Calls of Note Part 6

- Goldman Sachs has some interesting comments on Synchronoss Technologies (NASDAQ:SNCR) after the co announced it will provide order management support for Cingular/Apple's launch of the iPhone in June 2007, further expanding its long-standing relationship with Cingular (~65% of 2006 revenue). Importantly, the new relationship provides for support beyond just the e-commerce channel and into retail locations.

The company also updated its 4Q outlook, coming in about $1mn below its previous revenue range, but $0.01 above its original EPS range (now $0.11-$0.12 ex-ESOs vs. our $0.11 ex-ESOs). The 2007 outlook was reaffirmed, and the firm remains in-line with the top-end of the range at $100mn in revenue and $0.45 in EPS ($0.48 ex-ESOs). The revision to 4Q2006 guidance highlights the sensitivity in both revenue and margins to new transaction volumes coming onto the platform, but the ability to beat EPS expectations despite modest revenue slippage demonstrates very strong execution and automation rates.

Following a 9% rally yesterday in the shares off of the initial announcement of the Apple/Cingular partnership, the firm believes the stock has already captured much of the upside from this announcement.

Notablecalls: SNCR looks to have a highly promotional management. That's never a good sign. Considering VoIP accounts for large part of their revs/growth I'm somewhat cautious. Especially as it looks like they get paid per transaction. I'm skeptical regarding VoIP growth in general. Not even going to mention the miss on the revenue side and the fact the stock was up almost 10% yesterday. Expect to see a fade.

Calls of Note Part 5

- UBS comments on the impact of Apple's iPone on the global handset industry saying that in terms of overall design, the device looks great and is better than they expected. The iPhone is very innovative, particularly with respect to the man-machine interface, including the unique touchscreen technology.

In firm's view the biggest mystery surrounding the device is the lack of advanced mobile connectivity; ie no integrated 3G technology (WCDMA or HSDPA). It appears that Apple favours WiFi connectivity, which calls into question the "over-the-air" download capability of the device on traditional mobile networks. This could limit acceptance by mobile opertors in Europe.

UBS is forecasting 850k and 7.4m iPhone units for FY06-07E and FY-7-08E, respectively. This represents less than 1% of global units in each period. Given the high price of the iPhone (US$499 for 4GB and US$599 for 8GB), the impact in value terms is likely to be higher; they estimate iPhones will represent at c2-3% of industry revenue in 2008.

UBS expects no financial impact to Nokia in 2007. While potentially greater impact in 2008E, they believe there is nominal financial risk, as Nokia's sweetspot in terms of profit is in the mid-tier segment of the market. Potentially greater risk to Sony Ericsson which is focused on higher tier segment of the market.

Notablecalls: Not actionable but good to know cateogry. I would not be surprised to see NOK stock creep up as we get closer to Jan 25 (earnings). They either warn now or they won't warn at all.

Calls of Note Part 4

- First Albany notes MicroStrategy (NASDAQ:MSTR) CEO Michael Saylor held slightly over 3 million class A and class B shares as of March 31, 2006, the date of the company's most recent proxy statement. However, during 4Q:06, they estimate Mr. Saylor sold nearly 360,000 of his shares, representing 11.9% of his total MSTR holdings. Comparatively, he sold approximately 61,000 shares in all of 2005 and just over 20,000 shares in all of 2004.

The insider selling probably represents prudent diversification of assets, as MSTR shares have appreciated 2,260% in the past 4.5 years. However, it is difficult to entirely dismiss the insider sales (given the escalation in size), particularly if the company has switched from a state of accretive corporate buybacks, to substantial insider selling.

Regarding Q4, feedback indicates good traction, particularly in the retail vertical, and a willingness to let some deals slip to avoid pricing concessions at year-end. Firm is somewhat more cautious on 2007 citing valuation, margin compression and "below-industry" license revenue growth.

Reits Buy and $135 tgt for now.

Notablecalls: Mixed emotions regarding MSTR here. The level of insider selling isn't THAT bad and business looks to be humming nicely. I don't think MSTR is a short off of these comments. The chart looks to be agreeing with bulls as well.

Calls of Note Part 3

- Merrill Lynch is cutting their 2007 and 2008 EPS ests for Chipotle Mexican Grill (NYSE:CMG). Estimates go down by $0.10 (5.9%) and $0.14 (6.6%) to $1.59 and $1.95 respectively. Firm's revision reflects a lower outlook for margin expansion, given CMG's regional exposure to state minimum wage increases, and a 1% point downward revision of SSS growth forecast.

Given 99% company ownership and 54% of the units located in states with double digit minimum wage increases, they expect the margins to be vulnerable to labor cost pressures. Firm estimates EPS impact for labor inflation to be $0.06 - $0.08 (3-5%).

CMG is up against tough compares of 19.7% and 14.5% SSS growth in 1Q06 and 2Q06. ML expects SSS growth to decelerate from 15% YTD 2006 SSS growth to mid-single digits for 2007.
Sees limited upside to CMG's current multiple of 14.3x 2007E EBITDA given decelerating SSS growth and forecast for reduced margin expansion. Maintains Neutral.

Notablecalls: Not actionable but good to know category.

Calls of Note Part 2

- JP Morgan is adding OW-rated Mattson (NASDAQ:MTSN) to the JPMorgan U.S. Equity Focus List today with a Feb. '08 stock price target of $14, 14x their C2008 GAAP EPS estimate of $1.00.

In October 2006, Mattson pushed its upside gross margin target of "mid 40%" to C2Q07 from C4Q06. In general, the inability to deliver gross margin expansion has hindered MTSN shares over the past year while the rest of the fundamental story, including strong products, share gain, and operating expense discipline was solid.

Firm expects Mattson to deliver C4Q06 orders at the low end of guidance, but to also deliver sequential order growth in C1Q07 and C2Q07. Importantly, they believe C4Q06 orders carried higher gross margins than revenues as the company is successfully converting existing customers to its new higher margin products and is receiving orders from new customers at higher margins.

Solid penetrations of memory customers such as Samsung and Toshiba in 2006 should proliferate further in 2007, and strong exposure to Taiwanese memory makers should also drive order strength in C1H07. In C2H07, Mattson should benefit from its traditionally strong exposure to Foundry customers to keep the order strength continuing. Bottom line, this is a "show me" gross margin story and they expect it to unfold.

Notablecalls: Expect to see buy intetrest in MTSN today. The thing with JPM's Focus List is that they keep pressing their bets until they work.

Calls of Note Part 1

- Merrill Lynch is defending Research in Motion (NASDAQ:RIMM) after Apple launched its iPhone which combines cellphone and multimedia features in a touch screen only device causing RIMM's stock to go down hard in yesterday's trading.

In firm's view there are two distinct segments in the smartphone market: multimedia and messaging. The iPhone has a strong multimedia suite that will appeal to consumers, but they believe RIM's Blackberry smartphones with hardware keyboards have superior messaging (secure email) features targeted at prosumers and enterprises. They are also uncertain of the iPhone's ability to synch with Window-based contacts/outlook that could limit its enterprise adoption.

iPhone's pricing of $499-599 is much higher than smartphones from RIM, Palm, Nokia, Motorola and Samsung that are available for $0-300 (after rebates). First-time smartphone buyers may be attracted to iPhone's "wow" factor, but up-front price could divert them to cheaper alternatives which come with built-in an expandable memory slot (2Gb for ~$70), a full keyboard, and higher-speed (3G) networks. Regardless, the iPhone expands the general interests in smartphones, and could help support healthy pricing in the smartphone market (i.e. the Starbucks effect.)

The sell off in RIM stock is overdone, in firm's view, and mostly reflects high expectations with the Pearl platform. However they think Pearl's momentum can continue and will further accelerate with the imminent launch of Indigo and Crimson (full keyboard siblings of the Pearl). Firm believes iPhone's multimedia feature set and consumer focus could have a bigger overlap with Palm (PALM).

Reits Buy and $165 tgt on RIMM.

Notablecalls: ML's comments sound reasonable. I'd love to buy RIMM around 3-4 points lower, though. iPhone's no RIMM-killer.

Color on news: Apple (NASDAQ:AAPL)

While most firms are going gaga over Apple (NASDAQ:AAPL) I'm on the lookout for notes that are more down to earth. Citigroup has one:

- Citi reiterates their Hold rating for AAPL shares with a new $98 target (up from $85) after Apple's introduction of the highly anticipated iPhone at Macworld on Tuesday. While the design and ease-of-use of the product are revolutionary, the $499-599 initial price point and a single US carrier are likely to limit the available market to a subset of the already-modest smartphone portion of the handset market.

While investors may be tempted to believe that iPhone will ship earlier than June, the firm notes that the process of obtaining FCC approval for a new wireless device can take more than six months in some cases. In addition, firm's checks have consistently suggested a 2CQ volume-production ramp, consistent with a June launch. A six-month delay to availability is problematic because some iPod nano buyers---and even some hard drive-based iPod buyers---are likely to defer iPod purchases during 1HCY07, limiting earnings upside for the next six months.

Also, iPhone will initially sell for $499-599 with a two year service contract from Cingular (including a likely $150-200 subsidy). This leaves the low-end iPhone $200-350 more expensive than any other smartphone in the U.S., with the exception of Palm's Treo 700 Series where the differential is a more modest $0-100.

With its high price, the iPhone only represents compelling value to customers who plan to use all of its features, especially its 4-8GB of embedded flash for music, photo, and video storage. However, they suspect that a significant portion of music listeners will continue to prefer a discrete iPod for music because the smaller form factor is more convenient for running or the gym. These users are not likely to pay for 4-8GB of embedded flash memory that they do not intend to use. The use of removable flash storage would have allowed Apple to hit lower price points while still providing higher storage capacities for those customers that want them.

Citi's most likely-case scenario calls for iPhone shipments of 3-4M in CY07 and 8-9M in CY08. This scenario assumes that 10-15% of Cingular customers whose contracts expire in 2H07 buy iPhones and that the phone's compelling feature set attracts another 1.5M subscriptions to Cingular from other carriers in 2H07. For 2008, this scenario assumes that Apple takes 8-9% share of the U.S., European and Asia Pacific ex-Japan smartphone markets, or that Apple achieves 60-70% of estimated BlackBerry shipments in 2008.

