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Cramer Says DJ Orthopedics is a Good Crutch

2006-11-17T18:32:00.000-05:00

Cramer was discussing the resurgence of knee braces on sports players. He noted that orthopedic companies are going after companies, which the journal also said this. He said linemen are wearing these even when they don't need to.

DJ Orthopedics (DJO) makes these and he has recommended this name before. He isn't talking about orthopedics in general, he is talking about bracing. the air brace followed by the knee brace will keep you out of knee surgery. He said DJO is a one-stop pure play on this and everyone wants to avoid surgery.

Cramer thinks this goes a lot higher. He thinks there is the potential for brand recognition and these could be mass sold now. They had to outsource from New Jersey to Mexico manufacturing, so earnings may rise and the estimates are all over. He thinks it will raise estimates all year. If you use $2.10 for 2007 earnings it is only 21 times 2007 earnings. He said the multiple is lower than BMET and others, but the growth rate is higher.

DJO closed down 0.6% at $44.43 in regular trading, but its shares rose over 3% after-hours to $45.89 after Cramer touted. The 52-week trading range for DJO is $26.69 to $44.84.

Jon C. Ogg
November 17, 2006

Cramer Says DJ Orthopedics is a Good Crutch

2006-11-17T18:21:00.000-05:00

Cramer Say's Disney Was No Mickey Mouse; He Likes It

2006-11-17T18:05:00.000-05:00

On tonight's MAD MONEY show on CNBC, Cramer went over a stock gift because it went down for no reason.

First he noted the NYMEX (NMX) IPO. He said it isn't the ideal entry point, but you should only buy 1/4 of a position of whatever you want to buy now and add in as it drops down. But Cramer said the NYSE (NYX) should be the buy right here since the NMX is worth $12 billion and NYX is worth $14 Billion. NYX is bigger and better.

The stock that was down for no reason to Cramer is Disney (DIS). He said it is down $3 since earnings, but this is a buy. He thinks that DIS's first down move might not be able to be trusted. They didn't really do anything wrong. They didn't miss earnings or revenues, prime time did well, but the reason it fell was because the estimates were raised a lot ahead right before the company's quarter was announced. That created an artificial comparable confusion on the street, but it is firing on every cylinder and even them parks did wellfor DIS. He thinks movie costs are coming under control, although Pirates II was over $200 million and Pirates III will be expensive too. ABC and Disney channel ratings are going up. While the street thinks Disney can't grow like this forever he thinks that NASCAR will be a huge add for it in 2007.

DIS closed down 0.35% at $32.94 in normal trading today, but shares rose 1.3% to $33.38 in after-hours trading.

Jon C. Ogg
November 17, 2006

Market Wrap (Nov. 17, 2006)

2006-11-17T16:16:00.000-05:00

DJIA 12,342.56; Up 36.74 (0.30%)
NASDAQ 2,445.86; Down 3.20 (0.13%)
S&P500 1,401.20; Up 1.44 (0.10%)
10YR-Bond 4.607%; Down 0.048
NYSE Volume 2,625,847,000
NASD Volume 1,708,761,000

This marked the 6th consecutive record close for the DJIA today. Hardly anyone bothered noting that today was options expiration date for stock options. Japan's Nikkei closed down 0.45%; FTSE 100 in U.K. closed down 1.01%; Germany's DAX index was down 0.48%; France's CAC-40 closed down 1.20%.

The big deal of the day was the NYMEX (NMX) IPO. Almost nothing else came close to it in coverage. It was such a ridiculous IPO pricing at $59.00, because it opened at $120 out of the chute and closed at $132.99.

The homebuilding numbers tracked by permits and housing starts were just too weak to ignore at first, but they mostly recovered throughout the day. Lennar (LEN) closed down only -0.2% at $49.30, DR Horton (DHI)rose 0.6% to $25.10, and KB Home (KBH) rose 0.5% to $49.07.

Lower oil prices yet again didn't phase many key oil stocks with Exxon Mobil (XOM) rose 0.55% to $73.08 and Oil Service HOLDRs (OIH) rose 0.8% to $136.85.

Conor Medsystems (CONR) rose 18% to $32.68 after J&J (JNJ) offered $33.50 to acquire the company. SurModics (SRDX) rapidly fell on the deal because they coat the J&J Cypher stent now, but they issued a release stating they would still be used and so the stock ran up to close up 7.75% to $34.49.

H-P (HPQ) shares slid 1.25% to $24.94 despite beating EPS targets, as guidance is in-line.

After yesterday's earnings, Starbucks (SBUX) fell 5.1% to $37.42 because guidance was essentially the same as in its recent analyst meeting. Its revenues were deemed a tad light, but it was really large profit taking after a huge run.

Under Armour (UARM) rose 0.65% to $46.55 after Cramer last night said that it offered upside from current levels along with Nike (NKE).

Marvell Tech (MRVL) fell 2.9% to $19.04 after posting a sequential revenue decline.

Google (GOOG) was reiterated a Buy with a $600 target at Citigroup, but it never was able to crack $500.00. Its high was $499.85, and it closed up 0.58% at $498.79.

First Solar (FSLR) priced its IPO at $20.00 and closed up at $24.74.

Sony (SNE) saw its ADR's in the US trade up 2.1% to $40.79 as its long-awaited PS3 hit stores today.

Altria (MO) rose 1.7% to $85.01 after raising guidance and as its "lights" case appears to have permenently gone in its favor.

Foot Locker (FL) fell 2.7% to $23.27 after reporting a 2 percent decline in its third-quarter profit, and after the chances of a buyout are nearly gone.

Advanced Magnetics (AMAG) rose a sharp 29.8% to $57.00 after it reported promising results from a late-stage clinical trial for an iron-replacement therapy for chronic kidney disease patients.

Have a great weekend!

Jon C. Ogg
November 17, 2006

China Car Market: What If Everyone's Market Share Goes Up 100%

2006-11-17T15:00:00.000-05:00

Stocks: (GM)(F)(TM)(HMC)

Toyota says that its market share in China should rise 30% next year to about 400,000 cars. Ford says its share there should double next year. It has sold 118,000 cars through October. GM says it will increase it current share in Asia from 6.5% to 10% with most of the unit increase coming in China.

None of this includes the plans of companies like Nissan, VW, or DaimlerChrysler. Not to mentions the locals.

Perhaps China is growing so fast that all of the major car companies can reach a share of 100% in the huge Asian country. But, if that doesn't work, someone is going to be disappointed.

You can count on it.

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

Cramer Evaluates How To Trade The NYMEX IPO Today

2006-11-17T14:47:00.000-05:00

On today's STOP TRADING segment on CNBC at 2:45 PM EST, Jim Cramer reviewed how to trade off the NYMEX (NMX) IPO today.

Cramer said the NYMEX (NMX) IPO is over-extended at +140%, but he says if it gets to $120 or $110 then you can buy some. He said something is wrong with this picture. He said there was a tremendous media sensation for the IPO and they did leave a lot of money on the table, but they got rich anyway.

He thinks NYSE (NYX) is far cheaper. He said it went a little nutty, but it is not a return to dot.com values.

Cramer also endorsed Sears Holdings (SHLD) again, just like last night. He thinks that Eddie lampert should be allowed to invest the funds because he is a great investor.

Cramer called Conor Medsystems (CONR) is a second rate company that J&J (JNJ bought after CONR missed its quarter. He wants to know why people aren't buying Boston Scientific (BSX). He thinks BSX is done going down and it could go to $18 ot $19 when he discussed it.

Jon C. Ogg
November 17, 2006

The Real Market for PS3: eBay, For More than $2,000

2006-11-17T14:33:00.000-05:00

Stock Ticker: SNE

OK, we all have seen the media covering the swarms and swarms of young adults waiting in line at electronics stores around the country waiting to get their hands on the Sony Play Station 3. We had note dthat these were being listed for $2,000 and $3,000 for the voucher on eBay last month. Well, the consoles are going for north of $2,000 on eBay right now.

This is supposed to be THE big console with limited supply, but I can't get past reading about how many of the systems do not integrate well with most of the older games and how many defects or glitches there were in pre-reviews this week. It was also pretty shocking when I was in a GameStop store two weeks ago and asking about the console and the younger adult working there said to be sure to give this at least 3 large series of US shipments to the U.S. before buying it so that the first machines with all the glitches had been worked out and the returned systems were out of the system. I asked how long that would really be and the guy said "4 to 6 months." Now one thing that may trim that time down by a month or so is that these for now are being flown in by air freight, or at least so Sony claims. That was a stun to me what someone whose job is supposed to be to sell these systems.

Take a look at what these are selling for on real bids on eBay as of 2:22 PM EST Today after typing in "PS3" search on eBay items:

9919 items found for

PS3

List ViewPicture Gallery

Sort by: Customize Display

		Item Title	PayPal	Bids	Price*	Shipping to 77019, USA	Time Left
Featured Items
		SONY PS3 PLAYSTATION 3 60GB SYSTEM CONSOLE GUARANTEED! 1700+ FEEDBACK - WHY TRUST ANYONE ELSE WITH YOUR PS3?		47	$3,450.00	$40.00	1m
	Enlarge	PLAYSTATION 3 SYSTEM - 60GB PREMIUM SONY PS3 CONSOLE 100% POSITIVE FEEDBACK - EBAY MEMBER FOR 7 YEARS!		37	$2,650.00	$20.00	5m
		PS3 Sony Playstation 3 NIB Bid now before it is to late!! PS3 Nov 17th!!		19	$2,025.02	$50.00	5m
	Enlarge	SONY PLAYSTATION 3 PS3 20GB CONSOLE SYSTEM SHIPS NOV 17 GUARANTEED PRE-SALE		54	$2,425.00	$65.00	5m
	Enlarge	Sony Playstation 3 PS3 60GB Premium System Console NR 1 Extra Controller and Ridge Racer 7 CASH RECEIPT		47	$2,425.00	Not specified	5m
	Enlarge	PS3 Sony Playstation 3 60GB Console System -FREE EXTRAS Verified by store I am receiving on 11/17 GUARANTEED		14	$2,401.00	$35.00	5m
		Playstation3 60Gb Pre-order ships on 11/17 PS3 Talladega Nights Blue Ray and Need For Speed Carbon inc		59	$4,361.00	Free	5m
		PS3 Sony PLAYSTATION 3 60GB Premium Console FREE SHIP!		37	$2,650.00	Free	6m
		~SONY PLAYSTATION 3 PS3 PS 3 Premium 60 GB System~ FREE Guaranteed Overnight Shipping You get it 11/18		43	$2,477.69	Free	7m
		SONY PLAYSTATION 3 PS3 CONSOLE 60GB system Pre-Sale Guaranteed to ship on Nov 17 by Next Day Air!!		55	$2,401.00	$40.00	11m
		Sony PLAYSTATION 3 60GB Version - PS3 New in Box Trusted PowerSeller with 100% feedback - FREE SHIPPING		37	$2,025.00	Free	20m
		**- SONY PS3 PLAYSTATION 3 TOYS R US RECEIPT 60 GB ****** SOLD OUT PRESELL WILL HAVE IN HAND ON THE 17th of NOV		34	$2,225.00	$80.00	21m
	Enlarge	Sony PS3 Playstation 3 Console LCD HDTV + BONUSES Guarantee To Ship Overnight On 11/17 + Lots Of Extras		30	$1,630.05	$52.60	23m

Key Syndicate Deals for Thanksgiving Week

2006-11-17T14:26:00.000-05:00

Stock Tickers: AER, SPR, TM, INFY, NMX

We have a couple deals to watch for next week, but since it is Thanksgiving week you can expected everything to come Monday night for Tuesday trading.

Most of the A-Team trading desks are vaceant either all of Wednesday ahead of thanksgiving or at least after the first hour. Friday is a joke of a trading day and to the best of my knowledge there has never been any syndicate deal "purposely" on that trading day in the US.

Two IPO's to watch are AerCap Holdings N.V. (AER) and Spirit Aerosystems (SPR).

Aercap (AER)is a Dutch holder of aircrafts it leases out, and it sells and leases parts, engines, and services. This is an awaited IPO for US investors for what looks to be 26.1 million shares (about 2/3 being sold by insdiders) at a $22.00 to $24.00 range. This offering is led by Goldman Sachs, Lehman, Merrill Lynch and Morgan Stanley.

Spirit erosystems (SPR) will also price Monday night. It has some 52 million shares coming at a range of $23.00 to $25.00. Spirit's IPO is being led by Goldman Sachs, Morgan Stanley, and Credit Suisse. Spirit AeroSystems was created in 2005 when Canadian investment group Onex bought Boeing's (BA) Wichita and Oklahoma assets in a $1.5 billion cash and debt transaction. Onex officials had said their plan was to take Spirit public within five years, but this is 1 year and some change as the market and economy accomodate now.

We also have two secondaries to watch, and these are also set for Monday night. Toyota MOtors (TM) has a potential offering next week, but there has actually been very little buzz ahead of the deal so that may or may not be the case. Details on that will have to wait until Monday. Infosys Tech (INFY) out of India is supposedly having a $1.5 Billion share sale in the secondary market, although this has been approved since the start of November for up to 30 million ADR shares to be sold, which is supposedly to increase ownership of Infosys in the U.S.

There are other deals on the books, but these are the important ones to watch. Stay tuned Monday and Tuesday.

After slamming the crummy pricing job from the underwriters on the NYMEX (NMX) IPO this morning, I did manage in my rant to forget to at least congratulate the NYMEX seat holders. They all had 90,000 shares per NYMEX seat, so they just got to add a substantial amount to their "soon-to-be" liquid net worth.

Jon C. Ogg
November 17, 2006

Anatomy of a Mispriced IPO: NYMEX (NMX)

2006-11-17T10:34:00.000-05:00

Stock Tickers: NMX

$120.00 was the opening print for NYMEX (NMX). While there may be cheers here from the floor, this is ludicrous and obscene as far as a mispricing. I am not referring to the valuation or the stock price in and of itself, because the market is the mechanism that initially determines a fair and current price. But what is ludicrous is that the lead underwriters in charge of pricing are relied upon by a company coming public to determine a fair and equal pre-set pricing. NYMEX was told that the fair price on that was $59.00, above the raised ranges. For the first print out of the chute to be $120.00 you can rest assured that NYMEX was just boinked and a lot of IPO cash just got left on the table.

Investors that take the risk in getting IPO allocations do not deserve a 100% return instantly out of the chute for the first print after an IPO pricing. There was no history there, and there is very little risk. If you were allocated IPO shares at $59.00 on NYMEX, then you are allocated IPO shares to enough IPO's that even when you factor in pigs thatfall 20% in a day you make out like a bandit.

I am not a socialist and don't even call out for more and more never-ending market reform to protect Grandma Jones, but when you see this it is obscene. No doubt about it. If you were James Newsome, the CEO of NYMEX, you have to act happy on the floor like he just did on a quick CNBC interview, but you know he is going to go back to his office and call those investment bankers more four letter words than can be thought of. If not, then it is because of shell shock.

There have been lawsuits over this practice in the past where on dot.com IPO's in 1998 to 2000 where shares priced at $28.00 as "the max the market can bare" and then the first print is $100.00 or more. Imagine how much the dot.com bubble may have been better contained if the street actually priced deals at a fair market price. Milton Friedman is the man I recall saying the equivalent of "money is worth whatever people think it is worth," but I bet right now he would be asking the underwriters how $59.00 on a well known commodity is instantly worth $120.00 or more.

I won't even go into how this also destabilizes a market on a stock and the related companies. You never know where this IPO will close today. It could close at $175.00 or it could close at $90.00, although these are just theoretical numbers at this point. Since the open, there was even a $152.00 print, although it is back at $135.00 as I load the story and prints have been all over the place.

The Dutch Auction route for IPO's has been slammed in the past, but this makes a better and better case for it if you are an established name brand coming public. W.R.Hambrecht and its OpenIPO mechanism have often not been well received by the public and the deals are snubbed by the bulge bracket firms because it denounces how they operate, but it is probably assumed that the Hambrecht investment bankers are calling any large company out there on the IPO docket right now pointing out how much money was just left on the table by sticking with the "Good Ol' Boys."

Shares of InterContinental Exchange (ICE) have traded in a $93.90 to $98.45 range today and shares of Chicago Mercantile Exchange (CME) have traded in a $533.50 to $546.98 range today. If you wonder why researchers sometimes point out that a monkey throwing darts at a board or randomly picking names can outperform actual stock pickers sometimes, this may demonstrate part of the theory.

There is no reason to beat a dead horse (or a dead money) over and over here, but I think the point has been made.

Jon C. Ogg
November 17, 2006

It’s That Time of Year for Intuit

2006-11-17T10:07:00.000-05:00

By William Trent, CFA of Stock Market Beat

Last month we pointed out that Intuit (INTU) tends to trade in a seasonal pattern, with the annual price peak occurring late in the calendar year. True to form, the stock was down after hours after Intuit reported earnings for their first fiscal quarter yesterday:

Intuit Inc. (Nasdaq:INTU - News) today announced its first-quarter 2007 revenue increased 19 percent over the year-ago quarter to $362.1 million. Growth was primarily driven by strong sales of its QuickBooks software and add-on solutions, payroll and payments. Approximately $20 million of first-quarter revenue was attributed to the September launch of QuickBooks 2007, which was about 30 days earlier than last year. Without this earlier launch, revenue growth would have been approximately 12 percent.

Forward-looking Guidance
Intuit reaffirmed its previously-given revenue and earnings per share guidance for the second quarter of fiscal 2007 and provided operating income guidance for the first time. Intuit expects:
* Revenue of $743 million to $760 million, or year-over-year growth of 0 percent to 2 percent.* GAAP operating income of $185 million to $204 million, and non-GAAP operating income of $211 million to $230 million.* GAAP diluted earnings per share, or EPS, of $0.34 to $0.37, and non-GAAP diluted EPS of $0.39 to $0.42.

Intuit also reaffirmed its previously given third quarter, fourth quarter, and full year fiscal 2007 guidance for revenue and earnings per share, details of which are available on Intuit’s Web site at www.intuit.com/about_intuit/investors/earnings/2006/.

The guidance was slightly below consensus expectations, but that’s what the consensus gets for making estimates outside the high end of management’s guidance range. We bought put options following our earlier article, and still own them. It’s another one of those things that worked the way we expected it to.

The author may hold a position in the securities discussed.

The author's current holdings are as follows: Long: Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion's Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; Ceradyne (CRDN); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Lion's Gate (LGF) call options; Dell (DELL) put options; Ceradyne (CRDN) call options; Plantronics (PLT) put options.

http://stockmarketbeat.com/blog1/

Hewlett Packard (HPQ)

2006-11-17T10:05:00.000-05:00

By William Trent, CFA of Stock Market Beat

Hewlett Packard (HPQ) shares were off slightly after reporting that earnings beat consensus estimates - if you are willing to view their recurrent restructuring charges as non-recurring. While they have had their share of troubles this quarter, you have to hand it to them for reporting at all, the way things are going in tech-land (with everyone either delaying their report or giving partial data while being investigated by the SEC.)

