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MACRO AND HOUSING

Realtors: Home Sales Fall in 38 States [AP]

Summary: Existing home sales in the third quarter fell 12.7% from a year ago, with declines greatest in once-booming Nevada (-38%), Arizona (-36%), Florida (-34.2%) and California (-28.6%). 45 of 148 metropolitan areas surveyed also showed sales weakness. The median price for an existing U.S. home was $224,900, down 1.2% from a year ago.
Related links: NAR release • Media coverage: Wall St. Journal . Commentary: Barry Ritholtz: 'Median price lifted by 'trophy properties'?, Housing Bubble and Real Estate Market Tracker , Bursting the Housing Bubble , Housing Starts Chart: No Bottom Apparent
Potentially impacted stocks and ETFs: Pulte Homes (PHM), D.R. Horton (DHI), Toll Brothers (TOL) • ETFs: SPDR Homebuilders (XHB)

TECHNOLOGY AND INTERNET

Check Point Bids $586 Million for Protect Data [Reuters]

chkpSummary: Leading software firewall vendor Check Point Software bid approximately $586 million cash for Stockholm-based Protect Data in an effort to bulk up its mobile data offerings and move beyond its core VPN and business server markets. Expansion of network access to mobile workers has necessitated security solutions such as Protect's, which booked revenue of 370.8 million Swedish crown ($52.3 million) for the first nine months of 2006. Israel-based Check Point expects Protect Data to contribute approximately $90 million to its 2007 revenue. The enterprise security sector has been marked by consolidation recently, with IBM and EMC also making large acquisitions.
Related links: Media coverage: Globes (Israel) , Red Herring . Commentary: Did Checkpoint Pay Too Much for Protect Data? , Richard Stiennon at ZDNet , Checkpoint's Investor Confidence Is Weakening . Conference call transcripts: Check Point Software Q3 2006 .
Potentially impacted stocks and ETFs: Check Point Software (CHKP)

Novell Rally Stalls [TheStreet.com]

Summary: novellThree weeks ago when Novell, Inc. announced a groundbreaking deal to partner with Microsoft to work on interop solutions between its Linux operating system and Microsoft's, shares jumped 16%. Since then, they have given up more than half of their gains, emphasized yesterday by a note downgrading the stock to "underperform" by Credit Suisse analyst Jason Maynard, who wrote, "We do not believe the 10% appreciation in the stock is sustainable." Maynard also believes the deal will hurt Novell's standing in the open-source community; also, Oracle's entry into the Linux market means there won't be enough demand to support market share gains by Novell.
Related links: Media coverage: Reuters . Commentary: In Recognition of New "Mixed" Software Environment, Microsoft To Work With Novell's LinuxNovell: We Didn't Sell Our Soul To MicrosoftEnterprise Software: Credit Suisse Sees Microsoft Upside to $35. Conference call transcripts: Novell F3Q06.
Potentially impacted stocks and ETFs: Novell (NOVL), Microsoft (MSFT), Oracle (ORCL) • Competitors: Red Hat (RHAT) • ETFs: Software HOLDRS (SWH).

Google, Yahoo Gain Search Market Share; Microsoft, Time Warner Lose [Information Week]

Summary: ComScore reports that Google and Yahoo slightly gained in search market share in October, while Microsoft and Time Warner [AOL] declined and Ask.com remained steady. Google processed 45.4% of searches (up 0.3%), Yahoo 28.2% (up 0.1%), Microsoft 11.7% (down 0.2%), Time Warner 5.4% (down 0.2%), Ask 5.8%. Over the past year, Google's share has grown from 39% to 45.4%. Americans performed 6.8 billion web searches in October, up 33% from a year ago.
search boxRelated links: comScore press release, Nielson/NetRatings figures for October • Commentary: Google Nearing $500; Credit Suisse: It'll Go To $600 , Google To Take Traffic Lead At Current Growth Rate, MSN Still Going Nowhere Fast , IACI's Ask.com Gaining Search Share . Conference call transcripts: Google Q3 2006 , Yahoo! Q3 2006 .
Potentially impacted stocks and ETFs: Google (GOOG), Yahoo (YHOO), IAC (IACI) • ETFs: Internet HOLDRs (HHH)

ENERGY AND MATERIALS

U.S. Steel Rises to 6-Month High, Nucor Gains, After Evraz Bid [Bloomberg]

