the financial sector are talking about.  If Buffett does indeed come to the rescue, you can bet that the entity will be kept entire separated from the other insurance units inside the Berkshire Hathaway empire. Otherwise he’d be putting much much more at risk than just the initial investment.

When I started writing the stock was at $6.00…. now shares have dipped under $5.00.  Normally this would be a situation where maybe the stock gets halted, but we aren’t in normal times.  This is widespread panic and it is spreading into M B I A Inc. (NYSE: MBI) as well with its shares down 30% to under $10.00.  MGIC Investment Corp. (NYSE: MTG) is trading down 15% to $13.60 today.

If Mr. Buffett really does want one of these insurers, they are his for the picking.   If he sticks to his old mantra of buying only solid predictable companies, then he’s likely to just stick with his own new insurer.  The only hope is that he thinks one of these have gone way below anything cheap.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 10:04 am in Buffett, Financial Stocks, , , ,

Sirius (SIRI) May Have To Kill XM Satellite (XMSR) Deal

Sirius (SIRI) does not need competition from XM Satellite (XMSR), Apple’s (AAPL) iPod, or HD radio to put it out of business. The US government is doing the job nicely.

While it clear that the Department of Justice and FCC are sitting on a decision about the merger of the two satellite radio companies. What is not clear is why.

Some analysts say that the deal and its many technology pieces are complex and that judging what will happen to consumer choice for in-car entertainment is difficult. Given the resources available to review the marriage, that would seem unlikely. It may be the FCC does not want to take on Congress about whether the agency would be creating a monopoly. Sit on a deal long enough and it might go away. SIRI and XMSR could decide that the price of waiting much longer is not worth it.

What is abundantly clear is that Wall St. expects Sirius to keep losing money which it does not have. Current estimates are for a $.13 lose for Q4 07 and a $.29 loss for full year 2008. The company has long-term debt of almost $1.3 billion and at the end of Q3 had about $390 million in cash. At the current rate of losses, Sirius could be low on cash before the end of the year.

Sirius and XM may have to kill their deal and move into the capital markets separately to raise money. In the current credit markets, that will be very difficult, but they can not do it as a "merger in waiting".

With their current cash burn rates, they are almost out of time.

Douglas A. McIntyre

Posted on: January 17, 2008 – 9:32 am in Consumer Electronics, ,

Goldman Sachs Raises Microsoft Ahead Of Earnings (MSFT, INTC)

We already noted some changes out of Goldman Sachs in the beverage sector this morning, but there is a more decisive call today on Microsoft (NASDAQ: MSFT), and that is after a recent estimate raise on Microsoft and Apple Inc. (NASDAQ:AAPL) estimates.. 

  • Goldman Sachs is raising Microsoft to the Americas Conviction Buy List ahead of its earnings announcement. 

Despite the problems seen with Intel (NASDAQ: INTC) this week, Goldman Sachs notes that Microsoft is actually a defensive play in a tough macro economy. What is perhaps most interesting about this call in particular is that if you go back to October earnings out of Microsoft you will see that Goldman Sachs raised Microsoft to the Conviction Buy List right before earnings then.  We noted that analyst Sarah Friar must have known something, and the stock saw some upside after earnings. 

This is based on its ongoing momentum of its product cycle and its currency benefits.  Its strength in small and mid-sized business is also noted.  Interestingly enough, Goldman Sachs noted a boost from "stronger than expected PC unit growth" should generate some upside to the most lucrative PC software sales in 2008.  The note says there is 20% upside for it to reach their $40.00 target. Goldman Sachs has its fiscal 2008 (June) target at $1.82 EPS and fiscal 2009 (June) at $2.02 EPS.

Microsoft shares are trading up 1.1% in pre-market trading at $33.60.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 8:57 am in Analyst Calls, Software, ,

Goldman Sachs Beverage Changes (KO, HANS, TAP)

Goldman Sachs is out noting that investors hunkering down into earnings may want to look at beverages as an attractive sector with reasonable valuations.  Goldman Sachs also believes that macro weakness should continue to support defensive stock names for investors.  Interestingly enough the note also suggests that a demand rebound in the U.S. along with moderating cost inflation and international growth will lead to strong earnings growth.  It even noted an approximate 11% EPS gain in Q4 2007 and a gain of 14% EPS growth in 2008.

