Daily Archives: June 18, 2008

Huntsman Merger Gets An Acid Bath (HUN)

If you thought that the mid-single digit billion dollar mergers were safe from being terminated, think again.  Huntsman Corp. (NYSE: HUN) is being destroyed in after-hours trading after Hexion Specialty Chemicals announced that it has filed suit in Delaware to exit its contractual obligations to acquire the company.

The Hexion-led investor group is seeking to terminate its rights in the proposed $10.6 Billion acquisition of Huntsman Corp.  Hexion has said in this suit filed that it believes that the capital structure agreed to by both Huntsman and by Hexion for the combined company is no longer viable.

The reasons noted are because of Huntsman’s increased net debt and its lower than expected earnings.  Hexion notes that both companies are individually solvent but it believes that the merger’s capital structure previously agreed to would render the combined company insolvent.

Hexion also said in its filing that it does not believe that the banks will provide the debt financing for the merger that was contemplated by their commitment letters. Hexion stated in its suit that, while it will continue to use its reasonable best efforts to close the transaction, which includes obtaining all necessary antitrust and regulatory approvals as required by the merger agreement, it does not believe that alternate financing will be available.

If you have been following this merger for very long you will know this deal looked on the rocks from the start.  The company traded as high as $28.00 after the deal came to light in 2007 and the stock was north of $25.00 on January 1, 2008.  It has steadily slid down to almost $20.00 before this merger was terminated.

Unfortunately this stock is down at $13.50 on heavy trading volume in after-hours trading.  Huntsman has been its own public entity since early in 2005.  The prior lows had been around $16.00 and the 52-week trading range was $18.70 to $28.40.  Kiss this one goodbye.

You can join our open email distribution list to hear about other mergers, IPO’s, secondary offerings, restructuring, and other special situations.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 5:01 pm in Mergers and Buy Outs,

Evergreen Solar Signs Major Green Contract (ESLR)

Evergreen Solar, Inc. (Nasdaq: ESLR) has rewarded its investors with the announcement that it has signed two new long-term sales contracts valued at approximately $600 million.  The agreements are with groSolar in the U.S. and with Wagner & Co Solartechnik GmbH in Germany.

These contracts extend through 2012 and this now brings Evergreen’s total contractual backlog to approximately $1.7 billion.  For a comparison on how large this is and what it adds, analysts from First Call are only looking for an entire 2008 revenue base of $118.75 million.

The solar panels for these two contracts and the two contracts previously announced in May will be manufactured at the company’s new Devens, Massachusetts facility, which is set to begin production in July.  These combined four deals now account for some 65% of the company’s expected 160MW of annual production capacity at Devens through 2013.

Evergreen Solar also has six other customer contracts with a current total backlog of approximately $850 million, which will primarily be supplied by EverQ, its German-based joint venture.

Evergreen closed up marginally at $10.24 today and shares are up over 10% at $11.35 in after-hours trading after the news.  Its market cap is $1.24 Billion before tonight’s after-hours gains. This pop and this interest should make this one of the more active alternative energy stocks Thursday.

This is one we we have reviewed in our weekly "10 Stocks Under $10" newsletter, where we have 3 other active picks on the list in alternative energy, green energy, or "less dirty" energy.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 4:05 pm in Alternative Energy,

When Defensive Stocks Fail Too (PEP, KO, BUD, TAP, KFT, CAG, CPB, HRL, MCD, MO, PG, CL, MRK, JNJ)

It used to be that DEFENSIVE STOCKS were the way to go during periods of uncertainty and during times of market sell-offs.  But now that isn’t even working out.  After we looked at our first line defensive stocks only a piss poor reading of 3 out of 14 were up on the day.  Sure the DJIA dipped under 12,000 briefly and closed down 131.24 at 12,029.06, and the overall trend of the market is bad and feels like it wants to go worse.  To make matters worse, one of the three that are up was up because it is a takeover play currently.

