Daily Archives: March 18, 2008

Apple (AAPL) Looks At Free iTunes For Everyone

Apple (NASDAQ: AAPL) is in conversations with the music industry about offering its entire iTunes library free. It would recoup the loss of revenue by changing more for its iPod hardware.

According to the FT "Detailed market research has shown strong appetite among consumers for deals bundling music in with the cost of the device."

Since none of the major music publishers have signed on yet, it will be interesting to see if Apple tries to use its substantial leverage with them to create the new program. This would probably involve getting one of two of the publishers to agree to an altered partnership with Apple. Jobs & Co. could then pressure the balance of the industry to get in line.

Due to Apple’s share of the music download market, if the iTunes store is available free to purchasers of the company’s digital media products, it is likely to affect handset companies trying to start their own download operations. If Apple changes it model often enough, no one will be able to keep up.

Douglas A. McIntyre

Posted on: March 18, 2008 – 5:30 pm in Consumer Electronics,

New Electronics Forecast Bad For Apple (AAPL) And Best Buy (BBY)

New data from ChangeWave Research point to a huge drop in spending on consumer electronics. The most recent data was taken from a survey of 4,427 consumers between February 19th and 25th.

Only 19% of those polled said that they plan to spend more on consumer electronics over the next 90 days. That compares to 33% who said they would spend less.

Among retailers, the companies which the survey said would hit hardest are Best Buy (BBY), CostCo (COST), Circuit City (CC), Amazon (AMZN), and Apple (AAPL).

Soft spots among products included LCDs, iPods, digital cameras, and cell phones. The last category may spell some trouble for Motorola (MOT) and Nokia (NOK).

Two categories which should do well over the near-term based on the data are Nintendo Wii video game consoles and high-def DVD players. Nice news for Sony (SNE)

Douglas A. McIntyre

Posted on: March 18, 2008 – 4:47 pm in Consumer Electronics, , , , , , , ,

Uranium Strategic Investment, Denison Mines and Uranerz (DNN, URZ)

Uranerz Energy Corporation (AMEX: URZ)announced that it will raise approximately $23.676 million (US Dollars) in funds via a brokered private placement of 4 million units and via a non-brokered private placement of 5.865 million units, including 5,465,000 to Denison Mines Corp. (AMEX: DNN) at a price of $2.40 (US Dollars) per unit. Denison will then own about 9.9% of Uranerz after completing the investment.

Each unit is comprised of one common share and one-half of one common share purchase warrant for a period of 24 months at an exercise price of US$3.50 per share.  The securities have not been and will not be registered.  These fall under Reg. D inside the U.S. and fall under Reg. S outside the US in offshore accounts.

Denison is also a uranium producer in the United States.  Net proceeds will be used for the following:

  • to advance the 100% owned Nichols Ranch and Hank ISR properties whose license and permits were submitted in Q4-2007;
  • complete an aggressive exploration drill program on the 81% owned Arkose Property, contiguous with Nichols Ranch and Hank;
  • and for general working capital purposes.

Denison is a uranium producer with mining assets in the Athabasca Basin region of Saskatchewan, Canada and also in Colorado, Utah and Arizona. Denison also has a strong development portfolio with advanced stage projects in Zambia and Mongolia.

In US terms, Denison has a $1.6 Billion market cap and looks like it is profitable. Uranerz Energy has a $94 million market cap in U terms and is still in its early stages.

Jon C. Ogg
March 18, 2008

Posted on: March 18, 2008 – 4:00 pm in Metals, Nuclear, Secondary Offering, ,

The 52-Week Low Club (XRM)(MGI)(BGP)(DVAX)(NUVO)(SHFL)

Xerium Technologies (XRM) delays 10-K and risk of default. Falls to $1.16 from 52-week high of $9.20.

Moneygram (MGI) is taken out of one of the S&P indexes. Down to $1.62 from 52-week high of $30.67.

