Daily Archives: June 19, 2008

The 52-Week Low Club (SIRI)(XMSR)(TMA)(HUN)(CVH)(UNH)(MOT)

Thornburg Mortgage (TMA) Worries about going out of business. Down to $.22 from 52-week high of $27.82.

Huntsman (HUN) Apollo walks on buy-out deal. Falls to $12.15 from 52-week high of $28.40.

Coventry Health Care (CVH) Cuts guidance. Sells off to $30.10 from 52-week high of $64.

Unitedhealth Group (UNH) Concerns about slowdow in the health insurance sector. Dives to $26.94 from 52-week high of $59.46.

Motorola (MOT) Competition keeps coming out with strong products. Falls to $7.61 from 52-week high of $19.68.

XM Satellite (XMSR) Goldman says merger with Sirius (SIRI) will not help company’s prospects. Plunges to $7.95 from 52-week high of $16.44.

Sirius (SIRI) sells down to $1.97 from 52-week high of $3.94.

Douglas A. McIntyre

Posted on: June 19, 2008 – 2:55 pm in HI/LOW, , , , , , , , , , ,

Finally, An ETF For Ireland & The Irish Americans (NTRS, IQE)

Northern Trust Corp. (NASDAQ: NTRS) has announced that its Global Investments asset management arm of Northern Trust, has launched the first U.S. listed ETF tracking the ISEQ 20(TM) Index.  This is the leading investment benchmark index for investing in Irish companies.

NETS(TM) ISEQ 20(TM) Index Fund (Ireland) is now traded on the NYSE Arca under the ticker "IQE" and this allows US investors for the first time to invest in an ETF tracking the 20 Irish securities comprising the index.

The move is said to be the latest in a series of fifteen NETS(TM) ETF products launched by Northern Trust, designed to give investors exposure to some of the world’s best-recognized international equity markets via shares traded on U.S. exchanges.

So far this one has seen hardly a notice of its existence as it traded only 300 shares today as of 3:30 PM EST.  It may take a while for this one to get going, but it is very difficult for US investors to know what they are buying into when they try to invest in Ireland.

Jon C. Ogg
June 19, 2008

Posted on: June 19, 2008 – 2:37 pm in ETF, ,

Citigroup (C) Warning: Banks In Trouble Into 2009

Citigroup (C) came clean about what everyone with any sense already expected. Write-offs at the money center bank are not over.

According to The Wall Street Journal, the "bank will see a fresh round of write-downs from failing mortgage investments in the bank’s second-quarter results, and said credit costs from souring consumer loans "may continue to rise throughout the year."

After bottoming in March, a number of bank and brokerage stocks recovered as much as 20% into April and May. Several large financial company CEOs said that the worst of the crisis had passed.

The grim reality of the long-term situation has set in with raising mortgage defaults and a troubled consumer credit market. As bad news came out of UBS (UBS), Bank of America (BAC), Lehman (LEH), and AIG (AIG), stocks in the sector started to sell off and a number have hit new 52-week lows.

None of these stock will recover during 2008, and some may not move up for over a year. Wall St. doesn’t like all of the new surprises.

Douglas A. McIntyre

Posted on: June 19, 2008 – 2:17 pm in Banking, , , , ,

Speculative Oil & Gas Moves (SD, PINN)

Over at "VOLUME SPIKE" (vsinvestor.com) we were running some screens today and found two unusual option and stock movers worth noting today.  These two moves come from companies as different from each other as night and day, so besides them being in the same sector they are completely unrelated movers.  This was one of the oil & gas companies recently highlighted by none other than T. Boone Pickens when he was touting $150/barrel oil.

The first came in SandRidge Energy Inc. (NYSE: SD) with a highly unusual options volume trade in the SEP08 $80.00 CALLS.  That is more than any normal day’s implied volume by far if you look at the leverage of the contracts, and the stock has never traded at $80.00.  .

