Daily Archives: February 15, 2008

The 52-Week Low Club (AMLN, ARRS, AU, ED, GCI, IACI, IUSA, PCG, SLRY)

Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) is becoming a regular in this club. Yet another low of $28.02 intraday from a high of $53.25. It actually closed at $28.62, so it closed above the prior $28.41 low.

Arris Group Inc. (NASDAQ: ARRS). After an 86% drop in profit, shares plunge, targets are cut, and analysts downgrade, Arris lost 30% today and closed down at $5.50 from a former low of $6.91. The 52 week high is $17.89.

AngloGold Ashanti Ltd. (NYSE:AU)  A gold stock on the 52-week lows? Power issues prevail over high commodity prices… ouch! Trading at $33.75. The 52 week range is $33.80 to $51.35.

Consolidated Edison Inc. (NYSE:ED). $10 million lawsuit in the working from a mid-summer accident. Shares  down to $42.40, but $41.96 was the intraday low. The 52 week range is $42.35 to $52.90.

Gannett Co., Inc. (NYSE: GCI). It’s amazing when even a Warren Buffet stake won’t help a newspaper. Shares down to $31.90, prior 52-week range $31.97 to $63.50.

IAC/InteractiveCorp. (NASDAQ: IACI) has been under review for our special situations letter, although it has not yet been added with any formal recommendations. Shares actually closed up marginally at $21.88 after falling down to a low of $21.56; with a 52 week range of $21.80 to $52.90.

infoUSA Inc. (NASDAQ: IUSA) With such a lame Super Bowl commercial, what else could one ask for? Trading in at $7.82, but it traded as low as $7.50 today; preior range was $7.76 to $11.30.  We recently panned this one for our "10 Stocks Under $10" letter ahead of the big game.

PG & E Corp. (NYSE: PCG). As a reward for awards for environmental stewardship, this utility is given a new low. Trading at $39.85 it closed up marginally at the end of the day, but it saw $39.19 earlier today; 52-week trading range is $39.45 to $52.17.

Salary.com, Inc. (NASDAQ: SLRY).  We featured Salary.com on our "10 Stocks Under $10" letter as one of the worst ideas for an IPO of internet stocks and having potentially a fair value of $5 to $6 per share. Today, it reached a new low of $8.00 after a late morning nose-dive before coming back to close "only" down 2.8% at $8.32. The prior 52-week range was $8.31 to $16.32.

Douglas A. Mcintyre
February 15, 2008

Posted on: February 15, 2008 – 6:28 pm in HI/LOW, , , , , , , , ,

Will Other Integrated Oils Hike Dividends Too? (COP, XOM, CVX, BP)

ConocoPhillips (NYSE: COP) hiked its dividend Friday, and not just by a penny.  Its quarterly dividend was raised from $0.41 per quarter up to $0.47 per quarter.  ConocoPhillips hiked its dividend a year or so from $0.36 to $0.41.  At current prices around $78.50, the prior annualized dividend of $1.64 would yield of 2.08%.  But the new annualized dividend of $1.88 is now running almost 2.4%. 

Frankly, for companies involved in perhaps the best business around right now, the oil giants in the sector are paying quite lower dividends than one might imagine.

  • Exxon Mobil Corp. (NYSE: XOM) has a $0.35 dividend, or $1.40 annualized, and at $85.00 it has an implied yield of just under 1.65%.
  • Chevron Corp. (NYSE: CVX) has a $0.58 quarterly dividend, or $2.32 annualized, and at $83.00, this represents nearly a 2.8% dividend yield.

The standout is BP plc (NYSE: BP) although it is more thinly traded; it actually has a quite high dividend.  CORRECTION: Its dividend was recently bumped and is $0.8115 now rather than $0.65, so the actual yield is roughly 4.9% and even much higher than most oil dividends….CORRECTION FROM Its $0.65 quarterly dividend, or $2.60 annualized, generates just under a 4% dividend yield based on a $65.50 ADR price.  Dividend may fluctuate from dollar conversions

When you compare most of these dividends to the Dogs of the Dow, there is still quite a bit of room for dividend improvement.  At least that is how investors used to judge stocks once upon a time.

Jon C. Ogg
February 15, 2008

Posted on: February 15, 2008 – 3:21 pm in Dividend, Oil & Gas, , , ,

McClatchy (MNI) Downgraded Again

Night of the living dead newspaper chain McClatchy (NYSE: MNI) got hit with another downgrade today. Fitch cut the company’s issuer default rating further into the junk word, dropping it to "BB". It is also keeping the firm on its negative outlook list which means the rating may be cut again, according to the AP

McClatchy is famous for buying rival newspaper chain Knight-Ridder just as the industry hit its death spiral. The company’s shares were over $50 two years ago. They now change hands for just above $10.

