Data Feed

Gapping up: APLX +21.1%, PARD +16.3%, SLXP +14.8%, DYAX +4.0%, MIND +3.5%, AMGN +2.8%, VCLK +2.5%, NFLD +1.9%… Gapping down: FNSR -10.1%, OSIS -10.0%, RDN -7.8%, AGIX -7.7%, GES -7.3%, SCMR -5.9%, COST -5.9%, ABB -3.5%, ACGY -2.4%.++

S&P futures vs fair value: -13.0. Nasdaq futures vs fair value: -11.8.
Within the last 15 minutes the monthly ADP employment report showed that only an estimated 38K new private jobs were created in August. That’s the slowest pace in four years, suggesting that an employment deceleration may be underway, and equates to roughly 123K nonfarm jobs. The ADP data follow a report from Challenger, Gray & Christmas that showed August’s job cuts were the highest since February, led by record job cuts in the financial sector. The response in stocks, though, has been rather muted since the ADP report lacks credibility compared to Friday’s more closely-watched and well-established August nonfarm payrolls, which is expected to check in around 110K.

Buyers: Nautilus (NLS 9.65) 10% Owner Sherborne Investors GP bought 180,776 shares at $9.37… Torch Energy Royalty Trust (TRU 9.02) 10% Owner Trust Venture bought 2,335 shares at $9.02… Harte-Hanks (HHS 24.26) President and CFO bought 10K shares at $24.26… Adaptec (ADPT 3.83) 10% Owner Steel Partners II bought 40,426 shares at $3.64… Transmeridian Exploration (TMY 2.03) Director bought 75K shares at $1.90… Anadys Pharma (ANDS 2.37) CEO bought 150K shares at $2.04… Maxwell Technologies (MXWL 12.22) CEO bought 5K shares at $11.94. Sellers: Stratus Properties (STRS 32.85) CFO sold 10,620 shares at $33.02… Western Refining (WNR 54.35) Officer/Director sold 111,100 shares at $51.19 – $52.02… Monolithic Power Systems (MPWR 20.63) Director and 10% Owner InveStar Capital sold 98,450 shares at $20.31… Kirkland’s (KIRK 1.75) 10% Owner Endowment Capital Group sold 280,300 shares at $1.75… Mellanox Technologies (MLNX 16.50) Director sold 33,509 shares at $15.93… Parallel Petroleum (PLLL 17.97) CFO sold 10,863 shares at $17.65; Chairman sold 34,772 shares at $17.70… Cerner (CERN 57.18) Officer/Director sold 15,063 shares at $56.79… WellCare Health Plans (WCG 100.55) Director sold 14K shares at $97.73… Advanced Analogic Technologies (AATI 9.29) Director Battery Ventures VI, LP sold 199,522 shares at $9.13… Pennsylvania Real Estate Investment Trust (PEI 38.41) Director sold 20K shares at $36.81… Knot (KNOT 21.58) Chairman sold 13K shares at $21.02… VCA Antech (WOOF 40.98) CEO sold 57,652 shares at $40.33… Broadcom (BRCM 35.44) Chairman sold 400K shares at $33.96… Cadence Pharma (CADX 14.48) 10% Owner ProQuest Investments III sold 84,600 shares at $14.26 – $14.47… Expedia (EXPE 30.53) CFO sold 15,277 shares at $29.62… MGM Mirage (MGM 84.00) Officer sold 252,431 shares at $82.51 – $83.17.

GOL Gol Intelligent Airlines downgraded to Add at Calyon- tgt cut to $26 from $41 (22.23 )
Calyon downgrades GOL to Add from Buy and cuts their tgt to $26 from $41 based on their expectation that the market will put a lower multiple on its valuation at least until the confusion surrounding the reorganization of the Brazilian aviation market has been resolved and the impact of the Varig merger becomes clearer.

WFR MEMC Elec: Needham believes WFR is undervalued; sees co as attractive investment (58.33 ) -Update-
Needham believes WFR is a very attractive investment for the following reasons: 1) Favorable long term business conditions in the semiconductor and solar cell markets; 2) Healthy pricing environment with ASP increases for wafers and polysilicon expected to continue; 3) Margin growth story; 4) Solid balance sheet with strong net cash position and positive cash flow; 5) Management strategy focusing on profitability, market-share and technology.