PepsiCo (PEP)                $65.06    -$0.81 (-1.23%)   
Coca-Cola (KO)               $53.16    -$0.80 (-1.48%)   
Anheuser-Busch (BUD)    $61.90    +$0.70 (+1.14%)   
Molson-Coors (TAP)         $55.53    +$0.70 (+1.28%)   
Kraft (KFT)                       $30.00    -$0.32 (-1.06%)   
ConAgra (CAG)                $22.01    -$0.44 (-1.96%)   
Campbell Soup (CPB)       $33.51    -$0.25 (-0.74%)   
Hormel (HRL)                   $35.75    -$0.41 (-1.13%)   
McDonalds (MCD)            $58.21    -$1.00 (-1.69%)   
A’tria (MO)                       $20.71    -$0.01 (-0.05%)   
P&G (PG)                        $65.00    -$0.80 (-1.22%)   
Colgate Palmolive (CL)      $71.71    -$0.68 (-0.94%)   
Merck (MRK)                    $34.86    +$0.18 (+0.52%)   
J&J (JNJ)                          $64.44    -$1.15 (-1.75%)   

In an environment where consumers are spending less and less it seems that even the safe haven stocks aren’t immune as they once were.  Every one of these operations is suffering from issues that weren’t present, or not as much, in 2007 and 2006 such as a weaker consumer, higher energy costs, higher materials costs, and higher delivery/transport cost.  At a time where the market wants to buy agricultural stocks, energy and alternative energy, and defense/war stocks, the traditional names just aren’t working.  Pity.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 3:38 pm in Defensive Stocks, , , , , , , , , , , , , ,

The 52-Week Low Club (RF)(STI)(TSO)(VSE)(FITB)

Regions Financial  (RF) Another beating for bank stocks. Down to $10.75 from 52-week high of $34.60.

SunTrust Banks (STI) More regional bank pain. Drops to $$35.95 from 52-week high of $90.90.

Tesoro Corporation (TSO) Margins being squeezed at oil refiners. Falls to $20.60 from 52-week high of $65.98.

Verasun Energy (VSE) Corn prices hit ethanol stocks. Down to $3.84 from 52-week high of $17.75.

Fifth Third Bancorp (FITB) Big dilution coming along with concerns about further write-offs. Sells down to $10.10 from $43.20 as 52-week high.

Douglas A. McIntyre

Posted on: June 18, 2008 – 2:48 pm in HI/LOW, , , , ,

Wind ETF Launch: First Trust ISE Global Wind Energy ETF (FAN)

There was an interesting ETF launched today on the NYSE Euronext as a Wind Energy ETF.  The First Trust ISE Global Wind Energy ETF (NYSE Arca: FAN) launched today.  This index has a criteria based upon an equity’s market capitalization, liquidity and weighting concentration requirements.  Most of the major players in this ETF are global in nature and many do not even trade in the U.S.

These are the top holdings  of the index as of today’s fact sheet:

  • Repower Systems                    10.34%
  • Vestas Wind Systems A/S        9.95%
  • Gamesa Corp Tecnologica SA   8.07%
  • Hansen Transmissions Int’l NV   6.03%
  • Theolia                                     5.25%
  • Japan Wind Dev. Co., Ltd           5.06%
  • Nordex AG                               4.61%
  • Babcock & Brown Wind Ptr Gr.  4.44%
  • Clipper Windpower Plc              3.20%
  • Gurit Holding AG                      2.64%

These are some of the facts of the total ETF as well:

  • Number of Stocks             52
  • Maximum Market Cap.     $299.22 Billion
  • Median Market Cap.         $1.53 Billion
  • Minimum Market Cap.      $203 Million
  • Price/Earnings                 25.36
  • Price/Book                      3.06
  • Price/Cash Flow              22.26
  • Price/Sales                     2.30

FAN is designed to track the performance of the ISE Global Wind Energy Index and will invest at least 90% of its assets in common stocks that comprise the Index or in depository receipts representing securities in the Index.