They are adjusting estimates based on a scenario analysis of the likely impact of iPhone on future earnings. However, analysis suggests that the current share price is discounting a significant portion of the likely contribution. They therefore remain on the sidelines and would await a pullback into the low $80s before reconsidering the Hold rating.

Notablecalls: I don't think these comments are actionable in any way but I do believe that following yesterday's huge move upside will be somewhat capped. Note that Morgan Stanley is out on AAPL saying iPhone is clearly a game changer in the phone market and could drive even more earnings power than we currently model. Assuming 5% market share (vs. firm's current 1% estimate) and 10% operating margins, the iPhone could add $0.90+ of incremental annual EPS versus their current forecast. An expanding product portfolio, growing distribution engine and market share opportunities all keep them Overweight AAPL with a price target of $110. As far as I know, MSCO's ests are Street high following their brilliant Dec 28 iPhone call.

Paperstand

The WSJ’s „Heard on the Street” column thinks that Wall St. may have been too hard on ConAgra Foods (CAG). In March, CEO Gary Rodkin presented a turnaround plan to investors, vowing to trim his co's disparate portfolio and focus marketing dollars on promising brands such as Healthy Choice frozen meals and soups, and Hebrew National hot dogs. Wall St. was unimpressed. The co's stock price hit a 52w low and most analysts said the moves didn't go far enough. But since then, ConAgra has posted a string of better-than-expected earnings. And its stock has been on a tear, rebounding to more than $27, a nearly 50% gain. Still, 8 of the 12 analysts following ConAgra's stock have maintained ratings of Hold or Sell, unwilling to shake their long-held view of ConAgra as a portfolio of poorly managed businesses and brands that have historically failed to dominate supermarket categories. "The co has a weak portfolio of brands, compared to the rest of the group," says Pablo Zuanic of JP Morgan. Mr. Zuanic says that despite the co's recent progress, "they need to make key investments in marketing and innovation to generate some growth with the type of brands they have. It will be a very slow build for ConAgra." Fans of the stock, however, see potential in the co's long-neglected brands. Investors clearly like what they see, driving the co's P/E ratio to about 30, well above peers.

“Inside Track” section reports that Penn Treaty (PTA) hasn't filed its financial statements for more than a year b/c of accounting issues, but recent stock purchases by 10 insiders indicate that the provider of long-term-care insurance is on the mend, an analyst says. Ben Silverman, of InsiderScore.com, said the cluster of insider stock purchases shows the co expects to put the accounting problems behind them. "I think it's a sign of confidence from insiders that they think they'll clear up the accounting issues, and that the business will be healthy going forward," Mr. Silverman said.

Barron’s Online discusses Time Warner Cable (TWACAV.PK), whose problems could turn out to be virtues. In the past, such co’s have traditionally lacked investor enthusiasm. But the cable operator has an opportunity to dramatically increase subs in Adelphia's former mkts, as well as to expand the use of higher-margin products. Given that opportunity, it's odd that the stock trades at a discount to Comcast on a per-subs basis, when both co’s have the same 50% penetration rate of their mkt. But oddly enough, Time Warner Cable has a mkt cap equal to just $3,900 per subs. Comcast trades well above that, between $4,200 and $4,500 per subs. Shares of Time Warner Cable will probably move from the OTC mkt to the NYSE next Mon, says Jessica Reif Cohen of Merrill Lynch. When they do, it will be a cable giant whose stock is in short supply. Time Warner Cable may be worth as much as $51 a share, wrote Katherine Styponias, of Prudential, in a recent report.

“Inside Scoop” section reports that hedge fund Coghill Capital Mgmt still sees a world of value in EarthLink (ELNK), even though shares of the co have fallen 40% over the past year. Coghill disclosed that it now holds a 5.1% stake, or 6.25m shares of EarthLink, up from the 469K shares, or less than 1% stake, it owned at the end of the 3Q.

Calls of Note Part 6

- Goldman Sachs is very cautious on mortgage insurers saying they believe slowing home prices, continued seasoning of the books, and subprime challenges add risks to the downside. Firm expects to see further challenges in the fourth quarter related to the aforementioned factors but believes the impact will be more noticeable as they move into 2007. Home prices are still in the early stages of a slowdown and blocks in peak loss years still have built-up appreciation. Firm believes the risk reward is particularly unfavorable for MGIC Investment Corp. (NYSE:MTG) and The PMI Group (NYSE:PMI), which are up 7.9% and 7.0%, respectively, over the past month on the heels of Congress passing mortgage insurance tax deductibility into law. They believe MGIC will experience similar challenges to the third quarter, which could lead MGIC to pull back. PMI has not experienced noticeable loss challenges as of yet, but early signs of difficulties could cause the stock to be weak, with the stock now trading at a premium to the group.

Notablecalls: MTG may be a short here as the co is scheduled to report on Jan 11. A smart trading contact pinged me couple of days ago on MTG pointing out negative comments from Lennar (LEN) regarding Florida and California markets. These two markets account for around 20% of MTG's income.

Calls of Note Part 5

- Goldman Sachs is a bit cautious on Ctrip.com International (NASDAQ:CTRP) saying they believe initiatives by the government to adopt e-ticketing across all platforms by the end of 2007 have prompted optimism that large travel consolidators with capability to install e-ticketing system will aggressively take market share from fragmented local travel agents. Firm estimates Ctrip's and eLong's 2006 air-ticketing combined air-ticketing market share at 10%. Firm share the view that secular trend favors large travel consolidators, but believes substantial e-ticketing market share gain by Ctrip is unlikely in 2007.

Firm believes Ctrip's share price may come under pressure given: 1) Ctrip is trading at 38X 2007 non-GAAP diluted EPADS (vs 18X for US peers) and 30X 2008 with 2007-10 tax earnings CAGR of 32% and 2007E ROE of 36%. 2) They believe 2007 revenue guidance may disappoint when the company guides upon 4Q2006 results announcement in February. GS expects Ctrip to guide 2007 revenue growth of 30%-35% versus their 2007/2006 forecast of 47% and 2006 guidance of 40%. They lower their 2007 earnings by 5% assuming margin pressure from higher revenue contribution from lower margin air-ticketing, but increase 2008 earnings by 3% assuming more aggressive air-ticketing market share growth.

Maintains Neutral. Tgt $47 (up from $44).

Notablecalls: I would not be surprised to see some weakness in CTRP following the call. The stock is trading at a hefty multiple. I would definitely not want to overstay my welcome as CTRP is a notorious bouncer.

Calls of Note Part 4

- Wachovia is defending Intuitive Surgical (NASDAQ:ISRG) noting the shares are down year-to-date in 2007 after falling 18% during 2006 despite estimated 2006 EPS growth of 24%. The stock is presently trading at 39.5x firm's NTM EPS estimate. On a stock-based comp adjusted basis, this is an all time low NTM P/E and well below ISRG's two year average NTM P/E of 57x.

Firm believe that investors may be concerned about ISRG's 2007 guidance; initial 2006 guidance came in well below consensus estimates and the stock declined sharply as a result. However, heading into 2006 both ISRG's share price (at close to $140 vs. $91 currently) and consensus revenue estimates (at 37% vs. 33% currently) were considerably higher.

While the Cal Tech patent case does represent an overhang, the firm believes that any additional legal fees should have only a modest impact on annual EPS of $0.01-0.07 based on precedent patent litigation expenses at ISRG's peers (~$1-5MM/year). Since the suit has been brought by Cal Tech rather than a competitor the firm believes the worst case scenario for ISRG would involve royalty payments with little risk of an injunction. Resolution of the patent suit might take up to several years.

Valuation Range: $124 to $136. Maintains Outperform.

Notablecalls: Must say the chart looks tempting. Would not chase but rather be on the lookout for an intraday bounce. Could be worth several points.

Calls of Note Part 3

UBS is positive on MEMC (NYSE:WFR) saying their discussions with industry contacts found that MEMC has decided to sell more of its polysilicon to solar customers on the spot market in 1Q07 instead of using its polysilicon to make ingots for the manufacture of 300mm semiconductor wafers in its factory in Taiwan. Firm's channel checks continue to find solid demand for polysilicon with spot prices still well above $200/kg.

According to an article in the Boston Herald, Schott's (#7 solar module company) solar module factory in Massachusetts has been unable to procure granular polysilicon and Schott is trying to sell this factory. They believe MEMC was Schott's granular polysilicon supplier and MEMC is instead likely selling its polysilicon to higher paying customers in the spot market.

Firm's recent channel checks in Taiwan have also found strong 300mm semiconductor wafer demand from Powerchip, Promos, and Inotera where they estimate MEMC's share is around 20%. In addition, industry research has found that TSMC and UMC are likely to slowly order more wafers again in late
1Q07.

Maintains Buy and $60 tgt.

Notablecalls: Nothing huge but I do like the comments regarding WFR selling its polysilicon to higher paying customers in the spot market. Comments from Taiwan are also encouraging. Like the chart. This one may be moving higher in the n-t.

Calls of Note Part 2

- ThinkEquity's Eric Ross comments on NVIDIA (NASDAQ:NVDA) saying they have heard that NVDA has slowed wafer starts at its foundry suppliers. This could just be a re-adjustment of inventories, but the firm has found that this is typically a reduction of overall product inventories. Graphics card makers are worried business is slow. They have seen a seasonal drop-off in demand, but privately they worry demand could be weaker.

Firm still expects NVDA to take share from ATI through March 2007. NVDA has been migrating customers up from its 6200 and 6300 processors to its 7200 and 7300 processors. ATI is unlikely to have a competitive product until it starts ramping its R600 in March (delayed from February). After that, NVDA's G84 and G88 should arrive at Computex (in June) and may take share back.

It does not seem likely to the firm that AMD/ATI will gain significant share back from NVDA in laptops, despite two new Inspirons AMD/ATI is likely to launch in summer 2007 according to sources at the Consumer Electronics Show (CES). They also believe Vista will be a minor driver until 2H07.

