Gapping up on strong earnings/guidance: BIG +13.7%, SMTC +9.2%, STX +5.9%… Other news: LEND +6.2% (Lone Star extends tender offer to acquire LEND as part of previous agreement, but says co’s failure to satisfy all conditions continues), LMC +6.1% (Lundin family buys 8 mln shares, lifting stake to 15.2% - Forbes.com), ACH +5.0% (Bloomberg.com article highlights Hong Kong analysts outlook on ACH), ZNH +4.9% (Air China will consider merger with ZNH - Bloomberg), THC +4.8% (co says they believe they have the financial resources to execute their turnaround), NOK +4.2% (announces online music store), VMW +3.4% (selected as virtualization partner for National Security Agency), HOKU +3.4% (continued momentum following yesterday’s 12% run).
Gapping down on weak earnings/guidance: NCTY -14.4%, LNUX -6.4% (also downgraded at JMP Securities and ThinkEquity this morning), JOYG -5.4%. ANEN -5.5% (also downgraded at Needham this morning), ARUN -1.8%… Other news: PDLI -17.6% (announces restructuring initiative after the close yesterday, downgraded at J.P Morgan and CIBC this morning), ALGN -3.6% (downgraded to Underperform at Jefferies).
Roth notes recent pullback in semi stocks offers buying opportunity
Roth notes that over the past few weeks, at least a couple of stocks in their semiconductor universe have pulled back significantly and remain undervalued. Firm highlights Trident Microsystems (TRID), Techwell (TWLL) and Cirrus Logic (CRUS) whose fundamentals remain intact despite the recent sell off. Two other semiconductor names firm continues to like are Sigma Designs (SIGM) and Anadigics (ANAD). Firm would encourage investors to take advantage of the recent pull back and put new money to work in these stocks. Firm is reiterating their Buy rating on SIGM, ANAD, TRID, TWLL and CRUS
AAPL Apple: Confirms “Special Event” on September 5th - AppleInsider
AppleInsider reports co will use a special media event on September 5th to introduce a new array of digital media offerings, according to digital invitations issued to analysts and members of the media Tuesday afternoon.
ACH Alum. Corp China: Bloomberg.com article discusses Hong-Kong analyst’s fair value assesment of ACH (61.90
Bloomberg.com reports Foo Choy Peng, a Hong Kong-based analyst at UOB-Kay Hian, comments on the rise in shares of ACH. Aluminum Corp., known as Chalco, has gained more than 50% in Hong Kong trading since it announced earnings and acquisition plans on Aug 21. It traded at HK$20.45 in Hong Kong at 3:30 p.m. On Chalco shares: “From the fundamental perspective, HK$20 is fair value for Chalco stock. I like the company because the management is great and fundamentals are improving… Still, some analysts are still bearish on the stock as they don’t think aluminum prices will go up. As Chinese investors will be allowed to invest in the Hong Kong stock market, and there is more liquidity, we can allow some 20-30 percent premium for liquidity for Chalco stock, so it can go as high as HK$26, but the fair value is HK$20.”