Revenues grew 7% year/year. That is not an exciting number, but at least it is better than some others we have seen.

Inventories grew faster than sales, which management explained on the conference call thusly:
Next, the balance sheet. HP’s inventory came in at $7.8 billion, up $873 million year over year and up $286 million sequentially. Inventory days of supply stands at 38 days, up from 35 days last year and down from 41 days sequentially. The year-over-year increase in inventory reflects volume growth, strategic buys and supply chain changes designed to optimize our cost structure. The sequential increase is in line with normal seasonality.

We’re still a little skeptical, but the explanation is within the bounds of reason. Again, while not a major concern it was nothing to brag about.
Overall, we agree with the after-market response to the report. This was a decent but unspectacular quarter for Hewlett Packard.

The author may hold a position in the securities discussed.

The author's current holdings are as follows: Long: Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion's Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; Ceradyne (CRDN); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Lion's Gate (LGF) call options; Dell (DELL) put options; Ceradyne (CRDN) call options; Plantronics (PLT) put options.

http://stockmarketbeat.com/blog1/

Oil Revisited

2006-11-17T10:01:00.000-05:00

By William Trent, CFA of Stock Market Beat

When we last visited the oil patch, we found the arguments against higher oil prices lacking. It remains our view that demand for oil is rising at a faster pace than supplies of oil, and that the imbalance will be solved through the price mechanism. We don’t think the correction is even close to done.

However, an article we found in Oil & Gas Journal titled CERA study challenges ‘peak oil’ theory suggested it was time to update our analysis.

The article states:
The “peak oil” theory, stipulating that world oil production will soon peak and sharply decline, is flawed, according to an analysis by Cambridge Energy Research Associates (CERA).

Instead of a peak, CERA says, production is more likely to trace an “undulating plateau” that will last for a decade or more beyond 2030.

It seems of little consequence to us, as we believe demand will continue to rise without further drastic discouragement through higher prices. Whether supply is declining or flat, it will not keep pace with demand. The article continues:
The CERA report contends that the often-cited Hubbert model, which patterns production as a bell curve, fails to recognize that recoverable reserve estimates evolve with time and are subject to significant change. The model also underplays the impact of technological advances.
Although M. King Hubbert accurately predicted timing of the peak in US Lower 48 oil production in 1970, the CERA study says, he underestimated the peak rate by 20% and total cumulative Lower 48 production during 1970-2005 by 15 billion bbl.

Again, not exactly right is likely to be close enough for our theory to play out.

With the recent drop in prices, days of inventory made a run at breaking out of the long-term downtrend. However, the breakout failed and stocks remain low compared to long-term averages.

We’ll stick to our long position in the oil ETF (USO).

The author may hold a position in the securities discussed.

The author's current holdings are as follows: Long: Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion's Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; Ceradyne (CRDN); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Lion's Gate (LGF) call options; Dell (DELL) put options; Ceradyne (CRDN) call options; Plantronics (PLT) put options.

http://stockmarketbeat.com/blog1/

NYMEX Debuts, Watch Other Exchanges Too

2006-11-17T09:42:00.000-05:00

NYMEX (NMX) did price its long-awaited and well above average demand IPO. It priced 6.5 million shares at $59.00. The original terms were 6 million shares at $48.00 to $52.00, and then was bumped to 6.5 million shares with a higher $54.00 to $57.00 range. The deal was definitely set to price higher because of all the exchange hype, but it would seem that there is some money being left on the table here.

It is definitely discussed as having a premium to its above the already raised range, but the question remains as to how much higher. Some are thinking $5.00 higher, some $10.00 higher, and Jim Cramer even said he thinks it is a buy at $20.00 higher (from the $57 area anyway). The opening print will be one to watch regardless. The first indications were for $78 to $80, but who knows if that is right or real.

Sorry for the lack of a background on the NYMEX, but it has been covered so much that it would seem like it is from the Department of Redundancy Department.

InterContinental Exchange (ICE) is trading up 0.6% at $95.20 pre-market, and it is up from under $85.00 just last Friday. NYSE (NYX) is trading up 0.25% at $94.01 pre-market, although that is only about $1.00 than last Friday. The Chicago Mercantile Exchange (CME) is up 0.55% at $543.00 pre-market, and that stock was actually under $500.00 last Friday. NASDAQ (NDAQ) stock is flat pre-market at $36.45 and is actually in-line to under where it was last Friday. Some of these other exchanges have enjoyed some serious runs in the last week, so it makes you wonder what will happen to them after the NYMEX IPO prices.

Other potentially related shares that could get secondary or tertiary actions if this just gets ridiculous are the following: Investment Technology Group (ITG), eSpeed (ESPD), and International Securities Exchange (ISE), OptionsXpress (OXPS), MarketAccess (MKTX) and others.

Get ready for a wild day in exchange stocks trading.

Jon C. Ogg
November 17, 2006

GM Boasts About Asia (GM)(HMC)(F)(TM)(DX)

2006-11-17T08:50:00.000-05:00

US car executives cannot keep bragging about how well they will do in Asia. GM is now saying it believes it can raise its share in the region from 6.5% to 10% by 2010.

Those looking for a reason for the optimism won't find any. GM makes the statment but has nothing to back it up.

What GM wants Wall St. to believe that cars and small trucks that are bested by vehicles from Toyota and Honda in the US market will do better overseas. Toyota, Honda, VW, Nissan, Ford, Daimler and a pack of other companies want the share as much as GM does.

In 1995, GM's US share was nearly 33%. By 2005, it had fallen to just above 26%. And, Toyota is still gaining share in GM's home market.

Asia, of course, will be different. There GM's models will level Toyota, Honda, and local car company offerings.

When pigs fly.

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

Pre-Market Stock News (Nov. 17, 2006)

2006-11-17T08:24:00.000-05:00

(ADSK) Autodesk revenues $457M vs $457.25M(e); guides inline; subscription revenues up 50%; stock rose 5%.
(AME) Ametek gets positive radiation detection article from Business Week.
(AMED) Amedisys 3M share secondary priced at $41.50.
(ANN) Ann Taylor $0.54 EPS vs $0.52e.
(AW) Allied Waste 33M share secondary priced at $12.75.
(CHFN) Charter Financial announced self tender of 1M shares at $43 low and $52 high.
(CONR) Conor Medsystems trading up 19%as J&J gives it a $33.50 buyout.
(CPWM) Cost Plus -$0.53 EPS vs -$0.45e; sees Q4 $0.84-1.03 vs $1.09e.
(CTRN) Citi Trends $0.20 EPS vs $0.16e.
(DNA) Genetech wins additional breast cancer expanded use from FDA.
(EGLT) Eagle Test Systems $0.44 EPS vs $0.36e.
(EXEL) Exelixis billary tract tumor phase III study halted.
(FSLR) First Solar 20M share IPO priced at $20.00.
(GPS) Gap Stores $0.23 EPS vs $0.22e;
(HAL) Halliburton noted positively in Barron's Online.
(HIBB) Hibbett Sporting Goods $0.31 EPS vs $0.28e.
(HPQ) Hewlett-Packard $0.68 EPS vs $0.64e; SEC formally investigates board over pre-texting scandal.
(INTU) Intuit -$0.12 EPS vs -$0.12e.
(ISIS) Isis Pharma gets positive drug article in Business Week.
(MRVL) Marvell trading down 5% after results and guidance; still delaying quarterly filings.
(NMX) NYMEX 6.5M share IPO priced at $59.00, above the alreadty raised $54 to $57 range.
(NRF) Northstar Realty 16M share secondary priced at $14.95.
(NWACQ) Northwest Airlines positive article as buyout candidate in Business Week.
(ORH) Odyssey Re filed to sell 9M shares.
(PLSB) Placer Sierra Banc losing #1 mortgage depositor by June of 2007; 12.6% of total deposits and 30.2% of non-interest bearing deposits.
(RDY) Dr. Reddy's 12.5M share secondary priced at $16.00, yesterday's close was $16.45.
(SBUX) Starbucks trading down 7% as revenues were a hair light and guidance was same as before.
(SJM) J.M.Smucker $0.83 EPS vs $0.85e.
(SVM) Service master holder reportedly asking company to seek a buyer.
(VITA) Orthovita 7.7M share secondary priced at $3.25.
(VQ) Venoco IPO priced 12.5M shares at $17.00, under the $19 to $21 range.
(VTAL) Vital Images 3M share secondary priced at $31.00.
(XIDE) Exide filed to sell 28M shares.
(YHOO) Yahoo! buys BIX.COM (private) to allow users and advertisers to judge contests.

Select Analyst Calls (Nov. 17, 2006)

2006-11-17T08:22:00.000-05:00

AAP raised to Buy at Oppenheimer.
ADBE cut to Neutral at Oppenheimer.
ADSK reitr Buy at Jeffeires.
ALOG started as Hold at Jefferies.
APSG started as Hold at Jefferies.
AQR started as Buy at ThinkEquity.
BOBJ cut to Hold at Deutsche Bank.
CBF started as Mkt Perform at Wachovia.
CCI raised to Outperform at RBC.
CCRT started as Outperform at KBW.
CFC started as Sell at Goldman Sachs.
CFR raised to Outperform at Piper Jaffray.
CNQR started as Buy at Deutsche Bank.
COLM raised to Buy at B of A.
CPWM cut to Underperform at Raymond James.
DVAX raised to Outperform at Bear Stearns.
FNM & FRE started as Neutral at Goldman Sachs.
FORM started as Buy at Merrill Lynch.
FUL raised to Overweight at JPMorgan.
GOOG reitr Buy/$600 tgt at Citigroup.
INFY started as Outperform at Wachovia.
INTU cut to Mkt Perform at William Blair, cut to Accumulate at ThinkEquity.
INWK cut to Equal Weight at Morgan Stanley.
ITG raised to Overweight at JPMorgan.
LPNT started as Hold at Citigroup.
MEL raised to Overweight at Prudential.
MDTH started as Buy at Deutsche Bank, started as Outperform at Wachovia.
MNST cut to Hold at Citigroup.
MRVL cut to Underweight at Prudential.
NCC cut to Underweight at Prudential.
NGG cut to Sell at Citigroup.
NIHD started as Buy at Citigroup.
REP cut to Reduce at UBS.
SHMR cut to Sector Perform at CIBC.
SYNT started as Outperform at Wachovia.
THC started as Sell at Citigroup.
TIN cut to Hold at Deutsche Bank.
TLEO started as Buy at Deutsche Bank.
UHS started as Buy at Citigroup.
UNS started as Overweight at JPMorgan.
WIT started as Mkt Perform at Wachovia.
WSM cut to Hold at BB&T.
WY cut to Hold at Deutsche Bank.
WYNN cut to Hold at Citigroup.
XLNX cut to Peer Perform at Bear Stearns.
XOM cut to Mkt Perform at Bernstein.
YHOO raised to Buy at Oppenheimer.

VoIP Comes Of Age (VG)(CMCSA)(TMS)(TWX)(EBAY)

2006-11-17T07:20:00.000-05:00

The ViOP bandwagon is getting fairly full. After early service like Ebay's Skype and Vonage signed on millions of customers, the cable companies (especially Comcast and Time Warner) found the ViOP was a good way to steal customers from their telecom competitors. It has worked so well that 5.1 million of the US VoIP subscribers as measured at the end of September took their service from cable providers. The total number of US customers rose to 8.2 million, up from 3.5 million a year ago.

One of the complaints about VoIP, especially early versions, is the customers needed a PC or special adapters to make the service work. The experience was different from simply picking up a telephone and dialing. Other knocks against VoIP is the it had no 911 service. That is changing. Of course, if electricity is off, VoIP doesn't work either. They are still working on that one.

Thomson, the big French electronics firm, is beginning to offer a new VoIP handset, made by GE. (One has to wonder why GE does not market the product on its own.)

Thomson's product will be sold to subsribers of SunRocket, a US VoIP service with 170,000 subscribers. The new device can simply plug into a high-speed internet line and it works as a normal phone would. If you have SunRocket service. Companies like Uniden already have similar products.

Why Thomson would market a phone exclusively with one of the smaller VoIP companies is puzzling. The firm is locking itself out of over 95% of the US market.

Thomson may be dumb, but VoIP is gaining ground like a house on fire, and that will continue.

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

VoIP Comes Of Age (VG)(CMCSA)(TMS)(TWX)(EBAY)

2006-11-17T07:07:00.000-05:00

Ghosn And Nissan Get Blackballed (DCX)(F)(GM)

2006-11-17T06:12:00.000-05:00

Carlos Ghosn, the sell-proclaimed greatest car executive in history, is finding that linking up with a US partner for his Nissan/Renault combine has proved more difficult than he thought. Of course, Nissan is not in first place in Japan and Renault is not a major player in Europe, so perhaps Detroit is wary.

Ghosn now says that he is "not ready" to find a partner in the US. What he is not mentioning is that no one is taking. GM has turned him down. Ford seems prepared to go it alone, even if that plan leads to its demise. DaimlerChrysler does not need him. With large operations in the US and Europe, DCX is an unlikely partner.

Perhaps if Ghosn would stop watching the pot, it would eventually boil. He may have retired before that day comes.

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

While Ford's Sales Double In China, Will It Be Around To Enjoy It

2006-11-17T06:11:00.000-05:00

Stocks: (F)(GM)(TM)(HMC)

Ford is boasting that it will double sales in China, over and over again. But, the No. 2 car company in the US only sells about 100,000 cars in the big Asian nation. Rival GM will sell over 850,000 cars there this year.

Ford is still being bloodied in it home market, so the talk of China gains is whistling past the graveyard. Over the last decade, Ford's US share has dropped from 25.8% to 18.3%. During the same timeframe, Toyota's market share has rise from 13.3% from 7.4%. Honda's has risen from 5.4% to 8.6%.

Ford has actually predicted its US share will drop as low as 14%. Its $5 billion in annual cost cuts may bring North American operations to the point where they are cashflow positive, but that is a long way off. And, there is no guarantee that the company's forecast of a 14% bottom is accurate. Ford could hardly have predicted its current sales when it had almost 26% of its home market.

Ford management needs to shut-up about China. The company not be around to enjoy it progress there.

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

Investors Get Ticked At Starbucks (SBUX)(MCD)

2006-11-17T05:33:00.000-05:00

Wall St. took shares in Starbucks down by over 5% after hours as the company announced a 21% improvement in quarterly revenue to $2 billion. The company forecast that it would open 2,400 stores in the next twelve months. It also said that investors could expect another 20% increase in revenue.

Profits dropped 5.6% to $117 million, but this was due to changes in the company's accounting policies.

The key to the numbers was simple. Starbucks is still growin 20%. It grew 20% in fiscal 2005. It grew 21% in the recent quarter. It forecast 20% growth for next year. Off of an annual revenue run rate of $8 billion, the figure is extraordinary.

Starbucks has the stated and ambitious goal of eventually having 40,000 stores worldwide. At the end of this fiscal year, the figure was about 14,000, and, if the company's projections are right, that will be nearing 17,000 twelve months from now. Starbucks still has a reasonable chance of hitting its number within the next ten years.

McDonald's has over 30,000 stores, so why shouldn't Starbucks.

Why not, indeed.

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

Hewlett-Packard (HPQ) Earnings: Red Flag On Slowing Tech

2006-11-17T05:22:00.000-05:00

The market was not unhappy about HP's earnings, but the applause was muted.

HP's revenue rose 7% in its fiscal Q4 to $24.6 billion. The company forecast that annual sales for its 2007 fiscal year would rise about the same amount to $97 billion.

HP's stock fell about 2% after hours to $39.60. The shares have been trading near their 62-week high.

Revenue at HP's big personal systems group, which sells PCs, rose 10% to $7.8 billion, and revenue was up 7% at HP's imaging and printing group, hitting $7.3 billion. But, therein lies the problem. These two units are almost $15 billion of the quarter's $24 billion plus in revenue. And, the growth at the operations are unimpressive.

In fiscal 2004, HP grew 9%. In fiscal 2005, revenue was up 9% again. Even with the share that the company is taking from Dell in the large PC market, HP's rapid growth is behind it, at least for now.

At $40, the stock is now rich. Morningstar carries a "fair market" value of $30 on the stock and suggests that investors consider selling when the stock is above $37.60. For a company that has lost much of its top-line growth potential, that is not unfair.

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

Hewlett-Packard (HPQ) Earnings: Red Flag On Slowing Tech

2006-11-17T05:04:00.000-05:00

Media Digest 11/17/2006 Reuters, Wall Street Journal, New York Times

2006-11-17T04:49:00.000-05:00

Stocks: (QCOM)(DCX)(HPQ)(SBX)(SHLD)

According to Reuters, Delta is seeking the help of its creditors to fight off a bid by Delta Airlines to acquire the bankrupt carrier.

Reuters writes that the CEO of Qualcomm stated that investors in the company support its intellectual property legal fight although it has depressed the price of the company's stock.

Reuters, writes that DaimlerChrysler is still in talks with Chinese car manufacturer Cherry about building a subcompact car.

Reuters writes that HP profits went up four-fold due to year ago charges. Revenues rose 7% and beat estimates.

The Wall Street Journal reports that Sear Holding's profits tripled due to investments. Sales at its Sears and K Mart units were weak.

The Wall Street Journal also writes that a study by Harvard and Cornell indicates that 850 CEOs of public companies received incorrectly dated options which increased their pay an average of over 10%.

The New York Times reports that oil hit its lowest price in a year as the markets doubted the impact of OPEC production cuts.

The New York Times also writes that the profit as Starbuck's fell 5% due to new accounting methods. Revenue rose 20% to $2 billion.

Douglas A. McIntyre

Asia Markets 11/17/2006 PCCW, Fuji Film Up, Softbank, Yahoo Japan Down

2006-11-17T04:32:00.000-05:00

Stocks: (CAJ)(FUJ)(NIPNY)(HMC)(NTT)(TM)(CHL)(CH)(PCW)(HNC)

Markets in Asia were narrowly mixed.

The Nikkei was down .5% to 16,092. Bridgestone was up 1.4% to 2515. Canon was up 1% to 6310. Daiwa Securities was down 1.4% to 1263. Fuji Film was up 2.7% to 4590. Hitachi was up .6% to 707. Honda was up .2% to 4210. Japan Air was off 1.4% to 217. NEC was up 1% to 604. NTT was up 1.2% to 573000. Sharp was down .5% to 2030. Softbank was down 2.6% to 2245. Sony was up 1.3% to 4770. Toshiba was down .3% to 731. Toyota was up .3% to 7260. Yahoo Japan was down 3.6% to 40200.

The Hang Seng was up .2% to 19,183. Cathay Pacific was up 1.7% to 18.98. China Mobile was down 1.1% to 68.65. China Unicom was down 1% to 8.24. HSBC was up .4% to 147.2. PCCW was up 1.9% to 5.23.

The KOSPI was up .1% to 1,412.

