Daily Archives: March 19, 2008

FedEx Ready To Deliver Earnings (FDX, UPS)

Thursday we’ll see earnings out of FedEx Corporation (NYSE: FDX). The estimates from First Call are $1.22 EPS on $9.11 billion in revenues.  Next quarter estimates are $1.95 EPS on $9.45 billion in revenues. Estimates for fiscal May-2008 are $6.31 EPS on $37.48 billion in revenues. Estimates for fiscal May-2009 are $7.11 EPS on $39.98 billion in revenues.

If you want to use options that also expire tomorrow, it appears that options traders are braced for a move of up to about $2.10 in either direction.  Analysts have an average price target north of $112.00, some 30% higher than today’s close of $86.23.  FedEx’s 52-week trading range is $80.00 to $119.10.

UPS (NYSE: UPS) recently telegraphed that February volumes were down.  Over the last 3-months FedEx shares are down about 10% while UPS shares are marginally down; over the last year, UPS shares are up marginally, while FedEx shares are down roughly 20%.  UPS has outperformed the stock and may be a current favorite in comparison as a result, but FedEx looks like it has more caution priced in

The biggest outlying factor we are looking for doesn’t really revolve around this last quarter earnings.  It revolves around $100 oil combined with a slowing consumer, which combined could keep the de-pressurization a real risk.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 6:34 pm in Earnings, Transports, ,

Carnival Earnings, Bracing For Travel & Leisure Guidance (CCL, RCL)

Thursday we’ll see earnings out of Carnival Corp. (NYSE: CCL). The estimates from First Call are $0.29 EPS on $3.15 billion in revenues.  Next quarter estimates are $0.50 EPS on $3.32 billion in revenues. Estimates for fiscal Nov-2008 are $3.12 EPS on $14.69 billion in revenues.

Analysts have an average price target north of $52.00, more than $14.00 higher than Wednesday’s $37.60 close.  Carnival’s 52-week trading range is $36.10 to $52.10. 

Estimates have come down on this one over the last 90 days, and considering that it’s a cruise ship owner and operator and the consumer pocketbook is getting thinner and thinner and thinner.  The short interest has also risen on this one to 14.79 million shares, which is almost 4-days to cover.  The cruise ship operator stock is also real close to 4-year lows.   So if this has any "not so bad numbers" and signals that the rivets aren’t popping off the earnings, then we’d be expecting a large move up on short covering mixed with bargain hunters.

We’d note that its performance in recent periods has been similar to that of Royal Caribbean (NYSE: RCL), its closest competitor.  We recently noted also that Goldman Sachs had raised their rating on Royal Caribbean to its Conviction Buy List.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 5:27 pm in Earnings, Entertainment, Luxury, ,

Biotech Movers & Shakers (FOLD, BAX, CYTK, DSCO, HALO, IMCL, SGEN)

Amicus Therapeutics (NASDAQ: FOLD) had a late afternoon surge, up 7% to $10.73. The 52 week range is $9.00 to $18.22.

Baxter International (NYSE: BAX)—contaminant in recalled Heparin identified by the FDA today. Shares rose slightly to $58.18 in response to board approved $2 billion stock buyback program. maybe it’s a major drug stock, but this has been a pending issue for some time.

Cytokinetics Inc. (NASDAQ: CYTK) up almost 10% to $3.38 today; annual report filed last week.

Discovery Laboratories Inc. (NASDAQ: DSCO) up over 10% today to $2.38 on a late afternoon rise on no new news.

Halozyme Therapeutics, Inc. (NASDAQ: HALO) up 23% today to $6.06 on heavy late afternoon trading volume and no news. Halozyme dipped earlier this week due to downgrades.

ImClone Systems (NASDAQ: IMCL) showed little response to upgrades in anticipation to cancer clinical trial data. Shares inched up $0.20 to $43.30.

Seattle Genetics Inc. (NASDAQ: SGEN) upgraded by RBC Capital Markets and noted for strong research platform. Up 4% to $8.70. The 52-week range is $7.20 to $3.44.

