Data Feed

Gapping up: SCON +25.5%, KRSL +14.2%, FMCN +8.9%, VCLK +6.4%, TSO +3.4%, ICE +3.3%, TGB +3.1%, ARNA +2.4%, CHU +2.1%… Gapping down: CEA -14.7%, HOV -6.7%, LEN -6.5%, LOW -6.1%, MXIM -4.9%, GOLD -4.7%, TGT -4.3%, RTP -4.3%, AAUK -3.8%, LMC -2.9%, RYL -2.9%, KBH -2.9%.

S&P futures vs fair value: -4.3. Nasdaq futures vs fair value: -8.5.
Futures hold steady. Lennar had a worse than expected earnings report. September consumer confidence and August existing home sales are both due at 10:00 ET.

GOOG Google: Europe puts brakes on Google deal – Times of London (568.02 )
Times of London reports GOOG’s $3.1 bln acquisition of DoubleClick, the largest broker of online banner advertising, is likely to be delayed for months by the European Commission, advisors close to the internet search giant believe. The European competition watchdog will decide by October 26 whether to launch a full investigation into the takeover, which would hold up the deal for at least four months. The Commission could block it altogether if the investigation reveals significant competition issues. Advisors close to Google, which already dominates the mkt for search-based advertisements, believe that the DoubleClick case will rest on whether online advertising is judged to be a distinct market or part of a broader landscape that includes print, television and radio.

JMP Securities says after 3 quarters of spotty performance, their due diligence suggests that RightNow Technologies (RNOW 14.84) is finally primed to have a good quarter in 3Q and possibly 4Q as well. Their due diligence also suggests that RightNow may have won a multi-million dollar deal against salesforce.com (CRM) this quarter…. Wachovia says while they do not expect Zimmer Holdings’ (ZMH 81.49) new products to drive market share gains, they think these premium priced products should support a positive mix shift within ZMH’s existing surgeon base. The firm thinks new products, combined with exchange rates (the dollar’s recent weakness helps ZMH’s top line), means potential for upside to their estimates… Ferris Baker raises their F5 Networks (FFIV 38.00) tgt to $42 from $40. They expect the co to remain somewhat controversial, but prefer to be constructive because they think the longer term opportunity includes continued industry leadership and growth in new applications, especially with service providers as demand increases for Internet multimedia subsystems. For this reason they have added Acme Packet (APKT) to their comparative valuation table.

GM dealers seen able to weather short-term strike – Reuters
Reuters reports GM dealers said on Monday the United Auto Workers strike should have little short-term impact on showroom sales since inventories of most vehicles were running high before the work stoppage. “GM inventories are such that we don’t expect any short-term disruption,” said Marc Cannon, a spokesman for Fort Lauderdale, Florida-based AutoNation (AN), the largest GM dealer in the United States, with 72 franchises in 16 states. Peter DeLongchamps, vice president for manufacturing and communications at Houston-based Group 1 Automotive (GPI), said with inventories on GM vehicles running at between 70 and 100 days, “We have vehicle availability to weather a shutdown for 45 to 60 days at least.” A longer strike would concern dealers, said Paul Taylor, chief economist for the McLean, Virginia-based National Automobiles Dealers Association, which represents 93% of all U.S. auto dealers.

NETL NetLogic: Well positioned to exhibit strong growth in 2H07 – Caris (34.95 )
Caris reiterates their Above Average rating on NETL as their recent checks leave them incrementally bullish on the Company’s near and long term fundamentals. With the CSCO segment likely to trough in the Q3 timeframe and firm’s industry inputs pointing to continued momentum in non-CSCO business, they believe NETL is well positioned to exhibit strong growth in 2H07. Longer term, a combination of big picture growth drivers and new product cycle ramps make NETL a unique growth story within our small cap semiconductor universe.

Chinese govt to overhaul the telecommunication industry, according to reports – Bloomberg
Bloomberg reports China’s National Audit Office will collect operational data from telecommunication companies including China Telecom (CHA) and China Netcom (CN) from next month, National Business Daily reported on its Web site today, without citing anyone. The audit office will submit a report to China’s State Council that will be used as a blueprint for the govt’s plan to reorganize the industry, according to the newspaper. “The latest media report has driven renewed speculation that the government may speed up plans to restructure the industry,” said Marvin Lo, a Hong Kong-based analyst at Daiwa Institute of Research. “Any restructuring may favor the fixed- line companies as they may gain entry into the mobile-phone market.” (CHA and CN gained in Hong Kong trading