Buyers: Pep Boys (PBY 14.8 
Chairman bought 20K shares at $15.04… American Eagle Outfitters (AEO 24.4 CFO bought 5K shares at $24.30… Integrys Energy Group (TEG 50.27) Director bought 5K shares at $52.22… MEDecision (MEDE 3.8 Chairman bought 17,100 shares at $4.01… Vestin Realty Mortgage II (VRTB 5.15) CEO bought 9,782 shares at $5.13… Limited Brands (LTD 22.21) Officer bought 10K shares at $23.69… Verasun Energy (VSE 12.26) Director bought 30K shares at $12.38… Meade Instruments (MEAD 1.93) 10% Owner Hummingbird Concentrated Fund, LP bought 526,316 shares at $2.00… Kensey Nash (KNSY 23.95) 10% Owner Starboard Value Fund bought 905,540 shares at $24.00… Adaptec (ADPT 3.61) 10% Owner Steel Partners II LP bought 67,717 shares at $3.57… Brookdale Senior Living (BKD 35.51) Director JGE Capital Mgmt bought 238,400 shares at $36.46 and 11,600 shares at $36.60… Trans World Entertainment (TWMC 4.50) 10% Owner Riley Investment Mgmt bought 49,739 shares at $4.46… Command Security (MOC 2.82) 10% Owner Trinad Capital Master Fund bought 141,388 shares at $3.10… Sellers: Entravision Communications (EVC 8.82) President sold 197,500 shares at $9.15; CFO sold 12,398 shares at $9.24… Advanced Analogic Technologies (AATI 8.93) Director Battery Ventures VI LP sold 370K shares at $8.86… Buckeye Technologies (BKI 15.0 Director sold 15,500 shares at $16.22… Barnes Group (B 30.10) Director sold 15K shares at $31.51… Advocat (AVCA 10.49) Director sold 50K shares at $10.70… Intuit (INTU 26.63) CEO sold 154,567 shares at $27.41… Bottomline Technologies (EPAY 12.7 Director sold 20K shares at $13.36… Falconstor Software (FALC 10.67) Officer sold 50K shares at $10.90… VSE (VSEC 41.61) CEO sold 20,795 shares at $44.06… Treehouse Foods (THS 26.83) Director sold 17K shares at $27.31… Monolithic Power Systems (MPWR 20.06) Director and 10% Owner InveStar Capital sold 136K shares at $20.03… Flotek Industries (FTK 38.32) Director sold 20K shares at $38.43… Affymetrix (AFFX 22.69) Director sold 20,132 shares at $22.79.
MSFT Microsoft: Wii overtakes Xbox 360, becomes leader in retail sales - Vgchartz.com (27.93 )
According to Vgchartz.com, a new site that tracks down retail sales, Nintendo Wii has now overtaken Microsoft’s (MSFT) Xbox 360 and is the leader in retail sales. In the past week, Wii rose to 10.57 mln (41.6% of mkt) consoles sold world-wide, while Xbox 360 also passed the 10.5 mark, with 10.51 mln (41.4% of mkt) consoles sold. Sony’s (SNE) PSE sold 4.32 mln consoles, for 17% mkt share.
PDLI PDL BioPharma: Confusing restructuring and Nuvion failure but value persists - First Albany (23.60 ) -Update-
First Albany is maintaining their Buy rating on PDLI’s bundled announcement that it wants to sell its specialty pharmaceutical products and ularitide and that that the Phase III trial of Nuvion for ulcerative colitis failed. Although the restructuring plan appears incompletely thought out and Nuvion was the most advanced pipeline drug, they believe PDLI’s royalty revs, the potential proceeds from the asset sales, and the earlier-stage pipeline represent value above today’s likely opening bid. Firm has not modeled revs for either Nuvion, due to clinical uncertainties, or ularitide, due to its virtual sidelining. Firm raises tgt to $27 from $24.
DAI Daimler AG reports Q2 results (84.34 )
Co reports Q2 revs $32.23 bln vs $33.26 bln in yr ago period; EPS $2.36 vs $2.80 in yr ago period. In the second half of this year, Co expects the expansion of global automotive markets — for both passenger cars and commercial vehicles — to slow down compared to the same period of 2006. This is primarily due to developments in the triad markets. In full-year 2007, demand for passenger cars in the markets of North America, Western Europe and Japan is likely to fall slightly. However, significant increases in demand are anticipated for both passenger cars and commercial vehicles in the emerging markets of Asia and Latin America, as well as in Eastern Europe. Demand for trucks in North America is expected to fall sharply. The market volume for trucks in Japan should also be significantly lower than in the prior year. In view of the positive economic conditions in Western Europe, slightly positive market developments are anticipated. Total global demand for passenger cars and commercial vehicles should increase by approximately 3% in 2007 (2006: 4%). For full-year 2007, DaimlerChrysler anticipates unit sales in a similar magnitude to the prior year (2006: 2.1 million vehicles). For the Group, total revenues are expected to be in the same magnitude as in 2006 (US$134 billion). In its new structure, the Group expects to achieve EBIT in the magnitude of US$11.5 billion in full-year 2007 (2006: US$6.76 billion). Significant special factors affecting earnings in 2007 are the gain of US$1.9 billion realized on the transfer of interest in EADS and charges of US$0.4 billion resulting from the implementation of the new management model.