Rachel Lopez
March 19, 2008

Posted on: March 19, 2008 – 3:56 pm in Biotech, , , , , , ,

The 52-Week Low Club (COMS, CROX, ERIC, MNST, RYAAY, SEED, SNDK, YRCW)

  • You’ve always got some weak stocks that hit 52-week lows, particularly in a bear market.  But there were many active stand-out names today that normally don’t appear on this screen.
  • 3Com Corporation (NASDAQ: COMS) dropped over 20% on news that agreement with Bain has not yet been reached and may never happen. New low of $2.08 from $2.69. The 52 week high is $5.11.
  • CROCS Inc. (NASDAQ: CROX) is another victim of recession jitters, deserved or not.  Maybe the ugly-cool really was just a fad, and fads are bad for stocks when they go away.  New low of $16.20, with late trading at $16.60. The 52 week high is $75.10.
  • LM Ericsson Telephone Co. (NASDAQ: ERIC) fell 10% after its Sony Ericsson venture issued an earnings warning and profit decreases and projects lower cell-phone demand this year. Down to $17.4 late in the day with low of $17.04 from a 52-week high of $43.41.
  • Monster Worldwide Inc. (NASDAQ: MNST) downgraded due to decreased estimates resulting from increased media expenses. Down to $23.66 from a 52-week high of $50.28.
  • Ryanair Holdings plc (NASDAQ: RYAAY) down to $24.82 from $49.59.  No gold and 4-leaf clovers from the leprechaun for this Irish discount airliner to the E.U.…or maybe their staff is still celebrating St. Patrick’s Day.
  • Origin Agritech Limited (NASDAQ: SEED), the Chinese crop seed company, needs a little rain and sunshine. Down to $4.85.
  • SanDisk Corp. (NASDAQ: SNDK) is another victim of the market volatility. Down to $21.01 from a high of $59.75.
  • VMware, Inc. (NYSE: VMW) down despite positive growth and sales projections for the ultra hot-hot virtualization trend that will grow no matter what for the next 5 years. Tech stocks taking a beating. Late day lows $42.68 from a 52-week high of $125.25.
  • YRC Worldwide Inc. (NASDAQ: YRCW) high prices and weak demand for truckers are slowing this ride, plus a competitor warned again. Lowest price since 1998 of $10.99. 52-week high of $45.99.

As a reminder, the 52-week low list is where many fund managers and traders go looking for opportunities.  Sometimes the baby is thrown out with the bathwater, and sometimes they throw out the whole house and family with it.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 2:57 pm in HI/LOW, , , , , , , ,

Bookstore Earnings War: Borders Vs. Barnes & Noble (BGP, BKS, AMZN)

Today we’ll see earnings out of Borders Group, Inc. (NYSE: BGP). The estimates from First Call are $1.42 EPS on $1.34 billion in revenues.  Next quarter estimates are -$0.40 EPS on $759.44 million in revenues. Estimates for fiscal Jan-2009 are $0.54 EPS on $3.78 billion in revenues.  Analysts have an average price target north of $12.00.  Borders is trading up over 5% ahead of earnings at $7.35 and its 52-week trading range is $6.90 to $24.15.

Thursday we’ll see earnings out of Barnes & Noble, Inc. (NYSE: BKS). The estimates from First Call are $1.71 EPS on $1.85 billion in revenues.  Next quarter estimates are -$0.02 EPS on $1.18 billion in revenues. Estimates for fiscal Jan-2009 are $1.77 EPS on $5.55 billion in revenues.  Analysts have an average price target of $35.00. Barnes & Noble shares are down over 3% at $28.25 today and the 52-week trading range is $25.01 to $43.80.

Whatever the reports are, both stocks are much closer to lows than highs.  Book selling, magazines, and book accessories are all very economically sensitive.  Plus those used book stores are just too much of a steal to discount and and Amazon.com (NASDAQ: AMZN) is just extremely convenient.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 2:36 pm in Earnings, Entertainment, , ,

Talk of Writedowns Hit Merrill Lynch and Others (MER, BSC, MS)

This is just becoming all too familiar in the financial stocks, and the bears are still in charge since we can’t hold a major up-day.  Merrill Lynch & Co. (NYSE: MER) is feeling the wrath of writedown rumors today.  It has been seen with a sharp drop in the stock today, and it has also been seen with major volume in put options.  The March options expire tomorrow, so traders are going out to April with more than 120,000 put contracts in the April 18 expirations trading hands.

The company already announced it was suing SCA over written down assets but that is on old and already written-down numbers according to contacts.  More importantly, the talk is on yet another major writedown coming soon.  The figure vary from source to source, but the figures started out as being "more than $5 Billion" today.  Then we were told it could be $10 or $12 Billion, and someone else that is close to many primary brokers noted that $15 Billion is what some are talking about internally at Merrill Lynch.

