Data Feed

Gapping up: MVIS +17.7%, OIIM +14.1%, NRMX +10.0%, FONR +9.0, AMSC +8.0%, UCTT +7.9%, OCNF +5.7%, DGX +4.4%… Gapping down: MICC -12.0%, CFC -8.8%, ATHR -6.4%, FIA -6.4%, WYE -5.5%, NFLX -5.4%, BZH -5.1%, TXN -3.6%, CRDN -3.4

WSJ reports a river of money has flowed into shares of Amazon.com. They’re up more than 80% year to date. On the face of it, Amazon might still look like a good stock to own. Analysts surveyed by Thomson Financial expect the online retailer to report today that it earned 16 cents a share, excluding one-time items, in Q2, more than triple last year’s five-cent gain. Looked at another way, however, Amazon is looking more like an Internet bubble stock of yesteryear. At $71.74 a share, it trades at 121x last year’s earnings, making it much pricier than highfliers Apple (AAPL) and Google (GOOG), both of which have P/E ratios of around 45x. Analysts expect Amazon to register earnings for the full year of $1.01 a share. It would need to post earnings in excess of $2 a share to bring its P/E ratio more into line with that of Google and Apple at today’s prices.

Bond Watch: Market Stalls
The market is slipping but still bound by tight borders after last week’s push through 6 week highs. Action has dried up as Aug approaches leaving trade to the dogs & keying off equities & subprime headlines while data takes another day off. The 2-10-yr yield spread is still loitering around the teens at 16.5 with curve trade awaiting housing & GDP data later in the week. Bond prices in the EuroZone are lightly mixed with data pointing to continued strength while in Japan, bonds were offered as investors shunned the higher price tags. Treasuries will have some added baggage today with a small TIPS auction which will nevertheless weigh on prices as liquidity remains thin. Technicians will be actively watching for an erosion of the gains made on Fri as momentum wanes. Should short-term stops be triggered along the way the downside may see a bit of a run. A larger move, though, should be held in check by data down the pike. The buck has been backing off on the yen reaching its lowest point since mid-May, seeing 120.40 while the euro is treading along record levels on the dollar, hanging just off 1.3840. Gold was moving higher as the buck struggles with spot now 683.49 (+1.89), while crude is slipping in as refineries are expected to kick it into gear & now trading 73.96 (-0.93). The day will see auction results from the $6B reopened 20-yr TIPS (13). There is no hard data out today, but some officials speak, former Fed-head Greenspan talks real estate (8:30) & Gov Mishkin talks globalization (9:00). The euro is at 1.3833 & the yen is at 120.9000 while the 10-yr yield is at 4.960%

CFC Countrywide misses on top and bottom lines, lowers FY07 guidance (34.06 )
Reports Q2 (Jun) earnings of $0.69 per share (excluding a $0.12 tax benefit), $0.24 worse than the Reuters Estimates consensus of $0.93; revenues rose 5.9% year/year to $2.55 bln vs the $2.9 bln consensus. Co lowers FY07 EPS guidance to $2.70-3.30 (consensus $3.65) vs prior guidance of $3.50-$4.30. “During the quarter, softening home prices continued to affect many areas of the country and delinquencies and defaults continued to rise across all mortgage product categories as a result. Due to these adverse conditions, the Company incurred increased credit-related costs in the quarter, primarily related to its investments in prime home equity loans… Management anticipates that the second half of 2007 will be increasingly challenging for the industry and Countrywide. Absent a reduction in mortgage interest rates, production volumes are expected to fall and competitive pricing pressures are expected to increase. In addition, volatility in the secondary markets has increased significantly early in the third quarter and liquidity for mortgage securities has been reduced as a result. These conditions are expected to adversely impact secondary market execution and further pressure gain on sale margins. Furthermore, additional deterioration in the housing market may further impact credit costs…”

