Thursday, June 29, 2006

Calls of Note Part 2

- CIBC is defending Motorola (NYSE:MOT) saying that following several days of meetings with supply chain members in Asia, theyfeel comfortable that the conflicting and inconsistent data points that have recently surfaced do not stand in Motorola's way to deliver a positive quarter with a solid sequential increase in handset volume.

Firm believes MOT's mid and high end handset volume remains solid and unaffected. The low end has seen lower orders, but MOT's new targets still reflect a solid QoQ increase of ~15% and at least a flat to slightly up 3Q06 outlook, which is explained by a refresh cycle of new low-end handsets. Believes 3Q06 will bring more mixed data points from the supply chain and an associated headline risk to MOT. Maintains Sector Outperformer and $30 tgt.

Notablecalls: I don't think the stock has gotten hit enough for this to be an actionable call. So it goes to the not actionable but good to know category.

- JP Morgan notes video rental spending in stores and online increased 11.0% for the week ending June 25, 2006, according to Rentrak data. June is up 9.9% y/y through three of four weeks. This follows May and April rental spending, which finished with 3.4% and 3.7% growth, respectively.

July releases look weak, with corresponding box office down 43% as studios appear to be pushing product back to later in the year. Only five titles that earned more than $10m in box office are currently scheduled for release in July vs. 7 in 2005 and 15 in June 2006.

Notablecalls: Take a look at the action in Movie Gallery (NASDAQ:MOVI) over the past couple days. I don't think the momo players are ready for weak July performance.

- Banc of America is lowering their estimates on optionsXpress Holdings (NASDAQ:OXPS) following meeting with management. Firm also hosted a dinner with Int'l Securities Exchange (NYSE:ISE)'s management.

While higher market volatility has increased institutional options trading, increased uncertainty has led to lower retail activity. Both mgmt teams pointed out that typically retail activity is less volatile vs. institutional. Plus, as OXPS's customer base falls more in the long-term investor camp (vs. 'day-trader' camp), they expect diminished retail activity will prove temporary as market direction becomes clearer & seasonality subsides.

Firm lowers their Q2'06 est. by $0.01 to $0.30, FY'06 to $1.15 (from $1.20), FY'07 to $1.45 (from $1.50) on reduced market volumes & lower account growth. Maintains Buy but lowers tgt to $31 from $36.

Notablecalls: While I think BofA is late with their call on OXPS I'll be keeping an eye on it just in case the stock breaks down once more.

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