Calls of Note Part 2

Several firms are commenting on Jabil Circuit (NYSE:JBL) after the co released its FQ1 results and FQ2 guidance:

- Merrill Lynch notes that last night, for the second quarter in a row, Jabil provided partial FQ1 (Nov) results as it continues with a stock option investigation, which now includes an investigation into revenue recognition for Q4 of F1999 and Q3 of F2001. According to JBL, end demand was more subdued than expected as FQ1 progressed due largely to consumer (36% of sales). This does not come as a surprise given ofirm's recent research (e.g., China trip, inventory study, etc.), which has raised a number of yellow flags in the supply chain.

Given JBL's consistent track record, tey were surprised by several new issues that popped up in FQ1. First and foremost, the company is discontinuing a consumer product it designed due to delays and rising price pressures. Also, a more material intensive product mix hurt gross margins by ~50 basis points, which given the lack of SG&A details, likely implies operating profits were under more pressure than the Street would have thought.

Based on deteriorating cash cycle days (23 days vs. 14 days in FQ4), it looks as if cash flow from operations was negative for the first time in more than five years. Cash declined from $774MM to $658MM.

- Bear Stearns thinks JBL's Nov qtr conference call and "subdued" outlook will likely spoil its holiday spirits. Uncharacteristic for Jabil, its call focused more on what went wrong (more "subdued " demand, less consumer upside in Nov, yet more downside in Feb, growing inventories, negative mix change hit margins by 50bps and ensured they won't hit 4%+ until at least May 2007, $12M write-off due to failed LCD TV investment, $4M in additional legal costs, new revenue recognition issues related to 1999 and 2001, still no clue when it can file its financials, behind plan in fixing May qtr operational issues, whew??? getting tired) than what went right (hmm..networking demand was positive, (read: CSCO).

Why not downgrade? Three reasons: 1) They believe the problems listed above are temporal as opposed to secular. 2) They still like the risk/reward. 3) JBL is still a solid company earning above avg ROIC with a mgmt team that can steer it back onto its path.

Lowers FY07 EPS to $1.39 from $1.68. Tgt goes to $32 from $35. Maintains Outperform.

- RBC Capital notes they expect JBL shares to trend lower given disappointing and limited financial information as old (repair, tooling, mfg issues) and new (ODM charge, product mix) issues impeded margins in Q107. While the bulls will point to revenue growth, they remain concerned with multiple issues JBL has to contend with. Maintains Sector Perform rating as JBL has a 15% premium to the group; firm would get aggressive when the premium dissipates.

Notablecalls: Think we will see JBL going below $26 level today. Shorting around the high end of $25 level will also likely lead to profits.

Calls of Note Part 1

UBS comments on First Data (NYSE:FDC) ahead the announced analyst and investor conference call announced last night:

- Firm thinks FDC's 3 segments are performing very well & they believe shares will benefit over the next 12 months from several catalysts (i.e. M&A, contract wins & a potential new CEO in 1H07). Since the threat of contract losses is fairly small, they reiterate their positive FDC thesis (strong growth/cash flow/leverage, favorable valuation, expansion opportunities).

They have changed their model to be in-line w/reported F06 numbers & F07 guidance (vs. prior pro-forma ests that included less debt expense). They have also removed M&A/new contract assumptions & tweaked some 1x/"below the line" items which were not related to FDC's core business. As a result, F07E EPS changed to $1.32 (from $1.47), but "core" net income growth remains an impressive 15%+.

UBS notes they are not changing their investment thesis at all. Firm continues to believe that
FDC's three main segments are performing very well and will meet and/or beat their respective F07 segment guidance (as FDC had indicated on the company's 3Q conference call). They would be extremely surprised if the company retreated on its prior commentary given it was only a few weeks ago and their businesses don't change that fast.

Firm thinks management has become increasingly frustrated by where the Street's estimates are for 2007 and while part of the blame lies with them and others, they also believe FDC did not provide enough specific information on "1x below the line" items until recently. Thinks FDC wants to set the record straight on where its expectations lie for next year. If there is anything more to the 8:30am EST conference call today, that would be a surprise to the firm.

