Tag - Technology

News equals noise. When are people going to get it?

Technology was the driving force behind a rise in both small and mid-cap stocks on Tuesday.

The Standard & Poor's small-cap technology index rose 3 percent. Bank of America Merrill Lynch analysts are impressed with the balance sheets of small-cap technology stocks, noting that they should outshine their large cap brethren.

The Russell 2000 Small Cap Index and the Standard & Poor's Small Cap 600 both gained 2.3 percent in value on Tuesday. The technology-heavy Nasdaq Stock Market gained a similar 2.2 percent, while two other major U.S. stock indexes also held their ground - both the Dow Jones Industrial Average and the Standard & Poor's 500 closed 1.6 percent higher.

Friday's Top Performing Small Cap Stocks (AIRM, CASC, ZQK, SOLR, IPSU)

The discord in the Middle East has made some investors wary about putting money to work anywhere in the region, including Israel. But while the Arab world churns, Israel remains relatively stable and is a great place to find exciting technology companies.

The best thing is that many of these stocks pay dividends.

Special delivery to investors from Premiere Global Services (NYSE:PGI): an undervalued growth stock that has the wind beneath its wings. With a bevy of business communications applications and a selling model that makes accessing them easy, Premiere is gliding along in a sector fraught with missed connections.  

The company’s fortunes are tied to its Premiere Global Communications Operating System (PGiCOS), which offers business clients handy access to a number of applications from the Internet. Premiere provides a range of technology to automate and simplify everyday corporate needs including conferencing (both web and audio), document delivery, desktop fax, e-marketing and notifications.

Considering the economic drag on telecommunications, Premiere’s performance has been surprisingly strong. The telecommunications services sector, of which Premiere is a member, was down 15.8% year to date through July 15, 2008. At the same time, Premiere was up 5% on the year. Other telecommunications companies considered peers include AT&T (NYSE:T), down 21%, and Verizon Communications (NYSE:VZ), down 19%.

Founded in 1991 and headquartered in Atlanta, Ga., Premiere’s business may seem mundane but its results are anything but. Its flock of business applications pits it against various competitors depending on need, and provides a competitive advantage compared to single-product vendors. None of Premiere’s rivals has a similarly comprehensive on-demand platform, nor — Premiere says — a similar drive to directly integrate and embed their technologies into a customer’s business . . .

Television and cable systems are undergoing a revolution, as the old concept of sending out a signal to whoever’s watching at any given moment falls by the wayside.

Consumers can set a DVR to catch the shows they want to watch later, or they can use on-demand technology that utilizes systems such as those from SeaChange International (Nasdaq:SEAC).

Any parent who has had to deal with a screaming kid because of a missed “SpongeBob SquarePants” episode can appreciate on-demand video now provided by many cable or satellite companies, usually in an upgraded service package.

The Internet, with its growing cache of always-available content, is a threat to broadcasting, and to survive the shows must be available when consumers want them. While decades-old DVR technology is a cheap alternative to pricey cable add-ons, on-demand content eliminates one variable that trips up viewers: forgetting to set the dang timer.

SeaChange International, which got its start in 1993 in digital advertising, develops and sells the fail-safe hardware, software services and equipment needed to generate revenue and retain the eyeballs of viewers. After churning up two turbulent years of losses, SeaChange appears to have sailed into the calmer waters of profitability.

Of six analysts surveyed by Thomson Reuters, four have SeaChange at “strong buy,” one has it a “buy” and the other has it at “hold.” The median long-range price target is $10.75, or roughly 30% of upside potential from where SeaChange has recently traded.

SeaChange hit a 52-week high of $8.45 on Monday, more than 60% better than the 52-week low of $4.95 on Nov. 8. In the past year, investors seem hesitant to keep the stock above $8 — they waffled after it touched $8.25 in December, although it held around $9 in early June 2007. Shares were last above . . .

Riddle me this, Batman: what do you get when you cross the density of DRAM with the speed of SRAM and non-volatility of FLASH?