Wall St. is concerned, for good reason, that McClatchy might have problems with that $2.5 billion in debt it carries on the balance sheet.

Douglas A. McIntyre

Posted on: February 15, 2008 – 1:39 pm in Old Media,

Toyota (TM) Gets Pounded In Europe

Toyota (NYSE: TM) is not used to seeing its sales go anywhere but up. It has certainly had a tremendous ride in the US and Europe over the last several years. Numbers from Europe indicate that buyers may have had their fill of products from the Japanese car-maker.

During January, Toyota sales fell 10.5% in January. While auto sales overall for the month were down.3% in Europe according to figures obtained by Reuters. Sales for BMW were up 13%.

The US car companies did not post their best showing. Ford (NYSE: F) units fell 3.5% and GM (NYSE: GM) dropped .9%. At least they picked up market share from Toyota.

Douglas A. McIntyre

Posted on: February 15, 2008 – 1:30 pm in Autos, , ,

This Week’s Key Stock Buybacks & Repurchases (SYK, NILE, TDC, WW, CPWR, CE, EFX, VARI)

While earnings season is slowly winding down and while the economy is obviously cooling, we still have many large and small companies alike with solid balance sheets or that have extra cash to deploy on hand.  These are some of the key share buybacks we have seen this week.

Stryker (NYSE: SYK) announced a general $750 million for share buybacks for general corporate purposes and to offset dilution from options. This is one of the larger buyback plans announced, but it is small in comparison to its market cap of $27.93 billion.

Blue Nile (NASDAQ: NILE) approved a $100 million share buyback. With its poor guidance, buybacks may only partially help a growing problem. The current market cap sits at about $688.11 million.

Teradata (NYSE: TDC) announced a $250 million stock buyback plan. With positive 2008 guidance, future earnings per share should grow. The current market cap is $4.27 billion.

Watson Wyatt (NYSE: WW) announced a $100 million stock buyback plan.  The company noted that the buybacks will help offset dilution from employee benefit plans.  Its current market cap is $2.21 billion

Compuware (NASDAQ: CPWR) announced a $750 million buyback plan to reduce the balance of outstanding common shares to 200 million. They currently have 281.4 million shares outstanding. The current market cap is $2.27 billion.

Celanese (NYSE: CE) Board approved a $400 million share buyback. The CEO noted that the buyback demonstrates their commitment to delivering value to shareholders while retaining financial flexibility. The current market cap is $6.04 billion.

Equifax (NYSE: EFX) announced a $250 million share buyback approval. It is yet another in a series of buybacks valued at about $1.08 billion since 2004. The current market cap is $4.53 billion.

Varian (NYSE: VARI) Board approved a $100 million share repurchase program. The buybacks could boost an already healthy stock. The current market cap is $6.53 billion.

Rachel Lopez
February 15, 2008

Posted on: February 15, 2008 – 1:15 pm in Stock Buybacks, , , , , , , ,

IPO FILING: IDS Group (IDSI)

IDS Group, Inc. submitted an IPO filing on Thursday. The total proposed maximum aggregate amount in securities is listed as $86,250,000. They have applied to trade on the Nasdaq Global Market under the symbol “IDSI”. The underwriting group is listed as Thomas Weisel Partners LLC, Piper Jaffray, Needham & Company, LLC, and Robert W. Baird & Co.

IDS Group provides financial institutions and equipment manufactures software and services that improve the asset finance origination process. The software manages the accounting, administration, and compliance requirements associated with asset finance portfolios. Currently, they provide their services to 250 customers globally for equipment leasing companies, equipment finance providers, banks, and lessors. Some of their key products include Rapport, InfoLease, and ProFinia. They generated $47.7 million and $38.5 million for 2006 and nine months ended September 30, 2007, respectively.

IDS believes that the asset finance origination and portfolio management solutions market is very large and growing on a global scale. IDS lists key strengths in this market including: leading market position and strong, established brand; deep domain expertise and industry experience; strong customer loyalty; flexible pricing model; broad and integrated suite of solutions; and continuous and substantial research and development capability and investment. Potential risk factors include dependence on the asset finance industry, unpredictable sales cycle for software and services, uneven quarterly revenue and profitability, and a decrease in demand and potential customers due to consolidation in the financial services industry.

