Daily Archives: April 17, 2008

Intrepid Potash Hiked IPO Terms, From Hot To Scorcher (IPI)

Intrepid Potash Inc. is soon to be pricing an IPO, and the "hot status" was just confirmed.  With all the hype and pricing power of anything tied to potash, nitrates, fertilizer, and anything tied to Agriculture, this was a foregone conclusion.  The company issued an amended IPO filing with the SEC showing that it boosted the size of its planned IPO to a level that will now be over $1 Billion.

The Denver, Colorado-based potash producer hiked the size of the offering to 30 million shares from 24 million.  If things weren’t good enough, the company also hiked its estimated price range to $27.00 to $29.00 from a prior range of $24.00 to $26.00.

The NYSE has approved its "IPI" stock ticker.  The underwriting group is all large household names with Goldman Sachs, Merrill Lynch, Morgan Stanley, RBC Capital Markets, and BMO Capital Markets listed as underwriters.  The underwriters now have an overallotment option to purchase up to 4.5 million additional shares rather than the 3.6 million shares originally indicated.

You can join our open email distribution list to hear about other IPO’s, back door plays into IPO’s, spin-offs. break-ups, and other special situations we frequently preview.

Fertilizer is starting to taste so good for investors that you might start seeing Fried Fertilizer fast food joints soon.

Jon C. Ogg
April 17, 2008

Jon Ogg can be reached at jonogg@247wallst.com.  He is a producer and editor of the Special Situation newsletter and the "10 Stocks Under $10" weekly newsletter for 247Wallst.com; he does not own securities in the companies he covers.

Posted on: April 17, 2008 – 5:41 pm in Agriculture, IPOs,

Google’s (GOOG) Black Box Wins, Again

Almost no one knows what an algorithm is. The management at Google (NASDAQ:GOOG) doesn’t care. The company’s shares are up almost 20% after hours. Those who doubted the firm’s ability to improve its business had been selling the stock off since the beginning of the year.

All of the evidence from the first quarter, based on studies from internet measurement firms like comScore and large buyers of Google keyword inventory, said the growth the big search engine’s ad units was slowing, perhaps to a rate as poor as 5% year-over-year.

To some extent, analysts were right. In the US, the rate of ad growth slowed to 20%. It had been 30% in the fourth quarter of last year.

Google’s profits rocketed 30%. Revenue moved up 46% to $3.7 billion. The company reported net income of $1.31 billion, or $4.12 a share, compared with $1 billion, or $3.18 a share, a year earlier. The EPS figure was well above analyst estimates.

What happened to Wall St. is that it was fooled into thinking that Google’s growth had nearly stopped. More important, investors did not understand that the firm had built a better black box, again.

The advantage Google has had for five years now over competitors like Yahoo! (NASDAQ: YHOO) is that the basic "math" that finds accurate search results is better than any other company’s. The math for matching those search results with advertisers is even better.

The process which Google employs to get these superior results is kept in a vault, perhaps Fort Knox. It is probably the most valuable intellectual property in the world. Wall St. may have assumed that the engineers at Google had stopped working on the system. But, that would not be giving the unusually successful company  or its management their due.

Google probably has hundreds of people working, constantly, on improving its algorithms to drive more and more accurate results. Microsoft (NASDAQ: MSFT) and Yahoo! have teams equally eager to turn their science into magic, but they are, at best, a year or more behind the leader.

Wall St. was suckered. Google is still finding better solutions to the problems of search, at a geometric pace.

Douglas A. McIntyre

Posted on: April 17, 2008 – 4:58 pm in Earnings, , ,

AMD.. Bad, But…. (AMD, INTC)

Advanced Micro Devices (NYSE: AMD) is somehow managing to hang in there, despite waves of bad internal news.  The number two processor company said its first quarter losses narrowed to $358 million, but its sales across all business segments were slower than the company had expected.  Its EPS loss was -$0.59 (after a $0.08 charge) and revenues were up 22% to $1.51 Billion.  Analysts were expecting -$0.51 EPS on $1.5 Billion in revenues.  The gross margins were 42%, down from 44% the prior quarter and up from 28% in Q1-2007.

Shares have been acting as though the worse has been seen at the company as far as the stock is concerned, but many problems really persist.  Its CTO walked out the door, and Hector Ruiz is still hanging on.

