09:37 TECHX Market View: Nasdaq Comp testing resistance at its Oct low (2695 +27) -Update- -Technical-
Strong start brings resistance at its Oct low and the 50% retrace of the Oct-Nov decline into play at 2698/2701 into play (session high 2695).
09:37 BMI Badger Meter: Hearing BMI downgraded to Hold at Canaccord Adams (39.76 -0.84) -Update-
09:36 SPTN Spartan Stores initiated before the open with a Buy at UBS - tgt $30 (22.79 +0.20)
Before the open, UBS initiated SPTN with a Buy and $30 tgt. Firm believes that SPTN is still in the relatively early phases of a long-term turnaround under the helm of former A&P veteran Craig Sturken. While firm’s store location database shows nearly 100% existing overlap with supercenters, SPTN remains well positioned for further mkt share gains within its core trade areas. Firm’s analysis suggests that underlying share trends have generally improved over the past six months across SPTN’s retailing operations.
09:35 MU Micron beats OmniVision for HP PC camera CMOS image sensor orders - DigiTimes (8.29 +0.06)
DigiTimes reports Hewlett-Packard has chosen Micron Technology over OVTI as a secondary CMOS image sensor supplier as the US chipmaker is offering more competitive prices, according to sources close to OmniVision. Micron beat out OmniVision in bidding for PC camera CMOS image sensor orders, the sources said. However, they remarked in saying that the order amount is not large, which implies any corresponding impact over OmniVision will be limited. Losing the orders to Micron does not suggest the solutions from OmniVision are inferior in quality, it was simply due to the aggressive pricing that Micron offered, the sources stressed.
09:34 TECHX Market View: S&P 500 extends opening surge back near its 200 day sma and 50 day ema at 1483/1484 — session high 1482.31 (1482.21 +12.49) -Update- -Technical-
09:33 Hynix, Micron and Intel deliver flashy performances in 3Q NAND flash market, says iSuppli - DigiTimes
DigiTimes reports amid strong growth in global NAND flash memory sales in the third quarter, Hynix Semiconductor, MU and INTC impressively outperformed the competition, according to a preliminary ranking from iSuppli. Hynix achieved the strongest revenues growth on a sequential basis, followed by Micron and Intel, according to iSuppli. The co said Intel performed much better on an on-year basis, with its revenues rising by an industry-leading 222% compared to the third quarter of 2006.
09:33 KMP Kinder Morgan Prtnrs prices 6.2 mln offering at $49.34 (49.34 -0.73)
09:32 MOT Motorola: Zander moves aside, new CEO Brown moves up from Chief Operation Post - AmTech (16.19 +0.54) -Update-
AmTech notes this morning announced that Greg Brown will replace Ed Zander as CEO at MOT. Zander will remain on board as Chairman until MOT’s May annual meeting. Street will likely applaud the removal of Zander, who had become ineffective, and has long been rumored to be on the way out. Firm would NOT be buyers on the hope of a new CEO turning things around right away and would suspect any rally on this news will fade and be short-lived, as MOT remains in disarray on their product cycle miss. Their recent checks lead them to believe MOT not likely to have a competitive handset line until late 2008/2009. The 3G ‘hole’ is impacting them.
09:31 FXCB Fox Chase Bancorp announces its Board approved the repurchase of up to 5% of its common shares outstanding, or approx 327,000 shares (11.08 -0.39)
09:31 TEVA Teva Pharm announces tentative approval of generic Requip tablets (44.47 +0.13)
Co announces FDA has granted tentative approval for the Abbreviated New Drug Application to market its generic version of GSK’s Requip tablets. The brand product had annual sales of approximately $455 mln in US for the twelve months ended September 30, 2007.
09:31 FRX Forest Labs: Risk/Reward compelling ahead of Nebivolol PDUFA - AmTech (38.28 +0.3 
AmTech notes today, Nov 30, 2007, is the PDUFA date for FRX’ lead pipeline candidate nebivolol, for the treatment of hypertension. While a successful approval of nebivolol would be a positive catalyst for FRX shares, and more importantly help bridge the gap that Lexapro and Namenda will leave when they go generic in the 2012 timeframe, firm has not predicated their recent upgrade on such an outcome. Although they view nebivolol favorably, if indeed it does get delayed again, firm believes there is limited downside considering FRX is already trading near trough valuations. The late stage and depth of the pipeline will provide significant opportunities, starting as early as 2008, with nebivolol and including also milnacipran for fibromyalgia syndrome. Firm believes this now represents the appropriate time to come off the sidelines and be opportunistic on FRX.
09:31 ENDP Endo Pharm: Shares continue to be over sold - AmTech (27.51 +0.01)
AmTech notes ENDP shares have been under pressure for approxi five months now, since early July, down approx 22%. Firm believes that the primary overhangs on ENDP are two-fold: 1) generic concerns to core franchises Lidoderm and Opana, and 2) use of cash on hand. Firm had previously conducted an extensive review of Lidoderm’s IP-protection, Endo’s Citizen’s Petition, and the FDA’s requirements to bring a generic version of Lidoderm to market, and they continue to believe that the earliest likely timeframe of a generic will continue to be in 2014/2015. The situation with the Opana franchise is less clear as the strengths of the patents and the generic manufacturer’s (Impax Labs) ability to submit an acceptable ANDA remain in question.
09:31 OEH Orient-Express: SAC Capital Advisors discloses 5.6% stake in SC 13G (62.72 +0.93)
09:30 OEH Orient-Express: SAC Capital discloses 5.6% stake in SC 13G filing (62.72 0.93)
09:30 MRK Merck tgt raised to $70 from $62 at Deutsche Bank based on recent rev and Rx growth trends for major new products (59.70 -0.22)
09:30 OVTI OmniVision: Color on quarter (20.30 +1.41)
Longbow Research notes OVTI reported F2Q08 (ending October) revenues of $233MM (up 34% q/q) and pro-forma EPS of $0.51, above our $224MM and Street $223MM revenue estimate and our $0.45 and Street $0.43 EPS estimate. Firm remains bullish on the name given a) demand strength of emerging market handsets amid steady execution on design win and product roadmap front, b) continuing margin improvement and c) penetration into notebook market. We are raising our price target from $28 to $29… Morgan Keegan notes OVTI’s higher gross margin expectations, lower SG&A and a lower tax rate have increased their est for the year ending April 2008 by $0.24 to $1.77. Firm notes that although the co has grown significantly in the past two quarters and shown impressive cost control, they believe the environment is likely to become more competitive as participants such as Micron and Samsung regain focus… Needham was most encouraged by OVTI’s GM improvement, which is driving significant earnings leverage, and the diversification of its business, especially the growth of its notebook camera business. While concerns about handset demand in China and the potential for more aggressive competition from Micron, Samsung and Hynix bear watching, they believe OVTI shares remain compelling at just 11.0X our CY08E EPS estimate
09:28 SPIL Siliconware Precision: Hearing upgraded to buy from neutral at tier 1 firm (9.20 )
09:28 E ENI agrees to a 1.7 bln pounds Burren buy - FT (70.78 )
09:28 TSM Taiwan Semi: Hearing upgraded to Buy from Neutral at tier 1 firm (9.75 )
09:27 FBR comments on Mortgage Insurance October monthly statistics
Friedman Billings notes that the Mortgage Insurance Companies of America released October monthly statistics this morning that extend the growth and credit trends seen over the course of the year. They note the one notable data point was the severe (-84%) decline in bulk writings leading to a 9% linked monthly decline in new insurance written. Given the problems in both the securitization market and subprime originations, they are not surprised to see the bulk channel’s writings decline, but are somewhat surprised by the magnitude and speed of the decline. Although reducing exposures to the bulk channel can be viewed as a positive, the firm remains cautious on the group as the industry remains in the early stages of a worsening credit environment. Although stock valuations may look tempting, they do not foresee a near-term catalyst on the horizon.
09:25 CTR Cato downgraded to Hold from Buy at Stanford (14.88 )
09:25 WIRES Newspaper Notable Mentions
Guardian Unlimited: Bank of Japan Governor Toshihiko Fukui said on Friday the U.S. subprime problem is affecting Japanese financial institutions more than initially expected but the losses incurred by Japanese banks are relatively small and can be absorbed, Fukui said… LightReading: BT has rejected claims that it is uncovering additional costs associated with its deployment of the controversial carrier Ethernet technology, Provider Backbone Transport, and stated that its initial deployment of the technology in Italy is not proving to be unusually troublesome… WSJ: Talks between Kazakh authorities and a group of Western companies developing an oil field in the Caspian Sea have bogged down over a multibillion-dollar fine Kazakhstan wants to impose on the consortium… Icelandic investment co FL Group said it has cut its stake in AMR to 1.1% from 9.1%, citing a lack of progress by the American Airlines owner in boosting shareholder value… Del Laboratories, the maker of cosmetic products sold under brands including Sally Hansen, is close to a deal to be acquired by Coty, people familiar with the matter said. The deal, which values closely held Del in the range of $800 mln, could be announced in the next few days… GM CFO Fritz Henderson said the co expects U.S. auto sales to be around 15.7 mln vehicles in 2008, far below what auto makers had been enjoying. As sales fall, GM will run a blue-collar attrition plan to further cut costs… TheDeal.com: The FTC is poised to approve Web omnipresence GOOG’s $3.1 bln acquisition of online ad provider DoubleClick, without any conditions, according to a lawyer involved in the merger review. The approval is expected as early as next week, the lawyer said, with the deal likely to close soon afterward… AdAge.com: IPG has won the $150 mln PlayStation advertising account, executives familiar with the matter say… Daily Telegraph: Britain’s biggest buy-to-let mortgage lender, Bradford & Bingley, has been forced to abandon a planned share buyback due to the credit squeeze, but insisted it is on track to meet 2007 forecasts… Pacific Epoch: CEA chairman Li Fenghua said that the co is confident about finalizing a deal to sell a 24% stake in China Eastern Airlines to Singapore Airlines and its parent co, Temasek Holdings.
09:25 APH Amphenol coverage resumed with an Equal Weight at Morgan Stanley (43.34 )
09:24 WIRES On The Wires -Update-
Answers (ANSW) announces that WikiAnswers had reached a milestone of 400,000 registered contributors… Signalife (SGN) announces that The United States Patent and Trademark Office has awarded to the co patent #7,299,083 entitled “Electrode For, And Method Of, Indicating Signal Characteristics At Particular Positions In A Patient’s Body”… Entravision Communications (EVC) announces that it has entered into a definitive agreement to acquire Spanish-language radio station WNUE-FM serving the Orlando, Florida market from Mega Communications for an aggregate purchase price of approx $24 mln.
09:22 AAPL Apple: D.Phone the new iPhone distributor? - Pacific Epoch (184.29 ) -Update-
Pacific Epoch reports Chinese phone supermarket D.Phone is negotiating with Apple to sell iPhones in D.Phone stores, reports qq.com. D.Phone has established a special area displaying iPhone accessories in one Shanghai D.Phone store and plans to add the product areas to more D.Phone stores before year end, according to a D.Phone executive. In September, D.Phone vice president Jin Xin said that D.Phone had partnered with Apple to sell iPhones and Apple wireless value-added services in D.Phone stores if and when the products were sold in China.
09:21 TECHX Market View: Support and Resistance -Update- -Technical-
The stock indices are poised to build on this week’s turnaround in opening trade. For a look at the charts and the resistance/support levels of note for today go to The Technical Take.
09:18 MTL Mechel Steel mulls Toronto listing for mining division, according to report - DJ (82.77 )
DJ reports the co is mulling spinning off its coal-mining assets in a public offering on the Toronto Stock Exchange that could raise up to $2 bln, the news agency Interfax reported Friday citing a source close to Mechel. Up to a third of the spinoff’s shares could be floated, including the Yuzhny Kuzbass, Yakutugol and Elgaugol assets, the agency reported.
09:17 SCANX Gapping down
In reaction to weak earnings/guidance: DELL -9.4% (also tgt cut to $40 at Bear Sterns), BIG -4.8%, MENT -4.7%, ESEA -2.2%… Other news: FRPT -9.0% (Friedman Billings says reports from last night indicate U.S. Marine Corps may scale back its M.R.A.P requirements which would negativly impact FRPT), COMS -8.4% (Washington Times reports COMS merger with Chinese co may threaten national security), KMP -2.1% (files for 5.2 mln share common unit secondary offering)… Analyst downgrades: MOGN -6.0% , CMC -1.3%.