They still believe Playstation3 will lag versus the run-away success of Wii. This could constrain NVDA's gaming revenues. The biggest risk? If Intel's newest GPU (expected in September) is a decent GPU, both NVDA and ATI could lose share. It is planned to support DirectX10, and could offer real gaming capabilities.

Reits Sell and $28 tgt.

Notablecalls: ThinkEquity has yet again demonstrated their superior intelligence gathering skills. I don't think the note will do any damage to the stock in the s-t, though. Eric's comments regarding INTC's GPU warrant a closer look.

Calls of f Note Part 1

- Piper Jaffray comments on Apple (NASDAQ:AAPL) saying that as has been the case for the last several years of CES, they did not see any devices that we believe could prove to be significantly competitive with the iPod. Firm continues to believe Microsoft's Zune is the best iPod alternative and they continue to be surprised at the lack of a compelling offering from consumer electronics giants like Sony.

There were no announcements related to Zune at CES, but Microsoft (Bach) did say that Microsoft's and Apple's paths will cross more in the future in this category. Regarding new/updated Zune players, the company (Bach) indicated that an annual release cycle makes sense, with annual pre-holiday releases. Also, Bach stated that the company wants to get a music player right before looking into multi-function devices (i.e., cell phone/MP3 player combo).

Sony did not release any compelling MP3 players at CES. Creative did not release any new devices at CES (at least through the first day of the show). Employees of Creative that the firmspoke to at the booth were themselves surprised that the company has not had a faster product release schedule, citing that Creative's last release in the HDD MP3 player space was over a year ago (Zen Vision M)

SanDisk released three MP3 players at CES, but none that the firm feels will significantly steal iPod market share.

Notablecalls: Not actionable but good to know category. WSJ has a piece saying AAPL may announce the iPhone as early as today as the co will kick off its annual Macworld event today and CEO Steve Jobs is scheduled to deliver a keynote speech at 9 a.m. PT (12 p.m. ET). Note that ThinkEquity is out with their comments on AAPL saying they do not expect apple to announce a phone at Macworld. If they are wrong, and we do see a phone, they expect to see it delivered in the form of a Mobile Virtual Network Operator (MVNO). After all, with its world-class brand, strong distribution capability and industry-leading content aggregation platform (iTunes), Apple tops firm's list of yet-to-be-announced MVNOs.

Color on warning: Sprint Nextel (NYSE:S)

Several firms are commenting on Sprint Nextel (NYSE:S) after the co pre-released weak Q4 numbers and also guided down for 2007:

- Merrill Lynch notes that the mid-point of Sprint's EBITDA outlook for 2007 is about 12% below their previous estimate and 15% below consensus. Therefore, we now have the second major estimates downgrade since last August. Firm's estimates for 2007 had already been below consensus. They are lowering their consolidated EBITDA estimates for Sprint from $12.8bn to $11.8bn for 2007 and from $13.2bn to $12.5bn for 2008. EPS estimates fall from $1.25 to $1.00 in 2007 and from $1.32 to $1.17 in 2008.

Sprint shares traded in the after market at approximately $18 per share. On ML's revised estimates, Sprint trades at an EBITDA multiple of approximately 6.1x for 2007E and 5.3x for 2008E, which is in line with AT&T and Verizon trading at 5.6x and 4.9x EBITDA for 2008E, respectively. A positive for the stock is that after the second major estimates downgrade, Sprint presumably believes that it can exceed its updated outlook for 2007. However, valuation at levels in the after market is still only in line with the telecom comparisons even for 2008.

Firm's estimate revisions better reflect their view that Sprint does not have a quick fix for its problems, and that it must reinvest in the business, particularly on the Nextel side. Maintains Neutral

- Stifel notes the company reported losing 306,000 post-pay subscribers in 4Q06, versus their estimate of a loss of 200,000 post-pay subs, but did show some strength in wholesale subscriber adds, adding 876,000 in the quarter. Management continued to indicate much of the weakness stemming from the iDEN (legacy- Nextel) subscriber base, with churn increasing dramatically in the former- Nextel Partners properties.

The company clearly continues to struggle with integrating the legacy-iDEN networks, with the lower-margin revenue mix generated by the struggling iDEN business continuing to hamper consolidated results. Given the weak 4Q06 results and soft 2007 guidance, this may legitimately be the last surprisingly bad news from the company for a while, the firm still does not view the stock as compellingly inexpensive at current levels.

They believe the company has given itself a fairly low bar to cross in 2007 from a financial standpoint, although they would certainly like to see some stability from the company's post-pay retail operations before they become more confident in our financial estimates. From a momentum perspective, they wouldn't be surprised to see a near-term bottom occur sometime this week as
the market digests the new guidance and investors begin to perceive this as the last spate of bad news in the near term. Maintains Hold.

- Deutsche Bank is downgrading their rating to Sell from Hold saying that with the significant cut in estimated 2007 EBITDA, and with higher expected capital expenditures, it would seem that Sprint's operating performance will continue to deteriorate throughout 2007 before we are to witness signs of improvement. They now look for negative net subscriber additions in all four quarters for 2007.

With the pre-announcement, the company reported that it would significantly increase its 2007 forecasted capital expenditures to $8.5 billion, well above DB's estimate of $7.7 billion for 2007. The increase in capital expenditure forecast combined with the reduction in EBITDA estimates reduces firm's 2007 estimated free cash flow by more than 60% to $1.429 billion.

Following two quarterly disappointments in the past three that resulted in a meaningful reduction in forward estimates, with the continued deterioration of the company's basic post paid subscriber base, and with dwindling free cash flow to support the company's $6.0 billion share repurchase program (of which the company has repurchase $1.6 billion to date), they believe the long speculated concept of a leveraged buy-out will quickly fade from reality.

Although they believe that Sprint Nextel suffers from severe operational issues and is exposed to a fair degree of technology risk related not only to its network integration but also its iDEN re-banding effort, they also believe that it is a company capable of stabilizing core operations, as it has before. If this is the act of a management and board intent upon providing investors with a worst case perspective of a 2007 outlook, there is potential upside to firm's $11.3 billion EBITDA estimate.

DB finds it difficult to see why investors would pay much more than 5.0x for a company that has yet to produce even the slightest signs of stabilizing operations at a time when so many were assuming operational improvements to be a foregone conclusion. Accordingly, in taking the mid-point of the new guidance range and the mid point of the 5.0x - 5.5x EV/EBITDA multiple range in which the stock traded at before and after the significant share repurchase program was announced, the firm arrives at their revised $14 target price.

- JP Morgan thinks the patient will walk again as the company stated on the call that net adds should reverse to positive by 2Q07, a bold statement considering that suggests a turnaround within the next 90 days. Second, 2007 guidance was "the shoe drop" investors waited for, and we could see long-only buying today. Third, comments made today support firm's view that 3Q06 marked the operational bottom (variance of management targets vs results).

To achieve positive net adds in 2Q, gross adds need to be +/- 4% from the 4Q06 run-rate of 2.6mm and churn needs to improve 14-31bp (to 2.03%-2.11%) from 4Q. The improvements in churn seem achievable given positive seasonals as well as the waning iDEN churn impact (which is the source of negative growth).

Reducing 07 estimates, but S still trades at a 29% discount to Alltel. JPM would be buyers, especially on weakness.

Notablecalls: Must say I have very little feel for this one. Comments from both sides of the fence make sense. On one hand we've seen these potential LBO candidates bounce back hard following negative pre-releases but on the other hand comments from DB make me want to put out a small short above the $18 level. Sitting at my old trading desk I would most likely put out some light bids around $17.50 to catch the other side of some panicky downgrades. Nothing big, though. Would risk half a point or so.

Paperstand

According to the WSJ, General Electric (GE) has asked for bids on its plastics business, valued at as much as $10bn, in an auction that appears to reflect new concerns from the DoJ about the lack of competition among possible private-equity buyers. GE has told a handful of private-equity firms contacted about the possible plastics-unit sale that they face restrictions on their ability to team up with other private-equity bidders. Although the exact nature of the restrictions isn't known, sources indicated that the contacted firms aren't allowed to call other buyout funds about teaming up.

The WSJ reports that Apple (AAPL) may announce as early as Tuesday a device that combines the iPod with a cellphone. Cingular Wireless will provide cellphone service to go with the phone. Such a product would give Apple access to the huge wireless business, with nearly a billion handsets shipped every year. That dwarfs the nearly 70m iPods Apple has sold over the past 5 years. Apple could also further outline its plans to enter the interactive television business with a product code-named iTV.

"Heard on the Street" column out saying that skies may darken for insurers. The risk business is getting a little riskier for insurance co shareholders. In coming weeks, property-casualty insurers are expected to report record profits for '06, but their ample cash and the rising competition it fosters are pushing down premiums. That often is a sign profits for the most aggressive players could take a hit down the road and is a red flag for investors who are exposed to this risk if they own some property-casualty specialists. "When you've gone through a bad period, you do behave in a more conservative fashion," says William Berkley, CEO of W.R. Berkley (BER). Smaller players or bigger co's could seek to build mkt share by cutting prices. For a broad view of pricing trends, investors might pay close attention to commentary from big insurers and reinsurers like AIG (AIG), Allianz (AZ) and Swiss Re.

Barron's Online "Inside Scoop" section, during the 4Q, 3 execs and directors at Vornado (VNO) sold 1.56m shares for $184.2m. According a report by Lehman Brothers analyst David Harris, sales at Vornado raised insider sales across the REIT industry to $327m during the 4Q, the highest level since the firm started following these transactions 4 years ago.

Calls of Note Part 7

Thomas Weisel out on Crocs (NASDAQ:CROX), saying that channel checks point to a December-weighted quarter behind a surge of holiday sales.

Firm's checks at key retailers, in international markets and with Crocs direct channels suggest Crocs (both classics and new styles) were an extremely popular gift item this holiday season. All channels reported very strong sales in December and sparse inventory positions at key retail channel partners suggest demand exceeded supply. As expected, firm believes December strength offset both natural and buyer-imposed seasonality in October and early November.

