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News That Moved the Market
Microsoft's Bid For Yahoo Spurs Rally. The markets found a direction after a volatile morning digesting a plethora of news. Most of the attention went to Microsoft's (MSFT) unsolicited $44.6 billion bid for Yahoo (YHOO). Microsoft's $31/share bid represented a 62% premium over Yahoo's closing price on Thursday. The combination of the two companies may provide stiff competition to Google (GOOG) who owns 56% of the Internet search market. Shares of Microsoft fell hard with investors questioning the steep premium and how the two companies will merge cultures, technologies, and strategies.
Jobs Reports Disappoints; ISM Manufacturing Jumps. Investors also had two major economic reports to deal with Friday, with both the monthly jobs report and the ISM Manufacturing Index being released. The jobs report was an absolute disappointment, showing a decrease in non-farm payrolls for the first time in four and a half years. The report proved the Fed's actions over the past two weeks were well justified and even more action will probably be needed to dodge a recession. ISM Manufacturing came in at 50.7, well ahead of estimates and representing expansion. The contradicting reports had a somewhat canceling out effect that allowed investors to concentrate on Microsoft's (MSFT) bid.
Merrill Sued For Fraud. Merrill Lynch (MER) was charged by Massachusetts regulators with fraud after selling CDOs to the city of Springfield, Massachusetts. The CDOs lost 91% of their value and the city said it did not authorize the purchase of the CDOs, adding the investment was unsuitable for the city's risk tolerance. Merrill was a little puzzled by the suit, which came a day after the bank said it would reimburse Springfield $13.9 million for their losses.
Monday Notable Earnings:
Wendy's (WEN) Before Open
Yum Brands (YUM)After Close
Economic Events:
10:00 AM: Factory Orders
Friday, February 1, 2008
Today's Upgrades and Downgrades....
Lowe's: Citigroup downgrades Buy to Hold. Citigroup downgraded LOW to Hold from Buy, as they believe both LOW and HD 4Q07 SSS are likely tracking below guidance, as continued housing market weakness and a faltering consumer are taking its toll. The firm notes that since 2008 EPS visibility is very limited, and they anticipate HD and LOW guidance to be cautious in February, and as such, they expect additional pressure on these stocks. Firm cuts their ests for both HD and LOW.
Motorola: Citigroup upgrades Hold to Buy. Citigroup upgraded MOT to Buy from Hold as the co is finally exploring a structural and strategic realignment of its businesses. The firm believes that this will serve as a meaningful catalyst to Motorola shares as investors will look past the drag from the underperforming handset business. Firm says their sum of the parts analysis indicates a value of $16 - $17, with fairly conservative assumptions.
Avid Tech: Kaufman Bros downgrades Hold to Sell . Target $28 to $15. Kaufman Bros. downgrades AVID to Sell from Hold and lowers their tgt to $15 from $28, following Q407 revenue results that exceeded firm estimates with EPS slightly lower and based on management's view of 2008 as a transition year.
Garmin: Needham & Co upgrades Hold to Buy. Target $85. Needham upgrades GRMN to Buy from Hold with an $85 noting GRMN shares are down almost 30% ytd and 45% from their peak late last year. While some new concerns, such as threat of a macro slowdown and maturing of the European market have recently been added to the traditional ones, the firm believes these concerns are likely more than baked into the current share price and must be balanced against the very robust nearterm performance of Garmin's business. Firm also says while they are impressed by the new Nuviphone and expect it will minimally be a modest success, they don't view it as critical to the shares working from here.
RF Micro Device: Needham & Co downgrades Strong Buy to Buy. Needham downgrades RFMD to Buy from Strong Buy with a $6 tgt following earnings and saying they are bullish on RFMD for the following reasons: 1) Healthy handset unit growth, 2) more than doubling of GaAs content per handset with the migration to 3G, 3) Pricing of GaAs components to stabilize as industry enters capacity constraint conditions, 4) Continued Ramp up of Polaris transceivers through C08 based on current design activity; 5) Several strategies to increase margins.
