08:25 BONDX Bond Watch: Running Out of Gas
The market is crawling into a heavy week of event risk as global equities rallied a bit higher & the mid-Oct push by bond prices to fresh trend highs sputters lower. Despite some overnight buying in riskier assets trade is taking a cautious approach to the week, Apart from the calendar, headlines about Merrill Lynch’s boss stepping aside amidst massive damage via the subprime train wreck is probably helping prevent a full-scale reversal of the flight to quality that has propelled prices to such heights. The 2-10-yr yield spread is flatter at 60.0 as curve trade sheds some steepness as the world survived the weekend. In addition to investors seeking out riskier assets, bond prices in the EuroZone were hit by stronger inflation numbers out of Germany while in Japan, bonds improved on slower growth expectations. Action will likely be put on ice in treasuries today as event risk doesn’t really get rolling until Wed with FOMC & GDP. In the meantime, the market will be eyeing oil, geopolitics, technical levels & stocks to determine direction. Mostly a sideways to slightly negative bias is prevailing absent the higher tier calendar items. The dollar is mixed but mostly lower falling against the euro & other higher yielders while the yen suffered across the board. Spot gold remains higher running at 791.97 (+6.73) as the buck gets hit & crude is hanging near its record highs now at 92.84 (+0.9 
as ongoing geopolitical turmoil fuels buying. The euro is at 1.4403 & the yen is at 114.7465 while the 10-yr is -01/32nds yielding 4.406%. For more bond & economic commentary click here.
08:25 ATHR Atheros Communications upgraded to Buy from Market Perform at Collins Stewart (28.44 )
08:23 LTR prelim $0.77 vs $0.90 Reuters consensus; revs $1.02 bln vs $1.20 bln Reuters consensus
08:23 BIIB Biogen gets a dose of skepticism - WSJ (76.72 )
WSJ reports can the co help cure big pharma’s ills? Carl Icahn thinks so. Although the activist investor has indicated interest in buying the biotechnology concern, he says shareholders could make more by selling to a large pharmaceutical co. As Mr. Icahn sees it, biotechs — whose drugs are made of proteins instead of simple chemicals — have robust development pipelines that traditional drug cos need in an era when many of their top products will soon lose patent protection. But some analysts who follow the co aren’t so sure about its pipeline. They also say the co’s existing products might face sales pressure because of growing competition in multiple-sclerosis treatment, an area it now dominates, and a looming decrease in Biogen’s share of the profits on drugs it co-markets with Genentech.
08:19 TSO Tesoro Corp. downgraded to Market Perform from Outperform at BMO Capital (64.48 ) -Update-
08:19 DVW Covad: Kaufman looking for further progress in 3Q07 (0.64 ) -Update-
Kaufman notes DVW is scheduled to report 3Q07 results after the close on Oct 30. Firm anticipates DVW to post improving trends in 3Q07. They are projecting revs to be $124.9 mln and adjusted EBITDA of $8.74 mln, for an EBITDA margin of 7.0%. These figures compare to consensus ests of $123.5 mln and $9.02 million, respectively, for an EBITDA margin of 7.3%. Firm’s positive outlook for 2008 is based on continued strong growth in growth services of 35%, with legacy revs still following a declining trajectory in the low-double-digit range. They also anticipate a lessening drag from the line powered voice(LPVA) offering via ELNK to bolster margins.
08:19 INSID Insider trading disclosed in filings after the close Friday
Buyers: MGIC Investment (MTG 19.37) Chairman bought 50K shares at $19.77; Directors (2) bought 13K shares at $17.16 - $17.60… Consumer Portfolio Services (CPSS 5.02) Director bought 5K shares at $4.85… Pulte Homes (PHM 15.30) Director bought 10K shares at $15.00… Knoll (KNL 17.87) Directors (2) bought 7K shares at $17.50 - $17.73… Genaera (GENR 2.40) 10% Owner Xmark Opportunity Partners bought 62,365 shares at $2.64… Knology (KNOL 16.9 10% Owner Farallon Capital Partners bought 2K shares at $15.78… GMX Resources (GMXR 38.07) 10% Owner Centennial Energy Partners bought 22,500 shares at $36.05… Consolidated Tomoka Land (CTO 67.85) 10% Owner Wintergreen Advisers bought 28,165 shares at $66.95… QLT (QLTI 4.71) CEO bought 39,847 shares at $4.57; CFO bought 6K shares at $4.48; Director bought 14K shares at $4.49… Capital One (COF 64.40) Director bought 2,400 shares at $62.16… Comsys IT Partners (CITP 18.60) 10% Owner Amalgamated Gadget LP bought 5K shares at $16.50… Zions Bancorp (ZION 59.25) Director bought 2K shares at $59.20… Lamar Advertising (LAMR 52.11) 10% Owner SPO Advisory bought 56,200 shares at $50.92… SanDisk (SNDK 41.02) Director bought 50K shares at $40.44 - $41.01… Sellers: Amcol International (ACO 40.73) Director sold 60K shares at $39.24… Crane (CR 47.41) CEO sold 45K shares at $46.96… Sonic (SONC 25.09) Chairman sold 278,836 shares at $25.00… GlobalOptions Group (GLOI 4.45) Director sold 17,915 shares at $4.46… Team (TISI 33.27) Director sold 40,938 shares at $31.34… Seagate Technology (STX 26.95) Officers (2) sold 35K shares at $26.87 - $27.33; President sold 25K shares at $27.31… Shaw Group (SGR 74.5 10% Owner Tontine Management sold 403,933 shares at $73.74… GameStop (GME 57.44) Director sold 1.5 mln shares at $57.90.
08:18 SCANX Early pre-market gappers
Gapping up: SSRX +8.6%, NSANY +9.6%, RSH +8.0%, AXL +7.9%, CHU +6.9%, HUM +5.7%, NGA +5.7%, RDN +5.6%, CHINA +4.8%… Gapping down: GEHL -10.9%, ODP -8.3%, PANC -5.5%, WCG -4.3%, SCHN -3.5%, SILC -3.0%, SNY -1.8%, BEAS -1.5%, CFC -1.3%, ERIC -1.0%.
08:17 WNG Washington Group beats by $0.12, beats on revs; reaffirms FY07 EPS guidance, revs guidance (95.50 )
Reports Q3 (Sep) earnings of $1.22 per share, excluding non-recurring items, $0.12 better than the Reuters Estimates consensus of $1.10; revenues rose 29.1% year/year to $1.06 bln vs the $1.05 bln consensus. Co reaffirms guidance for FY07, sees EPS of $3.06-3.39 vs. $3.08 consensus; sees FY07 revs of $3.9-4.1 bln vs. $3.97 bln consensus.
08:17 IACI InterActive: Barry Diller and John Malone are having issues - WSJ (27.07 )
WSJ reports Barry Diller and John Malone are having some relationship issues. Over the course of a dozen years, with backing from Mr. Malone’s Liberty Media, Mr. Diller built an $18 bln empire that includes the HSN home-shopping network, Ticketmaster, Expedia and Ask.com. When business was good, Mr. Malone pretty much left him alone. But lately, the businesses Mr. Diller runs haven’t been looking good. The stock of IAC/InterActive, which Mr. Diller heads and in which Mr. Malone’s co owns a majority voting stake, is down. “There was a time when there was, I think, a 20% Barry premium” on Wall Street, Mr. Malone noted during a recent interview in his office, which looks out at the Rocky Mountains. “Today you could argue there is a Barry discount.” Mr. Malone is looking to unwind the complex business ties that link him to Mr. Diller. So is Mr. Diller, who eventually wants his independence. “We’ve been frustrated with each other at times,” says Mr. Diller, who hastens to add that he believes the relationship is still working. If a deal isn’t reached, Liberty Media could try to sell its positions in IAC and Expedia to someone else, forcing Mr. Diller to either raise money to buy the stakes or lose control. But to buy out Liberty Media, Mr. Diller might have no choice but to give up a couple of major businesses, shrinking his empire.
08:16 WNG sees FY07 $3.06-3.39 vs $3.08 Reuters consensus; sees revs $3.9-4.1 bln vs $3.97 bln Reuters consensus
08:16 WNG prelim $1.22 vs $1.10 Reuters consensus; revs $1.1 bln vs $1.05 bln Reuters consensus
08:15 PXPL Pixelplus obtains ‘completely positive’ ruling from the Korean Patent Court on the disputed contact hole process patent claimed by MagnaChip (1.05 )
Co announces that it obtained a completely positive and affirmative ruling from the Korean Patent Court granting the Company’s request to effectively cancel and invalidate the disputed contact hole process patent claimed by MagnaChip Semiconductor. The Korean Patent Court’s ruling on the contact hole process patent positively reaffirmed the earlier decision issued by the Intellectual Property Tribunal of the Korea Intellectual Property Office in December 2006 which granted the Company’s request to effectively cancel and invalidate the disputed contact hole process patent claimed by MagnaChip.
08:15 SILC Silicom Limited reports Q3 EPS of $0.25 vs $0.25 First Call consensus; revs $19.3 mln vs $7.17 mln consensus (19.10 )
08:14 WIRES On The Wires
Citi (C) announces that it has received approval from the Tokyo Stock Exchange to list the co’s shares on the TSE under the name “Citi” effective on Nov 5, 2007… Intevac (IVAC) announces it has signed a definitive asset purchase agreement to acquire Creative Display Systems… ASAT Holdings (ASTT) announces that it received a Nasdaq Staff Letter, dated Oct 25, 2007, advising that the co regained compliance with the $1.00 minimum bid price requirement… Rio Vista Energy Partners (RVEP) announce that its wholly-owned subsidiaries, Rio Vista Pennyand Rio Vista GO, have entered into three separate definitive agreements to acquire assets and/or equity including certain leasehold interests of oil and gas producing properties and associated pipeline gathering systems from three privately held companies based in East Central Oklahoma which have geographically contiguous operations.
