Daily Archives: February 7, 2008

comScore’s Own Guidance Measured Short By Traders (SCOR)

It appears that Internet audience measurement service comScore Inc. (NASDAQ: SCOR) is being treated roughly on its guidance after earnings this evening.

The company just posted revenues of $25.3 million, compared to its $25.0 to $25.3 million prior range and compared to First Call estimates of $25.18 million.  Its GAAP EPS was $0.42 at $12.7 million, but this included an income tax benefit of $8.1 million and included a $392,000 charge from its IPO.  Its non-GAAP earnings were were $0.21 based upon $6.4 million.  It had previously guided $6.2 to $6.5 million in non-GAAP earnings and First Call had estimates at $0.19 non-GAAP EPS.

comScore also noted that deferred revenue was $33.0 million and it added 58 new customers to total 895 customers.

ComScore is putting next quarter guidance at $0.10 to $0.11 non-GAAP EPS on $25.9 to $26.2 million in revenues, while First Call has estimates at $0.16 EPS on $25.3+ million in revenues.  comScore is also putting guidance for 2008 at $0.55 to $0.58 non-GAAP EPS on $112.2 to $113.2 million in annual revenues, while First Call has estimates at $0.79 non-GAAP EPS on $112.6 million in revenues.  We would note that this guidance for 2008 may be impacted by a deferred tax item.  We’d also note that the company noted it has a seasonally high burden in the first quarter due to payroll taxes and vacation accruals, and it even noted a ramp up in sales and technology groups.

Shares closed up over 6% today at $27.45.  But as the market is in a show-me mode, shares  are trading down 11% from its closing price at $24.40 in after-hours trading.  The 52-week trading range is $19.70 to $42.00.

Jon C. Ogg
February 7, 2008

Posted on: February 7, 2008 – 5:17 pm in Earnings, Internet, ,

The 52-Week Low Club (NT)(GSK)(IAR)(IFX)

Idearc (NYSE: IAR) Big earnings miss mugs shares, Down to $11.21 from 52-week high of $38.

Infineon Technologies (NYSE: IFX) German company posts weak numbers. Sells off to $7.89 from 52-week high of 18.74.

R H Donnelley  (NYSE: RHD) Printing operation has rough day. Falls to $21.10 from 52-week high of $84.49.

Prudential (NYSE: PRU) Joins other financials in the basement. Drops to $69.05 from 52-week high of $103.27.

Nortel Networks (NYSE: NT) Concerns about tech catch up to enterprise telecom equipment firm. Falls off to $10.95 from 52-week high of $31.79.

GlaxoSmithKline (NYSE: GSK) Drug maker has headache. Sells off to $41.71 on earnings from 52-wek high of $59.98.

Orion Energy Systems (NASD:OESX) Brutal quarter. Drops to $6.56 from 52-week high of $22.46.

Edge Petroleum  (NASD: EPEX) Company is selling some of its assets. Sells off to $4.05 from 52-week high of $15.78.

Select Comfort (NASD: SCSS) Bad quarter and downgrade. Drops to $4.94 from 2-week high of $20.17.

Douglas A. McIntyre

Posted on: February 7, 2008 – 4:04 pm in HI/LOW, , , , , , , , ,

Can Alcatel-Lucent Get One Right? (ALU)

Alcatel-Lucent (NYSE: ALU) will report earnings tomorrow morning.  By now we have seen almost every large technology company either say cautious things going forward, or we’ve seen their stocks get hammered over fears of a slowdown.  This company gave three earnings warnings last year after Alcatel acquired Lucent and it has been losing business.  The stock is down well over 50%.  We even named Patricia Russo as one of our CEO’s to go for 2008.

First Call has estimates at $0.14 EPS on some $7.3 Billion in revenues.  Estimates for the coming March quarter are $0.05 EPS on $5.6 Billion in revenues, and fiscal Dec-2008 targets are $0.56 EPS on almost $25 Billion in revenues.  The stock is cheaper than its peers on a forward P/E basis but that shouldn’t be hard to figure out why.

Analysts are still quite negative on Alcatel-Lucent, although the average price target is still north of $9.00 and that would imply close to a 50% gain from here.  The 52-week trading range is $5.54 to $14.57, so the $6.17 stock price isn’t exactly telling a great story.  While it has traded under $6.00, the current price has been used for support after a 6-month straight meltdown.  Because of such a low share price, options are of no use as a predicting tool.

