Calls of Note Part 2

- Goldman Sachs' Asia team notes there has been market speculation (reported in the Associated Press on Mar 14) that Mediatek may bid for Trident Microsystems (NASDAQ:TRID), a Tier-1 US-listed TV chipset maker with a market cap of around US$1.2bn.

Although Mediatek has declined to comment on the potential M&A, the firm does not believe such a transaction would add much value to Mediatek as:

1) Trident is trading at 22X 2007E consensus EPS while Mediatek is at 18X (including employee bonus), thus the deal could be dilutive if Mediatek were not able to achieve a price at a discount to the current trading price;

2) Trident is a Tier-1 TV chipset vendor with high-profile customers such as Sony and Samsung, but it faces serious competition to its already-high market share from emerging players such as Mediatek. Customer synergies would be nice to have, but the products are not highly complementary, in firm's view.

They continue to believe Mediatek should utilize its rich cash position to acquire IPs that it lacks, such as networking, broadband, or RF technology, in order to strengthen its product offerings to challenge the territory currently dominated by Broadcom/Marvell.

Notablecalls: TRID went vertical two days after TWP's cautious call (see archives). As I noted, TRID is a difficult stock to short and the violent upward move in the past 3 days pretty much proves my point. Shorts were squeezed with the help of takeover chatter, but looks like GSCO's comments may cool some of this.

Calls of Note Part 1

- Piper Jaffray notes there is talk on the Street that Apple (NASDAQ:AAPL) is planning an event for April 15 at the NAB tradeshow. At last year's NAB, expectations were that Apple would announce a high end version of Final Cut, but this did not materialize. Firm believes that there is a >50% chance that if Apple holds a special event at NAB, it will be the venue for this announcement. While still only a rumored special event, investors will likely be somewhat concerned about what Apple has up its sleeve as we get closer to NAB. Piper maintains their Outperform rating on Avid Tech (NASDAQ:AVID), given shares are already trading at a discounted multiple (18x CY07E EPS vs. comps at 24x) and does not believe a higher end version of Apple's Final Cut would end up significantly impacting Avid's pro post production business (Avid pro post production is 15%-20% of revenue).

If Apple announces a higher end version of Final Cut, it is likely to have at least one advantage over Avid: price. Any high end Apple editing package is likely to be priced lower than an Avid system (such as Adrenaline). THey believe, however, that Avid's pro customers are less sensitive to price and more sensitive to brand and familiarity. The Avid story is clearly not squeaky clean, but the firm believes it is getting closer to becoming a stable growing business again.

Notablecalls: Interesting comments by Piper's Gene Munster. Not actionable but good to know category. Should AAPL unveil the Final Cut, there would likely be a knee-jerk reaction in AVID's stock. But that's about it.

Calls of Note Part 3

- Citigroup has some interesting, yet concering comments on Baidu.com (NASDAQ:BIDU) after completing a paid search survey. The takeaways include:

Concerns on Baidu's growth rate reinforced. 1) Baidu likely seeing higher churn, with 15 advertisers planning to cut spend in next 6 months for every 20 planning to increase. 2) Google can't be counted out: advertisers give it higher satisfaction and spend more on Google on average than Baidu.

Advertiser breakdown suggests Baidu's lead over Google less than traffic lead. Of the respondents, 86.3% advertise on Baidu and 62.2% on Google (respondents advertise on more than one engine). This contrasts with the traffic share numbers from Sept, where Baidu had 61.9% share vs. 24.1% for Google.

Google looks set to gain from ad budgets in the next six months: more advertisers plan to increase their spend (~25%) plus fewer plan to decrease their spend (only ~5%) on Google, compared to Baidu, where ~20% plan to increase spend, but 15% plan to decrease spend.

Maintains Sell on BIDU.

Notablecalls: This may be the reason why BIDU was so weak yesterday. On the other hand, I've never really seen anything leak out of Citi before. Would not be surprised to see some initial weakness in BIDU following these comments.

Calls of Note Part 2

- Merrill Lynch is lowering their 1Q estimates on Motorola (NYSE:MOT) to reflect supply chain checks which are indicating in some cases as much as 20% sequential declines on orders of PCBs, casings, and connectors. The data also suggests sluggish demand for the KRZR and a slow start to the RIZR. They are lowering 1Q EPS to 18c from 19c and note that there could be further downside.

With growing evidence of a weak handset portfolio, the firm can no longer assume the best of both worlds, or growth in handset shipments coupled with ASP stabilization. In their view, management will elect to be margin-conscious and will therefore let MOT's market share decline rather than allow ASPs to drop. MLCO now models '07 units to be up 10.1% YoY vs. 20% before, with EPS estimate of $1.01, down from $1.12 (consensus is $1.17).

Firm notes Motorola's stock still looks cheap, trading at 13x new 2008E EPS of $1.38, down
from $1.54 (Street at $1.42). Furthermore, the stock could look even cheaper should management finance a stock buyback with debt. They therefore believe that the downside risk is limited. On a negative note however, shares will likely remain confined to the current trading range due to struggles in the handset business, risks to the profitable iDEN business and greater contribution from the less profitable Wimax segment.

Notablecalls: No surprises here. Must say I'm starting to turn somewhat more bullish on MOT as valuation is low and we have been getting some bullish indications from component suppliers. The $18 level may provide a short-term bounce here. Not a high conviction call, though.

Calls of Note Part 1

- Bank of America notes that while consumer worries stalk stocks in firm's coverage, they wanted to ring in with some positive comments on Apple (NASDAQ:AAPL), which they believe support their Buy thesis. In the last 3 months, Apple is +4.2%, while the NASDAQ is down 2.7%. Given Apple's strong product portfolio, the firm thinks Apple's stock can continue to do well.

BAC believes that Apple will introduce a new notebook, with flash based storage in 2H07. Turn on time will be shorter (with flash), and they imagine the form factor will be thinner, than existing notebooks. They do not believe the capacity point has been concluded, but guess will end up around ~30GB.

Similarly, they believe that Apple will introduce a new iPod video with flash based storage in 2H07, that will add to the existing family of hard drive storage based iPod videos. Finally, they have 5 million handsets in their CY07 model, and believe that their estimates could prove conservative.

Apple's flash based products have implications for the hard drive industry. The 1.8 inch drives or smaller (that go into iPods) is about 5% of total industry drive shipments, and notebooks are about 25% of total drive shipments, with notebooks growing about 2x the market growth. However, the firm believes that the ultra portable notebook market (target for flash based notebooks) is only about ~2% of total drive units (or about 6%-7% of total notebooks). Moreover, they have a hard time believing that the notebook market will significantly shift to ~ 30GB flash capacity, since Vista requires ~15GB (Apple's Tiger requires 2GB - 4GB). Firm believes that flash based Vista notebooks would be best suited for business travels that use the network as primary storage.

BAC stays Neutral on both STX and WDC.

Notablecalls: Nothing really new here. A new ultra thin laptop from Apple would of course be another monster seller.

Color on news: Juniper Networks (NASDAQ:JNPR)

Several firms comment on Juniper Networks (NASDAQ:JNPR) after the co filed an 8-K stating that Bob Dykes, EVP and CFO, and Rob Sturgeon, EVP Service Layer Technology (SLT) Group (Security) and GM of the Enterprise both resigned:

- JP Morgan believes the resignations are the result of CEO Scott Kriens' decision to make a significant change in direction for Juniper's senior mgmt team, based on firm's "reading between the lines" of the 8-K filing and conference call.

JPM believes Juniper has always had a weak bench with little outside experience. To wit, management from Netscreen, Peribit, and Kagoor left shortly after the acqus were complete, and when Jim Dolce, former CEO of Unisphere Networks left in Jan '06, he was replaced internally.

The firm also believes this announcement, together with the completed restatements, signals Juniper can again begin repurchasing stock, providing some support for the stock, since prior to the announcement Juniper was in possession of material non public information. As a reminder, Juniper's Board has authorized a $2B repurchase, which at today's prices equates to 113M shares, or approximately 19% of shares outstanding. They wouldn't be surprised, however, to see Juniper wait until it brings on new management before actually repurchasing stock in volume in order to be able to offer a more attractive options package.

So while the changes may appear negative at first, assuming Juniper can attract the right level of new talent, they believe these resignations could potentially end up being a positive for the company, lending Juniper a fresh start and together with recent hires Stephen Elop and Channels Chief Frank Vitagliano (hired from IBM last year), a fresh senior management team to execute on the margin expansion story that continues to be firm's core thesis on the stock. Reiterates Overweight.

- Merrill Lynch says they are concerned with the lack of management stability at Juniper; yet believe that the changes could be a positive sign. Five of the six most senior executives, outside of the CEO, have resigned since Jan'06: The VP of World Operations, the head of Routing and the head of Application Products resigned last year. Last night, it was the CFO and the head of SLT (enterprise). Despite the risk of being accused of wearing rose-colored glasses, the firm states that these changes are positive moves for the company.

MLCO notes they are discouraged by Management's unwillingness to participate in a CFO
resignation call, and reiterate the financial targets. Yet, despite their concerns, they believe the stock is not expensive, trading at 18.4x 2008 PE. The merits behind the management changes seem rational and should Juniper be able to fix its management issues and execute on its product launches, next year's estimates could prove conservative. Firm sees limited downside to the stock and maintains Buy rating.

- RBC Capital notes there are still moving-parts at Juniper and the CFO and a division- head just resigned. With multiple-compression likely despite a possible share-repurchase program, they are reducing their price-target from $19 to $18 and maintaining neutral-stance. A discount to the historic trading-range of 15-34x means a price-point near $15 may make the shares more-compelling. Juniper is now the third company in firm's universe to lose a CFO, joining Nortel and NETGEAR.

