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Qualcomm (QCOM) Loses A Big One

A Federal judge has told Qualcomm (QCOM) that it can no longer make chips based on three patents held by rival Broadcom (BRCM).

According to The Wall Street Journal "the chips are used in two kinds of third-generation cellular networks -- one called EV-DO, which Qualcomm developed, and another called WCDMA that is supported by a broader array of chip makers."

Reuters quotes Broadcom's general counsel as saying "Broadcom should not have to compete against companies that use Broadcom's own patented technology against us, and this injunction puts a stop to Qualcomm doing just that."

Douglas A. McIntyre

Backward & Forward, Cramer In 2007 To 2008

2007 was one volatile year and for now it appears that will be the norm for at least the start of 2008.  Everyone's favorite market pundit or least liked pundit is obviously Jim Cramer.  If you love Cramer or can't stand him it really doesn't matter.  He signed a new multi-year deal with CNBC recently.  Here are some of his major calls this year that will still be referred to in 2008:

Here were Cramer's TOP 9 STOCKS FOR 2007, with a call broken down for each one.  Borat would say HI FIVE on some and NOT SO NICE on others, as would be expected.  Cramer's 14,582 year-end DJIA target..... Friday's close was 13,365.87......although we did hit 14,279.96 on OCT 11, 2007.  Cramer also gave a batch of price targets on most of the DJIA components:

• Batch 1 (AA, MO, AIG, AXP, BA, T)
• Batch 2 (CAT, C, KO, DD, XOM, GE)
• Batch 3 (MMM, GM, HPQ, HON, HD, INTC, AMD, SHLD)

Cramer's Stock Picks FOR 5-YEARS OUT:

• Cramer's First Pick For Five Years Out: First Solar (FSLR, SPWR)
• Cramer's Second Pick For Five Years Out: MedcoHealth (MHS)
• Cramer's Third Pick For Five Years Out: Transocean (RIG)

SOME LISTS: His list of recession proof stocks compared to ours.  We are updating our
Defensive Stocks For The First Half Of 2008" currently.  Cramer gave a huge list of companies he expects to benefit from the alternative energy traders (SGR, FWLT, BWA, OMG, FSLR, FTEK, WFR, TTEK, ZOLT, BP, SPWR, CY, CPST, ITRI)... Jim Cramer pondered which US companies China would want to acquire, about 3 months before sovereign funds started buying into US companies.  Cramer's mortgage winners and losers...... Here were his MAJOR BULL MARKET STOCK PICKS (MHS, CVS, AGN, CELG, GENZ, CEPH, RIG, HAL, EMR, CAT, CMI, UTX, KO, PEP, CL, GS, SKS, VFC, UNP, CSX, BA), some of which are DJIA components.  Cramer produced a "MUST OWN" list of stocks, many of which are up significantly and some are down (WHR, BDK, ATI, BGC, HON, ASD, JCI, MDR, FWLT, CAT, TEX, DE, QCOM)

Cramer spent lots of time on International stocks that most US investors might not cover on their own.  He made a big call on Mercadolibre (MELI) (also BIDU, GOOG) with some emphasis on buying immediately, right before it made a huge run up.  Cramer's Hidden Video Game Investment Perfect World (PWRD, ATVI, ERTS, VIA) was one he said could run more than 50% for 2008.  Cramer made 5 TOP CHINESE PICKS (CEO, CHL, SSW, FMCN, BIDU, GMR).  We'll see in 2008 if any of his Canadian OIL TRUSTS get acquired in 2008 (BTE, CNE, PGH, PVX, PWE, AAV, GDI).  Cramer also went over his top picks from Europe for American investors (TOT, SI, ABB, PHG, BF)

ON TECHNOLOGY:  Cramer's NEW HORSEMEN OF TECH.... will the list change in 2008???  Did Cramer Say $1,000.00 on Google, Or Is It $600.00? That was in May 2007.  Cramer Gave Monster Price targets to Baidu.com (BIDU, GOOG).. will these targets change in 2008? Cramer was very positive on all the GPS stocks, although we'd expect that Cramer will change his tune in 2008 now that the holiday madness is behind us (GRMN, UA, CROX, NVT, TRMB, SIRF).

Would it be fair not to include the Barron's attack on Cramer from summer for those of you that criticize his every word?

ON WARREN BUFFETT.... Cramer noted that BROOKFIELD ASSET MANAGEMENT in Canada may be the next Berkshire Hathaway (NYSE:BRK/A) NYSE: BAM). Cramer reviewed 10 Warren Buffett stocks for analysis and then reviewed 10 More Warren Buffett stocks:

• Stock Tickers: BRK/A, BNI, KO, PG, WMT, USG, AXP, WFC, MCO, JNJ, COP
• Stock Tickers: BRK/A, UNP, USB, MTB, ASD, NSC, WLP, UNH, IR, HRB

Will his buyout of ALCOA (AA) prediction come true in 2008??? Cramer gave a list of stocks that had bought back so much stock that they might be taking themselves private.

Join our free email distribution list for other Cramer calls or for updates we send out regarding IPO's, spin-offs, restructuring, reorganization, activist investors and more.

Happy New Years from the 247WallSt.com team!

Jon C. Ogg
December 31, 2007

Merrill Lynch (MER) To Raise More Capital? Or Sell BlackRock Stake?

Press reports are saying that Merrill Lynch (MER) may have to raise more capital to offset huge Q4 losses. Merrill Lynch & Co. is in talks with Chinese and Middle Eastern sovereign-wealth funds to raise capital by selling another "big" stake in the company, Britain's Observer reported. The US investment company has already taken in more than Singapore's Temasek Holdings.

Merrill's stock is down by almost half this year to $53. Another raise of capital could create dilution which would take the shares lower.

The company has another option, and it would be surprising if it is not on the table. Merrill owns about half of money manager Blackrock (BLK), a company with a market cap of over $14. Shares in BLK are trading at $219, near their 52-week high.

Time for Merrill to stop selling stock and unload one of its assets.

Douglas A. McIntyre

Europe Markets 12/31/2007

Markets in Europe were mixed at 7.20 AM New York time

The FTSE fell .5% to 6,444. Barclays (BCS) was down 1.1% to 501. BHP Billiton (BHP) was down 1.1% to 1544.

The CAC 40 fell .4% to 5,603. Alcatel-Lucent (ALU) fell 1.8% to 4.89. ST Micro (STM) fell 1.2% to 9.73.

Data from Reuters

Douglas A. McIntyre

Biggest Change In US Markets: "Small Ball" Companies Rise To The Top

Over in the world of baseball where steroid-built great apes hit 60 home runs a season, there is still a place for what is known as "small ball". That approach to the game is based on hitting singles, bunting, stealing bases, and playing superior defense.

In the US stock market this year, "small ball" beat steroids at almost every turn, and that is likely to continue going into 2008. GM (GM) was a great home run hitter in 2007. It cut $9 billion in operating expenses and got as good a UAW contract as anyone could imagine. But, it sells a product which costs $25,000. In a tough economy most consumers can't handle that.

In the financial sector, stock market success has been based on the ability to lend billions of dollars to consumers, LBO companies, and funds that hold risky financial instruments. It is another industry that deals in huge sums and it had a bad year.

In the capital goods area, the market saw some of the same. Cisco (CSCO) sells routers that can go for six and seven figures. Its customers are finding that a little rich and its stock will end the year near a low. Boeing (BA) relies on huge orders. A slight product delay, like the one it hit with its 787, will tank the shares every time. One of those planes costs about $250 million. 