Shares closed up almost 2% at $6.19 today, and shares are up 1.4% at $6,.28 in after-hours.  The 52-week trading range is $5.31 to $16.19.

Jon Ogg is a producer and editor of the Special Situation newsletter and the "10 Stocks Under $10" weekly newsletter for 247Wallst.com.

Posted on: April 17, 2008 – 3:44 pm in Earnings, Semiconductor,

E*TRADE Earnings Disappoint, But Survival No Longer Under Question (ETFC)

E*TRADE (NASDAQ: ETFC) has posted earnings of -$0.20 EPS on a net loss of $91.2 million, and its net revenues were nearly $316 million and estimates from First Call were -$0.10 EPS on $363.94 million in revenues. 

Amazingly enough, this company is still adding accounts.  It opened 305,000 gross new accounts, up 10 percent quarter over quarter and it produced 62,000 net new accounts, up from 7,000 in the prior quarter to end with 4.8 million accounts.  Total customer assets fell by -11% on a quarter over quarter basis, but it noted that it has also stabilized its client asset flows and generated a net inflow of $300 million.

E*TRADE increased excess Bank risk-based capital to approximately $695 million, up $260 million from last quarter.   It said that quarter end shows some $10.7 Billion in excess FHLB borrowing capacity.  The company’s provision expense of $234 million included an additional $9 million associated with a change in the timing of foreclosure and bankruptcy-related charge-offs.  Its losses of $9 million

Next quarter estimates are -$0.03 EPS on $ 404.16 million in revenues. Estimates for fiscal Dec-2008 are -$0.12 EPS on $1.65 billion in revenues.

While CEO Don Layton noted caution at the start of 2008, he noted that E*TRADE exited the quarter "with increased stability and the beginnings of a return to growth,” He also noted that the growth in new customer relationships speaks to the continued strength and appeal of the E*TRADE brand.

Its home equity portfolio is the largest source of potential losses and Layton noted it is performing broadly in line with expectations and the company is affirming its three-year cumulative loss forecast of $1 billion to $1.5 billion.  Total allowances for loan losses rose to $566 million, as provision exceeded charge-offs by $58 million during the quarter. 

E*TRADE is changing its tune to now reflect a modest recession and taking more restructuring activities as a result.  The Company is also taking action that will reduce undrawn home equity lines by an additional $1.2 billion by the end of April.  In recognizing the slowdown and challenging environment, it is has revised expense reduction program designed to lower annual run-rate compensation-related expenses by 10% or by $50 million per year.

Shares were initially punished in after-hours trading on more disclosures of financial asbestos, but this is just more proof that Wall Street isn’t factoring in the obvious.  Shares closed up some 8% today at $3.62.  At one point, shares were under $3.50 in after-hours reaction, but now shares are up an additional 2% from the close at $3.71.

E*Trade is an active stock in our weekly "10 Stocks Under $10" newsletter.

Jon C. Ogg
April 17, 2008

Jon Ogg is a producer and editor of the Special Situation newsletter and the "10 Stocks Under $10" weekly newsletter for 247Wallst.com.

Posted on: April 17, 2008 – 3:28 pm in Brokerage Firms, Earnings,

Google (GOOG) Explodes Upward, Stock Up 17%

Google (NASDAQ: GOOG) sold off slightly, just over 1%, into the close. Then, all hell broke out. Shares moved up 17% immediately after earnings hit.

Google reported revenues of $5.19 billion for the quarter ended March 31, 2008, an increase of 42% compared to the first quarter of 2007.  In the first quarter of 2008, TAC totaled $1.49 billion, or 29% of advertising revenues.

GAAP operating income for the first quarter of 2008 was $1.55 billion, or 30% of revenues. This compares to GAAP operating income of $1.44 billion, or 30% of revenues, in the fourth quarter of 2007

GAAP EPS for the first quarter of 2008 was $4.12 on 317 million diluted shares outstanding, compared to $3.79 for the fourth quarter of 2007 on 318 million diluted shares outstanding.

The estimates for the search engine super-giant from First Call were $4.52 EPS on $3.61 billion in revenues.  Next quarter estimates are $4.64 EPS on $3.8 billion in revenues. Estimates for fiscal Dec-2008 are $19.55 EPS on $15.91 billion in revenues.

Those estimates are just a memory now. Google murdered the market’s expectations.