Summary: U.S. steel stocks jumped yesterday after Russia's Evraz Group SA agreed to buy Oregon Steel Mills Inc. (OS) for $2.3 billion. steelAmerica's largest steelmaker, U.S. Steel Corp., saw shares rise to an intraday price $76.16, the highest in six months. The Standard & Poor's Supercomposite Steel Index of 14 companies rose 2.6%. The acquisition is the largest-ever of an American company by a Russian company, stoking speculation that other steel companies may be targets. U.S. Steel shares jumped 9.3% on Friday after Russia's Kommersant newspaper reported OAO Severstal, Russia's biggest steel producer, may be preparing a takeover bid.
Related links: Commentary: Cramer's Take on OSU.S. Steel: Strong Prospects -- Barron'sMetals and Mining: Blast Off!Steel Suppliers Facing Rising Inventories, Lower Demand.
Potentially impacted stocks and ETFs: Oregon Steel Mills (OS), United States Steel Corporation (X) • Competitors: Nucor Corporation (NUE), AK Steel Holding Corporation (AKS) • ETFs: Market Vectors Steel ETF (SLX).

Platinum Surges to Record on Speculation Over Fund Introduction [Bloomberg]

Summary: Platinum experienced its biggest one-day gain in 20 years and soared to an all-time high on the announcement of an ETF for the precious metal. Platinum reached over $1,400 an ounce from a single $147 bounce, a culmination of the steadily increasing demand over the last four years for the metal which is used in jewelry and car exhaust equipment. As governments worldwide tighten emissions standards, demand is expected to increase another 5% this year to 7 million ounces. The platinum ETF is expected to increase the metal's price between 5-15%. Even if the ETF doesn't go ahead, analysts predict that rising demand will propel the price for platinum upward.
Related links: Media coverage: Platinum ETF Speculation Continues to Circulate [ResourceInvestor.com] • Platinum ETF will face resistance [Miningmx.com]. Commentary: A Look at Platinum Miners Two Companies Poised To Ride the Palladium Rush
Potentially impacted stocks and ETFs: Stillwater Mining Company (SWC), and North American Palladium (PAL)

RETAIL

Lowe's Reports 3Q Profit Increase [AP]

Summary: Lowe's announced an 11% increase in 3Q profits, but projected a fourth quarter decline of 4% from last year's $10.8 billion. Nevertheless, its shares rose 19 cents to $30.67, an indication that many investors have confidence in the second-largest home improvement retailer for the long-term, in spite of a sluggish housing market. Lowe's reported earnings of $716 million, or 46 cents a share for the third quarter, up from $646 million, or 40 cents a share for the same period last year, and an increase in revenue of $11.2 billion from $10.6 billion a year ago. However, its same-store sales dropped 4% and Lowe's net income fell short of the $935 million reported in the second quarter. Lowe's main rival, Home Depot, reported a sluggish third quarter and lowered its forecast for the fourth quarter, while indicating that the slow housing market is to blame. "If we had to declare a winner from Q3 results it would be Home Depot," Credit Suisse analyst Gary Balter said in a research note.
Related links: Conference Call: Lowe's 3Q 2006 [Web Cast] • Press Release. Media coverage: Motley FoolTheStreet.com. Commentary: Time to Buy Housing Stocks Home Depot & Lowe's: As Goes Housing
Potentially impacted stocks and ETFs: Lowe's (LOW)• Competitors: Home Depot (HD), Wolseley plc (WOS), Wal-Mart (WMT)

AEROSPACE AND DEFENSE

Korean Air Orders 25 Boeing Planes, Largest Purchase [Bloomberg]

