Labor Demand Grows Moderately -- Monster Survey
Online career and recruiting firm Monster Worldwide said its Employment Index moved up to 186 in April from 185 in March and from 163 in April 2006, giving the gauge a 14% gain y/y. President Steve Pogorzelski said, "The index is slightly higher in April, but its pace of growth does reflect a moderating U.S. economy so we see growth and demand at lower levels than we saw in 2006 and 2005... At the same time the demand we do see is relatively stable." 16 of 20 industries registered gains; education, healthcare, hospitality and food services were among the strongest sectors. Building and construction-related categories edged higher, but their growth rate is down dramatically from a year ago. Among regions, New England registered the strongest growth.
Sources: Press release, Reuters
Commentary: Job Growth Slows to Weakest Rate in Four Years -- ADP • A Closer Look at the Recent Labor Report • Economic Report Summary: Growth Slowdown Finally Arrives
Stocks/ETFs to watch: Monster Worldwide Inc. (MNST). ETFs: S&P 500 Index (SPY), Diamonds Trust Series 1 ETF (DIA), iShares Lehman Aggregate Bond (AGG)
T-Mobile to Launch Wi-Fi-Enabled Cellphones This Summer
T-Mobile USA, the fourth largest U.S. wireless operator and a primary growth driver for parent Deutsche Telekom, will launch a cellphone service this summer across the U.S. that will allow phones to roam on Wi-Fi hotspots. The service, called Hotspot at Home, is designed to improve indoor reception and cut customers' cellular bills. Nokia and Samsung make phones that work with the service, which has been tested in Seattle for several months. When a user comes within range of a Wi-Fi hotspot, calls are transferred to the Wi-Fi network. T-Mobile will offer customers a free, proprietary wireless router that it claims will provide better service and longer battery life. The company is said to be considering modifying the router so landline phones can be plugged into it, which would put T-Mobile into competition with landline providers like Verizon and AT&T. T-Mobile is competing with AT&T's Cingular and Sprint Nextel, which are also trying to meld their cellphone networks with Wi-Fi phones. Jeffrey Nelson of Verizon Wireless says the unlicensed frequencies on which Wi-Fi technology operates preclude the placing of enough quality controls "to give our customers a guaranteed great experience." Frank Hanzlik, managing director of trade group Wi-Fi Alliance, predicts businesses rather than individuals "are going to drive this trend aggressively." T-Mobile, which has 25 million subscribers, is trying to leverage its 8,000 U.S. Wi-Fi hotspots concurrently with its upgrade of its cellular network to include "3G" broadband services.
Sources: Wall Street Journal
Commentary: Size Matters: Verizon Wireless vs. T-Mobile USA • T-Mobile to Roll Out Dual-mode Phone • T-Mobile Comes Out On Top In FCC Spectrum License Auction
Stocks/ETFs to watch: Deutsche Telekom AG [ADR] (DT), Nokia Corp. (NOK), Verizon Communications Inc. (VZ), AT&T Inc. (T), Sprint Nextel Corp. (S), Telecom Italia S.p.A. [ADR] (TI). ETFs: PowerShares Dynamic Telecom & Wireless ETF (PTE), HOLDRS Wireless (WMH)
JDS Uniphase Sheds 10% on Q3 Loss and Weak Guidance
JDS Uniphase posted a Q3 loss of $14.2 million, or -$0.07/share due to higher stock options expenses, after earning $3.7m ($0.02/share) last year. Excluding certain items, JDSU earned $0.06/share, but missed analysts' forecast of $0.12. Sales of $361.7m (+15% y/y), however, beat the Street's expectation of $347m. Shares of JDSU gained 2.6% to $16.64 during normal trading, but tanked 9.9% to $15.00 after-hours on volume of 1.8m. JDSU's CEO commented: "In terms of revenue, JDS Uniphase’s third quarter was stronger than expected, with a much smaller than anticipated seasonal decline, and year-over-year growth of 15%," noting also that it was the first time in more than five years the company achieved positive free cash flow. JDSU has posted a net loss in 30 of the past 32 quarters. JDSU said it expects Q4 sales between $325m - $345m, short of analysts' forecast of $354m.