Rachel Lopez
February 15, 2008

Posted on: February 15, 2008 – 10:49 am in IPOs, ,

IPO WITHDRAWAL: Concentric Medical

Concentric Medical, Inc. withdrew its IPO filing this morning, citing “unfavorable market conditions.” The company originally filed it IPO paperwork on August 17, 2007 and had planned to trade on the Nasdaq Global Market under the symbol “CLOT.”

Concentric Metal received FDA approval for its Merci Retrieval System in 2004, the only approved device that restores blood flow in ischemic stroke patients by removing blood clots.  The company believes that their product could potentially treat 30% to 50% (210,000 to 350,000 cases annually) of all ischemic strokes in the United States, the third leading cause of death in the aging population. It is estimated that the  Merci system has treated only 6,000 patients, an indication of the potential growth for use in the market. In 2006 and six-months ended in June 2007, Concentric generated sales revenues of $11.2 million and $7.8 million, respectively, and net income losses of $6.9 and $3.5 million, respectively. 

Concentric Metal isn’t the only recent health care IPO withdrawal. This morning, Critical Homecare Solutions also withdrew. It looks like the health care IPO market isn’t so healthy right now but it isn’t the only industry needing some treatment.

Rachel Lopez
February 15, 2008

Posted on: February 15, 2008 – 10:06 am in IPOs, , ,

IPO WITHDRAWAL: Critical Homecare Solutions (CHCS)

Critical Homecare Solutions Holdings, Inc. withdrew its IPO filing this morning, stating that the withdrawal is “consistent with the public interest and the protection of investors.”  Critical Homecare Solutions Holdings originally filed its IPO paperwork October 10, 2007 and had planned to trade on Nasdaq Global Market under the symbol “CHCS.”

We noted this filing back in October, although frankly this looked like it would have a been an easy IPO to come to market.

Critical Homecare Solutions provides comprehensive home infusion therapy services and operates two segments, home infusion therapy, and home nursing. Their cost –effective services, pharmaceuticals, and equipment allow patients to nurse in the home. For nine-months ended in September 2007, they generated net revenues of $143.6 million. The company believed that the increasingly high health care expenditures in the United States and their unique business strategy would provide them with a strong opportunity to generate revenues. Apparently, they changed their mind. Add this IPO withdrawal to the growing list.

Rachel Lopez
February 15, 2008

Posted on: February 15, 2008 – 9:55 am in IPOs, ,

Microsoft (MSFT) Xbox Failure Rate As High As 16%

According to a report in The Inquirer, the failure rate of Microsoft (NASDAQ: MSFT) Xboxs is running at about 16%. One retailer put the number as high as 33%.

Most industry observers believe that this failure rate will rise as the machines are in use for a prolonged period. Overheating appears to be the main cause of the problems.

Douglas A. McIntyre

Posted on: February 15, 2008 – 9:19 am in Consumer Electronics,

Banks At Risk For Another $203 Billion In Write-Downs

UBS says that global banks may face another $208 billion in write-downs. The banks are at risk due to issues that could cause the failure of bond insurance companies.

“Banks have made progress in credit-market related writedowns,” London-based UBS analyst Philip Finch said in a note to investors today. “But more are expected,” he added according to Bloomberg

It will be interesting to see how accurate the forecast is.

Douglas A. McIntyre

Posted on: February 15, 2008 – 8:49 am in Banking

Goldman Sachs Turning Off Satellite Radio (XMSR, SIRI)

Goldman Sachs has panned satellite radio stocks and maintained a cautious "Sell" on XM Satellite Radio (XMSR).  What is interesting is that Goldman Sachs has also noted that its channel checks have indicated that it now appears "less likely that the DOJ will block the merger" with Sirius Satellite Radio (NASDAQ: SIRI).  But it also believes that deal or no deal, XM/Sirius shares would run up and mark near-term highs just like last year when the merger was announced.

This note even says that merged or un-merged, Goldman Sachs outlook for cautious based on unrealistic cash flow expectations.

Earlier this week we also saw Stanford indicate how it believes a merger approval from the DOJ is likely imminent.

Jon C. Ogg
February 15, 2008

Posted on: February 15, 2008 – 7:56 am in Analyst Calls, Media, Mergers and Buy Outs, Satellite, , , , ,

Goldman Sachs Pans Coal (ACI, FCL, ICO, BTU, MEE, CNX)

Goldman Sachs has downgraded its coverage in Coal Stocks this morning.   Goldman Sachs is basing this partly on the 30% gains seen, and valuations are stretched.