Bond Watch: Working Off Some Froth
The market flipped lower overnight as treasuries backed off their best levels of the year, despite some more fumbles in the hedge fund world (UK’s Cheyne capital). Globally bonds were bid, despite equities managing to firm up, as further bets the ECB would hold off raising rates next week has helped push prices higher. That sentiment is apparently not shared here in the US as expectations for a rate cut have been scaled back. The 2-10-yr yield spread is back in at 39.3 after tripping out to 44.4 since late yesterday’s risk aversion run. Steepeners look to be unwound though as the Fed keeps mum on its intentions, placing Bernanke’s talk on Fri at the top of the event risk spectrum. Bond prices in the EuroZone were assisted on their modest run higher by weak data while in Japan, bonds soared as equities melted down. Treasuries will have little to go on today with a data hiatus but there is an $18B 2-yr note auction with demand expected to be generous. The market looks like it will need to work off a little more froth & in the absence of another equity meltdown & a huge run of supply this week prices may now take a breather. The dollar is mixed with most of the majors gaining back lost ground from yesterday while the yen is rewinding its latest unwind. Spot gold is up at 665.70 (+3.20) while crude is up at 72.16 (+0.43). The euro is at 1.3629 & the yen is at 114.8000 while the 10-yr is -00+/32nds yielding 4.508%.
JMP says that one of the reasons they like Ariba’s (ARBA 8.61) story is the potential to monetize the Ariba Supplier Network. Yesterday, the co took an important step towards monetizing that by announcing a new membership program to the suppliers on the network, and firm views this is a critical change for ARBA as it may allow the co to share directly in the growth of the network… Jefferies raises their RightNow (RNOW 14.63) tgt to $18 from $16, based on signs of improved execution, a strong product cycle and evidence of solid demand. Although RNOW has some exposure to financial services in EMEA, exposure to North American financial services is low, and they estimate total exposure to financial services to be less than 5%, limiting downside risk from sub-prime exposure… Wachovia comments on the FDIC’s quarterly statistics on banking, saying delinquencies and foreclosures continue to rise in the latest FDIC statistics reflecting what has already been reported in Countrywide’s Q2 servicing portfolio results as well as the July new and existing home sales data, namely that higher foreclosures are pressuring already high levels of housing inventory… Jefferies cuts their Red Hat (RHT 18.67) tgt to $21.50 from $30, as they temper their expectation for CFFO growth in FY08 and contract the multiple to the market rate of growth.
ABN ABN AMRO: Shares slide could scupper Barclays bid - Times of London (45.41 )
Times of London reports ABN Amro appeared to slip farther away from Barclays (BCS) yesterday as its offer for the Dutch bank dwindled to 11.9 bln euros less than the rival bid from the Royal Bank of Scotland-led consortium. The sliding Barclays share price, down another 22p to 589p yesterday, has reduced the value of its mostly paper-based offer to only 58.4 billion euros. By contrast, the RBS offer, which is 93.5%, has been affected only modestly by the stock market gyrations and was worth 70.3 bln euros by yesterday’s close, 20% more than ABN’s.
S&P futures vs fair value: +8.7. Nasdaq futures vs fair value: +12.5.
Early indications suggest stocks will bounce back from yesterday’s broad-based dismantling. With the major indices plunging roughly 2.3% on average Tuesday, and the way in which stocks noticeably depreciated going into the close on below average volume as short sellers benefited from a lack of bids, yesterday’s overreaction to outdated details regarding the Fed’s perspective on monetary policy is fostering some early short covering.
