08:29 CSGS CSG Systems downgraded to Underweight from Equalweight at First Analysis (21.00 )
08:27 G Genpact beats Firstsource to bag Citi BPO for $630 mln - Economic Times (15.22 )
Economic Times reports after many a false alarm and multiple rounds of negotiations, the sale of Citigroup’s (C) captive BPO operations has finally been concluded with Genpact winning the final bid in a closely-run race with Firstsource Solutions. The transaction is the first such sale of a large captive BPO and sets the precedent for other captive managements that were closely following the process. In terms of transaction value, it is the largest deal in the business process outsourcing segment. The deal was reportedly done for $630 mln with Genpact getting close to 90% in the 10,000-strong operation. The last round had seen some tense moments with the Firstsource turning out to be the dark horse and entering a bid higher than that of Genpact.
08:24 AET Aetna upgraded to Buy from Hold at Citi; tgt raised to $66 from $56 (55.99 )
08:23 SWHC Smith & Wesson poised to take market share after competitor reports weak Q3 results - Merriman (21.23 )
Merriman notes that Sturm Ruger (RGR) reported Q3 rev of $31.9 mln, which represented a decline of 23% from the $41.6 mln reported in the year-ago period. Firm says RGR mgmt does not hold quarterly conference calls, but the explanations provided in the co’s 10-Q filing may indicate that competitive pressures are impacting trends. With SWHC’s recent launch into the shotgun and hunting rifle segments, firm believes the stumbles by RGR could open the door for the co to gain mkt share (if this is not already an indication that those market share gains are occurring). Firm notes that channel checks earlier this year indicated strong interest from distributors and retailers for the SWHC branded shotguns and hunting rifles ahead of their respective launches.
08:23 VIP Vimpel Comms seeks $4.5 bln for acquisition, Interfax reports - Bloomberg (31.16 ) -Update-
Bloomberg reports that VIP is seeking to borrow $4.5 bln to fund an acquisition, Interfax reported from London, citing unidentified bankers. VIP sent a “request for proposals” to banks for the funding. VIP will likely reveal the takeover target in the next few weeks after it secures the funding. (VIP, GLDN, MBT, ROS).
08:21 SCANX Early pre-mkt gappers
Gapping up: DV +19.1%, PANC +19.0%, ATSI +11.3%, CFC +18.6%, MSFT +13.3%, RDN +13.2%, SWIR +13.1%, WFR +9.6%, DRIV +8.1%, MTG +6.2%, PALM +5.9%, SLT +3.9%, MER +3.4%, NVDA +2.9%… Gapping down: VERT -52.5%, TRID -27.5%, RADS -19.2%, VSEA -14.9%, SU -4.6%, BEAS -3.7%, KLAC -3.3%, BIDU -3.1%, ASML -1.3%.
08:21 BIDU Baidu.com: Color on qtr (334.30 )
Susquehanna says BIDU’s results were largely in-line, but robust growth momentum continues… Citi says despite beating the St with revs +107% YoY and earnings + 113% YoY, the key factor to focus on is the stronger than expected outlook since 3Q was hit by a one-time, non-recurring Gov shutdown of websites ahead of the Peoples Congress. They believe the 4Q outlook reflects the true strength of the business and Baidu remains their Top Pick. They are raising their tgt to $425 from $250 and would buy on any 3Q results-related weakness.
08:20 WPPGY WPP Group confirms wins AT&T media work worth $2 bln to $3.4 bln annually - DJ (67.35 )
DJ reports the co’s Mediaedge:cia unit has won all media planning and duties for AT&T (T) after the U.S. telecoms operator consolidated its media buying work, a spokeswoman for Mediaedge:cia said Friday. The work has been reported to be valued at between $2 bln and $3.4 bln in gross billings on an annual basis.
08:19 SWIR Sierra Wireless upgraded to Outperform from Market Perform at Piper Jaffray; tgt $26 (19.07 )
08:18 FDRY Foundry Ntwks: Upgrade details (18.01 )
As mentioned at 7:23, JMP Securities upgraded FDRY to Market Perform from Market Underperform following earnings (10/25 after the close) the firm underestimated. They note, given FDRY’s above group average valuation and low free cash yield, they believe that increasing revenue and earnings will be offset by compressing valuation.
08:17 Banks’ SIVs, emerging from shadows - WSJ
WSJ reports as Citigroup (C) and other U.S. banks seek to raise as much as $100 bln for a rescue package for a group of investment funds, they aren’t just trying to avert a financial crisis: They are also working to shore up — particularly for Citigroup — what has been a very profitable business. United Kingdom regulatory filings show how the opaque funds, known as structured investment vehicles, or SIVs, generated hundreds of mlns of dollars in profit for investors and for the banks and cos that created the vehicles, with the top two of Citigroup’s seven funds bringing in nearly $50 mln a year at their peak. Although that is a small share of profit for a large bank like Citigroup, it is painful to lose given that the funds didn’t require much overhead.
08:17 BONDX Bond Watch: Leaning Lower
The market lost its slight bid on safe-haven flows. Geopolitics are flaring up again with Turkey entering the Iraq fray & sanctions heaped on Iran. Countrywide, the poster child of the housing disaster reported earnings to the not-as-bad-as expected side this morning upping equity futures & turning the bid in bonds to offers early on. The 2-10-yr yield spread flipped back out to 61.4 as curve trade steepened up a bit with near assurance of a 25 basis point rate cut next week. Bond prices in the EuroZone were helped a little higher by a dip in consumer confidence while in Japan, bond prices were hit by a recovery in equities. Treasuries will battle through what is likely to be a slow day of assessing the landscape heading into next week’s FOMC. Equity volatility continues to give bonds a ride here & there while data is nearly non-existent. Trade will be left to technical swings & positions squaring, later. The dollar gave up the 1.4350 level on the euro but common currencies follow-through has been muted thus far. The yen is weak as risk gets layered back on gradually. Spot gold is up at 27 year highs around 75.95 (+6.64) while crude oil spiked way up to a record 92.22 before backing off to 92.29 (+0.83). The day has revisions to Oct UofM sentiment (10) & Fed gov Mishkin but late. The euro is at 1.4381 & the yen is at 114.3400 while the 10-yr is -04/32nds yielding 4.393%. For more bond & economic commentary click here.
08:17 OMTR Omniture upgraded to Buy from Source of Funds at ThinkEquity (31.50 )
08:15 WIRES On The Wires
Amrep (AXR) announces that it will redistribute the fulfillment services work performed in its Marion, Ohio facility into its three other fulfillment facilities which are located in Illinois, Colorado and Florida. This integration will lead to the permanent closing of the Marion location by Sept 2008 and will eliminate redundant facility and overhead costs… Skyworks Solutions (SWKS) announces that the industry’s top five handset O.E.M.s are leveraging its Intera portfolio of E.D.G.E. and W.C.D.M.A. power amplifiers and front-end modules… Two ScanSource (SCSC) sales units, T2 Supply and Paracon, have joined to create ScanSource Communications. The new co encompasses T2 Supply’s video conferencing and telephony products and Paracon’s communications products and services.
08:14 DV DeVRY upgraded to Outperform from Peer Perform at Bear Stearns (40.03 )
08:14 MER Merrill Lynch: Views on Merrill’s shares not all glum - WSJ (60.90 ) -Update-
WSJ reports the losses at the co keep getting worse, and investors are acting as if there’s more news to come. Even as analysts vented at Merrill, others said the stock, despite all the bad news, was starting to look attractive, and value buyers are starting to move in. Merrill shares have fallen 13% over the past five days and now trade at just 1.5 times book value, a low level by historical standards. After the steep decline, some analysts are now bullish, with some pointing out that buying brokerages after their shares have fallen has been a good strategy for the past decade, and citing the strong performance in other areas. Others cited the standalone value of each of the firm’s businesses, which can sometimes be a precursor to a buyout, takeover or strategic changes instigated by an activist investor. David Trone of Fox-Pitt, Kelton said “Any way we slice it, it appears that Merrill is significantly undervalued. Clearly investors are disappointed and angry,” he said, but the stock is “clearly cheap.” Most analysts conceded that the rest of Merrill’s businesses are performing well. Citigroup analyst Prashant Bhatia, who rates the stock a buy, said Merrill’s stock could rise 48% to $90 a share if it could generate a 16% return on equity, below the level of the past few years but above what investors appear to be assuming. “Buying the brokers at times of distress,” he said, “tends to be a great value proposition.”