The Straits Times was up .5% to 2,813.

The Shanghai Composite was up 1.6% to 1,972.

Data from Reuters.

Douglas A. McIntyre

Sears Holdings Drops 5% After Earnings

2006-11-17T04:29:00.000-05:00

By Chad Brand of Peridot Capitalist

It's the same old story with Sears Holdings (SHLD). In fact, I feel like I'm just repeating myself a lot. However, I have long been positive on the stock, and it is one of Peridot's top five holdings, so rather than ignoring it just for the sake of not sounding repetitive, I will likely continue to share my views on the company and the stock's investment merit.

In case you missed it, Sears reported Q3 earnings of $1.27 per share and sales of $11.94 billion. The revenue number was at the high end of estimates, and the earnings number included investment income of 42 cents per share. Excluding one-time charges and investment income, earnings did miss consensus estimates, which caused the sell-off in the stock.

Comments on the quarter across Wall Street were very predictable. Same store sales were down, which is bad and must be turned around at some point. Earnings were up on cost cutting, but such moves can't be maintained forever. Most analysts are ignoring the investment income when looking at the quarterly results, because they are unrelated to operating activities of the main retailing business.

It is my view, however, that ignoring the investment income is a mistake for investors. If an investment in Sears stock was merely a bet on the retail operations, then I can understand not caring about profits derived from investing excess cash. However, a large piece of the investment thesis behind SHLD has been, and will continue to be, Eddie Lampert's ability to allocate excess capital in order to earn returns that far exceed those of the retail business. There is a reason he changed the name of the firm to Sears Holdings. It's a holding company. There is more than just retail here.

Investors who are in Sears merely for the retail operations should probably move on to something else. SHLD will continue to report declines in same store sales and grow profits via cost cutting, share repurchases, and investment income. This will ultimately lead to a tremendous increase in shareholder value.

If, however, you are like me and are investing in this stock for the entirety of the operation, then you should stay with it despite today's decline. Sears is a holding company and will continue to boost shareholder value via multiple ways. In fact, as the company finds new avenues for allocating capital, they will become less and less reliant on Sears and Kmart than they already are. While this will draw criticism from many, especially retailing analysts, the end result will be a rising share price, which is really all that matters to me.

Full Disclosure: I own shares of Sears Holdings personally, and my clients do as well.

http://www.peridotcapitalist.com/

Interview With Steven Drobny- President, Drobny Global Advisors & Author of 'Inside The House of Money'

2006-11-17T04:26:00.000-05:00

By Yaser Anwar, CFA of Stock Market Beat

An in-depth discussion pertaining to; Hedge Fund Industry- Implications of M&A boom on Hedge Funds, HFs as Asset Managers, Industry's Marketing Gimmicks, Risk/Reward Trade-offs, Regulation and Correlation to market. Investment banks taking positions in China, Emerging markets and more.

Steven Drobny is the engine behind Drobny Global Advisors. Steven has pushed the firm to new business areas, countries and clients bases. If you want to know who's who or what's what in global macro, ask Steven. To learn more about global macro hedge funds, read his book Inside the House of Money.

Before partnering with his namesake in 2000 (his name was already on the door!), Steven worked for Deutsche Bank in various roles, most recently in the Hedge Fund Group in London. While at DB, Steven also worked in the derivatives and trading groups in London, Zurich and Singapore. Prior to Deutsche, Steve was with AIG Trading in their Metals & Energy Trading Groups.

Steven Drobny also holds a Masters degree from the London School of Economics and a Bachelors degree from Bucknell University.

Wall Street Talk with Yaser Anwar

Guest: Steven Drobny, Author (ITHOM) & President, Drobny Global Advisors

_________________________________________________________

Y: Steven, thank you for joining us

1) Y: A recent trend in the industry has been- Hedge Funds as Asset Management Complexes [Note: DE Shaw's push into traditional asset management. Fortress & MAN Group already are asset management complexes]. If you're running a $5 billion fund, a 2% management fee brings in $100 million without any hassles. Say you're up another 10%, so that's another $100 million. Managers are disincentived to make money. What do you think needs to be done?

S: Nothing. The marketplace will define where investments are made and the fees charged for asset management. Investors are allowed to choose what they want and if they don’t like something they can vote with their feet. Remember, by definition, investors in hedge funds are required to be qualified investors. We are not talking about unsuspecting retail investors getting cold calls from their local stock broker. If performance does not stack up over time, there will likely be adjustments.

2) Y: In 2006, the hedge funds as a group have underperformed mutual funds and market indexes. With over 9K hedge funds seeking to generate alpha, a majority of which utilize the common strategies such as; Convertible Arbitrage & Long/Short Equity, don't you think the market is getting a little too overcrowded?

S: No I don’t. Again, investors that choose to invest with hedge funds are making a conscious decision. As long as that decision is educated, the marketplace should dictate the flow of capital. Whether the number is 900 or 9,000 or 90,000, the marketplace will ultimately decide.

The same thing applies to the different hedge fund strategies. Investors will choose based on performance. In the global macro space, hedge fund managers are at an advantage because of the breadth of their mandate. They are permitted to trade any asset class around the world.

As far as this year, hedge funds as a group are underperforming mutual funds and market indexes. And, this is a market environment in which you would expect that to occur because volatility across markets has collapsed. Long risk assets has been the trade of the year. So, investor portfolios, which are overwhelmingly long assets, have done well.

Hedge funds are meant to occupy a slice of a portfolio because they are traditionally uncorrelated and provide downside protection in volatile markets. The key is producing consistent positive absolute returns uncorrelated with other markets, and if hedge funds can do that, there will be a place for them in investor’s portfolios.

Follow-up question: Where do you see the hedge fund industry going?

S: The industry is going to be constantly evolving. Every six months the industry looks different from the prior six months. The hedge fund business is here to stay because it provides needed portfolio diversification and because it is very attractive from an employment standpoint due to it’s attractive compensation structure.

As long as that doesn’t change, hedge funds will continue to attract the smartest, most talented money managers, and at the end of the day investors are going to want access to that talent. So there always will be a hedge fund business, whether it grows, stabilizes, contracts or even converts into a total asset management business, remains to be seen.

The best comparison is with professional sports. If you are the best basketball player in the world, are you going to play in Italy? No. You’re going to play in the NBA for the highest bidder.

3) Y: When Alfred Jones started his hedge fund back in 1940, his purpose was to generate alpha by a long/short strategy, with returns uncorrelated to the markets. In the 80s and 90s, hedge funds did just that. Of late, HF returns seem increasingly correlated to the broad market indexes. Why do you think so?

S: It really depends on which market indices and which hedge fund strategies you are comparing. There are certainly managers and strategies that will look as if they are correlated to the broader equity markets at certain points. The key is whether they are correlated over time. Again, if managers or strategies fail to deliver, investors will adjust their portfolios.

4) Y: China has seen a large inflow of capital, especially into the financial sector. The major banks; Citigroup, BoA, Goldman, have all taken sizeable stakes in the Chinese financial sector. In other words, the herd seems to be too bullish. What do you make of this trend?

S: It is dangerous to assume the herd is always wrong. The truth is that the inflows into China are being limited by government restrictions. Perhaps the inflows would be much larger if the restrictions were limited.

The key is to ask, “Why are all of these institutions dedicating the time and energy into this market?” Then evaluate whether the opportunity is worth the attention. It seems to be a reflection of a booming, growing emerging market that has attracted capital for the long term.

5) Y: As hedge fund returns have come down over the years, their appetite for risk has rapidly increased. Your partner Andres Drobny (no relation) once said, "To make money and have value you have to have risk/reward parameters dominating what you do in markets."

With the recent debacles such as Amaranth & Archeus Capital (the most famous ones), do you think hedge funds are erring from the risk/reward scenarios, caused by narrowing of spreads (due to an overcrowded industry) and/or chartering in unseen territory?

S: First of all- the one thing the press gets wrong, is that Amaranth or Archeus are symptomatic of the HF industry. As you mentioned earlier there are about 9K hedge funds. We are talking about two funds.

Out of 9K hedge funds, there are going to be some good ones and some bad. The same applies to mutual funds and private equity funds. The key for investors is choosing the talented managers that have a good risk/reward framework and aren’t taking excessive leverage or risk in illiquid markets. At the end of the day, the onus is on the investors to choose and decide which hedge funds are the best out there.

Right now, we’re going through a pretty significant period of low volatility, low interest rates, and tight market spreads. There have been periods of time like this in the past and it typically unwinds back to a more volatile, riskier markets. The question is when and how do we get there and what the path looks like.

7) Y: In your book, Inside The House of Money, you interviewed some of the best traders in the world. Could you tell us one characteristic they all shared?

S: Humility. The popular image of big successful traders pounding their chest and always being right is really the guy that ends up out of the market after a couple of years when a secular or cyclical trend reverses. The best traders that have longevity, who have been through multiple market cycles and have consistently made money are very humble. They know that they are not smarter than the markets and to be in this game for the long term one has to be flexible.

8) Y: M&A activity has been steadily increasing in double-digits since 2002. It seems that 2006 will be the record year, beating the $3.327 trillion in global volume and $1.525 trillion in U.S. volume posted in 2000. With so much buying power, do you foresee another hedge fund strategy, dedicated to say such as LBO and/or PE financing, on the horizon other than Event driven strategies?

S: Perhaps. There will always be innovation in financial markets. Hedge funds are part of that process. Whether there is a different title to the strategy, who knows. Hedge fund strategy titles are mainly for marketing purposes. At the end of the day, what a hedge fund is supposed to do is- make money in any market environment regardless of their strategy.

That is what global macro is all about and has always been about. In terms of slicing and dicing the hedge fund business into smaller more finite, specific strategies, this has typically been a good way to raise money, especially in a world full of liquidity. If liquidity contracts, things may be very different.

9) Lately there has been a lot of chatter about regulating the hedge fund industry. What are your views on regulating the industry- Stricter oversight by the SEC and/or a self-regulating body?

S: The most successful hedge funds are running their business in such a way that is over and above what any regulatory government body would require. If regulation keeps out some of the frauds and scams, then that’s a good thing for the industry. Generally, regulation tends to increase costs with questionable benefit.

But, if regulation can be proven to boost investor confidence, then I am all for it. Again, the key is allowing investors to make educated decisions about their investments. Let the market work. If investors are not comfortable with the way their manager runs the firm, then they should not allocate the capital, regardless of what any government body does.

10) Y: In May, when the US markets were hit by a correction, most emerging markets followed it downwards and when the US markets regained their footing in August so did EM. I have a hard time imagining EM markets up if US markets are down 10% or so. What are your views on emerging markets?

S: EM presents tremendous opportunities just as any new market presents great opportunities. In terms of the US being down 10% and EM being up, it depends. I don’t think you can classify EM as one thing. China is very different from Russia, which is very different from India, which is very different from Brazil, so it depends on which market, what the different economies are doing, and the prospects.

For example: If the US market is down 10% but the US currency is down 50%, perhaps EM will be up, especially if you’re a US based investor. A large part of it depends on what your home currency is.

11) Y: Drobny Global Advisors is known for its unorthodox style of research advisory & investment conferences [Providing actual tradable ideas in a casual atmosphere with the audience concentrated among what’s considered “very smart money”]. You recently wrapped up a conference in Iceland, could you tell us a little about what was discussed?

S: Sure. The overall mood was mixed so the overall general feeling I took away from it was that we are at a major inflection point. Often at turning points, confusion reigns until the new trend is established.

Y: Steven, thank you very much for taking time out for this interview. Best of luck with DGA and look forward to the second edition of Inside The House of Money.

S: Thank you and good luck to you too.

http://www.equityinvestmentideas.blogspot.com/

Cramer Goes Back for Sears Holdings, Again

2006-11-17T04:24:00.000-05:00

Last night on CNBC's MAD MONEY Cramer also went over one of his long-standing favorite retail plays: Sears Holdings (SHLD).

He implied that SHLD stock is no different than investing in a company with a hedge fund manager trying to make his stocks go up. After today's drop of almost $10.00 after earnings, Cramer said the stock is going back up. He says this is a gift. He did tell on himself that you have heard him back this stock again and again. He said the bears are harping on same store sales and on inventory build-ups. He said it isn't a screaming buy because of it being a great retail play and not because it is a turnaround story. He says this is an investment ultimately in Eddie Lampert.

He has been there for the last $140 of upside, but he thinks it is going much higher and it may be a baby Berkshire Hathaway. Even though it is expensive on multiples, it will get more expensive and Eddie Lampert is a winner. The company allows Eddie Lampert to invest the profits from Sears and K-Mart elsewhere where he sees fit. The company made $101 million off of outside investments. The street doesn't like that they can't evaluate Sears as a retailer, but Cramer does.

Jon C. Ogg

Cramer Backs Nike and Under Armour

2006-11-17T04:23:00.000-05:00

Last night on CNBC's MAD MONEY, Jim Cramer reviewed two stocks in the same sector that are both buys. He said which one you should own depends on your preference.

He said if a company has good management, that means they just aren't screwing up. Nike (NKE) and Under Armour (UARM) got lucky because Reebok screwed up by cutting marketing. Reebok's ad budget was only $7 million after Adidas bought them, and these two won as a result.

Cramer says that even though NKE and UARM are competing, they are different stocks for different investors. He says both are buys.

He says Nike (NKE) is the best for longer-lived investors that look for more stability and more predictability. He noted Under Armour (UARM) is the younger investor's stock that has a lot of room for growth down the road.

NKE trades cheaper, and is more defensive in nature trying toi preserve market share it has. UARM is a high-multiple stock that would crumble if the company messes up. Cramer said UARM's 31% market share could pass NKE's 36%, but UARM could take market share and NKE stock could still keep rising because they are different stories. He thinks UARM will take market share from Reebok since they aren't defending the brand. UARM is one that will get hurt bad if they ever miss an estimate by a penny, and NKE is the stable lion in the group.

UARM closed down 1.28% at $46.25 in regular trading, but shares are up almost 3% from teh close at $47.50 in after-hours trading. NKE closed down 0.25% at $95.23 in regular trading, but shares are up 0.9% at $95.92 in after-hours trading.

Jon C. Ogg

Genetech Wins FDA Approval For Herceptin For Breast Cancer

2006-11-17T04:22:00.000-05:00

Genentech (DNA) announced that the FDA approved its Herceptin cancer treatment for an expanded use for adjuvant treatment of HER2-positive node-positive breast cancer. The studies showed a 52% reduction in the recurrence of breast cancer of some 3,500 patients in two Phase III studies and is the only targeted biologic therapy approved for use in adjuvant and metastatic HER2-positive breast cancer.

Adjuvant therapy is given to women with early-stage (localized) breast cancer who have had initial treatment - surgery with or without radiation therapy - with the goal of reducing the risk of cancer recurrence and/or the occurrence of metastatic disease. After three-and-a-half years in the study, 87 percent of women treated with Herceptin plus chemotherapy were disease free, compared to 71 percent of women treated with chemotherapy alone. A survival analysis conducted after patients had been followed for a median of 24 months showed a 33 percent reduction in the risk of death (based on a hazard ratio of 0.67), which is equivalent to a 49 percent improvement in overall survival.

DNA shares closed up 0.35% at $80.72 in regulartrading, but shares are up 0.9% at $81.45 in after-hours trading. DNA has a 52-week trading range of $75.58 to $100.20.

Jon C. Ogg

Autodesk Up and On Auto Pilot

2006-11-17T04:21:00.000-05:00

Autodesk (ADSK) just reported record quarter revenues of $457 million, just under the $457.25 million consensus estimate. It is not providing EPS because of the ongoing options review. ADSK closed up 1% at $27.00 in normal trading, but shares are up 6.4% to $39.35 in after-hours trading. The subscription revenues seem to be the game winner as the guidance seems in-line (although guidance may be conservative because of legal ramifications). ADSK 52-week trading range is $29.56 to $47.25.

There was a huge bright spot in what may be considered a slight beat with in-line guidance. Its subscription (recurring) revenues have now grown to $111 million, about 24% of revenues, and up 50% from last year. That is an impressive feat and has been one of the growth drivers to the company.

Total backlog was $352 million as of October 31, 2006, including $333 million of deferred revenues. Deferred subscription revenues increased $12 million sequentially to $275 million and there was $19 million of unshipped product orders at quarter end. Its DSO (days sales outstanding, or days to get paid!) also fell 1 day to 51 days.

There is also guidance (compared to street estimates) where available. Next quarter guidance: Net revenues for the fourth quarter of fiscal 2007 are expected to be between $490 million and $500 million ($495M estimate); following quarter guidance: Net revenues for the first quarter of fiscal 2008 are expected to be approximately flat with the fourth quarter of fiscal 2007. Fiscal 2007 guidance: For fiscal year 2007, net revenues are expected to be between $1.832 billion and $1.842 billion ($1.84B estimate). Fiscal 2008 guidance: For fiscal year 2008, net revenues are expected to be between $2.075 billion and $2.125 billion ($2.10 Billion estimates).

Jon C. Ogg
November 16, 2006

Starbuck's Decaf (SBUX)

2006-11-17T04:20:00.000-05:00

Starbuck's missed Wall St.'s revenue target and had poor earnings to boot. Some was due to changes in the company's accounting practices. Investors wanted revenue of $2.02 billion and the coffee retailer did $2 billion.

While the company's long range goal of hitting a total of 30,000 stores worldwide may not be in jeapordy, it may be set back a few days.

Starbuck's shares are off about 6% after hours to just above $37..

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

HP Earnings: Revenue Growth Light (HPQ)

2006-11-17T04:18:00.000-05:00

HP announced earnings after the close. Revenue rose only 7% to $24.6 billion. Non-GAAP operating income rose from $1.5 billion in the quater a year ago to $1.9 billion. Desktop sales were flat while notebook unit sales rose 24%. Revenue at the imaging and printing unit rose 7%.

Enterprise storage and server revenue rose 4% to $4.7 billion. And, services revenue rose 5%.

Looking at the results, Paul Meeks, a hardware analyst interviews on CNBC, believes that the results only merit a share price of $40 to $41, which is where the stock trades now.

The forecast for the next quarter is for revenue to be in the $24.1 to $24.3 billion range and for the next fiscal $97 billion.

While revenue and EPS were slightly ahead of Wall St. estimates, the figures hardly constitute a blow out quarter. After rising 40% this year, the shares may be taking a pause.

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

Cramer Goes Back for Sears Holdings Again

2006-11-16T18:20:00.000-05:00

Stock Tickers: SHLD

Tonight on CNBC's MAD MONEY Cramer also went over one of his long-standing favorite retail plays: Sears Holdings (SHLD).

He implied that SHLD stock is no different than investing in a company with a hedge fund manager trying to make his stocks go up. After today's drop of almost $10.00 after earnings, Cramer said the stock is going back up. He says this is a gift. He did tell on himself that you have heard him back this stock again and again. He said the bears are harping on same store sales and on inventory build-ups. He said it isn't a screaming buy because of it being a great retail play and not because it is a turnaround story. He says this is an investment ultimately in Eddie Lampert.