09:15 MS Morgan Stanley mgmt changes is clearly a negative- Punk Ziegel (52.34 )
Punk Ziegel notes MS announced a number of very significant mgmt changes on Thursday evening. The firm says this shake-up continues the management instability at this firm which has lasted for about 4 years now. This is clearly quite negative. The firm says the co will never make headway toward developing consistent earnings growth if the players on the team keep shifting and the strategies being employed are constantly changing. Presumably, the immediate reason for these changes is that the co is about to report a loss in its fourth fiscal quarter. The firm says that these sweeping changes suggest that there is more at risk than just the write downs. The co’s earnings power may have been reduced. Firm reits sell and $49 tgt.
09:15 ANST Ansoft CFO announces retirement (28.83 )
Co announces that Thomas Miller, the co’s CFO, will retire on Dec 31, 2007. He will be succeeded by Shane Emswiler, Ansoft’s Vice President of Finance.
09:15 S&P futures vs fair value: +17.0. Nasdaq futures vs fair value: +19.0.
09:13 AAPL Apple: Latest on China Mobile iPhone talks (184.29 ) -Update-
Macworld.com reports that talks between China Mobile (CHL) and Apple to bring the iPhone to that country have failed, citing a report from the Southern Daily newspaper. China Mobile’s CEO is reported as saying the “iPhone model is not suitable for China,” but sources claim the real reason talks have not gone well to this point is because of differences the companies have over revenue sharing… However, Bloomberg is reporting that China Mobile is still in talks with Apple, denying that talks between the two companies have ended.
09:13 S Sprint Nextel: Pali comments on reports of rejected capital offer, noting form of the investment valued Sprint’s stock at over $19 (15.36 )
Pali says they were disappointed by press reports that indicate that Sprint’s board did not consider an offer that would have included the return of Tim Donahue and other former Nextel executives to the co. While they recognize that the co does not necessarily need $5 bln of capital, they note that the form of the investment is a convertible that valued Sprint’s stock at over $19, which is 60% higher than the firm’s view of the equity value of the co.
09:13 BCO Brinks: MMI Investments discloses 8.4% stake in SC 13D/A; sends letter to nominate 4 Directors (61.71 +0.56)
In filing out earlier this morning, the firm notes “On November 30, 2007, MMI Investments delivered a letter to the Issuer, in compliance with the advance notice requirement in the Issuer’s bylaws and pursuant to the applicable provisions of the Virginia Stock Corporation Act, informing the Issuer of its proposal to nominate four candidates for election to the Board of Directors of the Issuer at the Issuer’s 2008 annual meeting of stockholders.”
09:12 XMSR XM Satellite: DOJ decision imminent - Bear Stearns (13.74 )
Bear Stearns Conversations with contacts in D.C. suggest that DOJ decision is imminent and could come as early as today or Monday. Firm believes that junior staffers at DOJ recommended blocking the merger, however, the higher officer deputy officials likely disagreed with the junior staff recommendation. They expect Tom Barnett likely will rule along with the higher officials and announce that the DOJ will not be blocking the deal. Firm believes the DOJ decision will be based on analysis of market leverage, competition, and market definition. Upon a positive announcement, firm expects both the stocks to appreciate - their analysis suggests XMSR at $20 and SIRI at $4.50. On the downside, XMSR could decline to high single digits as investors look for visibility into strategy, and potentially, mgmt transition. SIRI could decline to ~$3.
09:10 DRYS DryShips ticks to pre-market highs ahead of CEO’s upcoming appearance on CNBC (89.96 )
Stock is trading up 6.04 at 96.00 in pre-mkt.
09:10 BIDZ Bidz.com Short seller with web site makes BIDZ a temporary bargain- ThinkEquity (11.72 ) -Update-
ThinkEquity says Citron’s posting about BIDZ.com, claiming it “will expose … many red flags at BIDZ,” is simultaneously self-promoting and self-serving. The firm says their critique of the posting can be summarized as follows: The allegation that a low cash balance ($1 mln) reflects poor cash flow is simply wrong-headed. Firm says BIDZ cash flow is being used exactly as high-R.O.I companies with growth opportunities should, they think: to put more high-ROI investment to work so high-ROIs can compound growth for the benefit of shareholders. The assertion that BIDZ’ 3Q07 inventory was excessive (just over double last year’s) reflects a shallow understanding of the business.
09:10 X U.S. Steel proposes $1 bln capital investment program at Mon Valley Works plant (97.67 )
Co announces it is considering a $1 bln capital investment program at its Clairton Plant coke making operation near Pittsburgh. The program, which would take place over a period of years, involves the construction of two new coke batteries and a cogeneration facility, along with environmentally focused rehabilitation of several existing coke batteries.
09:10 AAPL Apple iTablet: The Mac Communicator? - LoopRumors (184.29 )
LoopRumors reports rumors of an Apple tablet have circulated since the Newton’s demise. But the information LOOPRumors is gathering points to an entirely new device that will coexist with Apple’s current laptop offerings. Apple will gear this new device at those users who already own Macs. The iTablet will run its own version of Mac OS X Leopard, specifically designed for the device. The iTablet will interact with other devices better than an iPhone or iPod. Users will be able to screen share with their home or work computer from a remote location, video conference with other users, and information suggests the iTablet will have beaming capabilities. Recent data suggests there will be solid state storage as well as a mini DVD drive. All of the standard I/O ports are said to be exposed on the side of the device, keeping the front and back simple. And although details of the outside are sketchy at best, the iTablet is said to be composed of glass, with one button on the face of the unit, sporting a metallic Apple logo on the back. Internal components will be more robust than the iPhone, capable of more computing power. The iTablet will include an accelerometer, allowing it to operate in multiple directions. And finally, an unconfirmed report suggests that Apple will utilize both sides of the device to input information. While a debut at Macworld Expo in January would be optimistic, the possibility does exist.
09:07 JBLU Jetblue Airways: Converts could pressure liquidity, expect more capacity reduction - Bear Stearns (6.79 )
Bear Stearns has $175mn of 3.5% sr converts that are puttable in ~8 mos (July 15, 0 last seen trading below par. While 3Q07’s $844mn cash meets this test, by YE 08 this balance could drop to $440mn at current fuel prices before buying back the convert. Even at $75/bbl oil next year, firm est YE 08 cash of $600 mln, (before buying back the converts), which leads firm to expect further capex reductions in the near term. While the convert market remains open today, they think a replacement convert is less likely. More probable, in firm’s view, JBLU could offer to increase the coupon, extend call protection, or offer another put in 09 for example and pay a few point sweetener (4-5pts ~ $7-8mn) to get relief.
09:07 INSID Insider trading disclosed in filings after the close yesterday
Buyers: Pep Boys (PBY 10.64) Chairman bought 60K shares at $11.36; Directors (3) bought 24K shares at $11.58-11.73; Officer bought 15K shares at $11.00; Director Barington Capital Group bought 400K shares at $11.27… RPC (RES 11.06) Chairman bought 147,900 shares at $10.93… USG (USG 36.17) 10% Owner GEBR bought 45,800 shares at $35.91… Lumber Liquidators (LL 8.60) CEO bought 10K shares at $8.12… US Auto Parts Network (PRTS 8.52) 10% Owner Oak Investment Partners bought 35,057 shares at $8.13… Borders Group (BGP 12.21) 10% Owner Pershing Capital Mgmt bought 522,300 shares at $12.12… Unitrin (UTR 45.26) Director bought 30K shares at $44.62… Neurobiological Technologies (NTII 2.77) 10% Owner Highland Capital Mgmt bought 452,303 shares at $2.71… Exide Technologies (XIDE 6.75) 10% Owner Tontine Capital Mgmt bought 562K shares at $6.16… Pomeroy IT Solutions (PMRY 6.60) CEO bought 7,500 shares at $6.88… Artes Medical (ARTE 2.90) Director NGN Capital bought 50K shares at $2.61… Ambassadors International (AMIE 12.07) Chairman bought 10K shares at $12.38… Equity One (EQY 23.12) Chairman bought 102,008 shares at $22.00-22.49… Kronos Worldwide (KRO 16.77) Chairman bought 7K shares at $15.90… Teekay Offshore Partners LP (TOO 25.96) 10% Owner Luxor Capital Group bought 49,100 shares at $25.00… Pinnacle Airlines (PNCL 15.75) 10% Owner M. Pabrai bought 31,749 shares at $15.37… Orange 21 (ORNG 4.63) Director & 10% Owner Integrity Brands Partners bought 391,500 shares at $4.72… Sellers: Chubb (CB 54.32) Officer sold 10,441 shares at $54.17… Nextwave Wireless (WAVE 5.99) Officer sold 99,500 shares at $6.03…Capella Education (CPLA 70.50) Director sold 22,282 shares at $69.17… Cephalon (CEPH 74.83) Officer sold 11,639 shares at $74.80… Winmark (WINA 21.83) 10% Owner sold 108,720 shares at $22.00… Visual Sciences (VSCN 16.20) Director sold 74,538 shares at $15.52-15.97… Jefferies (JEF 25.15) Officer sold 40K shares at $25.31… Selective Insurance Group (SIGI 23.36) Officer sold 20K shares at $22.75… Kinetic Concepts (KCI 58.80) Founder and Chairman sold 418K shares at $59.32… Interline Brands (IBI 23.71) Director sold 63,074 shares at $24.00… Digital Realty Trust (DLR 37.60) Officer sold 20K shares at $37.00… Electronic Arts (ERTS 56.83) Chairman sold 60K shares at $57.25… Wrigley (WWY 64.31) 10% Owner W. Hagenah sold 75K shares at $63.31… Robert Half (RHI 25.90) Director sold 571,928 shares at $24.62-25.44… Rambus (RMBS 19.42) Director sold 100K shares at $18.23-19.12… Blue Coat Systems (BCSI 35.91) CEO sold 133,112 shares at $33.96-35.59.
09:06 WRAPX Pre-market Summary
Following yesterday’s consolidative session, futures indicate a sharply higher open for the mkt after a speech last night by Fed Chairman Bernanke validated investors’ belief that the FOMC is likely to cut interest rates at its Dec 11 meeting. The economic outlook has been “importantly affected over the past month by renewed turbulence in financial markets, which has partially reversed the improvement that occurred in September and October,” Bernanke said. “These developments have resulted in a further tightening in financial conditions, which has the potential to impose additional restraint on activity in housing markets and in other credit-sensitive sectors,” he said. Another contributing factor is a WSJ article reporting that the Bush administration and major financial institutions are close to agreeing on a plan that would temporarily freeze rates on certain subprime loans. Details are still being worked out, and while this isn’t great news for mortgage investors, it is helping to ease concerns for the time being about the negative economic effects of a rash of foreclosures that could occur with a reset in adjustable rate mortgages. Dow futures are currently +132; Nasdaq futures are currently +25; S&P futures are currently +17.3. For technical levels of interest, click here. One negative item of note is the earnings report and outlook from Dell (DELL). The computer maker’s Q3 earnings didn’t live up to the mkt’s expectations as gross margins declined. In turn, Dell said its near-term results could be negatively impacted by a slower decline in component costs. Note the stock is indicated ~10% lower pre-mkt. A batch of economic data was just released, but the mkt had a fairly muted reaction. The data came in slightly worse than expected, as Oct core-PCE yr/yr was 1.9% vs the 1.8% consensus, while Personal Income and Personal Spending each came in at 0.2% vs. their respective 0.4% and 0.3% ests… The Bond mkt was modestly lower overnight on mixed emotions. Fed Chairman Bernanke’s comments seemed to validate a rate cut on Dec 11, which normally would fuel a rally in treasuries, but the size of the cut is still under debate and the equity mkts surged on the comments, which normally pushes treasuries lower. However, bonds have extended lower this morning. The 10-yr is currently -23/32 to 4.023%. Today’s Fed speakers include Philadelphia President Plosser at 10:00ET, Governor Kroszner at 13:40ET speaking on the financial markets and St. Louis President Poole at 16:00ET… In Commodities, Jan crude oil ($88.70 -2.31) continues to fall, breaching the $90 level this morning, following yesterday morning’s spike after an explosion cut Canadian oil shipments through four Enbridge (ENB) Clearbrook pipelines in Minnesota that supply crude to the Midwest. Three of the four pipelines have been restarted, with the fourth (Line 3) expected in the next couple of days… In Europe, mkts traded higher by mid-day as financial stocks continued to rebound, lifted by comments from the U.S. Federal Reserve, which signalled a possible interest rate cut in Dec. FTSE is currently +0.9%; DAX is currently +1.3%; CAC is currently +1.3%. In Asia, mkts for the most part rose after Federal Reserve Chairman Ben Bernanke reinforced speculation that U.S. policy makers will cut borrowing costs to bolster growth. Nikkei closed +1.1%; Hang Seng closed +0.6%; Shanghai Composite closed -2.6%… Notable pre-market Calls include Upgrades: VLO and WNR at BofA; Downgrades: CS, DB and UBS at Bear Stearns, ETFC at BMO Capital… On the Earnings calendar, no cos are confirmed to report after the close… On the Economic calendar, Nov Chicago PMI (consensus 50.5) will be released at 9:45ET, while Oct Construction Spending (consensus -0.2%) is due out at 10:00ET.