Douglas A. McIntyre

Posted on: April 17, 2008 – 3:06 pm in Earnings,

The 52-Week Low Club (BGG)(LVS)(CRMH)(EPIC)

Briggs & Stratton (BGG) Earnings below estimates. Drops to $14.71 from 52-week high of $33.40.

Las Vegas Sands (LVS) Industry slow, looking at job cuts. Falls to $65.72 from 52-week high of $148.76.

Novartis (NVS) No news. Slow sell-off. Runs down to $46.24 from 52-week high of $59.17.

CRM Holdings (CRMH)  New York Workers’ Compensation Board is withdrawing key license. Big drop to $2.84 from 52-week high of $9.15.

Epicor Software (EPIC) Cuts forecasts. Sells off to $7.42 from 52-week high of $15.58.

Douglas A. McIntyre

Posted on: April 17, 2008 – 2:47 pm in HI/LOW, , , ,

Dell May Be Catching H-P, Apple Stays Hot (DELL, HPQ, AAPL)

It appears that PC sales held up better than many have feared, and recent tech earnings this week aren’t signaling the end of the run. Data released last night from Gartner and from IDC are showing similar trends, although the numbers appear slightly different if you go through to the source documents.

Gartner has reported that the PC market was modestly affected by the U.S. recession, but noted that there was no fundamental change in market conditions.

One surprise to see on the list was Dell Inc. (NASDAQ: DELL) if you have paid attention to that stock bloodbath.  Its Q1 market share globally was 14.9%, up from 13.7% from Q1-2007.  Its total shipments also grew to 10.579 million from 8.688 million in the same periods. But inside the U.S., Dell’s U.S. market share is listed as 31.4% on some 4.775 million PC units shipped, up from 27.9%  and 4.126 million PC-units shipped in Q1-2007.

When you compares this to Hewlett-Packard (NYSE: HPQ), H-P did grow globally as well.  But in the U.S. it showed a slight drop in market share and in units shipped.  When you compare Dells and H-P stock prices, these results are very surprising.  Should this be interpreted as a potential "regaining ground" from Dell?

But the strength of Apple Inc. (NASDAQ: AAPL) is continuing to impress on a raw number basis.  Apple is more strong in the U.S. than internationally because of its prices, but its market share for US shipments for Q1 2008 was 6.6% with some 1.01 million units shipped.  That compares to a 5.2% market share and 762,000 units shipped in Q1-2007.

In a separate release from IDC, the data is a tad different but many of the trends are similar.  It noted that Dell enjoyed its strongest quarter in almost two years.  The impact of new retail presence and growing strength in the portable market propelled the company to a 21.6% improvement in shipments. Dell enjoyed strong portable growth in all major regions except Canada.

IDC also showed that Apple saw similar gains in Q1 in the U.S. with a 6% market share on 950,000 shipments, up from 4.9% market share and 759,000 shipments from Q1 2007.

What is obvious in comparing these two reports is that H-P is still king.  But its lead is no longer an absolute and competition is likely only to get tougher rather than easier.

Jon C. Ogg
April 17, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Posted on: April 17, 2008 – 1:57 pm in PC Companies, , ,

Inuitive Surgical Earnings To Set Stock Status (ISRG)

After today’s close, we’ll see earnings out of Intuitive Surgical, Inc. (NASDAQ: ISRG). The estimates for the DaVinci robotic surgical device maker from First Call are $0.98 EPS on $178.21 million in revenues.  Next quarter estimates are $1.19 EPS on $202.76 million in revenues. Estimates for fiscal Dec-2008 are $5.12 EPS on $857.30 million in revenues.

As this one has stayed strong and been up huge, this is well above key longer-term  moving average we like to use for trend establishments.  The 50-day moving average is $306.41 and the 200-day moving average is $267.04.  With shares flirting at $349.11, it’s a long way above those to determine key long-term support levels.  Options expire tomorrow, but traders appear to be braced for a move of $19.00 to $21.00 in either direction.

Analysts have an average price target north of $356.00.  Intuitive Surgical’s 52-week trading range is $120.54 to $359.59. 

This has been a major growth stock, and the earnings report here will either allow that status to prevail or it will seek a "market adjustment."  While that is stating the obvious, this earnings and guidance call could be a critical juncture for the stock.  As this stock has risen more than 20-fold over the last 5-years, you can imagine that this one will be closely watched.  Throw that in with charity hospitals and other quasi non-profit hospitals recently being under some tighter spending, and you’ve got a horse race. 