Notablecalls: The stock was down 20 cents in after hours action. That's probably not enough to generate a meaningful bounce. In fact, considering my ever-cautious stance regarding JNPR, I wouldn't rule out some further weakness as management failed to reiterate Q1 guidance.

Calls of Note Part 4

Susquehanna says they have recently learned that a large Midwestern insurance vendor may have signed a seven-figure deal with Interactive Intelligence (NASDAQ:ININ). This is significant news as the company had only 4 seven-figure deals last year, none of them in the first quarter; and only two in 2005, with neither of them in the first quarter. Firm spoke with a large, publicly traded insurance company that purchased Interactive Response in Q4, and may have followed with Interactive Distributor in Q1. At $40+/seat, the solution for 3,000+ seats represents a seven-figure deal. They are maintaining their estimates for Q1 and for the year, but believe that the above mentioned deal could be incremental.

Based on firm's proprietary analysis of capex for the customer care industry, spending continues to grow at a healthy rate in 2007, albeit at a lower than in 2006; 7% versus 12%. While this may be a cautionary note for market leaders in the space, firm believes that the opportunity for ININ remains robust due to small (<10%) market share and differentiated offerings (lower TCO, and IP-PBX).

Notablecalls: Nice find by Susquehanna! Expect to see some buying interest in the stock today.

Calls of Note Part 3

Roth out positive on Natus Medical (NASDAQ:BABY) after they visited co's Olympic Medical facility in Seattle to gauge the acquired business' manufacturing capabilities and assess its product offering. They came away content that Olympic Medical is a sound strategic fit, given its breadth of base neonatal care products. Firm continues to believe the integration of the bulk of Olympic's products into Natus' product portfolio, as well as the shift from a primarily direct mail model to a direct sales force, should drive volume growth and pricing strength across Natus' neonatal account base.

In addition, they spent time checking out the CFM and CoolCap devices. Firm believes both devices complement each other not only in the diagnosis and treatment of HIE, but also with respect to manufacturing, as both devices are housed and comprised of similar technology. They expect this latter point to provide significant profitability out of the CoolCap device.

At Roth's recent growth stock conference, Natus' management discussed its long-term corporate goals of achieving a revenue run rate toward the $250 million level by 4Q08 and to grow EPS by close to 50% annually. Firm believes management's track record over the past few years has demonstrated an ability to execute this type of combined organic and acquisition-based strategy, while driving toward enhanced profitability.

Firm reiterates Buy and raises price tgt to $22 from $20.

Notablecalls: This note might move this baby.

Color on Mid-Qtr Update: Texas Instruments (NYSE:TXN)

Despite some disappointment in lack of guidance upside in Texas Instruments' (NYSE:TXN) mid-quarter update, analyst community is mostly sticking with the bottoming theme.

- Citigroup notes that consistent with our fieldwork, bookings are improving, supporting an outlook for "growth" in 2Q07 (cons reflects +7.1% q/q). Recall that their checks suggest Mar/Apr are showing meaningful improvement.

While they are duly disappointed by a lack of guidance increase (they had raised their estimates last Monday), firm remains confident that fundamentals are improving. Firm makes no changes to their estimates.

- JP Morgan notes that as they expected, TI confirmed bookings were improving across the board, in all product categories. Firm believes the company's book-to-bill has increased above 1.0 in both its wireless (35% of 4Q06 revenue) and analog businesses (40% of 4Q06 revenue).

Firm believes TI's earnings power is $2.20 in 2008, driven by share gains in analog and DSPs along with margin expansion. They expect consensus estimates to rise throughout the year and they believe TXN stock has significant upside based on a potential 20X multiple to our assumed $2.20 earnings power for C08.

Concerned on TI's Inventory. Texas Instruments expects to keep utilization rates and inventory roughly flat QoQ during 1Q07, and firm expects 1Q07 inventory to peak at a record 84 days. Firm hopes TI elects to burn down inventory and create margin leverage for 2H07 because the inventory build could mute the margin recovery they expect.

- Merrill Lynch views the uneventful update as great opportunity and raises price objective to $38 from $35. Firm notes Texas Instruments offered very little new information during its mid-quarter update last night, which disappointed investors looking for numbers to be raised. Firm thinks this is a great opportunity to buy an attractively valued stock at the bottom of the business cycle.

Firm says a look at history reveals that TXN never sees "seasonally normal" activity at the top or bottom of industry cycles. The company is coming off a two-quarter hole in revenue that has taken shipments well below the rate of end market consumption. Firm estimates that wireless alone is $200 million to $300 million below real demand. They expect TXN to see significantly stronger than seasonal revenue growth in the second and third quarter of 2007 as revenue renormalizes to meet market demand.

- Goldman Sachs is more cautious, saying that they believe investors expected TI to narrow its guidance towards the high-end of the range and expect reiteration of original mid-points will be viewed as disappointing. Relative to TXN stock, firm believes the risk/reward is not appealing considering the limited upside to previous peak (~10%) and the likelihood of how far away we are from any kind of a real cyclical upturn as they believe that business will assume normal seasonal patterns now that they believe analog distributors have made their "catch-up" orders.

Notablecalls: I believe there is a buying opportunity in the stock today in the $31.50-$32 area. The key theme is still bottoming of the business, making this quarter's numbers secondary compared to order pickup. Just a trade, though, and remember to keep it on tight leash.

Calls of Note Part 2

BofA says their quarterly partner survay for Red Hat (NYSE:RHT) remains upbeat. Partners they surveyed (90) maintained a positive CY07 outlook, in aggregate, for their RHT biz and expect +24% Y/Y growth, which is consistent with firm's billings forecast (+24%). In addition, the majority view Oracle's presence as a relative non-event in the N/T, as only 12% see 'significant' interest from customers in Oracle's offering.

RHT is slated to report 4Q results on Thurs, Mar 29th. Firm is currently forecasting total rev of $112 million and pro forma EPS of $0.10, although they believe seasonal momentum could lead to modest top line upside. In terms of the key metrics to watch, firm's model projects total billed bookings (rev + change in deferred rev) of $140 million (+37% Y/Y) and OCF of $49 million.

RHEL 5 introduction could help create some N/T buzz. Tomorrow, firm expects mgmt will introduce RHEL 5 in San Francisco at 12:00 pm ET. Firm believes the key takeaway will be getting some insight into pricing for RHEL 5, as they expect that RHT is likely to adjust per server pricing based on the new virtualization capabilities. In addition, they believe mgmt may provide color around the upcoming Red Hat Exchange platform launch (RHX).

Notablecalls: Red Hat has been getting some positive comments lately. If the Xen virtualization is even close to what it is promised to be, it sure will generate a lot of buzz. The biggest optimists are expecting Xen to make VMWare unnecessary in many cases. WMWare, remember, was valued at up to $9 bln in most optimistic valuations - compared to RHT's EV of $4 bln. Apples to oranges, but shows the potential value in virtualization.

Calls of Note Part 1

Merrill Lynch commenting Nortel (NYSE:NT), saying that while the stock currently reflects a best-case recovery scenario, they are increasingly concerned that investors may be overlooking Nortel's weak product portfolio. Firm's proprietary quadrant analysis indicates that only ~14% of Nortel's product sales in 2006 came from growth markets where Nortel grew share. However, the overwhelming majority, or 44% of sales, came from declining segments, with the remaining 43% of sales from growth segments where Nortel lost share.

With Nortel exiting UMTS (~$650mn in '06 sales), and with firm's expectations for flattish CDMA trends, Nortel's remaining business has to grow at a challenging 10-15% pace in 2007 to meet Street expectations. Firm recently reduced their 2007 revenue growth estimate to only 0.7% YoY growth (vs. street at 3.5% growth) and believe there could be further downside to our estimates. Also, with >85% of Nortel's sales in markets where it is relatively weak, they are concerned 2008 could also be a challenging year, requiring either additional R&D expenses, potentially dilutive acquisitions, or expansion into low-margin services activities. Nortel has scheduled its 4Q06 earnings call for 19-Mar, and firm believes the stock could trade down if management sounds conservative on 2007 prospects.

Notablecalls: Merrill has valid concerns here. The Street is looking for healthy growth from Nortel, but to co is rather in the cost-cutting mode. Expect to see pressure on the shares today.

Calls of Note Part 6

One of the best comments this AM comes from Goldman Sach's Asia team on Gmarket (NASDAQ:GMKT):

GSCO notes Gmarket's GMV guidance miss in 4Q06 disturbed them. However they view Gmarket's enterprise value of $0.6 bn as unduly small relative to the franchise value of being Korea's largest e-commerce business growing at 2X-3X the pace of the e-commerce industry with the 7th most visited website in Korea, 11 mn active users, turnover last year of $2.4 bn, revenue last year of $164 mn, revenue growth last quarter of 67% yoy, and earnings growth last quarter of 78% yoy. Firm believes that Gmarket can fundamentally earn its way back to a $20-plus stock price by reporting GMV consistent with its guidance, starting with 1Q07 GMV out either in April or upon full results on May 9.

GSCO sees 3 non-earnings developments which might assist the stock:

1) Yahoo! or eBay could buy stock in Gmarket: eBay acquired prior market leader Internet Auction, and Yahoo! paid $13.30 per share for 4.5 mn Gmarket shares in June 2006. With GMV around one third that of Yahoo Japan and 3X faster growing, and GMV slightly larger than Taobao, the firm views Gmarket as complementary to Yahoo's Asian marketplaces.

2) Gmarket could boost its e-commerce share and leverage its platform by acquiring smaller Korean marketplaces.

3) Gmarket could coordinate any overseas expansion with Yahoo!, which controls the largest marketplaces in Japan, China, and Taiwan.