08:14 JSDA Jones Soda: Stifel lowers ests on weaker demand (9.97 )
Stifel is lowering Q3, Q4, 2007, and 2008 EPS ests for JSDA after conversations with trade sources and store checks indicate 3Q sales of concentrate for the co’s can product, Jones Pure Cane Soda, are likely to be weaker than previously forecast. Further, while they expect a sequential improvement in concentrate sales in the 3Q, firm believes their checks are indicative of end demand in 2007, which they expect will be materially weaker than their initial view. Firm is also increasing their selling and corporate expenses in 2H07 due to expected increased trade promotion and marketing support. Specifically, firm’s 3Q, 4Q, 2007, and 2008 EPS ests for JSDA go to $0.03, $0.02, $0.05, and $0.14 (from $0.05, $0.04, $0.09, and $0.18, respectively).
08:13 SOMH Somerset Hills Bancorp downgraded to Hold from Buy at Stifel- based on valuation (14.58 )
08:13 CVG Convergys upgraded to Buy at Stifel- tgt $23 (18.81 ) -Update-
Stifel upgrades CVG to Buy from Hold with a $23 tgt following the successful renegotiation of the DuPont contract. The firm says their estimates are not changing materially and they still view the H.R B.P.O business as having above-average risk, but they now view Convergys’ H.R B.P.O business with less apprehension and have more confidence in their estimates.
08:12 CFC Countrywide: Worst may be over, but still long way to go - Stifel (17.30 )
Stifel notes CFC reported a 3Q07 loss of $0.12, well below their $1.02 loss est and ($1.2 consensus. Firm believes the worst should be over for CFC as both liquidity and mark-to-market risk have been reduced with the actions this quarter. Moreover, with the writedowns and provisions, credit costs should be lower going forward. While the worst may be over for CFC, firm firmly believes it is not for the housing/mortgage market. Housing supply is still rising and demand continues to suffer from tighter underwriting and higher spreads for nonconforming loans. While the Fed should provide more help, they still expect prices to fall and weigh on mortgage credit and bond performance.
08:11 CNA CNA Financial beats by $0.10 (40.95 )
Reports Q3 (Sep) earnings of $0.78 per share, $0.10 better than the Reuters Estimates consensus of $0.68.
08:11 ACV Alberto-Culver reports Q4 (Sep) results, beats on revs (24.57 )
Reports Q4 (Sep) earnings of $0.32 per share, includes gains, charges, may not be comparable to the Reuters Estimates consensus of $0.35; revenues rose 14.5% year/year to $421.5 mln vs the $399.9 mln consensus.
08:10 Power cos consider options for energy resources - WSJ
WSJ reports Buoyed by favorable weather and a tame hurricane season, electric utilities are expected to report solid 3Q earnings this week and again are seen as a haven by investors fretful about mkt turbulence. Yet even as good returns roll in, power companies are grappling with some of the most serious issues they have faced in a long time. The industry is facing tough decisions involving how to generate and sell power in the future. In many states, electricity reserves are thinning, making it imperative that resource decisions be made sooner rather than later. Changing the resource mix is difficult. At the same time, the nation still is in a muddle about whether it wants to complete deregulation efforts begun a decade ago or call it quits. Regulators, meanwhile, are trying to hold the line on rates.
08:10 PTSI P.A.M. Transport downgraded to Market Perform from Outperform at Morgan Keegan (17.60 )
08:09 ASH Ashland reports Q4 (Sep) results, beats on revs (61.19 )
Reports Q4 (Sep) earnings of $0.51 per share, includes charges, may not be comparable to the Reuters Estimates consensus of $0.76; revenues rose 9.3% year/year to $2.1 bln vs the $1.94 bln consensus.
08:08 BPHX Blue Phoenix beats by $0.01, beats on revs (19.01 )
Reports Q3 (Sep) earnings of $0.18 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.17; revenues rose 34.5% year/year to $23 mln vs the $21.9 mln consensus.
08:07 LPX Louisiana-Pacific misses by $0.35, beats on revs (16.17 )
Reports Q3 (Sep) loss of $0.52 per share, excluding non-recurring items, $0.35 worse than the Reuters Estimates consensus of ($0.17); revenues fell 10.3% year/year to $472.5 mln vs the $449 mln consensus. “Both the continued deterioration in the market for new residential construction and the rising Canadian dollar drove our third-quarter operating results down,” said Chief Executive Officer Rick Frost. “In addition, the negative near-term housing forecast led us to curtail production at several operations and to permanently close two mills.”
08:07 AZS Arizona Star Resources: Barrick reaches friendly cash deal to acquire Arizona Star - 51% interest in Cerro Casale Project in Chile to be added to pipeline (15.24 )
Co announces that it has entered into a definitive support agreement pursuant to which Barrick Gold has agreed, subject to its terms, to make an offer to acquire all the outstanding common shares of Arizona Star for C$18.00 cash per common share. The Offer will be effected through a take-over bid circular to be mailed to Arizona Star shareholders not later than November 9, 2007. The transaction values Arizona Star at approximately C$773 mln. The Offer represents a premium of approximately 27% over Arizona Star’s 20-day volume weighted average trading price on the TSX-V through October 26, 2007. The board of directors of Arizona Star evaluated the Offer with the assistance of the management of Arizona Star and legal and financial advisors. After receiving the recommendation of its special committee, the board of directors of Arizona Star has unanimously determined that the Offer is fair and in the best interest of Arizona Star shareholders and recommends that shareholders accept the offer.
08:07 HBC HSBC Holdings reports Q3 EPS of C$0.30 vs Q2 EPS of C$0.28; co reports net interest income of C$319 mln vs C$282 mln in yr ago period (95.85 )
08:06 K Kellogg reports Q3 (Sep) results, revs in-line; raises FY07 guidance by a penny; guides FY08 EPS below consensus (54.44 )
Reports Q3 (Sep) earnings of $0.76 per share, includes charges and gains, may not be comparable to the Reuters Estimates consensus of $0.73; revenues rose 6.4% year/year to $3 bln vs the $2.99 bln consensus. Co raises guidance for FY07, to EPS of $2.72-2.75 from $2.71-2.74 vs. $2.78 consensus. Co issues downside guidance for FY08, sees EPS of $2.92-2.97 vs. $3.05 consensus.
08:06 ASIA AsiaInfo Contracts with three China Mobile subsidiaries for new business intelligence subsystem (12.10 )
Co announces that it has signed contracts with China Mobile’s Hubei, Liaoning and Shanghai subsidiaries to implement a newly developed Business Intelligence subsystem to support wireless value added data services.
08:06 ZICA Zi Corp licenses eZiText to tier 1 printer manufacturer (1.06 )
Co announces that it has signed a revenue-generating license agreement for its innovative predictive text software, eZiText, with a major global printer manufacturer.
08:06 BPHX prelim $0.18 vs $0.17 Reuters consensus; revs $23.0 mln vs $21.87 mln Reuters consensus
08:05 IMOS Chipmos Technology Chairman received prosecutor’s appeal petition for the ‘not guilty’ verdict by the Taipei District Court (5.48 )
Mr. Shih-Jye Cheng, chairman and CEO of ChipMOS informed the co that on Saturday, October 27, 2007 he received a copy of the petition of the Taipei District Prosecutor’s Office appealing the October 1, 2007 “not guilty” verdict of the Taipei District Court on the December 2005 indictment for alleged misuse of corporate funds by Mr. Cheng. The Prosecutor did not provide any substantive grounds for the appeal in such petition. Mr. Cheng has informed the co that he will continue to vigorously defend the charges and seek to have the “not guilty” verdict sustained upon appeal.
08:05 IIG Imergent announces it reaches settlement with the state of Louisiana and the Louisiana Consumer Protection Section (23.87 )
Co announces the Attorney General of the State of Louisiana and iMergent entered in an Assurance of Voluntary Compliance on October 26. The settlement resolves outstanding matters with the State of Louisiana and, as a result, does not require the company to register as a business opportunity nor does it restrict the company from doing business in Louisiana.
08:05 TZOO Travelzoo: At current levels, believe there is a 50% probability that TZOO could attract acquirers - Susquehanna (18.25 ) -Update-
08:05 NGA N. American Galvanizing reports Q3 EPS up more than 100%, revs up 7% (8.61 )
Reports Q3 (Sep) earnings of $0.20 per share vs $0.09 a year ago. Revenue rose 6.9% year/year to $21.5 mln. There are no analyst estimates. Co says “Strong overall market demand for hot-dip galvanizing continued…Strong customer demand, enhanced operating efficiencies, ongoing cost control and improved pricing, all contributed toward our record profitability…Co is also pleased to report that the scheduled installation of a new and bigger galvanizing kettle and furnace in our Canton, Ohio facility was completed on time and budget.” The plant was shutdown for three weeks in early July.
