Daily Archives: February 1, 2008

52-Week Low Club (AVID, CERN, DRIV, MIL, NZ, OMCL, HPOL, FLE, ACTU)

These are some of the more active stocks that were trading on new 52-week lows today:

  • Avid Technology Inc. (NASDAQ:  AVID). Selling at lowest level since 2003 today at around $19.20 due to downgrades and poor outlook. The former low was $23.50. 
  • Cerner Corp. (NASDAQ: CERN). This healthcare solutions company isn’t looking so healthy after disappointing quarter, although isn’t hasn’t spent the whole day trading under the 52-week low. 
  • Digital River Inc. (NASDAQ: DRIV). Not meeting the street, the e-commerce company was trading at $30 at mid-day. The prior 52 week low was $32.
  • Millipore Corp. (NYSE: MIL). Low sales lead to a new low. Trading at $64.61 at mid-day, the prior 52 week low was $64.90. 
  • Netezza Corporation (NYSE: NZ). Was down over 8% at mid-day, this data warehouse appliance provider on somewhat of a head scratcher….
  • Omnicell Inc. (NASDAQ: OMCL). Perhaps this medication control company needs to take a dose of its medicine as shares fall to as low as $17.61, although it is back above its prior low of $18.28 at mid-day. 
  • Harris Interactive Inc. (NASDAQ: HPOL). Down 21% at mid-day after a disappointing earnings call. The prior low was $2.90.
  • Fleetwood Enterprises Inc. (NYSE: FLE). This mobile home maker didn’t spend all day under the 52-week lows, but the weakness after yesterday’s earnings and a downgrade persisted. Apparently tornadoes aren’t the only ones that don’t like mobile homes.   
  • Actuate Corp. (NASDAQ: ACTU). For a company that provides software for business intelligence, business isn’t looking too hot. Down 23% at mid-day $4.34, its prior low was $4.91.

Have a great weekend, particularly if you are doing Mardi Gras parties and the Super Bowl!

Rachel Lopez
February 1, 2008

Posted on: February 1, 2008 – 4:01 pm in HI/LOW, , , , , , , , ,

Carl Icahn Buying Into J.C.Penney? (JCP)

The WSJ has reported that Carl Icahn has been amassing a stake in J.C.Penney Co. (NYSE: JCP).  Unfortunately, the WSJ is citing "people familiar with the matter."  Those people are not always clear and not always perfect, although we’d be under the opinion that the WSJ wouldn’t have run this based solely on "people" if it hadn’t gotten confirmation from unrelated sources that may know. 

We don’t know the size of the stake taken if this really occurred, although one noted that the holding may be on of the larger holdings.  As J.C.Penney has a $10+ Billion market cap, there is a lot of stock that could be acquired.

We’ll probably get to find out if this is real or if this isn’t tonight, because Carl Icahn is scheduled to appear briefly on CNBC’s FAST MONEY at 5:00 PM EST. 

So far J.C.Penney shares are up a bit over 1% at $48.00, although the stock has traded as high as $49.14 today.  The 52-week trading range is $33.27 to $87.18.  While many retail stocks were punished hard, JCP shares are actually up so far in 2008.

CEO Ullman is one of Jim Cramer’s favorite CEO’s as well so we’d expect Cramer to be discussing this tonight on CNBC’s MAD MONEY as this is a retail stock and within his current trends.

Jon C. Ogg
February 1, 2008

Posted on: February 1, 2008 – 1:48 pm in Activist Investor, Retail, , , ,

FDA’s First Stent Approval Since 2004 (MDT, JNJ, BSX, ABT)

Medtronic, Inc. (NYSE: MDT) has just announced that it has received formal approval from the FDA to market its Endeavor Zotarolimus-Eluting Coronary Stent System for the treatment of coronary artery disease.

This had been under study for some time and had been used in more than 4,100 patients that had been followed-up for up to four years.  Medtronic noted that this affects an estimated 13 million people in the United States and is the country’s leading cause of death.  Medtronic will begin marketing of these stents immediately and said it EXPECTS TO SHIP 100,000 units to hospitals in the U.S. over just the next 30 days.

