11 – August – 2008 – 24/7 Wall St.

Daily Archives: August 11, 2008

Short Sellers: Split Decision On Financials, And Bailing Out Of Tech (WM)(WFC)(WB)(BAC)(JPM)(MER)(FRE)(FNM)(MSFT)(QCOM)(DELL)(BRCM)(KFT)(GM)(AMR)

Shorts sellers suffered from a lack of conviction on the direction of financial stocks in the period that ended July 31. They were clear that betting against tech was no longer a good idea.

While the short interest in Washington Mutual (WM) rose 25% to 341.1 million shares and Wachovia (WB) and Wells Fargo (WFC) were both up about 7%, the short position in Bank of America (BAC) dropped 9% to 125 million. Shares short in Merrill Lynch (MER) fell 14% to 54.9 million and dropped 8 million to 48.9 million in JP Morgan (JPM).

Posted on: August 11, 2008 – 10:00 pm in Short Interest, AMR, BAC, BRCM, FNM, FRE, GM, INTC, JPM, KFT, MER, MSFT, QCOM, WB, WFC, WM, YHOO

Blue Chip Economists Too Optimistic, Again

Economists think that growth of the US GDP will continue to slow into the second half of the year and then into 2009. Their opinions are too upbeat.

The monthly poll by Blue Chip Economic Indicators says that those surveyed expect U.S. gross domestic product to grow at a 1.2 percent annualized rate in the third quarter, down 0.1 percentage point from the consensus July forecast.

Based on the fall-off in consumer spending a month after tax-payers received tax rebate checks, it is hard to imagine that things will be that good.

Posted on: August 11, 2008 – 9:27 pm in Economy

JP Morgan (JPM) Balance Sheet Takes Another Haircut

Every month, Wall St. hopes that bank write-downs will slow or stop and every month matters seem to get worse.

It looks like July will turn out to be no exception as a deteriorating housing market and faltering credit environment continue to damage bank balance sheets.

Posted on: August 11, 2008 – 9:15 pm in Banking, JPM

Cuomo Crushes Morgan Stanley (MS)

Morgan Stanley (MS) thought it could pull a "monkey see, monkey do" act with NY State Attorney General Andrew Cuomo. The investment house offered to buy back $4.5 billion in auction-rate securities using much the same system that Merrill Lynch (MER), Citigroup (C), and UBS (UBS) used to settle their differences with the government.

Cuomo would have none of it.

Posted on: August 11, 2008 – 9:05 pm in Brokerage Firms, C, MER, MS, UBS

Vegas Odds: Another Large Financial Firm Will Fail (LEH)(WB)(WM)

Bear Stearns was not the end of it. Institutional investors think at least one more large firm will fail, probably over the next six months. Although those surveyed did not name a company, at this point those mentioned most frequently in the press are Lehman (LEH), Washington Mutual (WM) and Wachovia (WB)

Posted on: August 11, 2008 – 8:51 pm in Banking, Leh, WB, WM

Comments From Capstone Turbine’s Q&A and Conference Call (CPST)

After the Capstone Turbine Corp. (NASDAQ: CPST) earnings report, we listened to the conference call and the question and answer session from analysts to get a better handle on the quarter and what is out in front of it on the calendar. Below are some excerpts from the analysts and from the company (listed only as company to avoid which officer was saying what). As a reminder, these are comments and a synopsis or paraphrase rather than direct quotes on individual models and exact metrics. Also, keep in mind that comments on the conference call were sometimes interrupted or not entirely heard in entirety.

Posted on: August 11, 2008 – 4:57 pm in Alternative Energy, Earnings, CPST

Capstone Turbine Results A Coin Toss On The Surface (CPST)

Capstone Turbine Corporation (NASDAQ:CPST) has posted its quarterly results, and traders on Wall Street are somehwat mixed on the data. If traders focus merely on the results in the quarter that went to the top-line and bottom line, then they can take it cautiously or negative. If traders are using the metric of backlog to judge future revenues, then they have reason to cheer.

Posted on: August 11, 2008 – 3:59 pm in Alternative Energy, Earnings, CPST

Cuomo Goes After Wachovia (WB)

Wb_2 NY Attorney General Andrew Cuomo wants blood from the banks that marketed auction-rate securities but have not made settlements with him. In his mind, Wachovia (WB), Morgan Stanley (MS), and JP Morgan (JPM) stand at the top of the list.

According to the AP, "Cuomo sent letters to JPMorgan, Morgan Stanley and Wachovia telling them that his office is reviewing the banks’ behavior in the sale of auction-rate securities."

Posted on: August 11, 2008 – 3:14 pm in Brokerage Firms, BAC, JPM, MS

The 52-Week Low Club 8/11/2008 (SIRF)(CDE)(AU)(BWTR)

Coeur d’Alene Mines (CDE) Faces bad earnings and falling metals prices. Drops to $1.69 from 52-week high of $5.18.

Anglogold Ashanti (AU) Metals stocks down. Slips to $25.68 against 52-week high of $51.35.

Basin Water (BWTR) Delays results and audit committee begins investigation. Falls to $1.29 from 52-week high of $13.42.

SiRF Technology (SIRF) Loses patent ruling against Broadcom (BRCM) Drops to $2.15 from 52-week high of $30.61.

Douglas A. McIntyre

Posted on: August 11, 2008 – 2:47 pm in HI/LOW, AU, BWTR, CDE, SIRF

Toyota (TM): Exporting From America? (GM)(F)

Batmobile512_2 It is a Category 5 irony that Toyota (TM) may be faced with exporting cars it makes in the US to other countries. It initially conquered the small car market in the America by importing vehicles made inexpensively in Japan.

