Daily Archives: February 14, 2008

How To Get Apple (AAPL) Back To $200

Apple (NASDAQ: AAPL) traded at over $200 just before the first of the year. On a good day it now trades at $128. 24/7 Wall St. recently ran an analysis of why Apple’s stock would not rise this quarter. There are some things which Apple could almost certainly do to improve its position, but  Jobs & Co.are not known for looking outside the company for advice. And, that is part of the problem. Apple is very secretive about how it does business. Some of the critical changes the company could make short-term have to do with improving access to information about the company.

Wall St. analysts currently have a median price target on Apple of $200. Of the 25 brokerages that cover the company, First Call shows that one analyst thinks the share will move up to $250. That shows there is a huge dislocation between how investment experts think the stock should be and where it trades now.

The first thing that Apple could do to get investors back on board is to tell them that the economy at large is not crippling their business. This is the first and foremost reason for the shares falling as far as they have. Most analysts think Apple will beat street estimates on Mac sales. American Technology Research sees 2.1 million Macs sold in this quarter, slightly above the consensus of about 2 million, according to Barron’s.

Apple does not release monthly sales figures for its major products, the iPhone, iPod, and Mac. The company should. Investors are forced to rely on experts to interpret data from resellers and suppliers to try to get at numbers which Apple could readily release. If several research firms are right and Mac sales are well ahead of expectations a release of January Mac sales would go a long way to calm shareholder fears.

The next thing the company needs to do is set the date for a release of the 3G version of the iPhone. Citigroup’s research analyst covering Apple says to look for that announcement in the next two quarters. But, Apple almost certainly already knows the timetable. If the iPhone has an Achilles heel it is that it runs on a slow data network which handicaps users. A 3G version which would run on AT&T’s (T) high-speed network would almost certainly lift iPhone sales and get people who currently own the handset to upgrade.

Apple has not said anything about the impact of upgrading memory in the high end versions of the iPhone and iPod. The handset now has a 16 GB model which retails for $499 and a version of the iPod with 32 GB which sells for the same price. The price of these models is $100 above the standard versions of the products but it is clearly not costing Apple that much in component costs. Some data on how the new models are selling should show improved profit margins on both products.

That opens the issue of Apple’s component costs. The company has not made any public statement about how much more it is making on its products because of global reductions in the price of displays and memory chips. Research firm Pacific Crest says the drops in costs will add $10 in gross margin to each Mac. That is against over two million units a quarter. Apple has those numbers. It would mean a lot to investors if they would let their CFO talk about them,

Another badly kept secret about which Apple gives little detail is that figures show iPhone customers download more data than the owners of any other handset. According to Fortune, Google (GOOG) has released numbers which show it is seeing 50 more searchs from Apple iPhones than from any other mobile handset. If that is true this could be a huge benefit to Apple. An iPhone customers would have to buy a very high end data plan from their carrier to do this kind of web surfing.. Apple gets a cut of this revenue. The bigger the customer contract, the better off Apple is. With close to five million iPhones in circulation, that is a lot of money. Apple never comments about it.

CNBC recently reported that Citigroup says "Apple will beat the Street’s expectations for the March quarter by a dime or more even though revenue will come in line. In other words, not only is Apple doing just fine, it’s coming up with a way to be more profitable. It’s not just fancy flash at this company, it’s about running a tight business that builds on the success it enjoys in the marketplace."

Any such comments about improving profitability coming from Apple? The flow of news out of the company is turned completely off That is the biggest problem the Apple shareholders face. Information from the company compared to speculation from Wall St. is worth $70 a share. So there..

The company could make one more gesture, It could kill its only really failed product line, Apple TV. That would show the market that the company is willing to admit its mistakes

Douglas A. McIntyre.

