Daily Archives: January 23, 2008

What Mortgage Mess? Annaly Raises Over $900 Million In Secondary (NLY, CIM)

Annaly Capital Management, Inc. (NYSE: NLY) has set the price for its public offering of 51,000,000 shares of common stock at $19.25 per share.  All of the shares are being offered by Annaly rather than by shareholders and it intends to use the proceeds to purchase mortgage-backed securities and for general corporate purposes.

It has a rather large underwriting group.  Merrill Lynch and Morgan Stanley are the joint book-running managers; and UBS, Wachovia, Credit Suisse, Keefe Bruyette & Woods, and then RBC Capital Markets are listed as co-managers.  Underwriters have a 30-day option to purchase up to an additional 7,650,000 shares of common stock to cover over-allotments.

This secondary will generate estimated gross proceeds of approximately $981.8 million before fees, and the estimated net proceeds to the Company from this offering after expenses are expected to be approximately $939.8 million, which the Company  The Company expects to close the transaction on or about January 29, 2008, subject to the satisfaction of customary closing conditions.

  • Annaly has been almost entirely an immune business model during this entire mortgage, CDO, CLO, and now the counterparty risk meltdown that has been present since late summer.  As the management team at Annaly has been bulletproof we have been favorable on its recently launched investment vehicle called Chimera Investment (NYSE: CIM).  We have been in praise of this from the filing date of the IPO and referred to it as the safer vulture investing vehicle that the public can use to profit off of the malaise that has been present, is present now, and that will be present in the coming months (hopefully just months).  Even Jim Cramer came out touting this one fairly recently.

Annaly’s market cap as of the close was $7.9 Billion, and its 52-week trading range is $12.14 to $20.22.  This secondary out of Annaly will probably be getting plenty of attention from the media on Thursday and Friday as the company isn’t having to pander to or cater to any stringent demands as others have in the current state of the financial sector.

Jon C. Ogg
January 23, 2008

Join our open email distribution list to get previews on IPO’s, secondaries, merger-arb, spin-offs, reorganizations, and other special situations.

Posted on: January 23, 2008 – 10:19 pm in Financial Stocks, REIT, Secondary Offering, ,

After-Hours Stock Gappers (January 23, 2008) (FFIV, TRMB, SYMC, PLXS, PLCM, CBST, WDC)

We have covered some of the earnings movers in after-hours already, but with earnings season now running full-tilt there are many other stocks that are gapping up.  Here are some of the more active stocks gapping higher:

  • F5 Networks (NASDAQ: FFIV) posted a 21% drop in earnings but gave adjusted EPS guidance above street projections; announcing a $200 million share buyback plan probably didn’t hurt either.  This one is volatile as can be with a 52-week trading band of $18.11 to $46.94.  Shares closed down 1% at $20.18 on the day, but shares are up almost 20% at $24.20 after the bell.
  • Trimble Navigation (NASDAQ: TRMB) must have gotten tired of all the negative valuation calls on GPS systems.  The company raised its Q4 2007 earnings and revenue guidance and reiterated its 2008 revenue plan.  Its $250 million buyback plan for common stock didn’t do any disfavors.  Shares closed down over 2% at $23.85 today, but shares are up 15% at $27.45 after-hours; 52-week trading range is $22.51 to $43.15. 
  • Symantec (NASDAQ: SYMC) probably got tired of us calling them a turnaround that hasn’t turned and its CEO John Thompson must not like us calling him out.  We’re glad because we actually like the company and its strategy, even if Wall Street has disagreed with the plan for longer than holders care to recall.  We even recently noted that the company looks like it is changing some of its stripes.  The data security software and storage provider put next quarter guidance at $0.33 to $0.35 non-GAAP EPS on revenues of $1.5 to $1.54 Billion; First Call had targets at $0.30 & $1.48 Billion.  Shares rose 1.6% to $15.26 after touching a new 52-week low today and shares are now up about 8.5% at $16.55.
  • Plexus Corp. (NASDAQ: PLXS) rose 7% in normal trading to $19.84.  But the company raised guidance to $0.46 to $0.51 adjusted EPS on revenues of $440 million to $460 million, compared to estimates of $0.42 & almost $430 million.  That was enough to take shares up another 8.3% to $21.50 in after-hours trading.
  • Polycom (NASDAQ: PLCM) showed that video and IP phones are still selling well after a report of $0.42 EPS on a 41% gain in revenues to $263.3 million.  First Call had estimates at $0.39 & $252.5 million.  Shares were down 1.3% at $22.28 in regular trading but shares rose some 7.7% to $24.00 in the after-hours session; its 52-week trading range is $21.38 to $36.61.
  • Cubist Pharmaceuticals (NASDAQ: CBST) closed down 0.5% at $20.23 in normal trading, but then the company posted earnings on strong sales of Cubicin.  The company posted a non-GAAP EPS for all of 2007 at $1.20 on $194.7 million in revenues.  At year-end Cubist had $398.3 million in cash, cash equivalents and investments.  It now sees Cubicin sales in 2008 to reach $370 to $385 million, while analysts expect total revenues of just under $384 million.  Volume was a bit thin but its shares rose another 7% to $21.72 in after-hours trading; its 52-week range is $17.01 to $25.72.
  • Western Digital (NYSE: WDC) didn’t want to be left out of the fun.  The number two hard drive maker posted earnings of $1.35 EPS, well above the $1.04 consensus estimate; Revenues were $2.2 Billion versus a $2.05 Billion estimate.  This one had already raised guidance.   Now the company targets the coming quarter at $0.85 to $0.91 EPS with revenues up to $2 Billion, while estimates from First Call are $0.80 & $1.9 Billion.  This one traded up 3.7% to $24.94 today, but shares rose another 7% to $26.65 in after-hours trading .  Maybe companies that raise guidance can really be trusted to beat that guidance.  This was our top buyout candidate into 2007 when the private equity firms could have acquired it on the cheap, but that’s their loss.