Bond Watch: Pulled Higher
The market went on a tear higher overnight as bonds were pumped up globally by weak Euro data pushing investors off the fence after 2 weeks of correcting. Add in soft retail sales speculation & a pinch of credit fear & the day is off to a good start for treasuries. The 2-10-yr yield spread blew back out to 60.6 as curve trade winds back up the steepeners ahead of data. Bond prices in the EuroZone were boosted by weak German business confidence numbers while in Japan, bonds are still down as equities try to hold their gains. Treasuries will check back in on some housing reports today but only to confirm the downward spiral is still in effect. Consumer confidence may get some attention as trade is watching for that pillar of economic support to erode just in time for the holiday shopping season. The dollar is off on the euro & yen & most of the majors heading into the day’s data, with the euro trying to sustain its run through 1.41. Gold has slid from its recent highs with spot now 724.94 (-5.66). Crude has also dropped running 80.01 (-0.94) as weather threats abate. The day’s data have consumer confidence & existing home sales (10), Fed-speak offers just Philly’s Plosser late. The euro is at 1.4108 & the yen is at 114.3200 while the 10-yr is +13/32nds yielding 4.575%.

Buyers: Healthstream (HSTM 2.74) Director bought 20K shares at $3.00… TSR (TSRI 4.50) CEO bought 11,600 shares at $4.27… Smithfield Foods (SFD 29.65) Director bought 315K shares at $29.93… Credit Acceptance (CACC 23.40) 10% Owner Prescott Associates bought 36,400 shares at $23.38… Citizens Communications (CZN 13.66) Chairman bought 15K shares at $13.80… B&G Foods (BGS 13.40) Officer bought 3K shares at $13.36… International Coal (ICO 4.18) 10% Owner Fairfax Financial bought 499,100 shares at $4.15… Dover Motorsports (DVD 6.35) 10% Owner Cibelli Capital Mgmt bought 24,400 shares at $6.31… Burlington Northern (BNI 80.89) 10% Owner Berkshire Hathaway bought 6K shares at $79.97… IncrediMail (MAIL 8.90) 10% Owner Longview Fund bought 100K shares at $8.52… NetSol Technologies (NTWK 2.65) CEO bought 10K shares at $2.50… Hedgehog Capital discloses 6.8% stake in Accredited Home Lenders (LEND 11.68) in SC 13G… Sellers: Flowers Foods (FLO 21.80) Chairman sold 259,048 shares at $22.35… American Software (AMSWA 9.17) Director sold 10K shares at $9.33… SIMTEK (SMTK 3.76) CEO sold 35K shares at $3.92… VSE (VSEC 50.50) Director sold 14,019 shares at $49.50… Nalco (NLC 28.20) former Chief Operating Officer sold 37,500 shares at $28.12… OSI Systems (OSIS 22.16) CEO sold 70K shares at $22.09… PAETEC (PAET 12.50) Officer/Director sold 250K shares at $12.79… Amtech Systems (ASYS 13.28) CEO sold 84,455 shares at $13.50… LSB Industries (LXU 24.23) 10% Owner Jayhawk Institutional Partners sold 394,732 shares at $23.56.

ACN Accenture: 4Q07 preview; tgt cut to $44 – Stifel (39.40 )
Stifel notes ACN scheduled to report 4Q07 results after the close Thursday. Firm is modestly raising their ests for the quarter, and modestly reducing their FY08 ests and target price on the shares ($44 from $48) assuming a slightly lower multiple to build in some conservatism given recent market turmoil and concerns about macro growth. Firm believes co’s contract signings, particularly in consulting, will be strong again in F4Q0

STP Suntech Power introduces new all black solar module for the U.S. solar homes market (42.19 )
Co announces the introduction and availability of a new all black solar module targeting the U.S. market for solar homes. STP’s new M.S.K. Black Label product will be unveiled on Sep 25 at the Solar Power 2007 Conference and Expo and will be available for sale for delivery in 2008. STP’s MSK Black Label is a 170 watt solar module designed to be installed on the standard American home.

GILD Gilead Sciences: More news on the horizon – BWS Financial (39.77 )
BWS Financial notes GILD has Phase IIb trial date of Darusentan for resistant hypertension published in the Journal of Clinical Hypertension. The successful conclusion of the trial led GILD to initiate Phase III trials. This is the first time that the specific trial data is released. Firm anticipates GILD reporting Phase I trial data of GS 9190 for hepatitis C virus in the coming week along with news of initiating a Phase I cancer trial for GS 9219. Firm would not be surprised to see GILD use some of the cash flow that the co is generating to add to the co’s R&D pipeline by the first quarter of 2008.

MT Mittal in $35 bln global expansion push – FT (77.17 )
FT reports the co is to spend $35 bln adding to the capacity of its steelmaking plants around the world, Lakshmi Mittal, the company’s chief executive and main owner, said on Monday. Mr Mittal said the spending plans, which have a focus on adding steel capacity in India, were justified by strong demand for steel in most countries. The recent credit problems that have affected banks and financial markets were having “no impact” on the majority of his customers. He said the one country where steel demand was noticeably weak was the US. However, this would have a limited effect on Arcelor Mittal, the world’s biggest steelmaker, since only about a fifth of its steel was sold there.