Posted on: February 14, 2008 – 8:51 pm in Consumer Electronics, ,

Cramer’s Big Pipe Hit (WG)

On tonight’s MAD MONEY on CNBC, Jim Cramer came out discussing oil and gas infrastructure, and said that a relatively small player name Willbros Group, Inc. (NYSE: WG) is a winner.  The company focuses on pipelines and associated facilities for onshore, coastal, and offshore locations.  He noted how the company sees $8 Billion worth of opportunity down the road in the coming years as we need several thousand more miles of pipeline both upstream and midstream.  This one also only has a $1.2 Billion market cap.  Cramer noted this is at the heart of the return of the natural gas and infrastructure theme. 

This closed down 2.6% today at $34.78 and the 52-week range is $20.05 to $62.04.  Cramer’s target: $45.00.

Jon C. Ogg
February 14, 2008

Posted on: February 14, 2008 – 6:39 pm in Cramer, Oil & Gas, , , ,

Buffett & Berkshire Hathaway Holdings A-G (BRK-A, BRK-B, AXP, AMP, BUD, BNI, KMX, KO, CMCSA, CDO, COP, COST, GCI, GSK)

These are the new combined holdings (alphabetically A-G) from Warren Buffett’s Berkshire Hathaway (NYSE: BRK-A) for the period ended December 31, 2007:

  • American Express (NYSE: AXP) 151.6 million shares for a value of more than $7.8 Billion.
  • Ameriprise (NYSE: AMP) 661,742 shares listed as worth some $36.4 million, why even bother…
  • Anheuser-Busch (NYSE: BUD) 35.56 million shares totaling some $1.87 Billion.
  • Burlington-Northern-Santa Fe NYSE: BNI) 60.828 million shares worth some $5.06 Billion.
  • Carmax Inc. (NYSE: KMX) 21 million shares worth some $414.7 million.
  • Coca-Cola (NYSE: KO) 200 million shares for some $12.27 Billion.
  • Comcast (NASDAQ: CMCSA) 12 million shares for some $217.4 million.
  • Comdisco (NYSE: CDO) 1.53 million shares for some $14 million, why even bother….
  • ConocoPhillips (NYSE: COP) 17.5 million shares for some $1.546 Billion.
  • CosctCo Wholesale (NASDAQ: COST) 5,254,000 million shares for some $366 million.
  • Gannett (NYSE: GCI) 3,447,600 shares for some $134.45 million.
  • General Electric (NYSE: GE) 7.777 million shares for some $288.3 million.
  • GlaxoSmithKline (NYSE: GSK) 1.51 million shares for $76.1 million.

Buffett’s Full List of holdings alphabetically H-P
Buffett’s Full List of holdings alphabetically S-Z

Jon C. Ogg
February 14, 2008

 

Posted on: February 14, 2008 – 5:56 pm in Buffett, Buffett Holdings, , , , , , , , , , , , , ,

Buffett & Berkshire Hathaway Holdings “H to P” (BRK-A, BRK-B, HD, IR, IRM, JNJ, KFT, MTB, MCO, NKE, NSC, PG)

These are the new combined holdings (alphabetically H-P) from Warren Buffett’s Berkshire Hathaway (NYSE: BRK-A) for the period ended December 31, 2007:

  • Home Depot (NYSE: HD) 4.181 million shares for $112.6 million.
  • Ingersoll Rand (NYSE: IR) 636,600 shares for some $29.55 million, why even bother….
  • Iron Mountain (NYSE: IRM) 4.66 million shares for some $172.6 million.
  • Johnson & Johnson (NYSE: JNJ) 61.75 million shares for some $4.11 Billion.
  • Kraft Foods (NYSE: KFT) 132.39 million shares for some $4.32 Billion.
  • M & T Bank (NYSE: MTB) 6.7 million shares for some $547 million.
  • Moody’s (NYSE: MCO) about 48 million shares for some $1.71 Billion.
  • Nike (NYSE: NKE) 7.641 million shares for some $490.85 million.
  • Norfolk Southern (NYSE: NSC) 1.933 million shares for some $97.5 million, low for a rail for Buffett.
  • Procter & Gamble (NYSE: PG) 105.8 million shares for some $7.77 Billion.