09:04 SCANX Gapping up
In reaction to strong earnings/guidance: SEAC +20.9%, JCG +11.7%, OVTI +6.7%, PRLS +6.1%, TIF +3.2%, ANDE +2.8%, LTRE +1.5%, ZUMZ +1.3% (also upgraded to Positive at Susquehanna)… Financial/Mortgage sectors seeing strength after WSJ reports that banks are near agreement to temporarily freeze interest rates on certain subprime home loans: CFC +12.9%, MBI +9.0%, ABK +8.9%, FRE +6.7%, MTG +6.5%, WM +5.6%, FNM +5.3%, CIT +5.0%, WFC +3.6%, MER +3.2% (also WSJ reports CFO of NYX in advanced talks to take key position at MER), GS +3.0%, UBS +2.5%, C +2.2%… Homebuilders seeing strength on rate cut expectations/positive mortgage news: PHM +8.1%, HOV +7.3%, RYL +7.0%, SPF +5.2%, TOL +4.3%, BZH +4.1%, CTX +4.0%… Solar stocks seeing strength, House vote on energy bill is next week (12/5) which could have positive implications for group: SOLF +10.6% (continued momentum after yesterday’s rally on earnings), LDK +6.5% (also announces its polysilicon plant construction on schedule and has secured additional 312 metric tons in polysilicon supplies for 2008), TSL +4.6%, SPWR +2.1%, FSLR +2.0% (also initiated with Hold at Soleil)… Other news: STEM +10.5% (announces first patient to receive transplant of HuCNS-SC cells in phase I clinical trial), JRJC +10.1% (still checking), ETFC +5.8% (trading higher despite analyst downgrade; mixed comments from other analysts), ALO +5.7% (announces positive results from phase III trial for its opioid), AU +5.3% (still checking), CRXL +5.1% (presents Indian phase I rabies antibodies cocktail study with positive results enabling progress towards phase II studies), BIDZ +4.9% (hearing ThinkEquity defending BIDZ), AAUK +4.9% (still checking), VMW +2.9% (CSCO discloses unchanged 6 mln share stake in SC 13D/A), PBY +2.4% (5 directors bought 99k shares in filings disclosed after close), GOOG +1.9% (WSJ reports GOOG plans to announce bid for wireless spectrum), HPQ +1.8% (hearing added to Conviction Buy list at tier-1 firm), ABT +1.6% (FDA advisory committee recommends approval of Xience), FCX +1.4% (Cramer makes bullish comments on MadMoney)… Analyst upgrades: LGF +8.2% (upgraded to Strong Buy at Wedbush), VSEA +3.0% (upgraded to Overweight at Thomas Weisel), FCEL +2.9% (initiated with Overweight at JPMorgan), FFIV +2.6% (upgraded to Outperform at BMO Capital), VLO +1.2% (upgraded to Buy at BofA).
09:04 WIRES On The Wires
Google (GOOG) announces that it will apply to participate in the FCC’s upcoming auction of wireless spectrum in the 700 megahertz (MHz) band… AstraZeneca (AZN) announces that it has completed enrollment of patients in the Z.E.S.T. study, the first of four Phase III trials for the investigational once-daily oral anti-cancer drug vandetanib. Data from the study is expected in 2008… Qimonda (QI) announces additional measures to further focus its production on 300mm capacities at increased competitiveness, reducing capacities at 200mm manufacturing facilities worldwide.
09:01 RCH China Architectural Engineering awarded contract to install facade of the China Water Conservancy Museum in Hangzhou, China (6.99 )
Co announces that it has been awarded a contract to build the external facade for the China Water Conservancy Museum in Hangzhou, China. The project is expected to commence at the end of December 2007 with an expected duration of approximately 12 months. The co noted that the total value of the two contracts announced this week by the co is expected to exceed $8 mln.
09:01 S&P futures vs fair value: +15.2. Nasdaq futures vs fair value: +16.0.
A strong start is still expected. Oil slips below $90 a barrel as three of the four pipelines that were damaged in an explosion are back online. Also, there is further speculation of an increase in OPEC output. Crude oil for January deliver is down 2.3% to $88.86.
09:01 MHK Mohawk: Downgrade details (80.14 )
As mentioned at 6:42 BofA downgraded MHK to Sell from Neutral and cuts their tgt to $70 from $75 saying they expect further deterioration in flooring demand, as continued weakness and declines in home sales and pricing weigh heavily on home improvement spending.
09:01 FDX FedEx Ground to increase 2008 rates by 4.9% (96.19 )
FedEx previously announced an increase to the net average shipping rate for FedEx Express by 4.9 percent, which is composed of a 6.9 percent increase in standard list rates, offset by a 2.0 percentage point reduction in its fuel surcharge. These rates also are effective Jan. 7, 2008 and apply to U.S. and U.S. export express package and freight shipments.
09:00 IHP IHOP Corp: announces closing of Applebee’s deal; removal of uncertainty as a significant positive for the shares - C.L. King (52.29 )
C.L. King notes IHOP announced the closing of the Applebee’s deal primarily through two successfully completed securitization transactions totaling $2.039 bln. IHOP also completed a private placement of $190 mln of non-convertible preferred stock and $35 mln of convertible preferred stock. While the deal will no longer be accretive in 2008 (primarily due to additional amortization), firm still expects it to be accretive in 2009 and beyond. Firm believes it was widely expected that IHOP would need to utilize the bridge financing given the difficult state of the bond markets, thus they view the removal of this uncertainty as a significant positive for the shares. Firm is reducing their ests for FY08 to $2.75 from $3.12 and their FY09 est to $3.25 from $3.70 to reflect higher interest expense then their prior model.
08:58 FRPT Force Protection: Change in USMC MRAP requirement negative for FRPT - Friedman Billings (14.95 )
Friedman Billings says reports from last night indicate that the United States Marine Corps is contemplating scaling back its M.R.A.P requirements by as much as one-third. According to the current plan approved by the D.O.D’s Joint Requirements Oversight Council, the USMC is approved for 3,700 MRAP vehicles, prior to any cuts in the requirement. Firm says if the USMC cuts are forwarded to, and approved by, the Office of the Secretary of Defense, the USMC MRAP requirement would fall to 2,400 vehicles, and the total program requirement would fall to approx 16,400 vehicles. The firm says this is a negative headline for FRPT and other MRAP contractors. They believe a one-third cut to the USMC MRAP buy would negatively impact FRPT by approx 14.0%.
08:57 Alternative Energy: Cowen believes the demand and ASP environment are excellent
Cowen’s sources on the Hill yesterday said that Speaker Pelosi may only get a final version of the energy bill to the Rules Committee Monday, implying that Dec 6 (not the 5) ought now to be the more likely date for a floor vote. The more complex matter: Firm is hearing wider confirmation from several camps –of firm’s Wed assertion that solar tax credits are likely to be dropped from the energy bill. Firm expects an extender bill which results in a 1- to 2- year extension of the ITC moving ahead prior to year-end, which would parallel the 2006 Republican Congress. Separately, the compounding effect of an update, albeit benign, re: German subsidies (the EEG) Dec 5 may heighten volatility in the group. This should create buying opportunities. Firm retains a long-term bullish outlook, and believes the demand and ASP environment are excellent.
08:55 WIRES On The Wires
ConocoPhillips (COP) announces that it has submitted a proposal to the governor of Alaska to advance the development of the Alaska Gas Pipeline Project. The proposed pipeline would transport approx 4 bln cubic feet per day of natural gas from the Alaska North Slope to markets in Canada and the United States… Telvent (TLVT) announces that it was recently awarded an automated metering infrastructure pilot project with a major U.S. utility.
08:55 DELL Dell earnings color (28.14 ) -Update-
The comparable EPS actual for DELL appear to be $0.34. After taking a look at a few follow up notes on DELL and it appears that the GAAP (including all non-recurring items) figure of $0.34 is comparable the First Call consensus of $0.35. See yesterday’s 16:13 comment.
08:54 MOLX Molex assumed with an Equal Weight at Morgan Stanley (27.70 )
08:53 CFC Countrywide upgraded to Outperform from In Line at Fox-Pitt (9.30 )
08:52 GTXI GTX: Acapodene pivotal data around the corner - Cowen (14.20 )
Cowen notes GTXI’s Phase III data on Acapodene for the treatment of side effects associated with androgen deprivation therapy and for the prevention of prostate cancer in high risk men are expected in 1Q08. Firm’s recent meetings with GTXI mgmt provided additional insights into these events. Firm believes that success from either Acapodene trial or GTx/Merck’s SARM program positions GTXI shares for upside.
08:50 ATR ATR Correction
In our 7:20 comment we incorrectly reported that ATR was positively profiled in IBD when it actually was ATHR. We have corrected the original comment to reflect this.
08:49 WSFS WSFS Financial upgraded to Buy from Hold at Sandler O’Neill (54.74 )
08:48 MOT Motorola: Growing pressures; breakup value to focus; tgt cut to $21 - CIBC (15.65 ) -Update-
CIBC says with the handset buisness suffering and new products delayed to mid-2008, the pressures for a change in leadership are growing. Carl Icahn recently increased his stake in MOT (3.3% from 2.8%) and could make another pass at a board seat early ‘08. Yet if a new CEO is elected, firm believes his ability to influence decisions could be limited. In any case, a breakup of the co is an option that could be discussed again. Firm lowers their EPS ests to reflect a deterioration in Asia and Europe as well as new delays in product announcements. Their tgt is moved from $23 to $21.
08:46 JCG J. Crew: Standout in tough retail tape; raising ests and tgt to $53 - CIBC (40.30 )
CIBC notes JCG had stand out Q3 results with EPS of $0.42 above their $0.37 est and Street’s $0.36; sales were ~$14 mln higher due to strength of comp and direct business. Despite fears of warmer weather creating inventory overages, inventory ended up 21%, in line with sales growth. Excluding the calendar shift, inventories were up only 12%, attesting to mgmt’s conservative planning, timely markdown cadence and strong product demand; bodes well for 4Q. Firm raises their tgt to $53 from $50. In light of 3Q upside, firm raised their ests.
08:43 COMS 3Com: U.S.-China company merger deemed ‘threat’ - Washington Times (4.64 )
In a story last night, Washington Times reports U.S. intelligence agencies informed a Treasury Department-led review committee recently that a merger between 3Com and a Chinese co would threaten U.S. national security. Bush administration intelligence officials said the office of the Director of National Intelligence recently submitted a required threat assessment to the Committee on Foreign Investment in the United States, known as CFIUS, which is conducting a 30-day investigation of the proposed deal between 3Com and China’s Huawei Technologies. The assessment, which is classified, described the deal as posing a “threat” to U.S. national security, according to officials familiar with the document. “The deal is in trouble,” said one official who noted that pro-business officials who in the past dismissed critics of the deal are now worried the merger will be blocked because of the assessment.
08:42 MNT Mentor Corp upgraded to Outperform from Market Perform at Leerink Swann (36.62 )
08:40 MOT Motorola confirms that Greg Brown is named Chief Executive Officer, succeeding Edward Zander who remains Chairman (15.65 ) -Update-
Co confirms that its Board of Directors has elected Greg Brown as CEO of MOT, effective Jan 1, 2008. Brown currently serves as President and COO. Brown will succeed Edward Zander as CEO, and Zander will continue to serve as Chairman of the Board of Directors until the annual meeting of stockholders in May 2008.
08:39 ZUMZ Zumiez: Inline Q3 but lower ’08 growth prospects - Caris (27.10 ) -Update-
Caris notes ZUMZ reported 3Q07 EPS of $0.28 vs their est of $0.28 consensus of $0.28, and co guidance of $0.27 - $0.28. More importantly, ZUMZ reiterated FY07 EPS guidance of $0.92 - $0.94. At this time firm maintains their Above Average rating and their $33tgt. Firm notes their rating reflects the continued commitment to grow square footage by at least 20% per annum and grow comp store sales by mid-single digits.