Sources: JDS Uniphase F3Q07 (3/31/07) Earnings Call Transcript, Press release [pdf], Bloomberg
Commentary: Recent Earnings Strength Tied to International Exposure • Optical Vendors: Cornering The Commodity Market • Fiber Optics Market: Benefiting from the Online Video Trend
Stocks/ETFs to watch: JDS Uniphase Corp. (JDSU). Competitors: Avanex (AVNX), Finisar Corp. (FNSR), Ciena Corp. (CIEN). ETFs: Broadband HOLDRs (BDH)
Symantec Beats, Guides Higher; Shares Respond in Kind
Symantec Corp. surprised to the upside when it reported 4Q07 earnings Wednesday after the close, sending shares higher by 4.6% in after-market action. Net earnings fell 49% but beat the Street anyway. EPS was $0.07 on sales of $1.36 billion; after special costs, EPS was $0.24. Thomson consensus estimates predicted EPS of $0.20 (Bloomberg expected $0.19) on sales of $1.27 billion. The company's outlook also exceeded the Street's: FY2008 EPS in a range of $1.10-$1.15 on sales of $1.295-$1.325 billion. Analysts, on average, have been looking for $1.09 on sales of $1.28 billion. Said CEO James Beer, "The bottom line is our March quarter beats Wall Street expectations quite comfortably." He attributed Symantec's beat quarter to "stronger bookings than we had previously projected and our cost reduction activities." The company is in the midst of a 5% workforce reduction. Contracts valued at $1 million or more jumped to 99 from 91 a year earlier. Symantec's shares rose 1.9% in regular trading to $18.17 in anticipation of earnings, then climbed another 4.57% to $19 in post-market action, following the results.
Sources: Symantec F4Q07 Earnings Call Transcript, Press release, Bloomberg, TheStreet.com, Wall Street Journal, MarketWatch
Commentary: Symantec Steps Into The Saas Arena • Symantec: Corporate Anti-Virus Sales Lagged Expectations In March • Symantec Could Be Buyout Target
Stocks/ETFs to watch: Symantec Corp. (SYMC). Competitors: McAfee Inc. (MFE), Microsoft Corp. (MSFT), CA, Inc. (CA). ETFs: iShares Goldman Sachs Software Index (IGV), Software HOLDRs (SWH), Internet Architecture HOLDRs (IAH)
Related: SYMC Investor Relations
Microsoft to Acquire Mobile Ad Group ScreenTonic
Microsoft has agreed to acquire mobile advertising group ScreenTonic SA. Financial terms were not disclosed. ScreenTonic, which is based in Paris, provides advertisers with a variety of display and text formats in addition to ad management and reporting services. Mobile advertising is still in its infancy relative to Web advertising, but is viewed by Microsoft and its rivals as a potentially lucrative area they hope will produce similar returns to those generated by pay-per-click ads that accompany search results on the Internet -- a multibillion-dollar industry that grew exponentially over only a few years. Google recently bolstered its online advertising position by acquiring online ad supplier DoubleClick for $3.1 billion. Mobile marketing and advertising around the world are forecast by ABI Research to increase sixfold to $19 billion by 2011 from an estimated $3 billion by the end of 2007.
Sources: Press release, Reuters, Hemscott
Commentary: Google's Doubleclick Acquisition: Redefining Advertising’s Currency • Microsoft's Web Prosperity is Forever Just Around the Corner
Stocks/ETFs to watch: Microsoft Corp. (MSFT). Competitors: Google Inc. (GOOG), Yahoo Inc. (YHOO), Oracle Corp. (ORCL), International Business Machines Corp. (IBM). ETFs: iShares KLD 400 Social Index (DSI), SPDR DJ Wilshire Large Cap (ELR), SPDR DJ Global Titans (DGT)
Conference call transcripts: Microsoft F3Q07 (Qtr End 3/31/07)
IAC/Interactive's Ask.com Hopes to 'Getify' Web Searchers with New Search Algorithms
Search engine Ask.com, owned by IAC/InterActiveCorp, will begin a TV and web advertising campaign Thursday geared to drum up interest in an upcoming relaunch of the site and its search algorithm which debuts later this year. Traffic on the 'Ask Network" has fallen over the past year from 5.9% to 5.2%. The company is attempting to generate buzz on its new search algorithms, one of which will incorporate user feedback into the algorithm. The ads insert the word algorithm into casual conversations; in one, a boy tells his father about a girl who was teased at school because her parents "searched with a lame algorithm." They end with the tag: The Algorithm: Experience Instant Getification." IAC/InterActiveCorp shares are up 34% over the last year.
