Monthly Archives: January 2008

Sony Earnings: Playstation Resurrection

For years the Playstation franchise carried Sony’s (SNE) earnings. The PS2 was one of the great selling consumer electronics products of all time.

Sony stumbled with the launch of the PS3. Microsoft’s (MSFT) Xbox had taken too many customers and the Nintendo Wii was becoming the world’s top game console. Sony’s CEO had to step down, and Howard Stringer was brought in from the US to run the company.

Sony’s game division has finally gone into the black.

Net income at Sony moved up 25% to $1.9 billion for the quarter ending December 31. Revenue rose almost 10%.

TV sales were the big winner for Sony during the quarter. Financially, the game unit which includes PS3 was a footnote. But, it is no longer a drag on earnings.

If there is any virtue to patience in business, it has found some very modest reward at Sony.

Douglas A. McIntyre

Posted on: January 31, 2008 – 2:35 am in Consumer Electronics, ,

S&P Sees CDO And Subprime Losses As High As $265 Billion

Losses from securities linked to subprime mortgages may exceed $265 billion as regional U.S. banks, credit unions and overseas financial institutions write down the value of their holdings, according to Standard & Poor’s writes Bloomberg.

The first and second quarters could be worse than most on Wall St. imagine.

Douglas A. McIntyre

Posted on: January 31, 2008 – 2:26 am in Financial Stocks

Amazon (AMZN): Nothing Will Satisfy A Bear Market

Wall St. has gone through the looking glass into Wonderland with Alice. The world is upside down now. Awful results at firms like E*Trade (ETFC) and Countrywide (CFC) can make shares rally. Outstanding results at a place like Amazon (AMZN) can cause a sell-off. It happened earlier in the month to Intel (INTC).

Amazon has to be the envy of the retail world, both online and brick-and-mortar. Fourth-quarter net income rose to $207 million, or 48 cents a share, from $98 million, or 23 cents a share, in the fourth quarter last year. Sales climbed to $5.67 billion, from $3.99 billion. That was all during a bad patch for holiday sales, one worse than any since 2001. Gross margins at Amazon dropped a touch, but just a touch.

Amazon also gave a robust outlook for 2008 and its shares dropped 11% to $65.

None of that makes any sense. The last time Amazon reported earnings, the stock reacted by moving above $100. The current earnings were better in almost every way, and the stock trades down by a third from where its was in late October.

A market is only as good as its reaction to the best earnings it sees. In a bull market, very good earnings get outstanding stock market results. Even mediocre earnings can be countenanced.

In a bear market, there is no such thing as good news.

Douglas A. McIntyre

Posted on: January 31, 2008 – 2:23 am in Earnings, , , ,

MBIA (MBI) Takes A Torpedo In The Boiler Room

Wall St. thought things would be bad when MBIA (MBI) reported earnings, but they were worse. The largest bond insurer posted a loss of $2.3 billion, or $18.61 a share, compared with profit of $181 million, or $1.32 a are in the same quarter the prior year. No wonder the company made its announcement at midnight.

MBIA it took a $3.4 billion charge after writing down the value of residential and commercial mortgages as well as complex financial instruments that it guarantees.

The numbers from the financial firm are certainly an indication that write-offs for mortgage-related securities at all large banks and investment houses could get worse, and it probably also makes a bail-out of MBIA and Ambac (ABK) harder. Any institution putting money into the firms will have to wonder if it is enough or whether further losses will make an initial bail-out inadequate.

The simple argument is that banks should put up the money to keep MBIA in business. If the insurer fails, that value of many of the muni bonds it insures will drop, leading to more write-offs at banks which hold these securities. The banks may not have the capital, but their arms will be twisted by regulators using their self-interest as an excuse.

If the bond insurers are the keystone keeping the financial system from crumbling, then the states and federal governments should find another way to back these pools of debt. It will save local and state treasuries billions of dollars and save tax-payers from having to make up the borrowing costs of municipalities.

No matter how much the government wants big banks to step up for MBIA, they don’t have the money.