If you don’t know, that’s OK — the answer is a digital memory storage technology that’s still largely in the development stage. It’s called “magnetoresistive random access memory,” or “MRAM,” and those following its evolution say it has the potential to revolutionize electronics as a smaller, faster, more energy efficient and durable way of storing and sending your data, iTunes songs or even digitized Batman reruns — if that’s your thing.

This nanotechnology relies on electron spin rather than charge to acquire, store and transmit information. Albert Fert, the co-recipient of the Nobel Prize for Physics in 2007, recently predicted that MRAM and its offshoots are good candidates to be the “universal” memory of the future. This kind of Holy Grail talk has helped feed market hunger for MRAM’s promise, but there are still plenty of developments, testing and marketing hurdles yet to cross - not to mention the pesky little issue of cost competitiveness.

Companies leading the charge include Cypress Semiconductor Corporation (NYSE: CY), Freescale Semiconductor (NYSE: FSL) — the Motorola Inc. (NYSE: MOT) spinoff, which was the first company to bring the memory to market, IBM Corp. (NYSE: IBM) and last but certainly not least, Eden Prairie, Minn.-based NVE Corp. (Nasdaq: NVEC).

“Spintronics,” as the highly durable applications of this technology are called, is something that has attracted several big chunks of Department of Defense R&D change for NVE. The company has built itself around researching and marketing new uses of the technology for harsh battlefield conditions in addition to medical and industrial applications where absolute reliability is required.

Shares of SPSS Inc. (Nasdaq: SPSS) are rising following news after the close on Monday that the provider of predictive analytics technology and services reported fourth-quarter results that beat Wall Street’s expectations.

The Chicago-based company reported that revenue for the quarter ended Dec. 31, 2007, increased 12% to $79.6 million from $71.1 million a year earlier. Eight analysts polled by Thomson Financial were expecting revenues of $75.3 million.

Net income was $10 million, or $0.50 per share, compared with $2 million, or $0.10 per share, during the final three months of 2006. Analysts had forecasted earnings of $0.38 per share.

“The fourth quarter was a good end to a good year,” said CEO Jack Noonan in a statement. “Revenue growth in the quarter was powered by new sales of our data mining tools, which augmented another solid increase in new licenses of our statistical products.”

SPSS licenses its software to organizations seeking to optimize interactions with their customers. New license revenues were $42.1 million during the fourth-quarter, up 18% from $35.8 million in the fourth quarter of 2006.

“I think they had a nice finish to a nice year,” said Peter Goldmacher, an analyst with investment bank Cowen & Co., in a phone interview.

However, Goldmacher is maintaining his “underperform” rating on the stock.

“One of the things I worry about is that this is a small company that has had three years of growth by fixing broken pieces of its business,” he said. “I don’t think there is margin upside by making improvements to their business.”
“They have a lot of work ahead of them,” Goldmacher concluded. “It’s going to be very hard to continue to improve the business.”

At close, shares of SPSS Inc. (SPSS) had added $5.70, or 18%, to $37.20. The 52-week high of $47.87 was reached on Aug. 1, 2007. The 52-week low of $29.01 was established on Feb. 7.

Newport Corp. (Nasdaq: NEWP) shares are climbing after the Irvine, Calif.-based firm said it projects its fourth-quarter earnings to exceed its previous guidance range of $0.16 to $0.20 per share.

The firm expects revenue to be in the upper range of between $110 million and $115 million. Wall Street analysts, on average, expect the firm to post a fourth-quarter profit of $0.18 per share on $112.8 million in revenue.

Newport said it expects the new fourth-quarter orders it received to be in the range of $128 million to $130 million, exceeding its previous expectation of about $110 million to $115 million.

"The momentum we are generating in our markets will allow us to begin the new year with a strong backlog and will position us well for a return to revenue growth in 2008,” CEO Robert J. Phillippy said in a statement.

In morning trading, NEWP shares are up 12.26%, or $1.49, at $13.64. Over the last 52 weeks, shares have ranged from $11.85 to $20.90.

Shares of Avocent Corp. (Nasdaq: AVCT) have dropped to a new 52-week low on news before the start of trading that the maker of software and IT technology announced preliminary fourth-quarter revenue that disappointed Wall Street.