Citrix Systems (CTXS) announces it has acquired QuickTree, a small privately-held software technology provider of addressing the security and performance challenges of X.M.L. and web services… Avigen (AVGN) announces the initiation of a Phase II trial for AV650 in the treatment of spasticity associated with multiple sclerosis… ChipMOS Tech (IMOS) announces that its 99.14% owned subsidiary, ChipMOS Technologies Inc, filed a lawsuit on Sep 5, 2007 Taiwan time in Kaohsiung District Court against Walton Advanced Engineering, alleging infringement by Walton of two of IMOS Taiwan’s B.G.A. package related patents which are used for D.D.R. II SDRAM devices… Genta (GNTA) announces that data from the co’s Phase 3 trial of Genasense plus chemotherapy would be presented at the opening session of the first Worldwide Melanoma Center Meeting organized by the European Association of Dermato-Oncology… SulphCo (SUF) announces that its shelf registration statement on Form S-3 filed on Aug 15, 2007, has been declared effective by the SEC.

The market is swinging modestly positive ahead of the open after suffering much of the night. The pre-market flip toward the good side coincides with global equities souring as profits on European banks were reportedly stressed providing steady bid in the safer assets. The 2-10-yr yield spread shot back out to 45.5 with the flight to quality (FTQ) driving curve trade steeper. Bond prices in the EuroZone have been boosted in the last few hours with an assist from weaker-than expected retail sales while in Japan, bond prices were helped along by another knock down on equities. Treasuries will get a look at some of the regional economic anecdotes that will be perused in next week’s FOMC meeting today via the Beige Book. It may have some insights into the plague that is housing (along with pending home sales) & its broader effects so trade will be tuning in. ADP releases its guesstimate at Fri’s jobs number shortly. The buck is stronger but still within recent well-worn boundaries as the FTQ sees its requisite dollar & yen buying. Spot gold is down at 679.66 (-1.99) while crude oil is up a bit at 75.25 (+0.17). Today has ADP employment change (8:30), pending home sales (10) & Fed’s Beige Book (14)

JSDA Jones Soda trading lower in pre-mkt after Seattle Post article highlights shareholder class action suit against co (10.71 Yesterday after the close, law firm Coughlin Stoia Geller Rudman & Robbins announced a shareholder class action suit against JSDA. Today, news of the suit is being picked up by the Seattle Post, in an article saying “JSDA and its two top executives were accused in a federal shareholder lawsuit Tuesday of “intentionally participating in a fraudulent scheme” to inflate the company’s stock price, which later precipitously fell when the business faltered. The suit, filed in U.S. District Court in Seattle, accuses the company, Chief Executive Peter van Stolk and Chief Financial Officer Hassan Natha of presenting a “misleading picture of Jones Soda’s business and prospects” and falsely overstating “sales and earnings capabilities”… The plaintiff in the suit, which is seeking class-action status, is Tillie Saltzman, who bought 100 shares at $15.90 each July 23″… Shares of JSDA are trading down ~5% in pre-market trading, on light volume.++

Wachovia notes that next Tuesday, September 11, the FDA’s Cardiovascular and Renal Drug Advisory Committee and the Drug Safety and Risk Management Advisory Committee will discuss updated information on the risks and benefits of ESAs when used in treatment of anemia due to chronic renal failure. Firm does not expect the FDA panel to be a catalyst for more restrictive EPO payment policies or decreased EPO utilization. As such, they believe that DaVita (DVA 58.93) stock is still discounted for risks associated with the pending FDA panel and expect the multiple to expand following the panel discussion… Morgan Keegan notes that Byte and Switch published an article yesterday morning which implies that Sun Microsystems (JAVA 5.50) is going another direction other than FalconStor (FALC 10.77) for de-duplication. They note that JAVA did in fact sign a reseller agreement with Diligent. They say this is a reseller agreement not an OEM agreement and it is limited to the Linux environment. The firm remains confident that FALC remains the OEM vendor of choice for Sun’s de-duplication initiatives in the Solaris space.

AMGN Amgen: NCD Resolution represents a major positive- Deutsche Bank (51.34 )
Deutsche Bank says last night the Senate and House of Representatives passed an N.C.D Resolution instructing C.M.S to begin immediate reconsideration of its N.C.D on the use of E.S.As (Aranesp and Procrit) in cancer and related neoplastic conditions. The firm believes this Resolution represents a major potential positive for AMGN. Given the unprecedented nature of recent events and this Resolution, it is unclear how fast CMS will complete its re-assessment and announce potential changes. This Resolution is consistent with their thesis that CMS’ policy was unlawful and unscientifically based, and comes faster than Street expectation.

Commercial real estate in U.S. poised for 15% price drop – Bloomberg.com
Bloomberg.com reports that U.S. commercial real estate prices may fall as much as 15% over the next year in the broadest decline since the 2001 recession, as rising borrowing costs force property owners to accept less or postpone sales. Investors in July bought the fewest commercial properties since Aug 2006 and apartment building acquisitions were down 50% from June, data compiled by industry consultants at Real Capital Analytics show.