Medarex: Banc of America Sec upgrades Sell to Neutral. BofA upgraded MEDX to Neutral from Sell based on valuation. At current prices, the firm believes expectations for MDX-010, its lead compound for melanoma, are low for a timely approval and that downside is limited. Longer term, they continue to believe that MDX-010 is a drug with activity in a relatively small percentage of patients and that it will ultimately gain approval. They estimate ~$300 mln in peak sales for MDX-010 in 2012.
Bristol-Myers: Cowen & Co upgrades Neutral to Outperform. Cowen upgraded BMY to Outperform from Neutral following earnings. The firm says standout Q4 EPS growth were driven by better-than-expected revenues. Current product dynamics, a good pipeline, upcoming news events, and attractive yield make a standout investment case.
Motorola: Citigroup upgrades Hold to Buy. Citigroup upgraded MOT to Buy from Hold as the co is finally exploring a structural and strategic realignment of its businesses. The firm believes that this will serve as a meaningful catalyst to Motorola shares as investors will look past the drag from the underperforming handset business. Firm says their sum of the parts analysis indicates a value of $16 - $17, with fairly conservative assumptions.
Avid Tech: Kaufman Bros downgrades Hold to Sell . Target $28 to $15. Kaufman Bros. downgrades AVID to Sell from Hold and lowers their tgt to $15 from $28, following Q407 revenue results that exceeded firm estimates with EPS slightly lower and based on management's view of 2008 as a transition year.
Garmin: Needham & Co upgrades Hold to Buy. Target $85. Needham upgrades GRMN to Buy from Hold with an $85 noting GRMN shares are down almost 30% ytd and 45% from their peak late last year. While some new concerns, such as threat of a macro slowdown and maturing of the European market have recently been added to the traditional ones, the firm believes these concerns are likely more than baked into the current share price and must be balanced against the very robust nearterm performance of Garmin's business. Firm also says while they are impressed by the new Nuviphone and expect it will minimally be a modest success, they don't view it as critical to the shares working from here.
RF Micro Device: Needham & Co downgrades Strong Buy to Buy. Needham downgrades RFMD to Buy from Strong Buy with a $6 tgt following earnings and saying they are bullish on RFMD for the following reasons: 1) Healthy handset unit growth, 2) more than doubling of GaAs content per handset with the migration to 3G, 3) Pricing of GaAs components to stabilize as industry enters capacity constraint conditions, 4) Continued Ramp up of Polaris transceivers through C08 based on current design activity; 5) Several strategies to increase margins.
Medarex: Banc of America Sec upgrades Sell to Neutral. BofA upgraded MEDX to Neutral from Sell based on valuation. At current prices, the firm believes expectations for MDX-010, its lead compound for melanoma, are low for a timely approval and that downside is limited. Longer term, they continue to believe that MDX-010 is a drug with activity in a relatively small percentage of patients and that it will ultimately gain approval. They estimate ~$300 mln in peak sales for MDX-010 in 2012.
Bristol-Myers: Cowen & Co upgrades Neutral to Outperform. Cowen upgraded BMY to Outperform from Neutral following earnings. The firm says standout Q4 EPS growth were driven by better-than-expected revenues. Current product dynamics, a good pipeline, upcoming news events, and attractive yield make a standout investment case.
Computer Associates Moves Higher....
CA up 3.27 to $25.27
Software maker CA Inc. (CA) said fiscal third-quarter net income tripled, aided by cost-cutting and a lower restructuring charge compared with a year earlier. The maker of business and data-management software formerly called Computer Associates also raised its full-year 2008 forecast.
Excluding items, the company reported earnings of 36 cents a share from continuing operations, compared with 24 cents a year earlier. Revenue rose 9.8% to $1.1 billion from $1 billion.
Analysts polled by Thomson Financial had expected the Islandia, N.Y., company to post earnings, excluding items, of 25 cents a share on revenue of $1.05 billion.
Software maker CA Inc. (CA) said fiscal third-quarter net income tripled, aided by cost-cutting and a lower restructuring charge compared with a year earlier. The maker of business and data-management software formerly called Computer Associates also raised its full-year 2008 forecast.
Excluding items, the company reported earnings of 36 cents a share from continuing operations, compared with 24 cents a year earlier. Revenue rose 9.8% to $1.1 billion from $1 billion.
Analysts polled by Thomson Financial had expected the Islandia, N.Y., company to post earnings, excluding items, of 25 cents a share on revenue of $1.05 billion.