08:37 PSS Collective Brands: Reports Q3 EPS on Dec 4; muted expectations for Q3 and Q4 already set - Caris (15.35 )
Caris notes PSS will report Q3 EPS on Tuesday, Dec 4, 2007. Firm believes the market anticipates weak comps and margin pressure given the difficult macro economic environment. Consensus EPS for Q3 has dropped several cents and now sits at $0.35 vs. their est of $0.36. The single digit forward P/E multiple appears to reflect most of the near-term downward pressure on earnings ests.
08:37 OTIV On Track Innovations downgraded to Hold from Buy at Soleil (3.99 )
08:37 MOT Motorola follow up (15.65 ) -Update-
As mentioned at 8:34, CNBC reported that CEO Ed Zander will be stepping down at the end of the year; will remain as Chairman until the Spring. Zander will be replaced by current COO Greg Brown… MOT is trading up 1.10 at 16.75 in pre-mkt.
08:35 SEAC SeaChange: Quarter update - FBR (5.54 )
Friedman Billings notes SEAC reported stronger than expected FY 3Q(Oct)08 results after the close yesterday. Improving cable demand trends and success with telcos and international operators delivered solid rev growth during the quarter, while cost reductions that were implemented in FY2Q drove EPS upside. Perhaps more importantly, SEAC’s transition to a more software-focused business model has so far been smoother than they expected, as illustrated in a key win for its Axiom video on demand software at Cox in Phoenix.
08:35 DRAM prices may hit speed bump on way down - NY Times
NY Times reports users should not be fooled by a possible stabilizing in DRAM prices in coming weeks because it’s only a speed bump on the way down, analysts say. Strong online sales after the Thanksgiving holiday in the U.S. could mean some renewed need for inventory restocking at DRAM and NAND flash memory houses, according to DRAMeXchange Technology. But while restocking may give DRAM sellers a short respite from falling prices, chip makers continue to supply the market with too much memory, ensuring prices will resume their slide swiftly, DRAMeXchange said. Analysts and industry players have predicted that prices may not rebound until the second quarter of next year.
08:35 Merriman note buying opportunities in their “Sin Redefined” Universe (CKNN, GNPI, TASR)
Merriman notes that since Oct 31, the cos within their “Branded Consumer — Sin Redefined” universe have declined by an avg of 14.8%. For CKNN, firm notes that not only have they seen any weakness in gambling revs from the casino operators, but they believe the recent approval of powercash by GLI combined with the potential problems plaguing Global Cash Access (GCA) given the pending internal investigation, sets up Cash Systems to take additional cash access market share and announce new casino customer wins in the coming weeks. For GNPI, firm believes the strong slate of Weinstein Co releases combined with the releases of branded titles during the holiday selling season sets up Genius Products to report 4Q gross revs that will likely be 3x the gross rev reported for 3Q. For TASR co says based on the strong TASER C2 backlog at 3Q and their recent analysis of 4Q announced TASER X26 orders, they believe that TASER is set up for strong 4Q revenue and they remain comfortable with their est of $28.9 mln.
08:34 MOT Motorola: CNBC reporting that CEO Zander will be stepping down at the end of the year; will remain as Chairman until the Spring
08:33 MENT Mentor Graphics: 3QF08 in line with pre-announcement and reaffirms guidance - Needham (12.90 )
Needham notes MENT’s 3QF08 rev and earnings miss was readily explained by the apparent slippage of a couple of large orders. And the actual level of bookings in the quarter was slightly better than mgmt’s original plan. However, mgmt’s incrementally more cautious outlook suggests there may be more risk to the co’s unchanged guidance and causes them to trim ests slightly below guidance. That said, firm believes at $12 (after hours), the shares are already discounting the possibility of worse earnings than their ests.
08:33 S&P futures vs fair value: +13.9. Nasdaq futures vs fair value: +15.0.
Futures gain some ground, and then have a fairly muted reaction following an economic release. Just reported, October personal income came in at +0.2%, spending was +0.3%, and the Core PCE was +1.9% year-over-year. Economists expected income, spending and Core PCE to come in at +0.4%, +0.3% and +1.8%, respectively.
08:32 Not seeing much of a reaction to economic data in equity futures
Dow futures +112 pts, SPX futures +14 pts, Nasdaq futures +22.
08:31 BRCD Brocade: Solid Q4; has potential to be stronger - Needham (7.74 ) -Update-
Needham believes BRCM’s combined co (with MCDTA) has the potential to be stronger given: 1) SAN switch consolidation to essentially a BRCD/Cisco duopoly; 2) potential for continuing price stability; 3) product line, HDCT, asset rationalization that are mostly complete. In addition, BRCD is rolling out its 8-gig products including its next generation director platform currently in qualification at OEMs and implementing a growth and diversification strategy including services, FAN and adjacent data center networking solutions such as HBAs (iSCSI and 4gigFC) and next generation intelligent server adapters.
08:30 ICE IntercontinentalExchange Futures Europe achieves new exchange-wide and WTI volume records (169.20 )
CO announces that its ICE Futures Europe subsidiary achieved new records both exchange-wide and in the ICE WTI Crude futures contract yesterday. On November 29, exchange-wide volume at ICE Futures Europe reached a record 875,375 contracts, surpassing the November 13, 2007 record of 858,604 contracts.
08:30 OSIP OSI Pharm upgraded to Buy from Market Perform at Collins Stewart (45.53 ) -Update-
08:30 ECONX PCE Deflator y/y +2.9 % vs +2.8% consensus
08:30 ECONX PCE Core m/m +0.2% vs +0.2% consensus
08:30 ECONX Personal Spending +0.2% vs +0.3% consensus
08:30 ECONX Personal Income +0.2% vs +0.4% consensus
08:30 ECONX PCE Core y/y +1.9% vs +1.8% consensus
08:27 NVLS Novellus: 4Q07 booking outlook provides encouragng signs - Stifel (26.70 )
Stifel notes on NVLS had a mid quarter update for 4Q07. Firm says in a pleasant surprise, NVLS reiterated its bookings outlook of +5%-15% sequentially, but noted this metric was tracking towards the high end of the range at this time. Mgmt highlighted that memory (both DRAM and NAND flash) and incremental foundry capacity additions were the catalysts for the better-than-expected bookings trend in the quarter. In total, firm came away encouraged over Novellus’ progress in turning its ship around, as well as the industry landscape and how 2008 capex will shape up.
08:24 Valero Energy and Western Refining upgrade details
As mentioned at 6:24 BofA upgraded VLO to Buy from Neutral and raised their tgt to $80 from $68 and upgraded WNR to Buy from Neutral and raised their tgt to $38 from $35. For WNR the firm says following 18 months of volatile trading due to its FTC-challenged merger with Giant and the resulting lack of information, they believe Western is ready to focus on execution and should begin to communicate its new strategy to investors. Firm notes WNR is now the 4th largest US independent, and thus should trade in line with crack expectations, so they are upgrading shares concurrent with their improved outlook for 2008 refining margins. For VLO the firm says with a market cap more than 4x greater than its closest peer, they continue to believe VLO trades as a proxy for refining margin expectations, and thus are upgrading shares concurrent with their improved outlook for 2008 refining margins.
08:24 CM CIBC set to reveal subprime exposure - Globe and Mail (87.65 )
Globe and Mail reports the bank could have as much as $10-bln worth of hedged exposure to the troubled U.S. subprime mortgage sector, although only a fraction of that amount is believed to be at risk of a writedown, according to people who have studied the bank’s dealings. While this level of exposure would be higher than most analysts have forecast, sources who closely monitorthe bank said it appears that CIBC has spread these hedges among many different parties, several of which are in good financial health. The view is that the risk would be limited to between 10% and 30% of the portfolio - roughly $1-bln to $3-bln - if some of CIBC’s hedging partners were to collapse and the bank had to take a charge.
08:22 BONDX Bond Watch: Listing Lower
The market is a little offered on mixed emotions as Bernanke’s appearance last night all but guaranteed a rate cut on Dec 11, if not sooner should things in credit markets & stocks get even uglier. Ordinarily rate cut expectations would fuel a rally in bond prices but these are not ordinary markets. Bonds are priced for at least a minimum of 50 basis point cut, if not more & with equities pointing higher courtesy of Helicopter Ben risk aversion continues to abate despite the bad financial headlines & data. The 2-10-yr yield spread is still unwinding some steepeners at 84.4 but only guardedly so as the next tapebomb seems to be lurking around the corner. Bond prices in the EuroZone were given an additional dusting with inflation reporting higher while in Japan, bonds jumped despite better equities & an unexpected boost in inflation as prices are getting an oversold bounce. The dollar, oddly, is not getting creamed on the Bernanke comments as most in currencies have been expecting a rate cut regardless of what the Fed was trying to say & despite higher inflation in the EuroZone. Conjecture that the Europeans have persuaded China to curtail some of their reserve diversification could have some merit. Spot gold is off at 793.67 (+0.60) while crude oil is still sliding at 89.32 (-1.69). Data has personal income/spending & core PCE inflation (8:30) followed by Chicago PMI (9:45) & construction spending (10). The Fed has Plosser (10), Kroszner (13:40) & Poole late (16). The euro is at 1.4768 & the yen is at 110.7150 while the 10-yr -10/32 yielding 3.974%. For more bond & economic commentary click here.
08:22 CRWN Crown Media tgt raised to $10.50 - Oppenheimer (7.30 )
Oppenheimer is raising their tgt on CRWN to $10.50 from $9.25 due to what they expect will be higher than originally estimated affiliation fees from the upcoming carriage agreements, including the one announced yesterday with Comcast. The increase in these carriage fees increases their 2008 (and beyond) rev, EBITDA (adjusted), and FCF ests.
08:20 ECONX Income and Spending Preview
The key consumer indicators of personal income and spending are going to be released at 8:30AM ET along with the Fed’s key index of inflation — the core PCE price index. They provide the current read on the largest contributor to economic growth and a read on core price pressures, which exclude food and energy. Briefing.com expects 0.4% gains in both income and spending. We expect core PCE to increase 0.2% to leave an unchanged 1.8% rise from a year ago. The consensus estimate is the same, with the exception of a slightly weaker 0.3% rise in spending… Personal income is the base for spending growth. The low savings rate shows that most personal income goes to taxes and/or spending. Our estimates leave personal income running at a strong 6.6% pace from a year ago as spending is slowing, but still strong at 5.7%. High energy costs, falling home prices and tighter credit are real, negative influences on spending, but their effects are moderate. The fundamentals of strong income growth and low interest rates provide true momentum. The economic concern now focused on the potential for recession emphasizes the risk to consumer spending. Briefing.com expects slower spending as a result of numerous headwinds. But, we do not expect to see a consumer pullback strong enough to drive the economy into recession… Core PCE prices are expected to hold at the 1.8% annual rate first reached in August. Slower economic growth in the quarters ahead will keep core inflation contained as the non-core components of energy and food are under increased pressure. The Fed uses core PCE price inflation as its key gauge of inflation and it now stands within the Fed’s central forecast range through the year 2010. With the fight against core inflation seemingly complete, the market interest centers on overall PCE inflation, which may end 2007 back above 3%… Chicago PMI will be released at 9:45AM ET and Construction Spending will follow at 10AM ET.
08:19 EHTH eHealth: Initiation details (31.74 ) -Update-
As mentioned at 7:13 BofA initiated EHTH with a Neutral and a $35 tgt saying EHTH’s comparison shopping model offers convenience, speed, and search capabilities tailor-made for the growing individual and uninsured markets. The firm says their outlook is positive, but reflected in the stock
08:18 ATV Acorn Intl downgraded to Sell from Buy at Merrill (9.96 )
08:18 ETFC E*TRADE: Citadel’s investment highlights investors’ increasing interest - WSJ (4.82 ) -Update-
WSJ reports Citadel’s big gamble comes at a key moment in the global financial crisis. After largely treating mortgage portfolios and banks for months as if they were so much toxic waste, hedge funds and private investors are starting to make some big investments, hoping to pick off opportunities. Abu Dhabi’s investment arm agreed to pump $7.5 bln into Citigroup earlier this week, while hedge funds have been fighting over the carcass of failed British bank Northern Rock. “The market is pricing assets like things are going to get really bad,” Mr. Griffin said in an interview. “But the more likely outcome is for the economy to slow for two or three quarters, and then strengthen.” The investment in E*Trade is the highest-profile move in Citadel’s history, representing about 2.5% of the hedge fund’s overall investment portfolio.