SOHU Sohu.com: TLBB maintains strong performance- WR Hambrecht (34.32 )
WR Hambrecht says their updated checks on T.L.B.B suggest the online game has increased its popularity (in terms of traffic) since the launch of an expansion pack on August 15. The firm says their checks indicate the following: 1) strong traffic patterns, as A.C.Us have increased 20% since the launch; 2) increased number of servers deployed; and 3) potential revenue upside due to improved traffic and monetization. The firm believes the recent success confirms T.L.B.B’s status as a hit game in China.

‘Quant’ funds shrug off concerns – FT
FT reports Renaissance Technologies and DE Shaw, two of the biggest quantitative hedge fund managers, are raising money as they shrug off concerns over the poor performance of many computer-driven funds last month. Long Island-based Renaissance, run by former maths professor and billionaire Jim Simons, is preparing to launch a “quant” fund next month that will trade futures. It estimates that the fund could run up to $50 bln. New York’s DE Shaw has pulled forward the planned re­opening of two of its funds to new investment by four months, which investors say is to allow it to take advantage of the availability of cheap assets. The timing of the fundraisings by DE Shaw and Renaissance suggests that they are not concerned that investors want to reduce their exposure to all quant funds following the dire performance of some of the biggest names in the sector. Many quant managers saw double-digit percentage drops in some funds in the first week of August, with the worst down more than 30%.

Germany arrests three men on suspicion of plotting attacks – WSJ
WSJ reports German authorities said Wednesday they had arrested three suspected Islamic terrorists for plotting imminent, “massive” bomb attacks on Frankfurt’s intl airport along with the Ramstein Air Base, a key U.S. military hub. German federal prosecutor Monika Harms said the three had trained at camps in Pakistan and procured about 1,500 pounds of hydrogen peroxide for making explosives. “This is a good day for security in Germany,” she said. She declined to specify what the suspects’ target was, but Defense Minister Franz Josef Jung cited the Frankfurt intl airport and the large U.S. air base at Ramstein, in southwestern Germany. Officials said the 35% solution of hydrogen peroxide, stored in a hideout, could have been mixed with other additives to produce a bomb with the explosive power of 1,200 pounds of TNT.

Bank of England calms overnight rate, won’t aid 3-month costs – Bloomberg.com
Bloomberg.com reports that the Bank of England offered to provide additional cash to reduce “unusually high” overnight interest rates and said it shouldn’t be expected to take additional action to reduce three-month borrowing costs. Commercial banks today increased their forecast for how much they will deposit with the central bank next month by 6% to 17.6 bln pounds ($35.4 bln). The Bank of England said it will offer to lend as much as 25% of that at the benchmark interest rate, currently at 5.75 percent, on Sept. 13. The move should “relieve some pressure on interest rates for overnight borrowing which have” in the past month “been unusually high relative to bank rate,” the central bank said. “The measures are not intended, nor can be expected, to narrow the spreads between anticipated policy rates and the rates at which commercial banks can borrow from each other at longer maturities (for example, the three-month interbank rate.)”

GLW Corning reaffirms Q3 guidance for EPS of $0.34-0.37 vs $0.36 consensus; revs $1.525-1.575 bln vs $1.55 bln Reuters consensus (24.15 )Co announces its Chairman and Chief Executive Officer Wendell P. Weeks will address investors at the 14th Annual Citigroup Global Technology Conference in New York today. He will reiterate the co’s Q3 guidance, provide updates on key topics relevant to the company’s display and telecommunications businesses, and address questions posed by investors. Co reaffirms Q3 guidance for EPS of $0.34-0.37 vs $0.36 consensus; revs $1.525-1.575 bln vs $1.55 bln Reuters consensus. “We have been pleased with the recent movement in the yen to U.S. dollar exchange rate… This positive rate change has been a fairly recent event and we are therefore not changing our guidance at this time. However, if this rate continues for the remainder of the quarter, it could positively impact the company’s third-quarter earnings per share by $0.01.”

DO Diamond Offshore: Friedman Billings cuts ests following fleet status report (108.22 )
Friedman Billings notes they are adjusting their ests lower to account for idle U.S GOM off-hire time and shipyard delays. In light of lower Treasury yields and widening risk premiums on financial instruments, firm sees DO’s yield based on its yearly special dividend payout significantly undervalued. Firm’s 2007 earnings est decreases to $7.10 from $7.16 to account for shipyard delays to prepare the Ocean New Era, Ocean Concord, Ocean Voyager, and Ocean Worker for their new contracts and to account for Ocean Drake’s idle time in the U.S. GOM. Firm’s 2008 est decreases to $11.90 from $11.98 mainly because the new-build, the Ocean Scepter, is now expected to be complete in the second quarter of 2008.