Yahoo! (YHOO) has a problem that is not dissimilar. Most of the display advertising campaigns it runs cost hundreds of thousands of dollars. Car and financial service companies spend a lot of that money advertising on the Internet.

In the world of "small ball", Google (GOOG) did well. Most of the customers for its revenue driver, Adsense, are small and medium-sized companies. Many are only investing a few thousand dollars a year buying the Google text ads. But, the firm has hundreds of thousand of those little customers.

McDonald's (MCD) is the quintessential "small ball" player. It ends the year near a 52-week high. The company still has Dollar Meals. A consumer can feed a family of four at the fast food place for $25. Procter & Gamble (PG) ends the year near its high. Razors and soap will always sell, and they are cheap.

Pepsi (PEP) and Coke (KO) leave 2007 near their 52-week tops. A soft drink still costs $1 most places. BUD will close the year near its high.

The lesson of stock prices in 2007 will probably carry well into 2008. Companies that sell expensive things to consumers and businesses are having trouble doing well. People in the US feel poor now. So do many companies. Fear closes the pocketbook.

The hero of the broken economy is a heavy set man who has just had a shave. He holds a beer in one hand and a hamburger in the other. He just spent $15, and he does not feel that he has to spend another dime.

Douglas A. McIntyre

Banks Go To Market To Raise Money In Record Numbers

The FT writes "according to data from Dealogic, commercial and investment banks raised equity worth $83bn in the final six months of 2007 – an increase of more than 20 per cent on the same period last year." That does not include the money that they have raised from sovereign funds.

The reason behind the need for capital is clearly the disintegration in the market for sub-prime based financial instruments. But, where that ends is still not clear. That means big banks and investment firms will be in the market for extra money in 2008.

In terms of potential dilution to current shareholders it is worth breaking down what may happen. Bear Stearns (BSC) has a market cap of under $13 billion. If it has to raise $5 billion, current shareholders could see the stock price fall from $87 to under $60 based on dilution alone.

Over at Countrywide (CFC), the problem could be worse. The mortgage lender only has a market value of $5.25 billion. It would only have to raise $2 billion to take its shares from their current low of $8.75 to below $5. With a market cap of $12 billion, the same kind of math could apply to Washington Mutual (WM).

To put the matter plainly, if US financial institution raise another $50 billion during 2008, the dilution could knock down the value of holdings by current shareholders by at least that much.

Some financial institutions could cut the value of their current shares by as much as half.

Douglas A. McIntyre

Markets In Europe And Japan Fall Apart For The Year, The US Holds Its Own

The Nikkei 225 will end the year down about 11%. The FTSE 100 will be slightly better than flat. The Swiss market will be down 3% and a number of other indices in Europe will close the year in the red.

It is perhaps a bit cruel to compare these markets to the Shanghai Composite, which is up 100% in 2007. Comparing them to the US markets may be more reasonable.

What happened to the old world exchanges? Clearly they had financial shares which fell due to the sub-prime financial troubles. Their car companies may not have done well because of the pullback in spending in many regions. Even shares in Toyota (TM), the most successful car company, are down 20%. The large pharma companies in these regions have done badly because of competition from generics.

But, the real reason that Japan and Europe are down is the same reason that they are not likely to recover. The saving grace for US markets has been tech. Japan and Europe do not have it, and it is almost certainly too late to get it. That is not to say that Sony (SNE) and ST Micro (STM) are not good companies. But, they are not in the league of Microsoft (MSFT), Cisco (CSCO), Google (GOOG), Intel (INTC), or Hewlett-Packard.

Europe and Japan will under-perform the US markets, perhaps from years, because they do not have the key industry that drives growth--tech. It may be an accident of history, but hardware, software, and the internet were largely built in the US and it remains that way.

As a coda, it is worth remembering that much of the rise in the markets in China is based on oil, telecom, and manufacturing companies. They are no less vulnerable than their counterparts in Europe. It is just that the time horizon is different.

Douglas A. McIntyre

Nintendo's Secret Weapon: The DS

The Nintendo DS is three years old. By the standards of video game consoles, that is a life time. But, according to The New York Times in the US "the hand-held DS outsold the Wii in November 1.53 million units to 981,000, according to sales figures compiled by NPD Group."

That means that the DS is outselling not only the Wii but also the Sony (SNE) PS3 and Microsoft MSFT) Xbox 360. Those game consoles cost about three times what the DS does, but they are also much harder to use.

The lesson of the DS may be that the core "gamer" universe is not getting much bigger. It is populated by 20-somethings and teenagers which can make their way through a thick instruction manuals, if they need one at all. They have friends who are up at all hours to play on the internet. They understand the complex video games that have come to market in the last five years For them, the $500 investment in an Xbox 360 or PS3 is worth it.

That leaves million of people who like to play more simple games, games that can be enjoyed by younger children and older adults. This is a huge market, and its wants a video game unit of its own, one that is easy to use and easy to carry.

The dynamics of video gaming are changing, and an old console from Nintendo is sitting right in the sweet spot.

Douglas A. McIntyre

This Week on Stockhouse December 24 to 28

Markets wrapped up the final full trading week of the year on a minor note as the credit crunch of 2007 continued to play out. Major financial institutions began to look at covering credit-related losses through asset sales, while countries all over the world digested the news of the assassination of Pakistan’s Benazir Bhutto. Gold prepared to end the year on a high note as it looks to trade above $800 at month’s end for the first time in history.

On Monday…

Nancy Zambell of Financially Fit encouraged investors to spend some time ensuring that their portfolios are up to snuff for the end of the year in It's the season for your portfolio check-up!

Luke Brocki focused his sights on a few uranium companies that grabbed some end-of-year gains in Late December uranium stocks rally.

A look at the Bakken oil formation and the companies active there came courtesy of community regular Stacey Laliberte in Saskatchewan's red-hot Bakken oil formation.

More community news came from littleguy123 as he finished off a multi-part series on the new “Axis of Evil” with some interesting theories about high-flying bonuses for CEOs of troubled financial companies, in Buying “loyalty” with billions in “bonuses”.

On Tuesday…

Merry Christmas!

On Wednesday…

Holiday festivities continued with Boxing Day in Canada.

Then on Thursday…

Matt Stiles put his neck on the line for the betterment of all when he recapped his predictions, successful or not, for 2007 – and then dove in with more for 2008. A great end-of-year read from one of Stockhouse’s own is called Themes for 2008, part one.

Buzz returned to collect thoughts from SH members on the red-hot commodity known as potash in More life left in potash plays.

For news about small stocks that made big moves in Thursday trading, please read the

Stockhouse U.S. Small and Micro-cap Stock Report.

Finally, on Friday…

Part two of Matt Stiles’ six-part Themes for 2008 series found the globe-trotting Canadian hunkering down for a heart-to-heart with Canada’s economic prospects for the New Year.

Stockhouse staff writer Sean Mason delivered a year-end wrap-up of ten of the most sought-after stocks on Stockhouse for 2007. Part one, called Top-10 stock searches of 2007, appeared Friday, with part two scheduled for next week.

In Buzz on the Boards, TD enjoyed the spotlight as one of not very many financial institutions that have weathered the credit storm better than most, in TD takes the high road.

Media Digest 12/31/2007 Reuters, WSJ, NYTimes, FT, Barron's

According to Reuters, Singapore says that it has no interest in controlling UBS (UBS) in which it has made a large investment

Reuters writes that IBM (IBM) is in talks to buy Israeli start-up XIV Information Systems for $300 million.