This one actually had a decent launch considering the lack of press and considering the ADR or foreign listed composition.  With less than 30 minutes to the close it has traded 356,000 shares.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 2:39 pm in Alternative Energy, ETF,

Dismal IPO Debuts: Britannia Bulk & RHI Entertainment (DWT, RHIE)

Today’s IPO activity resembles on of two things: 1) summer isn’t a good time to come pblic, or 2) teh IPO just stinks right now.  We had two separate IPO’s come to market in highly under-publicized debuts: Britannia Bulk Holdings Inc. (NYSE: DWT) and RHI Entertainment Inc. (NASDAQ: RHIE).  Both companies had poor IPO pricings and both companies saw their stocks list lower after opening for trading.

Britannia Bulk Holdings Inc. (NYSE: DWT) priced its 8.333 million share IPO at $15.00, and shares opened down around $14.25 and has traded around there most of the day.  Goldman Sachs and Banc of America were the leads on the deal, but the original price range was $17.00 to $19.00 at the filing. Brtitannia is a London-based international drybulk shipping and maritime logistics services provider with a focus on transporting drybulk commodities in and out of the Baltic region.

RHI Entertainment Inc. (NASDAQ: RHIE) priced its 13.5 million share IPO at $14.00 per share, which was also lower than its $16.00 to $18.00 announced price range from lead underwriters JPMorgan and Banc of America.  Shares are now down at $13.35 today with some 2.7 million shares having traded.  RHI develops, produces and distributes new made-for-TV movies, miniseries and other television programming worldwide, and is the leading provider of new long-form television content in the U.S.

This may have been the most quiet day this year for a day we had two IPO’s come to market.  It’s also a harbinger of what to expect for this summer.

You can join our open email distribution list to hear about other IPO’s, secondary offerings, private financings, mergers and acquisitions, restructurings, and more special situations.

If you think that the post-IPO market is totally dead, we actually found several IPO’s that are up more than 50% from their offering earlier in the year.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 12:48 pm in IPOs, ,

Open Letter To Michael Reed, CEO, Gatehouse Media (GHS)

Dear Mr. Reed,

It is time to eliminate the Gatehouse (GHS) dividend. With the company’s stock at a 52-week low, and down 86% from the period high, Wall St. does not believe that Gatehouse has the cash to pay its tremendous yield and make it debt service.

Most other public newspaper companies announced drops in advertising revenue of between 10% and 15% in May. Based on the last quarter, Gatehouse had razor thin operating margins, and debt service of over $24 million.

With long-term debt at $1.2 billion, Gatehouse may not make it even with the dividend gone. It certainly has almost no chance if the payments continue.

Douglas A. McIntyre

Posted on: June 18, 2008 – 12:00 pm in Old Media,

Bank Crisis Only 33% Over (C)(BAC)(UBS)

Wall St. almost always takes the public proclamations of hedge funds and short sellers with a grain of salt. But, some of the recent negative comments about Lehman Bros. may well have turned out to be true.

John Paulson, head of the hedge fund GAIM International and not a relative of the current Treasury Secretary, says that banking write-downs will hit $1.3 trillion. He sees the next year being worse for the financial system than the last year has been. Bloomberg quotes him as saying “We’re only about a third of the way through the writedowns." Paulson does think distressed securities are a good investment now, so he may be talking out of both sides of his hat.

If the projection is right, it would not be hard to imagine big money center banks getting hurt much worse as the year goes on. Citigroup (C), Bank of America (BAC), UBS (UBS), and several brokerages and insurers may have to seek out several billion dollars more capital each.

Most large cap financials are near 52-week lows. Paulson’s view of the world would almost certainly cause them to sell off more. Oppenheimer’s Meredith Whitney, the most quoted of bank analysts, has already said she feels the darkest days are still ahead.

Citigroup at $10? It was last there in 1995.

Douglas A. McIntyre

Posted on: June 18, 2008 – 11:45 am in Short Interest, , ,

Lindsay Sell-Off Hits Valmont Unusually Hard (LNN, VMI)

Lindsay Corporation (NYSE: LNN) is seeing a severe reaction to its earnings report this morning.  In fact, the fallout is hitting competitors rather hard as well.  We first noticed this one over in our screening at VOLUME SPIKE in unusual movers  to the downside and decided to look deeper here as this has been one of the agriculture plays and huge winners over the last year.