Before you go jump out the window, please keep in mind that this is all based on what traders and brokers are talking about today.  These aren’t rumors as much as they are traders trying to factor in as much as they can in more write-offs.  It is also on the week of the big brokerage firms reporting earnings.  What should be expected is that more writedowns ARE COMING without question.  There is no way those writedowns will end suddenly, and the sad part is that many assets are bing written down to a "mark to theory" basis.

Bear Stearns (NYSE: BSC) was a winner yesterday on many rumors of better solutions coming, although that also now feels like it was a long time ago.  Morgan Stanley (NYSE: MS) is still positive today after its earnings beat expectations.

What is more important than any big numbers here by far is the notion of what write-offs will be paper and what write-offs will cause implosions.  If it is merely on paper and broker and bank counterparties don’t cut the institutions off, then the talk may be wasted time.

Outside of that, you’ve probably already gotten used to seeing writedowns from major financial institutions either each day or each week.  Even if S&P was right about being past the halfway mark, that isn’t going to end immediately.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 2:20 pm in Brokerage Firms, , ,

Starbucks Annual Meeting: Presents Initiatives, Yet Stock Issues Persist (SBUX)

Starbucks Corp. (NASDAQ: SBUX) is holding its annual shareholder meeting today (playing right now), and with shares having slid more than 50% from highs it can’t be any shock that the home of "coffeeflation" is initiating its new plan.  For starters, now that Howard Schultz has returned, the company is slowing what was its ridiculous "take over the coffee world" aggressive store opening strategy.  It has also tried to take some of the more time-demanding products that slow down the line at rush hour.

In the first 30 minutes Schultz has noted that the company is very aware of the current challenges and the stock price, and assured that they are all highly motivated to remedy this.  Also noted was that the trends of a slowing traffic trend combined with much higher and record dairy prices that affect it.  International growth is still the big surge, even though it has been slowing US store growth plans.  Consumer products are still in the very early stages and the company believes that will be a $1 Billion segment.  As far as what’s ahead, Schultz said in the long initiative process that there are no sacred cows.  Our own comments on prior releases and issues:

Analyst estimates have already been brought down over the last quarter yet again and its earnings estimates out of First Call are $0.97 for fiscal Sept-2008 and $1.13 EPS for fiscal Sept-2009.  So at $18.25, its forward P/E ratio for this year is 18.8 and roughly 16.1 for forward 2009 numbers.  As far as valuations are concerned, this is far from dirt cheap and far from expensive.

The truth is that Starbucks hasn’t gone to hell in a hand basket.  It isn’t like you are thought of as a loser if you go there.  But it has lost its mojo and its days of being a growth stock are far behind in the rear view mirror.  Now it is a mature dominant brand that has competition from formerly uncool brands that is nipping it from all sides.

The market cap is $13.2 Billion, down from what used to be $25+ Billion.  So we aren’t talking anymore about "a coffee shop with a 50 P/E…"  Now we are just talking about a coffee shop.  The share price of two years ago no longer matters.  Shareholders of today will just have to look at this as a maturing premium coffee company with a slowing consumer that is looking for ways to trim expenses, and the old mantra of driving real earnings growth will become primary.  Everything else is just spilled coffee.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 12:40 pm in Annual Report, Food, Retail,

Nike Stock Stuck In Channel Ahead of Earnings (NKE)

After today’s close of trading, we’ll get to see the earnings report out of Nike (NYSE: NKE).  First Call has estimates at $0.81 EPS and $4.36 Billion in revenues.  Next quarter is also its fiscal year end and estimates are $0.97 EPS on $4.85 Billion in revenues.  While estimates for Fiscal May-2008 are $3.58 EPS, its May-2009 fiscal estimates from First Call are $3.89 EPS on $19.86 Billion.

One thing has become front and center for Nike, and that is its international sales and it seeing a big earnings jump because the US Dollar has weakened over and over.

With shares up about 1% today at $62.50, they have traded between $51.50 to $67.93 over the last 52-weeks.  For most of the last year this has traded between $55.00 and $65.00.  Analysts have an average price target of close to $71.00.  Keep in mind that options expire tomorrow, but it looks like traders are braced for a  move of up to $2.00 in either direction.