Dolby Labs (DLB): Stock of the Day....
DLB up 4.50 to $47.42
Dolby Labs (DLB) first-quarter net income rose to $47.7 million, or 42 cents a share, from $29.9 million, or 27 cents a share, a year earlier. Revenue increased to $150.2 million from $104.4 million the year before. On average, analysts had expected first-quarter earnings of 32 cents a share and revenue of $134.4 million. Dolby raised its 2008 forecasts, now projecting earnings of $1.34 to $1.44 a share and revenue of $575 million to $615 million. The company had predicted annual net income of $1.27 to $1.37 a share and revenue of $560 million to $600 million.
That is the company's 11th straight quarter or earnings and revenue growth!!!
The company's principal activities are to develop and deliver innovative products and technologies that make the entertainment experience more realistic and immersive in theatres, homes and cars. The Group operates in single segments, licenses its technologies to manufacturers of DVD players, DVD recorders, audio/video receivers, television sets, set-top boxes, video game consoles, personal audio and video players, personal computers, in-car entertainment systems and other consumer electronics. The Products and Production Services segment designs, manufactures and sells audio products for the motion picture, broadcast, music and video game industries to improve sound quality, provide surround sound and increase the efficiency of sound storage and distribution.
Dolby Labs (DLB) first-quarter net income rose to $47.7 million, or 42 cents a share, from $29.9 million, or 27 cents a share, a year earlier. Revenue increased to $150.2 million from $104.4 million the year before. On average, analysts had expected first-quarter earnings of 32 cents a share and revenue of $134.4 million. Dolby raised its 2008 forecasts, now projecting earnings of $1.34 to $1.44 a share and revenue of $575 million to $615 million. The company had predicted annual net income of $1.27 to $1.37 a share and revenue of $560 million to $600 million.
That is the company's 11th straight quarter or earnings and revenue growth!!!
The company's principal activities are to develop and deliver innovative products and technologies that make the entertainment experience more realistic and immersive in theatres, homes and cars. The Group operates in single segments, licenses its technologies to manufacturers of DVD players, DVD recorders, audio/video receivers, television sets, set-top boxes, video game consoles, personal audio and video players, personal computers, in-car entertainment systems and other consumer electronics. The Products and Production Services segment designs, manufactures and sells audio products for the motion picture, broadcast, music and video game industries to improve sound quality, provide surround sound and increase the efficiency of sound storage and distribution.
Arch Coal Beats Estimates...
Arch Coal beats by $0.09, reports revs in-line; guides FY08 EPS in-line (ACI) 43.95 : Reports Q4 (Dec) earnings of $0.56 per share, $0.09 better than the First Call consensus of $0.47; revenues rose 4.2% year/year to $644.4 mln vs the $641.1 mln consensus.
Co issues in-line guidance for FY08, sees EPS of $2.00-2.50 vs. $2.43 consensus.
The stock is trading up 2.25 to a new 52-week high $46.20
Co issues in-line guidance for FY08, sees EPS of $2.00-2.50 vs. $2.43 consensus.
The stock is trading up 2.25 to a new 52-week high $46.20
Don't Be Fooled By Yesterday's Rally....
Remember, yesterday was the last day of the worst January in Stock Market History. Fund Managers wanted to close out the month as high as they could to minimize the "shock" on their clients' faces when they get their January statements.
It's called "Window Dressing" and that's what happened.
Today's higher open was due to the Microsoft bid for Yahoo. M&A is back.
We've settled back down to even on the day....and traders still want to go back down and retest the bottom from last Tuesday. Be careful.
It's called "Window Dressing" and that's what happened.
Today's higher open was due to the Microsoft bid for Yahoo. M&A is back.
We've settled back down to even on the day....and traders still want to go back down and retest the bottom from last Tuesday. Be careful.
Movers on the open...
Google (GOOG) -40 to $524
Crocs (CROX) +1.81 to $36.60
Chipotle (CMG) +2.92 to $123.30
Gamestop (GME) +.75 to $52.33
Potash +3 to $144
Wynn Resorts (WYNN) + 4.25 to $119.25
Celgene (CELG) + 2.64 to $58.75
Intuitive Surgical (ISRG) + 55 to $309.00
Crocs (CROX) +1.81 to $36.60
Chipotle (CMG) +2.92 to $123.30
Gamestop (GME) +.75 to $52.33
Potash +3 to $144
Wynn Resorts (WYNN) + 4.25 to $119.25
Celgene (CELG) + 2.64 to $58.75
Intuitive Surgical (ISRG) + 55 to $309.00
Chevron Earnings....
