The markets got some extra relief today as weekly jobless claims only rose by 6,000 to 371,000. The Philly Fed also showed that manufacturing contracted slower than expected as output fell by 0.7% in April. Below are the unofficial closing prices for major index levels:
China Architectural Engineering, Inc. (AMEX: RCH) enjoyed another massive day as its stock rose another 23% to $10.17 late in the day based on construction, architecture, and engineering needs that will be necessary in China after that earthquake.
MOST NOTEWORTHY: Today's noteworthy initiations were Monolithic Power, Emergency Medical Services, Amsurg and EnergySolutions.
Monolithic Power (NASDAQ: MPWR) was initiated with a Buy at Am Tech, which predicted that Monolithic Power will have significant design win momentum that should result in stronger than expected revenue growth. The firm thinks the company will be able to grow 20% in its 2008, thanks to its new products and competitive prices.
Emergency Medical Services (NYSE: EMS) was initiated with a Sell, target $15 at Citigroup. Citigroup believes EMS's earnings contribution from insurance releases and prior period adjustments is not sustainable.
AMSurg (NASDAQ: AMSG) was initiated with a Buy, target $32 at Citigroup. Citigroup said it is positive on AMSurg given its history of FCF per share growth, low out of network exposure, little debt risk, and acquisition pipeline.
EnergySolutions (NYSE: ES) was initiated with a Market Perform, target $26 at FBRC. Friedman Billings expects EnergySolutions to trade at a slight discount to peers given its leverage balance sheet and perceived slower growth.
OTHER INITIATION:
VMWare (NYSE: VMW) initiated with a Market Weight at Thomas Weisel, based on valuation. Thomas Weisel believes VMWare is uniquely positioned to benefit from trends toward centralized IT resources, on-demand delivery and greater efficiency.
Citrix Systems (NASDAQ: CTXS) was initiated with an Overweight, target $37 at Thomas Weisel. Thomas Weisel believes Citrix Systems is uniquely positioned to benefit from trends toward centralized IT resources and on-demand delivery given its product line that targets the data center.
Deutsche Bank upgrades Wachovia (NYSE:WB) to "buy" from "hold" according toBriefing.com. The news service also reports that Thomas Weisel initiated VMWare (NYSE:VMW) with a "market weight" rating.
Citigroup downgraded CB Richard Ellis Group (NYSE:CBG) to "hold" from "buy" according to the AP. The news service also writes that Moody's raised it outlook on NRG Energy (NYSE:NRG) to "stable" from "negative."
Ford (NYSE:F) was raised to "hold" from "sell "at Citigroup according to24/7 Wall St.
Citrix Systems (NASDAQ: CTXS), a top enterprise software player, is striving to supercharged growth with the marvels of virtualization (a technology that gets more firepower from existing resources). Yet, with the slowing economy, things are proving kind of difficult.
This week Citrix announced its Q1 results. Revenues increased 22% to $377 million and net income came to $34.4 million, up 8.5%. Yes, when trying to conquer new technology frontiers, there's a need to ramp expenses (especially for marketing and R&D).
Citrix has an expanding global footprint, which has muted the downturn in the US. Also, the company has a nice assortment of products, such as its GoToMeeting franchise (which is one of the top on-demand offerings in the marketplace).
Still, Citrix is betting heavily on its virtualization technology, which is part of last year's acquisition of XenSource. Indeed, traction, such as with distribution deals with Dell (NASDAQ: DELL) and HP (NYSE: HPQ) is evident. Citrix was also able to expand its alliance with Microsoft (NASDAQ: MSFT).
But there is still much to prove to the Street. After all, the marquee virtualization player, VMWare (NYSE: VMW), had a particularly strong Q1.
Shares closed mostly higher today, although this was more of a mixed day between the haves and the have-nots. Boeing Co. (NYSE: BA) managed to keep earnings inline with estimates and were not bad considering the weak airline sector, so its 4.4% gain to $82.09 was a huge relief for the DJIA today. Below are the unofficial closing levels for major US index levels:
Ambac Financial Group, Inc. (NYSE: ABK) posted losses that were wider than expected. It showed losses of $1.7 billion and $11.69 per share and a $3.1 billion in subprime charges. The company sells insurance policies that repay bondholders if issuers default. The 52-week range is $4.50 - $96.10. Shares hit a new low today, and traded down over 40% at $3.45 in the final minutes of trading.