08:04 CXSP Chemgenex Pharm announces strategic restructuring of co to focus on late-stage cancer portfolio (15.70 )
Co announces a strategic restructuring of the business that will allow the co to focus its resources on the advancement of its clinical-stage cancer portfolio, particularly its lead product, omacetaxine mepesuccinate which is currently in phase 2/3 clinical trials for the treatment of chronic myeloid leukemia. As part of the restructuring, the co will demerge its metabolic disease assets by early December, pending shareholder approval.
08:04 SRP Sierra Pacific beats by $0.09, beats on revs (15.79 )
Reports Q3 (Sep) earnings of $0.69 per share, $0.09 better than the Reuters Estimates consensus of $0.60; revenues rose 11.5% year/year to $1.21 bln vs the $1.08 bln consensus.
08:04 Wedbush previews enterprise software (BBBB, FIC, SUMT, and TLEO)
For FIC, Wedbush expects in-line or higher Q4 results, as they believe that FIC mgmt could have issued conservative guidance, setting a low hurdle given the sales reorganization. For SUMT, they expect in-line or higher than expected Q3 rev and EPS results primarily due to low expectations following two weak quarters in a row. For BBBB, they expect in-line or higher than expected Q3 rev and EPS due to the significant up-sell opportunity of basic to enterprise licenses. They are increasing their tgt to $50/share from $45/share, reflecting the co’s market leadership in the course mgmt market, strength of recurring rev stream, and financial transparency. For TLEO, firm expects in-line or higher than expected Q3 rev and EPS driven by strong sales of Taleo Enterprise Edition 7 subscriptions.
08:03 SRP prelim $0.69 vs $0.60 Reuters consensus; revs $1.21 bln vs $1.08 bln Reuters consensus
08:03 TSO Tesoro Corp says Board of Directors to review Tracinda Corporation offer and provide recommendation (64.48 )
Co confirmed that it is aware of the public announcement made by Tracinda Corporation regarding a proposed unsolicited partial tender offer to be made to Tesoro’s stockholders from Tracinda to purchase up to 21,875,000 shares of Tesoro’s common stock, or approximately 16% of Tesoro’s outstanding shares of common stock, for $64.00 per share in cash.
08:02 CNA prelim $0.78 vs $0.68 Reuters consensus
08:02 MBT Mobile TeleSystems target raised 41% to $100.63 at Nomura - Bloomberg (82.03 )
08:02 K sees FY08 $2.92-2.97 vs $3.05 Reuters consensus
08:02 ACV prelim $0.35 vs $0.35 Reuters consensus; revs $421.5 mln vs $399.87 mln Reuters consensus
08:02 K raises FY07 to $2.72-2.75 compared to previous guidance of $2.71-2.74
08:01 CRDC Cardica announces a 1.5 mln share common stock offering and also announces a 2.57 mln share common stock offering by selling shareholders (11.28 )
08:01 K prelim $0.81 vs $0.73 Reuters consensus; revs $3 bln vs $2.99 bln Reuters consensus
08:01 VMW United States Marine Corps deploys VMware software (112.09 )
Co announces that the United States Marine Corps is deploying VMware products and services across its data centers and mobile combat units worldwide.
08:01 ASH prelim $0.51 vs $0.76 Reuters consensus; revs $2.1 bln vs $1.94 bln Reuters consensus
08:01 HTZ Hertz appoints Elyse Douglas as CFO (23.36 )
Co announces it has appointed Elyse Douglas Executive Vice President and Chief Financial Officer, effective immediately. Ms. Douglas reports to the co’s Chairman and Chief Executive Officer, Mark P. Frissora. Ms. Douglas has been serving as interim Chief Financial Officer of Hertz since the retirement of Paul J. Siracusa in August 2007.
08:01 BYD Boyd Gaming: 3Q7 preview; Borgata shortfall creates downside risk - Morgan Joseph (39.85 )
Morgan Joseph notes BYD will report its 3Q07 results before the market open on Wed, Oct 31. Firm is forecasting rev and EBITDA to decline Y/Y, but EPS should increase by $0.01. Firm is comfortable with their ests for the co’s central region and Las Vegas locals properties, although they have reservations going into the quarter for results at Borgata.
08:00 S&P futures vs fair value: +5.8. Nasdaq futures vs fair value: +12.5.
Futures point to a positive opening. The opening is being fueled by momentum from last week’s rally, a bullish bias in the foreign markets, and reports that a private equity firm considered buying out Sprint Nextel (S). Verizon (VZ) reported earnings that topped expectations.
08:00 LPX prelim ($0.52), ex items vs ($0.17) Reuters consensus; revs $472.5 mln vs $449.01 mln Reuters consensus
07:58 FRNT Frontier Airlines: Calyon rasing estimates (6.94 )
Calyon says in light of good Sept quarter results and co guidance firm is modifying their EPS ests. For FQ3 firm went from a loss of $(0.20) to a loss of $(0.14) Basic; FQ04 from a loss of $(0.3 to a loss of $(0.30) Basic and for FY2008 ending March 2008 from a loss of $(0.22) to a FD EPS profit of $0.08. Assuming that Lynx is up and running successfully by the beginning of FY 2009, firm’s EPS est goes from a profit of $0.07 to FD $0.97. These ests assume there is no tax because of net operating losses carried forward.
07:57 PRICE Filings, Offerings, Pricings and IPOs
Filings: EnerNOC (ENOC) files for a 4 mln share common stock offering; 800k by the co and 3.2 mln by selling shareholders… RadiSys (RSYS) files for a $150 mln mixed shelf offering… Nova Biosource Fuels (NBF) files for a $55 mln convertible notes offering by selling securityholders… Insulet (PODD) files for a 4.89 mln share common stock offering by selling shareholders… Offerings: Champion Enterprises (CHB) announces a $130 mln convertible notes offering.
07:54 SIRI Sirius Satellite: Previewing 3Q07; merger is issue here - Morgan Joseph (3.58 )
Morgan Joseph is forecasting revs and EBITDA for SIRI of $240.6 mln and ($85.1 mln) vs. $167.1 mln and ($126.6 mln) a year ago. Firm also forecasts EPS of ($0.09) vs. ($0.12) a year ago. Firm is looking for SAC of $105 vs. $114 a year ago. On the subscriber front, they are looking for SIRI to add 450k subscribers during 3Q07 to reach 7.6 mln total subscribers. Despite this belief that results are important to investors, the pending merger between Sirius and XM (XMSR) is likely to overshadow 3Q07 performance.
07:54 PHI Philippine Long Distance: Philippine investors bet on two rivals - WSJ (68.84 )
WSJ reports the Philippine cellular-phone industry has long been a cutthroat business, with the two leading providers battling to win subscribers and introduce new services. As the country’s economy gathers steam, though, analysts say there is increasing room for both Philippine Long Distance Telephone and Globe Telecom to raise profits and generate additional gains for investors. Investors have bought into the cos’ skills, raising the share price of PLDT 21% this year and pumping up Globe shares by 40%. Now, two twists in the tale could generate more interest in the two stocks, some analysts say. First, since liquidity problems in the credit mkts swept across the world in August, shares of PLDT and Globe have become popular defensive plays for investors in the Philippine stock mkt, where both are viewed as safe blue chips in uncertain times. Second, the two cos stand to benefit from an economic resurgence in the Philippines that has seen the nation of almost 90 mln people step back from the brink of a financial crisis to post economic growth rates not seen in 20 years. “PLDT is a quintessential proxy to the Philippines economy and the recovery in consumption,” says Ramakrishna Maruvada, a telecommunications analyst for Macquarie in Singapore.
07:54 ODP Office Depot downgraded to Underperform at Credit Suisse- tgt cut to $17 (20.29 ) -Update-
Credit Suisse downgrades ODP to Underperform from Neutral and cuts their tgt to $17 from $24 noting the co announced this morning that they are delaying the release of their third quarter earnings pending a review by the audit committee of their recognition of certain vendor funds. This is not a good development for shareholders in this underperforming stock. The firm says the majority of misstatements in retailing have occurred through improper, usually early, recognition of vendor funds. The note the most recent example was CSK Auto, where it took nearly two years to clean up the financials, but names from Rite Aid all the way back to Phar Mor have suffered from these issues.
07:51 MEOH Methanex upgraded to Market Perform from Underperform at Raymond James (28.17 )
07:51 GEHL Gehl misses by $0.16, misses on revs; announces 1 mln share repurchase plan (20.89 )
Reports Q3 (Sep) earnings of $0.40 per share, $0.16 worse than the Reuters Estimates consensus of $0.56; revenues fell 13.3% year/year to $104.9 mln vs the $118.4 mln consensus. Co issues downside guidance for FY07, sees EPS of $1.90-2.10 vs. $2.15 consensus; sees FY07 revs of $445-460 mln vs. $472.73 mln consensus. Co says “Our continued market share gains, international growth and strong gross margin improvement are all positive outcomes…While we can’t control the weakness that exists in the North American housing market, we continue to drive the improvement of our relative performance in the markets we serve.” Co also authorizes a 1 mln share repurchase plan.
07:49 BEBE bebe stores: Believes 1Q08 beginning of the end for BEBE’s woes - Brean Murray (14.63 )
Brean Murray is under no illusions that 1Q08 results will be impressive, as the co labored under extremely difficult comparisons and a series of fashion woes. That said, firm believes BEBE mgmt will be able to focus on a number of near-term positives in terms of current looks and the ability to pluck low-hanging fruit in terms of margins for the holiday season. As such, firm believes the risk/reward for BEBE remains impressive.