WFR MEMC Elec: Lowering 2H ests on power failure; CY08 and fundamentals unchanged – First Albany (58.33 )
First Albany notes WFR preannounced a rev shortfall and lowered 3Q rev guidance to $475 mln from $500 mln. The co lowered its 3Q margin outlook to flat sequentially versus previous guidance of a 100-basis-point sequential expansion. Firm notes the 3Q shortfall was driven by a week-long production stoppage created by a power failure at MEMC’s Pasadena facility. Firm is lowering their 3Q PF EPS to $0.80 on rev of $475.0 mln from $0.86 on $500.0 mln.

Details on Lehman downgrades of European investment banks
Bloomberg.com reports that European investment banks will take a “material hit” to earnings from writedowns associated with securities related to U.S. subprime loans, Lehman Brothers analysts said in a report. The analysts are predicting post-tax writedowns of at least 15-25% of banks’ “annualized level of first-half 2007 net profit,” they said in a report. They reduced their recommendation on Credit Suisse Group (CS) to “Equal Weight” from”Overweight.” They also cut their recommendation on Deutsche Bank (DB) to “Underweight” from “Overweight.”

CTRN Citi Trends coverage resumed with an Outperform at Cowen (21.66 )
Cowen resumes coverage of CTRN with an Outperform saying they acknowledge CTRN’s recent erratic earnings results due to inadequate control over store payroll and inventory shrinkage. However, they believe these issues are fixable and think management can show progress on both in H2:07. The firm still has confidence that the Citi-Trends concept is relevant to its target demographic, and do not think that CTRN has been experiencing any new store underperformance issue

APLX Cognos to Acquire Applix for $17.87/share in cash (14.37 ) -Update-
Cognos (COGN) and Applix (APLX) jointly announces the execution of a definitive agreement for Cognos to acquire Applix. The planned acquisition is a cash tender offer of $17.87 per share, which equates to approximately $339 mln or $306 mln net of Applix cash on hand. The transaction is subject to the receipt of regulatory approvals and other customary closing conditions. Cognos expects the acquisition to be completed in the fourth calendar quarter of 2007.

AMLN Amylin Pharms: Friedman Billings lowers Byetta ests; bigger drivers approaching though so buy on dips (49.83 )
Friedman Billings is lowering their Byetta sales ests for 3Q and beyond as weekly prescription data suggest flattish sales relative to last quarter; firm’s 3Q est is now $161 mln (down from $170 mln) compared to the Street est of $167 mln. For the year, they are at $632 mln; the Street is at $650 mln. In their new model, rev dips to $773 mln for 2007, which is below guidance of “greater than $800 mln.” Firm believes Byetta–even though it is a great drug–is hitting the wall for a twice-daily injectable. Firm remains strongly bullish on AMLN, however, as Byetta is a secondary driver now, behind both LAR and the obesity pipeline, which have blockbuster potential and are still probably under-modeled.

CIBC provides update to Milan Solar Conference
CIBC notes as usual that one of the hot topic areas remains polysilicon supply. Though they believe that some new poly entrants are on track with their production plans, firm continues to see the shortage at least lasting into mid-09 and believe that WFR will benefit, despite a temporary expansion delay. Lengthy equipment lead times continue to hinder the growth of the industry, but many industry players are excited by the aggressive showing by semiconductor capital equipment giant AMAT with its Sunfab line and potential to reduce wire saw lead times throught the HCT acquisition. They see firm equipments as a key advantage for LDK. Firm continues to favor WFR, LDK, STP, and cell manufacturers who have steady and secure access to raw polysilicon.

MOT Motorola: Expect signs of recovery in Q4 – Credit Suisse (17.20 )
Credit Suisse continues to believe MOT is well positioned for growth and margin expansion through handset cost reductions and accelerating growth in other segments; however, they believe challenges in the handset business are likely to persist through 2007. Firm’s 2007E/2008E EPS est (incl. options) of $0.21/$0.93 remain unchanged. Given firm’s view that channel inventory issues have largely cleared and that new product launches, such as RAZR(2), appear to be on track, they would expect MOT to gain share and improve margins in Q4, which they believe provides greater visibility into a recovery by the end of 2008.

Specialty Apparel: August Same-Store Sales Preview – Nollenberger
Nollenberger expects the teen retailers gained sales momentum in August, but the mature women’s retailers appeared to still struggle. They expects ARO to post an August same-store sales increase of 1-3% vs. a 3.3% increase last year. Firm expects AEO to post an August same-store sales increase of 5-7% vs. an 11% increase last year. Firm expects ANN to report an August same-store sales decrease of 3-5% vs. a 1.9% increase last year. For CACH they expect August same-store sales increase of 3-5% vs. a 3% decrease last year. For PSUN, firm expects August same-store sales increase of 3-5% vs. a 9.4% decline last year.