The Wall Street Journal writes that the British government is probing possible bribes paid by Glaxo and AstraZeneca to the regime of Saddam Hussein.

The New York Times writes that in battle between Sony’s (SNE) Blu-ray nor Toshiba’s HD DVD high definition formats, most consumers are staying on the sidelines.

The New York Times reports that the once hot market for handset ring tones is slowing down.

The New York Times writes that the Nintendo DS is even more popular than the Wii in the US.

The New York Time writes that the price of oil has firmed above $96.

The FT writes that commercial and investment banks raised equity worth $83 billion in the final six months of 2007.

Barron's writes that BNY Mellon is undervalued as a play for global wealth management.

Bloomberg writes that European stocks are heading for the first annual drop since 2002.

Douglas A. McIntyre

Asia Markets 12/31/2007

Most markets in Asia were closed.

The Hang Seng rose 1.6% to 27,813. China Mobile (CHL) rose 2.2% to 137.9. CNOOC rose 3.1% to 13.28.

Data from Reuters

Douglas A. McIntyre

In 2008, A Train Wreck For Car Sales (GM)(F)

The final month of 2007 looks pretty bad for car sales, and going into next year, things could get worse.

According to MSNBC "December sales are expected to fall around 4 percent, which would bring the full-year total for U.S. auto sales to 16.1 million vehicles, the lowest volume since 1998."

Some Wall St. analysts see Ford's (F) sales falling as much as 12% in December. GM (GM) could be down more, due to a drop in sales to rental fleets. It is the kind of "bad news is good news" that Detroit passes around these days. We don't make money selling to rental fleets, so that business is being cut. What is not mentioned in the same breath is that no one else stepped up to buy those cars.

In a recent interview Jerry York, an adviser to billionaire investor Kirk Kerkorian; financier Wilbur Ross; and Thomas Stallkamp, a former Chrysler president said that 2008 vehicle sales in the US could fall as low as 14.5 million. That could suck well over $35 billion in revenue out of the market next year.

The car experts at Edmunds believe that there are other trends which will undermine new car sales and profits next year. Incentives are expected to stay high. On US models, this could average about $3,000.

One of the most important trends which could undermine American new car sales is the moved to certified pre-owned vehicles, the high end of the used car market. Edmunds writes "certified pre-owned vehicle sales will rise as consumers will look to spend less and seek a greater sense of security in their next used vehicle purchase."

Ford and GM are trading near 20 year lows. It is hard to imagine, but that could get worse in 2008.

Douglas A. McIntyre

Why Are So Many Turnarounds Failing? (EK, PFE, RAD, TYC)

We compiled a list of many companies that just haven't been able to turn themselves around.  On some we offered a road out and on others we feel sorry for the management because getting out of the holes that the companies have dug just might not be possible.

Most of these that were covered ended up being tech stocks of some sort as many of those have remained in the gutter. But there are many major economy stocks that are underperforming against their potential.  These non-technology companies in here still have a shot at executing a turnaround, but after years of failure you can imagine an activist or worse might start rearing its head.  These are not at all the only turnarounds that could manage to turn their ships, but these are some that we covered.

Eastman Kodak (NYSE:EK) is in a pickle and frankly we are shocked that shareholders haven't revolted against Antonio Perez as CEO.  He was one our CEO's TO GO for 2007, although we didn't add him on the 2008 list.  This company has to rapidly implement its layoffs and restructuring rather than dribbling it out over a 10 year period.  They need to go back after more of the digital space.  They are trying, but nowhere near enough.

Pfizer (NYSE:PFE) has seen its share of skepticism.  It has been dead money and the new CEO is running out of "getting used to the job" time.  What is interesting is that a boost could come straight from a couple of acquisitions of companies with blockbuster drugs about to hit market.  Their drug pipeline might also not be as bad as we think. If the company gets off its duff, it could be one of the better drug companies with upside.  It was also reviewed under our 2008 Dogs of the Dow stocks.

Rite Aid (NYSE:RAD) has been another utter and complete failure of a turnaround.  This new CEO is actually very well respected and very well thought of.  She also didn't make up excuses in the last two reports as to fake reasons for a failure.  She needs to make 2008 the year of execution of a turnaround.  It is possible.  This was also Jim Cramer's #2 Speculative Stock for 2007.

Tyco International Ltd. (NYSE: TYC) is a turnaround that even though it started its turnaround has only managed a 360.  Its Tyco Electronics (NYSE: TEL) and Covidien (NYSE: COV) spin-offs have yet to rapidly reward shareholders.  The good news is that by early 2008 we will have at least two quarters of operations under the belt at each unit.  After that we expect that analysts will be able to adequately make their decisions on how to assign earnings targets.  The Tyco-stub is either one hell of a value stock, or it's just a value trap.  We'll know soon. 

These stocks may all be covered in newsletters because many now fit in the 10 STOCKS UNDER $10 newsletter category and many fall under the Special Situation Investing Newsletter category. 

On a separate note, we gave two different groups of stocks whose shares could actually double in 2008.  Our first list was of the more active names that are low-priced, and our second list was the screened group of stocks that was of known stocks that are just not quite as actively traded.  Lastly, we also gave a list of stocks that could drop another 50% in 2008 if these operators stumble or others that just don't get their you know what together.

2007 had its share of great IPO's and stinky IPO's.  We showed a solid list of IPO's that performed with stellar returns that came public in 2007.  And of course there is that smelly and stinky list of IPO's that lost more than half of their value since coming public in 2007 as well.  Believe it or not, some of these could be winners if they manage to do the right thing.

We issued a GUIDELINES for turnarounds.  For starters we avoided financial stocks, lenders, housing related, autos, and most retail names because the problems there are so bad that they will get fixed when the industry pressure allows them to get fixed.  Those might continue there march south until finally too much is too much, and while we feel that may be close we aren't hanging our hat on any date yet.  It just hasn't worked.

You can join our free email distribution list for previews on other IPO's, spin-offs, reorganizations, restructurings, merger-arb, speculation, and other aspects of M&A.  Here you may get some forethoughts on developing situations before the full data is published.

Jon C. Ogg
December 29, 2007

52-Week Low Club (December 28, 2007)

Some of these stocks hit 52-week lows and recovered off of lows so they won't have a low close.  But these did all touch or breach the 52-week lows.  At the end we also broke out retail stocks, financial stocks, airlines & transports, and hotels.  A separate report could have been compiled for REIT's as well, but many of those were left off because of room or volume. There were enough 52-week lows today that you might even wonder if there had been a mini-crash in the markets.  Here are the 52-week lows for December 28, 2007:

• Advanced Micro Devices (NYSE: AMD)... imagine if the company got Hector Ruiz to leave.
• American Greetings (NYSE: AM)...again.
• AstraZeneca (NYSE:AZN)... new entrant.
• Carmike Cinemas (NASDAQ:CKEC)
• ChipMOS (NASDAQ:IMOS)
• Corp. Office Property (NYSE: OFC)
• Cryptologic (NASDAQ: CRYP)
• Diebold (NYSE:DBD)
• Fortune Brands (NYSE:FO)
• Group 1 Auto (NYSE: GPI)
• Infinera Corp. (NASDAQ: INFN)
• Introgen (NASDAQ:INGN)
• Japan Smaller Cap Fund (NYSE: JOF)
• Lamar Advertising (NASDAQ: LAMR)
• Legget & Platt (NYSE: LEG)
• Martha Stewart (NYSE: MSO)
• Marvell Tech (NASDAQ:MRVL)
• Mattel (NYSE:MAT)
• McClatchy (NYSE:MNI)
• Micron Tech (NYSE:MU)
• NGAS Resources (NASDAQ:NGAS)
• Nortel Networks (NYSE:NT)
• Owens Corning (NYSE:OC)
• Omnicare (NYSE:OCR)
• Prestige Brand (NYSE: PBH)
• PC-Tel (NASDAQ:PCTI)
• Ruth's Chris (NASDAQ:RUTH)
• SanDisk (NASDAQ: SNDK)
• Theravance (NASDAQ:THRX)
• Tractor Supply (NASDAQ:TSCO)
• Wendy's (NYSE: WEN)
• World Fuel Services (NYSE:INT)
• U-Store-It (NYSE:YSI)

