March 07: Week 2 - Clearwire, Big Lebowski, Ford (F),Tommy Vercetti, Jones Soda (JSDA), and more


Monday - March 5th, 2007

Is it over for U.S. Automakers? Say it ain't so
Is there hope America? Today Ford said its U.S. auto sales fell 13.5% in February and DaimlerChrysler posted a 7.7% decline. Meanwhile, Honda said its U.S. sales rose 3.2% on stronger sales of its trucks. Trucks for crying out loud, that's Ford's bread and butter. Wall Street expects Toyota Motor Corp. to take Ford's No. 2 spot in U.S. sales this year, after its sales surpassed Ford's in two months in 2006. The Masters turn to the BBC for an outside perspective of our American Auto Industry. Before you think these stocks are selling at bargain prices, do all the homework. Maybe Ford could spice up its Ad campaign and get Lita Ford to help out. Same last name? Bad joke we know, but it's still funny. Article continued at the BBC...

Palm, Inc. (PALM) is down 8% today and just $3 away from its 52-week low. Friday's speculation of Palm being acquired sent shares soaring and of course today they are right back down. The Wall Street Journal reported Palm Inc. has been "beset by taxing competitive conditions, is working with investment bankers to explore its strategic options." The Masters can't help but think Carl Ichan and his new takeover dream of Motorola (MOT) could continue with taking out PALM in the same motion. Why not kill two birds with the same stone? If you haven't heard Carl Icahn and Icahn Partners LP are each filing to acquire in excess of $119.7M and up to $500M of MOT common stock, while Icahn Partners Master Fund LP and Icahn Partners Master Fund 2 L.P. are each filing to acquire in excess of $500M, but less than 25% of the outstanding, Motorola common stock. If Carl was to have MOT and PALM in his back pocket, why he could have the whole world in his hands (hand-held products world that is). With PALM trading at current levels and with so much up in the air, it makes for an entertaining investment ride, but do you want to be on that train?

How do you think the Dude would respond to the recent change in the Market?
The Dude: Look, man, I've got certain information, all right? Certain things have come to light. And, you know, has it ever occurred to you, that, instead of, uh, you know, running around, uh, uh, blaming me, you know, given the nature of all this new sh*t, you know, I-I-I-I... this could be a-a-a-a lot more, uh, uh, uh, uh, uh, uh, complex, I mean, it's not just, it might not be just such a simple... uh, you know?
The Big Lebowski: What in God's holy name are you blathering about?
The Dude: I'll tell you what I'm blathering about... I've got information man! New sh*t has come to light! And sh*t... man, .... in the parlance of our times, you know, I'm, I'm saying, ... mean uh... hasn't that ever occurred to you, man? Sir?
Thus the answers to the stock market are now answered, thanks Dude.

China's Impact on the Market
Isn't it beautiful, just weeks ago it was China, China, China. Then the tide turned to "Well China is going to see some slow down and it's time to be careful", right into "China took the money and ran". Consider this, China's Shanghai Stock Exchange, who since the end of March 2006 has driven the value of Worldbest's shares up 44%. Though China's is one of the fastest-growing economies in the world, it remains heavily influenced by the Communist state. So, we continue to walk on eggshells (smart little article) . Tired of hearing about it? So are we. America are you considering the world economy and how much the U.S. economy weighs in comparison to China's economy? Do the math, the impact last week, it was not necessary and don't point the finger at China. As Public Enemy once said, Don't believe the Hype. Another article but decent about China's impact...

Tuesday - March 6th, 2007

YouBet.com? - Get Real
The Market is having a nice day today, the sun is out and the Bulls are out in full-effect. So with stocks moving up, who's moving down? YouBet.com (UBET) hits a new 52-week low today, their shares are trading around $2.85. When your company hits a new low on a day like this, after a horrible decline in the market, you just have to ask one question? What can possibly be good about being the biggest loser of the day? The answer. Absolutely nothing. YouBet engages in the provision of technology-based wagering products and services for the horse racing industry. Can't stay away from the tracks, like throwing your money away on horse races? YouBet is your solution. YouBet reported yesterday that it expects Q4 losses to be bigger than expected and lowered its 2007 guidance. The downgrades have become to come in and this horse is being put to sleep. However once a gambler, always a gambler (right Charles Barkley?) and if somehow betting on horses becomes the newest fad, they'll cash in. But horses also make good glue, and some of that glue should be used to put YouBet back together. But is it too late? The Masters will admit, their website and ability to gamble on horse races is impressive. However does it make sense to be a public company? What can shareholders expect to gain from buying shares? Is there growth? Where's the value? Maybe if we talk to Mr. Ed. That's it, he'll have the answers. A horse is a horse, of course, of course...