Last night, the WSJ ran a note that showed T.Rowe Price being optimistic, although they might have a bit more patience and a longer horizon than most.

There have been virtually no key sentiment shifts from Wall Street in quite some time.  The good news is that the company actually beat estimates before, but that is after they lowered targets sharply.  If the company meets expectations tomorrow it will represent a 30% drop in earnings year over year on an EPS basis.  As of last look, this one has some 33.89 million shares carried in the short interest.

Jon C. Ogg
February 7, 2008

Posted on: February 7, 2008 – 2:05 pm in Earnings, Technology Companies, , , , , ,

Smartphone Trends Favor Apple (AAPL) And RIM (RIMM)

Handset users are throwing away their old phones in favor of smart phones from shops like Apple (NASDAQ: AAPL and Research-in-Motion (NASDAQ: RIMM). According to a survey by ChangeWave seventeen percent of people planning to buy a handset in the next six months plan to buy and iPhone. Fifteen percent plan to buy a RIMM product.

The bad news is that those planning to buy a phone from Motorola (NYSE: MOT) declined to 11%. That number was 33% in October 2006.

When people surveyed asked whether they were "very satisfied" with their handsets, Apple was in first place with 72% of users giving positive responses. Palm (NASDAQ: PALM) finished last with a 30% satisfaction rating.

The results should be good news for Apple and RIM. Apple’s shares are off over 35% this year and RIM is down 25%.

Douglas A. McIntyre

Posted on: February 7, 2008 – 2:02 pm in Consumer Electronics, , , ,

Another Recession Victim, Tully’s Coffee Pulls Its IPO

Tully’s Coffee Corporation has withdrawn its filing for an initial public offering that was originally filed on July 26, 2007.  The reason is simply "because of unfavorable market conditions."  This was never going to represent a significant challenge to Starbucks, but it is at least one less public competitor.

Tully’s has been around since 1992 and it does have coffee shops in Washington, Oregon, Idaho, California, and Arizona.  It even has Japan operations.  Although the company had originally postponed its IPO on August 14, 2007, this is the official withdrawal and this one won’t be public for quite some time (if ever).

If you take a look at our own IPO INDEX on our site, you might fall under the impression that the only companies coming public in this environment are the former blank check IPO’s or the SPAC’s.

Jon C. Ogg
February 7, 2008

Posted on: February 7, 2008 – 1:22 pm in IPOs, ,

The Best Of The Very Best Mutual Funds

Deciding which mutual funds make the best investments is especially hard because there are thousands to pick from. Some are load and some are no-load. Some do well over a year, but poorly over five years. Some do well in up markets and some do better when markets are falling.

24/7 Wall St. looked at the "Best Funds" lists of the publications that have for years devoted a tremendous amount of their editorial effort to evaluating mutual funds. We conducted a "meta-data" study to find out which funds were on more than one list. The number was very small.

Forbes, Money, Smart Money, and Kiplinger do not have much in common in the ways they measure performance. Some of the ratings are based on simple one-year returns. Others weigh in multi-year performance. Still others look at performance volatility. Some funds are measured on how they will fit into a portfolio mix to drive the best and safest long-term pay-back.

Here are the nine funds that made more than one list

Matthews China Fund (MCHFX) Designed to be a long-term China investment which keeps over two-thirds of its capital in securities from that country. On the Smart Money and Forbes lists.

CMG Focus (CGMFX)  Long-term appreciation focused and tends to invest in equities of a small number of companies at any one time. On the Forbes, Smart Money, and Kiplinger lists.

Harbor Bond International (HABDX) Invests for total return, primarily in corporate and government bonds in the US and overseas. On the Money and Kiplinger lists.

T Rowe Price Equity Income (PRFDX) Invests in well-established companies with higher than normal yields. On the Money and Kiplinger lists.

Dodge & Cox International (DODFX)  Invests for principle and income growth with 80% of assets from outside US. On both the Money and Kiplinger lists.

Fairholme Fund (FAIRX) Invests in no more that 25 equities at one time. May take positions in convertible preferred shares. On Kiplinger and Money lists.

T Rowe Price Emerging Markets Stock (PRMSX) Invests for long-term growth of capital. Eighty percent of investment in emerging markets in Asia, Latin America, and Middle East. On Kiplinger and Money lists.