Retail Stocks on 52-week lows: Ann Taylor (NYSE:ANN), Big Lots (NYSE:BIG), Borders Group (NYSE:BGP), Bon Ton Stores (NASDAQ:BONT), Chico's FAS (NYSE:CHS), Finish Line (NASDAQ:FINL), Liz Claiborne (NYSE: LIZ), Macy's (NYSE: M), Office Max (NYSE:OMX), Petsmart (NASDAQ:PETM), Stage Stores (NYSE:SSI)

Financial stocks on 52-week lows: Bear Stearns (NYSE: BSC), Citigroup (NYSE:C), Canseco (NYSE: CNO), Discover Financial (NYSE: DFS), Fifth Third Bancorp (NASDAQ:FITB), Fortress Investment (NYSE: FIG), MBIA Inc. (NYSE: MBI), Washington Mutual (NYSE:WM)... urgh!  When does it stop?

Airlines/Transports on 52-week lows:  Airtran Holdings (NYSE: AAI)...again.  Did they launch a Friends Die Free rewards plan?  Continental Airlines (NYSE:CAL), Fedex (NYSE:FDX), Mesa Air (NASDAQ:MESA), Northwest Airlines (NYSE: NWA)... near $100 oil is a real pain.

Hotels Hitting 52-week lows: Host Hotels (NYSE: HST), Lasalle Hotel (NYSE: LHO), Starwood Hotels (NYSE:HOT), Sunstone Hotel (NYSE: SHO), Wydham Worldwide (NYSE:WYN).  Maybe these all wish they could get the private equity buyers back in the sector.  If only they could still borrow.

These CEO's new year's resolutions are all the same: "In 2008 I want to keep my stock off the 52-week low lists."

Jon C. Ogg
December 28, 2007

Macy's: Growth Through Closures.. Expect Others To Follow (M, KSS, SHLD, TJX, JCP)

In a slowing retail environment, Macy's (NYSE: M) has decided it's time to close some stores.  This may not sound like a great 'growth strategy' for a retailer, but some companies reach the size that sometimes growth has to occur during actual contraction.  It has slated 9 stores to be closed. 

Macy's isn't stopping all growth plans, although if this review gets sharper it could lead to a flat store count through time. It opened 10 new stores and one furniture gallery in 2007. In 2008, Macy’s expects to open five stores, with an additional six to eight new locations currently planned for 2009.  Macy's currently operates more than 850 department stores, so this is a small drop in the bucket and will only have a limited impact in longer-term sales models.

Below are the nine stores getting the boot:

• Washington Square in Indianapolis, IN (opened in 1974);
• Prien Lake Mall in Lake Charles, LA (opened in 2003);
• Rolling Acres Mall in Akron, OH (opened in 1978);
• Canton Centre in Canton, OH (opened in 1968);
• Randall Park Mall in North Randall, OH (opened in 1976);
• Crossroads Mall in Oklahoma City, OK (opened in 1986);
• Valley View Center in Dallas, TX (opened in 1973);
• Sharpstown Center in Houston, TX (opened in 1961);
• Family Center at Riverdale in Riverdale, UT (opened in 2003).

I don't know if these other stores are in good areas that are just being used for cost cutting, but if you have ever been to Sharpstown Mall in Houston you might not doubt why the company is pulling out.

It sure sounds like Macy's may have something in common with winter skinny dippers: shrinkage.  But in all honesty and joking aside, Macy's may actually need to review even more stores for possible closure if the performance or the retail environment continue to soften.  With their stock hitting 52-week lows you can expect reviews to be stricter and tighter in a weak 2008.

This may have other ramifications in the retail superstore centers and mall operators.  There are many redundant stores in major cities and many geographic locations throughout the country that just aren't worth the effort for some retailers to continue in.  If you want to try to guess who else may start the downsizing of underperforming stores in a weaker economy take a look at the competitors:

• Kohl's (NYSE:KSS) operated 834 stores as of the end of last quarter.
• Sears (NASDAQ:SHLD), as of February 2007, operated many more stores than Macy's and we know Eddie Lampert wants to start making money again on his investment.
• TJX (NYSE: TJX), as of November 2007, operated 851 T.J.Maxx stores, 778 Marshalls, 287 HomeGoods, 130 A.J.Wrights in the U.S. alone with others located elsewhere in Canada and Europe.
• J.C.Penney (NYSE: JCP) as of November 2007, had more than 1,000 stores in the U.S. territory.

If this gets Macy's off that 52-week low club, it's hard to imagine that other department store operators won't follow suite with selective closures in the 1% to 2% area.

Jon C. Ogg
December 28, 2007

Shaw Group's SEC Inquiry Ends (SGR)

The Shaw Group Inc. (NYSE: SGR) has just announced that it has received notification from the Securities and Exchange Commission that the SEC's Division of Enforcement has completed its informal inquiry.  The company first announced this inquiry in June 2004.

The Division of Enforcement does not intend to recommend any enforcement action.  This had been a hanging chad so to speak, although after having dug around into the scope of this we had surmised that nothing of any consequence would really come from this.

Shaw Group shares closed at $59.77 Thursday, and while it hasn't yet traded it appears that shares are indicating up around $60.50 initially.  The 52-week trading range is $28.60 to $77.30.

Jon C. Ogg
December 28, 2007

2008 Tech Kickoff: Macworld Versus Consumer Electronics Show, CES (MSFT, AAPL, INTC, MCZ, S)

January is always an interesting month for gadget lovers, techies, programmers, computer geeks, gamers, and more.  The year is always kicked off with the biggest event of the year as the Consumer Electronics Show, the CES, starts the year.  A week later we get the beloved Macworld exposition from Apple (NASDAQ: AAPL).  These are both huge events.  CES is a bigger event as far as an entire industry in concerned, and Macworld has been  one of the launch platforms for Steve Jobs' new product directions.  We wanted to give you a breakdown of some of the events and resources in one central location:

CES, the Consumer Electronics Show January 07 to January 10, 2008 in Las Vegas:

• Homepage
• Press Center
• CES Blog
• BUSINESSWIRE center for press releases
• FULL EXHIBITOR LIST
• WiMAX official joint launch from ASUS/Intel/Sprint (NASDAQ: INTC) (NYSE: S)
• MadCatz (AMEX: MCZ)demonstrating new accessories for Xbox360 and PS3.
• Sunday, January 6, 2008 at 6:30 p.m. Pre-show Keynote: Microsoft (NASDAQ:MSFT) Chairman Bill Gates.  Click here for a full list of keynote speeches and address.