Have a great night and get ready for Microsoft earnings Thursday after the close.

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 7:31 pm in After-Hours Activity, , , , , , ,

Cramer Calls A Bottom & Gives Play Book Picks (C, CVS, COST, GES, JCG, IBM, DD)

On tonight’s MAD MONEY on CNBC, Jim Cramer said emphatically that the huge drop today followed by the monster rally in the same day is a classic bottoming pattern, although he thinks that the move was too quick and he wouldn’t be surprised if we pull back over the next couple of days.  When you see the action like this the financial stocks and the retailers that have been the most bettered become the best places to jump in.  Here are his play book picks from retail stocks and financial stocks as the sector rotation trades comes into play:

  • Cramer went out and said he believes that Citigroup (NYSE: C) has actually bottomed. 
  • The retail stocks aren’t just bought by short covering trades, and he thinks that is real buying.  The companies he speedily announced that he likes are CVS Caremark (NYSE: CVS), Costco Wholesale Corp. (NASDAQ: COST), Guess? (NYSE: GES), and J. Crew Group (NYSE: JCG). 

He also wants to pick stocks with no earnings risk that have already pre-announced better earnings:

  • IBM (NYSE: IBM) and DuPont (NYSE: DD) are his two picks that are the safest industrials to buy on pullbacks during the bottoming cycle.  Both pulled back but they’d both be higher if the market had been normal.  he wants to buy these on pullbacks.

Last week Cramer went value fishing for technology companies that he thought were either overlooked during the meltdown or that had been oversold.  Here were his picks then:

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 6:26 pm in Cramer, Financial Stocks, Retail, , , , , , , ,

Netflix Gives Back Some Gains, Despite Solid Numbers (NFLX)

Netflix, Inc. (NASDAQ: NFLX) has released its earnings and issued guidance and some core metrics to how how its business is doing.  The company posted $0.24 per diluted share on a GAAP basis on revenues of $302.4 million.  The company ended the quarter with a total base of 7,479,000 total subscribers.  The company had previously offered guidance of GAAP EPS $0.09 to $0.16 on Revenues of $297 to $302 million, and it had previously forecast a quarter end of 7.3 to 7.5 million subscribers.

Reed Hastings, Netflix co-founder & CEO noted, "We achieved strong results in 2007… despite facing tough competition for much of the year and investing strategically in our online video initiatives… The emergence of a bundled service that enables our subscribers to receive DVDs through the mail fast and movies and TV episodes over the Internet instantly, positions us to achieve solid growth in 2008 and over the long term."

The metrics are continuing to improve from prior quarters.  Subscriber acquisition costs again came down to $34.60 for the fourth quarter and churn was 4.1%.