Borders Group (BGP) Bad time to be in the print business. Down to $6.98 from 52-week high of $24.15.

Dynavax Technologies (DVAX) FDA halts trials of a company drug. Falls to $2.07 from 52-week high of $6.55.

Nuvelo (NUVO) Cuts staff and announces failure of drug trial. Down to $.55 from 52-week high of $6.63.

Shuffle Master (SHFL) Post loss for quarter. Drops to $5.13 from 52-week high of $19.78.

Douglas A. McIntyre

Posted on: March 18, 2008 – 2:56 pm in HI/LOW, , , , , ,

Visa IPO: Traders Use Member Banks & Owners As Back Door Plays (V, AXP, MA, DFS, JPM, BAC, NCC, WFC, C, USB)

Tonight we are going to get the highly awaited VISA, Inc. initial public offering.  This one has been on the books since November 2007 and we have previously noted that this was going to be one of the largest IPO’s ever.  Visa will trade under the ticker "V" on the New York Stock Exchange.

Visa_logoInvestors have been comparing this directly to MasterCard (NYSE: MA), although they are not comparing it at all to Discover Financial Services (NYSE: DFS).  Many have sent inquiries to us over this one and we’ve seen many stated opinions on this.  A common belief is that many investors have been hiding out in MasterCard shares as the beneficiary, mainly because so many feel this stock has been held up higher by Wall Street so that the Visa valuations don’t get battered.  MasterCard shares are up over 3% today ahead of the close at $208.18, and its 52-week trading range is $105.52 to $227.18.  MasterCard is also one that Jim Cramer has been behind since the start.

The IPO subscriptions are also said to be coming in rather well.  We sent this out to our open email distribution list earlier, but below are the percentage of Class B shares held by member banks.  These appear to be being used as a back door trade on the Visa IPO as they own significant shares in Visa.   Here are the percentages owned of the Class B shares:

  • JP Morgan Chase (NYSE: JPM): Class B 23.3%, selling 29 million shares;
  • Bank of America Corporation (NYSE: BAC): Class B 11.5%, selling 14 million shares;
  • National City Corporation (NYSE: NCC): Class B 8%, selling about 10 million shares;
  • Citigroup (NYSE: C): Class B 5.5%, selling 6.8 million shares;
  • U.S. Bancorp (NYSE: USB): Class B 5.1%;
  • Wells Fargo (NYSE: WFC): Class B 5.0%.

Here you can see the basics from its year-end numbers.  Lead underwriters include JPMorgan and Goldman Sachs.  The syndicate is actually huge.  Others listed are Banc of America, Citigroup, HSBC, Merrill lynch, UBS, Wachovia, CIBC, Daiwa Securities, Mitsubishi UFJ Securities, Piper Jaffray, RBC Capital, SunTrust Robinson Humphrey, and Wells Fargo.  One interesting note is that about $3 Billion is being put into an escrow account after the IPO as a reserve for litigation settlements in its law suits against American Express (NYSE: AXP) and Discover.

We have heard numerous levels issued, but so far the gray-market pricing is said to be $2.00 or more over the high end of the $37.00 to $42.00 price range for 406 million shares.  That number may change before the pricing. If you take the over-allotment of 41 million shares and just use the $42 price at the high-end of the range you get a total gross IPO of $Barring any market or institution blow-ups, this IPO will be the most discussed topic out there Wednesday.

Jon C. Ogg
March 18, 2008

Join our open email distribution list.  Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Posted on: March 18, 2008 – 2:36 pm in Banking, Financial Stocks, IPOs, , , , , , , , , ,

SPAC IPO FILING: China Growth Alliance Ltd. (CGN)

China Growth Alliance Ltd. is another a blank-check company or special purpose acquisition company (or SPAC) that has filed to come public via an initial public offering.  It filed to sell up to $56 million in units and will trade under the "CGN" ticker on AMEX.  China Growth plans to sell 7 million units in the IPO at $8.00 each. 