Buffett’s Full List of holdings alphabetically A-G
Buffett’s Full List of holdings alphabetically S-Z

Jon C. Ogg
February 14, 2008

Posted on: February 14, 2008 – 5:54 pm in Buffett, Buffett Holdings, , , , , , , , , , , ,

Buffett & Berkshire Hathaway Holdings S-Z (SNY, STI, USB, USG, UNP, UPS, UNH, WBC, WMT, WPO, WFC, WLP, WSC)

These are the new combined holdings (alphabetically S-Z) from Warren Buffett’s Berkshire Hathaway (NYSE: BRK-A) for the period ended December 31, 2007:

  • Sanofi-Aventis (NSE: SNY) 3.569 million shares for some $162.5 million.
  • SunTrust Banks (NYSE: STI) 3.2 million shares for some $200 million.
  • US Bancorp. (NYSE: USB) 67.58 million shares for some $2.145 Billion.
  • USG Corp. (NYSE: USG) 17.07 million shares for some $611 million.
  • Union Pacific (NYSE: UNP) 4.453 million shares for some $559 million.
  • United Parcel Service (NYSE: UPS) 1.49 million shares for some $101 million.
  • United Health Group (NYSE: UNH) 6 million shares for some $349 million.
  • Wabco Holdings (NYSE: WBC) 2.7 million shares for some $135 million.
  • Wal-Mart Stores (NYSE: WMT) 19.94 million shares for some $948 million.
  • Washington Post (NYSE: WPO) 1.727 million shares for some $1.367 Billion.
  • Wells Fargo (NYSE: WFC) 289.3 million shares for some $8.73 Billion.
  • Wellpoint (NYSE: WLP) 4.5 million shares for some $394.78 million shares.
  • Wesco Financial (AMEX: WSC) 5.7 million shares for some $2.28 Billion.

Buffet’s full stock list alphabetically A-G
Buffet’s full stock list alphabetically H-P

Jon C. Ogg
February 14, 2008

Posted on: February 14, 2008 – 5:52 pm in Buffett, Buffett Holdings, , , , , , , , , , , , ,

Things Get Ugly At GMAC

After a big fourth quarter loss, private equity player Cerberus may regret buying a controlling interest in GMAC.

The head of Cerberus said in a note to clients picked up by Reuters "… if the credit markets continue to decline and we find ourselves in a prolonged environment of capital market shutdown, GMAC could run into substantial difficulty." The home lending and auto financing parts of GMAC are likely to face a vicious downturn as the year wears on.

What is not clear is what Cerberus will do if its situation is dire. Does it default on its debt? Go into Chapter 11? Or seek some assistance from General Motors (GM)?

The answer to that was not in the Cerberus note.

Douglas A. McIntyre

Posted on: February 14, 2008 – 4:43 pm in Financial Stocks,

Priceline.com Earnings Keep Flying (PCLN)

Priceline.com Inc. (NASDAQ: PCLN) just posted non-GAAP EPS of $0.96 EPS on $334.9 million in revenues, while the estimates from First Call for the online travel company were $0.84 EPS on $329.3 million in revenues, and if you look below these are higher than mid-points of its guidance. 

Its guidance for next quarter is pro forma EPS of $0.50 to $0.60 EPS and revenue growth of 30% translates to $391.3 million, while next quarter estimates are $0.53 EPS on $342.42 million in revenues.

As far as 2008 guidance, Priceline offered $4.80 to $5.10 pro form EPS, and estimates for fiscal Dec-2008 are $4.90 EPS on $1.69 billion in revenues. 

The short interest may be playing part of this too as it has increased in each of the last two periods and was listed as 9.81 million shares on the last report, which is more than 4.5 days worth of trading volume.