There were several downgraded from a Neutral rating down to SELL: Arch Coal (NYSE: ACI), Foundation Coal (NYSE: FCL), International Coal Group (NYSE: ICO), and Massey Energy (NYSE: MEE).  Two others escaped with a little more dignity, but these were still downgraded to Neutral ratings from Buy: Peabody Energy (NYSE: BTU) and Consolidated Energy (NYSE: CNX).

Jon C. Ogg
February 15, 2008

Posted on: February 15, 2008 – 7:45 am in Analyst Calls, Oil & Gas, , , , , , ,

Top 10 Pre-Market Analyst Calls (CMG, FLR, MSO, MU, SNH, SSS, VIA.B, WTW, WFMI)

These are not the only calls out there from analysts, but these are the top analyst calls that 247WallSt.com is looking at this Friday morning:

  • Chipotle Mexican Grill (NYSE: CMG) raised to Outperform at Robert W. Baird.
  • Fluor (NYSE: FLR) raised to Buy at UBS.
  • Martha Stewart (NYSE: MSO) started as Outperform at RBC Capital.
  • Micron Tech (NYSE: MU) initiated as Outperform at Oppenheimer.
  • Senior Housing (NYSE: SNH) raised to Buy at UBS.
  • Sovereign Self Storage (NYSE: SSS) downgraded to Hold from Buy at Deutsche Bank.
  • Viacom (NYSE: VIA.B) raised to Buy at UBS.
  • Weight Watchers (NYSE: WTW) raised to Outperform at Oppenheimer.
  • Whole Foods (NASDAQ: WFMI) downgraded to Underweight at Lehman.

Jon C. Ogg
February 15, 2008

Posted on: February 15, 2008 – 7:36 am in Analyst Calls, , , , , , , , ,

Another Still-Born Idea From Newspaper Companies (NYT)(GCI)

Four big newspaper companies, including Gannett (NYSE: GCI), The New York Times (NYSE: NYT), the Tribune Company, and Hearst, are setting up a sales operation to market 120 of their newspapers’ online sites. In total, the web properties reach 50 million unique users a month.

An executive involved with running the new venture told Reuters "Each participating company has agreed to dedicate advertising inventory to quadrantOne, so the network can offer customized online campaigns on a highly competitive basis"

What was not promoted in the announcement is that the two most desirable papers owned by the companies, The New York Times and USA Today, will not offer inventory. They have their own large online sales staffs.

The idea is the creation of a desperate industry. Large companies like Gannett have the ability to aggregate inventory from their own papers. The trend in online advertising is clearly not to buy inventory on newspaper sites. Most public chains get 6% or 7% of their revenue from the web. This is not enough to replace the fall-off in print revenue. And, marketers look to large web properties like Google (GOOG), Yahoo! (YHOO), and AOL for the lion’s share of their spending.

These advertisers might buy inventory at from NYTimes.com or USAToday.com, but sorry, they are not part of the package.

Douglas A. McIntyre

Posted on: February 15, 2008 – 6:53 am in Old Media, , , ,

Beating Down Investors In Auction-Rate Securities

Auction-rate securities are short-term investments which are often pitched as an alternative to cash. Investors look to them as "safe haven" instruments where they can put money and earn a modest interest rate. But, as The New York Times points out "the bonds are, in fact, long-term securities. But the banks hold weekly or monthly auctions to set the interest rates and give holders the option of selling the securities."

Because of the global credit crunch the next tranche of investors is not around to buy these instruments and keep the market liquid. Trading in this market has gotten "locked up" and owners of the auction-rate securities have to figure out how to get their cash back.

MarketWatch writes that "an investor such as a corporate treasurer buys auction-rate securities, often municipal bonds but also sometimes preferred stock or corporate bonds. These have long-term maturities, but act like short-term investments because the holders can sell them at weekly or monthly auctions, when their rates reset."

This is another fine example of how the Einstein-level quants at Wall St. firms were never enlisted to look at the risks in these instruments, or, if they were, the information was not disclosed.

Bear Stearns (BCS) is under scrutiny from The Justice Department for not disclosing risks in its subprime-based hedge funds. It is the same old song. Wall St. firms may have known of the risks of these instruments because their analysts told them. Or, they must have seen the gridlock in the auction-rate market a few weeks before their investors knew. It did not happen in a day.

