Tag - Dcx

The Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) stumbled hard for the second day in a row on fears that cheap credit has dried up. The small-cap index fell 13.65 points, or 1.72%, to 777.83. The Dow lost 208.10 points, or 1.54%, to 13,265.47.

The Russell 2000 fell four out of five days this week, dropping a cumulative 58.61 points to its lowest level since March 14.

Credit has been cheap for the past few years, fueling a boom in corporate takeover deals and helping cash-strapped families finance new home purchases.

But fears are mounting that the party is coming to an end.

The U.S. housing sector started to weaken in the second half of 2006, when stagnant prices led to increased delinquencies and foreclosures jumped as borrowers struggled to repay cheap loans.

The pain was first felt by the subprime financial sector, which serves individuals with poor credit histories, but it increasingly appears that there has been a sizeable ripple effect.

A major red flag was raised on June 22 when investment bank Bear, Stearns & Co. (NYSE: BSC) said that it had assumed billions in loans to its hedge fund in order to prevent creditors from seizing its assets. The funds, which had made their investments in debt backed by subprime mortgages, lost practically all their value.

That stung, as did the downgrading of billions of dollars of outstanding bonds, which credit rating agencies did in the following days. The U.S. Federal Reserve reacted, promising to take measures to tighten lending regulations. Government bonds suddenly became more attractive.

By Thursday, the cauldron was already boiling.

When the U.S. Census Bureau announced that new home sales defied more upbeat projections by falling 6.6%, down a breathtaking 22.3% on a year-over-year basis, and major home builders such as Beazer Homes USA Inc. (NYSE: BZH) reported heavy quarterly losses, investors stampeded for the exits.

That same day DaimlerChrysler AG (NYSE: DCX) announced it’s postponing its $12 billion debt offering. Also postponed is the proposed deal to have the German-American carmaker bought by private equity group Cerberus Capital Management.

For now, it appears that the flow of cheap money has been cut off, putting the brakes on the major corporate deals that have inflated stock prices.

And despite Treasury Secretary Henry Paulson’s attempts to calm the mood by insisting that the subprime meltdown is contained and not leaking into the broader economy, investors remain frightened.

Today, the bears took their fears to heart.

On a normal day, stocks probably would have posted gains.

That’s because the U.S. Commerce Department reported that the U.S. economy expanded at an annualized rate of 3.4% between April and June, above the projected rate of 3.2%, and more than the revised pipsqueak pace of 0.6% during the first three months of the year.

Core consumer prices increased at an annual pace of 1.4%, within the U.S. Federal Reserve’s preferred range of between 1% and 2%.

Additionally, the University of Michigan’s monthly index of consumer sentiment increased to 90.4 in July from June’s reading of 85.3, suggesting that the American consumer feels good about spending money.

Toronto-based Kaboose, Inc. (TSX: KAB) is North America's largest independent online media company in the kids-and-family market — a sector dominated by giants such as Walt Disney Co. (NYSE: DIS), Time Warner Inc.'s (NYSE: TWX) AOL unit and Viacom Inc.’s (NYSE: VIA) Nickelodeon. Solid planning, creative financing, strategic marketing, and sound partnerships have this small-cap standing strong in the face of stiff competition from larger competitors with well-oiled marketing machines.

Founded in 1999, right before the dot-com bust, Kaboose plowed full steam ahead, aggressively snapping up kid-oriented websites. After a round of acquisitions, the small media company conceded it would never win the battle for children's attention on the Internet, so it shifted gears and targeted their moms. Today, the company runs a string of content-related sites that focus on mothers and young families. Visitors to Kaboose's sites can do everything from staying informed of the latest trends and reading product and service reviews to planning birthday parties and family vacations to creating online photo scrapbooks.

With a Web portfolio including popular sites like BabyZone, ParentZone, Birthday in a Box, Two Peas in a Bucket and the recently acquired image-sharing service Bubbleshare, Kaboose's 120,000 pages of content attract 12 million unique visitors a month and its family of sites have more than 2 million registered users (return visitors who can be tracked and cross-promoted)—a fact that has brought advertisers knocking.

"Kaboose is one of only a handful of Canadian companies that is benefiting from the significant shift in advertising spending from traditional media to online media," Ron Shuttleworth of Jennings Capital Inc., said in a recent report.

"As the company scales and solidifies its position as a pre-eminent destination for families, we expect that Kaboose should capture more share of advertising budgets and higher rates," he wrote.

