Daily Archives: June 7, 2008

Is Apple (AAPL) Low On Parts For iPhone 2.0? Shares To Collapse?

Apple (AAPL) may be short on materials for its new 3G iPhone which is set to be released next week. If the news is true, watch Apple’s shares drop from their current level of $185 to below $160.

According to Barron’s, "sources say that Apple has slashed its internal expectations for iPhone unit sales by up to 16%. They report that Apple had planned to ship 12 million 3G units by the end of the third quarter, but now expects to ship about 10 million to 10.5 million by the fourth quarter, owing to production delays."

For Apple stockholders, the news would be akin to a natural disaster. The new iPhone launch had been expected to drive company shares above $200. This had been based on the premise of a sharp increase in iPhone sales in the second half as customers push to get the new 3G product which runs on a much faster wireless network.

The Apple iPod’s sales growth is beginning to slow which is normal now that 150 million or more of them have been sold. Mac sales have picked up sharply, buy some analysts believe that increase has a natural limit because most corporations want to stay with PCs which run Windows.

If the iPhone has a problem a lot of the firms stockholders are going to head for the hills.

Douglas A. McIntyre

Posted on: June 7, 2008 – 5:23 pm in Consumer Electronics,

Apple (AAPL) Faces Potential Revenue Drop On iPhone

Apple (AAPL) is almost certain to make two changes to its iPhone pricing model when it releases version 2.0 next week.

The first is that it will drop the price that consumers will pay for the handset from about $400 to $200. Cellular servicer providers will make up most of the rest of that, but, it is likely that Apple will bear some of the burden.

Much more important, Apple has decided to take less of the revenue from calling plans sold with the phone. AT&T (T) and others will keep more of the money from voice and data fees. That will cut Apple’s long-term sales, perhaps by a lot. According to the FT, "Apple has also forgone a portion of the monthly revenue paid to the operators by iPhone users."

That leaves open the issue of whether Apple is actually trading improved unit volume for lower margins. It is a reasonable gamble, but it may not pay off. The iPhone is such a popular piece of hardware that it will sell extremely well, Apple does not have to give AT&T a better deal on fees to sell more handsets.

Apple passing on a revenue opportunity when it does not need to.

Douglas A. McIntyre

Posted on: June 7, 2008 – 6:52 am in Wireless, ,

Kerkorian: Ford (F) And The Making Of A Dunce

Kirk Kerkorian will end up owning more than 5% of Ford after he completes his current tender. He does not like to lose money, so if things don’t get better at the car company, he might lose his temper.

The Wall Street Journal is of the opinion that Kerkorian may push for changes and that the Ford family, which has 40% of the voting shares in the firm, might stand in his way. The paper writes "The family could even come under pressure to give up some of their votes, if Ford’s already precarious position worsens."

There is no reason for the Ford family to give an inch. Like the clan that owns a controlling interest in The New York Times Company (NYT), they can drive the company into the ground if they want to.

Kerkorian gets into Ford at a time when it may be too late to do much at all. The firm will be hurt for a long time because it built its business around SUVs and pick-ups. Changing over to smaller cars will be take months and the Japanese are waiting at that end of the market with better models and hybrids which get  something like 100 miles-per-gallon.

Ford has good overseas operations. If a recession spreads to Asia and Europe, the company will be troubled in those markets as well.

Management at Ford has already cut about as much as it can. At some point the UAW is going to make a stand. Ford could also make itself so small that it will not be able to take advantage of an economic recovery. It may no longer have the production capacity.

Kerkorian is a sucker. It is lucky for him that he is rich enough that it won’t matter.

Douglas A. McIntyre

Posted on: June 7, 2008 – 6:20 am in Autos, ,

Countrywide’s (CFC) Mozilo: Not An Ethical Bone In His Body

It turns out that Frank Mozilo, head of Countrywide (CFC), was passing out special mortgages to people including two former chiefs of Fannie Mae (FNM). Countrywide did business with the quasi-government operation, so being friendly was a good, perhaps excellent idea.

According to The Wall Street Journal, "These borrowers, known internally as "friends of Angelo" or FoA, include two former CEOs of FNM, the biggest buyer of Countrywide’s mortgages,

It is too early to say whether these discoveries will lead to any sort of government investigation. They certainly look bad.

More important, they raise the issue, once again, of why the management of Bank of America (NYSE:BAC) wants to buy Countrywide? There may be money to be made down the road, but there still could be a lot of troubling revelations between now and then.

Bank of America is trading near a 52-week low now. A lot of big investors don’t like the CFC deal. Perhaps the bank’s stock price will get the message through. There is very little benefit and a lot of potential risk in buying CFC.

Douglas A. McIntyre

Posted on: June 7, 2008 – 6:05 am in Banking, ,

The Week’s Top Biotech Movers For Next Week (TRCA, ACOR, ISPH, ONCY, PCYC, SQNM, IDEV, LGND, AUXL)

Out of the daily movers this last week, many of the top winners and losers were from news in many of the smaller biotech stocks.  We prepared a list of the winners and sinners from our daily review at BioHealthInvestor.com and gave a summary regarding the moves on each.  It is becoming more obvious that many small and mid-sized biotechs are going to be gobbled up by European or Asian biotech and pharma companies seeking the dollar-discount right now.

For starters, we ran a summary of the key moving pieces out of the American Society of Clinical Oncology (ASCO).  No review would be complete without it. Stocks covered: (AVAN, PFE, CELG, IMCL, DNA)

ACQUISITION NEWS
Tercica, Inc. (NASDAQ: TRCA) bites the dust as its own company the latest small cap biotech received a huge premium acquisition from a foreign buyer, with a 104% premium.  FULL DETAILS

MAJOR WINNERS
Acorda Therapeutics Inc. (NASDAQ: ACOR) had a great week after it announced positive data from a second Phase III study of its Fampridine-SR for patients’ walking abilities in MS patients.  FULL DETAILS

Inspire Pharmaceuticals Inc. (NASDAQ: ISPH) surged after reaching its primary endpoint in Phase III trial of Denufosol for Cystic Fibrosis.  FULL DETAILS

Oncolytics Biotech Inc. (NASDAQ: ONCY) gained after the Canadian biotech’s positive Phase II studies of intravenous REOLYSIN® in patients with sarcomas metastatic to the lung.  FULL DETAILS

Pharmacyclics Inc. (NASDAQ: PCYC) gained after its Phase 1/2 trial of motexafin gadolinium plus antibody targeted radiation therapy showed a high complete response rate in patients with non-Hodgkin’s lymphoma.  FULL DETAILS

Sequenom Inc. (NASDAQ: SQNM) surged after it announced its progress with a non-invasive technology that detects Down syndrome. FULL DETAILS

MAJOR LOSERS
Indevus Pharmaceuticals Inc. (NASDAQ: IDEV) tanked after an FDA request should cause a two-year delay in approving NEBIDO.  FULL DETAILS

MIXED REVIEW
Ligand Pharmaceuticals Inc. (NASDAQ: LGND) is one we gave a full pro and con review covering the upside of the stock and the negative side of the stock.  FULL DETAILS

Auxilium Pharmaceuticals Inc. (NASDAQ: AUXL) was a strange stock this week.  The company reported great news but shares slid before the market figured out it had misinterpreted news in the company.  INITIAL DETAILS

Jon C. Ogg
June 7, 2008

Posted on: June 7, 2008 – 6:01 am in Biotech, The Week, , , , , , , , ,