Wednesday, April 27, 2011

A Double Dip Recession May Be Inevitable

A potential double dip recession was a large concern a year and a half ago. There was a belief that the deep economic downturn of 2008 and 2009 could not generate enough momentum for an even modest recovery. Then, the unemployment rate started to fall, car sales began to rebound, same-store retail sales improved, corporate earnings moved higher and fuel prices dropped. The comeback was confirmed by a strong holiday sales season last year and fourth quarter GDP rose 3.1%. Unemployment has fallen below 9% much sooner than most economists believed it would.
It has only taken a few weeks, but the chances of a double dip recession have increased. The term is mentioned more often in the media and in speeches by economists. Several large companies have said that their margins and sales may be hurt by inflation.
There are a relative small number of reasons that the economy has begun to slow and most of these have worsened quickly. This 24/7 Wall St. analysis looks at each one, explains how its trajectory and momentum has changed this year, and how it could derail the economic recovery.
1.       Wages
Wages fall behind inflation. The Labor Department said that real wages fell in March, the fifth straight monthly dip. Inflation has risen sharply at the same time.  Retail prices may not have spiked yet, with the exception of gasoline, but businesses will have to start to pass along the rising costs of their raw materials to their customers. People cannot afford to maintain the lifestyles that they could just six months ago.
2.       Real Estate
Real estate prices could fall another 10% this year. Real estate guru Robert Shiller, the creator of the Case-Shiller index, said that home prices could plunge as much as 10% to 25% before the market bottoms. That would have several effects if it happens. The first is that the number of mortgages which are underwater could rise by the millions. Most estimates are that 11 million home loans are worth more than the properties they  are underwriting. Desperate homeowners who cannot afford their mortgages will find it harder and harder to sell, particularly if they need to pay a bank the difference between loan value and home value at the close of a sale. Long-term home owners who bought their houses before 2000 can still hope to have some real estate equity when they retire. Home price attrition would kill that hope and with it the belief many have that they can fund their retirements. Concerns about future income shortfalls almost always hurt current consumer spending.
3.       Unemployment
Long-term unemployment has not improved. The number of people in the US who have been unemployed is more than 4 million by most estimates. If individuals who have stopped looking for work are included, the figure would be much higher. The longer people are out of work, the more likely that they will exhaust their financial resources. If that happens, they need to rely on family or private charities for basic support such as food, clothing and shelter. Obviously, people with no income are not consumers. The problem is broader than that. Families which care for unemployed relatives have less discretionary income to spend on themselves.