With 2.5 million shares short and with a fairly low open interest in current month stock options, the trading activity is likely to be the value and growth buyers forming their longer-term opinions after such a long stock run.

Jon C. Ogg
April 17, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Posted on: April 17, 2008 – 1:12 pm in Earnings, Medical,

Nasdaq Delisting Candidates, To The Pink Sheets

The list of possible delisting candidates is too long to publish here. These companies are called "non-compliant" usually for late SEC filings or stock prices which trade below the exchange minimum share price. Most of these companies can appeal and go through a process to remain listed.

The entire list is published.here. Among some of the notables:

Applied Digital Solutions (DIGA)

Atari (ATAR)

Children’s Place (PLCE)

Conexant (CNXT)

EntreMed (ENMD)

Force Protection (FRPT)

infoUSA  (IUSA)

Mindspeed (MSPD)

PixelWorks (PXLW)

QMed (QMED)

Sonic Foundry (SOFO)

Sonic Solutions (SNIC)

TranSwitch (TXCC)

Zila (ZILA)

Douglas A. McIntyre

Posted on: April 17, 2008 – 12:30 pm in Exchange News, , , , , , , , , , , ,

NYSE Delisting Candidates, Headed To The Pink Sheets?

With the sudden delisting of the Journal Register, it is interesting to look at who else is on the NYSE list of companies who could get delisted. The NYSE is generally very good about this and lets the companies have time to get into compliance. Below are the lists. They are grouped based on why the NYSE has problems with them.

Issuers that are noncompliant with its quantitative and corporate governance listing standards:

Fremont General Corporation (FMT)

Fremont General Financing I (FMTPR)

Impac Mortgage Holdings, Inc. (IMH)

Impac Mortgage Holdings, Inc. (IMHPRB)

Impac Mortgage Holdings, Inc. (IMHPRC)

Journal Register Co. (JRC)

Luminent Mortgage Capital, Inc. (LUM)

Medifast, Inc. (MED)

Milacron Inc. (MZ)

NIS GROUP CO., LTD. (NIS)

Scottish Re Group Limited (SCT)

Scottish Re Group Limited (SCTPRB)

Sun-Times Media Group, Inc. (SVN)

Zarlink Semiconductor, Inc. (ZL)

Companies as delayed in filing both Annual and Interim Reports:

Beazer Homes USA, Inc. (BZH)
Diebold, Incorporated (DBD)
International Rectifier Corporation (IRF)
Penn Treat American Corporation. (PTA)

Sunrise Senior Living, Inc. (SRZ)
Symmetry Medical Inc. (SMA)
VeriFone Holdings, Inc. (PAY)
W Holding Company, Inc. (WHI)
WellCare Health Plans, Inc. (WCG)

Companies as delayed in filing an Annual Report:

China Yuchai International Limited (CYD)
Fremont General Corporation. (FMT)
Fremont General Financing I (FMTPR)
Impac Mortgage Holdings, Inc. (IMH)
    Impac Mortgage Holdings, Inc. (IMHPRB)
    Impac Mortgage Holdings, Inc. (IMHPRC)
Mesa Royalty Trust (MTR)
Schawk, Inc. (SGK)

Some firms make it on to more than one list, and some, like JRC and FMT, have already left for the "pink sheets"

Douglas A. McIntyre

Posted on: April 17, 2008 – 9:10 am in Exchange News, , , , , , , , , , , , , , , , , , , ,

Is Southwest The Only Profitable Air Carrier? (LUV, CAL, AMR, DAL, NWA)

Southwest Airlines Co. (NYSE: LUV) may be one of the few remaining profitable airlines.  The company posted earnings this morning with a $34 million profit, or $0.05 EPS, and $0.06 EPS before one-time items.  Its revenues rose by 15% year over year to $2.53 Billion.  First Call had estimates of $0.01 EPS on $2.49 Billion in revenues.  Southwest did note that it would take possession of its 29 new planes for 2008 but is cutting 2009 deliveries in half to 14 and is putting off 2010 orders.  Bookings remained strong for May and June and it noted that unless the economy softens too much further, it expects per-passenger revenues to climb again in the coming quarter from last year.  Southwest saw its fuel prices rise by some 33%, and it is reviewing its flights to determine unprofitable flying.

