Daily Archives: June 14, 2008

Broker Earnings To Dominate Earnings Calendar (LEH, GS, MS)

This coming week is going to be a rather important week for brokerage and investment banking firms.  We have three key firms in the sector reporting earnings: Lehman Brothers Holdings Inc. (NYSE: LEH), Goldman Sachs Group Inc. (NYSE: GS), and Morgan Stanley (NYSE: MS).  As a reminder, brokers almost never give financial guidance because so much is based upon trading and market results.   The other big commonality for the brokers this quarter is that the results aren’t expected to have any huge underwriting fees and won’t have the old massive advisory or investment banking fees because mergers are down in size and scope.  So most brokers are going to get their earnings from investment management fees, trading the markets, and from their brokerage operations.

Below we have created a full earnings preview with summaries and conjecture for each of the three major firms:

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Posted on: June 14, 2008 – 10:42 am in Brokerage Firms, Earnings, ,

The Week’s Top BioHealth Issues For Next Week (PFE, TEVA, CRA, IVGN, CMED, ANPI, ISRG, VVUS, CELG)

One key stock to watch next week is Pfizer Inc. (NYSE: PFE). While it has been in the land of the boring forever, watchers are looking to see if it will put in a rival bid over the $4.6 Billion Daiichi Sankyo bid from Japan for a majority stake in India’s number one generic drug maker Ranbaxy.

Speaking of Generics, Teva Pharmaceutical Industries (NASDAQ: TEVA) was weak all week after Mylan Inc. (NYSE: MYL) has signed a pact with India’s NATCO Pharma Ltd. to produce a generic version of Teva’s multiple sclerosis treatment called Copaxone.  As this  was an old favorite buy in generic investor hearts you can imagine this will be covered frequently this next week since the stock is now 15% off of its highs and closer to a 52-week low.

We know that Invitrogen (NASDAQ: IVGN) is buying Applera’s Applied Biosystems (NYSE: ABI) unit.  But what about Celera Group (NYSE: CRA)?  Traders may be looking for the "next merger candidate"and that might fit logically.

China Medical Technologies Inc. (NASDAQ: CMED) went up big on earnings news this last week and continued to rise even by the end of the week further than the initial reaction.  Technicians may have this one on a momentum screen now.

Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI) may be of interest after it showed some positive stent data, and its launch of QUILL may all help the perceptions next week on this small molecule company.

It’s always good to know what short sellers are targeting.  The last short selling report showed a huge drop off in the short interest compared to prior reports in large cap biotech stocks like Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Celgene Corporation (NASDAQ: CELG), and others.  FULL SHORT INTEREST DETAILS HERE.

Intuitive Surgical Inc. (NASDAQ: ISRG) was defended by William Blair this last week and shares managed to rally during the week after that news was out.  After seeing a 3-month low traders may focus here next week as a short bottom fishing attempt.

Vivus Inc. (NASDAQ: VVUS) is hanging tough after a huge gap up in its QNEXA treatment for obesity and for diabetics.  Shares barely closed down on the week, rather impressive for a small cap with a history of not holding gains.  Traders will definitely be keeping their radar eyes on this one for opportunities to buy it up or short it.

Lastly, there was a lot of news on the rheumatoid arthritis front with many companies delivering solid data for drug studies in the debilitating area from companies such as Abbott Laboratories, Array, Eli Lilly, Incyte, J&J, Schering-Plough, and Roche.  Much of the news seems overlooked by the end of a summer week, so watch these for next week.  Solid Developments for Rheumatoid Arthritis (ABT, ARRY, LLY, INCY, JNJ, SGP, RHHBY)

Jon C. Ogg
June 14, 2008

Posted on: June 14, 2008 – 7:31 am in Biotech, Drug companies, The Week, , , , , , , , ,

Same Headline, Wrong Tactic, Again: Ford (F) To Cut Costs

Ford (F) is making the rounds of its employees and unions to tell them that the company will have to take out more costs. According to The Wall Street Journal, the word went out to "plant managers and representatives of organized labor on Friday that substantial reductions in overtime and additional buyouts of union workers were necessary to cut costs further."

Ford is making a grave mistake. At this point, the company is already in financial trouble. That is not likely to change. The brutal drop in US sales of SUVs and pick-ups happened so swiftly that it has ruined turnaround plans for the company and GM (GM). It is also severely hurting sales for importers like Toyota (TM) and Honda (HMC).

The cutting has to end somewhere. It will not bring back revenue, but it can insure that the company is never fixed. Dropping more manufacturing capacity, more marketing money, and more development capital make its almost certain that Ford is handicapped for years. It will lose its ability to design, bring to market, and advertise the products it needs to get back some of its market share.