  • Goldman Sachs is adding Coca-Cola (NYSE: KO) to its Conviction Buy List this morning. 
  • Hansen Natural Corp. (NASDAQ: HANS) is seeing its fiscal EPS raised to $1.63 from $1.61 for this year and raised much higher for next year up to $2.25 EPS from a prior target of $2.10.
  • Molson Coors Brewing Co. (NYSE: TAP) is seeing a trim in estimates from Goldman Sachs down to $2.61 from $2.64 this year and down to $2.96 from $3.18 for next year.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 8:33 am in Analyst Calls, , ,

Vulture & Value Investing With Chimera Investment (CIM, NLY, LM)

Chimera Investment (NYSE: CIM) is an investment vehicle that is set up to invest in mortgages per its charter, although as we noted the day of the initial filing that this is going to effectively be nothing short of a vulture fund.  We have not been able to get data out of the company as of yet to see how much of the roughly $500 million raised in the IPO (before fees) has been placed in distressed assets to date, and frankly we’re pretty sure that Chimera doesn’t want that data out there.

This morning on CNBC, Dennis Gartman of the famed Gartman Letter noted besides covering short sales in many of his financial names that as far as being long any financial stocks he would look at Chimera and he noted the Annaly ties.  We’ve noted how Jim Cramer already got on board with this one last month. 

Also just this week (on Tuesday) Deutsche Bank initiated coverage on Chimera with a BUY rating.  Keefe Bruyette Woods started this with a peer perform rating last month and they are a premiere financial sector-focused brokerage and research house.

24/7 Wall St. has been positive on the notion of this investment vehicle even since before the IPO as this is essentially run as a distressed mortgage asset buyer by the people at Annaly Mortgage (NYSE: NLY), and Annaly is roughly 10% owner of Chimera.  It is our stance that the heads of Annaly know what they are doing in this sector and will be able to find value while everyone is in panic and crisis mode.

Remember that when you want to bet like a vulture investor you often do better betting on the best vulture than betting on the carcass.  So in Chimera, there are opportunities for value investors and speculators alike.  This has traded in a range of $14.50 to $18.83 since coming public at $15.00 in November and it closed at $17.93 yesterday. 

It also appears that Legg Mason (NYSE: LM) via its Legg Mason Opportunity Trust took an 8.93% stake in the company in a December filing.  Copper River Partners showed that they owned a 5.2% stake at the end of November.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 8:17 am in Financial Stocks, Value Investing, , ,

Pre-Market Stock News (Thursday, January 17, 2008)

It’s earnings season.  We’ve got dozens and dozens of companies with news related to earnings, management changes, contracts, drug news, retail, banking, tech, and more.  Here is a snapshot of the news affecting shares in pre-market trading:

  • ADC Telecom (ADCT) indicated up 2% after being noted as a cheap oversold tech stock again by Cramer on MAD MONEY last night.
  • AEGON (AEG) announced its CEO of Netherlands operations stepped down.
  • Altria (MO) noted as a great value stock again by Cramer on MAD MONEY.
  • Bank of New York (BK) $0.67 EPS vs. $0.69 estimate; $118 million after-tax writedown on CDO’s/mortgages or -$0.10 off of EPS.
  • Black Hills (BKH) announced that CFO Mark T. Thies resigned effective January 18.
  • Borg Warner (BWA) put earnings in 2008 at $2.85 to $3.00 EPS versus $2.85 estimates.
  • Callaway Golf (ELY) reaffirmed 2007 targets of $0.87 to $0.87 versus $0.87 estimate.
  • Capstone Turbine (CPST) announced its CFO is leaving to join a private genomics company; announced new distributor agreement in China for oil & gas sector.
  • Cell Therapeutics (CTIC) reported that Zevalin + chemo and stem-cell transplants produce high overall survival and progression-free survival rates in relapsed NHL patients.
  • China Automotive Systems (CAAS) announced its sales rose over 42% and exceeded 1.1 million units of power steering systems in in 2007.
  • Converted Organics (COIN) announced that it is exempt from the new tax that will be levied on most of the solid waste facilities in New Jersey.
  • Continental Airlines (CAL) revenues $3.52 Billion versus $3.51 Billion estimate; posted $71 million pre-tax profit, will have $70 to $140 million charge on employees.
  • GlaxoSmithKline (GSK) lower after NEJM report pans antidepressants.
  • IBM (IBM) reports earnings after the close, although it already raised guidance.
  • Logitech (LOGI) trading down roughly 4% after posting $0.71 EPS versus $0.63 estimate but revenues looked light; looking for 15% sales growth and 20% operating income growth in 2008;
  • Merrill Lynch (MER) loss was $12.57 net for Q4, -$10.73 for all of 2007, but writedowns for Q4 were $14.1 Billion (11.5B from ABS CDO and $2.6 from hedges with financial guarantors on ABS CDO); Thain interview CNBC at 9:15 AM.
  • MFA Mortgage (MFA) announced a public offering of 25 million shares of common stock at $9.25 per share; closed at $9.41 yesterday.
  • Novartis (NVS) shares down 2% after it noted a 45% earnings drop overseas after restructuring charges; plans some $9 Billion for share buybacks.
  • Pfizer (PFE) lower after NEJM report pans antidepressants.
  • PNC (PNC) $1.07 EPS versus $1.08 estimate.
  • QLT Inc. (QLTI) reported Visudyne sales were lower by 40%; announced that it will sell U.S. operations and cut jobs in restructuring.
  • TD Ameritrade (AMTD) reports earnings this morning.
  • True Religion (TRLG) preliminary Q4 revenues $52.4 million versus $46.9 million estimate; sees 2008 EPS $1.48 to $1.52 on revenues of $210 to $215 million versus $1.56/$210.5M estimates.
  • Wyeth (WYE) lower after NEJM report pans antidepressants.