Douglas A. McIntyre

Posted on: January 31, 2008 – 2:08 am in Financial Stocks, ,

Media Digest 1/31/2008 Reuters, WSJ, NYTimes, FT, Barron’s

According to Reuters, Amazon’s (AMZN) financial results show that its profit margins were squeezed in the last quarter.

Reuters writes that Starbucks (SBUX) will close 100 stores and say 2008 could bring a recession.

Reuters reports that bond insurance companies came under pressure with a Fitch downgrade of FGIC.

Reuters reports that NY State may use the powerful Martin Act securities fraud law to go after Wall St. firms which packaged mortgage-based products.

The Wall Steet Journal reports that MBIA (MBI) reported $3.5 billion in write-downs in its portfolio driving a $2.3 billion loss for Q4

The New York Times writes that Lilly is considering a $1 billion fine to settle claims against the company’s marketing of an antipsychotic drug.

The New York Times writes that William A. Ackman, a prominent money manager, said a failure of bond insurers could cause massive losses at big banks.

The New York Times writes that Altria (MO) will spin-off its international operation.

The Wall Street Journal writes that JC Penney will merge the buying operations of its stores and online services and cut jobs.

The FT writes that the head of Merrill Lynch (MER) see bail-outs of bond insurers coming company-by-company and not through an industry-wide bail-out.

The FT writes that inexpensive laptops from Asia could squeeze margins at big US PC makers including Dell (DELL), Apple (AAPL), and Hewlett-Packard (HPQ).

Bloomberg writes that Sony (SNE) turned in an increase in net income of 25% as its PS3 unit made a profit.

Douglas A. McIntyre

Posted on: January 31, 2008 – 1:40 am in Press Digest, , , , , , , ,

Can Google Break The Internet Earnings Drop? (GOOG, YHOO, AMZN, EBAY)

After the close of trading on Thursday, the beloved Google (NASDAQ: GOOG) will report earnings for Q4-2007.  This is the last of the internet giants to report earnings.  Interestingly enough, all of other pure-play web giants that reported earnings have been battered right after the report.  It seems that even the Internet is now economically sensitive at a time when investors are trying to find equilibrium on growth versus value in a slowing economy.

Yahoo! (NASDAQ: YHOO) fell 8% on Wednesday after the Tuesday earnings report.  Even though shareholders here are more patient than any other shareholders, 2008 is only ‘yet another year of a turnaround.’  Yahoo! is actually more expensive on its multiples ahead than Google because it is still the largest web property outside of search, it has the longest portal history of the Internet pure-plays, and there is a would-be takeover premium in the stock.  If Yahoo! management dug in and said they will fight any partnerships or takeovers, and if it just bullied Wall Street on a "we’re sticking to the #2 strategy" then we could even argue it is still 25% too high.

Frankly, comparing Amazon.com (NASDAQ: AMZN) and eBay (NASDAQ: EBAY) to Google is just not a real comparison.  At least that is our take.  But web-watchers look at all these for the inner workings of the web, monitoring traffic, sales, earnings, commentary, new developments and so on.  And the metrics of those properties are being used to judge elsewhere, particularly as eBay was said to be toning down ad spending with Google.

Read More »

Posted on: January 30, 2008 – 8:30 pm in Earnings, Internet, , , ,

Intuitive Surgical Braces For Earnings (ISRG)

Intuitive Surgical Inc. (NASDAQ: ISRG) is set to report earnings after the close on Thursday.  Shares closed at $235.00 Wednesday, down from a 52-week high of $359.59 and down from a December 31 close of $323.00.

First Call has estimates at $1.04 EPS on $175.9 million in revenues.  As far as Q1-2008, estimates are $0.98 EPS on $172.6 million revenues. Its fiscal-2008 estimates are $4.70 EPS on $811.1 million in revenues, representing an estimated 34% earnings per share growth and 38% revenue growth for 2008.