Priceline closed down 2.6% to $102.23 in regular trading and shares are trading up almost 7% initially at $109.00 in after-hours trading.  Its 52-week trading range is $48.75 to $120.67.

Jon C. Ogg
February 14, 2008

Posted on: February 14, 2008 – 4:14 pm in Earnings, Internet, Transports,

The 52-Week Low Club (UBS)(BX)(REDE)

UBS Ag (UBS) Swiss bank gets pounded on big write-off. Drops to $33.60 from 52-week high of $66.26.

Blackstone (BX) Today is CEO Steve Schwarzman’s birthday. Happy birthday, Steve. Shares slide to $16.63 from 52-week high of $38.

RedEnvelope (REDE) Quarterly loss takes shares down 50%. Makes new 52-week low of $1.63 compared to period high of $8.49.

Allscripts (MDRX) Bad quarter and downgrades. Falls to $10.76 from 52-week high of $29.31.

Netgear (NTGR) Ugly guidance. Sells off to $21.52 from 52-week high of $41.33.

Nighthawk Radiology (NHWK) Some of company’s top management leave. Sells down to $11.52 from 52-week high of $25.95.

Douglas A. McIntyre

Posted on: February 14, 2008 – 4:00 pm in HI/LOW, , , , , ,

Nielsen Branding Shows Why Microsoft Wants Yahoo! in Google Fight (MSFT, YHOO, GOOG)

Nielsen has released its top aggregate sites by parent company for January 2008, and it starts getting even more clear why this super-merger on the web is being pursued.  Below is the TOP 10 broken down by the related "parent companies", and this combines "work and home" inside the U.S.:
                                Unique    Time Per
                              Audience      Person
Parent                       (000)  (hh:mm:ss)
1.  Google                 124,279     1:37:35
2.  Microsoft              121,920     2:22:33
3.  Yahoo!                 113,874     3:19:43
4.  Time Warner       104,837     3:57:38
5.  News Corp.         75,831     2:02:49
6.  eBay                      65,758     2:04:37
7.  InterActiveCorp    65,691     0:24:37
8.  Amazon                 59,833     0:27:47
9.  Wikimedia             56,049     0:18:32
10. New York Times  51,624     0:20:26

Read More »

Posted on: February 14, 2008 – 2:21 pm in Internet, Media, , , ,

Subprime & CDO Meltdown Worse than RTC/S&L Crisis

There is a new study out that has compared the current mortgage and subprime meltdown to the S&L and consumer crisis of the 1980’s that led to the creation of Resolution Trust Corp. (the "RTC").  The results are not promising for any optimists other than those named Pangloss.

Navigant Consulting, Inc. provides business, regulatory and financial advisory services and it has released a study showing that the number of subprime-related cases filed in federal courts is already out-pacing the S&L crisis litigation in the early 1990’s.  This study noted that that subprime cases in 2007 already equaled half of the total 559 S&L cases handled by the RTC over a multi-year period, although this is only measuring federal court cases filed.  This notes that of the 278 cases filed in 2007 some 43% came from borrower class action suits, 22% came from securities cases, and 22% came from commercial contract disputes.

247WallSt.com would note that these only represent the cases for 2007.  The cases in 2008 are likely to dwarf the 2007 cases since these take time to file and much of the pending damages have either not yet happened or have not been able to be quantified.  The real damages and issues in 2007 were also not until the second half of the year.

We haven’t even seen all of the counterparty blow-ups come to pass yet.  We have yet to see any of the major financial institutions fail, and all of the bond insurers are still surviving.  Warren Buffett will only save entities that make financial sense.  We believe that the headlines coming are only going to get worse before they get better.  Stocks will continue to act on their own, and when these financial stocks do ultimately turn it will be long before we start seeing actual good headlines.  There is a reason we noted that financial mergers may become mandated rather than preferred.

Ultimately things will get better.  But there is much more pain to come.

