08:32 SLM SLM Corp: Acquisition unlikely; reducing EPS and tgt to $27 – Credit Suisse (28.49 )
Credit Suisse notes yesterday SLM announced that the buyer group (J.C. Flowers, JPMorgan, and Bank of America) will not seek to resolve the dispute between the parties related to the proposed acquisition of SLM. The Board will continue to pursue all available recourse which includes the $900 million breakup fee. SLM is also in the process of obtaining additional secured warehouse funding in excess of $30 bln from 10 financial institutions. This essentially replaces the credit facilities originally provided by Bank of America and JPMorgan at the time of the acquisition announcement. Firm lowers their 4Q and 2008 core EPS ests to $0.52 and $2.60 (Old: $0.62 and $3.25). Firm cuts tgt to $27 (Old: $60) just over 10x our 2008 core EPS estimate.
08:31 MINI reaffirms FY07 $1.39-1.41 vs $1.41 First Call consensus
08:31 S&P futures vs fair value: -15.8. Nasdaq futures vs fair value: -21.5.
Futures slide on a number of economic reports. November PPI Ex food & energy rose 0.4% month over month, compared to the expected rise of 0.2%. November retail sales less autos rose 1.8%, compared to the consensus estimate that called for a rise of 0.6%. Jobless claims for the week ended Dec. 8 came in at 333K, while economist expected 335K claims. Prior to the reports, Lehman Brothers (LEH) reported earnings that topped expectations, but did not give futures a lift.
08:31 ECONX Core PPI y/y +2.0% vs +1.8% consensus
08:31 MINI sees FY08 $1.50-1.60 vs $1.54 First Call consensus
08:30 ECONX PPI y/y +7.2% vs +6.0% consensus
08:30 BONDX Bond Watch: Aiming Higher
Treasuries are working for better levels along with global bonds in recovery mode following yesterday’s beat down. The market has a batch of data to deal with while trying to find its footing as they try to become accustomed to the new reality of less tight short lending. The market will be working for some ground is technical trade, regaining some ground but left to data & any official talk on the new Fed plan. The curve s now a bit flattened with the 2-10-yr yield spread now 96.7. The dollar is doing better on the euro which is seeing position squaring while yen is also trying for a comeback from recent lows as the market contemplates the Fed’s scheme. Gold has been leaking lower on corrective trade, with spot now 807/60 (-5.88), crude is also lower at 94.27 (-0.12). Data includes due retail sales, PPI, initial jobless claims & business inventories.
08:30 ECONX Core PPI m/m +0.4% vs +0.2% consensus -Update-
08:30 ECONX Nov. Retail Sales Less Autos @ 1.8% vs 0.6%
Prior revised to 0.4% from previous @ 0.2%.
08:30 China to let foreign companies sell Yuan stock, bonds – Bloomberg
Bloomberg China will let overseas cos sell stock and bonds in the nation for the first time, responding to U.S. calls to open its financial markets and increasing supply in an equity market that’s more than doubled this year. The announcement, made at the end of the third Sino-U.S. Strategic Economic Dialogue talks in Beijing today, will allow “qualified” cos to sell yuan-denominated shares, while locally incorporated foreign banks may sell bonds in the currency. The decision paves the way for cos to tap China’s $4.2 trillion stock market, the world’s best-performing in 2007. It will also broaden investor choice in a nation that bars its citizens from buying stocks abroad, a restriction that’s contributed to the 139% advance in the benchmark CSI 300 Index this year.
08:30 ECONX PPI m/m +3.2% vs +1.5% consensus
08:30 ECONX Nov. Advanced Retail Sales @ 1.2% vs. 0.6% consensus
08:30 ECONX Initial Jobless Claims 333K vs 335K consensus, prior revised to 340K from 338K
08:26 VITL Vital Signs: F4Q07 financial results disappoint, confuse, but probably provide a buying opportunity – Needham (53.30 ) -Update-
Needham states that in the years they have followed VITL the co has provided several “buying opportunities” and they expect today to be another of those. For the quarter VITL will take four unrelated, non-cash charges totaling $21 M before tax. Even adding back the charges the co still missed firm’s top and bottom line ests. Still, they find the explanations plausible, and FY08 guidance seems credible and in line with their previous ests.
08:24 CSGP CoStar Group: Needham believes recent pullback in CSGP shares provides opportunity to purchase quality co at discount price (46.39 )
Needham notes CSGP shares have traded off 25% since their mid-Oct high on investor concerns about the U.S. commercial real-estate market. New and existing customers continue to subscribe to CSGP’s information service despite the negative headlines around the U.S. credit crunch. The firm recently began to roll out 81 new geographies and as these markets come on line, they believe that CoStar will experience EBITDA margin expansion of more than 700 basis points in calendar 2008 versus calendar 2007 and non-GAAP EPS growth of approx 50% over the same period.
08:24 HRB H & R Block files 10-Q; says it is possible that the borrowing capacity under CLOCs may not be sufficient to meet financing needs (19.42 )
From today’s 10-Q: “We use capital primarily to fund working capital requirements, pay dividends and acquire businesses. Market conditions and recent credit-rating downgrades have negatively impacted our ability to issue commercial paper. As a result, we had no commercial paper outstanding at October 31, 2007. As an alternative to commercial paper issuance, we have been borrowing under our unsecured revolving committed lines of credit (CLOCs) to support working capital requirements arising from off-season operating losses in our Tax Services and Business Services segments and operating losses from our mortgage businesses. We had borrowings totaling $1.6 bln outstanding under our CLOCs at October 31, 2007, of a total borrowing capacity of $2.0 bln. Subsequent to October 31, 2007, we drew additional funds on the CLOCs to bring total borrowings to $1.8 bln as of the date of this filing. The CLOCs, among other things, require we maintain at least $650.0 mln of Adjusted Net Worth, as defined in the agreement, on the last day of any fiscal quarter. On November 19, 2007, effective October 31, 2007, the CLOCs were amended to, among other things, require $450.0 mln of Adjusted Net Worth, for the fiscal quarters ending October 31, 2007 and January 31, 2008. Before the end of the second quarter, we initiated efforts to seek an amendment to the Minimum Net Worth Requirement (i) in light of the possibility that we might not have met the Minimum Net Worth Requirement for the fiscal quarter ended October 31, 2007, (ii) to obtain flexibility for purposes of negotiating a sale of OOMC, and (iii) in light of the possibility that, without the amendment, we would not be in compliance with the Minimum Net Worth Covenant as of January 31, 2008 without taking steps to raise additional capital… A further disruption in credit markets, or a violation of covenants under our CLOCs, could adversely affect our access to these funds. In addition, it is possible that the borrowing capacity under our CLOCs may not be sufficient to meet our financing needs. To meet our future financing needs we may be required issue additional debt or equity securities.
08:20 LEH Lehman Brothers beats by $0.12, beats on revs (61.82 )
Reports Q4 (Nov) earnings of $1.54 per share, $0.12 better than the First Call consensus of $1.42; revenues fell 3.2% year/year to $4.39 bln vs the $4.26 bln consensus. Co reports Q4 R.O.E 16.6%. Co notes, “Despite what continues to be a difficult operating environment, the Firm’s results for the quarter highlight our ability to perform across market cycles and deliver value to our shareholders.” As of November 30, 2007, Lehman Brothers’ total stockholders’ equity was $22.5 billion, and total long-term capital (stockholders’ equity and long-term borrowings, excluding any borrowings with remaining maturities of less than twelve months) was approximately $145.7 billion. Book value per common share was $39.45. Capital Markets net revenues decreased 10%, Fixed Income Capital Markets reported a decrease in revs of 60%, due to the very challenging markets experienced during the period. Equities Capital Markets reported record net revenues of $1.9 bln, more than double the $900 mln reported in 4Q06.
08:19 SCANX Early pre-market gappers
Gapping up: SVNT +45.2%, RIGL +37.5%, DEPO +21.2%, MATK +13.2%, ADCT + 8.7%, PSPT + 7.5%, GXDX + 6.2%, JRCC +3.9%, KMGB +3.6%, JOSB +3.5%, UMBF +3.2%, ESLR +2.8%, CIEN +2.6%, RATE +2.4%, RATE +2.4%, CYNO +2.2%, GA +2.0%, CPSL +2.0%, FTK +1.6%, FSLR +1.4%, MON +1.2%, SIGM +1.2%, JCOM +1.2%, FRT +1.1%, MDZ +1.1%, PLCE +1.1%, LII +1.1%, HNR +1.0%, SPWR +1.0%… Gapping down: NBIX -46.3%, BIIB -27.5%, SCSS -14.7%, ASYS -12.6%, ADPI -10.7%, WSTL -8.5%, VITL -6.2%, LIHR -5.1%, CKR -5.1%, ELN -4.6%, COST -4.5%, POT -4.3%, BIDZ -4.3%, RIO -3.6%, QCOM -2.4%, PMCS -1.4%, MT -1.3%, CPII -1.3%, NSPH -1.1%, AGU -1.0%.