But, with bloated inventories of SUVs and pick-ups leading to idle plant capacity, Toyota may be sending cars overseas.

Posted on: August 11, 2008 – 1:49 pm in Autos, F, GM, TM

Does It Matter If Content Is Still King (TWX)(GOOG)??

Whenever analysts say "content is king," people often visualize Mel Brooks in "History of the World Part 1" shouting "it’s good to be the king." A more accurate picture is Shakespeare’s tragic "King Lear" – at least that’s the monarch that comes to mind when I think of Time Warner.

The world’s largest media conglomerate lives in confusing times. On the one hand, it can still make tens of millions at the box office from its latest installment in the Batman franchise "The Dark Knight." At the same time, it is waging a battle against Google and Wall Street to prove it can still deliver the goods as more content heads to the Internet.

Posted on: August 11, 2008 – 12:58 pm in Media, GOOG, TWX

Capstone Turbine Investors Brace For Earnings (CPST)

Capstone Turbine Corp. (NASDAQ: CPST) is set to report earnings after the close today. Once again we caution that with many analysts new in covering this stock and with the size of the company that an steadfast or firm earnings estimates should be thought of as a rough guide rather than a formal map or yardstick.

First Call has estimates at -$0.05 non-GAAP EPS and revenues at $9.73M. The company isn’t big on formal guidance, but estimates for next quarter are -$0.05 EPS and $11.76M revenues. Fiscal March-2009 estimates are -$0.15 EPS on $64.45M revenues. There are other key metrics below that are going to matter far more than exact earnings numbers.

Posted on: August 11, 2008 – 11:28 am in Alternative Energy, Earnings, CPST

24/7 Wall St. Day Trading Alerts (MSFT)(SIRI)

Several stocks made big moves today and substantial moves in volume.

Included in equity and options action were Sirius (SIRI) and Microsoft (MSFT)

Posted on: August 11, 2008 – 10:25 am in Cult Stock, MSFT, SIRI

RIM (RIMM) Gains Big Market Share In US

Mot Motorola (MOT) kept its lead in US market share by holding 25.8% of the country’s cellular phone business. That was hardly the big story.

Research-In-Motion (RIMM), maker of the Blackberry, was the significant winner in the second quarter. According to Reuters, "BlackBerry cornered 10 percent of U.S. cell phone sales in the second quarter in a market that grew more than 5 percent despite economic concerns, Strategy Analytics said on Monday."

Posted on: August 11, 2008 – 9:45 am in Consumer Electronics, AAPL, MOT, NOK, RIMM

Bargain Shoppers Driving TJX In More Ways Than One (TJX)

The soft economy is actually driving some retail winners, and it isn’t really the old analogy of just the wealthy doing well. The TJX Companies, Inc. (NYSE: TJX) is putting in new all-time highs this morning. Before today, shares of TJX had seen highs of $36.95, yet shares are trading north of $37.00 and the prior 52-week trading range had been $25.49 to $36.95.

Posted on: August 11, 2008 – 9:17 am in Apparel, HI/LOW, Retail, TJX

24/7 Wall St. Most Overpaid CEO Of The Day: Basin Water (BWTR) CEO Michael Stark

Angrybear_2

Basin Water (BWTR) shares are off over 50% to $1.78 on heavy volume.

Basin Water said that the Audit Committee of its Board of Directors is conducting a review of the Company’s accounting for certain specific transactions, and that the Audit Committee has retained independent legal counsel and accountants to assist in the review. The Company has delayed the filing of its Form 10-Q pending the completion of the Audit Committee’s review.

Posted on: August 11, 2008 – 9:14 am in Corporate Governance, BWTR

Coal is Hot, Ethanol is Not (PEIX, NRP)

Pacific Ethanol (NASDAQ:PEIX) led off its second quarter financial report with higher sales number. Unfortunately, the company also had to report earnings, or the lack of earnings. For the quarter, Pacific reported a net loss of $8.3 million (-$0.23 EPS). That was nearly double analysts’ average estimate of a -$0.12 EPS loss. Even the net sales figure of $198 million (up 74% year-over-year) fell short of estimates of $206.16 million. Sales volume and average sales price both increased. So what happened?

Posted on: August 11, 2008 – 9:01 am in Alternative Energy, Commodities, Earnings, Oil & Gas, NRP, PEIX

Can Small Businesses Escape From The Auction-Rate Securities Mess?

There has been a great deal of talk about how the New York State Attorney General and the SEC has done companies and individual investors a service by getting Merrill Lynch (MER), Citigroup (C) and UBS (UBS) to buy-back nearly $40 billion in auction-rate securities. They were marketed as "cash equivalents" with good yields, but when banks decided it was too risky to make a market in the securities, they could not be sold.

Posted on: August 11, 2008 – 7:29 am in Law, C, MER, MS, UBS, WB

JDA & i2: Supply Chain Consolidation Continues (JDAS, ITWO)

An announcement came early this morning that JDA Software Group Inc. (NASDAQ: JDAS) was acquiring i2 Technologies Inc. (NASDAQ: ITWO). The companies have signed a definitive merger pact for approximately $346 million in cash. For the common stock, this translates to $14.86 per share in cash.

Posted on: August 11, 2008 – 7:08 am in Mergers and Buy Outs, Software, ITWO, JDAS

The Government Helps Small Business, But A Very Little

The federal government decided to give small businesses a leg up. It is simply a token gesture and its likely to protect only a very small number of companies from the economic downturn.

A representative from the Small Business Administration said "Effective Aug. 1, the new standard allows small businesses with a net worth of $8.5 million or less and a net income of $3 million or less to qualify for the program."

Posted on: August 11, 2008 – 6:55 am in Economy

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