Jon C. Ogg
February 14, 2008

Posted on: February 14, 2008 – 1:37 pm in Economy, Financial Stocks, , , , ,

Heaviest Online Video Users Visit Odd Sites.

A recent research report from comScore breaks video viewers into three groups. The "heavy user" group watched an average of 841 minutes of video per month. This group made up 20% of all people who watched video.

Heavy viewers spend a great deal of time at odd and bizarre sites. The study noted Ouou.com, MegaVideo.com, and YouKu.com. The heavy users also spent time on YouTube,

"Moderate users", which made up the next 30% of the online video audience. They watched an average of 77 minutes of video per month and spent time on YouTube, just like everyone else. They favored television sites especially affiliate sites for Disney’s (DIS) ABC and CBS.

The bottom 50% of online video users watch so little that they hardly matter.

Douglas A. McIntyre

Posted on: February 14, 2008 – 1:36 pm in Internet,

Priceline.com Braced For Earnings (PCLN)

This afternoon after the market closes, we’ll get to see earnings out of Priceline.com Inc. (NASDAQ: PCLN).  The estimates from First Call for the online travel company are $0.84 EPS on $329.3 million in revenues, and if you look below these are higher than mid-points of its guidance.  Next quarter estimates are $0.53 EPS on $342.42 million in revenues. Estimates for fiscal Dec-2008 are $4.90 EPS on $1.69 billion in revenues.

The company did offer prior guidance with its last earnings for this quarter of $0.77 to $0.85 pro forma EPS on revenues of 22% to 26% growth (translates to a range of $317+ to $327+ million).

Analysts have an average price target north of $120.00, and the most recent critical call we saw was a raise from "Hold" to "Buy" out of Citigroup last month.  It appears that options traders are braced for a move of up to $7.00 or $8.00 in either direction.  Despite a decent pullback since December highs, this chart still looks like it has not violated a longer-term uptrend.  Conversely, this stock has been using its 50-day moving average as resistance and that level is currently $107.59.  Its 200-day moving average is $85.27 and shares reached down as low as $87.00 to $90.00 during the worst part of January.  The short interest has increased in each of the last two periods and was listed as 9.81 million shares on the last report, which is more than 4.5 days worth of trading volume.

Priceline.com has greatly exceeded its earnings targets in each of the last four quarters.  As shares are up over 100% from lows we’d expect that Wall Street wants to see some solid numbers again to maintain the current prices.    In late November-2007, Priceline.com did add Jetblue to its airline roster.  At current prices, Priceline.com trades with a P/E ratio of roughly 26 for the current period and just under a forward P/E ratio of 21 for fiscal Dec-2008.

In mid-day trading, shares are down 3.5% at $101.30 and Priceline.com Inc.’s 52-week trading range is $48.75 to $120.67.

Jon C. Ogg
February 14, 2008

Posted on: February 14, 2008 – 12:56 pm in Earnings, Internet, Transports,

Icahn’s Top Holdings (APC, BEAS, BIIB, CSX, LEA, M, MOT, JCP, REGN, TIN, TWX, TWC, UNM, WMB)

Billionaire activist investor and financier Carl Icahn has released the total holdings in an SEC filing for the period end December 31, 2007 for  ICAHN CAPITAL, LP.

As Carl Icahn and his friends are multi-billionaires, we have eliminated the positions under $50 million since smaller postions are hardly worth his time and effort. The left column is the dollar amounts and the second number is the number of shares:

  • ANADARKO PETROLEUM (NYSE: APC) $970,600,000  14,775,468 shares
  • BEA SYSTEMS (NASDAQ: BEAS)  $654,176,000; 41,456,016 shares
  • BIOGEN IDEC (NASDAQ: BIIB)  $469,973,000; 8,256,723 shares
  • CSX CORP (NYSE: CSX) $128,422,000; 2,920,000
  • LEAR CORP (NYSE: LEA) 265,424,000; 9,595,954 shares
  • MACYS (NYSE: M)  $133,610,000; 5,164,660 shares
  • MOTOROLA (NYSE: MOT) $969,881,000; 60,466,400 shares
  • J.C.PENNEY (NYSE: JCP)  $183,274,000; 4,166,271 shares
  • REGENERON PHARMA (NASDAQ: REGN)  $60,568,000; 2,508,001 shares
  • TEMPLE INLAND (NYSE: TIN) $71,901,000; 3,448,488 shares
  • TIME WARNER CABLE (NYSE: TWC) $130,027,000; 4,711,128 shares
  • TIME WARNER INC (NYSE: TWX) $213,526,000; 12,933,159
  • UNUM GROUP (NYSE: UNM) $95,659,000; 4,020,960 shares
  • WILLIAMS COS INC (NYSE: WMB)  $173,201,000; 4,840,724 shares

Jon C. Ogg
February 14, 2008

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in any of the companies he covers.  Join the 24/7 Wall St. open email distribution list to hear of spin-offs, emerging IPO, break-up, reorganization, and other special situation stocks.

Posted on: February 14, 2008 – 11:58 am in Activist Investor, Insider Activity, Mutual Funds, , , , , , , , , , , , , , , ,

Geeks on Call: New ‘Public’ Competitor to Best Buy’s Geek Squad (GOCH, BBY, TKO)

Geeks On Call Holdings, Inc. (OTCBB:GOCH) has completed a merger transaction and the closing of a $3.0 million private placement.  There was an SEC filing showing the details of the financing. Trading in the common stock of Geeks On Call Holdings, Inc. began this morning (February 14, 2008) on the Over-The-Counter Bulletin Board under the symbol "GOCH."  This has been listed under IPO’s but these OTC stocks that do private placements are traditionally deemed reverse mergers, so this may not have a traditional post-IPO path.

If "Geeks On Call" sounds a lot like Geek Squad out of Best Buy (NYSE: BBY) or FireDog, it is no coincidence.  Geeks on Call is not as widely spread out around the country as Geek Squad, and Geeks on Call sells franchise systems rather than operates a subsidiary of the top electronic retailer.  Geek Squad also has some 700 locations across the U.S., and has a much larger brand and workforce.  We noted ‘Public’ in the headline because OTC stocks that result from a reverse merger like this as a group have little history and a very thin float of public shares and usually trade with wide bid/ask spreads.

There is also a public company on AMEX called Telkonet, Inc, (AMEX: TKO) that beneficially owns 2.4545 million shares of Geeks on Call, or 18.25% of the outstanding stock. Another company called RTC Investments, LLC also owns some 2.777 million shares, or 20.65% of the outstanding stock.

Here are the guts of the company and the offering, and we urge you to conduct your own rigorous due diligence in all OTC stocks and newly emerged ‘public’ companies:

Read More »

Posted on: February 14, 2008 – 11:25 am in Cult Stock, IPOs, Mergers and Buy Outs, OTC, , , , , ,

Splitting Bond Insurers In Half–Nice Solution (ABK)(MBI)

New York State Insurance Superintendent Eric Dinallo has come up with the lame-brained idea of taking bond insurers like MBIA (NYSE: MBI) and Ambac (NYSE: ABK) and "breaking them in half." According to MarketWatch the programs would "separating the companies’ muni-bond businesses from their more troubled structured-finance units, which have exposure to complex mortgage-related securities known as collateralized debt obligations, or CDOs."

NY governor Eliot Spitzer says the bond insurers have "three to five days" to solve their problems or he will break them up. Warren Buffett has already offered a rescue package for the muni-bond insurance operations that would re-insure $800 billion in the instruments

Mr. Dinallo clearly hasn’t thought through what happens to the portions of the bond-insurers which hold nearly-worthless CDOs and other subprime-troubled paper. Perhaps that piece of the businesses could go to the common shareholders and they could watch the Chapter 11 proceedings from the sidelines..

