Genworth Financial (NYSE:GNW): This is good news for GNW, Reit Buy, $16 tgt - UBS

UBS has some interesting positive comments on Genworth Financial (NYSE:GNW) after the co announced it borrowed $930M of its $1.7B available credit facilities to repay $1.1B of senior notes maturing in 2Q09—after which GNW has no long-term debt maturing until 2011. According to UBS, GNW may be able to purchase a significant amount of this debt in the open market at a discount to par. Liquidity also appears sufficient at life and mortgage insurance operating company levels.

Capital seems adequate for double-A S&P/AM Best ratings in near-term
GNW reported a 3Q08 RBC ratio of 360% (levels typically consistent w/ double-A ratings). In 4Q08, it freed $115M in capital and was working on another $500M in capital-relief efforts (half internal). If credit losses are similar to 3Q08’s $(321)M, the firm thinks GNW may avert further downgrades through at least another quarter.

Asset sales—if possible—would help GNW’s capital and liquidity position
GNW could reinsure run-off blocks of life insurance and annuities; divest of some or all of its international businesses (including lifestyle protection and mortgage insurance); or sell its smaller wealth mgmt businesses. However, buyer demand for these assets could be light. Most insurers appear capital constrained at this time.

Valuation: Adjusted 4Q08E BVPS
UBS $16 PT assumes ~(30)% discount to GNW’s 4Q08E BVPS (which factors in quarter-to-date fair value declines in its investment portfolio) to reflect the possibility of a book value dilutive capital raise.

This is good news for GNW—since some observers suggested that the credit facility would not be accessible, as was the case for AIG when it tried to draw on its bank credit lines on September 15. Even after the good news, some suggested that this appears to be a desperate move for an investment-grade rated company. But, make no mistake, these are unprecedented times. And, GNW is
doing the right things to protect its liquidity.

Notablecalls: I have a bet going on since yesterday - GNW will surpass the $2 level today or I will be making 30 push-ups.

I don't plan to lose that bet.

GNW has $3.8 bln in cash - sufficient to fund $3.7 billion in GIC and funding agreements that may be
coming due in the next 12 months.

The stock is still trading like a Chap-11 candidate, yet the news from yesterday pretty much migitated these concerns.

I suspect GNW will trade above the $2 level today.

Bring it on, Rally Monkey!

I suspect now is the time to bring out the....

RALLY MONKEY!!!

Was watching Bloomie TV last night as commentators went ga-ga over the 'terrible and way unexpected' warning from Intel (NASAQ:INTC).

The stock is down around 6% this morning.

They didn't say anything we didn't already hear from Best Buy (NYSE:BBY) yesterday. Demand has fallen off the cliff and inventory levels have grown. Notice how BBY bounced?

It was only matter of time when the Wall St. induced crisis hit the Main Street. It's here and the stocks have already discounted it.

Paulson put out the open flames at fin. institutions and is now moving on to support the consumer. While the markets yesterday took this as a negative signal, I do believe this is really the prudent step. You can't support the whole system from one end alone.

Oh and, btw - Goldman's Conviction Sell for Dell (NASDAQ:DELL) is just silly. This thing has $2 in EPS power in better times.


Bring it on, Rally Monkey!

Wyeth (NYSE:WYE) : Added to Conviction Buy List at Goldman Sachs

Goldman Sachs is adding Wyeth (NYSE:WYE) to their Conviction Buy list on the significant gap between the current share price and break-up value of $50.

Wyeth’s strength in biologicals and vaccines and the lack of extreme patent exposure make it one of the most attractive fundamental stories in Pharma. These assets are underappreciated due to the overhang of WYE’s core Pharma business. Recent biotech price-tags reflect the industry’s willingness to pay a premium for these assets. Management has recently signaled a commitment to its growth assets, de-emphasizing primary care research. Firm's 12-month price target is $46, yielding 39% potential upside.

Notablecalls: These things tend to move.

Las Vegas Sands (NYSE:LVS): LVS raises dilutive capital but eases balance sheet strain - Goldman Sachs

Goldman Sachs is out positive on Las Vegas Sands (NYSE:LVS) after the co announced an additional capital raise of $2.1bn.

Firm is maintaining their Buy rating on the shares but acknowledge that it will take time for full value to be realized and in the near term exogenous factors (visa restrictions loosened in Macau/broader global macro travel environment) and non core factors (condo sales in Macau) will drive operating results and share performance. The reason they are maintaining their constructive view is that at this point much of the bad news is in the stock and there is significant “option” value if trends recover and future growth opportunities (additional development in Macau) rematerialize.

Goldman is lowering their 12-month price target (based on sum-of-the-parts) to $9.50 from $25 based on lower estimates and to take into account the dilution from the capital raise.

Notablecalls: I suspect the stock is ready for a bounce here. It broke the $5.50 pricing yesterday in a hurry but given the fact they have avoided insolvency at least for the time being, big money operators will be looking to shake out the shorts.

PS: Note Jefferies is also out in defense of LVS saying they still believe in the co. LVS. The capital raise keeps LVS solvent in the near-term, and the long-term value is substantial with company forecasted 3.0x leverage in '12 (EBITDA $3.5bb). Firm's new target comes to $19 vs. $44, to reflect the dilution from yesterday's securities issuance and significant model revisions.

Priceline.com (NASDAQ:PCLN): Estimates cut below consensus at Morgan Stanley

Morgan Stanley is out rather cautious on Priceline.com (NASDAQ:PCLN) taking their estimates way down.

Firm notes they would remain on the sidelines as global economic conditions deteriorate. The consumer spending slowdown, higher gas prices over the past year, the hassle factor for flying, airline capacity cuts, airline price increases and possible airline consolidation, and the reversal of foreign exchange benefits may weigh on results for the foreseeable future. Their updated model trims estimates to reflect these macro forces. Morgan maintains Equal-weight rating and is removing their price target given the lack of visibility.

Priceline beat expectations across the board, demonstrating its ability to take market share as the value brand in a weakening global economy. PCLN’s share of gross bookings hit 20% among the major online providers vs. 15% a year ago. Management referred to global economic conditions that deteriorated near quarter’s end, however, and international weakness that became particularly pronounced in late September and October, caused in part by FX. As such, the company warned of greater variability ahead for financial results given “the velocity of economic change.”

For 4Q08, firm's gross bookings estimate drops to $1.3 billion from $1.7 billion on the weak travel environment. Their revenue estimate drops to $375 million from $440 million million, and EPS estimate to $0.59 from $0.89.

For 2009, revenue estimate drops to $1.9 billion from $2.3 billion, and our EPS estimate to $3.88 from $4.89.

Notablecalls: Compare MSCO's estimates to consensus and you will see the firm now stands way below. I suspect PCLN will get hit today on this and the fact MSCO has removed their price tgt on the name. This means they no idea how to value the co.

General Motors (NYSE:GM): Deutsche cuts to Sell, $0 (zero) price tgt

Deutsche Bank is out with a major call on General Motors (NYSE:GM) downgrading the shares to Sell from Hold, lowering tgt to $0 from $4.

At this point, without external government intervention, their work shows GM may not be able to fund its U.S. operations beyond December. Even if GM’s suppliers do not change the company’s commercial payment terms, GM’s U.S. cash position will likely decline to less than $5 bn by late December, and the firm believes that this level could be overwhelmed by payables coming due in early January.

A government bailout not likely to help shares; lowering GM to Sell (PT zero)
Even if GM succeeds in averting a bankruptcy, Deutsche believes that the company’s future path is likely to be bankruptcy-like. They believe that the U.S. may ultimately need to provide GM with at least $10 bn in loans to keep the company afloat through 2009/2010, and potentially as much as $25 bn to fund GM’s cash burn and restructuring. While they believe that that GM’s secured creditors may get a par recovery, unsecured creditors may get very low recovery. Equity shareholders are unlikely to get anything. Firm is lowering their target on GM equity to $0.

Notablecalls: $4 level will be broken today. If you can find shares to short, GM is prolly headed toward $2.5 in the n-t. It's THAT bad. End of an era.

Las Vegas Sands (NYSE:LVS): Tug of War

There will be a tug of war today in Las Vegas Sands (NYSE:LVS) as two pieces of news are out:

- Merrill Lynch is downgrading the stock to Underperform from Neutral while lowering their tgt to $7 from $15. LVS needs to raise capital to cure US covenants, which it expects to violate in 4Q, and to fund growth projects. In base case scenario – building only Cotai sites 5/6, Singapore, Four Seasons condos and a reduced PA casino – Merrill estimates LVS needs to raise $2.75bn ($750mn to maintain covenant compliance, $2bn to fund growth). Their $7 PO assumes a common equity offering at $5.62, a 20% discount to the 11/7/08 close.

Capital raise, growth pipeline curtailment necessary
Firm estimates LVS will need to raise $750mn to $3.5bn in the form of convertible bonds, common/preferred equity, PIPE, or subordinated debt. This range encompasses sufficient capital to maintain US covenant compliance and: 1) fund its full growth pipeline, 2) proceed only with Cotai Sites 5/6, Singapore, the FS condos, and a scaled down PA casino, or 3) cancel all projects. See pages 4, 5, and 6.

Covenant issue, not a maturity issue, but default risk high
If LVS fails to raise sufficient capital to regain covenant compliance, it would need to seek amendments/waivers to its US credit agreement. If LVS were unable to secure amendments/waivers, its US subsidiaries would be unable to draw down on any available borrowings and it would be in default on its US facilities, airplane financings, convertible senior notes and senior notes. In a worst case scenario, there is a risk of bankruptcy.

- On the other hand NYT Dealbook is out with the following:

Casino giant Las Vegas Sands will detail its plans to handle its debt crisis early next week, according to a person close to the company, a development that may ease bankruptcy worries and could include another capital infusion by billionaire founder Sheldon Adelson, The Associated Press reported, citing a person close to the company.

http://dealbook.blogs.nytimes.com/2008/11/10/las-vegas-sands-to-detail-plans-next-week-report-says/


Notablecalls: I think MLCO is way late to the game here. Not saying LVS is a buy here but I suspect it's not going to be an easy short around the $7 level.