Oakmark International (OAKIX) Invests in common stocks of companies in at least five countries outside the US at any one time. On Money and Kiplinger lists.

Muhlenkamp (MUHLX) Buys stock and fixed income in companies it believes are undervalued. On both Money and Kiplinger lists.

Additional fund description data from Money.

Douglas A. McIntyre

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Posted on: February 7, 2008 – 12:41 pm in Mutual Funds, , , , , , , , ,

Verizon Expands 100 Million Share Buyback Plan (VZ)

Verizon Communications Inc. (NYSE: VZ) has announced that its Board of Directors has approved the buyback and repurchase up to 100 million shares of its common stock.  This replaces the previous 100 million share buyback plan, of which there were some 30 million shares.  The prior plan was due to expire on Feb. 28, 2010, and this new extended buyback plan is set to expire on Feb. 28, 2011.

Verizon noted that it has roughly 2.9 Billion shares outstanding.  At today’s share prices, this represents roughly $3.6 Billion for share buybacks.

Jon C. Ogg
February 7, 2008

Posted on: February 7, 2008 – 12:08 pm in Stock Buybacks, ,

Analyst Upgrade Shows Value & GARP At Cisco Systems (CSCO)

It’s always expected that you see analyst downgrades any time you see disappointing news out of a company.  This morning we did see at least two downgrades on Cisco Systems (NASDAQ: CSCO) after its earnings conference call where John Chambers took down the growth forecasts.

But sometimes analysts use weakness in the stock, especially after weakness had been there before, to look for opportunity.  Boutique research firm Pacific Crest Securities raised the rating on Cisco Systems to an Outperform rating from a "Sector Perform" rating.  The analyst call was on valuation and based upon upon the company’s solid position and on margins.  While Pacific Crest didn’t note that shares have reached an inflection buy level or a definite bottom, it did note that the stock is not likely to fall much further.

We aren’t ready to call a total or finite bottom as of yet on our own, although long-term investors have an incredible opportunity here to start picking up shares when they are weaker.  Shares had sold off significantly even before the earnings yesterday.  If you have followed anything related to the economy lately, the ever-cautious John Chambers could not have really been expected to not take numbers down.  This is a recession, and in fact now that the NASDAQ pulled back by 20% it is in bear market territory.  There is no reason to be greedy, and investors that make money in trading ranges during a bear market buy on extreme weakness rather than after shares have recovered.

The current environment has no immediate quick fix and we expect the headlines to continue for some time.  But there is beginning to look like a base is trying to form in this stock.  Longer-term investors can start marking in some attractive entry points and buy on days when the market is very weak.  We noted in our earnings preview how this was getting down to levels where it was probably going to start showing up all major screens run by Value managers and growth managers alike.

Cisco’s stock was down 7% earlier this morning.  Shares are only down about 2% now at $22.70, and even though it saw $21.77 earlier that would actually be above its old $22.30 to $34.24 trading range over the last 52-weeks.

Jon C. Ogg
February 7, 2008

Posted on: February 7, 2008 – 10:33 am in Analyst Calls, Technology Companies,

Solar IPO FILING: Real Goods Solar (RSOL, SPWR)

Real Goods Solar, Inc. has filed to come public via an initial public offering.  For filing purposes the company has a proposed maximum offering set at $57.5 million.  It will have the proposed NASDAQ ticker of "RSOL."

The lead underwriter is ThinkEquity and additional managers in the deal at Canaccord Adams and Broadpoint.

Real Goods Solar is a residential solar energy integrator.  It is ranked number one in California, which is nearly two-thirds of the total U.S. market for grid-connected solar energy systems. Services offered are design, procurement, installation, grid connection, monitoring, maintenance and referrals for third-party financing of solar energy systems. Its first sale was in 1978 of the first solar photovoltaic panels in the United States, and it has sold more than 2,400 residential and small commercial solar energy systems and some 30,000 various customer products.

For fiscal 2007 the company generated net revenues of $32.7 million, with a 30.0% gross margin and $1 million of income from operations.  It sells PV modules from Sharp, SunPower (NASDAQ: SPWR) and Kyocera Solar.