NICE Systems (NICE) announces that it has been selected by a government agency in the EMEA region to deploy its advanced integrated telecommunication interception and analysis solution. The contract is valued at over $4 mln, which is expected to primarily drive revenues in 2008… Neurogen (NRGN) announces that the US Adopted Names Council, in consultation with the World Health Organization, has approved the nonproprietary name “adipiplon” for NRGN’s wholly-owned drug candidate for treatment of insomnia, NG2-73… Monogram Biosciences (MGRM) announces that the National Heritage Insurance Co has established coding procedures for the co’s Trofile Assay… Columbia Laboratories (CBRX) announces it has entered into an agreement with DesignRxclusive to improve access to Crinone 8% for patients without insurance or whose benefits do not cover this product.

Mortgage Applications
The weekly MBA mortgage applications index was up 1.3% last week, with purchasing applications edging higher by 0.4% and refis climbing 2.3%. The fixed 30-yr mortgage rate was up at 6.42% while the 15-yr & 1-yr adjustable rate mortgage were flat at 6.10% & 5.62%, respectively.

CHS Chico’s FAS Aug same store sales -9.3% vs -6.7% Briefing.com consensus (16.08 )

OSIS OSI Systems reports Q4 results; guides Q1 & FY08 below consensus (25.56 )
Reports Q4 (Jun) earnings of $0.24 per share, includes charges and gains, may not be comparable to the Reuters Estimates consensus of $0.20; revenues rose 21.7% year/year to $152.8 mln vs the $156.4 mln consensus. Co issues downside guidance for Q1, sees Q1 revs of $125-130 mln vs. $137.48 mln consensus; co expects to report a net loss for Q1 vs $0.02 consensus. Co issues downside guidance for FY08, sees FY08 revs of $580-595 mln vs. $600.25 mln consensus.

Upgrades: Morgan Stanley upgrades FEMSA (FMX 35.67) to Overweight from Equal Weight. Downgrades: Morgan Stanely downgrades Neurogesx (NGSX 8.25) to Equal Weight from Overweight. Miscellaneous: CIBC initiates Silicon Motion (SIMO 21.58) with an Outperform and a $28 tgt saying they believe the co as the premier supplier of NAND flash controllers, is both a compelling value and perhaps the best way to play emerging flash markets such as mobile multimedia and S.S.D… CIBC initiates Lululemon Atheltica (LULU 34.96) with an Outperform and a $39 tgt saying they believe LULU is well positioned to replicate its Canadian success in the U.S. market, with a defined niche, adequate infrastructure, and an experienced mgmt team.

PNRA Panera Bread reports August same store sales +3.7% vs +3.5% single estimate (43.59 )

DFC Delta Financial Announces Securitization Backed by $900 Million in Mortgage Loans (5.10 )
Co announced that it has priced a securitization, backed by $900 mln of mortgage loans, through its subsidiary, Renaissance Mortgage Acceptance Corp. — the Renaissance Home Equity Loan Trust 2007-3. “Pricing this securitization was paramount for our Company in light of the rapid deterioration in the credit markets… This securitization removes the majority of the loans from our warehouse lines which greatly reduces our exposure on these facilities. We structured this transaction as a Real Estate Mortgage Investment Conduit (REMIC) gain-on-sale securitization, in which we sold all the bonds and intend to sell the residual interest. As such, we will account for this transaction as a sale and not as a financing.” As expected, the execution on this securitization was materially less favorable than in past quarters, reflecting the highly illiquid market conditions where virtually no mortgage-related securitizations are being consummated or sold. The co expects to obtain better execution on future securitizations based upon the tighter guidelines and considerably higher weighted average coupons for its more recent originations.

MTG MGIC Investment and Radian Group terminate merger (30.34 )
MGIC Investment (MTG) and Radian Group (RDN) jointly announce they have entered into an agreement that terminates their pending merger. The companies cited as the rationale for doing so their mutual agreement that current market conditions have made combining the companies significantly more challenging. Both MGIC and Radian believe it is in their best interests to remain independent companies at this time. All outstanding litigation between the companies will be withdrawn. Neither party made a payment to the other in connection with the termination. RDN will hold a conf call on Sept 5, 2007 at 10:00 am ET to discuss the co’s stand-alone plan.

Miscellaneous: RBC initiates Omniture (OMTR 24.96) with an Outperform… RBC initiates Taleo (TLEO 23.60) with an Outperform… RBC initiates Kenexa (KNXA 29.57) with a Sector Perform… RBC initiates Northstar Neuroscience (NSTR 10.90) with an Outperform… ThinkEquity initiates Keryx Bio (KERX 10.20) with a Buy and a $20 tgt… ThinkEquity initiates Arena Pharma (ARNA 13.75) with a Buy and a $22 tgt… ThinkEquity initiates Hain Celestial (HAIN 29.61) with a Buy and a $36 tgt… ThinkEquity initiates While Foods (WFMI 44.50) with an Accumulate and a $51 tgt… Wachovia initiates Lululemon (LULU 34.96) with a Market Perform saying they believe lululemon has it all — industry-leading productivity, strong operating margins, and significant square footage growth. But with the stock currently trading at 74x their 2008 EPS estimate, expectations are very high.