Reits Buy and $30 tgt.

Notablecalls: I guess the timing of the management conference call came as a surprise for some and I would not be surprised to see some mkt participants get panicky. That may create a nice buying opporunity in the pre mkt ahead of the call. UBS' comments make perfect sense.

Paperstand

The WSJ reports that hedge fund Highland Capital, that is the 2nd-largest shareholder in Delphi, plans to send a letter today to Delphi's board outlining a $4.7bn capitalization plan for Delphi, which is under Ch11. That would counter a proposal from a group of investors led by Appaloosa Mgmt and Cerberus Capital Mgmt that would infuse up to $3.4bn in preferred and common equity into the co.

According to the WSJ, Raytheon (RTN) last night was in the final stages of completing a deal to sell its aircraft-manufacturing unit to Canadian buyout firm Onex and Goldman Sachs Capital Partners for $3.3bn.

“Heard on the Street” column discusses Level 3 (LVLT), whose stock is up almost double in the past year and bond prices have risen about 20%. Behind the gains: Explosive growth in video viewing over the Internet, which requires high-speed networks of the sort Level 3 offers. At the same time, a hearty appetite by investors for risky debt has enabled the co to put itself on firmer footing by refinancing its debt at lower rates. There also are good reasons to believe that Level 3 might be an acquisition candidate. But there are reasons to be wary: The co remains saddled with debt, it is in a business that still has excess capacity, and it has reported a quarterly profit just once in its more than 20y history. With the stock and bonds at lofty levels, it could be that any future possible good news already is priced in. Even bullish analysts acknowledge that to keep the stock climbing, demand for video and voice over the Internet will have to be strong enough to allow Level 3 to increase what it charges for access to its fiber network. Level 3 also will have to demonstrate that it can skillfully integrate a series of recent acquisitions. The co will also have to show that it is getting closer to pulling more cash out of its business than it is putting in.

Barron’s Online “Inside Scoop” section reports that between Oct. 2 and Dec. 7, 8 insiders at Thermo Fisher (TMO) reaped over $103m in proceeds by selling 2.3m shares. Two million of those shares were bought with the exercise of options.

Calls of Note Part 3

- Citigroup is out positive on Human Genonme Sci (NASDAQ:HGSI) after VaxGen announced today that the Department of Health and Human Services (HHS) has terminated the company's contract to provide 75 million doses of a modern anthrax vaccine for civilian biodefense.

Today's setback for VaxGen could lead to additional contracts being awarded to Human Genome Sciences, in firm's view. Firm recalls that HGS is already producing 20,000 doses of ABThrax to deliver to the U.S. government for the national strategic stockpile by late 2008.

They believe that HHS might opt to enter into additional contract in the 2007/08 timeframe with HGS. Given the attractive margins of such a contract, this could be an important new cash flow source to HGS and could reduce further the likelihood for additional financing in the future
for the company.

Reits Buy and $19 tgt.

Notablecalls: Expect to see buy interest in HGSI today as Citi's call make sense.

Calls of Note Part 2

- Piper Jaffray is positive on Tempur-Pedic (NYSE:TPX) saying that based on their recent
retail channel checks, they believe that business trends in the mattress/ bedding sector have improved following the mid-term election. Firm believes the hotly contested mid-term elections impacted the mattress/bedding sector in two ways: consumer confidence and the availability of advertising space. As we have passed the elections and advertising space has become more
available, they believe that traffic trends and sell-through has recovered, albeit in a seasonally slow period for the industry. The firm is raising their 4Q domestic sales estimate from $162 million to $167 million, which is predicated on 23% domestic mattress unit volume growth and 3% average unit selling price growth. They believe the improving sales environment, coupled with strong acceptance of the company's RhapsodyBed and continued distribution expansion with high-volume retail accounts is positively impacting sales trends.

Piper is forecasting FY06 sales of $946 million, which is slightly above the low end of the company's guidance. They remain confident in their 4Q operating EPS estimate of $0.39 and FY06 estimate of $1.31 which is at the high end of management guidance.

Tgt goes to $20 from $19 with MP rating maintained.