NOK Nokia announces online music store (30.01 )
Co announces the Nokia Music Store, which allows people to listen to music directly on their Nokia device or personal computer. The Nokia Music Store is opening across key European markets this fall with additional stores in Europe and Asia opening over the coming months. Individual tracks will cost EUR 1.00 and albums from EUR 10.00, with a monthly subscription for PC streaming for EUR 10.00. The co also announced four new mobile devices specifically optimized for entertainment, music and games. The devices range in price from 225 to 560 EUR and are expected to begin shipping later this yr. (Briefing.com note: FT.com ran a story yesterday previewing NOK’s online music service, saying it is intended to rival Apple’s (AAPL) iTunes)
WM Washington Mutual tgt cut to $35 at FBR; credit costs on the rise (35.81 )
Friedman Billings cut their tgt on WM to $35 from $44 to reflect the continued challenging conditions in the mortgage market. Firm’s new tgt of $35 represents 10x their Y08 EPS est and 2x tangible book value. Firm also lowers their FY07 EPS est to $2.50 from $3.60 to reflect possible loan write-downs in the held-for-sale portfolio in the 2H07 and weak loan pricing in the secondary market. They are also lowering their FY08 EPS est to $3.50 from $4.10 to reflect weaker mortgage banking earnings throughout the first half of 2008. Although WM has ample liquidity and a stable deposit base to take advantage of the current mispricing of assets, firm is concerned about adverse selection with newly portfolioed mortgage loans
SPWR Sunpower: Fundamentals remain strong at SPWR, despite recent share price declines - First Albany (60.26 )
First Albany believes that SPWR has ample polysilicon supply to meet their ests. Firm believes that industry demand for solar photovoltaics remains strong. Despite, early implementation missteps with the California Solar Initiative, there have, they believe, been no implications on demand. Firm believes PV demand across Europe also remains strong. Although the credit markets remain in turmoil, firm does not believe solar funding is at risk. As they understand it, bulge bracket banks favor funding solar systems for the related tax credits, potential for future carbon credits, and pay-backs based on energy production.
TXN Texas Instruments: Optimistic about the cycle, but wireless shifts hurt - CIBC (33.42 )
CIBC hosted investor meetings with TXN IR manager Ron Slaymaker in Canada. TXN remains optimistic about the state of the semiconductor cycle despite macro uncertainty, with inventories clear across the sector and in some cases even too low. TXN believes it is well prepared for the upturn, having built stock at the trough. Firm notes the recent announcements from NOK introduce a second supplier at each of the important market nodes: GSM, EDGE, and 3G. In each case, TXN remains a supplier but loses sole-sourced status. Firm notes TXN is optimistic about 3G growth over the next few years, and stands to benefit from the richer baseband ASPs and higher attach rate of application processors.
CFC Countrywide to buy mortgages - Chicagotribune.com (19.31 ) -Update-
Chicagotribune.com reports that Countrywide Financial (CFC) is set to buy $128 mln of mortgages from failed Atlanta-based lender HomeBanc and take over leases at five of its offices in the South. The U.S. Bankruptcy Court approved the agreement Monday, according to court documents. In addition to approving the sale of HomeBanc’s loans, the court signed off on CFC’s plan to take over leases at HomeBanc branches in North Carolina, Georgia and Florida.
Yen declines as Japanese funds add to overseas bond holdings - Bloomberg.com
Bloomberg.com reports the yen fell, snapping a two-day gain versus the dollar and euro, as speculation the Bank of Japan wont’ raise interest rates spurred fund managers to send money abroad in search of higher returns. The yen slipped against all 16 of the most-active currencies as the odds the central bank will lift the overnight lending rate next month dropped to 20% from 30% yesterday, according to Credit Suisse Group. The yen has risen 7% against the dollar this quarter as credit-market losses caused fund managers to repay yen loans used to fund carry trades. The yen dropped to 114.69 against the dollar at 11:17 a.m. in London from as high as 113.87 and 114.27 late in New York yesterday. It also traded at 156.03 per euro from as strong as 154.54 and 155.40 yesterday.
Mortgage Applications
The weekly MBA mortgage applications index were down -4.0% last week, with purchasing applications lower by -4.0% and refis dropping -4.2%. The fixed 30-yr mortgage rate was down at 6.41% while the 15-yr edged fell to 6.10%. The 1-yr adjustable rate mortgage rate rocketed to 6.51% from 5.84%, the largest single month jump in that detail since it began being compiled in 1996, according to Bloomberg.
BCS Barclays eases debt vehicle fear - FT (46.61 )
FT reports co is holding collateral that would limit any potential losses arising from its exposure to troubled debt vehicles created by its investment banking arm, people close to the UK bank said yesterday. People close to the bank said that, even if it was forced to sell all the assets it holds as collateral at current distressed prices, its total loss from the vehicles would be no more than 75 mln pounds.