MSFT Microsoft’s Vista use grows as Mac OS X stays flat – Infoworld.com (31.19 )
InfoWorld.com reports that Windows Vista’s share of online users has increased every month this year, while rival Apple’s (AAPL) Mac OS X — to which Vista has often been compared — has shown little, if any, growth, a metrics company reports. According to Net Applications, Windows Vista accounted for 4.52% of all systems that browsed the Web in June, up from Jan’s 0.18%. Vista has grown its usage share each month since its release to consumers Jan. 30, hitting 0.93% in Feb, 2.04% in March, 3.02% in April and 3.74% in May. AAPL’s Mac O.S. X, meanwhile, accounted for 6.22% in Jan and hit its high point of 6.46% in May, but it slipped back to 6% in June. If Vista’s uptake trend continues, it should pass Mac O.S. X in Web usage share by the end of August. Shifts from the Mac O.S. X running on older PowerPC processors to the edition running on Intel (INTC) C.P.U.s have been constant, but according to Net Applications’ data, the computer maker is not making new Mac converts. Vista’s increases have come at the expense of Windows X.P. and Windows 2000, both of which have dropped in usage since Jan. AAPL’s next major upgrade to Mac O.S. X, dubbed Leopard, is scheduled to ship in Oct.

Filings: Terex (TEX) files for a mixed shelf offering… Beacon Power (BCON) files for a $50 mln mixed shelf offering; this replaces a previous shelf registration of $40 mln, which was filed in Sept 2006 and has been withdrawn… Nelnet (NNI) files for a 10.59 mln share common stock offering by selling shareholders… Regency Energy (RGNC) files for a 10 mln common unit secondary offering.

SBUX Starbucks: Second price increase of the year – FBR (28.17 )
Friedman Billings notes SBUX announced its second price increase this year, which raises the avg beverage price by about $0.09, or 3%, effective July 31. It should result in an additional 2.5% approx lift to SBUX’s overall average check. Firm believes this step is driven by the very high increases it has experienced in the cost of milk. This gives SBUX higher prices for the last two months of its FY07 year, which should mitigate further risk to earnings this year. Historically, SBUX has seen only a modestly negative effect on traffic from price increases so it may have a more meaningful effect on traffic this time. This price increase should help both comps and margins, but does not offset firm’s concern about slowing traffic trends and the overall growth rate of the U.S. business.

iPhone slowing? 3G coming sooner than you think – CIBC
CIBC says based on their store checks, they believe that demand for the iPhone has seen a significant decline in the past 10 days. Firm has noticed decent inventories at stores, and thin demand at best. In fact, among the stores they visited, most visitors were not looking at the device, and only a very small subset bought it. With the weakness, firm wouldn’t be surprised to see AT&T (T) and Apple (AAPL) step up their marketing efforts. Firm’s channel checks suggest AAPL is actually looking to introduce a 3G version of the iPhone for the U.S. market in Nov, ahead of the holiday season and earlier than currently expected.

Miscellaneous: CIBC initiate Air Methods (AIRM 38.10) with an Outperform and a $50 tgt saying they believe Air Methods is well positioned to achieve its long-term goal of 15% top-line growth and 20% bottom-line growth, based on strong price increases, continued base additions, modest operational improvements and leverage of its high fixed cost model… Wachovia initiates MasterCard (MA 167.60) with a Market Perform saying MA is a uniquely positioned asset as it’s one of only two pure branded card networks, which takes little credit risk, and can benefit from increased global penetration of card usage. The firm believes that near-term valuation is appropriate at roughly 30x their ‘08 EPS est. and that mkt expectations may be ahead of the stock… Jefferies initiates Cogent Communications (CCOI 33.56) with a Buy and sets a $40 tgt, as they believe the co faces limited repricing risk as the low-cost provider of IP transit while well positioned to capture significant top-line growth.