4.       Gasoline prices.
This problem touches affects every other one on the list but is insidious all on its own. The price of gas is up 35% in one year. A family that buys 300 gallons each month has to pay about $3,600 more on an annual basis to drive than it did a year ago. Three hundred miles is very little for a two income household with two people who commute by car. The other impact of rapidly rising gas prices is psychological. People look at a spike in fuel costs and often assume that the problem will get worse.
5.      Labor Productivity
Non-farm business sector labor productivity increased at a 2.6% annual rate during the fourth quarter of 2010, according to the U.S. Bureau of Labor Statistics. That is on top of several “improvements” in the previous quarters of 2010. Productivity tends to help business profits and hurt job creation because businesses learn to do more with fewer workers. Economists hoped that as the economy improved that businesses would add workers to support new sales. That will not happen if the recovery stalls.
6.       Small Business Credit
Lack of access to credit for small businesses. The US Small Business Administration reported in its 2010 Small Business Economy document that businesses with 500 or fewer people now employ about half of the US private labor workforce and create about 50% of private US GDP. But, these firms were hurt more by the recession than larger companies. In the first quarter of 2009, small companies accounted for 60% of all job losses. The main reason for that damage and the primary reason small business has not recovered well is access to credit. Large companies currently have unprecedented access to capital and interest rates are at historic lows. A large number of huge corporations have so much cash that they do not need access to capital at all. Banks are more willing to lend money to small businesses, but the improvement is modest. The Wall Street Journal reports that “the rebound in lending remains in its early stages, with credit growth more anemic than in past recoveries.”
7.       Government Employment
Cuts in government employment. Austerity may be good for the federal debt, but it is bad for public employees. And, the problem is not limited to Washington. States and municipalities have found that the capital markets want higher and higher interest rates to put money into government entities. The fight over jobs and job benefits may be most visible in places like Wisconsin now, but austerity at the federal level will cause job reductions in everything from the military to the Post Office.
8. Tax Cuts
Muted benefit of low taxes. When the House voted 277 to 148 in December to extend the Bush tax cuts, continue unemployment benefits, and provide some tax relief for corporations, the theory what that the President’s signature would assure GDP stimulus in 2011. The federal government gave up about $800 billion in tax receipts over the next two years because of the action. Estimates vary, but a typical American household should have benefited by over $1,000 because of the decision. That money would be reflected in improved consumer spending and business investment this year. The trouble is that high fuel prices and rising commodities costs will negate the value of the lower taxes and the extra money that they put into the economy.
9. Equity Markets
Slower stock market gains, or a drop. A great deal of the money lost by American investors, US mutual funds, and pension funds due to the collapse of the stock market, from 14,000 in October 2007 to 6,600 in March 2009. The DJIA is 88% higher that it was at the trough. Those gains have helped consumer spending as people’s portfolios have improved. But, that improvement will not continue at a 40% per year rate. And, the market has gone up enough that high commodities prices or slowing GDP growth could cause another sell-off. People and corporations with money in the market could feel poor very quickly if the market behaves much differently than it has for the last two years.
10. Stimulus
The effects of the $787 billion stimulus are gone. The American Recovery and Reinvestment Act was meant to have an effect on the economy beginning when it was signed into law in February 2009. The Council of Economic Advisers said that it would take a number of quarters for the money to reach all parts of the economy. USA Today reported that Nariman Behravesh, chief economist at IHS Global Insight, predicted the biggest effects would occur in 2010 from the bill’s spending for aid to state and local governments and on projects such as roads, bridges and transit . Most of the money is spent now. State and local governments certainly could use more help. Whatever jobs were to be saved or created by the funds have been saved or created. Nobel Prize-winning economist Paul Krugman argued in mid-2010 that “We are looking at what could be a very long siege here. We really are at a stage where we should have a kitchen-sink strategy. We should be throwing everything we can get at this.” If his concerns were accurate, it is a bit late to have acted on them. The stimulation from the stimulus has come and gone.

When Analysts Expect Shares to More Than Double (VICL, PRAN, BMY, AMGN)