08:16 HQ Sustainable Maritime (HQS) prices a 3 mln share common stock follow on offering at $7.80/share (8.65 )
08:15 PALM Palm: Apple’s ‘Podfather’ now aims to revive a wilting Palm – WSJ (5.49 )
WSJ reports in mid-July, as the co was putting the finishing touches on its new $99 Centro smart phone, the gadget’s development team received a stark message: It wasn’t good enough. The warning was delivered by Jon Rubinstein, a former top Apple executive who this year joined Palm as executive chairman with a directive from Palm CEO Ed Colligan to shake up the struggling smart-phone maker. Alongside Mr. Colligan, he has cleaned up the co’s product plans, overhauled its engineering staff, and made several strategic new hires. People familiar with his thinking say he is focused on a new Linux-based software platform that would create one set of applications for all Palm products. He wants the platform, due out sometime next year, to be the basis for new phone formats, including possibly a 12-key phone.
08:13 WIRES On The Wires
Comtech Telecommunications (CMTL) announces that its subsidiary, Comtech Mobile Datacom, received certification from the Department of the Army, Military Surface Deployment and Distribution Command, Defense Transportation Tracking System Program Office, to track and monitor hazardous cargo shipments, including Arms, Ammunition & Explosives and other sensitive items, being transported by commercial carriers… Sinovac Biotech (SVA) announces that it has received confirmation from Beijing Medicine Bidding Center that SVA’s hepatitis A vaccine Healive was selected by the Beijing Centers For Diseases Control and Prevention pursuant to its tender process… Vignette (VIGN)announces it has received three U.S. patents to add to its portfolio of innovation around Web Experience… Idera Pharmaceuticals (IDRA) announces that the first patient has been dosed in a Phase 1b trial evaluating IMO-2055 in combination with Tarceva and Avastin in patients with non-small cell lung cancer.
08:13 November video game sales preview – Kaufman
Kaufman notes November is expected to be a banner month for video game sales. NPD is expected to report retail video game sales data for the month of November today after the close. Firm is looking for a 47% increase in total industry sales to $2.3 billion, driven by a 55% increase in hardware sales to $1.2 billion and a 40% increase in software sales to just over $1.1 billion. Growth rates are down from September and October as they reach the anniversary of the November 2006 launch of the PS3 and Wii consoles. Nevertheless, overall demand for both hardware and software remains robust. Firm believes shortages of the Nintendo Wii have reached acute levels. Sony’s PS3 appears to be getting a lift in sales for the holiday season. Video game industry sales are on track to have a record year.
08:10 LEH Q4 ROE 16.6% – Bloomberg
08:10 LEH prelim $1.54 vs $1.42 First Call consensus; revs $4.4 bln vs $4.26 bln First Call consensus – Bloomberg
08:09 SCA Security Capital Assurance: Calyon maintains Buy rating despite Fitch placing SCA on negative watch (5.16 -1.50)
Calyon notes Fitch placed SCA on ‘rating watch negative’ yesterday. The firm thinks SCA may not find sufficient capital that is economically feasible to meet Fitch’s requirement and may be better off not raising new capital. In the firm’s view, SCA may be advantaged by putting themselves into run-off. Neither the holding co nor the operating cos are in jeopardy of insolvency unless the real estate market becomes much worse. In a runoff situation, SCA would continue to operate and its ultimate value will become evident in about two to three years when the severity of the subprime business is more clear. The firm sees its adjusted book value as $40.87 per share, the ultimate value will be this number minus any “real” not mark-to-market losses they have.
08:08 CNB Colnl BancGrp downgraded to Market Perform from Outperform at Morgan Keegan (16.05 )
08:07 EGT Elixir Gaming initiated with a Buy at Roth Capital- tgt $5.50 (4.10 )
08:06 VITL Vital Signs reports Q4 earnings; issues in line FY08 guidance (53.30 )
Co reports Q4 EPS of ($0.40), including charges, not comparable to consensus; revs $50.50 mln vs $53.11 mln First Call consensus. VITL sees FY08 $2.80-2.85 vs $2.81 First Call consensus.
08:05 U.S. Stock futures indices decline ahead of Lehman earnings, continued credit worries
Currently, S&P 500 futures down -14.00, Nasdaq 100 futures off -21.50, & Dow drops -104.
08:04 CYNO Cynosure: Unwarranted sell-off creates a very attractive buying opportunity – Jefferies (27.39 ) -Update-
Jefferies would be aggressive buyers at current levels. CYNO’s business fundamentals remain very strong as Affirm and Smartlipo sales continue to accelerate. They believe the co’s outlook for 2008 and beyond remains impressive with multiple legs of growth.
08:04 KMGB KMG Chemicals reports Q1 EPS of $0.15 vs $0.15 First Call consensus; revs $21.3 mln vs $18.90 mln First Call consensus (15.98 )
08:04 SPSN Spansion and Saifun Semiconductors (SFUN) e amendment to merger agreement; cash distribution increased to $6.05/share (4.33 )
SPSN and SFUN announce that the boards of directors of each have approved and executed an amendment to their merger agreement providing for an approximately $31.4 mln increase in the cash distribution, which would result in a cash distribution of approximately $6.05/share in cash. The exchange ratio that each outstanding share of Saifun common stock would receive in the merger remains 0.7429 shares of Spansion common stock.
08:03 SPWR Sunpower signs agreement to acquire Italian systems integrator; to be accretive to net income in ‘08 (127.20 )
Co announces it has signed a definitive agreement to acquire Solar Solutions, a solar systems integration and product distribution co based in Faenza, Italy. The acquisition is expected close in Q1 of 2008 and to be accretive to non-GAAP net income in 2008. Co states, “…We believe that this acquisition will provide an important platform for SunPower to address both the solar power plant and rooftop markets in Italy. We plan to work with Solar Solutions to leverage the business systems and skill sets we have built in the US market, where we are currently selling standardized systems to residential and commercial customers through a network of over 125 dealers, and to strengthen our capabilities to address the power plant segment as a turnkey contractor.”
08:02 NCOC National Coal closes three new sales contracts committing nearly all of its anticipated 2008 production (3.49 )
Co announces that it has signed three new coal sales contracts. With the addition of these commitments, National Coal has now sold 2,500,000 tons, or 96% of its estimated 2008 production. “We have been anticipating higher levels of production for 2008 versus 2007, and these additional sales contracts will support those higher levels of production.”
08:02 CREE Cree: Upgrade details (23.37 ) -Update-
As mentioned at 7:45 Piper Jaffray upgraded CREE to Buy from Neutral and raised their tgt to $30 from $25 based on improving notebook backlighting datapoints and potential for positive LED-related announcements around the Beijing Olympics.
08:02 YSI U-Store-It expects 2008 FFO per diluted share to be in the range of $0.88 to $0.94. (9.78 )
(consensus $0.92)
08:01 WBC WABCO Holdings announces that the co will meet, or potentially exceed, full-year EPS guidance of $2.85 vs consensus of $2.84
08:01 BX Blackstone closes new credit liquidity fund on $1.3 bln (23.01 )
Co announces the closing of Blackstone Credit Liquidity Partners with capital commitments in excess of $1.3 bln. The fund was created to capitalize on the recent dislocations in the credit markets by investing in a broad range of debt and debt-related securities and instruments including bank debt, publicly traded debt securities, bridge financings, securities issued by CDOs, and other debt instruments, all on a global basis.
08:01 AMAG AMAG Pharma announces that its European partner, Guerbet, has withdrawn its European marketing authorization application for Sinerem (62.67 )
Co announces that its European partner, Guerbet, has withdrawn its European marketing authorization application for Sinerem (trade name Combidex in the U.S.). Guerbet submitted an marketing authorization application to the European Medicines Agency in November 2006 seeking marketing approval for Sinerem for the detection and characterization of metastatic lymph nodes in patients with pelvic cancer. According to Guerbet, the Committee for Medicinal Products for Human Use indicated that the Phase III data submitted by Guerbet does not provide sufficient statistical demonstration of the efficacy of Sinerem.
08:00 S&P futures vs fair value: -11.3. Nasdaq futures vs fair value: -17.8.
Early indications suggest a bearish start to the trading day for stocks. Washington Mutual (WM) was downgraded by Banc of America today from Neutral to Sell and had its price target cut to $13 from $24. Biogen Idec (BIIB) announced that it will remain independent after it failed to receive any definitive offers for the company. Biogen’s stock fell nearly 30% in after hours action and is a key drag on the Nasdaq futures this morning. The Retail Sales, PPI and weekly initial claims reports will be released at 08:30 ET. Each carries potential to be a market mover, unlike the Business Inventories report at 10:00 ET which won’t cause much of a stir for traders.
07:59 LEAP Leap Wireless tgt cut to $75 at Jefferies (35.30 )
Jefferies cuts their tgt on LEAP to $75 from $90 as they continue to believe in the strong growth opportunities for LEAP. Firm expects the launch of the Auction 66 markets over the next 12-18 months to drive growth rates.
07:55 NUAN Nuance Communications: Secondary causes share pullback – Kaufman (19.31 )
Kaufman notes NUAN announced a secondary offering of 15 million shares with an over-allotment of 2.25 million shares. Of this 9.6 million shares from the company, 600,000 shares will be offered by company management, and 4.8 million shares are being offered by a long-term investor Warburg Pincus. This is 15% of Warburg’s total position. The over-allotment comes equally from the company and Warburg.