Upgrades: Bernstein upgrades BP (BP 68.13) to Outperform from Market Perform. Downgrades: Lehman downgrades Credit Suisse (CS 67.35) to Equal-weight from Overweight… Lehman downgrades Deutsche Bank (DB 128.30) to Underweight from Overweight… UBS downgrades Cepheid (CPHD 20.17) to Neutral from Buy… Friedman Billings downgrades Brookline Bancorp (BRKL 12.51) to Market Perform from Outperform and lowers their tgt to $12 from $13, based on valuation and believe acceleration in C&I, jumbo residential real estate and consumer lending products won’t generate earnings sufficient to make shares attractive relative to earnings multiples. Miscellaneous: Citigroup initiates Polo Ralph Lauren (RL 76.66) with a Buy and sets a $94 tgt.. BofA initiates Kilicke and Soffa (KLIC 9.04) with a Neutral and a $9.75 tgt saying order growth is not sustainable.. BofA initiates Colonial Properties (CLP 36.14) with a Neutral and a $38 tgt saying with the $1.8 bln office/retail J.V and outright asset sales complete, Colonial is a much improved and easier to digest predominantly Sunbelt multifamily story with an expertise in developing mixed-use projects that differentiates it from its peers… BMO Capital initiates MF Global (MF 27.10) with an Outperform… Citigroup initiates Domino’s Pizza (DPZ 17.66) with a Buy… Credit Suisse initiates Perfect World (PWRD 23.40) with an Outperform… J.P Morgan initiates Dice Holdings (DHX 9.59) with an Overweight… J.P Morgan initiates ESCO Tech (ESE 34.10) with a Neutral… Morgan Stanley initiates Perfect World (PWRD 23.40) with an Overweight… Piper Jaffray initiates Imclone (IMCL 34.67) with an Outperform and a $40 tgt… Piper Jaffray initiates Elan (ELN 19.48) with a Market Perform.

Upgrades: UBS upgrades Steel Dynamics (STLD 43.55) to Buy from Neutral… Credit Suisse upgrades Infineon (IFX 15.93) to Outperform from Neutral citing the opportunity for revenue growth when the chip maker starts shipping its ultra low cost wireless solution to Nokia in the first half of 2008… Citigroup upgrades ValueClick (VCLK 20.50) to Buy from Hold… J.P Morgan upgrades Tempur-Pedic (TPX 29.50) to Overweight from Neutral based on its innovative product lineup and robust demand trends. … Merrill Lynch upgrades Southern Copper (PCU 108.03) to Neutral from Sell… Merrill Lynch upgrades Century Aluminum (CENX 50.39) to Buy from Neutral… Merrill Lynch upgrades Alcoa (AA 36.41) to Buy from Neutral… Merrill upgrades Alumina (AWC 22.68) to Buy from Neutral… Jefferies upgrades MetroPCS Communications (PCS 28.65) to Buy from Hold and lowers their tgt to $35 from $38, as they believe the potential merger with LEAP could create synergies greater than PCS estimates while the upcoming launches of the L.A. and Auction 66 markets should highlight the significant operating leverage and result in significant FCF… Friedman Billings upgrades Check Point Software Technologies (CHKP 23.65) to Outperform from Market Perform and raises their tgt to $28 from $22, as it appears CHKP is starting to see a reacceleration in business from its strengthened VPN/firewall product portfolio and based on the potential for strong deal flow coming out of the Pointsec front, as the believe the co is positioned to benefit from an anticipated surge in endpoint security spending over the next year

Miscellaneous: Rodman & Renshaw initiates Genaera (GENR 2.80) with a Market Outperform and sets an $8 tgt, based on trodusquemine for the treatment of obesity and diabetes which has shown impressive activity in a number of preclinical models and a Phase II antibody to treat asthma partnered with AstraZeneca… Deutsche Bank initiates Trident Microsystems (TRID 14.81) with a Buy and sets a $23 tgt, based on a leadership position in the digital TV image processing market that should allow the co to deliver strong revenue/earnings growth in CY2007 and CY2008… Deutsche Bank initiates Silicon Image (SIMG 5.90) with a Hold and sets a $6 tgt, as they believe SIMG needs to diversify its product base into integrated solutions despite its leadership position in the discrete digital connectivity market… Deutsche Bank initiates Goodrich (GR 64.31) with a Buy and sets a $73 tgt, as they believe the co is well positioned to benefit from the cycle upturn with its strong and well balanced exposure to the buoyant commercial aerospace sector… Deutsche Bank initiates Boeing (BA 95.92) with a Hold and sets a $104 tgt, as historical correlations between share price and book/bill highlight their view that the easy money has been made in Boeing as a pure cyclical… Morgan Keegan initiates TravelCenters of America (TA 34.80) with an Outperform, based on a fragmented industry that offers significant growth potential, same site sales that should improve and incremental Ebitda growth offered by the Petro acquisition.