  • First quarter guidance is GAAP EPS of $0.13 to $0.21 on revenues of $323 to $328 million with a total of 7.85 to 8.05 million subscribers. First Call has estimates at $0.15 EPS and $320.1 million in revenues.
  • Fiscal guidance is GAAP EPS of $1.12 to $1.24 on revenues of $1.3 to $1.35 Billion revenues with a total of 8.4 to 8.9 million subscribers. First Call has estimates at $0.91 EPS on revenues of $1.31 Billion.

It looks like the bears might be harping on a slowing of its growth rates.  While that is bound to ultimately happen as a business matures, these numbers actually look pretty good considering the intense competitive environment that Wall Street has been concerned about during the onslaught of an economic slowdown.  Shares closed up over 6% at $23.76 in a strong market at the end of thetrading day, but shares in after-hours are down about 2.3% at $23.20.  Over the last 52-weeks, shares have traded as low as  $15.62  and as high as $29.14.

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 5:23 pm in Earnings, Entertainment,

A Bail-Out For Bond Insurers? (MBI, ABK)

Watch for a big run-up in Ambac (NYSE: ABK) and MBIA (NYSE: MBI) tomorrow. These stocks had major run-ups today in the last 90 minutes of trading as word of this began coming out, and may be part of the 500+ point run in the DJIA off of the lows. The FT reported that "the largest US banks are under pressure from New York State insurance regulators to provide as much as $15bn in fresh capital to support struggling bond insurers."

We have noted that many incentives are probably being handed to out because the implications of any major institutions failing would potentially be much worse than the Enron implosion.  This even went as far as "financial mergers may be mandated rather than just preferred" if you buy into the bailout theme.  Maybe even Warren Buffett might be considering a package if it makes financial sense for Berkshire Hathaway.  Barron’s also recently scored a huge home run for anyone who purchase MBIA Inc. (MBI) shares after its undervalued article from this weekend. After the troubles surfaced last week, the harsh reality of what could happen to our financial system started to come into play.  Without a Fed intervention yesterday and without more accommodating policies, we might have even seen a 1,000 point drop in the DJIA.

The only problem with the plan is that the banks don’t have anymoney, or at least they are holding what they do have.

Douglas A. McIntyre

Posted on: January 23, 2008 – 4:34 pm in Financial Stocks, ,

eBay’s Guidance As An Auction Didn’t Fetch The Minimum Bid (EBAY)

eBay (NASDAQ: EBAY) has posted earnings on a non-GAAP basis of $0.45 EPS on $2.18 Billion in revenues.  First Call had earnings estimates at $0.41 EPS on roughly $2.14 Billion in revenues.  The actual report was good, but eBay’s guidance is going to be a disappointment to some of the perma-bulls.  Guidance is as follows:

  • eBay’s non-GAAP EPS $0.37 to $0.39 on on $2.0 to $2.05 Billion in revenues; next quarter estimates are $0.40 EPS on $2.15 Billion in revenues.
  • eBay is guiding fiscal 2008 non GAAP earnings of $1.63 to $1.67 on revenues of $8.5 to $8.75 Billion; First Call has estimates for fiscal 2008 at $1.66 EPS on roughly $9 Billion in revenues.

It bought back roughly 9.2 million shares of its common stock at a cost of approximately $312 million (For the full year, the company repurchased 44.6 million shares of its common stock for approximately $1.5 billion).  As we had previously noted, Meg Whitman is retiring from the company and John Donahoe will become successor as of March 31, 2008.  The company has approved yet another repurchase plan of up to $2 Billion in stock.

Shares were challenging its 52-week lows yesterday and the stock was still down well over 30% from its 52-week highs. Shares posed a late day rally to close up some 6.6% at $28.94, although because of tepid guidance shares are down some 8% at $26.55 in after-hours trading. 

It looks like that $40-ish price target and some earnings estimates for the year might be coming down tomorrow morning.

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 4:33 pm in Earnings, Earnings Warning, Internet,

Qualcomm Delivers (QCOM)

Qualcomm (NASDAQ: QCOM) posted Dilued earnings per share of $0.46 EPS and non-GAAP EPS at $0.52 EPS on $2.44 Billion in revenues.  Estimates were $0.53 EPS on revenues of $2.41 Billion, according to First Call.  Guidance is as follows: 

  • Qualcomm is guiding next quarter to $0.50 to $0.52 EPS on $2.4 to $2.5 Billion in revenues.  For the coming quarter estimates are $0.52 EPS on $2.44 Billion in revenues.
  • Guidance for Fiscal 2008 is unchanged on EPS with a $2.01 to $2.07 but it now sees $9.6 to $10.0 Billion in revenues, up from $9.5 to $9.9 Billion; while Fiscal September-2008 estimates are $2.12 EPS on $9.83 Billion in revenues.