Summary: Korean Air Lines has made the largest order in its history, announcing it will buy 15 passenger aircraft and 10 cargo planes from Boeing, valued at approx. $5.5b. So far this year, Boeing has won orders for at least 857 planes (inc. the Korean Air deal), compared to Airbus' 508 (as of the end of Oct). An aviation consultant based in Singapore commented, "Movement seems to be heading away from the A380 freighter. [Boeing's] 747-8F has a lighter empty operating weight and, because it came to market later, it also has the benefit of new engine technology." Note Korean Air still plans to complete an earlier order with Airbus and fly the A380 in 2010. Air traffic in the Asia-Pacific region is seen outpacing average global growth at 6.8% (vs 5.6%) annually through until 2009, according to an Int'l Air Transport Assoc. forecast. Boeing-BA-1yr-chart-11-20-2006
Related links: Boeing press release. Media coverage: Reuters. Commentary: Boeing Could Nab Another $10b in Sales Before Year-end -- WSJHow Boeing Defense Got Its Groove BackEADS Takes an 'Early Loss' On Airbus Delay -- Shares RiseBoeing One-Ups Airbus Yet Again With FedEx Contract. Conference call transcripts: Boeing Q3 2006.
Potentially impacted stocks and ETFs: Boeing (BA), General Electric (GE) • Competitors: Lockheed Martin (LMT), Northrop Grumman (NOC), United Technologies (UTX) • ETFs: iShares Dow Jones US Aerospace & Defense (ITA), PowerShares Aerospace & Defense (PPA)

FINANCIAL

LSE Rebuffs Nasdaq [TheStreet.com]

Summary: It's no surprise the London Stock Exchange board unanimously rejected Nasdaq's latest takeover bid. The 1,243 pence/share offer valuing the LSE at $5.1b is only a 2% premium above last Friday's close, and is less than its current market value as shares have jumped above 1,300 pence again. The LSE said the offer "substantially undervalues the Company." The Nasdaq said it is "disappointed" with the LSE's "quick rejection" and for denying its request for a meeting. It will approach LSE shareholders with its offer, although it can't raise its bid unless advised to do so by LSE's board, or if a third-party makes a bid. LSE shares have jumped 100+% y-t-d and 50+% since the Nasdaq's first bid in March. A Telegraph article says short interest in the LSE has fallen sharply, and that the LSE's major investors are long-only hedge funds. Reuters reports the Times newspaper saying Nasdaq is preparing two secondary offerings in order to finance its bid. The WSJ notes, "Prospects for another bidder currently appear dim."
Related links: Nasdaq press releases: Response to Rejection of Offer for LSE, Acquisition of LSE Shares, "Final" Bid for LSE [pdf] and LSE plc press release: Statement re Nasdaq Final Offer. • Media coverage: Reuters, Telegraph, WSJ. Commentary: Nasdaq's LSE Bid's Fate Likely in the Hands of 'Market Sentiment'Nasdaq Bids Again for LSE, Boosts Stake to 28.75%Nymex's IPO: $34 Million Left on the Table? -- Exchanges' P/E Ratios.
Potentially impacted stocks and ETFs: Nasdaq (NDAQ), London Stock Exchange (LSE:LN) • Competitors: NYSE Group (NYX), Chicago Mercantile Exchange (CME), InterContinental Exchange (ICE), Int'l Securities Exchange Hldgs (ISE), NYMEX Holdings (NMX) • ETFs: iShares Dow Jones US Broker-Dealers (IAI), streetTRACKS KBW Capital Markets (KCE)

HEALTHCARE

Head of Cyberonics Resigns as Options Inquiry Expands [New York Times]

Summary: The news of Cyberonics' CEO Robert P. Cummins' Friday resignation sent the company's shares up yesterday to a high of $26.45 before closing at $24.17, up 12%. Mr. Cummins had been under SEC investigation for a questionable stock-options grant that occurred within hours of FDA approval of the company's signature Cyberonics 20 11 06depression implant in 2004. CFO Pamela Westbrook also left. Cyberonics' accounting practices have also been scrutinized and it has not been able to get insurance coverage for its implant product. Problematic transactions totaling $10 million will require Cyberonics to restate earnings going back to 2000. Analysts are confident that Cummins' departure allow for the company to be more readily acquired. Acquisition rumors heated up after Carl Icahn purchased a 2.4% stake in the company two weeks ago. Cummins' severance includes $1.72 million for resigning in addition to 75,000 shares and accelerated vesting of options and other stock grants.
Related links: Media coverage: Red Herring, MarketWatch . Commentary: Cyberonics Faces Increasing Shareholder PressureWSJ Options Scandal Scorecard.
Potentially impacted stocks and ETFs: Cyberonics (CYBX). Competitors: Shire plc (SHPGY), Taro Pharmaceutical Industries Ltd. (TARO) • ETFs: iShares Dow Jones U.S. Healthcare Index (IYH)

Actelion to Buy CoTherix for $420m, Shares Up [Reuters]