Last year, the advertising dollars poured in: Kaboose revenues swelled 200% to $11.7 million and in the third quarter of last year, the company recorded its first ever profit, $500,000 (a $1-million turnaround from the same period in 2005). All in all, sales have grown more than 1,000% since 2003. And the company has built an impressive list of business partners, including the likes of McDonald's Corp. (NYSE: MCD), Target Corporation (NYSE: TGT), Hewlett-Packard Company (NYSE: HPQ), DaimlerChrysler AG's (NYSE: DCX) Mercedes-Benz subsidiary, Mattel, Inc. (NYSE: MAT) and M.J. Heinz Company (NYSE: HNZ).

Richard Fetyko, an analyst with Merriman Curhan Ford & Co., wrote in a report last month that Kaboose has made significant recent strives to expand its user audience, which in turn is helping the company develop more partnerships and increase ad revenue. And he pointed to developments expected this year that will keep the company growing, such as Kaboose gearing up to take advantage of the technology that will allow its content to be shared through a virtual grapevine of blogs, discussion forums and video- and photo-sharing capability—the same strategy that has made huge successes of MySpace, YouTube and other social-networking sites that allow users to share and showcase their own content.

Although it's a leader in the sector, the $250 million small-cap is a minnow in a market dominated by big fish. But its small stature hasn't diminished the kudos that have been heaped upon it by market watchers. The half-dozen analysts that track the stock all recommend it as a strong buy for its growth prospects, contributing to the stock being driven up almost 50% this year and 136% over the past 12 months.

Following first-quarter results that exceeded expectations, Jennings Capital’s Shuttleworth in May raised his 12-month price target on Kaboose shares to C$5.00 from C$3.90. Sales skyrocketed to C$6.6-million, from C$2.3-million a year earlier, and its balance sheet remained clear and debt-free. "We continue to believe that Kaboose is a potential takeover target for a larger diversified media conglomerate," he added. On June 29, the stock closed at C$3.15 on the Toronto Stock Exchange.

Arinder Mahal, an analyst with Dundee Securities Corp., also raised his price expectations in May, setting a one-year target of C$4.75, up from C$4. He is bullish in light of the company's recent efforts to revamp a few of its sites (with new looks and content), forge lucrative partnerships and build a strong management team.

Speaking of management, Kaboose has brought in an infusion of industry talent with significant online media experience. Former managing editor of Parents.com, site director of AmericanBaby.com and editorial lead at Time Inc.'s Parenting.com, Michelle Shinseki, oversees the development of parenting content, and the introduction of Kaboose's interactive suite of community and photo tools to a new generation of users. Will Ellison, former Director of Interactive Marketing with Publisher's Clearing House, heads up the team responsible for online marketing initiatives. Michael Fogarty, the company's new chief revenue officer, previously worked on marketing and sales strategies at Time Warner Inc.'s AOL.

"The continued addition of top tier industry talent supports our strategy of increasing our share of the family Internet market," said Jonathan Graff, president of Kaboose, in a June 13 news release. "These talented individuals will play an important role in further developing the Kaboose family of online properties into the foremost online destination for moms and their families."

Perhaps most encouraging is the market's huge potential. According to America Online/DMS, AOL Time Warner's research unit, 71% of mothers use the Internet for product information and advice, spending just shy of 17 hours per week online researching parenting, education, health, food, movies and fashion. Nearly 95% of mothers have ordered a product or service online. In the United States alone, there are more than 20 million mothers who have children under 12, making $1.5 trillion worth of purchasing decisions annually.

Now that’s anything but child's play.

Even with fears of global warming and a worst-case-scenario of a shutdown of oil from the Middle East, it’s not easy being a green company.

The concept of non-polluting fuel cells powering our cars and trucks seemed too good to be true when it first exploded on the scene nearly two decades ago. Investors in one of the leading hydrogen-cell developers, Ballard Power Systems Inc. (Nasdaq: BLDP, TSX: BLD) might be left wondering if commercializing the technology is just a lot of hot air.

Ballard is a Canadian company that was a pioneer in fuel-cell research. Founded in 1979 to research and develop lithium batteries, it migrated to proton-exchange-membrane (PEM) fuel-cell products in the 1980s. With headquarters outside of Vancouver in Burnaby, B.C., it has another manufacturing facility in Lowell, Mass.

Fuel-cell technology seems like the modern-day successor to the medieval claims of alchemists that they could turn lead into gold. Combine hydrogen and oxygen, and presto-change-o, you have electricity flowing, with the only byproducts being water vapor and air. Ballard launched its first commercial fuel cell product, the Nexa power module, in 2001.