We recently have picked back up on searching for ten-baggers in the field of biotechnology and those companies tied to a broader “BioHealth” sector.  Ten-baggers are those which can rise tenfold, or 1,000% from their lows, and these are generally measured from an extreme low in the shares.  Occasionally you do get to see a legitimate Wall Street analyst calling for a stock to more than double.  That is exactly what we are seeing this morning in shares of Vical Inc. (NASDAQ: VICL).  Canaccord Genuity initiated coverage with a “BUY” rating and it assigned a whopping $8.00 price target objective based mostly upon its Allovectin-7 as a potential malignant melanoma treatment.
Before we get too far into the Canaccord call, it was just recently that we issued a potential ten-bagger alert in Prana Biotechnology Ltd. (NASDAQ: PRAN).  It was after this note that a portfolio manager sent us an email as to why Vical was “his ten-bagger pick” in the space based in part on the belief that A-7 will get FDA approval after its results.  And, yes, he did disclose that he owned the position.  The portfolio manager’s biggest point is a true one: Prana may be a decade out, Vical is a 2011 to 2012 event.
Back to Canaccord Genuity… Vical closed at $3.25 on Monday and the 52-week trading range is $1.70 to $4.05.  What Canaccord Genuity did was issue a research report calling for almost 150% upside.  This is not unheard of, but calling for 100% upside in a formal research report is generally thought of as being extremely optimistic.  This call was for 146%. There are very few analysts which cover Vical at this time and the consensus price target is about $5.50 per share. 
OK, so almost 10% of that upside has already been spoken for.  Vical shares were up 9.5% at $3.52 on more than 1 million shares even right before Noon today.  Here is what Canaccord Genuity sees that the rest of us haven’t yet considered or caught on to as of yet:
  • Anticipation of appreciation going into A-7′s Phase III melanoma trial results maturing in the first half of 2012.
  • Bristol-Myers Squibb (NYSE: BMY) was referenced as a point for stand of care and as a recent approval by the FDA.  A7 is noted as having even better results, with a 7.5-year survival rate in some of its patients. 
  • A7 also had a lower adverse event-risk than Yevoy with positive survival data.  A-7 was said to absent of Grade 3/4 adverse events.
  • The firm now models $1 billion in combined US/EU sales by 2018.
  • Almost all of Vical’s market cap is based upon its A7 as an oncology asset, but the belief is that A7 will reflect well upon its entire vaccine platform.  The company’s valuation is believed to be back-stopped by the DNA-based vaccine technology platform.
There are of course some risks.  The obvious is that clinical trials could fail or that regulatory hurdles could arise, and there is also a risk that competition could change.  Canaccord further noted that Vical had $52 million in cash at the end of 2010 and that should be ample to fund clinical trials and operations into the second-half of 2012.
There is also an Amgen Inc. (NASDAQ: AMGN) reference here.  Canaccord’s team noted, “Data from a proof-of-concept trial evaluating Amgen’s newly acquired OncoVEX also supports immunotherapy potential in this indication.” Canaccord also gave a pipeline chart with the status of each candidate, shown by name, target, who the product partner is, and what stage these are in:
  • Allovectin-7 AnGes, Teva Phase 3
  • TransVax none Phase 2
  • HIV DNA vaccine none Phase 2
  • Malaria DNA vaccine none Phase 2
  • Ebola vaccine NIH Phase 1
  • H1N1 Pandemic Influenza virus US Naval Medical Research
  • Center collaboration Phase 1
  • H5N1 pandemic flu vaccine none Phase 1
  • SARS vaccine NIH Phase 1
Vical has a market cap of $255 million even after today’s move.  Biotech and biohealth companies typically trade at mulotiples of revenues rather than at fractions of revenues.  Analysts only see $21 million 2012 revenues, so that “multiples” is true today.  The difference is what happens if Vical can actually ramp up to that $1 billion in sales by 2018.  There could still be a lot more to this story, particularly when Vical gets the call for its virus vaccine prgram any time the government gets scared about a new potential pandemic outbreak like SARS, pandemic flu, and worse.

Analyst Caution Takes Hold At Netflix (NFLX, AMZN, AAPL, GOOG)

Netflix, Inc. (NASDAQ: NFLX) had some impressive growth numbers on the surface.  The problem is that Wall Street and investors look ahead, and the devil is always in the details.  We have seen some positives so far, but we are also seeing some new and stronger caution prevail in the analyst community as well.
The numbers were impressive on the surface: Revenue rose about 45% to $718.5 million, operating income rose 75% to $102.2 million, and earnings rose about 88% to $1.11 EPS; Churn was up marginally to 3.88% per month, average revenue per user was up over 4% to $12.18 and subscriber acquisition costs fell by about one-third to $14.38 per user. 
Gabelli & Co. is cautious on the stock.  It noted decelerating growth in Canada, a new market lauch in the second half of this year, the launch of a third international market in 2012.  It did note that “fears of chord cutting were likely misplaced.”  Another plus was that House of Cards, its original series license, is “merely an extension of its success with serialized drama. While a new series has more content risk than reruns, the investment risk remains manageable.”  Perhaps the biggest concern from Gabelli was competition from Dish, (NASDAQ: AMZN), and Hulu, along with higher content costs.
Gabelli says “Sell” on Netflix.  The firm calls it “an excellent business, priced for perfection” priced at 30-times 2011 EBITDA and 55-times expected earnings. 
Janney Capital Markets also downgraded its rating to “Sell” and it is reducing its a ‘fair value’ target to $170 from $175 based on lower expectations in 2012.  The firm also cited competition, and it cited higher content costs and cited an expectation of higher subscriber acquisition costs.  It also cited rising risks of competition coming from Apple Inc. (NASDAQ: AAPL) and from Google Inc. (NASDAQ: GOOG).
Janney Capital further noted, “we are troubled by the company’s streaming cost accounting and its limiting of disclosures in this increasingly volatile environment.”
Again, there are generally two sides to any story and Netflix sure has more than one side to this story.  Gross margins of 39% were higher than most estimates, as were the growth in subscriber targets.  Maxim Group has reportedly raised its rating to “Hold” from “Sell” after the earnings report.  Following last night’s release, Canaccord Genuity raised the expected price target to $300 from $250 on the belief that “Netflix is in the sweet spot between declining physical competition and the advent of serious digital competition.”  Canaccord also raised revenue and earnings expectations to $3.3 billion in sales and $5.40 EPS for 2011 and $4.5 billion in sales on $8.29 EPS in 2012.

