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Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

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Tuesday, October 31, 2006

Cramer Features Brazil Stock Pick: (RIO-NYSE/ADR)

Cramer on MAD MONEY tonight also went over his Best of Breed picks in Brazil. Cramer says it is Nirvana down there with high growth and decent inflation. The election there was electing a socialist who is becoming a great quiet capitalist. He said that the situation in Brazil merits that investors need to be there.

CVRD-Companhia Vale do Rio Doce (RIO-NYSE/ADR) just bought Inco, and this is a great company for Cramer. He said the stock was beaten up for the acquisition of Inco, but he thinks it is highly accretive and it should have been bought instead of sold off. He also likes the cost containment they are doing, and he thinks the estimates are toolow for 2007. He said BHP & RTP are the stocks that are popular now with money managers, but he thinks money managers will turn this into a core holding soon. He isn't calling it a double, and investors need to know that it already has a $61.8 Billion market cap. He thinks there may be 1 or 2 months before the street switches its stance.

Jon C. Ogg
October 31, 2006

Cramer on MAD MONEY Calls Hansen Natural a Scary Stock

On tonight on MAD MONEY Cramer gave a stock to avoid as a scary stock on Halloween. He said that Hansen Natural (HANS) is that scary stock. He said even after the sell-off it is up 150% and it has nothing proprietary about it.

For a Backgrounder with Cramer on HANS: On September 13, 2006 Cramer gave the same call saying its trajectory made it a broken stock. It closed at $29.76 back then, but a duelling analyst call with a big upgrade the next morning caused it to rise 10% immediately.

HANS shares closed up 1.3% at $31.75 today, but fell 2.3% after-hours to $31.00 after Cramer panned it.

HANS will report earnings next week, but he thinks you need to get out before the report. He reminded about the 20+% drop after last earnings. He also said that Budweiser even took over its distribution.

Jon C. Ogg
October 31, 2006

Baidu.com Down More After Earnings

Sometimes beating earnings just isn't good enough. If you owned Baidu.com (BIDU) going into earnings today you know what that means. BIDU posted EPS of $0.37, $0.10 better than the $0.27 estimate. Revenues beat also at $30.3 million, but not by as wide of a margin with consensus revenues at $30.2 million. The revenue guidance was the disappointment with the company saying $34 million to $35 million was expected, but consensus is $36.25 million.

The sad thing is that this was the springloaded year, because its revenues were up 170% year-over-year and earnings were up essentially tenfold.

The street was already nervous ahead of the report, because shares of BIDU were down 9%, or -$8.72, to $87.28. Shares are down another -4.2% to $83.65 in after-hours trading. Its 52-week trading range is $44.44 to $96.67, although it looks like shortly after the open today it had traded as high as $99.00.

BIDU still carries a triple-digit P/E on a trailing basis. If you use the $83.65 after-hours price and company meets the $0.91 EPS target for 2006 and the $1.70 target for 2007 it has forward P/E's of 91.9 for 2006 and 49.2 for 2007. We would have adjusted the EPS target up except for the guidance miss on revenues.

Baidu.com is still listed as the #4 site as far as web traffic out of Alexa's Top 500.

Jon C. Ogg
October 31, 2006

Market Wrap (Oct. 31, 2006)

DJIA 12,080.73; Down 5.77 (0.05%)
NASDAQ 2,366.71; Up 2.94 (0.12%)
S&P500 1,377.94; Up 0.01 (0.00%)
10YR-Bond 4.6060% ; Down 0.067
NYSE Volume 2,712,865,000
NASD Volume 1,888,631,000

The Conference Board said its October consumer fell to 105.4 from 105.9 the month before, and that was well under the 107.7 consensus estimate. The 10-year treaury was 6 basis points lower on the weak number and on concerns after Wal-Mart's weak sales numbers yesterday. Oil remained lower after doubts prevailed that OPEC will really cut any production.

Eastman Kodak (EK) traded up 2.7% to $24.39 after its losses narrowed to $37 million.

IBM (IBM) Rose 0.9% to $92.33 after it added $4 Billion to its share buybacks.

SiRNA (RNAI) essentially doubled with a 95% gain to $12.63 after Merck announced it would acquire the company for $1.1 Billion.

Martha Stewart (MSO) rose 4% to $21.05 after the media company posted narrower losses and higher revenue additions.

(UARM) Under Armour beat earnings, although its guidance was somewhat under what many were hoping for. UARM fell 0.8% to $46.35.

Biogen-Idec (BIIB) rose a sharp 8% to $47.60 after it beat earnings with $0.60 EPS vs $0.48 estimates.

(NVAX) Novovax traded up 9%to $4.47 after the CDC said it would evaluate its bird flu vaccine.

Proctor & Gamble (PG) fell 0.66% to $63.39 despite slightly beating bottom-line numbers. The street was cautious on its revenues and profit taking prevailed.

UAL (UAUA) fell 2% to $35.94 after its $190 million in net income was actually a tad lighter than expectations at $1.40 EPS vs $1.43e.

Hansen Natural (HANS) rose 1.3% even after it received a stock options inquiry regarding options from 1996 to the present.

IAC/Interactive (IACI) rose almost 4% to $30.98 after the company posted $0.35 EPS vs. $0.33 estimates.

Entrust (ENTU) rose 4.4% to $3.76 after winning a data protection pact from Expedia.

DivX, Inc. (DIVX) fell 10% to $22.84 after beating revenue projection, but profit taking hit the shares and valuations at well-over 10-times revenues.

Vonage (VG) actually beat revenue projections and gave a Q1 2008 for its first anticipated real profitable quarter; VG fell 7% to $6.88 after the bears won today's argument.

CBRL Group (CBRL) rose 2.8% to $43.91 after it agreed to sell its Logan's Roadhouse unit outright to a private equity venture rather than pursue an IPO as it had originally planned.

Maidenform Brands (MFB) rose 2.5% to $22.15 after it filed to sell 7.8 million shares for selling holders.

Qwest Communications (Q) fell 4.2% to $8.63 despite beating earnings expectations.

Trammel Crow (TCC) rose a large 24% to $48.75 after CB Richard Ellis agreed to acquire the company.

Cisco (CSCO) replaced Ciena (CIEN) on Goldman Sachs Conviction Buy List; CSCO rose 0.95% to $24.13 and CIEN fell 0.5% to $23.51.

Earnings tomorrow morning: CI, CLX, COL, DB, DVN, GRMN, MMC, MYL, PRU & TWX.
Wednesday we have weekly oil inventories at 10:30 AM EST.

Jon C. Ogg
October 31, 2006

Cramer on the Elections (10/31/06)

On CNBC's STOP TRADING segment around 2:55 PM EST today, Jim Cramer discussed what he heard senators say ahead of the elections today.

Cramer said a GOP win would be a surprise. If the GOP actually won you would want to go back into oil, defense and pharma names.

Cramer is worried about Alliant Techsystems (ATK). He said they are the largest bullet maker and if we leave Iraq suddenly that iw would be bad for them. If you think we stay the course in Iraq, they would be good to own.

Cramer also worried about health cost names. He said he also wasn't worried about Sallie Mae (SLM) because First Marblehead (FMD) trades up and up.

Jon C. Ogg
October 31, 2006

Nierenberg Investment Raises Stake in RadiSys (RSYS) to 11.1%, Still Thinks Stock Dramatically Undervalued

From 13D Tracker

In an amended 13D filing on RadiSys Corp. (Nasdaq: RSYS), Nierenberg Investment disclosed an 11.1% stake (2.37 million shares) in the company. This is up from the 2.06 million share stake the firm disclosed in a quarterly filing with regulators.

The firm disclosed the last time they bought a large block of RSYS was one year ago, on October 28, 2005, when RSYS' fourth quarter guidance caused the share price to swoon. The firm bought 300,000 more shares on October 27, 2006.

Quoting from their amended 13D, filed November 9, 2005, which they said remains true, the firm said:

"RSYS is a dramatically undervalued growth company which possesses a fortress balance sheet, an impressive board of directors, a strong management team, and a business model which generates a stunning amount of positive cash flow.

The stock market has trouble valuing this company. Because RSYS is a micro-cap, not many analysts trouble to understand it. Moreover, RSYS' business, on the surface, is not easy for some people to understand. What "advanced embedded computing" means is not intuitively obvious. There are few, if any, pure play public companies with which to compare RSYS. RSYS' revenues are highly concentrated, with its top five customers generating 72% of sales in the most recent quarter. This means that quarterly revenues are inherently lumpy.

Wall Street's obsession with linear short term results causes it to undervalue dramatically the fundamental shareholder value which is being created at RSYS. Those who look out three to five years, like venture capitalists do, see value in a very different way than those who only look out three months."

http://www.13dtracker.blogspot.com/

Ilia Lekach Lowers Stake in eCom Ventures (ECMV) to 4%

From 13D Tracker

In an amended 13D filing on eCom Ventures, Inc. (Nasdaq: ECMV), Ilia Lekach disclosed a 4% stake (120K shares) in the company. This is down from the 9% stake he disclosed in a past filing (07/02).

According to traders who know the stock, Lekach's selling has undeservedly punished the stock over the past six months, but the stock has moved higher recently as word circulated Likach was nearly done selling.

While Lekach has been selling his stake in the company, eCom Ventures' controlling shareholder Glenn Nussdorf has been buying up shares of Lekach's company Parlux Fragrances (Nasdaq: PARL).

http://www.13dtracker.blogspot.com/

Nabi (NABI) Holder Third Point LLC Files Preliminary Consent Statement to Remove Board Members, Discloses Unsuccesful Settlement

From 13D Tracker

Nabi Biopharmaceuticals (Nasdaq: NABI) 9.5% holder Third Point LLC filed a preliminary consent statement to remove Chairman Thomas H. McLain and other directors from the Board of Directors (Harvey, Hudson, Davis, Castaldi)

Third Point said it will nominate Mr. Aryeh, Todd Davis, Stephen Kasnet, Timothy Lynch and Stuart Oran to be appointed by the remaining members of the Board to fill any vacancies created by the removal of directors.