Its underwriting group consist of Ferris Baker Watts Inc., Jesup & Lamont Securities Corp. and Maxim Group LLC.  Each unit consists of one ordinary share and one Class B warrant, while each Class A warrant will entitle the holder to buy one ordinary share for $6.00.

As normal with blank-check and SPAC companies, China Growth will acquire an unspecified business.  While no business, nor even exact sector is assured, the company intends to focus initial efforts in locating a business with operations in the People’s Republic of China.  It’s a good thing they cleared that up, because that would have been almost impossible to tell by the name.  Management is as follows:

  • Dr. Bin Zhou, Chairman and Co-Chief Executive Officer;
  • Mr. Peifeng Zhu Vice Chairman and Co-Chief Executive Officer;
  • Mr. Dongbing Ma, Vice Chairman and President.

Jon C. Ogg
March 18, 2008

Posted on: March 18, 2008 – 1:51 pm in China, IPOs

FOMC Goes Three-Quarters Of The Way

The FOMC has made its rate cut, although not quite as much as Wall Street was talking up.  Wall Street wanted a 100-basis point cut or 1 full point.  We got a 3/4-3/4 cut by 0.75% on fed funds to 2.25% and 0.75% on the discount rate cut to 2.50%.

At 2:10 PM EST ahead of the results, here were the market levels for reference:
DJIA                       12,241.64 (+269.39;+2.25%)
S&P500                1,311.81 (+35.21; +2.76%)
NASDAQ               2,232.42 (+55.41; +2.55%)
10YR-TBOND      3.393%    (+0.079)

Today’s PPI gains would have normally given some a pause in their demands that the FOMC cuts rates by a full point.  But the Fed can’t worry about the US Dollar right now, and it can’t really worry about inflation. It has to make certain that our disaster of a credit market and implosion in financial lending institutions from turning into a Resolution Trust Corp. situation.

The FOMC noted that inflationary outlook uncertainty has increased although it should moderate in teh coming quarters.  It noted "considerable stress" in the financial markets and "downside risks to growth remain."  It also noted that it will act in a timely manner to promote growth and price stability.  You can read the full statement here at the Federal Reserve site.

Fisher and Plosser were dissenting voters with the hope for less aggressive actions.

The initial reaction to the rate cut is mixed.  A 0.75% rate cut after the recent trends should be enough to appease all of us, even though Wall Street does frequently act as a spoiled child always wanting more and more.  We’ll see how the total reaction is by the end of the day before passing judgment.

Jon C. Ogg
March 18, 2008

Posted on: March 18, 2008 – 1:24 pm in Economy

Adobe Barely Off 52-Week Lows Ahead of Earnings (ADBE)

Tuesday after the close, we’ll get to see earnings out of Adobe Systems Inc. (NASDAQ: ADBE). The estimates from First Call are $0.45 EPS on $875.8 million in revenues.  Adobe frequently offers longer-term guidance compared to many software companies. Next quarter estimates are $0.44 EPS on $874.7 million in revenues. Estimates for fiscal Nov-2008 are $1.82 EPS on $3.57 billion in revenues.

Analysts have an average price target north of $45.00, which is approximately an implied 50% move to current prices.  2008 hasn’t been great to Adobe stock as shares were north of $40.00 at the end of 2007.  They were also above $45.00 at the start of November.  Options are not very straightforward, but it appears that options traders are only braced for a move of $0.98 to $1.12 in either direction.  The closest contracts may not even count for 1 million shares traded on a fully leveraged basis.

Adobe Systems’ 52-week trading range is $30.70 to $48.47, so at $31.61 the stock barely sits above its 52-week low.  If Adobe hits its estimates in fiscal NOV-2008, it has a forward P/E of 17.4 based on today’s prices.

Jon C. Ogg
March 18, 2008

Posted on: March 18, 2008 – 12:57 pm in Earnings, Software,

US Vehicles Sales Could Hit Thirteen Year Low (GM)(F)

GM (NYSE: GM) and Ford (NYSE: F) already trade near 52-week lows because of high gas costs and the rising prices of commodities for components used in cars.