The caution is so far outweighing the positives.  About six minutes before the open, Netflix shares were down 5.15% from its $251.67 close at $238.68 and its 52-week trading range is $90.00 to $254.98.
After about fifteen minutes of trading we have Netflix shares trading down 4.4% at $240.62 and we have already seen more than 3 million shares trade hands.

Dividend Watch: Making More Income Off Your Health Insurer (HUM, UNH, AET, WLP, CI)

Humana Inc. (NYSE: HUM) just became the newest dividend player when it comes to health insurers.  Maybe you aren’t happy about the cost of healthcare, but at least you can now collect higher income off the profits in this controversial investment sector. Humana raised its earnings guidance and forecasted first quarter earnings at $1.86 per share.  Thomson Reuters has estimates of $1.24 EPS.  For 2011, Humana also raised its guidance to $6.70 to $6.90 EPS against a Thomson Reuters estimate of $6.31.  The big move for investors is the new dividend announcement and the buyback announcement that came with the results.
The new dividend rate will be $0.25 per quarter per share of common stock.  What makes this dividend so interesting is that the dividend yield is north of 1.3%, even after today’s share price rise of more than 5%. Unitedhealth Group, Inc. (NYSE: UNH) currently yields about 1%.  Elsewhere in the sector, WellPoint Inc. (NYSE: WLP) yields about 1.4% and AETNA Inc. (NYSE: AET) yields about 1.5%.  This probably puts the heat on CIGNA Corporation (NYSE: CI) to start a better payout as well as its current yield is only about 0.1%.
Humana’s dividend is payable on July 28, 2011 to stockholders of record on June 30, 2011.  The board also replaced its prior share buyback plan of up to $250 million with a new authorization plan of up to $1 billion by June 30, 2013. The company had about $100 million still outstanding and not executed in its prior plan.  Humana’s market cap is roughly $13 billion after today’s move.
Humana is also realigning its segments into Retail, Employer Group, and Health and Well-Being Services; and it also said it would start to break out its “other” operation income as well.  Humana hit a new 52-week high this morning on the news and shares are currently up 5.3% at $76.58 so far this morning against a new 52-week range of $43.17 to $77.80.
  • Unitedhealth Group, Inc. (NYSE: UNH) is up less than 1% at $48.13 and its 52-week trading range is $27.13 to $48.90.
  • WellPoint Inc. (NYSE: WLP) hit a new 52-week high earlier this morning and the stock is currently up 0.7% at $72.74 and its 52-week trading range is $46.52 to $73.35.
  • AETNA Inc. (NYSE: AET) hit a new 52-week high and the stock is up 1.4% at $39.36 against a 52-week range of $25.00 to $39.71.
  • CIGNA Corporation (NYSE: CI) is up 0.8% at $45.68 and it is almost at a new 52-week high as the range of the last year is $29.12 to $45.98.
What is amazing is that Humana has not paid out a dividend since the early 1990′s.  The goal of the latest healthcare reform, if you call it reform, was to basically turn these insurers into the equivalent of regulated utilities.  The payouts are rising, and the big giant insurance mergers seem to have played out to where there are literally a few key players in each local market now.  If these are on the way to becoming regulated utilities, than investors are likely to demand even higher payouts ahead.