Any company which has murdered its chances for future growth is no company at all.

Douglas A. McIntyre

Posted on: June 14, 2008 – 5:53 am in Autos, , , ,

Saudis Get The Message, Pump More Oil

Now that world opinion about oil is becoming more passionate by the day, world leaders and world consumers have to blame someone for the high prices of gas.

The first wave of speculation, with OPEC leading the way, was against speculators who trades on oil futures and gamble on the direction of the value of crude. The Federal government and agencies in other countries are looking into that. Presumably, this has sent the offending parties underground, although there is no real evidence that they ever existed. And, sicking the police after them has done nothing to bring down oil.

The next potential cause of rising crude was the weak dollar. That may not have made sense. The dollar has strengthened somewhat, and crude as not dropped.

That only leaves OPEC. Many have believed that the cartel knew oil supplies were tight and that this would keep prices high. The cartel members were making extra money, and could point to outside causes for the cost inflation. That kept the heat off of them.

Now that almost all fingers are pointing to OPEC, the Saudis have decided that it is better to pump more than to take a beating. The kingdom will begin to ship an extra half-a-million barrels a day. According to The New York Times, "The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices."

It a world where money is the only important issue, the Saudi princes can turn themselves from villains into heroes in a matter of days.

The portrait of Saudi King Abdullah will be held high during every July 4 parade throughout the American heartland next month. He has become more important than George Washington.

Douglas A. McIntyre

Posted on: June 14, 2008 – 5:40 am in Uncategorized

Yahoo! (YHOO) Gives Up A Mint By Rejecting Microsoft’s (MSFT) Second Offer

Microsoft (MSFT) told its employees that it offered Yahoo! (YHOO) $8 billion in cash for 16% of the company and $1 billion to buy its search operations.

According to Reuters, "The proposal also included a revenue-sharing partnership that would have delivered $1 billion a year in additional operating income to Yahoo due in part to a three-year guarantee of better rates for advertisements tied to its search results."

A Yahoo! partnership with Google (GOOG) does not appear nearly so good, although Yahoo! has opted to take it. The world’s largest search company may add $500 million to the operating income at Yahoo!.

The portal’s board screwed the company’s shareholders again.

Douglas A. McIntyre

Posted on: June 14, 2008 – 5:19 am in Internet, , ,

Microsoft (MSFT) Becomes The Victim, Opens “Save The Whales” Fund

Now that Microsoft (MSFT) can’t have Yahoo! (YHOO), it does not want anyone else to have the portal. Yahoo! has gone to search rival Google (GOOG) to sell some of its advertising inventory. Google can get a better price for it and that could add $500 million per year to Yahoo!’s bottom line over time.

The Microsoft argument is simple, and convincing. According to Reuters, the software company said in an e-mail that the Google-Yahoo agreement would "limit choices for advertisers and publishers" and "destroy a competitive alternative."

The comment has the benefit of being true. Google and Yahoo! are the No. 1 and No. 2 search engines in the US, and together control about 85% of the market. Yahoo! has been clever, saying that it will only offer some of its inventory to Google. That give the deal a illusion of being "non exclusive". But, the relationship is likely to strengthen over time. Yahoo! can save several hundred million dollars by killing R&D on its own search technology.

The people who run the "Save The Whales" non-profit are starting up a fund for Microsoft.

Douglas A. McIntyre

Posted on: June 14, 2008 – 5:10 am in Mergers and Buy Outs, , ,

Time Warner (TWX) Kills Weather Channel Talks

Buying The Weather Channel and Weather.com got a bit rich for Time Warner (TWX). The company pulled out of the negotiations, leaving GE’s (GE) NBCU operation and its partners as potential future owners of the Landmark Communications properties.

It is a shame. Weather.com is one of the most visited websites in the US, ranking No. 15 among all US sites with 35 million unique visitors according to comScore. It would have made a strong fit with Time Warner’s CNN.com and AOL.com divisions. The Weather Channel, one of the most widely distributed cable channels would have matched up well with Turner and CNN. TWX could probably have even cut costs.

But, according to rumors, Landmark wants $3.5 billion for the weather properties. With its stock near a 52-week low, and generally under-performing other large media shares, Time Warner does not want to be seen as making any significant errors. It has over $9 billion coming in from its spin-off of Time Warner Cable (TWC).

It is a shame.

Time Warner only has a few highly attractive assets among its divisions. Its cable network operations are among those. According to the company’s SEC filings. the TV content division is among the strongest and fastest growing at the conglomerate.

TWX has been burned by M&A before, with the AOL merge topping that list. But, being gun shy only hurts the company’s chances of improving its lot.

Douglas A. McIntyre

Posted on: June 14, 2008 – 5:00 am in Uncategorized, , ,