Notablecalls: Must say I'm surprised to see ests raised on a furniture maker. This comes after TPX's main peer Select Comfort (NASDAQ:SCSS) took a bad stumble on Nov 30. I have no intention to call this one actionable. Good to know category.

Calls of Note Part 1

- Goldman Sachs is adding MedImmune (NASDAQ:MEDI) to the Americas Conviction Buy List with no change to our 12 month target price of $37, suggesting 14% potential upside. On 12/7/06, the firm raised their 2007 and 2008 EPS mainly due to higher royalties and government contract revenues. Firm expects more visibility on new product launches in the next 18 months. MedImmune shares might reach $50 in 2008 if investors are convinced that management's 2009 EPS target of $2.00 is achievable.

Catalyst: GSCO expects 1) Synagis sales, which declined in the 2005/06 winter season, to
stabilize in 2006/07. 2) FDA advisory committee review of Flumist for 1-5 year olds in March 2007 3) FDA approval and relaunch of liquid Flumist with an expanded label in mid 2007 4) An international partner for liquid Flumist 5) Launch of Numax, an improved Synagis with an incremental sales potential of $0.5bn, in 2008 6) Progress on an early but high potential pipeline in the next 18 months.

Notablecalls: Must say 14% worth of upside does not get me too excited. But on the other hand the $50 tgt for 2008 looks good. The only problem I have with this call is that there may still be too much hope tied to Flumist. Flumist for 1-5 yr olds? Are you kidding? Or am I just having a bad morning? Overall, expect to see some buy interest following the call.

Color on news: Redbak (NASDAQ:RBAK) and Ericsson

Couple of firms are out commenting on news of Ericsson AB's (NASDAQ:ERIC) $2.1 billion acquisition of data network equipment vendor Redback Networks (NASDAQ:RBAK):

- UBS notes the proposed acquisition of RBAK is consistent with firm's view that ERIC is seeking to enhance its IP & IPTV offering with edge routing capability. Notes that RBAK has already secured 12 of the top 20 wireline carriers in the world for its IP edge routers.

RBAK has had little focus on wireless carries & this deal will likely enhance its position globally given ERIC's #1 share in wireless infrastructure. Firm alsos believe RBAK's competitive positioning against CSCO & JNPR in top tier wireline operators is further aided. RBAK's recent loss at VZ, which we believe was due to aggressive efforts by JNPR, likely accelerated RBAK's plans to seek a merger.

UBS ests ERIC is about 6%-8% of JNPR sales. They believe the edge router portion of these sales, which are mostly focused in China, will be at risk post the proposed merger as ERIC will likely seek to sell the RBAK product (primarily SmartEdge) over the JNPR product line in edge opportunities.

- CIBC is downgrading JNPR to SP from SO. While JNPR remains a formidable competitor in both edge and core routing, the firm now believes upside to the stock is limited given the more formidable edge competition of an RBAK/ERIC combination and waning possibility of an acquisition premium.

JNPR needs to decide - sell now or buy bigger and faster. The two possible matches include Motorola and Nokia Siemens. Yet, the first is busy with other acquisitions and (so far) indicated no desire for large acquisitions while the second is bogged down with delayed deal closing and integration.

Though they believe Juniper s relationship with Ericsson (reseller) will remain in place for some time given the breadth of Juniper s product portfolio relative to Redback, they think a decline in the volume generated through this channel is now inevitable. Reseller alliances with Motorola , Nortel or Avaya for example could build some lost traction; but they see less
synergy with those partners across strategies and product lines.

Alternatively, JNPR could turn more aggressive in consolidation. However, options are less compelling (access or enterprise) and are likely to have a negative impact of financial performance (remember NetScreen?). In sum, the firm feels a premium is no longer justified and strategic risks are mounting. With its stock trading in the $19 range, JNPR is within a small margin of reaching CIBC's $20 price target. Given the above considerations they believe the stock is now fairly valued and are inclined to move to the sidelines.

Notablecalls: Looks like JNPR has the most to lose following the deal. I also have two high fives in store. First high five goes to ERIC's management for paying 7x annual revs for RBAK. That's pretty...high...guys. Second high five goes to financial advisors involved in the deal for ziplocked mouths as looking at the price action in RBAK stock couple of weeks ahead of yesterday's announcement it's pretty obvious there was a leak.