FYI - so you know its out there.

Wells Fargo (NYSE:WFC): Squeeze?

WFC: hearing two things:

- Barclays out saying S&P will have to buy 46.5 mill shares of wfc for a rebal today

- 75% of the 11b went to top 25 holders

Notablecalls: 46.5M shares is more than 10% of the offering size. 75% of the 11B going to big holders takes the flippers out of the equation.


FYI

Wells Fargo (NYSE:WFC): FBR reits Underperform, lowers tgt to $20

Friedman Billings Ramsey is reiterating their Underperform rating on Wells Fargo (NYSE:WFC) noting that following its $11 billion capital raise, WFC's tangible common equity to assets ratio is just 3.3%. Given this low level, and their expectation that WFC will have to come back to the market and raise more capital, they reduce their price target to $20 (from $25). Target equals to 2.0x 3Q08 tangible book value.

Why is tangible common equity important? It is the most important measure of a company's capital, as it is in a first loss position, and is a significant driver of a company's share price. If common equity is reduced by losses, book value shrinks and a stock will trade lower, regardless how much preferred equity is outstanding. FBR considers 3.3% tangible equity to assets a level of considerable leverage, particularly when faced with deteriorating credit quality, merger integration risk, economic weakness, and increased regulatory scrutiny. They also reduce 2009 operating EPS estimate to $1.70 (from $2.15), which largely reflects higher provision expense, based on WFC's guidance for approximately one-third of expected losses on Wachovia's loans to occur after the transaction closes. Firm initiates a 2010 operating EPS estimate of $2.65. Wells Fargo is clearly among the best depository franchises in the nation, and its position is only bolstered by its acquisition of Wachovia. While the acquisition makes strategic sense over the long run, they can't get comfortable with its near-term capital position or the shares' premium valuation.

Notablecalls: So now FBR slaps a $20 tgt on WFC. Can the shorts in WFC really have it this easy? I mean everyone was short the name yesterday in anticipation of a low pricing.

I don't think the shorts will wiggle out of this that easy.

FYI

Notable Calls Network (NCN): Las Vegas Sands (NYSE:LVS)

We caught some nice moves in Las Vegas Sands (NYSE:LVS) on Notable Calls Network (NCN) today:

- Around 7:42 AM ET this morning a top NCN member pinged me with the following snippet from LVS' 8K filing:

'..If the capital raising program is unsuccessful and the Company does not have access to the available borrowings under the U.S. senior secured credit facility, the Company would need to immediately suspend portions, if not all, of its ongoing global development projects and consider other alternatives. These factors raise a substantial doubt about the Company's ability to continue as a going concern..'

Knowing how sensitive the the Casinos have become to negative credit comments, I immediately distributed the snipped to all available NCN members with an added comment - 'This could potentially kill the stock'

There was ample size to be had short above the $10 level.

The stock quickly started to decline in pre mkt trading as the news of the 8K filing spread among trading desks.

Les than 15 minutes later the stock was already trading sub-$9 level and then sub-$8 level 30 minutes later.

- Around 8:25 AM ET another very knowledgeable NCN member pinged me with the following:

'..LVS sounds horrible but being told this is standard language in the 8k for Sarbanes, and could see TIER 1 to defend big soon..'

The stock was trading around $8 (or lower) and was clearly starting to find some buyers. So I distributed the comment to other NCN members as fast as I could, adding only a 'FYI ONLY' to the comment , implying it would be a somewhat risky bet.

The comment did make some sense, so I felt a heads up was in order.

The stock continued to zig-zag around the $8 level (+/- $0.50) until open when indeed we got some defenses from tier-1 firms.

The stock shot up $1+ in the first 15 minutes of trading offering a nice exit for the brave ones who had taken some long in pre mkt.

- It didn't take long for the fear (and general market weakness) to set in. The stock got crushed again over the next hours breifly hitting the low of $6.5 around noon.

- Around 1:10 PM we got word that Jefferis & Co was out defending LVS:

'..Jeff out with strong defend on LVS - particularly attractive on the recent massive sell-off. Shorter-term, we remain confident as we expect additional funds to be raised soon and news allowing vacation..'

As you can see, around $1 worth of upside was up for taking on this call. Mind you, in my humble opinion, Jeffco has one of the worst track records in the space but the call did work (for some reason). Guess people tend to forget & forgive after all :)

This is how Notable Calls Network (NCN) works - sharing the flow. We catch them every day.

Not all calls are this good (we get many wrong as well) but NCN is for the pros. You decide which calls to take and which one's to leave.

Want to be part of NCN?

It's easy. Just shoot me a brief email that includes a short description of yourself and your AOL nickname.

Please do note that contacts via IM are limited to people with:

- 3+ years of trading experience

- Access to quality research/analyst commentary

- Ability to generate and share (intraday) trading calls

I will not accept contacts from purely technically oriented traders, penny stock fans or people who have less than 3 years of experience in the field.

Auto Zone (NYSE:AZO): Downgraded to Underperform, $110 tgt at FBR

Friedman Billings Ramsey is out with a major downgrade on Auto Zone (NYSE:AZO) taking their rating to Underperform from Mkt Perform while lowering tgt to $110.

At a minimum, the firm does not think that AZO's stock price will be able to keep up with its peers, nor with the overall equity market. As with other retailers, sales have likely slowed for the sector since the end of AutoZone's fiscal year (August, 2008). When AZO had last reported, comp store sales were +0.6% and had been helped for that period by the tax stimulus. At Gabelli's after-market automotive conference yesterday in Las Vegas, the firm found most companies generally cautious about current sales trends. Therefore, they estimate that AZO's same-store sales are currently tracking at -2% for 1Q09E.

Separately, they are concerned that competitive pressures will accelerate for AZO, with AZO currently operating at hardline retail sector-high operating margins (EBIT) of 17.1% (LTM), which are up from 14.5% in 2002. Competitor O'Reilly Automotive (ORLY) vows to step up its investment in both inventory and price within its newly acquired CSK stores. This investment is also slated to take place in key markets for AZO (namely, the West Coast).

FBR has revised down their AZO earnings estimates;

Notablecalls: Talking to a especially well connected senior NCN member who thinks this one will kill the stock. He thinks a $10 haircut (towards $110-$112 level) may be in the cards here. - FYI

Southern Copper (NYSE:PCU): Downgraded to Sell, $10 tgt at Deutsche Bank

Deutsche Bank is out with a groovy downgrade on Southern Copper (NYSE:PCU) to Sell from Hold. According to the firm, the downgrade is based mainly on valuation and the stock's impressive rally - PCU has gained 70% in 6 trading days since hitting a low of US$9.84/share on October 27th compared with a gain of 18% for the S&P500 (and a 39% rally for competitor Freeport-McMoRan and a 14% move in LME copper prices). DB's Price Target of US$10/share continues to be based on 9x 2009E EPS of US$1.08 and, with PCU's stock at US$16.77/share, PCU trades at a rich 2009E PE of 15.5x, or ~2x the multiple of its peer group (7.3x).

Notablecalls: PCU has had a nice run since that Actionable call from Citigroup last week. I feel the stock needs a breather and DB's downgrade will bring just that. I see it coming back towards sub-$15 level in the n-t.

Microchip Tech (NASDAQ:MCHP) downgraded to Sell at Goldman Sachs

Goldman Sachs is out with a interesting downgrade to Sell on Microchip Tech (NASDAQ:MCHP) noting their checks indicate the market is starting to shift away from its core strengths, leading them to reevaluate the story. Firm says they have done extensive field work on the microcontroller market, prompted in part by Microchip’s proposal on October 2, 2008, to acquire Atmel’s MCU business. They have conducted more than a dozen meetings and calls with industry participants and contacts. They also spent two full days at the Embedded Systems conference in Boston on October 27-28, meeting with dozens of companies in the MCU ecosystem to garner insight into the state of the market. The slowdown in Microchip’s core growth and impact from increasing competition in MCUs is at the center of the downgrade to Sell from Neutral as well as a reduction in estimates and price target.

GSCO expects Microchip’s growth to be negatively affected by the following three points:

1) checks suggest an increasing pace of upgrades away from 8 bit to 16 and 32 bit, driven in part by ARM-based products;

2) Microchip is underexposed to fast-growing applications such as touch control and ultra low power;

3) Increasing competition, especially from large diversified companies (STM, TXN Freescale), which may lead to pricing and gross margin pressure in addition to slower growth. These factors, combined with what they view as an unwarranted 20% premium valuation in MCHP relative to its peers, lead the firm to a more negative stance on the stock. Firm adds that MCHP has outperformed the SOX by 20% in the past year and by 40% from the market low in 2002. They are lowering 6-month price target to $21 from $26.

Notablecalls: This is a pretty strong downgrade from Goldman. They went out and gathered new info. That's what every analyst should do. Goldman's tgt is way below current mkt price - I suspect the stock will get hit today.

How big of a hit?

Well, that depends on the market. If we are in a pull-back mode MCHP could see 7-8% downside today.

Nitrogen Expectations Reset, Upgrading AGU, CF and TRA to Buy - Citi

Citigroup is upgrading AGU, CF and TRA to Buys from Holds following the recent share price declines. Due to price volatility, their risk assessment is Speculative. While they lowered '09 estimates stand below consensus, which the market already views as too high, valuation on all three stocks seems attractive. Firm believes the majority of the fertilizer and corn price declines may be behind us and continue to prefer Top-Pick POT due to production discipline in potash.

Deep Recession Scenarios – While not base-case, Citi estimates that the '09 global grain stocks-to-use ratio could rise to 18.4% from 17.0% if corn use in ethanol remains flat YoY and could climb to 19.0% if feed demand also plateaus.