While everyone will be focused on Google earnings, this is at a critical juncture as a stock.  Intuitive Surgical makes the da Vinci surgical system for urologic, cardiothoracic, gynecologic, and general surgeries.  The problem is that the stock is up  almost twenty-fold over the last five-years and we just saw another quasi-robotic medical products competitor get crushed last night. 

The short interest for mid-January fell slightly to 1.915 million shares.  If options are any accurate guide, this stock could easily see a move of $22 or more in either direction after earnings.  Analysts still have an average price target north of $320 on Intuitive Surgical.  The company closed out Wednesday with a 50 forward P/E ratio, so Wall Street is going to keep demands high for the company in an environment where investors want more safety.

Jon C. Ogg
January 30, 2008

Posted on: January 30, 2008 – 6:12 pm in Earnings, Medical, , ,

Accuray, Neither Recession Proof Nor Credit Proof (ARAY)

Accuray Inc. (NASDAQ: ARAY) is being punished in after-hours trading.  The company posted earnings at $0.04 EPS on revenues of $52 million.  The problem is that First Call was at $0.09 EPS on $58.2 million. The company also gave 2008 revenue guidance of $210 to $230 million, down from a prior guidance of $250 to $270 million and down from consensus estimates of almost $265 million.  This represents 50% to 64% revenue growth projected over 2007, but it isn’t enough.

Accuray was in a position that you would think is recession-proof and full of growth ahead.  Its own CyberKnife Robotic Radiosurgery System treats tumors anywhere in the body non-invasively with continual image guidance technology and computer controlled robotic mobility.  As it monitors movement real-time, it delivers targeted high-dose radiation to minimize damage to surrounding healthy tissue.  It also eliminates the need for invasive head or body stabilization frames.  Shouldn’t that be recession proof????

You have to see the comments here and determine if you believe the CEO, Euan S. Thomson, Ph.D.:  "Accuray continues to experience record-setting growth…. This sustained growth is a testament to the impact that the CyberKnife System is having on meeting the demands for extracranial radiosurgery, particularly prostate and lung cancer…. While this was a positive quarter with respect to revenue and backlog growth, we believe that broader credit market issues are having a short-term impact on some of our U.S. customers’ purchase and installation timelines, as obtaining financing has become more difficult…."

Shares closed down 1% today at $14.98 and the 52-week trading range was $12.50 to $31.09.  But after-hours is ugly and a new 52-week low down almost 30% to under $11.00. 
You might wonder if Accuray’s salesforce has trouble pitching gold for the price of silver.  Something just doesn’t seem right here.

Jon C. Ogg
January 30, 2008 

Posted on: January 30, 2008 – 5:35 pm in Earnings, Earnings Warning, Medical, ,

Starbucks Earnings, Ammo For Bulls & Bears Alike (SBUX)

Starbucks (NASDAQ: SBUX) is seeing shares trade slightly lower in after-hours trading after earnings.  The coffee inflating retailer posted earnings of $0.28 EPS on revenues of $2.8 Billion, yet First Call estimates were $0.27 EPS on $2.77 Billion revenues.  Its margins contracted 160 basis points, a 1.6% total drop, down to 12.0%; and same store sales growth was 1% for the quarter.

As far as its slowing growth plans, it slowed the pace of U.S. store growth to 1,175 stores for this fiscal year, down from a revised target of 1,600 stores; while it increased International store openings to 975 stores.  The problem with today’s numbers is that Howard Schultz noted that the full details of the PLAN AHEAD will not be released until MARCH 19:  “We will unveil additional details of our transformation plan, including bold innovations that will reassert our coffee leadership, redefine the in-store experience and introduce core brand-building initiatives, on March 19, 2008, at the company’s Annual Meeting of Shareholders. Given all the work underway, we view 2008 as a year of refocus and renewal for Starbucks.”

Starbucks targets low double-digit EPS expansion this year.  Schultz also maintains that this $1 coffee initiative offering is just a test and it will be listening to customer feedback. 