Boston Scientific (NYSE: BSX) and Johnson & Johnson (NYSE: JNJ) are competitors in this stent market, although stents have been under more scrutiny than in say 2003 to 2006.  Abbott (NYSE: ABT) is still waiting on a yeah or nay out of the FDA on its new stent.

Jon C. Ogg
February 1, 2008

Posted on: February 1, 2008 – 12:35 pm in FDA, Medical, , , ,

Will Transmeta Agree To Sell For $15.50? (TMTA, INTC, AMD)

Transmeta Corp. (NASDAQ: TMTA) may be an interesting stock now.  The company scored a major win with a legal settlement/victory last year over Intel (NASDAQ: INTC).  Now Transmeta issued a statement that it has become aware of a letter from Riley Investment Management LLC expressing interest in seeking to acquire all of the outstanding shares of Transmeta not already owned by Riley or its affiliates for $15.50 per share in cash.
This is subject to numerous conditions, which are actually not stated as of yet.  Barron’s had noted a merger was coming yesterday from an SEC filing for $15.50 and shares rose from $12.74 on Wednesday up to $13.46 yesterday.  This morning shares are up over 3% and trading at $13.88 in early morning trading. 

This puts shares at the top of the trading range since its major move last year.  Transmeta’s market cap is currently $167 million.  Riley has many interests and this just a small list of the 35 interests in which Riley Investment Management LLC has a hand in: Cadiz Inc (NASDAQ: CLCI), Management Network Group Inc (NASDAQ: TMNG), Regent Communications Inc (NASDAQ:RGCI), Silicon Storage Technology Inc (NASDAQ:SSTI) and Zilog Inc (NASDAQ: ZILG).  Assuming he has the cash to muster this, it would be a major coup for his investment clients as this could be winning the company for almost free after you back out all the settlement cash and payments.

Riley Investment Management LLC, requested many records in a letter to the board in January that was disclosed in an SEC filing.  This same shareholder is expressing an interest in acquiring the company and he’s been challenging the company for some time.

In a prior SEC filing, Riley noted his request (demand) was "to investigate potential wrongdoing, mismanagement, waste of corporate assets and breaches of fiduciary duties" by members of Transmeta’s board of directors.  Riley has also been on them in 2007 with filing a complain about options grants diluting shareholders.  Riley had also noted that Transmeta failed to adequately disclose the formula behind a hefty bonus payment awarded to General Counsel John Horsley after it scored a $250 million settlement of patent litigation with Intel (NASDAQ: INTC) in October. Riley apparently estimated that Horsley’s bonus payment was at least $11 million.

Interestingly enough, we covered this one back last summer on the note that Advanced Micro Devices (NYSE: AMD) had invested $7.5 million into Transmeta.  Things have been tough on this company for quite some time.   It’s hard to know if the company will agree to sell itself or not.

Jon C. Ogg
February 1, 2008 

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Posted on: February 1, 2008 – 10:46 am in Mergers and Buy Outs, Private Equity, Semiconductor, Technology Companies, , ,

Chevron Beats Earnings On Mixed Results (CVX)

Chevron Corp. (NYSE: CVX) has posted strong earnings today, although there are some mixed operational numbers that might bring at least some pause for shareholders.

Higher oil prices are finally generating higher profits for oil behemoths.  Chevron has posted $2.32 diluted earnings per share, beating First Call’s estimates of $2.26. Their revenues were an impressive $61.41 billion, up more than 28% from last year.

While the surge in oil prices drove their profits in the E&P segment, their downstream operations were down 79%, or as the CEO said, “off sharply” due to unplanned refinery maintenance and costs.

CVX shares were initially up 2% in pre-market trading, but shares are back closer to flat at $83.30 in the first 30-minutes of trading.

Jon C. Ogg
February 1, 2008 

Posted on: February 1, 2008 – 10:01 am in Earnings, Oil & Gas,

Exxon Mobil Has Biggest Quarter Ever (XOM)

It appears that record oil prices really are paying off for Exxon Mobil Corp. (NYSE: XOM).  The largest company by market cap is reporting that it made some $11.66 Billion in quarterly profits on a whopping $116.64 Billion in quarterly revenues.  This revenue number compares to $90 Billion in Q4-2006.  As far as how this translates into simple shareholder math, Exxon generated $2.13 diluted earnings per share.  First Call had estimates pegged at a $1.95 estimate.