FIG Fortress unit moves to cut subprime links – FT (20.75 )
FT reports a subprime mortgage unit of the co is to stop buying loans originated by brokers as it scales back its operations in response to the US mortgage crisis. The move by Nationstar Mortgage, a wholly owned unit of FIG, raises questions over what role hedge funds and other relatively new entrants to the mortgage business will play in the mkt as a result of the subprime crisis.

BSX Boston Scientific: Wachovia comments on ICD market, believes August was a tough month for BSX (14.11 )
Wachovia believes August was a tough month for BSX that could signal risk to the firm’s market share estimates. They note that BSX gave up 300 bps of market share in August, and BSX’s share in their survey has been >200 bps below its 12 month average in two of the last three months. They think MDT was the main beneficiary in August, gaining 170 bps, while STJ gained about 90 bps. They say BSX will likely not have a new ICD platform on the market for ~12 months in Europe and ~18 months in the U.S., and they model >100 bps of WW market share loss over the next 18 months for BSX. They are also concerned that BSX’s plan to unveil its cost cutting program in 4Q07 is creating uncertainty among its employees and may increase turnover and reduce productivity over the next few months.

FMCN Focus Media files delayed Form 20-F; co completed previously disclosed investigation into allegations (48.50 )
“As a result of the Audit Committee investigation of allegations raised by attorneys representing an anonymous investor, we failed to timely file our 2006 annual report on Form 20-F. The unnamed investor, described as currently holding a short position in our ADSs, alleged that: (a) Everease, a company previously run by Focus Media’s founder and CEO, Jason Jiang, is a related party as a result of ongoing ties between Everease and Mr. Jiang and members of Mr. Jiang’s family; and (b) Focus Media was making undisclosed rebate payments to a third-party advertising agency through Everease in order to inflate Focus Media’s reported financial performance… On September 25, 2007, the Audit Committee completed its previously disclosed investigation into allegations made by U.S. Counsel to an investor described as holding a short position in our stock. The results of the investigation have been discussed with our independent Registered Public Accounting firm. Based upon its review of the evidence, the Audit Committee concluded that nothing had come to its attention – apart from the initial allegations that gave rise to the investigation – that would cause the Audit Committee to believe that we made undisclosed rebate payments to a third party advertising agency through another advertising agency, namely, Everease. We have informed the investigators that we have concluded that Everease is a related party based upon information developed during the investigation. Based upon its review of the evidence, the Audit Committee concurs with our conclusion that Everease should be deemed a related party.”

Rising costs could sap steelmakers’ profits – WSJ
WSJ reports the world’s steelmakers could face significantly higher costs next year as raw-materials prices rise, threatening the industry’s string of big profits if it can’t successfully pass on the costs to industries ranging from car makers to construction. The industry is set to begin talks next month with big producers of iron ore, a crucial ingredient for steelmaking, over next year’s prices. The group is set to demand a 50% price increase, compared with the 9.5% increase last year. If they gain most or all of that increase, that could hurt profit margins for steel producers already contending with higher prices for coal and coke, also used to make steel. Analysts forecast a 10% increase on most grades of steel. Steelmakers also may have to eat some of the higher costs. The cost pressures also could prompt more consolidation. Talks between Chinese steelmakers and iron-ore producers are expected to begin in early October, and are likely to set the pattern for the industry. Some steelmakers are better insulated than others against higher raw-material prices. X has its own iron-ore and coke supplies for its U.S. steel plants. Some steelmakers are trying to minimize their dependence on iron-ore providers. MT supplies about 47% of the iron ore it uses.

NILE Blue Nile: Initiation details (100.23 )
CIBC initiated NILE with a Sector Perform, saying the co’s strong position as the leading online retailer of engagement rings coupled with an attractive FCF-generating business model should mean the co achieves growth above the industry average. The firm sees well-capitalized online players like Amazon.com (AMZN) and traditional retailers like Tiffany (TIF) as potential threats to NILE’s growth trajectory.

LOW Lowe’s: Update on FY07 guidance; macro pressures remain in place – Wachovia (30.55 )
Wachovia notes LOW’s CEO Niblock’s basic message was that the recent weakness in fall outdoor categories like lawn & garden, nursery, etc. represented an incremental pressure point to the business beyond the already well known macro pressures. He did note, however, that the mid-single digit EPS growth outlook for FY08 was not materially different from a month ago, suggesting that broader trends in the business have remained consistent. Firm continues to believe macroeconomic pressures remain in place over the next few quarters. Reduced expectations for FY08 and an easing Fed should offer a level of support, and they would view prices in the mid-$20’s as offering attractive risk/reward.

