Small Cap Stock Report: Spectrum Brands Tumbles Again, Magic Software Gains Big After Inking IBM Deal (MGIC, SPC)

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

SMALL STOCKS: P.F. Chang's China Bistro, Mothers Work Gain

• Summary: Small stocks were hit hard in trading yesterday with restaurant stocks a notable exception. Both small stock indexes fell yesterday with the Russell 2000 index of small-cap stocks losing 0.52%, to 677.69 and the S&P SmallCap 600 index shedding 0.86%. In the restaurant group, small stocks climbed after large-cap McDonald's (MCD) said second-quarter earnings would exceed expectations. Gainers included P.F. Chang's China Bistro (PFCB), up 3%, and Lone Star Steakhouse & Saloon (STAR), which climbed 2.2%. Energy exploration and production stocks declined after crude-oil futures pulled back from last week's highs on speculation the fighting in the Middle East would soon end. Among small energy-related stocks, Penn Virginia (PVA) slid 3.4% while Comstock Resources (CRK) declined 3%. In terms of individual performers, Spectrum Brands (SPC) had the distinction of being the NYSE's top decliner, plunging 33% after reducing its fiscal-2006 earnings guidance, partly because of weak battery sales in Europe; Threshold Pharmaceuticals (THLD) fell 51% after plans to discontinue development of its TH-070 compound intended to treat men with enlarged prostates had to be discontinued because of disappointing results from clinical studies; IMA Exploration (IMR), a Vancouver precious-metals exploration company, tumbled 80% after a legal decision required the company's Argentinian silver mines be transferred to Canada's Aquiline Resources. Individual gainers included Magic Software Enterprises (MGIC), which jumped 65% after the Israeli technology company said it signed a three-year global distribution and manufacturing agreement with large-cap IBM. Ituran Location & Control (ITRN) climbed 6.7%; Mothers Work (MWRK) rose 3.8%; Wheeling-Pittsburgh (WPSC) gained 7.8%; PokerTek (PTEK), a marketer of electronic poker tables, gained 9% after the Charlotte, N.C. company announced a three-year contract to provide its PokerPro electronic-poker tables to large-cap Carnival's (CCL) cruise ships.
• Comment on related stocks/ETFs: Spectrum Brand's (SPC) 33% decline yesterday comes on-the-heels of equally steep declines in April '06 and August '05. According to regular Seeking Alpha contributor David Phillips, many of the reasons for those earlier declines, such as a management "more interested in egocentric than shareholder concerns" and pricing pressure resulting from rising commodity expenses, especially for zinc, are ever-present. For more on SPC's last big fall, check out Seeking Alpha's SPC archive.