If you looked at Valero’s numbers this week, it looked like the refiners were starting to look safer.

In early pre-market trading, shares of XOM are trading up 1.7% at $87.90.  The 52-week trading range is $69.02 to $95.27.

Jon C. Ogg
February 1, 2008 

Posted on: February 1, 2008 – 8:19 am in Earnings, Oil & Gas, ,

Bond Insurer Rescue Package From Banks? (MBI, ABK)

Ambac Financial Group Inc. (NYSE: ABK) and MBIA (NYSE: MBI) are both trading higher in pre-market trading this morning.  CNBC squeezed in a report after covering the Yahoo!-Microsoft that there are eight banks that have formed a consortium to rescue the ailing bond insurers.

MBIA is trading up roughly 12% to $17.50 and Ambac is trading up over 15% at $13.50 in pre-market trading.  We noted before how "mergers may be mandated rather than preferred" and this would fall right into that coup and conspiracy.  The counterparty risks are just too severe if one of these were to fail entirely.  Goldman Sachs recently outlined the values of potential packages.

Forming this consortium may be the banks saving their own skin rather than them just coaxing a financial opportunity.

Jon C. Ogg
February 1, 2008 

Posted on: February 1, 2008 – 8:03 am in Banking, Financial Stocks, Mergers and Buy Outs, , , , , ,

Top 10 Pre-Market Analyst Calls (ADBL, GOOG, LOW, MXIM, MEDX, MS, MOT, OI, TIVO, DIS)

Below are ten of the top analysts calls that247WallSt.com is looking at this morning:

  • Audible (NASDAQ: ADBL) downgraded to Hold from Buy at Citigroup.
  • Google (NASDAQ: GOOG) downgraded to Hold from Buy at Jefferies.
  • Lowe’s (NYSE: LOW) downgraded to Hold from Buy at Citigroup.
  • Maxim Integrated (NASDAQ: MXIM) downgraded to Hold from Buy at Jefferies.
  • Medarex (NASDAQ: MEDX) raised to Neutral from Sell at Banc of America.
  • Morgan Stanley (NYSE: MS) downgraded to Neutral from Buy at Goldman Sachs.
  • Motorola (NYSE: MOT) raised to Buy at Citigroup.
  • Owens-Illinois (NYSEO: OI) raised to Buy from Hold at Deutsche Bank.
  • TiVo (NASDAQ: TIVO) downgraded to Underperform from Market Perform at FBR.
  • Walt Disney (NYSE: DIS) raised to Outperform from Market Perform at Oppenheimer.

Jon C. Ogg
February 1, 2008

Posted on: February 1, 2008 – 7:43 am in Analyst Calls, , , , , , , , , ,

A Big Win For Yahoo! Shareholders, Microsoft (MSFT) Makes A Bid

It is the best news that Yahoo! (YHOO) investors have had in years. Microsoft (MSFT) has offered to buy the company for $31 representing a total equity value of approximately $44.6 billion. Yahoo! trades for $19.18.

The proposal would allow the Yahoo! shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the total consideration payable to Yahoo! shareholders consisting of one-half cash and one-half Microsoft common stock. The offer represents a 62 percent premium above the closing price of Yahoo! common stock on Jan. 31, 2008.

With Yahoo!’s latest earnings showing revenue moving up less than 10% and operating income actually falling its shareholders are getting more than they could ever have bargained for. A slowing ad market is likely to take its shares down further.

The bid is a sign that a turnaround for Yahoo!’s new management is a long way off. If Wall St. believed in their current plan, Microsoft would have a hard time making the offer.

A buy-out of Yahoo! would be a coup for Microsoft and its MSN operation. According to comScore, Yahoo! still has more unique users than Google. MSN and Yahoo! together would have about 35% of the search market. Google has over 50%, but separately the other two companies had no chance to catch it They may now.

MSFT will probably fire another 3,000 to 4,000 people at Yahoo!. That would make the deal very profitable for Redmond. If it sells Yahoo! Japan and the portal’s piece of China e-commerce company Alibaba it can cut the purchase price by about $10 a share.