He has been there for the last $140 of upside, but he thinks it is going much higher and it may be a baby Berkshire Hathaway. Even though it is expensive on multiples, it will get more expensive and Eddie Lampert is a winner. The company allows Eddie Lampert to invest the profits from Sears and K-Mart elsewhere where he sees fit. The company made $101 million off of outside investments. The street doesn't like that they can't evaluate Sears as a retailer, but Cramer does.

Jon C. Ogg
November 16, 2006

Cramer Backs Nike and Under Armour

2006-11-16T18:06:00.000-05:00

Stock Tickers: NKE, UARM

Tonight on CNBC's MAD MONEY, Jim Cramer reviewed two stocks in the same sector that are both buys. He said which one you should own depends on your preference.

He said if a company has good management, that means they just aren't screwing up. Nike (NKE) and Under Armour (UARM) got lucky because Reebok screwed up by cutting marketing. Reebok's ad budget was only $7 million after Adidas bought them, and these two won as a result.

Cramer says that even though NKE and UARM are competing, they are different stocks for different investors. He says both are buys.

He says Nike (NKE) is the best for longer-lived investors that look for more stability and more predictability. He noted Under Armour (UARM) is the younger investor's stock that has a lot of room for growth down the road.

NKE trades cheaper, and is more defensive in nature trying toi preserve market share it has. UARM is a high-multiple stock that would crumble if the company messes up. Cramer said UARM's 31% market share could pass NKE's 36%, but UARM could take market share and NKE stock could still keep rising because they are different stories. He thinks UARM will take market share from Reebok since they aren't defending the brand. UARM is one that will get hurt bad if they ever miss an estimate by a penny, and NKE is the stable lion in the group.

UARM closed down 1.28% at $46.25 in regular trading, but shares are up almost 3% from teh close at $47.50 in after-hours trading. NKE closed down 0.25% at $95.23 in regular trading, but shares are up 0.9% at $95.92 in after-hours trading.

Jon C. Ogg
November 16, 2006

Genetech Wins FDA Approval For Herceptin For Breast Cancer

2006-11-16T18:05:00.000-05:00

Autodesk Up and On Auto Pilot (updated)

2006-11-16T17:01:00.000-05:00

please ignore the previous ADSK first line as it improperly said "above"

Autodesk (ADSK) just reported record quarter revenues of $457 million, just under the $457.25 million consensus estimate. It is not providing EPS because of the ongoing options review. ADSK closed up 1% at $27.00 in normal trading, but shares are up 6.4% to $39.35 in after-hours trading. The subscription revenues seem to be the game winner as the guidance seems in-line (although guidance may be conservative because of legal ramifications). ADSK 52-week trading range is $29.56 to $47.25.

There was a huge bright spot in what may be considered a slight beat with in-line guidance. Its subscription (recurring) revenues have now grown to $111 million, about 24% of revenues, and up 50% from last year. That is an impressive feat and has been one of the growth drivers to the company.

Total backlog was $352 million as of October 31, 2006, including $333 million of deferred revenues. Deferred subscription revenues increased $12 million sequentially to $275 million and there was $19 million of unshipped product orders at quarter end. Its DSO (days sales outstanding, or days to get paid!) also fell 1 day to 51 days.

There is also guidance (compared to street estimates) where available. Next quarter guidance: Net revenues for the fourth quarter of fiscal 2007 are expected to be between $490 million and $500 million ($495M estimate); following quarter guidance: Net revenues for the first quarter of fiscal 2008 are expected to be approximately flat with the fourth quarter of fiscal 2007. Fiscal 2007 guidance: For fiscal year 2007, net revenues are expected to be between $1.832 billion and $1.842 billion ($1.84B estimate). Fiscal 2008 guidance: For fiscal year 2008, net revenues are expected to be between $2.075 billion and $2.125 billion ($2.10 Billion estimates).

Jon C. Ogg
November 16, 2006

Starbuck's Decaf (SBUX)

2006-11-16T16:33:00.000-05:00

Market Wrap (Nov. 16, 2006)

2006-11-16T16:25:00.000-05:00

DJIA 12,305.82; Up 54.11 (0.44%)
NASDAQ 2,449.06; Up 6.31 (0.26%)
S&P500 1,399.76; Up 3.19 (0.23%)
10YR-Bond 4.655% Up 0.04
NYSE Volume 2,738,514,000
NASD Volume 2,031,971,000

Today was another record high on the DJIA. We had another drop in Consumer Prices and natural gas innevtories coming out at another surplus helped fall $2.50 to $56.26. We learned of the death of famed economist (socio-economist) Milton Friedman today.

Dell (DELL) was the big shocker as it delayed earnings and said its SEC investigation has now gone to formal. DELL shares fell 2.5% to $25.10, but shares had been down 5% at one point.

Applied Materials (AMAT) fell 3.6% to $17.98 after it its EPS from operations were $0.30 versus $0.31 consensus estimates.

Clear Channel (CCU) rose 3.5% to $35.36 after receiving a $37.60 private equity buyout.

Readers Digest (RDA) rose a sharp 7% to $16.70 after getting a private equity buyout. And who says old media is dead?

Apple (AAPL) rose 1.9% to $85.61 after Cramer on MAD MONEY said the stock is not under any real threat for iPod dominance because of Microsoft's Zune launch and he said the stock is going to $100.00 by year-end.

Time Warner (TWX) rose 1.75% to $20.33 to another 52-week high close on optiosn activity on block volume today.

Irvine Sensores (IRSN) rose an unbelievable 123% to $2.39 after it said it won more than $16 million in new contract wins.

Rambus (RMBS) gained 30% to $21.72 on more speculation of an FTC resolution in its long-standing case.

Zoll Medical (ZOLL) rose a sharp 28% to $53.06 after its profit more than doubled.

The9 Ltd. (NCTY) rose 20% to $28.36 after beating earnings expectations from its Chinese "World of Warcraft" revenues.

Hott Topic (HOTT) rose 17% to $13.04 after beating earnings after yesterday's close.

Allot Communications (ALLT) rose to $13.81 after pricing its IPO at $12.00, above the $9.00 to $11.00 range.

KBR (KBR) rose to $20.75 after pricing its IPO at $17.00, at the top of its $15.00 to $17.00 range.

Hertz Global (HTZ) rose to $15.60 after it priced its IPO at $15.00, under the $16.00 to $18.00 range.

Evergreen Solar (ESLR) fell 4.5% to $8.53 after it filed to sell $250 million in mixed securities because of the crummy timing of this need to raise cash. They waited until it was close to the bottom rather than top of a longer-term range.

BEA Systems (BEAS) fell a sharp 16% to $13.13 after missing revenue projections after yesterday's close.

Cisco Systems (CSCO) rose $0.02 to $27.15 after it allocated another $7 Billion for share buybacks.

Lojack (LOJN) fell 4% to $15.51 after its CEO announced he would resign and work in a transition period for the already-named replacement from inside of the company.

Sears Holdinsg (SHLD) fell 5.5% to $169.26 after beating earnings estimates because of an earnings quality issue.

Jon C. Ogg
November 16, 2006

HP Earnings: Revenue Growth Light (HPQ)

2006-11-16T16:12:00.000-05:00

Cramer Thumbs Down on Pepsi (PEP); Positive on NYMEX IPO Again

2006-11-16T14:46:00.000-05:00

On today's STOP TRADING segment on CNBC, Jim Cramer started on the snack topic.

Cramer said he is still anti-Pepsi (PEP) because of the snackfood business. Cramer said that Pepsi did address his comments, but the fat wars will clip their wings. Cramer said it is too little too late. He thinsk Pepsi (PEP) could fall to $55 (from $61.80 now). He said they aren't sitting still, but their 20-times earnings multiple could get cut down to 18-times earnings. Cramer said that from the May ramp you still don't want to go back into it.

NYMEX is going to price tonight. He said again that he would still pay up $20 for the stock after the IPO price.

Jon C. Ogg
November 16, 2006

A Tribute to Milton Friedman

2006-11-16T12:51:00.000-05:00

There are numerous media reports today of the passing away of Milton Friedman, perhaps the greatest and most influential economist of the modern era.

There are genuinely too many ways to describe and too many things to properly credit him for. These are just some of the things I would credit him for, yet it is probably a disservice to him to keep the list so short:

Nobel Prize winner......

One of the greatest modern economists, if not THE greatest of modern economists......

Will have more name recognition as our time becomes history than Alan Greenspan could even aspire for......

Laissez-faire advocate......

Famous economic author......

Proponent of a more consumption tax basis.....

The reviver of money supply as the tool to increase or decrease economic output.....

Credited as one of the large proponents of free floating current exchange rates.....

Involved in the move toward changing military from a draft system to a volunteer for hire system.....

Even tied to the dropping of the gold standard to a market standard (I recall it as something like "money is worth whatever people think it is worth").....

In a summary, Milton Friedman will be missed. If any foreign government wanted to instill economic changes in the last 3 decades, Milton Friedman was at the top of the list of economists that would be used for consultation. This man transcended modern politics and was respected by many regardless of their political views.

Not all of his theories were loved, but whatever he said was listened to closely and evaluated before any criticism could be handily thrown back. If any of my credits to him are not factual, it is memory errors on my part. I cannot pay enough credit he is worthy of regardless of how much or how little I could say about him. His economic theories will be read about and used for future generations throughout the world.

Jon C. Ogg
November 16, 2006

How Many Times Will Applied Materials Call the Bottom?

2006-11-16T12:08:00.000-05:00

By William Trent, CFA of Stock Market Beat

Last month we wrote a piece asking someone (anyone) to tell Applied Materials (AMAT) CEO Mike Splinter there’s a slowdown coming for semiconductor equipment manufacturers. Apparently someone gave him the message, but he is taking it only half-heartedly.

According to TheStreet.com:
Splinter said he expects Applied’s silicon business to grow by more than 10% in fiscal 2007, outpacing the broader industry.But executives warned of a “modest pullback” among customers in the current quarter.

Applied projected that sales will decline 5% to 10% sequentially in its fiscal first quarter. That suggests a revenue range of $2.41 billion to $2.28 billion, below the average analyst expectation of $2.46 billion.

When we wrote our plea for intervention, we noted that Mike Splinter called the bottom of the last slowdown for about 8 consecutive quarters, so what should we expect? Which brings us to a new (albeit slow-paced) drinking game. From now until there is actually a bottom in semiconductor equipment orders we will take a shot each time Splinter suggests that orders have/will bottom in the current/next quarter.

The author may hold a position in the securities discussed.

The author's current holdings are as follows: Long: Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion's Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; Ceradyne (CRDN); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Lion's Gate (LGF) call options; Dell (DELL) put options; Ceradyne (CRDN) call options; Plantronics (PLT) put options.

http://stockmarketbeat.com/blog1/

Bogeying Hewlett-Packard Earnings; Dell's Problems Act As A Gift

2006-11-16T11:38:00.000-05:00

Stock Tickers: HPQ, DELL

Hewlett-Packard (HPQ) was given a gift with all of the problems at Dell (DELL) as far as what they have to show today. As for earnings, the street is looking for HPQ to post $0.64 EPS on revenues of $24.1 Billion. The street is also looking for EPS at $0.60 and revenues of $23.9 Billion for the quarter ended January 31, 2007.

The "pre-texting" scandal and invasions of privacy to protect its corporate leaks seems so far to be geared mostly to people who have left or been booted. We'll also get to see if the company is really using its $6 Billion allocated toward share buybacks.

It recently acquired VoodooPC to attack Dell's acquisition of Alienware to capture the premium high-end PC-gamer market. It also is heading more into the consulting and IT-side of the business after it completed the Mercury Interactive acquisition for some $4.5 Billion. The street has been guessing if the company will or will not make more acquisitions, so we'll have to look to see if they say more there on that front.

PC margins are still expected to grow from the 4% area now, despite the fact that this is already up since its Compaq acquisition. The company has regained its number one position as far as PC sales. The street is probably as confused as the public about how the release of Windows Vista at the end of January is going to affect all PC makers over the next quarter or two, so we may have to look at HPQ earnings for other metrics than the PC business and we'll have to treat it based on the overall "feel-good generalities" that the company gives us today.

Each quarter there is a hope that the printing & imaging operations will not be as dominant down the road (last quarter was $6.2 Billion out of $21.9 Billion total revenues and $884 million net income out of the entire $1.5 Billion non-GAAP net income).

The stock is up more than 15% since its mid-September lows, but shares are up 53% from the 52-week lows. While the stock is up within 2% of its yearly high put in earlier, its chart based on various technical indicators is surprisingly not saying that it is grossly overbought. The fundamental analysts are still more positive than negative on the name, but the average price target appears to be $42 to $43 on the stock.

It should be kept in mind that options expire tomorrow at the close of the market, but options traders appear braced for a move of roughly $0.85 to $0.95 based on current trading. There is also a net effect of left over contracts to the tune of only 12,000 or 13,000 options contracts in the closest put and call options that expire tomorrow, but there are actually just under 140,000 contracts in the open interest of the closest put and call options before you take the pairing off into consideration.

The company has to be thankful as could be since Dell dropped the SEC bomb today and delayed earnings. This may have at least taken some of the recent scandal news heat off of H-P, but now the media can focus more and more on how the overall restructuring plan is going since the same people that cover DELL and HPQ now only have to worry about what H-P says today. What ever the company says, they at least don't have to worry about Dell stealing their thunder tonight.

The company is projected to post revenue gains next year of close to 5% for Fiscal Oct. 2007 to roughly $96 Billion and expected to show EPS growth of about 13-14% to $2.48 or so for the same period. Now the street has to look ahead to that to see if the company can guide above that now that H-P is no longer just a turnaround and hotshot new CEO story promising headcount reductions and cost cutting measures.

Jon C. Ogg
November 16, 2006

Evergreen Solar's $250 Million Securities Shelf; Why Did They Wait So Long?

2006-11-16T09:54:00.000-05:00

Evergreen Solar (ESLR) has made a filing with the SEC to sell up to $250 million in mixed securities, otherwise known as a shelf offering. The stock has fallen 2% pre-market because of the dilution that can occur, and its market cap is only $608 million as is. What is unbelievable here is the timing.

Yesterday the closed at $8.94, but its 52-week trading range is $7.27 to $17.50. Its shares are well off the highs from earlier in the year when alternative energy stocks and other energy stocks were much higher because of soaring oil prices. So what is amazing here is why the company waited this long with the stock close to its lows. I won't fault a company for going to the capital markets to take advantage of a situation to bolster a balance sheet, but when you do it AFTER your stock loses almost 50% from having a more than 200% gain the year before it seems foolish.

None of the name analysts that follow the stock expect profits any time soon, so it isn't as though the company could hang its hat on the fact that it was generating any massive cash flows. The Sept. 30 balance sheet lists total assets at $211 million, with $162.7 million in current assets; and showed total long-term and current liabilities at $223.7 million.

So now they are planning securities sales to the tune of $250 million. The securities shelf is general like many with a list of common stock, preferred stock, depository shares, warrants, and debt instruments listed as possible securities. Here is how it lists its own use of proceeds: the net proceeds from the sale of securities offered by this prospectus will be used primarily for manufacturing expansions associated with EverQ and other opportunities, as well as for general corporate purposes, including working capital. We may also use a portion of the net proceeds to fund possible investments in and acquisitions of complimentary businesses, partnerships, minority investments, products or technologies. Currently, other than our commitments with EverQ, there are no commitments or agreements regarding such acquisitions or investments that are material. Pending such uses, we plan to invest the net proceeds in highly liquid, investment grade securities.

While this is at least being used for expansion capital and for possible acquisitions down the road, the company should have known about this back after the stock was a screaming eagle rather than just another money-losing alternative energy play that has already seen its huge run. This is a company that I have actually liked in the past because solar power makes so much sense and they have a history of actually selling solar panels and systems, BUT this shelf offering is indicative of management that is not out to maximize shareholder value. While the street may price offerings at a discount if shares are deemed lofty, you at least capture the momentum of the time. Maybe the company didn't know it would definitely need the extra plant capacity earlier this year, but optimistic management would have at least tried to take advantage of a stronger alternative energy stock market when it was there instead of waiting until the sector had cooled off.

If you were grading based on the timing and net effect of this offering for current shareholders, management would get a "D" or an "F" grade here for the timing of this secondary. The company had a $90 million convertible shelf filing last December, and at least that was while the shares were on the way up. But this makes you wonder just what the company was thinking.

Jon C. Ogg
November 16, 2006

Will The Companies Bought By Private Equity Get Turned Back To The Shareholders

2006-11-16T09:41:00.000-05:00

A novel class action suit is brewing. Shareholders in several public companies take private by big private equity firms like Blackstone and KKR say that these firms conspired to get good prices in the buy-outs. HCA, Harrah's and Univision are mentioned in the court documents and the suit is based, in part, on an investigation that the Justice Department is doing into potential cooperation among the large private equity operations.

If the plantiffs prevail or get far enough along to force a settlement, one of two things could happen. The private equity firms could pay shareholders a fee between the "fair value" of the public companies and what they paid for them as they were taken private. Or, they could give the companies back to the shareholders and take back the money they paid for the buyout.

Most shareholders would probably just like a little more money per share, but the private equity guys may not see it that way.

If a company is turned back to shareholders, they may do better over time. Any one of these companies could have a few good years and the share prices might rise. Riches for all.

On the other hand, any one of these companies could have a few bad years. Or, the stock market could take a sharp downturn. Then shareholders would lose buckets of money. Of course, then they could sue the management.

Note to shareholders of public companies being taken private: take the money and run.

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

Another Problem For Dell: Acer (DELL)(HPQ)(WMT)(AMZN)

2006-11-16T09:24:00.000-05:00

Unlike most other PC manufacturers Acer is in high-growth mode. Acer's shipments last year went up 22%, a rate more than double the industry's. Acer's growth in the third quater of this year was also better than its rivals. In short order, Acer may pass Lenovo for third place among PC companies, putting it behind only HP and Dell.

Acer, based in Taiwan, has a fairly low cost base. This helps it sell inexpensive machines in markets like China and India.

But, what about the US. Acer now runs inserts in major US newspapers. Acer's share here is 3.3% but it has been rising. The company now has reselling arrangements with Wal-Mart, Best Buy, Office Depot, CDW, and Amazon.com. In other words, Acer PC are now widely available in the US. Although the company has not set up a direct marking internet operation in the US, it would not be surprising to see that over the next year.

Dell did not need to worry about anything else, but it has not worked out that way.

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

A Tale of Two IPO's: Hertz Versus KBR

2006-11-16T09:16:00.000-05:00

Hertz Global (HTZ) and KBR (KBR) are two very different IPO's, although both come out from under a cloud.