Notablecalls: Must say I view GMKT as one of the more interesting e-commerce plays outside of the U.S. The stock got schmeissed on Friday after reporting weaker than expected results but managed to bounce nicely during the day. I'm not going to call this one outright actionable but the stock is worth keeping on the radar. Even for investors. Note that GSCO has a Buy and $21 tgt on the stock.

Calls of Note Part 5

Couple of cautious comments on Micron (NYSE:MU) and DRAM market in general:

- JP Morgan notes that memory pricing for DRAM components quarter-to-date has been weaker than our expectations due to excess capacity. In addition, firm's checks indicate component demand has been below their expectations at MU and QI due to excess inventory. As a result of the falling pricing and lower demand, they are lowering their estimates on MU and QI. While MU and QI stock have fallen in sync with the memory price declines in anticipation, the firm believes Consensus estimates will require additional "resetting" in the coming months and remain cautious on memory stocks.

- Bear Stearns says that based on channel checks with the DRAM supply chain, they expect DRAM pricing to remain under pressure for the remainder of C1Q07 and through almost all of
C2Q07. Firm's checks lead them to believe DDR2 spot and contract prices should decline further by about 15% from current levels before bottoming in the June timeframe. This follows declines of ~10% in 1H March and 20% in February for DDR2 contract prices. Inventory continues to rise in the channel which is expected to lead to a period of inventory digestion even after demand reacts to the recent price declines.

The price weakness is being driven by supply -- with Samsung, Elpida/Powerchip, Qimonda significant contributors to supply growth in C1Q07 -- and pressure from PC OEMs to lower prices following the stability in 2H06.

Bear is lowering their May-Q revenue estimate on MU from $1,457M (+0.8% QoQ) to $1,344M (-7.0% QoQ), based on a lowering of their DRAM ASP estimate from -11% QoQ to -21% QoQ. Firm is lowering their GM from 27.3% to 23.4% and GAAP EPS from $0.06 to $(0.05), significantly below consensus of $0.15. They would remain on the sidelines on Micron stock and see further downside pressure on the stock.

Notablecalls: Lousy call alert on MU. Hope you kept a tight stop.

Calls of Note Part 4

FBR calls Noble (NYSE:NE) their favorite stock and an FBR Top Pick. Firm believes that the stock has considerable upside potential, with very strong downside support. NE represents far and above the most attractive risk/return profile of any stock that they cover, with substantial upside potential and very strong downside protection trading just above firm's estimated liquidation value.

Based on Noble's March 8 fleet status report, they raised their 2008 EPS estimate to $13.90 from $13.65 on higher contract day rates and trimmed 2007 EPS estimate to $9.10 from $9.20 on downtime and contract slippage.

Noble continues to trade at an incredibly cheap valuation relative to firm's estimated liquidation value for the company. When they DCF its signed contracts and assume each rig is liquidated after each deal ends, they get an estimated liquidation value of $61.47 per share. By comparison, RIG is trading at 1.5x, DO at 1.8x, and GSF at 2.5x.

Maintains Outperform and $118 tgt.

Notablecalls: NE saw some buy interest on Fiday as there was some broker chatter saying the co had receieved a bid from SeaDrill.

Calls of Note Part 3

While unconfirmed, I'm hearing chatter Amgen (NASDAQ:AMGN) has been downgraded to Reduce from Neutral at UBS.

Notablecalls: Please see today's comments below for further color.

Calls of Note Part 2

- Morgan Stanley says that after Macau's '06 gaming revenue restatement and firm's latest trip to the market last week, they believe there is more risk to the Macau stories, and have adjusted their gaming forecasts. As a result, the firm has reduced their price targets for LVS ($93 to $88) and WYNN ($112 to $104). They're still Macau believers, but the restatement, along with very high expectations and continued concerns about how the Street is tying its market forecasts to its company forecasts, causes them to believe that there is more risk to the numbers. This could play out with continued downside margin surprises when companies report their results, as was the case for 4Q06. When looking at company/market results and forecasts, investors should ask, "Where is the growth coming from?" The answer will determine the viability of margin and earnings forecasts.

Several weeks ago, the Macau government restated the '06 gaming numbers. While the total revenue is the same, the mass vs. VIP split shifted dramatically towards VIP. Avg mass market spend/visitor/day went from up 14% in '06 prior to the restatement to down 1%. With a higher percentage of VIP revenues, the implied market EBITDA is lower, as VIP revenues carry 15% avg margins, while mass market margins avg around 35%.

Notablecalls: Expect to see some early weakness in both of the mentioned names.

Calls of Note Part 1

- ThinkEquity notes that with the Leopard launch (Mac OS X v 10.5) just around the corner, they have revisited their Apple (NASDAQ:AAPL) revenue and earnings power estimates in light of the ever- larger Mac OS X user base. Firm likes how Vista has established a "hardware upgrade mindset" among PC users, and they expect Apple CPU unit shipments to benefit from Vista tailwinds, the release of Leopard, and a CS3 pro catalyst. They believe software is core to further share gains and margin expansion for Apple, and encourage investors to remain focused with a "Look At The Core."

Think's new FY07 revenue estimate is $24.4 billion or 26.3% y/y growth (up from 22.3% y/y growth). New FY07 EPS estimate is $3.24 or 43% y/y growth (up from 35% y/y growth). Firm expects revenue growth to accelerate in FY08 thanks to the iPhone. Until they better understand the earnings power of this new offering, they are modeling a 170 basis point
decrease in gross margins, which could prove conservative. Maintains Buy and $120 tgt.

Notablecalls: Not actionable but good to know category. Think's ests for FY07 are now pretty much in-line with consensus.

Color on news: Amgen (NASDAQ:AMGN)

Several firms comment on Amgen (NASDAQ:AMGN) after the FDA modified the label for erythropoiesis stimulating agents (ESA), incl. Aranesp and Epogen/Procrit, to include a black box warning, recommendation to start with the lowest dose and strong emphasis against exceeding hemoglobin (Hb) of 12g/dL. Medicare also allowed carriers to drop coverage of ESA for treatment of anemia of cancer (AOC) immediately:

- JP Morgan notes that although the revised safety warnings for erythropoietin stimulating agents (ESAs) reinforced the labeled usage as expected, the language regarding risks of use was more severe than they thought. The new language is harsher than the firm thought, where they are surprised that DAHANCA data, which has not been published in a peer-reviewed journal, would be specifically referred to in a black box.

Separately, CMS sent a letter to the national Part B carriers instructing them to discontinue coverage of ESA's for AoC. Thus reimbursement changes have come quicker than expected, though the impact to EPS appears manageable, in the range of $0.05-$0.08 on 2008 EPS for AoC alone.

Maintains Overweight rating. Despite the significant negative headlines regarding ESA safety in recent weeks, they still see weakness as a buying opportunity ahead of catalysts with upside potential: 145 trial data, the ODAC panel (May 10), and potential setbacks to the CERA PDUFA (May 20).

- Goldman Sachs expects use of ESA for AOC ($0.6bn or 15% of Aranesp sales) to decline
significantly. Physicians will likely be more cautious and target lower Hb for the approved indications as well.The firm has modified their model to reflect a pessimistic scenario, assuming 12%, 24% and 30% reduction in Epogen + Aranesp sales in 2007-09, leading to a cut in our EPS (including ESO) by $0.11, $0.35 and $0.55 to $4.17, $4.50 and $4.89, respectively. GS model assumes launch of Roche's CERA in the US and Europe in 2007 and generic EPO in Europe in 2008 and in the US in 2013 (when patent of Epogen expires). Not included in the model are sales from new products, such as denosumab ($2+bn potential) and AMG-531 ($0.2bn) for which Phase 3 data should be available in 2007.

Maintains Buy but lowers tgt to $72 from $82.

- Baird says that while they understand some investors may have expected this move, we do think our estimates may need to be lowered.

Indeed, firm's recent EMR analysis indicating minimal Aranesp use above 13 g/dL. This same analysis, however, showed 13-14% of doses are delivered to patients with Hb >12g/ dL. They think these dynamics, coupled with recent AoC (anemia of cancer) reimbursement restrictions and the new label are bound to impact Aranesp revenue deleteriously.

Firm now models Aranesp revenue of $4.2B, $3.7B, $4.1B and $4.4B down from $4.7B, $5.2B, $5.6B and $6.2B for 2007-2010, respectively. They stress, however, that they view these new
estimates as extreme. Maintains Outperform and remains buyers of the stock. Tgt goes to $80 from $90.

- Deutsche Bank maintains their Buy rating and $90 tgt on AMGN saying their rating is based on underappreciated fundamentals, discounted valuation and potential catalysts in 2H07. They continue to expect volatility related to EPO/Aranesp and CERA-related competitive landscape. Firm estimates Medicare-covered AOC sales to account for ~5-6% of WW Aranesp sales (50% of AOC sales is covered by Medicare), with any potential impact significantly reflected in their recently reduced estimates.

Notablecalls: Presently it sure looks like AMGN has nothing going for it. EPO problems on one hand with follow-on biologics on other. Yet, looking at things from a longer-term perspective, none of these problems is fatal. I have no view on AMGN stock in the s-t but I do believe the problems currently known have been discounted.

Calls of Note Part 3

- JP Morgan has an interesting note out on McAfee (NYSE:MFE) after the co filed an 8K announcing the pay package for incoming CEO Dave Dewalt. After a quick read, and before any contact with the company, the firm is surprised about location of the CEO and treatment of options in change of control (acquisition) situations.

MFE has a big location in Plano, Texas and that is where CFO Eric Brown is located. Now it appears that company will continue the shift to Texas as the employment agreement has payments to cover transaction costs for Mr. Dewalt to purchase a residence in Dallas and sell his home in California.