07:52 CT Capital Trust announces its intention to declare a special cash dividend for 2007 estimated to be between $1.25-$1.75/share (34.34 )
Co announces its intention to declare a special cash dividend for 2007 estimated to be between $1.25 per share and $1.75 per share. The special dividend will represent 2007 REIT taxable income in excess of the amount distributed through the co’s regular, quarterly dividends
07:52 NVO Novo-Nordisk A/S downgraded to Neutral from Buy at Merrill (132.08 )
07:50 CSCO Cisco Systems: Analyst day highlights, themes in place – Robert Baird (28.80 )
Robert Baird notes CSCI held its C-Scape analyst day, which stressed video, Internet 2.0 and virtualization as growth drivers over the next few years. Cisco reiterated it’s not hampered by growth opportunities, and it has over 20 new projects ongoing, but needs to transform how it addresses customers’ needs for NG opportunities. Firm maintain Outperform rating and $38 tgt and feels CSCO is well-positioned globally to benefit from accelerating IP and video trends.
07:49 DYN Dynegy downgraded to Add at Calyon- tgt cut to $9 (7.90 )
Calyon downgrades DYN to Add from Buy and cuts their tgt to $9 from $10 saying they see Dynegy as a range-bound stock over the next 4-6 months (pre-summer 2008) trading between $7.50 and $9.50 per share. There are a lack of identifiable catalysts near term, but the firm sees upside potential longer term.
07:47 MRK Merck: FDA panel weighing Merck’s over-counter cholesterol drug – ChicagoTribune.com (59.72 )
ChicagoTribune.com reports that Merck (MRK) goes before a FDA advisory panel Thursday in an attempt to win approval of the cholesterol-lowering drug Mevacor as an over-the-counter remedy. The FDA usually follows the advise of its advisory panels but is not bound to do so. It’s unclear what the FDA advisory panel will do but an FDA staff reviewer of MRK’s application said over-the-counter Mevacor is a reasonably safe and effective drug if used as directed. But, the reviewer added, studies provided by MRK have not convinced the reviewer that consumers will comprehend the proposed product label to ensure safe and effective use. Although other newer cholesterol drugs such as Lipitor, generic Zocor and others are considered more effective at lowering L.D.L., particularly those at high risk for a heart attack or stroke, MRK said Mevacor would be targeted for men and women at moderate risk of strokes and heart attacks. But FDA panels have balked at an over-the-counter version of Mevacor in the past, worried that young people who don’t need the drugs might take them under the influence of advertising. In addition, the drugs contain rare but still serious side effects such as muscle damage and liver toxicity side effects common to all statins. This time, however, MRK believes it has addressed FDA advisers past concerns about whether consumers will use Mevacor appropriately.
07:47 GXDX Genoptix initiated with an Outperform at Cowen (32.38 )
07:46 AMIS AMIS Holdings to be acquired by ON Semiconductor in an All-Stock Transaction Valued at Approximately $915 mln; approximately $10.14 per share (7.35 )
ON Semiconductor (ONNN) and AMIS announce the signing of a definitive merger agreement providing for the acquisition of AMIS by ONNN in an all-stock transaction with an equity value of approximately $915 mln. AMIS shareholders will receive 1.150 shares of ONNN common stock for each share of AMIS common stock they own. Based on the closing stock price of ON Semiconductor on December 12, 2007, this represents a value to AMIS shareholders of approximately $10.14 per share. ONNN also announces a 20 million share increase to its stock repurchase program.
07:46 PETD Petroleum Development initiated with a Market Perform at BMO Capital (57.85 )
07:45 CREE Cree upgraded to Buy from Neutral at Piper Jaffray (23.37 )
07:45 STJ St. Jude Medical initiated with an Outperform at Friedman Billings- tgt $48 (41.40 )
Friedman Billings initiates STJ with an Outperform and a $48 tgt saying continued implantable cardioverter defibrillator share gains remain favorable based on product line extensions, incremental 2008 productivity from the recent 25% U.S. CRM sales force expansion, and Medtronic, (MDT) product recall.
07:43 MMSI Merit Medical initiated with an Outperform at Friedman Billings- tgt $18 (15.21 )
Friedman Billings initiates MMSI with an Outperofrm and an $18 tgt saying Merit is poised to reap the 2008 EPS growth benefits of the following 2007 cost-reduction programs: (1) manufacturing automation initiatives, (2) lower employee count, (3) moving production to Mexico, and (4) supply chain cost reduction.
07:42 BIIB Biogen Idec: Color on strategic review (75.88 )
Rodman & Renshaw notes BIIB announced after the markets closed that it concluded its strategic review and will continue its path as an independent company. Recall that on Oct 12, 2007, BIIB began the search for a purchaser. However, at the conclusion of this process, BIIB did not receive any definitive offers to purchase the Company. Firm recalls that BIIB splits an appreciable portion of profits for both Rituxan and Tysabri with Genentech (DNA) and Elan (ELN). While completing an acquisition of BIIB with the buy-sell agreements on the products would not have been insurmountable, in their view they made a transaction far more complicated for interested parties. Firm surmises that takeover premiums were perhaps reduced, therefore leading BIIB’s board to recommend continued independence… Wachovia notes BIIB announced that it will remain an independent entity after exploring a possible sale of the co to a major pharmaceutical co. Consistent with their view that the price tag of such an acquisition would be too steep to justify based on the rev outlook and rev growth prospects, widely speculated potential suitors (the usual suspects including PFE, JNJ, MRK) appeared hesitant to pay a whopping multiple for the slowing growth of flagship product Avonex and an early-stage pipeline… Bear Stearns notes BIIB announced that it failed to receive definitive offers to purchase the co, and would therefore remain independent. Firm believes that the stock price has factored in a takeover premium since the auction was announced in mid-October, and that the premium will now disappear, causing the stock to return to standalone fair value. They believe that in addition to BIIB’s relationships with Genentech and Elan, which may have complicated negotiations, the premature announcement of the auction may have impaired BIIB’s negotiating power with potential buyers, and the takeover premium reflected in the stock since mid-October may have deterred certain bidders. Firm believe fair value is in the mid-to-high $50s.
07:41 BSX Boston Scientific initiated with an Underperform at Friedman Billings- tgt $9 (12.63 )
Friedman Billings initiates BSX with an Underperform and a $9 tgt saying efforts to focus the product portfolio and improve capital efficiency are positive steps, yet both the cardiac rhythm management and drug-eluting stent market growth rates remain questionable, particularly in the face of incremental stent competition.
07:40 Nigeria seeks bigger slice of oil profits in overhaul – WSJ
WSJ reports Nigeria is beginning the deepest overhaul of its petroleum industry in decades, a move expected to make it tougher for big operators such as RDS.A to profit from tapping Africa’s biggest oil-producing country. Since coming to power in May, Nigerian President Umaru Yar’Adua has proposed changes such as creating a national oil co that he expects will help the state manage its oil and natural-gas resources better and pare the historical dominance of foreign oil cos in the country. Nigeria pumps about 2.1 mln barrels a day, or about 2.5% of the world’s daily oil needs. The planned changes are also about “rebalancing the relationship” between the state and foreign energy cos, according to Nigerian oil minister Odein Ajumogobia. That is code for handing over more oil profits, analysts say. The govt is in the early stages of renegotiating blns of dollars worth of offshore exploration deals signed in the 1990s with cos such as CVX, XOM, Shell and TOT. The contracts, up for renewal, were signed when oil traded at about $20 a barrel. Crude-oil futures in New York finished yesterday at $94.39 a barrel.
07:38 QCOM Qualcomm downgraded to Neutral from Buy at Merrill (41.01 )
07:37 KRC Kilroy Realty upgraded to Outperform at Friedman Billings- tgt cu to $75 (56.00 )
Friedman Billings upgrades KRC to Outperform from Market Perform and cuts their tgt to $75 from $82 and adds it to their top picks list replacing BMR, based on valuation.
07:37 PRICE Filings, Offerings, Pricings and IPOs
Filings: Affiliated Managers (AMG) files for a mixed shelf offering… iStar Financial (SFI) files for a 6 mln share common stock secondary offering… Offerings Assured Guaranty (AGO) announces a $300 mln common stock secondary offering… Pricings: Anesiva (ANSV 4.05) prices a 11.11 mln share common stock offering at $4.05/share… Energy Transfer (ETP 48.81) prices a 5 mln share common units offering at $48.81/unit… IPOs: K12 (LRN), a co that offers proprietary curriculum and educational services created for online delivery to students in kindergarten through 12th grade, prices its 6 mln share UPO at $18/share, at the top of the $16-$18 forecast range… MedAssets (MDAS), a provider of technology-enabled products and services which deliver solutions designed to improve operating margin and cash flow for hospitals and health systems, prices its 13.3 mln share IPO at $16/share, at the top end of the $14-$16 forecast range.
07:36 EXLS ExlService: Susquehanna notes competitor bid for Aviva BPO assets suggests increased likleihood of BOT (23.39 )
07:34 NTSC Nat’l Technical Systems announces Q3 EPS of $0.07 vs $0.04 a yr ago; total revs increased 4% YoY to $31 mln (7.35 )
07:34 MKTX Marketaxess: Initiation details (13.29 )
As mentioned at 6:27 BofA initiates MKTX with a Sell and a $12 tgt saying they believe investor expectations for 2008 industry volumes to grow and MKTX to quickly take share are optimistic. The firm sees flat ‘08 industry volumes (with a downside bias) and only modestly increasing volume share for MKTX due to credit market headwinds; hence, their street low estimates—14%/11% below ‘08/’09 consensus. The firm does not expect corporate bond markets (only 10% electronic) to migrate rapidly like equities and futures, given strong dealer opposition, a market structure not as conducive to e-trading and a lack of clear catalysts to drive the process.
