Daily Archives: September 22, 2008

Oil Never Left Us, Crude To $150

Tx00338coilwellgusherodessatexasp_2The titanic global recession and anxiety about the government’s failure to quickly fix the credit crisis pushed the price of oil up higher than it has been for months. High gas prices and slow growth in emerging countries decreased the demand for oil. Politicians said it was okay to drill off the coasts of Santa Barbara and Manhattan. The Brazilians found more crude reserves in deep water offshore than Venezuela or Russia have underground.

Oil prices had been volatile for so long that investors grew tired of it and chose to turn to something else. Mortgage-backed paper seemed like a good place to sweat out the future though no one understood the danger they posed. That made credit a perfect target for investor worry and government action.

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Posted on: September 22, 2008 – 3:28 pm in Oil & Gas

3Com Yields Another Rabbit (COMS)

3com_logo_23Com Corporation (NASDAQ: COMS) posted earnings of $0.11 non-GAAP EPS on revenue of $342.6 million.   First Call estimates were $0.06 EPS on $337.12 million in revenue.  While it had already raised guidance in early August, these resuls were above the raised targets.  3Com generated $39.3 million in cash from operations. The company’s cash and cash equivalents as of August 29 were $541.4 million.

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Posted on: September 22, 2008 – 3:15 pm in Earnings, Technology Companies,

The 52-Week Low Club 9/22/2008 (RTI)(ANPI)(NTAP)

Sad_clownRTL Intl Metals (RTI) No news but drop in titanium demand due to Boeing (BA) strike could be culprit. Falls to $20.04 from 52-week high of $85.20.

Angiotech Pharmaceuticals (ANPI) Cutting costs and having trouble with financing. Drops to $.90 from 52-week high of $7.90.

NetApp (NTAP) Downgrade from Wachovia. Sells down to $18.70 from 52-week high of $32.38.

Douglas A. McIntyre

Posted on: September 22, 2008 – 2:49 pm in HI/LOW, , ,

Alternative Energy Not Following Oil (FSLR, SPWR, STP, CSIQ, ESLR, CPST, FCEL, USU)

Oil is performing as though there were no sellers today.  Recalling a single $20.00 move up in the price of oil in a single day is elusive, but a gain of $18.66 per barrel at $123.21 for October futures is being attributed to a drop in the dollar followed by one major short squeeze.  We have already discussed this today with the supply interruption in the Caspian region.  But if this was believed to be a sustained issue rather than a single day’s trading issue then you would see a follow-through in alternative energy stocks today.  You aren’t.  Solar, turbines, fuel cells are lagging.  Here are today’s late day prices in some of the major stocks in the alternative energy sector which we follow:

  • First Solar Inc. (NASDAQ: FSLR) is down almost 5% at $230.03.
  • SunPower Corporation (NASDAQ: SPWR) is down 1.5% at $88.27.
  • Suntech Power Holdings (NYSE: STP) down over 2.3% at $42.50.
  • Canadian Solar Inc. (NASDAQ: CSIQ) is down 1.5% at $25.99.
  • Evergreen Solar Inc. (NASDAQ: ESLR) is down over 2% at $6.06.
  • Capstone Turbine Corp. (NASDAQ: CPST) is trading down over 7% at $1.40.
  • FuelCell Energy Inc. (NASDAQ: FCEL) is down almost 3% at $7.05.
  • USEC Inc. (NYSE: USU), actually nuclear rather renewable but still our favorite in alternative energy picks, is down 1.4% at $5.63.

Oil’s drop has taken out all of the hype from most of the stocks in the alternative energy universe.  What is funny is that many of these were deemed viable and to be in high demand even when oil was in the $50.00 range per barrel.  But that is what makes a market.  Either oil’s massive move up is a silly move, or these alternative energy leaders should be poised to make a massive run higher.   