07:47 PGIC Progressive Gaming: Legal issues move forward quicker than expected; tgt cut to $7.50 - Brean Murray (4.83 ) -Update-
Brean Murray notes a ruling on the post-trial motions in co’s “Webb Case” came quicker than expected and did not resolve the case as hoped. Progressive will now have to post a bond for $20 mln in conjunction with its appeal. The co indicated that it will file its appeal in spring 2008. In Progressive’s recent SEC documents, it stated that outside council believes it is “probable” that the jury verdict will be overturned or reversed as a result of the post trial motions. Firm has expected a decision on the post-trial motions in early 2008. Firm cuts tgt to $7.50 from $8.50.
07:47 DELL Dell added, HPQ removed from Goldman Sachs’ Conviction Buy List - CNBC (28.98 )
07:47 GEHL sees FY07 $1.90-2.10 vs $2.15 Reuters consensus; sees revs $445-460 mln vs $472.7 mln Reuters consensus
07:46 CAH Cardinal Health upgraded to Outperform at Credit Suisse- tgt raised to $77 (65.55 )
Credit Suisse upgrades CAH to Outperform from Neutral and raises their tgt to $77 from $74 based on a more favorable risk/reward scenario for the stock. The firm acknowledges the comps this qtr and next are difficult for CAH and the industry, but they believe at the current valuation, investors will be quick to look to C08.
07:46 GEHL prelim $0.40 vs $0.56 Reuters consensus; revs $104.9 mln vs $118.39 mln Reuters consensus
07:45 WCG WellCare Group: Jefferies comments on last week’s events; cuts tgt to $35 (31.36 )
Jefferies notes that following a federal/state raid on WCG’s headquarters 10/24, it has been reported that Connecticut and Georgia are investigating the co. In addition, on Friday, the co announced that the SEC has begun an investigation and that the Board has commenced a special independent committee to address the situation. The firm lowers their tgt to $35 from $107 saying new target represents a 53% probability of shares trading at 12-times their reduced ‘08 earnings outlook of $5.50 and a 47% probability of the co losing its contracts to provide Medicare and Medicaid benefits to its customers.
07:44 Indian shares surge, benchmark stock index crosses 20,000 level - International Herald Tribune
International Herald Tribune reports Indian shares soared to a record high Monday as the key stock index crossed the 20,000 level, propelled by foreign fund buying. Indian shares surged in late trade, with the Bombay Stock Exchange’s 30-share Sensex up 762 points, or 3.96%, to 20,004.62 points. Investors appeared to be encouraged by clarity from the market regulator last week on foreign fund investment and assurances to speed up registration for foreign institutional investors. Last week Indian shares had plunged in volatile trade over uncertainty about the Securities and Exchange Board of India proposal to curb foreign investment in Indian shares. Analysts say SEBI’s decision to finalize guidelines to limit participatory notes — a financial instrument allowing foreign funds not registered with the regulator to invest in Indian shares — would help streamline markets in the long run.
07:43 PX Praxair target raised to $102 from $86 at Soleil - believe PX has among the better combinations of EPS growth & ROC (86.46 )
07:42 PSD Puget Energy downgraded to Sell from Hold at Soleil - follows acquisition offer by Macquarie (27.80 )
07:42 SDA Sadia S.A. downgraded to Neutral from Overweight at HSBC (67.07 )
07:41 EDR Education Realty Trust initiated with a Hold at Keybanc (12.92 )
Keybanc initiates EDR with a Hold saying on the one hand, EDR offers investors exposure to a defensive and stable niche within multifamily real estate at an attractive valuation. On the other hand, the co remains “in the box” from a balance sheet perspective - highly leveraged and unable to raise needed equity to grow.
07:41 CMG Chipotle Mexican Grill: Expect continued outperformance in Q3 but valuation a downer - Morgan Joseph (133.95 )
Morgan Joseph expects CMG to continue to buck the trend in Q3 with strong SSS and managed food and labor costs. Given its exceptional operations, the co continues to outperform in an industry currently characterized by margin pressure and tightening consumer budgets. As such, they expect 3Q07 EPS of $0.54, a penny above consensus and vs. $0.36 last year as CMG beat expectations in 1H07. Overall, while firm expects 3Q to be another strong one for Chipotle, given the stock’s valuation at 23.8x EV/EBITDA in 2008E, they believe there is very little room for even slight downside during the quarter.
07:40 DAI Daimler: Chrysler workers approve contentious labor pact - Reuters (110.87 )
Reuters reports workers represented by the United Auto Workers ratified a four-year contract with automaker Chrysler, the union said on Saturday, capping a close-fought battle that had threatened to scuttle the labor pact. Hourly production workers at Chrysler voted 56% in favor of the new contract, which would allow the automaker to hire new workers at half the wage rate of current workers for a wide range of jobs in its factories.
07:39 AXL American Axle upgraded to Aggressive Buy at Keybanc- tgt raised to $34 (23.73 )
Keybanc upgrades AXL to Aggressive Buy from Buy and raises their tgt to $34 from $30 based on their belief that there are significant earnings drivers on the horizon that will force material upward revisions to 2008 and 2009 First Call mean earnings estimates. They believe the financial community in general continues to underestimate the co’s true earnings power and contend that it will be revealed over the course of the next year.
07:39 WTS Watts Ind: 3Q07 preview; expecting some copper benefit - Morgan Joseph (30.03 )
Morgan Joseph notes WTS is scheduled to report its 3Q07 results on Tuesday, Oct 30, after the market close. Firm projects 3Q07 EPS of $0.61 vs. $0.67 a year ago and the Street Consensus of $0.57. The anticipated decline in Y/Y EPS is mostly a result of a higher SG&A ratio and an 18% increase in diluted shares outstanding. Firm est is the Street high, as firm has adopted a more bullish stance based on their view that strength in non-residential construction should help alleviate weakness in the housing sector. Firm also expects that less expensive copper vs. the beginning of 2007 should flow through the income statement in 3Q07 and provide a temporary benefit to gross margins.
07:38 SCHN Schnitzer Steel misses by $0.07, beats on revs (77.77 )
Reports Q4 (Aug) earnings of $1.28 per share, $0.07 worse than the Reuters Estimates consensus of $1.35; revenues rose 23.8% year/year to $749 mln vs the $668.3 mln consensus. Co says “Looking forward, the positive macro-economic trends supporting our businesses, including global increases in steel consumption and strong demand for raw materials, remain in place. The international markets for scrap metal are expected to remain strong and gross prices for ferrous scrap are expected to increase from the recently completed Q4. Demand for steel products is expected to remain good but soften from Q4. Based on current market conditions, the average net sales prices during the quarter are expected to decline slightly from the record prices realized in the recently completed Q4, but remain significantly higher than prices realized in the first quarter of 2007.
07:38 DJO DJ Orthopedics misses by $0.05, misses on revs (49.88 )
Reports Q3 (Sep) earnings of $0.34 per share, excluding non-recurring items, $0.05 worse than the Reuters Estimates consensus of $0.39; revenues rose 5.8% year/year to $119.8 mln vs the $121.8 mln consensus.
07:37 NTE Nam Tai Electronics beats by $0.02, reports revs in-line (13.69 )
Reports Q3 (Sep) earnings of $0.28 per share, $0.02 better than the Reuters Estimates consensus of $0.26; revenues fell 6.4% year/year to $204.5 mln vs the $203.9 mln consensus. Co says, “The competitive environment remains intense and we expect resulting pricing pressure from customers to remain a significant challenge for the electronics manufacturing services industry in the coming quarters and years. Additionally, we will also have to face issues such as the continuing appreciation of Renminbi, changing tax and labor law, shortages of electricity supply and increases in overhead expenses resulting from inflation. In the near term we expect any increases in demand for products in our TCA segment to be offset by seasonal decreases in our other product segment.”
07:37 Lowering ethanol forecasts and tgts - Calyon
Calyon says as a result of the decoupling of ethanol and gasoline prices, firm lowers their ethanol price assumptions. Firm is therefore also lowering their price targets as they are based on their 2009 ests. Firm now has Add ratings on all ethanol stocks under coverage with a $14 (prior tgt $15) tgt on VSE, a $14 tgt (prior tgt $16) on AVR and an $11 tgt (prior tgt $13) on USBE. Firm is positive on the longer-term industry fundamentals and believe these cos are trading at attractive valuations, but do not anticipate near-term positive catalysts likely to take share prices meaningfully higher. Firm continues to believe these companies are efficient, well-capitalized producers poised to benefit from eventual passage of a new RFS. They do not expect a near-term catalyst to take them significantly higher but their valuations are compelling.
07:36 KEG Key Energy announces repurchase program, new debt financing plan, and business update (14.90 )
Co announced that its Board of Directors has authorized a share repurchase program of up to $300 mln. In addition, the co announced that it has completed the acquisition of the Moncla Companies; initiated a new bank financing; and provided an update on current business conditions, including its expected third quarter results and its September rig and trucking hours… Customer activity and demand for services are generally good across all of the co’s operating regions; however, capacity-driven factors have resulted in pricing pressures within all of the co’s lines of business. Further, new capacity within the well service segment has affected utilization levels, with the co’s weekly rig hours now averaging between 44,000 and 46,000, compared to approximately 53,000 during the peak periods of 2006. New capacity additions, as well as other factors, have negatively impacted the co’s September quarterly results. The co will release its quarterly results on November 9, 2007. The co expects to report revenue for the September quarter totaling approximately $414 mln and earnings per fully diluted share of between $0.25 and $0.27. Items affecting the September quarter include an approximate $7.0 mln sequential quarterly increase in workers compensation expense, the impact of an approximate $5.0 mln delayed billing and recognition issue with one of the co’s Argentine customers, continued high professional fees associated with the financial reporting process and weaker performance in the co’s pressure pumping segment due to the influx of new pumping equipment in the U.S. marketplace.