Now, JP Power is dropping its estimate for US light vehicle sales to 14.95 million. The research firm had earlier put up an estimate of 15.7 million.

According to Power "In the first quarter of 2008, sales are expected to average 15.2 million units, with sales in the second quarter falling to approximately 14.8 million units before beginning a slow rebound during the second half of the year and into 2009."

With vehicles sales of about 16.1 million in 2007, a drop to 14.9 million or below would be worth about $32 billion in total US car revenue based on an average price of $25,000 per vehicle. At current market share levels, the could push GM’s US revenues down by $8 billion and Ford’s down by $5 billion.

Neither company has the cost structure in place to weather that. Any savings from the UAW contract and cost cuts in 2006 are now in place and there is not much left to take out.

That means that loses at the big US car companies will be much greater than forecast just a month ago.

Douglas A. McIntyre 

Posted on: March 18, 2008 – 11:58 am in Autos, ,

Frank Quattrone Launches Qatalyst (CS, GS, GOOG, JMP)

If you have been around the markets for a decade you’ll know the name Frank Quattrone quite well.  Quattrone was one of the most influential investment bankers in the 1990’s who also became the head of Credits Suisse’s technology banking group.  He was nearly destroyed in one of the great Wall Street scandals in obstructing the investigation over brokerage firms giving shares in hot IPO’s to great clients for higher commissions, in which he was ultimately vindicated.

Frank Quattrone has just announced that he is launching Qatalyst Group, a new technology boutique being launched with former colleagues.  Qatalyst will be a technology-focused merchant banking boutique that is to be headquartered in San Francisco, CA.  This is being noted as Qatalyst Capital and Qatalyst Partners.

Qatalyst Partners is its investment banking business, and it will provide high-end M&A and corporate finance advice to technology companies. Qatalyst Capital Partners is its investing business and it will make selective principal investments, typically alongside leading venture capital and private equity firms.  Qatalyst Partners noted that it will provide "high quality, independent advice to the senior management teams and boards of the technology industry’s established and emerging leaders on strategic matters crucial to their growth and success."  While it will not engage in public securities research, sales, trading or brokerage, Qatalyst Partners may participate as advisor or underwriter in clients’ public offerings. 

This will combine a broad network of relationships with deep sector knowledge and seasoned M&A expertise. In addition to merger & acquisition advice, Qatalyst Partners will also advise companies on capital structure and capital raising alternatives, and will selectively raise private capital for clients. 

Eric Schmidt of Google (NASDAQ: GOOG) noted, "….I look forward to working with him again and am very enthusiastic about Qatalyst’s prospects for success."

It looks like this cadre is mostly from Goldman Sachs (NYSE: GS) and Credit Suisse Group (NYSE: CS).  Qatalyst’s initial founders include:

  • Jonathan Turner, a technology M&A expert, formerly Global Head of Credit Suisse’s Internet group and most recently served as Vice President of Corporate Development for online marketing leader QuinStreet;
  • Adrian E. Dollard, formerly General Counsel of Credit Suisse’s Technology group and a lawyer at Shearman & Sterling specializing in M&A, corporate finance and venture capital;
  • Neil Chalasani, most recently a Vice President with Evercore’s Technology, Media & Telecom group;
  • and will include Brian Slingerland, most recently a Vice President with Goldman, Sachs’ Technology Media & Telecom group;
  • and Brian Cayne, most recently an Associate at Vista Equity Partners.

Qatalyst Partners has submitted an application for registration as a broker-dealer with the SEC and has applied for membership in FINRA.  During the approval pending process, Qatalyst will operate as a division of JMP Securities so that they can begin to advise clients immediately.  JMP Securities is part of JMP Group (NYSE: JMP).

It looks like Wall Street just got a new technology boutique that will be involved in venture capital, private equity, and bringing companies public. 