Arguably, the third high fives should go to RBAK management for selling their co for such a high price but it does just not fit the category. Well done guys! Really!

Color on results: Palm (NASDAQ:PALM)

Several firms are commenting on Palm (NASDAQ:PALM) this AM after the co released its FQ3 results last night:

- UBS notes they continue to believe the Palm story is one of execution in terms of product
shipments, further cost efficiencies, and new product introductions. Although management delivered a license agreement with Access (for its operating system) that will improve gross margins by ~100bps, improvements will be offset by higher operating expenses to drive the Palm brand and awareness to consumers as well as accelerated R&D for new product development. While the firm views the strategy as the right investment to make given heightened competition, they do not believe the benefits and leverage in the model from these investments will materialize for the next several quarters.

UBS believes management clearly feels a sense of urgency to "right the ship" and execute. They believe success will hinge on the company's ability to raise consumer awareness of the value in its Treo products as well as bring more compelling product to market - both key elements in the increase in operating expenses over the next two quarters.

Firm's forecasts assume new product introductions in time for the 2008 holiday selling season to help accelerate unit shipments, ASP declines with fairly stable gross margins, and a leveling
off of operating expenses. They view new carrier wins as a key element to driving units, as sell-in on a per carrier basis has been decelerating due, in part, to the company's customers carrying less inventory. Lowering our pro forma FY07 EPS estimate (ex options) to $0.62 from $0.74 and pro forma FY08 EPS (ex options) to $0.76 from $0.81 reflecting higher than anticipated operating expenses.Tgt goes to $15 from $15.50. Maintains Neutral.

- Banc of America is more bullish calling the results good and guid okay incl Treo 750 delay. Palm posted in-line rev but better-than-expected F2Q product mix, margins, and EPS vs lowered guid. Mgmt acknowledged that Treo 750 certif. is running behind plan, in-line with ABC's checks, but F3Q rev guid was okay and is prob conservative. Palm's new mktg campaign leads to lower OMs and EPS, but firm's unit acceleration thesis holds.

Despite concerns about competition and pricing, Nov qtr smartphone unit sell-through was a record at 617K (+8% Q/Q, +42% Y/Y). Also, Palm's GM of 35.6% beat by 200bps and smartphone rev, units, and ASP of $283M, 603K, and $469 all beat BAC's ests. Handheld seg rev/units missed.

Palm's new deal with ACCESS for Palm OS is expected to boost F3Q's GM by 100bps and further improve mrgns over time. However, non-GAAP EPS guid of $0.11-0.13 missed firm's $0.17 est (cons $0.16) as Palm is ramping its $25M mktg campaign.

Firm is increasing FY07/08E rev from $1.23B/$1.49B to $1.27B/$1.58B, but non-GAAP EPS moves lower from $0.79/$1.00 to $0.68/$0.78 on higher opex. PT remains unchanged at $18.00, although they're moving from 20x CY07 EPS est to 20x CY08E EPS of $0.90 (non-GAAP) since they see CY07 EPS as temporarily depressed.

BAC thinks strong sell-through, GMs, and ASPs (all favorite bear topics) trump lower near-term OM/EPS and think increased mktg should lead to better future results, esp as units ramp.

Reits Buy.

Notablecalls: I suspect PALM didn't come in as bad as market participants generally feared. That's also the reason why we initially saw a positive reaction in after hrs trade. The GM side was impressive and in my book shows management can still execute. The $25 mln advertising campaign will eat into the bottom line s-t but coupled with new products expected over the next 6 months it may prove to be a step in the right direction. I also think that considering all the missteps made by management over the past 9 months Feb qtr guidance was kept low enough to avoid any futher stumbles. While I have no view on what the stock will do in the s-t things are starting to look somewhat better for PALM.

Paperstand

According to the WSJ’s „Heard on the Street” column, the oil industry is readying for a new wave of consolidation. "I think the environment is ripe for co’s to be considering consolidation," says Dan Pickering, of Pickering Energy Partners. "One thing these co’s know how to do is consolidate and cut costs." Targets include: HES, DVN, ECA, XTO and NXY.