Chevron beats by $0.06 (CVX) $83.25 : Reports Q4 (Dec) earnings of $2.32 per share, $0.06 better than the First Call consensus of $2.26; revenues rose 28.6% year/year to $61.41 bln.
CEO says "Fourth quarter earnings for our upstream business benefited from a significant increase in the price of crude oil. However, downstream profits were off sharply because of planned and unplanned refinery downtime in the United States, as well as the impact of higher crude-oil costs that were not fully recovered in the sales price of refined products.
CEO says "Fourth quarter earnings for our upstream business benefited from a significant increase in the price of crude oil. However, downstream profits were off sharply because of planned and unplanned refinery downtime in the United States, as well as the impact of higher crude-oil costs that were not fully recovered in the sales price of refined products.
Interesting Looking Company...
Intuitive Surgical Inc. (ISRG) expects its revenue to climb 40% this year from $600.8 million in 2007 as more hospitals buy and ramp up usage of the company's expensive robotic surgical system, the company said Thursday. Shares of Intuitive, which soared last year but have recently been more than $100 below the 52-week high, recently traded at $291.55 in after-hours trading. That's up considerably from Thursday's close at $254 following an 8.1% climb during the regular trading session.
Intuitive reported net income that more than doubled to $49.2 million in the recent quarter, helped by the sale of 78 da Vinci systems, up from 50 sales a year earlier. Twenty machines were sold to existing customers and 26 were sold outside the U.S. The company is forecasting system revenues, tied to shipments of da Vinci units, to rise about 30% in 2008.
System sales are important, but so is the growth in procedures because Intuitive collects usage-related revenue tied to the sale of accessories, system service and training. "System utilization has steadily increased and currently averages about three procedures per system per week across the installed base," Gong said. The worldwide installed base of da Vinci machines reached 795 at the end of the fourth quarter. The system today has grown on the back of prostate removal surgery, and hysterectomies represent a fast growth area. According to Gong, the company sees prostatectomy procedures growing by about 40% this year and hysterectomy procedures growing by about 150%.
The fourth quarter tends to be the strongest quarter for system sales, Gong noted. Intuitive sees first-quarter revenue down from the fourth quarter, but then growing sequentially in subsequent quarters. The average selling price per da Vinci machine reached a high of $1.38 million in the fourth quarter, helped by sales of a newer model and sales outside the U.S. that benefited from the weak dollar.
The average selling price on the year was about $1.33 million, which Intuitive expects will also be the average price in 2008. Intuitive sees gross margins in 2008 between 69% and 70%.
Intuitive reported net income that more than doubled to $49.2 million in the recent quarter, helped by the sale of 78 da Vinci systems, up from 50 sales a year earlier. Twenty machines were sold to existing customers and 26 were sold outside the U.S. The company is forecasting system revenues, tied to shipments of da Vinci units, to rise about 30% in 2008.
System sales are important, but so is the growth in procedures because Intuitive collects usage-related revenue tied to the sale of accessories, system service and training. "System utilization has steadily increased and currently averages about three procedures per system per week across the installed base," Gong said. The worldwide installed base of da Vinci machines reached 795 at the end of the fourth quarter. The system today has grown on the back of prostate removal surgery, and hysterectomies represent a fast growth area. According to Gong, the company sees prostatectomy procedures growing by about 40% this year and hysterectomy procedures growing by about 150%.
The fourth quarter tends to be the strongest quarter for system sales, Gong noted. Intuitive sees first-quarter revenue down from the fourth quarter, but then growing sequentially in subsequent quarters. The average selling price per da Vinci machine reached a high of $1.38 million in the fourth quarter, helped by sales of a newer model and sales outside the U.S. that benefited from the weak dollar.
The average selling price on the year was about $1.33 million, which Intuitive expects will also be the average price in 2008. Intuitive sees gross margins in 2008 between 69% and 70%.