07:33 MDZ MDS Inc misses by $0.07, beats on revs (19.23 )
Reports Q2 (Oct) earnings of $0.09 per share, excluding non-recurring items, $0.07 worse than the First Call consensus of $0.16; revenues rose 18.6% year/year to $338 mln vs the $322.6 mln consensus.
07:33 Second rescue saves subprime casualty SachsenLB – Reuters
Reuters reprots the German state and public banks clubbed together for the second time in five months to save subprime-stricken SachsenLB from collapse, heading off a blow to confidence in the country’s financial system. It was first rescued in August under a deal that forced its sale to a rival, but rising losses threw negotiations into disarray. Now the state of Saxony, which partly owns the troubled bank, Landesbank Baden Wuerttemberg — which wants to buy it — and other regional lenders have hammered out a deal to pay for SachsenLB’s dud investments in subprime mortgages. The result of the last-minute talks, overseen by German financial watchdog Bafin and the country’s central bank or Bundesbank, was announced by Saxony’s govt. Sources familiar with the matter said that the trio rescuing SachsenLB have agreed to divide up responsibility for 17.5 bln euros of the bank’s investments in subprime and related debt. These investments — part of SachsenLB’s programs which had a value of about 43 bln euros — could throw up blns of euros in losses.
07:33 ALNY Alnylam Pharmaceuticals: Rodman & Renshaw reports Regulus Therapeutics racks up its first journal publication on miRNA in cancer (31.39 ) -Update-
Rodman & Renshaw announces Regulus Therapeutics, the joint venture between Alnylam and Isis Pharmaceuticals (ISIS), announced the publication in the journal Nature a new study by Gottwein et al. “A viral microRNA functions as an orthologue of cellular miR155″. The authors showed that a microRNA derived from a virus was found to mimic the gene expression control of an endogenous host microRNA that has been suspected to be involved in B cell lymphoma. The investigators further stated that viral microRNA that is encoded by the Kaposi’s sarcoma Associated Herpesvirus might be the first example of an “oncomir”, that is, a viral microRNA oncogene. Additionally they indicated that the viral miR-K12-11 functions in a similar manner to the endogenous mir-155 in down regulating the genes with known cell regulatory function.
07:32 Euribor stays at 7-year high, defying central banks – Bloomberg.com
Bloomberg.com reports interest rates on loans in euros stayed at a seven-year high, a day after global central banks teamed up in an attempt to thaw a freeze in money markets. The three-month borrowing cost was at 4.95%, its highest level since December 2000. That’s 95 basis points more than the European Central Bank’s benchmark interest rate and up from 4.18% at the start of July, before losses related to subprime mortgages contaminated money markets. “It’s not going to help us find an exit to this crisis… These measures aren’t going to address the root cause of the crisis. Banks are still reluctant to lend money to each other because there are serious concerns about potential further bad news.” The euro levels suggest that money-market rates for the dollar and pound, which will be set by the British Bankers’ Association later, won’t decline.
07:32 WM Washington Mutual: Downgrade details (16.06 )
As mentioned at 6:27 BofA downgraded WM to Sell from Neutral and cut their tgt to $13 from $24 in the wake of recent management disclosures, their pessimism on the credit has grown and our confidence in the company undermined. The firm says while the upsized $3.0 bln convertible preferred offering and announced dividend cut will improve regulatory capital, they are not convinced dilutive capital raising exercises are done yet.
07:32 ADCT ADC Telecom: Rev and EPS outperformance continues – Robert Baird (16.74 ) -Update-
Robert Baird notes ADCT reported rev and EPS ahead of expectations for the fourth consecutive quarter, with gross margin expansion again driving EPS upside. Guidance was just in line, but they believe mgmt’s conservative outlook sets the stage for further outperformance in F2008. EPS leverage in F2008 is dampened by non-operating items, but firm believes operating fundamentals are improving and valuation remains attractive.
07:31 EMKR Emcore: Signs MOU for 60MW of CPV towers; raising FY08 ests and initiating FY09 numbers – Merriman (11.46 )
Merriman notes EMKR continues to build significant traction in its terrestrial solar unit as evidenced by yesterday’s very large contract announcement, adding over $300 mln to a total contact volume already in the hundreds of millions. With strong trends on the cable optics side likely to continue with recently increased capital spending from Comcast (CMCSA) and digital optics continuing to recover, they believe EMCORE is set to fire on all cylinders in 2008. We are increasing our solar PV rev ests for FY08 and initiating 2009 ests at levels they believe remain conservative.
07:31 HDY Hyperdynamics discloses correspondence in response to shareholder requests (1.77 )
Co announces that an informational 8-K has been filed with the SEC regarding correspondence that has been received from Guinea’s Chief of State, President Lansana Conte. Co has received many questions from shareholders regarding the co’s relationship with Guinea. In response, the co will file a form 8-K today to disclose two letters received from the President of Guinea that acknowledge our binding contractual relationship with Guinea and show the President of Guinea’s expectation for our future exploration work.
07:30 FUQI Fuqi Intl: Access to capital is key to FUQI satisfyinf demand and taking market share; increasing 4Q07 and forward ests – Merriman (7.97 )
Merriman believes FUQI’s strong brand and established wholesale distribution coupled with the entry into the higher margin retail channel should help it take increasing market share of China’s jewelry market. Firm projects the co’s complementary retail sales and expanding margins to generate income growth averaging 43% over the next three years. Applying average valuation multiples for comparable jewelry and branded consumer cos (P/E, EVto- Sales and EV-to-EBITDA) yields potential price appreciation to the $15.00-19.00 range.
07:30 RIGL Rigel Pharm’s R788 demonstrates significant improvement in Rheumatoid Arthritis in Phase 2 clinical study (8.00 )
Co announces that its oral syk kinase inhibitor, R788, has demonstrated statistically significant results in treating Rheumatoid Arthritis patients in a recently completed Phase 2 clinical trial. Groups treated with R788 at 100mg and 150mg po bid showed higher ACR20, ACR50, ACR70 and DAS28 response rates than the placebo group. The efficacy results for the 100mg and the 150mg dose groups were fairly comparable. Dramatically, the onset of the effect in these dose groups occurred as early as one week after initiation of therapy. Co believes that the significant A.C.R. scores and good tolerability observed in this clinical trial, and the further benefit of oral delivery may make R788 a favorable alternative to the currently marketed biological agents.
07:30 ESV Ensco: Near-term downside from concerns in Asia Pacific market – FBR (56.34 )
Firm’s backlog study shows backlog in the Asia Pacific market is lagging the other international jackup markets. They believe sentiment for ESV will be choppy in the near term, because ENSCO will price options and seek a contract for the ENSCO 56 in 1H08. Concerns should also arise from two speculative newbuilds that are due to enter the SE Asia market in January and March of 2008. Long term, firm maintains their Outperform rating on ESV due to the strength in the international jackup markets, aggressive entrance into the deepwater market, and options that the co’s strong free cash flow and conservative balance sheet hold.
07:29 French banks set up fund as safety net – FT
FT reports five French banks have agreed to launch a ‘super-conduit’ fund holding 1 bln euros of asset-backed securities early in the New Year to ensure a liquid mkt for any French mutual funds destabilized by the global credit crunch. BNP Paribas, Societe Generale, Calyon, Natixis and HSBC France have designed the fund as a safety net for investors and issuers in case credit conditions worsen in early 2008, as some fear. Several French banks had to suspend key funds this autumn after values slumped when some investors, fearing their assets resembled US mortgage-backed securities, sought to exit.
07:29 TRB Tribune: Zell hopeful Tribune deal closes Dec 20 – ChicagoTribune.com (31.90 )
ChicagoTribune.com reports that Chicago billionaire Sam Zell is hopeful that the $8.2 bln deal he’s leading to take TRB private will close Dec 20. Responding to a question at the Executives’ Club of Chicago luncheon Wed about whether there was news about the TRB deal, Zell responded by saying: “Hopefully it will close next Thursday.” The debt-laden deal cleared a crucial hurdle earlier this month when the company, which owns the Chicago Tribune, the Los Angeles Times, WGN-Ch. 9 and several other newspapers and television stations, received crucial media cross-ownership exemptions from the FCC allowing it to proceed with the deal. Zell and TRB are hoping to close the deal before the end of the year to avoid a number of costs that would make the transaction more risky and complicated.
07:28 WPSC Wheeling-Pittsburgh: Fiscal 2Q08 preview; good business activity in Q2 – Broadpoint Capital (19.40 )
Broadpoint Capital notes WPSC is scheduled to report fiscal 2Q08 results on Monday, Dec 17, after the markets close. Firm notes there are no changes to their FY08 rev and EPS ests of $107 mln and $0.88; the consensus is $109 mln and $0.89, respectively. For 2Q08, firm is maintaining their rev est of $25.1 mln (the consensus is $24.6 mln) but shaving $0.02 from EPS to reflect possible gross margin pressure due to a housing market slowdown and the sub-prime crisis. Firm’s revised est is $0.20 (the consensus is $0.19). Firm believes business activity was good in 2Q in both the segments. Firm notes the housing market slowdown and sub-prime mortgage crisis makes firm cautious on the earnings side.