The company also ended with some $11.3 Billion in cash and equivalents at the end of the quarter.  In addition, it noted that it has repurchased and retired more than 17.7 million shares of our common stock for approximately $668 million.

We’ll have to go through the initial phone sales and the forecasts for 2008, but considering all of the legal woes the company is in it is an impressive quarter and the outlook is probably enough to please most.  Shares closed down 0.8% at $36.63 in normal trading, but shares are up 6% to $38.90 in after-hours trading.  The 52-week trading range is $35.17 to $47.72.

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 4:18 pm in Earnings,

The 52-Week Low Club (PALM) (MOT)

Palm (PALM) Already weak company in the same sector as iPhone, Dragged down by bad news from Apple (AAPL). Falls to $4.25 from 52-week high of $19.50.

Human Genome Sciences (HGSI) Clinical trials set-back. Falls to $5.22 from 52-week high of $12.12.

Ciena (CIEN) Market does not like latest acquisition. Trades off to $21.40 from 52-week high of $49.55.

Motorola (MOT) Just when no one thought it could get worse. Shares drop to $9.43 from 52-week high of $19.98.

Qimonda Ag (QI) Weak results and downgrades for semiconductor company. Falls off to $3.51 from 52-week high of $17.29.

Douglas A. McIntyre

Posted on: January 23, 2008 – 4:01 pm in HI/LOW, , , , , ,

Pivotal Quarter For Netflix (NFLX)

Netflix, Inc. (NASDAQ: NFLX) is set to report earnings shortly.  Because of all of the recent attention to web movies out of Apple, competition increasing from Blockbuster, digital on-demand downloads, a slowing consumer looking for ways to trim monthly expenses, and more, this may be a very pivotal quarter for the online movie rental club.

First Call has estimates pegged at $0.14 EPS on $301.6+ million in revenues, and next quarter estimates are $0.15 EPS on $320.1+ million.  The company did offer guidance with its last earnings as follows:

  • 7.3 to 7.5 million subscribers
  • Revenues of $297 to $302 million
  • GAAP EPS $0.09 to $0.16

Analysts have an average price target on Netflix between $25 and $26 so the targets are not screaming for massive upside.  Options are not easy to use for inference in the current environment, but it appears that as of today options traders are braced for a move of up to about $2.10 in either direction.  Its chart has been using $21.75 as support, although at one point today its shares fell as low as $21.00 when the market was looking bleak again.

Netflix has seen margins come in to 33.9% in Q3 2007, down from 28% year over year and down from 35.2% sequentially.  Last quarter it ended (Q3) with 7.028 million total subscribers, up from 5.662 million from Q3 2006 and up from 7.742 million at Q2 2007.  As of Q3, it counted 6.845 subscribers as paid subscribers.  Subscriber acquisition costs $37.91 last quarter, which was lower than $45.32 for the year over year metric and down from $44.02 sequentially. Its churn rate was 4.2%, flay year over year and down from 4.6% sequentially.

It seems that for every effort from outside competition, Netflix has been able to answer the challenge.  If it can prove that it is able to weather the storm of the rapidly cooling economy, then the standard response to each new challenge may end up being "WHATEVER!" each time it is challenged.  But if there has been any real erosion in those subscriber numbers then there is a long way to go for this to challenge its 52-week low of $15.62 (52-week high is $29.14).

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 3:23 pm in Earnings, Entertainment,

Qualcomm Earnings Preview (QCOM, BRCM, MOT, NOK) (January 23, 2008)

Qualcomm (NASDAQ: QCOM) is set to report its second quarter 2008 earnings after the close today.  The company is expected to post $0.53 EPS on revenues of $2.41 Billion, according to First Call.  For the coming quarter estimates are $0.52 EPS on $2.44 Billion in revenues, and for Fiscal September-2008 projections are $2.12 EPS on $9.83 Billion in revenues.

The company raised guidance just about 30 days ago.  It put guidance at $0.52 to $0.53 EPS, up from a prior range of $0.50 to $0.52 EPS; and it put revenues at the high-end of a $2.3 to $2.4 Billion range.  That raised guidance was due to a better selling of mobile station modem chips of approximately 78 million units, compared to forecasts of 74 to 78 million.