Cummins Misses on Earnings...
Cummins misses by $0.05, beats on revs; guides FY08 revs in-line (CMI) 48.35 : Reports Q4 (Dec) earnings of $1.00 per share, $0.05 worse than the First Call consensus of $1.05; revenues rose 15.4% year/year to $3.5 bln vs the $3.46 bln consensus.
Sales are forecast to increase 12% from 2007 levels (which calculates to roughly $14.61 mln vs. $14.63 bln consensus), and the co expects to generate EBIT of 10% of sales in 2008.
The stock is down $3 premarket to $45.
Sales are forecast to increase 12% from 2007 levels (which calculates to roughly $14.61 mln vs. $14.63 bln consensus), and the co expects to generate EBIT of 10% of sales in 2008.
The stock is down $3 premarket to $45.
Google Wakes Up with a Hangover....
Talk about getting kicked when you're down....
Google stock is down 40 points pre market due to falling short on earnings and revenue expectations.....now the Mcrosoft / Yahoo Buyout.....
By the way...Yahoo shareholders and Board have to OK this deal. Google may.....and I say may....hop in here and raise the bid.....I doubt it though.
Google stock is down 40 points pre market due to falling short on earnings and revenue expectations.....now the Mcrosoft / Yahoo Buyout.....
By the way...Yahoo shareholders and Board have to OK this deal. Google may.....and I say may....hop in here and raise the bid.....I doubt it though.
Jetbue Partners with Irish Airline....
Low-fare,high-frills carrier JetBlue Airways Corporation (Nasdaq:JBLU) and Aer Lingus, Ireland's low-fares counterpart, today officially announced their industry-first strategic partnership will come into effect on April 3, 2008.
The innovative partnership will enable Irish and U.S. customers to book a single low fare reservation between Ireland and more than 40 continental U.S.destinations, connecting through JetBlue's home base at New York's John F.Kennedy International Airport (JFK).
The innovative partnership will enable Irish and U.S. customers to book a single low fare reservation between Ireland and more than 40 continental U.S.destinations, connecting through JetBlue's home base at New York's John F.Kennedy International Airport (JFK).
Exxon Mobil Reports Earnings...
Exxon Mobil Corp.'s (XOM) fourth-quarter net income rose 14% to $11.66 billion, or $2.13 a share, from $10.25 billion, or $1.76 a share, a year earlier, boosted in part by higher upstream earnings.
A Thomson Financial survey of analysts, on average, predicted earnings of $1.95 a share for the quarter. Analysts' estimates usually exclude items. The Irving, Texas, oil and gas company said revenue grew to $116.64 billion from $90.03 billion.
A Thomson Financial survey of analysts, on average, predicted earnings of $1.95 a share for the quarter. Analysts' estimates usually exclude items. The Irving, Texas, oil and gas company said revenue grew to $116.64 billion from $90.03 billion.
Microsoft to Buy Yahoo...
Microsoft Corp. (MSFT) offers to buy Yahoo Inc. (YHOO) for $44.6 billion, a move designed to create a more credible competitor to industry leader Google Inc. (GOOG) and deepen Microsoft's position in the market for online business software.
The hostile approach, outlined by Microsoft Chief Executive Steve Ballmer in a letter sent Thursday night to Yahoo's board and published Friday, is aimed at pressing Yahoo to agree to a combination it rejected a year ago.
The offer, for $31 a share in cash and stock, represents a 62% premium to Yahoo's closing price Thursday. It comes offer comes as Yahoo continues to struggle against Google in the race for online-advertising revenue and Internet-search market share despite efforts to upgrade its systems. Yahoo's shares have lost about 40% of their value over the past three months.
I think we called this one on Monday....
The hostile approach, outlined by Microsoft Chief Executive Steve Ballmer in a letter sent Thursday night to Yahoo's board and published Friday, is aimed at pressing Yahoo to agree to a combination it rejected a year ago.
The offer, for $31 a share in cash and stock, represents a 62% premium to Yahoo's closing price Thursday. It comes offer comes as Yahoo continues to struggle against Google in the race for online-advertising revenue and Internet-search market share despite efforts to upgrade its systems. Yahoo's shares have lost about 40% of their value over the past three months.
I think we called this one on Monday....
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