Sensex ends down 52pts at 15,414 – The Business Standard
The Business Standard reports the Sensex opened with a positive gap of 70 points at 15,535, and advanced to a high of 15,581 in morning trades. Profit-taking in noon trades saw the index slip into red and exhibit range-bound movement for most of the day. The Sensex attempted to climb back to the day’s high, however, late selling in the market saw the index tumble to a low of 15,411 – down 170 points from the day’s high. The Sensex finally ended (provisional) with a loss of 52 points at 15,414.

Asian stocks slide on subprime concerns; Mizuho Financial drops – Bloomberg.com
Bloomberg.com reports Asian stocks dropped for a second day after comments by a senior Japanese government official reignited concern losses from U.S. subprime mortgages will spread… The Hang Seng Index closed above 24,000 for the first time, paced by Sun Hung Kai Properties, after the Hong Kong government said home sales increased last month… Japan’s Nikkei 225 Stock Average dropped 1.6% to 16,158.54. Markets also fell in Australia, South Korea, Taiwan, Indonesia and Vietnam.

Global stocks, U.S. futures decline; Bradford & Bingley drops – Bloomberg.com
Bloomberg.com reports European and Asian stocks fell, led by banks on concern increasing borrowing costs will hurt profits. U.S. index futures dropped. Europe’s Dow Jones Stoxx 600 Index fell 0.5% to 377.53. National benchmarks dropped in 10 of the 14 western European markets that were open. Germany’s DAX Index lost 0.5%, while France’s CAC 40 slipped 0.7%. The U.K.’s FTSE 100 decreased 0.3%.

COST Costco reports August same store sales +2.0 vs +6.0 Briefing.com consensus; Q4 net sales $20.06 bln vs $20.75 bln consensus (61.61 )

YHOO Yahoo to buy behavioral ad firm for $300 mln – Reuters (23.97 )
Reuters reports Yahoo (YHOO) has struck a deal to buy BlueLithium, the fifth-largest U.S. online ad network, for $300 mln in cash, in the latest move to consolidate the behavioral ad targeting market. BlueLithium is a three-year-old co whose technology tracks consumer behavior as users move from site to site, allowing businesses to deliver more relevant ads.The deal, announced on Tuesday, bolsters Yahoo’s existing behavioral ad-targeting efforts with its 250 mln-strong base of Yahoo Mail users and Yahoo Travel, an analyst said.

YHOO Yahoo to buy behavioral ad firm for $300 mln – Reuters (23.97 )
Reuters reports Yahoo (YHOO) has struck a deal to buy BlueLithium, the fifth-largest U.S. online ad network, for $300 mln in cash, in the latest move to consolidate the behavioral ad targeting market. BlueLithium is a three-year-old co whose technology tracks consumer behavior as users move from site to site, allowing businesses to deliver more relevant ads.The deal, announced on Tuesday, bolsters Yahoo’s existing behavioral ad-targeting efforts with its 250 mln-strong base of Yahoo Mail users and Yahoo Travel, an analyst said.

C Conduit risks are hovering over Citigroup – WSJ (47.21 )
The Wall Street Journal reports banks such as Citigroup (C) could find themselves burdened by affiliated investment vehicles that issue tens of billions of dollars in short-term debt known as commercial paper. The investment vehicles, known as “conduits” and SIVs, are designed to operate separately from the banks and off their balance sheets. Citigroup, for example, owns about 25% of the market for SIVs, representing nearly $100 bln of assets under management. The largest Citigroup SIV is Centauri Corp., which had $21 bln in outstanding debt as of February 2007, according to a Citigroup research report. There is no mention of Centauri in its 2006 annual filing with the SEC. Yet some investors worry that if vehicles such as Centauri stumble, either failing to sell commercial paper or suffering severe losses in the assets it holds, Citibank could wind up having to help by lending funds to keep the vehicle operating or even taking on some losses. Citigroup has told investors in its SIVs (which stands for Structured Investment Vehicles) that they are sound and pose no problems. “Quite simply, portfolio quality is extremely high and we have no credit concerns about any of the constituent assets,” said a recent letter from Paul Stephens and Richard Burrows, directors in Citigroup’s London-based group that oversees the bank’s SIVs. “Citi’s SIVs remain robust and their asset portfolios are performing well.” A Citigroup spokesman declined to comment on the bank’s SIV disclosures or potential exposure that it might face from them. So far, there hasn’t been any suggestion of problems with Citigroup’s SIV or conduit vehicles. Yet recent turmoil in the commercial-paper market, in which some issuers were unable to find buyers for new paper, raised concerns that SIVs and conduits could face problems that would force the banks affiliated with them to step in.