Stocks Discount $2.75 Corn – Revised '09 fertilizer price forecasts imply that the average retail cost to a US corn farmer would total $0.98 per bushel of corn grown, a historically high level, while the equities discount fertilizer cost falling to roughly $0.60/bu, which would be more consistent with a $2.75/bu corn price.

Ethanol Points to $4 Corn - Near-term, Citi sees corn prices continuing to track ethanol, since the marginal bushel of corn appears to be consumed in fuel production, with a high YTD correlation of 0.93. Firm estimates that ethanol plants can breakeven at $4.27/bu corn.

Cattle Points to $3 Corn - Longer term, the sustainability of $4/bu corn will depend on meat prices. Live cattle futures of $0.94/lb support $3.09/bu corn and they estimate cattle prices need to rise to $1.21/lb to support $4/bu corn.

Despite the strong bounce from the "bottom" over the past week, the North American fertilizer producers have still traded down by over 50% since nitrogen and phosphate prices began to decline in late September. While the equities never baked-in record spot prices and margins, the stocks suffered nonetheless, regardless of whether the company produces nitrogen, phosphate or potash, which have vastly different supply characteristics and margin structure.

Notablecalls: I really don't know how investors or traders should go about this call. Remember the morning Citi downgraded CF end of Sept? The stock took a 20pt+ dumper. Will we now see a 10-15pt rally in the name on heels of the upgrade? I just don't see it.

Give me some feedback.

Goldman Sachs (NYSE:GS): Ladenburg lowers to tgt $80 from $140

GS (SELL $80) NEW PRICE TARGET $80,, WAS $140..The problem in the short run is valuation. The company has as a policy the purchase of distressed assets. In the past this has proven to be a very successful strategy generating an estimated $10 billion in revenues. Today this strategy is falling under the new mark to market accounting rules. These rules are forcing write downs of the acquired assets and this may harm earnings.Additionally, the value of the Industrial and Commercial Bank of China holding may have been lowered by as much as 30%.

Notablecalls: Ladenburg's Dick Bove is among the Axes. Looks like GS is headed lower.

Goldman Sachs (NYSE:GS): Merrill Lynch calling for negative Q4 EPS

Merrill Lynch is out with a big slash on Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS):

GS 4QE (Nov) to -$0.49 from $2.98 and MS 4QE to $0.36 from $0.72. Key driver is terrible recent global equity market performance. Effect magnified at GS by significant exposure via prop, Pvt. Equity businesses, though equity rebound by 11/30 could change picture. Also, MS may have more comp. leverage given better 2H result, larger YTD accrual.

Trading volume surges on de-lev’g, but marks outweigh
Fixed Inc. trade volumes up sharply as de-leveraging triggered trading activity across Treasuries (+20%), MBS (+29%) Inv. Grade (+10%). But spreads gapped significantly from previous highs as credit markets seized in Sep: High Yield spreads +723bps and Inv. Grade spreads, +193bps QTD. Equity mkts have fallen sharply (S&P 500: -25%, NASDAQ: -27%), on very strong volumes (NYSE: +43%, NASDAQ: +22%).

Inv. Banking hurts as M&A weak; Debt U/W abysmal
M&A closings down 25% sequentially to $472bn, Anncts. also down following marquee deals last quarter (-18%). Annc’d/Completed ratio for 4Q is running 1.4x, indicating pick-up in backlogs. M&A fee backlog now $7.3bn, up 2.3% from 3Q end, but down 7.6% from last month, and off 21% from Oct-07. Equity U/W running down 43% QTD (-55% YoY), with Int’l driving weakness (-74% seq.). US up 52% on weak 3Q, though lucrative IPO business fell to zero QTD. Debt U/W extremely weak.

Goldman Sachs (NYSE:GS) price tgt is cut to $100 from $159. Morgan Stanley (NYSE:MS) tgt remains at $25.

Notablecalls: Phew, this is a BIG cut. One has to embrace the fact MER is calling for negative EPS in Q4 for GS. Yes, n e g a t i v e!

I see GS going below $90 level today.

Apple (NASDAQ:AAPL): iPhone production forecast is now under pressure- FBR

Friedman Billings Ramsey (FBR) is out with a very negative call on Apple's (NASDAQ:AAPL) iPhone demand:

Our most recent checks suggest to us Apple's iPhone production forecast is now under pressure. While our previous checks indicated that iPhone production would fall about 10% sequentially in calendar 4Q, our new checks indicate that iPhone production could fall more than 40% sequentially in 4Q. We believe asimilar amount of production was removed from the calendar 1Q build forecast, though there is still plenty of time to modify that forecast should further revisions be necessary ( - firm sees this neg for BRCM, MRVL, LLTC).

Notablecalls: Note that at the beginning of Oct Apple said iPhone builds remained healthy. Looks like iPhone demand has deteriorated over the past weeks. This is going to hurt AAPL.

PharmaNet Development (NASDAQ:PDGI): Shares are 98% off annual highs; Upgrade to Outperform, $7 tgt - Baird

Baird is out with a pretty interesting upgrade on PharmaNet Development (NASDAQ:PDGI) raising their rating to Outperform with a whopping $7 tgt saying they believe that PDGI is increasingly likely to successfully address the convertible debt-related liquidity concerns by early 2009. While fundamental performance is poor and market trends not fully certain in the near-term, they believe that resolution of bankruptcy risk fears may drive materially higher valuation, despite PDGI's ongoing challenges.

Massive valuation reset. PDGI shares are 98% off annual highs, due partly to unprecedented performance and bookings volatility and abysmal 3Q trends (preannounced 9/11), market-wide and CRO sector pressures. However, the firm believes current price is severely discounted for bankruptcy fears.

Liquidity issues. Before 3Q reporting, PDGI held $52M cash, looked cash flow negative for
2008, substantially slashed guidance on 9/11, and as the shares imploded the global financial crisis heightened and capital markets activity ground to a halt. Not good, given PDGI's $143.75M
in 2.25% convertible notes, which are putable at $41.08 on August 15, 2009.

Believe PDGI can remedy this crisis. PDGI hired advisors to explore 1) cash tender, 2)
xchange offer, and/or 3) open market repurchases, among other options. Baird believes that
ncreased cash position ($63.3M), A/R collection potential ($124M), $14.1M FCF in 3Q, and
growing interest from outside sources and particular importance of this deal to the advisers lends confidence. They see a range of potential solutions, most of which will be highly dilutive, but resolution should lift the shares sharply off the floor.

This is a highly speculative call, and financing resolution wouldn't remedy all of PDGI's issues. Firm slashed future estimates for f/x risk, unique mix and market risk, a poor bookings profile and implied dilution from any financing venue. While they see PDGI earning its current share price in 3-5 years, they applied deeply discounted multiples (7.5x P/E, 5.6x EV/EBITDA, ultra-conservative DCF) to arrive at $7 price targe.

Notablecalls: Well I'll be damed if PDGI doesn't trade towards $2.50 level soon. I think Baird's wording is strong and will generate some speculative interest in PDGI in the n-t.

Energy Conversion (NASDAQ:ENER): Margin pothole in mid-2009; Initiate with Sell, $17 tgt - Citigroup

Citigroup is initiating coverage of Energy Conversion (NASDAQ:ENER) with Sell and $17 target. While the stock is already well off its high, they think it can still go lower as they foresee a big margin "pothole" in mid-2009 against broad expectations of margin expansion. C2009 and C2010 EPS estimates are about 1/2 of the Street, and trading at 18x C2010 EPS estimate, if they are right, the stock still seems to have further downside. F2009 EPS $1.61 (consensus $1.65), F2010 EPS $1.35 (consensus $3.39). $17 target is based on 10x C2010 EPS of $1.71.

Thin film solar — ENER has two primary business: thin-film solar uniquely suited for rooftop installations (specifically building-integrated applications where subsidies in some regions are more favorable), and a materials segment principally focused on commercializing NiMH battery technology.

You can run, but you can’t hide — Citi acknowledges ENER's small scale and niche end market (BIPV) in regions like France + Italy may provide some near- term pricing cover, but those mkts are still not big enough to provide much headroom. Meanwhile, collapsing prices for competing x-Si modules should overtake its pricing umbrella by CQ1:09. These floodwaters should force it to get more aggressive on pricing or curtail capacity expansion. Further, unlike x- Si which may count on cheaper silicon as a margin offset or FSLR who can use scale + profitability to take share, ENER appears to have few near-term offsets.

Notablecalls: This call is going to hurt ENER.

Southern Copper Company (NYSE:PCU): Upgrade to Buy from Sell. High Quality Assets. Strong Balance Sheet - Citigroup (Actionable Call Alert)

Citigroup is out with a big call on Southern Copper Company (NYSE:PCU) upgrading the shares to Buy from Sell, with a $20 price target.

According to Citi, PCU fits their current recommended profile of low cost miners with strong balance sheets. They had listed PCU as a Sell with copper at $3.75/lb given huge downside potential.

This scenario has unfolded ($1.85 copper, PCU down 74% from peak) and upside now outweighs downside.

5 reasons to buy:

#1: The Worst Is Over For Copper — Industry studies suggest that $1.70/lb is the 90th percentile on the copper cost curve, i.e. less than 10% below current prices. This is where copper has settled during previous global recessions.

#2: Structural Shortages Not Resolved — Copper is Citi's preferred base metal given structural supply constraints. The price was $4/lb only six months ago.

#3: High Quality Assets + Good Balance Sheet — PCU has the lowest cost mines and the highest reported reserves of any major copper producer. The company has almost zero net debt with over $1.1b in cash.

#4: Buy Ahead of Strike Settlement, Not After — They cannot predict a timetable for ending the painful strike at PCU’s Cananea mine. Yet, this will eventually boost annualized EPS by 40%+ and is a positive catalyst in waiting.

