Tag - Cogo

A controversial credit downgrade of U.S. government long-term debt by Standard & Poor's late Friday has left global financial markets in tatters as stock investors struggle to find firm footing.

Large or small, stocks are expected to take it on the chin early this week as governments wrestle with resurrecting their beaten-down economies.

The fact that gold has crossed the $1,700 mark for the first time and that Treasuries are on the rise show where investor sentiment could be headed.

Oil-Dri Corp of America (Nasdaq:ODC), Columbia Banking System Inc. (Nasdaq:COLB) and Mid Penn Bancorp Inc. (Nasdaq:MPB) are among the biggest percentage losers in Monday's trading among companies with market capitalizations under $1 billion.

Also included among the results: AgFeed Industries Inc. (Nasdaq:FEED), Chindex International Inc. (Nasdaq:CHDX), BTU International Inc. (Nasdaq:BTUI), Broadwind Energy Inc. (Nasdaq:BWEN), Force Protection Inc. (Nasdaq:FRPT) and Cogo Group Inc. (Nasdaq:COGO).

Salix Pharm (Nasdaq:SLXP), Fundtech Ltd. (Nasdaq:FNDT) and Crocs Inc. (Nasdaq:CROX) are among the most actively traded companies in Tuesday's trading among companies with market capitalizations under $1 billion.        

Also included among the results: China Sunergy Co Ltd. (Nasdaq:CSUN), Dyax Corp. (Nasdaq:DYAX), TeleCommunication Systems Inc. (Nasdaq:TSYS), Cogo Group Inc. (Nasdaq:COGO), GeoResources Inc. (Nasdaq:GEOI) and ArcSight Inc. (Nasdaq:ARST).  

Here are the most actively traded companies among small caps:  

Small-cap stocks weathered several storms today to punch out a higher close as investors were able to look past a sudden reversal higher in crude oil futures, renewed credit crunch worries amid a collapse in mortgage finance stocks and safe-haven money flow into short-dated treasury products. Oversold conditions and bargain hunting spurred by merger activity were enough to pull small-cap stocks into the green. The Russell 2000 (NYSE:IWM) rose 6.68, or 1.01%, to 670.44.

Heading through midday trading, the market tried to carve out a modest recovery rally in the wake of Wednesday’s big collapse, but a sudden afternoon surge in crude oil prices stomped out bullish sentiment in equities — at least for a while. Crude oil prices charged more than $5 a barrel higher, climbing back above $141 on supply concerns out of Africa and Brazil and amid ongoing tension in the Middle East.

Workers in Brazil threatened to initiate a five-day strike next week, while a ceasefire in Nigeria threatened supply from Africa. Meanwhile, Iran said it has been test-firing more missiles, as a “lesson for enemies;” U.S. officials warned Iran that it would defend its allies. The potential for supply disruption and geopolitical tension was enough to spark the sudden resurgence in crude oil prices, which had tumbled some $10 a barrel off recent record highs.

S&P 500 futures actually made their daily high this morning before the regular market even opened, rising to highs in conjunction with a better-than-expected headline figure on the weekly jobless claims report. The report showed a decline in claims to 346,000 which was much better than the 395,000 forecast and a big improvement on last week’s 404,000 figure. However, there were some “devils in the details” of the data, which hinted that all is not well in the labor market.

“Continuing claims, which lag initial claims by one week, rose 91,000 to 3.202 million. The insured unemployment rate moved up to 2.4% from 2.3% in the prior week. The insured unemployment rate has held at 2.4% in three out of the last five weeks. The noticeable decline in initial claims is a distortion and is not an indicator of a market improvement in labor market conditions,” Asha Bangalore, economist . . .

Cogo Group Inc. (Nasdaq:COGO) is sinking more than 47% today after the company provided a dreary company update ahead of the opening. The China-based company makes customized design solutions for technology product manufacturers. The company said sales and profit margins should stay on course with projections, but both will be pressured by weak demand and competition in the mobile handset sector. The company also said it anticipates a slowdown in demand for mid- and high-end cell phones while lower margin handsets will make up the majority of sales. Cogo Group will report its second-quarter earnings on Aug. 6, after the close.

In today’s trading, shares of Cogo Group are at $4.14 at 9:54 a.m. ET, down $3.71 from Wednesday’s close. The stock hit a 52-week low just after the opening bell. Shares have ranged from today’s $4.14 to $22.50 during the past year.

The Russell 2000 (NYSE: IWM) began in the green but soon fell deep into the red on news of problems at Bear Stearns.

At 10:05 a.m. ET, the small-cap index was down 13.77 points, or 2.03%, to 665.94. The Dow Jones Industrial Average (INDU) had shed 208.17 points, or 1.71%, to 11,937.57.

Stocks opened in positive territory on news before the opening that consumer prices surprisingly stayed put in February, according to the U.S. Labor Department. The core index, which excludes the costs of food and energy, was also unchanged. Economists were expecting both measures to rise 0.2%.