There is no 100% vesting of options in change of control: Instead there is a clause calling for the greater of a twelve months accelerated vesting, or 50% of the then unvested shares accelerated vesting in the case of a change of control. Firm finds this surprising as agreements like the one RSA Security did with its in coming CFO prior to it being acquired called for 100% vesting of unvested stock/options in case of change in control.

The need to uproot to move to Texas and not getting 100% vesting on change of control is not a situation that they would want if they believed the company was about to be acquired. This supports firm's thesis that the Board of Directors of MFE appears to be running the company in a way that says they will be independent for quite some time.

Notablecalls: Not actionable but good to know category.

Calls of Note Part 2

- Merrill Lynch notes that the central issue for Intel (NASDAQ:INTC) is always gross margin, and the firm recently spent some time with management trying to understand the company's plans. They think that Intel is a lot more interested in reducing AMD to its former status than in showing much gross margin improvement this year. Investors looking for Intel to deliver GM upside are likely to be disappointed.

Intel has bigger plans for 2008, and management clearly hopes to be able to show more meaningful GM improvement. Here's the problem - Intel's plans aren't going to work out unless AMD backs off. AMD may be in a difficult situation now, but it still has a decent product portfolio for this year and enough money to fund its capital spending plans.

The firm does credit Intel with taking a much harder line on operating expenses, and that should allow the company to deliver on their $1.10 estimate this year even as the battle with AMD continues. Intel has historically had difficulty controlling opex during periods of revenue growth, but they think that's changing.

Making money on the stock is going to be tough in the absence of sustainable gross margin improvement, though. The microprocessor business is becoming a duopoly, albeit a lopsided one. Intel's stockholders will be better off when the company's management realizes that and acts accordingly. Maintains Neutral.

Notablecalls: Interesting comments by MLCO's Joe Osha. However given the recent slide in INTC's stock I don't think there will be much of an impact.

Calls of Note Part 1

- Cowen continues to be positive on Intuitive Surgical (NASDAQ:ISRG) noting that with recent broad market weakness driving shares of ISRG down 6% from the Feb. high, the shares are trading at 28x 2008 EPS est. of $3.90 while they anticipate EPS growth of 40-45% for the next three years.

Intuitive Surgical is unique among mid-cap medical device companies due to its exceptional growth and high margins. The da Vinci surgical system has captured less than 10% of its target hospital market to-date and the firm sees penetration rising to 25% in 2009. They estimate 40% sales growth for 2007 and expect Intuitive to post results that exceed consensus throughout the year.

Da Vinci prostatectomy (80% of tot. procedure sales) share appears likely to reach 80% in three years from 35% today, with nearly 50% procedure growth in 2007. Hysterectomy volume should rise by more than 2x. They see notable upside in gastric bypass for obesity as hospitals fight for patient traffic. With an est. installed base of 600 units, including 41 hospitals with two systems and 13 hospitals with three da Vinci units, the firm perceives an enduring market presence for Intuitive that is strengthening quarterly.

Maintains Outperform rating.

Notablecalls: Nothing really new there. May create some buy interest, though. After all, it's ISRG.

Color on news: New Century Financial (NYSE:NEW)

Couple of firms comment on New Century Financial (NYSE:NEW) after the co last night said it had received $265 million in financing, but stopped accepting loan applications after some lenders blocked its credit lines:

- Merrill Lynch maintains Sell as they see little value in NEW shares. Further challenges appear to have engulfed NEW, as at least one lender seems to have terminated its credit facility, leaving the company with inadequate liquidity to operate normally. NEW has mortgaged its few remaining unencumbered assets, a move that essentially leaves equity holders holding the liabilities of closing the lending platform. Credit positioned marginally better but more losses seem likely in near-term.

NEW seems to have been provided a temporary life-line, however, the firm thinks a pending liquidity crisis is still likely to de-stabilize the company. Crisis of confidence now appears set to spread to primary business partners, as NEW's liquidity problems are limiting its ability to fund loans and it has stopped taking new applications. Revenue short-falls are certain and the value of broker network likely impaired on a major stoppage, suggesting the platform value of NEW is negative. They think the outcome is likely liquidation in bankruptcy.

- Keefe, Bruyette & Woods notes they believe that New Century will likely file for bankruptcy unless it finds a buyer. The company's operating expenses were running at almost $200 million a quarter and although this would go down moderately because of reduced loan acquisition expenses, the majority of those costs are fixed in the near term. Consequently, they would expect a bankruptcy filing in the relatively near future unless the company can find a buyer/partner.

It appears unlikely to the firm that New Century will be able to renew its credit lines because the extremely difficult market conditions will likely result in company generating material losses for the foreseeable future.

- JP Morgan notes that with the funding of new loans now halted due to lender restrictions, they believe NEW has relatively no unencumbered source of operating cash flow from which to satisfy any new margin calls or working capital requirements. Judging from NEW's statement on Feb. 7 that on Dec. 31, 2006 the company had $350M of cash and liquidity, it is easy to see how quickly the $195M remaining from the loan could be used up.

Firm believes NEW has most likely put up the vast majority of its remaining unencumbered assets to secure this $265M financing, and as a result, they believe there will be little if any assets left in the event of liquidation for common shareholders to lay claim to. They continue to view any purchase of NEW shares at this time as highly speculative, and would advise any investors that maintain a position in the common stock to sell those shares.

Notablecalls: I have no comments on this one. All too clear.

Color on results: National Semi (NYSE:NSM)

Several firms comment on National Semi (NYSE:NSM) after the maker of power management and other chips last night said inventory concerns appeared to be behind it:

- Wachovia says National delivered a positive outlook, forecasting sequential growth of 4.5% in the company's May quarter, following 3 straight quarters of sequential decline in sales (Revenue is expected to decline 21% yr/yr). Management believes the worst of the inventory correction is behind the company, in line with firm's checks on the broader analog space. While it appears they have been too negative on the company's wireless handset business (25%-30% of sales), they still have concerns about increased competition and the potential deceleration in growth for National in this market. NSM is trading at a 21x PE on current year EPS, right in line with the average of the HPA group.

Bookings increased 3% q/q, reversing two straight quarters of decline. National stated that bookings increased in mid January and have remained steady, with orders from distribution, EMS and OEMs all showing improvement. The company noted strength in wireless handset bookings (+14% q/q), comm/networking (+25%), and displays (+5%), while industrial/medical/consumer was flat and PC bookings down 10% q/q. Book-to-bill was greater than 1:1 for the first time in three quarters.

WACH's new May quarter estimates are $448 million in revenue and $0.27 in EPS, up from $440 million and $0.25. FY07 (May year-end) goes to $1.92 billion and $1.34, up from $1.91 billion and $1.24. Maintains Market Perform.

- Merrill Lynch notes the question du jour following National's revenue outlook will likely be whether or not the analog market is bottoming. Indications of distributor inventory declines coupled with booking increases suggest it's a possibility. The notion is supported by a decline of National's internal inventory of 3%, although they note days are up to nearly 90 days. ML thinks we're close enough to the trough to turn the focus to which companies are best positioned to leverage an industry uptick.

Unlike many of its peers, National still has viable margin levers to pull when the sector returns to revenue growth. In an environment where many analog players are struggling to balance growth and margins in their long-term strategies, the firm finds National coming off a very weak revenue trajectory with a solid 59.8% gross margin on just mid-50% utilization. A look at mix yields further potential upside to margins, as the higher margin standard analog business still only represents 84% of total revenue.

- JP Morgan says National is the third semiconductor company in the past three weeks with a book-to-bill above 1.0 and they expect more companies to report book to bill ratios above 1.0 as 1Q07 progresses.

Inventory build concerning. Inventory increased 14 days QoQ from 77 days in F2Q07 to 91 days in F3Q07, above the company's target range of 75-80 days and the highest since 1997. JPM is concerned the inventory build will mute margin recovery during C07.

As a result, they are raising F07 revenue and EPS estimates from $1.9 billion and $1.03 to $1.9 billion and $1.08 but lowering F08 revenue and EPS estimates from $2.0 billion and $1.25 to $1.9 billion and $1.16 due to a muted recovery. Maintains Neutral.

Notablecalls: NSM sure sounded optimistic. That comes only a month after they warned. The co has large exposure to cellural handset markets and noted seeing some real order strength there. As several tier-1 houses have upgraded the shares over the past couple of weeks I suspect the upside from levels reached in after hours action is limited.

Calls of Note Part 4

- Morgan Stanley is raising their view on Semiconductor Capital Equipment to Attractive from In-Line and upping most of their ratings and price targets. Unlike the consensus, the firm believe semi cap equipment stocks will soon reflect a bottoming of manufacturing utilizations in 1H07, an inflection in capital equipment orders in 2H07, and robust capital spending growth in 2008. Consequently, they see a combination of earnings growth and multiple expansion driving 20%+ appreciation in the average semi cap stock over the next 12-18 months.

MSCO sees bottom-up 10-15% capex growth in 2008, flat to down 5% capex in 2007 (vs. +2% previously). They assume non-strategic NAND suppliers will cut capacity expansion plans this year. However, bottom-up 2008 capex analysis indicates spending should pick up, driven primarily by the foundries/NAND flash suppliers and increasing capital intensity as the industry commences the move to 45nm. DRAM concerns in 2007 are overblown. DRAM capex $ per incremental unit shipment in 2007 remains below historical peaks, and DRAM capital intensity remains reasonable relative to historical trends.

Winners will have leverage to 45nm and company-specific product/profitability initiatives: They are upgrading ratings on Applied Materials (AMAT) and KLA-Tencor (KLAC) to Overweight, maintaining Overweight-V ratings on LAM (LRCX) and FormFactor (FORM), downgrading Cymer (CYMI) to Underweight and maintaining Novellus (NVLS) at Underweight.

