Quote of the Day

"More people should learn to tell their dollars where to go instead of asking where they went." -- Roger W. Babson


Morning News of Note:

• AAPL: Apple, iPod Users Reach a Settlement Over Faulty Batteries Apple Computer Inc.'s iPod portable-music player is a cultural icon beloved by music fans, save for one flaw: The rechargeable but nonreplaceable batteries in many early models didn't last nearly as long as advertised, leaving some consumers fuming. Now, Apple has effectively acknowledged the flaw, by agreeing to replace some iPods and give other consumers up to $50 in cash or credit on Apple purchases. The offer is part of a proposed settlement of a class-action lawsuit in San Mateo County, Calif. (Full Story) WSJ
• DELL: Dell plans to introduce premium PCs - Financial Times (40.60 ) The FT reports that Dell said it planned to introduce a new brand of "premium" PCs aimed at the high-end consumer mkt, a departure from the co's traditional emphasis on low prices and customer value. The new line of desktop and notebook PCs would be geared to the "mass luxury mkt" that wanted more powerful computers for music, video and games. Prices for the new line, to be introduced later this year, would range from $1,200 to $3,500.
• Energy: EU Energy Commissioner Andris Piebalgs said he will urge OPEC to boost production at meeting next wk; said EU will also seek to help EU energy co's raise investment in oil producing nations
• Fund Flows: equity funds rptd net inflows $1.402bln wk end 6/1, etf inflows 75% of total equity inflows; tech funds rptd net inflows for second consec wk, first time since 11/17/04; taxable bond funds rptd net inflows $1.502bln, incl $976m into HY bond funds, lgst since 9/3/03; money mkt funds rptd outflows $6.801bln -- AMG Data
• PEET: Peet's Coffee - next Starbux - BusinessWeek (29.82 +0.88) The BW discusses Peet's Coffee & Tea (PEET), saying that Michael Moe was one of the few analysts who had pegged Starbucks as a buy in '01, when it was just $14 a share. It has since rocketed to $54. Moe, now CEO of ThinkEquity, says he has found a new Starbucks in the making: Peet's Coffee. Coffee fans love choices, and Peet's is yet another in the hot specialty coffee mkt, says Moe, "with its own group of loyal fans, a la Starbucks." But Peet's is tiny next to Starbucks. And Peet's stock, now $29, sells at 36x estd '05 earnings of $0.77 a share, vs Starbucks' 45x earnings. Based on its fast earnings and sales growth, Peet's stock could double in 2 years, says Moe. ThinkEquity analyst Nicole Miller says Peet's aims to be the gold standard in specialty coffee, based on its deep-roasting process of Arabica beans. Peet's expects to add 23 stores this year. Kristine Koerber of JMP sees '06 earnings of $0.93 a share. (Briefing note: Peet's mkt cap stands at $406 mln)

Market Commentary: The market opened down this morning on the heels of a weaker-than-expected payroll report. The economy only added 78,000 jobs last month, versus expectations for something closer to +175,000. But these reports tend to be volatile from month to month, so I wouldn't put too much emphasis on any single month. I still think the economy is on solid footing, and likely emerging from a breif "soft patch" in the first quarter.