We wanted to take a look at Level 3 Communications, Inc. (NASDAQ: LVLT), RF Micro Devices Inc. (NASDAQ: RFMD), Alcatel-Lucent (NYSE: ALU), Flextronics International Ltd. (NASDAQ: FLEX), Sprint Nextel Corp. (NYSE: S), Netlist, Inc. (NASDAQ: NLST), and Conolog Corp. (NASDAQ: CNLG).  Some of these seven cult stocks are big companies with a broad customer or broad investor base, while some are mere cult stocks that have seen the sort of trading activity that raises the eyebrow of the skeptics.

Level 3 Communications, Inc.

Level 3 Communications, Inc. (NASDAQ: LVLT) reported a $182 million net loss, with earnings at -$0.11 EPS, as revenue fell 12$ to roughly $924 million. The wild card for the quarters ahead is the launch of Level 3 Tower Access, a ploy to gain off the overly stretched wireless networks due to all the smartphone data usage.

The company claimed improvement in its customer buying behavior and also saw positive free cash flow.  It is adding more sales staff but the company keeps rolling its debt.  Ultimately this debt level has to come down even if the company is getting better debt terms.

Level 3 shares fell from $1.38 to $1.27 with earnings this week and it effectively doubled its daily volume to over 20 million shares before Thursday’s recovery to $1.30.  The 52-week trading range is $0.60 to $1.77 and shares were as high as $1.66 on January 5… shares are 21% off the highs a month ago.

RF Micro Devices Inc.

RF Micro Devices Inc. (NASDAQ: RFMD) actually beat earnings on January 27 but was short against revenue estimates… Revenue was down 2% sequentially but up 24% year over year at $250.3 million; Net income was $24.9 million.

The company said sales from cellular products group will be better than normal seasonality, with multi-market product sales flat to up sequentially.  The opportunity for the company is the growth of smart phones, netbooks, data cards and internet connectivity devices.  Merriman Curhan Ford started this with a Buy rating after earnings with an upside seen to the $7 to $8 range.  This has been one of the duds of Cramer’s Mobile Internet Tech Tsunami stock picks.

With shares at $4.05, its 52-week trading range is $0.73 to $5.85 and the high in 2010 was $4.98 on January 4.  This only lost about 2.5% after earnings and has actually held its own since the earnings report but shares are down almost 20% from the highs in January.

Alcatel-Lucent

Alcatel-Lucent (NYSE: ALU) proved that what Cisco Systems (NASDAQ: CSCO) was seeing was not universal.  The troubled telecom and communications equipment and service provider gave earnings that showed now real return to normalcy yet and there was very little good news in the earnings report.  The profit was 46 million euros, or $63 million U.S., versus a 3.9 billion Euro loss a year ago, partly on one-time gains.  It saw a 19.9% drop in revenue to 3.97 billion euros to the lower-end of its own estimates and below revenue estimates of 4.3 to 4.4 billion euros.  Operating margins for this year are now seen at 1% to 5% versus 5% previously targeted.  If you go through the notes, this summary is actually being kind as problems exist on many fronts here.

Alcatel-Lucent closed down over 12% on Thursday at $2.79 in its ADRs.  The 52-week trading range is $1.09 to $4.95, and this hit a January high of $3.82 on January 14 for its ADRs.  This puts the stock down about 27% from highs of just a month ago.

Flextronics International Ltd.

Flextronics International Ltd. (NASDAQ: FLEX) was actually one  of the real laggards of the electronics manufacturing services companies this earnings season because it did not have an absolute blowout of the estimates as most peers did.  It was effectively the worst EMS reaction when you consider the double-digit gains from peers.  The earnings Were $0.17 EPS and $6.6 billion in revenues versus Thomson Reuters estimates of $0.15 EPS and $6.3 billion; guidance was the issue at $0.13 to $0.16 EPS on $5.8 to $6.2 billion in revenues versus Thomson Reuters estimates at the time of $0.13 EPS and $5.8 billion.  Flextronics was a victim of ‘sometimes good just isn’t good enough.’

At $6.87 now, the 2010 high was $7.49 on January 4.  The 52-week trading range is $1.81 to $7.97.  A Needham upgrade to BUY kept this reaction from being worse.  Being off only 8% from January highs in this market might not sound bad, but the EMS stocks have mostly seen significant gains during earnings season.

Sprint Nextel Corp.