Jon C. Ogg
March 18, 2008

Posted on: March 18, 2008 – 10:16 am in Internet, Mergers and Buy Outs, Private Equity, Technology Companies, , , ,

Apple (AAPL): Macs On Fire

If research firm NPD Group is to be believed, the Apple (NASDAQ: AAPL) Mac had 14% of PC sales in the US in February and 25% of the revenue share.

According to Apple Insider "The results — first revealed in an investor note from Pacific Crest Securities analyst Andy Hargreaves on Monday — represent 60 percent unit growth and 67 percent revenue growth over the same period one year ago. At the same time, overall US PC retail shipments grew just 9 percent on a 5 percent increase in revenues."

The information is probably not particularly good for Hewlett-Packard (NYSE: HPQ), and is probably especially bad for Dell (NASDAQ: DELL).

Unless iPod sales have dropped through the floor, the Mac info would indicate Apple is trading much too low.

Douglas A. McIntyre

Posted on: March 18, 2008 – 9:12 am in PC Companies, , ,

Early Recovery Laggards (AMGN, ARII, IP, MCD, SRZ, URI)

It almost seems that no matter what happens, there are always some major companies whose shares just won’t recover when the broad market recovers.  Sometimes it’s on news, and sometimes it is just because that sector won’t be the real beneficiary of a market move or a change in the economy.  A 200 point-plus gain in the DJIA and a 43 point gain in the NASDAQ doesn’t mean some aren’t struggling.

American Railcar Industries (NASDAQ: ARII) is one of the worst ones today with shares down over 10% at $19.45, now down more than 50% from 52-week highs.  UBS is the culprit this morning after it downgraded the stock from an already cautious Neutral rating down to a new SELL rating.

Amgen (NASDAQ: AMGN) just can’t catch a break.  Its shares are at a new 52-week low under that $43.02 level down at $42.45 today.  When your core anemia products are under fire from Congress and from the FDA, this is what happens.

International paper (NYSE: IP) is feeling the wrath of a downgrade after JP Morgan cut its rating to Neutral from Overweight, and shares are down almost 2% at $28.94 today.

McDonalds (NYSE: MCD) is so far the only DJIA component trading lower this morning after gapping up.  Maybe this defensive name is going to have a hard time duplicating its massive same-store performance that has been seen over the last two years or more.  Shares are down marginally at $54.21, and its 52-week trading range is $43.65 to $63.69.

Sunrise Senior Living (NYSE: SRZ) shares are down almost 10% at $20.85 this morning, which is another 52-week low.  Two weeks ago it gave preliminary results and noted it would have a 4140 million adjustment.  This morning it noted that it missed the deadline for filing its annual report, a real no-no for investors.

United Rentals Inc. (NYSE: URI) ar also down over 1% today at $17.50 after JPMorgan cuts its rating from an already cautious Neutral down to an "underweight" rating.

Jon C. Ogg
March 18, 2008

Posted on: March 18, 2008 – 9:06 am in HI/LOW, , , , , ,

High PPI More Honest Than CPI, FOMC Has To Look Past It

This morning we saw February Producer Prices come out with a gain of +0.3%, and that is after a +1% gain in January.  The core rate on an ex-food and energy basis rose +0.5%.  We had penciled in estimates from Bloomberg as +0.4% expected on nominal PPI and +0.2% on Core PPI.

If you take everything into consideration, what it really looks like is that the Labor Department was just more realistic on PPI than it was on CPI with that seemingly wrong FLAT release on Friday.

Some may say that this should give the FOMC some pause over an expect 1.0% rate cut on the Fed Funds rate.  The problem is that inflation is taking the backseat to a crippled consumer and a credit strapped nation that can’t refinance out of mortgages that are too high of rates on too high of an appraised house on a higher basis than they should have ever been approved for.  The Fed is going to have to hold its nose, forget about the US Dollar becoming the US Peso, and hit the CUT button big either way.