08:17 ACC American Campus Communities upgraded to Buy from Neutral at Merrill (25.75 )
08:17 ISLE Isle of Capri: F2Q07 preview; mobilizing into 2008 - Morgan Joseph (17.79 )
Morgan Joseph notes that after the markets close on Monday, Dec 3, ISLE will report F2Q08 results. Firm believes that results at the co’s properties are trending roughly in-line with expectations, with the recently opened Coventry casino being the notable exception. On their conf call, firm expects a further discussion on margin improvement and initiatives to leverage the co’s database to drive higher spend/patron. Firm also expects a discussion on Pompano Park and the impact of the snowbirds in F3Q. Lastly, they hope mgmt will provide an update on its portfolio review, with a focus on capital allocation and improving its balance sheet.
08:17 SCANX Early pre-market gappers
Gapping up: SEAC +19.1%, WNR +10.2%, JCG +10.2%, STEM +9.4%, LGF +8.2%, CFC +7.5%, FRE +6.7%, OVTI +5.9%, ETFC +5.8%, AU +5.3%, CRXL +5.1%, AAUK +4.9%, LDK +4.7%, TSL +4.6%, FCEL +3.5%, VSEA +3.0%, VMW +2.9%, ANDE +2.8%, UBS +2.8%, PBY +2.4%, FSLR +2.4%, MLNM +2.1%, SPWR +2.1%, GOOG +1.9%, FFIV +1.8%, WM +1.7%, ABT +1.6%, FCX +1.4%, ZUMZ +1.3%, C +1.3%, TIF +1.2%, GS +1.2%, MER +1.0%… Gapping down: DELL -9.4%, MOGN -6.0%, BIG -4.8%, MENT -4.7%, PCU -2.6%, ESEA -2.2% , KMP -2.1%, CBRL -1.8%, CMC -1.3%.
08:15 GLUU Glu Mobile upgraded to Buy at Kaufman- tgt $10 (5.95 )
Kaufman upgrades GLUU to Buy from Hold and cuts their tgt to $10 from $11 noting yesterday, Glu announced that it would acquire Chinese mobile game developer and publisher Beijing Zhangzhong MIG Information Technology. The firm says M.I.G acquisition gives Glu a toehold in the Chinese market. Firm notes Glu’s management asserts the market for mobile games in China could be as high as $1.24 billion by 2010.
08:12 NOA North American Energy initiated with an Outperform at Raymond James (13.30 )
08:10 BAK Braskem: Brazil’s Petrobras ups stake in Braskem to 30%, according to Estado - DJ (16.45 )
DJ reports Petrobras (PBR), is increasing its voting stake in petrochemicals Braskem to 30% from 8.1%, the Estado newswire said. That will bring its overall stake in Braskem to 25% from 6.8% previously. Braskem in return will receive shares it doesn’t already own in a series of Brazilian petrochemical assets. Among them are southern Brazilian petrochemical’s co Copesul, the petrochemical assets of Brazilian refining and petrochemicals firm Ipiranga, Petroquimica Paulinia and the Triunfo petrochemical complex, Estado said.
08:09 FFIV F5 Networks upgraded to Outperform from Market Perform at BMO Capital (26.12 )
08:09 DRRX Durect: Clinical results in Dec could serve as catalysts - Broadpoint Capital (5.80 )
Broadpoint Capital believes DRXX’s current valuation represents a compelling opportunity for growth-oriented investors. Prior to year-end, they anticipate that mgmt will announce the results from the Remoxy Phase-III trial and the Phase-II(A) results from ELADUR. Firm believes the latter of the two is particularly meaningful for investors. Their view is based on the expectation of a potential partnership in 2008. If, as they suspect, co announces positive results from the Phase-II(A) trial, they would anticipate that the partnering activity would accelerate. Terms of a potential partnership could include milestone payments of approx $70 mln with royalties in an estimated range of 14%-22%.
08:09 TU Telus: Downgrade details (46.62 ) -Update-
As mentioned at 7:15 RBC downgraded TU to Sector Perform from Outperform given depressed share price, but lack of positive catalysts and structural concerns may keep share price down in near-term.
08:07 PXPL Pixelplus announces complete withdrawal of claims on the disputed contact hole process patent asserted by MagnaChip in Seoul High Court (0.90 )
Co announces that the claims on the disputed contact hole process patent asserted by MagnaChip Semiconductor have been completely withdrawn from MagnaChip in Seoul High Court. Given this favorable development, MagnaChip’s patent infringement claims on the contact hole process patent will no longer be contested or remain at issue.
08:06 ABH AbitibiBowater: Upgrade details (18.77 ) -Update-
As mentioned at 7:03 RBC upgraded ABH to Outperform from Sector Perform with a $27 tgt saying capacity reductions of 1 mln tonnes include 600,000 tonnes of newsprint (approx. 5% of North American capacity), were about double what they expected, while a $125 mln increase in synergies exceeded the firms $75 mln expectation.
08:05 RCI Rogers Comms: Oversold on overblown wireless risk - RBC (41.50 )
RBC believes the shares of RCI are very attractively priced, especially considering there is no guarantee that either a new national competitor will surface or disrupt the wireless market. Firm says that after yesterday’s -8% drop, they now est that the market has knocked off -18% from RCI’s share price (i.e. would be trading closer to $50/sh without the spectrum concerns or even closer to $55/sh if the overall market hadn’t been down in the last month).
08:05 T AT&T: Colt looks down the barrel of an AT&T takeover - Guardian Unlimited (38.03 )
Guardian Unlimited reports the 15-year independence of Colt Telecom looks likely to come to an end, according to City whispers, as its major shareholder Fidelity tries to persuade the rival American telecom AT&T to stump up 300p a share for the business communications co. AT&T, which had a sizeable European presence during the dotcom days but has been quieter this side of the pond over recent years, is believed to have offered 240p to 250p a share, valuing Colt at 1.6-1.7 bln pounds.
08:03 BONDX Economic Calendar
Personal income/spending & core PCE inflation at 8:30 followed by Chicago PMI at 9:45 & construction spending at 10.
08:03 DO Diamond Offshore upgraded to Add from Neutral at Calyon - tgt $133 (114.33 )
08:03 WIRES On The Wires
Ryder System (R) announces plans to combine its U.S. and International Supply Chain Solutions business operations to form a single, fully integrated organization to serve S.C.S. customers globally… GSI Commerce (GSIC) announces it has signed a definitive agreement to acquire Zendor.com a customer care and e-commerce solutions company, for $7.9 mln in cash.
08:02 IM Ingram Micro reaffirms Q4 guidance (20.66 )
Co reaffirms Q4 guidance, sees EPS of $0.58-0.61 vs $0.61 consensus; reaffirms revs of $9.70-9.95 bln vs $9.89 bln consensus. Co reaffirms guidance in advance of executive presentations at upcoming investor conferences in December. CEO says, “Despite widely reported concerns about the macro-economic environment, we are comfortable with our guidance for the fourth quarter. Sales are expected to hit another record for the quarter and for the 2007 fiscal year, fueled by our success in adjacent markets and geographic expansion.”
08:01 RVEP Rio Vista Energy enters into definitive agreement with institutional investors for $4 mln private placement at $11.25/unit (10.65 )
08:01 ETFC E*TRADE downgraded to Market Perform from Outperform at BMO Capital (4.82 ) -Update-
08:01 IM reaffirms Q4 EPS of $0.58-0.61 with revs of $9.70-9.95 bln
08:01 ABT Abbott Labs: Popular XIENCE — ABT drug-eluting stent gets approval vote from FDA Panel - RBC (57.00 )
RBC notes ABT won a recommendation for approval from the FDA’s Circulatory System Devices Panel. The vote was 9-to-1 in favor of the XIENCE drug-eluting stent. The “Yes” vote carried two conditions, and the ABT conditions are substantively identical to the conditions recommended for MDT’s Endeavor drug-eluting stent during its panel review last month. Firm continues to expect 1H08 launch, and their model for ABT reflects $517 mln in U.S. XIENCE sales next year. That represents nearly a 22% share of the U.S. DES market.
08:00 ETFC E*TRADE takeover in near term is unlikely, Goldman Sachs says- Bloomberg (4.82 ) -Update-
08:00 IM reaffirms Q4 guidance
08:00 LGF Lions Gate Entain upgraded to Strong Buy at Wedbush- tgt $13 (9.24 )
Wedbush upgrades LGF to Strong Buy from Buy with a $13 tgt saying they think the timing is opportunistic to build positions in Lionsgate. The firm says despite what they perceive is a strengthening short and long-term outlook, LGF has drifted down following an expected blase’ quarter. They believe that the company’s already strong box office performance should help translate into a strong fiscal 3Q.
07:59 S&P futures vs fair value: +12.7. Nasdaq futures vs fair value: +12.8.
Early indications point to a noticeably higher opening. The primary factor in the bullish bias is a speech last night from Fed Chairman Bernanke that validated the market’s belief that the FOMC is likely to cut interest rates at its December 11 meeting. Secondly, The Wall Street Journal is reporting that the Bush Administration and major financial institutions are close to agreeing to a plan that would temporarily freeze rates on certain subprime loans. On a negative note, Dell (DELL) missed its earnings expectations.
07:59 BRCD Brocade: Q4 review; director driven - RBC (7.74 )
RBC notes BRCD reported fiscal 4Q07 rev roughly in line with Street ests of $341.1 mln, while non-GAAP EPS of $0.16 easily exceeded the Street’s $0.16 est. A stronger-than expected mix of director rev boosted reported gross and operating margins and non-GAAP EPS. And while the co’s outlook on macroeconomic trends was neutral to slightly positive, they chose a conservative stance on the forward rev outlook due to potential buying delays in front of the forthcoming director product cycle.
07:57 LULU Lululemon Athletica: Momentum continues; tgt raised to $47 - RBC (41.54 ) -Update-
RBC raises their tgt on LULU to $47 from $41 following Q3 results. Firm notes the story at LULU continues unfold as they would expect. Comp momentum is strong , inventory is in a better position, margins are improving, and mgmt remains on track to open 27 stores in N. America this year and 30-35 new stores next year. Firm is adjusting their ests as follows: 4Q from $0.16 to $0.18, 2007 from $0.40 to $0.44, 2008 from $0.54 to $0.68, and 2009 from $0.74 to $0.90.
07:56 China resolves key trade dispute with U.S. - ShanghaiDaily.com
ShanghaiDaily.com reports China signed an agreement in Geneva yesterday to eliminate a dozen tax breaks and other subsidies the U.S. challenged this year at the World Trade Organization, resolving one of the series of trade spats between the countries. To help reduce China’s trade surplus and ease friction with its trade partners, Beijing has cut tax rebates on a number of export products this year including steel, paper and plastics, and has said it may raise export taxes on some steel products. Most of the programs targeted in the case were designed to boost China’s exports, which have grown from about $150 bln in 1996 to $970 bln last year. The rest curbed imports by encouraging cos in China to buy local goods. Even so, China’s imports also have risen rapidly over the past 10 years to $792 bln in 2006. The U.S. had filed the case in Feb and was later joined by Mexico. Yesterday’s announcement came just a few weeks before the U.S. and China are scheduled to hold high-level trade and economic talks in Beijing.
07:55 RIGL Rigel Pharms: Buyers of RIGL ahead of multiple near term potential catalysts - Jefferies (7.40 )
Jefferies says they are buyers of RIGL ahead of multiple near term potential catalysts. Firm notes that P2 R788 results in R.A. due shortly (data on Dec. 12 or 13) could send shares significantly higher, if positive and clinically meaningful. They note that RIGL will hold a conference call with I.T.P. guru Dr. Jim Bussel to discuss the recently announced P2 data, and say slides will be posted on the RIGL website 1-2 hrs before the call (12/4 at 4:30 PM EST). Firm believes this call could serve to better frame the R788 ITP safety and efficacy data, clear up any Street misunderstandings, and better define the R788 market opportunity in ITP (they est. $100 mln peak sales). They see downside protection from un-partnered JAK3 (R34 and $3.61/share in cash.