List of some public exhibitors at CES: 8X8, Amcor, Analog Devices, Audiovox Electronics Corporation, Broadcom, Corel, Delphi, Digicom Digital, Directed Electronics, DIRECTV, Dolby Laboratories, Entropic Communications, Gemstar-TV Guide, Imation Corp, Immersion Corporation, iRobot, Jabil Circuit, Leggett & Platt, LG Electronics, LG.Philips LCD, Mad Catz Interactive, Microvision, Motorola, Palm, Philips, Silicon Image, Synaptics, Texas Instruments, Visteon, Xilinx, XM Satellite Radio...

MACWORLD: Macworld will be held at San Francisco's Moscone Convention Center January 14-18, 2008.  Keynote address will be held on Tuesday, January 15, 2008 at 9:00 a.m. at Moscone West.

• Homepage
• Keynote
• Exhibit floor featuring over 350 companies
• Demo of Microsoft (NASDAQ: MSFT)Office 2008 for Mac before it hit hits the shelves....
• MACWORLD Blog
• HERE is the Press Center to watch.......

CES has a one week jump so by the calendar alone it will already have more data on exhibitors and the exact schedule.  But these are the two tech events to watch in the first two weeks for technology companies in 2008.

Jon C. Ogg
December 28, 2007

Technology CEO's Who Need to Go in 2008 (ALU, AMD, BBND, CC, SYMC)

2007 has been a volatile year in the stock market, but there are many key technology CEO's who just aren't making a passing grade. 247WallSt.com has issued a brief list of some recognized CEO's in technology whose shareholders would likely be rewarded if the CEO was axed or stepped down.  We think these CEO's have a great shot at getting the ax in 2008.

We decided to run a GUIDELINES FOR CEOs TO GO.  Most of these CEO's have a recent history of disappointment, and calling a CEO out can't be just over stock prices. The CEOs have proven their need to be called on to go. Out of 24/7 Wall St.'s CEO list for 2007, six of the eight that we called on to be fired were fired or finally forced out.  Here's the full list, with a brief sentence and a link to the full explanations for each:

• Amir Bassan-Eskenazi of BigBand Networks (NASDAQ: BBND) has no street-cred left.  Usually it takes a long time to do a job this badly and an email from a former engineer there sent comments that were more harsh about him than we'd publish.  BigBand has been one of the worst IPOs of 2007 (full list here).  This management of the company has alienated everything that would yield any trust. Here's why the founder needs to go become a full-time golf hobbyist.
• Hector Ruiz of Advanced Micro Devices (NYSE: AMD) was a simple choice for a tech CEO who needs to go.  Even though he wants to stay that he won't be allowed to. Intel Corp. (NASDAQ:INTC) isn't just winning, it's running away with trophy from the processor war. Here's why he's toast, even if he won't admit it. 
• Patricia Russo of Alcatel-Lucent (NYSE: ALU) isn't here because we needed to be an equal opportunity offender. We feel that she is only still listed as CEO because she is American and can be used to keep CIFIUS oversight happy.  The French now own so many American patents from that merger that Alcatel needs to pretend to oversight regulators that Lucent is still around. Alcatel needs a new token American, and here's the backgrounder.
• Philip Schoonover of Circuit City (NYSE: CC) needs to scoot over. Can you count a retailer as a tech?  Yes, if that is what they sell.  Scoonover figured out the best way to stop selling technology there and the last results were so shameful that the company will likely lose money for the Christmas quarter.  Here's why employees of Circuit City put this on the Circuit City employee Intranet.
• John Thompson of Symantec (NASDAQ: SYMC) was a tough CEO to put on this list.  I like him personally and professionally as a CEO that seems to be a very straight shooter.  The diversification strategy away from security alone was one we thought would work out, but Wall Street was against this from the start because of no cost real cutting opportunities and because of a focus shift.  The acquisitions since have been dismissed by Wall Street and this tech stock is no longer considered a growth story.  Wall Street talks, here's the full piece on it.

Many of these names routinely end up in the 24/7 Wall St. "10 Stocks Under $10" weekly newsletter.

Jon C. Ogg
December 28, 2007

Citigroup (C) May Have To Sell Smith Barney

The market was full of talk yesterday about Goldman Sachs predictions that Citigroup (C) might have to write-off another $18.7 billion in CDOs in the fourth quarter. Word was that the big bank may have to cut its dividend by 40%.

Today's Wall Street Journal writes that Citi and HSBC (HBC) are considering selling some of their modest-sized units. For Citi that might include its auto loan business or stakes it owns in financial services companies in South America. It is not clear what those businesses would bring, but it is not likely that the figure would be $5 billion or $10 billion.

Citi does have a business that is fairly independent of its retail banking, commercial bank, and investment bank operations. Smith Barney has 9.3 million client accounts and those represent almost $1.6 trillion in assets. Compare that to TD Ameritrade (AMTD) which has 6.4 million accounts and about $300 billion in client assets.

AMTD has a market cap of $8 billion. Smith Barney is probably worth 50% more than that, or $12 billion. A bank which is better off, like Wachovia (WB)  which also has a large broker network, might view the asset as attractive.

Citi could obviously use the $12 billion and it is not clear that parting with Smith Barney does the firm any real harm. It is likely to be the first big asset to go.

Douglas A. McIntyre

Turnarounds That Haven't Turned Around: Tyco International (TYC, TEL, COV)

Tyco International Ltd. (NYSE: TYC) is a hard turnaround to call as one that hasn't turned around because it has already begun its long-term initiatives to enhance shareholder values.  The problem is that it has been unsuccessful so far.  The company completed the spin-off of Tyco Electronics (NYSE: TEL) and Covidien Ltd. (NYSE: COV) on July 1, 2007.  Because of these spin-offs, Tyco was a much harder stock to cover and to use valuations and historical data on.  In fact, analysts from large brokerages and bulge bracket firms have had a hard time breaking down the de-conglomerized conglomerate.  We also want to caution that many figures used actually vary from source to source and this made analysis not as straightforward here in this case.

First, let's look at the spin-off companies.  Tyco Electronics (NYSE: TEL) traded at $39.81 on a dividend adjusted basis at the end of July 2 and have fallen down to the mid to low-$30's before a recent recovery. But even north of $37.00 shares are still down.  Tyco Electronics has a equally mixed coverage spread between Buy/Hold and an average price target of roughly $41.00 from analysts.  Covidien (NYSE: COV), the medical products entity, shares traded at $43.24 on a dividend adjusted basis at the end of July 2 and have traded in mostly in a high-$30's to mid-$40's basis since.  With a $44+ handle this one still has a mixed verdict depending upon whom you ask.  Covidien has a mixed opinion from a thin group of analysts and an average price target of roughly $47.50.  It seems that offspring aren't being thought of as great growth vehicles.

But back to Tyco International Ltd. (NYSE: TYC).  Tyco International shares took a serious hit in late 1999, but they recovered sharply and hit new highs in 2001.  By early 2002 the accounting scandals and the Koz issues came full circle and shares were crushed.  On an adjusted basis the stock lost more than two-thirds of its value.  2003 to the end of 2004 were great years to own shares, but this hasn't really been the case since then.

Back before these spin-offs were completed, we noted how there appeared to be a phantom premium in Tyco shares just because of the hype around the break-up and because of the craze surrounding private equity and shareholder initiatives.  What appears to have happened is that now the street has given it a more proper valuation or at least a more realistic one, and as we noted not all bad stories have to have sad endings.

On an adjusted basis Tyco International (NYSE:TYC) shares were over $50 at the July 1 date, but they have never been back.  Shares trade around $40 now and have been as low as $38-ish over recent weeks.  If you trust the "average price targets" from analysts, that appears to be around $50.00 from a much smaller group than in prior years.