VCLK ValueClick: Jon Najarian on CNBC highlights recent options activity in stocks that coincided with rumors (22.00 )
Jon Najarian on CNBC highlights recent call buying in VCLK, noting the stock could be seen as a takeover tgt, possibly by TWX. He also discusses unusual call buying in DGX, thinks the stock could go into play. Notes buying in the Oct 60 & 65 calls, indicating a takeout price, if there is one, north of $70/share. (Briefing.com note: See OPTNX comments in archive for further color on the options activity in these stocks)

ABT Abbott Labs expects stent review in November – Chicagotribune.com (53.86 )
Chicagotribune.com reports that Abbott Laboratories (ABT) on Monday said it is working with the FDA to schedule an advisory panel review Nov 29 for the co’s Xience drug-coated stent heart device. Any panel recommendations and follow-up decision from the FDA would also cover the Promus coated stent made by Boston Scientific (BSX) because Promus and Xience are the same device, but are sold under different labels. BSX shares Promus profit with ABT through an agreement reached last year when the two cos bought parts of Guidant Corp. The scheduling of the FDA panel review will depend on the availability of panel members, which ABT expects to be confirmed in the next few weeks, ABT spokeswoman Kelly Morrison said. ABT disclosed earlier this month that the FDA planned to schedule an outside panel of experts to review the Xience device, but did not know the timing. In a note to investors Monday, Morgan Stanley analyst Glenn Reicin called the potential Nov 29 panel date “a clear positive for Abbott, in our view, as it secures the company’s guidance” for a U.S. launch in the first half of next year. The news should also put to rest investor fears that the FDA might require longer-term follow up data on Xience, Reicin said.

GM GM, UAW set to talk as strike impact spreads – CNN (34.74 )
CNN reports negotiators from the United Auto Workers union and GM are due back at the negotiating table Tuesday morning, as the impact of the strike is expected to start spreading to other workers the day after 73,000 union members went on strike against the nation’s largest automaker. With the auto industry buying most of its parts on a just-in-time basis, it won’t take long for the shutdown of 80 GM plants and parts centers spread across 30 states to start to spread to suppliers large and small, impacting mlns of workers across North America.

ADTN ADTRAN: Preannounces flat Q3 on weak Telco capex trends; lowering ests and tgt to $25 – FBR (22.84 )
Friedman Billings cuts their tgt to $25 from $29 after the co reduced its rev and EPS guidance for Q3 to flat sequential performance. Firm notes this contrasts to mgmt’s prior guidance of 3Q rev growth comparable to that in recent years, which to them suggested a sequential increase of 8%-10%. Adtran’s preannouncement comes amidst a host of data points from the market, reflecting a weak capex recovery across most large domestic carriers. Chief among these are the key parts of AT&T to which Adtran has leverage – the former BellSouth and Cingular units. In general, firm remains optimistic regarding ADTN’s IP data, optical networking, and enterprise routing opportunities for 2008-2009.

Credit Suisse initiates the restaurant sector with a Market Weight
Credit Suisse initiates the restaurant sector with a Market Weight sayng valuations across the industry look inexpensive, balance sheets are healthy, free cash flows strong, capital allocation is improved, and return outlooks are largely positive. However, to reflect the limited usefulness of a macro call when investing in the sector—as attractive and unattractive opportunities always exist even in menu categories and service levels that are out of in or out of favor they rate the sector a Market Weight. The firm initiates The Cheesecake Factory (CAKE) tgt $32, CKE Restaurants (CKR) tgt $22, Jack In The Box (JBX) tgt $82, Ruby Tuesday (RT) tgt $30, and Texas Roadhouse (TXRH) tgt $16.50, with Outperforms… The firm also initiates McDonald’s (MCD) tgt $58 and Sonic Corp (SONC) tgt $27, with Neutrals… They also initate P.F. Chang’s China Bistro (PFCB) with an Underperform and a $38 tgt.

Dollar declines against Yen, Euro before U.S. Home Sales Report – Bloomberg.com
The dollar weakened against the yen and fell to within a cent of a record low versus the euro before economic reports (due out at 10:00 am E.T.) that may add to evidence U.S. growth is losing momentum. The dollar dropped against 11 of 16 of the most-actively traded currencies before reports forecast to show falling U.S. home sales and consumer confidence. The data may stoke bets the Federal Reserve will cut interest rates for a second time this year, reducing the appeal of holding U.S. assets. The dollar fell to 114.42 yen as of 7:16 a.m. in New York, from 114.86 late yesterday. Against the euro, it traded at $1.4093, having declined to a record low of $1.4130 yesterday.