Jon C. Ogg
February 7, 2008

Posted on: February 7, 2008 – 9:03 am in Alternative Energy, IPOs, , ,

Time To Change Microsoft – Yahoo (MSFT/YHOO), Here’s a Better Deal

From Silicon Alley Insider

So, what’s the answer? Jerry and Steve hammer out a deal in which Microsoft trades its Internet division plus $10-$15 billion of cash for half of a stand-alone Yahoo. continued here…

Posted on: February 7, 2008 – 8:54 am in Uncategorized

Goldman Sachs Boots Stocks From Lists (MYL, HPQ, CVLT)

Mylan Inc. (NYSE: MYL) has been removed from the Goldman Sachs Conviction List, although the firm is not downgrading its official rating.  Goldman Sachs has maintained its Buy rating and $19.00 price target and does continue to see upside as shares are currently at $13.81.  Part of the problem is that it does not expect to receive guidance until May. 

CommVault (NASDAQ: CVLT) is also being booted from Goldman Sachs’ Technology Framework Growth List since the stock is down over 18% since being added just on January 18, 2008.  The firm is still maintaining its official buy rating and it has a $21.00 price target.

Hewlett-Packard (NYSE: HPQ) is also removed from the Goldman Sachs Technology Framework Favorite Value List.  This removal is due to stop-losses on the lists since it is down 11% since being added in August 2007.  Goldman Sachs is keeping its Conviction Buy rating and has not changed estimates.

Jon C. Ogg
February 7, 2008

Posted on: February 7, 2008 – 8:30 am in Analyst Calls, , ,

Level 3 Surges (LVLT)

Level 3 Communications, Inc. (NASDAQ: LVLT) posted results with earnings coming in at -$0.06 EPS from a $91 million net loss on revenues of $1.10 Billion.  First Call had estimates -$0.11 EPS and $1.08 Billion in revenues.  It also posted free cash flow of $41 million and an adjusted EBITDA of $246 million.

The communications deferred revenue balance was $929 million and it had had cash and marketable securities of approximately $723 million at the end of the fourth quarter.

The company will not be providing quarterly guidance beginning with 2008, although it did offer some long-term targets. Sunit Patel, CFO: "We believe that quarterly guidance is subject to volatility from seasonal and usage patterns and is of limited value to long term investors… Alternatively, we plan to comment on projected revenue, expense, cash flow and other longer term trends that we believe are better indicators of long term value creation." It is offering a core revenue growth range of 8% to 13% for 2008 with growth to pick over the course of the year; puts 2008 EBITDA of $950 million to $1.1 Billion.  It also expects lower revenue from seasonality in the first quarter.

Level 3 shares are surging on the improved results and on 2008 projections.  Shares are up some 11% to $3.49 in pre-market trading, although that was the initial surge and we still have a negative overhang in tech shares from Cisco earnings.  The 52-week trading range is $2.50 to $6.78.

Jon C. Ogg
February 7, 2008

Posted on: February 7, 2008 – 8:15 am in Earnings,

The Wheels Come Off At Wal-Mart (WMT)

It was a brutal January at Wal-Mart (NYSE: WMT). US same-store sales rose .5% with sales at the flagship Wal-Marts stores up only .2%.

"Comparable store sales in the United States for the February four-week period are estimated to be between flat and two percent," said Tom Schoewe, executive vice president and chief financial officer.

Revenue for the period rose 7.9% worldwide to $27.3 billion, driven mostly by international revenue which rose 20.8% to $7.2 billion.

Douglas A. McIntyre

Posted on: February 7, 2008 – 7:56 am in Retail,

EarthLink Manages Costs To Beat Earnings (ELNK)

EarthLink inc. (NASDAQ: ELNK) has posted results and frankly for a company that is an independent ISP these results aren’t all that bad.  Income from operations was $22.6 million, or $0.19 EPS, on total revenues of $281.98 million.  First Call had estimates at $0.15 EPS on $280.96 million in revenues.  Net losses after items was listed as -$0.08 EPS.

EarthLink ended the year with $288.6 million in cash and marketable securities.  The company has also repurchased some 10.1 million shares.  The company trimmed its workforce by more than half from the year earlier to 998 employees.

SUBSCRIBERS:
Narrowband access consumer:    2.624 million
Broadband access consumer:      1.059 million
TOTAL consumer:                            3.683 million
Narrowband access business:     27,000
Broadband access business:        66,000
Web Hosting:                                     100,000

For 2008 the company is guiding adjusted EBITDA of $230 to $250 million, net income of $140 to $155 million, and free cash flow of $$190 to $220 million.