07:28 ETEL eTelecare: Rejected PSPT offer highlights valuation discrepancy – FBR (8.75 )
Friedman Billings believes ETEL provides similar pportunities for investors to participate in the secular demand trends to outsource to the Philippines as PSPT; however, ETEL is trading at nearly a 15% valuation discount (higher due to today’s likely strength in shares of PSPT). The rejected offer of PSPT by IPVG would have valued ETEL at $16 per share. We believe both ETEL and PSPT are brand leaders in the Philippines BPO secto. Firm believes the significantly higher CY08 revenue guidance provided by PSPT, which was nearly 33% higher than consensus expectations, likely means that the 14% expectation for ETEL also will prove conservative.
07:27 PSPT PeopleSupport: Tells IVPG to talk the hand; raises ‘08 outlook to thwart hostile offer; tgt raised to $18 – FBR (13.77 )
Friedman Billings raises their tgt on PSPT to $18 from $15 after raising its outlook for CY08 simultaneously with its rejection of a $15 offer by IPVG. Firm believes this is exactly what the co should be doing in conjunction with its response to the offer, as the CY08 guidance inadvertently provided on its 2Q07 conf call resulted in unrealistically depressed consensus ests (including our own), leading to the unsolicited offer by IPVG Group and AO Capital. Firm believes a counteroffer by IPVG could certainly emerge; however, believe there are other opportunities at more attractive valuations if gaining a foothold in the Philippine BPO sector is truly its goal.
07:27 ADCT ADC Telecom: Executes on the playbook again with strong 4Q; more cost leverage ahead – FBR (16.74 )
Friedman Billings reiterates their Outperform rating and $22 tgt on ADCT following the co’s strong F4Q07 report Wed afternoon. The results served again to highlight the co’s progress in driving higher-margin fiber connectivity and wireless product sales, while keeping a lid on opex and grinding out overhead savings from “competitive transformation.” Additionally, firm still believes that ADCT’s leading share in FTTX network buildouts, along with new product and geographic opportunities, provides a very solid opportunity for positive top-line surprises that can be magnified at the EPS line.
07:26 Enthusiasm wanes for fund to bail out SIVs – WSJ
WSJ reports after months of intense planning to create a fund designed to save banks and structured investment vehicles from big losses, the proposal appears to be losing momentum. The nation’s three biggest banks have started to formally ask other financial institutions to join the fund, but some cos that were expected to sign up are now not as interested. As a result, the fund’s ability to provide a solution for the credit crunch is more uncertain than ever, according to people involved in the situation. Wachovia (WB), one of the first banks to express interest in providing capital to the fund a few months ago, yesterday played down the need to do so. Japan’s Sumitomo Mitsui Financial also said yesterday that it had been approached to participate in the fund, but hadn’t decided if it would. Japanese media reported that fellow Japanese bank Mitsubishi UFJ (MTU)Financial Group also was approached.
07:18 NVS Novartis sees Q4 flu vaccines sales weaker than in 2006 – DJ (56.23 ) -Update-
Novartis sees group sales grow in mid-single digits – DJ
07:17 DECK Deckers Outdoor profiled in New America section of IBD (152.95 )
IBD reports Uggs really took off since the sheepskin boots made it on Oprah Winfrey’s list of the best holiday gifts in 2003. The new Ugg Crochet boot made the talk-show queen’s list again this year. And when Oprah speaks, mlns of loyal fans listen and shop. CFO Zohar Ziv said the co has evolved Uggs into a year-round brand and made it for both sexes. Also adding to Uggs increasing popularity is the varying styles in the product line. Todd Slater, an analyst with Lazard Capital Markets, said the shoemaker can sustain growth with upside potential. Ziv said the co expects to generate $750 mln in sales by 2012, up from a prior forecast of $600 mln. Ugg Australia is expected to account for the majority of revenue. Deckers launched its Green Toe shoe in 2006, marking the first shoe to be made from 100% natural materials. Ziv said eco-friendly footwear will be a key part to Simple’s future. Deckers expects its intl business to account for 30% of its newly revised revenue outlook of $750 mln. In order to accomplish that goal, Deckers must retool agreements with distributors abroad and develop an intl strategy, Sterne, Agee & Leach analyst Sam Poser said. He expects the co to earn $2.32 a share in the fourth quarter on revenue of $178.4 mln.
07:14 CYNO Cynosure: Upgrade details (27.39 )
As mentioned at 6:36 Citigroup upgrades CYNO to Buy from Hold with a $41 tgt saying a misplaced quote from a laser panel dropped the stock back to a 9-month trough even though CYNO has been handily exceeding expectations and their checks suggest the current business trends remain strong. The firm says CYNO shares declined almost 15% yesterday after a laser competitor noted at an investor conference that sales have slowed in Dec due to concerns about lower consumer demand for aesthetic procedures. The firm says conversations with aesthetic physicians and the faster growing industry players in the last week suggests there has not been a notable reduction in demand in Q4. While they do expect the market to slow over time, they believe higher-end offerings such as CYNO’s Affirm and Smartlipo will continue to gain market share.
07:08 RIO Comp Vale Do Rio: Hearing downgraded to neutral from buy at tier 1 firm (34.90 )
07:07 CIEN Ciena beats by $0.06, beats on revs; guides Q1 revs in-line; guides FY08 revs in-line; announces new CFO (42.12 )
Reports Q4 (Oct) earnings of $0.48 per share, ex items, $0.06 better than the First Call consensus of $0.42; revenues rose 35.2% year/year to $216.2 mln vs the $211.3 mln consensus. Co guides for Q1, sees Q1 rev growth of up to 5% sequentially which equates to roughly $227 mln vs. $216.49 mln consensus. Co guides for FY08, sees FY08 rev growth of 20% yr/yr, which equates to roughly of $935.7 mln vs. $945.42 mln consensus. CIEN announced that it named James E. Moylan, Jr., 56, to succeed outgoing CFO, Joseph Chinnici.
07:06 HON Honeywell guides 2008 in-line; reaffirms 2007 guidance (57.74 )
As mentioned at 7:02, HON announced that it expects 2008 sales of $36.1-36.7 bln vs. $36.3 bln consensus, up 5-7% and EPS of $3.65-3.80 vs. $3.67 consensus. The company also reaffirmed its previously stated 2007 financial guidance.
07:06 WIRES On The Wires
ImClone Systems (IMCL) announces that it has enrolled the first patient in a disease-directed Phase II clinical trial of IMC-1121B to treat advanced malignant melanoma… China Precision Steel (CPSL) announces that it has engaged the public accounting firm Moore Stephens P.C. as its new independent registered public accounting firm… DATATRAK International (DATA) reports that it has signed an Enterprise Agreement and Marketing Alliance with NTT DATA enabling NTT DATA to become a value-added-reseller of the DATATRAK eClinical product suite to the Japanese clinical trials market… ProLogis (PLD) announces that it is expanding its industrial platform in China, with new development starts totaling US$100 mln.
07:05 COF Capital One downgraded to Hold at Jefferies- tgt cut to $50 from $80 (48.27 )
Jefferies downgrades COF to Hold from Buy and cuts their tgt to $50 from $80 saying they do not believe there should be material price appreciation in shares of COF until investors have improved visibility on the extent and timing of credit losses.
07:03 CIEN sees FY08 rev growth of up to 20% or roughly $935.7 mln vs $945.42 mln First Call consensus
07:02 HON Forecasts 2008 Sales Up 5-7% To $36.1-36.7 bln; Earnings Per Share Up 16-21% To $3.65-3.80; reaffirms FY07
(consensus $3.67 and $36.3 bln)
07:02 CIEN sees Q1 rev growth of up to 5% sequentially or rouhgly up to $227 mln vs $216.49 mln First Call consensus
07:01 CIEN announced that it named James E. Moylan, Jr., 56, to succeed outgoing CFO, Joseph Chinnici
07:01 ISIS ISIS Pharm announces ISIS 333611 granted Orphan Drug status for treatment of ALS (16.95 )
Co announces that the FDA has granted orphan drug status to ISIS 333611 for the treatment of an inherited form of amyotrophic lateral sclerosis, commonly referred to as Lou Gehrig’s disease.
07:01 CIEN prelim $0.48, ex items vs $0.42 First Call consensus; revs $216.2 mln vs $211.31 mln First Call consensus
07:00 ALNY Alnylam Pharmaceuticals reports continued progress in clinical development of ALN-RSV01 for the treatment of respiratory syncytial virus infection (31.51 )
Co announces the presentation of results from its Phase I trial with ALN-RSV01 delivered via inhalation. The Phase I study represents the first-ever clinical study of an RNAi therapeutic administered via inhalation. All major objectives of the trial were met, including definition of a safe and well-tolerated dose and regimen for advancement of ALN-RSV01 into further Phase II development.