Analysts that cover Southwest have a $0.20 EPS target for next quarter on $2.84 Billion in revenues, which seems a bit high in the current climate and in light of cancellations and charges that have already been seen.  But as of now, this may be the only profitable carrier and it has perhaps better brand loyalty than others.  Southwest shares are indicated up almost 1% pre-market.

Continental Airlines Inc. (NYSE: CAL) posted a loss of $80 million, or -$0.81 EPS, early this morning.  Outside of a gain on a small sale, it would have seen -$0.86 EPS, although this is actually slightly better than the -$0.93 EPS that First Call was expecting. Revenues rose by 17% year over year, but a fuel price surge of over 50% will bite into that in a hurry.  Continental is likely going to trim 5% of its capacity to focus on more profitable flying.  Analysts continue to expect a profit for Q2, although the fuel surge may create a need to bring those targets down.  As results were actually slightly above estimates, shares are up almost 2% pre-market.

Traders just are not reacting well to the Delta (NYSE: DAL) and Northwest (NYSE: NWA) merger, with Northwest shares down more than 10% since last Friday. Shares of Delta (DAL) are also down more than 10% since last Friday.  As one trader sent a quote this week to us: "Great, the combined giant can lose half the money and twice the baggage combined, and then hope they make it up on volume."

AMR Corp. (NYSE: AMR), American Airlines’ parent, posted a loss of $328 million on Wednesday led by fuel prices.  That didn’t even include the latest SNAFU for its massive flight cancellations.  It maintains that it can compete whether it pursues a merger of its own or not, although it is selling off 90% of its investment arm called American Beacon Advisors for some $480 million.

Jon C. Ogg
April 17, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Posted on: April 17, 2008 – 8:31 am in Airlines, , , , ,

TD AMERITRADE & SCHWAB Satisfy, Awaiting E*TRADE (AMTD, SCHW, ETFC)

TD AMERITRADE (NASDAQ: AMTD) came in with a solid report of $0.31 EPS on $623 million revenues.  First Call had estimates $0.31 EPS on $615.66 million in revenues.  It also reaffirmed guidance for FY2008 and sees EPS of $1.32 vs. $1.34 estimates.

The shares of Joe Moglia & Co. are trading up over 2% pre-market at $17.97, which is still in the middle of the $13.82 to $21.31 trading range of the last 52-weeks.

After today’s close, we’ll see earnings out of E*TRADE (NASDAQ: ETFC), and estimates from First Call are -$0.10 EPS on $ 363.94 million in revenues.  Next quarter estimates are -$0.03 EPS on $ 404.16 million in revenues. Estimates for fiscal Dec-2008 are -$0.12 EPS on $1.65 billion in revenues.

Last night we noted that the earnings report would be better on quality out of Ameritrade as it didn’t have the same financial asbestos that E*Trade had.  But the one with the most leveraged opportunity will probably be E*TRADE, and now we’ll have to see if the rough week we have seen in E*TRADE was justified or not.  The street acts like it is bracing for more asbestos found in the lunch room there, so we’ll see.  E*TRADE shares are up almost 1% at $3.36 in pre-market trading.

Charles Schwab Corp. (NASDAQ: SCHW) already reported earnings earlier this week that met analyst estimates, and its shares have traded up while E*TRADE hasn’t.  E*TRADE will have a lot to prove, but even an additional writedown or major charges should be tolerated so long as they are no death sentence.

Jon C. Ogg
April 16, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Posted on: April 17, 2008 – 7:59 am in Brokerage Firms, Earnings, , ,

NY Times (NYT), Bad Quarter But Worse March

The New York Times Company (NYSE: NYT) had a "challenging" first quarter.Total revenue fell almost 5% to to $748 million. Expense dropped only 1% to $723 million.

The company’s odd About.com online operation was the only strong performer. Its reveue rose 25% to $28 million. It operating profit was up 14% to $9.5 millon. Total Internet revenues grew 11.6 percent to $82.9 million from $74.3 million. Internet advertising revenues increased 16.0 percent in the quarter. Internet businesses include our digital archives, NYTimes.com, Boston.com, About.com and the Web sites of our other newspaper properties.

The newspaper segment of the company had a 78% operating profit drop to $13.3 million.