Sprint Nextel Corp. (NYSE: S) looked more like it should be called “Sprint, Next Sell!” when we saw its earnings reaction this week.  The company has closed on its Virgin Mobile and its iPCS deals and has been building out the Clearwire pact for the 3G and 4G wireless networks.

Sprint reported a loss, lower revenues, and lower subscribers this week.  The hurdles are many.  It is still amalgamated of many brands, has too many networks, and frankly is viewed as having the least attractive smartphone lineup of the 3 US major wireless carriers.  Everyone keeps hoping that Sprint Nextel will be acquired, but that is a rumor and a story that has become as frequent and as credible as the ghost ships and sea monsters of yesteryear.

Shares fell from $3.65 to $3.36 on Wednesday (on over 250 million shares to boot) and then to $3.26 on Thursday.  The high for 2010 has so far been $4.23 on January 26.  So the 10.6% drop from pre-earnings this week paled in comparison to the sell-off of 23% from the January highs.

Netlist, Inc.

Netlist, Inc. (NASDAQ: NLST) has not even reported earnings yet but it has set a date of Thursday, February 18… If there was ever a true tech cult stock in late 2009 into 2010, Netlist is that.  Because of its cloud computing initiatives and because of day trader hype and the never-ending quest of the investment community’s willingness to chase low-priced stocks, this one ran and ran.

One of the issues it has run into is that it is in patent suits as the plaintiff, but more important is that it filed to sell $30 million in stock.  After an exponential run-up from November the market cap here is only $67.5 million now.  The average volume is now over 4 million shares, and it has become frequent to see one-fourth or one-third of its entire share base trade in a single trading day…. a true cult stock.

In November it was hardly a $1.00 stock.  By the end of November the stock was north of $7.00.  The 2010 intraday high was $6.10, although it highest close for 2010 so far has been $5.53.  A close of $3.40 on Thursday puts this stock down 44% from intraday highs of 2010 and down 38% from its highest 2010 closing price.

Conolog Corp.

Conolog Corp. (NASDAQ: CNLG) is about as much of a cult stock as you will ever see.  It spent most of 2009 in the $1 range, at least after a 1-for-5 reverse share split. Forget earnings season here because this is just a classic example of a trader’s tout around news.  The two big issues around this stock that has caught the mind of the penny-stock traders have been that it announced the start of production of its “GlowWorm” fiber optic detector in late-January and the news that it announced advance orders for 280 systems and other equipment valued at over $1.9 million on Feb. 1.

Anything is possible in the world of penny stocks and cult stocks.  But Conolog is a company that has a history as questionable as it gets.  ‘GlowWorm’ is the big attraction for traders here, but this almost sounds more like a product for crazy fishermen or for parasite removal in a colonic than it does a ‘fiber optic detector that may be used in any fiber optic line or network without the need to cut the cable.’ When you see 3 reverse stock splits in four years, what does that tell you?

Conolog closed at $1.41 on January 4 and hit an intraday high of $4.72 on February 1.  The high close was also $4.01 on February 1, a day which saw a whopping 21+ million shares trade hands… that is almost 7-times its whole float of almost 3.2 million shares.  Shares are now back to $2.23 and the market cap here is a mere $7.1 million.

You are invited to join our free daily email distribution list to hear about unusual stock activity, top analyst upgrades and downgrades, IPOs and secondary offerings, ongoing day trader and options trader alerts, stock and market rumors, Buffett and guru investor news, M&A and more.

JON C. OGG
FEBRUARY 12, 2010

Beach First National Bancshares Inc. (NASDAQ: BFNB)
Dearborn Bancorp, Inc. (NASDAQ: DEAR)
deCODE genetics, Inc. (NASDAQ: DCGN)
Dune Energy, Inc. (NYSE AMEX: DNE)
EuroBancshares, Inc. (NASDAQ: EUBK)
Horizon Financial Corp. (NASDAQ: HRZB)
IA Global, Inc. (NYSE AMEX: IAO)
Imperial Industries, Inc. (NASDAQ: IPII)
Inhibitex, Inc. (NASDAQ: INHX)
Radient Pharmaceuticals Corporation (NYSE Amex: RPC)
Regent Communications Inc. (NASDAQ: RGCI)
RHI Entertainment Inc. (NASDAQ: RHIE)
TierOne Corp. (NASDAQ: TONE)
VIA Pharmaceuticals, Inc. (NASDAQ: VIAP)
Xenith Bankshares, Inc. (NASDAQ: XBKS)

These are just the most recent delisting candidates.  There are many many more companies which fall in the delisting category.  Companies which receive delisting notifications rarely get delisted from NASDAQ or NYSE immediately.  There is a plan for re-listing process.  There are requests for exceptions and requests for extensions to these deadlines which are frequently granted.