During 4Q, firm found new distribution of Crocs in Macy's (former Marshall Fields doors), Tilly's and Belk department stores. Also incremental to business in 4Q was distribution of Collegiate and Disney licensed products. Firm believes this net new revenue was offset by retailers whose merchandising strategy de-emphasized Crocs during the 4Q period. Their checks found a seasonally smaller representation of Crocs in certain sporting goods retailers and in many European stores.

Despite a big December, firm saw evidence of unmet consumer demand: In mid-December, their checks found Crocs online business to be out of stock on certain items and some indications that it was swamped by order volume. In late December, they noticed inventories at many retailers were very lean, particularly in the week following Christmas. As such, firm believes upside in the quarter may have been capped by: 1) a surge in online orders that exceeded fulfillment capacity; 2) retailers that failed to order enough product to meet holiday demand; and 3) late-December blizzards in Colorado that caused missed shipping days, limiting Crocs' ability to chase business.

Firm remains comfortable with their above consensus ests for both Q107 and 2007.

Notablecalls: Not actionable but good to know category. Although I must say the stock looks like it wants to move higher. TWP usually covers stuff in greater detail than other firms.

Calls of Note Part 6

- Piper Jaffray is surprisingly negative on eBay (NASDAQ:EBAY) saying their proprietary count of worldwide eBay listings suggests total Q4 listings of between 578M-590M. These results are between 8%-11% below their 639M listing estimate for the quarter and could potentially be sequentially down in the seasonally strongest quarter (listings were up sequentially 19% in 4Q05 and 17% in 4Q04). While listings were expected to be weaker than in previous years due to the changes to Store listings, a second sequential quarterly decline, and listings below expectations, estimates are likely to come down.

Assuming firm's range of a listing miss of 8%-11% is accurate, eBay would need a corresponding increase in revenue per listing of 8%-11% in order to match their $1,052M estimate for Q4 auction-based revenue. Firm notes that their estimate for total revenue is near the mid-point of company guidance and $21M below the Street consensus. Without any improvement in revenue per listings, the shortfall could be near $100M.

Current Street consensus estimates for 2008 assume growth accelerating from 21% in 2007 to 22% in 2008, despite the marked slowdown in growth eBay is seeing across its core properties. Considering that slower listings growth indicate that 4Q06 overall growth will likely only be between 21%-23% (down from 42% in 4Q05), PJ believes that expectations of over 20% growth for '07 or '08 are unrealistic. Firm's newly released 2008 revenue estimate of $8,142M is $568M below current Street expectations and assumes 16% growth in 2008.

Maintains UP and $25 tgt.

Notablecalls: Wow! If this is true and the listings have indeed declined THAT much, EBAY shareholders are in for some turbulence. The stock has been standing on shaky ground and I think will continue to trade down in the n-t. I would not be surprised to see a warning from EBAY. Nice piece of research from Piper Jaffray! Actionable call alert!

Calls of Note Part 5

Goldman Sachs is adding Royal Caribbean (NYSE:RCL) shares to their Conviction Buy List and estimates 22% upside potential over the next 12 months. Firm thinks the overhang of higher energy expenses seems to be abating while on the margin they feel more confident that pricing trends may be slightly more robust than the current pessimistic expectations. GSCO thinks last year's underperformance (-8% vs gaming/lodging +36%) sets Royal up to outperform in 2007 as expectations are low and P/E multiple (13.6X) is towards the bottom of the historic range (10X-20X).

Catalyst Two positive near-term catalysts. 1) Firm thinks RCL will report solid 4Q06 in
February and a positive 2007 outlook. 2), We are entering wave season (next 8-10 weeks) when 28%-30% of RCL's cruises are booked, investors visit the companies, and cruise stocks are more likely to outperform.

Notablecalls: I would have called this one actionable 2 pts lower. Now it goes to the good to know category. There's a fair chance it will get faded. These stocks have seen some short covering over the past couple of weeks.

Calls of Note Part 4

UBS has upgraded Tech from E/W to O/W. Firm considers upper teens EPS growth within reach for Tech in 2007, over twice the likely EPS growth for the S&P. Accelerating and superior EPS growth at Tech during a broad profit growth deceleration should help Tech regain some of its historic PE premium.

According to the firm, it's much more than Vista. It's been 7 years since the last major corporate IT capex up-cycle and the increasing need to support more traffic at faster speeds and to store such data have reached a crucial point. Like software, they expect significant enterprise spending growth on communications and storage. The opportunity presented to Tech by the global economy is likely underestimated.

Tech's premium is 30%+, but more like 25-30% adjusted for cash held and more like 10-15% ex. Energy & Financials. If secular 10%+ EPS growth is credible a lows 20s PE is reasonable.

Computers & Peripherals, Comm. Equip. and IT Services join Software at O/W from E/W. Raise Semiconductors to E/W from U/W. They downgrade Healthcare to U/W from E/W owing to waxing political risks and waning cyclical risks. Pharma to U/W from E/W and HC Equip & Services to E/W from O/W. UBS adds EMC to their SSS list and removes GR.

Notablecalls: Not actionable but good to know category. I think the call is major enough to be highlighted as UBS has a pretty good track record over the past yr or so. They went UW Tech early 2006 and upgraded to EW in Sept 06. Needless to say I disagree with their OW rating on Tech here.

Calls of Note Part 3

Citigroup notes their field checks reveal that AMD (NYSE:AMD) sold socket 939 parts into US distribution in December at a deep discount. Production of 939 parts should fall from ~20% in 4Q06 to almost nothing in 1Q07, putting this transitional issue in the past.

December was weak for PC components as the supply chain worked through previously built Pre-Vista systems. The Taiwanese PC supply chain had steep M/M declines in December for chip sets, communications and motherboards.

1Q07 motherboard shipments are expected to be better than normal, declining only 3% vs. a normal decline of 7%. Solid motherboard builds could provide a catalyst for PCs with upside to CIR's forecast dependent on the uptake of Vista.

Citi is lowering their 4Q06E revenue and EPS to $1,781M/$0.23 from $1,820M/ $0.27 and 2007E to $8,382M/$1.16 from $8,464M/$1.24, but keeps Buy rating as risk/reward for shares of AMD shows $17 downside (based on 13.6x trough) and upside to revised price target of $26 (down from $27).

Notablecalls: Citi's late again. Check out the comments from ThinkEquity's Eric Ross from last week.

Calls of Note Part 2

- Merrill Lynch comments on Motorola (NYSE:MOT) after speaking to the co about the issues leading up to pre-announcement. Firm is encouraged to see that management is planning to devote the time and effort to explain its "get well" plans, as explained below. However, none of the issues impacting Motorola seem temporary, and in their view, the recovery to historical margins may be gradual.

Comparing trends at MOT with its top 4 comps over the past 2 yrs, they note that shipments rose by 103% vs. 58% for competitors. MOT also showed better margin trends, led by a better product portfolio, featuring the RAZR, rising from 5% to 12% (ex 4Q) vs. a decline from ~15% to ~12% by its comps. As such, they were surprised that over the same timeframe MOT's ASP declines were steeper than its comps pointing to a somewhat irrational and aggressive pricing strategy. That strategy may have to be reconsidered.

However, without a good replacement for the RAZR, there is a risk that continued aggressive pricing could put greater pressure on margins, similar to long-term trends at Nokia. ML would therefore hope to see Motorola shift its primary focus to profitability rather than market share targets.

Following the release of 4Q financials on January 19, the company plans to host the normal post-earnings conf call at 7:30AM EST, followed by a two hour session at 10:00AM with the entire senior management team to discuss two main issues: 1) MOT's "get well" plans and the road to margin recovery and 2) MOT's 2007 outlook and the company's strategic focus. Firm expects mgmt to be more open with its acquisition and diversification strategies away from the commoditizing handset biz.

Maintains Neutral.

Notablecalls: Love the comments from ML. I also salute MOT management for hosting the two hour session to discuss their plans. That may even help the stock in the n-t.

Calls of Note Part 1

Bear Stearns is upping their 4Q projections for Wynn Resorts (NASDAQ:WYNN). Specifically, they are raising their Macau EBITDA projection to $54.7mm from prior $49.8mm (due to growing market share, strong table and slot volumes). Firm's 4Q EPS goes to $0.46, which is $0.02 above Consensus.

Firm continues to believe WYNN is a solid play on two 1H07 themes in the gaming sector: 1) strong high-end trends on the Las Vegas Strip and 2) growing market shares gains (Wynn specifc) and increasing EBITDA/cash flows in the growing Macau gaming market.

Reits Outperform rating and $108 tgt.

Notablecalls: Two reasons I decided to highlight this one: 1) The chart looks good 2) It's been squeezing the hell out of shorts over the past couple of weeks. Some bears were pretty convinced WYNN was done around end of Dec. Expect them to put up a fight at around $99-100 level.

Color on warning: Tellabs (NASDAQ:TLAB)

Several firms are commenting on Tellabs (NASDAQ:TLAB) after the co issued a warning for Q4. The opinions are somewhat mixed:

- Morgan Keegan is downgrading the stock to Mkt Perform from Outperform saying they think many investors anticipated weak results for Tellabs for Q4:06, and they had reduced their estimates below consensus (December 11), but they didn't imagine results could miss by so much.

Firm acknowledges management's assertion that elements of the weakness are temporary and likely tied to the recently closed merger of AT&T and BellSouth; however, they suspect sales and earnings will not recover quickly for 3 reasons.

1) Weak sales stem from carriers' drive to control spending and not just the mergers, and this won't change soon.
2) Wireless capex likely declines materially in 2007, and this market had been a positive driver for the past 2 years.
3) Two out of the three growth areas for Tellabs have poor margin, Fiber to the Premises and optical transport.

Considering the degree of the shortfall, the firm doubts Tellabs management will sit back waiting for sales to recover. We anticipate management could adjust its cost structure to keep operating expenses below 30% of sales and bring operating margin back to the mid-teens. Furthermore, they imagine Tellabs could make an acquisition to improve its geographic mix, which could be a risk depending on the details. Finally, they think investors have downside protection considering the possibility that Tellabs becomes an acquisition target considering its enviable relationships and incumbent position with U.S. carriers.