Jon C. Ogg
September 22, 2008

Posted on: September 22, 2008 – 1:39 pm in Alternative Energy, Oil & Gas, , , , , , , ,

Can Office & Retail REITs Stave Off The Economy? (GGP, KRC, DDR, SLG)

Office_building_picMany REITs are in trouble.  That is becoming the understatement of the year.  The REITs doing better in today’s environment are the ones whose projects are already built and those that were fully leased.  This is particularly true of retail and office REIT structures where investors are starting to become more risk adverse.

General Growth Properties, Inc. (NYSE: GGP) has been among the worst performers of retail and multi-use REITs.  Last week was deemed by many as the apex but that didn’t hold.  The company has secured additional funding in recent weeks, but is still back in the barrel.  Financing needs apparently still prevail and last week executives had to sell shares to cover margin calls.  Now, it is reviewing strategic alternatives and shares are down again.  In summer these shares were north of $40.00 and in the first half of 2007 this was a $60+ stock. On September 12, this was at $27.55.  Last week it closed as low as $19.92 before Friday’s recovery.  Shares today are down 17% at $17.70.

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Posted on: September 22, 2008 – 12:41 pm in Dividend, REIT, , , ,

Caspian Crude Barely Flowing (BP, CVX, STO, E, TOT, COP, HES)

Oil_gas_pipeline_picOil is trading sharply higher this morning, partly because of oil pipeline and delivery disruptions. Platts reported that crude oil flows through the BTC pipeline have dropped from about 800,000 b/d to 250,000-280,000 b/d. The cause of the reduced flows is the shut-in of about 60% of production in a field operated by BP plc (NYSE:BP). The shut-ins followed the appearance of gas bubbles in the sea around one of the platforms.

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Posted on: September 22, 2008 – 10:55 am in Oil & Gas, , , , , , ,

Horse Trading Begins On Bailout, Odds Increase Bill Will Be Delayed

Uncle_samHenry Paulson’s bank bailout bill never had a chance of making it through Congress unencumbered. The only question was how may boat anchors the House and Senate would attach. The sinking of the proposal began today.

There has already been talk of the plan being expanded to cover foreign banks with US operations, credit card and auto debt, and even mechanisms set up to asset homeowners with their mortgages.

Adding most of these measures could push the cost of the program above $1.5 trillion. Adding all of them might drive that number as high as $2 trillion.

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Posted on: September 22, 2008 – 10:45 am in Politics

Coal In Apple’s (AAPL) Stocking For Christmas

Applelogo1Morgan Stanley (MS) said what everyone already knows. It cut earnings estimates for Apple (AAPL) and several other hardware stocks. This holiday season will be a bitter one, even for those children who have been good.

From 2004 to early 2006, Apple rallied on increasing iPod sales. As those slowed a bit, the shares moved down. But, as the Mac took the baton, Apple’s shares rose again from late 2006 until the end of 2007. Apple’s significant run ended there. Despite some enthusiasm due to the iPhone, the stock has not retaken its all-time high of $202.96 which was posted late last December. Recently, the shares have been below $140.

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Posted on: September 22, 2008 – 10:03 am in Consumer Electronics,

3Com Investors Brace For Earnings & Guidance (COMS)

3com_logo3Com Corporation (NASDAQ: COMS) is one of the few tech stocks to report earnings after today’s close.  The troubled maker of routing and communication equipment is expected to post $0.06 EPS on $337.12 million in revenue. The company raised its guidance back in early August, although it was from business in China and that is still expected to wind down.

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Posted on: September 22, 2008 – 9:42 am in Earnings, Technology Companies,

As Crude Jumps, A Little Rally In Oil Shares (XOM)(BP)

Tx00338coilwellgusherodessatexasposA good thing happens, but a bad thing happens. The current market works that way. All the arrows never point in the same direction.

As word of the government’s bank bailout spread, crude oil moved up to $108. It has risen 10% in a few short days. If the market believes that the economy will respond to the "stimulus" package, oil may continue to trend higher.