Lindsay’s revenues rose 54% to $143.6 million from $93.1 million for the year-ago period; and net earnings were $14.1 million or $1.15 EPS, compared with $7.5 million or $0.62 EPS in the prior year’s third quarter.  There were only two estimates but the estimates from First Call were at $1.22 EPS on $137.2 million.

As previously disclosed in an 8-K filing on May 5, 2008, a third quarter correction of previously recognized tax expense resulted in a reduction in income tax expense of approximately $1.1 million and a $0.09 increase to earnings per diluted share for the third quarter.  Shares are down over 17% at $103.11 today on about 6-times volume in not even two hours of trading.  Its 52-week trading range is $35.28 to $131.14.

The company noted that its entire irrigation equipment revenues rose by 60% to $120.6 million from $75.4 million in the prior fiscal year’s third quarter.  Its domestic irrigation revenues were up 46% and international rose 95% from last year’s quarter. Infrastructure revenues rose 30% to $23.0 million compared with $17.7 million in the prior year period.

One issue is that the company posted slightly lower gross margins on lower infrastructure margins resulting from an unfavorable product mix and higher input costs.  The company’s backlog was listed as $84.4 million, up from $30.0 million at May 31, 2007.

Lastly, the company noted that irrigation equipment demand and agriculture economic indicators continue to remain strong.  The company did note that it plans to continue growing internally and via acquisitions. 

As we noted at VOLUME SPIKE (vsinvestor.com) we saw a huge fallout in a competitor called Valmont Industries, Inc. (NYSE: VMI) with its shares down well over 10% on strong volume as well.  It also saw a large move over the last year, but not as much as it is more diversified in operations.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 10:29 am in Agriculture, Earnings, ,

GM (GM) Chapter 11 Odds Moving Up To 25-To-1

Last week, 24/7 Wall St. listed GM’s (GM) odds of filing Chapter 11 between now and the end of the year at 30 to 1.

Wall St. seems to think things are getting worse, especially as the cost of oil stays high and US employment levels are worsening.

Today, GM’s shares are off 6% to $14.77. They hit a similar level in 1974 at the end of the Arab Oil Embargo. With crude at current prices, the embargo might as well still be on.

Most of GM’s cost cutting is behind it. The period when it could drop several billion dollars of expenses out of North America ended last year.

Big problem. No solutions. New odds, 25-to-1

Douglas A. McIntyre

Posted on: June 18, 2008 – 9:06 am in Autos,

AMR Fuel & Cash Guidance of Little Help (AMR)

AMR Corp. (NYSE: AMR) has come out with many projections today in a filing.  The company is out at the Merrill Lynch Global Transportation Conference.

Second quarter mainline unit revenue is expected to increase between 6.0% and 7.0% year over year, with second quarter consolidated unit revenue expected to increase between 5.9% and 6.9%.  AMR noted that its Cargo and other revenue is anticipated to increase relative to second quarter 2007 at a slightly greater rate than unit revenue.  AMR expects cash and short-term investment balance at the end of the second quarter of approximately $5.0 billion, including approximately $426 million in restricted cash and short-term investments.

Fuel Hedge Position:

  • Q2-2008: Hedged on approximately 36% of consumption at an average cap of $70/bbl WTI Crude ($2.38/gal. jet fuel equivalent).
  • FY-2008: Hedged on approximately 33% of consumption at an average cap of $78/bbl WTI Crude ($2.55/gal. jet fuel equivalent).

What is interesting is that the company is forecasting its fuel costs ahead as well as its consumption of fuel.  The company gave April actual fuel costs of $2.93/gallon on 224.6 million gallons and May at $3.19/gallon on 261.1 million gallons.  For June it is forecasting a cost of $3.46/gallon for 257 million gallons; and that brings its net Q2 cost average to $3.20/gallon for 762.7 million gallons.  As far as fiscal 2008, AMR is forecasting $3.38/gallon on average with a total consumption of $3.0037 Billion gallons.  In short, the company is telling you that it sees its fuel costs being $10.15 Billion for all of 2008 based upon the current environment and based upon what amount it has been able to hedge.