- Morgan Stanley notes the magnitude of Tellabs revenue miss for 4Q06 (14% below MS estimate), along with similar announcements from ADCT, ADTN, and RBAK, is indicative of the weak wireline spending environment. While the revenue shortfall is partly related to a spending pause ahead of the recently approved BLS/T merger, they expect the challenging wireline capex environment to extend into the first half of 2007, or until technological and business-model issues surrounding telco video deployments show signs of improvement. Accordingly, the firm thinks it's too early to get constructive on TLAB shares despite the reasonable valuation. Maintains Equal Weight.

- Goldman Sachs is the most optimistic of the bunch noting it is important to keep in mind that the weakness is likely temporary in nature and that the outlook for 2007 remains healthy as Tellabs is a play on carrier bandwidth growth. Firm believes this miss will clear the decks and set a new lower bar for the stock, which may set up a positive long term scenario. Goldman continues to believe that the Street's topline estimates for 2007 remain too low. The 4Q miss is primarily due to the negative impact from long awaited merger of AT&T and BellSouth. They believe that the 2007 revenue outlook is likely dependent on new product traction (7100, 8600, and 8800), unlike 2006 where revenue growth was largely driven by strength in transport products. GS is adjusting their 4Q06, FY07, and FY08 estimates to $461mn/$0.11, $2,231mn/$0.64, and $2,412/$0.71 (excluding ESO) to account for the 4Q miss in revenues.

The firm is maintaining their 12-month price target of $11, and expect shares to be range bound in the near-term until confidence builds around the revenue and gross margin outlook. Maintains Neutral.

Notablecalls: While the news is not unexpected the magnitude of the miss will surely put pressure on the common. While both Morgan Keegan and MSCO make solid points regarding wireline capex in H107 and C07 in general, GSCO's comments regarding carrier bandwidth growth strike the core. Bandwidth will continue to grow no matter what. More of a question of when not if. Think the stock becomes buyable for a bounce around 1.2-1.5 pts lower. Would not touch this one if it opens down any less than 1 pt. The valuation continues to be reasonable with potential buyout lurking in the background.

Paperstand

The WSJ reports that in a move that could complicate one of the US Air Force's most important and politically sensitive weapons programs, Northrop Grumman (NOC) is threatening to shun a competition against Boeing (BA) for aerial-refueling planes b/c of concerns over the bidding rules. Northrop officials have hinted for months about quitting the race for the decades-long program, valued at $100bn or more, if they don't think the co has a fair shot of winning. Late last week, Northrop officially warned the Air Force in writing that it may not bid. Northrop officials believe draft bidding guidelines effectively favor Boeing's less-expensive refueling plane b/c they don't lay out detailed criteria for how the Air Force will evaluate extra capabilities, such as cargo and passenger capacity, that Northrop's proposed airplane offers.

“Heard on the Street” column out saying that for many investors in Escala Group (ESCL), the only thing that stands between the co and its life as a forgotten penny stock: its listing on the Nasdaq. The continued listings of firms that chronically miss securities-filing deadlines and lose scores of execs amid fraud and accounting investigations confound some investors and analysts who say the exchanges go light on certain co’s for business's sake. "The exchanges are definitely easy on co’s and don't boot them off when they really should," says Mark Grothe, of Glass Lewis & Co. "The listings are a source of income for them, and they don't want to miss out on those listing fees." As a result, investors are left to trade on potentially specious financial information, and analysts can't value the stocks b/c of the lack of reliable earnings data. That leads to irregular trading volumes and erratic price swings that can whipsaw investors. In recent weeks, eyebrows have been rising over Escala. Its shares had languished in the $5 range since plummeting more than 85% in May amid allegations of a massive stamp fraud at its Spanish majority owner, Afinsa. Afinsa, which until recently controlled 67% of Escala, was taken over by the Spanish govt in May, amid allegations of fraud, money laundering and other legal infractions. Spanish authorities have said Afinsa will be liquidated. Spain's govt said in a court filing that an inquiry by the SEC focused on whether Escala inflated the price of stamps sold to Afinsa. Escala has acknowledged that it is under investigation by the SEC but hasn't disclosed the focus of the SEC's examination. Investors want to know if the internal inquiry puts Escala in the clear with Nasdaq, or whether the co will still be delisted.

Barron's Summary

Medifast (MED) shares now look vulnerable to investors worried about the rejection of a positive dietary study and the authorship of some supportive Internet messages (article speculates that co’s CEO pushes the stock at Yahoo! Message Boards).

Notablecalls: The co’s CEO Bradley T. MacDonald quit on Friday. While the stock already got hit somewhat on Friday, I believe it will be down more... much more on Monday.
Example of Mr. MacDonald in action can be seen here.

It wasn’t easy for a telecom co to have a lousy 2006, but SprintNextel (S) managed it, shares down 11% with the sector up 30%, missing earnings forecasts 3 straight qrtrs, a messy merger integration in a year when the AT&T-BellSouth deal was acclaimed as a masterstroke. All this was more than enough to lose friends on Wall St., where only a 1/3 of the analysts now recommend Sprint stock, as opposed to 70% of them pushing AT&T. But turnaround seekers should take heart in the sour sentiment, as well as the stock's cheapness v. the industry, based on cash flow. Sprint, with a $56bn mkt value and less debt than its peers, is buying back $6bn in stock while investing $3bn in local WiMax. If it pays off, great. If not, and the core business keeps struggling, the stock's not expensive, and Sprint as an acquisition tgt is already being bandied. All of which shifts the risk/reward bargain in investors' favor.

Fund manager likes BEN, AB and JNC, dislikes JNS, TROW, FII, CNS and LM.

Bed Bath & Beyond (BBBY) trades for 39, or a relatively inexpensive 16x F08 ests. The stock could rise into the high 40s if the co can top its '08 earnings guidance.

One Origin Agritech (SEED) fan, Maxim Group, believes it is worth $21 a share. And the co says it is still focused on acquisitions. But litigation could well drag the stock price still lower.

Tyco International (TYC) shareholders may hit the trifecta: Shares could be worth 50% more than Tyco's current stock, thanks to higher price-earnings ratios.

Calls of Note Part 3

Baird has plenty of negative to say about OmniVision (NASDAQ:OVTI) following their checks that suggest 2007 could prove to be a very difficult year for the company.

Omnivision's gross margin is set to fall significantly over the next few quarters, in firm's view. Their checks indicate TSMC's gross margin on sales to Omnivision are approximately 40%, and estimate there should a 20% differential between Omnivision's gross margin and that of a fabbed competitor such as Micron. At 20% gross margin, Omnivision would lose money.

Per firm's checks, pricing is dismal: as low as $0.70 for VGA sensors, $2.50 for VGA modules. Omnivision no longer benefits from the tight supply environment of 2006, and excess capacity should bring pricing further down in 2007.

Samsung is now the second-largest supplier of CMOS image sensors. For 2007, Samsung is targeting the lower end of the mobile phone market - Omnivision's last stronghold. Micron's recent acquisition of Avago Technologies represents further bad news for Omnivision, as it will enable Micron to target sub-1mp CMOS image sensor markets which the company so far had ignored - targeting two-third of Omnivision's current revenues.

Omnivision missed two product cycles (1.3mp and 2mp) and is not gaining meaningful traction at 2 and 3mp resolutions, per firm's checks. WaveFront Coding Technology does not work and is currently experiencing "serious technology issues," per firm's checks.

Notablecalls: Oh well, if I were an OVTI shareholder, these comments would make me physically sick. Lower margins, increasing competition, sector not being in very good shape as witnessed by Motorola today - altogether it doesn't make up for a very cosy being. Expecting the shares to go lower.

Calls of Note Part 2

JP Morgan is adding DivX (NASDAQ:DIVX) to the JPMorgan Focus List with a January 2008 price target of $30, based on a multiple of 32 times FY08E PF EPS of $0.92, aligned with the peak multiple of near-peers DTSI and DLB.

With DIVX down 26% from a high of $31.36 on 11/28 (vs. up 2% for the SPX), they believe the risk-reward trade-off is heavily weighted toward owning DIVX , especially in advance of next week's CES and potential product and partnership announcements that might catalyze interest. Channel checks reveal that DIVX' penetration of the US DVD market stood at about 50% approaching the holidays, significantly higher than the company's own 19% assessment. JPM believes this could yield potential CE licensing upside in the seasonally strong March quarter.

The risks associated with a secondary issue of shares on the lock-up expiry on 3/20/07 is overstated, in their view: a) they think a dilutive primary issue is unlikely, b) JPM thinks institutional interest will be high, and c) at end of March investor attention will turn to the likelihood of seasonally strong CE licensing results, trumping other concerns.

Reits Overweight.

Notablecalls: Expect to see buy interest in DIVX following the calls. Good for a trade as DIVX is a mover. And when you get a chance, do check the archives for further color.

Calls of Note Part 1

Cowen comments on Netflix (NASDAQ:NFLX) saying they expect a number of video downloading related announcements to occur at CES next week. Firm believes the announcements will focus on: 1) "download-to-own" video content and 2) revenue sharing deals between websites such as YouTube and content owners. While neither of these business models compete or overlap with Netflix, similar announcements at CES in 2005 put pressure on the shares. They continue to believe that mass market subscription-based video downloading is at least five years away. Firm would view a drop in Netflix shares due to downloading announcements from CES as a buying opportunity.

On Thursday, Sonic Solutions launched Qflix, a licensing and certification program approved by the studios, which will allow online retailers to sell movie downloads that can be burned onto DVDs. CinemaNow currently sells a limited number of download-to-burn movies (using a different technology) and iTunes sells movies for viewing on iPods and PCs/laptops -- both services price new release content at $15. Cowen expects downloadable movies to put a dent in traditional DVD retail sales over time.

Notablecalls: Chart looks like it may go down some more. My gut on the other hand tells me the worries are already priced in. When this happens, the stock usually gets hit early on but comes back with a vengeance. Especially one with NFLX's short interest.

