Wednesday, December 07, 2005

Morning Look

Morning News of Note:
  • G PG: Gillette losing 40% of its top managers About 53 depart in P&G takeover About 40 percent of Gillette Co.'s top executives and managers are leaving or have left the Boston shaving giant as Procter & Gamble Co. completes its takeover, according to the company. Of Gillette's 135 high-level managers, about 53 have departed. Some retired, others turned down jobs, and some were not offered positions at the newly combined company. (Full Story) Boston Globe
  • KO PEP: Heard on the Street... Isdell Could Lose Coke's Cola Crown With the Stock Down 17% Since CEO Took Over, Market Valuation Is On Track to Fall Short of Pepsi's Unless things change in a hurry, Neville Isdell, Coca-Cola Co.'s chairman and chief executive officer, could be remembered for being in charge when the King of Pop lost its throne. Coke shares are down 17% since the 62-year-old Mr. Isdell came out of retirement 18 months ago to spur a long-overdue turnaround in profit growth at the Atlanta-based beverage giant. The stock price of rival PepsiCo Inc., of Purchase, N.Y., has climbed 12% during the same period (Full Story) WSJ
  • PNRA: Panera Bread Co-PNRA reports November same store sales up 7.7%. PNRA raises its 2005 EPS outlook to $1.63-$1.64 vs consensus estimates of $1.61
  • Consumer Spending: Poor House The housing market may be cooling down, but that doesn't mean consumer spending will take a hit -- at least not yet. For several years, many Americans have been using soaring real-estate values to spend beyond their paychecks. (Full Story) WSJ
  • Mad Money Summary: Jim Cramer said that billboards are making a comeback and recommends buying Lamar Advertising (LAMR). He believes that advertisers are moving away from TV advertising due to digital video recorders. Responding to a question, Cramer said that he would avoid shares of Clear Channel Outdoor (CCO) and would look to buy the shares around $16 or $17. Cramer also commented on Yahoo! (YHOO) and Google (GOOG) saying that both are seeing secular growth in advertising. Cramer was also bullish on shares of Marchex (MCHX) and sees it as a play on local internet search. He recommends buying half of a position now and more later if shares pull back. Responding to a question Cramer said that valuation is too high for aQuantive (AQNT) and that Marchex is a better play. Cramer said the California Public Utility Commission will vote on an initiative that would give consumers 10-year incentives for the installation of solar panels in their home. Cramer believes that if this passes, it would be a big positive for Evergreen Solar (ESLR) and SunPower (SPWR). PMC-Sierra's (PMCS) CEO Bob Baily joined Cramer last night on his show by telephone to discuss the acquisition of Agilent Technologies' storage semiconductor business. Cramer said that he would wait to jump into shares and would like to see a quarter with the Agilent acquisition before he recommends shares

Market Comments: The market is fairly flat in early trading. Energy stocks are mostly higher, with oil trading above $60. Bond yields are around 4.51%. Yesterday's action leads me to believe that the market needs to spend some time consolidating its recent gains.

We will have to see if any consolidation comes in the form of sideways action or more of a pullback. There is an outside chance that those who are underinvested will use any weakness to plow into the market, but I think this is a lesser probability scenario.

long PEP, PG


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