The second strange volume alert came in a much more speculative stock called Pinnacle Gas Resources, Inc. (NASDAQ: PINN).  It looks like traders are "speculating on speculators" as this was a thin volume stock that has been active the last two days.

Douglas A. McIntyre
June 19, 2008

Posted on: June 19, 2008 – 1:34 pm in HI/LOW, Oil & Gas, Options, ,

Google Keeps Drumming Yahoo! (GOOG, YHOO, MSFT, TWX, IACI)

Nielsen Online has a report out for MAY 2008 data on the top U.S. SEARCH PROVIDERS.  As a reminder, this is "US SEARCH" rather than global search.  But it shows that Google Inc. (NASDAQ: GOOG) is still killing Yahoo! Inc. (NASDAQ: YHOO).  This shows that total US search grew by 9.5% in May 2008 over May 2007.  A couple standout names were the large increase seen at Microsoft (NASDAQ: MSFT), followed by additional gains at IAC/InteractiveCorp. (NASDAQ: IACI) with its Ask.com, and lastly the drop seen at Time Warner Inc. (NYSE: TWX) for its AOL search unit.

Provider                          Searches(000)  Y/YChange MarketShare
ALL Search                        7,849,553         +9.5%       100.0%
Google Search (GOOG)      4,654,624        +15.4%        59.3%
Yahoo! Search (YHOO)       1,328,667        -13.8%        16.9%
MSN/Windows Live (MSFT) 1,043,848        +72.4%        13.3%
AOL Search (TWX)                322,454        -15.6%         4.1%
Ask.com Search (IACI)          168,568        +18.4%         2.1%

As a reminder, every single search measurement out there gives different levels of readings and frequently the data conflicts from source to source.

Jon Ogg
June 19, 2008

Posted on: June 19, 2008 – 12:48 pm in Internet, , , , ,

Pier 1 Shows It Doesn’t Deserve Cost Plus (PIR, CPWM)

Pier 1 Imports Inc. (NYSE: PIR) is seeing its stock butchered by more than 16% in the first 30 minutes of trading this morning and it has already surpassed its average daily trading volume.  The company’s losses did narrow from last year but fell short of estimates.  The loss was -$0.37 EPS on a 13% drop in revenues to about $310 million, while First Call forecasts were -$0.15 EPS on $338 million in revenues.  The company’s same store sales were -5.4% for the period on slow March and April traffic.

Pier One also noted that it sees a slight negative to slight positive for its same store sales.  It also said it expects a slight positive earnings for its fiscal 2009, with the caveat of holiday sales living up to the company’s expectations.  Wall Street isn’t a believer, at least it doesn’t seem that way since its own internal track record has been a poor one for some time.   

This should effectively kill its unsolicited proposed buyout offer chances for Cost Plus Inc. (NASDAQ: CPWM) coming under the Pier One umbrella.  If Pier One wants the company they are now likely going to have to come up with a cash component for the merger to where it is as close to a no-lose situation for Cost Plus shareholders.  The 0.6 shares of Pier 1 would barely be $3.05 per Cost Plus share based upon a $5.08 Pier One stock price.

This shouldn’t be interpreted that Cost Plus has done a great job or that it will do a great job.  Much of the issues that hurt Pier 1 are the same issues that hurt Cost Plus.  But shareholders over at Cost Plus are likely going to roll the dice rather than accept a take-under buyout after feeling this much pain.

Pier One shares were at north of $8.00 even in mid-May and shares dropped from $6.67 to $5.26 when it announced its unsolicited offer for Cost Plus.  Cost Plus shares are at $3.40 after today’s open.  Perhaps both companies need to hear the old saying "Physician, heal thyself."

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 19, 2008

Posted on: June 19, 2008 – 9:17 am in Earnings, Mergers and Buy Outs, Retail, ,

Motorola (MOT) Bludgeoned By Sprint (S) Samsung Phone

Wall St. is tearing into Motorola (MOT) today. The shares are down 5% to a new 52-week low at $8.14.