Color on warning: Openwave (NASDAQ:OPWV)

Several firms are commenting on Openwave (NASDAQ:OPWV) after the co yet again lowered guidance and provided a reply to Harbinger's filings:

- JP Morgan is the most optimistic of the bunch saying product and operational transitions are progressing, and a good bookings quarter in December shows promise for future improvement. But revenue/EPS will likely be light based on preliminary results as the company's move to a more ratable model should show up first in bookings then in income statement.

Bookings are expected to be ~$120M for the quarter and revenue/EPS between $83-84M/($0.08)-($0.09) compared to JPM estimate of $90.9M/$0.00. Big part of bookings came from Sprint, the largest customer, but there are some signs of broader improvement. Timing of one large systems deal did not contribute to revenue holding back the top line, while the combination of lower revenue and higher commission expenses on the good bookings contributed to the earnings miss.

Management is looking for ways to improve shareholder value with the announcement of a $100M repurchase program that the firm expects to begin in late January and be completed quickly over 30-60 days.

JPM believes there is value in the stock trading at 1.7X revenue, a 48% discount to its peers. Remains Overweight.

- CIBC notes that with its proxy fight less than two weeks away, OPWV downplayed weak F2Q07 results and trumpeted its 1.43 book-to-bill as validation of its strategic plan. But the firm has their doubts, given management's indication that visibility is unimproved and that '07 numbers need a fresh sheering.

Though generally encouraged by bookings, several factors curb firm's enthusiasm. Almost half the bookings were with Sprint; exclude it and book-to- bill is only ~0.9. Also, the disconnect between bookings (improved), visibility (unchanged), and rev. outlook (reduced) is puzzling.

Typically, they would expect bookings and backlog growth to be a harbinger of either improved visibility or of revenue momentum. The firm is therefore perplexed by management's indication that, despite the multi-year high backlog level a) visibility on a quarterly basis remains stuck at 60%-70% and b) revenue growth for the remainder of the year will be only moderate (and below earlier
indications).

Nevertheless, they view OPWV s $100 million share buyback announcement as a constructive move towards further shareholder value creation and a solid way to utilize its strong cash postion. Maintains SO.

- Jefferies is downgrading their rating to Hold from Buy saying another negative preannouncement indicates no near-term stability in the core business, and offers no evidence of new product traction. No sign of a major restructuring in sight either. However, $3.60 in net cash/share, a $100MM stock buyback program and >$1Bn in NOLs should all help support OPWV stock.

Firm's downgrade today reflects a slower-than- expected recovery process, and increasing financial risk related to cash burn and very high DSOs. While downside is probably limited, it is difficult to find a catalyst right now for OPWV shares. Recent shareholder activism has been scorned by management, but detailed guidance, a significant buyback, and a renewed focus on costs show that the shareholder discontent is already producing results. Jeffco remains concerned that Openwave's high dependency on new products that may not be enough to offset a declining legacy business.

Tgt goes to $9 from $11.

Notablecalls: In case you consider investing in OPWV I strongly suggest you go back and read Harbinger's filings. I especially enjoyed description of the events of late August, when dismissal of the chief marketing officer, chief administrative officer, chief operating officer, chief of business development and 60-odd other employees was allegedly misrepresented to investors as a reorganization. According to Harbinger, the action had more to do with silencing dissent than cutting costs or improving operations a Silicon Valley version of the night of the long knives.

Secondly, take a close look at what the co is doing. WAP gateways, ringback tones and mobile browsers (not for smartphones, though!). Hope LBS and music will save the day. Really. Pass.

Color on warning: Motorola (NYSE:MOT)

Several tier-1 firms are commenting on Motorola (NYSE:MOT) after the co warned late last night:

- I believe yesterday's call of the day goes to Deutsche Bank for downgrading the stock to to Hold from Buy just 2 hrs ahead of the news. The firm notes they are concerned that slowing growth in mobiles, a shift in volumes to low-priced models and reinvigorated competition will force Motorola to choose between market share and pricing in coming quarters. The firm lowered their price target from $30 to $22 on lower estimates.

The firm believes global handset volumes remain strong, but they expect some slowdown in growth rates in 2007. Further, much of the volume gains in the latest and coming quarters have come from low-end devices. Thinks Motorola is finding it harder to balance market share and margins, and we are headed into a lower margin environment in 2007.

In the past, the company has bee able to use its leading product portfolio to boot both growth and profitability. This is also becoming harder as many Asian vendors now offer truly thin phones. DB would also not rule out a better line-up from Nokia at 3GSM. Finally, they think Apple is highly likely to launch its own mobile phone possibly next week. This may not be a volume threat to Motorola, but could capture RAZR's 'iconic' status, denting Motorola's marketing efforts.

- Morgan Stanley notes the significant cut in profitability this quarter is a blow to a
key tenet of our thesis that margin improvement (along with market share gains) would drive stock outperformance. As this news will be quickly priced in to shares tomorrow, they're going to resist the temptation to change their Overweight rating at this point until they learn more about the reasons for the margin collapse and assess whether they are fixable over the next few quarters.

Motorola's negative pre-announcement is striking in at least two regards. First, and most important, mobile device operating margins appear to have been cut in half this quarter to around 5-6%. Second, although of far less importance right now, is that Motorola appears to have gained around 150 bps of share in the handset market this quarter. Regarding profitability, based on the limited data Motorola released last night, the firm believes gross margins at the corporate level are a little over 27% this quarter, down from 31.9% in 3Q06 and below MS estimate of 31.5%.

Clearly there was bad news priced into shares given the recent underperformance, but they don't think news this bad was priced in. The firm would not be surprised to see shares trade off 5% or more in tomorrow's session. They estimate ASPs were around $121 this quarter, below their estimate of $135. Tgt goes to $25 from $26.

- Piper Jaffray is downgrading their rating to MP from OP based on belief it could take several quarters for Motorola's handset operating margins to recover.

While handset unit shipments of 66M exceeded firm's 62M estimate, handset ASPs and operating margins were well below estimates. In fact, they estimate handset ASPs were approximately $120 versustheir $135 estimate. Further, they estimate mobile phone division operating margins were roughly 4-5% during the quarter versus 11% estimate.

Given the disappointing operating margins for Motorola and lack of strong mid-to-high end products to replace the now lower ASP RAZR, PJ believs Motorola's mobile phone margins could remain below 10% throughout 2007. Due to the disappointing Q406 results and channel checks indicating increasing competition, they are lowering their 2006 proforma EPS estimate from $1.34 to $1.19, 2007 from $1.56 to $1.07, and introducing a 2008 est of $1.33.

Tgt goes to $20 from $27.

Notablecalls: Can't say the news is a total surprise. Check the archives over the past couple of months for further commentary. The magnitude of the miss is, though. I happened to sit at my desk when the news hit and the first question to cross my mind was, "If this is how bad MOT is doing, what the heck will Nokia's (NOK) results look like when the co reports on Jan 25?"

Motorola's RAZR/KRZR (thin line) is still the hottest selling handset on the mkt and despite that the co can't put together a decent qtr. Nokia has been lagging in terms of innovative handsets meaning a time bomb ticking away there as well.

Back to MOT, I suspect we may see an initial bounce just below the $19 level. The co is still profitable and the stock is down over 25% from it's recent top (not that expensive either). In medium-term however, I'm not that optimistic. The handset market has run out of steam. It has been nearly commoditized. Must say I have no idea how MOT could come about fixing this problem. S-t the only winner in the handset space will most likely be Apple with their iPhone. That won't make things easier for MOT/NOK.

Paperstand

The WSJ’s „Heard on the Street” column discusses Home Depot (HD), saying that investors may soon discover that Bob Nardelli wasn't the only wrench in the works. Plenty of problems remain for the retailer, from a decline in home prices to vigorous competition from Lowe’s. Those twin issues are daunting enough, but Home Depot has a host of internal flaws that are hampering its ability to meet those challenges. The co in recent months has lost several execs, and the top ranks are generally lacking in much-needed retail experience. Home Depot's customer service is lackluster and its stores are still run by antiquated systems that too often leave shelves short of popular items. Getting on top of all these issues will take time. The departure of Mr. Nardelli was a quick fix, perhaps clearing the way for some needed changes. But restoring the retailer's stock price will be more of a long-term project for successor Frank Blake. And views differ over whether Mr. Blake is the right man for the job, considering his lack of retail experience. Many on Wall St. think the stock will fall back more, or, at best, remain at the current price for a while before it starts rising again. "The question is, 'How does the business perform from here?' " said Colin McGranahan, of Sanford C. Bernstein. "Say what you will about Bob Nardelli, but he was a hard worker and knew how to fix problems. That means there is no easy fix. There's no white rabbit." Mr. McGranahan is particularly pessimistic about any near-term rebound for Home Depot.

Barron’s Online “Inside Scoop” section reports that the Chmn of Rite Aid (RAD) headed to the checkout line as shares of the drugstore chain hit a 52w high. Robert Miller sold 300K shares for $1.7m. Miller now owns 12K Rite Aid common shares and options to purchase 9.55m shares. "I think Miller's sale now fits his own profile of garnering some compensation through the sale of stock," Ben Silverman, of InsiderScore.com, says.

Calls of Note Part 5

- Jefferies has an interesting note on Novell (NASDAQ:NOVL) saying that as the co attempts to breathe life into its software business, they believe a re-positioning of the company as a Windows complement is probable. Recent SLES coupon activations are a beginning, and m&a could play a significant role.

Firm's checks indicate a tightening relationship between Novell and Microsoft, both technologically and strategically.

Firm expects Novell to receive the final part of a $300mm payment from Microsoft this week, boosting the company's net cash/share to ~$3.30. >16,000 activated subscriptions through late December puts Microsoft SLES coupon distributions at a pace that is well-ahead of the 70,000 annual average, and they think there is little chance in FY07 that Novell will record much 'dead' coupon revenue.

They believe investors could see an acquisition and some of the cost- cutting that was anticipated but did not happen late last year. Given that Novell is breakeven on an operating basis right now, they expect that almost any acquisition that delivers more than a 4% T-bill like return will be accretive.

Reits Buy with tgt going to $8 from $7.