Jon C. Ogg
February 7, 2008

Posted on: February 7, 2008 – 7:41 am in Earnings, Internet,

Top 10 Pre-Market Analyst Calls (RATE, CE, CSCO, DCP, RL, PFG, RYAAY, AKH, VM, XL)

Below are some of the early bird analyst calls that are affecting shares in pre-market trading:

  • Bankrate Inc. (NASDAQ: RATE) upgraded to Buy from Hold at Citigroup.
  • Celanese (NYSE: CE) raised to Buy from Neutral at UBS.
  • Cisco Systems (NASDAQ: CSCO) downgraded to Neutral from overweight at JPMorgan; downgraded to Neutral at Baird; more to come.
  • Dyncorp international (NYSE: DCP) upgraded to Buy at Jefferies; upgraded to Outperform at Wachovia.
  • Polo Ralph Lauren (NYSE: RL) cut to Hold from Buy at Citigroup.
  • Principal Financial (NYSE: PFG) raised to Neutral from Sell at UBS.
  • Ryanair Holdings (NASDAQ: RYAAY) and Air France KLM (NYSE: AKH) were both raised to Buy at UBS.
  • Virgin Mobile USA (NYSE: VM) downgraded to Equal Weight at Lehman.
  • XL Capital (NYSE: XL) cut to Neutral from Overweight at JPMorgan.

Jon C. Ogg
February 7, 2008

Posted on: February 7, 2008 – 7:20 am in Analyst Calls, , , , , , , , , ,

Bank Of England Cuts Rates

The Bank of England cut interest rates a quarter of a percent to 5.25%.

Douglas A. McIntyre

Posted on: February 7, 2008 – 7:19 am in International Markets

Europe Markets 2/7/2008 (BHP)(BT)(ALU)(FTE)

Markets in Europe were off about 1% at 7 AM New York time.

The FTSE was off .8% to 5,828. BHP Billiton (NYSE: BHP) was off 2.9% to 14.76. BT (NYSE: BT) was down 6.9% to 244.75 on weak earnings.

The DAXX was trading down 1.2% to 6,769. Infineon was off 15.8% on poor earnings. Man AG was off 4.3% to 81.02.

The CAC 40 was down 1% to 4,771. Alcatel-Lucent (NYSE: ALU) was off 3.5% to 4.16. France Telecom (NYSE: FTE) was up 5% to 23.73.

Data from Reuters.

Douglas A. McIntyre

Posted on: February 7, 2008 – 7:05 am in International Markets, , , ,

A World Talking To Itself: Cellphones Hit 50% Worldwide Usage

ET will not have to phone home. He can talk to more than half of the world’s population. According to stats from the US, cellphone penetration will hit 3.3 billion people this year.

According to The Wall Street Journal "ownership rates in developing countries are rising fastest, with Brazil, Russia, India and China accounting for one billion subscribers last year."

That includes people who bought a phone, but can’t afford to pay for service.

The news is bound to be music to the ears of companies like Nokia (NYSE: NOK), Samsung, and even embattled Motorola (NYSE: MOT) at some point every one of those phones will need to be replaced or upgraded. Over 3.3 billion handset sales is as big as any market in the world.

Douglas A. McIntyre

Posted on: February 7, 2008 – 6:30 am in Wireless, ,

Tech Pioneer Marc Andreessen Starts NYT Deathwatch

Perhaps Netscape founder Marc Andreessen does not like The New York Times Company (NYSE: NYT) or maybe he hates the content of its flagship newspaper. Either way, he has started a deathwatch on the company.

Marc writes "I hereby inaugurate my New York Times Deathwatch, which will continue until the last Sulzberger has left the building."

Since almost every institutional owner of the stock has tried to push the founding Sulzbergers out, Marc may have a long wait.

Douglas A. McIntyre

Posted on: February 7, 2008 – 6:21 am in Uncategorized,

Anheuser-Busch (BUD) In Merger Talks

AnheuserBusch (NYSE: BUD) and InBev, a rival beer company, are in talks about a merger, according to Trends magazine.

Douglas A. McIntyre

Posted on: February 7, 2008 – 6:09 am in Uncategorized,