In a related 13D filing, Third Point also disclosed an exchange between a Third Point representitive and the company which resulted in an unsuccesful settlement agreement.

From the 'Purpose of Transaction' section of the 13D filing:

"On October 26, 2006, Mr. Aryeh contacted Mr. McLain to clarify fundamental issues regarding NABI-HB raised on the Company's earnings conference call held the prior day. Mr. Aryeh also advised Mr. McLain that he had agreed to be a nominee of the Third Point Reporting Persons, and that he regretted that the Company's dispute with many of its largest stockholders had come to such an impasse. Later that day, Mr. McLain reached out to Mr. Aryeh and proposed that Mr. Aryeh act as an intermediary to attempt to reach a settlement with the Third Point Reporting Persons. With the consent of the Third Point Reporting Persons, Mr. Aryeh again proposed a settlement offer substantially on the terms previously proposed on September 29, 2006. Discussions continued on October 27, 2006 and ended without an agreement because the parties could not agree on the composition of the strategic action committee (the "SAC"). The Company insisted that the SAC be a committee of five members, consisting of three current Board members and two of the Third Point Reporting Persons' nominees, and the Reporting Persons agreed that the SAC could be a committee of five members if there were a mutual agreement on the fifth member. The Reporting Persons proposed that the SAC be established with four members - two designated by the Board and two of the Management Company's nominees - and that the four members, by majority vote, would choose a fifth member from among the current Board members and, failing agreement in good faith, that the four members would seek to agree in good faith on an independent person not currently on the Board to be added to the Board and the SAC. The discussions ended because the Company required that the fifth member of the SAC be another current member of the Board. Subsequently, on October 30, 2006, the Reporting Persons and the Company renewed discussions, but no settlement has been reached and significant differences between their respective positions remain."

http://www.13dtracker.blogspot.com/

Investors Prefer Coke Over Pepsi in October



Unless Coca-Cola (KO) manages a corporate blunder in the next few hours, it will be KO that has won the investor taste test challenge over Pepsi (PEP) for the month of October.

KO closed September 29 at $44.68, and was at $46.75 on last look. KO is up from an adjusted closing price at the close of 2005 after dividend of $39.46 and nominally closing at $40.31.

PEP closed September 29 at $65.26, and was down $0.33 on the day at $63.20 on last look. PEP is up from an adjusted closing price at the close of 2005 after dividend of $58.26 and nominally closing at $59.08.

Both companies did fairly well on earnings this month.

Two weeks ago KO posted $0.62 EPS vs $0.59 est. and revenues $6.45 Billion instead of almost $6.2 Billion. It even showed a 5% increase in its case volumes. After earnings Merrill Lynch added KO to its Focus One List. Ko also announced price hikes for its orange drinks because of rising orange juice prices.

Almost 3 weeks ago PEP also beat earnings with $0.88 EPS and Revenues of $8.95 Billion, compared to estimates of $0.86 and $8.8 Billion respectively. It also reaffirmed at least $2.98 fiscal EPS, and $2.98 happens to be the consensus estimate. At recent meetings, PEP has announced intentions to consolidate its Frito Lay network and put EPS growth at 7%.

Jon C. Ogg
October 31, 2006

Oracle Needs to Keep the Customer Satisfied

By William Trent, CFA of Stock Market Beat

We have discussed Oracle’s (ORCL) acquisition strategy several times, and believe it is the correct path for the company. However, the devil is always in the details, and with an acquisition strategy the details include making sure customers of both the parent and the acquired company remain satisfied.

As ComputerWorld reports, Oracle is having mixed success on that front.
Some Siebel CRM users interviewed at the Oracle OpenWorld user conference here last week said Oracle has been slow to provide details on its pledge to integrate Siebel and Oracle products and to reveal its long-term plans for its CRM product lines.

She said Oracle executives have given mixed messages about the future of the Siebel middleware products. Depending on Oracle’s plans, EDS may have to replace the Siebel middleware with software from Oracle, Reeves noted. “It’s an open question for the future,” she said.

Reeves said she hopes that Oracle moves to ease the migration to new versions of its tools. The process is now quite costly, mostly because EDS has to customize each new version, she said.
“Easing that migration and helping customers upgrade without significant financial drain is very important,” Reeves said.

At this point, it sounds like they aren’t so much ready to switch vendors as anxious to learn what improvements may be planned and how that might affect their own implementation plans. However, integrating software is a complicated process (IBM, Accenture and others make billions each year helping companies do it) and it may be unfair to expect a detailed roadmap so quickly. On the day-to-day service front, Oracle appears to be doing a much better job.
A couple of Siebel users said that Oracle’s services operation has equaled and in some cases exceeded that of the former Siebel Systems Inc.

Richard Napier, business development manager at InFact Group, a software consulting firm and systems integrator in Plano, Texas, said software patches and upgrades are easier to locate on the Oracle Web site than they had been on Siebel’s.

“In all our dealings with Oracle, we notice better communication, more efficiently handled service requests and basically more information” than Siebel offered, he said.

As long as the integration road map is worth the wait, Oracle should manage to pull everything together.

The author may hold a position in the securities discussed. A current list of the author's holdings is available here.

http://stockmarketbeat.com/blog1/

NYMEX IPO That Much Closer


NYMEX, the New York Mercantile Exchange, has filed what may be its last amended S-1 filing ahead of its IPO. It is selling 6 million shares at what they have listed as a $52.00 proposed maximum offering price. It lists 4.89 million shares as being sold by the exchange, and shareholders are selling 1.11 million shares. There are also an additional 900,000 shares set for the over-allotment.

NYMEX will trade under the ticker "NMX" on the NYSE. J.P.Morgan and Merrill Lynch are listed as the lead underwriters; co-managers are listed as Banc of America, Citigroup, Lehman, and Sandler O'Neill.

We first covered the original filing back on July 17, 2006 and just on October 18 noted that the CME/CBOT merger was probably the catalyst for the NYMEX hurrying its IPO.

Jon C. Ogg
October 31, 2006

DivX Gets Dusted on Its First Public Earnings Release

DivX, Inc. (DIVX) is selling off after the company reported its earnings last night. The company posted quarterly consolidated revenue of $15.4 million, an increase of 83 percent from the third quarter of 2005. Net income in the third quarter of 2006 was $3.1 million, or $0.10 per diluted share, compared to net income of $763,000, or $0.02 per diluted share, in the third quarter of 2005. Stock-based compensation charges for the third quarter totaled $526,000 compared to $58,000 for the same quarter a year ago.

"We are very pleased to enter the public markets with a strong third quarter," said Jordan Greenhall, CEO and co-founder of DivX, Inc. "DivX continues to change the way that people experience media. Our success is shown by our expansion into new devices, partnerships and geographies, while our existing partners continue to grow their use of DivX technology. With more than 180 million downloads and over 50 million DivX Certified devices shipped worldwide, we believe that we are at the forefront of an exciting market opportunity."

The company also generated $3.5 million in new cash this quarter from operations.

DivX (DIVX) is trading Down 11.8% at $22.40 after the earnings. It appears that the street is doing some basic revenue calculations and determining that over 10-times revenues may be a bit steap.

DIVX was one of the recent Cramer calls that essentially went up about 30% on what can be attributed to his touting the stock as "The next Level 3" after he ran shares of LVLT up after it signed a supply pact with YouTube. Now before you go blame Jim Cramer for the weakness this morning and say yet another one of his picks is down huge overnight, he did initially call it a Buy well under even this lower level today, and he only took a week or two before he said to ring the register with it up so much in a short period of time.

DIVX is a very recent IPO and has a $18.00 to $26.74 trading range since its IPO.

DIVX also has a distribution pact with Google, and that contract's current end-date is said to be coming up very soon.

Jon C. Ogg
October 31, 2006

Mainframe Madness (IBM)(HPQ)(DELL)(SUNW)(UIS)

Almost everyone in the tech world figured that mainframes had given way to huge clusters of cheap servers. Think again.

IBM's mainframe revenue was up 25% last quarter. Although mainframe revenue at the computer giant was only about $2.3 billion out of $65 billion, the purchase of a mainframe leads the customer to buy boat loads of software and maintenance. Long tail.

IBM has been busy resurrecting the mainframe with programs to market the expensive computers to smaller businessses. The revenue figures show that the move is working.

The news is good for Unisys and other, smaller mainframe companies. But, if the trend grows, it may not be so good for Sun, Hewlett-Packard, and Dell who make a great deal of their money from inexpensive servers.

Although there has been little news from IBM about building a class of computer between the mainframe and the low-end server, it is worth keeping an eye out.

Digital Equipment Corporation, now gone the way of the buffalo, made a huge business out of selling mid-range computers, called mini-computers during the 1960s, 1970s, and 1980s.

DEC was eventually bought by Compaq which was swallowed by Hewlett-Packard, which lost CarliaFiorini her job. But, just because she is gone it does not mean that the mainframe is.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Google Acquires JotSpot, Wiki's Just Went Mainstream

If you are reading this, you probably already know what a Wiki is. People who read blogs often know about wiki's. A wiki is simply a web-based location where multiple co-workers, partners, collaborators and the like can collaborate and conduct live editing. Wikpedia is the oldest and largest wiki on the web, and it has thousands of conent creators. Most giant public Linux projects are also constructed on wiki's at some point.