How are the bank bailout and oil related? They aren’t. It is a stretch to say that saving banks will do anything for the consumer or business credit markets any time in the next several months. Some economists question whether it will do anything at all.

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Posted on: September 22, 2008 – 9:29 am in Oil & Gas, ,

Will The Ice Cream Business Save Krispy Kreme (KKD)? No.

UnderWith its stock down more than 90% from the highs it reached in 2003,
Krispy Kreme Doughnuts (KKD) is looking for something to restore
the company to same-store sales growth and long-term profitability.

The answer? Small stores, international expansion, and soft-service
ice cream, the company hopes.

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Posted on: September 22, 2008 – 9:01 am in Food,

Day Trader Alert: Ciena (CIEN)

Ciena Corporation (NASDAQ: CIEN) shares rose this morning after they had been cored to the bone.  Despite its sector woes in telecom equipment and fiber optics, Barron’s called the stock a bargain this weekend on the convergence issues which Cisco and others have been touting for years.  This appears to be a value call with shares trading at under 10-times earnings, but keep in mind that analysts are looking for 2009 earnings to be below 2008.  Shares are nearly 80% off of 52-week highs, with a 52-week trading range of $9.52 to $49.55.  Shares are up almost 9% at $12.25 right before the open.

Jon C. Ogg
September 22, 2008

Posted on: September 22, 2008 – 8:28 am in Technology Companies,

H-P Jumps In On Buybacks (HPQ)

Hp_logoHewlett-Packard Co. (NYSE: HPQ) has decided to jump in on the stock buyback bandwagon.  Its new share buyback program is for $8 billion in common stock.  At current prices, this would represent over 165 million shares of its current and approximately 2.5 billion outstanding shares.  This buyback is not a complete chopping off of existing shares to shrink the existing float.  The company says that it intends to use this additional plan as part of an ongoing program to manage dilution created by shares issued under its employee stock plans and to repurchase shares opportunistically.  It says it bought back $1.6 billion of stock in Q3 and had about $3 billion under its existing $8 billion plan approved in November 2007.

Jon C. Ogg
September 22, 2008

Posted on: September 22, 2008 – 8:20 am in PC Companies, Stock Buybacks, Technology Companies,

Nike on Buybacks: Just Do It (NKE)

Nike_logoNike Inc. (NYSE: NKE) has decided to jump on the stock buyback bandwagon this morning.  The footwear and sports apparel and equipment maker has just announced it would repurchase up to $5 billion in common stock over the next four years.  This plan will begin upon the completion of its existing $3 billion share buyback plan.  Nike has repurchased roughly $5.5 billion in stock over the last 10 years.

Nike shares are up over 2% pre-market at $65.20.  Its 52-week trading range is $51.50 to $70.60. 

Jon C. Ogg
September 22, 2008

Posted on: September 22, 2008 – 8:08 am in Apparel, Stock Buybacks,

Microsoft’s $40 Billion Stock Buyback (MSFT)

Microsoft_logo_3Microsoft Corp. (NASDAQ: MSFT) is announcing another monster share buyback plan. This one gives it the authorization to repurchase as much as $40 billion worth of stock.  Its last buyback plan has been completed.  This new one is through September 30, 2013.

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Posted on: September 22, 2008 – 7:47 am in Software, Stock Buybacks,

Microsoft Scores AAA Rating From S&P (MSFT)

Microsoft_logo_2Standard & Poor’s has just made what appears to be its first new "AAA" corporate credit rating in years.  The winner is none other than Microsoft Corp. (NASDAQ: MSFT).  Its short-term and commercial paper ratings were also given "A-1+" ratings.  It has also awarded its "AAA" rating a stable outlook.

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Posted on: September 22, 2008 – 7:20 am in Analyst Calls, Software,

Lowe’s (LOW) Set To Curb New Store Plans

UnemplyIn a sign that the people with the closest view of housing expect market conditions to remain weak for a long time, Lowe’s (LOW) is expected to announce this week that it is curbing its ambitious expansion plans.