06:58 CALLS Early Research Calls V
Upgrades: Credit Suisse upgrades BMC Software (BMC 33.68) to Outperform from Neutral and raises their tgt to $41 from $34 based on an improving mainframe software pricing environment, their expectation for growth in mainframe software over the next several years, the upcoming release of the next generation of IBM mainframe hardware, as well as the opportunity to expand operating margins above consensus expectations. Downgrades: Bear Stearns downgrades Baldor Electric (BEZ 36.77) to Peer Perform from Outperform. Miscellaneous: Jefferies initiates LCA-Vision (LCAV 17.52) with a Hold and sets a $20 tgt, based on a weak LVC market and the likelihood that recent same-store sales declines won’t turn around anytime soon while likely ASP improvements alleviate some near-term concerns… J.P Morgan initiates Complete Production (CPX 19.53) with a Neutral… J.P Morgan initiates Bucyrus (BUCY 92.25) with an Overweight… J.P Morgan initiates Joy Global (JOYG 59.78) with a Neutral… UBS initiates Phase Forward (PFWD 23.04) with a Neutral… Deutsche Bank initiates Fuel Tek (FTEK 21.53) with a Hold… Rodman & Renshaw initiates Perma-Fix Environmental Services (PESI 2.58) with a Market Perform, based on valuation yet remain positive on the co due to substantial waste awaiting treatment in the Hanford facility, margin improvement opportunities, settlement of PDS lawsuit, expectations that PESI will continue to enjoy competitive advantages in the near to med term and rapidly rising cost estimates for nuclear waste cleanup in the U.S…. Deutsche Bank initiates American Superconductor (AMSC 26.37) with a Buy… Deutsche Bank initiates Itron (ITRI 81.67) with a Buy.
06:55 ADPI American Dental provides update on lawsuit (14.34 )
Co announces results of the trial related to the litigation between PDG, P.A. and PDHC, one of the co’s Minnesota subsidiaries, and the co. On December 12, 2007, the jury found PDHC or ADPI liable for breach of the service agreement and awarded compensatory damages of $9,413,397, breach of implied covenant of good faith and fair dealing and awarded compensatory damages of $11,500,000, breach of fiduciary duty and awarded compensatory damages of $200,000, tortious interference with contract or prospective advantage and awarded compensatory damages of $67,000,000 and defamation and awarded compensatory damages of $177,250, with aggregate compensatory damages of $88,290,647. The jury found that PDHC and ADPI were not liable on the remaining claims made by PDG. The jury found that PDG was not liable on any of the claims made by PDHC or ADPI. The jury is now considering the issue of whether PDG should be awarded punitive damages in addition to the compensatory damages described above. The Company is considering and evaluating the jury’s verdict and the Company’s options.
06:43 MGI MoneyGram: Euronet confirms offer to acquire MoneyGram for $1.65 bln in Euronet stock, or valued at $20/share (14.90 )
Euronet Worldwide (EEFT) confirms it delivered a letter to the Board of Directors of MGI on Dec 4, 2007, in which EEFT offered to acquire MGI in a tax-free, all-stock transaction based on a fixed exchange ratio of 0.6179 Euronet common shares for each share of MGI. Based on the closing price of Euronet shares on December 4, the offer is valued at approximately $1.65 bln, or $20.00 per MoneyGram share, a premium of approximately 43% to the closing price of MoneyGram shares that day. “To advance our discussions, we propose that we enter into a confidentiality agreement that would allow us both to conduct our due diligence and to begin to negotiate a merger agreement. We are prepared to move forward expeditiously in conducting due diligence, negotiating transaction agreements, and working together to obtain all the requisite regulatory approvals required to close the transaction. We believe that, working together, we can reach a definitive agreement by year-end.”
06:36 CALLS Early Research Calls IV
Upgrades: Merriman upgrades ADC Telecommunications (ADCT 16.74) to Buy from Hold, following Q407 revenue that was ahead of firm and consensus estimates… Credit Suisse upgrades Biogen (BIIB 75.88) to Neutral from Underperform with a $60 tgt saying they are not surprised by this conclusion to the acquisition process, although they had expected some bids to come in for the co. The firm says that the story for 2008 now becomes focused on Tysabri growth, the impact of potential PML cases on Tysabri’s long-term prospects, Rituxan growth, Rituxan challenges, and something positive emerging from the pipeline… Citigroup upgrades Cynosure (CYNO 27.39) to Buy from Hold. Downgrades: Lehman downgrades Par Pharmaceutical (PRX 21.16) to Equal-weight from Overweight… JP Morgan downgrades Plantronics (PLT 27.26) to Underweight from Neutral. Miscellaneous: Merriman initiates Equinix (EQIX 99.30) with a Neutral, as they believe the co’s investment in its data center should lead to improving top-line growth and margin yet the strategy leaves it highly exposed to changing market dynamics, including virtualization… Broadpoint Capital initiates Clean Energy (CLNE 15.27) with a Strong Buy and sets an $18 tgt, based on competitive advantages that include: 1) an established brand, critical mass and infrastructure, 2) secured LNG supply in the western U.S., and 3) a variety of turnkey services that aid in the transition of fleets and foster sales growth… BofA initiates BankRate (RATE 48.33) with a Neutral… Jefferies initiates TLC Vision (TLCV 3.01) with a Hold and sets a $3.25 tgt, based on their below-consensus revenue and earnings expectations, coupled with what they believe will be downward revisions in LVC procedure forecasts in ‘08… BofA initiates Omniture (OMTR 29.68) with a Buy.
06:33 GWR Genesee & Wyoming traffic from continuing operations in November 2007 was 62,435 carloads, a decrease of 5.5% YoY (27.47 )
Co announces that traffic from continuing operations in Nov 2007 was 62,435 carloads, a decrease of 3,633 carloads, or 5.5%, compared with Nov 2006. GWI’s traffic in the fourth qtr of 2007 through Nov was 130,051 carloads, a decrease of 9,017 carloads, or 6.5%, compared with Q4 of 2006 through Nov.
06:33 PBG Pepsi Bottling raises FY07 EPS guidance; issues downside EPS guidance for FY08 (40.66 )
Co issues in-line guidance for FY07 (Dec), sees EPS of $2.17-2.20 from $2.15-2.18 vs. $2.17 First Call consensus. PBG also now expects operating free cash flow to exceed $570 million as compared to the Company’s previous guidance of $560 to $570 million. Co issues downside guidance for FY08 (Dec), sees EPS of $2.30-2.38 vs. $2.40 consensus.
06:32 DEPO DepoMed says Court grants its motion for Summary Judgement of patent infringement against IVAX (3.30 )
Co announces the court has granted Depomed’s motion for summary judgment of infringement of U.S. Patent Nos. 6,340,475 and 6,635,280 in the company’s patent litigation against IVAX Corporation, and denied all three of IVAX’s summary judgment motions. The impact of the court’s rulings is that IVAX’s infringement of Depomed’s patents has been established as a matter of law, without the need for a trial on that issue. The court ruled against IVAX on IVAX’s motions for summary judgment related to the validity and enforceability of the patents, and the lack of willful infringement on the part of IVAX.
06:30 ANSV Anesiva prices a 11.11 mln share common stock offering at $4.05/share (4.05 )
06:27 CALLS Early Research Calls III
Upgrades: Keefe, Bruyette upgrades SLM (SLM 28.49) to Outperform from Market Perform and lowers their tgt to $37 from $40, based on valuation following news that the buyout consortium wasn’t interested in acquiring the co. Downgrades: BofA downgrades Red Hat (RHT 19.33) to Neutral from Buy with a $21 tgt saying while they expect the co to report solid 3Q results based on another steady quarter in the Linux O/S business, they believe that JBoss continues to have trouble gaining momentum and they see few catalysts on the horizon that could meaningfully boost our current billings and cash flow growth ests…… BofA downgrades Washington Mutual (WM 16.06) to Sell from Neutral and lowers their tgt to $13 from $24… Credit Suisse downgrades Pearson (PSO 15.18) to Underperform from Neutral… Keefe, Bruyette downgrades CME Group (CME 688.17) to Market Perform from Outperform and maintains their $730 tgt, based on valuation and challenging growth opportunities in 2008. Miscellaneous: UBS initiates Evergreen Solar (ESLR 14.41) with a Buy and a $20 tgt… UBS initiates Sunpower (SPWR 127.20) with a Buy and a $144 tgt… J.P Morgan initiates Spirit AeroSystems (SPR 34.20) with a Neutral… UBS initiates Arch Coal (ACI 40.86) with a Neutral and sets a $44 tgt… UBS initiates James River Coal (JRCC 8.44) with a Buy… BofA initiates MarketAxess (MKTX 13.29) with a Sell and sets a $12 tgt… Baird initiates Sealed Air (SEE 23.51) with a Neutral and sets a $26 tgt, based on near-term concerns on weakness in N. American food and protective, meat supply issues in Asia, and increasing raw material costs… Baird initiates Bemis (BMS 27.42) with a Neutral and sets a $25 tgt, based on near-term concerns on weakness in N. American food, higher costs due to inflated raw material and pressure sensitive markets in both N. America and Europe… Keefe, Bruyette assumes MF Global MF 28.73) with an Outperform and sets a $33 tgt, based on expectations for earnings growth, both from acquisitions and organically.
06:22 S&P futures vs fair value: -3.3. Nasdaq futures vs fair value: -6.0.
06:22 European Markets
FTSE…6457.70…-102.10…-1.6%. DAX…8002.99…-73.13…-0.9%.
06:22 Asian Markets
Nikkei…15536.52…-395.74…-2.5%. Hang Seng…27744.45…-776.61…-2.7%.