Barron’s Online “Inside Scoop” section reports that over the past 90 days, 15 MGM Mirage (MGM) execs and directors grossed $50.96m by selling 1.09m shares on the open mkt, of which 93% were acquired through options.

Calls of Note Part 4

- Morgan Stanley is positive on FormFactor (NASDAQ:FORM) saying their checks suggest new NAND product (Harmony) continues to gain momentum and recent checks affirm FORM is set to win a large NAND order from the Intel-Micron JV in Q4/Q1 and evaluations with Hynix are progressing at a smooth pace. Firm believes up-time performance, a proprietary and novel self-planarization technology (this is new), and product reliability are key differentiators.

On the DRAM front, MS believes the company is on-track to take test parrellization to a new level and introduce a one or two-touch DRAM solution in the 1H07.

On the DRAM competitive front, they agree with the bears that FORM will face more competition in 2007 and beyond as customers push for dual-source, but they disagree that it will have a meaningful impact next year. Moreover, the firm believes the bears are overlooking the significant learning curve and higher levels of complexity associated with DRAM testing (versus NAND) that competitors will have to overcome once they pass the evaluation stage.

Notes they would be buyers of FORM at current levels. With less than 5% down-side from current levels and upside of more than 30%+ to our stock price target, they continue to believe that investors who are waiting for a better entry point could be disappointed. Consequently, the firm maintains Overweight-V on form and it remains one of the top picks in the coverage universe.

Notablecalls: Can't say I'm too excited about FORM here. Not actionable but good to know category.

Calls of Note Part 3

- Goldman Sachs is positive on Baidu.com (NASDAQ:BIDU) raising their 12-month price target to $128 from $93 due to higher expectations for margins despite slightly lower revenue. Specifically, the firm is raising their 2007/2008 EPS by ~15% and increasing their long-term growth rate to 30% from 25% as they believe that the competitive landscape and investments will pressure margins less than they had modeled. Firm still estimates some margin contraction in 2007 (150 bps) while margins could be flat to up excluding the impact of the Japan investments.

While Baidu will continue to face near-term execution challenges in the transition to a direct sales force, firm's increased growth rate over the long-term reflects their view that investments and the competitive environment (primarily from Google and Yahoo!) are not expected to increase to the degree that they had forecasted in our margins, and Baidu is likely to maintain/gain share. Firm believes that 15%-plus upside to consensus 2007 and 2008 EPS driven by margins will continue to support the shares despite the expected topline weakness in the near-term. They do not expect the recently announced MSN deal to have a material effect in the near term due to MSN's minimal share of the Chinese search market.

Notablecalls: Well, Stevie will be happy! As BIDU is a mover and GSCO sure has the power to move it ..expect to see a move in the pre mkt.

Calls of Note Part 2

- Banc of America is increasing their target on Dreamworks (NYSE:DWA) to $37 from $31. 2006 has been a transformative year for DWA as it dissolved HoldCo, forged its relationship with Paramount, and its partnership with Aardman likely is over. Firm thinks the following are not yet reflected in DWA shares:

1) DWA's valuation has potential for upside. Firm forecasts normalized EPS of $1.80 - $2.00. The new target reflects the rolling fwd of estimates and higher movie assumptions in 2008+. It implies DWA could trade at 19.5x earnings, in line with other media co's and still a steep discount to the 50x price that DIS paid for PIXR.

2) BAC still believes a share buyback is likely. Despite a strong rally in DWA shares, they believe a repurchase in the low $30-range is attractive relative to where the stock could be in 12-24 months.

3) The visibility into DWA's film slate is far better today than it was at its IPO in late 2004. Over the next few years, feature films include two Shrek releases, Seinfeld's Bee Movie, a sequel to Madagascar, and Kung Fu Panda starring Jack Black.

4) They believe there is still untapped value in the Shrek franchise. In addition to at least two more Shrek films, we expect a Broadway musical of Shrek and a feature film based on supporting characters.