During the first quarter, the company repurchased a total of 12.2 million shares at an average cost of $295 million, and had 1.3 million shares remaining available for repurchase under the authorization in place. Starbucks’ Board of Directors authorized the repurchase of up to 5 million additional shares of the company’s common stock just last night.

Shares closed down 3.7% at $19.22 in regular trading today, and shares are down about 2% at $18.83 in after-hours trading.  The 52-week trading range is $17.66 to $35.42. 

There is nothing special in this earnings release.  The bulls will say the worst is over, and it probably is.  The bears will say the best days are obviously long gone in a more challenging environment, which is also true.  Personally, this sort of feels like being Imelda Marcos opening a birthday present, only to find the present is a new pair of shoes.

Jon C. Ogg
January 30, 2008 

Posted on: January 30, 2008 – 5:13 pm in Earnings, Food,

52-Week Low Club (AMLN, CYMI, NTCH, KEYN, MMA, NATI, STE, WTW)

There was a much larger list of companies which hit 52-week lows, but these were some of the larger percentage changes that we looked at:

  • Amylin Pharmaceuticals Inc. (AMLN) closed at $29.34 versus a prior 52-week low of $29.73 (high $53.25). Poor future outlook and inflated costs…. stock starting to look like the "Amylin-ville Horror."
  • Cymer Inc. (CYMI) down 20% to $27.00, prior 52-week range was $31.25 to $45.16. Cymer was downgraded after missing earnings yesterday.
  • Hutchinson Technology Inc. (NASDAQ: HTCH) fell 33% to $16.18; prior 52-week range was $17.69 to $27.85. Low sales projections and downgrades from Caris and Brean Murray.
  • Keynote Systems Inc. (KEYN) tanked 28% to $9.20 versus prior 52-week trading range of $10.35 to $17.35. A Bad note of losses and downgrades.
  • Municipal Mortgage & Equity LLC (NYSE: MMA) down 22% to $7.13, versus prior 52-week range of $9.05 to $32.20.  Woes continue, stock heading to pink sheets/OTC.
  • National Instruments Corp. (NASDAQ: NATI) fell almost 10% to $26.23, but intraday lows were $24.88; 52-week trading range $25.80 to $36.06.  Citi downgraded after Q1 earnings outlook looked short.
  • Steris Corp. (NYSE: STE) fell 14% to $23.48; prior 52-week range $24.65 to $31.71. It is involved in the development, manufacture, and marketing of infection prevention, contamination control, microbial reduction, and surgical and critical care support products and services.  For a nearly-recession proof business, you wonder why its outlook wasn’t in-line.
  • Weight Watchers (NYSE: WTW) fell 2.2% today to $41.94, although its intraday low was $41.49; prior 52-week trading range was $41.52 to $58.24.  No real news today, maybe losing weight equals losing share prices?  We doubt it.  This may be economically sensitive even if this is one of the few ongoing methods of weight loss that will actually work.

Jon C. Ogg
January 30, 2008

Posted on: January 30, 2008 – 4:53 pm in HI/LOW, , , , , , , ,

Amazon.com Delivers, But Valuations Catching Up (AMZN)

Amazon.com (NASDAQ: AMZN) posted earnings with net income at $0.48 EPS on net sales of $5.67 Billion.  First Call had estimates pegged at $0.48 EPS and $5.37 billion in revenues.  Interestingly enough, Amazon noted a $200 million currency benefit.

Bezos & Co. also offered guidance for next quarter of $155 to $200 million in operating income, up 7% to 38%; $3.95 billion and $4.15 billion in revenues, a gain of 31% to 38% year over year.  Next quarter’s estimates are $0.35 EPS and $3.92 billion in revenues.

For 2008, Bezos offered up guidance of $785 to $985 million in operating income and $18.75 to $19.75 Billion in revenues; while the estimates for 2008 are $1.63 EPS and $18.25 billion in revenues.

Its shipping revenues also grew some 38% to $265 million.  Outbound shipping costs totaled $449 million, up 42% from $317 million in Q4-2006. Net shipping cost was $184 million, or 3.2% of net sales.