Notablecalls: Not actionable but good to know category. Some of this stuff may be good for a short-term fade.

Calls of Note Part 3

- Thomas Weisel Partners notes that while they are more positive on Trident Micro's (NASDAQ:TRID) 2007 growth prospects, they continue to believe significant upside to the stock will be dictated by the success of Trident's 2008 design-win activity and limited by ongoing competitive pricing and share risk, particularly at Sony and Samsung. Based on recent checks with multiple industry contacts, they see incremental share risk at Sony in 2008, which is likely to prove management's $450mn revenue target more challenging to achieve, in firm's view. They are maintaining their CY08 revenue and EPS estimates of $377mn and $1.40. TWP believes shares are relatively fairly valued, trading at 18x and 15x CY07 and CY08 EPS estimates, respectively.

Recent checks with multiple TV industry contacts indicate that Sony has recently developed a new single-chip (MPEG decode + back-end) TV solution in conjunction with NEC that is much more cost competitive relative to its prior multi-chip solution, which is currently being utilized in its high-end X-series LCD-TVs. Checks suggest Sony is working aggressively to leverage this technology across its high-end and mainstream 2008 product lines-Sony's mainstream TVs are currently predominantly supplied by Trident. While firm's checks indicate that 2008 designs will not be decided for several months, they believe there is potential significant incremental risk to Trident's share position at Sony (which was north of 80% in 2006 and is likely closer to 60-65% in 2007, by TWP estimates).

Notablecalls: Nice catch by TWP's Jason Pflaum! I think the comments regarding Sony will create a big overhang on TRID stock over the next couple of days or even weeks. I've always considered TRID a difficult stock to short but sitting at my old trading desk I would have put out a short line in it. One to watch!

Calls of Note Part 2

- Deutsche Bank notes that following the recent ~25% pullback, shares of Applied Biosystems (NYSE:ABI) look significantly undervalued vs. strong core fundamentals. Given the company's market leading position in its three core technology platforms, an increased focus on the applied markets and emerging geographies, and its robust new product pipeline, the firm thinks that ABI is poised for significant future growth and appreciation. They reiterate Buy rating and $42 price target and would look to add shares at these depressed price levels.

ABI remains the market leader in its 3 core platforms: mass spec, sequencing, and real-time PCR. Given the company's leverage to pharmacogenomics, proteomics, molecular diagnostics and DNA forensics, the firm anticipates that ABI's LT organic growth rate, margin structure and cash flow should be at the forefront of the Life Science Tools peer group. Additionally, the upcoming debut of its new next-gen sequencer (from Agencourt) is a prime example of the company's ability to innovate internally as well as via strategic acquisitions.

The crux of DB's upgrade of ABI shares in Sep. was the company's success in the applied markets, and that fundamental view remains unchanged.

On the valuation side, the company's forward EBITDA multiple is at 9x, well below its historical average and that of the comp group (11.4x). Additionally, the company has a forward operating cash flow yield of 7.6%, well above the previous 2 years and significantly above the comp group average of 2-3% (with a free cash flow yield of 6.3%). Given the strength in fundamental valuation vs. current trading levels, the firm thinks that now is an opportune time to add shares of ABI.

Notablecalls: Given the schmeissing this stock has experienced over the last week, I'd keep it on my radar for a possibe bounce over the next couple of days.

Calls of Note Part 1

- RBC notes that despite the choppy tape and the recent slide in the shares, their checks on Cisco (NASDAQ:CSCO) indicate strengthening trends across most of the company's business segments. And with the shares now trading at a discount to its growth rate, the firm is reiterating their Outperform rating.

Bookings in the carrier (25%) and commercial (25%) segments remain strong and they are also hearing of improving trends on the Enterprise side (45%). It's still early in the quarter to determine upside for the April Q but carrier activity and wireline spending trends give the firm comfort in their revenue estimate of $8.73B (+3% QoQ), broadly inline with the consensus of $8.76B.

Cisco hit a soft spot during the recent quarter with U.S. Enterprise customers and this segment only grew only in the mid-single-digits. From discussions at Voicecon, the firm believes some of this weakness is temporary and they believe the industry is still in the middle of a healthy upgrade cycle. Nevertheless, although the broader enterprise-spending trend remains healthy, they're not expecting a quick snap-back in demand right away.

Considering the telcos spend on video, the upgrade cycle by cable operators, and the healthy growth in user-generated video, the back- half of 2007 and CY08 may provide strengthening-demand for Cisco. On top of this improving backdrop, Cisco may enjoy magnified results due to its numerous product cycles. As large as the company is, Cisco may be entering a growth spurt. RBC's price target is $32, or 20x CY08 EPS.

Notablecalls: Not actionable but good to know category. Given the overnight strength in Asia, you may want to try to get some commons cheap onboard. Just a trade, though. Would sell the merchandise soon after as I suspect the overall market strength won't hold.

Calls of Note Part 5

- Goldman Sachs is removing Directed Electronics (NASDAQ:DEIX) from the Americas Investment Sell List. Concerns of decelerating growth in satellite radio and the possibility of Directed losing the Sirius business are likely overblown. Although seasonality remains a headwind given Directed's exposure to consumer electronics, its valuation remains depressed even in the worst case scenario of Directed losing all of the Sirius business. With Directed's Q4 shortfall already priced into the stock and DEIX shares having declined by -24% since our downgrade vs. the S&P 500's -2.0%, our Sell has run its course. Over the past 52-weeks, DEIX shares are down -42% vs. the +9% for the S&P 500.

Although the risks associated with the Sirius satellite radio business will remain an overhang, the firm thinks Directed Electronics shares are getting punished beyond the value of the Sirius franchise. Analysis suggests that even in the worst case scenario, where Directed Electronics loses the entire Sirius business, DEIX shares would be at depressed relative to the earnings power of its underlying security and entertainment businesses.

While they are not recommending the shares now given Directed's seasonality and execution issues, they think the price is an attractive entry point for value-based investors with a long-term focus. Maintains $14.50 tgt.

Notablecalls: Would not be surprised to see some buy interest in DEIX over the next couple of days. GSCO was dead right on DEIX with their negative calls and while they are not turning positive here, it may be the first step.

Calls of Note Part 4

- Piper Jaffray notes they recently visited Crocs' (NASDAQ:CROX) Japanese operations and were highly impressed with the executive team, consumer adoption of the brand, regional sales potential, and initiatives underway to elevate the contribution to earnings from the Asian marketplace. The firm has increased confidence with respect to FY07 estimates and specifically management's ability to successfully identify and expand brand distribution into untapped markets. They believe international market growth is outpacing internal forecasts and they remain confident in international sales trending toward 40%-45% of total sales in FY07.

Global distrib. underappreciated: At roughly 21K doors (mid-Feb), current mkt cap of ~$1.88B suggests value of <$90K/door for Crocs' present distribution infrastructure. Piper believes the market is undervaluing potential upside from distribution leverage as they assume sales/door less than 50% of peak potential ($27K/avg door in FY06).

Maintains Outperform and $70 tgt.

Notablecalls: Not actionable but good to know category.

Calls of Note Part 3

- Jefferies is positive on Energy Conv. Devices (NASDAQ:ENER) after Intel announced at an analyst's conference in California that it has sent samples of its 128MBit PCM to customers. This unit will be a drop-in replacement for NOR flash. While ENER has added several new licensees for Phase Change Memory (PCM) over the last year, the stock has trended downward as the market has discounted the licensees. Firm believes that, given Intel's announcement coupled with Samsung's announcement for commercial production, investors will likely react positively to the news. Importantly, ENER is not manufacturing PCM but only licensing the technology through its ownership in the Ovonyx JV. This should increase investors confidence as established players are validating the technology.

The firm notes tjeu have not included any revenues or licensing fees from PCM until they get better visibility, but they believe this segment could be worth $40/share. Firm derives this value by applying a 1% licensing fee to the Flash and DRAM market of $50B, which yields $500M in revenues to the Ovonyx JV. Since this is a licensing company, Ovonyx should generate north of 50% net margins, yielding over $250M in net income. ENER owns 40% of the JV, which would add over $100M in equity income or more than $2.50 upside to earnings.

Even if they assume that technology is only rolled out to its current licensees (~75% of the market), full roll-out does not occur until 2010, and discount this value back by 25%, it would imply a current value of $15.

ENER has pulled back 20%+ following the $0.01 miss in the quarter. The firm would look to aggressively add to positions. ENER is trading at a discount to the solar industry even though it has similar expected growth rates and the best balance sheet. They also believe that the company is likely to announce an additional two PCM licensees (possibly MU and Hitachi) over the coming months.

Reits Buy and $47 tgt.

Notablecalls: You better buy this one early on! Actionable call alert! See archives for additional color.

Calls of Note Part 2

- FBR notes that tomorrow, the generic biologic debate begins in earnest and Amgen's (NASDAQ:AMGN) revenue will come under fire from yet another angle. The Senate HELP committee hearing on follow-on biologics begins tomorrow at 10 a.m. Even if watered down, legislation sponsored by Representative Waxman is threatening to biologics-makers with looming patent expirations. Amgen's Epo patent expires in 2013, and the firm calculates that Epogen is worth roughly 25% less with generic biologic competition than without. With numerous headwinds, the stock's multiple does not appear to be poised for expansion from its current 14x. They are maintaining Market Perform rating and $65 price target.

Notablecalls: Let's see if AMGN can overcome these comments today. I suspect it can.