Analysts still have an average price target north of $50.00 on this stock, which is more than 30% higher than today’s prices.  This is also at the bottom of its 52-week trading band and that is actually at the bottom of a two-year trading band.  Options trading is hard to peg with so much time value and with options volatility running so high, but it appears that the options traders are braced for a move of up to $2.50 in either direction.  We caution using options as a "prediction tool" in the current environment.

Interestingly enough, the dismal report out of Motorola (NYSE: MOT) has not really impacted shares as much as one would guess; and that is after Qualcomm expanded its relationship with the troubled handset maker.  It seems to almost be immune from legal worries as far as how its stock reacts.  This ongoing soccer match of litigation with Broadcom (NASDAQ: BRCM).  Even the customer loss of Nokia (NYSE: NOK) and impending suit there has yet to make a serious dent into the company as one might have guessed.

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 12:47 pm in Earnings, Telecom, Wireless, , , ,

Online Retail & Content Bracing For eBay Earnings (EBAY)

eBay (NASDAQ: EBAY) is set to report earnings after the close today.  First Call has earnings estimates at $0.41 EPS on roughly $2.14 Billion in revenues.  Next quarter estimates are $0.40 EPS on $2.15 Billion in revenues, and the fiscal 2008 target is $1.66 EPS on roughly $9 Billion in revenues.

eBay did already offer some guidance for a comparison with its last earnings.  For this quarter it previously offered guidance of $0.39 to $0.41 EPS on a non-GAAP basis and $2.1 to $2.15 Billion in revenues.  We should get some key insight for 2008 today, and this may be the real determining factor for how Wall Street treats Auction Street.

It is impossible to try pointing out that but there are many articles on the web about how the recent steroid scandal in sports has been affecting the sale of sports memorabilia, which is one key area for eBay.  A general spending slowdown has to also limit aggressive bidding in many areas it serves as well, although that doesn’t translate into an immediate drop in eBay’s cut of the pie until auction prices don’t merit the time spent on an auction process and listings fall off.   

Perhaps more important even that the last quarter is Meg Whitman’s tenure after reports of her impending resignation.  We may now get to find out if those reports were true.  We addressed this yesterday and gave some of the other metrics that have been ongoing there as well. 

Shares were challenging its 52-week lows yesterday and the stock is down well over 30% from its 52-week highs.  Options were pricing in a move of roughly up to $2.00 in either direction today, although we caution that the volatility is high enough right now that actual options analysis is a bit skewed.  Analysts still have an average target close to $40.00, so if the company just does an in-line or is cautious it wouldn’t be a stretch to imagine these targets coming down to say $35.00 or so.

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 10:30 am in Earnings, Internet, ,

The Stock Market Falls On RIM (RIMM)

Everything is fine at Research-In-Motion (RIMM). At least as far as anyone can tell. EPS is expected to be $.69 in the current quarter, up from $.33 a year ago. Sales are supposed to double. According to Thomson, the median price target Wall St. has on the stock is $140.

But, the shares in the company are down from 52-week high of over $137 to $85. Over the last three months, the shares have fallen more than Apple’s (AAPL).

There is some reason to believe that RIMM is better off than the Mac and iPod company. A lot of the sales for Blackberry products are to businesses. They are a cheap way for firms to give people a mobile communications device. Revenue for this kind of product may be absolutely fine.

The stock price says otherwise.

Douglas A. McIntyre

Posted on: January 23, 2008 – 10:28 am in Wireless, ,

Goldman Sachs Changes on Conviction Buy List in Tech (DOX, ADP, SNCR, SVR)

This morning Goldman Sachs has announced some changes to its CONVICTION BUY LIST:

  • Amdocs (NYSE: DOX) is being added to the Americas Conviction Buy list with a 49% return potential to its target after its earnings report.  Recent order flows should give the company a healthy 2008 with accelerating revenue growth and limited macroeconomic headwinds.
  • Automatic Data Processing (NYSE: ADP) is being kept officially as a Buy rating at Goldman, but it is being pulled off of the Conviction Buy List as part of a "moving away from macro-sensitive trends."  ADP is down 15.5% since being added, slightly worse than the S&P at -14.3%, and it has underperformed the S&P over a 6-month and 12-month period.