M&A Watch: Lawson, Icahn, and Private Equity (LWSN)

Lawson Software, Inc. (NASDAQ: LWSN) has managed to figure out a way to greatly underwhelm investors and speculators alike.  The company agreed to a sale price that is south of where the shares had traded.  While this is not illegal nor immoral, accepting what some would consider a “take-under” leaves a very bad taste in the mouths of investors.
The proposed buyout was for $11.25 per share in cash from Golden Gate Capital and from Infor.  The deal was said to be a competitive bidding process and the stock had run up before a deal was announced as investors were looking for further consolidation in the sector.
What is so interesting about this is that Carl Icahn was“seeking the highest price” yet the shares were much higher.  Shares had reached as high as $12.50 after word was out that the company might fetch more in a rival bid.  Then shares were trading at $12.13 just at the close on Monday.  A filing from Icahn today showed that a conversation took place with Lawson’s CEO and that this was the highest price available. The results for Icahn are not all that bad considering he was either the largest or second largest shareholder and that he started acquiring shares at $6.63 a year ago.
When we did the valuation analysis over the speculation in March for possibly more, we were a bit concerned as the private equity group was already paying almost 2-times 2012 earnings expectations.
Lawson’s 52-week trading range is $6.93 to $13.06, and the $13.06 high came after the surfacing of the offer.  The fact that Lawson was briefly higher ten years ago won’t matter to many any longer.  This is close enough to a high that it will be hard to argue that any laws were broken.  So far we have seen at least three different law firms issue statements about “investigations” over breach of fiduciary duty.  These sometimes blossom into class actions, but they often do not.
Any investor who bought before March made money.  Anyone investing in or speculating in Lawson after early March just learned the lesson that one buyout offer does not always garner yet another buyout offer.  This looks like a low-premium merger, but a low-premium merger that can still get done.

Dividend Watch: IBM Smart Move, Also Not So Smart Move (IBM)

International Business Machines Corp. (NYSE: IBM) is the largest Dow Jones Industrial Average component by far due to its share price.  If it was based on market capitalization like most indexes, IBM would rank fifth in the DJIA weighting.  News this morning of a higher dividend and an increased share buyback plan is helping to drive shares a bit more.  We view this morning’s news as part-genius and part nonsense.
IBM’s new dividend is $0.75 per common share, payable on June 10, 2011 to holders of record May 10, 2011.  This dividend hike is a smart move and frankly is something we would have liked to see even more of.  The payout is $0.10 higher, a jump of about 15%.  This was the good move.
The “bad move” by our take today is that IBM boosted its “other dividend”…. It increased the common stock repurchase plan by authorizing an additional $8 billion.  The company noted specifically that this additional $8 billion is in addition to about $4.7 billion it had remaining at the end of March from its prior share buyback plan still under authorization.
IBM did counter our ‘nonsense’ view by stating ahead of time that it “expects to request additional share repurchase authorization at the October 2011 board meeting.”
The new dividend payout comes to nearly 1.8% in a dividend yield.  The $12.7 billion or so that the company now has in total authorization for repurchase after this morning’s jump compares to a market capitalization rate of about $205 billion.
So, why is this nonsense for buying back stock?  Investors generally operate under the gumption that companies want to repurchase their shares when things have been tough as a mechanism of support.  Of course that is not always the case.  Still, this comes at a time when IBM shares are at historic highs.  This gives credence to a cynical view that maybe IBM is the only one left who wants to buy more IBM stock.
IBM could be using its cash to acquire more bolt-on companies or units of companies rather than simply shrinking its float.  IBM could trade at 6 times earnings and it would still be too large for an acquirer.  How many entities can write a $200 billion check?  Very few, or more likely none.  IBM doesn’t have to shrink its float because there are no predators due solely to size.  Investors might feel the buyback is a good return of capital, but more sophisticated investors might be thinking that this is a move to support the stock at all-time highs rather than a move to buy growth for the generation ahead.
IBM recently showed that its order backlog is a whopping $142 billion.Its most recent gross margins were reported as being 44.1%, and it had free cash flow of $800 million in the last quarter.  If IBM decided to stop buying back its stock it would be able to grow its cash even further, and then it would not have to dilute its share count ahead.  Many argue that this is six-of-one or a half-dozen-of-the-other. Maybe it is.  Still, we’d rather see companies using capital to increase dividends rather than to buy back stock at all-time highs.  We’d even rather see larger one-time dividends over share buybacks at all-time highs.
IBM shares hit an all-time high of $169.20 today and the stock is up 0.65% at $168.75 so far this morning.  Volume is not exactly stellar with about 3.4 million shares having traded hands mid-day.