The bottom line is that the sellers of auction-rate paper had knowledge about the market before the clients did. They weren’t given the chance to get out, even at a loss.

Wall St. now posts another example of its culture which is based on saving your own skin, even if it costs the customer all his money.

Douglas A. McIntyre

Posted on: February 15, 2008 – 6:36 am in Brokerage Firms,

UBS (UBS) May Face $18 Billion More In Write-Downs This Year

An analysis out of Citigroup says that UBS (UBS) could be forced to write-down $18 billion more of its $80 billion in exposure to subprime instruments and other debt which it holds on its balance sheet

According to Reuters "We estimate that the $80 billion remaining exposures could need 12-20 billion francs more markdowns in 2008," said the Citigroup note.

Since Citi (NYSE:C) is facing many of the same problems maybe it could do an analysis of its own balance sheet and publish how much analysts think it will have to write-down this year.

Douglas A. McIntyre

Posted on: February 15, 2008 – 6:07 am in Banking, ,

Sony’s (SNE) PlayStation 3 Becomes A Winner

After month upon month of being bested by the Nintendo Wii and Microsoft (NASDAQ: MSFT), the Sony (NYSE: SNE) PS3 is emerging from the shadows. Sales of video games rose 11% in North America in January. After the holiday season, many analysts expected that number would fall.

According to MarketWatch "the PlayStation 3 also surprised, selling about 269,000 units for the month and coming second only to the mega-popular Nintendo Wii, which moved about 274,000 units."

Executives at Sony must be beside themselves. After years of making a small fortune on the PS2, the Sony game operation became a financial boat anchor as sales of PS3 got off to an awful start.

Maybe those days are over.

Douglas A. McIntyre

Posted on: February 15, 2008 – 5:57 am in Consumer Electronics, ,

New Advice To Banks On LBOs: Take The Money And Run

Legal experts are beginning to advise their banking clients to take the hit on LBO break-up fees and walk away from their loan commitments. It is cheaper, they reason, to pay now and not have to take write-offs later as the value of the bonds are written down.

According to the FT "this advice from lawyers contrasts with the conventional wisdom that banks would risk serious damage to their reputations if they were to drop out of deals." While it may be more convenient for banks to pay several hundred million in break-up fees instead of writing down billion in loans, it is not that simple. Banks may even be willing to alienate big corporate clients in the name of saving their own hides.

What is not in the equation is the liability the banks may have with the public companies that they leave holding the bags. Angry boards may elect to bring suits against banks for lost shareholder value. In a big deal like the buy-out of BCE, that figure could be in the billions of dollars.

Even if boards do not have the appetite for litigation, shareholders may decide to form class action groups and get aggressive litigators to take their cases to court.

Stiffing shareholders at buy-out targets is not the best answer for banks.

Douglas A. McIntyre

Posted on: February 15, 2008 – 5:50 am in Banking

Media Digest 2/152008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, Citigroup says UBS (UBS) may face another $18 billion in write-downs this year.

Reuters writes that Alan Greenspan says the US is on the edge of recession.

Reuters writes that the credit crunch looms large for small business.

Reuters reports that Microsoft (MSFT) has shaken up the team that runs its online business.

The Wall Street Journal write that Citigroup (C) has barred withdrawals from a hedge fund which made a big bet on corporate loans.

The Wall Street Journal writes that Baxter Internatioal (BAX) is focusing on a plant in China for problems with its drug Heparin.

The Wall Street Journal writes that demand for grain is producing a boom for the agricultural industry.

The Wall Street Journal writes that Gannett (GCI), Hearst, New York Times (NYT) and Tribune are creating an online ad-sales network that will include more than 120 papers

The Wall St Journal writes that Gov Spitzer gave bond insurers a few days to work out their problems.

The New York Times writes that muncipalities are feeling the credit crunch.

The New York Times writes that its flagship paper will lay-off 100 people.

The New York Times writes that the market for auction-rate securities is frozen.

The FT writes that big banks have been advised to walk away from big buy-outs even if they have to pay fees to do so.

Douglas A. McIntyre

Posted on: February 15, 2008 – 4:13 am in Press Digest, , , , , ,

Asia Markets 2/15/2008 (CHU)

Markets in Asia were mixed.

The Nikkei fell a fraction to 13,623.

The Hang Seng was up .5% to 24,146. China Unicom (CHU) was up 2.8% to 19.44

The Shanghai Composite fell 1.2% to 4,497.

Data from Reuters

Douglas A. McIntyre

Posted on: February 15, 2008 – 3:54 am in International Markets,