Part of the trouble is that Sprint (S) is launching a new smartphone from Samsung. The price point will be $129, which may not take much business from AT&T’s (T) new Apple (AAPL) 3G iPhone, but it could cut into Motorola sales.

It is one more tremendous weight on Motorola’s effort to shoe horn its way back into the handset marketplace. The Samsung phone comes to market at about the same time as new versions of the RIM (RIMM) Blackberry and the latest iPhone. Even Palm (PALM), nearly out of business itself, it offering a new low-cost handset.

It has just gotten too crowded for Motorola to turn itself around in the phone booth.

Douglas A. McIntyre

Posted on: June 19, 2008 – 9:10 am in Wireless, , , , , ,

Is Advanced Micro Devices Raising More Cash? (AMD)

Advanced Micro Devices, Inc. (NYSE: AMD) is far from having its woes behind it.  Shares have slid from over $7.80 just two days ago down to $7.25 shortly after the open today. 

There is speculation in the market that the Mubadala Development Company, funded by the government’s sovereign wealth fund of the Emirate of Abu Dhabi, will increase its investment in Advanced Micro Devices.  Until we get any confirmation or refuting notes, we’ll treat this as a rumor or hearsay for now.

The firm invested already infused AMD with a large chunk of change at the end of 2007, and this was an investment that did not go without criticism and did not go without controversy.  As of March 31, AMD had in excess of $1.75 Billion between its cash and equivalents and its total liabilities were listed as $8.57 Billion.

Many shareholders supposedly felt slighted that they were not given an opportunity to invest extra funds into the company.  If Hector Ruiz doesn’t want to irritate his shareholders that have stuck by the company for much longer than Abu Dhabi’s investment, perhaps he should consider an institutional rights offering to all of its larger shareholders.  It might not be a cure, but it might go without any extra controversy or criticism.

Whether or not the company even needs a portion of the amounts being tossed around is a subject that varies from source to source.  To us it seems like it isn’t exactly necessary right now if the company can gets its earnings and revenues anywhere close to where Ruiz projected…..  But after all, we are talking about AMD.

Jon C. Ogg
June 19, 2008

Posted on: June 19, 2008 – 8:45 am in Rumors, Secondary Offering, Semiconductor,

Goldman Sachs Murders Sirius & XM (SIRI, XMSR)

Goldman Sachs has been negative on Sirius Satellite Radio Holdings Inc. (NASDAQ: SIRI) and on XM Satellite Radio Holdings inc. (NASDAQ: XMSR) on a basis that is with or without the companies merging together.  Today’s call is whacking these shares.

The firm has slashed its 6-month price targets for XMSR to $6.50 from $11.50 and on SIRI shares to $1.75 from a prior $2.25 target.

Goldman Sachs has reiterated its SELL ratings and CONVICTION SELL LIST on both stocks and is cutting its 2009 estimates for the company.  On Sirius, the firm has a loss expectation of -$0.36 for 2008, but for 2009 it cut estimates from -$0.25 EPS down to -$0.26 EPS.  On Xm it has -$1.75 EPS for 2008, but for 2009 it has widened its estimates to -$1.26 EPS from -$1.20 EPS.

Shares are getting hit on this news today.  In pre-market trading Sirius shares are down some 7% at $2.26, and that is going to be a 52-week low under  the prior $2.36 low.  XM shares are down some 8% pre-market at $9.55, which is also under the $98.62 lows over the last year.

Jon C. Ogg
June 19, 2008

Posted on: June 19, 2008 – 8:17 am in Analyst Calls, Satellite, ,

Galiot Capital Sets IPO Terms (GTC)

Galiot Capital Corporation has filed with the SEC for its 16,666,666 shares of common stock in an IPO at $15.00 per share.  The company will trade on the New York Stock Exchange under the symbol ‘‘GTC’’.

The underwriting group is rather large.  Deutsche Bank Securities, Credit Suisse, and Morgan Stanley are listed as the lead underwriters.  Co-managers are listed as Banc of America, Keefe Bruyette & Woods, and BNP Paribas.

