Morning News Roundup
Morning News of Note:
- Gapping Up:
Gapping up on strong earnings/guidance: CRYP +14.4%, SINA +14.3% (also upgrades from CE Unterberg and Brean Murray), FOXH +12.5% (also Wm Blair upgrade), HIHO +29% (light vol 1,200 shares), ACLS +4.8%, GLBL +4.7%, NT +2.9%, STKL +2.9%, PAAS +2.9%, CVS +2.4%, DCP +2.1%, PTEN +1.8%... Retailers gapping up on strong July comps/guidance: BEBE +5.4%, AEOS +3.8%... Other News: MROI +17% (to be acquired by IBM), ARWR +10.8% (announces research collaboration), VC +3.8%, IR +3.5% (raises dividend; accelerates share repurchase program), BDCO +2.2%, MEH +2.2%, NVDA +1.6% (ThinkEquity upgrade), IIP +1.5% (Mad Moeny mention), KNL +1.4% (prices offering), RACK +1.1% (positive TWP comments), SGP +1%.
- Gapping Down
Gapping down on disappointing earnings/guidance: COGT -26% (also downgrades from Morgan Stanley and Needham), ECLP -21%, LF -19% (also Citigroup downgrade to Sell), S -12%, SBUX -11.5% (also Thomas Weisel downgrade), TOPT -11.5%, MDT -10.2% (guides lower; also multiple downgrades), INSP -7%, ZEUS -6.2%, QDEL -6%, UL -4.4%, TFSM -4.1%, RIG -4%, POZN -3.6%, F -3.5%, THE -2.9%, PRU -2.3%... Retailers gapping down on disappointing July comps/guidance: ARO -6.4%, PSUN -4.8%, GYMB -4.2%... Hurricane/energy stocks give up yesterday's gain as Chris not likely to become hurricane: HSOA -2.7%, NBR -2%, CHK -2%, HAL -1.8%... Other news: HANS -8% (Citigroup downgrade), STJ -7.5% (in sympathy with MDT; also Pru downgrade), BSX -4.9% (in sympathy with MDT), RMBS -4.7% (WSJ runs article on FTC news from yesterday), HRLY -4.7% (profit taking after gap up late yesterday on takeover speculation), KOMG -2.8%, ZMH -2.7% (Wachovia downgrade to Underperform), AVCI -2.6% (profit taking after 7% move yesterday), ICI -2.4%, AKAM -2.2%, TIE -1.8%, SAP -1.8% (Cowen initiates at Underperform), GRMN -1.5%.
- Google, Yahoo, others team against click fraud - CNet
CNet reports after numerous class action lawsuits and criticism from advertisers, the major Web search cos finally announced on Wednesday plans to work together with two industry groups to quantify click fraud. The Interactive Advertising Bureau and the non-profit Media Rating Council said they are teaming with Google (GOOG), Yahoo (YHOO), Microsoft (MSFT), Ask.com, LookSmart and others to form the Click Measurement Working Group. The group's mission is to establish guidelines for what constitutes valid clicks and invalid clicks on ads. Guidelines can help the industry measure how prevalent click fraud really is. Third-parties who sell click-fraud combatting services to advertisers claim that click fraud rates are as high as 30 percent. Google and Yahoo counter that click fraud rates are minimal.
- AAPL Apple Computer teams up with Ford, General Motors & Mazda to deliver seamless iPod integration (68.16 )
Co announces it has teamed up with Ford Motor Company (F), General Motors (GM) and Mazda to deliver seamless iPod integration across the majority of their brands and models, making it easy for iPod users to enjoy and control their iPod's high-quality sound through their car's stereo system. With the addition of these models, more than 70% of 2007-model US automobiles will offer iPod integration.
- RACK Rackable Systems: Bullish outlook on the co's prospects appear well justified - TWP (19.29 )
Thomas Weisel says the general summary they can provide after 2 days with management is that the RACK story is not very well understood by the investment community and that their bullish outlook on the co's prospects (35-40%+ top line growth for several years with expanding margins seems likely to them) appear well justified, with strong long term pipeline of opportunity apparently in place. They say RACK is not losing one or more of its "Big 3" customers. All 3 are still ordering; Amazon was down as expected after strong rollouts, and 1 of other 2 is pausing to re-evaluate Intel. Firm also says RACK is unlikely to lose significant business and margin due to the Woodcrest transition.
- GRMN Garmin upgraded to Buy from Hold at Needham- tgt $108 (88.13 )
Needham upgrades GRMN to Buy from Hold with a $108 tgt saying they were frankly surprised by the market reaction to GRMN's strong earnings report yesterday. They say while GRMN's Aviation business was light in the quarter, they think the co made a strong case for this business rebounding sharply in 2H06. And while there will undoubtedly continue to be concerns around eventual margin erosion in the co's P.N.D business, the co's 2Q06 results demonstrated impressive margin resiliency. The firm says the combination of substantially raised estimates with a stock price that is below where it was following the 1Q06 report results in a meaningfully better risk/reward profile for the shares.
- Bank of England raises bank rate 1/4 point to 4.75%
- Cramer's 'Mad Money' Recap - TheStreet.com
On Wednesday's edition, Jim recommends Chevron (CVX) and says even though the co had everything working in it favor, it still missed numbers. It is the perfect example of a co that can do anything without the stock going lower. Shares dipped down and came back because with the rising price of oil, the co could do no wrong. Even though Cramer has emphasized buying best of breed, which in this case might be ConocoPhilips (COP), he said he's going to break the rules this time. Chevron might look like a bad oil co, but it has proven that it's invulnerable. If other oil companies reported bad numbers, they could go down, Cramer said. Next, he suggests staying away from Whole Foods (WFMI) and Rackable Systems (RACK). Finally, he is bullish on Fortune Brands (FO) and Masco (MAS), two cyclical plays on the refurbishment of homes for sale. Furthermore, he says they are still cheap and earnings aren't falling apart.
long AAPL, GOOG, WFMI; net short GRMN