Could Jones Soda become mainstream and take on Coke & Pepsi?
Most of you know about Jones Soda (NASDAQ: JSDA). It's that quirky soda with strange labels that has been quietly increasing its market value and stock price. Did you think Coke & Pepsi would sit on their crowns forever and not get challenged? Besides the Energy Drink phenomenon (Red Bull, Monster, etc..) and Hansen's (HANS) amazing run, who's to say Jones can't someday be No. 3 or dare we say No. 1? Yes, the idea is far fetched, but greater upsets have occurred in capitalism (American Auto Industry for one). Jones reports Q4 06 results on March 8th. Jones' shares are trading a few bucks under its 52-week high thanks to the recent crash. They are the small fish in the big pond and you could argue Cramer helped the stock by his recommendation in December. However you can't argue with the growth of the stock, more than 100% in the last 52-weeks. Their 2004 total revenue was $27.4M, in 2005 it was $33.5M, and I can't wait to hear the 2006 total. Jones is all about their fancy bottles, but the company is in the midst of a big-time national rollout of canned soda, and in the soda business, cans are king. Think Jones wants a piece of Coke or Pepsi? You damn straight they do. Article at SmartMoney...

Stephen King: How a small shock upset the apple cart
This is a great article, taking a look at the U.S. Market from an outside perspective. If you didn't read this yet, read it. It's not the Stephen King who wrote Carrie and everything else you know. Last week's carnage in financial markets provides a classic example of the expected happening at an unexpected time. Each investor can pretend the risks are low because he or she believes that every other investor knows about the underlying risks and is pricing assets accordingly. But back to the Stephen you and I know, the Dark Tower series is headed to the big screen. If you have never read these books, do so, it's perhaps his greatest work. Besides bloody prom queens. Continue Article at the Independent...

Wednesday - March 7th, 2007

Investing like Ace Rothstein in Macau China
Last year Macau, China received 21.99 million visitors, setting a new record and registering a 14.6% increase over the previous year. The two biggest Macau casinos that you can invest in have watched their stock drop in the last month. Those big boys would be Las Vegas Sands (LVS) down 14.7% and Wynn Resorts (WYNN) down 18.8% in the last 30 days. Both of those companies are taking over Macau China like Deniro and Pesci took over Vegas in Casino. Like Deniro's character Ace Rothstein said during the movie: "Running a casino is like robbing a bank with no cops around". We turn to Shaun Rein to make some sense of it all, analyze the recent drop in China's market, and focus on China's Tourism Industry. Shaun says "China’s economy is still humming along and there is little correlation with the strength of the stock market and the strength of the overall economy." That maybe so and even if you disagree, it's hard not to acknowledge LVS and WYNN's growth potential that should not be overlooked in the recent market panic. We all know the gambling industry will never slow down, with people constantly losing money, it's just more pressure to make it all back. One more quote from Ace to send us off: In the casino, the cardinal rule is to keep them playing and to keep them coming back. The longer they play, the more they lose, and in the end, we get it all. And how Ace, and how. Shaun Rein article continued...

Jupitermedia gets spanked hard, now what?
Wow, Jupitermedia Corp. (JUPM) said today it has ended talks to be bought by Getty Images Inc. (GYI), tanking Jupitermedia shares by 19%. JUPM shares are now just $2 from its 52-week low and what could possibly be good about today's news? Just last month Jupiter said it was in talks to sell itself to Getty for roughly $9.60 per share. Shares today are at $7.20, so if you got the cash, you could buy the company at a discount. Ichan, you interested? Just imagine how it feels to be some software analyst guy at Jupitermedia today? You can bet the boys at JUPM are probably just finishing up their Rum and Cokes at their desk and taking a printer out to a open field and going to town on the old boy. You know the scene, and if you want to relive it, here it is (YouTube Clip) . Read about how JUPM is going down...

Well my friends, the Masters saw this one coming. E.W. Scripps Company (SSP) got cold smoked last week after issuing lower guidance due to high costs in its internet division and unexpectedly poor performance in its newspapers. In the last month the stock has fallen 9.4%. This is exactly what we cautioned against back in October. They can't all be winners can they? But how about Food Network's star Rachael Ray? She's all over the place - Four Food Network programs, 16 best-selling cookbooks, she edits a monthly magazine published by Reader's Digest, plastered her name on a line of cookware, knives & furniture, shills Nabisco crackers and was asked by NASA to create meals for astronauts. Can't we just buy stock in her?

Our boy Todd Sullivan at Value Plays takes on AIG today and proves how they are not really improving. Todd said While AIG's strategy of refusing to settle claims may have helped them last year, there is a growing bulge in future liabilities out there that will have to get paid. Investor's beware.... Read his article at ValuePlays

Check out Take-Two Interactive shares (TTWO) up %12 today. Shares are screaming today due to an investor group that owns nearly half the company's outstanding shares said it plans to launch a proxy fight to take control of the company. Hot Coffee anyone? GTA Vice City Stories is out for the PS2 if you can't get enough, plus, it's the old city you know so well with new missions and tunes. Here's a review of the game (from IGN), long live Tommy Vercetti. Let's face it, GTA re-defined video games, if TTWO can get under control, their stock could really benefit. Investors know how dope Rockstar Games studio is and how valuable they are to TTWO. Get it together and GO TTWO.