Amazon.com also ended the year out with over $3 Billion in net cash and equivalents

Amazon.com shares closed up 0.35% at $74.21 in regular trading, and shares are down some 4% at $71.25 in after-hours trading.

Jon C. Ogg
January 30, 2008

Posted on: January 30, 2008 – 4:31 pm in Earnings, Internet, Retail, ,

SCO’s Last Annual Report Ever? (SCOX, SCOXQ)

SCO Group, Inc. (Pink Sheet-SCOXQ), formerly "SCOX," has filed its annual report.  After you have seen the history of this company through the years, it is almost impossible not to wonder if this is likely the end of the road for the company.  Very few companies this small are involved in this much litigation.  The stock was booted from trading on the NASDAQ at the end of December and it is now traded on the Pink Sheets.  It is under bankruptcy protection.  Its revenues appear to be racing faster and faster to zero.  Its balance sheet is in the same boat.

It turned out that having a business model of suing everyone under the sun wasn’t a good one.  Go figure.  All of these are excepts from the 10-K, and we have focused on the more pressing issues with comments from the company:

Read More »

Posted on: January 30, 2008 – 2:37 pm in Annual Report, , ,

FOMC 50/50 Delivery

The FOMC made its rate cut today and delivered on 0.50% on both the FED FUNDS and on the discount rate, so now Fed Funds will be targeted at 3.00%.  Wall Street economists had been expecting a 0.50% rate cut down to 3.00%, so this was right in line with what the markets were hoping for.

Some brief comments were as follows:

  • financial markets remain under considerable stress;
  • credit has tightened further for some businesses and households;
  • recent information indicates a deepening of the housing contraction as well as some softening in labor markets;
  • expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation…

You can see the full statement here.

At 2:10 PM EST, about 5 minutes before the scheduled FOMC time, these were the market levels:
DJIA               12,447.46  (-32.84; -0.26%)
S&P500        1,358.17   (-4.13; -0.30%)
NASDAQ       2,348.33   (-9.73; -0.41%)
10YR-Bond   3.697%     (+0.0390)

The markets have rallied after this announcement, mostly as the tone of this announcement does not eliminate further cuts in the future.

Jon C. Ogg
January 30, 2008 

Posted on: January 30, 2008 – 2:20 pm in Economy,

Starbucks Plan Acceptance Likely Outweighs Its Earnings (SBUX)

Starbucks Corp. (NASDAQ: SBUX) is set to report earnings today after the close of trading. First Call has estimates pegged at $0.27 EPS and $2.77 billion in revenues. Next quarter’s estimates are $0.22 EPS and $2.65 billion in revenues; if the company offers these targets, next year’s estimates for 2009 are $1.21 EPS and $12.66 billion in revenues.  As of last look analysts have a price target average of $27.92.  We recently came up with our own analysis for a fair value range, although our targets are much more conservative than those of Wall Street on Starbucks with a low-target calculation of $18 and $26 as a high-end target..

As of late morning after shares slid from being positive, it appears that options traders are looking for a move of up to $0.95 to $1.05 in either direction.  The only good news about the chart is that at least this one stabilized after hitting $18-ish levels before Schultz announced he would resume the helm.  Shares have traded in a $17.66 to $45.42 trading range over the last 52-weeks.

As estimates have been coming down, there are not near as many positives going in and it would be hard to imagine Wall Street demanding a solid quarter with bang up numbers.  Schultz has already made some announcements on what he will do to bring the growth under control and to keep the wheels on the car, but you can imagine investors will be weighing the strategy more than a past number.  Testing $1 coffee may be going the wrong way as it is "so early 1990’s.

Jon C. Ogg
January 30, 2008

Posted on: January 30, 2008 – 12:32 pm in Earnings, Food, ,

VMWare (VMW) Could Fall 50% Further

VWWare (VMW) lost about a third of its value on a disappointing quarterly report. The stock is now down to $56, near a 52-week low and off a period high of better than $125.