This is the answer to endless chains of email regarding projects, and wiki's have still only pierced a small percentage of the marketplace compared to email, websites, and blogs. Most wiki's are stored externally, but probably 95% or more of the business or collaborative sort are held in password and access approved access.

Google (GOOG) is acquiring a wiki-creation and hosting service called JotSpot, although terms have not been disclosed. JotSpot has some free versions and some subscription versions. New registrations will be suspended temporarily until the integrations have been switched over to Google's systems.

The company has been described as a start-up, although it is one of the original wiki-spaces for the web. JotSpot is thought to be ahead of other wiki creation sites because it allows more than just text. It allows richer media and multimedia files to be stored to the likes of documents and spreadsheets.

It appears as though Google is planning to turn the subscriber services into free services, and will incorporate JotSpot into its current offerings in the near future.

If Google is going to incorporate this for free into its current mix, it has more than a ton of work ahead. Google has been having many issues with its Blogger on the front-end and on the back-end. JotSpot and other wiki services do serve a great function, but anyone who has used a wiki for more than their own notes can confirm that this newer collaboration tool has a long way to go before businesses can readily rely on wiki's. This looks like the next natural migration and when you include the photo storage abilities, YouTube, Blogger, JotSpot, and Google Base you can see the beginning of a very powerful business platform.

Jon C. Ogg
October 31, 2006

Vonage Indicated Up After Earnings

Vonage (VG-NYSE) has released earnings and revenues this morning. Quarterly revenue more than doubled to $161 Million. Non-GAAP adjusted loss from operations was -$53 million in the quarter, down 12% from the prior quarter and down 18% from the year-ago quarter. Net loss for the quarter was $62 million, or $0.40 per share, an improvement of 16% from a net loss of $74 million, or $1.16 per share, in the prior quarter and from $66 million last year.

It added 204,591 net subscriber lines in the third quarter, which is almost 1 million adds in the last 12 months. Vonage finished the quarter with 2,057,844 lines in service, an increase of 11% sequentially and 94% above the year-ago level. Total subscriber lines were 2,057,844 at September 30, 2006, versus 1,853,253 at June 30, 2006 and 1,061,786 at September 30, 2005.

Average monthly telephony services revenue per line for the quarter was flat sequentially at $26.33 and up $1.49 from the third quarter 2005. On a year-over-year basis, positive shifts in customer mix to premium calling plans and the introduction of an Emergency 911 Cost Recovery fee contributed to a 6% net improvement in average monthly telephony services revenue per line.

Direct margin as a percentage of revenues increased to 64% in the third quarter 2006 versus 62% in the second quarter 2006 and 54% in the year- ago quarter. Direct cost of telephony services fell $0.66 sequentially to $6.86 on a per line basis and declined $1.70 from $8.56 in the year-ago quarter.

Total marketing costs were 57% of revenues, or $91 million, in the third quarter 2006 versus 63% of revenues, or $90 million, in the second quarter 2006 and 80% of revenues, or $59 million, in the year-ago quarter. Marketing costs per gross subscriber line addition were $254 for the third quarter 2006, an increase of 6% from the second quarter 2006.

Average monthly customer churn increased to 2.6%, up from 2.3% in both the second quarter 2006 and the year-ago quarter. The increase is attributable in part to the rapid growth in subscriber lines throughout 2006 and resulting impact on customer care.

The Company is reaffirming guidance on the following metrics:
- Fiscal Year 2006 Total Revenue: $600 to $615 million
- Fiscal Year 2006 Marketing Expense: $360 to $380 million
- Second Half 2006 Direct Margin(% of Total Revenue): 62% to 65%
- Second Half 2006 Adjusted SG&A(% of Total Revenue): 39% to 41%
- Positive Adjusted Operating Income as early as Q1 2008

The Company is updating subscriber line guidance:
- Fiscal Year 2006 Ending Subscriber Lines: 2.2 to 2.3 million

There are several metrics that the Bears can use against the company, but the initial indication is up on VG shares. The volume is still too thin to hang any firm figures on. Since the company is showing numbers that can be lived with, you should have a lot of "chat room" related traders moving the stock back and forth today. VG had over 5 million shares listed as its short interest as of October, down from almost 5.8 million shares.

This is a stock that the street is still somewhat in the guessing game on for many of the normal metrics used by analysts. It is of course known it is still fairly young company that has now only 2 earnings reports as a public company, and calling it a controversial and poor after-market IPO would be understatements.

The bears can focus on rising churn and rising marketing costs per subscriber, but so far the street has chosen to look alsewhere. So far it looks like traders are focusing on the early 2008 positive adjusted operating income, and that (with its burn rate) may be the main focal point in what has been such a battleground stock.

Jon C. Ogg
October 31, 2006

More Trouble For Citigroup: Goldman Gets Into Loans

Stocks: (GS)(BAC)(JPM)(C)

It looks like Goldman Sachs wants to be your banker, at least if you are in the private equity business. It the recent private equity purchase of Texas Genco, Goldman put up $2.5 billion in loans to the buyout firms involved.

Goldman rank 7th in "top arrangers of high risk corporate loans" for the first three quarters of 2006. That was well below JP Morgan, Bank of America, and Citi. But, with Citi's problems in its retail business, it does not need another headache.

Citi's corporate and investment banking revenues are already under pressure. And, the company's stock performance has hurt the market's belief that management can turn the big bank into an earnings machine.

The contrast in stock prices tells a lot of the story. Over the last six months, Citi's stock is flat. Goldman's is up almost 20%.

Ouch.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

CBRL Selling Logan's Roadhouse Instead of IPO

CBRL Group (CBRL) is a stock that has not been without criticism and not gone without volatility. The company had faced many internal pressures in the last year, although it has managed to get back closer to its highs over just the last 3 months.

CBRL has been in a long process of spinning off Logan's Roadhouse as its own standalone company in an IPO. We even covered the actual filing from the company back on July 14.

This morning, that has been thrown out the window. CBRL has opted to just sell the Logan's Roadhouse unit rather than go through an IPO and a full divestiture to shareholders. A New York-based private equity firm called Bruckmann, Rosser, Sherrill & Co., Inc. and a Los Angeles-based affiliate of Canyon Capital Advisors formed an affiliate group called LRI Holdings to acquire Logan's Roadhouse.

Logan's currently operates 143 and franchises 25 restaurants in 20 states. Total consideration in the transaction is $486 million, subject to approvals and contingencies. CBRL itself had a market cap of $1.32 Billion based on yesterday's close. More information can be found on the company and on the merger at the company website.

Jon C. Ogg
October 31, 2006

Pre-Market Stock News (Oct. 31, 2006)

(ADM) Archer Danields $0.61 EPS vs $0.56e.
(AEP) Amer Electric Power $0.99 EPS vs $0.99e; sees Fiscal 2006 $2.65-2.80 vs $2.73e.
(AGEN) Antigenics -$0.24 EPS vs -$0.22e.
(AGR) Agere Systems $0.30 EPS vs $0.24e.
(AL) Alcan $1.22 EPS vs $1.23e.
(ASV) ASV Inc. $0.19 EPS vs $0.28e.
(BIIB) Biogen-Idec $0.60 EPS vs $0.48e; raised fiscal guidance. R$703.5M vs $682M(e).
(BJS) BJ Services $0.76 EPS vs $0.75e.
(CBRL) CBRL is Selling its Logan's Roadhouse unit for $486 million.
(CEO) CNOOC reported revenues up 25% on higher gas prices in China/world.
(EK) Eastman Kodak reported a loss instead of a gain, but that included items.
(ENTU) Entrust gets a pact to secure information and identities for Expedia.
(ETR) Entergy $1.83 EPS vs $1.81e.
(GBX) Greenbrier $0.76 EPS vs $0.63e.
(GPI) Group 1 Auto $1.10 EPS vs $1.03e.
(GW) Grey Wold $0.25 EPS vs $0.26e.
(HAL) Halliburton sets $15 to $17 range for KBR.
(HRVE) Harvey Electronics CEO resigned.
(HSII) Heidrick & Struggles $0.60 EPS vs $0.55e.
(IACI) IAC/Interactive $0.35 EPS vs $0.33e.
(INTU) INtuit notified that SEC ended its option probe and will seek no recommendations of action.
(INTX) Intersections $0.15 EPS vs $0.12e.
(IRM) Iron Mountain $0.20 EPS vs $0.21e.
(JOE) St. Joe $0.18 EPS vs $0.11e, but that is before $0.10 in restructuring charges.
(KNDL) Kendle International $0.35 EPS vs $0.34e.
(LEXG) Lexicon Genetics -$0.20 EPS vs -$0.25e.
(LYO) Lyondell 10M share secondary priced at $25.50.
(MAS) Masco $0.60 EPS vs $0.58e.
(MFB) Maidenform filed to sell 7.8 million shares of stock for holders.
(MS) Morgan Stanley is reportedly taking a 15% stake in Avenue Capital, a distressed debt specialty firm.
(NXTM) NxStage Medical -$0.34 EPS vs -$0.37e.
(OSK) Oshkosh Truck $0.66 EPS vs $0.72e.
(PG) P&G $0.79 EPS vs $0.78e.
(PLUG) Plug Power announced new government contracts.
(PNC) PNC $1.28 EPS vs $1.25e.
(Q) Qwest $0.09 EPS vs $0.07e.
(RCII) Rent-a-Center $0.51 EPS vs $0.49e.
(RNAI) SiRNA gets acquired by Merck.
(RRA) RailAmerica $0.18 EPS vs $0.21e.
(SCLN) SciClone -$0.03 EPS vs -$0.05e.
(TCC) Trammel Crow is being acquired for $49.51 by CB Richard Ellis.
(UARM) Under Armour $0.32 EPS vs $0.25e; sees 2007 revenues above its own growth target.
(UBS) UBS missed earnings expectations overseas because of trading revenues.
(UTHR) United Therapeutics $0.79 EPS vs $0.53e.
(VC) Visteon -$1.38 EPS vs -$0.80e; includes items and unsure if comparable because revenues were slightly ahead.