#5: Low Valuation — PCU trades at 11x 2009 on “trough” copper and strikelimited production. Valuation is 5-7x on estimated mid-cycle EPS of $1.50-2.00, below fair value of 10-12x.

Notablecalls: I'm calling this one Actionable here below $13-$14 level

This call has it all:

- Beaten down stock, yet not your average inst. favorite.

- Low valuation (5-7x on estimated mid-cycle EPS)

- Catalyst ahead (Strike Settlement)

Will trade closer to $14-$15 level today.

PS: Goldman reits their Sell on PCU this morning:

We reiterate our Sell rating and $11 per share 12-month target price on Southern Copper. We have lowered our 2008-2010 EPS to $1.91, $0.68 and $1.12 per share from $1.95, $0.70 and $1.15, respectively to account for 3Q08 results, lowered production in 4Q08 and an increased cost structure despite expectations for an increase in sulfuric acid long term contracts, as power costs in Peru are not expected to abate until 2010. We believe that continued labor unrest in Mexico, softening copper and molybdenum prices and power costs will cap PCU’s stock performance in the near term in spite of the company’s high dividend yield (~5.0%).

NC: This will likley act as a drag. - so you know it's out there.

Thoratec (NASDAQ:THOR): Buy aggressively on any weakness in the stock. $31 target. - Canaccord

Canaccord is out with a very strong defense on Thoratec (NASDAQ:THOR) following a medical device correction (MDC) notifying physicians the percutaneous lead in HM-II may malfunction over time via
wear.

Action. *Buy aggressively on any weakness in the stock. $31 target.

*NOT a recall...clearing the air. *Released Friday post-close, this report has been broadly mistaken as an HM-II recall; which it is NOT. It is instead a notification mandated by FDA making physicians/patients aware the lead, which connects the pump with the external controller, may suffer “wear and fatigue [that] may result in damage that could interrupt pump function, require re-operation to replace the pump and potentially… serious injury or death.” There were only 27 lead failures in 1,972 HM-II implants over five years (five deaths; none caused by the lead).

*Is this “significant” to docs? Will it impact uptake? *After speaking over the weekend with several LVAD surgeons, Canaccord's key takeaways are: 1) every physician said the notice is NOT new news to clinicians, thus would not impact practice patterns at all; if anything they were surprised by the “low” incidence rate (27/1,972); 2) HM-II improves patients’ health so much their activity level increases dramatically (e.g., driving a Harley to work) which increases wear on the lead; 3) these patients are sick and have NO other options; as such lead fatigue is the least of their worries; 4) all of the investigators agreed this issue would have NO impact on the DT trial outcome.

*Weekend due diligence turned out quite bullish – think upside is possible to Q3 (report Thursday), Q4 and 2009 estimates. *Not only did clinicians quell initial concerns that this may adversely impact HM-II uptake, but our surgeon calls also suggested adoption by both transplant and non-transplant hospitals continues at a strong clip.

Notablecalls: Bounce candidate for sure. BofA is also out in defense. Could hit $20 level in a jiffy

PS: Lazard on THOR: Firm notes THOR fell ~50% after hours and they believe it is possible it could fall further on Monday as they believe the current market is not very comfortable with risk."

The Plot To Kidnap Obama...

Notablecalls: So now you know how I feel about the elections

Mosaic (NYSE:MOS): Mosaic Company Extreme Oversold Condition Changing Rating from Sell to Strong Buy with $60 Price Target - SISR

Strategic International Securities Research (SISR) is upgrading Mosaic (NYSE:MOS) to Strong Buy from Sell with a $60 price tgt (from $33). Firm is reversing their Sell rating on the stock to adding it to their recommended list.

Firm notes they are looking for current quarterly earnings to come in at $2.18, and full year estimate of $10.63 on revenues of $16.2 Billion. They believe that there will be a period of readjustment for Mosaic with both price declines and output reduced. Mosaic and the industry however are very effective at holding prices up by reducing output. SISR expects this to be the pattern for the coming months and even year or so as the price of these commodities adjusts to the international condition of a worldwide slowdown. Their projections are that output will be reduced by about 10% with prices declining by 20% to 30% over the next year. Given that price have increased by more than 400% this decline is relative by comparison.

Firm feels that given a historical PE of 12 for the industry their target is rather conservative with consensus currently being at $11.26 for 2009.

It is too early to make an extended forecasts but it is likely that just as on the upside this stock was overvalued, they believe it is currently undervalued.

Notablecalls: I bet most of you have never heard of Strategic International Securities Research (SISR) or their analyst Philip Miller covering Mosaic.

Yet, among the inst. side of the business, SISR carries weight. Why?

Just take a look at their recent track in MOS. They have played it almost perfectly:


These guys don't publish much. But when they do, you better take note.

Whole Foods (NASDAQ:WFMI): Downgraded to Underperform with a $9.50 tgt - Jefferies

Jefferies is out with a pretty significant negative call on Whole Foods (NASDAQ:WFMI) lowering their tgt to Underperform from Buy while lowering their tgt to $9.50 from $23.

The macro climate, always the greatest risk with WFMI, has worsened measurably in the five weeks since the firm launched coverage and now looks to be overwhelming the company's ability to drive even flat comps in 4Q08 and FY09. They have lowered their estimates, accordingly, as increased reliance on the macros (~50% correlation with employment) and near total lack of visibility on consumer spending or WFMI's demand elasticity leave them unable to recommend ownership of the shares.

Jeffco has lowered FY09 EPS estimate to $0.85, their prior worst-case scenario. They now forecast FY09 comps of -2.3% and 9 bps of margin contraction on related de-leveraging as they anticipate a steep fall off in spending by Whole Foods' consumers who are under mounting pressure from declining asset prices and falling disposable income.

The company's balance sheet is a growing concern, especially in the near term. Whole Foods had $25 million in cash-on-hand and approximately $135 million in availability on its credit lines as of 3Q. Firm notes they are unable to predict with accuracy the ability of Whole Foods to raise cash or reduce capital spending (lease adjustments/cancellations, supplier support etc.), but the issue, especially in a highly unsettled market and with no assurance from the company, is enough to make them negative on the stock, especially in the near-term.

Notablecalls: Jeffco's $9.50 tgt is bound to generate heavy selling interest in the name, I suspect.

I see the stock down 10%+ today.

Citigroup (NYSE:C): This is going to hurt

Hearing Goldman Sachs has reinstated coverage on Citigroup (NYSE:C) with a $11 tgt within 6 months; Also added to Conviction Sell list.

Notablecalls: This is going to hurt C

Mosaic (NYSE:MOS): Cargill Standstill Expires Wednesday October 22. Mosaic Buyout in the Offing? (Actionable Call Alert!)

Soleil's Gulley & Associates is out with a noteworthy call on Mosaic (NYSE:MOS) noting that Cargill's four-year standstill re Mosaic expires this Wednesday. The expiration sets up the possibility that Cargill could accept the gift that "Mr. Market" is presenting: accretively
increasing its ownership stake in Mosaic.

How accretive? Buyout of the 35% minority stake could boost Cargill earnings by more than 20%, given the fact that Mosaic is currently trading at just 2.7x consensus calendar 2009E EPS of $12.25.

Knowledgeable buyer. Given Cargill's extensive knowledge of the global grain markets, any action it takes with respect to its Mosaic ownership position will be closely watched. Cargill is a leading global grain processor and one of the largest private companies in the U.S., with F2008 sales of $120 billion and net income of $4 billion.

Mosaic shares are down 80% from the mid-June peak of $163, during which time the S&P 500 is down 30%. With Mosaic's equity market cap of just $15 billion, down from the peak of $72 billion, the 35% owned by the public is currently worth just $5 billion, down from the peak of $25 billion.

Mosaic currently accounts for roughly half of Cargill earnings:
- Cargill reported 1QF09 net profit of $1.5 billion
- Mosaic reported 1QF09 net earnings of $1.2 billion; 65% of which is $0.8 billion, approximately half of Cargill's $1.5 billion.

Quoting from Mosaic's F2008 10-K filing filed July 29, 2008:
"Standstill provisions in our Investor Rights Agreement with Cargill restrict Cargill from acquiring additional shares of our common stock from our public stockholders and taking other specified actions as a stockholder of Mosaic. These restrictions will expire on October 22, 2008. Following the expiration of the standstill period, Cargill will be free to increase its ownership interest in our common stock."

With Mosaic currently trading at a P/E of just 2.7x, Cargill's buyout of the minority interest it
doesn't own should be highly accretive to its net earnings. Firm ran twocases, at $50 and $82.5 per Mosaic share.

Maintains Buy and $127 tgt on MOS.

Notablecalls: This call sets up MOS as a short-term Actionable Call. I think the Cargill (65% owner of MOS) thing has gone unnoticed by the market here and will be in the spotlight as the standstill expires this week.

I think the stock could trade towards the $40 level as soon as today (with a little help from the market). I really think this comment can produce an explosive move in MOS this week as words starts spreading. Would be an ideal reason or a way to put some fire under the shorts.

Sunpower (NASDAQ:SPWRA): Downgraded at Citi and Merrill Lynch

Sunpower (NASDAQ:SPWRA) has some nasty comments from several tier-1 firms:

- Citigroup notes that following through on their call into what they thought would be the last good Q before big risk develops, they are downgrading SPWRA from Hold to Sell taking advantage of ~25% move post-earnings. The Street is already negative on this sector (firm highlighted ’09 supply shock back in May ’08), but this is a 100% stock-specific call. The bottom line here is that they think a big miss is coming in CQ1 as classic signs of inventory risk are developing in its components biz, while CQ4 should represent a multi-year peak in its margin structure. With respect to liquidity, it has access to cheap money through a term-loan but will continue to skate on thin ice as it looks unlikely to generate FCF through C2010. Risks to the call include potential for SPWRA to self-finance projects very near-term, which could mute some channel risk (albeit w/other ramifications). F09 (GAAP) from $2.29 to $1.92, F10 from $3.06 to $2.60. Target $55 to $30 on lower multiple on GAAP EPS.