08:12 TECHX Futures find some renewed upward momemtum following the CFC report as they push to pre-mkt highs -Update- -Technical-
08:10 ORCC Online Resources downgraded to Equalweight from Overweight at boutique firm; tgt cut to $11 from $16 (12.29 )
08:10 CFC Countrywide up as much as 2 pts in pre-mkt on strong Q4 guidance and short covering; would watch other mortgage names as sympathy plays (13.07 ) -Update-
Here are the names again: Mortgage Stocks (CCRT CFC CORS DFC DSL FED FMT FNM HBC IMB IMH MTG NFI PMI RATE SOV WM); Mortgage REITs (AFN ANH CAA CHC CMO CRZ DFC DFR DX IMH IOT JRT LUM NCT NFI NLY NMTG.ob QRR RAS RWT SFI TMA); Mortgage Insurance (PMI, RDN, MTG, TGIC). (PROFX)
08:09 CFC Countrywide misses by $0.47; guides Q4 EPS above consensus, sees Q3 as an earnings trough (13.07 )
Reports Q3 (Sep) loss of $2.12 per share, $0.47 worse than the Reuters Estimates consensus of ($1.65). Co issues upside guidance for Q4, sees EPS of $0.25-0.75 vs. $0.16 consensus. Management expects continued weakness in the housing markets in the near-term and absent declining interest rates, lower mortgage market origination volumes are anticipated for the remainder of 2007 and for 2008 as a result. Furthermore, the co expects its credit costs to remain at elevated levels through 2008 as a result of environmental conditions. Despite these expectations of continued industry challenges, management expects the co to be profitable in the fourth quarter of 2007 and in 2008. Longer term, management believes that changes that it has made in this quarter enhance the stability of the co and lessen the risks from further environmental disruptions. Management also believes that many opportunities will present themselves to the co as a result of the market transition taking place, and that the Company is well positioned to capitalize on these opportunities. Countrywide’s Board of Directors declared dividends of $785.42 per share on its Series B preferred stock and $0.15 per common share. The wide range in the guidance is caused by the significant potential volatility related to the following factors: general market conditions; MSR valuation and hedge performance; residual valuation; credit performance; secondary market liquidity; and Lower of Cost or Market adjustment of inventory. For 2008, the Company currently expects its return on equity to range between 10-15%. The earnings estimates and assumptions and other projections provided in this press release should be considered forward-looking statements and readers are directed to the information contained in the disclaimer provided herein. During the quarter, disruption in the capital markets caused a severe lack of liquidity for non-agency loans and mortgage-backed securities which resulted in losses on the sale or writedowns of such loans and securities that aggregated to approximately $1.0 bln. Approximately $12 billion of non- agency loans were moved to the co’s held-for-investment (HFI) portfolio after their writedown. The co negotiated $18 bln in additional highly-reliable liquidity. “We view the third quarter of 2007 as an earnings trough, and anticipate that the Company will be profitable in the fourth quarter and in 2008… Over the longer term, we believe that prospects for the U.S. housing and mortgage markets, as well as for Countrywide, remain very attractive.”
08:08 CMI Cummins upgraded to Outperform from Neutral at Credit Suisse based on valuation; use yesterdays weakness as buying opportunity (111.56 ) -Update-
08:08 EMN Eastman Chem Announces New $700 Million Share Repurchase Program
08:07 WCG WellCare Group tgt cut to $50 from $110 at Credit Suisse - following the FBI-led raid into the co’s corporate headquarters (42.67 ) -Update-
08:06 CFC Countrywide from Earnings Release -Update-
During the quarter, disruption in the capital markets caused a severe lack of liquidity for non-agency loans and mortgage-backed securities which resulted in losses on the sale or writedowns of such loans and securities that aggregated to approximately $1.0 billion. Approximately $12 billion of non- agency loans were moved to the Company’s held-for-investment (HFI) portfolio after their writedown.
08:06 CMI Cummins upgraded to Hold from Sell at Citi (111.56 )
08:05 LABL Multi-Color misses by $0.02, misses on revs (20.97 )
Reports Q2 (Sep) earnings of $0.28 per share, $0.02 worse than the Reuters Estimates consensus of $0.30; revenues rose 6.3% year/year to $52.1 mln vs the $53.4 mln consensus.
08:05 SR Standard Register reports Q3 EPS of $0.08 vs $0.03 two analyst estimate; reports revs of $208.3 mln vs $217.5 mln single estimate (12.40 )
08:04 SE Spectra Energy initiated with a Market Perform at Wachovia (25.91 )
08:04 TDW Tidewater beats by $0.01, beats on revs (59.03 )
Reports Q2 (Sep) earnings of $1.56 per share, $0.01 better than the Reuters Estimates consensus of $1.55; revenues rose 16.4% year/year to $319 mln vs the $307.6 mln consensus.
08:04 DSX Diana Shipping announces Time Charter contract for MV Erato; generate approx $28.5 mln (39.91 )
Co announces that it has entered into a time charter contract with C Transport Panamax, for one of its Panamax dry bulk carriers, the Erato, at a gross rate of $80,300 per day for a minimum twelve to a maximum fourteen month period. This employment is anticipated to generate approximately $28.5 mln of gross revenues for the minimum scheduled period of the charter. The charter is expected to commence at the beginning of January, 2008.
08:03 DRIV Digital River upgraded to Outperform from Market Perform at BMO Capital Markets; tgt raised to $62 from $50 (45.11 )
08:03 CFC Countrywide Comments from Earnings Release (13.07 ) -Update-
“Countrywide’s results for the third quarter of 2007 reflect the impact of unprecedented disruptions in the U.S. mortgage market and the global capital markets, as well as continued weakening in the housing market,” said Angelo R. Mozilo, Chairman and Chief Executive Officer. “However, during the period we also laid the foundation for a return to profitability in the fourth quarter. Countrywide has responded decisively and taken the steps we believe are necessary to address the current challenging market environment”.
08:03 TDW prelim $1.56 vs $1.55 Reuters consensus; revs $319 mln vs $307.62 mln Reuters consensus
08:03 TPPH Tapestry Pharmaceuticals announces strategy to focus on TPI 287 clinical program; reducing employee base by 28% (1.20 )
Co announces a plan to focus all of its resources on advancing TPI 287’s on-going and previously announced clinical trials. As part of the strategic plan, Tapestry is reducing its employee base by 28 percent. The co expects to eliminate 14 positions including executive and non-executive employees in all areas of operations. All clinical development staff remains with the co. “We continue to recruit patients for TPI 287’s prostate and pancreatic cancer trials and we are moving forward with plans to initiate several other, previously announced studies. Tapestry expects to report encouraging data from the Phase II prostate trial during our quarterly earnings call on November 5th and at our presentation at the Rodman & Renshaw conference in New York City on the same day. Tapestry expects savings from this downsizing of personnel, and other cost saving measures, to total approximately $11 mln (excluding the impact of eliminated capital expenditures) through the end of 2008. There will be a one-time cost of approximately $470,000 to implement this downsizing.
08:02 CFC prelim ($2.12) vs ($1.65) Reuters consensus
08:02 CFC sees Q4 $0.25-0.75 vs $0.16 Reuters consensus
08:01 NWK Network Equip to acquire Quintum Technologies; guides FY08 revs above consensus to $112-$115 vs $111.39 consensus estimates (14.15 )
Co announces that it has signed a definitive agreement to acquire privately held Quintum Technologies, a leading enterprise VoIP access switching and gateway solutions provider. Under the terms of the agreement, NWK will acquire all of the outstanding shares of Quintum for a total equity value of $41 mln, comprised of $20.5 mln in cash and $20.5 mln in NWK stock . Co also announces that it anticipates revs for FY08 will be in the range of $112 to $115 mln (consensus $111.39), excluding the effect of the acquisition of Quintum. Quintum’s unaudited quarterly rev in its most recent fiscal year has been in the range of $4 to $5 mln. Following the acquisition, Quintum’s revs and operating results will be consolidated with NWK’s, and additional charges are expected for newly issued employee stock options and amortization of intangible assets.
08:01 DSW DSW sees 2007 EPS at least 10% below last year’s EPS of $1.48, below the co’s previously announced estimate for diluted earnings per share of $1.63-$1.68. (25.02 )
Co announces that, based on net sales results for the 11 weeks ended Oct 20, 2007, it estimates a mid-single-digit decline in comparable store sales for the Q3. As a result, annual comparable store sales are now estimated to be in the range of flat to down 2% for fiscal 2007, below the co’s previously announced estimate for comparable store sales of flat to up 3%. Based on current business trends, estimated annual 2007 earnings are now expected to be at least 10% below last year’s reported diluted earnings per share of $1.48 (which calculates to roughly $1.33), below the previously announced est for EPS of $1.63 to $1.68. Consensus is for $1.55.