07:53 TEL Tyco Electronics initiated with an Equal Weight at Morgan Stanley (36.60 )
07:52 AXCA Axcan Pharma: A sweet pill to swallow; private buy-out at $23.35 a share - RBC (22.70 )
RBC raises their tgt on AXCA to $23.35 from $22 following TPG Capital take-out offer of $23.35 a share. Firm believes the take-out represents fair value for the shares considering the uncertainty that lies ahead. They believe TPG may have bought the business for the strong cash flow it generates. If TPG was to cut R&D expenses, they est it could gain an additional $0.30 on their estimated F2009 EPS, although over the long-term, with no R&D and no new products, they expect cash flow to decline. Firm does not expect any other parties to put in competing bids.
07:48 Biotechnology: Seven stocks with Dec catalysts (ACAD, GTOP, IMMU, MDVN, OMRI, SPPI) - Brean Murray
Brean Murray notes the following seven stocks with December catalysts: ACAD - Mid December Phase 2b schizophrenia data for ACP103 to be presented. Top-line data came out in March, and the details to come in two weeks will, in their view, show how inconclusive the trial was by showing that it does not help in planning a Phase 3 trial… GTOP - End of December for Phase 3 trial to fail outright, in firm’s opinion… IMMU - Firm expects partner UCB to say that they are moving forward with Phase 2 or Phase 3 trial of epratuzumab in lupus… MDVN - Firm expects the publication of Phase 2 data in a scientific journal to underscore just how unreliable the Russian Alzheimer’s trial was and how different it is from any trial that could be conducted in the U.S… MOGN - Expecting early December ASH conference to show data on Dacogen… OMRI - Firm believes that France will order about $20 million in smallpox antisera… SPPI - Expecting to initiate Phase 3 BPH trial with ozarelix, thereby confirming that Phase 2 was positive.
07:44 ZUMZ Zumiez upgraded to Positive from Neutral at Susquehanna (27.10 )
07:42 DELL Dell tgt cut to $40 from $43 at Bear Stearns, following earnings and given reduced margins, firm says results were mixed but the co is still in turnaround mode (28.14 ) -Update-
07:40 Jefferies discusses the Dept of Defense reorganization efforts and potential benefits for both client devices and back-end systems
Jefferies discusses the Dept of Defense continuing to fine tune its efforts in biometrics as laying the groundwork for healthy spending for both client devices and back-end systems. As part of this reorganization, the U.S. military plans to establish a Biometrics Center of Excellence. The firm focuses on recent reorganizations within the Dept of Defense to coordinate investments in biometrics. The firm thinks both ID and COGT will likely benefit. They also note potential impacts for ASEI, STST, and TTEK.
07:39 HR Healthcare Realty initiated with a Buy at Jefferies- tgt $26 (25.24 )
Jefferies initiates HR with Buy and a $26 tgt saying they believe healthcare REITs are more defensive than their operator tenants. Firm says HR appears well-positioned to benefit from superior L.T growth trends for outpatient services and is the only “pure play” focused on M.O.B’s and outpatient facilities. Firm also mentions HR’s strong asset base, proven mgmt team, and attractive yield.
07:37 FRE Freddie Mac: Expensive preferred offering stabilizes capital - FBR (29.51 )
Friedman Billings notes that on Nov 29 after the market close, FRE issued $6 bln of fixed-to-floating rate non-convertible non-cumulative perpetual preferred stock, with a fixed dividend rate of 8.375% through Dec 31, 2012. Thereafter, the dividend rate will be the higher of 3-month LIBOR plus 416 basis points, or 7.875%. The capital raise was widely expected as FRE has been facing difficulties meeting the 30% capital surcharge requirements due to higher credit losses and market volatility. Firm believes the $6 bln capital infusion will get FRE through the next few quarters as the co earnings come under pressure from higher credit cost and widening credit spreads. Given the cost of the preferred capital, they are reducing their FY08 EPS est to $0.15 from $0.90.
07:37 WSO Watsco downgraded to Hold from Aggressive Buy at Keybanc (38.12 )
Keybanc downgrades WSO to Hold from Aggressive Buy based on recent due diligence saying it has become more apparent that persisting housing weakness will likely prevent any meaningful earnings growth moving into 2008.
07:35 RY Royal Bank of Canada reports Q4 EPS of $1.01 vs $1.07 First Call consensus (53.81 )
07:33 WIRES On The Wires
Futuremedia (FMDA) announces that the ratio of its American Depositary Shares to ordinary shares will be changed to 1:1000 from 1:50, effective Monday, Dec 3, 2007… The Nuclear Regulatory Commission has docketed the Combined Construction and Operating License Application to build and operate two new nuclear units at the South Texas Project nuclear power station site filed by NRG Energy (NRG), CPS Energy and South Texas Project Nuclear Operating Company on Sep 24, 2007.
07:33 PRICE Filings, Offerings, Pricings and IPOs
Filings: Cadence Pharma (CADX) files for a $100 mln common stock shelf offering… Harmonic (HLIT) files for a 1.1 mln share common stock offering by selling shareholders… Kinder Morgan Prtnrs (KMP) files for a 5.2 mln share common unit secondary offering… Nuance Communications (NUAN) files for a mixed shelf offering which includes selling shareholders… Offerings: Canadian Solar (CSIQ) announces a $75 mln convertible notes private placement offering… Cell Therapeutics (CTIC) announces $6.5 mln convertible preferred stock and warrants offering to existing securities holders… CN (CNI) announces a $2.5 bln debt securities offering (in the US and Canadian mkts)… Akeena Solar (AKNS) files for a 4.75 mln share common stock offering by selling shareholders… Pricings: Anworth Mortgage (ANH 6.75) prices a 9 mln share common stock offering at $6.70/share.
07:31 UBS UBS AG: Downgrade detail (49.37 )
As mentioned at 6:43 Bear Stearns downgraded UBS to Peer Perform from Outperform saying the underlying value of the UBS franchise for long-term value investors is clear. However, until the sub-prime issue is put behind the bank and some normality returns to earnings, uncertainty will remain.
07:30 STEM StemCells says first patient completes its Phase I clinical trial (1.81 )
Co announces that the first patient to receive a transplant of HuCNS-SC cells in the co’s Phase I clinical trial has completed the trial. The patient, who was transplanted in November 2006, has finished the twelve-month period of immunosuppression and follow-up, and undergone the last of the tests and observations required by the trial protocol. As planned, the patient has subsequently been enrolled in a separate long-term follow-up study, designed to monitor the patients over a four-year period.
07:30 CRDN Ceradyne receives $107 mln ceramic body armor order for U.S. Army (51.19 )
Co announces it has received a $107 million delivery order for ESAPI (Enhanced Small Arms Protective Inserts) from the U.S. Army. This delivery order will be shipped against a larger indefinite delivery/indefinite quantity (ID/IQ) contract.
07:29 CS Credit Suisse: Downgrade details (60.28 )
As mentioned at 6:43 Bear Stearns downgraded CS to Underperform from Peer Perform saying the asset-gathering businesses continue to provide support and even on our worst case scenario, the non-investment banking businesses are worth around SFr50 per share. However the firm says, Investment Banking still represents 42% of their 2008 earnings forecast and the outlook here remains uncertain. Consequently, until some certainty is restored the firm believes the stock will underpeform the broader bank sector.
07:28 MER Merrill Lynch: Thain prepares to bring Chai over to Merrill - WSJ (57.41 )
WSJ reports Nelson Chai, CFO of NYX, is in advanced talks to take a key position at Merrill, according to people familiar with the matter. One possibility is for Mr. Chai to be named CFO, these people say. Details were still being worked out yesterday, and it’s possible Mr. Chai will decide to stay at the NYSE.
07:27 SWHC Smith & Wesson: Channel checks increase optimism sales and inventroy trends; not expecting another shoe to drop - Merriman (9.75 )
Merriman says given multiple channel checks they have completed following the co’s pre-announcement on Oct 29 as well as the fact that mgmt had the opportunity to lower guidance further had they believed there was a need to (management lowered 2Q08 revenue guidance by approximately $12M but FY08 annual revenue guidance by only $5M), they do not believe there will be a need to lower guidance further on the 2Q08 conference call. Firm believes it is this concern that is mainly holding back investors from taking positions in SWHC at current levels — providing an opportunity for the shares to move higher following the company’s 2Q conference call.
07:25 DB Deutsche Bank AG: Downgrade details (130.50 )
As mentioned at 6:24 Bear Stearns downgraded DB to Underperform from Peer perform saying the big question is how badly Deutsche Bank’s leading fixed income franchise will be hurt by the deteriorating market conditions in 2008. At a recent meeting Anshu Jain suggested that the Markets unit was in a position to take advantage of competitor weakness and strengthen the business. Firm notes he also suggested it might get close to matching 2006 revenues in 2008, with particular help from EMG activity. However, he also suggested that a weak Q1 2008 would inevitably see them reassess the situation. The firm says Corporate Banking & Securities still account for 51% of earnings in 2008. This illustrates how vulnerable earnings remain to weaker markets.
07:24 One-month euro Libor rates up again to 6-1/2 yr high - Reuters
Reuters reports London interbank offered rates for one-month euro extended gains to fresh 6-1/2 year highs as banks bid for cash at a higher premium to meet funding requirements during the New Year period. One-month euro Libor rates — lending rates between banks — rose to 4.82125% at their daily fixing, their highest since May 2001.
07:24 RDWR Radware: Developing turnaround story is encouraging, but still looking for sustained results - Wedbush (13.49 )
Wedbush continues to be encouraged by a turnaround effort which continues to progress and could become more visible over the next 1-2 quarters, but advise investors to remain on the sidelines until RDWR can demonstrate sustained and consistent rev performance. Firm notes no trend yet but productivity in the U.S. has improved. Little impact from financial services meltdown thus far and business appears relatively stable. Firm is still optimistic about co’s prospects, but slightly lowering 2008 revs to reflect economic environment.
07:23 ETFC E*TRADE: Buys an expensive lifeline - FBR (4.82 ) -Update-
Friedman Billings notes the terms and structure of the transaction were not as favorable as expected, but the transaction itself was a necessary evil. It shores up ETFC’s capital and allows the co to earn itself out of any remaining balance sheet issues over time. Although firm believes there is significant upside potential for investors willing to take a longer-term approach, near-term concerns regarding customer attrition and home equity exposure are likely to keep the stock in check for a while. With the uncertainty on how the customer base will respond over the coming weeks, firm remains on the sidelines at a Market Perform and lowers their tgt by $5.50 to $6.50.
07:23 OSIP OSI Pharm: Increasing financial leverage, re-invigorating Tarceva - Rodman & Renshaw (45.53 )
Rodman & Renshaw notes OSIP gave modest incremental updates on its oncology and metabolic franchises in addition to encouraging financial guidance. In the short-term, they remain focused on Tarceva’s growth that could potentially be driven by earlier use in NSCLC and in combination with Avastin. Beyond Tarceva, OSIP’s oncology and metabolic piplelines are interesting, but still quite early. Firm is also positive on the co’s collaboration with privately-held AVEO as it should provide OSIP access to novel cancer targets and intellectual property.
07:22 LULU Lululemon Athletica: Better than expected 3Q07; raised guidance - Broadpoint Capital (41.54 )
Broadpoint Capital notes LULU reported Q3 EPS of $0.11 with rev growth of 84% to $66.2 mln, driven by a 36% comp gain and 41% unit expansion. The co has stood behind its claims regarding the fiber content of its Vitasea fabric. Management does not believe that the media coverage surrounding Vitasea had a negative impact on its business. Firm has increased their FY07 EPS to $0.41 from $0.35, based on actual 3Q07 results and their new 4Q07 EPS est. They are also increasing their FY08 EPS to $0.72 from $0.56 previously, primarily due to a lower tax rate.
07:22 DELL Dell: Color on quarter (28.14 )
Broadpoint Capital notes DELL reported EPS of $0.34, $0.01 below the consensus, on revenue of $15.646B, 2.0% above the consensus. Firm notes the EPS downside was driven by a worse-than-expected gross margin and operating expenses, offset partially by a better-than-expected tax rate and rev. The 147-bps sequential decline in the gross margin was driven by a less favorable component pricing environment, a mix shift, and incremental costs associated with expediting orders in backlog. Firm notes mgmt warned of a negative near-term impact from less favorable component pricing environment and the expected mix shift to U.S. consumers and international regions. The co appears to be less definitive on previous promises of a 10% job cut, given new headcount from acquisitions and new growth initiatives. Furthermore, mgmt was unclear about margin and growth targets for the growth opportunities the co outlined… Friedman Billings notes DELL’s quarterly results proved disappointing–rev was modestly ahead of consensus but operating margins were below consensus and down sequentially. However, they believe the bigger disappointment was that mgmt just repeated what investors already knew–that the new team is changing DELL’s famous business model–while refusing to say how they think the new plan will affect profit margins. What is now clear is that expenses are higher, and profits lower, than investors had previously believed. Firm believes what is becoming clear is that margins will be lower than many had expected, and that the shares are already fairly valued.