Galiot is a Maryland corporation will qualify as a REIT and will invest in residential mortgage-backed securities, the principal and interest on which are guaranteed by a U.S. Government agency or a U.S. Government-sponsored entity.  The company is externally managed and advised by Fischer Francis Trees & Watts, Inc., an investment adviser registered with the Securities and Exchange Commission and a wholly-owned subsidiary of Charter Atlantic Corporation, an indirect wholly-owned subsidiary of BNP Paribas.

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 19, 2008

Posted on: June 19, 2008 – 8:08 am in Financial Stocks, IPOs, REIT, ,

Goldman Sachs Lifts Oil Services Sector (APC, APA, CVX, COP, DVN, EOG, HES, PBR, SU)

We already noted how Goldman Sachs Group (NYSE: GS) has raised its average oil prices for the years ahead, but the firm has also raised its OIL SERVICES Sector ratings this morning to "Attractive" from "Neutral."  Below are just some of the "BUY-Rated" stocks covered in this call with significant raised estimates:

  • Anadarko Petroleum Corp. (NYSE: APC)
  • Apache Corp. (NYSE: APA)
  • Chevron Corp. (NYSE: CVX)
  • ConocoPhillips (NYSE: COP)
  • Devon Energy Corp. (NYSE: DVN)
  • EOG Resources Inc. (NYSE: EOG)
  • Hess Corp. (NYSE: HES)
  • Petroleo Brasileiro S.A. (NYSE: PBR)
  • Suncor Energy Inc. (NYSE: SU)

The firm believes that $100.00 oil is reality. and is raising price targets by 12% on average with new price targets to reflect the high-end of its trading ranges with what it now sees as a 20% average upside for the Goldman Sachs "Buy-rated" stocks.

The firm had been recommending a strategy of "buy on pullbacks" but it notes that the pullbacks have been shorter and smaller than expected.   The firm believes that the stocks could trade 5% to 10% lower in a correction scenario as of now, but also says it would view any weakness as temporary and would use it as a buying opportunity.

Jon C. Ogg
June 19, 2008

Posted on: June 19, 2008 – 7:40 am in Analyst Calls, Oil & Gas, , , , , , , , ,

Circuit City Earnings & News Sounds Like “Going It Alone” (CC)

Circuit City Stores Inc. (NYSE: CC) has reported earnings this morning but the company is also giving some language as though it might not be all that gung-ho on proceeding with the merger intentions.  For the last quarter ended May 31, the electronics retailer has posted a loss of -$1.00 EPS on $2.3011 Billion in revenues.  First Call had estimates at -$1.07 EPS and $2.37 Billion in revenues.

What is interesting is that while the company says it is "leading a process to explore strategic alternatives to enhance shareholder value," and it says that the review continues.  This also notes that the board of directors has not determined any course of action in that review. 

The company has also decided to suspend its dividend.

Furthermore, the company has filed a blank or open shelf registration to allow it to sell an unspecified amount of securities in stock, debt, warrants, and other securities to give the company "greater flexibility to respond to strategic opportunities as they arise."

This week we saw a drop over at Best Buy (NYSE: BBY) after it beat earnings and gave good guidance.  Here we have a mixed report and one that might not be the most friendly to future holders if the company keeps its "go it alone" strategy.  Philip Schoonover has done such a poor job of things that he is still one of our top CEO’s that need to go.  In fact, we think he needs to change his name to "Scoot Over."
Shares are indicated up 2% at $4.14 after a $4.05 close yesterday.  Its 52-week trading range is $3.44 to $16.27. 

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 19, 2008

Posted on: June 19, 2008 – 7:11 am in Consumer Electronics, Earnings, Retail,

Leap Wireless Tapping Capital Markets (LEAP)

Leap Wireless International Inc. (NASDAQ: LEAP) has a proposed $400 million offering of senior notes broken up int two groups of $200 million each this morning.  Both tranches are unregistered as 144A placements.