Calls of Note Part 1

Couple of Tier-1 firms have positive comments on Yahoo (NASDAQ:YHOO) after the co presented at MS Tech conference yesterday:

- Morgan Stanley notes Terry Semel, Yahoo!'s Chairman & CEO, and Sue Decker, acting CFO & Head of Advertising Product Group, highlighted that Yahoo! should continue to benefit from favorable secular trends in online advertising. They addressed a number of new / current initiatives related to search / branded advertising + video + social media + mobile + off-network partnerships (Right Media + eBay + newspaper consortium). Post-Yahoo!'s successful release of Panama + reorganization of its structure and management in 12/06 to better focus on audiences, advertisers, and publishers, the firm feels more confident in the company's ability to capture future growth opportunities.

Yahoo! noted that the Panama launch and the new ranking algorithm (2/5/07), as expected, resulted in a noticeable lift in search volume, click-through rates, higher quality leads, and advertiser / user satisfaction. Given yesterday's remarks and firm's analysis of early signs of success for Panama, they continue to believe Yahoo!'s outlook is strong. In addition, experience with the new search offering and recent checks with advertisers / agencies / search engine marketers (SEMs) / developers / industry leaders to date confirm their hypothesis that Panama represents a major improvement over Yahoo!'s prior offering and a more competitive product. And, hey, as investors, they like the type of accelerating Y/Y revenue growth YHOO should support as 2007 quarters evolve. Reits Overweight.

- Merrill Lynch is upping their tgt on YHOO to $34 from $33 as management confirmed that the Panama algorithm launch has gone "quite well", with increasing click-through rates, higher quality leads for advertisers, and some cost-per-click pressure (as expected). These changes should generate higher ROI for advertisers, which should lead to more ad dollars for Yahoo! in the back half of the year. On a recent ML hosted call, comScore indicated that, indexed to Google, Yahoo!'s click-through rates were up 5-10% since the Panama launch. The firm is increasing their 1Q revenue estimate by $15mn to $1,206mn (ML now in-line with consensus) as believe low-end of the 1Q guidance range seems less likely. CY07 adjusted EPS increases to $0.75 from $0.74 on higher revs. and a lower share count. Maintains Buy.

Notablecalls: Nice comments but not likely actionable.

Color on news: CV Therapeutics (NASDAQ:CVTX)

Several firms comment on CV Therapeutics (NASDAQ:CVTX) after the co announced MERLIN trial failed to reach the primary efficacy endpoint (composite of cardiovascular death, MI, and recurrent ischemia), but there was no adverse trend in death or arrhythmias in patients taking Ranexa. Full data will be presented on March 27th, 2007 at 8:50AM at the American College of Cardiology meeting in New Orleans:

- Morgan Stanley notes this outcome, neutral safety data and failed efficacy, is largely consistent with their expectations, and the company believes it could support a first line label for Ranexa. A wider label should allow Ranexa to expand beyond niche status and potentially drive the company towards breakeven. However, given the current greater than$200M burn rate and the current less than $10M per quarter run rate, the firm continues to doubt sales will become large enough to drive meaningful profitability.

The worst case scenario that this drug leads to inferior outcomes has been taken off the table. However, the firm expects the underperformance to continue. Maintains Underweight.

- Merrill Lynch says that as they expected, MERLIN failed to achieve the primary efficacy endpoint but "there was no adverse trend in death or arrhythmias. The company believes that "the data could support expansion of the existing Ranexa indication to include first line angina" per the special protocol agreement (SPA) with the FDA. However, FDA does not always abide by SPAs, so the firm would wait to see the final label, which the company suggested could be issued in 1H:08.

The bulls expect this safety data to accelerate script growth, but they firmconservatively models ongoing, consistent TRx growth and maintain peak US sales of $240M in 2012E. They think the company could expand sales and marketing efforts and/or look to partner Ranexa (which would help offset costs). Maintains Neutral.

- Piper Jaffray notes that with cardiovascular efficacy questions now addressed, their key
remaining question on MERLIN is whether Ranexa causes a significant reduction in glucose levels in diabetics. If the company shows at least a 0.7% A1c reduction relative to placebo, the firm would view this as a significant positive with the potential to reinvent Ranexa as a diabetes drug. As a reminder, there was a 0.7% A1c reduction seen in the CARISA study and an even greater A1c reduction for placebo diabetics rolled over into extension studies. They have historically viewed and continue to view the diabetes data as a possible game changer for Ranexa.

Piper has lowered 2010 sales in the angina setting from $336m to $200m, reflecting continued growth at current rates. This lowers target from $12 (35x 2010E EPS of $0.60, disc. 30% for 2 periods) to $10 (35x 2010E EPS of $0.47, disc. 30% for 2 periods). This could prove highly conservative if Ranexa works in diabetes. With the stock indicated post-market close at $9-10, the firm remains at a Market Perform rating, but they will re-evaluate their rating if A1c data from MERLIN are positive.

- Bear Stearns says that while the MERLIN results are in-line with their expectations, they believe there could be some short term strength in CVTX shares based on short covering (roughly 28% of the shares are short), the anticipated filing for Ranexa in front-line angina (anticipated in the next 1-2 quarters), and the NDA filing for Regadenoson in mid-07. However, they are maintaining their Peer Perform rating for longer-term investors.

Notablecalls: Trial results are always difficult to interpret, especially when they appear to be mixed. I must say I like the comments from Bear Stearns as the expecations regarding efficiency in the MERIL were pretty low. Most analysts were just looking for solid safety. That's pretty much what we got, too. The co may still get first-line angina indication for Ranexa from the FDA, based on safety. With a very high short interest and Piper ringing the bell on diabetes potential, I'd keep CVTX on my radar screens for a bounce. More agressive accounts may find the $9 level reached in after market action a good entry point. Tight leash.

Color on Announcement: AMD (NYSE:AMD)

Several firms commenting Advanced Micro Devices (NYSE:AMD) after co announced yesterday morning that it is unlikely to meet its revenue guidance.

- Morgan Stanley believes AMD's margins will be under severe pressure as it suffers from aggressive pricing competition in MPUs, as well as a product line that is currently inferior to its primary competitors. While AMD's product portfolio should be more competitive in the second half of this year, firm expects its financials to remain under pressure for at least several quarters. Meaningful losses are likely during the first half of this year, and they could continue into the second half of the year as well. In addition, firm believes that AMD will need to raise capital to fund its previously planned capex investments for 2007. Consequently, they maintain their Underweight-V rating on AMD.

Firm's 2007 and 2008 EPS estimates are now ($0.50) and $0.60 respectively versus $0.15 and $0.84 previously.

- Cowen notes that AMD announced that 1Q07 (March) results would likely fall below rev guidance of $1.6-1.7B, down 4-10% seq. Mgmt attributed the primary source of weakness to inability to provide certain commitments to their distributors which have resulted in share losses presumably to INTC. Mgmt admitted to having "taken their eye off" the ball with respect to its distribution partners as AMD ramped into new OEM customers. Mgmt continues to highlight pricing pressure in the server end market as a significant source of weakness. Firm believes it is too early to call a bottom in shares of AMD. In their opinion, the visibility limitations make a valuation call on these growth shares incredibly challenging. Firm expects the data flow regarding fundamentals to remain negative over the near-term. Without any significant positive catalysts on the horizon, they expect shares to remain under pressure.

Firm expect the pricing pressure coupled with the integration of ATI's lower margin consumer-related business units is likely to result in sustained GM pressure. They believe the feasibility of achieving the 50% GM target exiting 2007 appears increasingly unrealistic.

- JMP offering contrarian view, upgrading the share to Market Outperform from Market Perform, with price tgt of $15 based on 15x their Street-high 2008 EPS estimate of $1.15 (Street @ $0.78 with a wide range). The upgrade is based on:

Firm's proprietary industry and channel research indicates that AMD's next-generation "Barcelona" quad-core server chip and next-generation low-power mobile PC processor chip is exhibiting excellent power, performance, scalability, and price/performance characteristics at key OEM customers such as HPQ, Dell, IBM, Fujitsu-Siemens, Sun, and Lenovo. Firm believes that the next-generation quad-core Opteron server chip and the next-generation low-power mobile processor chip will level the playing field with Intel. The new products may allow AMD to regain the performance mantle in the high-margin server chip market with performance gains of 20-30% over equivalent Intel Xeon server chip while also allowing AMD to target the high-margin corporate and small-business notebook PC market with bundled low-power processor/integrated graphics solutions.

While the ATYT merger has been a rocky one with delays and market share losses in several discrete and integrated graphics segments, firm's research suggests that the new AMD Series 690 integrated graphics chipset for desktops and notebooks, with full support for Vista DX10 graphics, HD video, and Blu-Ray/HD DVD, will likely allow AMD to achieve renewed success in the consumer and corporate PC market. Also, despite a 30-45 day delay in the production availability of AMD's next-generation high-end R600 discrete graphics chip competing with NVDA's GeForce8800, firm's research indicates that AMD has successfully addressed the production and power bottlenecks with the R600, and the solution will likely be successfully bundled with AMD's high-end Athlon64 processors for OEM and channel customers.

Firm's research also suggest that AMD's manufacturing yields on 65nm technology on 12-inch wafer production are ramping well, about one quarter ahead of schedule, and will likely allow AMD processor margins with the better product mix to quickly rebound to the 50-52% level from current levels of 40% over the next 12 to 18 months. Given the increased production volumes, AMD will likely be able to satisfy its rapidly expanding OEM and channel customers with plentiful supplies of high-end dual-core processors beyond the current quarter.

Notablecalls: While most of the Street is negative (to say it mildly), I actually like JMP's opinion. Too bad they are probably 1-2 qtrs too early with the upgrade. However, if they are right about Barcelona, AMD shareholders do have better times ahead.

Calls of Note Part 4

JP Morgan defending Starbucks (NASDAQ:SBUX) following recent decline. Firm believes the current price offers an excellent risk/reward opportunity and would own with a 3-12 month investment horizon.