Hertz (HTZ) priced its 88.2+ million share IPO at $15.00 per share, under the $16 to $18 range set by underwriters. This is being sold by the private equity consortium (Clayton, Dubilier & Rice, the Carlyle Group and Merril Lynch Global Private Equity) that bought it from Ford (F) just last year. The problem the street has is not so much with the overall operation of the company, but the structure is a real puker. Most of the proceeds are actually going back to the private equity firms (dividends) and the private equity consortium increased the debt structure since last year's acquisition. Until (assuming IF) this trades lower and has some seasonality behind the deal and gets some of the private equity ownership is sold off and diluted we will not evaluate the company for longer-term investors. This is also not the company's first pony ride so to speak. CNBC's Pisani just said he was surprised that the deal was weak from the floor of the NYSE this morning, but that shows you he isn't reading much ahead of these deals.

KBR (KBR) is FINALLY coming public. This is the engineering and contracting unit that is being spun off out of Halliburton (HAL) and the street has been hoping Halliburton would break this out for a couple of years or more. The pricing came at $17.00, at the top-end of the $15 to $17 range it had stated. This does not come without any fleas. It had to delay its IPO because of regulatary issues over no-bid contracts in the US, recently has had to delay its IPO a day because of demands out of UK regulators, and of course has much of its business operations tied to support contracts in Iraq. The street has perceived that this is actually coming out with an embedded call option of a "cleaner and leaner company" and Halliburton (HAL) shareholders may get the rest of the shares distributed directly to them. That may act as an overhang in the intermediate term, but longer-term investors appear willing to take a shot here with it being priced at a perceived 10% to 20% discount to peers.

Happy IPO'ing today.

Jon C. Ogg
November 16, 2006

China Mobile: It's Good To Be King (CHL)

2006-11-16T09:02:00.000-05:00

Stocks: (VZ)(S)(CHL)

China Mobile has almost 300 million customers. It also has plans about how it will get more. The CEO of the world's largest cell company want to make his phones a "Swiss Army knife that can do anything for you." Pretty cool. And, smart.

The company is offering a new music sharing service among phones with the help of News Corp. The company has also done an outstanding job of promoting text messaging and music downloads.

China Mobile is also looking outside its home markets for acquisitions in Asia, South America, and Africa. These are markets that will grow quickly and may not have well-funded and dominant local cell companies.

There may be a lesson in this for US cell companies like Verzion, Cingular, and Sprint. Doing well in the US may not be enough. Penetration of phones is fairly high in this country is fairly high. To let the Chinese take the market opportunities in emerging markets would be a mistake. No matter how big China Mobile is in its home market.

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

Semiconductor Industry Association Forecasts to 2009 Slightly Lower Than From June Projections

2006-11-16T08:56:00.000-05:00

The Semiconductor Industry Association has forecast sales of $321 Billion by 2009.

The new annual forecast projects that sales will reach $248.8 Billion in 2006, up 9.4 from 2005. Back in June it had forecast $249.6 Billion in sales for 2006, so this new base rate for 2006 is a revised lower number and affects the projections for 2007 and beyond.

The SIA is also projecting roughly a 10% increase in 2007 to $273.5 Billion, slightly more than a 10% sales increase in 2008 to $303.4 Billion, and a 5.8% increase in 2009 to $321 Billion.

The numbers are actually slightly under the rest of the projections made back in June of this year. Back then it forecast 11% growth in 2007, 12% in 2008, and 4% in 2009 to a total of what was then estimated at $323 Billion.

Please also remember to perhaps take many of the SIA projections with a grain of salt, as many chip industry executives have cautioned on for years. They all support the industry, but they all have their own opinions of how the industry and their businesses are going and they are not going to share much of their private thoughts with the SIA.

Jon C. Ogg
November 16, 2006

Pre-Market Stock News (Nov. 16, 2006)

2006-11-16T08:27:00.000-05:00

(AAPL) Apple is a buy according to Jim Cramer on MAD MONEY as Zune is D.O.A. and not a threat to iPod.
(ALLT) Allot Communications 6.5M share IPO priced at $12.00,above the $9 to $11 range.
(AMAT) Applied Materials $0.30 EPS from operations vs $0.31e; stock trading down 2.7%.
(AMSF) Amerisafe 7.8+ million share secondary priced at $11.75; closed at $12.05 yesterday.
(ANDE) Andersons and marathon (MRO) will build an etahnolplant.
(BEAS) BEA Systems trading down 10% after sales were slightly under street estimates.
(BIG) Big Lots $0.07 EPS vs -$0.02e; unsure if comparable.
(BRC) Brady $0.62 EPS vs $0.60e.
(BTU) Peabody Energy replacing HCA in S&P 500 Index on date TBA.
(C) Citigroup was won rights to bid $3.1 Billion to buy 85% stake in Guangdon bank in China.
(CACH) Cache 1.875 million share secondary is today.
(CCC) Calgon Carbon patent invalidated in Canada.
(CCU) Clear Channel has reportedly reached a buyout with Thomas H Lee and Bain for $37.60.
(CLE) Claire's Stores $0.39 EPS vs $0.38e.
(CRM) Salesforce.com trading down 2%after options and expenses wiped out net earnings.
(CSCO) Cisco authorized another $7 Billion for share buybacks.
(DELL) Dell's SEC investigation becomes formal and now said revenues will be released by month end instead of today; stock down over 4%.
(DENN) Denny;s CEo interviewed by Cramer on MAD MONEY; Cramer said it is a buy and could go from $4 to $6 soon.
(DKS) Dick's Sporting Goods to replace BTU in S&P Mid Cap 400 index.
(DWA) Dreamworks 11.5 million share secondary today priced at $26.80.
(FL) Foot Locker boosted dividend after earnings.
(GMCR) Green Mountain Coffee $0.19 EPS vs $0.17e.
(GMTC) GameTech names new CFo.
(GOOG) Google will replace HCA in S&P 100 Index on date TBA.
(HNSN) Hansen medical 6.25M share IPO priced at $12.00, in the middle of the $11 to $13 range.
(HRZ) Horizon Lines has 2.3 million share secondary.
(HTZ) Hertz Global priced its 88+M share IPO at $15.00, under the $16 to $18 range.
(IFX) Infineon reported narrower losses overseas.
(KBR) KBR 27.8 million share IPO priced at $17.00, at the top of the $15 to $17 range.
(LOJN) Lojack CEO has resigned.
(NWY) New York & Co. $0.16 EPS vs $0.15e.
(RA) Reckson getting $49 bid from Icahn and Macklowe.
(SCHS) SchoolSpecialty filed to sell $125M in notes.
(SHLD) EPS $1.27 vs $0.98, but was $0.82 after items. R$11.94B vs $11.82B(e); s-s-s -3% but consensus was -3.3%.
(SPSN) Spansion 35 million share secondary priced at $13.75, versus $14.00 close; down from $15.25+ in last 5 days.
(TTEK) Tetra Tech $0.20 EPS vs $0.18e.
(TWMC) Transworld Ent. -$0.43 EPS vs -$0.38e.
(TWX) Time Warner's AOL head Jonathan Miller is leaving the company and will be replaced by NBC's Randy Falco according to reports.
(WSM) William Sonoma $0.29 EPS vs $0.24e;sees Q4 $1.03-1.09 vs $1.15e.
(WTS) Watts Water 5 million share secondary priced at $40.00, compared to the $41.58 close yesterday.
(WTSLA) Wet Seal $0.08 EPS vs $0.08e.
(WYNN) Wynn is going to expand to a full second resort in Macau.
(ZLC) Zales -$0.45 EPS vs -$0.46e.
(ZUMZ) Zumiez fell 6% after missing sales expectations and guiding Q4 same as prior guidance.
(ZVUE) HandHeld Entertainment announced free trading of its 3.2+ million PIPE shares from February; doubles float to about 6.3 million shares.

Pre-Market Stock News (Nov. 16, 2006)

2006-11-16T08:26:00.000-05:00

Select Analyst calls (Nov. 16, 2006)

2006-11-16T08:09:00.000-05:00

ARB cut to Peer Perform at Bear Stearns.
ARXT started as Buy at First Albany.
ATMI cut to Neutral at JPMorgan.
ATVI started as Peer Perform at Bear Stearns.
BEAS cut to Sell at Merrill Lynch.
CBRL started as Buy at SunTrust.
CDL cut to Sell at B of A.
CRL cut to Neutral at Goldman Sachs.
CXR cut to Sell at B of A.
DDE cut to Sell at Stifel Nicolaus.
DG raised to Buy at B of A.
ENDP raised to Outperform at RWBaird.
ERTS started as Peer Perform at Bear Stearns.
ETM cut to Sell at B of A.
GR maintained buy but removed from Focus List at Merrill Lynch.
JBLU cut to Reduce at UBS.
LM raised to Outperform at Wachovia.
NBIX raised to Peer Perform at Bear Stearns.
NOVA raised to Buy at Deutsche Bank.
PETM cut to Neutral at Goldman Sachs.
SAH raised to Buy at Goldman Sachs.
SFL cut to Sell at Citigroup.
SMBI cut to Sell at Goldman Sachs.
SUN started as Neutral at Prudential.
THQI started as Peer Perform at Bear Stearns.
TSO started as Neutral at Prudential.
TTWO started as Underperform at Bear Stearns.
VLO started as Neutral at Prudential.

Internet Ad Revenue Slows: Where Will MSN, Yahoo!, And AOL Go?

2006-11-16T06:16:00.000-05:00

Stocks: (GOOG)(YHOO)(TWX)(MSFT)

Internet ad revenue grew 33% year-over-previous-year in the third quarter. It hit $4.2 billion for the three month period.

That is the headline and the Internet Advertising Bureau is sticking to it. But, from Q2 to Q3, the number was basically flat. Q2 internet ad money was $4.1 billion.

There are two ways to look at the numbers. One is that revenue is still growing at a reasonable pace. The other is that it is hardly growing at all. The figures from Q4 will tell the tale as holiday marketing dollars pour into all media, and the internet sees if it can post a strong pace over Q3 2006 and Q4 2005.

Quarter-over-pervious quarter numbers are actually fairly dismal. Old Terry Semel, CEO of Yahoo! says that the market is underestimating what will happen with internet marketing dollars as more money is spent on video and social networks. He had better hope so.

While Google is operating almost exclusively in the text based ad end of the internet, Yahoo!, AOL, and MSN has to fight for the banner and button ads that he been the mainstay of online marketing money for several years. Yahoo!'s stock has taken a beating as its revenue from advertising has slowed. The AOL move from subsription-based revenue to advertising depends on a robust market. Time Warner says it can increase ad revenue faster than the market as a whole. But, if the overall market is slowing, that may be cold comfort. Microsoft, which actually lost money in it online businesses last quarter will also depend on a strong online ad market to restart its efforts at MSN.

A rising tide lifts all ships. But, that only works if the tide is rising.

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

Europe Market Report 11/16/2006 Alcatel, VW, DaimlerChrysler Up

2006-11-16T06:11:00.000-05:00

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

Markets in Europe were narrowly mixed at 6 AM New York time.

The FTSE was up .1%% to 6,236. Barclays was down .5% to 704. BP was up .3% to 598.5. BT was up .5% to 282.5. GlaxoSmithKline was up .2% to 1368. Prudential was down .7% to 657. Reuters was up .2% to 468.5. Unilever was flat at 1412. Vodafone was up .4% to 139.5.

The DAXX was down a fraction to 5,428. Bayer was down .1% to 40.23. DaimlerChrysler was up 2.2% to 48.56. DeutscheBank was down a fraction at 98.76. Deutsche Telekom was up .4% to 13.89. Siemens was up .1% ot 75.4. VW was up 1.9% to 85.85.

The CAC 40 was down .1% to 5,506. Alcatel was up 1.8% to 10.63. AXA was down .6% to 30.01. France Telecom was up .9% to 20.36. ST Micro was up .7% to 14.34. Vivendi was up .4% to 29.97.

Data from Reuters.

Douglas A. McIntyre

XM's $150 Million GPS (XMSR)(SIRI)(MSFT)(AAPL)

2006-11-16T05:45:00.000-05:00

XM Satellite Radio got a nice run-up in its stock yesterday. The company's shares moved from $14 to almost $14.80 and traded above $14.90 for part of the day.

The move added over $150 million to XM's market cap, which now stands just shy of $4 billon.

The uptick in the stock seemed to be based on an announcement that XM has launched its new GPS in some Nissan and Infiniti cars. The navigation system is nice, but the fact that it will be offered in Nissan Altima's is hardly big news.

Satellite radio investors have developed the kind of desparate behavior that is usually exhibited by people who have been without water in the desert for several days usually display.

XM's stock is still down from a 52-week high of $32, and even improved earnings have barely moved the stock.

The market appears to believe that satellite radio is last year's next big thing and Wall St. has moved on to things like the iPod and Xbox.

The question now is whether the two satellite radio companies can do anything to get back the interest of investors. Shy of a sharp acceleration in subscriber growth rates, probably not.

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

Who Will Replace Rollins At Dell? (DELL)(HPQ)(INTC)(MO)

2006-11-16T05:43:00.000-05:00

The Vegas odds are that Kevin Rollins will be out as CEO at Dell. It may be a couple of months, but his fate may already be sealed.

The SEC has accelerated its investigation into Dell's accounting practices. The computer company is expected to reports improved results for the last quarter, but filing of financial data will be delayed while the probe goes on.

Dell has also lost the poll position as the largest computer manufacturer to arch-rival Hewlett-Packard.

Michael Dell, the company founder, must now be completely humiliated by what has happened to his company's reputation and position as one of the premier companies in the US.

If Rollins goes, who gets the job?

1. Michael Dell. The company's founder, he was CEO before Rollins. He may not want to make the time commitment to the several years it will take to get Dell back on top. He does not need the money.

2. Michael Miles. The former CEO of Philip Morris and a Dell board member. Tremendous experience in consumer marketing. Due to his age, a short-term prospect.

3. Todd Bradley. Bradley is the head of HP's personal systems group which includes PCs and technical work stations.

4. William Amelio. Amelio is a former Dell executive who is now CEO of Chinese PC giant Lenovo which tool over the PC operations of IBM.

5. Sean Maloney. Head of sales and marketing at Intel. He has an engineering and marketing background and in his current position works with every major PC and server manufacturer in the world.

Rollins is out. Count on it.

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

While GM Fiddles In China, Detroit Burns

2006-11-16T05:11:00.000-05:00

Stocks: (GM)(TM)(F)

GM is boasting that its sales in China will grow 15% next year, slightly faster than the overall growth rate in the Asian country. Great.

But GM's sales in China grew over 37% in the first nine months of 2006, so the projection would appear to be a significant slowing. GM sold over 645,000 vehicles in China during that period.

None of this will matter if GM cannot improve operations in it North America operations. And, Toyota is about to see what it can do to the largest's US car company's core product line, pick-ups. Toyota is investing $1.2 billion in a new plant in Texas to build its Tundra pick-up.

Car industry analysts see Toyota's move as a way to pressure margins in the key pick-up segment of Ford and GM's sales. Pick-ups not only have large sales volumes. They also are highly profitable.

GM can do what it wants in China. Its largest rival is coming from Japan to eat its lunch in the US.

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

Sprint And Microsoft: Also-Rans Team Up

2006-11-16T04:59:00.000-05:00

Stocks: (S)(MSFT)(GOOG)(YHOO)(VOD)(VZ)

Sprint and Microsoft have announced a strategic alliance to provide search functions on Sprint cell phones. Microsoft has been trying to get into this business in the US for some time. Microsoft is in a fierce competition with Google and Yahoo! to provide mobile search. The programs will be supported by advertising. Sprint and Microsoft will split the proceeds.

Microsoft rival Google already has deals with Vodafone and Japanese cell carrier KDDI, so the amount of mobile real estate available to search companies is already shrinking.

Some of the cell phone carriers like Alltel are avoiding using Microsoft, Google, and Yahoo! altogether. Alltel has done a deal with start-up JumpTap. Verizon has its own systems called VZ Navigation.

The deal with Sprint offers some affirmation the the No. 3 US cell operator still has a very valuable base for offering services from companies like Microsoft. And, Microsoft, which is desparate to flank Google and Yahoo! in mobile search gets a large footprint for its search offerings which are currently a distant third place on the web.

Two companies in third place. What does 3+3 equal?

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

Media Digest 11/16/2006 Reuters, Wall Street Journal, New York Times

2006-11-16T04:58:00.000-05:00

Stocks: (JNJ)(AMGN)(V)(TWX)(MSFT)(S)(MRK)(DELL)(GM)(T)

According to Reuters, VW's stock is up on speculation that Porsche could make a bid for the entire company. Porsche is already the largest shareholder.

Reuters writes that Hertz IPO raised $1.32 billion.

Reuters reports that Vivendi's profits were lifted by its video game business.

Reuters also writes that Time Warner ousted the CEO of AOL and replaced him with a high ranking executive from NBC Universal.

According to the Wall Street Journal, US Airways offered Delta $8.67 billion for the airline which is still in Chapter 11.

The Wall Street Journal writes that Dell has announced that the SEC has stepped up its investigation into the computer makers accounting practices which will cause a delay in quarterly filing from the company.

The Wall Street Journal reports that GM will name a former AT&T financial official as its chief accounting officer after a series of financial restatements at the large car maker.

The Wall Street Journal also writes that Merck has won another federal trial over the affects of its painkiller Vioxx.

The Wall Street Journal also reports that Sprint will begin to offer local search on its phones. The system will be powered by Microsoft.

The New York Times writes that high doses of anemia drugs from Johnson & Johnson and Amgen are linked to heart attacks. Sales of the two drugs total about $9 billion a year.

Douglas A. McIntyre

Asia Markets 11/16/2006 PCCW, Cathay Pacific Up, China Netcom Down

2006-11-16T04:26:00.000-05:00

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

Asian markets were narrowly mixed.

The Nikkei was down .5% to 16,164. Bridgestone was down .8% to 2,480. Canon was up .2% to 6250. Daiwa Securities was down 1.2% to 1281. Fuji Film was down 1.8% to 4470. Hitachi was down .7% to 703. Honda was down 1.2% to 4200. Japan Air was down 1.3% to 220. NEC was down .3% to 598. NTT was up .5% to 566000. Sharp was down 1.4% to 2040. Softbank was down 1.1% to 2305. Toshiba was down .7% to 733. Toyota was down .8% to 7230. Yahoo Japan was down 1.5% to 41700.

The Hang Seng was up .3% to 19,154. Cathay Pacific was up 2.3% to 18.66. China Mobile was up 1.5% to 69.4. China Netcom was down 3.3% to 15.28. HSBC was down .7% to 146.6. PCCW was up 1.4% to 5.13.

The KOSPI was down .1% to 1,411.

The Straits Times was up .6% to 2,795.

The Shanghai Composite was up 1% to 1,942.

Data from Reuters

Douglas A. McIntyre

Farallon Capital Discloses Confidentiality and Standstill Agreement with Mills (MLS)

2006-11-16T04:24:00.000-05:00

From 13D Tracker

In an amended 13D filing on Mills Corp. (NYSE: MLS) 10.9% holder Farallon Capital disclosed a Confidentiality and Standstill Agreement with the company.