The head of investor relations was not available for comment as he is in New York for the Merrill Lynch Global Transportation Conference.  The good news is that this cash balance does look a tad better than when we tallied up the cash burn rates over the last two weeks. The key word is the "tad" part.  This unfortunately doesn’t change the odds in the current environment that AMR or other airlines will face that Chapter 11 late in Q4-2008 or early in 2009. 

We noted again in our "10 Stocks Under $10" on may 27 that AMR may not be able to avoid Chapter 11.  As a reminder, that doesn’t mean a grounding and implosion.  But unless fuel prices change drastically this may become self-fulfilling as forward fuel hedges are just too expensive and would just further bite into most carriers’ cash balances (including AMR).

The current environment is actually rather simple when you remove the emotions out of the equation.  Airline ticket prices have to rise even more than they have and they have to be able to nickel and dime you every step of the way.  Forget the blankets and pillows, forget the peanuts, forget the freebies, expect to pay more….. and don’t count on any comforts.

If you think cash is tight right now, these carriers better all be happy as hell that the Dreamliner has faced delay after delay.

Wall Street isn’t exactly giving this a ringing endorsement as shares are down 2% right after the open at $5.59.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 8:38 am in Airlines, Transports,

Record Industry Dying, Digital Thriving: No News Here

PricewaterhouseCoopers released it annual media forecast, and perhaps they should have saved their money. Anyone could have guessed the results.

According to Reuters, the report says "advertising tied to the burgeoning interest in watching videos on the Internet and on devices, such as Apple Inc’s iPod, will account for 24 percent of growth in the sector and is projected to grow fastest at a compound annual growth rate of 19.5 percent to 2012."

Global television revenue should be fine.

The music industry is dead.

PwC should stick to the accounting business.

Douglas A. McIntyre

Posted on: June 18, 2008 – 8:11 am in Media

Panera Mixed Guidance Scored A Win (PNRA)

Panera Bread Company (NASDAQ: PNRA) is issuing some mixed guidance this morning, although shares are reacting favorably to the news.  The company is increasing its second quarter 2008 earnings per diluted share target to $0.48 to $0.50.  Its prior guidance was $0.40 to $0.44, and First Call had estimates at $0.42 EPS. The increase is from same stores sales growth of 6.1% to 6.4% rather than a previously targeted range of 5% to 6%.  It is also seeing a better than expected margin improvement on higher growth in gross profit per transaction.

This isn’t universal though.  Panera also noted that the continuing rise in gas prices will generate an incremental $0.02 to $0.03 negative impact on earnings per share for the second half of 2008, which it will update in its earnings report to be released on July 22, 2008.

It has employed some hedging strategies, although only for a limited time period.  Panera has locked in approximately 95% of its fiscal first and second quarter 2009 wheat requirements at a total cost of approximately $10.00 per bushel versus the approximately $15.00 per bushel paid for the same period in 2008. Panera HAS NOT locked its requirements for the third and fourth fiscal quarters of 2009, as it noted that suppliers are not offering commitments on basis for that time period. It does expect to benefit from the year-over-year decrease in wheat costs in 2009, but also notes that part of that benefit will be offset by higher commodity costs in proteins, dairy, packaging, and the increasing cost of gasoline.

Shares closed at $45.46 yesterday and shares are up over 7% at $48.94 in pre-market trading with 45 minutes to the open.  The 52-week trading range is $30.60 to $53.45.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 7:51 am in Earnings, Food,

New York Times (NYT) Revenue Down, Internet Weak

May ad revenue for The New York Times Company (NYT) was off almost 13%. The company’s properties in Boston, including the Globe had a 17.7% advertising fall-off.

Internet revenue for the newspapers grew slower than the industry, increasing. 14.2%

Ad sales at the company’s About.com online division was up 13.7%.