Summary: Swiss biotech firm Actelion says it will buy CoTherix Ventavis Logo 21 11 06Inc. for $420m in cash, or $13.50 per share, a 21% premium over Friday's close of $11.20. Actelion makes Tracleer, an oral treatment for pulmonary arterial hypertension [PAH], which involves high blood pressure in arteries between the heart and lungs that limits physical activity and shortens life-span. Annual sales are almost $700 million. Last year CoTherix introduced Ventavis, an CoTherix Chart 21 11 06inhaled treatment for PAH which is forecasted to generate $100m+ sales in 2007. The acquisition will enable Actelion to cross-promote both treatments, and also gives it access to a lucrative experimental treatment called Fasudil for PAH as well as chest pains that often precede heart attacks. Both boards approved the deal.
Related links: Press Release, Ventavis website: www.4ventavis.com. Media coverage: MSN Money. Commentary: Seeking Alpha's coverage of the booming Merger & Acquisition market
Potentially impacted stocks and ETFs: CoTherix Inc. (CTRX) • ETFs: iShares NASDAQ Biotechnology Index ETF (IBB), PowerShares Dynamic Biotech & Genome (PBE), SPDR Biotech (XBI), First Trust Amex Biotechnology Index (FBT)

Sales Advance at Medtronic [TheStreet.com]

Summary: Increased sales of Medtronic's pacemakers and implantable cardioverter defibrillators resulted in an overall strong Q2. However, Medtronic's quarterly earnings actually fell to $681 million, or 59 cents/share, down 12% from last Medtronic 20 11 06year. Despite this, the company beat analyst estimates of 56 cents/share. After accounting for 2Q05's stock option expensing, gains and charges, this quarter's earnings actually climbed 13%. Revenue came in at $3.08 billion, up 11% from last year and exceeding analyst estimates of $2.97 billion. The company now claims approximately 56% of the worldwide ICD market and over 50% of the global pacemaker market. Medtronic's shares advanced 24 cents to $48.95 in after-hours trading Monday.
Related links: Media coverage: MarketWatch, Memphis Business Journal. Commentary: Heartening Test Results May Pump ICD MakersMedical Device Industry Breathes Sigh of Relief.
Potentially impacted stocks and ETFs: Medtronic (MDT)• Competitors: Boston Scientific Corp (BSX), Johnson & Johnson (JNJ), St. Jude Medical Inc. (STJ) • ETFs: iShares Dow Jones US Medical Devices (IHI), Vanguard Health Care VIPERs (VHT), iShares Dow Jones US Healthcare (IYH).

INTERNATIONAL

Yen May Weaken as Minutes Signal BOJ in No Hurry to Raise Rates [Bloomberg]

Summary: The Bank of Japan released its Oct 12-13 Monetary Policy meeting minutes today, in which its outlook for the economy to (likely) "expand moderately" and for "gradual" rate hikes is reiterated. A majority of economists don't expect a follow-on rate hike at the BoJ's next meeting Dec 19th. BoJ Governor Toshihiko Fukui has said he wants to act "in advance" to prevent any overheating in corporate capex and real estate investment, but he doesn't feel there's an immediate inflation threat. The yen is expected to remain weak and trade between ¥117.5 and ¥118.8/US$ this week. The latest government data shows Japanese investors bought ¥924b ($7.8 billion) in foreign bonds and notes during the week-ended Nov. 11. With short-term interest rates in Japan at 0.25%, overseas rates are very attractive for Japanese investors. A further widening of rate spreads, especially against the euro, could put more pressure on the yen. Global-Central-Bank-Rates-11-21-06
Related links: BoJ Oct. 12 and 13 Policy Meeting Minutes. [pdf] Media coverage: Bloomberg and IHT. Commentary: BoJ Keeps Target Interest Rate at 0.25%Japan's Q3 GDP Surprises to Upside, Stocks ReboundSignificance of the Surprisingly Weak YenWhich Currency ETF is the Best Hedge Against the Dollar?.
Potentially impacted stocks and ETFs: Canon (CAJ), Honda (HMC), Matsushita (MC), Nintendo (OTCPK:NTDOY), Nissan (OTCPK:NSANY), Sharp (OTCPK:SHCAY), Sony (SNE), Toyota (TM) • ETFs: iShares MSCI Japan Index (EWJ), iShares S&P/TOPIX 150 (ITF), BLDRS Asia 50 ADR Index (ADRA)

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