The Huntsville, Ala.-based company reported that it expects fourth-quarter revenue to be between $155 million and $157 million, which is well below the $173.72 million projected by 11 analysts polled by Thomson Financial. During the fourth quarter of 2006 the company brought in $164.9 million.

Chairman and CEO John Cooper explained that Avocent was negatively affected by several deferred orders and lower IT investment activity among some U.S. customers, including those in the financial services industry.

“We believe some customers delayed projects as they are taking additional time to contemplate industry developments and to assess macroeconomic factors,” said Cooper in a statement. “These factors were not apparent in our international sales where we experienced solid growth in Europe and Asia.”

“This is probably industry-wide; Avocent is not the only one affected,” said Eric Kainer, an analyst with investment bank ThinkEquity Partners, in a phone interview. “Anyone who has broad exposure to the financial industry is being impacted.”

Avocent reported that it is working with U.S. distributors to reduce the level of inventories held by them at the end of the fourth quarter.

As for the company’s growing international business, Kainer does not see how that segment can offset weakness in the North American markets.

“It’s a lot to make up for,” said Kainer, who currently has a “buy” rating on Avocent’s stock. “I don’t see any way in which it could fully make up for it.”

Final results for the fourth quarter ended Dec. 31 will be released on Jan. 24.

At 1:11 p.m. ET shares of Avocent Corp. (AVCT) had retreated $3.68, or 18%, to $16.53. The previous 52-week low of $20.04 was established on Jan 4, while the 52-week high of $35.64 was reached on Feb 2, 2007.

Shares of Intraware, Inc. (Nasdaq: ITRA) are gaining traction today after the provider of asset delivery and management for enterprise technology companies said Monday that Business Objects, a provider of business intelligence solutions, has renewed its agreement with the small cap for its SubscribeNet digital asset and entitlement management products.

Shares of Intraware (ITRA) jumped 12.62%,or $1.64, to $5.80 at 10:04 a.m. ET. Shares of Intraware have been trading in the range of $3.80 to $6.83 for the past 52 weeks.

Acacia Research Corp.’s (Nasdaq: ACTG) subsidiary, Computer Acceleration Corp., said this morning that the District Court for the Eastern District of Texas ruled against Acacia in its patent infringement trial with Microsoft Corp. (Nasdaq: MSFT), finding that the patent-in-suit was not “infringed” and “invalid.”

Acacia Research’s subsidiaries develop, acquire and license patented technologies. Acacia Research’s subsidiaries control 84 patent portfolios.

Shares of Acacia Research (ACTG) spiraled down 23.73%, or $4.07, to $13.08 in pre-market trading. Shares of Acacia Research have been trading in the range of $10.87 to $17.92 for the past 52 weeks.

Top Image Systems, Ltd. (Nasdaq: TISA), a developer and marketer of information recognition systems and technologies, said this morning that it anticipates a loss for the third quarter of 2007, while Wall Street anticipated a profit.

For the three months ended Sept. 30, the Israeli company said it expects to book revenues of between $6 million to $6.3 million, and as a result anticipates recording an operating loss for the third quarter of 2007 will be in the range of $1.4 million to $1.8 million. Last year Top Image broke even on revenues of $5.25 million.

The company attributed the anticipated loss partly to increased expenses in the quarter related to its incorporation of CPL and Asiasoft into TIS.

An analyst polled by Thomson Financial was forecasting earnings per share of $0.05 on revenues of $6.63 million.

Top Image said it will release its third quarter results on Nov. 28. The company said the delay in reporting is due to additional time required to apply U.S. GAAP reporting requirements to the firm’s recently acquired Asiasoft financial results and also to fully consolidate Asiasoft's financial results for the reported period.

Shares of Top Image (TISA) were halted in pre-market trading.

“Many technology stocks have been in the doldrums for some time,” says George Putnam, publisher of The Turnaround Letter. As a result, he says, the makers of semiconductors, which are at the heart of most technology products, have been suffering as well.
 
“But the semiconductor stocks are notoriously cyclical, and when they come back, they could rebound with a vengeance,” say Putnam, a long-standing expert in distressed stocks and turnaround situations.