08:01 XING Qiao Xing reports Q2 EPS of $3.30 may not be comparable to $0.34 single estimate; reports revs of $129.7 mln vs $130.7 mln single estimate (11.89 )
08:01 AVID Avid Tech downgraded to Hold at Kaufman; tgt cut to $28 (27.17 )
Kaufman downgrades AVID to Hold from Buy and cuts their tgt to $28 from $40. Firm downgrades co because AVID continues to be in transition and believes that it will take at least a quarter or two to start to see the company execute on actionable business plans.
08:00 BONDX Economic Calendar
Revisions to Oct UofM sentiment at 10.
08:00 S&P futures vs fair value: +1.8. Nasdaq futures vs fair value: +19.3.
The futures market points to a positive opening. The Nasdaq is set to outperform after Microsoft (MSFT) reported blowout fiscal first quarter earnings, and raised its earnings guidance for FY08. Countrywide (CFC), which has been at the epicenter of the subprime crisis, is due to report its earnings before the open.
08:00 FSIN Fushi Intl raises $39 mln in private placement at $14/share (16.59 )
07:58 BAC Bank of America to exit wholesale mortgage lending - Bloomberg.com (47.00 )
Bloomberg.com reports that BAC plans to stop making loans to mortgage brokers by the end of the year, a move that will cut 700 jobs, the bank said in a statement. The exit from “wholesale” mortgage lending is part of the 3,000 job cuts previously announced after BAC reported a 32% decline in Q3 income on Oct 18. Most of the other job cuts are in the bank’s global corporate and investment bank, which reported a 93% decline in profit during the quarter. BAC is aiming to boost its direct share of home lending by focusing on its own branch offices and mortgage lenders. Its mortgage production increased 27% in Q3 compared with the year earlier period, the bank said in the statement. “BofA has had a strong niche in A-credit loans, not Alt-A or the weird stuff that has got others into trouble,” Eric Weinstein, founder of Carteret Mortgage Corp., said in an interview. “They weren’t in subprime, they haven’t had any real losses and it’s a well-run operation, so I’m a bit shocked.” (On 10/24, BAC announced it will lay off about 3,000 employees, with the biggest hits coming in the investment banking unit, and begin a comprehensive strategic review of that line of business).
07:56 CLS Celestica: Risk to fundamentals remains to the downside, continue to expect the shares to underperform relative to FLEX and JBL - Credit Suisse (6.44 )
Credit Suisse says although CLS clearly made positive steps in Q3, they continue to see the co’s restructuring/turn-around as leading to more share loss and margin disappointment. They believe the risk to CLS’ fundamentals remains to the downside and continue to expect the shares to underperform relative to the share gainers FLEX and JBL.
07:55 TMWD Tumbleweed Comms downgraded to Hold at Roth; tgt $1.90 (1.81 )
Roth downgrades TMWD to Hold from Buy and cuts tgt to $1.90 from $2.75 following in-line Q3 results. Firm believes a compelling valuation likely limits downside, given uncertainty in near-term catalysts, but uncertainty in near-term catalysts.
07:55 BZP BPZ Energy target raised to $14 at Jefferies (10.90 )
Jefferies raises their tgt on BZP to $14 from $8, citing: 1) upside oil potential from the next 2 wells in the Corvina Field, 2) upside oil potential from Albacora field set to spud next summer, and 3) “other” potential from Piedra Redonda offshore and Block XIX onshore.
07:50 HES Hess upgraded to Buy from Neutral at Bank of America (69.26 )
07:49 LYTS LSI Industries beats by $0.02, misses on revs; not comfortable providing guidance at this time (21.80 )
Reports Q1 (Sep) earnings of $0.32 per share, $0.02 better than the Reuters Estimates consensus of $0.30; revenues rose 3.9% year/year to $90 mln vs the $94.8 mln consensus. Co said, “While we were generally pleased with the first quarter results, especially the improvement in profitability, there were some items that could have made the quarter even better. Lighting sales began the quarter with very positive growth, then we experienced an unusual softness in September. Fortunately, that positive growth has returned in the second quarter. Also, Wal-Mart has communicated to LSI that it has pushed out to future periods essentially its whole new store construction schedule, thereby causing shipment delays for LSI… Providing accurate sales and earnings guidance for fiscal 2008 at this time is very difficult and subject to a number of important timing issues.”
07:49 WMT Wal-Mart: Hearing WMT upgraded to Neutral from Sell at tier-one firm (43.88 )
07:47 OIS Oil States downgraded to Sector Perform from Outperform at RBC (44.79 )
07:46 ATHN AthenaHealth CEO appears on CNBC, notes earnings are coming up on 11/1 and discusses co’s network (39.00 )
Says they have a Bloomberg size staff of analysts, with information constantly being integrated into their network.
07:46 COLM Columbia Sportswear: Hearing COLM downgraded to Neutral from Buy at tier-one firm (51.24 )
07:45 LYTS prelim $0.32 vs $0.30 Reuters consensus; revs $90.00 mln vs $94.79 mln Reuters consensus
07:41 AXTI AXT Inc downgraded to Hold at Roth Capital (5.93 )
Roth Capital downgrades AXTI to Hold from Buy and maintains their $6 tgt, based on valuation following mixed Q307 results and lowered Q407 guidance.
07:41 FO Fortune Brands beats by $0.06, reports revs in-line; guides for Q4 (82.82 )
Reports Q3 (Sep) earnings of $1.35 per share, excluding non-recurring items, $0.06 better than the Reuters Estimates consensus of $1.29; revenues fell 0.9% year/year to $2.2 bln vs the $2.2 bln consensus. FO sees Q4 EPS up low-single digits to down mid-single digits compared to last yr’s $1.42, current consenus $1.47.
07:40 FO sees Q4 EPS up low-single digits to down mid-single digits compared to last yr’s $1.42, current consenus $1.47
07:38 LZ Lubrizol beats by $0.11, beats on revs; guides FY07 in-line (67.51 )
Reports Q3 (Sep) earnings of $1.04 per share, $0.11 better than the Reuters Estimates consensus of $0.93; revenues rose 8.7% year/year to $1.12 bln vs the $1.1 bln consensus. Co issues in-line guidance for FY07, sees EPS of $3.85-3.90, excluding non-recurring items, compared to previous guidance of $3.80-3.90, vs. $3.89 consensus; co sees revs up 9.5% yr/yr, which equates to approx $4.42 bln vs $4.36 bln consensus.
07:38 WFR MEMC Elec: Color on qtr (59.30 )
Deutsche Bank notes that WFR reported 3Q07 results in-line with expectations, and guided 4Q07 in-line as well. They say the announcement of a new solar PV wafer contract and an expansion to an existing contract essentially doubled solar PV rev under contract to $15 bln to $18 bln, leaving adequate capacity to sign another ~$4 bln, ten yr contract. They view this as a strong long term positive… Credit Suisse says that Bulls rightfully should argue contracts warrant multiple-expansion. But, they say, note that contracts in solar are not as much a rarity as they once were -through Aug, solar industry saw ~6 poly/wafer contracts on avg/month; that has tripled now to ~18/month. The firm says contracts may become a moot-point relative to 1H09 oversupply if the whole industry is working off of contracts… CIBC says while it’s not the neatest qtr, they believe investors will look past 1-time operational issues and focus on massive wafer supply agreement announced with Conergy. They say the announcement of new/increased solar wafer deals shows that there is no shortage of interest from customers or that WFR is losing bargaining power…. Thomas Weisel believes there could another $3-4 bln long-term deal for solar starting in 2008, which could provide additional upside to the firm’s estimates.
07:38 WCG WellCare Group: Initial signs point to whistleblower lawsuit - Wachovia (42.67 )
Wachovia says that initial indications on WCG point to a potential whistleblower (qui tam) investigation. They note the Asst. US Attorney assigned to the WellCare case, Jay Trezevant, specializes in health care qui tam cases. Trezevant also has a masters degree in accounting. They think this could indicate that WCG faces a whistleblower investigation. Other sources they’ve spoken to with knowledge of the situation also suggest that WCG faces a qui tam lawsuit. Firm thinks a whistleblower case would support the view that the issue is company specific to WCG.