SIRIUS XM Hits $2.00… What To Expect Now (SIRI)

When penny stocks cross each new dollar level, speculators and investors generally take a look at what they are holding and decide if there is a reason to keep on holding on or whether they should move on down the road.  When you add in that this is SIRIUS XM Radio Inc. (NASDAQ: SIRI), you could have a serious review by this same investment community.  SIRIUS XM did print a new high of $2.00 today and its new adjusted 52-week trading range is $0.86 to $2.00.
SmarTrend over the weekend pointed out that SIRIUS XM has the highest EV/Sales (enterprise value to sales) ratio of all cable and satellite providers at 3.6-times enterprise value.  If you go back to our “10 Hidden Gems” from the SIRIUS XM 2010 Annual report, we would caution against this sole enterprise value note as the real market cap is based on about 3.93 billion shares outstanding.  The company actually has 9,000,000,000 shares authorized at December 31, 2010 and 3,933,195,112 of those are what makes up the free float.  Liberty Media Corporation holds preferred stock that is convertible into 2,586,976,000 shares of common stock and the company cannot issue equity or debt securities without the consent of Liberty Media.
This $2.00 milestone hit this morning is right on the heels of what has become a near-term high in short selling in SIRIUS XM.  This also comes after SIRIUS XM lost Wunderlich as one of its top market bulls after a downgrade in recent weeks.  If U.S. auto sales can stay on the mend, then SIRIUS XM Radio might be able to milk out more and more gains.  The supposition here of course is that this also implies that the economy keeps growing and that higher gas prices won’t curb new car buying.
It seems that what matters most is the upcoming price hikes.  A post-merger suit is still out there, but it seems that it is more than a bit late to have much impact today.  With Pandora soon to be public and with “free” radio out there for anyone, it seems that calling this a monopoly may be harder and harder to prove.
Still, the question needs to be “What happens at $2.00 per shares?”…  The answer so far is that the buyers backed away and the sellers didn’t back away.  Shares hit a high of $2.00 briefly today and that did not last very long.
There is another situation that investors and speculators will want to pay attention to here.  Options trading has to go on the rise.  When stocks “break a buck” (hit a new dollar price), it generally means that options trading sees an increase as well.  We have seen only about 2,300 of the May 2011 $2.00 CALLS trade hands today. If you go out to June 2011, the same sort of options trading is seen.  For this to matter, you should probably have to see trading volume go up easily into the tens of thousands of contracts.
It would be easy to say that SIRIUS XM should be a “Sell” here.  It would also be easy to say “It will keep growing.”  There are as many caveats as one can imagine in SIRIUS XM regardless of which side of the market you are on here.  At a minimum, it would seem that many SIRIUS XM holders who have been in the stock for less than three years would exercise some prudence and lock in at least some profits.  It now may take new buying interest from a pool of new investors for SIRIUS XM to continue running higher and higher.