In this newsletter watch, the turnaround specialist looks at the semis, offering several low-priced, small-cap turnaround speculations. Readers should be mindful that as low-priced, small-cap turnarounds, these are high-risk situations and the usual caveats should be considered.
 
“There are signs that a rebound in semiconductors may be just beginning,” he says, pointing to Intel, which he calls the 600-pound gorilla of the group, as recently reporting improved results.
 
“The industry has suffered from a glut of older, lower-margin products, but that glut is finally being worked off. Moreover, new applications ranging from high definition television to a new generation of smart phones are creating demand for new, higher margin chips,” Putnam says. And while the stocks of some of the bigger players, like Intel, have already begun to trend upward, he says that a number of other semiconductor stocks are still trading at or near multi-year lows.
 
Conexant Systems, Inc. (Nasdaq: CNXT), he says, is a leading provider of semiconductor technology targeting all avenues of broadband communications, from DSL chipsets and digital set-top boxes to home-networking processors and game consoles. 

IMAX Corp. (Nasdaq: IMAX) shares are up after the entertainment technology company announced before the opening that it has signed a deal with Wanda Cinema Line Corp. to install the 10 new theaters in China, with the first two installations scheduled for December. The new theaters are expected to be open by 2010, which will bring the total number of Chinese IMAX theaters to 39.

"IMAX is a world-class brand that has been received exceptionally well across Asia and we are very excited to include the IMAX theatre business as an integral part of our present and future growth," Bao Jiazhong, Wanda Cinema Line’s general manager, said in a statement.

All 10 new installations are scheduled to be installed as part of new multiplex constructions, Canada-based IMAX said. The first two installations will be in the cities of Changsha and Changchun.

Wanda Cinema Line operates 15 multiplexes in China. The deal will make Wanda Cinema the biggest IMAX exhibitor outside North America.

In pre-market trading, IMAX shares are up 7.49%, or $0.31, at $4.45. Over the last 52 weeks, shares have ranged from $3.32 to $5.68.

Remember what a dividend is? It’s an old-fashioned way of creating shareholder value by giving shareholders money.

Dividends have gone out of fashion with the focus on high-tech growth stocks. Investors are looking for capital gains on their investment, not dividend yield. But there is a way to make high-growth tech stocks pay dividends right away – with an investment in Hercules Technology Growth Capital, Inc. (Nasdaq: HTGC).

Hercules has a current dividend yield of 9.9%, one of the highest among Nasdaq stocks. The specialty finance company has carved out a niche in “venture debt” – it makes loans of $1 million to $30 million to private technology and life sciences companies that are backed by venture capital or private equity firms.

Hercules has paid a dividend every quarter since it went public in June 2005 – it just declared its eighth consecutive quarterly dividend, $0.30, for the second quarter, ended June 30. The reason: it has to pay dividends, because it is organized as a business development company (BDC), making it a registered investment company under the Investment Company Act of 1940, the same act that governs mutual funds. To maintain this status, which exempts it from paying corporate income tax, the company must distribute 90% of its net taxable income as dividends.

Of course, you have to have income to pay dividends. Though its track record is still short, Hercules has made its high-risk loans with minimal losses – of the $700 million loan commitments made since its founding in 2003, the gross loss has been $5 million and the net loss, after bankruptcy workouts, has been $1 million. One of the reasons for this strong record is that Hercules has forged relationships with more than a hundred top venture capital and private equity firms to provide it with a high-quality deal flow.

Technology is a sector often overlooked in the Canadian small-cap market, which is precisely why small-cap specialists Martin Dufresne and Patrick Potvin, portfolio managers at Montreal-based Fiera YMG Capital Inc., have been steadily boosting their holdings.
 
"We are finding select stocks that trade at modest valuations relative to the companies' growth prospects," Dufresne said after finishing a recent evaluation of the sector based on what he described as “industry reports by sell side analysts, meetings with managements and internal research.”

Generally, said Potvin, "our strategy is to sell off low growth or disappointing companies and put the proceeds into those companies that we consider have a more promising growth profile."

As a result, according to Potvin, the portfolio managers say they have been reducing holdings of companies that have become large cap and parlaying the proceeds into smaller caps that "generally tend to have higher growth prospects."
 