Concerns regarding 1Q margin pressure linger, but firm does not see risk to near-term estimates. While they believe F2Q will be another challenging margin quarter (which is they believe is reflected in their model), they remain comfortable with $0.20 estimate which should be aided by solid comp and store growth. Firm's model reflects 23% revenue growth, driven by 19% U.S. operating week growth and 5% comps. They continue to expect operating margin improvement in 2H.

The Schultz memo is a call to action, not for slower growth. Chairman Howard Shultz's internal letter warning of "the commoditization of the Starbucks experience" was very well publicized. Firm believes the letter was focused on growing Starbucks' appeal relative to consumers, and that it was a call on the company's culture without financial implications of slower store growth, higher capital spending, or increased operating expenses.

Improved QSR coffee not a threat. While McDonald's increased its coffee sales by 15% in F06, firm sees the company's improved coffee roasts and packaging primarily as a better beverage option for MCD's breakfast patrons and in a defensive move from other QSR names either promoting (BKC) or planning to introduce breakfast (WEN). In summary, firm does not see improved offerings at QSR as a major threat to SBUX.

Notablecalls: Nothing new in this note, but seems to be the first defense after quite a big decline. Look for others to follow as SBUX continues to be analyst favorite. Not actionable, though.

Calls of Note Part 3

Stifel out with a note on American Science & Engineering (NASDAQ:ASEI), saying that details of the FY07 Supplemental Budget Appropriation bill include $24 million to upgrade 67 Z Backscatter Vans (ZBV) now in the field in Southwest Asia to ruggedized level, which means removing the proprietary equipment and installing it in a vehicle armored sufficiently to protect the crew and the equipment.

Firm views this potential order as a positive as it is the first indication that the ruggedized ZBV, for which development began just a few months ago, is ready for deployment, and also hints that future purchases of new ZBVs could be the ruggedized version, which most likely carries a higher price and delivers more operating profit dollars to American Science & Engineering's P&L.

Firm believes American Science & Engineering will likely partner with a reputable armored vehicle manufacturer and limit it's direct work to high margin proprietary items.

ASEI shares trade with a high level of volatility and firm thinks current valuation levels are inexpensive given the proven utility of the company's products and likelihood of deployment of several new products over the next 12 months. The lack of forward visibility is what they think is behind the discount to the peer group, but they are confident that additional business will likely develop. Firm would be buyers at current levels.

Reiterates Buy and $72 price tgt.

Notablecalls: Nice find by Stifel! Expect to see buying interest based on this note. ASEI is a mover with sizeable short interest, so could be worth a point or more. Actionable!

Calls of Note Part 2

Wachovia out with a nice overview of their key impressions from 2nd Annual Wachovia Homebuilding Conference, which was held March 1st and 2nd in Las Vegas.

Sales trends continue erratic. In general firm believes the Spring selling season has been at least a mild disappointment for most; traffic levels seem firm, but sales activity soft. The exception is CA, which several companies mentioned as rebounding nicely (SPF, TOL, CTX). FL was regularly described as the state with the most widespread weakness. Opinions were mixed but biased towards signs of stabilization in the DC metro and mixed but biased towards weakness in TX. DHI seemed more pessimistic about conditions; SPF more optimistic.

Downturn duration expectations extending. Likely as a result of a so-far sluggish Spring, firm felt some builders seemed to be tempering their outlooks for their business. Firm liked HOV CEO Ara Hovnanian's characterization of this recovery as potentially a boat hull, or a long period of flatness before a gradual rise. To paraphrase him, whether the hull is the size of a Boston Whaler or the Queen Mary has yet to be seen.

Sub-prime not a worry (yet). Most builders do not expect problems in the sub-prime market to spill into substantially-tightened lending standards for the prime market, and on average firm believes builders feel that sub-prime customers represent 10-12% of total business.

Builders making headway in labor cost savings. Several builders reported increasing concessions from trade subcontractors, on the order of 5-7% labor cost reductions in select markets, which should begin bolstering margins in 2H07.

Pay down debt in the short run, re-grow in the long-run. Of course firm continues to hope for a more permanent focus on free cash flow by builders even after the cycle rebounds, and more measured additions to lot supply coupled with bolstered share repurchase activity. In the short run, however, most appear to be focused on reducing debt or maintaining current debt-to-cap levels, while keeping an eye out for opportunities to re-invest in land.

Little commentary on M&A potential. While many builders believe the industry likely to consolidate in the long run, few expect substantial public-to-public merger activity in the near-term. Some commented that substantial liquidity is likely to move towards the distressed-land and distressed private-builder markets rather than into public builder private equity takeouts.

Notablecalls: Not actionable, but very good to know category.

Calls of Note Part 1

Bear Stearns out with an interesting note on Palm (NASDAQ:PALM), saying that in light of news reports that PALM mgmt has hired investment bankers to "explore options," they wanted to highlight an important valuation issue: net operating loss (NOLs) carryforwards, because the actual realizable amount -- around $1.00-$1.10/share -- is less than some investors may expect.

According to PALM's latest 10Q, the company has NOLs of ~$609mm on 104mm shares. However, this translates to ~$1/share since NOLs will be subject to IRS limitations if PALM is acquired.

Specifically, IRS limits the use of acquired company's NOLs to a long-term tax exempt rate (4.18% as of 3/07) of the equity value per year at the time of the acquisition for up to 20 years --e.g., at hypothetical acquisition price of $17/share for PALM, annual limit on NOLs is $74mm (i.e., equity value of $1.77bn * 4.18%).

In addition, NOLs from a prior acquisition (i.e., Handspring's $273mm), must adhere to the IRS limitation specified at the time of acquisition (10/03) --i.e., $9mm/year based on equity value of $188mm.

Notablecalls: Bear Stearns is late with this note as PALM already gave up all of the Friday's gains yesterday. However, this goes to the very good to know category should the takeover speculations resurface.

Calls of Note Part 4

- Stifel is out with a Subprime Mortgage Sector downgrade saying that following meetings with three mortgage lenders last week (CFC, NDE, and IMH) and several recent negative developments in the sector, they are taking a significantly more bearish stance on the industry.

Specifically, despite valuations that are well below book value, the firm sees increasing evidence that this industry is now in a downward spiral whereby each negative development fuels additional deterioration in key fundamentals including origination volume, pricing, credit " and most importantly " funding.

Firm believes recent developments have led to a "crisis in confidence" that has put unbelievable pressure on secondary market demand with bids for loan pools and ABS bonds nearly evaporating. With the NEW and FMT news late Friday, the firm believes this risk is only increasing further, and they now expect profitability will be severely strained until conditions stabilize. They expect this to make it difficult for even higher quality players like LEND to remain solvent and all remaining subprime lenders will need to obtain significant covenant waivers to remain operational.
As a result, despite stocks that have fallen an average of nearly 50% since their initial cutious call (Feb 7), they believe further downside is likely, as liquidity risk is still rising. Accordingly, they have cuttheir rating to Sell from Hold on NFI, LEND, and NEW.

For CFC, while they still believe the company will take advantage of the sector turmoil, their near-term bias is also negative as they expect the disconcerting trends in the subprime sector to increasingly spread into the Alt-A and, to a lesser extent, prime sectors.

Notablecalls: Several firms are out with some pretty nasty commentary on NEW and other names. I know that many were loading up on the likes of NFI in anticipation of a bounce but now it looks like that train is going straight to hell.

Calls of Note Part 3

Two defensive notes out on Amgen (NASDAQ:AMGN).

- JP Morgan says that With AMGN shares now trading at 12.5X 08 consensus (vs Big Pharma at 15), they'd argue the selloff from anemia-related headlines is overdone. They find AMGN's risk/reward highly attractive ahead of the ODAC panel and CERA PDUFA, both in May. They are comfortable with the risk of trial 145 (Aranesp in small cell lung cancer or SCLC) as, like many recent negative anemia trials, target Hb levels are outside of commercial clinical practice.

The 145 study guides Hb levels to 13-14g/dl, higher than 97% of commercial oncology patients on Aranesp. Hence, even if Aranesp demonstrates harm in Trial 145, its relevance to contemporary practice is questionable, in firm's view. With 80% power to detect a 42% survival difference between the study cohorts, a smaller difference (e.g., 10%) is unlikely to reach statistical significance. So the most likely scenario, in their view is that Aranesp shows no difference (i.e. benefit or harm) between treatment arms.

Firm believes that a negative trial 145 is manageable for Aranesp where worst-case scenario, 10% of CIA sales may be at risk (~$285M). When also factoring in a potential hit to Aranesp in AoC, they estimate a total EPS impact of $0.13 or 3% of our 2008 ests of $4.83. Reiterates Overweight.

- Deutsche Bank thinks that Amgen's recent severe decline from $75.85 (1/22/07) to $61.75 (3/2/07) per share or $16B or 23% is unwarranted, and more than reflects impact from negative events sidelining investors. On valuation, AMGN shares are trading at 12x their 08 EPS est of $5.31 or 43% discount to its comp grp avg of 21x, making AMGN an increasingly attractive investment opportunity.

Sum of the parts analysis shows -ve events more than fully reflected in valuation. Firm set forth an abbreviated sum of the parts framework for forecasting financial impact from anticipated new KDOQI guidelines impact, and negative dialysis, pre-dialysis, AOC data and upcoming studies (including the 145 lung cancer CIA trial results in May). Net/net, firm est the sum impact to be $125M/$0.11 in 07, $265M/$0.23 in 08, and $283M/$0.20 in 09.

Notablecalls: The defenses keep coming, but this time Deutsche got to a new level - they are holding a conference call with investors to discuss the issues. Might want to grab a few commons ahead of the call at 10AM EST today. Tight leash though as the defenses have failed to work so far. Would love to see it gap down first along with the general market.