After-Hours Top Earnings & Event Stock Movers (BRCM, BWLD, KEYN, LDK, MIPS, REGN, RFMD, SFSF)

We have many after-hours movers after earnings and other reported events.  We are tracking moves in Broadcom Corporation (NASDAQ: BRCM), Buffalo Wild Wings, Inc. (NASDAQ: BWLD), Keynote Systems, Inc. (NASDAQ: KEYN), LDK Solar Co., Ltd. (NYSE: LDK), MIPS Technologies, Inc. (NASDAQ: MIPS), Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN), RF Micro Devices, Inc. (NASDAQ: RFMD), and SuccessFactors, Inc. (NASDAQ: SFSF).
Broadcom Corporation (NASDAQ: BRCM) was one we were having mixed emotions in ahead of earnings.  In the current quarter, sales were put in a range of $1.75 to $1.85 billion and that was a disappointment.  Shares are down over $3.00 or more than 8% at $37.13 on more than 2.2 million shares in the after-hours.
Buffalo Wild Wings, Inc. (NASDAQ: BWLD) beat earnings substantially at $0.81 EPS versus a Thomson Reuters figure of $0.73 EPS.  Same-store sales were up and it is opening 100 new locations.  For some reason the company did not introduce “The Ring Stinger” as the hottest wing sauce available.  Shares are up 4.7% at $63.30 on more than 50,000 after-hours shares. 
Keynote Systems, Inc. (NASDAQ: KEYN) blew out earnings at $0.29 EPS versus $0.21 estimates; shares are up 9.9% at $23.35 on more than 32,000 after-hours shares.
LDK Solar Co., Ltd. (NYSE: LDK) lowered guidance after having closed up on the day by more than 3%… The company lowered revenue guidance by about $100 million in the first quarter but reaffirmed its 2011 range.  Shares are down 4.55% at $10.90 on more than 2 million shares traded in the after-hours session.
MIPS Technologies, Inc. (NASDAQ: MIPS) is getting drilled after turning in $0.09 EPS versus $0.10 EPS estimates, but lower guidance is the real killer.  Shares are down 12% at $9.40 on more than 365,000 after-hours shares. 
Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) is not an earnings play but it feels like one… The company turned in positive results with Sonfi-Aventis (NYSE: SNY) showing that the Phase III VELOUR trial evaluating ZALTRA in combination with the FOLFIRI chemotherapy regimen versus a regimen of FOLFIRI plus placebo met its primary endpoints of improving overall survival in the second-line treatment of metastatic colorectal cancer.  Its shares are up 7.9% at $56.25 on more than 250,000 after-hours shares. 
RF Micro Devices, Inc. (NASDAQ: RFMD) had a 23% drop in revenue  and now the company sees a “flat to down 5%” revenue figure this quarter.  RF chips and components aren’t universal winners, apparently.  This one is down about 3.5% at $6.10 on nearly 300,000 after-hours shares. 
SuccessFactors, Inc. (NASDAQ: SFSF) won but lost in its cloud-based business execution software solutions… The company SuccessFactors beat earnings estimates, guided Q2 revenues above consensus and it raised 2011 guidance.  The company also announced that it was spending $290 million to acquire Plateau Systems for its leading learning management system, a Next Generation Portal technology, and CaaS- Content as a Service.  SuccessFactors had a $3.15 billion market cap. The stock is down 8% at $37.05 on more than 230,000 after-hours shares.

Top Active Trader Alert Stocks (BRCM, ERIC, SVVS)

Active traders and day traders have many stocks to choose from this Wednesday morning.  We are tracking news and moves in shares of Broadcom Corporation (NASDAQ: BRCM), Ericsson (NASDAQ: ERIC), and Savvis Inc. (NASDAQ: SVVS).
Broadcom Corporation (NASDAQ: BRCM) is down 7.75% premarket to $37.28, relative to a 52-week range of $29.05-$47.93. The company issued poor second quarter revenue guidance.
Ericsson (NASDAQ: ERIC) is up more than 10.5% premarket to $14.55, relative to a 52-week range of $9.51-$13.39. The company reported above expectations Q1 profits.
Savvis Inc. (NASDAQ: SVVS) is up 8.5% premarket to $39.10, relative to a 52-week range of $14.47-$37.98. It was announced the company would be acquired from centurylink for $2.5 billion.


