April 07: Week 1 - Sotheby, Phoenix Footwear, RedEnvelope, Micron (MU), MVIS, and Vonage (VG)


Monday - April 2nd, 2007
So what's doing well today, well that would be Sotheby's (BID) hitting a new 52-week high today at $45 and change a share. Last Monday JMP Securities analyst Kristine Koerber raised Sotheby's to "Strong Buy" from "Market Perform." While the shares are up almost 60% in the past year, Koerber said in a really clever quote it's "not too late to start bidding" on Sotheby's. Cute huh?
Sotheby's derived most of its $665M in revenue last year from commissions. The auction house is based in Bloomfield Hills, Mich. and they charge hefty commissions to both the buyers and the sellers of crap you can't afford.
Sotheby's trades at 18 times her 2007 estimate. In its history, the stock has traded anywhere from 13 times to 40 times earnings.
It is very possible that Sotheby's could be auctioning the King's stuff soon, that's right, the one and only Elvis Presley. Some of Elvis' memorabilia is sitting in a Nevada airport hangar pending resolution of an ownership dispute. The collection, known as "Dr. Nick's Memories of Elvis," consists of items once owned by Dr. George Nichopolous, once a personal physician to the rock star who died of heart disease and prescription drug abuse in 1977 at his Memphis mansion (Dr. Nick from the Simpsons anyone?). Just imagine if Sotheby's gets to sell that stuff, mo money baby. Mo money.

Tuesday - April 3rd, 2007

Oil under $66, WTF it's going up
Oil is trading at under $66 a barrel, to this we say "so what?". With summer coming, expect prices to go up at the pump, and they already are. Let's just take a look at gasoline in West Virginia - prices have gone up 19.2 cents a gallon in the past month. The average price today is $2.74 for a gallon of regular, up from $2.54 a month ago, according to AAA's Daily Fuel Gauge Report. Expect $3 a gallon this summer America. So look for the Oil & Gasoline stocks to prosper. Which stocks you ask? We've got the magic pick for you in our March newsletter but we'll give you two for free: BP Plc (BP) and Suncor Energy (SU). Oil still runs the world and will for years to come.

What a great day on the Market. But not for Phoenix Footwear (PXG), their stock is down 24% today with shares trading around $3.40. Yesterday they reported a quarterly loss of $23.4M, or $2.95 per share, from a profit of $71,000, or a penny per share, in the year-ago quarter. Revenue fell 13% to $28.9M for the quarter. However for 2006 revenue grew 29% to $140.6M but their net loss of $20.4M made last year a bad one.
Right now would be great timing for a takeover. Or perhaps the public just doesn't care to buy its H.S. Trask and Tommy Bahama footwear anymore? Things can't get much worse for PXG and considering their revenue is growing, so perhaps this company can turn things around. The Masters expect things to get worse before they get better with analysts just waiting to put in the downgrades. Might catch a bounce on this one but we'll watch for now

Wednesday - April 4th, 2007

One of our favorite ridiculous companies RedEnvelope Inc. (REDE) had its CEO throw in the towel. Yesterday Chief Executive Ken Constable resigned to "pursue other business opportunities", translating to bailing before the company goes under. Shares of REDE are down 11% today and $1 away from a new 52-week low, with shares trading around $7.25. To truly appreciate this company you just have to visit their website (which is very well designed) and just browse through all the over-priced gifts. They currently have a lavender lab + blanket for baby that is only $60. Better yet, since it's almost Easter, go all out and buy their Easter Cactus for only $48.
Nothing says Easter more than a cactus plant, so spend away America. I was thinking of getting my lady friend a cute easter bunny and chocolates, but a $50 cactus would be much more romantic, don't you think? "Here hunny, hug this!"
Well, better luck next time REDE. Despite the bashing, people actually do buy their crap, they brought in $113M last year in revenue but their net income of -$5.6M didn't help anything but put them in the Red. Clever I know.
RedEnvelope should just sell out to Amazon (AZMN) or Overstock (OSTK). But if you think they can turn it around, help them out by purchasing that Easter Cactus.

Thursday - April 5th, 2007

Micron (MU) gets the 1-2-shabadoo!
Micron Technology (MU) is very close to a new 52-week low with shares trading at around $11.66 following a downgrade and a disappointing earnings call. Goldman Sachs changed their position to “sell” from “neutral” today.
Micron's conference call reported lackluster earnings then gave some warm-fuzzy news about how they believe the memory card business is stabilizing. However, Goldman Sachs said Micron's outlook is far too optimistic. So who do you believe, Micron or the analysts?
MU lost $52M, or 7 cents a share, in the three months ended March 1, compared to a year-ago profit of $193M, or 27 cents a share. Revenue did rise $1.43B which is up 16% from the $1.2B generated a year ago.
So with shares trading near the 52-week low, why not take the chance and assume Micron Executives are not full of it and pick up a few shares?
Citigroup analyst Glen Yeung lifted his target price target on Micron shares to $17 from $15.50. Yeung said that there is evidence that DRAM pricing has gone up slightly in recent weeks, as customers have begun using up their past product inventories, and that prices should remain stable in the second half of the year. 1-2-shabadoo people? Or 1-2-shabadon't? We vote shabadoo!!

Friday - April 6th, 2007

It just gets better and better for Vonage Corp. (VG). A federal judge ruled today that Vonage cannot service new customers while it appeals a finding that it infringed Verizon Communications Inc. (VZ) patents for making phone calls over the Internet.
Of course Vonage plans to appeal the decision and it requires the company to post a $66M bond.
Conspiracy Theory or not, just image what will happen Monday to VG shares?
Vonage shares closed down almost 7% on Thursday to $3.37 on the New York Stock Exchange ahead of the court hearing. Yea I'm sure the gang over at 3I Investments PLC with their 12,846,511 shares of Vonage are feeling good about this news. As expected, it's only getting worse before it can get better for Vonage.

Microvision Inc. (MVIS) saw shares breaking out of the long term $4 resistance this week. Volume on MVIS has been crazy for the past few days, around 1.7 million shares compared to the daily average volume of just 787,162 shares. The company recently announced that it entered into a product development deal with a global Tier 1 automotive partner. Back in February we told how their PicoP technology could change the game, time to re-read that story my friends.