- Merrill Lynch downgrades the stock to Neutral from Buy and are lowering their PO to $55 from $95, primarily on demand concerns in the U.S. residential solar market. They continue to think SPWR is one of the best positioned solar companies; however it’s difficult to ignore the current macroeconomic environment and the pressures it will put on consumer spending on capital intensive projects like solar. Firm's new PO reflects a 20x multiple on their ‘09 non-GAAP EPS (including options) and is supported by their return on operating capital model.

Though the ITC extension was a major milestone for the solar industry that should drive growth in the U.S. over the coming years, the firm is increasingly cautious on near-term residential solar demand given weakening economic and employment trends, falling home prices, and tightening credit. Sunpower has about 1/3rd exposure to the residential solar market and ~25% exposure to the U.S., which could put estimates at risk.

Sunpower’s component business exceeded expectations on both revenues and margins. Likewise, the company’s 4Q component business outlook was better than management’s prior forecast. However, the firm wonders how much of this is inventory stocking at dealers versus actual sell through given their concerns about residential related solar demand, particularly in the U.S.

- Goldman Sachs is lowering SPWRA tgt to $36 this morning.

Notablecalls: Citi's comments regarding a 'big miss' coming will kill the stock today. Short interest stands close to 40% so the action will be choppy.

Archer-Daniels-Midland (NYSE:ADM): Actionable Call Alert

- Merrill Lynch is upgrading Archer-Daniels-Midland (NYSE:ADM) to Buy from Neutral noting the recent ~40% correction in commodity prices has lowered ADM’s working capital needs and improved the company’s cash flow significantly. This improvement in cash flow has also allowed ADM to repay all the commercial paper ($2.2 billion) it had outstanding at fiscal year end (June). Firm expects commodity prices to continue to moderate, which should strengthen ADM’s balance sheet further.

Raising F2009 EPS estimate on LIFO gains: As crop prices rallied over the past few years, ADM’s earnings have been negatively impacted with nearly $800 million ($0.83 per share) in LIFO charges. With crop prices retreating, they are now estimating a sizable LIFO gain in F2009— $0.32 per share vs. previous $0.05 per share estimate.

Share repurchase possible given cash position: Given that ADM had roughly $2.8 billion in cash and cash equivalents on its balance sheet at F2008 year end (or approximately 25% of its current market cap), and considering the sell off in the stock over the last few months, the firm thinks the company will come under increasing pressure to repurchase shares. They would expect some movement on this front once the company has wrapped up its annual meetings with the rating agencies—scheduled to take place this month.

Notablecalls: I like this call.

- The shares have traded down ~60% over the last 6 months on a combination of factors, including: grain spikes early in the summer following widespread flooding in the Corn Belt; concerns about sustainability of earnings in the near term; concerns regarding demand destruction from higher crop prices, and more recently, concerns regarding the company’s balance sheet and its financial flexibility (MLCO comment)

The end-demand is still there, especially with prices now down. ADM stock has gotten hit along with the AG space but it's quite clear they stand to benefit from lower prices as the are merely processors.

- It's cheap, trading just 6.5x FY09 EPS estimate. Especially with MLCO upping their ests due to LIFO. Free Cash Flow yield stands at a whopping 30%+. Roughly 25% of their mkt cap is cash, so there are NO liquidity issues.

- ADM has managed to repay all the commercial paper ($2.2 billion).

- Catalysts ahead. Not huge ones but it would be nice to see ADM buying back stock here.

ADM's just so much better than the Ferts.

I suspect the stock will trade toward the $18 level today.

eBay (NASDAQ:EBAY): Merrill Lynch downgrades to Sell

Two firms quite negative on eBay (NASDAQ:EBAY) this morning:

- Merrill Lynch is downgrading ebay (NASDAQ:EBAY) from Neutral to Underperform with PO of $19 due to company specific issues and market share losses. They would expect eBay to Underperform the group if the sector rebounds. While their $1.87 EPS for ‘09 is only modestly below consensus at $1.90, with GMV on the threshold of declining, eBay faces an increasing need to restructure the high margin marketplace to drive growth given ongoing slowdown in transactions. A further restructuring of seller fees to attract larger sellers, or a tech. upgrade to better compete with other platforms (AMZN) could drive marketplace margins lower than current estimates. They don’t expect positive 3Q results or 4Q guidance.

- Deutsche Bank notes that while the good news last week was that eBay reaffirmed 3Q guidance (revs of $2.1-$2.15bnn; EPS of $0.39-$0.41), they think the bad news this week may be that the underlying metrics for 3Q and 4Q guidance may be a bit disappointing (owing to a consumer spending slowdown, forex headwinds and structural challenges). Simply put, they think ests could move lower in coming quarters, especially as recent seller checks indicate declining GMV activity. Hence, the firm reiterates their SELL investment rating, and believes that recent value-buyer interest may be a bit premature.

Notablecalls: I suspect EBAY will trade closer to $16 level today. MLCO negative call just ahead of the earnings release is pretty gutsy and usually works.

EBAY's a short above $17.

Apple (NASDAQ:AAPL): Upgraded to Overweight at JP Morgan

JP Morgan is upgrading Apple (NASDAQ:AAPL) to Overweight from Neutral. Apple’s model is far more diverse than previous vintages, and they think the staying power has been underappreciated. With its market share momentum likely intact, Apple in firm's view offers strong relative downside protection to the looming earnings reset that they expect to impact IT Hardware companies in coming weeks and again early next year.

- Diverse model provides staying power. There has been considerable investor concern lately over the Apple model losing steam, particularly if the consumer vertical rolls over. JPM estimates that the company’s total model exposure is about 70-75% consumer, but they think that Apple’s brand and market share momentum offer meaningful buffers to potential macro-driven pressures on the consumer.

- Retail expansion could sustain share gains and international momentum. JPM thinks a major force behind Apple’s growth story will be its diversifying revenue streams. They expect Apple’s penetration of the international markets to be measured in years and supported by the increasing build-out of the retail stores overseas.

- iPhone could lead to the enterprise or other content-rich devices. Firm thinks the iPhone could be a stepping stone to penetrating the enterprise. Also, they could envision the iPhone pushing Apple deeper into the set-top box market as the convergence of voice, web, data, and content continues.

- Expect numbers to come down across the sector, but Apple likely has a backstop beyond the first round. For Apple, they are revising their below-consensus revenue and EPS estimates. Looking to fiscal 2009, revenue and EPS estimates are $36.98 billion and $5.27, versus the Street consensus of $40.26 billion and $6.02.

- Apple trades at 18.8x JPM's calendar 2009 EPS estimate, versus the peer group average of 11.1x. With macro pressures showing no signs of dissipating, they believe it is time to play defense, and they think Apple can avoid having a major problem with the “E” in the price-to-earnings multiple moving through the coming year. Firm expects the company’s model to limit a series of major earnings cuts from unfolding in coming quarters, and they think this should support a valuation gap in Apple’s favor.

Notablecalls: Another valuation call. Things will be bad but Apple will be less bad than others. Does that really convince anyone?

Note that JPM is also upgrading IBM to Overweight with DELL, LXK and NTAP getting their ratings slashed.

Visa (NYSE:V): Upgraded at Piper and Morgan Keegan

Two firms are upgrading Visa (NYSE:V) today:

- Piper Jaffray upgrades V to Buy saying they believe this very high-quality franchise should be oninvestors' short list of stocks to own through this economic cycle. Firm is comfortable with Visa's earnings power through this cycle and over the long-term, despite financial/economic uncertainty in the markets and dollar strength; Visa's intrinsic value will continue to grow at a very attractive rate for many years to come.

Pullback in the share price, even with yesterday's recovery, has greatly improved the risk/reward, in our view, creating an attractive entry point for long-term investors; shares trading at 21x calendar '09 est. of $2.76.

Buffers against economic slowdown: debit (35% of pay. vol), non-U.S. & non-Europe pay. vol, new products, margin expansion on scale, op. leverage. Reducing fiscal '09/'10 EPS estimates from $2.77/$3.26 to $2.66/$3.22 on slower payments volume growth forecast.

Tgt is lowered to $72 from $81.

- Morgan Keegan upgrades V to Outperform noting the shares are down (36%) from highs on concern over economic sensitivity and technical selling pressures; Street 2009 op. EPS Consensus of $2.77 likely to be lower over coming weeks & technical factors could continue to weigh on stock.

They are modestly lowering 2008 & 2009 op. EPS to $2.19 (vs. $2.20 prev.) and $2.68 (vs. $2.76 prev.), factoring in softer global economic environment, currency headwinds, offset by positive pricing, and cost controls

Shares attractively valued at under 21x CY:09 op. EPS; Despite likelihood that US volumes have not yet bottomed & sequential card growth to remain negative in near-term – Morgan Keegan believes the long-term franchise value is highly attractive at current levels;

Notablecalls: Both are valuation calls. I see the stock hitting $62-63 today on these upgrades, if market holds up OK. Note that MoKe is upgrading MA as well on valuation basis.

Sovereign Bancorp (NYSE:SOV): Could a Deal with Santander be Imminent? - MSCO

Morgan Stanley has some interesting comments on Sovereign Bancorp (NYSE:SOV) noting the co is in late-stage talks topotentially be acquired by Banco Santander (already a 24.9% owner of SOV), according to an article published by the Wall Street Journal late Sunday evening. According to the WSJ, a deal could be announced as early as Monday with a deal price of roughly where SOV shares closed on Friday at $3.81. Neither company has commented on the potential transaction.

Selling out at the wrong time for the wrong price?