Cheyne may liquidate commercial paper unit amid market rout - Bloomberg.com
Bloomberg.com reports that Cheyne Capital Management, the hedge fund manager set up by former Morgan Stanley bankers Stuart Fiertz and Jonathan Lourie, may liquidate the assets backing a commercial paper program after a global credit market rout. The Cheyne Finance LLC fund has been selling assets and has enough cash to repay commercial paper due through November, London-based Cheyne Capital Management said in a statement. “Investors are not going to refinance you in this environment,” said Craig Saalmann, credit strategist at JPMorgan Chase & Co. in Sydney. Standard & Poor’s Corp. said in a statement yesterday that deteriorating market prices were putting pressure on the credit ratings of Cheyne Finance and that the fund might have to liquidate.
JOYG Joy Global misses by $0.03; issues guidance for next 12 months (44.82 )
Reports Q3 (Jul) earnings of $0.66 per share, $0.03 worse than the Reuters Estimates consensus of $0.69; revenues rose 5.4% year/year to $621.8 mln vs the $662.4 mln consensus. “We now expect our revenues over the next 12 months to be in the range of $2.6 to $2.8 billion. Continued focus on cost control and productivity initiatives should result in increased efficiencies. We anticipate operating earnings in the range of $490 to $530 million. We believe this level of operating performance, combined with continued repurchase of our shares, will result in diluted earnings per share of $2.90 to $3.15 in the next twelve months.”
WSM Williams-Sonoma beats by $0.10; reaffirms Q3, Q4 guidance; raises FY08 guidance to reflect Q2 upside (29.57 )
Reports Q2 (Jul) earnings of $0.26 per share, excluding non-recurring items, $0.10 better than the Reuters Estimates consensus of $0.16; revenues rose 4.1% year/year to $859.4 mln vs the $862.9 mln consensus. Co reaffirms guidance for Q3, sees EPS of $0.22-0.27 vs. $0.24 consensus; sees Q3 revs of $887-907 mln vs. $896.62 mln consensus. Co reaffirms guidance for Q4 (Jan), sees EPS of $1.20-1.26 vs. $1.23 consensus; sees Q4 (Jan) revs of $1.38-1.42 bln vs. $1.4 bln consensus. Co raises for FY08, to EPS of $1.82-1.90 vs. $1.79 consensus; sees FY08 revs of $3.95-3.99 bln vs. $3.96 bln consensus
Miscellaneous: CIBC initiates Ametek (AME 38.73) with an Outperform and a $45 tgt and is the firm’s top pick in the midcap area of their universe over the next 12-18 months, as they expect AME to continue to post favorable results, particularly vs. most in the firm’s group… Credit Suisse initiates hhgregg (HGG 12.95) with an Outperform and a $17 tgt saying they believe the company can continue its success, and through a combination of high-single-digit square footage growth, low-single-digit comps and deleveraging, it can grow by more than 20% per year in the next three to five years.
ENER Energy Conversion misses by $0.05; issues in line Q1, Y08 guidance (28.90 )
Reports Q4 (Jun) loss of $0.16 per share, excluding non-recurring items, $0.05 worse than the Reuters Estimates consensus of ($0.11); revenues rose 29.0% year/year to $36 mln vs the $35.1 mln consensus. Co issues in-line guidance for Q1, sees Q1 revs of $40-45 mln vs. $41.15 mln consensus. Co issues in-line guidance for FY08, sees FY08 revs of $220-245 mln vs. $225.12 mln consensus.
Upgrades: CIBC upgrades Sectra Energy (SE 22.32) to Outperform from Sector Perform with a $28 tgt noting the shares have declined materially since January. At the same time, the firm believes the investing climate now favors the stock with its attractive dividend yield and defensive characteristics. Downgrades: Morgan Stanley downgrades Alpha Natural (ANR 17.99) to Equal Weight from Overweight… Morgan Stanley downgrades Foundation Coal (FCL 33.3 to Equal Weight from Overweight… Morgan Stanley downgrades Arch Coal (ACI 29.16) to Underweight from Overweight… CIBC downgrades PDL BioPharma (PDLI 23.60) to Sector Perform from Outperform saying while they believe the plan to sell the ESP Pharma products was mostly expected, they are surprised by Nuvion’s failure, given the promising response rates observed in ph.I/II. The firm notes shares slipped to ~$20 on the news, and based on the co’s new fundamentals and a lack of near-term catalysts, they believe this is near fair value…. CIBC downgrades Bear Stearns (BSC 108.66) to Sector Perform from Outperform saying the stock is certainly cheap on the basis of P/BV at roughly 1.2X, but the firm believes earnings for BSC in particular will be under pressure well into 2008. The firm does not see a potential Fed rate cut as enough of a positive catalyst for BSC’s earnings, as the high yield and subprime mortgage markets are unlikely to recover from a rate cut alone.