In the larger Amdocs call away from macro-sensitivity, Goldman Sachs said it is also noting Synchronoss Technologies (NASDAQ: SNCR) as one of its best buy ideas (has a Buy rating).  Goldman is also becoming increasingly optimistic on Syniverse (NYSE: SVR) (although it has a neutral rating today).

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 9:01 am in Analyst Calls, , , ,

Pfizer’s Guidance Holding Up Better Than Skeptics Would Guess (PFE)

Pfizer Inc. (NYSE: PFE) has posted earnings that are lower than last year’s results, but were actually above analyst expectations from First Call.  The drug giant posted $0.52 EPS versus $0.47 estimates on $13.1 Billion in revenues versus $12.2 Billion estimates.  It is also guiding 2008 EPS to a range of $2.35 to $2.45 versus a $2.34 consensus estimate.  Pfizer is targeting fiscal 2008 revenues to be between $47 Billion to $49 Billion, while estimates are $47.1 Billion.

As far as the first quarter, there are some exclusivities that won’t be there and the company noted: "First-quarter 2008 revenues may not be comparable to the first-quarter 2007 revenues as a result of the loss of U.S. exclusivity of Norvasc, Camptosar (February 2008) and Zyrtec (January 2008)…..Collectively, these products contributed U.S. revenues of about $1.1 billion in the first-quarter 2007 and $2.7 billion in the full-year 2007. We have considered these factors in our full-year 2008 guidance."

If that revenue number looks much higher than expectations it is partially because of currency, as the strong foreign currencies compared to a weak dollar added roughly 5%.  Part of the reason for the drop in net earnings was a result of its consumer products unit sale. We have noted that Pfizer is a turnaround that hasn’t yet turned around, and that may be starting to change.

Its fiscal earnings per share for 2007 was $1.20 after items. Based on a $22.23 close yesterday, Pfizer now has a trailing P/E of 18.5 (after items) and a forward 2008 P/E ratio of 9.26.  If you look at our comments and targets on the 2008 Dogs of the Dow this new guidance plays into the possibility that Pfizer could end up being one of the surprise sleepers this year.

If you want to know how the restructuring is going, the company trimmed 11,000 jobs last year, closed six manufacturing sites, closed two R&D sites, and is still targeting a $1.5 to $2.0 Billion adjusted cost reduction for 2008 compared to 2006 before the restructuring was implemented.  The company repurchased $10 Billion in stock during 2007 and has another $5 Billion authorized for repurchases.

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 8:39 am in Drug companies, Earnings,

The Case For (And Against) A Comcast/Sprint Deal (CMCSA, S)

From Silicon Alley Insider

Last week, Sprint Nextel pre-announced a hideous Q4, warning investors that it was losing customers far faster than Wall Street expected. The stock promptly fell 25% Friday, and now sports a $25 billion market cap and a label of "buyout target."

Who might scoop up Sprint? continued…

Read More »

Posted on: January 23, 2008 – 8:11 am in Uncategorized

Pre-Market Stock News (January 23, 2008)

We are full fledged into earnings season now, so most news coverage will point to the current earnings environment and guidance.  There are of course drug developments and other contracts awards.  Below is a snapshot of some of the key data we saw affecting shares in pre-market trading:

  • Abbott Laboratories (ABT) $0.93 EPS versus $0.92 estimate; sees Q1 EPS $0.61 to $0.63 versus $0.65 estimates and sees 2008 EPS $3.20 to $3.25 versus $3.22 estimate.
  • Advanced Energy Industries Inc. (NASDAQ: AEIS) traded down over 10% after after it lowered guidance.
  • Air Products (APD) $1.16 EPS vs $1.13 estimates. 
  • Apple Inc. (AAPL) trading down 10% after it posted $1.76 EPS on $9.6 Billion revenues; Estimates were $1.62 EPS on revenues of $9.47 Billion; Guidance for next quarter is $0.94 EPS and revenues $6.8 Billion versus estimates of $1.09 EPS on $6.98 Billion in revenues.
  • Baidu.com (BIDU) announces the formal launch of its Japanese language search engine run by its Japanese subsidiary.
  • CheckPoint Software (CHKP) trading up almost 5% after $0.46 EPS versus $0.45 est.; Revenues $206.7M vs. $202.3M est.;
  • CNH Global (CNH) $0.50 EPS versus $0.60 estimate.
  • Coach (COH) $0.69 EPS vs $0.68 estimate; noted weak mall traffic and decline in average transaction size.
  • EntreMed (ENMD) is starting its Phase II study with its MKC-1 cell cycle inhibitor in ovarian cancer and advanced endometrial cancer.
  • Ethan Allen (ETH) posted $0.70 EPS versus $0.68 estimate.
  • Foster Wheeler (FWLT) trades ex-split to reflect a 2 for 1 stock split.
  • General Dynamics (GD) $1.42 EPS vs. $1.41 estimate; sees 2008 EPS $5.55 to $5.65 versus $5.73 estimate.
  • HOKU Scientific Inc. (HOKU) traded down 10% after earnings beat but guidance was deemed light.
  • INX (INXI) awarded Department of Defense contract to provide up to $21 million in support  of a Cisco Systems network pact.
  • Martek Biosciences (MATK) noted a December publication showed its DHA may help in late-onset Alzheimer’s, although NIH study results will be in 2010.
  • Parametric (PMTC) $0.26 EPS vs. $0.23 estimate; sees next quarter $0.24 to $0.28 vs. $0.26 estimate; sees 2008 EPS $1.17 to $1.27 vs. $1.16 estimate (revenue in-line).
  • Praxair (PX) $0.98 EPS vs $0.97 estimate.
  • Qualcomm (QCOM) expanded relationship with Motorola for chipsets into certain UMTS 3G handsets in 2008 and 2009.
  • RLI Corp. (RLI) $1.22 EPS versus $1.05 estimate.
  • Rockwell Automation (ROK) $1.04 EPS vs. $1.01 estimates; guides 200 EPS $4.25 to $4.45 versus $4.38 estimate.
  • Southwest Airlines (LUV) $0.12 EPS vs. $0.10 estimate ; reigned in 2008 growth plans to 4%-5% capacity.
  • Texas Instruments Inc. (TXN) has posted earnings of $0.54 EPS and revenues of $3.56 Billion; analysts pegged at $0.52 EPS on $3.58 Billion in revenues; sees Next quarter $0.43 to $0.49 EPS on revenues of $3.27 to $3.55 Billion versus estimates of $0.45 EPS on $3.41 Billion in revenues.
  • TJX Companies (TJX) was Jim Cramer’s retail pick on CNBC’s MAD MONEY last night.
  • United Tech (UTX) $1.08 EPS vs. $1.06 estimate; sees 2008 $4.65 to $4.85 versus $4.85 estimate.
  • Vertex Pharmaceuticals (VRTX) will begin Phase III evaluation of telaprevir for its lead investigational hepatitis C protease inhibitor.
  • WellPoint (WLP) $1.51 EPS versus $1.51 estimate.
  • Werner Enterprises (WERN) $0.28 EPS vs. $0.28 estimate.

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 7:58 am in Pre-Market Activity, , , , , , , , , , , , , , , , , , , , , , , , , ,

Does Martek Hold A Key To Treating Alzheimer’s Disease? (MATK)

Everyone knows about the current and future epidemic of Alzheimer’s Disease.  This disease is largely untreated and most current treatments gear around early diagnosis, slowing the onset, or prolonging the early stages from becoming late-stage Alzheimer’s.  Martek Biosciences Corp. (NASDAQ: MATK) has made an announcement this morning about its DHA from microalgae being a possible component in combating Alzheimer’s.  The problem is that this was published in December and this looks very preliminary from a mice study.

In a recent pre-clinical study published in the December 26 issue of the Journal of Neuroscience, an omega-3 fatty acid found in algae called docosahexaenoic acid (or DHA), was found to decrease an important risk factor for late-onset Alzheimer’s disease.

Conducted at the University of California, Los Angeles using a mouse model, a diabetic rat model, and cultured human cells, the study found that DHA increases the production of LR11.  This LR11 protein is supposed to be vital in clearing the brain of the enzymes that make the beta amyloid plaques that are thought to be a key cause of Alzheimer’s disease. The investigators used Martek’s DHA from microalgae for a portion of the research.

Martek also noted that the National Institutes of Health is also funding a multi-million dollar clinical study on the effects of vegetarian DHA from microalgae in slowing the progression of Alzheimer’s disease.  Those results for now will not be available until 2010.  If Martek’s DHA is going to be a key component in treating this, it will likely be one of many different steps and many simultaneous treatments.  Unfortunately this Alzheimer’s epidemic is going to be with us for quite some time.

