Metabolix, Woodward Governor Soar; Symyx Technologies, Isilon Sink

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 |  Includes: ISLN, MBLX, SMMX, WGOV
by: CrossProfit
Metabolix Inc. (NASDAQ:MBLX) jumped 12% on old new news. The company manufactures a 'green' plastic that can compete without subsidies with petroleum based plastic. The news is about a joint venture with Archer Daniels Midland Co. (NYSE:ADM) called Telles Tm. The 50M kilo per year plant is scheduled to go online in Q2/3 2008, rumored to be ahead of schedule. Currently, small quantities are being manufactured for test and customer evaluation purposes and are seemingly well received. Since the November IPO first day close (11/10/2006) at $15.52, MBLX has been trading in the $16 to $20 range. As of 04/19/2007, the stock took off to close on 04/27/2007 at $26.99.

Tidbits:

1) Posted 16M loss for 2006, anticipated due to new production facility.
2) Coming off of six month IPO freeze in May, see if insiders start selling or not.
3) Insiders exercised options in March 2007 @$13.21 and are holding.
4) State Farm is largest institutional holder, over 10%!
5) Could be profitable as early as Q1 2009.
6) Russell 2000 stock, followed by CrossProfit.

MBLX has a potential 40% to 60% upside from here within 12 months. It all depends on the final production capacity of the new production facility. At 110M pounds, it may not have economy of scale. At 330M pounds per year, as mentioned in previous press releases as feasible, MBLX could be the new green wave. Then again, if the new technology is really very profitable as well, ADM will buyout the whole shebang at a handsome profit to shareholders. Insiders hold 22% of outstanding shares.

MBLX 6-mo chart

MBLX 6-mo chart

Symyx Technologies Inc. (SMMX) dropped like a rock from a week ago Friday's (04/20/2007) close @$17.96 to this past Friday's close @$11.80. Apparently the market for research software for biotech and drugs is more limited than previously thought.

Tidbits:

1) Posted $0.03 loss for last quarter, in line with analyst consensus.
2) Guided in February 2007, for 2007, EPS at $0.33 to $0.38.
3) Lowers guidance two months later to EPS at $-0.04 to $0.06!
4) Lost all credibility with analysts.
5) Goldby, Goldwasser, Hilleman, Nowak and Weinberg sold about 10,000 shares each in March.
6) Street feels; company officers played the market, but no one will say so openly.

SMMX is going to have a hard time pulling up from here. We anticipate that shares will continue on a downward slide until some credibility is restored. There may be a need for a few changes at the company in order for this to happen. As of now, Goldwasser is 'a marked man'.

SMMX 1-yr chart

SMMX

Woodward Governor Co. (NASDAQ:WGOV) was up sharply after reporting blowout earnings related to aircraft engine system sales. Revenues thrust ahead of expectations to $256.3M plowing the way to a first $1B revenue year.

Tidbits:

1) Last quarter EPS came in at $0.63 verses $0.32 a year ago, verses $0.50 anticipated.
2) Raises full year guidance to $2.35/$2.45 from $2.05/$2.15, now in 3rd fiscal quarter.
3) Industrial controls division is executing better than predicted.
4) Windows NT based systems run smoothly in closed environment.
5) Low production costs, out-sources production to companies in India; for example, WG-1 is manufactured by SLVMR in Haryana (India).
6) Company does not disclose what percentage or products are manufactured in USA.

As long as we fixate on revenues and profits, no one will notice that Federal contracts awarded to American companies entail an import component far beyond what is commonly realized. It is not only the private sector that continues to grow the US trade deficit, but the public sector as well. For now, there is no point in singling out WGOV, as they are executing very well the out-sourcing of their production. Shareholders are more concerned nowadays with 'environmental green' than with 'deficit green'. A recent MarketWatch article labeled WGOV "a maker of energy control products"!

WGOV 1-yr chart

WGOV

Isilon Systems Inc. (ISLN) must have run out of stor-y-age as this data storage company sank 25% after reporting earnings. Several analysts tried to pump the stock by raising targets, to no avail. They will probably lower them again soon.

Tidbits:

1) Outstanding shares swelled to 61.6M shares.
2) EPS came in at $-0.05 compared with $-0.09 a year ago (non GAAP).
3) Revenue more than doubled to $21.6M.
4) Customer base grew from 180 to 448 - fantastic.
5) Doesn't have Cramer pump support.
6) Competition is making a profit.

It is all about profits. You can grow revenue by over a 100%, grow your customer base by 250%, but if you can't show me the money, honey, Jack is out of this box. What's more is that there is a strong growing demand for data storage. Funny; there was no insider selling. This kind of reminds you of Omniture (OMTR), grows revenue and customer base through acquisitions, but can't turn a profit. Funny; lots of insider selling. Get ready for the OMTR quarterly results.

ISLN 4-mo chart

ISLN 4-mo chart