March 07: Week 4 - PureDepth, RNWK, Palm, CNBC Secret Squirrel Club, MOT, and Ozone, Street Dancer


Monday - March 19th, 2007

PureDepth’s technology could profoundly change the $85 billion U.S. gambling industry
PureDepth, Inc. (PDEP.OB) has inked a deal with International Game Technology to provide a "realistic digital video display" to add a new level of control to vanilla slot machines. Now casinos can change the typical cherries and numbers to Brad Pitt and Angelina Jolie's kids, for instance, if they know Brad and Angelina are staying at their casino and want to score some suck-up points. Furthermore those same casinos can now control the cost, payout, and nearly every other aspect of the game making it one profitable and anticipated revenue cash cow.

PureDepth slot screens were created using real depth between two or more LCD panels providing "viewing innovation" that enables users to simultaneously view two separate fields of data on one monitor. By overlaying two or more separate image planes within a single monitor, PureDepth adds realistic 3D effects that are pleasant to the eye and they have 46 approved patents and more on the way to protect their valuable investment.

However, before you get all excited and start buying up shares of PureDepth because they only cost $1.77 a share, they are an OTC BB stock. The technology and payday of this company are why we are writing about PureDepth, that and anything we can do to dig at Brad and Angelina's child acquisition spree. I mean how many kids can you adopt in a 90 days? Seriously? Isn't their a limit on how many people you can buy? Nope celebs rule the world. But expect PureDepth to get more media attention and should you decide to invest in them, consider they will be operating in the red for a long time to come. If you are bored today, read PureDepth's last quarterly report, it's not pretty and the word "Risk" appears 15 times (which is as many times as Brad and Angelina mention their kids in a typical interview). If PureDepth can become profitable, then it may be time to think about buying shares, but if you like gambling and playing the slots, by all means, let it ride. Read more about PureDepth...

RealNetworks, Inc. worth looking at
With the market doing so well today, let's take a look at a company that isn't doing so hot. RealNetworks, Inc. (RNWK) has taken a beating in the last 3 months falling 28% in share price. Shares are trading around $7.77, which is 20 cents from their 52-week low. The Masters are further inclined to mention RNWK after they were Upgraded last week by Goldman Sachs and the response was a quick rally followed by shares falling right back down. Goldman Sachs analyst Anthony Noto upgraded RealNetworks to "Neutral" from "Sell". He does not see a significant downside to the stock following its weakness over the past few months. Noto went on to say:
"Our fundamental view that the company operates in a competitive environment and could see decelerating growth in many of its product lines remains unchanged."
Noto believes these concerns are already priced into the stock with it trading at such low prices. He then said:
"We also believe that the company could be increasingly interested in buying back shares at current levels, which would provide near-term support."
RNWK brought home $395M in revenue last year and $145M in net income - thus they are profitable America. Besides their consumer products and services such as Rhapsody, RealPlayer, and Real Music Store RNWK has its Helix Initiative and the Helix Servers going for them. RealNetworks is more than just their RealPlayer and could be worth a look while it is trading at its current levels.

With crap sales of the PS3, Sony (SNE) could be the perfect short candidate. So in over six years, the WORST month the PS2 had in America is 87,000 more units than the PS3 unit sales in February. The PS3 sales were barely 60% of the worst PS2 monthly sales. Sony is in trouble (read more) .

Tuesday - March 20th, 2007

Big Money and Bullies always get their way. Ain't that right Boss Hogg? Today Blockbuster's (BBI) CEO John Antioco will leave by the end of the year (Uncle Jessy for this story) and agreed to a smaller 2006 bonus and resolved a dispute over his pay package. Billionaire investor and director Carl Icahn (Boss Hogg in this story) tried to kick out Antioco from the board during a 2005 proxy battle and called his $54M severance package at the time "unconscionable." Well, looks like that all worked out. As you know fellow Masters, we love the Icahn. He knows how to throw his money and weight around just like he has done at American Railcar (ARII) and everywhere else he goes. Wedbush Morgan analyst Michael Pachter said:
"My guess is that as long as Antioco is there, they don't change anything. The impact should be positive short term, because ... Icahn wants the share price to go up. I really think Icahn just is impatient. He is not a long-term investor." So what does Antioco get? Don't feel bad for him, he will receive a salary of $1.25M, a $2,025,000 bonus, a bottle of moonshine, and deferred compensation of $1.45M. Icahn's gets even a bigger ego and the "badass of the week award". Ya'll come back now, ya hear.

Palm (PALM) is expecting a buyout this week, they are saying shares could fetch $20, it's trading at just below $19 today. The price tag for Palmmy is a nice $2B (maybe Boss Hogg will buy them) and the sale could happen this week. "Sources" have previously told Reuters that Palm hired Morgan Stanley to pursue a buyer. Unstrung said that Morgan Stanley wanted to wrap up a deal by Thursday, when Palm is scheduled to report quarterly results.

Housing: Enough Already!!
"I got two words for you, shut the **** up" ~ Robert De Niro, Midnight Run (1988)
Todd Sullivan puts the "housing" and "subprime" talk into perspective and provides some relevant data as to why everyone just needs to cool their jets. When the media gets stuck on something they are like Rainman obsessing about Wapner being on in 5 minutes. Let it go gang. For two years all we have heard is "housing must slow down" and "there are too many risky loans out there". Now that the housing market has slowed down and the home buyers with those risky (subprime) loans did exactly what we knew they would do, default, this is suddenly a big deal? Read more at ValuePlays..