Notablecalls: Expect to see some buy interest in NOVL today.

Calls of Note Part 4

Merrill Lynch is raising their 12-month price objective for Celgene (NASDAQ:CELG) stock to $73 from $59, as they begin working off their 2008 EPS estimate, which they raised modestly to $1.57 from $1.54. Firm expects profits to more than double and margins to expand for Celgene in 2007 as it continues to ramp sales of Revlimid.

Firm expects Celgene to continue ramping Revlimid sales in 2007 for its labeled indications of relapsed/refractory multiple myeloma and MDS 5Q- and they look for approval in the EU in 1H07. Revlimid was a center of attention at ASH (Amer. Soc. Hematology) in December with continuing positive clinical developments in the treatment of CLL (chronic lymphocytic leukemia) and NHL (non-Hodgkins lymphoma) and the firm expects the company to initiate pivotal trial programs in both during the year. Thalomid sales are also holding up very well.

Assuming some off-label use of Revlimid in relapsed/refractory CLL and ultimately label expansion, they have added modest probability-adjusted sales estimates in that indication beginning in 2008, which raises EPS estimates to $1.57 from $1.54 in 2008, to $2.06 from $1.99 in 2009 and to $2.47 from $2.31 in 2010.

Reits Buy.

Notablecalls: ML isn't the first one to up their tgt to around $70. But I suspect the note will generate some interest despite that.

Calls of Note Part 3

- UBS comments on LAM Research (NASDAQ:LRCX) saying that while Intel has not updated its NOR flash plans, their industry research suggests if Intel upgrades its NOR flash fabs from 200mm to 300mm, Lam will likely win Intel's silicon etcher business. While Lam is unlikely to disclose customer information, channel checks found Lam's silicon etcher has better process scalability compared to Hitachi's (Intel's incumbent 200mm supplier).

They believe a 300mm NOR flash upgrade win at Intel would require 15-20 new silicon etchers at each of Intel's two existing volume production NOR flash fabs in Ireland and Israel. We estimate this could amount to $150M and $0.30 in incremental revenue and EPS for Lam.

Firm's 12-month price target is based on applying a 16x multiple to their CY08 EPS estimate of $3.95. While Lam's 1H07 shipment visibility to foundry and DRAM customers remains limited, tey view the possibility of a first ever etch win at Intel as a key 2H07 catalyst. Maintains Buy.

Notablecalls: I have never seen comments like this one move stocks. But I do like the way UBS covers the Semi and Semi Eq. space.

Calls of Note Part 2

- Banc of America notes their industry/channel checks suggest that Intel's (NASDAQ:INTC) Dec qtr revs finished at $9.6b (+10% Q/Q) - or near the high end of guidance ($9.1-9.7b).

Specifically, checks suggest that Intel benefited from a stronger uptake of Core 2 Duo mobile
processors (Merom), as well as stronger momentum in servers (driven in part by share gains versus AMD). Given the strength in notebooks & servers they expect Q4 gross margin to benefit from improved mix. Consequently, they expect Q4 GAAP gross margin to clock in at ~52% vs. the mid-pt of guidance of 50%. Finally, from a geographic standpoint, most of the strength was witnessed outside North America, with Europe & APAC exhibiting relative outperformance.

The firm is raising their above-consensus 4Q rev. est. to $9.6b, and tweaking GAAP EPS est. higher to $0.27 (Street: $0.25). Firm's new CY07 GAAP EPS est. of $1.27, up from $1.25, remains comfortably above consensus ($1.11). They note that this marks their 2nd upward rev. to Intel's est. in less than a month.

Maintains Buy and Top Pick status. Tgt $28.

Notablecalls: Most certainly good to know category. I would not be surprised to see some buy interest in INTC early on as it looks like INTC is regaining some ground vs AMD.

Calls of Note Part 1

Piper Jaffray comments on Apple Computer (NASDAQ:AAPL) sayings the Macworld keynote will be held on Tuesday, January 9 at 9:00am PST. They expect new product announcements at Macworld could include: iTV, a new iPod, and the iPhone.

Despite all of the talk regarding new product announcements, or lack thereof, at Macworld, the firm continues to believe that the announcement of an iPhone would be positive for AAPL shares and no sign of this product would be a negative.

Firm's take on most likely announcements:

iPhone entering production phase of 12m units (Certainty rank: 9 out of 10). In Nov-06 two separate reports came from Asian news sources indicating that Taiwanese manufacturer Hon Hai's subsidiary Foxconn had received a 12m unit contract for the iPhone. According to Commercial Time the manufacturer signed the contract with Apple to produce 12m units for a scheduled release in 1H07. Additionally, China Times reported that the manufacturer will produce between 500,000-600,000 units per month starting in early CY07.

iTV ($299) release at Macworld with some improvements from September debut (10 out of 10). At a Sep-06 event, Apple introduced the iTV, a wireless media streaming device to view iTunes content on a TV. At the show, the device was simply streaming media (but did not store it locally); Piper believes Apple could release an improved model with an internal hard disk drive. Downloadable movies average about 1.5GB each on iTunes and one way that Apple can ease capacity restrictions is to add hard drive space to the iTV. They believe Apple will eventually improve on the iTV shown in September, but the improvements may not come until after the initial release.

Maintains Outperform and $99 tgt.

Notablecalls: Not actionable but good to know category. Expect to see some serious volatility over the next week or so. Note that usually the stock gets sold hard on the day of the announcement.

Paperstand

Barron’s Online „Inside Scoop” section reports that SAC Capital still sees value for Pacific Sunwear (PSUN), although the co's stock has jumped 55% since hitting a multiyear low this summer. SAC disclosed ownership of 3.89m shares, or a 5.6% stake. "When we see aggressive buying from a fund, especially a fund the size of SAC with their history of returns, that's a positive event for the stock," says Ben Silverman, of InsiderScore.com.

The WSJ reports that Cisco (CSCO) agreed to buy IronPort Systems, a network-security start-up, for $830m in cash and stock. The deal extends a string of acquisitions in the security field by Cisco that has been expanding beyond its original stronghold in networking hardware.

Calls of Note Part 2

- Jefferies notes that electrifying performance from Taser (NASDAQ:TASR) during 2007 is their prediction because they believe more U.S. law enforcement agencies have included Tasers in their 2007 budgets, international opportunities appear to keep growing, and new products broaden the scope of the business.

Financial performance likely provides positive surprises in 2007. jefco's revenue estimate of $105 million assumes market penetration expands by 10% during the year, from ~25% to ~35%, due to more police agencies including Tasers in their budgets. A 10% increase translates into approximately $80 million of revenue since there are around 800,000 U.S. law enforcement officials and the average initial purchase is $1,000 for the X26 and cartridges They estimate ROIC improves to over 80% in 2007, driven by a 32% operating margin and capital turnover of almost 5x.

With 30 lawsuits either dismissed or decided in the company's favor, and none decided against the company, the perceived legal risks should decline. Fourth quarter weakness likely in stock, but may hold back stock performance until reported.

Reits Buy and $13 tgt.

Notablecalls: Something for both traders and investor types.

Calls of Note Part 1

Advanced Micro Devices (NYSE:AMD) is getting whacked this AM by several negative comments:

- Goldman Sachs is downgrading AMD to Sell from Neutral, as they expect a weak P&L throughout the year given the significant ramp in fixed costs, a weak CPU pricing environment in 2007, and increasing competition from Intel in CY1H2007.

- ThinkEquity's Eric Ross notes that inventories at AMD have suddenly built in the channel, and
prices are plummeting. The firm believes the channel is angry, and PC OEMs are expressing concern about AMD's roadmap (particularly mobile). They fear this will translate into share loss to Intel. With the price war between AMD and Intel re-igniting, they believe AMD has little opportunity of meeting the high expectations for GM and OM it set on its recent analyst day. With capacity building in the channel and the risks of missteps in executing its merger with ATI, ThinkEquity lowers rating to Sell and price target to $15.

Since Mr. Ross and his team returned from Asia at the beginning of December, AMD inventories have built in the channel from essentially zero to roughly one month. They note inventories wereextremely low due to all of AMD's production capacity being allocated directly to PC OEMs. This implies that programs for major OEMs are not going well, or are being cancelled.

The firm has heard from several channel sources that distributors now saddled with AMD parts are rapidly cutting prices to unload these parts. Many distributors are worried they will lose money on these parts (and are not happy about it).

Intel's early release of its new quad core chip at extremely competitive prices will further pressure AMD to lower prices and further impact gross margins. With no real end in sight to the now-beginning price war between AMD and Intel, the firm believes AMD's gross margins could fall into the mid 40% range with little chance of meeting the targets (50% +/- 2%) it laid out for 2007 at its analyst day on December 15.

Rating goes to Sell from Buy with tgt cut to $15 from $30.

Notablecalls: Ouch! AMD most likely going sub $20 today. The GSCO downgrade is a non-event but the comments from Eric are just plain ugly. Additional pressure for DELL?

Color on news: Sirius Satellite (NASDAQ:SIRI)

Several firms are commenting on Sirius Satellite (NASDAQ:SIRI) after the co said on Tuesday it ended 2006 with 6.024 million subscribers and achieved its first quarter of positive free
cash flow in the fourth quarter in line with its expectations:

- Bear Stearns notes the subs number was slightly ahead of their recently revised estimate of 5.9m and in the range of their recently reduced guidance (5.9-6.1m). The ending subs would imply net adds of 905K for the quarter, which declined 21% YOY as 4Q 05 was skewed by Howard Stern.

Assuming OEM net adds are consistent with their expectation, the marginal outperformance is driven by retail, and that Sirius had a 58% market share at retail (consistent with publicly released NPD data), Sirius's ending subs imply that XM likely may have ended the quarter with 7.85M subscribers, about 50K higher than firm's current estimates.

Over the last month based on retail travails, Sirius has fallen 15% and the 10% EV premium has been erased and actually turned to an 4% EV gap to XM. The firm thinks this is more reasonable given that the focus in 2007 is shifting to OEM where XM's partners have ~60% market share. Should Sirius execute during 2007 and the EV gap widen further, they could be inclined to revisit their Underperform rating, as they are bullish on the industry and the long term prospects of the companies.