Upgrades: Credit Suisse upgrades Right Now Tech (RNOW 15.92) to Outperform from Neutral and raises their tgt to $21 from $18 saying with the stock trading at 3x revenue, relatively low expectations, and strong end markets, the firm likes the risk/reward tradeoff at current levels, and they think the odds are in favor of the stock working from here. Downgrades: Jefferies downgrades Parametric Technology (PMTC 18.50) to Hold from Buy and maintains their $20 tgt, as they believe their prior Q407 license number looked too ambitious and compares will remain tough… BB&T downgrades Astec Industries (ASTE 55.23) to Hold from Buy, noting Q2 EPS was ahead of ests, and based on valuation… Friedman Billings downgrades American Express (AXP 64.66) to Market Perform from Outperform and raised their tgt to $70 from $67 based on limited upside to their new tgt. The firm notes the co had an in line qtr but is fairly valued… Fortis downgrades Chesapeake Energy (CHK 35.76) to Hold from Buy and raises their tgt to $38 from $36 based on valuation… CIBC downgrades Lifepoint (LPNT 32.25) to Sector Perform from Outperform following earnings saying the weak quarter was primarily due to LPNT’s struggles with several expense items including bad debt, contract labor, and medical malpractice… Merrill downgrades Zymogenetics (ZGEN 13.65) to Neutral from Buy.

Wachovia previews auto retailer earnings; thinks GPI, LAD, and AN are likely to miss consensus expectations
Wachovia previews Auto retailer earnings, noting that AN, ABG, and LAD report on 7/26, and that an underwhelming industry backdrop (15.9MM average SAAR in Q2) will likely drive uneven results for the group. They say that other than PAG, no retailer provides quarterly EPS guidance. They think GPI, LAD, and AN are likely to miss consensus expectations. They say GPI and ABG have the greatest sensitivity to swings in gross margin and SG&A, according to their estimates. Firm’s top picks are PAG, GPI and SAH.

Dollar falls to two-month low against Yen on mortgage concerns – Bloomberg.com
Bloomberg.com reports the dollar declined to the lowest in more than two months against the yen and weakened against the 10 most-active currencies on speculation subprime mortgage losses will deepen and reduce demand for U.S. assets. The slide accelerated after the dollar reached levels that triggered automatic orders to sell. The dollar fell to a 26-year low against the pound and the weakest since Mar ‘85 versus New Zealand’s currency. The subprime rout is spreading with Basis Capital Fund Mgmt, an Australian hedge fund, hiring Blackstone Group (BX) to advise on limiting its losses. “The subprime market is a concern and the U.S. economy is going to be slower than anticipated,” said Paul Chertkow, head of currency strategy at Bank of Tokyo-Mitsubishi UFJ. “There’s no good reason to think the dollar’s going to appreciate.”

Bloomberg.com reports that Basis Capital Fund Management hired Blackstone Group LP to limit losses after the Australian hedge fund manager was hurt by the rout in the U.S. subprime mortgage market. Blackstone, already helping Bear Stearns (BSC) with two failed hedge funds, will advise Basis Capital “to prevent adverse pricing and selling of assets,” the Sydney-based firm said in a statement today. Basis Capital said July 18 the value of its Aust-Rim Opportunity Fund and Yield Alpha Fund may be cut by more than half if their assets are sold at distressed prices. (Briefing.com note: There had been chatter last week around potential hedge fund problems in Australia, which was said to be one of the multiple factors that contributed to the flight to quality seen in treasuries)

WSJ reports for the past few years, military officials have tapped cos like Boeing (BA), Lockheed Martin (LMT) and Northrop Grumman (NOC) to oversee big projects — a role that gives the cos both broad responsibilities and healthy profit margins. The lead-integrator role gives them oversight once handled by the Pentagon, essentially giving one co wide latitude to oversee everything from choosing technologies to divvying up work among subcontractors. But those growing cost numbers and troubles with some programs have brought the lead-integrator approach under fire. Lawmakers who criticize the practice are asking whether defense cos should have so much influence over everything. The House version of the defense budget for the next fiscal year, which begins Oct. 1, includes language that could put an end to any new “lead systems integrator” contracts after Oct. 1, 2011. It also calls for the govt to identify work that should be reserved for the govt. But by putting the target date off into the future, the legislation acknowledges that the lead-systems-integrator approach could be the only way to get this work done now.

