Media Digest 4/14/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, Blockbuster (NYSE:BBI) said it has offered to buy Circuit City (NYSE:CC) for $6 to $8 in cash.
Reuters writes that a merger between Delta (NYSE:DAL) and Northwest (NYSE:NWA) could be announced this week.
Reuters reports that TIme Warner’s (NYSE:TWX) AOL landed a deal to sell all of Verizon’s (NYSE:VZ) online ad inventory.
Reuters writes that India’s Jet Airways will demand compensation from Boeing (NYSE:BA) for late delivery of the 787.
The Wall Street Journal reports that Wachovia (NYSE:WB) will get an outside infusion of several billion dollars.
The Wall Street Journal writes that G-7 and IMF meetings failed to come up with a joint emergeny plan to help the global economy.
The Wall Street Journal reports that Deutsche Bank (NYSE:DB) will sell as much as $20 billion in leveraged buy-out loans to private equity firms.
The Wall Street Journal reports that Salesforce.com (NYSE:CRM) will sell Google’s (NASDAQ:GOOG ) Apps software to its customers.
The Wall Street Journal reports that some shareholder-advisory firms are suggesting investors vote against re-electing the current Citigroup (NYSE:C) board.
The New York Times reports that economic ministers said that the world food crisis is even worse than the economic crisis.
The New York Times reports that CBS (NYSE:CBS) may be hurt by the lack of a major blockbuster show in its new schedule.
Bloomberg writes that profits at Phillips declined on falling TV prices.
WB common stock will be priced at $24/share, deal oversubscribed-CNBC
David Faber reports the $3.5B of common stock in the equity offering will be priced at $24/share.
EMKR: Reiterate Buy and $10 target following analyst day@NEED
Needham continues to expect the company’s value to be unlocked when it divides in two parts.
IBM: Target to $130 from $120 ahead of March quarter report@GSCO
Goldman expects higher revenue, mix improvement, and cost management to drive results. Shares are Buy rated.
Actionable call should be strong if the market holds up.
ADBE: AIR product developer checks bullish; maintain Outperform@PACS
PacCrest’s developer checks on the AIR product are bullish which they view as a long-term strategic benefit in driving adoption of the product. Target $54.
Eaton (ETN) is one of the few names trading to the upside today, up +5.14% after a mixed Q1 earnings announcement today (better on the ex-items side) but with raised guidance for Q2. Actionable call, look for possible continuing strength here.
JASO: See at least 20% upside to shares@LEHM
Lehman’s checks indicate JASO’s wafer prices were unchanged in Q1 vs. Q4, implying ASP upside. Additionally, the firm believes the company has negotiated higher 2H08 contract prices with European customers and sees at least 20% upside to consensus estimates from additional poly contract announcements. Shares are Overweight rated.
WB: Down on Negative Pre-Announcement
The stock is down (-10.3%) in the early pre-market following an announcement of an unexpected miss along with a cut in dividend, loss provision increases, a capital raise and write-downs.
Sympathy plays could be looked at in STI, USB, WFC, USB, PNC, C.
GOOG: Recommend buying shares ahead of earnings report@PACS
Pacific Crest’s checks with U.S. based advertisers have been positive and they believe the consensus estimates reflect an unrealistic slowdown. They maintain an Outperform rating and recommend buying GOOG shares ahead of the quarter.
Let’s see how GOOG shares react to this positive upgrade, I’m not sure investors are convinced.
GOOG: Cautious on Qtr, continue to like in 2H08@UBSW UBS believes Street estimates are too high for the quarter and notes slowing click volumes. The firm remains positive on shares in 2H08.
Fed Reserve Governor Warsh speaks about market developments at NYU 3:15pm 4/14
MER: Expect further write-downs, estimates lowered@JPMS
JP Morgan expects to see additional net write-downs of around $3B in CDO/subprime and non-US residential mortgages, $0.3B in Alt-A, and $2.7B in commercial mortgage portfolios in Q1. They lowered their 2008 estimate to $1.46 from $2.75 and remain on the sidelines with a Neutral rating.
Actionable call. Look for weakness in MER, it has earnings this week and investors will probably be risk averse going into the numbers.
COF: Estimates and price target lowered to $52 from $60@LYON
Calyon lowered COF estimates citing weakness across all the company’s segments following analysis of its March charge-offs. The firm lowered Q1 EPS estimate to 11c from $1.30, 2008 to (96c) from $5.25 and 2009 to (48c) from $6.52. Shares are Neutral rated.
Actionable call. Look for weakness here.
V initiated with an Outperform@COWN
Cowen is positive on the Visa’s growth prospects and attractive business model.
If the market holds up it will be interesting to see if V can muster some strength.
V initiated with a Buy, target $75@DBAB
That would be two.
IT Services: Checks indicate slowing hiring trends@BOFA
Banc of America interviewed executives at leading Indian IT recruitment firms and found that hiring trends are slowing. They believe attrition rates may moderate as employees take a more cautious approach before switching, but see margin upside for some offshore vendors given efforts to slow wage inflation. Banc of America lowered their target on Infosys (INFY) to $54 from $61, on Wipro (WIT) to $16 from $17 and Satyam (SAY) to $29 from $31 but continues to believe the risk/reward is favorable for INFY and Cognizant (CTSH).
Biotechnology: See several high-potential M&A targets@STFG
After Takeda (TKPHF) agreed to acquire Millennium Pharmaceuticals (MLNM) at a 53% buyout premium, Stanford does not expect the deal to be derailed by anti-trust or national security concerns. The firm identifies Imclone systems (IMCL), Medivation (MDVN), Theravance (THRX), and United Therapeutics (UTHR) as high-potential M&A targets in the biotech sector.
EBAY target raised to $40 from $34, reiterate Buy@PIPR
Piper expects EBAY to report upside in Q1 due to better performance in core eBay as well as strength in PayPal and Skype. They raised their Q1 estimate to 42c from 40c and find the valuation attractive at current levels.
Internet Strategist: Expect most Q1 results to be at low end of guidance@PIPR
Piper expects the majority of companies in the internet sector to report results at the low end of the guidance range with a few companies (PCLN, EBAY, AKAM, CTRP, and BIDU) likely to report upside. They also believe many companies will lower 2008 guidance and maintain a Neutral stance on the sector. Piper’s top 12-months picks are: GOOG, EBAY, FMCN, PCLN and SFLY.
Fast Money recap- Macke likes INTC, WMT, adami likes AAPl, Seymour thinks long EEV, Najarian recommends shorting EBAY.
Macke Owns (INTC), (YHOO), (MSFT); Jon Najarian Owns (AAPL), (AMR), (FDX), (PDLI), (TSO); Jon Najarian Is Short (HOG), (IBM), (WB); Seymour Owns (AAPL), (CSCO), (MER), (MSFT), (TSO), (INTC); Seygem Asset Management Owns (TSM), (COP), (SSL), (EEV)
Keep nimble and with retail sales out let’s see how the market reacts . The WB news is a negative for the market and we should see some weakness in the sector and XLF. Keep focused with an eye on your goals! Keep positive and great trading! Good Luck!
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