The firm said at the request of the Company and as a condition to being included in discussions about a possible strategic transaction (if any) involving the Company, they have agreed to be subject to the "standstill" arrangements.

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

SAC Capital's Latest Adjustments

2006-11-16T04:22:00.000-05:00

From 13D Tracker

Another 13F filing of interest. This one from one of the world's largest and most well respected hedge funds SAC Capital, which is run by Steve Cohen.

SAC is not a buy and hold type investor, so while interesting the stocks may not be good piggybacks:

Some positions closed out: FPL Group Inc. (NYSE: FPL) (sold 1.9M shares), Emulex Corp. (NYSE: ELX) (sold 2.3M shares), Laidlaw International Inc. (NYSE: LI) (sold 1.3M shares), Source Interlink Companies Inc. (Nasdaq: SORC) (sold 2.5M shares), Level 3 Communications Inc. (Nasdaq: LVLT) (sold 5.8M shares).

Some new positons: NTL Inc. (Nasdaq: NTLI) (added 2.5M shares), Tyco International Ltd. (NYSE: TYC) (added 1.45M shares), Pentair Inc. (NYSE: PNR) (added 1.3M shares)

Some raised positons: Business Objects SA (Nasdaq: BOBJ) (added 2.85M shares), Alcoa Inc. (NYSE: AA) (added 2.6M shares), Phelps Dodge Corp. (NYSE: PD) (added 482K shares)

Some lowered position: Inco Ltd. (NYSE: N) (cut 1.5M shares), International Paper Co. (NYSE: IP) (cut 2.6M shares), Time Warner Inc. (NYSE: TWX) (cut 5.6M shares).

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

Changes in Buffett's Berkshire Hathaway Holdings

2006-11-16T04:20:00.000-05:00

From 13D Tracker

While certainly not an activist investors, Warren Buffett's moves are always newsworthy:

Here are his latest from a quarterly 13F filing yesterday.:

The firm showed a new 10 million share position in Western Union Co. (NYSE: WU).

The firm raised its stake in USG (NYSE: USG) from 10.2 million shares to 16.7 over the quarter (already known through 13D). The firm raised its stake in Lowes (NYSE: LOW) from 780K to 7 million over the quarter. The firm raised its stake in Nike (NYSE: NKE) from 2.47 million to 4 million shares. The firm raised its stake in Iron Mountain Inc. (NYSE: IRM) from 5 million to 6 million.

The firm lowered its stake in Anheuser-Busch Companies Inc. (NYSE: BUD) from 43.5 million shares to 36.4 million. The firm lowered its stake in Target Corp. (NYSE: TGT) from 5.5 million to 746K. The firm lowered its stake in Ameriprise Financial Inc. (NYSE: AMP) from 23.9 million to 19.3 million over the quarter (already known from 13G, currently at 14.72 million). The firm lowered its stake in H&R Block (NYSE: HRB) from 11.4 million shares to 10.98 million shares.

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

Analog Devices Conference Call Review

2006-11-16T04:17:00.000-05:00

By William Trent, CFA of Stock Market Beat

Having had a chance to review the Analog Devices (ADI) conference call, we came away with a few observations. We’ll start with the commentary from CEO Jerald Fishman:

I think first and most importantly, for the full year of 2006, our sales to our broad base of industrial customers have increased 15% from 2005. Revenues from industrial customers for the year represented 42% of our sales, and industrial applications remained one of the most fragmented markets in the electronics industry.

Within this overall category that we call industrial products, sales to instrumentation customers was up 20% year over year, motor control was up 23% year over year, medical was up 24% year over year, power metering up 16%, and sales into defense applications increased 17%.

While sales to automotive customers increased only slightly last year, our newest products are designed into many new platforms that will begin to appear in 2007 and 2008 models.

This is in keeping with our take on Rockwell Automation (ROK), as well as today’s Econoday article. However, we are scratching our heads over his next comment:

Our sales to ATE customers increased 11% year to year, but ATE continues to be a very challenging market, as semiconductor capital spending still remains very choppy.

If they describe a market in which orders have been up about 60% from the previous year for the last six months as “choppy” we can’t wait to see how they describe the downturn we believe is looming.

Fishman also listed a number of factors that will impact the current quarter, including the fact that comparisons are affected by an extra week of selling time:

Our first quarter in 2007 will be influenced by a number of factors. Our opening OEM backlog for Q1 is down $11 million from the beginning of Q4 as the result of generally lower bookings during the quarter, primarily as a result of excess inventory in infrastructure, handset and automatic test equipment [inaudible] our customers.

While distribution bookings were also weaker in Q4, end market re-sales remain stable, indicating continuing firm demand from our broad base of industrial customers. Our end customer book-to-bill ratio was approximately 0.98 for the quarter.

Our lead times have decreased again during Q4, which would imply a greater percentage of our revenues will be derived from turns business, which is business that we booked and we shipped in the same quarter. I think this is very typical at this point in the cycle.

Our Q1 will also be a 14-week quarter, which occurs once every seven years to adjust for the fact that 52 weeks is slightly different than 365 days. This should provide a revenue boost which could offset the normal seasonality due to the holiday period that we usually experience.

Also, as mentioned in our press release, during Q1 we will record a $35 million revenue as a result of a recently completed license transaction. This will not be repeated in future quarters and will also be excluded from our non-GAAP measures.

As a result of all these factors, when you add them all up, our revenue plan for Q1 is in the range of $635 million to $670 million, which does not include the one-time $35 million license fee.

The extra week was the subject of a great deal of back-and-forth during the conference call, and likely explains why the market performance today is not as strong as the post-market trading yesterday seemed to indicate.

The author may hold a position in the securities discussed. The author's current holdings are as follows: Long: Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion's Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; Ceradyne (CRDN); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Lion's Gate (LGF) call options; Dell (DELL) put options; Ceradyne (CRDN) call options; Plantronics (PLT) put options.

http://stockmarketbeat.com/blog1/

Buffett’s Latest Portfolio Moves & Soros Takes Major Stake in AMD, Chipotle & Cisco

2006-11-16T04:14:00.000-05:00

By Yaser Anwar, CSC of Equity Investment Ideas

Note: Dear Readers- The analysis below was taken from an email newsletter by MoneyNews.

Warren Buffett’s Berkshire Hathaway made some adjustments to its investment portfolio in the third quarter, reducing its stake in some and adding shares in others, according to regulatory filings with the Securities and Exchange Commission.

First, let’s look at the cutbacks: Target, Anheuser-Busch, and H&R Block.

Berkshire just disclosed its stake in Target at the end of October, buying 5.5 million shares or $268 million worth of the nation’s second largest discount retailer in the second quarter. But just as quickly, Berkshire sold off about 4.75 million shares, bringing its stake in Target to just 745,700 shares.

Target announced yesterday a 16 percent jump in third quarter profits to 59 cents per share, beating expectations. Analysts surveyed by Thomson Financial were expecting earnings to come in at 55 cents a share.

Berkshire sold 7.11 million shares in Anheuser-Busch, the world’s largest brewer, after making an initial investment of 44.7 million shares or 5.7 percent of the company last year. Berkshire’s remaining investment was 36.4 million at the end of September.

Berkshire cut its stake in tax preparer H&R Block, reducing shares to 10.97 million from 11.93 million.
Now, let’s look at where the company added to its positions: Lowe’s, Nike, and Iron Mountain.

Berkshire made a significant increase in its stake in home-improvement retailer Lowe’s, boosting the amount of shares from 390,000 to 6.79 million. Lowe’s and Home Depot, Lowe’s main competitor, have both cut their earnings outlook in the face of the housing slump. Buffett owns 4.18 million of Home Depot stock, too. Apparently, Buffett thinks now’s the time to buy.

The company also hiked its stake in Nike, the world’s biggest athletic-shoe maker, from 2.47 million shares to 4 million shares. Berkshire added a million shares of Iron Mountain, the largest seller of records-management services, to its portfolio, raising its stake to 6 million shares.

Berkshire Hathaway also gained 10 million shares of Western Union as part of its spinoff from First Data Corp. in September.
Soros’s hedge fund added to its equities position by taking major stakes in a few companies.

Soros Fund Management LLC increased its equities investments by 38 percent in the third quarter, investing nearly $2.9 billion, according to the filings. Soros bought a $20 million stake in Advanced Micro Devices (AMD) and an $11 million position in Chipotle Mexican Grill, which recently spun off from parent company McDonalds.

The fund also added to its position in Cisco Systems, bringing the investment to $30 million worth of shares from $2.4 million worth in the second quarter, a 1,150 percent increase in the stake.

Soros also decided that some energy companies are a bargain right now, while others are not. The Soros fund invested $42 million in Occidental Petroleum and $31 million in Valero Energy. However, the fund sold $15 million worth of shares in both Massey Energy Corp. and Pioneer Natural Resources.

Soros seemingly has mixed feelings about health-care companies too. His fund picked up $12 million worth of shares in health benefits company WellPoint, and sold $22 million worth of the iShares Nasdaq Biotech Index.

Soros also sold his entire $2.5 million stake in Yahoo, in favor of buying a $2 million stake in rival Google.

The hedge fund also invested $18 million in McData Corp’s convertible debt.

http://www.equityinvestmentideas.blogspot.com/

Catalysts That Make Rayoneir (RYN) A Buy

2006-11-16T04:11:00.000-05:00

By Yaser Anwar, CSC of Equity Investment Ideas

On October 23rd, I highlighted Rayoneir for its timberland assets. Since then the stock has barely moved & is still attractive. Here's why:

Rayonier owns 1.6 million acres of timberland in the southeastern US. University of Florida’s Food and Resource Economics Department, which issues the annual land-value survey, Timberland in Northeast Florida is worth $3,864 per acre. RYN also owns about 400K acres in Pacific Northwest, which at $2K an acre would be worth $800 million.

Right now, RYN has a market cap of $3.1bn, whereas I've calculated liquidation value of it's 1.6 mil acres at 3K/acre= $4.8 billon. Let's timber will fall in price so- 1.6mil acres at $2500/acre= $4billion. That's ignoring all it's other businesses and land in Australia and New Zealand.
The reason I believe the Street is valuing the stock like that:

1) RYN has no earnings leverage to commodity paper prices, hence if paper prices were to rally, Rayonier could underperform its paper-heavy peers.

2) The Street is valuing Rayonier at roughly $2K per US acre, assuming its international operations in Australia & New Zealand, real estate, and paper mills are worthless.

3) As of late, housing starts are falling, which positively correlate with lumber futures/prices. Similarly, Lumber & Timber have a positive correlation. Hence, if housing market dwindles so does lumber & timberland. Hence the cheaper valuation.

4) RYN's exposure to Florida & portfolio of properties close to the beach in the southeastern (hurricane fears, which now seem to be subdued).

5) On Oct. 25th, management's outlook was mediocre (at least according to me). RYN expects 4th Q results to be less than the 3rd Q due to a drop in real estate sales.

I recommend getting into TOL back when it reported in August (24 then 28 now) because in my opinion the time to rotate back into housing and timber REITS/stocks is before the next Fed cut.

Yesterday HD rose even after it lowered guidance and missed estimates by 2 cents, because the street believed the next Fed move will be to cut rates.

In closing, I believe timber is a great investment. Why? From 1972-2001, an investor in timber saw average annual returns of over 14.5%. In other words, if you had invested $10,000 in timber in 1972, you'd be sitting on over half a million dollars right now .

And the best stock to make it with is RYN. Why? Due to the stable business, long-term outperformance of timber, attractive properties, almost 5% dividend yield & most importantly- The valuation. RYN trades at a 20% EV/EBITDA discount to PCL & as I mentioned in the last post, I believe it's (timber) land is also undervalued.

http://www.equityinvestmentideas.blogspot.com/

Cramer Says The Canadian Trusts Are Oversold, Buy the Canadian Oil Trusts

2006-11-16T04:10:00.000-05:00

Cramer on MAD MONEY said you can now BUY the Canadian oil trusts after they took a huge beating from the Canadian tax changes.

Canetic Resource Trust (CNE) with a 19% yield;
Enterra Energy Trust(ENT) with a 20% yield.

The Canadians allowed all TRUST shares to pass on a dividend TAX FREE, but the breaking of a campaign promise not to tax these trust as corporations was made. In 4 years there will be 35% of the dividends shaved off for Canadian taxes. He said the trusts fell 10% to 30% immediately on the news, which you know if you follow them.

He said the bounce started today and it will continue, but you are also getting a call option essentially free that the new Candian legislation will be stopped or changed.

He has 3 more that fit the bill. He thinks that these are huge dividend names Pengrowth (PGH), Baytex Energy (BTE), and Precision Drilling (PDS). They are all bouncing on big volume and these are all buys.

Jon C. Ogg

Cramer Says To Hell with Microsoft's Zune, BUY APPLE (AAPL)!!!!

2006-11-16T04:09:00.000-05:00

On tonight's MAD MONEY segment on CNBC, Cramer went over a stock where it was hit because of competition. He said Microsoft (MSFT) just took aim at Apple (AAPL) with Zune's launch against iPod.

Cramer said "the Microsoft launch is officially being pronounced a dud!"...... That is not "dude". He thinks AAPl is a fantastic must own stock and the Zune he even noted as the "Edsel," an old Ford failed car launch that was a dud. He thinks the Zune colors stink and the Zune music store is also a dud. He also said that the fact that it is made by Microsoft, and kids and many others hate them.

He said the Zune is not Vista compatible. It is a rejiggered Toshiba and if they want to take on AAPL they should do a better design. Zune's rankings are also lower than expected. At Amazon.com this was only #12 yesterday on electronics and #7 today. If it was great on launch it would be #1.

Cramer said that AAPl has been impervious to this launch. HE said they still have a tiny market share, but they have 50% of market share with upper-end college students. He thinks their retail initiative is great and they are even testing Mac sales at Best Buy.

After Cramer said this AAPL traded up after-hours an additional 0.8% to $84.75, although it closed down 1.1% at $84.05 today. Cramer said he thinks AAPL is a $100.00 stock "By the end of the year."

Jon C. Ogg

A Little Fiasco At Zumiez (ZUMZ)

2006-11-16T04:07:00.000-05:00

Retailer Zumiez announced earnings that looked good on paper. Revenue for the period ending October 28 rose 43% to $82 million. Same store sales were up over 10%, but that slowed a bit from over 13% for the first nine months.

Net income for the three month period was $6.8 million. That was up from $5.3 million in the same quarter a year ago. Not much movement there.

Guidance was lackluster. "The company stated that it is maintaining guidance for fiscal 2006 to $0.66 to $0.67 in diluted earnings per share." Not much of an endorsement for Q4 action.

The stock was beaten to within an inch of its life on the news. It fell 13% almost immediately and was down to $27.30. The company's 52-week high/low is $38.85/$18.06.

There should be a lot of unhappy shareholders come this morning.

Cramer Says The Canadian Trusts Are Oversold, Buy the Canadian Oil Trusts

2006-11-15T18:30:00.000-05:00

Cramer Says To Hell with Microsoft's Zune, BUY APPLE (AAPL)!!!!

2006-11-15T18:07:00.000-05:00

Stock Ticker: AAPL

On tonight's MAD MONEY segment on CNBC, Cramer went over a stock where it was hit because of competition. He said Microsoft (MSFT) just took aim at Apple (AAPL) with Zune's launch against iPod.

Cramer said "the Microsoft launch is officially being pronounced a dud!"...... That is not "dude". He thinks AAPl is a fantastic must own stock and the Zune he even noted as the "Edsel," an old Ford failed car launch that was a dud. He thinks the Zune colors stink and the Zune music store is also a dud. He also said that the fact that it is made by Microsoft, and kids and many others hate them.

He said the Zune is not Vista compatible. It is a rejiggered Toshiba and if they want to take on AAPL they should do a better design. Zune's rankings are also lower than expected. At Amazon.com this was only #12 yesterday on electronics and #7 today. If it was great on launch it would be #1.

Cramer said that AAPl has been impervious to this launch. HE said they still have a tiny market share, but they have 50% of market share with upper-end college students. He thinks their retail initiative is great and they are even testing Mac sales at Best Buy.

After Cramer said this AAPL traded up after-hours an additional 0.8% to $84.75, although it closed down 1.1% at $84.05 today. Cramer said he thinks AAPL is a $100.00 stock "By the end of the year."

Jon C. Ogg
November 15, 2006

Market Wrap (Nov. 15, 2006)

2006-11-15T16:17:00.000-05:00

DJIA 12,251.71; Up 33.70 (0.28%)
NASDAQ 2,442.75; Up 12.09 (0.50%)
S&P500 1,396.57; Up 3.35 (0.24%)
10YR-Bond 4.615%; Up 0.047
NYSE Volume 2,857,269,000
NASD Volume 2,074,955,000

US Airways (LCC) rose some 16.75% to $59.46 after it made an offer to acquire Delta Airlines for some $8 Billion in stock and debt. Other airlines traded up in response to a consolidating industry: UAUA traded up 9% to $39.99, CAL traded up 12.6% to $43.21, AAI traded up 16% to $12.82, and JBLU traded up 7.4% to $15.13.

Emergent BioSolutions (EBS) was another dismal IPO that traded as a broken deal. It priced at $12.50, under the range and closed down even lower at $11.70.

Comverse Tech (CMVT) gave up a sharp 14% to $17.69 after the company disclosed accounting irregularities and problems on revenue recognition back to 2002, and that is after its ongoing options SNAFU.

CDC Corp (CHINA) traded up 10% to $7.80 after it outperformed earnings estimates.

Embrex (EMBX) traded up39% to $16.64 after Pfizer’s animal health unit acquired the company for $17 per share.

Trimeris (TRMS) rose 20% to $12.03 after the company realigned its focus on its HIV drug Fuzeon.

e-Future Information (EFUT) finally fell 31% to $29.89 after several days or parabolic gains after its recent thin volume IPO.

Tripos (TRPS) was the largest percentage loser by falling 60% to $0.62 after posting a loss and selling its discovery research unit.

SunTrust Banks (STI) rose 1.3% to $80.26 after the company announced a planned succession to its CEO, partly on thought that it could be acquired.

Grainger (GWW) rose 3.5% to $73.57 after it raised the guidance range to where the mid-point was above consensus estimates for fiscal 2007.

Prudential (PRU) rose 1.8% to $81.00 the day after it allocated $3 Billion to share buybacks.

Corel (CREL) fell 0.9% to $12.84 after Entrust (ENTU) filed a copyright infringement suit against the company.

StemCells (STEM) rose 5% to $3.34 after it was announced that the company performed its first neural stem cell transplant.

Vanda Pharma (VNDA) rose a sharp 52% to $14.90 after it posted positive insomnia treatment results for jet setters and those with infrequent sleep issues.

Sify Ltd. (SIFY) fell 2.2% to $9.47 after its CFO was leaving to pursue other interests.