Upgrades: Wachovia upgrades Lee Enterprises (LEE 18.80) to Market Perform from Underperform, based on valuation following Q307 EPS that was in-line with firm estimates and ad revenues that were slightly below firm estimates… Citigroup upgrades Wachovia (WB 48.82) to Buy from Hold. Downgrades: Bear Stearns downgrades Navteq (NVT 57.33) to Peer Perform from Outperform… Citigroup downgrades Canadian National Railway (CNI 57.71) to Hold from Buy… First Albany downgrades Dexcom (DXCM 9.03) to Neutral from Buy. Miscellaneous: Oppenheimer initiates Rosetta Genomics (ROSG 6.95) with a Buy and sets an $11 tgt, based on its position as the first commercial enterprise to focus on the emerging microRNA field and its development and commercialization of research, diagnostic and therapeutic products, and other applications based on microRNAs and feel this position can be leveraged to produce multiple sources of royalty income in the future… Oppenheimer initiates Halozyme Therapeutics (HALO 9.31) with a Buy and sets a $14 tgt, as they are optimistic the co will announce one or more multi-product Enhanze deals in the next 12 months while a disclosure by Roche of any of the drugs covered by their partnership that incorporates Enhanze into several marketed and pipeline products could serve as a catalyst for shares… SunTrust initiates McCormick & Schmick’s Seafood Restaurants (MSSR 25.15) with a Buy and a $31 tgt, based on the co’s broad appeal and unique niche that should allow it to remain relatively insulated from the current casual dining malaise while the compelling nature of the concept and its proven business model should enable the 72-unit chain to reach 250 restaurants with unit growth averaging 14% annually… Citigroup initiates (Discover Financial (DFS 26.12) with a Sell and a $24 tgt

Upgrades: Citigroup upgrades Cumulus Media (CMLS 11.12) to Hold from Sell… RBC upgrades Pep Boys (PBY 18.36) to Sector Perform from Underperform… Lehman Bros. upgrades Apollo Group (APOL 64.01) to Overweight from Equal-Weight… Lehman Bros. upgrades Xcel Energy (XEL 20.97) to Equal-weight from Underweight. Downgrades: Lehman Bros. downgrades Nisource (NI 21.18) to Underweight from Equal-weight… Citigroup downgrades Edwards Lifesciences (EW 49.88) to Sell from Hold… Citigroup downgrades KLA-Tencor (KLAC 61.27) to Hold from Buy… Jefferies downgrades United Rentals (URI 32.98) to Hold from Buy and lowers their tgt to $34.50 from $39, as they believe shares are fully valued following the announced buyout of the co by Cerbuerus Capital… Jefferies downgrades GlobalSantaFe (GSF 78.33) to Hold from Buy and maintains their $83 tgt, based on valuation after the co’s merger announcement with RIG… UBS downgrades Pacer Int’l (PACR 23.14) to Neutral from Buy… BofA downgrades Ventana Medical Systems (VMSI 83.87) to Neutral from Buy… Piper Jaffray downgrades Atheros Communications (ATHR 32.11) to Market Perform from Outperform… JMP Securities downgrades United Rentals (URI 32.98) to Market Perform from Outperform, as the stock appears fully valued on the announced acquisition by Cerberus Capital Mgmt… Lehman Bros. downgrades Netflix (NFLX 17.27) to Equal-weight from Overweight.

Sensex ends up 63pts at 15,795 – The Business-Standard.com
The Business-Standard.com reports the Sensex opened with a positive gap of 70 points at 15,802. The index rallied to a fresh all-time high of 15,869 -up 137 points from the previous close. Power and Capital Goods stocks continued to lead the upmove today. Profit-taking in intra-day deals saw the index pare gains, but eventually finish 63 points higher at 15,795.

Asian stocks rise on earnings outlook, led by KDDI and Ping An – Bloomberg.com
Bloomberg.com reports Asian stocks rose, driving a regional benchmark to a high, after Samsung Heavy Industries reported better-than-expected earnings and Ping An Insurance said profit may have doubled. The Nikkei 225 Stock Average added 0.2% to 18,002.03, while South Korea’s Kospi index, which today touched 2,000 for the first time, was little changed. Other markets open for trading climbed, except Pakistan and the Philippines.