Select Analyst Calls (Oct. 31, 2006)

ABN cut to Reduce at Deutsche Bank.
ALEX cut to Neutral at JPMorgan.
APCC raised to Hold at Citigroup.
BEAS reitr Buy at Jefferies.
BORL cut to Neutral at B of A.
BRL raised to Buy at Citigroup.
BSX started as Outperform at Credit Suisse.
CHAP started as Neutral at Goldman Sachs.
CCU cut to Mkt Perform at Wachovia.
CKFR reitr Buy at Jefferies.
CMA cut to Underweight at Prudential.
CSCO replacing CIEND on Goldman Sachs Conviction Buy List.
CVC cut tpo Mkt Perform at Wachovia.
DGIN reitr Buy at Jefferies.
ECLP cut to Mkt Perform at FBR.
ESLR cut to Hold at Jefferies.
HDIX started as Buy at Deutsche Bank, started as Outperform at Piper Jaffray.
HRZ raised to Overweight at JPMorgan.
ICE added to Goldman Sachs Conviction Buy List.
KSS cut to Hold at AGEdwards.
MCHX cut to Underperform at RBC.
MDT started as Neutral at Credit Suisse.
MPWR cut to Mkt Perform at Raymond James.
MYL cut to Hold at Citigroup.
NILE cut to Underperform at Piper Jaffray.
ORCC reitr Buy at Jefferies.
ORCL reitr Buy at Jefferies.
PMTI cut to Neutral at Merriman Curhan.
PNX cut to Sell at Merrill Lynch.
POT raised to Buy at Merrill Lynch.
RVBD started as Neutral at Goldman Sachs, started as Buy at Deutsche Bank.
SBL cut to Neutral at Baird.
STJ started as Underperform at Credit Suisse.
STT raised to Overweight at Prudential.
THC cut to Sell at Deutsche Bank.
TSS cut to Hold at AGEdwards.
VOL started as Neutral at Goldman Sachs.
VZ cut to Neutral at UBS.
WCRX started as Neutral at Goldman Sachs, started as Overweight at Morgan Stanley, started as Neutral at JPMorgan.

October 31, Best Of 24/7 AM Edition

Counterfeit Microsoft: What's It Worth?

Microsoft (MSFT) launched 55 legal actions around the world in an attempt to get software dealers to stop selling counterfeit versions of their software.The world's largest software company says that it wants the behavior ended, but it does not say what it is costing the company now.

A recent study by the European Union says that up to 7% of worldwide commerce is based on pirated goods. That would be $300 million in lost revenue in total.According to the latest Microsoft 10-Q, the companies two big software divisions, client and server brought in $5.8 billion in the quarter, so an annual run rate of over $23 billion. If the piracy rate of those software products is 7%, Microsoft loses over $1.6 billion a year.

That's real money.



Trans-Fat Range Wars: McDonald’s And Starbucks

Stocks: (MCD)(SBUX)(YUM)

New York City is thinking of setting a ban for restaurants that sell foods with trans-fats and Kentucky Fried Chicken is not going to sell food containing the stuff.

That opens the door to the question about what the really big food and beverage chains will do about the “bad health” issue of trans-fats and what it will cost them to fix Trans-fats are unsaturated fats that can clog your arteries, and perhaps are killing consumers left and right.McDonald’s and Starbucks, with their donuts, cookies, and hamburgers are apparently stuffed with trans-fats.

It poses two problems for the huge chains. First, there is a cost to replacing menu items with new foods. Trans-fat foods have a longer shelf life. They are cheaper than products made with content like butter. They also require less refrigeration. If you have a business with thousands of outlets, changing a lot of the “eats” over to a healthier fare could be damned expensive.

The other problem is the tobacco company/car company issue. Smokers sue cigarette companies for giving them cancer and heart disease. And, of course, the State of California is suing the auto manufactures for polluting the air.

People may now think that Starbucks and McDonald’s have poisoned them with trans-fats, knowingly cutting short the customer’s lives by filling their bodies with sludge. It has premature heart attacks and strokes written all over it.

KFC does not have much to lose. They are fairly small and comparatively poor next to Starbucks and McDonald’s.It has to end up in court. Everything else does.



As The US Goverment Give Up On Royalties, Big Oil Needs Some Chaos

Stocks: (XOM)(CVX)(COP)The US Government surrendered without lifting a finger. Its case that Chevron underpaid for use of federal land to pump gas in the Gulf of Mexico was dropped.

Oil and gas companies are mandated to pay part of their sales for product brought out of land owned by the government. But, the calculations are fuzzy.

Big oil stands to add to its profits if the feds don't push for a higher rate of royalty. What's it worth? Perhaps several hundred million dollars.

But, it is a small gift. With falling oil prices, it will not make up from the likely drop in profits at Big Oil. Inventories are still rising. The fears that Saudi production could be hurt by terrorists is receding. And, OPEC's plan to cut production seems to have no teeth.

Ah, for a little, tiny war. Not one in which anyone gets hurt, mind you. Or, a little coup d'etat. Just something to grab the headlines for a day or two.

Of course, higher oil prices are not the only reason that Big Oil has had larger profits, but, there must be some reason that the stock prices of these companies are up an average of 40% over the last two years. But, that number was closer to 70% for Exxon just a few months ago. Before oil prices came down from over $70 to under $60.

Oil prices are now hostage to whether there is any chaos in the world events that would change oil prices. Threats of attacks on oil facilities in Saudi Arabia recently pushed prices up. But, it did not last. Oil companies need an event that no sane person would wish for. Mayhem.

Hard to say if it will come.

There is no evidence that oil executives are warmongers or anarchists. But, that does not mean that a touch of chaos isn’t helpful to raising the price of oil.

Counterfeit Microsoft: What's It Worth?

Microsoft launched 55 legal actions around the world in an attempt to get software dealers to stop selling counterfeit versions of their software.

The world's largest software company says that it wants the behavior ended, but it does not say what it is costing the company now.

A recent study by the European Union says that up to 7% of worldwide commerce is based on pirated goods. That would be $300 million in lost revenue in total.

According to the latest Microsoft 10-Q, the companies two big software divisions, client and server brought in $5.8 billion in the quarter, so an annual run rate of over $23 billion. If the piracy rate of those software products is 7%, Microsoft loses over $1.6 billion a year.

That's real money.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Viacom Rattle's YouTube's Cage (VIA)(GOOG)(TWX)

Viacom wants YouTube to take down some of the entertainment company's intellectual property. The stuff it copyrights. Things like the Stephen Colbert show. Hard to sell them in re-runs when they are available on the web for free.

So, the dance between Google, the new owner of YouTube, and the big content companies continues.

The maneuvering for earning money off video on the web is just beginning. But, YouTube would be making a mistake to assume that the Time Warners and Viacoms of the world need it. They have set up websites of their own. YouTube videos of their content draws away audiences that might go to those sites and watch video ads or click on banners. A lot of $$$ are involved. And, copyright infringement can be an ugly business.

Google may have bitten off more than it can chew.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

IBM Leaves The US, Gingerly

IBM is setting up development centers in India and China. Its global procurement center has already be relocated to China.

The two new centers will help IBM build its service-oriented architecture business "which makes it easier for businesses to quickly find information stored in different formats."

The India facility will focus on solutions for healthcare. The China-based operation will work on government and bank solutions.

What happened to locating these jobs in the US? IBM now has 43,000 employees in India. That number is likely to grow. And, while IBM keeps it headquarters in the US, there seems to be a dearth of announcements about adding facilities here.

IBM has benefited from its new service-oriented strategy. On the basis of a strong financial performance in Q3, the companies stock has gone from $74 in July to the current $92, right at its 52-week high.

Let's hope that IBM's US-based employees made a lot of money on their stock options. They may need it for early retirement.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

As The US Goverment Give Up On Royalties, Big Oil Needs Some Chaos

Stocks: (XOM)(CVX)(COP)

The US Government surrendered without lifting a finger. Its case that Chevron underpaid for use of federal land to pump gas in the Gulf of Mexico was dropped. Oil and gas companies are mandated to pay part of their sales for product brought out of land owned by the government. But, the calculations are fuzzy.

Big oil stands to add to its profits if the feds don't push for a higher rate of royalty. What's it worth? Perhaps several hundred million dollars.

But, it is a small gift. With falling oil prices, it will not make up from the likely drop in profits at Big Oil. Inventories are still rising. The fears that Saudi production could be hurt by terrorists is receding. And, OPEC's plan to cut production seems to have no teeth.

Ah, for a little, tiny war. Not one in which anyone gets hurt, mind you. Or, a little coup d'etat. Just something to grab the headlines for a day or two.

Of course, higher oil prices are not the only reason that Big Oil has had larger profits, but, there must be some reason that the stock prices of these companies are up an average of 40% over the last two years. But, that number was closer to 70% for Exxon just a few months ago. Before oil prices came down from over $70 to under $60.

Oil prices are now hostage to whether there is any chaos in the world events that would change oil prices. Threats of attacks on oil facilities in Saudi Arabia recently pushed prices up. But, it did not last. Oil companies need an event that no sane person would wish for. Mayhem.

Hard to say if it will come.