Firm's initial reaction is that they would be quite surprised if Sovereign management were to sell the company at the current stock price. Friday’s closing price is just 58% of its estimated 3Q08 tangible book value per share of $6.61, and well below where the overall midcap bank group is trading at 1.6x. Their view is that after disclosing and writing-off its poor-performing GSE and CDO investments, the company had put its most pressing problems behind it. Unless the company has not disclosed a material adverse item (which is possible), they see little reason why the stock should be trading substantially below its tangible book value.

Potential Treasury actions a near-term positive: In addition, if the Treasury were to announce a plan to guarantee bank deposits and liabilities through preferred equity, as suggested by MSCO chief US economist, in an effort to restore confidence in the US banking system, SOV’s closing price on Friday may prove to be much too low. Any improvement in confidence in the banking system could indirectly result in a much higher equity valuation for the SOV shares.

Reits Overweight, $9 tgt.

Notablecalls: Just fyi - not making a call ahead of a potential announcement.

Amusing:

10/10/02 - low in SPX and end of tech bear mkt
10/10/07 - all time high in SPX
10/10/08 - today

Apple (NASDAQ:AAPL): Another Bite of the Apple - BMO Capital

BMO Capital is out cautious on Apple (NASDAQ:AAPL) having recently visited or spoken with sales reps at 32 Apple and 30 AT&T stores in various parts of the US and the UK. Apple is not escaping the gravity of weakening consumer spending, in firm's view.

Negative – for the first time in years, store reps are indicating sales have slowed, in CPUs in particular. While the data was not universal, about onethird of sales reps they spoke with noticed some slowing, which is a significant change from past checks. Conversations with AT&T sales reps indicated no recent change in iPhone run rates, but the firm has elected to cut their FY2009 iPhone forecast nonetheless.

In recent visits to 32 stores across the country, 11 indicated that sales had slowed in the past 30 days, while 20 indicated that sales had stayed about the same, and one indicated that sales had improved. While store checks might not seem that negative, over the past five years of checking Apple stores, wthey have received consistently steady and/or improving sales comments. This is the first time they have heard store reps describe slowing sales since Apple began its stock run five years ago. In addition research provided by ChangeWave Research indicate slowing sales.

How Might Apple Guide for the Dec Q?

The question is not if Apple will guide below Street estimates, but how far will Apple guide
below Street estimates. For example, for the September quarter, the firm suggested that Apple would guide to $1.00 when Street estimates were approximately $1.30 – too great of a delta, and the stock sold off. For this quarter, with the inclusion of significant deferred revenues, they believe estimating quarterly guidance is more difficult.

BMO's analysis suggests that Apple would guide to around $10.0 billion in revenue vs. the Street at $10.8 billion and their $10.1 billion estimate. They also believe that Apple will guide EPS in the range of $1.45-$1.50, compared with current Street estimates of $1.71 and their $1.60.

Maintains Outperform on AAPL due to stock’s recent decline relative to their target price of $120.

Notablecalls: Not making a call here but letting you know it's out there.

Reluctant

I'm reluctant to put out any calls on the page in this environment. Don't think analyst calls get much attention.

NC

Early Morning Tid-bits:

- Goldman Sachs downgrades First Solar (NASDAQ:FSLR) to Sell and adds to their Conviction Sell List

NC: The stock will get hit today in a major way. There is little support for FSLR in this mkt. I would not be surprised to see the stock hit par in the coming months. Note that SPWR gets the boot from GSCO as well. Piper lowers FSLR tgt to $250 from $350.

- Morgan Stanley reits Overweight and $175 tgt on Monsanto (NYSE:MON) noting soft commodity price bearsare lurking around the wrong stock. While they do not foresee a $3 bushel of corn, the firm notes they have always modeled Monsanto's pricing power as if the farmer was only going to realize $3 corn (and $8 soybeans). The market appears to have a dispositive view (i.e., expecting $3 corn and for it to result in demand destruction for Monsanto’s products)

Firm believes that farmers will earn a 72% ROIC on the triple stack in F09 at $3 corn (and would still earn a 45% ROIC at $2 corn) and therefore see little risk of demand destruction should new crop corn prices decline further from their present position.

NC: I think MON should be on your bounce radar today.

- FBR is upgrading Freeport-McMoRan Copper & Gold, Inc. (NSYE:FCX) to Outperform with a $85 tgt with a view that the stock is oversold and that the risk/reward is now compelling. Valuation multiples have contracted significantly, and free cash generation is strong even if copper prices were to contract further.

NC: This is a major call in my opinion. When was the last time you saw this one upgraded? FBR has been skittish on the space for quite a while. FCX is trading around 5x 2008/2009 EPS. This one could reach $48-$50 level in a jiffy.

- RBC Capital is out with some positive comments on Research in Motion (NASDAQ:RIMM) saying the BlackBerry 9530 Storm, RIM's first widescreen/touchscreen Smartphone, is expected to be announced this week (possibly Wednesday in London) in a joint Verizon/Vodafone/RIM press conference. Launch still expected 1st week November; they expect 850k Storms shipped Q3/Q4, and 3-4M units FTM. Exclusively at Verizon/Vodafone (who do not carry the iPhone), Storm may be aggressively marketed by these carriers and RIM into the holidays.

Maintains Sector Perform and $90 tgt.

NC: I think you should add RIMM to your bounce list. The stock acted very nicely yesterday. We may get some follow-through today.


Hope it helps,

NC

Research in Motion (NASDAQ:RIMM): Deutsche Bank lowers tgt to $50 from $70

Deutsche Bank is lowering their price target on Research in Motion (NASDAQ:RIMM) from $70 to $50 on concerns that the Bold will not ship on time at AT&T, causing RIM to possibly miss its quarter. The transition to a consumer-facing company has proven more challenging for RIM than expected. Pricing and margins are likely to remain volatile, meriting a Sell rating.

Firm thinks AT&T is unlikely to finish testing the new 3G Blackberry before the end of October, which makes it likely that the Bold will not ship until November, later than the company expects. While the Storm seems to be shipping on time at Verizon, they do not expect it to be readily available until mid-November and it is unlikely to be sufficient to offset the delay in the Bold. This raises the probability, in firm's opinion, that RIM will miss their November quarter guidance.

They thinks RIM may have bitten off more than it can chew. The company is pushing up against its limits in developing a 3G stack and other software for its new devices. The shift to a consumer-centric model has also eroded gross margins, increased ad expense and leaves the company further exposed to product cycles.

Notablecalls: Ouch. Just letting you know it's out there.

Mosaic (NYSE:MOS): Bounce?

Several tier-1 firms defending Mosaic (NYSE:MOS) following results announced last night:

- Morgan Stanley notes the "miss” relative to expectations came on the COGS line, as Mosaic's revenue came in above our expectations despite lower than anticipated volume. Not surprisingly given the widely reported $100 decline in DAP prices over the past month (i.e., trade magazines have been reporting prices around $1,00 per tonne for several weeks now), Mosaic is choosing to protect price by reducing DAP production during what it believes will be a limited period of demand softness. Morgan Stanley expects this move to shore up recent DAP price weakness and continues to note that on a go forward basis lower sulfur production costs are largely offsetting the current reduction in DAP prices. Importantly, potash results were inline with firm's expectation and the company made no alterations to its potash production expectation. Finally, given the global economic environment, what should not be lost in all of this is that Mosaic now has ~$700 million of net cash - a substantial cushion that makes it more than capable of matching supply with demand to protect price.

Given the present equity market environment, investors will likely be overly disturbed by the "miss" and cast a more skeptical eye on the production cut (i.e., will it be enough to maintain status quo DAP price levels?). That said, with Mosaic shares trading down ~20% in the post-market to $55 per share, they believe that a near-worst case scenario is now priced in for the balance of F2009.

Maintains Overweight and $155 tgt

- Citigroup maintains their Buy and $150 tgt noting that combining the macro environment and guidance cut, MOS shares are likely to trade-off today, but farmer economics indicate underlying farm demand for fertilizers should remain strong over the full application season. In firm's opinion, the market will have a difficult time focusing on the expanding margins until phosphate prices stabilize, which is why they view the production curtailments as a positive, since this should shorten the inventory adjustment period and tighten the market for calendar 2009;

Notablecalls: I think MOS represents a bounce candidate for today. Note management conf call started today at 11:00 AM ET - suspect they will do their best to soften the hit.

Looking to buy in the $56-$59 range.


UPDATE: Merrill Lynch downgrades the Ferts:

Cheap stocks likely to get cheaper – downgrading fertilizers We continue to believe that low global grain inventories will create a favorable multi-year demand environment for input providers and that it will take several years for significant new capacity to come on line. While the stocks remain inexpensive they appear to be driven more by price and earnings momentum than by valuation. With phosphate prices falling, nitrogen prices peaking and potash prices rising less than expected there is considerable uncertainty surrounding the near-term earnings outlook as underscored by Mosaic’s earnings miss and downward guidance. The near-term fertilizer demand outlook has become more uncertain as the recent decline in corn prices has reduced the margin advantage over less fertilizer intensive soybeans. We are reducing our ratings from Buy to Underperform on Mosaic, Potash Corp., Agrium, Intrepid, CF, and Terra.

NC: I continue to view the space as a bounce play here. MLCO call is more of a sentiment call than based on any data. Takes a special (didn't say retarded!) person to downgrade a stock following a downside move of $160 -> $55.

Hartford’s (NYSE:HIG): Capital Concerns Look Significantly Overdone - Morgan Stanley

Morgan Stanley recommends investors take advantage of what they believe is unwarranted
pressure on Hartford’s (NYSE:HIG) stock reflecting escalating concerns over the company’s capital adequacy.

While there is little doubt the company has taken some substantial hits this quarter, they still arrive at the conclusion that its capital position is more than adequate to support its ratings.

Even if we were to see further market deterioration, driving the need for incremental capital, MSCO's bear-case would still suggest substantial upside in the stock from present levels.