07:21 CRK Comstock: Ideally positioned; awaiting catalysts - FBR (33.28 )
Friedman Billings notes CRK mgmt demonstrated solid progress in positioning itself well for growth in 2008. They believe the co holds the potential to deliver on a number of catalysts, including 1) its first Cotton Valley horizontal well, 2) monetization of untapped potential at its newly active Hico Knowles field, and 3) development of newly acquired South Texas assets. News flow may materialize as early as mid-Dec, at which point, CRK might well be set up for outperformance vs the peer group.
07:20 BUD Anheuser-Busch: No price war, but bumpy transition may be ahead - Credit Suisse (51.26 )
Credit Suisse notes their price war fears have diminished, but they see transitional challenges ahead as A-B recasts its go-to market model. After a Credit Suisse hosted lunch of BUD, firm believes that the co is unlikely to start a price war in the U.S. in the upcoming year and will instead remain focused on protecting margins and offsetting the impact of higher commodity costs with higher pricing. This is a positive for BUD. However, they also believe that BUD is now in the beginning stages of a transition process from a “push” based to a “pull” based organization and they believe this transition, although needed, may take considerable time to bear fruit.
07:20 ATHR Atheros Communications profiled in New America section of IBD (29.82 )
IBD reports the wireless future is now, thanks in part to the co. The wireless chipmaker rolled out the world’s most integrated, most compact single-chip 802.11n design expressly for the personal computer mkt. ATR carved out a lucrative niche earlier this decade with its crop of Wi-Fi chips. Battery power is a big issue for many portable consumer devices, and Atheros has a solution. It unveiled its ROCm, or radio-on-chip for the mobile, single-chip AR6002 family, featuring the industry’s lowest-power design for mobile wireless products. “In the longer term, the biggest growth segment for us will be the consumer market,” Craig Barratt, CEO of ATR, said. “Many personal portable devices will use additional connectivity technologies like Wi-Fi and Bluetooth.” Betsy Van Hees, an analyst with Cowen, says “We believe… that embedded Wi-Fi, Ethernet and to a lesser extent Bluetooth present the greatest growth drivers for the co.” The company’s cost-driven focus gave it an edge in a very competitive landscape, she says. As a fabless chipmaker, Atheros outsources its manufacturing to suppliers based almost entirely in Asia. A fabless model keeps overhead down and margins up.
07:20 ETFC E*TRADE: ABS Portfolio Sale has very clear, generally negative, implications for the valuation of like assets on brokers’ balance sheets - Credit Suisse (4.82 )
Credit Suisse believes ETFC’s ABS Portfolio Sale has very clear, generally negative, implications for the valuation of like assets on brokers’ balance sheets. Firm notes some will argue that ETFC’s ABS portfolio sale was a distress sale. Others, i.e., those on the more conservative end of the spectrum, will interpret the ETFC portfolio sale as an observable trade that dictates valuation for like securities. With less exposure to these most troubled asset classes and historic strength in risk management, Lehman and Goldman rank among their favorites.
07:19 ZIOP Ziopharm Oncology: Momentum continues with ZIOPHARM’s oncology programs - Rodman & Renshaw (3.21 )
Rodman & Renshaw notes they attended yesterday’s ZIOPHARM R&D day and came away impressed with the co’s motivation to continue to drive news flow from its clinical programs. After a year in which ZIOPHARM demonstrated the ability to provide steady news flow regarding the advancement of its product candidates, darinaparsin (ZIO-101), IPM (ZIO-201) and indibulin (ZIO-301), firm believes ZIOPHARM is at the cusp of providing multiple positive inflection points in the next six months that have potential to significantly drive share appreciation. Firm believes an update of upcoming milestones provided during the day support their view that ZIOPHARM shares will build momentum in 2008.
07:18 IDEV Indevus Pharm downgraded to Market Outperform from Strong Buy at JMP (7.57 )
07:15 VSEA Varian Semi upgraded to Overweight from Market Weight at Thomas Weisel (40.27 )
07:15 TU Telus downgraded to Sector Perform from Outperform at RBC (45.20 )
07:13 EHTH eHealth initiated with a Neutral at BofA- tgt $35 (31.74 )
07:07 Hearing Steel Sector upgraded to attractive from neutral at tier 1 firm
Also hearing Olympic Steel (ZEUS) upgraded to buy from neutral, Commercial Metals (CMC) downgraded to neutral from buy and Steel Dynamics (STLD) downgraded to neutral from buy.
07:05 KIRK Kirklands beats by $0.03, reports revs in-line (0.58 )
Reports Q3 (Oct) loss of $0.24 per share, excluding non-recurring items, $0.03 better than the First Call consensus of ($0.27); revenues fell 7.4% year/year to $88.7 mln vs the $88.8 mln consensus.
07:04 TIF Tiffany & Co beats by $0.03, beats on revs; guides FY08 EPS in-line (48.75 )
Reports Q3 (Oct) earnings of $0.28 per share, excluding non-recurring items, $0.03 better than the First Call consensus of $0.25; revenues rose 18.0% year/year to $627.3 mln vs the $616.2 mln consensus. Co issues in-line guidance for FY08, sees EPS of $2.25-2.30, excluding non-recurring items, compared to previous guidance of $2.22-2.27, vs. $2.29 consensus.
07:03 WIRES On The Wires
GeoPetro Resources (GPR) announces the recent acquisition of 4,480 acres of undeveloped land on a high-impact oil and gas prospect in the Swan Hills-Whitecourt area of northwestern Alberta… BPZ Resources (BZP) announces that the second earn-out target provided for in the original merger agreement related to its merger with Navidec dated July 8, 2004 has been achieved.
07:03 ABH AbitibiBowater upgraded to Outperform from Sector Perform at RBC (18.77 )
07:02 KIRK prelim ($0.24), excluding charges and tax change vs ($0.27) First Call consensus
07:01 TIF sees FY08 $2.25-2.30 vs $2.29 First Call consensus; sees revs up approx 15%
07:01 DSTI DayStar Technologies initiated with a Buy at ThinkEquity (4.25 )
07:01 KIRK prelim ($0.49), ex items vs ($0.27) First Call consensus; revs $88.7 mln vs $88.80 mln First Call consensus
07:00 TIF prelim $0.72 may not compare to $0.25 First Call consensus; revs $627.3 mln vs $616.17 mln First Call consensus
07:00 CALP Caliper Life Sciences upgraded to Positive from Neutral at Susquehanna (5.45 )
06:59 Credit Suisse initiates the employment services sector with a Market Weight
Credit Suisse initiates the employment services sector with a Market Weight. The firm says key themes, including a war for talent and a global push for more flexible labor costs, should drive strong long term growth for temporary staffing, permanent placement, and talent screening companies. But, in the face of rising economic uncertainty and downside earnings risk, risk/reward not compelling enough to warrant positive view on whole sector. The firm selects stocks exposed to preferred themes and at trough valuations. The firm initiates Manpower (MAN) with an Outperform and a $73 tgt. The firm also initiates Robert Half (RHI) tgt $28, MPS Group (MPS) tgt $13, HireRight (HIRE) tgt $13, Korn/Ferry (KFY) tgt $17, and Heidrick & Struggles (HSII) tgt $36, with Neutrals.
06:59 FFI Fortune Industries sees Y08 EPS of $0.10-0.25 with revs of $180-200 mln. Co does not have estimates. (2.32 )
06:43 CALLS Early Research Calls III
Downgrades: Bear Stearns downgrades Credit Suisse (CS 60.2 to Underperform from Peer Perform… Bear Stearns downgrades UBS (UBS 49.37) to Peer Perform from Outperform… Friedman Billings downgrades MGI Pharma (MOGN 35.10) to Market Perform from Outperform with a $37 tgt based on yesterday’s runup in the stock on acquisition hopes after the co’s announcement that it had hired Lehman to explore strategic options. The firm remains bullish on Aloxi and think that it has another qtr or two of upside, but yesterday’s surge amply rewards the stock for this. Miscellaneous: J.P Morgan initiates California Pizza (CPKI 15.94) with a Neutral… J.P Morgan initiates Plug Power (PLUG 3.7 with an Underweight… J.P Morgan initiates FuelCell Energy (FCEL 8.84) with an Overweight… J.P Morgan initiates Ballard Power (BLDP 4.47) with a Neutral…UBS initiates Philips electronics (PHG 41.57) with a Buy… UBS initiates Infineon (IFX 11.78), and ASML Holding (ASML 34.11) with Buys… UBS initiates ARM Holding (ARMHY 8.21), Qimonda (QI 7.22), STMicroelectronics (STM 15.3 with Neutrals… ThinkEquity initiates WebMD (WBMD 44.30) with an Accumulate tgt $48.
06:41 Sensex ends up 360pts - The Business Standard
The Business Standard the Sensex opened with a positive gap of 133 points at 19,136. Volatility in early trades saw the index pare gains and drop to a low of 19,007. The index, thereafter, moved up as the day progressed. The Sensex rallied to a high of 19,425 - up 422 points from the previous close - before finishing with a smart gain of 360 points at 19,363. The market breadth was fairly positive - out of 2,860 stocks traded, 1,747 advanced, 1,050 declined and 63 were unchanged today.
06:40 Asian stocks rise on U.S. rate cut speculation; Banks, JFE gain - Bloomberg.com
Bloomberg.com reports Asian stocks rose, trimming the biggest monthly decline in more than a year, after Federal Reserve Chairman Ben Bernanke reinforced speculation that U.S. policy makers will cut borrowing costs to bolster growth… Japan’s Nikkei 225 Stock Average gained 1.1% to 15,680.67. Benchmarks climbed in other markets open for trading, except in Thailand, New Zealand and China, where the CSI 300 Index posted a record monthly drop.
06:40 Global stocks, U.S. futures gain; Schneider, Citigroup advance - Bloomberg.com
Bloomberg.com reports global stocks rose, trimming the biggest monthly decline in almost five yrs, after Federal Reserve Chairman Ben S. Bernanke fueled expectations the central bank will cut interest rates. U.S. index futures increased… Europe’s Dow Jones Stoxx 600 Index increased 0.8%. Germany’s DAX advanced 0.9%, and France’s CAC 40 gained 0.7%. The U.K.’s FTSE 100 increased 0.6%.
06:38 BWY BWAY Holding reports Q4 (Sep) results, beats on revs; guides Q1 EPS below consensus; guides FY08 EPS below consensus (9.81 )
Reports Q4 (Sep) loss of $0.06 per share, includes charges, may not be comparable to the First Call consensus of $0.12; revenues rose 1.5% year/year to $252.8 mln vs the $248.3 mln consensus. Co issues downside guidance for Q1, sees EPS of ($0.22)-($0.16) vs. $0.09 consensus. Co issues downside guidance for FY08, sees EPS of $0.68-0.78 vs. $0.85 consensus.
06:24 CALLS Early Research Calls II
Upgrades: BofA upgrades Western Refining (WNR 27.21) to Buy from Neutral… BofA upgrades Valero (VLO 63.73) to Buy from Neutral… J.P Morgan upgrades Telmex (TMX 35.45) to Neutral from Underweight. Downgrades: BofA downgrades Mohawk Industries (MHK 80.14) to Sell from Neutral… Bear Stearns downgrades Deutsche Bank (DB 130.50) to Underperform from Peer Perform. Miscellaneous: Jefferies initiates Infinera (INFN 21.43) with a Hold and sets a $22.50 tgt, as they like Infinera as a play on rising network bandwidth growth and management’s ability to execute the business and take share in the Wave Division Multiplexing space yet believe shares already reflect a bullish outlook for the business… SunTrust initiates DealerTrack Holdings (TRAK 43.70) with a Buy and sets a $61 tgt, as they believe the co is in the relatively early stages of dramatically increasing penetration of dealers, finance companies and aftermarket providers with its market-leading array of transaction and subscription-based solutions… BMO Capital initiates Cigna (CI 52.30) with an Outperform and a $60 tgt… BMO Capital initiates Exrpess Scripts (ESRX 68.26) with an Outperform and an $83 tgt… BMO Capital initiates Medco Health (MHS 101.87) with an Outperform and a $120 tgt… BMO Capital initiates Aetna (AET 55.69) with an Outperform and a $65 tgt… BMO Capital initiates CVS Caremark (CVS 40.06) and UnitedHealth (UNH 54.76) with Market Performs.