No matter how bad the quarter was, March was worse. During the month total revenues from continuing operations decreased 6.4% compared with the same month a year ago. Advertising revenues decreased 11.1%. Ad revenue at the company’s New England Media Group, mostly the Boston Post, dropped an astonishing 26%. At the Regional Media Group the figure was over 19%. Advertising revenues at the About Group rose 22.4% due to growth in cost-per-click advertising.

Most of the newspaper advertising fall-off was in classifieds. With online companies like Craigslist taking that business, it isn’t coming back.

Douglas A. McIntyre

Posted on: April 17, 2008 – 7:52 am in Old Media,

SunPower Beats, Traders Fade News Initially (SPWR)

SunPower (NASDAQ: SPWR) has posted $0.39 Non-GAAP EPS on revenues $273.7 million.  This translates to $0.15 GAAP EPS.  These numbers are above plan according to First Call estimates of $0.35 non-GAAP EPS and $245.2 million in revenues.

The company is also raising guidance. It sees Q2 2008 non-GAAP EPS $0.48 to $0.52 on $330 million to $350 million revenues, which compares to estimates of $0.46 EPS and $295 million in revenues.  It also sees non-GAAP gross margin of 23% to 24%. For fiscal 2008 the company sees non-GAAP EPS of $2.10 to $2.20 on $1.3 billion to $1.375 billion revenues, while First Call has estimates at $2.07 EPS and $1.27 Billion in revenues.

It is also reconfirming 2009 forecast for total revenue to increase at least 40% from 2008 levels. If we interpolate this it translates to "at least" $1.82 Billion to $1.925 Billion, which compares to First Call targets of $1.88 Billion.

SunPower also noted that it is still aggressively expanding solar cell production by more than 150% in 2008 compared to 2007.  It expects silicon supply costs to decline by approximately 10% during 2008 and expects to reach its targets of 30% gross margin, 10% operating expenses and 20% operating margins on a non-GAAP basis, no later than the first quarter of 2009.  It also believes that 100% of projected solar cell production is secured with contracted silicon through 2010, and below is a table of its expected output:

MEGAWATT CAPACITY         2008    2009   2010
Nameplate capacity:                214     414     574
With Silicon Agreements:        255     450+    650+

Shares of SunPower are seeing a bit of a "sell the news" this morning and are trading down by more than 3% at $96.00 in pre-market trading.  The 52-week trading range is $51.00 to $164.49.  Based on yesterday’s close, these forecasts would give the company roughly a 47.4 to 45.2 forward P/E ratio (non-GAAP).

Jon C. Ogg
April 17, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Posted on: April 17, 2008 – 7:24 am in Alternative Energy, Earnings,

Nokia (NOK) Numbers Bad For Motorola (MOT)

Nokia (NYSE: NOK) sold 115 million handsets in the first quarter, an increase of 27% over the same quarter a year ago. The bad news is that the average yield-per-handset fell to 79 euros well down from 89 euros in the period a year ago.

Nokia’s net profit rose from 1.2 billion euros in the first quarter of the year, up from 980 million euros on the same period of 2007, an increase of 25%, But, Wall St. expected more and the stock is down 10%.

According to the AP "The Finnish company expects the mobile phone market worldwide to grow by some 10 percent in 2008 from its 2007 estimate of 1.14 billion units, but added that the average selling price across the industry would continue to fall during the year."

All of that is very bad for Motorola (NYSE: MOT). Nokia’s unit growth is faster than that of the overall market and there are signs that peers Samsung and Sony Ericsson are also growing quickly. The drop in average-price-per-phone and a falling market share are likely to do some real damage to MOT.

Douglas A. McIntyre

Posted on: April 17, 2008 – 7:14 am in Wireless, ,

Top 10 Pre-Market Analyst Calls (MT, CBOU, CPHD, IFF, IP, PFCB, PG, RAI, RF, USX, VQ)

These are some of the top analyst calls we are focusing on this morning:

  • ArcelorMittal (NYSE: MT) Cut to Neutral from Overweight at HSBC.
  • Caribou Coffee (NASDAQ: CBOU) Cut to Neutral from Outperform at Cowen.
  • Cepheid (NASDAQ: CPHD) Raised to Buy from Neutral at UBS.
  • Intl Flavors & Fragrances (NYSE: IFF) Cut to Underweight from Neutral at JPMorgan.
  • International Paper (NYSE: IP) cut To Neutral from Outperform at Credit Suisse.
  • PF Chang’s (NASDAQ: PFCB) Cut to Neutral from Outperform at Cowen.
  • Procter & Gamble (NYSEL PG) Cut to Hold from Buy at Deutsche Bank.
  • Reynolds American (NYSE: RAI) Raised to Neutral from Sell at Goldman Sachs.
  • Regions Financial (NYSE: RF) Raised to Hold from Sell at Citi.
  • US Steel (NYSE: USX) Cut to Hold From Buy at Citigroup.
  • Venoco (NYSE: VQ) Raised to Buy from Hold at Jefferies.