5) The company has yet to exploit its relationship with Paramount. Firm's model does not reflect the value of potential television projects with Nickelodeon or other potential synergies with Paramount.

Notablecalls: One for the investor types. Right now the stock looks like it wants to go lower.

Calls of Note Part 1

- UBS is reducing their 4Q06 revenue estimate on Tellabs (NASDAQ:TLAB) to $530M from $543.5M, toward the low end of company guidance of $525-550M. They expect weakness in the quarter mostly due to delays in the closure of the T/BLS merger. Firm's 4Q06 EPS estimate reduces to $0.14 from $0.15 and they expect CY06 EPS of $0.56 vs.$0.57 prev.

UBS makes no changes to their 2007/2008 estimates. Tellabs should see a strong ramp of the ROADM 7100 at Verizon in 2007 but given this is a new account, initial revenue recognition is challenging to forecast. Firm continues to expect growth in 5500 sales in 2007 though at a much slower rate of 5% Y/Y, and believe 5500 growth will be more challenging in 2008/2009.

They currently estimate 6% growth only in FTTP revenues from Verizon next year for TLAB as they expect revenues from increased customer connects to be offset by ASP declines and share loss (most likely to Alcatel) as Verizon rolls out GPON. Higher FioS penetration, higher churn, or higher market share in GPON for TLAB would present upside potential to FTTP ests.

Maintains $12 tgt on Neutral rating.

Notablecalls: Nothing drastic here. The reason why I wanted to highlight the call is that since early Friday there have been rumors of Ericsson (NASDAQ:ERIC) making a sizeable acquisition in the U.S. TLAB looks like a suitable candidate. I'm aware of the earlier rumor of ERIC + Entrisphere (competitor to TLAB) but given it's small size it would not fit the bill. Also, RBAK would make sense as a target.

Color on news: eBay (NASDAQ:EBAY)

Several firms are commenting on eBay (NASDAQ:EBAY) after reports the co is taking a 49% stake in a partnership with Chinese online portal and wireless operator Tom Online Inc. (Tom would hold a 51% stake):

- Prudential notes that in their view this news is like chop suey: good news mixed with bad. The
good news is that eBay would significantly reduce its operating losses in China. In addition, the combined company would be a stronger competitor. But the bad news is that eBay effectively would admit defeat in a market that was, at one time, billed as its next great growth opportunity.

The new Tom/eBay Chinese Web site will reportedly launch sometime in 2007. EBay is expected to maintain its own "cross-border" trading site for Chinese users that are selling to buyers outside of China, but it will shutter its main auction site in China.

Accdg to reports, the companies have not decided which brand name to use for the site. Tom CEO Wang Lei Lei will be CEO of the joint venture, and Jeff Liao, CEO of eBay's China subsidiary, will hold an unspecified management role at the joint venture and will also continue to run eBay's cross-border trading site. EBay is expected to contribute $40mm to the venture initially, and Tom will contribute $20mm.

Maintains Overweight rating and $40 price target on EBAY.

- Bear Stearns notes that while not stated in the article, they believe that eBay could simultaneously enter into a transaction involving PayPal and a local payments provider. Firm believes that a second transaction of this nature would be prudent and could likely add strength to the new platform, if true.

If this transaction were to happen, the firm would view it as a positive for the following reasons: 1) eBay will continue to participate in the upside growth of China, a market exhibiting one of the fastest Internet growth rates; 2) eBay will have access to a strong local company; 3) it will
cut of a funding source for eBay and likely lead to improved margins; and 4) potential synergies between Skype and PayPal.

Maintains Outperform.

Notablecalls: Not actionable but good to know category. Note that there are several firms out on EBAY this AM previewing the qtr (Jan 17) with GSCO telling investors to buy ahead of the release.