MBIA Inc. (NYSE: MBI) dropped dramatically after Ambac's worse-than-expected earnings report. The rivals are expected to be hit hard by the wave of defaults it insures due to the subprime credit crisis. The two have been struggling to raise capital to cover losses and have suffered downgrades to their credit ratings. MBI shares were down 32% at $9.00 in the final minutes today.
Apple (NASDAQ: AAPL) ... the name is synonymous with high-tech and high touch. It has surely been on a roll ... no need for me to tell you that. Tonight, is the real deal, the make it or break it. The question of whether the economic slowdown is going to have any real effect on Mac, iPhone and/or iPod sales.
The word is that iPod sales have been declining because of the continuing increase in iPhone sale. Why would anyone want a traditional iPod if they can have it all with the iPhone or iTouch anyway? This is no news to anyone that follows Apple. So, what do you say we discount that conversation entirely.
Macbook sales have been on fire. The latest update to this line has sent PC laptops to the junkyard as potential buyers who were on the fence have gladly jumped over, head first. (Disclosure: I am a happy jumper!) To the delight of most users, the most concerning aspect of the transition was painless. The fear of not having a Windows machine was put to rest as companies like VMWare (NYSE: VMW) provided virtualization programs that allowed for a seamless experience within a dual operating environment.
The biggest surprise that occurred was that Mac OSX was quick to learn and many never actually used the Windows crutch past the first few weeks. That was bad news for VMWare and other companies in the virtualization business. ( See VMWare: A WallStreet Chainsaw Massacre) . But what is in store for Apple over the next few quarters?
EMC Corp. (NYSE: EMC) said its first-quarter profit dipped 14% on acquisition-related charges, but it posted a 17% revenue gain to $3.47 billion that beat Wall Street forecasts. Excluding items, EMC's profit was $477.3 million, or 23 cents per share. Also, VMware (NYSE: VMW) reported a 5% profit rise on faster-than-forecast sales growth. The company is mostly held by EMC. EMC shares are up about 5.5% in premarket trading. VMW shares are up 13.75% in premarket trading.
Philip Morris International Inc. (NYSE: PM), spun off last month by Altria Group Inc. (NYSE: MO) reported first-quarter earnings this morning, posting a 29% increase in profit to $1.87 billion, or 89 cents a share as new varieties of Marlboro cigarettes such as clove flavored ones as well as acquisitions spurred sales in Indonesia, Pakistan and Mexico. The weak dollar also helped boost the bottom line. Revenue climbed 18% to $15.6 billion. The results beat the 78 cents analysts were looking for. Altria reports quarterly results Thursday. While Altria now does all its business in the U.S. where smoking has been on the decline, cigarette companies tend to do well in a weak economy.
Last night we heard that eBay Inc. (NASDAQ: EBAY) is suing Craigslist for unfairly trying to dilute eBay's 28% stake in it by more than 10%. Craiglist today is firing back, saying the online auctioneer's actions are unethical and smelling of a hostile takeover.
ThinkPanmure has upgraded VMWare (NYSE: VMW) to "buy" from "accumulate," according toBriefing.com. The financial news service also reports that Merrill Lynch has upgraded Kroger (NYSE: KR) to "buy" from "neutral."
Citi Investment Research reiterated its "hold" on Molex (NASDAQ: MOLX) saying that "high raw material costs may weigh on earnings," according to the AP.
Douglas A. McIntyre is an editor at 247wallst.com.
TheStreet.com's Jim Cramer says that absent any catalyst beyond "cheap," the sector looks set to disappoint.
When people say "tech" on TV, it is almost always followed with "cheap," or "low valuation." To which I say, "So what?" AMD (NYSE: AMD) (Cramer's Take) looked cheap until last night. Motorola (NYSE: MOT) (Cramer's Take) looked cheap and there turned out to be no there there. Cisco (NASDAQ: CSCO) (Cramer's Take) looks cheap but all I hear are earnings cuts. Dell (NASDAQ: DELL) (Cramer's Take) looks cheap, but who cares?
Lots of cheap out there.
Here's my question: where's the catalyst?