Capital Concerns Appear Overblown… The outlook for Hartford’s financial strength ratings were reduced to negative from stable at Fitch, which triggered concerns among investors over whether it has sufficient capital. Analysis leads the firm to the conclusion that these concerns are largely unwarranted, with other companies such as Principal and Genworth, even Lincoln, likely to face capital challenges before Hartford.

Valuation now looks Compelling: Hartford is facing highly challenging credit and equity market conditions, which is leading the firm to reduce estimates for both 2008 and 2009. However, even after taking a conservative view on the fundamental outlook, the valuation looks compelling, trading at just 4.7 times 2009 estimate and 75% of Y/E 2009 expected reported book. To justify where the stock is presently trading, they estimate it would need to raise $7.0 billion of equity at price of $30, which illustrates just how far the stock is now trading away from view of its intrinsic value.

What’s next: Firm expects management will provide an update to investors on its capital position through a press release in the coming days. Beyond that, earnings are due to be released on October 29.

Notablecalls: Worth a bounce, no?

TARP Update -- Humpty Dumpty Is Dusting Himself Off - Keefe

Keefe Bruyette notes Tuesday was a relative quiet day in Washington but initial indications seem to confirm their belief contained in Tuesday morning's note that they believe that Congress will try to resuscitate the TARP later this week.

Negotiations on resurrecting the TARP were low key on Tuesday. However, the consistent theme of comments throughout the day was that Congress would try to bring the TARP bill back for another vote.

The pace of negotiations will likely pick up on Wednesday. One item that seems to have some traction and that may get added to the bill is increasing the deposit insurance cap from $100,000 to $250,000. That should make the bill more popular with several members as this idea is seen as a protection for Main Street. Both presidential candidates support the idea.

Businesses that could be affected if the credit markets continue to seize up have become more engaged and are pushing members who voted "no" to support the plan if it comes up for another vote. This is a very important move as it changes the focus of the TARP from a bailout of Wall Street to that of economic stabilization for the entire country and should help give political cover to members of Congress who have been wary of being seen as bailing out Wall Street.

There are also reports that phone calls to congressional offices in support of the plan picked up after the vote failed on Monday.

They think a vote on Thursday in the House is a little optimistic and even Friday is a stretch. They think it is more likely that a vote will come over the weekend or on Monday.

Notablecalls: Fyi

Apple (NASDAQ:AAPL): Pullback in Apple shares overdone – reiterate Buy - Goldman Sachs

Goldman Sachs is out defending Apple (NASDAQ:AAPL) noting broader Broader concerns about softer consumer demand will continue to cause Apple shares to be volatile in the near term. However, the recent sell off creates an opportunity as they think Apple will outperform the group through the end of the year, driven by iPhone unit upside and a strong product pipeline. Firm thinks yesterday’s -18% decline (underperforming S&P 500 by -910 bps) more than captures the concerns over Mac growth in a weakening spending environment, making Apple shares attractive at current levels. In the intermediate-term, they think Apple shares could move back to the $145 level, applying a 1x PEG multiple on calendar 2009 earnings estimate recognizing iPhone as current period revenue.

Implications
In the near term checks suggest that Apple will meet GSCO's 2.7M unit Mac estimate and probably show some upside to iPhone unit forecast of 4.26M. This, combined with favorable component prices, should drive solid gross margin and earnings at least in line with GAAP earnings estimate of $1.07. At the same time, they continue to expect Apple to roll out new products over the next several months, including a new line up of notebooks within the next few weeks. Valuation

Goldman's 12-month price target of $200 is based on target P/Es, growth-adjusted earnings multiples, cash flow metrics, and DCF.

Notablecalls: I suspect AAPL's due for a bounce here. It still has $6-$7 EPS power in the n-t and possibly $10 EPS power in the L-T.

TARP -- Putting Humpty Dumpty Back Together Again - Keefe

Keefe, Bruyette notes that on Monday, the House rejected legislation creating a Troubled Asset Relief Program, 205-228. In the wake of the vote, Congress is trying to pick up the pieces and pass the bill. Firm thinks it will take a few days to put a deal back together. In the end, they continue to believe that a bill will be passed.

Washington failed for several reasons to pass the TARP. However, Wall Street's reaction to the failure will, in Keefe's opinion, move Congress to finish the bill in several days.

Political leadership in both parties needs to do a better job of convincing voters of the need for the TARP and they think the market's reaction to the bill's failure will help them make that case.

Cooler heads will, in their opinion, prevail over the coming days. House members will need a few days to decompress but the firm continues to believe that a bill will pass in the coming week or two.

They think the biggest question is how Congress will pass a bill—what will it look like? Increased deposit insurance coverage could be part of a revised bill.

Notablecalls: Hence we are in green territory in the pre market.

My game plan for the open/pre mkt

I suspect we will get a nice bounce off the open:

- Wachovia (NYSE:WB) looks horrible but apart from that I see no real reason to be overly pessimistic here.

Whoever buys it will end up with a large mkt share. Bullish for the L-T. I wish it will be Wells buying WB. Citi has too many problems.

The only problematic area is tech with fin. exposure. So I'm not sure I will be buying Research in Motion (NASDAQ:RIMM) just yet. Although they have confessed already and got its beating.

Even Apple (NASDAQ:AAPL) is worth a nibble in the $115-$117 area. AAPL's not my call but coming from a heavy hitting tier-1 trader on NCN (Notable Calls Network).

Hope it helps,

fyi

Apple (NASDAQ:AAPL): Actionable Short Call

Apple (NASDAQ:AAPL) shareholders are going to bleed from their eyeballs today:

- Morgan Stanley is out with a downgrade to Equal Weight (from OW), lowering their tgt to $115 from $178 revising FY09 EPS growth to 6% (9% below the consensus forecast) on the back of several concerns. First, PC unit growth is decelerating and the remaining source of growth is increasingly in the sub-$1,000 market where AAPL does not play. Second, even in the best of scenarios AAPL’s EPS growth will decelerate meaningfully from June quarter levels. A combination of tough compares and investments in iPhone growth drive December quarter EPS to a decline of 8% YoY (down from +29% EPS growth June). Lastly, they believe multiples for high growth stocks will continue to compress in the current environment and in the context of 6% FY09 EPS growth assumption (and consensus estimate of 15.5%) they don’t believe AAPL is immune to this trend.

Firm continues to believe AAPL’s 2-3 year market share story is intact (but now more back-end loaded) and if the market is willing to look through near-term estimate reductions (and increasingly at cash flow), the stock could work from recently reduced levels.

- RBC Capital is downgrading AAPL to Sector Perform on: 1) reduced visibility to growth, margins; 2) elevated risks to valuation.

Sept RBC IQ/Changewave data (4,300) shows Mac purchase intentions suddenly moderating, with 29% intending to purchase a Mac laptop next 90 days, down from 34% Aug. 26% intend to purchase a Mac desktop, down from 30% Aug. These are the biggest declines in 2-1/2 years. In a separate survey, Sept RBC IQ/ Changewave data (4,100) shows 40% of consumers plan on spending less on electronics next 90 days, the weakest outlook ever seen.

While Mac momentum remains strong (16% Q/Q, 34% Y/Y) RBC Q4 Mac outlook becomes 2.9M (3M prior) and we see elevated risk for disappointing Q1 guidance, below street at $11B and $1.75. They still expect Apple's global PC share to rise to 4.1% CY09, from 2.9% CY07; F09/F10 iPod unit outlook drops to -3% Y/Y (prior 10-12%).

Notablecalls: I think AAPL could test the $120 level today and there could be risk to even lower levels. It's all about what RIMM had to say. Not to mention DELL's recent comments re: demand and pricing.

Actionable short anywhere above the $123 level.

These two were the biggest AAPL bulls.

Research in Motion (NASDAQ:RIMM): Colour on qtr

Research in Motion (NASDAQ:RIMM) in focus today.

Let's start with the downgrades:

- Deutsche Bank lowers their rating to Sell from Hold, lowering their tgt to $70 from $120. RIM has become more dependent on hardware sales with time. This means that they have to keep running to keep up with changes in consumer tastes and risk missing numbers if their products do not hit. The company stated they expect operating margins to improve as R&D spend decreases, but also seemed to indicate ad spending would continue to grow. The company guided Q3 gross margins to 47% and expect the margins to move into the mid 40s in FY10. This is well below DB's estimate of 50%. RIM pointed to a large number of new product lines for the cut. In part, the firm thinks this is indicative of their struggle with 3G technologies among other issues.

- RBC Capital is downgrading RIMM to Sector Perform from Outperform, lowering tgt to $90 from $165 for 2 reasons: 1) reduced visibility to recovering margins; 2) increased risks to growth from the macroeconomic environment.

RIM's strong fundamentals (great products, competitive advantages, execution) and momentum
from RIM's pending product cycle remains; However, RIM's thrust to invest in market share ('land grab') " pressuring GMs 370bps Q/Q and 670 bps F10 -- caught them/market by surprise, raising risks to valuation.

Reflecting a more conservative outlook, they are lowering F09/F10 outlook to $11.3B rev/$3.62 EPS ($11.4B, $3.84 prior) and F10 to $16.4B rev/$4.68 EPS ($17.5B, $6.00 prior).

The upgrades:

- Raymond James upgrades RIMM to Outperform from Mkt Perform while cutting their tgt to $110 from $140.

- CSFB is upgrading RIMM to Neutral from Underperform noting that following the company’s F2Q results, they are lowering their EPS estimates by 5%/2% for FY09/FY10 to $3.64/$4.58 and revising price target to $80; however, given that their margin concerns (now evident), are likely to force Street numbers toward their already below consensus estimates, they raise rating to Neutral.