According to The Wall Street Journal, Citigroup analyst Deborah Weinswig expects Lowe’s to open 75 new stores next year for 4.5% growth in retail-square footage, down from 120 stores opening this year, to generate about 8% growth. Lowe’s had previously said it expected to open 135 to 145 new stores each year.

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Posted on: September 22, 2008 – 7:05 am in Retail, ,

Top Pre-Market Upgrades & Downgrades (AB, ABFS, CNY, DKX, BEN, KMT, ODFL, OTTR, PZN, RJF, JOE, TROW, YRCW)

These are not all of the research calls affecting shares of stock, but these are some we have our eyes on this Monday:

  • Alliance Bernstein (AB) Raised to Outperform at KBW.
  • Arkansas Best (ABFS) Cut to Underweight at JPMorgan.
  • Con-Way (CNY) Cut to Neutral at JPMorgan.
  • Dick’s Sporting Goods (DKS) Started as Overweight at Lehman.
  • Franklin Resources (BEN) Cut to Market Perform at KBW.
  • Kennametal (KMT) Cut to Sell at Goldman Sachs.
  • Old Dominion Freight Line (ODFL) Cut to Neutral at JPMorgan.
  • Otter Tail (OTTR) Raised to Outperform at Baird.
  • Pzena (PZN) Cut to Underperform at KBW.
  • Raymond James Financial (RJF) Cut to Market Perform at KBW.
  • St. Joe (JOE) Cut to Market Perform at KBW.
  • T. Rowe Price (TROW) Cut to Underperform at KBW.
  • YRC Worldwide (YRCW) Cut to Underweight at JPMorgan.

Jon C. Ogg
September 22, 2008

Posted on: September 22, 2008 – 6:27 am in Analyst Calls, , , , , , , , , , , , ,

USA Per Capita Bailout Costs

The $700 billion financial system bailout has so far stabilized the financial markets.  That part is hard to debate.  The long term effects, the path, and the implications are, of course, up for debate.  The questions in many discussions this weekend were what the real costs would be and whether or not these institutions should be allowed to fail.

So, one issue we wanted to consider, was what exactly does this translate to on a per individual in the U.S.  In 2006, there were more than 133.9 million individual tax returns and the total number of tax returns including corporations, employment taxes, and more came to more than 168.8 million.  We decided to use the larger number of 168.8 million as a representation for the entire tax system rather than just individuals, since the larger number of roughly $2.5 trillion collected was only about half of the total collections from individuals.  After all, we are all in the same soup on bailouts here.

The $700 billion bailout translates to roughly $4,147.00 per filer.  If you wanted to use just the individual tax filings, you would come up with more than $5,200.00.  That is the price of saving Fannie Mae, Freddie Mac, AIG, Bear Stearns, Lehman, Countrywide, and other failed financial institutions via assisted mergers and other bailouts.  We haven’t even gotten to the other failures which are waiting in the wings.

Dare we add in the $600 per individual or $1,200.00 per couple tax rebate stimulus checks that went out this year?  We have also discussed that the entire package could even reach $1 trillion and even the notion of $2 trillion.  These numbers are starting to look astronomical on a per capita basis.  Before long, it might even add up to real money.

Jon C. Ogg
September 22, 2008

Posted on: September 22, 2008 – 5:54 am in Economy, , ,

GM (GM) Dives Into Its Line Of Credit–Running On Empty

Gm20jpeg20imageGeneral Motors (GM) said on Friday that it will draw down $3.5 billion on the $4.5 billion line of credit it put in place with JPMorgan Chase (JPM) and Citigroup (C) back in 2006.

GM is pursuing the "get it while the gettin’s good" approach to capital management. With the credit markets tight and GM’s fiscal health in rapid deterioration, the company wanted to take out the money now rather than wait a few months and find out it’s no longer available.

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Posted on: September 22, 2008 – 5:15 am in Autos, , , ,