The pricing of the company’s IPO last year was $29, and that is probably closer to the real value of the company. That would move the firm’s market cap from its current $22 billion to just over $13 billion.

Fourth quarter revenue at VMW was $412 million, up 80% over the same period a year ago. GAAP operating income was $76 million, a 19% operating margin. At this point VMWare trades about 14x its revenue run rate.

In the last quarter, Microsoft had revenue of $16.37 billion. Operating income was $6.48 billion. That is an operating margin of almost 40%. In its core software businesses, Microsoft has operating margins higher than 60%.

Wall St. would argue that Microsoft is not growing as fast as VMWare. That is true, but VMWare is facing competition in it virtualization software business. It is the lead, which should command some premium.But, Microsoft actually has only modest competition in its operating software operations. Their business in that arena is also probably less likely to be hurt by recession or a major competitive threat.

Microsoft’s multiple of revenue is about a little over 5x. Should the difference in revenue multiples be so great between the two firms. Almost certainly not. Could VMW’s growth rate give it a 7x or 8x figure? Probably. That gives the stock a value of about $30.

Douglas A. McIntyre

Posted on: January 30, 2008 – 12:27 pm in Software, ,

Can Amazon.com Live Up To Growth Targets? (AMZN)

Amazon.com (NASDAQ: AMZN) is set to report earnings after the close today.  First Call has estimates pegged at $0.48 EPS and $5.37 billion in revenues. Next quarter’s estimates are $0.35 EPS and $3.92 billion in revenues; the estimates for 2008 are $1.63 EPS and $18.25 billion in revenues.

Analysts have fairly aggressive price targets on Amazon with an average north of $98.00.  We’d note that shares have traded as low as $36.63 and as high as $101.09 over the last year.  Up until the last pullback this has spent most of the last four months in an $80 to $100 trading band, although we’d caution that $95 or so was the top of that band on all but one day.  Shares have also been hanging out for the last week or more under the 200-day moving average, which was $78.72 on last look.

Options are almost impossible to use for a predicting tool today with a high VIX, high event risk, and high volatility.  If you want a guess at options as a prediction, options traders appear to be braced for a move of more than $7.25 in either direction.  The short interest is also a must-see ahead of earnings, and as of mid-January the short interest was 31.4+ million shares (up 1.5% from December-end).

We do not know if Bezos & Co. will go out on a limb and offer any targets for 2008.  But we are fairly certain that 2007 will be an important benchmarking for analysts as they try to come up with 2008 targets.  Even with the recent sell-off we’ve seen, it doesn’t look like the analysts are going to line up in defense of Amazon.com if it makes any comments that are overly cautious ahead. 

If the company meets the 2007 target, its trailing P/E ratio will be 66.  With a target of $1.63 expecting almost 45%  earnings growth, this forward P/E ratio is still 45.3 for 2008 targets.  Sometimes valuations do matter, particularly when you are teetering on a recession or a bear market.

Jon C. Ogg
January 30, 2008 

Posted on: January 30, 2008 – 12:21 pm in Earnings, Internet, Retail, , ,

SPAC IPO Filing: Open Acquisition Corp. (OXE, VGR)

Open Acquisition Corp. is a SPAC, a special purpose acquisition company, that has filed to come public via an IPO.  With $125 million proceeds targeted at $10.00 per unit, each unit will consist of one share of stock and one warrant with a $7.50 strike price.  The total proposed maximum aggregate amount in securities is listed as $264,687,600.00.  Deutsche Bank is listed as the lead underwriter.  Once the securities begin separate trading, the common stock and warrants will be traded under the symbols “OXE” and “OXE.W” on the American Stock Exchange.

The filing does not specify a particular business focus, however, it is organized with the purpose to own no less than a controlling share in a “merger, capital stock exchange, stock or asset acquisition, or other similar business combination.”  Furthermore, it does specify which businesses that it will NOT engage in: real estate brokerage, insurance brokerage and employee benefits, retail investment advisory and asset management services, quick service restaurants, nor in tobacco.