Yahoo!’s days as an independent are over.

Douglas A. McIntyre

Posted on: February 1, 2008 – 6:47 am in Internet, Mergers and Buy Outs, ,

No Cut From OPEC, No Relief For The US

It is all about the "Benjamins". OPEC wants more money, every month of every year.

The cartel signaled that it will not increase oil production at its current meeting. Their reason is that the global economy is slowing. That means demand will drop. Winter is ending in the Northern hemisphere, so that should drop demand, too. The fact that oil still trades for over $90 does not count for much.

The debate about oil prices works in a circle. Oil prices go up, the economy gets hurt. Demand goes down. Prices drop. The economy gets better, and so does demand for crude.

The problem with the little circle is that it is broken. Demand for oil is not dropping. In China, the government pays for oil at whatever price the market bears but offers businesses and consumers low prices for gas and diesel. It is a hell of a price to pay for keeping their economy strong, but they seem to like it that way.

Oil exporters are keeping more of their own oil. The Saudis and Mexicans have more and more cars. They are building roads, bridges, and ports. They will probably send a smaller piece of their production overseas each year from now on.

OPEC can keep the price of oil high because there is no real evidence that demand is slackening, no matter what their members say. That puts them in the cat bird seat. Until cars run on water or manure, none of it is likely to change.

Douglas A. McIntyre

Posted on: February 1, 2008 – 6:26 am in Oil & Gas

2007: The Internet’s Worst Year Ever (GOOG)(YHOO)(EBAY)(AMZN)

Google (GOOG) joined the list of big online companies that disappointed just about everyone with its earnings. Revenue rose 51 percent to $4.827 billion. That just wasn’t enough.

Google’s share will probably trade around $500 on the news. That is down from a peak of $747. About $80 billion in market cap has been swept away.

Wall St. would say that 2000 was the worst year for internet stocks. Many lost 90% of their value. Some went out of business. The Nasdaq fell by half. But, it is important to remember that most of the internet companies which got public in 1998, 1999, and early 2000 should never have made it through the IPO process. Many had no revenue and substantial losses. They had high "burn rates". Once the IPO cash was gone, so were the businesses.

In 2007, things are very different. The market is dealing with companies which have been around for over a decade. They have generated substantial profits. The largest ones, Google, Yahoo! (YHOO), Ebay (EBAY), and Amazon (AMZN) are large operations. So are the internet arms of News Corp (NWS), Time Warner (TWX), and Microsoft (MSFT).

Since the beginning of the year, Yahoo!, Google, Ebay, and Amazon have all lost close to 20% of their value–in a month. Even the first month of 2000 was not that bad.

The market has decided to begin what could be a long, hard devaluation of internet companies. The reason is fairly simple. They are not growing at 2x year-over-year any more. Even the expectations for Google are at sub-50% growth. A recession could undercut that figure, and the law of large numbers will bring that number down every year for the foreseeable future.

The internet industry is not dying. But, it has become a normal industry now. It will trade based on more normal "metrics" and more normal valuations. None of that is good news for Google shareholders.

Douglas A. McIntyre

Posted on: February 1, 2008 – 6:13 am in Internet, , , , , , ,

A Way Out For Motorola (MOT): A JV With Sony Ericsson

When Sony (SNE) and Ericsson (ERIC) found that neither had enough market share to go it alone in the global handset business, they merged their operations.

During 2007, the joint venture moved its share of the handset business from 7% worldwide to 9%. Sony-Ericsson appears to be doing very, very well. In Sony’s recent quarterly report, it showed net income of 30.4 billion yen for its piece of the business. Sony’s total net was 200.2 billion yen so the handset operation was a big contributor.

With its sales falling, Motorola’s handset division shipped 40 million phones last quarter. That would put is share at 12%, behind Nokia (NOK) at 40% and Samsung at about 15%.

In the fourth quarter, Motorola’s handset division had revenue of $4.8 billion and lost $358 million. For the year 2007, Sony Ericsson had revenue of $12.9 billion euros. More important, it has operating income of $1.5 billion euros. (One euro equals 1.5 USD)

Sony-Ericsson could take the Motorola handset business and rip out a lot of duplicate costs. A combined company would have over 20% of the global market, putting it as a solid No.2 behind Nokia. Could Motorola get 33% of the new company? Maybe not. But, it could get a sizable piece of what could instantly be a very profitable, strong global handset operator.