Sources: Wall Street Journal
Commentary: Interactive Corp: Can "Fun Web Products" Boost Ask’s Search Share? • Google Gets More Search Share, Again • IAC's Ask City Enters Lucrative Local Search Market • IAC/Interactive Beats Street on Strong Unit Integration
Stocks/ETFs to watch: IAC/InterActiveCorp (IACI). Competitors: Google Inc. (GOOG), Yahoo! Inc. (YHOO), Microsoft Corp. (MSFT)
Conference call transcript: IAC/InterActiveCorp Q4 2006 Earnings Call Transcript
VeriSign Posts In-line Revenue, Low-end Guidance
VeriSign Inc., the main administrator of the internet web-address database, said its Q1 revenue of $379 million was little changed (+1.6%) and in-line with analyst estimates of $375 million. VeriSign did not publish earnings numbers for a third-straight quarter due to a pending restatement because of its options postdating review. It said Q2 revenue will be $365-370 million, and profit will be $0.25/share. Analysts had been calling for $371 million and $0.25/share. The company will be raising the fees for registering .com and .net names for the first time since 1999 in October. In November 2006 the U.S. government extended VeriSign's contract to administer .com websites until 2012; the terms allow it to raise prices by 7% in as many as four of the next six years. In its release, the company said, "With our unique infrastructure that enables and protects an increasing amount of the world’s networked interactions, we are helping our customers more quickly and economically deliver new services that improve customer loyalty, business productivity and operational compliance." Shares dropped 3.6% in after-hours trading to $26.05.
Sources: Press release, MarketWatch, Bloomberg
Commentary: VeriSign Fortifying Its Network, Aiming At More Consulting • Domain Names: Land Grab of the 21st Century • VeriSign Maintains Hold Over .Com Domains; Stock Jumps
Stocks/ETFs to watch: VeriSign Inc. (VRSN). Competitors: Entrust Inc. (ENTU). ETFs: HOLDRS Internet Infrastructure (IIH)
Conference call transcript: VeriSign Maintains Hold Over .Com Domains; Stock Jumps
RealNetworks Posts 60% Q1 Earnings Surge
Shares of Seattle-based digital media provider RealNetworks gained 7% to $8.12 in AH trading Wednesday after the company reported better-than-forecast Q1 results. Q1 net income rose 60% to $40 million ($0.22/share) from $24.9 million ($0.14) in the year-ago period. Analysts were expecting EPS of $0.17. Revenue reached $129.5 million from $86.6 million, also beating analyst expectations of $125.3 million. The company is forecasting Q2 revenue of $130-134 million, an EPS range of a $0.01 loss to a $0.01 profit and EPS before items of $0.04-0.06. Analysts were forecasting break-even EPS excluding items on revenue of $133.6 million for Q2. For the full year, the company is projecting revenue of $547 million-563 million, EPS of $0.24-0.27 and EPS before items of $0.23-0.25. Analysts were forecasting EPS before items of $0.22 on revenue of $550.5 million. RealNetworks also announced its board has approved a $100 million stock buyback program.
Sources: RealNetworks Q1 2007 Earnings Call Transcript, Press release, MarketWatch, Reuters, TheStreet.com
Commentary: Can RealNetworks Survive the Competition? • RealNetworks: Fairly Valued After Recent Swoon
Stocks/ETFs to watch: RealNetworks, Inc. (RNWK). Competitors: Apple Inc. (AAPL), Microsoft Corp. (MSFT). ETFs: Internet Infrastructure HOLDRs (IIH), Internet HOLDRs (HHH), PowerShares Dynamic Small Cap Growth (PWT)
ValueClick Net Up 90%, Beats by a Penny; FTC Investigation?
ValueClick reported Q1 net income jumped 90% to $18.6 million, or $0.18/share, beating the Street by a penny. Sales rose 34% to $156.9m, also topping analysts' estimates. ValueClick raised its full-year EPS guidance by a penny to $0.79 - $0.81, compared to analysts' expectation of $0.81. Sales are seen coming in at $655m - $665m, versus analysts' forecast of $662.2m. Q2 EPS is expected between $0.17 to $0.18 (vs. $0.14 last year) on sales growth of at least 20% to $157m - $159m -- the company cited tougher y/y comparisons. Analysts' average estimates are $0.18 on $158.1m of sales. Shares of ValueClick gained 1.45% to $29.31 during normal trading, and last traded 2.1% lower to $28.70 in the after-hours on volume of nearly 173,000. Separately, on Henry Blodget's InternetOutsider.com, there's note of a possible FTC investigation of ValueClick, regarding its practices, which "could negatively impact its lead-generation business" and is likely to limit "certain types of ads going forward," according to the Stanford Group.