One tranche is a total of $200 million of unsecured senior notes due 2015 with interest at a rate to be determined at pricing and will be guaranteed on a senior unsecured basis by Leap Wireless International, Inc. and certain of its indirect subsidiaries.

The other tranche is a total of $200 million in convertible senior notes due 2014 with interest rate, conversion rate, and other terms to be determined by negotiations among Leap and the initial purchasers of the notes.

Net proceeds are earmarked for working capital and other general corporate purposes, including the build-out of new markets, the expansion of Leap’s footprint in its existing markets and the development of its broadband initiative.

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

As of yesterday’s close at $54.65, Leap has a market cap listed as $3.77 Billion before any implied dilution.

Jon C. Ogg
June 19, 2008

Posted on: June 19, 2008 – 6:53 am in Secondary Offering, Wireless,

Goldman Sachs Lifts Oil Targets (GS)

Goldman Sachs Group (NYSE: GS) has raised its Brent Crude average oil prices for the years ahead.  The firm has increased its price forecasts to reflect a continued tightening of global crude oil supply and demand fundamentals.  Here are the new price targets:

  • 2008 average raised to $117.40 from $108.00;
  • 2009 to 2010 will average $140.00 (from $110.00) in 2009 and 2010 will be the peak at $150.00 average;
  • 2011 average will slide back to an average of $140.00;
  • 2012 average appears to be all the way down to $85.00 (from $75.00).

Jon C. Ogg
June 19, 2008

Posted on: June 19, 2008 – 6:36 am in Analyst Calls, Oil & Gas, ,

Top 10 Pre-Market Analyst Calls (AIG, BARE, CWST, DNA, GILD, MHS, SLAB, TKLC, UBS, WCA)

These are ten of the analyst calls we are seeing early this Thursday morning in early bird pre-market trading hours:

  • American International Group (NYSE: AIG) raised to Buy at Citigroup.
  • Bare Escentuals (NASDAQ: BARE) Raised to Buy from Hold at Citigroup.
  • Casella Waste (NASDAQ: CWST) raised to Overweight at JPMorgan.
  • Genentech (NYSE: DNA) Started as Buy at Deutsche Bank.
  • Gilead (NASDAQ: GILD) Started as Buy at Deutsche Bank.
  • Medco Health Solutions (NYSE: MHS) Cut to Neutral from Buy at UBS.
  • Silicon Laboratories (NASDAQ: SLAB) Raised to Outperform from Market Perform at FBR.
  • Tekelec (NASDAQ: TKLC) Cut to Equal-weight from Overweight at Lehman Brothers.
  • UBS AG (NYSE: UBS) cut to Neutral at Credit Suisse.
  • WCA Waste (NYSE: WCA) Cut To Underweight From Neutral By JP Morgan.

Jon C. Ogg
June 19, 2008

Posted on: June 19, 2008 – 6:11 am in Analyst Calls, , , , , , , , , ,

More Oil Woes In Nigeria

Shell has shut some of its oil production in Nigeria.

According to CNN Money "it shut down production from an offshore oil field that produces about 200,000 barrels per day after the most powerful militant group in Nigeria launched an attack on an installation."

Crude prices should be up again today.

Douglas A. McIntyre

Posted on: June 19, 2008 – 5:40 am in Oil & Gas

Thornburg (TMA) Problems Raise CountryWide (CFC) Issues

Thornburg Mortgage (TMA) may not make it. The mortgage lender once has a market cap of well over $5 billion. Its shares are down to $.65 and its market value is only about $100 million. TMA raised $1.35 billion, but keeping its stock price up has proved difficult due to concerns about the housing market and more home loan defaults.

Thornburg made most of its loans to people who were well off. That makes its trouble all the more peculiar. It also raises the issue of whether other companies in the industry still have more profound problems ahead of them. Since the largest company in the sector is CountryWide (CFC), the Thornburg collapse may have lessons beyond its own walls.

CountryWide still trades above $4. That is down from a 52-week high of almost $39, but the shares have not fallen as far as TMA’s. Perhaps that is because Bank of America (BAC) is buying it.