This is going to be a long day, and this data is nothing compared to what you will start seeing next week.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 7:33 am in Pre-Market Activity

Merrill Lynch Monster Writedowns (MER)

Merrill Lynch (NYSE: MER) has issued its loss for the quarter at -$12.57 EPS for Q4, -$10.73 EPS for all of 2007.  The total loss in dollars was listed as $8.6 Billion for the quarter.

The net writedowns for all the mortgage, lending, and derivative mess in Q4 were $14.1 Billion.  Of that $14.1 Billion, 11.5B was from ABS & CDO’s and another $2.6 from hedges with financial guarantors on ABS & CDO’s.  Wall Street was somewhere in a 412 Billion to $15 Billion range, so this is toward the higher-end of that range.  The good news for shareholders is that yesterday the number that was being thrown around by some trading floors was as much as $20 Billion after it was all said and done.

At the end of Q4, its book value per share was listed as $29.37 (down from $41.35 at the end of 2006). Including the impact of the equity and equity-related transactions, Merrill Lynch’s pro forma book value per share would be $30.30 at the end of 2007.

John Thain will have an interview on CNBC at 9:15 AM this morning.  Here are Thain’s comments from the press release:

  • "While the firm’s earnings performance for the year is clearly unacceptable, over the last few weeks we have substantially strengthened the firm’s liquidity and balance sheet…. In addition, a great majority of Merrill Lynch’s key businesses delivered record results in 2007, and as I look ahead to 2008, the firm is intensely focused on continuing this momentum and delivering growth and increased profitability for our shareholders and employees.”

Shares closed at $55.09 yesterday and the early pre-market indications are around $54.00.  We’d caution on this number at there are more than two hours to the open of trading and this number may be higher or lower by the time the market opens depending on Thain’s stance and on outside news.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 7:19 am in Brokerage Firms, Earnings, Financial Stocks,

Top 10 Pre-Market Analyst Calls (ADBE, BIIB, DAI, DCGN, EBAY, HOG, JPM, WFC, MFE, MPEL, TIBX)

These are not at all the only key impact analyst calls, but these are the early bird calls that 247WallSt.com is focusing on:

  • Adobe (NASDAQ: ADBE) downgraded to Neutral from Buy at UBS.
  • Biogen Idec (NASDAQ: BIIB) raised to Buy from Neutral at Banc of America.
  • Daimler (NYSE: DAI) downgraded to Market Perform at Bernstein.
  • deCODE Genetics (NASDAQ: DCGN) downgraded to Underweight at Lehman.
  • eBay (NASDAQ: EBAY) raised to Outperform from Peer Perform at Bear Stearns.
  • Harley Davidson (NYSE: HOG) downgraded to SELL from Hold at Citigroup.
  • JPMorgan Chase (NYSE: JPM) & Wells Fargo (NYSE: WFC) were both downgraded to Peer Perform at Oppenheimer.
  • McAfee (NYSE: MFE) downgraded to Neutral from Buy at UBS.
  • Melco PBL Entertainment (NASDAQ: MPEL) raised to Buy from Neutral at UBS.
  • TIBCO Software (NASDAQ: TIBX) raised to Buy from Hold at Citigroup.

