Monday, June 26, 2006

Calls of Note Part 5

- Bear Stearns positive on Burlington Northern Santa Fe (NYSE:BNI) following meeting with management saying management was extremely upbeat about the economy, freight demand, pricing, and its ability to continue to meet high single digit demand growth without a major congestion issue.

BNI continues to see strength from its customers across virtually all segments other than lumber where they are seeing a slowdown in the housing market (only about 9% of its rev.) and some excess centerbeam car capacity. Yields remain firm and we believe continue to modestly accelerate. BNI still has roughly 25-30% of its contracts to re-price including about 70% of its coal business.

In the near term they see strong upside. Longer term the firm continues to see strong potential productivity enhancements in each business line, particularly in BNI's core coal and intermodal franchises. Over the next five years about 60% of its yet to be re-priced coal contracts will see a material price increase and begin to pay a fuel surcharge. Maintains Outperform.

Notablecalls: BNI's chart looks good.

- JMP Securities is maintaining their Market Perform rating on Portalplayer (NASDAQ:PLAY) and lowering FY06, FY07 revenue and EPS estimates to account for the continuing lack of visibility in future business with Apple (largest customer accounting for over 90% of revenues in 2005) and a somewhat slower ramp for the Widows Vista notebook secondary display processor market.

For small-cap value investors, the firm notes that PLAY has almost $8.00 per share in cash and has lowered its operating expenses to minimize its cash burn rate. They believe that PLAY may either consolidate with Sigmatel (SGTL) in order to better compete with China-based Actions Semiconductor (ACTS) or it may be a strategic M&A acquisition candidate for players such as Broadcom, NVIDIA, Intel, TXN, etc., seeking an innovative design company with a healthy balance sheet.

Notablecalls: Not actionable but good to know. On the other side - If I were short, I'd want to get out now.

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