The leader in sports apparel has a current year P/E ratio of 17.5 if it hits its mark, and ahead to next year its forward P/E ratio is 16 on a rounded basis.  The value is in having the perhaps world’s strongest sporting apparel and sporting goods brand.  The question over value versus price boils down to how much of a market premium you think it deserves because of that brand leader strength. 

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 11:48 am in Apparel, Earnings,

Globalstar Offering Could More Than Double Its Size (GSAT)

Globalstar Inc. (NASDAQ: GSAT) filed for a shelf registration of mixed securities this morning that would allow it to sell up to $700 million.  The registration will allow it to sell debt securities, common and preferred stock, warrants and depositary shares.

As far as the use of proceeds, Globalstar noted that a part of the proceeds will be used to meet capital expenditures relating to it procuring and deploying second-generation satellite constellation and related ground facilities.

The potential size of the offering is rather large for this company.  Its shares have been cut in half from its 52-week highs appear to be down some 60% from its late-2006 IPO.  Its market cap is now about $565 million.  On last look, the company had $57.3 million in total liabilities.

When you see shelf filings of this size, these usually are a combination of debt and stock.  It’s hard for a company to get away with diluting current shareholders by more than half.  Either way, it looks like the fully diluted share count may soon be much larger than today.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 10:14 am in Satellite, Secondary Offering,

SPAC Warrant Separation: GHL Acquisition Corp. (GHL, GHQ, GHQ-U, GHQ-WS)

GHL Acquisition Corp. (Amex: GHQ-U), a special purpose acquisition company or SPAC, has announced that it has allowed for the separation in trading of its common stock and warrants.  This SPAC will thus no longer be considered exclusively "units" upon the separation.

The SPAC’s initial public offering was February 21, 2008, and holders may elect to trade the common stock and warrants separately commencing on March 20, 2008.  This is an elective event rather than a mandatory event.  Units notseparated will continue to trade on the American Stock Exchange underthe symbol "GHQ.U".

The common stock will trade on the American Stock Exchange under the "GHQ" ticker, and the warrants will trade under the "GHQ.WS" ticker.

We had previously noted that this one was affiliated with Greenhill & Co. (NYSE: GHL).

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 10:03 am in IPOs, , , ,

CardioNet Priced At Bottom of Range, Trades Lower From Start (BEAT)

CardioNet Inc. (NASDAQ: BEAT) priced its 4.5 million share IPO at a price of $18.00 per share.  The San Diego, California-based provider of real-time patient heart monitoring systems had originally set the range at $20.00 to $22.00, but later reduced its range to $18.00 to $20.00. 

So this deal priced at the bottom of a lowered trading range, and it did it after a huge rally day on Wall Street.  That won’t initially excite traders, even if the products are good from the company. 

Citigroup, Lehman Brothers, Leerink Swann and Thomas Weisel Partners were the underwriters for the offering.

So far shares have traded over 1 million shares and the last trade seen was $17.80.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 9:43 am in IPOs, Medical,

ETF LAUNCH: Foreign Government Inflation-Index Bonds

There is a new ETF launching today, and this one is a foreign government bond inflation-protected ETF.  State Street Global Advisors, the investment management arm of State Street Corporation (NYSE: STT) announced that the SPDR(R) DB International Government Inflation-Protected Bond ETF (Ticker: WIP) is set to begin trading on the American Stock Exchange.

The SPDR DB International Government Inflation-Protected Bond ETF, besides being a mouthful of words, is designed to track the performance of the DB Global Government ex-US Inflation-Linked Bond Capped Index.  The index includes 120 inflation-indexed bonds from 18 developed and emerging countries outside of the US.

In order to be included in this index, the bonds must be capital-indexed and linked to an eligible inflation index with at least one-year remaining to maturity.  They must also have a fixed, step-up, or zero notional coupon and must settle on or before the Index rebalancing date.  The Fund’s expense ratio is 0.50 percent.

Some ETF’s catch on like fire.  Others fail to gain major traction.  The more straightforward and the more simple ETF’s tend to see more liquidity than the complex and less direct ETF’s.   This one is more than fairly diverse and many will have a hard time tracking what all is in the ETF.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 9:26 am in ETF, ,

Visa Opens For Trading

Visa, Inc. (NYSE: V) has just opened for trading after its record IPO for a US-listing.  The buy interest has been increasing all morning.  Visa shares have just opened for trading at what looked like $60.00, with some trades at $61.00.