IRE Bank of Ireland sticks to full-year guidance – Reuters (67.67 )
Reuters reports the co stuck to its full-year earnings guidance on Tuesday, saying the impact of recent mkt turmoil had been modest during the first half of its business year which runs to the end of September. “The financial impact of this will be modest in our current half-year reporting period,” IRE said in a trading statement. The co, which described its capital and funding positions as strong, said it expected to report underlying first-half earnings per share (EPS) growth of about 10% when compared with the 73 cents reported a year earlier. Excluding from last year’s profit numbers the contribution from broker Davy, which Bank of Ireland sold last October, first-half EPS growth would be about 13%, while underlying pretax profit would be up about 15% year-on-year. For the full year Bank of Ireland said business trends remained strong, though guidance on its likely final result would depend on the impact of any further prolonged volatility in the financial mkts. “Subject to this, we re-affirm previous guidance of delivering low double digit underlying EPS growth for the year to 31 March 2008,” Bank of Ireland said.

Upgrades: Merrill upgrades Heidrick and Struggles (HSII 35.61) to Neutral from Sell… Morgan Stanley upgrades Nokia (NOK 36.56) to Overweight from Underweight. Downgrades: BB&T downgrades Corn Products (CPO 47.76) to Hold from Buy. Miscellaneous: UBS initiates Nvidia (NVDA 35.37) with a Neutral and a $37 tgt.

Downgrades: J.P Morgan downgrades Marsh McLennan (MMC 24.80) to Neutral from Overweight… Merrill downgrades Denbury Resources (DNR 45.15) to Neutral from Buy… Bear Stearns downgrades Food stocks to Market Weight from Overweight, the firm also downgrades Deen Foods (DF 25.76) and Kellogg (K 55.73) to Peer Perform and Outperform… Friedman Billings downgrades ARRIS Group (ARRS 11.98) to Market Perform from Outperform and lowers their tgt to $15 from $20, as they expect the market to view the CCBL acquisition as dilutive in the near term, rather than accretive on a cash basis, gross margins should remain under pressure on a less favorable mix that could persist until DOCSIS 3.0 gear begins to ramp and see further margin pressure as Arris aggressively bids to gain share for its CMTS ahead of cable’s adoption of DOCSIS 3.0 technology. Miscellaneous: CIBC initiates Blue Nile (NILE 101.01) with a Sector Perform saying at these levels they believe the shares are fairly valued… CIBC initiates Getty Images (GYI 26.55) with a Sector Perform saying the co has created the leading marketplace for stock photography (about a $3 bln mkt worldwide). However, the business model is in transition, and they believe earnings visibility is limited at this time.

DFS Discover Financial Services beats by $0.04 (22.26 )
Reports Q3 earnings of $0.42 per share, $0.04 better than the Reuters Estimates consensus of $0.38. CEO says, “Discover achieved strong results this quarter, driven by record quarterly sales volume, continued growth in card receivables and sound credit quality. Our third quarter performance reflects our commitment to achieving continued growth in balances and transaction volume while remaining unrelenting in our focus on credit risk management. In addition, we’ve made significant gains in one of our most important strategic initiatives through agreements with merchant acquirers, which will enable us to increase acceptance of Discover Network cards

PLCM Polycom upgraded to Buy at Kaufman- tgt $34 (26.93 )
Kaufman upgrades PLCM to Buy from Hold with a $34 tgt saying they believe the current weakness has created an attractive opportunity. In addition to a compelling valuation, the firm feels Polycom remains the leader in video conferencing, which they expect to exhibit strong growth over the next several years, and is well positioned to continue to capitalize upon this growth.

Downgrades: J.P Morgan downgrades Marsh McLennan (MMC 24.80) to Neutral from Overweight… Merrill downgrades Denbury Resources (DNR 45.15) to Neutral from Buy… Bear Stearns downgrades Food stocks to Market Weight from Overweight, the firm also downgrades Deen Foods (DF 25.76) and Kellogg (K 55.73) to Peer Perform and Outperform… Friedman Billings downgrades ARRIS Group (ARRS 11.98) to Market Perform from Outperform and lowers their tgt to $15 from $20, as they expect the market to view the CCBL acquisition as dilutive in the near term, rather than accretive on a cash basis, gross margins should remain under pressure on a less favorable mix that could persist until DOCSIS 3.0 gear begins to ramp and see further margin pressure as Arris aggressively bids to gain share for its CMTS ahead of cable’s adoption of DOCSIS 3.0 technology. Miscellaneous: CIBC initiates Blue Nile (NILE 101.01) with a Sector Perform saying at these levels they believe the shares are fairly valued… CIBC initiates Getty Images (GYI 26.55) with a Sector Perform saying the co has created the leading marketplace for stock photography (about a $3 bln mkt worldwide). However, the business model is in transition, and they believe earnings visibility is limited at this time.