MAT Mattel announces recall of 11 toys as a result of ongoing investigation and product testing (21.97 )
Co announces that, as a result of their ongoing investigation of its toys manufactured by vendors in China, the co has voluntarily recalled 11 toys globally, including eight pet and furniture playsets sold under the Barbie brand and three Fisher-Price toys, due to impermissible levels of lead. No Barbie dolls are included within the recall. In total, there are 522,000 affected toys in the U.S., and 322,000 affected toys outside of the U.S. Mattel has completed the testing program for the majority of its toys, including all of its toys currently sourced from vendors.

RYL Ryland Group’s third-largest institutional holder reduces stake – Barron’s Online (29.67 )
Barron’s Online reports hedge fund Tontine Capital Partners just sold $8.8 mln worth of stock in Ryland Group (RYL). Tontine sold 307K shares at an average price of $28.60 each, according to a filing with the SEC late Friday (see In Play comment here). Tontine now holds just under 10% of Ryland’s stock, or 4.2 mln shares. The new stake represents a 6.8% reduction in the value-oriented investor’s position. Tontine remains Ryland’s third-largest institutional holder, based on data from Thomson’s StreetSight.

NUE Nucor mentioned positively in Weekday Trader – Barron’s Online (52.30 )
Barron’s Online reports EPS at Nucor (NUE) will be boosted by new capacity coming online due to acquisitions, generally low supply inventories across the industry, a recover in steel prices and stock buybacks. America’s “best run steel company” has a track record of posting strong margins and now trades at a discount to peers rather than a premium, says Citigroup metals analyst John Hill. Chief executive Daniel DiMicco expects international development to spur strong demand for all types of commodities for the next 15-20 years, and result in “more good years than bad years” in the cyclical steel industry. A worsening of U.S. liquidity crisis in 2008 could impact customers, but DiMicco says, “We have not seen that yet.” Nucor’s exposure to automotives is less than other U.S. steelmakers and “non-residential [demand] is most definitely helping to offset softness in other markets,” adds DiMicco. He says that Nucor is exporting about 5% of its production to take advantage of overseas prices. U.S. imports make up nearly 30% of U.S. supply and are down roughly 20% this year. Steel prices appear to be bottoming out in these conditions, says Aldo Mazzaferro of Goldman Sachs. Nucor also has a strong balance sheet. Its net-cash position could serve as a catalyst when Nucor makes more acquisitions or continues to buyback stock, says Timna Tanners of UBS. Earnings are expected to fall to $4.99 this year before climbing to $5.48 in 2008. Based on 2008 estimates, Nucor’s EV/Ebitda is roughly 5x compared to peers at 6-7x and takeout premiums for “lesser quality steel and aluminum assets” at 9-10 times,” says Citigroup’s Hill.

‘Mad Money’ Recap: Lightning Round cont. – TheStreet.com

Cramer was bearish on Ingles Markets (IMKTA), Valassis Communications (VCI) Arris Group (ARRS) and American Science and Engineering (ASEI).

‘Mad Money’ Recap: Lightning Round – TheStreet.com
Cramer was bullish on CME Group (CME), Life Partners (LPHI), MasterCard (MA), UnitedHealth Group (UNH), Teck Cominco (TCK), Cisco Systems (CSCO), Sirius Satellite Radio (SIRI), Brush Engineered Manual (BW), Google (GOOG), Apple (AAPL) and L-3 Communications Holdings (LLL).

Cramer’s ‘Mad Money’ Recap – TheStreet.com
On Tuesday’s edition, Jim calls Hewlett-Packard (HPQ) the cheapest big-cap tech stock available. Next, he says Peet’s Coffe & Tea (PEET) could be owned because it is a small rival that can grow rather than be a copycat. He also favors it as a regional-to-national coffe play. He mentions an entry point of up to $25.75. Finally, he suggests Carolina Group (CG) and claims Newport volume could expand and notes the co is close to wrapping up a long-standing class action lawsuit. Once that is completed, the company will be free to use its cash. In the “Sudden Death” segment, Cramer was bullish on United Technologies (UTX), EMC (EMC) and E-Trade Financial (ETFC). He gave a thumbs down to Thornburg Mortgage (TMA).