The merger priced at $44.00 per share, above the $37.00 to $42.00 range.  Indications were hitting the tape at $52 to $57 after the open, then indications came at $55 to $60 after the market was open for 30 minutes.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 9:16 am in Banking, Financial Stocks, IPOs,

Thornburg Financing Conditions Hinder Shares (TMA)

Thornburg Mortgage, Inc. (NYSE:TMA) is seeing shares get hit this morning.  While new financing may be a reprieve, it looks like it is coming at a high price with conditions that will be difficult to maintain. 

The company announced that it has entered into an agreement for 364 days with 5 of its remaining reverse repurchase agreement counterparties and their affiliates, who are providing approximately $5.8 billion of reverse repurchase agreement financing.   These counterparties agreed to a contractual reduction of margin requirements and agreed to a suspension of their rights to invoke further margin calls and related rights. This includes subsidiaries of Bear Stearns, Citigroup, Credit Suisse, Royal Bank of Scotland, and UBS Securities LLC. 
While Thornburg has already made reductions, it must further reduce its current reverse repurchase agreement borrowings outstanding with two reverse repurchase agreement counterparties by an additional $1.2 billion combined.  This will be achieved either through asset sales or transfers of collateral specified.

The continued effectiveness of this agreement is contingent upon a variety of factors, most importantly one that requires that Thornburg Mortgage raise a minimum of net proceeds of $948 million in new capital within seven business days.  It must also establish and maintain a liquidity fund in the amount of $350 million, and to maintain an amount in that fund equal to 5% of the monthly outstanding borrowings of its reverse repurchase agreement counterparties in investments.

You should read through the full press release because the terms go on and on.  Thornburg shares are down over 10% at $2.60 in early trading.  It looks like the initial fears about having to give away the keys to the castle may be more prevalent than the original filing from 2 days ago to raise capital.  The situation at Thornburg may be getting tougher before getting easier.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 8:57 am in Financial Stocks, Secondary Offering,

3Com Sets Stage To Pursue Merger Break-Up Fee (COMS)

3Com Corporation (NASDAQ: COMS) intends to proceed with its currently scheduled shareholder meeting on Friday, March 21, 2008 to enable 3Com shareholders to vote on the company’s existing merger agreement with affiliates of Bain Capital Partners, LLC. 

The board of directors is still recommending that investors vote in favor of the deal.  The sole purpose of the special meeting is to conduct the shareholder vote.  The company does actually note it has the right to pursue a break-up fee under certain circumstances.

The original terms with affiliates of Bain Capital Partners call for $5.30 in cash per share, although even if the group somehow manages to win CFIUS approval that deal may change depending on concessions made.  The parties withdrew their joint merger filing and no application has been re-submitted to date.  So far, the parties have been unable to agree upon an alternative transaction that addresses CFIUS’ concerns and is acceptable to 3Com’s board of directors.

If you read through the release, it seems that 3Com is making every statement in the world that the vote is a mere formality and that it is going to have to stay on its own.  It also sounds like it is going to pursue a break-up fee as a result.  Whether or not a regulatory denial constitutes an event that would qualify for a break-up fee is an entirely different matter, but this seems to be the angle that is at least being set up as a possibility.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 7:50 am in Mergers and Buy Outs, Technology Companies,

E*Trade, Still Growing Account Base (ETFC)

E*TRADE Financial Corporation (NASDAQ: ETFC) has noted that customer cash and deposits
increased by nearly $1 billion in February, although total retail customer assets including customer cash and securities fell 1.7% month over month to $171 billion.

Total Daily Average Revenue Trades (DART’s) fell 17% month over month due to weaker market trends in February.  While electronic brokers are measured by DART’s as the bogey and that would be a bad number, the more impressive metric here is that E*Trade still generated 43,000 net new accounts in February to end with retail accounts totaling 4.8 million, up 0.9% month over month and 6.1 percent year over year.  If you were sitting here in November, you would have assumed that a run on the bank was a serious risk.

E*Trade has been a recent feature in our weekly "10 Stocks Under $10" newsletter, and it is an active call.

The company did also announce that R. Jarrett Lilien, President and COO will be leaving effective May 16, 2008.  Interestingly enough, E*Trade does not plan to fill the role of President and COO.