Jon C. Ogg
January 17, 2008

Posted on: January 17, 2008 – 7:09 am in Analyst Calls, , , , , , , , , , ,

Airline Mergers Don’t Work (DAL)(UAUA))(NWA)

Perhaps the people at Delta (DAL) did not get the memo. The reasons for airline mergers seem to be a bit soft. While there may be come savings in cutting ground crews and reservations people, customers often walk away from the mess of a merger. Service just becomes too poor.

“A merger almost inevitably is going to cause some service problems,” said Philip A. Baggaley, an analyst at Standard & Poor’s told The New York Times.

Mergers also do nothing to address high fuel costs, infrastructure, and aircraft maintenance expenses.

False economies may drive another round of carrier mergers, but they won’t keep airlines out of bankruptcy court if fuel costs stay high and the economy is weak.

The reasons that airline boards are looking at big combinations is that hope springs eternal. A merger may bring some short-term savings and "buy time" for an upturn in the economy to lift all boats.

The big airlines have another alternative. Do the hard thing. Get with labor. Cut costs. Or have another wreck in which jobs are lost more randomly because they cannot be supported by revenue.

Douglas A. McIntyre

Posted on: January 17, 2008 – 4:01 am in Airlines, , ,

Tech M&A And Global Results Shows Industry Has Life

A funny thing happened on the way to the tech collapse. It didn’t happen. The market may not have liked Intel’s (INTC) results, but for a company its size, it still posted impressive growth.

The Oracle (ORCL) purchase of BEA Systems (BEAS) is notable for the premium which was paid. If Oracle is still considered the "smart money" in tech, it is sending a signal that enterprise business is still growing.

Data released yesterday by IDC showed very strong growth for PC sales across the world in Q4 and remarkable good figures in the US. Dell (DELL) would appear to be on the mend. According to Reuters "Dell shipped 17.1 percent more PCs in the quarter than in the year-earlier period, for a total of 11.3 million units and 14.6 percent of the global PC market." In other words, the market is good enough for the weak to get a bit stronger.

Perhaps the best bell-weather of tech spending were results from huge enterprise software company SAP (SAP). When the company released results yesterday it said "Growth was broad-based across every major region, which means we are not on the edge of a global recession,"

If tech spending is strong, overall capital outlays at companies may not be contracting. That news would be a contrast to recent concerns that corporate spending may be weak.

The funeral for tech is notable for the fact that the body did not show up.

Douglas A. McIntyre

Posted on: January 17, 2008 – 3:48 am in Mergers and Buy Outs, , , , ,

Drug Companies Cut Corners Again

Drug companies have put their fingers on the scales to make studies on the "effectiveness of a dozen popular antidepressants" look better than they actually are. According to The Wall Street Journal unpublished data submitted to the Food and Drug Administration shows that drugs from Pfizer and Wyeth may not live up to their billing.

Why don’t studies with negative results see the light of day? Money.

Drug companies have a long history of being less than forthcoming about problems with some of their products. Billions of dollars are at stake, so the temptation is understandable. But, it is also dangerous as information for drugs like Vioxx appear to come out a bit late.

In one recent case Pfizer submitted five trials on its drug Zoloft to the FDA. Only the two studies with positive results made it into the marketplace.

The FDA bears some responsibility here and it is a shame that drug companies do not receive more public criticism from the agency.

At this point, it would not be surprising to see Congress step in and make its clear to the Big Pharma firms that hiding poor results comes with a price.

Douglas A. McIntyre

Posted on: January 17, 2008 – 3:37 am in Pharmaceuticals

With Potential New Oil Supply Coming, China Is Wild Card

A new study be Cambridge Energy Research Associates shows that new oil field discoveries could offset slowing production from older fields. According to The Wall Street Journal "This study supports a view that there is no impending short-term peak in global oil production."

If the supply coming online is coupled with modest demand due to a slowing global economy, the data may be accurate.

What the figures do not take into account is the unpredictability of the Chinese willingness to underwrite the cost of crude. The central government is still buying oil and, after refining, selling it at extremely low prices in the form of low gas and diesel pricing. This, is turn, is keeping demand robust and growing in the China consumer and industrial sectors.

Oil consumption numbers are based on rational market behavior. China may become the largest consumer of oil by the end of the decade. And, its purchasing of crude in not based on normal market forces.

Douglas A. McIntyre

Posted on: January 17, 2008 – 3:24 am in Oil & Gas