Color on news: Biogen-Idec (NASDAQ:BIIB)

Couple of firms are commenting on Biogen-Idec (NASDAQ:BIIB) and Genentech (NYSE:DNA) after the FDA issued an advisory that two patients taking Rituxan for systemic lupus erythematosus (SLE) developed and died from progressive multifocal leukoencephalopathy (PML):

- Merrill Lynch notes there have been 23 cases of confirmed PML in patients taking Rituxan for lymphoma and the risk of PML is listed on the drug's label. The firm does not expect these cases to result in any change in sales of Rituxan in its primary indication of Non-Hodgkin's Lymphoma (NHL), which they project will represent about 87% of the drug's sales in 2007. However, there could be a modest slowing of uptake for Rituxan in non-fatal indications such as rheumatoid arthritis or other not yet approved indications of SLE or multiple sclerosis.

The PML was reported as late as 12 months after discontinuing Rituxan treatment in two patients who were being treated off-label for SLE. Also, PML cases have been reported in patients with SLE who have never received Rituxan, likely because patients are receiving one or multiple immunosuppressive drugs and have compromised immune systems. As a result, it is possible that these cases may not be related to Rituxan.

Even if none of the high-risk patients were given Rituxan, ML estimates that the maximum EPS impact for DNA could be $0.03 in 2007, $0.04 in 2008 and $0.06 in 2009. For BIIB, they estimate that maximum EPS impact would be $0.04 in 2007, $0.06 in 2008 and $0.08 in 2009. For now though, the firm maintains their estimates.

- Baird comments on BIIB saying the two SLE patients had longstanding SLE with multiple courses of immunosuppressant therapy prior to receiving Rituxan.

In an 8k, BIIB points out that PML is a known risk in patients who have immune suppression and has previously been reported in SLE patients who were not receiving Rituxan.Firm recalls that Rituxan is not approved for the treatment of SLE. Additionally, they model no revenue in this indication, so they see little material commercial impact here. Reiterates Neutral rating, $55 price target.

Notablecalls: Looks like much ado about nothing. BIIB ended down 2.5 points in aft mkt trading. That looks somewhat excessive. Buying BIIB around the $47.50 level likely presents a good risk/reward oppy. Don't think we will see any downgrades.

Paperstand

The WSJ reports that eBay (EBAY) in its second big pullback from Asia, is shutting down its main Web site in China and replacing it with a site that would be largely run by Tom Online (TOMO). The co plans to announce as early as today that it is taking a 49% stake in the new site in partnership with Tom Online. Tom Online would hold the other 51%.

Barron’s Online “Inside Scoop” section reports that value investor Blum Capital has begun harvesting profits from its stake in UAP Holding (UAPH) as the agricultural-products maker continues to trade near its 52w high. Blum disclosed that it sold about $11m in UAP stock, cutting its stake to 6.1%, or 3.13m shares, down from 7.1% stake, or 3.6m shares.

Calls of Note Part 6

- JP Morgan is raising their 4Q'06 revenue estimate on Google (NASDAQ:GOOG) by $40M based on belief that the co is experiencing strong query volume growth and a noticeable pickup in keyword coverage. Firm's revised 4Q revenue, EBITDA, and EPS estimates are $2.23B, $1.39B, and $2.91. (Prev EPS was 2.86, cosensus $2.88)

According to firm's estimates, Google is on track to grow its global query volumes by 14% in 4Q, vs. the market which the firm believes is tracking up 10%. JPM is consequently increasing their Q/Q volume growth assumption to 14% from 13%, contributing ~$20M of incremental revenue.

Google continued to grow its advertising coverage at a steady pace in 4Q, dispelling some investors' concerns that Google's monetization upside may be tapped out. In 4Q, firm's 50K
keyword survey identified a 4.4% Q/Q increase in coverage to 77.9%.

Although the firm estimates 14% volume growth for Google.com, most competitors are showing muted 4Q growth. They estimate Yahoo!, MSN, and AOL are on pace to grow 4.5%, 3.0%, and 0.0%, respectively in 4Q. As such, they believe Google continues to gain global market share.

Google Remains firm's Top Pick. Google trades at 33.1x F'07 pro forma EPS estimate of $14.50 compared to its peers at 35.7x. Given that Google is growing significantly faster; JPM believes it deserves a premium, and thus maintains Overweight.

Notablecalls: Note that WSJ is out with a negative piece on GOOG this AM saying co's earning growth may hit a speed bump soon as their $10 billion cash hoard in interest-bearing investments like government securities -- isn't likely to grow at the same rate as last year. Will the JPM note outweigh the WSJ piece?