Within a robust smartphone market (expect 2H08 and 2009 growth of 60%) they believe that RIM’s share will be flat globally at about 14%. This lack of share gains is in contrast to recent years and is driven by our expectations for share loss at AT&T in the U.S. (where they believe share is unsustainably high at around 70%) especially given the success of the 3G iPhone. Given this, the firm now projects FY09/FY10 volumes of 26.7mn/40.8mn and expect revenue growth to slow to 53% in FY10, structurally lower than the triple digit growth seen in recent times

On their new estimates, RIMM shares trade on a P/E of 17.5x which they believe is reasonable especially given that consensus expectations may now become more realistic.

The positives:

- UBS is keeping their Buy rating and $165 tgt unchanged noting gross margin pressure now make RIMM more of a top line conviction play.

- JP Morgan is keeping RIMM at Overweight saying that though they advised waiting until after the F2Q09 print before buying RIMM on potential weakness, they are disappointed that the weakness originates not in a temporary setback owing to a product transition but in a permanent step-down in gross margins. That said, they believe this pullback is an excellent entry point into a tremendous growth stock, with the multiple at a multiyear low, even using significantly lower FY10E EPS.

- TD Newcrest believes the company is making a bet on market share at the expense of gross margin. They understand the bet and think it is a smart move. But overall, the Street tends to be short sighted and this explains the slaughtering of the stock in after hours trading following the release of these results. Firm's updated forecast shows slightly lower EPS, but they think RIM could still grow faster than reflected in their estimates. At these prices, they are very bullish on the stock despite target price reduction to $140 from $170 previously.

Notablecalls: Well, RIMM's now below the $80 level I was talking about couple of days ago. Earnings power is still around $5-6 per share. I suggest you wait til Monday or even Tuesday to make some buys in the low $70's.

Corrections Corporation of America (NYSE:CXW): Bounce candidate following BofA defense?

Bank of America is out with an interesting defense on Corrections Corporation of America (NYSE:CXW) noting that over the past week, they have not come across any negative news items or concerns that would justify the -11.6% move in CXW’s stock (versus +0.3% for the S&P500).

Actually, to the contrary, siance its presentation at their conference (Sep 16), there have been several positive data points from CA that they believe provide incremental visibility into earnings over the next several quarters while also eliminating the CA overhang concerns from last quarter’s earnings call in early Aug.

Positive CA data points: 1) inmate re-ramp at Tallahatchie facility in sight (incremental EPS visibility into 4Q while eliminating overhang concerns from 2Q earnings call); 2) inmate transfers since Aug 1 running at levels that are in-line with 1H08 levels (which they believe is above management’s expectations); and 3) CA budget signed with no material changes to CDCR’s operating budget (versus January’s proposal).

Firm would use recent weakness, which they believe to be unfounded, as a buying opportunity. They believe the recent string of positive data points from CA point to greater earnings visibility through 2009 and highlight a CA-based catalyst roadmap through year-end.

Reits Buy and $32 tgt, offering potential 37% return.

Notablecalls: May get a bounce out of this one.

MEMC Elec (NYSE:WFR): Bounce play on RBC upgrade and lowered bar

RBC Capital upgrades MEMC Elec (NYSE:WFR) to Outperform from Sector Perform with a $53 tgt based on a likely renewal of demand growth in the solar sector led by pending passage of an 8-year extension and expansion of the U.S. solar tax credit program and a compelling valuation which they believe indicates over-pessimism baked into current share prices. Firm notes their upgrade is in conjunction with their macro report upgrading the entire solar sector, as they believe sector stocks are near a bottom. Their caution on WFR this year has been predicated on silicon oversupply risks in 2009 exacerbated by the company's execution issues. But they believe the fundamental headwinds in semi pricing, deterioration of spot poly prices in 2009 and a limited upside to Q3 #s from hurricane Ike impact is more than baked into the shares - trading at ~6x FY09E of $4.84. While FY09 sensitivity analysis is difficult given minimal mgmt biz unit disclosure, the firm believes current multiples reflect no growth, an unlikely prospect given oversupply timeframe likely shifted to 2H09 or 2010 on U.S. subsidy action and potential additional catalysts from even more robust U.S. energy policy with a new administration.

RBC highlights the company's $1.4B cash position, no debt, and ~$150M cash flow per qtr. A 6x forward multiple represents an historically low mark, even looking back to previous semi cycle downturns and large discount below the 9-11x multiple of comps such as Wacker Chemi and Shin-Etsu.

Q3 Outlook: they believe the shutdown of the Pasadena plant for Hurricane Ike soaked up the remaining buffer in mgmt's Q3 guidance. Although the plant was not damaged, raw material deliveries were delayed and the firm believes some labor was impacted as they took care of their families. They are adjusting their Q3 estimates to Rev/EPS of $573M / $1.06 from $603M / $1.13.

Notablecalls: Senate passed alt energy extension 90-2... the house will vote with the senate most likely.. Spain ups susidy to 500MW from 300MW... finally some relief for the solar names.

I spoke to one Solar watcher this morning who noted the only other sector he can compare Solar to is the mobile sector that took off in the 90s... it had its downturn in early 2000s (most names being cut down to 1/3 of their value) but eventually rebounded due to fast growth and M&A.

With WFR guiding today..I think it represents a nice potential bounce play. The bar has been lowered.

Research in Motion (NASDAQ:RIMM): FQ2 preview - JPM

JP Morgan is previewing Research in Motion (NASDAQ:RIMM) noting that at the threshold of a new product cycle, they would remain buyers of RIMM but the possibility of conservative F3Q guidance (associated with uncertain product timing) could present investors with a more attractive entry point. Firm believes the uncertainty will be resolved by the Feb. quarter, by which time, they believe RIM will be poised to capture percentage points of market share from incumbent handset OEMs, and demonstrate earnings leverage off a new level of operating expense.

JPM expects F2Q09 results to meet or beat expectations, owing to continued strength in Pearl and Curve sales and strong early adoption of the Bold, internationally. Firm looks for RIMM to report $0.85 GAAP EPS on sales of $2.95bn, which puts them slightly below consensus (but without strong conviction). They acknowledge cyclical headwinds but believe enterprise adoption remains solid, and consumer adoption is accelerating. Channel and end-market results reveal massive share gains. JPM looks for RIMM to ship 6.2m units, at a blended ASP of $349 and for 2.63m net subscriber additions. A massive 28% q/q increase in operating expense was signaled in prior guidance. They see modest risk to gross margins, offset by potential unit shipment upside.

They expect RIMM’s new product cycle to propel the firm into a leadership position in the global handset industry. There is, however, near-term risk relating to the timing of product introductions – which could lead RIM to issue cautious F3Q guidance. However, the firm believes the uncertainty will be fully resolved by F4Q09. They are looking for F3Q guidance to align with their forecast of $0.98 GAAP EPS on sales of $3.0bn, 7.3m units, $346 ASPs, 2.94m net subscriber additions.

Maintains Overweight RIMM is trading at 18.6 times FY10 PF EPS estimate of $5.25, in line with the mean of coverage, but a 41% discount to its two-year historical average of 31.5 times.

Notablecalls: RIMM's a niche player but growth is surely slowing. While everyone is still talking about the growth potential outside of US, it's becoming clear Bberry will not be as successful there. Also, now we have HTC, NOK and even GOOG coming out with similar QWERTY handsets.

I have been talking to one savvy RIMM watcher who thinks RIMM will need to hit $80 for him to become more positive on the name. I tend to agree with him here.

RIMM's a great trading vechicle but n-t risk is to the downside.

Hansen Natural (NASDAQ:HANS): Expect a deal of some sort between HANS and KO to happen by tomorrow - UBS

UBS telling clients they expect a deal of some sort between HANS and KO to happen by tomorrow.....thinks most likely scenario is a distribution deal with an equity stake of 30-40% in which case stock trades to mid to high 30's....thinks outright acquisition is still a possibility (worth $50)

Notablecalls: Fyi. Could fly.

PS: I was pinged on HANS saying this call was actually a rehash of UBS' last week note. So the comment it ripped out of context. Disregard. Sorry.

Apple (NASDAQ:AAPL): Piper Jaffray raising Sept qtr ests - fyi

Piper Jaffray is out positive on Apple (NASDAQ:AAPL) raising estimates for September to EPS of $1.17 vs. Street at $1.11, and revenue of $8.37b vs. Street at $8.07b.

This quarter the iPhone will, for the first time, account for a meaningful percentage of booked revenue. Last quarter (June) it was 4%, and this quarter (Sept) they are modeling for it to be 21%. Given iPhone should account for 21% of booked revenue in this quarter, they are also publishing a metric that assumes the entire iPhone sale is accounted for in the quarter the phone is sold. Firm is calling this booked EPS and revenue. New booked EPS is $1.60 and booked revenue is $10.15b in the Sept. quarter.

How They Arrive At 2.8m Macs. Through the first two months of the Sept. quarter (July and Aug.), Mac NPD data is up 32% y/y. In the month of July, NPD data was 43% y/y and in Aug. units were up 23% y/y. However, they note that Aug. was a tough comp, as a redesigned iMac was released in Aug-07. But even if one assumes continued y/y growth of 23% in the month of Sept. (which they believe is conservative), the overall y/y growth rate for the full quarter would come in at 29%, implying 2.8m Macs in the Sept. quarter.

Piper's $250 price target is based on 27.4x (from 27x) CY09 booked EPS of $9.14.

Notablecalls: Note that JMP Securities was out with some cautious comments on the Macbook Pro demand. Just a fyi. No call here.

The Pakistani example of banning short sales:

A smart hedgie pinged me with the following:

An extreme example comes from Pakistan where the local SEC responded to a stock slump last month by banning short selling and limiting daily price declines to 1% while allowing them to rise by 10%. The initial reaction was a massive 8.6% one day rally followed by 15 straight days of slumping prices amid extremely low turnover, the worst such period for that market in several years. As rioting investors stormed the Karachi Stock Exchange last week, the rules were rescinded."

Notablecalls: fyi