Upgrades: J.P Morgan upgrades Molson Coors (TAP 86.77) to Overweight from Neutral… Bear Stearns upgrades Scientific Games (SGMS 32.62) to Outperform from Peer Perform. Downgrades: J.P Morgan downgrades PDL BioPharma (PDLI 23.60) to Neutral from Overweight… J.P Morgan downgrades Sonic (SONC 22.12) to Neutral from Overweight… Bear Stearns downgrades Wynn Resorts (WYNN 117.80) to Peer Perform from Outperform… Bear Stearns downgrades Arthur J. Gallagher (AJG 29.51) to Underperform from Peer Perform. Miscellaneous: Lehman initiates Airvana (AIRV 5.20) with an Overweight… Morgan Stanley initiates Orbitz (OWW 12.04) with an Overweight… Piper Jaffray initiates Orbitz (OWW 12.04) with an Outperform and a $16 tgt… BB&T initiates Cuisine Solutions (FZN 5.59) with a Buy and a $9 tgt… Citigroup initiates Pennsylvania (PEI 35.97) with a Hold… Citigroup initiates Phillips Van Heusen (PVH 54.60) with a Hold… Citigroup initiates National Instruments (NATI 31.24) with a Hold… Citigroup initiates Agilent Tech (A 34.67) with a Buy.
Sensex ends up 74pts, Tata Steel zooms 9% - The Business Standard
The Business Standard reports taking cues from the overseas markets, the Sensex opened with a huge negative gap of 268 points at 14,651 and dropped to a low of 14,592. However, fresh buying (mainly in Tata Steel) at lower levels saw the index recoup losses in early trades. Buying spread to other counters as the day progressed, and the index rebounded by mid-noon trades. The index touched a high of 15,030 -up 438 points from the day’s low. The Sensex finally ended with a gain of 74 points at 14,993.
Asian stocks drop on credit concerns, U.S. consumer confidence - Bloomberg.com
Bloomberg.com reports Asian stocks fell, following declines in the U.S., on concern a rout in credit markets will hurt banks’ earnings and slow growth in the world’s biggest economy. Japan’s Nikkei 225 Stock Average slid 1.7% to 16,012.83, while Hong Kong’s Hang Seng Index lost 1.5%. Benchmarks in other markets also retreated, except in Thailand, Pakistan, India and Sri Lanka.
European stocks, U.S. futures advance; Accor, Whitbread gain - Bloomberg.com
Bloomberg.com reports European stocks climbed and U.S. index futures advanced on speculation the global credit debacle will be limited to the financial industry and won’t spread to the broader economy… National benchmarks gained in 11 of the 17 western European markets that were open. Germany’s DAX lost 0.2%, France’s CAC 40 added 0.2% and the U.K.’s FTSE 100 advanced 0.3%. The Stoxx 50 rose 0.3%, while the Euro Stoxx 50, a measure for the euro region, gained 0.1%
Upgrades: Deutsche Bank upgrades SupportSoft (SPRT 5.06) to Buy from Hold and raises their tgt to $7 from $6.25, based on improved confidence that the consumer initiative is nearing an inflection point, core business expectations that are low and valuation… Merrill Lynch upgrades Bank of Nova Scotia (BNS 47.40) to Buy from Neutral. Downgrades: JMP Securities downgrades SourceForge (LNUX 3.61) to Underperform from Market Perform and sets a $3 tgt, following Q407 revenue that was below firm and consensus estimates with EPS that met firm and consensus estimates and believe the co has lost a degree of credibility given its prior guidance implicitly suggested it wouldn’t face seasonal headwinds in its media business… Jefferies downgrades PolyMedica (PLMD 51.69) to Hold from Buy and raises their tgt to $53 from $48, following the announcement that Medco Health has entered into a definitive agreement to acquire PLMD for $53/share in cash and don’t expect the co to receive competing offers… Merrill Lynch downgrades Polo Ralph Lauren (RL 73.22) to Neutral from Buy. Miscellaneous: Baird initiates California Pizza Kitchen (CPKI 19.60) with an Outperform and sets a $24 tgt, as they expect unit development, same-store growth, and margin expansion to drive annual EPS +17-21% in upcoming years and see potential for co-wide ROIC to improve on rising contribution from franchising and licensing programs… JP Mogan initiates Orbitz Worldwide (OWW 12.04) with a Neutral… Citigroup initiates Tektronix (TEK 31.52) with a Hold and sets a $38 tgt.