Jon C. Ogg
November 15, 2006

A Little Fiasco At Zumiez (ZUMZ)

2006-11-15T16:14:00.000-05:00

Cramer Reviews How to Trade Off Deals

2006-11-15T14:37:00.000-05:00

On today's STOP TRADING segment on CNBC, Jim Cramer discussed how to play the potential Delta/USAir merger and the Blockbuster deals.

Jim Cramer said on NYSE (NYX) that the Deutsche Boerse was running scared. Cramer said the NYSE will be immediately accretive. He still thinks it is going to $250.00 down the road. He also thinks a deal with Taiwan or Tokyo will add huge to it.

Cramer also said NYMEX (NMX) will open at a huge premium.

He also noted the world gold demand and said that global industrial demand was the only growth area. He also said that foreign emerging banks have been demanding gold. He still likes Yamana Gold (AUY) because "they have gold out the ying yang!"

Cramer said he would buy UAL (UAUA) for any airline deal as it is the cheapest stock in the airline group as a whole.

On Blockbuster (BBI), Cramer said he hasn't cared about BBI so much. But after the Weistein exclusive deal and after they have really tried to do more things he thinks BBI shares could hit $6.00.

Jon C. Ogg
November 15, 2006

Value Act Capital Lowers Stake in Williams Scotsman (WLSC)

2006-11-15T12:29:00.000-05:00

From 13D Tracker

In an amended 13D filing on Williams Scotsman International, Inc (NASDAQ: WLSC), Value Act Capital disclosed a 4.9% stake (2.1 million shares) in the company. This is down from the 2.52 million share stake the firm disclosed in an August 13D filing.

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

Spirent Communications (SPM) Rejects Large Shareholder Proposal for Board Representation

2006-11-15T12:27:00.000-05:00

From 13D Tracker

Spirent Communications Plc (NYSE: SPM) said it considered and rejected a proposal from Sherborne Investors GP, LLC to remove the Company Chairman, the Chairman of the Audit Committee and the Chairman of the Remuneration Committee and to replace them with four Sherborne nominees.

The company said a Spirent Board proposed by Sherborne would comprise four Sherborne nominees (led by Mr Bramson of Sherborne who would become Chairman), one Lexa BV nominee, two independent non-executive directors and two executive directors.

The company said they offered Sherborne two seats on the Spirent Board, one as Deputy Chairman and one as Chairman of the Audit Committee, but this offer was rejected.

Sherborne has previously notified Spirent that it holds 130,250,000 shares in the Company, representing 14.68% of the issued share capital and Lexa BV has previously notified Spirent that it held 120,000,000 shares in the Company, representing 13.52% of the issued share capital.

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

Red Hat Gets A Break, Finally (RHAT)(NOK)(MSFT)(NOVL)

2006-11-15T11:31:00.000-05:00

After being pounded in the market when its Linux solution was left out of Microsoft's alliance with alternative Linux shop Novell, Red Hat has finally gotten a break. Nokia has chosen Red Hat's Linux software system for it network server platforms.

While Red Hat has more market share in the Linus OS business than Novell, the deal, with its huge marketing support, boosted a flagging Novell.

Red Hat's stock has fallen from $32 in May to its current price of under $17. But, the stock may have run too far, too fast before that. It stood at under $11 in May 2005, so it had tripled in a year.

Wall St. should not forget that Red Hat is nicely profitable, and growing. In the last reported quarter ending August 31, the company did just shy of $100 million, and had an operating profit of over $9 million. Revenue had gone up each of the three immediate quarters.

Novell's deal with Microsoft may put it too close to the huge software company that many enterprise customers do not trust. Microsoft has made "land grabs" in the past, and companies like Nokia may elect to use Red Hat over the rival "Novell brought to you by Microsoft" Linux solution.

For Red Hat, not all the news is bad.

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

Wal-Mart, Home Depot, Target: Looking for some holiday cheer - Nov. 14, 2006 (WMT)(HD)(TGT)

2006-11-15T10:02:00.000-05:00

By William Trent, CFA of Stock Market Beat

A couple of months ago, we addressed the prospects of slowing consumer spending by saying, “Slowdown? Maybe. But if you have the right merchandise consumers will still spend more than they earn.”

Now we get a similar assessment from CNNMoney:
Moreover, since consumer purchases fuel two-thirds of the economy, these two months provide a vital temperature-taking of the overall health of the nation’s economy.Any significant slowdown in consumer spending immediately raises concerns that the economy as a whole will likely follow.

So how do things look so far? Despite the retail picture being a little muddy this year, analysts for the most part seem to agree that consumers are not yet shying away from shopping.
They’re just becoming more cautious and more picky about where they shop.

Betting against the consumer is always a long shot. Sometimes they come in, but usually they don’t. Given the housing weakness, this may be the year for it. However, it’s not something we’ll put a lot of money on.

The author may hold a position in the securities discussed. The author's current holdings are as follows: Long: Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion's Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; Ceradyne (CRDN); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Lion's Gate (LGF) call options; Dell (DELL) put options; Ceradyne (CRDN) call options; Plantronics (PLT) put options.

http://stockmarketbeat.com/blog1/

Watch Out for Rambus Headlines Today

2006-11-15T10:00:00.001-05:00

Stock Ticker: RMBS

We have a dual situation in Rambus (RMBS) today. The company is presenting at the UBS Global Communications and Technology Conference at 11:30 a.m. Eastern Time this morning and it has Federal Trade Commission oral hearings today at 2:00 PM EST.

This UBS Global Communications and Technology Conference event will be available through a webcast and can be accessed at Rambus' Investor Relations web site at http://investor.rambus.com/.

In another event, the Federal Trade Commission is meeting to consider oral arguments in the Rambus case. This meeting is set to adjourn to a closed session after the open session. The time is for 2;15 PM EST today and will be held at the FTC building at 600 Pennsylvania Ave. in Washington, D.C. The matters to be considered are two-fold in that oen is public and one is private. Portion Open to the Public: (1) Oral Argument in Rambus Incorporated, Docket 9302. Portion Closed to the Public: (2) Executive Session to follow Oral Argument in Rambus Incorporated, Docket 9302.

Please keep in mind that these hearings and public sections can change without notice, so there is always a shot that nothing will be mentioned at all on newswires today.

SYNOPSIS

While certain court cases have gone in Rambus' favor, the FTC is the body that has ruled against Rambus over it having created a monopoly by deceiving a standards-setting committee years ago. If the FTC stays on the anti-Rambus stance, then it could potentially create an environment that Rambus may have to pay back some of the back-royalties it collected and it could thwart many such royalty payments in the future.

Any adverse stance if you take it three steps further could be deemed by the street as a threat to the Rambus business model. Since Rambus does NOT manufacture chips and sell them on their own and since they are 100% reliant on negotiated royalties for use of their chip design, this is essentially just a royalty company that collects fees for using their designs. It would also give any defendant or plaintiff on the other side of Rambus a real leg to stand in future court cases.

While we have laid out the potential worst case scenario, it should be taken not as a prediction. In reality these cases tend to create a cap or a more stable royalty payment scenario rather than an outright elimination. With certain agreements in place it is now cheaper for certain patent and design licensees to just pay than it is to go in and risk punitive damages by refusing to abide by agreements and going to court to overturn an already-signed contract.

Since traders tend to shoot first and ask question later, if the bother, you could see some sudden moves in either direction today and not know why the stock moved. That is just another day in the market. As a reminder, RMBS stock options expire Friday (11/17/06) with the rest of the stock option expirations in US-traded public stocks. The company also already noted on Monday that it does not expect to file its quarterly results on time as it investigates stock options granting.

Jon C. Ogg
November 15, 2006

Embraer Shares Shrug Off Sales Decline

2006-11-15T10:00:00.000-05:00

By William Trent, CFA of Stock Market Beat

Embraer (ERJ) reported a sales and profit decline due to production problems with the ramp up of its 190 and 195 aircraft. The issue caused deliveries to fall to 30 aircraft from 41 over the same period last year. Embraer had warned about the problem, cutting its delivery forecast for this year to 135 planes from 145. But it raised its 2007 delivery estimate to at least 160 from 150.

Because of the fact that it appears to be timing-related (and of much lower magnitude than the issues at Airbus (EADS) investors appear inclined to shrug off the problems. Over the long run, we think Embraer is sitting in the sweet spot between the large planes nobody will want to fly on and the smaller turboprop planes nobody wants to fly on.

We think it is only a matter of time before some carrier decides to create an uber-Southwest (LUV) and launch non-stop regional jet service between large markets and middle tier markets that currently require a connection on the hub-and-spoke model airlines. That could really result in a new order boost.

The author may hold a position in the securities discussed. The author's current holdings are as follows: Long: Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion's Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; Ceradyne (CRDN); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Lion's Gate (LGF) call options; Dell (DELL) put options; Ceradyne (CRDN) call options; Plantronics (PLT) put options.

Looking at the e-Future Information Technology (EFUT) Exponential Gains & Trading Volume Spike

2006-11-15T09:09:00.000-05:00

Stock Ticker: EFUT

The explosion in trading volume in Chinese micro-cap stock E-Future Information Technology (EFUT) has been mind-boggling. This was one of the stealth IPO's of only 1.1335 million shares that priced at $6.00. Here are the most recent closing prices with trading volume:

14-Nov-06 $43.60 14,254,600
13-Nov-06 $29.49 3,182,800
10-Nov-06 $19.89 1,755,700
9-Nov-06 $14.28 634,700 (opened at $11.00)

e-Future is the first Chinese software company listed in NASDAQ CAPITAL MARKET, and also the first software company in the front supply chain market. The underwriter was also an unknown firm called Anderson & Strudwick, Inc.

The company just made a press release yesterday before the open that they knew of no reason for the exponential performance. It said it has actually issued 2.6+ million ordinary shares to date.

Since October 30, 2006, the share price and trading volume of e-Future's ordinary shares has increased dramatically. On several trading days, e-Future's trading volume has been a multiple of its total outstanding ordinary shares. Yesterday's summary: e-Future is unaware of any business information underlying the increase in e-Future's per share price and trading volume.

Being a logistical supply chain software company in China obviously has its perks, but these strange performing IPO's can be a bit scary after many companies start showing their results. We aren't saying this is a sham, but these situations more often than not end up correcting themselves in time. This seems to be a classic thin volume explosion that turns into a mega-volume trading stock that is touted by many chat rooms and the day traders play the volume on the momentum alone.

EFUT shares are trading down 8% at $40.00 pre-market, but that is after closing up over $14.00 higher than the $29.49 close on Monday.

Jon C. Ogg
November 15, 2006

Microsoft Pokes Cable And Telecoms

2006-11-15T08:48:00.000-05:00

Stocks: (MSFT)(CMCSA)(TWX)(GOOG)(T)(VZ)

Microsoft has decided to set up free wireless internet in Portland. For everyone. The whole city. Google has looked at a similar initiative in San Francisco.

Since Microsoft is providing its IPTV platform to a number of telecoms like AT&T and Verizon, the move could eventually put it at odds with some of its largest customers.

Microsoft's free wireless broadband will be supported by advertising that will run at the top of the browser page. The big software company understands the process well since online advertising is already a large source of revenue for its MSN division.

But, free wireless broadband does not exactly help cable companies and telecoms who are selling broadband access over their networks. AT&T, Verizon, Comcast, and Time Warner Cable bring in a large portion of their revenue from broadband-to-the-home. It is always hard to compete with "free" expecially if the product is good.

While it is too early to tell whether Microsoft can turn a profit with ad supports wireless broadband, if it works in Portland traditional broadband suppliers could find that they have a new, very well funded competitor.

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

Pre-Market Stock News (Nov. 15, 2006)

2006-11-15T08:16:00.000-05:00

(AA) ALCOA names new CFO effective Jan. 1, 2007.
(ABG) Ashbury Auto filed to sell 3+ million shares for holders.
(ADI) Analog Devices $0.39 EPS vs $0.40e.
(ALXN) Alexion filed to sell 2.5 million shares of common stock.
(ANF) Abercrombe & Fitch $1.11 EPS vs $1.11e.
(ARM) Arvin Motor $0.40 EPS vs $0.40e.
(BORL) Borland Software -$0.16 EPS and R$82.4M vs -$0.08/$77M(e).
(CDCY) Compudyne $0.09 EPS vs $0.02e; unsure if comparable
(CEP) Constellation Energy IPO priced 4.5M shares at $21.00, top of the $19 to $21 range.
(CHINA) CDC $0.09 EPS vs $0.06e.
(CMVT) Comverse found revenue recognition errors.
(COBT) Cobalt settled with GlaxoSmithkline.
(COCO) Corinthian Colleges $0.02 EPs vs $0.03e.
(CRFT) Craftmade announced it will have charges as Lowe's discontinues orders.
(CUZ) Cousins Properties announced a special $3.40 dividend.
(DELL) Dell is acquiring private ACS in UK for consulting business for undisclosed terms, although it said it would be immaterial to financial results.
(DIGE) Digene said its CEO is retiring.
(DISK) Image Entertainment -$0.14 EPS vs -$0.07e; filed to sell shares.
(EBS) Emergent Biosolutions IPO priced 5M shares at $12.50, under the $14 to $16 range.
(GOOG) Google may be losing the president of its China operations according to Pacific Epoch reports.
(HAL) Halliburton noted positively as the way to play the KBR IPO according to Cramer, but UK authorities are demanding a withdrawal of the unit IPO.
(HH) Hooper Homes -$0.06 EPS vs $0.02e.
(HTZ) Hertz's upcoming IPO was panned by Cramer on MAD MONEY.
(LCC) US Airways is in proposed merger with Delta and will offer $8 Billion for stock and debt.
(LZB) La-Z-Boy $0.06 EPS vs $0.02e.
(MED) Medifast $0.11 EPS vs $0.09e.
(NMX) NYMEX upcoming IPo was noted very favorably by Cramer on MAD MONEY.
(NWS) News Corp is close to buying backing Liberty's 19% stake.
(PBY) Pep Boys -$0.14 EPS vs -$0.05e.
(PRU) Prudential approved $3 Billion for share buybacks.
(SGR) Shaw Group COO resigned to take other position elsewhere.
(SIFY) Sify CFO is leaving to take advantage of other opportunities.
(SIL) Apex Silver Mines files to sell $200M in mixed securities.
(SINT) SI Int'l filed to sell $150 million in mixed securities.
(SPWR) SunPower is acquiring private PowerLight.
(STEM) Stem Cells trading up 8% after performing first human neural stem cell transplant.
(STI) SunTrust president/COO will replace current CEO effective January 1, 2007.
(SVM) ServiceMaster may attract private equity buyers according to WSJ.
(TAYD) Taylor Devices gapping up 14% pre-market on tsunami warning in Northern Japan.
(TLB) Talbots $0.15 EPS vs $0.15e.
(TRMS) Trimeris shares rose more than 15% after switching to FUZEON focus in Roche pact.
(TWB) Tween Brands $0.58 EPS vs $0.57e.
(TWX) Time Warner's Parsons said he is keeping AOL according to Bloomberg interview.
(TYC) Tyco $0.51 EPS vs $0.49e, but that is backing out $0.12 gain; TYC will take $600 million in charges for restructuring to save $50M in 2007 and $200M in 2008.
(VAS) Viasys gets FDA marketing approval for Sonara.
(VLCF) Knightsbridge tankers $0.85 EPS vs $0.82e.
(VNDA) Vanda Pharmaceuticals releases positive insomnia drug results and was interviewed on CNBC.
(VRGY) Verigy $0.56 EPS vs $0.48e.
(WNS) WNS $0.15 EPS vs $0.14e.

Select Analyst Calls (Nov. 15, 2006)

2006-11-15T08:08:00.000-05:00

AMZN started as Buy at Soleil.
ASH cut to Neutral at Credit Suisse.
ATRS raised to Buy at Jefferies.
BBBY cut to Underweight at JPMorgan.
BORL cut to Underweight at JPMorgan.
CAKE raised to Outperform at FBR.
CMVT cut to Sell at Goldman Sachs.
DAC started as Buy at Jefferies.
DRIV started as Outperform at thomas Weisel.
EIX raised to Buy at Goldman Sachs.
FL raised to Buy at Merrill Lynch.
GOOG started (renewed) coverage with Buy and $600 target.
HD raised to Overweight at JPMorgan.
MEL raised to Buy at B of A.
MO raised to Buy at Goldman Sachs.
QCOM reitr Buy at Jefferies.
RLH cut to Mkt Perform at FBR.
SKS raised to Buy at merrill Lynch.
SPLS started as Hold at Soleil.
SYK added to Focus List at Merrill Lynch.
TELK cut to Underweight at Lehman.
TXU cut to Neutral at Goldman Sachs.
VNO added to Goldman Sachs' conviction buy list.
VOD raised to Buy at Deutsche Bank.

The Stock Exchanges Vs. The Internet: Free Quotes For All

2006-11-15T06:04:00.000-05:00

Stocks: (NYX)(NDAQ)(TWX)(YHOO)

The large internet sites that deliver financial news object to the fees that Nasdaq and the New York Stock Exchange plan to charge for stock quotes. It would appear, at first glance, that the fight is purely economic. The internet sites don't want to pay much for quotes because it adds to the content cost structure and makes it more expensive to offer services to draw visitors. The exchanges have a more acute problem. Data fees make up so much income for them that a lost of the fees might wipe out much of their operating profits. A look at the 10-Q for the NYSE Group shows revenue of $603 million for the September quarter. Data fees were over $57 million of that. The company's operating profit was almost $68 million. Those data fees are important.

The finanacial internet sites have some many visitors that it could cost them millions of dollars to offer real-time quotes to their users, and now the exchanges want to up the cost of that data.

But, the fights goes beyond revenue and profit.

The banks that pay huge transaction fees to the exchanges and the companies that also shell out huge sums for their listings may not be entirely happy with a system that makes quotes more expensive and, perhaps, less available to investors due to cost. Do Apple and GM really want the barrier to getting quotes on their stocks raised? Or, would they rather have as many investors as possible with access to the data? Not a difficult question to answer.

One can see listed companies putting pressure on exchanges to distribute live quotes for a little as possible, if not for free.

Another difficult matter is the question of monopoly. When the exchanges were non-profits is was more palatable for them to charge for quotes that were not available elsewhere. But, they are not "for profit" institutions and they have bought up all of the electronic trading platforms that could offer quotes outside the exchange system. There is now, in essence, only one game in town. In general, the government has not supported "for profit" monopolies, at least not for any extended period of time.

There is another important set of players in this game: the investment banks who pay transaction fees to the exchanges. In Europe, seven investment banks including Citigroup, Morgan Stanley, Goldman Sachs, and UBS, have said they are considering setting up their own trading platform to take volume away from the London Stock Exchange. Why? The banks believe that the fees that they pay to the exhange are too high. It may be more efficient to simply set up a competing system.

The internet war with the stock exchanges is likely to become much more complex. If listed companies and investment banks begin to assert their own interests, the exchanges could have more problems than those created by petitions from Yahoo! and AOL.