06:22 Asian stocks fall after Fed plan fails to ease worry over credit crisis; Sensex ends down 270 points
Stock markets across Asia faltered Thursday with Japan and Hong Kong leading the decline following Wall Street’s choppy performance overnight as investors weighed a Federal Reserve plan to work with other central banks to ease the global credit crunch… The Nikkei 225 Stock Average was 2.5% lower at 15,536.52, and the broader Topix index lost 2.6% at 1,516.10. Hong Kong’s Hang Seng slipped 2.7% to 27,744.45 and the Shanghai composite was down 2.7% at 4,958.04… The Sensex opened with a huge positive gap of 122 points at 20,498, which turned out to be the high for the day. A heavy bout of selling towards the close saw the index tumble to a low of 20,066 – an intra-day swing of 432 points. The Sensex finally closed with a huge loss of 271 points. (Thomson and The Business Standard)
06:21 Renewed suprime worries lead European shares lower – Reuters
Reuters reports that European shares dropped on Thursday, as fresh concerns about subprime problems weighed on financial stocks, while doubts arose about the impact of major central banks’ funding plan… The UK’s FTSE 100 index fell 1.3%, Germany’s DAX index declined 0.8% and France’s CAC 40 dropped 1.5%.
06:14 CALLS Early Research Calls II -Update-
Miscellaneous: BofA initiates Fairchild Semiconductor (FCS 15.02) with a Neutral and sets a $16 tgt, based on expectations for slower growth in 1H08, which could also limit gross margin expansion beyond what’s baked into estimates and a cautious view on the co’s ability longer-term to generate meaningful top-line growth that is in line with its analog peers… BofA initiates Jack Henry & Associates (JKHY 26.28) with a Neutral and sets a $28 tgt, as they see limited upside due to moderating de novo trends over the past nine months, limited margin expansion opportunity resulting from the shift from higher margin licensing to lower margin outsourcing and lack of near term catalyst… BofA initiates PMC-Sierra (PMCS 7.09) with a Sell and sets a $6 tgt, as they beleive the risk/reward is unattractive at current levels, given the aggressive growth projections reflected in consensus revenues which they feel may prove optimistic given the weak macro/IT spending backrop while earnings power is limited and the still relatively high cost structure calsl for additional restructuring to drive earnings leverage… UBS initiates First Solar (FSLR 241.68) with a Buy and sets a $350 tgt, as they estimate FSLR’s proprietary cadmium telluride thin film technology solar module can be priced below $2.00 per watt starting in 2H09 and believe this will enable them to enjoy a 12-18 month time to market advantage over its mainstream crystalline solar competitors.
06:13 CALLS Early Research Calls I
Miscellaneous: McAdams Wright Ragen adds Teppco Partners LP (TPP 39.00) to its Focus List and sets a $46 tgt, based on shares trading near the low end of its eight year range on an EV/EBITDA basis and comfortably above its eight year average on a spread-to-treasury basis… Kaufman initiates Amdocs (DOX 34.34) with a Hold and sets a $37 tgt, as they believe demand will remain sluggish throughout 2008 as carriers hold off on large and complex billing system upgrades and instead focus on more pressing near-term issues… Kaufman initiates CSG Systems Int’l (CSGS 16.29) with a Buy and sets a $22 tgt, as they believe the Street has already priced in continued cable subscriber weakness and a reasonable risk that CSG will lose all or a portion of the Comcast and/or EchoStar deals… Kaufman initiates Convergys (CVG 17.04) with a Hold and sets a $19 tgt, as they lack confidence regarding the 2008 new signings outlook for any of the three business units and are concerned that the current restructuring and headcount cuts will prove disruptive over the medium term…BofA initiates Fidelity National Information Services (FIS 43.63) with a Buy and sets a $54 tgt, based on continued strength in Lender Processing Services driven by accelerating defaults over the next year and further market share gains, international growth, particularly in Latin America and operating margin improvements resulting from the ramp up of its Brazilian card portfolio and recent acquisition of eFunds.
06:12 JOSB Jos. A. Bank beats by $0.05, reports revs in-line (25.60 )
Reports Q3 (Oct) earnings of $0.38 per share, $0.05 better than the First Call consensus of $0.33; revenues rose 9.9% year/year to $131.3 mln vs the $131.3 mln consensus.
06:08 WIRES On The Wires
Covanta Holding (CVA) announces that is has taken a 40% stake in a joint venture with Guangzhou Development Industry (Holdings) Co., Ltd. (GDIH) to develop energy- from-waste projects in the Guangdong Province of Southeast China… Dow Chemical (DOW) and Petrochemical Industries Company of the State of Kuwait, a wholly owned subsidiary of Kuwait Petroleum, announce plans to form a 50/50 joint venture that will be a market-leading, global petrochemicals co.
06:07 ADG Allied Defense announces ammunition orders for approximately $10.4 mln (5.76 )
Co announces that its U.S.-based ammunition company, MECAR USA, has been awarded a $10.4 mln order for the benefit of the United States military in support of Operation Iraqi Freedom.
06:06 SVNT Puricase meets pre-specified primary efficacy endpoint in two replicate Phase 3 studies (14.46 ) -Update-
Co announces statistically significant positive results for the Puricase Phase 3 program in treatment-failure gout patients, which has been conducted under the auspices of a Special Protocol Assessment with the FDA. Puricase 8 mg administered by a two-hour intravenous infusion every two weeks or every four weeks met the primary efficacy endpoint in the Intent to Treat and Per Protocol analyses in each of two replicate, six-month Phase 3 clinical trials, (the studies are termed, Gout Outcomes and Urate Therapy, GOUT 1 and GOUT 2). Moreover, the every two week dose group also attained statistical significance for the a priori definition of reduction of gout tophi in the pre-specified pooled analysis, while the every four week dose group revealed a favorable numerical trend for this secondary endpoint. Analysis of other secondary efficacy endpoints also showed favorable numerical trends in one or both pegloticase dose groups. There were no expedited reports of serious adverse events during the Phase 3 trials.
05:59 CEA China Eastern Airlines enters into strategic cooperation with Singapore Airlines and Temasek (95.34 )
Co announces the establishment of a strategic cooperation partnership with Singapore Airlines Ltd. and Lentor Investments Pte. Ltd. (”Temasek”), an indirect, wholly-owned subsidiary of Temasek Holdings Ltd., by way of a private placement of new H shares. CEA will issue approx 2.985 bln new H shares in total, among which approx 1.1 bln shares will be placed to China Eastern Air Holding Co, approx 1.235 bln shares will be placed to SIA and the remaining portion of approx 649 mln shares will be placed to Temasek. The subscription price of the CEA new H shares is HK$3.80 per share, representing a premium of approx 464.95% over the net asset value per share of the cp (unaudited) as at 30 June 2007. CEA Holding, SIA and Temasek will subscribe for the CEA new H shares in cash amounts of approx HK$4.182 bln, HK$4.693 bln and HK$2.468 bln respectively.
05:46 SNB holds Swiss rates, says uncertainty abounds – Reuters
Reuters reports the Swiss National Bank kept interest rates unchanged on Thursday for the first time in over two years despite rising inflation, and said it was closely watching threats to the economy from the global credit crisis. The SNB said it remained unclear whether the worst of the crisis had passed. On Wednesday it joined the world’s leading central banks in a surprise coordinated action to ease tensions in the interbank lending market. The SNB said its target band for the 3-month Swiss franc LIBOR rate remained at 2.25-3.25% and that it continued to aim for the mid-point of the range, or 2.75%.
05:44 Northern Rock names CEO, takes $574 mln hit – Reuters
Reuters reports Northern Rock said it had taken a 281 mln pound ($574 mln) hit, or two-thirds of its market value, from its exposure to the credit crisis, adding to its woes as it brought in a new chief executive. The lender said Andy Kuipers, a director who stood down from the board last month, would replace veteran Adam Applegarth, who leaves the co on Thursday. Applegarth announced last month he would step down but had not been expected to leave until next year. On Thursday, the bank faced the prospect of being left with only one bidder — its preferred suitor Virgin Group — after investment group Olivant said it had been rebuffed by the bank and threatened to withdraw. It called for the timetable to speed up and to be given access to the financing banks involved, a source close to the matter said. Olivant’s proposal is backed by several leading Northern Rock shareholders, including hedge funds RAB Capital and SRM Capital, who together own more than 15% in the lender. The prospect of a single bidder and news of the hit from CDOs and other structured debt investments weighed on Northern Rock’s shares, which fell as much as 9% lower early on Thursday. In an update on the rescue process underway since the bank’s near-collapse in September, Northern Rock said it remained in “accelerated” discussions with a bidding consortium led by Virgin Group and was “engaged” with parties including Olivant. It also confirmed it expects to complete its strategic review by February.
05:38 NVS Novartis slashes jobs in latest industry cutback – Reuters (56.23 )
Reuters reports Novartis (NVS) will slash 2.5% of its global workforce, aiming for annual savings of $1.6 bln in 2010, becoming the latest major drugmaker to undertake a deep restructuring. Novartis said on Thursday it would take a charge of $450 mln in Q4 for the measures, which aim to combat price pressures on drugs, higher research costs, tighter regulations and more generic competition. The co cut 2,500 jobs from its global total of 100,000.