Just last week a court approved some $3.2 Billion in investor class action law suit settlements over the accounting fraud took the company down.

We do caution against using any solid earnings forecasts because many analysts have not fully adjusted their opinions to reflect the "new" Tyco in a post spin-off world.  First Call has Fiscal September-2008 EPS at $2.61 (a 15.5 forward P/E ratio) and fiscal September-2009 EPS at $3.24 (a 12.5 forward P/E ratio), although we still question some of these since the spin-offs.  If the company can achieve those estimates, then there are few who could argue against this being one of the better value plays out there.

Most of our "turnaround stocks that haven't turned around" are troubled companies in troubled predicaments that may have a very hard time making a turnaround come to fruition.  But Tyco may be one of the exceptions.  That phantom premium may be in the rear view mirror.  Its value is also now easier to see since the spin-offs have been completed and are basically two quarters on their own.  Who knows, maybe 2008 to 2009 will be Tyco's time to shine.

Jon C. Ogg
December 28, 2007

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The Case For $150 Oil

The killing of Benazir Bhutto and a drop in oil supplies in the US moved oil above $96 overnight. Trouble between the Kurds and Turks contributed as well. But, none of these things has any direct bearing on a significant interruption in the oil supply.

Several pieces of analysis from the US government's Energy Information Administration and the International Energy Agency see crude demand rising virtually every year for the next decade. Oil producing nations like Saudi Arabia and Mexico are using more crude to build their own economies, leaving less to export.

That leaves the issue of what would happen if there were a real disruption of supply against spiking demand from the US, China, and other oil hungry economies.

A drop in supply of three to four million barrels a day would affect 5% of oil availability. An interruption of the flow of oil from Nigeria is about half of that. A cut of oil from Iraq would be a little less.

In the freak economics of oil pricing, having 5% of supply off-line would increase prices by much more than 5%. News which has little effect on oil supply pushes can push crude prices up by $3 or $4.

Would a real catastrophe move oil up 50%? The man who knows that does not exists. But, the psychology of oil prices is perverse.

Douglas A. McIntyre

10 More Stocks That Could Double In 2008

It takes a lot for an active stock of an already established company to see the price of its shares double.  In fact, it usually means that a company has posted a significant recovery or that something incredible happened that wasn't factored into traditional investment models.  Stocks that double are also frequently deemed as clunkers full of problems that staged a significant recovery.  But that has also been used as a description for many key companies like Apple and many more.

We created a primary list recently (see below), but our screen of stocks that could double yielded over 50  candidates and we wanted to run some of the less active stocks in this category.  Almost all of these are still quite active, so only a few may not ring a bell.  Here is the second list of stock candidates that could double with the explanations if the stars line up right inside each company or if certain outside developments come to fruition:

• Capstone Turbine (NASDAQ: CPST); Dialysis Corp. of America (NASDAQ: DCAI); Palomar Medical Technologies Inc. (NASDAQ: PMTI); Qwest Communications International Inc. (NYSE: Q); Sanmina-SCI Corp. (NASDAQ: SANM); Smith & Wesson Holding Corp. (NASDAQ: SWHC); Travelzoo Inc. (NASDAQ: TZOO); YRC Worldwide (NASDAQ: YRCW);  Websense Inc. (NASDAQ: WBSN);  Xinhua Finance Media Ltd. (NASDAQ: XFML).

Capstone Turbine (NASDAQ: CPST) is one of those stocks which could actually make a significant comeback. This one used to trade many multiples higher.  We've covered this one in our "10 Stocks Under $10 Newsletter" for subscribers.  It was at $1.25 or $1.30 at the time and shares now sit close to $1.70.  This company is now producing revenues and its turbines are getting significant interest.  The initial re-screen on this one came to us after Lazard Capital Markets gave this a call for the stock to double to $2.50 in its alternative energy coverage.  After we dug around and reviewed all the past data and put in our own thoughts on alternative energy, we think that instead of this hitting $2.50 that it has a shot at being able to surge past that level.  This is highly dependent upon it announcing new orders, and recent customer order activity has us behind this one.

Dialysis Corp. of America (NASDAQ: DCAI) is another company that has fallen from grace. Shares were north of $30.00 back in 2005 and it's seen its share of ugliness since then.  Shares are currently close to three-year lows.  A double from today's prices would barely get it above the $14.16 52-week high.  The $78 million market cap makes this one trade close to three-times book value and under one-times 2008 revenues.  But we think that the company may actually have to go do a dilutive capital raise first so it can open more facilities.  This has severe risks tied to reimbursement rates, so any cuts in that area would drive this lower.  The problem of today's treatment is that kidney dialysis is really the only option for renal patients with kidney failure and there isn't another viable alternative widely available to the masses and widely covered by insurance.

Palomar Medical Technologies Inc. (NASDAQ: PMTI) is a risky cosmetic laser maker that could roar or flop in 2008. With shares under $16.00, this stock could double and still be down more than 40% from its $55 highs seen earlier in 2007.  It and P&G (NYSE: PG) recently agreed to extend the Launch Decision of a home-use, light-based hair removal device for women until no later than February 29, 2008 in place since February 2003. Gillette had until January 7, 2008 to make the Launch Decision and it is likely that this will end exclusivity.  Lasers are a competitive business and it will have to really ramp its sales overseas for this to double again.  But if the company gets another critical supply deal and if it secures this current P&G deal in limbo, then this could become one of the explosive growth prospects again.  If not, well then this could slide further down even if many feel the worst has been priced in.

Qwest Communications International Inc. (NYSE: Q) has had a rough time since September and it has only traded above $10.00 for a very brief time period in the last 5-years.  But it recently reestablished its dividend, and the 'perceived' yield was actually higher than the dividend of land-line rivals Verizon (NYSE: VZ) and AT&T (NYSE: T).  Shares are also about 75% higher than the mid-point of its old trading range from 2003 to 2005.  It still has a $13 Billion market cap, so it will take many institutional buyers to believe in this one for it to be a double.  But the performance of its two top rivals has not been sustained as far as the stocks go.  Its lack of a wireless offering has also been thought of as a hole in the business plan and analysts would either have to raise their targets or make cuts on valuation if Qwest got back to $10.00.  Any upside would make the valuations on Qwest seem paltry.  If the company wouldn't have made its recent dividend gesture we would have passed on this one.  But that sure made us think more good news was coming because a dividend is not meant to be a one-time event for companies.

Sanmina-SCI Corp. (NASDAQ: SANM) is an EMS (electronics manufacturing services) company where tech and non-tech companies come to have it manufacture for them.  It owns factories all over the world and it has been in a turnaround for quite some time.  If the company can make that turn then for this to double after a rough week the stock would still not even be at its 52-week highs. We covered this in our "10 Stocks Under $10" and its market cap has dipped back under that $1 Billion mark.  There are some pretty big risks that it won't be able to turn around, so this one is a real coin toss.  The company has moved from being perceived as a tech-only manufacturer as it serves medical, defense & aerospace, automotive, and more.  Any major win could make this one turn or it could always become a potential acquisition from some of the other larger EMS players.

Smith & Wesson Holding Corp. (NASDAQ: SWHC) is one of the only gun plays in the entire U.S.  That is a bad spot right now as shares are down 75% from their highs.  So for this to double it would still be down 50% from its 52-week highs.  The company had already been in trouble as a stock goes, but then it failed to impress in October and then warned again for 2008 in early December.  Those each took nearly half of the value away each time.  What is interesting is that with a weak consumer and weakening economy expected in 2008, this could scare people about crime if lower-income wage jobs start to dry up.  That could make more homeowners want to buy a gun.  With a presidential election around the corner, we wouldn't be shocked to see a rush of buyers try to load up on any remote gun desires if they feared that 2009 or 2010 might bring about stronger gun controls.  That HAS happened before.  We don't know if it will come about again.  That why this is a COULD rather than a WILL.