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

Europe Market Report 11/15/2006 Deutsche Telekom, BT, Vodafone Up

2006-11-15T05:50:00.000-05:00

Stocks: (BCS)(BP)(BT)(GSK)(UL)(RTRSY)(VOD)(BAY)(DCX)(DB)(BT)(SI)(ALA)(AXA)(FTE)(V)

Markets in Europe were up modestly at 5.50 AM New York time.

The FTSE was up .4% to 6,214. Barclays was up .9% to 707. BP was flat at 593. BT was up 1.3% to 281. GlaxoSmithKline was up .7% to 1376. Prudential was up 1.2% to 658. Reuters was up .5% to 462.25. Unilever was up .3% to 1399. Vodafone was up 2.8% to 139.25.

The DAXX was up .5% to 6,420. Bayer was up .1% to 40.22. DaimlerChrysler was up 1.2% to 47.07. DeutscheBank was up .5% to 98.82. Deutsche Telekom was 1.8% to 13.81. Siemens was up .3% t0 74.9.

The CAC 40 was up .4% to 5,497. Alcatel was up 1.2% to 10.36. AXA was up .5% to 30.23. France Telecom was up 1.1% to 20.13. ST Micro was up 1.9% to 14.06. Vivendi was up .4% to 29.66.

Data from Reuters.

Douglas A. McIntyre

Microsoft's Google Play (MSFT)(GOOG)

2006-11-15T05:35:00.000-05:00

Microsoft wants its customers and investors to know that the company is no longer a three-legged beast. It has added a fourth appendage, internet delivered software. Perhaps the only people on Wall St. who did not know this were those who have been away for a year.

The Microsoft push is clearly a reaction to Google's long-lived program to deliver services like spreadsheets, word processing and calendars over the internet with the software stored on servers and not the user's PC. Microsoft's new business will operate side-by-side with its desktop, server software and entertainment units.

The Microsoft program has one significant difference with Google's plans. Microsoft internet based software, dubbed Microsoft Live by the company, will work with software already installed on PCs.

Microsoft was somewhat circumspect about why it was taking the dual internet-delivered/desktop installed approach. Given Google's plan to have its products be "internet only" the hybrid approach of the world's largest software maker might be out of step.

The answer lies with the fact that Microsoft may think the Google strategy is the right one, the one that will eventually win, but MSFT cannot destroy it core business of Windows-on-the-PC overnight. With more than half of the company's revenue from that source, financial suicide is not an option.

Because Microsft is tethered so strongly to the past, and most move into internet based software services in a measured way, it may lose a great deal to company's like Google which have no legacy to protect.

That's bad news for Microsoft.

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

Media Digest 11/15/2006 Reuters, Wall Street Journal, New York Times

2006-11-15T05:13:00.000-05:00

Stocks: (BKS)(LOW)(BUD)(TGT)(NWS)(MSFT)(GOOG)(C)(HD)(TWX)(GE)

According to Reuters, Bershire Hathaway added shares in Nike and Lowe's, but may have reduced positions in Anheuser Busch and Target.

The Wall Street Journal reports that Boeing may win up to $10 billion in new plane orders in the coming weeks as airline replace older planes.

Reuters writes that News Corporation believes that its operating profits will be up in double digits although advertising in it major markets will be flat. Fox, satellite holdings, and new media should drive the growth, the company said.

Reuters reports that Microsoft believes that web based software will be the most important development affecting the company over the next decade. However, MSFT believes that server delivered software will operate with software already loaded on the PC. This contrast with Google's model of delivering software strictly over the web.

The Wall Street Journal reports that Citigroup now seems to be the lead bidder for a $3.1 billion investment in China's Guangdong Development Bank.

The WSJ also reports that seven major investment banks in Europe are working on a stock trading system that could take trading from the London Stock Exchange. The banks include Goldman Sachs, Merrill, and Citigroup.

The Wall Street Journal writes that bankrupt car parts company Collins & Aikman will sell itself off to satify creditors.

The Wall Street Journal also writes that Home Depot had a 3.1% earnings drop and cut forecasts due to a soft housing market.

The New York Times reports that the president of the NBCUniversal television group is in talks to join Time Warner's AOL unit. Randy Falco might take over as CEO at AOL.

Douglas A. McIntyre

Asia Markets 11/15/2006 Cathay Pacific, Fuji Film Up, Yahoo Japan Down

2006-11-15T04:54:00.000-05:00

Stocks: (CAJ)FUJ)(HIT)HMC)(NIPNY)(NTT)(SNE)(TM)(CHL)(CHU)(PCW)(HBC)

Markets in Asia were mixed with the Nikkei off and the Hang Seng up sharply.

The Nikkei fell .3% to 16,243. Bridgestone was down 1.2% to 2500. Canon was up .5% to 6240. Daiwa Securities was up 1.5% to 1296. Fuji Film was up 2.7% to 4550. Hitachi was up .3% to 708. Honda was up .2% to 4250. Isuzu was up 3.2% to 512. NEC was up 1% to 500. NTT was down 1.2% to 563000. Sharp was up .5% to 2070. Softbank was down 1.1% to 2330. Sony was down .4% to 4710. Toshiba was up .4% to 738. Toyota was up 1.3% to 3010. Yahoo Japan was down 1.7% to 42350.

The Hang Seng rose 1.1% to 19,093 to a record close. Cathay Pacific rose 3.9% to 18.24. China Mobile rose 2.6% to 68.35. China Unicom rose 1% to 8.34. HSBC fell .3% to 147.7. PCCW fell .2% to 5.06.

The KOSPI rose .4% to 1,413.

The Straits Times rose .6% to 2,778.

The Shanghai Composite rose 1.8% to 1,923.

Data from Reuters.

Douglas A. McIntyre

Will Toyota Move Its Headquarters To Detroit?

2006-11-15T04:35:00.000-05:00

Stocks: (GM)(TM)(F)(DCX)

The CEOs of the Big Three went to the the CEO of the United States. They wanted to discuss their problems. The yen. Labor costs. Medical costs.

They left the White House saying that they did not ask the President for a bail-out. It is a bit like saying that you won't join the world's most exclusive golf club, Augusta National, home of The Masters. Of course you won't join. You haven't been asked.

The CEO's of The Big Three won't get help from the US government. It isn't offering any.

It is clear to all who want to look that the car industry is not critical to the economic health of the US. It was once, but the industry is now too small, employees too few people, and is too troubled. GM has recently cut 70,000 jobs and this is on top of cuts at it US competitors and a number of auto parts manufacturers,

In addition the industry exports little. And, its contribution to the GDP as gone the way of big steel. The US employment grow in the auto industry comes from Japanese companies building plants on America soil.

If the US government want this country to have a competitive auto industry again, it will have to give Toyota an incentive to move its headquarters from Tokyo to Detroit. Then, everyone in Michigan can learn Japanese.

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

Is McDonald's Smarter Than The Competition? (MCD)(BKC)(WEN)

2006-11-15T04:20:00.000-05:00

McDonald's same store sales in October were not just good. They were much better than those of their direct competitors. But why? With more stories and higher market penetration, in theory smaller fast food retailers should be able to grow faster.

But, the theory does not work. McDonald's same store sales rose 5.5%. At Wendy's, the figure was a pitiful 1.2%. At Burger King, the figure was 2.6%. McDonald's also generate substantially more revenue per store than its rivals.

Wall St. often wants to look for complex reasons as to why one company does better than the competition, espcially in a large market like fast food. How can one company, with products similar to its rivals, do so much better?

Part of the reason is that McDonald's is not focusing on increasing its number of stores, especially in the US. It has worked on increasing its revenue yield per store. But, that explanation in-and-of-itself is inadequate.

It would appear that McDonald's offers a menu that is, very simply, more attractive than what Burger King and Wendy's have. The food is just as unhealthy any in the world. But, people like it more. McDonald's is like Toyota. It just has a "line up" that buyers like better.

If investors are looking for something more complex to give them comfort about the growing McDonald's fast food lead they won't find it.

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

More Bad News For Boston Scientific (BSX)

2006-11-15T04:02:00.000-05:00

Boston Scientific is acting like its business is OK again after a string of bad news. The company is boasting that sales will rise 11% to 21% in 2007. For investors to believe this, they need to buy into the fact that most of the integration risks of the company's $21 billion purchase of medical devices company Guidant is behing it.

Boston Scientific is also asking Wall St. to believe that sales of its drug-coated stents ,which keep clogged arteries open, will improve. It is forecasting that stent sales could be as high as $2.7 billion next year. But, a number of studies show that stents may actually increase clotting and cause heart attacks. No wonder the company's stock trades near its 52-week low with shares changing hands at about below $16, down from nearly $28 earlier in the period.

Now, the news gets worse. A study published in the New England Journal of Medicine says that, in many cases, stent implants may not help patients at all. Treatment with drugs may well be just as effective in many patients, making stents unnecessay. The finding are particular harmful to the future of Boston Scientifc's devices if their is a health concern associated with stent implants.

Boston Scientifc obviously wants investors to think the worst is behind it and that 2007 will be a strong year. But, the evidence keeps contradicting that.

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

Motorola Chases Cisco (MOT)(CSCO)(JNPR)(NT)

2006-11-15T03:43:00.000-05:00

Who can stop the Cisco express? In the recent quarter, the company produced a sales increase of 25% year-over-year and EPS was up 30%. With its purchase of Scientific Atlanta, that company now has a footprint for data and video deliver that runs from the router all the way into the living room. The company's shares trade near $27. With the exception of a brief spike in 2004, the company's shares have not traded this high at any point in the last five years. Smaller competitors like Juniper and Nortel have fallen hopelessly behind Cisco in their range of products and their revenue.

Motorola does not seem to be paying attention. The company recently bought Netopia and is building its business in wireless modems and routers so that it can add IPTV capability to its products in the distribution of video, voice and data. Motorola has been strong in the cable service area since it bought cable set-top company General Instruments. Netopia gives it access to the DSL delivered television markets.

With the phone companies focused on delivering more services to be competitive with their cable competition, Motorola is putting itself in the middle of that supply chain.

Cisco may be able to push around smaller competitors like Juniper, but Motorola is a different matter.

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

Sprint Gets Dropped (S)(INTC)(MOT)

2006-11-15T03:23:00.000-05:00

AG Edwards thinks that Sprint's stock has gone as far at it can, at least for now.

Could be. The bank cut the phone company from a "buy" to a "hold" with a price target of $21. Sprint trades about $1 shy of that. The reasoning behind the change of heart is that Sprint's stock has moved up on speculation that the company may be bought by Comcast and, since the likelihood of that is small, the stock has had its run.

Compared to Verizon and Cingular, Sprint is a bit of a dog. Its subscriber churn rate is too high and its added fewer new subscribers in the last quarter. It trades below its 52-week peak of nearly $27 while most telecom stocks are at multiyear highs.

The Edward's analysis misses the point. There are only three significant cell phone players in the US, and Spint is one of them. As Morningstar points out, the Nextel component of the company is largely made up of corporate customers who are more likely to spend extra money for upgraded services like wireless data plans.

The reasoning that Spint will go no higher is based on the premise that the Sprint integration with Nextel will continue to go badly and the yield that the company gets from its 50 million subscribers will not improve.

Targetting Spint's price at $21 is also a statement that Spint's new WiMax build-out to create a broadband phone network will not be successful. The technology is already a succes in places like Korea and is being tested in a number of countries around the world. Intel, Motorola, and Samsung are making a large investment in the tech and believe that they will benefit from supplying infrastructure and handset for WiMax systems aournd the world.

Sprint and its allies may not become the dominant cell phone provider in the US, but the company could make a very good living from being No. 2.

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

Analyzing Home Depot (HD)

2006-11-15T03:19:00.000-05:00

By Yaser Anwar, CSC of Equity Investment Ideas

Yesterday morning HD reported disappointing 3Q results. The stock was up over 4% in a strong market which has me thinking that

1) Possible rumors about an M&A activity or...

2) The Street thinks its found a bottom (which I kind of doubt)

...but the most likely catalyst seems to be...

3) The Fed comments about the economy & wholesale inflation is easing, raising hopes that the Fed will cut interest rates in early 07.

HD reported revenues of $23.1 bn, vs Street estimates of $23.4 billion, driven by a faster than anticipated deceleration in housing, absence of hurricane activity, commodity pricing, and softness in discretionary projects.

HD's comps fell 5.1% and 4th Q comps are expected to be down in the mid-single digits, while EPS is expected to decline 12%-16% YoY, leading to 4%-5% EPS growth for 06.

CEO Nardelli expects the housing decline to affect HD in 4Q'06 and into 2007. HD’s 3Q gross margin decreased 92 bps YoY to 32.6% due to a mix shift towards the lower-margin.

"Housing-related issues came faster and deeper than we thought," CEO Robert Nardelli said during a conference call. "They will pressure throughout all of '07, and we think there is deeper to go." With 10 consecutive months of declining housing turnover, the housing market is beginning to significantly impact HD’s results.

Management noted that, relative to other players in the home improvement sector, HD may feel more pressure from its exposure to the housing market, given its large number of stores in bubble markets in the Northeast, California, and Florida.

Management now expects earnings of $2.83 to $2.86 per share on revenue of approximately $91.29 billion. HD's previous guidance was for earnings to be at the low-end of its earlier guidance range of $2.99 to $3.10 per share on revenue of $92.92 billion to $95.36 billion and the current consensus earnings estimate is $2.96 per share on revenue of $92.42 billion for the year ending January 31, 07.

Sales in Mexico were strong during the quarter, with double-digit sales growth. According to management, Canadian sales also showed strength. Management also stated that it expects $1 billion in sales from its catalog and Internet business in 06. The home services segment grew 11.3% to $1 billion due to strong growth in countertops, HVAC, and exterior patio projects.

From 03 through 06, HD has had a 3-year CAGR of about 12% in sales. This sales growth has been a function of modest growth in SSS, new store additions, and acquisitions in the Professional market. Home Depot's ROIC has increased steadily over the past 5 years, to 20% in 06.

While some analysts believe that the worst is now behind HD, I'm not convinced. Based on trends in the housing market, I believe HD's results will likely get worse before they begin to improve.

With a stagnating housing market, a tough competitor gaining market share and slowing growth issues related to store saturation in the US market, investors should expect Home Depot shares to come under pressure.

Given the economic condition investors should expect a further deteriorating housing market over the next few quarters or more, alongside HD's issues of store saturation and intense competition. That being said, at a multiple of 11 for 08 EPS estimate, the shares trade at a discount to Lowe's (LOW) and a significant discount to the S&P 500.

http://www.equityinvestmentideas.blogspot.com/

Icahn Shifts Positions, Adds CYBX, HLT and WCI

2006-11-15T03:17:00.000-05:00

From 13D Tracker

Activist investors Carl Ichan made the following changes in a 13F filing from his Icahn Management LP unit:

New stakes: Cyberonics Inc. (Nasdaq: CYBX) 607K shares, Hilton (NYSE: HLT) 4.06 million shares, WCI Communities Inc. (NYSE: WCI) 1.66 million shares.

No longer holding: BJ's Wholesale Club Inc. (NYSE: BJ), BKF Capital (OTC: BKFG), Cimarex Energy Co. (NYSE: XEC), Pioneer Natural Resources (NYSE: PXD), Ryland Group Inc. (NYSE: RYL), Transocean Inc. (NYSE: RIG).

Raised stakes: Time Waner (NYSE: TWX) from 49.6M shares to 55 million shares, Take Two (Nasdaq: TTWO) from 800K to 2.9 million shares.

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

Cramer Says Hertz IPO Will Hurt You!

2006-11-15T03:16:00.000-05:00

Cramer said the IPO to avoid this week is Hertz (HTZ). He thinks this can burn you. This is where the sellers of the IPo make a lot of money, but the new buyers can be left holding the bag. He thinks it can end up being just like the Seally (ZZ) IPO and he won't touch it with a pole.

He said the first thing is to do no harm. He won't use the Vonage (VG) or the Burger King (BKC) deal, but he thinks it will be a disappointment. This was sold to a private equity group for $15 Billion and the new sale is 27% being sold. They have increased the debt and knocked down earnings. The $16 Billion of the IPO, but over $900 million of the IPO is funding a special dividend and another $400 million is essentially another dividend. The 3 firms also have 7 of 9 board seats and this is one that you need to avoid.

He thinks it won't go above $20.00 after the IPO any time soon and the downside is just too hard to calculate.

Jon C. Ogg

Cramer Very Positive on NYMEX IPO

2006-11-15T03:15:00.000-05:00

We already saw Cramer endorese the KBR (KBR) IPO and even that he said Halliburton (HAL) was a cheaper and safer way to go.

The huge IPO of the week that Cramer then reviewed was the NYMEX (NMX), the owner of the New York Mercantile Exchange. He said the price was boosted from $48-52 to $54-57 and bumped the shares from 6 million to 6.5 million shares, and it is heavily oversubscribed. Cramer said he thought the company deserves every bit of it. The conventional wisdom is that no one thinks it will go down. He said the sentiment is right. Cramer thinks you should buy a piece of it because this may the most quiet bull market in various sorts of exchanges. He even went over the NYSE (NYX) as still up $5.00 from last week and it can more than double. Cramer said he doesn't know of any reason why this NYMEX is different. He said the numbers speak for themselves because income rose 150% on a 71% revenue gain, but if it prices in the mid-range it will only have a 30-times earnings multiple. That's too low for Cramer. He thinks the opening will be higher and he thinks you have to do limit orders. If it opens up $25.00 north of that he would still be a buyer, but if it opens up $15.00 he would buy Twice as much and if it is up only $5.00 then he would think it is a true gift. He said never do market orders and don't buy in all at once.

Because NMX boosted the range today it also impacted InterContinental Exchange (ICE) with it closing up 9% to $96.55.

Jon C. Ogg

Cramer Discusses Upcoming IPO's: KBR from Halliburton

2006-11-15T03:14:00.000-05:00

Last night on Cramer's MAD MONEY on CNBC, Cramer went over upcoming IPO's on what to look for and what to avoid. He also said he doesn't want to get caught short this market.

KBR (KBR) Cramer said he has been covering this but it is selling 17%, stock is being sold by Halliburton (HAL). KBR is an engineering and constructuring company that builds plants, but it has a permanent dark cloud of negativity and more so now with the Democrats in charge of Congress. Cramer said it is coming very cheap to market because it may get hammered by new Congress or may lose Iraqi business. He said that is just not the right case. Cramer noted it has a $15 Billion backlog and will be valued at roughly $4 Billion in market cap. He thinks it is at a 20% to other engineering and consulting firms. Cramer said even if bad press continues the numbers will speak for itself. It is oversubscriber. He noted the way to play it was to play pin action in Halliburton (HAL). This has the lowest multiple and could get a valuation expansion in its multiples.

He still will review NYMEX (NMX), and Hertz (HTZ) in the coming segments.

Jon C. Ogg