Sources: ValueClick Q1 2007 Earnings Call Transcript, Press release, Bloomberg, MarketWatch, InternetOutsider.com
Commentary: Is ValueClick the Target of an FTC Investigation? • ValueClick: An Online Advertising Value Bet • Google Launches Cost-Per-Action Ad Beta in Threat to ValueClick
Stocks/ETFs to watch: ValueClick (VCLK). Competitors: 24/7 Real Media Inc. (TFSM), aQuantive (AQNT), DoubleClick -- privately held and agreed to be acquired by Google (Apr. '07)
Dow Jones Takes No Action on News Corp. Bid; Murdoch Considers Next Tack
Dow Jones & Company said it has decided to take no action on News Corp.'s $5 billion ($60/share) proposal following a board meeting Wednesday afternoon. The company said it had received notice from a representative of the Bancroft family that they would vote approximately 52% of the company's outstanding voting power against the bid. Wall Street Journal says another large shareholder -- the Ottaway family who owns about 6.2% of the company's Class B shares -- is also opposed to the proposal. Even so, with the relatively slim margin (58%), there is still the possibility News Corp. could sway enough of the vote to swing the deal; the shares' $56 price (up from $36 pre-bid) makes it clear many traders remain hopeful. The Journal says that were it not for the Bancroft family, the board would almost surely approve the offer. But a person familiar with the family says the family is not necessarily "all together" on the matter, and that some members could be swayed. He says the older generation is more opposed to the proposal than the younger. Two possibilities would be for News' Rupert Murdoch to sweeten his offer, or to offer a higher price for the company's supervoting shares -- a strategy that is legal but hated by shareholders. One News Corp. insider says, "the word on this is patience." Murdoch hopes to sit down with Bancroft family members in the coming weeks.
Sources: Press release, Wall Street Journal
Commentary: Dow Jones' Bancrofts Can't Have Their Cake and Eat It Too • Murdoch Makes a Play at Dow Jones: Why I'm Not Surprised • Dow Jones: The Market Believes The Bancrofts Are Bluffing
Stocks/ETFs to watch: Dow Jones & Company Inc. (DJ), News Corp. (NWS). Competitors: Gannett Co. Inc. (GCI), McClatchy Company (MNI), The New York Times Co. (NYT), Washington Post Co. (WPO), Lee Enterprises Inc. (LEE), Reuters Group plc (RTRSY), Pearson plc (PSO)
Conference call transcript: Dow Jones Q1 2007 Earnings Call Transcript
Clear Channel to Sell Another 201 Radio Stations
San Antonio-based media and entertainment company Clear Channel Communications announced Wednesday that it is in definitive agreements to sell 201 more radio stations in 38 markets, bringing its total divestiture to date to 362 radio stations in 72 markets for a total of approximately $820 million. The transactions are expected to close in 2H 2007. The company plans to divest its remaining 86 radio stations, which are spread across 16 markets, including Charlottesville, San Luis Obispo and the Florida Keys. Clear Channel estimates net proceeds after taxes and costs of the sale of the 362 stations will be approximately $730 million. Including the previously announced sale of the TV division to Providence Equity Partners, net proceeds are estimated at $1.88 billion. Clear Channel shareholders will vote May 8 on a proposal to sell the company to a private equity group led by Thomas H. Lee Partners LP and Bain Capital Partners LLC. The radio and TV station sales are not contingent upon approval of the sale.
Sources: Press release, MarketWatch, MoneyCentral (I, II)
Commentary: Clear Channel Sells Some Assets for $1.5 Billion • The Activist Investor: Private Equity's Polonius • Clear Channel Communications: Get Up, Stand Up - Shareholders Fight Back
Stocks/ETFs to watch: Clear Channel Communications Inc. (CCU). Competitors: XM Satellite Radio Holdings Inc. (XMSR), Sirius Satellite Radio Inc. (SIRI), Citadel Broadcasting Corp. (CDL), Cumulus Media Inc. (CMLS). ETFs: PowerShares Dynamic Media Portfolio ETF (PBS), PowerShares Dynamic Leisure & Entertainment (PEJ)
Conference call transcripts: Q3 2006
Dolan Family to Take Cablevision Private for $10.6 Billion; Shares Rise
Cablevision shares rose almost 10% to close at $35.90 on Wednesday after the company announced it will sell itself to the Dolan family for $10.6 billion in cash. Including debt, the price is almost $23 billion. The Dolans will pay $36.26/share, a premium of 34% above their first bid in 2005 and 11% above the shares' Tuesday close. The deal is contingent upon a vote later in the year of non-family shareholders, some of whom believe the offer undervalues the company. Cablevision is about two years ahead of its rivals in spending on systems upgrades and product launches, so capex could now decrease. Privatization, according to the Dolans, will allow the company to operate from "a long-term, entrepreneurial management perspective that is not often appreciated by the public markets' constant focus on short-term results." In related news, Moody's and S&P said Wednesday they may downgrade Cablevision further into junk territory. The possible cut would "[reflect] the potential for a significant degradation of credit measures if the [Dolan] transaction were to be significantly debt-financed, with no sale of assets and accompanying debt paydown," said S&P. The Dolans plan to finance the deal with $2.1 billion in equity through reinvestment of their company shares and $15.5 billion in debt financing. The company's existing $11.6 billion of debt will remain outstanding.