Wednesday - March 21st, 2007

The CNBC Secret Squirrel Club
More on the Palmster, A major Palm (PALM) shareholder (who wished to be unnamed - thus Mr. Secret Club guy) told CNBC's Jim Goldman that  Motorola (MOT)  is expected to announce as soon as Thursday a deal to acquire Palm  for roughly $2B. "For Motorola, I think it's the threat of Nokia owning Palm," the The secret club guy shareholder said. "The upside for Motorola is much greater...Paying $2B in cash for a company generating $120M in free cash flow is not a stretch.  They could pay up to $25 a share and the deal would still be accretive.  Accretive immediately."
Shares of Palm are trading around $19. We are hoping the secret shareholder issues decoder rings so we can find out who he really is. Could this guy just be the greatest pumper in history or is he credible? Does he do his normal 9 to 5 during the day then fight crime at night? Sounds like a job for Secret Squirrel and Morocco Mole, better yet get Inspector Clouseau to find out who the anonymous shareholder might be. That way he can blow up the entire building and make it look like an accident. You have to admit, Peter Sellers was the man, Steve Martin was terrible in that recent remake. You also have to hand it to CNBC for putting a secret shareholder on the air (and on their website) and calling the whole thing an Exclusive story, I didn't know they were in the pumping business?

New 52-week low for Smart Move Inc. (MVE) with shares hitting $3.90. This company is a great idea, but not all great ideas turn out to be great investments. If you have to move, just load up their SmartVault shipping containers to and you've got yourself storage and they'll move the containers to your new home. They Guarantee the delivery time, have GPS to track your stuff, and allow you 28 Days to pack and move. Sounds great doesn't it? Revenue for the nine months ended Sept 30, 2006 increased 393% to $3.2M as compared to the same period last year. But the net loss of $8.1M for the first nine months of 2006, compared to a net loss of $2M for the same period in 2005 has got investors worried. If they can get out of debt, the Masters will consider investing in MVE, until then, move on.

Thursday - March 22nd, 2007

Micron Technology (MU) shares have fallen over 33% in the last six months. Shares of Micron are in the $11 range and flirt with a new 52-week low on a daily basis. It's no surprise though considering the flash memory sector is hurting, just look at SanDisk (SNDK). Micron is to Boise, ID like Boeing (BA) is to Seattle, WA.
Micron got an Upgrade on March 12th by Citigroup Investment with the expectation that DRAM prices will stop falling soon. They decreased the stock's 52-week price target to $15.50 per share from $17.50 per share. Micron has been around since 1978 and they manufacture & market DRAM, Flash memory, CMOS image sensors, other semiconductor components, and memory modules. Think they can pull out of their slump? Might be worth thinking about.

Rackable Rumors move it up
Look at the Rack go! Rackable Systems (RACK) shares are up 9% today. There is a rumor that Sun Microsystems (SUNW) is looking to buy them but that is unconfirmed and could be just as much hype as yesterday's CNBC Exclusive interview with the unnamed Palm Shareholder (Mr. Secret Club Guy).
By the way, have you checked out Palm today (PALM)? Shares are down almost 9% but don't worry, I'm sure that buyer is coming any minute, just tune into CNBC. Back to Rackable...
They did make news today and hired a new Executive Vice-President, Carl Boisvert who has more than 20 years of leadership within the server market. This is great news for Rackable considering their stock price has dropped 40% in the last three months. Their stock is still trading miles away from its 52-week high of $56. Shares of RACK are trading at just under $18 today. Rackable is a promising company with a great product. They are a trendsetter with their open architecture server designs and low cost server solutions. Just to let you know their clients include Amazon.com (AMZN), Yahoo! (YHOO), Electronic Arts (ERTS), and many more. Rackable is here to stay.

Friday - March 23rd, 2007

Yesterday the finger pointing over the Subprime headache took a turn for the worst when U.S. Senators accused the Federal Reserve and its former chairman, Alan Greenspan, of a "pattern of neglect" that fostered a crisis in the mortgage industry. Forget the fact that he saved us from economic hardships during his tenure from 1987 to 2005, he's the one to blame.
Even if he is to blame, imagine being in his shoes after serving and being reinstated by Presidents Ronald Reagan, Bush I, Bill Clinton, and Bush 2 Electric Boogaloo.

Why take the blame when you can point fingers? Greenspan should have been a "Street Dancer" like Ozone. How would Ozone respond in a situation like this?
Ozone: Girls are whack, man!
Exactly, change the subject and pretend like you didn't hear the question. Hang in there Alan.

Just like clockwork, Carl Icahn is urging Motorola (MOT) shareholders to vote him onto the company's board at its May 7th shareholder meeting. Carl now has 2.7% of MOT shares and is playing Mr. Nice saying he only wants to be a shareholder and not fire everyone or force the CEO to leave - just like he did with Blockbuster (BBI).
Blockbuster fans are having a tough week and it's only getting worse with Cramer giving his approval to dump shares as well.
BBI is down 5.6% for the week, MOT is down 2.3% for the week. The Ichan factor, its the real deal, good or bad.

It's Friday so how about a laugh and take a break from the market. Let's review the Chappelle's Show clip from season 2 on Electric Guitar, Drums, or Electric