There is no evidence that oil executives are warmongers or anarchists. But, that does not mean that a touch of chaos isn’t helpful to raising the price of oil.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in comanies that he writes about.

Europe Market Report 10/31/2006 ST Micro, Daimler Up Sharply

Markets in Europe were slightly higher at 5.45 AM New York time.

Stocks: (BCS)(BP)(BT)(PUK)(VOD)(UN)(UL)(BAY)(DCX)(DB)(DT)(SAP)(SI)(ALA)(AXA)(FTE)(V)

The FTSE was up .3% to 6,142. Barclays was up .9% to 711.5. BP was down .3% to 590. BT was down .6% to 277.25. Prudential was up 1.1% to 648. Reuters was down .4% to 446.5. Vodafone was up 1.1% to 135.5. Unilever was up .7% to 1317.

The DAXX was up .4% to 6,284. Bayer was up .2% to 39.27. Daimler was up 2.3% to 44.63. DeutscheBank was up .1% to 98.46. Deutsche Telekom was down .3% to 13.46. SAP was up 1.1% to 157.25. Siemens was up .3% to 71.25.

The CAC 40 was up .1% to 5,368. Alacatel was up 1.2% to 10.16. AXA was up .7% to 29.86. France Telecom was up .4% to 20.5. ST Micro was up 2% to 13.55. Vivendi was up 1.2% to 30.33.

Data from Reuters

Douglas A. McIntyre

Trans-Fat Range Wars: McDonald’s And Starbucks

Stocks: (MCD)(SBUX)(YUM)

New York City is thinking of setting a ban for restaurants that sell foods with trans-fats and Kentucky Fried Chicken is not going to sell food containing the stuff.


That opens the door to the question about what the really big food and beverage chains will do about the “bad health” issue of trans-fats and what it will cost them to fix Trans-fats are unsaturated fats that can clog your arteries, and perhaps are killing consumers left and right.

McDonald’s and Starbucks, with their donuts, cookies, and hamburgers are apparently stuffed with trans-fats. It poses two problems for the huge chains. First, there is a cost to replacing menu items with new foods. Trans-fat foods have a longer shelf life. They are cheaper than products made with content like butter. They also require less refrigeration. If you have a business with thousands of outlets, changing a lot of the “eats” over to a healthier fare could be damned expensive.

The other problem is the tobacco company/car company issue. Smokers sue cigarette companies for giving them cancer and heart disease. And, of course, the State of California is suing the auto manufactures for polluting the air.

People may now think that Starbucks and McDonald’s have poisoned them with trans-fats, knowingly cutting short the customer’s lives by filling their bodies with sludge. It has premature heart attacks and strokes written all over it.

KFC does not have much to lose. They are fairly small and comparatively poor next to Starbucks and McDonald’s.

It has to end up in court. Everything else does.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Comcast 1, Verizon 0 (CMCSA)(T)(VZ)(BLS)

Wall St. liked Verizon’s cell phone numbers, but the broadband part of their earnings sent a shudder through investors.

While the company put on 1.9 million new cell customers, broadband subscribers only rose by 448,000.


With Verizon and it rival Cingular (owned by AT&T and BellSouth) continuing a history of strong wireless sales, the good news is already baked into the stock prices.

But, the shadow of Comcast’s huge cable broadband network must disturb the sleep of Verizon management. Their lack of progress with adding their own broadband customers is a sign that the cable companies are not just holding their own. With cable’s ability to offer voice-over-internet, TV and broadband, the phone companies have to play catch-up.

Verizon is betting the ranch on improving its broadband to the home system by upgrading it to fiber. Old news. But, the initiative has only brought in 118,000 customers, although it service is in its early stages.

Comcast flanked the phone companies by adding a large number of broadband subscribers and voice over IP users. VoIP customers rose 483,000 in the last quarter compared with the same period a year ago.


Verizon may be a wireless powerhouse, but its foray into consumer broadband is still lagging, and, with its huge investment in fiber, that cannot continue.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Click Fraud Blues

Stocks: (GOOG)(YHOO)(F)

Whenever someone says that want an audit, good things rarely lie ahead. Several of the nation’s largest advertisers want the large internet sites to give a better accounting of their audiences and validity of users clicking on text ads. And, why not? Click fraud has been an issue on the internet for some time.


But, now companies like Kimberly-Clark and Ford want an army of auditors looking over the shoulders of the Googles and Yahoo!s of the world. If there is a finger on the scales, they want to know about it.

Of course, for old media, this is nothing new. Television audiences have been measures for decades. The Audit Bureau of Circulations has checked newspapers and magazines, and has sometimes found that publishers are cheating.

If big newspapers can do it, why can’t large websites?

For a company like Google, where virtually all of the news is good, it is hard to imagine that something might come out of left field to undermine the revenue growth of the company’s hugely successful AdSense platform.

But, bad news does have a habit of catching up with good.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Ask.com Is Going Nowhere: Barry Diller’s Fantastic Journey

Stocks: (GOOG)(TWX)(YHOO)(IACI)

Ah. To believe that anything is possible. That’s the ticket.

Shares of IAC/Interactive have done well this year, up almost 15%. Odd for an internet stock, although the company also owns big TV commerce channel Home Shopping Network. But part of IAC’s appeal is that it owns No. 5 search engine Ask.com.

According to Comscore, Ask.com has between 5% and 6% of the US search engine user market. Google is over 45%, followed by Yahoo! at 28%, and Microsoft at 12%.


It would appear that Google will hold its lead, at least until Hell freezes over. Search is critical to the strategies of Yahoo! and Microsoft.

Microsoft can’t stumble in search. For the new Microsoft Live suite of products to work, its search function has to be more and more widely used. And, the company is making the case that they can close the ground between themselves and the two leaders to anyone who will listen: "We believe the search business is still in its infancy, and we’re upping our game with cutting edge features like best of breed Local and Image search, along with practical tools that give people more control to help them better find what they’re searching for," a company spokesperson told BetaNews.

Yahoo! is also in a position where it cannot afford to lose any more of its search share. With Google cutting deals with companies like MySpace to provide search features, a marginalization of Yahoo! search would put the last nail in the big portal’s coffin.

Ask.com may be a nice product. But IAC does not have the audience or balance sheet to mount a real campaign to catch the companies ahead of it. According to the company’s last 10-Q, IAC has operating income of $81 million in the last quarter. Retailing was almost half of the company’s business. Ticketing, lending, real estate and teleservices businesses made up nearly another 30%. That means that Ask.com is not a very large business, and if it is strategic to IAC, it does not show in the numbers.

Ask.com might be a nice toy for IAC, but that is all it will ever be.

Could TI Get A Break? How About AMD Or Intel?

Stocks: (INTC)(TXN)(AMD)(MSFT)

If a stock or group of related stocks falls far enough, you can always find someone on Wall St. who thinks they are cheap. The new darling of that crowd is Texas Instruments.
The argument is not completely without merit. Sales of devices that use chips from TI may improve, but, they may not. Cell phone sales are actually projected to grow less than 10% worldwide next year down from over 20% in 2006. Total cell phone sales may approach one billion units for the current year, but Texas Instruments needs that market to keep a torrid pace.

If TI’s core markets like cell phones and consumer electronics devices do not move up sharply, the stock is not exactly cheap. It trades at about $31 now. But, over the last two years, it has been as low as $21. It could still fall a fair amount to stay in its 24-month range. Its performance over that stretch has been about the same at the S&P 500, which means it is up about 20%.

The case for Intel and AMD having better 2007s is also built on a reasonable foundation. Microsoft Vista will need powerful chips so that PCs can take advantage of all of the new OS’s features. But, price wars have hurt margins at the x86 producers, and there is not reason to assume that the trend will simply disappear because Vista needs better chips. Dell, Lenovo, and Hewlett-Packard are not inclined to pay any more for components than they have to.


AMD may not need a lot of good news to recover. At it current level of about $21, it is off by half from its 52-week high. Investors assume that Intel’s new dual core and quad core products are going to hurt AMD’s PC and server share. But, if the No.2 maker of x86 products shows that it can gain some of the market without further margin erosion, the stock might get some of its groove back.

It is unlikely that Intel and AMD would both go up at the same time. What Intel loses, AMD tends to gain. And the same holds true in both directions. Intel is also beaten down. In the summer of 2005, the stock was close to $29. It now trades at $21, so a sliver of good news could move it up.

The chip companies may do better in 2007. But, there would have to get some breaks that hardly fall into the “sure thing” category.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Media Digest 10/31/2006 Reuters, Wall Street Journal, New York Times

Stocks: (MNST)(IBM)(MSFT)(SNE)(VIA)(GOOG)(BP)(F)(VZ)(COP)

According to Reuters, IBM will set up two new IT centers in China and India, highlighting the importance of the regions for future growth.

Reuters writes that Microsoft is filing 55 suits around the world to prevent software dealers from selling counterfeit products.

Reuters also reports that the US Justice Department is investigating Sony for possible antitrust violations in the SRAM markets.

Reuters also writes that Viacom has asked YouTube to take down certain material to which Viacom owns the rights.

The Wall Street Journal reports that BP's decision to defer upgrading its facility may have contributed to a deadly explosion at one of its Texas facilities in 2005.

The Wall Street Journal writes that Ford will cut it North American production by as much as 12% in the first half of 2007.

The Wall Street Journal also reports that Verizon's net rose 2.8% on strong wireless sales, but broadband subsription growth was week.

The New York Times writes that the US has dropped a bid to collect royalties from Chevron which could save oil companies hundreds of millions of dollars.

The New York Times also writes that the founder of Monster has resigned from the company's board as its investigates options back-dating.