Calls of Note Part 2

Jefferies says they attented the SPIE conference in San Jose last, where they met with both equipment vendors involved in lithography, and fab managers from IDMs and foundries, coming away with positive data points for ASML (NASDAQ:ASML). The net take from this was (1) chipmakers remain committed to existing CY07 spending plans with no signs of Capex push-out, (2) traction of Immersion tools may be slower than expected, as DRAM chipmakers look to utilise dry-lithography tools longer and (3) ASML's product roadmap in-tune with customer requirements.

On the first point, firm spoke with key representatives from both leading memory chipmakers (DRAM and NAND) and foundry players. Despite weakening NAND and DRAM spot prices, memory chipmakers alluded that their mgmt remain committed to the current CY07 capex budget. In particular, Samsung, Hynix and Toshiba appear focused on fighting for DRAM and NAND market share. Amongst the foundries, TSMC's capex spend remains on track, as well as spending plans from the MPU chipmakers.

On the second point, firm does not expect to see any Immersion booking surprise in 1H:07. From their conversations, firm believes that DRAM chipmakers are likely to purchase dry 193nm-lithography tools rather than Immersion tools. This is because DRAM makers are unwilling to take the higher yield impact and higher maintenance costs associated with Immersion tools. In contrast, NAND makers will purchase Immersion, preferring the higher productivity gained from geometry shrinkage.

Notablecalls: Not actionable. While Jeffy came away with positive data points from the conference, the most important point seems to be lower than expected traction of Immersion tools. That may be perceived negatively for Cymer (NASDAQ:CYMI). One to keep an eye on.

Calls of Note Part 1

Wachovia out noting that Medtronic's (NYSE:MDT) interventional spine unit was not present at the 2007 Society of Interventional Radiology (SIR) meeting; MDT's booth only featured vascular products. When Arcuate was missing at this year's AAOS meeting, firm assumed it was because MDT was instead targeting interventional radiologists (IRs). Given that SIR is the key IR meeting, they now suspect MDT may have pulled back from its aggressive Arcuate launch. It is not clear why this "on again/off again" program seems to be off again; firm suspects either legal concerns surrounding the Kyphon (NASDAQ:KYPH) patent lit. or a change in strategy given the pending management changes at MDT. Either way, firm views Arcuate's disappearing act as a positive for KYPH.

Firm says meeting supports their Outperform rating on KYPH: They expect upside to their 2007 revenue (driven by X-Stop) and EPS estimates (driven by lower convertible debt interest); the 15-20% growth forecast for kyphoplasty (KP) among IRs is consistent with their 18% domestic KP forecast. Further, the threat posed by MDT's Arcuate continues to ease while KYPH's acquisition of Disc-O-Tech's Confidence VP system should allow for further IR penetration and share gains in 2008 and beyond.

Notablecalls: Might have called this one actionable on some other day, but with futures indicating another choppy day, don't think this note will catch enough attention.

Attention!

NC will be on vacation on Friday and will resume posting Monday morning.

Oh and btw, I still love getting feedback (wink-wink!).

NC

Calls of Note Part 2

- Prudential is lowering their Q1 EPS on Nokia (NYSE:NOK) below cons. to 0.23 (down by 0.03) and Q2 to 0.24 (down 0.02). Even with decent unit volumes and associated share gains, they expect near-term results to be impacted by lingering price discounting that has affected market players for the past few quarters, which will likely limit earnings power in 1H07. Firm does not believe the ASP pressure is due to geography mix alone, as price discounting is evident in developed markets too.

Firm expects new devices, like the new N-Series and E-Series, to start to ramp from mid-March onwards; however, this means Q1 will still be largely dependent on the existing product line. They expect near-term ASP weakness will lead to weak near-term earnings.

Over the course of the year, they are more optimistic about a rebound in the business as new handsets begin to ship in volume and as the NOK/SI integration work proceeds once that deal closes. NOK releases up to 4 dozen new handset models a year, which should help relieve near-term ASP pressure. Firm expects margins to improve in 2H07, and they are raising their 4Q EPS estimate by 0.01.

Net-net, this does not change their overall thinking on the company, and they continue to view Nokia as the best-positioned handset maker. Firm believes this near-term weakness will yield to eventual recovery, but until we move closer to such recovery, they remain Neutral Weight with a $22 price target.

Notablecalls: You buy any of this stronger H2 talk? SI integration will save the day? Huh?

Color on news: Motorola (NYSE:MOT)

Couple of firms comment on Motorola (NYSE:MOT) after financier Carl Ichan and three of his entities filed to buy more than $2 billion, or 4.4 percent, of the company's common stock. The company also filed its 10K last night:

- Piper Jaffray notes the co indicated in its 10K that roughly 39% of Mobile Device sales were to China Mobile, Sprint, Verizon, Cingular, and T-Mobile. With firm's channel checks indicating weakening North American market share and a continued drop in Motorola ASPs, they have lowered their 1H07 estimates. Motorola indicated mobile device inventory was up year over year due to slower Q406 demand than Motorola anticipated for certain products, which the firm believes was primarily iDEN phones and KRZR handsets. Checks indicate additional price cuts of KRZR and RAZR during Q107 should help lower inventory, but such pricing actions will likely result in sequentially lower Q107 operating margins. The co indicated "going forward mobile devices will rebalance its market share and profitability objectives with a greater emphasis on profitability."

Based on more cautious 1H07 outlook, they are lowering 2007 proforma EPS estimate from $1.17 to $1.08 and 2008 estimate from $1.39 to $1.36. Maintains Market Perform but lowers tgt to $20 from $21.

- JP Morgan believes MOT's current lackluster handset line-up is leading to continued ASP and operating margin pressure in Q1 and Q2 which also raises the potential for a more modest turnaround in back half of '07. Coupled with the current leadership void following the departure of Ron Garriques, they are reducing their Mobile Devices operating margin estimates. However, the firm continues to believe MOT is capable of returning to double-digit handset margins longer term and with near term share price support provided by Carl Icahn, they are maintaining Overweight rating.

Reducing handset margins to 2.5% in Q1 and 4.5% in Q2, down 350 basis points each from previous estimates while Q3 and Q4 margins fall to 6.0% and 9.0% down 300 and 100 basis points respectively.

Icahn purchases limit downside as 4 of Carl Icahn's funds filed notice after the close of their intentions to purchase a minimum $1.2B worth of MOT stock. At Wednesday's $18.52 close, $1.2B implies approximately 65M new shares in addition to the 40M shares which Icahn's funds already control, giving him a minimum 4.3% stake of the roughly 2.5B shares outstanding.

Notablecalls: Looks like things in the handset space are going to get worse before getting better. In order for things to get better, we need something new - new kinds of services or killer products like the iPhone. I don't see anything that exciting coming from MOT nor NOK in the near term. Regarding Ichan, call me paranoid but I'm not buying this potential increase in positions. I suspect that a month later investors will find out Ichan has actually reduced its currently reported quantity. I've seen it happen at least once in the past. The stock was up around 5% last night in after market action. Don't think the levels will hold.

Calls of Note Part 1

- Bear Stearns notes investors should stay on the sidelines on AMD (NYSE:AMD) even at current levels. Trough valuations get them to a price of $11-$12, and given further deterioration in fundamentals and negative data points from their recent channel checks, the firm believes AMD has downside to these trough levels. They expect AMD to gain share in 2H07 and 2008, after share losses in 1H07, but these share gains will be achieved through aggressive pricing, not because of its technological edge.

AMD's 1Q unit shipments are tracking well below firm's conservative expectations (they have already factored in excess inventory exiting 4Q in their earlier estimates) due to weaker than expected demand for AMD in mature markets, the company's inability to penetrate existing accounts given its less competitive product roadmap, and belief that some of its desktop customers have increased their activities with Intel. Firm expects AMD's unit share to decline 140 bps QoQ to 23.7% in 1Q. Though 1Q price declines are well known, they believe AMD's 2Q processor pricing will deteriorate significantly beyond current market expectations. Bear is lowering 1Q revenues from $1.65B (-7% QoQ) to $1.53B (-14% QoQ), and 1Q EPS from ($0.11) to ($0.22). Maintains Peer Perform.

Notablecalls: So Bear thinks it's not the time to bottom fish in AMD. They are most likely right. Note that ThinkEquity's Eric Ross took his tgt on AMD to $12 almost a month ago citing similar reasons.

Morgan Stanley positive on Apple (NASDAQ:AAPL)

- Morgan Stanley says they would be buyers of Apple (NASDAQ:AAPL) on incremental revenue and operating leverage. Firm believes the market is underestimating the likely success of iPhone. They're raising C2007 unit and revenue forecasts to better reflect iPhone interest levels, as described in our proprietary survey. EPS estimates for 2007 and 2008 increase to reflect higher unit estimates and a more favorable NAND pricing outlook. They also believe the market is underestimating potential operating leverage. While the firm sees positive leverage drivers across Apple's product segment, the iPhone alone increases scale (better pricing from suppliers), strengthens retail store leverage (increased velocity on fixed-cost base), and takes advantage of lower NAND pricing in the market. Rates AAPL Overweight with a $110 price target.

Expecting 8M units in 2007, up from 6M: MSCO is raising their iPhone unit estimates by 33% due to their survey. A survey of 2,500 US consumers found that more people are interested in buying an iPhone than the combined number of people who already own or are planning to buy a similar high-end device in the NTM (23% vs. 19%). Firm's new forecast could prove conservative if the above-mentioned catalysts play out. C2007 iPod estimate trends down (by 1.5M units) to consider a slightly higher cannibalization rate than previously forecast. C2007 Revenue and EPS increase $600M and $0.43, respectively.

Notablecalls: Considering MSCO's ests were already Street high, any positive revisions will be greeted by the market with a nice bump in share price. Actionable call alert!