Online sales for the company are not running at a rate to come close to covering for falling print revenue

Douglas A. McIntyre

Posted on: June 18, 2008 – 7:50 am in Old Media,

FedEx Pretends The World Is A Vacuum (FDX, UPS)

The original headlines are showing the huge losses at FedEx Corp. (NYSE: FDX), but this is actually because of charges over at Kinko’s as its reverts to the full FedEx center name and restructuring there.  The bad news is that the news isn’t that hot elsewhere and the company is making its forecasts as though today is as bad as it gets.

The company’s loss was $0.78 after items, and on a non-GAAP basis the company posted $1.45 EPS on revenues of $9.87 Billion.  First Call was $1.47 EPS on $9.6 Billion in revenues.  Here is the outlook: FedEx is looking for $0.80 to $1.00 EPS for the coming Q1-2009 and it is targeting fiscal 2009 at $4.75 to $5.25 EPS.  First Call has next quarter estimates of $1.27 EPS and fiscal May-2009 at $5.84.

This forward guidance accounts for the high fuel price environment and the related impact on fuel surcharges, which the company says "are reducing demand for FedEx services and impacting yield across its transportation segments."  But as before, this projection ASSUMES NO ADDITIONAL INCREASES TO CURRENT FUEL PRICES AND ASSUMES NO ADDITIONAL WEAKENING IN THE ECONOMY. 

Unfortunately for the company, we don’t live in a vacuum.  This is also the first time that the company is noting a real reduction in demand and that is a good indication that this translates to lack of any pricing power and a lack of ability to pass on the higher costs of doing business.  It is really hard to imagine that this was going to be much different based on the company’s history.  Either way, Wall Street is greeting the company with a resounding thud this morning.

Shares closed at $84.33 yesterday and they are trading down at $80.45 in pre-market trading at 8:15 AM EST.  The 52-week trading range is $80.00 to $119.10.

This is also being viewed as a negative for United Parcel Service, Inc. (NYSE: UPS) as its shares are down over 3% in pre-market trading close to $65.00. Its prior 52-week low is also close at $64.01.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 7:23 am in Earnings, Earnings Warning, Transports, ,

Trouble At Morgan Stanley (MS) With Net Losses Of $436 Million In Mortgage Proprietary Trading

Wall St. is selling off Morgan Stanley (MS) before the open on weak earnings. Shares are down over 3%

MS reported income from continuing operations for the second quarter ended May 31, 2008 of $1.026 billion, or $0.95 per diluted share, compared with $2.363 billion, or $2.24 per diluted share, in the second quarter of last year.

Net revenues were $6.5 billion, 38 percent below last year’s second quarter. Non-interest expenses of $5.1 billion, including severance expense of approximately $245 million related to staff reductions.

Equity sales and trading net revenues of $2.1 billion decreased 11 percent from last year’s second quarter

Fixed income sales and trading net revenues were $414 million, down 85 percent from last year’s second quarter primarily reflecting lower revenues in interest rate, credit & currency products and commodities, and net losses of $436 million in mortgage proprietary trading.

Investment banking delivered revenues of $875 million, down 49 percent from last year’s second quarter.

Listen to the earnings call here.

Douglas A. McIntyre

Posted on: June 18, 2008 – 7:12 am in Earnings Warning,

Hewlett-Packard & VMware Expand Virtualization Pacts (HPQ, VMW)

Hewlett-Packard (NYSE:HPQ) is expanding its strategic collaboration in virtualization with VMware (NYSE: VMW) to introduce new integrated software offerings.  The aim here is to more easily assist customers to seamlessly automate the management of each operating system and various programs across both physical and virtual environments.

HP Business Service Management will allow for the monitoring of physical and virtual environments and products will include HP Business Availability Center, HP Operations Center and HP Network Management Center.  HP Discovery & Dependency Mapping and HP Universal CMDB will allow discovery of virtualized environments, accurate tracking, and reporting changes.  HP Business Service Automation will allow change processes across virtual and physical environments in HP Server Automation Center, HP Client Automation, and HP Operations Orchestration.