07:38 CALLS Early Research Calls V
Upgrades: Deutsche upgrades General Mills (GIS 56.97) to buy from hold and raises their tgt to $64 from $63… Jefferies upgrades Five Star Quality Care (FVE 8.80) to Buy from Hold and raises their tgt to $11 from $8.30… Jefferies upgrades Kindred Healthcare (KND 19.46) to Buy from Hold and raises their tgt to $26 from $22, based on good near-term earnings visibility and reasonable prospects for legislation to remove a significant reimbursement overhang… Downgrades: Calyon downgrades Diamond Offshore (DO 117.65) to Neutral from Add and maintains their $118 tgt, based on valuation following strong Q307 revenues and believe shipyard days and higher costs could cause margin erosion… Jefferies downgrades Penn National Gaming (PENN 61.81) to Hold from Buy and maintains their $67 tgt, based on valuation… Piper Jaffray downgrades Life Time Fitness (LTM 64.82) to Market Perform from Outperform and increases their tgt to $64 from $60… JMP Securities downgrades eTelecare Global Securities (ETEL 8.92) to Market Perform from Market Outperform… Citi downgrades Power Integrations (POWI 30.75) to Hold from Buy and cuts their tgt to $32 from $34… CIBC downgrades Online Resources (ORCC 12.29) to Sector Perform from Sector Outperform… Lehman downgrades First Advantage (FADV 18.49) to Equal-Weight from Overweight and cuts their tgt to $22 from $26… JP Morgan downgrades Level 3 (LVLT 40.60) to Neutral from Overweight… Calyon downgrades MoneyGram (MGI 17.41) to Reduce from Neutral and lowers their tgt to $27 from $25, as they believe shares will face near-term pressure because its strategic flexibility is severely limited while management has been reluctant to book losses and isn’t answering questions regarding the depth and breadth of credit exposure… BofA downgrades Eli Lilly (LLY 52.43) to Neutral from Buy and cuts their tgt to $56 from $64.
07:38 FO prelim $1.35, ex items vs $1.29 Reuters consensus; revs $2.2 bln vs $2.20 bln Reuters consensus
07:38 WIRES On The Wires
The Board of Directors of Regency Energy Partners (RGNC) announces that it has identified qualified candidates to fill independent director posts and expects to name at least one to the board in 4Q07. Also, the board announces its search for a CEO to replace Jim Hunt, RGNC’s President and CEO, upon his planned retirement in 2008… Macy’s (M) and Tommy Hilfiger U.S.A. announce that they have signed a strategic alliance agreement under which M’s will be the exclusive department store retailer of Tommy Hilfiger men’s and women’s sportswear in the United States, beginning in fall 2008… IDM Pharma (IDMI) announces details on clinical data presentations evaluating three of the co’s pipeline compounds to be presented at upcoming medical congresses.
07:37 IR Ingersoll-Rand beats by $0.06, beats on revs; guides Q4 EPS in-line (49.71 )
Reports Q3 (Sep) earnings of $0.96 per share, excluding non-recurring items, $0.06 better than the Reuters Estimates consensus of $0.90; revenues rose 9.9% year/year to $2.24 bln vs the $2.2 bln consensus. Co issues in-line guidance for Q4, sees EPS of $0.94-0.99, excluding non-recurring items, vs. $0.98 consensus.
07:36 IR sees Q4 $0.94-0.99 vs $0.98 Reuters consensus
07:35 IR prelim $0.96, ex items vs $0.90 Reuters consensus, $0.88 First Call; revs $2.24 bln vs $2.20 bln Reuters consensus
07:35 NILE Blue Nile: Upgrade details (78.13 )
As mentioned at 6:36, Citigroup upgraded NILE to Hold from Sell and maintained their $88 tgt solely on valuation. The firm continues to expect an in-line revenue quarter at best (68 mln) when the co reports Q3 results on 11/6.
07:34 POT Potash: Color on yesterday’s conference call and Russian situation (114.58 )
RBC notes that during its conference call, POT indicated that it had received reports indicating that a sinkhole created by last year’s flooding of Uralkali’s Berezniki #1 potash mine is moving dangerously close to a bypass railroad line constructed earlier this year. They note that closure of the bypass line could lead to a shut-in of Silvinit’s potash production, which represents about 5 mln tonnes or 10% of global potash demand. The doesn’t know how high Potash prices could go, but if their realized potash price assumption increases by $100/tonne to $350/tonne, their 2008 EPS estimate would increase from $4.60 to about $6.45. If their price assumption doubles to $500/tonne, their 2008 EPS estimate would increase to about $9.25… UBS raises their POT price tgt to $126 from $115, citing a better phosphate outlook and slightly higher potash pricing given the increased probability of higher prices due to the developing Silvinit situation… Credit Suisse raises their POT tgt to $122 from $116, saying whether the rail issue in Russia ever actually does end up disrupting traffic is probably secondary in significance for investors to the impact that the potential for a disruption could have on the Chinese negotiations, currently underway. They note that should traffic actually be disrupted, the impact would be temporary (probably a couple of months), but would serve to make a very tight market even tighter.
07:33 WMI Waste Mgt misses by $0.02, reports revs in-line; guides FY07 EPS below consensus (39.03 )
Reports Q3 (Sep) earnings of $0.57 per share, $0.02 worse than the Reuters Estimates consensus of $0.59; revenues fell 1.1% year/year to $3.4 bln vs the $3.43 bln consensus. Co lowers guidance for FY07, sees EPS of $2.04-2.07, excluding a $0.04 tax benifit the company had previously included in guidance vs. $2.10 consensus.
07:32 LZ sees FY07 $3.85-3.90 vs $3.89 Reuters consensus
07:32 WMI sees FY07 $2.04-2.07, ex items vs $2.10 Reuters consensus
07:31 LZ prelim $1.04 vs $0.93 Reuters consensus, $0.94 First Call; revs $1.12 bln vs $1.10 bln Reuters consensus
07:31 BELF.A Bel Fuse reports Q3 EPS of $0.47 vs $0.62 in yr ago period; reports revs of $66.4 mln vs $73.3 mln in yr ago period (34.68 )
07:31 Transition Therapeutics (TTHI) receives remaining upfront payment from Elan Corporation (10.25 )
Co announces the receipt of $7.5 mln representing the second half of the $15 mln upfront payment under the co’s global collaboration agreement with a subsidiary of Elan (ELN) for the Alzheimer’s disease drug candidate ELND-005/AZD-103. ELND-005/AZD-103 has completed Phase I clinical trials and the drug candidate appears to be safe and well tolerated at all doses and dosing regimes examined in approx 110 subjects. The drug candidate was also shown to be orally bioavailable, cross the blood brain barrier, and achieve levels in the human brain and C.S.F. that were shown to be effective in animal models for Alzheimer’s disease.
07:31 IPCS IPCS Inc announces subscriber activity for the quarter ended Sep 30, 2007; gross additions of approximately 68,400 (35.79 )
Co announces that it serves approximately 622,000 customers as of Sept 30, 2007. For the quarter ended September 30, 2007, iPCS reported gross additions of approximately 68,400; net additions of approximately 10,100; average monthly churn, net of 30 day deactivations, of approximately 2.8%; and ending subscribers of approximately 622,000.
07:30 WMI prelim $0.57, ex items vs $0.59 Reuters consensus; revs $3.4 bln vs $3.43 bln Reuters consensus
07:30 BEAS BEA Systems: Oracle sends letter to co saying $21 is too high (17.53 )
In a press release late last night, Oracle sent a letter to BEAS saying “We believe that your counterproposal at $21 per share price is an impossibly high price… Furthermore, no other co has come forward to bid for BEA. Our proposal at $17 per share is the only offer. Apparently no other cos think that BEA is worth $17 per share, let alone $21 per share. Accordingly, we repeat our proposal to purchase BEA at $17 per share, a price that we are unwilling to increase. We do not believe BEA is worth more than that and we have an obligation to our own shareholders to exercise price discipline when evaluating acquisition opportunities. We urge the BEA Board to put our $17 per share proposal to the shareholders for a vote. But if BEA’s objective is to remain independent, then the $21 per share counterproposal is a perfect strategy because there are no bidders above $17 per share. If the BEA board continues to refuse to execute an acquisition agreement at $17 per share, our proposal will expire at 5 p.m., PDT, on Sunday, October 28, 2007, at which time Oracle will move on and evaluate other potential acquisitions.”