Miscellaneous: UBS initiates Homebuilder stocks with a Pessimistic view, the firm initiates KB Home (KBH 25.74) and Centex (CTX 25.80) with Buys, UBS also initiates Ryland (RYL 22.64), Meritage (MTH 15.15), and Hovnanian (HOV 11.00) with Neutrals, UBS initiates Beazer Homes (BZH 9.06), Pulte Homes (PHM 15.10), DR Horton (DHI 13.56), Standard Pacific (SPF 7.05), and Lennar (LEN 24.18) with Sells… Jefferies initiates Network Appliance (NTAP 27.27) with a Hold and sets a $28 tgt, as they see slower traction of new products based on GX operating system and increasing competition in the mid-range market while significant exposure to financial vertical remains a near-term concern… Jefferies initiates EMC (EMC 20.51) with a Buy and sets a $25 tgt, as the co’s broad portfolio is aligned with long-term growth drivers in the storage industry while restructuring and new product cycles in the core information storage business should generate double-digit growth in operating profits… Piper Jaffray initiates Simcere Pharma (SCR 15.00) with a Market Perform… Raymond James initiates FPIC Insurance (FPIC 42.20) with an Outperform… RBC initiates Gardner Denver (GDI 37.21) with a Sector Perform and a $39 tgt… RBC initiates Red Hat (RHT 19.00) with a Sector Perform and a $22… Stanford initiates Knot (KNOT 21.23) with a Hold.

SGR Shaw Group awarded spent fuel storage system engineering services contract by FirstEnergy (57.88 )
Co announces its Nuclear Division of the Shaw Power Group has been awarded an engineering services contract by FirstEnergy Nuclear Operating Co, a subsidiary of FirstEnergy (FE), to expand the used nuclear fuel storage capacity at its Perry Nuclear Power Plant in northeast Ohio. The value of Shaw’s contract, which will be included in the co’s first quarter fiscal year 2008 backlog, was undisclosed.

AMGN Amgen Dahanca 10 study results presented at ECCO annual meeting; also says new biomarker data links KRAS gene to Vectibix (55.29 )
Co announces the analysis of the Aranesp Danish Head and Neck Cancer (DAHANCA) 10 study presented by investigators from the Dahanca study group in the Presidential Session at the 14th European Cancer Conference in Barcelona, Spain. As previously communicated, the trial was stopped on Nov. 28, 2006, due to futility following an interim analysis, which showed low likelihood that the Aranesp arm would demonstrate improved outcomes… The study investigators completed their analysis of the data in July 2007 and have concluded that patients with primary HNSCC who were treated with Aranesp had significantly poorer tumor control after radiotherapy. Of 515 patients eligible for analysis, the results demonstrated a poorer outcome with Aranesp treatment in 5-year loco-regional control (56 percent with Aranesp versus 69 percent for the control group; RR: 1.44 (1.06-1.96), p=0.02), the primary endpoint for the study. There were no significant differences in overall survival (RR: 1.28 (0.98-1.68), p=0.08), the risk of developing distant metastases or in non-cancer related deaths. There was also no enhanced risk of cardiovascular events observed in the Aranesp arm. Systematic imaging was not applied in this study. Instead, the study relied on clinical methodology for detection of disease persistence or recurrence. This method is not the U.S. or European regulatory standard for assessing disease progression in HNSCC… The co also announced the results of a biomarker analysis that supports KRAS as a predictive clinical biomarker that could be used to select patients who are more likely to respond to treatment with Vectibix monotherapy.

Upgrades: Merrill Lynch upgrades Korn/Ferry (KFY 16.58) to Neutral from Sell… J.P Morgan upgrades Sonic Solutions (SNIC 8.89) to Overweight from Neutral… JP Morgan upgrades GOL (GOL 22.54) to Neutral from Underweight… JP Morgan upgrades TAM (TAM 24.99) to Neutral from Underweight. Downgrades: Merrill downgrades Mercadolibre (MELI 41.06) to Neutral from Buy… JP Morgan downgrades Paccar (PCAR 87.96) to Neutral from Overweight… Bear Stearns downgrades Cadbury Schwepps (CSG 46.33) to Underperform from Peer Perform… Bear Stearns initiates Dow Chemical (DOW 44.00) with a Peer Perform… Oppenheimer downgrades Michael Baker (BKR 51.57) to Neutral from Buy, as they see insufficient upside potential in shares even with a sale of the energy business as announced while noting the signs of potential indecision by the board, and possible staff defections due to the uncertainty… Friedman Billings downgrades C-COR.net (CCBL 12.02) to Market Perform from Outperform and cuts their tgt to $13.75 from $16 based entirely on the proposed $730 mln acquisition by Arris Group. The firm says on one hand, they view Arris’ $13.75/share offer as fair, as it is in line with historical public company M&A valuations. On the other hand, they say the offer price is below their prior 12-month price target of $16, which they had based on potential EPS upside in CY08 and beyond from a ramp in high-margin solutions business.

