Thursday, December 27, 2007

Paperstand (AAPL, WFC, MBLX)

According to the WSJ, News Corp's (NWS) Twentieth Century Fox and Apple (AAPL) are preparing to announce a deal in which Fox movies would be available for rent digitally through Apple's iTunes Store. In a related move, Fox also plans to release DVDs that use Apple's digital rights mgmt system, a move that would allow consumers to make legal copies of the disc that could be played on an iPod or other device, such as a computer.

“Heard on the Street” column discusses Wells Fargo (WFC), saying that now may be the time to get out of the stock, before more bad news comes along. Until late Nov, Wells Fargo had appeared to be weathering the housing swoon far better than its competitors. And, while Wells's shares are down 12% for the year, that is a far cry from the 26% decline posted by the DJ Wilshire Banks Index. Wells also has been adamant that it was too smart to get mired in the subprime lending boom. But now the housing downturn is starting to tarnish even Wells Fargo's sterling reputation for conservative loan underwriting. And, the bank does have subprime exposure, although it likes to downplay the risks. The bank's recent home-equity missteps, combined with the worsening housing mkt, make it appear unlikely that Wells can avoid a tough year ahead as it builds reserves for bad loans. The co's loans are concentrated --both geographically, in states such as California, Nevada and Arizona, and in lines of business, including home-equity and construction loans --in areas likely to see more problems, says Fred Cannon, of KBW. "They have more exposure to home-equity loans" than their peers, "and the exposure is in areas where housing is fairly weak," says Matthew Wright, of First Investors Blue Chip Fund. He adds: "I tend to think there will be more loan-loss provisions."

Barron’s Online highlights Metabolix (MBLX), saying that the co is at the forefront of developing new type of environmentally-friend plastic. Derived from corn, natural plastic completely breaks down to its basic elements of carbon dioxide and water on its own whether it is in a landfill or sitting in water. These plastics can be engineered to biodegrade over weeks or months. Next year is a critical year for the co as it transitions from a R&D co to a commercial one. A slew of well-known partners are giving credibility to Metabolix's technology and products. Most visibly, all 12 of the holiday gift cards introduced this season by big-box retailer Target are made from Metabolix's Mirel plastic brand under a pilot program. And by the end of ‘08, the facility being built by Archer Daniels Midland (ADM) will start producing that plastic in mass quantities. The potential applications for this natural plastic are broad from single-use products such as coffee cups, dinnerware and golf tees to sturdier containers for cosmetics, food and detergent. Agricultural applications include degradable plant pots, stakes, erosion control netting and mulch film. "The key to Metabolix is that they seem to be the most advanced public co with a green plastic alternative to fossil-fuel based plastic," says Jackson Robinson, of Winslow Mgmt.

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