Travelzoo Inc. (NASDAQ: TZOO) could end up being a Hail Mary pass for 2008 after posting a dismal 2007.  Shares are barely above 52-week lows and this stock would basically have to rise 200% before it took out its 52-week high of $40.68.  It only trades at about 17-times 2008 projected earnings and it is still expected to have revenue gains.  The beast of the sector is Priceline.com (NASDAQ: PCLN) and that stock has risen nearly five-fold over the last 24 months.  The company has what is deemed one of the lower-end online travel package and search features out there, but the beauty of the web is that ANY company can end up with a killer app or major consumer draw that sucks customers back to it.  That might not be the case and we think management isn't as sharp as at other online travel sites.  But one bit of good news here could make this skyrocket with a flood of day traders, and it has over 25% of its float listed as being in the short interest.  It has also been the subject of takeover rumors in the past.

YRC Worldwide (NASDAQ:YRCW) is one of our favorite trucking stocks as a go-to play in the sector. The problem is that this sector just stinks right now and it has made warning after warning besides its CEO being generally very openly cautious.  But with shares at $17.00 and a trailing P/E of under 10, any upside surprise or even any 'less bad' news might make this look like the old flying trucks commercials from the early 90's.  In fact, if YRCW stock doubled from here it would still be $13.00 short of its 52-week highs.  In January 2005 this even traded north of $60.00.  Are the rest of the bad headlines out? No.  We think times will remain tough. But at some point Wall Street realizes an overreaction and quickly fixes it.  This one may linger and may continue to slide.  So when or from level it doubles off of is anyone's guess.  If that CEO would just be upbeat on TV once rather than negative, that might send the signal to others to buy as well.  Lastly, this one could actually be a takeover candidate.

Websense Inc. (NASDAQ: WBSN) is one of the old Internet hi-flyers that got sleepy and then became a Rip Van Winkle of a sleeper. With this being back close to $16.00, a double would only take it back to its highs at the end of 2005 and start of 2006.  But the company has still managed to grow while its shares have slumbered and its $400 million market cap is not ridiculous compared to sales estimates of $226 million expected for 2007 or more than $300 million for 2008.  It trades at less than 19-times 2007 EPS and less than 15-times 2008 earnings, yet EPS growth is expected to be 25%.  The company's strength is also its weakness: it has the best enterprise-wide web filtering mechanism for enterprise Internet and Intranet access out there, but IT buyers have noted over and over how it is also quite expensive compared to second rate services. Is it fair to hint that Larry Ellison & Co. at Oracle (NASDAQ: ORCL) or that his rivals like SAP AG (NYSE:SAP) or Microsoft (NASDAQ: MSFT) might consider buying it?  Probably not.  But if a buyer stepped in they'd be getting a very valuable set of customers.  The company could always make a strategy of creating a more mainstream web filtering product that smaller organizations can afford or justify.  As web 2.0 applications are bandwidth intensive and as they become more and more prevalent, companies with bandwidth intensive businesses may also have to increase their web filtering efforts.

Xinhua Finance Media Ltd. (NASDAQ: XFML) is another stock that could garner a double if it can prove it is worthy. But we want to warn you that it could also see another 50% drop.  It was a runner up on the "Worst IPO's of 2007" this week and many investors are not convinced that all the bad stuff out there is fully reflected in today's prices.  But the Chinese financial and traditional media could end up being a major sleeper as media is still very under-penetrated in China where it is located.  Management is also fairly well heeled in the media circles in China and its media properties and ancillary services all hold significant values independently if it wanted to divest into a more focused company (unlikely to us). If Xinhua Finance Media doubled from today's prices it still would be short of that $13.00 high.  2008 is either going to be a year of forgiveness and acceptance, or it is going to hurt.  This one is risky enough that we might only want to look at long-dated (May) calls to limit any potential downside if there are more land mines in this one.

• Our previous 10 STOCKS THAT COULD DOUBLE is as follows: AMD, BSX, CHTR, ETFC, DNDN, KBH, LVLT, PALM, SIRI, VG.
• Keep in mind that many of these stocks are also risky and might not make a turnaround. We also came up with a list of stocks that COULD FALL 50% IN 2008 under the right circumstances (BIDU, BIDZ, C, CFC, F, JRC, LDK, MU, PMCS, VMW).

Jon C. Ogg
December 28, 2007

You can join our free email distribution list to get previews for other issues around IPO's, spin-offs, merger-arb, turnarounds, and more.  Jon Ogg produces the Special Situation Investing Newsletter; he does not own securities in the companies he covers.   

Wal-Mart (WMT) Goes Back To Selling Shirts Online

According to several media reports, Wal-Mart (WMT) has shut its movie download business. It blames the fact that Hewlett-Packard (HPQ) is discontinuing the technology platform which makes the service work. It is hard to believe that some other technology company could not do that.

What Wal-Mart probably discovered is that an e-commerce site, no matter how large, may not be able to sell consumers shirts, garden tools, and sporting goods along with downloads of the latest movies and TV shows.

Wal-Mart was early to the digital video download business. Walmart.com is one of the three or four largest e-commerce websites in the country. It had 42.5 million unique visitors in November, according to comScore. But, it would appear that the digital download crowd is going to Amazon (AMZN), Apple (AAPL), and Netflix (NFLX) for their entertainment. Since those brands are associated with media products, that would make sense.

There is another, more troubling explanation. Wal-Mart is the country's largest seller of DVDs. It should have some foothold in selling video online. Obviously, that has not worked.

Wal-Mart's move may be the earliest indication that offering video online is not a viable business yet. And, that is bad news for the companies still in the business.

Douglas A. McIntyre

Media Digest 12/28/2007 Reuters, WSJ, NYTimes, FT, Barron's

According to Reuters, Merrill Lynch (MER) plans to lay-off 1,600 people.

Reuters writes that US durable goods numbers were worse than expected for November.

Reuters writes that Wal-Mart (WMT) will end its movie download business.

The Wall Street Journal writes that Nokia (NOK) has delayed its mobile game business launch again.

The Wall Street Journal writes that hedge funds are having more trouble borrowing money.

The Wall Street Journal writes that Warren Buffett is starting a bond insurance company which will make it cheaper for local governments to borrow money.

The Wall Street Journal reports that Citigroup (C) and HSBC (HBC) are considering selling units to shore up finances.

The New York Times writes that millionaires created by Google (GOOG) are putting their money into a series of start-ups.

The New York Times reports that holiday online sales were only up 19% over a year ago.

The FT writes that the subprime crisis is hitting newspaper revenues.

The FT reports that IPOs of Chinese companies are expected to raise $100 billion next year.

Barron's writes that a Google phone may launch in February.

CNN Money writes that oil moved up to $96.

Bloomberg writes that Citigroup (C), Goldman Sachs (GS), and JP Morgan (JPM) are discounting their LBO debt by as much as 10%.

Douglas A. McIntyre

Asia Markets 12/28/2007

Markets in Asia fell.

The Nikkei was off 1.7% to 15,308.

The Hang Seng fell 1.7% to 27,371. China Petroleum (SNP) was off 3.8% to 11.70. Bank of East Asia was up 2.7% to 52.90.

The Shanghai Composite fell .9% to 5,262.

