Periodicals Wrap-Up for Tuesday, June 3rd
WALL STREET JOURNAL: As it prepares to report its first quarter results, Lehman Brothers Holdings (LEH) may need to raise $3B to $4B to support its balance sheet, meaning its first quarter loss could be higher than the anticipated $300M, according to the Wall Street Journal. The capital raise would likely be through new common shares…Yahoo! (YHOO) shareholders are suing the company over an employee severance plan they say was intended to help block its takeover by Microsoft (MSFT), adding between $462M and $2.1B to Microsoft’s costs,the Wall Street Journal reported…FINANCIAL TIMES: The Financial Times reported that Momentive Performance Materials, a company owned by private-equity firm Apollo Management, has exercised its option to suspend cash payments on part of its debt…As manufacturers push to compete in the “netbook” category, Intel (INTC) admitted to shortages of its Atom microprocessor. In an interview with with the Financial Times, Intel’s executive vice-president, Sean Maloney, said the company had received more orders than expected for the low-power processor…
Big advertisers unhappy with Google’s “piggybacking”-WSJ
When smaller advertiser use any form of a larger advertiser’s name in the content of search ads to draw in Web surfers to their own site it’s called “piggybacking.” And that’s why a number of Google’s (GOOG) larger advertisers are very upset with how Google oversees–or doesn’t–sponsored Web searches, reports the Wall Street Journal’s “Advertising” column. While policies may exist against it the question is how strictly they are enforced. Laws as apply to the Internet are unclear and are only beginning to be tested in court. Companies say the tactic is confusing to potential customers and makes the cost of doing business more expensive. For Google, which controlled over 70% of the search business in 2007, that ’s a big problem which could damage its plans for ad sales growth.
Expecting Wachovia to sink further, investor Michael Price sits tight-WSJ
Michale Price makes money off of troubled financial firms. For now he’s waiting on Wachovia Corp. (WB) because he thinks it hasn’t yet hit bottom, according to the Wall Street Journal’s “Heard on the Street”. He thinks Wachovia will have higher credit losses tied to its adjustable rate mortgages and will have to will have to raise a lot more money. He’s betting that the current share price is not where it will be as the firm deals with its problems, and he’s ready to pounce when he judges the timing to be right.
Intel can’t keep up with demand for its Atom chip-FT
Intel (INTC) said it is experiencing shortages of its latest Atom microprocessor. Intel has received more orders than it anticipated for the low-power processor, Intel Executive Vice President Sean Maloney said. “We�re ramping it strongly and are still catching up with the demand,” Maloney said.
Billionaire investor to tell lawmakers of oil “bubble”-FT
Billionaire investor George Soros, chairman of the $17B hedge fund Soros Fund Management, is expected to today tell a congressional committee that there is a “bubble in the making” in oil and other commodities and that rising oil prices are the result of a number of fundamental changes in the market. Soros is expected to tell the Senate commerce committee that commodity indices are not a “legitimate asset class” for institutional investors and that index-buying is based on a “misconception”. Additionally, Soros will say a crash in the oil market is “not imminent”.
Boone Pickens calls probe of oil price manipulation a “waste of time”-Bloomberg
Billionaire hedge fund manager Boone Pickens has called a probe by the Commodity Futures Trading Commission into whether oil prices were manipulated by speculators to more than $135 per barrel a “waste of time”. In interviews at an American Wind Energy Association conference, Pickens said the price of oil will increase “until you can kill demand” and that the CFT is “trying to find a scapegoat”.
Pre-Market Movers: Ahead of the Bell
Once again pre-market volumes are light with a relative handful of names moving on news. The futures under these conditions tend to drive prices, not the underlying. This can lead to sudden jumps in price so it is best not to put too much weight on what we see ahead of the day session. General Motors (GM) is the volume leader to the upside this morning, trading up +1.77% after it announced further cost cutting steps including closure of four truck factories. Away from GM there is a sudden drop in volume. Research in Motion (RIMM) is next most active, trading down (-0.2%). Coverage was assumed with a Buy and a target price of $163 at Goldman Sachs. Anglo American (AAUK) is trading up +0.4% on no news. Apple (AAPL) is trading up +0.4% after Thomas Weisel Partners raised their price target on the name to $225 (see note here for details). Monsanto (MON) is trading up +2.23% after Goldman Sachs raised estimates and their price target to $155 from $140. Jumping to the the top of the most actives as we were writing this note is Auxilium Pharmaceuticals (AUXL), trading down (-4.76%). The company is just beginning at webcast to discuss positive Xiaflex trial results.
MA: Estimates and target raised to $367 from $312@STFL
Stifel raised MA estimates citing strong top line growth and and guidance that implies additional price increases. Shares are Buy rated.
AAPL: See potential upside to iPhone estimates@PACS
Pacific Crest believes that while the total addressable market for the iPhone may be overstated, software could drive upside to their iPhone units estimate. The firm believes the productivity benefits of software could drive accelerated adoption of smartphones by worldwide corporate users. Shares remain Outperform rated.
EDU: Weakness offers a good accumulation point@FBCO
Credit Suisse said the recent sell-off in shares offers a good accumulation opportunity as EDU’s underlying demand trends have not changed. Shares are Outperform rated.
WMT upgraded to Outperform from Market Perform@MOKE
Morgan Keegan upgraded WMT based on improving productivity and earnings outlook.
Lehman-LEH does not need to raise capital, source says-Reuters
The source said that Lehman plans to raise capital only to help market perceptions of if market opportunity presents itself.