Jon C. Ogg
March 18, 2008

Posted on: March 18, 2008 – 8:02 am in Economy

Yahoo! (YHOO) Comes Out With Lame Business Plan To Support Higher Value

Yahoo! (NASDAQ: YHOO) has come out with a business plan which says the company is worth more than Micorosft (NASDAQ: MSFT) is offering. That is based, to some large extent, on how the company will do in 2010. As if the management knows.

The one piece of good news is that Yahoo! says it will hit its Q1 numbers. Wall St. was concerned that, if it did not, Microsoft might drop its offer and try to buy the company at a lower price point later.

Some keys:

The plan supports the unanimous determination by the Company’s board of directors that Microsoft’s January 31, 2008 unsolicited acquisition proposal substantially undervalues Yahoo!.

Yahoo!’s management today also reaffirmed its outlook for the first quarter 2008 and full year 2008, as previously provided on January 29, 2008

Key sources of projected growth in revenue and operating cash flow cited in the presentation include $1.9 billion in added revenue ex-TAC over the next three years from display/video advertising, as Yahoo! expects its growth to outpace the currently anticipated market rate of growth in online display/video advertising.

Over the course of the three-year financial forecast the company has plans and strategic initiatives which are expected to roughly double operating cash flow over the next three years from $1.9 billion to $3.7 billion and generate $8.8 billion in revenue excluding traffic acquisition costs (revenue ex-TAC) in 2010

That assumes that the competition does nothing to upset these programs, that the economy is OK, and that management knows what it is doing.

Douglas A. McIntyre.

Posted on: March 18, 2008 – 7:44 am in Mergers and Buy Outs, ,

GameStop Sets Earnings Growth to 2010 (GME)

GameStop Corp. (NYSE: GME) has just posted its earnings with $1.14 diluted EPS on revenues of $2.8656 Billion. The estimates for the largest pure-play video game retailer from First Call were $1.12 EPS on $2.89 billion in revenues. 

It sees current quarter comparable store sales of +24% to +25% and sees EPS in a range of $0.32 to $0.33.  Next quarter estimates are $0.29 EPS on $1.55 billion in revenues.

The video game retail giant also forecast fiscal Jan-2009 total revenues to grow 19% to 21% on comparable store sales growth of 10% to 12%.  It is targeting a 25% to 30% EPS gain to a range of $2.25 to $2.34 EPS.  Estimates for fiscal Jan-2009 are $2.23 EPS on $8.15 billion in revenues.  The company is also noting that prospects for the 575 to 600 new store openings this year look very promising even with the current concerns about the US economy.

More importantly, the company is targeting fiscal January-2010 EPS growth of 25%.  While many feel the valuations are stretched or that the growth has already been seen, these numbers are going to become pretty hard to argue against in the current environment.

GameStop Corp. closed down 4% Monday at $47.00 and its 52-week trading range is $26.50 to $63.77.  Shares are indicated at $48.50 to $49.00 in initial reactions to the earnings.

Jon C. Ogg
March 18, 2008

Posted on: March 18, 2008 – 7:43 am in Earnings, Retail, Video Games,

Goldman Sachs Sails Past Lowered Estimates (GS)

Goldman Sachs (NYSE: GS) has just posted earnings, and while many metrics are lower than last year the results overall were well above estimates that had been lowered in a weakening environment.  The company earned $1.51 Billion on $8.34 Billion in revenues.  On an EPS basis it posted $3.23.  First Call had earnings estimates at $2.58 EPS and $7,47 Billion in revenues.

Its annualized return on average tangible common shareholders’ equity (1) was 17.0% and annualized return on average common shareholders’ equity was 14.8% for the first quarter of 2008.  Individual unit numbers were as follows:

  • Fixed Income, Currency and Commodities generated quarterly net revenues of $3.14 billion;
  • Equities produced quarterly net revenues of $2.51 billion;
  • Assets under management increased 21% from a year ago to a record $873 billion;
  • Securities Services net revenues grew 38% to $722 million;
  • Investment Banking revenues fell 32% to $1.17 billion;
  • Financial Advisory fell 23% to $663 million.