Data from Reuters

Douglas A. McIntyre

52-Week Low Club (AAI, ANN, AM, BIG, BJRI, CHS, CC, LIZ, M, OMX, MSO, RL, HOT, WM, WEN, ZLC)

Today's list of 52-week lows was still dominated by retail and consumer spending stocks, although a surprise surge from several key semiconductor names made today's list.  Some of these did end up recovering back above their respective 52-week lows.  Here's your list for today:

• Airtran (AAI)...down from a $13.09 high.  $95+ Oil is a pain. Stock broke significant support at $8.00 two weeks ago so it's in no-man's land.
• Ann Taylor (ANN)... Is the growth story gone? If so and IF it can hit its earnings estimates then it is a hidden value stock.  But with women spending less on clothes over the holidays it may just be a value trap.
• American Greeting (AM)... I started complaining about the cost of greeting cards LONG BEFORE the economy softened, and I'm not alone.
• Big Lots (BIG)...again...should say "habitual offender" on it.
• BJ's Restaurants (BJRI)...cool brewpub, although still expensive on earnings measurement.
• Chico's FAS (CHS)...again.
• Circuit City (CC)...needs to fire that CEO immediately.
• Liz Claiborne (LIZ)...again.
• Macy's (M)....again.
• Marvell Tech (MRVL).. see chip stocks on 52-week lows.
• Martha Stewart Living (MSO)... Is it changing its name to "DYING"? Maybe a weak ad environment and magazine environment is even worse than we thought?
• Micron Tech (MU) turnaround still can't turn around... see chip stocks on 52-week lows.
• Office Max (OMX)...again.
• Ralph Lauren Polo (RL)...recovered above that 52-week low but this was a surprise to see even in a weak consumer. Stock is now over $40.00 under highs.
• Sandisk (SNDK).. see chip stocks in 52-week lows.
• Starwood Hotels (HOT)... givin' all the inheritance away may not keep young Paris happy.
• STMicro (STM)...see chip stocks on 52-week lows.
• Washington Mutual (WM)... when WA-MU changes its name to UH-OH!
• Wendy's International (WEN)... just an expensive burger chain with a "hoped for buyout" allowing a premium, otherwise would be even lower.
• Zale Corp. (ZLC)..... I didn't get my wife diamonds for Christmas either.

All these CEO's have a fairly easy new year's resolution for 2008: "I want to keep my stock from hitting 52-week lows".......

Jon C. Ogg
December 27, 2007

Fed Rate Reductions Most Of Next Year?

According to Bloomberg the Federal Reserve will reduce interest rates at every policy setting meeting ``for the next two to three quarters,'' Pacific Investment Management Co.'s Paul McCulley said in a note released today to clients.

The note said that rates could fall below 3%.

Douglas A. McIntyre

Key Chip & Semiconductor Stocks Hit 52-Week Lows (MRVL, MU, SNDK, STM)

It was a bit surprising today to see some of the names that were on the 52-week low list that were chip stocks.  So far AMD has managed to escape this list today, although it's only about 1% above the $7.54 52-week low.  It looks like that PC surge isn't helping more than a few.  Here are some of the key names:

• SanDisk Corp. (NASDAQ:SNDK) is down almost 2.5% at $34.25, under the 52-week trading band of $34.43 to $59.75. This actually marks the bottom of a two-year trading range and now shares would have to fall back to $20-ish to reach the 2004 lows before this range was in place.  Maybe the company should have stuck with being the Flash memory leader rather than  having tried to compete against iPod sales with its own MP3 flash player.
• Micron Technology (NYSE: MU) at $7.35 after today's 2% drop is just under the new low 52-week lows of $7.37 after it's earnings prove it can't turnaround.  THIS ONE NEEDS A BREAK-UP.
• Marvell Technology Group Ltd. (NASDAQ: MRVL) was a bit surprising to see, even if it has been losing its old steam.  This looks like it broke the lows of 2005 and this could fall to $10.00 before traders start pointing to any linear support on its chart.  Ouch.
• STMicroelectronics NV (NYSE: STM) was a surprise to see on the list, but this is just a re-touch of the $14.34 lows.

Other key chip stocks and chip related names that are within about 3% of 52-week lows: AMAT, CHRT, IMOS, AMD...

Jon C. Ogg
December 27, 2007

Boeing (BA) Picks Up An Order From British Air

The end of the year has turned out well for Boeing (BA). British Airways has put in an order for twenty-four 787 Dreamliners. The face value of the order is $4.4 billion, according to Reuters.

Douglas A. McIntyre

Financial Market Reactions On Bhutto Assassination (INP, IFN, IIF, MINDX, IBN, TTM)

It is unfortunate to have to analyze tragic international or domestic terrorism news from a financial angle on horrible news such as the murder of a foreign leader or a challenger for that leadership ahead of an election.  Pakistan opposition leader Benazir Bhutto was assassinated Thursday in a suicide attack at a campaign rally that also killed killed more 20 others (reports still vary).  The news of her death was reported after the Pakistan markets were closed. 

Investors are looking to see how far down the Karachi Stock Exchange will drop and one of the best proxies as to see how this will affect the Pakistani stocks is to look at the closest markets.  India is the closest and most tied (good and bad) to Pakistan, and the worries that this could create additional instability in the region has the ETF and the Indian funds that trade in the U.S. down considerably:

• The major ETF that tracks India is the iPath MSCI India Index ETN (NYSE: INP), and it is trading down some 5% at $96.10 today.  Its 52-week trading range is $46.13 to $110.09.
• There are two closed-end funds that track the performance of Indian stocks. India Fund, Inc. (NYSE: IFN) is also down some 5.1% at $59.40 today, and its 52-week trading range is $35.51 to $71.54.  The second is less actively traded, but the Morgan Stanley India Investment Fund, Inc. (NYSE: IIF) is down some 6% at $50.75, and its 52-week trading range is $38.29 to $66.56.
• One open-ended mutual fund that we will not know how that trades really until tomorrow after we have a chance to see how those trade is the Matthews India Fund (MINDX).  These only trade at N.A.V. at the end of each day and these traded at $24.29 yesterday.  This fund started out 2007 at $15.62, so it is also up considerably.
• A couple of the more liquid stocks that trade as ADR's in the U.S. are ICICI Bank Ltd. (NYSE: IBN) and Tata Motors Ltd. (NYSE: TTM), and both are down close to 5% today.

This is potentially a very large political and geopolitical event that could end up with much greater repercussions than a mere 3%or 5% move.  The hardest part of interpreting these price reactions is that Wall Street is staffed with a skeleton crew this week and part of next week.  These are the go to stock and fund names to track the financial market reactions to the situation.

Jon C. Ogg
December 27, 2007

Are Netflix & Blockbuster Watching Apple's Video Deal? (NFLX, AAPL, BBI)

We've all heard by now that Apple (NASDAQ:AAPL) is in a deal with News Corp's (NYSE: NWS) Fox for a movie rental download deal.  Apple is Since Apple TV is still referred to as a "hobby" rather than a solid business line, this deal won't likely be a huge winner for Apple in the grand scheme of things.  Disney (NYSE: DIS) has had its catalog available on iTunes to allow for purchases, and other studios have partial movie and partial video content catalogs already available.  Maybe the rental feature will be better than the "buy it" feature, but we really doubt this will be a huge financial impact. 

But Blockbuster (NYSE: BBI) and Netflix (NASDAQ:NFLX) may at least on the surface be a potential spot for worries.  These may sell off on the news initially, but this won't l