Wall St. continues to question the wisdom the BAC move. That may have helped drive the shares of the money center bank to a 52-week low of $28, about half of its high for the period.

CountryWide may actually be worse off than Thornburg. It is more squarely in the troubled subprime market. It faces more large write-offs on both home loans and home equity loans.

If CountryWide did not have BAC support, its shares could be well below $1. Without the promise of a "bail out" and with a slew of federal investigations, CFC could be facing the end of its days as well.

The smoke signals from TMA say Bank of America paid too much for CountryWide, no matter how hard the company tries to defend the transaction.

Douglas A. McIntyre

Posted on: June 19, 2008 – 5:35 am in Financial Stocks

Verizon (VZ) Ups Broadband Speed, But Who Will Know?

Verizon (VZ) is going to make its FiOS fiber-to-the-home product deliver even faster broadband speeds. It is hard to imagine that their customers will even know.

The new product will run at 50 Mbps. According to The Wall Street Journal, "a person could download a high-definition movie in 13 minutes."

But, how many people really want to do that.

The broadband connection speed war between cable and TV companies is escalating. That means that the firms will add billion of dollars to capex to "keep up with the Jones".

For most people, a fast connection allows them to watch video and get web pages loaded quickly. Receiving high-def films to watch on a PC screen is probably never going to be a big business.

But, the future is coming, so Verizon might as well dump money into the project in case anyone cares.

Douglas A. McIntyre

Posted on: June 19, 2008 – 5:16 am in Telecom,

Another Private Equity Fund Shafts A Buy-Out Target

The private equity dance always looks the same now. In 2006 or early 2007, when credit was plentiful and the stock market was up 100% a year, funds would offer buy-outs of public companies at huge premiums. As the credit markets fell apart, the private equity people would come up with excuses to walk on the deals. Often, the target companies felt they had no recourse and ran away like whipped dogs. Some challenged the matters in court.

Apollo Management, run by a former Drexel Burnham executive, an associate of the great Mike Milken, has decided to skip on a deal it set to buy Huntsman (HUN).

Apollo set the price for Huntsman at $6.5 billion. Now the fund says that Huntsman’s financial fortunes have gotten worse over the last several months. Because of rising commodities prices, that conclusion about Huntman’s numbers is largely true.

The regular exit route for buy-out firms from the deals which they set a year or more ago is based on their feeling that the deals were iron-clad when things were good, but mutable when times were tough.

Relativism in business is not new. What makes money is the beacon for what it right. The courts will decide the Huntsman case. If there is any justice, Apollo will be forced to keep its word. Public company shareholders can be suckers, so someone has to look out for their interests.

Douglas A. McIntyre

Posted on: June 19, 2008 – 5:00 am in Mergers and Buy Outs,

Detroit Ostrich Farm: GM (GM) Cuts Back SUV Design

Elvis has left the building but that does not seem to matter to GM. The company is cutting back on new designs for future SUVs, the same SUVs that no one will buy.

The Wall Street Journal writes that the largest car company in the US is looking at it whole product line.

GM’s stock fell below $15 yesterday.It has not been that low since the last days of the Arab Oil Embargo in 1974. Gas prices killed GM then, and, over 30 years later, it is happening again.

GM advocates would make the argument that the SUV was a perfect product for its time. Gas was cheap and trucks have very large profit margins. The counter to that argument is that GM is a large enough company so that it could have had a portfolio of products to prepare for the inevitable day when petrol was not $1.50 anymore. The company does support seven major brands.

More nimble firms like Honda (HMC) never let their global fleets be based largely on one bet, a bet that gas would always be plentiful. GM’s argument that it needed to make hay while the sun was shining worked until it didn’t.

Now, GM is faced with one of the greatest financial disasters in its history. It will need to raise more money and, in this credit environment, that will be very hard.

Douglas A. McIntyre

Posted on: June 19, 2008 – 4:43 am in Autos, ,