07:35 NTE prelim $0.28 vs $0.26 Reuters consensus, $0.25 First Call; revs $204.5 mln vs $203.88 mln Reuters consensus
07:34 HTZ Hertz Global beats by $0.08, beats on revs; sees FY07 EPS and revs at upper end or above previous guidance (23.36 )
Reports Q3 (Sep) earnings of $0.65 per share, excluding non-recurring items, $0.08 better than the Reuters Estimates consensus of $0.57; revenues rose 9.3% year/year to $2.45 bln vs the $2.38 bln consensus. Co issues upside guidance for FY07, sees EPS at upper end or above previous guidance of $1.15-1.22 vs. $1.21 consensus; sees FY07 revs at upper end or above previous guidance of $8.5-8.6 vs. $8.57 bln consensus.
07:33 DCO Ducommun beats by $0.10, beats on revs (36.95 )
Reports Q3 (Sep) earnings of $0.55 per share, $0.10 better than the Reuters Estimates consensus of $0.45; revenues rose 16.1% year/year to $94.7 mln vs the $90.6 mln consensus.
07:32 SPG Simon Properties beats by $0.04, reports revs in-line (98.48 )
Reports Q3 (Sep) funds from operations of $1.46 per share, $0.04 better than the Reuters Estimates consensus of $1.42; revenues rose 10.8% year/year to $907.1 mln vs the $899.3 mln consensus.
07:32 Global microchip sales up 6 pct in Sept, according to the Semiconductor Industry Association - Reuters
Rueters reports global microchip sales rose nearly 6% in September, driven by demand for consumer products like personal computers and cell phones, the Semiconductor Industry Association said on Monday. Microchip sales in September were $22.6 bln, compared with $21.3 bln last year. Third-quarter sales rose about 6% to $67.8 bln from $64.0 bln, in the year ago period.
07:31 HTZ sees FY07 at upper end of previous guidance: $1.15-1.22 vs $1.21 Reuters consensus; sees revs $8.5-8.6 mln vs $8.57 bln Reuters consensus
07:31 PENN Penn Natl Gaming downgraded to Hold from Buy at Brean Murray due to lack of upside to acquisition price (62.25 )
07:31 DCO prelim $0.55 vs $0.45 Reuters consensus; revs $94.7 mln vs $90.57 mln Reuters consensus
07:31 D Dominion announces 2-For-1 stock split (88.64 )
Co’d board of directors approved a two-for-one stock split. Dominion shareholders of record on Nov. 9, 2007, will receive one additional share of common stock for each share held on that date. This move does not change the proportionate interest that a shareholder maintains in the company. The additional shares will be distributed on or after Nov. 19, 2007.
07:31 CHINA CDC Corp and Mgame agree to negotiate to resolve differences over Yulgang (7.09 )
CDC Games, a business unit of CHINA, announces that it’s CEO, Peter Yip, met with Mgame’s CEO, Mr. Yi-Hyung Kweon, in Seoul, Korea today to discuss their differences over the operation of the online game, Yulgang, by CDC Games in China. The parties agreed to work together to find a mutually satisfactory result and signed an agreement to agree to negotiate in good faith over the next several weeks to resolve all differences between the parties and reach an amicable solution.
07:30 HMIN Home Inns initiated with a Negative at Susquehanna (48.27 )
07:30 SCHN prelim $1.28 vs $1.35 Reuters consensus; revs $749.0 mln vs $668.30 mln Reuters consensus
07:30 HTZ prelim $0.65 vs $0.57 Reuters consensus; revs $2.45 bln vs $2.38 bln Reuters consensus
07:29 VZ Verizon beats by $0.01, reports revs in-line (45.60 )
Reports Q3 (Sep) earnings of $0.63 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.62; revenues rose 5.8% year/year to $23.77 bln vs the $23.63 bln consensus. Co added a net of 202,000 new FiOS TV customers in Q3, added a net of 285,000 new broadband connections. Wireless added 1.6 mln total net new subs, retail churn 1.21%.
07:29 Roth previews energy and industrial technologies
Roth notes that while most of their Buy rated stocks (ARGN, COGO, FTEK, GVP, WFI.TO) have appreciated quite strongly in recent weeks, they believe POWR is attractive at current levels, offering exposure to the growing demand response and energy efficiency markets at a reasonable valuation. Firm believes 3Q07 is a defining quarter for two of their Hold rated stocks (BWTR and MXWL), with quarterly results expected to provide initial insight into each co’s operating potential after a period of transition.
07:28 PWAV Powerwave initiated with a Buy at Brean Murray- tgt $8 (5.99 )
Brean Murray initiates PWAV with a Buy and an $8 tgt saying the co should benefit from continued investment in 3G networks, increasing wireless voice and data usage and new technologies such as WiMAX. The firm says Powerwave represents an interesting turnaround story. The firm says over the past 18 months, the co has suffered losses as it has struggled to adjust to reduced demand and carrier consolidation. However, following a restructuring, they believe Powerwave is poised to see improving results as the spending environment ramps in 4Q07 and beyond.
07:26 WINN Winn-Dixie Stores beats by $0.22, reports revs in-line (18.62 )
Reports Q0 loss of $0.01 per share, $0.22 better than the Reuters Estimates consensus of ($0.23); revenues rose 0.7% year/year to $1.62 bln vs the $1.62 bln consensus. Co sees Y08 adjusted EBITDA of $90-115 mln, and identical store sales slightly higher yr/yr.
07:26 STO StatoilHydro Q3 profit rises on Forex gains, despite lower production, gas prices - RTT News (78.90 )
RTT News reports the co reported earnings and said that its profit for the third quarter grew 26% from the previous year, aided by foreign exchange gains, despite a 19% decline in net operating income. The co recorded a mere 1% growth in quarterly revenues due to lower production in the Norwegian continental shelf, together with 15% decrease in gas prices. According to the co, Statoil ASA’s merger with Norsk Hydro’s oil and gas operations became effective as of October 1, 2007. Consequently, StatoilHydro’s 3Q of 2007 financial statements comprise the financial results for former Statoil group only. In the 3Q, the co’s net income climbed 26% to NOK 10.68 bln or $1.97 bln from NOK 8.49 bln in the previous year quarter. In the 3Q, earnings per share were NOK 4.94 or $0.91 that grew 29% from NOK 3.82 or $0.59 in the 3Q of 2006. According to the co, the y-o-y growth in net income was mainly due to an increase in net financial items from currency gains, partly offset by lower downstream results.
07:26 VZ prelim $0.63, ex items vs $0.62 Reuters consensus; revs $23.8 bln vs $23.63 bln Reuters consensus
07:24 ECA EnCana: Resource play strategy is working; on track to exceed 2007 production guidance - CIBC (66.97 )
CIBC notes ECA posted strong 3Q07 results on the back of stronger-than-expected natural gas production and refining margins. As the newer resource plays ramp up, 2007 production growth is likely to exceed guidance. Firm is raising their 2007 production forecast, by 5,200 Boe/d, to 723,900 Boe/d and our 2008 forecast by 14,000 Boe/d, to 756,110 Boe/d. Firm notes ECA has significant cash flow generation ability, producing over $2.2 bln p.a. in free cash flow over 2007/2008. An effective hedging program insulates realizations from volatile price swings and wide basis differentials.
07:24 WINN prelim ($0.01) vs ($0.23) Reuters consensus; revs $1.62 bln vs $1.62 bln Reuters consensus
07:22 KDN Kaydon earnings color (55.30 ) -Update-
Reuters Estimates is telling us that an actual of $0.56, adjusting for relocation and expansion costs of $1.0 mln, is comparable to their consensus of $0.59. See 7:07 comment for the full earnings report.
07:20 MRT Mortons Restaurant Group reports EPS in-line, revs in-line; guides Q4 revs in-line (17.21 )
Reports Q3 (Sep) loss of $0.04 per share, in-line with the Reuters Estimates consensus of ($0.04); revenues rose 12.7% year/year to $78.9 mln vs the $78.4 mln consensus. Co issues guidance for Q4, sees EPS of $0.46-0.48, includes higher than initially anticipated pre-opening costs, may not be comparable to $0.51 consensus; sees Q4 revs of $101-104 vs. $103.09 mln consensus.
07:20 ORLY O’Reilly Auto: Comps rebound and outpace industry; 4Q07 comps raised - Merriman (32.92 )
Merriman notes ORLY reported 3Q07 rev of $661.8 mln and EPS of $0.46. Same-store sales increased 4.3%, slightly above firm’s expectations. Firm’s 3Q07 projections were slightly too aggressive. They believe fundamentals are headed in the right direction and their 2008 growth projections expect this trend to continue. Firm is tweaking their 4Q07 rev est to $633.8 mln from $640.4 mln and their EPS est to $0.41 from $0.42.