Chrysler proposes shedding non-core assets - WSJ
The Wall Street Journal reports newly independent Chrysler LLC may join the rest of Detroit in putting noncore assets on the block. The co has proposed in its contract talks with the UAW shutting down or selling its Mopar unit, a maker of high-performance and specialty auto parts, and Chrysler Transport, which manages deliveries of supplies to Chrysler plants, people familiar with the matter said. The UAW opposes the divestitures, people familiar with the matter said. Mopar and Chrysler Transport together employ almost 1,300 workers. The talks between the co and the UAW are continuing, and it is unclear whether the divesting of assets will be part of the final agreement. UAW and Chrysler representatives declined to comment. If the co does decide to sell or shut down some of its noncore assets, it would look at possibly placing employees in other locations or find other ways to ensure workers wouldn’t lose their jobs, people familiar with the matter said. Chrysler’s talks with the UAW also have centered on the co receiving a concession on health-care costs similar to the one GM (GM) and Ford (F) received from the UAW in 2005. Chrysler also wants the ability to outsource to a third party some of its noncore employees, such as UAW members who handle maintenance or janitorial work
CFC Why is Countrywide sliding? - WSJ (19.31 )
The Wall Street Journal reports Bank of America’s (BAC) $2 bln investment in Countrywide (CFC) last week was supposed to put an end to fears about the financial strength of the nation’s largest home-mortgage lender. Investors still don’t know how badly Countrywide has been wounded by the recent credit crunch. At a minimum, Countrywide faces a hit to near-term earnings; some analysts expect a loss in the current quarter. At worst, the co could be forced to dump assets at fire-sale prices or seek another emergency infusion of capital, potentially slashing the value of its stock further. “Two billion dollars from Bank of America is not a lot compared to what they may need,” says Stuart Plesser, an equity analyst at Standard & Poor’s. Frederick Cannon, an analyst at Keefe, Bruyette & Woods, says the total amount of loans waiting to be sold may now top $40 bln, given the current difficulty of finding buyers for many types of loans. Mr. Cannon says it isn’t clear what share of the loans can be sold to Fannie and Freddie or how much Countrywide may have to mark down the value of the others. Countrywide also had about $23 bln of “trading securities,” mostly mortgage-related, as of June 30. Mr. Cannon worries that some of these also may have lost considerable value. A Countrywide spokesman says the “overwhelming majority” of those securities are backed by Fannie or Freddie or the U.S. government, and there is “no serious impairment” to the portfolio’s value. In addition, Countrywide’s savings bank held about $15.7 bln of mortgage securities, excluding those guaranteed by Fannie or Freddie, and may have to mark down some, Mr. Cannon adds. The spokesman declined to comment. Analysts can only guess at what the value of Countrywide’s holdings might be at the end of the third quarter. But Paul J. Miller Jr. of Friedman, Billings says Countrywide may need to write down $1 bln to $2 bln in the value of loans that don’t fit the criteria for sale to Fannie or Freddie. Keefe Bruyette’s Mr. Cannon roughly estimates that Countrywide will have a loss of $0.99 in Q3.