Software bundles have been made available to combine the VMware Infrastructure 3 suite and automation products with HP Insight Control Environment to offer customers seamless physical and virtual platform management.

HP has also announced that its VMware Authorized Training Center is the first center to train more than 10,000 students on VMware certifying courses required for the VMware Certified Professional exam.

VMware has already struck many deals with PC makers and with IT companies for virtualization.  Now you can expect the development environments of each to expand from here.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 6:59 am in Software, ,

Top 10 Pre-Market Analyst Calls (ASMI, BWA, CCL, RCL, EMC, SSP, MWA, NSM, NST, SCG, WBMD)

These are ten of the analyst calls we are focusing on early this Wednesday morning in pre-market trading:

  • ASM Intl NV (NASDAQ: ASMI) raised to Buy at Jefferies.
  • BorgWarner (NYSE: BWA) Raised to Overweight from Equalweight at Lehman.
  • Carnival (NYSE: CCL) and Royal Caribbean (RCL) were both Downgraded to Hold from Buy at ABN AMRO.
  • EMC Corp (NYSE: EMC) cut to Neutral at Bernstein.
  • EW Scripps (NYSE: SSP) raised to Outperform at Bear Stearns.
  • Mueller Water Products (NYSE: MWA) Raised to Outperform from Neutral at Baird.
  • National Semi (NYSE: NSM) raised to Buy at Deutsche Bank.
  • NStar (NYSE: NST) Cut to Sell from Neutral at Goldman Sachs.
  • Scana Corp. (NYSE: SCG) Cut to Sell from Neutral at Goldman Sachs.
  • WebMD Health (NASDAQ: WBMD) Cut to Sell from Neutral at Goldman Sachs.

Jon C. Ogg
June 18, 2008

Posted on: June 18, 2008 – 6:37 am in Analyst Calls, , , , , , , , , , ,

The 24/7 Wall St. Ten Worst Managed Companies In America (JAVA)(SHLD)(BSX)(SBUX)(S)(CC)(MOT)(AMD)(AIG)(PFE)

With the trading year almost half over and results from the first quarter out, 24/7 Wall St. has created the latest installment of its Ten Worst Managed Companies In America list.

This analysis is based on: 1) one year and five year stock performance relative to the major indexes and other companies in the industry, 2) the company’s position in its industry both now and over the last five years, 3) whether management made identifiable and critical decisions which hurt the company, 4) a change in the company’s relative market strength compared to its competition, and 5) whether the company could have identified mistakes and changed course quickly enough to avoid a catastrophe.

Some readers will think it is not fair to include companies which have had a recent change of management. While it may be true that a new CEO gets a "honeymoon", if his early, significant decisions do not create a substantial change in the company’s fortunes there is little reason to hope for later improvement.

Read More »

Posted on: June 18, 2008 – 5:51 am in Management Change, , , , , , , , , , , , , , , , , , , , , ,

Apple (AAPL) iPhone Sales May Double, As Mac Cruises

Apple’s (AAPL) stock price may just keep going up. New evidence indicates that, while iPod sales growth is slowing, Mac and iPhone sales could more than make up for that difference.

One brokerage counted heads and found that global iPhone sales could double next year. According to Reuters, "Morgan Stanley expects 27 million iPhones to be sold in calendar year 2009 with an average revenue of $550 per unit". Because Apple is allowing carriers to underwrite the cost of the phone for subscribers and with the new 3G versions of the handset coming to market, the analysis has the benefit of being believable.

Over at Lehman, research experts report that Mac sales were probably up 50% in May. That means Apple is getting its machines off the shelf at a better rate than HP (HPQ) or Dell (DELL).

Most of this adds up to a fiscal year, starting in October, in which Apple could once again defy all of the market’s logic about consumer electronics and PC penetration. It also breaks the business rule of thump that a company cannot have hit after hit without a number of failures in between.

If Apple reaches $300 a share toward the end of the year, who would be surprised?

Douglas A. McIntyre

Posted on: June 18, 2008 – 5:02 am in Consumer Electronics, , ,