Shorts? Stronger growth in the second half? No, the only catalysts I look for in tech are product cycles, and other than Salesforce.com (NYSE: CRM) (Cramer's Take) (nice move there), Research in Motion (NASDAQ: RIMM) (Cramer's Take) and maybe Apple (NASDAQ: AAPL) (Cramer's Take), because we need a new phone there already, there are no new product cycles to speak of.
On its face, it looks like the tech M&A market is holding up nicely -- despite the credit crunch and slowing economy. For example, in Q1, tech M&A came to $92 billion, which was down from last year's $100 billion (this is according to the 451 Group).
Good, huh? Well, as usual, statistics can be deceiving. Keep in mind that Microsoft's (NASDAQ: MSFT) $45 billion bid for Yahoo! (NASDAQ: YHOO) was a huge factor (interestingly enough, there are signs that the deal may not go through).
In fact, there was a 50% reduction in deals in excess of $1 billion (only 11). For the most part, larger transactions need debt financing -- which is in short supply nowadays. After all, last year we saw a rush by private equity firms into the tech sector.
According to the 451 Group, it also looks like strategic buyers are getting skittish. Simply put, they are concerned about the macroeconomy. And something else: with lower stock prices -- with companies like Microsoft, Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG) and VMware (NYSE: VMW) -- it is more dilutive to do deals.
"VMware is a market leader in software virtualization. Companies typically do not use the full computing power of their servers, and when not in use, that server sits idle.
"Virtualization technology allows IT managers to use that underutilized capacity -- running software across the organization's entire base of servers. Thus, virtualization is a key cost-cutting technology.
"VMware has a short interest ratio of 11.7 and a freely traded float of just 50 million shares. If all those shorts try to cover, the stock looks likely to be in short supply. Meanwhile, trading at 36 times 2009 earnings estimates with a long-term growth rate of 45%, VMW doesn't look overpriced.
"Under Armour (NYSE: UA) makes clothing (along with sports equipment) targeting the athletic and outdoor-oriented market. Specifically, the company makes clothes designed to wick moisture away from the skin and keep the wearer at a comfortable temperature, regardless of weather conditions.
"Meanwhile, the stock has seen strong earnings growth despite the slowdown in consumer spending -- earnings surged 42% in the fourth quarter. And management recently announced its looking for revenues to reach $765-775 million in 2008, representing around a 27% increase over 2007 levels.
"With a forward P/E of 23 and a long-term growth rate of 25%, UA looks inexpensive. With a float of less than 32 million shares and a short interest ratio approaching 12, Under Armour looks like a prime short-squeeze candidate."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
Deutsche Bank upgrades UBS (NYSE:UBS) from "hold" to "buy" according toBriefng.com. The news service also writes that Wachovia upgraded VMWare (NYSE:VMW) to "outperform" from "market perform".
Recently, I've been getting too many emails and comments on my blog asking what I think of the Visa (NYSE: V) IPO. Listen, every single long-term investor should be interested in it. Until today, it's been one of the few remaining marquee companies around unavailable to our stock-obsessed society and aside from litigation risk, the company's got everything going for it.
It's got strong sales and transaction growth and more importantly, like rival MasterCard (NYSE: MA), it's immune to the current credit crunch, passing off cardholder debts to the banks. So, when others are sweating potentially catastrophic events like The Bear Stearns Companies Inc. (NYSE: BSC) and the potential collapse of other brokers like Lehman Brothers Holdings (NYSE: LEH), scaring everyone half to death, these guys are sitting pretty. This is also the main reason why MasterCard's stock has handily outperformed rivals American Express (NYSE: AXP) and Discover Financial Services (NYSE: DFS), two companies -- and stocks -- that are certainly feeling that credit pain.
There'll be plenty of other articles dissecting the company, but I find that in rare situations like these, it's best to think in terms of the general picture. Not because it's the right way to invest, but because it's the way most people do. And those most people are the ones who can really influence the stock price here.
.gif){kind=logo}
Here are some highlights from this past week's 
and 
. He also operates 
Apple (NASDAQ: 
On its face, it looks like the tech M&A market is holding up nicely -- despite the credit crunch and slowing economy. For example, in Q1, tech M&A came to $92 billion, which was down from last year's $100 billion (this is according to the 
and 
. He also operates 
Recently, I've been getting too many emails and 
Starbucks: The next McDonald's
Wal-Mart's launch of $20 slimming jeans will be a huge success
Why I spent some of my stimulus check on GE