If NY State or any other entity wants to create a "bad bank" out of the troubled assets of the muni-insurance firms, it is going to have to take on those liabilities and suffer whatever losses they may create. The disaster was created by the mistakes made by management. The shareholders should not be left holding the check.

Douglas A. McIntyre

Posted on: February 14, 2008 – 11:06 am in Financial Stocks, ,

Level 3 (LVLT): Worst Stock Of The Year

Every time Wall St. looks at Level 3 (NASDAQ: LVLT) it sees promise. The company provides broadband pipes all over the US and some abroad. In a world where high-speed data, video, and voice are powering internet traffic, the shares should be the perfect investment.

But, they aren’t. Over the last year, LVLT is off  close to 60%. It is hard to find any other widely-traded stock in that neighborhood.

Level 3 shares were downgraded today, by Morgan Stanley, from "equal weight" to "underweight" In layman’s terms that means sell the shares as soon as possible. According to Reuters the MS research note said "Level 3 expects to generate negative free cash flow in 2008 and remains highly leveraged." The news sent LVLT down another 6%.

Level 3 still has $6.3 billion in long-term debt, and, without any operating profits, it is an unlikely buy-out target.

The two men who run Level 3, James Crowe and Kevin O’Hara have been at the company for almost a decade. The board is made up of retired executives, a former college professor, and an admiral who runs the nominating and governance committees, all asleep at the helm.

Douglas A. McIntyre

Posted on: February 14, 2008 – 10:48 am in Telecom,

Bernanke On Recession Watch, Inflation In The Wings

A close look at Ben Bernanke’s testimony in the Senate today show that the man is profoundly worried. He just know how to couch in complex terms.

The chairman hints at what he believes credit will stay tight even if the Fed keeps cutting rates. The good deal is not being passed along to consumers. He mentions "in the latest Senior Loan Officer Opinion Survey conducted by the Federal Reserve, banks reported having further tightened their lending standards and terms for a broad range of loan types over the past three months."

Mr. Bernanke does not seem to like the prospect for housing either. Due to mortgage related problems he believes that "further cuts in homebuilding and in related activities are likely."

All of these negatives lead the man to believe that consumer spending is going to be weak.

He does provide a ray of hope, and that is US exports. He testified "growth in U.S. exports should continue to provide some offset to the softening in domestic demand." Bernanke also believes that the economic stimulus package the the federal government is launching will help the consumer toward the end of the year.

To make the markets more worries, he said the Fed has to watch inflation. It is still waiting in the wings.

Bernanke ended his comments by saying "at present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt."

But, he added that the Fed would have to guard against downside risks. Someone must have asked him if he could spare a dime when he walked over to the Senate building.

Douglas A. McIntyre

Posted on: February 14, 2008 – 10:18 am in Economy

As Market Despairs, Second-Tier Techs Fall Further Behind

The fear of a slowdown in tech spending has done a great deal of damage to big tech stocks. Over the last three months Amazon (AMZN) is down 3%, Intel (INTC) is off almost 20%, Hewlett-Packard (HPQ) is down 12%, and Cisco (CSCO) is of 20%.

The real damage has been done to the tech companies which sit in the second tier. These firms have weaker balance sheets, smaller market share, and thinner margins. Wall St. obviously believes that they will have more than their share of earnings problems and those with weak balance sheet could be in deep trouble.

Shares in AMD (AMD) are off over 40% over the last 90 days. The company is still experiencing slow revenue growth and it balance sheet has $5 billion in debt. Its graphic chip business only broke even in the last quarter compared with Nvidia (NVDA) which posted a large profit. AMD is still at risk for having to raise more money.

Nortel (NT) crosses swords with Cisco in some markets. The Canadian company says it will aim toward providing 4G gear for the next generation of wireless deployments. The company has had virtually no revenue growth over the last four quarters and operates on thin margins. The company has $3.8 billion in long-term debt. No wonder the shares are down over 35% during the last quarter.