Douglas A. McIntyre

Asia Markets 10/31//2006 Creative Technology, NTT Down, Singapore Air Up

Stocks: (CAJ)(FUJ)(HMC)(NIPNY)(NTT)(DCM)(SNE)(TM)(CHL)(CN)(HBC)(PCW)

Asian markets were up modestly.

The Nikkei rose .3% to 16,399. Canon was flat at 6270. Credit Saison was down 3% to 4230. Daiwa Securities was down 1.7% to 1327. Fuji Film was down .2% to 4340. Hitachi was down 2% to 675. Honda was up .2% to 4140. Japan Air was down .4% to 223. Mazda was up 2.1% to 791. Mitsubiishi Electric was up 1.9% to 1020. NEC was down .3% to 602. NTT was down 2.2% to 589000. Docomo was down 1.1% to 179000. Sharp was up 1.2% to 2085. Softbank was down 2.8% to 2560. Sony was up .2% to 4850. Toshiba was down .4% to 740. Toyota was down .7% to 3440. Yahoo Japan was down .9% to 45500.

The Hang Seng was .2% to 16,324. Cathay Pacific was up 1% to 16.98. China Mobile was up 1.4% to 63.2. China Netcom was down .7% to 13.82. HSBC was flat at 146.8. PCCW was up .6% to 4.77.

The KOSPI was up .6% to 1,365.

The Straits Times was up .1% to 2,694. Creative Technology was down 7.1% to 10.4. Singapore Air was up .7% to 15.2.

The Shanghai Composite was up 1.6% to 1,838.

Data from Reuters.

Douglas A. McIntyre

Analyzing Rogers Communications (RG)- A Near Duopoly

By Yaser Anwar, CSC of Equity Investment Ideas

Nikhil Hutheesing, editor of Forbes Wireless Stock Watch, recommends buying shares of Canadian cable company, Rogers Communications (RG).


Toronto-based Rogers does business in four segments: cable, wireless, media, and telecom. The $18 billion company was founded in 1920 and currently provides cable television service, high-speed Internet access, and cable telephony service to more than one million customers in Canada. It also owns 314 video stores.


Rogers’ operating profit grew by 31% in the second quarter on a 29% rise in revenues, led by a 57% growth in sales at the cable division. Over the past four quarters, Rogers has produced $1.56 billion in operating cash flow on $7.54 billion in sales.


Shares of Rogers trade in the US, and had changed hands for as little as $36.62 on April 3 of this year. They’ve since advanced 54% and hit a new 52-week high on Friday, closing at $56.98, or 44.5 times expected 06 EPS of $1.28.


Even with that kind of a multiple, Rogers sports a modest 0.46 price-earnings growth (PEG) ratio, indicating that shares are relatively cheap if the company achieves the 30% annualized growth over the next five years that analysts have forecasted.


Hutheesing believes there are good reasons to be optimistic about Rogers. “Rogers represents one of the few full service communication plays available to investors,” he says. “In the U.S., no similar company exists. There are cable TV companies that offer high speed Internet access and Voice-over-IP telephone service. There are also wireless service providers like Cingular and Verizon Wireless that offer cell phone service and broadband 3G service and telecom companies that provide Internet access via DSL. In Canada, Rogers Communications offers customers all of these ”options.”


The company’s communications portfolio is comprehensive and, Hutheesing points out, it’s doing business in a fertile market. “Besides its extraordinary wealth of assets, Rogers operates in a market with greater growth opportunities than exist in the U.S., because the market for wireless is only about 50% penetrated in Canada compared to 70% in the U.S.,” says Hutheesing. “So its growth rates will be higher than companies such as Sprint Nextel and Verizon Wireless.


Hutheesing originally recommended Rogers in May of 2006 but remains a bull at today’s prices. “Rogers is moving aggressively on all fronts and plays a key role in Canada's communication systems, and I think the company's shares offer impressive upside ahead.”
Yaser's Take: I've resided in Canada for almost two years now. Over here you either use Rogers for your cable TV, internet & communication (Landlines and/or mobiles) needs or you use Bell.


Unlike the US, where you have- Comcast, AT&T, Verizon, Cingular etc, these two companies, Bell & Rogers, have the lion share of the market, a duopoly you can say.


From a consumer's point of view this gives you less choice, but from a shareholders' perspective you couldn't ask for more. There are a couple of small companies which seek to full-fill your cable and cellular needs, but lack the economies of scale that Bell or Rogers have.

http://equityinvestmentideas.blogspot.com/index.html

A Quick Take On Harley Davidson (HOG)

By Yaser Anwar, CSC of Equity Investment Ideas

With the repurchase of 21+ million shares, $1+ billion, in 05 & almost 10 million shares in 2006, one can indeed say management has done a terrific job thus far.


Not only that, investors can expect further stock repurchases and dividend hikes as management utilizes FcF. This is a Warren Buffet type of company. From the past couple of years, management has been continuing a series of payout boosts (from 8% in 01 to 18% so far). In the 2nd Q, HOG increased its quarterly dividend by nearly 17%.


Last year the company had a short-term earnings blip and the stock fell 10 points, would have been a great buying point. That's exactly what Bill Nygren, one of the top value investors, of OakMark Fund (OAKLX) did. OakMark is one of HOG's Top Mutual Fund Holders.

http://equityinvestmentideas.blogspot.com/index.html

Cramewr's MAD MONEY: Positive on Tobacco and Chevron After Election

Last night on CNBC's Mad Money, Cramer discussed the tobacco industry in a positive light. He thinks there is a pretty good buy list: Altria (MO), Reynolds (RAI), Vector (VGR), UST (UST), and Carolina Group (CG).

Cramer also said he thinks in California that PROP 87 will pass that makes oil companies in California fund outside alternative energy. He thinks it will hurt oilcompanies and thinks Chevron (CVX) has the most exposure. He thinks if that happens you will want to Buy Chevron (CVX) after the election and after they cut numbers.

Cramer also interviewed the CEO of Rite Aid (RAD), and ended up saying that RAD is the one for those who can tolerate high speculation.

Jon C. Ogg

Monday, October 30, 2006

Cramewr's MAD MONEY: Positive on Tobacco and Chevron After Election

Tonight on CNBC's Mad Money, Cramer discussed the tobacco industry in a positive light. He thinks there is a pretty good buy list: Altria (MO), Reynolds (RAI), Vector (VGR), UST (UST), and Carolina Group (CG).

Cramer also said he thinks in California that PROP 87 will pass that makes oil companies in California fund outside alternative energy. He thinks it will hurt oilcompanies and thinks Chevron (CVX) has the most exposure. He thinks if that happens you will want to Buy Chevron (CVX) after the election and after they cut numbers.

Cramer also interviewed the CEO of Rite Aid (RAD), and ended up saying that RAD is the one for those who can tolerate high speculation.

Jon C. Ogg
October 30, 2006

Rackable Avoids Getting Racked

After seeing the headlines come across on Rackable Systems (RACK), it seemed the stock should itself have gotten racked. But the company's guidance and large short interest helped it trade up after-hours.

RACK posted EPS $0.19 and revenues of $80.5 Million, versus estimates at $0.20 and $84.6 million.

The guidance for Q4 and for 2007 saved the company. Next quarter Revenue is projected to be in the range of $100 - $110 million and EPS at $0.25 to $0.27, compared to $94.3 million and $0.23 estimates. Fiscal 2007 Revenue is projected to be in the range of $475 to $525 million on EPS of $1.28 to $1.40, versus $455 million and $1.28 estimates.

Third quarter gross margin was negatively impacted by rapid price increases in component pricing, specifically DDR memory. The company expects gross margins to improve in the fourth quarter and for the full year 2007.

RACK shares traded up 6% to $30.85 in after-hours trading, and it closed up 2% to $28.89 in regular trading ahead of earnings. RACK's 52-week trading range was noted as $13.80 to $56.00. Some 20.5% of its float, or 5.649 million shares, are listed in the short interest for October.

Jon C. Ogg
October 30, 2006.

Market Wrap (October 30, 2006)

DJIA 12,086.50; Down 3.76 (0.03%)
NASDAQ 2,363.77; Up 13.15 (0.56%)
S&P500 1,377.93; Up 0.59 (0.04%)
10YR-Bond 4.6730% ; Down 0.002
NYSE Volume 2,218,156,000
NASD Volume 1,724,181,000

Verizon (VZ) beat earnings, but profit taking too the stock down 3% to $37.65. Cramer said it was a Buy after the drop.

American Power Conversion (APCC) rose 26% to $30.02 after it agreed to a $31 buyout from Schneider.

Yahoo! (YHOO) rose 2.4% to $25.95 after Merrill Lynch started it as a Buy.

Both Sirius (SIRI) and XM Satellite (XMSR) fell after each announcing high-end auto deals today. SIRI closed down 1.5% at $3.79 and XMSR closed down 4.5% at $11.40.

Point Therapeutics (POTP) closed up 19.2% at $1.49 after positive osteosarcoma results.

Qualcom (QCOM) closed down 1% at $36.74 after the EU is investigating overcharging cell phone makers for its CDMA.

Blackrock (BLK) rose 3.7% to $155.00 after it missed earnings on net charges for the Merrill Lynch operations, but gace a solid outlook.

Applied Digital (ADSX) Closed up another 10% at $2.47 after adding more sales personnel at its Digital Angel.

Emisphere Tech (EMIS) fell 23% to $6.77 on mixed drug results for diabetes.

Tenet Healthcare (THC) closed down 10.5% at $7.42 after it gave another earnings warning.

Taro (TARO) closed down 9.4% at $10.88 after the resignation of its CFO amid an investigation.

Google (GOOG) closed up 0.3% at $476.57 after removing copyrighted materials off of YouTube.