European stocks drop, led by Next, Sports Direct on U.K. floods – Bloomberg.com
Bloomberg.com reports European stocks fell, paced by U.K. retailers Next and Kingfisher as floods devastated parts of central England. National benchmarks fell in 11 of the 17 western European markets that were open. The U.K.’s FTSE 100 and France’s CAC 40 lost 0.3% while Germany’s DAX slid 0.4%.

The Wall Street Journal reports Allison Transmission, a highly profitable unit of GM (GM), has hit a snag in the debt-financing market. Wall Street firms postponed a sale of $3.1 bln in loans that would pay for the LBO of Allison by private-equity firms, said a person familiar with the matter. While the sale of Allison to Carlyle Group LP and Onex Corp. is highly likely to proceed, the trouble raising debt from investors complicates matters for the co and its bankers. A person familiar with the matter said with today’s postponed sale, the Wall Street firms will now try to distribute the loan among a small group of banks. The junk bonds, meanwhile, hadn’t been offered to investors yet. The outlook for that sale couldn’t immediately be determined. The buyout itself still is on track to be completed in the third quarter. If the debt hasn’t been distributed to investors by then, the deal may be financed directly by the underwriters, which can still try to sell the loans and bonds afterward if market conditions improve.

The Wall Street Journal reports the outcome of the Bancroft family’s deliberations remains difficult to predict, but yesterday one key family member who had been ambivalent about the sale to Mr. Murdoch told her relatives she was staunchly opposed, people familiar with the matter said. Jane MacElree, a family trustee who votes shares totaling about 15% of Dow Jones’s total shareholder power, made it clear to the family she was in the anti-Murdoch camp, people familiar said. Ms. MacElree, a member of the Cox branch, is one of the most senior Bancrofts and has been viewed as a swing vote. Her decision could put her at odds with some of her seven children, who support the deal. Their conclusion was clear: While they viewed the offer as a substantial one that would give Dow Jones (DJ) much-needed resources to expand, they acknowledged that it would be difficult to guarantee that The Wall Street Journal’s editorial independence would survive a sale, even under the guidelines agreed to by Dow Jones’s board and News Corp. (NWS). “It might be better financially but I wouldn’t say it’s everybody’s favorite option,” one participant said. “It’s the same old story.” The family, which has about three dozen adult members, broke away after the presentation to deliberate in private. Family members, some of whom called in by telephone, will be given several days to cast their votes on the deal, and it could be next week before the results of the poll are known.

‘Mad Money’ Recap: Lightning Round cont. – TheStreet.com
Cramer was bearish on Symantec (SYMC), Hercules Offshore (HERO) and Halliburton (HAL).

‘Mad Money’ Recap: Lightning Round – TheStreet.com
Cramer was bullish on Oracle (ORCL), Reliance Steel (RS), Transocean (RIG), GlobalSantaFe (GSF), Consolidated Edison (ED), Altria (MO), Flotek Industries (FTK), Schlumberger (SLB), Goldman Sachs (GS), Brookfield Asset Management (BAM), AT&T (T) and Valmont Industries (VMI).

Cramer’s ‘Mad Money’ Recap – TheStreet.com
On Monday’s edition, Jim says there is upside potential in SanDisk (SNDK) with back-to-school and holiday sales approaching. He favors the co’s flash memory-enabled products that should create a strong demand for SanDisk’s business in 2H07, all the way into 2008. Next, he suggests two dry bulk shippers: OceanFreight (OCNF) and Star Maritime (SEA). Neither co pays a dividend, but both are solid plays. He says the sector is favored because of globalization, with iron ore and coal being shipped between countries in increasingly high amounts. In addition, because the margins on building the dry bulk carriers are low, companies don’t expand their fleet. This is turn enables the carriers to charge higher rates because of high demand and low supply, Cramer said.