This is no wave of the magic wand; it works. But the reality is that you also have a lot of weight to tote around in the costly fuel-cell device. General Motors Corp. (NYSE: GM) invested heavily in fuel-cell technology, but its interest faded. At the time, automakers were bumping up the fuel efficiency of their gasoline and diesel engines, crude oil was cheap and plentiful, and few were heeding the cries of researchers about global warming and potential petroleum-product delivery bottlenecks.  

Now with the growing fears of global warming and $3 gasoline way too common, vehicle makers appear to be warming to fuel cells again, as well as using hydrogen as the fuel in internal-combustion engines. While hybrid technology combining an electric motor with a gasoline engine is the current rage, a fuel cell could take the place of that gasoline engine. Both Ford Motor Co. (NYSE: F) and DaimlerChrysler AG (NYSE: DCX) have invested in Ballard Power.
 
Already fuel cells are proving their viability in real-world situations. In January, DaimlerChrysler rolled out a Mercedes-Benz F-cell compact sedan powered by a stack of Ballard fuel cells as a supervisor’s response vehicle for the Sacramento, Calif., Metropolitan Fire District. Daimler has a fleet of fuel-cell vehicles deployed, mostly in Europe, including cars, medium-duty vans and buses.
 
In early June, Ford showcased one of its Edge crossovers, a fuel cell-electric hybrid with plug-in capabilities on a drive from Seattle to Ballard’s hometown of Burnaby. Last January in Washington, Ford unveiled the HySeries Drive Edge, which uses its lithium-ion battery’s stored electricity for the first 25 miles, after which the Ballard fuel cell kicks in for another 200 miles. Hydrogen refueling is needed after about 400 miles, with the potential of becoming an ideal zero-emissions commuter vehicle.  
 
Until fuel cells become feasible as a standalone power plant, this new type of hybrid could offer a solution in the face of rising gasoline prices. Mujeeb Ijaz, manager of Ford’s fuel-cell vehicle engineering program, told the Canadian press that a plug-in hybrid might be “the first commercially viable market, because it’s got the greatest pull from the customer’s point of view.”
 
And there sits Ballard out in western Canada, waiting to capitalize. Some alternative-energy analysts have estimated that it could take nearly another decade before fuel-cell vehicles reach the market. Ballard is not abandoning its vehicle fuel-cell development, but it is turning to other fields that might be able to put it to practical use faster.
 
At its May annual meeting, Ballard Chief Executive John Sheridan told shareholders that the non-automotive uses of its fuel cells could make the company profitable again after a string of hefty annual losses. Some shareholders bought Ballard at the height of the tech boom at more than $100; it’s currently trading around $5.
 
“Our path to profitability is non-automotive,” Sheridan said, noting that “we do not foresee early-stage commercialization of fuel-cell cars until 2014, 2015.”
 
While Sheridan did not divulge when the company expected to become profitable, some analysts are willing to give their best guesses. RBC Capital analyst Stuart Bush, who has an underperform rating on Ballard’s shares, said in an April note to investors that he doesn’t expect to see a profit until 2010.

Bush’s analysis came out after Ballard client General Hydrogen Corp. said it was delaying orders pending a possible acquisition by Plug Power Inc. (Nasdaq: PLUG). The $10 million acquisition went through, and Ballard signed a new two-year agreement with Plug Power to supply fuel-cell stacks for materials-handling applications. Plug Power also acquired another Ballard customer, Cellex Power Products, earlier this year. Terms of the new Plug Power deal weren’t disclosed, but Ballard was banking on $22 million flowing from its former General Hydrogen pact alone, before scaling back expectations.

Despite those setbacks, Ballard executives sounded fairly optimistic in reporting first-quarter results in April. For the three months ended March 31, the company pared its loss to $14.3 million from $17.2 million the year before. Revenue grew 44% to $13.6 million. In its 2007 outlook, Ballard is expecting revenue from continuing operations to increase 30% to a range of $55-$65 million, while it plans to slice its cash burn by 20% to $40-$50 million.

Ballard has some new contracts, including one from the U.S. Department of Defense, for $3 million to develop a materials-handling demonstration program. It’s also continuing as a player in Japan’s government-subsidized residential fuel-cell cogeneration program.

Perhaps it’ll take something more than Al Gore stumping for change and $3-a-gallon gasoline to spur fuel-cell development. Many analysts that cover alternative-energy companies rate Ballard at something equal to a hold, or perhaps a sector underperform. If it can turn the corner by becoming a force in materials handling or proving ways that fuel cells can be put to use, shares of green pioneer Ballard would undoubtedly climb out of their blue funk.

The Russell 2000 lost big today, while the Dow managed a small rise.  Among specific small cap stocks, QAD Inc. (Nasdaq: QADI) said it expects to report a loss in the first quarter of fiscal 2008, while shares of Source Interlink Companies, Inc. (Nasdaq: SORC) sagged on news of a $1.2 billion media acquisition.