Shares of E*Trade are indicated down slightly in early pre-market trading, although we’d accept this as a win so far as it is still adding net accounts.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 7:20 am in Brokerage Firms,

Visa Taking $17.9 Billion in Market Trading Capital (V)

Visa, Inc. (NYSE: V) will trade this morning.  The deal has priced at $44.00 per share, which is $2.00 above the range of $37.00 to $42.00 per share.  That is also what we noted as the gray-market indications yesterday afternoon.  The total amount that is going to be absorbed from this IPO is some $17.9 Billion.

This is the largest IPO in the U.S. and is actually the second largest global IPO in history behind the $22 Billion IPO of Industrial & Commercial Bank of China Ltd. in 2006.

Yesterday we noted that traders were hiding out in Visa’s member banks and owners as the way to get in on the IPO ahead of time if investors worried they weren’t going to get shares.

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.

Shares should begin trading shortly after the market open today.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 7:02 am in Banking, Financial Stocks, IPOs,

Morgan Stanley (MS) Results Poor, But Investors Relieved

Morgan Stanley (MS) followed other Wall St. firms with poor results and the company said the future was doubtul.

But, the numbers were good enough to keep the horses in the barn.

The company said income from continuing operations for the first quarter ended February 29, 2008 were $1,551 million, or $1.45 per diluted share, compared with $2,314 million, or $2.17 per diluted share, in the first quarter of last year. Net revenues were $8.3 billion, 17 percent below last year’s first quarter.

Fixed income sales and trading revenues were $2.9 billion, the second highest quarter ever. These results reflect record revenues in interest rate, credit & currency products and the second highest quarter ever for commodities, partly offset by mortgage proprietary trading net writedowns of approximately $1.2 billion.

Asset Management faced challenging market conditions with losses in real estate and incurred further losses related to securities issued by structured investment vehicles resulting in a pre-tax loss of $161 million.

Shares are up almost 5% in the pre-market.

Douglas A. McIntyre

Posted on: March 19, 2008 – 6:45 am in Most Actives,

Top 10 Pre-Market Analyst Calls (AZN, BG, CCJ, CFC, DWSN, INAP, LAMR, MNST, NCC, SGEN)

Below are the ten analyst calls that 247WallSt.com is focusing on in pre-market trading this Wednesday morning:

  • AstraZeneca (NYSE: AZN) raised to Overweight at HSBC Securities.
  • Bunge (NYSE: BG) raised to Overweight at JPMorgan.
  • Cameco (NYSE: CCJ) cut to Hold at TD.
  • Countrywide Financial (NYSE: CFC) raised to Market Perform at Wachovia.
  • Dawson Geophysical (NASDAQ: DWSN) started as Hold at Jefferies.
  • InterNAP (NASDAQ: INAP) cut to Neutral at Merriman Curhan Ford.
  • Lamar Advertising (NASDAQ: LAMR) cut to Underweight at JP Morgan.
  • Monster Worldwide (NASDAQ: MNST) cut to Neutral at JPMorgan.
  • National City (NYSE: NCC) Raised to Sector Perform at RBC
  • Seattle Genetics (NASDAQ: SGEN) raised to Outperform at RBC Capital Markets.

Jon C. Ogg
March 19, 2008

Posted on: March 19, 2008 – 6:36 am in Analyst Calls, , , , , , , , , ,

Sony Ericsson Warning Bad For Motorola (MOT) And Nokia (NOK)

Large handset company Sony Ericsson said it would miss Q1 earnings because of lack of handset demand. The company said it will only ship 22 million handsets for the period, which would be flat with last year.

"Slowing market growth of mid to high-end phones in markets where Sony Ericsson has a strong presence is affecting sales," according to a statement picked up by Reuters.

If handset sales are starting to flatten due to a bad economy, Nokia (NOK), which sells 40% of the world’s mobile phones, is likely to be hurt badly. But, it has a strong balance sheet and good margins.

The other company which will suffer is Motorola (MOT), a firm which has absolutely no margin for a poor market. The US company’s shares trade at $9.74 down from a 52-week high of $19.68. Motorola is trying to sell its handset unit, but if its finances are getting worse, that may be next to impossible. Last year, Motorola revenue from handsets was down 33% and the firm lost $1.2 billion in that part of its business.

Motorola’s shares may look inexpensive below $10, but they almost certainly are not.

Douglas A. McIntyre

Posted on: March 19, 2008 – 5:34 am in Wireless, ,