Jon C. Ogg
April 17, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Posted on: April 17, 2008 – 6:52 am in Analyst Calls, , , , , , , , , , ,

Dell (DELL) Tries to Conquer China

Dell (NASDAQ: DELL) is sick of being kick around in China. Hewlett-Packard (NYSE: HPQ), Lenovo, and Acer have been picking on the Austin-based PC firm for years.

According to the AP "Dell Inc. will expand its presence in China by selling desktop and notebook computers at Suning, the country’s second-largest electronics chain, and doubling the number of Gome stores that carry Dell machines." That will put Dell into 12,000 shore on the mainland.

If it can fix its worldwide customer service problems, it may actually get some sales in the world’s most populated country.

Douglas A. McIntyre

Posted on: April 17, 2008 – 6:23 am in China, ,

Merrill Lynch (MER) Falls On A Hand Grenade

Merrill Lynch (MER) turned in a truly aweful quarter. The financial company reported a net loss from continuing operations for the first quarter of 2008 of $1.97 billion, or $2.20 per diluted share, compared to net earnings from continuing operations of $2.03 billion, or $2.12 per diluted share for the first quarter of 2007.

First quarter 2008 net revenues were $2.9 billion, down 69% from the prior-year period.

Merrill wrote down $1.5 billion related to troubled debt instruments and took a $3 billion adjustment related to protection on certain kinds of debt

Douglas A. McIntyre

Posted on: April 17, 2008 – 5:54 am in Earnings Warning,

High-Tech Falls In Love With Cash (AAPL)(MSFT)(CSCO)(EBAY)(EMC)(GOOG)

Fearing a reprise of the 2000 catastrophe which wrecked hundreds of tech companies, big firms in the sector are hording cash. The only trouble with the idea is that the firms putting money onto their balance sheets don’t need it. Those corporations which failed eight years ago were predominantly small and had raised too little in their IPOs.

According to The Wall Street Journal "As of late last month, the technology sector — which already had been heavy on cash in the past few years — held nearly $232 billion in cash and cash equivalents, up more than 6% from nearly $218 billion a year earlier, according to Standard & Poor’s."

Part of the movement includes EBay (EBAY), EMC (EMC), Apple (AAPL), Google (GOOG),and Cisco (CSCO). But, all of these companies make money, most over $1 billion in operating income per annum, some several times that.

One of the problems with a recession is the herd thinking which creeps into the market, causing all companies and financial institutions to think more like one another. In a robust economy planning becomes divergent and open to more risk. That is what drives productivity and innovation into the boom and bust cycle.

Cash for the sake of cash is mindless and robs investors of value. If large tech companies have vaults full of bullion they should use it to create some "shareholder value", a phrase as repugnant as it is overused.

Unless a company can make a case that it plans to make acquisitions, it should send money back to shareholder. Share buy-backs are one way, although they don’t seem to do much. Special dividends are another. Microsoft (MSFT) did that a few years ago and its made Bill Gates very rich.

Cash does no one any good when it sits in mattresses.

Douglas A. McIntyre

Posted on: April 17, 2008 – 5:48 am in Technology Companies, , , , , ,

Europe Markets 4/17/2008 (BCS)(DT)(FTE)

Markets in Europe rose slightly at 6.25 AM New York time.

The FTSE was up .1% to 6,052. Barclay’s (BCS) rose 2.6% to 491.5. SABMiller was up 5.5% to 1,182.

The DAXX moved up .1% to 6,708. Deutsche Telekom (DT) was down 2% to 11.08. Man Ag was up 1.2% to 90.67.

The CAC 40 traded higher by .7% to 4,887. France Telecom (FTE) was off 3.5% to 20.13. Societe Generale was up 4.8% to 71.31.

Data from Reuters

Douglas A. McIntre

Posted on: April 17, 2008 – 5:33 am in International Markets, , ,