The Russell 2000 lost 7.21 points, or 0.87%, to 822.33.  The Dow Jones Industrial Average added 20.56 points, or 0.15%, to 13,346.78.

Shares of enterprise applications provider QAD Inc. depreciated following news the Carpinteria, Calif.-based company expects a net loss in the first quarter of fiscal 2008.  According to preliminary estimates, QAD projects a net loss of between $0.05 per share and $0.07 per share for the quarter ended April 30, the company said after Friday’s close.  Revenue is forecast at $56 million.  The previous projections called for net income of between $0.01 per share and $0.03 per share.  Analysts are looking for earnings of $0.05 on revenue of $59.48 million.  QAD attributed the revenue and earnings shortfall in part to lower than expected license revenues in the first quarter of 2008 due to sales management changes in the North America region.  Shares loss $1.47, or 16%, to $7.90.

Asset management company Lazard Capital initiated its coverage of San Diego-based La Jolla Pharmaceutical Company (Nasdaq: LJPC) with a buy rating.  According to news reports after the market open, the target price has been set at $9.  Shares added $0.18, or 3%, to close at $5.49.

Shares of Bonita Springs, Fla.-based Source Interlink Companies, Inc. ended the day among the losers following news the entertainment products marketing company has bought PRIMEDIA Inc.’s (NYSE: PRM) Enthusiast Media segment for $1.2 billion.  The all-cash transaction combines EM’s industry-leading magazine content portfolio, containing over 70 magazine titles and 90 Web sites, with Source Interlink's premier magazine distribution and merchandising platform, the company said after the opening bell.  The deal is expected to close in the summer.  Shares lost $1.81, or 15%, to close at $5.79.

The news that most preoccupied investors’ mind today was the announcement that DaimlerChrysler (NYSE: DCX) has sold 80.1% of its stake in Chrysler to private equity group Cerberus Capital Management for $7.45 billion.  It has long been rumored that the German automaker is looking to offload its troubled counterpart.

Stocks are trading mixed this afternoon, after news that a private equity group purchased a majority stake in Chrysler for $7.45 billion.  In small cap action, US BioEnergy Corp. (Nasdaq: USBE) missed profit expectations, while consulting company Inforte Corp. (Nasdaq: INFT) is being acquired for $50 million.

At 11:23 a.m. ET the Russell 2000 had lost 2.43 points, or 0.29%, to 827.11.  The Dow Jones Industrial Average was up 30.23 points, or 0.23%, to 13,356.45.

Carlsbad, Calif.-based Xenonics Holdings, Inc. (Nasdaq: XNN), which manufactures portable illumination products, has narrowed its net loss.  The net loss for the quarter ended March 31 was $0.18 million, or $0.01 per share, compared with a net loss of $0.68 million, or $0.04 per share, a year earlier, the company said before the opening bell.  Analyst estimates were unavailable.  Chairman Alan Magerman said the current quarter will see  a “positive impact” on financial results due to strong sales of Xenonics new night vision device SuperVision.  The stock is up $0.15, or 6%, to $2.55.

Shares of US BioEnergy Corp. are trading lower on news the Inver Grove Heights, Minn.-based company reported net income that missed analysts’ expectations.  The net income for the first quarter ended March 31 was $5.2 million, or $0.08 per share, compared with a net loss of $1.56 million, or $0.04 per share, in the same period of 2006, the ethanol producer announced before the start of trading.  However, that’s below Wall Street’s projected earnings of $0.22 per share.  US BioEnergy also said that it has begun construction of a 100 million gallons-per-year ethanol plant near Janesville, Minnesota.  Shares are down $0.50, or 4%,to $13.11.

Chicago-based Inforte Corp. will be acquired by Business & Decision Group (Euronext: BND) for approximately $50 million in an all-cash transaction, according to a joint announcement by the two consulting companies before the opening bell.  That’s $4.25 per Inforte share, a 33% premium on Friday’s closing price.  The acquisition has been approved by both boards and is expected to be completed in 90 days.  Shares are up $0.95, or 30%, to $4.15.

DaimlerChrysler (NYSE: DCX) has sold 80.1% of its stake in Chrysler to private equity group Cerberus Capital Management for $7.45 billion, the company said before the start of trading.  United Auto Workers, the union representing Chrysler’s factory workers, welcomed the deal.

Members of Ford Motor Co.’s (NYSE: F) founding family are denying news reports this morning that they are considering selling part of their controlling stake in the company.  Earlier today some media outlets cited unnamed sources claiming the family is discussing a sale.