After Hours Summary: SMTC up 7.6% on earnings/guidance; LEND up 5.5% (Lone Star extends tender offer to acquire Accredited)Companies moving in after hours trading in reaction to earnings: Trading Up: SMTC +7.6%; DY +5.4%; PEC +1.9%; VSNT +1.9%; BGP +1.4%… Trading Down: NCTY -11.9%; LNUX -5.8%; ARUN -5.1%; DDS -3.7%; APSG -3.4%; ONAV -1.8%; CFI -1.4%… Companies moving in reaction to news: Trading Up: LEND +5.5% (Lone Star extends tender offer to acquire Accredited); STX +5.1% (raises Q1 EPS and revs guidance, above consensus); MOSY +1.9% (announces a $19.5 mln stock repurchase program); AMGN +1.6% (Court rules that Roche infringes one of Amgen’s Erythropoietin patents); OGE +1.6% (announces cost recovery issue jeopardizes plant)… Trading Down: PDLI -16.7% (announces significant strategic and portfolio changes); RIO -1.1% (Brazil court rules against Comp Vale Do Rio in antitrust case — DJ).
Basis Yield Alpha Fund files for bankruptcy protection in Manhattan, according to court filing - Reuters
DDS Dillard’s misses by $0.30; misses on revs (24.34 -1.34)
Reports Q2 (Jul) loss of $0.31 per share, excluding non-recurring items, $0.30 worse than the Reuters Estimates consensus of ($0.01); revenues fell 2.1% year/year to $1.65 bln vs the $1.68 bln consensus.
TRN Trinity Industries mentioned positively in Weekday Trader - Barron’s Online (35.08 )
Barron’s Online reports shares of Trinity Industries (TRN) offer value after a 30% pullback from last May’s peak. Strong backlogs in railcar orders, plus a robust demand for Trinity’s inland barges and wind tower structures, make for solid earnings prospects. Meantime, the shares trade at an undemanding 10x forward earnings. Sam Halpert, senior analyst at Van Eck Associates, sees Trinity as a cheap play in infrastructure, where other stocks have gotten rather rich. While he says he is watching railcar demand closely, he notes Trinity’s “valuation is attractive” given that three of its main businesses “have good growth prospects as a low-cost provider.” At minimum, he sees a 20% upside to Trinity shares, noting that that figure is probably “overly conservative.” Meanwhile, to cut costs, Trinity has shifted 40% of its railcar production to Mexico thanks to an additional plant opened in 2006. Leasing activities should also help stabilize earnings. A joint venture called TRIP will help finance leases and allow Trinity to recognize upfront more of the revenue from the $1.4 bln in railcars TRIP will buy over the next few years. Van Eck’s Halpert says the barge business is basically a duopoly, which helps limit the supply, and demand is strong because “barges are far and away the cheapest ways to transport” much higher volumes. Trinity expects to see greater demand for its highway guardrails and proprietary products such as highway crash cushions thanks to the Federal Highway Bill’s mandate to spend $286.5 bln over the next six years.
Mad Money’ Recap: Lightning Round cont. - TheStreet.com
Cramer was bearish on Merck (MRK), Micron Technology (MU), Casual Male Retail Group (CMRG), O’Charley’s (CHUX), Qualcomm (QCOM) and Wal-Mart (WMT).
‘Mad Money’ Recap: Lightning Round - TheStreet.com
Cramer was bullish on Elan (ELN), Schering-Plough (SGP), Amazon.com (AMZN), Research In Motion (RIMM), Apple (AAPL), Google (GOOG), UIL Holdings (UIL), Consolidated Edison (ED), Gap (GPS), Kohl’s (KSS), American Eagle Outfitters (AEO), Costco (COST), Chipotle Mexican Grill (CMG), Burger King (BKC), McDonald’s (MCD), Hawaiian Electric (HE) and EMC (EMC).
Cramer’s ‘Mad Money’ Recap - TheStreet.com
On Tuesday’s edition, Jim favors Wynn Resorts (WYNN) and cites Macao, where the co is licensed to operate, and the conference call this week that emphasized product and services strength. Next, he calls International Game Technolog (IGT) a long-term investment that shouldn’t be sold before 2008. It is an undervalued global play in an untapped market. Finally, he favors American Woodmark (AMWD) for its $100 mln buyback announcement, 50% dividend increase and solid balance sheet.