The numbers make it easier for the U.S. Federal Reserve to lower interest rates when it next meets on March 18; however, consumer prices have increased 4% on a year-over-year basis, above the Fed’s preferred range of between 1% and 2%.

The bullish sentiment evaporated quickly, though, on news that J.P. Morgan Chase & Co. (NYSE: JPM) and the New York Federal Reserve will loan money to Bear Stearns (NYSE: BSC) to help it deal with its liquidity problems.

Bucking the negative trend is Exelixis Inc. (Nasdaq: EXEL). The biotechnology company reported before the start of trading that Genentech Inc. (NYSE: DNA) has exercised the option to further develop and market Exelixis’ experimental cancer drug XL518.

The Russell 2000 (NYSE: IWM) is posting large losses with less than an hour left in the session. At 3:10 p.m. ET, the small-cap index was down 12.67 points, or 1.92%, to 647.44. The Dow Jones Industrial Average (INDU) had declined 140.19 points, or 1.18%, to 11,753.50.

Stocks small and large are falling as recession fears take hold on Wall Street. Friday’s disappointing jobs report, which showed that payrolls plunged 63,000 in February, led many observers to conclude that the U.S. economy is either in or will soon be in a recession.

A report by investment bank The Goldman Sachs Group, Inc. (NYSE: GS) released before the start of trading forecasts that the U.S. Federal Reserve will respond by lowering its target federal funds rate to 2% by late April.

An analyst with the New York-based company thinks the Fed will lower its target interest rate 0.5% during its next two regularly scheduled meetings, the first of which is on March 18. However, the report claims that an emergency rate cut as early as Monday can’t be ruled out.

The federal funds rate, the rate commercial banks charge each other for overnight loans, currently stands at 3%.

The Russell 2000 (NYSE: IWM) futures are rising and the small-cap index will likely open in the green.

Small-cap stocks are set for a bullish opening on news that General Electric Co. (NYSE: GE) reported a fourth-quarter profit from continuing operations of $6.82 billion, or $0.68 per share, compared with $5.95 billion, or $0.58 per share, a year earlier. The result matches analysts’ expectations.

Investors will be paying attention to the Reuters/University of Michigan preliminary consumer sentiment index for January, which will be released at 10 a.m. ET. The index measures consumers’ willingness to spend money. Economists are expecting to see a small decline.

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Comtech Group, Inc. (COGO), up 10%.
• MedCath Corp. (MDTH), up 9%.
• Globecomm Systems, Inc. (GCOM), up 9%.

Biggest percentage losers:

• Seattle Genetics, Inc. (SGEN), down 5% on news of a 10 million share public offering priced at $9 a share.
• Monarch Casino & Resort, Inc. (MCRI), down 4%.
• Isle of Capri Casinos, Inc. (ISLE), down 2%.

The Russell 2000 (NYSE: IWM) futures are higher but the small-cap index could be weighed down by news of poor housing starts.

The slump in the housing sector has apparently deepened, according to a report by the U.S. Census Bureau that shows a decline in December housing starts.

Housing starts fell 14% to a seasonally adjusted annual rate of 1.006 million units, below November’s downwardly revised total of 1.173 million. Economists were expecting to see a smaller drop to 1.15 million.

What’s worse, the housing sector does not appear to be headed for recovery.

That’s because building permits, a sign of future construction, fell 8.1% to an annual rate of 1.068 million units. Economists were expecting a smaller decline.

In other economic news, investors will be paying attention to U.S. Federal Reserve chairman Ben Bernanke’s congressional testimony. Concerns about the overall state of the economy have increased calls for some sort of response to prevent a recession.

Observers and economists widely expect the Fed to lower its target interest rate when it next meets on Jan. 29 and 30.

Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Comtech Group, Inc. (COGO), up 10% on news it has reaffirmed its 2007 guidance due to strong business.
• Smith & Wesson Holding Corp. (SWHC), up 8%.
• Brigham Exploration Co. (BEXP), up 7% on news it has discovered three wells.

Biggest percentage losers:

• Jones Soda Co. (JSDA), down 4% on news of an analyst downgrade.
• Provident Bankshares Corp. (PBKS), down 4% on news of a fourth-quarter loss.
• ANADIGICS, Inc. (ANAD), down 3%.

Chinese companies may soon see their raw materials costs drop. According to a report released today by Susquehanna Financial, policy changes enacted in China, effective this month, may cause raw material costs to drop, but might also place upward pressure on labor costs.

Among the policy initiatives the investment bank cites are China’s new labor contract law, lowered import taxes on 45 categories of imported goods, as part of the WTO concessions, and a mandate by the All-China Federation of Trade Unions for 80% of China’s foreign-funded and private enterprises to form trade unions by the end of 2008.

“We view the timing of these events as a one-two punch aimed to raise real wages of Chinese workers, while minimizing the impact to economic growth and unemployment rate by bringing down raw material costs in key industries,” Susquehanna Financial analyst Adele Mao wrote in a research note.

The policies could affect mainland China-based companies in both the near-term and long-term by causing gradual increases in labor costs, while causing raw material costs to fall.