Calls of Note Part 5

- UBS notes that while they remain cautious on its fundamental outlook, they increasingly believe Alltel (NYSE:AT) could be an acquisition candidate in early 2007. Speaking at firm's Media/Comm conference, CFO Sharilyn Gassaway suggested that mgmt is talking with interested parties and prefers an auction process to drive value rather than a one-off transaction with private equity.

UBS notes they have recently seen increased activity in fixed income and derivatives markets, with higher interest for short-term calls and 5-year CDS spread widening 32% in the last week. Meanwhile, Alltel shares are up 8% since lows after reporting a weak 3Q.

Management recently suggested that a continued shift to family plans and prepaid products will put pressure on voice ARPU trends. In 3Q, Alltel's retail voice ARPU had declined by 6% annually (stripping out the effects of data and ETC revenues), up from a 2% decline in 2Q. They also expect increased retention efforts to drive CPGA higher.

Despite fundamental issues facing the company, the firm is raising their 12-month price to $61 from $57 based on the reduction in our public market discount to 10% from 20% given increased expectations for a deal in 1H07.

Notablecalls: Just in case you care.

Calls of Note Part 4

- Bear Stearns comments in TiVo (NASDAQ:TIVO) saying they can foresee several scenarios where the company is able to capitalize on its technological superiority, partnership agreements,
and the recent rapprochement with the advertising community. However, a number of significant challenges remain, which are unlikely to be resolved in the near-term, in firm's view, and they would prefer to wait for better visibility.

While the company may be displaying the Comcast solution at the upcoming CES in January 2007, the real value of the agreement is in 1) helping TiVo garner more distribution partnerships as other MSOs, they think, are likely to wait to evaluate Comcast's success before they make a commitment, and 2) the advertising potential that the significantly larger distribution presence offers, which will be impacted by long sales cycle and lead-times, as well as technological issues before a much broader cable advertising solution can be deployed.

Also, channel checks indicate that sales of TiVo DVRs have picked up in the last four weeks, which may be a function of the improved value proposition to the consumer, or better marketing, or just seasonality of the strong 4Q.

Maintains Underperform rating.

Notablecalls: The comments sure sound more positive than negative. Note that there has been some blog-level talk of a possible partnership with GOOG. Not actionable (although I would not be surprised to see TIVO close higher today).

Calls of Note Part 3

- ThinkEquity's Eric Ross notes the firm returned from a week in Taiwan where they had the opportunity to meet with over 30 companies in the electronic supply chain. As in September, they went to Taiwan to determine if theyshould upgrade our Universe; after much investigation and thought, the firm believes there is little reason to own PC names, as they believe there is little upside to expectations in 2007 (and the potential for an inventory bubble).

PC unit demand is ok (still below seasonality), but all low end. Box demand is ok, but certainly not great. Believes 4Q06 Q/Q unit growth will roughly be 7% vs. 14% for normal seasonality.

Low-end pricing is the ONLY driver. Consumer customers do not seem to be buying anything except for low price. Box makers appear to be hesitating to offer new features such as Blu-Ray in this environment, as they believe they are unlikely to be repaid. Average pricing for desktops is
hovering below $700, and laptops are averaging below $900. Since returning to the U.S., the firm has seen laptops as low as $399, and desktops for $349 (although this is the same price as they saw before, one now can get a color printer included for free). Everyone the firm spoke with believes desktops are weak, and notebooks are strong. Consensus is that notebooks will have grown units 25% in 2006. Desktops may decline slightly Y/Y in units in 2006.

No one they met with believes Vista will be a big driver in 1H07. Even though investors and IR reps alike have inflated Vista as the saviour of the semiconductor industry, everyone the firm spoke with in the Asian supply chain believes it will be a dud. Also, no one even mentioned the Chinese New Year.

Every check they have done suggests that Advanced Micro Devices (NYSE: AMD) is shipping at capacity for the next several quarters (firm believes this could be 18+ million CPUs per quarter).

Notablecalls: This pretty much confirms my pessimistic views regarding the Vista-induced PC demand.