Trustreet Properties INc traded up 35% to $16.97 after an acquisition by GE Capital.

You can expect the earnings onslaught to resume tomorrow. As far as beating or missing earnings estimates, CNBC gave the following numbers with 63% of the S&P 500 Index companies having already reported earnings: 74% above, 11% Met, and 15% were under.

Jon C. Ogg

Cramer: Verizon is Back from the Dead

In CNBC's STOP TRADING segment, Cramer was discussing a DJIA component stock that is back from the dead. Cramer was saying that Verizon (VZ) is that name. He said the 4.5% and spin-off of Yellow Pages makes this a BUY right here down $1.43 on earnings. He thought the numbers were great. He said management has delivered, and this management is underpaid compared to the other CEOs. He says wireless is the key to the company.

Cramer also noted Comcast (CMCSA) positively again.

Cramer likes Comcast better than Verizon, but the two can be split.

On Yahoo! (YHOO) Cramer discussed the strong performance from Merrill Lynch calling it a Buy. Cramer thinks Panama will help, but he still thinks management needs to be changed at Yahoo!.

Jon C. Ogg
October 30, 2006

The Street Looks Forward to KBW's IPO Next Week

KBW, Inc. is on the IPO docket for the week of November 6 to November 10. For those who are not familiar with the name KBW this is the parent of Keefe, Bruyette, & Woods, a stellar investment bank that tends to focus on the financial sector. It plans to offer 6.5 million shares at a range of $19-$21, giving the deal a proposed market cap of $609 million on $130 million raised in share sales.

The underwriters include KBW and Merrrill Lynchas lead underwriters; and co-managers are Banc of America, Fox-Pitt Kelton, JMP Securities, Thomas Weisel, BNY Capital, and FTN Midwest.

430 people as of June 30, 2006, including 101 in investment banking, 151 in sales and trading and 82 in research; it covers 489 companies under research.

-U.S. registered broker-dealer, Keefe, Bruyette & Woods, Inc.;
-U.S. registered investment advisor, KBW Asset Management, Inc.;
-Keefe, Bruyette & Woods Limited, an investment firm authorized and regulated by the U.K. Financial Services Authority.

The firm specialized in the bank and thrift sector; and expanded the financial services sector: insurance companies, broker-dealers, mortgage banks, asset management companies, mortgage REITs, consumer and specialty finance firms, financial processing companies and securities exchanges. It also expanded from the United States into Europe with a European-focused team in the London office.

It provides research, sales & trading, investment banking, and fixed income services.

KBW posted 2005 revenues combined at $307.8 million and net income was listed at $17.4 Million on an after-tax basis. For the first 6 months of 2006 the company posted revenues of $193.1 million and after-tax net income of $14.8 Million. As of June 30, 2006 it carried Assets of $622 million and total operating liabilities of $340 million.

The company has the traditional range of risks listed in the prospectus for the company, including the equivalent comments that its real assets walk out the front door and go home every night. In truth, unless they have hidden and buried ghosts that aren't known this IPO will be well received. It is hard to call that before you start to see some price indications, so we will wait to see the financial details before we blindly go out with an open endorsement.

The deal looks pricey if you use backward metrics, but if you believe in the company for 2007 and beyond it starts to look like a far better deal. Even though the pricing seems aggressive, it is priced better than it really looks. Initial indications from the street points to strong demand from the street on the IPO at the current terms.

Jon C. Ogg
October 30, 2006

Horsemen Stocks Maintain Most Actives Leadership; Most Actives Under-$5.00

As you will see the volume in raw shares has flip-flopped again to the Horsement stocks. The low priced most actives are just slow today and the bigger-cap leaders are regaining some of their losses posted on Friday after Goldman Sachs reported that Motherboard orders in SE Asia were falling off of a cliff because of severe oversupply. Here is the data today, and all the Horsement stocks are trading higher.

Ticker Price Change Volume
FNSR $ 3.72 $ - 3,935,366
LVLT $ 5.39 $ 0.19 23,183,560
SIRI $ 3.79 $ (0.06) 12,541,853
SUNW $ 5.55 $ 0.05 30,537,352
PMCS $ 6.61 $ 0.20 3,472,708
CNXT $ 1.89 $ (0.02) 5,517,452
CHTR $ 2.29 $ - 9,520,394
Total

88,708,685




NASDAQ 2357.61 6.99 1,012,627,000




Ticker Price Change Volume
INTC $ 21.25 $ 0.15 22,041,732
MSFT $ 28.66 $ 0.32 23,734,034
CSCO $ 23.94 $ 0.22 26,470,850
AAPL $ 80.43 $ 0.02 11,564,583
ORCL $ 18.38 $ 0.28 16,137,161
Total

99,948,360


Jon C. Ogg
October 30, 2006

Market Turns Its Back on Sirius and XM Premium Auto Deals

Sirius Satellite Radio (SIRI) and XM Satellite Radio (XMSR) have each issued high-end deal announcements today, although neither deal will add a significant number of net subscribers.

Sirius (SIRI) has announced that Bentley Motors will use Sirius exclusively in the 2007 models. "All vehicles equipped with SIRIUS will include a lifetime subscription to the service, which will enhance each Bentley's individual customization and give each customer a new vehicle experience," said Andrew Stuart, CEO for Bentley Motors Inc.

XM (XMSR) has also announced that Porsche will use XM Radio as its sole supplier for satellite radio systems starting in 2007. "XM has the technology and content that is consistent with Porsche's commitment to providing our customers the best possible driving experience," said Peter Schwarzenbauer, President and CEO, Porsche Cars of North America. "We are very pleased to be expanding our partnership with XM."

The street doesn't seem to care because the deals will be small add-on deals incrementally. Both stocks are trading lower with Sirius (SIRI) down 1.8% at $3.78 and with XM Satellite (XMSR) down 5.7% at $11.27.

Jon C. Ogg
October 30, 2006

Citigroup's Broken Game Plan (C)(BAC)

Almost everyone else has taken a swipe at Citigroup recently, so why not add the British egg-head weekly The Economist. The paper did not spare Citi’s feelings.

The paper made two critical points. One is that Citi's overseas consumer banking operation is going nowhere. Earnings for the unit are flat. While Citi has a lot of branchs outside the US, it does not have critical mass in most countries.

The second issue is Citi's consumer bank at home. In the US, several banks like Bank of America have more offices than Citi.

In short, Citi may be big in consumer banking, but it is not a concentrated share in any one place. Not enough to give it scale.

Citi's management is simply focusing in the wrong units. The company's investment bank and corporate lending units are areas where the bank can pack some muscle.

Indeed, areas of the bank like trading have been strong performers although they can be very cyclical. Wealth management has been a recent bright spot for the big bank. So, it remains mystifying why management would focus on a flagging consumer unit, no matter how large, instead of businesses that are doing well.

Investors are getting more impatient by that day. Citi's CEO may not have a lot more time to show that his strategy is working.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

RLR Capital Partners Raises Stake in Infocrossing (IFOX) to 6.2%

From 13D Tracker

In an amended 13D filing on Infocrossing, Inc. (Nasdaq: IFOX), RLR Capital Partners disclosed a 6.2% stake (1.34 million share) in the company. This is up from the 5.1% stake (1.08 million shares) the firm disclosed in its original 13D filing in June. In the original filing the firm disclosed a letter sent to the company regarding prior meetings with the company and forthcoming value creating strategic and capital structure opportunities. Also in the original filing, the firm said they believe shares of IFOX are "substantially undervalued."

The stock is up from the mid-$10 level when the firm disclosed the letter, currently trading at $12.45. According to calculations, the firm paid an average price of $11.06 each for its shares.

http://www.13dtracker.blogspot.com/

The Grinch Stole Yahoo!'s Christmas

Merrill Lynch upgraded Yahoo! from "neutral" to "buy" on the theory that the stock has fallen far enough and that the holidays will help salvage the big internet company's poor performance. Merrill also thinks that 2007 could be helped by Yahoo!'s new advertising search platform. It seems a little late to be upgrading Yahoo!.

If its last quarter is any indication, it may have better numbers in Q4, but not compared with Google, and possibly not compared to it own Q4 in 2005. The problem facing Yahoo! is that it is losing share in the search market and that its display ads are dropping in key categories.

Christmas is not going to turn that around. Google's AdSense product has such a huge lead inthe marketplace that even if Yahoo! builds a better mouse trap, there is no guarantee that advertiser will automotically go to the work to move to a new product. It is much like Google's foray into online payments. PayPal from EBay has not lost much, if any, share to it. As a matter of fact, PayPal was the big earnings winner for Ebay last quarter.

Santa is not giving Yahoo! anything this year. Except, maybe, a lump of coal.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Capella Education IPO Terms Set

Capella Education Co. has set its proposed IPO terms of 4 million common shares being offered at a $17.50 and $19.50 per share range.

The Minneapolis-based provider of online post-secondary education services via the Internet will trade trade under ticker CPLA on NASDAQ. It is the for-profit parent company of Capella University, an accredited online academic institution. Capella University offers undergraduate and graduate degree programs in business, technology, education, human services and psychology, and currently serves more than 16,000 enrolled adult learners from all 50 states and more than 63 countries.

The current expected IPO time frame is for next week. Credit Suisse is serving as the lead underwriter; and co-managers are listed as Banc of America, Piper Jaffray, and Stifel Nicolaus.

Shareholders include Forstmann Little, Technology Crossover Ventures, Insight Venture Partners, and Cherry Tree Ventures. More information can be found at the www.capella.edu or www.capellaeducationcompany.com websites.