These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Wednesday morning., Inc. (NASDAQ: AMZN) Reiterated Outperform and raised target to $220 at Oppenheimer; Reiterated Buy with $198 target at BofA/ML; Maintained Buy with $220 target at Canaccord Genuity.
American Capital, Ltd. (NASDAQ: ACAS) Raised to Outperform at Wells Fargo.
Apollo Investment Corporation (NASDAQ: AINV) Cut to Market Perform at Wells Fargo.
Arch Coal Inc. (NYSE: ACI) Cut to Sell at S&P Equity Research (late-Tuesday call).
BioMarin Pharmaceutical (NASDAQ: BMRN) Cut to Neutral as Bear of the Day at Zacks.
Capital One Financial Corp. (NYSE: COF) Maintained Buy but raised target to $65 at BofA/ML.
Cisco Systems, Inc. (NASDAQ: CSCO) Maintained Neutral but cut target to $22 at BofA/ML.
Emerson Electric Co. (NYSE: EMR) Raised to Outperform at Oppenheimer.
First Solar, Inc. (NASDAQ: FSLR) Raised to Buy at Kaufman Bros.
IAC/InterActiveCorp. (NASDAQ: IACI) Raised to Buy at Citigroup; Raised target to $39 at BofA/ML.
International Business Machines Corp. (NYSE: IBM) Reiterated Buy and Raised target to $190 at Argus.
Joy Global, Inc. (NASDAQ: JOYG) Maintained Outperform as Bull of the Day at Zacks.
Lexmark International Inc. (NYSE: LXK) Cut to Hold at Citigroup.
Panera Bread Company (NASDAQ: PNRA) Maintained Neutral but raised target to $135 at BofA/ML
Stillwater Mining Company (NYSE: SWC) Reiterated Outperform and $28 target at Credit Suisse.
Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) Raised to Conviction Buy List at Goldman Sachs.
Wynn Resorts Ltd. (NASDAQ: WYNN) Maintained Buy at Zacks.

Media Digest (4/27/2011) Reuters, WSJ, NYT, FT, Bloomberg

Johnson & Johnson (NYSE: JNJ) will buy Synthes for $21.9 billion (Reuters)
S&P cut the Japan sovereign rating outlook because of the earthquake (Reuters)
The Sony (NYSE: SNE) Playstation network was hacked and personal data was exposed (Reuters)
Amazon (NASDAQ: AMZN) said it expect sales in the current quarter to be strong (Reuters)
Gold and silver rose ahead of Federal Reserve comments (Reuters)
News Corp (NYSE: NWS) hopes to receive bids over $100 million for MySpace (Reuters)
Congress has expanded its investigation of Apple (NASDAQ: AAPL) mobile tracking systems (Reuters)
Microsoft (NASDAQ: MSFT) still faces falling PC demand and a weak stock performance (Reuters)
Nasdaq (NASDAQ: NDAQ) and ICE have begun to pressure NYSE (NYSE: NYX) shareholder to accept their bid (Reuters)
Sony continues to consider a deal with Sharp for its LCD business (Reuters)
Carlyle executives think that America’s position at the top of the deal world will erode (Reuters)
CEOs who received stock options during the credit crisis will, in many cases, make huge profits (WSJ)
BP plc (NYSE BP) profits rose on sales of assets (WSJ)
Google and Apple each gather and store data from personal computers (WSJ)
Yahoo! (NASDAQ: YHOO) may spin out its Hadoop software unit (WSJ)
Sony will launch two Android tablets (WSJ)
The Environmental Protection Agency will limit the use of natural gas in drilling for shale (WSJ)
Home prices have dropped near the lows they hit during the recession (WSJ)
Google’s YouTube will move further into the movie rental business (WSJ)
Defense contractor earnings will be hurt by US budget cuts (WSJ)
Some options traders are concerned about the end of QE2 (WSJ)
Railroad and truck companies have begun to suffer because of high fuel prices (NYT)
The Greek deficit is above the level predicted when it received bailout funds (NYT)
EU telecommunications companies may charge Google more for the data it moves over the web (FT)