07:24 Alberta royalty grab stuns oil industry - Globe and Mail
Globe and Mail reports Alberta Premier Ed Stelmach infuriated the province’s oil industry Thursday with surprisingly aggressive plans to take more money from the energy business, but the increases are less than a govt-commissioned panel recommended last month. The govt said that under the new regime, money collected from the energy business could be 20% higher in 2010 than forecast, potentially bringing an additional $1.4-bln to the treasury. That figure is nearly half a bln dollars less than the expert review panel wanted. Starting in 2009, royalty rates will be increased across the board — for example, in the oil sands, rates will start rising when the price of oil is higher than $55 a barrel, with a new maximum of 40% of a co’s net revenue, up from a fixed rate of 25%. (Cos that have been affected by this previously: ECA, COP, TLM, PCZ, MRO, SU, BQI)
07:23 CALLS Early Research Calls IV
Upgrades: Piper Jaffray upgrades DeVRY (DV 40.03) to Outperform from Market Perform and raises their tgt to $60 from $31… Nollenberger upgrades Deckers Outdoor (DECK 113.09) to Buy from Neutral and sets a $147 tgt, following Q307 EPS that was above firm and consensus estimates and raised FY07 revenue and EPS guidance… JMP Securities upgrades Novatel Wireless (NVTL 22.47) to Market Outperform from Market Perform… JMP Securities upgrades Foundry Networks (FDRY 18.01) to Market Perform from Market Underperform… Credit Suisse upgrades Alexion Pharma (ALXN 77.13) to Outperform from Neutral… Downgrades: ThinkEquity downgrades Vasco Data Security (VDSI 26.13) to Source of Funds from Accumulate and cuts their tgt to $23 from $36… CIBC downgrades Comcast (CMCSA 21.2 
to Sector Perform from Sector Outperform… Calyon downgrades Alaska Air (ALK 26.01) to Neutral from Add and lower their tgt to $26 from $30, following Q307 revenue and EPS that was above consensus estimates and the expectation of a Q407 loss… Miscellaneous: Morgan Keegan initiates Gasco Energy (GSX 2.32) with an Outperform… Brean Murray initiates Progressive Gaming (PGIC 4.74) with a Buy and $8.50 tgt…
07:21 Dollar falls to record low versus Euro as bets on Fed cut mount - Bloomberg
Bloomberg reports the dollar fell to a record low against the euro before a report that may show waning U.S. consumer confidence, adding to the case for the Federal Reserve to cut interest rates. The U.S. currency headed for a third weekly decline versus the euro as an unexpected drop in U.S. durable goods orders yesterday combined with increased speculation about corporate losses linked to the housing slump. The dollar traded at $1.4362 as of 10:21 a.m. in London, after falling to an all-time low of $1.4375 earlier, and from $1.4324 late yesterday in New York.
07:19 MSFT Microsoft: Color on qtr (31.99 )
Cowen notes that MSFT printed significant upside to their estimates on broad-based strength in the business. The firm’s numbers come up, but should continue to have an upward bias on the strength of core areas. They believe shares have 5-10% upside vs. the market over the next 12 months, although this could be meaningfully greater if investors become willing to pay comparable to CSCO or INTC… RBC says MSFT’s Q2 rev midpoint for guidance of $15.85 bln was above St at $15.57 bln. Midpoint EPS guidance was $0.45, showing continued leverage relative to the firm’s prior est of $0.43. However, they say removing the Q1 upside and MSFT’s estimated aQuantive contribution of $550 mln, the guidance increase is just $140 mln for the remainder of FY08. EPS guidance was a similar story, with guidance raised to $1.795 from $1.71, though they believe operating leverage is more at play than the increased revenue guidance. The silver lining is that guidance is likely conservative, and the firm expects more upside to follow… Deutsche Bank says four of the five business units easily beat their expectations and O.S.B delivered inline results when adjusted for Aquantive. The bottom-line is that they view this quarter to be as clean and impressive as it can get… Thomas Weisel notes that the Entertainment and Devices segment grew 87.3% y/y, above their estimate for 30.6% growth and guidance of 30-40%, reflecting $330mn in Halo3 revenue. They say FY08 guidance was raised from 10-19% to 15-20% growth, reflecting the solid Halo3 launch in F1Q, but unchanged, or slightly less revenue for the remainder of the year. This could be in anticipation of another price cut, given another round of price cuts from Sony earlier in Oct, says the firm.
07:15 DWSN Dawson Geophys profiled in New America section of IBD (79.16 )
IBD reports with no breaks on the price of oil, plus energy cos’ insatiable appetite for exploration, times seldom have been better for service companies that find drillers’ bread and butter. Dawson Geophysical, which produces seismic data that help drillers find oil and natural gas, has been increasing its number of field crews and equipment throughout the year and says winds are blowing in its favor. Seismic cos grow the bottom line by expanding the number of crews and output per crew. Stephen Jumper, CEO of the co, says Dawson is and would remain in “pure play,” as it has been for more than six decades, acquiring seismic data in the continental U.S. Equity analysts who follow Dawson are optimistic, but are waiting for this quarter’s results to see if it can maintain the trend. Daniel Scalzi of Matrix USA praises the co’s healthy balance sheet and efficiency. Scalzi says Dawson’s rate of return on capital at 20.5% is more than double its cost of capital, which is 9.4%. However, he says the co has a negative $12 mln cash flow, which increases its risk.
07:13 SAIA Saia earnings color (14.07 ) -Update-
Reuters Estimates is telling us that an actual of $0.43 is comparable to their consensus of $0.45. See 7:06 comment for full report.
07:12 WIRES On The Wires
Acacia Research (ACTG) announces that its Financial Systems Innovation subsidiary has entered into a settlement agreement covering a patent that applies to credit card fraud protection technology with Shell Oil Co…Acacia Research (ACTG) announces that its Financial Systems Innovation subsidiary has entered into a settlement agreement covering a patent that applies to credit card fraud protection technology with Shell Oil Co… Callidus Software (CALD) announces that it has signed contracts for its hosted on-demand services covering more than 23,000 payees through the end of Q3 — a jump for this service that was introduced just 21 months ago.
07:10 CVH Coventry Health Care reports EPS in-line, revs in-line; guides Q4 EPS in-line, revs in-line; guides FY08 revs above consensus (61.75 )
Reports Q3 (Sep) earnings of $1.08 per share, in-line with the Reuters Estimates consensus of $1.08; revenues rose 32.1% year/year to $2.52 bln vs the $2.5 bln consensus. Co issues in-line guidance for Q4, sees EPS of $1.17-1.18 vs. $1.19 consensus; sees Q4 revs of $2.65-2.75 bln vs. $2.7 bln consensus. Co issues guidance for FY08, sees GAAP EPS of $4.42-4.58, may not be comparable to $4.58 consensus; sees FY08 revs of $12.41-12.97 bln vs. $11.58 bln consensus.
07:08 IDXX IDEXX Labs beats by $0.01; announces 2-for-1 split; guides FY07 EPS in-line, revs above consensus; guides FY08 in-line (114.25 )
Reports Q3 (Sep) earnings of $0.81 per share, $0.01 better than the Reuters Estimates consensus of $0.80; revenues rose 22.4% year/year to $229.4 mln vs the $223.8 mln consensus. IDXX announces a 2-for-1 stock split. Co issues guidance for FY07, sees EPS of $3.13-3.16 vs. $3.13 consensus; sees FY07 revs of $910-915 mln vs. $903.65 mln consensus. Co issues in-line guidance for FY08, sees EPS of $3.63-3.73 vs. $3.72 consensus; sees FY08 revs of $1.03-1.05 bln vs. $1.02 bln consensus.
07:08 CVH sees FY08 $4.42-4.58 vs $4.58 Reuters consensus
07:08 CVH sees FY07 $3.97-3.98 vs $4.01 Reuters consensus
07:07 CVH sees Q4 $1.17-1.18 vs $1.19 Reuters consensus
07:07 CVH prelim $1.08 vs $1.08 Reuters consensus; revs $2.52 bln vs $2.50 bln Reuters consensus
07:06 SAIA Saia reports Q3 (Sep) results, revs in-line (14.07 )
Reports Q3 (Sep) earnings of $0.43 per share, included pre-tax gain of $1.7 mln, may not be comparable to the Reuters Estimates consensus of $0.45; revenues rose 9.7% year/year to $248 mln vs the $249.2 mln consensus.
07:05 KIM Kimco Realty beats by $0.02, misses on revs; guides FY07 EPS below consensus; guides FY08 EPS in-line (42.60 +0.95)
Reports Q3 (Sep) funds from operations of $0.57 per share, $0.02 better than the Reuters Estimates consensus of $0.55; revenues rose 16.5% year/year to $173.7 mln vs the $176.2 mln consensus. Co issues downside guidance for FY07, sees FFO of $2.56-2.59 vs. $2.61 consensus. Co issues in-line guidance for FY08, sees FFO of $2.70-2.78 vs. $2.77 consensus.
07:04 ITT ITT Industries beats by $0.02, beats on revs; raises Y07 guidance (62.89 )
Reports Q3 (Sep) earnings of $0.92 per share, $0.02 better than the Reuters Estimates consensus of $0.90; revenues rose 9.0% year/year to $2.18 bln vs the $2.15 bln consensus. Co raises guidance for FY07, sees EPS of $3.50-3.53, compared to previous guidance of $3.44-3.50, vs. $3.51 consensus; sees FY07 revs of $8.75 bln, compared to previous guidance of $8.6 bln, vs. $8.68 bln consensus.