07:20 BRKS Brooks Automation: Lowering ests due to weak Dec outlook from WPE companies - Merriman (12.74 )
Merriman is lowering their rev and EPS ests for BRKS following weak near-term outlooks from its 10%+ customer Lam Research (LRCX) and other upfront wafer processing equipment customers such as KLA Tencor (KLAC) Varian Semiconductor International (VSEA) and Novellus (NVLS). Firm believes BRKS is not out of the woods yet and they expect another down sequential quarter in Dec. Firm’s new rev est for the Dec quarter is $149 mln, down 10.4% from their Sept quarter est of $166 mln vs. their previous Dec quarter est of $166 mln, flat with the Sept quarter.
07:19 ENDP Endo Pharm: Earnings preview - Broadpoint Capital (28.73 )
Broadpoint Capital notes ENDP is scheduled to report Q3 results on Thursday. Firm anticipates co will report rev of $265 mln and adjusted EPS of $0.45, compared to $217 mln and $0.33. Investors should note that third-quarter results last year were adversely affected by wholesaler de-stocking, which had an adverse impact on reported rev relative to underlying prescription demand. On the call firm anticipates that mgmt will discuss new development with respect to the Paragraph-IV challenge to Opana, including the listing of two additional patents in the FDA’s Orange Book.
07:19 POT Potash: Upgrade details (116.67 ) -Update-
As mentioned at 6:51 BofA upgraded POT to Buy from Neutal with a $140 tgt after reports Russian potash producer Silvinit may be forced to cease all potash shipments. The firm says sources suggest a stoppage is imminent; a notion supported by the decision of PCS, Agrium and Belorussian Potash to not accept orders until further notice. The firm says POT is well-positioned to capitalize with another 1.5 mln tons of new capacity on track for 2Q08.
07:19 DO Diamond Offshore tgt raised to $174 at FBR; unrecognized dividend growth potential (112.47 )
Friedman Billings raises their tgt on DO to $174 from $139 as co updated their yield valuation following co’s decision to pay a special dividend quarterly. Firm assumes that DO will raise the dividend each quarter as cash flows grow. The distribution could grow 51% in 2009 to $12.80, keeping cash roughly constant near $500 million.
07:18 WFR MEMC Elec tgt raised to $100 at FBR; added to “Top-Pick” List (71.08 )
Friedman Billings raises their tgt on WFR to $100 from $75. Firm says even with the sharp decline in semi wafer prices and assuming flattish margins going forward, they believe there is incremental confidence in WFR’s ability to deliver more than $3 bln of revs by CY09, compared to its long-term target of $3-$4 bln, leading to a quarterly EPS exceeding $1.30 sometime in CY09. What is driving such earnings are the “solar wafer contracts”, not including spot poly, which are expected to increase from 15% of the total to 35-40% in CY08 and > 50% in CY09. This implies > $1,750 mln of contracted solar wafer revs in CY09, up from estimated $300 mln in CY07. Firm increases their CY08 pro forma EPS est from $3.96 to $4.28, which is above the current consensus of $4.07. Firm adds co to its “Top-Pick” List.
07:18 MRT sees Q4 $0.46-0.48 vs $0.51 Reuters consensus; sees revs $101-104 mln vs $103.09 mln Reuters consensus
07:18 CVG Convergys: HRO overhang removed; BPO segment disappoints - FBR (18.81 )
Friedman Billings notes CVG announced a successful contract resolution with an HRO client that had the possibility of a $35 mln hit to earnings, which relieved a current overhang on the shares. The resolution largely overshadowed CVG’s modest operating results as the co posted lethargic 2% YoY growth in its customer care BPO segment, with margins of 8.7%, its lowest in nine quarters. CVG did post decent results in its billing segment, away from the Sprint deconversion, and solid margins of 19.2%. While they acknowledge the relief of the overhang, firm believes that the customer care and HRO business segments have experienced an increased risk profile in recent months, and, thus, they remain on the sidelines until signs of a more stabilized operation emerge.
07:18 SSRX 3SBIO profiled in New America section of IBD (16.02 )
IBD reports the co is one of China’s leading biotech cos and its growing faster than the overall mkt, and it has been profitable for the past few years. It holds the No. 1 mkt share in China for the popular protein-based biotech drug recombinant human erythropoietin — also known as Epoetin, or Epo for short. The Epo product, under the brand name Epiao, has cornered 37% of the Chinese mkt in product sales. 3SBio has sold about 7 mln vials of Epiao since 1999. The drug accounts for about 70% of 3SBio’s total revenue and is growing more than 30% annually. Sales of 3SBio’s second best-selling product, Tpiao, which launched in January 2006, grew faster — 263%. In addition to new cancer applications, continued growth likely will come from use in kidney dialysis. Six pipeline drugs, meanwhile, are in development. They include second-generation versions of Epiao and Tpiao as well as a vaccine for human papilloma virus, or HPV, to name a few. Analysts polled by Thomson Financial expect 3SBio to post strong double-digit earnings growth through 2011, starting with 32% year-over-year growth in the next fiscal year, to 62 cents a share.
07:17 ORCC Online Resources tgt cut to $12 at FBR (8.53 )
Friedman Billings cuts their tgt to $12 from $18 after tempered CY08 expectations led to a violent 30% sell-off of the shares on Friday. Firm does not believe the business is fundamentally broken, but rather a question of ORCC’s lack of credibility. Firm believes the shares will remain under pressure for the next few weeks as investors head for the exits, and they believe it will take several quarters of solid execution to rebuild investor’s confidence in this management team to begin to get the stock moving higher again.
07:17 MRT prelim ($0.04) vs ($0.04) Reuters consensus; revs $78.9 mln vs $78.35 mln Reuters consensus
07:17 LCC US Airways: Pricing power negates rising fuel costs - Calyon (27.35 )
Calyon believes LCC is recovering despite high fuel costs, although merger challenges remain. Higher estimated fuel cost expense should be offset by skillful yield mgmt as the co maximizes the potential of its two combined systems from the recent merger. Co sees strong demand in the fourth quarter, particularly in the business travel sector which should enable it to continue to strengthen its revs. In addition, recent capacity constraints should enable them to continue to strengthen load factors and yields.
07:17 MA MasterCard: Despite below Street view for 3Q07, raising est for 2007 - Calyon (157.03 )
Calyon expects that MA will report 3Q07 EPS of $1.35 per share (down 5% y/y) on an operating basis before the market opens on Wed, Oct 31. Despite the $0.21 hike in their 3Q07 est, they remain $0.06 below the Street consensus. The increase was mainly driven by an overly conservative model that needed adjusting after AMEX’s (AXP) impressive quarterly earnings report. Firm believes MA should again benefit from continued strong spending volumes and billed business growth, as their industry thesis continues to play out. Firm’s 2007 est is up $0.09 to $4.95.
07:16 TZOO Travelzoo: Expect European turnaround by 2H08 - Susquehanna
07:16 DLA Delta Apparel: 1Q08 earnings preview - Nollenberger (16.50 )
Nollenberger notes DLA is scheduled to report 1Q08 results on Friday, Nov 2. Firm’s 1Q08 rev est is $77.9 mln, an increase of 24% over 1Q07. Firm’s 1Q08 EPS est is $0.09. Firm believes DLA has the potential to benefit from a growing customer base, increased Soffe brand recognition, operational improvements, and possible acquisitions going forward. As a result, they believe Delta Apparel should experience top and bottom-line growth over the next few years. After a few weak quarters, firm believes the co is on track to benefit from recent repositioning and acquisitions.
07:16 LANC Lancaster Colony beats by $0.05, beats on revs (38.15 )
Reports Q1 (Sep) earnings of $0.51 per share, $0.05 better than the Reuters Estimates consensus of $0.46; revenues rose 9.0% year/year to $285.6 mln vs the $271.7 mln consensus. For Q2 co said, “we expect continued Specialty Foods sales growth but remain confronted by broadly and sharply higher ingredient costs. Candle sales should benefit from holiday demand, but margins may remain constrained by higher wax prices and placement costs associated with several scheduled product resets. We expect Automotive sales to continue on an upward trend and may see some moderation in year-over- year material costs… We continue our strategic alternative review of
nonfood operations, which we intend to complete by the fiscal year-end.”
07:14 LANC prelim $0.51 vs $0.46 Reuters consensus; revs $286.0 mln vs $271.69 mln Reuters consensus
07:10 ENTG Entegris beats by $0.04, beats on revs; guides Q4 EPS in-line, revs in-line (8.08 )
Reports Q3 (Sep) earnings of $0.10 per share, excluding non-recurring items, $0.04 better than the Reuters Estimates consensus of $0.06; revenues fell 10.6% year/year to $151.8 mln vs the $144.8 mln consensus. Co issues in-line guidance for Q4, sees EPS of $0.07-0.10, excluding non-recurring items, vs. $0.09 consensus; sees Q4 revs of $144-152 mln vs. $150.37 mln consensus.
07:08 ARLP Alliance Resource beats by $0.05, beats on revs (38.10 )
Reports Q3 (Sep) earnings of $0.83 per share, excluding non-recurring items, $0.05 better than the Reuters Estimates consensus of $0.78; revenues rose 6.5% year/year to $260.5 mln vs the $255 mln consensus. Co issues guidance for FY07, sees FY07 revs, excluding transportation revs, of $985 mln-1.0 bln, may not be comparable to $1.04 bln consensus.
07:08 GW Grey Wolf misses by $0.01, misses on revs (6.03 )
Reports Q3 (Sep) earnings of $0.17 per share, $0.01 worse than the Reuters Estimates consensus of $0.18; revenues fell 7.7% year/year to $224 mln vs the $226.5 mln consensus.