Douglas A. McIntyre

Posted on: February 1, 2008 – 5:57 am in Wireless, , , ,

Rio Tinto (RTP): A Mad Bid For Questionable Assets (BHP)(AA)

Most on Wall St. believed that Alcoa (AA) was the odd man out in the metals industry. It missed out on buying Alcan. It has been nowhere to be seen in the big takeover tussle between large rivals Rio Tinto (RTP) and BHP Billiton (BHP).

What a difference a day can make. Alcoa and China metals company, Aluminum Corp of China, have picked up 14% of Rio Tinto (RTP) shares. They obviously did it very quietly. The move clearly has the backing of the Chinese central government, which means the money is sitting around to make a full-fledged bid. All of this has to be bad news for BHP Billiton (BHP) which hoped it would get the prize of owning Rio. Maybe its will raise its offer and create an all-out war for RTP.

If it does nothing, BHP may get off easy. Shares in Rio Tinto are already up about 80% over the last year. That puts its market cap at around $140 billion or 5.5x sales. Alcoa trades at less than 1x sales. Being a takeover target obviously has its advantages.

Buying Rio Tinto at these prices would be a huge risk for anyone. Its share price is up about 80% over the last year. Part of that is due to M&A activity, but most is because of the rising price of global commodities.

Commodities prices could be knocked back if the worldwide economic slowdown gets much worse. A prolonged recession may move metals values way down. The stock price of Freeport McMoRan (FCX) has already started to fray. Wall St. liked its deal to buy Phelps Dodge. That is no longer true.

Alcoa’s share price may be the best proxy for what a big metals company is worth. It is down over 15% over the last three months.

A year from now, Rio Tinto’s premium may well look like folly.

Douglas A. McIntyre

Posted on: February 1, 2008 – 5:39 am in Metals, , ,

Media Digest 2/1/2008 Reuters, WSJ, NYTimes, FT, Barron’s

According to Reuters, Chinese mining group Chinalco and Alcoa (AA) have bought 12% of Rio Tinto (RTP) setting up a potential bid against BHP Billiton (BHP).

Reuters writes that Motorola (MOT) is considering selling of spinning off its mobile handset business.

Reuters reports that Google’s (GOOG) earnings fell short of expectations.

Reuters reports that MBIA (MBI) tried to assure investors is was still viable but ratings agencies may cut their view of the firm’s debt.

Reuters reports that mortgage bankers, industry experts and nonprofit officials say that the impact of one particularly nasty kind of ARM — called the Option ARM– has still not hit the market.

The Wall Street Journal reports that a grand jury is probing Merck’s (MRK) marketing of Vioxx.

The Wall Street Journal writes that Tivo (TIVO) won a key patent case, sending it share up.

The New York Times reports that inflation in China in increasing the prices of its exports into the US

The New York Times writes that Google claimes ad growth is still strong, despite missing earnings forecasts.

The New York Times writes that OPEC is expected to keep oil prces unchanged.

The FT writes that SRM Global Fund is seeking to block the Bank of America (BAC) talkover of Countrywide (CFC), saying the price is too low.

Bloomberg reports that Nissan had its first profit in five quarters.

CNN Money writes that Exxon (XOM) profit’s for the last quarter may be the biggest ever posted by a US company.

Douglas A. McIntyre

Posted on: February 1, 2008 – 4:15 am in Press Digest, , , , , , , , , , ,

Asia Markets 2/1/2008 (CHL)(PTR)

Markets in Asia were mixed.

The Nikkei fell ,7% to 13,497. Hita hi (HIT) rose 1.5% to 807. KDDI fell 5.2% to 681000.

The Hang Seng moved up 2.9% to 24,124. China Life (CHL) rose 5.4% to 29.5. PetroChina (PTR) rose 6.9% to 11.45.

The Shanghai Composite moved down 1.4% to 4,321.

Data from Reuters

Douglas A. McIntyre

Posted on: February 1, 2008 – 3:49 am in International Markets, , ,