07:04 THI Tim Hortons misses by $0.01, beats on revs; announces new $200 mln share repurchase (37.50 )
Reports Q3 (Sep) earnings of $0.36 per share, $0.01 worse than the Reuters Estimates consensus of $0.37; revenues rose 18.6% year/year to $490.5 mln vs the $475.8 mln consensus. The Board of Directors has approved a new 12-month, $200 mln share repurchase program.
07:03 IDXX sees FY08 $3.63-3.73 vs $3.72 Reuters consensus; sees revs $1.03-1.05 bln vs $1.02 bln Reuters consensus
07:03 IDXX announces a 2-for-1 stock split
07:03 IDXX sees FY07 $3.13-3.16 vs $3.13 Reuters consensus; sees revs $910-915 mln vs $903.65 mln Reuters consensus
07:02 HTE Harvest Energy Trust recommends rejection of mini-tender offer by TRC Capital Corporation (28.15 )
Co announces it has been notified of an unsolicited “mini-tender offer” by T.R.C. Capital Corporation of Toronto to purchase up to 1.5 mln trust units at a price of Cdn$27.25 per trust unit, representing approx 1.03% of the outstanding trust units of Harvest. HTE is in no way associated with TRC, its mini-tender offer or the offer documentation. HTE recommends that unitholders NOT tender their trust units to this offer.
07:02 IDXX prelim $0.81 vs $0.80 Reuters consensus, $0.79 First Call; revs $229.4 mln vs $223.77 mln Reuters consensus
07:01 ITT sees FY07 $3.50-3.53 vs $3.51 Reuters consensus; sees revs $8.75 bln vs $8.68 bln Reuters consensus
07:01 MTZ MasTec says to settle legacy wage and hour lawsuit and accelerate closure of legacy litigation (14.65 )
Co announces that it has reached an agreement to settle its previously disclosed wage and hour lawsuit regarding the co’s install to the home employees. The lawsuit involving claims dating back as far as 2001 and covering current and former employees from California, Florida, Georgia, Maryland, New Jersey, New Mexico, North Carolina, South Carolina, Texas and Virginia, is similar to numerous class action lawsuits filed against others nationwide.
07:01 ITT prelim $0.92 vs $0.90 Reuters consensus; revs $2.18 bln vs $2.15 bln Reuters consensus
07:01 ISIS ISIS Pharm to receive up to $9.9 mln in funding to discover and develop an antisense drug for Huntington’s Disease (17.34 )
Co announces that C.H.D.I., Inc a non-profit foundation pursuing treatments for Huntington’s Disease, will provide up to $9.9 mln in funding to ISIS for the discovery and development of an antisense drug for the treatment of H.D., a fatal neurodegenerative disease. C.H.D.I.’s funding builds upon an earlier successful collaboration between ISIS and C.H.D.I., in which C.H.D.I. provided Isis with funding for studies that demonstrated the feasibility of using antisense drugs to treat H.D. C.H.D.I. will provide Isis with up to $9.9 mln in funding over three years to identify and conduct IND-enabling studies on an antisense drug targeting the huntingtin gene.
07:01 KIM sees FY08 funds from operations of $2.70-2.78 vs $2.77 Reuters consensus
07:01 KIM sees FY07 funds from operations of $2.56-2.59 vs $2.61 Reuters consensus
07:00 SAIA prelim $0.43 may not be comparable to $0.45 Reuters consensus; revs $248 mln vs $249.17 mln Reuters consensus
07:00 ULBI Ultralife Batteries receives U.S. Air Force orders totaling $2.3 mln (13.55 )
Co announces it has received orders valued in total at approximately $2.3 mln from the U.S. Air Force for tactical communications systems for military vehicles.
07:00 KIM prelim funds from operations of $0.57 vs $0.55 Reuters consensus; revs $173.71 mln vs $176.21 mln Reuters consensus
07:00 WEN Wendy’s says rolls out Phase 2 of its strategic growth plan (34.03 )
Co announces it is launching Phase 2 of its Strategic Growth Plan. Wendy’s leadership team has identified 10 imperatives for 2008 and beyond aimed at achieving improved results for every restaurant in our system. “The 10 imperatives build on top of Wendy’s “Recipe for Success,” which is focused on: Revitalizing the Wendy’s Brand, Streamlining and Improving Operations, Reclaiming Innovation Leadership, Strengthening Franchisee Commitment, Capturing New Opportunities (eg. International growth), and Embracing a Performance Driven Culture.”
06:57 CALLS Early Research Calls III
Upgrades: Calyon upgrades Discover Financial Services (DFS 17.56) to Add from Neutral and maintains their $23 tgt, based on valuation… HSBC upgrades Taiwan Semi (TSM 9.7 to Overweight from Neutral… Downgrades: Friedman Billings downgrade Ambac (ABK 43.95) to Market Perform from Outperform and lowers their tgt to $50 from $90, based on uncertainty surrounding structured credits as well as expectations for less flexible capital depoloyment… Friedman Billings downgrades MBIA (MBI 46.99) to Market Perform from Outperform and lowers their tgt to $50 from $80, based on uncertainty surrounding structured credits as well as expectations for less flexible capital deployment… Lehman downgrades Choicepoint (CPS 40.60) to Equal-weight from Overweight… Lehman downgrades First Advantage (FADV 18.49) to Equal-weight from Overweight… Oppenheimer downgrades Trident Microsystems (TRID 12.21) to Neutral from Buy, following Q108 revenue that was below consensus estimates with EPS below consensus coupled with disappointing Q407 guidance… Deutsche Bank downgrades Trident Microsystems (TRID 12.21) to Hold from Buy and lowers their tgt to $11 from $23, following soft Q108 results and disappointing Q208 guidance… Jefferies downgrades Trident Microsystems (TRID 12.21) to Hold from Buy and lowers their tgt to $9 from $20, following mixed Q108 results with guided Q208 revenue significantly below consensus.
06:36 CALLS Early Research Calls II
Upgrades: Citigroup upgrades Santander (STD 20.21) to Buy from Hold… Hearing tier-one firm upgrades Owens-Illinois (OI 42.21) to Buy from Neutral….Broadpoint upgrades Nuance Communications (NUAN 20.50) to Buy from Neutral and sets a $24 tgt, based on checks that indicate strong demand and a likelihood of solid near-term financial results and likely involvement in the Google Phone may serve as an incremental catalyst in early ‘08… Morgan Stanley upgrades Golden Telecom (GLDN 104.89) to Overweight from Equal-weight… Citigroup upgrades Blue Nile (NILE 78.13) to Hold from Sell… CIBC upgrades Methanex (MEOH 27.04) to Sector Perform from Underperform… Downgrades: UBS downgrades Steel Dynamics (STLD 54.00) to Neutral from Buy… UBS downgrades Colonia Properties (CLP 33.33) to Neutral from Buy… Hearing tier-one firm downgrades Timken (TKR 33.89) to Neutral from Buy… Friedman Billings downgrades Emulex (ELX 22.32) to Market Perform from Outperform and maintains their $22 tgt, based on valuation following Q3 revenue that met consensus with EPS ahead… Friedman Billings downgrades Franklin Resources (BEN 138.64) to Market Perform from Outperform and lowers their tgt to $134 from $149, following Q407 EPS that was below consensus estimates… Friedman Billings downgrades Advanta (ADVNB 17.69) to Market Perform from Outperform and lowers their tgt to $17.50 from $35, following Q307 EPS that was below firm and consensus estimates.
06:31 STAA STAAR Surgical to purchase Canon’s interest in JV (3.20 )
Co announces that it has entered into an agreement to acquire the interests of all other shareholders in Canon Staar, a joint venture that was formed by STAAR, Canon and Canon Marketing Japan, to develop, manufacture and sell in Japan products using STAAR’s technology. At closing STAA will pay to the Canon companies $4 mln in cash and 1.7 mln newly issued shares of Series A Convertible Preferred Stock, and will acquire the 50% interest in Canon Staar currently owned by the Canon companies.
06:31 ATSI ATS Medical receives FDA clearance for ATS Simulus Semi-Rigid Annuloplasty Ring (1.86 )
Co announces FDA clearance for the ATS Simulus Semi-Rigid Annuloplasty Ring.
06:31 CLDA Clinical Data to net $19.5 mln cash from the sale of Vital Scientific (27.66 )
Co announces the sale of Vital Scientific to the ELITech Group. Under terms of the agreement, ELITech will acquire Vital Scientific for $15 million in cash. In addition, Clinical Data will retain approximately $4.5 million in cash from Vital Scientific immediately prior to the sale.