These won’t be the last of the companies in the coming days which disclose delisting notifications.

JON C. OGG

Charter is in a pretty good business. As a cable provider it markets digital TV, broadband and VoIP services. The company has more than five million customers. It also has over $20 billion in debt. The stock changes hands at $.38. That compares with a 52-week high of $3.94

There are several other very well-known companies which could move below $1 and face problems with their exchange listings and their ability to attract new capital.

Ford (F) has fallen from a 52-week high of $8.99 to $1.88 earlier this month. US cars sales in each of the last three months of the year could be more brutal than they were in the first three quarters. In addition to a slowing economy, car buyers, even those with reasonable finances, are finding it hard to get car loans. A number of auto industry analysts believe that Ford will get low on cash by the second half of next year.

Level 3 (LVLT) appeared to have recovered from a share price which was hurt by the company’s net losses earlier this year. It had cut its great hunger for buying and unsuccessfully integrating new operations. But, it has almost $7 billion in debt and extremely modest operating income. Shares have fallen from a 52-week high of $4.48 to $1.26. Any significant problems with its debt or a quarter or two of losses and the stock could go lower.

Ambac (ABK) has done well recently. The bond insurance company indicated that it will try to get the federal government to buy its risky assets. That may not happen. Or, the toxic assets on the firm’s balance sheet could become more troubled as the economy and housing market fail. The stock has been as low as $1.04. It trades at $3.04 now. It would only take one big dose of bad news to push it lower again.

AIG (AIG) has to sell a lot of assets to get out from under the $89 billion it has borrowed from its federal government loan facility. There is already speculation that it is having trouble selling some of its best assets because of the credit market. The insurance company still has bad paper on its books and the value of that could certainly be falling. Management now gets to spend a lot of time with NYS Attorney General Cuomo. Not a good distraction during a turnaround. The stock traded at $1.25 earlier this year, and now sells for $2.12 a share.

NCC (NCC) has recovered some from its balance sheet problems. Investors are speculating that the Paulson plan will help the bank rid itself of bad assets. It might even get Treasury to buy some of its shares to provide capital. There have also been rumors that a larger bank like Citigroup (C) will buy it. A quarter or two of bad write-offs and disclosures about the faltering value of its balance sheet could cut NCC down to size. It trades at $3.03 but was at $1.25 not terribly long ago.

Douglas A. McIntyre

The larger of the deals involved is with German-based Ralos Vertriebs GmbH and has a face value of $750 million. But, the terms spread the agreement over five years, ending in 2013. It is not clear what the cost of sales here is. Wall St. may look at this as roughly $150 million per annum with a return which may be modest.

ESLR traded above $18 at Christmas last year.

Solar companies have done well lately because of the alternative energy craze. But, Evergreen Solar has been something of an exception. Its first quarter earnings were very disappointing. Revenues were $18.3 million for the first quarter of 2008, compared to $16.9 million for the fourth quarter of 2007 and $12.6 million in the first quarter of 2007. For a company in a "hot" sector, that growth is modest.

And, the company had an operating loss of $7.5 million, about two-thirds of that for facility start-up and write-off costs. That would tend to speak poorly of management.

Evergreen looks good on the news, but no so strong on its merits.

Douglas A. McIntyre

• Barrick Gold (NYSE: ABX) was noted positively with the stock being called as "going to $75 in 18 to 24 months" by Schaeffer Research.  This is actually a call on how to play gold going above $1,000… just keep in mind that this is total performance chasing, even though it cites a near 10% pullback as Barrick has doubled in the last year and this is one of the largest pure-plays on gold out there.  Jim Cramer named this one recently as his speculative gold stock for 2008.
• Cleveland Biolabs (NASDAQ: CBLI) was listed as being able to nearly triple after being cut in half.  Two mostly unknown pundits have spoken positively about it despite the company losing its largest potential Defense Department order for its anti-radiation drug Protectan, which lost out to Osiris Therapeutics (NASDAQ: OSIR).  It lists foreign government contracts, and its potential for oncological hopes in chemotherapy.  This one seems extremely speculative with a $56 million market cap, even if only 2.5-times net book value with essentially zero in real revenues.  This was one that we also recently noted as one of the many biotechs hitting 52-week lows.
• Lastly noted is Uranium Energy (AMEX: UEC), a volatile speculative stock in the highly volatile uranium sector.  With so many already producing uranium and many being less speculative in a speculative group, this one is noted as having a new mine going into production in 2010.  If you look at our past grouping of uranium calls as the nuclear sector heats and cools, you’ll see why this one is definitely one of the more risky plays out there.  This also recently moved from the OTCBB to Amex, and was one we asked "when is enough finally enough?" in many of the uranium names.