Among the small-cap companies Susquehanna has a “positive” rating on, and for which the policies will probably cause a decrease in raw material costs, but increase in labor costs, include China Fire & Security Group, Inc. (Nasdaq: CFSG), FalconStor Software, Inc. (Nasdaq: FALC) and Comtech Group, Inc. (Nasdaq: COGO).

Comtech Group, Inc. (Nasdaq: COGO), provider of customized designs for the technology manufacturing sector, reported third-quarter earnings after Thursday’s close that beat analysts’ estimates by a penny.

For the third quarter ended Sept. 30, the Chinese small cap recorded net income of $7.1 million, or $0.18 per share, a penny above the Thomson mean estimate of $0.17 per share. The current quarter’s bottom-line results represent an increase of 28.6% per share over the $4.8 million, or $0.14 reported for the third quarter of 2006.

The company booked revenue of $56.1 million, up 30% from revenue of $43.2 million reported during the third quarter of 2006. Thomson revenue view $55.80 million

The company said it experienced strong growth in its three key product categories: digital media, mobile handsets and telecommunications equipment. The company’s mobile handset business, in particular, accounted for over 40% of the firm’s total revenue for the quarter, fueled by robust consumer spending in China. The company said it believes consumer spending power in China will continue to grow at a rapid pace.

Comtech also said that it entered the education technology market during the quarter with a customized module for learning devices.

Looking ahead, management upwardly revised its 2007 full year guidance to revenue of $221 million in revenue from previous revenue guidance of $220 million. Ten analysts polled by Thomson Financial are on average anticipating sales of $219.25 million for the full year.

When people in China talk to each other, they use cell phones—a lot. According to the Chinese Ministry of Information Industry (MII), 487 million people were using mobile phones by April of this year, 100 million more than the number of people using fixed lines. The market is growing by 60 million new subscribers a year; 20% of owners replace their phones each year.

That has given a huge boost to Comtech Group, Inc. (Nasdaq: COGO), a Shenzen-based electronics module supplier to cell phone makers and other Chinese electronic equipment makers. In the second quarter, the company’s pro-forma net income was up 53% from a year earlier to $6.06 million, on revenues up 22% to $50.6 million.

As a result, the company’s stock has been hotter than Fergie ringtone downloads in the last couple months. From a 52-week low of $13.45 in early August, it hit a high of $21.85 on Oct. 11. The market cap of this company is now pushing the definition of “small,” having recently risen to just over $800 million.

Six out of seven analysts following the company have “buy” recommendations. One reason for continued optimism is that in 2008, China plans to begin rolling out a 3rd-generation wireless system and Comtech has been developing modules to feed the appetite of this fast, internet-enabled system. A May report by Roth Capital Partners notes that the company is “well-positioned to benefit from China’s 3G rollout and continued strength in China’s core electronics markets.”

A word of caution: do not confuse Comtech Group with U.S.-based Comtech Telecomm. Corp. (Nasdaq: CMTL). Google searches on Comtech Group bring up news of multi-million dollar deals signed by Comtech Telecomm. Despite similar names and markets, the companies are not related.

Shares of Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY) are rising following news this morning that the Cambridge, Mass.-based company has entered into an alliance with Roche Holding Ltd., according to which Roche obtains a non-exclusive license to Alnylam’s technology platform for developing RNAi therapeutics. Alnylam will receive $331 million upfront. The agreement could be worth more than $1 billion when factoring in future milestone payments. RNAi is a natural mechanism that the body uses to inhibit expression of certain genes. Shares are up $9.19, or 60%, to $24.39.

Shares of Novavax Inc. (Nasdaq: NVAX) are rising following news this morning that the Rockville, Md.-based pharmaceutical company has signed a non-exclusive, worldwide license agreement with industry giant Wyeth (NYSE: WYE) to obtain rights to a patent application covering virus-like particle technology for use in human vaccines in certain fields of use. The stock is up $0.02, or 1%, to $3.07.

What if movies adapted to the digital age as music did? Download a movie anywhere, anytime, and watch it with any device whenever you want. The idea of going to a movie theater is already archaic to entertainment seekers who have home theaters or digital TVs with large screens. And DVDs get damaged and take up space – just like their CD ancestors.

The current turmoil in the movie world is reminiscent of the music industry just before Steve Jobs shook things up with iPod and iTunes. Consumers spurned the unwanted music bundled in discs with the tracks they did want. They revolted by using file sharing software to download individual tracks for free. The music distributing companies cried intellectual property theft. Eventually, the dust settled, and the music companies learned to live in the digital world. And Apple Inc (Nasdaq: AAPL) made pots of money, along with its shareholders.

In the Internet video world, something similar is afoot. Clever entrepreneurs such as YouTVpc.com and peekvid.com store movies in overseas servers and use file sharing software to let consumers download movies free. Hollywood is crying copyright theft.

But digital media is unstoppable; large video files are easy to distribute when they are compressed with technologies such as MPEG 4. And the broad acceptance of broadband networks makes the distribution of internet video files feasible.