- Deutsche Bank thinks that given that Sirius stock opens 2007 at $3.54, just above its 52-week
low of $3.50, and the stock was down 7.5% in 4Q06, reflecting the lower sub guidance on December 4 and investor fears about a decelerating satellite radio retail category generally, they believe the 6.0m subs will be viewed as good news and maintain Buy rating.

- Cowen notes that six quarters ago, in August 2005, SIRI set guidance for positive FCF in Q4:06. Firm views the accomplishment of this goal as a strong indication of the co's FCF pot'l. This success bodes well for SIRI'slonger-term guidance of $3B in revs and $1B in FCF by 2010. This LT guidance reflects significant upside to their estimates.

Expects several catalysts to drive appreciation in 2007 including: 1) OEM growth, 2) Settlement in royalty arbitration, 3) Cont'd FCF performance. M&A could provide add'l upside, however they do not view it as highly likely.

Notablecalls: Think SIRI shareholders will enjoy a nice day today.

Color on news: Lennar (NYSE:LEN)

Several firms are commenting on Lennar (NYSE:LEN) after the country's 3rd largest homebuilder warned for Q4:

- Deutsche Bank notes Lennar's preliminary 4Q06 results reveal an impact from worsening housing market conditions similar to other builders, but they also continue to show the different strategy that Lennar is pursuing. As the firm has written previously, Lennar's strategy of aggressively matching pricing with current market conditions should allow its earnings to
rebound sooner than other builders.

4Q06 orders are down only -6% (vs. -35-40% for other builders in 3Q), illustrating Lennar's strategy of adjusting pricing to maintain a steady sales and delivery pace. Closings of 14,006 reflect an impressive turnover rate of roughly 90%, up from 68% in 4Q05. Write-downs of $400-$500mm in 4Q06 will bring the total for the year to roughly $525-$625mm, or 6-7% of equity after-tax. Firm notes that as they have written previously, builders' year-end write-downs should continue to be higher than investors' expect. In contrast to Toll and Hovnanian, Lennar sees no signs of imminent housing market bottoming. DB reduces their estimates--4Q06 to $0.74 (excluding write-downs) and FY07 to $2.10.

- UBS on the other hand notes that while many builders were caught off guard by the severity & speed of the correction, they believe Lennar's strategy of building 'even flow' to match the delivery pace, vs building to order, is disappointing. In their opinion, aggressive discounting, necessitated by elevated cancellation rates & spec building, leads to a vicious circle of further price reductions and falling margins. The returns generated on the Newhall project underscore the co's land expertise, which unfortunately was overshadowed in 06 by poor execution in the HB business.

UBS is not all that pessimistic regarding the co saying that as capital for private builders becomes increasingly constrained, they expect opportunities for well-financed public builders to unfold. Historically, Lennar has had success in expanding through acquisitions during downturns, as demonstrated by the acquisition of U.S. Homes in 2000 and Pacific Greystone in 1997. The financial flexibility created by Lennar's conservative balance sheet, combined with its land expertise, should limit downside potential during this slowdown. Through its F3Q (Aug), Lennar's net debt to capital was 37%, well below the 48% group average, reflecting management's efforts to limit balance sheet leverage to govern growth and reduce risk.

The firm is reducing their F06E EPS to $5.55 (-32% YOY) from $5.85, vs mgmt's revised guidance of ~$5.60. Further, F07E goes to $2.20 (-60% YOY) from $2.40. TgtT remains $52 and rating at Neutral.

- JP Morgan comments that while LEN noted that market conditions continued to weaken, they note that 4Q orders (w/JVs) of down 6% nearly matched 3Q's -5%, against a similar comp of 25% vs. 4Q's 24%. Moreover, the firm note that while pricing has likely weakened, aside from this possibly being exacerbated by LEN's evenflow/spec model, they believe weaker pricing is necessary to reduce today's excess inventory. Lastly, contrary to LEN's comments, new and existing home sales, the MBA Purchase index, and other builders' comments on some regions all point to signs of stabilization.

While LEN's 4Q charges of $400-$500 mil. are on top of YTD charges of $98 mil., JPM notes
these are only slightly more than KBH's $395-$445 mil., HOV's $326 mil., PHM's expected $300 mil., and DHI's $260 mil (all YTD). Moreover, at 4.8% of equity (after-tax), they continue to believe book value remains reliable.

Overall, they believe this newsflow in total is a neutral event, and continue to believe stable to improving trends in inventory, orders, and can rates will be positive catalysts for the sector, and reiterate their positive stance.

At 1.41x book value, LEN's is trading roughly in-line with its large-cap peers' 1.39x, which the firm believes appropriately reflects the outlook for a roughly in-line FY07 EPS decline. Hence, the firm maintains Neutral rating.

Notablecalls: As I have noted before, housing downturns have historically lasted between 26 and 52 months with new home unit sales averaging around a 50% decline. New home sales topped at close to 1.4 mln units in 2005 and have declined to around 1 mln units currently. Add a highly leveraged consumer to the mix and you'll likely see a prolonged downturn. While several firms expect this downturn to last no more than next couple of qtrs I suspect they will be disappointed.

While I have very little or no feel for the homies I suspect LEN will not get hit in any substantial way following the news. Buying it down 5-6% may provide a nice st bounce entry.

Paperstand

The WSJ’s „Inside Track” section reports that recent stock purchases by co insiders and a hedge fund are broadcasting a pretty clear signal about Gray Television (GTN). Chmn and CEO J. Mack Robinson and his wife, regular buyers of the stock over the years, have stepped up their purchasing pace by buying, since the beginning of Nov, almost $1m of stock in the co. Highland Capital Mgmt spent $1.29m on the shares in Dec, raising its stake to 10.5%. The positive signal sent by these purchases is reinforced by the fact they took place during a period when the co's common and Class A shares each rose more than 25%, said Jonathan Moreland, of InsiderInsights.com. "Buying into strength is a positive," he said.

Barron’s Online “Inside Scoop” section reports that on Dec. 28 Tudor Investment disclosed a 5.9% stake in Priceline (PCLN), or 2.15m shares. Tudor had not owned the stock since selling out of a previous holding at the end of ‘05. Priceline's largest shareholder, Fidelity Mgmt Research, also purchased shares in the 4Q, moving up from the 6.6% stake, or 2.4m shares, to a 12.3% stake, or 4.5m shares, on Dec. 11. Ben Silverman, of InsiderScore.com, says that the buys by Tudor and Fidelity outweighed the impact of a sale by Hutchison Whampoa, which sold its entire 10% stake, or 3.9m shares. "The fact that the [Hutchison] sale went on, and then the stock went higher shows that there is certainly a mkt for the stock," says Silverman, adding that "it looks like some of the institutions used that sale as an opportunity to beef up their own holdings" of Priceline stock.

NY Times reports that the S-Korean antitrust agency has formed a task force to investigate the licensing and business practices of the Qualcomm (QCOM). In Japan, Europe and the US, Qualcomm faces accusations by rivals that it has abused its mkt dominance in wireless technology to demand excessive royalties and block fair competition.

Barron's Summary

Barron’s cover discusses the new AT&T/BellSouth (T), sayint that in the next few years, AT&T's earnings growth will depend largely on savings from cost-cutting after several big mergers. Cable competitors are in hot pursuit of the co's retail phone customers, however, and also have their sights on small and midsize businesses. Any or all of these issues could trip up AT&T in ‘07 or ‘08, resulting in lower-than-expected rev, higher expenses and a declining stock price. The co's shares have climbed 46.5% in the past year, to a recent 35, amid investor enthusiasm for the BellSouth deal, and currently trade for 13.6x next year's earnings. If P/E multiple merely retreats to 11, the bottom of its normal range, the stock could fall nearly 15%, to 30. But if the co misses Street's earnings tgts, the downside could be greater.

Fund manager picks include TSM and CHL. Another fund manager remains vary on India, but likes TTM and VSL.

The shares of Safeway (SWY) have surged 48% in the past year, to a recent 35, but investors may be getting carried away. Considering the challenges ahead, the stock is probably worth closer to 30.

Now that Great Plains Energy (GXP) has turned itself around, the shares could return 15% over the next year, thanks in part to a hefty dividend. The stock price is up 17% just since last summer.

“Up and Down Wall Street” section reports that usually, cancellations run only about 15% of orders for publicly owned home builders. However, cancellations have soared this year. According to Doug Kass 3Q rates for each of the leading home builders are: Centex (CTX), 37%; DR Horton (DHI), 40%; KB Homes (KBH), 53%; Lennar (LEN), 31%; Pulte Homes (PHM), 36%; Beazer (BZH), 57%; Hovanian (HOV), 35%; MDC Holdings (MDC), 49%; and Standard Pacific (SPF), 50%.

“Technology Trader” out saying that when Microsoft (MSFT) starts selling consumers the Vista at the end of the month, the co can look forward to a good cycle of upgrade sales. That's why the co’s shares rose 14% last year. Last year, memory-chip press agents told that Vista would spark a surge in demand for DRAM. The flacks told the truth. But the Vista memory boost has already happened, ahead of release of Vista. Since last summer, PC makers have urged PC buyers to get Vista-ready amounts of DRAM when purchasing, increasing avg DRAM per PC to 1Gb. That anticipation spurred a hot summer run in DRAM sales, as well as stock prices, for makers like Micron (MU), Qimonda (QI) and others. That was nice while it lasted. Some memory makers talk vaguely of a Vista demand boost in the 2H07, but that makes no sense when PCs are already selling with enough DRAM for Vista. What is more likely to appear this year is a glut of DRAM supply. Manufacturers are adding a lot of new production capacity this year. And the industry is starting to make chips that have smaller transistors, which would increase the bit-yield per wafer by about 50%. The shares of Micron already have fallen a 1/3 from their summer peak. Investors got the willies as demand softened for NAND flash and as Micron inventories steadily climbed. There's also lots of NAND manufacturing capacity on the way. Given the potential for a ‘07 glut in DRAM and NAND, Micron doesn't look like a fresh-money buy for ’07.