Fiera YMG has roughly C$21-billion under management, of which about C$6-billion is in Canadian equities. Dufresne and Potvin manage a number of small-cap Canadian portfolios including the Millennia III North American Small Company fund. This is part of the segregated family of funds managed by Fiera YMG for Desjardins Financial Security.

The Millennia III North American Small Company fund has almost 50% in the U.S. equity market via futures contracts linked to the Russell 2000 Index (NYSE: IWM). The rest is invested in Canadian small caps and managed by Dufresne and Potvin.

Jazz Technologies Inc. (Amex: JAZ) surged in after-hours trading Monday after the holding company of Jazz Semiconductor, Inc. announced it expects higher second quarter revenues than previously anticipated.

For the three months ended June 29 the semi-conductor company said it now expects revenues to be in the range of $52 million to $52.5 million, compared with previous guidance of $48 million to $50 million.

The consensus of two analysts surveyed by Thomson Financial was for revenue of $48.9 million for the second quarter.

The Newport Beach, Calif.-based company said results were positively impacted by increased demand.

"We are seeing signs that the specialty semiconductor sector and Jazz, specifically, are emerging from the inventory correction,” said Gil Ameilo, chairman and CEO of Jazz Technologies. “We expect for this momentum to continue in the second half of the year and beyond, translating into gradual sequential growth."

Electronic components maker American Technical Ceramics Corp. (AMEX: AMK) agreed to be acquired by passive electronic components manufacturer and supplier AVX. Corp. (NYSE: AVX) Monday for $231 million in cash.

Shares of American Technical Ceramics (ATC) surged 42% or $7.18 on the news to hit a fresh 52-week high of $23.99 at Monday's close.

“The acquisition will enhance AVX’s capabilities in the Advanced Products Group,” Brian White at Jefferies & Co. wrote in a research note. “[However] we question the premium paid for ATC, which may be a function of the AVX's overly liquid balance sheet and the attractive margin profile of ATC.”

AVX will pay $24.75 in cash without interest for each outstanding share of small-cap American Technical Ceramics’ stock. The purchase price represents a 47% premium over ATC’s closing price of $16.81 on Friday. Each option will be converted into the right to receive $24.75 in cash minus the applicable exercise price.

White further commented that the “transaction does not have much overlap with AVX in terms of component lines as ATC focuses on high reliability products, while adding strong RF capabilities.”

Not all that long ago, the term wireless applied specifically to voice communications. But as is understood by anyone who has discovered the texting feature on their cell phones, the global positioning systems in their cars, or attends company conferences remotely from a laptop in their local Starbucks, wireless voice technology today is just one of a multitude of wireless applications.

The term wireless in the year 2007 applies to the transmission of voice, video and data and covers a long and growing list of uses from accessing the Internet over a handheld device to preventing theft of truck cargo by implanting a GPS device in the trailer. Quite simply, the industry is booming.

Wireless technology helps corporate executives work more effectively on the road, keeps blue collar workers more efficient in the field, and is providing a lot more entertainment options for the living room, the car and the daily subway commute.

The sheer number of wireless devices and applications as well as potential users makes it difficult to even measure the size of the market.

One good statistic is that consumer spending on wireless technologies is projected to exceed spending on wireline, or fixed wire services by the year 2010. And anecdotally, there is growing evidence that more and more consumers prefer using their cell phones for text and entertainment data than to talk. That shift is spurring demand for new wireless technologies.

All the companies that years ago made money selling traditional land-line telephone equipment today are pouring resources into wireless networks, and in recent years many of these industry giants have grown even larger through mergers and alliances. France’s Alcatel merged last year with Lucent Technologies – resulting in Alcatel-Lucent (NYSE: ALU) -  while Nortel Networks Corp. (NYSE: NT) formed a partnership with Microsoft Corporation (Nasdaq: MSFT) to build wireless technologies for corporations. Cisco Systems, Inc. (Nasdaq: CSCO) has increasingly been investing in Internet gear to allow for the delivery of voice, video and data to wireless devices, and Motorola Inc. (NYSE: MOT) is actively acquiring smaller businesses that make technologies to enable wireless communications.