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 7:33 am in Biotech, , ,

Motorola (MOT) Blows It Again

Motorola (MOT) reported sales of $9.65 billion in the fourth quarter of 2007. That is down from $11.8 million in revenue in the quarter a year ago. Net earnings in the fourth quarter of 2007 were $0.04 per share, which include $0.05 per share from continuing operations and a net loss of $0.01 per share from discontinued operations  Analysts expected the company to make $.13 on revenue of $9.62 billion

Mobile Devices segment sales were $4.8 billion, down 38 percent compared with the year-ago quarter. The operating loss was $388 million, compared with operating earnings of $341 million in the year-ago quarter.

Home and Networks Mobility segment sales were $2.7 billion, up 11 percent compared with the year-ago quarter. Operating earnings decreased to $192 million, compared with operating earnings of $223 million in the year-ago quarter

Enterprise Mobility Solutions segment sales were $2.1 billion, up 35 percent compared with the year-ago quarter, driven by sales from the Symbol business acquired in early 2007. Operating earnings increased to $451 million, compared with operating earnings of $323 million in the year-ago quarter.

Shares were off pver 5% in the pre-market.

Douglas A. McIntyre

Posted on: January 23, 2008 – 7:13 am in Wireless,

U.K. & E.U. Central Banks Need To Follow With Rate Cuts

Yesterday’s FOMC emergency intervention of 75 basis point rate cut to 3.5% was believed to be part of a global coordinated rate cut effort in effort to stave off loan default risks pouring turning counterparty risk into widespread counterparty  defaults. 

The Canadian central bank followed suit with a rate cut of 0.25% down to 4.0%, but that was essentially the only matched effort.  It was also deemed a small effort.  So far the coordinated global intervention from central banks hasn’t happened.

It is believed that the Bank of England AND the European Central Banks need to follow suit with rate cuts.  More than rate cuts need to be seen, but this is the easiest start that doesn’t require legislation and doesn’t require other stimulus packages that will take 60 to 120 days to be enacted.  The Bank of England currently has a 5.50% benchmark rate and the ECB’s benchmark rate is currently 4.0%.  Both the U.K. and the E.U. have room to bring rates down.  It almost appears as though these central banks are more worried about inflation more than they are about trying to keep up growth or propping up financial markets.

These two central banks should look at the drop in commodity prices in recent days as the global inflation and global growth trades are being partly to largely unwound, depending on which country you are in.  They will suffer from U.S. counterparty risks too if there is any major shoes that drop.  If they wait for 30-day to 90-day old data to confirm the facts for posterity, it may be too late.

The good news is that there is always today and two more days this week after today.  Yesterday we had noted the chances that the FOMC would provide an intermeeting emergency intervention, or if not we were going to probably see a 1,000 point drop in the DJIA.

Who knows, maybe the central bankers and their wives from England and Europe want to be able to use that overwhelming strength of the Euro to come shopping in New York City before they lower rates.  They better take those trips quick and then follow these rate cuts, otherwise they’ll get to feel this same pinch.  The FOMC averted a huge drop in the U.S. markets that also propped up European and Asian markets.  Its now the turn of the U.K. and the E.U.

Jon C. Ogg
January 23, 2008

Posted on: January 23, 2008 – 7:09 am in Economy, ,

A Book Of Etiquette For Sovereign Funds

Worries over the actions of sovereign funds from China, Singapore, and the Middle East have government officials in the US and the UK voicing concerns about whether all of their large financial institutions will end up being based in Beijing or Kuwait City. They should have thought of that when they avoided regulating mortgage-back instruments.

Perhaps there is a solution. The FT writes that the head of big bank Standard Chartered wants "state-backed investment funds should agree to a code of conduct governing their behaviour or risk being branded “irresponsible” players in the global economy." The concern here is that the "sovereigns" will become "irresponsible participants in the world economy.”

There are already several safe-guards on sovereign fund activity. In most cases, the investments they make are for minority interests. Capital often goes in a convertible debt with no voting rights,or common shares with little or no say in management.

But, some private and government interests don’t think that the normal limitations that would apply to Carl Icahn or Kirk Kerkorian are tight enough for overseas investors.

Perhaps the free market should not be so free. Bad decisions at financial companies should be rewarded with restrictions on new investors, but only if they come from outside the US or the UK. If Carl Icahn wants to buy Citi and liquidate it, that is fine. But, the Saudis can’t have 10%.

Douglas A. McIntyre

Posted on: January 23, 2008 – 6:33 am in Financial Stocks,