06:18 S&P futures vs fair value: +6.6. Nasdaq futures vs fair value: +6.5.
06:17 European Markets
FTSE…6392.60…+43.50…+0.7%. DAX…5646.42…+48.31…+0.9%.
06:17 Asian Markets
Nikkei…15680.67…+166.93…+1.1%. Hang Seng…28643.61…+161.07…+0.6%.
06:12 CALLS Early Research Calls I
Miscellaneous: BofA initiates HMS Holdings (HMSY 30.99) with a Buy and sets a $40 tgt, as they favor the co due to its substantial first mover advantages that underscore its industry leading position, is poised to capitalize on the growing healthcare spending and note legislation that mandates Federal and state governments identify and recoup claims paid in error is accelerating demand for HMSY’s cost containment services… KeyBanc initiates Joy Global (JOYG 57.40) with a Hold, as they believe near-term weakness in domestic underground coal mining in conjunction with potential supply chain headwinds could impede margin growth in the near term… KeyBanc initiates Bucyrus International (BUCY 87.27) with a Hold, as they remain positively biased toward the co’s exposure to mid-, late-, and long-cycle end-markets, its rich backlog, and the long-term accretion potential from DBT, however, they believe near-term weakness in the domestic coal market, coupled with integration risk from the recent DBT acquisition and potential supply chain constraints could generate a better opportunity to buy shares in the near term… Sandler O’Neill initiates Invesco (IVZ 26.82) with a Buy and sets a $32 tgt, based on accelerating AUM growth, margins that are likely headed even higher, management’s focus on driving shareholder value, estimates that have room to rise and valuation… Morgan Keegan initiates Global Options Group (GLOI 3.80) with a Market Perform, as they believe until the co turns profitable shares are fairly valued and favor the co’s business model that has proven effective, management and large market opportunity.
06:10 BIG Big Lots beats by $0.02, reports revs in-line; guides Q4 and FY07 below consensus, authorizes new $150 mln share repurchase program (20.49 )
Reports Q3 (Oct) earnings of $0.14 per share, $0.02 better than the First Call consensus of $0.12; revenues fell 1.8% year/year to $1.03 bln vs the $1.03 bln consensus. Co issues downside guidance for Q4 (Jan), sees EPS of $0.81-0.86 vs. $0.87 consensus. Co issues downside guidance for FY08, sees EPS of $1.37-1.42 vs. $1.45 consensus. Co’s Board authorizes a new repurchase program providing for the repurchase of up to $150 mln of common shares.
06:05 WIRES On The Wires -Update-
Omnicell (OMCL) announces that it has entered into a definitive agreement to acquire Rioux Vision in an all cash transaction valued at approx $26 mln, subject to adjustment; Rioux Vision designs and manufactures mobile cart technology… Canadian Solar (CSIQ) announces that it plans to make a private offer of approx $75 mln of its convertible senior notes due 2017.
05:48 TJX Banks denied class status against TJX - Boston Globe (28.08 )
The Boston Globe reports TJX Cos. (TJX) gained a legal victory yesterday as a federal District Court judge in Boston yesterday told banks suing the retailer for damages following its massive data breach that they cannot pursue their claims as a class. Technically, Judge William G. Young’s decision to deny class certification does not end the claims against TJX by banks that want the parent of stores including TJ Maxx and Marshalls to pay for the costs of reissuing credit and debit cards following a computer system breach by unknown hackers through last year. But the decision will make it harder for plaintiffs to proceed, since they will now have to pursue claims individually and many may decide it isn’t worth the expense, said lawyer Stefan L. Jouret, a litigator at Donovan Hatem LLP in Boston. “I think it’s a very severe blow to the plaintiffs’ case,” he said.
05:43 GOOG Google to announce bid for wireless spectrum - WSJ (697.00 )
The Wall Street Journal reports Google (GOOG) plans to announce Friday that it will apply to bid for wireless spectrum in a January FCC auction, according to people familiar with the matter. The co had previously said it would probably bid for spectrum, a chunk of the airwaves that can be used to provide mobile phone and Internet services. The FCC has a Dec. 3 deadline for any parties to declare their intent to bid. A Google spokesman declined to comment. If it wins a wireless license, Google would be in a position to become a provider of mobile phone and Internet services, to partner with others interested in doing so or to lease the spectrum to them. Google expects to bid on the so-called “C” block of spectrum, says one of the people familiar with the matter.
05:41 COP ConocoPhillips to submit Alaska pipeline proposal - WSJ (78.82 )
The Wall Street Journal reports ConocoPhillips (COP) plans to submit a proposal today to build a $30 bln natural-gas pipeline from Alaska to the lower 48 states, in a sign that a delayed project to bring new supplies to growing markets could move forward. A ConocoPhillips proposal would be the first indication that oil producers are ready to work with Alaska Gov. Sarah Palin and her effort to jumpstart the pipeline. ConocoPhillips’s proposal isn’t an official application because it doesn’t meet all the requirements set out by the state. But the co hopes its alternative plan still might be successful. In an interview, Chief Executive James Mulva said the proposal “gives the highest probability that this pipeline will move towards sanctioning.” He said he is willing to partner with a pipeline company and hopes to join with the other two major producers on the North Slope: BP (BP) and Exxon Mobil (XOM). “Given the scope and size of this project, all three producers should participate,” he said. If its proposal is accepted, ConocoPhillips said it hopes to begin preliminary engineering work next year.
05:39 U.S., banks near a plan to freeze subprime rates - WSJ
The Wall Street Journal reports the Bush administration and major financial institutions are close to agreeing on a plan that would temporarily freeze interest rates on certain troubled subprime home loans, according to people familiar with the negotiations. An accord could reassure investors and strapped homeowners. It could also give a boost to the Bush administration, which is facing criticism for inaction amid the recent housing turmoil. The plan is being negotiated between regulators including the Treasury Department and a coalition of mortgage-related companies including Citigroup (C), Wells Fargo (WFC), Washington Mutual (WM) and Countrywide Financial (CFC). People familiar with the talks say the individual members have agreed to follow any agreement reached by the coalition, which is called the Hope Now Alliance. Details of the plan, which could be announced as early as next week, are still being worked out. In general, the government and the coalition have largely agreed to extend the lower introductory rate on home loans for certain borrowers who will have trouble making payments once their mortgages increase. Exactly which borrowers will qualify for the freeze and how long the freeze would last are yet to be determined. Under one scenario, the freeze could run as long as seven years. The parties are developing standard criteria that would determine eligibility. The criteria should be finalized by the end of year.
05:29 Morning News Summary
WSJ: U.S., banks near a plan to freeze subprime rates… ConocoPhillips (COP) to submit Alaska pipeline proposal… Google (GOOG) to announce bid for wireless spectrum. Boston Globe: Banks denied class action status against TJX (TJX).
04:05 CRXL Crucell presents Indian Phase I rabies antibodies cocktail study, positive results enable prompt progression towards Phase II studies (17.96 )
Co announces the results of the second clinical evaluation of their rabies monoclonal antibody cocktail. Data for the Phase Ib study conducted in India which started in April 2007 indicate that the cocktail is well tolerated, provides the expected neutralizing activity and that it can be safely administered in combination with a rabies vaccine. The combined data from both Phase I studies prompt the progression towards Phase II studies which are expected to start in 1H08 in the US and the Philippines.
04:03 WIRES On The Wires -Update-
LDK Solar (LDK) announces its polysilicon plant construction remains on schedule and has secured an additional 312 metric tons in polysilicon supplies for 2008… Ampal-American Israel (AMPL) and Israel Infrastructure Fund, leading a group of institutional investors, announce the closing of a joint venture to invest in East Mediterranean Gas; Ampal and the institutional investors will each hold a 50% interest in the joint venture.
02:52 NEM Newmont Mining agrees to sell royalty and other non-core assets valued at approx $1.3 bln to Franco-Nevada (51.39 )
Co confirms that it has agreed to sell its royalty assets and certain other non-core investments to Franco-Nevada in a transaction valued at approx $1.3 bln. Newmont expects to record a pre-tax gain from discontinued operations of approx $950 mln in Q4 in connection with the completion of the sale.
01:13 IBKR Interactive Brokers mentioned positively in Weekday Trader - Barron’s Online (29.17 )
Barron’s Online reports shares of Interactive Brokers (IBKR) don’t reflect the success of the co’s market making business that has doubled and the brokerage business that has grown seven fold. The true benefit Interactive Broker’s offers investors is the business model. The co is built on a technology platform that generates operating leverage, which is rare among online brokerage firms because inevitably staffing at many firms grows to support the system. During the recently-ended Q3, Interactive Brokers’ revenues rose 35% over Q2, yet expenses only increased 5.4%. High degrees of operating leverage are possible at Interactive Brokers because the business relies on a very sophisticated, large computer system that is operated by a small group of people. The firm’s Q3 incremental margin was 94% on a quarter-over-quarter basis and 83% year-over-year as high trading volumes “literally fell to the bottom line,” said Rich Repetto, a Sandler O’Neil analyst.
01:12 ‘Mad Money’ Recap: Lightning Round cont. - TheStreet.com
Cramer was bearish on Volt Information Sciences (VOL), Perfect World (PWRD), Ambac (ABK), PMI Group (PMI), MGIC Investment (MTG) and MBIA (MBI).
01:10 ‘Mad Money’ Recap: Lightning Round - TheStreet.com
Cramer was bullish on Tesoro (TSO), Marathon Oil (MRO), Shanda Interactive Entertainment (SNDA), CBRL (CBRL), Sirius Satellite Radio (SIRI), McDonald’s (MCD), Dolby Laboratories (DLB), Verizon (VZ), AT&T (T), Diana Shipping (DSX) and UnitedHealth (UNH).
01:08 Cramer’s ‘Mad Money’ Recap - TheStreet.com
During the “Sudden Death” round, Cramer was bullish on ABB (ABB) and Freeport-McMoRan (FCX). Cramer was bearish on Taseko Mines (TGB) and Playboy Enterprises (PLA).
00:12 Bernanke hints of further rate cuts - AP
AP reports Fed Chairman Ben Bernanke on Thursday hinted that another interest rate cut may be needed to bolster the economy. The worsening credit crunch, a deepening housing slump and rising energy prices probably will create some “headwinds for the consumer in the months ahead,” he said. Bernanke said he expects consumer spending will continue to grow and suggested the country can withstand the current problems without falling into a recession. But he indicated that consumers could turn more cautious as they try to cope with all the stresses. The odds have grown that the country could enter a recession. A sharp cutback in consumer spending could send the economy into a tailspin. Against this backdrop, Fed policymakers will need to be “exceptionally alert and flexible,” Bernanke said. That comment probably will be viewed as a sign the Fed may lower interest rates when it meets on Dec. 11. The economic outlook has been “importantly affected over the past month by renewed turbulence in financial markets, which has partially reversed the improvement that occurred in September and October,” Bernanke said. “These developments have resulted in a further tightening in financial conditions, which has the potential to impose additional restraint on activity in housing markets and in other credit-sensitive sectors,” he said. In his remarks, Bernanke said rising gasoline and heating oil prices as well as higher food costs have the potential to raise inflation. He said that is something the Fed also is watching.
00:07 WIRES On The Wires
Temple-Inland (TIN) announces that its Board of Directors has approved the final terms of the previously announced spin-offs of Guaranty Financial Group and Forestar Real Estate Group through tax-free distributions of Guaranty and Forestar common stock to Temple-Inland stockholders; distributions are expected to be made on December 28, 2007 to TIN stockholders of record as of the close of business on December 14, 2007… Cell Therapeutics (CTIC) announces that it has entered into agreements to sell approx $6.5 mln of its 7% Convertible Preferred Stock and warrants in a registered offering to several institutional investors, including certain of its existing securities holders.
00:05 CAH Cardinal Health receives DEA order to temporarily cease distribution of controlled substances from Auburn, WA facility (59.94 )
Co announces that the U.S. Drug Enforcement Administration will temporarily suspend its license to distribute controlled substances from its Auburn, WA distribution center effective Dec. 3. The co said the suspension affects only the Washington facility and only controlled substance shipments from that facility. Steps are being taken to ensure continuity of service to its customers. In an order received today, the DEA said Cardinal Health “failed to maintain effective controls against the diversion of a particular controlled substance,” and cites the sale of hydrocodone to one pharmacy that allegedly dispensed excessive amounts of the drug based on illegitimate prescriptions from Internet pharmacy web sites.
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