Tuesday, October 03, 2006


The WSJ’s „Heard on the Street” column discusses General Motors (GM), saying that the co’s momentum could stall in 2H06. For the past few weeks, GM has been touting the progress of its turnaround, and after slashing its hourly payroll and launching new SUVs, the auto maker appears headed for a substantial improvement in its Q3 earnings. But investors shouldn't necessarily take that as a green light for buying GM stock. Some analysts believe GM may not be able to sustain the rev increases that have helped turn around earnings in the 1H06, especially now that the economy is showing signs of slowing down and GM has planned for significant production cuts in the 2H06. "From a stock perspective, I think the fundamentals are deteriorating, or at least have peaked," said Ron Tadross, of BofA.

The Barrons’ “Inside Scoop” section reports that David J. Bronczek, CEO and president of FedEx (FDX) sold 27K shares for a total of $3m. But Jonathan Moreland, director of research at InsiderInsights.com, says that he finds the exercising and holding of options by five other FedEx insiders in the past two months "more intriguing" than Bronczek's open-market selling. The five insiders exercised and held onto a total of 14,788 shares with a total mkt value of $492K.

The NY Times discusses more and more crowded animated movie sector. Filmmakers plan to release 17 movies in ‘06, compared with 11 in ‘05. Pixar is now part of Disney (DIS), having been acquired earlier this year. DreamWorks (DWA), meanwhile, is still publicly traded and is unlikely to be sold anytime soon, analysts say. DreamWorks must also manage Wall St. One reason DreamWorks’ stock is trading at a low price is that analysts are concerned that a DreamWorks investor, Paul G. Allen, will activate his option to sell shares to the public. Asked by analysts last month if Mr. Allen had activated that option, DreamWorks’ president, Lewis Coleman, said DreamWorks did not have to disclose that information, but had 90 days to respond to Mr. Allen. “In our view, these comments are vague and cryptic enough to suggest that certainly the answer could be yes,” a Prudential analyst, Katherine Styponias, wrote in a report last month. By all accounts, article suggests, DreamWorks and Pixar should be in a good spot to weather the uncertainty.

According to the DigiTimes, citing sources, foundries are bracing for a weak 4Q with inventory issues likely to last through the 1Q07. OmniVision's decreased orders with TSMC as an indication of weak demand for the foundry sector. According to some institutional investors who have visited TSMC recently, the foundry does not have an optimistic outlook for the 4Q, and inventory may last until the 1Q07. Although demand from the motherboard and notebook sectors has grown strong, PC-related ICs account for only 1/3 of foundries' rev. But demand from the communications and consumer electronics sectors, both of which combine for half of the revs for foundries, is weaker compared to previous years.

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