Sources: Wall Street Journal, Bloomberg, MarketWatch, Reuters (I, II), New York Times
Commentary: Cablevision: The Dolan Family Finally Seals The Deal • Dolans Try Again to Take Cablevision Private
Stocks/ETFs to watch: Cablevision Systems Corp. (CVC). Competitors: Verizon Communications Inc. (VZ), Comcast Corp. (CMCSA), DirecTV Group Inc. (DTV). ETFs: Consumer Discretionary SPDR (XLY), PowerShares FTSE RAFI Consumer Services (PRFS)
Conference call transcripts: Q4 2006
ENERGY AND MATERIALS
Valero Sells 165,000 bbl/Day Refinery To Husky For $1.9 Billion
Husky Energy Inc. announced Wednesday that it will buy Valero Energy Corp.'s 120 year-old, 165,000 barrel a day refinery in Lima, Ohio, for $1.9 billion, plus an additional $200,000 million of net working capital. Canadian-based and listed Husky bought the refinery to process oil sands crude, while securing a place for itself in the world's largest oil-consuming market. According to Natexis Bleichroeder analyst Roger Read, "We're in the golden age of refining here - I don't think there is any obvious end to it." Refining margins have been on the rise in 2007 and may average $15.65 per barrel this year, a 6.3% rise over 2006, according to a Friedman, Billings Ramsey report. Husky outbid nine other companies in its successful purchase of the Lima facility. The U.S.'s biggest refiner, Valero will use proceeds from the refinery sale to buy back shares of its stock. Husky, meanwhile, needs added refining capacity, like many Canadian oil sands producers, as it taps into Western Canada's largely untouched oil sands reserves. Husky plans to put another $2 billion of improvements into the plant. Valero's shares are up 50% this year; they gained another 2.5% yesterday to a closing price of $72.90.
Sources: Press Release, Reuters, Bloomberg, MarketWatch
Commentary: Implications of Valero's Refinery Sale on Capacity Valuation • Valero Energy Remains a Bargain Despite Recent Runup - Barron's • Cramer's Take on VLO
Stocks/ETFs to watch: Valero Energy Corporation (VLO). Competitors: ExxonMobil Corporation (XOM), ConocoPhillips (COP), Chevron (CVO). ETFs: iShares Dow Jones US Oil & Gas Exp. (IEO), PowerShares FTSE RAFI Energy Sector (PRFE), Rydex S&P Equal Weight Energy (RYE), Vanguard Energy ETF (VDE)
Related: Wikipedia: Oil Refineries
Prudential Beats Street with 52% Rise in Q1 Net
U.S. life insurer Prudential Financial reported a 52% Q1 earnings rise on growth in assets under management and retail brokerage. The Newark-based company posted Q1 net income of $1.025 billion ($2.18/share), up from $675 million ($1.38) in the year-ago quarter. Operating earnings, which exclude investments, were $868 million ($1.85/share) versus $669 million ($1.36) a year ago, ahead of analyst forecasts of $1.65. Q1 revenue was $6.71 billion, a 9.4% gain over last year's $6.13 billion and again exceeding analyst expectations of $6.55 billion. Chairman and CEO Arthur F. Ryan reiterated the company's expectation of full-year after-tax adjusted operating income of $6.80-7.00/share. The company posted its results after the close Wednesday, and its shares dipped slightly to $96.74 in AH trading. During regular trading, the shares had risen 1.7% to $96.80, a 52-week high.
Sources: Press release, MarketWatch, Reuters, MoneyCentral
Commentary: Jim Cramer's Mad Money Lightning Round Picks, April 18 • Choosing a Life Insurance Company [Motley Fool]
Stocks/ETFs to watch: Prudential Financial, Inc. (PRU). Competitors: Citigroup Inc. (C), MetLife Inc. (MET). ETFs: KBW Insurance ETF (KIE), iShares Dow Jones US Insurance (IAK), PowerShares Buyback Achievers (PKW)
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