Upgrades: Deutsche Bank upgrades Westwood One (WON 2.98) to Buy from Hold and lowers their tgt to $3.50 from $4.00, based on a likely new CBS deal, feasibility of sale to private equity and signs that at least the network business is turning up… Baird upgrades Briggs & Stratton (BGG 26.04) to Neutral from Underperform and maintains their $29 tgt, based on valuation. Downgrades: JMP Securities downgrades Broadcom (BRCM 36.52) to Market Perform from Outperform, based on valuation. Miscellaneous: BofA initiates EMC (EMC 20.51) with a Buy and sets a $24 tgt, based on a core business that will benefit from the product cycle and penetration of new market segments and solid revenue growth prospects at VMW and potential for margin upside… BofA initiates Network Appliance (NTAP 27.27) with a Neutral and sets a $28 tgt, based on concerns over revenue growth slowing, increased competition and risks associated with high options expense… Oppenheimer initiates Consolidated Communications Holdings (CNSL 18.99) with a Buy and sets a $24 tgt, based on the co aggressively marketing video service, with a full product range including over 100 channels, high definition and DVR capability… Oppenheimer initiates AspenBio Pharma (APPY 6.87) with a Buy and sets a $16 tgt, as the co is currently seeking FDA approval for a novel appendicitis screening test, AppyScore, and the firm expects this test to be commercialized in ‘08.

Sensex rebounds, up 35pts – The Business Standard
The Business Standard reports the Sensex has rebounded into the positive zone and is now up 35 points to 16,880… Out of 2,806 stocks traded so far, 1,697 have declined, 1,049 have advanced and 60 are unchanged.

Asian stocks advance, led by BHP; Toyota climbs on GM strike – Bloomberg.com
Bloomberg.com reports Asian stocks rose to a two-month high, led by BHP Billiton and Sumitomo Metal Mining, after prices of copper, nickel and zinc gained. The Nikkei 225 Stock Average gained 0.6% to 16,401.73 in Japan, where exchanges were shut yesterday for a holiday. Markets in South Korea and Taiwan were closed for a second day. Benchmarks retreated from records in Hong Kong, China and India. They fell elsewhere, except in Australia, New Zealand, Malaysia and the Philippines.

European stocks, U.S. futures decline; Total, Home Depot drop – Bloomberg.com
Bloomberg.com reports European stocks fell for a second day as a retreat in crude prices pushed energy shares lower and mining companies snapped a five-day rally. U.S. index futures also dropped… National benchmarks fell in all of the 17 western European markets that were open. France’s CAC 40 lost 0.8%. Germany’s DAX dropped 0.7%, as did the U.K.’s FTSE 100. The Stoxx 50 declined 1%, while the Euro Stoxx 50, a measure for the euro region, retreated 0.8%.

JRJC China Finance Online raises Q3 revenue guidance; issues FY08 revenue guidance above consensus (26.23 )
Co raises Q3 revenue guidance to to $7.1-7.5 mln vs $6.75 mln single estimate, prior guidance $6.7-7.1 mln. Co sees FY08 revs $45-51 mln vs $40.87 mln consensus.

LEN Lennar reports Q3 results (24.18 )
Reports Q3 (Aug) earnings of ($3.25) per share vs the Reuters Estimates consensus of ($0.55); revenues fell 44.0% year/year to $2.34 bln vs the $2.3 bln consensus. Stuart Miller, President and Chief Executive Officer of Lennar Corporation, said, “It is already well documented that the housing market has continued to deteriorate throughout our third quarter. Heavy discounting by builders, and now the existing home market as well, has continued to drive pricing downward. Consumer confidence in housing has remained low, while the mortgage market has continued to redefine itself, creating higher cancellation rates.” Mr. Miller continued, “Our response to, and primary focus in, this environment continues to be to adjust pricing to meet current market conditions in order to keep inventories low and to keep our balance sheet positioned for the future. The net effect has been a continued deterioration of our net margin and accordingly, higher impairments to our inventory.” We also have, and continue to, reduce overhead to be ‘right-sized’ for new and anticipated lower volume levels. While it has been challenging to stay ahead of rapidly adjusting market conditions and resulting revenue reductions, we have reduced our workforce to date by approximately 35% and expect continued reductions in the fourth quarter.” Mr. Miller concluded, “The combination of moving our stated inventory to current market valuations, ‘right-sizing’ our overhead to reduced volume levels and a stabilization of market conditions should ultimately bring us back to profitability.”

BP BP shares hit ahead of “dreadful” results – Financial Times (71.24 )
The Financial Times reports Tony Hayward, BP’s (BP) new chief executive, has prepared staff for a far-reaching shake-up of co as he delivered a blunt warning that Q3 revenues would be “dreadful”. Mr Hayward told a staff meeting in Houston he would be announcing a streamlining of the company’s organization next month, the Financial Times has learnt. He said that BP’s financial performance was at its lowest since the crisis of 1992-93. The remarks were made to a “town hall” meeting and summarised by a BP manager in a note circulated to colleagues under the heading “BP Confidential”. Mr Hayward blamed the under-performance relative to BP’s competitors on missing revenues from the Texas City and Whiting refineries in the US and from big production projects that have not yet started operation. Mr Hayward went on to say that Q4 would improve BP’s revenues, however, as it picks up 250,000 barrels per day of production from the start of Atlantis, as well as Greater Plutonio in Angola, Mango in Trinidad and smaller Gulf of Mexico projects. He added that the Texas City and Whiting refineries should be at full capacity by the year’s end, according to the note, although the co has said they will not be operating at that capacity until next year.