RIMM coverage assumed with a Buy, target $163@GSCO
Goldman expects RIMM to beat estimates for the next 1 to 2 years but is incrementally more cautious heading into the Q1 report as guidance may be below expectations.
LULU: Expect company to outperform its sector@OPCO
After Lululemon reported Q1 results that Oppenheimer views as strong, the firm would continue to buy the stock ,as they expect the company to outperform its sector in sales and earnings growth over the next year. The firm maintained their Outperform rating.
LULU: Recommend buying shares on any weakness@THNK
ThinkPanmure believes LULU reported “impressive” sales but points out operating margin came in lower-than-expected and the company reduced EPS guidance for 2008. However, they believe demand remains strong and would buy the stock on any dips. The firm lowered their target to price to $45 from $50 but keeps a Buy rating.
LULU: Use weakness as a buying opportunity@RBCM RBC Capital said fundamentals are moving in the right direction and gross margins continue to rise. The firm is not surprised by the incoming CEO’s initiatives that led to the company trimming guidance and recommends buying weakness. Shares are Outperform rated.
NUE target raised to $90 from $83, maintain Buy@SBSH
Citigroup raised their estimates to reflect the strength in the steel market and recent financings and remains positive on the stock.
EDU discusses impact of earthquake, Beijing Olympics
These events have created a number of short-term challenges, but the Company remains confident in the long-term success of the business. New Oriental, in the two weeks after the earthquake, has seen a noticeable nationwide decrease in the number of students enrolling in new classes compared to the Company’s own internal estimates, a trend which was especially pronounced during the three days of official mourning from May 19 to 21, 2008. New Oriental is hopeful that the trend will reverse itself, and expects enrollments to recover in June as preliminary relief efforts are completed and the nation returns to a more normal state. The Company noted that there would be no material adverse financial impact from the Sichuan earthquake for the fourth quarter ended May 31, 2008. New Oriental does not expect any long-term, material, adverse impact to its business as a result of the Beijing Olympic Games.
ICE to acquire Creditex Group
IntercontinentalExchange announced that it has entered into a definitive merger agreement to acquire Creditex Group Inc., a credit market leader and innovator in the execution and processing of credit default swaps with markets spanning the U.S., Europe and Asia. Creditex is a leader in the most liquid segments of the CDS market including CDS indexes, single-names and standardized tranches. The transaction consideration will total $625 million comprising approximately $565 million in ICE common stock and $60 million in cash, as well as a working capital adjustment to be finalized at closing.
ABX upgraded to Sector Outperformer from Sector Performer@CIBC
CIBC upgraded ABX based on stronger 2H08 production.
Wal-Mart launches challenge to Craigslist-FT
Wal-Mart (WMT) has started publishing free classified ads on its Walmart.com website. The move is seen as a challenge to Craigslist.
Steel: Estimates raised to reflect contract re-pricing@DBAB
Deutsche Bank believes steel producers have been successful in the re-pricing of contracts and expects this to continue throughout 2008. They believe ArcelorMittal (MT) , AK Steel (AKS) and U.S. Steel (X) will see the largest impact and recommends buying shares of X and MT. Deutsche raised their estimates for MT, AKS, X and Nucor (NUE) and increased X’s target to $220 from $165 and MT’s target to $130 from $119.
FSLR: Weakness on CEO sale overdone@COWN
Cowen said the CEO still holds a substantial stake in FSLR and that the sale was due to portfolio diversification. Shares are Outperform rated.
Fast Money position recap- First Moves- Jeff likes long the DOG (shorting the Dow), Guy likes CELG, Jon likes NSM,
Karen likes BONT for the CNBC Challenge. Macke Owns (INTC), (DIS), (MSFT), (WMT); Adami Owns (C), (AGU), (BTU), (NUE), (GS), (INTC), (MSFT); Finerman Owns (GS), (AAPL); Finerman’s Firm Owns (GE), (MSFT), (NYX), (SBUX), (SUN), (TSO), (VLO); Finerman’s Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Finerman’s Firm Owns SPX Index Puts; Finerman’s Firm And Finerman Own (C) And (C) Leaps; Jon Najarian Owns A Call Spread In (HOC), (MEE), (SBUX), (TSO), (VLO), (AAPL), (COP), (FTO); Jon Najarian Owns (ACI) Call Spreads And Calls; Jon Najarian Owns (ANR) Calls Spreads And Calls; Jon Najarian Owns (C) Preferred Shares; Jon Najarian Owns (KEY) Puts, (LEH) Puts; Jon Najarian Owns (NSM).
Watching the coal stocks ACI, BTU, MEE, ANR, WLT, FDG, TCK, CNX, CLF, MTL. Watching MA with the nice upgrade, V and GOOG, AAPL, RIMM, BIDU, AMZN, FXI, ^VIX, UUP, USO, UNG-very interesting strength here and looking to see if the NG plays APA, XTO, RRC, EOG, CLR respond to higher UNG prices. Let’s see how the financials act with the new news today. Stay smart, nimble, focused, goal oriented, and pick plays with high probability of success. Great Luck to you and Great trading. As most of you know I trade with my brother Hiep (Biotechman) and we have been participating in the CNBC Challenge and have been doing real well. How well? Our portfolio is at $1.378 million. Our portfolio is now in the top 200 performing portfolios in the world in the contest. Down below is a screen shot of our portfolio as of last night and its performance thus far. We want to be #1! I guess it shows we can hang with the best of them.
BOOOOOYAHHHHH!!!!
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