05:36 CFC Countrywide subpoenaed by Illinois – NY Times (10.53 )
The NY Times reports the Illinois attorney general is investigating the home loan unit of Countrywide Financial (CFC) as part of the state’s expanding inquiry into dubious lending practices that have trapped borrowers. Lisa Madigan, the AG, has subpoenaed documents from Countrywide relating to its loan origination practices, a person briefed on the matter said. Rick Simon, a Countrywide spokesman, said the co was cooperating with the investigation but declined to comment further.
05:30 MOT Is Motorola worth more if it gets busted up? – WSJ (16.19 )
The Wall Street Journal reports signs are growing that Motorola (MOT) may may be contemplating a breakup in the wake of the collapse in popularity of its Razr cellphone. Such a move would satisfy Carl Icahn, who this year ran an unsuccessful proxy fight to gain a board seat. He says carving up Motorola could produce almost $20 bln of additional shareholder value. That translates to nearly $8 more a share and would make the stock worth roughly 50% more than its current price. Analysts agree in principle with Mr. Icahn’s math, although many caution that Motorola needs to fix underlying problems in the handset division to maximize the value of a breakup. Breaking Motorola into stand-alone units would highlight uncertainties facing its lesser-known businesses and would go against the trend of consolidation in the telecommunications-equipment business. And any effort to sell one or more of the businesses could fail because of the frozen credit markets. Speculation could lift Motorola’s stock more than an actual split-up. “The point is that if the handset business was spun off, with over $20 billion in revenue in a growing industry, it is obviously worth a great deal more than zero,” Mr. Icahn said in a telephone interview. Analyst Ping Zhao of CreditSights values the parts of Motorola, without the mobile-devices division, at $33 bln. One obstacle to a breakup is whether the credit-market crunch has reduced the number of potential buyers. Another option would be to spin out the units as publicly traded companies, either through IPOS or stock dividends to shareholders. The question is how much would a buyer pay for each of the pieces. One industry banker says the cellphone piece could sell for less than one times sales if its problems aren’t fixed.
05:25 Morning News Summary
WSJ: Is Motorola (MOT) worth more if it gets busted up? NY Times: Countrywide (CFC) subpoenaed by Illinois. Reuters: Novartis (NVS) slashes jobs in latest industry setback… Northern Rock names CEO, takes $574 mln hit… SNB holds Swiss rates, says uncertainty abounds.
04:01 SHPGY Shire plc announces board changes (70.59 )
Co announces, effective June 2008, Angus Russell will be appointed Chief Executive Officer. James H. Cavanaugh will retire as Non-Executive Chairman and Matthew Emmens will succeed him as Non-Executive Chairman.
03:58 NBIX Neurocrine receives approvable letter for indiplon capsules with additional safety and efficacy data required by FDA (10.25 )
Co announces they have received communication from the FDA indicating that the NDA for indiplon 5 mg and 10 mg capsules for the treatment of insomnia is approvable pending additional clinical and preclinical data. The 2007 Approvable Letter did not raise any of the issues previously raised by FDA in the 2006 Approvable Letter. The requirements as spelled out in the 2007 Approvable Letter are as follows: 1) An objective/subjective clinical trial in the elderly. 2) A safety study assessing the rates of adverse events occurring with indiplon when compared to a marketed product. 3) A preclinical study to evaluate indiplon administration during the third trimester of pregnancy. “While we are disappointed in the FDA action, we will accept the FDA’s offer to discuss the applications via a meeting or telephone conference in order to clarify and determine the next steps required,” said Gary Lyons, President and CEO of Neurocrine.
03:55 COST Costco reports EPS in-line, revs in-line (70.19 )
Reports Q1 (Nov) earnings of $0.59 per share, in-line with the First Call consensus of $0.59; revenues rose 11.7% year/year to $15.81 bln vs the $15.81 bln consensus.
02:37 WIRES On The Wires -Update-
ZymoGenetics (ZGEN) and Merck Serono, a division of Merck KGaA, announce the initiation of a Phase 2/3 clinical trial of atacicept in lupus nephritis, a severe form of systemic lupus erythematosus… OSI Systems (OSIS) announces that it has increased its beneficial ownership in Spacelabs Healthcare, listed on the London AIM Exchange, to more than 90%; OSIS intends, within the next 10 business days, to complete the purchase of the remaining minority shareholding of Spacelabs at a cost of approx $15 mln… Harvest Natural Resources (HNR) announces it has executed a sale and purchase agreement to acquire a 50% operated interest in the Dussafu Marin Exploration Production Sharing Contract located offshore Gabon from Sasol Petroleum West Africa Ltd.
02:36 CTIC Cell Therapeutics announces issuance of $23.25 mln in new Convertible Senior Notes in exchange for $36.08 mln of existing Convertible Senior Sub. Notes (2.51 )
Co announces that it issued approx $23.25 mln of its new 5.75% Convertible Senior Notes due 2011 and 5,459,574 shares of its common stock in exchange for approx $10.5 mln of its outstanding 5.75% Convertible Senior Subordinated Notes due 2008 and approx $25.6 mln of its outstanding 5.75% Convertible Subordinated Notes due 2008.
01:04 HERO Hercules Offshore mentioned positively in Weekday Trader – Barron’s Online (24.86 )
Barron’s Online reports shares of Hercules Offshore (HERO) are trading 8.5x earnings estimates for the next four quarters, a deep discount to offshore drilling peers at a time when the co’s prospects appear to be bottoming out and improving in 2008. With the largest fleet of rigs and barges in the Gulf of Mexico’s shallow waters, Hercules shares are poised for great upside as rig day rates are stabilizing and demand picks up with natural-gas prices treading north of $7. Thanks to this year’s acquisition of competitor Todco, Hercules has gained control over more rigs in the Gulf of Mexico and some exposure to international offshore rigs. “The market isn’t rewarding [Hercules shares] with the multiple or valuation that the combination of the Todco assets and the Hercules assets (deserves),” says Joshua Schachter, portfolio manager at Snow Capital Management. Improving shallow-water operations could boost the stock 35% over the next 12 months. But sentiment is so bearish that value investor Schachter says the stock could easily double within the next 18 months on a steady recovery. Since August, top executives and directors have made their largest open-market purchases since Hercules went public in late 2005. They spent $6.3 mln on about 253,900 shares.
01:03 ‘Mad Money’ Recap: Lightning Round cont. – TheStreet.com
Cramer was bearish on Force Protection (FRPT), US Airways (LCC) and Cognizant Technology Solutions (CTSH).
01:03 ‘Mad Money’ Recap: Lightning Round – TheStreet.com
Cramer was bullish on Intuitive Surgical (ISRG), Textron (TXT), Siemens (SI), Philips (PHG), Syngenta (SYT), Bunge (BG), Monsanto (MON), SunPower (SPWR), First Solar (FSLR), Solarfun Power (SOLF), Cisco Systems (CSCO) and Pre-Paid Legal (PPD).
01:01 Cramer’s ‘Mad Money’ Recap – TheStreet.com
On Wednesday’s edition, Jim favors Sigma Designs (SIGM) and described it as a play on the slow demise of cable companies and the rise of telephone companies competing for those services. Sigma, Cramer said, should get a big cut of that money as it designs and makes the chips for the set-top boxes. The co, he said, beat estimates last time it reported, which caused analysts to aggressively raise their price targets. He also notes pricing power due to high demand. During the “Sudden Death” round, Cramer was bullish on Tenet Healthcare (THC) and bearish on Acxiom (ACXM).
01:00 WIRES On The Wires
Flotek Industries (FTK) announces has filed an application to list its common stock on the NYSE. Pending approval of its application, Flotek anticipates its common stock will begin trading on the NYSE December 27, 2007, under its current symbol “FTK”… Tempur-Pedic International (TPX) confirms that the U.S. District Court for the Northern District of GA has dismissed with prejudice, in its entirety, the putative antitrust class action complaint filed against the co entitled Benny and Wanda Jacobs, et al. v. Tempur-Pedic International and Tempur-Pedic North America.
00:56 MT ArcelorMittal to increase stake in China Oriental (74.90 )
Co announces that it had entered into a shareholders’ agreement with the controlling shareholders of China Oriental Group Co Ltd. which will enable ArcelorMittal to eventually raise its equity stake in the co to 73.13%
00:54 VNDA Vanda Pharma presents Phase 3 iloperidone efficacy data (8.85 )
Co announces that data from four Phase 3 efficacy and safety trials demonstrate that iloperidone, an investigational atypical antipsychotic, is associated with significantly greater improvements in the symptoms of schizophrenia versus placebo and has a favorable safety and tolerability profile. These results were included as part of the recently filed NDA for iloperidone and were presented for the first time this week at a major psychiatric congress.
00:53 SVNT Savient Pharma to release top-line results from Puricase phase 3 trials in treatment-failure gout on Dec. 13 (14.46 )
Co announces they will make public top-line results from its two Phase 3 clinical trials with Puricase for patients with treatment-failure gout via a news release to be issued at approx 6:00 AM ET on December 13, 2007. At 8:00 AM ET that same day, Christopher Clement, President and Chief Executive Officer and Zeb Horowitz, Chief Medical Officer, will host an investment community conference call to discuss the clinical results and to answer questions.
Wednesday After the Close
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