Jon C. Ogg
October 30, 2006

Opnext IPO Filing: Optical Components Carve-Out From Hitachi

Opnext Inc., a maker of optical components, has filed for an IPO given a $150 million nominal value for registration purposes. The Eatontown, N.J.-based supplier plans to trade on the Nasdaq under ticker symbol OPXT.

Goldman Sachs is serving as the lead underwriter; and co-managers are listed as J.P.Morgan, CIBC World Markets, Cowen & Co, and Jefferies. Hitachi is the company’s primary shareholder because it is the former parent. Clarity Partners and Cross-Atlantic Capital are also said to be holders. The actual timing of the IPO is not yet determined. The company is still losing money, but does more than $150 million in revenues.

More information on the company can be found at the www.opnext.com website. There is also a great Q&A page giving more information at http://www.opnext.com/suppt/faq.cfm URL.

It is very hard to call Hitachi (HIT) a great backdoor play into this IPO, even though the street is rewarding new technology IPOs with high premiums. That is because the HIT ADR's give the company a net value of $19.5 Billion in the equivalent of Japanese Yen. That does NOT merit a trade just as a backdoor play. Others may treat HIT as undervalued or at a huge discount, but we are only evaluating this event in the sense of exploring HIT as a Backdoor Play. The current price on HIT ADR's is roughly $59.00, and it has a trading range of $55.74 to $76.57 over the last 52-weeks in the thinly traded ADR's.

Jon C. Ogg
October 30, 2006

The New York TImes Falls Further Behind (NYT)(NWS)

It is not enough that The New York Times company has been bleeding circulation and advertising revenue and that online operations cannot make that up. Now there is further evidence that it cannot hold circulation in it home market.

The latest figures for daily newspaper circulation show the New York Times down 3.5% for the six month period ending September 30 dropping to 1,086,798.. The other key NYT property, The Boston Globe, did even worse. Circulation there fell 6.7% to 386,415.

Moving onto the list of the top five circulation dailies in the US is the NY Post. It now ranks ahead of papers like The Chicago Tribune and Washington Post.

The New York Times better look over its shoulder. News Corp's NY Post might be gaining on them

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Sony Goes To The Mattresses (SNE)(AAPL)(TWX)

Like a mob boss trapped by federal agents in a farm house, Sony has decided it needs to go to the mattresses.

The company now admits that its Playstation3 platform and burning PC batteries recall are going to be legacy problems. Sony needs to turn elsewhere for growth.

But, by signalling which parts of the company might make up for problems with its gaming platform, Sony may be taking the risk of making promises to Wall St. that it cannot keep. For a second time.

Where is Sony pointing for relief? Its movie studio and consumer electronics businesses.

The big Japanese conglomerate is risking its growth on two notably fickle industries. Sony Pictures has done very well this year, with films like "The Da Vinci Code" , but, as studios like Warner Bros have showed recently success one year does not necessarily roll into the next.

Consumer electronics is also a tough and crowded market. IPod. Samsung. Toshiba. It's a long list.

Now that Sony has telegraphed its punches, it better deliver.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Select Analyst Calls (Oct. 30, 2006)

AAP started as Underweight at JPMrgan.
AMP raised to Neutral at B of A.
AZO started as Underweight at JPMorgan.
BIIB raised to Peer Perform at Bear Stearns.
CAR cut to Hold at Soleil.
CRS raised to Outperform at Bear Stearns.
CX raised to Buy at Merrill Lynch.
ENR started as Underweight at Morgan Stanley.
END started as Overweight at JPMorgan.
HLND started as Overweight at Lehman.
IR cut to Hold at Deutsche Bank.
JNS cut to Sell at Goldman Sachs.
KLAC raised to Outperform at RBC.
KOF raised to Equal Weight at Lehman.
KOMG raised to Buy at Deutsche Bank.
LLL raised to buy list at Goldman Sachs.
LMT raised to Buy at Goldman Sachs.
LNET cut to Hold at Soleil.
LVS started as Buy at Deutsche Bank.
NOVN cut to Sell at Soleil.
NVLS cut to Sector Perform at RBC.
OSG cut to Sell at Citigroup.
ORLY started as Neutral at JPMorgan.
PSUN raised to Neutral at JPMorgan.
SHW started as Equal Weight.
SSCC raised to Buy at B of A.
WFMI cut to Sector Perform at RBC.
WSH raised to Overweight at Morgan Stanley.
YHOO raised to Buy at Merrill Lynch.

Pre-Market Stock News (Oct. 30, 2006)

(ANSV) Anesiva delayed some testing results for 2 or 3 weeks with the FDA.
(APCC) American Power Conversions up $6.29 after getting $31 buyout offer from French mkaer of power back-ups.
(ARJ) Arch Chemicals $0.30 EPS vs $0.29e.
(BLK) Blackrock $1.06 EPS vs $1.14e; unsure if items in number.
(CCO) Clear Channel Outdoors $0.09 EPS vs $0.07e.
(CCU) Clear Channel Communication $0.38 EPS vs $0.37e.
(CSCX) Cardiac SCiences extended GE pact.
(DCO) DCO $0.40 EPS vcs $0.34e.
(FPL) FPL Group $1.15 EPS vs $1.07e.
(GERN) Geron -$0.15 EPS vs -$0.16e.
(HOC) Holly Corp authorized up to $100 million for stock buybacks.
(IFSIA) INterface filed to sell 5 million shares of common stock.
(KIM) Kimco Realty $0.56 EPS vs $0.6e.
(LOW) Lowe's up 1% afterCramer said it has bottomed and should be bought.
(LYO) Lyondell filed to sell 10 million shares of common stock.
(MCEL) Millennium Cell -$0.04 EPS vs -$0.05e.
(NRGN) Neurogen starts phase II studies on insomnia patients.
(PMTI) Palomar Tech trading up afgter Cramer said it can still be bought to make some money.
(QCOM) Qualcoom reported that a court has enjoined Broadcom from using Qualcomm's patent.
(RIN) Rinker rejected offer from Cemex as it wants more cash.
(RSG) Repbublic Services $0.58 EPS vs $0.51e.
(SKYW) Skywest $0.63 EPS vs $0.63e.
(SYY) Sysco Foods $0.37 EPS vs $0.36e.
(VZ) Verizon $0.68 EPS vs $0.66e.
(WMT) Wal-Mart said OCT retial sales look up only 0.5%.
(WSSI) Webside Story names new CEO; said it will meet or beat previous guidance.

Radio Stocks Runs Like A Scalded Dog

The word is that video killed the radio star. Seem that way. YouTube. AOL Video. Yahoo! Video, MovieLink, IPTV.

:Might as well bury radio and sing “Danny Boy”.

Thing is, radio won’t die. At least not shares in radio companies.

Last week Sirius shares took a big run from $3.68 to $3.95 in one day. The NBA started on Sirius, but there was no big news there.

XM had an even bigger move over the course of a trading day. It jumped from under $10 to $11.95. The company made an announcement about some convertible securities, but nothing that would seem to move the stock almost 20%.


Traditional radio giant Clear Channel also made an impressive move from $31.52 on last Tuesday to $35.46. The company’s management indicated it might be willing to consider a private equity buy-out.


It may be that nothing will come of the action, but at least some of Wall St’s big money is looking at radio again. Maybe it’s because it hasn’t gone away and stocks in the sector have gotten so cheap. Sirius has not been this low since late 2004. XM has not been this low since 2003. Clear Channel has come up some, but its but, its August low of $27.17 is as low as the stock has been since 2002.

XM and Sirius still lose a lot of money. But, there is a segment of the investing community that believes that they are growing fast enough to become profitable before they have to raise more money. Clear Channel had an operating profit of almost $1.5 billion in 2005 on revenue of $6.6 billion.

High definition TV may be great, but try watching it while you are driving.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Airbus Hands Boeing The Keys To The Plane (BA)

The smoke signals have been rising above the horizon for some time now. Emirates Airlines has dropped orders for the ten Airbus 340s it was buying and will go with the Boeing 777 instead. Emirates is also sending some of its folks to Airbus to see whether the European airplane manufacturer will ever actually build the 380 super-jumbo jet. If the visit goes badly, Boeing could pick up some 747 orders as well.

When Boeing announced earnings recently, its stock dropped from about $84 to $80.. Investors were trading the past instead of the future. Never a good thing.

Boeing earnings were down, partly because the company closed its airplane broadband unit. However, sales were up as were airplane deliveries. Boeing also raised guidance for next year.

The folks on Wall St. wanted a little more than Boeing had to offer, and refused to trade the shares higher. Maybe it will take Airbus shutting down for them to see the orders coming Boeing’s way.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in com.panies that he writes about

Wal Mart Moves Toward Negative Growth (WMT)(TGT)

Someone came up with the term “negative growth” because the word “shrinking” seemed to mundane. No matter. Wal-Mart is very close to shrinking and negative growth here in its home market. After saying it might grow 2% to 4%, then recently revising that to 1.3%, Wal-Mart could only muster a .5% same-stores sales figure. For all we know that could be revised downward as it was in another recent month.

Despite revamped stores and discounting holiday goods, Wal-Mart may be reaching the end of it growth phase in the US. It may simply have too many stores, too much market share, and too much competition from other large retailers like Target. There are, of course, large online retailers like Amazon who did not even exist a decade ago.

According to the company's 10-Q, in its last full quarter Wal-Mart’s international sales grew from $14.2 billion last year to $18.6 billion, about 32% compared to 6% in the US. Operating income for the unit grew from $799 million to $977 million. Wal-Mart US stores had operating income of over $4 billion, so international has a ways to go to catch up. But, it will have to try.



Since Wal-Mart has exited the South Korean and German markets, overseas growth may be a lot tougher.

But, no matter. The “negative growth” may be starting for the huge retailer’s US operations.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.
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