In identifying a target, the management will evaluate aspects such as the following: earnings and growth potential; experience and skill of management and availability of additional personnel; capital requirements; competitive position; financial condition and results of operation; stage of development of the products, processes or services; breadth of services offered; degree of current or potential market acceptance of the products, processes or services; regulatory environment of the industry; and costs associated with effecting the business combination.

Open Acquisition Corp. chairman is Howard M. Lorber and President/CEO is Michael S. Liebowitz. Lorber is the current President and CEO of Vector Group (NYSE: VGR), a holding company focused on tobacco and real estate businesses. He is also the chairman and CEO of fast food chain Nathan’s Famous, Inc. Liebowitz is the former president and CEO of Harbor Group, Ltd., a property and casualty brokerage firm. He is the current president and CEO of Insreview, Inc, an insurance consultant for investment banks, capital market and mezzanine lenders, and real estate opportunity funds.

Rachel Lopez
January 30, 2008

Posted on: January 30, 2008 – 10:58 am in IPOs, ,

American Water Works IPO Closer To Market (AWK)

American Water Works Company submitted an amended IPO filing after yesterday’s market closed, and this is one we at 247WallSt.com have been looking forward to.  The filing still shows a planned IPO for a sale of up to $1.5 Billion in securities.  While most filing numbers are merely for filing purposes, this is going to be one of the larger IPO’s of 2008. 

The underwriting group is still listed as Goldman Sachs, Citigroup, and Merrill Lynch.  We won’t be shocked if that number of underwriters grows as far as co-managers are concerned.  American Water Works Company still has the stock ticker “AWK” on the NYSE as its pre-designated ticker.

American Water Works generated $2.1 billion in total operating revenue in 2006, and pro forma for the nine months ended September 30, 2007 is $1.66 billion in operating revenues.  This is one IPO we have been waiting for as RWE AG in Germany is essentially selling this one back to the U.S. public after acquiring it.

Jon C. Ogg
January 30, 2008

Posted on: January 30, 2008 – 10:03 am in IPOs, Water, , , , , ,

E*TRADE Insiders Buying Spree (ETFC)

There are some SEC filings out of online brokerage firm E*TRADE Financial Corp. (NASDAQ: ETFC) that shows quite a bit of insider transactions that took place on January 29.  These were all insider acquisitions and this was after earnings.  Below are the purchases seen from management with the shares purchased and the listed prices:

  • Hayter, director 4,917 at $4.06
  • Layton, director  245,800 at $4.06
  • Fisher, director 31,806 at $4.06
  • Randall, director 29,500 at $4.06
  • Parks, director  24,586 at $4.06
  • Raffaeli, director 12,293 at $4.06
  • Lilien, acting CEO 7,376 at $4.06
  • Weaver, director 68,843 at $4.06
  • Brewster, director 24,586 at $4.06
  • Willard, director 11,942 at $3.98 and 13,058 at $3.99

We looked over its recent earnings and noted how the company is not at all signaling its demise.  These insider share purchases may only fuel that more.  We just noted this one in our "10 Stocks Under $10" weekly subscriber letter on Sunday and we really wonder if Mr. Moglia or Mr. Schwab have an interest in buying this company.

Jon C. Ogg
January 30, 2008

Posted on: January 30, 2008 – 9:50 am in Brokerage Firms, Insider Activity,

China’s Huge Bear Market (PTR)(LFC)

China’s Hang Seng Index is off almost 25% over the last three months. The S&P 500 is barely off 10% over the same period.

A look at some of the components of the Hang Seng looks even worse. During the last 90 days, shares in PetroChina (PTR) are off 40%. Shares in China Life (LFC) are down 40%.

Bank of China is off well over 30%.

All of this is likely to make the middle class in the country feel a little less well off. A great deal of the net worth of the well-off Chinese is in stocks and land.

Under the circumstances, the Chinese consumer may start to buy less. Couple that with falling exports due to slowing economies in the West and it points to a recession.

Douglas A. McIntyre

Posted on: January 30, 2008 – 9:49 am in International Markets, ,