We’ve seen the "Inside Wall Street" column give some great calls before, and we’ve seen it give some duds.  It’s too soon to call these out entirely, but twoout of these three have a real risk at ultimately giving investors a chanceof sitting on a goose egg.

Jon C. Ogg
February 22, 2008

The web site is a video viewing site and social networking site that allows users to create their own profiles, post videos, and comment on each other’s posts. It offers short-form videos that are predominantly user-generated or, in many cases, professionally produced videos that have been user "edited." Everyone can watch videos on CnBoo.com. People can see first-hand accounts of current events, find videos about their hobbies and interests, and discover the quirky and unusual.  The company claims that CnBoo.com already has more than 1.2 million members and over 1 million pieces of original video shorts.  So far it is being billed as the YouTube of China, sorry Google.

There is one question here that really needs to be addressed though, outside of the traditional OTC stock spin: How does this get around the Chinese censorship laws there?  There has to be some issue here, even if the company claims it "monitors" the content per Chinese laws.  The company’s website is also very basic and doesn’t exactly ooze "mega-video" AND this company in the joint venture was (partly) funded In MARCH 2007 with 2 deposits of 1 million RMB (about $130,000.00 at the time under today’s echange rates).  Access the registration from March here, and you can probably assume that there will be some share sales if there haven’t been already.

Investors need to know that this one has stock promoters behind it because the emails have been sent around en-masse in a template that many other OTC stocks get put in.  But hey, I don’t want to sound only negative on this sort of investment tool because sometimes letting the actual fundamentals get in the way of a great story is more costly than can be imagined.  I am sure the fact that all the chat rooms are calling it "the next YouTube, and in China too" is going to keep the buzz going regardless of if this is a $2.80 stock, a $4.00 stock, or a $0.50 stock.  After you have been around for a while, these all fit a boilerplate dujour and it is hard not to at least raise an eyebrow or two.  But, once again, sometimes putting the fundamentals and financials in front of a big story makes a huge missed opportunity.  That will be for you to decide.

Jon C. Ogg
March 22, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

If you have been following the story at all, as it is a cult stock status, VeriChip is what the street has been deeming as RFID for people and portable location-based assets mostly geared toward healthcare.  VeriChip just announced on Monday that it received the US patent for its portable RFID asset tracking system, so that may have been the last hurdle (or one of them) that the company has been waiting to finally come public.

As of November 2006, its RFID systems have been installed in over 4,000 healthcare locations, primarily located in North America.  The company believes it already has 50% facility penetration for infant tagging at birth facilities in the US.  It is also looking to its VeriMed system, the controversial human implantable microchip, as the next major avenue of growth after some key patents expire in April 2008; other products are VeriGuard and VeriTrace.  Its revenues for 2005 were $24.5 million (after acquisitions) and its net loss after taxes was $5.5 million; the 9-months ended 2006 saw revenues of $20.34 million and a net loss after taxes of $3.45 million.

Applied Digital (ADSX) has been one backdoor play on this IPO and now that looks to be coming closer to actually happening.  The company was formed in November 2001 and Applied (ADSX) owns 5.55+ million shares; IBM Credit Corp owns 410,889 shares in the company.  The other backdoor play here is actually Digital Angel (DOC-AMEX), which is the sole supplier of its implantable microchip that has been sourced from Raytheon (RTN).  The company has minimum purchase requirements on chip purchases or Digital Angel can sell to third parties: 2007 $875,000; 2008 $1.75M; 2009 $2.5M; 2010 $3.75M; 2011 & Beyond $3.75M.  Digital Angel is an old tied-company to Applied Digital as well, so this actual situation is deemed as a double backdoor play.

This has been in the hopper for some time, and this latest patent announced Monday might have been one of the last hurdles to an IPO.  Applied Digital (ADSX) is up 1% at $1.959 and has a market cap of $131 million.  Digital Angel (DOC) is also up 1% at $2.69 and has a market cap of $119.75 million.

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Jon C. Ogg
January 9, 2007