Goldman Sachs also listed its total capital as $222.11 billion, which was $42.63 billion in total shareholders’ equity and $179.48 billion in unsecured long-term borrowings. Its stated book value per common share was $92.44 and its tangible book value per common share was $80.28.  As far as its share buyback plan, it repurchased roughly 7.9 million shares of its common stock at an average cost of $198.87 per share for some $1.56 billion during the quarter.  There were some charges in the numbers.  It lost $1 Billion on non-investment grade credit origination and on residential mortgage loans and securities.

 

Goldman Sachs shares closed down $5.84 to $151.02 yesterday and shares are indicated up $7.00 to above $158.00 in pre-market trading; its 52-week trading range is $140.27 to $250.70.

Jon C. Ogg
March 18, 2008

Posted on: March 18, 2008 – 7:18 am in Brokerage Firms, Earnings,

Citigroup (C): A Merger With Bank of America (BAC)

With Citigroup’s (NYSE: C) shares off from $55.55 to under $19 and concerns that it cannot weather another round of write-downs which may be coming for subprime paper, credit card debt, and troubled LBO loans, the quesiton is, who might take the bank over ?

High on the list would have to be Back of America (NYSE: BAC) which seems to have managed to avoid a lot of the LBO and subprime landmines.

BAC shares are off 30% over the last six months, while Citigroup is down 65%

Douglas A. McInyre

Posted on: March 18, 2008 – 7:08 am in Banking, ,

Citigroup (C) Merger Candidates, JP Morgan (JPM)

Citigroup (NYSE:C) will probably looking be looking for merger partners now that its stock is down to under $19 from a 52-week high of $55.55.

The first choice would probably be JP Morgan (JPM). It is better managed, has done more to avoid the currest credit crisis, and has a number of overlapping businesses which would allow the combined company to take out tremendous amounts of redundant costs and operations.

If Citi hits another skip, JP Morgan may be able to pick it up for $15.

Douglas A. McIntyre

Posted on: March 18, 2008 – 7:03 am in Uncategorized, ,

Goldman Sachs on Canadian Oil Drilling (BJS, HAL, WFT, CAM, SII, FTI)

Goldman Sachs issued its first of a 3-part conference call covering the Canadian market, and it noted that the stimulation outlook is improving.  Its preference in the first of three notes is for oil service stocks with a higher exposure to gas in the near-term.  It favors BJ Services (NYSE: BJS), Halliburton (NYSE: HAL), and Weatherford (NYSE: WFT) over more oil-dominant related names like Cameron International Corporation (NYSE: CAM), Smith International Inc. (NYSE: SII), and FMC Technologies, Inc. (NYSE: FTI).

Most of the upside here is due to a limited new drilling activity in North America in the second half of 2008 and into 2009, which is combined with significantly higher natural gas prices.  It also notes that oil drillers will be dependent upon new rig additions.

Jon C. Ogg
March 18, 2008

Posted on: March 18, 2008 – 6:57 am in Analyst Calls, Oil & Gas, , , , , ,

Intel (INTC) Takes Another Dig At AMD (AMD)

Intel (NASDAQ: INTC) is not satisfied with its 75% to 80% share of the PC and server markets. It is about to launch a new, more powerful set of chips, presumably to take more business from AMD (NYSE: AMC) and Nvidia (NASDAQ: NVDA).

Yesterday Intel gave "new details of plans to introduce chips that pack four, six, eight or more electronic brains on a piece of silicon to boost calculating performance," according to The Wall Street Journal.

Intel’s stock is off under 20% during the last six months. Shares of its two rivals are down over 40%. The big company clearly plans to use its superior cash flow to fund R&D and put more hurt on the competition.

Douglas A. McIntyre

Posted on: March 18, 2008 – 6:44 am in Semiconductor, , ,