07:07 KDN Kaydon reports Q3 (Sep) results, misses on revs (55.30 )
Reports Q3 (Sep) earnings of $0.54 per share, may not be comparable to the Reuters Estimates consensus of $0.59; revenues rose 7.8% year/year to $107.4 mln vs the $111.1 mln consensus.
07:06 BRKR Bruker BioSciences beats by $0.01, beats on revs (9.66 )
Reports Q3 (Sep) earnings of $0.06 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.05; revenues rose 25.5% year/year to $131.6 mln vs the $116.8 mln consensus.
07:05 SSW Seaspan misses by $0.01, reports revs in-line (32.25 )
Reports Q3 (Sep) earnings of $0.29 per share, excluding non-recurring items, $0.01 worse than the Reuters Estimates consensus of $0.30; revenues rose 79.9% year/year to $54.2 mln vs the $54.7 mln consensus.
07:05 ECTX EcTel reports Q3 non-GAAP EPS of ($0.04) vs ($0.0 two analyst estimate; reports revs up 16% yr/yr to $5.8 mln vs $5.7 mln two analyst estimate (3.42 )
07:05 MANT ManTech upgraded to Outperform from Neutral at Cowen (37.45 )
07:04 VSE VeraSun Energy downgraded to Add at Calyon- tgt $14 (12.56 )
Calyon downgrades VSE to Add from Buy with a $14 tgt saying they are positive on the longer-term industry fundamentals and believe these companies are trading at attractive valuations, but do not anticipate near-term positive catalysts likely to take share prices meaningfully higher.
07:04 VNUS VNUS Medical Tech beats by $0.04, beats on revs; guides Q4 EPS in-line, revs in-line (15.60 )
Reports Q3 (Sep) loss of $0.14 per share, $0.04 better than the Reuters Estimates consensus of ($0.18); revenues rose 46.8% year/year to $17.5 mln vs the $16.2 mln consensus. Co issues in-line guidance for Q4, sees EPS of ($0.06)-($0.10) vs. ($0.0 consensus; sees Q4 revs of $18-18.5 mln vs. $18.23 mln consensus.
07:04 SIAL Sigma-Aldrich and Sangamo Bio announces nature biotechnology study demonstrating zinc finger technology for modification of human stem cells (50.32 )
Co and Sangamo BioSciences (SGMO) announce the publication of data demonstrating the use of Sangamo’s ZFP Nucleases for “gene-editing” in human stem cells. This work represents a significant advance in the ability to specifically and efficiently modify the human genome in stem cells potentially enabling the efficient generation of stem cell lines for use as models of human disease for medical research and for drug testing. In addition to its use in the generation of valuable research reagents, the technology has potential in the therapeutic application of stem cells.
07:04 WATG Wonder Auto Tech reports Q3 EPS of $0.15 vs $0.15 two analyst estimate; reports revs up 40% yr/yr to $27.3 mln vs $27.3 mln two analyst estimate (7.60 )
07:03 KDN prelim $0.54 vs $0.59 Reuters consensus; revs $107.4 mln vs $111.06 mln Reuters consensus
07:02 BRKR prelim $0.06 vs $0.05 Reuters consensus; revs $131.6 mln vs $116.81 mln Reuters consensus
07:02 OSIS OSI Systems awarded $14.0 mln phase 3 contract from EDO Corp (23.61 )
co announces that its Optoelectronics and Manufacturing division has received a phase 3 order for approximately $14.0 mln from EDO Corporation.
07:02 ENTG prelim $0.10, ex items vs $0.06 Reuters consensus; revs $151.8 mln vs $144.78 mln Reuters consensus
07:02 SSW prelim $0.29 vs $0.30 Reuters consensus, $0.29 First Call; revs $54.2 mln vs $54.67 mln Reuters consensus
07:01 GW prelim $0.17 vs $0.18 Reuters consensus; revs $224.0 mln vs $226.51 mln Reuters consensus
07:01 PSO Pearson wins new five-year testing contract from U.S. Department of Education (16.27 )
Co announces that The United States Department of Education has awarded a new five-year contract for the period 2008-2012 to the Educational Measurement group of Pearson for delivering and scoring the National Assessment of Educational Progress. PSO has been responsible for scoring N.A.E.P, also known as the “Nation’s Report Card,” since 1989.
07:01 PDGI PharmaNet Devlpmt downgraded to Hold at Jefferies- tgt cut to $37 (34.24 )
Jefferies downgrades PDGI to Hold from Buy and cuts their tgt to $37 from $39 saying while PDGI should see margin recovery in both Early and Late-stage, departures of PharmaNet board and management executives have introduced new risk. Firm says they are stepping to the sidelines until they can get clarity.
07:01 ARLP sees FY07 revs $985 mln to 1.0 bln vs $1.04 bln Reuters consensus
07:01 VNUS sees Q4 ($0.06-0.10) vs ($0.0 Reuters consensus; sees revs $18-18.5 mln vs $18.23 mln Reuters consensus
07:01 KDN Kaydon announces acquisition of Avon Bearings (55.30 )
Co announces that it has acquired Avon Bearings in a cash transaction valued at $55 mln. The acquisition of Avon is expected to be accretive to Kaydon’s earnings within the first full year of ownership and immediately accretive to cash earnings. Avon is expected to add approximately $30 mln to Kaydon’s fiscal 2008 sales.
07:00 VNUS prelim ($0.14) vs ($0.1 Reuters consensus; revs $17.5 mln vs $16.22 mln Reuters consensus
07:00 ARLP prelim $0.83 vs $0.78 Reuters consensus; revs $260.5 mln vs $255.03 mln Reuters consensus
06:57 PGIC Progressive Gaming downgraded to Accumulate at ThinkEquity- tgt cut to $5 from $7.50 (4.83 )
ThinkEquity downgrades PGIC to Acumulate from Buy and cuts their tgt to $5 from $7.50 noting Progressive announced Friday that it lost its post-trial motions and will proceed to appeals court in the Webb lawsuit. Consequently, Progressive will have to post a $20 mln bond by November 8. The firm believes posting this bond, will hinder the co’s efforts for much-needed capital structure improvements.
06:54 ECI Encision reports Q2 EPS of $0.00 vs $0.01 in yr ago period; reports revs up 17% yr/yr to $3.1 mln with no estimates (2.38 )
06:51 POT Potash upgraded to Buy from Neutral at BofA (118.67 )
06:47 AET Aetna downgraded to Neutral from Buy at Merrill (55.88 )
06:43 CALLS Early Research Calls II
Upgrades: Citigroup upgrades NTT DoCoMo (DCM 13.60) to Hold from Sell. Downgrades: Citigroup downgrades Stanley (SXE 27.43) to Hold from Buy… Deutsche Bank downgrades Developers Diversified Realty (DDR 51.54) to Hold from Buy… Lehman downgrades NVIDIA (NVDA 34.40) to Equal-weight from Overweight… JMP downgrades Clayton Holdings (CLAY 5.4 to Market Perform from Outperform following earnings and saying they do not see any near term catalysts… Thomas Weisel downgrades Network Appliance (NTAP 31.49) to Market Weight from Overweight saying recent checks on the quarter were somewhat mixed and suggest a slower recovery than expected; increased competitive pressure in NetApp’s core market, and a run up in the stock price. Miscellaneous: BofA initiates Thomas Properties (TPGI 12.27) with a Neutral and sets a $14 tgt… RBC initiates SemGroup (Energy (SGLP 30.15) with a Sector Perform and a $32 tgt.
06:35 ALJ Alon USA Energy provides preliminary Q3 EPS estimate; guides down (38.68 )
Co issues downside guidance for Q3 (Sep), sees EPS of $0.23-0.29 vs. $0.71 Reuters Estimates consensus. The co’s Q3 earnings were negatively affected by record crude oil prices in Q3, which resulted in lower margins, particularly in Alon’s asphalt segment as asphalt market prices did not reflect the sharp increase in costs of crude oil and other raw materials. Asphalt margins are expected to be less than $20 per ton due to the $12 per barrel increase in crude oil prices in Q3. This increase in crude prices was approx double the increase in crude prices in Q2. Also adversely affecting earnings were substantially lower West Coast margins. Refinery operating margins at the co’s Calif. refineries for Q3 are expected to be less than $2 per barrel vs approx $10 per barrel in Q2 due primarily to a $19 per barrel decrease in West Coast 3-2-1 margin.
06:33 DUSA DUSA Pharma and River’s Edge announce settlement agreement involving Nicomide (2.39 )
Co and River’s Edge Pharmaceuticals announce that they have entered into a settlement and mutual release agreement to dismiss the lawsuit brought by DUSA against River’s Edge asserting a number of claims arising out of River’s Edge’s alleged infringement of U.S. Patent No. 6,979,468 under which DUSA has marketed, distributed and sold Nicomide. Under the terms of the agreement, River’s Edge acknowledges the validity and enforceability of the Nicomide patent. River’s Edge has agreed to make a lump-sum settlement payment to DUSA for damages and will permanently cease the manufacture, distribution and sale of its nicotinamide product, NIC 750. River’s Edge will immediately notify the drug databases that NIC 750 is no longer available.
