Biotechs Still Under Liquidation

Morning News of Note:

• MSFT GOOG: Microsoft and Google Set to Wage Arms Race Bill Gates, the chairman of Microsoft, described Google in an interview late last year as a worthy adversary, a company to test Microsoft's mettle. "This is hypercompetition, make no mistake," Mr. Gates observed. The rivalry between the companies is growing more combative, and with good reason: the outcome is likely to shape the future of competition in computing and the way people use information technology. (Full Story) NY Times
• MOT: Motorola's Q still standing in line April showers are done. Where is Motorola's Q? The much-anticipated Q, a super-thin e-mail device, had been scheduled for an April launch, but the deadline passed. A launch later this Q, as in quarter, might be in the offing. (Full Story) Chicago Sun Times
• C: Smith Barney Will Consolidate Foreign Clients Citigroup Inc.'s Smith Barney brokerage unit is planning an aggressive revamping of its oversight of foreign investors' accounts, prompting complaints from brokers who will lose clients under the plan. The plan, aimed at complying with antiterrorism and money-laundering rules, calls for consolidating thousands of foreigners' accounts managed by brokers in more than 400 offices, into about 40 "focus" offices specializing in "Offshore Wealth Services." (Full Story) WSJ
• GLW: Corning Incorporated announced that its board of directors recently approved a capital expenditure plan of $174 million to further expand its Generation 8 size liquid crystal display glass substrates manufacturing capacity at its facility in Shizuoka, Japan. The company had previously announced that it will ship samples of its Gen 8 size LCD glass from this facility in the second quarter. Corning expects to begin Gen 8 commercial shipments in the third quarter, with this new capacity continuing to come on line through late 2007. In addition, Corning announced that it recently signed a supply agreement making Corning the majority glass substrate supplier for Sharp Corporation's Gen 8 fab in Mie Prefecture, which is currently under construction and expected to open later this year. Sharp's new Gen 8 factory will be focused on LCD TVs that are 40 inches and larger. Corning's new investment will add Gen 8 glass capacity to meet Sharp's future supply requirements
• Mad Money Summary: Jim Cramer's "Mad Money" Jim Cramer opened his show discussing ethanol. He had previously recommended The Andersons (ANDE), Archer Daniels Midland (ADM) and Agco (AG), and is now recommending MGP Ingredients (MGPI). MGP Ingredients is a food company that just bought a stake in Iogen, a company that turns cellulose into ethanol. He also suggested Union Pacific (UNP), which he believes will be the best-of-breed play on shipping ethanol. Cramer then recommended Toyota (TM), the best hybrid play of the auto makers. Cramer brought up Archer Daniels Midland again, noting that it reports earnings tomorrow. He said if other "high-flying" stocks are an indication, Archer will fall after it reports. Then Cramer discussed the "comeback player of the year," American Standard (ASD), which has turned itself around in an unbelievably short period of time. In the "Lightning Round," Cramer was bullish on Raytheon (RTN), Flextronics International (FLEX), Agilent (A), Red Hat (RHAT), Goldman Sachs (GS), Ceradyne (CRDN), Headwaters (HW), Chartered Semiconductor Manufacturing (CHRT), Informatica (INFA), Home Depot (HD), First Data (FDC), Manitowoc (MTW) and Oshkosh Truck (OSK), and was bearish on Sanmina-SCI (SANM), VA Software (LNUX), Evergreen Solar (ESLR) and InterDigital Communications (IDCC)

Market Comments: The market is getting a bounce at the open. We'll have to see if it can last throughout the session. I would have preferred to see a weak open that reversed higher into the close.

Companies that reported good earnings are seeing their stocks up nicely (see EMR, FSH, ADM, etc.). Energy stocks are up again, and brokers are getting a bounce in early trading as well. But biotechs continue to be sold relentlessly. This has to be the most hated group in the market, as these stocks seem to go down every day. Pretty soon it will be time to add some stocks from that group.

I am still feeling a bit defensive, following yesterday's reversal and also the fact that the overdue pullback remains elusive.

long C, EMR, FSH, GLW, GOOG