06:29 Sensex ends up 483pts at 19,254 - The Business Standard
The Business Standard reports the Sensex opened with a positive gap of 53 points at 18,824. Nervouness in the opening trades following Sebi’s new norms on P-notes saw the index slip to a low of 18,630. The index, however, soon recovered and bounced into the positive zone. Unabated buying, thereafter, saw the index rally past the 19,000-mark to a fresh all-time intra-day high of 19,276 - up 646 points from the day’s low. The Sensex finally ended (provisional) with a significant gain of 483 points at 19,254.
06:29 Asian stocks rise the most in a month; Sony, Honda, BHP gain - Bloomberg.com
Bloomberg.com reports Asian stocks rose the most in almost a month after Sony and Honda Motor reported earnings that beat analysts’ estimates, signaling companies in the region are withstanding a slowdown in the U.S. Japan’s Nikkei 225 Stock Average advanced 1.4% to 16,505.63. South Korea’s Kospi index climbed 2.6%, the best performance in the region, while Thailand’s SET Index added 1.4%, headed for the highest in almost 11 yrs. Hong Kong’s Hang Seng Index gained 1.8% to 30,405.22. Malaysia’s Kuala Lumpur Composite Index also rose to a record.
06:29 CX CEMEX S.A. reports Q3 (Sep) results, beats on revs (29.71 )
Reports Q3 (Sep) earnings of $1.04 per share, may include gains, charges, may not be comparable to the Reuters Estimates consensus of $0.95; revenues rose 31.2% year/year to $6.1 bln vs the $6.03 bln consensus.
06:29 European stocks drop, led by Retailers; Ahold, Delhaize fall - Bloomberg.com
Bloomberg.com reports European stocks fell, led by retailers, after the dollar declined to a record low against the euro and oil prices surged to an all-time high… National benchmarks slipped in 9 of the 16 western European markets that were open. The U.K.’s FTSE 100 added 0.1%. Germany’s DAX was little changed and France’s CAC 40 lost 0.1%.
06:27 VVI Viad Corp beats by $0.04, reports revs in-line; guides Q4 EPS below consensus, revs in-line; guides FY07 EPS in-line (36.04 )
Reports Q3 (Sep) earnings of $0.32 per share, excluding non-recurring items, $0.04 better than the Reuters Estimates consensus of $0.28; revenues fell 0.7% year/year to $228.8 mln vs the $230 mln consensus. Co issues mixed guidance for Q4, sees EPS of ($0.08)-($0.14) vs. ($0.06) consensus; sees Q4 revs of $186-208 mln vs. $170.92 mln consensus. Co issues in-line guidance for FY07, sees EPS of $1.72-1.78 vs. $1.77 consensus.
06:21 HMA Health Management beats by $0.02, beats on revs; reaffirms FY07 EPS guidance (6.79 )
Reports Q3 (Sep) earnings of $0.08 per share, $0.02 better than the Reuters Estimates consensus of $0.06; revenues rose 8.2% year/year to $1.07 bln vs the $1.05 bln consensus. Co reaffirms guidance for FY07, sees EPS of $0.45-0.50 vs. $0.47 consensus.
06:21 S&P futures vs fair value: +2.0. Nasdaq futures vs fair value: +21.0.
06:20 European Markets
FTSE…6587.80…+11.50…+0.2%. DAX…7933.52…+1.08…+0.0%.
06:20 Asian Markets
Nikkei…16505.63…+221.46…+1.4%. Hang Seng…30405.22…+550.73…+1.8%.
06:18 CALLS Early Research Calls I
Upgrades: Deutsche Bank upgrades Corporate Executive Board (EXBD 72.12) to Buy from Hold and raises their tgt to $85 from $75, following Q307 EPS that exceeded consensus estimates and raised FY07 EPS guidance and believe business should reaccelerate in Q407 and 2008… Ferris Baker upgrades Infinity Property & Casualty (IPCC 38.24) to Buy from Neutral and sets a $46 tgt, following Q307 EPS that exceeded firm and consensus estimates… Downgrades: Wachovia downgrades Choice Hotels Int’l (CHH 40.54) to Underperform from Market Perform, following Q307 EPS that exceeded consensus estimates and based on valuation… Janney downgrades Tollgrade Communications (TLGD 8.36) to Neutral from Buy… Miscellaneous: Morgan Keegan initiates Gasco Energy (GSX 2.32) with an Outperform, as they believe the market has largely ignored operational improvements and newly emerging Mancos potential… Wachovia initiates Best Buy (BBY 47.93) with a Market Perform, based upon low visibility into holiday sales and product margin trends and valuation… Wachovia initiates Circuit City Stores (CC 7.86) with a Market Perform, based on low visibility into holiday sales and product margin trends in the flat-panel TV category… Wachovia initiates Spectra Energy (SE 25.91) with a Market Perform, based on solid growth prospects while commodity exposure and complex corporate structures are an overhang… Wachovia initiates USEC (USU 8.23) with a Market Perform, based on deteriorating margins at its existing plant and significant construction risk at its planned facility… Wachovia initiates Reliant Energy (RRI 26.19) with an Outperform, as they believe RRI’s core generation assets are located in attractive power markets, where supply/demand fundamentals are likely to continue to drive the value of existing plants higher while expansion of its competitive retail business outside of TX could be a long-term growth engine.
06:13 ACPW Active Power beats by $0.02, misses on revs; guides Q4 EPS in-line, revs in-line (1.73 )
Reports Q3 (Sep) loss of $0.06 per share, $0.02 better than the Reuters Estimates consensus of ($0.08); revenues rose 43.6% year/year to $8.2 mln vs the $8.4 mln consensus. Co issues in-line guidance for Q4, sees EPS of ($0.05)-($0.07) vs. ($0.07) consensus; sees Q4 revs of $9-10 mln vs. $9.53 mln consensus.
06:11 ALEX Alexander & Baldwin beats by $0.13, misses on revs
Reports Q3 (Sep) earnings of $1.14 per share, $0.13 better than the Reuters Estimates consensus of $1.01; revenues rose 3.2% year/year to $434.7 mln vs the $483.2 mln consensus. Co
06:02 Nintendo rules out Wii price cut - AP
AP reports Nintendo ruled out a price cut for its smash-hit Wii video game console Friday and announced the co will being selling the Wii in China next year. Nintendo President Satoru Iwata said the co was struggling to meet demand of the Wii and a price cut was out of the question. Speaking at a press conference in Tokyo, Iwata said Nintendo planned to start selling Wiis in China next year, opening up a previously untapped market. ”We barely have enough Wiis to meet global demand this year. But next year, I think we can bring the Wii to China,” Iwata said.
06:00 NSANY Nissan posts surprise core profit rise - Reuters (19.40 )
Reuters reports Nissan (NSANY) posted a surprise 12% gain in quarterly operating profit on Friday as a pickup in its global car sales overcame rising commodity prices, and it kept its full-year forecasts unchanged. July-September operating profit was 218.7 bln yen ($1.92 bln), beating an average estimate of 183.5 bln yen in a survey of four brokerages by Reuters Estimates. Net profit slid 26.8% to 120.1 bln yen from the year before, when it booked extraordinary gains from the sale of shares in truck affiliate Nissan Diesel Motor Co to Volvo AB and had a lower effective tax rate. Consensus forecasts put Nissan’s operating profit at 785.5 bln yen for the year to next March, against the co’s projection of 800 bln yen. Nissan left its net profit forecast at 480 bln yen, or up 4.2% from 2006/07.
05:52 LPL LG. Philips surges amid stake sale talk - Reuters (23.51 )
Reuters reports shares in LG.Philips (LPL) surged on Friday on market talk Japan’s Matsushita Electric Industrial (MC) was buying a stake in the South Korean flat screen maker, but both firms poured cold water on the talk. “There is market talk that Matsushita will buy a stake in LG.Philips,” said Jay Kim, an analyst at Hyundai Securities. Other traders also said they were aware of the speculation. An LG.Philips spokeswoman said the co was seeking strategic partnerships with other companies. “But we are not currently in talks with any specific company,” she said. Matsushita said separately that it was not negotiating or considering negotiating with LG.Philips LCD on a stake. LG.Philips told Reuters in an interview on Wednesday it is in talks with major television makers about taking a stake in the South Korean firm and does not rule out Japanese companies.