06:30 ANGO AngioDynamics says granted summary judgement motion on willfulness in VNUS litigation (19.99 )
Co announces that its motion for summary judgment of no willful infringement was granted in the U.S. District Court in the Northern District of California in the patent litigation brought by VNUS Medical Technologies against Diomed, AngioDynamics and Vascular Solutions. The court found that VNUS was not able to establish that AngioDynamics willfully infringed the VNUS patents, ruling that willful infringement is not a trialable issue against AngioDynamics. The impact of the ruling prevents the potential tripling of damages in the event that a jury finds infringement by AngioDynamics.
06:30 POWR PowerSecure lighting subsidiary wins pilot projects at major retailers (11.03 )
Co announces that EfficientLights, its recently acquired energy conservation subsidiary, has initiated new pilot/demonstration projects at several national retailers. According to PowerSecure, the potential total market for such lighting efficiency products could exceed $1 bln, and the retailers that have signed on for the new pilots represent approximately 18% of that opportunity.
06:30 CALLS Early Research Calls I
Upgrades: Deutsche Bank upgrades Washington Post (WPO 801.51) to Buy from Hold and raises their tgt to $910 from $740, due to its 80% EBITDA exposure to the counter-cyclical Education division, sticky cable operations, and politically-driven TV in ‘08… Jefferies upgrades Harvest Natural Resources (HNR 13.27) to Buy from Hold and raises their tgt to $17 from $11, based on conversion to a mixed company that clears the way for renewed investment in Venezuela… UBS upgrades Western Refining (WNR 38.15) to Neutral from Sell. Downgrades: Baird downgrades Puget Energy (PSD 27.80) to Neutral from Outperform and raises their tgt to $30 from $29, following the co’s announcement they have signed a merger agreement with an investment consortium led by Macquarie for $30/share and believe a bidding war is less than likely… Friedman Billings downgrades Baker Hughes (BHI 90.05) to Market Perform from Outperform and maintains their $96 tgt, following Q307 EPS that matched firm and consensus expectations and based on valuation given the more modest growth prospects compared to peers… Oppenheimer downgrades Oil States International (OIS 42.81) to Neutral from Buy, due to recently proposed royalty increases in Alberta, Canada, and the resulting likely decreased investment in the region… Oppenheimer downgrades Kensey Nash (KNSY 28.20) to Neutrla from Buy, based on valuation… BofA downgrades Life Time Fitness (LTM 64.52) to Neutral from Buy.
06:28 BVN Buenaventura SA misses by $0.09, misses on revs
Reports Q3 (Sep) earnings of $0.79 per share, $0.09 worse than the Reuters Estimates consensus of $0.88; revenues rose 35.2% year/year to $195.8 mln vs the $198.5 mln consensus.
06:27 CTCM CTC Media reports Q3 EPS of $0.11 vs $0.05 in yr ago period; reports revs up 33% yr/yr to $94.1 mln vs $94.1 mln single estimate (21.58 )
Co sees Y07 revs of $460-480 mln, compared to previous guidance of $460-500 mln, with a consolidated OIBDA margin of 45-47%.
06:26 Sensex hits 20K, ends up 709pts at 19,952 - The Business Standard
The Business Standard reports the Sensex opened with a positive gap of 378 points at 19,621, and then there was no looking back. Sustained buying across-the-board, saw the index zoom past the 20,000-mark in late noon deals. The index touched a fresh all-time intra-day high of 20,025. The Sensex finally ended (provisional) with a gain of 709 at 19,952.
06:26 Asian stocks rise; Nissan Motor, Mitsubishi UFJ lead advance - Bloomberg.com
Bloomberg.com reports Asian stocks rose, driving benchmarks in Hong Kong, India, South Korea and Malaysia to records, after Nissan Motor reported profit that exceeded analysts’ estimates and oil surpassed $93 a barrel for the first time… Japan’s Topix index climbed 2.1 percent, the most in a month… Hong Kong’s Hang Seng Index exceeded 31,000 points for the first time.
06:26 Global stocks, U.S. futures rise; BHP Billiton, Nissan advance - Bloomberg.com
Bloomberg.com reports stocks in Europe and Asia climbed, led by mining and energy companies, after metal prices rallied and oil rose to a record. U.S. index futures gained… Europe’s Dow Jones Stoxx 600 Index added 0.7% to 386.50. National benchmarks rose in all of the 17 western European markets that were open. The U.K.’s FTSE 100 advanced 0.6%. France’s CAC 40 and Germany’s DAX increased 0.7%.
06:25 FSNM First State Banc misses by $0.05 (17.41 )
Reports Q3 (Sep) earnings of $0.32 per share, $0.05 worse than the Reuters Estimates consensus of $0.37.
06:23 RSH RadioShack reports Q3 (Sep) results, misses on revs (19.62 )
Reports Q3 (Sep) earnings of $0.34 per share, may not be comparable to the Reuters Estimates consensus of $0.26; revenues fell 9.4% year/year to $960.3 mln vs the $988.1 mln consensus.
06:23 S&P futures vs fair value: +4.4. Nasdaq futures vs fair value: +13.0.
06:22 European Markets
FTSE…6692.70…+31.40…+0.5%. DAX…7998.83…+49.66…+0.6%.
06:22 Asian Markets
Nikkei…16698.08…+192.45…+1.2%. Hang Seng…31586.90…+1181.68…+3.9%.
06:16 HST Host Hotels announces resignation of Christopher Nassetta and the appointment of W. Edward Walter as President and CEO (22.37 )
Co announces that Christopher Nassetta has tendered his resignation as President and Chief Executive Officer of Host Hotels & Resorts, to become President and Chief Executive Officer of Hilton Hotels. Mr. Nassetta will remain at the co until the end of Nov to assist in the transition of duties to the new chief executive officer. The Board of Directors has appointed W. Edward Walter as President and Chief Executive Officer effective today.
06:15 ARXT Adams Respiratory Therapeutics receives approvable letter from FDA for Mucinex with Codeine; expects FY08 net sales and EPS to be at the higher end of ranges (40.58 )
Co announces that the FDA has issued an approvable letter related to the NDA for Mucinex with Codeine extended-release bi-layer tablets. The approvable letter relates to the use of Mucinex with Codeine in the prescription treatment of cough associated with the common cold, inhaled irritants and stable chronic bronchitis. The FDA stated in the letter that it has completed its review of the Mucinex with Codeine NDA and that it is approvable. In addition to some preliminary labeling comments, the FDA has requested additional data to support the use of the product with food, and has suggested various approaches to address this issue. Adams does not expect this development to impact its financial guidance for FY08. The co’s previously stated net sales guidance issued on Aug. 21, 2007, did not include any potential revenue from Mucinex with Codeine. As a result of a a recent assessment by the co of early customer response to the FDA enforcement action, Adams now expects its FY08 net sales to be at the higher end of the previously stated guidance range of $400 mln to $440 mln, and expects its FY08 diluted EPS to be at the higher end or slightly exceed the previously stated diluted EPS range of $1.55 to $1.75. Furthermore, Adams reiterates its belief that diluted EPS will grow in excess of 30% in FY09.
06:10 ODP Office Depot announces delay to Q3 earnings (20.29 )
Co announces that it has delayed the distribution of its Q3 earnings release and related conference call and webcast, previously scheduled to take place on October 30, 2007. The delay is due to an independent review by the Audit Committee of vendor program funds. The review relates principally to the timing of the recognition of certain vendor program funds. A subsequent press release will be issued announcing a new date and time for the distribution of Q3 earnings information.
06:09 HUM Humana beats by $0.05, beats on revs; guides FY07 EPS above consensus; guides FY08 EPS above consensus (75.56 )
Reports Q3 (Sep) earnings of $1.53 per share, excluding non-recurring items, $0.05 better than the Reuters Estimates consensus of $1.48; revenues rose 11.9% year/year to $6.32 bln vs the $6.22 bln consensus. Co issues upside guidance for FY07, sees EPS of $4.75-4.80 vs. $4.52 consensus. Co issues upside guidance for FY08, sees EPS of $5.30-5.50 vs. $5.20 consensus.
06:01 S Carlyle considered buying out Sprint - Washington Post (17.38 )
The Washington Post reports the Carlyle Group began to consider one year ago the idea of buying part or all of Sprint-Nextel (S), according to industry sources familiar with the matter. Nothing ever came of the deliberations, but Carlyle’s interest suggests that private equity could still play a role in Sprint’s future, analysts and private-equity sources say. “I think Sprint is a very interesting company with great assets that have yet to be fully utilized and could be of interest to a potential buyer, strategic or otherwise,” said Daniel Akerson, former Nextel chief executive who now leads Carlyle’s U.S. Buyout fund. He declined to discuss Carlyle’s interest in Sprint. While a buyout of Sprint may be out of reach for a single firm, a group of private-equity investors could pull it off if the credit markets rebound, said Rick Rickertsen, managing partner at Pine Creek Partners, a Washington private-equity firm. “Sprint has great recurring revenue that private equity likes, and great brands,” he said. “It has great franchise value and is perceived to be very under-managed.” In 2006, Carlyle tossed around several strategies, including buying Sprint’s long-distance operation, or selling it. Buying the whole company and selling some of its spectrum was also a possibility. In the end, Carlyle decided against making an offer, according to sources who spoke on the condition of anonymity because of the confidential nature of the deliberations. A big hurdle was the potential price tag. Carlyle advisers also grew skeptical of Sprint’s large bet on building a new wireless network with WiMax technology, thinking the co should instead put its resources toward buying more powerful airwaves at an upcoming federal auction, one source said. Serious discussio