JNJ Johnson & Johnson’s risky tactic fails in patent fight – NY Times (65.20 )
The NY Times reports Johnson & Johnson (JNJ) was rebuffed yesterday in an attempt to gain the upper hand in a patent case in which its lawyers tried a high-risk tactic: highlighting safety concerns about the co’s own product. The lawyers hoped to persuade a federal judge in Delaware that because Johnson & Johnson’s drug-coated Cypher stent had been linked in clinical studies to blood clots, it fell outside the safety profile of a Boston Scientific (BSX) patent. That position appeared to contradict Johnson & Johnson’s repeated assertions in its communications with doctors and the public in the past year that Cypher is no more likely to induce clots than older bare-metal stents. And it did the company no good. Judge Sue L. Robinson refused to throw out a jury verdict that the Cypher, made by the Johnson & Johnson subsidiary Cordis, infringed on a Boston Scientific patent covering drug coatings. She also upheld a jury verdict against Johnson & Johnson in a separate patent case involving the design of the underlying metal stent. The Johnson & Johnson motion reflected the complexity of the legal maneuvering the companies have tried after back-to-back jury trials two years ago left them in a legal standoff. The juries decided that each company had infringed patents owned by the other. Follow-up trials in which potential damages were to be weighed have been postponed while the two companies sought to overturn the infringement verdicts. Judge Robinson made all the verdicts final yesterday. Both companies said last night that they would now proceed to appeal the verdicts against them to the U.S. Court of Appeals for the Federal Circuit in Washington. In the motion related to drug coatings on which Judge Robinson ruled yesterday, the goal of the Johnson & Johnson lawyers was clear enough — the Boston Scientific patent covers stents with a “non-thrombogenic” coating, that is, a coating that does not cause clots. Thus, evidence that Cypher has a significant clotting problem might suggest it does not infringe on the patent.

BWA A green ride for investors? – WSJ (86.01 )
The Wall Street Journal reports just as suppliers making antilock brakes and air bags benefited from more-stringent safety standards years ago, companies focused on products such as advanced exhaust systems, more-efficient diesel engines and turbochargers could boost their top lines in the years ahead amid concerns over global warming and dependence on foreign oil. That could be good news for stock investors. One of the biggest potential winners: BorgWarner (BWA). The co’s portfolio is dominated by parts that improve vehicle efficiency, including emissions-curbing exhaust gasoline-recirculation systems, variable cam timing for engines and turbochargers for diesel engines. BorgWarner’s stock could balloon to $105 by year’s end and as high as $136 by 2010, said Joseph Amaturo, a Buckingham Research Group analyst who has a “strong buy” rating on the supplier’s shares. Near term, Mr. Amaturo said, the supplier is insulated from a sales downturn at U.S. auto companies — Detroit’s Big Three account for only 17% of BorgWarner’s annual sales — and is well positioned to take advantage of stricter fuel-economy rules. “Almost everything that company does is aimed at making cars cleaner and more fuel efficient,” said John Casesa, managing partner of Casesa Shapiro Group, an auto-industry advisory firm. “It’s very hard to find a company that is a pure play on these themes. BorgWarner would be one of them.”

‘Mad Money’ Recap: Lightning Round cont. – TheStreet.com
Cramer was bearish on Headwaters (HW), XM Satellite Radio (XMSR), Tribune (TRB), Blockbuster (BBI), Cummins (CMI), Fossil (FOSL), CIT Group (CIT), Amgen (AMGN), Arcelor Mittal (MT) and China Finance Online (JRJC).

‘Mad Money’ Recap: Lightning Round – TheStreet.com
Cramer was bullish on SunPower (SPWR), Sirius (SIRI), Celgene (CELG) and Caterpillar (CAT).

Cramer’s ‘Mad Money’ Recap – TheStreet.com
On Monday’s edition, Jim suggests two companies that are tapping into international markets: Best Buy (BBY) and Carnival Cruise Lines (CCL). With a huge international growth rate — foreign sales were up 50% last year — Best Buy is showing vision in the face of a U.S. economy that has trouble growing. By expanding into China and Mexico, Best Buy is providing for more success as these countries begin to spend more money. Carnival Cruise has projected that 40% of its fleet should be European by 2010. Its closest competitor, Royal Caribbean (RCL), only devotes 10% of its fleet to Europe.