05:50 MER Merrill’s chief is said to consider a bid to merge - NY Times (60.90 )
The NY Times reports Merrill Lynch (MER) chairman and chief executive, E. Stanley O’Neal, floated the idea of a merger with a large bank, a foray that angered Merrill’s board and could cost him his job, according to people close to the firm. Mr. O’Neal broached the possibility of a merger with Wachovia (WB) without first getting the approval of Merrill’s board, a major breach of corporate protocol at a time when directors were already concerned about the co’s performance, these people said. Merrill’s board was so upset with Mr. O’Neal that it even discussed the names of potential candidates to replace him, according to people with knowledge of the board’s proceedings. Candidates who were discussed include Laurence D. Fink, chairman and chief executive of BlackRock (BLK), an investment firm partly owned by Merrill, and John A. Thain, chief executive of the NYSE (NYX). Jason Wright, a Merrill Lynch spokesman, declined to comment on contacts with possible merger partners. A Wachovia spokeswoman declined to comment. The board’s reaction indicates that a merger with Wachovia is not likely for now. The sequence of events began late last week, according to people with knowledge of the discussions. Just days before a Merrill board meeting scheduled for Sunday, Mr. O’Neal called G. Kennedy Thompson, Wachovia’s chairman and chief executive, to float the idea of a merger, people briefed on the situation said. Mr. O’Neal inquired, “Would you be interested in having a conversation?”, according to a person briefed on their discussion. Mr. Thompson expressed interest in talking, while acknowledging the difficulty of the deal. Mr. O’Neal, increasingly embattled with the bank’s growing loss, then directed Gregory J. Fleming, Merrill’s co-president, to follow up with Wachovia executives. Mr. Fleming has a close relationship with Mr. Thompson, and has represented him on many merger deals.
05:45 J.C. Flowers considers bid for Northern Rock - WSJ
The Wall Street Journal reports J.C. Flowers confirmed late Thursday that it is in talks with Northern Rock and is considering launching a bid for the mortgage lender. Though it said there was “no certainty” an offer would be made, Flowers said it had already settled on a management team should it go ahead. It said Paul Myners, nonexecutive chairman of Land Securities Group plc, would become Northern Rock chairman, while Halfords Group plc Chairman Richard Pym would be executive deputy chairman, and former ABN Amro Holding NV finance director Hugh Scott-Barrett would take the chief financial officer role.
05:43 RY Bonds’ pricing is questioned in Email trail - WSJ (54.58 )
The Wall Street Journal reports in a series of emails to senior bank executives, a former Royal Bank of Canada (RY) trader alleged that some of his colleagues intentionally “mismarked,” or improperly valued, government agency and corporate bonds in a bid to boost profits at the firm’s investment-banking unit. “Losses have been intentionally hidden over the last 5 months,” trader Gregory O’Connor told a top Royal Bank of Canada executive in a July 24 email, which was reviewed by The Wall Street Journal. RBC last month recognized trading losses totaling $40 mln, $13 mln of which was related to bonds Mr. O’Connor alleges were mispriced, and fired several traders in its corporate-bond business, though the firm didn’t acknowledge that the terminations were related to mismarking securities. Mr. O’Connor says in an interview that the fired traders’ books were marked down to reflect losses after they left. “Mr. O’Connor knows full well that the firm took pains carefully to investigate the facts and took remedial action,” RBC said in a statement. “He is choosing to distort facts and damage the firm’s reputation for his personal gain.” Yesterday, the firm fired Mr. O’Connor after inquiries from the Journal.
05:40 Morning News Summary
WSJ: Bonds’ pricing is questioned in Email trail (RY)… J.C. Flowers considers bid for Northern Rock. NY Times: Merrill’s (MER) chief is said to consider a bid to merge. Reuters: LG.Philips (LPL) surges amid stake sale talk… Nissan (NSANY) posts surprise core profit rise. AP: Nintendo rules out Wii price cut.
05:23 CFC Countrywide: Earnings Preview (13.07 )
CFC is set to report earnings tomorrow in what is easily one of the most anticipated earnings reports and conference calls of the season. There is a lot of uncertainty what to expect and commentary will dominate the direction of the stock price. Back on July 24th co lowered their Q3 EPS outlook to a range of $2.70 to $3.30 as compared to previous outlook of $3.50 to $4.30. In their 8-K released a few weeks ago co estimated that it will incur a pre-tax restructuring charge of ~$125-150 mln, consisting of ~$30-35 mln in one-time termination benefits, $73-89 mln in lease termination costs and $22-26 mln in fixed asset disposals and other miscellaneous costs. Of the total amount of the pre-tax restructuring charge, ~$57 million is expected to be recognized in Q3. CFC estimates that of the total amount of the pre-tax restructuring charge approximately $65-90 mln will result in future cash outlays. We’d expect any mark-to-market commentary to generate significant interest. However, we’re not expecting co to make any specifics here as it appears there is no one in the industry with the answers but would pay attention to any questions surrounding these issues. Other areas of focus are the 1) CEO’s stock sales, 2) $16 bln ‘Home preservation program, 3) ARMs Loans, 4) Update on Operations, 5) Employee reductions and lawsuits, 6 6) Second Bail Outlay Rumors and 7) Deposit Growth. Levels of interest. (Note that the length of horizontal line correlates with strength of support or resistance level) (PVIEW)
03:14 ABFS Arkansas Best misses by $0.13, reports revs in-line (31.26 )
Reports Q3 (Sep) earnings of $0.75 per share, $0.13 worse than the Reuters Estimates consensus of $0.88; revenues fell 5.4% year/year to $479.8 mln vs the $484 mln consensus.
02:51 VERT VerticalNet announces preliminary Q307 financial results (5.60 ) -Update-
Co reports preliminary revenues are expected to be in the range of $3.0 to $3.1 mln for the three months ended September 30, 2007 as compared to $4.2 mln for Q306. Preliminary operating losses are expected to be in the range of $1.7 to $1.9 mln for Q307 which is within the same range as the previous quarter and improved vs a Q207 operating loss of $2.2 mln.
02:46 VERT Verticalnet to be acquired by BravoSolution (5.60 )
Co announces the execution of a definitive agreement under which BravoSolution, a European provider of supply management software and services, will acquire Verticalnet in a transaction valued at approx $15.2 mln, including the assumption of all outstanding Verticalnet debt and other liabilities of Verticalnet related to the transaction. Under the terms of the definitive agreement, BravoSolution will acquire all the outstanding shares of Verticalnet common stock at a price of $2.56 per share. BravoSolution will also acquire all the outstanding shares of Verticalnet Series B Preferred for $3,205,000.
01:48 ‘Mad Money’ Recap: Lightning Round cont. - TheStreet.com
Cramer was bearish on USEC (USU), Vasco Data Security (VDSI), Umpqua Holdings (UMPQ), Odyssey Marine Exploration (OMEX), FuelCell Energy (FCEL), Terex (TEX), Park National (PRK) and Palm (PALM).
01:47 ‘Mad Money’ Recap: Lightning Round - TheStreet.com
Cramer was bullish on Goldman Sachs (GS), Covance (CVD), Thermo Fisher Scientific (TMO), Shaw Group (SGR), ABB (ABB), Foster Wheeler (FWLT), General Motors (GM), Ford (F) and Parker-Hannifin (PH).
01:46 Cramer’s ‘Mad Money’ Recap - TheStreet.com
On Thursday’s edition, Jim suggests GameStop (GME) and cites an increasingly older demographic and the co’s used-game business, where margins are up 50%. Next, he recommends Psychiatric Solutions (PSYS) and says as Congress is trying to increase coverage for mental health, Psychiatric Solutions is a great stock to own going into the election season. The industry is ripe for consolidation as well, in his view. During the “Sudden Death” round, Cramer was bullish on Denbury Resources (DNR), LifeCell (LIFC) and Quintana Maritime (QMAR). He was bearish on Charming Shoppes (CHRS) and Delta Air Lines (DAL).
01:26 BHI Baker Hughes reports EPS in-line, beats on revs (93.69 )
Reports Q3 (Sep) earnings of $1.22 per share, in-line with the Reuters Estimates consensus of $1.22; revenues rose 15.9% year/year to $2.68 bln vs the $2.64 bln consensus. Co comments that the outlook for its international business remains strong while the near-term outlook for N. America remains uncertain as the rate of growth in drilling activity has slowed and natural gas inventories continue to build.
01:23 NBY NovaBay Pharmaceuticals prices IPO offiering of 5.0 mln shares at $4.00 per share
01:22 KOSN Kosan Biosciences to reacquire epothilone program form Roche (5.65 )
Co announces that Roche and Kosan are concluding their epothilone development and commercialization collaboration. The collaborative research, development and commercialization agreement entered into in September 2002 will terminate after a transition period, following which Kosan will reacquire worldwide rights to its epothilone program and have full control of clinical development of KOS-1584 and its other epothilone product candidates going forward. Co doesn’t expect the termination of its collaborative research, development and commercialization agreement with Roche to impact its financial guidance for 2007 due to transition period funding.
01:18 LPNT Lifepoint Hospitals beats by $0.03, reports revs in-line (29.57 )
Reports Q3 (Sep) earnings of $0.55 per share, $0.03 better than the Reuters Estimates consensus of $0.52; revenues rose 4.6% year/year to $656.2 mln vs the $652.3 mln consensus.