Thursday - March 8th, 2007

Look at Ford (F) today up 4.4%. Ford is flying high on an analyst upgrade from Credit Suisse saying that they will post slightly 'better-than-expected' North American results for the first quarter. Credit Suisse's Christopher J. Ceraso said the following:
"If our new number proves accurate, we think it could mark a potential catalyst for the stock, as it would represent the first 'upside surprise' since the fourth quarter of 2005, and potentially serve as early evidence that the Way Forward plan is beginning to gain traction"
Nice work CEO Alan Mulally is rising to the challenge. So expect the 2008 Ford Light Cycle to rollout any minute. Finally some good news for the troubled automaker after last week's recall of its 2003 pickup and vans for a cruise control switch problem. Alan has a tough job ahead, you can bet he's eating his Wheaties every morning.

McDonalds (MCD) reported today that sales rose 5.7% on U.S. Coffee and improved results in Asia. You bet the Masters last month had articles about Mickey D's coffee vs. Starbucks and how they are getting fatter on foreign soil. Just like these hungry kids:

But don't let their taste for cheeseburgers slow you down. Even if you hate everything McDonald's stands for, why not cash in on their global success? According to McDonald's website:
"Since going public in 1965, McDonald's has paid twelve stock splits. In fact, an investment of $2,250 in 100 shares at that time, had grown to 74,360 shares worth approximately $3.3 million as of year-end market close on December 29, 2006."
Dah, Dah, Dah, Dah-Dah...I'm lovin' it.

Because Craig McCaw didn't have enough money, already
Craig's senior year at Stanford he took control of his family's cable company and ever since then he and his brothers have been setting the pace in the world of cable and cellular industries. The McCaw brothers acquired MCI's cellular wing in 1986 then sold the cable company to Cooke Cablevision (now part of Comcast). In 1994, the McCaw brothers sold McCaw Cellular to AT&T for $11.5B. The company was renamed AT&T Wireless. AT&T Wireless was sold to Cingular in 2004 to become the nation's largest wireless carrier, and today they all are under the AT&T (T) umbrella. So now, its Clearwire (CLWR), and today the IPO is not going as well as planned. Clearwire raised $600M with a 24 million share offering of Class A stock. The shares were sold at $25 each, at the top end of a forecast range of $23 to $25. All eyes are on McCaw and his new wireless broadband internet service provider, so can he do it again? Clearwire's product and technology is amazing, but how quick will it catch on? Everyone that wants broadband has it. So can he offer it for a better price and wouldn't a wireless setup be cool? Well, we would all like that, but are we going to make the switch, how easy is that for everyone, is it cost effective? Will the God of the Cell phone become the God of Wireless Internet? Time will tell. Jon Ogg's take on the IPO...

Friday - March 9th, 2007

eLong (LONG) is taking a huge beating today, hitting a new 52-week low down almost 20%. The Chinese travel website released disappointing revenue totals and the bears are tearing apart the stock worse than Mel Gibson's rantings at a highway patrol officer. Hotel booking commissions came in at $7.2M down 2% from the third quarter and up 23% when compared to the year-ago period. eLong had $1.2M in revenue from air ticket sales, a decrease of 13% from the third quarter of 2006 and up 27% percent year-on-year. They finished the quarter with a net loss of $234,000, compared to a net income of $337,000 in the third quarter and a net loss of $1.1M in the same period in 2005. Bottom line Masters, the online travel revolution has yet to set sail in China, but China's internet use is on the move. China's internet market grew steadily in 2006 as the number of users increased to 135 million, according to a report by CCID Consulting. This is a long-term growth stock people, think 5 years, not 5 days or 5 months. Besides, everyone is turning a sour face to Chinese stocks so the result to the earnings call is no surprise. There are plenty of people that believe that China's stock market correction was long overdue but won't hurt growth. Not convinced? Can't say I blame you, hold tight and watch this stock, with Expedia's (EXPE) influence eLong is destined to make a comeback. Expedia did it, and everyone hated that stock last summer. eLong is expecting Q1 2007 total revenue to come in between $8.0M and $8.5M, stay tuned.

Strong demand for corn from ethanol plants is driving up the cost of livestock and will raise prices for beef, pork and chicken, the Agriculture Department said Friday. The average price of corn, unchanged from last month, is $3.20 a bushel, up from $2 last year. The StockMasters recommend stockpiling these items because it's the end of world as we know it.

ZymoGenetics gets an upgrade, Barkely gambling pays off
Well look at that, you remember that so-so article we wrote about ZymoGenetics (ZGEN) and Charles Barkley. Turns out today Bear Sterns upgraded the company, citing optimism that a spray version the company's bleeding control product will get approved ahead of schedule. Shares of ZGEN are trading up 4% however Barkley's gambling debts remain unchanged. It's fun when the Masters are on the money but don't worry, we won't get all cocky. We'll leave that to Cramer. ZGEN still has a long way to go, they need to start making some sales, reduce spending, stop gambling, and start playing ball. Article continued at Yahoo...