Sun Microsystems (JAVA) is up against IBM (IBM) and HP in the server market. Its shares are off over 25% during the last quarter. With almost no operating margin, and single digit growth, the company really does not have anywhere to go to find new business.

Douglas A. McIntyre

Posted on: February 14, 2008 – 10:04 am in Technology Companies, , , , , , , ,

TorreyPines Therapeutics: Forget Morale, The Beatings Continue (TPTX)

TorreyPines Therapeutics (NASDAQ: TPTX) has announced its strategic plan for 2008.  Unfortunately it doesn’t look or sound very promising.

The company will focus on clinical development activities to maximize the value of the company’s versatile lead compounds, which are AMPA/kainate receptor antagonists tezampanel and NGX426 and muscarinic agonist NGX267.  It will conduct a clinical guidance meeting with the FDA in the first half of the year to discuss the efficacy results from a recently completed Phase II trial for acute migraine headaches.

It will also initiate a Phase II trial of tezampanel in muscle spasticity and rigidity secondary to spinal cord trauma in the second half of the year; and it will complete the ongoing Phase I maximum tolerated dose trial of NGX426, the oral prodrug of tezampanel. Torry Pines will also initiate a Phase I single-dose trial of NGX426 in a capsaicin model for neuropathic pain in the first half of the year, and will initiate a Phase I multiple dose trial of NGX426 in the second half of this year. Lastly, it will follow-up on the muscarinic agonist by initiating a Phase II trial of NGX267 in xerostomia, or dry mouth, secondary to Sjogren’s syndrome in the first half of 2008.

After the conclusion of its collaboration with Eisai Co., Ltd. on February 28, 2008, the company "will streamline operations by reducing its work force."  President & CEO Neil Kurtz, M.D., will assume oversight of all clinical development programs. Its Chief Medical Officer, Michael Murphy, will leave the company at the end of the month to pursue other interests.  For whatever it is worth, biotech companies usually don’t fire people because business is about to boom and chief medical officers don’t usually leave on the eve of a breakthrough on the next potential blockbuster drug.

TorryPines has been public since 1999 and briefly in 2000 this used to be more than a $100 stock when it had hopes of offering a potential treatment for Alzheimer’s.  It now sits at $2.00+.  The 52-week trading range is $1.80 to $8.75.  As of yesterday’s close this one had a $33.8 million market cap and it had $39.7 million on the books in cash on September 30, 2007.  Unfortunately its cash burn has been roughly $7 million per quarter up until these "new initiatives."  As of last look, this one employed some 43 employees, although that number may have changed and is obviously going to be different.

Since this still has "lead compounds" to focus on we cannot yet call this one a biotech zombie.  But it is close.

Jon C. Ogg
February 14, 2008

Posted on: February 14, 2008 – 8:38 am in Biotech, , ,

Genoptix Insiders & Backers Cutting Stake in Secondary Offering (GXDX)

The venture backers and the officers and insiders Genoptix (NASDAQ: GXDX) have filed to sell 4.2 million shares of common stock in a secondary offering, which could be up to 4.83 million shares of common stock if the overallotment shares are allocated.  This represents roughly an extra one-third being added to the float and the outstanding shares after this offering is listed as being 16,095,270 shares.

Lehman Brothers has been tapped as the lead underwriter and co-managers are listed as Banc of America, UBS, and Cowen & Co.

Genoptix is a specialized laboratory service provider focused on delivering personalized and comprehensive diagnostic services to community-based hematologists and oncologists.  All proceeds are going to selling shareholders.

Genoptix shares are indicated down 1.4% at $30.06 in pre-market indications.  This has been public less than 6 months and has traded in a range of $23.40 to $37.88, and it trades roughly 108,000 shares per day.

Jon C. Ogg
February 14, 2008

Posted on: February 14, 2008 – 8:10 am in IPOs, Medical, ,